HomeMy WebLinkAbout1999-01-05; City Council; 14999 Exhibit 4; INDEPENDENT AUDITORS' REPORTCERTIFIED PUBLIC ACCOUN
11 00 MAIN STREEl
lRVl N E, CALI FORh
(949) e Fax (949)
CONRAD
%SSOCIATES. A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS L.L.p.
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The Board of Commissioners Carlsbad Redevelopment Agency Carlsbad, California
INDEPENDENT AUDITORS’ REPORT e
We have audited the accompanying financial statements of the Carlsbad Redevelopment Ag
a component unit of the City of Carlsbad, as of and for the year ended June 30, 1998, as list
the table of contents. These component unit financial statements are the responsibility c management of the Carlsbad Redevelopment Agency. Our responsibility is to expre: opinion on these component unit financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards Government Auditing Standards. Those standards require that we plan and perform the aul obtain reasonable assurance about whether the component unit financial statements are fr material misstatement. An audit includes examining, on a test basis, evidence supportin amounts and disclosures in the component unit financial statements. An audit also inc assessing the accounting principles used and significant estimates made by management, as as evaluating the overall component unit financial statement presentation. We believe tha audit provides a reasonable basis for our opinion.
In our opinion, the component unit financial statements referred to above present fairly, : material respects, the financial position of the Carlsbad Redevelopment Agency at June 30, ‘ and the results of operations for the year then ended, in conformity with generally accc
accounting principles.
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AaA&&&?’’+ L*aP e
September 25, 1998
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MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC KCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
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CARLSBAD REDEVELOPMENT AGENCY
Component Unit Financial Statements
Year Ended June 30,1998
(With Independent Auditors’ Report)
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CARLSBAD REDEVELOPMENT AGENCY
Component Unit Financial Statements
Year Ended June 30,1998
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TABLE OF CONTENTS
Financial Section: e
Independent Auditors’ Report
Component Unit Financial Statements:
Combined Balance Sheet - All Governmental Fund Types and Account Groups
Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types
Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Special Revenue and Debt Service Funds
Notes to Component Unit Financial Statements
Auditors’ Opinion on Compliance with Audit Guidelines for California Redevelopment Agencies
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CARLSBAD REDEVELOPMENT AGENCY
Combined Balance Sheet - All Governmental Fund Types and Account Groups
June 30,1998
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Governmental Fund Tms Account Group
General To1
Special Debt Capital Long-Term JMemora
Revenue Service Proiects Debt - 1998
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Assets and Other Debits
Cash and investments (note 3) $1,664,745 1,102,647 2,272,245 - 5,039,637
Loan receivable 2,409,933 - - 2,409,933
Taxes receivable 10,957 43,827 - 54,784 Interest receivable - 358 30,147 30,505
Amount available in debt service fund - 1,146,832 1,146,832
a Accounts receivable 72,979 - 72,979
Prepaid expenditures 909 6,903 7,812
Amount to be provided for retirement a of general long-term debt 23,985,486 23.985.486
Total assets and other debits $4,086,544 1,146.832 2.382.274 25.132.3 18 32,747,968
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Liabilities and Fund Balances
Liabilities: Accounts payable $- - 10,386 - 10,386 Accrued expenses 1,394 26,349 - 27,743 Deposits payable 323 - 323 Deferred revenue - 29,800 29,800
of Carlsbad (note 5) - 10,392,318 10,392,318 Bonds payable (note 5) - 14,740,000 14.740,OOO
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Advances from the City
Total liabilities 1,394 66,858 25,132,318 25,200.570
Fund balances (note 7): Reserved for loan receivable 2,409,933 - - 2,409,933 Reserved for prepaid expenditures 909 6,903 - 7,812 Reserved for debt service - 869,000 - - 869,000 Reserved for encumbrances 654 18,759 - 19,413
Designated for future debt service - 277,832 - 277,832
Designated for approved capital projects - 1,988,720 1,988,720
Designated for continuing
appropriations 301,034 301,034 Undesignated 1,673,654 - - 1,673,654
Total fund balances 4,085,150 1,146,832 2,315.416 - 7,547.398
Total liabilities and fimd balances $4,086,544 1.146.832 2.382.274 25,132.318 32.747,968
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Unreserved:
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See accompanying notes to component unit financial statements.
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CARLSBAD REDEVELOPMENT AGENCY
Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types
Year Ended June 30,1998
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Totals Special Debt Capital [Memorandurr Revenue Service Proiects 1998 e
Revenues : Property tax increment $ 302,097 1,208,387 - 1,510,484 1,
Charges for services - - 121,261 121,261
Miscellaneous 5.550 - 1,062 6,612 -
Interest 322,069 64,563 132,231 518,863
a Total revenues 629.716 1,272,950 254,554 2,157,220 l.-
Expenditures: Current: General government - 14,996 385,846 400,842
Capital outlay - - 536,536 536,536
Principal - 288,394 - 288,394
Interest and fiscal charges 1,376,101 1,376,101 1, Miscellaneous -
- - 0 Community development 65,186 65,186
Debt service:
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Total expenditures 65.186 1,679,491 922,382 2,667,059 2,
Excess (deficiency) of revenues over (under) expenditures 564.530 (406,541) (667,828) (509,839) k
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Other financing sources (uses): Operating transfers in - - 360,000 360,000 1 Operating transfers out - (3 60,000) - (360,000) (1
the City of Carlsbad - 579,462 - 579,462 L
sources (uses) - 219,462 360,000 579.462 L
Transfers from the City of Carlsbad - - - - Proceeds of advances from
Total other financing
Excess (deficiency) of revenues and other financing sources over (under) expenditures
and other financing uses 564,530 (187,079) (307,828) 69,623 1
Residual equity transfers in -
Fund balances at beginning of year 3,520,620 1,333,911 2,623,244 7,477,775 7,:
Fund balances at end of year $4,085,150 1,146,832 2,315,416 7,547,398 7&
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See accompanying notes to component unit financial statements.
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CARLSBAD REDEVELOPMENT AGENCY
Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Special Revenue and Debt Service Funds
Year Ended June 30, 1998
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Special Revenue Debt Service Actual on
Budgetary Variance- v Basis Over Budget (Note2) wnder) Budget Actual 1
Property tax increment $ 300,000 302,097 2,097 1,200,000 1,208,387 Interest 75,000 322,069 247,069 100,000 64,563 (
Total revenues 375.000 629.716 254,716 1,300,000 1,272.950 (
Revenues: *
Miscellaneous - 5,550 5,550 - -
e Expenditures : Current: - - - 18,000 14,996 General government Community development 126,162 71,285 (54,877) - - Debt service: - e Principal - 288,394 288,394 - - Interest and fiscal charges - 1,383,868 1,376,101 .
Total expenditures 126.162 71,285 (54,877) 1,690,262 1,679,491 (
Excess (deficiency) of
revenues over (under) e expenditures 248.838 558.431 309,593 (390,262) (406,541) (
Other financing sources (uses): Operating transfers out - - - (3 60,000) (3 60,000)
from the City of Carlsbad - 579,462 579,462 .
sources (uses) - 219,462 219,462 -
Proceeds of advances - -
e Total other financing - -
Excess (deficiency) of revenues and other
financing sources over (under) expenditures and other financing uses 248,838 558,431 309,593 (170,800) (187,079) ( e
Fund balances at beginning
Fund balances at end ofyear $3,769,458 4,079.051 309,593 1,163,111 1,146.832 (-
of year 3,520,620 3,520,620 - 1,333,911 1,333,911
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See accompanying notes to component unit financial statements.
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
Year Ended June 30,1998
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(1) Organization and Summq of Significant Accounting Policies
The Carlsbad Redevelopment Agency (Agency) was established in July 1976 wit adoption of Ordinance No. 1 19 1 by the Carlsbad City Council pursuant to the Calii Community Redevelopment Law, now codified as Part 1, Division 24, of the St2 California Health and Safety Code. The Agency has the broad authority to acc rehabilitate, develop, administer, and sell or lease property. The Agency is not subjl federal or state income taxes.
The principal objectives of the Agency are to eliminate blighted influences withi “Village Area” of the City of Carlsbad (City), stimulate and attract private invest generate added employment through increased specialty goods and services, and ex the City’s sales tax revenue.
The Agency is an integral part of the reporting entity of the City. The funds and acc group of the Agency have been included within the scope of the general purpose fina statements of the City because the City Council is the governing board ovei operations of the Agency. Only the funds and account group of the Agency are incl herein; therefore, these financial statements do not purport to represent the fina
position or results of operations of the City of Carlsbad, California.
The accounting policies of the Agency conform to generally accepted accou principles as applicable to governmental units. The following is a summary of the significant policies:
(a) Basis of Presentation
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The accounts of the Agency are organized on the basis of funds and an acc group, each of which is considered to be a separate accounting entity. operations of each fund and account group are accounted for by providi separate set of self-balancing accounts that comprise its assets, liabilities, balance, revenues, and expenditures. The various funds and account groul
summarized by type in the financial statements. The fund types and acc group used by the Agency are as follows:
GOVERNMENTAL FUND TYPES
Governmental hnds are used to account for the Agency’s expendable finsu resources and related liabilities. The measurement focus is upon determinatic changes in financial position. The following are the Agency’s governmental
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Cont hued)
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(1) Organization and Summary of Significant Accounting; Policies, (Continued)
Special Revenue Fund
Special revenue hnd is used to account for revenues derived from specific sou (other than major capital projects) that are restricted by law or administra regulation to expenditures for specified purposes.
Debt Service Fund
Debt service fund is used to account for the accumulation of resources for, payment of, general long-term debt principal, interest and related costs.
Capital Pro-iects Fund
Capital projects fund is used to account for financial resources to be used for acquisition or construction of major capital facilities.
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GENERAL LONG-TERM DEBT ACCOUNT GROUP
This account group is used to establish accounting control and accountability
the Agency’s general long-term debt. This account group is used to account fo long-term obligations of the Agency.
Measurement Focus and Basis for Accounting
Governmental fbnd types are accounted for on a “spending’’ measurement foc Accordingly, only current assets and current liabilities are included on their bala sheets, and the reported fund balance provides an indication of available, spend: resources. Operating statements for governmental fhd types report incre; (revenues) and decreases (expenditures) in available spendable resources.
The modified accrual basis of accounting is utilized by the governmental f types. Revenues are recognized when susceptible to accrual, i.e., both rneasuri and available. Available means collectible within the current period or SI enough thereafter to be used to pay liabilities of the current period.
Revenues that are accrued include the tax increment on real property taxes interest income.
Real property taxes are levied on October 15 against owners of record at J~L
1. The taxes are due in two installments, on November 1 and February 1, become delinquent after December 10 and April 10, respectively. Tax liens atta
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
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(1) Organization and Summary of Significant Accounting Policies, (Continued)
annually as of 12:Ol a.m. on the first day of January in the fiscal years for P the taxes are levied. Under the provisions of NCGA Interpretation 3, propert
revenue is recognized in the fiscal year for which the taxes have been le provided it is collected within 60 days of the end of the fiscal year.
Governmental fund expenditures are recognized when the liability is incL except for principal and interest on long-term debt which is recognized when
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(c) Encumbrances 0
Encumbrance accounting, under which purchase orders, purchase order reqi contracts and other commitments for the expenditure of monies are record1
order to reserve that portion of the applicable appropriation, is employed i extension of formal budgetary control in the governmental funds. Encumbrz outstanding at year-end do not constitute expenditures or liabilities, bu reported as reservations of fund balance for subsequent-year expenditures. a
(d) Cash and Investments
The Agency participates in the pooled cash and investment fund of the Cil Carlsbad. Pooled investments are stated at fair value. The Agency’s equity ii pooled cash is included in the financial statements as cash and investm Interest earned as a result of the pooling is accrued in the cash and invest] pool and allocated to the appropriate funds as part of the monthly int allocation.
Investments are reported in the accompanying balance sheet at fair value, er for nonparticipating certificates of deposit and investment contracts that reported at cost because they are not transferable and they have terms that arc affected by changes in market interest rates.
Changes in fair value that occur during a fiscal year are included with intc revenue reported for that fiscal year. Interest revenue includes interest earni changes in fair value, and any gains or losses realized upon the liquida maturity, or sale of investments.
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(e) Compensated Absences
Vacation pay is payable to employees at the time used or upon terminatio employment. The cost of accumulated vacation expected to be paid in the ner months is recorded as a find liability; currently no amounts are expected tl paid after 12 months.
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
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(1) Organization and Summary of Significant Accounting Policies, (Continued)
(f) Total Columns
Total columns on the accompanying combined financial statements are capti “Totals (Memorandum Only)” to indicate that they are presented only to faci financial analysis. Data in these columns do not present financial position, re
of operations, or changes in fund balance in conformity with generally acct accounting principles. Such data is not comparable to a consolidation. Intel eliminations have not been made in the aggregation of this data.
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(2) Budgetary Data
The budget for the Agency is established by the City of Carlsbad. The City Manag authorized to make transfers of appropriated amounts from one department to an( within a fund. The legal level of budgetary control is at the fund level. Revisions alter the total appropriations of any fund must be approved by the City Council wit1 exception of budget adjustments which involve offsetting revenues and expenditures. City Manager is authorized to increase or decrease an appropriation for a specific pur where the appropriation is offset by unbudgeted revenue which is designated for specific purpose. Quarterly budget reviews are conducted each year and any n changes to the adopted budget are approved by the City Council at that time.
Budgets are adopted on the modified accrual basis, except that encumbrances are tre as budgeted expenditures in the year purchases are committed. Expenditures may exceed budgeted appropriations at the fund level. Unencumbered appropriations lap: year-end. Annual budgets are adopted for the special revenue and debt service funds.
For purposes of budgetary presentation, actual generally accepted accounting princi (GAAP) expenditures have been adjusted to include encumbrances outstanding.
The following schedule is a reconciliation of the budgetary and GAAP Special Revc fund balances:
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Special Revenue
Fund balance - budgetary basis $4,079,05 1 Encumbrances outstanding at year-end 654
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Earned leave at year-end 5,445
Fund balance - GAAP basis $4,0853 50 e
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
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(3 ) Cash and Investments
The Agency participates in the pooled cash fund of the City.
Authority for Deposits and Investments
The Agency’s investment policy and state statutes authorize the Agency to inv obligations of the U.S. Government, its agencies and instrumentalities; commercial rated A-1 by Standard and Poor’s Corporation or P-1 by Moody’s Commercial record with a maximum maturity of 180 days or 15% of the portfolio; bar acceptances with a maximum maturity of 270 days or 25% of the portfolio; repur agreements with a maximum maturity of one week; certificates of deposit with nai
and state licensed or chartered banks or federal or state savings and loan associa medium-tern corporate notes with a maximum five-year maturity rated in the tw rating categories and not to exceed 30% of the portfolio; money market funds v portfolios consist of one or more of the foregoing investments; a sweep account an State Treasurer’s investment pool.
State statutes require that all deposits be insured or collateralized. Depositories ho public funds on deposit are required to maintain collateral in the form of a PO securities with the agent of the depository having a market value of at least 10 percent in excess of the total amount of all public funds on deposit.
Classification of Investments bv Credit Risk:
As defined in Governmental Accounting Standards Board Statement No. 3, the Age investments in securities are categorized in the following manner:
Category 1 - Investments that are insured or registered, which are held by the Ag or its agent in the Agency’s name.
Category 2 - Uninsured and unregistered investments, for which the securities are by the counterparty’s trust department or agent in the Agency’s name.
Category 3 - Uninsured and unregistered investments, for which the securities are by the counterparty or by its trust department or agent, but not in the Agency’s name.
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
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(3) Cash and Investments, (Continued)
At June 30, 1998, the Agency had the following investments which are not categori by credit risk:
Carrying Amount,
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Investment Market Value
Investments held by City not subject to categorization: e
Investment in State of California Pooled Investment Account Investment in City’s pooled cash fund $2,109,472 2,929,884
Investment held by fiscal agent not subject to categorization: e Investment in mutual funds 28 1
Total investments $5,039.637
The Agency is a voluntary participant in the Local Agency Investment Fund (LAIF) is regulated by California Government Code Section 16429 under the oversight o Treasurer of the State of California. The fair value of the Agency’s investment in pool is reported in the accompanying financial statements at amounts based upor Agency’s pro-rata share of the fair value provided by LAIF for the entire LAIF portj
(in relation to the amortized cost of that portfolio). The balance available for withdr: is based on the accounting records maintained by LAIF, which are recorded 01 amortized cost basis. Included in LAIF’s investment portfolio are collateral mortgage obligations, mortgage-backed securities, other asset-backed securities, loa certain state funds, and floating rate securities issued by federal agencies, govern sponsored enterprises, and corporations.
The carrying amount of all investments reflected in the above table is at fair value.
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(4) Pension Plan e
The Agency’s employees are included in the City’s pension plan which is administc
by the California Public Employees Retirement System (PERS). PERS is an a; multiple-employer public employee retirement system that acts as a common investn and administrative agent for participating public entities within the State of California e
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
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(4) Pension Plan. (Continued)
All fill-time employees are eligible to participate as members of the PERS. Benefits after an employee has been a member of the plan for five years. Employees are eligibl
retire after age 50 with 5 years of credited service. Annual retirement benefits determined based on age at retirement, the length of membership service and the amc
of earnings based on the highest twelve consecutive months average. The PERS provides death and disability benefits. These benefit provisions and all other requireml are established by state statute.
Employees are required to make contributions equaling 7% of gross pay. This is paic the City for the benefit of the employees in lieu of salary. The City is also require( contribute the remaining amounts necessary to hnd the benefits for its members, using actuarial basis recommended by the PERS actuaries and actuarial consultants and ado1 by the PERS Board of Administration.
Additional disclosures required by Governmental Accounting Standards Board Staten No. 5 are not available for the Agency as a separate entity. This information for the Ci reporting entity is presented in the Comprehensive Annual Financial Report of the Cic Carlsbad.
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(5) Long-Term Debt a
The following is a summary of changes in long-term debt for the year ended June 1998:
Principal Principal Balance at Additional Balance at July 1, 1997 Obligations Deletions June 30. 1998 0
Advances from the City of Carlsbad $ 9,842,656 579,462 (29,800) 10,392,318
Bonds payable 15,005.000 - (265,000) 14,740,000
Total $24.847.656 579.462 (294.800) 25,132.3 18 0
Since activation of the Redevelopment Agency in July 1976, the City has advanced Agency monies for approved expenditures. Advances from the City bear interest equa the City’s interest rate received on pooled investments. There is no stated maturity datt e
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
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(5) Long-Term Debt. (Continued] 0
On August 15, 1993, the Agency issued $15,495,000 in tax allocation bonds witl, average interest rate of 5.3% to finance redevelopment activities within the Vi1 Redevelopment Project Area and to advance refund $11,185,000 of outstanding 1 series tax allocation bonds with an average interest rate of 7.3%. These bonds were ca in full on November 1,1947.
Debt service requirements to maturity for the bonds, including sinking fund payments, as follows:
1999 $ 1,048,352 2000 1,043,390
2001 1,042,77 1 2002 1,046,23 4
2003 1,043,777 2004-2008 5,217,919 2009-2013 5,205,600 20 14-20 18 5,184,113 201 9-2023 5,151,337 2024 1,026.500
27,009,993
(1 2.269.993)
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Less amounts representing interest
Bonds payable $14.740,000
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16) Obligations Under Operating Leases a
In June 1988, the Agency entered into an agreement to lease a parking lot on State St1 from a private party. The lease requires monthly rental payments for twenty years.
Minimum hture rental payments under operating lease as of June 30, 1998 are:
1999 $ 58,726 2000 62,250 200 1 65,985
2002 69,944 2003 74,140 e Subsequent to 2003 443,014
$774,059
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Total minimum hture rental payments
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
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(7) Fund Balances
Reserves for the loan receivable and prepaid expenditures are established to show certain assets are already committed for other purposes and are not available discretionary expenditures.
Reserve for debt service represents resources legally restricted to the payment of ge long-term debt principal and interest maturing in future years.
Reserve for .encumbrances represents cornmitments related to unperformed contract services and undelivered goods.
Unreserved-undesignated balances represent the fund balance remaining after redul for reserved and designated fund balances.
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CERTIFIED PUBLIC ACCOUN
11 00 MAIN STREFT,
IRVINE, CALIFORN
(949) ’ a Fax (949) :
CONRAD
%SSOCIATES. A PARTN E RS HIP INCLUDING PRO FE 55 ION AL CO RPO RAT1 ON S L.L.F!
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The Board of Commissioners
Carlsbad Redevelopment Agency Carlsbad, California
Auditors’ Opinion On Compliance With Audit Guidelines for California Redevelopment Agencies
We have audited the combined financial statements of the Carlsbad Redevelopment Agenc component unit of the City of Carlsbad, California) as of and for the year ended June 30, 1 and have issued our report thereon dated September 25, 1998. We conducted our aud accordance with generally accepted auditing standards and Government Auditing Standl Those standards require that we plan and perform the audit to obtain reasonable assurance a whether the financial statements are free of material misstatement.
Compliance with laws and regulations applicable to the Carlsbad Redevelopment Agency i! responsibility of the Carlsbad Redevelopment Agency’s management. As part of obtail reasonable assurance about whether the financial statements are free of material misstatex we performed tests of the Carlsbad Redevelopment Agency’s compliance with provisions of 1
and regulations contained in the Guidelines For Compliance Audits of California Redevelopx Agencies issued by the State Controller’s Office, Division of Local Government Fiscal Affair
The results of our tests indicated that, with respect to the items tested, the Carl: Redevelopment Agency complied, in all material respects, with the provisions referred to in preceding paragraph. With respect to items not tested, nothing came to our attention that cai us to believe that the Carlsbad Redevelopment Agency had not complied, in all material respc with those provisions.
This report is intended for the information of the Carlsbad Redevelopment Agency and the 5 Controller’s Office. However, this report is a matter of public record and its distribution is limited.
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September 25, 1998
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MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
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