Comprehensive Annual
Financial Report
II
Fiscal Year Ended June 30,20
San Leandro, California
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CITY OF SAN LEANDRO, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2003
PREPARED BY: City of San Leandro - Finance Department
Ed Schilling, Acting Finance Director
City of San Leandro
Comprehensive Annual Financial Report
For the year ended June 30, 2003
Table of Contents
INTRODUCTORY SECTION
Table of Contents i
Letter of Transmittal.. v
Government Finance Officers Association ( GFOA) Award xiii
Principal Officers . xv
Organizational Chart . xvi
Location Map. xvii
FINANCIAL SECTION
Independent Auditors' Report 1
Management's Discussion and Analysis .. 3
Basic Financial Statements:
Government- Wide Financial Statements:
Statement of Net Assets 21
Statement of Activities and Changes in Net Assets 22
Fund Financial Statements:
Government Funds Financial Statements:
Balance Sheet 28
Reconciliation of the Governmental Funds Balance Sheet
to the Government- Wide Statement of Net Assets 31
Statement of Revenues, Expenditures and Changes in Fund Balances 32
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 34
Proprietary Funds Financial Statements:
Statement of Net Assets.. ... ... ... 36
Statement of Revenues, Expenses and Changes in Net Assets 37
Statement of Cash Flows 38
Fiduciary Fund Financial Statement:
Statement of Fiduciary Net Assets - Agency Funds 40
City of San Leandro
Comprehensive Annual Financial Report
For the year ended June 30, 2003
Table of Contents, Continued
FINANCIAL SECTION. Continued
Basic Financial Statements, Continued:
Index to Notes to Basic Financial Statements ... ... 41
Notes to Basic Financial Statements 43
Required Supplementary Information:
Budget and Budgetary Accounting
Statement of Revenue, Expenditures and Changes in Fund Balances - Budget and Actual-
Major Fund - General Fund ... 79
Pension Plans Schedule of Funding Progress 80
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- Major Funds:
San Leandro Public Financing Authority Debt Service Fund 93
Redevelopment Agency Debt Service Fund... 94
Schedule of Revenue, Expenditures and Changes in Fund Balances-
Budget and Actual- Non- Major Funds:
Street/ Traffic Improvements Special Revenues Fund 95
Park Development Fee Special Revenue Fund 96
Parking Special Revenue Fund ... ... ... ... ... ... 97
Special Gas Tax Special Revenue Fund 98
Cherrywood Maintenance District Special Revenue Fund 99
Traffic Congestion Relief Special Revenue Fund 100
Measure B ACTIA Paratransit Special Revenue Fund 101
Heron Bay Special Revenue Fund 102
Special State Grants Special Revenue Fund 103
CDBG Special Revenue Fund ... ... ... ... 104
HOME Special Revenue Fund ... ... 105
Special Assessment District Debt Service Fund 106
Non- Major Enterprise Funds:
Combining Statement of Net Assets 108
Combining Statement of Revenues, Expenses, and Changes in Retained Earnings 109
Combining Statement of Cash Flows 110
ii
City of San Leandro
Comprehensive Annual Financial Report
For the year ended June 30, 2003
Table of Contents, Continued
FINANCIAL SECTION. Continued
Supplementary Information, Continued:
Internal Service Funds:
Combining Statement of Net Assets.. 112
Combining Statement of Revenues, Expenses and Changes in Net Assets I13
Combining Statement of Cash Flows 114
Fiduciary Fund Financial Statements:
Combining Statement of Fiduciary Net Assets - Agency Funds 116
Combining Statement of Changes in Assets and Liabilities - Agency Funds 117
STATISTICAL SECTION
General Governmental Revenues by Source - Last Ten Fiscal Years 119
General Governmental Expenditures by Function - Last Ten Fiscal Years 120
Property Tax Levies and Collections - Last Ten Fiscal Years 121
Assessed and Estimated Actual Value of Taxable Property-
Last Ten Fiscal Years ..... ... ... ... ... ... .. 122
Property Tax Rates - All Direct and Overlapping Governments -
Last Ten Fiscal Years 123
Computation of Direct and Overlapping Debt 124
San Leandro Housing Finance Corporation Revenue Bond Coverage
Last Ten Fiscal Years 125
Demographic Statistics - Last Ten Fiscal Years 126
Property Values, Construction and Bank Deposits - Last Ten Fiscal Years 127
Special Assessment Billings and Collections - Last Ten Fiscal Years 128
Computation of Legal Debt Margin .129
Principal Taxpayers 130
Statistical Profiles ... .131
iii
AI
City of San'Leandro
Civic Center, 835 E. 14th Street
San Leandro, California 94577
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February 27, 2004
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HonorableMayor and Membersof the City Council
City of SanLeandro
San Leandro, CA94577
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Dear MayorandMembers of the City Council:
The Cityof SanLeandro ComprehensiveAnnualFinancialReportfor the Fiscal YearEndedJune 30,
2003 ( CAFR) is submittedherewith. The accuracyof the data, and the completenessand fairness of
the presentationincluding all disclosures, is the responsibilityof the management of the City. We
. believethedatais accuratein allmaterialrespects' andis presentedin a mannerfairlysettingforththe
City's financialposition, results of operations, and cash flows of its proprietary funds as of June 30,
2003. Further, we believe that all disclosuresthat arenecessaryforthe reader to understandthe City's
financialactivitieshave been includedin the CAFR.
The CAFR consists of three sections: the Introductory Section, the Financial Section, and the
StatisticalSection. Each of thesesections includesvariouselements.
1. TheIntroductorySection includes: 1) this transmitta1letterwhich highlightsthe City's
significantaccomplishmentsduring the fiscal year and key financialissues faced by the City during
th. e fiscal year; 2) a list of principalCity officials; 3) an organizationalchart; and 4) a map to identify .'
the City's locationwithin the SanFranciscoBayArea.
2. . The Financial Section includes: 1) the independentauditor's report, 2) Management's
Discussionand Analysis; 3) basic financial statementsand notes to these statements, and4) schedules
and supplementaryinformation.
3. The Statistical Section includes several tables' of unaudited data depicting both
financialandnon- fina1j1ciatrlenddata about the Cityand its operations.
MAJOR CHANGES IN REPORTING
The financial statements represent a substantial change from the prior years' format. The
Governmental Accounting Standards Board ( GASB) established a new framework for financial
reports in June of 1999. This is the first year the Cityhas preparedthe CAFR underGASBStatement
No. 34, BasicFinancial Statements- andManagement'sDiscussionandAnalysis- for StateandLocal
t
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City Council: Orval " DB" Badger;
Glenda Nardine;
Bob Glaze;
Tony Santos;
Surlene G. Grant;
BillStephens
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Transmittal Letter vi February 27, 2004
Government. GASB 34 requires that management provide a narrative introduction, overview and
analysisto accompanythe financialstatementsin the form of Management's Discussionand Analysis
( MD& A). This letter of transmittal is designed to complement the MD& A and should be read in
conjunctionwith it. The City of San Leandro'sMD& Acan be foundimmediatelyfollowingthe report
of the independentauditors.
The major differencesfrom the prior year's financialstatementsare listedbelow:
. The detailed financial analysispreviouslyfound in the TransmittalLetter has been moved to
the ManagementDiscussionandAnalysissection.
. Management's Discussion and Analysis is a newly required section that provides a detailed
analyticalreview.
. The " General Purpose Financial Statements" have been replaced with the " Basic Financial
Statements" whichincludesGovernment- wideStatementsand Fund Statements.
. The Government- wideFinancialStatementsare on the full accrualbasis of accounting.
. The Government- wide Statement of Net Assets reports land, building, equipment and
infrastructureas CapitalAssets.
. The General Fixed Assets and General Long- TermDebt Account group information is not
included any longer because the information is reported as assets and liabilities in the
Government- wideStatementof Net Assets.
. The net cost of each governmentfunction is reported in the Government- wideStatement of
Activitiesand Changesin Net Assets.
. Fund Statementsare reportedusing the modified accrualbasis of accountingconsistentwith
prior years. However, they are divided into Major and Non- major funds based on detailed
analysisof fund assets, liabilities, expendituresandrevenues.
GOVERNMENT
The City of San Leandro was incorporatedin 1872, and functionsunder a Mayor- Council- Manager
form of governmentcreated by charter in 1978. The City is governedby a seven- membercouncil
elected by City residents. Municipal services provided include public safety; highways and streets;
recreation, library and cultural services; public improvements; planning and zoning and general
administrativeservices.
THE REPORTING ENTITY
The CAFR for the year ending June 30, 2003 provides a financial account of those activities,
organizationalelements, and City functionsfor which the City Councilprovides policy directionand
generaloversight. It presents financialinformationon the activitiesof the City of San Leandroitself
and the componentunits of the Cityuponwhichthe City Councilis authorizedto imposeits will. The
operating nature of the City's component units determineshow they are reported in the financial
statements. The activitiesof componentunits that provide financialbenefitor createfinancialburden
for the City are blended within the City's generalfinancialstatements. Componentunits that have no
discernablefinancialimpact upon the City are presentedseparately. As of June 30, 2003 there were
no discretelyreportablecomponentunits. The City's blendedcomponentunits include: operationsof
Transmittal Letter vii February 27, 2004
the San LeandroRedevelopmentAgency, the San LeandroParkingAuthority, the San LeandroPublic
Financing Authority, the San Leandro EconomicDevelopmentAgency, and the enterpriseoperation
of the San LeandroHousingFinance Corporation.
The scopeof the City Council's power and influenceincludes, but is not limitedto the following:
. The authorityto establishandmodifYoperatingand capitalbudgets
. Thepower to appointvotingmembersto othergoverningauthorities
. The powerto appointthe CityManagerand City Attorney
. The abilityto plan and directoperations
. The authorityto veto, modifY, and overruledecisions
Another significantexampleof controlis the natureof financialinterdependencybetweenthe various
City funds. Manifestationsof financial interdependencyinclude taking responsibilityfor financing
deficits, being entitled to operatingsurpluses, and giving implied guarantees(" moral responsibility")
for debt obligations.
ACCOUNTING SYSTEMS ANDBUDGETARY CONTROL
The City's accounting records are maintained on a modified accrual basis of accounting for all
governmental fund types and agency funds. Under this basis, revenues are recognized when
susceptible to accrual, i. e., both measurable and available, and expenditures, other than interest on
long- term obligations, are recorded when paid, and recognizedwhen the liability is expected to be
liquidatedwith expendable, availableresources. The City's proprietaryfund typesuse the full accrual
basis of accounting, whichrecognizesrevenueswhen earnedand expenseswhen incurred.
ill developingand evaluatingthe City's accountingsystem, considerationis given to the adequacyof
internal accountingcontrols. Such controlsare designedto providereasonable, althoughnot absolute
assuranceregardingthe safeguardingof assets against loss from unauthorizeduse or dispositionand
the reliabilityof financialrecordsfor preparingfinancialstatementsand maintainingaccountabilityof
assets. The concept of reasonableassurancerecognizesthat the costs of a control should not exceed
the benefits likely to be derived and that the evaluation of costs and benefits requires estimatesand
judgments by management. The City's internalaccountingcontrols adequatelysafeguardassets and
reasonablyassurethe proper recordingof financialtransactions.
The City's budget is a detailed operatingplan that identifiesestimatedcosts and results in relation to
estimatedrevenues. The budget includes: 1) programs, projects, servicesand activitiesto be provided
during the fiscal year; 2) estimatedrevenuesavailableto financethe operatingplan; and 3) estimated
spendingrequirementsof the operatingplan. The budget representsa process through which policy
decisions are made, implemented, and controlled. Page 78 of the General Purpose Financial
Statementssummarizesthe budgetaryroles of variousCity officialsandthe timetablefor their various
budgetaryactionsaccordingto the City Charter.
Transmittal Letter viii February 27, 2004
PROmLEOFTHEGOVERNMENT
IncOlporatedin 1872, San Leandrois one of the oldest communitiesin the San FranciscoBay Area.
The City occupiesfifteen squaremilesbetweenthe citiesof Oaklandand Haywardand is borderedon
the west by the San Francisco Bay. San Leandro offers its 80,000 residents the quiet chann and
character of a communitythat has been establishedfor more than 130 years. Once an agricultural
community, the City has been successfulin attractingsignificantindustrial, manufacturingand retail
developmentto the area.
The currentshort- termfiscal outlookfor Californiaranges frompessimisticto catastrophic. The State
of California has accumulated a multi- year deficit of over $ 20 billion. In response to the pending
fiscal crisis, Governor Schwarzeneggeris seeking voter approval for a $ 15 billion deficit recovery
bond issu~ alongwith major proposedbudget cuts to a broad spectrumof education, health& human
service, transportationand other Stateprograms. What the Statewill do if the deficitrecoverybond is
not approvedin Marchis unknown.
California cities, still smarting from State- initiatedrevenue reductions during the 1990' s, are being
asked to contribute an additional $ 1.3 billion in property taxes to the Educational Revenue
AugmentationFunds ( ERAF) to assist in solvingthe budget crisis. For the City of San Leandrothat
will translateinto a reductionof $ 535,000of annualpropertytaxes in additionto the.$ 2.2 million of
propertytaxes currentlybeing divertedto ERAFby prior Stateaction.
California cities are also monitoring the State's handling of the Motor Vehicle License Fee in Lieu
( VLF)" backfill." The City's GeneralFund is entitledto collect approximately$ 4.7 million annually
of this importantrevenue source. Due to legislativeaction in the late 1990' s, only one- thirdofVLF
revenue receivedby cities is generatedby actual fee payments. The remainingtwo- thirdsare funded
from the State's discretionaryGeneralFund ( the " backfill"). The Citywould lose approximately$ 3.2
million if this backfill were discontinued. A series of State budget actions including a one- time
borrowingof$ 1.3 billion ofVLF backfillthat will not be forthcomingthis fiscalyear ( at a cost to San
Leandro of $ 1.5 million) have raised serious questions about the Legislature's willingness to
appropriatethe fundsto providethe balanceofthe backfillthat is owed to cities and counties.
San Leandro's 2003 revenues reflectedthe significantdrag that the technologyrecessionhas had on
most Bay Area city sales taxes. In fact, the City's sales tax receipts for 2003 were $ 3.5 million less
than budgeted and nearly $ 2.2 less than the amount received in 2002. The 2003 GeneralFund was
balanced with the appropriationof $ 3.0 million of City GeneralFund reserves including$ 2.1 million
of unappropriated 2002 carry- over that was specificallyeannarked to cover the anticipated 2003
deficit and $ 900,000 from the Reserve for Economic Uncertainties. The appropriationof reserve
funds during 2003 also included $ 4.8 million for capital improvementprojects and $ 600,000 for the
UtilityUsersTax rebateprogram, both planned as part of the 2003 Budget.
Because the City Council emphasized establishing and building reserves, during years when the
economy was strong, the City has positioned itself to manage the difficulties presented by an
economic downturn. The continued availabilityof over $ 12 million of General Fund Reserves
Transmittal Letter ix February 27, 2004
provides the City financialflexibilityin facingthe challengesof increasedcosts, reducedrevenuesand
the uncertaintiescausedby the State's budget crisis.
MAJOR INITIATIVES ANDACCOMPLISHMENTS
In its role of providingpolicydirectionand generaloversight, the City Councilestablishesmajorgoals
for City service delivery. These goals are identified and quantified in the City's annual budget
document. The City can boast of an impressivelist of major initiativesand accomplishmentsduring
2003 that helped achievethe City's mission of servingthe public and enhancingthe qualityof life in
San Leandro. Someof thesemajorinitiativesand accomplishmentsinclude:
Economic Development and Redevelopment
Downtown Lighting& Pedestrian Proiect - The City initiated a major redevelopmentproject in the
traditional downtown through the development of a new lighting and pedestrian improvement
program for the City- ownedPlaza ShoppingCenterparkinglot. Detaileddesign for the relatedproject
to improvethe BARTto downtowncorridoron WestEstudilloStreetwas also initiatedwith receiptof
grantfunds ftom the MetropolitanTransportationCommission.
Marina Boulevard Auto Row - Development of the City's Marina Boulevard continued with the
approval of plans and initiation of constructionfor new Volvo and Saturn dealerships on property
purchased ftom the YakotaNursery. Complementingthis private development, the Agency and City
widened MarinaBoulevardand improvedthe railroadcrossingimmediatelyeast of this project. Two
satelliteauto dealershipswere also completedbringing Chevrolettrucks and Buicks to the expanding
MarinaAutoRow.
CreeksidePlaza OfficeComplex- The first CreeksidePlaza Officebuildingopenedin May2002, and
in 2003 work began on the secondof three officebuildingsto be completedon the site. Locatedat the
key intersection of San Leandro Boulevard and Davis Street opposite the BART Station, the
completedcomplexwill add 200,000squarefeet of officespace and 500 newjobs to the City.
Bayfair Mall Renovation- Following years of planning and negotiating, the renovation of Bayfair
Mall moved closer to reality with the opening of a new Target store and the approval of major
demolition and new construction that will add a new department store, a bookstore and a home
furnishingsstore to the Center. M & J Wilkow of Chicagomade significantadvancesin moving the
Center renovationforward, and then in the fall of 2003 they sold the propertyto Madison Marquette,
one of the most experienced shopping center developer/ renovatorsin the United States. The new
shops are expectedto openby Christmas2004and additionalnew developmentis beingplanned.
Utility User Tax Relief for Low Income Households Expanded
The City's UtilityUser Tax ( UUT) exemptionprogram for low incomeresidentswas expandedftom
covering gas and electricityto include an exemptionof the Utility User Tax for qualifyingresidents
using SBC ( formerly Pacific Bell) telephone service. An estimated 6,000 low income residents
benefit ftom theUUT exemptionprogram.
Transmittal Letter x February 27, 2004
Capital Improvements
ill 2003 the City initiated its most aggressive capital improvement program in years with over $ 30
million of projects initiated. FlUlding for the program included a transfer of over $ 6 million ITomthe
City's General FlUld Capital hnprovement Reserve and the appropriation of $ 2 million of General
FlUldrevenues. Some of the more notable capital improvements initiated were:
Park Renovationwas a major focus of the 2003 capitalimprovementprogram. Followinga review
and updating of prior needs analyses, the City initiatedimprovementsand renovationsat Floresta,
Cheny Grove, McCartney and Halcyon Parks. hnprovements includednew restrooms, improved
play equipmentand generalrenovation.
Washington Manor Aquatics Center will replace the existing outdated Washington Manor
swimming pool with a modem Aquatics Center featuring two pools; an eight lane pool for
competitiveswimmingand water polo and a familyorientedpool with a play structureand three lap
swimming lanes. The pool design resulted ITommonths of work by an Aquatics Task Force that
was chargedwith evaluatingall of the City's existingpools and aquaticsneeds. Theproject is being
funded in large part with $ 2.75 million of proceedsIToma May 2003 Refundingof the City's 1993
City Hall Certificates of Participation ( see Note 7 on page 65) that took advantage of low tax
exempt bond interest rates to raise the new money and maintain the same level of annual debt
serviceon the outstandingcertificates.
San LeandroHistoricalMuseumon West Estudillowas initiatedin the fall of 2002 with the gutting
of an lll1impressiveretail/ officebuilding adjacentto the Casa Peralta and transfiguredinto a modest
but beautiful new City facility in January 2004. The Museum houses a series of exhibits on San
Leandro's history, an art gallery to display the work of local artists and a small performing arts
theater.
Streethnprovement Programprojectswere fundedin the amolUltof over $ 14 million includingthe
initiationof the Westgate Parkway, a long- plannednew arterialbetweenDavis Streetand Williams
Street at a cost of nearly $ 11 million. Additionalprojects provided for the repair and resurfacingof
City streets.
Manor BranchLibrarywill be completelyrebuiltand expandeddue to the City's successin securing
a competitiveState Librarygrantof$ 3.8 million.
MarinaDevelopment
The City continuedits efforts to improvethe Marinathroughthe developmentof a ConnectionsPlan
to enhancepedestrianand vehiculartraffic through the City- ownedarea and through securinga State
grant to relocate the small boat lalUlchingfacility to improve the development potential of a key
Marina site. The City is also solicitingproposalsfor a restaurantand banquet facilityat the site of the
formerBlueDolphinwhichwas finallyrazed aftersittingvacant for a decade.
CityWork Forceand Personnel
The City increasedits workforcefor providingmunicipalservicesby four full time positionsand nine
full- time equivalent( FTE) part- time positions. The fiscal year 2003 Budget included a total of 413
full- timepositiorisand 81.5FTE part- timepositions. The position increaseswere in Engineeringand
Transportation ( 2) to provide staffing required to implement the capital improvement program, in
Community Development ( 1.5) to speed up development review and in Recreation and Human
Services( 5) to managethe increasingnumberof programofferings
Transmittal Letter xi February 27, 2004
General Fund Reserve Levels
As of June 30, 2003 the GeneralFund had a Reservefor EconomicUncertaintiesof $ 7.1 million and
an EmergencyReserveof $ 5 million ($ 2 million of which was loanedto the RedevelopmentAgency
andwill be repaidupon the sale of West San Leandro/ McArthurBoulevardProjectAreabonds).
Enhancing Service Levels
The City implemented a new constituentcomment program in 2003 that has become the basis for
managing constituentand Council service complaintsthroughoutthe City. " Access San Leandro" is
availableto the public on- line24 hours a day providingdirect accessto the City's residentsregarding
recreationprograms, abandonedvehicles, tree trimming needs, business licenses, street maintenance,
street lightoutagesand more.
CASH MANAGEMENT POLICIES
The City maintains a cash and investmentpool for all City Funds. The City Treasurerinvests City
funds in accordancewith the InvestmentPolicy adoptedannuallyby the City Council. The objectives
of the policy are legality, safety, liquidityand yield. The policyaddressesthe credit qualityof issuing
financial institutions and the types of investmentspermitted by the Califomia Government Code.
Permitted City investments include obligations of the U. S. Treasury and its agencies and
instrumentalities, commercialpaper, banker's acceptances, high qualitymedium- termcorporatenotes,
repurchase agreements, reverse repurchase agreements, certificates of deposit, high quality mutual
funds, and the StateTreasurer's LocalAgencyInvestmentFund. Additionalinformationon the City's
cash and investmentscan be foundon page 47 of the notesto the financialstatements.
RISK MANAGEMENT
The City maintainsa programof commercialinsurancecombinedwith self- insurancefor substantially
all of its governmental operations, except for major construction projects and contractor- supplied
services. In such circumstances, insuranceto protect the City is providedby each contractor. The City
is a memberof the LocalAgencyWorkers' CompensationExcessJoint Powers Authority( LAWCX).
The City is also a memberof CalifomiaJoint PowersRisk ManagementAuthority( CJPRMA), which
provides annual generalliabilitycoveragein an aggregateup to $ 25 million. Additionalinformation
on the City's risk management activity can be found on page 73 of the notes to the financial
statements.
INDEPENDENT AUDIT
The City's Charter requires an annual audit of the financial records by an independent audit firm
selectedby the City Council. The GeneralPurpose Financial Statementswere auditedby Caporicci,
Cropper and Larson, Certified Public Accountants, and their opinion is included in the financial
sectionof this report.
Transmittal Letter xii February 27, 2004
CERTIFICATEOFACHIEVEMENT
The GovernmentFinance OfficersAssociationof the United States and Canada( GFOA) has awarded
a Certificateof Achievementfor Excellencein FinancialReportingto the City of San Leandrofor its
ComprehensiveAnnual Financial Report for the fiscal year ended June 30, 2002. In order to be
awarded a Certificateof Achievement, a governmentmust publish an easily readable and efficiently
organizedComprehensiveAnnual FinancialReport. This report must satisfyboth generallyaccepted
accountingprinciplesand applicablelegalrequirements.
A Certificate of Achievement is valid for a period of one year only. We believe that this
comprehensive annual financial report for fiscal year 2003 continues to meet the Certificate of
Achievement Program's requirements and we are submitting it to the GFOA to determine its
eligibilityfor anothercertificate.
ACKNOWLEDGMENTS
I would like to express my sincere appreciation to the accounting professionals of the Finance
Department, Mary McCarthy, Christine Galvin and Clarence Youngs, whose professionalism,
support, dedication, and efficiencyare responsiblefor the preparationof this report. I would also like
to thank Caporicci& Larson, CPAs for their professionalassistanceand cooperation. Finally, I want
to thank John Jermanis, City Manager, and the City CouncilFinance Cornmitteefor their continued
interest and support in planning and conductingthe City's financialoperations in a responsible and
progressIvemanner.
Respectfullysubmitted,
EdwardG. Schilling
ActingFinanceDirector
G:\ AUDIT2002\ 03 Transmitta1. doc
Certificate of
Achievem. ent
for Excellence
in Financial
Reporting
Presented to
City of San Leandro,
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2002
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports ( CAFRs) achieve the highest
standards in government accounting
and financial reporting.
~~~
President
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Executive Director
XIV
PRINCIPAL OFFICERS
CITY OF SAN LEANDRO
CITY COUNCn..
Mayor
Vice Mayor
Councilmember
. Councilmember
Councilmember
Councilmember
Councilmember
COUNCn.. APPOINTEES
City Manager
City Attorney
APPOINTED OFFICIALS
Assistant City Manager
City Clerk
Police Chief
Community Development Director
Acting Finance Director
Library Services Director
Recreation and Human Services Director
Human Resources Director
Engineering - Transportation Director
Public Works Services Director
xv
Shelia Young
Bob Glaze
Orval " OB" Badger
Surlene G. Grant
Glenda Nardine
Tony Santos
Bill Stephens
John J. Jennanis
Jayne W. Williams
Edward G. Schilling
Marian Handa
Joseph W. Kitchen
Hanson Hom
Edward G. Schilling
David Bohne
. CarolynKnudtson
Justinian Caire
Uchenna Udemezue
Robert Rockett
This organizational chart reflects relationshipsbetween. policy- makingresponsibility
( Mayor, CityCouncil, andAdvisoryBoardsand Commissions) .
and administrative officers and departments.
Board of
Zoning
Adjustments
Planning
Commission
Rent Review Ii
Board :
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Finance
Community
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Personnel
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Citizensof
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City Council
Library
Historical
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Human
Services
Commission
Library
Services
Police
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Recreation
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Commission
Youth
Advisory
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Senior
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Engineering
Fire I I I and
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Recreation
PublicWorksfIi: I andHuman
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C& L
Caporicci & Larson
Certifiedl'ubltc Accountants
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and Members of the City Council
of the City of San Leandro
San Leandro, California
We have audited the accompanying financial statements of 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, 2003, 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
an opinion on these basic fmancial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in the United States and the
standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the basic financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the basic 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
opmlOn.
In our opinion, such basic financial statements referred to above present fairly, in all material respects, the 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, 2003, and the respective changes in financial position and cash flows, where
applicable, thereof for the year then ended in conformity with generally accepted accounting principles in the United
States.
As described in Note 1 to the basic financial statements, the City adopted statements of the Governmental Accounting
Standards Board No. 34, Basic Financial Statements- and Management's Discussion and Analysis- for State and Local
Governments; No. 37, Basic Financial Statements- and Management's Discussion and Analysis- for State and Local
Governments: Omnibus; and No. 38, Certain Financial Statement Note Disclosures.
In accordance with Government Auditing Standards, we have also issued our report dated December 4, 2003 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 grants. That report is an integral part of an audit performed in
accordance with GovernmentAuditing Standards and should be read in conjunction with this report in considering the
results of our audit.
The accompanying Required Supplementary Information, such as management's discussion and analysis, budgetary
comparison information 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 the Governmental Accounting Standards Board.
We have applied certain limited procedures, which consisted principally of inquires of management regarding the
methods ofmeasure. ment and presentation of the Required Supplementary Information. However, we did not audit the
information and express no opinion on it.
OakJand
180 Grand Ave.. Suite 1365
Oakland, California 94612
Toll Free Ph: ( 877) 862- 2200
Orange County
3184- DAirway Avenue
Costa Mesa, California 92626
Toll Free Fax: ( 866) 436- 0927
1
Sacramento
777 Campus Commons Rd., Suite 200
Sacramento, California 95825
San Diego
600 " B" Street, Suite 1900
San Diego, California 92101
-- ---
To the Honorable Mayor and Members of the City Council
of the City of San Leandro
San Leandro, California
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
City's basic financial statements. The accompanying supplementary information is presented for purpose of additional
analysis and is not a required part of the basic financial statements. The supplementary information has been subjected
to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in
all material respects in relation to the basic financial statements taken as a whole. The Introductory Section and
Statistical Tables have not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them.
~~. f c:/; u.~
Oakland, California
December 4, 2003
2
-- ---
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30,2003
--------------------------------------------------------------------------------------------------
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, 2003. We encourage readers to consider this information in
conjunction. with the additional information that is furnished in the letter of transmittal, which
can be found preceding this narrative, and with the City's financial statements, which follow.
Financial Highlights - Primary Government
Government- Wide Highlights:
Net Assets - The assets of the City exceeded its liabilities at fiscal year ending June 30,
2003 by $ 340.4 million. Of this amount, $ 23.5 million was reported as " unrestricted net
assets" and may be used to meet the government's ongoing obligations to citizens and
creditors.
Changes in Net Assets - In this first year of reporting the City's Statement of Net Assets,
Governmental Activities Net Assets total $ 326.8 million and Business- Type Activities
Net Assets total $ 13.6 million. An important measure of future financial activity will be
the changes in these net asset levels.
Fund Highlights:
Governmental Funds - Fund Balances- As of the close of fiscal year 2003, the City's
governmental funds reported a combined ending fund balance of $ 72.4 million, an
increase of $ 4.9 million from the prior year.
General Fund - The unreserved fund balance of the general fund on June 30, 2003 was
$ 18.2 million, a decrease of $( 10.1) million from the prior year. This decrease largely
reflects the City's investment in various capital improvements from reserves previously
set aside for that purpose.
Long- Term Debt:
The City's total debt obligations increased by $ 10.2 million or 17% during fiscal year
2003. During the 2003 fiscal year, the City issued $ 15.935 million in refunding Tax
Allocation Bonds for the Plaza Redevelopment Project, which refunded the 1993 Tax
Allocation Bonds and $ 12.55 million Refunding Certificates of Participation that
refunded the 1993 Certificates of Participation. In both of the Fiscal Year 2003
financings additional capital was raised for the City ($ 2.75 million) and the Agency
($ 8.015 million) accounting for the increase in the amount of outstanding City debt.
3
- - --
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2003
-----------------------------------------------------------------------------------------------
OVERVIEW OF FINANCIAL STATEMENTS
This 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: 1)
government- wide financial statements, 2) fund financial statements, and 3) 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 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. This statement, for the first time, combines and consolidates governmental
fund's current financial resources with capital assets and long- term obligations.
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).
Both of the above financial statements have separate sections for three different types of
programs or activities. These three types of activities are:
GovernmentalActivities - 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, 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 doesn't have any discretely
presented component units to report upon.
The government- wide financial statements can be found on pages 21 through 23 of this report.
4
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2003
----------------------------------------------------------------------------------------------------
Fund Financial Statements and Major Component Unit Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have
been segregated for specific activities or objectives. The City, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with finance- related
legal requirements. All of the funds of the City can be divided into three categories:
governmental funds, proprietary funds, and fiduciary funds.
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 86 through 106 of this report.
Governmental Funds - Governmentalfunds 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 22 governmental funds, of which 6 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 6 major funds are - the General Fund, San Leandro Public Financing Authority Debt
Service Fund, Redevelopment Agency Debt Service Fund, Capital Improvement Projects Capital
Project Fund, Community Redevelopment Agency Capital Projects Fund, and the
Redevelopment Agency Low/ Moderate Housing Capital Projects Fund. Data from the other 16
governmental funds are combined into a single, aggregated presentation. The basic
governmental fund financial statements can be found on pages 28 through 29 of this report.
Individual fund data for each of these non- major governmental funds is provided in the form of
combining statements on pages 86 through 106 of this report.
5
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2003
----------------------------------------------------------------------------------------------------
ProprietaryFunds - 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, Environmental Services,
Shoreline Enterprise, Storm Water Utility, and the San Leandro Housing Finance Corporation.
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.
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 36 through 38 ofthis
report.
Fiduciary Funds - Fiduciaryfunds are used to accountfor resourcesheld 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.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data
provided in the government- wide and fund financial statements. The notes to the financial
statements can be found on pages 41 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.
6
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2003
-----------------------------------------------------------------------------------------------
GOVERNMENT- WIDEFINANCIALANALYSIS
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 $ 340.4 million at the close of the fiscal year ending June 30,
2003. This is the first year the City has established the value of its net assets, so no comparison
numbers are available. In the future readers of these reports will want to compare the change in
net assets from year to year as a measure of the City's financial health.
By far the largest portion of the City's net assets ( 82.9%) reflects its investment in capital assets
for governmental activities ( e. g. land, streets, sewers, buildings, machinery, and equipment); less
any related debt used to acquire those assets that are still outstanding. 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 $ 34.7 million ( 10.2%) 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,
$ 23.5 million ( 6.9%) may be used to meet the government's ongoing obligations to citizens and
creditors.
City of San Leandro's Net Assets
Fiscal Year Ending June 30,2003
Governmental Business- Type
Activities Activities Total
2003 2003 2003
Current Assets $ 81,941,634 $ 19,797,950 $ 101,739,584
Non- Current Assets 9,550,423 ( 970,943) 8,579,480
Capital Assets 327,866,089 6,595,397 334,461,486
Total Assets $ 419,358,146 $ 25,422,404 $ 444,780,550
Current liabilities 14,796,724 1,684,488 16,481,212
Non- Current Liabilities 77,801,142 10,126,714 87,927,856
Total liabilities $ 92,597,866 $ 11,811,202 $ 104,409,068
Investments in Capital
Net of Related Debt 275,539,820 6,595,397 282,135,217
Reshicted 34,740,460 - 34,740,460
Unreshicted 16,480,000 7,015,805 23,495,805
Total Net Assets $ 326,760,280 $ 13,611,202 $ 340,371,482
7
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2003
----------------------------------------------------------------------------------------------------
Governmental Activities
Governmental activities decreased the City's net assets by $ 14.2 million while the Business- type
activities increased the City's net assets by $ 0.8 million accounting for the City's total decline in
net assets of$ 13.4 million. Key elements of this decrease follows:
City of San Leandro's Statement of Activities and Changes in Net Assets
Fiscal Year Ending June 30,2003
Revenues:
Program Revenues:
Charges for Services
Operating Grants and Contributions
Capital Grants and Contributions
General Revenues:
Property Taxes
Sales Taxes
Other Taxes
Motor Vehicle license Fees
Investment Earnings
Miscellaneous
Gain On Sale of Assets
Total Revenues
Expenses:
General Government
Public Safety
Engineering & Transportation
Recreation and Culture
Community Development
Interest on long- term debt
Water Pollution Control
Shoreline
San Leandro Housing Finance Corp.
Storm Water Utility
Environmental Services
Total Expenses
Increase ( Decrease) in Net Assets Before Transfers
Transfers
Change in Net Assets
Net Assets, Beginning of Year ( as restated)
Net Assets, End of Year
Total
$ 22,253,850
5,339,449
10,257,395
14,257,571
20,680,473
16,947,118
4,680,544
3,126,854
2,941,987
4,041
$ 100,489,282
22,918,853
35,703,556
11,477,536
14,311,154
11,203,292
4,530,710
8,620,442
2,267,019
590,425
992,544
1,307,149
$ 113,922,680
- 13,433,398
- 13,433,398
353,804,880
$ 340,371,482
Governmental Business- Type
Activities Activities
$ 9,365,768 $ 12,888,082
5,339,449
10,257,395
14,257,571
20,680,473
16,653,364 293,754
4,680,544
2,335,395 791,459
2,651,075 290,912
4,041 -
$ 86,225,075 $ 14,264,207
22,918,853
35,703,556
11,477,536
14,311,154
11,203,292
4,530,710
8,620,442
2,267,019
590,425
992,544
1,307,149
$ 100,145,101 $ 13,777,579
- 13,920,026 486,628
- 316,945 316,945
- 14,236,971 803,573
340,997,251 12,807,629 - -
$ 326,760,280 $ 13,611,202
8
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30,2003
----------------------------------------------------------------------------------------------------
Per GASB 34, program revenues are derived directly from the program itself or from parties
outside the reporting government's taxpayers or citizenry. They reduce the net cost of the
function to be financed from the government's general revenues. 41.1% of the governmental
program revenues came from Capital Grants and Contributions, which includes restricted
revenue such as State and Federal construction grants, developer fees and Measure B sales tax.
21.4% of the program revenue came from Operating Grants and Contributions category which
includes restricted revenues such as gas tax, parking meter receipts and Community
Development Block Grants. The remaining 37.5% of program revenue came from charges for
servIces.
General revenues are all other revenues not categorized as program revenues. This category
includes revenues such as property taxes, Redevelopment Agency tax increment receipts, sales
tax, investment earnings and motor vehicle license fees. Total general revenue from.
governmental activities was $ 61.3 million. The largest component is sales tax which was 33.8%
or $ 20.7 million. Additional significant general revenues were other taxes of $ 16.7 million which
includes real property transfer tax of $ 3.8 million and utility user's tax of $ 9.3 million.
. Property taxes were on target with the amount budgeted for the year. The City of San
Leandro receives twelve cents out of every dollar for property tax generated in the City.
. Real property transfer tax is levied at a rate of$ 6 per $ 1,000. The City received 90.8% of
the amount budgeted for the year.
. Sales tax revenue was $ 20.7 million. This was $ 3.5 million less than budgeted and $ 2.3
million less than sales tax revenue generated during the previous year. While the staff
expects the City to benefit from new car dealerships, the general economic slowdown
limited sales tax revenue particularly in the business to business sector for the fiscal year
ended 06/ 30/ 2003.
For the most part, increases in expenses paralleled the growth in demand for services. Total
governmental activity type expenses were $ 100.1 million in fiscal year 2003. The largest
expenses were incurred for Public Safety and General Government. These two activities
combined account for 58.5% of all governmental activities.
. Public safety expenses increased during the fiscal year primarily due to salaries and
benefits. Fire Service costs also increased due to an increase in contract with the Alameda
County Fire Department.
. General government increased due to a reduction in salary savings due to departments
being fully staffed.
. Depreciation expense for the fiscal year ended 06/ 30/ 2003 was $ 15.6 million.
9
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2003
----------------------------------------------------------------------------------------------------
Business Type Activities
Net assets for business- type activities were $ 13.6 million, an increase of$ 0.8 million ITomthe
prior fiscal year. Total program revenues for business- type activities were $ 12.9 million.
Program revenues consisted of marina berth rentals, sewer service fees, and Storm Water Utility
charges. Total general revenues were $ 1.7 million. Total expenses for the business- type
activities were $ 13.8 million during fiscal year 2003, and related to Water Pollution Control
Plant services, Marina and Golf Course activities, Storm Water Utility services, Environmental
Services, and debt payments made through the San Leandro Housing Finance Corporation.
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 capacity. In particular, unreserved fund balance may serve as a useful measure of a
government's net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported combined ending
fund balances of $ 72.4 million. Approximately, $ 41 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 fund balance of the General Fund was $ 18.2 million, while total
fund balance reached $ 38.4 million. As a measure of the General Fund's liquidity, it may be
useful to compare both unreserved fund balance and total fund balance to total fund
expenditures. Unreserved fund balance represents 24.1% of total General Fund expenditures
including transfers out, while total fund balance represents 50.9% of that same amount.
The available fund balance of the City's General Fund decreased by $ 10.1 million during the
2002/ 03 fiscal year. Key factors in this decrease are as follows:
Designated Fund Balance - The City used $ 1 million in the designation for Economic
Uncertainty to offset the shortfalls in sales tax. $ 4.8 million of the designation for Capital
Improvement projects was transferred to the Capital Improvement Project Fund to fund
the Capital Improvement Project Program for fiscal year 2002- 03. Additionally, the
10
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2003
----------------------------------------------------------------------------------------------------
General Fund loaned the Redevelopment Agency Fund $ 2 million from the designation
for Major Emergencies to fund the MacArthur Blvd Streetscape Project.
San Leandro Public Financing Authority Debt Service Fund- The San Leandro Public
Financing Authority Debt Service Fund was established to account for Certificates of
Participation issued in 1993 for the Seismic Retrofit Project. In 2003, the City issued 2003
Certificates of Participation. The proceeds were used to refund the 1993 COP's and to raise
capital funds to build a new aquatics center. The fund also accounts for the 1999 Library and
Fire Station Certificates of Participation. This debt is being paid back pursuant to lease
agreements between the City of San Leandro and the San Leandro Public Financing Authority.
At the end of fiscal year 2003, the reserved fund balance for the San Leandro Public Financing
Authority fund was $ 3.2 which is to be used for debt repayment during fiscal year 2003- 04.
Redevelopment Agency Debt Service Fund - This fund was established to account for annual
debt payments for the 1993 Tax Allocation Bonds. The 1993 Tax Allocation Bonds were
refunded by proceeds received from the issuance of 2002 Tax Allocation Bonds during the year.
Proceeds from this issuance will also be used to finance redevelopment projects as set forth in
the Redevelopment Plan. Additionally the fund accounts for 2001 Certificates of Participation
issued to assist the Redevelopment Agency finance activities in the Joint Project Area. At the
end of fiscal year 2003, the reserved fund balance for the Redevelopment Agency Debt Service
Fund was $ 1.4 million which is to be used for debt repayment during fiscal year 2003- 04.
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 total fund balance was $ 7.4 million. The unreserved fund balance at the end
of fiscal year 2002- 03 was $ 7.0 million, which is an increase of $ 10.1 million primarily due to
the receipt of bond proceeds in the Plaza and Joint Project area. The unreserved fund balance is
designated for capital improvement projects.
Capital Improvements Projects Capital Projects Fund - The Capital Improvement Projects
Capital Projects Fund was established to account for major capital improvement projects. The
total fundbalancewas $ 10.6million. At the endof fiscalyear2003, the unreservedfundbalance
was $ 8.9 million, an increase of $ 5.7 million from the prior year. The increase is related to the
transfer of$ 4.8 million in project monies from the General Fund and the receipt of$ 2.75 million
in bond proceeds from the 2003 Certificates of Participation issuance to fund the Aquatics
Complex project.
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. The total fund balance was $ 2.1 million. At the end of fiscal year
2003, the unreserved fund balance was $ 1.9 million, a decrease of $ 1.7 million from the prior
year. The decrease is related to agency assisted activities including commencement of
11
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2003
----------------------------------------------------------------------------------------------------
construction on affordable housing units for seniors, disabled adults, and lower income persons.
The agency also continued to fund single- family rehabilitation and to provide first time home
buyer loans.
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, 2003, the fund's net assets totaled $ 18.7 million, of which $ 2.9
million was restricted and $ 15.8 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, 2003, the fund's net assets totaled ($ 7) million. The fund had
a deficit fund balance of ($ 10.7) 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.
San Leandro Housing Finance Corporation - The San Leandro Housing Finance Corporation
was established to account for the operation of the City's home financing program through the
sale of revenue bonds and other financing mechanisms. As of June 30, 2003, the fund's net
assets totaled $ 0.4 million. This balance will be used to pay for debt service payments during
2003- 04.
GENERAL FUND BUDGETARY HIGHLIGHTS
The final amended General Fund Budget, excluding transfers, totaled $ 66.3 million, including
$ 0.8 million in budget amendments to the originally adopted budget and encumbrances of $. 6
million, which will fund contractual obligations and outstanding purchase orders. The budget
amendments are briefly summarized as follows:
. Appropriations of $ 0.6 million related to various operating expenses in Recreation &
Culture, Public Safety, Community Development, Engineering & Transportation, and
General Government.
. Appropriations of $ 0.2 million related to the award of a grant to the Davis Street
Community Center in recognition of return of the building located at 1103Davis Street to
the Community Redevelopment Agency.
Of the $ 0.8 million in mid- year appropriations, $ 0.05 million were covered by specific funding
sources and $ 0.75 million to be funded out of available fund balance.
12
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30,2003
----------------------------------------------------------------------------------------------------
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, 2003, amounts to $ 334.5 million, net of accumulated depreciation of $ 93.9 million.
This 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 total additions to the City's
investment in capital assets for the current fiscal year was $ 273.4 million, net of accumulated
depreciation.
The City implemented new reporting standards for this fiscal year. ' The majority of major capital
asset additions during the current fiscal year were attributable to the retroactive reporting of
infrastructure required by Governmental Accounting Standards Board Statement No. 34.
. Addition of infrastructure in 2002- 03 in the amount of $ 258.2 million, net of accumulated
depreciation.
. Addition of construction in progress in the amount of$ 15.8 million.
Additional information on the City's capital assets can be found in note 6 on pages 58 through 60
of this report.
Debt Administration
Long Term Debt - At the end of the current fiscal year, the City had $ 70.5 million in debt
outstanding compared to the $ 60.3 million last year, a 17% net increase. In fiscal year 2003, the
City's Redevelopment Agency issued $ 15.9 million to refund the City's 1993 Tax Allocation
Bonds and to finance redevelopment activities. The City Issued $ 12.5 million during the fiscal
year to refund the City's 1993 COP's and to raise funds for a new aquatics center.
The City has no outstanding general obligation debt. The City's 2003 Certificates are rated " A+"
by Standard & Poors. Additional information on the City's long- term debt obligations can be
found in Note 7 ofthe notes to the financial statements.
13
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30,2003
----------------------------------------------------------------------------------------------
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
Fiscal year 2003 was the first year that the national recession was clearly reflected in San
Leandro's financial results. Sales tax revenues of $ 20.7 million were nearly $ 2.3 less than the
$ 22.9millionreceivedin FY 2002, and $ 3.5millionless than the 2003budget. To date in 2004
the level of sales tax revenue has stabilized, but the total is still expected to remain below the
amount received in 2002 and approximately $ 1.1 million below the amount budgeted for 2004.
On closer analysis of the 2003 sales tax receipts, it is clear that the principal economic category
responsible for the reduction is in business to business sales. Other categories such as general
retail, transportation and construction have remained relatively stable, or, in the case of
transportation, actually increased. $ 1.7 million of the $ 2.3 million total reduction appears to be
attributable to reduced business to business activity.
Other City revenue categories for 2003 were close to the budgeted amounts, and in the aggregate
actually exceeded budgeted estimates. An analysis of the first six months of 2004 suggests that
the revenue profile is unchanged. Sales taxes are below estimate, but other principal revenue
sources including property taxes and utility user taxes are holding their own.
In addition to reduced sales tax revenues, the City will also be confronted in 2004- 05 with
significant increases in its level of contribution to the Public Employees Retirement System
( PERS). In fact, in comparison with the amounts budgeted for PERS contributions in 2004, the
City and Alameda County Fire Department for its firefighters allocated to San Leandro will be
required to contribute an additional $ 2.8 million, with further increases scheduled for 2005- 06.
Finally, the Governor's proposed 2004- 05 proposed budget includes an additional City of San
Leandro contribution to the Education Revenue Augmentation Fund ( ERAF). In 2004, the City's
annual contribution to ERAF due to prior State action totals $ 2.2 million. The additional
contribution proposed for 2005 would increase the total by another $ 535 thousand.
The combination of the reduced sales tax and VLF revenues and increased PERS contribution
requirements has required the City to begin early planning for reductions in its 2005 budget. A
total of 24 full time positions have been identified for elimination as they become vacant unless
the City is able to offset those cuts by developing new sources of revenue.
Finally, the City anxiously awaits to see the outcome of Proposition 57, the Deficit Reduction
Bond measure on the March 2 State ballot. The State has already " borrowed" from San Leandro
$ 1.5 million of Motor Vehicle In Lieu fees, and considerable uncertainty remains about whether
additional scheduled VLF receipts will be forthcoming during this 2004 fiscal year. It is
impossible to contemplate what might be the impact on City or State finances if Proposition 57
were to fail.
14
City of San Leandro
Management's Discussion and Analysis
For the Fiscal Year Ended June 30,2003
-------------------------------------------------------------------------------------------
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 14 th Street, San Leandro, CA 94577.
15
--
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-
81
-- -- ---- -- ---
61
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oz
- - - -
City of San Leandro
Statement of Net Assets
June 30,2003
Governmental Business- Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments ( Note 2) $ 51,441,688 $ 17,637,577 $ 69,079,265
Restricted cash and investments ( Note 2) 18,845,226 1,377,578 20,222,804
Receivables:
Property taxes 312,036 - 312,036
Accounts 7,936,090 759,545 8,695,635
Federal, State, and local grants 2,125,237 - 2,125,237
Interest - 91,599 91,599
Special assessments 19,184 229,458 248,642
Sales tax - Measure B 360,612 - 360,612
Due from other governments 13,268 - 13,268
Short- term internal balances ( Note 5) 300,814 ( 300,814)
Inventory and prepaid items 95,028 - 95,028
Other assets 492,451 3,007 495,458
Total current assets 81,941,634 19,797,950 101,739,584
Noncurrent assets:
Loans receivable ( Note 3) - 6,156,715 6,156,715
Notes receivable ( Note 4) 2,281,567 141,198 2,422,765
Long- term internal balances 7,268,856 ( 7,268,856)
Capital assets ( Note 6):
Non Depreciable 32,928,627 - 32,928,627
Depreciable 380,696,423 14,714,050 395,410,473
Less accumulated depreciation ( 85,758,961) ( 8,118,653) ( 93,877,614)
Capital assets, net 327,866,089 6,595,397 334,461,486
Total noncurrent assets 337,416,512 5,624,454 343,040,966
Total assets 419,358,146 25,422,404 444,780,550
LIABILITIES
Current liabilities:
Accounts payable and accruals 5,308,343 547,289 5,855,632
Interest payable 503,984 - 503,984
Deferred revenue ( Note 9) 1,918,373 16,845 1,935,218
Other liabilities 2,563,738 819,806 3,383,544
Compensated absences payable - within one year ( Note 8) 305,876 36,421 342,297
Claims andjudgments payable - within one year ( Note 11) 2,337,000 - 2,337,000
Long- term debt - due within one year ( Note 7) 1,859,410 264,127 2,123,537
Total current liabilities 14,796,724 1,684,488 16,481,212
Noncurrent liabilities:
Deposits 10,000 47,418 57,418
Compensated absences payable - due in more than one year ( Note 8) 3,674,905 368,251 4,043,156
Claims andjudgments payable - due in more than one year ( Note 11) 5,493,867 - 5,493,867
Long- term debt - due in more than a year ( Note 7) 68,622,370 9,711,045 78,333,415
Total noncurrent liabilities 77,801,142 10,126,714 87,927,856
Total liabilities 92,597,866 11,811,202 104,409,068
NET ASSETS
Invested in capital assets, net of related debt 275,539,820 6,595,397 282,135,217
Restricted for:
Capital projects 25,045,765 - 25,045,765
Debt service 5,578,389 - 5,578,389
Special projects 4,116,306 - 4,116,306
Total restricted 34,740,460 - 34,740,460
Unrestricted 16,480,000 7,015,805 23,495,805
Total net assets $ 326,760,280 $ 13,611,202 $ 340.371,482
See accompanying Notes to Basic Financial Statements.
21
- --------
City of San Leandro
Statement of Activities and Changes in Net Assets
For the year ended June 30,2003
General revenues and transfers:
Taxes:
Property taxes
Sales taxes
Motor vehicle license fees
Other taxes
Total taxes
Investment earnings
Miscellaneous
Gain on sale of assets
Transfers
Total general revenues and transfers
Change in net assets
Net assets - beginning of year, as restated ( Note 15)
Net assets - end of year
See accompanying Notes to Basic Financial Statements.
22
Program Revenues
Indirect Operating Capital
Expenses Charges for Grants and Grants and
FunctionslPrograms Expenses Allocation Services Contributions Contributions Total
Primary government:
Governmental activities:
General government $ 26,575,870 $ ( 3,657,017) $ 3,218,931 $ - $ 227,668 $ 3,446,599
Public safety 34,330,291 1,373,265 1,640,507 332,474 3,221,706 5,194,687
Engineering and transportation 11,208,583 268,953 495,890 3,851,175 5,195,828 9,542,893
Recreation and culture 13,629,231 681,923 1,677,531 10,093 115,662 1,803,286
Community development 9,870,416 1,332,876 2,332,909 1,145,707 1,496,531 4,975,147
Interest on long- term debt 4,530,711
Total governmental activities 100,145,101 - 9,365,768 5,339,449 10,257,395 24,962,612
Business- type activities:
Water Pollution Control Plant 8,620,442 - 9,115,046 - - 9,115,046
Marina 1,774,816 - 1,322,689 - - 1,322,689
San Leandro Housing Finance
Corporation 590,425
Storm Water Utility 992,544 - 1,098,687 - - 1,098,687
Environmental Services 1,307,149 - 703,052 - - 703,052
GolfCourse 492,203 - 648,608 - - 648,608
Total business- type activities 13,777,579 - 12,888,082 - - 12,888,082
Total primary government $ 113,922,680 $ - $ 22,253,850 $ 5,339,449 $ 10,257 ,395 $ 37,850,694
--
Net ( Expense) Revenue
and Changes in Net Assets
Governmental Business- Type
Activities Activities Total
23
$ ( 19,472,254) $ - $ ( 19,472,254)
( 30,508,869) - ( 30,508,869)
( 1,934,643) - ( 1,934,643)
( 12,507,868) - ( 12,507,868)
( 6,228,145) - ( 6,228,145)
( 4,530,711) - ( 4,530,711)
( 75,182,489) - ( 75,182,489)
494,604 494,604
( 452,127) ( 452,127)
( 590,425) ( 590,425)
106,143 106,143
( 604,097) ( 604,097)
156,405 156,405
( 889,497) ( 889,497)
( 75,182,489) ( 889,497) ( 76,071,986)
14,257,571 - 14,257,571
20,680,473 - 20,680,473
4,680,544 - 4,680,544
16,653,364 293,754 16,947,118
56,271,952 293,754 56,565,706
2,335,395 791,459 3,126,854
2,651,075 290,912 2,941,987
4,041 - 4,041
( 316,945) 316,945
60,945,518 1,693,070 62,638,588
( 14,236,971) 803,573 ( 13,433,398)
340,997,251 12,807,629 353,804,880
$ 326,760,280 $ 13,611,202 $ 340,371,482
tZ
- -
FUND FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
25
9Z
GOVERNMENTAL FUND FINANCIAL STATEMENTS
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.
San Leandro Public Financing Authority Debt Service Fund - Accounts for certificates of participation issued in 1993
for the Seismic Retrofit Project. The debt will be repaid through receipt of tax increment in future years and includes a
sale and leaseback agreement between the City of San Leandro and the San Leandro Community Redevelopment
Agency. This fund also accounts for Certificates of Participation issued for the library and fire stations seismic retrofit.
The debt will be paid back pursuant to lease agreements between the City of San Leandro and the San Leandro Public
Finance Authority.
Redevelopment Agency Debt Service Fund - Accounts for annual debt payments on the 2001 Certificates of
Particiaption and the 2003 Tax Allocation Bonds.
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.
Community 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.
27
-- ---
City of San Leandro
Balance Sheet
Governmental Funds
June 30, 2003
Major Funds
San Leandro Capital Community
Public Financing Redevelopment Improvement Redevelopment
Authority Agency Projects Agency
General Debt Service Debt Service Capital Projects Capital Projects
ASSETS
Cash and investments $ 12,969,524 $ 38,356 $ - $ 8,405,916 $ 8,870,712
Cash and investments with fiscal agent - 3,116,394 1,639,139 2,750,534 9,225,496
Receivables:
Property taxes - - - - 253,496
Accounts 6,688,774 - - 5,175 12,568
Federal, State, and local grants - - - 160,026
Interest - - - - 5,015
Special Assessment 19,184
Sales tax - Measure B
Loans - - - - 3,036,274
Notes 2,28 I, 567
Due from other governments 13,268
Due from other funds 2,843,751
Other assets 488,970
Advances to other funds 17,386,496
Total assets $ 42,691,534 $ 3,154,750 $ 1,639,139 $ 11,321,651 $ 21,403,56 I
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and accruals $ 2,598,459 $ - $ - $ 519,493 $ 189,371
Deposits payable - - - - 10,000
Deferred revenue 1,338,312 - - - 3,041,289
Due to other funds - - 219,879
Other liabilities 60,538 - - 170,750 1,550,653
Advances from other funds - - - - 9,163,319
Compensated absences payable 289,770
Total liabilities 4,287,079 - 219,879 690,243 13,954,632
Fund Balances:
Reserved for:
Encumbrances 556,902 - - 1,766,659 444,651
Advances to other funds 17,386,496
Long- term notes/ loans receivables 2,281,567
Debt service - 3,153,974 1,419,260
Unreserved:
Designated:
Unrealized gain / ( loss) on investments 94,693 776 - 30,826 26,054
Internship program 50,000
Major emergencies 3,000,000
Economic uncertainty 6,971,759
Fire equipment acquisition 1,315,210
Computer purchase program 225,000
Utility users rebate 227,000
Capital projects 5,942,349
Asset seizure 353,479
Unreserved, undesignated, reported in:
Special revenue funds
Capital projects funds - - - 8,833,923 6,978,224
Total fund balances 38,404,455 3,154,750 1,419,260 10,631,408 7,448,929
Total liabilities and fund balances $ 42,691,534 $ 3.154,750 $ 1,639.139 $ 11,321,651 $ 21,403,561
See accompanying Notes to Basic Financial Statements.
28
Major Funds
Redevelopment
Agency Low! Non- Major
Moderate Housing Governmental
Capital Projects Funds Total
$ 1,972,791 $ 9,601,757 $ 41,859,056
2,113,663 18,845,226
58,540 - 312,036
17,235 282,303 7,006,055
1,965,211 2,125,237
117,062 145,443 267,520
2,142,417 2,161,601
360,612 360,612
3,864,774 1,410,418 8,311,466
2,281,567
13,268
2,843,751
960 489,930
194,145 - 17,580,641
$ 6,224,547 $ 18,022,784 $ 104,457,966
$ 123,077 $ 1,423,742 $ 4,854,142
10,000
3,981,836 4,278,339 12,639,776
2,323,058 2,542,937
781,797 2,563,738
9,163,319
289,770
4,104,913 8,806,936 32,063,682
212,531 3,185,914 6,166,657
17,386,496
2,281,567
1,000,170 5,573,404
10,699 41,083 204,131
50,000
3,000,000
6,971,759
1,315,210
225,000
227,000
784,259 6,726,608
353,479
5,396,061 5,396,061
1,896,404 ( 1,191,639) 16,516,912
2,119,634 9,215,848 72,394,284
$ 6,224,547 $ 18,022,784 $ 104,457,966
29
Of
--- -- ---
--
City of San Leandro
Reconciliation of the Governmental Funds Balance Sheet
to the Government- Wide Statement of Net Assets
June 30, 2003
Total Fund Balances - Total GovernmentalFunds $ 72,394,284
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.
Total capital assets
32,928,627
292,026,967
324,955,594
Non depreciable assets ( Land and construction in progress)
Depreciable buildings, property, equipment and infrastructure, net
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. ( 503,984)
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. 3,908,223
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:
Total long- term liabilities
( 1,859,410)
( 68,622,370)
( 3,512,057)
( 73,993,837)
Long- term debt - current portion ( net)
Long- term debt - non- current portion ( net)
Compensated absences - non- current portion
Net Assets of Governmental Activities $ 326,760,280
See accompanying Notes to Basic Financial Statements.
31
-- -- --- ---
City of San Leandro
Statement of Revenues, Expenditures and Changes in Fund Balances
GovernmentalFunds
For the year ended June 30, 2003
Major Funds
San Leandro Capital Community
Public Financing Redevelopment Improvement Redevelopment
Authority Agency Projects Agency
General Debt Service Debt Service Capital Projects Capital Projects
REVENUES:
Property and other taxes $ 45,113,775 $ - $ - $ - $ 5,372,4 I7
Licenses and permits 3,443,062
Fines and forfeitures 568,776
Service charges 2,391,454 - - 324,694
Intergovernmental 5,338,452 - - 160,026 98,130
Use of money and property 2,325,204 2,862,575 53,654 31,360 387,456
Interdepartmental charges 5,027,499
Other 2,788,027 - - 1,036,819 174,340
Total revenues 66,996,249 2,862,575 53,654 1,552,899 6,032,343
EXPENDITURES:
Current:
General government 10,360,747 - - 988,849
Public safety 34,422,588
Engineering and transportation 3,130,817 - - 1,467,306
Recreation and culture 12,640,482 - - 740,398
Community development 6,076,056 - - 78,078 2,028,170
Debt service:
Principal - 440,000 380,000 - 862,323
Interest and fees - 2,059,21I 1,417,436 - 120,141
Total expenditures 66,630,690 2,499,21 I 1,797,436 3,274,631 3,010,634
REVENUES OVER ( UNDER) EXPENDITURES 365,559 363,364 ( 1,743,782) ( 1,721,732) 3,021,709
OTHER FINANCING SOURCES ( USES):
Proceeds from refunding of bonds - 12,550,000 15,935,000
Payment to refunded bonds escrow agents - ( 10,435,000) ( 6,445,000)
Transfers in 5,000 10,903 819,480 9,004,692 8,016,242
Transfers ( out) ( 8,770,189) ( 2,750,000) ( 8,015,234) ( 395,053) ( 820,489)
Total other financing sources ( uses) ( 8,765,189) ( 624,097) 2,294,246 8,609,639 7,195,753
REVENUES AND OTHER FINANCING
SOURCES OVER ( UNDER) EXPENDITURES
AND OTHER FINANCING USES ( 8,399,630) ( 260,733) 550,464 6,887,907 10,217,462
FUND BALANCES:
Beginning of year 46,804,085 3,415,483 868,796 3,743,501 ( 2,768,533)
Prior period restatements
Beginning of year, as restated 46,804,085 3,415,483 868,796 3,743,501 ( 2,768,533)
End of year $ 38,404,455 $ 3,154,750 $ 1,419,260 $ 10,631,408 $ 7,448,929
See accompanying Notes to Basic Financial Statements.
32
-
( 572,970) ( 3,480,681) 4,941,819
33
Major Funds
Redevelopment
Agency Low/ Non- Major
Moderate Housing Governmental
Capital Projects Funds Total
$ 1,363,141 $ 715,106 $ 52,564,439
812,850 4,255,912
568,776
1,656 2,717,804
7,562,416 13,159,024
89,001 519,716 6,268,966
5,027,499
325,184 1,041,921 5,366,291
1,777,326 10,653,665 89,928,711
642,179 11,991,775
4,241,272 38,663,860
9,001,378 13,599,501
1,134,413 14,515,293
2,350,296 1,298,376 11,830,976
205,000 1,887,323
147,431 3,744,219
2,350,296 16,670,049 96,232,947
( 572,970) ( 6,016,384) ( 6,304,236)
28,485,000
( 16,880,000)
4,308,426 22,164,743
( 1,772,723) ( 22,523,688)
2,535,703 11,246,055
3,692,604 12,696,529 68,452,465
( 1,000,000) - ( 1,000,000)
2,692,604 12,696,529 67,452,465
$ 2,119,634 $ 9,215,848 $ 72,394,284
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 30,2003
Net Change in Fund Balances - Total Governmental Funds $
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.
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.
Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term
liabilities in the Government- Wide Statement of Net Assets.
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. This
amount represents the unamortized discount on the debt issuance.
Bond premium on issuance of debt is an expenditures 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 ofthe outstanding debt. This amount represents the
unamortized premium on the debt issuance.
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.
Repayment of refunded bonds to escrow agents is reported as other financing sources in the governmental
funds, but the payments reduce long- term liabilities in the Government- Wide Statement of Net Assets.
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.
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.
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.
4,941,819
7,079,885
( 14,856,238)
( 28,485,000)
102,678
( 587,327)
1,887,323
16,880,000
( 311,506)
( 301,843)
( 586,762)
Change in Net Assets of Governmental Activities $ ( 14,236,971)
See accompanying Notes to Basic Financial Statements.
34
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
provideing food service facilities for the general public in an area connected to the San Francisco Bay.
San Leandro Housing Finance Corporation - This fund operates the City's home financing program through the sale
of revenue bonds and other financing mechanisms.
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.
35
---
City of San Leandro
Statement of Net Assets
Proprietary Funds
June 30, 2003
Major Enterprise Funds Governmental
Water San Leandro Non- Major Activities
Pollution Housing Finance Enterprise Internal
Control Plant Shoreline Corporation Funds Total Service Funds
ASSETS
Current assets:
Cash and investments $ 15,414,649 $ 602,297 $ - $ 1,620,631 $ 17,637,577 $ 9,582,632
Restricted cash and investments - - 1,377,578 - 1,377,578
Receivables:
Accounts 514,786 198,151 - 46,608 759,545 930,035
Interest 39,010 - 52,589 - 91,599
Special assessment 210,871 - - 18,587 229,458
Other assets 2,082 - - 925 3,007 2,521
Inventory - - - - - 95,028
Total current assets 16,181,398 800,448 1,430,167 1,686,751 20,098,764 10,610,216
Noncurrent assets:
Notes receivable 141,198 - - - 141,198
Loans receivable - - 6,156,715 - 6,156,715
Capital assets:
Depreciable 8,744,515 5,969,535 - - 14,714,050 7,056,622
Less accumulated depreciation ( 5,858,469) ( 2,260,184) - - ( 8,118,653) ( 4,146,127)
Total capital assets, net 2,886,046 3,709,351 - - 6,595,397 2,910,495
Total noncurrent assets 3,027,244 3,709,351 6,156,715 - 12,893,310 2,910,495
Total assets 19,208,642 4,509,799 7,586,882 1,686,751 32,992,074 13,520,711
LIABILITIES
Current liabilities:
Accounts payable 269,694 253,198 - 24,397 547,289 454,201
Deferred revenue - - - 16,845 16,845
Due to other funds - 250,000 50,814 - 300,814
Due to other agencies - - 819,806 - 819,806
Claims andjuddgements - due in one year - - - - - 2,337,000
Compensated absences - due in one year 23,999 3,384 - 9,038 36,421 16,106
Notes payable - due in one year - 134,127 - - 134,127
Bonds payable - due in one year - - 130,000 - 130,000
Total current liabilities 293,693 640,709 1,000,620 50,280 1,985,302 2,807,307
Noncurrent liabilities:
Deposits payable - 47,418 - - 47,418
Advances Hornother funds - 7,268,856 - - 7,268,856 1,148,466
Claims andjudgements - due in more than one year - - - - - 5,493,867
Compensated absences - due in more than one year 242,652 34,215 - 91,384 368,251 162,848
Notes Payable - due in more than one year - 3,536,045 - - 3,536,045
Bonds payable - due in more than one year - - 6,175,000 - 6,175,000
Total noncurrent liabilities 242,652 10,886,534 6,175,000 91,384 17,395,570 6,805,181
Total liabilities 536,345 11,527,243 7,175,620 141,664 19,380,872 9,612,488
NET ASSETS
Invested in capital assets, net of related debt 2,886,046 3,709,351 - - 6,595,397
Unrestricted 15,786,251 ( 10,726,795) 411,262 1,545,087 7,015,805 3,908,223
Total net assets $ 18,672,297 $ ( 7,017,444) $ 411,262 $ 1,545,087 $ 13,611,202 $ 3,908,223
See accompanying Notes to Basic Financial Statements.
36
--
City of San Leandro
Statement of Revenues, Expenses, and Changes in Net Assets
Proprietary Funds
For the year ended June 30, 2003
See accompanying Notes to Basic Financial Statements.
37
Major Enterprise Funds Governmental
Water San Leandro Non- Major Activities
Pollution Housing Finance Enterprise Internal
Control Plant Shoreline Corporation Funds Total Service Funds
OPERATING REVENUES:
Charges for services $ 7,441,239 $ 966,501 $ - $ 1,406,973 $ 9,814,713 11,071,464
Licenses and permits 198,756 - - 259,999 458,755
Rents and concessions 708,858 972,788 - - 1,681,646
Other operating revenues 766,193 32,008 - 134,767 932,968 608,229
Total operating revenues 9,115,046 1,971,297 - 1,801,739 12,888,082 11,679,693
OPERATING EXPENSES:
Salaries and benefits 2,865,856 396,229 - 1,221,090 4,483,175 2,665,022
Contractual and other services 4,685,993 778,625 145,777 487,055 6,097,450 3,643,733
Materials and supplies 784,277 88,711 - 113,416 986,404 1,481,045
Depreciation 238,860 117,212 - - 356,072 697,589
Other operating costs 45,456 192,466 4,777 478,132 720,831 3,864,319
Total operating expenses 8,620,442 1,573,243 150,554 2,299,693 12,643,932 12,351,708
OPERATING INCOME ( LOSS) 494,604 398,054 ( 150,554) ( 497,954) 244,150 ( 672,015)
NONOPERATING REVENUES ( EXPENSES):
Property and other taxes 2,776 290,242 - 736 293,754
Intergovernmental - 12,133 - 278,779 290,912
Investment income - 89,797 638,520 63,142 791,459 43,253
Interest expense - ( 693,776) ( 439,871) - ( 1,133,647)
Total nonoperating revenues ( expenses) 2,776 ( 301,604) 198,649 342,657 242,478 43,253
INCOME ( LOSS) BEFORE
OPERATING TRANSFERS 497,380 96,450 48,095 ( 155,297) 486,628 ( 628,762)
OPERATING TRANSFERS:
Transfers in - 232,000 - 5,879,705 6,1l1,705 42,000
Transfers out ( 30,900) ( 5,606,032) - ( 157,828) ( 5,794,760)
Total operating transfers ( 30,900) ( 5,374,032) - 5,721,877 316,945 42,000
Change in net assets 466,480 ( 5,277,582) 48,095 5,566,580 803,573 ( 586,762)
NET ASSETS:
Beginning of the year 18,205,817 ( 1,739,862) 363,167 ( 4,021,493) 12,807,629 4,494,985
End of the year $ 18,672,297 $ ( 7,017,444) $ 411,262 $ 1,545,087 $ 13,611,202 $ 3,908,223
- --
City of San Leandro
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2003
Major Enterprise Funds Governmental
Water San Leandro Non- Major Activities
Pollution Housing Finance Enterprise Internal
Control Plant Shoreline Corporation Funds Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers/ other funds $ 9,120,014 $ 1,983,545 $ - $ 1,936,558 $ 13,040,117 11,645,290
Cashpaymentsor receiptsto/ fromotherfunds - - 7,600 ( 1,259,777) ( 1,252,177)
Cash payments to suppliers for goods and services ( 5,621,564) ( 985,675) ( 150,554) ( 1,113,745) ( 7,871,538) ( 8,077,930)
Cash payments to employees for services ( 2,855,260) ( 391,303) - ( 1,218,716) ( 4,465,279) ( 2,638,212)
Net cash provided ( used) by operating activities 643,190 606,567 ( 142,954) ( 1,655,680) ( 548,877) 929,148
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Property and other taxes received 2,776 290,242 - 736 293,754
Intergovernmentarlevenuereceived - 12,133 - 278,779 290,912
Repaymentor receipt of advancesto or fromotherfunds - 4,598,856 - ( 4,731,508) ( 132,652) ( 129,078)
Transfersin fromotherfunds 232,000 - 5,879,705 6,111,705 42,000
Transfers out to other funds ( 30,900) ( 5,606,032) ( 157,828) ( 5,794,760)
Net cash provided ( used) by noncapita1 financing activities ( 28,124) ( 472,801) - 1,269,884 768,959 ( 87,078)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Retirement oflong- term debt - ( 173,378) ( 130,000) - ( 303,378)
Acquisition or disposal of fixed assts ( 540,237) ( 392,682) - 393,683 ( 539,236) ( 478,670)
Interest payments on bonds and notes payable - ( 693,776) ( 439,871) ( 1,133,647)
Net cash provided ( used) by capital and
related financing activates ( 540,237) ( 1,259,836) ( 569,871) 393,683 ( 1,976,261) ( 478,670)
CASH FLOWS FROM INVESTING ACTMTIES:
Changes in loans and notes receivable ( 3,667) 896,165 892,498
Interest received ( 7,335) 89,797 639,172 63,142 784,776 43,253
Net cash provided ( used) by investing activities ( 11,002) 89,797 1,535,337 63,142 1,677,274 43,253
Net increase ( decrease) in cash and cash equivalents 63,827 ( 1,036,273) 822,512 71,029 ( 78,905) 406,653
CASH AND CASH EQUIVALENTS:
Beginning of year 15,350,822 1,638,570 555,066 1,549,602 19,094,060 9,175,979
End of year $ 15,414,649 $ 602,297 $ 1,377,578 $ 1,620,631 $ 19,015,155 $ 9,582,632
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income ( loss) $ 494,604 $ 398,054 $ ( 150,554) $ ( 497,954) $ 244,150 ( 672,015)
Adjustments to reconcile operating income ( loss) to net
cash provided ( used) by operating activities:
Depreciation 238,860 117,212 - 356,072 697,589
Changes in assets and liabilities:
Accounts receivable 217,921 3,869 - 161,735 383,525 ( 34,403)
Specialassessmentreceivable ( 210,871) - - ( 18,587) ( 229,458)
Inventory - - - 9,199
Other assets ( 2,082) ( 925) ( 3,007)
Accounts payable 3,254 74,127 ( 27,773) 49,608 63,384
Claims and judgements - - - 838,584
Deposits ( 3,000) 8,379 - 5,379
Deferredrevenue ( 106,092) ( 14,773) ( 120,865)
Dueto otherfunds - - 7,600 ( 1,259,777) ( 1,252,177)
Compensatedabsences 10,596 4,926 - 2,374 17,896 26,810
Total adjustments 148,586 208,513 7,600 ( 1,157,726) ( 793,027) 1,601,163
Net cash provided ( used) by operating activities $ 643,190 $ 606,567 $ ( 142,954) $ ( 1,655,680) $ ( 548,877) $ 929,148
See accompanying Notes to Basic Financial Statements.
38
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.
39
City of San Leandro
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2003
See accompanying Notes to Basic Financial Statements.
40
Agency
Funds
ASSETS
Cash and investments $ 1,158,244
Cash and investments with fiscal agents 3,058,521
Accounts receivable 246,744
Special assessments receivable 846,937
Total assets $ 5,310,446
LIABILITIES
Accounts payable $ 261,450
Deposits payable 548,247
Due to bondholders 4,339,339
Due to property owners - 161,410
Total liabilities $ 5,310,446
City of San Leandro
Index to Notes to Basic Financial Statements
For the year ended June 30, 2003
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES 43
A. Financial Reporting Entity .. 43
B. Basis of Presentation, Measurement Focus and Basis of Accounting 44
C. Recognition of mterest Liability ... 46
D. Use of Restricted and Unrestricted Net Assets 46
E. Cash, Cash Equivalents and mvestments ... ... .. 46
F. mventory ... ... ... .. 47
G. Capital Assets ... 47
H. Long Term Debt ... ... .48
I. Compensated Absences .48
J. Property Taxes ... .48
K. Post Employment Benefits Other than Pensions 49
L. New Funds and Closed Funds... 49
M. Use of Estimates ... .. 49
N. Net Assets .49
O. Implementation of New GASB Pronouncements 49
NOTE 2 - CASH AND INVESTMENTS 50
A. Cash Deposits.. 50
B. mvestments.. .. 51
C. Credit Risk .. 51
D. Summary of Cash and mvestments .. 52
E. mvestment in Local Agency mvestment Fund 53
F. Summary of mvestments to Maturity ... 53
NOTE 3 - LOANS RECEIVABLE 54
NOTE 4 - NOTES RECEIVABLE 55
NOTE 5 - INTERFUND TRANSACTI 0 NS .56
A. Fund Financial Statements - mterfund Receivables and Payables 57
B. Fund Financial Statements - Long Term Advances 57
C. Fund Financial Statements - Transfers ... 57
NOTE 6 - CAPITAL ASSETS 58
A. Government- Wide Financial Statements... ... ... 57
B. Fund Financial Statements ... 60
NOTE 7 - LONG- TERMDEBT0 BLIGATIONS 61
A. Governmental Activities Long- Term Debt ... 61
B. Long- Term Debt of Business- Type and Proprietary Funds... .68
C. Debt Covenants and Restrictions ... 70
41
City of San Leandro
Index to Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
NOTE 8 - COMPENSATED ABSENCES 70
NOTE 9 - DEFERRED REVENUE 71
A. Government- Wide Financial Statements... 71
B. Fund Financial Statements.. 71
NOTE 10 - OTHER REQIDRED FUND DISCLOSURES 72
NOTE 11 - INSlJRANCE 73
NOTE 12 - EXPENDITURES IN EXCESS OF APPROPRIATIONS 74
NOTE 13 - COMMITMENTS AND CONTINGENCIES 74
A. Downtown Plaza Shopping Center Morea.. 74
B. Davis Street Community Center Owner Participation Agreement 74
C. Century Theaters Reimbursement and Performance Agreement 74
D. Others ... 74
NOTE 14- EMPLOYEERETIREMENTPLANS 75
NOTE 15 - RESTATEMENT OF PRIOR PERIOD BALANCES 76
A. Government- Wide Financial Statements... 76
B. Fund Financial Statements 76
42
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City of San Leandro
Notes to Basic Financial Statements
For the year ended June 30, 2003
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. 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. The accompanying
general purpose 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 following is a brief review of the blended component units included in the accompanying basic financial
statements of the City in which the City Council functions as the governing board:
The Community 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 Community
Redevelopment Agency and Low and Moderate Income Housing Capital Projects Funds in the accompanying
basic financial statements.
The San Leandro Housing Finance Corporation ( Corporation) was established to provide housing for the
City's low and moderate income residents. The financial activities of the Corporation have been included as the
San Leandro Housing Finance Corporation Enterprise Fund 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 [ mancial 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.
43
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City of San Leandro
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
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. Discretely presented component units are reported in a separate
column in the basic financial statements to emphasize that they are legally separate from the City. The City does not
have any component units that are discretely presented. Complete financial statements for each of the above
component units may be obtained from the City's Finance Department.
B. Basis of Presentation, Measurement Focus and Basis of Accounting
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity.
The operations of each fund are accounted for with a separate set of self- balancing accounts that comprise its assets,
liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to
and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which
spending activities are controlled.
Government- Wide Financial Statements
The City's government- wide financial statements include a Statement of Net Assets and a Statement of Activities and
Changes in Net Assets. These statements present summaries of governmental and business- type activities for the City,
the primary government, accompanied by a total column. Fiduciary activities of the City are not included in these
statements.
These basic financial statements are presented on an " economic resources" measurement focus and the accrual basis
of accounting. Accordingly, all of the City's assets and liabilities, including capital assets and related infrastructure
assets and long- term liabilities, are included in the accompanying Statement of Net Assets. The Statement of
Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period
in which they are earned while expenses are recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City and are presented in the following three
categories:
... COChapaperirgtaaetslignfrgoagrnrstaesnravtnsidcaencsdonctornibtruitbiuotnisons
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities,
payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those
representing balances between the governmental activities and the business- type activities, which are presented as
internal balances and eliminated in the total primary government column. ( In the Statement of Activities, internal
service fund transactions have been eliminated.) However, those transactions between governmental and business- type
activities have not been eliminated. The following interfund activities have been eliminated: . . Due to/ from other funds Advances to/ from other funds . Transfers in/ out
44
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City of San Leandro
Notes to Basic Financial Statements, Continued
For the year ended June 30,2003
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Government- Wide Financial Statements, Continued
The City applies all applicable GASB pronouncements ( including all NCGA Statements and Interpretations currently
in effect) as well as the following pronouncements issued on or before November 30, 1989, to the business- type
activities, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting
Standards Board ( FASB)
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and
Changes in Fund Balances for all major governmental funds and non- major funds aggregated. An accompanying
schedule is presented to reconcile and explain the differences in net assets as presented in these statements to the net
assets presented in the government- wide financial statements. The City has presented all major funds that met the
applicable criteria.
All governmental and expendable trust funds are accounted for on a spending or " current financial resources"
measurement focus. Accordingly, only current assets and current liabilities generally are included on the balance
sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases ( revenues and other
financial sources) and decreases ( expenditures and other financial uses) in net current assets. Under the modified
accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable
and available to finance expenditures of the current period.
Revenues are recorded when received in cash, except those revenues subject to accrual ( generally 60 days after year-end)
are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the
City, are property taxes, charges for services, federal and state grants, sales tax, and interest. Expenditures are
recognized in the accounting period in which the related fund liability is incurred.
Deferred revenues arise when potential revenues do not meet both the " measurable" and " available" criteria for
recognition in the current period. Deferred revenues also arise when the government receives resources before it has a
legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent
periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the
deferred revenue is removed from the balance sheet and revenue is recognized.
The Reconciliation of the Fund Financial Statements to the Government- Wide Financial Statements is provided to
explain the differences created by the integrated approach of GASB Statement No. 34.
Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Assets, a Statement of Revenues, Expenses and
Change in Net Assets, and a Statement of Cash Flows for all proprietary funds.
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.
45
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City of San Leandro
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Proprietary Fund Financial Statements, Continued
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 liability is incurred.
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.
Fiduciary Fund Financial Statements
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 in not presented in this report.
C. 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.
D. 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.
E. 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.
46
City of San Leandro
Notes to Basic Financial Statements, Continued
For the year ended June 30~ 2003
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
E. Cash, Cash Equivalents and Investments, Continued
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, 2003 LAIF had invested 2.327% 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.
F. 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 office
supplies and postage for department use and a monthly count is performed to adjust this account to actual at the
appropriate month- end.
G. Capital Assets
Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not available.
Donated fixed 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
Improvements other than buildings
Machinery and equipment
Inftastructure
50 years
20 years
5- 20 years
20- 50 years
In June 1999, the GASB issued Statement No. 34 which requires the inclusion of inftastructure capital assets in local
governments' basic financial statements. In accordance with GASB Statement No. 34, the City has included all
inftastructure into the 2002- 03 Basic Financial Statements.
The City defines inftastructure as the basic physical assets that allow the City to function. The assets include streets,
sewer, and park lands. Each major inftastructure 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.
47
City of San Leandro
Notesto BasicFinancial Statements, Continued
For the year ended June 30,2003
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
G. Capital Assets, Continued
For all inffastructure 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 ffom the date of construction/ acquisition to the current date on a straight line, unrecovered 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.
H. Long- Term Debt
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.
Fund Financial Statements
The fund financial statements do not present long- term debt but are shown in the Reconciliation of the Governmental
Funds Balance Sheet to the Government- Wide Statement of Net Assets.
L Compensated Absences
Government- Wide Financial Statements
For governmental and business- type activities, compensated absences are recorded as incurred and the related
expenses and liabilities are reported.
Fund Financial Statements
In 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.
J. Property Taxes
Property taxes are leviedlliened 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.
48
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City of San Leandro
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
NOTE 1- SIGNIFICANT ACCOUNTING POLICIES, Continued
K. 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, 2003, the City paid $ 607,646 in medical and dental premiums on behalf of 116
participants.
L. New Funds and Closed Funds
During 2002- 2003, the City merged the Golf Fund, an enterprise fund, into the Marina Fund, an enterprise fund. The
fund is now referred to as the Shoreline Fund.
M. 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 : tromthose estimates.
N. Net Assets
Government- Wide Financial Statements
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."
Fund Financial Statements
Reservation of fund balances of governmental funds and retained earnings of proprietary funds are created to either
satisfy legal covenants, including State laws, that require a portion of the fund equity be segregated or identify the
portion of the fund equity not available for future expenditures.
O. Implementation of New GASB Pronouncements
In 2003, the City adopted new accounting standards in order to conform to the following Governmental Accounting
Standards Board Statements: . Statement No. 34, Basic Financial Statements- and Management's Discussion and Analysis- for State and Local
Governments . Statement No. 37, Basic Financial Statements- and Management's Discussion and Analysis- for State and Local
Governments: Omnibus . Statement No. 38, Certain Financial Statement Note Disclosures
49
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City of San Leandro
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, Continued
o. Implementation of New GASB Pronouncements, Continued
GASB Statement No. 34 is a new financial reporting requirement for local governments in the United States. The City has
implemented this pronouncement and has restructured much of the information that it has presented in the past. The main
goal is to make the reports more comprehensive and easier to understand and use.
GASB Statement No. 37 addresses selected issues and amends GASB Statement No. 21, Accountingfor Escheat Property,
and No. 34, Basic Financial Statements- and Management's Discussion and Analysis- for State and Local Governments.
These Statements make selective changes including accounting for Escheat Property, Management's Discussion and
Analysis, Capitalization of Construction - Period futerest, Modified Approach for Reporting fufrastructure, Program
Revenues and Major Fund Criteria.
GASB Statement No. 38 establishes and modifies disclosure requirements related to Summary of Significant
Accounting Policies, actions taken to address violations of significant finance - related legal and contractual
provisions, debt and lease obligations, short- term debt, disaggregation of receivable and payable balances, and
interfund balances and transfers.
NOTE 2 - CASH AND INVESTMENTS
The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds,
which the City Treasurer invests to enhance interest earnings. The pooled interest earned is allocated to