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Certified Public Accountants
BUILDING AUTHORITY OF THE
CITY OF CARLSBAD
Combined Financial Statements
June 30, 1992
(With Independent Auditors' Report Thereon)
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Table of Contents
June 30, 1992
Page
Independent Auditors' 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
Notes to Combined Financial Statements .................................. 4-8
Supplementary Statement and Schedule:
Combining Statement of Revenues, Expenditures and Changes
in Fund Balance - Debt Service Funds ................................ 10
Schedule of Insurance Coverage ........................................ 11
Peat Marwick
Certified Public Accountants
750 B Street
San Diego, CA 92101
Independent Auditors' Report
The Board of Directors
Building Authority of the
City of Carlsbad, California:
We have audited the accompanying component unit financial statements of the
Building Authority of the City of Carlsbad (the Authority) as of and for the
year ended June 30, 1992, as listed in the accompanying table of contents.
These component unit financial statements are the responsibility of the
Authority's management. Our responsibility is to express an opinion on these
component unit financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the component unit financial statements referred to above
present fairly, in all material respects, the financial position of the
Building Authority of the City of Carlsbad as of June 30, 1992, and the
results of its operations for the year then ended in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the component unit
financial statements taken as a whole. The combining financial statement and
schedule listed in the accompanying table of contents are presented for
purposes of additional analysis and are not a required part of the component
unit financial statements of the Building Authority of the City of Carlsbad.
Such information has been subjected to the auditing procedures applied in the
audit of the component unit financial statements and, in our opinion, is
fairly stated in all material respects in relation to the component unit
financial statements taken as a whole.
September 9, 1992
Member Firm of
Klynveld Peat Marwick Goerdeler
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Combined Balance Sheet
All Governmental Fund Types and Account Group
June 30, 1992
Assets and Other Debits
Cash and investments
Net investment in direct financing lease
Interest receivable
Amount available in debt service fund
Amount to be provided for retirement
of general long-term debt
Total assets
Liabilities and Fund Balance
Liabil i ties:
Revenue bonds payable
Deferred revenue
Total liabilities
Fund balance:
Reserved for debt service
Unreserved - undesignated
Total fund balance
Total liabilities
and fund balance
Notes
2
3
Governmental
Fund Types
General
$ 93,407
14,944
184
14.944
14.944
93.591
Debt
Service
20,004
52
$ 108.535 20.056
20,056
93.591 20.056
Account
Group
General Totals
Long-term (Memorandum
Debt Only)
113,411
14,944
236
20,056 20,056
35.000
35,000
163.591
35,000
14.944
35.000 49.944
20,056
93.591
113.647
$ 108.535 20.056 35.000 163.591
See accompanying notes to combined 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 year ended June 30, 1992
Revenues:
Lease payments !J
Interest on investments
Total revenues
Expenditures:
Principal retirement
Interest
Administrative expenses
Total expenditures
Excess (deficiency) of
revenues over
expenditures
Other financing sources (uses):
Operating transfers in
Operating transfers out
Total other financing
sources (uses)
Excess of revenues and other
financing sources over
expenditures and other
financing uses
Fund balance at beginning of year
Fund balance at end of year !J
General
36,000
4.807
40.807
4.597
4.597
36.210
4,597
(37.247)
(32.650)
3,560
90.031
93.591
Debt
Service
1.236
1.236
30,000
3,000
33.000
(31.764)
32,650
32.650
Totals
(Memorandum
Only)
36,000
6.043
42.043
30,000
3,000
4.597
37.597
4.446
37,247
(37.247)
886 4,446
19.170 109.201
20.056 113.647
See accompanying notes to combined financial statements.
3
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Notes to Combined Financial Statements
June 30, 1992
(1) Organization and Summary of Significant Accounting Policies
The Building Authority of the City of Carlsbad (the Authority) was
organized on 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 excess of revenues over expenditures or
net assets of the Authority remaining after providing for all debts and
obligations of the Authority are distributable upon dissolution to the
City of Carlsbad. The Authority is not subject to federal or state
income taxes.
The Authority is an integral part of the reporting entity of the City of
Carlsbad (the City). The accounts of the Authority have been included
within the scope of the general purpose financial statements of the
City because the City Council exercises oversight responsibility over
the operations of the Authority. Only the accounts of the Authority
are included herein; therefore, these financial statements do not
purport to represent the financial position or results of operations of
the City of Carlsbad.
The accounting policies of the Authority conform to generally accepted
accounting principles as applicable to governmental units. The
following is a summary of the more significant policies:
(a) Basis of Presentation:
The accounts of the Authority are organized on the basis of funds and
an account group, each of which is considered to be a separate
accounting entity. The operations of each fund and account group
are accounted for by providing a separate set of self-balancing
accounts that comprise its assets, liabilities, fund balance,
revenues, and expenditures. The various funds and account group
are summarized by type in the financial statements. The fund types
and account group used by the Authority are as follows:
GOVERNMENTAL FUND TYPES;
Governmental funds are used to account for the Authority's expendable
financial resources and related liabilities. The measurement focus
is upon determination of changes in financial position. The
following are the Authority's governmental fund types:
(Continued)
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Notes to Combined Financial Statements, Continued
(1) Organization and Summary of Significant Accounting Policies, Continued
(a) Basis of Presentation^ Continued;
GOVERNMENTAL FUND TYPES. Continued;
General Fund
The general fund is the general operating fund of the Authority.
It is used to account for all financial resources except those
required to be accounted for in another fund.
Debt Service Funds
Debt service funds are used to account for the accumulation of
resources for, and payment of, general long-term debt principal,
interest and related costs.
GENERAL LONG-TERM DEBT ACCOUNT GROUP;
This account group is used to establish accounting control and
accountability for the Authority's general long-term debt. It is
used to account for all long-term obligations of the Authority.
(b) Measurement Focus and Basis for Accounting;
Governmental fund types are accounted for on a "spending" measurement
focus. Accordingly, only current assets and current liabilities
generally are included on their balance sheets, and the reported
fund balance provides an indication of available, spendable
resources. Operating statements for governmental fund types report
increases (revenues) and decreases (expenditures) in available,
spendable resources.
Governmental fund types use the modified accrual basis of
accounting. Revenues are recognized when susceptible to accrual
(i.e., both measurable and available). Available means collectible
within the current period or soon enough thereafter to be used to
pay liabilities of the current period. Revenues that are accrued
include interest income.
Governmental fund expenditures are recognized when the liability is
incurred, except for principal and interest on long-term debt,
which is recognized when due.
(Continued)
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Notes to Combined Financial Statements, Continued
(1) Organization and Summary of Significant Accounting Policies. Continued
(c) Budgets;
The Authority does not adopt an annual budget; thus, no budgetary
comparisons are presented.
(d) Investments;
Investments are stated at cost or amortized cost which approximates
market value.
(e) Total Columns;
Total columns on the combined statements are captioned "Totals
(Memorandum Only)" to indicate that they are presented only to
facilitate financial analysis. Data in these columns do not
present financial position, results of operations, or changes in
fund balance in conformity with generally accepted accounting
principles. Such data is not comparable to a consolidation.
Interfund eliminations have not been made in the aggregation of
this data.
(2) Cash and Investments
Authority for Deposits and Investments;
State statutes require that all deposits be insured or collateralized.
Depositories holding public funds are required to maintain collateral
in the form of a pool of securities with the agent of the depository
having a market value of at least 10 to 50 percent in excess of the
total amount of all public funds on deposit. Investments are further
limited by the Authority's policy to invest only in U.S. government
obligations purchased through its trustee.
Classification of Investments by Credit Risk;
As defined in Governmental Accounting Standards Board Statement No. 3,
the Authority's investments are categorized in the following manner:
Category 1 - Investments that are insured or registered, for which the
securities are held by the Authority or its agent in the
Authority's name.
Category 2 - Uninsured and unregistered investments, for which the
securities are held by the counterparty's trust department
or agent in the Authority's name.
(Continued)
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Notes to Combined Financial Statements, Continued
(2) Cash and Investmentst Continued
Classification of Investments by Credit Risk. Continued;
Category 3 - Uninsured and unregistered investments, for which the
securities are held by the counterparty or by its trust
department or agent, but not in the Authority's name.
Cash and investments at June 30, 1992 consist of the following:
Cost Market Value
Cash on deposit (all 100% insured) $ 538 538
U.S. Treasury Bills (all category 2) 112.873 112.873
Total $ 113.411 113.411
(3) Lease Agreements
The Authority has leased the site for the Civic Center from the City
under a ground lease dated November 1, 1967 for a total advance rental
payment of $1. The lease expires upon expiration of the Joint Powers
Agreement between the Authority and the City.
On the same date, the Authority entered into an agreement with the City
to lease back to the City the Civic Center site and the facilities to
be constructed thereon. The agreement requires annual lease payments
of $36,000 payable in advance on each July 1 until the Authority's
revenue bonds have been paid or provision for payment has been made.
In addition, the City must pay, upon written notice, all taxes,
assessments, insurance and administrative costs of the Authority. The
lease expires on September 30, 2007 or upon final payment of the
bonds. This lease has been accounted for as a direct financing lease.
(4) Revenue Bonds Payable
The following is a summary of changes in revenue bonds payable for the
year ended June 30, 1992:
Revenue bonds payable as of June 30, 1991 $ 65,000
Bonds retired 30.000
Revenue bonds payable as of June 30, 1992 $ 35.000
(Continued)
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Notes to Combined Financial Statements, Continued
Revenue Bonds Payable. Continued
The Authority issued the 1967 Carlsbad Building Authority Revenue Bonds
in an original amount of $460,000 with interest payable at 6.0% per
annum. The bonds were issued under a trust indenture with Banker's
Trust Company of California as Trustee. The remaining bonds mature
December 15, 1992.
Bonds maturing on or after December 15, 1979 are subject to call in whole
or in part at the option of the Authority.
In accordance with the terms of the bond indenture, cash balances of the
following funds are restricted to be used for specified purposes as
follows:
General Fund - An amount necessary to pay administrative expenses and
maintain $1,500 in working capital shall be maintained in this fund.
Amounts accumulated after meeting the requirements of the interest,
principal retirement and reserve funds and the working capital
requirements shall be declared surplus and may be used to reimburse the
City for rent previously paid.
Interest and Principal 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 shall be transferred to
these funds as necessary from the General Fund.
Debt Service Funds:
Reserve Fund - An amount at least equal to one half the 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 General Fund. This fund may be used to pay the principal
and/or interest on the last maturity of the bonds outstanding.
At June 30, 1992, the Authority was in compliance with all significant
debt covenants.
SUPPLEMENTARY STATEMENT AND SCHEDULE
i
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Combining Statement of Revenue, Expenditures and Changes
in Fund Balance - Debt Service Funds
For the year ended June 30, 1992
Interest
Principal
Retirement Reserve Totals
Revenue - interest on investments
Expenditures:
Principal retirement
Interest
Total expenditures
Excess (deficiency)
of revenues over
expenditures
Other financing sources -
operating transfers in
Excess of revenues and
other financing sources
over expenditures
Fund balance at beginning of year
Fund balance at end of year $
350
3.000
3. OOP
(3.000)
3.000
30,000
30.000
(29.650)
29.650
886 1.236
30,000
3.000
33.000
886 (31.764)
32.650
886 886
19.170 19.170
20.056 20.056
See accompanying independent auditors' report.
10
t
BUILDING AUTHORITY OF THE CITY OF CARLSBAD
Schedule of Insurance Coverage
June 30, 1992
Insurance coverage maintained by the City of Carlsbad with the Authority listed
as additional insured at June 30, 1992 includes:
Amount of
Type of Coverage Coverage Term
All risk including valuable papers $ 36,093,500 10/01/91 to 10/01/92
Rental income 522,000 10/01/91 to 10/01/92
Equipment floater 517,400 10/01/91 to 10/01/92
Honesty Blanket Bond 1,500,000 04/06/92 to 04/06/95
Since 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
program.
See accompanying independent auditors' report.
11