City of Petaluma
Petaluma, California
Comprehensive Annual Financial Report
For the year ended June 30, 2005
Prepared By:
The City of Petaluma Finance Department
Steven Carmichael, Administrative Services Director
Cinde Rubaloff, Accounting Manager
City of Petaluma
Comprehensive Annual Financial Report
For the year ended June 30, 2005
Table of Contents
Page
INTRODUCTORY SECTION
Letter of Transmittal ............................................................................................................................... .............. i
GFOA Certificate of Achievement for Excellence in Financial Reporting...................................................... ix
Organization Chart ............................................................................................................................... ................ x
Principal Officials of the City of Petaluma, California...................................................................................... xi
FINANCIAL SECTION
Independent Auditors’ Report......................................................................................................................... .. 1
Management’s Discussion and Analysis .......................................................................................................... 3
Basic Financial Statements:
Government- Wide Financial Statements:
Statement of Net Assets......................................................................................................................... .. 17
Statement of Activities and Changes in Net Assets ............................................................................. 18
Fund Financial Statements:
Government Fund Financial Statements:
Balance Sheet ............................................................................................................................... ....... 24
Reconciliation of the Governmental Funds Balance Sheet
to the Government- Wide Statement of Net Assets.................................................................. 27
Statement of Revenues, Expenditures and Changes in Fund Balances ...................................... 28
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Government- Wide
Statement of Activities and Changes in Net Assets ................................................................ 30
Proprietary Fund Financial Statements:
Statement of Net Assets ..................................................................................................................... 32
Statement of Revenues, Expenses and Changes in Fund Net Assets.......................................... 34
Statement of Cash Flows.................................................................................................................... 36
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Assets ................................................................................................... 40
Statement of Changes in Fiduciary Net Assets............................................................................... 41
Notes to Basic Financial Statements .............................................................................................................. 43
City of Petaluma
Comprehensive Annual Financial Report
For the year ended June 30, 2005
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Basic Financial Statements, Continued:
Required Supplementary Information:
Budgetary Information ............................................................................................................................. 82
Budgetary Comparison Schedule – General Fund......................................................................... 83
Budgetary Comparison Schedule – Home/ Begin Special Revenue Fund.................................. 84
Budgetary Comparison Schedule – Redevelopment Special Revenue Fund ............................. 85
Budgetary Comparison Schedule – Impact Fee Special Revenue Fund...................................... 86
Defined Benefit Pension Plan .................................................................................................................. 87
Supplementary Information:
Non- Major Governmental Funds:
Combining Balance Sheet......................................................................................................................... 92
Combined Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 95
Schedule of Revenues, Expenditures and Changes in Fund Balances –
Budget and Actual ( Budgetary Basis):
City Capital Project Funds – Major Fund ........................................................................................ 97
Redevelopment CBD Capital Project Fund – Major Fund ............................................................ 98
Redevelopment PCD Capital Project Fund – Major Fund ............................................................ 99
Community Development Block Grant Special Revenue Fund................................................... 100
Grants and Donations Special Revenue Fund ................................................................................ 101
Gas Tax Special Revenue Fund......................................................................................................... 102
Public Safety Special Revenue Fund ................................................................................................ 103
Landscape Assessment District Special Revenue Fund ................................................................ 104
Street Special Revenue Fund............................................................................................................. 105
Transient Occupancy Tax Special Revenue Fund .......................................................................... 106
Prince Park Trust Special Revenue Fund ........................................................................................ 107
Redevelopment CBD/ PCD Debt Service Fund.............................................................................. 108
Wickersham Park Trust Permanent Fund....................................................................................... 109
Internal Service Funds:
Combining Statement of Net Assets....................................................................................................... 112
Combining Statement of Activities and Changes in Net Assets......................................................... 114
Combining Statement of Cash Flows ..................................................................................................... 116
City of Petaluma
Comprehensive Annual Financial Report
For the year ended June 30, 2005
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Supplementary Information, Continued
Fiduciary Funds:
Combining Balance Sheet......................................................................................................................... 120
Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Fiduciary Funds – Private Purpose Trust Funds............................................................................ 121
Statement of Changes in Assets and Liabilities – Agency Funds....................................................... 122
STATISTICAL SECTION ( Unaudited)
Government- Wide Expenditures by Function............................................................................................. 123
General Government Expenditures by Function ........................................................................................ 124
Government- wide Revenue by Source ......................................................................................................... 125
General Government Revenue by Source .................................................................................................... 126
Property Tax Levies and Collections............................................................................................................. 127
Assessed Value of Taxable Property ............................................................................................................. 128
Property Tax Rates – Direct and Overlapping Governments.................................................................... 129
Special Assessment Billings and Collections ............................................................................................... 130
Computation of Legal Debt Margin .............................................................................................................. 131
Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita.................... 132
Ratio of Annual Debt Service Expenditures for General Bonded Debt to
Total General Government Expenditures.............................................................................................. 133
Direct and Overlapping Bonded Debt Statement ....................................................................................... 134
Schedule of Revenue Bond Coverage for Proprietary Funds.................................................................... 135
Demographic Statistics..................................................................................................................... .............. 136
Construction, Property Value and Bank Deposits ...................................................................................... 137
Assessed Valuation of Principal Property Taxpayers................................................................................. 138
Miscellaneous Statistics..................................................................................................................... ............. 139
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ix
x
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x
xii
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xi
CITY OF PETALUMA OFFICIALS
DAVID GLASS
Mayor
MICHAEL HARRIS KEITH CANAVERO MICHAEL HEALY
Vice- Mayor Councilmember Councilmember
KAREN NAU MIKE O’BRIEN PAMELA TORLIATT
Councilmember Councilmember Councilmember
CITY MANAGER
Michael A. Bierman
ADMINISTRATIVE SERVICES DIRECTOR/ TREASURER
Steven Carmichael
xii
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3
MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the City of Petaluma ( City), we offer readers of the City’s financial
statements this narrative overview and analysis of the financial activities of the City for the
fiscal year ended June 30, 2005.
We encourage readers to consider the information presented here in conjunction with
additional information that we have furnished in our letter of transmittal, which can be found
on page v of this report.
Financial Highlights
Government Wide Financial Statements
• The assets of the City exceeded its liability at the close of the fiscal year by $ 244.6
million ( Net Assets). Of this amount, $ 159.7 million was invested in capital assets, net
of related debt. The balance was restricted for capital projects, $ 40.9 million, debt
service and special projects, $ 21.4 million, and unrestricted, $ 22.6 million. This
included all City funds and Redevelopment Agency funds.
• The City’s total net assets increased by $ 24.7 million, comprised of a $ 19.8 million,
increase in governmental net assets and $ 5.0 million increase in business- type
activities net assets.
Fund Financial Statements
• At the close of the fiscal year, the City’s governmental funds, including the general
fund, special revenue funds, debt service funds, capital projects funds, and
redevelopment agency funds, reported combined ending fund balances of $ 58.7
million, a decrease of $ 20.3 million from the prior year. The 2005 fund balance was
comprised of $ 61.8 million reserved balances, and $ 4.0 million designated balances,
producing an unreserved fund balance of ($ 7.1) million.
• At the end of the fiscal year, the total General Fund was $ 8.66 million, an increase of
$ 2.5 million over the prior year. Of this amount, $ 6.5 million was reserved, including
$ 4.2 million reserved for contingencies, approximately 10% of annual expenditures.
The unreserved portion was $ 2 million, approximately 5% of General Fund
expenditures.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction of the City’s Basic Financial
Statements. The City’s Basic Financial Statements are comprised of three components: 1)
Government- Wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the
Financial Statements. This report also contains other required supplementary information.
4
Overview of the Financial Statements, Continued
Government- Wide Financial Statements – The Government- Wide Financial Statements consist
of a Statement of Net Assets and a Statement of Activities and Changes in Net Assets, which are
designed to provide readers with a broad overview of the City’s finances, in a manner similar to
a private- sector business.
The Government- Wide Financial Statements distinguish the two functions of the City. The first
is activities which are principally supported by taxes and intergovernmental revenues
( governmental activities). The second is activities that are intended to recover all, or a
significant portion, of their costs through user fees and charges ( business- type activities).
The Government- Wide Financial Statements can be found on pages 25- 27 of this report.
Fund Financial Statements – A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The City,
like other state and local governments, uses fund accounting to ensure and demonstrate
compliance with finance- related legal requirements. All of the funds of the City can be divided
into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental Funds – Governmental funds account for basically the same functions as those
reported in the government activities in the Government- Wide Financial Statements. However,
unlike the Government- Wide Financial Statements, Governmental Fund Financial Statements
focus on near- term inflows and outflows of spendable resources, as well as on balances of
spendable resources available at the end of the fiscal year.
The Governmental Fund Financial Statements are on pages 32- 37 of this report.
Proprietary Funds – The City maintains two types of proprietary funds. Enterprise funds are
used to report the functions presented as business- type activities in the Governmental- Wide
Financial Statements. Internal service funds, the second type of proprietary fund, are used to
account for the accumulation of resources, and the allocation of costs, which are required to
provide internal services to various City departments and functions.
The Proprietary Fund Financial Statements are on pages 40- 46 of this report.
Notes to the Basic Financial Statements – The notes provide additional information that is
essential to a full understanding of the data provided in the Government- Wide and Fund
Financial Statements. The Notes to the Basic Financial Statements begin on page 52 through
page 88 of this report.
Other Information – In addition to the Basic Financial Statements and accompanying notes, this
report also presents certain required supplementary information. The first type of information
presented is the budgetary information. The budgetary comparison statements have been
provided for the governmental funds to demonstrate compliance with the legal provisions of
the 2005 appropriation ordinance. The second type of information included relates to the City’s
progress in funding its obligation to provide pension benefits to its employees. The Required
Supplementary Information begins on page 90 of this report.
5
Government- Wide Financial Statement Analysis
Statement of Net Assets – As noted earlier, net assets are an indicator of a government’s
financial position. In the case of the City, net assets ( the amount by which total assets exceeded
total liabilities) equaled $ 244.6 million at the close of the fiscal year.
The largest portion of the City’s net assets ( 65%) reflect its investment in capital assets ( e. g.,
infrastructure, land, buildings, machinery, and equipment), less any related, outstanding debt
used to acquire those assets. The City uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the City’s
investment in its capital assets is reported net of related debt, it should be noted that the
resources needed to repay this debt must be provided from other sources i. e. future revenues,
since the capital assets themselves cannot be used to liquidate these liabilities. An additional
portion of the City’s net assets ( 30%) represents resources that are subject to external
restrictions.
The remaining balance ( 5%), the unrestricted net assets, may be used to meet the government’s
ongoing obligations to citizens and creditors, subject to restrictions of various funding sources,
as applicable.
As stated earlier, net assets increased by $ 24.7 million during the fiscal year. This increase is
due in part to the $ 6.3 million net increase in grants and donations, $ 2.8 increase in general
revenues, and $ 1.7 decrease in functional expenses. The balance of the increase is the net result
of fiscal year activity and cannot be attributed to any specific items.
6
Government- Wide Financial Statement Analysis
Governmental Activities – Governmental Activities increased the City’s net assets by $ 19.8
million.
2005 2004 % Change 2005 2004 % Change
Assets:
Current and other assets $ 84,584 $ 101,758 $ ( 17,174) $ 19,290 $ 21,678 $ ( 2,388)
Capital Assets, net of depreciation 135,104 96,174 38,930 99,326 91,332 7,994
Total assets 219,688 197,932 21,756 118,616 113,010 5,606
Liabilities:
Long- term liabilities 51,958 51,845 113 28,890 27,899 991
Other Liabilities 8,713 6,850 1,863 4,118 4,466 ( 348)
Total liabilities 60,671 58,695 1,976 33,008 32,365 643
Net Assets:
Invested in capital assets, net of
related debt 89,920 47,066 42,854 69,769 62,769 7,000
Restricted 69,502 77,164 ( 7,662) 5,126 10,283 ( 5,157)
Unrestricted ( 405) 15,008 ( 15,413) 10,713 7,593 3,120
Total net assets $ 159,017 $ 139,238 $ 19,779 $ 85,608 $ 80,645 $ 4,963
Governmental Activities
Summary of Net Assets
Governmental Activities
As of June 30, 2005 and 2004
( in thousands)
Business- type Activities
7
Government- Wide Financial Statement Analysis, Continued
2005 2004 % Change
Revenues:
Program Revenues
Charges for service $ 9,474 $ 7,916 19.7%
Operating grants and contributions 2,415 7,658 - 68.5%
Capital grants and contributions 11,244 469 2297.4%
Total program revenue 23,133 16,043 44.2%
General Revenues:
Taxes 40,204 39,169 2.6%
Unrestricted Investment Earnings 1,817 1,273 42.7%
Miscellaneous Revenue 1,061 47 2157.4%
Total Revenue 66,215 56,532 17.1%
Expenses:
General government ( 117) 2,466 - 104.7%
Community development 15,463 15,568 - 0.7%
Police 12,732 12,369 2.9%
Fire 7,086 5,738 23.5%
Parks and recreation 4,542 4,446 2.2%
Public works 6,284 4,987 26.0%
Unallocated Capital Outlay - 1,125 - 100.0%
Interest on long- term debt 1,157 2,837 - 59.2%
Total Expenses 47,147 49,536 - 4.8%
Revenues Over ( Under) Expenses 19,068 6,996 172.6%
Internal Capital Contributions ( 1,556) - 100.0%
Transfers 2,267 941 140.9%
Change in Net Assets 19,779 7,937 149.2%
Net assets- beginning of year 139,238 131,301 6.0%
Net assets- end of year $ 159,017 $ 139,238 14.2%
Governmental Activities
Summary of Statement of Activities and Changes in Net Assets
Governmental Activities
For the Years Ended June 30, 2005 and 2004
( In thousands)
Governmental Activities Changes:
• Operating grants and contributions decreased, and capital grants and contributions
increased, due to change in classification between operating and capital. Additionally
capital contributions increased $ 3.8 million over prior year due to developer
contributions.
• Change in taxes were due to the following:
• Redevelopment Agency tax increment increased due to increasing property
values in the project areas.
• Motor vehicle in- lieu tax increased due to increased state funding.
• Other taxes decreased due to a decline in impact fee revenue.
8
Government- Wide Financial Statement Analysis, Continued
• General government expenses decreased due to increased negative allocation of indirect
costs.
• Fire functional expenses increased due to the recordation of a donated piece of real
property.
• Public works costs increased as a result of increased street maintenance, reconstruction
activity.
2005 2004 % Change
Revenues:
Program Revenues
Charges for service $ 2 5,633 $ 2 6,556 - 3.5%
Operating grants and contributions 3 ,138 4 ,446 - 29.4%
Total program revenue 2 8,771 3 1,002 - 7.2%
General Revenues: 0.0%
Unrestricted Investment Earnings 4 30 2 46 74.8%
Total Revenue 2 9,201 3 1,248 - 6.6%
Expenses:
Business- type Activities
Airport 1 ,151 1 ,624 - 29.1%
Ambulance 2 ,175 1 ,965 10.7%
Marina 6 37 5 43 17.3%
Public Transportation 1 ,431 1 ,340 6.8%
Waste Water 8 ,594 7 ,525 14.2%
Water Utility 9 ,539 9 ,814 - 2.8%
Total Expenses 2 3,527 2 2,811 3.1%
Revenues Over ( Under) Expenses 5 ,674 8 ,437 - 32.7%
Internal Capital Contributions 1 ,556 - 0.0%
Transfers ( 2,267) ( 941) 140.9%
Change in Net Assets 4 ,963 7 ,496 - 33.8%
Net assets- beginning of year 8 0,645 7 3,149 10.2%
Net assets- end of year $ 8 5,608 $ 8 0,645 6.2%
Business- type Activities
Summary of Statement of Activities and Changes in Net Assets
Business- type Activities
For the Years Ended June 30, 2005 and 2004
( In thousands)
Business- type Activities Changes:
• All revenues and expenses were substantially consistent with the prior year.
• Internal capital contributions were recorded the first time in FY 2005. This presents the
transfers of capital assets from governmental activities to business- type activities.
• The increase in transfers out was to finance capital projects in the governmental
activities.
9
Fund Financial Statements Analysis
Governmental Funds – The focus of the City’s Governmental Funds is to provide information
on near- term inflows, outflows, and balances of spendable resources. Such information is
useful in assessing the City’s financing requirements. In particular, unreserved fund balance
may serve as a useful measure of a government’s net resources available for spending at the end
of the fiscal year.
As of the end of the current fiscal year, the City of Petaluma Governmental Funds reported
combined ending fund balances of $ 58.7 million, a decrease of $ 20.3 million from the prior year.
$ 61.8 million is reserved for encumbrances ($ 1.3 million), notes receivable ($ 20.9 million) long
term advances and due from other funds ($ 34.7 million), contingencies ($ 4.1 million) and
miscellaneous ($. 8 million). An addition $ 4 million is designated for special projects. This
produces a deficit unreserved fund balance of $ 7.1 million.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year,
unreserved fund balance of the General Fund was $ 2.0 million, while total fund balance was
$ 8.7 million. As a measure of the General Fund’s liquidity, it may be useful to compare both
unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund
balance represents 5% of total General Fund expenditures, while total fund balance represents
22% of that same amount.
The General Fund balance increased by $ 2.5 million during the current fiscal year.
The Redevelopment Agency had a total fund balance of $ 22.2 million:
• Special Revenue Funds $ 13,499,182
• CBD Capital Project Fund ($ 24,886,199)
• PCD Capital Project Fund $ 33,936,865
• CBD/ PCD Debt Service Funds ($ 322,393)
Most of the fund balance is reserved for notes receivable, long- term advances and due from
other funds, and capital projects. The net decrease in fund balance during the current year in
the RDA was $ 19.1 million, primarily due to the planned use of funds for the capital projects.
Proprietary Funds – Enterprise Funds activity was comparable to the prior year. Total increase
in net assets was $ 4.8 million, substantially all of which was generated by the waste water
utility fund. Internal Service Funds activity was comparable to the prior year. Total increase in
net asset was $ 1.9 million, substantially all of which was generated in the Worker’s
Compensation Fund, for the purpose of reducing the negative net asset balance carried forward
from prior years.
10
General Fund Budgetary Highlights
The General Fund total revenues were above the adopted budget estimates by $ 9.1 million, due
to: unbudgeted contributions of $ 6.2 million, and revenues in excess of budgeted amounts
including, $. 2 million property tax, $. 3 million sales tax, $. 8 million property transfer tax, $ 1.1
million motor vehicle in- lieu, and $. 5 million in overhead charges.
The General Fund expenditures were over the budget by $ 5.5 million. The majority of this
variance was caused by the accounting for donated real property and infrastructure at the end
of the year. Note 11 contains detailed information on the amounts and the explanations for all
governmental departments and funds which exceeded appropriation at the end of 2005.
Amendments to the General Fund appropriations for 2005 totaled $ 2.3 million.
Capital Asset
Capital Assets – The City’s capital assets for its Governmental and Business- Type Activities as
of June 30, 2005, amounts to $ 234.4 million ( net of accumulated depreciation). This investment
in capital assets includes land, construction in progress, buildings and improvements, vehicles
and equipment, and infrastructure. Detailed information about the City’s capital assets is
contained in Note 6. The total increase in the City’s investment in capital assets, net of
depreciation, for the current fiscal year was $ 46.9 million or a 25% increase ( this represents an
increase of 40.5% in Governmental Activities and a 8.7% increase for Business- type Activities).
Capital asset balances as of June 30, 2005 and 2004 were:
Increase Increase
( Decrease) ( Decrease)
2005 2004 % Change 2005 2004 % Change
Land $ 33.4 $ 24.3 37% $ 10.6 $ 10.0 6%
Construction in progress 39.6 13.5 193% 21.7 18.1 20%
Building and improvements 12.0 10.8 11% 10.8 10.7 1%
Vehicle and Equipment 4.3 3.4 26% 1.8 2.1 - 14%
Infrastructure 45.8 44.2 4% 54.4 50.4 8%
Total capital assets $ 135.1 $ 96.2 40% $ 99.3 $ 91.3 9%
Capital Assets, Net of Depreciation
( In Millions)
as of June 30, 2005 and 2004
Governmental Business- type
Activities Activities
Debt Administration
Long Term Debt – At the end of the current fiscal year, the City had total long term debt of $ 83.9
million, of which $ 44.6 was bonded debt of the Redevelopment Agency ( secured by future tax
increment revenue), and $ 22.9 million bonded debt of the enterprise funds ($ 6.3 certificate of
participation and $ 16.6 secured by water and waste water revenue.)
11
Debt Administration, Continued
• The Airport loan from the California Department of Transportation increased by $ 1.4
million this fiscal year, with the new proceeds to be used for the hangar expansion
capital improvement project.
• The Marina loan from the California Department of Boating and Waterways principal
increase by $ 0.2 million, the amount of unpaid interest and penalties.
• Compensated absences liability increased for both the governmental activities and
business- type activities during the current fiscal year.
State statutes limit the amount of general obligation debt a governmental entity may issue up to
15% of its total assessed valuation. The current debt limitation for the City is $ 938 million and
at June 30, 2005, the City was at 8% of its legal debt limit. Additional information on the City’s
long term debt can be found in Note 7 of this report.
Balance Balance Increase
June 30, 2005 June 30, 2004 ( Decrease)
Governmental Activities:
2004A Tax Allocation Bonds $ 17,265 $ 17,390 $ ( 125)
2000B Tax Allocation Bonds 685 785 ( 100)
2001A Tax Allocation Bonds 2,975 3,245 ( 270)
2003A Tax Allocation Bonds 23,630 23,630 -
Unamortized Bonds Issuance Discount
for 2003A Tax Allocation Bonds ( 13) ( 14) 1
Assessment District 19 TAB 642 710 ( 68)
Total governmental activities $ 45,184 $ 45,746 $ ( 562)
Business- Type Activities:
California Airport Loan $ 1,978 $ 659 $ 1,319
2003 Certificates of Participation 6,295 6,295 -
Unamortized Bonds Issuance Premium
for 2003 Certificates of Participation 77 80 ( 3)
2000 Wastewater Revenue Bonds 7,395 7,720 ( 325)
Unamoritized Bonds Issuance Discount
for 2000 Wastewater Revenue Bonds ( 66) ( 70) 4
2001B Water Revenue Bonds 9,220 9,400 ( 180)
Unamoritized Bonds Issuance Discount
for 2001B Water Revenue Bonds ( 16) ( 17) 1
California Dept of Boating & Waterways 4,674 4,455 219
Total business- type activities $ 29,557 $ 28,522 $ 1,035
Summary of Long- Term Debt
As of June 30, 2005 and 2004
( in millions)
12
Economic Outlook
The economy at both the national and State level continue to grow at a sluggish rate. The local
economy is further impacted by the continued slump in the Petaluma high tech industry. We
are also challenged by the rising retirement cost of the Public Employees Retirement System
( PERS).
The City has a diverse economic base that includes residential, retail, and commercial assets.
While the sales and hotel taxes have decreased, the property and property transfer taxes
increased, mitigating the impact of the economic slowdown.
We have adopted a balanced budget for FY 2005- 06, taking all the known factors into account.
Requests for Information
This financial report is designed to provide a general overview of the City’s finances for all
those with an interest in the government’s finances. Questions concerning any of the
information provided in this report or requests for additional financial information should be
addressed to the Administrative Services Director, 11 English Street, Petaluma, California 94952.
BASIC FINANCIAL STATEMENTS
13
14
GOVERNMENT- WIDE FINANCIAL STATEMENTS
15
16
City of Petaluma
Statement of Net Assets
June 30, 2005
Governmental Business- Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments $ 4 6,946,247 $ 1 0,589,627 $ 5 7,535,874
Restricted cash and investments 2 ,053,187 5 ,126,132 7 ,179,319
Receivables:
Accounts receivable, net 7 2,003 3 ,342,724 3 ,414,727
Interest receivable 3 38,588 - 3 38,588
Intergovernmental 3 ,249,656 1 60,746 3 ,410,402
Internal services balances ( 212,820) 2 12,820 -
Inventories 1 7,418 2 75,318 2 92,736
Other assets 6 41,350 - 6 41,350
Deposits and prepaid items 1 ,224,846 1 68,310 1 ,393,156
Total current assets 5 4,330,475 1 9,875,677 7 4,206,152
Noncurrent assets:
Long- term internal balances 1 ,245,435 ( 1,245,435) -
Non- current receivables 3 ,065,363 - 3 ,065,363
Notes receivable 2 5,312,905 - 2 5,312,905
Land held for resale 4 02,053 - 4 02,053
Deferred charges 2 27,446 6 59,761 8 87,207
Capital assets:
Non- depreciable 7 3,023,732 3 2,346,648 1 05,370,380
Depreciable, net 6 2,080,348 6 6,979,243 1 29,059,591
Total capital assets 1 35,104,080 9 9,325,891 2 34,429,971
Total noncurrent assets 1 65,357,282 9 8,740,217 2 64,097,499
Total assets 2 19,687,757 1 18,615,894 3 38,303,651
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 4 ,530,050 2 ,128,514 6 ,658,564
Wages payable 1 ,191,165 1 21,383 1 ,312,548
Interest payable 3 88,022 4 87,130 8 75,152
Unearned revenue 3 65,249 5 0,000 4 15,249
Refundable deposits 3 69,413 1 80,730 5 50,143
Claims payable - due within one year 1 ,287,360 - 1 ,287,360
Compensated absences - due within one year 4 19,201 5 3,602 4 72,803
Long- term debt - due within one year 5 82,000 1 ,096,307 1 ,678,307
Total current liabilities 9 ,132,460 4 ,117,666 1 3,250,126
Noncurrent liabilities:
Claims payable - due in more than one year 3 ,965,640 - 3 ,965,640
Compensated absences - due in more than one year 2 ,971,300 4 29,450 3 ,400,750
Long- term debt - due in more than one year 4 4,601,731 2 8,460,595 7 3,062,326
Total noncurrent liabilities 5 1,538,671 2 8,890,045 8 0,428,716
Total liabilities 6 0,671,131 3 3,007,711 9 3,678,842
NET ASSETS
Invested in capital assets, net of related debt 8 9,920,349 6 9,768,989 1 59,689,338
Restricted for:
Special projects 1 6,289,349 - 1 6,289,349
Debt service - 5 ,126,132 5 ,126,132
Capital projects 4 0,933,275 - 4 0,933,275
Total restricted 5 7,222,624 5 ,126,132 6 2,348,756
Unrestricted 1 1,873,653 1 0,713,062 2 2,586,715
$ 1 59,016,626 $ 8 5,608,183 $ 2 44,624,809
See accompanying Notes to Basic Financial Statements.
Primary Government
Total net assets
17
City of Petaluma
Statement of Activities and Changes in Net Assets
For the year ended June 30, 2005
Indirect Operating Capital
Expense Charges for Grants and Grants and
Functions/ Programs Expenses Allocation Services Contributions Contributions
Primary government:
Governmental activities:
General government $ 4,431,366 $ ( 4,548,032) $ 1,046,469 $ 99,144 $ 229,876
Community development 13,973,094 1,490,118 3,662,041 873,349 645,748
Police 12,728,827 2,606 1,204,915 326,404 -
Fire 7,083,647 2,675 583,811 - 1,754,990
Parks and recreation 3,863,928 678,059 1,431,244 38,900 6,789,000
Public works 6,206,076 77,996 1,545,972 1,076,894 1,824,487
Interest on long- term debt 1,129,694 27,202 - - -
Total governmental activities 49,416,632 ( 2,269,376) 9,474,452 2,414,691 11,244,101
Business- type activities:
Airport 1,076,774 73,812 1,031,176 126,730 -
Ambulance 1,696,071 479,200 1,799,204 - -
Marina 576,070 60,773 235,068 - -
Public transportation 1,318,552 112,578 186,207 1,916,156 -
Waste water utility 7,765,897 827,587 13,289,537 842,830 -
Water utility 8,824,026 715,426 9,091,568 251,906 -
Total business- type activities 21,257,390 2,269,376 25,632,760 3,137,622 -
Total primary government $ 70,674,022 $ - $ 35,107,212 $ 5,552,313 $ 11,244,101
General Revenues and Transfers:
Taxes:
Property taxes
Redevelopment tax increment
Sales taxes
Franchise tax
Property transfer tax
Motor vehicle in- lieu taxes
Other taxes
Total taxes
Unrestricted investment earnings
Miscellaneous revenue
Internal capital contributions
Transfers
Total general revenues and transfers
Change in net assets
Net assets - beginning of year
Net assets - end of year
See accompanying Notes to Basic Financial Statements.
Program Revenues
18
Governmental Business- Type
Total Activities Activities Total
$ 1,375,489 $ 1,492,155 $ - $ 1,492,155
5,181,138 ( 10,282,074) - ( 10,282,074)
1,531,319 ( 11,200,114) - ( 11,200,114)
2,338,801 ( 4,747,521) - ( 4,747,521)
8,259,144 3,717,157 - 3,717,157
4,447,353 ( 1,836,719) - ( 1,836,719)
- ( 1,156,896) - ( 1,156,896)
23,133,244 ( 24,014,012) - ( 24,014,012)
1,157,906 - 7,320 7,320
1,799,204 - ( 376,067) ( 376,067)
235,068 - ( 401,775) ( 401,775)
2,102,363 - 671,233 671,233
14,132,367 - 5,538,883 5,538,883
9,343,474 - ( 195,978) ( 195,978)
28,770,382 - 5,243,616 5,243,616
$ 51,903,626 ( 24,014,012) 5,243,616 ( 18,770,396)
5,202,050 - 5,202,050
13,358,873 - 13,358,873
10,313,999 - 10,313,999
1,840,187 - 1,840,187
1,756,647 - 1,756,647
4,271,413 - 4,271,413
3,460,981 - 3,460,981
40,204,150 - 40,204,150
1,816,739 430,542 2,247,281
1,060,745 - 1,060,745
( 1,556,046) 1,556,046 -
2,267,332 ( 2,267,332) -
43,792,920 ( 280,744) 43,512,176
19,778,908 4,962,872 24,741,780
139,237,718 80,645,311 219,883,029
$ 159,016,626 $ 85,608,183 $ 244,624,809
and Changes in Net Assets
Net ( Expense) Revenue
19
20
FUND FINANCIAL STATEMENTS
21
22
Governmental Fund Financial Statements
General Fund - The General Fund is used to account for resources traditionally associated with government
which are not required legally or by sound financial management to be accounted for in another fund.
Home/ Begin Special Revenue Fund - The Home/ Begin Special Revenue Fund is used to account for federal
grants received under the Housing and Community Development Act of 1974. The money is used for specific
programs, which provide housing to people with low and moderate income.
Redevelopment Special Revenue Fund - This fund accounts for the redevelopment agency’s 20% set- aside, as
required by law, of tax increment. The activity of this funds consists of supporting development of affordable
housing in the community. Also included in this fund are redevelopment donations and grant revenues
received, which accounts for restricted donations and grants.
Impact Fees Fund - This fund is used to account for fee received from local development projects, which are
used for the construction of major public improvements, assistance to low income people in the community,
acquisition, development, enhancement of neighborhood and community parks with fee receipts from new
residential development.
City Capital Project funds - These funds account for the collection of resources and the related expenditure
on acquisition and construction of major capital improvement projects in the City, other than those accounted
for in proprietary funds.
Redevelopment- CBD Capital Project Fund - This funds accounts for the administration and capital projects
undertaken in the Central Business District project area of the Agency.
Redevelopment- PCD Capital Project Fund - This funds accounts for the administration and capital
improvement projects undertaken in the Petaluma Community Development project area of the
Redevelopment Agency.
23
City of Petaluma
Balance Sheet
Governmental Funds
June 30, 2005
Impact
General Home/ Begin Redevelopment Fees
Fund Special Revenue Special Revenue Special Revenue
ASSETS
Cash and investments $ 6 ,587,360 $ 6 03,878 $ 1 ,663,097 $ 6 ,997,368
Restricted cash and investments - - - -
Receivables:
Accounts receivable, net 72,003 - - -
Interest receivable 3 04,812 - - -
Intergovernmental receivable 2 ,458,100 - 42,866 51,613
Due from other funds 1 ,592,000 - - 79,000
Inventories 9,613 - - -
Deposits and prepaid items 50,304 - 292 3 25,258
Other assets 2 61,470 - 54,229 73,600
Advances to other funds - - - -
Non- current receivables 25,477 7 04,840 1 ,134,311 2 81,622
Notes receivable 49,375 6 ,189,175 1 1,812,256 4 ,933,061
Land held for resale - - - -
Total assets 1 1,410,514 7 ,497,893 1 4,707,051 1 2,741,522
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities 6 24,824 66,000 33,577 1 67,615
Wages payable 1 ,118,147 - 5,752 -
Deferred revenue 5 21,980 6 ,900,135 1 ,168,540 4 27,057
Refundable deposits 3 69,413 - - -
Due to other funds - - - -
Advances from other funds 1 12,500 - - -
Total liabilities 2 ,746,864 6 ,966,135 1 ,207,869 5 94,672
Fund Balances:
Reserved for:
Encumbrances 6 59,100 - 2 52,290 -
Notes receivable 49,375 6 ,189,175 1 1,812,256 4 93,061
Land held for resale - - - -
Long- term advances and due from other funds 1 ,592,000 - - 79,000
Inventories 9,613 - - -
Contingencies 4 ,150,000 - - -
Deposits and prepaids 50,304 - 292 2 70,604
Total reserved 6 ,510,392 6 ,189,175 1 2,064,838 8 42,665
Unreserved, designated for:
General fund 1 84,392 - - -
Special revenue funds - 2 01,578 - 3 ,506,149
Unreserved, reported in:
General fund 1 ,968,866 - - -
Special revenue funds - ( 5,858,995) 1 ,434,344 7 ,798,036
Debt service funds - - - -
Capital project funds - - - -
Permanent funds - - - -
Total unreserved, undesignated 1 ,968,866 ( 5,858,995) 1 ,434,344 7 ,798,036
Total fund balances 8 ,663,650 5 31,758 1 3,499,182 1 2,146,850
Total liabilities and fund balances $ 1 1,410,514 $ 7 ,497,893 $ 1 4,707,051 $ 1 2,741,522
See accompanying Notes to Basic Financial Statements.
Major Funds
24
Redevelopment Redevelopment Non- Major Total
City CBD PCD Governmental Governmental
Capital Project Capital Project Capital Project Funds Funds
$ 6 ,956,797 $ 6 ,290,357 $ - $ 9 ,336,266 $ 3 8,435,123
- - 1 ,908,178 1 45,009 2 ,053,187
- - - - 72,003
- - 33,776 - 3 38,588
- 28,161 1 43,301 5 25,615 3 ,249,656
- 1 ,385,700 2 57,100 - 3 ,313,800
- - - - 9,613
- - 6,100 908 3 82,862
- - - 2 52,051 6 41,350
- - 3 2,793,685 - 3 2,793,685
7 48,720 - 1 23,788 46,605 3 ,065,363
- - 1 ,472,838 8 56,200 2 5,312,905
- - 4 02,053 - 4 02,053
7 ,705,517 7 ,704,218 3 7,140,819 1 1,162,654 1 10,070,188
1 74,177 1 ,053,807 1 ,401,239 9 74,779 4 ,496,018
1,320 7,610 1 2,749 10,032 1 ,155,610
- - 4 14,266 9 90,538 1 0,422,516
- - - - 3 69,413
1 ,460,000 10,000 1 ,375,700 4 68,100 3 ,313,800
- 3 1,519,000 - - 3 1,631,500
1 ,635,497 3 2,590,417 3 ,203,954 2 ,443,449 5 1,388,857
- 8,800 3 35,800 36,984 1 ,292,974
- - 1 ,472,838 8 56,200 2 0,872,905
- - 4 02,053 - 4 02,053
- - 3 3,050,785 - 3 4,721,785
- - - - 9,613
- - - - 4 ,150,000
- - - 908 3 22,108
- 8,800 3 5,261,476 8 94,092 6 1,771,438
- - - - 1 84,392
- - - 1 55,200 3 ,862,927
- - - - 1 ,968,866
- - - 7 ,966,856 1 1,340,241
- - - ( 322,393) ( 322,393)
6 ,070,020 ( 24,894,999) ( 1,324,611) - ( 20,149,590)
- - - 25,450 25,450
6 ,070,020 ( 24,894,999) ( 1,324,611) 7 ,669,913 ( 7,137,426)
6 ,070,020 ( 24,886,199) 3 3,936,865 8 ,719,205 5 8,681,331
$ 7 ,705,517 $ 7 ,704,218 $ 3 7,140,819 $ 1 1,162,654 $ 1 10,070,188
Major Funds
25
26
City of Petaluma
Reconciliation of the Governmental Funds Balance Sheet
to the Government- Wide Statement of Net Assets
June 30, 2005
Total Fund Balances - Total Governmental Funds $ 58,681,331
Capital assets used in governmental activities were not current financial resources. Therefore, they were
not reported in the Governmental Funds Balance Sheet. Except for the internal service funds reported
below, the capital assets were adjusted as follows:
Non- depreciable 7 3,023,732
Depreciable, net 6 0,217,775
Total capital assets 133,241,507
Revenues which are deferred on the Governmental Funds Balance Sheet because they are not currently
available are reported as revenue in the Statement of Activities and Changes in Net Assets and accordingly
increase the net assets on the Statement of Net Assets. 10,057,267
Internal Service Funds were used by management to charge the costs of certain activities, such as
insurance and fleet management, to individual funds. The assets and liabilities of the Internal Service
Funds were included in governmental activities in the Government- Wide Statement of Net Assets. 5,639,136
Bond issuance costs are an expenditure in the governmental funds but are capitalized and amortized over
the life of the bonds in the Government- Wide Financial Statements. 227,446
Interest payable on long- term debt did not require current financial resources. Therefore, interest payable
was not reported as a liability on the Governmental Funds Balance Sheet. ( 388,022)
Long- term liabilities were not due and payable in the current period. Therefore, they were not reported in
the Governmental Funds Balance Sheet.
Compensated absences - due in within one year ( 419,201)
Compensated absences - due in more than one year ( 2,839,107)
Long- term liabilities - due within one year ( 582,000)
Long- term liabilities - due in more than one year ( 44,601,731)
Total long- term liabilities ( 48,442,039)
Net Assets of Governmental Activities $ 1 59,016,626
See accompanying Notes to Basic Financial Statements.
Amounts reported for Governmental Activities in the Statement of Net Assets were different because:
27
City of Petaluma
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2005
Impact
General Home/ Begin Redevelopment Fees
Fund Special Revenue Special Revenue Special Revenue
REVENUES:
Taxes $ 19,614,848 $ - $ 2,556,414 $ -
Licenses, permits and fees 2,916,568 - - 1,572,750
Fines, forfeitures and penalties 4 29,836 - - -
Use of money and property 502,460 31,812 28,840 854,167
Intergovernmental 4 ,973,980 2 44,525 13,696 87,202
Charges for current services 6,667,730 - 1 7,925 -
Other 6 ,396,544 512 8 3,202 -
Total revenues 41,501,966 276,849 2,700,077 2 ,514,119
EXPENDITURES:
Current:
General government 3 ,874,863 - - -
Community development 2,620,433 2 61,780 886,437 2,637,582
Police 12,447,247 - - -
Fire 7 ,105,833 - - -
Parks and recreation 3,939,631 - - 1 ,000
Public works 3,571,137 - - 2 ,580
Capital outlay 6 ,020,759 - - -
Debt service:
Principal - - - -
Interest 8 41 - - -
Total expenditures 39,580,744 261,780 886,437 2,641,162
REVENUES OVER ( UNDER) EXPENDITURES 1,921,222 1 5,069 1,813,640 ( 127,043)
OTHER FINANCING SOURCES ( USES):
Proceeds from sale of assets 8,756 - - -
Transfers in 1,040,000 - - -
Transfers out ( 449,000) - ( 231,853) ( 5,893,876)
Total other financing sources ( uses) 5 99,756 - ( 231,853) ( 5,893,876)
Net change in fund balances 2,520,978 1 5,069 1,581,787 ( 6,020,919)
FUND BALANCES:
Beginning of year 6 ,142,672 5 16,689 11,917,395 1 8,167,769
$ 8,663,650 $ 5 31,758 $ 13,499,182 $ 1 2,146,850
See accompanying Notes to Basic Financial Statements.
End of year
Major Funds
28
Redevelopment Redevelopment Non- Major Total
City CBD PCD Governmental Governmental
Capital Project Capital Project Capital Project Funds Funds
$ - $ 727,977 $ 10,033,717 $ 1,182,897 $ 34,115,853
- 5,218 - 207,891 4,702,427
- 200 - 3 1,448 461,484
2 4,957 - 747,263 2 21,109 2,410,608
525,336 - 548,895 2,274,254 8 ,667,888
- - - 316,985 7,002,640
170,902 13,055 11,202 5,790,884 12,466,301
721,195 746,450 11,341,077 10,025,468 69,827,201
- - - - 3,874,863
- 579,075 5 ,294,188 1,273,113 13,552,608
- - - 262,356 12,709,603
- - - 1 0,808 7,116,641
- - - 323,147 4,263,778
- - - 1,412,096 4 ,985,813
10,097,433 1 6,582,169 9,183,712 39,280 41,923,353
- - - 563,000 563,000
2,645 4 12,878 - 2,271,314 2 ,687,678
10,100,078 1 7,574,122 14,477,900 6,155,114 91,677,337
( 9,378,883) ( 16,827,672) ( 3,136,823) 3,870,354 ( 21,850,136)
- - - - 8,756
9,803,042 14,612,127 30,981,598 15,205,649 71,642,416
( 192,000) ( 13,723,800) ( 9,074,000) ( 40,586,024) ( 70,150,553)
9,611,042 888,327 21,907,598 ( 25,380,375) 1,500,619
232,159 ( 15,939,345) 18,770,775 ( 21,510,021) ( 20,349,517)
5,837,861 ( 8,946,854) 1 5,166,090 30,229,226 79,030,848
$ 6,070,020 $ ( 24,886,199) $ 33,936,865 $ 8,719,205 $ 58,681,331
Major Funds
29
City of Petaluma
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Government- Wide Statement of Activities and Changes in Net Assets
For the year ended June 30, 2005
Net Change in Fund Balances - Total Governmental Funds $ ( 20,349,517)
Governmental Funds reported capital outlay as expenditures. However, in the Government- Wide Statement of
Activities and Changes in Net Assets, the cost of those assets was allocated over their estimated useful lives as
depreciation expense. This was the amount of capital assets recorded in the current period.
Capital assets additions 42,204,332
Capital assets contributed to Business- Type Activities ( 1,556,046)
Depreciation expense on capital assets was reported in the Government- Wide Statement of Activities and Changes in
Net Assets, but they did not require the use of current financial resources. Therefore, depreciation expense was not
reported as expenditures in Governmental Funds. ( 2,781,122)
Loss on the disposal of capital assets is reported in the Government- Wide Statement of Activities and Changes in Net
Assets, but they do not require the use of current financial resources. Therefore, it is not reported as revenues in
Governmental Funds.
- Proceeds from sale of capital assets ( 8,756)
- Loss on disposal of capital assets ( 195,298)
Revenue which are deferred on the Governmental Funds Balance Sheet because they are not currently available are
reported as revenue in the Statement of Activities and Changes in Net Assets and accordingly increase the net assets
on the Statement of Net Assets 821,652
Internal service funds are used by management to charge the costs of certain activities to individual funds. The net
expense of certain activities of certain internal service funds is reported with governmental activities. 1,704,820
Interest expense on long- term debt was reported in the Government- Wide Statement of Activities and Changes in
Net Assets, but they did not require the use of current financial resources. Therefore, interest expense was not
reported as expenditures in Governmental Funds. The amount represents the change in accrued interest from prior
year. 5 ,670
Bonds issuance cost are expenditures on the Governmental Funds Financial Statements. However, in the
Government- Wide Statement of Activities and Changes in Net Assets, the bond issuance cost are capitalized and
amortized over the life of the bonds.
Current year amortization of bond issuance costs ( 81,811)
Bond discount is recognized as expenditure on the Governmental Funds Financial Statements. However, in the
Government- Wide Statement of Activities and Changes in Net Assets, the bond discount is capitalized and
amortized over the life of the bonds. This amount represent the current year amortization ( 474)
Compensated Absences were reported on the Government- Wide Statement of Activities and Changes in Net Assets,
but they did not require the use of current financial resources. Therefore, compensated absences were not reported as
expenditures in the Governmental Funds. ( 547,542)
Bond proceeds provided current financial resources to Governmental Funds, but issuing debt increased long- term
liabilities in the Government- Wide Statement of Net Assets. Repayment of bond principal was an expenditure in
Governmental Funds, but the repayment reduced long- term liabilities in the Government- Wide Statement of Net
Assets.
Long- term debt repayments 563,000
Change in Net Assets of Governmental Activities $ 19,778,908
See accompanying Notes to Basic Financial Statements. ####
Amounts reported for governmental activities in the Statement of Activities were different because:
30
Proprietary Fund Financial Statements
Airport Fund - This fund accounts for the daily operation and maintenance of the Petaluma Airport,
including capital improvements.
Ambulance Fund - The fund is used to account for the activities related to providing ambulance
transportation services for the City.
Marina Fund - This fund accounts for the daily operation and maintenance of the Petaluma Marina,
structural and equipment improvements, and planning and implementing promotional campaigns.
Public Transportation Fund - The fund is used to account for the operation of City's transit services.
Waste Water Utility Fund - This fund is part of the Department of Water Resources and Conservation, which
provides comprehensive and integrated management of Petaluma’s water resources, including collection and
treatment of wastewater.
Water Utility Fund - This fund is part of the Department of Water Resources and Conservation, which
provides comprehensive and integrated management of Petaluma’s water resources, including reliable
delivery of high quality water.
Internal Service Funds - These funds are used to provide goods and services by one department or agency to
other departments or agencies of the City on a cost reimbursement basis.
31
City of Petaluma
Statement of Net Assets
Proprietary Funds
June 30, 2005
Public
Airport Ambulance Marina Transportation
Fund Fund Fund Fund
ASSETS
Current assets:
Cash and investments $ 1 ,396,984 $ 4 9,105 $ 2 44,832 $ 1 87,760
Restricted cash and investment 3 ,812,432 - - -
Receivables:
Accounts receivable, net 7 1,623 3 60,879 1 4,391 -
Intergovernmental receivable 9 ,121 - - 5 1,625
Inventories 3 7,929 - 2 ,111 2 3,850
Deposits and prepaids 2 ,647 1 92 7 ,564 1 0,635
Total current assets 5 ,330,736 4 10,176 2 68,898 2 73,870
Non- current assets:
Deferred Debt Charges 2 88,340 - - -
Advances to other funds - - - -
Capital assets: - -
Nondepreciable 5 ,217,263 - - 9 33,956
Depreciable 9 ,685,335 4 95,115 4 ,823,560 1 ,644,414
Less accumulated depreciation ( 7,100,918) ( 294,742) ( 2,039,458) ( 567,963)
Total capital assets 7 ,801,680 2 00,373 2 ,784,102 2 ,010,407
Total non- current assets 8 ,090,020 2 00,373 2 ,784,102 2 ,010,407
Total assets 1 3,420,756 6 10,549 3 ,053,000 2 ,284,277
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 3 25,915 1 3,304 2 1,054 8 0,662
Wages payable 1 ,552 2 4,992 3 77 4 ,871
Interest payable 1 43,938 - 2 09,098 -
Refundable deposits 1 04,155 - 1 2,675 -
Deferred Revenue - - - 5 0,000
Claims payable - due within one year - - - -
Compensated absences - due within one year 6 92 2 ,646 - 1 ,118
Long- term debt - due within one year 3 10,253 - 2 21,376
Total current liabilities 8 86,505 4 0,942 4 64,580 1 36,651
Non- current liabilities:
Claims payable - due in more than one year - - - -
Compensated absences - due in more than one year 2 ,059 8 3,627 - 3 6,599
Advances from other funds - due in more than one year - - 1 ,274,685 -
Long- term debt - due in more than one year 8 ,039,237 - 4 ,452,745 -
Total non- current liabilities 8 ,041,296 8 3,627 5 ,727,430 3 6,599
Total liabilities 8 ,927,801 1 24,569 6 ,192,010 1 73,250
NET ASSETS
Invested in capital assets, net of related debt ( 547,810) 2 00,373 ( 1,890,019) 2 ,010,407
Restricted for debt service 3 ,812,432 - - -
Unrestricted 1 ,228,333 2 85,607 ( 1,248,991) 1 00,620
Total net assets $ 4 ,492,955 $ 4 85,980 $ ( 3,139,010) $ 2 ,111,027
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.
Equipment replacement ( BA) fund is completely allocated to the business type activities
Net assets of business- type activities
See accompanying Notes to Basic Financial Statements.
Major Funds
32
Governmental
Activities
Waste Water Water Utility Internal
Utility Fund Fund Total Service Funds
$ 5 ,119,151 $ 2 ,832,371 $ 9 ,830,203 $ 9 ,270,548
1 06 1 ,313,594 5 ,126,132 -
1 ,818,100 1 ,077,731 3 ,342,724 -
1 00,000 - 1 60,746 -
- 2 11,428 2 75,318 7 ,805
1 47,149 1 23 1 68,310 8 41,984
7 ,184,506 5 ,435,247 1 8,903,433 1 0,120,337
1 14,678 2 56,743 6 59,761 -
- - - 1 12,500
2 0,276,669 5 ,918,760 3 2,346,648 -
5 6,557,302 5 0,627,152 1 23,832,878 2 ,787,012
( 24,124,609) ( 23,120,560) ( 57,248,250) ( 529,824)
5 2,709,362 3 3,425,352 9 8,931,276 2 ,257,188
5 2,824,040 3 3,682,095 9 9,591,037 2 ,369,688
6 0,008,546 3 9,117,342 1 18,494,470 1 2,490,025
1 ,056,900 6 30,679 2 ,128,514 3 4,032
3 9,499 5 0,092 1 21,383 3 5,555
6 2,510 7 1,584 4 87,130 -
- 6 3,900 1 80,730 -
- - 5 0,000 -
- - - 1 ,287,360
2 0,961 2 8,185 5 3,602 -
3 35,552 2 29,126 1 ,096,307 -
1 ,515,422 1 ,073,566 4 ,117,666 1 ,356,947
- - - 3 ,965,640
1 02,864 2 04,301 4 29,450 1 32,193
- - 1 ,274,685 -
6 ,993,478 8 ,975,135 2 8,460,595 -
7 ,096,342 9 ,179,436 3 0,164,730 4 ,097,833
8 ,611,764 1 0,253,002 3 4,282,396 5 ,454,780
4 5,380,332 2 4,221,091 6 9,374,374 2 ,257,188
1 06 1 ,313,594 5 ,126,132 -
6 ,016,344 3 ,329,655 9 ,711,568 4 ,778,057
$ 5 1,396,782 $ 2 8,864,340 8 4,212,074 $ 7 ,035,245
2 12,820
1 ,183,289
$ 8 5,608,183
Major Funds
33
City of Petaluma
Statement of Revenues, Expenses and Changes in Net Assets
Proprietary Funds
For the year ended June 30, 2005
Public
Airport Ambulance Marina Transportation
Fund Fund Fund Fund
OPERATING REVENUES:
Charges for sales $ 476,971 $ - $ 9,183 $ -
Charges for services 554,205 1,799,204 225,885 186,207
Connection fees - - - -
Total operating revenues 1,031,176 1 ,799,204 235,068 186,207
OPERATING EXPENSES:
Cost of services 491,553 1,424,923 58,988 1,030,921
Claims - - - -
General and administrative 209,629 734,497 190,181 279,026
Depreciation and amortization 331,229 52,059 141,225 105,853
Total operating expenses 1,032,411 2 ,211,479 390,394 1,415,800
Operating income ( loss) ( 1,235) ( 412,275) ( 155,326) ( 1,229,593)
NONOPERATING REVENUES ( EXPENSES):
Intergovernmental 1 26,730 - - 1,916,156
Investment earnings and rent 8 7,653 2,413 11,804 22,314
Interest expense ( 121,104) - ( 246,287) ( 3,493)
Gain or ( loss) on disposal of assets 390 3 ,250 - ( 16,676)
Contribution to/ from City - - 1 2,659 -
Total nonoperating revenues ( expenses) 93,669 5,663 ( 221,824) 1,918,301
Income ( loss) before operating transfers 92,434 ( 406,612) ( 377,150) 688,708
OPERATING TRANSFERS
Transfers in 14,337 - 42,000 201,800
Transfers out - - - -
Total transfers 14,337 - 42,000 201,800
Change in net assets 1 06,771 ( 406,612) ( 335,150) 890,508
NET ASSETS:
Beginning of year 4 ,386,184 8 92,592 ( 2,803,860) 1,220,519
End of year $ 4,492,955 $ 4 85,980 $ ( 3,139,010) $ 2,111,027
Some amounts reported for business- type activities in the statement of activities are different because
the net revenue ( expense) of certain internal service funds is reported with business- type activities.
Equipment replacement ( BA) fund is completely allocated to the business type activities
Change in net assets of business- type activities
See accompanying Notes to Basic Financial Statements.
Major Funds
34
Governmental
Activities
Waste Water Water Utility Internal
Utility Fund Fund Total Service Funds
$ - $ 8,965,859 $ 9 ,452,013 $ -
12,542,228 208,680 15,516,409 5,650,907
747,309 447,603 1,194,912 -
13,289,537 9,622,142 26,163,334 5,650,907
3,910,700 6 ,415,025 13,332,110 2,770,201
- - - 1,469,631
2,849,149 2 ,258,458 6,520,940 2 51,350
1,372,740 1 ,248,924 3,252,030 2 72,789
8,132,589 9 ,922,407 23,105,080 4,763,971
5,156,948 ( 300,265) 3,058,254 8 86,936
842,830 251,906 3,137,622 -
7 9,018 204,681 407,883 1 80,072
( 13,534) ( 100,795) ( 485,213) -
( 496,032) ( 45,594) ( 554,662) -
495,538 1,047,849 1 ,556,046 ( 27,383)
907,820 1,358,047 4 ,061,676 1 52,689
6,064,768 1 ,057,782 7,119,930 1 ,039,625
154,931 49,000 462,068 8 30,000
( 1,524,000) ( 1,259,931) ( 2,783,931) -
( 1,369,069) ( 1,210,931) ( 2,321,863) 830,000
4,695,699 ( 153,149) 4,798,067 1,869,625
46,701,083 2 9,017,489 5,165,620
$ 51,396,782 $ 2 8,864,340 $ 7,035,245
152,381
12,424
$ 4,962,872
Major Funds
35
City of Petaluma
Combining Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2005
Public
Airport Ambulance Marina Transportation
Fund Fund Fund Fund
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers/ other funds $ 1,009,542 $ 1,766,338 $ 216,717 $ 225,572
Cash payments to suppliers for goods and services ( 191,251) ( 1,429,953) ( 45,110) ( 1,069,352)
Cash payments to employees for services ( 202,985) ( 719,272) ( 189,845) ( 277,760)
Claims paid - - - -
Net cash provided ( used) by operating activities 615,306 ( 382,887) ( 18,238) ( 1,121,540)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Due to other funds ( 70,477) - - ( 1,014,247)
Transfers in 14,337 - 42,000 201,800
Transfers out - - - -
Net cash provided ( used) by noncapital financing activities ( 56,140) - 42,000 ( 812,447)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Intergovernmental capital receipts 119,900 - - 2,152,808
Change in capital assets, net ( 632,591) 3,250 - ( 49,882)
Proceeds of long term debt 1,400,000 - 218,630 -
Payments of long term debt ( 84,895) - - -
Interest paid ( 131,995) - ( 235,322) ( 3,493)
Net cash provided ( used) by capital and
related financing activities 670,419 3,250 ( 16,692) 2,099,433
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received from investments 87,653 6,250 13,468 22,314
Net cash provided ( used) by investing activities 87,653 6,250 13,468 22,314
Net increase ( decrease) in cash and cash equivalents 1,317,238 ( 373,387) 20,538 187,760
CASH AND CASH EQUIVALENTS:
Beginning of year 3,892,178 422,492 224,294 -
End of year $ 5,209,416 $ 49,105 $ 244,832 $ 187,760
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income ( loss) $ ( 1,235) $ ( 412,275) $ ( 155,326) $ ( 1,229,593)
Adjustments to reconcile operating income ( loss) to net
cash provided ( used) by operating activities:
Depreciation and amortization 331,229 52,059 141,225 105,853
Changes in:
Accounts receivable ( 21,634) ( 33,249) 8,183 -
Inventories 7,325 - ( 263) ( 4,682)
Deposits and prepaids ( 2,647) 383 ( 7,564) ( 10,635)
Advances - - - -
Accounts payable and accrued liabilities 295,624 ( 5,030) 14,141 ( 33,749)
Wage payable 903 6,886 336 667
Refundable deposits 2,990 - ( 18,970) -
Deferred revenue - - - 50,000
Claims payable - - - -
Accrued compensated absences 2,751 8,339 - 599
Total adjustments 616,541 29,388 137,088 108,053
Net cash provided ( used) by operating activities $ 615,306 $ ( 382,887) $ ( 18,238) $ ( 1,121,540)
Major Funds
36
Governmental
Activities
Waste Water Water Utility Internal
Utility Fund Fund Total Service Funds
$ 12,918,530 $ 9,539,680 $ 25,676,379 $ 5,417,679
( 4,385,406) ( 6,658,015) ( 13,779,087) ( 4,388,933)
( 2,808,779) ( 2,225,823) ( 6,424,464) ( 226,859)
- - - ( 306,000)
5,724,345 655,842 5,472,828 495,887
- - ( 1,084,724) -
154,931 49,000 462,068 830,000
( 1,524,000) ( 1,259,931) ( 2,783,931) -
( 1,369,069) ( 1,210,931) ( 3,406,587) 830,000
742,830 251,906 3,267,444 -
( 4,571,618) ( 5,021,849) ( 10,272,690) ( 1,511,725)
- - 1,618,630 -
( 320,552) ( 219,126) ( 624,573) -
( 15,904) ( 102,162) ( 488,876) -
( 4,165,244) ( 5,091,231) ( 6,500,065) ( 1,511,725)
121,155 249,764 500,604 247,953
121,155 249,764 500,604 247,953
311,187 ( 5,396,556) ( 3,933,220) 62,115
4,808,070 9,542,521 18,889,555 9,208,433
$ 5,119,257 $ 4,145,965 $ 14,956,335 $ 9,270,548
$ 5,156,948 $ ( 300,265) $ 3,058,254 $ 886,936
1,372,740 1,248,924 3,252,030 272,789
( 201,544) ( 75,465) ( 323,709) -
- ( 56,469) ( 54,089) 2,224
( 147,149) 3,753 ( 163,859) ( 152,202)
- - - ( 112,500)
( 474,706) ( 186,521) ( 390,241) ( 119,851)
21,066 ( 4,528) 25,330 6,999
( 22,314) ( 10,750) ( 49,044) -
- - 50,000 -
- - - ( 306,000)
19,304 37,163 68,156 17,492
567,397 956,107 2,414,574 ( 391,049)
$ 5,724,345 $ 655,842 $ 5,472,828 $ 495,887
Major Funds
37
38
Private Purpose Trust Funds:
These funds account for assets legally held in trust for speific purpose.
Agency Funds:
These funds are custodial in nature ( assets equal liabilities) and do not involve measurement of results
of operations. They are used to account for assets heald in an agency capacity for others and therefore
cannnot be used to support the City's programs.
Fiduciary Fund Financial Statements
39
City of Petaluma
Statement of Fiduciary Net Assets
Fiduciary Funds
For the year ended June 30, 2005
Private Purpose
Trusts Agency
Funds Funds
ASSETS
Cash and investments $ 168,274 $ 3,869,566
Restricted cash and investments - 678,189
Intergovernmental receivable - 70,431
Total assets 168,274 $ 4,618,186
LIABILITIES
Accrued liabilities - $ 4,618,186
Total liabilities - $ 4,618,186
NET ASSETS
Held in trust $ 168,274
See accompanying Notes to Basic Financial Statements.
40
City of Petaluma
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
For the year ended June 30, 2005
Private-
Purpose
Trusts
ADDITIONS:
Investment income $ 1,338
Total additions 1,338
DEDUCTIONS:
Program costs
Administrative costs 1,799
Total deductions 1,799
CHANGES IN NET ASSETS ( 461)
NET ASSETS:
Beginning of year 168,735
End of year $ 168,274
See accompanying Notes to Basic Financial Statements.
41
42
City of Petaluma
Notes to Basic Financial Statements
For the year ended June 30, 2005
43
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Petaluma, California ( City) have been prepared in conformity with
generally accepted accounting principles ( GAAP) as applied to governmental agencies. The Governmental
Accounting Standards Board ( GASB) is the accepted standard setting body for establishing governmental
accounting and financial reporting principles. The more significant of the City’s accounting policies are
described below.
A. Reporting Entity
The City was incorporated as a general law City by the state legislature on April 12, 1858. The City currently
operates under a Council- Manager form of government established under a charter election in 1947. The City
provides the following services as authorized by its charter: police and fire protection, ambulance service,
transit service, parks and recreation, public works, community development, and general administrative
services. In addition, the City owns and operates a water and sewer system, a municipal airport, and a marina.
As required by GAAP, these basic financial statements present the City and its component units, entities for
which the City is considered to be financially accountable. Blended component units, although legally separate
entities are, in substance, part of the City’s operations and data from these units are combined with data of the
City. Discretely presented component units, on the other hand, are reported in a separate column in the
combined basic financial statements to emphasize their legal separateness from the City. Each blended
component unit has a June 30 year- end. The City had no discretely presented component units. The following
entities are reported as blended component units:
Petaluma Community Development Commission
The Petaluma Community Development Commission ( PCDC) was established by the City Council under the
State of California Health and Safety Code, Section 34100, et seq. on September 27, 1976, to perform
redevelopment activities for the City. Although PCDC is a separate legal entity from the City, it is reported as
if it were part of the primary government because the City Council is the governing board, and it is financially
accountable to the City. Separate basic financial statements are issued by PCDC to comply with the
redevelopment agency guidelines as established by the State of California. A copy may be obtained upon
request from the City of Petaluma. PCDC is comprised of two project areas, Central Business District ( CBD)
and Petaluma Community Development project area ( PCD). A separate basic financial statement was issued
and may be obtain from the City at City Hall.
City of Petaluma Public Financing Corporation
The City of Petaluma Public Financing Corporation ( PPFC) was established in November of 1990 and is a not-for-
profit benefit corporation, created under the laws of the State of California. Although PPFC is a separate
legal entity from the City, it is reported as if it were part of the primary government, because its sole purpose
is to be a financing entity for the City. PPFC does not issue separate basic financial statements.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
44
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
A. Reporting Entity, Continued
Petaluma Public Financing Authority
The Petaluma Public Financing Authority ( PPFA) was established in May of 1996 as a joint powers authority
between the City and PCDC. Its purpose was to issue revenue bonds, which provided funds for a consolidated
special assessment bond refunding. Although PPFA is a separate legal entity from the City, it is reported as if
it were part of the primary government, because its sole purpose is to be a financing entity for the City. PPFA
does not issue separate basic financial statements.
B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting
entity. The operations of each fund are accounted for with a separate set of self- balancing accounts that
comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate.
Governmental resources are allocated to and accounted for in individual funds based upon the purposes for
which they are to be spent and the means by which spending activities are controlled.
Government - Wide Financial Statements
The City’s Government- Wide Financial Statements include a Statement of Net Assets and a Statement of
Activities and Changes in Net Assets. These statements present summaries of governmental and business-type
activities for the City accompanied by a total column. Fiduciary activities of the City are not included in
these statements.
The Government- Wide Financial Statements are presented on an “ economic resources” measurement focus and
the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as
well as infrastructure assets, and long- term liabilities, are included in the accompanying Statement of Net
Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting,
revenues are recognized in the period in which they are earned while expenses are recognized in the period in
which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
􀂾 Charges for services
􀂾 Operating grants and contributions
􀂾 Capital grants and contributions
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables and receivables including the corresponding deferred revenues. All internal balances in
the Statement of Net Assets have been eliminated except those representing balances between the
governmental activities and the business- type activities, which are presented as internal balances and
eliminated in the total primary government column. In the Statement of Activities and Changes in Net
Assets, internal service fund transactions have been eliminated; however, those transactions between
governmental and business- type activities have not been eliminated.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
45
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Government - Wide Financial Statements, Continued
The City applies all applicable GASB pronouncements ( including all NCGA Statements and Interpretations
currently in effect) as well as the following pronouncements issued on or before November 30, 1989 to the
business type activities, unless those pronouncements conflict with or contradict GASB pronouncements:
Financial Accounting Standards Board ( FASB) Statements and Interpretations, Accounting Principles Board
( APB) Opinions and Accounting Research Bulletins ( ARB) of the committee on Accounting Procedure. The
City applies all applicable FASB Statement and Interpretations issued after November 30, 1989 except those
that conflict with or contradict GASB pronouncements.
Governmental Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures
and Changes in Fund Balances for all major governmental funds and non- major funds aggregated. An
accompanying schedule is presented to reconcile and explain the differences in net assets as presented in these
statements to the net assets presented in the Government- Wide Financial Statements. The City has presented
all major funds that met the qualifications for major fund reporting.
All governmental funds are accounted for on a spending or " current financial resources" measurement focus and
the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included
on the Balance Sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances presents
increases ( revenues and other financing sources) and decreases ( expenditures and other financing uses) in net
current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting
period in which they become both measurable and available to finance expenditures of the current period.
Accordingly, revenues are recorded when received in cash, except for that revenues subject to accrual
( generally 90 days after year- end) are recognized when due. The primary revenue sources, which have been
treated as susceptible to accrual by the City, are property tax, tax payer- assessed tax revenues ( sales tax,
transient occupancy taxes, franchise taxes, etc.), certain grant revenues and earnings on investments.
Expenditures are recorded in the accounting period in which the related fund liability is incurred.
Deferred revenues arise when potential revenues do not meet both the “ measurable” and “ available” criteria
for recognition in the current period. Deferred revenues also arise when the government receives resources
before it has a legal claim to them, as when grant monies are received prior to incurring qualifying
expenditures. In subsequent periods, when both revenue recognition criteria are met or when the government
has a legal claim to the resources, the deferred revenue is removed from the balance sheet and revenue is
recognized.
The Reconciliation of the Fund Financial Statements to the Government- Wide Financial Statements is provided
to explain the differences created by the integrated approach of GASB Statement No. 34.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
46
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues, Expenses
and Changes in Fund Net Assets, and a Statement of Cash Flows for each major proprietary fund. A separate
column representing internal service funds is also presented in these statements. However, internal service
balances and activities have been combined with the governmental activities in the Government- Wide
Financial Statements.
Proprietary funds are accounted for using the " economic resources" measurement focus and the accrual basis of
accounting. Accordingly, all assets and liabilities ( whether current or noncurrent) are included on the
Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Fund Net Assets present
increases ( revenues) and decreases ( expenses) in total net assets. Under the accrual basis of accounting,
revenues are recognized in the period in which they are earned while expenses are recognized in the period in
which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have
been made for uncollectible amounts. In accordance with GASB Statement No. 20, Accounting and Financial
Reporting for Proprietary Funds and Other Government Entities that Use Proprietary Fund Accounting, the City
applies all GASB pronouncements currently in effect as well as Financial Accounting Standard Board
Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins of
the Committee on Accounting Procedure issued on or before November 30, 1989.
Operating revenues in the proprietary funds are those revenues that are generated from the primary
operations of the fund. All other revenues are reported as non- operating revenues. Operating expenses are
those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating
expenses.
Fiduciary Fund Financial Statements
Fiduciary Fund Financial Statements include a Statement of Net Assets and a Statement of Changes in
Fiduciary Net Assets. The City's fiduciary funds represent Agency Funds and Private- Purpose Trust Funds.
Agency funds are custodial in nature ( assets equal liabilities) and do not involve measurement of results of
operations. The agency funds are accounted for using the accrual basis of accounting. The Private- Purpose
Trust Funds are used to account for resources legally held in trust for special purposes. These funds are
accounted for using the accrual basis of accounting.
C. Use of Restricted/ Unrestricted Net Assets
When an expense is incurred for purposes for which both restricted and unrestricted net assets are available,
the City’s policy is to apply restricted net assets first.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
47
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
D. Cash, Cash Equivalents and Investments
The City pools cash resources of its various funds to facilitate cash management. Cash in excess of current
requirements is invested and reported as investments. It is the City’s intent to hold investments until maturity.
However, the City may, in response to market conditions, sell investments prior to maturity in order to
improve the quality, liquidity, or yield of the portfolio. Interest earnings are apportioned among funds based
on ending accounting period cash and investment balances.
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and highly liquid
investments with original maturity of three months or less from the date of acquisition. Cash and cash
equivalents are combined with investments and displayed as Cash and Investments.
In accordance with GASB Statement No. 40, Deposit and Investment Disclosures ( Amendment of GASB No. 3),
certain disclosure requirements for Deposits and Investment Risks were made in the following areas:
􀂃 Interest Rate Risk
􀂃 Credit Risk
􀂉 Overall
􀂉 Custodial Credit Risk
􀂉 Concentrations of Credit Risk
In addition, other disclosures are specified including use of certain methods to present deposits and
investments, highly sensitive investments, credit quality at year- end and other disclosures.
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for
External Investment Pools, highly liquid market investments with maturities of one year or less at time of
purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as
fair value for those securities for which market quotations are readily available.
The City participates in an investment pool managed by the State of California titled Local Agency Investment
Fund ( LAIF), which has invested a portion of the pool funds in Structured Notes and Asset- backed Securities.
LAIF’s investments are subject to credit risk with the full faith and credit of the State of California
collateralizing these investments. In addition, these Structured Notes and Asset- backed Securities are subject
to market risk as to change in interest rates.
E. Inventories
Inventories in General Fund are recorded at cost, and inventories in Proprietary Funds are recorded at the
lower of cost of market. All inventories use the first- in, first- out method and the items are recorded as
expenditures/ expenses when consumed. The General Fund inventory, which consists primarily of supplies
and parts, is offset by a reserved fund balance to indicate that this asset is not available for appropriation.
The Proprietary Fund inventory consists primarily of supplies, meters, and vehicle parts held for further
consumption.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
48
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
F. Receivables
In the government- wide statements, receivables consist of all revenues earned at year- end, but not yet
received. Allowance for uncollectible accounts receivable are based upon historical trends and the periodic
aging of accounts receivable. At June 30, 2005, allowance for doubtful accounts ( which is netted with accounts
receivables in the financial statement presentation) was as follows for the various funds:
Airport Fund $ 2,700
Ambulance Fund 175,000
Marina Fund 400
Waste Water Utility Fund 30,000
Water Utility Fund 11,000
G. Interfund Transactions
Advances to and advances from other funds/ City/ Redevelopment Agency represent interfund loans in the
fund financial statements. Advances between funds are offset by a fund balance reservation or by deferred
revenue in the applicable governmental funds to indicate that they are not expendable available financial
resources. Any unpaid interest due to lack of funds in the borrowing fund increases the principal owed and is
reported in the lending fund as deferred revenue.
All other outstanding balance between funds are reported as due to and due from other funds. These are
generally repaid within the following fiscal year.
Any residual balances outstanding between the governmental activities and business- type activities are
reported in the Government- Wide Financial Statements as “ internal balances.”
H. Capital Assets and Depreciation
Capital assets, which include land, buildings, improvements, equipment and infrastructure assets ( e. g. roads,
bridges, sidewalks, and similar items), are reported in the applicable governmental or business- type activities
in the Governmental- Wide Financial Statement. Capital assets are recorded at historical cost or estimated
historical cost if actual cost is not available. Donated assets are valued at their estimated fair value on the date
donated. The City’s policy is to capitalize all property, plant, and equipment with a unit cost of $ 5,000 or more,
and a useful life of one year or more.
Capital assets in government fund operations are recorded as expenditures in the fund financial statements.
They are capitalized for the government- wide financial statements. Infrastructure assets are also reported as
capital assets in the government- wide financial statements.
Capital assets used in proprietary fund types are capitalized in the fund in which they are utilized. Interest
during construction is capitalized in the proprietary funds.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
49
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
H. Capital Assets, Continued
Depreciation is charged as an expense of operations for all activities on the government- wide financial
statements, and as expense of operations in the proprietary funds on the fund financial statements.
Depreciation is based on the estimated useful lives of the assets using the straight- line method. The revised
estimated useful lives are as follows:
Vehicles and equipment 4- 15 years
Building and improvements 10- 50 years
Infrastructure 20- 50 years
The Governmental Accounting Standards Board ( GASB) issued Statement No. 34 which requires the inclusion
of infrastructure capital assets in local governments’ basic financial statements. In accordance with Statement
No. 34, the City has included the value of all infrastructure in the current Basic Financial Statements.
The City defines infrastructure as the basic physical assets that allow the City to function. The assets include:
􀂾 Sidewalks and bridges
􀂾 Street system
􀂾 Sewer system
􀂾 Pipes
Each major infrastructure system can be divided into subsystems. For example the street system can be
subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices ( signs,
signals and pavement markings), landscaping and land. These subsystems were not delineated in the Basic
Financial Statements. The appropriate operating department maintains information regarding the subsystems.
For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34
for infrastructure reporting. Estimated historical costs were developed in one of the following methods:
1) Use of historical records where available.
2) Standard unit costs appropriate for the construction/ acquisition date of asset.
3) Present replacement cost indexed by a reciprocal factor of the price increase from the
construction/ acquisition date to the current date.
The accumulated depreciation, defined as the total depreciation from the date of construction/ acquisition to
the current date was computed on a straight line, using industry accepted life expectancies for each
infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation
from the estimated historical cost.
Interest accrued during capital assets construction, if any, is capitalized for the business- type and proprietary
funds as part of the asset cost.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
50
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
I. Interest Payable
In the Government- Wide Financial Statements, interest payable for long- term debt is recognized as the liability is
incurred in the appropriate activity.
In the Fund Financial Statements, propriety fund types recognize the interest payable when the liability is
incurred.
Interest costs incurred on borrowed funds during the period of construction of capital assets for Enterprise Fund
are capitalized, when material, as a component of the cost of acquiring such assets. Interest in the amount $ 957,041
was capitalized during the year ended June 30, 2005.
J. Deferred Revenue
In the Government- Wide Financial Statements, deferred revenue is recognized for transactions for which
revenue has not yet been earned.
In the Fund Financial Statements, deferred revenue is recorded when transactions have not yet met the
revenue recognition criteria based on the modified accrual basis of accounting. The City records deferred
revenue for transactions for which revenues have not been earned, or for which funds are not available to meet
current financial obligations. Typical transactions for which deferred revenue is recorded are grants received
but not yet earned or available, interest on interfund advances receivable, long- term assessments and loans
receivable.
K. Compensated Absences
The City has compensated absences of regular vacation and sick leave which are accounted for in accordance
with generally accepted accounting principles ( GAAP). Employees may accumulate earned vacation time.
Management employees are limited to the amount, which may be earned, in a three year period. All other
employees are limited to the amount, which may be earned, in a two year period.
Employees may accumulate unused sick leave without limits. The unused sick leave vests after five years of
service for firefighters, and after ten years of service for all other employees. Vested sick leave is payable upon
death or retirement for all employees at 50% of the vested amount, up to a limit of 1,000 hours for fire battalion
chiefs, 720 hours for firefighters, 600 hours for police mid- management employees, and 480 hours for all other
employees. All employees may elect, in lieu of a cash payment, to have all vested sick leave applied to their
years of service under the retirement plan.
Public safety employees are also eligible for vested sick leave to be paid upon a disability retirement at 50% of
the vested amount, up to a limit of 1,000 hours for firefighters, and 600 hours for all police officers.
A liability is calculated for all of the cost of compensated absences based on benefits earned by employees in
the current period, for which there is a probability of payment at termination. The salary and related payroll
costs are those in effect as of June, 30, 2005.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
51
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
K. Compensated Absences, Continued
For governmental funds, compensated absences are recorded as current and non- current liabilities only on the
government- wide financial statements. For proprietary funds, current and non- current liabilities for
compensated absences are recorded as expenses in both the government- wide financial statement and the fund
financial statement.
L. Long- Term Debt
Government- Wide Financial Statements
Long- term debt and other long- term obligations are reported as liabilities in the appropriate activities.
Bond premiums and discounts and issuance costs are deferred and amortized over the life of the bonds using the
straight- line method. Bonds payable are reported net of premium or discount. Issuance costs are reported as
deferred charges.
Fund Financial Statements
Long- term debt is not reported in the governmental Fund Financial Statements but is shown in the Reconciliation
of the Governmental Funds Balance Sheet to the Government- Wide Statement of the Net Assets.
In the Fund Financial Statements, governmental funds recognized bond premiums and discounts and issuance
costs during the current period. The fact amount of debt issued is reported as other financing sources. Premiums
on debt issuance are reported as other financing sources while discounts on debt issuance are reported as other
financing uses. All debt issuance costs are reported as debt service expenditure.
M. Net Assets and Fund Equity
In the Government- Wide Financial Statements, net assets are classified in the following categories:
Invested in Capital Assets, net of Related Debt – This amount consists of capital assets net of accumulated
depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or
improvement of the assets.
Restricted – This amount is restricted by external creditors, grantors, contributors, laws or regulations of
other governments.
Unrestricted – This amount is all net assets that do not meet the definition of “ invested in capital assets,
net of related debt” or “ restricted net assets.”
In the Fund Financial Statement, reservation and designations of fund balances of governmental funds and
unrestricted net assets of proprietary funds are created to either satisfy legal covenants, including State laws,
that require a portion of the fund equity be segregated or identify the portion of the fund equity not available
for future expenditures.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
52
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
M. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates
affect the reported amount of expenses. Actual results could differ from these estimates and assumptions.
O. Revenues
Property Taxes
Article XIII of the California Constitution ( more commonly known as Proposition 13) limits ad valorem taxes
on real property to one percent of value plus taxes necessary to pay indebtedness approved by voters prior to
July 1, 1978. The Article also established the 1975/ 76 assessed valuation as the basis and limits annual
increases to the cost of living, not to exceed two percent, for each year thereafter. Property may also be
reassessed to full market value after a sale, transfer of ownership, or completion of new construction. The State
is prohibited under the Article from imposing new ad valorem, sales, or transactions taxes on real property.
Local government may impose special taxes ( except on real property) with the approval of two- thirds of the
qualified voters.
Property taxes attached as a lien on the property as of January 1. Secured property taxes are levied on July 1
and are due in two installments by December 10 and April 10. The County of Sonoma bills and collects
property taxes on behalf of the City using an alternative method of distribution known as the “ Teeter Plan.”
The State Revenue and Taxation Code allows counties to distribute secured real property and supplemental
property taxes on an accrual basis resulting in full payment to the City each fiscal year. Any subsequent
delinquent payments and related penalties and interest will revert to Sonoma County. The City reports
property tax revenue net of collection fees.
Sales Tax Revenue
The City accrues the State’s July and August sales tax payments for the previous fiscal year. These payments
consist of actual receipts for the period of May 15 through July 14 and are measurable and available for the
fiscal year in which that they are accrued. The City reports sales tax revenue net of collection fees.
Program Revenue
In general, program revenues are derived from the activities of a particular function. Program revenues
include charges for services, permits and fees, and restricted operating and capital grants.
Operating and Non- Operating Revenues of Proprietary Funds
Operating revenues of proprietary funds result from providing goods and services. They also include all
revenue not related to capital and relating financing, non- capital financing or investing activities.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
53
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
P. New Pronouncements
In 2005, the City adopted a new accounting standard in order to conform to the following Governmental
Accounting Standards Board Statements:
􀂾 Statement No. 40, Deposit and Investment Disclosures ( Amendment of GASB No. 3) – The Statement
addresses common deposit and investment risks related to credit risk, concentration of credit risk,
interest rate risk, and foreign currency risk. The Statement requires certain disclosures of
investments to address the different risk factors.
2. CASH AND INVESTMENTS
The City maintains a cash and investment pool, which includes cash balances and authorized investments of all
funds, which the City Treasurer invests to enhance interest earnings.
A. Cash Deposits
The carrying amount of the City’s cash deposits were ($ 798,573) at June 30, 2005. Bank balances before
reconciling items were $ 786,102. The total bank balance was collateralized or insured with securities held by
the pledging financial institutions in the City’s name as discussed below.
The California Government Code requires California banks and savings and loan associations to secure the City’s
cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall
have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus,
collateral for cash deposits is considered to be held in the City's name.
The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also
allows institutions to secure city deposits by pledging first trust deed mortgage notes having a value of 150% of
the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully
insured up to $ 100,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the
collateralization requirements.
The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by
fiscal agents under the provisions of bond indentures and asset seizure funds segregated in the police trust
account. Interest income from cash and investments with fiscal agents is credited directly to the related fund.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
54
2. CASH AND INVESTMENTS, Continued
B. Investments
Under provisions of the California Government Code, authorized investments for the City include securities of
the State or local agencies of the State, securities of the U. S. Treasury and other Federal agencies, certificates of
deposit, bankers’ acceptances, repurchase agreements, commercial paper, money market, mutual funds,
guaranteed investment contracts, California Asset Management Program ( CAMP) and State of California Local
Agency Investment Funds ( LAIF).
Local Agency Investment Fund - The City’s investments with Local Agency Investment Funds ( LAIF) at June 30,
2005, included a portion of the pool funds invested in Structured Notes and Asset- Backed Securities. These
investments included the following:
Structured Notes are debt securities ( other than asset- backed securities) whose cash- flow characteristics
( coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/ or that have
embedded forwards or options.
Asset- Backed Securities the bulk of which are mortgage- backed securities, entitle their purchasers to receive a
share of the cash flows from a pool of assets, such as principal and interest repayments from a pool of
mortgages ( such as CMO’s) or credit card receivables.
As of June 30, 2005, the City had $ 17,953,487 invested in LAIF, which had invested 2.406% of the pooled
investment funds in Structured Notes and Asset- Backed Securities. The City valued its investments in LAIF as
of June 30, 2005, by multiplying its account balance with LAIF times a fair value factor determined by LAIF.
This fair value factor was determined by dividing all LAIF participants’ total aggregate fair value by total
aggregate amortized cost resulting in a factor of 0.997747553.
Investment in Assessment District Bond - The City purchased a $ 925,353 improvement bond for the Assessment
District 2000- 01 in September 2001. This bond was issued to finance a portion of the work of the
Washington/ McDowell capital improvement project. The bond will be repaid by the property owners through
September 2021. Interest is earned at a rate of 6% per annum. The assessment will be collected by the Sonoma
Assessor’s Office.
California Asset Management Program - CAMP is a separate public agency established under the provisions of
the California Joint Exercise of Powers Act. This program provides California public agencies with investment
management services, and accounting and arbitrage rebate calculation services of tax- exempt financings.
C. Cash and Investment with Fiscal Agents
The Cash and Investments with Fiscal Agents in the amount of $ 7,857,508 include certain amounts which are
held by fiscal agents to be used only for specific capital outlay, payments of certain long- term debt and
maintaining required reserves. These funds have been invested only as permitted by specific State statutes
governing their investment or applicable City ordinance, resolution, or bond indenture.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
55
2. CASH AND INVESTMENTS, Continued
D. Summary of Cash and Investments
The following is a summary of cash and investments at June 30, 2005:
Governmental Business- Type Fiduciary
Activities Activities Funds Total
Cash and investments $ 46,946,247 $ 10,589,627 $ 4,037,840 $ 6 1,573,714
Restricted cash and investments $ 2,053,187 $ 5,126,132 $ 678,189 $ 7 ,857,508
Total cash and investments $ 6 9,431,222
Government- Wide Statement of Net Assets
Investments held in the City Treasury grouped by maturity date at June 30, 2005, are shown below:
Investment Type Fair Value 1 year or less 1- 2 years 2- 3 years 3- 4 years 4- 5 years Over 5 years
Securities of U. S. Government Agencies
FNMA $ 11,820,483 $ 5 ,554,566 $ 6 ,265,917 $ - $ - $ - $ -
FHLB 11,719,264 - 7,337,558 4,381,706 - - -
FHLMC 4,760,368 - 4,760,368 - - - -
US Treasury Notes 8,262,433 - 6,790,093 1,472,340 - - -
Total Securities of U. S. Government Agencies 36,562,548 5 ,554,566 25,153,936 5,854,046 - - -
Local Agency Invesments Funds 17,953,487 17,953,487 - - - - -
California Asset Management Program 6,930,899 6 ,930,899 - - - - -
Investments in Assessment Dist. Bond 925,353 87,579 8 7,579 87,579 8 7,579 8 7,579 487,458
Deposits ( 7 9 8 , 5 7 3 ) ( 798,573) - - - - -
Total $ 6 1,573,714 $ 35,282,523 $ 2 5,241,515 $ 5,941,625 $ 8 7,579 $ 87,579 $ 4 87,458
Investment Maturities ( in years)
E. Risk Disclosures
Interest Rate Risk: Interest rate risk is the market value fluctuation due to overall changes in the interest rates. It
is mitigated by limiting the average maturity of the City’s portfolio not to exceed five years.
As a means of maintaining liquidity and minimizing interest rate risk, the City’s investment policy limits are as
follows:
Maturity % of Portfolio
Up to one year 57% ( Minimum)
one year to five years 43% ( Maximum)
Credit Risk: Credit risk is the risk that a security or a portfolio will lose some or all of its value due to a real or
perceived change in the ability of the issuer to repay its debt. According to the City’s investment policy, no
more than 5% of the total portfolio may be invested in securities of any single issuer, other than the US
Government, its agencies and instrumentalities, and LAIF. If a security is downgraded by either Moody’s or
S& P to a level below the minimum quality required by the City, it shall be the City’s policy to sell that security
as soon as practicable.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
56
2. CASH AND INVESTMENTS, Continued
E. Risk Disclosures, Continued
At June 30, 2005, the City had the following deposits and investments:
Moody's S& P
Investments:
Securities of U. S. Government Agencies:
FNMA Aaa AAA
FHLB Aaa AAA
FHLMC Aaa AAA
US Treasury Notes Aaa AAA
Local Agency Investment Funds
California Asset Management Program
Investments in Assessment Dist. Bond
Not Rated
Credit Quality Ratings
Not Rated
Not Rated
Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the
counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the
possession of an outside party. None of the City’s investments were subject to custodial credit risk.
F. Fair Value of Investments
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for
External Investment Pools, investments were stated at fair value using the aggregate method as follows. The
total fair value adjustment resulted in a loss of $ 307,902.
3. NOTES RECEIVABLE
As of June 30, 2005, the City had the following notes receivables:
Balance Balance
June 30, 2004 Additions Deletions Adjustments June 30, 2005
Housing Loans to
Not- For- Profit Agencies $ 17,314,863 $ 2 ,044,620 $ ( 2,240) $ - $ 1 9,357,243
First- Time Home Buyers Loans 4,112,274 1 ,144,000 ( 636,450) ( 137,000) 4 ,482,824
Eligible Construction Cost Loan
and Tax increment Loan 1,096,706 3 76,132 - - 1 ,472,838
Total $ 22,523,843 $ 3 ,564,752 $ ( 638,690) $ ( 137,000) $ 2 5,312,905
An adjustment was made to record interest accruals that were not previously accounted for.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
57
3. NOTES RECEIVABLE, Continued
As of June 30, 2005, the City had the following loans receivable:
Description Balance at June 30, 2005
Housing Loans to Nonprofit Agencies:
Buckelew Project $ 3 47,269
Capri Creek Assoc LLC 9 7,500
Casa Grande 8 96,657
Caulfield Land St. Housing Assoc 1 82,999
Downtown River Assoc LP 6 ,996,836
Eden Housing Inc - Washington Creek 3 20,000
Old Elm Partners 2 ,504,336
575 Vallejo St. Assoc. 8 51,184
579 Vallejo St. Assoc. 9 90,000
Edith St. Apt. Inc 1 ,217,884
Lieb Sr. Apt. Inc. 1 ,612,156
Madrone Village Assoc 2 89,947
Parklane Apt. Corp 1 74,875
Roundwalk Village Partners 1 ,863,800
Salishan Apt. Inc 3 88,380
Wood Sorrel 6 14,681
Southgate 8 ,739
Total Housing Loans to Nonprofit Agencies 1 9,357,243
First Time Home Buyers Loans 4 ,482,824
Eligible Construction Cost Loan and Tax Increment Loan:
Sheraton Marina Hotel OPA 7 50,000
Sheraton Marina Hotel TOT OPA 7 22,838
Total Eligible Construction Cost Loan and Tax Increment Loan 1 ,472,838
Total Notes Receivables $ 2 5,312,905
Housing Loans to Not- for- Agencies
The City has provided various loans to not- for- profit agencies for the construction of units for low- income
rental housing projects. The loans are funded using HOME funds, Community Development Block Grant
funds, General fund, and Housing funds. The interest rates range from zero to 5.78%. Payment is deferred
until a variety of events occur, such as: sale or transfer of property, failure to adhere to low and moderate
housing provisions of the promissory note, to the extent of residual receipts, or at the maturity date of the note.
The maturity dates range from 32- 55 years.
The City and the Petaluma Community Development Commission have loaned funds to not- for- profit
agencies to finance construction of low and moderate income housing. The terms range from 13 to 60 years,
and the interest rates range from zero to 6.56%. Payment is deferred until a variety of events occur, such as:
sale or transfer of property, failure to adhere to low and moderate housing provisions of the promissory note,
to the extent of residual receipts, or at the maturity date of the note.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
58
3. NOTES RECEIVABLE, Continued
First- Time Home Buyers Loans
The City offers qualified low and moderate income first time home buyers silent second mortgages on home
purchases. Accrued interest and principal are due when the primary loan is refinanced or on sale of the
property. The interest rate is the lower of the principal amount plus interest at a rate of 10% per annum, or
28.6% to 33% net of sales price. The total amount outstanding as of June 30, 2005 was $ 4,482,824.
Eligible Construction Cost Loan and Tax Increment Loan
Sheraton Marina Hotel OPA - The Petaluma Community Development Commission provided a construction
loan to a private developer for the construction of a hotel at the Marina. The loan is secured by a deed of trust.
The loan accrues interest at 3% per annum for the first five years. Repayment is scheduled to begin July 1,
2007, and to continue in equal monthly payments over ten years.
Sheraton Marina Hotel TOT OPA - The Petaluma Community Development Commission is in the process of
loaning the same developer two- thirds of the monthly Transient Occupancy Tax generated by the hotel, to a
maximum of $ 2,000,000. This loan accrues interest at 3% simple interest for the first ten years. Repayment is
scheduled to begin July 1, 2012, and to continue in equal monthly payments over fifteen years.
4. DEFERRED REVENUE
A. Government- Wide Financial Statements
Deferred revenues in Government- Wide Financial Statements represent amounts for which revenues have not
been earned. At June 30, 2005, deferred revenues in the Government- Wide Financial Statements were as
follows:
Unearned
Revenues
Governmental Activities:
Developer's fees $ 3 65,249
Business- Type Activities:
Capital grants 5 0,000
Total $ 4 15,249
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
59
4. DEFERRED REVENUE, Continued
B. Fund Financial Statements
At June 30, 2005, the following deferred revenues were recorded in the fund Financial Statements because
either the revenues had not been earned or the funds were not available to finance expenditures of the current
period:
Governmental Funds:
Governmental Funds:
Interest receivable on:
Notes receivable:
575 Vallejo St Associate $ 3 04,642
Parklane Apartment Corp 1,778
579 Vallejo St Associate 2 16,188
Salishan Apartments, Inc. 81,560
Edith St Apartment 125,787
Old Elm Partner, LP. 173,901
Boulevard Apartment 4,282
Downtown River 198,712
Lieb Senior Apartment 27,459
Sheraton Marina Hotel ( Owners Participation Agreement) 392,991
Sheraton Marina Hotel ( TOT Owners Participation Agreement) 21,275
Total interest on Notes receivable 1 ,548,575
Housing loans 8 ,285,906
Developers fees 3 65,249
Miscellaneous 222,786
Total Governmental Funds 10,422,516
Public Transportation Enterprise Fund 5 0,000
Total deferred revenue $ 10,472,516
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
60
5. INTERFUND BALANCES AND TRANSACTIONS
A. Due to/ from Other Funds
Due to/ from other funds for the year ended June 30, 2005 were as follows:
Impact Fees Redevelopment Redevelopment
General Special Revenue CBD Capital PCD Capital
Fund Funds Projects Fund Projects Fund Total
Governmental funds:
City capital projects fund $ 1,460,000 $ - $ - $ - $ 1,460,000
Redevelopment - CBD
capital project fund - 10,000 - - 10,000
Redevelopment - PCD
capital project fund - - 1,385,700 - 1,385,700
Non- Major funds 132,000 69,000 - 257,100 458,100
Total $ 1,592,000 $ 79,000 $ 1,385,700 $ 257,100 $ 3,313,800
Due from other funds
Due to other funds
The Due to/ from other funds are to provide cash flow for the funds with negative cash.
B. Advances to/ from Other Funds
Advances to/ from other funds for the year ended June 30, 2005 were as follows:
Redevelopment
PCD Fund:
Capital Project Vehicle Replacement Total
Governmental funds:
General fund $ - $ 1 12,500 $ 1 12,500
Redevelopment - CBD
Capital Project 3 1,519,000 - 3 1,519,000
Enterprise funds:
Marina fund 1 ,274,685 - 1 ,274,685
Total $ 3 2,793,685 $ 112,500 $ 3 2,906,185
Internal Service
Advances to other funds
Advances from other
funds
The advance to the general fund was to cover the costs of the purchase of traffic enforcement vehicle. The
advance will be repaid from the increased parking ticket revenue.
The advance to the Redevelopment CBD Capital Projects Fund was to cover cash flow deficit related to
funding of redevelopment projects in the CBD project area.
The advance to the Marina fund was for debt service payments.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
61
5. INTERFUND BALANCES AND TRANSACTIONS, Continued
C. Transfers In/ Out
Transfers in/ out for the year ended June 30, 2005 were as follows:
Enterprise Funds
Redevelopment Redevelopment Non- Major Public Waste Water Internal
General City CBD PCD Governmental Airport Marina Transportation Water Utility Service
Fund Capital Project Capital Project Capital Project Funds Fund Fund Fund Fund Fund Funds Total
Governmental Funds:
Major Funds:
General Fund $ - $ - $ - $ - $ 4 9,000 $ - $ - $ - $ - $ - $ 400,000 $ 449,000
Redevelopment Special
Revenue Fund - 66,727 15,126 1 50,000 - - - - - - 231,853
Impact Fees Special
Revenue Fund - 5,893,876 - - - - - - - - 5,893,876
City Capital Projects
Fund - - - - 192,000 - - - - - - 192,000
Redevelopment CBD
Capital Project Fund - - - 10,093,800 3,767,400 - - - - - - 13,861,200
Redevelopment PCD
Capital Project Fund - - 1,754,000 - 7 ,320,000 - - - - - - 9,074,000
Non- Major Funds 1,040,000 3,909,166 10,519,400 20,872,672 3,627,249 14,337 42,000 201,800 143,000 49,000 30,000 40,448,624
Proprietary Funds:
Waster Water Fund - - 1,299,000 - 25,000 - - - - - 200,000 1,524,000
Water Utility Fund - - 973,000 - 75,000 - - - 1 1,931 - 200,000 1,259,931
Total $ 1,040,000 $ 9,803,042 $ 14,612,127 $ 30,981,598 $ 15,205,649 $ 1 4,337 $ 42,000 $ 201,800 $ 1 54,931 $ 4 9,000 $ 830,000 $ 72,934,484
Transfers Out
Transfers In
Governmental Funds
Transfers between funds were to provide funding for capital projects, debt service, vehicle/ equipment
replacements and general and specific operation expenses.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
62
6. CAPITAL ASSETS
A. Government- Wide Financial Statements
At June 30, 2005 the City’s capital assets consisted of the following:
Governmental Business- Type
Activities Activities Total
Non- Depreciable Assets:
Land $ 33,445,433 $ 10,603,885 $ 44,049,318
Construction in progress 39,578,299 21,742,763 61,321,062
73,023,732 32,346,648 105,370,380
Depreciable Assets:
Buildings and improvements 19,054,806 16,811,596 35,866,402
Vehicles and Equipment 7,186,785 4,760,171 11,946,956
Infrastructure 87,063,109 102,777,662 189,840,771
113,304,700 124,349,429 237,654,129
Less accumulated depreciation ( 51,224,352) ( 57,370,186) ( 108,594,538)
Total depreciable assets, net 62,080,348 66,979,243 129,059,591
Total capital assets $ 135,104,080 $ 99,325,891 $ 234,429,971
The following is a summary of capital assets for governmental activities:
Transfers to/ from
Balance Business- Type Balance
July 1, 2004 Additions Deletions Reclassification Activities June 30, 2005
Governmental Activities:
Capital assets, not being depreciated:
Land $ 24,274,508 $ 9,526,403 $ - $ - $ ( 355,478) $ 33,445,433
Construction in process 13,501,478 32,508,401 - ( 6,431,580) - 39,578,299
Total capital assets,
not being depreciated 37,775,986 42,034,804 - ( 6,431,580) ( 355,478) 73,023,732
Capital assets, being depreciated:
Buildings and improvements 17,470,544 - ( 49,180) 1,605,549 27,893 19,054,806
Vehicles and equipment 6,323,618 1,649,104 ( 823,546) ( 6,569) 44,178 7,186,785
Infrastructure 87,491,438 - ( 3,984,485) 4,832,600 ( 1,276,444) 87,063,109
Total capital assets,
being depreciated 111,285,600 1,649,104 ( 4,857,211) 6,431,580 ( 1,204,373) 113,304,700
Accumulated depreciation:
Buildings and improvements ( 6,727,673) ( 490,499) 46,743 34,153 ( 3,603) ( 7,140,879)
Vehicles and equipment ( 2,922,609) ( 709,173) 711,436 6,073 ( 36,410) ( 2,950,683)
Infrastructure ( 43,237,016) ( 1,791,277) 3,891,911 ( 40,226) 43,818 ( 41,132,790)
Total accumulated depreciation ( 52,887,298) ( 2,990,949) 4,650,090 - 3,805 ( 51,224,352)
Total capital assets,
being depreciated, net 58,398,302 ( 1,341,845) ( 207,121) 6,431,580 ( 1,200,568) 62,080,348
Total governmental activities $ 96,174,288 $ 40,692,959 $ ( 207,121) $ - $ ( 1,556,046) $ 135,104,080
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
63
6. CAPITAL ASSETS, Continued
A. Government- Wide Financial Statements, Continued
The following is a summary of capital assets for business- type activities:
Transfers to/ from
Balance Governmental Balance
July 1, 2004 Additions Deletions Reclassification Activities June 30, 2005
Business- Type Activities:
Capital assets, not being depreciated:
Land $ 9,996,501 $ 251,906 $ - $ - $ 355,478 $ 10,603,885
Construction in process 18,131,551 9,877,951 - ( 6,266,739) - 21,742,763
Total capital assets, not being depreciated 28,128,052 10,129,857 - ( 6,266,739) 355,478 32,346,648
Capital assets, being depreciated:
Buildings and improvements 16,383,959 - ( 100,384) 555,914 ( 27,893) 16,811,596
Vehicles and equipment 5,404,463 172,527 ( 792,099) 19,458 ( 44,178) 4,760,171
Infrastructure 100,195,376 - ( 4,385,525) 5,691,367 1,276,444 102,777,662
Total capital assets, being depreciated 121,983,798 172,527 ( 5,278,008) 6,266,739 1,204,373 124,349,429
Less accumulated depreciation for:
Buildings and improvements ( 5,685,288) ( 398,746) 88,411 - 3,603 ( 5,992,020)
Vehicles and equipment ( 3,314,551) ( 450,039) 767,680 - 36,410 ( 2,960,500)
Infrastructure ( 49,779,456) ( 2,431,190) 3,836,798 - ( 43,818) ( 48,417,666)
Total accumulated depreciation ( 58,779,295) ( 3,279,975) 4,692,889 - ( 3,805) ( 57,370,186)
Total capital assets, being depreciated, net 63,204,503 ( 3,107,448) ( 585,119) 6,266,739 1,200,568 66,979,243
Total business- type activities $ 91,332,555 $ 7,022,409 $ ( 585,119) $ - $ 1,556,046 $ 99,325,891
Depreciation expense was charged to various governmental functions as follows:
General government $ 441,356
Community development 339,124
Police 295,168
Fire 112,436
Parks and recreation 382,800
Public works 1,420,065
Total depreciation expense - governmental functions $ 2,990,949
Depreciation expense was charged to the business- type functions as follows:
Airport $ 3 31,229
Ambulance 5 2,059
Marina 1 41,225
Transit 1 05,853
Waste Water Utility 1 ,369,953
Water Utility 1 ,279,656
Total depreciation expense - business- type functions $ 3 ,279,975
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
64
6. CAPITAL ASSETS, Continued
B. Funds Financial Statements
The governmental funds financial statements do not present general government capital assets but are shown
in the Reconciliation of the Governmental Funds Balance Sheet to the Government- Wide Statement of Net
Assets.
7. LONG- TERM DEBT
A. Governmental Activities Long- Term Debt
Amounts Amounts
Balance Balance Due Within Due in More
July 1, 2004 Additions Deletions June 30, 2005 One Year than One Year
2000A Tax Allocation Bonds $ 1 7,390,000 $ - $ ( 125,000) $ 1 7,265,000 $ 1 35,000 $ 17,130,000
2000B Tax Allocation Bonds 7 85,000 - ( 100,000) 6 85,000 1 00,000 585,000
2001A Tax Allocation Bonds 3 ,245,000 - ( 270,000) 2 ,975,000 2 75,000 2,700,000
2003A Tax Allocation Bonds 2 3,630,000 - - 2 3,630,000 - 23,630,000
Unamortized Bonds Issuance Discount
for 2003 A Tax Allocation Bonds ( 13,743) 4 74 - ( 13,269) - ( 13,269)
Auto Plaza DDA - AD 19 7 10,000 - ( 68,000) 6 42,000 7 2,000 570,000
Compensated Absences 2 ,825,467 2 ,955,379 ( 2,390,345) 3 ,390,501 4 19,201 2,971,300
Accrued Claims Payable 5 ,559,000 1 ,315,405 ( 1,621,405) 5 ,253,000 1 ,287,360 3,965,640
Total $ 5 4,130,724 $ 4 ,271,258 $ ( 4,574,750) $ 5 3,827,232 $ 2 ,288,561 $ 51,538,671
Classification
2000A Tax Allocation Bonds
On June 15, 2000, the Petaluma Community Development Commission issued Tax Allocation Bonds, Series
2000A in the amount of $ 18,000,000. The proceeds of the bonds were to finance the flood control project, and
to fund new and continuing improvement projects in the Petaluma Community Development Project Area.
The Bonds mature annually each May 1 from 2001 to 2030, in amounts ranging from $ 115,000 to $ 7,635,000 and
bear interest at rates ranging from 5.00% to 5.75%. Interest is payable semiannually on May 1 and November
1. The Bonds maturing on or after May 1, 2009, are subject to optional redemption prior to maturity, in whole
or in part, either in inverse order of maturity or in inverse order of maturity and by lot within any one
maturity date, on any date on or after May 1, 2008, at a price equal to the principal amount, plus accrued
interest on the redemption date. The bonds are payable from and secured by tax revenues. The outstanding
balance of the bonds was $ 17,265,000 as of June 30, 2005.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
65
7. LONG- TERM DEBT, Continued
A. Governmental Activities Long- Term Debt, Continued
2000A Tax Allocation Bonds, Continued
The annual debt service requirements for the 2000A Tax Allocation Bonds outstanding at June 30, 2005, was as
follows:
For the Year
Ending
June 30, Principal Interest Total
2006 135,000 $ 972,938 $ 1,107,938
2007 135,000 966,188 1,101,188
2008 145,000 959,438 1,104,438
2009 150,000 952,188 1,102,188
2010 150,000 944,688 1,094,688
2011- 2015 1,325,000 4,600,786 5,925,786
2016- 2020 3,755,000 3,944,712 7,699,712
2021- 2025 4,945,000 2,756,798 7,701,798
2026- 2030 6,525,000 1,237,252 7,762,252
Total $ 17,265,000 $ 17,334,988 $ 34,599,988
2000B Tax Allocation Bonds
On October 1, 2000, the Commission issued Tax Allocation Bonds, Series 2000B in the amount of $ 965,000. The
proceeds of the bonds were used to refund the 1984 Tax Allocation Bonds and to finance off- street parking and
the construction of the City’s downtown parking garages, located in the Central Business District Project Area.
The Bonds mature annually each September 1 from 2002 to 2010, in amounts ranging from $ 85,000 to $ 130,000
and bear interest at rates ranging from 4.30% to 4.90%. Interest is payable semiannually on March 1 and
September 1. The Bonds maturing on or after September 1, 2006, are subject to optional redemption prior to
maturity, in whole or in part, either in inverse order of maturity or in inverse order of maturity and by lot
within any one maturity date, on any date on or after September 1, 2005, at a price equal to the principal
amount, plus accrued interest on the redemption date. The bonds are payable from and secured by tax
revenues. The outstanding balance of the bonds was $ 685,000 as of June 30, 2005.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
66
7. LONG- TERM DEBT, Continued
A. Governmental Activities Long- Term Debt, Continued
2000B Tax Allocation Bonds, Continued
The annual debt service requirements for the 2000B Tax Allocation Bonds outstanding at June 30, 2005, was as
follows:
For the Year
Ending
June 30, Principal Interest Total
2006 $ 100,000 $ 30,140 $ 130,140
2007 105,000 25,475 130,475
2008 110,000 20,475 130,475
2009 115,000 15,130 130,130
2010- 2011 255,000 12,555 267,555
Total $ 685,000 $ 103,775 $ 788,775
2001A Tax Allocation Bonds
On June 4, 2001, the Commission issued Refunding Tax Allocation Bonds, Series 2001A in the amount of
$ 4,025,000. The proceeds of the bonds were used to finance refund the 1992 Tax Allocation Bonds and to fund
the development of the auto plaza located in the Petaluma Community Development Project Area. The Bonds
mature annually each May 1 from 2002 to 2014, in amounts ranging from $ 250,000 to $ 390,000 and bear interest
at rates ranging from 3.50% to 4.50%. Interest is payable semiannually on May 1 and November 1. The Bonds
maturing on or after May 1, 2010, are subject to optional redemption prior to maturity, in whole or in part,
either in inverse order of maturity or by lot within any one maturity date, on any date on or after May 1, 2009,
at a price equal to the principal amount, plus accrued interest on the redemption date. The bonds are payable
from and secured by tax revenues. The outstanding balance of the bonds was $ 2,975,000 as of June 30, 2005.
The annual debt service requirements for the 2001A Tax Allocation Bonds outstanding at June 30, 2005, was as
follows:
For the Year
Ending
June 30, Principal Interest Total
2006 $ 275,000 $ 121,360 $ 396,360
2007 290,000 111,460 401,460
2008 305,000 100,730 405,730
2009 315,000 89,140 404,140
2010 330,000 76,540 406,540
2011- 2014 1,460,000 164,256 1,624,256
Total $ 2,975,000 $ 663,486 $ 3,638,486
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
67
7. LONG- TERM DEBT, Continued
A. Governmental Activities Long- Term Debt, Continued
2003A Tax Allocation Bonds
On October 28, 2003, the Commission issued Tax Allocation Bonds, Series 2003A in the amount of $ 23,630,000.
The proceeds of the bonds will be used to finance redevelopment projects within the Petaluma Community
Development Project area. The Bonds mature annually each May 1 from 2007 to 2033, in amounts ranging
from $ 430,000 to $ 8,215,000 and bear interest at rates ranging from 2.25% to 5.00%. Interest is payable
semiannually on May 1 and November 1. The Bonds maturing on or after May 1, 2014, are subject to optional
redemption prior to maturity, in whole or in part, either in inverse order of maturity or by lot within any one
maturity date, on any date on or after May 1, 2013, at a price equal to the principal amount, plus accrued
interest on the redemption date. The bonds are payable from and secured by tax revenues. The outstanding
balance of the bonds was $ 23,630,000 as of June 30, 2005.
The annual debt service requirements outstanding at June 30, 2005 were as follows:
For the Year
Ending
June 30, Principal Interest Total
2006 $ - $ 1,072,005 $ 1,072,005
2007 430,000 1,072,005 1,502,005
2008 430,000 1,062,330 1,492,330
2009 445,000 1,052,655 1,497,655
2010 460,000 1,040,418 1,500,418
2011- 2015 2,510,000 4,957,350 7,467,350
2016- 2020 2,900,000 4,434,410 7,334,410
2021- 2025 3,620,000 3,722,834 7,342,834
2026- 2030 4,620,000 2,759,502 7,379,502
2031- 2033 8,215,000 835,000 9,050,000
Total $ 23,630,000 $ 22,008,509 $ 45,638,509
The bonds were issued at a discount of $ 14,217 which is being amortized over the 30 years life of the bonds
resulting in an annual amortization of $ 474.
City of Petaluma
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
68
7. LONG- TERM DEBT, Continued
A