CITY OF MARTINEZ, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2005
Prepared by
ADMINISTRATIVE SERVICES DEPARTMENT
CITY OF MARTINEZ
Comprehensive Annual Financial Report
For the Year Ended June 30, 2005
Page
INTRODUCTORY SECTION:
Table of Contents ............................................................................................................................... ........................ i
Letter of Transmittal.................................................................................................................... .............................. v
Key Personnel ............................................................................................................................... .......................... xii
Organization Chart ............................................................................................................................... .................. xiii
Location Map ............................................................................................................................... .......................... xiv
CSMFO Award ............................................................................................................................... ........................ xv
GFOA Award.......................................................................................................................... ............................... xvi
FINANCIAL SECTION:
Independent Auditor’s Report on Basic Financial Statements.............................................................................. 1
Management’s Discussion and Analysis ................................................................................................................. 3
Basic Financial Statements:
Government- wide Financial Statements:
Statement of Net Assets......................................................................................................................... 18
Statement of Activities ........................................................................................................................... 19
Fund Financial Statements:
Governmental Funds:
Balance Sheet.......................................................................................................................... ........... 22
Reconciliation of the Governmental Funds – Fund Balance
with the Governmental Activities Statement of Net Assets........................................................... 23
Statement of Revenues, Expenditures, and Changes in Fund Balances ............................................ 24
Reconciliation of the Net Change in Fund Balances Total Governmental
Funds with the Change in Governmental Net Assets.................................................................... 25
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual:
General Fund........................................................................................................................... ..... 26
CITY OF MARTINEZ
Comprehensive Annual Financial Report
For the Year Ended June 30, 2005
Page
FINANCIAL SECTION ( Continued):
Basic Financial Statements ( Continued)
Proprietary Funds:
Statement of Net Assets ........................................................................................................................... 28
Statement of Revenue, Expenses and Changes in Net Assets Net Assets .............................................. 29
Statement of Cash Flows.......................................................................................................................... 30
Fiduciary Funds:
Statement of Fiduciary Net Assets .......................................................................................................... 32
Statement of Changes in Fiduciary Net Assets....................................................................................... 33
Notes to Financial Statements ........................................................................................................................ 35
Supplemental Information:
Non- major Governmental Funds:
Combining Balance Sheets...................................................................................................................... 62
Combining Statements of Revenues, Expenditures, and Changes
in Fund Balances....................................................................................................................... ......... 64
Combining Schedule of Revenues, Expenditures, and Changes
in Fund Balances- Budget and Actual................................................................................................ 66
Internal Service Funds:
Combining Statement of Net Assets ....................................................................................................... 70
Combining Statements of Revenues, Expenses and Changes in Net Assets.......................................... 71
Combining Statements of Cash Flows .................................................................................................... 72
Fiduciary Funds:
Statement of Changes in Assets and Liabilities – All Agency Funds .................................................... 74
CITY OF MARTINEZ
Comprehensive Annual Financial Report
For the Year Ended June 30, 2005
Page
STATISTICAL SECTION:
General Governmental Revenues by Source – All Governmental Fund Types ...................................... 75
General Governmental Expenditures by Function - All Governmental Fund Types .............................. 76
Property Tax Levies and Collections ........................................................................................................ 77
Assessed and Estimated Actual Value of Taxable Property .................................................................... 78
Property Tax Rates – Direct and Overlapping Governments .................................................................. 79
Computation of Legal Debt Margin.......................................................................................................... 80
Computation of Direct and Overlapping Debt.......................................................................................... 81
Population for Last Ten Years .................................................................................................................. 82
Property Values and Construction ........................................................................................................... 83
Water Fund Certificates of Participation Debt Service Coverage............................................................ 84
Top 20 Sales Tax Generators .................................................................................................................. 85
Top 20 Property Tax Generators ............................................................................................................. 86
Miscellaneous Statistics..................................................................................................................... ....... 87
The City operates under the Council- Manager form of government. The City Manager is
responsible for the efficient implementation of Council policy and the effective administration of
all City government affairs. The City is organized into four departments reporting directly to the
City Manager; they are Administrative Services, Building, Community Development, and Police.
Governmental Structure, Local Economic Condition and Outlook
The City provides a full range of services including police protection, community development,
recreation activities, parks and street maintenance, water utilities and general administration.
The City’s General Fund supports most of these services. It is the primary reporting entity for
general government operations of the City of Martinez. It accounts for all financial resources not
required by law or administrative action to be accounted for in another fund. The General Fund
is the City’s largest operating fund.
General Fund revenues, including transfers in, totaled $ 16,524,939 in fiscal 2004- 05, an increase
of 7.9% from the prior fiscal year with taxes representing 80% of the total General Fund
revenues, or $ 13,221,884. Other revenue sources that comprised the remaining 20% of General
Fund revenues included licenses, permits and fees, intergovernmental, charges for services, fines
and forfeits, use of money and property, and miscellaneous.
The City’s enterprise operations consist of the Parking Services, Water System, and Marina
Services funds. Revenue to the Parking Services Fund is generated from meter collections and
citations, and expenditures represent enforcement and meter maintenance activities. The City’s
only parking district is the main downtown area. The Martinez Water System provides a reliable
supply of high quality potable water in sufficient quantity to meet the needs of Martinez
residents and businesses. The safety of the water and the health of the community are ensured
through the use of advanced technology, proper water treatment, water quality analysis,
treatment plant maintenance, backflow prevention, and the maintenance of the water distribution
system. The water system operates much in the same way as a private business. Revenues
generated by the Martinez Water System are deposited into the Water System Fund. A private
contractor operates the full- service Martinez Marina, with oversight by City staff and the Marina
Commission. The City is moving forward to establish a long- term lease arrangement to provide
for the Marina’s financial stability and ensure that the facility is available for the enjoyment of
Marina users.
Despite the State’s continuing dependence on local revenues to fill the gap in its operating
budget, the City’s revenues in 2004- 05 exceeded projections by $ 390,075. The approval by
voters of Proposition 1A in November 2004 is expected to protect local agencies from future
local revenue shifts by the State. The Triple Flip tax swap imposed by the State in 2004- 05 has
reduced the sales tax and vehicle license fee revenues the City receives, and replaced them with
additional property tax revenue. The General Fund ended fiscal year 2004- 05 with an
unreserved and undesignated fund balance of $ 5.4 million.
Unemployment rates in the East Bay continue to decline and outpace the State and national
averages. As of May 2005, the national and State unemployment rates were 4.9% and 5.0%,
respectively, with the rate in Contra Costa County significantly lower at only 4.4%. According
to the June 2005 Economic Development Alliance for Business Newsletter, the East Bay has
actually gained 10,700 workers since January 2001 despite the massive exodus of tech jobs
following the market crash. Economists generally agree that the housing market will cool as
mortgage rates rise, and the cost of materials increases, which in turn will result in a slowdown
in the construction employment sector. The Bay Area remains the most expensive place to live
in the United States, and the cost of housing is the single most important factor driving the cost
of living. However, a slowdown in the housing market would likely lead to tepid overall growth
in the next few years.
At the national level, the impact of Hurricane Katrina is still uncertain. Gas prices spiked from
already inflated rates after the disaster hit, with little relief in sight as the winter months approach
and demand for natural gas increases. The Fed raised interest rates for the 11th consecutive time
on September 20, 2005 in hopes of staving off inflationary pressures, and more rate hikes are
expected in the near term. Commercial banks responded by raising the prime rate – seen as the
benchmark for millions of consumer and business loans – to 6.75%, its highest point in more
than 4 years. As the cost of borrowing rises, many economists forecast a gradual cool down in
the housing market. Cash from mortgage refinancing has helped bolster the retail markets for the
past 3 years, but without large influxes of capital from this source, consumer spending is likely to
decline. As such, tepid economic growth is expected by the second half of 2006.
There are certain trends in California city finances. State and Federal aid to California cities has
declined from 21% of a typical city’s budget in 1974- 75 to 10% today. The sales tax base is
declining due to a shift toward a service- oriented economy and increasing internet and catalog
retail sales. Public safety spending has increased since September 11, 2001, and infrastructure
improvements and maintenance are lagging.
Local governments are committed to contributing $ 1.3 billion in additional property tax shifts in
2005- 06 to help the State balance its budget. The City’s share is $ 399,000. This amount is in
addition to the ongoing ERAF property tax shifts occurring since 1992- 93 from local
governments, which help the State meet its constitutional requirement to fund schools. Through
2004- 05, the City has lost $ 17,022,000 in these ERAF shifts. In addition, some funding to cities
for special programs not covered by Proposition 1A has been cut, deferred or suspended,
including proposed borrowing from Proposition 42 revenues in 2005- 06; deferral and suspension
of some State mandates; and elimination of funding for booking fees.
As the City looks to the future, it strives to develop and diversify its economy without
compromising those things that make it unique. The continued development of the downtown
and Marina areas are crucial elements of the City’s long- term economic strategy. Finding ways
to preserve the City’s rich history to the community’s advantage could also help the City attract
more investors and visitors. The City is intent upon accomplishing these and other strategic
goals. Martinez’ economic outlook, despite the turbulence of the past few years and the
tremendous challenges that loom on the horizon, remains one of optimism for an auspicious
future.
Major Initiatives and Objectives
Enhancements to Public Safety. The City completed several initiatives to strengthen public
safety. In support of “ Megan’s Law”, the City placed information on its website regarding the
general location of all sex offenders registered within the City of Martinez. Providing this
information via the website allows citizens the convenience of accessing it from their homes
instead of having to visit the Police Department. The City initiated a Cell Phones for Seniors
Program to supply cellular telephones to senior citizens unable to afford them for use in the event
of an emergency. This program enables the Martinez Police Department to collect donated cell
phones, configure them so they can dial 9- 1- 1 in case of an emergency, and distribute the phones
to seniors. Over 150 seniors in the community have taken advantage of this program. The
Martinez Police Department, in conjunction with Mothers Against Drunk Drivers ( M. A. D. D.),
entered into a program of increased patrols that focus specifically on drunk drivers and follow- up
monitoring of those charged with drunk driving. The City also implemented a Gunlock Safety
Program. Every year, many children are victims of serious injury and death as a result of playing
with loaded firearms. As an additional security measure to help ensure that a tragedy does not
occur, the City implemented a program to provide free gunlocks to all interested citizens.
Approximately 1,500 gunlocks have been supplied to residents through the program by the
Martinez Police Department.
Hiring of Full- time Economic Development Director. The City continued its commitment to
economic development and downtown revitalization by hiring a full- time Economic
Development Director. This position is tasked with new business recruitment and promotion;
revitalization of the downtown area; community coordination; and other special projects.
Additionally, the Economic Development Director now reports directly to the City Manager, a
reflection of the importance of this program to the City.
Fees Analysis/ Cost of Services and Cost Allocation Study. The City completed Phase II of its
Fees Analysis, a Cost of Services and Cost Allocation Study, in April 2005. After a series of
public workshops and public hearings, new fees for Building, Engineering, Planning, and Police
services were implemented in June 2005. New fees for Recreation services are scheduled to be
implemented later in the year.
Indoor Performing Arts Center at 636 Ward Street. As part of the City’s ongoing promotion
and expansion of the arts in Martinez, the City arranged to lease a downtown building for use by
the Willows Theatre Company as a performing arts center. Conversion of the space to
accommodate live theater is already underway, with the first live performances scheduled to
begin in December 2005.
ABC’s “ Extreme Makeover: Home Edition” Show. When a local family was selected from
among thousands of applicants to receive a new home, the City not only gave its approval but
also dedicated significant staff time to the project. The coordinated efforts of the City,
representatives from the show, hundreds of community volunteers, and a local construction firm
helped make the family’s dream a reality in only one week’s time. The final product was one of
the community’s proudest moments of the year.
Implementation of New Placarding Law. The City strengthened its Unreinforced Masonry
Program by implementing State Assembly Bill 2533. This bill requires owners of unreinforced
masonry buildings to post a warning sign at the building’s entrance. The new law is intended to
warn passers by and patrons that the building may be unsafe in the event of an earthquake. The
new placards are required to be posted until the building has been adequately reinforced.
Employee Safety Program. The City continued to emphasize its employee safety program.
Injury rates decreased by 25% from the prior year, and the City became the first agency in the
Risk Management Municipal Pooling Authority to receive the third level safety program award.
As a result of the City’s improved workers’ compensation claims experience, the City will
realize savings next fiscal year in its insurance premium.
Marina Enhancements. Significant work was performed during the past year on two long- term
projects, the boat launch ramp and the Ferry Plaza improvements. Utilizing an $ 855,000 grant
secured from the Department of Boating and Waterways, the boat launch ramp was raised to help
alleviate flooding that took place during the high winter tides. The work at the plaza included a
new sheet pile wall topped by a shiny new railing, providing the perfect vantage point to view
the boats in the Marina. Pavers now replace the rough gravel that was once between the parking
lot and the water’s edge. New site furnishings including benches, trashcans and additional
seating are now evident throughout the plaza, with a map and historical, environmental, and
directional signs still to come. The sheet pile wall and plaza improvements were funded through
two grants from the California Coastal Conservancy in the amounts of $ 287,500 and $ 500,000,
respectively.
Marina Request for Proposals and Lease. The City issued an RFP for a long- term lease for the
Marina to find a Developer/ Operator. The process was successful, and the City Council selected
Pacific Marina Development/ Almar Marinas. The City Council approved the terms for a long-term
lease that includes an entitlement period of two years. At the end of the entitlement period,
the agreement will convert into a full 45 year agreement.
Alhambra Avenue Improvement Project. The City secured Measure C funding for the Alhambra
Avenue Improvement Project and completed the Project Study Report. The project, slated to
begin construction by June 2006, consists of improvements from Highway 4 south to MacAlvey
Drive. Features of the project include a sidewalk constructed from Forest Hills to John Swett
Elementary School; a new coordinated traffic signal system; extra turn lanes at Alhambra Valley
Road; sound walls to control traffic noise; and various landscaping enhancements.
Financial Information
Accounting System and Budgeting Controls. In developing and evaluating the City's
accounting system, consideration is given to the accuracy of internal accounting control. Internal
accounting controls are designed to provide reasonable assurance regarding the safeguarding of
assets against loss from unauthorized use or disposition, the accuracy and reliability of
accounting data and the adherence to prescribed managerial policy. The concept of reasonable
assurance recognizes that the cost of control should not exceed benefits likely to be derived and
the evaluation of costs and benefits requires estimates and judgments by management.
The City’s accounting and budgeting records for the basic financial statements in this report
conform to generally accepted accounting principles according to standards established by the
Governmental Accounting Standards Board.
The City maintains extensive budgetary controls. The City’s Annual Budget provides the overall
control of its revenues and expenditures. The City’s accounting system produces monthly
reports on expenditures and encumbrance activity that assist Department Heads in managing
their activities and programs. These reports are also reviewed by the Administrative Services
Director and by the Finance Manager to assure budgetary compliance.
As a recipient of federal, state, and county financial assistance, the City is responsible for
ensuring that an adequate control structure is in place to comply with applicable laws and
regulations related to those programs. This internal control structure is subject to periodic
evaluation by management and the finance staff of the City.
Debt Administration. The City generally incurs long- term debt to finance projects or purchase
assets that will have useful lives equal to or greater than the related debt.
The General Long- term Obligations Account Group provides accounting control over the
principal of the City’s general long- term debt. This debt will be repaid only out of governmental
funds, but is not accounted for in these funds because this debt does not require an appropriation
or expenditure in this accounting period. The City’s long- term obligations are reported in the
Statement of Net Assets.
Proprietary Fund ( Enterprise and Internal Service) long- term debt is maintained in the
proprietary fund that will repay the debt because the City accounts for these funds on a full-accrual
basis in a manner similar to that of commercial operations.
Bond premiums, discounts, and issuance costs are recognized during the period of issuance for
governmental- fund types. Bond proceeds are reported as another financing source net of the
applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds
received, are reported as debt service expenditures. For proprietary- fund types, the bond
premiums, discounts, and issuance costs are deferred and amortized over the life of the bonds
using the effective interest method. Bonds payable are reported net of the applicable bond
premium or discount. Issuance costs are reported as deferred charges. The City’s primary
General Long- term Obligations consist of Certificates of Participation from 1992, which was
refunded in March of 2003. This debt is explained in detail in Note 7 to the Financial
Statements.
Cash Management Policies and Practices. The City’s investment policy is to minimize credit
and market risks while maintaining an optimal yield on its portfolio. Bank deposits are either
insured by the Federal Government or collateralized. All collateral on deposits were held either
by the City or its agent in the City’s name. Idle cash is primarily invested in the State of
California Local Agency Investment Fund ( LAIF). The City earned interest income of $ 452,722
on its investments.
City of Martinez Key Personnel
June 30, 2005
City Council
Rob Schroder, Mayor
Bill Wainwright, Vice Mayor
Lara DeLaney, Councilmember
Janet Kennedy, Councilmember
Mark Ross, Councilmember
Council Appointees
June Catalano, City Manager
Elected Officials
Gary Hernandez, City Clerk
Carolyn Robinson, City Treasurer
City Staff
Lianne Marshall, Administrative Services Director
Richard Pearson, Community Development Director
David Scola, Building Director
Dave Cutaia, Chief of Police
CITY OF MARTINEZ
Citizens of Martinez
City Clerk ( elected)
Administration
Personnel
Finance
Information Systems
Admin Services Dept
Building Permits/ Inspections
Code Enforcement
Construction Management
Solid Waste
Building Dept Economic Development
Administration
Planning
Public Works
Water System
Parking Services
CIP
Engineering
Marina
Senior Center
Recreation and Community Services
Community Development Dept
Administrative Services
Investigative Services
Support Services
Traffic Enforcement
Field Services
Emergency Services
Police Dept
City Manager
City Council ( elected) City Treasurer ( elected)
AREA MAP
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City of Martinez
MANAGEMENT’S DISCUSSION AND ANALYSIS
Governmental Accounting Standards Board Statement 34, “ Basic Financial Statements--- and
Management’s Discussion & Analysis--- for Local Governments” ( GASB 34) requires the City to
provide this overview of its financial activities for the fiscal year, and should be read in
conjunction with the accompanying Transmittal Letter and Basic Financial Statements.
FISCAL 2005 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
City- wide Activities:
• The City’s total net assets were $ 76,888,998 at June 30, 2005, down $ 808,894 from the prior
year. Of this total, $ 37,622,310 were Governmental assets and $ 39,266,688 were Business-type
assets.
• Total City revenues were $ 30,845,276 in Fiscal 2005. General Revenues and Transfers,
which result from both Governmental and Business- type Activities, totaled $ 14,918,390.
Program Revenues from the Governmental Activities were $ 4,841,970, and Program
Revenues from the Business- type Activities were $ 11,084,916.
• Total City expenses were $ 31,654,170 in Fiscal 2005. Program Expenses from the
Governmental Activities were $ 20,630,503, and Program Expenses from the Business- type
Activities were $ 11,023,667.
General Fund Activities:
• General Fund revenues of $ 16,524,939 in Fiscal 2005 represented an increase of $ 1,774,639
from the prior year. General Fund expenditures of $ 15,632,133 in Fiscal 2005 represented an
increase of 1,188,243 over the prior year expenditures.
• General Fund balance of $ 9,747,335 at June 30, 2005 was $ 514,276 higher than Fiscal
2004’ s fund balance of $ 9,233,059.
OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
This Comprehensive Annual Financial Report is in six parts:
1) Introductory section, which includes the Transmittal Letter and general information,
2) Management’s Discussion and Analysis ( this part),
3) The Basic Financial Statements, which include the City- wide and the Fund financial
statements, along with the Notes to these financial statements,
4) Required Supplemental Information,
5) Combining Statements for Non- major Governmental Funds and Fiduciary Funds,
6) Statistical information.
The Basic Financial Statements
The Basic Financial Statements comprise the City- wide Financial Statements and the Fund
Financial Statements; these two sets of financial statements provide two different views of the
City’s financial activities and financial position both long term and short term. The Fiduciary
Funds are excluded from the Basic Financial Statements because the City cannot use these assets
to finance its own operations.
The City- wide Financial Statements provide a longer- term view of the City’s activities as a
whole, and comprise the Statement of Net Assets and the Statement of Activities. The Statement
of Net Assets provides information about the financial position of the City in its entirety,
including all its capital assets and long- term liabilities on the full accrual basis, similar to that
used by corporations. The Statement of Activities provides information about all the City’s
revenues and all its expenses, also on the full accrual basis, with the emphasis on measuring net
revenues or expenses of each of the City’s programs. The Statement of Activities explains in
detail the Change in Net Assets for the year.
The City- wide Financial Statements group all the City’s activities into Governmental Activities
and Business- type Activities, as explained below. All the amounts in the Statement of Net
Assets and the Statement of Activities are separated into Governmental Activities and Business-type
Activities in order to provide a summary of these two activities of the City as a whole.
The Fund Financial Statements report the City’s operations in more detail than the City- wide
statements and focus primarily on the short- term activities of the City’s General Fund and other
Major Funds. The Fund Financial Statements measure only current revenues and expenditures,
current assets, liabilities and fund balances; they exclude capital assets, long- term debt and other
long- term obligation amounts.
Major Funds account for the major financial activities of the City and are presented individually,
while the activities of Non- major Funds are presented in summary, with subordinate schedules
presenting the detail for each of these other funds. Major Funds are explained below.
The City acts solely as a depository agent for various community groups and functions, as well
as an Assessment District. The fiduciary statements provide information about the cash balances
and activities of these functions. These statements are separate from, and their balances are
excluded from, the City’s financial statements.
The City- wide Financial Statements
The Statement of Net Assets and the Statement of Activities present information about the
following:
• Governmental Activities— All of the City’s basic services are considered to be governmental
activities, including general government; community development; public safety; public
works; recreation, parks, and community services; public improvements; building inspection
and code enforcement; planning and zoning; and general administration services. These
services are supported by general City revenues such as taxes, and by specific program
revenues such as mitigation/ impact fees.
• Business- type Activities— The City’s three enterprise activities, Parking Services, Water
System, and Marina Services are reported here. Unlike governmental services, these services
are supported through charges paid by users based on the amount of the service they use.
Citywide Financial Statements are prepared on the accrual basis, which means they measure the
flow of all economic resources of the City as a whole.
Fund Financial Statements
The Fund Financial Statements provide detailed information about each of the City’s most
significant funds, called Major Funds. The concept of Major Funds, and the determination of
which are Major Funds, was established by GASB Statement 34 and replaces the concept of
combining like funds and presenting them in total. Instead, each Major Fund is presented
individually, with all Non- major Funds summarized and presented only in a single column.
Subordinate schedules present the detail of these Non- major Funds. Major Funds present the
major activities of the City for the year, and may change from year to year as a result of changes
in the pattern of the City’s activities.
Fund Financial Statements include governmental, enterprise and internal service funds as
discussed in the following:
Governmental Fund Financial Statements are prepared on the modified accrual basis, which
means they measure only current financial resources and uses. Capital assets and other long-lived
assets, along with long- term liabilities, are not presented in the Governmental Fund
Financial Statements.
Enterprise and Internal Service Fund financial statements are prepared on the full accrual basis,
as in the past, and include all their assets and liabilities, current and long- term.
Since the City’s Internal Service Funds are proprietary funds used by the City to account for the
financing of goods and services provided by one department or agency to other departments or
agencies of the City on a cost- reimbursement basis, their activities are reported only in total at
the Fund level. Internal Service Funds may not be Major Funds because their revenues are
derived from other City funds. These revenues are eliminated in the City- wide Financial
Statements and any related profits or losses are returned to the activities that created them, along
with any residual net assets of the Internal Service Funds.
Comparisons of Budget and Actual financial information are presented only for the General
Fund and other Major Funds that are Special Revenue Funds.
Fiduciary Statements
The City is the agent for one assessment district, the Alhambra Creek Special Assessment
District, and is responsible for holding amounts collected from property owners that await
transfer to the District’s bond trustees. The City is also an agent for certain community
organizations, for which it collects and disburses cash and maintains separate cash accounts. The
City’s fiduciary activities are reported in the separate Statements of Fiduciary Net Assets and the
Agency Funds Statement of Changes in Assets and Liabilities. As previously mentioned, these
activities are excluded from the City’s other financial statements because the City cannot use
these assets to finance its own operations.
FINANCIAL ACTIVITIES OF THE CITY AS A WHOLE
This analysis focuses on the net assets and changes in net assets of the City’s Governmental
Activities ( Tables 1, 2 and 3) and Business- type Activities ( Tables 4 and 5) presented in the
City- wide Statement of Net Assets and Statement of Activities that follow.
Governmental Activities
Table 1
Governmental Net Assets at June 30, 2005
Governmental Activities
2005 2004
Cash and investments $ 15,831,027 $ 17,081,638
Other assets 2,857,444 2,931,925
Capital assets 25,006,061 25,634,010
Total Assets 43,694,532 45,647,573
Long- term debt outstanding 2,005,000 2,200,000
Other Liabilities 4,067,222 4,573,004
Total Liabilities 6,072,222 6,773,004
Net assets:
Invested in capital assets, net of debt 23,001,061 23,434,010
Restricted 1,968,361 1,860,177
Unrestricted 12,652,888 13,580,382
Total Net Assets $ 37,622,310 $ 38,874,569
The City’s net assets from governmental activities decreased $ 1,252,259 in 2005 from
$ 38,874,569 in 2004. This decrease is the Change in Net Assets reflected in the Statement of
Activities, as shown in Table 2, and is explained below:
• Cash and investments decreased from fiscal year 2004 by $ 1,250,611 due primarily to the
completion of major construction projects such as the Bay Trail and street paving.
• Other non- capital assets decreased $ 74,481 primarily due to a reduction in inventory.
• Capital assets decreased $ 627,949, net of depreciation charges, with normal depreciation
more than offsetting additions in construction in progress and equipment.
• Long- term debt declined $ 195,000 as no new debt was issued in fiscal 2005 and principal
payments were made to reduce existing debt.
• Net assets invested in capital assets net of related debt decreased $ 432,949 to
$ 23,001,061 as assets depreciated and new project expenditures were limited as discussed
above.
• Restricted net assets are composed of $ 791,717 in Capital Projects, $ 520,880 in Special
Revenue Projects and $ 655,764 in Debt Service.
• Unrestricted net assets are normally the part of net assets that can be used to finance day-to-
day operations without constraints established by debt covenants or other legal
requirements. Unrestricted net assets were $ 12,652,888 at June 30, 2005 a decrease of
$ 927,494 largely due to the completion of construction projects.
Fiscal Year 2005 Government Activities ( see Table 2)
As the Sources of Revenue Chart shows, $ 5,603,872 or 29% of the City’s Fiscal 2005
Governmental Activities revenue came from property taxes, $ 4,605,311 or 23% came from other
taxes and $ 3,012,701 or 15% came from sales tax. The remaining $ 6,156,360 or 33% came
primarily from operating contributions and grants, and charges for services.
The Functional Expenses Chart includes only current year expenses, which are discussed in
detail below. The largest expenses were in Community Development which accounted for
$ 8,871,098 or 43%, followed by Police with $ 8,579,502 or 42%. The remaining $ 3,161,903 or
15% was spread fairly evenly among General Government, Building, Administrative Services
and Nondepartmental, with interest on long term debt amounting to less than 1%.
Expenses do not include capital outlays, which are now added to the City’s capital assets. In
Fiscal 2005, the City’s capital assets decreased $ 627,949 as shown in detail in Table 7.
Sources of Revenue
Charges for Services
11%
Operating Grants &
Contributions
10%
Investment Earnings
1%
Capital Grants and
Contributions
4%
Rents and Leases
1%
Property Taxes
29%
Sales Taxes
15%
Other Taxes
23%
Transfers
1%
Miscellaneous
1%
Intergovernmental
4%
Administrative Services
3%
Interest on Long Term
Debt
0%
Community
Development Dept
43%
Nondepartmental
Services
3%
General Government
5% Building
4%
Police
42%
Functional Expense
The Statement of Activities presents program revenues and expenses and general revenues in
detail. All of these are elements in the Changes in Governmental Net Assets are summarized
below.
Table 2
Changes in Governmental Net Assets
Table 2 shows that governmental expenses were $ 20,630,503 in Fiscal 2005, up $ 1,753,584 from
the prior year, as increases in Nondepartmental services, Administrative Services, Building,
Community Development and Police expenses were partially offset by declines in General
government and interest expense.
Total government activities revenues of $ 19,378,244 were up by $ 876,262 in 2005, as an
increase in general revenues of $ 1,377,083 offset a decrease of $ 500,821 in program revenues.
Governmental Activities
Table 3 presents the net cost of each of the City’s largest programs. Net expense is defined as
total program cost less the revenues generated by those specific activities. In the City’s case, the
net expenses of community development and building varied significantly from the total
expenses in Table 2. Overall, program revenues reduced program expenses by an average of
23.5% of total expenses. The City’s program revenues include developer fees, plan check fees,
Governmental Activities
2005 2004
Expenses
General government $ 1,064,838 $ 1,361,712
Nondepartmental services 602,262 583,170
Administrative services 611,904 597,450
Building 821,956 742,330
Community development 8,871,098 7,673,229
Police 8,597,502 7,852,448
Interest on LTD 60,943 66,580
Total expenses 20,630,503 18,876,919
Revenues
Program revenues:
Charges for services 2,146,907 1,703,266
Operating contributions & grants 1,896,096 2,365,301
Capital grants 798,967 1,274,224
Total program revenues 4,841,970 5,342,791
General revenues:
Property tax 5,603,872 5,072,317
Sales tax 3,012,701 3,683,973
Other taxes 4,605,311 2,167,772
Intergovernmental 881,895 1,762,251
Investment earnings 267,746 199,788
Rents and leases 124,181 63,389
Miscellaneous 158,568 19,701
Total general revenues 14,654,274 12,969,191
Total revenues 19,496,244 18,311,982
Changes in net assets, before transfers ( 1,134,259) ( 564,937)
Transfers ( 118,000) 190,000
Change in net assets ($ 1,252,259) ($ 374,937)
building inspection, traffic fines, recreation fees, police fees, grants, assessment revenues, and
other charges for services.
Table 3
Governmental Activities
Community Development experienced the largest variance in net expenses between Fiscal 2005
and 2004 with an increase of $ 1,927,599. The difference was due to a decrease in grant funding
and Measure C funding, coupled with an increase in capital expenditures. The Police
Department’s net expenses increased $ 644,067 due to an increase of expenses with functional
revenues remaining virtually the same. General Government net expenses decreased $ 319,369
due to reduced expenditures in 2005 over 2004.
Table 4
Business- type Net Assets at June 30, 2005
Business- type Activities
2005 2004
Cash and investments $ 8,772,508 $ 8,799,029
Other assets $ 2,626,334 $ 2,633,760
Capital assets 44,093,611 44,034,365
Total Assets 55,492,453 55,467,154
Long- term debt outstanding 14,500,680 15,286,586
Other Liabilities 1,725,085 1,357,245
Total Liabilities 16,225,765 16,643,831
Net assets:
Invested in capital assets, net of debt 30,894,163 31,622,821
Restricted 492,014 478,686
Unrestricted 7,880,511 6,721,816
Total Net Assets $ 39,266,688 $ 38,823,323
Net ( Expense) Revenue
From Services
2005 2004
Governmental Activities:
Police ( 7,480,527) ( 6,836,460)
Community development ( 5,814,759) ( 3,887,160)
General government ( 929,537) ( 1,248,906)
Administrative services ( 611,904) ( 597,450)
Nondepartmental services ( 602,262) ( 583,170)
Building ( 288,601) ( 314,402)
Interest on long term debt ( 60,943) ( 66,580)
Total Governmental Activities ( 15,788,533) ( 13,534,128)
Business- type activities net assets totaled $ 39,266,688 at June 30, 2005, an increase of $ 443,365
from the prior year. Most of the increase in net assets was due to a reduction in long term debt
with principal payments on bonds totaling $ 440,000.
Table 5
Changes in Business- type Net Assets
Table 5 shows that the Business- type expenses were $ 11,023,667 in Fiscal 2005, down slightly
from the prior year.
Total Business- type revenues of $ 11,467,032 were up by $ 2,676,270 in 2005, with an increase in
program revenues of $ 2,392,394 and $ 283,876 in general revenues. Most of the program
revenue increase was due to $ 1,404,646 in grant funds from the Department of Boating and
Waterways for the Marina and a rate increase in the Water System Fund. Most of the increase in
general revenues was in transfers.
Table 6
Business- type Activities
Business- type Activities
2005 2004
Expenses
Water System $ 10,019,095 $ 10,088,366
Marina Services 472,205 470,175
Parking Services 532,367 547,454
Total expenses 11,023,667 11,105,995
Revenues
Program revenues:
Charges for services 9,680,270 8,692,522
Operating contributions & grants 0 0
Capital grants 1,404,646 0
Total program revenues 11,084,916 8,692,522
General revenues:
Taxes 56,769 62,306
Investment earnings 184,977 139,026
Rents and leases 22,370 25,231
Miscellaneous 0 61,677
Total general revenues 264,116 288,240
Total revenues 11,349,032 8,980,762
Change in net assets, before
transfers 325,365 ( 2,125,233)
Transfers 118,000 ( 190,000)
Change in net assets $ 443,365 ($ 2,315,233)
Net ( Expense) Revenue
From Services
2005 2004
Business- type Activities:
Water System ($ 777,906) ($ 1,692,597)
Marina Services 1,098,521 ( 342,567)
Parking Services ( 259,366) ( 378,309)
Total Business- type Activities $ 61,249 ($ 2,413,473)
THE CITY’S FUND FINANCIAL STATEMENTS
Governmental Funds
At June 30, 2005, the City’s governmental funds reported a combined fund balance of
$ 13,678,458, which is a decrease of $ 510,204, or 3.6%, compared with the prior year. The
General Fund accounted for a $ 514,276 increase, but this was more than offset by decreases in
Capital Improvements of $ 1,138,431 and Non- major Funds of $ 113,951.
Governmental fund revenues increased $ 1,079,532 to a total of $ 19,439,023. Non- major Fund
revenues decreased $ 554,100 and Capital Improvements decreased by $ 141,007, while General
Fund revenues increased by $ 1,774,639. Governmental fund expenditures increased $ 2,118,843
to a total of $ 19,831,227. General Fund expenses increased $ 1,188,243, Capital Improvements
increased $ 886,961 and Non- major Fund expenditures increased $ 43,639. Other financing
sources decreased $ 308,000.
ANALYSES OF MAJOR GOVERNMENTAL FUNDS
General Fund
General Fund revenues increased overall by $ 1,774,639 this fiscal year due primarily to
increases in Taxes of $ 1,926,558. These increases were partially offset by a decline in
Intergovernmental revenue of $ 439,613. These two revenue sources were changed by the State’s
implementation of the “ Triple Flip” in 2005. Prior to Fiscal 2005, cities received 1% of sales tax
revenue based on a point of sale formula. As of July 1, 2004, the State reduced the local
allocation by 25% and replaced the reduction with a dollar- for- dollar allocation of local property
tax, referred to as “ Sales Tax in Lieu.” At the same time, the State reduced the allocation cities
received in Motor Vehicle Tax from 2% to .67% of market value, and replaced it with a new
revenue source referred to as the “ Property Tax Swap,” an allocation that grows with property
taxes. The difference between Taxes and Intergovernmental was primarily the result of the shift
of $ 1,092,420 in Motor Vehicle Tax from Intergovernmental to Taxes as a result of the Property
Tax Swap; increases in property taxes of $ 531,555 ( due to the rise in assessed valuations); and
increases in sales tax, including Sales Tax in Lieu, of $ 86,960. These revenue increases were
partially offset by the first year of a two- year $ 399,067 ERAF III payment to the State. Other
revenue increases were in Licenses, Permits and Fees, which were up by $ 124,550 due to the rise
in construction. Fines & Forfeitures were up by $ 63,303 over last fiscal year primarily due to an
increase in parking citations with the installation of the new downtown parking meters. Use of
Money and Property increased $ 98,389, with $ 91,364 in interest earned over the prior year.
Actual revenues exceeded budgeted amounts by $ 390,075 or 2.4%, with taxes comprising
$ 229,215 of the increase.
General Fund expenditures increased overall but were less than originally budgeted.
Expenditures, including transfers out, increased $ 175,180 in Fiscal 2005 to a total of
$ 16,010,663. Transfers out of the General Fund decreased $ 1,363,423 in Fiscal 2005 to
$ 378,530. The transfers were mostly the result of the City Council’s decisions to use $ 250,000
for paving projects and $ 100,000 for open space slide repairs.
Although the final expenditures for the General Fund at year- end were $ 516,495, or 3.2% below
budget, the fiscal year ended with encumbrances of $ 228,618. Budget amendments and
supplemental appropriations of $ 787,386 were made during the year to increase appropriations
for unanticipated expenditures after adoption of the original budget.
At June 30, 2005, the General Fund balance was comprised of $ 573,040 in reserved balances and
$ 9,174,295 in unreserved balances, of which $ 3,738,017 was designated by Council for certain
purposes as referred to in Note 10C of the financial statements. Only the unreserved portion
represents available liquid resources, since the reserved portion is represented by non- cash assets
or by open purchase orders.
Capital Improvement Fund
The Capital Improvement Fund accounts for major City capital improvement projects. The Fund
is budgeted on a project length basis and therefore is not comparable on an annual basis.
Revenue received in 2005 included funding for projects from the Association of Bay Area
Governments, CDBG and Contra Costa County in the amount of $ 695,767. Another $ 642,213 in
funding came from in transfers from General Fund, Gas Tax revenue, NPDES grants and Park
Land Dedication fees. The Fund also received $ 299,509 in mitigation fees. Total revenue
received, including transfers in, was 36% less than the prior year. Expenditures, including
transfers out, for Fiscal 2005 were up $ 541,606 from 2004. In 2005, work was done on several
capital projects, including $ 1,369,126 in street projects, $ 54,414 on handicap access ramps, and
$ 904,199 on Bay Trail I and II projects which included construction of pedestrian and bicycle
trails.
Other Governmental Funds
These funds are not presented separately in the Basic Financial Statements, but are individually
presented as Supplemental Information.
Internal Service Funds
Internal Service Funds are proprietary funds used by the City to account for the financing of
goods or services provided by one department or agency to other departments or agencies of the
City on a cost- reimbursement basis. The City’s Internal Service Funds are the Equipment
Replacement Fund and the Management Information System ( MIS) Fund.
• Equipment Replacement Fund— Costs for the Equipment Replacement Fund are considered
to be “ direct costs” that are readily identifiable with a specific service. The Equipment
Replacement Fund charges departments equipment and vehicle rates based on value and
overall maintenance costs.
• Management Information System ( MIS) Fund— Costs for the MIS Fund are considered to be
“ indirect costs” that are not easily associated with a specific service. These costs are
distributed by both number of workstations and overall use of technology.
Enterprise Funds
Enterprise Funds are used to account for operations ( a) that are financed and operated in a
manner similar to private business enterprises, where the intent of the City is that the costs and
expenses, including depreciation, of providing goods or services to the general public on a
continuing basis be financed or recovered primarily through user charges; or ( b) which the City
has decided that periodic determination of revenue earned, expenses incurred, and/ or net income
is appropriate for capital maintenance, public policy, management control, accountability, or
other purposes. The City’s Enterprise Funds include Parking Services, Water System, and
Marina Services and are described below:
• Parking Services— Parking Services Fund revenue is generated from parking meters.
Operating revenues increased $ 103,856 this year to a total of $ 273,001 due to the installation
of new meters. Operating expenses decreased by $ 63,031 to $ 481,768; this decrease was
attributable to a parking study that was completed in 2004. Non- operating expense increased
by $ 58,815 due to a loss on disposal of the old meters. Net assets of $ 1,157,662 decreased by
$ 215,698 due to the purchase of the new parking meters. $ 389,614 of the Parking Services
Fund’s fiscal year end Net Assets was unrestricted. Future revenue is expected to continue to
grow due to the installation of the new parking meters.
• Water System— The Water System Fund is financed and operated in a manner similar to that
of a private business. Net assets of the Water System Fund decreased $ 619,430 in the current
year compared to a $ 1,516,882 decline in fiscal year 2004. Late in Fiscal 2004, the City
increased water rates, resulting in an increase in revenue of $ 838,882 while expenses
increased only $ 100,018. Additionally, there was a $ 24,553 decrease in non- operating
expenses and a $ 51,035 increase in operating revenues. At June 30, 2005, the Fund’s Net
Assets were $ 40,454,328, with $ 30,126,115 invested in capital assets and $ 492,014 restricted
for debt service. Only $ 9,836,199 of the Fund’s Net Assets was unrestricted at June 30,
2005. Due to the age of the Water System, significant investments will be required in future
years to enhance security and update water lines and equipment.
• Marina Services— Marina Fund revenues include lease payments, charges for services,
property taxes, and State grants for capital improvement projects. The Marina Fund incurred
an operating loss of $ 191,364 in the current year, mostly due to the amortization of dredging
the Marina; however, the loss was less than the $ 228,276 loss from the prior year. Operating
revenues increased $ 33,889 due to the repair of the launch ramp, which increased charges for
services, while operating expenses decreased slightly by $ 3,023. The Fund’s Net Assets
increased a total of $ 1,191,355, with a $ 1,227,904 increase in capital assets due to
construction of the boat launch ramp and Ferry Plaza improvements.
CAPITAL ASSETS
GASB 34 requires the City to record all of its capital assets including infrastructure, which was
not recorded in prior years. Infrastructure includes roads, bridges, signals and similar assets used
by the entire population.
In accordance with GASB 34, in Fiscal 2003, the City recorded the cost of all its infrastructure
assets and computed the amount of accumulated depreciation for these assets based on their
original acquisition dates.
At the end of Fiscal 2005, Governmental Activities had $ 25,006,061 and Business- type
Activities had $ 44,093,611, net of depreciation, invested in a broad range of capital assets as
shown in Table 7 below:
Table 7
Capital Assets at Year- end
The City depreciates all its capital assets over their estimated useful lives, as required by GASB
34. The purpose of depreciation is to spread the cost of a capital asset over the years of its life so
that an allocable portion of the cost of the asset is borne by all users. Additional information on
capital assets and depreciable lives may be found in Note 6.
June 30, 2005 June 30, 2004
Governmental Activities
Land $ 4,978,951 $ 4,978,951
Construction in progress 578,022 285,872
Building and improvements 4,706,879 4,706,879
Equipment 4,178,518 3,939,280
Infrastructure 35,638,966 35,638,966
Less accumulated depreciation ( 25,075,275) ( 23,915,938)
Totals $ 25,006,061 $ 25,634,010
Business- Type Activities
Land $ 1,665,154 $ 1,665,154
Construction in progress 1,553,568 336,798
Building and improvements 16,621,758 16,621,758
Equipment 1,816,199 1,590,643
Infrastructure 87,196,002 87,170,105
Less accumulated depreciation ( 64,759,070) ( 63,350,093)
Totals $ 44,093,611 $ 44,034,365
DEBT ADMINISTRATION
Each of the City’s debt issues is discussed in detail in Note 7 to the financial statements.
Debt Service Funds are used to account for the accumulation of resources for and the payment of
general long- term debt principal, interest and related costs ( other than those paid for by the
Enterprise Funds). In March 2003, the City issued Certificates of Participation ( COPs) in the
amount of $ 2,200,000 to refund and retire the outstanding 1992 proceeds that were used to
finance the rehabilitation and expansion of the Martinez City Hall.
The Water Fund has two outstanding debt issues. In 1999 and 2003, the City issued Certificates
of Participation ( COPs) in the amounts of $ 6,040,000 and $ 5,595,000, respectively. COP
proceeds were used to finance improvements to the Water Plant.
The following table represents the City’s debt as of June 30, 2005:
Table 8
Outstanding Debt
June 30, 2005 June 30, 2004
Governmental Activity Debt
General Long- Term Debt
2003 Certificates of Participation $ 2,005,000 $ 2,200,000
Notes Payable, California Energy Commission 0 0
Total governmental activity debt $ 2,005,000 $ 2,200,000
Business- Type Activity Debt
Water Fund Long- Term Debt
1999 Water System Improvements $ 5,630,000 $ 5,775,000
2003 Refinancing Project 5,010,000 5,305,000
Total principal $ 10,640,000 $ 11,080,000
Marina Long- term Debt, including accrued interest
1960 State of California $ 2,483,527 $ 2,458,026
1973 State of California 311,523 311,523
1978 State of California 157,623 157,623
1982 State of California 370,071 370,071
1985 State of California 987,936 987,937
Total Marina Fund debt $ 4,310,680 $ 4,285,180
Total business- type activity debt $ 14,950,680 $ 15,365,180
SPECIAL ASSESSMENT DISTRICT DEBT
A special assessment district in the City has also issued debt to finance infrastructure and
facilities construction for that district. No special assessment debt was issued in Fiscal 2005.
At June 30, 2005, a total of $ 1,050,000 in special assessment district debt was outstanding,
issued by one special assessment district. This debt is secured only by special assessments on
the real property in the district issuing the debt, and is not the City’s responsibility, although the
City does act as these Districts’ agent in the collection and remittance of assessments.
ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The economy of the City and its major initiatives for the coming year are discussed in detail in
the accompanying Transmittal Letter.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Comprehensive Annual Financial Report is intended to provide citizens, taxpayers,
investors, and creditors with a general overview of the City’s finances. Questions about this
Report should be directed to the Administrative Services Department, at 525 Henrietta Street,
Martinez, CA 94553.
CITY OF MARTINEZ
STATEMENT OF NET ASSETS
AND STATEMENT OF ACTIVITIES
The Statement of Net Assets and the Statement of Activities summarize the entire City’s financial activities
and financial position. They are prepared on the same basis as is used by most businesses, which means they
include all the City’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the
full accrual basis— the effect of all the City’s transactions is taken into account, regardless of whether or when
cash changes hands, but all material internal transactions between City funds have been eliminated.
The Statement of Net Assets reports the difference between the City’s total assets and the City’s total
liabilities, including all the City’s capital assets and all its long- term debt. The Statement of Net Assets
presents similar information to the old balance sheet format, but presents it in a way that focuses the reader on
the composition of the City’s net assets, by subtracting total liabilities from total assets.
The Statement of Net Assets summarizes the financial position of all the City’s Governmental Activities in a
single column, and the financial position of all the City’s Business- Type Activities in a single column; these
columns are followed by a Total column that presents the financial position of the entire City.
The City’s Governmental Activities include the activities of its General Fund, along with all its Special
Revenue, Capital Projects and Debt Service Funds. Since the City’s Internal Service Funds service these
Funds, their activities are consolidated with Governmental Activities, after eliminating inter- fund transactions
and balances. The City’s Business- type Activities include all its Enterprise Fund activities.
The Statement of Activities reports increases and decreases in the City’s net assets. It is also prepared on the
full accrual basis, which means it includes all the City’s revenues and all its expenses, regardless of when cash
changes hands. This differs from the “ modified accrual” basis used in the Fund financial statements, which
reflect only current assets, current liabilities, available revenues and measurable expenditures.
The format of the Statement of Activities presents the City’s expenses first, listed by program, and follows
these with the expenses of its business- type activities. Program revenues— that is, revenues which are
generated directly by these programs— are then deducted from program expenses to arrive at the net expense
of each governmental and business- type program. The City’s general revenues are then listed in the
Governmental Activities or Business- type Activities column, as appropriate, and the Change in Net Assets is
computed and reconciled with the Statement of Net Assets.
Both these Statements include the financial activities of the City and the Martinez Public Improvement
Corporation, which is legally separate but is a component unit of the City because it is controlled by the City,
which is financially accountable for the activities of this entity.
CITY OF MARTINEZ
STATEMENT OF NET ASSETS
JUNE 30, 2005
Governmental Business- Type
Activities Activities Total
ASSETS
Cash and investments ( Note 3):
Available for operations $ 15,451,865 $ 8,280,494 $ 23,732,359
With fiscal agents 379,162 492,014 871,176
Receivables ( net of allowance for uncollectible)
Accounts and other 260,285 1,401,771 1,662,056
Intergovernmental 1,151,492 880,522 2,032,014
Interest 182,785 182,785
Loans receivable ( Note 5) 262,010 22,920 284,930
Internal balances ( Note 4) 973,537 ( 973,537)
Prepaids and inventory ( Note 1 H) 27,335 27,335
Bond issuance costs, net of amortization 1,294,658 1,294,658
Capital assets ( Note 6):
Land and construction in progress 5,556,973 3,218,722 8,775,695
Depreciable assets, net 19,449,088 40,874,889 60,323,977
Total Assets 43,694,532 55,492,453 99,186,985
LIABILITIES
Accounts payable 512,980 481,105 994,085
Accrued wages and benefits and compensated absences -
within one year ( Note 1G) 571,032 111,537 682,569
Deposits 1,228,952 73,997 1,302,949
Deferred revenue 315,047 393,091 708,138
Claims payable due within one year ( Note 14) 80,000 80,000
Accrued interest 49,728 49,728
Accrued compensated absences due in more than one year ( Note 1 G) 1,359,211 165,627 1,524,838
Long- term debt ( Notes 7 and 8):
Due within one year 200,000 450,000 650,000
Due in more than one year 1,805,000 14,500,680 16,305,680
Total Liabilities 6,072,222 16,225,765 22,297,987
NET ASSETS ( Note 10)
Invested in capital assets, net of related debt 23,001,061 30,894,163 53,895,224
Restricted for:
Capital projects 791,717 791,717
Debt service 655,764 492,014 1,147,778
Special revenue projects 520,880 520,880
Total Restricted Net Assets 1,968,361 492,014 2,460,375
Unrestricted 12,652,888 7,880,511 20,533,399
Total Net Assets $ 37,622,310 $ 39,266,688 $ 76,888,998
See accompanying notes to financial statements
CITY OF MARTINEZ
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2005
Net ( Expense) Revenue and
Program Revenues Changes in Net Assets
Operating Capital
Charges for Grants and Grants and Governmental Business- type
Functions/ Programs Expenses Services Contributions Contributions Activities Activities Total
Governmental Activities:
General government $ 1,064,838 $ 123,738 $ 11,563 ($ 929,537) ($ 929,537)
Nondepartmental services 602,262 ( 602,262) ( 602,262)
Administrative services 611,904 ( 611,904) ( 611,904)
Building 821,956 533,355 ( 288,601) ( 288,601)
Community development 8,871,098 1,032,160 1,225,212 $ 798,967 ( 5,814,759) ( 5,814,759)
Police 8,597,502 457,654 659,321 ( 7,480,527) ( 7,480,527)
Interest on long term debt 60,943 ( 60,943) ( 60,943)
Total Governmental Activities 20,630,503 2,146,907 1,896,096 798,967 ( 15,788,533) ( 15,788,533)
Business- type Activities:
Water System 10,019,095 9,241,189 ($ 777,906) ( 777,906)
Marina Services 472,205 166,080 1,404,646 1,098,521 1,098,521
Parking Services 532,367 273,001 ( 259,366) ( 259,366)
Total Business- type Activities 11,023,667 9,680,270 1,404,646 61,249 61,249
Total $ 31,654,170 $ 11,827,177 $ 1,896,096 $ 2,203,613 ( 15,788,533) 61,249 ( 15,727,284)
General revenues:
Property taxes 5,603,872 5,603,872
Sales taxes 3,012,701 3,012,701
Other taxes 4,605,311 56,769 4,662,080
Intergovernmental 881,895 881,895
Investment earnings 267,746 184,977 452,723
Rents and leases 124,181 22,370 146,551
Miscellaneous 158,568 158,568
Transfers ( Note 4) ( 118,000) 118,000
Total general revenues and transfers 14,536,274 382,116 14,918,390
Change in Net Assets ( 1,252,259) 443,365 ( 808,894)
Net Assets- Beginning 38,874,569 38,823,323 77,697,892
Net Assets- Ending $ 37,622,310 $ 39,266,688 $ 76,888,998
See accompanying notes to financial statements
FUND FINANCIAL STATEMENTS
GASB 34 revises the format of the Fund Financial Statements so that only individual major funds are
presented, while non- major funds are combined in a single column. Major funds are defined generally as
having significant activities or balances in the current year.
MAJOR GOVERNMENTAL FUNDS
The funds described below are determined to be Major Funds by the City in Fiscal 2005. Individual non-major
funds may be found in the Supplemental section.
GENERAL FUND
The General Fund is used for all the general revenues of the City not specifically levied or collected for other
City funds and the related expenditures. The General Fund accounts for all financial resources of a
governmental unit which are not accounted for in another fund.
CAPITAL IMPROVEMENTS
To account for the funds spent and revenue received for various capital projects within the City.
CITY OF MARTINEZ
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2005
Other Total
Capital Governmental Governmental
General Improvements Funds Funds
ASSETS
Cash and investments ( Note 3):
Available for operations $ 10,219,611 $ 1,683,440 $ 1,566,086 $ 13,469,137
With fiscal agents 379,162 379,162
Receivables
Accounts 245,671 245,671
Intergovernmental 554,567 418,716 178,209 1,151,492
Other
Interest 182,785 182,785
Loans receivable ( Note 5) 262,010 262,010
Prepaids and inventory 27,335 27,335
Due from other funds ( Note 4) 806,938 806,938
Advances to other funds ( Note 4) 209,251 209,251
Total Assets $ 12,246,158 $ 2,364,166 $ 2,123,457 $ 16,733,781
LIABILITIES
Accounts payable $ 381,957 $ 55,989 $ 51,848 $ 489,794
Accrued wages and benefits 544,177 544,177
Compensated absences 17,033 17,033
Claims payable ( Note 14) 80,000 80,000
Deposits 1,209,109 19,843 1,228,952
Due to other funds ( Note 4) 83,405 83,405
Deferred revenue 266,547 262,010 83,405 611,962
Total Liabilities 2,498,823 317,999 238,501 3,055,323
FUND BALANCES
Fund balance ( Note 10)
Reserved for:
Debt service 655,764 655,764
Prepaids and inventory 27,335 27,335
Special events 80,200 80,200
Police grants 23,633 105,328 128,961
Petty cash 1,175 1,175
Advances to other funds 209,251 209,251
Grants 2,828 2,828
Encumbrances 228,618 42,699 271,317
Unreserved, Reported in:
General Fund 9,174,295 9,174,295
Special Revenue Funds 940,575 940,575
Capital Projects Funds 2,046,167 140,590 2,186,757
Total Fund Balances 9,747,335 2,046,167 1,884,956 13,678,458
Total Liabilities and Fund Balances $ 12,246,158 $ 2,364,166 $ 2,123,457 $ 16,733,781
See accompanying notes to financial statements
CITY OF MARTINEZ
Reconciliation of the
GOVERNMENTAL FUNDS -- FUND BALANCE
with the
GOVERNMENTAL ACTIVITIES STATEMENT OF NET ASSETS
JUNE 30, 2005
Total fund balances reported on the governmental funds balance sheet $ 13,678,458
Amounts reported for Governmental Activities in the Statement of Net Assets
are different from those reported in the Governmental Funds above because of the following:
CAPITAL ASSETS
Capital assets used in Governmental Activities are not current assets or financial resources and
therefore are not reported in the Governmental Funds. 23,892,898
ALLOCATION OF INTERNAL SERVICE FUND NET ASSETS
Internal Service Funds are not governmental funds. However, they are used by management to
charge the costs of certain activities, such as insurance and central services and maintenance
to individual governmental funds. The net current assets of the Internal Service Funds are therefore
included in Governmental Activities in the following line items in the Statement of Net Assets.
Cash and investments 1,982,728
Interest and other 14,614
Internal balances 40,753
Capital assets 1,113,163
Accounts payable ( 23,186)
Accrued liabilities ( 9,822)
Accrued compensated absences ( 12,685)
Deferred revenue ( 48,500)
ACCRUAL OF NON- CURRENT REVENUES AND EXPENSES
Revenues which are deferred on the Fund Balance Sheets because they are not available currently
are taken into revenue in the Statement of Activities. 345,415
LONG TERM ASSETS AND LIABILITIES
The assets and liabilities below are not due and payable in the current period and therefore are not
reported in the Funds:
Long- term debt ( 2,005,000)
Non- current portion of compensated absences ( 1,346,526)
NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 37,622,310
See accompanying notes to financial statements
CITY OF MARTINEZ
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2005
Other Total
Capital Governmental Governmental
General Improvements Funds Funds
REVENUES
Taxes $ 13,221,884 $ 13,221,884
Special assessments $ 654,028 654,028
Licenses, permits, and fees 480,275 $ 299,509 779,784
Intergovernmental 1,415,980 744,104 949,766 3,109,850
Charges for services 706,670 706,670
Fines and forfeits 294,715 38,360 333,075
Use of money and property 263,164 19,038 26,607 308,809
Miscellaneous 142,251 31,850 150,822 324,923
Total Revenues 16,524,939 1,094,501 1,819,583 19,439,023
EXPENDITURES
Current:
General government 827,226 827,226
Nondepartmental services 602,262 602,262
Administrative services 596,296 596,296
Building 763,635 763,635
Community development 4,547,174 1,322,248 1,090,328 6,959,750
Police 8,295,540 294,245 8,589,785
Debt service
Principal 195,000 195,000
Interest and fiscal charges 60,943 60,943
Capital outlay 1,236,330 1,236,330
Total Expenditures 15,632,133 2,558,578 1,640,516 19,831,227
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES 892,806 ( 1,464,077) 179,067 ( 392,204)
OTHER FINANCING SOURCES ( USES)
Transfers in ( Note 4) 642,213 222,747 864,960
Transfers ( out) ( Note 4) ( 378,530) ( 316,567) ( 287,863) ( 982,960)
Total Other Financing Sources ( Uses) ( 378,530) 325,646 ( 65,116) ( 118,000)
NET CHANGE IN FUND BALANCES 514,276 ( 1,138,431) 113,951 ( 510,204)
BEGINNING FUND BALANCES 9,233,059 3,184,598 1,771,005 14,188,662
ENDING FUND BALANCES $ 9,747,335 $ 2,046,167 $ 1,884,956 $ 13,678,458
See accompanying notes to financial statements
CITY OF MARTINEZ
Reconciliation of the
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the Change in
GOVERNMENTAL NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2005
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current
liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the
Statement of Activities, which is prepared on the full accrual basis.
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS ($ 510,204)
Amounts reported for governmental activities in the Statement of Activities
are different because of the following:
CAPITAL ASSETS TRANSACTIONS
Governmental Funds report capital outlays as expenditures. However,
in the Statement of Activities the cost of those assets is capitalized and allocated over
their estimated useful lives and reported as depreciation expense.
The capital outlay expenditures are therefore added back to fund balance 292,150
Depreciation expense is deducted from the fund balance
( Depreciation expense is net of internal service fund depreciation
of $ 338,874 which has already been allocated to serviced funds) ( 1,020,111)
LONG TERM DEBT PROCEEDS AND PAYMENTS
Bond proceeds provide current financial resources to governmental funds, but
issuing debt increases long- term liabilities in the Statement of Net Assets.
Repayment of bond principal is an expenditure in the governmental funds, but
in the Statement of Net Assets the repayment reduces long- term liabilities.
Repayment of debt principal is added back to fund balance 195,000
ACCRUAL OF NON- CURRENT ITEMS
The amounts below included in the Statement of Activities do not provide or ( require) the use of
current financial resources and therefore are not reported as revenue or expenditures in
governmental funds ( net change):
Deferred revenue ( 5,767)
Compensated absences ( 7,914)
ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal Service Funds are used by management to charge the costs of certain activities,
such as equipment acquisition, maintenance, and insurance to individual funds.
The portion of the net revenue ( expense) of these Internal Service Funds arising out
of their transactions with governmental funds is reported with governmental activities,
because they service those activities.
Change in Net Assets - All Internal Service Funds ( 195,413)
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES ($ 1,252,259)
See accompanying notes to financial statements
CITY OF MARTINEZ
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2005
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts ( Negative)
REVENUES:
Taxes 10,384,901 $ 12,992,669 $ 13,221,884 $ 229,215
Licenses, permits, and fees 320,177 304,077 480,275 176,198
Intergovernmental 2,872,374 1,295,206 1,415,980 120,774
Charges for services 539,376 541,011 706,670 165,659
Fines and forfeits 326,620 371,958 294,715 ( 77,243)
Use of money and property 303,876 303,959 263,164 ( 40,795)
Miscellaneous 130,059 325,984 142,251 ( 183,733)
Total Revenues 14,877,383 16,134,864 16,524,939 390,075
EXPENDITURES:
Current:
General government 838,037 859,647 827,226 32,421
Nondepartmental services 725,602 616,965 602,262 14,703
Administrative services 635,378 639,568 596,296 43,272
Building 743,348 801,570 763,635 37,935
Community development 4,603,473 4,934,795 4,547,174 387,621
Police 7,875,404 8,296,083 8,295,540 543
Total Expenditures 15,421,242 16,148,628 15,632,133 516,495
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES ( 543,859) ( 13,764) 892,806 906,570
OTHER FINANCING SOURCES ( USES)
Transfers ( out) ( 368,000) ( 378,500) ( 378,530) ( 30)
Total other financing sources ( uses) ( 368,000) ( 378,500) ( 378,530) ( 30)
EXCESS ( DEFICIENCY) OF REVENUES AND OTHER
SOURCES OVER EXPENDITURES AND OTHER USES ( 911,859) ( 392,264) 514,276 906,540
BEGINNING FUND BALANCES 9,233,059 9,233,059 9,233,059
ENDING FUND BALANCES $ 8,321,200 $ 8,840,795 $ 9,747,335 $ 906,540
See accompanying notes to financial statements
MAJOR PROPRIETARY FUNDS
Proprietary funds account for City operations financed and operated in a manner similar to a private business
enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through
user charges.
The concept of major funds established by GASB Statement 34 extends to Proprietary Funds. The City has
identified the funds below as major proprietary funds in Fiscal 2005. Individual non- major funds may be
found in the Supplemental section.
GASB 34 does not provide for the disclosure of budget vs. actual comparisons regarding proprietary funds
that are major funds.
WATER SYSTEM FUND
To account for the funds received from customers receiving water service provided by the City and the related
expenditures for administration; system improvements, maintenance and repairs; and debt service for issues
related to the provision of water to the customers.
MARINA SERVICES FUND
To account for the operations at the municipal marina.
PARKING SERVICES FUND
To account for the activities related to the various parking lots in the downtown area, including parking meters
and shuttle services.
CITY OF MARTINEZ
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2005
Business- type Activities- Enterprise Funds Governmental
Activities-
Parking Internal Service
Water System Marina Services Services Totals Funds
ASSETS
Current Assets:
Cash and investments ( Note 3):
Available for operations $ 7,881,666 $ 1,948 $ 396,880 $ 8,280,494 $ 1,982,728
With fiscal agent 492,014 492,014
Receivables:
Accounts and other 1,401,473 298 1,401,771 14,614
Intergovernmental 880,522 880,522
Interest
Total Current Assets 9,775,153 882,768 396,880 11,054,801 1,997,342
Capital Assets ( Note 6):
Land 630,912 800,165 234,077 1,665,154
Buildings 15,335,900 252,929 15,588,829
Improvements 787,807 245,122 1,032,929
Equipment 1,301,625 514,574 1,816,199 3,007,827
Infrastructure 87,196,002 87,196,002
Less: Accumulated depreciation ( 63,756,641) ( 776,704) ( 225,725) ( 64,759,070) ( 1,894,664)
40,707,798 1,064,197 768,048 42,540,043 1,113,163
Construction in progress ( Note 6) 58,317 1,495,251 1,553,568
Net Capital Assets 40,766,115 2,559,448 768,048 44,093,611 1,113,163
Other Non Current Assets:
Loan receivable ( Note 5) 22,920 22,920
Bond issuance costs, net 1,294,658 1,294,658
Total Assets 51,858,846 3,442,216 1,164,928 56,465,990 3,110,505
LIABILITIES
Current liabilities
Accounts payable 405,053 68,786 7,266 481,105 23,186
Accrued liabilities 111,537 111,537 9,822
Deferred revenue 393,091 393,091 48,500
Deposits 32,573 41,424 73,997
Due to other funds ( Note 4) 723,533 723,533
Accrued interest 49,728 49,728
Current portion of long term debt ( Note 7) 450,000 450,000
Total Current Liabilities 1,048,891 1,226,834 7,266 2,282,991 81,508
Noncurrent Liabilities:
Accrued compensated absences ( Note 1G) 165,627 165,627 12,685
Advance from other funds ( Note 4) 209,251 209,251
Long term debt ( Note 7) 10,190,000 10,190,000
Loans payable ( Note 8) 4,310,680 4,310,680
Total Liabilities 11,404,518 5,746,765 7,266 17,158,549 94,193
Invested in capital assets,
net of related debt 30,126,115 768,048 30,894,163 1,113,163
Restricted for debt service 492,014 492,014
Unrestricted 9,836,199 ( 2,304,549) 389,614 7,921,264 1,903,149
Total Net Assets ( Deficit) $ 40,454,328 ($ 2,304,549) $ 1,157,662 39,307,441 $ 3,016,312
Some amounts reported for business- type activities in the Statement of Net Assets are different
because certain internal service fund assets and liabilities are included with business- type activities. ( 40,753)
Net assets business- type activities $ 39,266,688
See accompanying notes to financial statements
NET ASSETS ( Note 10)
CITY OF MARTINEZ
PROPRIETARY FUNDS
STATEMENT OF REVENUE, EXPENSES
AND CHANGES IN FUND NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2005
Business- type Activities- Enterprise Funds Governmental
Activities-
Parking Internal Service
Water System Marina Services Services Totals Funds
OPERATING REVENUES
Water sales $ 8,718,295 $ 8,718,295
Rents and leases $ 141,060 141,060
Charges for services 521,860 25,020 $ 273,001 819,881 $ 1,230,687
Other fees 1,034 1,034
Refunds and rebates 274
Total Operating Revenues 9,241,189 166,080 273,001 9,680,270 1,230,961
OPERATING EXPENSES
Filtration plant 4,115,012 4,115,012
Maintenance, repair, and distribution 1,817,680 88,517 273,718 2,179,915 1,063,351
Administration 1,641,272 109,038 131,595 1,881,905
Depreciation and amortization 2,067,107 159,889 76,365 2,303,361 338,874
Total Operating Expenses 9,641,071 357,444 481,678 10,480,193 1,402,225
Operating Income ( Loss) ( 399,882) ( 191,364) ( 208,677) ( 799,923) ( 171,264)
NONOPERATING REVENUES ( EXPENSES)
Interest income 172,118 1,766 11,093 184,977 40,244
Interest ( expense) ( 457,036) ( 114,761) ( 571,797)
Rents and leases 22,370 22,370
Loss on disposal of equipment ( 58,815) ( 58,815) 22,744
Taxes 16,068 40,701 56,769
Total Nonoperating Revenues ( Expenses) ( 262,548) ( 96,927) ( 7,021) ( 366,496) 62,988
Income ( Loss) Before Transfers ( 662,430) ( 288,291) ( 215,698) ( 1,166,419) ( 108,276)
Transfers in ( Note 4) 43,000 75,000 118,000
Net transfers 43,000 75,000 118,000
Contributions- Intergovernmental 1,404,646 1,404,646
Change in net assets ( 619,430) 1,191,355 ( 215,698) 356,227 ( 108,276)
BEGINNING NET ASSETS ( DEFICIT) 41,073,758 ( 3,495,904) 1,373,360 3,124,588
ENDING NET ASSETS ( DEFICIT) $ 40,454,328 ($ 2,304,549) $ 1,157,662 $ 3,016,312
Some amounts reported for business- type activities in the Statement of Activities are different because the
portion of the net income of certain internal service funds is reported with the business- type activities 87,138
which those funds service
Change in net assets of business- type activities $ 443,365
See accompanying notes to financial statements
CITY OF MARTINEZ
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2005
Business- type Activities- Enterprise Funds
Governmental
Activities-
Parking Internal Service
Water System Marina Services Services Totals Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 9,362,792 $ 166,096 $ 273,001 $ 9,801,889 $ 1,264,847
Payments to suppliers ( 6,400,224) ( 133,445) ( 414,455) ( 6,948,124) ( 784,884)
Payments to employees ( 1,209,736) ( 1,209,736) ( 295,464)
Cash Flows from Operating Activities 1,752,832 32,651 ( 141,454) 1,644,029 184,499
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Rent and lease payments received 22,370 22,370
Taxes received 16,068 40,701 56,769
Interfund receipt 723,533 723,533
Transfers in 43,000 75,000 118,000
Cash Flows from Noncapital Financing Activities 65,370 814,601 40,701 920,672
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Advances from other funds ( 10,629) ( 10,629)
Received from other governments 524,124 524,124
Acquisition of capital assets ( 647,911) ( 1,387,793) ( 435,614) ( 2,471,318) ( 472,089)
Proceeds from sale of equipment 139,081 139,081 55,948
Principal payments on capital debt ( 440,000) ( 440,000)
Interest paid ( 458,288) ( 89,261) ( 547,549)
Cash Flows from Capital and Related Financing Activities ( 1,407,118) ( 963,559) ( 435,614) ( 2,806,291) ( 416,141)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest 198,157 2,022 14,890 215,069 48,039
Cash Flows from Investing Activities 198,157 2,022 14,890 215,069 48,039
Net Cash Flows 609,241 ( 114,285) ( 521,477) ( 26,521) ( 183,603)
Cash and investments at beginning of period 7,764,439 116,233 918,357 8,799,029 2,166,331
Cash and investments at end of period $ 8,373,680 $ 1,948 $ 396,880 $ 8,772,508 $ 1,982,728
Reconciliation of Operating Income ( Loss) to Cash Flows
from Operating Activities:
Operating income ( loss) ($ 399,882) ($ 191,364) ($ 208,677) ($ 799,923) ($ 171,264)
Adjustments to reconcile operating income to cash flows
from operating activities:
Depreciation and amortization 2,067,107 159,889 76,365 2,303,361 338,874
Change in assets and liabilities:
Accounts receivable 134,525 8,380 142,905 ( 14,614)
Prepaids 661
Notes receivable
Accounts payable and other liabilities ( 54,209) 64,110 ( 9,142) 759 ( 19,467)
Deposits 2,887 2,887
Accrued vacation and other fringe benefits 15,326 15,326 1,790
Accrued wages and benefits 19
Deferred revenue ( 12,922) ( 8,364) ( 21,286) 48,500
Cash Flows from Operating Activities $ 1,752,832 $ 32,651 ($ 141,454) $ 1,644,029 $ 184,499
See accompanying notes to financial statements
FIDUCIARY FUNDS
FIDUCIARY FUNDS
Fiduciary funds are used to account for assets held by the City as an agent or in trust for individuals, private
organizations, and other governments. The financial activities of these funds are excluded from the Entity-wide
financial statements, but are presented in separate Fiduciary Fund financial statements.
CITY OF MARTINEZ
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2005
Agency Trust
Funds Fund Total
ASSETS
Restricted cash and investments ( Note 3) $ 335,434 $ 114,787 $ 450,221
Total Assets $ 335,434 $ 114,787 $ 450,221
LIABILITIES
Accounts payable $ 5,062 $ 4,064 $ 9,126
Due to bondholders 184,060 184,060
Due to members 146,312 146,312
Total Liabilities $ 335,434 4,064 339,498
NET ASSETS
Reserved for private purpose activities 110,723 110,723
Total Net Assets $ 110,723 $ 110,723
See accompanying notes to financial statements
CITY OF MARTINEZ
FIDUCIARY FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Trust
Funds
ADDITIONS
Donations $ 5,131
Interest 3,870
Total Additions 9,001
DEDUCTIONS
Supplies 8,412
Improvements 10,000
Total Deductions 18,412
CHANGE IN NET ASSETS ( 9,411)
NET ASSETS, BEGINNING OF YEAR 120,134
NET ASSETS, END OF YEAR $ 110,723
See accompanying notes to financial statements
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Martinez was incorporated in 1876 and operates under an elected Mayor/ Council form of
government. The City’s major operations include public safety, water system, marina, parking,
community development, building, recreation and parks, and general administrative services.
A. Reporting Entity
The financial statements of the City of Martinez include the financial activities of the City as well as
the Martinez Public Improvement Corporation which is controlled by and dependent on the City.
While the Corporation is a separate legal entity, the City Council serves in a separate session as its
governing body and the financial activities of the Corporation are integral to those of the City.
Corporation financial activities have been aggregated and merged ( termed “ blended”) with those of
the City in the accompanying financial statements.
The Martinez Public Improvement Corporation is a nonprofit public benefit corporation organized
and existing under the Nonprofit Public Benefit Corporation Law of the State of California. The
purposes for which the Corporation was formed include, among others, ( i) rendering financial
assistance to the City by financing, refinancing, acquiring, constructing, improving, leasing and
selling of buildings, building improvements, equipment, electrical, water, sewer, road and other public
improvements, lands and any other real or personal property for the benefits of the City and
surrounding areas; ( ii) acquiring by lease, purchase or otherwise, real or personal property or any
interest therein; and ( iii) constructing, reconstructing, modifying, adding to, improving or otherwise
acquiring or equipping buildings, structures or improvements and ( by sale, lease, sublease, leaseback,
gift or otherwise) making any part or all of any such real or personal property available to or for the
benefit of the residents of the City. The Corporation is reported as part of the City’s operations
because of its purpose to provide financing for the City.
The Pleasant Hill/ Martinez Joint Facilities Agency is established for the purpose of providing cost-effective
services for employees participating in the Miscellaneous CALPERS retirement plan. The
Agency is controlled by the City and has the same governing body as the City, which also performs
all accounting and administrative functions for the Agency.
Separate financial statements for the Martinez Public Improvement Corporation and the Pleasant
Hill/ Martinez Joint Facilities Agency are not issued.
B. Basis of Presentation
The City’s Basic Financial Statements are prepared in conformity with accounting principles
generally accepted in the United States of America. The Government Accounting Standards Board is
the acknowledged standard setting body for establishing accounting and financial reporting standards
followed by governmental entities in the U. S. A.
These Standards require that the financial statements described below be presented.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
Government- wide Statements: The Statement of Net Assets and the Statement of Activities display
information about the primary government ( the City) and its component units. These statements
include the financial activities of the overall City government, except for fiduciary activities.
Eliminations have been made to minimize the double counting of internal activities. These statements
distinguish between the governmental and business- type activities of the City. Governmental activities
generally are financed through taxes, intergovernmental revenues, and other nonexchange
transactions. Business- type activities are financed in whole or in part by fees charged to external
parties.
The Statement of Activities presents a comparison between direct expenses and program revenues for
each segment of the business- type activities of the City and for each function of the City’s
governmental activities. Direct expenses are those that are specifically associated with a program or
function and, therefore, are clearly identifiable to a particular function. Program revenues include ( a)
charges paid by the recipients of goods or services offered by the programs, ( b) grants and
contributions that are restricted to meeting the operational needs of a particular program and ( c) fees,
grants and contributions that are restricted to financing the acquisition or construction of capital
assets. Revenues that are not classified as program revenues, including all taxes, are presented as
general revenues.
Fund Financial Statements: The fund financial statements provide information about the City's
funds, including fiduciary funds and blended component units. Separate statements for each fund
category— governmental, proprietary, and fiduciary— are presented. The emphasis of fund financial
statements is on major individual governmental and enterprise funds, each of which is displayed in a
separate column. All remaining governmental and enterprise funds are aggregated and reported as
nonmajor funds.
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. Nonoperating revenues, such as subsidies and
investment earnings, result from nonexchange transactions or ancillary activities.
C. Major Funds
Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/ expenses
equal to ten percent of their fund- type total and five percent of the grand total. Major governmental
and business- type funds are identified and presented separately in the fund financial statements. All
other funds, called non- major funds, are combined and reported in a single column, regardless of their
fund- type. The General Fund is always a major fund. The City may also select other funds it believes
should be presented as major funds.
The City reported the following major governmental funds in the accompanying financial statements:
General Fund - The General Fund is used for all the general revenues of the City not specifically
levied or collected for other City funds and the related expenditures. The General Fund accounts for
all financial resources of a governmental unit which are not accounted for in another fund.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
Capital Improvements Fund- To account for the funds spent and revenue received for various
capital projects within the City.
The City reported all its enterprise funds as major funds in the accompanying financial statements:
Water System Fund- To account for the funds received from customers receiving water service
provided by the City and the related expenditures for administration; system improvements,
maintenance and repairs; and debt service for issues related to the provision of water to the customers.
Marina Services Fund- To account for the operations at the municipal marina.
Parking Services Fund- To account for the activities related to the various parking lots in the
downtown area, including parking meters and shuttle services.
The City also reports the following fund types:
Internal Service Funds. The funds account for equipment replacement and management information
systems; all of which are provided to other departments on a cost- reimbursement basis.
Fiduciary Funds. Agency Funds are used to account for assets held by the City as an agent for
individuals, private organizations, and other governments. The financial activities of these funds are
excluded from the Government- wide financial statement, but are presented in separate Fiduciary Fund
financial statements.
D. Basis of Accounting
The government- wide, proprietary, and fiduciary fund financial statements are reported using the
economic resources measurement focus and the full accrual basis of accounting. Revenues are
recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of
when the related cash flows take place.
Governmental funds are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Under this method, revenues are recognized when measurable
and available. The City considers all revenues reported in the governmental funds to be available if
the revenues are collected within sixty days after year- end. Expenditures are recorded when the
related fund liability is incurred, except for principal and interest on general long- term debt, claims
and judgments, and compensated absences, which are recognized as expenditures to the extent they
have matured.
Governmental capital asset acquisitions are reported as expenditures in governmental funds. Proceeds
of governmental long- term debt and acquisitions under capital leases are reported as other financing
sources.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
Those revenues susceptible to accrual are property, sales and franchise taxes, certain other
intergovernmental revenues, special assessments and interest revenue. Fines, permits, licenses and
charges for services are not susceptible to accrual because they are not measurable until received in
cash.
Non- exchange transactions, in which the City gives or receives value without directly receiving or
giving equal value in exchange, include taxes, grants, entitlements, and donations. On the accrual
basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed.
Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all
eligibility requirements have been satisfied.
The City may fund programs with a combination of cost- reimbursement grants, categorical block
grants, and general revenues. Thus, both restricted and unrestricted net assets may be available to
finance program expenditures. The City’s policy is to first apply restricted grant resources to such
programs, followed by general revenues if necessary.
Certain indirect costs are included in program expenses reported for individual functions and
activities.
The City follows those Financial Accounting Standards Board Statements issued before November
30, 1989 unless they conflict with Governmental Accounting Standards Board Statements.
E. Revenue Recognition for Water System Enterprise Fund
Revenues are recognized based on cycle billings rendered to customers. Revenues for services
provided but not billed at the end of the year are accrued.
F. Property Taxes and Special Assessment Revenue
Revenue is recognized in the fiscal year for which the tax and assessment is levied. The County of
Contra Costa levies, bills and collects property taxes for the City; the County remits the entire amount
levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property
taxes are levied on January 1 of the preceding fiscal year.
Secured property tax is due in two installments, on November 1 and February 1, and becomes a lien
on those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property
tax is due on July 1 and becomes delinquent on August 31.
The term “ unsecured” refers to taxes on personal property other than real estate, land and buildings.
These taxes are secured by liens on the personal property being taxed. Property tax revenues are
recognized by the City in the fiscal year they are assessed provided they become available as defined
above.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
G. Compensated Absences
Compensated absences comprise unused vacation leave, vested sick pay and other employee benefits
which are accrued as earned. The City’s liability for compensated absences is recorded in various
Governmental funds or Proprietary funds as appropriate. The liability for compensated absences is
determined annually. For all governmental funds, amounts expected to be permanently liquidated are
recorded as fund liabilities; the long- term portion is recorded in the Statement of Net Assets.
The changes of the compensated absences were as follows:
Governmental Activities
Business- Type
Activities Total
Beginning Balance $ 1,427,744 $ 150,301 $ 1,578,045
Additions 1,428,474 159,955 1,588,429
Payments ( 1,479,974) ( 144,629) ( 1,624,603)
Ending Balance $ 1,376,244 $ 165,627 $ 1,541,871
Current Portion $ 17,033 $ 17,033
Compensated absences are liquidated by the fund that has recorded the liability. The long- term
portion of governmental activities compensated absences is liquidated primarily by the General Fund.
H. Inventories
Inventories are valued at cost ( on the first- in, first- out basis). Inventories of the General Fund consist
of expendable supplies held for consumption. The cost is recorded as an expenditure in the General
Fund at the time individual inventory items are consumed. Reported General Fund inventories are
equally offset by a fund balance reserve which indicates that they do not constitute available
spendable resources even though they are a component of net current assets.
I. Postemployment Health Care Benefits
The City provides health care benefits for retired employees and spouses based on negotiated
employee bargaining unit contracts. Substantially all of the City’s employees may become eligible
for those benefits if they reach the normal retirement age and have a minimum ten years of service
while working for the City. The premium reimbursement benefits are as follows: 0- 10 years of
service = 0%; 11- 15 years of service = 25%; 16- 20 years of service = 50%; 21- 25 years of service =
75%; 26 years or more of service = 100%. Currently, 33 retirees meet the eligibility requirements and
receive reimbursement.
Additionally, the City provides the option of postretirement health benefits to sworn Police Personnel
through the Public Employees’ Retirement System in lieu of the reimbursement plan, in accordance
with the MOU for that represented group. The City covers 100% of the cost. Currently, 29 retirees
meet the eligibility requirements and are either receiving a reimbursement or health benefits paid
directly by the City to PERS.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
The cost of retiree health care benefits is recognized as an expenditure as health care premiums are
paid. For the year ending June 30, 2005, those costs totaled $ 426,686.
J. Closed Funds
In fiscal year 2005, the City closed the Disaster Recovery Special Revenue Fund and the Traffic
Congestion Relief Special Revenue Fund.
NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING
A. Budgeting Procedures
Budgets are adopted for the General Fund and all Special Revenue Funds. These budgets are adopted
on a basis consistent with generally accepted accounting principles ( GAAP). All annual
appropriations lapse at fiscal year- end. Capital Projects Funds are budgeted on a project length basis.
On or before the last day in March of each year, all departments of the City submit requests for
appropriations to the City’s Manager so that a budget may be prepared on or by May 1, the proposed
budget is presented to the City’s Council for review. The Council holds public hearings and a final
budget must be prepared and adopted no later than June 30.
The appropriated budget is prepared by fund, function and department. The City’s department heads
may make transfers of appropriations within a department. The City Manager is authorized to revise
the budget so long as the total revisions in any single budget year do not exceed 5% of the budget, and
provided that sufficient revenues are available to offset such revisions. Council approval is required
for additional appropriation from fund balances or new revenue sources. The legal level of budgetary
control is the department level.
The budget is revised in February to take into consideration information available during the fiscal
year. Budget amounts presented in the accompanying financial statements reflect original
appropriations modified by supplemental amendments discussed above which were not material.
NOTE 3 - CASH AND INVESTMENTS
The City pools cash from all sources and all funds except Cash and Investments held by Trustees so that
it can be invested at the maximum yield consistent with safety and liquidity, while individual funds can
make expenditures at any time.
A. Policies
California Law requires banks and savings and loan institutions to pledge government securities with a
market value of 110% of the City’s cash on deposit, or first trust deed mortgage notes with a market
value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is
held in a separate investment pool by another institution in the City’s name and places the City ahead of
general creditors of the institution.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 3 - CASH AND INVESTMENTS ( Continued)
The City invests in individual investments and in investment pools. Individual investments are
evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner
in the records of the institution issuing the security, called the book entry system. In order to increase
security, the City employs the Trust Department of a bank as the custodian of certain City managed
investments, regardless of their form.
The City’s investments are carried at fair value, as required by generally accepted accounting principles.
The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end,
and it includes the effects of these adjustments in income for that fiscal year.
B. Classification
Cash and investments are classified in the financial statements as shown below, based on whether or not
their use is restricted under the terms of City debt instruments or Agency agreements.
Cash and investments available for operations $ 23,732,359
Restricted investments 871,176
Total Primary Government cash and investments 24,603,535
Cash and investments
in Fiduciary Funds ( separate statement) 450,221
Total cash and investments $ 25,053,756
Cash and Investments Available for Operations is used in preparing proprietary fund statements of cash
flows because these assets are highly liquid and are expended to liquidate liabilities arising during the
year.
C. Investments Authorized by the California Government Code and the City’s Investment Policy
The City’s Investment Policy and the California Government Code allow the City to invest in the
following, provided the credit ratings of the issuers are acceptable to the City; and approved percentages
and maturities are not exceeded. The table below also identifies certain provisions of the California
Government Code, or the City’s Investment Policy where the City’s Investment Policy where is more
restrictive.
Minimum Maximum
Maximum Credit Percentage
Authorized Investment Type Maturity Quality Allowed
Shares of Beneficial Interest N/ A Top rating
category
20%
California Local Agency Upon Demand N/ A No limit
Investment Fund ( LAIF Pool)
U. S. Treasury Obligations 5 Years N/ A No limit
U. S. Agency Securities and 5 Years N/ A No limit
U. S. Government Sponsored Enterprise
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 3 - CASH AND INVESTMENTS ( Continued)
D. Investments Authorized by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal agents under
the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to
be used if the City fails to meet its obligations under these debt issues. The California Government
Code requires these funds to be invested in accordance with City resolutions, bond indentures or State
statutes. The table below identifies the investment types that are authorized for investments held by
fiscal agents. The table also identifies certain provisions of these debt agreements:
Minimum
Maximum Credit
Authorized Investment Type Maturity Quality
Repurchase Agreements 6 months Top Four Rating
Category
U. S. Treasury Obligations N/ A N/ A
U. S. Agency Securities and U. S. Government N/ A N/ A
Sponsored Enterprise
State Obligations N/ A A
Commercial Paper 270 days Top Rating Category
Negotiable Certificates of Deposit 365 days Top Rating Category
Time Certificates of Deposit 365 days Top Rating Category
Guaranteed Investment Contract N/ A Not lower than their
bond rating
Shares of Beneficial Interest N/ A Top Rating Category
Money Market Funds N/ A Aaam or AAAm- G
Bankers Acceptances 365 days
Top Rating Category
California Local Agency Upon Demand N/ A
Investment Fund ( LAIF Pool)
California Asset Management Program ( CAMP) Upon Demand N/ A
E. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair
value to changes in market interest rates. The City generally manages its interest rate risk by holding
investments to maturity.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 3 - CASH AND INVESTMENTS ( Continued)
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 or earliest call date:
12 Months 13 to 24
Investment Type or less Months Total
U. S. Government Agencies
Non- callable $ 2,751,872 $ 1,459,079 $ 4,210,951
Callable 4,567,784 4,567,784
California Local Agency Investment Fund 15,421,520 15,421,520
Money Market Funds 300,481 300,481
Total Investments $ 23,041,657 $ 1,459,079 24,500,736
Cash with Trustee 21,443
Cash in banks and on hand 531,577
Total Cash and Investments $ 25,053,756
The City is a participant in the Local Agency Investment Fund ( LAIF) that is regulated by California
Government Code Section 16429 under the oversight of the Treasurer of the State of California. The
City reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the
value of the pool share. The balance is available for withdrawal on demand, and is based on the
accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in
LAIF’s investment portfolio are collateralized mortgage obligations, mortgage- backed securities, other
asset- backed securities, loans to certain state funds, and floating rate securities issued by federal
agencies, government- sponsored enterprises, United States Treasury Notes and Bills, and corporations.
At June 30, 2005, these investments have an average maturity of 151 days.
F. Credit Risk
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 actual rating as of June 30, 2005 for each investment type as
provided by Standard and Poor’s.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 3 - CASH AND INVESTMENTS ( Continued)
Investment Type AAA A- 1+ Total
U. S. Government Agencies
Non- callable $ 3,166,516 $ 1,044,435 $ 4,210,951
Callable 4,567,784 4,567,784
Totals $ 7,734,300 $ 1,044,435 $ 8,778,735
Not rated:
California Local Agency Investment Fund 15,421,520
Money Market Funds 300,481
Cash with Trustee 21,443
Cash in banks and on hand 531,577
Total Investments $ 25,053,756
G. Concentration of Credit Risk
Significant investments in the securities of any individual issuers, other than U. S. Treasury securities,
mutual funds, are set forth below:
Reporting Investment Reported
Unit Issuer Type Amount
Entity- wide Federal National Mortgage Association Federal Agency Security $ 3,858,170
Federal Home Loan Bank Federal Agency Security 3,407,456
Federal Home Loan Mortgage Corporation Federal Agency Security 1,513,109
Major Funds
Water System Proprietary Fund Federal Home Loan Mortgage Corporation Federal Agency Security 459,220
Non Major Funds Federal Home Loan Mortgage Corporation Federal Agency Security 197,514
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 4 – INTERFUND TRANSACTIONS
A. Transfers Between Funds
With Council approval, resources may be transferred from one City fund to another. The purpose of
the majority of transfers, is to reimburse a fund which has made an expenditure on behalf of another
fund. Less often, a transfer may be made to open or close a fund.
Fund Receiving Transfers Fund Making Transfers
Amount
Transferred
Capital Improvements Fund General Fund 355,000 B
Non- Major Governmental Funds 287,213 B
Non- Major Governmental Funds General Fund 5,530 A
Capital Improvements Fund 216,567 B
Non- Major Governmental Funds 650 B
Water System General Fund 18,000 A
Capital Improvements Fund 25,000 A
Marina System Capital Improvements Fund 75,000 B
Total Interfund Transfers $ 982,960
A: To fund operations
B: To fund capital projects
B. Current Interfund Balances
Current interfund balances arise in the normal course of business and are expected to be repaid shortly
after the end of the fiscal year. At June 30, 2005, Marina System Enterprise Fund and Alhambra
Creek Improvement Capital Projects Fund owed the General Fund $ 723,533 and $ 83,405
respectively.
C. Long- Term Interfund Advances
In 2005 the General Fund made an advance to the Marina Systems Enterprise Fund in the amount of
$ 225,000, to be repaid monthly over the next 13 years. Annual interest at 4.96% is accrued on the
unpaid balance. As of June 30, 2005 the balance was $ 209,251.
D. Internal Balances
Internal balances are presented in the Entity- wide financial statements only. They represent the net
interfund receivables and payables remaining after the elimination of all such balances within
governmental and business- type activities.
NOTE 5 – LOAN RECEIVABLE AND DEFERRED REVENUE
The City made a loan to Riverhouse Associates, which was used to rehabilitate the Riverhouse Hotel,
an affordable housing project. The loan is secured by a deed of trust, bears no interest, and is due
August 14, 2021. At June 30, 2005 the loan balance was $ 284,930.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 6 - CAPITAL ASSETS
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not
available. Contributed capital assets are valued at their estimated fair market value on the date
contributed.
With the implementation of GASB Statement 34, the City has recorded all its public domain
( infrastructure) capital assets, which include roads, bridges, curbs and gutters, streets and sidewalks,
drainage systems and lighting systems.
GASB Statement 34 requires that all capital assets with limited useful lives be depreciated over their
estimated useful lives. Alternatively, the “ modified approach” may be used for certain capital assets.
Depreciation is not provided under this approach, but all expenditures on these assets are expensed,
unless they are additions or improvements.
The purpose of depreciation is to spread the cost of capital assets equitably among all users over the
life of these assets. The amount charged to depreciation expense each year represents that year’s pro
rata share of the cost of capital assets.
Depreciation is provided using the straight line method which means the cost of the asset is divided by
its expected useful life in years and the result is charged to expense each year until the asset is fully
depreciated. The City has assigned the useful lives listed below to capital assets:
Buildings 30 years
Improvements 18- 67 years
Equipment 7 years
Infrastructure 40 years
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest
incurred during the construction phase is reflected in the capitalized value of the asset constructed, net
of interest earned on the invested proceeds over the same period.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 6 - CAPITAL ASSETS ( Continued)
A. Capital Asset Additions and Retirements
Capital asset activity for the year ended June 30, 2005 comprise:
June 30, 2004 Additions Retirements Transfers June 30, 2005
Governmental activities
Capital assets not being depreciated:
Land $ 4,978,951 $ 4,978,951
Construction in progress 285,872 $ 292,150 578,022
Total capital assets not being depreciated 5,264,823 292,150 5,556,973
Capital assets being depreciated:
Buildings 4,706,879 4,706,879
Equipment 3,939,280 472,090 ($ 232,852) 4,178,518
Infrastructure 35,638,966 35,638,966
Total capital assets being depreciated 44,285,125 472,090 ( 232,852) 44,524,363
Less accumulated depreciation
Buildings ( 2,314,476) ( 80,275) ( 2,394,751)
Equipment ( 1,864,367) ( 411,215) 199,648 ( 2,075,934)
Infrastructure ( 19,737,095) ( 867,495) ( 20,604,590)
Total accumulated depreciation ( 23,915,938) ( 1,358,985) 199,648 ( 25,075,275)
Net capital assets being depreciated 20,369,187 ( 886,895) ( 33,204) 19,449,088
Governmental activity capital assets, net $ 25,634,010 ($ 594,745) ($ 33,204) $ 25,006,061
Business- type activities
Capital assets, not being depreciated:
Land $ 1,665,154 $ 1,665,154
Construction in progress 336,798 $ 1,401,358 ($ 139,081) ($ 45,507) 1,553,568
Total capital assets not being depreciated 2,001,952 1,401,358 ( 139,081) ( 45,507) 3,218,722
Capital assets being depreciated:
Buildings 15,588,829 15,588,829
Improvements 1,032,929 1,032,929
Equipment 1,590,643 468,285 ( 242,789) 60 1,816,199
Infrastructure 87,170,105 601,675 ( 621,225) 45,447 87,196,002
Net capital assets being depreciated 105,382,506 1,069,960 ( 864,014) 45,507 105,633,959
Less accumulated depreciation for:
Buildings ( 5,611,222) ( 398,329) ( 6,009,551)
Improvements ( 615,040) ( 159,017) ( 774,057)
Equipment ( 1,101,800) ( 99,129) 183,974 ( 1,016,955)
Infrastructure ( 56,022,031) ( 1,557,701) 621,225 ( 56,958,507)
Total accumulated depreciation ( 63,350,093) ( 2,214,176) 805,199 ( 64,759,070)
Net capital assets being depreciated 42,032,413 ( 1,144,216) ( 58,815) 45,507 40,874,889
Business- type activity capital assets, net $ 44,034,365 $ 257,142 ($ 197,896) $ 44,093,611
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 6 - CAPITAL ASSETS ( Continued)
B. Capital Asset Contributions
Some capital assets may be acquired using federal and State grant funds, or they may be contributed
by developers or other governments. GASB Statement 34 requires that these contributions be
accounted for as revenues at the time the capital assets are contributed.
C. Depreciation Allocation
Depreciation expense is charged to functions and programs based on their usage of the related assets.
The amounts allocated to each function or program are as follows:
Governmental Activities
Community development $ 958,253
Police 59,433
General government 2,425
Capital assets held by the City's internal service funds 338,874
Total Governmental Activities $ 1,358,985
Water System $ 1,977,922
Marina System 159,889
Parking Services 76,365
Total Business- Type Activities $ 2,214,176
Business- Type Activities
NOTE 7 – LONG TERM DEBT
The City generally incurs long- term debt to finance projects or purchase assets which will have useful
lives equal to or greater than the related debt.
Proprietary Fund ( Enterprise and Internal Service) long- term debt is accounted for in the proprietary
funds which will repay the debt because these funds are accounted for on the full- accrual basis in a
similar manner to commercial operations.
For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized
during the period of issuance. For proprietary fund types, bond premiums and discounts, as well as
issuance costs, are deferred and amortized over the life of the bonds using the straight- line method.
Bonds payable are reported net of the applicable bond premium or discount.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 7 – LONG TERM DEBT ( Continued)
The City’s debt issues and transactions are summarized below and discussed in detail thereafter.
A. Current Year Transactions and Balances
Original Issue Balance at Balance at Current
Amount June 30, 2004 Retirements June 30, 2005 Portion
Governmental Activity Debt
General Long Term Debt
2003 Certificates of Participation
Refinancing Project, 2- 4%, due 12/ 01/ 13 $ 2,200,000 $ 2,200,000 $ 195,000 $ 2,005,000 $ 200,000
Total governmental activity debt $ 2,200,000 $ 2,200,000 $ 195,000 $ 2,005,000 $ 200,000
Business- Type Activity Debt
Enterprise Long Term Debt
Certificates of Participation:
1999 Water System Improvements, 4.2-
5.375%, due 12/ 1/ 26 $ 6,040,000 $ 5,775,000 $ 145,000 $ 5,630,000 $ 150,000
2003 Refinancing Project, 2- 4%, due 12/ 01/ 18 5,595,000 5,305,000 295,000 5,010,000 300,000
Total business- type activity debt $ 11,635,000 $ 11,080,000 $ 440,000 $ 10,640,000 $ 450,000
B. 1999 Certificates of Participation
On August 1, 1999, the City issued Certificates of Participation ( COPs) in the amount of $ 6,040,000
to fund and retire the construction of various improvements to the City’s existing municipal water
system. Semi- annual interest payments are due on June 1 and December 1 of each year, and annual
principal payments are due on December 1. Interest and principal payments are payable from net
revenues derived from the operation of the water system.
C. 2003 Certificates of Participation
On March 11, 2003, the City issued Certificates of Participation ( COPs) in the amount of $ 7,795,000
to refund and retire the outstanding 1992 City Hall Refurbishment Certificates of Participation and the
1993 Water System Improvements Certificates of Participation. Interest payments on the 2003 COPs
are due semi annually on June 1 and December 1, and annual principal payments are due on
December 1. Interest and principal payments are payable from lease revenues on City Hall and net
revenues derived from the operation of the water system.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 7 – LONG TERM DEBT ( Continued)
D. Debt Service Requirements
Annual debt service requirements are shown below:
Governmental Activities Business- type Activities
For the Year
Ending June 30 Principal Interest Principal Interest
2006 $ 200,000 $ 55,306 $ 450,000 $ 449,143
2007 200,000 51,306 455,000 436,661
2008 205,000 47,256 470,000 423,808
2009 215,000 42,519 485,000 410,263
2010 220,000 36,532 500,000 394,517
2011- 2015 965,000 69,722 2,800,000 1,668,198
2016- 2020 2,980,000 1,017,619
2021- 2025 1,690,000 454,062
2026- 2030 810,000 44,095
Total $ 2,005,000 $ 302,641 $ 10,640,000 $ 5,298,366
E. Authorized but Unissued Debt
The City has previously issued Water Revenue Bonds authorized by the electorate at a bond election
held on June 7, 1966. Series A, B, and C Bonds in the amount of $ 3,250,000 were previously issued
and have been fully retired. $ 1,400,000 remains authorized but unissued.
In fiscal 2004- 2005, the City had a conditional commitment to borrow an additional $ 2.93 million
from the State to finance certain Marina improvements.
NOTE 8 – LOANS PAYABLE TO STATE OF CALIFORNIA
At June 30, 2005, the Marina Fund owed $ 4,310,680 in loans to the State. There was an increase of
$ 182,688 during the fiscal year 2004- 2005 due to accrued interest and a reduction of $ 78,594 due to
interest payments.
In January of 1960, the City entered into an agreement with the State of California, whereby a loan of
$ 1,300,000 was granted to the City for the construction of a Marina. At June 30, 2005, the amount
payable to the State including interest amounted to $ 2,483,527.
The agreement was modified in 1964 with the following conditions:
Net income from the operations of the Marina is distributable as follows:
• Pro rata reimbursement to contributors of initial development costs as described in the
agreement.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 8 – LOANS PAYABLE TO STATE OF CALIFORNIA ( Continued)
• 80% of the annual net income to the State, until the sum of $ 1,300,000 is paid; the remaining
20% to be paid to the City.
• After the principal portion of the loan is repaid to the State, 80% of the annual net income
shall be paid to the City; the remaining 20% shall be paid to the State until the State has been
paid 3% interest per annum on the unpaid principal of the loan for each year starting with
January 1, 1961. The agreement will terminate upon completion of the foregoing payments.
On December 20, 1973, the City entered into another agreement with the State of California, whereby
a loan of $ 450,000 was granted to the City to complete the Martinez Small Craft Harbor ( MSCH). At
June 30, 2005, the amount payable to the State was $ 311,523 including accrued interest. The terms
are as follows:
• The loan is payable from the gross revenues from operations of the facilities located or
erected within the MSCH Project, prior to any other expenditures from such revenues.
• Payments of principal and interest at 4.5% shall be payable in equal annual installments on
August 1 of each year with a final payment due on August 1, 2004. During fiscal year 2005
the State amended the agreement and extended the final payment date for one additional
year.
• Any retained earnings arising from the operation of the MSCH Project after deductions for
repayments of the State loan, operating and maintenance expenses and reserve funds
provided for by the State, shall be invested in reasonably liquid assets. No transfer of such
funds, other than for advance repayment of the State loan, shall be made so long as any
principal or interest remains unpaid.
• Whenever the retained earnings exceeds two years of MSCH Project operating and loan
repayment expenses, such excess may be required by the State for advance repayment of the
loan.
On January 30, 1978, the City entered into another agreement with the State of California, whereby a
loan of $ 175,000 was granted to the City for construction of Marina Improvements. At June 30, 2005
the amount payable to the State was $ 157,623 including accrued interest. The terms are as follows:
• The loan is payable from the gross revenues from operation of the facilities located or
erected within the Project Area.
• Payments of principal and interest at 4.5% in equal annual installments shall be payable on
August 1 of each year with a final payment due August 1, 2008.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 8 – LOANS PAYABLE TO STATE OF CALIFORNIA ( Continued)
On November 1, 1982, the City entered into another agreement with the State of California, whereby
a loan of $ 300,000 was granted to the City for the construction of new berthings and improvements to
the Marina. The loan was to be based on stages of completion. At June 30, 2005, the amount payable
to the State was $ 370,071 including accrued interest. The loan terms are as follows:
• The loan is payable from the gross revenues originating from the operations of the Marina.
These gross revenues constitute sole security for the loan.
• The loan shall bear compound interest at 4.5% per annum on the unpaid balance.
• Repayment of the loan shall be in equal annual installments on August 1 of each year with
final payment due August 1, 2014.
On January 14, 1985 the City entered into another agreement with the State of California, whereby a
loan of $ 770,425 was granted to the City for twelve capital improvement projects at the Marina. At
June 30, 2005, the amount payable to the State was $ 987,936 including accrued interest. The loan
terms are as follows:
• The loan is payable from the gross revenues from the operation of the facilities located
within the project area.
• The loan shall bear compound interest at 4.5% per annum on t