CITY OF SAN LEANDRO, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2006
PREPARED BY: City of San Leandro – Finance Department
Jesse Baloca, Finance Director
City of San Leandro
Comprehensive Annual Financial Report
For the year ended June 30, 2006
Table of Contents
i
INTRODUCTORY SECTION
Table of Contents ............................................................................................................................... ...................... i
Letter of Transmittal.................................................................................................................... ............................ v
Government Finance Officers Association ( GFOA) Award ................................................................................... xi
California Society of Municipal Finance Officers ( CSMFO) Award .................................................................... xii
Principal Officers ............................................................................................................................... .................. xiii
Organizational Chart ............................................................................................................................... ............. xiv
Location Map. ............................................................................................................................... ........................ xv
FINANCIAL SECTION
Independent Auditors’ Report .............................................................................................................................. 1
Management’s Discussion and Analysis............................................................................................................... 3
Basic Financial Statements:
Government- Wide Financial Statements:
Statement of Net Assets ..................................................................................................................... 19
Statement of Activities and Changes in Net Assets........................................................................... 20
Fund Financial Statements:
Government Funds Financial Statements:
Balance Sheet.......................................................................................................................... .......... 26
Reconciliation of the Governmental Funds Balance Sheet
to the Government- Wide Statement of Net Assets...................................................................... 29
Statement of Revenues, Expenditures and Changes in Fund Balances ............................................. 30
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 .................................................................... 32
Proprietary Funds Financial Statements:
Statement of Net Assets ..................................................................................................................... 34
Statement of Revenues, Expenses and Changes in Net Assets.......................................................... 35
Statement of Cash Flows ................................................................................................................... 36
Fiduciary Fund Financial Statement:
Statement of Fiduciary Net Assets – Agency Funds ......................................................................... 38
City of San Leandro
Comprehensive Annual Financial Report
For the year ended June 30, 2006
Table of Contents, ( Continued)
ii
FINANCIAL SECTION, Continued
Basic Financial Statements, Continued:
Index to Notes to Basic Financial Statements................................................................................................. 39
Notes to Basic Financial Statements............................................................................................................... 41
Required Supplementary Information:
Budget and Budgetary Accounting
Statement of Revenue, Expenditures and Changes in Fund Balances – Budget and Actual –
Major Fund – General Fund................................................................................................................ 78
Major Fund – Measure B .................................................................................................................... 79
Pension Plans Schedule of Funding Progress .................................................................................................. 80
Notes to Required Supplementary Information ............................................................................................... 81
Supplementary Information:
Non- Major Governmental Funds:
Combining Balance Sheet ......................................................................................................................... 86
Combining Statement of Revenue, Expenditures and Changes in Fund Balances.................................... 90
Schedule of Revenue, Expenditures and Changes in Fund Balances –
Budget and Actual – Non- Major Funds.............................................................................................. 94
Non- Major Enterprise Funds:
Combining Statement of Net Assets........................................................................................................ 112
Combining Statement of Revenues, Expenses, and Changes in Net Assets ........................................... 113
Combining Statement of Cash Flows ...................................................................................................... 114
Internal Service Funds:
Combining Statement of Net Assets........................................................................................................ 116
Combining Statement of Revenues, Expenses and Changes in Net Assets ............................................ 117
Combining Statement of Cash Flows ...................................................................................................... 118
Fiduciary Fund Financial Statements:
Combining Statement of Fiduciary Net Assets ........................................................................................ 120
Combining Statement of Changes in Assets and Liabilities – Agency Funds ......................................... 121
STATISTICAL SECTION
Net Assets by Component - Last Four Fiscal Years ...................................................................................... 123
Changes in Net Assets - Last Four Fiscal Years............................................................................................ 124
City of San Leandro
Comprehensive Annual Financial Report
For the year ended June 30, 2006
Table of Contents, ( Continued)
iii
STATISTICAL SECTION, Continued
Fund Balances of Governmental Funds - Last Four Fiscal Years ................................................................. 125
Changes in Fund Balances of Governmental Funds - Last Four Fiscal Years............................................... 126
General Governmental Revenue by Source
Last Four Fiscal Years.......................................................................................................................... .. 127
General Governmental Expenditures by Function -
Last Four Fiscal Years.......................................................................................................................... .. 128
Assessed Value and Estimated Actual Value of Taxable Property -
Last Four Fiscal Years.......................................................................................................................... .. 129
Direct and Overlapping Property Tax Rates
L ast Four Fiscal Years.......................................................................................................................... .. 130
Principal Property Tax Payers
Current and Nine Years Ago ................................................................................................................... 131
Property Tax Levies and Collections
Last Four Fiscal Years.......................................................................................................................... .. 132
Sewer Rate – Last Four Fiscal Years ............................................................................................................. 133
Ratio of General Bonded Debt by Type - Last Four Fiscal Years................................................................. 134
Direct and Overlapping Debt ......................................................................................................................... 136
Computation of Legal Debt margin - Last Four Fiscal Years........................................................................ 137
Demographic and Economic Statistics – Last Four Fiscal Years .................................................................. 138
Principal Employers – Current and Four Years Ago ..................................................................................... 139
Full- Time and Part- Time City Employees by Function -
Last Four Fiscal Years.......................................................................................................................... .. 140
Operating Indicators by Function – Last Four Fiscal Years .......................................................................... 141
Capital Asset Statistics by Function – Last Four Fiscal Years ...................................................................... 142
v
December 18, 2006
Honorable Mayor and Members of the City Council
City of San Leandro
San Leandro, CA 94577
Dear Mayor and Members of the City Council:
It is with pleasure to submit for your information the Comprehensive Annual Financial Report
( CAFR) of the City of San Leandro for the fiscal year ended June 30, 2006. Responsibility for
both the accuracy of the data and the completeness and fairness of the presentation, including all
disclosures, rests with the City’s management. To the best of my knowledge and belief, the
enclosed data is accurate in all material respects and is reported in a manner designed to present
fairly the financial position and results of operations of the various activities of the City of San
Leandro ( City). All disclosures necessary to enable the reader to gain an understanding of the
City’s financial activities have been included.
The City’s Charter requires an annual audit by an independent audit firm selected by the City
Council of the books of account and financial records and reports of the City and that the City
publish a complete set of audited financial statements after the close of each fiscal year. This
report is published to fulfill this requirement for the fiscal year ended June 30, 2006.
The CAFR consists of three sections and includes the following information:
1. Introductory Section – This section includes this transmittal letter, a list of principal City
officials, the City’s organizational chart; a map identifying the City’s location within the
San Francisco Bay Area, and the most recent achievement certificates awarded to the City
for its excellence in financial reporting.
2. Financial Section - The basic financial statements include management’s discussion and
analysis, government- wide financial statements, fund financial statements, notes to the
basic financial statements, and required supplementary information as well as the
auditors’ report on the financial statements and schedules.
3. Statistical Section - Includes selected financial and demographic information, which is
generally presented on a multi- year basis and is unaudited.
vi
This report presents management’s representations concerning the finances of the City.
Consequently, management assumes full responsibility for the completeness and reliability of all
of the information presented in this report. To provide a reasonable basis for making these
representations, management of the City has established a comprehensive internal control
framework that is designed both to protect the City’s assets from loss, theft or misuse and to
compile sufficient reliable information for the preparation of the City’s financial statements in
conformity with generally accepted accounting principles ( GAAP). Because the costs of internal
controls should not outweigh the benefits, the City’s comprehensive framework of internal
controls has been designed to provide reasonable rather than absolute assurance that the financial
statements will be free from material misstatement.
Vavrinek, Trine, Day and Company, LLP, a public accounting firm fully licensed and qualified to
perform audits of local governments within the State of California, has audited the City’s basic
financial statements. The goal of the independent audit was to provide reasonable assurance that
the basic financial statements of the City for the fiscal year ended June 30, 2006, are free of
material misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the accounting
principles used and significant estimates made by management; and evaluating the overall
financial statement presentation. The independent auditors concluded, based upon the audit, that
there was a reasonable basis for rendering an unqualified opinion that the City’s basic financial
statements for the fiscal year June 30, 2006, are fairly presented in conformity with accounting
principles generally accepted in the United States. The independent auditor’s report is presented
as the first component of the financial section of this report.
The independent audit of the financial statements of the City of San Leandro was part of a
federally mandated Single Audit designed to meet the special needs of Federal grantor agencies.
The standards governing Single Audit engagements require the independent auditor to report not
only the fair presentation of the financial statements, but also on the audited government’s
internal controls and compliance with legal requirements, with special emphasis on internal
controls and legal requirements involving the administration of Federal awards. These reports are
available in the City’s separately issued Single Audit Report.
GAAP requires that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statement in the form of Management’s Discussion and Analysis
( MD& A). The MD& A compliments this letter of transmittal and should be read in conjunction
with it. The City’s MD& A can be found immediately following the report of the independent
auditors in the financial section of the CAFR.
THE REPORTING ENTITY
The City of San Leandro was incorporated in 1872 and is one of the oldest communities in the
San Francisco Bay Area. The City occupies fifteen square miles between the cities of Oakland
and Hayward and is bordered on the west by the San Francisco Bay. San Leandro offers its
approximately 81,500 residents the quiet charm and character of a community that has been
established for more than 130 years. Once an agricultural community, the City has been
successful in attracting significant industrial, manufacturing and retail development to the area.
vii
The City functions under a Mayor- Council- Manager form of government and is governed by a
seven- member council elected by City residents. Municipal services provided include public
safety; highways and streets; recreation, library and cultural services; health services; public
improvements; planning and zoning and general administrative services.
As of June 30, 2006 there were no discretely reportable component units. The City’s blended
component units include: operations of the San Leandro Redevelopment Agency, the San
Leandro Parking Authority, the San Leandro Public Financing Authority, the San Leandro
Economic Development Agency, and the enterprise operation of the San Leandro Housing
Finance Corporation.
The CAFR for the year ending June 30, 2006 provides a financial account of those activities,
organizational elements, and City functions for which the City Council provides policy direction
and general oversight. It presents financial information on the activities of the City of San
Leandro itself and the component units of the City upon which the City Council is authorized to
impose its will. The operating nature of the City’s component units determines how they are
reported in the financial statements. The activities of component units that provide financial
benefit or create financial burden for the City are blended within the City’s general financial
statements. Component units that have no discernable financial impact upon the City are
presented separately. The scope of the City Council’s power and influence includes, but is not
limited to the following:
• The authority to establish and modify operating and capital budgets
• The power to appoint voting members to other governing authorities
• The power to appoint the City Manager and City Attorney
• The ability to plan and direct operations
• The authority to veto, modify, and overrule decisions
Another significant example of control is the nature of financial interdependency between the
various City funds. Manifestations of financial interdependency include taking responsibility for
financing deficits, being entitled to operating surpluses, and giving implied guarantees (“ moral
responsibility”) for debt obligations.
The City Council is required to adopt a final budget through the passage of a resolution by no
later than June 30th, the close of the fiscal year, following a public hearing process conducted to
obtain taxpayer comments. This annual budget serves as the foundation for the City of San
Leandro’s financial planning and control. The budget is prepared by fund, function ( e. g., public
safety) and department ( e. g., police). The legal level of budgetary control is at the fund level.
The City Manager is authorized to transfer budgeted amounts between departments and line
items within any fund; however, any revisions which alter the total expenditures of any fund must
be approved by the City Council. Transfers between funds must be approved by the City
Council. All appropriations lapse at year- end, unless otherwise authorized by the City Council
and the City Manager, except for capital improvement funds for which appropriations endure
until the project is completed.
viii
ECONOMIC CONDITION OF THE CITY
The City of San Leandro has a diverse and strong economy with its business community
comprised of a diverse collection of business ranging from neighborhood coffeehouses and fine
restaurants, large food processing centers, and regional shopping opportunities, to cutting edge
technology. While the economic base had dramatically changed from its agricultural early years,
San Leandro continues to expand on its sound business base with new developments such as the
Marina Boulevard Auto Mall, the recently remodeled Bayfair Mall, and the future development
of a Kaiser Permanente hospital and retail project.
The City of San Leandro continued to experience overall growth with its major revenues, and
unlike the past few years the City experienced a positive net change in its General Fund Balance.
Year end General Fund results primarily reflect timing of commitments that have yet to be paid,
spending restrictions implemented as part of the City’s economic recovery efforts, and the result
of a full years experience collecting the new 911 Communication Systems Access Fee ( 911 Fee),
which provides some recovery against dispatch/ 911 emergency response program operating
costs. The overall decline in governmental fund reserves primarily reflects the City’s progress
with its capital improvement projects such as the Washington Manor Library renovation and
Washington Manor Pool refurbishing, and West Estudillo Pedestrian work. Budget- wise, the
City has closed its operating shortfall with the June 2006 approved business license tax increase
and new franchise fee on solid waste/ refuse disposal.
The City’s fiscal security also appears more stable resulting from the November 2005 approval of
Proposition 1A, which placed additional restrictions on the State’s ability to balance its budget
through local government takeaways and borrowing. Although, the State is anticipating a $ 5.5
billion shortfall in its current year budget it is hopeful that the local government revenues will
continue to be protected during future budget cycles. Other potential revenue risks include the
ongoing legal proceedings that challenge City’s new 911 Fee as a tax subject voter approval and
the recent slowdown of the Bay Area housing market. During this housing market slowdown,
property tax and other housing affected revenues continue to anticipate growth just not the high
level percentage growth experienced over the last few years.
As the City’s financial condition continues to improve, management will be working to confirm
security of its revenue base while restoring previously reduced services back to original levels.
Such near future examples include the restoration of a school resource officer and other sworn
police officers, the return of Sunday library services, City’s annual Cherry Festival celebration,
and downtown holiday lighting activities. Other needs that the City is hoping to address during
its upcoming budget process are the current level of maintenance deferrals ( e. g. street and roads,
facilities, technology) and the funding of other post employment benefits ( GASB # 45). The City
will continue to monitor and evaluate these needs against the priority of developing an ongoing
balanced budget and the prudence of not utilizing one- time resources towards the obligation of an
ongoing program.
At fiscal year end, the City’s general fund maintains a strong level of reserves available for
emergencies and economic uncertainties of $ 13.9 million or at 18.8% of its fiscal year 2006- 07
General Fund expenditures.
ix
CASH MANAGEMENT
The City maintains a cash and investment pool for all City Funds. The City Treasurer invests
City funds in accordance with the Investment Policy adopted annually by the City Council. The
objectives of the policy are legality, safety, liquidity and yield. The policy addresses the credit
quality of issuing financial institutions and the types of investments permitted by the California
Government Code. Permitted City investments include obligations of the U. S. Treasury and its
agencies and instrumentalities, commercial paper, banker’s acceptances, high quality medium-term
corporate notes, repurchase agreements, reverse repurchase agreements, certificates of
deposit, high quality mutual funds, and the State Treasurer’s Local Agency Investment Fund.
Additional information on the City’s cash management can be found in Note 2 of the notes to the
financial statements.
RISK MANAGEMENT
The City maintains a program of commercial insurance combined with self- insurance for
substantially all of its governmental operations, except for major construction projects and
contractor- supplied services. In such circumstances, insurance to protect the City is provided by
each contractor. The City is a member of the Local Agency Workers’ Compensation Excess Joint
Powers Authority ( LAWCX). The City is also a member of California Joint Powers Risk
Management Authority ( CJPRMA), which provides annual general liability coverage in an
aggregate up to $ 40 million. Additional information on the City’s risk management activity can
be found in the notes to the financial statements.
CERTIFICATE OF ACHIEVEMENT
The City of San Leandro was awarded the Certificate of Achievement for Excellence in Financial
Reporting for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2005
from both the Government Finance Officers Association of the United States and Canada
( GFOA) and the California Society of Municipal Finance Officers ( CSMFO). In order to be
awarded a Certificate of Achievement, a government must publish an easily readable and
efficiently organized Comprehensive Annual Financial Report. This report must satisfy both
generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that this
comprehensive annual financial report for fiscal year 2006 continues to meet the Certificate of
Achievement Program’s requirements and we are again submitting to GFOA for determination of
another of eligibility for another certificate. The CSMFO ( State) program has been discontinued
for those entities that have already received a previous CSMFO certification and qualify for the
national GFOA program.
ACKNOWLEDGMENTS
This CAFR represents the culmination of numerous hours of hard work expended by the
dedicated staff in the Accounting Division of the Finance Department. In particular, I would like
x
to express appreciation to Carla Rodriguez, Christine Galvin, and Clarence Youngs whose
support and dedication made the timeliness of the report possible. Furthermore, I would like to
thank Vavrinek, Trine, Day, and Company for their professional assistance and cooperation.
Finally, I want to thank John Jermanis, City Manager, Steve Hollister, Assistant City Manager,
and the City Council Finance Committee for their continued interest and support in planning and
conducting the City’s financial operations in a responsible and progressive manner.
Respectfully submitted,
Jesse S. Baloca
Finance Director
xii
PRINCIPAL OFFICERS
CITY OF SAN LEANDRO
For Fiscal Year Ended June 30, 2006
CITY COUNCIL
Mayor Shelia Young
Vice Mayor Surlene G. Grant
Councilmember Orval “ OB” Badger
Councilmember Glenda Nardine
Councilmember Tony Santos
Councilmember Joyce R. Starosciak
Councilmember Bill Stephens
COUNCIL APPOINTEES
City Manager John J. Jermanis
City Attorney Jayne W. Williams
APPOINTED OFFICIALS
Assistant City Manager Stephen Hollister
City Clerk Marian Handa
Police Chief Joseph W. Kitchen
Community Development Director Hanson Hom
Finance Director Jesse Baloca
Library Services Director David Bohne
Recreation and Human Services Director Carolyn Knudtson
Human Resources Director Justinian Caire
Engineering – Transportation Director Uchenna Udemezue
Public Works Services Director Michael Bakaldin
Alameda
Contra Costa
Santa Clara
San Mateo
San Francisco
Marin
Sonoma Napa Solano
San Francisco Bay
Alamo
Pinole
Orinda
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Newark
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Vallejo
Oakland
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Clayton
Benicia
Belmont
Ashland
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Stanford
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Martinez
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Mill Valley
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Walnut Creek
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Mountain View
Half Moon Bay North Fair Oaks
South San Francisco
Tamalpais- Homestead Valley
East Palo Alto
Palo Alto
Castro Valley
Hercules
5 2.5 0 5
Miles
VAVRINEK, TRINE, DAY
& COMPANY, LLP
Certified Public Accountants
VALUE THE DIFFERENCE
To the Honorable Mayor and Members of City Council
of the City of San Leandro
San Leandro, California
We have audited the accompanying financial statements of the governmental activities, the business- type
activities, each major fund, and the aggregate remaining fund information of the City of San Leandro, California
( City), as of and for the year ended June 30, 2006, which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of the City's
management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are nee of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable
basis for our opinions.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business- type activities, each major fund, and the
aggregate remaining fund information of the City as of June 30, 2006, and the respective changes in financial
position and cash flows, where applicable, thereof for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated September 25, 2006, on
our consideration of the City's internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be read in conjunction with this report in considering the results of our audit.
5000HopyardRoad, Suite335 PleasantonC, A 94588 Tel: 925.734.6600Fax: 925.734.6611www. vtdcDa. can
FRESNO . LAGUNA HILLS . PLEASANT ON . RANCHO CUCAMONGA . PALO ALTO
The accompanying Required Supplementary Information. such as management's discussion and analysis
( MD& A) and other information as listed in the table of contents are not a required part of the basic financial
statements but are supplementary information required by accounting principles generally accepted in the United
States of America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement, and presentation of the Required Supplementary
Information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the basic financials statements. The introductory section. combining and individual fund financial
statements and statistical tables listed in the table of contents are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the City. These financial statements and schedules
are also the responsibility of the management of the City. The combining and individual nonmajor fund financial
statements have been subjected to the auditing procedures applied in our audit of the basic financial statements,
and in our opinion, are fairly stated in all material respects when considered in relation to the basic financials
statements taken as a whole.
The introductory section and statistical tables have not been subjected to the auditing procedures applied in the
audit of the basic financial statements, and, accordingly, we express no opinion on them.
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Pleasanton, California
September 25,2006
CITY OF SAN LEANDRO, CALIFORNIA
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2006
3
Management of the City of San Leandro ( the “ City”) provides this Management Discussion and
Analysis of the City’s Comprehensive Annual Financial Report ( CAFR) for readers of the City’s
financial statements. This narrative overview and analysis of the financial activities of the City
is for the fiscal year ended June 30, 2006. We encourage readers to consider this information in
conjunction with the additional information that is furnished in the letter of transmittal found in
the preceding Introductory Section, and with the City’s basic financial statements and the
accompanying notes to those financial statements.
FINANCIAL HIGHLIGHTS
• The assets of the City exceeded its liabilities at fiscal year ending June 30, 2006 by $ 356.8
million. Of this amount, $ 302.4 million are capital assets, net of related debt, $ 31.7 million
is for restricted uses as specified by entities outside of the City government, and $ 22.7
million was reported as “ unrestricted net assets” and may be used to meet the government’s
ongoing obligations to citizens and creditors.
• The City’s total net assets increased by almost $ 13.8 million. The change primarily reflects a
net increase to capital assets of $ 15.8 million and a reduction to current assets and total
liabilities of $ 2.8 million and $ 1.2 million, respectively.
• At the close of the current fiscal year, the City’s governmental funds reported total ending
fund balances of $ 62.3 million, a decrease of $ 11.6 million from the prior year. The decrease
primarily reflects the use of capital project reserves of $ 12.6 million, an increase to General
Fund reserves of $ 2.6 million, and a decrease of non- major fund reserves of $ 1.6 million.
• At the end of the fiscal year, the General Fund balance was $ 36.8 million, an increase of $ 2.6
million from the prior year. The increase primarily reflects $ 2.6 million in positive
operations. The General Fund balance also reflects receipt of a $ 1.4 million loan repayment
from the State made during the current year.
• At fiscal year end, the City’s general fund maintains reserves available for emergencies and
economic uncertainties of $ 5 million and $ 9 million, respectively. This is a $ 1.5 million
increase from fiscal year ending June 30, 2005. The July 1, 2005 fire equipment replacement
reserve balance of $ 796 thousand was utilized for operation during the fiscal year.
• The City’s long- term debt decreased by $ 3.1 million during the current fiscal year. The
decrease reflects normal debt amortization. Long- term debt was not issued during the current
fiscal year.
OVERVIEW OF THE BASIC FINANCIAL STATEMENTS
Management’s Discussion and Analysis is intended to serve as an introduction to the City’s basic
financial statements. The City’s basic financial statements are comprised of three components:
4
government- wide financial statements; fund financial statements; and notes to the financial
statements. This report also contains other supplementary information in addition to the basic
financial statements themselves.
Government- wide Financial Statements
The government- wide financial statements are designed to provide readers with a broad
overview of the City’s finances, in a manner similar to statements of a private- sector business.
They are comprised of the Statement of Net Assets and Statement of Activities and Changes in
Net Assets.
The Statement of Net Assets presents information on all of the City’s assets and liabilities, with
the difference between the two reported as net assets. Over time, increases or decreases in net
assets may serve as a useful indicator of whether the financial position of the City is improving
or deteriorating.
The Statement of Activities and Changes in Net Assets presents information showing how the
government’s net assets changed during the fiscal year. All changes in net assets are reported as
soon as the underlying event giving rise to the change occurs, regardless of the timing of the
related cash flows. Thus revenues and expenses are reported in this statement for some items
that will only result in cash flows in future fiscal periods ( e. g. uncollected taxes and earned but
unused vacation leave).
The government- wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenue ( governmental activities) from other functions
that are intended to recover all or a significant portion of their costs through user fees and
charges ( business- type activities).
Both of the above financial statements have separate sections for three different types of
programs or activities. These three types of activities are:
Governmental Activities - The activities in this section are mostly supported by taxes and charges
for services. The governmental activities of the City include General Government, Public
Safety, Engineering & Transportation, Recreation and Culture, Library and Community
Development.
Business- Type Activities – These functions normally are intended to recover all or a significant
portion of their costs through user fees and charges to external users of goods and services. The
business- type activities of the City include Water Pollution Control Plant, Environmental
Services, Shoreline Enterprise, Storm Water Utility, and San Leandro Housing Finance
Corporation.
Discretely Presented Component Units - The City of San Leandro has no discretely presented
component units to report upon.
The government- wide financial statements can be found on pages 19 through 21 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
5
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.
The fund financial statements provide detailed information about each of the City’s most
significant funds, called Major Funds. The concept of Major Funds, and the determination of
which are major funds, was established by GASB Statement 34 and replaces the concept of
combining like funds and presenting them in total. Instead, each Major Fund is presented
individually, with all Non- major Funds summarized and presented in a single column. Further
detail on the Non- major funds is presented on pages 83 through 121 of this report.
Governmental Funds - Governmental funds are used to account for essentially the same
functions reported as governmental 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. Such information may be
useful in evaluating a government’s near- term financial capacity.
Because the focus of governmental funds is narrower than that of the government- wide financial
statements, it is useful to compare the information presented for government funds with similar
information presented for governmental activities in the government- wide financial statements.
By doing so, readers may better understand the long- term impact of the government’s near- term
financing decisions. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures, and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities. These
reconciliations are presented on the page immediately following each governmental fund
financial statement.
The City has 24 governmental funds, of which 5 are considered major funds for presentation
purposes. Each major fund is presented separately in the governmental fund balance sheet and in
the governmental fund statement of revenues, expenditures, and changes in fund balances. The
City’s 5 major funds are - the General Fund, Measure B Fund, Redevelopment Agency Capital
Projects Fund, Capital Improvement Projects Capital Projects Fund, and the Redevelopment
Agency Low/ Moderate Housing Capital Projects Fund. Data from the other 19 governmental
funds are combined into a single, aggregated presentation. The basic governmental fund
financial statements can be found on pages 25 through 31 of this report.
Proprietary Funds - The City maintains two different types of proprietary funds - enterprise
funds and internal service funds. Enterprise funds are used to report the same functions
presented as business- type activities in the government- wide financial statements. The City uses
an enterprise fund to account for its Water Pollution Control Plant, Shoreline, San Leandro
Housing Finance Corporation, Storm Water Utility, and Environmental Services. Internal
service funds are used to accumulate and allocate costs internally among the City’s various
functions. The City uses internal service funds to account for its fleet of vehicles, facilities,
insurance services and its information systems. Because these services predominantly benefit
governmental rather than business- type functions, they have been included within governmental
activities in the governmental- wide financial statements.
6
Proprietary funds provide the same type of information as the government- wide financial
statements, only in more detail. Like the government- wide financial statements, proprietary fund
financial statements use the accrual basis of accounting. There is no reconciliation needed
between the government- wide financial statements for business- type activities and the
proprietary fund financial statements.
The basic proprietary fund financial statements can be found on pages 33 through 36 of this
report.
Fiduciary Funds – Fiduciary funds, which consist solely of trust and agency funds, are used to
account for resources held for the benefit of parties outside the government. Fiduciary funds are
not reflected in the government- wide financial statements because the resources of those funds
are not available to support the City’s own programs. The fiduciary funds statement of net assets
can be found on page 38.
Notes to the Basic Financial Statements
The notes to the basic financial statements 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 financial statements can be found on pages 39 through 76 of this report.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents
certain required supplemental information. This information includes budgetary comparison
schedules, as well as more detailed information about the City’s participation in the California
Public Employees Retirement System ( CALPERS) defined benefit pension plan. The combining
statements referred to in connection with non- major governmental funds and internal service
funds are presented immediately following the required supplemental information on pages 77
through 81 of this report.
GOVERNMENT- WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve, over time, as a useful indicator of a government’s
financial position. In the case of the City of San Leandro, combined net assets ( government and
business type activities) totaled $ 356.8 million at the close of the fiscal year ending June 30,
2006.
As shown below, the largest portion of the City’s net assets, $ 302.4 million or 84.8%, reflects its
investment in capital assets ( e. g. land, streets, sewers, 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 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, since the
capital assets themselves cannot be used to liquidate these liabilities.
An additional $ 31.7 million ( 8.9%) of the City’s net assets represent resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net assets,
$ 22.7 million ( 6.4%) may be used to meet the government’s ongoing obligations to citizens and
creditors.
7
A summary of the government- wide statement of Net Assets is as follows:
City of San Leandro
Net Assets at June 30, 2006
( in thousands)
2006 2005 2006 2005 2006 2005
Current Assets $ 8 2,932 $ 8 8,822 $ 2 3,715 $ 2 0,674 $ 1 06,647 $ 1 09,496
Non- Current Assets 1 6,803 1 6,636 ( 9,189) ( 8,566) 7 ,614 8 ,070
Capital Assets 3 31,747 3 16,165 1 4,291 1 4,040 3 46,038 3 30,205
Total assets 431,482 421,623 28,817 26,148 460,299 447,771
Current and other liabilities 21,313 17,557 858 1,990 22,171 19,547
Long- term liabilities 77,761 81,495 3,566 3,712 81,327 85,207
Total liabilities 99,074 99,052 4,424 5,702 103,498 104,754
Net assets:
Invested in capital assets,
net of related debt 2 91,400 2 71,398 1 1,029 1 4,040 3 02,429 2 85,438
Restricted 3 1,717 4 1,927 3 1,717 4 1,927
Unrestricted 9 ,291 9 ,246 1 3,364 6 ,407 2 2,655 1 5,653
Total net assets $ 3 32,408 $ 3 22,571 $ 2 4,393 $ 2 0,447 $ 3 56,800 $ 3 43,018
Governmental Activities Business- Type Activities Total
Changes in Net Assets
The City’s net assets increased by $ 13.8 million from the prior fiscal year. Revenues increased
by $ 14 million while expenses remained relatively flat from the prior fiscal year. The City also
made a prior year net asset adjustment by increasing its governmental type assets close to $ 1.4
million. The prior year adjustment reflects City revenue earned and loaned to the State of
California. The prior year loan was repaid by the State during the current fiscal year. The
earned revenue and subsequent loan receivable were inadvertently not recorded when the events
occurred. Please refer to Note 14 in the basic notes to the financial statements for additional
detail of the prior year adjustment.
Governmental Activities
Government activities increased the City’s net assets by almost $ 9.8 million. Overall,
Governmental revenues increased by $ 12.2 million or 14.1% over the prior fiscal year. General
revenues increased by $ 4.4 million or 6.9%; while grants, contributions and service charges
increased by $ 7.8 million or 34.9%. General revenues primarily reflect a $ 4.4 million or 7.4%
increase in combined property, sales and other tax revenues, a sale of redevelopment agency
property for $ 517 thousand, and greater investment earnings of $ 575 thousand from the prior
year.
Expenditures increased by $ 511 thousand or 0.6%. Expenditures primarily reflect an increase in
the cost of operations at the same service level as the prior fiscal year.
Business Type Activities
Net assets for business- type activities were close to $ 24.4 million, an increase of $ 3.9 million
from the prior fiscal year. Total revenues for business- type activities were $ 16.7 million, which
is an increase of $ 2.2 million over the prior fiscal year. Revenue increase primarily reflects
growth in program revenue service charges, which increased by $ 1.7 million as a result of
increased Water Pollution Control Plant revenues of $ 961 thousand, a San Leandro Housing
8
Finance Corporation reimbursement of $ 914k, and a decrease in Shoreline berthing rentals and
concession revenues of $ 145 thousand. Total expenses for the business- type activities were
close to $ 12.8 million reflecting a decrease of $ 620 thousand or 4.6%. Expenses primarily
reflect a decrease in Water Pollution Control Plant services and Marina and Golf Course
activities of $ 488 thousand and $ 671 thousand, respectively, and a contribution of San Leandro
Housing Finance Corporation funds of $ 947 thousand towards a Federal qualified low- moderate
housing capital project .
A summary of the government- wide statement of Changes in Net Assets follows:
City of San Leandro
Changes in Net Assets
Year Ended June 30,2006
( in thousands)
2006 2005 2006 2005 2006 2005
Revenues
Program revenues:
Charges for Services $ 12,515 $ 10,900 $ 15,101 $ 13,361 $ 27,616 $ 24,261
Operating grants and contributions 4,608 2,470 4,608 2,470
Capital grants and contributions 13,056 8,944 13,056 8,944
General revenues:
Property taxes 21,167 18,884 21,167 18,884
Sales tax 22,145 20,705 22,145 20,705
Other taxes 20,479 19,830 299 213 20,778 20,043
Motor Vehicle License Fees 531 530 531 530
Investment Earnings 3,082 2,507 723 577 3,805 3,084
Gain on sale of asssets 517 517 0
Miscellaneous 827 1,921 543 294 1,370 2,215
Total Revenues 98,927 86,691 16,666 14,445 115,593 101,136
Expenses
General Government 22,864 22,166 22,864 22,166
Public safety 37,416 35,819 37,416 35,819
Engineering & Transportation 2,261 9,006 2,261 9,006
Recreation and Culture 12,714 11,687 12,714 11,687
Community Development 11,238 7,462 11,238 7,462
Interest on Long- Term Debt 3,924 3,766 3,924 3,766
Water Pollution Control 6,980 7,468 6,980 7,468
Shoreline 2,470 3,026 2,470 3,026
San Leandro Housing Finance Corp 947 669 947 669
Storm Water Utility 921 1,056 921 1,056
Environmental Services 1,453 1,172 1,453 1,172
Total Expenses 90,417 89,906 12,771 13,391 103,188 103,297
Excess( deficiency) of revenues
over expenses before transfer 8,510 ( 3,215) 3,895 1,054 12,405 ( 2,161)
Transfer ( 51) ( 147) 51 147
Increase in net assets 8,459 ( 3,362) 3,946 1,201 12,405 ( 2,161)
Beginning net assets 322,570 325,933 20,447 19,246 343,016 345,179
Ending net assets $ 331,029 $ 322,571 $ 24,393 $ 20,447 355,421 $ 343,018
Prior Period Adjustment 1,379 1,379
Beginning net assets, restated $ 332,408 $ 24,393 $ 356,800
Governmental Activities Business- Type Activities Total
9
FINANCIAL ANALYSIS OF INDIVIDUAL FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with
finance- related legal requirements.
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
financial 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 June 30, 2006, the City’s governmental funds reported combined ending fund balances of
$ 62.3 million. Approximately, $ 21.2 million of this amount constitutes unreserved fund balance,
which is available for spending at the government’s discretion. The remainder of fund balance is
reserved to indicate that it is not available for spending because it has already been legally
committed.
The following are major funds that either qualified under the reporting criteria or were
considered to be important to financial statement users:
General Fund - The general fund is the primary operating fund of the City. At the end of the
current fiscal year, unreserved ( designated and undesignated) fund balance of the general fund
was $ 16 million, while total fund balance is close to $ 36.8 million, which is an increase of $ 2.6
million from the prior fiscal year. 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 23.2% of total general fund expenditures including transfers
out, while total fund balance represents 53.2% of that same amount.
The City’s management also designates unreserved fund balance to a particular function, project
or activity. Fund balance may also be designated for purposes beyond the current year.
However, designated fund balance is available for appropriation at any time. Of the $ 16 million
General Fund unreserved fund balance, 100% is designated for a specific purpose. The most
significant designations are $ 9 million earmarked for economic uncertainty, $ 5 million
earmarked for major emergencies, and approximately $ 1.4 million earmarked for future capital
projects. The City had no unreserved and undesignated fund balance at year- end June 30, 2006.
Measure B Fund – The Measure B Construction Fund accounts for the City’s share of proceeds
of a one- half cent sales tax increase originally approved by the voters in November 1986 to
provide funds for street & road improvements and bicycle & pedestrian improvements. The
program is administered by the Alameda County Transportation Authority. At the end of fiscal
year 2006, the total fund balance was $ 2.0 million, which is an increase of $ 749 thousand from
the prior fiscal year.
Capital Improvement Projects Capital Projects Fund - The Capital Improvement Projects
Capital Project Fund was established to account for major capital improvement projects. The
2006 fiscal year ended with a reserved fund balance close to $ 3.8 reflecting year end
encumbrances. Encumbrances primarily reflect remaining debt proceeds from the City’s 2003
Certificates of Participation issuance to fund Washington Manor Pool refurbishing project, 2005
10
lease purchase proceeds to fund the City’s Computer Aided Dispatch and Records Management
System ( CAD/ RMS) project, and underground utility projects funded by fee revenue.
Redevelopment Agency Capital Improvement Fund - The Redevelopment Agency is
responsible for the planning and implementation of the City’s Redevelopment Plan for the three
Project Areas established under the Community Redevelopment Law. The Agency’s operations
are funded primarily by the issuance of debt, which is expected to be repaid out of property tax
increment revenue generated by increases in property assessed values in the redevelopment
project areas. The reserved fund balance at the end of fiscal year was $ 8.9 million.
Redevelopment Agency Low/ Moderate Housing Capital Projects Fund - The
Redevelopment Agency Low/ Moderate Housing Capital Projects Fund was established to
account for the 20% tax increment revenue set aside and legally designated for low and moderate
income housing and neighborhood improvements. At the end of fiscal year 2006, the unreserved
fund balance was close to $ 439 thousand. The decrease of $ 3.5 million reflects the purchase of
motel property that will be converted to low- moderate income housing with 68- units.
Proprietary Funds
The City’s proprietary funds provide the same type of information found in the government- wide
financial statements but in more detail.
The total net assets of the enterprise funds increased by $ 3.96 million primarily reflecting the
Water Pollution Control Plant’s operating income. Unrestricted net assets of internal service
funds at June 30, 2006, amounted to $ 11.3 million and primarily reflect reduced workers
compensation and general liability settlements as compared to the previous fiscal year.
Water Pollution Control Plant Enterprise Fund – The Water Pollution Control Plant
Enterprise fund was established to account for the City’s sewers, which protect public health and
preserve water quality through collection, treatment and disposal of the community’s wastewater
and wastewater solids. As of June 30, 2006, the fund’s net assets totaled $ 26.5 million, of which
$ 7.0 million was restricted and $ 19.5 million was unrestricted.
Shoreline Enterprise Fund - The Shoreline Enterprise Fund was established in 2002- 03 to
combine the Marina Enterprise Fund and the Golf Course Enterprise Fund. This fund accounts
for the operation of recreational berthing and food service facilities and the golf course for use by
the general public. As of June 30, 2006, the fund’s net assets totaled ($ 3.6) million. The fund
had a deficit fund balance of ($ 7.6) million in the unrestricted portion of the net assets. The
deficit has accumulated over the years and reflects the transfer of golf course assets in 2003
pursuant to the City’s lease with American Golf Company. The deficit will be eliminated
through cost containment and revenue enhancement.
GENERAL FUND BUDGETARY HIGHLIGHTS
The final amended general fund expenditure budget totaled $ 71.5 million, which is an increase
close to $ 1.1 million over the original adopted budget.
Significant amendments to the fiscal year 2005- 06 budget primarily include $ 794 thousand in
prior year outstanding encumbrances and approved carryovers of unspent budget from the prior
11
fiscal year and a $ 113 thousand appropriation to support the City’s new red light enforcement
program, costs which are offset by new red light violation revenues.
The following is a summary of the General Fund budget and actual for the current fiscal year.
Variance with
final budget
Actual positive/
Adopted Final ( budget basis) ( negative)
Revenue
Property and other taxes $ 52,695.9 $ 52,695.9 $ 56,507.7 $ 3,811.8
Licenses and permits 3,663.6 3,663.6 3 ,574.6 ( 89.0)
Fines and forfeitures 620.0 620.4 8 37.6 217.2
Service charges 4,853.3 4,851.1 5 ,128.6 277.4
Intergovernmental 935.3 935.3 1 ,196.7 261.5
Use of money and property 2,203.8 2,203.8 2 ,321.2 117.4
Interdepartment charges 1,783.8 1,783.8 1 ,783.8 0.0
Other 318.8 392.8 4 34.7 41.9
Total Revenues 67,074.6 67,146.7 71,784.9 4,638.2
Expenditures
General government 11,556.6 11,808.3 11,310.5 497.8
Public safety 38,524.1 38,830.9 38,765.9 65.0
Engineering and transportation 5,485.4 5,634.7 5,185.9 448.8
Recreation and culture 11,745.4 11,915.0 10,720.1 1,194.9
Community development 3,154.6 3,329.3 2,925.4 403.9
Total Expenditures 70,466.1 71,518.2 68,907.7 2,610.4
Total excess ( deficiency of revenues)
over expenditures ( 3,391.5) ( 4,371.5) 2,877.2 7,248.6
Other financing sources ( uses)
Transfers in
Transfers out ( 50.6) ( 238.6) ( 238.6) -
Total other financing sources ( uses) ( 50.6) ( 238.6) ( 238.6) -
Net change in fund balance ($ 3,442.1) ($ 4,610.1) $ 2,638.6 $ 7,248.6
CITY OF SAN LEANDRO
Summary Analysis of General Fund Budget, Fiscal Year 2005- 06
( in thousands)
Budget Amounts
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City’s investment in capital assets for its governmental and business type activities as of
June 30, 2006, amounts to $ 346 million ( net of accumulated depreciation), which is an increase
of $ 15.8 million. Investment in capital assets includes land, buildings, improvements, machinery
and equipment, infrastructure and construction in progress. Infrastructure assets are items that
are normally immovable and of value only to the City such as roads, bridges, streets and
sidewalks, drainage systems, lighting systems and similar items.
The following is a summary of the City’s capital assets:
12
City of San Leandro
Capital Assets ( net of depreciation)
Year Ended June 30,2006
( in thousands)
2006 2005 2006 2005 2006 2005
Land $ 16,641 $ 14,439 $ 3,578 $ 3,578 $ 20,219 $ 18,017
Buildings 4 3,741 4 0,627 5,021 5,012 48,762 45,639
Improvements other than buildings 4 63 9 32 463 932
Machinery and equipment 1 ,891 2 ,320 581 604 2,472 2,924
Licensed Vehicles 2 ,826 2 ,370 45 54 2,871 2,424
Infrastructure 2 32,117 2 39,336 1,181 1,210 233,298 240,546
Construction in progress 3 4,068 1 6,141 3,885 3,582 37,953 19,724
Capital assets, net $ 331,747 $ 316,165 $ 14,291 $ 14,040 $ 346,038 $ 330,205
Governmental Activities Business- Type Activities Total
The increase to governmental assets was $ 15.6 million. The total increase to non- depreciable
assets primarily reflects the net of $ 1.6 million in land, $ 22.9 million in construction in progress,
$ 7 million in deletions, and $ 2.7 million in adjustments. New construction in progress includes
$ 4.8 million for the refurbishing of the Washington Manor Pool, $ 3.2 million for the Washington
Manor Library, $ 1.5 million West Estudillo Pedestrian work, $ 2.8 million for Westgate Parkway
project, and $ 2.1 million for the City’s CAD/ RMS replacement project, for example.
Depreciable assets primarily reflect $ 10.5 million in additions offset by $ 14 million in annual
depreciation, and net asset deletions of $ 1.2 million.
The net increase to business- type assets was $ 251 thousand. Construction in progress reflects
$ 496 thousand increase that primarily reflects $ 187 thousand in lift station improvements, $ 189
thousand in waste water treatment plan improvements, and $ 101 thousand for sanitary sewer
pipe replacement. The increase to construction in progress was offset by $ 193 thousand for
Marina restroom improvements that were completed and reclassified to buildings. Other
additions include $ 98 thousand in machinery and equipment. Offsetting the additions was $ 345
thousand in annual depreciation.
Additional information on the City’s capital assets can be found on Note 6 on the notes to the
financial statements.
Debt Administration
At the end of the current fiscal year, the City’s total long- term debt outstanding is $ 73.6 million,
a decrease of $ 3.1 million from the prior fiscal year. The net decrease primarily reflects normal
debt amortization. As of June 20, 2006, the 139th Avenue and Marina Boulevard special
assessment debts were fully retired. The City continues to have no outstanding general
obligation debt. Additional information on the City’s long- term debt obligations can be found in
Note 7 of the notes to the financial statements.
13
The following is a summary of the City’s outstanding debt:
City of San Leandro
Outstanding Debt
Year Ended June 30,2006
( in thousands)
2006 2005 2006 2005 2006 2005
Revenue bonds and notes $ 21,380 $ 21,945 $ 21,380 $ 21,945
( backed by specific tax and fee revenues)
Certificates of participation 40,245 41,200 40,245 41,200
Other loans 8,740 10,180 3,262 3,402 12,002 13,582
Total $ 70,365 $ 73,325 $ 3,262 $ 3,402 $ 73,627 $ 76,727
Governmental Activities Business- Type Activities Total
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
Fiscal year 2005- 06 was a year where revenues exceeded the cost of operations by $ 2.6 million
in the General Fund and by ($ 14.3) million for other governmental fund activities. As
anticipated, the regional and local economy continued to experience moderate growth, which is
reflective in the City’s major revenue sources. Sales tax, the City’s largest General Fund source
of revenue has stabilized, rebounding back to previous fiscal year 2001- 02 levels during the
current year. In anticipation of a housing market decline, a reduction in property tax percentage
growth, a decline in property sale transfer taxes, housing permits and fees were speculated to
offset much of the growth to other revenues resulting in the prediction of a slight ongoing
General Fund deficit. Fortunately, property related revenues remained strong through the end of
the fiscal year. Expenditures less than budget also contributed to the positive year end operations
and primarily reflect $ 1.3 million in encumbrances ( committed resources not yet paid due to
timing) and one- time savings from operations.
Although the City’s General Fund ended the year with positive operations reflective of
conservatively projected revenues, timing that committed funds are expended and operational
savings, the City has been fiscally prudent by not expanding permanent programs with one- time
windfalls. The City perceives that a budgetary gap still exists and continues to forego unmet
needs, defer capital replacement and infrastructure maintenance, and operate at previously
reduced service levels in its fiscal year 2006- 07 budget. The City’s 911 Communications
System Access Fee, which was implemented in December 2004 and generated approximately
$ 2.3 million, is currently in litigation in a neighboring jurisdiction and continues to be considered
a revenue- at- risk program.
In both the national and local economy, the housing markets have entered a true slowdown and
the Federal Reserve has placed a hold on raising interest rates since June 2006, after 17
consecutive increases, suggesting that overall inflation has so far been contained as of the date
this reporting. According to the UCLA Anderson Forecast as of third quarter 2006, the
California housing market will continue to soften and along with real estate employment but that
home prices are unlikely to experience significant declines overall.
The City of San Leandro projects ongoing moderate growth over the next two years mixed with
strong business to business sales, moderate retail growth, partially offset by declining auto sales.
14
Property related revenues are projected to grow but at lesser percentage growth rate experienced
during the last three fiscal years. Over the next couple of years, the cost of basic operations can
be expected to increase by 5- 6% a year. The net increase is reflective of the City’s new
employment agreements, health benefit costs that are expected to grow by 12- 15%, and a the
expected rise of 2- 3% annually to the cost of other ongoing services.
In June 2006, a voter- approved increase to the City’s business license tax and a new solid waste
franchise fee on solid waste/ refuse disposal is expected to close the City’s budgetary gap and
allow for the limited restoration to several previously reduced services. Services intended for
restoration include a school resource officer, the restoration of Sunday library service hours, the
City’s annual Cherry Festival celebration, the downtown holiday lighting program, and the
restoration of funding reductions to community- based organizations.
At the end of the fiscal year, the City maintains reserves available for emergencies and economic
uncertainties $ 13.9 million, or 18.8% of the new fiscal year 2006- 07 general fund operating
expenditure budget, as compared to Council’s 20% recommended reserve policy.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City’s finances for all of its
citizens, taxpayers, customers, investors and creditors. Questions concerning any of the
information provided in this report or requests for additional information should be addressed to
the City of San Leandro, Finance Department, 835 East 14th street, San Leandro, CA 94577.
3
BASIC FINANCIAL STATEMENTS
GOVERNMENT- WIDE FINANCIAL STATEMENTS
City of San Leandro
Statement of Net Assets
June 30, 2006
Governmental Business- Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments ( Note 2) $ 5 1,154,419 $ 2 2,725,820 $ 7 3,880,239
Restricted cash and investments ( Note 2)
Cash and investments with fiscal agent 1 8,970,530 - 1 8,970,530
Unrestricted receivables:
Property taxes 3 44,044 - 3 44,044
Accounts 5 ,449,062 7 83,477 6 ,232,539
Interest 5 86,951 1 82,214 7 69,165
Special assessments 1 ,028,060 2 1,987 1 ,050,047
Restricted receivables 4 ,932,882 4 ,932,882
Inventory and prepaid items 1 20,053 - 1 20,053
Other assets 3 46,294 1 ,756 3 48,050
Total current assets 8 2,932,295 2 3,715,254 1 06,647,549
Noncurrent assets:
Loans receivable ( Note 3) 5 ,735,680 - 5 ,735,680
Notes receivable ( Note 4) 1 ,878,757 - 1 ,878,757
Long- term internal balances 9 ,189,079 ( 9,189,079) -
Capital assets ( Note 6):
Non Depreciable 5 0,708,751 7 ,463,297 5 8,172,048
Depreciable 4 06,401,400 1 6,022,828 4 22,424,228
Less accumulated depreciation ( 125,363,230) ( 9,194,830) ( 134,558,060)
Capital assets, net 3 31,746,921 1 4,291,295 3 46,038,216
Total noncurrent assets 3 48,550,437 5 ,102,216 3 53,652,653
Total assets 4 31,482,732 2 8,817,470 4 60,300,202
LIABILITIES
Current liabilities:
Accounts payable and accruals:
Restricted 9 88,735 6 61,175 1 ,649,910
Unrestricted 6 ,604,722 - 6 ,604,722
Interest payable 7 75,951 - 7 75,951
Unearned revenue ( Note 9):
Restricted 8 61,489 1 2,564 8 74,053
Unrestricted 1 ,811,276 - 1 ,811,276
Other liabilities:
Restricted 1 ,730,899 - 1 ,730,899
Unrestricted 3 ,940,032 7 61 3 ,940,793
Compensated absences payable - due within one year ( Note 8) 2 1,007 3 7,591 5 8,598
Claims and judgments payable - due within one year ( Note 11) 1 ,734,299 - 1 ,734,299
Long- term debt - due within one year ( Note 7) 2 ,587,267 1 46,115 2 ,733,382
Total current liabilities 2 1,055,677 8 58,206 2 1,913,883
Noncurrent liabilities:
Deposits - 6 9,836 6 9,836
Compensated absences payable - due in more than one year ( Note 8) 4 ,043,856 3 80,099 4 ,423,955
Claims and judgments payable - due in more than one year ( Note 11) 5 ,757,314 - 5 ,757,314
Long- term debt - due in more than a year ( Note 7) 6 8,217,512 3 ,116,239 7 1,333,751
Total noncurrent liabilities 7 8,018,682 3 ,566,174 8 1,584,856
Total liabilities 9 9,074,359 4 ,424,380 1 03,498,739
NET ASSETS
Invested in capital assets, net of related debt 2 91,400,560 1 1,028,943 3 02,429,503
Restricted for:
Capital projects 2 1,555,534 - 2 1,555,534
Debt service 5 ,791,241 - 5 ,791,241
Special projects 4 ,370,541 - 4 ,370,541
Total restricted 3 1,717,316 - 3 1,717,316
Unrestricted 9 ,290,497 1 3,364,147 2 2,654,644
$ 3 32,408,373 $ 2 4,393,090 $ 3 56,801,463
See accompanying Notes to Basic Financial Statements.
Total net assets
19
City of San Leandro
Statement of Activities and Changes in Net Assets
June 30, 2006
Indirect Operating Capital
Expenses Charges for Grants and Grants and
Functions/ Programs Expenses Allocation Services Contributions Contributions Total
Primary government:
Governmental activities:
General government $ 2 2,864,200 $ ( 409,735) $ 3 ,232,746 $ - $ 1 ,095,617 $ 4 ,328,363
Public safety 3 7,415,908 - 4 ,609,005 2 15,151 6 56,502 5 ,480,658
Engineering and transportation 2 ,260,498 2 42,090 6 94,746 2 ,477,229 9 ,985,756 1 3,157,731
Recreation and culture 1 2,714,017 - 1 ,759,542 3 93,104 1 ,318,125 3 ,470,771
Community development 1 1,238,106 1 67,645 2 ,218,454 1 ,522,844 - 3 ,741,298
Interest on long- term debt 3 ,924,447 - - - - -
Total governmental activities 9 0,417,176 - 1 2,514,493 4 ,608,328 1 3,056,000 3 0,178,821
Business- type activities:
Water Pollution Control Plant 6 ,979,509 - 1 0,267,776 - - 1 0,267,776
Shoreline 2 ,470,221 - 2 ,234,105 - - 2 ,234,105
San Leandro Housing Finance
Corporation 9 46,776 - 9 13,662 - - 9 13,662
Storm Water Utility 9 21,120 - 1 ,055,105 - - 1 ,055,105
Environmental Services 1 ,453,306 - 6 30,344 - - 6 30,344
Total business- type activities 1 2,770,932 - 1 5,100,992 - - 1 5,100,992
Total primary government $ 1 03,188,108 $ - $ 2 7,615,485 $ 4 ,608,328 $ 1 3,056,000 $ 4 5,279,813
General revenues and transfers:
Taxes:
Property taxes
Sales taxes
Motor vehicle license fees ( unrestricted)
Other taxes
Total taxes
Investment earnings
Miscellaneous
Gain or loss on sale of assets
Transfers
Total general revenues and transfers
Change in net assets
Net assets - beginning of year, as restated ( Note 14)
Net assets - end of year
See accompanying Notes to Basic Financial Statements.
Program Revenues
20
Governmental Business- Type
Activities Activities Total
$ ( 18,126,102) $ - $ ( 18,126,102)
( 31,935,250) - ( 31,935,250)
1 0,655,143 - 1 0,655,143
( 9,243,246) - ( 9,243,246)
( 7,664,453) - ( 7,664,453)
( 3,924,447) - ( 3,924,447)
( 60,238,354) - ( 60,238,354)
- 3 ,288,267 3 ,288,267
- ( 236,116) ( 236,116)
- ( 33,114) ( 33,114)
- 1 33,985 1 33,985
- ( 822,962) ( 822,962)
- 2 ,330,060 2 ,330,060
( 60,238,354) 2 ,330,060 ( 57,908,294)
2 1,167,178 - 2 1,167,178
2 2,144,559 - 2 2,144,559
5 30,525 - 5 30,525
2 0,479,433 2 99,126 2 0,778,559
6 4,321,695 2 99,126 6 4,620,821
3 ,082,051 7 23,250 3 ,805,301
8 26,816 5 42,837 1 ,369,653
5 16,633 - 5 16,633
( 50,594) 5 0,594 -
6 8,696,601 1 ,615,807 7 0,312,408
8 ,458,247 3 ,945,867 1 2,404,114
3 23,950,126 2 0,447,223 3 44,397,349
$ 3 32,408,373 $ 2 4,393,090 $ 3 56,801,463
Net ( Expense) Revenue
and Changes in Net Assets
21
FUND FINANCIAL STATEMENTS
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
Governmental Fund Financial Statements
GOVERNMENTAL FUND FINANCIAL STATEMENTS
Measure B - This fund accounts for the City's share of proceeds of a one- half cent sales tax increase originally
approved by the voters in November 1986. The program is administered by the Alameda County Transportation
Authority. The tax provides funds for eight specific projects within Alameda County including major freeway
improvements and a major rail extension.
The General Fund - Accounts for all general revenues of the City not specifically levied or collected for other City
funds and the related expenditures. The General Fund accounts for all financial resources of a governmental unit which
are not accounted for in other funds.
Capital Improvement Projects Capital Projects Fund - Accounts for monies for major capital improvement projects
not provided for in one of the other capital projects funds.
Redevelopment Agency Capital Projects Fund - Accounts for the planning and implementation of the City’s
Redevelopment Plan for the three Project Areas located within the City’s boundaries.
Redevelopment Agency Low/ Moderate Housing Capital Projects Fund - Accounts for the 20% tax increment revenue
set aside legally designated for low and moderate income housing and neighborhood improvement programs.
25
City of San Leandro
Balance Sheet
June 30, 2006
Capital
Improvement Redevelopment
Projects Agency
General Measure B Capital Projects Capital Projects
ASSETS
Cash and investments $ 17,457,087 $ - $ - $ 11,502,710
Cash and investments with fiscal agent - - 6,124,432 7,968,464
Receivables:
Property taxes - - - 269,421
Accounts 4,501,137 6,275 3,441 -
Federal, State, and local grants - 2,734,656 - -
Interest 6,172 - 19,808 75,220
Special Assessment 245,039 - - -
Sales tax - Measure B - 213,027 - -
Loans - - - 1,613,631
Notes 1,878,757 - - -
Due from other funds 1,999,343 - - -
Other assets 3,851 328,000 13,200 -
Advances to other funds 17,605,995 - - -
Total assets $ 43,697,381 $ 3,281,958 $ 6,160,881 $ 21,429,446
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and accruals $ 4,327,569 $ 348,118 $ 916,653 $ 412,791
Unearned revenue 1,811,276 - - 1,613,631
Due to other funds - 583,277 416,445 -
Other liabilities 495,610 328,000 1,052,685 3,444,422
Advances from other funds - - - 6,969,174
Compensated absences payable 264,607 - - -
Total liabilities 6,899,062 1,259,395 2,385,783 12,440,018
Fund Balances:
Reserved for:
Encumbrances 1,264,078 752,697 3,775,098 726,324
Advances to other funds 17,605,995 - - -
Long- term notes/ loans receivables 1,878,757 - - -
Capital Projects - - - 8,263,104
Debt service - - - -
Unreserved:
Designated:
Internship program 50,000 - - -
Major emergencies 5,000,000 - - -
Economic uncertainty 8,993,421 - - -
Computer purchase program 225,000 - - -
Capital projects 1,379,780 - - -
Asset seizure 401,288 - - -
Unreserved, undesignated, reported in:
Special revenue funds 1,269,866 - -
Total fund balances 36,798,319 2,022,563 3,775,098 8,989,428
Total liabilities and fund balances $ 43,697,381 $ 3,281,958 $ 6,160,881 $ 21,429,446
See accompanying Notes to Basic Financial Statements.
Major Funds
26
Redevelopment
Agency Low/ Non- Major
Moderate Housing Governmental
Capital Projects Funds Total
$ 828,841 $ 6,068,463 $ 35,857,101
- 4,877,634 18,970,530
74,623 - 344,044
11,762 305,683 4,828,298
- 1,985,027 4,719,683
256,131 99,975 457,306
- 783,021 1,028,060
- 172 213,199
4,153,752 1,002,279 6,769,662
- - 1,878,757
- - 1,999,343
- - 345,051
- - 17,605,995
$ 5,325,109 $ 15,122,254 $ 95,017,029
$ 31,056 $ 1,257,200 $ 7,293,387
4,405,455 1,909,748 9,740,110
- 999,621 1,999,343
- 349,652 5,670,369
450,000 311,000 7,730,174
- - 264,607
4,886,511 4,827,221 32,697,990
80,453 950,650 7,549,300
- - 17,605,995
- - 1,878,757
- - 8,263,104
- 5,791,241 5,791,241
- - 50,000
- - 5,000,000
- - 8,993,421
- - 225,000
358,145 133,251 1,871,176
- - 401,288
- 3,419,891 4,689,757
438,598 10,295,033 62,319,039
$ 5,325,109 $ 15,122,254 $ 95,017,029
27
City of San Leandro
Reconciliation of the Governmental Funds Balance Sheet
to the Government- Wide Statement of Net Assets
June 30, 2006
Total Fund Balances - Total Governmental Funds $ 62,319,039
Amounts reported for governmental activities in the Statement of Net Assets were reported differently
because:
Capital assets used in governmental activities are not current financial resources and therefore are not
reported in the Governmental Funds Balance Sheet.
Non depreciable assets ( Land and construction in progress) 5 0,708,751
Depreciable buildings, property, equipment and infrastructure, net 2 77,212,760
Total capital assets 327,921,511
Interest payable on long- term debt does not require current financial resources. Therefore, interest payable
was not reported as a liability in Governmental Funds Balance Sheet. ( 775,951)
Internal service funds are used by management to charge the costs of certain activities to individual funds.
The assets and liabilities of the internal service funds are included in governmental activities in the
Government- Wide Statement of Net Assets. 11,340,291
Recognition of unearned revenue 6,033,363
Long- term liabilities are not due and payable in the current period. Therefore, they were not reported in the
Governmental Funds Balance Sheet. The long- term liabilities were adjusted as follows:
Long- term debt - current portion ( net) ( 2,587,267)
Long- term debt - non- current portion ( net) ( 68,217,512)
Compensated absences - non- current portion ( 3,625,101)
Total long- term liabilities ( 74,429,880)
Net Assets of Governmental Activities $ 332,408,373
See accompanying Notes to Basic Financial Statements.
29
City of San Leandro
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2006
Capital Redevelopment
Improvement Redevelopment Agency Low/
Projects Agency Moderate Housing
General Measure B Capital Projects Capital Projects Capital Projects
REVENUES:
Property and other taxes $ 56,507,732 $ - $ - $ 5,605,298 $ 1,960,825
Licenses and permits 3,574,618 - - - -
Fines and forfeitures 837,602 - - - -
Service charges 5,128,578 73,179 682,824 - -
Intergovernmental 1,196,732 4,500,396 - - -
Use of money and property 2,321,209 15,756 202,544 601,252 63,720
Interdepartmental charges 1,783,790 - - - -
Other 434,720 - 24,708 608,002 323,383
Total revenues 71,784,981 4,589,331 910,076 6,814,552 2,347,928
EXPENDITURES:
Current:
General government 10,766,082 - 27,579 - -
Public safety 38,765,932 - 1,325,664 - -
Engineering and transportation 5,185,903 3,343,519 2,077,876 - -
Recreation and culture 10,720,069 - 4,000,182 - -
Community development 2,925,362 - 451,720 6,624,606 5,669,472
Debt service:
Principal 438,520 - - 292,676 63,000
Interest and fees 105,874 - - 418,150 68,579
Total expenditures 68,907,742 3,343,519 7,883,021 7,335,432 5,801,051
REVENUES OVER ( UNDER) EXPENDITURES 2,877,239 1,245,812 ( 6,972,945) ( 520,880) ( 3,453,123)
OTHER FINANCING SOURCES ( USES):
Transfers in - - 118,500 - -
Transfers ( out) ( 238,573) ( 496,443) - ( 2,574,143) -
Total other financing sources ( uses) ( 238,573) ( 496,443) 118,500 ( 2,574,143) -
NET CHANGE IN FUND BALANCES 2,638,666 749,369 ( 6,854,445) ( 3,095,023) ( 3,453,123)
FUND BALANCES:
Beginning of year, as previously reported 32,779,872 1,273,194 10,629,543 12,084,451 3,891,721
Prior Period Restatements 1,379,781 - - - -
Beginning of year, as restated 34,159,653 1,273,194 10,629,543 12,084,451 3,891,721
End of year $ 36,798,319 $ 2,022,563 $ 3,775,098 $ 8,989,428 $ 438,598
See accompanying Notes to Basic Financial Statements.
Major Funds
30
Non- Major
Governmental
Funds Total
$ 344,193 $ 64,418,048
1,038,085 4,612,703
- 837,602
1,242 5,885,823
7,938,688 13,635,816
3,147,078 6,351,559
- 1,783,790
727,042 2,117,855
13,196,328 99,643,196
191,059 10,984,720
205,322 40,296,918
5,357,400 15,964,698
5,697,128 20,417,379
954,247 16,625,407
2,165,023 2,959,219
3,355,265 3,947,868
17,925,444 111,196,209
( 4,729,116) ( 11,553,013)
3,122,498 3,240,998
- ( 3,309,159)
3,122,498 ( 68,161)
( 1,606,618) ( 11,621,174)
11,901,651 72,560,432
- 1,379,781
11,901,651 73,940,213
$ 10,295,033 $ 62,319,039
31
City of San Leandro
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, 2006
Net Change in Fund Balances - Total Governmental Funds $ ( 11,621,174)
Governmental activities in the Statement of Activities and Changes in Net Assets were reported differently
because:
Governmental funds report capital outlay as expenditures. However, in the Government- Wide Statement of
Activities and Changes in Net Assets, the cost of those assets is allocated over their estimated useful lives
as depreciation expense. This is the amount of capital assets recorded in the current period. 27,945,859
Depreciation expense on 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,
depreciation expense is not reported as expenditures in governmental funds. ( 12,647,333)
Adjustment of unearned revenue from prior year ( 301,947)
Bond discount on issuance of debt is an adjustment to the expenditures in governmental funds, but the
discount reduces long- term liabilities in the Government- Wide Statement of Net Assets. In the Government
Wide Statement of Net Assets the discount is amortized over the period of the outstanding debt. ( 4,107)
Bond premium on issuance of debt is an expenditure in governmental funds, but the premium increases
long- term liabilities in the Government- Wide Statement of Net Assets. In the Government- Wide Statement
of Net Assets the premium is amortized over the period of the outstanding debt. 23,492
Repayment of bond Principal is an expenditure in governmental funds, but the repayment reduces long-term
liabilities in the Government - Wide Statement of Net Assets. 2,959,220
Payroll expense on compensated absences 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,
compensated absences expense is not reported as expenditures in governmental funds. 42,853
Interest expense on long- term debt is reported in the Government- Wide Statement of Activities and
Changes in Net Assets, but does not require the use of current financial resources. Therefore, interest
expense was not reported as expenditures in governmental funds. The following amount represents the
change in accrued interest from the prior year. 4,036
Internal service funds are used by management to charge the costs of certain activities, such as insurance
and fleet management, to individual funds. The net revenue of the internal service funds is reported with
governmental activities. 2,057,348
Change in Net Assets of Governmental Activities $ 8,458,247
See accompanying Notes to Basic Financial Statements.
32
Internal Service Funds - These funds are used to account for special activities and services performed by a designated
City department for other departments on a cost reimbursement basis.
PROPRIETARY FUND FINANCIAL STATEMENTS
Water Pollution Control Plant - This fund accounts for the City’s sewers which protect public health and preserve
water quality through the collection, treatment and disposal of the community’s wastewater and wastewater solids.
Shoreline - The City operates various recreational facilities which include golf and marina berthing as well as
providing food service facilities for the general public in an area connected to the San Francisco Bay.
33
City of San Leandro
Statement of Net Assets
Proprietary Funds
June 30, 2006
Governmental
Water Non- Major Activities
Pollution Enterprise Internal
Control Plant Shoreline Funds Total Service Funds
ASSETS
Current assets:
Cash and investments $ 1 9,343,435 $ 1 ,727,748 $ 1 ,654,637 $ 2 2,725,820 $ 1 5,297,318
Restricted cash and investments - - - - -
Receivables:
Accounts 5 84,297 1 83,543 1 5,637 7 83,477 6 20,764
Interest 1 56,216 1 1,977 1 4,021 1 82,214 1 29,645
Special assessment - - 2 1,988 2 1,988 -
Other assets 1 72 1 ,584 - 1 ,756 1 ,243
Inventory - - - - 1 20,053
Total current assets 2 0,084,120 1 ,924,852 1 ,706,283 2 3,715,255 1 6,169,023
Noncurrent assets:
Capital assets:
Non- Depreciable 3 ,767,692 3 ,695,605 - 7 ,463,297 -
Depreciable 9 ,859,981 6 ,162,847 - 1 6,022,828 7 ,554,332
Less accumulated depreciation ( 6,583,458) ( 2,611,372) - ( 9,194,830) ( 3,728,922)
Total capital assets, net 7 ,044,215 7 ,247,080 - 1 4,291,295 3 ,825,410
Total noncurrent assets 7 ,044,215 7 ,247,080 - 1 4,291,295 3 ,825,410
Total assets 2 7,128,335 9 ,171,932 1 ,706,283 3 8,006,550 1 9,994,433
LIABILITIES
Current liabilities:
Accounts payable 362,234 2 55,934 4 3,007 6 61,175 3 00,070
Unearned revenue - - 1 2,564 1 2,564 -
Other liabilities 761 - - 7 61 5 62
Claims and judgments - due in one year - - - - 1 ,734,299
Compensated absences - due in one year 22,645 3 ,802 1 1,144 3 7,591 1 4,012
Notes payable - due in one year - 146,115 - 1 46,115 -
Total current liabilities 3 85,640 4 05,851 6 6,715 8 58,206 2 ,048,943
Noncurrent liabilities:
Deposits payable 4 ,831 6 5,005 - 6 9,836 -
Advances from other funds - 9 ,189,080 - 9 ,189,080 6 86,742
Claims and judgments - due in more than one year - - - - 5 ,757,314
Compensated absences - due in more than one year 2 28,965 3 8,446 1 12,688 3 80,099 1 61,143
Notes Payable - due in more than one year - 3 ,116,239 - 3,116,239 -
Total noncurrent liabilities 2 33,796 1 2,408,770 1 12,688 1 2,755,254 6 ,605,199
Total liabilities 6 19,436 1 2,814,621 1 79,403 1 3,613,460 8 ,654,142
NET ASSETS
Invested in capital assets, net of related debt 7 ,044,215 3 ,984,726 - 1 1,028,941 -
Unrestricted 1 9,464,684 ( 7,627,415) 1 ,526,880 1 3,364,149 1 1,340,291
Total net assets $ 2 6,508,899 $ ( 3,642,689) $ 1 ,526,880 $ 2 4,393,090 $ 1 1,340,291
See accompanying Notes to Basic Financial Statements.
Major Enterprise Funds
34
City of San Leandro
Statement of Revenues, Expenses, and Changes in Net Assets
Proprietary Funds
For the year ended June 30, 2006
Governmental
Water Non- Major Activities
Pollution Enterprise Internal
Control Plant Shoreline Funds Total Service Funds
OPERATING REVENUES:
Charges for services $ 9,651,841 $ 935,161 $ 1,375,090 $ 11,962,092 $ 11,313,689
Licenses and permits 335,374 - 258,642 594,016 -
Rents and concessions - 1,298,660 - 1,298,660 -
Other operating revenues 280,561 284 965,379 1,246,224 285,413
Total operating revenues 10,267,776 2,234,105 2,599,111 15,100,992 11,599,102
OPERATING EXPENSES:
Salaries and benefits 3,236,240 603,688 1,279,304 5,119,232 2,964,720
Contractual and other services 1,747,093 623,257 359,848 2,730,198 4,225,611
Materials and supplies 594,230 92,729 72,020 758,979 704,506
Depreciation 226,568 117,063 - 343,631 147,048
Other operating costs 1,175,378 404,123 1,610,030 3,189,531 1,604,308
Total operating expenses 6,979,509 1,840,860 3,321,202 12,141,571 9,646,193
OPERATING INCOME ( LOSS) 3,288,267 393,245 ( 722,091) 2,959,421 1,952,909
NONOPERATING REVENUES ( EXPENSES):
Property and other taxes - 299,126 - 299,126 -
Intergovernmental - - 542,837 542,837 -
Investment income 600,412 39,947 82,891 723,250 86,872
Interest expense - ( 629,361) - ( 629,361) -
Total nonoperating revenues ( expenses) 600,412 ( 290,288) 625,728 935,852 86,872
INCOME ( LOSS) BEFORE
TRANSFERS 3,888,679 102,957 ( 96,363) 3,895,273 2,039,781
TRANSFERS:
Transfers in - - 279,168 279,168 17,567
Transfers out ( 62,782) - ( 165,792) ( 228,574) -
Total operating transfers ( 62,782) - 113,376 50,594 17,567
Change in net assets 3,825,897 102,957 17,013 3,945,867 2,057,348
NET ASSETS:
Beginning of the year 22,683,002 ( 3,745,646) 1,509,867 20,447,223 9,282,943
End of the year $ 26,508,899 $ ( 3,642,689) $ 1,526,880 $ 24,393,090 $ 11,340,291
See accompanying Notes to Basic Financial Statements.
Major Enterprise Funds
35
City of San Leandro
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2006
Governmental
Water Non- Major Activities
Pollution Enterprise Internal
Control Plant Shoreline Funds Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers/ other funds $ 10,580,619 $ 2,329,057 $ 1,738,353 $ 14,648,029 $ 12,615,083
Cash payments or receipts to/ from other funds ( 1,184,376) ( 429,244) ( 456,366) ( 2,069,986) -
Cash payments to suppliers for goods and services ( 2,564,230) ( 716,899) ( 1,646,860) ( 4,927,989) ( 8,252,701)
Cash payments to employees for services ( 3,313,654) ( 593,803) ( 1,268,123) ( 5,175,580) ( 2,934,429)
Net cash provided ( used) by operating activities 3,518,359 589,111 ( 1,632,996) 2,474,474 1,427,953
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Property and other taxes received - 299,126 - 299,126 -
Intergovernmental revenue received - - 542,837 542,837 -
Repayment or receipt of advances to or from other funds - 385,712 - 385,712 ( 162,957)
Transfers in from other funds - - 279,168 279,168 17,567
Transfers out to other funds ( 62,782) - ( 165,792) ( 228,574) -
Net cash provided ( used) by noncapital financing activities ( 62,782) 684,838 656,213 1,278,269 ( 145,390)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Retirement of long- term debt - ( 139,823) - ( 139,823) -
Acquisition or disposal of assets ( 588,288) ( 6,375) - ( 594,663) ( 418,687)
Interest payments on bonds and notes payable - ( 629,361) - ( 629,361) -
Net cash provided ( used) by capital and
related financing activates ( 588,288) ( 775,559) - ( 1,363,847) ( 418,687)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 444,196 27,970 68,870 541,036 ( 42,773)
444,196 27,970 68,870 541,036 ( 42,773)
Net increase ( decrease) in cash and cash equivalents 3,311,485 526,360 ( 907,913) 2,929,932 821,103
CASH AND CASH EQUIVALENTS:
Beginning of year 16,031,950 1,201,388 2,562,550 19,795,888 14,476,215
End of year $ 19,343,435 $ 1,727,748 $ 1,654,637 $ 22,725,820 $ 15,297,318
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income ( loss) $ 3,288,267 $ 393,245 $ ( 722,091) $ 2,959,421 1,952,909
Adjustments to reconcile operating income ( loss) to net
cash provided ( used) by operating activities:
Depreciation 226,568 117,063 - 343,631 147,048
Changes in assets and liabilities:
299,015 ( 34,129) 33,099 297,985 ( 43,307)
- - 12,491 12,491
- - - - ( 43,359)
( 172) ( 1,385) - ( 1,557) -
( 267,395) 96,874 ( 967,286) ( 1,137,807) ( 2,530)
1,142 7,326 - 8,468 -
Claims & Judgements - - - - ( 607,730)
Compensated absences ( 29,066) 10,117 10,791 ( 8,158) 24,922
Total adjustments 230,092 195,866 ( 910,905) ( 484,947) ( 524,956)
Net cash provided ( used) by operating activities $ 3,518,359 $ 589,111 $ ( 1,632,996) $ 2,474,474 $ 1,427,953
See accompanying Notes to Basic Financial Statements.
Major Enterprise Funds
Net cash provided ( used) by investing activities
Accounts receivable
Deposits
Special assessment receivable
Inventory
Other assets
Accounts payable
36
FIDUCIARY FUND FINANCIAL STATEMENTS
Agency Funds are custodial in nature ( assets equal liabilities) and do not involve measurement of results of operations.
They are used to account for assets held in an agency capacity for others and therefore cannot be used to support the
City's programs.
37
City of San Leandro
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2006
Agency
Funds
ASSETS
Cash and investments $ 2,899,937
Cash and investments with fiscal agents 512,346
Accounts receivable 24,499
Special assessments receivable 14,720
Total assets $ 3,451,502
LIABILITIES
Accounts payable $ 1,134,610
Deposits payable 1,058,675
Due to bondholders 1,258,217
Total liabilities $ 3,451,502
See accompanying Notes to Basic Financial Statements.
38
City of San Leandro
Index to Notes to Basic Financial Statements
For the year ended June 30, 2006
39
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES ........................................................................................ 41
A. Financial Reporting Entity ............................................................................................................................. 41
B. Government Wide Financial Statements ........................................................................................................ 42
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation ........................................ 42
D. Recognition of Interest Liability .................................................................................................................... 44
E. Use of Restricted and Unrestricted Net Assets............................................................................................... 44
F. Cash, Cash Equivalents and Investments ....................................................................................................... 44
G. Inventory ............................................................................................................................... ........................ 45
H. Capital Assets......................................................................................................................... ....................... 45
I. Long Term Debt ............................................................................................................................... ............. 46
J. Compensated Absences....................................................................................................................... .......... 46
K. Property Taxes.......................................................................................................................... ..................... 46
L. Post Employment Benefits Other than Pensions ............................................................................................ 46
M. New Funds and Closed Funds........................................................................................................................ 46
N. Use of Estimates...................................................................................................................... ...................... 47
O. Net Assets......................................................................................................................... ............................. 47
P. Changes in Accounting Principles ................................................................................................................. 47
Q. Implementation of New GASB Pronouncements........................................................................................... 47
R. Unearned Revenue ............................................................................................................................... ......... 49
NOTE 2 - CASH AND INVESTMENTS................................................................................................................. 49
A. Cash Deposits....................................................................................................................... ......................... 49
B. Investments.................................................................................................................... ................................ 50
C. Summary of Cash and Investments ................................................................................................................ 54
NOTE 3 – LOANS RECEIVABLE..................................................................................................................... .... 55
NOTE 4 - NOTES RECEIVABLE..................................................................................................................... ..... 56
NOTE 5 - INTERFUND TRANSACTIONS........................................................................................................... 56
A. Fund Financial Statements - Interfund Receivables and Payables ................................................................. 56
B. Fund Financial Statements - Long Term Advances ....................................................................................... 57
C. Fund Financial Statements - Transfers ........................................................................................................... 58
NOTE 6 – CAPITAL ASSETS......................................................................................................................... ....... 59
A. Government- Wide Financial Statements........................................................................................................ 59
B. Fund Financial Statements ............................................................................................................................. 61
NOTE 7 - LONG- TERM DEBT OBLIGATIONS ................................................................................................. 62
A. Governmental Activities Long- Term Debt .................................................................................................... 62
B. Long- Term Debt of Business- Type and Proprietary Funds ........................................................................... 71
C. Debt Covenants and Restrictions ................................................................................................................... 71
City of San Leandro
Index to Notes to Basic Financial Statements, Continued
For the year ended June 30, 2006
40
NOTE 8 – COMPENSATED ABSENCES.............................................................................................................. 72
NOTE 9 – UNEARNED REVENUE........................................................................................................................ 72
A. Government- Wide Financial Statements........................................................................................................ 72
B. Fund Financial Statements ............................................................................................................................. 72
NOTE 10 – OTHER REQUIRED FUND DISCLOSURES................................................................................... 73
NOTE 11 - INSURANCE...................................................................................................................... ................... 73
NOTE 12 - COMMITMENTS AND CONTINGENCIES..................................................................................... 74
A. Downtown Plaza Shopping Center MOREA ................................................................................................. 74
B. Century Theaters Reimbursement and Performance Agreement ................................................................... 74
C. Others ............................................................................................................................... ............................. 74
NOTE 13 - EMPLOYEE RETIREMENT PLANS ................................................................................................ 75
NOTE 14 – RESTATEMENT OF PRIOR PERIOD BALANCES....................................................................... 75
A. Government- Wide Statements..................................................................................................................... .. 76
NOTE 15 – SUBSEQUENT EVENT ....................................................................................................................... 76
NOTE 16 – JOINTLY GOVERNED ORGANIZATIONS.................................................................................... 76
City of San Leandro
Notes to Basic Financial Statements
For the year ended June 30, 2006
41
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of San Leandro, California, ( City) have been prepared in conformity with
generally accepted accounting principles ( GAAP) as applied to governmental agencies in the United States. The
Governmental Accounting Standards Boards ( 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. Financial Reporting Entity
The City of San Leandro, California ( City) was incorporated in 1872 and is situated between the cities of Oakland and
Hayward in the East Bay of the San Francisco Bay Area. The City operates under the Mayor- Council- Manager form
of government created by charter in 1978 and provides the following services: public safety ( police, fire, disaster
preparedness and hazardous waste disposal), highways and streets, sanitation, health services, public improvements,
planning and zoning and general administration services.
The City is governed by a seven- member council elected by City residents. The City is legally separate and fiscally
independent, which means it can issue debt, set and modify budgets and fees and sue or be sued. As required by
generally accepted accounting principles, the financial statements include the financial activities of the City - the
primary government - and its component units.
Component units are legally separate organizations for which the elected officials of the primary government are
financially accountable. In addition, component units can be other organizations for which the primary government’s
exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.
The blended component units discussed below are included in the City of San Leandro’s basic financial statements in
which the City Council functions as the governing board:
The Redevelopment Agency of the City of San Leandro ( Agency) was established to assist in the clearance and
rehabilitation of City areas determined to be in a declining condition. The Agency has all accounting and
administrative functions performed by City staff and the Agency receives advances from the City to finance
operations. The financial activities of the Agency have been included in the Redevelopment Agency and Low and
Moderate Income Housing Capital Projects Funds in the accompanying basic financial statements.
The City of San Leandro Parking Authority ( Parking Authority) was established to issue debt for downtown
parking structures and lots. The financial activities are accounted for in the Parking Authority Debt Service Fund
in the accompanying basic financial statements.
The San Leandro Public Financing Authority ( Financing Authority) was established to issue debt for the
Seismic Retrofitting capital project and other community related financing programs. The financial activities are
accounted for in the San Leandro Public Financing Authority Debt Service Fund and the Seismic Retrofit Capital
Projects Fund in the accompanying basic financial statements.
San Leandro Economic Development Agency ( Development Agency) was created to issue debt and provide for
development activities within City limits, which includes lending services to local businesses. The activities of
this agency are accounted for in the Economic Development Agency Capital Projects Fund in the accompanying
basic financial statements.
City of San Leandro
Notes to Basic Financial Statements
For the year ended June 30, 2006
42
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
A. Financial Reporting Entity, Continued
The above component units are included in the City’s basic financial statements using the blended method since the
governing body of these component units are substantially the same as the governing body of the City and these
component units provide services entirely to the City. Separate financial statements for each of the above component
units may be obtained from the City’s Finance Department.
B. Government– Wide Financial Statements
The government- wide financial statements ( i. e., the statement of net assets and the statement of activities) report
information on all of the non- fiduciary activities of the primary government and its components units. For the most
part, the effect of inter fund activity has been removed from these statements. Governmental activities, which
normally are supported by taxes and intergovernmental revenues, are reported separately from business- type activities,
which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported
separately from certain legally separate component units for which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segments are
offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.
Our policy is to allocate indirect costs to a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given
function or segment and 2) grants and contributions that are restricted to meeting the operational or capital
requirements or a particular function or segment. Taxes and other items not properly included among program
revenues are reported instead as general revenues.
Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even
though the latter are excluded from the government- wide financial statements. Major individual governmental funds
and major individual enterprise funds are reported as separate columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government– wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash
flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter
to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are
collected within 30 days of the end of the current fiscal period. The City considers sales taxes and property taxes as
available if they are collected within 60 days after year end. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to
compensated absences and claims and judgments, are recorded only when payment is due.
City of San Leandro
Notes to Basic Financial Statements
For the year ended June 30, 2006
43
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation, continued
Sales taxes, property taxes, licenses, and interest associated within the current period are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special
assessment receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the
current period. All other revenue items are considered to be measurable and available only when cash is received by
the City.
The City reports the following major governmental funds:
The General Fund is the government’s primary operating fund. It accounts for all financial resources of the
general government, except those required to be accounted for in another fund.
The Measure B Fund accounts for the City’s share of proceeds of a half cent sales tax which is administered
by the Alameda County Transportation Authority for major freeway improvements and major rail extensions.
The Capital Improvement Projects Capital Projects Fund accounts for monies for major capital improvements
projects not provided for in one of the other capital projects funds.
The Redevelopment Agency Capital Projects Fund accounts for planning and implementation of the City’s
Redevelopment Plan for the three project Areas located within the City’s boundaries.
The Redevelopment Agency Low/ Moderate Housing Capital Projects Fund accounts for the 20% tax
increment revenue for low and moderate income housing and neighborhood improvement program.
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.
The City also reports the following major proprietary funds:
Water Pollution Control Plant Fund accounts for the City’s sewers which protect public health and preserve
water quality.
Shoreline Fund accounts for various recreational facilities which include golf and marina berthing as well as
providing food service facilities for the general public in an area connected to the San Francisco Bay.
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. The City’s Internal Service Funds account for Information Systems Management, Building Maintenance,
Self – Insurance and Equipment Maintenance provides service to other departments of the City on a cost
reimbursement basis.
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 Net Assets presents 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.
City of San Leandro
Notes to Basic Financial Statements
For the year ended June 30, 2006
44
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation, continued
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 nonoperating revenues. Operating expenses are those expenses that are
essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses.
The Fiduciary fund financial statements normally include a Statement of Net Assets and a Statement of Changes in
Fiduciary Net Assets. The City's fiduciary funds represent agency funds. Agency funds are custodial in nature ( assets
equal liabilities) and do not involve measurement of results of operations. As a result, a statement of Changes in
Fiduciary Net Assets is not presented in this report. The City’s Fiduciary Funds includes the Deposits Fund which
accounts for all deposits held on behalf of other persons and businesses and the Cherrywood Fund accounts for monies
accumulated for payments of special assessment bonds.
D. Recognition of Interest Liability
In the government- wide financial statements, interest payable of long- term debt is recognized as the liability is
incurred for governmental fund types and proprietary fund types.
In the fund financial statements, proprietary fund types recognize the interest payable when the liability is incurred.
E. Use of Restricted and 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.
F. Cash, Cash Equivalents and Investments
The City pools cash and investments from all sources, except the fiscal agent cash and investments, for the purpose of
increasing income through investment activities. Interest income on investments is allocated on the basis of average
month- end cash and investment balances in each fund. Cash and cash equivalents represent cash and investments and
restricted cash and investments with an original maturity term of three months or less. Pooled cash and investments
allocated to proprietary fund types are considered cash and cash equivalents since specific investments held in the
City’s pooled cash and investments are not allocated to each fund.
The City invests in the California Local Agency Investment Fund (“ LAIF”), which is part of the Pooled Money
Investment Account operated by the California State Treasurer. LAIF funds are invested in high quality money market
securities and are managed to insure the safety of the portfolio. A portion of LAIF’s investments are in structured
notes and asset- backed securities. As of June 30, 2006, LAIF had invested 4.849% of its funds in such securities.
LAIF determines fair value on its investment portfolio based on market quotations for these securities where market
quotations are readily available, and on amortized cost or best estimate for those securities where market value is not
readily available.
In accordance with GASB Statement No. 31, highly liquid money 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.
City of San Leandro
Notes to Basic Financial Statements
For the year ended June 30, 2006
45
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
G. Inventory
Inventory is held for consumption and is valued at average cost. Internal service fund supplies consist of materials and
supplies for the various City vehicles ( tires, batteries, etc.) and building maintenance, which are used for replacement
parts for vehicle service and to maintain City buildings. Information management service inventory consists of
postage for department use and a monthly count is performed to adjust this account to actual at the appropriate month-end.
H. Capital Assets
Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not available.
Donated capital assets are valued at their estimated fair market value on the date donated. City policy has set the
capitalization threshold for reporting capital assets at $ 5,000. Depreciation is recorded on a straight- line basis over
estimated useful lives of the assets as follows:
Buildings 50 years
Improvements other than buildings 20 years
Machinery and equipment 5- 20 years
Licensed Vehicles 7 years
Infrastructure 20- 50 years
In June 1999, the GASB issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local
governments’ basic financial statements. In accordance with GASB Statement No. 34, the City included all
infrastructures into the 2005- 06 Basic Financial Statements.
The City defines infrastructure as the basic physical assets that allow the City to function. The assets include streets,
sewer, and park lands. 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, landscaping and land.
These subsystems were not delineated in the basic financial statements. The appropriate operating department
maintains information regarding the subsystems.
Interest accrued during capital assets construction, if any, is capitalized for the business- type and proprietary funds as
part of the asset cost.
For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for
infrastructure reporting. Original costs were developed in one of three ways: ( 1) historical records; ( 2) standard unit
costs appropriate for the construction/ acquisition date; or ( 3) present 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 on a straight line, un- recovered cost method
was computed using industry accepted life expectancies for each infrastructure subsystem. The book value was then
computed by deducting the accumulated depreciation from the original cost.
City of San Leandro
Notes to Basic Financial Statements
For the year ended June 30, 2006
46
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
I. Long- Term Debt
In Government- Wide Financial Statements, long- term debt and other financed obligations are reported as liabilities in
the appropriate activities.
Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using
the effective interest method. Bonds Payable are reported net of the applicable premium or discount. Issuance costs
are reported as deferred charges.
In Fund Financial Statements long- term debt is not presented but is instead shown in the Reconciliation of the
Governmental Funds Balance Sheet to the Government- Wide Statement of Net Assets.
J. Compensated Absences
In Government- Wide Financial Statements for governmental and business- type activities, compensated absences are
recorded as incurred and the related expenses and liabilities are reported.
In Fund Financial Statements for governmental funds, compensated absences are recorded as expenditures in the years
paid, as it is the City’s policy to liquidate any unpaid compensated absences at June 30 from future resources, rather
than currently available financial resources. In proprietary funds, compensated absences are expensed to the various
funds in the period they are earned, and such fund’s share of the unpaid liability is recorded as a long- term liability of
the fund.
K. Property Taxes
Property taxes are levied/ liened on July 1 based on March 1 assessed valuation and are payable in two installments,
becoming delinquent on December 10 and April 10. The Alameda County Tax Collector bills and collects property
taxes and allocates a portion to the City as billed. Property tax revenues are recognized in the fiscal year for which the
taxes have been levied, provided they become available. In January, 1994, the City elected to continue collection of
interest and penalties on delinquent taxes and recognizes these revenues when available. Available means when due or
past due and collected within the current period, or expected to be collected soon thereafter, and to be used to pay
liabilities of the current period.
L. Post Employment Benefits Other Than Pensions
The City provides post- retirement medical and dental benefits to all employee groups through the age of 65 as required
by current association and management agreements. The City records premium payments on a “ pay- as- you- go” basis.
During the year ended June 30, 2006, the City paid $ 627,645 in medical and dental premiums on behalf of 132
participants.
M. New Funds and Closed Funds
During 2005- 2006, the City did not open any new funds however; the San Leandro Housing Financing Corporation
fund was closed.
City of San Leandro
Notes to Basic Financial Statements
For the year ended June 30, 2006
47
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
N. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires City
management to make estimates and assumptions that affect certain amounts and disclosures. Accordingly, actual
results could differ from those estimates.
O. Net Assets
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 Net Assets – This amount is restricted by external creditors, grantors, contributors, or laws or
regulations of other governments.
Unrestricted Net Assets – 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 Fund Financial Statements, reservations of fund balances for governmental 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.
P. Implementation of New GASB Pronouncements
In November 2003, GASB issued Statement No. 42, Accounting and Financial Reporting Impairment of Capital
Assets and for Insurance Recoveries establishing guidance for accounting and reporting for impairment of capital
assets and for insurance recoveries, whether associated with an impaired capital asset or not. This statement is
effective for: 1) periods beginning after December 31, 2004 or 2) during the 2005- 06 fiscal year. The City of San
Leandro implemented this statement this fiscal year with no significant impact on the financial statements.
In May 2004, GASB issued Statement No. 44, Economic Condition Reporting: The Statistical Section. This Statement
amends the portions of NCGA Statement 1, Government Accounting and Financial Reporting Principles, which guide
the preparation of the Statistical section.
Statement No. 44 establishes the objectives of the Statistical section and the five categories of the information it
contains – financial trend information; revenue capacity information; debt capacity information; demographic and
economic information and operating information. This Statement adds new information which users have identified as
important and also eliminates certain previous requirements. The City implemented Statement No. 44 this fiscal year
with no significant impact to the financial statements.
City of San Leandro
Notes to Basic Financial Statements
For the year ended June 30, 2006
48
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
P. Implementation of New GASB Pronouncements, continued
In December 2004, GASB issued GASBS No. 46, Net Assets Restricted by Enabling Legislation. This Statement
clarifies the definition of a legally enforceable enabling legislation restriction to be one that a party external to a
government— such as citizens, public interest groups, or the judiciary— can compel a government to honor. The
Statement states that the legal enforceability of an enabling legislation restriction should be reevaluated if any of the
resources raised by the enabling legislation are used for a purpose not specified by the enabling legislation or if a
government has other cause for reconsideration. Although the determination that a particular restriction is not legally
enforceable may cause a government to review the enforceability of other restrictions, it should not necessarily lead a
government to the same conclusion for all enabling legislation restrictions. This Statement also specifies the
accounting and financial reporting requirements if new enabling legislation replaces existing enabling legislation or if
legal enforceability is reevaluated. Finally, this Statement requires governments to disclose the portion of total net
assets that is restricted by enabling legislation. The City implemented Statement No. 46