08c CAFRMEMORANDUM
TO: CITY COUNCIL 1
FROM: ANGELA KRAETSCH, DIRECTOR OF ADMINISTRATIVE SERVICE
SUBJECT: CONSIDERATION OF ACCEPTANCE OF THE COMPREHENSIVE
ANNUAL FINANCIAL REPORT (CAFR)
DATE: JANUARY 24,2012
RECOMMENDATION:
It is recommended that the City Council receive and file the Comprehensive Annual
Financial Report (CAFR) for the fiscal year ended June 30,201 1.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
There is no financial impact from this action.
No or minimal future staff time is projected with respect to the PDROPS or the two
agreements.
BACKGROUND:
The firm of Moss, Levy & Hartzheim, LLP was hired to audit the City of Arroyo Grande's
financial records for the fiscal year ended June 30, 201 1. Audit services are retained for
two reasons: first, to have an independent review of internal control; and secondly, to
ensure that the resulting financial reports fairly represent the financial position of the City.
The auditors conducted testing of internal controls in July 2011. The procedures for
receiving and disbursing cash, the accounting methodology used to record transactions,
the separation of duties to avert collusion, and asset securities were reviewed. As a result
of this extensive testing, no internal control issues/events were found.
ANALYSIS OF ISSUES:
Generally accepted accounting principles (GAAP) provide the criteria for judging whether a
financial report is fairly presented. In defining the minimum standard of acceptable basic
financial reporting for state and local governments, GAAP mandate a complete set of basic
financial statements, including accompanying note disclosures, as well as the presentation
of certain required supplementary information in connection with the basic financial
statements. GAAP encourages government agencies to present this information within the
broader framework of a CAFR.
Agenda Item 8.c.Page 1
CITY COUNCIL
ACCEPTANCE OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
JANUARY 24,201 2
PAGE 2
The CAFR is a more detailed financial report beyond just the basic financial statements. It
is made up of (at minimum) three basic sections:
The introductory section, which provides general information on the
government's structure and personnel as well as information useful in assessing
the government's financial condition.
The financial section contains the basic financial statements. This is the section
that staff has presented to the Council in the past.
The statistical section provides a broad range of trend data covering key
financial indicators from the past 10 fiscal years.
In October of 201 1, an audit was conducted on the 2010-1 1 financial transactions.
Documentation in support of the assets, liabilities, and fund balance of all the funds in the
City were examined and verified. This process assures an impartial review and
substantiation of the City, Five Cities Fire Authority (FCFA) and Redevelopment Agency's
fund balances. The result of this review is the City's CAFR. The Redevelopment Agency's
financial report was received and filed by the RDA Board of Directors separately at the
December 13, 201 1 meeting. The FCFA's financial report will be received and filed at the
February ~7'~ FCFA Board meeting.
The Fiscal Year 2010-1 1 CAFR is in compliance with Government Accounting Standards
Board pronouncement 54 (GASB 54). GASB 54 is designed to modify fund balance
reporting in governmental funds. Prior fund balance classifications of reserved;
designated; and undesignated have been replaced with five new components:
nonspendable; restricted; committed; assigned; and unassigned. The intent of GASB 54 is
to improve the usefulness of fund balance information by providing clearer fund balance
classifications that can be more consistently applied.
For financial reporting purposes, the Local Sales Tax Fund is combined with the General
Fund. The audit of the Combined Funds, as shown in the table on the following page,
reports revenues and transfers in of $16,414,963, expenditures of $14,498,811, and
transfers out of $1,623,786. This resulted in an increase to the fund balance of $292,366.
The combined fund balance for the General Fund is $5,292,792 or 33% of expenditures
(includes transfers out). .However, $595,268 of this balance is considered nonspendable,
$569,379 for prepaid items; $25,889 is reserved for inventory. In addition, $350,000 is
assigned to bdlance the budget in FY 201 1-12. This leaves an unassigned balance of
$4,347,524, which is 27% of the combined expenditures.
Agenda Item 8.c.Page 2
CITY COUNCIL
ACCEPTANCE OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
JANUARY 24,2012
PAGE 3
Local Sales Corn bined
Act ivily General Fund Tax Fund Balance
6130110 Fund Balance $ 3,234,884 $1,765,542 $ 5,000,426
Revenues (includes transfers in) 14,690,506 1,724,457 16,414,963
Expenses (14,398,288) (100,523) (14,498,811)
Transfers (41 0,4 13) (1,213,373) (1,623,786)
Excess of revenues over (under) expenditures (11 8,195) 41 0,561 292,366
Fund Balances:
Nonspenda ble for perpaid items
Nonspenda ble for inventory
Assigned fund balance
Unassigned fund balance
613011 1 Total Fund Balance $ 3,116,689 $2,176,103 $ 5,292,792
Auditors may issue three different types of opinions at the conclusion of an audit, an
Unqualified, Qualified, or Adverse Opinion. An Unqualified Opinion assures the audit
reader that the information presented fairly represents the financial position of the City. A
Qualified Opinion states that the information is fairly presented except for a particular
issue. An Adverse Opinion indicates that the agency has major accounting and/or internal
control issues. The Administrative Services Department staff is proud to report that for the
fiscal year ended June 30, 2011, the City of Arroyo Grande received an Unqualified
Opinion.
ALTERNATIVES:
The following alternatives are provided for City Council consideration:
- Approve staff recommendations and receive and file the comprehensive Annual
Financial Report;
- Do not approve staff recommendations;
- Modify staff recommendations and approve;
- provide direction to staff
ADVANTAGES:
By receiving and filing the Comprehensive Annual Financial Report, the City will be
accepting the auditors Unqualified Opinion. As mentioned before, an Unqualified Opinion
assures the audit reader that the information presented fairly represents the financial
position of the City.
Agenda Item 8.c.Page 3
CITYCOUNCIL
ACCEPTANCE OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
JANUARY 24,201 2
PAGE 4
DISADVANTAGES:
There are no disadvantages in relation to the recommended action.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, January 19, 2012. The Agenda
and report were posted on the City's website on Friday, January 20, 2012. No public
comments were received.
Attachment:
- City of Arroyo Grande Comprehensive Annual Financial Report (on file in the
Administrative Services and Legislative and Information Services Departments
for public review, as well as on the City's website at www.arroyogrande.org)
Agenda Item 8.c.Page 4
Comprehensive Annual Financial Report
CITY OF ARROYO GRANDE, CALIFORNIA
For the Fiscal Year Ended June 30, 2011
CITY OF ARROYO
GRANDE
CALIFORNIA
Comprehensive Annual
Financial Report
For the Fiscal Year Ended June 30, 2011
Prepared by the Department of Administrative Services
Angela Kraetsch, Director of Administrative Services
Ryan Cornell, Accounting Supervisor
CITY OF ARROYO GRANDE
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Table of Contents
For the Fiscal Year Ended June 30, 2011
i
INTRODUCTORY SECTION
Letter of Transmittal ................................................................................................................................................................ A-1
Directory of Officials ................................................................................................................................................................ A-6
Organizational Chart ................................................................................................................................................................ A-7
FINANCIAL SECTION
Independent Auditors’ Report ................................................................................................................................................. B-1
Management’s Discussion and Analysis (unaudited) ............................................................................................................... B-3
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Assets ............................................................................................................................................... B-13
Statement of Activities ................................................................................................................................................. B-14
Fund Financial Statements:
Description of Major Governmental and Propriet ary Funds ........................................................................................ B-1 7
Balance Sheet – Governmental Funds ......................................................................................................................... B-18
Reconciliation of the Balance Sheet of Governm ental Funds to the Statement of Net Assets ................................... B-21
Statement of Revenues, Expenditures, and Chang es in Fund Balances – Governmental Funds ................................. B-22
Reconciliation of the Statement of Revenues, E xpenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities ..................................................................... B-24
Statement of Net Assets – Proprietary Funds .............................................................................................................. B-25
Statement of Revenues, Expenses, and Changes i n Net Assets – Proprietary Funds .................................................. B-26
Statement of Cash Flows – Proprietary Funds ............................................................................................................. B-27
Statement of Fiduciary Net Assets – Agency Fun ds ..................................................................................................... B-29
Notes to Basic Financial Statements ............................................................................................................................... B-30
REQUIRED SUPPLEMENTARY INFORMATION SECTION (unaudited)
Budgetary Information – Major Governmental Funds:
General Fund ..................................................................................................................................................................... C-1
Transportation Impact Fees Fund ..................................................................................................................................... C-3
Other Postemployment Benefits – Schedule of Fundin g Progress .......................................................................................... C-4
SUPPLEMENTAL INFORMATION SECTION
Description of Nonmajor Governmental and Fiduciary Funds ................................................................................................. D-1
Nonmajor Governmental Funds:
Combining Balance Sheet ................................................................................................................................................. D-4
Combining Statement of Revenues, Expenditures, an d Changes in Fund Balances ....................................................... D-12
Agency Funds:
Statement of Changes in Assets and Liabilities ............................................................................................................... D-20
Independent Auditors’ Report on Internal Control O ver Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance
with Government Auditing Standards ............................................................................................................................ D-21
CITY OF ARROYO GRANDE
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Table of Contents
For the Fiscal Year Ended June 30, 2011
ii
STATISTICAL SECTION (unaudited)
Net Assets by Component – Last Nine Years ........................................................................................................................... E-2
Change in Net Assets – Last Nine Years ................................................................................................................................... E-4
Fund Balances of Governmental Funds – Last Ten Fis cal Years ............................................................................................... E-8
Changes in Fund Balances of Governmental Funds – L ast Ten Fiscal Years ........................................................................... E-10
General Governmental Tax Revenues by Source – Last Ten Fiscal Years ............................................................................... E-12
Assessed and Estimated Actual Value of Taxable Pro perty – Last Ten Fiscal Years ............................................................... E-13
Property Tax Rates – Direct and Overlapping Govern ments – Last Ten Fiscal Years ............................................................. E-14
Principal Property Taxpayers – Current Fiscal Year and Nine Fiscal Years Ago ...................................................................... E-16
Secured Property Tax Roll Levies and Collections – Last Ten Fiscal Years ............................................................................. E -18
Taxable Sales by Category – Last Ten Calendar Year s ............................................................................................................ E-20
Ratios of Outstanding Debt by Type – Last Ten Fisc al Years .................................................................................................. E-22
Ratios of General Bonded Debt Outstanding – Last T en Fiscal Years .................................................................................... E -24
Direct and Overlapping Debt.................................................................................................................................................. E-25
Legal Debt Margin Information – Last Ten Fiscal Ye ars ......................................................................................................... E-26
Demographic Statistics – Last Ten Fiscal Years ...................................................................................................................... E-28
Principal Employers – Current Fiscal Year and Nine Fiscal Years Ago .................................................................................... E-29
Full-Time Equivalent City Government Employees by Function – Last Ten Fiscal Years ........................................................ E-30
Operating Indicators by Function – Last Ten Fiscal Years ...................................................................................................... E-32
Capital Asset Statistics by Function – Last Ten Fi scal Years ................................................................................................... E-34
CITY OF ARROYO GRANDE
INTRODUCTORY SECTION
A-2
The independent audit of the financial statements of the City of Arroyo Grande are part of a
broader, federally mandated “Single Audit,” design ed to meet the special needs of federal grantor
agencies. The standards govern ing Single Audit engagements require that agencies expending
more than $500,000 in federal monies, be requir ed to have the independent auditor report not
only on the fair presentation of the financial st atements, but also on the audited government’s
internal controls and compliance with legal requ irements, with special emphasis on internal
controls and legal requirements involving the administration of federal awards. The City
expended more than the minimum amount of fede ral awards and, as a result, was subject to a
Single Audit Report.
Management has provided a narrative introducti on, overview, and analysis to accompany the
basic financial statements in the form of Managem ent’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 immedi ately following the report of the independent
auditors.
Profile of the Government
The City of Arroyo Grande is located five mile s inland from the central California coastline.
Incorporated in 1911, the City contains acres of ag riculturally 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 17,365.
The City is empowered to levy a property tax on both real and personal properties located within
its boundaries. It’s also empowered by State statute to extend its corporate limits by annexation,
which occurs periodically when deemed appropriate by the governing council.
The City has operates under the council-manager fo rm of government and has done so since 1911.
Policy-making and legislative authority are vested in a governing council consisting of the mayor
and four other members. The governing council is responsible for, but not limited to, passing
ordinances, adopting budget(s), appointing committ ees, and hiring both the City’s manager and
attorney. The City’s manager is responsible for carrying out the policies and ordinances of the
City Council, for overseeing the day-to-day oper ations of the City, and for appointing the heads
of the various departments. The Council is el ected 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.
A-3
The City provides a full rang e of services, including public safety; the construction and
maintenance of highways, streets, and other infrastr ucture; and recreational activities and cultural
events. Certain sanitation services are prov ided through the Water and Sewer Funds, which
function as a Recreation and Maintenance Depart ment of the City. The City is ultimately
financially responsible for the Arroyo Grande Rede velopment Agency (RDA), which is reported
separately within the City’s financial statemen ts. Additional information on the RDA can be
found in the notes to the basic financial statements.
The annual budget serves as the foundation for the City’s financial planning and control. All
departments/divisions are required to submit requ ests for appropriations to the City Manager.
These requests are used as the starting point for developing a proposed budget. The City
Manager then presents this proposed budget to the City Council for review prior to June 1 st . The
City Council is required to hold public hearin gs on the proposed budget and to adopt a final
budget by no later than June 30 th , the close of the City’s fiscal year. The appropriated budget is
prepared by fund, function (e.g. public work s), and department (e.g. automotive shop).
Department heads may make transfers of approp riations within a department. Transfers of
appropriations between departments or changes in appropriations that affect the fund balance,
require the approval of the City Council.
Factors Affecting Financial Condition
The information presented in the financial statemen ts is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the City of
Arroyo Grande operates.
Local economy
The City of Arroyo Grande is currently in the midst of a downward economic environment and
indicators point to a continued decline. Key indi cators are the region’s increasing unemployment
rate of 9.4% which is slightly higher than the national average of 8.9%; home prices, which had
doubled in previous years, are continuing to decrease thus property tax revenues are still
declining; and sales tax revenues is continuing to decline.
Long-term financial planning
Several capital improvement projec ts are expected to improve the City’s infrastructure, increase
the number of City parks, improve drainage problems and improve the overall look of the
community. On the following page is a list of projects approved in the FY 2011-12 & FY 2012-13
Biennial Budget will impact the community.
A-4
Parks – The installation of sports lighting at Do n Roberts, Ikeda and Volunteer fields and various
ADA upgrades.
Miscellaneous Projects – There is approximatel y $1,450,000 budgeted towards the City’s Police
Department expansion.
Street Projects – The environmental report for the Brisco Road-Halcyon Road/Route 101
Interchange project. In additi on, several pavement rehabilitation projects are scheduled to
improve the City’s streets.
Drainage Projects – The completion of the News om Springs Drainage proj ect and various creek
preservation projects.
Water & Sewer Projects – The installation of a new production water well, various waterline
upgrades, lift station No. 3 replacement, Water an d Sewer Master Plan update and the upgrade of
the Pike sewer lines.
Cash management policies and practices
Cash temporarily idle during the fiscal year wa s invested in the Local Agency Investment Fund
(LAIF), a State investment pool. This pool offers the City liquidity, safety, and a higher rate of
interest than could be found with local banks. The average yield on investments was .495%
during the 2010-11 fiscal year. Investment income includes appreciation in the fair value of LAIF
at fiscal year-end. Increases in fair value du ring the current fiscal year, however, do not
necessarily represent trends that will continue; nor is it always po ssible to realize such amounts.
Risk Management
The City joined the California Joint Powers Insu rance 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 me mbers-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 us ing recognized insurance experience rating
techniques.
In addition, various control te chniques, including employee acci dent prevention training, have
been implemented during the year to minimize accident-related lo sses. The third-party coverage
is currently maintained for indi vidual workers’ compensation claims in excess of $350,000, while
the City participates in a shared risk pool fo r liability claims above $30,000. During the 2003-04
fiscal year, the City began the process of joinin g the California Joint Powers Insurance Authority
for workers’ compensation coverage.
A-5
Pension and other postemployment benefits
The City participates in the defined benefit pe nsion plan administered by the California Public
Retirement Agency (CalPERS) for all full-time empl oyees. Each fiscal year, the Agency calculates
the amount of the annual contribution the City mu st 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 postretirement health bene fits for certain retirees and their dependents.
As of the end of the current fiscal year, there were forty-five (45) retired employees receiving
these benefits, which are financed on a pay-as-you-go-basis.
Additional information on the City’s pension a rrangements and postemployment benefits can be
found in NOTE 7 – LONG-TERM DEBT, NOTE 11 – CITY EMPLOYEES’ RETIREMENT PLAN
and NOTE 12 – POSTEMPLOYMENT BENEFITS in the notes to the basic financial statements.
Acknowledgements
The preparation of this report would not have been possible without the efficient and dedicated
services of the entire staff of the administrative services and administration departments. We
would like to express our appreciation to all members of the department who assisted and
contributed to the preparation of this report. Cr edit also must be given to the Mayor and City
Council for their unfailing support for maintaining the highest standards of professionalism in
the management of the City of Arroyo Grande’s finances.
Respectfully submitted,
___________________________
Angela Kraetsch
Director of Administrative Services
APPROVED FOR SUBMITTAL TO CITY COUNCIL:
___________________________
Steven Adams
City Manager
CITY OF ARROYO GRANDE
DIRECTORY OF OFFICIALS
June 30, 2011
ELECTED OFFICIALS
Mayor .......................................................................................................................................................... Tony Ferrara
Mayor Pro Tem ............................................................................................................................................... Caren Ray
Council Member ............................................................................................................................................ Tim Brown
Council Member .......................................................................................................................................... Joe Costello
Council Member ........................................................................................................................................... Jim Guthrie
ADMINISTRATIVE PERSONNEL
City Manager ............................................................................................................................................... Steve Adams
City Attorney ................................................................................................................................................. Tim Carmel
Director of Administrative Services ....................................................................................................... Angela Kraetsch
Legislative and Information Services Director/City Clerk ........................................................................Kelly Wetmore
Community Development Director ......................................................................................................... Teresa McClish
Recreation and Maintenance Services Director........................................................................................... Doug Perrin
Police Chief ............................................................................................................................................... Steve Annibali
Fire Chief ..................................................................................................................................................... Mike Hubert
A ‐6
CITY OF ARROYO GRANDE
ORGANIZATIONAL CHART
June 30, 2011
COMMUNITY OF ARROYO GRANDE
CITY
TREASURER
CITY
CLERK
CITY COUNCIL
CITY MANAGER CITY
ATTORNEY
A ‐7
COMMUNITY
DEVELOPMENT
POLICE
ADMINISTRATIVE
SERVICES
RECREATIONAND
MAINTENANCE
LEGISLATIVE AND
INFORMATION
SERVICES
THIS PAGE IS INTENTIONALLY LEFT BLANK
CITY OF ARROYO GRANDE
FINANCIAL SECTION
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2011
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, 2011. 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, 2011, are as follows:
• The assets of the City exceeded its liabilities by $86,521,156. Of this total, $14,270,723 may be used to meet the
government’s ongoing obligations to citizens and creditors.
• Total net assets for the City, as a whole, increased between fiscal years ending 2011 and 2010, increasing by less than
1%.
• The City’s governmental funds reported a combined ending fund balance of $17,401,917, a decrease of $580,824 from
the prior fiscal year. Approximately 25% of the ending fund balance is available for spending at the City’s discretion.
• Unassigned fund balance for the General Fund was $4,347,524 or 30% of the General Funds expenditures.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the
reader can understand the City as a financial whole, an entire operating entity. These statements then proceed to provide an
increasingly detailed look at specific financial activities. This annual report consists of five parts – introductory section ,
management’s discussion and analysis (this section), the basic financial statements, an optional section that presents combining
statements for nonmajor governmental funds and agency funds statement of fiduciary net assets, and a statistical section.
The basic financial statements include two kinds of statements that present different views of the City:
• The first two statements are government ‐wide financial statements that provide both long ‐term and short ‐term
information about the City’s overall financial status.
• The remaining statements are fund financial statements that focus on individual parts of the government, reporting the
City’s operations in more detail than the government ‐wide statements .
The financial statements also include notes that explain some of the information in the financial statements and provide more
detailed data.
The following explains the structure and content of each of the statements.
Government ‐wide Statements
Government ‐wide statements report information about the City as a whole using accounting methods similar to those used by
private ‐sector companies. The statement of net assets includes all of the government’s assets and liabilities. All of the current fiscal
year’s revenues and expenses are accounted for in the statement of activities regardless of when the cash is received or paid.
The two government ‐wide statements report the City’s net assets and how they have changed. Net assets are the difference
between the City’s assets and liabilities and are one of the ways to measure the City’s financial health or position.
• Over time, increases or decreases in the City’s net assets is an indicator of whether its financial health is improving or
deteriorating, respectively.
• To assess the overall health of the City, you need to consider additional non ‐financial factors such as changes in the
City’s tax base, facility condition, required educational programs, and other factors.
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2011
B ‐4
The government ‐wide financial statements of the City are divided into two categories:
• Governmental activities: Most of the City’s basic services are included here, such as the general government, police,
public works, community development, parks, recreation, and facilities. Property and sales taxes, user fees, interest
income, franchise fees, and state and federal grants finance these types of activities.
• Business ‐type activities: The City charges a fee to customers to cover all or most of the cost of certain services it
provides. The City’s water system is reported in this category.
Fund Financial Statements
The fund financial statements provide more detailed information about the City’s most significant funds and not the City as a whole.
The City’s major governmental funds include the General Fund, Transportation Impact Fees Fund, Capital Improvement Fund, and
the Redevelopment Capital Projects Fund. Funds are accounting devices that the City uses to keep track of specific sources of
funding and spending for particular purposes.
• Some funds are required by State law and by bond covenants.
• Management establishes other funds to control and manage money for particular purposes or to show that it is
meeting legal responsibilities for using certain taxes, grants, and/or other money.
The City has three kinds of funds:
• Governmental funds: Most of the City’s basic services are included in governmental funds which focus on how money
flows into and out of these funds and the balance left at fiscal year ‐end that are available for spending. These funds
are reported using an accounting method called modified accrual accounting, which measures cash and all other
financial assets that can readily be converted to cash. The governmental funds statements provide a detailed short ‐
term view of the City’s general governmental operations and the basic services it provides. Governmental fund
information helps determine whether there are more or fewer financial resources that can be spent in the near future
to finance the City’s programs. Because this information does not encompass the additional long ‐term focus of the
government ‐wide statements, additional information is provided in the financial statements that reconciles and
explains the relationship (or differences) between them.
• Proprietary funds: When the City charges customers for the services it provides, these services are generally reported
in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of
Net Assets and the Statement of Revenues, Expenses, and Changes in Net Assets. In fact, the City’s proprietary funds
are the same as the business ‐type activities reported in the government ‐wide statements but provide more detail and
additional information, such as cash flows. The proprietary fund financial statements provide separate information for
the Water and Lopez funds.
• Fiduciary funds: The City is the trustee, or fiduciary , for the Downtown Parking Association and Sanitation District. The
City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the
City’s fiduciary activities are reported in a separate statement of fiduciary net assets. We exclude these activities from
the City’s government ‐wide financial statements because the City cannot use these assets to finance its operations.
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2011
B ‐5
FINANCIAL ANALYSIS OF THE CITY AS A WHOLE
The City’s combined net assets at June 30, 2011 and 2010 are as follows:
Fiscal Year Ended Fiscal Year Ended Increase/ Total %
June 30, 2011 June 30, 2010 (Decrease) Change
Assets:
Current and other assets $ 27,360,889 $ 28,490,897 $ (1,130,008) (4)%
Capital assets, net 72,831,973 69,404,939 3,427,034 5%
Total assets 100,192,862 97,895,836 2,297,026 2%
Liabilities:
Long ‐term liabilities outstanding 10,668,970 9,211,808 1,457,162 16%
Other liabilities 3,002,736 3,007,834 (5,098) (1)%
Total liabilities 13,671,706 12,219,642 1,452,064 12%
Net Assets:
Invested in capital assets, net of related debt 64,070,442 61,729,191 2,341,251 4%
Restricted 8,179,991 937,284 7,242,707 773%
Unrestricted 14,270,723 23,009,719 (8,738,996) (38)%
Total net assets $ 86,521,156 $ 85,676,194 $ 844,962 1%
Total net assets for the City, as a whole, increased between fiscal years ending 2011 and 2010, increasing by 1% to $86,521,156.
This increase of $844,962 comes from the change in total net assets of $954,255, less a prior period adjustment of $(109,293), as
recorded in the Statement of Activities. Program expenses by function, general revenues by major source, excess and/or deficiency
of revenues over expenses are presented in the Statement of Activities.
GOVERNMENTAL ACTIVITIES
The City’s net assets of governmental activities at June 30, 2011 and 2010 are as follows:
Fiscal Year Ended Fiscal Year Ended Increase/ Total %
June 30, 2011 June 30, 2010 (Decrease) Change
Assets
Current and other assets $ 20,410,091 $ 20,640,543 $ (230,452) (1)%
Capital assets, net 62,774,230 59,872,199 2,902,031 5%
Total assets 83,184,321 80,512,742 2,671,579 3%
Liabilities
Long ‐term liabilities outstanding 10,554,940 9,107,032 1,447,908 16%
Other liabilities 2,852,265 2,780,628 71,637 3%
Total liabilities 13,407,205 11,887,660 1,519,545 13%
Net Assets
Invested in capital assets, net of related debt 54,012,699 52,196,451 1,816,248 3%
Restricted 8,179,991 937,284 7,242,707 773%
Unrestricted 7,584,426 15,491,347 (7,906,921) (51)%
Total net assets $ 69,777,116 $ 68,625,082 $ 1,152,034 2%
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2011
B ‐6
The City’s net assets from governmental activities increased by less than 2% from $68,625,082 to $69,777,116. Key elements of the
governmental activities increase is as follows:
Fiscal Year Ended
June 30, 2011
Revenues
Program revenues:
Charges for services $ 2,355,786
Grants and contributions 3,990,656
General revenues:
Property taxes 5,379,176
Other taxes 5,791,582
Other 868,806
Total revenues $ 18,386,006
Expenses
General government $ 4,786,979
Public safety 5,795,069
Parks, recreation, and facilities 1,590,053
Community development 3,224,094
Streets and roads 1,835,373
Sewer 798,287
Interest on long ‐term debt 499,825
Total expenses $ 18,529,680
The City’s total governmental net assets increased to $69,777,116. A significant portion comes from taxes (60%) and charges for
services (13%).
The cost of all governmental activities this fiscal year was $18,529,680. However, as shown in the Statement of Activities , the
amount that our taxpayers ultimately financed for these activities through the City’s tax revenue was $11,170,758 because some of
the cost was paid by those who directly be benefited from the programs $2,355,786, or by other governments and organizations
that subsidized certain programs with grants and contributions $3,990,656. Overall, the City’s governmental revenues, including
intergovernmental aid and fees for services, were $18,386,006. Transfers from the business ‐type activities contributed $1,888,403
toward governmental activities.
The City’s programs include general government, public safety, parks, recreation, and facilities, community development, streets
and roads, and sewer. Each program’s net cost (total cost less revenues generated by the activities) is presented on the following
page. The net cost shows the financial burden that was placed on the City’s taxpayers by each of these functions. These functions
were subsidized by taxes, investment income, miscellaneous income, gain on the sale of capital assets, and transfers from the
business ‐type activities.
Net
13%
22%
29%
31%
5%Charges for
services
Contributions &
grants
Property taxes
Other taxes
Other
26%
31%9%
17%
10%
4%3%General
government
Public safety
Parks &
recreation
Community
development
Streets and
roads
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2011
B ‐7
Charges for Contributions Governmental
Expenses Services and Grants Activities
Governmental Activities:
General government $ 4,786,979 $ 50,355 $ 1,468,044 $ (3,268,580)
Public safety 5,795,069 188,407 1,078,099 (4,528,563)
Parks, recreation, and facilities 1,590,053 694,090 (895,963)
Community development 3,224,094 498,223 986,949 (1,738,922)
Streets and roads 1,835,373 96,409 457,327 (1,281,637)
Sewer 798,287 828,302 237 30,252
Interest on long ‐term debt 499,825 (499,825)
Total $ 18,529,680 $ 2,355,786 $ 3,990,656 $ (12,183,238)
Total resources available during the fiscal year to finance governmental operations were $88,306,796 consisting of restated net
assets at July 1, 2010 of $68,032,387, program revenues of $6,346,442, general revenues and transfers of $13,927,967. Total
governmental activity expenses during the fiscal year were $18,529,680; thus net assets were increased by $1,744,729 to
$69,777,116.
BUSINESS ‐TYPE ACTIVITIES
The net assets of business ‐type activities for the fiscal year ended June 30, 2011 and 2010 are as follows:
Fiscal Year Ended Fiscal Year Ended Increase/ Total %
June 30, 2011 June 30, 2010 (Decrease) Change
Assets
Current and other assets $ 6,950,798 $ 7,850,354 $ (899,556) (11)%
Capital assets, net 10,057,743 9,532,740 525,003 6%
Total assets 17,008,541 17,383,094 (374,553) (2)%
Liabilities
Long ‐term liabilities outstanding 114,030 104,776 9,254 9%
Other liabilities 150,471 227,206 (76,735) (34)%
Total liabilities 264,501 331,982 (67,481) (20)%
Net Assets
Total net assets $ 16,744,040 $ 17,051,112 $ (307,072) (2)%
The City’s net assets from business ‐type activities decreased less than 2% from $17,051,112 to $16,744,040. The key elements of
this decrease are as follows:
• Water revenue decreased due to conservation efforts and homes foreclosures.
• Operating expenses increased primarily as a result of an increase in the Lopez water contract.
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2011
B ‐8
Fiscal Year Ended Fiscal Year Ended Increase/ Total %
June 30, 2011 June 30, 2010 (Decrease) Change
Operating revenues $ 5,689,722 $ 5,773,357 $ (83,635) (1)%
Operating expenses (4,761,534) (4,505,177) 256,357 6%
Operating income 928,188 1,268,180 (339,992) (27)%
Non ‐operating revenues 34,670 35,847 (1,177) (3)%
Income before transfers 962,858 1,304,027 (341,169) (26)%
Capital contributions 135,071 135,071 100%
Transfers out (1,888,403) (1,492,439) 395,964 27%
Change in net assets (790,474) (188,412) 602,062 320%
Total net assets – beginning of fiscal year, restated 17,534,514 17,239,524 294,990 2%
Total net assets – end of fiscal year $ 16,744,040 $ 17,051,112 $ (307,072) (2)%
The total expense of business ‐type activities the fiscal year was $4,761,534. As shown on the Statement of Activities , and
summarized above, the amounts paid by users of the systems was $5,689,722, net non ‐operating revenues $34,670, capital
contributions of $135,071, and transfers out of $1,888,403.
The business ‐type activities include the water utility and the Lopez fund. The two activities’ net cost (total cost less revenues
generated by the activities) is presented below:
Fiscal Year Ended Fiscal Year Ended Increase/ Total %
June 30, 2011 June 30, 2010 (Decrease) Change
Proprietary (Business ‐type) Activities:
Water utility $ 625,935 $ 775,795 $ (149,860) (19)%
Lopez fund 302,253 492,385 (190,132) (39)%
Operating income $ 928,188 $ 1,268,180 $ (339,922) (27)%
Total resources available during the fiscal year to finance proprietary funds (business ‐type) activities was $23,393,997; consisting of
restated net assets at July 1, 2010 of $17,534,514, program revenues of $5,828,980 and general revenues of $30,483. Total
proprietary fund (business ‐type) activity expenses during the fiscal year were $4,761,534 for operations and $1,888,403 for
transfers; thus Net Assets decreased by $790,474 to $16,744,040.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted 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 reported a combined fund balance of $17,401,317, a
decrease of $580,824 in comparison with the prior fiscal year. Approximately 25% of this total amount ($4,339,971) constitutes
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2011
B ‐9
unassigned fund balance , which is available for spending at the City’s discretion. The remaining components of fund balance consist
of non ‐spendable of $669,050 (4%), restricted of $8,513,465 (49%), and assigned of $3,879,431 (22%). For further information on
the definition of the fund balance classification, see note 1, subsection k.
The General Fund is the chief operating fund of the City of Arroyo Grande. At the end of the current fiscal year, unassigned fund
balance (of the General Fund) was $4,347,524, while total fund balance reached $5,292,792. 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 30%
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 in more detail.
Net assets of the Water Fund at the end of the fiscal year amounted to $13,174,986, and the net assets for the Lopez fund
amounted to $3,569,054. There was a decrease in the total growth in net assets in the Water and Lopez funds of $761,585 and
28,889, respectively. Other factors concerning the finances of these two funds have already been addressed in the discussion of the
City of Arroyo Grande’s business ‐type 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.
City Council’s approval is required for changes impacting fund balances, such as increases to appropriations that are not offset by
matching increases to estimated revenue. Approval is also required for all budget transfers between departments/divisions that
alter fund balance. Quarterly Reports are used to keep the City Council informed of key budget issues, forecasts, and required
changes. The budget amendments reported in the quarterly 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.
Final differences between the original budget and the final amended budget were due to an increase of $454,319 in appropriations
and can be mainly attributed to the expenditures summarized below:
• Police firing range
• Fuel modification system
• City Hall project
• OTS ‐AVOID the 14 DUI grant
• Police video surveillance project
The City’s General Fund balance of $5,292,792 differs from the General Fund’s budgetary final fund balance of $2,763,901 principally
because of ongoing capital projects that had not been completed.
CAPITAL ASSETS
The capital assets of the City are those which are used in the performance of the City’s functions, including but not limited to
infrastructure ‐related assets. At June 30, 2011, net capital assets of the governmental activities totaled $62,774,230 and the net
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2011
B ‐10
capital assets of the business ‐type activities totaled $10,057,743. 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 City’s investment in capital assets for the current fiscal year was 74% of total net assets.
Original Accumulated Book
Description Cost Depreciation Value
Capital Assets – Governmental Activities:
Land $ 2,870,474 $ ‐ $ 2,870,474
Construction in progress 5,364,312 5,364,312
Building and improvements 4,832,259 1,818,191 3,014,068
Equipment, vehicles, and machinery 4,714,907 2,767,979 1,946,928
Infrastructure 80,575,601 30,997,153 49,578,448
Total $ 98,357,553 $ 35,583,323 $ 62,774,230
Capital Assets – Business ‐Type Activities:
Land $ 56,730 $ ‐ $ 56,730
Building and improvements 222,999 212,938 10,061
Equipment, vehicles, and machinery 742,810 628,487 114,323
Infrastructure 15,873,294 5,996,665 9,876,629
Total $ 16,895,833 $ 6,838,090 $ 10,057,743
Major capital asset events during the fiscal year include the following:
• Completion of the Orchard Street paving project.
• The completion of Paulding Middle School sidewalks.
• Completion of Tally Ho sidewalks.
• The completion of Water Well No. 10.
At the end of the fiscal year, the City had invested (net of related debt) $64,070,442 in a broad range of capital assets, including land,
building, equipment, and infrastructure.
LONG ‐TERM DEBT
At the end of the current fiscal year, the City had total General Obligation debt outstanding of $1.4 million that is backed by the full
faith and credit of the City. The proceeds of the debt issuance were used for expanding the current fire station in order to
accommodate a full time fire staff. Voters approved the general obligation debt, which is to be repaid through a tax assessment on
property taxes, in November 2002. The City received an “A” rating from Standard & Poor’s for the general obligation debt.
The Redevelopment Agency issued 2007 Tax Allocation bonds of $6.3 million. The RDA Tax Allocation bonds were used to pay off
existing debt and any remaining funds will be used for future projects. These bonds are backed by the Redevelopment Agency and
are to be repaid with property tax proceeds.
Compensated absences is the outstanding amount of vacation, sick leave, management annual leave, and comp time earned by
employees as of June 30, 2011.
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2011
B ‐11
The following table summarizes the long ‐term debt of the City:
Fiscal Year Fiscal Year
Ended June Governmental Business ‐Type Ended June 30, 2011
Debt Description 30, 2010 One ‐Year Long ‐Term One ‐Year Long ‐Term One ‐Year Long ‐Term
General obligation $ 1,475,000 $ 80,000 $ 1,315,000 $ ‐ $ ‐ $ 80,000 $ 1,315,000
Tax allocation bonds 6,265,000 105,000 6,060,000 105,000 6,060,000
Capital lease payable 260,396 160,342 152,063 160,342 152,063
Loan payable 109,293 22,000 1,332,694 22,000 1,332,694
Compensated absences 1,156,128 943,653 73,552 1,017,205
OPEB 356,467 384,188 40,478 424,666
Total $ 9,622,284 $ 367,342 $10,187,598 $ ‐ $ 114,030 $ 367,342 $10,301,628
FINANCIAL ISSUES AND CONCERNS
The current global economic crisis continues to have a dramatic impact on the City of Arroyo Grande. The City was able to adopt the
first year of the biennial budget for the fiscal 2011 ‐12 through the use of reserves and concessions from the labor organizations.
However, the second year of the biennial budget has not been adopted due to projected deficit balances. Major factors affecting
the City are:
• A significant decrease in City revenues.
• The loss of the Redevelopment Agency of the City of Arroyo Grande.
• The City’s aging infrastructure.
• The police station that does not meet current ADA requirements.
• Large transportation projects such as; Halcyon Road/Brisco Road/Highway 101 interchange.
• The current downturn in the economy.
The City is continually working on ways to continue to fund on ‐going operations.
CONTACTING THE CITY’S ADMINISTRATIVE SERVICES DEPARTMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the
City’s finances and to demonstrate the City’s accountability for the money it receives. If you have any questions about this report or
need additional financial information, contact Angela Kraetsch, Director of Administrative Services at 300 West Branch Street in
Arroyo Grande, California or by phone at (805) 473 ‐5400.
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CITY OF ARROYO GRANDE
STATEMENT OF NET ASSETS
June 30, 2011
ASSETS
Cash and investments$15,845,333 $4,138,046 $19,983,379
Restricted cash and investments6,732 6,732
Receivables:
Accounts1,147,769 1,019,333 2,167,102
Taxes981,184 981,184
Grant294,105 4,187 298,292
Loan315,500 315,500
Interest14,415 4,602 19,017
Inventory:
Parts and fuel42,109 61,664 103,773
Land held for resale860,928 860,928
Prepaid items591,142 1,722,966 2,314,108
Deferred charges310,874 310,874
Capital assets:
Nondepreciable:
Land2,870,474 56,730 2,927,204
Construction in progress5,364,312 5,364,312
Depreciable:
Structures and improvements4,832,259 222,999 5,055,258
Equipment4,714,907 742,810 5,457,717
Infrastructure80,575,601 15,873,294 96,448,895
Accumulated depreciation(35,583,323) (6,838,090) (42,421,413)
Total assets83,184,321 17,008,541 100,192,862
LIABILITIES
Accounts payable822,238 35,506 857,744
Accrued wages and benefits752,868 752,868
Interest payable154,965 154,965
Deposits payable302,627 93,819 396,446
Deferred revenue819,567 21,146 840,713
Noncurrent liabilities:
Due within one year367,342 367,342
Due in more than one year10,187,598 114,030 10,301,628
Total liabilities13,407,205 264,501 13,671,706
NET ASSETS
Invested in capital assets, net of
related debt54,012,699 10,057,743 64,070,442
Restricted for:
Access programming67,016 67,016
Affordable housing1,872,061 1,872,061
Debt service987,585 987,585
Landscape maintenance360,936 360,936
Park construction990,567 990,567
Public improvements3,104,994 3,104,994
Public safety213,955 213,955
Streets and roads582,877 582,877
Unrestricted7,584,426 6,686,297 14,270,723
Total net assets$69,777,116 $16,744,040 $86,521,156
The notes to the basic financial statements are an integral part of this statement.
Total
Business ‐Type
Activities
Governmental
Activities
B ‐13
CITY OF ARROYO GRANDE
STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2011
Governmental Activities:
General government$4,786,979 $50,355 $1,468,044
Public safety5,795,069 188,407 203,255
Parks, recreation, and facilities1,590,053 694,090
Community development3,224,094 498,223 110,244
Streets and roads1,835,373 96,409 457,327
Sewer798,287 828,302 237
Interest on long ‐term debt499,825
Total governmental activities18,529,680 2,355,786 2,239,107
Business ‐type Activities:
Water2,168,569 2,794,504 4,187
Lopez2,592,965 2,895,218
Total business ‐type activities4,761,534 5,689,722 4,187
Total government$23,291,214 $8,045,508 $2,243,294
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 assets
Net assets at beginning of fiscal year
Prior period adjustments
Net assets at beginning of fiscal year ‐ restated
Net assets at end of fiscal year
The notes to the basic financial statements are an integral part of this statement.
B ‐14
ExpensesCharges for Services
Operating
Contributions and
Grants
Program Revenues
$$(3,268,580) $‐$(3,268,580)
874,844 (4,528,563) (4,528,563)
(895,963) (895,963)
876,705 (1,738,922) (1,738,922)
(1,281,637) (1,281,637)
30,252 30,252
(499,825) (499,825)
1,751,549 (12,183,238) (12,183,238)
135,071 765,193 765,193
302,253 302,253
135,071 1,067,446 1,067,446
$1,886,620 (12,183,238) 1,067,446 (11,115,792)
5,379,176 5,379,176
4,781,774 4,781,774
390,472 390,472
539,673 539,673
79,663 79,663
389,292 30,483 419,775
479,514 479,514
1,888,403 (1,888,403)
13,927,967 (1,857,920) 12,070,047
1,744,729 (790,474) 954,255
68,625,082 17,051,112 85,676,194
(592,695) 483,402 (109,293)
68,032,387 17,534,514 85,566,901
$69,777,116 $16,744,040 $86,521,156
B ‐15
Total
Capital Contributions
and Grants
Governmental
ActivitiesBusiness ‐type Activities
Net (Expense) Revenue and Changes
in Net Assets
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CITY OF ARROYO GRANDE
DESCRIPTION OF MAJOR GOVERNMENTAL AND PROPRIETARY FUNDS
June 30, 2011
Governmental Funds
General Fund – This is the primary operating fund of the City, which accounts for resources and services traditionally
associated with government. The General Fund provides administrative, financial, police protection, fire protection,
community development, parks and recreation, and public works 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.
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.
Redevelopment Capital Projects Fund – This fund is used to account for tax increment revenue and expenditures relating to
the City’s redevelopment project area in accordance with the California Health and Safety Code.
Other Governmental Funds – This is the aggregate of all the Nonmajor governmental funds.
Proprietary Funds
Water Fund – This fund is used to account for the activities associated with the transmission and distribution of potable
water by the City to its users.
Lopez Fund – This fund is responsible for the purchase of water from Lopez Dam. The City has a 50.55% share of the water
and expense generated by Zone 3 – County of San Luis Obispo’s Flood Control and Water Conservation District.
B ‐17
CITY OF ARROYO GRANDE
GOVERNMENTAL FUNDS
Balance Sheet
June 30, 2011
ASSETS
Cash and investments$4,025,558 $2,767,775 $947,009
Receivables:
Accounts982,016 7,821
Taxes891,344
Grant37,535 116,721
Loan
Interest4,517 2,512
Inventory:
Parts and fuel25,889
Land held for resale
Prepaid items569,379 233
Due from other funds215,586
Advances to other funds
Total assets$6,751,824 $2,770,287 $1,071,784
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable$219,051 $‐$442,389
Accrued wages and benefits752,868
Deposits payable302,327
Deferred revenue184,786 594,557
Due to other funds
Advances from other funds
Total liabilities1,459,032 1,036,946
Fund Balances:
Nonspendable595,268 233
Restricted2,770,287
Assigned350,000 34,605
Unassigned4,347,524
Total fund balances5,292,792 2,770,287 34,838
Total liabilities and fund
balances$6,751,824 $2,770,287 $1,071,784
The notes to the basic financial statements are an integral part of this statement.
Capital Improvement
Fund
Transportation Impact
Fees Fund General Fund
B ‐18
$293,062 $7,818,661 $15,852,065
157,932 1,147,769
27,782 62,058 981,184
139,849 294,105
315,500 315,500
840 6,546 14,415
16,220 42,109
825,129 35,799 860,928
400 21,130 591,142
215,586
919,797 919,797
$1,147,213 $9,493,492 $21,234,600
$1,639 $159,159 $822,238
752,868
300 302,627
40,224 819,567
215,586 215,586
919,797 919,797
921,736 414,969 3,832,683
400 37,350 633,251
225,077 5,553,900 8,549,264
3,494,826 3,879,431
(7,553) 4,339,971
225,477 9,078,523 17,401,917
$1,147,213 $9,493,492 $21,234,600
B ‐19
Total
Other Governmental
Funds
Redevelopment Capital
Projects Fund
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CITY OF ARROYO GRANDE
RECONCILIATION OF THE GOVERNMENTAL FUNDS ‐ BALANCE SHEE T
TO THE STATEMENT OF NET ASSETS
For the Fiscal Year Ended June 30, 2011
Total fund balances ‐ governmental funds$17,401,917
Capital assets at historical cost$98,357,553
Accumulated depreciation(35,583,323)
Net capital assets62,774,230
(154,965)
310,874
Compensated absences$943,653
General obligation bonds1,395,000
Tax allocation bonds6,165,000
Capital lease payable312,405
CA energy loan payable127,512
USDA loan payable1,200,000
Reimbursement agreement27,182
Other postemployment benefits384,188
Total long ‐term liabilities(10,554,940)
Total net assets, governmental activities$69,777,116
The notes to the basic financial statements are an integral part of this statement.
Ingovernmentalfunds,onlycurrentassetsarereported.Inthestatementofnetassets,all
assets are reported, including capital assets and accumulated depreciation.
Ingovernmentalfunds,interestonlong ‐termdebtisnotrecognizeduntiltheperiodinwhich
itmaturesandispaid.Inthegovernment ‐widestatementofactivities,itisrecognizedinthe
period that it is incurred.
Ingovernmentalfunds,debtissuecostsarerecognizedasexpendituresintheperiodtheyare
incurred.Inthegovernment ‐widestatementofactivities,debtissuecostsareamortizedover
the life of the debt.
Ingovernmentalfunds,onlycurrentliabilitiesarereported.Inthestatementofnetassets,all
liabilities,includinglong ‐termliabilities,arereported.Long ‐termliabilitiesrelatingto
governmental activities consist of:
B ‐21
CITY OF ARROYO GRANDE
GOVERNMENTAL FUNDS
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2011
REVENUES
Taxes and assessments$10,673,432 $267,489 $‐
Licenses and permits194,743
Fines and penalties66,724
Use of money and property325,314 15,936
Intergovernmental revenues1,112,918 876,705
Charges for services717,210 98,059
Other revenue55,197 78,674
Total revenues13,145,538 283,425 1,053,438
EXPENDITURES
Current:
General government4,880,438
Public safety5,248,185
Parks and recreation1,537,714
Community development460,292
Streets and road395,231
Sewer
Capital outlay1,068,357 6,402,451
Debt service:
Principal873,598
Interest and fiscal agent fees34,996
Total expenditures14,498,811 6,402,451
Excess of revenue over
(under) expenditures(1,353,273) 283,425 (5,349,013)
OTHER FINANCING SOURCES (USES)
Proceeds from issuance of debt925,607 1,327,512
Proceeds from sale of capital assets 849,000
Transfers in2,343,818 3,172,501
Transfers out(1,623,786) (253,718)
Total other financing sources
(uses)1,645,639 (253,718) 5,349,013
Net change in fund balances292,366 29,707
Fund balances ‐ July 1, 20105,000,426 2,740,580 34,838
Fund balances ‐ June 30, 2011$5,292,792 $2,770,287 $34,838
The notes to the basic financial statements are an integral part of this statement.
B ‐22
General Fund
Transportation Impact
Fees Fund
Capital Improvement
Fund
$1,234,596 $569,796 $12,745,313
194,743
66,724
4,703 43,339 389,292
766,322 2,755,945
1,280,626 2,095,895
4,223 138,094
1,239,299 2,664,306 18,386,006
40,367 4,920,805
5,248,185
1,537,714
684,053 447,749 1,592,094
695,240 1,090,471
273,818 273,818
196,597 7,667,405
262,111 1,135,709
456,155 491,151
684,053 2,372,037 23,957,352
555,246 292,269 (5,571,346)
2,253,119
849,000
722,808 6,239,127
(1,025,421) (1,447,799) (4,350,724)
(1,025,421) (724,991) 4,990,522
(470,175) (432,722) (580,824)
695,652 9,511,245 17,982,741
$225,477 $9,078,523 $17,401,917
B ‐23
Other Governmental
FundsTotal
Redevelopment Capital
Projects Fund
CITY OF ARROYO GRANDE
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE OF GOVERNMENTAL FUNDS TO STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2011
Total net change in fund balances ‐ governmental funds$(580,824)
4,102,088
(8,674)
(1,117,410)
(13,774)
138,674
(716,655)
(58,696)
Change in net assets ‐ governmental activities$1,744,729
The notes to the basic financial statements are an integral part of this statement.
B ‐24
Int h estatemento f activities,postemp l oyment b ene f itsaremeasure d b yt h eamountsearne d
duringthefiscalyear.Ingovernmentalfunds,expendituresfortheseitemsaremeasuredby
theamountoffinancialresourcesused(essentiallytheamountpaid).Thisfiscalyear,
postemployment benefits earned were more than the amounts used by:
Ingovernmenta l f un d s,intereston l ong ‐term d e b tisrecognize d int h eperio d t h atit b ecomes
due.Inthegovernment ‐widestatementofactivities,itisrecognizedintheperiodthatitis
incurred.Unmaturedinterestowingattheendoftheperiod,lessmaturedinterestpaid
during but owing from the prior period was:
Th e i ssuanceo f l ong ‐t erm d e bt prov id escurren t fi nanc i a l resources t o th egovernmen t a l
funds.Alsogovernmentalfundsreporttheeffectofissuancecosts,premiums,discounts,and
similaritemswhendebtisfirstissue,whereastheseamountsaredeferredandamortizedin
thestatementofactivities.Thisamountistheneteffectofthesedifferencesinthetreatment
of long ‐term debt and related items:
Int h estatemento f activities,compensate d a b sencesaremeasure d b yt h eamountsearne d
duringthefiscalyear.Ingovernmentalfunds,however,expendituresfortheseitemsare
measuredbytheamountoffinancialresourcesused(essentiallytheamountspaid).Forthis
fiscal year ended, vacation used exceeded the amounts earned by:
Ingovernmentalfunds,theentireproceedsfromdisposalofcapitalassetsarereportedas
revenue.Inthestatementofactivities,onlytheresultinggainorlossisreported.The
difference between proceeds from disposal of capital assets and the resulting gain is:
I ngovernmen t a l f un d s,procee d san d repaymen t so f l ong ‐t erm d e bt arerepor t e d aso th er
financingsourcesandexpenditures,respectively.Inthegovernment ‐widestatements,
proceedsandrepaymentsoflong ‐termdebtarereportedasincreasesordecreasesin
liabilities,respectively.Thisistheamountbywhichproceedsfromissuanceofdebtof
$2,253,119 is more than repayments of debt of $(1,135,709) in the period.
Capita l out l aysarereporte d ingovernmenta l f un d sasexpen d itures.However,int h e
statementofactivities,thecostofthoseassetsisallocatedovertheirestimatedusefullivesas
depreciationexpense.Thisistheamountbywhichadditionstocapitaloutlayof$5,763,242is
more than depreciation expense $(1,661,154) in the period.
CITY OF ARROYO GRANDE
PROPRIETARY FUNDS
Statement of Net Assets
June 30, 2011
ASSETS
Current assets:
Cash and investments$2,424,631 $1,713,415 $4,138,046
Receivables:
Accounts, net534,710 484,623 1,019,333
Grant4,187 4,187
Interest2,739 1,863 4,602
Inventory61,664 61,664
Prepaid items353,813 1,369,153 1,722,966
Total current assets3,381,744 3,569,054 6,950,798
Capital assets:
Nondepreciable assets56,730 56,730
Depreciable assets, net10,001,013 10,001,013
Total capital assets, net10,057,743 10,057,743
Total assets13,439,487 3,569,054 17,008,541
LIABILITIES
Current liabilities:
Accounts payable35,506 35,506
Deposits payable93,819 93,819
Deferred revenue21,146 21,146
Total current liabilities150,471 150,471
Noncurrent liabilities:
Compensated absences73,552 73,552
OPEB liability40,478 40,478
Total noncurrent liabilities114,030 114,030
Total liabilities264,501 264,501
NET ASSETS
Invested in capital assets, net of
related debt10,057,743 10,057,743
Unrestricted3,117,243 3,569,054 6,686,297
Total net assets$13,174,986 $3,569,054 $16,744,040
The notes to the basic financial statements are an integral part of this statement.
Totals Lopez Fund Water Fund
B ‐25
CITY OF ARROYO GRANDE
PROPRIETARY FUNDS
Statement of Revenues, Expenses, and Changes in Net Assets
For the Fiscal Year Ended June 30, 2011
OPERATING REVENUES
Sale of water$2,722,394 $2,895,218 $5,617,612
Distribution charges35,603 35,603
Meter installations12,862 12,862
Other revenue23,645 23,645
Total operating revenues2,794,504 2,895,218 5,689,722
OPERATING EXPENSES
Distribution574,227 574,227
General326,221 326,221
Lopez water contract669,077 2,592,965 3,262,042
Production351,362 351,362
Depreciation247,682 247,682
Total operating expenses2,168,569 2,592,965 4,761,534
Operating income625,935 302,253 928,188
NON ‐OPERATING REVENUES
Federal and state grants4,187 4,187
Interest income18,317 12,166 30,483
Total non ‐operating revenues22,504 12,166 34,670
Income before capital
contributions and transfers648,439 314,419 962,858
Capital contributions135,071 135,071
Transfer out(1,545,095) (343,308) (1,888,403)
Change in net assets(761,585) (28,889) (790,474)
Net assets ‐ July 1, 201013,453,169 3,597,943 17,051,112
Prior period adjustment483,402 483,402
Net assets ‐ July 1, 2010, restated13,936,571 3,597,943 17,534,514
Net assets ‐ June 30, 2011$13,174,986 $3,569,054 $16,744,040
The notes to the basic financial statements are an integral part of this statement.
Water FundLopez FundTotals
B ‐26
CITY OF ARROYO GRANDE
PROPRIETARY FUNDS
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers$2,822,378 $2,918,280 $5,740,658
Payments to employees and suppliers(2,011,652) (2,565,126) (4,576,778)
Other receipts23,645 23,645
Net cash provided by operating
activities834,371 353,154 1,187,525
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Purchase of capital assets(154,212) (154,212)
Net cash used by capital and
related financing activities(154,212) (154,212)
CASH FLOWS FROM NONCAPITA L
FINANCING ACTIVITIES
Transfers to other funds(1,545,095) (343,308) (1,888,403)
Net cash used by noncapital
financing activities(1,545,095) (343,308) (1,888,403)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received18,781 13,617 32,398
Net cash provided by investing
activities18,781 13,617 32,398
Net increase (decrease) in cash
and cash equivalents(846,155) 23,463 (822,692)
Cash and cash equivalents ‐ July 13,270,786 1,689,952 4,960,738
Cash and cash equivalents ‐ June 30$2,424,631 $1,713,415 $4,138,046
The notes to the basic financial statements are an integral part of this statement.
Water FundLopez FundTotals
B ‐27
CITY OF ARROYO GRANDE
PROPRIETARY FUNDS
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2011
Reconciliation of operating income to net
cash provided (used) by operating
activities:
Operating income$625,935 $302,253 $928,188
Adjustments to reconcile operating
activities:
Depreciation expense247,682 247,682
Change in assets and liabilities:‐
Receivables, net1,452 23,235 24,687
Inventories7,269 7,269
Prepaid items19,514 27,666 47,180
Accounts and other payables(85,040) (85,040)
Deposits7,130 7,130
Deferred revenue1,175 1,175
OPEB 9,503 9,503
Compensated absences(249) (249)
Net cash provided by
operating activities$834,371 $353,154 $1,187,525
The notes to the basic financial statements are an integral part of this statement.
B ‐28
Water FundLopez FundTotals
CITY OF ARROYO GRANDE
STATEMENT OF FIDUCIARY NET ASSETS
Agency Funds
June 30, 2011
ASSETS
Cash and investments$349,894
Accounts receivable3,410
Interest receivable206
Prepaid items 30
Total assets$353,540
LIABILITIES
Due to other agencies$353,540
Total liabilities$353,540
The notes to the basic financial statements are an integral part of this statement.
Agency Funds
B ‐29
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐30
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Arroyo Grande (City) has been prepared in conformity with accounting principles
generally accepted in the United States of America as applied to governmental units. The Government Accounting Standards Board
(GASB) is the accepted standard ‐setting body for establishing governmental accounting and financial reporting principles. The more
significant City’s accounting policies are described below:
A. Reporting Entity
The City was incorporated in 1911, under the laws of the State of California. The City of Arroyo Grande operates under a
Council ‐Manager form of government, which includes an elected Mayor and a four ‐member council. The accompanying basic
financial statements present the financial activity of the City, which is the primary government, 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. This City’s component unit, which is described below, is a blended unit of the City.
The City Council serves in a separate session as the governing body of the Arroyo Grande Redevelopment Agency, although this
Agency is a legal entity apart from the City.
The Arroyo Grande Redevelopment Agency is included as a component unit in the accompanying financial statements. The
financial activities of the foregoing entities have been aggregated and merged (termed “blending”) with those of the City in the
accompanying financial statements, as it meets the criteria for inclusion as set forth in the GASB Statement No. 14, as amended
by GASB Statement No. 39.
The Arroyo Grande Redevelopment Agency was established in 1996; by the City Council to eliminate blight within the defined
project areas by encouraging and assisting planned development of low ‐income housing and commercial projects. The
Redevelopment Agency exists for the purpose of facilitating the City’s capital. Separate financial statements are prepared by
the Arroyo Grande Redevelopment Agency and are available at City Hall offices.
B. Basis of Accounting and Presentation
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The
operations of each fund are accounted for with a separate set of self ‐balancing accounts that comprise its assets, liabilities, fund
balances or net assets, revenues, and expenditures or expenses, as 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 fiduciary funds 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.
Private ‐sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both
the government ‐wide and proprietary fund financial statements to the extent that those standards do not conflict with or
contradict guidance of GASB. Governments also have the option of following subsequent private ‐sector guidance for their
business ‐type activities and enterprise funds, subject to the same limitation. The City has elected not to follow subsequent
private ‐sector guidance.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐31
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
B. Basis of Accounting and Presentation – continued
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of
accounting. Under this method, revenues are recognized when measurable and available . The City considers all revenues
reported in the governmental funds to be available if the revenues are collected within sixty days after fiscal year ‐end.
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 transaction, in which the City gives or receives value without directly receiving or giving equal value in exchange,
include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in
the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year
in which all eligibility requirements have been satisfied.
Other revenues susceptible to accrual include other taxes, intergovernmental revenues, interest, and charges for services.
Grant revenues are recognized in the fiscal year in which all eligibility 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 assets 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 Assets and the Statement of Activities display information about the City and its component unit. These
statements include the financial activities of the overall City government, except for fiduciary activities. Eliminations have been
made to minimize the double counting or internal activities. Government activities generally are financed through taxes,
intergovernmental revenues, and other non ‐exchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the
City’s 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 and blended component
units. 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.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐32
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
B. Basis of Accounting and Presentation – continued
Proprietary fund financial statements include a Statement of Net Assets, a Statement of Revenues, Expenses, and Changes in
Net Assets, and a Statement of Cash Flows for all proprietary funds. Proprietary funds are accounted for using the “economic
resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or
non ‐current) are included on the Statement of Net Assets. The Statement of Revenues, Expenses, and Changes in Fund Net
Assets present increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting,
revenues are recognized in the period in which they are 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
organization, other governmental units, and/or other funds. The City maintains two funds – Sanitation District and Downtown
Parking.
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 ten
percent of their fund ‐type total. The General Fund is always a major fund. The City may also select other funds it believes
should be presented as major funds.
The City reported the following major governmental funds in the accompanying financial statements:
General Fund – The fund accounts for all financial resources except for those to be accounted for in another fund. It is the
general operating fund of the City.
Transportation Impact Fees Fund – This fund accounts for transportation impact fees collected.
Capital Improvement Fund – This fund accounts for capital improvements projects performed by the City and the use of those
revenues.
Redevelopment Capital Projects Fund – This fund accounts for the accumulation of resources for, and the payment of,
operations and related costs in the Arroyo Grande Redevelopment Agency.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐33
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
C. Major Funds – continued
The City reported the following major proprietary funds:
Water Fund – This fund accounts for the activities of providing water to residents of the City.
Lopez 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.
Certain proceeds of long ‐term debt, including the USDA City Hall loan, as well as certain resources set aside for repayment, are
classified as restricted assets on the government ‐wide balance sheet, because their use is limited by applicable debt covenants.
The City has classified additional assets as restricted to comply with laws and other agreements.
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External
Investment Pools , 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 pooled managed by the State of California titled Local Agency Investment Fund (LAIF)
which has invested a portion of the pool funds in structured notes and asset ‐backed securities. LAIF’s investments are 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.
E. Assets Held for Resale
The City has assets held for resale and is recorded at the lower of cost or market, but not greater than the net realizable value.
F. Capital Assets
Capital assets are defined as costs related to the acquisition or purchase of property, plant, equipment, and infrastructure
(roads, sidewalks, drainage systems, lighting systems, etc.). Capital assets are reported in the applicable governmental or
business ‐type activities columns in the government ‐wide financial statements. All capital assets are valued at historical cost or
estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair
value on the date contributed. It is City policy is 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.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐34
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
F. Capital Assets – continued
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:
Structures and improvements 50 years
Equipment 5 – 25 years
Infrastructure 15 – 50 years
G. Interfund Transactions
Interfund transactions are reported as loans, services provided, reimbursements, or transfers. Loans are reported as interfund
receivables and payables, as appropriate, and are subject to elimination upon consolidation. Services provided, deemed to be
at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when one fund
incurs a cost, charges the 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.
H. Deferred Revenue
In the government ‐wide financial statements, deferred revenue is recognized for transactions for which revenue has not yet
been earned. A typical transaction recorded as deferred revenue is the prepaid charged for services.
In the governmental fund financial statements, deferred revenue is recorded when transactions have not yet met the revenue
recognition criteria based on the modified accrual basis of accounting. The City records deferred revenue for transactions for
which revenues have not been earned, or for which funds are not available to meet current financial obligations. Typical
transactions for which deferred revenue is recorded are grants received but not yet earned or available.
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 and compensatory time. In the event of retirement, employees may choose to be paid
50% of their unused sick leave, to a maximum of 480 hours at the current rate of pay. In addition, unused accumulated sick
leave may be converted to PERS retirement credit per the City’s contract with PERS.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐35
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
J. Long ‐term Debt
In the government ‐wide financial statements, and proprietary fund types in the fund financial statements, long ‐term debt and
other long ‐term obligations are reported as liabilities in the applicable governmental activities, business ‐type activities, or
proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and
amortized over the life of the bonds using straight line method. Bonds payable are reported net of the applicable bond
premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as, bond issuance
costs, during the current period. The face amount of the debt issued is reported as other financing resources. Premiums
received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from actual debt proceeds received, are reported as debt service
expenditures.
K. Fund Balances and Net Assets
Fund balance is the difference between the assets and liabilities reported in the governmental funds. In compliance with GASB
Statement No. 54, the City has established the following fund balance types:
Non ‐spendable – The non ‐spendable fund balance classification includes amounts that cannot be spent because they are either
(a) not in 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 amount. 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 to be established by (a) the governing
body itself or (b) a body or official to which the governing body had 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
For the Fiscal Year Ended June 30, 2011
B ‐36
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
K. Fund Balances and Net Assets – continued
Net assets is the difference between the assets and liabilities reported in the governmental ‐wide and proprietary fund financial
statements. Net assets are classified in the following categories:
Invested in Capital Assets, net of Related Debt – The invested in capital assets, net of related debt classification includes
amounts consisting of capital assets net of accumulated depreciation and reduced by outstanding debt directly attributed to the
acquisition, construction, or improvement of the assets.
Restricted Net Assets – The restricted net assets classification includes amounts that are restricted by external creditors,
grantors, contributors, laws or regulations of other governments.
Unrestricted Net Assets – The unrestricted net assets classifications is the amount remaining that do not fall into one of the
above two categories.
The City’s policy that when an expenditure is incurred for which both restricted and unrestricted fund balances are available,
the restricted fund balance be spent first followed by committed, then assigned, and, if applicable, unassigned.
The City has established a formal minimum general fund balance policy of 15% of appropriations.
L. Property Taxes
California Constitution Article XIII A limits the combined property tax rate to one percent of a property’s assessed valuation.
Additional taxes may be imposed with voters’ approval. Assessed value is calculated at one hundred percent of a property’s fair
value, as defined by Article XIII A, and may be increased no more 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 follows:
Secured Unsecured
Valuation/Lien Dates January 1 January 1
Levy Dates July 1 July 1
Due Dates November 1 (50%) August 1
February 1 (50%)
Delinquency Dates December 10 (Nov) August 31
April 10 (Feb)
The City adopted an alternative method of property tax distribution (the “Teeter Plan”). Under this method, 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 after the fiscal year
end.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐37
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
M. Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues, expenditures or expenses as appropriate. Actual results could differ from those estimates.
N. New Accounting Pronouncements
Governmental Accounting Standards Board Statement No. 54 – For the fiscal year ended June 30, 2011, the City implemented
Governmental Accounting Standards Board (GASB) Statement No. 54, “Fund Balance Reporting and Governmental Fund Type
Definitions.” The statement is effective for periods beginning after June 15, 2010. The objective of this statement is to enhance
the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently
applied and by clarifying the existing governmental fund type definitions. Implementation of GASB Statement No. 54 and the
impact on the City’s financial statements for the fiscal year ended June 30, 2011 are explained in Note 1 (k) – Fund Balances and
Net Assets.
Governmental Accounting Standards Board Statement No. 59 – For the fiscal year ended June 30, 2011, the City implemented
GASB Statement No. 59, “Financial Instruments Omnibus.” The statement is effective for periods beginning after June 15, 2010.
The objective of this statement is to update and improve existing standards regarding financial reporting and disclosure
requirements of certain financial instruments and external investment pools. Implementation of GASB Statement No. 59 did
not have an impact on the City’s financial statements for the fiscal year ended June 30, 2011.
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 fiscal year end are automatically
rebudgeted in the following fiscal year.
NOTE 3 – CASH AND INVESTMENTS
The composition of cash and investments as of June 30, 2011, is as follows:
Total
Cash in bank and on hand $ 1,418,538
Cash and investments held with fiscal agent 457,984
Investments 18,463,483
Total $ 20,340,005
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐38
NOTE 3 – CASH AND INVESTMENTS – continued
Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted
under the terms of the City’s debt instruments or Agency’s agreements:
Cash and investments, statement of net assets $ 19,990,111
Cash and investments, statement of fiduciary net assets 349,894
Total $ 20,340,005
Investments Authorized by the California Government Code and the City’s Investment Policy
The table below identifies the investment types that are authorized for the City by the California Government Code. The table also
identifies certain provisions of the California Government Code that address interest rate risk, credit risk, and concentration of credit
risk.
Maximum Maximum
Maximum Percentage of Investment
Authorized Investment Type Maturity Portfolio in One Issuer
Local Agency Bonds 5 years None None
U.S. Treasury Obligations 5 years 60% None
U.S. Agency Securities 5 years None None
Bankers’ Acceptances 180 days 40% 30%
Commercial Paper 270 days 25% 10%
Negotiable Certificates of Deposit 5 years 20% None
Repurchase Agreements 1 year None None
Reverse 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
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
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐39
NOTE 3 – CASH AND INVESTMENTS – continued
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the
longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways
that the 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 by the following table below that shows the distribution of the
City’s investments by maturity:
Remaining Maturity (in Months)
Carrying 12 Months or 13 – 24 25 – 60 More than
Investment Type Amount Less Months Months 60 Months
Local Agency Investment Fund $ 15,863,580 $ 15,863,580 $ ‐ $ ‐ $ ‐
Certificates of Deposit 1,599,000 1,599,000
Money Market Funds 1,000,903 1,000,903
Held by Fiscal Agent:
Money Market Funds 457,984 457,984
Total $ 18,921,467 $ 18,921,467 $ ‐ $ ‐ $ ‐
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 $ 15,863,580 N/A $ ‐ $ ‐ $ ‐ $ 15,863,580
Certificates of Deposit 1,599,000 N/A 1,599,000
Money Market Funds 1,000,903 N/A 1,000,903
Held by Fiscal Agent:
Money Market Funds 457,984 N/A 457,984
Total $ 18,921,467 $ ‐ $ ‐ $ ‐ $ 18,921,467
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that
stipulated by the California Government Code. There are no investments in any one issuer that represent 5% or more of total City’s
investments.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐40
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, 2011, is as follows:
Transfers and
Balance Other Re ‐ Balance
July 1, 2010 Additions Deletions classifications June 30, 2011
Governmental Activities
Nondepreciable capital assets
Land $ 2,870,474 $ ‐ $ ‐ $ ‐ $ 2,870,474
Construction in progress 1,904,012 4,780,853 354,838 (965,715) 5,364,312
Total nondepreciable capital
assets 4,774,486 4,780,853 354,838 (965,715) 8,234,786
Table continued on following page
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐41
NOTE 4 – CAPITAL ASSETS – continued
Transfers and
Balance Other Re ‐ Balance
July 1, 2010 Additions Deletions classifications June 30, 2011
Depreciable capital assets
Structures and improvements $ 4,843,882 $ ‐ $ 11,623 $ ‐ $ 4,832,259
Equipment 4,804,398 982,389 158,333 (913,547) 4,714,907
Infrastructure 80,093,288 482,313 80,575,601
Total depreciable capital assets 89,741,568 982,389 169,956 (431,234) 90,122,767
Less accumulated depreciation 34,643,855 1,661,154 169,956 (551,730) 35,583,323
Net depreciable capital assets 55,097,713 (678,765) 120,496 54,539,444
Net capital assets $ 59,872,199 $ 4,102,088 $ 354,838 $ (845,219) $ 62,774,230
Business ‐type Activities
Nondepreciable capital assets
Land $ 56,730 $ ‐ $ ‐ $ ‐ $ 56,730
Construction in progress 11,784 148,318 (160,102)
Total nondepreciable capital
assets 68,514 148,318 (160,102) 56,730
Depreciable capital assets
Structures and improvements 222,999 222,999
Equipment 736,916 5,894 742,810
Infrastructure 15,094,719 778,575 15,873,294
Total depreciable capital assets 16,054,634 5,894 778,575 16,839,103
Less accumulated depreciation 6,590,408 247,682 6,838,090
Net depreciable capital assets 9,464,226 (241,788) 778,575 10,001,013
Net capital assets $ 9,532,740 $ (93,470) $ ‐ $ 618,473 $ 10,057,743
Transfers and Other Reclassifications
During the 2010 ‐11 fiscal year, the City completed $482,313 in infrastructure ‐related assets.
During the 2010 ‐11 fiscal year, capital contributions to business ‐type activities were $135,071 and $483,402 represents a prior
period adjustment. See note 17 for further detail on the prior period adjustment.
During the 2010 ‐11 fiscal year, the City transferred $913,547 in equipment ‐related assets (with accumulated depreciation of
$551,730) to the Five Cities Fire Authority, as required by the joint powers agreement. See note 10 for further detail.
Depreciation Allocation
Depreciation expense was charged to function and programs based on their usage of related assets. The amounts allocated to each
function or program is presented on the following page:
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐42
NOTE 4 – CAPITAL ASSETS – continued
Depreciation Allocation – continued
Governmental Activities:
General government $ 47,248
Public safety 293,096
Parks and recreation 51,439
Streets and roads 744,902
Sewer 524,469
Total depreciation expense – governmental activities $ 1,661,154
Business ‐type Activities:
Water $ 247,682
Total depreciation expense – business ‐type activities $ 247,682
NOTE 5 – LOAN RECEIVABLE
The Arroyo Grande Redevelopment Agency (RDA) entered into a purchase agreement with the Housing Authority of the City of San
Luis Obispo (Housing Authority) 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 loan receivable. The loan is to be repaid when the property is sold.
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. Under the terms of the agreement, the RDA and Habitat for Humanity will
have until December 2011 to negotiate an affordable housing agreement. If an agreement is not executed by that time, Habitat for
Humanity will have the option of repaying the loan or conveying the property to the RDA. The cost of the property purchased was
$260,000.
Loan Receivable :
RDA Set Aside Fund $ 315,500
NOTE 6 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
A. Interfund Transfers
The transfers in and out between funds during the fiscal year ended June 30, 2011, were as follows:
Transfer In Transfer Out
General Fund $ 2,343,818 $ 1,623,786
Transportation Impact Fees Fund 253,718
Capital Improvement Fund 3,172,501
Redevelopment Capital Projects Fund 1,025,421
Nonmajor Governmental Funds 722,808 1,447,799
Water Fund 1,545,095
Lopez Fund 343,308
Total $ 6,239,127 $ 6,239,127
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐43
NOTE 6 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS – continued
B. Interfund Loans
The due to and from other funds at June 30, 2011, were as follows:
Due From Due To
General Fund $ 215,586 $ ‐
Nonmajor Governmental Funds 215,586
Total $ 215,586 $ 215,586
C. Interfund Advances
Advances receivable and payable constitute long ‐term borrowing between funds. Each advance carries a stated interest rate
and has scheduled debt service payments. Interfund advances receivable and payable balance at June 30, 2011, was as follows:
Advances Advances
Receivable Payable
Redevelopment Capital Projects Fund $ ‐ $ 919,797
Nonmajor Governmental Fund 919,797
Total $ 919,797 $ 919,797
NOTE 7 – LONG ‐TERM DEBT
A. Compensated Absences
City employees accumulate earned but unused vacation and sick pay benefits, which can be converted to cash at termination of
employment. Since no means exists to reasonably estimate the amounts that might be liquidated with expendable currently
available financial resources, if any, they are reported as long ‐term debt on the Statement of Net Assets. 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, 2011, total $943,653 for governmental activities and $73,552 for business ‐type activities.
B. General Obligation Bonded Debt
The purpose of the bonds was to finance the expansion, construction, and retrofit of the City’s fire station. The outstanding
general obligation bonded debt of the City at June 30, 2011 is shown below:
Redeemed
Date of Maturity Amount of Outstanding Current Outstanding
Issue Interest Rates Date Original Issue July 1, 2010 Year June 30, 2011
2003 2.00 – 4.45% 2024 $ 1,900,000 $ 1,475,000 $ 80,000 $ 1,395,000
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐44
NOTE 7 – LONG ‐TERM DEBT – continued
B. General Obligation Bonded Debt – continued
The annual requirements to amortize general obligation bonds payable is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2012 $ 80,000 $ 56,225 $ 136,225
2013 85,000 53,253 138,253
2014 90,000 49,970 139,970
2015 90,000 46,505 136,505
2016 95,000 42,850 137,850
2017 ‐2021 550,000 155,589 705,589
2022 ‐2024 405,000 27,312 432,312
Total $ 1,395,000 $ 431,704 $ 1,826,704
C. Tax Allocation Bonded Debt
The purpose of the tax allocation bonds were to repay debt and to provide funds for future improvement projects. The
outstanding tax allocation bonded debt of the Arroyo Grande Redevelopment Agency (RDA) at June 30, 2011 is shown below:
Redeemed
Date of Maturity Amount of Outstanding Current Outstanding
Issue Interest Rates Date Original Issue July 1, 2010 Year June 30, 2011
2007 5.30 – 5.80% 2037 $ 6,285,000 $ 6,265,000 $ 100,000 $ 6,165,000
The future minimum payment obligation for the tax allocation bonds payable is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2012 $ 105,000 $ 349,032 $ 454,032
2013 110,000 343,330 453,330
2014 115,000 337,363 452,363
2015 120,000 331,131 451,131
2016 130,000 324,501 454,501
2017 ‐2021 745,000 1,510,048 2,255,048
2022 ‐2026 980,000 1,267,880 2,247,880
2027 ‐2031 1,300,000 939,600 2,239,600
2032 ‐2036 1,725,000 503,875 2,228,875
2037 ‐2038 835,000 49,155 884,155
Total $ 6,165,000 $ 5,955,915 $ 12,120,915
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐45
NOTE 7 – LONG ‐TERM DEBT – continued
D. Capital Leases Payable
The City is leasing police equipment (vehicles, motorcycles, and radars) with Ford Motor Credit under an agreement which
provides for title to pass upon expiration of the lease period.
The City is leasing a platform fire truck with Oshkosh Capital under an agreement which provides for title to pass upon
expiration of the lease period.
The future minimum payment obligation for the capital leases payable are as follows:
Fiscal Year Ford Motor Oshkosh
Ending June 30 Credit Capital Total
2012 $ 133,750 $ 38,478 $ 172,228
2013 11,249 38,478 49,727
2014 38,478 38,478
2015 38,479 38,479
2016 38,479 38,479
Total 144,999 192,392 337,391
Less: amount representing
Interest (5,786) (19,200) (24,986)
Present value of net minimum
lease payments $ 139,213 $ 173,192 $ 312,405
E. California Energy Resources Conservation and Development Commission Loan Payable
On July 7, 2010, the City entered into a loan agreement with the California Energy Resources Conservation and Development
Commission (CA Energy). The purpose of the loan was to partially fund the city ‐wide energy savings project. The project
consisted of heating, ventilation, and air conditioning (HVAC) retrofits including equipment, building controls, lighting
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 parks and recreation building.
The outstanding loan payable debt of the City at June 30, 2011 is shown below:
Proceeds
Date of Maturity Amount of Outstanding Current Outstanding
Issue Interest Rates Date Original Issue July 1, 2010 Year June 30, 2011
2011 3.00% 2026 $ 127,512 $ ‐ $ 127,512 $ 127,512
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐46
NOTE 7 – LONG ‐TERM DEBT – continued
E. California Energy Resources Conservation and Development Commission Loan Payable – continued
The future minimum payment obligation for the loan payable is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2012 $ ‐ $ ‐ $ ‐
2013 3,420 8,179 11,599
2014 7,936 3,664 11,600
2015 8,176 3,424 11,600
2016 8,414 3,185 11,599
2017 ‐2021 46,082 11,916 57,998
2022 ‐2026 53,484 4,514 57,998
Total $ 127,512 $ 34,882 $ 162,394
F. United States Department of Agriculture Loan Payable
On September 1, 2010, the City entered into a lease ‐purchase agreement with the United States Department of Agriculture
(USDA). The purpose of this loan was to acquire the property and office building for the relocation of the City Hall offices. The
outstanding loan payable debt of the City at June 30, 2011 is shown below:
Proceeds
Date of Maturity Amount of Outstanding Current Outstanding
Issue Interest Rates Date Original Issue July 1, 2010 Year June 30, 2011
2011 3.75% 2041 $ 1,200,000 $ ‐ $ 1,200,000 $ 1,200,000
The future minimum payment obligation for the USDA loan payable is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2012 $ 22,000 $ 44,586 $ 66,586
2013 23,000 43,744 66,744
2014 24,000 42,863 66,863
2015 25,000 41,944 66,944
2016 26,000 40,988 66,988
2017 ‐2021 145,000 189,281 334,281
2022 ‐2026 173,000 159,581 332,581
2027 ‐2031 209,000 123,844 332,844
2032 ‐2036 251,000 80,831 331,831
2037 ‐2041 302,000 29,175 331,175
Total $ 1,200,000 $ 796,837 $ 1,996,837
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐47
NOTE 7 – LONG ‐TERM DEBT – continued
G. Reimbursement Agreement
On June 10, 2005, the City entered into a reimbursement agreement with S & S Homes of the Central Coast, Inc (Developer)
whereas the Developer paid for costs of designing, constructing, and installing certain underground utility improvements that
are subject to reimbursement from the City. The City is obligated to reimburse the Developer in full by the end of seven years
from the time final inspection and approval of the underground utilities occurred, with simple interest accruing at 5% per
annum.
On March 24, 2009, the City amended to reimbursement agreement with the Developer which reduced the amount to be
reimbursed by $20,000.
The outstanding reimbursement agreement of the City at June 30, 2011 is shown below:
Redeemed
Date of Maturity Amount of Outstanding Current Outstanding
Issue Interest Rate Date Original Issue July 1, 2010 Year June 30, 2011
2007 5.00% 2014 $ 129,293 $ 109,293 * $ 82,111 $ 27,182
* ‐ Denotes a prior period adjustment. See Note 17 for further detail.
The future minimum obligation for the reimbursement agreement is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2012 $ ‐ $ ‐ $ ‐
2013
2014 27,182 4,613 31,795
Total $ 27,182 $ 4,613 $ 31,795
H. Other Postemployment Benefits
In 2004, GASB issued Statement No. 45 which required the City to measure and report the liabilities associated with other post ‐
employment benefits (OPEB). The City’s annual OPEB requirement was determined to be $196,673. The City is currently
funding the liability on a pay ‐as ‐you ‐go basis but is working towards fully funding this liability in the future. See Note 12 for
further detail.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐48
NOTE 7 – LONG ‐TERM DEBT – continued
I. Changes in Long ‐Term Liabilities
Long ‐term liability activity for the fiscal year ended June 30, 2011, is as follows:
Balance Balance Due Within
July 1, 2010 Additions Deletions June 30, 2011 One Year
Governmental Activities
Compensated absences $ 1,082,327 $ ‐ $ 138,674 $ 943,653 $ ‐
General obligation bonds 1,475,000 80,000 1,395,000 80,000
Tax allocation bonds 6,265,000 100,000 6,165,000 105,000
Capital leases payable 260,396 925,607 873,598 312,405 160,342
CA energy loan payable 127,512 127,512
USDA loan payable 1,200,000 1,200,000 22,000
Reimbursement agreement 109,293 * 82,111 27,182
OPEB 325,492 185,083 126,387 384,188
Total $ 9,517,508 $ 2,438,202 $ 1,400,770 $ 10,554,940 $ 367,342
Business ‐type Activities
Compensated absences $ 73,801 $ ‐ $ 249 $ 73,552 $ ‐
OPEB 30,975 11,590 2,087 40,478
Total $ 104,776 $ 11,590 $ 2,336 $ 114,030 $ ‐
* ‐ Denotes a prior period adjustment. See Note 17 for further detail.
NOTE 8 – WATER SUPPLY CONTRACT
The City of Arroyo Grande has entered into a Water Supply Contract with the San Luis Obispo County Financing Authority (SLOCFA).
The SLOCFA was created on August 15, 2000, to issue bonds for the purpose of financing part or all of the costs of the 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 of Arroyo Grande 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 future minimum contract payments for the debt service are shown below:
Fiscal Year Contract
Ending June 30 Payments
2012 $ 535,333
2013 535,940
2014 535,965
2015 535,232
2016 536,243
2017 ‐2021 2,688,494
2022 ‐2026 2,702,207
2027 ‐2030 2,174,346
Total $ 10,243,760
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐49
NOTE 8 – WATER SUPPLY CONTRACT – continued
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.
NOTE 9 – COMPOSITION OF FUND BALANCES
The composition of fund balances at June 30, 2011, is as follows:
Transportation Capital RDA Other
General Impact Fees Improvement Capital Governmental
Fund Fund Fund Projects Fund Funds Total
Nonspendable:
Inventory $ 25,889 $ ‐ $ ‐ $ ‐ $ 16,220 $ 42,109
Prepaid items 569,379 233 400 21,130 591,142
Total 595,268 233 400 37,350 633,251
Restricted for:
Access programming 67,016 67,016
Affordable housing 1,871,661 1,871,661
Debt service 1,142,550 1,142,550
Landscape maintenance 360,936 360,936
Park construction 990,567 990,567
Public improvements 2,770,287 334,707 3,104,994
Public safety 203,586 203,586
Redevelopment 225,077 225,077
Streets and roads 582,877 582,877
Total 2,770,287 225,077 5,553,900 8,549,264
Assigned for:
Affordable housing 12,923 978,838 991,761
Capital projects 34,605 360,138 394,743
General government 133,005 133,005
Parks and recreation 40,096 40,096
Public safety 153,545 153,545
Streets and roads 10,431 10,431
Utility service 2,130,607 2,130,607
Other purposes 25,243 25,243
Total 350,000 34,605 3,494,826 3,879,431
Unassigned 4,347,524 (7,553) 4,339,971
Total fund balances $ 5,292,792 $ 2,770,287 $ 34,838 $ 225,477 $ 9,078,523 $ 17,401,917
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐50
NOTE 10 – JOINT POWERS AUTHORITY
The City of Arroyo Grande is a member of the Five Cities Fire Authority (FCFA), a joint powers authority between the Cities of Arroyo
Grande, Grover Beach, and the Oceano Community Services District. FCFA was formed on July 9, 2010 for the purpose of providing a
more efficient fire protection service within the City limits of Arroyo Grande and Grover Beach, as well as the towns of 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 of Arroyo Grande contributed $1,478,489 to FCFA during the fiscal year ended June 30, 2011 for fire
protection services. Separate financial statements may be obtained from the Five Cities Fire Authority at 140 Traffic Way in Arroyo
Grande, California.
NOTE 11 – CITY EMPLOYEES’ RETIREMENT PLAN
Plan Description
The City of Arroyo Grande’s defined pension plan, Public Employees’ Retirement System (PERS), provides retirement and disability
benefits, annual cost ‐of ‐living adjustments, and death benefits to plan members and beneficiaries. PERS is part of the Public Agency
portion of the California Public Employees’ Retirement System (CalPERS), an agent multiple ‐employer plan administered by CalPERS,
which acts as a common investment and administrative agent for participating public employers within the State of California. A
menu of benefit provisions as well as other requirements are established by State statutes with the Public Employees’ Retirement
Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through
local ordinance (other local methods). CalPERS issues a separate comprehensive annual financial report. Copies of the CalPERS’
annual financial report may be obtained from the CalPERS Executive Office – 400 P Street – Sacramento, CA 95814.
Funding Policy
The City contributes the employee and employer shares for the Miscellaneous Plan and the Safety Plan. Since the City has less than
100 active members in each plan as of June 30, 2004, it is required to participate in a risk pool. Mandated pooling became effective
for the City of Arroyo Grande during the 2005 ‐06 fiscal year. During the 2010 ‐11 fiscal year, the City contracted fire services to Five
Cities Fire Authority and, as a result, is responsible for the retirement contributions for their employees. This changed the history of
funded status when compared to prior fiscal year’s CAFR. The City of Arroyo Grande is required to contribute the actuarially
determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are
those adopted by the CalPERS Board of Administration. The required employer contribution rates for the fiscal year 2010 ‐11, was
15.850% for miscellaneous employees and 35.911% for police safety employees. The contribution requirements of the plan
members are established by the State statutes and the employer contribution rate is established and may be amended by CalPERS.
The City’s contributions to CalPERS for fiscal years ending June 30, 2011, 2010, and 2009, were $1,315,871, $1,418,323, and
$1,640,136, respectively, and equal 100% of the required contributions for each fiscal year.
NOTE 12 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
Plan Description
The City of Arroyo Grande provides post ‐retirement health benefits, in accordance with State statutes, to all employees retiring from
the City and enrolled in an insurance program under the California Public Employees’ Medical and Hospital Care (PEMHCA). The
CalPERS PEMHCA plan is a defined contribution, multiple employer, and healthcare plan providing benefits to active and retired
employees. 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.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐51
NOTE 12 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS – continued
Funding Policy
The City participates in the CalPERS Health Benefit Program where all employee groups were under the equal contribution option.
The City was required to contribute $105 per month during calendar year 2010 and $108 per month during calendar year 2011
towards the cost of the retiree health insurance, which is the same amount contributed toward active employee health insurance.
In modifying the current retiree medical agreements, it was agreed that existing employees with a minimum of five (5) years of full ‐
time service at the time of retirement and new employees with a minimum of ten (10) years of service will receive a supplemental
monthly payment (amount varies depending upon employee group and type of insurance). The remaining balance of the premium
is paid directly by the retirees to CalPERS. The mandatory employer contribution for active and retiree health insurance is increased
annually in accordance with PEMHCA regulation. Beginning on January 1, 2012, the contribution amount will increase to $112 per
month. During fiscal year 2010 ‐11, expenditures of $128,474 were recognized for post ‐retirement health insurance contributions on
a pay ‐as ‐you ‐go basis.
As required by GASB 45, an actuary will determine the City’s annual required contributions (ARC) at least once every two fiscal years.
The ARC is calculated in accordance with certain parameters, and includes (1) the normal cost for one year, and (2) a component for
amortization of the total unfunded actuarial accrued liability (UAAL) over a period not to exceed 30 years.
GASB 45 does not require pre ‐funding of OPEB benefits. Therefore, the City’s funding policy is to continue to pay healthcare
premiums for retirees as they fall due. The City has elected not to establish an irrevocable trust at this time; however, the City plans
to begin funding this liability during the 2012 ‐13 fiscal year.
Annual OPEB Cost
For the fiscal year 2010 ‐11, the City’s OPEB cost (expense) of $196,673 was less than the annual required contributions (ARC) of
$202,039 due to interest on OPEB obligations of $17,823 and the amortization adjustment to ARC of $(23,189). The City’s annual
OPEB cost, the annual OPEB cost contributed, the percentage of annual OPEB cost contributed to the plan, and the net OPEB
obligation of 2010 ‐11, is shown below:
Annual % of Annual
Fiscal Year Annual OPEB Cost OPEB Cost Net OPEB
Ending June 30 OPEB Cost Contributed Contributed Obligation
2008 $ 219,706 $ 64,532 29% $ 155,174
2009 219,706 109,503 50% 110,203
2010 219,706 128,616 59% 91,090
2011 196,673 128,474 65% 68,199
Total $ 855,791 $ 431,125 51% $ 424,666
The funded status of the plan as of June 30, 2011, is as follows:
Actuarial accrued liability (AAL) $ 2,053,387
Actuarial value plan assets
Unfunded actuarial accrued liability (UAAL) $ 2,053,387
Funded ratio (actuarial value of plan assets/AAL) 0%
Covered payroll (active plan members) $ 5,055,775
UAAL as a percentage of covered payroll 41%
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐52
NOTE 12 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS – continued
Annual OPEB Cost – continued
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of
the occurrence of events are far into the future. Examples include assumptions about future employment, mortality, and the
healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the
employer are subject to continual revisions as actual results are compared with past expectations and new estimates are made
about the future. The schedule of funding progress, presented as required supplementary information following the notes to the
basic financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing
or decreasing over time relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer
and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include
techniques that are designed to reduce short ‐term volatility in actuarial accrued liabilities and the actuarial value of assets,
consistent with the long ‐term perspective of the calculations.
The actuarial valuation of plan assets, dated July 1, 2010, used the Projected Unit Credit cost method. The actuarial assumptions
included a 5.0 percent investment rate of return (net of administrative expenses) and an annual healthcare cost trend rate of 8
percent initially, reduced by decrements to an ultimate rate of 5.0 percent after three years. These assumptions reflect an implicit
3.0 percent general inflation assumption. The City’s unfunded actuarial accrued liability is being amortized as a level dollar amount
on an open basis over 30 years. The remaining amortization period as of June 30, 2010 was 30 years.
NOTE 13 – LIABILITY, PROPERTY, AND WORKERS’ COMPENSATION PROTECTION
A. Description of Self ‐Insurance Pool Pursuant to Joint Powers Agreement
The City of Arroyo Grande is a member of the California Joint Powers Insurance Authority (Cal JPIA). The Cal JPIA is composed
of 107 California public entities and is organized under a joint powers agreement pursuant to California Government Code
6500 et seq. The purpose of the Cal JPIA is to arrange and administer programs for the pooling of self ‐insured losses, to
purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other coverage’s. The
Cal JPIA’s pool began covering claims of its members in 1978. Each member government has an elected official as its
representative on the Board of Directors. The Board operates through a 9 ‐member Executive Committee.
B. Self ‐Insurance Programs of the Authority
General Liability – Each member government pays a primary deposit to cover estimated losses for a fiscal year (claims year). Six
months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for
each open claims year. Costs are spread to members as follows: the first $30,000 of each occurrence is charged directly to the
member; costs from $30,001 to $750,000 are pooled based on a member’s share of costs under $30,000; costs from
$750,001 to $15,000,000 are pooled based on payroll. Costs of covered claims about $15,000,000 are currently paid by
reinsurance. The protection for each member is $50,000,000 per occurrence and $50,000,000 annual aggregate.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐53
NOTE 13 – LIABILITY, PROPERTY, AND WORKERS’ COMPENSATION PROTECTION – continued
B. Self ‐Insurance Programs of the Authority – continued
Workers’ Compensation – The City of Arroyo Grande also participates in the workers’ compensation pool administered by the
Cal JPIA. Members retain the first $50,000 of each claim. Claims are pooled separately between public safety and non ‐public
safety. Loss development reserves are allocated by pool and by loss layer ($0 to $100,000 allocated by retained amount and
$100,000 to $2,000,000 by payroll). Losses from $50,000 to $100,000 and the loss development reserve associated with losses
up to $100,000 are pooled based on the member’s share of losses under $50,000. Losses from $100,000 to $2,000,000 and loss
development reserves associated with losses from $100,000 to $2,000,000 are pooled based on payroll. Costs from $2,000,000
to $50,000,000 are transferred to an excess insurance policy. Costs in excess of $50,000,000 are pooled among the Members
based on payroll. Administrative expenses are paid from the Cal JPIA’s investment earnings.
C. Purchase Insurance
Property Insurance – The City of Arroyo Grande participates in the all ‐risk property protection of the Cal JPIA. Several insurance
companies underwrite this insurance protection. The City’s property is currently insured according to a schedule of covered
property submitted by the City to the Cal JPIA. Total all ‐risk property insurance coverage is $37,033,492. There is a $5,000 per
loss deductible. Premiums for the coverage are paid annually and are not subject to retroactive adjustments.
Fidelity Bonds – The City of Arroyo Grande purchases blanket fidelity bond coverage in the amount of $1,000,000 with $2,500
deductible. The fidelity coverage is provided through Cal JPIA. Premiums are paid annually and are not subject to retroactive
adjustments.
D. Adequacy of Protection
During the past three fiscal (claims) years, none of the above programs have bad settlements or judgments that exceeded
pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in
the prior fiscal year.
NOTE 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 – CONTINGENCIES AND COMMITMENTS
The City is involved in various litigations. In the opinion of management and legal council, the disposition of all litigation pending will
not have a material effect on the City’s financial statements.
The City has received State and Federal funds for specific purposes that are subject to review and audit by the grantor 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.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐54
NOTE 16 – SUBSEQUENT EVENTS
Recent Changes in Legislation Affecting California Redevelopment Agencies
On June 29, 2011, the Governor of the State of California signed Assembly Bills X1 26 and 27 as part of the State’s budget package.
Assembly bill X1 26 requires each California redevelopment agency to suspend nearly all activities expect to implement existing
contracts, meet already ‐incurred obligations, preserve its assets and prepare for the impending dissolution of the agency. Assembly
Bill X1 27 provides a means for redevelopment agencies to continue to exist and operate by means of a Voluntary Alternative
Redevelopment Program. Under this program, each city would adopt an ordinance agreeing to make certain payments to the County
Auditor Controller in fiscal year 2011 ‐12 and annual payments each fiscal year thereafter. Assembly Bill X1 26 indicates that the city
“may use any available funds not otherwise obligated for other uses” to make this payment. The City of Arroyo Grande intends to
use available monies of its redevelopment agency for this purpose and the City and Agency have approved a reimbursement
agreement to accomplish that objective. The amounts to be paid after fiscal year 2012 ‐13 have yet to be determined by state
legislature.
Assembly Bill X1 26 directs the State Controller of the State of California to review the propriety of any transfers of assets between
redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers
is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required
to order the available assets to be transferred to the public body designated as the successor agency by Assembly Bill X1 26.
In the event that Assembly Bill X1 26 is upheld, the interagency receivable recognized by funds of the City that had previously loaned
or advanced funds to the redevelopment agency may become uncollectible resulting in a loss recognized by such funds. The City
might additionally be impacted if reimbursements previously paid by the redevelopment agency to the City for shared
administrative services are reduced or eliminated.
The League of California Cities and the California Redevelopment Association (CRA) filed a lawsuit on July 18, 2011 on behalf of
cities, counties, and redevelopment agencies petitioning the California Supreme Court to overturn Assembly Bills X1 26 and 27 on
the grounds that these bills violate the California Constitution. On August 11, 2011, the California Supreme Court issued a stay of all
Assembly Bill X1 27 and most of Assembly Bill X1 26. The California Supreme Court stated in its order that “the briefing schedule is
designed to facilitate oral argument as early as possible in 2011, and a decision before January 15, 2012.” A second order issued by
the California Supreme Court on August 17, 2011 indicated that certain provisions of Assembly Bills X1 26 and 27 were still in effect
and not affected by its previous stay, including requirements to file an appeal of the determination of the community remittance
payment by August 15, the requirement to adopt an Enforceable Obligations Payment Schedule (“EOPS”) by August 29, 2011, and
the requirement to prepare a preliminary draft of the initial Recognized Obligation Payment Schedule (“ROPS”) by September 30,
2011.
The stay provided by Assembly Bill X1 26 only affects enforcement, and as a result, each agency must adopt an Enforceable
Obligation Payment Schedule and draft Recognized Obligation Payment Schedule prior to September 30, as required by the statue.
Enforceable obligations include bonds, loans, and payments required by the federal or State government; legally enforceable
payments required in connection with agency employees such as pension payments and unemployment payments, judgments or
settlements; legally binding and enforceable agreements or contracts; and contracts or agreements necessary for the continued
administration or operation of the agency that are permitted for purposes set forth in AB X1 26.
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2011
B ‐55
NOTE 17 – PRIOR PERIOD ADJUSTMENTS
A prior period adjustment of $(109,293) was made which effects the statement of activities under governmental activities. In June
2005, the City entered into a long ‐term reimbursement agreement that with S & S Homes of the Central Coast to plan, install, and
construct certain underground utilities. See Note 7; section ‘G’ for further detail.
A prior period adjustment of $483,402 was made which effects the proprietary funds statement of revenues, expenses, and changes
in net assets and the government ‐wide statement of activities. The City capitalized infrastructure ‐related assets in the governmental
funds when they should have been capitalized and depreciated over the useful life of the asset in the business ‐type activities and
proprietary funds. See Note 4 for further detail.
THIS PAGE IS INTENTIONALLY LEFT BLANK
CITY OF ARROYO GRANDE
REQUIRED SUPPLEMENTARY INFORMATION
SECTION (unaudited)
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
General Fund
For the Fiscal Year Ended June 30, 2011
REVENUES
Taxes and assessments$10,486,925 $10,507,918 $10,673,432 $165,514
Licenses and permits218,420 233,420 194,743 (38,677)
Fines and penalties111,500 111,500 66,724 (44,776)
Use of money and property268,250 292,090 325,314 33,224
Intergovernmental revenues309,100 1,114,782 1,112,918 (1,864)
Charges for services879,800 724,300 717,210 (7,090)
Other revenue163,300 73,300 55,197 (18,103)
Total revenues12,437,295 13,057,310 13,145,538 88,228
EXPENDITURES
General government
City Council131,150 126,820 114,876 (11,944)
City manager426,100 474,041 439,458 (34,583)
City attorney179,250 261,952 308,850 46,898
Legislative services297,160 302,211 294,337 (7,874)
Information technology229,190 237,118 235,441 (1,677)
Administrative services699,400 692,076 705,019 12,943
Printing27,450 27,450 23,928 (3,522)
Non ‐departmental796,640 2,224,929 2,102,181 (122,748)
Governmental buildings164,780 156,812 156,546 (266)
Engineering360,900 297,600 271,712 (25,888)
Building and life safety`259,490 241,107 228,090 (13,017)
Public safety
Police5,676,186 5,614,891 5,202,374 (412,517)
Fire1,589,071 64,819 45,811 (19,008)
Parks and recreation
Parks626,400 551,364 526,818 (24,546)
Recreation138,470 142,505 134,257 (8,248)
General recreation136,900 137,601 126,885 (10,716)
Preschool program75,170 78,776 75,007 (3,769)
Special recreation programs110,500 110,500 107,378 (3,122)
Children in Motion446,660 261,643 266,790 5,147
Five Cities Youth Basketball51,750 51,750 47,924 (3,826)
Soto sports complex263,490 257,752 252,655 (5,097)
Community development455,570 483,954 460,292 (23,662)
Streets and road
Street & bridge maintenance50,000 50,000 46,217 (3,783)
Street lighting235,200 235,200 224,548 (10,652)
Automotive shop117,430 145,555 124,466 (21,089)
Capital outlay216,193 986,393 1,068,357 81,964
Debt service133,880 133,880 908,594 774,714
Total expenditures$13,894,380 $14,348,699 $14,498,811 $150,112
Continued on following page
Variance Over
(Under)Actual Amounts OriginalFinal
Budget Amounts
C ‐1
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
General Fund
For the Fiscal Year Ended June 30, 2011
Continued from previous page
Excess of revenue over (under)
expenditures$(1,457,085) $(1,291,389) $(1,353,273) $(61,884)
OTHER FINANCING SOURCES (USES)
Proceeds from issuance of debt925,607 925,607
Transfer in2,385,200 2,359,800 2,343,818 (15,982)
Transfer out(1,244,100) (3,304,936) (1,623,786) 1,681,150
Total other financing sources
(uses)1,141,100 (945,136) 1,645,639 2,590,775
Net change in fund balance(315,985) (2,236,525) 292,366 2,528,891
Fund balance ‐ July 1, 20105,000,426 5,000,426 5,000,426
Fund balance ‐ June 30, 2011$4,684,441 $2,763,901 $5,292,792 $2,528,891
C ‐2
Budget Amounts
Actual Amounts
Variance Over
(Under)OriginalFinal
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
Transportation Impact Fees Fund
For the Fiscal Year Ended June 30, 2011
REVENUES
Taxes and assessments$15,000 $15,000 $267,489 $252,489
Other revenue40,000 40,000 15,936 (24,064)
Total revenues55,000 55,000 283,425 228,425
OTHER FINANCING SOURCES (USES)
Transfer out(1,000,000) (1,728,883) (253,718) 1,475,165
Total other financing sources
(uses)(1,000,000) (1,728,883) (253,718) 1,475,165
Net change in fund balance(945,000) (1,673,883) 29,707 1,703,590
Fund balance ‐ July 1, 20102,740,580 2,740,580 2,740,580
Fund balance ‐ June 30, 2011$1,795,580 $1,066,697 $2,770,287 $1,703,590
C ‐3
Budget Amounts
Actual Amounts
Variance Over
(Under)OriginalFinal
CITY OF ARROYO GRANDE
OTHER POSTEMPLOYMENT BENEFITS ‐ SCHEDULE OF FUNDING PROGRESS
For the Fiscal Year Ended June 30, 2011
Actuarial
Valuation
Date
07/01/07
UAAL as a
Percent ‐
age of
Covered
Payroll
((b ‐a)/c)
C ‐4
$‐1,835,537 $
Actuarial
Accrued
Liability (AAL)
Projected Unit
Cost (b)
1,835,537 $
Actuarial
Valuation of
Assets (a)
31%
Covered Payroll
5,968,881 $
Funded
Ratio (a/b)
0%
Unfunded AAL
(UAAL)(b ‐a)
07/01/102,053,287 2,053,287 0%41%5,055,775
CITY OF ARROYO GRANDE
SUPPLEMENTAL INFORMATION SECTION
CITY OF ARROYO GRANDE
DESCRIPTION OF NONMAJOR GOVERNMENTAL AND FIDUCIARY FUNDS
June 30, 2011
Nonmajor Governmental Funds
Special Revenue Funds:
Sewer Fund – This fund is used to account for maintenance of sewer lines connecting City residents to the San Luis Obispo
County Sanitation District sewer plant. Maintenance costs are funded by user charges.
Park Development Fund – This fund accounts for the receipts of park ‐in ‐lieu fees (Quimby) and grant revenues that are
used for construction, park acquisition, and development of park facilities.
Special Gasoline Tax Fund – This fund accounts for receipts and expenditures of money apportioned by the State under
Streets and Highway Code sections 2105, 2106, 2107, and 2107.5. The use of gas tax revenues can only be used to
construct and maintain streets and highways.
Landscape Assessment Fund – This fund accounts for the landscape maintenance of parkways within City housing tracts. A
special benefit assessment is levied on property owners to pay for landscape maintenance expenditures.
Traffic Signal Fund – This fund accounts for traffic signalization assessment levied against developments for the future cost
of traffic signals.
Construction Fund – This fund accounts for the accumulation of tax revenues levied on construction of residential dwelling
units, mobile home lots, and commercial buildings. Expenditures are restricted to public improvements, including but not
limited to, facilities, fire stations, fire ‐fighting equipment, parks, street improvements, and equipment.
Drainage Fees Fund – This fund accounts for development drainage fees restricted to improving drainage within the City.
Sewer Facility Fund – This fund accounts for the accumulation of sewer facility revenues to be used in capital improvement
projects in the City.
Traffic Circulation Fund – This fund accounts for developer traffic mitigation measure fees charged as a result of an
environmental review.
State COPS Grant Fund – This fund accounts for the receipt and use of monies from the State of California restricted to the
purchase of police equipment and technology for crime prevention.
Traffic Congestion Relief Fund – This fund accounts for receipts and expenditures of money apportioned by the State under
AB 2928, for street or road maintenance or reconstruction.
Parkside Assessment District Fund – This fund accounts for revenue derived from annual assessments, which are used to
pay the cost incurred by the City for landscape maintenance.
Water Neutralization Impact Fund – This fund accounts for mitigation fees collected from developers to neutralize
projected water demand of development projects, above historical usage amounts.
Fire Protection Impact Fees Fund – This fund accounts for impact fees collected from developers for the expansion of the
existing fire station in order to serve future development.
D ‐1
CITY OF ARROYO GRANDE
DESCRIPTION OF NONMAJOR GOVERNMENTAL AND FIDUCIARY FUNDS
June 30, 2011
Nonmajor Governmental Funds – continued
Special Revenue Funds – continued:
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.
Grace Lane Assessment District Fund – This fund accounts for revenue derived from annual assessments, which are used to
pay the cost incurred by the City for landscape maintenance.
Park Improvement Impact Fees Fund – Impact fees collected for park improvements are to be used to maintain the adopted
level of service for neighborhood and community parks of 4.0 acres per thousand population. This fund accounts for the
receipt and use of these monies.
In ‐Lieu Underground Utility Fund – This fund accounts for monies paid by developers in meeting the City’s underground
utility requirements.
Recreation Community Center Impact Fees Fund – This fund accounts for impact fees collected and used for recreation
facilities in order to maintain the adopted level of service of recreation/community center facilities of 542 square feet per
thousand population.
In ‐Lieu Affordable Housing Fund – This fund accounts for monies paid by developers in meeting the City’s mandatory
affordable housing requirements.
CDBG Grant Fund – This fund accounts for revenues and expenditures related to Community Development Block Grant
(CDBG) Funds.
Public Access Television Fund – This fund accounts for fees collected from Charter Communications that are restricted for
support of public, education, and government access programming and equipment.
Transportation Fund – This fund accounts for revenues from the Local Transportation Fund (LTF) and the South County Area
Transit (SCAT). Expenditures are restricted to public transportation.
Water Availability Fund – This fund accounts for impact fees collected to mitigate future water requirements.
Redevelopment Set ‐Aside Fund – This fund accounts for the 20% tax increment revenues to be used for low and moderate
housing within the City.
Debt Service Funds:
Fire Station GO Bond Fund – This fund is used to account for the accumulation of resources and payment of long ‐term debt
principal and interest for general obligation bonds issued by the City to finance the expansion of the City Fire Station.
Redevelopment Debt Service Fund – This fund is used to account for the accumulation of resources and payment of long ‐
term debt principal and interest for tax allocation bonds issued by the RDA to finance the repayment of dept and future
projects.
D ‐2
CITY OF ARROYO GRANDE
DESCRIPTION OF NONMAJOR GOVERNMENTAL AND FIDUCIARY FUNDS
June 30, 2011
Nonmajor Governmental Funds – continued
Debt Service Funds – continued:
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.
Fiduciary Funds
Agency Funds:
Sanitation District Fund – This agency fund accounts for the receipt and remittance of wastewater processing fees on behalf
of the South San Luis Obispo County Sanitation District. The City bills the wastewater processing fee through the utility
bills, collecting the fee from the City's utility customers.
Downtown Parking Fund – This agency fund collects assessments from Arroyo Grande Village merchants for the
maintenance of the Village parking lots for the Downtown Village Merchants Association.
D ‐3
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet
June 30, 2011
ASSETS
Cash and investments$257,802 $636,987 $‐
Receivables:
Accounts157,932
Taxes 51,180
Grant237 7,720
Loan
Interest349 645
Inventory:
Parts and fuel16,220
Land held for resale
Prepaid items2,808 7,553
Advances to other funds
Total assets$435,348 $637,632 $66,453
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable$11,965 $‐$11,797
Deferred revenue40,224
Due to other funds 54,656
Total liabilities11,965 40,224 66,453
Fund Balances:
Nonspendable19,028 7,553
Restricted597,408
Assigned404,355
Unassigned (7,553)
Total fund balances423,383 597,408
Total liabilities and fund
balances$435,348 $637,632 $66,453
Special Revenue Funds
SewerSpecial Gasoline Tax Park Development
D ‐4
$25,745 $491,753 $3,195 $461 $359,840
22 408 3 298
$25,767 $492,161 $3,198 $461 $360,138
$21 $‐$‐$‐$‐
21
25,746 492,161 3,198 461
360,138
25,746 492,161 3,198 461 360,138
$25,767 $492,161 $3,198 $461 $360,138
Special Revenue Funds
Sewer Facility Drainage Fees Construction Traffic Signal
Landscape
Assessment
D ‐5
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet
June 30, 2011
ASSETS
Cash and investments$25,026 $193,877 $‐
Receivables:
Accounts
Taxes
Grant25,000
Loan
Interest21 184
Inventory:
Parts and fuel
Land held for resale
Prepaid items10,369
Advances to other funds
Total assets$25,047 $229,430 $‐
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable$‐$123,013 $‐
Deferred revenue
Due to other funds
Total liabilities123,013
Fund Balances:
Nonspendable10,369
Restricted96,048
Assigned25,047
Unassigned
Total fund balances25,047 106,417
Total liabilities and fund
balances$25,047 $229,430 $‐
Special Revenue Funds
Traffic CirculationState COPS Grant
Traffic Congestion
Relief
D ‐6
$285,070 $422,131 $43,930 $63,523 $49,853
227 397 33 52 40
$285,297 $422,528 $43,963 $63,575 $49,893
$‐$764 $‐$‐$‐
764
285,297 421,764 43,963 63,575 49,893
285,297 421,764 43,963 63,575 49,893
$285,297 $422,528 $43,963 $63,575 $49,893
Special Revenue Funds
Parkside
Assessment District
Police Protection
Impact Fees
Water
Neutralization
Impact
Fire Protection
Impact Fees
D ‐7
Grace Lane
Assessment District
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet
June 30, 2011
ASSETS
Cash and investments$347,714 $196 $45,111
Receivables:
Accounts
Taxes
Grant
Loan
Interest302 32
Inventory:
Parts and fuel
Land held for resale
Prepaid items
Advances to other funds
Total assets$348,016 $196 $45,143
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable$‐$‐$‐
Deferred revenue
Due to other funds
Total liabilities
Fund Balances:
Nonspendable
Restricted348,016 45,143
Assigned196
Unassigned
Total fund balances348,016 196 45,143
Total liabilities and fund
balances$348,016 $196 $45,143
Special Revenue Funds
D ‐8
Park Improvement
Impact Fees
In ‐Lieu
Underground Utility
Recreation
Community Center
Impact Fees
$58,995 $‐$70,075 $57,385 $1,724,686
106,892
46 60 1,566
919,797
$978,838 $106,892 $70,135 $57,385 $1,726,252
$‐$653 $3,119 $2,729 $‐
106,239 54,656
106,892 3,119 57,385
67,016
978,838 1,726,252
978,838 67,016 1,726,252
$978,838 $106,892 $70,135 $57,385 $1,726,252
Special Revenue Funds
CDBG Grant
Public Access
TelevisionTransportation
D ‐9
In ‐Lieu Affordable
Housing Water Availability
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet
June 30, 2011
ASSETS
Cash and investments$1,517,184 $6,680,539
Receivables:
Accounts157,932
Taxes6,946 58,126
Grant139,849
Loan315,500 315,500
Interest1,330 6,015
Inventory:
Parts and fuel16,220
Land held for resale35,799 35,799
Prepaid items400 21,130
Advances to other funds919,797
Total assets$1,877,159 $8,350,907
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable$5,098 $159,159
Deferred revenue40,224
Due to other funds215,551
Total liabilities5,098 414,934
Fund Balances:
Nonspendable400 37,350
Restricted1,871,661 4,411,350
Assigned3,494,826
Unassigned(7,553)
Total fund balances1,872,061 7,935,973
Total liabilities and fund
balances$1,877,159 $8,350,907
Total Special
Revenue Funds
Redevelopment Set ‐
Aside
D ‐10
Special Revenue Funds
$673,418 $457,972 $6,732 $1,138,122 $7,818,661
157,932
3,932 3,932 62,058
139,849
315,500
531 531 6,546
16,220
35,799
21,130
919,797
$677,881 $457,972 $6,732 $1,142,585 $9,493,492
$‐$‐$‐$‐$159,159
40,224
35 35 215,586
35 35 414,969
37,350
677,881 457,937 6,732 1,142,550 5,553,900
3,494,826
(7,553)
677,881 457,937 6,732 1,142,550 9,078,523
$677,881 $457,972 $6,732 $1,142,585 $9,493,492
D ‐11
Total Nonmajor
Governmental
Funds
Fire Station GO
Bonds
Total Debt Service
Funds
City Hall USDA Debt
Service
Redevelopment
Debt Service
Debt Service Funds
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2011
REVENUES
Taxes and assessments$‐$‐$‐
Use of money and property2,179 4,128
Intergovernmental revenues237 457,327
Charges for services825,353 63,988
Other revenue3,104 1,119
Total revenues830,873 68,116 458,446
EXPENDITURES
Current:
General government
Community development
Streets and road 695,240
Sewer273,818
Capital outlay10,236
Debt service:
Principal
Interest and fiscal agent fees
Total expenditures284,054 695,240
Excess of revenue over
(under) expenditures546,819 68,116 (236,794)
OTHER FINANCING SOURCES (USES)
Transfers in 239,470
Transfers out(619,560) (152,219) (2,676)
Total other financing sources
(uses)(619,560) (152,219) 236,794
Net change in fund balances(72,741) (84,103)
Fund balances ‐ July 1, 2010496,124 681,511
Fund balances ‐ June 30, 2011$423,383 $597,408 $‐
Special Revenue Funds
D ‐12
Special Gasoline Tax Park Development Sewer
$5,800 $‐$‐$‐$‐
140 2,479 8 7 1,906
96,409 26,564
5,940 98,888 8 7 28,470
1,919
1,919
4,021 98,888 8 7 28,470
(3,300) (1,575)
(3,300) (1,575)
721 98,888 8 (1,568) 28,470
25,025 393,273 3,190 2,029 331,668
$25,746 $492,161 $3,198 $461 $360,138
D ‐13
Traffic SignalSewer Facility
Special Revenue Funds
Drainage Fees Construction
Landscape
Assessment
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2011
REVENUES
Taxes and assessments$‐$‐$‐
Use of money and property137 1,167 486
Intergovernmental revenues100,000
Charges for services
Other revenue
Total revenues137 101,167 486
EXPENDITURES
Current:
General government
Community development
Streets and road
Sewer
Capital outlay186,361
Debt service:
Principal
Interest and fiscal agent fees
Total expenditures186,361
Excess of revenue over
(under) expenditures137 (85,194) 486
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out (90,716)
Total other financing sources
(uses)(90,716)
Net change in fund balances137 (85,194) (90,230)
Fund balances ‐ July 1, 201024,910 191,611 90,230
Fund balances ‐ June 30, 2011$25,047 $106,417 $‐
Traffic CirculationState COPS Grant
Traffic Congestion
Relief
Special Revenue Funds
D ‐14
$56,888 $‐$‐$‐$9,668
1,387 2,761 180 320 244
85,473 21,151 12,479
58,275 88,234 21,331 12,799 9,912
1,437 197,568
1,437 197,568
56,838 (109,334) 21,331 12,799 9,912
(3,600) (11,325)
(3,600) (11,325)
53,238 (120,659) 21,331 12,799 9,912
232,059 542,423 22,632 50,776 39,981
$285,297 $421,764 $43,963 $63,575 $49,893
Special Revenue Funds
Police Protection
Impact Fees
Grace Lane
Assessment District
Fire Protection
Impact Fees
Parkside
Assessment District
Water
Neutralization
Impact
D ‐15
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2011
REVENUES
Taxes and assessments$‐$‐$‐
Use of money and property1,938 195 209
Intergovernmental revenues
Charges for services24,646 7,502
Other revenue
Total revenues26,584 195 7,711
EXPENDITURES
Current:
General government
Community development
Streets and road
Sewer
Capital outlay
Debt service:
Principal82,111
Interest and fiscal agent fees19,703
Total expenditures101,814
Excess of revenue over
(under) expenditures26,584 (101,619) 7,711
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out(20,193)
Total other financing sources
(uses)(20,193)
Net change in fund balances6,391 (101,619) 7,711
Fund balances ‐ July 1, 2010341,625 101,815 37,432
Fund balances ‐ June 30, 2011$348,016 $196 $45,143
D ‐16
Special Revenue Funds
Park Improvement
Impact Fees
In ‐Lieu
Underground Utility
Recreation
Community Center
Impact Fees
$‐$‐$‐$‐$‐
183 398 10,209
110,244 98,514
50,625 28,436 38,000
50,808 110,244 28,834 98,514 48,209
30,042 10,325
19,604
19,604 30,042 10,325
50,808 90,640 (1,208) 88,189 48,209
(90,640) (88,189) (160,489)
(90,640) (88,189) (160,489)
50,808 (1,208) (112,280)
928,030 68,224 1,838,532
$978,838 $‐$67,016 $‐$1,726,252
Transportation
Special Revenue Funds
In ‐Lieu Affordable
HousingCDBG Grant
Public Access
Television
D ‐17
Water Availability
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2011
REVENUES
Taxes and assessments$308,649 $381,005
Use of money and property9,380 40,041
Intergovernmental revenues766,322
Charges for services1,280,626
Other revenue4,223
Total revenues318,029 2,472,217
EXPENDITURES
Current:
General government40,367
Community development227,221 447,749
Streets and road695,240
Sewer273,818
Capital outlay196,597
Debt service:
Principal82,111
Interest and fiscal agent fees19,703
Total expenditures227,221 1,755,585
Excess of revenue over
(under) expenditures90,808 716,632
OTHER FINANCING SOURCES (USES)
Transfers in239,470
Transfers out(203,317) (1,447,799)
Total other financing sources
(uses)(203,317) (1,208,329)
Net change in fund balances(112,509) (491,697)
Fund balances ‐ July 1, 20101,984,570 8,427,670
Fund balances ‐ June 30, 2011$1,872,061 $7,935,973
D ‐18
Total Special
Revenue Funds
Redevelopment Set ‐
Aside
Special Revenue Funds
$188,791 $‐$‐$188,791 $569,796
3,217 81 3,298 43,339
766,322
1,280,626
4,223
192,008 81 192,089 2,664,306
40,367
447,749
695,240
273,818
196,597
80,000 100,000 180,000 262,111
59,765 356,468 20,219 436,452 456,155
139,765 456,468 20,219 616,452 2,372,037
52,243 (456,387) (20,219) (424,363) 292,269
456,387 26,951 483,338 722,808
(1,447,799)
456,387 26,951 483,338 (724,991)
52,243 6,732 58,975 (432,722)
625,638 457,937 1,083,575 9,511,245
$677,881 $457,937 $6,732 $1,142,550 $9,078,523
Redevelopment
Debt Service
Fire Station GO
Bonds
Debt Service Funds Total Nonmajor
Governmental
Funds
Total Debt Service
Funds
D ‐19
City Hall USDA Debt
Service
CITY OF ARROYO GRANDE
STATEMENT OF CHANGE IN ASSETS AND LIABILITIES
Agency Funds
For the Fiscal Year Ended June 30, 2011
Sanitation District Fund
Cash and investments$136,373 $1,524,465 $1,524,137 $136,701
Accounts receivable1,446,410 1,443,000 3,410
Total assets$136,373 $2,970,875 $2,967,137 $140,111
Due to other agencies$136,373 $2,970,875 $2,967,137 $140,111
Total liabilities$136,373 $2,970,875 $2,967,137 $140,111
Downtown Parking Fund
Cash and investments$137,734 $114,241 $38,782 $213,193
Interest receivable153 206 153 206
Prepaid items54 24 30
Total assets$137,941 $114,447 $38,959 $213,429
Due to other agencies$137,941 $114,447 $38,959 $213,429
Total liabilities$137,941 $114,447 $38,959 $213,429
Total Agency Funds
Cash and investments$274,107 $1,638,706 $1,562,919 $349,894
Accounts receivable1,446,410 1,443,000 3,410
Interest receivable153 206 153 206
Prepaid items54 24 30
Total assets$274,314 $3,085,322 $3,006,096 $353,540
Due to other agencies$274,314 $3,085,322 $3,006,096 $353,540
Total liabilities$274,314 $3,085,322 $3,006,096 $353,540
D ‐20
BalanceBalance
June 30, 2011 AdditionsDeductions July 1, 2010
CITY OF ARROYO GRANDE
STATISTICAL SECTION (unaudited)
THIS PAGE IS INTENTIONALLY LEFT BLANK
CITY OF ARROYO GRANDE
NET ASSETS BY COMPONENT
Last Nine Fiscal Years
Governmental Activities
Invested in capital assets, net of related debt$53,704,820 $55,451,775 $55,951,374
Restricted6,329,061 757,172 200,806
Unrestricted2,035,617 7,829,450 8,684,890
Total governmental activities net assets62,069,498 64,038,397 64,837,070
Business ‐Type Activities
Invested in capital assets, net of related debt8,146,356 8,033,971 10,006,833
Unrestricted6,017,721 5,652,056 4,343,240
Total business ‐type activities net assets14,164,077 13,686,027 14,350,073
Primary Government
Invested in capital assets, net of related debt61,851,176 63,485,746 65,958,207
Restricted6,329,061 757,172 200,806
Unrestricted8,053,338 13,481,506 13,028,130
Total primary government net assets$76,233,575 $77,724,424 $79,187,143
Source: City of Arroyo Grande Annual Financial Report
E ‐2
Fiscal Year
TheCityofArroyoGrandeimplementedGASBStatementNo.34forthefiscalyearendedJune30,2003.Informationprior
to the implementation of GASB Statement No. 34 is not available.
200320042005
$57,463,427 $51,452,482 $51,506,838 $52,059,524 $52,196,451 $54,012,699
294,162 872,226 916,560 969,659 937,284 8,179,991
8,204,641 13,859,907 15,736,998 15,799,496 15,491,347 7,584,426
65,962,230 66,184,615 68,160,396 68,828,679 68,625,082 69,777,116
9,903,095 9,815,456 9,759,235 9,670,367 9,532,740 10,057,743
5,173,626 5,924,601 6,961,084 7,569,157 7,518,372 6,686,297
15,076,721 15,740,057 16,720,319 17,239,524 17,051,112 16,744,040
67,366,522 61,267,938 61,266,073 61,729,891 61,729,191 64,070,442
294,162 872,226 916,560 969,659 937,284 8,179,991
13,378,267 19,784,508 22,698,082 23,368,653 23,009,719 14,270,723
$81,038,951 $81,924,672 $84,880,715 $86,068,203 $85,676,194 $86,521,156
E ‐3
Fiscal Year
2011 20062007200820092010
CITY OF ARROYO GRANDE
CHANGES IN NET ASSETS
Last Nine Fiscal Years
Expenses
Governmental activities:
General government$2,200,775 $2,282,682 $3,201,586
Public safety5,000,896 5,679,014 6,333,577
Parks, recreation, and facilities1,517,289 1,636,072 1,720,296
Community development792,917 974,163 1,100,514
Streets and roads2,293,828 2,245,277 2,753,823
Sewer694,666 729,279 723,144
Interest on long ‐term debt43,099 75,523 78,141
Unallocated depreciation557,824 47,176
Total governmental activities expenses13,101,294 13,669,186 15,911,081
Business ‐type activities:
Water1,030,381 1,078,898 1,129,392
Lopez1,363,773 1,519,067 1,448,995
Total business ‐type activities expenses2,394,154 2,597,965 2,578,387
Total primary government expenses$15,495,448 $16,267,151 $18,489,468
Program Revenues
Governmental activities:
Charges for services:
General government$47,231 $55,081 $75,014
Public safety356,567 329,175 445,091
Parks, recreation, and facilities596,729 628,309 769,870
Community development360,882 484,959 440,610
Streets and roads195,412 194,754 237,423
Sewer611,157 557,833 634,462
Operating grants and contributions2,301,994 1,223,544 2,148,549
Capital grants and contributions1,185,129 1,100,009 1,402,786
Total governmental activities program revenues5,655,101 4,573,664 6,153,805
Business ‐type activities:
Charges for services:
Water1,793,287 1,820,753 1,880,728
Lopez1,633,283 1,764,929 1,994,492
Operating grants and contributions
Capital grants and contributions
Total business ‐type activities program revenues3,426,570 3,585,682 3,875,220
Total primary government program revenues$9,081,671 $8,159,346 $10,029,025
Net revenue (expense)
Governmental activities$(7,446,193) $(9,095,522) $(9,757,276)
Business ‐type activities1,032,416 987,717 1,296,833
Total primary government net expense$(6,413,777) $(8,107,805) $(8,460,443)
Fiscal Year
200320042005
E ‐4
$4,855,828 $4,164,825 $4,240,653 $4,216,918 $4,543,500 $4,786,979
6,792,337 7,378,307 7,521,516 8,090,323 7,290,559 5,795,069
1,879,511 1,895,030 1,916,258 1,944,018 1,679,563 1,590,053
659,125 931,635 861,279 680,610 983,321 3,224,094
1,316,248 2,706,738 3,341,886 2,447,914 3,044,033 1,835,373
728,300 761,133 759,438 738,149 858,806 798,287
74,092 163,460 457,271 460,671 462,435 499,825
16,305,441 18,001,128 19,098,301 18,578,603 18,862,217 18,529,680
1,150,492 1,159,014 1,236,610 1,324,507 1,732,341 2,168,569
1,681,126 2,176,061 2,363,814 2,834,416 2,772,836 2,592,965
2,831,618 3,335,075 3,600,424 4,158,923 4,505,177 4,761,534
$19,137,059 $21,336,203 $22,698,725 $22,737,526 $23,367,394 $23,291,214
$76,833 $71,054 $614,920 $142,082 $139,111 $50,355
343,219 428,343 443,302 445,198 384,106 188,407
907,846 850,546 627,707 695,501 675,828 694,090
539,819 337,350 288,672 218,197 292,480 498,223
116,877 109,733 180,317 6,747 52,290 96,409
724,196 684,026 760,618 767,717 788,165 828,302
1,711,173 1,917,767 2,325,946 1,772,492 2,244,546 2,239,107
807,813 673,932 664,433 577,876 888,102 1,751,549
5,227,776 5,072,751 5,905,915 4,625,810 5,464,628 6,346,442
2,192,318 2,192,075 2,336,545 2,284,127 2,508,136 2,794,504
2,350,934 2,667,329 3,395,713 3,673,952 3,265,221 2,895,218
4,187
1,792 135,071
4,545,044 4,859,404 5,732,258 5,958,079 5,773,357 5,828,980
$9,772,820 $9,932,155 $11,638,173 $10,583,889 $11,237,985 $12,175,422
$(11,077,665) $(12,928,377) $(13,192,386) $(13,952,793) $(13,397,589) $(12,183,238)
1,713,426 1,524,329 2,131,834 1,799,156 1,268,180 1,067,446
$(9,364,239) $(11,404,048) $(11,060,552) $(12,153,637) $(12,129,409) $(11,115,792)
Fiscal Year
200620072008200920102011
E ‐5
CITY OF ARROYO GRANDE
CHANGES IN NET ASSETS
Last Nine Fiscal Years
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes$2,770,276 $3,122,123 $3,441,330
Sales and use taxes3,201,889 3,315,874 3,460,478
Transient lodging taxes369,956 399,794 390,670
Franchise taxes408,636 515,406 526,792
Business license tax61,014 67,887 75,901
Debt service 238,048
Investment income329,054 213,420 347,595
Other revenue628,384 1,903,644 1,358,260
Gain on sale of capital assets759,681
Transfers847,934 1,526,273 716,875
Total governmental activities 9,376,824 11,064,421 10,555,949
Business ‐type activities:
Investment income92,889 60,506 84,088
Transfers(847,934) (1,526,273) (716,875)
Total business ‐type activities revenues(755,045) (1,465,767) (632,787)
Total primary government $8,621,779 $9,598,654 $9,923,162
Change in Net Assets
Governmental activities$1,930,631 $1,968,899 $798,673
Business ‐type activities277,371 (478,050) 664,046
Total primary government $2,208,002 $1,490,849 $1,462,719
Source: City of Arroyo Grande Annual Financial Report
E ‐6
200320042005
TheCityofArroyoGrandeimplementedGASBStatementNo.34forthefiscalyearendedJune30,2003.Informationprior
to the implementation of GASB Statement No. 34 is not available.
Fiscal Year
$4,572,642 $5,240,507 $5,295,263 $5,586,348 $5,471,651 $5,379,176
3,674,807 3,800,667 5,280,813 4,658,777 4,252,903 4,781,774
434,986 449,474 437,164 389,067 348,014 390,472
566,000 588,841 621,987 639,776 604,325 539,673
79,701 81,821 80,990 79,111 80,283 79,663
476,461 701,918 893,125 589,734 337,724 389,292
1,294,708 1,236,158 1,363,029 1,285,769 606,653 479,514
1,103,520 1,051,376 1,341,156 1,392,494 1,492,439 1,888,403
12,202,825 13,150,762 15,313,527 14,621,076 13,193,992 13,927,967
116,742 190,383 199,398 112,543 35,847 30,483
(1,103,520) (1,051,376) (1,341,156) (1,392,494) (1,492,439) (1,888,403)
(986,778) (860,993) (1,141,758) (1,279,951) (1,456,592) (1,857,920)
$11,216,047 $12,289,769 $14,171,769 $13,341,125 $11,737,400 $12,070,047
$1,125,160 $222,385 $2,121,141 $668,283 $(203,597) $1,744,729
726,648 663,336 990,076 519,205 (188,412) (790,474)
$1,851,808 $885,721 $3,111,217 $1,187,488 $(392,009) $954,255
E ‐7
Fiscal Year
200620072008200920102011
CITY OF ARROYO GRANDE
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
General Fund
Reserved$8,758 $5,654 $525,547 $24,468
Unreserved2,489,824 2,993,021 1,944,963 2,643,229
Nonspendable
Assigned
Unassigned
Total general fund$2,498,582 $2,998,675 $2,470,510 $2,667,697
All Other Governmental Funds
Reserved$812,722 $3,079,549 $1,741,301 $1,104,604
Unreserved, reported in:
Special revenue funds6,105,327 6,747,271 7,317,092 8,009,074
Debt service funds(1,591,345) (1,687,649) (1,960,331) (1,865,635)
Nonspendable
Restricted
Assigned
Unassigned
Total all other governmental funds$5,326,704 $8,139,171 $7,098,062 $7,248,043
Source: City of Arroyo Grande Annual Financial Report
E ‐8
2002
Fiscal Year
TheCityofArroyoGrandeimplementedGASBStatementNo.54forthefiscalyearendedJune30,2011.
Information prior to the implementation of GASB Statement No. 54 is not available.
200320042005
$1,108,791 $778,455 $794,186 $725,546 $679,140 $‐
1,250,287 1,116,751 2,272,789 2,726,035 4,321,286
595,268
350,000
4,256,808
$2,359,078 $1,895,206 $3,066,975 $3,451,581 $5,000,426 $5,202,076
$2,248,940 $2,641,882 $2,814,009 $2,919,758 $2,896,080 $‐
7,566,466 10,984,987 11,656,498 11,367,715 10,181,391
(2,616,734) 397,041 528,838 530,905 (95,156)
73,782
8,513,465
3,529,431
83,163
$7,198,672 $14,023,910 $14,999,345 $14,818,378 $12,982,315 $12,199,841
E ‐9
2011
Fiscal Year
20062007200820092010
CITY OF ARROYO GRANDE
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Revenues
Taxes and assessments$7,224,464 $7,142,416 $8,212,366 $8,609,480
Licenses and permits436,768 326,938 288,931 316,499
Fines and penalties127,185 147,311 138,372 128,181
Use of money and property354,276 329,057 213,420 347,595
Intergovernmental revenues2,577,439 2,987,737 2,683,961 3,078,703
Charges for services2,226,225 1,862,471 2,124,631 2,704,696
Other revenue409,295 628,384 450,131 789,668
Total revenues13,355,652 13,424,314 14,111,812 15,974,822
Expenditures
Current:
General government2,038,481 2,015,056 2,214,920 3,128,497
Public safety4,477,364 4,811,438 5,500,539 6,056,680
Parks and recreation1,218,486 1,465,179 1,592,374 1,675,641
Community development703,382 771,434 966,162 1,092,513
Streets and road1,485,993 1,730,009 1,766,639 1,850,713
Sewer259,348 190,464 228,754 222,150
Capital outlay1,562,625 2,524,327 4,841,957 4,259,607
Debt service:
Principal30,661 189,628 24,627 90,497
Interest and fiscal agent fees6,789 19,240 71,387 74,772
Total expenditures11,783,129 13,716,775 17,207,359 18,451,070
Excess of revenue over (under)
expenditures1,572,523 (292,461) (3,095,547) (2,476,248)
Other Financing Sources (Uses)
Cost of issuance(67,390)
Proceeds from issuance of debt113,270 2,029,870
Proceeds from sale of capital assets794,607
Transfer in2,014,784 1,931,284 4,907,167 5,036,622
Transfer out(1,298,249) (1,083,350) (3,380,894) (2,213,206)
Total other financing sources
(uses)829,805 3,605,021 1,526,273 2,823,416
Net Change in Fund Balances $2,402,328 $3,312,560 $(1,569,274) $347,168
Debt service as a percentage of non ‐
capital expenditures0.37%1.90%0.78%1.18%
Source: City of Arroyo Grande Annual Financial Report
E ‐10
Fiscal Year
2002200320042005
$11,004,014 $12,023,398 $13,266,750 $12,703,434 $12,156,062 $12,745,313
321,112 251,710 197,526 175,202 207,801 194,743
119,993 120,693 116,999 104,320 77,145 66,724
476,461 701,918 893,126 589,738 337,724 389,292
1,516,844 1,388,559 2,230,140 1,175,605 2,053,958 2,755,945
2,353,582 2,177,104 2,320,190 1,987,517 2,105,522 2,095,895
536,868 508,756 853,555 633,781 227,969 138,094
16,328,874 17,172,138 19,878,286 17,369,597 17,166,181 18,386,006
4,792,777 4,067,238 4,166,466 4,075,286 4,432,039 4,920,805
6,500,678 7,040,983 7,194,758 7,035,372 6,965,253 5,248,185
1,836,832 1,846,854 1,865,175 1,892,237 1,631,204 1,537,714
654,154 929,196 858,840 682,609 983,321 1,592,094
1,113,395 1,157,235 1,114,181 1,110,200 1,162,452 1,090,471
228,243 261,076 248,806 224,587 267,933 273,818
2,497,186 2,333,001 3,214,579 3,379,483 2,855,174 7,667,405
96,396 97,329 84,024 194,775 199,775 1,135,709
70,723 102,185 382,013 448,702 448,835 491,151
17,790,384 17,835,097 19,128,842 19,043,251 18,945,986 23,957,352
(1,461,510) (662,959) 749,444 (1,673,654) (1,779,805) (5,571,346)
(312,051)
6,285,000 484,799 2,253,119
849,000
3,687,453 3,440,859 4,752,885 5,116,137 5,825,184 6,239,127
(2,583,933) (2,389,483) (3,355,125) (3,723,643) (4,332,745) (4,350,724)
1,103,520 7,024,325 1,397,760 1,877,293 1,492,439 4,990,522
$(357,990) $6,361,366 $2,147,204 $203,639 $(287,366) $(580,824)
1.10%1.30%3.02%4.28%4.20%11.09%
E ‐11
20102011
Fiscal Year
2006200720082009
CITY OF ARROYO GRANDE
GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE
Last Ten Fiscal Years
20022,421,430 $ 3,069,234 $ 347,564 $ 55,158 $ 443,004 $ 121,956 $ 6,458,346 $
20032,640,126 3,201,889 369,956 61,014 408,636 130,150 6,811,771
20043,122,124 3,315,874 399,794 67,887 515,406 128,704 7,549,789
20053,534,079 3,460,478 390,670 75,901 526,792 150,563 8,138,483
20064,192,636 3,674,807 434,986 79,701 566,000 151,874 9,100,004
20075,240,507 3,800,667 449,474 81,821 588,841 109,182 10,270,492
20085,201,904 5,280,813 437,164 80,990 621,987 93,359 11,716,217
20095,518,824 4,658,777 389,067 79,111 639,776 67,524 11,353,079
20105,408,201 4,252,903 348,014 80,283 604,325 63,450 10,757,176
20115,313,261 4,781,774 390,472 79,663 539,673 65,915 11,170,758
Source: City of Arroyo Grande Annual Financial Report
E ‐12
Includes all governmental fund types (i.e. general fund, special revenue funds, capital project funds, and debt service funds).
Fiscal
Year Total
Property
Taxes
Sales & Use
Tax
Transient
Occupancy
Tax
Business
Licenses
Franchise
Revenues
Property Tax
Transfer
CITY OF ARROYO GRANDE
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
Last Ten Fiscal Years
2002 100%
20031,394,050,860 36,165,293 1,430,216,153 26,967,524 1,403,248,629 100%
20041,544,938,583 39,202,838 1,584,141,421 27,451,140 1,556,690,281 100%
20051,705,009,381 37,532,227 1,742,541,608 27,317,728 1,715,223,880 100%
20061,854,194,694 45,169,815 1,899,364,509 26,909,137 1,872,455,372 100%
20072,051,896,464 41,436,924 2,093,333,388 26,740,180 2,066,593,208 100%
20082,196,091,386 41,592,228 2,237,683,614 26,977,685 2,210,705,929 100%
20092,291,770,614 45,964,735 2,337,735,349 27,218,700 2,310,516,649 100%
20102,245,531,517 44,455,451 2,289,986,968 27,131,700 2,262,855,268 100%
20112,242,734,120 41,864,014 2,284,598,134 26,925,209 2,257,672,925 100%
Source: San Luis Obispo County Auditor ‐Controller
Assessed
to
Property
Forcomparisonpurposes,grossassessedvaluationsincludehomeownersandotherexemptions.Althoughtheseexemptions
reducepropertytaxcollections,therevenuelossisreimbursedbytheStateofCalifornia.Assuch,grossassessedvaluationisthe
revenue base used in establishing property tax ‐related revenues.
Fiscal Year
Secured Gross
Assessed Value
Unsecured Gross
Assessed Value
Total Gross
Assessed ValueExemptions
Net Taxable
Value
E ‐13
1,267,045,775 $ 1,276,023,797 $ 26,557,127 $ 1,302,580,924 $ 35,535,149 $
CITY OF ARROYO GRANDE
PROPERTY TAX RATES ‐ DIRECT AND OVERLAPPING GOVERNMENTS
Last Ten Fiscal Years
20021.000000.002300.016700.019800.000001.03880
20031.000000.002300.013800.019100.000001.03520
20041.000000.002300.012110.015190.013041.04264
20051.000000.002230.032450.013840.013041.06156
20061.000000.002220.020180.011090.011001.04449
20071.000000.002210.019340.010170.009641.04136
20081.000000.002200.028540.009670.008911.04932
20091.000000.002200.028540.009670.008201.04861
20101.000000.002200.028540.009670.008171.04858
20111.000000.002900.029140.009720.008171.04993
Source: HDL Coren & Cone, San Luis Obispo County Assessor
E ‐14
ValuationsareestablishedbytheCountyAssessoroftheCountyofSanLuisObispo,exceptforpropertyownedbyprivate
utilitycompanies,whichisvaluedbytheStateofCalifornia.UndertheprovisionsofArticleXIIAoftheStateConstitution
(Proposition13adoptedbythevotersonJune6,1978)propertiesareassessedat100%offullvalueandsubsequently
increasedatamaximumrateof2%peryear.TheCountycollectspropertytaxesanddistributestheappropriateamount
toeachcity.Each$1.00ofpropertytaxisdistributedtovariouslocalgovernmentagenciesbaseduponfixedallocation
factors.
San Luis
Obispo
County Tax
Rate
State Water
Project Tax
Unified/High
Bond Lease
Lopez Dam
BondsFire Bonds
Total Tax
Rate Fiscal Year
THIS PAGE IS INTENTIONALLY LEFT BLANK
CITY OF ARROYO GRANDE
PRINCIPAL PROPERTY TAXPAYERS
Current Fiscal Year and Nine Fiscal Years Ago
Rank
ESJ Centers LLC$41,891,408 11.83%
MSB Properties Inc.15,465,187 20.68%
Sunrise Terrace Associates11,096,546 30.49%
PEDP Inc10,275,582 40.45%
Manfred G Freutel Trust9,248,922 50.40%
In ‐N ‐Out Burgers7,553,772 60.33%
Deblauw Properties LLC6,733,706 70.29%
Ray B. Bunnell6,731,196 80.29%
NKT Commercial LLC6,636,738 90.29%
Orradre Ranch A California LP5,941,343 100.26%
Signature Real Estate Equities
Castlerock Development Ca.
Yates Family Partnership LP
Charter Communications Prop.
Juanita D. McMullen Trust
Casa Grande Joint Venture
Totals$121,574,400 5.31%
Source: HDL Coren & Cone, San Luis Obispo County Assessor
Recreational
Residential
Commercial
Unsecured
Percentage of
Total Taxable
Assessed
Valuation
Assessed
Valuation
2010 ‐11
E ‐16
Taxpayer
Commercial
Commercial
Residential
Commercial
Type of Business
Institutional
Commercial
Residential
Recreational
Vacant
Commercial
Unknown
Commercial
Rank
$47,341,495 13.63%
4,302,045 90.33%
9,281,648 20.71%
7,970,476 30.61%
6,253,782 40.48%
6,018,080 50.46%
5,089,571 60.39%
4,683,095 70.36%
4,579,719 80.35%
4,262,325 100.33%
$99,782,236 7.65%
2001 ‐02
Percentage of
Total Taxable
Assessed
Valuation
Assessed
Valuation
E ‐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
20022,114,971 $ 2,114,971 $ 100%**
20032,318,552 2,318,552 100%**
20042,582,790 2,582,790 100%**
20052,852,686 2,852,686 100%**
20063,120,935 3,120,935 100%**
20073,452,422 3,452,422 100%**
20083,696,974 3,696,974 100%**
20093,855,626 3,855,626 100%**
20103,782,238 3,782,238 100%**
20113,777,302 3,777,302 100%**
Source: San Luis Obispo County Auditor ‐Controller
TheCityhaselectedtheTeeterPlanmethodofpropertytaxcollection,wherebytheCountyremits100%oftaxeslevied
and pursues collection and retains any delinquent taxes and related penalties and interest.
E ‐18
THIS PAGE IS INTENTIONALLY LEFT BLANK
CITY OF ARROYO GRANDE
TAXABLE SALES BY CATEGORY
Last Ten Calendar Years
(in thousands of dollars)
Apparel Stores$8,419 $9,114 $9,290 $9,872
General Merchandise53,393 56,500 57,073 58,949
Food Stores16,272 17,226 18,306 18,304
Eating and Drinking Places21,434 24,013 25,829 27,101
Building Materials23,830 22,950 24,979 27,107
Auto Dealers and Supplies51,727 51,684 48,904 48,959
Service Stations29,553 27,561 32,041 39,591
Other Retail Stores37,772 42,504 45,544 46,072
All Other Outlets53,228 53,950 54,289 62,627
Total$295,628 $305,502 $316,255 $338,582
Source: State of California Board of Equalization and the Hdl Companies.
E ‐20
Duetoconfidentialityissues,thenamesofthetenlargestrevenuepayersarenotavailable.Thecategoriespresentedare
intended to provide alternative information regarding the sources of the City's revenue.
2001200220032004
$10,203 $10,162 $10,190 $9,953 $10,408 $10,260
60,052 61,516 61,639 62,296 63,243 62,156
19,960 21,077 18,561 17,909 16,850 15,439
25,521 26,827 28,733 30,775 29,777 29,836
29,713 27,485 24,672 22,119 18,727 18,222
51,966 44,222 37,539 26,705 22,035 24,958
43,146 43,621 44,033 48,632 34,574 36,655
48,600 46,049 45,897 40,486 39,112 38,885
66,935 69,014 59,353 50,478 43,993 47,410
$356,096 $349,973 $330,617 $309,353 $278,719 $283,821
E ‐21
20092010 2005200620072008
CITY OF ARROYO GRANDE
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Fiscal Year
2002$‐$‐$177,630 $‐$‐
20031,900,000 117,873
20041,900,000 93,247
20051,835,000 67,750
20061,765,000 41,353
20071,695,000 6,285,000 14,024
20081,625,000 6,285,000
20091,550,000 6,275,000 375,023
20101,475,000 6,265,000 260,396
20111,395,000 6,165,000 312,405 1,327,512 27,182
Source: City of Arroyo Grande Annual Financial Report
E ‐22
Governmental Activities
General
Obligation
Bonds
Tax Allocation
BondsCapital LeasesLoan Payable
Reimburse ‐
ment
Agreement
$656,257 $‐$833,887 0.07%51.28
578,630 41,415 2,637,918 0.19%159.65
496,164 32,761 2,522,172 0.16%152.10
408,557 23,803 2,335,110 0.14%141.21
315,488 14,529 2,136,370 0.11%128.70
216,617 4,927 8,215,568 0.36%490.22
111,582 8,021,582 0.34%470.86
8,200,023 0.37%480.10
8,000,396 0.35%466.63
9,227,099 0.40%531.36
E ‐23
Outstanding
Debt per
Capita Safe Water LoanCapital Leases
Total Primary
Government
Business ‐Type Activities
Percent of
Estimated
Actual Value
of Taxable
Property
CITY OF ARROYO GRANDE
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
Last Ten Fiscal Years
2002$‐$‐$‐$1,276,023,797 0.00%16,260 ‐
20031,900,000 1,836,100 63,900 1,403,248,629 0.00%16,523 3.87
20041,900,000 456,260 1,443,740 1,556,690,281 0.09%16,582 87.07
20051,835,000 229,673 1,605,327 1,715,223,880 0.09%16,537 97.07
20061,765,000 323,029 1,441,971 1,872,455,372 0.08%16,599 86.87
20071,695,000 415,430 1,279,570 2,066,593,208 0.06%16,759 76.35
20081,625,000 499,891 1,125,109 2,210,705,929 0.05%17,036 66.04
20091,550,000 568,811 981,189 2,310,516,649 0.04%17,080 57.45
20101,475,000 625,638 849,362 2,289,986,968 0.04%17,145 49.54
20111,395,000 677,881 717,119 2,284,598,134 0.03%17,365 41.30
Source: San Luis Obispo County Tax Assessor Rolls ‐ California Department of Finance
Fire General Obligation Bond
Fiscal
Year
Estimated Actual
Taxable Value of
Property
General
Bonded Debt
Less: Amount
Available in
Debt Service
Funds
E ‐24
Net General
Bonded Debt
Ratio of
Net
Bonded
Debt to
Assessed Population
Net
Bonded
Debt Per
Capita
CITY OF ARROYO GRANDE
DIRECT AND OVERLAPPING DEBT
June 30, 2011
$10,850,000 32.743%$3,552,616
Lucia Mar Unified School District37,097,789 20.198%7,493,011
City of Arroyo Grande1,395,000 100.000%1,395,000
San Luis Obispo County Certificates of Participation37,830,000 5.568%2,106,374
San Luis Obispo Pension Obligations122,689,398 5.568%6,831,346
39,210,000 5.547%2,174,979
10,245,000 20.198%2,069,285
Total Assessed Valuations$259,317,187 $25,622,611
Ratio to Assessed Valuation:
Direct Debt0.06%
Total Direct and Overlapping Tax and Assessment Debt0.54%
Combined Total Debt1.20%
Assessed Valuation Calculation:
Net Taxable Value$2,284,598,134
Less: Redevelopment Agency Tax Increment(146,712,278)
Total Assessed Valuation$2,137,885,856
Source: California Municipal Statistics
Percentage
Applicable to
the City
Amount Applicable
to the City
E ‐25
Jurisdiction
San Luis Obispo County Flood Control and Water
Conservation District, Zone No. 3
San Luis Obispo Community College District Certificates of
Participation
Lucia Mar Unified School District Certificates of
Participation
Net Debt
Outstanding
CITY OF ARROYO GRANDE
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
Debt Limit$48,846,785 $53,633,106 $59,405,303 $65,345,348
Total net debt applicable to limit
Legal debt margin$48,846,785 $53,633,106 $59,405,303 $65,345,348
0%0%0%0%
Source: San Luis Obispo County
Fiscal Year
2002200320042005
E ‐26
Totalnetdebtapplicabletothelimitasa
percentage of debt limit
$71,226,169 $70,520,002 $76,003,136 $79,840,076 $79,151,950 $76,912,430
$71,226,169 $70,520,002 $76,003,136 $79,840,076 $79,151,950 $76,912,430
0%10%9%9%9%10%
Legal Debt Margin Calculation for Fiscal Year 2011
Assessed value $2,284,598,134
Debt limit ‐ 3.75% of total assessed value85,672,430
Amount of debt applicable to limit(8,760,000)
Legal debt margin $76,912,430
Fiscal Year
2006200720082009
E ‐27
20102011
Section43605ofCaliforniaGovernmentCodeestablishesalegaldebtlimitof15%ofgrossassessedvaluationfor
municipalities.However,thisprovisionwasenactedwhenassessedvaluationwasestablishedbasedon25%ofmarket
value.EffectivewithFY1981 ‐82,taxablepropertyisassessedat100%ofmarketvalue.Althoughthedebtlimitprovision
hasnotbeenamendedbytheStatesincethischange,thepercentagehasbeenproportionatelymodifiedto3.75%forthe
purposes of this calculation for consistency with the original intent of the State’s limit.
CITY OF ARROYO GRANDE
DEMOGRAPHIC STATISTICS
Last Ten Fiscal Years
Fiscal Year(1)(2)(3)(3)(4)
200216,260 25,111 $ 1.4%*4.1%
200316,523 25,957 2.3%*4.1%
200416,582 27,720 2.0%*4.0%
200516,537 29,420 1.7%10,971 4.4%
200616,599 31,945 2.3%10,890 4.0%
200716,759 33,624 1.0%10,960 4.4%
200817,036 34,012 1.6%10,900 5.9%
200917,080 32,796 1.1%10,820 9.2%
201017,145 31,946 *10,772 10.4%
201117,365 **10,546 9.4%
* ‐ Data not available
Source:
(1) State of California Department of Finance
(2) HDL Coren & Cone
(3) Lucia Mar Unified School District
(4) State of California Employment Development Department
High School
Drop Out Rate
School District
Enrollment
E ‐28
Population Median Income
Unemployment
Rate
CITY OF ARROYO GRANDE
PRINCIPAL EMPLOYERS
Current Fiscal Year and Nine Years Ago
RankRank
Lucia Mar Unified School District900111%***
Arroyo Grande Community Hospital38025%***
Wal ‐Mart22333%***
City of Arroyo Grande16542%***
Albertson's13052%***
K ‐Mart10061%***
Chili's7171%***
Trader Joes6381%***
Applebees6291%***
Regal Cinemas50101%***
* ‐ Data not available
Source:
University of California, Santa Barbara Economic Forecast Project
City of Arroyo Grande Business License records
EmployerEmployeesEmployees
E ‐29
2010 ‐112001 ‐02
Percentage of
Total City
Employment
Percentage of
Total City
Employment
CITY OF ARROYO GRANDE
FULL ‐TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
Last Ten Fiscal Years
2002200320042005200620072008200920102011
General government12.0 13.0 12.0 11.0 10.4 10.5 10.5 10.5 10.5 10.5
Police36.0 35.0 36.0 36.0 36.0 36.0 36.0 35.0 34.0 34.0
Fire and building8.0 7.0 8.0 10.0 11.0 11.0 11.0 10.0 10.0
Parks and recreation14.0 14.0 14.0 15.0 15.0 16.0 16.0 15.0 11.0 11.0
Community development6.0 6.0 6.0 6.0 5.6 6.0 6.0 4.5 4.5 5.5
Streets and roads16.3 15.0 16.3 15.3 15.3 15.3 15.3 6.0 4.0 4.0
Sewer2.3 2.0 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.4
Water5.4 5.0 5.4 6.4 6.4 6.4 6.4 6.4 5.7 5.6
Total100.0 97.0 100.0 102.0 102.0 103.5 103.5 89.7 82.0 73.0
Source: City of Arroyo Grande budget records
Fiscal Year
Function
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CITY OF ARROYO GRANDE
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
20022003200420052006
General Government
Number of business licenses1,320 *1,320 *1,935
Number of minutes transcribed30 36 33 36 31
Number of agenda items processed300 280 312 320 297
Number of recruitments29 29 29 29 29
Police
Number of officers26 26 26 27 27
Incidents recorded16,559 17,194 16,582 17,300 14,448
Major crimes373 395 437 480 510
Traffic collisions250 230 280 300 442
Traffic enforcement activities6,922 7,064 4,957 6,000 4,149
Arrests772 788 696 780 584
Engineering/Streets
Miles of streets maintained65 65 65 70 70
Miles of sewer maintained55 62 63 64 65
Number of vehicles maintained86 86 87 88 89
Pieces of equipment maintained385 385 385 386 385
In ‐house capital projects constructed3 6 3 2 3
Capital projects constructed8 9 6 8 6
CIP studies initiated2 2 2 *2
CIP studies completed4 3 1 1 1
Plan and map checks completed100 100 100 28 13
Street service request360 480 500 510 550
Community Development
Number of planning commission agendas18 23 29 29 26
Number of planning commission staff reports60 69 79 80 80
Number of ARC agendas12 17 **15
Building permits issued626 414 509 540 550
Building inspections conducted3,400 4,000 4,435 4,500 3,400
Parks and Recreation
Number of street trees maintained1,340 1,350 1,360 1,000 1,060
Registrations11,500 11,650 11,500 11,650 11,500
Participants in City recreation sports2,914 2,968 2,870 3,090 3,136
Number of programs/events/classes72 73 72 73 72
Number of teams 272 279 272 281 294
Children in Motion enrollment1,050 1,100 1,050 1,100 1,050
Water
Water customer accounts6,035 6,035 6,053 6,117 6,208
Acre feet of water consumed3,353 3,458 3,490 3,204 3,037
Miles of water lines maintained65 65 66 67 68
* ‐ Data not available
Source: City of Arroyo Grande budget records
Fiscal Year
E ‐32
20072008200920102011
1,900 1,713 1,705 1,622 1,654
34 24 35 30 44
320 302 275 297 295
33 51 31 19 18
27 27 27 26 26
12,456 12,518 14,150 17,072 16,145
500 498 395 478 444
479 325 450 429 432
3,029 4,646 4,616 4,863 4,013
697 609 364 631 605
70 67 67 67 67
66 66 66 66 66
90 70 90 89 90
389 385 389 385 389
3 3 3 3 2
7 6 7 6 10
*2 ‐ 2 4
1 1 1 1 2
8 8 8 13 12
560 560 560 550 560
20 17 20 18 19
58 37 58 36 43
13 12 13 12 13
560 530 540 530 421
4,500 3,508 4,500 3,400 3,019
1,091 1,141 1,200 1,200 1,200
11,650 11,000 11,650 11,500 11,650
3,132 3,144 2,200 2,290 2,200
73 114 91 72 91
301 306 281 255 281
1,050 1,200 1,250 1,200 800
6,422 6,449 6,457 6,304 6,312
3,245 3,343 3,177 2,918 2,746
69 69 69 69 69
Fiscal Year
E ‐33
CITY OF ARROYO GRANDE
CAPITAL ASSET STATISTICS BY FUNCTION
Last Ten Fiscal Years
2002200320042005200620072008200920102011
Police
Stations1 1 1 1 1 1 1 1 1 1
Patrol units10 10 10 10 10 10 10 10 10 10
Motorcycles2 2 2 2 2 2 2 2 2 2
Engineering/Streets
Streets (miles)65 65 65 70 70 70 70 70 70 70
Parks & Recreation
Parks17 18 18 18 18 19 19 19 19 19
Acreage of parks142.3 150.3 150.7 150.9 150.9 151.6 151.6 151.6 151.6 151.6
Community centers2 2 2 2 2 2 2 2 2 2
Water
Water mains (miles)68 68 68 68 68 68 68 69 69 69
Water capacity**5.0 5.0 5.0 5.0 6.5 6.5 6.5 6.5 6.5 6.5
** ‐ In millions of gallons
Source: CBIZ GASB Statement No. 34 Infrastructure Inventory and Valuation City records
Fiscal Year
Function
E ‐34