Loading...
HomeMy WebLinkAbout; ; 2000-2001 CAFR; 2001-06-30I I p I I I c I I I I I I I I I I I CITY OF CARLSBAD CALIFORNIA WORK ENJOY! Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2001 COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2001 1635 Faraday Avenue, Carlsbad, CA 92008 Website: www.ci.carlsbad.ca.us Prepared by the Finance Department Cover Photos: Top left - Carlsbad neighborhood Middle - Faraday Building, located at 1635 Faraday, which houses the City's Community Development, Administrative Services and Public Works Departments (Photo by Glenn Cormier, In Site Architectural Photography) Bottom Right - Carlsbad's Poinsettia Park. CITY OF CARLSBAD Comprehensive Annual Financial Report Year Ended June 30, 2001 TABLE OF CONTENTS INTRODUCTORY SECTION: Table of Contents i Council's Five-Year Vision Statements 1 Letter of Transmittal 3 Certificate of Achievement for Excellence in Financial Reporting, Government Finance Officers Association 34 Certificate of Award for Outstanding Financial Reporting, California Municipal Finance Officers 35 Location Map 36 List of City Officials 37 Organization Chart 38 Boards, Commissions and Committees 39 FINANCIAL SECTION: Independent Auditors'Report 41 General Purpose Financial Statements: • Combined Balance Sheet - All Fund Types and Account Groups 44 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types 47 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Budgetary Basis) - All Governmental Fund Types 48 CITY OF CARLSBAD Comprehensive Annual Financial Report Year Ended June 30,2001 TABLE OF CONTENTS (CONTINUED) General Purpose Financial Statements (continued): • Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types 50 • Combined Statement of Cash Flows - All Proprietary Fund Types 51 • Notes to General Purpose Financial Statements 53 Supplemental Data: Governmental Funds: General Fund: • Schedule of Revenues - Budget and Actual (Budgetary Basis) 90 • Schedule of Expenditures - Budget and Actual (Budgetary Basis) 91 • Comparative Schedule of Revenues 92 • Comparative Schedule of Expenditures • 93 Special Revenue Funds: • Combining Balance Sheet 96 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 98 • Combining Schedule of Revenues and Expenditures - Budget and Actual (Budgetary Basis) 100 CITY OF CARLSBAD Comprehensive Annual Financial Report Year Ended June 30, 2001 TABLE OF CONTENTS (CONTINUED) Page Supplemental Data (continued): Debt Service Funds: • Combining Balance Sheet 110 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 111 • Redevelopment Areas Debt Service Fund - Budget and Actual (Budgetary Basis) 112 Capital Projects Funds: • Combining Balance Sheet 116 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 118 Proprietary Funds: Enterprise Funds: • Combining Balance Sheet 122 • Combining Statement of Revenues, Expenses and Changes in Retained Earnings 123 • Combining Statement of Cash Flows 124 Internal Service Funds: • Combining Balance Sheet 128 • Combining Statement of Revenues, Expenses and Changes in Retained Earnings 129 Hi CITY OF CARLSBAD Comprehensive Annual Financial Report Year Ended June 30, 2001 TABLE OF CONTENTS (CONTINUED) Page Supplemental Data (continued): Internal Service Funds (continued): • Combining Statement of Cash Flows 130 Fiduciary Funds: Agency Funds: • Combining Statement of Changes in Assets and Liabilities 134 Account Groups: General Fixed Asset Account Group: • Schedule of General Fixed Assets by Function 138 • Schedule of Changes in General Fixed Assets by Function 139 • Schedule of General Fixed Assets by Source 140 Schedule of Annual Debt Service Requirements 142 STATISTICAL SECTION: (Not covered by Independent Auditors' Report) • General Expenditures by Function, Last Ten Fiscal Years 148 • General Revenues by Source, Last Ten Fiscal Years 150 • Ratio of General Bonded Debt to Assessed Valuation and Net Bonded Debt Per Capita, Last Ten Fiscal Years 152 iv CITY OF CARLSBAD Comprehensive Annual Financial Report Year Ended June 30, 2001 TABLE OF CONTENTS (CONTINUED) STATISTICAL SECTION (continued): • Computation of Legal Debt Margin 152 • Schedule of Direct and Overlapping Bonded Debt 153 • Ratio of Annual Debt Service for General Bonded Debt to Total Governmental Expenditures, Last Ten Fiscal Years 154 • Construction and Business Activity, Last Ten Fiscal Years 155 • Water Enterprise - Revenue Bond Coverage, Last Ten Fiscal Years 156 • Schedule of Assessed Valuation, Last Ten Fiscal Years 158 • Demographic Statistics, Last Ten Fiscal Years 160 • Property Tax Levies and Collections, Last Ten Fiscal Years 161 • Principal Employers, 2000-2001 162 • Principal Taxpayers, 2000-2001 163 • Top 30 Sales Tax Generators, 2000-2001 164 • Miscellaneous Statistical Information, 2000-2001 165 z 30o O mr% O Z Carlsbad City Council Year 2001 FIVE-YEAR VISION STATEMENTS City Council continues to clarify and pursue the vision of Carlsbad that reflects the pride and quality of life for all who live, work, and play here. Carlsbad's... • diverse and healthy economic base provides opportunities for employment to the residents of Carlsbad, economic vitality to the community, and the necessary revenues to support City services, • policies and decisions implement the General Plan, enforce the Growth Management Plan, maintain the safety and security of its citizens, and are based on what is best for Carlsbad, • leadership role in local and regional planning issues actively involves confronting governmental issues at the local, state and national levels, and • operates an open government for the betterment of the community in a non-partisan manner while encouraging active citizen participation and involvement with the City Council, and the City's Boards and Commissions. Carlsbad efficiently and effectively... • delivers top-quality public services, • manages environmental concerns proactively, including: • open space • water quality/conservation • beach erosion • air quality • resource conservation and waste reduction • wildlife habitats • has a safe and efficient integrated transportation system, • maintains Citywide "small town" community spirit, and • has a Community where continuous and life-long learning are supported and embraced for people of all ages. City of Carlsbad Finance Department September 21, 2001 Honorable Mayor, City Council, and City Manager CITY OF CARLSBAD Carlsbad, California 2000-2001 COMPREHENSIVE ANNUAL FINANCIAL REPORT LETTER OF TRANSMITTAL We are pleased to present the 2000-2001 Comprehensive Annual Financial Report of the City of Carlsbad to the City Council and the City Manager. This report includes financial statements for the City, the Housing Authority of the City of Carlsbad, the Carlsbad Public Improvement Corporation, the Carlsbad Redevelopment Agency, and the Carlsbad Municipal Water District, as well as the opinion of our independent auditors, Conrad and Associates, LLP. The completion of this independent audit is an important part of the total financial management program for the City of Carlsbad. The information found in this report is provided by management to the City Council and the public to assist those interested in understanding the fiscal condition of the City as of June 30, 2001. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the City of Carlsbad. All disclosures necessary to enable the reader to gain an understanding of the government's financial activities have been included. Background Although the "village" dates back more than 100 years, Carlsbad incorporated in 1952 as a General Law city. It is located about 35 miles north of the City of San Diego on the southern California coast. The City is governed by a five member City Council, under the Council/Manager form of government. The Council is elected at large on a staggered basis for a term of four years. The City Clerk and City Treasurer are also elected to four- year terms. The City Council appoints the City Manager and City Attorney. The City covers about 42 square miles and has a population of 83,469, with an expected build-out population of 120,000 residents. Industries in the area include a major regional shopping center, a 1635 Faraday Avenue • Carlsbad, CA 92008-7314 • (760) 602-2430 • FAX (760) 602-8553 www.ci.carlsbad.ca.us • Business License (76O) 6O2-2495 • Utility Billing (760) 602-2420 3 specialty outlet center, 19 auto dealers, 30 hotels offering 3,134 rooms for tourist lodging, high technology, multimedia, communication and biomedical businesses, electronics, golf apparel and equipment manufacturers, several business and light industry parks, and numerous land developers. Carlsbad has created an atmosphere that is very conducive to attracting new businesses and residents. Carlsbad is a full-service City providing the following services to its citizens and customers: • Police department • Development services • Fire department and paramedic services • Street construction and maintenance • Water delivery system • Library and arts programs • Sewer system • Recreation programming for all ages • Solid waste services • Park lands • Housing programs School programs and facilities are provided by four different school districts located within the City boundaries. Although the City Council has no direct control over these school districts, the Council recognizes the importance of quality school facilities and programs to Carlsbad's residents. Council has worked closely with the schools in the past to provide assistance, when possible, and has included the enhancement of school facilities into the City's strategic goals for the year. In addition to the usual City services, Carlsbad offers a variety of programs to help local residents and businesses. The Carlsbad Police Department, in conjunction with the Senior Volunteer Patrol, offers a variety of services to residents and visitors of Carlsbad. Whether a regular visit is made to a homebound citizen or a vacation security consultation is made to assist residents on security issues in preparation for their vacation, the Police Department is focused on customer service. They have also implemented a year-round bicycle patrol as well as a school resource officer program. The school resource officers help to maintain order in and around schools, to deter crime through enforcement and to foster a positive interaction among students, citizens and educators. The City also operates a redevelopment agency that encompasses two separate project areas. The Village Redevelopment area covers 0.4 square miles of the downtown area. The South Carlsbad Coastal Redevelopment area is just south of the Village Redevelopment area and fronts the Pacific Ocean. In addition to the redevelopment project area, the agency operates a housing authority that provides 491 low and moderate-income families with housing assistance. The City's literacy program provides adult education to local area residents. Older Carlsbad residents receive assistance through the City's senior citizen programs. In addition, the City provides major support for the Convention and Visitors Bureau and sponsors annual Community Activity Grants to individuals or groups who provide programs to the City that enhance the quality of life for Carlsbad's residents and/or visitors. Over one million dollars in an endowment fund has been set aside to fund these grants. Percentage Increase During the Past Ten Years 200.0% £ 150.0% -- During the past ten years, the City has experienced a significant amount of change through both residential and commercial development. However, while the City's population has increased by 30% during the past decade, property values, sales tax revenues and transient occupancy taxes have gone up at a much faster rate as shown in the following graph. This has enabled the City the means to consistently provide a high service level for Carlsbad residents. u_c 0D) roca>o^a>Q. 100.0% -• 50.0% - - 0.0% Population Net Assessed Values Sales Tax Revenues Transient Occupancy Taxes 2000 Strategic Goals and Budget Development The budget process for the City of Carlsbad begins in January each year with a review and update of the City Council's five- year vision statements (see page 1). Through these vision statements, Council continually defines and clarifies their vision of Carlsbad. The strategic goals for the City are developed next. The goals further define the methods used to achieve the vision and call out areas in which Council would like to place special emphasis during the year. Once these are developed, staff develops operational goals based on Council's direction. These operational goals are the basis for the development of the annual budget. The significant accomplishments on the following page reflect the City's the Council's vision of Carlsbad. City of Carlsbad 2000 Strategic Goals • Ensure the effective and efficient delivery of top- quality services to our Community. • Develop and implement proactive strategies to ensure the financial health of the Community and the City. • Integrate a comprehensive, efficient transportation system with "quality-of-life" centered land use decisions. • Enhance educational opportunities for all segments of the Community. progress towards the achievement of the strategic goals and Significant Events and Accomplishments During 2000-2001, the City experienced many significant events and accomplishments that may not be evident from a review of the financial statements. Some of the more important events are shown below. South Carlsbad Coastal Redevelopment Area - The formation of the South Carlsbad Coastal Redevelopment Area, the City's second redevelopment area, was approved by the City Council in July of 2000. This area is bounded by Agua Hedionda Lagoon on the north, the Pacific Ocean on the west, Interstate 5 and related properties on the east, and the City limits on the south. The purpose of the formation of this new redevelopment area includes the elimination and alleviation of blight found to exist within the project area, increase the supply of affordable housing and improving the physical, social and economic well-being of residents in the project area through redevelopment efforts. On May 15, 2001, Council approved a Work Plan for development of a land use strategy and master plan for the South Carlsbad Coastal Redevelopment Project Area. At the same time, approval was given to form a 15-member Citizen's Advisory Committee to assist staff in development of the land use strategy and master plan. Focus on Customer Service - The City has placed an emphasis on excellent customer service, as evidenced by one of the City Council's goals being, "Ensure the effective and efficient delivery of top-quality services to our Community." As a result of this focus on customer service, the following new or modified services and facilities, have been created in Carlsbad: >^ Sunday Library/Art Gallery Hours - recently, the City has opened up both libraries to the public on Sundays. The South Carlsbad Library, the Cole Library and the William D. Cannon Art Gallery are all open seven days a week, with hours of 1 to 5 p.m. on Sundays. s Historic Site Brochure - the City created a self guided tour brochure to provide photos and information on sites of historic interest in Carlsbad. v' The Citizen's Academy - In an effort to provide education and training to the citizens of Carlsbad, the City recently implemented a Citizen's Academy, inviting citizens of the community to come and learn more about the City, departmental functions and programs available. There were 24 citizens that attended and "graduated" from the Academy. The feedback from the participants was very positive and the City plans on providing the Academy on a bi-annual basis. v' Experience Carlsbad - "Experience Carlsbad" is a program that was developed to acclimate new employees to the culture of Carlsbad. Included in the training program are segments on the City's values and mission, benefits orientation, tour of the City, a conversation with City leaders, customer service workshops, and a follow-up program. s The City's Website - Carlsbad made several improvements to the City web site during the year including the introduction of online employment and business license applications and renewals, and the online library catalog. Construction of Capital Projects - The City's aggressive Capital Improvement Program continued in 2000-2001 with an outlay of approximately $22.1 million. As development continues, the need for development-related services and new facilities is also growing. Capital projects are prioritized in order to meet and/or exceed the City's Growth Management Plan standards. This Plan requires a standard level of facilities (including libraries, schools, parks, water, sewer, etc.) be available to meet the increased demands. Some of the major capital projects started or completed in 2000-2001 included: s Cole Library Remodel - Once the South Carlsbad Library was opened to the public, the Cole Library was closed down to renovate for safety improvements, reallocation of staff and public meeting spaces, mechanical upgrades, and improvements to building finishes. These improvements were completed in 2000-2001. Furthermore, exterior improvements were completed during this past year. v' Street Improvements - Improvements to streets, highways, sidewalks, and traffic signals continue in the City of Carlsbad. Significant progress has been made on the traffic circulation projects in response to, and in anticipation of, current and future development within the City. The Palomar Airport Road and Rancho Santa Fe Road widening projects had design or construction activity during the past fiscal year. Other major circulation projects under construction or design include the extensions of Cannon Road west, Faraday Avenue south and Poinsettia Lane east. s Public Works Center - Design of a new Public Works Center is underway and _ _. construction is expected to begin during 2001-2002. This facility will be located next to the Safety Center and will include a warehouse, general offices and yard facilities for the Public Works Departments. •/ Leo Carrillo Park - The City continues to develop and restore this 26.9 acre park in the southeast quadrant of the City. The master plan has been completed and work is underway to rehabilitate existing structures and to provide landscaping, parking lots, restrooms, walkways, picnic facilities, and public art. The general theme for this park will be passive in nature with interpretive programming. ttettft of oM tnttonce tuMgt v Recycled Water Plant - This project includes preparation of a design report and construction of numerous recycled waterlines throughout the City to provide a unified network for the delivery of recycled water. </ Water Distribution - Several waterlines were worked on during the year including segments along Poinsettia Lane, El Camino Real, El Fuerte, White Sands Drive, and across Interstate 5 between Batiquitos Drive and Navigator Circle. In addition, construction continued on the Cannon Road west transmission main. v' South Agua Hedionda Interceptor - Phases I and II continued to progress during the year. This project is designed to provide sewer service to those areas generally tributary to the south side of Agua Hedionda Lagoon. J Vista/Carlsbad Interceptor - The Vista/Carlsbad Interceptor project involves installation of a new and upgraded sewer trunk line through the downtown portion of Carlsbad to the Encina Water Pollution Control Facility. The interceptor will run along Jefferson Street from Interstate 5 to Oak Avenue and along Oak Avenue from Jefferson Street to the west side of the railroad right-of-way. This project is required to handle buildout flows and replace deteriorated pipelines, and is partially funded by the City of Vista. Affordable Housing - During 2000-2001, construction was completed on 230 new affordable housing units in the City. Laurel Tree Apartments is a 138-unit, full-featured complex consisting of two-, three-, and four- bedroom apartments. Shortly after it opened in 2000, the development won a prestigious Orchid Award from the San Diego Orchids & Onions committee for outstanding architecture and site design. In addition to the Laurel Tree Apartments, Poinsettia Station, a 92 one-, two- and three-bedroom unit complex was opened near Carlsbad State Beach. Poinsettia Station is the first transit-oriented residential development in Carlsbad, exemplifying the principals of smart growth. The development is nearby the Poinsettia Lane transit station, where the Coaster takes commuters south to San Diego and several stops along the way, as well as north to the Carlsbad Village and to the Oceanside terminal for connection with other rail transportation. Technology Enhancements - In the City's quest to provide top quality services, technology plays a key role. Technology has not only enhanced the delivery of Carlsbad's services, but it has also improved the efficiency in which these services are provided. Some of the most recent improvements in technology implemented in Carlsbad have included: v' Strategic Technology Plan - During the year, the Strategic Technology Plan Team developed forms and procedures to be used by City staff for submittal of new system requests. These tools will be used to perform business case reviews for proposed technology and to ensure that there are good business reasons to go forward with potential projects. This review includes doing cost/benefit analysis for proposed projects. Intranet - The Intranet site, "@Carlsbad", made its debut on June 25, 2001. The Intranet is an internal web site that provides a single point of access to information such as: Human Resources documents and forms, department newsletters, contracts and agreements, people and facilities finder, connections to other useful sites, and much more.City Internet - The City's website was upgraded during the year including a redesigned home page, quick links, a "what's new" section, a facility finder, a library catalog, an online employment application and submittal page, and the ability to apply and renew business licenses online. Records Management - The Records Management department has been providing historical information to the City via the Document Management System. The system allows employees the ability to access City information such as agenda bills, minutes, ordinances, resolutions, plans, drawings, and maps within minutes. Total City Operations In 2000-2001, the City of Carlsbad once again enjoyed a fiscal year of solid economic growth. Beginning with the 1994-95 fiscal year, the local economy has been expanding, resulting in rising revenue levels for the City. Service levels to the citizens have also grown enabling Carlsbad to remain a model city, providing effective and efficient top-quality services. Revenue from All Fund Types (in thousands) Category General Fund Special Revenue Funds Debt Service Funds Capital Projects Funds Enterprise Funds'1' Internal Service Funds'11 TOTAL REVENUES 2000-2001 $81,601 13,521 1,716 39,408 35,048 11,360 $182,654 1999-2000 $ 69,363 11,688 1,484 32,717 31,511 9,686 $156,449 2000-2001 over (under) 1999-2000 $12,238 1,833 232 6,691 3,537 1 ,674 $26,205 Percent Change 17.6% 15.7 15.6 20.5 11.2 17.3 16.8% (1) Includes operating and non-operating revenues For 2000-2001, total revenues collected by the City for all services totaled over $182 million. General fund revenues grew by 17.6% to $81.6 million. The healthy economy, coupled with continued low inflation, has kept consumer confidence high, allowing for increased retail sales and tourism. The Carlsbad Company Stores, a specialty outlet center, has expanded since its opening in 1997 to well over 60 shops and restaurants that contribute over $1 million annually to the City's sales tax receipts. Legoland, a family theme park located in Carlsbad, has expanded recently. Legoland contributes to the City's sales tax base as well as stimulating the development of new hotels in the area. The effect of the new development and the demand for housing in Carlsbad is an increasing tax base. The three major revenue sources for the City: property taxes, sales taxes and transient occupancy taxes (hotel tax) brought in $50.1 million in fiscal year 2001. These taxes are the major source of funding for most of the City's services and allow the City to live up to its reputation as one of the premier locations in San Diego County. Not only are sales taxes and TOT higher this fiscal year, property taxes have also risen. The demand for housing has grown as more industries move into the City's highly desirable industrial corridor. Residential development has had a tough time keeping up with the fast paced population growth throughout San Diego County. This influx of citizens, as well as the strong resale market, has pushed the assessed values in Carlsbad up over 18% during the past year. This translated into higher property taxes for the City. Despite the strong demand for housing, receipts from many of the pre-construction phases of development slowed down this year. The number of large master plans working their way through the development process has dwindled due in part to less land being available for development. As the City came out of the recession in the mid 1990's, there was a large backlog of projects ready to process. Most of those are under construction now or were recently completed. This has resulted in lower planning, engineering and other similar revenues. Most City funds experienced higher revenues during the year. Enterprise and Capital Project funds showed increases predominantly due to increased income from property and investments. Under the requirements of Governmental Accounting Standards Board Statement No. 31, the City's investments are stated at their fair value. Any realized gains and losses from the investment portfolio as well as the net increase or decrease in the fair value of the investments (unrealized gains/losses) are all recognized as investment income. As of June 30, 2001, income from property and investments for all City pooled funds totaled $21.6 million of which approximately $8.7 million (40.3%) is a result of the net increase in the fair value of the investments during fiscal year 2001. The unrealized gain on investments held in the portfolio at year-end was $4.4 million. Expenditures (or Expenses) from All Fund Types (in thousands) Category General Fund Special Revenue Funds Debt Service Funds Capital Projects Funds Enterprise Funds'1' Internal Service Funds'1' TOTAL EXPENDITURES 2000-2001 $59,404 7,588 2,564 23,329 23,991 9,636 $126,512 1 999-2000 $52,833 9,733 2,461 40,629 24,122 9,323 $139,101 2000-2001 over (under) 1999-2000 $ 6,571 (2,145) 103 (17,300) (131) 313 $(12,589) Percent Change 12.4% (22.0) 4.2 (42.6) (0.5) 3.4 (9.1)% (1) Includes operating and non-operating expenses The revenues collected by the City during 2000-2001 allowed the staff of over 744 full and hourly full-time equivalent employees to provide a complete range of City services to the 83,469 residents and many businesses in Carlsbad. Spending on all City programs totaled $126.5 million, a decrease of $12.6 million from 1999-2000. While the majority of programs within the City saw increased spending, spending on capital projects slowed down as many of the projects 10 on the horizon were in the planning stages during the year. Projected expenditures on capital projects in the next five years exceed $211.2 million. Other factors contributing to the growth in expenditures were additional programs and services offered through General fund financing. These programs addressed enhanced customer service, health and safety issues, new technologies, community outreach, and the City's growth. The remainder of this report will discuss the revenues and expenditures (or expenses) for each fund type in the City of Carlsbad for the fiscal year ended June 30, 2001. General Fund The City's General fund is used to record all revenues and expenditures not specifically restricted by law or Council policy. Major sources of revenue include property tax, sales tax, transient occupancy tax (TOT), vehicle license fees, business license fees, development revenues, and interest income. GENERAL FUND 1992 TO 2001 (in millions) nm tart 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 General fund revenues provide a representative picture of the local economy. These revenues are of particular interest as they fund basic City services such as police, fire, library, street and park maintenance, and recreation programs. Once again, in 2000-2001, the City of Carlsbad experienced a period of solid economic growth with General fund revenues growing to $81.6 million as shown below. The remainder of this section will highlight changes in the more significant revenue sources. General Fund Revenues (in thousands) Category Taxes Intergovernmental Licenses and Permits Charges for Services Fines & Forfeitures Income from Property and Investments Interdepartmental Other TOTAL 2000-2001 $57,435 5,545 3,409 6,171 764 4,817 2,148 1,312 $81,601 1999-2000 $50,037 4,903 3,321 5,499 771 2,227 2,007 598 $69,363 2000-2001 over (under) 1999-2000 $ 7,398 642 88 672 (7) 2,590 141 714 $12,238 Percent Change 14.8% 13.1 2.7 12.2 (0.9) 116.3 7.0 119.6 17.6% 11 Taxes Sales Taxes ($21.2 million) - For the year, sales tax receipts finished up 9% over last year's collections. This was due to the continuation of a healthy Up 9%economy, relatively high consumer confidence and additional new retail sites locating to the City. The three largest economic segments in the City continue to be new auto sales, department stores and restaurants; together they generate 54% of the City's sales tax revenues. In order to comply with a Revenue and Taxation Code provision passed in 1991, a sales tax rollback of 0.25% went into effect on January 1, 2001. This rollback was due to the State having back-to-back fiscal years with a reserve fund of at least 4% of its total General fund. This reduction in the sales tax rate from 7.75% to 7.5% came from the State's share of the sales tax. The City continued to receive its 1% share. FOR SALE 1 Up 17% Property Taxes ($19.7 million) - The City wrapped up the year with $19.7 million in property tax revenues, an increase of 17% from fiscal year 1999-2000. According to the County of San Diego Assessor's Office reports, assessed values in Carlsbad increased 18% for fiscal year 2000-2001. This was the largest increase of any city in San Diego County. Up11% Under Proposition 13, assessed values of property can only increase by up to 2% per year. However, when property changes ownership, the assessed value increases to the full market value. Therefore, the recent surges in property resales in Carlsbad as well as the development of new housing, significantly affected property tax revenues for the City. Transient Occupancy Tax ($9.3 million) - Transient occupancy taxes (TOT) are $936,000 more than the previous fiscal year. The increase in TOT revenues is due entirely to the opening of the Courtyard by Marriott Hotel and the Carlsbad Beach Hilton Gardens in June 2000. Without these two new hotels, TOT for the year would have actually decreased by 1%. According to PKF Consulting, room rates have increased during the past year, leading us to believe that the drop in TOT revenues is due to an increase in the vacancy rate experienced by local hotels. This is directly attributable to the recent slow down in the economy. Franchise Taxes ($3.9 million) - Franchise tax revenues are up significantly from the previous fiscal year. Franchise fees come from public utility sources such as SDG&E, trash collection franchises and cable franchises conducting business within City limits. The majority of this year's increase is due to increased collections from San Diego Gas & Electric (SDG&E). Up 51% SDG&E pays franchise taxes for the use of public land over which they transport gas and electric services. In addition, SDG&E also pays an "in-lieu" franchise tax based on the value of gas and electricity transported on SDG&E lines put purchased from another source. The majority of "in-lieu" taxes collected are from Cabrillo Power, the operator of the Encina Plant. This "in-lieu" tax was put in place to capture the franchise taxes on gas and electricity that is transported using public lands but which would not otherwise be included in the calculations for franchise taxes. 12 The franchise taxes paid by SDG&E are up in total by 18.9%. Net electricity sales increased by 11%, while net gas sales increased by 45%. The "in-lieu" taxes are up by 221.6% for the year. Up 23% Business License Tax ($2.3 million) - Business license revenues have increased by $437,000 over 1999-2000 figures. The majority of this year's increase was due to two factors; the success of our recent public awareness campaign and the licensing of Cabrillo Power. In an effort to create equity amongst the business community, as well as bring businesses into compliance with the City's business license ordinance, the City embarked on a public awareness campaign. This campaign was designed to educate the business community on the requirements and procedures for business licensing in the City of Carlsbad. Over 2,100 letters were mailed to various businesses that were potentially doing business in the City without a license. The City also implemented a temporary amnesty period through September 30, 2000, for newly licensed businesses. During this amnesty period, all penalties for prior business license taxes were waived for newly licensed businesses. The City saw 317 new organizations obtaining a business license as a result of this program, bringing in over $102,000 in additional business license revenue. Up 10% Transfer Taxes ($1.1 million) - When there is a consideration paid for real property, the County Assessor's Office charges a transfer tax. The transfer tax rate in San Diego County is $1.10 per thousand multiplied by the selling price of the property. The City receives 50% of the transfer tax charged for sales within the City of Carlsbad. During the current fiscal year, transfer taxes are up 10% due to the continuation of a strong housing market. Intergovernmental UP 14% Vehicle License Fees ($4.3 million) - Vehicle License Fees (VLF) have increased by $524,000 over 1999-2000 figures. Vehicle License Fees are collected by the Department of Motor Vehicles and disbursed by the State Controller to the City. The State taxes motor vehicles in lieu of local property taxes. Vehicle License Fees have increased this year due to the population growth in the City and the Statewide increase in VLF received. Registered vehicles include automobiles, trucks, trailers, and motorcycles. State Assembly Bill 858 went into effect on January 1, 2001. This bill provides a 67.5% VLF credit to licensed vehicle owners in the State. Vehicle owners have seen a reduced VLF fee during the year. This reduction is in place for the 2001 and 2002 calendar years. This bill is double-joined with State Assembly Bill 511, which appropriated money necessary to cover the reduction in VLF revenues so that cities and counties, the recipients of VLF, will not see any reduction in their VLF revenues at this time. Other Intergovernmental Revenues ($911.000) - Other intergovernmental revenues include miscellaneous receipts received from the State or Federal governments. Included in the $911,000 received this year are reimbursements from the State for mandated costs, drug enforcement programs and disaster relief, 13 reimbursements for Peace Officer Standards and Training (POST) expenses, a contribution from the Encinitas Unified and Carlsbad School Districts to partially offset DARE program and school resource officer expenses, one-time monies received from the State for "fiscal relief and reimbursements for booking fees, and a small miscellaneous State grant. Up10% Homeowners Exemptions ($316.000) - When property taxes are calculated on a particular parcel of property, the first $7,000 of property value is excluded from the property tax calculation. The State then reimburses the City for this mandated exemption. This reimbursement is entitled Homeowner Exemption revenue, and is shown under intergovernmental revenues. Sales of new homes have remained strong during the fiscal year, as reflected in the revenue received for the year. Licenses and Permits I . w ..1 88'Down 3% Building Permits ($2.1 million) - The most significant source of development-related revenue this past year was building permits, down 3%, as compared to fiscal year 2000. Building permits are issued Residential Units Trend 2500 - 2000 1500 1000 500 -. n I to cover the cost of regulating construction activities. This allows the City the means to protect overall community interests. For the fiscal year, 1,823 new homes were started, compared to 1,838 new homes in fiscal year 2000. For the year, residential home development was most active in Rancho Carrillo, La Costa Valley and Calavera Hills. In addition, there was an extensive amount of multi-unit development throughout the City during the year. Total commercial/industrial building permits issued this year comprised 811,336 commercial and 463,754 industrial square feet. This compares to 265,487 commercial and 475,664 industrial square feet permitted last fiscal year. Some of the larger commercial projects permitted included the La Costa Glen apartment buildings, Carlsbad Self Storage, Inns of America Suites, the Albertson's at La Costa Plaza, and the La Costa Glen Assisted Living facility. Other Licenses and Permits ($1.3 million) - Other licenses and permits consist of plumbing, electric, mechanical, right-of-way, grading, conditional land use, lagoon, and other miscellaneous permit revenues. In the previous fiscal year there was a large refund of fees for a permit application, which was withdrawn. This is a big factor in the increase in fees for the current fiscal year. Additional increases can be seen in miscellaneous building permits (plumbing, electrical and mechanical), miscellaneous development permits (right-of-way and coastal development) and general permits (special use and fire protection systems). 14 Charges for Services Development-Related Revenues ($2.9 million) - Development related revenues, which include planning fees, building department fees and engineering fees again this year reflect a slowing down of the building industry in Carlsbad. Up 55% Ambulance Fees ($1.4 million) - The City bills any individual who is transported in one of the City's ambulances. Billing and collecting of these fees is done by an outside company, which receives a percentage of the fees collected. For the year, ambulance fees are 55% or $513,000 higher than fiscal year 1999-2000. The increase is due to higher collection rates and an increase in the City's population. Recreation Fees ($1.1 million) - Recreational fees are generated through instructional classes, youth and adult sports, the triathlon and other special events, day trips, various aquatic programs, and lagoon permits. Year-to-date recreation fee revenue is $244,000 more than the previous fiscal year. Fines and Forfeitures ($764,000) - Fines and forfeitures represent fees collected for code violations, parking citations, overdue fines and returned checks. Overdue library fines are up for the year due mainly to the opening of the new library in the prior fiscal year. However, this was more than offset by the decrease in revenues received by the City from the court system for our share of moving violations. Down 1% Up 116% Income From Property and Investments ($4.8 million) - For the year, income from property and investments is up almost $2.6 million. The increase in interest revenue is due to two factors. First, General fund revenues have increased significantly in the current fiscal year. Combining this increase in revenues with a reduction in expenditures as compared to the previous fiscal year, the cash balance has increased by 34% this year. Secondly, the City records the value of their investments at fair market value. This valuation generates either an unrealized gain or loss, which is reflected in income from property and investments. Of the 116% change in income from property and investments, 48% was due to the fluctuation in the fair market valuation of the City's investment from fiscal year 1999-2000 to 2000-2001. Interdepartmental Charges ($2.1 million) - Interdepartmental charges are $141,000 or 7% more than last year. Interdepartmental charges are amounts paid by other funds Up for services provided to them by the General fund. The majority of this 7% year's increase is due to increasing costs in the General fund. 15 Miscellaneous ($1.3 million) - Miscellaneous revenue sources include revenues received by the City to offset the costs of special studies or projects for developers, reimbursements for damage done to City streets, right- of-ways, other City owned property, and other miscellaneous reimbursements and donations. These amounts vary significantly from year to year. Up120% General Fund Expenditures (in thousands) Category Policy and Leadership Group Administrative Services Public Safety Community Development Community Services Public Works Non-Departmental Debt Service TOTAL 2000-2001 $ 2,411 4,720 23,365 5,293 10,678 12,225 642 70 $59,404 1999-2000 $ 2,166 3,755 21,436 5,371 8,132 11,578 384 11 $52,833 2000-2001 over (under) 1999-2000 $ 245 965 1,929 (78) 2,546 647 258 59 $6,571 Percent Change 11.3% 25.7 9.0 (1.5) 31.3 5.6 67.0 536.4 12.4% General fund expenditures were $59.4 million; an increase of $6.6 million from 1999-2000. The economy continued to remain strong this fiscal year, allowing the City to maintain service levels and expand or add some programs, including: Increased Police staffing by the addition of four new positions Began Parent Project to help parents deal with difficult children Implemented a senior citizen fire and life safety education program Removed 1,400 diseased trees from Hosp Grove Distribution City of Carlsbad calendars citywide Began Sunday hours at both libraries Remodeled Cole Library Provided the library catalog online through the City's internet site Developed a self-guided tour brochure of historic sites in Carlsbad Created an Arts Education Program for Carlsbad students. • Continued implementation of the Records Management system • Began planning for the Storm Water Protection Program • Installed playground park equipment at Calavera Park • Planted nearly 200 trees in valid planting sites • Held the first Carlsbad Citizen's Academy • Expanded Stay 'N' Play and Kidz Camp programs • Continued work on the Residential Traffic Management Program 16 Significant changes noted in the major service areas were as follows: Policy and Leadership Group Spending in Policy and Leadership Group increased by $245,000 this fiscal year. This group includes the City Council, City Manager, City Clerk, City Attorney, and City Treasurer departments. The increase in expenditures is attributable to the additional costs related to the Public Information Program. During the year calendars were created for distribution to all Carlsbad residents; the calendars highlighted citywide events including City Council meetings, important phone numbers, a facility finder, and other items of interest to Carlsbad residents. Administrative Services Administrative Services, which includes the Finance, Purchasing, Human Resources and Records Management, had an increase in expenditures in 2000-2001 of $965,000. This increase can be traced to the continued installation and training of staff on the document management system. In addition, Administration expenses were higher during the year due to the costs of power deregulation consulting, the airport noise study, work on the telecommunications policy, the Futuring Conference, and miscellaneous Faraday building costs. Public Safety Spending on public safety programs totaled $23.4 million; up $1.9 million, or 9%, from 1999-2000. This increase was shared equally between police and fire services. The Fire department's fleet replacement changes increased due to the purchase of two new fire engines in the Fleet Internal Service Fund, and combined with normal increases in salaries and benefits, their expenditures were up by $964,000. Four new police positions were added during the year to address needs in patrol, traffic, community services, and vice narcotics. In addition, information technology charges increased by over $200,000 in the Police department to cover the cost of replacing personal computers as they become obsolete. Community Development Community Development, which encompasses the Hiring Center, Geographic Information Systems (GIS), Economic Development, Community Promotion, Land Use Planning, Building Inspection, and related administrative costs had expenditures of $5.3 million for fiscal year 2000-2001, a decrease of $78,000. The decrease in expenditures can be traced to lower GIS and Economic Development expenses during the past twelve months. The GIS area was involved in a software implementation during the previous fiscal year. Economic Development expenses dropped as compared to the previous year due to the timing of a tourism study. 17 Community Services Community services consists of the Library, Cultural Arts, Recreation, Park Planning, and Senior Citizen programs. This group had total expenditures of $10.7 million for the year; an increase of $2.5 million. This past fiscal year was the first full year of operations for the City's two libraries. An additional full-time employee, as well as five hourly full-time equivalent positions were added to meet the demand for services from the two libraries. Another 5.4 hourly full-time equivalent positions were added so that the libraries could operate on Sundays ^ from 1:00 p.m. to 5:00 p.m. Three full-time recreation specialist positions were created to replace part-time positions and to provide adequate coverage and supervision at each of the community centers. Recreation expenditures also included additional full- and part-time salaries for the Stay 'N' Play, Kidz Camp and Youth Special Event Programs. The Stay 'N' Play program was added at Magnolia Elementary School and an additional week of Kidz Camp was offered during the summer. Parks Planning salaries increased partially due to the conversion a part-time position to a full-time position and the hiring of a part-time park planning assistant. The park planning assistant was added to help address the workload issues related to new park development projects required by the Growth Management Plan. Public Works Public Works is charged with building and caring for all of the assets of the City. It includes Engineering; Parks, Streets and Facilities Maintenance; Building Maintenance; and Traffic Sign and Signal Maintenance programs. Total expenditures in 2000-2001 for Public Works were $12.2 million, an increase of $647,000 over 1999-2000. Increases during the year were noted in Facilities, Traffic Signals and Parks Maintenance. Facilities Maintenance increased their staffing to keep up with the routine building maintenance of the new Faraday facility and the expansion of the City's library facilities. The City purchased and installed green LED lamps in all traffic signals at every intersection in the City in an effort to reduce energy costs, thereby impacting the Traffic Signals expenditures for the year. A large factor in the increase in parks maintenance costs included the increase in heating and lighting brought about by the recent surge in energy prices. Non-Departmental Non-departmental expenditures consist of programs not specifically associated with a department. Examples include fees paid to the County for property tax administration and annual City audit charges. This category increased by $258,000 in 2000-2001, from the purchase of property near the Carlsbad Arts Offices. Special Revenue Funds The City's Special Revenue funds, which account for the collection and use of special or restricted revenues, received $13.5 million in total revenue in 2000-2001. This is an increase of $1.8 million, or 15.7%, from last year. A majority of this increase was a $1 million increase in income from property and investments. An increase in Special Revenue fund revenues combined with a reduction in Special Revenue expenditures, has lead to a 24% increase in the average monthly cash balance in the Special Revenue funds throughout the year. In addition, 18 the change in the market value of the City's investments during the fiscal year increased income from property and investments by 28%. These factors, as well as an overall increase in the return on the City's investments, have created higher interest earnings for the fiscal year. There was also a large increase in intergovernmental revenues. Due the fact that home/apartment rental rates in the San Diego region are some the highest in the country, the federal government increased the amount of housing assistance they offer Section 8 housing assistance participants in Carlsbad. They also increased the amount of money the City receives to help offset the administrative costs of running the program. Furthermore, the State reimbursed the City additional amounts under the California Library Services Act (CLSA) for services provided by the City's two libraries. One new fund was established during the year. The California Law Enforcement Equipment Program High Technology Grant (CLEEP) is a state grant to be used to enhance law enforcement budgets for the purchase of high-technology equipment. This can include such items as computers, cellular phones, night vision equipment, software, digital cameras, and other high-technology equipment. Special Revenue Funds Revenues (in thousands) Category Taxes Intergovernmental Charges for Services Fines and Forfeitures Income from Property and Investments Property Owner Contributions Donations Miscellaneous TOTAL 2000-2001 $ 1,910 4,729 - 125 2,655 3,377 312 413 $13,521 1999-2000 $1,769 3,976 54 69 1,641 3,281 561 337 $11,688 2000-2001 over (under) 1999-2000 $ 141 753 (54) 56 1,014 96 (249) 76 $1,833 Percent Change 8.0% 18.9 (100.0) 81.2 61.8 2.9 (44.4) 22.6 15.7% Expenditures from the Special Revenue funds support a wide variety of programs and projects. Some of the major uses for these funds include: Community service programs such as street lighting, landscaping services for street trees and median maintenance. Cultural programs including grants from the California Library Services Act and California Arts Council, and the Civic Arts program. Donations, scholarships and bequests for designated library and community service activities. 19 Endowments designated for community assistance, the preservation of the Flower Fields at Carlsbad Ranch, the new auditorium at the South Carlsbad Library, and mitigation credits set aside for future mitigation projects. Special programs such as the Police Asset Forfeiture Program, Citizens Options for Public Safety (COPS) Program, Law Enforcement Block Grant, California Law Enforcement Equipment Program High Technology Grant, library computer purchase and adult literacy programs, and habitat preservation programs. Housing assistance through the Tyler Court affordable senior apartments. Welfare programs such as the HDD-sponsored Carlsbad Housing Authority Rental Assistance Program, Affordable Housing development and the Senior Nutrition Program. Special Revenue Funds Expenditures (in thousands) Category Public Safety Community Development Community Services Public Works Principal and Interest TOTAL 2000-2001 $ 262 4,059 893 2,177 197 $7,588 7999-2000 $ 364 6,167 956 2,245 1 $9,733 2000-2001 over (under) 1999-2000 $ (102) (2,108) (63) (68) 196 $(2,145) Percent Change (28.0)% (34.2) (6.6) (3.0) 19600.0 (22.0)% Spending in Special Revenue funds totaled $7.6 million in 2000-2001, a decrease of $2.1 million from 1999-2000. The largest factor in this decrease was a $2 million contribution from the Low and Moderate Income Housing fund for the purchase of the Tyler Court affordable senior complex made during the previous fiscal year. Debt Service Funds The City's Debt Service funds record the payment of interest and principal on the current portion of outstanding debt not recorded in other funds. As of June 30, 2001, the total debt payable from non-enterprise sources, excluding obligations under capital leases and advances, was $18.9 million. City debt is comprised of the Hosp Grove Certificates of Participation (COPs) and the Redevelopment Tax Allocation bonds. No general obligation bonds are outstanding as of June 30, 2001. 20 Debt Service Funds Revenues (in thousands) Category Taxes Income from Property and Investments Total 2000-2001 $1,575 141 $1,716 1999-2000 $1,385 99 $1,484 2000-2001 over (under) 1999-2000 $190 42 $232 Percent Change 13.7% 42.4 15.6% Debt service revenues totaled $1.7 million, an increase of $232,000 from last year. The increase in tax revenues was due to higher assessed values within the Redevelopment Area. Additionally, higher average cash balances in the Hosp Grove and Redevelopment funds during the year of 31%, as well as an increase in the market value of investments, created the larger interest earnings in those funds. Debt Service Funds Expenditures (in thousands) Category General Government Principal Interest and Fiscal Charges TOTAL 2000-2001 $ 37 820 1,707 $2,564 1999-2000 $ 15 795 1,651 $2,461 2000-2001 over (under) 1999-2000 $22 25 56 $103 Percent Change 146.7% 3.1 3.4 4.2% General government and interest charges increased from the prior year due to activity in the new South Carlsbad Coastal Redevelopment Area, the City's second redevelopment area, which was formed during the 1999-2000 fiscal year. Capital Projects A Capital Project fund is one that accounts for the receipt and disbursement of monies that are restricted for the acquisition or construction of capital facilities (other than those financed by Enterprise funds). Capital Project funds for the City of Carlsbad include those supported by the City's public facilities fees, community facilities district (Mello-Roos) taxes, park development fees, drainage fees, traffic impact fees, bridge and thoroughfare districts and other development fees, county sales tax funds, and general funds earmarked for capital purposes in the Capital Construction fund. The capital projects supported by the City's Redevelopment Agency are also included in this group. 21 Capital Projects Funds Revenues (in thousands) Category Taxes Intergovernmental Charges for Services Income from Property and Investments Contributions from Property Owners Miscellaneous TOTAL 2000-2001 $ 9,227 4,012 257 12,773 12,605 534 $39,408 1999-2000 $ 9,077 5,214 197 6,539 1 1 ,452 238 $32,717 2000-2001 over (under) 1999-2000 $ 150 (1,202) 60 6,234 1,153 296 $6,691 Percent Change 1.7% (23.1) 30.5 95.3 10.1 124.4 20.5% Tax revenues result from the collection of community facilities district (Mello-Roos) special taxes and the license tax on new construction. The 2000-2001 increase in tax revenues is the net result of higher special tax payoffs in Community Facilities District #1 for industrial/commercial developments, partially offset by a reduction in special tax prepayments in the Rancho Santa Fe District. Intergovernmental revenues decreased during the year as the City did not draw down as much TransNet funding as in the past. This is not an indication of a reduction in money available from TransNet, but rather a timing factor in when the funds will be used. In addition, the City did not receive the magnitude of state and federal grant funding as in previous years. Increases in income from property and investments are the result of the several factors including the maintenance of larger cash balances during the year (10%), the addition of the Infrastructure Maintenance fund (6%), increases in property rentals (3%), an increase in the average portfolio yield for the year (8%), and the majority of the increase was due to the increase in the market value of the City's investments. The change in contributions from property owners was primarily the result of higher collections of Public Facility Fees (PFF) and Bridge and Thoroughfare District No. 2 (BTD #2) contributions, both of which are collected when building permits are issued. Capital Projects Funds Expenditures (in thousands) Category General Government Capital Outlay Principal Interest TOTAL 2000-2007 $ 1,213 22,067 37 12 $23,329 7999-2000 $ 1,062 39,543 18 6 $40,629 2000-2001 over (under) 1999-2000 $ 151 (17,476) 19 6 $(17,300) Percent Change 14.2 % (44.2) 105.6 100.0 (42.6)% 22 Capital Project Expenditures Versus Residential Permits Issued 2500 Spending on capital projects decreased by 44.2% in 2000-2001 from the previous year. This drop was due to several large projects that were worked on in the previous year, including the Pine School acquisition, completion of the Faraday Center and Dove Library, construction of Cannon Road west, completion of the Faraday Avenue extension, widening of La Costa Avenue, and the pavement management program. Historically, capital project spending has matched the residential development occurring within the City, ensuring that the necessary infrastructure is in place for new Carlsbad residents. 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 I Capital Expenditures - Permits Issued Enterprise Operations The City of Carlsbad manages water, sewer, solid waste, and a planned golf course as Enterprise fund operations. An Enterprise fund is one where most or all of the costs involved are supported by user fees. Within these funds, the City uses many of the accounting practices applicable to commercial businesses, including the recording of depreciation on fixed assets and the allocation of overhead costs from support services. User fees are set on an annual basis to cover both operating costs and debt service needs. Enterprise Funds Total Revenues, Expenses and Net Income (in thousands) Water Golf Course Sewer Solid Waste 2000-2001 Revenues Expenses Net Income $23,188 (18,028) $ 5,160 $ 221 $ 75 $10,853 (5,556) $ 5,297 $786 (261) $525 1999-2000 Revenues Expenses Net Income Percent Change $22,179 (18,609) $ 3,570 44.5% $ 161 (199) $ (38) 297.4% $ 8,422 (5,165) $ 3,257 62.6% $749 (149) $600 (12.5)% 23 Most of the increase in water revenues during the current fiscal year is due to increases in investment income. This increase in investment income is due to the maintenance of a higher cash balance as compared to the prior fiscal year, as well as an increase in the market value of investments. Water sales were actually down from the previous year due to the heavier than normal rainfall the region experienced during this past winter, partially offsetting the increase in income from property and investments. The largest Water Enterprise fund expense, purchased water, was down 4% for the year mirroring the drop in water sales from the wet winter. The enterprise recognized $4.8 million in capital contributions during the past fiscal year. Capital contributions are generated through development impact fees charged to new commercial, industrial and residential developers for access to the City's potable and reclaimed waterlines. Design has been completed on a 250-acre municipal golf course located directly south of the future Veterans Memorial Park. The location is directly accessible to major roads and the interstate freeway. The City is currently awaiting approval of the plans from environmental agencies before construction can begin. Revenues to the Golf Course fund for 2000-2001 were derived entirely from interest on cash balances. Golf course expenses consist primarily of street assessments and Mello-Roos taxes associated with the land purchased for the municipal golf course. Another source of cash to the fund (not reflected in the number shown here) was a $600,000 contribution from the City's General fund to cover future expenses. A major factor in the rise in Sewer revenues was the maintenance of higher average cash balances throughout the year, in the Capital Connection Fee and Capital Replacement funds, and an increase in the market value of the City's investments. The customer base has also increased adding to the growing revenues. Expenses for sewer operations total $5.6 million, 8% or $391,000 higher than the previous fiscal year. Encina Plant expenses have increased by 7%, primarily the result of higher energy costs. General and administrative costs are up by $196,000, a result of a more accurate accounting of the Sanitation's share of utility engineering and utility billing costs assessed through interdepartmental charges. Solid waste revenues represent charges for recycling fees, non-jurisdictional fees based on the level of tonnage processed by Waste Management and interest earned on available cash balances. The increase in solid waste revenues for the year was the result of higher earnings on the fund's increased cash balances held during the year as well as an increase in the market value of investments. This increase in investment revenues more than offset the drop in non- jurisdictional fees incurred by the enterprise. General and administrative costs reflect a significant increase during the year due to the costs associated with the negotiations with Allied Waste for continued use of the Palomar Transfer Station. Internal Service Funds Internal Service funds are used to account for services provided by a City department to other City departments. As with an Enterprise fund, the source of revenue is user fees charged to the departments receiving the service. 24 Internal Service Funds Total Revenues. Expenses and Net Income (in thousands) 2000-2001 Revenues Expenses Net Income 1999-2000 Revenues Expenses Net Income Percent Change Fleet Management $ 3,409 (2,611) $ 798 $ 3,073 (2,441) $ 632 26.3% Health Insurance $ 2,596 (2,343) $ 253 $ 2,593 (2,767) $ (174) 245.4% Information Technologies $ 3,366 (2,938) $ 428 $2,472 (2,276) $ 196 118.4% Risk Management $1,232 (792) $ 440 $ 909 (1,080) $(171) 357.3% Workers' Compensation $757 (952) $(195) $ 639 (759) $(120) (62.5)% Fleet Management Fleet Management operates a central vehicle maintenance program, which services all City vehicles and other small machinery. Replacement of vehicles, including fire equipment, is an important component of the program. The City's current policy for funding the replacement of fleet equipment valued at more than $5,000, is to set aside a certain amount of money each year in a replacement fund to ensure that there will be sufficient funds available when the equipment needs to be replaced. Vehicle purchases totaled $1.5 million; $500,000 more than the previous year. Included in these purchases were two new fire engines. Fleet operating expenses during 2000-2001 were $2.6 million, which was more than offset by charges for services to the various funds in the City. The $7.5 million year-end working capital is earmarked for vehicle replacement. Health Insurance The City also operates a Health Insurance Internal Service fund for collecting premiums, paying claims, premiums, administrative costs, and holding reserve funds. Revenues are generated by charging departments for their share of the estimated health insurance costs during the year. At the beginning of the 2001 calendar year, management employees switched their health coverage to the Public Employees Retirement System Health Plan and dropped out of the City's self-insured plan. This change can be seen in the reduction in claims expense for the fund during the year. However, due to the increasing cost of providing health benefits, the rates charged per employee for health insurance coverage has increased, thereby offsetting any reduction in charges for services in the fund due to management changing health insurance plans. For fiscal year 2000-2001, the health insurance Internal Service fund produced a net income of $327,000, thereby eliminating the prior year negative fund balance. 25 Information Technologies The City's Information Technologies Internal Service fund accounts for the resources which support the various City departments in the performance of work tasks through computer automation and telecommunication services. The department also strives to increase citizen access to City services through the use of technology. The City continues to invest heavily in new hardware and software. This continued investment, has led to increased depreciation charges, which are reflected in charges for services made to the various departments using information technology services throughout the City. Operating expenses also increased significantly during the year as the City entered into several new maintenance contracts as well as hired consultants to assist with citywide technology projects. At year-end, working capital increased to $2.2 million, up $774,000 from 1999-2000. Of this amount, $577,000 is earmarked for replacement of equipment in the future. Risk Management Revenues in the Risk Management fund are up by 35.5% from last year. The majority of this revenue represents charges to other departments for general liability coverage. However, the increase in this fiscal year's revenues as compared to the previous fiscal year was due to a refund received as a result of prior year audit adjustments. Claims expense and other related costs for the Risk Management Self-Insurance fund totaled $792,000, down $288,000 from 1999-2000. The City is a member of the California Municipal Excess Liability Program, a group purchase program for general liability coverage, covering most losses exceeding $500,000 with up to a maximum of $10,000,000 per occurrence. The decrease in total expenses for the fund was not the result of fewer liability claims brought against the City, but rather the magnitude of the claims. The estimated claims payable for general liability at year-end was $640,000, up $16,000. Working capital totaled $2.3 million at June 30, 2001, as compared to $2.9 million at June 30, 2000. The drop in working capital was due to a residual operating transfer of $1 million made to the General fund to refund excess charges collected in prior fiscal years. Worker's Compensation Revenues in the Workers' Compensation fund are up slightly from the prior fiscal year. The bulk of the revenue represents charges to other departments for Workers' Compensation coverage. The only change in revenue was from reimbursements received in the fund for settlements and other costs, reimbursed back to the fund. As the City's workforce increases, the City's exposure to possible worker's compensation incidents also increases. The increase in the City's staffing levels can be seen in this year's worker's compensation numbers. Also reflected in the increase in claims expense, is the magnitude of the claims filed. Health insurance costs have been on the rise, negatively impacting the City's claims expense. Claims expense makes up the majority of the total expenses in the Workers' Compensation fund. Claims expense for 2000-2001 amounted to $817,000, compared to $676,000 in 1999-2000. Workers' Compensation estimated claims payable at year-end was $969,000, again, moderately higher than the previous fiscal year. 26 Agency Funds The City uses Agency funds to account for assets held by the City for other individuals, entities or governments. Typically these funds relate to contractors' cash performance bonds, assessment district reserve funds and employee and employer payroll tax withholding accounts. The City held a total of $16.1 million in Agency funds as of June 30, 2001, compared to $16.6 million at the end of 1999-2000. This decrease is due to a reduction in the amount of contractor and miscellaneous deposits held by the City. Cash Management The City Treasurer is charged with the design of an effective cash management and investment program consistent with the California Government Code, the Carlsbad Municipal Code and the Carlsbad Investment Policy. Among other activities this includes arranging for banking services, forecasting cash receipts and expenditures, investing all inactive cash, and reporting investment activities. City Council, with the advice of the City Treasurer, annually adopts a comprehensive investment policy specifying, among other things, investment objectives and strategy, type and term of investments, reporting requirements, and investment oversight. Investments are made either as pooled investments or as investments held separately. Pooled investments are made and managed internally by the City Treasurer and include the inactive cash of agencies controlled by the City and the various funds of those agencies. Cash is received into the pool without regard to the agency or fund from which it originated. At the end of fiscal year 2000-2001, total assets in the pooled investments were $374.1 million. This represented an increase of $53.4 million, or 16.7%, from fiscal year 1999-2000. Pooled investments are generally recorded at their market value as required by the Government Accounting Standards Board statement #31. The investments in the Treasurer's Pool earned approximately $21.6 million in interest, which was an increase from $17.6 million earned in the previous fiscal year, due to the maintenance of a higher average cash balance in the Treasurer's Pool throughout the year. The average yield of the pooled investments for fiscal year 2000-2001 increased to 6.18% from 5.81% in fiscal year 1999-2000. Investments held separately are managed by the Finance Director and generally include bond proceeds and other funds, which are individually invested. Total assets of investments held separately were $9.8 million at the end of fiscal year 2000-2001. The fiscal year 2000-2001 pooled investments and the investments held separately include the types of instruments indicated on the following page. 27 Treasurer's Pooled Investments Interest Rates Amount Invested (In Millions) Cash and Deposits Federal Agency Obligations Treasury Notes Corporate Notes Commercial Paper Investment Pool (LAIF) 0.00-6.08 0.00-7.68 5.50-6.63 4.75-9.50 5.34-6.53 $ 2.2 197.6 4.1 110.5 0.0 59.7 SUBTOTAL $374.1 Investments Held Separately Cash and Deposits Mutual Funds Guaranteed Investment Contracts Investment Pool (LAIF) SUBTOTAL TOTAL 0.00 5.36 5.34 -2.43 -9.33 -6.53 $ .5 5.2 2.7 1.4 $ 9.8 $383.9 Gann Limit - Appropriations Subject to Limit CITY OF CARLSBAD PROPOSITION 4 SPENDING LIMIT VERSUS APPROPRIATION OF PROCEEDS OF TAXES (IN MILLIONS) 250 200 - D Spending Limit • Approp of Taxes In 1979, Proposition 4, the "Gann" initiative, was passed. The purpose of this law is to limit government spending by putting a cap on the total proceeds of taxes that may be appropriated each year. This limit is increased each year through a formula that takes into consideration changes in the Consumer Price Index and state per-capita income. When a city reaches this limit, excess tax revenue must be returned to the State or citizens through a process of refunds, rebates or other means that may be defined at that time. The Gann Limit for the City of Carlsbad has increased steadily since 1979 and still provides the City with a comfortable operating margin. In 1991-1992, state law allowed the recalculation of the City's limit with new inflation factors. Using population growth in San Diego County and growth in State per capita income allowed the Gann limit for 2000-2001 to increase to $225.8 million. Appropriations of "proceeds of taxes" were only $58.1 million, thus allowing the City a healthy margin of $167.7 million. 28 Economic Outlook National On September 11, 2001, terrorists attacked the World Trade Center in New York City, as well as the Pentagon in Washington, D.C. The World Trade Center in New York is considered to be the hub of the U.S. financial markets. These attacks crippled the U.S. financial markets as well as the airline industry for several days. This has also led to a huge decline in airline travel and consumer confidence, which has snowballed, affecting almost every industry in the country. There is no prognosis as to when things will "return to normal", but there are signs of increased airline travel and the stock market has recorded some recent increases, indicating that America may be ready to resume their normal activities. Some experts suggest that this return to normalcy may not occur until the war against Afghanistan and terrorism has been completed, or at least until Americans feel that they are once again safe and secure. California The California economy was showing signs of weakness even before the September 11th attacks. Since that time, the State's economy has further deteriorated resulting in projected budget deficits for this year and the next. The State's fiscal condition was brought about mainly by the downturn in the economy, the dot com implosion and the energy crisis. While it's difficult to tell what the ultimate impact will be on local governments, the last recession has demonstrated that if the State experiences budget shortfalls, it is likely that local government revenues will be impacted. During the last recession, the State took over $2.5 million from Carlsbad in the form of a reallocation of property taxes. These taxes were never allocated back to the City. This time, it is possible that the City may lose some portion of its Vehicle License Fees (VLF). VLF is collected by the Department of Motor Vehicles on all registered vehicles in the State of California. It is divided among cities and counties and disbursed to cities mainly on the basis of population. In the past years, the State gave a tax cut to the citizens of California by reducing the VLF rate by 67%. At this time, the State is backfilling (reimbursing) local governments for the loss of this revenue from the State's General fund. However, if the State experiences budget shortfalls, they may choose not to fund the backfill. If this occurs, the City would lose $3 million. San Diego Region Diversification of San Diego County's employment base after the recession of the early 1990's has helped keep the region in positive growth territory, while other parts of California and the nation are experiencing varied degrees of economic decline. Unfortunately, San Diego's leading economic indicators, which include local unemployment insurance claims, building permits, stock prices, consumer confidence, and help wanted advertising are weakening. The reliability of electricity, the September 11, 2001 terrorist attacks in Washington, D.C. and New York City, the impact of high gasoline prices on tourism and consumer spending, and the stock market's volatility will likely be the most significant factors affecting the state, regional and local economy in the coming year. One area that remains strong is housing. This is attributable in part to lower mortgage interest rates for purchases and refinances, which has in turn fueled both housing demand and consumer spending. As long as mortgage interest rates remain low and the regional demand for housing exceeds the supply, we should see continued strength in 29 this sector. Overall, it is expected that San Diego's economic growth will continue, but potentially at a much slower rate. Carlsbad Carlsbad, like the region, has benefited from diversification of its employment base and its sources of revenue. The local economy has remained strong as a result of increased demand for new housing, expansion of the hospitality industry and an increase in local consumer spending. However, if San Diego's regional economy should begin to weaken significantly we can expect the same effect to occur in Carlsbad. Last year we predicted that the industrial/office/commercial market would continue to grow at a slower pace than prior years. This was a result of over-building of space in 1998 and 1999, some of which had not yet been leased or sold, in 2000, we saw a slight decline in construction activity, with over half of the new construction attributed to commercial projects. Some of these projects included a large self-storage facility, a new hotel, a residential care facility, and timeshare units. Commercial development impacts our local economy by providing jobs, increased property taxes through increased property values, higher development related services revenues (building permits, building, engineering, and planning fees), new transient occupancy taxes, and additional sales tax revenues. In the upcoming couple of years, projected commercial developments include La Costa Plaza, Rancho La Costa Village and the Pavillion at Carlsbad. These three projects will provide over 327,000 square feet in new retail stores, restaurants, a supermarket, a drug store, and other service establishments, which will help boost sales tax revenues as well as property taxes. In fiscal year 2001-2002, we should continue to see a slow down in industrial development as the supply of available industrial sites dwindles. Provided the local economy remains positive, we expect to see this sector accelerate as new industrial sites in the Palomar Forum and Raceway come online during the 2001-2002 timeframe. This type of development enhances Carlsbad's economy by providing local jobs, increased property taxes and development related service revenues. New home construction in Carlsbad remained high for both 1999 and 2000. Carlsbad's coastal location and quality of life continue to make it a highly desirable location to live; however, Carlsbad's high-end residential market is beginning to experience some softening. While more expensive homes continue to sell, they are on the market for longer periods of time with prices often reduced. As a result of the slower pace in the upper price ranges, many new home developers in the San Diego region have begun to rethink the high-end housing strategy and concentrate on the mid-priced home market. Through the construction of new homes, increased property taxes are generated as well as building, engineering and planning fees. Carlsbad's prime coastal location, its two premiere resort hotels, Legoland, the airport, and its many businesses make it a popular destination with both leisure and business travelers. In fact, Carlsbad's lodging market has experienced significant growth over the past few years. This is a result of additional room capacity generated from new properties such as the Grand Pacific Resort, Hilton Gardens Inn, Marriott Residence Inn, and the Courtyard by Marriott, which cater to the weekday business traveler and the weekend leisure traveler. We expect to see continued growth as new properties like the Inns of America Suites come on line in late 2001. However, fewer people traveling and the related drop in visitor spending will undoubtedly have an effect on the Carlsbad hospitality market. 30 Even before the events of September 11, 2001, other parts of California, especially the Bay Area, were experiencing a decline in occupancy rates. These declines are primarily driven by sharp decreases in corporate spending for business travel. Since most of Carlsbad's tourist trade is generated from leisure travel originating in Southern California and the Southwestern U.S., we do not expect to see as significant of a decline as many of the large cities in California, unless the overall economy begins to deteriorate rapidly. Furthermore, in a slow economy, and with a reluctance to fly on commercial aircraft, consumers are apt to stay closer to home and shorten the duration of their stay. Carlsbad's strong presence in the "long weekend" and "drive" market should help insulate the City from dramatic declines in occupancy. In Summary Despite the threats brought by fiscal reform and the recent slow down in the economy, Carlsbad is expected to continue to prosper. Through careful planning and prudent financial management, the City has weathered the roller coaster ride of the 1990's, and is entering the 21s' century in strong financial health. The outlook for the City reflects a reduction in consumer confidence, slightly increasing housing prices and continued development, but at a slower rate than in the past two years. The uncertainty in the economy may show itself in more moderate consumer spending which is expected to slow down the rate of growth in sales taxes and vehicle license fees as well as in tourism, which effects the transient occupancy taxes. Despite the slowing economy, Carlsbad will continue to stay focused on achieving its mission of providing top quality services to our citizens and customers in a manner that enhances the quality of life for all who live, work and play in Carlsbad. Certificate of Award for Outstanding Financial Reporting The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Carlsbad for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2000. This was the fourth consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to GFOA to determine its eligibility for another certificate. In addition to the GFOA award, the California Society of Municipal Finance Officers (CSMFO) presented a Certificate of Award for Outstanding Financial Reporting to the City of Carlsbad for 31 its comprehensive annual financial report for the fiscal year ended June 30, 2000. We believe our current report continues to conform to the program requirements. Financial Statement Format This report is designed to provide both summarized and detailed information on the operation of each of the City's funds. The report is organized as follows: Introductory Section - This section contains the table of contents, letter of transmittal, CAFR awards, location map, list of City officials, organization chart, and the boards, commissions and committees chart. Financial Section - This section contains the combined or summarized financial statements for all funds, as well as the notes to the financial statements and required supplementary information. Statistical Information - This section provides data on the City's fiscal activity over the past ten years including revenues, expenditures, debt, assessed value, and demographic information. Accounting System and Budgetary Control The City's accounting system is designed around the following basic principles: (1) The City is not a single entity. It is the total of many entities, each with its separate function and legal restrictions on the use of City resources. In the private sector, a corporation may have many "subsidiaries" which comprise the parent corporation. In the public sector, a city government may have a variety of "funds" that provide the basis for separately recording the financial data related to a specific activity. A fund is an accounting entity with a complete set of self-balancing accounting records. Each fund has been established because of some restriction on the use of resources received by that fund. This report includes the transactions of all entities over which the City Council of the City of Carlsbad has authority (as defined by the Governmental Accounting Standards Board). (2) The City's accounting system operates on a modified accrual basis for all governmental and agency-type funds. Governmental funds include the General, Special Revenue, Debt Service, and Capital Projects funds. A modified accrual system is one where: a) revenues are recognized when they are both measurable and available to liquidate liabilities of the current period; and b) expenditures are recognized when an event or transaction is expected to draw upon current spendable resources (rather than future resources). (3) The proprietary fund types (Enterprise and Internal Service funds) use the accrual method of accounting. Revenues and expenses are recorded when earned or incurred, respectively. (4) Internal controls exist within the accounting system to ensure safety of assets from misappropriation, unauthorized use or disposition, and to maintain the accuracy of 32 financial record keeping. These internal controls must be established consistent with sound management practices based on the cost/benefit of the controls imposed. The cost of a control should not be excessive in relation to its benefit as viewed by City management. The internal controls in existence within the City's system are sufficient to ensure in all material aspects both the safety of the City's assets and the accuracy of the financial record keeping system. (5) As a recipient of Federal, State and County financial assistance, the City is also responsible for ensuring that an adequate framework of internal controls is in place to ensure compliance with applicable laws and regulations related to those programs. The framework of internal controls is subject to periodic evaluation by management. As part of the City's Single Audit, tests are made to determine the adequacy of the framework of internal controls. This includes the portion relating to Federal assistance programs, as well as determining that the government has complied with applicable laws and regulations. The results of the City's Single Audit for the fiscal year ended June 30, 2001, provided no material weaknesses in the framework of internal controls or significant violations of applicable laws and regulations. (6) Budgetary control is maintained through monthly reports on all revenue and expenditure accounts as well as monthly reports summarizing the financial position of the City. The City Council has the authority to control the budget through adoption of a formal budget at the beginning of each year and by amending the budget as necessary through the year. Expenditures should not exceed budgeted figures. All appropriations expire at year-end unless specifically carried into the new fiscal year by Council action. The Carlsbad Municipal Code requires that the City Manager annually prepare a budget for the City Council with a message describing important features, and be responsible for its administration after adoption. Acknowledgments This report has been a joint effort by many people from many different areas of responsibility. The dedicated efforts of Kevin Branca, Assistant Finance Director, and all of the accounting staff, deserve full credit for the preparation and contents of this report. We appreciate Kreithchele Angeles of Conrad and Associates, L. L. P. for the professional way in which the audit of this financial report was conducted. It has been a pleasure to work with the Conrad and Associates staff throughout this period. Respectfully submitted, LISA HILDABRAND Finance Director 33 Certificate of Achievement for Excellence in Financial Reporting Presented to City of Carlsbad, California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2000 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. 6^<^-<— Executive Director 34 California Society ofJ U J ^finance Officers Certificate of Award Outstanding Financial Reporting 1999-2000 Presented to the City of Carlsbad This certificate is issued in recognition of meeting professional standards and criteria in reporting which reflect a high level of quality in the annual financial statements and in the underlying accounting system from which the reports were prepared. February' 26, 2001 Chair, Professional & Technical Standards Committee Dedicated to Excellence in Municipal Financial Management IT >Y 35 ORANGE COUNTY RIVERSIDE COUNTY OCEANSIDE CARLSBAD ENCINITAS SOLANA BEACH DEL MAR I T-5 LAJOLLA SAN DIEGO CORONADO IMPERIAL BEACH TIJUANA 36 CITY OF CARLSBAD ELECTED CITY OFFICIALS Claude A. "Bud" Lewis, Mayor Ann J. Kulchin, Mayor Pro Tem Ramona Finnila, Council Member Matt Hall, Council Member Julianne Nygaard, Council Member Lorraine Wood, City Clerk James M. Stanton, City Treasurer ADMINISTRATION AND DEPARTMENT HEADS Raymond R. Patchett, City Manager Frank Mannen, Assistant City Manager James F. Elliott, Administrative Services Director Lloyd Hubbs, Public Works Director Sandra Holder, Community Development Director Jim Hawks, Police Chief Mike Smith, (Acting) Fire Chief Ron Ball, City Attorney Julie Clark, Human Resources Director Ruth Fletcher, Purchasing Officer Debbie Fountain, Housing & Redevelopment Director Robert J. Greaney, Water Department General Manager Lisa Hildabrand, Finance Director Michael Holzmiller, Planning Director Pat Kelley, Principal Building Inspector Clifford Lange, Library Director Erin Letsch, Risk Manager Ken Price, Recreation Director Aletha L. Rautenkranz, Information Systems Director CHAIRPERSONS, COMMISSIONS AND BOARDS Susan Pynes Arts Commission Bruce Macklin Beach Erosion Committee Robert Turner Community Television Foundation Bill Compas Design Review Board Gordon Bizieff Historic Preservation Commission Roy Latas Housing Commission Claude A. Lewis Housing and Redevelopment Commission William Kamenjarin Library Board of Trustees William Scott Pieratt Parks and Recreation Commission Vacant Personnel Board Jeff Segall Planning Commission James Whittaker Senior Commission Ann L'Heureux Serra Cooperative Library System Advisory Board Bill Dominguez Sister City Committee Frank H. Whitton Traffic Safety Commission Vacant Underground Utility Advisory Committee 37 OJ00 CITY OF CARLSBAD ORGANIZATION CHART Personnel Board Beach Erosion Committee Community Television Foundation Traffic Safety Commission Underground Utility Advisory Committee Design , Review Board Housing 1 Commission i Housing & -[ Redevelopment i Commission Planning i Commission PUBLIC SAFETY ADMINISTRATIVE SERVICES FIRE POLICE KEY Elected Council Appointed 'I - Staff Support Reporting Relationship Programs 0 DWl — ~ rzn FINANCE HUMAN RESOURCES INFORMATION TECHNOLOGY PURCHASING RISK MANAGEMENT RECORDS MANAGEMENT MAYOR"\ & )COUNCIL^-/ ( CITY >j VTREASURER/ CITY MANAGER CITY ATTORNEY PUBLIC WORKS ADMINISTRATION ENGINEERING SERVICES GENERAL SERVICES MAINTENANCE & OPERATIONS COMMUNITY DEVELOPMENT COMMUNITY SERVICES er %-s: t**. "!$n1?* BUILDING ECONOMIC DEVELOPMENT GEOGRAPHIC INFO SYSTEMS HOUSING AND REDEVELOPMENT PLANNING ARTS LIBRARY RECREATION SENIOR CENTER Arts Commission _, Sister City i Committee Historic Preservation Commission i Library Board -« of i Trustees i Serra Cooperative -' Library System i Advisory Board ' Parks & Rec , Commission Senior Commission BOARDS, COMMISSIONS, AND COMMITTEES CITY COUNCIL Arts Commission Beach Erosion Committee Community Television Foundation Design Review Board Historic Preservation Commission Housing Commission Housing and Redevelopment Commission Library Board of Trustees Parks and Recreation Commission Personnel Board Planning Commission Senior Commission Serra Cooperative Library System Advisory Board Sister City Committee Traffic Safety Commission Underground Utility Advisory Committee 102901 40 -n 2! > o> I™*" <^f\m OZ CONRAD ASSOCIATES, L.L.R AND CERTIFIED PUBLIC ACCOUNTANTS 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92614 (949) 474-2020 Fax (949) 263-5520 City Council City of Carlsbad, California Independent Auditors' Report P* We have audited the accompanying general purpose financial statements of the City of Carlsbad, California as of and for the year ended June 30, 2001, as listed in the table of contents. These general ** purpose financial statements are the responsibility of the management of the City of Carlsbad, California. Our responsibility is to express an opinion on these general purpose financial statements "" based on our audit. m We conducted our audit in accordance with auditing standards generally accepted in the United States of «• America and Government Auditing Standards, issued by the Comptroller General of the United States of JH America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit M includes examining, on a test basis, evidence supporting the amounts and disclosures in the general ^ purpose 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. if In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Carlsbad, California as of June 30, 2001, and the results of pi its operations and the cash flows of its proprietary fund types for the year then ended in conformity with H accounting principles generally accepted in the United States of America. p. During the year ended June 30, 2001, the City changed its method of accounting for capital contributions '•, as a result of implementing GASB Statement No. 33, as described further in note 15 to the financial ** statements. ^ Our audit was made for the purpose of forming an opinion on the general purpose financial statements m taken as a whole. The combining, individual fund, and individual account group financial statements and schedules listed in the table of contents are presented for purposes of additional analysis and are not p a required part of the general purpose financial statements of the City of Carlsbad, California. Such L~ information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. The scope of our audit did not include the statistical schedules listed in the table of contents and we do not express an opinion on them. H I" MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS ** MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION 41 City Council City of Carlsbad, California Page Two In accordance with Government Auditing Standards, we have also issued our report dated September 21, 2001 on our consideration of the City of Carlsbad's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. September 21,2001 42 43 CITY OP CARLSBAD Combined Balance Sheet - All Fund Types and Account Groups June 30, 2001 Assets and Other Debits Assets: Cash and investments (note 3) Receivables: Loans Taxes Accrued interest Accounts, net Other Due from other funds (note 4) Due from other governments Advances to other funds (note 5) Inventory Prepaid items Restricted assets: Cash and investments (note 3) Accrued interest Fixed assets, net (notes 6 and 7) Other debits: Amount to be provided for retirement of general long-term debt Total assets and other debits Liabilities. Equity and Other Credits Liabilities: Accrued liabilities Accrued interest payable Due to other funds (note 4) Advances from other funds (note 5) Due to other governments Estimated claims payable (note 17) Due to bondholders Current portion of long-term debt (note 10) Deposits payable Current liabilities payable from restricted assets - accrued interest Deferred revenue Long-term debt payable (notes 8,9, and 10) Total liabilities Equity and Other Credits: Investment in general fixed assets Contributed capital (note 15) Fund balances: Reserved (note 13) Unreserved (note 13) Retained earnings: Reserved (note 13) Unreserved (note 13) Total equity and other credits Total liabilities, equity and other credits 125,013 8,645,217 13,274,918 11,746,139 58,857,284 70,603,423 Governmental Fund Types General $ 62,935,559 184,422 3,537,458 - 49,496 293,278 60,451 2,000 16,762,452 35,585 17,640 Special Revenue 26,079,826 9,081,414 25,606 131 10,424 - - 255,335 3,000,000 - 206,815 Debt Capital Service Projects 2,375,840 151,310,874 _ 25,586 8,856 16,026 18,873 384,822 - - 1,376,096 4,970,854 - 221,133 $ 83,878,341 $ 4,504,688 - 38,659,551 276,659 47,048 4,222 2,417,452 . 12,475,252 158,291,508 839,388 13,403 9,520,854 91,379 252,433 671,741 18,278,357 19,709,453 12,475.252 1,528,500 (11,586,300) 37,987,810 (10,057,800) 9,000 303,935 10,686,580 16,222,805 131,382,123 147,604,928 $ 83,878,341 38,659,551 2,417,452 158,291,508 See accompanying notes to general purpose financial statements. 44 Fiduciary Proprietary Fund Types Fund Type Enterprise 110,386,363 _ 59,946 - 3,581,106 - - - - 265,334 4,550 1,716,656 28,557 138,271,615 254,314,127 4,406,846 - - 2,737,200 575,280 - - 1,834,070 1,521,324 260,843 1,147,349 12,478,164 24,961,076 137,353,743 _ - 1,682,161 90,317,147 229,353,051 254,314,127 Internal Service Agency 13,095,116 15,979,416 _ 20,283 93,522 269,649 486 - - - - 108,000 50,290 _ - 7,059,419 20,582,474 16,093,707 566,762 1,900,056 - - - 1,882,393 8,576,226 - 5,617,425 _ - 20,490 2,469,645 16,093,707 8,815,419 _ ' - _ 9,297,410 18,112,829 20,582,474 16,093,707 Account Groups General General Fixed Long-Term Totals Assets Debt (Memorandum Only) 382,162,994 9,265,836 3,677,735 128,552 4,295,983 293,278 60,451 1,633,431 24,733,306 408,919 500,428 1,716,656 28,557 121,033,984 - 266,365,018 20,287,900 20,287,900 121,033,984 20,287,900 715,559,044 10,594,343 1,900,056 60,451 24,733,306 579,502 1,882,393 8,576,226 1,834,070 7,364,141 260,843 10,348,934 20,287,900 32,786,554 20,287,900 100,920,819 121,033,984 - 121,033,984 146,169,162 47,775,801 198,362,560 1,682,161 99,614,557 121,033,984 - 614,638,225 121,033,984 20,287,900 715,559,044 45 46 CITY OF CARLSBAD Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types Year Ended June 30,2001 Totals Revenues: Taxes Intergovernmental Licenses and permits Charges for services Fines and forfeitures Income from property and investments Interdepartmental charges Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: General government Public safety Community development Community services Public works Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Proceeds of debt Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Residual equity transfers in (note 16) Residual equity transfers out (note 16) Fund balances at end of year General $ 57,435,104 5,544,848 3,409,156 6,170,698 763,681 4,816,922 2,147,717 - - 1,312,367 81,600,493 7,772,055 23,364,767 5,293,259 10,678,280 12,225,167 - 26,613 43,473 59,403,614 22,196,879 252,412 (8,815,546) 51,853 (8,511,281) 13,685,598 56,502,769 1,015,056 (600,000) $ 70,603,423 Special Revenue 1,910,205 4,728,709 - - 124,927 2,654,739 - 3,377,047 311,976 412,986 13,520,589 262,417 4,058,658 892,969 2,176,929 - 145,497 51,381 7,587,851 5,932,738 17,430 (53,647) 29,550 (6,667) 5,926,071 34,133,574 - (2,071,835) 37,987,810 Debt Service 1,575,295 - - - - 140,442 - - - - 1,715,737 36,531 - - - - - 820,000 1,707,041 2,563,572 (847,835) 800,000 (280,000) - 520,000 (327,835) (9,563,120) - (166,845) (10,057,800) Capital Projects 9,226,819 4,012,120 - 256,609 - 12,772,515 - 12,605,481 - 534,585 39,408,129 1,213,632 - - - - 22,066,731 37,329 11,756 23,329,448 16,078,681 8,474,346 (501,394) 9,850 7,982,802 24,061,483 121,319,821 2,223,624 - 147,604,928 (Memorandum Only) 70,147,423 14,285,677 3,409,156 6,427,307 888,608 20,384,618 2,147,717 15,982,528 311,976 2,259,938 136,244,948 9,022,218 23,627,184 9,351,917 11,571,249 14,402,096 22,066,731 1,029,439 1,813,651 92,884,485 43,360,463 9,544,188 (9,650,587) 91,253 (15,146) 43,345,317 202,393,044 3,238,680 (2,838,680) 246,138,361 See accompanying notes to general purpose financial statements. 47 CITY OF CARLSBAD Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Budgetary Basis) - All Governmental Fund Types Year Ended June 30, 2001 Revenues: Taxes Intergovernmental Licenses and permits Charges for services Fines and forfeitures Income from property and investment Interdepartmental charges Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: General government Public safety Community development Community services Public works Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Proceeds of debt Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year, Residual equity transfers in Residual equity transfers out Fund balances at end of year General Fund Budget $ 58,041,000 5,409,000 3,500,000 5,810,000 797,000 3,725,000 2,100,000 949,640 80,331,640 12,217,776 24,136,954 6,505,683 11,577,407 13,526,446 67,964,266 12,367,374 252,134 (8,815,546) (8,563,412) 3,803,962 56,502,769 1,000,000 (600,000) $ 60,706,731 Actual on Budgetary Basis 57,435,104 5,544,848 3,409,156 6,170,698 763,681 4,816,922 2,147,717 1,312,367 81,600,493 8,463,275 23,807,754 5,846,994 11,199,889 13,115,205 62,433,117 19,167,376 252,412 (8,815,546) 51,853 (8,511,281) 10,656,095 56,502,769 1,015,056 (600,000) 67,573,920 Variance- Over (Under) (605,896) 135,848 (90,844) 360,698 (33,319) 1,091,922 47,717 362,727 1,268,853 (3,754,501) (329,200) (658,689) (377,518) (411,241) (5,531,149) 6,800,002 278 51,853 52,131 6,852,133 15,056 6,867,189 Special Revenue Funds Budget 342,500 4,366,237 274,899 15,000 923,766 2,744,729 392,924 153,883 9,213,938 579,358 5,333,119 1,369,664 8,719,313 16,001,454 (6,787,516) - (6,787,516) 34,133,574 27,346,058 Actual on Budgetary Basis 1,910,205 4,728,709 124,927 2,654,739 3,377,047 311,976 412,986 13,520,589 492,250 4,454,488 1,320,686 8,383,683 14,651,107 (1,130,518) 17,430 (53,647) 29,550 (6,667) (1,137,185) 34,133,574 (2,071,835) 30,924,554 Variance- Over (Under) 1,567,705 362,472 (274,899) 109,927 1,730,973 632,318 (80,948) 259,103 4,306,651 (87,108) (878,631) (48,978) (335,630) (1,350,347) 5,656,998 17,430 (53,647) 29,550 (6,667) 5,650,331 (2,071,835) 3,578,496 See accompanying notes to general purpose financial statements. 48 Debt Service Funds Budget 1,370,000 40,000 1,410,000 67,938 290,000 1,478,954 1,836,892 (426,892) - (426,892) (10,507,997) _ (10,934,889) Actual on Budgetary Basis 1,575,295 95,641 1,670,936 36,531 305,000 1,471,151 1,812,682 (141,746) (280,000) (280,000) (421,746) (10,507,997) (166,845) (11,096,588) Variance- Over (Under) 205,295 55,641 260,936 (31,407) 15,000 (7,803) (24,210) 285,146 (280,000) (280,000) 5,146 - (166,845) (161,699) Budget 59,753,500 9,775,237 3,500,000 6,084,899 812,000 4,688,766 2,100,000 2,744,729 392,924 1,103,523 90,955,578 12,285,714 24,716,312 11,838,802 12,947,071 22,245,759 290,000 1,478,954 85,802,612 5,152,966 252,134 (8,815,546) (8,563,412) (3,410,446) 80,128,346 1,000,000 (600,000) 77,117,900 Totals (Memorandum Only) Actual on Budgetary Basis 60,920,604 10,273,557 3,409,156 6,170,698 888,608 7,567,302 2,147,717 3,377,047 311,976 1,725,353 96,792,018 8,499,806 24,300,004 10,301,482 12,520,575 21,498,888 305,000 1,471,151 78,896,906 17,895,112 269,842 (9,149,193) 81,403 (8,797,948) 9,097,164 80,128,346 1,015,056 (2,838,680) 87,401,886 Variance- Over (Under) 1,167,104 498,320 (90,844) 85,799 76,608 2,878,536 47,717 632,318 (80,948) 621,830 5,836,440 (3,785,908) (416,308) (1,537,320) (426,496) (746,871) 15,000 (7,803) (6,905,706) 12,742,146 17,708 (333,647) 81,403 (234,536) 12,507,610 15,056 (2,238,680) 10,283,986 49 CITY OF CARLSBAD Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types Year Ended June 30, 2001 Operating revenues: Water sales Sewer services charges Other charges for services Contributions from other government agencies Miscellaneous Total operating revenues Operating expenses: Sewer plant operations Purchased water Depreciation Fuel and supplies Claims expense General and administrative Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Income from property and investments Interest expense and fees Gain (loss) on disposition of assets Property taxes Amortization of issuance costs Total nonoperating revenues (expenses) Income before capital contributions and transfers Operating transfers in Operating transfers out Capital contributions Net income (loss) Retained earnings at beginning of year Residual equity transfers out Retained earnings at end of year Enterprise $ 16,474,378 5,654,116 1,362,335 476,374 909,463 24,876,666 2,153,572 10,587,342 2,912,755 7,426,619 23,080,288 1,796,378 8,798,382 (851,558) (45,456) 1,370,736 (11,309) 9,260,795 11,057,173 10,103,261 21,160,434 70,838,874 $ 91,999,308 Internal Totals Service (Memorandum Only) 9,556,849 658,868 10,215,717 1,511,459 525,966 3,717,337 3,881,371 9,636,133 579,584 1,064,078 79,812 1,143,890 1,723,474 121,400 (15,000) 290,495 2,120,369 8,177,041 (1,000,000) 10,297,410 16,474,378 5,654,116 10,919,184 476,374 1,568,331 35,092,383 2,153,572 10,587,342 4,424,214 525,966 3,717,337 11,307,990 32,716,421 2,375,962 9,862,460 (851,558) 34,356 1,370,736 (11,309) 10,404,685 12,780,647 121,400 (15,000) 10,393,756 23,280,803 79,015,915 (1,000,000) 102,296,718 See accompanying notes to general purpose financial statements. 50 CITY OF CARLSBAD Combined Statement of Cash Flows - All Proprietary Fund Types Year Ended June 30, 2001 Totals Cash flows from operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization (Increase) decrease in receivables (Increase) decrease in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accrued liabilities Increase (decrease) in due to other governments Increase (decrease) in deposits payable Increase (decrease) in estimated claims payable Increase (decrease) in deferred revenue Increase (decrease) in loans payable Net cash provided by (used for) operating activities Cash flows from noncapital financing activities: Cash received from other funds Cash paid to other funds Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities: Purchases of fixed assets Principal payment on bonds Interest and other fees paid Property taxes received Capital contributions received Net cash provided by (used for) capital and related financing activities Cash flows from investing activities: Interest on investments Net cash provided by (used for) investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Enterprise Internal Service (Memorandum Only) $ 1,796,378 2,912,755 429,175 12,007 (200) (13,353) (714,387) 27,266 (387,153) (107,546) 3,954,942 600,000 600,000 (6,660,830) (1,661,614) (935,016) 1,370,736 7,949,547 62,823 8,800,494 8,800,494 13,418,259 96,991,053 $110,409,312 579,584 1,511,459 (244,607) (10,925) (15,010) 100,145 39,674 (14,342) 1,945,978 121,400 (1,015,000) (893,600) (1,681,648) (1,681,648) 1,064,078 1,064,078 434,808 12,660,308 13,095,116 2,375,962 4,424,214 184,568 1,082 (15,210) 86,792 (714,387) 27,266 39,674 (401,495) (107,546) 5,900,920 721,400 (1,015,000) (293,600) (8,342,478) (1,661,614) (935,016) 1,370,736 7,949,547 (1,618,825) 9,864,572 9,864,572 13,853,067 109,651,361 123,504,428 (Continued) 51 m CITY OF CARLSBAD Combined Statement of Cash Flows - All Proprietary Fund Types (Continued) Enterprise Internal Service Reconciliation of cash and cash equivalents to amounts reported on the balance sheet: Reported on the balance sheet: Cash and investments Restricted assets - cash and investments Less investments not meeting the definition of cash equivalents: Investment contracts Cash and cash equivalents at end of year $ 110,386,363 1,716,656 (1,693,707) $110,409,312 13,095,116 13,095,116 Totals (Memorandum Only) 123,481,479 1,716,656 (1,693,707) 123,504,428 Supplemental schedule of noncash investing, capital and financing activities: Capital assets contributed by (to) other funds 1,553,714 290,495 1,844,209 See accompanying notes to general purpose financial statements. 52 CITY OF CARLSBAD Notes to General Purpose Financial Statements Year Ended June 30,2001 (1) Summary of Significant Accounting Policies The City of Carlsbad, California (Carlsbad) was incorporated on July 16, 1952. Carlsbad operates under a Council-Manager form of government and provides the following services: general government, public safety, community development, community services and public works. The accounting policies of Carlsbad and its component units conform to generally accepted accounting principles as applicable to governmental units. The following is a summary of the more significant policies: (a) Description and Scope of the Reporting Entity As required by generally accepted accounting principles, these financial statements present the City of Carlsbad (City) and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization's governing body and the City is able to impose its will on that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable for an organization if that organization is fiscally dependent upon the City (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City's financial statements to be misleading or incomplete. Based upon the above criteria, the component units of the City are the Housing Authority of the City of Carlsbad, the City of Carlsbad Public Improvement Corporation, the Carlsbad Redevelopment Agency and the Carlsbad Municipal Water District (District). Since the City Council serves as the governing board for these component units, all of the City's component units are considered to be blended component units. Blended component units, although legally separate entities, are in substance, part of the City's operations and so data from these units are reported with the interfund data of the primary government. Only the City of Carlsbad Public Improvement Corporation and the Carlsbad Redevelopment Agency issue separate component unit financial statements. Upon their completion, the financial statements of these component units can be obtained from the Finance department. 53 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (1) Summary of Significant Accounting Policies. (Continued) (b) Basis of Presentation The accounts of the City are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund or account group are accounted for by providing a separate set of self- balancing accounts that comprise its assets, liabilities, fund balance/retained earnings, revenues, and expenditures or expenses. The various funds and account groups are summarized by type in the financial statements. Fund types and account groups used by the City are as follows: GOVERNMENTAL FUND TYPES: Governmental funds are used to account for the City's expendable financial resources and related liabilities (except those accounted for in proprietary and similar trust funds). The measurement focus is based upon determination of changes in financial position. The following are the City's governmental fund types: General Fund ' The General fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds Special revenue funds are used to account for revenues derived from specific sources (other than major capital projects) that are restricted by law or administrative regulation to expenditures for specific purposes. 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. Capital Projects Funds Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds. 54 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) PROPRIETARY FUND TYPES: The City applies all applicable GASB pronouncements in accounting and reporting for its proprietary operations as well as the following pronouncements issued on or before November 30, 1989, unless these pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARBs) of the Committee on Accounting Procedure. Proprietary funds include the following fund types: Enterprise Funds Enterprise funds are used to account for operations (a) that are financed primarily through user charges, or (b) where the governing body has decided that determination of net income is appropriate. Internal Service Funds Internal service funds are used to account for goods or services provided by one department to other departments of the City on a cost-reimbursement basis. FIDUCIARY FUND TYPE: 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 following is the City's fiduciary fund type: Agency Fund Agency funds are used to account for assets held by the City in an agency capacity for individuals and private businesses. They do not involve measurement of results of operations. ACCOUNT GROUPS: Account groups are used to establish accounting control and accountability for the City's general fixed assets and general long-term debt. The following are the City's account groups: 55 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued') General Fixed Assets Account Group This account group is used to account for all fixed assets of the City other than those accounted for in the proprietary funds. General Long-Term Debt Account Group This account group is used to account for all long-term obligations of the City except those accounted for in the proprietary funds and trust funds. (c) Measurement Focus and Basis for Accounting Governmental fund types are accounted for on a "spending" measurement focus. Accordingly, only current assets and current liabilities 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. The proprietary fund types are accounted for on an "income determination" or "cost of services" measurement focus. Accordingly, all assets and liabilities are included on the balance sheet, and the reported fund equity provides an indication of the historical net worth of the fund. Operating statements for proprietary fund types report increases (revenues) and decreases (expenses) in total historical net worth. Fiduciary fund types are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Fiduciary fund assets and liabilities are accounted for on the modified accrual basis of accounting. Governmental fund types use the modified accrual basis of accounting. Revenues are recognizable 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. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the individual programs are used as guidance. Revenues that are accrued include real property taxes, sales tax, transient occupancy taxes, franchise taxes, vehicle license fees, highway users tax, interest, and some state and federal grants. 56 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) Real property taxes are levied on October 15 against owners of record at January 1. The taxes are due in two installments, on November 1 and February 1, and become delinquent after December 10 and April 10, respectively. Tax liens attach annually as of 12:01 a.m. on the first day of January in the fiscal year for which the taxes are levied. Under the provisions of NCGA Interpretation 3, property tax revenue is recognized in the fiscal year for which the taxes have been levied, provided it is collected within 60 days of the end of the fiscal year. Governmental expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made early in the following year. Proprietary funds use the accrual basis of accounting, i.e., revenues are recognized in the period earned and expenses are recognized in the period incurred. (d) Encumbrances Encumbrance accounting, under which purchase orders, purchase order requests, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary control in the governmental funds. Encumbrances outstanding at year-end do not constitute expenditures or liabilities, but are reported as reservations of fund balance. (e) Cash and Investments Cash includes amounts in demand and time deposits. Investments are reported in the accompanying balance sheet at fair value, except for certain certificates of deposit and investment contracts that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as income from property and investments reported for that fiscal year. Income from property and investments includes interest earnings; changes in fair value; any gains or losses realized upon the liquidation, maturity, or sale of investments; property rentals and the sale of City owned property. 57 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (1) Summary of Significant Accounting Policies. (Continued) The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund's share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled investments is allocated to the various funds based on each fund's average cash and investments balance. Restricted cash and investments represent amounts that are restricted under the terms of debt agreements, including debt service reserves and balances associated with special assessments for the construction of enterprise fund assets. (f) Inventories Inventories consist of materials and supplies that are valued at cost and are recorded as expenses or expenditures on a first-in, first-out basis when consumed. (g) Compensated Absences Vacation pay is payable to employees at the time used or upon termination of employment. For governmental funds, the cost of accumulated vacation expected to be paid in the next 12 months is recorded as a fund liability and amounts expected to be paid after 12 months (if any) are recorded in the general long-term debt account group. For compensated absences recorded at June 30, 2001, all balances are expected to be paid within the following 12 months. For proprietary funds, the cost of vacation is recorded as a liability when earned. (h) Risk Management The City accounts for its general liability, a portion of its health insurance, and workers' compensation activities in internal service funds. The funds are responsible for collecting premiums from other City funds and departments and paying claims settlements and insurance premiums. Interfund premiums are based on the insured fund's claims experience. Incurred but not reported claims are accrued at year-end if material. (i) Unbilled Services Unbilled water revenue of the enterprise funds is recognized as earned when the water is consumed. 58 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) (j) General Fixed Assets General fixed assets are recorded as expenditures in the governmental fund types and capitalized at historical cost in the general fixed assets account group. In the case of gifts or contributions, such assets are recorded at fair market value at the time received. Fixed assets consisting of certain improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, and drainage systems, have not been capitalized. Such assets normally are immovable and of value only to the City. Therefore, the objective of stewardship for capital expenditures is satisfied without recording these assets. In the General Fixed Assets Account Group, construction in progress is transferred to buildings or improvements upon approval by the City Council, which approximates the completion date. No depreciation has been provided on general fixed assets, (k) Fixed Assets - Proprietary Funds Fixed assets used by proprietary funds are stated at cost or estimated historical cost. Contributed fixed assets are recorded at estimated fair market value at the time received. Net interest costs are capitalized on projects during the construction period. Depreciation is charged to operations using the straight-line method based on the estimated useful life of the related asset. The estimated useful life of the assets are as follows: Years Buildings and improvements 10 - 50 Wells, reservoirs and dams 10 -100 Transmission and distribution lines 40 - 70 Sewer, sewer lines and wells 50 Sewage treatment facility 50 Equipment 3-20 59 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (1) Summary of Significant Accounting Policies. (Continued) (1) Deferred Revenue The deferred revenue reported in the City's financial statements represent money received during the current or previous fiscal years that has not been earned by the City as of the end of the fiscal year. These monies will be recognized as revenues in subsequent fiscal years, once the revenue has been earned. (m) Advances to Other Funds Interfund loan receivables are reported as advances and are offset equally by a fund balance reserve which indicates that they do not constitute expendable available financial resources and therefore are not available for appropriation. (n) Residual Equity Transfers Residual equity transfers represent non-routine transfers of equity between funds, including amounts transferred to reflect the opening, closing, or reclassification of funds. Residual equity transfers into the proprietary funds are recorded as capital contributions. (o) 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 operations, or cash flows in conformity with generally accepted accounting principles. Such data is not comparable to a consolidation since interfund eliminations have not been made. 60 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) Budgetary Data The City follows these procedures in establishing its budgetary data: 1 . During May or June, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1 . The budget includes proposed expenditures and estimated revenues on a departmental basis. 2. Public hearings are conducted at City Council meetings to obtain citizens' comments during June. 3. Prior to July 1, the budget is enacted legally through passage of an appropriation resolution. The City Manager is authorized to make transfers of appropriated amounts from one department to another within a fund. The legal level of budgetary control is at the fund level. Revisions that alter the total appropriations of any fund must be approved by the City Council with the exception of budget adjustments which involve offsetting revenues and expenditures. The City Manager is authorized to increase or decrease an appropriation for a specific purpose where the appropriation is offset by unbudgeted revenue which is designated for said specific purpose. Quarterly budget reviews are conducted each year and any major changes to the adopted budget are approved by the City Council at that time. During the year, several supplementary appropriations were necessary. Budgets for governmental type funds are adopted on the modified accrual basis, except that encumbrances are treated as budgeted expenditures in the year purchases are committed. Expenditures may not exceed budgeted appropriations at the fund level. All appropriations lapse at fiscal year-end unless City Council takes action in the form of a resolution to continue the appropriation into the following fiscal year. For purposes of budgetary presentation, actual generally accepted accounting principles (GAAP) expenditures have been adjusted to include encumbrances outstanding and designations for continuing appropriations at year-end and to exclude any earned leave accruals at year-end, and certain non-budgeted accruals. Annual budgets are adopted for the General, special revenue and debt service funds except for the Hosp Grove COPs. Accordingly, the revenues and expenditures for this fund have been excluded from the budget basis financial statements. Annual budgets are not adopted for the capital projects funds; therefore, budget basis financial statements have not been prepared because a comparison of such budgetary amounts to annual revenues and expenditures is not meaningful. 61 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (2) Budgetary Data. (Continued) The following schedule is a reconciliation of the budgetary and GAAP fund balances: Special Debt General Revenue Service Fund Funds Funds Fund balances-budgetary basis $67,573,920 30,924,554 (11,096,588) Encumbrances outstanding at year-end 2,051,063 4,083,737 Fund balances designated for continuing appropriations 1,166,082 3,186,466 Earned leave at year-end (72,556) (10,069) Non-budgeted accruals (45,000) Non-budgeted debt service (70,086) (196,878) Fund balances of unbudgeted funds - - 1,038.788 Fund balances-GAAP basis S70.603.423 37.987.810 (10.057.800^ (3) Cash and Investments Each participating fund's portion of the City's cash and investment pool is displayed on the combined balance sheet as "Cash and investments." This category also includes cash and investments that are held separately by several of the City's funds. Authority for Deposits and Investments: The City's investment policy and state statutes authorize the City to invest in obligations of the U.S. Government, its agencies and instrumentalities; commercial paper rated A-l by Standard and Poor's Corporation or P-l by Moody's Commercial Paper record with a maximum maturity of 180 days and not to exceed 15% of the portfolio; banker's acceptances with a maximum maturity of 180 days and not to exceed 25% of the portfolio; repurchase agreements with a maximum maturity of one week; certificates of deposit with national and state licensed or chartered banks or federal or state savings and loan associations; medium-term corporate notes with a maximum five-year maturity rated in the top two rating categories and not to exceed 30% of the portfolio; money market funds whose portfolios consist of one or more of the foregoing investments; a sweep account and the State Treasurer's investment pool. State statutes require that all deposits be insured or collateralized. Depositories holding public funds on deposit are required to maintain collateral in the form of a pool of government securities with a market value of at least 10 percent in excess of the City's deposit or 50 percent in excess of the deposit as collateral in mortgage pools. 62 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (3) Cash and Investments. (Continued) Cash and investments are classified in the accompanying combined balance sheet as follows: Cash and investments $382,162,994 Restricted assets: Cash and investments 1,716,656 $383.879.650 Cash and investments held by the City at June 30, 2001 consisted of the following: Cash on hand (petty cash) $ 5,500 Deposits 5,329,840 Investments 378,544,310 Total cash and investments S383.879.65Q Deposits: The following summary presents the amount of the City's deposits which are fully insured or collateralized with securities held by the City or its agent in the City's name (Category One), those deposits which are collateralized with securities held by the pledging financial institution's trust department or agent in the City's name (Category Two), and those deposits which are not collateralized or are collateralized with securities held by the pledging financial institution or its trust department or agent but not in the City's name (Category Three) at June 30,2001. Category Bank Carrying Form of Deposit 123 Balance Amount Demand deposits $300,000 565,797 - 865,797 1,671,340 Bank investment contracts - 3,658,500 - 3,658.500 3.658.500 $300.000 4.224.297 - 4,524.297 5.329.840 63 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (3) Cash and Investments, (Continued) Investments: As defined in Governmental Accounting Standards Board Statement No. 3, investments in securities are categorized in the following manner: Category 1 - Investments that are insured or registered, which are held by the City or its agent in the City's name. Category 2 - Uninsured and unregistered investments, for which the securities are held by the counterparty's trust department or agent in the City's name. 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 City's name. Category Form of Investment 1 23 Carrying Amount United States Treasury notes $ 5,099,249 - - 5,099,249 United States Government agency obligations 197,558,761 - - 197,558,761 Corporate notes 110.531.838 - - 110.531.838 $313.189.848 - - 313,189,848 Investments not subject to categorization: Investment in Local Agency Investment Fund (a) 62,131,476 Investment in mutual funds 188,179 Investment contracts (b) 3.034.807 S378.544.310 (a) The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 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 financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire LATF 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. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage- backed securities, other asset-backed securities, loans to certain state funds, and 64 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (3) Cash and Investments, (Continued) floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. (b) This is contract value. No secondary market exists for resale in order to establish market value. The carrying amount of all investments reflected in the above table is at fair value, except for nonparticipating investment contracts which are carried at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. (4) Due To and From Other Funds The following table shows amounts due from funds within the City to other funds within the City at June 30, 2001: Due To Due From Other Funds Other Funds General $ - 60,451 Special Revenue Funds: State Grants 47,048 Capital Projects Funds: Federal Grants 10,778 State Grants 2.625 - Totals S60.451 60.451 65 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (5) Advances To and From Other Funds The following table shows amounts advanced from funds within the City within the City at June 30, 2001: Advances From General Fund General Fund General Fund Advances To Capital Projects Fund: Park Development Fund Debt Service Funds: Village Redevelopment Area South Carlsbad Redevelopment Area Enterprise Funds: Golf Course Fund Capital Projects Funds: BTD#3 BTD#3 Special Revenue Fund Gas Tax Gas Tax Capital Projects Fund Capital Projects Funds: General Capital Construction Park Development NW Quadrant Park Development SE Quadrant BTD#2 BTD#4 BTD#5 Total advances to other funds Amount $ 1,550,000 12,248,019 227,233 2,737,200 2,000,000 1,000,000 1,080,000 2,250,000 500,000 350,000 790.854 $24.733.306 (6) General Fixed Assets A summary of changes in the general fixed assets account group is as follows: Land Buildings Improvements Furniture and equipment Construction in progress Total Balance at Julv 1. 2000 $38,014,845 47,753,464 10,463,535 11,280,361 1.505.117 Increases 3,241,867 8,573,173 158,139 2,109,791 12.895.744 Balance at Decreases June 30. 2001 41,256,712 (50,400) 56,276,237 (807,871) 9,813,803 (1,819,831) 11,570,321 C12.283.950) 2.116.911 $109.017.322 26.978.714 fl4.962.052^ 121.033.984 66 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (6) General Fixed Assets, (Continued) Construction in progress in the general fixed assets account group is composed of the following: Expended Project Balance at Authorization June 30. 2001 Committed ADA Projects Leo Carrillo Park (Phase I) Swim Complex Chlorination Equipment ADA - Northwest Quadrant Parks Public Service Center Safety Center Conference Center Improvements Safety Center Building Improvements Police/Fire Cad Implementation Police Training Range Relocation Fire Station #5 Storage Building Chase Field Bathrooms/Snack Bar Zone 19 Community Park $ 263,347 4,927,094 140,000 50,000 1,463,407 ts 165,000 50,000 2,000,000 950,000 135,000 190,000 500,000 70,014 1,069,246 5,015 34,848 538,622 13,014 18,382 184,572 41,238 7,464 11,150 123.347 193,333 3,857,848 134,985 15,152 924,785 151,986 31,618 1,815,428 908,762 127,536 178,850 376.653 Totals $10.833.848 2.116.912 8.716.936 (7) Fixed Assets - Proprietary Funds A summary of proprietary fund type fixed assets at June 30, 2001 is as follows: Enterprise Internal Service Land, water rights, rights-of-way Buildings and improvements Wells, reservoirs and dams Transmission and distribution lines Sewer, sewer lines and wells Sewage treatment facility Equipment and vehicles Construction in progress Less accumulated depreciation Fixed assets, net $ 7,212,043 7,246,703 27,707,752 48,153,591 34,301,588 34,897,995 1,679,381 16.403.009 177,602,062 (39.330.447) $138.271.615 13,366,894 13,366,894 (6.307.475) 7.059.419 67 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (7) Fixed Assets - Proprietary Funds. (Continued) Enterprise Fund interest is charged to expense as incurred, except for interest related to borrowings used for construction, which is capitalized net of interest earned on construction funds borrowed. Interest capitalization ceases when the construction project is substantially complete and placed in service. No interest costs were capitalized in the Enterprise Funds during the year ended June 30, 2001. The Enterprise funds had various construction contracts in progress at June 30, 2001 with an estimated cost to complete of approximately $36,277,000. (8) Obligations Under Capital Leases On November 15, 1996, the City entered into an Equipment Lease-Purchase Agreement with Motorola, Inc. for the purchase of equipment and services necessary for the City's participation in the San Diego County Regional Communications System. The system is designed to replace existing conventional radio frequencies with a trunked 800 Mhz system to develop communications capabilities to cope with potential disaster and improve inter and intra-agency communications in the future. The maximum amount of credit extended to the City under the terms of the agreement is $3,235,478, with an option to increase the total by 10%. As of June 30, 2001, the City has purchased equipment and services under the agreement totaling $1,855,714. The payment terms are for 15 years at an interest rate of 6.91% per year. The unpaid principal amount as of June 30, 2001 is $559,308. The City has entered into several office equipment lease-purchase agreements with various vendors. As of June 30, 2001, the City has purchased office equipment, totaling $434,072. All lease terms are for 60 months, with interest rates ranging from 5.56% to 15.50%. The unpaid principal balances total $349,132 as of June 30,2001. i 68 * — CITY OF CARLSBAD ^ Notes to General Purpose Financial Statements ** (Continued) WM mm •*• (8) Obligations Under Capital Leases, (Continued) 0am Minimum future lease payments under the capital lease as of June 30, 2001 are: *" 2002 $ 190,581 - 2003 190,581 2004 190,581 - 2005 151,785 M 2006 85,876 Subsequent to 2006 396.325 <*• Total minimum future lease payments 1,205,729 ^ Less amounts representing stated or implicit interest (297.289) «• Present value of future lease payments $ 908.440 mm m (9) Obligations Under Operating Leases m In June 1988, the Carlsbad Redevelopment Agency entered into an agreement to lease a parking lot on State Street from a private party. The lease requires monthly rental "* payments for twenty years. "™ Minimum future rental payments under the operating lease as of June 30, 2001 are: 2002 $ 69,944 «* 2003 74,140 ^ 2004 78,589 2005 83,304 „ 2006 88,303 Subsequent to 2006 192.818 am Total minimum future rental payments S587.098 m In October, 1998, the City entered into an agreement to lease a 68,000 square foot office building for the community development, administrative and public works departments. «M The lease required monthly rental payments of $74,816 for ten years commencing November 16, 1999. The lease provided for an option to purchase the building between ** the twelfth and twenty-fourth month of the lease at a price of $9,100,000. In January 2001, the City exercised their option to purchase the building. 69 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (10) Lone-Term Debt The following is a summary of changes in the principal balance of long-term debt for the year ended June 30, 2001: Principal Balance at July 1. 2000 General long-term debt account group: Bonds $14,170,000 Certificates of participation 5,570,000 HUD Section 108 Loan 619,950 Obligations under capital leases 904.183 Total general long-term debt S21.264.133 Proprietary funds: Certificates of participation $ 4,410,000 Installment purchase agreement 9,810,000 Loan payable 1,792,43 5 Accrued assessments 951,044 Obligations under capital leases - Total enterprise funds S16.963.479 Principal Balance at Additions Reductions June 30.2001 91,253 20.490 305,000 515,000 140,000 107.486 13,865,000 5,055,000 479,950 887.950 1.067.486 20.287.900 1,040,000 460,000 107,546 161,614 3,370,000 9,350,000 1,684,889 789,430 20.490 1.769.160 15.214.809 70 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) f 10) Lone-Term Debt. (Continued) Long-term debt at June 30,2001 is comprised of the following issues: Balance at General Long-Term Debt June 30. 2001 1993 Carlsbad Housing and Redevelopment Commission Tax Allocation Bonds, principal due in amounts ranging from $325,000 to $1,000,000 on September 1 of each year through 2024. Interest payable on March 1 and September 1 at rates varying from 5.25% to 5.30% per annum. $13,865,000 1997 Hosp Grove Refunding Certificates of Participation, principal due in amounts ranging from $540,000 to $735,000 on August 1 of each year through 2009, interest payable on August 1 and February 1 at rates varying from 4.10% to 4.70% per annum. Payable from the General Fund, with a required reserve amount of $659,500. 5,055,000 Community Development Block Grant (CDBG) program - Section 108 loan payable to HUD. Funds used to acquire property for affordable housing project. Principal due in amounts ranging from $150,000 to $169,950 on August 1 of each year through 2004. Interest payable on August 1 and February 1 at rates varying from 8.22% to 8.27% per annum. Payable from future CDBG entitlements. 479,950 Obligations under capital leases (note 8) 887,950 Total General Long-Term Debt $20.287.900 Proprietary Funds Long-Term Debt 1997 Carlsbad Municipal Water District Refunding Certificates of Participation, principal due in varying amounts ranging from $1,075,000 to $1,175,000 on May 1 of each year through 2004, interest payable on May 1 and November 1 each year at rates varying from 4.20% to 4.40% per annum. The required reserve amount is $740,000. $3,370,000 Encina Financing Joint Powers Authority (EFJPA) Installment Purchase Agreement, principal due in varying amounts ranging from $480,000 to $905,000 on August 1 of each year through 2015, interest payable on February 1 and August 1 each year at rates varying from 4.30% to 5.5% per annum. The required reserve amount is $942,161. 9,350,000 71 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) Long-Term Debt. (Continued) Balance at June 30.2001 1993 Carlsbad Municipal Water District loan agreement with the State Water Resources Control Board. Principal is due in varying amounts ranging from $110,665 to $151,558 on November 30 of each year through 2013, interest payable on November 30 of each year at 2.9% per annum. 1,684,889 In December of 1994, the Golf Course Enterprise Fund purchased land with accrued assessments. Principal is due in varying amounts ranging from $168,405 to $196,925 in 2004-05. The 2005-06 principal amount of $206,432 will be reduced by a reserve fund credit of $146,304 which is already reflected on the City's books. 789,430 Obligations under capital leases (note 8) 20,490 Subtotal proprietary funds 15,214,809 Less unamortized discounts, issuance costs and deferred charges (882,085) Less current portion (1.834.070) Total Proprietary Funds Long-Term Debt $12.498.654 72 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (10) Long-Term Debt. (Continued) Debt service requirements to maturity for general long-term debt are as follows: 2002 2003 2004 2005 2006 2007-2011 2012-2016 2017-2021 2022-2024 Tax Allocation Bonds $ 1,046,234 1,043,777 1,045,403 1,045,977 1,040,634 5,213,113 5,191,569 5,166,898 3,081,875 Certificates of Participation 752,285 754,350 754,800 758,475 745,865 2,254,738 - - - HUD Section 108 Loan 183,408 180,651 176,980 - - - - - - Totals 1,981,927 1,978,778 1,977,183 1,804,452 1,786,499 7,467,851 5,191,569 5,166,898 3,081,875 23,875,480 6,020,513 Less amounts representing interest (10.010.4801 (965.513) Total general long-term debt S13.865.00Q 5.055.000 541,039 (61.089) 479.950 30,437,032 (11.037.082) 19.399.950 73 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (10) Long-Term Debt. (Continued) Debt service requirements to maturity for the enterprise funds are as follows: 2002 2003 2004 2005 2006 2007-2011 2012-2015 Less amounts representing interest Carlsbad Municipal Water District Certificates of Participation $1,220,010 1,219,860 1,226,700 Encina Installment Purchase Agreement 942,161 936,199 936,256 939,581 936,394 4,671,045 3,720,547 Carlsbad Municipal Water District Loan Payable 159,527 159,527 159,527 159,527 159,527 797,635 444,953 Golf Course Accrued Assessments 213,617 215,377 215,163 217,098 70,553 3,666,570 13,082,183 2,040,223 (296.570) Total enterprise fund debt S3.370.000 (3.732.183) 9.350.000 (355,334) 1.684.889 Totals 2,535,315 2,530,963 2,537,646 1,316,206 1,166,474 5,468,680 4.165.500 931,808 19,720,784 (142.378) (4.526.465) 15.194.319 (11) Rate Covenants The 1997 Water Revenue Certificates of Participation requires that the District set its charges for services each year at rates sufficient to produce net revenues (after paying the operating and maintenance expenses of the District, excluding depreciation) at least 1.15 times the debt service for that year. The 1997 Encina Financing Joint Powers Authority Wastewater Revenue Bonds require that the District set its charges for services each year at rates sufficient to produce net revenues (after paying the operating and maintenance expenses of the District, excluding depreciation) of at least 1.25 times debt service for that year. 74 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (12) Debt Without Government Commitment Special Assessment Bonds As of June 30, 2001, the City has five series of Assessment District Bonds outstanding in the amount of $42,105,538. These bonds were issued under the provisions of the Improvement Bond Acts of 1911 and 1915 and were used to finance public infrastructure improvement projects. Mortgage Revenue Bonds Multi-Family Housing Revenue Bonds are issued to provide construction and permanent financing to developers of multi-family residential rental projects located in the City to be partially occupied by persons of low or moderate income. The total mortgage revenue bonds outstanding as of June 30, 2001 is $22,245,000. The bonds, together with interest thereon, are limited obligations of the City payable solely from bond proceeds, revenues and other amounts derived solely from home mortgage and developer loans secured by first deed of trust, irrevocable letters of credit, and irrevocable surety bonds. Industrial Development Bonds The Industrial Development Authority (Authority) of the City has issued $3,172,500 in Industrial Development Revenue Bonds. Any costs relating to the issuance of the Bonds, as well as the principal and interest payments, are to be paid by the private party benefiting from the bond issue. In the opinion of City officials, these bonds are not payable from any revenues or assets of the City, and neither the full faith and credit nor the taxing power of the City of Carlsbad, the State of California, nor any political subdivision thereof, is obligated to the payment of the principal or interest on the bonds. Accordingly, no liability has been recorded in the General Long-Term Debt Account Group. 75 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (13) Fund B alances/Retained Earnings The following is a summary of reserved and unreserved fund balances and retained earnings as of June 30, 2001: Governmental Fund Types Special Debt Capital Fund Balances General Revenue Service Projects Reserved for: Loans receivable $ 184,422 9,081,414 Inventory 35,585 - - Prepaid items 17,640 206,815 - 221,133 Debt service - - 1,528,500 Advances to other funds * 8,551,606 3,000,000 - 4,970,854 Low and moderate income housing - 1,906,391 Habitat mitigation 725,423 - Nearshore reef mitigation 180,400 - - Encumbrances 2.051.063 4.083.737 - 11.030.818 Subtotal 11.746.139 18.278.357 1.528.500 16.222.805 Unreserved: Designated for approved capital projects ... 85,174,830 Designated for continuing appropriations 1,166,082 3,186,466 - 37,893,659 Undesignated 57.691.202 16.522.987 (11.586.300) 8.313.634 Subtotal 58.857.284 19.709.453 (11.586.300) 131.382.123 Total fund balances $70.603.423 37.987.810 (10.057.800) 147.604.928 * Only reflects that portion of fund balance invested in interfund advances (the General fund amount is net of $8,210,846 in deferred revenue for measurable but unavailable interest earned on such advances). Proprietary Fund Types Internal Retained Earnings Enterprise Service Reserved for debt service $ 1,682,161 Unreserved 90.317.147 9.297.410 Total retained earnings $91.999.308 9.297.410 76 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (13) Fund Balances/Retained Earnings. (Continued) Reserves for loan receivables, inventory, prepaid items and advances to other funds, net of accrued interest recorded as deferred revenue, are established to show that certain assets are already committed to other purposes and are not available for discretionary expenditures. Reserves for debt service represent resources legally restricted to the payment of long- term debt principal and interest maturing in future years. Reserves for habitat mitigation represent resources set aside as security for the construction of wetland habitat to ensure the mitigation of certain species required as part of the Cannon Road West project. Reserves for nearshore reef mitigation represent resources set aside as security for the City's share of the potential environmental mitigation costs of the Regional Beach Sand Project. Reserves for encumbrances represent commitments related to unperformed contracts for services and undelivered goods. Unreserved-undesignated represents the fund balance or retained earnings remaining after reduction for reserved and designated fund balances or retained earnings. (14) Accumulated Fund D eficits The following funds reported deficits in fund balances or retained earnings as of June 30, 2001: Deficit Balance Debt Service Funds: Redevelopment Areas $(11,096,588) Enterprise Funds: GolfCourse (336,910) 77 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (15) Change in Accounting Principle Effective July 1, 2000, GASB Statement No. 33 changed the manner in which capital contributions are recorded in proprietary funds. Previously such capital contributions had been credited directly to an equity account called contributed capital. Capital contributions include donated capital assets and resources restricted for the acquisition, improvement, or construction of capital assets. As a result of the implementation of GASB Statement No. 33, capital contributions are now required to be reflected in the statement of revenues, expenses, and changes in retained earnings. GASB Statement No. 33 requires that this accounting change be made on a prospective basis. On July 1, 2001, the balance of the contributed capital account will be combined with retained earnings into a single equity account called net assets in conjunction with the City's implementation of GASB Statement No. 34. (16) Residual Equity Transfers Residual equity transfers are nonrecurring or non-routine transfers of equity between funds. A summary of significant residual equity transfers at June 30, 2001 is as follows: Debt Special Capital Internal General Service Revenue Projects Service The General fund transferred a one-time lump sum to the enterprise-Golf Course fund for start up costs. $(600,000) Equity for South Carlsbad Redevelopment debt service fund transferred to South Carlsbad Redevelopment capital project fund (166,845) 166,845 Excess funds transferred from Risk Management internal service fund to the General fund 1,000,000 (1,000,000) Other 15,056 (15,056) 78 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (16) Residual Equity Transfers (Continued) Debt Special Capital Internal General Service Revenue Projects Service Equity for Infrastructure Replacement special revenue fund transferred to Infrastructure Replacement capital project fund (2,056,779) 2,056,779 (17) Risk Management The City is exposed to various risks of loss related to its operations, including losses associated with errors and omissions and injuries to employees and members of the public. The City uses a Risk Management Self-Insurance fund, a Health Insurance fund and a Workers' Compensation fund (all internal service funds) to account for and finance its uninsured risks of loss. All funds of the City make payments based on estimates of the amounts needed to pay prior and current year claims and to establish a reserve for catastrophe losses. Since July 1, 1999, the City has been a member of the California Municipal Excess Liability Program, a group purchase program for general liability coverage. Under this program, the pool provides coverage up to a maximum of $10,000,000 per occurrence with a self-insured retention provided by the City in the amount of $500,000. At June 30, 2001, the unencumbered fund equity for the Risk Management Self-Insurance fund was approximately $2,300,000. Health insurance coverage for City employees is provided by either Kaiser, CalPERS, Sharp Healthcare or the Reliastar plan. Approximately 25% of the City's employees are covered through the Reliastar plan which is administered by CoreSource. Under the City's agreement with Reliastar, Reliastar will provide coverage for each individual claim over $75,000. If aggregate claims for the City for any two month period exceed 125% of the actual claims, Reliastar will assume payment for the excess amount. The City is insured for workers' compensation claims by Employers Reinsurance Corporation (Corporation). The Corporation provides coverage for losses which exceed the City's self-insured retention of $300,000 per claim. 79 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (17) Risk Management. (Continued) The estimated claims payable reported at June 30, 2001 is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.Changes hi the estimated claims payable amounts in fiscal years 2000 and 2001 for the three internal service funds are as follows: Claims Expense and Beginning Changes in Claim Balance Estimates Payments Ending Balance Health Insurance fund: 1999-2000 2000-2001 Risk Management fund: 1999-2000 2000-2001 Workers' Compensation fund: 1999-2000 2000-2001 $342,356 1,599,063 (1,557,020) 384,399 384,399 1,127,242 (1,238,724) 272,917 137,232 623,586 833,745 834,734 531,672 188,083 594,164 784,479 (45,318) (171,668) (593,175) (649,738) 623,586 640,001 834,734 969,475 (18) Joint Ventures Encina Water Pollution Control Facility: The Encina Water Pollution Control Facility (the Facility) is a sewer facility owned jointly by the Cities of Carlsbad and Vista, the Leucadia County Water District, the Buena Vista Sanitation District, the Vallecitos Water District (formerly the San Marcos County Water District) and the Encinitas Sanitary District. The Encina Wastewater Authority (EWA) is a joint powers authority established to operate and administer the facility. It is responsible for the management, maintenance and operations of the joint system. Ownership interests in the facility are determined by joint agreement at the time 80 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (18) Joint Ventures. (Continued) the assets are acquired. As of June 30, 2000, the Cities and Districts have the following approximate ownership interest: City of Carlsbad 27% City of Vista 28% Leucadia County Water District 17% Vallecitos Water District 17% Buena Vista Sanitation District 7% Encinitas Sanitary District 4% EWA's financial statements for the fiscal year ending June 30, 2000 (the latest available) reflect the early implementation of GASB 34 and reflect the following: Total assets $49,884,859 Total liabilities 2.124.453 Net assets $47.760.406 The EWA does not recognize net income or loss. Net operating expenditures in excess of users' assessments are treated as accounts receivable on the EWA's books and charged to users' accounts in the following year. Conversely, users' assessments in excess of net operating expenditures are treated as a liability and credited against users' accounts, also in the following year. Under this basis, net operating revenues for the EWA totaled $72,472 in fiscal year 2001. The financial statements of the EWA can be obtained at 6200 Avenida Encinas, Carlsbad, California 92009. Encina Financing Joint Powers Authority: The Encina Financing Joint Powers Authority (the Authority) was created on February 1, 1989 between the City of Carlsbad (Carlsbad), the City of Vista (Vista), the Buena Vista Sanitation District (Buena) and the Leucadia County Water District (Leucadia). The primary purpose of the Authority is to issue revenue bonds in order to finance the expansion of the Facility. The Authority is governed by a Board of Directors, which consists of one director appointed by each member. The financial statements of the Authority can be obtained at the City of Carlsbad's City Hall. In August 1989, the Authority issued $33,500,000 of revenue bonds and executed installment purchase agreements for approximately the same amount. In February 1997, bonds were issued by the Authority to refinance and defease the outstanding bonds. Two of the members (Buena and Vista) defeased their 1989 obligations through available funds; while Carlsbad and Leucadia refinanced their obligations. Repayment of the 81 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (18) Joint Ventures. (Continued) bonds will be accomplished through payments made by Carlsbad and Leucadia pursuant to the new installment purchase agreements. The individual agreements set forth the purchase price and specify the debt service requirements for each member. The following is a table of the outstanding balance owed as of June 30, 2001 by each member. Installment Member Agreement Balance City of Carlsbad $ 9,350,000 Leucadia County Water District 6,3 75,000 City of Vista Buena Vista Sanitation District - S15.725.00Q The installment balances are secured by a pledge of the revenues from each member's wastewater system, net of a deduction for maintenance and operating costs. Significant covenants within the agreements require the members to maintain insurance on the facility, and establish wastewater rates which are sufficient to pay the operating costs and debt service on the bonds and which will result in net revenues equal to at least 1.25 times the annual installment payments due. The City's share in the accounts of the Authority is recorded in the Sewer Enterprise Fund. The expansion of the Facility is shown as a fixed asset of the Sewer Enterprise Fund. (19) Participation in San Diego Association of Governments (S ANDAG) The City is a member of the San Diego Association of Governments (SANDAG), a joint powers agreement for the purpose of engaging in regional cooperative comprehensive planning, to assist the Member Agencies, and to provide a regional reviewing organization for certain federal and state grant projects. SANDAG is currently comprised of 18 incorporated Cities from the San Diego region and the County of San Diego. 82 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) T20) Retirement Plan Plan Description The City of Carlsbad contributes to the California Public Employees Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statutes and city ordinance. Copies of PERS' annual financial report may be obtained from their executive office: Lincoln Plaza, 400 P Street, Sacramento, California 95814. Funding Policy Participants are required to contribute 7% (9% for safety employees) of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. The amount paid by the City on behalf of employees for the year ended June 30, 2001 was $2,402,368. The City is required to contribute at an actuarially determined rate. For the year ended June 30, 2001, the employer contribution rate for the City of Carlsbad (as a percentage of covered payroll) was 3.266% for safety employees and 0.0% for miscellaneous employees. The contribution requirements of plan members and the City are established by PERS. Annual Pension Cost For 2001, the City's annual pension cost (employer contribution) of $370,444 for safety and $5,607 for miscellaneous to PERS was equal to the City's required and actual contributions. For 2001, the member contributions paid by the City were $1,013,068 for safety and $1,389,300 for miscellaneous. The required contribution was determined as part of the June 30, 1998, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8.25% investment rate of return (net of administrative expenses), (b) projected annual salary increases of 3.75%, and (c) 2% per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.5%. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a four-year period (smoothed market value). PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period for miscellaneous employees at June 30, 2001 is through June 30, 2019; for safety employees at June 30,2001, it is through June 30,2013. 83 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (20)Retirement Plan. (Continued) Three-Year Trend Information for PERS (Safety) Fiscal Year Ending 6/30/99 6/30/00 6/30/01 Annual Pension Cost (Employer Contribution) $ 774,465 525,164 370,444 Percentage of APC Contributed 100% 100% 100% Net Pension Obligation $ 0 0 0 Three-Year Trend Information for PERS (Miscellaneous) Fiscal Year Ending 6/30/99 6/30/00 6/30/01 Annual Pension Cost (Employer Contribution) $1,510,047 437,978 5,607 Percentage of APC Contributed 100% 100% 100% Required Supplementary Information Funded Status of Plan (Safety) Net Pension Obligation $ 0 0 0 Valuation Date 6/30/97 6/30/98 6/30/99 Entry Age Normal Accrued Liability $45,646,733 53,527,398 59,160,306 Actuarial Value of Assets 53,055,298 63,822,496 73,078,737 Unfunded Liability/ (Excess Assets') (7,408,565) (10,295,098) (13,918,431) Funded Status 116.2% 119.2% 123.5% Annual Covered Payroll 8,438,265 9,021,054 9,784,191 UAAL As a % of Payroll (87.797%) (114.123%) (142.254%) 84 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (20) Retirement Plan. (Continued) Funded Status of Plan (Miscellaneous) Valuation Date 6/30/97 6/30/98 6/30/99 Entry Age Normal Accrued Liability $51,842,297 56,210,285 62,314,238 Actuarial Value of Assets 60,367,455 72,756,235 84,329,881 Unfunded Liability/ (Excess Assets) (8,525,158) (16,545,950) (22,015,643) Funded Status 116.4% 129.4% 135.3% Annual Covered Payroll 14,995,218 15,687,958 16,405,530 UAAL As a % of Payroll (56.853%) (105.469%) (134.196%) (21) Deferred Compensation Plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to substantially all full-time employees, permits them to defer a portion of their salary until future years. Amounts deferred may not exceed the lesser of $8,500 or 25% of a participant's "includable compensation," as defined in the participation agreement. Distributions are made upon the occurrence of the participant's termination, retirement, death or unforeseen emergency, and in a manner in accordance with the election made by the participant. The City believes it has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. As of January 1, 1999, the City has formally established a trust in accordance with Internal Revenue Code Section 457(g) for all of its deferred compensation plans to provide protection from the claims of the employer's general creditors. (22) Post-Retirement Health Care In addition to the pension benefits described herein, per Resolution 614, all former employees of the Carlsbad Municipal Water District (including dependents) are eligible for post-retirement health care benefits if they voluntarily retire after the age of 50 with no less than 5 years of service and whose age combined with years of service equals 70 or more. Currently, thirteen retirees meet these eligibility requirements and are receiving benefits. 85 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (22) Post-Retirement Health Care The City pays for 100% of the premiums for health insurance which is coordinated with Medicare and other benefits provided by federal and state law, when available, to the extent it reduces the cost of insurance premiums. Expenditures for post-retirement health care benefits are funded on a pay-as-you-go basis. Expenditures of approximately $53,300 were charged to expense for post-retirement health care costs during 2000-2001. Based on an actuarial valuation performed as of November 1991, the District's liability for the current and past service costs of these benefits is approximately $1,600,000. 1m If M ] 86 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (23) Segment Information for Enterprise Funds The City maintains four enterprise funds that provide water, sewer and other services. Segment information for the year ended June 30, 2001 is as follows: Operating revenues Operating expenses: Depreciation Plant operations Operating income (loss) Nonoperating activities: Property taxes Capital contributions Other, net Net income (loss) Contributed capital: Beginning balance Current year additions Current year deletions Ending balance Fixed assets: Additions Deletions Net working capital Long-term liabilities Total assets Total liabilities $ $ $ $ $ $ 1 Carlsbad Municipal Water District 17,838,830 1,471,885 16.199,156 167,789 1,370,736 4,799,726 3,621,929 9.960.180 66,928,612 66.928.612 2,955,083 fl 11.8431 46.031.581 3.744.745 $121,801,773 8.442,230 Golf Course - 146,442 (146,442) 600,000 221,362 674.920 7,465,190 7.465.190 805,291 1.885.790 3.358.225 10,667,452 3.539.172 Sewer 6,530,618 1,440,380 3.562,505 1,527,733 4,703,535 3,768,970 10.000.238 62,956,520 62.956.520 4,571,607 (5.5941 54.574.094 9.259.743 118,144,304 12.747.390 Solid Waste 507,218 490 259.430 247,298 277,798 525.096 3,421 3.421 (2.45 n 3.468.314 3,700,598 232,284 Totals 24,876,666 2,912,755 20,167,533 1,796,378 1,370,736 10,103,261 7,890,059 21.160.434 137,353,743 137.353.743 8,331,981 (119.8881 105.959.779 16.362.713 254,314,127 24.961,076 Total equity SI 13.359.543 7.128.280 105.396.914 3.468.314 229.353.051 87 CITY OF CARLSBAD Notes to General Purpose Financial Statements (Continued) (24) Commitments and Contingencies The City is a defendant in certain legal actions arising in the normal course of operations. In the opinion of management and legal counsel, any liability resulting from these actions will not result in a material adverse effect on the City's financial position, because the City has set aside sufficient monies to cover confirmed adverse actions. 88 T3-o GENERAL FUND The General fund is used to account for resources traditionally associated with government which are not required legally or by sound financial management to be accounted for in another fund. Major Service Areas Public Safety Community Development Administrative Services Community Services Policy/Leadership Group 89 CITY OF CARLSBAD General Fund Schedule of Revenues - Budget and Actual Budgetary Basis Year Ended June 30, 2001 Taxes: Property taxes Sales and use taxes Transient occupancy taxes Franchise taxes Business license permits Real property transfer taxes Total taxes Intergovernmental: Vehicle licence fees Homeowners exemptions Other Total intergovernmental Licenses and permits: Building permits Other Total licenses and permits Charges for services: Planning fees Building department fees Engineering fees Ambulance fees Recreation fees Other Total charges for services Fines and forfeitures Income from property and investments Interdepartmental charges Miscellaneous Total revenues Budget $ 20,291,000 21,130,000 9,500,000 3,820,000 2,200,000 1,100,000 58,041,000 4,200,000 297,000 912,000 5,409,000 2,200,000 1,300,000 3,500,000 750,000 1,500,000 750,000 1,160,000 1,051,000 599,000 5,810,000 797,000 3,725,000 2,100,000 949,640 Actual on Budgetary Basis 19,657,514 21,196,726 9,269,484 3,915,976 2,300,367 1,095,037 57,435,104 4,318,128 316,194 910,526 5,544,848 2,102,477 1,306,679 3,409,156 820,456 1,420,181 664,384 1,443,594 1,132,460 689,623 6,170,698 763,681 4,816,922 2,147,717 1,312,367 Variance- Over (Under) (633,486) 66,726 (230,516) 95,976 100,367 (4,963) (605,896) 118,128 19,194 (1,474) 135,848 (97,523) 6,679 (90,844) 70,456 (79,819) (85,616) 283,594 81,460 90,623 360,698 (33,319) 1,091,922 47,717 362,727 $ 80,331,640 81,600,493 1,268,853 90 CITY OF CARLSBAD General Fund Schedule of Expenditures - Budget and Actual Budgetary Basis Year Ended June 30, 2001 General government: Policy and leadership group: City council City manager City clerk City attorney City treasurer Total policy and leadership group Administrative services: Administration Finance Purchasing Human resources Records management Total administrative services Non-departmental Total general government Public safety: Police protection Fire protection Total public safety Community development: Administration Hiring center Geographic information systems Economic development Community promotion Planning Building inspection Total community development Community services: Library Cultural arts Park planning/recreation Senior programs Total community services Public works: Administration Engineering Park maintenance Street and signal maintenance Facilities maintenance Traffic sign maintenance Total public works Total expenditures Budget 254,360 1,396,914 155,526 798,688 147,548 2,753,036 626,408 1,643,143 574,031 1,739,977 1,517,361 6,100,920 3,363,820 12,217,776 14,346,143 9,790,811 24,136,954 605,032 85,849 336,645 248,301 496,176 2,881,137 1,852,543 6,505,683 6,616,355 697,443 3,807,199 456,410 11,577,407 557,013 4,914,250 2,771,803 2,274,006 2,189,126 820,248 13,526,446 $ 67,964,266 Actual on Budgetary Basis 233,258 1,298,679 110,029 798,688 114,451 2,555,105 507,865 1,510,744 504,796 1,303,527 1,414,024 5,240,956 667,214 8,463,275 14,045,053 9,762,701 23,807,754 519,614 82,584 316,928 178,650 494,258 2,497,037 1,757,923 5,846,994 6,615,264 684,740 3,524,595 375,290 11,199,889 523,154 4,707,124 2,718,684 2,233,787 2,135,479 796,977 13,115,205 62,433,117 Variance Over (Under) (21,102) (98,235) (45,497) (33,097) (197,931) (118,543) (132,399) (69,235) (436,450) (103,337) (859,964) (2,696,606) (3,754,501) (301,090) (28,110) (329,200) (85,418) (3,265) (19,717) (69,651) (1,918) (384,100) (94,620) (658,689) (1,091) (12,703) (282,604) (81,120) (377,518) (33,859) (207,126) (53,119) (40,219) (53,647) (23,271) (411,241) (5,531,149) 91 CITY OF CARLSBAD General Fund Comparative Schedule of Revenues For the Years Ended June 30, 2000 and 2001 2000 2001 Increase Actual Actual (Decrease) Taxes: Property taxes 16,762,040 19,657,514 2,895,474 Sales and use taxes 19,493,247 21,196,726 1,703,479 Transient occupancy taxes 8,333,196 9,269,484 936,288 Franchise taxes 2,591,779 3,915,976 1,324,197 Business license permits 1,863,514 2,300,367 436,853 Real property transfer taxes 993,026 1,095,037 102,011 Total taxes 50,036,802 57,435,104 7,398,302 Intergovernmental: Vehicle licence fees 3,793,919 4,318,128 524,209 Homeowners exemptions 288,358 316,194 27,836 Other 821,247 910,526 89,279 Total intergovernmental 4,903,524 5,544,848 641,324 Licenses and permits: Building permits 2,156,584 2,102,477 (54,107) Other 1,164,267 1,306,679 142,412 Total licenses and permits 3,320,851 3,409,156 88,305 Charges for services: Planning fees 563,372 820,456 257,084 Building department fees 1,421,681 1,420,181 (1,500) Engineering fees 1,114,900 664,384 (450,516) Ambulance fees 931,045 1,443,594 512,549 Recreation fees 888,477 1,132,460 243,983 Other 579,302 689,623 110,321 Total charges for services 5,498,777 6,170,698 671,921 Fines and forfeitures 770,949 763,681 (7,268) Income from property and investments 2,226,973 4,816,922 2,589,949 Interdepartmental charges 2,006,923 2,147,717 140,794 Miscellaneous 597,693 1,312,367 714,674 Total revenues 69,362,492 81,600,493 12,238,001 92 CITY OF CARLSBAD General Fund Comparative Schedule of Expenditures For the Years Ended June 30, 2000 and 2001 General government: Policy and leadership group: City council City manager City clerk City attorney City treasurer Total policy and leadership group Administrative services: Administration Finance Purchasing Human resources Records management Total administrative services Non-departmental Total general government Public safety: Police protection Fire protection Total public safety Community development: Administration Hiring center Geographic information systems Economic development Community promotion Planning Building inspection Total community development Community services: Library Cultural arts Park planning/recreation Senior programs Total community services Public works: Administration Engineering Park maintenance Street and signal maintenance Facilities maintenance Traffic sign maintenance Total public works Debt service Total expenditures 2000 Actual 229,049 916,869 201,092 704,593 114,715 2,166,318 263,342 1,299,324 429,997 1,080,223 682,170 3,755,056 383,935 6,305,309 12,876,386 8,559,413 21,435,799 457,029 76,673 316,162 161,251 369,972 2,265,048 1,724,911 5,371,046 4,167,707 495,054 3,130,177 339,062 8,132,000 612,698 4,516,502 2,356,210 2,010,961 1,655,619 425,493 11,577,483 11,038 52,832,675 2001 Actual 233,983 1,187,743 98,558 775,468 114,675 2,410,427 491,642 1,385,831 504,140 1,077,449 1,261,230 4,720,292 641,336 7,772,055 13,841,268 9,523,499 23,364,767 465,517 82,584 262,475 133,875 370,299 2,240,252 1,738,257 5,293,259 6,266,110 645,656 3,400,017 366,497 10,678,280 488,410 4,327,022 2,559,298 2,040,001 2,066,872 743,564 12,225,167 70,086 59,403,614 Increase (Decrease) 4,934 270,874 (102,534) 70,875 (40) 244,109 228,300 86,507 74,143 (2,774) 579,060 965,236 257,401 1,466,746 964,882 964,086 1,928,968 8,488 5,911 (53,687) (27,376) 327 (24,796) 13,346 (77,787) 2,098,403 150,602 269,840 27,435 2,546,280 (124,288) (189,480) 203,088 29,040 411,253 318,071 647,684 59,048 6,570,939 93 SPECIAL REVENUE FUNDS Special Revenue funds are used to account for specific revenues whose expenditures are restricted by law or administrative regulation to specified purposes. Affordable Housing To account for receipt of fees charged to developers to provide funding assistance for affordable housing needs of lower and moderate income households. Community Development Block Grant To account for federal block grants and commercial and residential loans for community development. Donations and Bequests To account for donations, scholarships, bequests and endowments received from both outside parties and the General fund, designated for specific City purposes. Federal Grants To account for federal grants received to support the City's law enforcement and fire mitigation programs. Gas Tax To account for receipts and expenditures of money apportioned under the Streets and Highways Code of the State of California. Infrastructure Replacement To account for funds set aside for the future repair and replacement of the City's base infrastructure. Low and Moderate Income Housing To account for money administered by the Carlsbad Redevelopment Agency for designated low and moderate income housing. Other Funds To account for any other funds received by the City whose expenditures are restricted by law or administrative regulation to specified purposes. 94 SPECIAL REVENUE FUNDS (CONTINUED) Police Asset Forfeiture To account for money received under federal and state programs distributing property confiscated from illegal activities. Section 8 Housing Authority To account for federal grants for low and moderate income rental assistance payments. Senior Nutrition To account for money received and expenditures for senior programs under the Older Americans Act. Special Benefit Districts To account for revenues and expenditures from property tax assessments for street lighting, landscaping and channel dredging. State Grants To account for State of California library, civic arts and law enforcement grants. Tyler Court Apartments To account for revenues and expenditures from housing assistance through the Tyler Court affordable senior apartments. Community Development 95 Assets Cash and investments Receivables: Loans Taxes Accrued interest Accounts, net Due from other governments Advances to other funds Prepaid items Total assets Liabilities and Fund Balances Liabilities: Accrued liabilities Due to other funds Deposits payable Due to other governments Deferred revenue Total liabilities Fund balances: Reserved for: Loans receivable Advances to other funds Prepaid items Low and moderate income housing Encumbrances Unreserved: Designated for continuing appropriations Undesignated Total fund balances Total liabilities and fund balances CITY OF CARLSBAD Special Revenue Funds Combining Balance Sheet June 30, 2001 Community Affordable Development Donations Housing Block Grant and Bequests Federal Grants 638 $ 11,940,680 $ 15,148 38,548 425 40,506 4,222 14,145 543 Gas Tax 5,281,580 7,623 7,541,842 138,032 7,084,215 6,658,462 5,568 3,000,000 52,164 7,541,842 138,032 10,084,215 4,039 15,148 6,658,462 638 1,906,391 24,490 3,335,551 11,925,532 $ 11,940,680 44,728 14,145 5,568 425 363,320 39,710 113,897 (361,877) 7,374,090 7,436 7,527,697 52,164 7,541,842 543 4,039 3,000,000 302 3,465,823 137,187 2,728,085 886,268 137,489 10,080,176 138,032 10,084,215 96 Low and Moderate Income Housing 692,571 2,417,384 6,397 131 - - - 553 3,117,036 2,929 - - - - 2,929 2,417,384 - 553 _ 152 _ 696,018 Police Section 8 Special Tyler Other Asset Housing Senior Benefit State Court Funds Forfeiture Authority Nutrition Districts Grants Apartments 386,659 518,119 253,435 285 3,136,270 806,897 232,298 - ._ 3,029 - 26,604 198,502 16,185 . - 2,100 , 205,199 - 386,659 518,119 660,165 16,470 3,162,874 808,997 232,298 26,278 14,479 133,322 25,270 47,048 71,357 - - - 20,022 - 252,433 .... 350,068 14,479 133,322 72,318 20,022 . 205,199 . ... - - - 140,715 1,042 7,864 1,991 16,269 22,059 16,155 97,560 - - - 93,582 229,789 419,517 97,034 - 3,013,283 621,038 212,276 Totals 26,079,826 9,081,414 6,397 131 29,633 255,335 3,000,000 206,815 38,659,551 276,659 47,048 91,379 4,222 252,433 671,741 9,081,414 3,000,000 206,815 1,906,391 4,083,737 3,186,466 16,522,987 3,114,107 386,659 518,119 310,097 1,991 3,029,552 736,679 212,276 37,987,810 3,117,036 386,659 518,119 660,165 16,470 3,162,874 808,997 232,298 38,659,551 97 CITY OF CARLSBAD Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2001 Revenues: Taxes Intergovernmental Fines and forfeitures Income from property and investments Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: Public safety Community development Community services Public works Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess(deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Proceeds of debt Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Residual equity transfers out Fund balances at end of year Community Affordable Development Donations Federal Gas Housing Block Grant and Bequests Grants Tax $ - - - - 1,516,381 452,891 - 185,519 524,320 67,315 634,824 8,028 540,422 1,856,956 - ... 209,939 2,000 - 63,390 - 2,184 Infrastructure Replacement - - - 2,383,276 520,206 908,153 193,547 2,058,987 79,651 175,419 338,086 279,133 250,940 468 140,416 464 45,690 - - 176,351 524,192 279,133 79,651 250,940 2,206,925 (3,986) 629,020 113,896 1,808,047 17,430 (4,312) (22,083) (7,500) 3,546 3,152 - - 3,546 3,152 (4,312) (4,653) (7,500) 2,210,471 (834) 624,708 109,243 1,800,547 9,715,061 8,270 6,902,989 28,246 8,279,629 . 2,056,779 (2,056,779) $ 11,925,532 7,436 7,527,697 137,489 10,080,176 98 Low and Moderate Income Housing 393,824 130,464 524,288 70,985 416 2,612 74,013 450,275 3,152 3,152 453,427 2,660,680 3,114,107 Police Section 8 Other Asset Housing Senior Funds Forfeiture Authority Nutrition 3,243,738 110,715 124,927 33,976 40,704 6,670 102,037 33,976 165,631 3,250,408 212,752 36,497 3,180,586 33,938 - - 210,761 2,599 2,104 33,938 36,497 3,185,289 210,761 38 129,134 65,119 1,991 (17,430) 19,700 (17,430) 19,700 38 111,704 84,819 1,991 401,677 406,415 225,278 (15,056) 386,659 518,119 310,097 1,991 Special Benefit Districts 265,051 1,520,091 332,773 2,117,915 1,925,989 1,598 511 1,928,098 189,817 - 189,817 2,839,735 3,029,552 Tyler State Court Grants Apartments 735,846 45,519 357,446 7,119 5,520 788,484 362,966 146,269 293,582 369,137 515,406 293,582 273,078 69,384 (2,322) (2,322) 270,756 69,384 465,923 142,892 736,679 212,276 Totals 1,910,205 4,728,709 124,927 2,654,739 3,377,047 311,976 412,986 13,520,589 262,417 4,058,658 892,969 2,176,929 145,497 51,381 7,587,851 5,932,738 17,430 (53,647) 29,550 (6,667) 5,926,071 34,133,574 (2,071,835) 37,987,810 99 CITY OF CARLSBAD Special Revenue Funds Combining Schedule of Revenues and Expenditures - Budget and Actual (Budgetary Basis) Year Ended June 30, 2001 Revenues: Taxes Intergovernmental Charges for services Fines and forfeitures Income from property and investments Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: Public safety Community development Community services Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Affordable Housing Trust Community Development Block Grant Budget 287,483 287,483 Actual on Budgetary Basis Variance- Over (Under)Budget 199,637 199,637 1,212,517 2,183,639 717,504 (87,846) 1,202,730 (87,846) 1,202,730 Actual on Budgetary Basis 452,891 Variance- Over (Under) (264,613) 250,000 1,250,000 - 1,500,000 524,320 1,856,956 2,000 2,383,276 274,320 606,956 2,000 883,276 717,504 67,315 - - 520,206 67,315 - - (197,298) 701,695 (501,035) 701,695 (501,035) 971,122 (485,226) (181,489) 303,737 100 Donations and Bequests Federal Grants Revenues: Taxes Intergovernmental Charges for services Fines and forfeitures Income from property and investments Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: Public safety Community development Community services Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Budget 84,000 287,924 371,924 454,031 Actual on Budgetary Basis Variance- Over (Under) Actual on Budgetary Budget Basis 634,824 209,939 63,390 908,153 432,740 550,824 156,872 12,113 (82,107) 475,413 (77,985) 63,390 536,229 (21,291) (21,291) 557,520 168,985 210,455 7,394 217,849 (48,864) 185,519 8,028 193,547 217,140 454,031 432,740 217,140 (23,593) Variance- Over (Under) 28,647 (4,085) 24,562 6,685 (7,394) (709) 25,271 (Continued) 101 CITY OF CARLSBAD Special Revenue Funds Combining Schedule of Revenues and Expenditures - Budget and Actual (Budgetary Basis) Year Ended June 30, 2001 Gas Tax Budget Actual on Budgetary Basis Variance- Over (Under) Revenues: Taxes Intergovernmental Fines and forfeitures Income from property and investments Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: Public safety Community development Community services Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures 6,444,848 6,444,848 $ (6,444,848) 1,516,381 540,422 2,184 2,058,987 6,444,848 6,444,848 (4,385,861) 1,516,381 540,422 2,184 2,058,987 Low and Moderate Income Housing Actual on Variance- Budgetary Over Budget Basis (Under) 2,058,987 342,500 25,000 500 368,000 122,050 122,050 245,950 393,824 130,464 524,288 71,137 71,137 51,324 105,464 (500) 156,288 (50,913) (50,913) 453,151 207,201 102 Other Funds Police Asset Forfeiture Revenues: Taxes Intergovernmental Fines and forfeitures Income from property and investments Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: Public safety Community development Community services Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Budget 192,809 192,809 Actual on Budgetary Basis 33,976 33,976 190,808 190,808 (192,809) (156,832) Variance- Over (Under) 33,976 33,976 (2,001) Budget 15,000 20,000 35,000 135,100 (2,001) 135,100 35,977 (100,100) Actual on Budgetary Basis 124,927 40,704 165,631 135,099 135,099 30,532 Variance- Over (Under) 109,927 20,704 130,631 (1) (1) 130,632 (Continued) 103 CITY OF CARLSBAD Special Revenue Funds Combining Schedule of Revenues and Expenditures - Budget and Actual (Budgetary Basis) Year Ended June 3 0,2001 Revenues: Taxes Intergovernmental Fines and forfeitures Income from property and investments Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: Public safety Community development Community services Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Section 8 Housing Senior Nutrition Actual on Budgetary Budget Basis 3,035,900 10,000 3,243,738 6,670 3,045,900 3,250,408 3,412,060 3,188,437 3,412,060 3,188,437 (366,160)61,971 Variance- Over (Under) 207,838 (3,330) 204,508 (223,623) (223,623) 428,131 Actual on Budgetary Budget Basis 110,000 105,000 215,000 212,752 212,752 2,248 110,715 102,037 212,752 >12,360 212,360 392 Variance- Over (Under) 715 (2,963) (2,248) (392) (392) (1,856) 104 Special Benefits Districts State Grants Revenues: Taxes I ntergovernmental Fines and forfeitures Income from property and investments Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: Public safety Community development Community services Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Budget Actual on Budgetary Basis Variance- Over (Under)Budget 345,961 Actual on Budgetary Basis 735,846 Variance- Over (Under) 389,885 151,500 1,494,729 425,399 2,071,628 _ 2,274,465 2,274,465 265,051 1,520,091 332,773 2,117,915 _ 1,938,835 1,938,835 113,551 25,362 (92,626) 46,287 - (335,630) (335,630) 24,483 - . 370,444 233,803 502,678 - 736,481 45,519 - 7,119 788,484 140,011 484,778 - 624,789 21,036 - 7,119 418,040 (93,792) (17,900) - (111,692) (202,837)179,080 381,917 (366,037)163,695 529,732 (Continued) 105 CITY OF CARLSBAD Special Revenue Funds Combining Schedule of Revenues and Expenditures - Budget and Actual (Budgetary Basis) Year Ended June 30, 2001 Tyler Court Apartments Budget Actual on Budgetary Basis Variance- Over (Under) Revenues: Taxes Intergovernmental Fines and forfeitures Income from property and investments Contributions from property owners Donations Miscellaneous Total revenues Expenditures: Current: Public safety Community development Community services Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures 346,670 2,883 349,553 308,796 308,796 357,446 5,520 362,966 293,582 293,582 10,776 2,637 13,413 (15,214) (15,214) Totals Budget 342,500 4,366,237 15,000 923,766 2,744,729 392,924 428,782 9,213,938 579,358 5,333,119 1,369,664 8,719,313 16,001,454 Actual on Budgetary Basis 1,910,205 4,728,709 124,927 2,654,739 3,377,047 311,976 412,986 13,520,589 492,250 4,454,488 1,320,686 8,383,683 14,651,107 Variance- Over (Under) 1,567,705 362,472 109,927 1,730,973 632,318 (80,948) (15,796) 4,306,651 (87,108) (878,631) (48,978) (335,630) (1,350,347) 40,757 69,384 28,627 (6,787,516)(1,130,518)5,656,998 106 107 108 DEBT SERVICE FUNDS Debt Service funds are used to account for accumulation of resources for, and payment of, principal and interest on the City's general bonded debt and special assessment bonds for which the City is obligated in some manner. Hosp Grove COPs To account for payment of debt service on the 1997 Certificates of Participation (1988 Refunding) issued to purchase Hosp Grove. Redevelopment Bonds To account for payment of debt service on bonds issued to finance improvements for the Carlsbad Redevelopment Agency. Housing and Redevelopment Bonds 109 CITY OF CARLSBAD Debt Service Funds Combining Balance Sheet June 30, 2001 Assets Cash and investments Receivables: Taxes Accrued interest Total assets Liabilities Advances from other funds Total liabilities Fund Balances Hosp Grove Redevelopment COPs Areas $1,023,288 15,500 $1,038,788 1,352,552 25,586 526 1,378,664 Totals 2,375,840 25,586 16,026 2,417,452 12,475,252 12,475,252 12,475,252 12,475,252 Reserved for debt service Unreserved: Designated for future debt service Undesignated Total fund balances Total liabilities and fund balances 659,500 379,288 1,038,788 $1,038,788 869,000 1,528,500 379,288 (11,965,588) (11,965,588) 1,378,664 (11,096,588) (10,057,800) 2,417,452 110 CITY OF CARLSBAD Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2001 Hosp Grove Redevelopment COPs Areas Totals Revenues: Taxes Income from property and investments Total revenues Expenditures: Current: General government Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Residual equity transfers in (out) Fund balances at end of year $ 44,801 44,801 515,000 235,890 750,890 (706,089) 800,000 800,000 93,911 944,877 - 1,575,295 95,641 1,670,936 36,531 305,000 1,471,151 1,812,682 (141,746) (280,000) (280,000) (421,746) (10,507,997) (166,845) 1,575,295 140,442 1,715,737 36,531 820,000 1,707,041 2,563,572 (847,835) 800,000 (280,000) 520,000 (327,835) (9,563,120) (166,845) $ 1,038,788 (11,096,588) (10,057,800) 111 CITY OF CARLSBAD Debt Service Fund Redevelopment Areas Schedule of Revenues and Expenditures Budget and Actual (Budgetary Basis) Year Ended June 30, 2001 Revenues: Taxes Income from property and investments Total revenues Expenditures: Current: General government Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Budget $ 1,370,000 40,000 1,410,000 Actual on Budgetary Basis 1,575,295 95,641 1,670,936 Variance- Over (Under) 205,295 55,641 260,936 67,938 290,000 1,478,954 1,836,892 $ (426,892) 36,531 305,000 1,471,151 1,812,682 (31,407) 15,000 (7,803) (24,210) (141,746)285,146 112 113 CAPITAL PROJECTS FUNDS Capital Projects funds are used to account for the purchase or construction of major capital facilities which are not financed by Proprietary or Trust funds. Assessment Districts To account for capital projects financed by the issuance of assessment district bonds. Bridge and Thoroughfare Districts To account for receipts of fees charged to developers for street and highway construction. Community Facilities District No. 1 To account for civic facilities, freeway interchanges, and road segments financed by Community Facilities District No. 1 "special tax revenues" (Mello Roos). Federal Grants To account for capital projects financed by federal grants. General Capital Construction To account for transfers from the General fund for various capital projects and to account for funds set aside for the future repair and replacement of the City's base infrastructure. Other Funds To account for any other funds used by the City for the purchase or construction of major capital facilities. Park Development To account for receipts of fees charged to developers for park acquisition and development. Planned Local Drainage Areas To account for receipts of fees charged to developers for drainage facilities necessitated by growth. 114 CAPITAL PROJECTS FUNDS (CONTINUED) Public Facilities Construction To account for receipts of fees charged to developers for specific public facilities such as libraries and fire stations necessitated by growth. Rancho Santa Fe Road Project To account for amounts paid by developers for Rancho Santa Fe Road construction and improvements. Redevelopment Agency To account for financial resources segregated for the rehabilitation of commercial and public property and capital projects in the Carlsbad Village area. Sales Tax/TransNet To account for receipts of County sales tax allocated by the San Diego County Regional Transportation Commission to finance transportation projects. State Grants To account for capital projects financed by state grants. Traffic Impact Projects To account for receipts of fees charged to developers for street construction and improvement. Civic and Maintenance Projects Water, Sewer and Drainage Projects Street, Interchange and Traffic Signal Projects 115 CITY OF CARLSBAD Capital Projects Funds Combining Balance Sheet June 30,2001 Bridge and Community General Assessment Thoroughfare Facilities Federal Capital Other Park Districts Districts District No. 1 Grants Construction Funds Development $ 1,346,673 6,763,211 42,541,507 - 14,491,371 1,676,343 8,856 68,334 - - - - 6,247 - - - - 11,059 200,725 4,970,854 $ 1,352,920 6,831,545 42,550,363 11,059 19,662,950 1,676,343 $ - 26,602 92,597 281 46,154 10,778 4,640,854 - - 63,250 4,667,456 92,597 11,059 109,404 200,725 4,970,854 902,092 1,170,566 8,688 519,246 458,290 1,261,997 1,279,683 - 6,046,033 1,056,945 894,630 - 40,007,517 - - 113,764 (8,688) 7,816,688 505,634 1,352,920 2,164,089 42,457,766 - 19,553,546 1,676,343 8,536,124 _ 550 - -_ - 8,536,674 56,338 - 4,880,000 _ 4,936,338 - 1,205 3,599,131 . - 3,600,336 Assets Cash and investments Receivables: Taxes Accounts, net Accrued interest Due from other governments Prepaid items Advances to other funds Total assets Liabilities and Fund Balances Liabilities: Accrued liabilities Due to other funds Advances from other funds Deposits payable Deferred revenue Total liabilities Fund balances: Reserved for: Prepaid items Advances to other funds Encumbrances Unreserved: Designated for continuing appropriations Designated for approved capital projects Undesignated Total liabilities and fund balances $ 1,352.920 6,831,545 42,550,363 11,059 19,662,950 1,676,343 8,536,674 116 Planned Local Public Drainage Facilities Facilities Construction 7,194,507 31,466,375 248,957 7,443,464 31,466,375 337,420 240,685 240,685 337,420 804,892 217,056 1,549,370 10,230,064 4,848,517 20,681,835 7,202,779 31,128,955 Rancho Santa Fe Traffic Road Redevelopment Sales Tax/ State Impact Project Agency TransNet Grants Projects 17,799,167 1,387,648 11,943,075 874,973 5,289,900 66,981 12,626 1,365,037 20,408 17,799,167 1,487,663 11,943,075 2,240,010 5,289,900 60,206 29,460 186,218 70 4,042 2,625 9,000 60,206 38,460 186,218 2,695 4,042 20,408 749,367 70,771 6,477,820 2,172 106,943 5,826,866 696,709 2,342,393 150,832 3,395,346 11,162,728 661,315 2,936,644 2,084,311 1,783,569 17,738,961 1,449,203 11,756,857 2,237,315 5,285,858 Totals 151,310,874 8,856 384,822 18,873 1,376,096 221,133 4,970,854 158,291,508 839,388 13,403 9,520,854 9,000 303,935 10,686,580 221,133 4,970,854 11,030,818 37,893,659 85,174,830 8,313,634 147,604,928 7,443,464 31,466,375 17,799,167 1,487,663 11,943,075 2,240,010 5,289,900 158,291,508 117 CITY OF CARLSBAD Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2001 Revenues: Taxes Intergovernmental Charges for services Income from property and investments Contributions from property owners Miscellaneous Total revenues Expenditures: Current: General government Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Proceeds of debt Total other financing sources(uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing us Fund balances at beginning of year Residual equity transfers in Residual equity transfers out Fund balances at end of year Bridge and Assessment Thoroughfare Districts Districts $ - 99,664 611,074 556,140 233,994 99,664 1,401,208 425,430 9,809 2,020,820 _ - 435,239 2,020,820 (335,575) (619,612) 409,146 - 409,146 (335,575) (210,466) 1,688,495 2,374,555 - S 1,352,920 2,164,089 Community Facilities Federal District No. 1 Grants 8,887,552 17,009 3,280,154 953,451 225,279 13,346,436 17,009 119,835 2,859,652 17,009 _ - 2,979,487 17,009 10,366,949 85.200 - 85,200 10,452,149 32,005,617 - 42.457,766 General Capital Construction 197,294 - 1,199,502 _ 20,000 1,416,796 21,400 1,528,451 36,030 9.999 1,595,880 (179,084) 7,500,000 (216,194) 7,283,806 7,104,722 10,392,045 2,056,779 19,553,546 Other Park Funds Development 730,808 111,734 695,199 134,880 811,790 1,669 979,091 1,506,989 418,586 _ - 418,586 979,091 1,088.403 (200,000) (200,000) 779,091 1,088,403 897,252 2,511,933 - 1,676,343 3.600.336 118 Planned Rancho Local Public Santa Fe Traffic Drainage Facilities Road Redevelopment Sales Tax/ State Impact Facilities Construction Project Agency TransNet Grants Projects 139,674 2.299 1,200,000 2,064,303 256,609 613,999 2,990,960 1,526,677 94,809 999,368 45,374 504,001 204,568 8,209,737 151,517 - - - 1,583,398 13.186 - - 40,457 818,567 11,200,697 1,817,868 366,903 2,199,368 2,109,677 2.127,856 143,428 50,891 - 429,731 - - 22,917 511,653 11,422,602 946,720 53,166 996,044 80,028 1,202,191 1,299 1,757 655,081 11,473,493 946,720 485,953 996.044 80,028 1,225,108 163,486 (272,796) 871.148 (119,050) 1,203,324 2,029,649 902,748 280,000 200.000 (85,200) 9.850 289,850 200,000 (85,200) 163,486 (272,796) 871,148 170,800 1,403,324 1,944,449 902,748 7,039,293 31,401,751 16,867,813 1,111,558 10,353,533 292,866 4,383,110 166,845 Totals 9,226.819 4,012,120 256,609 12,772,515 12,605,481 534,585 39,408,129 1,213,632 22,066,731 37,329 11.756 23,329.448 16,078,681 8,474,346 (501.394) 9.850 7,982.802 24,061,483 121,319,821 2,223,624 7.202,779 31,128,955 17,738,961 1,449,203 11,756,857 2,237,315 5,285.858 147,604.928 119 120 ENTERPRISE FUNDS Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs of providing goods or services to the general public be financed or recovered primarily through user charges. Carlsbad Municipal Water District To account for the operation, maintenance, planning, capital facility financing, and all customer service functions of the Carlsbad water system. Golf Course To account for revenues, expenses, and the construction activities of the City's proposed municipal golf course. Sewer To account for the operation, maintenance, and capital facility financing of the City's sewer system. Solid Waste To account for revenues and expenses of the City's solid waste source-reduction and recycling programs. Carlsbad Municipal Water District 121 CITY OF CARLSBAD Enterprise Funds Combining Balance Sheet June 30, 2001 Assets: Current assets: Cash and investments Receivables: Taxes Accounts, net Prepaid items Inventory Total current assets Restricted assets: Cash and investments Accrued interest Total restricted assets Fixed assets Less accumulated depreciation Fixed assets, net Total assets Liabilities and Fund Equity Current liabilities: Accrued liabilities Due to other governments Current portion of long-term debt Deposits payable Total current liabilities Current liabilities payable from restricted assets - accrued interest payable Advances from other funds Deferred revenue Loan payable Certificates of participation, net of unamortized issuance costs and deferred charges of $124,479 Installment purchase agreement, net of deferred charges of $757,606 Accrued assessments Total liabilities Fund equity: Contributed capital Retained earnings: Reserved for debt service Unreserved Total retained earnings Total fund equity Total liabilities and fund equity Carlsbad Municipal Water District $ 47,929,075 21,112 2,462,130 4,550 259,528 50,676,395 762,292 6,832 769,124 89,669,751 (19,313,497) 70,356,254 $ 121,801,773 $ 2,758,985 575,280 1,185,665 124,884 4,644,814 52,671 - - 1,574,224 2,170,521 _ - 8,442,230 66,928,612 740,000 45,690,931 46,430,931 113,359,543 $ 121,801,773 Golf Course 2,055,433 _ - - - 2,055,433 - . 8,612,019 8,612,019 10,667,452 1,238 - 168,405 169,643 11,304 2,737,200 - - - _ 621,025 3,539,172 7,465,190 . (336,910) (336,910) 7,128,280 10,667,452 Sewer 57,011,836 _ 847,231 - 5,806 57,864,873 954,364 21,725 976,089 79,320,292 (20,016,950) 59,303,342 118,144,304 1,414,339 - 480,000 1,396,440 3,290,779 196,868 - 1,147,349 - - 8,112,394 - 12,747,390 62,956,520 942,161 41,498,233 42,440,394 105,396,914 118,144,304 Solid Waste 3,390,019 38,834 271,745 - - 3,700,598 - - - - 3,700,598 232,284 - - 232,284 - - - - _ - 232,284 3,421 . 3,464,893 3,464,893 3,468,314 3,700,598 Totals 110,386,363 59,946 3,581,106 4,550 265,334 114,297,299 1,716,656 28,557 1,745,213 177,602,062 (39,330,447) 138,271,615 254,314,127 4,406,846 575,280 1,834,070 1,521,324 8,337,520 260,843 2,737,200 1,147,349 1,574,224 2,170,521 8,112,394 621,025 24,961,076 137,353,743 1,682,161 90,317,147 91,999,308 229,353,051 254,314,127 122 CITY OF CARLSBAD Enterprise Funds Combining Statement of Revenues, Expenses and Changes in Retained Earnings Year Ended June 30, 2001 Operating revenues: Water sales Sewer services charges Other charges for services Contributions from other government agencies Miscellaneous Total operating revenues Operating expenses: Sewer plant operations Purchased water Depreciation General and administrative Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Income from property and investments Interest expense and fees Gain (loss) on sale of property Property taxes Amortization of issuance costs Total nonoperating revenues (expenses) Income before capital contributions Capital contributions Net income (loss) Retained earnings (deficit) at beginning of year Retained earnings (deficit) at end of year Carlsbad Municipal Golf Water District Course $ 16,474,378 - 772,028 452,098 225,030 17,923,534 10,587,342 1,471,885 5,696,518 146,442 17,755,745 146,442 167,789 (146,442) 3,978,186 219,250 (301,235) 2,112 (43,713) 1,370,736 (11,309) 4,992,665 221,362 5,160,454 74,920 4,799,726 600,000 9,960,180 674,920 36,470,751 (1,011,830) Sewer 5,654,116 107,557 - 1,005,909 6,767,582 2,153,572 - 1,440,380 1,645,897 5,239,849 1,527,733 4,322,413 (552,435) (1,008) - - 3,768,970 5,296,703 4,703,535 10,000,238 32,440,156 Solid Waste - 482,750 24,276 192 507,218 - 490 259,430 259,920 247,298 278,533 - (735) - - 277,798 525,096 _ 525,096 2,939,797 Totals 16,474,378 5,654,116 1,362,335 476,374 1,231,131 25,198,334 2,153,572 10,587,342 2,912,755 7,748,287 23,401,956 1,796,378 8,798,382 (851,558) (45,456) 1,370,736 (11,309) 9,260,795 11,057,173 10,103,261 21,160,434 70,838,874 46,430,931 (336,910) 42,440,394 3,464,893 91,999,308 123 CITY OF CARLSBAD Enterprise Funds Combining Statement of Cash Flows Year Ended June 30, 2001 Cash flows from operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization (Increase) decrease in receivables (Increase) decrease in inventory (Increase) decrease in prepaid items Increase (decrease) in accrued liabilities Increase (decrease) in due to other governments Increase (decrease) in deposits payable Increase (decrease) in deferred revenue Increase (decrease) in loans payable Net cash provided by (used for) operating activities Cash flows from noncapital financing activities: Cash received from other funds Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities: Purchases of fixed assets Principal payment on bonds Interest and other fees paid Property taxes received Capital contributions received Net cash provided by (used for) capital and related financing activities Cash flows from investing activities: Interest on investments Net cash provided by (used for) investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Carlsbad Municipal Water District $ 167,789 1,471,885 527,452 9,807 (200) (303,705) (357,776) (143,079) (107,546) 1,264,627 (2,101,620) (1,040,000) (440,576) 1,370,736 4,058,106 1,846,646 3,978,186 3,978,186 7,089,459 40,861,908 $ 47,951,367 Golf Course (146,442) (9,849) (156,291) 600,000 600,000 (805,291) (161,614) (2,112) (969,017) 221,362 221,362 (303,946) 2,359,379 2,055,433 Sewer Solid Waste 1,527,733 247,298 1,440,380 490 (79,619) (18,658) 2,200 279,668 20,533 (356,611) 170,345 (387,153) 2,596,943 249,663 (3,753,919) (460,000) (492,328) 3,891,441 (814,806) 4,322,413 278,533 4,322,413 278,533 6,104,550 528,196 50,907,943 2,861,823 57,012,493 3,390,019 Totals 1,796,378 2,912,755 429,175 12,007 (200) (13,353) (714,387) 27,266 (387,153) (107,546) 3,954,942 600,000 600,000 (6,660,830) (1,661,614) (935,016) 1,370,736 7,949,547 62,823 8,800,494 8,800,494 13,418,259 96,991,053 110,409,312 124 CITY OF CARLSBAD Enterprise Funds Combining Statement of Cash Flows (Continued) Carlsbad Municipal Water District Golf Course Reconciliation of cash and cash equivalents to amounts reported on the balance sheet: Reported on the balance sheet: Cash and investments Restricted assets: Cash and investments Less investments not meeting the definition of cash equivalents: Investment contracts Cash and cash equivalents at end of year Sewer Solid Waste Totals 47,929,075 762,292 (740,000) 2,055,433 57,011,836 3,390,019 110,386,363 954,364 - 1,716,656 (953,707)(1,693,707) 47,951,367 2,055,433 57,012,493 3,390,019 110,409,312 Supplemental schedule of noncash investing, capital and financing activities: Capital assets contributed by (to) other funds $ 741,620 812,094 1,553,714 125 126 INTERNAL SERVICE FUNDS Internal Service funds are used to account for the financing of goods or services provided by one department or agency of a government to other departments or agencies on a cost reimbursement basis. Fleet Management To account for charges to other funds to provide fleet maintenance and accumulate funds for fleet replacement. Health Insurance To account for charges to other funds and from employees to provide health insurance for full- time City employees. Information Technology To account for charges to other funds for information technology services. Risk Management To account for charges to other funds to insure for liability claims against the City. Workers' Compensation To account for charges to other funds to insure against Workers' Compensation claims. Information Technology Workers' Compensation 127 CITY OF CARLSBAD Internal Service Funds Combining Balance Sheet June 30, 2001 Fleet Health Information Risk Workers' Management Insurance Technology Management Compensation Totals Assets Current assets: Cash and investments Receivables: Accounts, net Inventory Prepaid items Total current assets Fixed assets: Equipment and vehicles Less accumulated depreciation Fixed assets, net Total assets Liabilities and Fund Equity Current liabilities: Accounts payable Accrued wages payable Accrued vacation payable Capital lease payable Estimated claims payable Total current liabilities Fund equity: Contributed capital Retained earnings: Unreserved Total fund equity Total liabilities and fund equity $ 5,798,940 11,864 108,000 5,918,804 10,697,892 (5,146,225) 5,551,667 $ 11,470,471 $ 363,682 11,968 16,138 9,876 401,664 3,552,623 7,516,184 11,068,807 346,522 2,332,588 1,317 50,290 398,129 2,332,588 2,666,518 (1,160,298) 1,506,220 398,129 3,838,808 50,091 36,791 55,627 10,614 272,917 272,917 153,123 2,598,257 125,212 1,087,428 125,212 3,685,685 2,733,905 256,468 2,990,373 2,484 (952) 1,532 2,991,905 1,723 7,320 16,928 640,001 665,972 1,911,939 413,994 2,325,933 1,883,161 13,095,116 269,649 108,000 50,290 1,883,161 13,523,055 13,366,894 (6,307,475) 7,059,419 1,883,161 20,582,474 376 415,872 6,118 62,197 88,693 20,490 969,475 1,882,393 975,969 2,469,645 752,600 8,815,419 154,592 9,297,410 907,192 18,112,829 $11,470,471 398,129 3,838,808 2,991,905 1,883,161 20,582,474 128 CITY OF CARLSBAD Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Retained Earnings Year Ended June 30, 2001 Fleet Health Information Risk Workers' Management Insurance Technology Management Compensation Totals Operating revenues: Other charges for services Miscellaneous Total operating revenues Operating expenses: Depreciation Fuel and supplies Claims expense General and administrative Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Income from property and investments Gain (loss) on disposition of assets Total nonoperating revenues (expenses) Income (loss) before capital contributions and transfers Operating transfers in Operating transfers out Capital contributions Total Contributions and transfers Net income (loss) Retained earnings (deficit) at beginning of year Residual equity transfer out Retained earnings (deficit) at end of year $ 2,858,915 2,858,915 1,020,498 511,070 1,079,558 2,611,126 247,789 470,343 79,812 550,155 797,944 47,400 254,305 301,705 1,099,649 6,416,535 $ 7,516,184 2,228,481 337,171 2,565,652 2,343,085 2,343,085 222,567 30,287 30,287 252,854 74,000 74,000 326,854 (201,642) 125,212 3,205,000 2,128 3,207,128 490,464 14,896 2,432,163 2,937,523 269,605 158,325 158,325 427,930 (15,000) 36,190 21,190 449,120 638,308 1,087,428 727,473 265,640 993,113 497 557,418 234,198 792,113 201,000 238,821 238,821 439,821 _ 439,821 974,173 (1,000,000) 413,994 536,980 53,929 590,909 816,834 135,452 952,286 (361,377) 166,302 166,302 (195,075) _ (195,075) 349,667 154,592 9,556,849 658,868 10,215,717 1,511,459 525,966 3,717,337 3,881,371 9,636,133 579,584 1,064,078 79,812 1,143,890 1,723,474 121,400 (15,000) 290,495 396,895 2,120,369 8,177,041 (1,000,000) 9,297,410 129 CITY OF CARLSBAD Internal Service Funds Combining Statement of Cash Flows Year Ended June 30, 2001 Cash flows from operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization (Increase) decrease in receivables (Increase) decrease in inventory (increase) decrease in prepaid items Increase (decrease) in accrued liabilities Increase (decrease) in estimated claims payable Increase (decrease) in deferred revenues Net cash provided by (used for) operating activities Cash flows from noncapital financing activities: Cash received from other funds Cash paid to other funds Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities: Purchases of fixed assets Net cash provided by (used for) capita! and related financing activitic Cash flows from investing activities: Interest on investments Net cash provided by (used for) investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental schedule of noncash investing, capital and financing activities: Capital assets contributed by (to) other funds Fleet Management $ 247,789 1,020,498 1,828 (10,925) 103,409 1,362,599 47,400 47,400 (1,550,039) (1,550,039) 470,343 470,343 330,303 5,468,637 $ 5,798,940 $ 254,305 Health Insurance 222,567 9,933 (24,725) (39,337) (111,482) (14,167) 42,789 74,000 74,000 30,287 30,287 147,076 199,446 346,522 Information Technology 269,605 490,464 100 9,715 44,342 814,226 (15,000) (15,000) (131,609) (131,609) 158,325 158.325 825,942 1,506,646 2,332,588 36,190 Risk Workers' Management Compensation 201,000 (361,377) 497 (256,468) (8,551) 282 16,415 134,741 (175) (47,282) (226,354) (1,000,000) (1,000,000) 238,821 166,302 238,821 166,302 (808,461) (60,052) 3,542,366 1,943,213 2,733,905 1,883,161 Totals 579,584 1,511,459 (244,607) (10,925) (15,010) 100,145 39,674 (14,342) 1,945,978 121,400 (1,015,000) (893,600) (1,681,648) (1,681,648) 1,064,078 1,064,078 434,808 12,660,308 13,095,116 290,495 130 131 132 AGENCY FUNDS Agency funds are used to account for assets held by a government for other funds, governments or individuals. Contractors' and Miscellaneous Deposits To account for money deposited by contractors for designated future development and other miscellaneous deposits. Assessment Districts To account for the debt service transaction on assessment district bonds for which the City is not obligated. 133 CITY OF CARLSBAD Agency Funds Combining Statement of Changes in Assets and Liabilities Year Ended June 30, 2001 Balance at June 30, 2000 Additions Reductions Balance at June 30, 2001 Contractors' and Miscellaneous Deposits: Assets: Cash and investments Accounts receivable Total assets Liabilities: Accrued interest payable Deposits payable Total liabilities Assessment Districts: Assets: Cash and investments Taxes receivable Accrued interest Total assets Liabilities: Due to bondholders Totals - All Asencv Funds: Assets: Cash and investments Accounts receivable Taxes receivable Accrued interest Total assets Liabilities: Accrued interest payable Due to bondholders Deposits payable $ 8,574,896 16,202 $ 8,591,098 $ 1,707,618 6,883,480 S 8,591,098 $ 7,804,501 102,297 95,052 $ 8,001,850 $ 8,001,850 $ 16,379,397 16,202 102,297 95,052 $ 16,592,948 $ 1,707,618 8,001,850 6,883,480 16,888,367 14,822 16,903,189 665,904 23,830,428 24,496,332 5,320,615 20,283 93,522 5,434,420 5,225,956 22,208,982 14,822 20,283 93,522 22,337,609 665,904 5,225,956 23,830,428 (17,946,268) (30,538) (17,976,806) (473,466) (25,096,483) (25,569,949) (4,662,695) (102,297) (95,052) (4,860,044) (4,651,580) (22,608,963) (30,538) (102,297) (95,052) (22,836,850) (473,466) (4,651,580) (25,096,483) 7,516,995 486 7,517,481 1,900,056 5,617,425 7,517,481 8,462,421 20,283 93,522 8,576,226 8,576,226 15,979,416 486 20,283 93,522 16,093,707 1,900,056 8,576,226 5,617,425 Total liabilities $ 16,592,948 29,722,288 (30,221,529)16,093,707 134 135 136 GENERAL FIXED ASSETS ACCOUNT GROUP General fixed assets are those fixed assets used in operations accounted for in governmental funds. General fixed assets include all fixed assets not accounted for in an enterprise, internal service, or trust and agency fund. Construction in Progress Furniture and Equipment 137 CITY OF CARLSBAD General Fixed Assets Account Group Schedule of General Fixed Assets by Function June 30, 2001 Land Buildings Improvements Furniture and equipment Construction in progress Totals General Culture and Public Public Government Recreation Safety Works Totals $ 7,685,134 30,680,408 2,150,407 740,763 41,256,712 17,221,712 25,057,915 13,996,610 - 56,276,237 915,669 8,029,849 526,276 342,009 9,813,803 2,467,306 3,848,019 3,550,465 1,704,531 11,570,321 - 1.313.620 264.670 538.621 2.116.911 $28.289.821 68.929.811 20.488.428 3.325.924 121.033.984 138 CITY OF CARLSBAD General Fixed Assets Account Group Schedule of Changes in General Fixed Assets by Function Year Ended June 30, 2001 General government Culture and recreation Public safety Public works Totals General Fixed Assets at July 1.2000 $ 17,754,676 67,826,597 20,471,585 2.964.464 $109.017.322 Increases 21,361,436 4,556,894 483,804 576.580 26.978.714 Decreases (10,826,291) (3,453,680) (466,961) (215.120) (14.962.052) General Fixed Assets at June 30. 2001 28,289,821 68,929,811 20,488,428 3.325.924 121.033.984 139 CITY OF CARLSBAD General Fixed Assets Account Group Schedule of General Fixed Assets by Source June 30, 2001 As of June 30, 1986 $27,136,537 Net additions subsequent to June 30, 1986: General Fund 21,124,977 Community development block grants 2,912,726 Federal grants 709,124 State grants 855,967 Street lighting 327,151 Park development 21,164,964 Public facilities 38,028,463 Redevelopment 8.774.075 Total investments in general fixed assets $121.033.984 140 ANNUAL DEBT SERVICE REQUIREMENTS The following schedules present principal and interest debt service requirements for the City's debt. ousing and Redevelopment Bonds HUD Section 108 Loan Encina Joint Powers Authority Purchase Agreement Water Distnct COPs State Loan for Reclaimed Water Golf Course Accrued Assessment 141 CITY OF CARLSBAD Schedule of Annual Debt Service Requirements $15.495.000 - 1993 CARLSBAD HOUSING AND Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Totals REDEVELOPMENT COMMISSION TAX ALLOCATION BONDS Interest Due September 1 364,883 356,351 347,426 337,976 328,001 317,633 306,607 295,058 282,851 269,989 256,470 242,295 227,332 211,583 195,045 177,589 159,214 139,920 119,576 98,182 75,525 51,675 26.500 Interest Due March 1 356,351 347,426 337,977 328,001 317,633 306,607 295,058 282,851 269,989 256,470 242,295 227,332 211,583 195,045 177,589 159,213 139,920 119,576 98,183 75,525 51,675 26,500 - Total Interest 721,234 703,777 685,403 665,977 645,634 624,240 601,665 577,909 552,840 526,459 498,765 469,627 438,915 406,628 372,634 336,802 299,134 259,496 217,759 173,707 127,200 78,175 26,500 Principal Due September 1 325,000 340,000 360,000 380,000 395,000 420,000 440,000 465,000 490,000 515,000 540,000 570,000 600,000 630,000 665,000 700,000 735,000 775,000 815,000 855,000 900,000 950,000 1,000,000 Total Annual Debt Service 1,046,234 1,043,777 1,045,403 1,045,977 1,040,634 1,044,240 1,041,665 1,042,909 1,042,840 1,041,459 1,038,765 1,039,627 1,038,915 1,036,628 1,037,634 1,036,802 1,034,134 1,034,496 1,032,759 1,028,707 1,027,200 1,028,175 1.026.500 S5.187.681 10.010.480 13.865.000 142 CITY OF CARLSBAD Schedule of Annual Debt Service Requirements, (Continued) $6.595.000 - 1997 HOSP GROVE CERTIFICATES OF PARTICIPATION Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Totals (1988 Refunding) Interest Due August 1 111,678 100,608 88,743 76,058 62,418 48,448 33,373 17,273 Interest Due February 1 100,607 88,742 76,057 62,417 48,447 33,372 17,272 - Total Interest 212,285 189,350 164,800 138,475 110,865 81,820 50,645 17.273 Principal Due August 1 540,000 565,000 590,000 620,000 635,000 670,000 700,000 735,000 Total Annual Debt Service 752,285 754,350 754,800 758,475 745,865 751,820 750,645 752,273 5.055.000 6.020.513 $1.199.950 - HUD SECTION 108 LOAN Fiscal Year 2001-02 2002-03 2003-04 Totals Interest Due August 1 19,787 13,621 7,030 Interest Due February 1 13,621 7,030 Total Interest 33,408 20,651 7,030 Principal Due August 1 150,000 160,000 169,950 Total Annual Debt Service 183,408 180,651 176,980 143 CITY OF CARLSBAD Schedule of Annual Debt Service Requirements, (Continued) $7.400.000 - 1997 CARLSBAD MUNICIPAL WATER DISTRICT Fiscal Year 2001-02 2002-03 2003-04 Totals CERTIFICATES Interest Due November 1 72,505 49,930 25,850 OF PARTICIPATION (1988 Refunding Proiect) Interest Due Mavl 72,505 49,930 25,850 Total Interest 145,010 99,860 51,700 Principal Due May 1 1,075,000 1,120,000 1,175.000 Total Annual Debt Service 1,220,010 1,219,860 1,226,700 $148.285 3.666.570 $11.080.000 - ENCINA FINANCING JOINT POWERS AUTHORITY Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Totals INSTALLMENT PURCHASE AGREEMENT Interest Due August 1 236,241 225,921 215,278 200,978 188,603 172,791 156,153 139,353 122,816 105,191 86,228 66,241 45,228 23.190 Interest Due February 1 225,920 215,278 200,978 188,603 172,791 156,153 139,353 122,816 105,191 86,228 66,241 45,228 23,191 - Total Interest 462,161 441,199 416,256 389,581 361,394 328,944 295,506 262,169 228,007 191,419 152,469 111,469 68,419 23,190 Principal Due August 1 480,000 495,000 520,000 550,000 575,000 605,000 640,000 675,000 705,000 740,000 780,000 820,000 860,000 905,000 Total Annual Debt Service 942,161 936,199 936,256 939,581 936,394 933,944 935,506 937,169 933,007 931,419 932,469 931,469 928,419 928,190 3.732.183 13.082.183 144 CITY OF CARLSBAD Schedule of Annual Debt Service Requirements, (Continued) $2,331.489 - CARLSBAD MUNICIPAL WATER DISTRICT Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Totals STATE LOAN FOR Interest Due November 30 48,862 45,653 42,350 38,952 35,455 31,857 28,155 24,345 20,425 16,391 12,240 7,969 2,680 RECLAIMED WATER PROJECTS Principal Due November 30 110,665 113,874 117,177 120,575 124,072 127,670 131,372 135,182 139,102 143,136 147,287 151,558 123.219 1.684.889 Total Annual Debt Service 159,527 159,527 159,527 159,527 159,527 159,527 159,527 159,527 159,527 159,527 159,527 159,527 125.899 2.040.223 $2.618.908 GOLF COURSE ACCRUED ASSESSMENT Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 Totals Interest 45,212 37.465 29.103 20,173 10.425 Principal 168,405 177,912 186,060 196,925 60.128 2&M3Q Total Annual Debt Service 213,617 215,377 215,163 217,098 70.553 145 146 O 6 147 CITY OF CARLSBAD General Expenditures by Function Last Ten Fiscal Years Fiscal Year m 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1 998-99 1999-00 2000-01 Total"' $53,985,119 55,104,390 62,668,276 60,280,103 59,802,924 65,943,032 80,045,280 112,156,205 105,655,384 92,884,485 General Govt. $5,884,582 6,080,919 5,513,101 5,871,248 5,850,829 6,961,469 6,909,151 6,784,525 7,382,909 9,022,218 Public Safely $15,989,114 15,734,643 16,351,652 15,915,678 16,850,087 17,410,033 18,631,042 21,927,751 21,799,386 23,627,184 Comm. Devel. $5,934,690 5,886,636 6,255,252 6,465,977 7,363,194 7,431,539 7,894,536 8,636,634 11,538,444 9,351,917 Comm. Services $7,473,689 7,176,621 7,548,100 7,459,685 7,590,363 8,390,009 6,672,810 7,541,378 9,088,264 11,571,249 Public Works $9,088,351 8,376,678 8,847,328 8,111,572 8,956,757 8,816,767 11,437,101 12,689,683 13,822,429 14,402,096 Capital Projects $ 5,639,898 7,192,002 12,933,253 12,159,653 9,654,082 13,556,164 23,693,412 52,106,587 39,543,074 22,066,731 Debt Service $3,974,795 4,656,891 5,219,590 4,296,290 3,537,612 3,377,051 4,807,228 2,469,647 2,480,878 2,843,090 '"Includes General, Special Revenue, Debt Service and Capital Projects Funds. (2)Beginning in fiscal year 1997-98, Park Maintenance expenditures are included in Public Works instead of Community Services. GENERAL EXPENDITURES BY FUNCTION 2000-01 Capital Projects 24% Public Works 15% Debt Service 2% Community Services 12% General Government 10% Public Safety 26% Community Development 10% Source: City of Carlsbad Comprehensive Annual Financial Reports 148 TOTAL EXPENDITURES LAST TEN YEARS 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal Year SPENDING ON CAPITAL PROJECTS LAST TEN YEARS 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal Year 149 CITY OF CARLSBAD General Revenues by Source Last Ten Fiscal Years Fiscal Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 Total'" S 58,440,436 58,115,465 62,239,740 69,768,517 74,611,395 98,645,130 122,653,159 145,393,991 115,252,270 136,244,948 Property Taxes $15,132,124 15,332,036 13,920,220 13,537,893 13,576,407 14,516,474 15,226,827 17,121,586 19,916,613 23,143,014 Sales Taxes $8,723,382 9,167,849 10,840,115 11,399,568 11,542,970 12,495,143 14,817,057 17,129,474 19,493,247 21,196,726 Transient Occupancy Taxes $3,077,595 3,098,793 3,153,084 3,252,270 3,406,917 3,675,472 6,046,092 7,010,249 8,333,196 9,269,484 Other Taxes $5,153,213 3,408,805 4,124,250 8,434,825 8,621,717 10,824,890 15,290,601 14,508,643 12,661,882 14,237,832 Business Licenses $ 910,532 1,071,342 1,093,827 1,245,830 1,491,159 1,510,462 1,603,744 1,737,850 1,863,514 2,300,367 (1) Includes General, Special Revenue, Debt Service and Capital Projects Funds. (2) Includes interdepartmental services category added in 1991-92 and miscellaneous revenues, 160 £140 =5120 GENERAL REVENUE LAST TEN YEARS Fiscal Year £ 0 t/>§10 H PROPERTY TAX AND SALES TAX REVENUE LAST TEN YEARS Property Tax Sales Tax Fiscal Year o CN Source: City of Carlsbad Comprehensive Annual Financial Reports 150 Other Licenses $3,307,980 3,355,533 3,590,927 3,766,340 4,178,844 5,609,730 6,484,025 3,826,686 3,320,851 3,409,156 Intergovern- mental $6,087,138 7,107,385 8,019,308 7,590,323 6,426,262 11,764,760 17,091,140 17,801,614 14,094,118 14,285,677 Charges for Services S 7,759,224 5,725,597 9,181,814 9,819,230 6,805,386 10,707,653 7,614,902 6,805,147 5,749,416 6,427,307 Fines and Forfeits S3 12,984 231,877 231,454 263,411 335,395 317,892 331,318 935,955 839,831 888,608 Investment Income $4,826,292 4,866,361 3,996,127 4,415,975 4,862,050 6,075,188 8,632,261 8,925,565 10,495,817 20,384,618 Contributions From Property Owners $ 446,813 380,389 344,851 2,148,548 9,359,802 15,450,861 25,861,948 45,763,304 14,733,063 15,982,528 Other"' $2,703,159 4,369,498 3,743,763 3,894,304 4,004,486 5,696,605 3,653,244 3,827,918 3,750,722 4,719,631 TRANSIENT OCCUPANCY TAX LAST TEN YEARS M "oQ co CHARGES FOR SERVICES LAST TEN YEARS Fiscal Year Fiscal Year 151 CITY OF CARLSBAD Computation of Legal Debt Margin June 30, 2001 Net assessed valuation S 10.490.115.729 Debt limit (15% of 25% of net assessed valuation as adjusted) 393,379,340 Amount of debt applicable to debt limit: Bonded debt 13,865,000 Certificates of participation 5,055,000 Obligations under capital leases 887,950 Total amount of debt applicable to debt limit 19,807,950 Legal debt margin $ _JT73.571.390 Percent of debt limit 5% Source: County of San Diego Office of the Auditor and Controller 152 2000-01 Assessed Valuation: CITY OF CARLSBAD Schedule of Direct and Overlapping Bonded Debt June 30, 2001 $10,617,645,929 (after deducting $178,841,829 redevelopment increment valuation) DIRECT AND OVERLAPPING BONDED DEBT: San Diego County Water Authority Metropolitan Water District Carlsbad Unified School District Carlsbad Unified School District Lease Tax Obligations Carlsbad Unified School District Community Facilities Dist. No. 1 Oceanside Unified School District Encinitas Union School District Encinitas Union School District Lease Tax Obligations San Marcos Unified School District School Facilities Improvement District San Marcos Unified School District Community Facilities District No. 5 San Dieguito Union High School Dist. Community Facilities Dist. No. 94-1 San Dieguito Union High School Dist. Community Facilities Dist. No. 94-2 San Dieguito Union High School Dist. Community Facilities Dist. No. 95-2 Olivenhain Municipal Water Dist., Assessment Dist. No. 96-1 City of Carlsbad 1915 Act Bonds TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Diego County General Fund Obligations San Diego County Pension Obligations San Diego County Supt. of Schools General Fund Obligations Mira Costa Community College District Certificates of Participation Carlsbad Unified School District General Fund Obligations San Marcos Unified School Dist. Certificates of Participation Encinitas Union School Dist. Certificates of Participation Other School District Certificates of Participation City of Carlsbad General Fund Obligations TOTAL DIRECT AND OVERLAPPING GF OBLIGATION DEBT: GROSS COMBINED TOTAL DEBT: Applicable 6.719 % 1.083 97.855 97.855 100.000 .010 27.374 27.374 30.968 100.000 100.000 98.327 36.882 22.670 100.000 Debt June 30.2001 $ 291,958 5,712,608 25,930,299 1,957,100 11,255,000 2,950 7,927,187 1,452,191 6,446,924 12,755,000 299,221 21,517,291 332,724 4,875,184 41,535,000 $ 142,290,637 5.502 % $ 5.502 5.502 27.344 97.855 27.257 27.374 Various 100.000 $ 31,639,622 18,897,895 129,521 1,847,087 57,621,917 328,447 662,451 183,942 5,055,000 116,365,882 $ 258,656,519 (1) Excludes tax and revenue anticipation notes, revenue, mortgage revenue, and tax allocation bonds and non-bonded capital lease obligations. Ratios to Assessed Valuation: Total Gross Overlapping Tax and Assessment Debt. Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($5,055,000) Gross Combined Total Debt 1.32% 0.05% 2.44% SHARE OF AUTHORIZED & UNSOLD GENERAL OBLIGATION BONDS: Carlsbad Municipal Water District, I.D. No. 1 Carlsbad Municipal Water District, I.D. No. 3 Source: California Municipal Statistics, Inc. $99,369 $200,000 153 CITY OF CARLSBAD Ratio of Annual Debt Service for General Bonded Debt to Total Governmental Expenditures Last Ten Fiscal Years Fiscal Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 Principal $150,000 Interest $3,908 Total Debt Service0' $153,908 Total Governmental Expenditures*2* $53,985,119 55,104,390 62,668,276 60,280,103 59,802,924 65,943,032 80,045,280 112,156,205 105,655,384 92,884,485 Ratio of Debt Service to Governmental Expenditures 0.3 (1) Debt service requirement on General Obligation Bonds comprised of 1962 Sewer Bonds Series B and C and 1966 Library Bonds. Excludes debt service for the Assessment District and the Building and Parking Authorities. (2) Includes General, Special Revenue, Debt Service and Capital Project funds. RATIO OF DEBT SERVICE TO GENERAL EXPENDITURES LAST TEN YEARS 0.0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal Year Source: City of Carlsbad Comprehensive Annual Financial Reports 154 CITY OF CARLSBAD Construction and Business Activity Last Ten Fiscal Years Building Fiscal Permit Year Revenue 1991-92 $ 1992-93 1993-94 1994-95 1995-96 1996-97 1 219,445 234,063 365,571 644,131 917,788 ,262,177 1997-98 2,094,523 1998-99 2,524,063 1999-00 2,156,584 2000-01 2,102,074 Percent Change (74.4) 6.7 56.1 76.2 42.4 37.6 65.9 20.5 (14.6) (2.5) Estimated Valuation $ 42,351,906 49,809,414 71,057,243 145,344,099 162,116,427 305,247,426 479,909,805 588,527,417 468,596,775 513,763,904 Business License Revenue Percent Construction Change Deposits $ 910,532 9.4 $4,663,219 1,071, 1,093, 1,245, 1,491, 342 17.7 5,224,780 827 2.1 4,474,153 830 13.9 5,667,913 159 19.7 5,239,235 1,510,462 1.3 6,822,684 1,603, 1,737, 1,863, 744 6.2 5,857,013 850 8.4 5,779,355 514 7.2 6,132,355 2,300,367 23.4 4,782,012 ESTIMATED BUILDING VALUATION LAST TEN YEARS Dollars in millions $600 -j-' $500-^ $400 - " $300-'' $200 - x $100-'_. .<sa flit>*^a 1 I _ ^r*r ^VJ 1 -f^ JS 6 f - 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal Year Source: City of Carlsbad Comprehensive Annual Financial Reports 155 CITY OF CARLSBAD Water Enterprise Revenue Bond Coverage Last Ten Fiscal Years Fiscal Year 1991-92 1992-93 1993-94 1 994-95 1995-96 1996-97 1997-98 1998-99 1 999-00 2000-01 Gross Revenue'" $11,504,798 12,267,854 15,188,913 15,912,020 17,147,790 18,911,511 18,356,555 19,942,226 22,178,880 23,187,752 0) Includes (2) Includes Total Expenses'21 $ 9,520,564 11,421,571 12,286,557 12,690,114 13,998,346 14,692,531 14,583,879 16,732,975 18,609,221 18,027,298 operating and oneratine and Net Revenue Available For Debt Service $1,984,234 846,283 2,902,356 3,221,906 3, 149,444 4,218,980 3,772,672 3,209,251 3,569,659 5,160,454 non-operating non-oneratine Principal $685,000 730,000 775,000 825,000 880,000 1,040,000 955,000 995,000 1,040,000 1,075,000 revenues. exnenses. Debt Service Requirements Interest Total Coverage $842,538 798,696 751,248 700,098 644,822 494,954 264,695 227,450 187,650 145,010 $1,527,538 1,528,696 1,526,248 1,525,098 1,524,822 1,534,954 1,219,695 1,222,450 1,227,650 1,220,010 1.29 0.55 1.90 2.11 2.07 2.75 3.09 2.63 2.91 4.23 Source: City of Carlsbad Comprehensive Annual Financial Reports 156 WATER ENTERPRISE GROSS REVENUE VS. TOTAL EXPENSES LAST TEN YEARS $25 n 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal Year H GROSS REVENUE • TOTAL EXPENSES WATER ENTERPRISE REVENUE AVAILABLE FOR DEBT SERVICE LAST TEN YEARS $6.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal Year Source: City of Carlsbad Comprehensive Annual Financial Reports 157 CITY OF CARLSBAD Schedule of Assessed Valuation Last Ten Fiscal Years Fiscal Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 Secured Property $5,823,039,810 5,948,358,026 5,858,987,695 5,673,354,814 5,676,061,219 5,811,751,594 6,232,883,670 7,154,426,710 8,675,347,964 10,289,895,123 isecured Property $205,094,661 242,255,869 270,120,519 288,206,831 310,402,764 348,706,124 352,854,173 424,962,226 419,824,253 422,862,440 Less Property Exemptions $27,414,635 31,586,277 36,151,898 40,417,338 46,279,594 55,138,448 57,681,797 78,827,023 85,462,447 95,111,634 (l) Does not include redevelopment incremental valuation or state-assessed unitary values. Source: County of San Diego Office of the Auditor and Controller 158 Total Assessed Valuation10 $6,000,719,836 6,159,027,618 6,092,956,316 5,921,144,307 5,940,184,389 6,105,319,270 6,528,056,046 7,500,561,913 9,009,709,770 10,617,645,929 Homeowner's Exemptions S 90,728,114 92,131,120 94,519,630 96,173,142 98,488,810 100,249,766 103,825,400 108,623,200 119,026,600 127,530,200 Net Assessed Valuation $5,909,991,722 6,066,896,498 5,998,436,686 5,824,971,165 5,841,695,579 6,005,069,504 6,424,230,646 7,391,938,713 8,890,683,170 10,490,115,729 Percentage Change 8.0 2.7 (1.1) (2.9) 0.3 2.8 7.0 15.1 20.3 18.0 NET TAXABLE VALUE LAST TEN YEARS Dollars in billions $12 n 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal Year 159 CITY OF CARLSBAD Demographic Statistics Last Ten Fiscal Years Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 20 10 (Estimate) 2020 (Estimate) (1) Source - State Square Miles 42.2 42.2 42.2 42.2 42.2 42.2 42.2 42.2 42.2 42.2 42.2 42.2 Department of Finance. Population'0 65,331 66,481 66,652 66,479 68,010 70,532 73,688 77,550 82,030 83,469 97,126(2) 105,289(2) Population Percent Change 1.9 1.8 0.9 (0.2) 2.3 3.7 4.5 5.2 5.8 1.8 16.4 8.4 County Population0' 2,583,470 2,614,222 2,638,511 2,658,584 2,682,093 2,724,437 2,794,785 2,853,258 2,911,468 2,883,595 3,388,400(3) 3,863,500(3) (2) Source - based on City of Carlsbad projected residential construction estimates in 2001-02 Capital Improvement Program. (3) Source - State Department of Finance Interim County Population Projections (June 2001). 90,000 -( 80,000 - ' 70,000 • ' 60,000 • ' 50,000 • ' 40,000 • ' 30,000-' 20,000 •' 10,000 • ' POPULATION LAST TEN YEARS ^IIUJ ft!?- - . • SB !> ?' , /IE 1 ¥ '. £3 i •t • an f. Is >t J JV ! £ 1* '- —s C ' £S (^ -*v h j 4* s\ t* 1 1 tf £ — /53T &, "$ *** £* U. $ v (,' "•£ - City Population Percent of County 2.5 2.5 2.5 2.5 2.5 2.6 2.6 2.7 2.8 2.9 2.9 2.7 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal Year 160 CITY OF CARLSBAD Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 Total Current Lew $14,932,937 13,990,844 12,373,782 11,977,833 11,891,199 12,227,583 13,277,486 15,115,611 17,923,250 20,959,581 Total Current Collections $13,795,525 12,776,232 11,593,369 10,843,322 11,164,134 11,551,981 12,636,654 14,421,616 17,110,252 20,085,365 % of Levy Collected 92.4 91.3 93.7 90.5 93.9 94.5 95.2 95.4 95.5 95.8 PROPERTY TAX LEVIES & COLLECTIONS LAST TEN FISCAL YEARS Dollars in millions $25-f $20 - $0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal Year ID LEVIES BCOLLECTIONS Source: County of San Diego Office of the Auditor and Controller 161 CITY OF CARLSBAD Principal Employers 2000-2001 FIRM PRODUCT/SERVICE EMPLOYEES MANUFACTURING Callaway Golf Taylor Made Golf-Adidas Golf Company Tyco-Mallinckrodt Acushnet Golf Ashworth, Inc. ViaSat Modern Postcard/The Iris Group, Inc. Republic Tool & Manufacturing Company Synrron Bioresearch, Inc. Invitrogen Beckman Coulter The Upper Deck Schumacher NON-MANUFA CTURING Westfield Shoppingtown/Plaza Camino Real Four Seasons Resort-Aviara LEGOLAND California City of Carlsbad La Costa Resort & Spa Carlsbad Company Stores Carlsbad Unified School District Grand Pacific Resorts Gemological Institute of America 24-Hour Fitness SOMC Group, Inc. Farmers Insurance PinnFund USA San Diego Gas & Electric Company ISIS Pharmaceuticals COSTCO Wholesale Prescription Solutions Toyota Carlsbad/Lexus Golf Equipment Golf Equipment Respiratory Products Golf Equipment Golf Apparel Data Communications Custom Promotional Cards Tools Test Kits & Diagnostics Research Supplies Medical Diagnostic Reagent Sports Trading Cards Chemical Purification Systems Shopping Mall Resort Family Theme Park Municipal Government Hotel/Health Spa Outlet Shopping Center Education Hotel Management/Timeshare Development Gemlogical School Health Club Headquarters Software Distributor Insurance Services Mortgage Banking Power Generation Research and Development Grocer/Wholesale/Retail Prescription Services Car Dealership 2000 727 650 540 394 375 320 300 300 295 260 250 248 3000 1100 1100 1030 950 850 800 700 500 400 380 350 325 325 300 285 250 250 Source: City of Carlsbad Chamber of Commerce 162 CITY OF CARLSBAD Principal Taxpayers 2000-01 Percentage of Net Assessed Taxpayer Cabrillo Power, LLC Callaway Golf Company Legoland California, Inc. La Costa Hotel & Spa Corporation Aviara Resort Associates Real Estate Collateral Mgmt. Co. Prentiss Properties H. G. Fenton Company Air Products & Chemicals Standard Pacific Corporation SSR Western MultiFamily, LLC Type of Business Power Generation Manufacturer Family Theme Park Hotel & Health Spa Resort & Golf Course Real Estate Real Estate Distribution Warehouse Manufacturer General Contractor Real Estate Valuation $298,576,808 187,083,605 177,211,809 132,214,291 119,818,629 76,499,989 64,652,790 57,133,163 51,921,351 49,262,713 45,710,000 $1,260,085,148 Valuation' ' 2.8% 1.8% 1.7% 1.3% 1.1% 0.7% 0.6% 0.5% 0.5% 0.5% 0.4% 12.0% (1)Net assessed valuation for 2000-01: $10,490,115,729 Source: County of San Diego Office of the Auditor and Controller 163 CITY OF CARLSBAD Top 30 Sales Tax Generators 2000-2001 Firm Product/Service Arco AM/PM Mini Mart Aviara Resort Associates Bob Baker Cadillac Bob Baker Jeep/Eagle/Hyundai Bob Baker Volkswagen Callaway Golf Company Carlsbad Mitsubishi Carlsbad Toyota Carlsbad Volvo Claim Jumper Restaurant Costco Wholesale Discover Infiniti Carlsbad Dixon Ford Ford Credit Titling Trust Gap Outlet Hoehn Acura Hoehn Honda Invitrogen Corporation J C Penney Company Jim Finney Pontiac K & P Fuel Service Station La Costa Hotel & Spa Legoland Lexus Carlsbad Macy's Department Store Oreo Construction Supply Polo Ralph Lauren Outlet Reliable Wholesale Lumber Robinsons-May Department Store Schumacher Automated Fuel Management Hotel/Food Sales Car Dealership Car Dealership Car Dealership Golf Manufacturer Car Dealership Car Dealership Car Dealership Restaurant General Stores Car Dealership Car Dealership Automobile Lessor Clothing Store Car Dealership Car Dealership Manufacturer of Research Supplies Department Store Car Dealership Automated Fuel Management Hotel & Health Spa Family Theme Park Car Dealership Department Store Construction Material Supply Clothing Store Building Materials Department Store Chemical Purifier Source: Municipal Resource Consultants (MRC) 164 CITY OF CARLSBAD Miscellaneous Statistical Information 2000-2001 Date of Incorporation Type of City Form of Government Area Population (CA Dept of Finance Report 1/1/00) Net Assessed Valuation Number of Street Lights Miles of Streets Fire Protection: Number of Stations Number of Firefighters & Officers Police Protection: Number of Stations Number of Sworn Police Officers Municipal Water District: Number of Customers Number of Water Connections Average Daily Consumption Miles of Lines and Mains Miles of Sewers Recreation and Culture: Number of Parks Acres of Parks (Improved Community & Special Use Areas) Acres of Open Space (Special Resource Areas & General City-Owned Open Space) Number of Pools Number of Libraries Number of Volumes Total Number of Authorized Full Time City Employees July 16, 1952 General Law Council/Manager 42.19sq. miles. 83,469 $10,490,115,729 6,138 281.33 6 73 1 103 70,000 23,000 18.8 million gallons 400 149 34 205 1,634 1 2 276,185 625.25 Source: City of Carlsbad Finance Department 165 166 CARLSBAD REDEVELOPMENT AGENCY Component Unit Financial Statements and Supplemental Data Year Ended June 30,2001 (With Independent Auditors' Report) CARLSBAD REDEVELOPMENT AGENCY Component Unit Financial Statements and Supplemental Data Year Ended June 30,2001 TABLE OF CONTENTS Page Financial Section: Independent Auditors' Report 1 Component Unit Financial Statements: Combined Balance Sheet - All Governmental Fund Types and Account Groups 2 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types " 4 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Special Revenue and Debt Service Funds 5 Notes to Component Unit Financial Statements 6 Supplemental Data: Special Revenue Funds: Combining Balance Sheet 17 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 18 Debt Service Funds: Combining Balance Sheet 19 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 20 Capital Projects Funds: Combining Balance Sheet 21 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 22 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 23 CONRAD ASSOCIATES, L.L.P. AND CERTIFIED PUBLIC ACCOUNTANTS 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92614 (949) 474-2020 Fax (949) 263-5520 The Board of Commissioners Carlsbad Redevelopment Agency Carlsbad, California INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of the Carlsbad Redevelopment Agency, a component unit of the City of Carlsbad, as of and for the year ended June 30, 2001, as listed in the table of contents. These component unit financial statements are the responsibility of the management of the Carlsbad Redevelopment Agency. Our responsibility is to express an opinion on these component unit financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the component unit financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the component unit financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall component unit 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 Carlsbad Redevelopment Agency at June 30, 2001, and the results of operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental data listed in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements of the Carlsbad Redevelopment Agency. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated September 21, 2001 on our consideration of the Carlsbad Redevelopment Agency's internal control over financial reporting and our tests of its compliance with certain provision of laws, regulations, contracts and grants. September 21,2001 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION CARLSBAD REDEVELOPMENT AGENCY Combined Balance Sheet - All Governmental Fund Types and Account Groups June 30,2001 Governmental Fund Types Assets and Other Debits Cash and investments (note 3) Accounts receivable Loans receivable Taxes receivable Interest receivable Prepaid expenditures Fixed assets (note 8) Amount available in debt service fund Amount to be provided for retirement of general long-term debt Total assets and other debits Liabilities and Fund Balances Liabilities: Accrued expenses Deposits payable Advances from the City of Carlsbad (note 6) Bonds payable (note 5) Total liabilities Fund Balances and Other Credits: Investment in general fixed assets Fund balances (note 9): Reserved for loans receivable Reserved for prepaid expenditures Reserved for debt service Reserved for encumbrances Unreserved: Designated for approved capital projects Designated for continuing appropriations Undesignated Total fund balances and other credits Special Revenue Debt Service $ 924,869 2,417,384 6,397 131 553 25,586 526 $ 2,929 20,022 12,475,252 22,951 12,475,252 2,417,384 553 152 869,000 908,294 (11,965,588) Total liabilities, fund balances and other credits $3,349,334 See accompanying notes to component unit financial statements. 2 Capital Projects 1,352,552 1,387,648 66,981 12,626 20,408 $3,349,334 1,378,664 1,487,663 29,460 9,000 38,460 20,408 70,771 661,315 696,709 3,326,383 (11,096,588) 1,449,203 1,378,664 1,487,663 Account Groups General Fixed Assets - - - - - 6,191,477 6,191,477 - _ - General Long-Term Totals Debt (Memorandum Only) 3,665,069 66,981 2,417,384 31,983 13,283 20,961 6,191,477 13,865,000 13,865,000 13,865,000 26,272,138 32,389 29,022 12,475,252 13,865,000 13,865,000 13,865,000 26,401,663 6,191,477 _ - - - _ - - 6,191,477 6,191,477 6,191,477 2,417,384 20,961 869,000 70,923 661,315 696,709 (11,057,294) (129,525) 13,865,000 26,272,138 CARLSBAD REDEVELOPMENT AGENCY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types Year Ended June 30, 2001 Revenues: Property tax increment Charges for services Income from property and investments Miscellaneous Total revenues Expenditures: Current: General government Community development Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Proceeds of debt Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Residual equity transfers in Residual equity transfers (out) Total residual equity transfe Fund balances at end of year Special Revenue $ 393,824 487,910 5,520 887,254 364,567 416 2,612 367,595 519,659 3,152 3,152 522,811 2,803,572 - - $ 3,326,383 Debt Service 1,575,295 95,641 1,670,936 36,531 305,000 1,471,151 1,812,682 (141,746) (280,000) (280,000) (421,746) (10,507,997) (166,845) (166,845) (11,096,588) Capital Totals Projects (Memorandum Only) 2,299 256,609 94,809 13,186 366,903 429,731 53,166 1,299 1,757 485,953 (119,050) 280,000 9,850 289,850 170,800 1,111,558 166,845 166,845 1,449,203 1,971,418 256,609 678,360 18,706 2,925,093 466,262 364,567 53,166 306,715 1,475,520 2,666,230 258,863 280,000 (280,000) 13,002 13,002 271,865 (6,592,867) 166,845 (166,845) - (6,321,002) See accompanying notes to component unit financial statements. 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 30,2001 Special Revenue Revenues: Property tax increment Income from property and investment Miscellaneous Total revenues Expenditures: Current: General government Community development Debt service: Principal Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers out Proceeds of debt Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Residual equity transfers (out) Fund balances at end of year Debt Service Budget Actual $ 342,500 393,824 371,670 487,910 3,383 5,520 717,553 887,254 430,846 364,567 416 2,612 430,846 367,595 286,707 519,659 3,152 3,152 286,707 522,811 2,803,572 2,803,572 - $ 3,090,279 3,326,383 Variance Over (Under) 51,324 116,240 2,137 169,701 (66,279) 416 2,612 (63,251) 232,952 3,152 3,152 236,104 _ - 236,104 Budget 1,370,000 40,000 - 1,410,000 67,938 - 290,000 1,478,954 1,836,892 (426,892) - (426,892) (10,507,997) - (10,934,889) Actual 1,575,295 95,641 - 1,670,936 36,531 - 305,000 1,471,151 1,812,682 (141,746) (280,000) - (280,000) (421,746) (10,507,997) (166,845) (11,096,588) Variance Over (Under) 205,295 55,641 '- 260,936 (31,407) - 15,000 (7,803) (24,210) 285,146 (280,000) - (280,000) 5,146 . (166,845) (161,699) See accompanying notes to component unit financial statements. CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements Year Ended June 30,2001 (1) Organization and Summary of Significant Accounting Policies The Carlsbad Redevelopment Agency (Agency) was established in July 1976 with the adoption of Ordinance No. 1191 by the Carlsbad City Council pursuant to the California Community Redevelopment Law, now codified as Part 1, Division 24, of the State of California Health and Safety Code. The Agency has the broad authority to acquire, rehabilitate, develop, administer, and sell or lease property. The Agency is not subject to federal or state income taxes. The principal objectives of the Agency are to eliminate blighted influences within the "Village "Area" of the City of Carlsbad (City), stimulate and attract private investment, generate added employment through increased specialty goods and services, and expand the City's sales tax revenue. The principal objectives of the Agency are to eliminate blight and environmental deficiencies within the "South Carlsbad Coastal Redevelopment Project Area" of the City of Carlsbad (City), assemble land into parcels suitable for modern, integrated development, replan, redesign, and develop properties which are stagnant or improperly utilized, increase, improve and preserve the community's supply of housing affordable to very low, low, and moderate income households, develop new beach and coastal recreational opportunities, facilitate the redevelopment of the Encina power generating facility, fund the Carlsbad Boulevard realignment, enhance the commercial and recreational functions in the Project Area, and strengthen the economic base of the Project Area. The Agency is an integral part of the reporting entity of the City. The funds and account groups of the Agency have been included within the scope of the general purpose financial statements of the City because the City Council is the governing board over the operations of the Agency. Only the funds and account groups of the Agency are included herein; therefore, these financial statements do not purport to represent the financial position or results of operations of the City of Carlsbad, California. The accounting policies of the Agency 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 Agency are organized on the basis of funds and account groups, 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 CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements (Continued) (1) Organization and Summary of Significant Accounting Policies, (Continued) balance, revenues, and expenditures. The various funds and account groups are summarized by type in the financial statements. The fund types and account groups used by the Agency are as follows: GOVERNMENTAL FUND TYPES Governmental funds are used to account for the Agency's expendable financial resources and related liabilities. The measurement focus is upon determination of changes in financial position. The following are the Agency's governmental fund types: Special Revenue Funds Special revenue funds are used to account for revenues derived from specific sources (other than major capital projects) that are restricted by law or administrative regulation to expenditures for specified purposes. 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. Capital Projects Funds Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. ACCOUNT GROUPS Account groups are used to establish accounting control and accountability for the Agency's general fixed assets and general long-term debt. The following are the Agency's account groups: General Fixed Assets Account Group This account group is used to account for all fixed assets of the Agency, other than assets held for resale. General Long-Term Debt Account Group This account group is used to establish accounting control and accountability for the Agency's general long-term debt. This account group is used to account for all long-term obligations of the Agency. CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements (Continued) (1) Organization and Summary of Significant Accounting Policies, (Continued) (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 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. The modified accrual basis of accounting is utilized by the governmental fund types. 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 the tax increment on real property taxes and interest income. Real property taxes are levied on October 15 against owners of record at January 1. The taxes are due in two installments, on November 1 and February 1, and become delinquent after December 10 and April 10, respectively. Tax liens attach annually as of 12:01 a.m. on the first day of January in the fiscal years for which the taxes are levied. Under the provisions of NCGA Interpretation 3, property tax revenue is recognized in the fiscal year for which the taxes have been levied, provided it is collected within 60 days of the end of the fiscal year. Governmental fund expenditures are recognized when the liability is incurred, except for principal and interest on long-term debt which is recognized when due. (c) Encumbrances Encumbrance accounting, under which purchase orders, purchase order requests, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary control in the governmental funds. Encumbrances outstanding at year-end do not constitute expenditures or liabilities, but are reported as reservations of fund balance for subsequent-year expenditures. (d) Cash and Investments The Agency participates in the pooled cash and investment fund of the City of Carlsbad. Pooled investments are stated at fair value. The Agency's equity in the pooled cash is included in the financial statements as cash and investments. CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements (Continued) (1) Organization and Summary of Significant Accounting Policies, (Continued) Interest earned as a result of the pooling is accrued in the cash and investment pool and allocated to the appropriate funds as part of the monthly interest allocation. Investments are reported in the accompanying balance sheet at fair value, except for nonparticipating certificates of deposit and investment contracts that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. Changes in fair value that occur during a fiscal year are included with income from property and investments reported for that fiscal year. Income from property and investments includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments as well as any income from property owned by the Agency. (e) Compensated Absences Vacation pay is payable to employees at the time used or upon termination of employment. The cost of accumulated vacation expected to be paid in the next 12 months is recorded as a fund liability; currently no amounts are expected to be paid after 12 months. (f) Total Columns Total columns on the accompanying combined financial 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) Budgetary Data The budget for the Agency is established by the City of Carlsbad. The City Manager is authorized to make transfers of appropriated amounts from one department to another within a fund. The legal level of budgetary control is at the fund level. Revisions that alter the total appropriations of any fund must be approved by the City Council with the exception of budget adjustments which involve offsetting revenues and expenditures. The City Manager is authorized to increase or decrease an appropriation for a specific purpose where the appropriation is offset by unbudgeted revenue which is designated for said specific purpose. Quarterly budget reviews are conducted each year and any major changes to the adopted budget are approved by the City Council at that time. CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements (Continued) (2) Budgetary Data, (Continued) Budgets are adopted on the modified accrual basis, except that encumbrances are treated as budgeted expenditures in the year purchases are committed. Expenditures may not exceed budgeted appropriations at the fund level. Unencumbered appropriations lapse at year-end. Annual budgets are adopted for the special revenue and debt service funds. (3) Cash and Investments Cash and investments held by the Agency at June 30,2001 consisted of the following: Cash on hand (petty cash) $ 150 Deposits 91,783 Investments 3,573,136 Total cash and investments $3.665.069 Authority for Deposits and Investments The Agency's investment policy and state statutes authorize the Agency to invest in obligations of the U.S. Government, its agencies and instrumentalities; commercial paper rated A-l by Standard and Poor's Corporation or P-l by Moody's Commercial Paper record with a maximum maturity of 180 days or 15% of the portfolio; banker's acceptances with a maximum maturity of 180 days or 25% of the portfolio; repurchase agreements with a maximum maturity of one week; certificates of deposit with national and state licensed or chartered banks or federal or state savings and loan associations; medium-term corporate notes with a maximum five-year maturity rated in the two top rating categories and not to exceed 30% of the portfolio; money market funds whose portfolios consist of one or more of the foregoing investments; a sweep account and the State Treasurer's investment pool. State statutes require that all deposits be insured or collateralized. Depositories holding public funds on deposit 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. Deposits: The following summary presents the amount of the Agency's deposits which are fully insured or collateralized with securities held by the Agency or its agent in the Agency's name (Category One), those deposits which are collateralized with securities held by the pledging financial institution's trust department or agent in the Agency's name (Category Two), and those deposits which are not collateralized or are collateralized with securities held by the pledging financial institution or its trust department or agent but not in the Agency's name (Category Three) at June 30,2001. 10 CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements (Continued) (3) Cash and Investments, (Continued) Category Bank Carrying Form of Deposit l_ 23 Balance Amount Demand deposits Classification of Investments by Credit Risk: As defined in Governmental Accounting Standards Board Statement No. 3, the Agency's investments in securities are categorized in the following manner: Category 1 - Investments that are insured or registered, which are held by the Agency or its agent in the Agency's name. Category 2 - Uninsured and unregistered investments, for which the securities are held by the counterparty's trust department or agent in the Agency's name. 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 Agency's name. At June 30, 2001, the Agency had the following investments which are not categorizable by credit risk: Carrying Amount/ Investment Market Value Investments held by Agency not subject to categorization: Investment in State of California Pooled Investment Account $ 907,794 Investment in City's pooled cash fund 2,665,342 Total investments $3.573.136 The Agency is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the Agency's investment in this pool is reported in the accompanying financial statements at amounts based upon the Agency's pro-rata share of the fan: 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. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government- sponsored enterprises, and corporations. 11 CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements (Continued) (4) Pension Plan The Agency's employees are included in the City's pension plan which is administered by the California Public Employees Retirement System (PERS). PERS is an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for participating public entities within the State of California. All full-time employees are eligible to participate as members of the PERS. Benefits vest after an employee has been a member of the plan for five years. Employees are eligible to retire after age 50 with 5 years of credited service. Annual retirement benefits are determined based on age at retirement, the length of membership service and the amount of earnings based on the highest twelve consecutive months average. The PERS also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute. Employees are required to make contributions equaling 7% of gross pay. This is paid by the City for the benefit of the employees in lieu of salary. The City is also required to contribute the remaining amounts necessary to fund the benefits for its members, using the actuarial basis recommended by the PERS actuaries and actuarial consultants and adopted by the PERS Board of Administration. Additional disclosures required by Governmental Accounting Standards Board Statement No. 27 are not available for the Agency as a separate entity. This information for the City's reporting entity is presented in the Comprehensive Annual Financial Report of the City of Carlsbad. (5) Long-Term Debt The following is a summary of changes in long-term debt for the year ended June 30, 2001: Principal Principal Balance at Additional Balance at July 1,2000 Obligations Deletions June 30,2001 Bonds payable $14.170.000 - (305.000^ 13.865.000 12 CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements (Continued) (5) Long-Term Debt, (Continued) On August 15, 1993, the Agency issued $15,495,000 in tax allocation bonds with an average interest rate of 5.3% to finance redevelopment activities within the Village Redevelopment Project Area and to advance refund $11,185,000 of outstanding 1988 series tax allocation bonds with an average interest rate of 7.3%. These bonds were called in full on November 1,1997. Debt service requirements to maturity for the bonds, including sinking fund payments, are as follows: 2002 $ 1,046,234 2003 1,043,777 2004 1,045,403 2005 1,045,977 2006 1,040,634 Subsequent to 2006 18,653,455 23,875,480 Less amounts representing interest (10,010,480) Bonds payable $13.865.000 (6) Advances from the City of Carlsbad Since activation of the Redevelopment Agency in July 1976, the City has advanced the Agency monies for approved expenditures. Advances from the City bear interest equal to the City's interest rate received on pooled investments. There is no stated maturity date. The outstanding balance at June 30, 2001 is $12,475,252. 13 CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements (Continued) (7) Obligations Under Operating Leases In June 1988, the Agency entered into an agreement to lease a parking lot on State Street from a private party. The lease requires monthly rental payments for twenty years. Minimum future rental payments under operating lease as of June 30, 2001 are: 2002 $ 69,944 2003 74,140 2004 78,589 2005 83,304 2006 88,303 Subsequent to 2006 192,818 Total minimum future rental payments $587,098 (8) General Fixed Assets A summary of changes in the general fixed assets account group is as follows: Balance at Balance at July 1,2000 Additions Deletions June 30,2001 Land $2,285,824 - - 2,285,824 Buildings 3,461,598 - - 3,461,598 Improvements 444,055 - - 444,055 Total $6.191.477 - - 6.191.477 (9) Fund Balances Reserves for the loan receivable and prepaid expenditures are established to show that certain assets are already committed for other purposes and are not available for discretionary expenditures. Reserve for debt service represents resources legally restricted to the payment of general long-term debt principal and interest maturing in future years. Reserve for encumbrances represents commitments related to unperformed contracts for services and undelivered goods. 14 CARLSBAD REDEVELOPMENT AGENCY Notes to Component Unit Financial Statements (Continued) (9) Fund Balances, (Continued) Unreserved-undesignated balances represent the fund balance remaining after reduction for reserved and designated fund balances. The Village Redevelopment Area Debt Service Fund reported a deficit fund balance of $10,898,538. The South Carlsbad Redevelopment Area Debt Service Fund reported a deficit fund balance of $198,050 at June 30,2001. 15 SUPPLEMENTAL DATA 16 CARLSBAD REDEVELOPMENT AGENCY Special Revenue Funds Combining Balance Sheet June 30, 2001 Assets and Other Debits Cash and investments Loans receivable Taxes receivable Interest receivable Prepaid expenditures Total assets and other debits Liabilities and Fund Balances Liabilities: Accrued expenses Deposits payable Total liabilities Fund Balances: Reserved for loans receivable Reserved for prepaid expenditures Reserved for encumbrances Unreserved: Undesignated Total fund balances Total liabilities and fund balances Low and Moderate Income Housing $ 692,571 2,417,384 6,397 131 553 $ 3,117,036 $ 2,929 2,929 2,417,384 553 152 696,018 3,114,107 $ 3,117,036 Tyler Court Apartments 232,298 232,298 20,022 20,022 212,276 212,276 232,298 Totals 924,869 2,417,384 6,397 131 553 3,349,334 2,929 20,022 22,951 2,417,384 553 152 908,294 3,326,383 3,349,334 17 CARLSBAD REDEVELOPMENT AGENCY Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30,2001 Revenues: Property tax increment Income from property and investment Miscellaneous Total revenues Expenditures: Current: Community development Debt Service: Principal Interest Expense Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Proceeds of debt Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Low and Moderate Income Housing $ 393,824 130,464 524,288 70,985 416 2,612 74,013 450,275 Tyler Court Apartments . 357,446 5,520 362,966 293,582 _ - 293,582 69,384 Totals 393,824 487,910 5,520 887,254 364,567 416 2,612 367,595 519,659 3,152 3,152 453,427 2,660,680 69,384 142,892 3,152 3,152 522,811 2,803,572 $ 3,114,107 212,276 3,326,383 18 CARLSBAD REDEVELOPMENT AGENCY Debt Service Funds Combining Balance Sheet June 30, 2001 Assets and Other Debits Cash and investments Taxes receivable Interest receivable Total assets and other debits Liabilities and Fund Balances Liabilities: Advances from the City of Carlsbad Total liabilities Fund Balances: Reserved for debt service Unreserved: Undesignated Total fund balances Total liabilities and fund balances South Village Carlsbad Redevelopment Redevelopment Area Area Totals $ $ 1,323,369 25,586 526 1,349,481 29,183 1,352,552 25,586 526 29,183 1,378,664 $ 12,248,019 12,248,019 869,000 (11,767,538) (10,898,538) 227,233 12,475,252 227,233 12,475,252 869,000 (198,050) (11,965,588) (198,050) (11,096,588) $ 1,349,481 29,183 1,378,664 19 CARLSBAD REDEVELOPMENT AGENCY Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30,2001 South Village Carlsbad Redevelopment Redevelopment Area Area Totals Revenues: Property tax increment Income from property and investments Total revenues Expenditures: Current: General government Debt Service: Principal Interest expense Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Residual equity transfers (out) Fund balances (deficit) at end of year $ 1,575,295 93,038 1,668,333 15,957 305,000 1,457,917 1,778,874 (110,541) (280,000) (280,000) (390,541) (10,507,997) 1,575,295 2,603 95,641 2,603 1,670,936 20,574 36,531 305,000 13,234 1,471,151 33,808 1,812,682 (31,205) (141,746) (280,000) (280,000) (31,205) (421,746) (10,507,997) (166,845) (166,845) $ (10,898,538)(198,050) (11,096,588) 20 CARLSBAD REDEVELOPMENT AGENCY Capital Projects Funds Combining Balance Sheet June 30, 2001 South Village Carlsbad Redevelopment Redevelopment Area Area Totals Assets and Other Debits Cash and investments Accounts receivable Interest receivable Prepaid expenditures - Total assets and other debits Liabilities and Fund Balances Liabilities: Accrued expenses Deposits payable Total liabilities Fund Balances: Reserved for prepaid expenditures Reserved for encumbrances Unreserved: Designated for approved capital projects Designated for continuing appropriations Undesignated Total fund balances Total liabilities and fund balances $ $ $ $ 1,387,648 66,981 12,626 20,408 1,487,663 29,460 9,000 38,460 20,408 70,771 661,315 696,709 1,449,203 1,487,663 1,387,648 66,981 12,626 20;408 1,487,663 29,460 9,000 38,460 20,408 70,771 661,315 696,709 1,449,203 1,487,663 21 CARLSBAD REDEVELOPMENT AGENCY Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30,2001 South Village Carlsbad Redevelopment Redevelopment Area Area Revenues: Property Tax Increment Charges for services Income from property and investment Miscellaneous Total revenues Expenditures: Current: General government Capital outlay Debt Service: Principal Interest Expense Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Loan proceeds Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Residual equity transfers in Fund balances at end of year Totals $ 2,299 256,609 94,809 13,186 366,903 429,731 53,166 1,299 1,757 485,953 (119,050) 280,000 9,850 289,850 170,800 1,278,403 2,299 256,609 94,809 13,186 366,903 429,731 53,166 1,299 . - 1,757 485,953 (119,050) 280,000 9,850 289,850 170,800 (166,845) 1,111,558 166,845 166,845 $ 1,449,203 1,449,203 22 CONRAD ASSOCIATES, AND CERTIFIED PUBLIC ACCOUNTANTS 1100 MAIN STREET, SUITE C -R IRVINE, CALIFORNIA 92614 (949) 474-2020 Fax (949) 263-5520 The Board of Commissioners Carlsbad Redevelopment Agency Carlsbad, California REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS We have audited the financial statements of Carlsbad Redevelopment Agency as of and for the year ended June 30, 2001, and have issued our report thereon dated September 21, 2001. 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 of America. Compliance As part of obtaining reasonable assurance about whether the financial statements of the Carlsbad Redevelopment Agency are free of material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Such provisions included those provisions of laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies, issued by the State Controller and as interpreted in the Suggested Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies, issued by the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Carlsbad Redevelopment Agency's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended for the information of management and the State Controller and is not intended to be and should not be used by anyone other than these specified parties. September 2 1,2001 23 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION r'1 r CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Financial Statements and Supplemental Data Year Ended June 30,2001 (With Independent Auditors' Report Thereon) CONRAD AND ASSOCIATES, L.L.P.CERTIFIED PUBLIC ACCOUNTANTS CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Financial Statements and Supplemental Data Year Ended June 30,2001 TABLE OF CONTENTS . Page Independent Auditors' Report 1 Combined Balance Sheet - Governmental Fund Type and Account Group 2 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Funds 3 Notes to Financial Statements 4 Supplemental Data: Combining Balance Sheet - Debt Service Funds 11 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Funds 12 CONRAD AND CERTIFIED PUBLIC ACCOUNTANTS ASSOCIATES, L.L.R 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92614 (949) 474-2020 Fax (949) 263-5520 Board of Directors City of Carlsbad Public Improvement Corporation Carlsbad, California Independent Auditors' Report We have audited the accompanying component unit financial statements of the City of Carlsbad Public Improvement Corporation (the Corporation) as of and for the year ended June 30, 2001, as listed in the accompanying table of contents. These component unit financial statements are the responsibility of the Corporation'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 auditing standards generally accepted in the United States of America. 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 City of Carlsbad Public Improvement Corporation as of June 30, 2001, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the component unit financial statements taken as a whole. The combining financial statements 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 City of Carlsbad Public Improvement Corporation. 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 12, 2001 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Combined Balance Sheet - Governmental Fund Type and Account Group June 30, 2001 Governmental Fund Type Assets Cash and investments held by the City (note 2) Cash and investments held by trustee (note 2) Net investment in direct financing lease (note 3) Interest receivable Amount available in debt service fund Amount to be provided for retirement of certificates of participation Total assets Debt Service $ 361,336 1,424,244 6,617,088 22,332 $8.425.000 Account Group General Long-Term Debt 1,807,912 6,617,088 8.425.000 Totals (Memorandum Only) 361,336 1,424,244 6,617,088 22,332 1,807,912 6,617,088 16.850.000 Liabilities and Fund Balances Liabilities: Deferred revenue Certificates of participation payable (note 4) Total liabilities $6,617,088 6,617,088 8,425,000 8,425,000 6,617,088 8,425,000 15,042,088 Fund balances: Reserved for debt service (notes 4 and 6) 1,807,912 - 1,807,912 Total fund balances 1,807,912 - 1,807,912 Total liabilities and fund balances $8.425.000 8.425.000 16.850.000 See accompanying notes to financial statements. CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Funds Year Ended June 30, 2001 Revenues: Lease payments Interest on investments Total revenues Debt Service $1,985,217 87,917 2,073,134 Expenditures: Principal Interest Administrative expense Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year 1,555,000 421,305 2,235 1,978,540 94,594 60,107 (60,107) 94,594 1,713,318 $1.807.912 See accompanying notes to financial statements. CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Notes to Financial Statements Year Ended June 30,2001 (1) Organization and Summary of Significant Accounting Policies The City of Carlsbad Public Improvement Corporation (the Corporation) was organized on June 1, 1988 under the Nonprofit Public Benefit Corporation law for the purpose of financing and constructing certain improvements. 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 Carlsbad, California (the City). The accounts of the Corporation have been included within the scope of the general purpose financial statements of the City because the City Council has financial accountability over the operations of the Corporation. Only the accounts of the Corporation are included herein; therefore, these financial statements do not purport to represent the financial position or results of operations of the City. The accounting policies of the Corporation 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 Corporation 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 the account group are summarized by type in the financial statements. The fund types and the account group used by the Corporation are as follows: GOVERNMENTAL FUND TYPE The governmental fund is used to account for the Corporation's expendable financial resources and related liabilities. The measurement focus is upon determination of changes in financial position. The following is the Corporation's governmental fund type: 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 Corporation's general long-term debt. It is used to account for all long-term obligations of the Corporation. CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Notes to Financial Statements (Continued) (1) Organization and Summary of Significant Accounting Policies, (Continued) (b) Measurement Focus and Basis of Accounting The governmental fund type is accounted for on a "spending" measurement focus. Accordingly, only current assets and current liabilities are generally included on its balance sheet, and the reported fund balance provides an indication of available, spendable resources. The operating statement for the governmental fund type report increases (revenues) and decreases (expenditures) in available, spendable resources. The governmental fund type uses 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. The governmental fund expenditures are recognized when the liability is incurred, except for principal and interest on long-term debt, which is recognized when due. (c) Budgets The Corporation does not adopt an annual budget, therefore, no budgetary comparisons are presented. (d) Cash and Investments Investments are reported in the accompanying balance sheet at fair value, except for certain certificates of deposit and investment contracts that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as interest on investments reported for that fiscal year. Interest on investments includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments. (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 balances 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. CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION t Notes to Financial Statements (Continued) « (2) Cash and Investments Authority for Investments The Trust Agreement by and among the First Trust of California, as successor trustee, the <• Corporation and the City, dated June 1, 1988, authorizes the trustee to invest in Federal Treasury Securities, Federal Agency Securities, interest-bearing demand or time deposits, obligations of U.S. corporations having assets in excess of $500,000,000 and carrying one of the three highest ratings by Moody's and Standard and Poor's Corporation, repurchase agreements, money market funds, commercial paper rated A-l by Standard and Poor's Corporation and P-l by Moody's Commercial Paper with original maturities * of not more than 180 days, bankers acceptances with maturities of not more than 180 days, and tax-exempt obligations rate in one of the three highest ratings by Moody's and Standard and Poor's Corporation. Classification of Deposits by Credit Risk t The following summary presents the amount of the Corporation's deposits which are fully insured or collateralized with securities held by the Corporation or its agent in the Corporation's name (Category 1), those deposits which are collateralized with securities held by the pledging financial institution's trust department or agent in the Corporation's name (Category 2), and those deposits which are not collateralized or are collateralized with securities held by the pledging financial institution or its trust department or agent * but not in the Corporation's name (Category 3) at June 30, 2001. Category Bank Carrying Form of Deposit 123 Balance Amount Deposits managed by fiscal agent: * Bank Investment agreements $ - 1.399.500 - 1.399.500 1.399.500 Classification of Investment by Credit Risk As defined in Governmental Accounting Standards Board Statement No. 3, investments in securities are categorized in the following manner: •Category 1 - Investments that are insured or registered, which are held by the Corporation or its agent in the Corporation's name. Category 2 - Uninsured and unregistered investments, for which the securities are held by the counterparty's trust department or agent in the Corporation's name. • 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 Corporation's name. CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Notes to Financial Statements (Continued) (2) Cash and Investments, (Continued) As of June 30, 2001, the Corporation had $361,336 invested in the City of Carlsbad's cash and investments pool and $24,744 invested in Federal Agency treasury money market mutual funds which are not categorizable by credit risk. (3) Lease Agreements Hosp Grove Under the terms of a lease agreement dated June 1, 1988, the City has leased property known as Hosp Grove to the Corporation and the Corporation has leased back to the City the same property and all improvements constructed thereon. The Agreement requires the City to pay semiannual lease payments to the Corporation equal to the debt service requirements of the Certificates of Participation issued by the Corporation on June 1, 1988 (the Certificates). Under the terms of the lease agreement between the City and the Corporation, the City is required to make lease payments on January 15 and July 15 until the Certificates have been paid in full. In addition, the City must pay all taxes, assessments, insurance, maintenance and utilities on the property and its improvements. The lease expires on August 1, 2008 or upon the date of retirement of the Certificates. The lease has been accounted for as a direct financing lease. Carlsbad Municipal Water District Under the terms of a Lease Agreement dated September 1, 1997, the Carlsbad Municipal Water District (District) has leased the Project (which represents the additions, betterments, extensions and improvements of the Water System) to the Corporation and the Corporation has leased back to the District the same Project. All right, title and interest in each component of the Project shall vest in the District immediately upon execution and delivery of the Agreement. All revenues (which consists of all income, rents, rates, fees, charges and other monies derived from the ownership or operation of the Water System) are irrevocably pledged to the payment of the installment payments. The Agreement requires the district to pay semi-annual lease payments to the Corporation equal to the debt service requirements of the 1997 Water Revenue Certificates of Participation issued by the Corporation on September 1, 1997. Under the terms of the Lease Agreement between the District and the Corporation, the District is required to make lease payments on April 15 and October 15 until the Certificates have been paid in full. The lease expires on May 1, 2004 or upon the date of retirement of the Certificates. The lease has been accounted for as a direct financing lease. CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Notes to Financial Statements (Continued) (4) Certificates of Participation Hosp Grove The Corporation issued Refunding Certificates of Participation (Hosp Grove Project) Series 1997 pursuant to a Trust Agreement by and among the Corporation, the City and the Trustee. The Certificates represent an undivided interest in the lease payments made by the City to the Corporation. The Certificates mature on August 1 of each year through 2008. The Corporation is required to maintain a debt service reserve of $659,500. As of June 30, 2001, the reserve balance was $675,000. Debt service requirements to maturity for the Certificates are as follows: Year ending June 30, 2002 $ 752,285 2003 754,350 2004 754,800 2005 758,475 2006 745,865 2007-2009 2,254,736 6,020,511 Less amounts representing interest (965,511) Outstanding balance $5.055.000 Carlsbad Municipal Water District The Corporation issued 1997 Water Revenue Certificates of Participation (1988 Refunding Project) pursuant to a Trust Agreement by and among the Corporation, the Water District and the Trustee. The Certificates represent an undivided interest in the lease payments made by the Water District to the Corporation. The Certificates mature on May 1 of each year through 2004. The Corporation is required to maintain a debt service reserve of $740,000. As of June 30, 2001, the reserve balance was $768,145. CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Notes to Financial Statements (Continued) (4) Certificates of Participation, (Continued) Debt service requirements to maturity for the Certificates are as follows: Year ending June 30, 2002 1,220,010 2003 1,219,860 2004 1,226,700 3,666,570 Less amounts representing interest (296,570) Outstanding balance $3.370.000 The following is a summary of changes in the general long-term debt of the Corporation for the year ended June 30, 2001: Balance at Balance at July 1,2000 Additions Reductions June 30,2001 Refunding Certificates of Participation (Hosp Grove Project) Series 1997 $5,570,000 - (515,000) 5,055,000 1997 Water Revenue Certificates of Participation (1988 Refunding Project) 4,410,000 (1,040,000) 3,370,000 $9.980.000 - (1.555.000) 8.425.000 (5) Rate Covenants The 1997 Water Revenue Certificates of Participation require that the District set its charges for services each year at rates sufficient to produce net revenues (after paying the operating and maintenance expenses of the District, excluding depreciation) at least 1.15 times the debt service for that year. CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Notes to Financial Statements (Continued) (6) Fund Balances The reserve for debt service represents resources legally restricted to the payment of general long-term debt principal and interest maturing in future years. 10 SUPPLEMENTAL DATA CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Combining Balance Sheet - Debt Service Funds June 3 0,2001 Assets Cash and investments held by the City Cash and investments held by trustee Net investment in direct financing lease Interest receivable Total assets Hosp Grove Lease Payment $ 361,336 2,452 4,016,212 $4.380.000 Reserve 659,500 15,500 Carlsbad Municipal Water District Lease Payment Reserve 979 761,313 2,600,876 6,832 Total 361,336 1,424,244 6,617,088 22,332 2.601.855 768.145 8.425.000 Liabilities and Fund Balances Liabilities: Deferred revenue Total liabilities Fund balances: Reserved for debt service Total fund balances Total liabilities and fund balances $4.380.000 $4,016,212 4,016,212 363,788 363,788 $4.380.000 - 675,000 675,000 675.000 2,600,876 2,600,876 979 979 2.601.855 - 768,145 768,145 768.145 6,617,088 6,617,088 1,807,912 1,807,912 8.425.000 11 CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Funds Year Ended June 30, 2001 Revenues: Lease payments Interest on investments Total revenues Expenditures: Principal Interest Administrative expenses Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financial sources (uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Hosp Grove Lease Payment Reserve 515,000 233,655 2,235 750,890 Carlsbad Municipal Water District Lease Payment Reserve Total $800,000 - 1,185,217 - 1,985,217 26,104 18,697 1,012 42,104 87,917 826,104 18,697 1,186,229 42,104 2,073,134 1,040,000 187,650 1,227,650 1,555,000 421,305 2,235 1,978,540 75,214 18,697 (41,421) 42,104 94,594 18,697 - 41,410 - 60,107 _^ (18,697) - (41,410) (60,107) 18,697 (18,697) 41,410 (41,410) 93,911 269,877 675,000 S363.788 675.000 (11) 694 94,594 990 767,451 1,713,318 979 768.145 1.807.912 12 ENCINA FINANCING JOINT POWERS AUTHORITY Financial Statements and Supplementary Information Year Ended June 30,2001 (With Independent Auditors' Report Thereon) r CONFIAD AND ASSOCIATES, LLR CERTIFIED PUBLIC ACCOUNTANTS ENCINA FINANCING JOINT POWERS AUTHORITY Financial Statements and Supplementary Information Year Ended June 30,2001 TABLE OF CONTENTS Page Independent Auditors' Report 1 Combined Balance Sheet - Governmental Fund Type and Account Group 2 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Funds 3 Notes to Financial Statements 4 Supplementary Information: Combining Balance Sheet - Debt Service Funds 9 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Funds 10 CONRAD AND CERTIFIED PUBLIC ACCOUNTANTS ASSOCIATES, L.L.R 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92614 (949) 474-2020 Fax (949) 263-5520 Board of Directors Encina Financing Joint Powers Authority Carlsbad, California Independent Auditors' Report We have audited the accompanying combined financial statements of the Encina Financing Joint Powers Authority (the Authority) as of and for the year ended June 30, 2001, as listed in the accompanying table of contents. These combined financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 combined financial statements referred to above present fairly, in all material respects, the financial position of the Encina Financing Joint Powers Authority as of June 30, 2001, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the combined financial statements taken as a whole. The supplementary information listed in the accompanying table of contents is presented for purposes of additional analysis and is not a required part of the combined financial statements of the Encina Financing Joint Powers Authority. Such information has been subjected to the auditing procedures applied in the audit 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. '£••* September 7, 2001 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION ENCINA FINANCING JOINT POWERS AUTHORITY Combined Balance Sheet- Governmental Fund Type and Account Group June 30,2001 Assets Governmental Fund Type Debt Service Investments held by trustee (note 2) $ 1,608,421 Interest receivable 36,612 Installment sale receivable (note 3) 15,725,000 Amount available in debt service funds for retirement of revenue bonds Amount to be provided for retirement of revenue bonds Account Group General Long-Term Totals Debt (Memorandum Only) 1,608,421 36,612 15,725,000 Total assets $17.370.033 1,645,033 14,079,967 15.725.000 1,645,033 14,079,967 33.095.033 Liabilities and Fund Balances Liabilities: Revenue bonds payable (note 3) Deferred revenue (note 3) Total liabilities Fund balances: Reserved for debt service (note 4) Total fund balances $ 15,725,000 15,725,000 1,645,033 1,645,033 $17.370.033 15,725,000 15,725,000 15.725.000 15,725,000 15,725,000 31,450,000 1,645,033 1,645,033 33.095.033 See accompanying notes to financial statements. ENCINA FINANCING JOINT POWERS AUTHORITY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Funds Year Ended June 30,2001 t Revenues: Installment payments from members Interest on investments Total revenues Expenditures: Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Debt Service $1,499,061 87,959 1,587,020 775,000 810,716 1,585,716 1,304 87,935 (87,935) 1,304 1,643,729 $1.645.033 See accompanying notes to financial statements. ENCINA FINANCING JOINT POWERS AUTHORITY Notes to Financial Statements Year Ended June 30,2001 (1) Summary of Significant Accounting Policies 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) Description of Reporting Entity The Encina Financing Joint Powers Authority (the Authority) was created on February 1, 1989 by the Buena Sanitation District, the City of Carlsbad, the Leucadia Water District, and the City of Vista. The purpose of the Authority was to issue revenue bonds in order to acquire additional capacity for the Encina Water Pollution Control Facility (Facility) and to finance any other authorized costs. The Authority is governed by a Board of Directors which consists of one director appointed by each member. Action can be taken at any meeting of the Board by the vote of any three directors. The Authority is not subject to federal or state income taxes. From time to time, the Authority will issue debt on behalf of those members wishing to participate in the financing. (b) Fund Accounting The basic accounting and reporting entity is a "fund." A fund is defined as an independent fiscal and accounting entity with a self-balancing set of accounts, recording resources, related liabilities, obligations, reserves and equities segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The accounting records of the Authority are organized on the basis of funds and an account group classified for reporting purposes as follows: Governmental Funds The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt, principal, interest and related costs. Account Group The General Long-Term Debt Account Group is used to establish accountability for the Authority's general long-term debt. It is used to account for all long-term obligations of the Authority. ENCINA FINANCING JOINT POWERS AUTHORITY Notes to Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) (c) Measurement Focus and Basis for Accounting Governmental fund types are accounted for on an "expendable" measurement focus. Accordingly, only current assets and current liabilities are generally 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. (d) Budgets The Authority does not adopt an annual budget, therefore, no budgetary comparisons are presented. (e) Cash and Investments Investments are reported in the accompanying balance sheet at fair value, except for certain certificates of deposit and investment contracts that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as interest on investments reported for that fiscal year. Interest on investments includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments. (f) 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. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. ENCINA FINANCING JOINT POWERS AUTHORITY Notes to Financial Statements (Continued) (2) Investments Held By Trustee Authority for Investments The Trust Agreement by and among State Street Bank and Trust Company of California, as Trustee, and the Authority dated February 1, 1997 authorizes the trustee to invest in U.S. Treasury Securities, U.S. Agency Securities, interest-bearing demand or time deposits, money market funds rated AAAm, AAAm-G or better by Standard & Poor's Corporation, commercial paper rated A-1+ by Standard and Poor's Corporation and P-l by Moody's Investors Service with original maturities of not more than 270 days, bankers acceptances rated A-l or A-1+ by Standard & Poor's Corporation and P-l by Moody's Investors Service with maturities of not more than 180 days, certain municipal obligations, as defined in the Trust Agreement, and investment agreements approved by AMBAC Indemnity Corporation with notice to Standard and Poor's. Classification of Investments by Credit Risk As defined in Governmental Accounting Standards Board Statement No. 3, investments in securities are categorized in the following manner: Category 1 - Investments that are insured or registered, which 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 its agent in the Authority's name. Category 3 - Uninsured and unregistered investments, for which the securities are held by the counterparty's trust department or its agent, but not in the Authority's name. As of June 30, 2001, the Authority had $1,831 invested in mutual funds and $1,606,590 invested in a guaranteed investment contract which are not categorizable by credit risk. (3) Waste water Revenue Bonds In February 1997, the Authority issued Wastewater Revenue Refunding Bonds, 1997 Series A to refund the remaining balance of outstanding Revenue Bonds, 1989 Series A bonds. The 1997 Refunding Bonds bear interest with rates ranging from 4.0% to 5.5%. ENCINA FINANCING JOINT POWERS AUTHORITY Notes to Financial Statements (Continued) (3) Wastewater Revenue Bonds, (Continued) The following is a table of the outstanding balance owed on the 1997 Refunding Bonds as of June 30, 2001: Installment Approximate Member Balance Share City of Carlsbad $ 9,350,000 59.45% Leucadia Water District 6,375,000 40.55% $15.725.000 Covenants within the Installment Purchase Agreements require the members to, among other things, (1) maintain insurance on the facility, and (2) establish wastewater rates which are sufficient to pay the operating costs and debt service on the bonds and which will result in net revenues equal to at least 125% of the annual installment payments due. In addition, under the debt agreements, the Authority must maintain reserve funds equal to the lesser of the maximum annual debt service on the bonds or 10% of the original principal amount of the bonds. Required sinking fund payments begin in 2011. These payments are reflected in the following schedule: Year ending June 30, 2002 $ 1,582,328 2003 1,577,067 2004 1,575,053 2005 1,580,177 2006 1,572,828 2007-2011 7,855,863 2012-2015 6,258,600 22,001,916 Less amounts representing interest (6,276,916) Outstanding balance $15.725.000 ENCINA FINANCING JOINT POWERS AUTHORITY Notes to Financial Statements (Continued) (3) Wastewater Revenue Bonds, (Continued) The following is a summary of changes in the general long-term debt of the Authority for the year ended June 30, 2001: Balance at Balance at July 1,2000 Additions Reductions June 3 0,2001 Wastewater Revenue Bonds $16.500.000 - 775.000 15.725.000 (4) Reserves for Debt Service The reserves for debt service represent resources legally restricted to the payment of general long-term debt principal and interest maturing in future years. SUPPLEMENTARY INFORMATION ENCINA FINANCING JOINT POWERS AUTHORITY Debt Service Funds Combining Balance Sheet June 3 0,2001 Assets Investments held by trustee Interest receivable Installment sale receivable Total assets City of Carlsbad Leucadia County Water District Debt Payment Reserve Debt Payment Reserve Total $ 9,350,000 $9.350.000 954,364 21,725 976.089 6,375,000 6.375.000 654,057 1,608,421 14,887 36,612 - 15,725,000 668.944 17.370.033 Liabilities and Fund Balances Liabilities: Deferred revenue $9,350,000 Fund balances: Reserved for debt service - Total liabilities and fund balances $9.350.000 976,089 6,375,000 976.089 6.375.000 15,725,000 668,944 1,645,033 668.944 17.370.033 ENCINA FINANCING JOINT POWERS AUTHORITY Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2001 City of Carlsbad Leucadia County Water District Revenues: Installment payments from members Interest on investments Total revenues Expenditures: Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Debt Payment $890,560 170 890,730 460,000 482,026 942,026 (51,296) 51,467 (171) 51,296 ear $ - Reserve Debt Payment 608,501 51,439 1,108 51,439 609,609 315,000 328,690 643,690 51,439 (34,081) 171 35,189 (51,467) (1,108) (51,296) 34,081 143 975,946 976.089 Reserve Total 1,499,061 35,242 87,959 35,242 1,587,020 775,000 810,716 1,585,716 35,242 1,304 1,108 87,935 (35,189) (87,935) (34,081) 1,161 1,304 667,783 1,643,729 668.944 1.645.033 10 r CONRAD AND CITY OF CARLSBAD Carlsbad, California Single Audit Report on Federal Award Programs Year ended June 30, 2001 ASSOCIATES, M-R CERTIFIED PUBLIC ACCOUNTANTS CITY OF CARLSBAD Single Audit Report on Federal Award Programs Year ended June 30, 2001 TABLE OF CONTENTS Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 1 Report on Compliance with Requirements Applicable to Each Major Program, Internal Control over Compliance and on the Schedule of Expenditures of Federal Awards in Accordance with OMB Circular A-133 2 Schedule of Expenditures of Federal Awards 4 Notes to Schedule of Expenditures of Federal Awards 5 Financial Data Schedule 6 Schedule of Findings and Questioned Costs 10 Summary Schedule of Prior Audit Findings 11 CONRAD AND CERTIFIED PUBLIC ACCOUNTANTS 1 100 MAIN STREET, SUITE c IRVINE, CALIFORNIA 9261 4 (949) 474-2020 Fax (949) 263-5520 L.L.P The Honorable Members of City Council City of Carlsbad Carlsbad, California REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS We have audited the financial statements of the City of Carlsbad (City) as of and for the year ended June 30, 2001, and have issued our report thereon dated September 21, 2001. 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 of America. Compliance As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended for the information of the City's management and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. September 21,2001 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION CONRAD AND CERTIFIED PUBLIC ACCOUNTANTS ASSOCIATES, L.L.R 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92614 (949) 474-2020 Fax (949) 263-5520 The Honorable Members of City Council City of Carlsbad Carlsbad, California REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM, INTERNAL CONTROL OVER COMPLIANCE AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS IN ACCORDANCE WITH OMB CIRCULAR A-133 Compliance We have audited the compliance of the City of Carlsbad (City) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2001. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2001. Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION The Honorable Members of City Council City of Carlsbad Page Two Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. Schedule of Expenditures of Federal Awards and Financial Data Schedule We have audited the financial statements of the City as of and for the year ended June 30", 2001, and have issued our report thereon dated September 21, 2001. Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying schedule of expenditures of federal awards and financial data schedule are presented for purposes of additional analysis as required by OMB Circular A-133 and are not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole. This report is intended for the information of the City's management and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. September 21,2001 CITY OF CARLSBAD Schedule of Expenditures of Federal Awards Year ended June 30, 2001 Federal Grantor/ Pass-through Grantor/ Program Title U.S. Department of Housing and Urban Development: Direct Assistance: Section 8 Housing Certificate Program Section 8 Housing Voucher Program Community Development Block Grant Subtotal U.S. Department of Health and Human Services: Pass-through the County of San Diego: Senior Nutrition Program U.S. Department of Agriculture: Pass-through the County of San Diego: Senior Nutrition Program Direct Assistance: Cooperative Forestry Assistance Subtotal U.S. Department of Justice: Direct Assistance: Law Enforcement Block Grant Police Asset Forfeiture Subtotal U.S. Department of Transportation: Pass-through the California Department of Transportation: Intermodal Surface Transportation Efficiency Act - Bike Lanes Total federal financial expenditures * Major program. Catalog of Federal Domestic Assistance Number 93.045 10.558 10.664 16.592 16.000 20.205 Program Identification Number Federal Amount Assistance Provided to Expenditures Subrecipients 14.857 14.855 14.218 CA077CE CA077VO B93MC060563 248,427 * 2,936,861 * 524,193 * 3,709,481 - - 213,757 213,757 34111 34111 96-LB-VX-2303 11-119914 22,140 88,575 90,810 179,385 79,929 53,927 133,856 17,008 4,061,870 213,757 See accompanying notes to schedule of expenditures of federal awards. CITY OF CARLSBAD Notes to the Schedule of Expenditures of Federal Awards Year ended June 30, 2001 (1) Summary of Significant Accounting Policies Applicable to the Schedule of Expenditures of Federal Awards (a) Scope of Presentation The accompanying schedule presents only the expenditures incurred by the City of Carlsbad (City) that are reimbursable under programs of federal agencies providing financial assistance. For the purposes of this schedule, financial assistance includes both federal financial assistance received directly from a federal agency, as well as federal funds received indirectly by the City from a non-federal agency or other organization. Only the portion of program expenditures reimbursable with such federal funds are reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with state, local or other non-federal funds are excluded from the accompanying schedule. (b) Basis of Accounting The expenditures included in the accompanying schedule were reported on the modified accrual basis of accounting. Under the modified accrual basis of accounting, expenditures are incurred when the City becomes obligated for payment as a result of the receipt of the related goods and services. Expenditures reported included any property or equipment acquisitions incurred under the federal program. (c) Subrecipients During the fiscal year ended June 30, 2001, the City disbursed $213,757 of its Community Development Block Grant to various subrecipients to be used for the allowable expenditures as provided in the grant agreement. FINANCIAL DATA SCHEDULE CITY OF CARLSBAD Schedule of Findings and Questioned Costs Year ended June 30, 2001 (A) Summary of Auditors' Results 1. An unqualified report was issued by the auditors on the financial statements of the auditee. 2. There were no material weaknesses in internal control over financial reporting nor were there any reportable conditions, based upon our audit of the financial statements of the auditee. 3. The audit disclosed no noncompliance which is material to the financial statements of the auditee. 4. There were no material weaknesses or other reportable conditions in internal control over major programs of the auditee. 5. An unqualified report was issued by the auditors on compliance for major programs. 6. The audit disclosed no audit findings required by the auditors to be reported under paragraph .510(a) of OMB Circular A-133. 7. The major programs of the auditee were CFDA No. 14.857 and 14.855 U.S. Department of Housing and Urban Development - Section 8 Housing Certificate and Voucher programs and CFDA No. 14.218 U.S. Department of Housing and Urban Development Community Development Block Grant program. As of April 1, 2001, CFDA No. 14.857 and CFDA No. 14.855 were consolidated into CFDA No. 14.871. 8. The dollar threshold used to distinguish Type A and Type B programs was $300,000. 9. The auditee was considered to be a low risk auditee for the year ended June 30, 2001 for major program determination. (B) Findings Related to the Financial Statements which are Required to be Reported in Accordance with GAGAS There were no auditors' findings required to be reported in accordance with GAGAS. (C) Findings and Questioned Costs for Federal Awards as Defined in Paragraph .510(a) of OMB Circular A-133 There were no auditors' findings required to be reported in accordance with paragraph .510(a) of OMB Circular A-133. 10 CITY OF CARLSBAD Summary Schedule of Prior Audit Findings Year ended June 30,2001 5 There were no prior year audit findings. 11