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12-19-2006 - Comprehensive Annual Financial Report for Year Ended June 30, 2006i *=01= Wovina UM TO: Andrew G. Pasmant, City Manager, and City Council FROM: Tom Bachman, Director Finance Department AGENDA Item: D-4c Date: December 19, 2006 SUBJECT: COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2006 RECOMMENDATION: It is recommended that the City Council receive and file the City's Comprehensive Annual Financial Report for the fiscal year ended June 30, 2006. DISCUSSION: Each year, independent auditors perform an examination of the financial records of the City and prepare an audit report on the City's financial statements. The Independent Auditor's Report issued by Mayer Hoffman McCann, P.C. the certified public accounting firm retained by the City, is included in the City's June 30, 2006 Comprehensive Annual Financial Report (CAFR). The CAFR includes Management's Discussion and Analysis in the Financial Section, which provides a simple narrative introduction, overview and analysis of the basic financial statements. The first two statements in the Financial Section, the Statement of Net Assets and the Statement of Activities, provide information about the activities of the City as a whole. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private sector companies. All current year's revenues and expenses are taken into account regardless of when cash is received or paid. Capital assets, including infrastructure and long-term liabilities, are included on a city wide Statement of Net Assets. Overall, the City's net assets decreased from $250.7 million by $8.7 million to $242.0 million. Major items contributing to this decrease in net assets included a $1.4 negative fair value adjustment to investments held in the City Debt Service Fund, expenditures exceeding revenues by $5.2 million in the City Capital Projects Fund and a $1.9 million in the CDC Capital Projects Fund. The Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance for the Governmental Funds (including the General Fund) are found on pages 18 and 22, and present information in a manner more consistent with how the City prepares its budget. For the General Fund, revenues exceeded expenditures by $1.2 million. This is the first surplus in the General Fund after five years of deficits is the result of a balanced budget that saw many property related revenues exceed their budget. The unreserved fund balance of the General Fund was $24.0 million, while the total fund balance was $48.9 million. Following the basic financial statements is the Notes section beginning on page 30. The Notes provide a description of the accounting policies used by the City and further information regarding the basic financial statements. The Supplementary Schedules Section of the report includes individual fund statements for the special revenue, debt service, capital projects, proprietary and agency funds. The Statistical Section contains financial and demographic data pertaining to the City. This report also incorporates the activities of the City, the West Covina Redevelopment Agency and the West Covina Public Financing Authority. A copy of the Comprehensive Annual Report is included in the agenda pack. FISCAL IMPACT: Non Prepared by: om ac Finance Director Attachment: Comprehensive Annual Financial Report 063006 ZAftenda 1tcmTAFRtCAFR - 063006.12-19-06.doc 1 T. t 1 1 1 1 City of West Covina, California Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2006 PREPARED BY: City of West Covina Finance Department Thomas Bachman Director of Finance 1 CITY OF WEST COVINA ' Comprehensive Annual Financial Report Year ended June 30, 2006 iTABLE OF CONTENTS 1 Page INTRODUCTORY SECTION: Letter of Transmittal--------------------------=------------------------------ ------------------------ v CityOfficials------------------------------------------------------- -------- =-=------------------------ x 1 Organizational Chart ---- ---------------------------- ----------------------------------------- =------- xi Certificate of Achievement for Excellence in Financial Reporting ------------------------- xii 1 FINANCIAL SECTION: Independent AuditorsReport --------------------------------------------- ------------------------- 1 Management's Discussion and Analysis (Required Supplementary Information) ---------- 3 1 Basic Financial Statements: . ' Government -wide Financial Statements: Statement of Net Assets ------------- ---------------------------------------------------------- 15 Statement of Activities------------------------------------------------------------------------16 ' Fund Financial Statements: Governmental Funds: Balance Sheet---------------------------------------------18 ----------------------------------- ' Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets--------------------------------------------------------------- 20 1 Statement of Revenues, Expenditures and Changes in FundBalances --------------------------------------------------------------------------------- 22 Reconciliation of the Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ----------- 24 Proprietary Funds: Statement of Net Assets ---------- ---------------------------------------------------------- 25 Statement of Revenues, Expenses and Changes. in FundNet Assets -------- ------------------------------------------- =-------------------------- 26 Statement of Cash Flows------------------------=------------------------------------------27 1 i CITY OF WEST COVINA ' Comprehensive Annual Financial Report , Year ended June 30 2006 TABLE OF CONTENTS (CONTINUED) Page 1 Fiduciary Funds: Statement of Fiduciary Assets and Liabilities , -------------------------------------------29 Notes to the Basic Financial Statements------------------------------------------------------30 ' SUPPLEMENTARY INFORMATION: Required Supplementary Information: Notes to the Required Supplementary Information ---------- ------------------------------- 70 ' Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual: GeneralFund---------------------------------------------------------------------------------71 Supplementary Schedules: Non -Major Governmental Funds: Combining, Balance Sheet------------------------------------------------------------- ------ 74 , Combining Statement of Revenues, Expenditures and Changes inFund Balances-----------------------------------------------------------------------------75 Non -Major Special Revenue Funds: Combining Balance Sheet -------------------------------------- -------------------- --------- 78 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -------------------------------------------------------------- 82 ' Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: -Recreation Fund---------------------------------------------------------------------------86 Drug Enforcement Rebate Fund --------------------------------------------------------- 87 Business Improvement Tax Fund-------------------------------------------------------88 Air Quality Improvement Fund---------------------------------------------------------89 Proposition A Fund-----------------------------------------------------------------------90 PropositionC Fund -------------------------------------------------------- --------------- 91 TrafficSafety Fund --------------------------------------------------------------- ---------- 92 GasTax Fund ------------------------- ----------------------------------------------------- 93 Traffic Congestion Fund-----------------------------------------------------------------94 Police Special Programs Fund -------------------------------------------- ---------------95 ' ii , CITY OF WEST COVINA Comprehensive Annual Financial Report Year ended June 30, 2006 TABLE OF CONTENTS, (CONTINUED) Page Transportation Development Act Fund------------------------------------------------96 Waste Management Fund----------------------------------------------------------------97 GrantsFund --------------------------- -------------- ----------------------------------------98 TreeFund ----------------------------------------------------------------------------------- 99 Inmate Welfare Fund------------------------------------------------------------------- 100 BKKCommunity Fund -----------------------------------------------------------------101 Charter Cable Fund---------------------------------------------------------------------102 PublicSafety Fund --------------------------------------------------- =-------------------- 103 Community Development Block Grant----------------------------------------------104 COPSGrant Fund----=------------------------------------------------------------------105 Artsin Public Places--------------------------------------------------------------------106 Special Assessments Fund -------------------------- =--------------------- ------------- 107 North Azusa Relinquishment ------- ----=-----=---------------------------------------- 108 Major Debt Service Funds: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: CityDebt Service Fund ---- ------------------------------------------------------------- 110 Community Development Commission Debt Service Fund ---------------------- ill Maj or and Non-Maj or Capital Proj ects Funds: Combining Balance Sheet----------------------------------------------------------------- 114 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ----------------------------------------------------------- 115 Schedule of Revenues, Expenditures and Changes in Fund. Balances - Budget and Actual: Community Development Commission Capital Projects Fund ------------------- 116 Capital Outlay Fund --------------------------------------------------------------------- 117 Construction Tax Fund-----------------------------------------------------------------118 Park Development Fund ----------------------------- ------------------------------------ 119 iii CITY OF WEST COVINA Comprehensive Annual Financial Report Year ended June 30, 2006 TABLE OF CONTENTS, (CONTINUED) Internal Service Funds: Combining Statement of Net Assets ----------=---------------------------------- Combining Statement of Revenues, Expenses and Changes in Net Assets Combining Statement of Cash Flows -------------------------------------------- Agency Fund: Statement of Changes in Assets and Liabilities STATISTICAL SECTION: Table Page Net Assets by Component-------------------------------------------------------- 1------------- 129 Changes in Net Assets------------------------------------------------------------ 2 -------------130 Changes in Net Assets — Governmental Activities --------------------------- 3-------------132 Changes in Net Assets — Business -type Activities---------------------------- 4-------------133 Fund Balances of Governmental Funds ---------------------------------------- 5------------- 134 Changes in Fund Balances of Governmental Funds-------------------------- 6-------------135 Assessed Value and Estimated Actual Value of Taxable Property--------- 7-------------136 Direct and Overlapping Property Tax Rates----------------------------=------ 8------------- 138 Principal Property Tax Payers -------------------------------------- =------------ 9-----------=- 140 Property Tax Levies and Collections ------------------------------------------- 10--------- --- 142 Ratios of Outstanding Debt by Type-------------------------------------------- 11------------ 144 Ratio of General Bonded Debt Outstanding ----------------------------------- 12------------ 146 Direct and Overlapping Debt ---------------------------------------------------- 13------------147 Legal Debt Margin Information ------------------------------------------------- 14 ------------ 148 Pledged -Revenue Coverage------------------------------------------------------ 15 ------------ 150 Demographic and Economic Statistics -------=--------------------------------- 16 ------------ 152 Principal Employees-------------------------------------=------------------------ 17 ------------ 153 Full-time and Part-time City Employees by Function------------------------ 18 ------------ 154 Operating Indicators by Function ---------------- ------------------------------- 19------------ 156 Capital Asset Statistics by Function ------------- -------------------------------- 20 ------------ 158 Ivi 1 Finance Department October 19, 2006 To the Members of the City Council, the City Manager, and the Citizens of the City of West Covina: It is the policy of the City of West Covina to annually publish a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of certified public accountants. Pursuant to that policy, we hereby issue the comprehensive annual financial statements of the City of West Covina ("the City") for the fiscal year ended June 30, 2006. This report consists of management's representations concerning the finances of the City. Management assumes full responsibility for the ..completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal 1,11 control framework that is designed both to protect the City's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City's financial statements have been audited by Mayer Hoffinan McCann P.C., allfirm of certified public accountants. The goal of the independent audit was to. provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2006,''lare free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the _financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the!' overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City's financial statements for the fiscal year ended June 30, 2006, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited City's internal controls and legal requirements involving the administration of federal awards. These reports are available in the City's separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should bell read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. Profile of the Government ' The City of West Covina is located in the San Gabriel Valley, 20 miles east of downtown Los Angeles and 15 miles north of Orange County. Incorporated in 1923, the City covers 17 square ' miles and has a population of approximately 110,000. The City's location and access to major freeways makes West Covina close to many visitor 'attractions and an ideal business and commercial center. The City has over 32,000 housing units and offers the amenities of a big city , location with a high standard of living for its community. West Covina is a general law city and operates under the council-manager form of government. , Policy -making and legislative authority are vested in the City Council, consisting of five council members elected at -large to overlapping four-year terms. The City Council selects a Mayor from one of its members each March to serve a one-year term. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring ' both the City Manager and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the various departments. The City provides a full range of services to its citizens, including police, fire and emergency medical; construction and maintenance of streets, traffic signalization and other infrastructure; planning and building safety; and social, recreational and cultural activities and events. The City t offers fifteen parks, four community centers and a county operated library. The City is financially accountable for a redevelopment agency and financing authority, both of which financial statements are combined within the City's financial statements. Additional information ' regarding all three of these legally separate entities can be found in the notes to the financial statements. The City Council reviews and adopts an two-year operating budget to provide for effective , management and budgetary control of City assets and to assist in achieving the objectives set by the City Council. All departments of the City are required to submit requests for appropriation to the City Manager during March of every other year in which the two-year budget is prepared. The ' City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the City Council for review prior to May 31. The council holds public hearings on the proposed budget and adopts a final two-year budget in June every other year. The appropriated budget is prepared by fund, function (e.g., public safety), and department (e.g., police). The City Manager is authorized to transfer budgeted amounts between departments to assure adequate and proper standards of service. Budgetary revisions, including supplemental appropriations which increase appropriations in individual funds, must be approved by the City Council. At the end of the first year of the two-year budget, a review is held with City Council to make any necessary adjustments to the upcoming second year budget. —, Budget -to -actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison ' is presented as part of the required supplementary information in the accompanying financial statements. For governmental funds that have appropriated annual budgets, other than the general fund, this comparison is presented in the supplementary section of the accompanying financial , statements. vi Local economy The City of West Covina is a largely residential city that has a large commercial section along the Interstate 10 corridor. That commercial section includes two regional shopping centers and a number of auto dealerships. Because of this makeup, as well as changes at the state level that replaced the majority of vehicle license fees with a like amount of property taxes, the City relies heavily on sales tax and property tax revenues as its two major sources of revenues. 92% of City General Fund property taxes are generated by residential properties and over 60% of sales tax revenues are generated from the two shopping centers and the auto dealerships. Total sales tax revenues grew by 6.6% during the fiscal year and property taxes increased by 13.5% during the year. These two revenues sources are expected to continue to show strong increases. The City, because of its location and demographics, continues to be an attractive location for commercial and office tenants. Retailers, restaurants and auto dealerships all have strong interest in locating in the City and several projects are currently underway or in discussion featuring these types of businesses. A new commercial center on a former landfill site and two new auto dealerships are currently under construction. The office market is generally underserved in the eastern San Gabriel Valley and the City has entertained several proposals for construction of new office space. Property taxes are expected to ' continue to increase in the near future. "Despite the slowdown in the residential real estate market, many of the homes in the City still carry relatively low assessed valuations and when they are sold, they result in a substantial increase in assessed valuation. In the last three years the ' sales of homes has resulted, on average, in an increase in assessed valuation exceeding 100%. Long-term financial planning After six years of gap budgets that were balanced with the use of reserves, the City adopted a budget in 2005-06 that was essentially balanced, containing a gap of only $56,908. This positive trend was continued in the City's first two-year budget which was adopted for the 2006-07 and 2007-08 budget years and which produced balanced budgets in both years. The City has worked hard over the last few years to find and implement solutions to the City's ongoing budget structural imbalance and to ensure that the economic well being of the City is maintained. The reversal of gap budgets is the result of strong revenue growth due to an improving economy, the implementation of new revenue sources such as the ambulance service and the sales tax reimbursement agreement with the Community Development Commission, and controlling the growth of expenditures. While the City's financial position has improved dramatically in the last two years, the challenge for the City in future years will be to continue to control the growth of expenditures at a reasonable rate as revenue growth begins to level ,off from its rapid increases. The City also has a ' number of large capital items that have been deferred in recent years but must now be addressed. These items include the replacement of the City's 911 emergency radio system, replacement of the city hall heating and air conditioning system, and the replacement of many City vehicles. The City is addressing alternatives to funding these 'and other capital needs. During the 2005-06 vii fiscal year, the City was able to set aside $1 million to be placed in a vehicle replacement fund to assist in meeting the funding needs to replace vehicles. The City was recently approved for a low interest loan through the California Energy Commission to replace the city hall HVAC system and will pay for much of that upgrade through energy savings generated by the new system. Through the last, few years, the City has been able to maintain a General Fund unreserved fund balance that is equal to 48% of its 2005-06 expenditure budget. This large fund balance allows , the City to weather financial difficulties and also provide funding for capital needs. All of these above mentioned factors have placed the City in a good position to continue to provide a high level of service to the community. Relevant financial policies , Fiscal year 2005-06 was the second and final year of the shift by the state of City property tax to the ERAF (Educational Revenue Augmentation Fund) fund. $1.1 million was shifted from the City .during both the 2004705 and 2005-06 fiscal years. This shift has been discontinued for ' future years. Proposition 1A, which was approved by 80% of California voters in November 2004 should , provide the City with protection for local government revenues and help provide a level of stability for revenues which hasn't existed in the past. The state also previously adopted the so-called "triple flip" as part of the state fiscal recovery ' bonds approved by California voters in March 2004. Under the triple flip, one quarter of the City's sales tax revenue will be swapped for a like amount of property tax. This swap will remain in place as long as the fiscal recovery bonds are outstanding. Increases in this new ' revenue source will be tied to increases in the City's remaining portion of sales tax. . The state also eliminated a portion of the vehicle license fee (VLF) revenues and replaced them with a like amount of property tax revenues. This is a permanent shift. The increase in the Property Tax in Lieu of VLF is tied to increases in assessed valuation in the City, which will benefit the City in the near term as property taxes are expected to continue their strong growth in the next couple of years. Major Initiatives A major initiative of the City over the last couple of years has to bring the General Fund budget ' into to balance. Now that that has occurred, the goal is to continue that trend and to focus on a number of capital items that have been deferred in recent years due to insufficient funding. The City is evaluating a number of its facilities for needed improvements, including police and fire department facilities and certain park facilities. While the City's large fund balance provides the opportunity to fund many of these projects, the City will continue to aggressively pursue external funding sources where possible for these projects. ' The Community. Development Commission continues to serve a vital role of stimulating local businesses, generating employment opportunities and enhancing the City's economic stability by generating a larger tax base. The major project continues to be efforts to redevelop the former , BKK landfill site located in the southern portion of the City. The City broke ground in August on a sports park at the site that is the first phase of this redevelopment project. This was followed up by the start of construction on the commercial development that is located on the site , viii ' 11 11 1� I I I adjacent to the sports park. Both projects are estimated to be completed within one year. The City also sold a portion of its property on the site to a developer who has plans to build two office buildings. The City is also continuing discussions about developing property surrounding the civic center area. Proposals from interested developers include upscale restaurants and an office/commercial development. Awards and Acknowledgements 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 West Covina for its comprehensive annual financial report for the fiscal year ended June 30, 2005. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report that satisfied both generally accepted accounting principles and applicable legal requirements. We believe the current comprehensive annual financial report continues to meet GFOA standards. The City has received GFOA's Distinguished Budget Presentation Award for its annual budget document for fiscal year 2005-06. In order to qualify for the Distinguished Budget Presentation Award, the City's budget document was judged to be proficient in several categories, including as a policy document, a financial plan, an operations guide, and a communications device. The preparation of this report could not have been accomplished without the efficient and dedicated services of the entire staff of the finance department. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. Credit also must be given to City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfully submitted, Tom Bachman Director of Finance n Ix CITY OF•WEST COVINA City Officials June 30, 2006 CITY COUNCIL Steve Herfert, Mayor Mike Touhey, Mayor Pro Tem Roger Hernandez Sherri Lane Shelly Sanderson CITY MANAGER Andrew G. Pasmant EXECUTIVE MANAGEMENT Artie Fields Arnold. M. Alvarez-Glasman Sue Rush Clay Durbin Chris Chung Michelle McNeill Steve Samaniego Thomas Bachman Richard Elliott Artie Fields Doug McIsaac Frank Wills Shannon Yauchzee Erin Hoppe Assistant City Manager City Attorney City Clerk Communications Director Community Development Commission Director Community Services Director Environmental Management Director Finance Director Fire Chief Interim Human Resources Director Planning Director Police Chief Public Works Director Risk Management Director x 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 City Clerk (Elected) City of West Covina Organizational Chart Citizens of West Covina City Council (Dected) Community Seryces Commission Planning Commission Waste Management & Environmental Quality Commission City Manager City Treasurer; (Elected) Human Resources Commission Senior Citizens' Commission City Attorney City Clerk Communications Community Development Commission environmental Management Finance Fire Planning 7 Police Public � Works Community Services PI Human Resources Risk Management Xl Certificate .of Achievement for Excellence in Financial Reporting Presented to City of West Covina, California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2005 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 goverment accounting and financial reporting. ! L c fwxO1�y President owns */101- Executive Director B xii 1 1 1 a 1 Mayer Hoffman McCann PC. An Independent CPA Firm Conrad Government Services Division 2301 Dupont Drive, Suite 200 Irvine, California 92612 949-474-2020 ph 949-263-5520 fx www.mhm-pc.com Honorable Mayor and City Council City of West Covina West Covina, California INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of West Covina, California, as of and for the year .ended June 30, 2006 which collectively comprise the City's basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the management of the City of West Covina. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the City's 2005 financial statements which were audited by Conrad and Associates, L.L.P., who merged with Mayer Hoffman McCann P.C. as of January 1, 2006, and whose report dated November 1, 2005, expressed unqualified opinions on the respective financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information. 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. 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 principals 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 financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of West Covina, California, as of June 30, 2006 and the respective changes in financial position and cash flows, where applicable, of the City of West.Covina, California for the year then ended in conformity with accounting principles generally accepted in the UnitedStates of America. The information identified in the accompanying table of contents as management's discussion and analysis and required supplementary information are not a required part of the basic financial statements, but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. L� Honorable Mayor and City Council City of West Covina West Covina, California Our audit was conducted for the purpose. of forming an opinion on the financial statements that collectively comprise the City of West Covina's basic financial statements. The introductory section, combining and individual fund financial statements and schedules and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, wem express no opinion on the. In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2006 on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing; and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Irvine, California October 19, 2006 2 1 I 1 MANAGEMENT'S DISCUSSION AND ANALYSIS The following discussion and analysis of the financial performance of the City of West Covina provides an overview of the City's financial activities for the fiscal year ended June 30, 2006. The information presented herein should be considered in conjunction with the transmittal letter and financial statements identified in the accompanying table of contents. FINANCIAL HIGHLIGHTS • As of June 30,. 2006, the City's total net assets (excess of assets over liabilities) were $242.2 million. • The City's total net assets decreased $8.8 million. The majority of the decreases occurred in the City and CDC Debt Service fund, the CDC Capital Projects Fund, and as a result of the depreciation expense of City assets. • As of June 30, 2006, The City's governmental funds reported combined ending fund balances of $93.6 million, a decrease of $4.8 million from the prior year. Approximately $24.0 million of this total amount is available for spending at the City's discretion. • As of June 30, 2006, unreserved fund balance for the General Fund was $24.0 million, or 52% of total General Fund expenditures. • The City's total debt increased by approximately $50,000 during the current fiscal year. The City issued $2.7 million in refunding debt during the fiscal year. OVERVIEW OF THE FINANCIAL STATEMENTS The annual report consists of four parts — management's discussion and analysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for non -major governmental funds and internal service funds. The basic financial statements include two kinds of statements that present different views of the City: • The first two statements are government -wide financial statements that provide both long- term and short-term information about the City's -overall financial status. • The remaining statements are fund financial statements that focus on individual parts of the City government, reporting the City's operations in more detail than the government -wide statements. • The governmental funds statements tell how general government services like public safety were financed in the short term as well as what remains for future spending. • Proprietary funds statements offer short- and long-term financial information about ' the activities the government operates like businesses, such as the West Covina Service Group, the City's computer enterprise. • Fiduciary fund statements provide information about the fiduciary relationships — like the agency funds of the City — in which the City acts solely as agent or trustee for the benefit of others, to whom the resources in question belong. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that provides additional financial and budgetary information. Reporting the City as a Whole The accompanying government -wide financial statements include two statements that present financial data for the City as a whole. The Statement of Net Assets and the Statement of Activities report information about the City as a whole and about its activities. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most _ private -sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the City's net assets and changes in them. The City's net assets — the difference between assets and liabilities — is one way to measure the City's financial health, or financial position. Over time, increases and decreases in the City's net assets are one indicator of whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors, however, such as changes in the City's property tax or sales tax base and the condition of the City's roads, to assess the overall health of the City. The Statement of Net Assets and the Statement of Activities are divided into two kinds of activities: • Governmental activities — Most of the City's basic services such as public safety, streets and roads, economic development and parks and recreation, are reported here. Sales taxes, property taxes, state subventions, and other revenues finance most of these activities. • Business -type activities — The City charges a fee to customers to help it cover all or most of the cost of the services accounted for in these funds. These activities include the City's computer enterprise operation. The government -wide financial statements include the City of West Covina Community Development Commission and the West Covina Public Financing Authority (component units), along with the City of West Covina (the primary government). Although legally separate, these component units are important because the City is financially accountable for them. Reporting the City's Most Significant Funds The fund financial statements provide detailed information about the City's most significant funds — not the City as a whole. Some funds are required to be established, by State law or by bond covenants. However, City Council establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting administrative responsibilities for using certain taxes, grants, or other money (like grants received). The City's two kinds of funds — governmental and proprietary— use different accounting approaches. Governmental funds — Most of the City's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year end that are available for spending. These funds are reported using the modified accrual accounting method, which measures cash and all other current financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance. the City's programs. We describe the relationship or differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in reconciliations on the pages following the fund financial statements in this report. Proprietary funds — When the City charges customers for the services it provides these services are generally reported in proprietary funds. Proprietary funds are reported in the I� 1 n II 1 ' same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the City's enterprise funds are the same as the business -type activities we report in the government -wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. We use internal service funds (the other component of proprietary funds) to report activities that provide supplies and services for the City's other programs and activities. ' Reporting the City's Fiduciary Responsibilities ' The City is an agent for certain assets held for, and under the control of, other organizations and individuals. All of the City's fiduciary activities are reported in a separate Agency Fund Combining Statement of Changes in Assets and Liabilities. We exclude these activities from the City's other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. ' GOVERNMENT -WIDE FINANCIAL STATEMENTS n �1 .1 As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. At June 30, 2006, net assets for the City of West Covina were $241,973,725. A summary of the government -wide statement of net assets at June 30, 2006 follows: Current and other assets Capital assets Total Assets Long-term debt outstanding Other liabilities Total Liabilities Net Assets: Invested in capital assets, net of debt Restricted Unrestricted Total net assets Table 1 Net Assets Governmental Activities Business -Me Activities Total 2006 2005 2006 2005. 2006 1f 2005 188,816,281 194,787,967 1,809,032 2,060,525 190,625,313 196,848,492 1216,467,378 216,748,972 216,330,441 193.706 136,937 216,942,678 405,565,253 411,118,408 2,002,738 2,197,462 407,567,991 1413,315,870 146,960,042 147,366,572 133,571 118,791 147,093,613 147,485,363 18,295,186 14,953,944 205,467 109,116 18,500,653 .15,063,060 165,255,228 162,320,516 339,038 227,907 165,594,266 I162,548,423 144,030,127 143,792,663, 193,706 136,937 144,223,833 143,929,600 99,990,727 104,865,107 - - 99,990,727 104,865,107 Q,710,82D 140,122 1,469,994 1,832,618 (2,240,835) 1, 1,972,740 240,310,025 248,797,892 1,663,700 1.969.555 241,973,725 u 4250.767.447 $144,223,833 (59.6%) of the net assets reflects the City's investment in capital assets, Mess any related debt used to acquire those assets that is still outstanding. Since these assets are;; used to provide services to the citizens they are not available for future spending. An additional $999990,727 (41.3%) of net assets represents resources that are subject to external restrictions on I 1 5 � how they may be used. There is a resulting negative balance of $3,710,829 of net assets that is unrestricted and may be used to meet the City's ongoing service and credit obligations. The negative amount of unrestricted net assets is due to outstanding debt of the redevelopment agency that was not used for capital assets and is therefore an offset against unrestricted net assets. A summary of the government -wide statement of activities for the year ended June 30, 2006 follows: Revenues Program revenues: Charges for services Operating contributions and grants Capital contributions and grants General revenues: Property taxes Sales taxes Other taxes Other general revenues Total revenues Expenses General government Public safety Public works Community services Community development Interest expense Computer service Total expenses Increase (decrease) in net assets Beginning net assets Ending net assets Table 2 Changes in Net Assets Governmental Activities Business -Me Total Activities 2006 2005 2006 2005 2006 2005 13,133,571 9,320,772 1,721,715 1,992,662 11,614,595 10,802,517 - - 285,078 378,493 - - 11 14,855,286 11,313,434 ' 11,614,595 10,802,517 285,078 378,493 ' 27,614,922 17,565,368 - - 27,614,922 17,565,368 14,216,986 14,522,220 - - 14,216,986 14,522,220 6,279,487 5,829,540 - - 6,279,487 5,829,540 4,533,752 12,036,704 71,120 38,463 4.604.872 12.075.167 77,678,391 70,455,614 1,792,835 2,031,125 79,471,226 72,486,739 1,594,760 2,919,887 - - 1,594,760 2,919,887 38,433,238 38,436,098 - - 38,433,238 38,436,098 20,696,562 19,642,927 - - 20,696,562 19,642,927 6,482,112 4,144,990 - - 6;482,112 4,144,990 11,245,539 6,761,102 - - 11,245,539 6,761,102 7,714,047 5,001,981 - - 7,714,047 5,001,981 2,098,690 2,212,802 2,098,690 2,212,802 86,166,258 76,906,985 2,098,690 2,212,802 88,264,948 79,119,787 (8,487,867) (6,451,371) (305,855) (181,677) (8,793,722) (6,633,048) 248,797,892 255,249,263 1,969,555 2,151,232 250,767,441 257,400,495 240,310,025 248.797.892 l6 700 1.969.555 241.973.725 250.767.447 The increase or decrease in net assets can provide an indication as to whether the overall financial position of the City improved or deteriorated during the year. Total net assets for the City decreased by $8,793,722 during the fiscal year. Governmental activities' net assets decreased by $8,487,867 (3.4%) during the fiscal year while business -type activities net assets decreased by.'$305,855 (15.5%). The net assets (financial position) of the City changed as a result - of the revenue and expense fluctuations described below for the governmental and business -type activities of the City. 1 1 u 6 Governmental Activities Some of the more significant changes in the revenues and expenses of the City's governmental activities presented above are as follows: • Property tax revenue is the City's largest revenue source. This revenue source grew by $10,049,554 (57.2%) due in large part to $6,693,315 of Supplemental Property Tax in lieu of VLF that was classified as Other Agency revenue in the prior year. The revenue source was restructured by the state to now become a part of .the property tax revenue. Aside from the reclassification, property taxes grew 19.1 % during the fiscal year • Vehicle in lieu revenue decreased by 63.0% due to previously mentioned restructuring of this revenue source. The decrease was somewhat offset during the year by a one-time repayment of the VLF gap loan in the amount of $1.9 million. • Interest income, included in other revenues in .the chart above, decreased $139,618 (6.5%) due to a large negative fair market value adjustment that occurred during the year. • Community Services costs have increased by 56.4%. • Community Development costs have increased by 66.3% due mainly to redeveloping the former BKK landfill site. Revenues by Source — Governmental Activities Operating grants and col Charges for services 17% Other revenue 0% Investment incom 3% Motor vehicle in 3% 8% Capital grants and contributions 0% -operty taxes 36% Expenses by Function — Governmental Activities Interest expense General government 9% 2% Community developr 13% Community services 8% 24% Business-Tvi)e Activities Public safety 44% The business -type activity is the Computer Services Group, which provides dispatch and records management software and services to other police departments. The business -type activities revenues (see Table 2) decreased by $238,290 (11.7%) from $2,031,125 in 2004/05 to $1,792,835 in 2005/06. Expenses decreased by $114,112 (5.2%) from $2,212,802 in 2004/05 to $2,098,690 in 2005/06. The reasons for significant changes in the revenues and expenses of the .City's business -type activities from the prior year are as follows: • The City computer service enterprise operating revenues decreased from $1,992,662 in 2004/05 to $1,721,715 in 2005/06. Investment income increased from $38,600 in 2004/05 to $71,120 in 2005/06. IExpenses and Program Revenues — Business -type Activities ' 2,500,000 2,000,000 ' 1,500,000 1,000,000 500,000 Computer service' MAJOR FUNDS ' As noted earlier, the City uses fund accounting to provide proper financial management of the City's resources and to demonstrate compliance with finance -related legal requirements. Major Governmental Funds. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance of the General Fund was $23,969,115, while total -fund balance was $48;923,669. As a measure of the General Fund's liquidity, it may be useful to compare both unreserved fund balance � and total fund balance to total fund expenditures. Unreserved fund balance represents 51% of total general fund expenditures, while total fund balance represents 104% of that same amount. The reasons for significant changes in the revenues and expenditures of the City's General Fund from the prior year are as follows: • Total taxes were up $8,982,795 (35.401/o) from the prior year. This amount includes ' $6,963,315 of Supplemental Property Tax in lieu of VLF that was classified as Other Agency revenue in the prior year. This reclassification is a result of the method the state used in reallocating local government revenues over the two-year period. There is a corresponding reduction in that revenue source in the 'current year. Property taxes, exclusive from the Supplemental in lieu of VLF and the ERAF III shift, increased by $976,939 (13.5%) due to a strong residential real estate market. Sales tax revenues, including the triple flip amount, increased by $877,375 (6.6%) due to an improving economy and the addition of a new auto dealership. Business license taxes increased $192,655 (13.3%). • Licenses and permits decreased by $283,794 (27.1 %) due to increases in building permits. 1 • Investment income, despite higher interest rates, decreased by $873,147 (16.7%) due to the repayment in the prior year of an additional $981,947 in interest from the CDC to the City. • Revenues from other agencies decreased by $4,602,354 (61.7%) due to the previously mentioned reclassification of the VLF revenues to property taxes. This reclassification was ' partially offset by the $1.8 million one-time repayment of the VLF Gap Loan from the state. • Charges for services increased by $1,206,982 (60.7%) due to the ambulance service, which was implemented in the middle of the .prior year, being in operation for a complete year. ' Ambulance revenues increase by $1,029,861 (141.6%) from $727,387 in the prior year to $1,757,248 in 2005-06. • Total General Fund expenditures, offset by interfund transfers and excluding fund transfers, increased by $2,780,151 (6.3%). ' • Public safety costs increased by $2,100,939 (5.7% due in part to additional costs associated with the ambulance service being in operation for the entire year. • Public Works increased by $470,017 (12.7%) due to. increased costs for plan check and t building inspections and a general increase in all maintenance categories. The increase in plan check and building inspections was offset by the increase in building permits. The Debt Service Fund finished the fiscal year with a total fund balance of $11,244,570, down from $19,802,427'in the prior year. The majority of that amount is designated for payment of debt service on the"City's lease revenue bonds. The decrease in fund balance was due to an $1,424,268 negative fair market value adjustment to two large investments that are held within that fund. Aside from the fair market value adjustment, investments generated $1.1 million in interest revenue. The Community Development Commission Debt Service Fund has a deficit fund balance of $12,831,390, down from a deficit of $13,296,682 in the prior year. This deficit is due to $22, l 19,988 of advances from the General Fund. These advances will be repaid to the General ' Fund from future.property tax increment revenues. Property tax revenue increased by $1,624,393 (9.3%) over the prior year while debt service expenditures and transfers out increased by $2,759,603 (16.4%). ' The Community Development Commission Capital Projects Fund finished the fiscal year with a total fund balance of $18,879,685, down from $20,794,233 in the prior year. The majority of that amount is reserved for land held for resale, notes and loans payable, and low and moderate -income housing programs. Total revenues for the year increased by $128,221 (4.3%). Investment income increased by $441,851 (146%) due to increased interest rates and a fair value adjustment of $194,482. Rental income decreased by $340,180 (71.9%) due to the, sale by the CDC of a commercial center during the year. Loan repayments decreased by $874,906 (49.9%) from the prior year due to a decrease in repayments of low and moderate -income housing loans. Other revenues increased by $904,455 (84.9%) due to the sale of CDC equity interests in an office complex. Expenditures increased by $5,114,528 (94.9%) due in large part to costs associated with redeveloping a former landfill site. GENERAL FUND BUDGET There was $5,488,938 in additional appropriations made during the fiscal year. The major differences between the original budget and the final amended budget of the General Fund are briefly summarized below. • $3.5 million increase in the budget for the West Covina Sportsplex capital project • $1.0 million increase in the budget to transfer funds to a newly established equipment replacement fund. 10 I I E C L, U • $425,488 increase in the budget for general government activities • $328,487 increase in the budget for the public safety departments to offset costs of new MOU's Taxes exceeded their budget by $2,575,608 due to property tax exceeding its budget by $1,723,010, sales tax compensation fund ("triple flip") exceeding its budget by $333,219, business license taxes exceeding its budget by $192,061 and contractors license and documentary transfer taxes exceeding their budgets by a combined $227,154. The increase in property taxes was due largely to the Supplemental in Lieu of VLF tax exceeding its budget by $719,715 and a large increase in supplemental taxes that exceeded the budget by $706,256. Licenses and permits exceeded their budget by $204,433 due to increased building permits activity and despite animal licenses falling short of its budget by $48,483. Charges for services exceeded its budget by $344,017 due to large increases in plan check and planning filing fees driven by strong building activity. On the expenditure side, public safety was over budget by $56,828 due in large part to a overages caused by overtime that exceeded its budget and a one-time payout of excess leave balances in the police department. This overage was offset somewhat by savings in the fire and communications departments. General Government expenditures came in under budget due to lower than expected legal costs and costs related to the City election, and position vacancies. CAPITAL ASSETS Capital Assets (net of depreciation) Governmental Activities Business -type Activities Total 2006 2005 2006 2005 2006 2005 Land 54,572,073 53,708,584 - - 54,572,073 53,708,584 Buildings and system 8,372,879 8,095,722 - - 8,372,879 8,095,722 Other improvements 18,006,574 18,052,675 - - 18,006,574 18,052,675 Equipment and vehicles 6,746,421 6,656,944 193,706 136,937 6,940,127 6,793,881 Infrastructure 105,869,842 110,528,342 - - 105,869,842 110,528,342 Rights of way 14,376,498 14,376,498 - - 14,376,498 14,376,498 Construction in progress 8,804,685 4,91.1,676 - - 8,804,685 4,911,676 Total 216.748.972 216.330.441 193,706 136 937 216.942.678 216.467.378 The major additions to capital assets during the year ended June 30, 2006 were as, follows: • Residential street rehabilitation on various streets ($2,137,898) • Rowland Avenue median landscaping ($208,252) • Sidewalk reconstruction ($160,643) • Acquisition of various equipment, vehicles and improvements other than buildings include: o Eight police vehicles ($196,993) o One fire engine ($434,686) o Upgrades to the 911 emergency phone system (174,770) o Upgrade underground fuel tanks ($99,760) Additional information on the City of West Covina's capital assets can be found in note 8 on pages 50-51 of this report. LONGTERM DEBT At the end of the current fiscal year, the City had debt outstanding of $153,105,935. Of this amount, $117,725,000 represents outstanding bonds and $35,380,935 represents other debt such as developer agreements payable, amounts due to other agencies, compensated absences payable, notes payable and capital lease obligations. Of the outstanding bonds, $38,810,000 comprises lease revenue bonds secured by leases from the General Fund, $36,570,000 of bonds secured by tax increment revenues of the Redevelopment Agency including the housing set -aside funds, and $42,345,000 of special assessment debt. The special assessment bonds are secured by a special tax levied annually on the property within the community facilities district, in addition to a pledge by the City and Redevelopment Agency of property taxes and sales taxes generated within the district. Outstanding Bonds Governmental Activities 2006 2005 Lease revenue bonds $44,550,000 44,880,000 Special assessment bonds 42,345,000 43,350,000 Tax allocation bonds 30,830,000 31,500,000 Total $117,725,000 119,730,000 , In September 2005, the City of West Covina Public Financing Authority issued $2,735,000 of tax-exempt variable rate lease revenue bonds to refund a 2002 taxable issue. The City maintains an "A" rating from Standard & Poor's for its lease revenue bonds. Additional information on the City's long-term debt can be found in the notes to the , accompanying financial statements. Additional information on the City of West Covina's long-term debt can be found in notes 9 - 17 on pages 51 — 63 of this report. Contacting the City's Financial Management This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional financial ' information, contact the Finance Director's Office, at City of West Covina, 1444 West Garvey Ave., West Covina, California 91793. 12 �. (This page intentionally left blank.) i i 1 1 1 1 0 13 7 BASIC FINANCIAL STATEMENTS Assets: Cash and investments (note 2) Cash and investments with with fiscal agent (note 2). Receivables: Accounts Taxes .Interest Assessments (note 6) Notes and loans (note 5) . Due from other agencies Inventory Prepaids and other assets Land held for resale (note 7) Capital assets (note 8): Land and rights of way Construction in progress Other capital assets, net Total assets CITY OF WEST COVINA Statement of Net Assets June 30, 2006 Governmental Business -Type Activities Activities Totals 2006 2005 $ 84,096,038 1,791,388 85,887,426 79,504,004 18,536,609 - 18,536,609 20,357,189 358,472 7,500 365,972 569,182 7,089,894 - 7,089,894 4,815,009 585,625 10,144 595,769 321,520 42,391,447 - 42,391,447 43,411,804 26,858,017 - 26,858,017 30,809,869 5,717,593 -. 5,717,593 5,641,171 39,147 - 39,147 98,542 429,864 - 429,864 366,519 2,713,575 - . 2,713,575 10,953,683 68,948,571 - 68,948,571 68,085,082 8,804,685 - 8,804,685 4,911,676 138,995,716 193,706 139,189,422 143,470,620 405,565,253 2,002,738 407,567,991 413,315,870 Liabilities: Accounts payable 4,461,551 31,188 4,492,739 3,137,029 Other accrued liabilities 2,564,639 28,054 2,592,693 3,625,738 �f Due to other governments 704,629 704,629 444,354 Interest payable 1,474,713 1,474,713 1,196,484 Deposits 798,939 - 798,939 948,939 Unearned revenue 2,302,318 122,300 2,424,618 138,544 Long-term liabilities (notes 9 to 18): Due within one year 5,988,397 23,925 6,012,322 5,571,972 Due in more than one year Total liabilities 146,960,042 165,255,228 133,571 339,038 147,093,613 165,594,266 147,485,363 162,548,423 Net assets: Invested in capital assets, net of related debt 144,0301127 _ 193,706 144,223,833 143,929,600 Restricted for: Public safety 408,012 - 408,012 346,060 Public works 403,377 - 403,377 653,436 Community services 5,731,588 - 5,731,588 7,026,923 Community development 45,177,966 - 45,177,966 50,000,082 Debt service 48,269,784 - 48,269,784 46,838,606 Unrestricted (3,710,829) 1,469,994 (2,240,835) 1,972,740 Total net assets $ 240,310,025 1,663,700 241,973,725 250,767,447 See accompanying notes to the basic financial statements. 1 15 . CITY OF WEST COVINA Statement of Activities Year ended June 30, 2006 Program Revenues Operating Capital *Charges for Contributions Contributions Expenses Services and Grants and Grants Governmental activities: General government $ 1,594,760 2,767,383 - - Public safety 38,433,238 3,310,988 1,571,561 - Public works 20,696,562 5,297,840 5,156,405 277,194 Community services 6,482,112 1,454,683 4,886,629 7,884 Community development 11,245,539 302,677 - - Interest expense 7,714,047 - - - Total governmental activities 86,166,258 13,133,571 11,614,595 285,078 Business -type activities: Computer service 2,098,690 1,721,715 - - Total business -type activities 2,098,690 1.1721,715 - - $ 88,264,948 14,855,286 11,614,595 285,078 General revenues: Taxes: Property taxes Sales tax Other taxes Motor vehicle in lieu, unrestricted Investment income (loss) Other revenues Total general revenues and transfers Change in net assets Net assets at beginning of year, as restated.(note 25) Net assets at end of year See accompanying notes to the basic financial statements. 16 1 1 Net (Expense) Revenue and Changes in Net Assets .Governmental Business -type Activities Activities 2006 1,172,623 (33,550,689) (9,965,123) (132,916) (10,942,862) (7,714,047) (61,133,014) Totals 2005 1,172,623 (1,529,722) (33,550,689) (34,568,596) (9,965,123) (9,677,000) (132,016) 909,260 (10,942,862) (6,537,164) (7,714,047) (5,001,981) (61,133,014) (56,405,203) (376,975) (376,975) (220,140) - (376,975) (376,975) (220,140) (61,133,014) (376,975) (61,509,989) (56,625,343) 27,614,922 - 27,614,922 17,565,368 14,216,986 - 14,216,986 14,522,220 6,279,487 - 6,279,487 5,829,540 2,606,079 - 2,606,079 7,044,997 1,993,102 71,120 2,064,222 2,897,450 (65,429). - (65,429) 2,132,720 52,645,147 71,120 52,716,267 49,992,295 (8,487,867) (305,855) (8,793,722) (6,633,048) 248,797,892 1,969,555 250,767,447 257,400,495 $ 240,310,025 1,663,700 241,273,725 250,767,447 17 CITY OF WEST COVINA Balance Sheet - Governmental Funds June 30, 2006 City CDC General Debt Service Debt Service Assets Cash and investments $ 16,641,674 16,263,789 2;844,089 Cash and investments with fiscal agent - 1,013,734 6,001,364 Receivables: Accounts 203,686 18,439 - Taxes 3,258,765 - 2,881,465 Interest 145,336 - 77,488 Assessments - - - Notes and loans - - - Due from other funds (note 3) 4,752,871 - - Due from other governments 2,157,791 - 264,335 Inventory Prepaids and other assets 61,842 78,912 3,300 Advances to other funds (note 4) 30,738,988 - - Land held for resale - - - Total assets $ 57,960,953 17,374,874 12,072,04I Liabilities and Fund Balance Liabilities: Accounts payable S , 900,731 1,500 33,957 Other accrued liabilities 1,772,589 128,804 40,092 Pass -through payable - - 704,629 ,Due to other funds (note 3) - - 2,004,765 Deposits 223,683 - - Deferred revenue 6,127,179 - - Advances from other funds (note 4) - - 22,119,988 Total liabilities 9,024,182 130,304 24,903,431 Fund balance: Reserved for: Encumbrances 280,933 1,751 - Notes and loans - - - Inventory - - - Prepaids and other assets 61,842 78,912 3,300 Advances to other funds 24,611,809 - - Land held for resale - - - Low and moderate income housing - - - Debt service requirements - 1,013,734 6,001,364 Unreserved, reported in General fund 23, 982,187 - . - Special revenue funds - - - Debt service funds - . 16,150,173 (18,836,054) Capital projects funds - - - Total fund balance 48,936,771 17,244,570 (12,831,390) Total liabilities and fund balance $ 57,960,953 17,374,874 12,072,041 See accompanying notes to the basic financial statements. 18 CDC Non -Major Total Governmental Funds Capital Projects Governmental 2006 2005 25,712,948 13,160,564 74,623,064 71,122,293 1,387,999 10,133,512 18,536,609 20,357,189 18,758 50,998 291,881 498,843 - 949,664 7,089,894 4,815,009 209,954 101,562 5314,340 297,464 42,345,000 46,447 42,391,447 43,411,804 22,213,981 4,644,036 26,858,017 30,809,869 25,000 - 1,845,566 3,295,467 6,623,437 5,717,593 2,555,013 5,609,146 - - 11,471 11,471 14,977 250,883 2,970 397,907 344,549 - - 30,738,988 31,488,655 2,713,575 - 2,713,575 10,953,683 94,878,098 34,242,257 216,528,223 222,278,494 413,316 2,867,635 4,217,139 2,846,677 32,689 572,659 2,546,833 3,560,043 - 1,882,742 - 2,422,908 704,629 . 6,310,415 444,354 2,501,221 575,256 798,939 948,939 64,495,410 7,027,956 77,650,545 82,144,297 8,600,000 19,000 30,738,988 31,488,655 75,999,413 12,910,158 122,9.67,488 123,934,186 644,989, 4,133,774 5,061,447 11,649,337 63,571 - 63,571 1,856,540 - 11,471 11,471 14,977 250,883 2,910 397,907 344,549 - 2,713,575 - - 24,611,809 2,713,575 .. 24,011,809 10,953,683 8,880,250 - 8,880,250 11,194,342 1,387,999 - 8,403,097 8,783,274 - - 23,982,187 23,513,760 - 9,981,374 9,981,374 5,980,930 - - (2,685,881) (888,628) 4,937,418 7,202,510 12,139,928 929,735 18,878,685 21,332,099 93,560,735 98,344,308 94,878,098 34,242,257 216,528,223 222,278,494 19 CITY OF WEST COVINA Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2006 Fund balances of governmental funds Amounts reported for governmental activities in the statement of net assets are different because: Capital assets, net of depreciation, have not been included as financial. resources in governmental fund activity. Capital assets Accumulated depreciation Long term debt and compensated absences that have not been included in the governmental fund activity: Bonds payable Compensated absences Other long term liabilities Accrued interest payable for the current portion of interest due on bonds payable has not been reported in the governmental funds. Revenues that are measurable but not available are recorded as deferred revenue under the modified accrual basis of accounting. $ 93,560,735 311,504,180 (95,887,854) (117,725,000) (3,962,651) (25,513,163) (1,474,713) 75,348,227 Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net assets 4,460,264 Net assets of governmental activities $ 240,310,025 See accompanying notes to the basic financial statements. 20 (This page intentionally left blank.) 21 CITY OF WEST COVINA Statement of Revenues, Expenditures and Changes in Fund Balances - Govemmental Funds Year ended June 30, 2006 Revenues: Taxes Special assessments Licenses and permits Fines and forfeitures Investment income Rental income Revenue from other agencies Charges for services Repayment of notes and loans Developer fees Other revenues Total revenues Expenditures: Current: General government Less interfund revenues Public safety Public works Community services Community development Debt service: Principal Interest and.fiscal charges Pass -through payments Developer agreement payments Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): t' _____ 1 $ 34,380,808 1,329,125 108,320 4,358,369 96,888 2,855,483 3,195,003 241,268 46,565,264 City _ Debt Service (727,157) 483,152 (244,005) CDC Debt Service 19,052,184 597,618 19,649,802 4,302,189 312,258 - (1,881,624) - - 38,810,835 - - 4,179,688 - - 963,118 - - 561,520 - - 130,000 1,892,472 2,334,730 (370,462) (2,578,735) Transfers in (note 21) 3,021,877 430,000 Transfers out (note 21) (1,430,000) (416,597) Issuance of refunding bonds - 2,735,000 Payment to refunded bond escrow agent - (2,727,525) Total other financing sources (uses) 1,591,877 20,878 Net change in fund balances 1,221,415 (2,557,857) Fund balances (deficit) at beginning of year, as restate( 47,715,356 19,802,427 Fund balances (deficit) at end of year $ 48,936,771 17,244,570 See accompanying notes to the basic financial statements. 1,465,000 6,077,381 3,199,441 1,858,120 12,599,942 7,049,860 416,597 (7,001,165) (6,584,568) 465,292 (13,296,682) 12,831,390 C 'I 11'� 1 I I 22 Non -Major CDC Governmental. Total Governmental Funds Capital Projects Funds 2006 2005 - 5,031,802 58,464,794 49,046,990 - 3,582,066 3,582,066 3,448,956 - 7,439 1,336,564 1,046,759 - 1,060,522 1,168,842 1,264,600 743,373 835,496 5,807,699 8,239,221 132,688 36,940 266,516 589,564 - 9,446,446 12,301,929 12,052,408 - 1,569,615 4,764,618 3,533,169 878,883 476,213 1,355,096 2,336,958 - 7,884 7,884 378,493 1,388,914 453,485 2,566,819 2,517,164 3,143,858 22,507,908 91,622,827 84,454,282 - 298,066 4,912,513 4,790,513 - - (1,881,624) (1,864,101) - 1,185,572 39,996,407 37,643,249 - 10,089,460 14,269,148 12,937,191 - 10,894,819 11,857,937 8,337,754 9,252,125 571,866 10,385,511 5,229,820 455,000 - 2,050,000 2,200,464 796,569 - 8,766,422 7,901,882 - - 3,199,441 2,631,124 - - 1,858,120 2,186,247 10,503,694 23,039,783, 95,413,875 81,994,143 (7,359,836) (531,875) (3,791,048) 2,460,139 5,444,288 30,000 9,342,762 9,842,137 - (1,495,000) (10,342,762) (10,140,446) - - 2,735,000 13,500,000 - - (2,727,525) - 5,444;288 (1,465,000) (992,525) 13,201,691 (1,915,548) (1,996,875) (4,783,573) 15,661,830 20,794,233 23,328,974 98,344,308 82,682,478 18,878,685 21,332,099 93,560,735 98,344,308 23 CITY OF WEST COVINA Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year ended June 30, 2006 Net changes in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities is different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlay Depreciation expense Proceeds from the issuance of debt is reported as other financing sources in governmental funds. The issuance ofbonds increases liabilities in the statement of net assets, but does not result in an increase in net assets in the statement of activities. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. Changes in pass -through obligations payable is an expenditure in the governmental funds, but reduces or increases long-term liabilities in the statement of net assets. The statement of net assets includes accrued interest on long term debt To record as an expense the net change in compensated absences in the statement of activities. Revenues that are measurable but not available are recorded as deferred revenue under the modified accrual basis of accounting. $ (4,783,573) 8,403,153 (7,783,573) (7,475) 2,050,000 (1,976,944) (278,229) (54,383) (6,657,526) Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The net revenues (expenses) of the internal service funds is reported with governmental activities. 2,600,683 Change in net assets of governmental activities $ (8,487,867) See accompanying notes to the basic financial statements. 24 CITY OF WEST COVINA Statement of Net Assets - Proprietary Funds June 30, 2006 i Business- Governmental II Type Activities Activities Enterprise Internal Totals Assets Funds Service Funds 2006 2005 Current assets: Cash and investments $ 1,7191,388 9,472,974 11,264,362 8,381,711 Receivables: Accounts 7,500 66,591 74,091 7,0,339 Interest 10,144 51,285 61,429 24,056 Due from other agencies - - - 312,025 Inventory - 27,676 27,676 83,565 Prepaids and other assets - 31,957 31,957 211,970 Total current assets 1,809,032 9,650,483 11,459,515 8,61�3,666 Capital assets: it Construction in progress - 36,275 36,275 �,4 353 Other capital assets Less accumulated depreciation 848,759 655,053 3,894,936 (2,798,565) 4,743,695 3,453,618 4,792,683 (3,320,404) Capital assets, net 193,706 1,132,646 1,326,352 1,470,632 1 Total assets 2,002,738 10,783,129 12,785,867 10,084,298 Liabilities and Net Assets Liabilities: Current liabilities: l Accounts payable 31,188 244,412 275,600 290 352 Other accrued liabilities 28,054 17,806 45,860 65,695 Due to other funds (note 3) 313,022 313,022 53,792 Unearned Revenue 122,300 - 122,300 i Current portion of compensated absences payable 23,925 17,888 411813 94,307 Total current liabilities 205,467 593,128 798,595 504,146 Non -current liabilities: _ Claims and judgments payable - 5,646,618 5,646,618 5,6 TU6,313 Compensated absences payable 133,571 83,119 216,690 134,703 Total non -current liabilities 133,571 5,729,737 5,863,308 5,751,016 Total liabilities 339,038 6,322,865 6,661,903 6,255,162 Net assets: I� Invested in capital assets 193,706 1,132,646 1,326,352 1,470,632 Unrestricted 1,469,994 3,327,618 4,797,612 2,358,504 Total net assets $ 1,663,700 4,460,264 6,123,964 3,829,136 See accompanying notes to the basic financial statements. 25 I CITY OF WEST COVINA Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds Year ended June 30, 2006 Operating revenues: Charges for services Other revenues Total operating revenues Operating expenses: Personnel services Cost of sales, services and operations Depreciation Insurance and claims Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Investment income Gain (loss) on sale of asset Total nonoperating Business- Governmental Type Activities Activities - Enterprise Internal Totals Funds Service Funds 2006 2005 S 1,721,715 5,382,654 7,104,369 6,614,138 - 6,061 6,061 5,120 1,721,715 5,388,715 7,110,430 6,619,258 1,326,188 799,391 2,125,579 1,969,937 712,461 1,137,332 1,849,793 2,008,371 60,041 232,971 293,012 287,042 - 1,837,075 1,837,075 3,195,968 2,098,690 4,006,769 6,105,459 .7,461,318 (376,975) 1,381,946 1,004,971 (842,060) 71,120 revenues (expenses) 71,120 Income (loss) before transfers (305,855) Transfers in (note 21) - Transfers out - Change in net assets (305,855) Net assets at beginning of year 1,969,555 Net assets at end of year $ 1,663,700 218,737 289,857 128,062 - - (10,160) 218,737 289,857 117,902 1,600,683 1,294,828 (724,158) 1,000,000 1,000,000 249,863 - - (250,000) 2,600,683 2,294,828 (724,295) 1,859,581 3,829,136 4,553,431 4,460,264 6,123,964 3,829,136 See accompanying notes to the basic financial statements 26 1 1 I 1 CITY OF WEST COVINA Statement of Cash Flows -Proprietary Funds Year ended June 30, 2006 9 Cash flows from operating activities: Cash received from customers Cash received from user departments Cash payments to suppliers for goods and services Cash payments to employees for.services . Net cash provided by (used for) operating activities Business- Governmental Type Activities Activities- i! Enterprise Internal Totals Funds Service Funds 2006 2005 $ 1,868,540 - 1,868,540 2,123,895 - 5,392,463 5,392,463 4,610,077 II �I' (1,338,476) (2,914,791) (4,253,267) (4,31I0,989) (710,622) (777,445) 1,488,067 (1,890,668) (180,558) 1,700,227 1,519,669 462,315 Cash flows from noncapital financing activities: l Cash received from other funds - 1,259,230 1,259,230 29,551 Cash paid to other funds - - - (260,284) Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities: Cash paid for acquisition and construction of capital assets Net cash proved by (used for) capital and related financing activities Cash flows from investing activities: Interest received 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 ji i 1,259,230 1,259,230 (230,733) (116,810) (31,922) 148,732 (15,954) (116,810) (31,922) 148,732 (15,954) 66,971 185,513 252,484 115,577 66,971 185,513 252,484 b 115,577 (230,397) 3,113,048 2,882,651 331,205 2,021,785 6,359,926 8,381,711 8,050,506 $ 1,791,388 9,472,974 11,264,362 1� 8,381,711 (Continued) 1 27 CITY OF WEST COVINA Statement of Cash Flows -Proprietary Funds (Continued) Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation (Increase) decrease in accounts receivable (Increase) decrease in due from other agencies (Increase) decrease in prepaids and other assets Increase (decrease)in accounts payable Increase (decrease)in other accrued liabilities Increase (decrease) in compensated absences payable Increase (decrease) in deferred revenue Increase (decrease) in claims and judgments payable Total adjustments Net cash provided by (used for) operating activities Business- Governmental Type Activities Activities - Enterprise Internal Funds 'Service Funds Totals 2006 2005 $ (376,975) 1,381,946 1,004,971 (842,060) 60,041 232,971 293,012 287,042 (7,500) 3,748 (3,752) (16,519) 32,025 55,889 87,914 115,208 720 (10,707) (9,987) (20,561) 1,119 (15,871) (14,752) 60,561 (26,285) 6,450 (10,835) 33,031 13,997 15,496 29,493 46,238 122,300 - 122,300 - - 30,305 30,305 799,375 196,417 318,281 514,698 -1,304,375 $ (180,558) 1,700,227 1,519,669 462,315 There were no noncash financing or investing activities for the year ended June 30, 2006. See accompanying notes to the basic financial statements. 28 t 1 1 1 1 1 1 i 1 1 1 1 1 t 1 1 1 1 CITY OF WEST COVINA Statement of Fiduciary Assets and Liabilities June 30, 2006 Assets Cash and investments (note 2) Accounts receivable Total assets Liabilities and Net Assets Liabilities: Accounts payable Deposits Total liabilities Special Deposits Fund 2006 2005 $ 199,046 752,180 928,692 2,817 $ 1,127,738 754,997 $ 325,087 42,517 802,651 712,480 $ 1,127.738 754,997 See accompanying notes to the basic financial statements. 29 CITY OF WEST COVINA Notes to the Basic Financial Statements Year ended June 30, 2006 (1) Summary of Significant Accounting Policies The basic financial statements of the City of West Covina, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard -setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below. (a) Reporting Entity The City of West Covina was incorporated on February 23, 1923 under the general laws of the State of California. The accompanying financial statements present the City of West Covina 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 (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. Included within the financial reporting entity of the City of West Covina are the City of West Covina Community Development Commission, and the West Covina Public Financing Authority because each component unit meets the above -mentioned criteria. A brief description of each component unit follows: The City of West Covina Community Development Commission The Community Development Commission ("Commission"), formerly the Redevelopment Agency of the City of West Covina, was established on August 9, 1971. The primary purpose of the Commission is to eliminate blighted areas by encouraging development of residential, commercial, industrial, recreational and public facilities. The City Council appoints the Commission director and has full accountability for the Commission's fiscal matters. The Commission's financial data and transactions are included within the debt service fund type and the capital projects fund type. Revenues of the Commission consist primarily of property tax allocations on the incremental increase of property values in the redevelopment area and interest income. 30 I C CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (1) Summaa of Significant Accounting Policies (Continued) West Covina Public Financing Authority The West Covina Public Financing Authority ("Authority") was created by a joint exercise of joint powers agreement between the City of West Covina' and the Community Development Commission of the City of West Covina on June 1, 1990. The purpose of the Authority is to provide, through the issuance of debt, financing necessary for various capital improvements. The Authority is administered by the Board who are the members of the City Council. The Authority's sole source of income is installment sale, loan and lease payments received from the City and Community Development Commission which�are used to meet the debt service requirements on debt issues. The Authority is blended into the debt service funds of the City. 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. The City of West Covina Community Development Commission issues separate component unit financial statements. Upon their completion, financial statements of the component unit ° can be obtained at City Hall, 1444 W. Garvey Avenue, West Covina, California 91793. (b) Basis of Accounting and Measurement Focus The basic financial statements of the City are composed of the following: • Government -wide financial statements • Fund financial statements • Notes to the basic financial statements 1 Financial reporting is based upon all GASB pronouncements, as well as the FASB Statements and Interpretations, APB Opinions, and Accounting Research Bulletins that were issued on or before November 30, 1989 that do not conflict 1 with or contradict GASB pronouncements. FASB pronouncements issued after November 30, 1989 are not followed in the preparation of the accompanying financial statements. Government -wide Financial Statements Government -wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business -type activities of the 1 31 CITY OF WEST COVINA I Notes to the Basic Financial Statements (Continued) I (1) Summaa of Significant Accounting Policies (Continued) primary government (including its blended component units). Eliminations have , been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the City. Government -wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government -wide financial statements. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial - statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities resulting from nonexchange transaction are recognized in accordance with the requirements of GASB Statement No. 33. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Taxes and other items not included among program revenues are reported instead as general revenues. Amounts paid to acquire capital assets are capitalized as assets in the government - wide financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the government -wide financial statements, rather than as an other financing source. Amounts paid to reduce long- term indebtedness of the reporting government are reported as a reduction of the , related liability, rather than as an expenditure. Fund Financial Statements The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. 11 32 1 I D I I I J u I 1 I CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies (Continued) Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements. These statements display information about the major funds individually and nonmajor funds in the aggregate for governmental and enterprise funds. Fiduciary statements include financial information for fiduciary funds and similar component units. Fiduciary funds of the City primarily represent assets held by the City in a custodial capacity for other individuals or organizations. Governmental Funds In the fund financial statements, governmental funds are presented using the modified -accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. Revenue recognition is subject to the measurable and available criteria for the governmental funds in the fund financial statements. Significant revenues subject to the criteria include taxes, licenses and. permits, and intergovernmental revenues. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes, place. Imposed nonexchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government -mandated and voluntary nonexchange transactions are recognized as revenues when all applicable eligibility requirements have been met. In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Non -current portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. 33 CITY OF WEST COVINA 1 Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies (Continued) Special reporting treatments are used to indicate, however, that they should not be , considered "available spendable resources," since they do not represent net current assets. Revenues, expenses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement No. 33 which requires that local governments defer grant revenue that is not received within 60 days after the fiscal year ends to meet the "available" criteria of revenue recognition. In the past, the industry practice for grants was to recognize revenue in the fiscal year in which the related expense was incurred. Therefore recognition of governmental fund type revenue represented by non- ' current receivables are deferred until they become current receivables. Non- current portions of other long-term receivables are offset by fund balance reserve accounts. Sales taxes, property taxes, franchise taxes, revenue from other agencies, rental income, occupancy taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the availability period. Other revenue items are considered to be measurable and available where cash is received by the government. The availability period for 1 these revenues is 60 days, with the exception of a seven month availability period for sales tax and motor vehicle in -lieu revenues. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as other financing sources rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures. When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources. Proprietary Fiduciary Funds and The City's enterprise and internal service funds are proprietary funds. In the fund financial statements, the proprietary funds and fiduciary funds are presented using ' the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the economic ' 34 1 I 1 I I 1 CITY OF WEST COVINA Notes to the Basic Financial- Statements (Continued) (1) Summary of Significant Accounting Policies (Continued) resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net assets. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non -operating revenues, such as subsidies, taxes, and investment earnings result from nonexchange transactions or ancillary activities. Amounts paid to acquire capital assets are capitalized as assets in the enterprise fund financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the enterprise fund financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the enterprise fund are reported as a reduction of the related liability, rather than as an expenditure. Agency funds are custodial in nature (assets equal liabilities) and do not involve the recording of City revenues and expenses. (c) Fund Classifications The City reports the following major governmental funds: General Fund This is the primary operating fund of the City. It accounts for all activities of the general government, except those required to be accounted for in another fund. Debt Service Fund This fund is used to account for the ,payment of principal, interest and related costs on the City's long-term debt issues. Community Development Commission Debt Service Fund This fund is used to account for the accumulation of resources for, and the payment of, Community Development Commission long-term debt principal, interest and related costs. Community Development Commission Capital Projects Fund This capital projects fund is used to account for the financial resources to be used for property acquisition, improvement and rehabilitation within the project areas authorized under provisions of the California Redevelopment Law. 1 35 CITY OF WEST COVINA I Notes to the Basic Financial Statements (Continued) j (1) Summary of Significant Accounting Policies (Continued) Additionally, the City reports the following fund types: , Enterprise Fund This fund is used to account for operations that are financed and operated in a manner similar to private business enterprises. The City's enterprise , fund is used to account for computer services provided by the Police Department to other public agencies. , Internal Service Funds These funds are used to account for vehicle and equipment maintenance and replacement and for the City's self-insurance programs. Departments of the City are charged for the services provided or benefits received from these funds. Agency Fund This fund is used to account for special deposits received by the City. (d) Encumbrances Encumbrance accounting, under which purchase orders, contracts and other 1 commitments for the expenditure of funds are recorded in order to reserve that portion of the fund balance, is employed in the governmental funds. Encumbrances are reported as reservations of fund balances in the fund financial statements since they do not constitute expenditures or liabilities. Encumbrances outstanding at year-end are re -appropriated in the following year. (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 investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. 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 investment balance. , 1 36 1 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies (Continued) (f) Cash Equivalents For purposes of the statement of cash flows, cash equivalents are defined as short- term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates, and have an original ' maturity date of 3 months or less. Cash equivalents represent the proprietary funds' share in the cash and investment pool of the City of West Covina. (g) Inventory Inventory is stated at average cost. Physical counts of inventory are taken on a cyclical basis during each fiscal year with perpetual records adjusted to actual at that time. The City uses the consumption method of accounting for inventory. (h) Land Held for Resale Land held for resale represents land, structures, and their related improvements ' that were acquired for resale in accordance with the objective of the Redevelopment Project. Land held for resale is valued at the lower of cost or the sales price per contract with the developer. A portion of fund balance is reserved for land held for resale in the fund financial statements to indicate that a portion of fund balance is not available for future expenditures. (i) Property Taxes I 1 Under California law, property taxes are assessed and collected by the counties up to 1 % of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of West Covina accrues only those taxes which are received within 60 days after year end. The property tax calendar is as follows: Lien Date: Levy Date: Due Date: Delinquent Date: January 1 July 1 First Installment - November 1 Second Installment - February 1 First Installment - December 11 Second Installment - April 11 37 I CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (1) SummM of Significant Accounting Policies (Continued) Taxes are collected by Los Angeles County and are remitted to the City periodically. Dates and percentages are as follows: December 20 40% Advance January 20 10% Advance February 20 Collection No. 1 April 20 3 5 % Advance May 20 Collection No. 2 July 20 Collection No. 3 0) Claims and Judgments The City records a liability for litigation, judgments, and claims when it is probable that an asset has been impaired or a liability (including claims incurred but not reported) has been incurred prior to year end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. This liability is recorded in the internal service fund that accounts for the City's self insurance activities. (k) Advances to Other Funds Noncurrent portions of long-term interfund loan receivables are reported as advances and are offset equally by a fund balance reserve account in fund financial statements which indicates that they do not constitute expendable available financial resources and therefore are not available for appropriation. (1) Employee Leave Benefits In accordance with GASB Statement No. 16, a liability is recorded for unused vacation and similar compensatory leave balances since the employees' entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement. Under GASB Statement No. 16, a liability is recorded for unused sick leave balances only to the extent that it is probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receive termination payment, as well as those who are expected to become eligible to receive termination benefits as a result of continuing their employment with the City. Other amounts of unused sick leave are excluded from the liability since their payment is contingent solely 1 I I 1 1 P 1 [i F1 38 I 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies (Continued) upon the occurrence of a future event (illness) which is outside the control of the City and the employee. , The General Fund typically has been used to liquidate the liability for compensated absences. (m) Capital Assets Capital assets greater than $5,000 and infrastructure greater than $100,1000 are capitalized and recorded at cost or at an estimated fair value of the assets at the time of acquisition where complete historical records. do not exist. Contributed capital assets are valued at their estimated fair market value at the date of the contribution. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are public domain (infrastructure) consisting of certain improvements including roads, bridges, curbs and gutters, streets and sidewalks, medians, sewer and storm drains. Depreciation has been provided using the straight-line method over the estimated ' useful life of the asset in the government -wide financial statements and in the fund financial statements of the proprietary funds. Interest is capitalized on proprietary fund assets acquired with tax-exempt debt. The amount of interest to be capitalized is calculated by offsetting interest expense incurred from the date of the borrowing until completion of the project with interest earned on invested proceeds over the same period. The following schedule summarizes capital asset useful lives: Governmental Activities: Infrastructure — pavement 25 years Infrastructure — other 20-75 years Buildings 20-50 years Improvements other than buildings 20-50 years Equipment and vehicles 5-25 years ' Business -type Activities: Equipment and vehicles 5-25 years J 1 1 39 1 CITY OF WEST COVINA 1 Notes to the Basic Financial Statements ' (Continued) (1) SummM of Significant Accounting Policies (Continued) (o) Prior Year Date I Selected information included in the accompanying financial statements regarding the prior year has been presented for comparison purposes only and does not represent a complete presentation in accordance with generally accepted accounting principles. Certain minor reclassifications of prior year data have been made in order to enhance their comparability with current year figures. ' (2) Cash and Investments . Cash and investments held by the City at June 30, 2006 are reported in the accompanying t financial statements as follows: Statement of Net Assets: Cash and investments $85,887,426 Cash and investments with fiscal agent 18,536,609 Fiduciary Funds: , Statement of Assets and Liabilities: Cash and investments 199,046 Total cash and investments $104,623,081 Cash and investments as of June 30, 2006 consists of the following: ' Cash on hand $ 4,750 Deposits with financial institutions 2,746,079 Investments 101,872,252. Total cash and investments $104,623,081 Investments Authorized by the California Government Code and the Entity's Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code and the City's investment policy. The table also identifies certain provisions of the California Government Code (or the City's investment policy, if more restrictive) that addresses interest rate risk and concentration of credit risk. This , table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy. 1 40 � fl r� I 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (2) Cash and Investments (Continued) Investment Types Authorized by State Law Local Agency Bonds U.S. Treasury Obligations U.S. Agency Securities Banker's Acceptances Commercial Paper Negotiable Certificates of Deposit Repurchase Agreements Reverse Repurchase Agreements Medium -Term Notes Mutual Funds Time Certificates of Deposit Money Market Mutual Funds Mortgage Pass -Through Securities County Pooled Investment Funds Local Agency Investment Fund (LAIF) JPA Pools (other investment pools) (Continued) Authorized *Maximum By Investment *Maximum Percentage Policy Maturily Of Portfolio No N/A None Yes 5 years None Yes 5 years None Yes 180 days 40% Yes 270 days 40% Yes 5 years 30% Yes 100 days 20% Yes 92 days 20% Yes 5 years 30% No N/A None Yes 5 years 25% Yes N/A 20% Yes 5 years 20% Yes N/A None_ Yes N/A None No N/A None *Maximum Investment In One Issuer None None None 30% 10% None None None None None None 10% None None None None * Based on state law requirements or investment policy requirements, whichever is more restrictive. Investments Authorized by Debt Agreements Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment typesthat are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address. interest rate risk and concentration of credit risk. 41 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) O Cash and Investments (Continued) Authorized Maximum Investment Type Maturi U.S. Treasury Obligations None U.S. Agency Securities None Certificates of Deposit None. Banker's Acceptances 360-365 days Commercial Paper 365 days Money Market Mutual Funds N/A Repurchase Agreements 30 days- 6 months Local Agency Investment Fund None Investment Agreements None Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair _value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City. manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash .flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: Remaining Maturity Carrying Less Than 1 1 to 2 years 2 to 3 years Over 3 years Investment Tyne Amount US Agency Securities $34,985,767 14,709,657 4,905,010 - 15,371,100 Local Agency Investment Fund 41,809,805 411809,805 - - - Los Angeles County Investment Pool Held by. fiscal agent: Money market funds Federal Agency securities Investment agreements 6,540,071 6,540,071 - - - 4,032,464 4,032,464 - - - 8,504,941 7,769,941 735,000 - - 5,999,204 - - - 5,999,204 $101,872,252 74,861,938 5,640,010 - 21,370,304 42 1 f 1 1 1 1 t 1 1 1 1 1 1 1 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) 21 Cash and Investments (Continued Disclosures Relatiniz to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the actual rating as of year end for each investment type. Investment Tyne US Agency Securities Local Agency Investment Fund Los Angeles County Investment Fund Held by fiscal agent: Minimum Legal Carrying Rating Amount N/A $34,985,767 N/A 41,809,805 N/A 6,540,071 Rating as of Year End AAA AA Not Rated 34,985,767 - - - - 41,809,805 6,540,071 Money Market funds A 4,032,464 4,032,464 - - Federal Agency Securities A 8,504,941 8,504,941 - Investment Agreements A 5,999,204 - . 5,999,204 - $101,872,252 47,523,172 5,999,204 48,349,876 Concentration of Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City investments are as follows: Issuer Investment Type Reported Amount FNMA Federal agency securities $6,995,010 FHLB Federal agency securities 16,842,820 43 LI CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (2) Cash and Investments (Continued) Investments in any one issuer that represent 5% or more of total investments by the reporting unit (primary government, discretely presented component unit, governmental activities, major fund, nonmajor funds in the aggregate, etc.) are as follows. Tssuer City Debt Service Fund: FNMA FHLMC Investment Type Federal agency securities Federal agency securities CDC Debt Service Fund: AIG . Investment agreement Westdeutsche Landesbank Investment agreement Custodial Credit Risk Reported Amount $ 4,027,500 11,343,600 996,534 5,002,670 Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker -dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit): The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2006, $2,037,978 of the City's deposits with financial institutions in excess of federal depository insurance limits were held in collateralized accounts. Investments held by bond trustee are selected under the terms of the applicable trust agreement. The trustee acquires the investment and holds the investment on behalf of the reporting government. u 1 -1 1 44 1 J 11 1 11 1 J I r-, CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (2) Cash and Investments (Continued) Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code 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 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. (3) Due From and To Other Funds Interfund receivable and payable balances at June 30, 2006 are as follows: Due from Other Funds Due to Other Funds Amount General Fund CDC Debt Service Fund $ 1,979,765(a) CDC Capital Projects Fund 37,176 Internal Service Funds 313,022 Non -Major Governmental Funds 2,422,908(b) Total General Fund 4,752,871 CDC Capital Projects Fund CDC Debt Service Fund 25,000 Non -Major Governmental Funds CDC Capital Projects Fund 1,845,566(c) 6,623,437 (a) The largest component of these interfmd balances is $1,566,877 to accrue I'sales tax reimbursement owed to the General Fund. (b) The majority of these interfund balances is as a result of short-term borrowings to cover deficit cash in the Gas Tax Fund, the Traffic Safety Fund, the Transportation Development Fund, the Grants Fund, the Park Fund, the Internal Service Funds and the CDC at June 30, 2006. (c) This interfund balances is the result of amounts due to the City Capital Outlay Fund as reimbursement from the CDC for costs related to the redevelopment of 'a former landfill site. 45 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (4) Interfund Advances The City has authorized several interfund advances to be used for the operations of the funds receiving the advances. At June 30, 2006 the outstanding advances are: Advances to Other Funds Advances from Other Funds Amount I General Fund CDC Debt Service Fund $22,119,988 (a) CDC Capital Projects Fund 8,600,000 (b) Non -Major Governmental Funds 19,000 (c) $30,738,988 (a) The General Fund has made the following advances to the Community Development Commission: Administrative and construction costs $13,192,855 Capital project costs 2,344,324 Revolving credit 5,424,746 Red Onion loan costs 1,158,063 Total $22,119,988 The outstanding advances are comprised of original principal of $18,890,497 and accumulated interest of $3,229,491 that has been included in deferred revenue in the fund financial statements. The advances accrue interest at 10.5% per annum and will be paid off in 2018. The Red Onion loan is due and payable with a balloon payment in June 2007. (b) In July 2000, the General Fund extended a $5,600,000 line of credit to the Community Development Commission. The Commission withdrew $600,000 in fiscal year ended June 30, 2003 and the remaining $5,000,000 in fiscal year ended June 30,.2004. The line of credit accrues interest at the LAIF interest rate plus 2% and has no stipulated repayment date. In June 2006, the General Fund advanced $2,000,000 to the Community . Development Commission Capital Projects Fund. The advance accrues interest at 6% per annum and is due in June 2007. In June 2006, the City advanced $1,000,000 to the CDC Capital Projects Fund. The advance accrues interest at 6% and is due June 2007. 1 11 I 1 (c) The General Fund advanced $19,000 to the Parks Capital Projects Fund. The t advances does not accrue interest and has no stipulated repayment date. 46 1 11 J II 1 fi CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (5) Notes and Loans Receivable As of June 30, 2006, the following notes and loans receivable were outstanding: Housing rehabilitation $ 5,634,519 First time home buyers 1,366,493 Housing preservation program 1,561,823 Lark Ellen Towers 5,603,426 Executive Lodge Apartments 6,263,716 West Covina Senior Villas 3,683,333 Clippinger note 1,073,006 Other Community Development Commission loans 1,671,701 Total $26,858,017 The City has made several housing rehabilitation loans totaling $5,634,519 to qualified applicants using Community Development Block Grants and housing set -aside funds. These loans bear interest up to 5% and are repaid when title to the property changes. The Commission has made loans to first-time home buyers totaling $1,366,4931. Loans are secured by second trust deeds and bear interest at 5%. Principal and interest are deferred for five years and are due monthly in years 6 through 30. There were 62 individual loans outstanding at June 30, 2006 ranging from $10,000 to $25,000. The Commission has . also made housing preservation loans totaling $1,561,823 to qualified applicants using housing set -aside funds. Principal and interest are deferred for ten years; after the tenth year loans bear interest at 5%. Loans are repaid after the tenth year or when title to the property changes. There were 183 individual loans outstanding at June 30, 2006 ranging from $4,000 to $10,050. In May 1997, the Commission loaned $4,270,000 to Lark Ellen Towers. The, loan is secured by a deed of trust. The loan accrues interest at 3% per annum and °requires annual payments equal to the maximum of $35,000 or 50% of net profits earned by the project. The outstanding principal and accrued interest at June 30, 2006 is $5,603426. In April 1998, the Commission loaned $5,622,300 to Executive Lodge Apartments Limited Partnership (Promenade Apartments project). The loan is secured by adeed of trust. The loan accrues interest at 3% per annum. The outstanding principal and;accrued interest at June 30, 2006 is $6,263,716. In May 2002, the Commission loaned $4,250,000 to West Covina Senior Villas, LLC. The loan is secured by a deed of trust. The loan does not accrue interest. The note requires annual payments of $141,667 through May 2032 that are forgiven by the City unless the borrower defaults on the agreement. The outstanding principal at June 30, 2006 is $3,683,333. 1 47 L'I CITY OF WEST COVINA I Notes to the Basic Financial Statements , (Continued) (5) Notes and Loans Receivable (Continued) The Commission provided a loan to Clippinger that bears interest of 7% and is ' collateralized by a promissory note and sales tax guarantees. The outstanding principal and accrued interest at June 30, 2006 is $1,073,006. (6) Assessments Receivable ' As of June 30, 2006, the following assessments receivable were outstanding: CDC Capital Projects Fund: 1996 Special Tax Bonds $42,345,000 Non -Major Governmental Fund: Special Assessments Fund 46,447 Total $42,391,447 , In connection with the Commission's issuance of its $51,220,000 1996 Special Tax Bonds, the Commission has recorded $42,345,000 in assessments receivable and deferred revenue. The assessment is an annual special tax levied on the community facilities district in amount sufficient to ensure payment of the debt service on the bonds. This , special tax supplements sales and property tax increment revenues that also support the debt service on the bonds. These assessment and corresponding deferred revenue will be reduced as the principal on the bonds mature. During fiscal year ended June 30, 1994, the City established the West Covina Auto Plaza Business Improvement District in order. to levy assessments within the Auto Plaza area for the purpose of constructing and maintaining an electronic reader board. The City annually assesses the dealerships within the district for the annual maintenance and capital costs. The $46,447 in assessments receivable and deferred revenue is the amount of the annual assessment due at June 30, 2006. (7) Land Held for Resale Land held for resale is comprised of the following at June 30, 2006: Auto Plaza Expansion $ 326,633 , BKK Project 2,386,942 Total land held for resale 2 713 575 48 tCITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (8) Capital Assets ' Capital asset activity for the year ended June 30, 2006 is as follows: I Balance at June 30, 2005 Additions Deletions Balance at June 30, 2006 �I Governmental activities: Buildings $ 12,250,161 - - 12,250,161 Improvements other than buildings 31,811,466 282,976 (20,361) 32,074,081 Equipment and vehicles 15,343,832. 1,089,111 (355,740) 16,077,203 Infrastructure — Pavement 158,036,857 2,147,899 - 160,184,756 Infrastructure — Other 16,727,039 _439,139 (70,244) 17,095,934 I! Total cost of depreciable assets 234,169,355 3,959,125 (446,345) 237,682,135 Less accumulated depreciation: 277,157 II (31877,282) Buildings (4,154,439) - � Improvements other than buildings (13,758,791) (790,807) 482,091 (14067,507) Equipment and vehicles (8,686,888) (1,507,606) 863,712 (91330,782) Infrastructure — Pavement Infrastructure — Other (51,195,499) (13,040,055) (6,759,186) 416 108) - - (57;9541685) (13!456.163) I 686,419) Total accumulated depreciation (90,935,672) 9 473 007) 1,622,960 (98 ii Net depreciable assets 143,333,683 (5,514,582) 1,176,615 138,995,716 iCapital assets not depreciated: it Land 53,708,584 863,489 - 54,572,073 ' Rights of way Construction in progress 14,376,498 4,911,676 - 6,917,484 - (3,024,475) 14,376,498 8,804,685 'I Capital assets, net $216,330,441 2,266,391 (1.847.8601 216.748.972 Depreciation expense was charged in the following functions in the Statement of Activities: General government $ 36,251 1, Public safety 925,250 Public works 8,061,437 Community services 227,351 Community development 223,418 $ 9,473,707 i 49 it CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (8) Caavital Assets (Continued) Balance at Balance at June 30, 2005 Additions Deletions June 30, 2006 Business -type activities: Equipment and machinery $731,949 116,810 848,759 Total cost of depreciable assets 731,949 116,810 - 848,759 Less accumulated depreciation: (595,012) (60,041) - (655,053) Total accumulated depreciation (595,012) (60,041) - (655,053) Capital assets, net $136,937 56,769 - 193,706 Depreciation expense was charged in the following programs of the primary government: Computer service $60,041 (9) Long -Term Liabilities Changes in long-term liabilities for the year ended June 30, 2006 are as follows: Balance at Balance at Due within Due in more Governmental activities June 30, 2005 Additions Deletions June 30, 2006 one vear than one year Lease Revenue Bonds: 1988 Lease Revenue Bonds 2002 Lease Revenue Bonds 2003 Lease Revenue Bonds 2004 Lease Revenue Bonds 2005 Lease Revenue Bonds $ 5,985,000 - 21,895,000 - 3,500,000 - 13,500,000 - - 2,735,000 Total Lease Revenue Bonds 44,880,000 2,735,000 1996 Special Tax Bonds 43,350,000 - Tax Allocation Bonds: 1999 Tax Allocation Bonds . 3,935,000 2002 Tax Allocation Bonds 11,910,000 Total Tax Allocation Bonds 15,845,000 (245,000) 5,740,000 265,000 5,475,000 (2,690,000) 19,205,000 405,000 18,800,000 (130,000) 3,370,000 130,000 3,240,000 - 13,500,000 - 13,500,000 - 2,735,000 40,000 2;695,000 (3,065,000) 44,550,000 840,000. 43,710,000 (1,005,000) 42,345,000 1,105,000 41,240,000 - (5,000) 3,930,000 5,000 - (210,000) 11,700,000 215,000 - (215,000) 15,630,000 220,000 3,925,000 11,485,000 15,410,000 50 1 1 1 1 1 1 1 i 1 1 1 1 1 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (9) Long -Term Liabilities (Continued Balance at Balance at Due within Due in more Governmental activities June 30, 2005 Additions Deletions June 30, 2006 one year than oneyear Housing Set -Aside Bonds: 1998 Housing Set -Aside Bonds 5,390,000 - (145,000) 5,245,000 150,000 5,095,000 2001 Housing Set -Aside Bonds 10,265,000 - (310,000) 9,955,000 320,000 9,635,000 Total Housing Bonds 15,655,000 - (455,000) 15,200,000 470,000 14,730,000 Compensated absences payable 3,993,779 771,924 (702,045) 4,063,658 715,706 3,347,952 Claims and judgments payable 5,616,313 918,778 (888,473) 5,646,618 2,403,185 3,243,433 Capital lease obligations 819,731 - (247,346) 572,385 173,902 398,483 Notes payable 1,456,236 - (60,795) 1,395,441 60,604 1,334,837 Developer agreement payable 16,064,161 2,180,124 (707,848) 17,536,437 - 17,536,437 Due to the County of Los Angeles 5,233,616 775,284 - 6,008,900 - 6,008,900 Total long-term liabilities $152,913,836 7,381,110 (7,346,507) 152,948,439 5,988,397 146,960,042 Changes in long-term liabilities for business -type activities for the year ended June 30, 2006 are as follows: Balance at Balance at Due within Due in more Business -type activities: June 30, 2005 Additions Deletions June 30, 2006 one vear than one year Compensated absences payable 4 4 5V 1f�Z29) 2 LU.5m 10) Lease Revenue Bonds 1988 Lease Revenue Refunding Bonds (The Lake Public Parkins Proiect In 1988, the Community Development Commission issued $7,750,000 of Variable Rate Lease Revenue Bonds for the purpose of constructing two multi -story parking structures. The bonds consist of $7,350,000 of current interest bonds and $400,000 of compound interest bonds. The bonds carried interest rates of 6.625% and 7.50%, respectively, until January 31, 1994. On February 1, 1994, the bonds were converted to variable rate bonds. 51 L� CITY OF WEST COVINA I Notes to the Basic Financial Statements ' (Continued) (10) Lease Revenue Bonds (Continued) The interest rates vary based on the prevailing financial market conditions beginning on , February 1, 1994, to a maximum of 12% over the term of the bonds and are payable monthly. The bonds are subject to mandatory redemption beginning August 1, 1994, and annually thereafter through August 1, 2018. ' The bonds are secured by the facilities and lease rentals to be received pursuant to a lease agreement between the Commission and the City. At June 30, 2006, the outstanding ' balance is $5,740,000. 2002 Lease Revenue Refunding Bonds, Series A and B (Public Facilities Project) On June 25 2002 the City issued $2 690 000 of Taxable Variable Rate Lease Revenue , Refunding Bonds, 2002 Series A and $19,205,000 Variable Rate Lease Revenue Refunding Bonds, 2002 Series B to provide financing for the advance refunding of the City's 1997 Refunding Certificates of Participation. The interest of the Series A bonds is payable August 1, 2002. The Series A bonds bear interest at a variable interest rate determined weekly and after the fixed rate conversion date, at fixed interest rates. The principal of the Series A bonds is due annually beginning on September 1, 2006, in amounts ranging from $40,000 to $165,000. The Series A bonds mature on September 1, 2035. The entire principal amount of $2,690,000 was paid in full in September 2005. The Series B bonds initially bear interest at 2.5% per annum and, during the initial rate period, interest on the Series B bonds is payable on March 1, 2003 and semiannually thereafter on September 1 and March 1 of each year until September 1, 2006. Thereafter, interest with respect to the Series B bonds is payable on October 1, 2006 and each month ' thereafter at a variable rate, and after the fixed rate conversion date at the fixed rates. Principal on the Series B bonds is due annually beginning on September 1, 2006, in amounts ranging from $405,000 to $950,000. The Series B bonds mature on September 1, 2035. , The Series B bonds are payable from lease payments to be made by the City to the Authority as rental for certain public facilities consisting of a portion of the City's Civic ' Center Complex. At June 30, 2006, the outstanding balance is $19,205,000. 2003 Lease Revenue Bonds, Series A (Community Center Project) I On February 19, 2003, the City issued $3,625,000 of Lease Revenue Bonds to provide financing for the construction of a community center. The bonds mature annually through , August 1, 2023 in amounts ranging from $125,000 to $270,000, with interest rates that vary beginning on August 1, 2004 at 1.60% to a maximum of 5.375% over the term of the bonds. Interest is payable semiannually on February 1 and August 1 of each year. 52 1 1 �7 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (10) Lease Revenue Bonds (Continued) The bonds are payable from lease payments as rental for certain public facilities. The reserve requirement at June 30, 2006 of $287,100 was fully funded. At June 30, 2006, the outstanding balance is $3,370,000. 2004 Lease Revenue Bonds, Series A and B (Golf Course Project) In August 2004, the City issued $8,165,000 of Variable Rate Lease Revenue Bonds, Series A and $5,335,000 of Variable Rate Lease Revenue Bonds, Series B to provide financing for grading and infrastructure relating to the City's proposed municipal golf course. The Series A bonds mature annually through May 1, 2034 in amounts ranging from $45,000 to $535,000. The Series B bonds mature annually through May l; 2034 in amounts ranging from $45,000 and $350,000. The Series A and B bonds bear interest at a variable rate reset weekly and at a fixed rate after the fixed rate conversion date. Prior to the fixed rate conversion date, interest is payable on the first business day, of each month. Following the fixed rate conversion date, interest is payable on May 1 and November 1 of each year. The bonds are payable from lease payments as rental for certain public facilities. At June 30, 2006, the outstanding balance is $13,500,000. 2005 Lease Revenue Bonds, Series C (Public Facilities Project) In September 2005, the City issued $2,735,000 of Variable Rate Lease Refunding Bonds, Series C to provide funds to refinance the City's 2002 Series A Taxable Variable Rate Lease Revenue Refunding Bonds. The reacquisition price exceeded the net carrying amount of the old debt by $45,000. the refunding was undertaken to reduce total debt service payments over the next 30 years by $479,618 and resulted in an economic gain of $331,860. The bonds mature annually on September 1 in amounts ranging from $40,000 to $155,000 through September 1, 2034. The bonds bear interest at a variable rate reset weekly and at a fixed rate after the fixed rate conversion date. Prior to the fixed rate conversion date, interest is payable on the first business day of each month. Following the fixed rate conversion date, interest is payable on March 1 and September 1 ` of each year. The bonds are payable from lease payments as rental for certain public facilities. At.June 30, 2006, the outstanding balance is $2,735,000. 53 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (10) Lease Revenue Bonds (Continued) The annual debt service requirements on the Lease Revenue Bonds are as follows: 1988 Lease 2002 Lease 2003 Lease Year Ending Revenue Bonds Revenue Bonds Revenue Bonds June 30 Principal Interest Principal Interest Principal Interest 2007 $265,000 210,658 405,000 704,824 130,000 154,615 2008 290,000 200,933 415,000 689,960 135,000 151,230 2009 310,000 190,290 430,000 674,730 140,000 147,100 2010 335,000 17.8,913 440,000 658,949 140,000 142,235 2011 365,000 166,618 455,000 642,801 150,000 136,535 2012-2016 2,305,000 610,138 2,480,000 2,953,616 845,000 575,781 2017-2021 1,870,000 140,745 2,885,000 2,469,727 1,055,000 346,658 2022-2026 - - 3,340,000 1,908,033 775,000 63,383 2027-2031 - - 3,870,000 1,257,342 - - 2032-2036 - 4.485,000 503,524 $5,740,000 1,698,295 19,205,000 12,463,506 3,370,000 1,717,537 2004 Lease 2005 Lease Year Ending Revenue Bonds Revenue Bonds June 30 Principal Interest Principal Interest 2007 $ - 507,600 40,000 100,375 2008 - 507,600 45,000 98,907 2009 90,000 504,216 50,000 97,255 2010 200,000 496,696 60,000 95,420 2011 315,000 484,852 60,000 93,218 2012-2016 1,790,000 2,228,176 345,000 430,675 2017-2021 2,245,000 1,842,024 425,000 361,679 2022-2026 2,805,000 1,359,052 510,000 277,636 2027-2031 3,520,000 753,128 615,000 177,445 2032-2036 2,535,000 98,136 585,000 54,683 $13,500,000 8,781,480 2,735,000 1,787,293 54 rJ r. CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) , (11) 1996 Special Tax Bonds (The Fashion Plaza Project) In 1996, the Community Development Commission issued $51,220,000 of Special Tax Refunding Bonds comprised of $9,980,000 of serial bonds and $41,240,000 of term bonds. The serial bonds mature annually through September 1, 2006, in amounts ranging from $635,000 to $1,785,000, with interest rates that vary beginning on August 1, 1997 at 4.0% to a maximum of 2.5% over the term of the bonds. The term bonds bear interest at a rate from 5.75% to 6.0% payable semiannually and are due September 1, 2002. The term bonds are not subject to optional redemption; mandatory redemption begins September 1, 2007, then annually thereafter through September 1, 2022. Interest is payable semiannually on March 1 and September 1 of each year. The bonds are secured by and payable from a portion of the revenues derived from an annual special tax to be levied against all taxable real property within the Special - Assessment District. In addition, the Commission has pledged certain other incremental revenues generated within the District consisting of property taxes and sales taxes. The required reserve at June 30, 2006 of $5,103,401 was fully funded. The outstanding principal balance of the bonds at June 30, 2006 is $42,345,000. Debt service requirements on these bonds at June 30, 2006 is as follows: Year Ending June 30 Principal Interest 2007 $ 1,105,000 2,493,694 2008 1,200,000 2,430,188 2009 1,295,000 2,358,456 2010 1,390,000 2,281,262 2011 1,485,000 2,196,750 2012-2016 10,260,000 9,368,400 2017-2021 16,495,000 5,359,650 2022-2026 9,115,000 572,850 Totals $42,345,000 27,061. 550 1 55 I CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (12) Tax Allocation Bonds 1999 Tax Allocation Bonds On November 1, 1999, the Community Development Commission issued $3,945,000 of Taxable Variable Rate Tax Allocation bonds. The proceeds of the bonds were used to fund a loan to the Commission, which was used by the Commission to finance certain redevelopment projects within the West Covina Merged Project Area. The bonds are payable from and secured by certain tax revenues payable to the Commission. The interest on the 1999 Bonds is payable monthly at an adjustable interest rate with a maximum of 12%. Principal is due annually beginning on November 1, 2003, in amounts ranging from $5,000 to $165,000 through November 1, 2029. The Commission has a letter of credit to pay the principal rinci al and interest due on the bonds to the extent that other funds are not available. The letter of credit expires on November 17, 2007. The outstanding principal balance of the bonds at June 30, 2006 is $3,930,000. ' 2002 Tax Allocation Refunding Bonds On June 4, 2002 the Community Development Commission issued $12,200,000 of Tax Allocation Refunding Bonds. The proceeds of the Bonds were used to prepay the outstanding 1993 Tax Allocation Bonds. The 2002 Bonds are payable from tax revenues of the Commission. The interest on the bonds is payable semiannually on September 1 ' and March 1 of each year, commencing March 1, 2003. The interest rate of the bonds ranges from 1.75% to 5.10%. The principal of the bonds is due annually beginning on September 1, 2003, in amounts ranging from $85,000 to $800,000 and maturing on September 1, 2025. At June 30, 2006 the required reserve of $987,833 was fully funded. The principal balance of outstanding bonds at June 30, 2006 is $11,700,000. i 56 u 11 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (12) Tax Allocation Bonds (Continued) The annual debt service requirements on the tax allocation bonds are as follows: 1999 Tax Allocation Bonds 2002 Tax Allocation Bonds Year Ending June 30 Principal Interest PrinciRal Interest 2007 $5,000 208,290 215,000 527,839 2008 5,000 207,760 470,000 517,833 ; 2009 5,000 207,495 485,000 502,538 2010 115,000 201,400 500,000 485,293 ' 2011 125,000 194,775 520,000 466,413 2012-2016 710,000 864,430 2,915,000 1,997,567 2017-2021 860,000. 651,635 3,640,000 1,235,731 2022-2026 1,075,000 391,670 2,955,000 391,553 2027-2031 1,030,000 84,005 - - $3,930,000 3,011,460 11,700,000 6,124,767 1998 Housinp, Set -Aside Tax Allocation Bonds In 1998, the Community Development Commission issued $7,345,000 of Tax Allocation Bonds to provide funds for the acquisition and rehabilitation of a multi -family housing project. The bonds mature annually through September 1, 2025 in amounts ranging from $20,000 to $325,000, with interest rates varying from 4.5% to 7.0%. Interest is payable semiannually on March 1, and September 1, of each year. The bonds are payable solely from and secured by a pledge of that portion of the tax increment revenues receivable by the Commission with respect to the merged redevelopment project area and are required to be deposited into the Commission's Low and Moderate Income Housing Fund. At June 30, 2006 the required reserve of $440,455 was fully funded. The principal balance of outstanding bonds at June 30, 2006 is $5,245,000. 2001 Housing; Set -Aside Tax Allocation Bonds On December 1, 2001 the Community Development Commission issued $11,275,000 of Housing Set -Aside Tax Allocation Bonds. The proceeds of the bonds were used to fund a grant for the acquisition and development of a senior housing apartment complex and finance the implementation of the Commission's low and moderate income housing programs. The bonds are payable from and secured by certain tax increment revenues. 57 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (12) Tax Allocation Bonds (Continued) The interest on the bonds is payable on March 1 and September 1 of each year, , commencing March 1, 2002. The interest rate of the bonds ranges from 2.25% to 5.00%. The principal of the bonds is due annually beginning on September 1, 2002, in amounts ranging from $20,000 to $600,000. The bonds mature on September 1, 2031. The bonds are subject to optional and mandatory redemption provision. At June 30, 2006 the required reserve of $763,211 was fully funded. The principal balance of outstanding bonds at June 30, 2006 is $9,955,000. The annual requirements to amortize housing tax allocation bonds as of June 30, 2006 are as follows: 1998 Housing Bonds 2001 Housing Bonds Year Ending June 30 Principal Interest Principal Interest 2007 $ 150,000 283,093 320,000 450,648 2008 165,000 275,455 330,000 439,634 2009 170,000 267,247 345,000 427,430 ' 2010 175,000 258,670 355,000 414,039 2011 2012-2016 190,000 1,090,000 249,430 1,084,697 370,000 2,095,000 399,716 1,744,588 2017-2021 1,425,000 741,182 2,725,000 1,102,774 2022-2026 1,880,000 278,464 1,375,000 638,825 2027-2031 - - 1,945,000. 297,375 2032-2036 - - 95,000 4,750 $5,245,000 3,438,238 9,955,000 5,919,779 (13) Claims and Judgmments The City is exposed to various risks of loss related to its operation, including losses , associated with errors and omissions, injuries to employees and members of the public. The City's Internal Service Self Insurance Fund is used to account for and finance its uninsured risks of loss. The City of West Covina participates in a joint powers insurance authority insurance pooling arrangement with other public agencies for general liability coverage in excess of the City's self -insured retention of $1,000,000 per occurrence. The pool shares losses from $1 million to $2 million among its members and purchases commercial — insurance/reinsurance for losses from $2 million to $25 million, per occurrence. 11 58 1 11 11 1 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (13) Claims and Judgments (Continued) The City of West Covina participates in a joint powers authority insurance pooling arrangement with other public agencies for worker's compensation coverage in excess of the City's self -insured retention of $1 million per occurrence. The pool shares losses from $1 million to $5 million among its members for both employer liability and workers' compensation coverage and purchases excess insurance coverage for losses from $5 million to $150 million. Claims for general liability and worker's compensation did not exceed the self insurance retention level during the last five years. The claims and judgments liability reported in the Internal Service Self Insurance Fund is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims and judgments 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 loss can be reasonably estimated. As of June 30, 2006, claims and judgments payable, including estimated claims for incurred but not reported claims, amounted to $5,646,618. Changes in the claims and judgments payable amounts in fiscal years 2005 and 2006 for the Self Insurance Fund are as follows: Current Year Beginning of Claims and Fiscal Year Changes in Claim Balance at Liabili1y Estimates Payments Fiscal Year End 2004-05 $4,816,938 2,160,337 (1,360,962) 5,616,313 2005-06 5,616,313 918,778 (888,473) 5M6,618 (14) Capital Leases Obligations The following represents governmental activity obligation under capital leases: Fire Trucks In February 1999, the City entered into a lease agreement for the acquisition of a fire truck. This lease agreement qualifies as a capital lease for accounting purposes (title transfers at end of the lease) and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of inception. The fire truck acquired during the fiscal year under this lease agreement is recorded at its acquisition cost of $636,483. 59 [�I CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) 14) Capital Leases Obligations (Continued) The City obtained financing in the amount of $636,483 with an interest rate of 8.61% and annual payments of $82,148 through the end of the lease (June 2009). The outstanding balance at June 30, 2006 is $224,002. In October 2002, the City entered into a lease agreement for the acquisition of a fire truck. This lease agreement qualifies as a capital lease for accounting purposes (title transfer at end of lease) and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of inception. The fire truck acquired during the fiscal year under this lease agreement is recorded at its acquisition cost of $348,192. The City obtained financing in the amount of $348,192 with an interest rate of 3.66% and quarterly payments of $14,153 through the end of the lease (October 2009). The outstanding balance at June 30, 2006 is $185,179. Ambulance In June 2004, the City entered into a lease agreement for the acquisition of four ambulances. This lease agreement qualifies as a capital lease for accounting purposes (title transfers at the end of the ' lease) and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of inception. The ambulance acquired during the fiscal year under this lease agreement is recorded at their acquisition cost of $261,792. The City obtained financing in the amount of $261,792 with an interest rate of 3.76% and quarterly payments of $14,489 through the end of the lease (June 2009). The outstanding balance at June 30, 2006 is $163,204. The calculation of the present value of the future lease payments for obligations under capital leases is as follows: Year Ending June 30 2007 2008 2009 2010 Subtotal Less amount representing interest 1999 2002 Fire Truck Fire Truck $ 82,147 56,608 82,148 56,612 82,148 56,610 28.305 246,443 198,135 (22,441) 1( 2,956) 2004 Ambulances Total 57,956 196,711 57,956 196,716 57,956 196,714 - 28.305 173,868 618,446 (10.664 ) 4f 6,061) Present value of future lease payments 24 17 (4 60 J E, 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (15) Notes Payable Chamber of Commerce Note In June 1996, the City entered into a note agreement for $135,670 to provide funding for the purchase of certain real property. The note accrues interest at 5.78%. Principal and interest payments of $7,135 are due semi-annually through June 1, 2011. The note is payable from the revenues of the general fund. At June 30, 2006, the outstanding balance is $61,334. Butler Note On January 24, 2002, the West Covina Public Financing Authority entered into a note for $248,000 to finance the purchase of certain real property. The interest rate is adjusted on each thirty-six month anniversary of the effective date, and shall be that rate which is 0.5% in excess of the one year United States Treasury Note in existence on the date of such adjustment. The principal is due on December 24, 2011. The note is payable from the revenues of the general fund. At June 30, 2006, the outstanding balance is $248,000. Valencia Note On May 1, 2003, the City entered into a note agreement for $1,215,000 'to finance the purchase of certain real property. The initial interest rate of 5.31% is adjustedon the eighteenth month anniversary of the effective date, and shall be at that rate which'is 0.5% in excess of the two year United States Treasury Bill in existence on the date of such adjustment. Principal and interest payments are due monthly through 2023. The note is payable from the revenues of the general fund. The outstanding balance at June 30, 2006 is $1,086,107. The annual debt service requirements on all notes are as follows: Year Ending June 30 2007 2008 2009 2010 2011 2012-2016 2017-2021 2022-2026 Chamber of Commerce Principal Interest $10,928 3,343 11,560 2,711 12,228 2,042 12,936 1,336 13,682 588 Butler Note Principal Interest - 8,333 8,333 8,333 - 8,333 - 8,333 248,000 4,166 Valencia Note Principal 49,676 51,259 52,943 54,602 56,311 309,121 360,623 151,572 Interest 32,819' 31,264 29,658 28,001 26,292 103,890 52,388 4,663 $61,334 10,020 248,000 45,831 1,086,107 308,975' 61 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (16) Developer Agreement Payable The Commission entered into an share certain future tax revenues Facilities District. Since 1992, the totaled $31,035,327. The City developer totaling $13,498,890. (17) Due to the County of Los Angeles agreement with a developer to generated by the Community developer's share of revenues has made payments to the Outstanding at June 30. 2006 17,536,437 Based on an agreement dated June 19, 1990 between the Commission and the County, during the first twenty years beginning in 1990, the Commission will retain from the County 50% of the County portion of tax increment. Per the agreement, the Commission must repay all amounts withheld from the County beginning in 2011. Repayment terms have not yet been established. Interest does not accrue on this obligation for the first twenty years and is 7% thereafter. The balance at June 30, 2006 is $6,008,900. (18) Accumulated Fund Deficits The following funds reported deficits in fund balances/net assets as of June 30, 2006: Deficit Balance Debt Service Funds: Community Development Commission $12,831,390 Special Revenue Funds: Transportation Development Act 943 Grants 2,025,954 Management's explanation for the resolution of significant accumulated fund deficits are summarized as follows: Community Development Commission Debt Service Fund: The deficit fund balance of $12,831,390 is a result of recording $30,719,988 of advances from the General Fund in accordance with GASB Statement No. 34. Prior to implementation of the statement, advances payable were recorded in the General Long - Term Debt Account Group. The advances are scheduled to be repaid to the General Fund through 2018 from the future tax increment revenues. n 1 1 t 62 1 1 . CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (18) Accumulated Fund Deficits (Continued) Grants Fund: The deficit in fund balance of $2,025,954 is a result of $2,302,308 of deferred revenue that has been recorded for receivables that are earned but not available within the availability period of 60 days. (19) Defined Benefit Pension Plan The City of West Covina contributes to the California Public Employees Retirement System (PERS), an agent multiple -employer public employee defined benefit pension plan. PERS provides retirement, disability benefits, 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. Copies of PERS' annual financial report may be obtained from its executive office at 400 "P" Street, Sacramento, California 95814. Participants are required to contribute 7% of their annual covered salary for miscellaneous employees and 9% for safety employees. The City makes the contributions required of City employees on their behalf and for their account. Benefit provisions and all other requirements are established by state statute and City contracts with employee bargaining groups. Under GASB 27, an employer reports an annual pension cost (APC) equal to the annual required contribution (ARC) plus an adjustment for the cumulative difference between the APC and the employer's actual plan contributions for the year. The cumulative difference is called the net pension obligation (NPO). The ARC for the period July 1, 2005 to June 30, 2006 has been determined by an actuarial valuation of the plan as of June 30, 2003. The contribution rate indicated for the period is 31.760% of payroll for the safety plan and 6.986% of payroll for the miscellaneous plan. Subsequent to that actuarial valuation, the City initiated a re -amortization of its public safety unfunded actual liability which resulted in the lowering of the contribution rate for the 2005-06 fiscal year to 27.234% of payroll. In order to calculate the dollar value of the ARC for inclusion in financial statements prepared as of June 30, 2006, this contribution rate would be multiplied by the payroll of covered employees that was actually paid during the period July 1, 2005 to June 30, 2006. �, 63 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (19) Defined Benefit Pension Plan (Continued) A summary of principle assumptions and methods used to determine the ARC is shown below. Valuation Date Actuarial Cost Method Amortization Method Average Remaining Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Inflation . Payroll Growth Individual Salary Growth Safe June 30, 2003 Entry Age Actuarial Cost Method Level Percent of Payroll 22 Years as of the Valuation Date 3 Year Smoothed Market 7.75% (net of administrative expenses) 3.25% to 13.15% depending on Age, Service, and type of employment 3.00% 3.25% A merit scale varying by duration of employment coupled with an assumed annual inflation component of 3.0% and an annual production growth of 0.25%. Miscellaneous June 30, 2003 Entry Age Actuarial Cost Method Level Percent of Payroll 14Years as of the Valuation Date 3 Year Smoothed Market 7.75% (net of administrative expenses) 3.25% to 14.45% depending on Age, Service, and type of employment 3.00% 3.25% A merit scale varying by duration of employment coupled with an assumed annual inflation component of 3.0% and an annual production growth of 0.25%. Initial unfunded liabilities are amortized over a closed period that depends on the plan's date of entry into Ca1PERS. Subsequent plan amendments are amortized as a level percent of pay over a closed 20-year period. Gains and losses that occur in the operation of the plan are amortized over a rolling period, which results in an amortization of 10% of unamortized gains and losses each year. If the plan's accrued liability exceeds the actuarial value of plan assets, then the amortization period may not be lower than the payment calculated over a 30 year amortization period. For the safety plan, the unfunded actuarial June 30, 2035. For the miscellaneous plan, over a period ending June 30, 2024. liability is amortized over a period ending the unfunded actuarial liability is amortized I 64 C� L� 1 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (19) Defined Benefit Pension Plan (Continued) The Schedule of Funding Progress below shows the recent history of the actuarial value of assets, actuarial accrued liability, their relationship, and the relationship of the unfunded accrued liability to payroll Required Supplementary Information — Safety (in thousands) Entry Age Unfunded Normal Actuarial Liability/ Annual Valuation Accrued Value (Excess Funded Covered Date Lighifily of Assets Assets) Status Payroll 6/30/03 $165,066 142,773 22,293 86.5% 15,622 6/30/04 181,590 150,395 31,195 82.8% 16,893 6/30/05 186,863 161,520 25,343 86.4% 16,226 Required Supplementary Information — Miscellaneous (in thousands) Entry Age Unfunded Normal Actuarial Liability/ Annual Valuation Accrued Value (Excess Funded Covered Date Liabili of Assets Assets) Status Payroll 6/30/03 $70,296 72,755 (2,459) 103.5%. 11,736 6/30/04 74,196 75,121 (925) 101.2% 11,630 6/30/05 79,750 78,907 843 98.9% 11,320 Three -Year Trend Information Annual Pension Cost (Emnlover Contribution Fiscal Percentage of Year Safely Miscellaneous APC Contributed 6/30/04 $2,281,792 - 100% 6/30/05 4,285,798 818,198 100% 6/30/06 4,842,219 854,542 100% UAAL Asa%of Payroll 142.7% 184.7% 156.2% UAAL As, a % of Pay oll (21.0)% (8.0)% 7.4% Net Pension Obligation 65 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (20) Post -Retirement Health Care Benefits Post -Retirement Benefits Employees who retire from the City are eligible to receive health care benefits covering themselves and any qualified family members. The City pays varying amounts per month for each retiree: $64 for general employees, and up to $475 for sworn police and fire personnel towards the premiums charged under a health benefit plan administered by the Public Employees' Retirement System (PERS) in which the individual is able to select, on an annual basis, insurance from a number of insurance carriers. Contributions are financed on a pay-as-you-go basis. Expenditures for post -retirement health care benefits for fiscal year ended June 30, 2006 were $534,526 in premiums with 152 participants receiving benefits. (21) Transfers In/Transfers Out The following schedule summarizes the City's transfer activity: Transfers In General Fund Debt Service Fund CDC Capital Projects Fund CDC Debt Service Fund Non -Major Governmental Funds Non -Major Internal Service Fund Total Transfers Transfers Out Amount Non -Major Governmental Funds $1,465,000(a) CDC Debt Service Fund 1,556,877(b) General Fund 430,000 CDC Debt Service Fund 5,444,288(c) City Debt Service Fund 416,597 Non -Major Governmental Funds 30,000 General Fund 1,000,000(d) $10.342.762 (a) The Traffic Safety Fund and the Public Safety Augmentation Fund transferred $865,000 and $600,000, respectively, to the General Fund to reimburse the General Fund for traffic and public safety related activities. (b) The Community Development Commission Debt Service Fund transferred $3,044,288 to the General Fund to reimburse the General Fund for sales taxes paid to a developer. (c) The Community Development Commission Debt Service Fund transferred $3,044,288 to the Community Development Commission Capital Projects Fund. This transfer represents 20% of property tax increment received by the Community Development Commission during the year that is restricted for low and moderate income housing projects. u 1 66 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (21) Transfers In/Transfers Out (Continued) The Redevelopment Agency Debt Service Fund also transferred $2,400,000 to the Redevelopment Agency Capital Projects Fund. The transfer was made to provide funding for repayment of advances made by the General Fund to the 1 Redevelopment Agency Capital Projects Fund. (d) The General Fund transferred $1,000,000 to establish the Vehicle Replacement Internal Service Fund. (22) Expenditures in Excess of Appropriations Expenditures for the year ended June 30, 2006 exceeded the appropriations "of of the following funds: Budget Actual Variance Capital Projects Funds: Community development Commission $ 7,235,454 10,503,694 3,268,240 ' Special Revenue Funds: Inmate Welfare $18,276 19,137 861 1 I (23) Subsequent Events In .September 2006, the West Covina Public Financing Authority issued $10,7110,000 Series A Tax Exempt Lease Revenue Bonds and $7,295,000 Series B Taxable; Lease Revenue Bonds to provide funds for the construction and equipping of recreational facilities (Big League Dreams project). The bonds mature annually on June 1 in amounts ranging from $80,000 to $1,820,000 through June 2, 2036. The interest rate of the bonds ranges from 4.00% to 6.07%. Interest on the bonds is payable semiannually on December 1 and June 1 of each year, commencing June 1, 2007. (24) Other Commitments d In 1989, in order to assist in the expansion of the Fashion Plaza shopping center, the City enacted an ordinance to allow the Redevelopment Agency of the City of West Covina (the predecessor to the West Covina Community Development Commission) to receive the sales tax generated as a result of .the expansion project. At the same time, the City enacted an ordinance providing a credit for sales tax payable by the developer" in the amount equal to the sales tax due to the redevelopment agency. These sales tax ordinances and related agreements between the City and the Agency essentially transferred the sales tax increment due to the Fashion Plaza expansion project from the City to the Agency. 67 CITY OF WEST COVINA Notes to the Basic Financial Statements (Continued) (24) Other Commitments (Continued) On July 25, 2005, the Board of Directors of the West Covina Community Development Commission (a blended component unit of the City of West Covina) adopted Resolution No. 2005-50. By this resolution, the Board of Directors authorized the Commission to reimburse the City of West Covina over a period of 17 years for the sales tax revenue that had essentially been shifted from the City to the Agency. These budgeted interfund transfers between the primary government of the City of West Covina and its blended component unit will be recorded in the fiscal year that they result in a flow of current financial resources, as required by the measurement focus prescribed for governmental funds. , (25) Prior Period Adjustment In fiscal year 2003/04, the Community Development Commission transferred a commission owned property to a developer at no cost. The property has been carried in Land Held for Resale at $290,900. A prior period adjustment to reduce Land Held for Resale and Fund Balance in the CDC Capital Projects Fund in the amount of $290,900 is I reflected on the financial statements. t 1 11 68 1 1 1 1 I 1 1 1 1 1 1 1 REQUIRED SUPPLEMENTARY INFORMATION 69 CITY OF WEST COVINA Notes to the Required Supplementary Information Year ended June 30, 2006 (1) Budgets and Budgetary Data The annual budget adopted by the City Council provides for the general operation of the City. The annual budget is adopted in summary form by the City Council in June of each year for the General, special revenue and capital projects funds. The resolution sets a combined appropriation of the funds for the operation of the City. The City Manager is authorized to transfer budgeted amounts between departments to assure adequate and proper standards of service. Budgetary revisions, including supplemental appropriations which increase appropriations in individual funds, must be approved by the City Council. The budgetary level of control is at the fund level. The budgeted figures used in the financial statements are the final amended amounts, which do not vary significantly from the original adopted budget. The budget is formally integrated into the accounting system and employed as a management control device during the year for the General Fund, special revenue funds and capital projects funds. Budgets for governmental fund types are adopted on a basis consistent with generally accepted accounting principles. Operating appropriations lapse at the end of the fiscal year. Capital projects funds are appropriated on a project basis and appropriations are funded by the council to continue until the specific projects are completed. 1 �l [i Ll 70 II CITY OF WEST COVINA Schedule of Revenues, General Fund Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Variance Prior Budget Positive Year IOriginal Final Actual (Negative) Actual Revenues: I Taxes $ 25,561,600 25,561,600 34,380,808 8,819,208 i�25,398,013 Licenses and permits 1,124,692 1,124,692 1,329,125 204,433 i' 1,045,331 Fines and forfeitures 145,702 145,702 108,320 (37,382) 118,954 Investment income 4,300,000 4,300,000 4,358,369 58,369 5,231,516 Rental income 123,192 123,192 96,888 (26,304) 91,010 Revenue from other agencies Charges for services 8,964,135 2,850,986 8,964,135 2,850,986 2,855,483 3,195,003 (6,108,652) 344,017 " 7,457,837 1,988,021 Other revenues 121,069 121,069 241,268 120,199 563,836 Total revenues 43,191,376 43,191,376 46,565,264 3,373,888 ,41,894,518 Expenditures: Current: General government 4,245,929 4,671,417 4,302,189 369,228 1i 4,109,595 Less interfund revenues (1,967,750) (1,967,750) (1,881,624) (86,126) (1,864,101) Public safety 38,537,569 38,754,007 38,810,835 (56,828) 36,709,896 Public works 4,074,961 4,182,569 4,179,688 2,881 3,709,671 I Community services 901,168 1,115,532 963,118 152,414 ! 1,002,117 Community development 560,887 585,928 561,520 24,408 488,397 Total expenditures 46,352,764 47,341,703 46,935,726 405,977 1'44,155,575 Excess (deficiency) of fi irevenues over (under) expenditures (3,161,388) (4,150,327) (370,462) 3,779,865 i, (2,261,057) ' Other financing sources (uses): Transfers in 3,534,480 3,644,480 3,021,877 (622,603) I' 2,046,447 Transfers out (430,000) (4,930,000) (1,430,000) 3,500,000 (895,203) Total other financing sources uses (uses) 3 104 480(1,285,520 ) 1 59 7 1,8 7 2,877,397 1,151,244 Net change in fund balances (56,908) (5,435,847) 1,221,415 6,657,262 (1,109,813) 1 Fund balances at beginning of year 47,715,356 47,715,356 47,715,356 - 48,825,169 ' Fund balances at end of year $ 47,658,448 42,279,509 48,936,771 6,657,262 47,715,356 71 I n 11 (This page intentionally left blank.) I 1 I 1 1 72 ! SUPPLEMENTARY SCHEDULES 73 CITY OF WEST COVINA Combining Balance Sheet - Non -Major Governmental Funds June 30, 2006 Special Capital Revenue Projects Totals Funds Funds 2006 2005 Assets Cash and investments $ 13,439,570 (279,006) 13,160,564 11,982,619 Cash and investments with fiscal agent - 10,133,512 10,133,512 11,573,915 Receivables: Accounts 48,798 2,200 50,998 282,129 Taxes 949,664 - 949,664 585,151 Interest 83,739 17,823 101,562 34,190 Assessments 46,447 - 46,447 61,804 Notes and loans 4,644,036 - 4,644,036 6,027,263 Due from other funds - 1,845,566 1,845,566 10,384 Due from other agencies 3,267,741 27,726 3,295,467 3,494,296 Inventory 11,471 - 11,471 14,977 Prepaid items 2,970 - 2,970 908 Total assets $ 22,494,436 11,747,821 34,242,257 _ 34.067,636 Liabilities and Fund Balance Liabilities: Accounts payable $ 1,088,821 1,778,814 2,867,635 1,845,005 Other accrued liabilities 240,720 331,939 572,659 391,239 Due to other funds 2,422,908 - 2,422,908 1,517,033 Deferred revenue 7,027,956 - 7,027,956 6,966,385 Advances from other funds - 19,000 19,000 19,000 Total liabilities 10,780,405 2,129,753 12,910,158 10,738,662 Fund balance: Reserved for: Encumbrances 1,718,216 2,415,558 4,133,774 10,040,055 Notes and loans - - - 1,425,000 Inventory 11,471 - 11,471 14,977 Prepaid items 2,970 - 2,970 908 Unreserved -designated 12,987,587 7,202,510 20,190,097 13,729,797 Unreserved-undesignated (3,006,213) - (3,006,213) (1,881,763) Total fund balance 11,714,031 9,618,068 21,332,099 23,328,974 Total liabilities and fund balance $ 22,494,436 11,747,821 34,242,257 34,067,636 74 I CITY OF WEST COVINA Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Non -Major Governmental Funds Year ended June 30, 2006 Special Capital Revenue Projects Totals,i Funds Funds 2006 2005 Revenues: Taxes $ 4,754,608 277,194' 5,031,802 '6,221,186 Special assessments 3,582,066 - 3,582,066 3,448,956 Licenses and permits 7,439 7,439 1,428 Fines and forfeitures 1,060,522 - 1,060,522 111,145,646 1 Investment income 373,937 461,559 835,496 Q 325,244 Rental income 4,077 32,863 36,940 li 25,686 Revenue from other agencies 9,197,118 249,328 9,446,446 4,594,571 ' Charges for services 1,569,615 - 1,569,615 1,545,148 Repayment of notes and loans 476,213 - 476,213 583,169 Developer fees - 7,884 7,884 378,493 Other revenues 428,485 25,000 453,485 615,566 Total revenues 21,454,080 1,053,828 22,507,908 18,885,093 Expenditures: Current: IPublic General government safety 110,475 1,184,812 187,591 760 298,066 1,185,572 680,918 924,633 Public works 9,820,590 268,870 10,089,460 l,9,227,520 Community services Community development 5,083,591 5,811,228 10,894,819 7,335,637 'I 571,866 - 571,866 611,452 Total expenditures 16,771,334 6,268,449 23,039,783 18,780,160 Excess (deficiency) of revenues over (under) expenditures 4,682,746 (5,214,621) (531,875) 104,933 Other financing sources (uses): Transfers in Transfers out 30;000 (1,495,000) - - 30,000 (1,495,000) 320,552 (3,036,577) Issuance of long-term debt - - - 13,500,000 Total other financing sources (uses) (1,465,000) - (1,465,000) 10,783,975 Net change in fund balances 3,217,746 (5,214,621) (1,996,875) 10,888,908 Fund balances at beginning of year 8,496,285 14,832,689 23,328,974 12,440,066 Fund balances at end of year $ 11,714,031 9,618,068 21,332,099 23,328,974 75 1 NON -MAJOR SPECIAL REVENUE FUNDS 1 Special Revenue Funds are used to account for specific revenues that are legally restricted to , expenditure for particular purposes. The City of West Covina has the following Non -Major Special Revenue Funds: ' Recreation Programs Fund — This fund accounts for fees charged to participants for recreation programs. Drug Enforcement Rebate Fund — This fund accounts for the City's portion of revenue received from drug asset seizures. The revenue is used to enhance the police programs. Business Improvement Tax Fund — This fund accounts for business improvement taxes which are. restricted to economic development activities. Air Quality Improvement Fund — This fund accounts for the City's portion of motor vehicle ' registration fees collected under AB 2766. This fee was levied to fund programs to reduce air pollution from mobile sources such as cars, trucks and buses. Money is distributed to the cities based on population, and additional discretionary grants are made based on specific requests. ' Proposition A Fund — This fund accounts for the 0.5% sales tax collected in Los Angeles County which is used for transportation programs and projects. Proposition C Fund — This fund accounts for gasoline taxes which are restricted for transportation programs and projects. Traffic Safety Fund — This fund accounts for the vehicle code fines expended for traffic safety enforcement. State Gas Tax Fund — This fund accounts for the City's proportionate share of gas tax monies collected by the State of California which are used for street construction and maintenance. Traffic Congestion Relief Fund — This fund accounts for revenues and expenditures related to the City's allocation of AB2898 monies received from the State. Police Special Prop -ram Fund — This fund accounts for donations received and expenditures j related to the Police Department's Drug and Alcohol Awareness Program (the "Every 15 Minutes Program" and D.A.R.E.) ' Transportation Development Act Fund — This fund accounts for regional Transportation Development Act funds received from Los Angeles County which are used for local streets and roads. Waste Management Fund — This fund accounts for the money received from the State of California and user fees to develop and implement a plan to reduce solid waste deposits in local landfills. Grants Fund — This fund accounts for the various Federal and State of California and local grants that are restricted to expenditures for specific programs and projects. , Tree Fund — This fund accounts for developer contributions restricted for the replacement of trees and new urban forestation projects. I 76 1 fj 1 1 1 I L 1 u NON -MAJOR SPECIAL REVENUE FUNDS (CONTINUED) Inmate Welfare Fund — This fund accounts for revenues from items sold to inmates. The revenues are used to enhance inmate welfare. BKK Community Fund - This fund accounts for revenue received which is restricted for community enhancement in the neighborhood surrounding the BKK landfill site. Charter Cable Fund — This fund accounts for monies received from the City's cable television franchisee for a one-time litigation settlement and for cable -related capital expenditures. Public Safety Fund — This fund accounts for sales tax revenue legally restricted for public, -safety. Revenue is used to augment police operations. CDBG Fund — This fund accounts for activities of the Community Development Block Grant received from the U.S. Department of Housing and Urban Development. COPS Fund - This fund accounts for revenue from the State restricted for supplementing police operations. Art in Public Places Fund — This fund accounts for development fees paid in lieu of acquisition and installation of approved artwork in a development with expenditures restricted to acquisition, installation, maintenance and repair of artworks at approved sites. Special Assessments Fund — This fund accounts for monies received from services deemed to benefit the properties and businesses against which the special benefit assessments are' levied. The assessments are levied once a year and sent to the Los Angeles County Tax Collector for collection, or billed directly to business owners. The City presently provides sewer, open space, landscape maintenance, park maintenance, street lighting and business improvement services. I� North Azusa Relinquishment Fund — This fund accounts for monies received from the State as a result of the relinquishment to the City of a certain portion of North Azusa Avenue. 1 77 Assets Cash and investments Receivables: Accounts Taxes Interest Assessments Notes and loans Due from other funds Due from other agencies Inventory Prepaid items Total assets CITY OF WEST COVINA Non -Major Special Revenue Funds Combining Balance Sheet June 30, 2006 Business Recreation Drug Improvement Air Quality Proposition Programs Enforcement Tax Improvement A $ 192,129 16,566 912 76,690 43,652 131,687 1,094,458 460 269 783 7,013 35,155 - $ 209,607 77,150 43,921 167,625 1,101,471 Liabilities and Fund Balances Liabilities: Accounts payable $ 44,525 - Other accrued liabilities 20,331 - Due to other funds - - Deferred revenue - - Total liabilities 64,856 - Fund balances (deficit): Reserved for: Encumbrances 3,583 - Notes and loans - - Inventory - - Prepaid items - - Unreserved: Designated for: Special purposes 141,168 77,150 Undesignated - - Total fund balances (deficit) 144,751 77.150 Total liabilities and fund balances $ 209,607 77,150 1,229 181,760 338 3,726 35,155 - 36,722 185,486 - 1,000 280,237 43,921 129,903 635,748 43,921 130,903 915,985 43,921 167,625 1,101,471 78 Proposition Traffic C Safety u Traffic Police Transportation Gas Congestion Special Development Waste' Tax Relief Programs Act Management 2,753,010 84,265 - - 19,785 - - - 170 - - - - 48,195 348,408 140,812 - 15,985 202 227 - 128 - - - 4,850 600 1,000 - - - - 2,769,595 133,662 348,805 140,812 . 19,913 4,850 219,373 16,156 18,402 - 30,001 4,706 28,043 - 259,892 22,663 249,374 20,862 306,337 22,663 5,793 5,793 87,560 5,642 9,762 81,675 = 270 600 1,000 - - - - 2,432,061 106,158 32,706 36,474 19,913 (1,213) 2,520,221 112,800 42,468 .118,149 19,913 (943) 2,769,595 133,662 348,805 140,812 19,913 4,850 175,334 54,821 1,077 55,030 286,262 6 490 2,854 3,344 5,000 277,9'18 282,9,18 1! 286,262 (Continued) 79 CITY OF WEST COVINA Non -Major Special Revenue Funds Combining Balance Sheet (Continued) Inmate BKK Charter Public Grants Tree Welfare Community Cable Safety Assets Cash and investments 522,285 214 13,458 1,524,827 724,709 172,489 Receivables: Accounts 21,298 - 3,503 - - - Taxes - - - - - 112,877 Interest 3,285 10 96 9,403 4,553 1,034 Assessments - - _ _ _ _ Notes and loans Due from other funds - Due from other agencies 2,147,430 Inventory. - Prepaid items 670 - - - 500 - Total assets 2,694,968 224 17,057 1,534,230 729,762 286,400 Liabilities and Fund Balances Liabilities: Accounts payable 250,274 - 1,299 25 38,676 560 Other accrued liabilities 33,770 - - - _ _ Due to other funds 2,134,560 - Deferred revenue 2,302,318 - - - - - Total liabilities 4,720,922 - 1,299 25 38,676 560 Fund balances (deficit): Reserved for: Encumbrances 979,589 - - 1,142 16,487 - Notes and loans - - - - _ _ Inventory - - - _ _ _ Prepaid items 670 - - - 500 - Unreserved: Designated for: Special purposes - 224 15,758 1,533,063 674,099 285,840 Undesignated 3,006,213 - - - _ _ Total fund balances (deficit) (2,025,954) 224 15,758 1,534,205 691,086 285,840 Total liabilities and fund balances 2,694,968 224 17,057 1,534,230 729,762 286,400 I I fl I I r 1 I Ij I I Arts in North COPS Public Special Azusa Totals CDBG Grant Places Assessments Relinquishment 2006 2005 7,089 32,686 8,305 3,955,044 1,907,454 13,439,570 8,461,156 - 6,073 - 1,188 - 48,798 282,129 - - 244,551 - 949,664 585,151 574 289 51 25,603 11,785 83,739 26,209 - - - 46,447 - 46,447 61,804 4,644,036 - - - - 4,644,036 6,027,263 - - - - - - 10,384 1,025,276 - - - - 3,267,741 3,494,296 - - - 11,471 - 11,471 14,977 - - - 200 - 2,970 9108 5,676,975 39,048 8,356 4,284,504 1,919,239 22,494,436 18,964,277 46,644 13,939 - 250,949 4,520 1,088,821 1,772,668 93,461 - - 23,490 - 240,720 211,906 - - - - - 2,422,908 1,517,033 4,644,036 - - 46,447 - 7,027,956 6,966,3„85 4,784,141 .13,939 - 320,886 4,520 10,780,405 10,467,992 155,730 - - 56,334 34,205 1,718,216 it 1,074,470 - - - - - - 1,425,000 - - - 11,471 - 11,471 14,977 - - - 200 - 2,970 908 737,104 25,109 8,356 3,895,613 1,880,514 12,987,587 7,862,693 - - - - - 3,006,213 1,881,763 892,834 25,109 8,356 3,963,618 1,914,719 11,714,031 8,496,285 5,676,975 39,048 8,356 4,284,504 1,919,239 22,494,436 18,964,277 l� 1 81 CITY OF WEST COVINA Non -Major Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 2006 Revenues: Taxes Special assessments Licenses and permits Fines and forfeitures Investment income Rental income Revenue from other agencies Charges for services Repayment of notes and loans Other revenues Total revenues Expenditures: Current: General government Public safety Public works Community services Community development Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances (deficit) at beginning of year Fund balances (deficit) at end of year Business Recreation Drug- Improvement Air Quality Proposition Programs Enforcement Tax Improvement A $ - - - - 1,796,475 4,796 2,185 1,409 4,379 29,795 4,077 - - - - - 70,276 - 148,247 120,881 1,209,155 - - - 6,906 1,218,028 72,461 1,409 152,626 1,954,057 31,810 1,174,358 - 1,174,358 31,810 52,804 - 26,402 - 38,735 1,547,252 117,941 1,547,252 43,670 40,651 1,409 34,685 406,805 43,670 40,651 1,409 34,685 406,805 101,081 36,499 42,512 96,218 509,180 $ 144,751 77,150 43,921 130,903 915,985 82 Traffic Police Transportation Proposition Traffic Gras Congestion Special Development Waste C Safety Tax IRelief Programs Act Management 1,545,101 - - 1,215 - - - - 1,060,522 - - _ _ 76,469 1,158 53596 2,193 633 234 - - 2,013,805 501,249 - 58,446 - - 10,170 - - - - - 12,675 6,965 7,123 - 1,621,570 1,061,680 2,043,461 510,407 7,756 58,680 42,995 - - - _ _ - - - - 4,269 - 539,318 281,766 2,355,249 376,547 - 110,410 356,686 - - - 938,999 281,766 2,355,249 376,547 4,269 110,410 682,571 779,914 (311,788) 133,860 3,487 51,730 - - 30,000 (865,000) - 865,000 30,000 682,571 (85,086) (281,788) 133,860 3,487 (51,730) 1,837,650 197,886 324,256 (15,711) 16,426 50,787 2,520,221 112,800 42,468 118,149 19,913 943 6,074 55,030 221,083 282,187 11 _II 233,625 233,625 48,562 48,562 234,356 11 282,918 (Continued) 83 CITY OF WEST COVINA Non -Major Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) . Revenues: Taxes Special assessments Licenses and permits Fines and forfeitures Investment income Rental income Revenue from other agencies Charges for services Repayment of notes and loans Other revenues Total revenues Expenditures: Current: General government Public safety Public works Community services Community development Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances (deficit) at beginning of year Fund balances (deficit) at end of year Inmate BKK Charter Grants Tree Welfare Community Cable 18,350 61 517 18,190 25,952 752,233 - - - - 87,529 - - - - - - 27,375 373,159 - 858,112 61 27,892 391,349 25,952 399,335 - 19,137 - 15,696 529,555 2,000 - 90,874 9,620 858,151 - - 15,607 232,672 1,787,041 2,000 19,137 106,481 257,988 (928,929) (1,939) 8,755 284,868 232,036 (928,929) (1,939) 8,755 284,868 (232,036) (1,097,025) 2,163 7,003 1,249,337 923,122 2,025,954 224 15,758 1,534,205 691,086 84 1 1 1 1 1 i 1 1 1 1 1 1 1 1 1 Arts in North Public COPS Public Special Azusa Totals Safety CDBG Grant Places Assessments Relinquishment 2006 2005 689,498 - - - 723,534 - 4,754,608 4,059,284 - - - - 3,582,066 - 3,582,066 3,448,956 - - - - 6,224 - 7,439 II 1,428 - - - - - - 1,060,522 1,145,646 5,693 1,132 1,792 268 113,918 53,143 373,937 132,210 - - - - - - 4,077 3,850 - 3,114,746 162,205 - - 2,200,000 9,197,118 6,615,509 - - - - 34,772 - 1,569,615 +1,545,148 - 476,213 - - - - 476,213 583,169 - - - - 1,188 - 428,485 566,293 II 695,191 3,592,091 163,997 268 4,461,702 2,253,143 21,454,080 18,101,493 38,356 29,124 - - - - 110,475 107,645 - 458,743 203,018 - - - 1,184,812 1 915,921 - 1,334,736 - - 3,825,689 338,424 9,820,590 9,069,299 - 626,505 - - - - 5,083,591 15,967,372 - 502,669 - - 69,197 - 571,866 611,452 38,356 2,951,777 203,018 - 3,894,886 338,424 16,771,334 16,671,689 656,835 640,314 39,021 268 566,816 1,914,719 4,682,746 1,429,804 - - - - - - 30,000 320,552 (600,000) - - - (30,000) - (1,495,000) (2,105,605) 600,000 - - - (30,000) - (1,465,000) (1,785,053) 56,835 640,314 (39,021) 268 536,816 1,914,719 3,217,746 (355,249) 229,005 252,520 64,130 8,088 3,426,802 - 8,496,285 '8,851,534 285,840 892,834 25,109 8,356 3,963,618 1,914,719 11,714,031 18,496,285 85 CITY OF WEST COVINA Recreation Programs Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Revenues: Investment income Rental income Charges for services Total revenues Expenditures: Current: Community services Total expenditures Net change in fund balances Fund balances at. beginning of year Fund balances at end of year Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative) Actual $ 1,500 4,796 3,296 1,570 1,000 4,077 3,077 3,850 1,380,623 1,209,155 171,468 1,159,153 1,383,123 1,218,028 165,095 1,164,573 1,359,956 1,174,358 185,598 1,156,289 1,359,956 1,174,358 185,598 1,156,289 23,167 43,670 20,503 8,284 101,081 101,081 - 92,797 $ 124,248 144,751 20,503 101,081 :: CITY OF WEST COVINA Drug Enforcement Rebate Fund Schedule of Revenues, Expenditures and Changes in Fund Balances i - Budget and Actual Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative Actual i Revenues: u ' Investment income Revenue from other agencies $ 980 10,500 2,185 70,276 1,205 59,776 ,i 764 14,845 Total revenues 11,480 72,461 60,981 15,609 'i Expenditures: Current: it Public safety 733810 31,810 42,000 71,554 Total expenditures 73,810 31,810 42,000 71,554 li Net change in fund balances (62,330) 40,651 102,981 I� (55,945) Ali Fund balances at beginning of year 36,499 36,499 - 92,444 Fund balances at end of year $ 25,831 77,150 102,981 36,499 II, 9 l II i; �I u 1 ' 87 CITY OF WEST COVINA Business Improvement Tax Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative Actual Revenues: Investment income $ 800 1,409 609 611 Total revenues 800 1,409 609 611 Net change in fund balances 800 1,409 609 611 Fund balances at beginning of year 42,512 42,512 - 41,901 Fund balances at end of year $ 43,312 43,921 609 42,512 1 1 1 1 1 1 1 1 1 1 1 1 1 CITY OF WEST COVINA Air Quality Improvement Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Revenue from other agencies Total revenues Expenditures: Current: Public Safety Public works Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year Variance Prior Final Positive Year Budget Actual (Negative Actual $ - 4,379 4,379 1,406 128,000 148,247 20,247 :97,484 128,000 152,626 24,626 98,890 - 52,804 (52,804) - 129,453 26,402 103,051 - 70,000 38,735 31,265 123,847 199,453 117,941 81,512 1123,847 71,453 34,685 106,138 24,957 - - - ii 12,853 - - - 1112,853 (71;453) 34,685 106,138 (12,104) 96,218 96,218 - 108,322 $ 24,765 130,903 106,138 96,218 :• CITY OF WEST COVINA Proposition A Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Taxes Investment income Revenue from other agencies Charges for services Other revenues Total revenues Expenditures: Current: General government Public works Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Variance Prior Final Positive Year Budget Actual (Negative) Actual $ 1,621,958 1,796,475 174,517 1,610,207 10,000 29,795 19,795 15,169 - 120,881 120,881 170,816 4,500 6,906 2,406 4,989 - - - 60 1,636,458 1,954,057 317,599 1,801,241 60,000 - 60,000 - 206,372 - 206,372 86,031 1,653,568 1,547,252 106,316 1,690,597 1,919,940 1,547,252 372,688 1,776,628 (283,482) 406,805 690,287 24,613 - - 435,252 435,252 (283,482) 406,805 690,287 (410,639) .509,180 509,180 - 919,819 Fund balances at end of year $ 225,698 915,985 690,287 509,180 all I 1 1 1 1 I 1 1 1 1 1 1 1 1 1 i 1 i CITY OF WEST COVINA Proposition C Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Taxes Investment income Total revenues Expenditures: Current: General government Public works Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year Variance Prior Final Positive Year Budget Actual (Negative) Actual $ 1,345,311 1,545,101 199,790 1,335,957 - 76,469 76,469 25,016 1,345,311 1,621,570 276,259 1,360,973 299,000 42,995 256,005 15,779 11 2,356,153 539,318 1,816,835 739,836 421,512 356,686 64,826 364,118 3,076,665 938,999 2,137,666 1,119,733 1,731,354 682,571 2,413,925 241,240 - - - 266,286 - - - 266,286 (1,731,354) 682,571 2,413,925 507,526 1,837,650 1,837,650 - 1,330,124 $ 106,296 2,520,221 2,413,925 1,837,650 91 CITY OF WEST COVINA Traffic Safety Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Revenues: Fines and forfeitures Investment income Total revenues Expenditures: Current: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative) Actual $ 1,350,000 1,060,522 (289,478) 1,145,646 - 1,158 1,158 1,704 1,350,000 1,061,680 288,320 1,147,350 399,019 281,766 117,253 318,869 399,019 281,766 117,253 318,869 950,981 779,914 171,067 828,481 (1,200,000) 865,000 335,000 1,037,500 (1,200,000) 865,000 335,000 1,037,500 (249,019) (85,086) 163,933 (209,019) 197,886 197,886 - 406,905 Fund balances at end of year $ 51;133 112,800 163,933 197,886 92 CITY OF WEST COVINA Gas Tax Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative) Actual Revenues: Taxes $ Licenses and permits - 1,215 1,215 1,290 Investment income - 5,596 5,596 ! 6,164 Revenue from other agencies 1,990,000 2,013,805 23,805 2,036,510 Charges for services - 10,170 10,170 - Other revenues - 12,675 12,675 - Total revenues 1,990,000 2,043,461 53,461 2,043,964 Expenditures: Current: Public works 2,445,494 2,355,249 90,245 2,083,504 Total expenditures 2,445,494 2,355,249 90,245 11 2,083,504 Excess (deficiency) of revenues over (under) expenditures (455,494) 311,788 143,706 39,540 Other financing sources (uses): Transfers in 30,000 30,000 - 30,000 Total other financing sources (uses) 30,000 30,000 - 30,000 Net change in fund balances (425,494) (281,788) 143,706 .(9,540) Fund balances at beginning of year 324,256 324,256 - 333,796 Fund balances at end of year $ (101,238 42,468 143,706 324,256 93 li CITY OF WEST COVINA Traffic Congestion Relief Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Revenue from other agencies Other revenues Total revenues Expenditures: Current: Public works Total expenditures Net change in fund balances Fund balances (deficit) at beginning of year Fund balances (deficit) at end of year Variance Prior Final Positive Year Budget Actual (Negative Actual $ - 2,193 2,193 782 469,796 501,249 31,453 - - 6,965 6,965 - 469,796 510,407 40,611 782 465,000 376,547 88,453 16,493 465,000 376,547 88,453 16,493 4,796 133,860 129,064 (15,711) 15,711 15,711 - - $ 10, 915 118,149 129,064 15, 711 1 1 1 1 1 1 1 1 1 1 i 1 1 1 1 CITY OF WEST COVINA Police Special Programs Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Revenues: Investment income Other revenues Total revenues Expenditures: Current: Public safety Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances at end of year Year ended June 30, 2006 95 Variance Prior Final Positive Year Budget Actual (Negative Actual $ - 633 633 ; 258 8,123 7,123 1,000 4,989 8,123 7,756 367 15,247 10,674 4,269 6,405 4,505 10,674 4,269 6,405 4,505 (2,551) 3,487 6,038 742 16,426 16,426 - 15,684 $ 13,875 19,913 6,038 16,426 u CITY OF WEST COVINA Transportation Development Act Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Revenue from other agencies Total revenues Expenditures: Current: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses):. Transfers in Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances (deficit) at end of year Variance Prior Final Positive Year Budget Actual (Negative Actual $ - 234 234 777 56,000 58,446 2,446 56,219 56,000 58,680 2,680 56,996 110,676 110,410 266 64,448 110,676 110,410 266 64,448 54,676 51,730 2,946 7,452 8,000 - 8,000 (54,676) (51,730) 2,946 548 50,787 50,787 - 50,239 $ 3,889 943 2,946 50,787 CITY OF WEST COVINA Waste Management Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Revenues from other agencies Charges for services Other revenues Total revenues Expenditures: Current: Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year Variance Prior Final Positive Year Budget Actual (Negative Actual $ - 6,074 6,074 3,377 - 55,030 55,030 - 215,327 221,083 5,756 220,871 - - - 441 215,327 282,187 66,860 224,689 234,793 233,625 1,168 235,178 234,793 233,625 1,168 235,178 19,466 48,562 68,028 10,489 - - - F 12,853 i - - - 12,853 (19,466) 48,562 68,028 (23,342) 234,356 234,356 - :257,698 $214,890 282,918 68,028 1234,356 97 l CITY OF WEST COVINA Grants Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Revenue from other agencies Charges for services Total revenues Expenditures: Current: Public safety Public works Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Net change in fund balances Fund balances (deficit) at beginning of year Fund balances (deficit) at end of year Variance Prior Final Positive Year Budget Actual (Negative) Actual $ - 18,350 18,350 11,412 1,501,591 752,233 (749,358) 1,702,270 75,000 87,529 12,529 132,794 1,576,591 858,112 718,479 1,846,476 779,700 399,335 380,365 558,443 857,987 529,555 328,432 358,623 1,853,004 858,151 994,853 315,012 3,490,691 1,787,041 1,703,650 1,232,078 (1,914,100) (928,929) 985,171 614,398 3,413 - - 3,413 (1,914,100) (928,929) 985,171 617,811 (1,097,025) 1,097,025 - (1,714,836) $ 3,011,125 2,025,954 985,171 1,097,025 CITY OF WEST COVINA Tree Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual _ r Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative Actual Revenues: Investment income Other revenues Total revenues Expenditures: Current: Public works Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances at end of year $ - 61 61 26 - - - 360 - 61 61 386 2,000 2,000 i� - - 2,000 2,000 - - (2,000) (1,939) 61 386 2,163 2,163 - 1,777 $ 163 224 61 2,163 99 CITY OF WEST COVINA Inmate Welfare Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Revenues: Investment income Other revenues Total revenues Expenditures: Current: Public safety Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances at end of year Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative Actual $ - 517 517 157 10,500 27,375 16,875 10,142 10,500 27,892 17,392 10,299 18,276 19,137 861 14,497 18,276 19,137 861 14,497 (7,776) 8,755 16,531 (4,198) 7,003 7,003 - 11,201 $ 773 15,758 16,531 7,003 100 t I 1 i 1 1 1 1 1 1 1 CITY OF WEST COVINA BKK Community Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Other revenues Total revenues Expenditures: Current: Public works Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year Variance Prior Final Positive „ Year Budget Actual (Negative) Actual $ - 18,190 18,190 3,026 - 373,159 373,159 - - 391,349 391,349 3,026 151,763 90,874 60,889 1; 364,326 41,257 15,607 25,650 11,421,614 193,020 106,481 86,539 "1,785,940 u 193,020 284,868 477,888 (1,782,914 1,500,000 - 1,500,000 - (1,500,000) = 1,500,000 - (1,693,020) 284,868 1,977,888 (1,782,914) 1,249,3.37 1,249,337 - 13,032,251 $ 443,683 1,534,205 1,977,888 ' 1,249,337 101 CITY OF WEST COVINA Charter Cable Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Other revenues Total revenues Expenditures: Current: Public safety Public works Community services Total expenditures Net change in fund balances Fund balances at beginning of year Variance Prior Final Positive Year Budget Actual (Negative) Actual $ - 25,952 25,952 5,725 150,000 - 150,000 550,000 150,000 25,952 124,048 555,725 94,696 15,696 79,000 - 21,350 9,620 11,730 - 317,729 232,672 85,057 32,750 433,775 257,988 175,787 32,750 (283,775) (232,036) 51,739 522,975 923,122 923,122 - 400,147 Fund balances at end of year $ 639,347 691,086 51,739 923,122 102 11 1 CITY OF WEST COVINA Public Safety, Fund Schedule of Revenues, Expenditures and Changes. in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Taxes Investment income Total revenues Expenditures: Current: General government Public safety Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year Variance Prior Final Positive Year Budget Actual (Negative) Actual $ 600,000 689,498 89,498 535,834 - 5,693 5,693 3,327 600,000 695,191 95,191 539,161 132,263 38,356 93,907 - - - - 739 132,263 38,356 93,907 739 i� 467,737 656,835 189,098 538,422 600,000 600,000 - i 590,000 600,000 600,000 - 590,000 1 (132,263) 56,835 189,098 (51,578) 229,005 229,005 - 280,583 $ 96,742 285,840 189,098 229,005 If 103 CITY OF WEST COVINA Community Development Block Grant Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Revenue from other agencies Repayment of notes and loans Total revenues Expenditures: Current: General government Public safety Public works Community services Community development Total expenditures Net change in fund balances Fund balances (deficit) at beginning of year Fund balances (deficit) at end of year Variance Prior Final Positive Year Budget Actual (Negative) Actual $ 461 1,132 671 4,110 1,383,000 3,114,746 1,731,746 2,365,723 500,000 476,213 23,787 583,169 1,883,461 3,592,091 1,708,630 2,953,002 44,954 29,124 15,830 3,805 479,985 458,743 21,242 12,769 1,714,913 1,334,736 380,177 1,457,944 1,030,426 626,505 403,921 627,967 500,000 502,669 2,669 535,726 3,770,278 2,951,777 818,501 2,638,211 (1,886,817) 640,314 2,527,131 314,791 252,520 252,520 - (62,271) $ 1,634,297 892,834 2,527,131 252,520 104 CITY OF WEST COVINA COPS Grant Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Revenue from other agencies Total revenues Expenditures: Current: Public safety Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances (deficit) at end of year Variance Prior Final Positive 'Year Budget Actual (Negative) Actual $ - 1,792 1,792 1,971 163,000 162,205 795 163,565 163,000 163,997 997 165,536 227,532 203,618 24,514 253,414 227,532 203,018 24,514 253,414 (64,532) (39,021) 25,511 (87,878) 64,130 64,130 - 152,008 $ 402 25,109 25,511 64,130 105 CITY OF WEST COVINA Art in Public Places Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Investment income Revenue from other agencies Total revenues Expenditures: Current: Community services Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances (deficit) at end of year Variance Prior Final Positive Year Budget Actual (Negative) Actual $ - 268 268 11 - - - 8,077 - 268 268 8,088 - 268 268 8,088 8,088 8,088 - - $ 8,088 8,356 268 8,088 106 1] CITY OF WEST COVINA Special Assessments Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative) Actual Revenues: Taxes $ 476,148 723,534 247,386 577,286 Special assessments 3,611,847 3,582,066 (29,781) 3,448,956 Licenses and permits - 6,224 6,224 138 Investment income 33,000 113,918 80,918 44,847 Charges for services 15,300 34,772 19,472 27,341 Other revenues - 1,188 1,188 301 Total revenues 4,136,295 4,461,702 325,407 4,09,8,869 Expenditures: Current: General government 25,000 - 25,000 88,061 Public works 4,201,462 3,825,689 375,773 3,579,225 Community development 90,749 69,197 21,552 75,726 Total expenditures 4,317,211, 3,894,886 422,325 3,743,012 Excess (deficiency) of revenues over (under) expenditures 180,916) 566,816 747,732 355,857 Other financing sources (uses): Transfers out 30,000 30,000 - 30,000 Total other financing sources (uses) 30,000 30,000 - 30,000 Net change in fund balances (210,916) 536,816 747,732 325,857 Fund balances at beginning of year 3,426,802 3,426,802 - 3,100,945 Fund balances at end of year $ 3,215,886 3,963,618 747,732 3,426,802 107 CITY OF WEST COVINA North Azusa Relinquishment Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year.ended June 30, 2006 Revenues: Investment income Revenue from other agencies Total revenues Expenditures: Current: Public works Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances (deficit) at end of year Variance Prior Final Positive Year Budget Actual (Negative) Actual $ - 53,143 53,143 - - 2,200,000 2,200,000 - - 2,253,143 2,253,143 - 989,600 338,424 651,176 - 989,600 338,424 651,176 - (989,600) 1,914,719 2,904,319 - $ (989,600) 1,914,719 ' 2,904,319 - 108 I MAJOR DEBT SERVICE FUNDS Debt Service Funds are used to account for the accumulation of resources for, and the payment of, governmental long-term debt principal and interest. The City of West Covina has the following Major Debt Service Funds: City Debt Service Fund - To account for the payment of principal and interest on the City's long- term debt issues. iment Commissi principal and interest on long-term 1 1 1 1 109 Fund - To account for the payment of ity Development Commission. CITY OF WEST COVINA City Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Revenues: Investment income Other revenue Total revenues Expenditures: Current: General government Public safety Public works Community services Debt service: Principal Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative) Actual $ 1,640,537 (727,157) (2,367,694) 1,874,145 402,850 483,152 80,302 385,949 2,043,387 (244,005) (2,287,392) 2,260,094 312,258 (312,258) - - - 8,720 675,541 130,000 545,541 410,464 2,814,203 1,892,472 921,731 1,293,022 3,489,744 2,334,730 1,155,014 1,712,206 (1,446,357) (2,578,735) 1,132,378) 547,888 Transfers in 7,839,188 430,000 (7,409,188) 1,266,472 Transfers out - (416,597) (416,597) (342,251) Issuance of long-term debt - 2,735,000 2,735,000 - Payment to refunded bond escrow a - (2,727,525) (2,727,525 - Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year 7,839,188 20,878 (7,818,310) 924,221 6,392,831 (2,557,857) (8,950,688) 1,472,109 19,802,427 19,802,427 - 18,330,318 Fund balances at end of year $ 26,195,258 17,244,570 (8,950,688) 19,802,427 110 CITY OF WEST COVINA Community Development Commission Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative) Actual Revenues: Taxes $ 17,042,500 19,052,184 2,009,684 1`7,427,791 Investment income Other revenue 477,000 - 597,618 120,618 506,795 464,354 - - _ Total revenues 17,519,500 19,649,802 2,130,302 18,398,940 Expenditures: Debt service: Principal 2,324,050 1,465,000 859,050 1,345,000 Interest and fiscal charges 7,556,730 6,077,381 1,479,349 5,794,665 Pass -through payments 2,476,900 3,199,441 (722,541) 4,817,371 Payment to refunded bond escrow, 1,878,000 1,858,120 19,880 ITotal expenditures 14,235,680 12,599,942 1,635,738 11,957,036 Excess (deficiency) of revenues over (under) expenditures 3,283,820 7,049,860 3,766,040 6,441,904 Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) '- Net change in fund balances 1 Fund balances (deficit) at beginning of year Fund balances (deficit) at end of year 1 1,484,480 416,597 (1,067,883) 1,324,198 (5,011,500) (7,001,165) (1,989,665) (4,884,468) (3,527,020) (6,584,568) (3,057,548) (3,560,270) (243,200) 465,292 708,492 2,881,634 (13,296,682) (13,296,682) - (16,178,316) $ (13,539,882) 12,831,390 708,492 13,296,682 111 1 1 1 L (This page intentionally left blank) 11 I i 1 112 I MAJOR AND NON -MAJOR 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 Funds. Capital Projects Funds are ordinarily not used to account for the acquisition of furniture, fixtures, machinery, equipment and other relatively minor or comparatively short-lived capital assets. The City of West Covina has the following Major Capital Projects Fund: Community Development Commission Capital Projects Fund — This fund accounts, for the financial resources to be used for property acquisition, improvement and rehabilitation within project areas authorized under provisions of the California Community Redevelopment Law. The City of West Covina has the following Non -Major Capital Projects Funds: Capital Outlay Fund — This fund accounts for all capital expenditures not being accounted for in the capital projects described below, or in other fund types. Construction Tax Fund — This fund accounts for monies received from developers based on the construction of dwelling units and used primarily to construct public domain assets. Park Development Fund — This fund accounts for park fees received from residential developers to be used for new park construction. 1 1 CITY OF WEST COVINA Non -Major Capital Projects Funds Combining Balance Sheet June 30, 2006 Capital Construction_ Park Totals Outlay Tax Development 2006 2005 Assets Cash and investments $ (3,198,762) 391,605 2,528,151 (279,006) 3,521,463 Cash and investments with fiscal agent 10,133,512 - - 10,133,512 11,573,915 Receivables: Accounts - - 2,200 2,200 - Interest - 2,484 15,339 17,823 7,981 Due from other agencies 27,726 - - 27,726 - Due from other funds 1,845,566 - - 1,845,566 - Total assets $ 8,808,042 $ 394,089 $ 2,545,690 $ 11,747,821 $ 15,103,359 Liabilities and Fund Balances Liabilities: Accounts payable $ 1,675,584 16,619 86,611 1,778,814 72,337 Other accrued liabilities 178,886 - 153,053 331,939 179,333 Advances from other funds - - 19,000, 19,000 19,000 Total -liabilities 1,854,470 16,619 258,664 2,129,753 270,670 Fund balances: Reserved for: Encumbrances 2,021,713 16,247 377,598 2,415,558 8,965,585 Unreserved: Designated for capital projects 4,931,859 361,223 1,909,428 7,202,510 5,867,104 Total fund balances 6,953,572 377,470 2,287,026 9,618,068 14,832,689 Total liabilities and fund balances $ 8,808,042 394,089 2,545,696 11,747,821 15,103,359 114 1 1 1 1 i 1 1 1 CITY OF WEST COVINA Non -Major Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 2006 Revenues: Taxes Investment income Rental income Revenue from other agencies Developer fees Other revenues Total revenues Expenditures: Current: General government Public safety Public works Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Issuance of long-term debt Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year Capital Construction Park Totals Outlay Tax Development 2006 2005 366,665 249,328 615,993 277,194 12,794 289,988 174,770 12,821 760 - 21,912 246,958 5,434,622 7,554 5,632,064 267,333 (5,016,071) 22,655 (5,016,071) 22,655 11,969,643 354,815 $ 6,953,572 377,470 115 277,194 125,392 82,100 461,559 193,034 32,863 32,863 21,836 - 249,328 15,572 7,884 7,884 378,493 25,000 25,000 49,273 147,847 1,053,828 i, 783,600 - 187,591 573,273 - 760 8,712 - 268,870 158,221 369,052 5,811,228 1,368,265 d 369,052 6,268,449 2,108,471 (221,205) (5,214,621) ' (1,324,871) �i - (930,972) 13,500,000 r 12,569,028 (221,205) (5,214,621)!' 11,244,157 2,508,231 14,832,689 3,588,532 2,287,026 9,618,068 14,832,689 CITY OF WEST COVINA Community Development Commission Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Variance Prior Final Positive Year Budget Actual (Negative) Actual Revenues: Investment income $ 454,000 743,373 289,373 301,521 Rental income - 132,688 132,688 472,868 Repayment of notes and loans 250,000 878,883 628,883 1,753,789 Other revenues 53,200 1,388,914 1,335,714 487,459 Total revenues 757,200 3,143,858 2,386,658 3,015,637 Expenditures: Current: Community development 5,979,704 9,252,125 (3,272,421) 4,129,971 Debt service: Principal 455,000 455,000 - 445,000 Interest and fiscal charges 800,750 796,569 4,.181 814,195 Total expenditures 7,235,454 10,503,694 3,268,240 5,389,166 Excess (deficiency) of revenues over (under) expenditures (6,478,254) 7,359,836 881,582 2,373,529 Other financing sources (uses): Transfers in 2,400,000 5,444,288 3,044,288 4,884,468 Transfers out (11,280,168) - 11,280,168 (981,947) Gain (loss) on sale of asset 6,700,000 - 6,700,000 - Total other financing sources (uses) (2,180,168) 5,444,288 7,624,456 3,902,521 Net change in fund balances (8,658,422) (1,915,548) 6,742,874 1,528,992 Fund balances at beginning of year 20,794,233 20,794,233 - 19,265,241 Fund balances at end of year $12,135,811 18,878,685 6,742,874 20,794,233 116 � CITY OF WEST COVINA t Capital Outlay Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Variance Prior Final Positive II Year Budget Actual (Negative) Actual ' Revenues: Investment income $ 864,960 366,665 (498,295) 147,547 iRevenue from other agencies - 249,328 249,328 15,572 Total revenues 864,960 615,993 (248,967) 163,119 I, Expenditures: Current: General government 932,676 174,770 757,906 550,405 Public safety 5,438 760 4,678 8,712 Public works 28,252 21,912 6,340 '' 59,166 Community services 50,957,512 5,434,622 45,522,890 I! 678,438 Total expenditures 51,923,878 5,632,064 46,291,814 '' 1,296,721 Excess (deficiency) of revenues over (under) expenditures (51,058,918) 5,016,071 46,042,847 ! 1,133,602 Other financing sources (uses): Transfers in 17,795,688 - (17,795,688) - Transfers out (7,090,188) 7,090,188 (922,972) Issuance of long-term debt 18,875,000 _ (18,875,000)i 13,500,000 Total other financing sources (uses) 29,580,500 - (29,580,500)j 12,577,028 ' Net change in fund balances (21,478,418) (5,016,071) 16,462,347 11,443,426 Fund balances at beginning of year 11,969,643 11,969,643 - 526,217 Fund balances at end of year $ (9,508,775) 6,953,572 16,462,347 11,969,643 117 i CITY OF WEST COVINA Construction Tax Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Revenues: Taxes Investment income Total revenues Expenditures: Current: General government Public works Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year Variance Prior Final Positive Year Budget Actual (Negative Actual $120,000 277,194 157,194 125,392 - 12,794 12,794 5,481 120,000 289,988 169,988 130,873 40,555 12,821 27,734 22,868 360,070 246,958 113,112 99,055 16,000 7,554 8,446 - 416,625 267,333 149,292 121,923 296,625 22,655 319,280 8,950 8,000 (8,000) (296,625) 22,655 319,280 950 354,815 354,815 - 353,865 $ 58,190 377,470 319,280 354,815 118 CITY OF WEST COVINA Park Development Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2006 Variance Prior Final Positive ;Year Budget Actual (Negative) Actual Revenues: Investment income $ - 82,100 82,100 1140,006 Rental income 20,000 32,863 12,863 21,836 Developer fees 7,884 7,884 378,493 Other income - 25,000 25,000 49,273 Total revenues 20,000 147,847 127,847 489,608 1 Expenditures: Current: Community services 1,422,233 369,052 1,053,181 689,827 Total expenditures 1,422,233 369,052 1,053,181 689,827 Excess (deficiency) of revenues over (under) expenditures 1,402,233 221,205 1,181,028 200,219 1 Other financing sources (uses): Transfers out 1,500,000 - 1,500,000 _ Total other financing sources (uses) 1,500,000 - 1 500 000 - Net change in fund balances (2,902,233) (221,205) 2,681,028 (200,219) 11 Fund balances at beginning of year 2,508,231 2,508,231 2,708,450 Fund balances at end of year y $ 394,002 2,287,026 2,681,028 2,508,231 119 p This page left blank)- � Pg Y I 1 I 1 120 PROPRIETARY FUND TYPES Enterprise Funds account for operations that are financed and operated in a manner similar to 1 private business enterprises. The City of West Covina has the following Major Enterprise Fund: Computer Service Fund — This fund accounts for sales and expenses related to the computer services provided by the Police Department to other public safety agencies. Internal Service Funds are used to account for the financing of goods or services provided by one department to other departments of the City on a cost reimbursement basis. ' The City of West Covina has the following Non -Major Internal Service Funds: Fleet Management Fund — This fund provides maintenance on materials and supplies' for City vehicles, and other gasoline or diesel powered equipment. Self -Insurance Fund — This fund accounts for the use of funds that are charged to departments for the administration and payment of claims under the City's self -insured general liability and workers' compensation programs. Vehicle Replacement Fund — This fund provides for replacement of City Vehicles. i� i 1 1 1 121 CITY OF WEST COVINA Internal Service Funds Combining Statement of Net Assets June 30, 2006 Fleet Self- Vehicle Totals Management Insurance Replacement 2006 2005 Assets Current assets Cash and investments $ - 8,472,974 1,000,000 9,472,974 6,359,926 Receivables: Accounts - 66,591 - 66,591 70,339 Interest - 51,285 - 51,285 18,061 Inventory 27,676 - - 27,676 83,565 Prepaid items - 31,957 - 31,957 21,250 Total current assets 27,676 8,622,807 1,000,000 9,650,483 6,553,141 Capital assets: Construction in progress 36,275 - - 36,275 4,353 Other capital assets 3,894,936 - - 3,894,936 4,060,734 Less accumulated depreciation 2,798,565 - - 2,798,565 2,731,392 Capital assets, net 1,132,646 - - 1,132,646 1,333,695 Total assets 1,160,322 8,622,807 1,000,000 10,783,129 7,886,836 Liabilities and Net Assets Liabilities: Current liabilities: Accounts payable 99,524 144,888 - 244,412 260,283 Other accrued liabilities 10,992 6,814 - 17,806 11,356 Due to other funds 68,465 244,557 - 313,022 53,792 Current portion of compensated absences 10,464 7,424 - 17,888 69,599 Total current liabilities 189,445 403,683 - 593,128 395,030 Non -current liabilities: Claims and judgments - 5,646,618 - 5,646,618 5,616,313 Compensated absences payable 43,729 39,390 - 83,119 15,912 Total long-term liabilities 43,729 5,686,008 - 5,729,737 5,632,225 Total liabilities 233,174 6,089,691 - 6,322,865 6,027,255 Net assets: Invested in capital assets 1,132,646 - - 1,132,646 1,333,695 Unrestricted (205,498) 2,533,116 1,000,000 3,327,618 525,886 Total net assets $ 927,148 2,533,116 1,000,000 4,460,264 1,859,581 122 CITY OF WEST COVINA Internal Service Funds 1 Combining Statement of Revenues, Expenses and Changes in Net Assets Year ended June 30, 2006 1 Fleet Self- Vehicle Totals Management Insurance Replacement 2006 2005 Operating revenues: Charges for services $ 1,361,343 4,021,311 - 51382,654 4,621,476 Other revenues 6,061 - - 6,061 5,120 Total operating revenues 1,367,404 4,021,311 - 5,388,715 4,626,596 Operating expenses: Personnel services 503,515 295,876 799,391 711,998 Cost of sales, services and operations 883,432 253,900 - 1,137,332 1,092,295 Depreciation 232,971 - - 232,971 248,255 Insurance and claims paid - 1,837,075 - 1,837,075 3,195,968 Total operating expenses 1,619,918 2,386,851 - 4,006,769 5,248,516 Operating income (loss) (252,514) 1,634,460 - 1,381,946 (621,920) Nonoperating revenues a enses ( xP : ) Investment income - 218,737 - 218,737 89,462 Gain (loss) on sale of asset - - - - (10,160) Total nonoperating p revenues (expenses) - 218,737 - 218,737 79,302 Income (loss) before transfers (252,514) 1,853,197 - 1,600,683 1 (542,618) Transfers in - - 1,000,000 1,000,000 - Transfers out - - - _ _ Change in net assets (252,514) 1,853,197 1,000,000 2,600,683 (542,618) 1 Net assets (deficit) at begmningofyear 1,179,662 679,919 - 1,859,581 2,402,199 Net assets at end of year $ 927,148 2,533,116 1,000,000 4,460,26411' 1,859,581 ' 123 �! 'i CITY OF WEST COVINA Internal Service Funds Combining Statement of Cash Flows Year ended June 30, 2006 Cash flows from operating activities: Cash received from user departments Cash payments to suppliers for goods and services Cash payments to employees for services 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: Cash paid for acquisition of capital assets Net cash proved by (used for) capital and related financing activities Cash flows from investing activities: Interest received 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 Fleet Self - Management Insurance $ 1,367,404 4,025,059 (849,291) (2,065,500) (500,864) (276,581) Vehicle Replacement Totals 2006 2005 5,392,463 4,610,077 - (2,914,791) (3,340,071) (777,445) (704,715) 17,249 1,682,978 - 1,700,227 565,291 1 14,673 244,557 1,000,000 1,259,230 29,551 14,673 244,557 1,000,000 1,259,230 29;551 (31,922) - - (31,922) (679) (31,922) - - (31,922) (679) - 185,513 - 185,513 79,116 - 185,513 - 185,513 79,116 , - 2,113,048 1,000,000 3,113,048 673,279 - 6,359,926 - 6,359,926 5,686,647 $ - 8,472,974 1,000,000 9,472,974 6,359,926 , (Continued) 124 r Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income {loss) Adjustments to reconcile operating income (loss) to net cash provided ' by (used for) operating activities: Depreciation (Increase) decrease in accounts receivable (Increase) decrease in inventory (Increase) decrease in prepaids and other assets Increase (decrease) in accounts payable Increase (decrease) in other accrued liabilities Increase (decrease) in compensated absences Increase (decrease) in claims and judgements payable Total adjustments Net cash provided by (used for) operating activities S 1 CITY OF WEST COVINA Internal Service Funds Combining Statement of Cash Flows (Continued) Fleet Self - Management Insurance $ (252,514) 1,634,460 Vehicle Totals Replacement 2006 2005 1,381,946 (621,920) 232,971 - - 232,971 248,255 - 3,748 - 3,748 (16,519) 55,889 - - 55,889 (16,025) - (10,707) - (10,707) (19,841) (21,748) 5,877 - (15,871) 184,683 1,561 4,889 - 6,450 3,040 1,090 14,406 - 15,496 4,243 - 30,305 - 30,305 799,375 269,763 48,518 - 318,281 1,187,211 $ 17,249 1,682,978 - 1,700,227 565,291 125 11 (This page intentionally left blank) L I� i 1 1 126 t 1 f 1 1 1 1 1 1 1 1 1 1 1 i 1 AGENCY FUND Agency Funds account for monies held by the City in a trustee capacity as an agent for individuals, private organizations and other governmental units. The City's Agency Funds are as follows: Special Deposit Fund — This fund is used to account for developer funds placed on deposit with the City pending either a return to the depositor or disbursement by the City on behalf of the depositor to pay for studies and other developer expenses. 127 CITY OF WEST COVINA Agency Fund Combining Statement of Changes in Assets and Liabilities Year ended June 30, 2006 Balance at July 1, 2005 SPECIAL DEPOSITS AGENCY FUND Assets Cash and investments $ 752,180 Accounts receivable 2,817 Total assets $ 754,997 Liabilities Accounts payable $ 42,517 Deposits 712,480 Total liabilities $ 754,997 Balance at Additions Deletions June 30, 2006 1,659,056 (2,212,190) 199,046 934,380 (8,505) 928,692 2,593,436 (2,220,695) .1,127,738 812,206 (529,636) 325,087 2,701,867 (2,611,696) 802,651 3,514,073 (3,141,332) 1,127,738 IU4:3 CITY OF WEST COVINA Table 1 Net Assets by Component Last Four Fiscal Years (accrual basis of accounting) ' Fiscal Year 2003 2004 2005 2006 Governmental activities: Invested in capital assets, net of related debt $ 148,947,725 146,195,649 143,792,663 $144,030,127 Restricted 110,501,120 106,938,430 104,865,107 99,990,727 Unrestricted 3,655,287 2,406,084 140,122 (3,,710,829) Total governmental activities net assets $ 263,104,132 255,540,163 248,797,892 $240,310,025 Business -type activities: Invested in capital assets, net of related debt $ 383,176 458,875 136,937 193,706 Restricted - - - - - Unrestricted 2,015,309 1,692,357 1,832,618 1,469,994 Total business -type activities net assets $ 2,398,485 2,151,232 1,969,555 1,663,700 Primary government: Invested in capital assets, net of related debt $ 149,330,901 146,654,524 143,929,600 $144,223,833 I Restricted 110,501,120 106,938,430 104,865,107 99,990,727 Unrestricted 5,670,596 4,098,441 1,972,740 (2,240,835) Total primary government net assets $ 265,502,617 257,691,395 250,767,447 $241,973,725 1 The City of West Covina implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. ' Source: City of West Covina Finance Deparment 1 t CITY OF WEST COVINA Changes in Net Assets Last Four Fiscal Years (accrual basis of accounting) Fiscal Year 2003 2004 2005 Expenses: Governmental activities: General government $ 3,578,429 Public safety 30,258,976 Public works 18,043,497 Community services 6,400,613 Community development 5,545,289 Interest on long-term debt 5,007,946 Total governmental activities expenses 68,834,750 Business -type activities: Simulator 254,867 Computer enterpise 1,372,798 Total business -type activities expenses 1,627,665 Total primary government expenses 70,462,415 Program revenues: Governmental activities: Charges for services: General government 22,486 Public safety 1,754,863 Public works 3,810,930 Community services 1,277,251 Community development 969,865 Operating grants and contributions 9,850,635 Capital grants and contributions 346,125 Total governmental activities program revenues 18,032,155 Business -type activities: Charges for services: Simulator 90,336 Computer enterprise 1,569,556 Operating grants and contributions - Capital grants and contributions - Total business -type activities program revenues 1,659,892 Total primary government program revenues 19,692,047 (Continued) 2,314,558 33,172,116 16,803,123 7,911,247 6,438,979 4,039,240 70,679,263 241,047 2,023,376 2,264,423 72,943,686 1,271,852 1,772,859 3,763,540 1,471,603 154,837 9,833,967 1,064,756 19,333,414 79,903 2,165,999 2,919,887 38,436,098 19,642,927 4,144,990 6,761,102 5,001,981 76,906,985 2,212,802 2,212,802 79,119,787 1,377,178 2,562,910 3,610,577 1,546,169 223,938 10;802,517 378,493 20,501,782 1,992,662 Table 2 2006 1,594,760 38,433,238 20,696,562 6,482,112 11,245,539 7,714,047 86,166,258 2,098,690 2,098,690 88,264,948 2,767,383 3,310,988 5,297,840 1,454,683 302,677 11,614,595 285,078 25,033,244 1,721,715 2,245,902 1,992,662 1,721,715 21,579,316 . 22,494,444 26,754,959. 130 1 t 1 1 1 1 1 1 1 1 1 1 1 1 i 1 CITY OF WEST COVINA Changes in Net Assets Last Four Fiscal Years (accrual basis of accounting) 2003 Net revenues (expenses): Governmental activities (50,902,595) Business -type activities 32,227 Total net revenues (expenses) (50,770,368) General revenues and other changes in net assets: Governmental activities: Taxes: Property taxes 13,711,795 Sales tax 13,333,877 Franchise tax 2,425,160 Other taxes 3,733,940 Motor vehicle in lieu, unrestricted 6,291,597 Investment income 5,543,268 Rental income 436,755 Gain/ (loss) on sale of property (1,041,331) Other general revenues 859,556 Transfers - Total governmental activities 45,294,617 Business -type activities: Investment income 30,545 Transfers - Total business -type activities 30,545 Total primary government 45,325,162 Changes in net assets Fiscal Year 2004 2005 (51,345,849) (56,405,203) (18,521) (220,140) (51,364,370) (56,625,343) 16,107,447 17,565,368 14,355,566 14,522,220 2,617,462 2,870,211 4,028,136 2,959,329 5,054,209 7,044,997 44,464 2,858,850 1,324,596 2,132,720 250,000 137 43,781,880 49,953,832 21,268 38,600 (250,000) (137) (228,732) 38,463 43,553,148 49,992,295 Governmental activities (5,507,978) (7,563,969) (6,451,371) Business -type activities 62,772 1 (247,253) (181,677) Total primary government $ (5,445,206) (7,811,222) (6,633,048) The City of West Covina implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Source: City of West Covina Finance Department 131 Table 2 2006 (61,133,014) (376,97511 (61,509,989) 14,2116,986 6,279,487 2,845,521 (239,442) 1,993,102 (65,429) 52,645,147 77,675,372 71,120 11,120 77,746,492 16,542,358 (305,855) $ 16,236,503 CITY OF WEST COVINA Table 3 Changes in Net Assets - Governmental Activities , Last Four Fiscal Years (accrual basis of accounting) Fiscal Year Expenses: 2003 2004 2005 2006 General government S 3,578,429 2,31.4,558 2,919,887 1,594,760 Public safety Public works 30,258,976 18,043,497 33,172,116 16,803,123 38,436,098 19,642,927 38,433,238 20,696,562 ' Community services 6,400,613 7,911,247 4,144,990 6,482,112 Community development 5,545,289 6,438,979 6,761,102 11,245,539 Interest on long-term debt 5,007,946 4,039,240 5,001,981 7,714,047 , Total governmental activities expenses 68,834,750 70,679,263 76,906,985 86,166,258 Program revenues: Charges for services: , General government 22,486 1,271,852 1,377,178 2,767,383 Public safety 1,754,863 1,772,859 2,562,910 3,310,988 Public works 3,810,930 3,763,540 3,610,577 5,297,840 Community services 1,277,251 1,471,603 1,546,169 1,454,683 ' Community development 969,865 154,837 223,938 302,677 - Operating grants and contributions 9,850,635 9,833,967 10,802,517 11,614,595 Capital grants and contributions 346,125 1,064,756 378,493 285,078 Total governmental activities program revenues 18,032,155 19,333,414 20,501,782 25,033,244 Net program revenues (expenses) (50,802,595) (51,345,849) (56,405,203) (61,133,014) ' General revenues and other changes in net assets: Taxes: Property taxes 13,711,795 16,107,447 17,565,368 14,216,986 Sales tax 13,333,877 14,355,566 14,522,220 6,279,487 Franchise tax Other taxes 2,425,160 3,733,940 2,617,462 4,028,136 2,870211 2,959,,329 2,845,521 (239,442) Motor vehicle in lieu, unrestricted 6,291,597 5,054,209 7,044,997 1,993,102 Investment income 5,543,268 44,464 2,858,850 (65,429) Rental Income 436,755 - - - Gain / (loss) on sale of property (1,041,331) - - - Other general revenues 859,556 1,324,596 2,132,720 - Transfers - 250,000 137 52,645,147 Total governmental activities 45,294,617 43,781,880 49,953,832 77,675,372 ' Changes in net assets - governmental activities SS (5,5� (7,563,969 (6,451,371) 16,542,358 —, The City of West Covina implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Source: City of West Covina Finance Department , 132 1 I 1! 1 1 CITY OF WEST COVINATable 4 Changes in Net Assets - Business -type Activities Last Four Fiscal Years (accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 Expenses: Simulator $ 254,867 241,047 - 2,098,690 Computer Enterprise 1,372,798 2,023,376 2,212,802 it - Total business -type activities expenses 1,627,665 2,264,423 2,2123802 2,098,690 Program revenues: Charges for services: Simulator Computer Enterprise Operating grants and contributions Capital grants and contributions Total business -type activities program revenues 90,336 79,903 - 1,569,556 2,165,999 1,992,662 1,659,892 2,245,902 1,992,662 Net revenues (expenses) 32,227 18,521 220,140 General revenues and other changes in net assets: Investment income '30,545 Transfers - 21,268 250,000 38,600 137 Total business -type activities 30,545 _ (228,732) 38,463 11 U Changes in net assets - business -type activities $ 62,772 247,253) (181,677) The City of West Covina implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Source: City of West Covina Finance Department l 1,721,715 j,721,715 I (376,975 II - 71,120 71,120 it (305,855) l I� 133 CITY OF WEST COVINA Table 5 Fund Balances.of Governmental Funds Last Four Fiscal Years (modified accrual basis of accounting) Fiscal Year. 2003 2004 2005 2006 General fund: Reserved $29,565,395 24,398,011 24,201,596 $24,954,584 Unreserved 29,486,397 24,427,158 23,513,760 23,982,187 - Total general fund $ 58,051,792 48,825,169 47,715,356 $48,936,771 All other governmental funds: Reserved $21,204,178 34,406,256 44,606,915 25,198,543 Unreserved, reported in: Special revenue funds 8,434,845 6,021,975 5,980,930 9,981,374 Capital projects funds 5,874,255 (1,654,836) 929,735 12,139,928 Debt service funds (4,022,064) (4,625,186) (888,628) (2,685,881) Total all other governmental funds $ 31,491,214 34,148,209 50,628,952 44,623,964 The City of West Covina has elected to show only four years of data for this schedule. Source: City of West Covina Finance Department 134 CITY OF WEST COVINA Changes in Fund Balances of Governmental Funds Last Four Fiscal Years (modified accrual basis of accounting) Fiscal Year 2003 2004 2005 Revenues: Taxes Special assessments Licenses and permits Fines and forfeitures Investment income Rental income Intergovernmental ' Charges for services Repayment of notes and loans Developer fees Other Total revenues L 1 I Expenditures Current: General government Less interfund revenues Public safety Public works Community services Community development Debt service: Principal retirement Interest and fiscal charges Cost of issuance Pass -through payments Developer agreement payments Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Issuance of bonds Gain/ (loss) on sale of property Payment to refunded bond escrow agent Total other financing . . sources (uses) Net change in fund balances Debt service as a percentage of noncapital expenditures $ 43,507,485 47,634,431 49,046,990 3,532,950 3,311,896 3,448,956 1,101,778 1,425,077 1,046,759 1,219,531 1,410,536 1,264,600 8,790,949 3,564,751 8,239,221 436,755 593,486 589,564 9,607,367 8,586,703 12,052,408 1,861,498 2,279,000 3,533,169 4,534,914 1,877,550 2,336,958 - 916,384 378,493 1,259,634 1,624,656 2,517,164 75,852,861 73,224,470 84,454,282 5,327,608 4,230,885 4,790,513 (1,796,311) ' (1,942,452) (1,864,101) 29,767,232 34,037,594 37,643,249 13,504,313 10,996,162 12,937,191 11,655,366 10,630,005 .8,337,754 9,326,955 8,814,434 5,229,820 2,258,871 1,807,869 2,200,464 7,315,734 7,664,295 7,901,882 191;724 - - 3,395,174 4,067,098 4,817,371 80,946,666 80,305,890 81,994,143 (5,093,805) (7,081,420) 2,460,139 7,564,948 8,781,210 9,842,137 (7,564,948) (8,531,210) (10,140,446) 5,444,192 261,792 13,500,000 (1,041,331) - 4,402,861 511,792 _ 13,201,691 $ (690,944) (6,569,628) 15,661,830 18.9% 18.9% 19.9% The City of West Covina has elected to show only four years of data for this schedule. Source: City of West Covina Finance Department Table 6 P. .I 2006 58,464, 1,336,564 1,168,842 5,807,699 266,5 16 12,301,9219 4,764,618 1,355,096 7,884 2,566,819 91.622.827 4,912,513 (1,881,624) 39,996,407 11 14,269,148 11,857,937 10,385,5�11 Ii- 8,766422 11 3,199:441 1,858,120 11 95.413.875 (3,791,048' 9,34217162 (10,342,7162' i f 2,735,000 (2,727,525. (992,525; II (4,78LOS 135 CITY OF WEST COVINA Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands of dollars) City Fiscal Year Taxable Ended Less: Assessed June 30 Secured Non- Unitary Unsecured Exemptions Value 1997 4,044,306 $ 311 116,586 160,037 4,321,300 1998 4,044,435. 371 122,442 213,081 4,380,329 1999 4,274,386 372 136,853 97,999 4,509,610 2000 4,487,480 371 143,022 113,337 4,744,210 - 2001 4,692,999 371 137,519 86,107 4,916,996 2002 5,176,454 371 151,040 (128,700) 5,199,165 2003 5,510,228 371 146,482 (132,460) 5,524,621 2004 5,934,864 1,388 146,871 (127,293) 5,955,830 2005 6,356,011 464 147,894 (159,992) 6,344,377 2006 7,016,084 464 152,701 (183,443) 6,985,806 NOTE: In 1978 the voters of the State of California passed Proposition 13 which limited - property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With -few exceptions, property is only re -assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: HdL Coren & Cone, Los Angeles Assessor Combined Tax Rolls 136 1 t i 1 1 1 1 1 1 1 1 1 1 1 1 i 1 1 1 Community Development Commission Less: Secured Unsecured Exemptions Taxable Assessed Value City +CDC Total Taxable Assessed Value 796,122 85,003 (17,226) 863,899 5,185J99 888,980 96,927 (66,131) 919,776 5,300,105 919,202 104,642 (58,875) 964,969 5,474,579 1,022,180 108,050 (91,813) 1,038,417 5,782,627 1,200,574 104,795 (56,215) 1,249,154 6,166,150 1,303,935 136,767 (97,811) 1,342,891 6,542,056 1,388,741 133,358 (83,020) 1,439,079 6,963,700 1,459,309 132,127 (103,577) 1,487,859 7,443,689 1,547,925 132,801 (111,853) 1,568,873 7,913,250 1,723,957 137,934 (118,531) 1,743,360 8,729,166 137 Table 7. I' Total j Direct Tax Rate �I 13.985% II 13.985% 13.985% 13.985% 13.985% 13.985% 13.985% 13.985% it 13.985% �I 13.985% CITY OF WEST COVINA Direct and Overlapping Property Tax Rates (Rate per $100 of assessed value) (Tax Rate Area 9495) Last Ten Fiscal Years Roll Year 1997 1998 1999 2000 2001 City Prop 13 Rate: City of West Covina Sewer Maintenance District $0.00313 $0.00313 $0.00313 $0.00313 $0.00313 City of West Covina Tax District I 0.13671 0.13671 0.13671 0.13671 0.13671 City Direct Rate $0.13984 $0.13984 $0.13984 $0.13984 $0.13984 Children's Institutional Tuition Fund (400.21) $0.00288 $0.00288 $0.00289 $0.00288 $0.00288 County Sanitation District No. 22 Operating (066.85) 0.01414 0.01414 0.01414 0.61414 0.01414 County School Services (400.15) 0.00145 0.00145 0.00145 0.00145 0.00145 County School services Fund West Covina (985.06) 0.00785 0.00785 0.00785 0.00785 0.00785 Development Ctr Handicapped Minors West Covina (98) 0.00087 0.00087 0.00087 0.00087 0.00087 Educational Revenue Augmentation Fund (400.00) 0.07247 0.07247 0.07247 0.07247 0.07247 Educational Revenue Augmentation Fund (400.01) 0.16929 0.16929 0.16929 0.16929 0.16929 L.A. County Accumulative Capital Outlay (001.20) 0.00012 0.00012 0.00012 0.00012 0.00012 L.A. County Flood Control Imp. Dist. Main. (030.10) 0.00180 0.00180 0.00180 0.00180 , 0.00180 L.A. County Library (003.01) 0.02409 0.02408 0.02408 0.02408 0.02408 L.A. County Fire - Ffw (007.31) 0.00756 0.00756 0.00756 0.00756 0.00756 L.A. County Flood Control Maintenance (030.70) 0.01019 0.01019 0.01019 0.01019 0.01019 Los Angeles County General ( 001.05) 0.32955 0.32955 0.32955 0.32955 0.32955 Mount San Antonio Children's Center Fund (809.20) 0.00030 0.00030 0.00030 0.00030 0.00030 Mount San Antonio Community College (809.04) 0.03104 0.03104 0.03104 0.03104 0.03104 Upper San Gabriel Valley Muni Water -Covina (368.10) 0.00058 0.00058 0.00058 0.00058 0.00058 West Covina Unified School District (985.03) 0.18597 0.18597 0.18597 0.18597 0.18597 Sub -Total $0.86014 $0.86014 $0.86014 $0.86014 $0.86014 Total Prop 13 Rate $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 Metro Water District 0.008900 0.008900 0.008900 0.008900 0.008800 Flood Control 0.001991 0.002197 0.001953 0.001765 0.001552 Community College 0.000000 0.000000 0.000000 0.000000 0.000000 Unified Schools 0.000000 0.000000 0.000000 0.000000 0.027280 County 0.001604 0.001584 0.001451 0.001422 0.001314 Total Voter Approved Rates $0.012495 $0.012681 $0.012304 $0.012087 $0.038946 Total Tax Rate $1.012495 $1.012681 1.012304 $1.012087 $1.038946 NOTE: In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of the any voter approved bonds. Source: L.A. County Assessor 2005/06 Tax Rate Table 138 Table 8 1 1 1 1 1 i 1 1 1 1 1 1 1 1 1 i i 1 2002 2003 2004 2005 2006 $0.00313 $0.00313 $0.00313 $0.00313 $0.00313 0.13671 0.13671 0.13671 0.13671 0.13671 $0.13984 $0.13984 $0.13984 $0.13984 $0.13984 $0.00288 $0.00288 $0.00288 $0.00288 $0.00288 0.01414 0.01414 0.01414 0.01414 0.01414 0.00145 0.00145 0.00145 0.00145 0.00145 0.00785 0.00785 0.00785 0.00785 0.00785 0.00087 0.00087 0.00087 0.00087 0.00087 0.07247 0.07247 0.07247 0,07247 0.07247 0.16929 0.16929 0.16929 0.16929 0.16929 0.00012 0.00012 0.00012 0.00012 0.00012 0.00180 0.00180 0.00180 0.00180 0.00180 0.02408 0.02408 0.02408 0.02408 0.02408 0.00756 0.00756 0.00756 0.00756 0.00756 0.01019 0.01019 0.01019 0.01019 0.01019 0.32955 0.32955 0.32955 0.32955 0.32955 0.00030 0.00030 0.00030 0.00030 0.00030 0.03104 0.03104 0.03104 0.03104 0.03104 0.00058 0.00058 0.00058 0.00058 0.00058 0.18597 0.18597 0.18597 0.18597 0.18597 $0.86014 $0.86014 $0.86014 $0.86014 $0.86014 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 0.007700 0.006700 0.006100 0.005800 0.005200 0.001073 0.000881 0.000462 0.000245 0.000050 0.000000 , 0.019460 0.015246 0.014731 0.021220 0.052398 0.079847 0.050839 0.082226 0.061470 0.001128 0.001033 0.006992 0.000923 0.000800 $0.062299 $0.107921 $0.073639 $0.103925 $0.688740 $1.062299 $1.107921 $1.073639 $1•103925 $1.088740 139 CITY OF WEST COVINA Principal Property Tax Payers Current Year and Nine Years Ago 1997 Percent of Total City Taxable Taxable Assessed Assessed Taxpayer Value Value Plaza West Covina LLC Eastland Shopping Center LLC Hassen Imports Partnership West Covina 8 LLC Eastland Tower Partnership Pried XIV Trust Greenwood Covina LLC Ten West Associates LLC PPC AVF III Pacific LLC Sears Development Company Centermark Properties May Department Stores Company Hassen Real Estate Partnership Queen of the Valley Hospital South Hills Home Partnership BKK Company David Seitang PGP Inland Communities Citrus Valley Health Partners Table 9 XI: Percent of Total City Taxable Taxable Assessed Assessed Value Value $ 172,183,499 2.46% 87,632,112 1.25% 47,960;053 0.69% 35,107,600 0.50% 27,069,000 0.63% 31,650,000 0.45% 26,813,551 0.38% 22,700,000 0.32% 21;900,000 0.31% 37,166,950 0.53% 17,387,865 0.25% 120,888,833 2.80% 42,063,958 0.97% 29,227,189 0.68% 22,753,058 0.53% 21,444,322 0.50% 17,544,204 0.41% 14,572,085 0.34% 13,645,600 0.32% 12,160,621 0.28% $ 321,368,870 7.44% $ 500,501,630 7.16% The amounts shown above include assessed value data for both the City and the Community Development Commission. The top ten property tax payers are shown for each year. Source: Los Angeles County Assessor's Office 140 1 1 1 1 1 1 1 1 1 1 1 1 1 (This page intentionally left blank.) 141 CITY OF WEST COVINA Property Tax Levies and Collections Last Ten Fiscal Years City Collected within the Fiscal Taxes Levied Fiscal Year of Levy Collections in Total Collections to Date Year Ended for the Percent Subsequent Percent June 30 Fiscal Year Amount of Levy Years Amount of Levy 1997 $4,497,904 4,103,730 91.24% 187,019 4,290,749 95.39% 1998 4,474,200 4,176,518 93.35% 73,842 4,250,360 95.00% 1999 4,593,230 4,299,907 93.61% (63,181) 4,236,726 92.24% 2000 4,800,590 4,507,903 93.90% (103,451) 4,404,452 91.75% 2001 5,013,366 4,784,660 95.44% (169,430) 4,615,230 92.06% 2002 5,490,462 5,168,577 94.14% (258,169) 4,910,408 89.44% 2003 5,604,199 5,307,176 94.70% 61,647 5,368,823 95.80% 2004 6,120,235 5,826,025 95.19% 76,492 5,902,517 96.44% 2005 6,228,741 5,637,051 90.50% 63,827 5,700,878 91.53% 2006 7,404,266 6,799,451 91.83% (262,305) 6,537,146 88.29% NOTE: The amounts presented include City property taxes and Community Development Commission tax increment. This schedule also includes amounts collected by the City and the Community Development Commission that were passed -through to other agencies. Source: Los Angeles County Auditor Controller's Office N/A - Not available at time of printing. 142 1 1 1 1 Table 10 Community Development Commission Collected within the Fiscal Taxes Levied Fiscal Year of Levy Collections in Total Collections to Date Year Ended for the Percent Subsequent Percent June 30 Fiscal Year Amount of Levy Years Amount of Levy 1997 N/A N/A N/A N/A N/A N/A 1998 N/A N/A N/A N/A N/A N/A 1999 N/A N/A N/A N/A N/A N/A 2000 N/A N/A N/A N/A N/A N/A 2001 N/A N/A N/A N/A N/A N/A 2002 9,918,959 9,580,979 96.59% 771,567 10,352,546 104.37% 2003 10,668,287 10,539,591 98.79% 346,132 10,885,723 102.04% 2004 11,439,589 11,308,165 98.85% 647,807 11,955,972 104.51% 2005 12,333,003 12,130,821 98.36% 1,291,517 13,422,338 108.83% 2006 14,104,710 14,076,889 99.80% 1,144,548 15,221,437 107.92% 143 CITY OF WEST COVINA Ratios of Outstanding Debt by Type Last Ten Fiscal Years Fiscal Year Ended June 30 Lease Revenue Bonds Special Assessment Bonds Governmental Activities Tax Allocation Bonds 1 Loans Capital Lease Obligations 1997 $ 8,580,000 49,435,000 17,485,000 3,277,369 364,822 1998 7,870,000 48,800,000 22,400,000 3,191,864 630,471 1999 7,125,000 48,115,000 21,115,000 722,817 1,006,822 2000 6,970,000 47,370,000 23,595,000 715,443 819,113 2001 6,800,000 46,670,000 22,055,000 707,643 661,487 2002 28,515,000 45,915,000 33,205,000 955,643 476,544 2003 31,945,000 45,110,000 32,670,000 19,116,045 979,560 2004 31,735,000 44,255,000 32,155,000 21,014,344 1,058,092 2005 44,880,000 43,350,000 31,500,000 22,754,013 817,731 2006 44,550,000 42,345,000 30,830,000 24,940,778 572,389 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. ' The 1994 West Covina Public Financing Authority Water Revenue Bonds were defeased as of June 30, 2000 due to the sale of the City's water system. 2 These ratios are calculated using personal income and population for the prior calendar year. Source: City of West Covina Finance Department 144 1 i 1 1 1 1 1 1 1 Business -Type Activities Total Total Governmental .Certificates of Business -type Activities Participation Activities 79,142,191 23,535,000 23,535,000 82,892,335 22,795,000 22,795,000 78,084,639 21,995,000 21,995,000 79,469,556 21,150,000 21,150,000 76,894,130 20,260,000 20,260,000 109,067,187 - - 129,820,605 - - 130,217,436 - = 143,301,744 - - 143,238,167 - - 145 Table 11 Total Percentage Debt Primary of Personal Per r Government Income Z Capita', 2 102,677,191 4.13% 1,008 10507,335 4.05% 1,022 100,079,639 3.51% 955 100,619,556 3.38% 945 97,154,130 3.09% 903 109,067,187 3.28% 1,000 120,820,605 3.86% 1,190 130,217,436 3.75% 1,178 143,301,744 3.88% 1,286 143,238,167 3.45% 1,274 CITY OF WEST COVINA Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years (In Thousands, except Per Capita) Table 12 Fiscal Year Ended June 30 Lease Revenue Bonds Special Assessment Bonds Tax Allocation Bonds Total Percent of Assessed Value 1 Per Capita 1997 8,580 49,435 17,485 75,500 1.46% 84 1998 7,870 48,800 22,400 79,070 1.49% 76 1999 7,125 48,115 21,115 76,355 1.39% 68 2000 6,970 47,370 23,595 77,935 1.35% 65 2001 6,800 46,670 22,055 75,525 1.22% 63 2002 28,515 45,915 33,205 107,635 1.65% 262 2003 31,945 45,110. 32,670 109,725 1.58% 293 2004 31,735 44,255 32,155 108,145 1.45% 287 2005 44,880 43,350 31,500 119,730 1.51% 403 2006 44,550 42,345 30,830 117,725 1.35% 396 General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (of which, the City has none). ' Assessed value has been used because the actual value of taxable property is not readily.available in the State of California. Source: City of West Covina Finance Department and Los Angeles County Assessor's Office 146 CITY OF WEST COVINA Table 13 Direct and Overlapping Debt June 30, 2006 City Assessed Valuation $ 6,985,806 Redevelopment Agency Incremental Valuation 1,743,360 Total Assessed Valuation $ 8,729,166 ' Percentage Total Debt City's Share of Applicable I Debt 6/30/06 Debt Overlapping Tax and Assessment Debt: I Los Angeles County 0.760% $ 8,395,000 $ 63,802 Los Angeles County Flood Control District 0.787% 127,840,000 1,006,101 Metropolitan Water District . 0.384% 389,565,000 1,495,930 ' Mount San Antonio Community District College 13.133% 109,015,843 14,317,051 Baldwin Park Unified School District 0.403% 41,253,674 166,252 Bassett Unified School District . 0.037% 22,723,352 8,408 Covina Valley Unified School District 32.317% 44,185,000 14,279,266 Hacienda -La Puente Unified School District 1.606% 96,063,125 1,542,774 Rowland Unified School District 19.756% 60,508,249 11,954,010 Walnut Valley Unified School District 0.997% 85,387,670 851,315 West Covina Unified School District 94.060% 37,185,000 34,976,211 West Covina Community Facilities District No. 1989-1 100.000% 42,345,000 42,345,000 Los Angeles County Regional Park & Open Space Assessment District 0.760% 325,710,000 2,475,396 Total overlapping tax and assessment debt 1,390,176,913 125,481,516 Dirent and Overlapping General Fund Debt: Los Angeles County General Fund Obligations 0.760% $ 1,267,261,972 $ 9,631,191 Los Angeles County Pension Obligations 0.760% 737,082,395 5,601,826 Los Angeles County Superintendent of Schools Certificates of Participation 0.760% 21,784,577 165,563 Los Angeles County Sanitation Distrcit No. 15 Authority 2.256% 42,188,640 951,776 Los Angeles County Sanitation Distrcit No. 21 Authority 3.245% 24,866,958 . 806,933 ' Los Angeles County Sanitation Distrcit No. 22 Authority 21.102% 21,499,980 4,536,926 Baldwin Park Unified School District General Fund Obligations 0.403% 28,060,000 113,082 Covina Valley Unified School District Certificates of Participation 32.317% 16,621,000 1,372,701 Hacienda -La Puente Unified School District Certificates of Participation 1.606% 3,505,000 56,290 Walnut Valley Water District Authority 2.439% 15,055,000 367,191 Total gross direct and overlapping general fund debt 2,177,929,522 27,603,479 Less: LA. County Certificates of Participation (100% self-supporting from leasehold revenues on properties in Marina del Rey) 298,148 Less: Walnut Valley Water District Authority 367,191 ' Total net direct and overlapping general fund debt $ 26,938,140 City direct debt 143,238,167 ' Total direct and overlapping debt $ 170,176,307 1 GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT $ $ 153,084,995 z 152,419,656 1 Percentage of overlapping agency's assessed valuation located within boundaries of the city. ' 2 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded d. capital lease obligations. Source: California Municipal Statistics, Inc. 147 CITY OF WEST COVINA Legal Debt Margin Information Last Ten Fiscal Years (in thousands of dollars) Fiscal Year Total Net Assessed Valuation Total Net Debt Debt Limit Applicable to Limit Legal Debt Margin 1997 $4,321,300 $ 162,049 - 162,049 1998 $4,380,329 $ 164,262 - 164,262 1999 $4,509,610 $ 169,110 - 169,110 2000 $4,744,210 $ 177,908 - 177,908 2001 $4,916,996 $ 184,387 - 184,387 2002 $5,199,165 $ 194,969 - 194,969 2003 $5,524,621 $ 207,173 - 207,173 2004 $5,955,830 $ 223,344 - 223,344 2005 $6,344,377 $ 237,914 - 237,914 2006 $6,985,806 $ 261,968 261,968 Legal Debt Margin Calculation for Fiscal Year 2006: Assessed value $ 6,985,806 Debt limit (3.75% of assessed value) 261,968 Debt applicable to limit: G 1 bl" ' b d Table 14 Total Net Debt Applicable to Limit as a Percentage of Debt Limit 0.0% 0.0% 0.0%0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% enera o igation on s - Legal debt margin $ 261,968 The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). Although the statutory debt limit has not been amended by the State since this change, the percentages presented in the above computations have been proprtionately modified to 3.75% (25% of 15%) for the purpose of this calculation in order to be consistent with the computational effect of the debt limit at the time of the state's establishment of the limit. Source: City of West Covina Finance Department Los Angeles County Tax Assessor's Office 148 1 1 1 1 1 1 1 1 1 1 1 (This page intentionally left blank.) 149 CITY OF WEST COVINA Pledged -Revenue Coverage . Last Ten Fiscal Years (In Thousands) Lease Revenue Bonds and Certificates of Participation Fiscal Year Ended Debt Service June 30 Revenue Principal Interest Coverage 1997 $ 35,035 930 515 24.25 1998 32,188 1,740 1,561 9.75 1999 32,221 1,850 1,626 9.27 2000 34,391 1,325 1,531 12.04 2001 36,924 1,060 1,204 16.31 2002 36,237 1,110 1,156 15.99 2003 36,408 195 361 65.48 2004 36,793 210 597 45.59 2005 41,895 355 882 33.87 2006 46,950 375 1,310 27.86 Tax Allocation Bonds Fiscal Year Ended Tax Debt Service June 30 Increment Principal Interest Coverage _ 1997 $ 8,098 1,180 1,015 3.69 1998 7,922 1,230 956 3.62 1999 6,951 1,285 1,197 2.80 2000 8,176 1,465 1,157 3.12 2001 8,342 1,540 1,115 3.14 2002 9,577 1,615 1,192 3.41 2003 10,886 535 1,253 6.09 2004 11,956 515 1,391 6.27 2005 13,422 655 1,400 6.53 2006 15,221 670 1,458 7.15 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest or depreciation expenses. Source: City of West Covina Finance Department 150 1 1 1 1 1 1 1 1 Table 15 Assessment District Bond Fiscal Year Less Net Ended Operating Available Debt Service June 30 Revenue Expenses Revenue Principal Interest Coverage 1997 4,046 1,341 2,705 1,785 1,680 0.78 1998 6,894 4,264 2,630 635 2,856 0.75' 1999 3,780 1,399 2,381 685 2,827 0.68 2000 3,667 285 3,382 145 2,794 0.96'" 2001 3,195 1,169 2,026 700 2,759 0.59 '' 2002 5,214 1,210 4,004 755 2,722 1.151 2003 3,388 1,367 2,021 805 2,683' 0.58. 2004 4,643 1,017 3,626 855 2,642 1.04 2005 4,005 1,128 2,877 905 2,597 0.82 2006 3,831 739 3,092 1,005 2,548 0.87 151 CITY OF WEST COVINA Table 16 Demographic and Economic Statistics Last Ten Calendar Years Per Personal Capita Unemployment Calendar Population Income Personal Rate Year (1) (in thousands) (2) Income (3) (4) 1996 101,906 $ 2,487,322 $ 24,408 7.9% 1997 103,422 $ 2,610,268 $ 25,239 4.6% 1998 104,801 $ 2,852,683 $ 27,220 4.5% 1999 106,500 $ 2,979,125 $ 27,973 4.2% 2000 107,631 $ 3,146,269 $ 29,232 3.8% 2001 109,029 $ 3,325,712 $ 30,503 4.2% 2002 109,083 $ 3,362,811 $ 30,828 3.9% 2003 110,515 $ 3,475,918 $ 31,452 4.6% 2004 111,404 $ 3,696,273 $ 33,179 3.8% 2005 112,417 $ 4,150,098 $ 36,917 4.8% Sources: (1) U.S. Department of Census and State Department of Finance (2) Estimated by multiplying population by per capita income. (3) Bureau of Economic Analysis. Used per capita income of Los Angeles - County # 06037. The per capita personal income for 2005 is preliminary data for Metropolitan Statistical Area of Los Angeles- Long Beach -Santa Ana, CA. (4) State of California Employment Development Department 152 1 1 1 1 i 1 1 1 1 1 1 1 1 1 1 CITY OF WEST COVINA ii Table 17 Principal Employers Current Year and Nine Years Ago 1997 2006 JI Percent of Percent of Number of Total Number of Total Employer Employees Employment Employees Employment Queen of the Valley'Campus 1,591 3.02% WC Unified School District _ 985 1.87% City of West Covina 504 0.96% S G V Newspaper Group 327 0.62% it Robinsons- May Data was not. available at time 283 0 . n54% Target Store #T1028 of printing. 263 0.5 I00 % i Sear Roebuck and Company 228 0.43% Macy's 225 0.42% J C Penney Corp Inc #1505-7 223 4.20% II Penske Motorcars 221 0.66% i' Note: "Total Employment" as used above represents the total employment i� j i of all employers. locatedil within City limits. Source: Labor Market Info, EDD, State of California City of West Covina Business License section II II 0 153 CITY OF WEST COVINA . Full-time and Part-time City Employees by Function Last Seven Fiscal Years Function General government Public safety Public works Community services Community development Total Table 18 Full -Time and Part-time Employees as of June 30 2000 2001 2002 2003 2004 2005 2006 37 40 39 47 44 43 44 282 286 291 295 297 297 296 94 81 82 81 81 79 79 75 71 70 71. 65 66 63 21 22 21 23 23 22 22 510 500 502 517 511 : 507 504 Source: City of West Covina Finance Department 154 1 1 1 1 1 1 1 1 1 1 1 1 1 (This page intentionally left blank.) 155 Police: Total arrests Calls for Police service ' Fire Emergency responses Fire inspections Public works: Building permits issued Street resurfacing (miles) Community Services Recreation class registrations Environmental Management Graffiti sites cleaned CITY OF WEST COVINA Operating Indicators by Function Last Ten Fiscal Years Fiscal Year 1997 1998 - 1999 2000 2001 5,229 5,028 4,903 4,402 4,327 67,700 69,843 72,311 72,450 92,200 7,205 6,310 6,419 6,476 6,479 3,080 2,278 2,311 2,395 2,391 2,872 3,240 3,240 2,680 2,800 N/A 2,100 1,800 2,300 2,800 N/A 4,208 4,208 4,500 6,744 ' 1997 to 2000 reflect all calls that generated a police response to the scene of the call; 2001 through 2006 reflect all calls received that generated an incident number, not necessarily a police response. N/A -- Not available at time of printing Source: City of West Covina Finance Department 156 i 1 1 2002 2003 Fiscal Year 2004 2005 Table 19 2006 1 4,183 3,701 3,837 3,852 3,491 1 95,546 93,822 95,654 89,340 80,049 6,717 7,179 7,080 7,122 7,057 ' 2,391 3,350 3,350 3,819 3,122 1 3,079 3,510 3,830 3,798 4,250 2,500 2,400 3,617 3,950 4,342 7,077 7,767 8,055 8,055 9,600 1 - 1 157 CITY OF WEST COVINA Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 1997 1998 1999 2000 2001 Police: Stations 1 1 1 1 1 Fire: Fire stations 5 5 5 5 5 Public works: Streets (miles) 230.00 230.00 230.00 230.00 230.00 Streetlight poles 826 826 826 826 826 Streelight fixtures 1,109 1,109 1,109 1,109 1,109 Traffic signals 112 113 113 113 113 Parks and recreation: Parks 15 15 15 15 15 Community centers 4 4 4 4 4 City water department ' Number of consumers 7,002 7,002 7,002 - - Average daily consumption 6,100,000 6,100,000 6,100,000 - - Water mains (miles) 80.30 80.30 80.30 - - Wastewater: Sanitary sewers (miles) 233.00 233.00 233.00 233.00 233.00 Storm sewers (miles) 42.00 42.00 42.00 42.00 42.00 ' The Water department was sold in FY 1999-2000 Source: City of West Covina 158 Table -20 i iFiscal Year 2002 2003 2004 2005 2006 i 1 1 1 1 1 i 5 5 5 5 5 230.00 230.00 230.00 230.00 230.00 826 826 826 826 826 1,109 1,109 1,109 1,109 1,109 ! 113 113 113 113 114 15 15 15 15 16 ! 4 4 4 4 4 233.00 233.00 233.00 233.00 233.00 42.00 42.00 42.00 42.00 42.00 ! i ! u i 159 ! 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