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BUILDING AUTHORITY OF THE CITY OF CARLSBAD
FINANCIAL STATEMENTS
WITH REPORT ON EXAMINATION BY CERTIFIED PUBLIC ACCOUNTANTS
June 30, 1987
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Table of Contents
June 30, 1987
Page
Number
Accountants' Report 1
Combined Balance Sheet - All Governmental Fund Types
and Account Group 2
Combined Statement of Revenues, Expenditures and Changes
in Fund Balance - All Governmental Fund Types 3
Statement of Changes in Bonds Payable 4
Notes to Financial Statements 5-8
Combining Balance Sheet - All Debt Service Funds 9
Combining Statement of Revenues, Expenditures and Changes
in Fund Balance - All Debt Service Funds 10
'PHILIP H. HOLTKAMR C.P.A.
'THOMAS M. PERLOWSKI, C.PA
'WIN G. PETERS, C.P.A.
"DONALD H. PETERSON. C.P.A
•DONALD e. CALLAHAN, C.PA.
"L. PETER SCHERER. C.P.A.
•RODNEY K. MCDANIEL, C.P.A.
•RALPH H. WEINTRAUB, C.PA,
EDWARD GRODSKY, C.P.A.
ELLIS C. DIEHL. C.PA. (RETIRED)
BRYN B. EVANS. C.P.A. (RETIRED)
"A PROFESSIONAL CORPORATION
DIEHL, EVANS AND COMPANY
A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS
CERTIFIED PUBLIC ACCOUNTANTS
I2O WEST WOODWARD AVENUE
ESCONDIDO. CALIFORNIA 92O25-999O
(619) 741-3141
August 21, 1987
OTHER OFFICES AT '
-J965 ROOSEVELT STREET
CARLSBAD, CALIFORNIA 92OO8-23S9
(6(9) 729-23^3
I 9 I O NORTH BUS" STREET
SANTA ANA, CALIFORNIA 927O6-2894
(714) 542-^453
ONE CIVIC PLAZA. SUITE 265
NEWPORT BEACH, CALIFORNIA 9266O
(714) 644 6, -36
ACCOUNTANTS' REPORT
BOARD OF DIRECTORS
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
CARLSBAD, CALIFORNIA
We have examined the combined financial statements of the Building
Authority of the City of Carlsbad as of and for the year ended June 30,
1987, as listed in the table of contents. Our examination was made in
accordance with generally accepted auditing standards and, accordingly,
included such tests of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.
In our opinion, the combined financial statements referred to above
present fairly the financial position of the Building Authority of the City
of Carlsbad at June 30, 1987 and the results of its operations and changes
in fund balance for the year then ended, in conformity with generally
accepted accounting principles applied on a basis consistent with that of
the preceding year.
Our examination was made for the purpose of forming an opinion on the
combined financial statements taken as a whole. The combining financial
statements listed in the table of contents are presented for purposes of
additional analysis and are not a required part of the combined financial
statements of the Building Authority of the City of Carlsbad. The information
has been subjected to the auditing procedures applied in the examination of
the combined financial statements, and in our opinion, is fairly stated in
all material respects in relation to the combined financial statements taken
as a whole.
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
COMBINED BALANCE SHEET
ALL GOVERNMENTAL FUND TYPES AND ACCOUNT GROUP
June 30, 1987
ASSETS:
Cash and savings held by
trustee
U.S. Government securities, at
cost, (approximates market)
Due from other funds
Interest receivable
Lease payments receivable
(Note Ib)
Unearned lease finance charges
TOTAL ASSETS
Governmental Fund Types
Working Debt
Revenue Capital Service
1,639
95,655
516
$773
24,262
$ 1,500 34,450
Account Group
Lease
Payments
Receivable
And Bonds
Payable
202,700
(32,700)
Totals
(Memorandum Only)
19871986
$ 2,412 $ 8,566
119,917 72,585
35,950 37,275
516
202,700 238,650
(32,700) (43,650)
$ 328,795 $ 313,426
LIABILITIES AND FUND BALANCE
LIABILITIES:
Revenue bonds payable (Note 3)
Due to other funds
Deferred revenue - advance
rents
TOTAL LIABILITIES
FUND BALANCE (Note 4):
Reserve for payment of bond
principal and interest
Reserve for working capital
Unreserved
TOTAL FUND BALANCE
TOTAL LIABILITIES AND
FUND BALANCE
$ 170,000
$ 28,940
36,000
64,940
$ 1,500
32,870
32,870 1,500
$ 97,810 _$ IjSOO
$ 7,010
7,010 170,000
52,475
52,475
$ _51,_485 1 170,000
170,000
35,950
36,000
241,950
195,000
37,275
232,275
52,475
1,500
32,870
86,845
53,975
1,500
25,676
81,151
See accompanying accountants' report and notes to financial statements.
2
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCE - ALL GOVERNMENTAL FUND TYPES
For the fiscal year ended June 30, 1987
REVENUE:
Lease payments - finance
charges
Interest on investments
TOTAL REVENUE
EXPENDITURES:
Interest
Administrative expense
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF
REVENUE OVER EXPENDITURES
OTHER FINANCING SOURCES (USES):
Lease payments received -
principal
Bonds paid
Operating transfers in
Operating transfers out
TOTAL OTHER FINANCING
SOURCES (USES)
EXCESS (DEFICIENCY) OF
REVENUE AND OTHER
SOURCES OVER EXPENDI-
TURES AND OTHER USES
FUND BALANCE, July 1, 1986
FUND BALANCE, June 30, 1987
Revenue
10,950
4,043
14,993
14,993
25,050
8,930
(41,779)
7,194
25,676
Working
Capital
$ 563
563
(563)
563
[7,799) 563
1,500
Debt
Service
$ 2,164
2,164
10,950
10,950
(8,786)
(1,500)
53,975
Totals
(Memorandum Only)
19871986
10,950
6,207
17,157
10,950
563
11,513
5,644
5,694
81,151
12,450
6,834
19,284
12,450
2,347
14,797
4,487
(25,000)
41,216
(8,930)
7,286
25,050
(25,000)
50,709
(50,709)
50
23,550
(25,000)
38,057
(38,057)
(1,450)
3,037
78,114
See accompanying accountants' report and notes to financial statements.
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
STATEMENT OF CHANGES IN BONDS PAYABLE
For the fiscal year ended June 30, 1987
BALANCE AT JULY 1, 1986 $ 195,000
Payments made 25,000
BALANCE AT JUNE 30, 1987
See accompanying accountants' report and notes to financial statements.
* BUILDING AUTHORITY OF THE CITY OF CARLSBAD
NOTES TO FINANCIAL STATEMENTS
June 30, 1987
* 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. The financial statements have been prepared on the modified accrual
basis.
b. The leasing of the facilities to the City has been accounted for as a
direct finance lease whereby the long-term lease has been treated as
a sale of the facilities to the City and the lease payments receiv-
able represent the selling price. Finance charges included in the
lease payments are taken into income each year as earned on a declin-
ing balance method over the life of the lease. This method has the
effect of recording income in an amount that equals bond interest
expense each year.
2. HISTORY AND ORGANIZATION:
The Building Authority of the City of Carlsbad was organized October 1,
1967 under a joint exercise of powers agreement between the City of
Carlsbad and the County of San Diego for the purpose of financing and
constructing a civic center building for lease to the City of Carlsbad.
Any net earnings or net assets of the Authority after providing for all
debts and obligations of the Authority are distributable upon dissolution
to only the City of Carlsbad.
The Authority leased the site from the City of Carlsbad on November 1,
1967 for the sum of $ 1 which represents the rent for the full term of
the lease. The site lease will terminate at the end of the sublease.
On November 1, 1967 the Authority entered into a sublease with the City
of Carlsbad under the terms of which the Authority agreed to construct
the above-mentioned civic center facilities and lease them back to the
City for annual rental payments of $ 36,000, payable in advance on July
1. The leaseback will terminate on October 31, 2007 or such earlier time
when all debts of the Authority are paid in full.
The City also agreed to pay as additional rent all taxes, assessments,
insurance premiums and administrative costs of the Authority.
3. REVENUE BONDS PAYABLE:
To provide funds for the construction of the City Hall, the Authority
sold $ 460,000 principal amount of revenue bonds with interest at 6%. The
bonds were issued under a trust indenture with Crocker National Bank as
Trustee. The bonds mature serially December 15 each year as follows;
$ 25,000 in years 1987, 1988, 1989, $ 30,000 in years 1990 and 1991 and
$ 35,000 in year 1992 for a balance of $ 170,000 as of June 30, 1987.
See accompanying accountants' report.
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
NOTES TO FINANCIAL STATEMENTS
(Continued)
June 30, 1987
3. REVENUE BONDS PAYABLE (Continued):
Bonds maturing on or after December 15, 1979 are subject to call in whole
or in part at the option of the Authority at prices ranging from 100.75%
to 104% of the principal amount of the bonds.
4. FUND BALANCES:
In accordance with the terms of the indenture, cash balances of the
following funds are restricted to be used for specified purposes as
follows:
Interest and Retirement Funds - on or before August 1 of each year, a sum
sufficient to pay twelve months' interest due on the next succeeding
December 15 and June 15 as well as the amount of principal maturing on
the next succeeding December 15.
Reserve Fund - an amount at least equal to one half maximum annual debt
service ($ 18,025) shall be maintained at all times. Any excess shall on
June 30 and December 30 of each year be transferred to the Revenue Fund.
Moneys in this fund may be used to pay the principal and/or interest on
the last maturity of bonds outstanding.
Working Capital Fund - an amount necessary to pay administrative expenses
and maintain a $ 1,500 balance in this fund.
Revenue Fund - amounts accumulated in this fund after meeting requirements
of the interest and redemption, reserve and working capital funds shall
be declared surplus and may be used to reimburse the City for rent previ-
ously paid.
5. INSURANCE:
Insurance coverage maintained by the City of Carlsbad with the Authority
listed as additional insured at June 30, 1987 includes:
Type of Coverage
All risk including valuable
papers and rental income
Equipment floater
Comprehensive crime
Amount
$ 24,300,995
725,639
500,000
Term
10/01/85 to 10/01/86
10/01/85 to 10/01/86
04/16/87 to 04/16/88
Effective as of January 1, 1986, the Authority has not been covered under
a liability insurance policy but is included under the City of Carlsbad's
self-insurance fund. As of June 30, 1987, there were no asserted or
unasserted claims outstanding against the Authority.
See accompanying accountants' report.
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
NOTES TO FINANCIAL STATEMENTS
(Continued)
June 30, 1987
6. COMPARATIVE DATA:
Comparative total data for the prior year have been presented in the ac-
companying financial statements in order to provide an understanding of
changes in the Authority's financial position and operations. However,
comparative (i.e. presentation of prior year totals by fund type) data
have not been presented in each of the statements since their inclusion
would make the statements unduly complex and difficult to read.
7. TOTAL COLUMNS:
Total columns on the Combined Statements are captioned Memorandum Only to
indicate that they are presented only to facilitate financial analysis.
Data in these columns do not present financial position, results of operat-
ions , or changes in fund balances in conformity with generally accepted
accounting principles. Neither is such data comparable to a consolidation.
Interfund eliminations have not been made in the aggregation of this data.
8. CASH AND INVESTMENTS:
Cash and investments at June 30, 1987 consisted of the following:
Cost Market Value
Investments (Held by Trustee)
Cash $ 2,412 $ 2,412
U.S. Treasury Bills 119,917 120,509
Total Investments $ 122,329 $ 122,921
See accompanying accountants' report.
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
NOTES TO FINANCIAL STATEMENTS
(Continued)
June 30, 1987
7. CASH AND INVESTMENTS (Continued):
Safekeeping Arrangements for Investments
Under Sections 53651 to 53653 of the California Government Code, as
amended, the collateral underlying a governmental entity's investments
must be "delivered" to the entity. If U.S. Treasury Bills are used as
the underlying collateral, delivery may be made by book entry only. For
all other collateral, the security must be physically delivered either
to the entity or to a third-party custodial agent.
Under California Senate Bill No. 2115, passed by the California Legisla-
ture in 1986, when a bank is used as a third-party custodial agent, the
bank is permitted to maintain the underlying securities in either its
"Trust Department", or a separate "Safekeeping Department".
The Authority's deposits and investments are maintained with various
financial institutions and are stated at cost.
As defined in GASB 3, the Authority's investments are catergorized in
the following manner:
Category 1: includes investments that are insured or registered, and
where the securities are held by the Authority or its
agent in the Authority's name.
Category 2: includes uninsured and unregistered investments, and where
the securities are held by the broker's or dealer's trust
department or agent in the Authority's name.
Category 3: includes uninsured and unregistered investments and where
the securities are held by the broker or dealer, or by its
trust department or agent, but not in the Authority's name.
Classification of Cash and Investments by Credit Risk
Investments:
Category 1 $ -
Category 2
Category 3 122,329
Total $ 122,329
Authorized Investments
It is the Authority's policy only to invest in U.S. Government obliga-
tions through its Trustee.
See accompanying accountants' report.
f
SUPPLEMENTARY INFORMATION
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
COMBINING BALANCE SHEET
ALL DEBT SERVICE FUNDS
June 30, 1987
Totals
ASSETS:
Cash and savings held by trustee
U.S. Government securities, at
cost, (approximates market)
Due from Revenue Fund
TOTAL ASSETS
Interest Retirement
$ 9,450 $ 25,000
$ . _?_, 4JJO. $ 25.000
Reserve
$ 773
24,262
J 25.03J5
1987
$ 773
24,262
34,450
U5JL485.
1986
$ 4,532
19,356
35,779
.$_5JL667_
LIABILITIES:
Due to Revenue Fund $ 7,010 $ 7,010 $ 5,692
FUND BALANCE (Note 4):
Reserved for payment of bond
principal and interest
TOTAL LIABILITIES AND
FUND BALANCE
$ 9,450 $ 25,000 18,025 52,475 53,975
9,450 $ 25,000 $ 25.035 $ 59.485 $ 59,667
See accompanying accountants' report and notes to financial statements.
9
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - ALL DEBT SERVICE FUNDS
For the fiscal year ended June 30, 1987
REVENUE:
Interest on investments
Totals
Interest Retirement Reserve 1987 1986
$ 263 $ 582 $ 1,319 $ 2,164 $ 1,739
EXPENDITURES:
Interest 10,950
EXCESS (DEFICIENCY) OF
REVENUE OVER EXPENDITURES (10,687)
OTHER FINANCING SOURCES (USES):
Bonds paid
Operating transfers in 16,050
Operating transfers out (6,863)
TOTAL OTHER FINANCING
SOURCES (USES) 9,187
EXCESS (DEFICIENCY) OF REVENUE
AND OTHER SOURCES OVER EXPEN-
DITURES AND OTHER USES (1,500)
4»
FUND BALANCE, July 1, 1986
FUND BALANCE, June 30, 1987
10,950
582
(25,000)
25,166
(748)
(582)
25,000
10,950 12,450
1,319
(1,319)
(1,319)
.
18,025
$ 18,025
(8,786)
(25,000)
41,216
(8,930)
7,286
(1,500)
53,975
$ 52,475
(10,711)
(25,000)
35,729
(2,218)
8,511
(2,200)
56,175
$ 53,975
t
See accompanying accountants' report and notes to financial statements.
10