Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
ACFR - Fiscal Year 2003 04 (PDF)
labs City o Saratoga Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2004 City of Saratoga Comprehensive Annual Financial Report For the year ended June 30, 2004 Table of Contents -- Page IntroductoKy Section Tableof Contents................................................................................................................................................... i Letter of Transmittal............................................................ .... v ............................................................................. GFOA Certificate of Achievement for Excellence in Financial Reporting................................................... ix PrincipalOfficials of the City...............................................................................................................................x -- Organization Chart..............................................................................................................................................xi Financial Section IndependentAuditors'Report...........................................................................................................................1 Management's Discussion and Analysis..........................................................................................................3 Basic Financial Statements: Government-Wide Financial Statements ..................................................................................................17 Statementof Net Assets.........................................................................................................................19 Statement of Activities and Changes in Net Assets...........................................................................20 Fund Financial Statements..........................................................................................................................23 Governmental Funds: BalanceSheet...........................................................................................................................................26 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets......................................................................27 Statement of Revenues, Expenditures and Changes in Fund Balances ....................... ...28 ................ Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets......................................................................29 Fiducianj Funds: Statement of Fiduciary Net Assets........................................................................................................32 _ Index to Notes to the Basis Financial Statements....................................................................................33 Notes to the Basic Financial Statements....................................................................................................35 i City of Saratoga Comprehensive Annual Financial Report For the year ended June 30, 2004 Table of Contents, Continued Page Financial Section, Continued Required Supplelnentarlj Inforination............................................................................................................ BudgetaryInformation............................................................................................................................... Modified Approach for City Streets Infrastructure Capital Assets..................................................... DefinedPension Plan................................................................................................................................. Supplementary Information: _ Non-Major Governmental Funds................................................................................................................69 CombiningBalance Sheet......................................................................................................................71 Combining Statement of Revenues,Expenditures and Changes in Fund Balances......................71 Schedule of Revenues,Expenditures and Changes in Fund Balances-Budget and Actual: _ Local Law Enforcement Special Revenue Fund...........................................................................72 Lighting and Landscaping Assessment District Special Revenue Fund..................................73 LibraryDebt Service Fund..............................................................................................................74 _ FiduciaryFunds.............................................................................................................................................75 _. Combining Statement of Fiduciary Net Assets- Agency Funds......................................................76 Combining Statement of Changes in Assets and Liabilities -Agency Funds................................77 Capital Assets Used in the Operation of Governmental Funds.............................................................79 Comparative Schedules by Source.......................................................................................................80 Schedule by Function and Activity......................................................................................................81 Schedule of Changes by Function and Activity..................................................................................82 - Statistical Section (Unaudited Government-Wide Information: Government-Wide Expenses by Function.................................................................................................84 Government-Wide Revenues.......................................................................................................................85 Fund Information: - General Fund Revenues-By Source- Last Ten Fiscal Years.................................................................86 General Fund Expenditures-By Function- Last Ten Fiscal Years.......................................................87 Property Tax Levies and Collections- Last Ten Fiscal Years.................................................................88 1I - City of Saratoga — Comprehensive Annual Financial Report For the year ended June 30,2004 — Table of Contents, Continued Page Statistical Section (Unaudited) General Fund Tax Revenue - Last Ten Fiscal Years.................................................................................89 Assessed and Estimated Actual Value of Taxable Property- Last Ten Fiscal Years ................................................................................................... .....90 ...................... Property Tax Rates (Per$100 of Assessed Valuation) -All Overlapping Governments- -- Last Ten Fiscal Years ..............................................................................................................................91 Special Assessment Billings and Collections- Last Ten Fiscal Years....................................................92 _ Ratio of General Obligation Bonded to Assessed Debt to Assessed Value and Bonded Debt Per Capita- Last Ten Fiscal Years................................................................................93 Ratio of Annual Debt Service Expenditures for General Bonded Debt to- -' Total General Fund Expenditures - Last Ten Fiscal Years................................................................94 Demographic Statistics- Last Ten Fiscal Years ........................................................................................95 Property Values, Remodeling and Construction-Last Ten Fiscal Years.............................................96 Computation of Legal Debt Margin............................................................................................................97 Computation of Direct and Overlapping Debt.........................................................................................98 - PrincipaI Taxpayers............................................................................................ ...99 ........................................ Miscellaneous Statistics................................................................................................................... .100 iii ;'�� �.(' _(' .,�, hr '�;� __ r: _ �� . r.� i��lt} �royJ7 -7 � '.t-Q� ,�`-..�`�.�J r� � IV f b - ti�ls &1A �CC � L I ail? I' �RUM ALE VEN 1 J, • SARA'1'MIA. CALIFORNIA !.i >(170 • ('.I{)$) 868-12O0 4 COI AC'IL M1.aIPEf S Inc•nrporat.ed 1)r•r2'., 19.09 Start Sogosian h:attrleen King Norman Kline December 16 2004 Nrck Streit Ann, Waltonsmrth To the Honorable Mayor and City Council City of Saratoga Saratoga,CA 95070 The Comprehensive Annual Financial Report (CAFR) of the City of Saratoga for the year ended June 30, 2004, is hereby submitted as mandated by applicable statutes. These statutes require that the City of Saratoga annually issue a report on its financial position and activity, and that an independent firm of certified public accountants audit this report. Responsibilities for both the accuracy of the data and the completeness and fairness of the presentation, including all _ disclosures, rests with the City's management. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner that presents fairly the financial position and results of operations of the various funds, account groups and component units of the City of Saratoga. All disclosures necessary to enable the reader to gain an understanding of the City of Saratoga's activities have been included. - GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in - conjunction with it. The CAFR is presented in the following sections: 1. Introductory Section - The introductory section, which is unaudited, includes this letter of -' transmittal, a list of the City of Saratoga's elected officials and administrative personnel,an organization chart, the Government Finance Officers Association's (GFOA's) of the United States Certificate of Achievement for Excellence in Financial Reporting and the California _ Society of Municipal Finance Officer's (CSMFO) Certificate of Award for Financial Reporting to the City of Saratoga for its CAFR for the fiscal year ending June 30,2003. 2. Management's Discussion and Analysis. 3. The basic financial statements include independent auditors' report, government-wide - financial statements,fund financial statements,notes to the basic financial statements. 4. Required Supplemental Information - includes budgetary information, modified - approached for city streets infrastructure capital assets and defined pension plan information. - 5. Combining Statements for non-major governmental funds and fiduciary funds. 6. Statistical Section - Includes selected financial and demographic information, which is - generally presented on a multi-year basis and is unaudited. F°n^.te7 of rrc,:yrlpd papa REPORTING ENTITY The financial reporting entity (the City) includes all the fund activity of the primary government, as well as all of its component units. Component units are legally separate entities for which the City is fully accountable. Blended component units, although legally separate entities, are in substance, part of the City's operations and data from these units are combined with data of the City. Accordingly, the operations of the Landscaping and Lighting Assessment District #1 and the agency cash flows and cash balances of the Saratoga Public Finance Authority are reported in the City's financial statements. CASH MANAGEMENT The City has practiced a passive approach to investments and maintains flexibility by managing a — pooled cash system. Under the pooled cash concept,the City invests the cash of all funds with maturities planned to coincide with cash needs. Idle cash is invested in certain eligible securities as constrained by law and further limited by the City's investment policy. The goals of the City's — investment policy are safety, liquidity and yield. GOVERNMENTAL STRUCTURE AND RELATED INFORMATION The City, incorporated in 1956, is located 40 miles south of San Francisco in the Santa Clara Valley. The City currently covers a land area of approximately 12 square miles and contains a population of 30,300 as reported by the State of California Department of Finance. The City is a general law city of the State of California and operates under a council-manager form of government. Policymaking and legislative authority are vested in the City Council, which consists of a Mayor, Vice Mayor and three additional council members. City Council members are elected at-large for staggered four-year terms. The Mayor is selected annually by the City Council. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing members to the City's seven advisory commissions and hiring the City Manager and City Attorney. The City Manager is responsible for implementing the policies and ordinances of the _ City Council, overseeing the daily operations of the City, and recommending appointments of the City's department directors to the City Council. The City provides a limited range of services including public safety, development regulation, public works, community and recreation activities and events, and general administrative functions. — The City supports privatization and has supplemented its work force through numerous contracts with others. Contracted services include, but are not limited to, public safety, infrastructure maintenance, engineering services, legal services and recreation activities. The City is also committed to citizen participation in the evaluation,expansion and enhancement of services. Saratoga residents who wish to assist the City Council in forming government policy may do so by serving on an advisory commission. The commissions all act in an advisory capacity to the City Council, and are comprised of the Finance Commission, Heritage Preservation Commission, Library Commission, Parks and Recreation Commission, Planning Commission, Public Safety — Commission, and Arts and Youth Commission. Vl - ECONOMIC CONDITIONS AND OUTLOOK Within a close proximity to many businesses associated with the high technology industry, Saratoga is viewed as a desirable place to live and serves primarily as a residential community to the Silicon Valley. There is limited commercial or industrial activity occurring within the City's -- boundaries. Due to the community's residential character, the main measure of the City's economic condition -- is based on the stability of property taxes, motor vehicle license fees, sales tax, franchise fees, as well as the fluctuations in service charges which affects development taxes, permits and fees, and to a lesser extent, sales activity. The local economv was hobbled by the weak high-tech sector and unfavorable business investment climate. Because of the poor economy, sales tax is down$133,000 from FY02-•03. Sales -- tax and Transient Occupancy tax are expected to have nominal increases, if not flat in FY04-05. Property tax continued to increase as the value of property subject to local tax base increased of about 7%. One substantial threat to the City's General Fund sources of revenues was the State - Governor's "take-away" of Vehicle License Fee of$576,000 in FY03-04 and expects to borrow from the City an additional$319,381 in property in each of the next two years. - In response to the decline of revenues, the City's expenditures was reduced by implementing cuts to all department programs in areas such as training, use of consultant services and office equipment and supplies. Capital equipment purchases and facility maintenance was deferred. -- The contract cost with the Sheriff's office was reduced by 5%. Street sweeping services was reduced from weekly to a monthly basis. Other costs savings strategies used were the implementation of the holidays work furlough, which reduced payroll liability and utilities cost and the hiring freeze of 2 vacated positions, the consolidation of 2 positions into 1, and the freeze of employees' merit increases. These expenditures reductions are expected to carry to fiscal year 04-05 and possibility other operational changes are to be made. A study of the development fees -` is needed to bring them in line with the real costs of providing services related to new projects. FINANCIAL INFORMATION AND MAJOR INITIATIVES Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and -- to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in confornuty with generally accepted accounting _principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are - met. The concept of reasonable assurance recognizes that: (1) the cost of a control. should not exceed benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal, state and local financial assistance, the City is also responsible for guaranteeing that an adequate internal control structure is in place to ensure and document - compliance with applicable laws and regulations related to these programs. This internal control structure is subject to periodic evaluation by the City's management. --- In addition, the City maintains extensive budgetary controls. The objective of these controls is to ensure compliance with legal provisions embodied in the annual appropriated budget .approved by the City Council. Activities of the general fund, special revenue funds, capital projects funds - and debt service funds are included in the annual appropriation. vii The level of budgetary control (i.e., the level at which expenditures cannot exceed the _ appropriated amount) is at the fund level. The City also maintains an encumbrance accounting system as another method of maintaining budgetary control. Encumbered amounts of the operating budget lapse at year-end with the exception of the Capital Improvements Projects, _ which contains multiple-year projects. However, outstanding encumbrances of a material nature are typically reappropriated as part of the following year's budget process. OTHER INFORMATION Independent Audit. California law requires cities to prepare an annual audit by an independent — certified public accountant. In addition to meeting the requirements set forth in statutes, the audit was also designed to meet the requirements of the federal Single Audit Act of 1984, as amended, and the related U.S. Office of Management and Budget's Circular. Generally accepted auditing — standards set forth in the General Accounting Office's Government Auditing Standards were used by the auditors in conducting the engagement. The auditor's unqualified report is included in the financial section of this report. Caporicci & Larson, CPA's, performed the City's fiscal year 2001- 2002 audit. Awards. The City was awarded a certificate for its early implementation of GASB #34. Additionally, the Government Finance Officers Association (GFOA) and the California Society of Municipal Finance Officers (CSMFO) awarded a Certificate of Achievement to the City for its Excellence in Financial Reporting on the CAFR for the fiscal year ended June 30, 2003. In order to _ be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized financial report. This report satisfied both generally accepted accounting principles and _ applicable legal requirements. The Certificate of Achievement is valid for a period of one year. We believe our current CAFR _ continues to meet the Certificate of Achievement program's requirements, and plan on subriutting it to the GFOA to determine its eligibility for another certificate. Acknowledgements. This CAFR represents the culmination of numerous hours of hard work expended by many individuals in the Accounting Division of the Administrative Services Department. In particular, we would like to express our appreciation to Vivian Gong, Accounting _ Supervisor and our staff members Jaye Tkach, Julie Ingraham, Karen Caselli and Corey Stick. Furthermore, we would like to thank Caporicci & Larson, CPA's for their helpful and timely assistance in the preparation of this report. Finally, we would like to give credit to the City _ Council and the Finance Advisory Commission for their ongoing interest and support in planning, conducting and advising on the operations of the City in a responsible and progressive manner. _. Respectfully submitted, — Dave Anderson Michele Braucht _ Citv Manaizer Administrative Services Director Certificate of Achievement for Excellence in Financial Reporting Presented to City of Saratoga, California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2003 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. w A.4 p __ �� LAHApA �o ppRPpPATIph/y President Executive Director IX CITY OF SARATOGA ELECTED OFFICIALS AND ADMINISTRATIVE PERSONNEL As of June 30, 2004 CITY COUNCIL Ann Waltonsmith - Mayor Kathleen King- Vice Mayor Nick Streit Norman Kline - Stan Bogosian CITY STAFF Dave Anderson - City Manager Lorie Tinfow- Assistant City Manager Cathleen Boyer - City Clerk Michele Braucht - Administrative Services Director — Tom Sullivan-Community Development Director John Cherbone - Public Works Director Joan Pisani- Recreation Director CITY ATTORNEY Richard S. Taylor-Shute, Mihaly &Weinberger INDEPENDENT AUDITOR _ Caporicci &Larson,CPAs X - City of Saratoga - Organization Chart City Council Effective 07/01/03 City Manaoer City Attorney Assistant Qily Manager Recreation Director Community Public Works Director Administrative Services Development Director Senior Recreation F.rigi egg Street Maintenance City Clerk Supervisor Supervisor Building Official (2 b FTE) Supervisor Recreation Plan Check Examinerl Administrative Street Maintenancg AdministrativeAnalyst Worker Engineer S Worker MIS Assistant (3.0 FTE) Supervisor (5.b FTE) Secretary W the City Recreation Program Buildlna Inspector Office Specialist Park Maintenae -. Manaaer Coordinator (3.0 FTE) (1.75 FTE) Supervlsornc Accounting Supervisor Human Resource na I s Fadli Coorditor Planner Office Specialist Analyst FTE) (0.6 FTE) (4.0 FTE) Park Maintenance (7.9 FTE) Leadworker Office Specialist CommunitvService Office Specialist (1.75 FTE) Officer Park Maintenanec Office Specialist Specialist Public Safety Officer Park Maintenancf> ILltTtlled Ill Worker (6.0 FTE) Office Specialist Japanese Garden Specialist Total FTE 60.75 Regular 59.75 Office Speciallst Limited 1.0 xi - «\ - \/ - � x - C&L Caporicci&Larson Certified Public Accountants -- INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of the City Council of the City of Saratoga Saratoga,California — We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Saratoga,California (City), as of and for the year ended June 30, 2004, 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 financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting 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 opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects,the financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2004, and the respective changes in financial position for the year then ended in conformity with generally accepted accounting principles in the United States. 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 is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the Required Supplementary Information. However, we did not audit the information and express no opinion on it. 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 and Statistical sections 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. (3�cV�;ee,.,,. � Za-t,a4-- Oakland, California November 22, 2004 Tull Frce Ph:(8"-,)s62-2200 Toll Frec Fax:(866)4Y( 092 Oakland Orange County Sacramento san Diego ISH i ru—1%,,-_,Soot' I36i 3 1 R i D Air%,.i-v,-- '�C:unlws Commons FA Suite 200 600'B"?tFecC-$lPh• 1900 Uak1.,-1,t &Iiwvid 9.iG12 C usta M—,,C"fif t1ia o2626 tiuirainenio.Ca Gfo rn is 95825 San Diego 92101 CITY OF SARATOGA MANAGEMENT'S DISCUSSION AND ANALYSIS INTRODUCTION The following provides a narrative overview and analysis of the fiscal operations during the -" fiscal year ended :June 30, 2004 for the City of Saratoga. The Management Discussion and Analysis is to be read in conjunction with the annual Transmittal Letter and the Basic Financial Statements. The City of Saratoga is in it third year of reporting within the provisions of Governmental Accounting Standards Board Statement No.34 (GASB 34). FISCAL YEAR 2003-2004 FINANCIAL HIGHTLIGHTS • The City's total net assets were $117,899,126. • Total City revenues, including program and general revenues were $15,589,803, while -- total expenses were $16,867,534. • Governmental program revenues were $6,662,883, while Governmental Program expenses were $16,867,534. • General Fund revenues were $12,406,075, while General Fund expenditures were $11,559,753. - OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT This Comprehensive Annual Financial Report is in six parts: 1. Introductory section,which includes the transmittal letter and general information. 2. Management's Discussion and Analysis. 3. The Basic Financial Statements, which included the governmental-wide and fund - financial statements, along with the notes to the financial statements. 4. Required supplemental information. 5. Combining statements for non-major governmental funds and fiduciary funds. 6. Statistical information. The Basic Financial Statements The Basic Financial Statements are comprised of City-wide Financial Statements and Fund Financial Statements. These two sets of financial statements provide the reader two different viewpoints of the City's financial activities and financial position. The Government-Wide Financial Statements provide a longer-term view of the City's activities as a whole, and comprise the Statement of Net Assets and the Statement of Activities. The Statement of Net Assets provides information about the financial position of the City as a whole, including all its capital assets and long-term liabilities on a full accrual basis, similar to that used by corporations_ The Statement of Activities provides information about all the City's revenues and all its expenses, also on a full accrual basis, with the emphasis on _._ measuring net revenues and/or expenses for each of the City's programs. The Statement of 3 Activities explains in detail the change in Net Assets for the fiscal year. All of the City's activities are required to be grouped into government activities and business- type activities. The entire amount in the Statement of Net Assets and the Statement of ` Activities are also required to be separated into governmental activities or business-type activities in order to provide a summary of these two activities of the City as a whole. In the _ case of the City of Saratoga there are no business-type activities as of June 30, 2004. The Fund Financial Statements report the City's operations in more detail than the _ governmental-wide statements and focus primarily on the short-term activities of the City's general fund and other major funds. The Fund Financial Statements measure only current revenues and expenditures and fund balances;they exclude capital assets,long-term debt, and - other long-term amounts. Major funds account for the major financial activities of the City and are presented individually, while the activities of non-major funds are presented in summary, with subordinate schedules presenting the detail for each of these other funds. Major funds are _ explained below. The Government-Wide Financial Statements The Statement of Net Assets and the Statement of Activities present: information about the following; Governmental activities - All of the City's basic services are considered to be governmental activities, including general government, community development, public safety, _ transportation, and, cultural and leisure. These services are supported by general City revenues such as taxes,and by specific program revenues such as developer fees. Business-type activities. - Enterprise activities are reported here; they-would include activities such as water, sewer, and utilities. Unlike governmental services, these services are supported by charges paid by user based on the amount of service the use. The City of Saratoga does not have any business-type activities at this time. Governmental-wide financial statements are prepared on the accrual basis, which means they _ measure the flow of all economic resources of the City as a whole. Fund Financial Statements Fund financial statements provide detailed information about each of the City's most significant funds, called major funds. The concept of major funds, and the determination of which are major funds, was established by GASB Statement 34 and replaces the concept of combining like funds and presenting them in total. Instead, each major fund is presented individually, with all non-major funds summarized and presented only in a single column. Subordinate schedules present the detail of these non-major funds. Major funds present the 4 major activities of the City for the fiscal year, and may change from year to year as a. result of changes in the pattern of the City's activities. Governmental fund financial statements are prepared on the modified accrual basis, which means they measure only current financial resources and uses. Capital assets and. other long- lived assets, along with long-term liabilities are not presented in the governmental fund financial statements. 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 the City's near-term financing requirements. Internal Service Funds -the City has no internal service funds at June 30, 2004. Enterprise Funds --the City has no enterprise funds at June 30, 2004. Proprietary Funds- the City has no proprietary funds at June 30,2004. Fiduciary Funds - These funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organization, other governmental units, and/or other funds. The City maintains two such funds. - Community Access Television Trust Fund - acts as a trustee for the CATV Foundation Board for investment purposes. - Assessment District Bonds - acts as an agent for bondholders for Village Parking;Districts #2 and #3, the Leonard Road Improvement District and the Saratoga Public Financing - Authority. Notes to the Financial Statements Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. _- The notes can be found immediately following the fund financial statements Required Supplementary Information follows the basic financial statements and includes a - budgetary comparison schedule that includes reconciliation between the statutory fund balance for budgetary purposes and the fund balance for the General Fund as presented in the governmental fund financial statements. Combining and Individual Fund Statements and Schedules Combining and individual fund statements and schedules provide information for non-major governmental funds, and special revenue funds. _ GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets may serve over time as an indicator of the City's financial position. The total City's assets decreased .5 % to $135,011,326 in fiscal year 2003-04 from. $135,698,311 in fiscal year 2002- 03. 5 The most significant portion of the City's net assets $118,999,458 or 88% accounts for its investment in capital assets (e.g., land, buildings, general government infrastructure, equipment, etc.), less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to the citizens: consequently, these assets are not available for future spending. $12,307,755 or 10.4 % of the City's net assets is unrestricted and may be used to meet the City's ongoing obligations to citizens and creditors. $1,286,913 or 1.1 % of the City's net assets is subjected to external restrictions on how they may be used. Of these restricted net assets, $500,937 is for restricted for capital projects, $701,976 is for repayment of long-term debt and$84,000 is restricted for housing activities. Statement of Net Assets (In Thousands) Governmental Activities 2004 2003 Current Assets $ 16,012 $ 16,974 Capital Assets 118,999 113,725 Total Assets 135,011 135,699 ` Current Liabilities 2,413 1,847 Long-term Debt 14,699 1:5,021 Total Liabilities 17,112 16,868 Net Assets: Invested in Capital Assets, net of debt 104,305 103,785 ` Restricted -Capital Projects 501 7,176 Restricted -Debt Service 702 836 Restricted -Special Projects 84 298 Unrestricted 12,307 6,736 Total Net Assets $ 117,899 $ 118,831 6 — Statement of Changes in Net Assets _ (In Thousands) -- Governmental Activities 2004 2003 Program Revenues: Charges for services S 4,663 $ 5,767 Operating grants and contributions 954 1,703 Capital grants and contributions 1,045 _ 229 Total Program Revenues 6,662 7,699 General Revenues: Property taxes 4,068 4,216 Sales taxes 895 1,028 Special assessments - 47"1 Franchise taxes 984 933 Local taxes 1,129 1,304 Motor vehicle in-lieu fees 1,489 1,897 [wicstment earnings 114 247 .Miscellaneous 248 315 Total General Revenues 8,927 10,411 'Total Revenues 15,589 18,110 Expenses: General and intergovernmental services 3,149 3,218 Public safety 3,209 3,513 Environmental services 514 648 Public works 5,114 3,875 - Community services 1,534 1,976 Community development services 2,575 2,086 Interest on long-term debt(unallocated) 772 783 Depreciation expenses(unallocated) 0 _1,566�_ Total Expenses 16,867 _ 17,665 Increase(decrease)in net assets S (1,278) S 445 7 Incl(Dec) in Revenues by Sources _ Gov't Activities(000's) $200 $0 iJt.(il'iiy _ Chrg for Grants Prop Tax Other Tax VLF Interest Misc Svcs pSeriesl $(1,103) $67 $(148) $(729) $(408) $(1U) $(67) Saratoga's revenues declined $2,520,000 or approximately 13.9% compared to prior year. o Charges for Services Decrease reflects a decreasing use of City services; Engineering Fees $251,000, Recreation Fees $155,000, Geology Review Fees by $29,000, Building and Grading Fees $11.5,000 and a decrease of$465,000 in indirect cost charged internally to department. o Grants Increase in Grants received in Public Safety and Infrastructure Capital Improvement Project funds, $284,000 for Playground Safety, $351,000 for the Citywide Traffic Signal Upgrade and $305,000 for the Saratoga-Sunnyvale Gateway Project. o Property Tax Decrease of $238,000 in the voter approved property tax for the General Obligation Library Bond offset by an increase of $90,000 in the general secured and non-secured property tax. Assessed property valuations increased 7.1%. • Other Tax Decrease of $729,000 is primary due to two events; Sales Tax decrease by $133,000 and prior year special assessment of$471,000 was a one-time event. o Vehicle License Fee Decrease due to State failed to make three months of back fill payments of$516,892. o Interest Decrease due to declining LAIF interest rate. 8 Inct(Dec)in Exp by Functions Gov't Activities(000's) $1,600 $1,000 -- $500 — — $0 - - p--- _ Gen PS Env pw Comm Sv �Dev Int unalloc Dep unallocSeries1 $(69) $(306) $(134) $1,239 $(440) 490 $(11) $(1,566) Saratoga's expenditures declined by $797,000 or 4.5% Gen (General Government) -- Decrease of$69,000 primary due to the reduction of$60,000 in legal fees. o PS(Public Safety) -- Decrease of $306,000 primarily due to elimination of one traffic safety officer and a reduction of investigative hours by detectives. o Env (Environmental) Decrease of$134,000 due to reduction of $82,000 in Inter-agency dues pay to West Valley Solid Waste JPA and $52,000 in other contract services. PW (Public Works) Increased by $1,239,000 compared to prior year primary due to depreciation expense being recorded at the program level. Comm Sv (Community Services) Decrease of $440,000 primary due to elimination of administration expense owed to the General fund and an increase of$89,000 in depreciation expense recorded at the program level. O Dev (Development Services) Increase by $490,000 primary due to the recording of depreciation expenses at the - program level. 6 Int unalloc (Interest Unallocated) Decrease in Interest payment on the 2001 GO bond. o Dep unalloc (Depreciation Unallocated) Fiscal year 2003-04 is the first year the City of Saratoga allocated depreciation expense at a program level: General Government $137,000, Public Safety $23,000, Public Works $1,290,000, Community Services$89,000 and Community Development$370,000. 9 GENERAL FUND BUDGETARY HIGHLIGHTS Changes from the City's original budget to the final budget is detailed in the Required Supplementary Information Section along with a comparison to actual activity for the year ended. Source of Funds _ During the City's mid-year review process, revenue projections were revised to reflect: • Decrease of $576,000 in vehicle license fee, 3 months no backfill that reflect the State _ Governor's January 2004 budget proposal. • Decrease of 10% or $102,000 in retail activity and sales tax revenues. • Increase of$100,000 in document transfer tax. • Increase of $200,000 transfers in from 5-year capital improvement project to fund a feasibility study to support a redevelopment agency. Use of Funds During the City's fiscal year, amendments to the original budget were revised to primarily _ reflect: • Increase appropriations to $121,000 in Litigation Services to cover anticipated claim settlement. _ • Increase of$590,000 in operating transfer out to the Streets/Road for pavement management plan projects. FY 2003-04 FY 2003-04 Annual Adopted Year End Inc/(Dec) Source of Funds On-Going$ 20,204 $ 19,648 $ (556) — Transfers - 200 200 Total Source of Funds$ 20,204 $ 19,848 $ (356) Use of Funds On-Going$ 11,564 $ 12,007 $ 443 Transfers 2,065 2,306 241 — Total Use of Funds$ 13,629 $ 14,313 $ 684 CAPITAL ASSETS The City of Saratoga elected to use the "Modified Approach" as defined by GASB Statement No. 34 for infrastructure reporting in which eligible infrastructure capital assets are not required to be depreciated if the following requirements: _ 10 — The City manages the assets using an asset management system which requires that the City (1) perform an up-to-date inventory; (2) perform condition assessments and summarized the results using a measurement scale; and (3) estimate the annual amount to preserve the assets at the established condition assessment level. . The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed condition assessment level. �- The City policy is to achieve an average Pavement Condition Index (PCI) rating of 70 for all streets. The City achieved the 70 rating with 78% of streets are rated as Excellent to Good, 13% of streets are rated as Fair, and 9% of streets are rated as Poor to Substandard. The City -� estimated and spent $1,961,844 to maintain and preserve eligible infrastructure assets. For more detail information on Capital Assets activity, please refer to Note G in the section entitled "Notes to the Basic Financial Statements" and "Required Supplementary Section". As of June 30, 2004, the City had $118,999,000 invested in a variety of capital assets, as reflected -- in the following schedule, which represents an increase of$274,000 or .23% above the prior year Capital Assets at Year-end (Net of Depreciation - In Thousands) Governmental Activities 2004 2003 Land $ 11,118 $ 4,831 Buildings and Structures 16,914 2,975 -- Machinery and Equipment 569 747 Infrastructure 86,174 87,248 Construction in Progress 4,224 22,924 Total $ 118,999 $ 118,725 The following reconciliation summarizes the change in Capital Assets, which primarily reflect -- the completion Library Expansion project and other park projects, and the continued progress of the City's adopted 5-year Capital Improvement Program. Changes in Capital Assets (In Thousands) Governmental Activities 2004 2003 Beginning Balance $ 118,725 $ 106,105 Additions: Buildings and Structures 14,418 CIP (12,354) 13,936 Infrastructure 30 - Machinery and Equipment 88 251 - Retirements: Inventory Adjustments - - Depreciation (1,908) (1,567) Ending Balance $ 118,999 $ 118,725 11 DEBT ADMINISTRATION Oustanding Debt, at year-end (In Thousands) Governmental Activities 2004 2003 2001 General Obligation Bond $ 14,695 $ 14,940 Claims Payable 181 247 Compensated Absences 260 262 Total $ 15,135 $ 15,449 The current portions of long-term debt ($436,000 and $428,000 for 2004 and 2003, respectively)are classified as current liabilities in the City's Statement of Net Assets. During the year, the City made debt service payments that include the second principal - reduction of$245,000 on the City's $15,000,000, 2001 General Obligation Library bonds. The decrease in compensated absences primarily reflects the changes in payable annual leave - balances for City employees. Further information on the City's outstanding debt can be found in the notes to the financial statements. _ ECONOMIC FACTORS In November of 2004, voters in California considered more than 270 local measures related to - local agency taxes, fees and financing. One hundred eighteen (118) of these measures concerned city taxes, fees or financing. The City of Saratoga along with sixteen other cities proposed a Utility User Tax (UUT). All proposals were for general-purpose taxes and required majority voter approval. Voters approved six measures to continue existing taxes. All proposals to increase existing UUT failed and only two of seven proposals for new Utility User taxes passed. _ The voter's did not approve the Utility User Tax for the city of Saratoga, which at 4% was anticipated to generate $2,560,000 for a period of ten years. _ Proposition 1A is a historic, bipartisan agreement that allows the State to borrozn - but not permanently take -- local government revenues in the event of a fiscal emergency. The measure ` does not raise taxes, nor take funding from education or any other constituency. A direct fiscal impact on the City of Saratoga is that in fiscal year 2004-05 and 2005-06 the City will make a "contribution" of$260,150 to the supplement the State of California's budget, in fiscal year 2006- 07 the City will be repaid in full $520,300 for their contribution. 12 Major initiatives for the fiscal year 2004-2005 must take in to consideration the impact of those events highlighted above as such they are as follows: Maintain preparedness for economic downturns and sustain City operations by closely monitoring current revenues and expenditures. Continue to maintain General Fund Reserves in the amount of$1,500,000 for economic �- uncertainty and $2,403,623 for operations; • Preserve the commitment of capital improvement reserves for projects related to public safety, infrastructure, parks and trails, and facilities; and • Prioritize City services that can be rendered within the parameters of the current revenue climate. REQUEST FOR FINANCIAL INFORMATION This financial report is designed to provide a general overview of the City of Saratoga's finances for all of Saratoga's residents, taxpayers, customers, investors, and creditors. 'Phis financial report seeks to demonstrate the City's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional. information should be addressed to the Administrative Services Department, 13777 Fruitvale Avenue, Saratoga, California 95070. 13 r; oS l A 'Jt 14 f...�l .. ____ i�i�• r�� d J I r[�4 I _T,�,: - 1 fi -� City of Saratoga — Statement of Net Assets June 30, 2004 Primary ... Government Governmental Activities — ASSETS Current assets: Cash and investments $ 12,820,688 Restricted cash and investments 1,286,913 Receivables: Accounts 1,510,332 Interest 47,980 Loans 345,955 Total current assets 16,011,868 Noncurrent assets: Capital assets: Non-depreciable 60,583,974 Depreciable,net 58,415,484 Total capital assets 118,999,458 Total noncurrent assets 118,999,458 Total assets 135,011,326 LIABILITIES Current liabilities: Accounts payable 536,356 Accrued payroll 183,227 Interest payable 320,836 Deposits payable 885,399 Deferred revenues 1,039 Claims payable 50,000 Long-term debt-due within one year 436,635 Total current liabilities 2,413,492 Noncurrent liabilities: Long-term debt-due in more than one year 14,698,708 Total noncurrent liabilities 14,698,708 Total liabilities 17,112,200 NET ASSETS Investment in capital assets,net of related debt 104,304,458 Restricted for: Capital projects 500,937 Debt service 701,976 Special projects 84,000 Total restricted 1,286,913 Unrestricted 12,307,755 Total net assets $ 117,899,126 See accompanying Notes to the Basic Financial Statements. 19 City of Saratoga Statement of Activities and Changes in Net Assets For the year ended June 30, 2004 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Total Primary government: Governmental activities: ... General and intergovernmental services $ 3,149,593 $ 1,467,643 $ - $ - $ 1,467,643 Public safety 3,208,027 216,400 185,620 284,000 686,020 Environmental services 513,539 514,382 29,016 - 543,398 Public works 5,113,509 124,927 585,186 669,837 1,379,950 Community services 1,535,575 917,563 10,000 91,134 1,018,697 Community development services 2,575,621 1,423,035 144,140 - 1,567,175 Interest on long-term debt(unallocated) 771,670 - - - - Total $ 16,867,534 $ 4,663,950 $ 953,962 $ 1,044,971 $ 6,662,883 General revenues and taxes: Taxes: Property taxes +� Sales taxes Franchise taxes Local taxes Motor vehicle in-lieu fees Total taxes Investment earnings Miscellaneous Total general revenues and taxes Change in net assets Net assets-beginning of year,as restated Net assets-end of year See accompanying Notes to the Basic Financial Statements. 20 Net(Expense) Revenue and Changes in Net Assets Primary Government Governmental Activities $ (1,681,950) (2,522,007) 29,859 (3,733,559) (516,878) (1,008,446) (771,670) (10,204,651) 4,068,218 895,028 983,620 1,128,441 1,488,954 8,564,261 114,537 248,122 8,926,920 (1,277,731) 119,176,857 $ 117,899,126 21 6'A 22 24 GOVERNMENTAL FUND FINANCIAL STATEMENTS General Fund The General Fund is used to account for all of the general resources 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 the City which are not accounted for in another fund. Community Development Block Grant Special Revenue Fund This fund accounts for grant funds received from the Federal Government for the purpose of developing -� viable urban communities and for the City's rehabilitation loan program. Streets and Roads Special Revenue Fund This fund accounts for revenues and expenditures received from the Federal Government, under I.S.T.E.A. and State, Street and Highway Code Sections 2105, 2106, 2107, and 2107.5. The allocations must be spent for street maintenance or repairs;a limited amount may be spent for engineering. Coital Improvement Capital Projects Fund This fund accounts for resources used for the major capital acquisition and construction activities. Other Governmental Funds Other Governmental Funds is the aggregate of all the nonmajor governmental funds. 25 City of Saratoga Balance Sheet Governmental Funds June 30, 2004 Major Funds Community Other Total Development Streets Capital Governmental Governmental General Block Grant and Roads Improvement Funds Funds r ASSETS Cash and investments $ 6,775,033 $ - $ 607,645 $ 4,197,606 $ 1,240,404 $ 12,820,688 Restricted cash and investments 269,675 84,000 5,776 225,486 701,976 1,286,913 Receivables: Accounts 702,101 43,395 - 757,840 6,996 1,510,332 Interest 47,980 - - - 47,980 Loans - 345,955 - - 345,955 Due from other funds 48,604 - - - - 48,604 Total assets $ 7,843,393 $ 473,350 $ 613,421 $ 5,180,932 $ 1,949,376 $ 16,060,472 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 242,172 $ - $ 42,091 $ 230,164 $ 21,929 $ 536,356 r.r Accrued payroll 159,707 - 19,559 - 3,961 183,227 Due to other funds - 43,395 - - 5,209 48,604 Deposits payable 885,399 - - - - 893,399 w Deferred revenue - 345,955 - 1,039 - 346,994 Claims payable 501000 - - - - 50,000 Total liabilities 1,337,278 389,350 61,650 231,203 31,099 2,050,580 Fund Balances: Reserved for: Encumbrances 269,675 - 5,776 225,486 500,937 Petty cash 300 - - - - 300 Debt service - - 701,976 701,976 Special projects - 84,000 - - 84,000 Unreserved,designated for: Operations 2,403,623 - - - 2,403,623 r Economic uncertainty 1,500,000 1,500,000 PERS 139,668 - - - 139,668 MSS 128,198 - - - - 128,198 Unreserved,undesignated,reported in: General fund 2,064,651 - - - - 2,064,651 Special revenue funds - - 545,995 - 36,609 582,604 Capital projects funds - - - 4,724,243 1,179,692 5,903,935 Total fund balances 6,506,115 84,000 551,771 4,949,729 1,918,277 14,009,892 Total liabilities and fund balances $ 7,843,393 $ 473,350 $ 613,421 $ 5,180,932 $ 1,949,376 $ 16,060,472 See accompanying Notes to the Basic Financial Statements. 26 City of Saratoga Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets -- June 30, 2004 Total Fund Balances-Total governmental funds $ 14,009,892 Amounts reported for governmental activities in the statement of net assets were different because: Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. The capital assets were adjusted as follows: Non-depreciable capital assets 60,583,974 Depreciable capital assets,net 58,415,484 Total capital assets 118,999,458 Interest payable on long-term debt did not require current financial resources. Therefore,interest payable was not reported as a liability in Governmental Funds Balance Sheet. (320,836) Deferred revenues reported in Governmental Funds Balance Sheet includes balance of loans receivable. The balance was deferred because funds were not available to pay for current-period expenditures. 345,955 Long-term liabilities were 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: General obligation bonds (14,695,000) Claims payable (180,865) ^ Compensated absences (259,478) Total long-term liabilities (15,135,343) Net Assets of Governmental Activities $ 117,899,126 See accompanying Notes to the Basic Financial Statements. 27 City of Saratoga Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2004 Major Funds Community Other Total Development Streets Capital Governmental Governmental General Block Grant and Roads Improvement Funds Funds REVENUES: r Property taxes $ 3,020,515 $ - $ $ $ 1,141,335 $ 4,161,850 Other local taxes 1,822,785 - - - 1,822,785 Intergovernmental-State 1,687,387 - 582,340 1,159,301 100,000 3,529,028 Intergovernmental-Federal - 102,553 - - - 102,553 Franchise fees 983,621 - - - - 983,621 Use of money and property 386,450 41,587 2,846 8,380 439,263 Current service charges 3,037,674 - 10,598 - 34,788 3,083,060 Reimbursement of interfund cost allocations 1,467,643 - - - 1,467,643 Total revenues 12,406,075 144,140 595,784 1,159,301 1,284,503 15,589,803 EXPENDITURES: Current: General and intergovernmental services 3,037,062 - - - 3,037,062 Public safety 3,172,922 - - - 12,997 3,185,919 Environmental services 488,495 - 26,973 - - 515,468 Public works 1,208,717 - 2,316,769 - 301,703 3,827,189 Community services 1,357,048 102,728 - - - 1,459,776 Community development services 2,216,151 - - - - 2,216,151 Capital outlay 79,358 - 10,548 1,737,637 369,563 2,197,106 Debt service: .r Principal - - - - 245,000 245,000 Interest and fiscal charges - - - - 776,774 776,774 Total expenditures 11,559,753 102,728 2,354,290 1,737,637 1,706,037 17,460,445 REVENUES OVER (UNDER)EXPENDITURES 846,322 41,412 (1,758,506) (578,336) (421,534) (1,870,642) OTHER FINANCING SOURCES(USES): Transfers in 464,664 - 2,305,793 98,369 65,000 2,933,826 Transfers out (2,370,793) - - (200,000) (363,033) (2,933,826) Total other financing sources(uses) (1,906,129) - 2,305,793 (101,631) (298,033) Net change in fund balances (1,059,907) 41,412 547,287 (679,967) (719,567) (1,870,642) FUND BALANCES: Beginning of year,as restated 7,565,922 42,588 4,494 5,629,696 2,637,844 15,880,534 End of year $ 6,506,115 $ 84,000 $ 551,771 $ 4,949,729 $ 1,918,277 $ 14,009,892 See accompanying Notes to the Basic Financial Statements. 28 "" City of Saratoga 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, 2004 ... Net Change in Fund Balances-Total governmental funds $ (1,870,642) Amounts reported for governmental activities in the Statement of Activities and Changes in Net Assets were different because: Governmental funds reported capital outlay as expenditures. However,in the Government-Wide Statement of Activities and Changes in Net Assets,the cost of those assets was allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlay 2,182,504 Depreciation expense (1,907,970) 274,534 Long-term claims payable were reported in the Government-Wide Statement of Activities and Changes in Net Assets, but they did not require the use of current financial resources. Therefore, long-term claims payable were not reported as expenditures in governmental funds. 66,329 Long-term compensated absences were reported in the Government-Wide Statement of Activities and Changes in Net Assets, but they did not require the use of current financial resources. Therefore, long-term compensated absences were not reported as expenditures in governmental funds. 1,944 Bond proceeds provided current financial resources to governmental funds,but issuing debt increased long- term liabilities in the Government-Wide Statement of Net Assets. Repayment of bond principal was an expenditure in governmental funds,but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Assets. Long-term debt repayments 245,000 Interest expense on long-term debt was reported in the Government-Wide Statement of Activities and Changes in Net Assets,but it did not require the use of current financial resources.Therefore,interest expense was not reported as expenditures in governmental funds. The following amount represented the change in accrued interest from prior year. 5,104 Change in Net Assets of Governmental Activities $ (1,277,731) See accompanying Notes to the Basic Financial Statements. 29 y� 1 30 �+ FIDUCIARY FUND FINANCIAL STATEMENTS AAgena Funds Agency Funds is the aggregate of all the agency funds. 31 City of Saratoga Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2004 Agency Funds ASSETS Cash and investments $ 120,151 �+ Restricted cash and investments 331,282 Accounts receivable 42,946 ..r Total assets $ 494,379 LIABILITIES Deposits payable $ 87,376 Due to assessment district bondholders 407,003 Total liabilities $ 494,379 .. r .r ..Y See accompanying Notes to the Basic Financial Statements. 32 �+ City of Saratoga -- Index to Notes to the Basic Financial Statements For the year ended June 30, 2004 Page Note 1 -Summary of Significant Accounting Policies.................................................................................35 A. Financial Reporting Entity............................................................................................................35 B. Basis of Accounting/Measurement Focus.................................................................................36 C. Cash, Cash Equivalents and Investments ..................................................................................38 D. Restricted Cash and Investments.................................................................................................39 E. Prepaid Items..................................................................................................................................39 F. Interfund Transactions..................................................................................................................39 G. Capital Assets.................................................................................................................................39 H. Interest Payable..............................................................................................................................41 I. Claims Payable...............................................................................................................................41 -- J. Compensated Absences................................................................................................................41 K. Lang-Term Obligations.................................................................................................................41 L. Fund Balances.................................................................................................................................42 M. Net Assets............................................................................ --........42 N. Use of Restricted/Unrestricted Net Assets................................................................................42 O. Property Tax and Special Assessments.......................................................................................42 P. Uses of Estimates............................................................................................................................43 Note 2 - Cash and Investments..........................................................................................................................43 A. Cash Deposits.................................................................................................................................43 B. Investments.....................................................................................................................................44 C. Credit Risks............................................................................................................................... ..45 -- D. Summary of Cash and Investments to Maturity.......................................................................46 Note3-Loans Receivable..................................................................................................................................47 33 City of Saratoga Index to Notes to the Basic Financial Statements, Continued For the year ended rune 30, 2003 .r Page • Note 4- Fund Financial Statements lnterfund Transaction .......................................................................47 A. Due from/to Other Funds............................................................................................................47 B. Transfers In/ .............48 Note5- Capital Assets.......................................................................................................................................49 Note6- Long-Term Debt...................................................................................................................................50 Note 7- Non-City Obligations................................ ...........51 ............................................................................... Note8 - Risk Management................................................................................................................................51 Note9 - Retirement Plans..................................................................................................................................53 Note 10-Net Assets.......................................................................... ..55 .. ................................................................ A. Investment in Capital Assets,Net of Related Debt...................................................................55 B. Restricted Net Assets.....................................................................................................................55 Note11 -joint Powers Agreements....................................................... ....55 -�...................................................... Note 12- Commitments and Contingencies ..................................................................................................56 A. Lawsuits...........................................................................................................................................56 B. Federal and State Grant Programs............... ................................56 -•................................................ Note 13- Prior Period Adjustments.................................................................................................................56 r 34 City of Saratoga Notes to the Basic Financial Statements For the year ended June 30, 2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Saratoga, 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 was incorporated as a municipal corporation in 1956 under the general laws of the State of California, and had a population of 30,300 at June 30, 2004, The City is a largely residential community located in the foothills of the Santa Cruz Mountains. The City operated under the Council-Manager form of government, with five elected Council members served by a full-time City Manager and staff. At June 30, 2004, the City's staff comprised 59 full time employees who were responsible for the following City provided services: ♦ Public Safety - The City provides round-the-clock police services under a contract with the County Sheriff's offices. Fire services are provided by special district. Emergency management, code enforcement and inspection services are provided by 1 City employee. ._ • Public Works/Maintenance -The City builds and maintains its parks, streets,curbs, gutters and related public property with a force of 22 employees. Major projects may be contracted out to reduce costs. ♦ Community Development - Zoning administration, plan checking and advance planning services are provided by 12 employees. ♦ Culture,Recreation and Community Support services are provided by a total of 10 employees. ♦ General Government services are provided by a total of 14 employees. As required by GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The City Council acts as the governing board. In addition,the City staff performs all administrative and accounting functions for these entities and these entities provide their services entirely to the City. Blended component units, although legally separate entities are, in substance, part of the City's operations and data from these units are combined with data of the City. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize their legal separateness from the City, Each blended component unit has a June 30 year-end. The City had no discretely presented component units. 35 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued .. A. Financial Reporting Entity, Continued The following entities are reported as blended component units: Saratoga Public Financing Authority - The Saratoga Public Financing Authority (Authority) is a joint powers authority organized by the City of Saratoga (City) and the City of Saratoga Parking Authority (Parking Authority) on June 16, 1993, under the laws of the State of California. The Authority was organized to provide financial assistance to the City and Districts for public improvements for the City and the purchase by the Authority of Local Obligations within the meaning of the Act. Lighting and Landscaping Assessment District - The Lighting and Landscaping Assessment District (District) was established in 1980 for the levy and the collections of assessments upon the several lots or parcels of land in the District, and for the construction or installation of improvements, including maintenance. Complete financial statements for each component unit may be obtained from the City of Saratoga, 13777 Fruitvale Avenue,Saratoga,CA 95070. B. Basis of Accounting and Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Government-Wide Financial Statements The City's government-wide financial statements include a Statement of Net Assets and a Statement of Activities and Changes in Net Assets. These statements present summaries of governmental activities for the City.Fiduciary activities of the City are not included in these statements. Nor These statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting,revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Certain types of transactions are reported as program revenues for the City in three categories: • Charges for services • Operating grants and contributions -� • Capital grants and contributions 36 �+ City of Saratoga — Notes to the Basic Financial Statements, Continued For the year ended June 30,2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Government-Wide Financial Statements,Continued 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. The following interfund activities have been eliminated: ♦ Due from/to other funds ♦ Transfers in/out 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. The following funds are major funds: General Fund The General Fund is used to account for all of the general resources 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 the City which are not accounted for in another fund. Community Development Block Grant Special Revenue Fund This fund accounts for grant funds received from the Federal Government for the purpose of developing viable urban communities and for the City's rehabilitation program. Streets and Roads Special Revenue Fund This fund accounts for revenues and expenditures received from the Federal Government, under I.S.T.E.A. and State, Street and Highway Code Sections 2105, 2106, 2107, and 2107.5. The allocations must be spent for street maintenance or repairs;a limited amount may be spent for engineering. Capital Improvement Capital Projects Fund — This fund accounts for resources used for the major capital acquisition and construction activities. All governmental funds are accounted for on a spending or current financial resources measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other — financing uses) in net current assets. 37 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued ,.. B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements,Continued Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that 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 tax, sales tax, special assessments, intergovernmental revenues, other taxes, interest revenue, rental revenue and certain charges for services. Fines, forfeitures, licenses and permits and parking meter revenues are not susceptible to accrual because they are usually not measurable until received in cash. Expenditures are recorded in the accounting period in which the related fund liability is incurred. Deferred revenues arise when potential revenues do not meet both the "measurable' and "available' criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to .. incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the deferred revenue is removed from the combined balance sheet and revenue is recognized. 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. -� FiduciM Fund Financial Statements .r Fiduciary fund financial statements include a Statement of Net Assets. The City's fiduciary funds represent agency funds. Agency funds do not have a measurement focus,although they do have a basis of accounting. An accrual basis of accounting is used to record the financial transactions. Agency funds W are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. C. Cash, Cash Equivalents and Investments r The City pools its available cash for investment purposes. The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and displayed as Cash and Investments. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market r value is used as fair value for those securities for which market quotations are readily available. The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF),which has invested a portion of the pool funds in Structured Notes and Asset- Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State 38 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued C. Cash, Cash Equivalents and Investments, Continued of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to change in interest rates. D. Restricted Cash and Investments Certain restricted cash and investments are held by a fiscal agent for the redemption of bonded debt and for acquisition and construction of capital projects. E. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. F. Interfund Transactions Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or"advances to/from other funds' (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as"due to/from other funds." Advances between funds, are reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. G. Capital Assets Capital assets, which includes land, buildings, improvements, furniture, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), were reported in the applicable governmental activities in the government-wide financial statements. Capital assets were recorded at historical cost or estimated historical cost if actual cost was not available. Donated assets were valued at their fair market value on the date of donation. City policy has set the capitalization threshold for reporting capital assets at $1,000. The City has chosen the Modified Approach for reporting the streets subsystem of infrastructure capital assets. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: -Buildings and structures 40 years -Machinery and equipment 5-10 years Infrastructure 20-50 years The City has not allocated the depreciation expense to departments. 39 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30,2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued ... G. Capital Assets, Continued In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments' basic financial statements. In accordance with Statement No. 34, the City has included the value of all infrastructure into its basic financial statements. The City defines infrastructure as the basic physical assets that allow the City to function. The City -� defines infrastructure as the basic physical assets including the street system, park and recreation lands and improvements system;storm water conveyance and drainage system,buildings combined with site amenities such as parking and landscaping areas used by the City -r in the conduct of its business. Each major infrastructure system can be divided into subsystems. For example the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals and pavement markings),landscaping and land. These subsystems were not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems. The City elected to use the Modified Approach as defined by GASB Statement No. 34 for infrastructure reporting of its streets, concrete and asphalt pavements. The City commissioned a physical assessment of the streets condition as of June 30, 2001. This condition assessment will be performed every 3 years. A Pavement Condition Index (PCI) «r was assigned to each street segment. The index is expressed in a continuous scale from 0 to 100,where 0 is assigned to the least acceptable physical condition and 100 is assigned to segments of street that have the physical characteristics of a new street. The following conditions were defined: Condition Rating Excellent 86-100 Very Good 71-85 Good 56-70 Fair 41-55 Poor 2640 -� Very Poor 11-25 Substandard 0-10 The City's policy relative to maintaining the street assets is to achieve an average rating of 70 for all street segments. This acceptable rating allows minor cracking and raveling of the pavement along with minor roughness that could be noticeable to drivers traveling at the posted speeds. For all other infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for infrastructure reporting. The City commissioned an appraisal of City owned infrastructure and property as of June 30, 2001 and has completed an internal update for June 30, 2004. This appraisal determined the original cost, which is defined as the actual cost to acquire new property in accordance with market prices at the time of first construction/acquisition. 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 40 City of Saratoga -- Notes to the Basic Financial Statements, Continued For the year ended.fune 30,2004 I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued G. Capital Assets, Continued construction/acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line, 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. Interest Payable In the government wide financial statements, interest payable of long-term debt is recognized as the liability is incurred for governmental fund types. The City has not allocated the interest on long-term debt to departments. In the fund financial statements, governmental fund types do not recognize the interest payable when the liability is incurred.. ,_. L Claims Payable The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general liability claims (including property damage claims) and workers' compensation claims. The estimated liability for workers' compensation claims and general Iiability claims includes "incurred but not reported" (IBNR) ,claims. There is no fixed payment schedule to pay these liabilities. J. Compensated Absences In the government-wide financial statements, compensated absences are recorded as incurred and the related expenses and liabilities are reported. In the fund financial statements, 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. K. Long-Tenn Obligations _.. In the government.wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental 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 bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. ---- In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financial sources. Premiums received on debt issuance are reported as other financing sources while 41 City of Saratoga — Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 _ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued — K. Long-Tenn Obligations, Continued discounts on debt issuance reported as other financing uses. Issuance costs,whether or not withheld from the actual debt proceeds received,are reported as debt service expenditures. L. Fund Balances In the fund financial statements, governmental funds report reservations of fund balances for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balances represent tentative management plans that are subject to change. — City Council has designated an amount for operations, which it has defined as being equal to the greater of one-quarter of the total budgeted General Fund appropriations for the current budget year or $2,000,000. The designation is increased annually by an amount equal to the interest the City earned on an equivalent amount of cash and investments. M. Net Assets In the governmental-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." ` N. Use of Res tricted/ibirestricted 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. O. Property Tax and Special Assessments County tax assessments included secured and unsecured property taxes, and special assessments. "Unsecured" refers to taxes on personal property. These tax assessments are secured by liens on the property being taxed. Revenue is recognized in the period for which the tax and assessment is levied. The County of Santa Clara levies, bills and collects property taxes for the City, the County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes ` are levied on January 1. 42 City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued O. Property Tax and Special Assessments, Continued Secured property tax is due in two installments on November 1 and February 1, and becomes a lien on those dates. It becomes delinquent on December 10 and April 10,respectively. Unsecured property tax is due on July 1 and becomes delinquent on August 31, P. Use of Estimates The preparation of basic financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly,actual results could differ from those estimates. 2. CASH AND INVESTMENTS The following is a summary of pooled cash and investments and restricted cash and investments at June 30, 2004: - Government-Wide Statement of Fiduciary _._ Net Assets Funds Governmental Statement of Activities Net Assets Total Pooled cash and investments $ 12,820,688 $ 120,151 $ 12,940,839 Restricted cash and investments 1,286,913 331,282 1,618,195 Total $ 14,107,601 $ 451,433 $ 14,559,034 -- 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 the funds based on average month-end cash and investment balances in these funds. A. Cash Deposits - The carrying amounts of the City's cash deposits were $263,835 at June 30, 2004. Bank balances before reconciling items were $531,103 at that date. The total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City's name is discussed below. The California Government Code requires California banks and savings and loan associatiorLs to secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus,collateral for cash deposits is considered to be held in the City's name. 43 City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30,2004 — 2. CASH AND INVESTMENTS,Continued — A. Cash Deposits, Continued The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes that have a value of 150% of the City's total cash deposits. The City may waive collateral requirements for cash — deposits which are fully insured up to $100,000 by the Federal Deposit Insurance Corporation. The City, however,has not waived the collateralization requirements. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. B. Investments Under the provisions of the City's investment policy,and in accordance with California Government Code,the following investments are authorized: ♦ Securities of the U.S. Government or its agencies. _ ♦ Certificates of Deposit (or Time Deposits) placed with commercial banks and/or savings and loan companies. ♦ Negotiable Certificates of Deposit. ♦ California Local Agency Investment Fund. ♦ Investment-grade obligations of state,local governments or public authorities. — ♦ Money market mutual funds. ♦ Passbook savings account and demand deposits. The City has complied with the provisions of GASB Statement No. 31,Accounting and Financial Reporting for Certain Investments and for External Investments Pools. No current adjustments have been made to the — accompanying basic financial statements, because the CitNr's investments were primarily in the State of California Local Agency Investment Fund and the fair value adjustment was immaterial. The City's investments with Local Agency Investment Fund (LAIF) at June 30, 2004, include a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments include the following: _ ♦ Structured Notes - debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. — ♦ Asset-Backed Securities - the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and _. interest repayments from a pool of mortgages (such as CMOs) or credit card receivables. 44 City of Saratoga -- Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 2. CASH AND INVESTMENTS,continued B. .Investments, Continued LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. _ As of June 30, 2004, the City had $13,923,628 invested in LAIF which had invested 1.603% of the pool investment funds in Structured Notes and Asset-Backed Securities. C. Credit Risk Governmental Accounting Standards Board Statement No. 3 requires that deposits and investments be _ classified by credit risk. Classifications of deposits and investments by credit risk are as follows: _._ Dew Categonl I - Insured or collateralized with securities held by the entity or by its agent:in the entity's name. Category 2 - Collateralized with securities held by the pledging financial institutions trust department or agent in the entity's name. Category 3- Deposits which are uninsured or uncollateralized. Investments Categon, I -Insured or registered,with securities held by the entity or its agent in the entity's name. Categories - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the entity's name. _. Category 3 - Uninsured and unregistered, with securities held. by the counterparty, or by its trust department or agent,but not in the entity's name. _. Investments Not Subject to Categorization - Investments in the California Local Agency Investment Fund (LAIF) are not categorized, as GASB No. 3 does not require categorization of investment pools managed by another government. Certain fiscal agent investments are not categorized because the underlying assets are open-ended mutual funds. Guaranteed investment contracts are not categorized because they are direct contractual investments and are not securities.. All such investments are not required to be categorized under interpretive guidelines issued by the GASB. 45 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30,2004 ` 2. CASH AND INVESTMENTS,Continued C. Credit Risk, Continued Deposits and investments were categorized as follows at June 30,2004: Not Required Category Category to be Fair 1 3 Categorized Value City Treasury- Demand deposits: Cash deposit $ 263,835 $ - $ - $ 263,835 Investments: Money market mutual funds - - 40,273 40,273 Local agency investment fund - - 13,923,628 13,923,628 Total investments - - 13,963,901 13,%3,901 Total deposits and investments 263,835 - 13,963,901 14,227,736 Cash and investments with Fiscal Agents Money market mutual funds - 171,298 - 171,298 Guaranteed investment contract - 160,000 - 160,000 Total cash and investments with fiscal agents - 331,298 - 331,298 Total $ 263,835 $ 331,298 $ 13,963,901 $ 14,559,034 At June 30,2004, the City had no category 2 deposits or investments. D. Summary of Investmei:ts to Maturity Investments grouped by maturity date at June 30,2004,are shown below: Maturity Fair Value T Current to one year $ 13,963,901 46 City of Saratoga -- Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 3. LOANS RECEIVABLE The City had the following loan receivable as of June 30, 2004: _ Balance Balance July 1,2003 Additions Deletions June 31),2004 Housing Rehabilitation Loan Program $ 394,217 $ - $ (48,262) $ 345,955 The City administers a housing rehabilitation program called the Saratoga Housing Assistance and -- Rehabilitation Program (SHARP) using Housing and Community Development Act funds. Under the SHARP, individuals with incomes below a certain level and corporations building rental housing for low- and-moderate income tenants are eligible to receive low interest loans, secured by deeds of trust, for construction work on their properties. Federal funds received by the City are deposited with a commercial bank. Upon approval of loans,the bank disburses the funds,arranges for and collects repayments. - At June 30,2004, the City had outstanding SHARP loans of$345,955. During the year ended.June 30, 2004, the City received$48,262 in repayments from all participants. In the governmental fund financial statements, these loans have been offset by deferred revenue as they are not expected to be repaid immediately. In the government-wide financial statements, the amount of deferred revenue was recognized as revenues. 4. FUND FINANCIAL STATEMENTS INTERFUND TRANSACTIONS A. Due fromlto Other Funds Due from/ other funds as of June 30,2004 were as follows: Due to Other Funds Special Revenue Fund Community Other Development Governmenta Due from Other Funds Block Grant Funds Total General Fund $ 43,395 $ 5,2109 $ 48,604 47 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30,2004 — 4. FUND FINANCIAL STATEMENTS INTERFUND TRANSACTIONS, Continued — B. Transfers WOut Transfers for the year ended June 30, 2004 were as follows: Transfers In — Special Capital Revenue Fund Projects Fund Other General Street and Capital Governmental Transfers Out Fund Roads Improvement Funds Total General Fund S - $ 2,305,793 $ - $ 65,000 $ 2,370,793 — Capital Projects Fund: Capital Improvements 200,000 - - 200,000 Other Governmental Funds 264,664 - 98,369 363,033 Total $ 464,664 $ 2,305,793 S 98,369 $ 65,000 $ 2,933,826 The above transfers resulted from the normal course of the City's operation. 48 City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 5. CAPITAL ASSETS Capital assets activity for the year ended June 30,2004, consisted of the following: Primary Government _ Balance Balance July 1,2003 Additions Retirements June 30,2004 -- Governmental Activities: Capital assets,not being depreciated: Land and land improvements $ 4,830,840 $ 6,287,190 $ - °i 11,118,030 Construction in progress 22,924,027 2,087,331 (20,786,879) 4,224,479 Infrastructure: Street pavement system 45,182,765 58,700 - 45,241,465 Total capital assets not being depreciated 72,937,632 8,433,221 (20,786,879) .60,583,974 Capital assets,being depreciated: Buildings and structures 4,860,089 14,418,358 - 19,278,447 Machinery and equipment 1,973,716 88,141 - 2,061,857 Infrastructure: Bridges 1,563,654 - - 1,563,654 Signs and lights 762,527 - - 762,527 _ Drainage system 39,844,721 11,193 - 39,855,914 Sidewalks 11,475,780 18,470 - 11,494,250 Total capital assets being depreciated 60,480,487 14,536,162 - 75,016,649 Accumulated depreciation (14,693,195) (1,907,970) - (16,601,165) Total capital assets being depreciated,net 45,787,292 12,628,192 - 58,415,484 Governmental activities capital assets,net $ 118,724,924 $ 21,061,413 $ (20,786,879) $ 118,999,458 Depreciation Expense by Function: General Government $ 137,006 Public Safety 22,759 Public Works 1,289,752 Community Services 88,676 Community Development 369,777 Total $ 1,907,970 In accordance with GAASB Statement No. 34, the City has reported all capital assets including;infrastructure in the Government-Wide Statement of Net Assets. The City elected to use the "Modified Approach' as defined by GASB Statement No. 34 for infrastructure reporting for its pavement system. .As a result, no accumulated depreciation or depreciation expense has been recorded for this system. A more detailed discussion of the "Modified Approach' is presented in the Required Supplementary Information section of this report. All other capital assets including other infrastructure systems were reported using the Basic _.. Approach whereby accumulated depreciation and depreciation expense have been recorded.. 49 City of Saratoga ` Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 _ 6. LONG-TERM DEBT A summary of the City's long-term debt transactions for the year ended June 30,2004,is presented below: Classification Amounts Amounts Balance Balance Due Within Due in More ` Description July 1,2003 Additions Retirements June 30,2004 One Year than One Year General Obligation Bonds: 2001 Library Bonds $ 14,940,000 $ - $ (245,000) $ 14,695,000 $ 255,000 $ 14,440,000 Claims payable 247,194 - (66,329) 180,865 - 180,865 Compensated absences 261,422 - (1,944) 259,478 181,635 77,843 Total $ 15,448,616 $ - $ (313,273) $ 15,135,343 $ 436,635 $ 14,698,708 General Obligation 2001 Library Bonds-Original Issue$15,000,000 On May 1, 2001, the City issued General Obligation Bonds Series 2001 in the amount of $15,000,000. The proceeds of the bonds were used to improve, renovate, and expand the Saratoga Community Library. The bonds are payable from and secured by certain property taxes within the City. Interest on the bonds ranges from 5% to 6 and is payable on February 1 and August 1 of each year, commencing February 1, 2002. Principal is due annually beginning on August 1, 2002, in amounts ranging from$60,000 to $940,000. The bonds mature on August 1, 2032 and are subject to redemption prior to maturity at redemption prices ranging from 100% to 101% of par. The bonds may be called for redemption beginning on or after August 1, 2011, at the option of the City. At June 30, 2004, the outstanding balance of the bonds was $14,695,000. The annual debt service requirements on these bonds are as follows: For the Year ` Ending June 30, Principal Interest Total 2005 $ 255,000 $ 763,631 $ 1,018,631 2006 270,000 750,506 1,020,506 2007 280,000 736,756 1,016,756 2008 295,000 720,906 1,015,906 2009 310,000 702,756 1,012,756 2010-2014 1,860,000 3,209,180 5,069,180 2015-2019 2,275,001) 2,670,655 4,945,655 _ 2020-2024 2,825,000 2,036,554 4,861,554 2025-2029 3,645,000 1,201,595 4,846,595 2030-2032 2,680,000 215,776 2,895,776 -- Total $ 14,695,000 $ 13,008,315 $ 27,703,315 50 City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended [une 30, 2004 6. LONG-TERM DEBT,Continued Claims Payable At June 30, 2004, the claims payable has been accrued. See Note 8 Risk Management for more information. The total amount of the long-term claims payable was$180,865 at June 30,2004. The claims payable liability will generally be liquidated through the General Fund. Compensated Absences The City's liability for vested and unpaid compensated absences (accrued vacation and sick pay) has been accrued and amounts to$259,478 at June 30, 2004. The compensated absences liability will generally be liquidated through the General Fund. 7. NON-CITY OBLIGATIONS - The following bonds bearing the City's name were issued to finance redevelopment projects; however, neither the faith and credit nor the general taxing power of the City has been pledged to the;payment of the bonds. Furthermore, the City has no obligation for the payment of the bonds in the case of default. _ Therefore,the following obligations are not included in the accompanying basic financial statements. Original Outstanding at Amount June 30,2004 Parking Assessment Districts#2 and#3 $ 1,244,900 $ 160,000 --- Leonard Road Improvement Assessment District 101,686 50,000 Saratoga Public Financing Authority 1993 Revenue Bonds -1,600,000 370,000 The City is the collecting agent for Village Parking Assessment Districts #2 and #3 and the Leonard Road Improvement District, but is not obligated for the repayment of debt issued by these Districts. As a result, _-. these Districts have not been included in the basic financial statements of the City. 8. RISK MANAGEMENT The City participates in the following public entity risk pools: ABAG Plan Corporation (ABAG PLAN) covers general liability claims in an amount up to $7,000,000. The City has a deductible or uninsured liability of up to $25,000 per claim. Once the City's deductible is met ABAG PLAN becomes responsible for payment of all claims up to the limit. During the fiscal year ended June 30, 2004, the Cite contributed $116,685 for current year coverage and received no refund of prior year excess contributions. 51 City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 — 8. RISK MANAGEMENT,Continued The ABAG Workers' Compensation Pool Insurance Authority (ABAG POOL) covers workers' compensation claims up to the statutory limit. The City has no deductible for these claims. During the — fiscal year ended June 30, 2004,the City contributed$289,987 for current year coverage. The City's contributions to each risk pool equal the ratio of the City's payroll to the total payrolls of all — entities participating in the same layer of each program,in each program-year. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. There have been no significant reductions of insurance settlements that exceeded insurance coverage for the past three years. The workers' compensation and general liability claims payable of $230,865 reported at June 30, 2004, are -- based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the basic financial statements indicates that it is probable that a liability has been incurred at the date of the basic financial statements and the amount of the loss can be — reasonably estimated. Changes in the claims liability amounts were as follows: Fiscal Year Year Claims Claims and Claims Ended Payable Changes in Claims Payable June 30, July 1 Estimates Payments June 30 _ 2002 $ 100,000 $ 32,061 $ (32,061) S 100,000 2003 100,000 214,052 (16,858) 297,194 2004 297,194 (32,044) (34,285) 230,865 Claims liability is presented on the Statement of Net Assets as follows at June 30,2004: — Current portion of claims payable $ 50,(W, Claims payable-due in more than one year(Note 6) 180,865 Total $ 230,865 Each risk pool is governed by a board consisting of representatives from member municipalities. The board controls the operations of each risk pool, including selection of management and approval of _ operating budgets,independent of any influence by member municipalities beyond their representation on the Board. 52 — City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 8. RISK MANAGEMENT,Continued The following represents summary audited financial information of ABAG Plan Corporation for the fiscal year ended June 30, 2003: Total assets $ 41,602,323 Total liabilities $ 11,578,210 Fund equity $ 30,024,113 Total revenues $ 9,590,770 Total expenses $ 1,928,095 Net increase in fund equity $ 7,662,675 The following represents summary audited financial information of ABAG Comp Shared Risk Pool for the fiscal year ended June 30, 2003: Total assets $ 1,109,010 Total liabilities $ 876,136 _._ Fund equity $ 232,874 Total revenues $ 602,100 Total expenses $ 134,995 Net increase in fund equity $ 467,105 Audited financial information for each risk pool may be obtained from ABAG at P. O. Box 2089, Oakland, California 94604-2089.. 9. RE;TIREMENT PLANS Pension Plan Plan Description -The City contributes to the California Public Employees Retirement System(PERS),an agent multiple-ernployer public employee defined benefit pension plan. PERS provides :retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their Executive Office located at 400 P Street, Sacramento,California 95814. 53 City of Saratoga ` Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 9. RETIREMENT PLANS,Continued — Pension Plan, Continued Funding Policy - Active plan members are required by state statute to contribute for miscellaneous employees 7"o of their annual covered salary. The City employer makes the contributions required of City employees on their behalf and for their account, which amounted to $267,497 for the year ended — June 30, 2004. The City employer is required to contribute for fiscal year 2003-2004 at an actuarially determined rate of 0% of annual covered payroll for miscellaneous employees. AnnuRl Pension Cost - For fiscal year 2003-2004, the City's annual pension cost was $0. The required contribution was determined as part of the June 30,2001 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8.25% investment rate of return (net of administrative expenses), (b) projected annual salary increases ranging from 3.75% to 14.2% for miscellaneous employees depending on age, service, and type of employment, and (c) 3.75% per year payroll growth adjustments. Both (a) and (b) included an inflation component of 3.50%. The actuarial — value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a three-year period. PERS unfunded actuarial accrued liability (or surplus) is amortized as a level percentage of projected payroll on a closed basis. The amortization — period at June 30,2001,was 37 years for miscellaneous employees. THREE-YEAR TREND INFORMATION FOR PERS — Annual Percentage of Pension Cost APC Net Pension Fiscal Year (APC) Contributed Obligation 6/30/02 $ - 100% $ 6/30/03 - 100% F 6/30/04 - 100% 54 — City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30,2004 10. NET ASSETS A. Investment in Capital Assets,Net of Related Debt As of June 30, 2004, the investment in capital assets,net of related debt consisted of the following: Capital assets,net(Note 5) $ 118,999,458 2001 General Obligation Library Bonds(Note 6) (14,695,000) Investment in capital assets,net of related debt $ 104,304,458 B. Restricted Net Assets As of June 30, 2004, the restricted net assets consisted of the following: Restricted for Capital Debt Special Projects Service Projects Total Restricted cash and investments $ 500,937 $ 701,976 $ 84,000 $ 1,286,913 11. JOINT POWERS AGREEMENTS The City is a member of the Santa Clara County Traffic Authority (Traffic Authority), which consists of various cities in the San Francisco Bay area. - The Traffic Authority was formed in 1985 by a joint exercise of powers agreement between the County of Santa Clara and the cities of Santa Clara County for the purpose of financing highway capital improvements within. the County to serve transportation needs. Financial statements may be obtained from the Traffic Authority at 1754 Technology Drive, Suite 224,San Jose, California 95110. The City is also a member of other Joint Powers Authorities (JPA)but has had no material transactions with them. These JPA's are governed by boards consisting of representatives from their members. The boards control the operations of each JPA, including selection of management and approval of operating budgets, independent of any influence by its members beyond their representation on the board. 55 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2004 — 12. COMMITMENTS AND CONTINGENCIES — A. Lawsuits The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City business. City management believes, based upon consultation with the City Attorney, that these cases,in the aggregate,are not expected to result in a material adverse financial impact on the — City. Additionally,City management believes that the City's insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize. B. Federal and State Grant Programs The City participates in Federal and State grant programs. These programs are audited by the City's — independent accountants in accordance with the provisions of the Federal Single Audit Act Amendments of 1996 and applicable State requirements. No cost disallowance is expected as a result of these audits;however,these programs are subject to further examination by the grantors. Expenditures which may be disallowed, if any,by the granting agencies cannot be determined at this time. The City expects such amounts,if any, to be immaterial. As of June 30, 2004, in the opinion of City management, there were no additional outstanding matters that would have a significant effect on the financial position of the funds of the City. 13. PRIOR PERIOD ADJUSTMENTS Government-Wide Financial Statements The City recorded the following prior period adjustments to correct prior year deferred revenues as part of — GASB Statement No. 34 implementation. Accordingly, the net assets as of July 1, 2003 have been restated as follows: Prior Period Net Assets, Adjustment as Previously Deferred Net Assets, Reported Revenues as Restated Government-Wide Activities: Net assets $ 118,830,902 $ 345,955 $ 119;176,857 Total government-wide activities $ 118,830,902 $ 345,955 $ 119,176,857 56 — City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended,June 30,2004 13. PRIOR PERIOD ADJUSTMENTS,Continued Fund Financial Statements The City recorded the following certain reclassifications to City funds to more accurately reflect the transaction in the prior years: General Fund- The City determined that activity recorded in the Special Revenue funds: Traffic Safety, Development Services, Environmental Programs, and Recreation and the Deposits Agency fund should be reclassified to General fund. CommunitJ Development Block Grant Special Revenue Fund- The City determined that prior year revenue collected from County was recorded in this fund in error. Capital Improvement Capital Projects Futtd - The City determined that prior year revenue collected from County was misclassified to Community Development Block Grant fund. Fund Balances, Prior Period Adjustments as Previously Reclassification Fund Balances, Reported Cash of Funds as Restated Major Fund: General Fund $ 5,203,828 $ - 2,362,NZI $ 7,565,922 Community]development Block Grant 57,190 (14,602) - 42,588 Capitallmprovennent 5,615,094 -14,602 - 5,629,696 Total $ 10,876,112 $ - $ 2,362,094 $ 13,238,206 57 24 5: Gx - :2 - � 3�7g - � 58 - City of Saratoga Required Supplementary Information For the year ended June 30, 2004 1. BUDGETARY INFORMATION — Through the budget, the City Council sets the direction of the City, allocates its resources and establishes its priorities. The Annual Budget assures the efficient and effective uses of the City's economic resources, as well — as establishing that the highest priority objectives are accomplished. The Annual Budget serves from July 1 to June 30, and is a vehicle that accurately and openly communicates — these priorities to the community,businesses, vendors, employees and other public agencies. Additionally, it establishes the foundation of effective financial planning by providing resource planning, performance measures and controls that permit the evaluation and adjustment of the City's performance. The City does not adopt an annual budget for all capital projects funds. All capital projects funds are budgets on the project length basis. The City follows these procedures in establishing the budgetary data reflected in the basic financial statements: a. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. — b. Public hearings are conducted to obtain taxpayer comments. c. The budget is legally enacted through passage of a resolution. — d. The City Manager may authorize transfers of budget amounts within a fund. However, any revisions that increase the total budgeted expenditures of any fund must be approved by the City — Council. Expenditures may not legally exceed budgeted appropriations at the fund level without City Council approval. e. Formal budgetary integration in the form of legally adopted budgets is employed as a management — control device for all funds except the agency funds. Budgets are adopted on a basis consistent with generally accepted accounting principles. Budgeted expenditures reported are as amended by supplemental appropriations of the City Council. Encumbrance accounting, under which purchase orders, contacts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is — employed as an extension of formal budgetary integration in the General, special revenue and capital projects funds. Unexpended and unencumbered appropriations of these governmental funds automatically lapse at the end of the fiscal year. Encumbrances outstanding at year-end are reported as a reservation of fund balances. They do not constitute expenditures or estimated liabilities. 60 City of Saratoga Required Supplementary Information, Continued For the year ended June 30, 2004 1. BUDGETARY INFORMATION,Continued The followings are the budget comparison schedules for General Fund and all major special revenue funds. Budget Comparison Schedule,General Fund Positive (Negative) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund Balances-Beginning,as restated $ 6,899,374 $ 6,899,374 $ 7,565,922 $ 666,548 - Resources(inflows): Property taxes 3,060,190 3,060,190 3,020,515 (39,675) Other local taxes -1,902,035 1,902,035 1,822,785 (79,250) Intergovernmental-State 1,934,007 1,376,833 1,687,387 310,554 Franchise fees 932,582 932,582 983,621 51,039 Use of money and property 47-1,360 471,360 386,450 (84,910) Current service charges 3,537,635 3,537,635 3,037,674 (499,%1) Reimbursement of interfund cost allocations 1,467,643 "1,467,643 1,467,643 - Transfers in - 200,000 464,664 264,664 Amount available for appropriations 20,204,826 19,847,652 20,436,661 589,009 Charges to Appropriations(outflows): Current: - General and intergovernmental services 3,086,209 3,152,209 3,037,062 115,147 Public safety 3,188,793 3,188,793 3,1.72,922 15,871 Environmental services 609,385 643,132 488,495 154,637 Public works 1,209,565 1,209,565 1,208,717 848 Community services 1,403,425 1,620,307 1,357,048 263,259 Community development services 2,047,633 2,077,633 2,216,151 (138,5-18) Capital outlay 19,300 115,875 79,358 36,517 Transfers out 2,064,949 2,305,793 2,370,793 (65,000) 'Total charges to appropriations 13,629,259 14,313,:307 13,930,546 382,761 Fund Balances-Ending; $ 6,575,567 $ 5,534,345 $ 6,506,115 :5 971,770 61 City of Saratoga Required Supplementary Information, Continued For the year ended June 30, 2004 _ 1. BUDGETARY INFORMATION, Continued — Budgetary Comparison Schedule,Community Development Block Grant Special Revenue Fund Positive (Negative) Budgeted Amounts Actual Variance,.N ith Original Final Amounts Final Budget Fund Balances-Beginning,as restated $ 53,569 $ 53,569 $ 42,588 $ (10,981) a Resources(inflows): Intergovernmental-Federal 170,406 170,406 102,553 (67,853) Use of money and property 3,030 3,030 41,587 38,557 Amount available for appropriations 227,005 227,005 186,728 (40,277) Charges to Appropriations(outflows): Community services 140,848 140,848 102,728 38,120 Capital outlay 63,294 63,294 _ - 63,294 Total charges to appropriations 204,142 204,142 _ 102,728 101,414 _ Fund Balances-Ending $ 22,863 $ 22,863 $ 84,000 $ 61,137 62 City of Saratoga Required Supplementary Information, Continued For the year ended June 30, 2004 1. BUDGETARY INFORMATION, Continued Budgetary Comparison Schedule, Street and Roads Special Revenue Fund Positive (Negative) Budgeted Amounts Actual Variance"rith Original Final Amounts Final Budget Fund Balances-Beginring $ - $ - $ 4,484 S 4,484 Resources(inflows): Intergovernmental-State 590,362 590,362 582,340 (8,022) Use of money and property - - 2,846 2,846 Current service charges 703,000 117,480 10,598 (106,882) Transfers in 1,715,324 2,305,793 2,W65 793 - Amount available for appropriations 2,408,686 3,013,635 2,906,061 (107,574) Charges to Appropriations(outflows): Current: Environmental services 35,096 35,096 26,973 8,123 Public works 2,373,590 2,892,022 2,316,769 575,253 Capital outlay - 37,500 10,548 26,952 Total charges to appropriations 2,408,686 2,964,618 2,354,290 6-10,328 Fund Balances-Ending; $ - $ 49,017 $ 551,771 $ 502,754 2. MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS In accordance with GASB Statement No. 34, the City is required to account for and report infrastructure capital assets. The City defines infrastructure as the basic physical assets that allow the City to function and those resources utilized primarily by the public and provides future economic benefits for a minimum of two years. Infrastructure can be defined as assets that are immovable and of value only to the government. Major infrastructure system includes the street system, park and recreation lands and improvements system; storm water conveyance and drainage system, buildings combined with site amenities such as parking and landscaping areas used by the City in the conduct of its business. Each major infrastructure system can be divided into subsystems. For example, the street system can be divided into concrete and asphalt pavements, concrete curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals and pavement markings), landscaping and land. Subsystem detail is not presented in these basic financial statements;however, the City maintains detailed information on these subsystems. 63 City of Saratoga Required Supplementary Information, Continued For the year ended June 30, 2004 2. MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS — The City has elected to use the "Modified Approach" as defined by GASB Statement No. 34 for infrastructure reporting for its Streets Pavement System. Under GASB Statement No. 34, eligible — infrastructure capital assets are not required to be depreciated under the following requirements: • The City manages the eligible infrastructure capital assets using an asset management system with _ characteristics of (1) an up-to-date inventory; (2) perform condition assessments and summarize the results using a measurement scale; and (3) estimate annual amount to maintain and preserve at the established condition assessment level. _ • The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed condition assessment level. The City commissioned a physical assessment of the streets conditions as of June 30, 2001. The study assists the City by providing current inspection data used to evaluate current pavement condition. This helps to — maintain a City-defined desirable level of pavement performance while optimizing the expenditure of limited fiscal resources. The entire pavement network within the City is composed of approximately 135.2 centerline miles of pave surfaces. The City's road system can be grouped by function class and includes — 19.3 centerline miles of arterial, 23.3 centerline miles of collector,and 92.6 miles as residential. A visual survey of all pavement segments was conducted to assess the existing surface condition of each of _ the individual pavement segments. Upon completion of the study, a Pavement Condition Index (PCI) was calculated for each segment in the City's pavement network to reflect the overall pavement condition. Rating between 0 and 100, a PCI of 0 would correspond to a badly deteriorated pavement with virtually no remaining life. A PCI of 100 would correspond to a pavement with proper engineering design and construction at the beginning of its Iife cycle. The following conditions were defined: _ Condition Rating Excellent 86-100 Very Good 71-85 Good 56-70 _ Fair 41-55 Poor 26-40 Very Poor 11-25 Substandard 0-10 The City Policy is to achieve an average rating of 70 for all streets, which is a good rating. This rating allows minor cracking and raveling of the pavement along with minor roughness that could be noticeable ` to drivers traveling at the posted speeds. As of June 30, 2004, the City's street system was rated at a PCI index of 70 on the average with the detail condition as follows: Condition % of Streets Excellent to Good 78% Fair 13% Poor to Substandard 9% 64 City of Saratoga Required Supplementary Information, Continued For the year ended June 30, 2004 2. MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS, Continued The City expended $1,489,667 on street maintenance for the year ended June 30, 2004. These routine maintenance expenditures delayed deterioration. The budget required to maintain and improve the current level of overall condition through the year 2006 is a minimum of$4,500,000. ($1,500,000 projected budget each year for the years ending June 30, 2004,2005, and 2006.) A schedule estimated annual amount calculated to maintain and preserve its streets at the current level compared to actual expenditures for street maintenance for the last five years is presented below: Funded Actual Funded by by Gas Total Fiscal Year Budget Expenditures General Fund Tax Fund Funded 1999-00 $ 1,846,839 $ 1,686,129 $ -I,095,289 $ 590,840 $ -1,686,129 2000-01 2,520,255 801,160 2,05,309 595,851 801,160 2001-02 3,529,420 2,214,717 1,631,855 582,862 2,114,717 2002-03 2,207,922 1,553,674 974,514 579,160 1,553,674 2003-04 1,961,844 1,489,667 907,327 582,340 1,489,667 As of June 30, 2004, approximately 22% of the City's streets were rated below the average standard of 70. The City will continue to rehabilitate these segments of the streets. Total deficiencies (deferred maintenance) identified in the Pavement Management System amounted to approximately $13,817,763 for all streets. 3. DEFINED PENSION PLAN _.. A schedule of funding progress for the year ended June 30, 2004 including the past three actuarial valuations is presented below. _. Miscellaneous Employees Unfunded Actuarial Entry Age Unfunded Liability as Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Asset Accrued Accrued Funded Covered Covered Date* Value Liability Liability Ratio Payroll Payroll 6/30/2001 $ 19,419,719 $ 14,742,788 $ (4,676,931) 131.7% $ 3,035,996 -154.0% 6/30/2002 18,292,349 15,889,904 (2,402,445) 115.1% 3,620,470 -66.4% 6/30/2003 2,372,879,034 2,596,966,545 224,087,511 91.4% 725,020,458 30.9% * Latest information available. 65 66 i I I� J Z�b.tl 68 -- -- NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Local Law Enforcement - This fund accounts for State Supplemental Law Enforcement entitlement allocated - based on population. Lighting and Landscaping Assessment District - This fund accounts for revenues and expenditures associated with development of the City. Debt Service Fund Library Bond - Santa CIara County lease revenues are accumulated in this fund to pay annual principal and interest payments on the 1976 and 2001 library bonds. Capital Projects Funds Park Development - This fund accounts for resources used for the acquisition and consii°uction of major capital facilities by the City,primarily the acquisition and construction of various City parks. Library Expansion -This fund accounts for resources used for the construction of the City's library. 69 City of Saratoga ` Combining Balance Sheet Nonmajor Governmental Funds June 30, 2004 Special Revenue Debt Service Capital Projects Lighting and Total Landscaping Other Local Law Assessment Library Park Library Governmental Enforcement District Bond Development Expansion Funds ASSETS Cash and investments $ 2,125 $ 52,236 $ - $ 200 $ 1,185,843 S 1,240,404 Restricted cash and investments - - 701,976 - - 701,976 Accounts receivable - 564 3,209 - 1,223 6,996 Total assets $ 2,125 $ 52,800 $ 707,185 $ 2.00 $ 1,187,066 $ 1,949,376 ` LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ 14,35-5 S $ $ 7,574 $ 21,929 Accrued payroll 2,125 1,836 - 3,961 Due to other funds - - 5,209 - 5,209 Total liabilities 2,125 16,191 5,209 - 7,574 31,099 Fund Balances: Reserved for: Debt service - - 701,976 - - 701,976 Unreserved,undesignated,reported in: Special revenues funds - 36,609 - - - 36,609 ` Capital projects funds - - - 200 1,179,492 1,179,692 Total fund balances - 36,609 701,976 200 1,179,492 1,918,277 Total liabilities and fund balances S 2,125 $ 52,800 $ 707,185 $ 200 $ 1,187,066 $ 1,941),376 70 City of Saratoga Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the year ended June 30, 2004 Special Revenue Debt Service Capital Projects Lighting and Total Landscaping Other Local Law Assessment Library Park Library Governmental Enforcement District Bond Development Expansion Funds REVENUES: Property taxes $ - $ 253,950 $ 887,385 $ $ $ 1,141,335 Intergovernmental-State 100,000 - - 1()0,0()0 Use of money and property 3,749 385 16 - 4,230 8,380 Current service charges - 16,788 - 18,000 - 34,788 Total.revenues 103,749 271,123 887,401 18,000 4,230 1,2S4,503 EXPENDITURES: Current: Public safety 12,997 - - 12,997 Public works - 301,703 - - 301,703 Capital outlay - 369,563 369,563 Debt service: _., Principal 245,000 - - 245,000 Interest and fiscal charges - 776,774 - 770,774 Total.expenditures 12,997 301,703 1,021,774 - 369,563 1,70t,03 REVENUES OVER (UNDER)EXPENDITURES 90,752 (30,580) (134,373) 18,000 (365,333) (421,5:34) OTHER FINANCING SOURCES(USES): Translers in 65,000 65,000 Transfers out (2t)t,N,4) (98,369) (361,1)c3) Total.other financing sources(uses) (264,664) (33,369) (298,03:3) Net change in fund balances (173,912) (30,580) (134,373) (15,369) (365,333) (711067) _. FUND BALANCES: Beginning of year 173,912 67,189 836,349 15,569 1,544,825 2,637,S44 I:nd of year $ - $ 36,609 $ 701,976 $ 200 $ 1,179,492 $ 1,918,277 71 City of Saratoga Schedule of Revenues,Expenditures and Changes in Fund Balances - Budget and Actual Local Law Enforcement Special Revenue Fund For the year ended June 30, 2004 Variance with Final Budget -- Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 174,683 $ 174,683 $ 173,912 $ (771) RESOURCES(INFLOWS): Intergovernmental-State 100,000 100,000 100,000 - Use of money and property 1,735 3,735 3,749 14 Amount available for appropriation 278,418 278,418 277,661 (757) CHARGES TO APPROPRIATIONS(OUTFLOWS): Current: Public safety 74,203 74,203 12,997 61,206 Transfers out - - 264,664 (264,664) -- Total charges to appropriations 74,203 74,203 277,661 (203,458) FUND BALANCES-ENDING $ 204,215 $ 201,215 $ - $ (204,215) 72 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Lighting and Landscaping Assessment District Special Revenue Fund For the year ended June 30, 2004 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 65,261 $ 65,261 $ 67,189 $ 1,928 RESOURCES(INFLOWS): Property taxes 244,434 244,434 253,950 9,516 Use of money and property 1,435 1,435 385 (1,050) Current service charges - - 16,788 16,788 -- Amount available for appropriation 311,130 311,130 338,312 27,182 CHARGI-S TO APPROPRIATIONS(OUTFLOWS): Current: Public works 310,077 344,609 301,703 42,906 --- Total charges to appropriations 310,077 344,609 301,703 42,906 FUND BALANCES-ENDING $ 1,053 $ (33,479) $ 36,609 S 70,088 73 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Library Bond Debt Service Fund For the year ended June 30, 2004 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 11119,817 $ 1,119,817 $ 836,349 $ (283,468) RESOURCES(INFLOWS): Property taxes 1,025,010 1,025,010 887,385 (137,625) Use of money and property - - 16 16 Amount available for appropriation 2,144,827 2,144,827 1,723,750 (421,093) CHARGES TO APPROPRIATIONS(OUTFLOWS): Debt service: Principal 245,000 245,000 245,000 - Interest and fiscal charges 779,635 779,635 776,774 2,861 .r Total charges to appropriations 1,024,635 1,024,635 1,021,774 2,861 FUND BALANCES-ENDING $ 1,120,192 $ 1,120,192 $ 701,976 $ (418,216) 74 -- ]FIDUCIARY FUND FINANCIAL STATEMENTS AgencX Funds Cable T.V. Trust -This fund accounts for funds of the Saratoga Community Access T.V. Foundation. Assessment Districts Bonds - This fund accumulates the monies for payment of bonds for Village Parking --- Districts #2 and #3, the Leonard Road Improvement District and the Saratoga Public Financing Authority which are financed by assessments placed on the County tax roll. 75 City of Saratoga Combining Statement of Fiduciary Net Assets Agency Funds _ June 30,2004 Total Cable T.V. Assessment Agency Trust District Bonds Funds ASSETS Cash and investments $ 87,376 $ 32,775 120,151 Restricted cash and investments - 331,282 331,282 Accounts receivable - 42,946 42,046 Total assets $ 87,376 $ 407,003 $ 494,379 LIABILITIES Deposits payable $ 87,376 $ - 5 87,376 Due to assessment district bondholders - 407,003 407,003 Total liabilities 5 87,376 $ 407,003 $ 494,379 76 _ City of Saratoga Combining Statement of Changes in Assets and Liabilities Agency Funds -- For the year ended June 30, 2004 Balance Balance. July 1,2003 Additions Deductions June 30,2004 _ Cable T.V.Truss: Assets: Cash and investments $ 167,428 $ 9,546 $ (89,598) $ 87,376 Liabilities: Deposits payable $ 167,428 $ 9,546 $ (89,598) $ 87,376 Assessment District Bonds Assets: Cash and investments $ 34,822 $ 174,651 $ (176,698) $ 32,775 Restricted cash and investments 330,109 1,1.73 331,282 Accounts receivable 42,946 - - 42,946 Total assets $ 407,877 $ 175,824 $ (176,698) $ 407,003 Liabilities: Due to assessment district bondholders $ 407,877 $ 175,824 $ (176,698) $ 407,003 Total liabilities $ 407,877 $ 175,824 $ (176,698) $ 407,003 'Total A eency Funds Assets: Cash and investments $ 202,250 $ L84,197 $ (266,296) $ 120,151 Restricted cash and investments 330,109 1,173 - 331,282 Accounts receivable 42,946 - - 42,946 Total assets $ 575,305 $ 185,370 $ (266,296) $ 494,379 Liabilities: Deposits payable $ 167,428 $ 9,546 $ (89,598) $ 87,376 Due to assessment district bondholders 407,877 -175,824 (176,698) 407,003 Total liabilities $ 575,305 $ 185,370 $ (266,296) $ 494,379 77 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 79 City of Saratoga - Capital Assets Used in the Operation of Governmental Funds Comparative Schedules by Source June 30, 2004 and 2003 2004 2003 GOVERNMENTAL FUNDS CAPITAL ASSETS: Land and land improvements $ 11,118,030 $ 4,830,840 Buildings and structures 19,278,447 4,860,089 Machinery and equipment 2,061,856 1,973,716 Infrastructure 98,91.7,810 98,829,447 Construction in progress 4,224,480 22,924,027 Total governmental funds capital assets 135,600,623 133,418,119 Accumulated depreciation (16,601,165) (14,693,195) -- Total governmental funds capital assets,net S 118,999,458 $ 118,724,924 INVESTMENTS IN GOVERNMENTAL FUNDS CAPFFAL ASSETS BY SOURCE: General Fund $ 109,656,766 $ 109,584,004 Special revenue funds 1,570,614 1,553,469 Capital projects funds 24,321,828 22,229,231 Donations 51,415 51,415 Accumulated depreciation (16,601,165) (14,693,195) Total governmental funds capital assets $ 118,999,458 $ 118,724,924 80 City of Saratoga Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity June 30, 2004 Land and Buildings Machinery Construction Land and and in Improvements Structures Equipment Infrastructure Progress Total FUNCTION AND ACTIVITY General and inter overnrnental services: Management services $ - $ 271,629 S 103,118 $ $ 42,737 $ 417,484 Administrative services - 167,586 141,777 - 30100 Intergovernmental services 118,184 3,096,786 89,156 3,304,126 Total general and intergovernmental services 118,184 3,536,001 334,051 4 2,73 7 4,030,9M Public safety: Police services - - 70,305 - - 70,305 Code enforcement - - 69,412 69,412 Tot11 public safety - - 139,717 139,717 Public works: Streets and sidewalks 13A,696 30,628 688,100 98,906,617 1,758,786 101,518,827 Parks/open space 2,529,529 99,634 471,870 - - 3,101,053 Total public works 2,664,225 130,282 1,159,970 98,906,617 1,758,786 104,619,880 Community services 6,593,157 1,312,265 331,279 - 1,963,880 10,200,581 Community development services 1,742,464 14,299,899 96,839 11,193 459,077 16,609,472 Total governmental funds capital assets 11,118,030 19,278,447 2,061,856 98,917,810 4,224,480 135,600,623 Accumulated depreciation - (2,364,517) (1,493,299) (12,743,349) - (16,601,1655) Total governmental funds capital assets,net $ 11,118,030 $ 16,913,930 $ 568,557 $ 86,174,461 $ 4,224,480 $ 118,999,458 81 City of Saratoga r Capital Assets Used in the Operation of Governmental Funds Schedule of Changes by Function and Activity For the year ended June 30, 2004 Governmental Governmental Funds Capital Funds Capital -- Assets Assets July 1,2003 Additions Deletions June 30,2004 FUNCTION AND ACTIVITY General and intergovernmental services: Management services $ 369,017 $ 79,637 S (31,170) S 417,484 — Administrative services 309,363 - - 309,30 Intergovernmental services 3,294,788 9,338 - 3,304,126 Total general and intergovernmental services 3,973,168 88,975 (31,170) 4,030,973 Public safety: Police services 70,306 - (1) 70,303 Code enforcement 69,412 - - 69,412 Total public safety 139,718 - (1) 139,717 Public works: Streets and sidewalks 100,643,676 952,321 (77,170) 101,518,827 Parks/open space 3,090,245 10,808 - 3,101,053 Total public works 103,733,921 963,129 (77,170) 104,619,880 Community services 9,356,204 7,211,823 (6,367,446) 10,200,581 Community development services 16,215,108 14,705,456 (14,111,092) 16,609,472 Total governmental funds capital assets 133,418,119 22,969,383 (20,786,879) 135,600,623 Accumulated depreciation (14,693,195) (1,907,970) - (16,601,165) Total governmental funds capital assets,net $ 11.8,724,924 `b 71,061,413 $ (20,786,879) $ 118,999,438 82 City of Saratoga Government-Wide Expense - By Function 56,000,000 $5,000,000 { $4,000,000 $3,000,000 $2,000,000 $1,000,000 I 2003 2004 O General/Inter-Governmental ■Public Safetv ❑Envirorunental Services ❑Public bVurks ■Commwlity Services OComtnunity Development Services — 0Interest on Lons;-Iernr Debt ❑Expense Unallocated Community Interest on Depreciation —. General/Inter- Public Environmental Public Community Development Long-term Fxpense Fiscal Year Governmental Safety Services Works Services Services Debt Unallocated Total 2003 S 3,218,231 S 3,512,550 $ 647,935 $ 3,874,717 $ 1,975,659 $ 2,086,160 $ 782,506 $ 1,566,93-1 S 17,664,689 2004 3,149,593 3,208,027 513,539 5,111,509 1,535,575 2,575,621 771,670 - 16,867,534 Note: 1'he fiscal year ended June 30,2002 was the first year that the City implemented GASB Statement No.34. ` Source: City of Saratoga Annual Financial Report 84 City of Saratoga - Government-Wide Revenues- By Sources ss,tulo,000 X� -- $7,000,000 S6,000,000 ' $5,000,000 - S4,000,O1)0 ''r rs , $3,000,000 $2,000,000 $1,000,000 / 2003 2004 ❑Charges torServices ®OFcratingCrantsandContributions ■CapitaiGrant-,and Contributions ❑Taxes ■Minor Vchicic In-lieu Fees ❑Investment Earnings ■Miscellaneous Program Revenues General Revenues Charges Operating Capital Motor for Grants and Grants and Vehicle Investment Fiscal Year Services Contributions Contributions 'faxes In-lieu Fees Earnings Miscellaneous Total 2003 $ 5,796,502. $ 1,901,933 $ - $ 7,952,843 $ 1,896,606 $ 246,671 $ :315,165 $ 18,109,720 2004 4,663,95C, 953,962 1,044,971 7,075,307 1,488,954 114,537 249,121 15,589,802 Note: The fiscal year ended June 30,2002 was the first year that the City implemented GASB Statement No.34. Source: City of Saratoga Annual Financial Report 85 City of Saratoga General Fund Revenues - By Source Last ten fiscal years - $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 - - $2,000,000 - $1,500,000 $-1,000,000 - $500,000 - I $- r 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 _ ■Property Taxes ©Other Local Taxes 0Intergovernmental Franchise Fees 0 Use of Money and Property 0 Current Service Charges Current - Property Other Inter- Franchise Use of Money Services Fiscal Year Taxes Local Taxes governmental Fees and Property Charges Total 1995 $ 1,221,096 $ 2,434,070 $ 1,064,052 $ 707,822 $ 272,425 $ 1,996,874 $ 7,696,339 1996 1,546,162 2,965,069 1,152,968 669,467 343,295 2,036,854 8,713,815 1997 2,142,454 2,424,825 1,301,443 685,083 665,966 2,552,050 9,771,821 1998 1,664,144 2,202,826 1,392,591 772,258 457,382 2,037,182 8,526,383 1999 -1,864,766 2,328,071 1,680,670 777,560 472,198 1,705,692 8,828,957 2000 2,790,294 2,718,358 1,623,583 886,618 630,833 2,005,183 10,654,869 _ 2001 2,065,051 2,938,209 1,725,765 876,652 930,430 1,962,122 10,498,229 2002 2,772,02-1 2,067,288 1,901,892 1,010,609 216,562 2,546,937 10,515,309 2003 3,400,228 2,138,618 1,947,205 932,808 242,228 2,602,924 11,264,011 2004 3,020,515 1,822,785 1,687,387 983,621 386,450 4,505,317 12,406,075 Note: Year 2003 property tax receipts include one time Special Assessment. Source: City of Saratoga Annual Financial Report 86 - City of Saratoga General Fund Expenditures - By Function Last ten fiscal years r i $4,000,000 $3,500,000 $3,000,000 - $2,500,000 $2,000,000 $1,500,000 --- ---- - - - i $1,000,000 — -.—- $500,000 $- — — 1995 1996 1997 -1998 1999 2000 2001 2002 2003 2004 I ®Public Safety ©Development Services ❑Public Works ❑Community Service&Support 13 General/Intragovernment ❑Capital Outlay ■Environmental Services I General/ -- Inter- Public Environmental Development Public: Community Capital Fiscal Year Governmental Safety Services SeMces Works Services Outlay Total 1995 $ 1,698,219 $ 2,411,207 S - $ 907,232 1; 2,587,008 $ 234,788 $ 531,607 !l; 8,370,061 1996 1,819,188 2,322,425 - 1,098,931 1,444,155 177,837 154,695 7,017,231 1997 279,737- 2,616,973 - -1,616,532 2,697,413 349,019 280,500 7,840,174 1998 1,074,696 2,598,233 - 65,502 877,204 179,928 226.310 5,021,873 1999 1,754,995 2,581,940 - 30,947 712,822 72,880 212;223 5,365,807 2000 1,404,530 2,761,741 - 129,849 1,113,870 172,549 578,612 6,161,151 _.._ 2001 1,574,597 3,062,160 - 140,883 1,349,838 262,696 651;814 7,041,988 2002 1,943,.301 3,570,910 - 111,520 1,378,334 465,241 614,171 8,083,477 2003 3,168,878 3,431,591 - 85,994 1,104,505 343,864 228,607 8,363,439 _-.. 2004 3,037,062 3,172,922 488,495 2,216,15-1 1,208,717 1,357,048 79,358 11,559,753 Source: City of Saratoga Annual Financial Report 87 City of Saratoga Property Tax Levies and Collections (General Fund) Last ten fiscal years $4,000,000 $7,000,000,000 $3,500,000 $6,000,000,000 -- $3,000,000 $5,000,000,000 _ $2,500,000 $4,000,000,000 $2,000,000 $1,500,000 $3,000,000,000 $1,000,000 $2,000,000,000 • I ' $500,000 $1,000,000,000 rn m rn o o rn ON rn o 0 ► Tax Levied C—Property Value — Property Tax Value of Property Fiscal Levies and Subject to Local Year Collections Tax Rate 1995 $ 1,221,096 5 3,289,435,553 1996 1,546,162 3,398,224,679 1997 2,142,454 3,697,796,461 1998 1,664,144 4,029,381,944 1999 1,864,766 4,432,656,416 2000 2,790,294 4,823,743,087 2001 2,065,051 5,331,749,683 2002 2,772,02"1 6,271,461,110 2003 3,400,228 6,489,250,969 2004 3,020,515 6,953,969,775 Note: Year 2003 property tax receipts include one time Special Assessment. Sources: Citv(it Saratoga Annual Financial Report C'aIitornia Municipal Statistics Inc. 88 City of Saratoga General Fund Tax Revenue Last ten fiscal years $6,000,000 $5,000,000 $4,000,000 x $3,000,000 $2,000,000 $1,000,000 $- `:.+ ;,�,::. ,.., .,.x :;:. . ... ,,. +., ,,,.:,<. .•„ ::.. ,.ems -, T 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 ❑UtiIity Users'Tax —— ■Property Tax(2) —� I ❑Sales'Tax ❑Other Taxes(1) I Fiscal Utility Year User's Tax Property Tax(2) Sales Tax Other Taxes(1) Total 1995 $ 725,373 $ 1,221,096 $ 672,1.34 S 836,563 $ 3,655,166 1996 729,468 1,546,162 .996,799 1,338,802 4,511,231 1997 312,464 2,142,454 966,900 1,145,461 4,567,279 1998 - 1,664,144 1,057,677 1,145,149 3,866,970 1999 - 1,864,766 979,192 1,348,879 4,192,837 2000 - 2,790,294 1,071,122 1,647,236 5,508,652 2001 - 2,065,051 1,255,726 1,682,483 5,003,260 2002 - 2,772,021 1,066,607 1,000,681 4,839,309 _-_ 2003 - 1,400,228 1,028,329 1,110,289 5,538,846 2004 - 3,020,515 ;895,028 927,757 4,843,300 Notes: (1)Other Taxes include:Transient Occupancy Tax,Real Property Transfer Tax,Construction Tax,Business License Tax. 2002 Statement of Revenues,Expenditures,&Changes in Fund Balance classifies Business License as a fee associated with activity. For comparative purposes,the inclusion of 2002 Business Licenses would total$1,276,043. (2)Properly Tax levy's are remitted in full by Santa Clara County which handles delinquencies and retains all interest and penalties. Year 2000 property tax receipts include settlement proceeds,Year 2003 property tax receipts include one time Special Assessment. Source: City of Saratoga Finance Department 89 City of Saratoga Assessed and Estimated Actual Market Value of Taxable Property Last ten fiscal years $7,000,000,000 $6,000,000,000 — $5,000,000,000 -- - _ $4,000,000,000 $3,000,000,000 i $2,000,000,000 i $1,000,000,000 -1995 -1996 1997 1998 1999 2000 2001 2002 2003 2004 0Secured Property ■Unsecured Property Fiscal Secured Unsecured Total Estimate(] Year Property Property Assessed Market 1995 $ 3,261,741,964 $ 27,693,589 $ 3,289,435,553 $ 3,289,435,553 1996 3,363,964,334 34,260,345 3,398,224,679 3,398,224,679 1997 3,660,513,753 37,282,708 3,697,796,461 3,697,796,461 1998 3,990,741,994 38,639,950 4,029,381,944 4,029,381,944 1999 4,392,456,823 40,199,593 4,432,656,416 4,432,656,416 2000 4,789,325,625 34,417,462 4,823,743,087 4,823,743,087 2001 5,292,676,050 39,073,633 5,331,749,683 5,331,749,683 _ 2002 6,227,826,411 43,634,699 6,271,461,110 6,271,461,110 2003 6,441,614,970 47,635,999 6,489,250,969 6,489,250,969 2004 6,912,443,373 39,781,926 6,953,969,775 6,953,969,775 _- Note: The California Constitution requires properties to be assessed at full market value on the date of purchase but limits increases in assessed valuation to 2%annually. Source: California Municipal Statistics,Inc. 90 City of Saratoga - Property Tax Rates (Per$100 of Assessed Valuation) - All Overlapping Governments Last ten fiscal years 1.2000 1.mw - 0.8000 0.6000 - T 0.4000 - 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 ❑Basic County Wide Levy ■School Districts ❑Special Districts&Other Fiscal Basic County School Special Districts fear Wide Levy Districts and Other 199E5 1.0332 0.0903 0.0180 1996 1.0338 0.1170 0.0147 1997 1.0365 0.0743 0.01.02 1998 1.0412 0.0415 0.11098 1999 1.0405 0.0647 0.0082 2000 1.0343 0.0612 0.0085 200:1. 1.0380 0.0685 0.0135 2002 1.0388 0.0544 0.0129 2003 1.0412 0.0917 0.0282 - 2004 1.0421 0.0918 0.0288 Source: California Municipal Statistics Inc. 91 City of Saratoga Special Assessment Billings and Collections Last ten fiscal years $600,000 $500,000 ` $400,000 $300,000 $200,000 $100,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 a Special Assessment Special Assessment Fiscal Billings and Year Collections 1995 $ 88,623 1996 104,292 1997 83,101 1998 102,164 1999 55,505 _ 2000 157,936 2001 95,973 2002 101,162 2003 574,469 2004 124,365 Note: Year 2003 comprises of Lighting and Landscaping and one time special assessment in General Fund Source: City of Saratoga Annual Financial Report 92 City of Saratoga - Ratio of General Obligation Bonded Debt to Assessed Value and Bonded Debt Per Capita Last ten fiscal years S7,000,000,000 600 S6,000,000,000 500 - - ti5,000,Ol10,U(10 400 $4,000,000,000 �♦ 300 — S3,000,000,000 �'- 200 — $2,000,000,000 $1,000,000,000 100 ' r - - --ter--i in r s s a o 0 rn rn rn rn a a o 0 Net Bonded Debt Per Capita - —♦—Assessed VahJe --- -- -- Fiscal Assessed Bonded Debt Year Population Value Debt Per Capita 1995 $ 29,576 $ 3,289,433,553 $ 555,00() 19 1996 29,579 3,398,224,(,79 490,000 17 1997 30,591 1,697,796,46-1 415,000 14 1998 31,097 4,029,181,944 340,000 11 1999 31,255 4,432,656,416 265,000 8 2000 31.,320 4,823,743,087 185,000 6 2001 29,843 5,331,749,683 15,100,000 506 --- 2002 30,444 6,271,461,110 15,000,000 493 2003 30,482 6,489,250,`)69 14,940,000 490 2004 30,300 6,953,969,775 14,695,000 485 Note: Includes Library General Obligation Bonds only Sources: County of Santa Clan}Tax Rate and Information Publication - California Municipal Statistics Inc. 93 City of Saratoga Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Fund Expenditures -Last ten fiscal years -12.00% 10.00% 8.a0%- 6.00% 4.00% 2.00% 0.00% 1995 -1996 1997 1998 1999 R 2000 2001 2002 2003 2 004 13 Debt Service Percent of Total Debt Service to Fiscal Total General Fund General Fund Year Principal Interest Debt Service Expenditures Expenditures 1995 $ 60,000 6 33,644 $ 93,644 $ 8,370,061 1.12% 1996 65,000 30,307 95,307 7,017,231 1.36% 1997 75,000 26,700 101,700 7,840,174 1.30% 1998 75,000 22,178 97,178 5,021,873 1.94% 1999 75,000 18,071 93,071 3,363,807 1.73% 2000 80,000 18,783 98,783 6,161,151 1.60% 2001 85,000 9,774 94,774 7,041,988 1.35% 2002 99,973 592,462 692,435 8,083,477 8.57% 2003 60,000 783,756 843,756 8,363,439 10.09% 2004 245,000 777,112 1,022,112 11,559,753 8.84°,/° (Vote: Includes General Obligation Bonds Source: City of Saratoga Finance Department 94 City of Saratoga Demographic Statistics Last ten fiscal years $31,500 _- $1,750,000 $31,000 ��— $30,500 $1,700,000 �rrmv<u 530,000 $1,650,000 �~ $29,500 $1,600,000 S29,000 - $1,55(1,000 $28,500 $1,500,000 00 a rn CD " 1995199619971998 1999 r i n N N ; 2000 2007 2002 20Q3 N �OCity Population County Population Fiscal City County Population Year Population Population % of County 1995 $ 29,576 S 1,607,673 1.84% 1996 29,579 1161Z258 1.83 199,7 30,59-1 11653,061 1.85 1998 31,097 11689,908 1.84% 1999 31,255 1,715,374 1.82% _ 2000 31,320 1,736,722 1.80% 2001 29,843 11682,585 1.77 2002 30,444 11719,565 1.77 2003 30,482 1,729,917 1.76 2004 30,300 11731,400 l.75% Source: State of Califomia Department of Finance-Population Research Unit 95 City of Saratoga Property Values, Remodeling and Construction Last ten fiscal years 57,000,000,000 $90,(10U,000 56,000,000,000 $80,000,000 _ $70,000,000 $5,000,000,000 $60,000,000 $4,000,000,000 $50,000,000 $3,000,000,000 $40,000,000 — $2,()00,000,000 $30,000,000 j $20,000,000 $1,000,000,000 1 $10,000,000 $- $ —m h LA - 1995 1997 1999 2001 2003 1995 1997 1999 2001 2003 i -• ■Property Values OR es i dential Remodeling&Construction $3-00,000,0()0 57,000,000 $450,000,000 S6,000,000 $400,000,000 $5,000,000 $350,000,000 $300,000,000 $4,000,000 $250,000,000 _ $3,000,000 $200,000,000 $2,000,000 - $150,0o0,0o0 $100,000,000 $1,000,000 $50,000,00(1 LP 4 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1997 1999 2001 2003 ❑Commerical Ke model ing&Construction ❑Bank Deposits Commercial Remodeling Residential Remodeling _ and Construction and Construction Fiscal Property Number Number Bank Year Values of Permits Value of Permits Value Deposits -1995 $ 3,289,224,679 57 $ 1,147,719 3,194 $ 35,922,169 $ 304,179,000 1996 3,398,224,679 69 1,171,533 2,535 66,013,893 331,014,000 1997 3,697,796,461 52 843,020 1,834 44,982,977 343,982,200 _ 1998 4,029,381,944 47 5,300,593 1,844 48,230,194 376,130,000 1999 4,432,656,416 66 6,383,068 1,916 66,218,156 391,733,000 2000 4,823,743,087 57 4,362,875 1,960 65,901,107 446,758,000 2001 5,331,749,683 61 1,439,538 1,63-1 68,500,341 469,940,000 2002 6,27-1,461,110 42 1,405,295 1,685 53,474,165 446,251,000 2003 6,489,250,969 41 987,768 1,346 82,162,747 N/A 2004 6,953,969,775 43 2,865,523 1,554 57,079,206 N/A Source: City of Saratoga Finance Department Bank deposits from Findley Reports and Sheshenoff Information Services 96 — City of Saratoga Computation of Legal Debt Margin June 30, 2004 Assessed value $ 6,953,969,775 Bonded debt limit(15%of assessed value) $ 1,043,095,466 Amount of debt subject to limit• Total long-term debt 14,695,000 Legal debt margin $ -1,057,790,466 --- Source: City of Saratoga Finance Department 97 City of Saratoga - Computation of Legal Debt Margin June 30, 2003 Percentage Amount Applicable to City Applicable to City of Saratoga of Saratoga DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Santa Clara Valley Water District,'Lone W-1. 3.819% $ 222,839 Foothill-De Anza Community College District 1.7600 3,334,058 Campbell Union High School District 5.7350 4,229,563 Fremont Union High School District 3.6720 4,917,175 Los Gatos-Saratoga Joint Union High School District 41.0890 29,438,214 Campbell Union School District 7.2080 5,690,954 Cupertino Union School District 6.3700 7,790,800 Moreland School District 13.2450 6,697,902 Saratoga Union School District 85.7690 48,665,158 Saratoga Fire Protection District 97.5540 5,710,555 City of Saratoga 100.0000 14,695,000 Santa Clara Valley Water District Benefit Assessment District 3.6320 7,159,035 Total Gross Direct And Overlapping Tax And Assessment Debt $ 138,551,253 DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: Santa Clara County General Fund Obligations 3.612% $ 22,881,053 Santa Clara County Board of Education Certificates of Participation 3.632 672,283 ` Foothill-DeAnza Community College District Certificates of Participation 1,76 429,776 West Valley Community College District Certificates of Participation 11.243 2,688,763 Los Gatos-Saratoga Joint Union l ligh School District Certificates of Participation 41.089 1,855,168 Cupertino Union School District Certificates of Participation 6.37 411,.502 Moreland School District Certificates of Participation 13.245 747,680 Saratoga Union School District Certificates of Participation 85.769 6,685,694 a NIidpeninsula Regional Open Space Park District General Fund Obligations 6.352 7,420,101 Total Direct And Overlapping General Fund Obligation Debt $ 43,793,420 Gross Combined Total Debt $ 182,144,673 (1) (1) Excludes tax and revenue anticipation notes,revenue,mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to Assessed Valuation: Direct Debt (514,695,000) 0.21% Total Direct and Overlapping Tax and Assessment Debt 1.99% Combined'Total Debt 2.62% STATE SCHOOL BUILDING REPAYABLE AS 6/30/2004: SO Source:California Municipal Statistics,Inc. 98 — City of Saratoga - Principal Taxpayers; June 30, 2004 Percent of Total Assessee Use Assessed Value Assessed Value Saratoga Office Center Partners LLC Office Building $ 22,325,000 0 32% Navico Incorporated Residential Properties 13,543,440 0.20'X, Michael T. LaBarbera Shopping Center 12,900,960 0,1916 David C.and Roxanne N.Peterschmidt Single Family Residence 12,004,998 0.17% San Jose Water Works Water Company 9,900,550 0.14% David J.and"Terri E.Morrison Office Building 9,423,067 0.14'N, Ashok Krishnamurlhi Single Family Residence 9,281,800 0.13% Argonaut Associates LLC Shopping Center 9,240,526 0.13% Deloise A.Jordan Single Family Residence 8,918,193 0.13 ; - Rama K.and Poonam M.Shukla Single Family Residence 8,800,000 0.13% David L.House Single Family Residence 8,594,081 0.12% Public Storage Props IX Inc. Warehousing 8,373,313 0.12 0 - S.and MaliniSrinivasan Single Family Residence 7,800,808 0.11% John T.and Karean L.Chapman Single Family Residence 7,359,750 0.11% Sobrato Construction Corporation Residential Properties 7,085,616 0.10% John and Carle Freitas LLC Institutional 5,900,000 0.09 y, Vincent R.and Susan Borelli Single Family Residence 5,689,250 0.08% 849 College Ave.Inc. Single Family Residence 5,400,000 0.08% Stephen J.Luczo Single Family Residence 5,274,203 0.08% James S.and Lynda J.Morley Single Family Residence 5,120,734 0.07% Total $ 182,936,311 2.65% Total assessed valuation $ 6,912,443,373 Source:California Municipal 5 tatistics,Inc. 99 City of Saratoga Miscellaneous Statistics June 30, 2004 Date of Incorporation 1956 Dorm of Government Council-i0anager Employees: Public Safety 1 City manger's office 6 Recreation 10 Public:works/ maintenance 21 a Community development 12 Administrative services 7 Total employees 57 Area 12.25 square miles Miles of Streets 150 137 public;13 private: _ Length of Storm Drains 45 miles Fire Protection: Saratoga Fire District: Number of stations 1 Number of firefighters 24 Number of reserve firefighters 25 _ Central Fire District: Number of stations 2 Number of firefighters 18 Number of reserve firefighters 40 Police Protection: Number of stations 1 Number of police officers 80 _ Number of support personnel 6 Water Utility: _ San Jose 1%Iater Company: Number of meters 10,121 Average daily consumption 843 gallons per household Length of water mains 177 miles Length of storm drains 45 miles Sewer: West Valley Sanitation District: Number of connections 8,564 Length of sewer lines 123 miles Cupertino Sanitation District: Number of connections 2,118 Length of sewer lines 36 miles Culture and Recreation: Parks 15 Acres in parks 81 acres Taxable Sales $ 89,502,900 Registered Voters 20,258 Population 10,300 Sources: Various City records 100