HomeMy WebLinkAbout1999-01-05; City Council; 14999 Exhibit 5; PUBLIC IMPROVEMENT CORPORATION FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA JUNE 30, 19980
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Financial Statements and Supplemental Data
Year Ended June 30, 1998
(With Independent Auditors’ Report Thereon)
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Financial Statements and Supplemental Data
Year Ended June 30,1998
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TABLE OF CONTENTS
Independent Auditors’ Report
Combined Balance Sheet - Governmental Fund Type and Account Group
Combined Statement of Revenues, Expenditures and Changes in Fund Balances -
Debt Service Funds
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e Notes to Financial Statements
Supplemental Data:
Combining Balance Sheet - Debt Service Funds
Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Funds
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CERTIFIED PUBLIC ACCOUb
11 00 MAIN STREE
I RVI N E, CALI FORP
(949) Fax (949)
CONRAD
~SSOCILYTES. A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS L.L.R e
e Board of Directors City of Carlsbad Public Improvement Corporation Carlsbad, California
Independent Auditors’ Report e
We have audited the accompanying component unit financial statements of the City of Car Public Improvement Corporation (the Corporation) as of and for the year ended June 30, 195 listed in the accompanying table of contents. These component unit financial statements ai responsibility of the Corporation’s management. Our responsibility is to express an opinic
these component unit financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. 1 standards require that we plan and perform the audit to obtain reasonable assurance i whether the financial statements are free of material misstatement. An audit includes exami on a test basis, evidence supporting the amounts and disclosures in the financial statements audit also includes assessing the accounting principles used and significant estimates mac management, as well as evaluating the overall financial statement presentation. We believc our audit provides a reasonable basis for our opinion.
In our opinion, the component unit financial statements referred to above present fairly, i material respects, the financial position of the City of Carlsbad Public Improvement Corpor as of June 30, 1998, and the results of its operations for the year then ended in conformity generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the component unit fina statements taken as a whole. The combining financial statements listed in the accompan table of contents are presented for purposes of additional analysis and are not a required pa the component unit financial statements of the City of Carlsbad Public Improve1 Corporation. Such information has been subjected to the auditing procedures applied in the i
of the component unit financial statements and, in our opinion, is fairly stated in all mal respects in relation to the component unit financial statements taken as a whole.
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September 17, 1998
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1 e MEMBERS OF AlCPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Combined Balance Sheet - Governmental Fund Type and Account Group
June 30,1998
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Governmental Account Fund Type Group
General Total Debt Long-Term (Memorai Service Debt Only a
Assets
Cash held by the City (note 2) $ 110,159 - 110:
Cash and investments held by trustee (note 2) 1,429,607 - 1,429:
Interest receivable 22,455 22,
certificates of participation - 1 1,392,779 1 1,392,
e Net investment in direct financing lease (note 3) 1 1,392,779 - 1 1,392, -
Amount available in debt service funds 1,562,221 1,562, Amount to be provided for retirement of
Total assets $12,955,000 12,955,000 25,910, e
Liabilities and Fund Balances
Liabilities: a Deferred revenue $1 1,392,779 - 11,392, - 12,9552 12,955,000
Total liabilities 11,392,779 12,955.000 24,347,
Certificates of participation payable (note 4)
0 Fund balances: Reserved for debt service (notes 4 and 6) 1,562,221 - 1,562,
Total fund balances 1.562,221 - 1,562,
Total liabilities and fund balances $12,955,000 12,955,000 25,9104 a
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See accompanying notes to financial statements.
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Funds
Year Ended June 30,1998
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Debt Serv
Revenues : Lease payments $ 1,989,: Interest on investments 94; e
Total revenues 2,083,;
Expenditures: Principal 1,395,( e Interest 561,5 Payment to bond escrow agent 2,159,5 Cost of issuance 2 16,6 Administrative expense 23.5
Total expenditures 4,356,3
Excess (deficiency) of revenues over (under) expenditures (2,272,8
Other financing sources (uses):
Operating transfers in 1,033,l 0 Operating transfers out (1,033,l Transfers from the City of Carlsbad 2,036,71 Proceeds of refunding bonds 1 3,s 047 Payment to refunded bond escrow agent (12,946,4
Total other financing sources (uses) 2.894,9
Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 622,l
e Fund balances at beginning of year 940,O
$ 1,562,2:
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Fund balances at end of year
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See accompanying notes to financial statements.
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Notes to Financial Statements
Year Ended June 30, 1998
(1 ) Organization and Summary of Significant Accounting; Policies
The City of Carlsbad Public Improvement Corporation (the Corporation) was orga, on June 1, 1988 under the Nonprofit Public Benefit Corporation law for the purpo financing and constructing certain improvements on the parcel of property Imov Hosp Grove. The Corporation is not subject to federal or state income taxes.
The Corporation is an integral part of the reporting entity of the City of Carl
California (the City). The accounts of the Corporation have been included withi scope of the general purpose financial statements of the City because the City Counc
financial accountability over the operations of the Corporation. Only the accounts c
Corporation are included herein; therefore, these financial statements do not purpc
represent the financial position or results of operations of the City.
The accounting policies of the Corporation 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 Corporation are organized on the basis of funds an account group, each of which is considered to be a separate accounting el The 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 the account grou
summarized by type in the financial statements. The fund types and the acc group used by the Corporation are as follows:
GOVERNMENTAL FUND TYPE
The governmental fund is used to account for the Corporation’s expenc financial resources and related liabilities. The measurement focus is determination of changes in financial position. The following is the Corporat governmental fund type:
Debt Service Funds
Debt service funds are used to account for the accumulation of resources for, payment of, general long-term debt principal, interest and related costs.
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GENERAL LONG-TERM DEBT ACCOUNT GROUP
e This account group is used to establish accounting control and accountabiliv the Corporation’s general long-term debt. It is used to account for all long- obligations of the Corporation.
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Notes to Financial Statements
(Continued)
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0 (1) Organization and Summary of Significant AccountinP Policies. (Continued)
(b) Measurement Focus and Basis of Accounting
The governmental fund type is accounted for on a “spending” measurement fc Accordingly, only current assets and current liabilities are generally include
its balance sheet, and the reported fund balance provides an indicatioi available, spendable resources. The operating statement for the governmc fund type report increases (revenues) and decreases (expenditures) in avail( spendable resources.
The governmental fund type uses the modified accrual basis of accoun Revenues are recognized when susceptible to accrual (i.e., both measurable available). Available means collectible within the current period or soon enc thereafter to be used to pay liabilities of the current period. Revenues that accrued include interest income.
The governmental fund expenditures are recognized when the liability is incui except for principal and interest on long-term debt, which is recognized when I
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(c) Budgets
The Corporation does not adopt an annual budget, therefore, no budge
comparisons are presented. e
(d) Cash and Investments
Investments are reported in the accompanying balance sheet at fair value, exc for certain certificates of deposit and investment contracts that are reported at 1 because they are not transferable and they have terms that are not affected changes in market interest rates.
Changes in fair value that occur during a fiscal year are recognized as interes investments reported for that fiscal year. Interest on investments includes inte earnings, changes in fair value, and any gains or losses realized upon liquidation, maturity, or sale of investments.
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(e) Total Columns
Total columns on the combined statements are captioned “Totals (Memorand Only)” to indicate that they are presented only to facilitate financial analy Data in these columns do not present financial position, results of operations changes in fund balances in conformity with generally accepted accounl
principles. Such data is not comparable to a consolidation. Interfund eliminati
have not been made in the aggregation of this data.
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Notes to Financial Statements
(Continued)
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(2) Cash and Investments
Authority for Investments
The Trust Agreement by and among the First Trust of California, as successor trustee
Corporation and the City, dated June 1, 1988, authorizes the trustee to invest in Fel Treasury Securities, Federal Agency Securities, interest-bearing demand or time depc obligations of U.S. corporations having assets in excess of $500,000,000 and can one of the three highest ratings by Moody’s and Standard and Poor’s Corpora repurchase agreements, money market funds, commercial paper rated A-1 by Star and Poor’s Corporation and P-1 by Moody’s Commercial Paper with original matui of not more than 180 days, bankers acceptances with maturities of not more than days, and tax-exempt obligations rate in one of the three highest ratings by Moody’s Standard and Poor’s Corporation.
Classification of Investment by Credit Risk
As defined in Governmental Accounting Standards Board Statement No. 3, investm
in securities are categorized in the following manner:
Category 1 - Investments that are insured or registered, which are held by Corporation or its agent in the Corporation’s name.
Category 2 - Uninsured and unregistered investments, for which the securities are by the counterparty’s trust department or agent in the Corporation’s name.
Category 3 - Uninsured and unregistered investments, for which the securities are 1 by the counterparty or by its trust department or agent, but not in the Corporation’s na
As of June 30, 1998, the Corporation had $110’159 invested in the City of Carlsb cash and investments pool which are not categorizable by credit risk.
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Category Form of Investment 1 2 3 Carrying Vi
Investments managed by City Treasurer: 0 United States Treasury obligations $30,098 - - 30,09
Investments managed by fiscal agent: Repurchase agreement - ; 1,399,509 1,399,50‘
$30,098 - - 1,399,509 1,429.60’ 0 -
The carrying amount of all investments reflected above is at fair value.
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Notes to Financial Statements
(Continued)
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13) Lease Agreements
Hosp Grove
Under the terms of a lease agreement dated June 1, 1988, the City has leased pro known as Hosp Grove to the Corporation and the Corporation has leased back to the
the same property and all improvements constructed thereon. The Agreement req the City to pay semiannual lease payments to the Corporation equal to the debt se
requirements of the Certificates of Participation issued by the corporation on Jul
1988 (the Certificates). Under the terms of the lease agreement between the City an
Corporation, the City is required to make lease payments on January 15 and July 15
the Certificates have been paid in full. In addition, the City must pay all t assessments, insurance, maintenance and utilities on the property and its improvem The lease expires on August 1, 2008 or upon the date of retirement of the Certific The lease has been accounted for as a direct financing lease.
Carlsbad Municisal Water District
Under the terms of a Lease Agreement dated September 1, 1997, the Carlsbad Munil Water District (District) has leased the Project (which represents the addit betterments, extensions and improvements of the Water System) to the Corporation the Corporation has leased back to the District the same Project. All right, title interest in each component of the Project shall vest in the District immediately 1 execution and delivery of the Agreement. All revenues (which consists of all incc rents, rates, fees, charges and other monies derived from the ownership or operatic the Water System) are irrevocably pledged to the payment of the installment paymt The Agreement requires the district to pay semi-annual lease payments to the Corpors equal to the debt service requirements of the 1997 Water Revenue Certificate,
Participation issued by the Corporation on September 1, 1997. Under the terms ol Lease Agreement between the District and the Corporation, the District is require make lease payments on April 15 and October 15 until the Certificates have been paj full. The lease expires on May 1,2004 or upon the date of retirement of the Certifici The lease has been accounted for as a direct financing lease.
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14) Certificates of Participation e
Hosp Grove
In September 1997, the Corporation issued $6,595,000 of Refunding Certificate: Participation, Series 1997 to refund $6,615,000 of outstanding Certificates
Participation, Series 1988. The 1997 Certificates bear interest at rates ranging f 3.75% to 4.70%. The net proceeds of $6,486,351 were used to purchase govern securities. Those securities were deposited in an U.S. irrevocable trust with an esci
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
e Notes to Financial Statements
(Continued)
J4) Certificates of Participation, (Continued) e
HOSD Grove, (Continued)
agent to provide for all future debt service payments on the Corporation’s Certifica Participation, Series 1988. As a result, the Certificates of Participation, Series 198 considered to be defeased and the liability for those bonds has been removed fro1 balance sheet.
The Corporation rehnded the Certificates of Participation, Series 1988 to reduce its debt service payments over the next nine years by $1,209,961 and to obtain an ecor
The Corporation issued these Certificates pursuant to a Trust Agreement by and a the Corporation, the City and the Trustee. The Certificates represent an undi interest in the lease payments made by the City to the Corporation. The Certif mature on August 1 of each year through 2008. The Corporation is required to main debt service reserve of $659,500. As of June 30, 1998, the reserve balance was $814
Debt service requirements to maturity for the Certificates are as follows:
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e gain of $954,720.
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Year ending June 30,
1999 $ 811,490
2000 758,803 2001 748,655 2002 752,285 2003 754,350 2004-2008 3,761,605 e 2009 752,272
8,339,460
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Less amounts representing interest (1,744,460)
Outstanding balance $6,595,000 e
Carlsbad Municipal Water District
In September 1997, the Corporation issued $7,400,000 of 1997 Water Rev Certificates of Participation to refund $8,160,000 of outstanding 1988 Certificati Participation (previously issued by the Carlsbad Municipal Water District). The Certificates bear interest at rates ranging from 3.75% to 4.40%. The net proceec
$7,328,65 1 after payment of $7 1,349 in issuance and interest costs were used to pur( government securities. Those securities were deposited in an U.S. irrevocable trust
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Notes to Financial Statements
(Continued)
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0 (4) Certificates of Participation, (Continued)
Carlsbad Municipal Water District, (Continued)
. an escrow agent to provide for all future debt service payments on the Carl Municipal Water District’s 1988 Certificates of Participation. As a result, the
Certificates of Participation are considered to be defeased and the liability for those b has been removed from the District’s balance sheet.
The Corporation refunded the Water District’s 1988 Certificates of Participatio reduce the District’s total debt service payments over the next eight years by $2,123
and to obtain an economic gain of $1,848,491.
The Corporation issued these Certificates pursuant to a Trust Agreement by and an-
the Corporation, the Water District and the Trustee. The Certificates represen undivided interest in the lease payments made by the Water District to the Corporal The Certificates mature on May 1 of each year through 2004. The Corporatio required to maintain a debt service reserve of $740,000. As of June 30, 1998, the res
Debt service requirements to maturity for the Certificates are as follows:
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0 balance was $747,708.
Year ending June 30,
1999 $1,2 19,695 2000 1,222,450 200 1 1,227,650
2003 1,2 19,860 2004 1,226,700
7,336,365
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2002 1,220,010
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Less amounts representing interest (976,365)
Outstanding balance $6,360,000
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Notes to Financial Statements
(Continued)
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e (4) Certificates of Participation, (Continued)
The following is a summary of changes in the general long-term debt of the Corpor: for the year ended June 30,1998:
Balance at Balance e July 1, 1997 Additions Reductions June 30, ’
Certificates of participation,
Refimding certificates of
1997 Water revenue certificates
Hosp Grove, 1988 $6,615,000 - (6,615,000) -
e participation, Series 1997 6,595,000 - 6,595,O -
of participation - 7,400,000 (1,040,000) 6,360.0
$6,615,000 13,995,000 (7,655,000) 12,955,O e
(5) Rate Covenants
The 1997 Water Revenue Certificates of Participation require that the District se
charges for services each year at rates sufficient to produce net revenues (after payin&
operating and maintenance expenses of the District, excluding depreciation) at least
times the debt service for that year.
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(6) Fund Balances
The reserve for debt service represents resources legally restricted to the paymen general long-term debt principal and interest maturing in future years.
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SUPPLEMENTAL DATA
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Combining Balance Sheet - Debt Service Funds
June 30,1998
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Carlsbad Municipal a
Hosp Grove Water District
Lease Lease
Payment Reserve Payment Reserve - Tot
Assets e
Cash held by the City $ 110,159 - 110
Cash and investments held by trustee 29,231 659,500 867 740,009 1,429
Net investment in direct financing lease 5,780,487 5,6 12,292 11,392
Interest receivable 123 15,500 6,832 22
Total assets $5,920,000 675.000 5,613,159 746,841 12,955 e
Liabilities and Fund Balances
Liabilities:
Deferred revenue $5,780.487 - 5,612,292 - 11,392
Total liabilities 5,780,487 5,612,292 - 11,392
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Fund balances:
Reserved for debt service 139,513 675,000 867 746,841 1,562
Total fund balances 139,513 675.000 867 746,841 1,562,
Total liabilities and fund balances $5,920,000 675,000 5,613.159 746,841 12.955,
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CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances - Debt Service Funds
Year Ended June 30, 1998
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Carlsbad Municipal
Hosp Grove Water District Lease Lease Payment Reserve Payment Reserve Tots
Revenues:
Lease payments $ 800,000 1,189,362 - 1,989,: Interest on investments 16,755 44,07 1 1,932 31,464 94,:
Total revenues 8 16,755 44,071 1,191,294 31,464 2,083,:
0 Expenditures: Principal 355,000 1,040,000 - 1,395,( Interest 359,094 202,463 - 561,f Payment to bond escrow agent 122,882 2,036,703 - 2,159,: Cost of issuance 125,851 90,819 - 2 1 6,t .. 23,: Administrative 23.572
Total expenditures 986,399 - 3,369,985 - 4,356.3
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Excess (deficiency) of revenues
over (under) expenditures (169.644) 44,071 (2,178,691) 3 1.464 (2,272,Z
0 Other financial sources (uses): Operating transfers in 268,039 24,851 740,228 1,033,l Operating transfers out - (268,039) (740,228) (24,851) (1,033,l - - 2,036,7
Proceeds of refunding bonds 6,486,35 1 - 7,318,355 - 13,804,7
0 agent (6,486.35 1) - (6,460,123) - (12,946,4
Transfers from the City of Carlsbad 2,036,703 -
Payment to refunded bond escrow
Total other financing sources (uses) 268,039 (268,039) 2,179,558 715,377 2,894,s
Excess (deficiency) of revenues
over (under) expenditures and
other financing uses 98,395 (223,968) 867 746,841 622,l
Fund balances at beginning of year 41,118 898.968 940,O
e Fund balances at end of year $ 139,513 675,000 867 746,841 1,562,2
e and other financing sources
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