CC 2020-05-26_08c Acceptance of CAFR 2019
MEMORANDUM
TO: CITY COUNCIL
FROM: MICHAEL STEVENS, ADMINISTRATIVE SERVICES DIRECTOR
BY: NICOLE VALENTINE, ACCOUNTING MANAGER
SUBJECT: CONSIDERATION OF ACCEPTANCE OF THE COMPREHENSIVE
ANNUAL FINANCIAL REPORT
DATE: MAY 26, 2020
SUMMARY OF ACTION:
Receive and file the Comprehensive Annual Financial Report (CAFR) for the fiscal year
ended June 30, 2019.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
Preparation of the City’s financial reports requires approximately 200 hours per year of
personnel resources and auditing services costing approximately $26,600 annually.
RECOMMENDATION:
It is recommended the City Council receive and file the Comprehensive Annual Financial
Report (CAFR) for the fiscal year ended June 30, 2019.
BACKGROUND:
On April 22, 2014, the City Council awarded an agreement for consultant services to
Moss, Levy & Hartzheim, LLP, to audit the City’s financial records for the fiscal years
ended June 30, 2014, through June 30, 2019. 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. Typically, the
audited financial statements would be presented to the City Council by December 31;
however, due to other workload priorities and department vacancies, the preparation of
the CAFR was delayed this year.
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. GAAP encourages
government agencies to present this information within the Comprehensive Annual
Financial Report (CAFR).
Item 8.c. - Page 1
CITY COUNCIL
CONSIDERATION OF ACCEPTANCE OF THE COMPREHENSIVE ANNUAL
FINANCIAL
MAY 26, 2020
PAGE 2
The CAFR is a more detailed financial report beyond basic financial statements. It is made
up of three sections:
• The introductory section: provides general information of the City which includes
the letter of transmittal, list of principal officials, and organizational chart.
• The financial section: provides the overall financial information of the City which
includes the report of the independent auditor, management’s discussion and
analysis (a narrative of the City’s finances), the basic financial statements, required
supplementary information, and other supplementary schedules and statements.
• The statistical section: provides a broad range of operational, economic, and
historical data that provides a context for assessing the City’s economic condition.
This section provides information about the City’s general financial trends, revenue
capacity, debt capacity, economic and demographic trends, and operating
information.
The auditors conducted testing of internal controls in November 2019 and February 2020.
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 testing, there were no internal control issues/events noted.
In November 2019, an audit was conducted on the net position of the City at June 30,
2019. 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’s net position. The result of this review is the City’s CAFR.
The City’s CAFR is in compliance with newly effective Government Accounting Standards
Board (GASB) pronouncements, as detailed in the Notes to the Financial Statements.
The following outlines the financial highlights for the year:
The City’s combined net position at June 30, 2019, increased by 2.45% from $83.6
million to $85.7 million. This overall increase is due to an increase in governmental
activities. The increase in governmental activities is largely due to changes in the
net pension liability and other post-employment benefits (OPEB) liability.
Overall City-wide revenues from all governmental and business-type activities
increased by $976,000 or 6.2%. The City’s significant source of revenue is derived
by property and sales taxes; these taxes have increased in the past several fiscal
years. During the 2018-19 fiscal year, these taxes generated $13 million, or 78%
of total revenue.
Item 8.c. - Page 2
CITY COUNCIL
CONSIDERATION OF ACCEPTANCE OF THE COMPREHENSIVE ANNUAL
FINANCIAL
MAY 26, 2020
PAGE 3
The City’s total expense of all programs in the fiscal year 2018-19 decreased by
about $48,000.
The City was able to reduce its CalPERS unfunded retirement liability in FY 2018-
19 by prepaying $3 million to reduce future pension costs.
The General Fund, which includes the Local Sales Tax Fund, reported an
unassigned fund balance of $7.6 million at the end of FY 2018-19; a 6.6% increase
over the end of FY 2017-18. The unassigned fund balance represents 37% of total
expenditures, which exceeds the City’s reserve policy goal of 20%.
The table below highlights the Statement of Revenue, Expenditures, and Changes in
Fund Balances for the General Fund for FY 2018-19.
Auditors may issue three different types of opinions at the conclusion of an audit; an
unmodified, modified, or adverse opinion. An unmodified opinion assures the reader that
the information presented in the CAFR fairly represents the financial position of the City.
A modified opinion states that the information is fairly presented except for a particular
issue. An adverse opinion indicates that the agency has major accounting and/or internal
control issues and no reliance may be placed on the financial statements.
The Administrative Services Department staff is proud to report that for the fiscal year
ended June 30, 2019, the City of Arroyo Grande received an unmodified opinion from the
City’s auditors.
General Fund
Local Sales
Tax Fund Total
Beginning Fund Balance 7/1/18 8,312,895$ 2,004,236$ 10,317,131$
Revenues 16,037,404 2,339,670 18,377,074
Expenditures (19,573,279) (851,747) (20,425,026)
Other Financing Sources/(Uses)1,581,564 - 1,581,564
Net Change in Fund Balance (1,954,311)$ 1,487,923$ (466,388)$
Fund Balance:
Nonspendable 54,670$ -$ 54,670$
Assigned for capital projects - 1,582,507 1,582,507
Assigned for post employment benefits 659,046 - 659,046
Unassigned 5,644,868 1,909,652 7,554,520
Ending Fund Balance, 6/30/19 6,358,584$ 3,492,159$ 9,850,743$
Item 8.c. - Page 3
CITY COUNCIL
CONSIDERATION OF ACCEPTANCE OF THE COMPREHENSIVE ANNUAL
FINANCIAL
MAY 26, 2020
PAGE 4
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Receive and file the Comprehensive Annual Financial Report; or
2. Provide other direction to staff.
ADVANTAGES:
By receiving and filing the Comprehensive Annual Financial Report, the City will be
accepting the auditors’ unqualified opinion. As mentioned above, an unqualified opinion
assures the reader that the information presented in the CAFR fairly represents the
financial position of the City.
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 at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
ATTACHMENTS:
1) Comprehensive Annual Financial Report and Independent Auditors’ Report on
Internal Control over Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards (on file in the Administrative Services and
Legislative and Information Services Departments for public review, as well as on
the City’s website at www.arroyogrande.org)
Item 8.c. - Page 4
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDING JUNE 30, 2019
CITY OF ARROYO GRANDE,
CALIFORNIA
PREPARED BY THE DEPARTMENT OF
ADMINISTRATIVE SERVICES
ATTACHMENT 1
Item 8.c. - Page 5
City of Arroyo Grande
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Table of Contents
For the Fiscal Year Ended June 30, 2019
i
INTRODUCTORY SECTION
Letter of Transmittal ................................................................................................................................................................ A-1
Directory of Officials ................................................................................................................................................................ A-5
Organization of City Government ............................................................................................................................................ A-6
FINANCIAL SECTION
Independent Auditors’ Report .................................................................................................................................................. B-1
Management’s Discussion and Analysis (unaudited) ............................................................................................................... B-3
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Position ............................................................................................................................................ B-16
Statement of Activities .................................................................................................................................................. B-18
Fund Financial Statements:
Description of Major Governmental Funds .................................................................................................................. B-21
Balance Sheet – Governmental Funds .......................................................................................................................... B-22
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................. B-25
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds .................................. B-26
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities ..................................................................... B-28
Description of Major Proprietary Funds ....................................................................................................................... B-29
Statement of Net Position – Proprietary Funds ............................................................................................................ B-30
Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds ................................................ B-31
Statement of Cash Flows – Proprietary Funds .............................................................................................................. B-32
Description of Fiduciary Funds ...................................................................................................................................... B-35
Statement of Fiduciary Net Position ............................................................................................................................. B-36
Statement of Changes in Fiduciary Net Position ........................................................................................................... B-37
Notes to Basic Financial Statements ................................................................................................................................ B-38
Required Supplementary Information (unaudited)
Budgetary Information – Major Governmental Funds:
General Fund ................................................................................................................................................................. B-67
Special Gasoline Tax Fund ............................................................................................................................................. B-69
Transportation Impact Fees Fund ................................................................................................................................. B-70
In-Lieu Affordable Housing Fund .................................................................................................................................. B-71
Community Development Block Grant (CDBG) Fund .................................................................................................... B-72
Schedule of Changes in the OPEB Liability and Related Ratios ....................................................................................... B-73
Net Pension Liability – Schedule of Proportionate Share ................................................................................................ B-74
Net Pension Liability – Schedule of Contributions ........................................................................................................... B-75
Supplemental Information
Description of Nonmajor Governmental Funds ............................................................................................................... B-77
Nonmajor Governmental Funds:
Combining Balance Sheet ............................................................................................................................................. B-80
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ..................................................... B-84
Agency Funds:
Statement of Changes in Assets and Liabilities ............................................................................................................. B-88
Item 8.c. - Page 6
City of Arroyo Grande
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Table of Contents
For the Fiscal Year Ended June 30, 2019
ii
STATISTICAL SECTION (unaudited)
Net Position by Component – Last Ten Fiscal Years ................................................................................................................. C-2
Changes in Net Position – Last Ten Fiscal Years........................................................................................................................ C-4
Fund Balances of Governmental Funds – Last Ten Fiscal Years ................................................................................................ C-8
Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years ........................................................................... C-10
General Governmental Tax Revenues by Source – Last Ten Fiscal Years ............................................................................... C-12
Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ............................................................... C-13
Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years ............................................................. C-14
Principal Property Taxpayers – Current Fiscal Year and Nine Fiscal Years Ago ...................................................................... C-16
Secured Property Tax Roll Levies and Collections – Last Ten Fiscal Years .............................................................................. C-18
Taxable Sales by Category – Last Ten Calendar Years ............................................................................................................ C-20
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ................................................................................................... C-22
Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ..................................................................................... C-24
Direct and Overlapping Debt .................................................................................................................................................. C-25
Legal Debt Margin Information – Last Ten Fiscal Years .......................................................................................................... C-26
Demographic Statistics – Last Ten Calendar Years ................................................................................................................. C-28
Full-Time Equivalent City Government Employees by Function ............................................................................................. C-29
Operating Indicators by Function – Last Ten Fiscal Years ....................................................................................................... C-30
Capital Asset Statistics by Function – Last Ten Fiscal Years .................................................................................................... C-32
Item 8.c. - Page 7
Introductory Section
Accounting and financial reporting
standards prescribe that the
introductory section of the CAFR
contains the following: letter of
transmittal, list of principal officials, and
organizational chart.
Item 8.c. - Page 8
Arroyo Grande
ADMINISTRATIVE SERVICES • 300 E. Branch Street • Arroyo Grande, California 93420
Phone: (805) 473-5400 • Fax: (805) 473-0386 • E-mail: agcity@arroyogrande.org • Website: www.arroyogrande.org
CITY OF
CALIFORNIA
May 1, 2020
To the Honorable Mayor, Member of the City Council, and the Citizens of the City of Arroyo Grande
State law requires that all general-purpose local governments publish within six months of the close of the fiscal year a
complete set of financial statements presented in conformity with accounting principles generally accepted in the United
States of America (U.S.GAAP) and audited in accordance with auditing standards generally accepted in the United States
of America by a licensed certified public accountant. Pursuant to the requirement, we hereby issue this annual financial
report of the City of Arroyo Grande (the City) for the fiscal year ended June 30, 2019.
This report consists of management’s representations concerning the finances of the City. Consequently, management
assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide
a reasonable basis for making these representations, management of the City has established a comprehensive internal
control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficient
reliable information for the preparation of the City’s financial statements in conformity with U.S.GAAP. Because the cost
of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been
designed to provide reasonable rather than absolute assurance that the financial statements will be free from material
misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete
and reliable in all material respects.
The City’s financial statements have been audited by Moss, Levy & Hartzheim LLP, a licensed certified public accountant
firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for
the fiscal year ended June 30, 2019 are free of material misstatements. The independent audit involved examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting
principles used and significant estimates made by management; and evaluating the overall financial statement
presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering
an unmodified opinion that the City’s financial statements for the fiscal year ended June 30, 2019 are fairly presented in
conformity with U.S.GAAP. The independent auditors’ report is presented as the first component of the financial section
of this report.
The independent audit of the City’s financial statements is part of a broader, federally mandated “Single Audit” designed
to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require that
agencies expending more than $750,000 in federal monies, be required to have the independent auditor report not only
on the fair presentation of the financial statements, but also on the audited government’s internal controls and
compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the
administration of federal awards. The City did not expend the minimum amount of federal awards and was thus not
subject to a Single Audit Report.
Management has provided a narrative introduction, overview, and analysis to accompany the basic financial statements
in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the
MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the
independent auditors.
A-1
Item 8.c. - Page 9
A- 2
Profile of the Government
The City of Arroyo Grande is located five miles inland from the central California coastline. Incorporated in 1911, the City
contains acres of agriculturally productive land in a valley created by the Arroyo Grande Creek. The City currently occupies
a land area of 5.45 square miles and serves a population of approximately 18,087.
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 City Council.
The City has operated under the council-manager form of government since 1911. Policy-making and legislative authority
are vested in a governing council consisting of the mayor and four other members. The governing council is responsible,
among other things, for passing ordinances, adopting the budget, appointing committees, and hiring both the City’s
manager and attorney. The City’s manager is responsible for carrying out the policies and ordinances of the City Council,
for overseeing the day-to-day operations of the City, and for appointing the heads of the various departments. The Council
is elected on a non-partisan basis. Council members serve four-year staggered terms and the mayor is elected to serve a
two-year term. The mayor and the council members are elected at large.
The City provides a full range of services including: police protection, the construction and maintenance of streets and
other infrastructure, and recreational activities and cultural events. Certain utility services are provided by the City through
the Water and Sewer Funds, which is a division of the Public Works department.
The annual budget serves as the foundation for the City’s financial planning and control. All departments and divisions are
required to submit requests for appropriations to the City Manager. These requests are used as the starting point for
developing a proposed budget. The City Manager then presents this proposed budget to the City Council for review prior
to June 1st. The City Council is required to hold public hearings on the proposed budget and to adopt a final budget by no
later than June 30th, the close of the City’s fiscal year. The appropriated budget is prepared by fund, department (e.g.
public works), and division (e.g. automotive shop). Department directors may make transfers of appropriations within a
department. Transfers of appropriations between departments or changes in appropriations that affect the fund balance,
require the approval of the City Council.
Factors Affecting Financial Condition
The information presented in the financial statements is perhaps best understood when it is considered from the broader
perspective of the specific environment within which the City operates.
Local Economy
The City continues to experience economic improvement, with increases in all major tax revenue sources. The formation
of a local Tourism Business Improvement District is positively impacting local lodging establishments, as well as other
businesses that are related to tourism. Development activity in the City has remained steady, with measured increases
projected into next fiscal year. In addition, home prices have and sales tax revenues are increasing. Further detail on the
City demographics can be found in the Statistical Section of the report.
Long-Term Financial Planning
The City completed a 10-year fiscal forecast that acknowledges continued investment in the City’s infrastructure as an
important goal. Numerous Capital Improvement Plan (CIP) projects were completed during the fiscal year to improve the
City’s infrastructure, facilities and parks, improve drainage problems and improve the overall look of the community. The
following list of projects approved in the FY 2019-20 Budget will impact the community.
Item 8.c. - Page 10
A- 3
Street Projects – The Brisco Road-Halcyon Road/Route 101 Interchange project is in the Project Approval and
Environmental Determination phase and a preferred alternative is scheduled to be selected. In addition, several pavement
rehabilitation projects are scheduled to improve the City’s streets.
Bridge Projects – The Bridge Street bridge rehabilitation, Traffic Way bridge improvement project, and the reinforcement
of the historic Swinging Bridge are all programmed.
Water & Sewer Projects – Various waterline upgrades, the construction of the Lift Station No. 1 force main replacement
and a comprehensive structural analysis of the steel pipe bridges crossing the Arroyo Grande Creek at Coach Road and
Garden Street are budgeted.
Cash Management Policies and Practices
Cash temporarily idle during the fiscal year was primarily 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 2.96% during the past fiscal year. Investment income includes appreciation
in the fair value of LAIF at fiscal year-end. Increases in fair value during the current fiscal year, however, do not necessarily
represent trends that will continue; nor is it always possible to realize such amounts.
Risk Management
The City joined the California Joint Powers Insurance Authority (CJPIA) in July of 2003, for the purpose of pooling liability
risks. The CJPIA was formed under the Joint Powers Agreement (JPA) provisions of the State law. The Fund is directed by
a board of directors comprised of a representative appointed by the city council of each member agency. The Insurance
Fund derives its revenues from contributions established for each city at the beginning of each policy year. The
contributions are established by the board of directors based on the recommendations of the JPA’s program
administrators and actuaries using recognized insurance experience rating techniques.
In addition, various control techniques, including employee accident prevention training, have been implemented during
the year to minimize accident-related losses. The third-party coverage is currently maintained for individual workers’
compensation claims in excess of $350,000, while the City participates in a shared risk pool for liability claims above
$30,000. During FY 2003-04, the City began the process of joining the California Joint Powers Insurance Authority for
workers’ compensation coverage.
Pension and Other Postemployment Benefits
The City participates in the defined benefit pension plan administered by the California Public Retirement Agency (CalPERS)
for all full-time employees. Each fiscal year, the Agency calculates the amount of the annual contribution the City must
make to the pension plan to ensure the plan will be able to fully meet its obligation to retired employees on a timely basis.
The City also provides postretirement health benefits for certain retirees and their dependents. As of the end of the current
fiscal year, there were forty-seven (47) retired employees receiving these benefits, which are financed on a pay-as-you-
go-basis.
Additional information on the City’s pension arrangements and postemployment benefits can be found in NOTE 8 – LONG-
TERM LIABILITIES, NOTE 11 – DEFINED BENEFIT PENSION PLAN and NOTE 12 – POSTEMPLOYMENT HEATHCARE BENEFITS
(OPEB) in the notes to the basic financial statements.
Item 8.c. - Page 11
Item 8.c. - Page 12
City of Arroyo Grande
DIRECTORY OF OFFICIALS
A- 5
ELECTED OFFICIALS
Mayor ................................................................................................................................ Caren Ray Russom
Mayor Pro Tem ..................................................................................................................... Kristen Barneich
Council Member ............................................................................................................................ Lan George
Council Member ....................................................................................................................... Jimmy Pauling
Council Member ......................................................................................................................... Keith Storton
ADMINISTRATIVE PERSONNEL
City Manager ...................................................................................................................... James A. Bergman
City Attorney ...................................................................................................................... Timothy J. Carmel
Director of Administrative Services /City Treasurer ......................................................... Shannon Esenwein
Director of Community Development .................................................................................... Teresa McClish
Director of Legislative and Information Services Director/City Clerk ..................................... Kelly Wetmore
Police Chief.................................................................................................................................... Beau Pryor
Director of Public Works ............................................................................................................. Bill Robeson
Director of Recreation Services .......................................................................................... Sheridan Bohlken
Item 8.c. - Page 13
City of Arroyo Grande
ORGANIZATION OF CITY GOVERNMENT
A- 6
Citizens of
Arroyo Grande
City Council
Boards &
Commissions City Manager
Administrative
Services
Finance
Human
Resource
Community
Development
Building & Life
Safety
Engineering
Planning
Legislative &
Information
Services
City Clerk
Information
Techology
Police
Patrol Services
Support
Services
Public Works
Capital
Projects
Maintenance
Services
Utility
Recreation
Services
Children in
Motion
Preschool
Special Events
Sports
Leagues
City Attorney
Item 8.c. - Page 14
Financial Section
The financial section of the CAFR
includes the following elements: report
of the independent auditor,
management’s discussion and analysis,
basic financial statements (including
notes), required supplementary
information and related notes,
combining statements (nonmajor
funds), and individual fund financial
statements and schedules.
Item 8.c. - Page 15
Item 8.c. - Page 16
Moss, Levy & Hartzheim LLP
Certified Public Accountants
2400 Professional Parkway, Suite 205 Santa Maria, CA 93455 Tel 805.925.2579 Fax 805.925.2147 mlhcpas.com
BEVERLY HILLS ∙ CULVER CITY ∙ SANTA MARIA
INDEPENDENT AUDITORS’ REPORT
City Council of the City of Arroyo Grande
Arroyo Grande, California
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of Arroyo Grande (the City), as of and for the fiscal year ended June
30, 2019, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed
in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether
due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance
with auditing standards generally accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of
the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of
Arroyo Grande, as of June 30, 2019, and the respective changes in financial position, and cash flows where applicable thereof, for
the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in the financial statements, in January 2020, the World Health Organization has declared COVID-19 to constitute a
“Public Health Emergency of International Concern.” Given the uncertainty of the situation, the duration of any financial impact
cannot be reasonably estimated at this time. Our opinion is not modified with respect to this matter.
B-1
Item 8.c. - Page 17
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on
pages B-3 through B-15, the budgetary comparison information on pages B-67 through B-72, the schedule of changes in the OPEB
liability and related ratios on page B-73, the schedule of proportionate share of net pension liability on page B-74, and the schedule
of pension contributions on page B-75 be presented to supplement the basic financial statements. Such information, although not a
part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquires of management about the methods of
preparing the information and comparing the information for consistency with management’s responses to our inquires, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of
Arroyo Grande’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements,
agency funds financial statements, and statistical section are presented for purposes of additional analysis and are not a required
part of the basic financial statements.
The combining and individual nonmajor fund financial statements and the agency funds financial statements are the responsibility of
management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic
financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion, the combining and individual nonmajor fund financial statements and agency funds financial statements are fairly stated, in
all material respects, in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 1, 2020, on our consideration of the
City of Arroyo Grande’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Santa Maria, California
May 1, 2020
B-2
Item 8.c. - Page 18
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
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, 2019. 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, 2019, are as follows:
• The City finished the fiscal year with General Fund expenditures exceeding revenues by approximately $2,048,000,
however, after transfers and other financing sources, the General Fund’s fund balance of $9.8 million reflects a decrease
of approximately $466,000. This fund balance amount exceeded the City’s reserve policy goal of 20% of appropriated
General Fund expenditures. Of the $9.8 million in fund balance, approximately $7.5 million is “unassigned” fund balance
which is available at the City Council’s discretion.
• In total, the Water and Sewer funds have finished the fiscal year with operating revenues exceeding operating expenses.
Both funds have reserves exceeding the policy goal of 90-days of operating expenses, plus a Capital Reserve of $500,000,
and a debt service reserve equal to one year of annual debt service.
• The City completed capital improvement projects including:
o Removed the deteriorated roof and substructure at the Strother Park restrooms and installed a new roof
structure including new exterior lighting.
o Performed approximately two miles of pavement dig out repairs on James Way.
o Installed new sidewalk facilities in the vicinity of Harloe Elementary School.
o Rehabilitated approximately 900 feet of storm drain pipe and 550 linear feet of sewer pipe using a trenchless
(or no-dig) lining process.
o Constructed drainage improvement along a hillside street to alleviate flooding, capture storm water and
convey it to an existing underground storm drain system.
o Upgrades to lighting at the Woman’s Club and installation of new stage lighting and overhead ceiling fans.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of a series of financial statements, schedules 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 three basic sections – introductory
section, financial section (which consists of this discussion and analysis), 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 financial statements.
The financial statements also include notes that explain some of the information in the financial statements and provide more detailed
data.
FINANCIAL ANALYSIS OF THE CITY AS A WHOLE
Government-wide financial statements report information about the City as a whole using accounting methods similar to those used
by private-sector companies (all fiscal year revenues and expenses are accounted for regardless of when the cash is received or paid).
The statement of net position includes all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of
resources. The statement of activities also reports the City’s net position but more specifically how it has changed (revenues and
Item 8.c. - Page 19
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 4
expenses). Net position is the difference between all of the City’s assets added to deferred outflows of resources and liabilities added
to the deferred inflows of resources. Net position is one of the ways to measure the City’s financial health or position.
Over time, increases or decreases in the City’s net position is an indicator of whether its financial health is improving or deteriorating,
respectively. To assess the overall health of the City, you also need to consider additional non-financial factors such as changes in the
City’s tax base, facility condition, and other factors.
The City’s combined net position for the past 10 fiscal years is presented in the graph below:
Net position increased during the 2018-19 fiscal year from $83.7 million to $85.7 million, or by 2.3%. This overall increase is due to an
increase in governmental activities and a slight increase in business-type activities. The increase in governmental activities is largely
due to changes in the net pension liability and other post-employment benefits (OPEB) liability.
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, community
development, police, public works, and recreation services. Property and sales taxes, user fees, interest income, franchise
fees, and state and federal grants finance these types of activities.
• Business-type activities: The City charges a fee to customers to cover all or most of the cost of certain services it provides.
The City’s water, Lopez treatment, and sewer systems are reported in this category.
Item 8.c. - Page 20
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 5
GOVERNMENTAL ACTIVITIES
The City’s net position of governmental activities at June 30, 2019, 2018, and 2017 are as follows:
The Governmental Accounting Standards Board Statement No. 68 established guidelines regarding how the City reports pension
liability. Pension liability has always existed; however, it has not been required to be reported in the financial statements until the
2014-15 fiscal year. At June 30, 2019, the City reported net pension liability of $17.8 million for governmental activities. Net pension
liability is influenced by several factors, including the long-term rate of return earned by the pension system’s investments as well as
the City’s share of the total pension fund’s assets and can fluctuate significantly from year to year. More information on the long term
pension obligations can be found in the Notes to the Financial Statements and the Required Supplementary Information.
The City continues to utilize revenue from the 2006 Local Sales Tax Measure for the purposes of capital projects and infrastructure
improvements. During the 2018-19 fiscal year, the City utilized approximately $857,000 of this funding to improve and maintain streets
and sidewalks, $200,000 to support public safety efforts, $200,000 for infrastructure upgrades and improvements, and $100,000 for
storm water and drainage projects. The Local Sales Tax Measure provides approximately $2.3 million annually and is critical in the
maintenance and improvement of the infrastructure throughout the community.
Variance % Change
CY to PY CY to PY
Assets:
Current and other assets $ 22,712,839 $ 21,426,864 $ 20,553,682 $ 1,285,975 6%
Capital assets, net 42,611,094 43,421,093 42,996,103 (809,999)-2%
Total assets 65,323,933 64,847,957 63,549,785 475,976 1%
Deferred Outflows of Resources:
Deferred pension and OPEB 8,517,815 6,916,288 5,191,361 1,601,527 23%
Total DOR 8,517,815 6,916,288 5,191,361 1,601,527 23%
Liabilities:
Long-term liabilities outstanding 24,707,991 26,452,962 18,753,650 (1,744,971)-7%
Other liabilities 2,472,400 1,495,243 1,532,765 977,157 65%
Total liabilities 27,180,391 27,948,205 20,286,415 (767,814)-3%
Deferred Inflows of Resources:
Deferred pension and OPEB 2,312,902 1,252,990 1,318,073 1,059,912 85%
Total DIR 2,312,902 1,252,990 1,318,073 1,059,912 85%
Net Position:
Net investment in capital assets 41,265,463 41,836,070 41,437,236 (570,607)-1%
Restricted 8,748,114 8,217,418 8,375,502 530,696 6%
Unrestricted (5,665,122) (7,490,438) (2,676,080) 1,825,316 -24%
Total net position $ 44,348,455 $ 42,563,050 $ 47,136,658 $ 1,785,405 4%
FYE 2017FYE 2018FYE 2019
Item 8.c. - Page 21
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 6
The City’s statement of activities of governmental activities at June 30, 2019, 2018, and 2017 are as follows:
During the 2018-19 fiscal year, the City’s total revenue increased by 8.6% to $21.3 million and expenses increased by 0.5% to $21.7
million.
The City’s significant source of revenue is derived by property and sales taxes. These taxes have had increases in the past several fiscal
years. During the 2018-19 fiscal year, these taxes generated $13.6 million, or 64% of total revenue. This was an increase of about
$640,000 when compared to the 2017-18 fiscal year and an increase of about $683,000 when compared to the 2016-17 fiscal year.
Because these taxes are the significant sources of City income, fluctuations to these taxes can have a dramatic change in the services
the City can provide. The table on the following page shows the increases and decreases in property and sales taxes for the past ten
fiscal years:
Variance % Change
CY to PY CY to PY
Revenues
Program revenues:
Charges for services $ 2,918,489 $ 2,142,437 $ 3,163,969 776,052 36.2%
Grants and contributions 1,931,669 1,888,900 1,923,039 42,769 2.3%
General revenues:
Property taxes 7,272,617 6,838,615 6,494,953 434,002 6.3%
Other taxes 8,362,855 8,025,623 7,699,664 337,232 4.2%
Other revenues 873,548 772,144 584,271 101,404 13.1%
Total revenues 21,359,178 19,667,719 19,865,896 1,691,459 8.6%
Expenses:
General government 6,489,527 6,323,149 5,659,730 166,378 2.6%
Community development 1,664,055 2,339,874 1,604,701 (675,819)-28.9%
Public safety 8,516,528 7,205,048 5,075,763 1,311,480 18.2%
Recreation 914,396 1,108,612 705,766 (194,216)-17.5%
Public works 1,955,759 2,063,905 1,777,425 (108,146)-5.2%
Streets and roads 2,129,780 2,516,344 2,448,134 (386,564)-15.4%
Interest on long-term debt 55,900 53,546 56,988 2,354 4.4%
Total expenses 21,725,945 21,610,478 17,328,507 115,467 0.5%
Income (deficiency) transfers (366,767) (1,942,759)2,537,389 1,575,992 -81.1%
Transfers from (to) business-type activity 2,152,172 1,968,873 2,108,785 183,299 9.3%
Change in net position 1,785,405 26,114 4,646,174 1,759,291 6737.0%
FYE 2017FYE 2018FYE 2019
Item 8.c. - Page 22
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 7
Property tax revenues have steadily increased for the past five fiscal years and are projected to continue a modest but steady increase
for the upcoming years. During the 2016-17 fiscal year, the City redeemed bonds that had been funded through a property tax
allocation and no property tax was received for this purpose. This reduction in property tax revenues will be ongoing in future years;
however significant interest savings was realized by paying the debt. In addition, sales tax and transient occupancy tax are expected
to increase, however, not at the same growth as experienced in previous fiscal years.
The City charged $2.9 million for services to users and developers in the 2018-19 fiscal year and makes up approximately 13.6% of
total revenue for the City. This represents an increase of approximately $800,000 from the prior fiscal year. The Community
Development Department which includes the Planning, Engineering and Building divisions reported revenues of $1.5 million in the
2018-19 fiscal year compared to $900,000 in the 2017-18 fiscal year. In addition, the 2018-19 fiscal year included an increase of
$16,000 in public works related services.
The cost of all governmental activities in the 2018-19 fiscal year was $21.7 million, an increase of 0.6% in comparison to last fiscal year.
The City is a service oriented organization, therefore, the majority of the fluctuations in expenses from one year to the next can be
attributed to employee-related benefits including pensions and medical costs. Further analysis of the changes in employee-related
expenditures is presented in the City’s funds section of this report.
As shown on the following page, public safety represents the City’s highest percent of expenses incurred at 31%, followed by general
government (which includes the City Clerk, Information Technology, City Council, City Manager, Finance and Human Resources
divisions) at 29%, Public Works (which consists of maintenance of parks and facilities not including utilities) at 12% and Community
Development (which includes Planning, Engineering and Building) at 11%. These functions were subsidized by taxes, investment
income, miscellaneous income, and transfers from the business-type activities.
Item 8.c. - Page 23
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 8
The City continues to invest heavily in public safety; those activities cost the City approximately $8.5 million in the 2018-19 fiscal year.
The City currently contributes approximately $2.6 million towards the operations of the Five Cities Fire Authority. The City has invested
in much needed fire-related infrastructure including fire engines. The Fire Authority has an aging fleet and in response, during the
2015-16 and 2016-17 fiscal years, the Five Cities Fire Authority board of directors entered into two lease purchase arrangements for
the replacement of two fire engines.
In addition, the City continues to contribute heavily to streets, roads, and sidewalk renovations, also known as the Streets Program.
Because most road work is repair and/or maintenance, they are recognized as expenditures in the fiscal year incurred. For the 2018-
19 fiscal year, the City spent approximately $2.1 million in street and road costs. The Streets program is funded from the State’s
gasoline taxes which contributed approximately $714,000, which includes approximately $328,000 in SB1 Road Maintenance
Rehabilitation funds and is also funded from the additional Local Sales Tax fund which is funded by the one half cent sales tax the
voters approved in 2006. During the 2018-19 fiscal year, the additional sales tax contributed over $857,000 towards street and road-
related projects. The City continues to prioritize its road maintenance efforts now and into the future.
BUSINESS-TYPE ACTIVITIES
The City provides water delivery and wastewater collection services to a population of approximately 18,087 with 6,400 accounts. The
City has two main sources of water: ground water and surface water from Lopez Reservoir. Water treatment is handled by the County
of San Luis Obispo and wastewater treatment is handled by the South San Luis Obispo County Sanitation District. The net position of
business-type activities for the fiscal years ended June 30, 2019, 2018, and 2017 are as follows:
-
5
10
15
20
25
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Expenses by Function
Last 10 Fiscal Years
(In Millions)
Public safety General government Streets and roads All other
Item 8.c. - Page 24
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 9
As shown above, the City’s net position increased by 0.6%, from $41.1 million to $41.4 million. As mentioned in the government-wide
section of this report, pension liability is now being reported as a result of GASB Statement No. 68. Business-type activities reported
pension liability in the amount of $2.1 million for fiscal year 2018-19.
In March 2014, the City Council approved the Water and Wastewater Financial Plan and Rate Study for the fiscal years 2014-15 to
2018-19. As a result of that study, the City increased its reserve requirements from 60-days of operating and maintenance costs to 90-
days. This has provided a greater degree of flexibility because of revenue decreases due to conservation and other unforeseen costs.
In addition, the City continues to maintain a capital reserve of $500,000 and a debt service reserve equal to 1-year of debt service
obligations (which is approximately $1.4 million).
Variance % Change
CY to PY CY to PY
Assets:
Current and other assets $ 9,260,779 $ 8,443,551 $ 7,929,909 $ 817,228 9.7%
Capital assets, net 34,389,325 35,156,981 35,236,648 (767,656)-2.2%
Total assets 43,650,104 43,600,532 43,166,557 49,572 0.1%
Deferred Outflows of Resources:
Deferred pension and OPEB 1,015,342 571,886 497,832 443,456 77.5%
Total DOR 1,015,342 571,886 497,832 443,456 77.5%
Liabilities:
Long-term liabilities outstanding 2,688,218 2,696,309 1,989,886 (8,091)-0.3%
Other liabilities 345,085 261,443 245,871 83,642 32.0%
Total liabilities 3,033,303 2,957,752 2,235,757 75,551 2.6%
Deferred Inflows of Resources:
Deferred pension and OPEB 253,510 77,020 30,578 176,490 229.1%
Total DIR 253,510 77,020 30,578 176,490 229.1%
Net Position:
Total net position $ 41,378,633 $ 41,137,646 $ 41,398,054 $ 240,987 0.6%
FYE 2017FYE 2018FYE 2019
Item 8.c. - Page 25
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 10
The City’s statement of activities of business-type activities at June 30, 2019, 2018, and 2017 are as follows:
The business-type activities had operating income of $2.2 million in the 2018-19 fiscal year, whereas $1.9 million in the 2017-18 fiscal
year and $1.3 million in the 2016-17 fiscal year. Operating revenues were higher, while expenses were slightly lower than in prior year
when activity was significantly impacted by the severe drought. During the 2015-16 fiscal year, the City Council approved a Stage 1
Water Shortage Emergency, which limited the amount of water a customer could use without incurring financial penalties. During the
2016-17 fiscal year, the Water Emergency was rescinded. Revenues have rebounded as customers have increased water usage,
although not to pre-drought levels. The operating expenses include payments to the County for the City’s share of costs at the Lopez
water treatment facility.
The City’s current rate structure includes both a monthly fixed charge (flat amount that does not change per billing cycle) and a
volumetric charge (which is dependent on the actual amount of water usage). The fixed charge generates approximately 37% of the
total revenue with 63% from the variable. So although the City has some level of stability from the fixed charge, the change in
consumption of water has had a significant effect on the overall revenues. The City continues to closely monitor revenues and
conservation efforts, as these are now a continuous way of life in California.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
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, Special Gasoline Tax Fund, Transportation Impact Fees Fund, In-Lieu
Affordable Housing Fund, Community Development Block Grant Fund, and the Capital Improvement 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.
Variance % Change
CY to PY CY to PY
Operating revenues $ 8,179,421 $ 8,058,122 $ 7,179,441 $ 121,299 1.5%
Operating expenses 5,932,637 6,108,484 5,906,838 (175,847) -2.9%
Operating income 2,246,784 1,949,638 1,272,603 297,146 15.2%
Non-operating revenues 161,148 58,064 31,308 103,084 177.5%
Non-operating expenses (14,773) (2,341) - (12,432)531.1%
Transfers out (2,152,172) (1,968,873) (2,108,785) (183,299)9.3%
Total non-operating and transfers (2,005,797) (1,913,150) (2,077,477) (92,647)4.8%
Change in net position $ 240,987 $ 36,488 $ (804,874) $ 204,499 560.5%
FYE 2017FYE 2018FYE 2019
Item 8.c. - Page 26
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 11
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 is 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
Position and the Statement of Revenues, Expenses, and Changes in Net Position. 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, Lopez, and Sewer funds.
• Fiduciary funds: The City is the trustee, or fiduciary, for the Sanitation Distribution, Downtown Parking, San Luis Obispo
TMD Assessment, and the Successor Agency of the Former Redevelopment Agency. The City is responsible for ensuring
that the assets reported in these funds are used for their intended purposes.
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 $19.2 million, an increase of
approximately $512,000 in comparison with the prior fiscal year. Of the total fund balance, 39% of this total amount ($7.5 million)
constitutes unassigned fund balance, which is available for spending at the City’s discretion. The remaining components of fund
balance consist of non-spendable, restricted, committed and assigned and are presented below. For further information on the
definition of the fund balance classification, see Note 1, Subsection K – Fund Balances and Net Position.
The General Fund is the chief operating fund of the City of Arroyo Grande. The General Fund is comprised of the following specific
funds: General Fund, Local Sales Tax Fund, and Post Employment Benefits Fund. At the end of the current fiscal year, unassigned fund
Nonspendable $ 54,670 $ - $ 54,670 0.3%
Restricted - 7,969,706 7,969,706 41.5%
Committed - - - 0.0%
Assigned 2,241,553 1,403,177 3,644,730 19.0%
Unassigned 7,554,520 - 7,554,520 39.3%
Total $ 9,850,743 $ 9,372,883 $ 19,223,626 100.0%
% of TotalFund Balances All Other
Funds TotalGeneral Fund
Item 8.c. - Page 27
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 12
balance was $7.5 million, while total fund balance reached $9.8 million. As a measure of the General Fund’s liquidity, it may be useful
to compare unassigned fund balance to total fund expenditures. Unassigned fund balance represents 36.9% of total general fund
expenditures. This exceeds the City Council’s reserve goal of 20%.
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 includes a statement of cash flows. 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. Semi-annual reports are used to keep the City Council informed of key budget issues, forecasts, and required changes.
The budget amendments reported in the financial reports fall into three categories:
• The carryover of appropriations for contracts, equipment, and/or projects approved in the previous fiscal year(s), but
not completed as of fiscal year-end.
• Increases or decreases in estimated revenues to reflect actual receipts of major revenues.
• Additional appropriations for unforeseen, but necessary expenses or expenditures.
Overall General Fund revenues have been improving and the City is benefitting from the widespread economic gains. Sales taxes are
increasing in all major categories, property taxes are trending upward and there has been increased registration in the City’s recreation
programs. Expenditures have largely remained at or below budgeted levels.
The overall difference between the original General Fund budget and the final amended budget was an increase of approximately
$540,000 in appropriations. This can mainly be attributed by the following: 1) the carryover of uncompleted capital projects from the
prior fiscal year, 2) costs associated with an increase in the number and complexity of public records requests, and 3) negotiated salary
and benefit increases for employees.
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, 2019, capital assets, net of related accumulated depreciation, of the governmental activities
totaled $42.6 million and the capital assets, net of related accumulated depreciation, of the business-type activities totaled $34.4
million. Depreciation on capital assets is recognized in the government-wide financial statements.
The investment in capital assets includes land, buildings and system improvements, machinery and equipment, park facilities, roads,
highways, and bridges. The capital assets are summarized by activity on the following page.
Item 8.c. - Page 28
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 13
Major capital asset events during the fiscal year include the following:
• Women’s Club Kitchen Renovation $282,000
• Sierra/Hillcrest Drainage Project $122,000
• Soto Sports Complex Barrier Removal Phase 3 $80,000
• Ash/Strother Restroom Roof Replacement $67,000
New annual programs are recommended through the budget process. In the five-year Capital Improvement Program from fiscal years
2018-19 through 2022-23, the major capital projects include:
• Reinforcement of the Swinging Bridge – Total cost estimated to be $ 518,000.
• Both the Bridge Street Bridge and Traffic Way Bridge Improvements: Total cost of both projects is estimated to be $12.6
million to be funded through State grants.
• Brisco Road Interchange Project – Depending on which alternative is selected, the total cost of improvements is
estimated to be between $14 million and $23 million.
• Pavement Management Program, the City’s annual improvements to streets and roads – $1.2 million.
• Continued improvements with the Water and Sewer systems based on their specific master plans.
Description Original Cost
Accumulated
Depreciation Book Value
Governmental Activities:
Land 4,236,528$ -$ 4,236,528$
Infrastructure 6,379,188 - 6,379,188
Construction in Progress 3,365,856 - 3,365,856
Structures & Improvements 13,970,476 3,732,041 10,238,435
Machinery & Equipment 4,239,315 2,682,529 1,556,787
Infrastructure 40,892,026 24,057,725 16,834,301
Total 73,083,389$ 30,472,295$ 42,611,094$
Description Original Cost
Accumulated
Depreciation Book Value
Business-Type Activities:
Land 56,730$ -$ 56,730$
Construction in Progress 112,606 112,606
Structures & Improvements 222,999 219,247 3,752
Machinery & Equipment 848,416 482,060 366,356
Infrastructure 58,996,364 25,146,483 33,849,881
Total 60,237,115$ 25,847,790$ 34,389,325$
Item 8.c. - Page 29
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2019
B - 14
LONG-TERM LIABILITIES
At the end of the 2018-19 fiscal year, the City had a variety of outstanding long-term liabilities, totaling $24.7 million in governmental
activities and $2.7 million in business-type activities. The City had total USDA loans payable outstanding of $996,000 that was used to
acquire the property and office building for the location of City Hall offices. The City also has capital leases for police vehicles and
certain information technology equipment, the outstanding amount of which is $276,890. Lastly, the City’s most significant
outstanding long-term liability is the net pension liability. The net pension liability is the difference between the total pension liability
(the present value of projected benefit payments to employees based on their past service) and the assets (mostly investments
reported at fair value) set aside to pay current employees, retirees, and beneficiaries.
Further detail on each liability can be found in Note 8 in the Notes to the Basic Financial Statements section. The following table
summarizes the long-term liabilities of the City:
FINANCIAL ISSUES AND CONCERNS
The budget for the 2018-20 fiscal years was approved by City Council on June 12, 2018. It represents a balanced and responsible
approach to meeting the City’s short and long-term needs in a cost effective manner, will continue to fund the high quality services
provided to the community, and will invest in the future through capital improvements and maintenance activities.
As the City experiences continued revenue growth, it will be important to determine the highest priority uses of additional resources.
Over the past year, staff has worked to identify important priorities for funding and has identified deficiencies in service, maintenance
and/or investment that will require attention in the short and long-term. Staff identified several challenges facing the City in the near
future including:
• Rising pension costs
• Securing a long-term, drought resistant water supply
• The eventual closure of the Diablo Nuclear Power Plant
• Overall economic development and revenue generation
• Long-term infrastructure maintenance
• Sustainability of ongoing operational needs
CONTACTING THE CITY’S ADMINISTRATIVE SERVICES DEPARTMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the
City’s finances and to demonstrate the City’s accountability for the money it receives. If you have any questions about this report or
need additional financial information, contact the Administrative Services Department at 300 East Branch Street in Arroyo Grande,
California or by phone at (805) 473-5400.
Debt Description FYE 2018 One-Year Long-Term One-Year Long-Term One-Year Long-Term
Capital Lease $ 621,662 $ 152,108 $ 124,782 $ 40,746 $ 63,144 $ 192,854 $ 187,926
Loan Payable 1,106,950 39,482 1,029,259 - - 39,482 1,029,259
Comp Absence 784,383 - 743,235 - 104,915 - 848,150
Net Pension 21,434,067 - 17,800,487 - 2,140,905 - 19,941,392
OPEB 5,202,209 - 4,818,638 - 379,254 - 5,197,892
Total $ 29,149,271 $ 191,590 $ 24,516,401 $ 40,746 $ 2,688,218 $ 232,336 $ 27,204,619
Business-Type FYE 2019Governmental
Item 8.c. - Page 30
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Item 8.c. - Page 31
City of Arroyo Grande
STATEMENT OF NET POSITION
June 30, 2019
ASSETS
Cash and investments $ 19,028,671 $ 7,780,464 $ 26,809,135
Receivables:
Accounts 1,053,705 1,383,574 2,437,279
Taxes 1,509,989 1,509,989
Loan 1,027,445 1,027,445
Interest 38,359 21,674 60,033
Inventory 23,378 72,751 96,129
Prepaid items 31,292 2,316 33,608
Nondepreciable capital assets:
Land 4,236,528 56,730 4,293,258
Infrastructure 6,379,188 6,379,188
Construction in progress 3,365,856 112,606 3,478,462
Depreciable capital assets:
Structures and improvements 13,970,476 222,999 14,193,475
Equipment 4,239,315 848,416 5,087,731
Infrastructure 40,892,026 58,996,364 99,888,390
Accumulated depreciation (30,472,295) (25,847,790) (56,320,085)
Total assets 65,323,933 43,650,104 108,974,037
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension 8,298,518 998,082 9,296,600
Deferred OPEB 219,297 17,260 236,557
Total deferred outflows of resources 8,517,815 1,015,342 9,533,157
LIABILITIES
Accounts payable 316,057 116,045 432,102
Accrued wages and benefits 793,735 793,735
Interest payable 10,632 414 11,046
Deposits payable 1,012,015 130,897 1,142,912
Unearned revenue 339,961 56,983 396,944
Noncurrent liabilities:
Due within one year 191,590 40,746 232,336
Due in more than one year 24,516,401 2,688,218 27,204,619
Total liabilities 27,180,391 3,033,303 30,213,694
DEFERRED INFLOWS OF RESOURCES
Deferred pension 1,719,457 206,803 1,926,260
Deferred OPEB 593,445 46,707 640,152
Total deferred inflows of resources 2,312,902 253,510 2,566,412
(Continued)
Governmental
Activities
Business‐Type
Activities Total
The notes to the basic financial statements are an integral part of this statement.
B‐16
Item 8.c. - Page 32
City of Arroyo Grande
STATEMENT OF NET POSITION
June 30, 2019
NET POSITION
Net investment in capital assets $ 41,265,463 $ 34,285,435 $ 75,550,898
Restricted for:
Access programming 110,219 110,219
Community development 804,220 804,220
Capital projects 1,235,610 1,235,610
Debt service 52,051 52,051
Landscape maintenance 497,944 497,944
Park construction 1,410,462 1,410,462
Public improvements 2,193,035 2,193,035
Public safety 520,778 520,778
Streets and roads 1,400,790 1,400,790
Water production 1,758,615 1,758,615
Unrestricted (5,665,122) 5,857,588 192,466
Total net position $ 44,348,455 $ 41,378,633 $ 85,727,088
Total
Governmental
Activities
Business‐Type
Activities
B‐17
Item 8.c. - Page 33
City of Arroyo Grande
STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2019
Governmental Activities:
General government $ 6,489,527 $ 83,416 $ 95,735 $‐
Community development 1,664,055 1,483,826 554,684
Public safety 8,516,528 168,457 178,523 23,075
Recreation services 914,396 1,075,413
Public works 1,955,759 6,400
Streets and roads 2,129,780 100,977 1,079,652
Interest on long‐term debt 55,900
Total governmental activities 21,725,945 2,918,489 1,353,910 577,759
Business‐type Activities:
Water 1,439,083 7,127,921
Lopez 3,576,785
Sewer 931,542 1,051,500
Total business‐type activities 5,947,410 8,179,421
Total government $ 27,673,355 $ 11,097,910 $ 1,353,910 $ 577,759
General Revenues
Taxes:
Property taxes
Sales and use taxes
Transient lodging taxes
Franchise taxes
Business license tax
Investment income
Other
Transfers
Total general revenues and transfers
Change in net position
Net position at beginning of fiscal year
Net position at end of fiscal year
Program Revenues
Expenses Charges for Services
Operating
Contributions and
Grants
Capital Contributions
and Grants
The notes to the basic financial statements are an integral part of this statement.
B‐18
Item 8.c. - Page 34
$ (6,310,376) $‐$ (6,310,376)
374,455 374,455
(8,146,473) (8,146,473)
161,017 161,017
(1,949,359) (1,949,359)
(949,151) (949,151)
(55,900) (55,900)
(16,875,787) (16,875,787)
5,688,838 5,688,838
(3,576,785) (3,576,785)
119,958 119,958
2,232,011 2,232,011
(16,875,787) 2,232,011 (14,643,776)
7,272,617 7,272,617
6,381,702 6,381,702
1,235,407 1,235,407
642,952 642,952
102,794 102,794
760,895 161,148 922,043
112,653 112,653
2,152,172 (2,152,172)
18,661,192 (1,991,024) 16,670,168
1,785,405 240,987 2,026,392
42,563,050 41,137,646 83,700,696
$ 44,348,455 $ 41,378,633 $ 85,727,088
Net (Expense) Revenue and Changes
in Net Position
Total
Governmental
Activities
Business‐type
Activities
B‐19
Item 8.c. - Page 35
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Item 8.c. - Page 36
City of Arroyo Grande
DESCRIPTION OF MAJOR GOVERNMENTAL FUNDS
B-21
General Fund
This is the primary operating fund of the City, which accounts for resources and services traditionally associated
with government. The General Fund provides administrative, financial, police protection, community
development, public works, and recreation services to the community and other funds. The General Fund
accounts for revenues that have unrestricted uses and are not required legally or by contractual agreement to be
accounted for in another fund.
Special Gasoline Tax Fund
This fund accounts for receipts and expenditures of money apportioned by the State under Streets and Highway
Code sections 2105, 2106, 2107, and 2107.5. The use of gas tax revenues can only be used to construct and
maintain streets, roads and highways.
Transportation Impact Fees Fund
This fund accounts for developer impact fees (AB1600 fees) paid to protect the public health, safety, and welfare
by maintaining the existing level of public services for existing and future residents within the City of Arroyo
Grande.
In-Lieu Affordable Housing Fund
This fund accounts for monies paid by developers in meeting the City's mandatory affordable housing
requirements.
CDBG Fund
This fund accounts for revenues and expenditures related to Community Development Block Grant (CDBG) Funds.
The program is a flexible program that provides the City with resources to address a wide range of unique
community development needs.
Capital Improvement Fund
This fund accounts for capital projects constructed within the City. Funding sources are provided from other City
funds through capital transfers; grant revenues from the federal and state governments; and other miscellaneous
sources. These funding sources are used to improve the City parks, drainage systems, streets, sewer pipelines, and
water systems.
Other Governmental Funds
This is the aggregate of all the Nonmajor governmental funds.
Item 8.c. - Page 37
City of Arroyo Grande
GOVERNMENTAL FUNDS
Balance Sheet
June 30, 2019
ASSETS
Cash and investments $ 9,711,947 $ 47,172 $ 2,164,220 $ 926,292
Accounts receivable 695,130
Taxes receivable 1,389,316 93,204
Loan receivable 238,405
Interest receivable 17,585 720 5,144 1,626
Inventory 23,378
Prepaid items 31,292
Due from other funds 54,943
Total assets $ 11,923,591 $ 141,096 $ 2,169,364 $ 1,166,323
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable $ 185,345 $ 12,657 $‐$‐
Accrued wages and benefits 793,735
Deposits payable 1,012,015
Unearned revenue 81,753
Due to other funds
Total liabilities 2,072,848 12,657
Deferred inflows of resources:
Unavailable revenue 238,405
Total deferred inflows of resources 238,405
Fund Balances:
Nonspendable:
Inventory 23,378
Prepaid items 31,292
Restricted for:
Access programming
Community development
Debt service
Landscape maintenance
Park construction
Public improvements 2,169,364
Public safety
Streets and roads 128,439
Water production
Assigned for:
Affordable housing 927,918
Capital projects 1,582,507
Post employment benefits 659,046
Tourism benefit
Unassigned 7,554,520
Total fund balances 9,850,743 128,439 2,169,364 927,918
Total liabilities, deferred inflows of
resources, and fund balances $ 11,923,591 $ 141,096 $ 2,169,364 $ 1,166,323
General Fund
Transportation
Impact Fees Fund
In‐Lieu
Affordable
Housing Fund
Special Gasoline
Tax Fund
B‐22
Item 8.c. - Page 38
$ 69,123 $ 128,707 $ 5,981,210 $ 19,028,671
1,000 336,864 20,711 1,053,705
27,469 1,509,989
789,040 1,027,445
13,284 38,359
23,378
31,292
54,943
$ 859,163 $ 465,571 $ 6,042,674 $ 22,767,782
$‐$ 82,610 $ 35,445 $ 316,057
793,735
1,012,015
217,982 40,226 339,961
54,943 54,943
54,943 300,592 75,671 2,516,711
789,040 1,027,445
789,040 1,027,445
23,378
31,292
110,219 110,219
15,180 15,180
62,683 62,683
497,944 497,944
1,410,462 1,410,462
23,671 2,193,035
520,778 520,778
1,272,351 1,400,790
1,758,615 1,758,615
927,918
164,979 19,610 1,767,096
659,046
290,670 290,670
7,554,520
15,180 164,979 5,967,003 19,223,626
$ 859,163 $ 465,571 $ 6,042,674 $ 22,767,782
TotalCDBG Fund
Other
Governmental
Funds
Capital
Improvement
Fund
The notes to the basic financial statements are an integral part of this statement.
B‐23
Item 8.c. - Page 39
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Item 8.c. - Page 40
City of Arroyo Grande
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION
June 30, 2019
The notes to the basic financial statements are an integral part of this statement.
B-25
Total fund balances – governmental funds
In governmental funds, only current assets are reported. In the statement of net position, all assets
are reported, including capital assets and accumulated depreciation.
Capital assets at historical cost $ 73,083,389
Accumulated depreciation (30,472,295)
Net capital assets
In governmental funds, interest on long-term debt is not recognized until the period in which it
matures and is paid. In the government-wide statement of activities, it is recognized in the period
that it is incurred.
In governmental funds, certain receivables are deferred because they do not meet current financial
obligations. However, in government-wide statement of activities, they are recognized in the
period that they are incurred.
In governmental funds, pension obligations are deferred because they do not meet current financial
obligations. However, in government-wide statement of activities, deferred outflows and deferred
inflows of resources related to pensions are recorded. The difference between deferred outflows
of resources of $8,298,518 and deferred inflows of resources of $1,719,457 is:
In governmental funds, OPEB obligations are deferred because they do not meet current financial
obligations. However, in government-wide statement of activities, deferred outflows and deferred
inflows of resources related to OPEB are recorded. The difference between deferred outflows of
resources of $219,297 and deferred inflows of resources of $593,445 is:
In governmental funds, only current liabilities are reported. In the statement of net position, all
liabilities, including long-term liabilities, are reported. Long-term liabilities relating to governmental
activities consist of:
Compensated absences $ 743,235
Capital lease payable 276,890
CA Energy loan payable 72,741
USDA loan payable 996,000
Net pension liability 17,800,487
Other postemployment benefits 4,818,638
Total long-term liabilities
Total net position, governmental activities
$ 19,223,626
42,611,094
(10,632)
1,027,445
6,579,061
(374,148)
(24,707,991)
$ 44,348,455
Item 8.c. - Page 41
City of Arroyo Grande
GOVERNMENTAL FUNDS
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2019
REVENUES
Taxes and assessments $ 15,358,298 $‐$‐$‐
Licenses and permits 616,702
Fines and penalties 44,160
Use of money and property 584,671 4,844 43,173 221,864
Intergovernmental revenues 200,933 713,894
Charges for services 1,507,850 72,178 134,999
Other revenue 64,460 2,093
Total revenues 18,377,074 720,831 115,351 356,863
EXPENDITURES
Current:
General government 6,301,094
Community development 1,836,149 30,042
Public safety 9,167,815
Recreation services 1,001,752
Public works 1,861,192
Streets and road 657,200
Capital outlay 70,981 19,846
Debt service:
Principal 172,819 37,573
Interest and fiscal agent fees 13,224 3,759
Total expenditures 20,425,026 718,378 30,042
Excess of revenue over/(under)
expenditures (2,047,952) 2,453 115,351 326,821
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 35,000
Transfers in 2,349,499 346,404
Transfers out (802,935) (412,378) (57,465)
Total other financing sources/(uses)1,581,564 (65,974) (57,465)
Net change in fund balances (466,388) (63,521) 57,886 326,821
Fund balances ‐ July 1, 2018 10,317,131 191,960 2,111,478 601,097
Fund balances ‐ June 30, 2019 $ 9,850,743 $ 128,439 $ 2,169,364 $ 927,918
General Fund
Transportation
Impact Fees Fund
In‐Lieu
Affordable
Housing Fund
Special Gasoline
Tax Fund
B‐26
Item 8.c. - Page 42
$‐$‐$ 277,174 $ 15,635,472
616,702
44,160
108,340 962,892
8,092 546,592 462,158 1,931,669
542,600 2,257,627
11,100 77,653
8,092 557,692 1,390,272 21,526,175
14,844 241,987 6,557,925
13,181 1,879,372
9,029 9,176,844
24,593 1,026,345
3,805 155,036 2,020,033
792,003 1,449,203
683,616 23,075 797,518
29,000 239,392
37,894 54,877
1,494,268 533,795 23,201,509
8,092 (936,576) 856,477 (1,675,334)
35,000
1,081,661 78,804 3,856,368
(431,418) (1,704,196)
1,081,661 (352,614) 2,187,172
8,092 145,085 503,863 511,838
7,088 19,894 5,463,140 18,711,788
$ 15,180 $ 164,979 $ 5,967,003 $ 19,223,626
Other
Governmental
Funds TotalCDBG Fund
Capital
Improvement
Fund
The notes to the basic financial statements are an integral part of this statement.
B‐27
Item 8.c. - Page 43
City of Arroyo Grande
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2019
The notes to the basic financial statements are an integral part of this statement.
B-28
Total net change in fund balances – governmental funds
In governmental funds, capital outlays are reported as expenditures. However, in the statement of
activities, the cost of those assets is allocated over their estimated useful lives as depreciation
expense. This is the amount by which additions to capital outlay of $797,518 is more than
depreciation expense $(1,413,230) in the period.
In governmental funds, the entire proceeds from disposal of capital assets are reported as revenue.
In the statement of activities, only the resulting gain or loss is reported. The difference between
proceeds from sale of capital assets and the loss on disposal of capital assets is:
In governmental funds, issuance and repayments of long-term receivables are reported as
expenditures and other financing sources, respectively. In government-wide statements, these
activities are reported as increases or decreases in assets. This is the amount by which repayments
exceed the issuance of note receivables in the period.
In governmental funds, interest on long-term debt is recognized in the period that it becomes due.
In the statement of activities, it is recognized in the period that it is incurred. Unmatured interest
owing at the end of the period, less matured interest paid during but owing from the prior period
was:
In governmental funds, proceeds and repayments of long-term debt are reported as other financing
sources and expenditures, respectively. In the government-wide statements, proceeds and
repayments of long-term debt are reported as increases or decreases in liabilities, respectively. This
is the amount by which proceeds from the issuance of debt of $0 is less than repayments of debt of
$(239,392) in the period.
In the statement of activities, compensated absences are measured by the amounts earned during
the fiscal year. In governmental funds, however, expenditures for these items are measured by the
amount of financial resources used (essentially the amounts paid). For this fiscal year ended,
vacation earned exceeded the amounts used by:
In governmental funds, pension costs are recognized when employer contributions are made. In
the statement of activities, pension costs are recognized on the accrual basis. This year, the
difference between accrual-basis pension costs and actual employer contributions was:
In governmental funds, postemployment healthcare costs are recognized when employer
contributions are made. In the statement of activities, postemployment healthcare costs are
recognized on the accrual basis. This year, the difference between accrual-basis postemployment
healthcare costs and actual employer contributions was:
Change in net position – governmental activities
$ 511,838
(615,712)
(194,287)
(201,997)
(1,023)
239,392
(57,384)
2,155,599
(51,021)
$ 1,785,405
Item 8.c. - Page 44
City of Arroyo Grande
DESCRIPTION OF MAJOR PROPRIETARY FUNDS
B-29
Water Fund
This fund is used to account for the activities associated with the transmission and distribution of potable water by
the City to its users. This fund also accounts for the accumulation of water facility revenues to be used in capital
improvement projects in the City.
Lopez Fund
This fund is responsible for the purchase of water from Lopez Dam. The City has a 50.55% share of the water and
expense generated by Zone 3 – County of San Luis Obispo’s Flood Control and Water Conservation District.
Sewer Fund
This fund is used to account for maintenance of sewer lines connecting City residents to the South San Luis Obispo
County Sanitation District sewer plant. This fund also accounts for the accumulation of sewer facility revenues to
be used in capital improvement projects in the City.
Item 8.c. - Page 45
City of Arroyo Grande
PROPRIETARY FUNDS
Statement of Net Position
June 30, 2019
ASSETS
Current assets:
Cash and investments $ 3,913,879 $ 1,704,878 $ 2,161,707 $ 7,780,464
Receivables:
Accounts, net 1,215,861 167,713 1,383,574
Interest 16,583 5,091 21,674
Inventory 66,887 5,864 72,751
Prepaid items 2,316 2,316
Total current assets 5,215,526 1,704,878 2,340,375 9,260,779
Capital assets:
Nondepreciable assets 80,854 88,482 169,336
Depreciable assets, net 11,466,418 22,753,571 34,219,989
Total capital assets, net 11,547,272 22,842,053 34,389,325
Total assets 16,762,798 1,704,878 25,182,428 43,650,104
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension 937,615 60,467 998,082
Deferred OPEB 17,260 17,260
Total deferred outflows of resources 954,875 60,467 1,015,342
LIABILITIES
Current liabilities:
Accounts payable 108,598 7,447 116,045
Deposits payable 130,897 130,897
Interest payable 256 158 414
Unearned revenue 48,191 8,792 56,983
Debt due within one year 25,224 15,522 40,746
Total current liabilities 313,166 31,919 345,085
Noncurrent liabilities:
Compensated absences 91,532 13,383 104,915
Leases payable 39,089 24,055 63,144
OPEB liability 379,254 379,254
Net pension liability 2,011,203 129,702 2,140,905
Total noncurrent liabilities 2,521,078 167,140 2,688,218
Total liabilities 2,834,244 199,059 3,033,303
DEFERRED INFLOWS OF RESOURCES
Deferred pension 194,274 12,529 206,803
Deferred OPEB 46,707 46,707
Total deferred inflows of resources 240,981 12,529 253,510
NET POSITION
Net investment in capital assets 11,482,959 22,802,476 34,285,435
Restricted for:
Capital projects 851,275 384,335 1,235,610
Unrestricted 2,308,214 1,704,878 1,844,496 5,857,588
Total net position $ 14,642,448 $ 1,704,878 $ 25,031,307 $ 41,378,633
TotalsLopez FundWater Fund Sewer Fund
The notes to the basic financial statements are an integral part of this statement.
B‐30
Item 8.c. - Page 46
City of Arroyo Grande
PROPRIETARY FUNDS
Statement of Revenues, Expenses, and Changes in Net Position
For the Fiscal Year Ended June 30, 2019
OPERATING REVENUES
Charges for services $ 7,013,413 $‐ $ 1,047,542 $ 8,060,955
Distribution charges 66,457 66,457
Meter installations 24,213 24,213
Other revenue 23,838 3,958 27,796
Total operating revenues 7,127,921 1,051,500 8,179,421
OPERATING EXPENSES
Distribution 812,113 812,113
General 190,776 348,034 538,810
Lopez water contract 3,576,785 3,576,785
Production 138,721 138,721
Depreciation 285,430 580,778 866,208
Total operating expenses 1,427,040 3,576,785 928,812 5,932,637
Operating income (loss)5,700,881 (3,576,785) 122,688 2,246,784
NON‐OPERATING REVENUES/(EXPENSES)
Loss on disposal of capital assets (9,083) (9,083)
Interest income 118,505 922 41,721 161,148
Interest expense (2,960) (2,730) (5,690)
Total non‐operating revenues 106,462 922 38,991 146,375
Income (loss) before transfers 5,807,343 (3,575,863) 161,679 2,393,159
Transfer in 75,035 3,576,785 3,651,820
Transfer out (5,414,188) (389,804) (5,803,992)
Change in net position 468,190 922 (228,125) 240,987
Net position ‐ July 1, 2018 14,174,258 1,703,956 25,259,432 41,137,646
Net position ‐ June 30, 2019 $ 14,642,448 $ 1,704,878 $ 25,031,307 $ 41,378,633
Water Fund Lopez Fund TotalsSewer Fund
The notes to the basic financial statements are an integral part of this statement.
B‐31
Item 8.c. - Page 47
City of Arroyo Grande
PROPRIETARY FUNDS
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 7,147,215 $‐ $ 1,058,281 $ 8,205,496
Payments to suppliers (1,017,122) (3,576,785) (138,552) (4,732,459)
Payments to employees (249,778) (245,731) (495,509)
Other receipts 23,838 3,958 27,796
Net cash provided (used) by operating
activities 5,904,153 (3,576,785) 677,956 3,005,324
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Lease principal payments made (24,575) (15,124) (39,699)
Interest expense payments (2,704) (2,572) (5,276)
Purchase of capital assets (45,991) (61,644) (107,635)
Net cash used by capital and
related financing activities (73,270) (79,340) (152,610)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers from/(to) other funds (5,339,153) 3,576,785 (389,804) (2,152,172)
Net cash provided (used) by noncapital
financing activities (5,339,153) 3,576,785 (389,804) (2,152,172)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 114,007 922 40,517 155,446
Net cash provided by investing
activities 114,007 922 40,517 155,446
Net increase in cash and cash
equivalents 605,737 922 249,329 855,988
Cash and cash equivalents ‐ July 1, 2018 3,308,142 $ 1,703,956 $ 1,912,378 $ 6,924,476
Cash and cash equivalents ‐ June 30, 2019 $ 3,913,879 $ 1,704,878 $ 2,161,707 $ 7,780,464
RECONCILIATION TO THE STATEMENT OF NET POSITION
Cash and investments $ 3,913,879 $ 1,704,878 $2,161,707 $ 7,780,464
(Continued)
Water Fund Lopez Fund TotalsSewer Fund
The notes to the basic financial statements are an integral part of this statement.
B‐32
Item 8.c. - Page 48
City of Arroyo Grande
PROPRIETARY FUNDS
Statement of Cash Flows (Continued)
For the Fiscal Year Ended June 30, 2019
Reconciliation of operating income (loss) to net
cash provided (used) by operating
activities:
Operating income (loss)$ 5,700,881 $ (3,576,785) $ 122,688 $ 2,246,784
Adjustments to reconcile operating
activities:
Depreciation expense 285,430 580,778 866,208
Change in assets, deferred outflows of resources,
liabilities and deferred inflows of resources:
Receivables, net 34,776 10,739 45,515
Inventory 2,395 (1,132) 1,263
Prepaid items (2,316) (2,316)
Deferred outflows for pensions (411,263) (29,475) (440,738)
Deferred outflows for OPEB (2,718) (2,718)
Accounts and other payables 66,672 (32,546) 34,126
Deposits payable 1,788 1,788
Unearned revenue 6,568 6,568
Compensated absences 3,613 2,770 6,383
OPEB 9,967 9,967
Pension liability 42,237 13,767 56,004
Deferred inflows for pensions 157,557 10,367 167,924
Deferred inflows for OPEB 8,566 8,566
Net cash provided (used) by
operating activities $ 5,904,153 $ (3,576,785) $ 677,956 $3,005,324
Water Fund Lopez Fund TotalsSewer Fund
The notes to the basic financial statements are an integral part of this statement.
B‐33
Item 8.c. - Page 49
THIS PAGE IS INTENTIONALLY LEFT BLANK
Item 8.c. - Page 50
City of Arroyo Grande
DESCRIPTION OF FIDUCIARY FUNDS
B-35
Private-Purpose Trust Fund
Successor Agency to the Former Arroyo Grande Redevelopment Agency
This private-purpose trust fund was created to hold the assets of the former redevelopment agency of the City of
Arroyo Grande until they are distributed to other units of state and local government after the payment of
enforceable obligations have been made.
Agency Funds
Sanitation Distribution Fund
This agency fund accounts for the receipt and remittance of wastewater processing fees on behalf of the South San
Luis Obispo County Sanitation District. The City bills the wastewater processing fee through the utility bills,
collecting the fee from the City's utility customers.
Downtown Parking Fund
This agency fund collects assessments from Arroyo Grande Village merchants for the maintenance of the Village
parking lots for the Downtown Village Merchants Association.
San Luis Obispo TMD (Tourism Marketing District) Fund
This agency fund collects assessments The TMD assessment is 1% of taxable rents collected by lodging operators in
the City and is remitted to the County. Lodging operators include hotels, motels, vacation rental properties, private
home vacation rentals, inns, bed & breakfasts, etc. The TMD assessment increases to 1.5% on July 1, 2020.
Item 8.c. - Page 51
City of Arroyo Grande
STATEMENT OF FIDUCIARY NET POSITION
June 30, 2019
ASSETS
Cash and investments $ 322,936 $ 265,829 $ 588,765
Restricted cash and investments 5,029 5,029
Accounts receivable 92,497 92,497
Interest receivable 5 5
Inventory ‐ land held for resale 860,928 860,928
Note receivable 1,362,617 1,362,617
Total assets 2,551,510 $ 358,331 2,909,841
LIABILITIES
Accounts payable 99 $ 18,699 18,798
Interest payable 65,916 65,916
Unearned revenue 172,186 172,186
Due to other agencies 339,632 339,632
Bonds payable 4,830,654 4,830,654
Total liabilities 5,068,855 $ 358,331 5,427,186
NET POSITION
Held in trust for:
Successor agency to the former
redevelopment agency (2,517,345) (2,517,345)
Total net position $ (2,517,345) $ (2,517,345)
Private‐Purpose
Trust Fund
Agency Funds Totals
Successor Agency to
the Former
Redevelopment
Agency
The notes to the basic financial statements are an integral part of this statement.
B‐36
Item 8.c. - Page 52
City of Arroyo Grande
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
Fiduciary Fund
For the Fiscal Year Ended June 30, 2019
ADDITIONS
Property taxes $ 665,198
Use of money and property 28,561
Total additions 693,759
DELETIONS
Contract services 5,351
Amortization 11,524
Interest and fiscal agent fees 202,329
Total deletions 219,204
Net change in net position 474,555
Net position ‐ July 1, 2018 (3,273,761)
Prior‐period adjustment 281,861
Net position ‐ July 1, 2018, restated (2,991,900)
Net position ‐ June 30, 2019 $ (2,517,345)
Successor Agency to
the Former
Redevelopment
Agency
Private‐Purpose
Trust Fund
The notes to the basic financial statements are an integral part of this statement.
B‐37
Item 8.c. - Page 53
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-38
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of The City of Arroyo Grande (City) have been prepared in conformity with accounting principles
generally accepted in the United States of America as applied to governmental units. The Government Accounting Standards Board
(GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more
significant of the City’s accounting policies are described below:
A. Reporting Entity
The City was incorporated in 1911, under the laws of the State of California. The City operates under a Council-Manager form of
government, which includes an elected Mayor and a four-member council. The accompanying basic financial statements present
the financial activity of the City, which is the primary government, along with the financial activities of its component unit, which
is an entity for which the City is financially accountable. Although they are separate legal entities, blended component units are
in substance part of the City’s operations and are reported as an integral part of the City’s basic financial statements.
There are no component units in this report which meet the criteria of the GASB Statement No. 14, The Financial Reporting Entity,
as amended by GASB Statements No. 39, 61, and 80.
B. Basis of Accounting and Presentation
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The
operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund
balances or net position, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and
accounted for in individual funds based upon the purposes for which the governmental resources are to be spent and the means
by which spending activities are controlled.
The government-wide, proprietary funds and private-purpose trust fund financial statements are reported using the economic
resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are
recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Assets equal liabilities and the
measurement of operations is not a focus of the agency funds.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of
accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues
reported in the governmental funds to be available if the revenues are collected within sixty days after fiscal year-end.
Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt,
claims and judgments, and compensated absences, which are recognized as expenditures to the extent that they have matured.
Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of long-term debt and acquisitions under
capital leases are reported as other financing sources.
Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange,
include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in
the fiscal year for the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which
all eligibility requirements have been satisfied.
Item 8.c. - Page 54
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-39
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
B. Basis of Accounting and Presentation – continued
Other revenues susceptible to accrual include other taxes, intergovernmental revenues, interest, and charges for services.
Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements,
the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general
revenues. Thus, either restricted and unrestricted fund balances or net position may be available to finance program
expenditures/expenses. The City’s policy is to first apply restricted grant resources to such programs, followed by general
revenues if necessary.
Government-wide Statements
The Statement of Net Position and the Statement of Activities display information about the City. These statements include the
financial activities of the overall City government, except for fiduciary activities. Eliminations have been made to minimize the
double counting of internal activities. Government activities generally are financed through taxes, intergovernmental revenues,
and other non-exchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the City’s
governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are
clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services
offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program,
and (c) fees, grants, and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues
that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements
The fund financial statements provide information about the City’s funds, including fiduciary funds. Separate statements for each
fund category-governmental, proprietary and fiduciary-are presented. The emphasis of fund financial statements is on major
individual funds, each of which is displayed in a separate column. All remaining governmental funds are aggregated and reported
as non-major funds.
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in
Net Position, and a Statement of Cash Flows for all proprietary funds. Proprietary funds are accounted for using the economic
resources measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or non-
current) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position
present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are
recognized in the period in which they are earned while expenses are recognized in the period in which liability is incurred.
Operating revenues in the proprietary funds are those revenues that are generated from the primary operation of the fund. All
other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary
operations of the fund. All other expenses are reported as non-operating expenses.
Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private
organizations, other governmental units, and/or other funds. The City maintains three agency funds; Sanitation Distribution,
Downtown Parking, and San Luis Obispo County TMD Assessment Fund and one private-purpose trust fund, the Successor Agency
to the Former Redevelopment Agency of Arroyo Grande.
Item 8.c. - Page 55
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-40
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
C. Major Funds
GASB Statement No. 34 defines major funds and requires that the City’s major funds be identified and presented separately in
the fund financial statements. All other funds, called non-major funds, are combined and reported in a single column, regardless
of their fund-type.
Major funds are defined as funds that have assets, liabilities, revenues, or expenditures/expenses equal to or greater than (a) ten
percent of their fund-type total and (b) five percent of all fund types total combined. The General Fund is always a major fund.
The City may also select other funds it believes should be presented as major funds.
The City reported the following major governmental funds in the accompanying financial statements:
General Fund – This is the primary operating fund of the City, which accounts for resources and services traditionally associated
with government. The General Fund provides administrative, financial, police protection, fire protection, community
development, recreation, and maintenance services to the community.
Special Gasoline Tax Fund – This fund accounts for the receipts and expenditures of money apportioned by the State under Streets
and Highway Code sections 2103, 2105, 2106, 2107, and 2107.5. The use of gas tax revenue can only be used to construct and
maintain streets, roads, and highways.
Transportation Impact Fees Fund – This fund accounts for transportation impact fees collected.
In-Lieu Affordable Housing Fund – This fund accounts for monies paid by developers in meeting the City’s mandatory affordable
housing requirement.
CDBG Fund – This fund accounts for revenues and expenditures related to Community Development Block Grant (CDBG) funds.
Capital Improvement Fund – This fund accounts for capital improvements projects performed by the City and the use of those
revenues.
The City reported the following major proprietary funds:
Water Fund – This fund accounts for the activities of providing water to residents of the City. This fund also accounts for the
accumulation of water facility revenues to be used in capital improvement projects in the City.
Sewer Fund – This fund is used to account for maintenance of sewer lines connecting City residents to the South San Luis Obispo
County Sanitation District sewer plant. Maintenance costs are funded by user charges. This fund also accounts for the
accumulation of sewer facility revenues to be used in capital improvement projects in the City.
Lopez Fund – This fund accounts for the activities associated with Lopez Lake and the water contract with the County of San Luis
Obispo.
D. Cash and Investments
The City pools its available cash for investment purposes. The City considers pooled cash and investments, with original maturities
of three months or less, to be cash equivalents.
Item 8.c. - Page 56
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-41
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
D. Cash and Investments – continued
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External
Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized
cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market
quotations are readily available. The City’s investments with fiscal agent required by bond indentures are stated at cost, which
approximate fair value.
The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which
has invested a portion of the pool funds in structured notes and asset-backed securities. LAIF’s investments are subject to credit
risk with the full faith and credit of the State of California collateralizing these investments. In addition, these structured notes
and asset-backed securities are subject to market risk as to change in interest rates.
E. Capital Assets
Capital assets are defined as costs related to the acquisition or purchase of property, plant, equipment, and infrastructure (roads,
sidewalks, drainage systems, lighting systems, etc.). Capital assets are reported in the applicable governmental or business-type
activities columns in the government-wide financial statements. All capital assets are valued at historical cost or estimated
historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair value on the
date contributed. It is the City’s policy to capitalize all capital assets with costs exceeding $50,000 for infrastructure-type assets
and $5,000 on all other assets and with useful lives exceeding two years.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset
are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.
With the implementation of GASB Statement No. 34, the City has recorded all its public domain (infrastructure) capital assets,
which include roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems.
The purpose of depreciation is to spread the cost of capital assets equitable among all users over the life of these assets. The
amount charged to depreciation expense each fiscal year represents that fiscal year’s pro rata share of the cost of capital assets.
GASB Statement No. 34 requires that all capital assets with limited useful lives be depreciated over their estimated useful lives.
Depreciation is provided using the straight line method which means the cost of the asset is divided by its expected useful life in
years and the result is charged to expense each fiscal year until the asset is fully depreciated. The City has assigned the useful
lives listed below to capital assets:
Machinery and equipment 5 – 15 years
Structures and improvements 10 – 50 years
Infrastructure 25 – 50 years
F. Interfund Transactions
Interfund transactions are reported as loans, services provided, reimbursements, or transfers. Loans are reported as interfund
receivables and payables, as appropriate, and are subject to elimination upon consolidation. Services provided, deemed to be at
market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when one fund incurs
a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions
are treated as transfers. Transfers among governmental funds are netted as part of the reconciliation to the government-wide
financial statements.
G. Unearned Revenue
Unearned revenues are recognized for transactions for which revenue has not yet been earned. Typical transactions for which
unearned revenue is recorded are grants received but not yet earned.
Item 8.c. - Page 57
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-42
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
H. Deferred Outflows and Inflows of Resources
Pursuant to GASB Statement No. 63, “Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and
Net Position,” and GASB Statement No. 65, “Items Previously Reported as Assets and Liabilities,” the City recognizes deferred
outflows and inflows of resources.
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources.
A deferred outflow of resources is defined as a consumption of net position by the City that is applicable to a future reporting
period.
In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources.
A deferred inflow of resources is defined as an acquisition of net position by the City that is applicable to a future reporting period.
I. Compensated Absences
In compliance with GASB Statement No. 16, the City has established a liability for accrued sick leave and vacation. All vacation is
accrued when incurred in the government-wide and proprietary financial statements. This liability is calculated for current
employees at the current rates of pay. City employees accrue vacation and sick leave that vary in amounts, based primarily on
employment status and years of service. In the event of termination or retirement, employees are reimbursed for the total value
of their accumulated vacation days, annual leave and compensatory time. In the event of retirement, employees may choose to
be paid 50% of their unused sick leave, to a maximum of 450 hours at the current rate of pay. In addition, unused accumulated
sick leave may be converted to retirement credit per the City’s contract with the California Public Employees Retirement System.
J. Long-term Liabilities
In the government-wide financial statements, proprietary fund, and private-purpose trust fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities,
business-type activities, or proprietary fund type statement of net position.
In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period.
The face amount of the debt issued is reported as other financing resources. Premiums received on debt issuances are reported
as other financing sources while discounts on debt issuances are reported as other financing uses.
K. Fund Balances and Net Position
Fund balance is the difference between the assets and liabilities reported in the governmental funds. In compliance with GASB
Statement No. 54, the City has established the following fund balance classifications:
Non-spendable – The non-spendable fund balance classification includes amounts that cannot be spent because they are
either (a) not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted – The restricted fund balance classification includes amounts that reflect constraints placed on the use of resources
(other than non-spendable items) that are either (a) externally imposed by creditors (such as through debt covenants),
grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions
or enabling legislation. Committed – The committed fund balance classification includes amounts that can only be used for specific purposes
pursuant to constraints imposed by formal action of the City Council. Those committed amounts cannot be used for any
other purpose unless the government removes or changes the specified use by taking the same type of action (legislation,
resolution, ordinance, etc.) it employed to previously commit those amounts. Committed fund balance should also
incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use
in satisfying those contractual requirements.
Assigned – The assigned fund balance classification includes amounts that are constrained by the government’s intent to be
used for specific purposes, but that are neither restricted nor committed. Such intent is to be established by (a) the City
Council itself or (b) the City Manager to which the City Council has delegated the authority to assign amounts to be used for
specific purposes.
Item 8.c. - Page 58
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-43
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
K. Fund Balances and Net Position – continued
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.
Governmental Accounting Standards Board Statement No. 63 requires that the difference between assets added to the deferred
outflows of resources and liabilities added to the deferred inflows of resources be reported as net position. Net position is
classified in the following categories:
Net Investment in Capital Assets – Net position that is net investment in capital assets consist of capital assets, net of
accumulated depreciation, and reduced by outstanding debt directly attributed to the acquisition, construction, or
improvement of the assets.
Restricted Net Position – The restricted net position is the portion of net position that has external constraints placed on it by
external creditors, grantors, contributors, laws, or regulations of other governments, or through constitutional provisions or
enabling legislation.
Unrestricted Net Position – The unrestricted net position classification is the amount remaining that does not fall into one of
the above two categories.
When an expenditure is incurred for which both restricted and unrestricted fund balances are available, it is City’s policy that the
restricted fund balance be spent first followed by committed, then assigned, and, if applicable, unassigned.
The City has established a formal minimum general fund balance policy of 15% of appropriations, with the goal of maintaining
20% of appropriations.
L. Property Taxes
California Constitution Article XIII A limits the combined property tax rate to one percent of a property’s assessed valuation.
Additional taxes may be imposed with voters’ approval. Assessed value is calculated at one hundred percent of a property’s fair
value, as defined by Article XIII A, and may be increased by no more than two percent per year unless a change in ownership
occurs. The State Legislature has determined the method of distributing the one percent tax levy among the various taxing
jurisdictions.
Property tax revenues are recognized in the fiscal year for which taxes have been levied and collected within sixty days of fiscal
year end. Property taxes are billed and collected as shown below:
Secured Unsecured
Valuation/Lien Dates January 1 January 1
Levy Dates July 1 July 1
Due Dates November 1 (50%) August 1
February 1 (50%)
Delinquency Dates December 10 (Nov) August 31
April 10 (Feb)
The City has adopted an alternative method of property tax distribution (the “Teeter Plan”). Under this method, the City receives
100% of its secured property tax levied in exchange for foregoing any interest and penalties collected on delinquent taxes. The
City receives payments as a series of advances made by the County throughout the fiscal year. The secured property tax levy is
recognized as revenue upon receipt including the final payment, which generally is received within 60 days of the fiscal year end.
Item 8.c. - Page 59
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-44
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
M. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension
expense, information about the fiduciary net position of the City’s California Public Employees Retirement System (PERS) plan
and additions to or deductions from the PERS plan fiduciary net position have been determined on the same basis as they are
reported by PERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when
due and payable in accordance with the benefit terms. Investments are reported at fair value.
N. 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.
O. Future Accounting Pronouncements
GASB Statements listed below will be implemented in future financial statements:
Statement No. 84 "Fiduciary Activities” The provisions of this statement are effective
for fiscal years beginning after December 15, 2019.
Statement No. 87 "Leases” The provisions of this statement are effective
for fiscal years beginning after June 15, 2021.
Statement No. 89 “Accounting for Interest Cost Incurred
before the end of a Construction period"
The provisions of this statement are effective
for fiscal years beginning after December 15, 2020.
Statement No. 90 "Majority Equity Interests-an Amendment of
GASB Statements 14 and 61.”
The provisions of this statement are effective for
fiscal years beginning after December 15, 2019.
Statement No. 91 "Conduit Debit Obligations” The provisions of this statement are effective
for fiscal years beginning after December 15, 2021.
NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Biennial budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for
governmental funds. The two-year budget is legally adopted for all funds by the City Council prior to July 1 of odd years. The City
Manager first submits a preliminary budget in April of the odd year, which includes projected expenditures and the means of financing
them, to the City Council. As modified during public study sessions, the preliminary budget becomes the proposed budget. Following
public hearings on the proposed budget, the final annual budget is adopted by the City Council in June. After adoption of the final
budget, transfers of appropriations within a general fund department, or within other funds, can be made by the City Manager. Budget
modifications to any of the funds, increases or decreases to a fund’s overall budget, and all transfers in and out of any funds, must be
approved by the City Council. Numerous properly authorized amendments are made during the fiscal year. Budgetary control is
enhanced by integrating the budget into the general ledger accounts. Encumbrance accounting is employed (e.g., purchase orders)
to avoid expenditures over the budget. Encumbrances outstanding at the end of the fiscal year are automatically budgeted in the
following fiscal year.
Item 8.c. - Page 60
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-45
NOTE 3 – CASH AND INVESTMENTS
The composition of cash and investments as of June 30, 2019, is as follows:
Cash in bank and on hand $ 11,948,383
Cash and investments held with fiscal agent 5,029
Cash in escrow 7,345
Investments 15,442,172
Total $ 27,402,929
Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted under
the terms of the City’s debt instruments or Agency’s agreements:
Cash and investments, statement of net position $ 26,809,135
Cash and investments, statement of fiduciary net position 588,765
Restricted cash and investments, statement of fiduciary
net position
5,029
Total $ 27,402,929
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting
principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices
in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable
inputs.
The City has the following recurring fair value measurements as of June 30, 2019:
Fair Value Measurements Using
Total
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Investments by Fair Value
U.S. Agency Securities $ 7,006,519 $ 7,006,519 $ - $ -
Investments measured at Amortized Cost
Local Agency Investment Fund 4,859,812
Certificates of Deposit 3,575,841
Money Market Funds 5,029
Total $ 15,447,201
Investments Authorized by the California Government Code and the City’s Investment Policy
The table on the following page identifies the investment types that are authorized for the City by the California Government Code.
The table also identifies certain provisions of the California Government Code that address interest rate risk, credit risk, and
concentration of credit risk.
Item 8.c. - Page 61
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-46
NOTE 3 – CASH AND INVESTMENTS – continued
Investments Authorized by the California Government Code and the City’s Investment Policy (continued)
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
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the
longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways
that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments
and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as
necessary to provide the cash flows and liquidity needed for operations. Information about the sensitivity of the fair values of the
City’s investments to market interest rate fluctuations is provided below that shows the distribution of the City’s investments by
maturity:
Remaining Maturity (in Months)
Carrying
Amount
12 Months or
Less
13-24 Months
25-60 Months
More than 60
Months Investment Type
Local Agency Investment Fund $ 4,859,812 $ 4,859,812 $ - $ - $ -
Certificates of Deposit 3,575,841 2,834,841 741,000
U.S. Agency Securities 7,006,519 1,009,540 1,483,720 4,513,259
Held by Fiscal Agent:
Money Market Funds 5,029 5,029
Total $ 15,447,201 $ 8,709,222 $ 2,224,720 $ 4,513,259 $ -
Item 8.c. - Page 62
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-47
NOTE 3 – CASH AND INVESTMENTS – continued
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is
measured by the assignment of 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 $ 4,859,812 N/A $ - $ - $ - $ 4,859,812
Certificates of Deposit 3,575,841 N/A 3,575,841
U.S. Agency Securities 7,006,519 N/A 7,006,519
Held by Fiscal Agent:
Money Market Funds 5,029 N/A 5,029
Total $ 15,447,201 $ - $ 7,006,519 $ - $ 8,440,682
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.
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.
Item 8.c. - Page 63
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-48
NOTE 4 – CAPITAL ASSETS
Capital asset activity for the fiscal year ended June 30, 2019, is as follows:
Transfers and
Balance Other Re- Balance
July 1, 2018 Additions Deletions classifications June 30, 2019
Governmental Activities
Nondepreciable capital assets
Land $ 4,236,528 $ - $ - $ - $ 4,236,528
Infrastructure 6,379,188 6,379,188
Construction in progress 3,652,161 683,616 (194,287) (775,634) 3,365,856
Total nondepreciable capital
assets 14,267,877 683,616 (194,287) (775,634) 13,981,572
Depreciable capital assets
Structures and improvements 13,407,938 8,410 554,128 13,970,476
Equipment 4,258,597 105,492 (124,774) 4,239,315
Infrastructure 40,670,520 221,506 40,892,026
Total depreciable capital assets 58,337,055 113,902 (124,774) 775,634 59,101,817
Less accumulated depreciation 29,183,839 1,413,230 (124,774) 30,472,295
Net depreciable capital assets 29,153,216 (1,299,328) 775,634 28,629,522
Net capital assets $ 43,421,093 $ (615,712) $ (194,287) $ - $ 42,611,094
Transfers and
Balance Other Re- Balance
July 1, 2018 Additions Deletions classifications June 30, 2019
Business-type Activities
Nondepreciable capital assets
Land $ 56,730 $ - $ - $ - $ 56,730
Construction in progress 736,394 77,209 (9,083) (691,914) 112,606
Total nondepreciable capital
assets 793,124 77,209 (9,083) (691,914) 169,336
Depreciable capital assets
Structures and improvements 222,999 222,999
Equipment 817,990 30,426 848,416
Infrastructure 58,304,450 691,914 58,996,364
Total depreciable capital assets 59,345,439 30,426 691,914 60,067,779
Less accumulated depreciation 24,981,582 866,208 25,847,790
Net depreciable capital assets 34,363,857 (835,782) 691,914 34,219,989
Net capital assets $ 35,156,981 $ (758,573) $ (9,083) $ - $ 34,389,325
Transfers and Other Reclassifications
During the 2018-19 fiscal year, the City completed $1,467,548 in various capital projects.
Item 8.c. - Page 64
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-49
NOTE 4 – CAPITAL ASSETS – continued
Depreciation Allocation
Depreciation expense was charged to functions and programs based on their usage of related assets. The amounts allocated to each
function or program is presented below:
Governmental Activities:
General government $ 154,397
Community development 1,317
Public safety 384,437
Public works 130,721
Streets and roads 742,358
Total depreciation expense – governmental activities $ 1,413,230
Business-type Activities:
Water $ 285,430
Sewer 580,778
Total depreciation expense – business-type activities $ 866,208
NOTE 5 – LOANS RECEIVABLE
On August 13, 1996, the City entered into a loan agreement with C-Court Limited Partnership for the purpose of development of a
rental housing development located at 351 South Elm Street in the amount of $344,040 provided by the CDBG Fund. The note has a
term of 30-years, with no interest bearing. The total amount of the loan is due at the end of the term.
On August 13, 1996, the City entered into a loan agreement with Oak Forest Association for the purpose of development of a 20-unit
multifamily affordable housing development located at 163 South Elm Street in the amount of $445,000 provided by the CDBG Fund.
The note had a term of 30-years, with no interest bearing. The total amount of the loan is due at the end of the term.
On July 25, 2006, the City entered into a loan agreement with the Redevelopment Agency of Arroyo Grande, subsequently the
Successor Agency of the Former Redevelopment Agency of Arroyo Grande, for the purpose of funding the cost of the acquisition of a
vacant lot on the north side of Faeh Street in the amount of $820,130. The loan originally called for interest to be accrued equal to
the rate earned by the City’s Local Agency Investment Fund, however, on February 23, 2010, the agreement was amended to no longer
accrue interest. The Department of Finance recognizes loans from Cities to Redevelopment Agencies as “enforceable obligations”
eligible for repayment, under provisions of the loan agreements pursuant to provisions included in Assembly Bill 1484, once the
Successor Agency receives a “Finding of Completion” from the Department of Finance, loan agreements between the Redevelopment
Agency and the City shall be deemed to be enforceable obligations provided that the Oversight Board makes a finding that the loan
was for legitimate redevelopment purposes. On May 14, 2013, the Oversight Board approved the legitimacy of this loan. The total
amount outstanding, including accrued interest at June 30, 2019, was $0 as it was paid off in full during the year.
On March 28, 2013, the Redevelopment Agency of Arroyo Grande, subsequently the Successor Agency of the Former Redevelopment
Agency of Arroyo Grande, entered into a loan agreement with Courtland Street Apartments, LP for the construction of a 36-unit
affordable housing rental project and related improvements on the property located on the corner of Grand Avenue and Courtland
Avenue. On August 13, 2013, the City approved Amendment No. 1 to the Affordable Housing and Loan Agreement which provides up
to $400,000 of additional In-Lieu Affordable Housing funds towards this project. The total amount outstanding, including accrued
interest at June 30, 2019, was $238,405.
Loans Receivable:
In-Lieu Affordable Housing Fund $ 238,405
CDBG Fund 789,040
Total $ 1,027,445
Item 8.c. - Page 65
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-50
NOTE 6 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
A. Interfund Transfers
The transfers in and out between funds during the fiscal year ended June 30, 2019, were as follows:
Transfer In Transfer Out
General Fund $ 2,349,499 $ 802,935
Special Gasoline Tax Fund 346,404 412,378
Transportation Impact Fees Fund 57,465
Capital Improvement Fund 1,081,661
Nonmajor Governmental Funds 78,804 431,418
Water Fund 75,035 5,414,188
Lopez Fund 3,576,785
Sewer Fund 389,804
Total $ 7,508,188 $ 7,508,188
B. Interfund Receivable and Payable
The amounts borrowed between funds during the fiscal year ended June 30, 2019, were as follows:
Due from Due to
General Fund $ 54,943 $ -
CDBG Fund 54,943
Total $ 54,943 $ 54,943
NOTE 7 – DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
At June 30, 2019, deferred inflows of resources, reported in the governmental fund financial statements, consisted of the following:
Unavailable Loan Revenue:
In-Lieu Affordable Housing Fund $ 238,405
CDBG Fund 789,040
Total $ 1,027,445
Information on deferred inflows and outflows of resources related to pension and OPEB plans can be found in Note 11 – Defined
Benefit Pension Plans and Note 12 – Postemployment Health Care Benefits (OPEB).
NOTE 8 – LONG-TERM LIABILITIES
A. Compensated Absences
City employees accumulate earned but unused vacation and sick pay benefits, which can be converted to cash at termination of
employment. Since no means exists to reasonably estimate the amounts that might be liquidated with current available financial
resources, if any, they are reported as long-term debt on the Statement of Net Position. No expenditure is reported for these
amounts in the funds statements. However, in the Statement of Activities the expenditure is allocated to each function based on
usage. The non-current portion of these vested benefits (payable in accordance with various collective bargaining agreements)
at June 30, 2019, total $743,235 for governmental activities and $104,915 for business-type activities.
B. Capital Leases Payable
The City is leasing police vehicles with De Lage Landen Public Finance LLC under an agreement which provides for title to pass
upon expiration of the lease period. The final lease payment was made this year.
The City is leasing police vehicles with California Nation Bank and public works vehicles and equipment from Community Bank of
Santa Maria under agreements which provide for title to pass upon expiration of the lease period.
Item 8.c. - Page 66
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-51
NOTE 8 – LONG-TERM LIABILITIES – continued
B. Capital Leases Payable (continued)
The future minimum payment obligation for the capital leases payable are shown below:
Fiscal Year
Ending June 30
California
First National
Bank
Community
Bank of Santa
Maria
Total
2020 $ 74,448 $ 130,155 $ 204,603
2021 129,467 129,467
2022 64,469 64,469
Total 74,448 324,091 398,539
Less: amount
representing in interest
2,863 14,896
17,759
Present value of net
minimum payments
$ 71,585 $ 309,195
$ 380,780
C. California Energy Resources Conservation and Development Commission Loan Payable
On July 7, 2010, the City entered into a loan agreement with the California Energy Resources Conservation and Development
Commission (CA Energy). The purpose of the loan was to partially fund the city-wide energy savings project. The project consisted
of heating, ventilation, and air conditioning retrofits including equipment, building controls, lighting equipment and lighting
controls, installation of vending machine misers, installation of LCD computer monitors, installation of computer controls, and
installation of LED streetlights. Installation occurred at all City owned buildings including city council chambers, city hall, fire
department, community center, corporate yard, Soto Field complex, and recreation services building.
The outstanding loan payable debt of the City at June 30, 2019 is shown below:
Date of
Issue Interest Rate
Maturity
Date
Amount of
Original Issue
Outstanding
July 1, 2018
Redeemed
Current Year
Outstanding
June 30, 2019
2011 3.00% 2026 $ 127,512 $ 81,950 $ 9,209 $ 72,741
The future minimum payment obligation for the loan payable is as follows:
Fiscal Year
Ending June 30
Principal
Interest
Total
2020 $ 9,482 $ 2,117 $ 11,599
2021 9,775 1,825 11,600
2022 10,070 1,530 11,600
2023 10,374 1,225 11,599
2024 10,686 914 11,600
2025-2026 22,354 845 23,199
Total $ 72,741 $ 8,456 $ 81,197
Item 8.c. - Page 67
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-52
NOTE 8 – LONG-TERM LIABILITIES – continued
D. United States Department of Agriculture Loan Payable
On September 1, 2010, the City entered into a lease-purchase agreement with the United States Department of Agriculture
(USDA). The purpose of this loan was to acquire the property and office building for the relocation of the City Hall offices. The
outstanding loan payable debt of the City at June 30, 2019 is shown below:
Date of
Issue Interest Rates
Maturity
Date
Amount of
Original Issue
Outstanding
July 1, 2018
Redeemed
Current Year
Outstanding
June 30, 2019
2011 3.75% 2041 $ 1,200,000 $ 1,025,000 $ 29,000 $ 996,000
The future minimum payment obligation for the USDA loan payable is as follows:
Fiscal Year
Ending June 30
Principal
Interest
Total
2020 $ 30,000 $ 36,788 $ 66,788
2021 31,000 35,644 66,644
2022 32,000 34,462 66,462
2023 33,000 33,244 66,244
2024 35,000 31,969 66,969
2025-2029 194,000 138,938 332,938
2030-2034 233,000 98,981 331,981
2035-2039 280,000 51,000 331,000
2040-2041 128,000 4,838 132,838
Total $ 996,000 $ 465,864 $ 1,461,864
E. Net Pension Liability
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension
expense, information about the fiduciary net position of the City of Arroyo Grande’s California Public Employee’s Retirement
System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the
same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are
recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. See Note 11 for
further detail.
F. OPEB Liability
For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense,
information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the Plan’s fiduciary
net position have been determined on the same basis. For this purpose, benefit payments are recognized when due and payable
in accordance with the benefit terms. Investments are reported at fair value. See Note 12 for further detail.
G. Changes in Long-Term Liabilities
Long-term liability activity for the fiscal year ended June 30, 2019, is as follows:
Balance
July 1, 2018
Additions
Deletions
Balance
June 30, 2019
Due Within
One Year
Governmental Activities
Compensated absences $ 685,851 $ 704,659 $ 647,275 $ 743,235 $ -
Capital leases payable 478,073 201,183 276,890 152,108
CA Energy loan payable 81,950 9,209 72,741 9,482
USDA loan payable 1,025,000 29,000 996,000 30,000
Net pension liability 19,349,166 673,213 2,221,892 17,800,487
OPEB liability 4,832,922 392,833 407,117 4,818,638
Total $ 26,452,962 $ 1,770,705 $ 3,515,676 $ 24,707,991 $ 191,590
Item 8.c. - Page 68
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-53
NOTE 8 – LONG-TERM LIABILITIES – continued
G. Changes in Long-Term Liabilities - continued
Balance
July 1, 2018
Additions
Deletions
Balance
June 30, 2019
Due Within
One Year
Business-type Activities
Compensated absences $ 98,532 $ 72,677 $ 66,294 $ 104,915 $ -
Capital leases payable 143,589 39,699 103,890 40,746
Net pension liability 2,084,901 176,629 120,625 2,140,905
OPEB liability 369,287 42,006 32,039 379,254
Total $ 2,696,309 $ 291,312 $ 258,657 $ 2,728,964 $ 40,746
NOTE 9 – WATER SUPPLY CONTRACT
The City has entered into a Water Supply Contract with the San Luis Obispo County Financing Authority (SLOCFA). The SLOCFA was
created on August 15, 2000, to issue bonds for the purpose of financing part or all of the costs of the purchase, construction, expansion,
improvement, or rehabilitation of any real or other tangible property. The SLOCFA issued $28,905,000 ($13,200,000 of General
Obligation Bonds and $15,705,000 Revenue Bonds) of Lopez Dam Improvement Bonds on October 1, 2000. The City is considered a
participating agency of SLOCFA. The City’s share of the Water Supply Contract is 50.55%, based upon such participating agency’s share
of the quantity of water to be distributed by SLOCFA from the Lopez Dam. The City is obligated to pay for the debt service of SLOCFA
based on their water share, as stated above. The City is further obligated to make contract payments until the fiscal year 2030.
The minimum contract payments only include the City’s portion of the Revenue Bonds. The General Obligation Bonds are not included
in the financial statements, because the SLOCFA collects the property tax revenue and makes the payment on behalf of the City.
However, in the event SLOCFA is disbanded, the City will be obligated to continue to pay its share of the remaining debt service.
The future minimum contract payments for the debt service are shown below:
Fiscal Year
Ending June 30
Contract
Payment
2020 $ 471,019
2021 470,974
2022 472,112
2023 472,491
2024 471,316
2025-2029 2,357,639
2030 939,977
Total $ 5,655,528
NOTE 10 – JOINT POWERS AUTHORITY
The City is a member of the Five Cities Fire Authority (FCFA), a joint powers authority between the Cities of Arroyo Grande, Grover
Beach, and the Oceano Community Services District. FCFA was formed on July 9, 2010 for the purpose of providing a more efficient
fire protection service within the City limits of Arroyo Grande and Grover Beach, as well as the towns of Oceano and Halcyon, which
are unincorporated areas of San Luis Obispo County. Each member contributes its pro rata share of operating costs to FCFA based on
a funding formula, calculated annually. The FCFA governing board consists of one member appointed from each participating entity
as determined by the respective City Council or Board of Directors. All financial decisions are made by this three-member board. The
City contributed $2,523,661 to FCFA during the fiscal year ended June 30, 2019 for fire protection services. Separate financial
statements may be obtained from the Five Cities Fire Authority at 140 Traffic Way in Arroyo Grande, California 93420.
Item 8.c. - Page 69
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-54
NOTE 11 – DEFINED BENEFIT PENSION PLANS
A. General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (Police) and
Miscellaneous Employee Pension Plans, cost-sharing multiple employer defined benefit plans administered by the California
Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plans are established by State statue and City
resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit
provisions, assumptions and membership information that can be found on the CalPERS website.
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members,
who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time
employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All member
are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death
Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are
applied as specified by the Public Employees’ Retirement Law.
The defined benefit pension plan provisions and benefits at June 30, 2019 are summarized below:
Miscellaneous Employee Plan
Tier I Tier II Tier III (PEPRA)
Hire date
Prior to December
20, 2012
On or after
December 20,
2012*
On or after
January 1, 2013
Benefit formula 2.5% @ 55 2.0% @ 55 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service
Benefit payments Monthly for life Monthly for life Monthly for life
Retirement age 55 55 62
Required employee contribution rates 8.000% 7.000% 6.250%
Required employer contribution rates 10.609% 8.892% 6.842%
Required employer payment of unfunded
liability
$974,613
$749
$311
Safety Employee Plan
Tier I Tier II Tier III (PEPRA)
Hire date
Prior to December
20, 2012
On or after
December 20,
2012*
On or after
January 1, 2013
Benefit formula 3.0% @ 50 3.0% @ 55 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service
Benefit payments Monthly for life Monthly for life Monthly for life
Retirement age 50 55 57
Required employee contribution rates 9.000% 9.000% 11.500%
Required employer contribution rates 20.556% 17,614% 12.141 %
Required employer payment of unfunded
liability
$993,772
$115
$228
*After January 1, 2013, second tier will only apply to employees transferring from another CalPERS agency
Item 8.c. - Page 70
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-55
NOTE 11 – DEFINED BENEFIT PENSION PLAN – continued
A. General Information about the Pension Plans – continued
Contribution Description – Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1
following notice of a change in the rate. The total plan contributions are determined through the CalPERS’ annual actuarial
valuation process. For public agency cost-sharing plans covered by either the Miscellaneous or Safety risk pools, the Plans’
actuarially determined rate is based on the estimated amount necessary to pay the Plan’s allocated share of the risk pool’s costs
of benefits earned by employees during the year, and any unfunded accrued liability. The employer is required to contribute the
difference between the actuarially determined rate and the contribution rate of employees. Contributions to the pension plan
from the City during the 2018-19 fiscal year were $1,273,841 for the miscellaneous plan and $4,351,442 for the safety plan.
At June 30, 2019, the City reported a liability of $12,294,958 for the miscellaneous plan and $7,646,434 for the safety plan for its
proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018 and the total pension
liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2017 rolled forward to
June 30, 2018 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of
the City’s long-term share of contributions to the pension plan relative to the projected contributions of all pension plan
participants, actuarially determined. At June 30, 2019, the City’s proportionate share of the net pension liability for each Plan as
of June 30, 2017 and June 30, 2018 was as shown on the following page:
Miscellaneous Safety
Proportion-June 30, 2017 0.32272% 0.14581%
Proportion-June 30, 2018 0.32624% 0.13032%
Adjustment due to differences in proportions 0.00352% -0.01549%
B. Pension Liabilities, Deferred Outflows and Inflows, and Pension Expense Related to Pensions
For the fiscal year ended June 30, 2018, the City recognized pension expense of $1,792,507 for the miscellaneous plan and
$1,460,367 for the safety plan. Pension expense represents the change in the net pension liability during the measurement
period, adjusted for actual contributions and the deferred recognition of changes in investment gains or losses, actuarial gains or
losses, actuarial assumptions or method, and plan benefits.
At June 30, 2019, the City reported deferred outflows and inflows of resources related to pension from the following resources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to measurement date $ 5,625,283 $ -
Differences between expected and actual experience 584,300 109,420
Changes in assumptions 2,151,911 444,742
Net difference between projected and actual earnings on
pension plan investment
112,553
Differences between City contributions and proportionate
share of contributions
732,204
Adjustment due to differences in proportions 90,349 1,372,098
Total $ 9,296,600 $ 1,926,260
Item 8.c. - Page 71
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-56
NOTE 11 – DEFINED BENEFIT PENSION PLAN – continued
B. Pension Liabilities, Deferred Outflows and Inflows, and Pension Expense Related to Pensions – continued
The reported deferred outflows of resources related to pensions in the amount of $5,625,283 resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the pension liability in the 2019-20 fiscal year. The
additional amounts reported as deferred outflows and inflows of resources related to pensions will be recognized as pension
expense as follows:
Fiscal Year
Ending June 30
Amount
2020 $ 1,744,223
2021 993,081
2022 (828,699)
2023 (163,548)
Total $ 1,745,057
Actuarial Assumptions – The total pension liability for both the miscellaneous and safety plans in the June 30, 2018 actuarial
valuation was determined using the following actuarial assumptions:
Change in Assumptions – In December 2017, the CalPERS Board adopted new mortality assumptions for plans participating in the
Public Employees’ Retirement Fund (PERF). The mortality table was developed from the December 2017 experience study and
includes 15 years of projected ongoing mortality improvement using 90 percent scale MP 2016 published by the Society of
Actuaries. The inflation assumption was reduced from 2.75 percent to 2.50 percent. The assumptions for individual salary increase
and overall payroll growth were reduced from 3.00 percent to 2.75 percent.
Discount Rate – The discount rate used to measure the total pension liability was 7.15 %. To determine whether the municipal
bond rate should be used in the calculation of a discount rate for public agency plans (including PERF C), CalPERS stress tested
plans that would be most likely resulted in a discount rate that would be different from the actuarially assumed discount rate.
Based on the testing of the plans, the tests revealed the assets would not run out. Therefore, the current 7.15 % discount rate is
appropriate and the use of the municipal bond rate calculation is not deemed necessary. The long-term expected discount rate
of 7.15 % is applied to all plans in the Public Employees Retirement Fund, including PERF C. The stress test results are presented
in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB 68 section.
Miscellaneous and Safety
Valuation Date June 30, 2017
Measurement Date June 30, 2018
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 3%
Projected Salary Increase Varies by Entry Age and Service
Investment Rate of Return 7.00%
Mortality Derived using CalPERS' Membership
Data for all Funds (1)
Post Retirement Benefit Increase Contract COLA up to 2.50% until
Purchasing Power Protection Allowance
Floor on Purchasing Power applies;
2.75% therafter
(1)The mortality table used was developed based on CalPERs' specific data. The table includes 20
years of mortality improvements using Society of Actuaries Scale BB. For more details on this
table please refer to the 2017 experience study report.
Item 8.c. - Page 72
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-57
NOTE 11 – DEFINED BENEFIT PENSION PLAN – continued
B. Pension Liabilities, Deferred Outflows and Inflows, and Pension Expense Related to Pensions – continued
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that
is scheduled to be completed in February 2022. Any changes to the discount rate will require Board action and proper stakeholder
outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB No. 67
and No. 68 calculations through at least the 2021-22 fiscal year. CalPERS will continue to check the materiality of the difference
in calculation until such time as they have changed their methodology.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-
estimate ranges of expected future real rates of return (expected returns, net pension plan investment expense and inflation) are
developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return
expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected
compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block
approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits were calculated
for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same
present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of
return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of
one percent.
The table on the following page reflects the long-term expected real rate of return by asset class. The rate of return was calculated
using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return
are net of administrative expenses.
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following table represents the City’s proportionate
share of the net pension liability calculated using the discount rate of 7.15 %, as well as what the City’s proportionate share of the
net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.15 %) or 1 percentage
point higher (8.15 %) than the current rate:
Asset Class
New
Strategic
Allocation
Real Return
Years 1-10(a)
Real Return
Years 11+(b)
Global Equity 50.0%4.80%5.98%
Fixed Income 28.0%1.00%2.62%
Inflation Assets 0.0%0.77%1.81%
Private Equity 8.0%6.30%7.23%
Real Assets 13.0%3.75%4.93%
Liquidity 1.0%0.00%-0.92%
Total 100.0%
(a) An expected inflation of 2.00% was used for this period.
(b) An expected inflation of 2.92% was used for this period.
Item 8.c. - Page 73
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-58
NOTE 11 – DEFINED BENEFIT PENSION PLAN – continued
B. Pension Liabilities, Deferred Outflows and Inflows, and Pension Expense Related to Pensions – continued
Plans’ Net Pension Liability
Discount Rate -1%
(6.15%)
Current Discount
Rate (7.15%)
Discount Rate +1%
(8.15%)
Miscellaneous $ 17,799,935 $ 12,294,958 $ 7,750,691
Safety 11,659,556 7,646,434 4,358,399
Total $ 29,459,491 $ 19,941,392 $ 12,109,090
Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the
separately issued CalPERS financial reports.
C. Payable to the Pension Plan
At June 30, 2019, the City had no amount outstanding for contributions to the pension plan required for the 2018-19 fiscal year.
NOTE 12 – POSTEMPLOYMENT HEALTH CARE BENEFITS (OPEB)
A. Plan Description
The City provides postemployment health care benefits through the CalPERS cost-sharing multiple employer health care program
(PEMHCA) to eligible employees. The City pays the greater of $136 per month or the PEMHCA minimum of $133 for fiscal year
2017-2018. To be eligible for postretirement health benefits, employees must complete at least 5 years of continuous service and
be a minimum of 55 years of age. The healthcare plan is administered by the California Public Employees’ Retirement System.
Copies of the CalPERS annual financial report may be obtained from the Executive Office, 400 P Street, Sacramento, CA 95814.
As of June 30, 2019, the City has not funded an OPEB trust that meets the criteria in paragraph 4 of GASB Statement No. 75.
B. Employees Covered
As of June 30, 2017, actuarial valuation, the following current and former employees were covered by the benefit terms under
the City’s Plan:
C. Contributions
The City currently finances benefits on a pay-as-you-go basis primarily from the City’s General Fund, Streets Fund and Water Fund.
D. Total OPEB Liability
The City's OPEB Liability was measured as of June 30, 2018 and the total OPEB liability used to calculate the OPEB Liability was
determined by an actuarial valuation as of June 30, 2017 rolled forward to June 30, 2018 using standard update procedures.
Actuarial assumptions. The total OPEB liability was determined using the following actuarial assumptions, applied to all periods
included in the measurement, unless otherwise specified:
Active plan members 71
Inactive plan members or beneficiaries currently receiving benefits 57
Inactive plan members entitled to but not yet receiving benefit payments 35
Total 163
Salary increases 3.00%, up from 2.00% in 2018
Discount rate 3.87%, up from 3.58% in 2018
Healthcare cost trend rate 7.50% decreasing to 4.00% by 2076
Item 8.c. - Page 74
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-59
NOTE 12 – POSTEMPLOYMENT HEALTH CARE BENEFITS (OPEB) – continued
D. Total OPEB Liability - continued
Pre-retirement mortality rates were based on the CalPERS 1997-2015 Experience Study, as appropriate, without projection. Post-
retirement mortality rates were based on the mortality projected fully generational with Scale MP-2017. Actuarial assumptions
used in the June 30, 2017 valuation were based on a review of plan experience during the period July 1, 2015 to June 30, 2017.
Discount rate. GASB 75 requires a discount rate that reflects the following:
a) The long-term expected rate of return on OPEB plan investments — to the extent that the OPEB plan's fiduciary net
position (if any) is projected to be sufficient to make projected benefit payments and assets are expected to be
invested using a strategy to achieve that return;
b) A yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or
higher — to the extent that the conditions in (a) are not met.
To determine a resulting single (blended) rate, the amount of the plan's projected fiduciary net position (if any) and the amount
of projected benefit payments is compared in each period of projected benefit payments. The discount rate used to measure the
City's total OPEB liability is based on these requirements and the following information:
E. Changes in the OPEB Liability
Sensitivity of the OPEB liability to changes in the discount rate. The following presents the OPEB liability, as well as what the OPEB
liability would be if it were calculated using a discount rate that is 1 percentage point lower (2.87 percent) or 1 percentage-point
higher (4.87 percent) than the current discount rate:
Long-Term
Expected Return Municipal Bond
of Plan Investments 20 Year High Grade
Reporting Date Measurement Date (if any)Rate Index Discount Rate
June 30, 2018 June 30, 2017 N/A 3.75%3.58%
June 30, 2019 June 30, 2018 N/A 3.87%3.87%
Total OPEB
Liability
Balance at June 30, 2018
(Valuation Date June 30, 2017)5,202,209$
Changes recognized for the measurement period:
Service cost 243,548
Interest 191,291
Changes of assumptions (234,295)
Contributions - employer -
Net investment income -
Benefit payments (204,861)
Administrative expense -
Net Changes (4,317)
Balance at June 30, 2019
(Measurement Date June 30, 2018)5,197,892$
1% Decrease Discount Rate 1% Increase
2.87%3.87%4.87%
OPEB Liability 6,078,649$ 5,197,892$ 4,499,481$
Item 8.c. - Page 75
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-60
NOTE 12 – POSTEMPLOYMENT HEALTH CARE BENEFITS (OPEB) – continued
E. Changes in the OPEB Liability - continued
Sensitivity of the OPEB liability to changes in the healthcare cost trend rates. The following presents the OPEB liability, as well as
what the OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage-point lower (6.5
percent decreasing to 3.0%) or 1 percentage-point higher (8.5 percent decreasing to 5.0%) than the current healthcare cost trend
rates:
F. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the fiscal year ended June 30, 2019, the City recognized OPEB expense of $303,393. As of the fiscal year ended June 30, 2019,
the City reported deferred outflows and deferred inflows of resources related to OPEB from the following sources:
The reported deferred outflows of resources related to OPEB in the amount of $236,557 resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the 2019-20 fiscal year. The
additional amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as OPEB expense
as follows:
NOTE 13 – LIABILITY, WORKERS’ COMPENSATION, AND PURCHASED INSURANCE
A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement
The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 116 California
public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The
purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance
or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began
covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of
Directors. The Board operates through a nine-member Executive Committee.
1% Decrease Trend Rate 1% Increase
6.5% decreasing 7.5% decreasing 8.5% decreasing
to 3.0%to 4.0%to 5.0%
OPEB Liability 4,520,470$ 5,197,892$ 6,130,484$
Deferred Outflows Deferred Inflows
of Resources of Resources
Contributions subsequent to measurement date 236,557$ -$
Changes in assumptions 640,152
236,557$ 640,152$
Amount
2020 (131,446)$
2021 (131,446)
2022 (131,446)
2023 (131,446)
2024 (93,067)
2025 (21,301)
(640,152)$
Fiscal year ending June 30,
Item 8.c. - Page 76
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-61
NOTE 13 – LIABILITY, PROPERTY, AND WORKERS’ COMPENSATION PROTECTION – continued
B. Self-Insurance Programs of the Authority
Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted
annually thereafter, for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual
retrospective adjustment. The total funding requirement for primary self-insurance programs is based on an actuarial
analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risk-
sharing pool.
Primary Liability Program
Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated
relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the
weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs
up to $30,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3)
The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage
of the pool’s total incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are distributed based
on the outcome of cost allocation within the first and second loss layers.
The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Subsidence losses
have a sub-limit of $40 million per occurrence. The coverage structure includes retained risk that is pooled among members,
reinsurance, and excess insurance. More detailed information about the various layers of coverage is available on the following
website: https://cjpia.org/protection/coverage-programs.
Primary Workers’ Compensation Program
Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each
member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which
establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes
incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the
first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated
as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $100,000 to statutory limits are
distributed based on the outcome of cost allocation within the first and second loss layers.
For 2018-19 the Authority’s pooled retention is $2 million per occurrence, with reinsurance to statutory limits under California
Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $2 million. Coverage from $2 million to
$5 million is purchased as part of a reinsurance policy, and Employer’s Liability losses from $5 million to $10 million are pooled
among members.
C. Purchase Insurance
Property Insurance – The City participates in the all-risk property protection program of the Authority. This insurance protection
is underwritten by several insurance companies. The City is currently insured according to a schedule of covered property
submitted by The City to the Authority. The City property currently has all-risk property insurance protection in the amount of
$27,291,024. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500
deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments.
D. Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded
pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2018-19.
Item 8.c. - Page 77
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-62
NOTE 13 – LIABILITY, PROPERTY, AND WORKERS’ COMPENSATION PROTECTION – continued
E. Self-Insurance
The City retains the risk for workers’ compensation losses incurred prior to joining the Cal JPIA. Several member agencies of the
now dissolved Central Coast Cities Self-Insurance Fund continue to participate in a non-risk sharing arrangement for claims
management and the purchase of excess insurance. The participating agencies share a set of common guidelines and annually
set aside premiums to pay their individual losses within their self-insured retentions. Losses are debited and investment income
is credited to specific member accounts. The City has not incurred any losses in excess of insurance coverage. Claims liabilities in
the governmental funds are generally liquidated by the General Fund.
The last actuarial study to determine the undiscounted outstanding claims liability was completed for the year ended June 30,
2015. The liability was estimated based on the actuarial study and considered claims asserted and paid, and the time limitation
for filing claims. There are no amounts estimated for claims incurred but not reported because the time limit for filing claims has
elapsed. The estimated asset (liability) at June 30, 2019 and the changes in those balances are shown below:
Cash, investments and current assets $ 50,232
Estimated claims liability (77,548)
Unpaid claims asset $ (27,316)
Unpaid claims asset at July 1, 2018 $ (39,050)
Revenues 1,305
Claim payments and related expenditures (19,258)
Change in fair market value 187
Change in estimated claims liability 29,500
Unpaid claims asset at June 30, 2019 $ (27,316)
NOTE 14 – REVENUE LIMITATIONS IMPOSED BY CALIFORNIA PROPOSITION 218
Proposition 218, which was approved by the voters in November 1996, will regulate the City’s ability to impose, increase, and extend
taxes, assessments, and fees. Any new, increased, or extended taxes, assessments, and fees subject to the provisions of Proposition
218, require voters’ approval before they can be implemented. Additionally, Proposition 218 provides that these taxes, assessments,
and fees are subject to the voters’ initiative process and may be rescinded in the future years by the voters.
NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (the Bill) that provides for the dissolution of all
redevelopment agencies in the State of California. This action impacted the reporting entity of the City that previously had reported
a redevelopment agency (RDA) within the reporting entity of the City as a blended component unit.
The Bill provides that upon dissolution of a redevelopment agency, either the City or another unit of local government will agree to
serve as the “successor agency” to hold the assets until they are distributed to other units of State and local government. On January
10, 2012, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill
as part of the City Resolution No. 4420.
After the enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into
new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only
be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that
were subject to legally enforceable contractual commitments).
Item 8.c. - Page 78
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-63
NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY – continued
In future years, successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual
installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior
redevelopment agency have been paid in full and all assets have been liquidated.
The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment
agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually
committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available
assets to be transferred to the public body designated as the successor agency by the Bill.
Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City are
valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. The City’s position on this issue
is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal
determination may be made at a later date by appropriate judicial authority that would resolve this issue unfavorably to the City.
A. Financial Reporting
In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all
redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012.
As a result, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust
fund) in the financial statements of the City.
B. Cash and Investments
The RDA has pooled its cash and investments with the City in order to achieve a higher return on investment. Certain restricted
funds, which are held and invested by independent outside custodians through contractual agreements, are not pooled. These
restricted funds include cash with fiscal agents. See Note 3 for disclosure related to cash and investments pooled with the City
and the related custodial risk categorization.
Cash and investments at June 30, 2019, consisted of the following:
Total
Cash and investments pooled with the City $ 322,936
Restricted cash and investments held with fiscal agent 5,029
Total $ 327,965
C. Inventory – Land Held for Resale
On August 11, 2006, the RDA purchased a vacant lot at the corner of Faeh Street and El Camino Real in the amount of $825,129.
The RDA purchased the property because the location is a key site to the City’s economic development strategy and goals and
didn’t want the property to be sold as individual lots.
On June 22, 2010, the RDA transferred $980,000 to the General Fund, in exchange for land located on Pearwood Avenue in which
the City purchased for approximately $35,799. The proposed sale and purchase price is based upon an appraisal conducted at
the time the project was proposed.
The RDA is currently holding both properties for resale. Inventory is valued at cost which approximates fair value.
Item 8.c. - Page 79
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-64
NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY – continued
D. Notes Receivable
On January 11, 2005, the RDA entered into a loan agreement with the Family Care Networks, Inc. for the acquisition and
development of property at 201 South Halcyon Road to be used for affordable housing for low and very low income households
in the amount of $50,000. The term of the loan agreement is 55 years and will be considered paid in full as long as the units are
maintained as affordable housing.
On December 9, 2008, the RDA entered into a purchase agreement with the Housing Authority of the City of San Luis Obispo and
purchased property utilizing low and moderate set-aside funds. The property was then sold to the Housing Authority for $285,000
in cash, plus $55,500 as a note receivable. This note is to be repaid when the property is sold.
On December 14, 2010, the RDA entered into a loan agreement with Habitat for Humanity of San Luis Obispo County (Habitat for
Humanity) and purchased property utilizing low and moderate set-aside funds in the amount of $260,000. Under the terms of the
agreement, as long as each home is sold to a qualified homebuyer (as defined in the agreement), a portion of the outstanding
balance of the loan shall be forgiven.
On March 28, 2013, the RDA entered into a loan agreement with Courtland Street Apartments, LP for the construction of a 36-
unit affordable housing rental project and related improvements on the property located on the corner of Grand Avenue and
Courtland Avenue in the amount of $930,000 utilizing low and moderate set-aside funds. The term of the loan agreement is 55
years with interest accruing on the outstanding principal balance at the rate of 3% per annum. Repayment of the loan began on
March 1, 2015. Total amount outstanding, including accrued interest at June 30, 2019, was $997,117.
E. Loans Payable
On July 25, 2006, the City entered into a loan agreement with the RDA for the purpose of funding the cost of the acquisition of a
vacant lot on the north side of Faeh Street in the amount of $820,130. The loan originally called for interest to be accrued equal
to the rate earned by the City’s Local Agency Investment Fund, however, on February 23, 2010, the agreement was amended to
no longer accrue interest. The Department of Finance recognizes loans from Cities to Redevelopment Agencies as “enforceable
obligations” eligible for repayment, under provisions of the loan agreements pursuant to provisions included in Assembly Bill
1484, once the Successor Agency receives a “Finding of Completion” from the Department of Finance, loan agreements between
the RDA and the City shall be deemed to be enforceable obligations provided that the Oversight Board makes a finding that the
loan was for legitimate redevelopment purposes. On May 14, 2013, the Oversight Board approved the legitimacy of this loan.
The total amount outstanding as of June 30, 2018 of $207,319 was repaid in full by June 30, 2019.
F. Tax Allocation Bonds Payable
On May 1, 2007, the RDA issued $6,285,000 of 2007 tax allocation bonds. The purpose of the tax allocation bonds were to repay
debt and to provide funds for future improvement projects. The bonds were fully defeased by the Taxable Tax Allocation
Refunding Bonds, Series 2018 of $5,305,000 on June 27, 2018 that will mature on September 1, 2037. As a result of the refunding,
the City had a total savings of $841,389 for an economic gain of $415,389. The defeased amount was put into escrow and will
pay off the 2007 Bonds with a payment of $305,000 plus 5.304% interest on September 1, 2019 and $5,005,000 plus 5.800%
interest on September 1, 2037. As of June 30, 2019, the principal balance of the 2018 bonds outstanding was $5,040,000. As a
result of the refunding there was an original issue discount, loss on refunding, and prepaid bond insurance created that is
amortized over the life of the refunded bonds. As of June 30, 2019, these amounts net to $209,346 which reduces the total
amount of bonds payable.
Item 8.c. - Page 80
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2019
B-65
NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY – continued
F. Tax Allocation Bonds Payable (Continued)
The future minimum payment obligation for the tax allocation bonds payable is as follows:
Fiscal Year
Ending June 30
Principal
Interest
Total
2020 $ 190,000 $ 195,009 $ 385,009
2021 195,000 189,238 384,238
2022 200,000 182,943 382,943
2023 210,000 176,116 386,116
2024 215,000 168,775 383,775
2025-2029 1,190,000 720,074 1,910,074
2030-2034 1,445,000 458,312 1,903,312
2035-2039 1,395,000 124,303 1,519,303
Total $ 5,040,000 $ 2,214,770 $ 7,254,770
G. Prior-Period Adjustment
There is a prior-period adjustment in the Statement of Changes in Fiduciary Net Position of $281,861 to record revenue that was
deferred but should have been recognized in the prior fiscal year as it was for required obligations of the fiscal year ended June
30, 2018.
NOTE 16 – CONTINGENCIES AND COMMITMENTS
The City is involved in various litigations. In the opinion of management and legal counsel, the disposition of all litigation pending will
not have a material effect on the City’s financial statements.
The City has received State and Federal funds for specific purposes that are subject to review and audit by the grantor agencies.
Although such audits could generate expenditure disallowances under the term of the grants, it is believed that any required
reimbursement will not be material.
The City has the following outstanding contracts listed below for uncompleted projects at June 30, 2019:
Project Name Amount
5658 – Sidewalk Repairs $ 124,330
5783 – Sierra/Hillcrest Drainage 4,469
5794 – Corrugated Metal Pipe Lining 242,061
5845 – Lift Station #1 Force Main Replacement 644,282
Total $ 1,015,142
NOTE 17 – SUBSEQUENT EVENTS
Subsequent to year-end, the City may be negatively impacted by the effects of the worldwide coronavirus pandemic. The City is closely
monitoring its operations, liquidity, and reserves and is actively working to minimize the current and future impact of this
unprecedented situation. As of the date of issuance of these financial statements, the full impact to the City’s financial position is not
known.
Item 8.c. - Page 81
THIS PAGE IS INTENTIONALLY LEFT BLANK
Item 8.c. - Page 82
City of Arroyo Grande
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
General Fund
For the Fiscal Year Ended June 30, 2019
REVENUES
Taxes and assessments $ 14,996,500 $ 14,996,500 $ 15,358,298 $ 361,798
Licenses and permits 500,000 500,000 616,702 116,702
Fines and penalties 45,000 45,000 44,160 (840)
Use of money and property 415,000 415,000 584,671 169,671
Intergovernmental revenues 134,000 134,000 200,933 66,933
Charges for services 1,367,800 1,367,800 1,507,850 140,050
Other revenue 28,500 28,500 64,460 35,960
Total revenues 17,486,800 17,486,800 18,377,074 890,274
EXPENDITURES
General government
City council 97,800 97,800 110,725 (12,925)
City manager 644,200 672,318 340,756 331,562
City attorney 283,200 283,200 247,086 36,114
City clerk 420,800 429,015 407,257 21,758
Information technology 634,200 639,108 543,077 96,031
Finance and human resources 841,300 884,400 964,868 (80,468)
Non‐departmental 3,664,200 3,688,630 3,687,325 1,305
Community development
Planning 661,400 927,321 525,227 402,094
Engineering 704,100 786,254 877,770 (91,516)
Building and life safety 389,600 389,600 433,152 (43,552)
Public safety
Administration 1,127,100 1,159,699 1,052,879 106,820
Patrol services 6,838,700 6,837,100 7,204,221 (367,121)
Support services 1,727,800 1,712,163 910,715 801,448
Emergency operations center 600 600 600
Recreation services
Administration 476,500 495,300 392,204 103,096
Preschool program 101,900 101,900 86,079 15,821
Special recreation programs 149,500 149,500 173,148 (23,648)
Children in Motion 346,700 346,700 350,321 (3,621)
Public works
Administration 910,000 913,113 887,940 25,173
Park maintenance 442,900 458,400 375,393 83,007
Soto sports complex maintenance 234,100 234,100 233,325 775
Building maintenance 231,900 245,371 195,172 50,199
Automotive shop 159,000 176,500 169,362 7,138
Capital outlay 70,981 (70,981)
Debt service 166,000 166,000 186,043 (20,043)
Total expenditures 21,253,500 21,794,092 20,425,026 1,369,066
Excess of revenue over (under)
expenditures (3,766,700) (4,307,292) (2,047,952) 2,259,340
Continued on following page
Variance
Over/(Under)Actual AmountsOriginalFinal
Budget Amounts
B‐67
Item 8.c. - Page 83
City of Arroyo Grande
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
General Fund
For the Fiscal Year Ended June 30, 2019
Continued from previous page
OTHER FINANCING SOURCES/(USES)
Proceeds from sale of capital assets $ 2,000 $ 2,000 $ 35,000 $ 33,000
Transfer in 2,348,300 2,348,300 2,349,499 1,199
Transfer out (1,713,300) (3,560,970) (802,935) 2,758,035
Total other financing sources/
(uses)637,000 (1,210,670) 1,581,564 2,792,234
Net change in fund balance (3,129,700) (5,517,962) (466,388) 5,051,574
Fund balance ‐ July 1, 2018 10,317,131 10,317,131 10,317,131
Fund balance ‐ June 30, 2019 $ 7,187,431 $ 4,799,169 $ 9,850,743 $ 5,051,574
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
B‐68
Item 8.c. - Page 84
City of Arroyo Grande
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
Special Gasoline Tax Fund
For the Fiscal Year Ended June 30, 2019
REVENUES
Use of money and property $‐$‐$ 4,844 $ 4,844
Intergovernmental revenues 759,100 759,100 713,894 (45,206)
Other revenue 2,093 2,093
Total revenues 759,100 759,100 720,831 (38,269)
EXPENDITURES
Streets and roads 706,800 706,800 657,200 49,600
Capital outlay 19,846 (19,846)
Debt service 20,300 20,300 41,332 (21,032)
Total expenditures 727,100 727,100 718,378 8,722
Excess of revenue under
expenditures 32,000 32,000 2,453 (29,547)
OTHER FINANCING SOURCES (USES)
Transfer in 346,400 346,400 346,404 4
Transfer out (378,400) (378,400) (412,378) (33,978)
Total other financing sources
(uses)(32,000) (32,000) (65,974) (33,974)
Net change in fund balance (63,521) (63,521)
Fund balance ‐ July 1, 2018 191,960 191,960 191,960
Fund balance ‐ June 30, 2019 $ 191,960 $ 191,960 $ 128,439 $ (63,521)
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
B‐69
Item 8.c. - Page 85
City of Arroyo Grande
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
Transportation Impact Fees Fund
For the Fiscal Year Ended June 30, 2019
REVENUES
Use of money and property $ 10,000 $ 10,000 $ 43,173 $ 33,173
Charges for services 75,000 75,000 72,178 (2,822)
Total revenues 85,000 85,000 115,351 30,351
EXPENDITURES
Community development 15,000 15,000 15,000
Total expenditures 15,000 15,000 15,000
Excess of revenue over
expenditures 70,000 70,000 115,351 45,351
OTHER FINANCING USES
Transfer out (1,685,808) (57,465) 1,628,343
Total other financing uses (1,685,808) (57,465) 1,628,343
Net change in fund balance 70,000 (1,615,808) 57,886 1,673,694
Fund balance ‐ July 1, 2018 2,111,478 2,111,478 2,111,478
Fund balance ‐ June 30, 2019 $ 2,181,478 $ 495,670 $ 2,169,364 $ 1,673,694
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
B‐70
Item 8.c. - Page 86
City of Arroyo Grande
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
In‐Lieu Affordable Housing Fund
For the Fiscal Year Ended June 30, 2019
REVENUES
Use of money and property $ 201,500 $ 100,400 $ 221,864 $ 121,464
Charges for services 5,000 18,000 134,999 116,999
Total revenues 206,500 118,400 356,863 238,463
EXPENDITURES
Community development 75,000 123,770 30,042 93,728
Total expenditures 75,000 123,770 30,042 93,728
Net change in fund balance 131,500 (5,370) 326,821 332,191
Fund balance ‐ July 1, 2018 601,097 601,097 601,097
Fund balance ‐ June 30, 2019 $ 732,597 $ 595,727 $ 927,918 $ 332,191
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
B‐71
Item 8.c. - Page 87
City of Arroyo Grande
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
Community Development Block Grant Fund
For the Fiscal Year Ended June 30, 2019
REVENUES
Intergovernmental revenues $ 63,900 $‐ $ 8,092 $ 8,092
Total revenues 63,900 8,092 8,092
EXPENDITURES
Community development
Total expenditures
Net change in fund balance 63,900 8,092 8,092
Fund balance ‐ July 1, 2018 7,088 7,088 7,088
Fund balance ‐ June 30, 2019 $ 70,988 $ 7,088 $ 15,180 $ 8,092
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
B‐72
Item 8.c. - Page 88
City of Arroyo Grande
SCHEDULE OF CHANGES IN THE OPEB LIABILITY AND RELATED RATIOS
Last 10 Years*
As of June 30, 2019
Measurement Period 2018 2019
Total OPEB Liability
Service cost 287,461$ 243,548$
Interest on the total OPEB liability 164,612 191,291
Difference between expected and actual experience ‐ ‐
Changes in assumptions (633,250)(234,295)
Changes in benefit terms ‐ ‐
Benefit payments (210,020)(204,861)
Net change in total OPEB Liability (391,197)(4,317)
Total OPEB liability‐ beginning 5,593,406 5,202,209
Total OPEB liability‐ ending (a)5,202,209$ 5,197,892$
Covered payroll 6,130,128$ 6,604,604$
Total OPEB liability as a percentage
of covered payroll 84.86%78.70%
(1) Fiscal year 2018 was the 1st year of implementation, therefore only two years are shown.
B‐73
Item 8.c. - Page 89
City of Arroyo Grande
NET PENSION LIABILITY ‐ SCHEDULE OF PROPORTIONATE SHARE
Last Ten Fiscal Years (1)
As of June 30, 2019
The following table provides required supplementary information regarding the City's Pension Plans.
2015 2016 2017 2018 2019
Proportion of the net pension liability 0.23934%0.25243%0.22499%0.21613%0.20694%
Proportionate share of the net pension liability 14,892,793$ 17,326,688$ 19,468,856$ 21,434,067$ 19,941,392$
Covered payroll 5,222,082$ 5,594,685$ 5,912,090$ 6,070,014$ 5,866,531$
Proportionate share of the net pension liability as
percentage of covered payroll 285.19%309.70%329.31%353.11%339.92%
Plan's total pension liability 30,829,966,631$ 31,771,217,402$ 33,358,627,624$ 37,161,348,332$ 38,944,855,364$
Plan's fiduciary net position 24,607,502,515$ 24,907,305,871$ 24,705,532,291$ 27,244,095,376$ 29,308,589,559$
Plan fiduciary net position as a percentage of the
total pension liability 79.82%78.40%74.06%73.31%75.26%
Notes to Schedule:
Changes in assumptions
In 2018, inflation was changed from 2.75 percent to 2.50 percent and individual salary increases and overall payroll growth was reduced
from 3.00 percent to 2.75 percent.
In 2017, as part of the Asset Liability Management review cycle, the discount rate was changed from 7.65% to 7.15%.
In 2016, the discount rate was changed from 7.5% (net of administrative expense) to 7.65% to correct for an adjustment to
exclude administrative expense.
In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement ages
of general employees.
(1) The 2014‐15 fiscal year was the first year of implementation, therefore only five years are shown.
B‐74
Item 8.c. - Page 90
City of Arroyo Grande
NET PENSION LIABILITY ‐ SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years (1)
As of June 30, 2019
The following table provides required supplementary information regarding the City's Pension Plan.
2015 2016 2017 2018 2019
Contractually required contribution (actuarially determined)1,590,307$ 2,071,858$ 2,191,573$ 2,342,517$ 2,558,407$
Contribution in relation to the actuarially determined
contributions (1,590,307) (2,071,858) (2,191,573) (2,342,517) (5,625,283)
Contribution deficiency (excess)‐$ ‐$ ‐$ ‐$ (3,066,876)$
Covered payroll 5,594,685$ 5,912,090$ 6,070,014$ 5,866,531$ 5,822,646$
Contributions as a percentage of covered payroll 28.43% 35.04% 36.10% 39.93% 96.61%
Notes to Schedule
Valuation date:6/30/2016
The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2018/19 were
derived from the June 30, 2016 funding valuation report.
Actuarial cost method Entry age normal
Asset valuation method/period For details, see the June 30, 2016 funding valuation report.
Inflation 2.50%
Discount rate 7.375%
Salary increases Varies by entry age and service
Investment rate of return 7.00% net of pension plan investment and administrative
expenses; includes inflation
Retirement age/mortality The probabilities of retirement and mortality are based on
the 2010 CalPERS Experience Study for the period from 1997
to 2007. Pre‐retirement and post‐retirement mortality rates
include 5 years of projected mortality improvement using
Scale AA published by the Society of Actuaries.
(1) The 2014‐15 fiscal year was the first year of implementation, therefore only five years are shown.
B‐75
Item 8.c. - Page 91
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Item 8.c. - Page 92
City of Arroyo Grande
DESCRIPTION OF NONMAJOR GOVERNMENTAL
B-77
Special Revenue Funds
Fire Protection Impact Fees Fund
This fund accounts for impact fees collected from developers for the expansion of the existing fire station in order
to serve future development.
Public Access Television Fund
This fund accounts for fees collected from Charter Communications that are restricted for support of public,
education, and government access programming and equipment.
Police Protection Impact Fees Fund
This fund accounts for impact fees collected from developers for the expansion of the existing police facility in
order to serve future development.
Park Development Fund
This fund accounts for the receipts of park-in-lieu fees (Quimby) and grant revenues that are used for construction,
park acquisition, and development of park facilities.
Park Improvement Impact Fees Fund
Impact fees collected for park improvements are to be used to maintain the adopted level of service for
neighborhood and community parks of 4.0 acres per thousand population. This fund accounts for the receipt and
use of these monies.
Community Center Impact Fees Fund
This fund accounts for impact fees collected and used for recreation facilities in order to maintain the adopted
level of service of recreation/community center facilities of 542 square feet per thousand population.
Grace Lane Assessment District Fund
This fund accounts for revenue derived from annual assessments, which are used to pay the cost incurred by the
City for landscape maintenance.
Landscape Assessment Fund
This fund accounts for the landscape maintenance of parkways within two housing tracts. A special benefit
assessment is levied on property owners to pay for landscape maintenance expenditures.
Parkside Assessment District Fund
This fund accounts for revenue derived from annual assessments, which are used to pay the cost incurred by the
City for landscape maintenance.
Traffic Signal Fund
This fund accounts for traffic signalization assessment levied against developments for the future cost of traffic
signals.
Traffic Circulation Fund
This fund accounts for developer traffic mitigation measure fees charged as a result of an environmental review.
Item 8.c. - Page 93
City of Arroyo Grande
DESCRIPTION OF NONMAJOR GOVERNMENTAL
B-78
Special Revenue Funds – continued
Transportation Fund
This fund accounts for revenues from the Local Transportation Fund (LTF) and the South County Transit (SCT).
Expenditures are restricted to public transportation.
In-Lieu Water Neutralization Fund
The City requires development projects that increase total water consumption in the City to “neutralize” that
demand by reducing water consumption in existing development by an equivalent amount. This fund accounts for
these funds collected by developers and is used towards the City’s water conservation efforts.
Construction Fund
This fund accounts for the accumulation of tax revenues levied on construction of residential dwelling units,
mobile home lots, and commercial buildings. Expenditures are restricted to public improvements, including but
not limited to, facilities, fire stations, fire-fighting equipment, parks, street improvements, and equipment.
Drainage Fees Fund
This fund accounts for development drainage fees restricted to improving drainage within the City.
In-Lieu Underground Utility Fund
This fund accounts for monies paid by developers in meeting the City's underground utility requirements.
Tourism Business Improvement District Fund
The purpose of the Tourism Business Improvement District (TBID) is to provide projects, programs and activities
that benefit lodging businesses located and operating within the City of Arroyo Grande. A two percent (2%)
assessment is levied on all lodging businesses of the rent charged by the operator per occupied room per night for
all transient occupancies. Revenue collected is used to promote the lodging industry within the City.
Water Availability Fund
Pursuant to the provisions of Section 38743 of the Government Code, water availability charges is a “special
charge” which is levied to each parcel of property not served with city water. These charges are restricted for the
sole purpose of expanding water supply such as desalination plant, recycled water, scalping plant, etc.
State COPS Grant Fund
This fund accounts for the receipt and use of monies from the State of California restricted to the purchase of
police equipment and technology for crime prevention.
Debt Service Funds
Fire Station GO Bond Fund
This fund is used to account for the accumulation of resources and payment of long-term debt principal and
interest for general obligation bonds issued by the City to finance the expansion of the City Fire Station.
City Hall USDA Debt Service Fund
This fund is used to account for the accumulated resources and payment of long-term debt principal and interest
for USDA loan payable issued by the City to finance for the relocation of City Hall.
Item 8.c. - Page 94
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Item 8.c. - Page 95
City of Arroyo Grande
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet
June 30, 2019
ASSETS
Cash and investments $ 238,275 $ 89,310 $ 49,643 $ 1,214,675 $ 232,648
Receivables:
Accounts 20,711
Taxes
Interest 529 198 113 2,755 610
Total assets $ 238,804 $ 110,219 $ 49,756 $ 1,217,430 $ 233,258
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $‐$‐$‐ $‐$‐
Unearned revenue 40,226
Total liabilities 40,226
Fund Balances:
Restricted for:
Access programming 110,219
Debt service
Landscape maintenance
Park construction 1,177,204 233,258
Public improvements
Public safety 238,804 49,756
Streets and roads
Water production
Assigned for:
Capital projects
Tourism benefit
Total fund balances 238,804 110,219 49,756 1,177,204 233,258
Total liabilities and
fund balances $ 238,804 $ 110,219 $ 49,756 $ 1,217,430 $ 233,258
Park
Improvement
Impact Fees
Park
Development
Special Revenue Funds
Fire Protection
Impact Fees
Police
Protection
Impact Fees
Public Access
Television
B‐80
Item 8.c. - Page 96
$ 17,625 $ 57,600 $ 1,286 $ 445,081 $ 970,801 $ 150,841 $ 150,083
736
111 140 5 1,075 2,253 354 221
$ 17,736 $ 57,740 $ 1,291 $ 446,892 $ 973,054 $ 151,195 $ 150,304
$‐$ 7,015 $ 478 $ 486 $‐$‐$ 2,202
7,015 478 486 2,202
50,725 813 446,406
17,736
973,054 151,195 148,102
17,736 50,725 813 446,406 973,054 151,195 148,102
$ 17,736 $ 57,740 $ 1,291 $ 446,892 $973,054 $ 151,195 $ 150,304
Community
Center Impact
Fees
Special Revenue Funds
Parkside
Assessment
District
Landscape
Assessment
District
Grace Lane
Assessment
District
Traffic
Circulation TransportationTraffic Signal
B‐81
Item 8.c. - Page 97
City of Arroyo Grande
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet (continued)
June 30, 2019
ASSETS
Cash and investments $ 311,052 $30 $ 5,891 $ 19,564 $ 283,527
Receivables:
Accounts
Taxes 26,733
Interest 690 14 46
Total assets $ 311,742 $30 $ 5,905 $ 19,610 $ 310,260
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 1,268 $‐$‐$‐$ 19,590
Unearned revenue
Total liabilities 1,268 19,590
Fund Balances:
Restricted for:
Access programming
Debt service
Landscape maintenance
Park construction
Public improvements 30 5,905
Public safety
Streets and roads
Water production 310,474
Assigned for:
Capital projects 19,610
Tourism benefit 290,670
Total fund balances 310,474 30 5,905 19,610 290,670
Total liabilities and
fund balances $ 311,742 $30 $ 5,905 $ 19,610 $ 310,260
Drainage Fees
In‐Lieu
Underground
Utility
Tourism
Business
Improvement
District
In‐Lieu Water
Neutralization Construction
Special Revenue Funds
B‐82
Item 8.c. - Page 98
$ 1,448,955 $ 231,642 $ 5,918,529 $ 657 $ 62,024 $ 62,681 $ 5,981,210
20,711 20,711
27,469 27,469
3,592 576 13,282 2 2 13,284
$ 1,452,547 $ 232,218 $ 5,979,991 $ 659 $ 62,024 $ 62,683 $ 6,042,674
$ 4,406 $‐$ 35,445 $‐$‐$‐$ 35,445
40,226 40,226
4,406 75,671 75,671
110,219 110,219
659 62,024 62,683 62,683
497,944 497,944
1,410,462 1,410,462
23,671 23,671
232,218 520,778 520,778
1,272,351 1,272,351
1,448,141 1,758,615 1,758,615
19,610 19,610
290,670 290,670
1,448,141 232,218 5,904,320 659 62,024 62,683 5,967,003
$ 1,452,547 $ 232,218 $ 5,979,991 $ 659 $ 62,024 $ 62,683 $ 6,042,674
Debt Service
Total Special
Revenue Funds
Water
Availability
State COPS
Grant
Special Revenue Funds
Fire Station GO
Bonds
Total Debt
Service Funds
City Hall USDA
Debt Service
Total Nonmajor
Governmental
Funds
B‐83
Item 8.c. - Page 99
City of Arroyo Grande
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2019
REVENUES
Taxes and assessments $‐$‐$‐$‐$‐
Use of money and property 4,342 1,516 939 22,276 4,915
Intergovernmental revenues
Charges for services 50,550 61,484 4,728 139,098 77,076
Total revenues 54,892 63,000 5,667 161,374 81,991
EXPENDITURES
Current:
General government
Community development
Public safety
Recreation services 24,593
Public works
Debt service:
Principal
Interest and fiscal agent fees
Total expenditures 24,593
Excess of revenue over/
(under) expenditures 54,892 63,000 5,667 161,374 57,398
OTHER FINANCING SOURCES/(USES)
Transfers in
Transfers out (48,543)
Total other financing
sources/(uses)(48,543)
Net change in fund balances 54,892 63,000 5,667 161,374 8,855
Fund balances ‐ July 1, 2018 183,912 47,219 44,089 1,015,830 224,403
Fund balances ‐ June 30, 2019 $ 238,804 $ 110,219 $ 49,756 $ 1,177,204 $ 233,258
Special Revenue Funds
Park
Development
Police
Protection
Impact Fees
Public Access
Television
Park
Improvement
Impact Fees
Fire Protection
Impact Fees
B‐84
Item 8.c. - Page 100
$‐$ 9,094 $ 3,000 $ 44,204 $‐$ 15,067 $‐
877 1,170 49 9,073 18,947 2,978 1,272
362,158
4,488 28,799
5,365 10,264 3,049 53,277 47,746 18,045 363,430
8,493
15,024 6,537 50,277
15,024 6,537 50,277 8,493
5,365 (4,760) (3,488) 3,000 47,746 18,045 354,937
(30,652) (3,096) (2,004) (6,096) (240,696)
(30,652) (3,096) (2,004) (6,096) (240,696)
(25,287) (7,856) (5,492) (3,096) 47,746 18,045 114,241
43,023 58,581 6,305 449,502 925,308 133,150 33,861
$ 17,736 $ 50,725 $ 813 $ 446,406 $ 973,054 $ 151,195 $ 148,102
Landscape
Assessment
District
Parkside
Assessment
District
Grace Lane
Assessment
District
Community
Center Impact
Fees
Special Revenue Funds
Transportation
Traffic
CirculationTraffic Signal
B‐85
Item 8.c. - Page 101
City of Arroyo Grande
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued)
For the Fiscal Year Ended June 30, 2019
REVENUES
Taxes and assessments $‐$‐$‐$‐$ 205,759
Use of money and property 5,430 1 119 388 (56)
Intergovernmental revenues
Charges for services 91,014
Total revenues 96,444 1 119 388 205,703
EXPENDITURES
Current:
General government 233,494
Community development 13,181
Public safety
Recreation services
Public works
Capital outlay
Debt service:
Principal
Interest and fiscal agent fees
Total expenditures 13,181 233,494
Excess of revenue over/
(under) expenditures 83,263 1 119 388 (27,791)
OTHER FINANCING SOURCES/(USES)
Transfers in 5,004
Transfers out (3,000)
Total other financing
sources/(uses)2,004
Net change in fund balances 83,263 1 119 388 (25,787)
Fund balances ‐ July 1, 2018 227,211 29 5,786 19,222 316,457
Fund balances ‐ June 30, 2019 $ 310,474 $30 $ 5,905 $ 19,610 $ 290,670
Drainage Fees
Special Revenue Funds
In‐Lieu
Underground
Utility
Tourism
Business
Improvement
District
In‐Lieu Water
Neutralization Construction
B‐86
Item 8.c. - Page 102
$‐$‐$ 277,124 $50 $‐$50 $ 277,174
30,006 4,085 108,327 13 13 108,340
100,000 462,158 462,158
85,363 542,600 542,600
115,369 104,085 1,390,209 63 63 1,390,272
241,987 241,987
13,181 13,181
9,029 9,029 9,029
24,593 24,593
83,198 155,036 155,036
23,075 23,075 23,075
29,000 29,000 29,000
37,894 37,894 37,894
83,198 32,104 466,901 66,894 66,894 533,795
32,171 71,981 923,308 63 (66,894) (66,831) 856,477
5,004 73,800 73,800 78,804
(75,035) (22,296) (431,418) (431,418)
(75,035) (22,296) (426,414) 73,800 73,800 (352,614)
(42,864) 49,685 496,894 63 6,906 6,969 503,863
1,491,005 182,533 5,407,426 596 55,118 55,714 5,463,140
$ 1,448,141 $ 232,218 $ 5,904,320 $ 659 $ 62,024 $ 62,683 $ 5,967,003
Debt Service
Total Nonmajor
Governmental
Funds
Total Debt
Service Funds
State COPS
Grant
Total Special
Revenue Funds
Water
Availability
City Hall USDA
Debt Service
Fire Station GO
Bonds
Special Revenue Funds
B‐87
Item 8.c. - Page 103
City of Arroyo Grande
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
Agency Funds
For the Fiscal Year Ended June 30, 2019
Sanitation Distribution Fund
Cash and investments $ 121,567 $ 2,877,021 $ 2,742,901 $ 255,687
Accounts receivable 71,389 2,413,968 2,406,227 79,130
Total assets $ 192,956 $ 5,290,989 $ 5,149,128 $ 334,817
Due to other agencies 192,956 5,290,989 5,149,128 334,817
Total liabilities $ 192,956 $ 5,290,989 $ 5,149,128 $ 334,817
Downtown Parking Fund
Cash and investments $ 2,086 $ 8,257 $ 8,323 $ 2,020
Interest receivable 17 5 17 5
Total assets $ 2,103 $ 8,262 $ 8,340 $ 2,025
Accounts payable $‐$ 4,722 $ 4,722 $‐
Due to other agencies 2,103 3,540 3,618 2,025
Total liabilities $ 2,103 $ 8,262 $ 8,340 $ 2,025
San Luis Obispo County TMD Assessment Fund
Cash and investments $ 7,691 $ 109,333 $ 108,902 $ 8,122
Accounts receivable 11,416 13,367 11,416 13,367
Total assets $ 19,107 $ 122,700 $ 120,318 $ 21,489
Accounts payable $ 18,747 $ 96,218 $ 96,266 $ 18,699
Due to other agencies 360 26,482 24,052 2,790
Total liabilities $ 19,107 $ 122,700 $ 120,318 $ 21,489
Total Agency Funds
Cash and investments $ 131,344 $ 2,994,611 $ 2,860,126 $ 265,829
Accounts receivable 82,805 2,427,335 2,417,643 92,497
Interest receivable 17 5 17 5
Total assets $ 214,166 $ 5,421,951 $ 5,277,786 $ 358,331
Accounts payable $ 18,747 $ 100,940 $ 100,988 $ 18,699
Due to other agencies 195,419 5,321,011 5,176,798 339,632
Total liabilities $ 214,166 $ 5,421,951 $ 5,277,786 $ 358,331
Balance Balance
June 30, 2019AdditionsDeductionsJune 30, 2018
B‐88
Item 8.c. - Page 104
Statistical Section
The statistical section offers operational,
economic, and historical data that
provide a context for assessing a
government’s economic condition. The
data includes: information on financial
trends, information on revenue capacity,
information on debt capacity,
demographic and economic
information, and operating information.
Item 8.c. - Page 105
City of Arroyo Grande
NET POSITION BY COMPONENT
Last Ten Fiscal Years
Governmental Activities
Net investment in capital assets $ 52,196,451 $ 54,012,699 $ 62,176,633 $ 62,107,039
Restricted 937,284 8,179,991 7,221,859 7,374,485
Unrestricted 15,491,347 7,584,426 6,370,870 2,520,322
Total governmental activities
net position 68,625,082 69,777,116 75,769,362 72,001,846
Business‐Type Activities
Net investment in capital assets 9,532,740 10,057,743 9,816,684 10,268,542
Restricted
Unrestricted 7,518,372 6,686,297 6,057,411 6,628,074
Total business‐type activities
net position 17,051,112 16,744,040 15,874,095 16,896,616
Primary Government
Net investment in capital assets 61,729,191 64,070,442 71,993,317 72,375,581
Restricted 937,284 8,179,991 7,221,859 7,374,485
Unrestricted 23,009,719 14,270,723 12,428,281 9,148,396
Total primary government net
position $ 85,676,194 $ 86,521,156 $ 91,643,457 $ 88,898,462
Source: City of Arroyo Grande Annual Financial Report
Fiscal Year
2010 2011 2012 2013
C‐2
Item 8.c. - Page 106
$ 37,123,166 $ 39,466,986 $ 39,712,230 $ 41,437,236 $ 41,836,070 $ 41,265,463
7,580,876 8,516,033 5,531,798 8,375,502 8,217,418 8,748,114
2,977,346 (7,576,941) (2,753,544) (2,676,080) (7,490,438) (5,665,122)
47,681,388 40,406,078 42,490,484 47,136,658 42,563,050 44,348,455
35,230,778 35,100,758 34,768,726 35,236,648 35,013,392 34,285,435
1,196,593 1,158,896 1,737,212 1,737,212 1,737,212 1,235,610
7,727,871 6,487,746 5,696,990 4,424,194 4,387,042 5,857,588
44,155,242 42,747,400 42,202,928 41,398,054 41,137,646 41,378,633
72,353,944 74,567,744 74,295,504 76,673,884 76,849,462 75,550,898
8,777,469 9,674,929 7,269,010 10,112,714 9,954,630 9,983,724
10,705,217 (1,089,195) 3,128,898 1,748,114 (3,103,396) 192,466
$ 91,836,630 $ 83,153,478 $ 84,693,412 $ 88,534,712 $ 83,700,696 $ 85,727,088
Fiscal Year
2016 20192014201520172018
C‐3
Item 8.c. - Page 107
City of Arroyo Grande
CHANGES IN NET POSITION
Last Ten Fiscal Years
Expenses
Governmental activities:
General government $ 4,543,500 $ 4,786,979 $ 4,475,869 $ 4,442,707
Community development 983,321 3,224,094 1,578,940 1,934,076
Public safety 7,290,559 5,795,069 5,708,603 5,594,859
Recreation 850,711 759,139 723,234 765,563
Public works 828,852 830,914 1,439,738 1,313,371
Streets and roads 3,044,033 1,835,373 2,600,752 2,266,016
Sewer 858,806 798,287 793,207 821,609
Interest on long‐term debt 462,435 499,825 318,960 109,800
Total governmental activities
expenses 18,862,217 18,529,680 17,639,303 17,248,001
Business‐type activities:
Water 1,732,341 2,168,569 2,142,321 2,490,896
Lopez
Sewer 2,772,836 2,592,965 2,679,699 2,215,526
Total business‐type activities
expenses 4,505,177 4,761,534 4,822,020 4,706,422
Total primary government
expenses $ 23,367,394 $ 23,291,214 $ 22,461,323 $ 21,954,423
Program Revenues
Governmental activities:
Charges for services:
General government $ 139,111 $ 50,355 $ 38,563 $ 47,652
Community development 292,480 498,223 403,679 699,553
Public safety 384,106 188,407 168,502 74,388
Recreation 675,828 694,090 650,897 597,230
Public works 75,165 84,964 86,198 179,908
Streets and roads 52,290 96,409 16,561 44,455
Sewer 788,165 828,302 925,213 1,089,899
Operating grants and contributions 2,169,381 2,154,143 731,446 875,502
Capital grants and contributions 888,102 1,751,549 1,509,016 1,066,625
Total governmental activities
program revenues 5,464,628 6,346,442 4,530,075 4,675,212
Business‐type activities:
Charges for services:
Water 2,508,136 2,794,504 3,443,240 4,236,880
Lopez
Sewer 3,265,221 2,895,218 2,552,516 2,252,208
Operating grants and contributions 4,187 2,760
Capital grants and contributions 135,071 690,957
Total business‐type activities
program revenues 5,773,357 5,828,980 5,998,516 7,180,045
Total primary government program
revenues $ 11,237,985 $ 12,175,422 $ 10,528,591 $ 11,855,257
2010 2011 2012 2013
Fiscal Year
C‐4
Item 8.c. - Page 108
$ 4,206,267 $ 4,991,206 $ 5,440,588 $ 5,659,730 $ 6,323,149 $ 6,489,527
1,596,223 2,017,973 1,850,925 1,604,701 2,339,874 1,664,055
5,804,569 5,905,903 5,652,892 5,075,763 7,205,048 8,516,528
817,557 860,010 960,669 705,766 1,108,612 914,396
1,703,736 1,746,040 1,899,410 1,777,425 2,063,905 1,955,759
2,746,128 2,230,930 2,544,510 2,448,134 2,516,344 2,129,780
111,507 56,988 53,546 55,900
16,985,987 17,752,062 18,348,994 17,328,507 21,610,478 21,725,945
2,304,928 1,306,742 1,317,405 1,677,487 1,737,552 1,439,083
2,271,238 3,170,608 3,296,262 3,359,544 3,419,571 3,576,785
794,673 821,584 690,809 869,807 953,702 931,542
5,370,839 5,298,934 5,304,476 5,906,838 6,110,825 5,947,410
$ 22,356,826 $ 23,050,996 $ 23,653,470 $ 23,235,345 $ 27,721,303 $ 27,673,355
$ 48,931 $ 22,615 $ 12,666 $ 52,734 $ 37,178 $ 83,416
507,718 894,495 690,152 1,218,957 926,624 1,483,826
39,093 135,134 122,158 227,920 152,481 168,457
735,369 743,589 706,229 746,467 843,584 1,075,413
117,252 418,772 86,378 420,095 2,112 6,400
1,024 97,696 305,797 497,796 180,458 100,977
1,387,188 1,499,188 1,191,800 989,341 1,289,808 1,353,910
665,453 233,549 463,235 933,698 599,092 577,759
3,502,028 4,045,038 3,578,415 5,087,008 4,031,337 4,850,158
4,997,374 6,497,466 5,804,415 6,202,191 7,033,290 7,127,921
1,973,699 1,581 81
1,150,806 1,066,815 881,889 977,250 1,024,751 1,051,500
8,121,879 7,564,281 6,687,885 7,179,441 8,058,122 8,179,421
$ 11,623,907 $ 11,609,319 $ 10,266,300 $ 12,266,449 $ 12,089,459 $ 13,029,579
Fiscal Year
2016 20192014 2015 2017 2018
C‐5
Item 8.c. - Page 109
City of Arroyo Grande
CHANGES IN NET POSITION (continued)
Last Ten Fiscal Years
Net revenue (expense)
Governmental activities $ (13,397,589) $ (12,183,238) $ (13,109,228) $ (12,572,789)
Business‐type activities 1,268,180 1,067,446 1,176,496 2,473,623
Total primary government net
expense $ (12,129,409) $ (11,115,792) $ (11,932,732) $ (10,099,166)
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes $ 5,471,651 $ 5,379,176 $ 6,633,678 $ 6,232,026
Sales and use taxes 4,252,903 4,781,774 4,127,541 4,269,905
Transient lodging taxes 348,014 390,472 630,379 746,333
Franchise taxes 604,325 539,673 570,172 575,495
Business license tax 80,283 79,663 84,925 85,078
Investment income 337,724 389,292 333,962 330,551
Other revenue 606,653 479,514 773,180 565,018
Transfers 1,492,439 1,888,403 2,070,466 1,468,937
Extraordinary gain 2,641,541
Total governmental activities 13,193,992 13,927,967 17,865,844 14,273,343
Business‐type activities:
Investment income 35,847 30,483 24,025 17,835
Other revenue
Transfers (1,492,439) (1,888,403) (2,070,466) (1,468,937)
Total business‐type activities
revenues (1,456,592) (1,857,920) (2,046,441) (1,451,102)
Total primary government $ 11,737,400 $ 12,070,047 $ 15,819,403 $ 12,822,241
Change in Net Position
Governmental activities $ (203,597) $ 1,744,729 $ 4,756,616 $ 1,700,554
Business‐type activities (188,412) (790,474) (869,945) 1,022,521
Total primary government $ (392,009) $ 954,255 $ 3,886,671 $ 2,723,075
Source: City of Arroyo Grande Annual Financial Report
2010 2011 2012 2013
Fiscal Year
C‐6
Item 8.c. - Page 110
$ (13,483,959) $ (13,707,024) $ (14,770,579) $ (12,241,499) $ (17,579,141) $ (16,875,787)
2,751,040 2,265,347 1,383,409 1,272,603 1,947,297 2,232,011
$ (10,732,919) $ (11,441,677) $ (13,387,170) $ (10,968,896) $ (15,631,844) $ (14,643,776)
$ 6,564,035 $ 6,832,769 $ 7,133,641 $ 6,494,953 $ 6,838,615 $ 7,272,617
4,583,049 4,634,828 5,213,844 5,835,213 6,174,833 6,381,702
840,602 1,124,486 1,159,458 1,160,087 1,153,959 1,235,407
595,161 612,261 613,715 610,820 609,182 642,952
85,625 90,108 86,947 93,544 87,649 102,794
375,843 426,084 486,526 547,492 553,645 760,895
626,840 949,606 123,376 36,779 218,499 112,653
(23,434,931) 2,297,653 2,037,478 2,108,785 1,968,873 2,152,172
(9,763,776) 16,967,795 16,854,985 16,887,673 17,605,255 18,661,192
33,627 84,005 109,597 31,308 42,793 161,148
15,271
23,434,931 (2,297,653) (2,037,478) (2,108,785) (1,968,873) (2,152,172)
23,468,558 (2,213,648) (1,927,881) (2,077,477) (1,910,809) (1,991,024)
$ 13,704,782 $ 14,754,147 $ 14,927,104 $ 14,810,196 $ 15,694,446 $ 16,670,168
$ (23,247,735) $ 3,260,771 $ 2,084,406 $ 4,646,174 $ 26,114 $ 1,785,405
26,219,598 51,699 (544,472) (804,874) 36,488 240,987
$ 2,971,863 $ 3,312,470 $ 1,539,934 $ 3,841,300 $ 62,602 $ 2,026,392
Fiscal Year
2014 2015 2016 20192017 2018
C‐7
Item 8.c. - Page 111
City of Arroyo Grande
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
General Fund
Reserved $ 679,140 $‐$‐$‐
Unreserved 4,321,286
Nonspendable 595,268 642,708 773,416
Committed 3,159,440 4,276,484
Assigned 350,000 703,355 458,549
Unassigned 4,256,808 537,038 149,944
Total general fund $ 5,000,426 $ 5,202,076 $ 5,042,541 $ 5,658,393
All Other Governmental Funds
Reserved $ 2,896,080 $‐$‐$‐
Unreserved, reported in:
Special revenue funds 10,181,391
Debt service funds (95,156)
Nonspendable 73,782 45,523 24,110
Restricted 8,513,465 7,262,107 7,412,863
Committed 65,565
Assigned 3,529,431 711,439 1,208,489
Unassigned 83,163 (13,405) (10,060)
Total all other governmental funds $ 12,982,315 $ 12,199,841 $ 8,071,229 $ 8,635,402
Source: City of Arroyo Grande Annual Financial Report
Fiscal Year
The City of Arroyo Grande implemented GASB Statement No. 54 for the fiscal year ended June 30, 2011. Information
prior to the implementation of GASB Statement No. 54 is not available.
2010 2011 2012 2013
C‐8
Item 8.c. - Page 112
$‐$‐$‐$‐$‐$‐
56,938 130,822 998,035 1,071,000 40,379 54,670
4,206,637 3,825,974
1,356,870 1,284,047 530,460 1,986,271 3,193,183 2,241,553
1,154,882 2,463,910 6,061,702 6,327,625 7,083,569 7,554,520
$ 6,775,327 $ 7,704,753 $ 7,590,197 $ 9,384,896 $ 10,317,131 $ 9,850,743
$‐$‐$‐$‐$‐$‐
49,547 49,547
7,673,231 7,762,037 5,564,688 7,600,388 7,437,987 7,969,706
84,341 327,809 3,967,671 546,365 956,670 1,403,177
(18,547) (184,584)
$ 7,757,572 $ 8,120,846 $ 9,397,322 $ 8,146,753 $ 8,394,657 $ 9,372,883
Fiscal Year
2016 20192014201520172018
C‐9
Item 8.c. - Page 113
City of Arroyo Grande
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Revenues
Taxes and assessments $ 12,156,062 $ 12,745,313 $ 12,169,550 $ 11,965,499
Licenses and permits 207,801 194,743 206,319 259,153
Fines and penalties 77,145 66,724 71,605 52,299
Use of money and property 337,724 389,292 333,962 312,551
Intergovernmental revenues 2,053,958 2,755,945 2,372,614 1,258,892
Charges for services 2,105,522 2,095,895 1,925,491 2,733,085
Other revenue 227,969 138,094 604,371 151,312
Total revenues 17,166,181 18,386,006 17,683,912 16,732,791
Expenditures
Current:
General government 4,432,039 4,920,805 4,358,806 4,664,317
Community development 983,321 1,592,094 1,567,283 1,241,020
Public safety 6,965,253 5,248,185 5,337,305 5,136,154
Recreation 850,711 759,139 720,797 758,822
Parks and facilities 780,493 778,575 1,350,922 1,288,515
Streets and road 1,162,452 1,090,471 1,877,833 1,544,570
Sewer 267,933 273,818 273,296 257,073
Capital outlay 2,855,174 7,667,405 4,594,942 2,115,032
Debt service:
Principal 199,775 1,135,709 367,342 242,294
Interest and fiscal agent fees 448,835 491,151 289,407 111,670
Total expenditures 18,945,986 23,957,352 20,737,933 17,359,467
Excess of revenue over (under)
expenditures (1,779,805) (5,571,346) (3,054,021) (626,676)
Other Financing Sources (Uses)
Cost of issuance
Proceeds from issuance of debt 2,253,119 69,077 275,595
Proceeds from sale of capital assets 849,000 62,169
Transfer in 5,825,184 6,239,127 6,691,654 4,532,700
Transfer out (4,332,745) (4,350,724) (4,621,188) (3,063,763)
Extraordinary loss (3,333,432)
Total other financing sources
(uses)1,492,439 4,990,522 (1,193,889) 1,806,701
Net Change in Fund Balances $ (287,366) $ (580,824) $ (4,247,910) $ 1,180,025
Debt service as a percentage of non‐
capital expenditures 4.20%11.09%4.24%2.38%
Source: City of Arroyo Grande Annual Financial Report
Fiscal Year
2010 2011 2012 2013
C‐10
Item 8.c. - Page 114
$ 12,875,650 $ 13,352,062 $ 14,207,605 $ 14,194,617 $ 14,864,238 $ 15,635,472
262,929 340,265 269,932 515,087 420,387 616,702
45,012 43,764 46,534 38,255 51,402 44,160
364,460 424,326 590,820 564,151 827,397 962,892
2,052,641 1,732,737 1,655,035 1,923,039 1,888,900 1,931,669
1,449,387 1,870,662 1,606,914 2,610,627 1,670,648 2,257,627
111,723 368,312 88,385 18,559 167,929 77,653
17,161,802 18,132,128 18,465,225 19,864,335 19,890,901 21,526,175
4,469,132 4,786,049 5,256,955 5,835,396 5,982,128 6,557,925
1,595,790 1,684,674 1,849,608 1,844,250 2,169,203 1,879,372
5,329,649 5,356,518 5,879,489 5,672,186 6,279,983 9,176,844
808,823 866,808 960,669 1,025,778 1,015,189 1,026,345
1,558,905 1,663,621 1,804,644 1,863,718 1,816,847 2,020,033
1,947,648 1,474,872 1,760,289 1,805,170 1,707,213 1,449,203
2,484,378 4,333,128 1,546,294 2,460,561 1,727,935 797,518
358,308 329,291 395,065 1,146,751 296,071 239,392
111,623 104,060 132,374 75,952 57,863 54,877
18,664,256 20,599,021 19,585,387 21,729,762 21,052,432 23,201,509
(1,502,454) (2,466,893) (1,120,162) (1,865,427) (1,161,531) (1,675,334)
448,512 209,613 282,552 322,227
35,343 838,806 34,991 18,220 50,570 35,000
5,254,550 7,523,254 8,777,226 4,970,305 4,848,407 3,856,368
(2,957,819) (4,602,467) (6,739,748) (2,861,520) (2,879,534) (1,704,196)
2,780,586 3,759,593 2,282,082 2,409,557 2,341,670 2,187,172
$ 1,278,132 $ 1,292,700 $ 1,161,920 $ 544,130 $ 1,180,139 $ 511,838
2.99% 2.74% 3.01% 6.78% 1.87% 1.33%
Fiscal Year
20182016 2019201420152017
C‐11
Item 8.c. - Page 115
City of Arroyo Grande
GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE
Last Ten Fiscal Years
2010 5,408,201$ 4,252,903$ 348,014$ 80,283$ 604,325$ 63,450$ 10,757,176$
2011 5,313,261 4,781,774 390,472 79,663 539,673 65,915 11,170,758
2012 6,563,217 4,127,541 630,379 84,925 570,172 70,461 12,046,695
2013 6,150,672 4,269,905 746,333 85,078 575,495 81,354 11,908,837
2014 6,564,035 4,583,049 840,602 85,625 595,161 105,396 12,773,868
2015 6,724,240 4,634,828 1,124,486 90,108 612,261 108,529 13,294,452
2016 7,005,656 5,213,844 1,159,458 86,947 613,715 127,985 14,207,605
2017 6,384,175 5,835,213 1,160,087 93,544 610,820 110,778 14,194,617
2018 6,687,106 6,174,833 1,153,959 87,649 609,182 151,509 14,864,238
2019 7,152,037 6,381,702 1,235,407 102,794 642,952 120,580 15,635,472
Includes all governmental fund types (i.e. general fund, special revenue funds, capital project funds, and debt service funds).
Source: City of Arroyo Grande Annual Financial Report
Total
Transient
Occupancy Tax
Property Tax
Transfer
Fiscal
Year Property Taxes
Sales & Use
Tax
Business
Licenses
Franchise
Revenues
C‐12
Item 8.c. - Page 116
City of Arroyo Grande
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
Last Ten Fiscal Years
2010 $ 2,245,531,517 $ 44,455,451 $ 2,289,986,968 $ 27,131,700 $ 2,262,855,268 100%
2011 2,242,734,120 41,864,014 2,284,598,134 26,925,209 2,257,672,925 100%
2012 2,195,793,943 41,107,547 2,236,901,490 26,926,650 2,209,974,840 100%
2013 2,204,645,960 42,637,641 2,247,283,601 26,788,183 2,220,495,418 100%
2014 2,300,046,365 45,362,799 2,345,409,164 26,614,912 2,318,794,252 100%
2015 2,468,055,741 50,263,602 2,518,319,343 26,368,700 2,491,950,643 100%
2016 2,581,058,076 45,395,240 2,626,453,316 26,777,282 2,599,676,034 100%
2017 2,707,856,604 45,043,543 2,752,900,147 26,612,159 2,726,287,988 100%
2018 2,841,199,531 45,708,217 2,886,907,748 26,406,810 2,860,500,938 100%
2019 3,009,154,915 49,746,409 3,058,901,324 26,484,388 3,032,416,936 100%
Source: San Luis Obispo County Auditor‐Controller
For comparison purposes, gross assessed valuations include homeowners and other exemptions. Although these exemptions reduce property tax
collections, the revenue loss is reimbursed by the State of California. As such, gross assessed valuation is the revenue base used in establishing property
tax‐related revenues.
Assessed to
Property
ValueFiscal Year
Secured Gross
Assessed Value
Unsecured Gross
Assessed Value
Total Gross Assessed
Value Exemptions Net Taxable Value
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Item 8.c. - Page 117
City of Arroyo Grande
PROPERTY TAX RATES ‐ DIRECT AND OVERLAPPING GOVERNMENTS
Last Ten Fiscal Years
2010 1.00000 0.00220 0.02854 0.00967 0.00817 1.04858
2011 1.00000 0.00290 0.02914 0.00972 0.00817 1.04993
2012 1.00000 0.00300 0.02984 0.00972 0.00817 1.05073
2013 1.00000 0.00400 0.03954 0.00992 0.00817 1.06163
2014 1.00000 0.00400 0.03994 0.00992 0.00817 1.06203
2015 1.00000 0.00400 0.04094 0.00992 0.00606 1.06092
2016 1.00000 0.00374 0.06019 0.00982 0.00556 1.07931
2017 1.00000 0.00400 0.05919 0.00882 0.00000 1.07201
2018 1.00000 0.00400 0.10119 0.00732 0.00000 1.11251
2019 1.00000 0.00400 0.08094 0.00732 0.00000 1.09226
Source: HDL Coren & Cone, San Luis Obispo County Assessor
Fiscal Year
Valuations are established by the County Assessor of the County of San Luis Obispo, except for property owned by private utility
companies, which is valued by the State of California. Under the provisions of Article XIIA of the State Constitution (Proposition 13
adopted by the voters on June 6, 1978) properties are assessed at 100% of full value and subsequently increased at a maximum
rate of 2% per year. The County collects property taxes and distributes the appropriate amount to each city. Each dollar of
property tax is distributed to various local government agencies based upon fixed allocation factors.
San Luis
Obispo County
Tax Rate
State Water
Project Tax
Unified/High
Bond Lease
Lopez Dam
Bonds Fire Bonds Total Tax Rate
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Item 8.c. - Page 118
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Item 8.c. - Page 119
City of Arroyo Grande
PRINCIPAL PROPERTY TAXPAYERS
Current Fiscal Year and Nine Fiscal Years Ago
Rank
Sphear Investments LLC Commercial $ 61,622,636 1 2.01%
Grand and Elm Properties LP Commercial 14,694,751 2 0.48%
Sunrise Terrace Associates Residential 13,095,140 3 0.43%
Manfred G Freutel Trust Residential 10,492,541 4 0.34%
Bolsa Chica Mobile Estates Inc Residential 9,206,471 5 0.30%
1400 West Branch LLC Commerical 9,196,835 6 0.30%
Kent and Joan Sather Commerical 8,020,000 7 0.26%
EPT Arroyo Inc Recreational 7,796,178 8 0.25%
K Patrick Sandman LLC Commercial 7,620,957 9 0.25%
Ray B. Bunnell Trust Commercial 7,571,746 10 0.25%
Deblauw Properties LLC Commercial
ESJ Centers LLC Commercial
MSB Properties Inc Commercial
NKT Commerial LLC Commercial
Arroyo Grande Redevelopment Agency Vacant
Totals $ 149,317,255 4.87%
Source: HDL Coren & Cone
Taxpayer
2018‐19
Percentage of
Total Taxable
Assessed
ValuationType of Business Assessed Valuation
C‐16
Item 8.c. - Page 120
Rank
$‐‐‐
11,117,628 3 0.49%
9,270,898 4 0.40%
5,558,869 10 0.24%
7,571,718 5 0.33%
6,746,048 7 0.29%
6,749,713 6 0.29%
41,760,931 1 1.82%
15,501,960 2 0.68%
6,609,750 8 0.29%
5,778,300 9 0.25%
$ 116,665,815 5.09%
2009‐10
Percentage of
Total Taxable
Assessed
ValuationAssessed Valuation
C‐17
Item 8.c. - Page 121
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
2010 3,782,238$ 3,782,238$ 100% * *
2011 3,777,302 3,777,302 100% * *
2012 3,696,711 3,696,711 100% * *
2013 3,715,390 3,715,390 100% * *
2014 3,874,384 3,874,384 100% * *
2015 4,164,044 4,164,044 100% * *
2016 4,345,982 4,345,982 100% * *
2017 4,578,200 4,578,200 100% * *
2018 4,819,065 4,819,065 100% * *
2019 5,167,326 5,167,326 100% * *
Source: San Luis Obispo County Auditor‐Controller
* The City has elected the Teeter Plan method of property tax collection, whereby the County remits 100% of taxes levied and
pursues collection and retains any delinquent taxes and related penalties and interest.
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Item 8.c. - Page 122
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Item 8.c. - Page 123
City of Arroyo Grande
TAXABLE SALES BY CATEGORY
Last Ten Calendar Years
(in thousands of dollars)
Food Stores $17,173 $15,773 $15,564 $16,098
Eating and Drinking Places 29,880 29,949 32,738 37,136
Building Materials 19,148 18,676 19,806 20,429
Auto Dealers and Supplies 22,528 24,753 30,056 33,789
Service Stations 34,574 36,817 42,795 45,431
Other Retail Stores 113,694 112,340 113,172 115,587
All Other Outlets 44,284 46,231 47,300 46,302
Total $281,281 $284,539 $301,431 $314,772
Source: State of California Board of Equalization and the Hdl Companies.
2012
Due to confidentiality issues,the names of the ten largest revenue payers are not available.The categories
presented are intended to provide alternative information regarding the sources of the City's revenue.
2009 2010 2011
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Item 8.c. - Page 124
$17,705 $18,047 $15,955 $9,489 $12,659 $13,900
36,314 42,140 46,885 49,848 52,748 54,210
22,848 25,855 29,882 31,555 34,972 35,773
40,123 41,161 42,048 47,866 55,963 52,923
43,831 42,938 39,520 34,411 38,604 43,168
119,916 118,561 119,822 120,281 119,427 117,893
50,130 54,064 63,468 70,977 77,015 88,176
$330,867 $342,766 $357,580 $364,427 $391,388 $406,043
201820142015201620172013
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Item 8.c. - Page 125
City of Arroyo Grande
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Fiscal Year
2010 $ 1,475,000 $ 6,265,000 $ 260,396 $‐ $‐
2011 1,395,000 6,165,000 312,405 1,327,512 27,182
2012 1,315,000 221,140 1,305,512 27,182
2013 1,230,000 365,861 1,279,092 27,182
2014 1,140,000 550,653 1,247,156
2015 1,050,000 344,538 1,213,980
2016 955,000 288,500 1,179,566
2017 414,978 1,143,889
2018 478,073 1,106,950
2019 276,890 1,068,741
Source: City of Arroyo Grande Annual Financial Report
General
Obligation Bonds
Tax Allocation
Bonds Capital Leases Loan Payable
Reimbursement
Agreement
Governmental Activities
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Item 8.c. - Page 126
$‐ $‐ $ 8,000,396 0.35% 466.63
9,227,099 0.40% 531.36
2,868,834 0.13% 165.91
2,902,135 0.13% 166.84
122,007 3,059,816 0.13% 176.52
82,167 2,690,685 0.11% 155.58
41,604 2,464,670 0.09% 139.00
1,558,867 0.06% 87.89
143,589 1,728,612 0.06% 96.68
103,890 1,449,521 0.05% 80.14
Outstanding
Debt per CapitaSafe Water Loan Capital Leases
Total Primary
Government
Percent of
Estimated
Actual Value of
Taxable
Property
Business‐Type Activities
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Item 8.c. - Page 127
City of Arroyo Grande
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
Last Ten Fiscal Years
2010 $1,475,000 $625,638 $849,362 $2,289,986,968 0.04%17,145 49.54
2011 1,395,000 677,881 717,119 2,284,598,134 0.03%17,365 41.30
2012 1,315,000 727,231 587,769 2,236,901,490 0.03%17,291 33.99
2013 1,230,000 818,400 411,600 2,247,283,601 0.02%17,395 23.66
2014 1,140,000 873,044 266,956 2,345,409,164 0.01%17,334 15.40
2015 1,050,000 895,403 154,597 2,518,319,343 0.01%17,295 8.94
2016 955,000 906,890 48,110 2,626,453,316 0.00%17,731 2.71
2017 - 230 (230) 2,753,005,173 0.00%17,736 (0.01)
2018 - 596 (596) 2,886,907,748 0.00%17,880 (0.03)
2019 - 659 (659) 3,058,901,324 0.00%18,087 (0.04)
Source: San Luis Obispo County Tax Assessor Rolls - California Department of Finance
Fiscal
Year
Fire General Obligation Bond
General Bonded
Debt
Less: Amount
Available in
Debt Service
Funds
Net General
Bonded Debt
Estimated Actual
Taxable Value of
Property
Ratio of Net
Bonded
Debt to
Assessed
Value Population
Net Bonded
Debt Per
Capita
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Item 8.c. - Page 128
City of Arroyo Grande
DIRECT AND OVERLAPPING DEBT
June 30, 2019
$ 7,925,000 32.666% $ 2,588,781
San Luis Obispo County Community College District 132,425,000 5.668%7,505,849
Lucia Mar Unified School District 55,861,576 20.518%11,461,678
San Luis Obispo County Certificates of Participation 24,120,000 5.691%1,372,669
San Luis Obispo Pension Obligations 86,764,398 5.691%4,937,762
Lucia Mar Unified School District Certificates of Participation 20,643,590 20.518%4,235,652
Redevelopment Successor Agency 5,303,000 100.000%5,303,000
Combined Total Debt $ 333,042,564 $ 37,405,391
Ratio to Assessed Valuation:
Direct Debt 0.00%
Total Direct and Overlapping Tax and Assessment Debt 0.75%
Combined Total Debt 1.30%
Ratio to Redevelopment Successor Agency Incremental Valuation:2.59%
Assessed Valuation Calculation:
Net Taxable Value $ 3,032,416,936
Less: Redevelopment Agency Tax Increment (204,861,378)
Total Assessed Valuation $ 2,827,555,558
Source: California Municipal Statistics
Net Debt Outstanding
Percentage
Applicable to the
City
Amount Applicable to
the CityJurisdiction
San Luis Obispo County Flood Control and Water Conservation
District, Zone No. 3
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Item 8.c. - Page 129
City of Arroyo Grande
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
Debt Limit $ 79,151,950 $ 76,912,430 $ 81,390,806 $ 81,888,135
Total net debt applicable to limit
Legal debt margin $ 79,151,950 $ 76,912,430 $ 81,390,806 $ 81,888,135
9% 9% 9% 10%
Source: San Luis Obispo County
Fiscal Year
Total net debt applicable to the limit as a
percentage of debt limit
2010 2011 2012 2013
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Item 8.c. - Page 130
$ 85,681,844 $ 92,280,975 $ 100,526,999 $ 104,290,694 $ 109,284,041 $ 114,711,635
$ 85,681,844 $ 92,280,975 $ 100,526,999 $ 104,290,694 $ 109,284,041 $ 114,711,635
3% 3% 3% 2% 1% 1%
Legal Debt Margin Calculation for Fiscal Year 2019
Assessed value $ 3,032,416,936
Debt limit ‐ 3.75% of total assessed value 113,715,635
Amount of debt applicable to limit 996,000
Legal debt margin $ 114,711,635
Section 43605 of California Government Code establishes a legal debt limit of 15% of gross assessed valuation for municipalities. However,
this provision was enacted when assessed valuation was established based on 25% of market value. Effective with FY 1981‐82, taxable
property is assessed at 100% of market value. Although the debt limit provision has not been amended by the State since this change, the
percentage has been proportionately modified to 3.75% for the purposes of this calculation for consistency with the original intent of the
State’s limit.
2017 20192014201520162018
Fiscal Year
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Item 8.c. - Page 131
City of Arroyo Grande
DEMOGRAPHIC STATISTICS
Last Ten Calendar Years
Year Population
2010 17,145 547,714$ 31,946$ 10.4%
2011 17,365 554,159 31,912 9.5%
2012 17,291 590,856 34,171 6.2%
2013 17,395 555,104 31,912 5.3%
2014 17,334 580,593 33,494 4.9%
2015 17,295 567,314 32,802 4.0%
2016 17,731 580,593 32,745 4.9%
2017 17,736 601,429 33,910 3.7%
2018 17,880 629,380 35,200 3.0%
2019 18,087 709,825 39,245 3.0%
‐
Source: California Department of Finance & US Census Bureau
Personal Income
(in thousands)
Per Capita
Personal Income
Unemployment
Rate
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Item 8.c. - Page 132
City of Arroyo Grande
FULL‐TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
Last Ten Fiscal Years
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
General government 10.6 10.7 10.5 10.4 10.5 9.8 12.8 12.8 12.8 12.8
Community development 10.8 10.5 9.2 9.7 9.1 10.0 11.5 11.5 11.7 10.5
Police 38.5 38.5 39.6 38.4 37.5 32.8 34.7 34.7 33.6 31.9
Recreation 16.5 11.9 11.4 11.5 11.9 13.1 13.7 13.7 14.4 14.4
Public works 10.1 11.1 10.9 9.8 9.8 11.2 14.1 14.1 13.7 11.7
Streets and roads 6.0 6.4 6.1 5.6 5.2 4.8 4.8 4.8 3.9 3.5
Sewer 3.2 2.0 1.9 1.0 0.5 2.1 2.3 2.3 2.7 2.7
Water 6.5 6.6 6.6 6.1 6.8 5.1 6.3 6.3 6.7 6.7
Total 102.2 97.7 96.2 92.5 91.3 88.9 100.2 100.2 99.5 94.2
Source: City of Arroyo Grande payroll records
Fiscal Year
Function
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Item 8.c. - Page 133
City of Arroyo Grande
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
2010 2011 2012 2013 2014
General Government
Number of business licenses 1,622 1,654 1,654 1,690 1,775
Number of minutes transcribed 30 44 30 33 23
Number of agenda items processed 297 295 246 231 296
Number of recruitments 19 18 10 14 18
Police
Number of officers 26 26 26 24 27
Incidents recorded 17,072 16,145 17,250 18,275 18,809
Major crimes 478 444 313 458 508
Traffic collisions 429 432 410 253 378
Traffic enforcement activities 4,863 4,013 4,295 4,058 3,758
Arrests 631 605 574 695 568
Public Works
Miles of streets maintained 70 70 70 70 70
Miles of sewer maintained 66 66 69 70 70
Number of vehicles maintained 89 90 86 67 60
Pieces of equipment maintained 385 389 350 300 295
Number of street trees maintained 1,200 1,200 1,200 1,200 1,210
Street service request 550 560 263 352 376
Water customer accounts 6,304 6,312 6,525 6,545 6,578
Acre feet of water consumed 2,918 2,746 2,868 2,862 2,868
Miles of water lines maintained 69 69 87 87 87
In‐house capital projects constructed 3 2 3 2
Capital projects constructed 6 10 7 8 13
CIP studies initiated 2 4 3 4
CIP studies completed 1 2 1
Community Development
Number of planning commission agendas 18 19 14 20 18
Number of planning commission staff repor 36 43 35 60 53
Number of ARC agendas 12 13 11 15 21
Plan and map checks completed 13 12 13 9 6
Building permits issued 530 421 376 360 450
Building inspections conducted 3,400 3,019 1,601 2,183 2,390
Recreation Services
Registrations 11,500 11,650 11,750 11,880 12,000
Participants in City recreation sports 2,290 2,200 2,260 2,285 2,235
Number of programs/events/classes 72 91 108 115 120
Number of teams 255 281 336 325 320
Children in Motion enrollment 1,200 800 840 959 1,009
Source: City of Arroyo Grande budget records
Fiscal Year
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Item 8.c. - Page 134
2015 2016 2017 2018 2019
1,760 1,863 1,844 1,844 1,924
41 36 32 30 22
340 325 287 280 245
15 23 17 35 27
23 22 20 23 26
17,203 17,140 17,925 17,242 18,689
500 508 403 435 215
340 349 288 331 359
2,967 1,934 2,956 2,144 2,596
675 716 870 738 701
70 70 66 66 66
70 70 71 75 70
55 59 50 70 70
285 291 282 285 285
1,218 1,233 1,244 1,244 1,244
423 423 426 426 426
6,384 6,410 6,433 6,502 6,593
2,481 1,965 1,823 2,213 2,087
87 87 88 87 90
1 2 1 2 2
8 17 16 8 9
3 1 3 1
3 2 2
16 19 18 18 17
55 53 57 64 26
18 22 18 15 14
17 14 39 31 30
505 534 537 430 484
2,414 2,154 2,241 2,911 2,519
12,130 12,280 8,619 9,095 9,035
2,255 2,080 1,872 1,423 1,512
125 142 392 234 215
324 289 115 113 95
1,083 1,058 1,023 1,109 1,287
Fiscal Year
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Item 8.c. - Page 135
City of Arroyo Grande
CAPITAL ASSET STATISTICS BY FUNCTION
Last Ten Fiscal Years
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Police
Stations 1 1 1 1 1 1 1 1 1 1
Patrol units 10 10 10 10 10 10 10 10 10 10
Motorcycles 2 2 2 2 2 2 2 2 2 2
Engineering/Streets
Streets (miles)70 70 70 70 70 70 70 70 70 70
Parks & Recreation
Parks 19 19 19 19 19 19 19 19 19 19
Acreage of parks 151.6 151.6 151.6 151.6 151.6 151.6 151.6 151.6 151.6 151.6
Community centers 2 2 2 2 2 2 2 2 2 2
Water
Water mains (miles)69 69 87 87 87 87 87 87 87 87
Water capacity**6.5 6.5 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7
** ‐ In millions of gallons
Source: CBIZ GASB Statement No. 34 Infrastructure Inventory and Valuation City records
Fiscal Year
Function
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Item 8.c. - Page 136