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11a. Annual Financial Report
CITY OF DOWNEY, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Prepared by: Department of Finance John Michicoff Finance Director Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets Statement of Activities CITY OF DOWNEY TABLE OF CONTENTS For the Fiscal Year Ended June 30, 2009 Page Number INTRODUCTORY SECTION: Letter of Transmittal i - vi Principal Officials vii Organization Chart viii GFOA Certificate of Achievement for Excellence in Financial Reporting ix FINANCIAL SECTION: Independent Auditors' Report Management's Discussion and Analysis (Required Supplementary Information Fund Financial Statements: Governmental Funds: Balance Sheet Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Proprietary Funds: Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows 1 - 2 3 - 16 17 18 - 19 20 21 23 24 - 25 27 28 - 31 32 - 33 34 - 37 Fiduciary Funds: Statement of Fiduciary Assets and Liabilities 38 Notes to Basic Financial Statements 39 - 77 CITY OF DOWNEY TABLE OF CONTENTS (CONTINUED) For the Fiscal Year Ended June 30, 2009 Page Number Required Supplementary Information: 79 Schedules of Funding Progress: City Employee Retirement Plan 80 Postemployment Benefits Other Than Pensions 80 Budgetary Comparison Schedules: General Fund 81 Gas Tax Special Revenue Fund 82 Note to Required Supplementary Information 83 Supplementary Schedules: Other Major Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Housing Capital Projects Fund 85 86 Other Governmental Funds: 87 Combining Balance Sheet 89 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 90 Other Special Revenue Funds: 91 Combining Balance Sheet 92 - 93 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 94 - 95 Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Waste Reduction Fund 96 Street Lighting Fund 97 CDBG Special Revenue Fund 98 Sewer and Storm Drain Fund 99 CATV Public Access Fund 100 Air Quality Fund 101 Grants 102 Other Debt Service Funds: 103 Combining Balance Sheet 104 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 105 Supplementary Schedules (Continued): CITY OF DOWNEY TABLE OF CONTENTS (CONTINUED) For the Fiscal Year Ended June 30, 2009 Other Capital Projects Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Firestone Redevelopment Fund Woodruff Redevelopment Fund City Capital Projects Fund Internal Service Funds: Combining Statement of Net Assets Combining Statement of Revenues, Expenses and Changes in Net Assets Combining Statement of Cash Flows Agency Funds: Combining Statement of Fiduciary Assets and Liabilities Combing Statement of Changes in Fiduciary Assets and Liabilities STATISTICAL SECTION: Page Number 107 108 109 110 111 112 113 114 115 116 117 118 - 119 120 - 121 Description of Statistical Section Contents 123 Financial Trends: Net Assets by Component - Last Seven Fiscal Years Change in Net Assets - Expenses and Program Revenues - Last Seven Fiscal Years Change in Net Assets - General Revenues - Last Seven Fiscal Years Fund Balances of Governmental Funds - Last Seven Fiscal Years Changes in Fund Balances of Governmental Funds - Last Seven Fiscal Years 124 - 125 126 - 127 128 - 129 130 - 131 132 - 133 Revenue Capacity: Assessed Valuation - Last Ten Fiscal Years 134 Assessed Value of Taxable Property - Last Ten Fiscal Years 135 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 136 - 138 Principal Property Taxpayers - Current Year and Nine Years Ago 139 Property Tax Levies and Collections - Last Ten Fiscal Years 140 CITY OF DOWNEY TABLE OF CONTENTS (CONTINUED) For the Fiscal Year Ended June 30, 2009 STATISTICAL SECTION (UNAUDITED) (CONTINUED): Page Number Debt Capacity: Ratios of Outstanding Debt by Type - Last Seven Fiscal Years 141 Ratio of General Bonded Debt to Assessed Value and Net Bonded Debt per Capita - Last Ten Fiscal Years 142 Schedule of Direct and Overlapping Debt 143 Schedule of Legal Debt Margin - Last Ten Fiscal Years 144 Pledged-Revenue Bond Coverage: Water Leasehold Mortgage Bond Coverage - Last Ten Fiscal Years 145 Golf Course Revenue Coverage - Last Ten Fiscal Years 146 Demographic and Economic Information: Demographic and Economic Statistics - Last Ten Calendar Years 147 Principal Employers - Current Year and Nine Years Ago 148 Operating Information: Full-Time and Part-Time City Employees by Function - Last Ten Fiscal Years 149 Operating Indicators by Function - Last Ten Fiscal Years 150 Capital Asset Statistics by Function - Last Ten Fiscal Years 151 INTRODUCTORY SECTION Honorable Mayor, Members of the City Council City of Downey Downey, California In accordance with the Charter of the City of Downey (City), it is with much pride and gratitude that I submit for your consideration the Comprehensive Annual Financial Report (CAFR) of the City of Downey for the fiscal year ended June 30, 2009. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data, as presented, is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs have been included. This letter of transmittal is designed to complement the Management's Discussion & Analysis (MD&A) in the financial section and should be read in conjunction with it. GENERAL INFORMATION ABOUT THE CITY OF DOWNEY The City of Downey, located twelve miles southeast of the City of Los Angeles in the County of Los Angeles, California, was incorporated on December 17, 1956 and on January 14, 1965 became a Chartered City. Downey is operated under a Council-Manager form of government, and is governed by a five-member Council with four elected from designated districts and one elected at large. The City provides a full range of municipal services to its 113,607 residents. These services include, but are not limited to, police, fire, public works, recreational, library and cultural programs. In addition to general government activities, the City exercises oversight of the Downey Community Development Commission, the City of Downey Water Facilities Corporation and the Downey Public Facilities Financing Corporation; therefore, the financial activities of these organizations are included in this reporting entity. Since the Downey Unified School District, other special districts, the County of Los Angeles and its related agencies have not met the established criteria for inclusion in the reporting entity; they have been excluded from this report. ECONOMIC CONDITION AND OUTLOOK The U.S. economy had a sudden turn for the worse after the fall of Lehman Brothers on September 15, 2008. The poor performance from housing, financial and automotive related sectors severely impacted the U. S. economy and around the world. With the shrinking incomes and household wealth, consumer confidence has been weak. According to the U. S. Department of Labor and California Employment Development Department, the seasonally adjusted unemployment rate for the City is 9.2% which is in line with the national rate of 9.5% but lower than the 11.6% rate in the State of California in June 2009. The City is cautiously optimistic with the economic recovery. While exercising fiscal conservatism, City staff has worked diligently to retain and attract existing or new business that will continue to provide an economic stimulus to our local economy. The vital changes show in our community - a new Kaiser Permanente Medical Center, a new park, and Columbia Memorial Space Science Learning Center. Furthermore, the City Council has initialized the new downtown specific plan to revitalize the downtown in 2009. MAJOR INITIATIVES For the Year. The City continued its efforts in the redevelopment of the former NASA property. The 13-acre Discovery Sports Complex, City's first park in 35 years, was dedicated in October 2008 and had grand opening on July 4 The construction of the new Kaiser Permanente Medical Center was completed. The new six-story, 352-bed facility began serving the community on September 15, 2009. This state-of-art hospital facility meets earthquake building standards and includes an electronic health record system and a full-service emergency department. As part of the Downey Landing development, the Columbia Memorial Space Science Learning Center (CMSSLC) was dedicated in November 2008 and opened to the public in October 2009. To date, over $20 million of property improvements have been made to the former NASA property which required the City's involvement from various disciplines (building, planning, engineering, legal, risk management, etc.). Furthermore, the Community Development Commission has made progress to revitalize the downtown. With the Commission's economic incentive, Porto's Bakery will be investing over $160 million into the downtown to build a 15,300 square foot bakery/restaurant. Along the Firestone commercial corridor, Bob's Big Boy restaurant opened to the public in September 2009 at the nostalgic Johnnies Broiler location. The following projects were either completed or commenced in the current year: $5.0 million in highway improvements to Lakewood Boulevard, a major arterial through the city; $2.4 million for the construction of the Columbia Memorial Space Science Learning Center; $815 thousand for the Discovery Sports Complex; $548 thousand in Safe Route to School; $283 thousand in improvements to Imperial Highway; $178 thousand in improvements to Paramount Boulevard; and $2.3 million in other highway improvements and beautification projects. Future Initiatives. The city is involved in numerous economic development projects. The City is aggressively seeking Tesla Motors, an electric vehicle manufacturer, to build a production plant at the 79 acre site currently occupied by Downey Studios. Starting October 2009, the city operates and maintains Columbia Memorial Space Science Learning Center (CMSSLC). The center's primary mission is to inspire the future generation by the range of introductory exhibits, programs, simulators and labs on engineering, science and technology. In the downtown area, significant progress has been undertaken on a specific plan to enhance opportunities to revitalize a much tired downtown area. The plan addressed new opportunities in mixed use, land use, housing, and parking strategies. The construction of Porto's Bakery in downtown district broke ground in November 2009. Porto's Bakery is part ofa larger project that includes the purchase and rehabilitation ofa five story office building, and the construction ofa new parking garage. Moreover, the City initiated an affordable housing plan at the former Verizon and Avenue Theater site. The City will deliver a single family affordable unit on Blodgett Avenue in conjunction with Habitat for Humanity of Greater Los Angeles, a non-profit organization. The City plans to take the opportunity to develop the vacant lots at two former auto dealer sites - the intersection of Lakewood and Gallatin and Florence and Studebaker. Street and traffic flow improvements will continue throughout the city. With an infusion of Federal economy stimulus funding from The American Recovery and Reinvestment Act of 2009 (ARRA) and the additional funding by voter approval of Measure R, the City will be able to continue the Lakewood Boulevard Improvement project and other traffic signal communication projects. In order to provide efficient service to the citizens, the City begins initial stages ofa computerized permit tracking system. In addition, the City is in a process of redesigning City's official website to prepare for the future need. Finally the City intends to maintain its aggressive position of assisting and attracting businesses of all sizes by developing a business friendly environment. FINANCIAL INFO ATION 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 conformity with generally accepted accounting principles (GAAP). The City also has a budget committee in place. 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 the benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. As part of our internal control evaluation, the City contracts with an outside independent public accounting firm to complete a special audit, which is called a single audit, to comply with certain federal government regulations. During this audit, tests are made to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs as well as to determine that the government has complied with applicable laws and regulations. The results of the government's single audit for the fiscal year ended June 30, 2008 provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws and regulations. The single audit for the current fiscal year is in progress; however, the City fully anticipates that there will also be no instances of material weaknesses in the internal controls. Budgeting Controls. The City also maintains control of its fiscal condition through the annual budget. The objective of the budget is to ensure funds are expended in accordance with the wishes of the City Council. Activities of the General Fund, Special Revenue Funds, and the Capital Project Funds are included in the budget. The level of budgetary control is the department level within the fund. The City Council may amend the budget by motion during the fiscal year. The City uses the encumbrance system as a management control technique to assist in controlling expenditures. At year-end, all appropriations and encumbrances are canceled (allowed to lapse) and thus are not included in reported expenditures. Debt Administration. The City of Downey has no general obligation debt. However, the City does have two revenue bond issues and one tax allocation bond issue. The City uses various trustees as its paying agents for all bonds and coupons. The City deposits with the trustee, according to agreement, principal and interest requirements as appropriate. A list of the City's debt issues is summarized below: Principal Issue Trustee Outstanding_ Downey Public Facilities Financing Corporation: 2002 Certificates of Participation U.S. Bank $ 8,470,000 Downey Community Development Commission: 1997 Refunding Tax Allocation Bonds U.S. Bank 7,910,000 California Statewide Communities Development Authority: 2005 Pension Obligation Bonds Wells Fargo Trust Services 20,255,000 Note 9, of the Notes to Basic Financial Statements, presents more detailed information about these debt issues. Cash Management Policies and Practices. The City invests all idle funds in a pooled account pursuant to an investment program governed by a City Council investment policy adopted annually. This policy maintains flexibility in cash management and also places certain restrictions on the City's investment program beyond those already established by State law. The major restrictions are as follows: (1) All banks and/or savings and loans that the City shall place money in must be located within the State of California. (2) All government securities, repurchase agreements, and banker's acceptances, shall be purchased through the City's primary bank or other major bank only. ( Specific instruments may not be purchased without prior Council approval. Some of the instruments are inverse floaters, interest only strips, equity-linked securities, options, futures, swaps, or reverse repurchase agreements to name a few. During 2008-09, the City directly managed the day to day investing of a portfolio averaging $106,184,000 yielding approximately $4,261,000. Interest was credited to funds based on month- end cash and investment balance. The City's pool investment as ofJune 30, 2009 has book value at $109,243,000 with the market value of $116,045,000. Despite the economic downward spiral, this 6.2% gain in book value demonstrates that the City maintained a strong portfolio yielding a reasonable and safe return on investments, while safeguarding the City's cash assets and maintaining adequate levels of liquidity. Risk Management. The City self-insures for a substantial part of its operation. Workers' Compensation, employee health benefits, and general liability are managed on a self-insured basis. The City contracts with third-party administrators to process claims and help manage these programs. The self-insured retention, the amount payable at June 30, 2009 and the limit of excess insurance coverage are as follows: Amount Limit of Self-Insured Payable Insurance Retention 6-30-09 Coverage Workers' Compensation $ 750,000 $ 5,818,000 $ 50,000,000 Employee Health Benefits 85,000 957,000 1,000,000 General Liability 2,000,000 1,597,000 20,000,000 The amount payable includes the calculated (projected) value of Incurred but Not Reported (IBNR) claims. The various amounts are based upon information provided by the City's Claim Administrator and Actuary. The City purchases all risk property insurance for its buildings and property that includes earthquake and flood protection with a $50,000 deductible for buildings and property and 5% of value deductible for earthquake. Relevant Financial Policies. In June of 2004, the Governmental Accounting Standards Board (GASB) issued Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The Statement establishes accounting and reporting requirements for state and local government employers that provide health care and other non- pension benefits to retirees, commonly referred to as other post employment benefits (OPEB). GASB Statement No. 45 requires that the City recognize as a liability the future costs of retiree health insurance benefits. The liability may be reduced if the City pre-funds cash into an irrevocable trust for these benefits, which is allowed to earn interest but must not be spent on anything other than these benefits. In implementation of GASB Statement No. 45 in June 2009, the City has established an irrevocable trust and deposited the full Annual Required Contribution (ARC) in the amount of $2,140,000 to the trust. The City will pay into the trust account Annual Required Contribution for ten years. The investment returns on this trust account will be credited to the account balance. And an actuarial report for OPEB will be updated every two years. OTHER INFO ATION Independent Audit. The City Charter requires an annual audit of the books of account, financial records, and transactions of all administrative departments of the City by an independent certified public accountant. Accordingly, this year's audit was completed by Diehl, Evans and Company, LLP. The auditor's report has been included in this report. Government Finance Officers Association of the United States and Canada (GFOA) Certificate of Achievement Award, The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Downey for its comprehensive annual financial report for the fiscal year ended June 30, 2008. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. I believe our current comprehensive annual financial report continues to conform to the Certificate of Achievement Program's requirements and I am submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments. The preparation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire Finance Department staff. I would like to express my sincere appreciation to all members of the Finance Department, especially the Finance Manager, Maurina Lee. Additionally, I want to thank and acknowledge the efforts of the City's audit firm Diehl, Evans and Company In closing, without the leadership and strong support of the members of the City Council, City Manager and Assistant City Manager, the implementation of vital fiscal management policies and procedures resulting in this report would not be possible. Respectfully submitted, Jm - Michicort Director of Finance David R. Gafin Council Member CITY OF DOWNEY PRINCIPAL OFFICIALS Citv Council Mario A. Guerra, Mayor Ann M. Bayer, Mayor Pro Tem Roger C. Brossmer Council Member APPOINTED OFFICIALS Edward W. Lee — City Attorney Kathleen L. Midstokke — City Clerk MANAGEMENT TEAM Gerald M. Caton, City Manager Lee Powell, Assistant City Manager Desi Alvarez, Deputy City Manager — Special Projects Mark Sauter, Deputy City Manager — Emergency Preparation Brian Ragland Director of Public Works Roy Campos Chief of Police John Perfitt Director of Economic Development Luis H. Marquez Council Member Jeff Turner Fire Chief Thad Phillips Director of Community Services John Michicoff Gilbert Livas Director of Finance Deputy City Manager - Development Linda Haines Scott Pomrehn Building and Housing Director Assistant Deputy City Manager COMM. SERVICES Thad Phillips Director Recreation Library Theatre Social Svc. Golf Course BOA ' I S AND COMMISSIONS Required by Charter: Planning Commission Personnel Advisory Board Library Advisory Board CITY CLE Kathleen L. Midstokke DEPUTY CITY MANAGER/ SPECIAL PROJECTS Desi Alvarez DEPUTY CITY MANAGER/ EMERGENCY PREP. Mark Sauter FIRE DEPT. Jeff Turner Fire Chief Administration Suppression Paramedics Prevention Joint Comm. POLICE DEPT. Roy Campos Chief of Police Administration Field Operations Detectives Code Enfrcmt. CITY OF DOWNEY ORGANIZATIONAL CHART CITIZENS OF DOWNEY ELECT 5 MEMBER CITY COUNCIL Who Elect Mayor Annually CITY MANAGER Gerald M. Caton Assistant Deputy City Manager Scott K. Pomrehn CITY MANAGER APPOIN S DEPARTMENT HEADS ASSISTANT CITY MANAGER Lee Powell Personnel Division Public Information/Cable TV FINANCE DEPT. John Michicoff Director ,4dministration Purchasing Accounting LT Risk Mgmt PUBLIC WORKS DEPT. Brian Ragland Director Administration Engineering Water & Sewer Physical Svc. OTHER BOA I S AND Community Services Commission Keep Downey Beautiful Parking Place Commission Water Advisory Board Traffic Committee Project Area Committee Downey Hospital Commission CITY ATTORNEY Edward W. Lee DEPUTY CITY MANAGER/ COMMUNITY DEVEL. Gilbert Livas Planning Division BUILDING SAFETY Linda Haines Director Administration Building • COMMISSIONS ECONOMIC DEVELOPMENT John Perfitt Director Administration Redevelopment Housing 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. Certificate of Achievement for Excellence in Financial Reporting Presented to City of Downey California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2008 President Executive Director FINANCIAL SECTION OTHER OFFICES AT: DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 5 CORPORATE PARK, SUITE 100 IRVINE, CALIFORNIA 92606-5165 (949) 399-0600 • FAX (949) 399-0610 www.diehlevans.corn City Council Members City of Downey Downey, California December 4, 2009 INDEPENDENT AUDITORS' REPORT -1- 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92008-2389 (760) 729-2343 • FAX (760) 729-2234 MICHAEL R. LUDIN, CPA CRAIG W. SPRAKER. CPA NITIN P. PATEL, CPA ROBERT J. CALLANAN, CPA .PHILIP It HOLTKAMP, CPA *THOMAS M. PERLOWSKI, CPA 9-IARV EY J. SCHROEDER. CPA KENNETH R. AMES, CPA .WILLIAM C. PENTZ, CPA •A PROFESSIONAL CORPORATION We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Downey, California, as of and for the year ended June 30, 2009, 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 of Downey's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Downey, California, as of June 30, 2009, and the respective changes in financial position and where applicable, cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 13 to the basic financial statements, the City adopted the provisions of Governmental Accounting Standards Board Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions", for the year ended June 30, 2009. 613 W VALLEY PARKWAY, SUITE 330 'ESCONDIDO, CALIFORNIA 92025-2598 (760) 741-3141 • FAX (760) 741-9890 In accordance with Government Auditing Standards, we have also issued our report dated December 4, 2009 on our consideration of the City of Downey's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management's discussion and analysis, schedules of funding progress and the budgetary comparison schedules identified in the accompanying table of contents are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures to the management's discussion and analysis, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this required supplementary information. However, we did not audit the management's discussion and analysis and express no opinion on it. The schedules of funding progress, budgetary comparison schedules and related notes have 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Downey's basic financial statements. The introductory section, other supplementary schedules and statistical section as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The other supplementary schedules has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical section 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. As management of the City of Downey (the City), we offer readers of the City's basic financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2009. It is encouraged that the readers consider the inforrnation presented here in conjunction with additional information that has been furnished in the letter of transmittal and the accompanying basic financial statements. All amounts, unless otherwise indicated, are expressed in thousands of dollars. FINANCIAL HIGHLIGHTS Government-wide • The assets of the City exceeded its liabilities as of June 30, 2009 by $299.0 million. Of this amount, $55.3 million (unrestricted net assets) may be used to meet the City's ongoing obligations to citizens and creditors; however, expenditure restrictions apply to the grant funds and much of the business-type and capital project funds. ▪ The City's total net assets increased by S2.7 million. Of this, $4.0 million is at libutable to governmental activities and offset with the net expense of $1.3 million from operations of business-type activities. • The City's total long-terui liabilities, including such items as bonds, notes, and accrued self-insured claims, decreased by $3.8 million during the current fiscal year, a decrease of 4.3%. During fiscal year 2009, the City eliminated the retiree health benefit liability by paying into an irrevocable trust the actuarially-detennined Annual Required Contribution (ARC) for Other Post Employment Benefit (OPEB) liability. Fund based MANAGEMENT'S DISCUSSION AND ANALYSIS • As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $43.4 million, a decrease of $3.5 million in comparison with the prior year. Approximately 35% ($15.2 million) is available for spending at the government's discretion. • At the end of the current fiscal year, unreserved fund balance for General Fund was $13.4 million, which equates to 19.9% of the total General Fund expenditures. • For the General Fund, actual revenues (inflows) of $66.5 million are $148 thousand less than final budgeted revenues of $66.7 million. This variance is due to a decrease in Taxes ($3.6 million) and offsetting increase in Investment and rental income ($1.6 million) and Charge for services revenue ($2.1 million). The balance of the variance is attributed to the decrease in remaining revenue categories. • General Fund expenditures (outflows) for the current year were $67.1 million. This was $2.2 million less than the final budgeted expenditures of $69.3 million. These savings were attributable primarily to prudent management of city services and risk management. Some of the more significant departmental savings were from Finance ($1.0 million), Community services ($486 thousand) and Community development ($475 thousand). See independent auditors' report 3 OVERVIEW OF THE BASIC FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide the reader with a broad overview of the City's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City's assets and liabilities, including capital assets and long-term liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City as a whole is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. Functional activities are highlighted in this statement, whereby direct and indirect functional costs are shown net of related program revenue. This statement shows the extent to which the various functions depend on general taxes and non-program revenues for support. The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that intended to recover all or a significant portion of their costs through user fees and charges (business- type activities). The governmental activities of the City included general government, public safety, public works, community services, community development, unallocated infrastructure depreciation, and interest on long term debt. The business-type activities of the City include a water utility, golf course and transit services. The government-wide financial statements include not only the City itself, but also the Downey Community Development Commission, the City of Downey Water Facilities Corporation, and the Downey Public Facilities Financing Corporation. Although these entities are legally separate, they function for all practical purposes as part of the City, and therefore have been included as a blended component unit as an integral part of the primary government. Fund financial statements. The fund financial statements focus on current available resources and are organized and operated on the basis of funds. A fund is a self balancing group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives in accordance with special regulations, restrictions or limitations. Like other state and local governments, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. See independent auditors' report 4 OVERVIEW OF THE BASIC FINANCIAL STATEMENTS (CONTINUED) Because the focus of the government fund is narrower than that of the government-wide financial statements, it is useful to compare the information presented for the governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long term impact of the City's near-teiiii financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual governmental funds, organized by their type (Special Revenue, Debt Service, and Capital Projects). Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Gas Tax Special Revenue Fund, Firestone Debt Service Fund, and Housing Capital Projects Fund, which are considered to be major funds. Data from the Other Governmental Funds are combined into a single, aggregated presentation. Individual fund data for each of these other governmental funds are provided in the form of supplementary combining statements elsewhere in this report. The City adopts an annual appropriated budget to substantially cover all City expenditures with the exception of debt service on bonds. A budgetary comparison is provided for each of the City's governmental funds to demonstrate compliance with their budgets. However, budgetary comparison statements are not presented for the Debt Service Funds because budgets are not adopted for these funds. Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses its enterprise funds to account for its water utility, golf course and transit services. Internal Service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its employee benefits and insurance, and for its equipment. Because these services predominantly benefit governmental rather than business-type functions, they have been included with governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for all of the enterprise funds, which are considered to be major funds of the City. Conversely, all of the internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the Internal Service funds is provided in the form of combining statements in the Supplementary Schedule section of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds include Special Deposit Fund, Cemetery District Fund, and other funds. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is similar with that used for proprietary funds. The fiduciary fund financial statements can be found in the Basic Financial Statements section of this report. Notes to basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. See independent auditors' report 5 OVERVIEW OF THE BASIC FINANCIAL STATEMENTS (CONTINUED) Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's progress in funding its obligation to provide pension and other benefits to its employees. It includes Schedules of Funding Progress for the City Employee Retirement Plan and Postemployment Benefits Other Than Pensions, and Budgetary Comparison Schedules for the General Fund and Gas Tax Special Revenue Fund. The combining statements referred to earlier in connection with non-major governmental funds, internal service funds, and agency funds are presented immediately following the required supplementary information on employee benefit. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Downey, assets exceeded liabilities by $243.1 million for governmental activities and $55.9 million for business-type activities for a total of $299.0 million at the close of the most recent fiscal year. The following summaries of net assets and changes in net assets present current and prior year amounts for comparative purposes. See independent auditors' report NET ASSETS (amounts expressed in thousands) Governmental Activities Business-type Activities Total 2009 2008 2009 2008 2009 2008 Current and other assets $ 132,618 $ 140,453 $ 22,750 $ 24,342 $ 155,368 $ 164,795 Capital assets 192,760 188,467 43,770 44,227 236,530 232,694 Total assets 325,378 328,920 66,520 68,569 391,898 397,489 Other liabilities 16,588 22,522 2,143 2,609 18,731 25,131 Long-term liabilities 65,680 67,333 8,460 8,681 74,140 76,014 Total liabilities 82,268 89,855 10,603 11,290 92,871 101,145 Net Assets: Invested in capital assets, net of related debt 176,041 172,185 35,423 35,586 211,464 207,771 Restricted 32,221 28,201 0 0 32,221 28,201 Unrestricted 34,848 38,679 20,494 21,693 55,342 60,372 Total net assets $ 243,110 $ 239,065 $ 55,917 $ 57,279 $ 299,027 $ 296,344 By far, the largest portion of the City's total net assets (70.7%) reflects its investment in capital assets (i.e., infrastructure, land, buildings, machinery and equipment), net of related debt used to acquire those assets that are still outstanding. The City uses these assets to provide services to citizens; consequently, they are not available for future spending. Although the City's investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. - 6 GOVERNMENT -WIDE FINANCIAL ANALYSIS (CONTINUED) An additional portion of the City's net assets (10.8 %) represents resources that are subject to external restrictions in how they may be used. The remaining balance of $55,342 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. Of the unrestricted net assets for the fiscal year 2009, $20,494 is attributable to business -type activities and $34,848 is from governmental activities. CHANGE IN NET ASSETS (amounts expressed in thousands) Governmental Activities Business -type Activities 2009 2008 2009 2008 REVENUES: Program revenues: Charges for services $ 11,401 $ 12,894 $ 11,692 $ 12,137 Operating grants and contributions 7,499 7,965 762 - Capital grants and contributions 7,634 3,623 - General revenues: Taxes Property taxes 25,561 23,974 - Transient occupancy taxes 934 1,050 - Sales and use taxes 9,675 11,706 3,004 3,310 Property taxes in lieu of sales and use tax 3,444 3,856 Franchise taxes 2,276 2,142 Utilities users' tax 7,677 8,002 Other taxes 1,632 1,819 - Earning on investments 4,889 5,973 1,436 1,580 Gain/(Loss) on sale of property 49 24 (28) 28 Miscellaneous 1,491 1,443 - 2,012 Total revenues 84,162 84,471 16,866 19,067 -7 EXPENSES: Program activities: General government 4,881 5,891 Public safety 45,314 43,510 Public works 7,450 7,460 Community services 9,220 9,390 - Community development 8,732 8,898 Unallocated infrastructure depreciation 4,965 4,806 Interest on long term debt 1,859 1,823 - Water 9,739 10,121 Golf 2,699 2,765 Transit 3,486 2,939 Total expenses 82,421 81,778 15,924 15,825 Excess of revenues over expenses 1,741 2,693 942 3,242 Transfers 2,304 4,761 (2,304) (4,761) Change in net assets $ 4,045 $ 7,454 $ (1,362) $ (1,519) See independent auditors' report 50,000 40,000 30,000 20,000 10,000 0 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Earning on investments 6% Other taxes 2% Utilities users' tax 9% Franchise taxes 3% Property taxes in lieu of sales and use tax 4% Sales and use taxes 11% See independent auditors' report Revenue by Source - Governmental Activities Gain on sale of property 0% Miscellaneous Transient occupancy taxes 1% co 2% Governmental Activities. The most significant revenues, including transfers, of the governmental activities are taxes (59%), which included property taxes (29%), sales and use taxes (11%), and other taxes (19%). Program revenues are 31% of the total revenues of the governmental activities, which includes charges for services (13%), operating grants and contributions (9%) and capital grants and contributions (9%). The remaining 10% of total revenues is comprised of earnings on investments, miscellaneous, transfers, and gain on sale of property. Governmental Activities by Program/Function ., 1‘ TO 6,0 kW' veko4 teY' fit de e acCY6 ko rt% iipProgram Expenses co' • Program Revenue 8 Transfers 3% Property taxes 29% st Oft St' - diY G lo kod' 0 Charges for services 13% Operating grants and contributions 9% Capital grants and contributions 9% Public safety expenses, which include police and fire service, are the most significant of all governmental expenses at 55%. Thereafter, community services (11%), community development (11%), public works (9%), general government (6%), unallocated infrastructure depreciation (6%), interest on long term debt (2%). GOVE ' MENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Business-type activities. Business-type activities decreased the City's net assets by $1,362. The most significant revenue generated was from charges from services (69%). The balance of revenues is from sales tax (18%), earning on investments (8%) and operating grants and contributions (5%). Of the charges from services revenue, the most significant revenues generated were from the sales of water and related services ($8,782). The second significant revenue is the revenue generated by users of the golf course ($2,780). The balance ($130) is attributable to transit pass sales for the city operated transit services. Earnina on investments 3 Operating .. - auts anc contribution 4 Sales ancluse ta. 1 $°o Revenues by Source - Business-type Activities Water related expenses were also the most significant at $9,739 or 61% of total operating expenses. As with revenues, the transit was next with expenses of $3,486 (22%) followed by the golf course operation with expenses of $2,699 (17%). See independent auditors' report 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Business-type Activities by Program Ve ter =Program Expenses 9 Golf Transit • Program Revenue Wale] 52 .0° Transit As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental funds. The focus of the City's governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported total ending fund balances of $43,419, a net decrease of $3,522 over the prior year. The change is the result of decreases in the fund balances of the General Fund, Firestone Debt Service Fund, and other governmental funds offset by increases in Gas Tax Special Revenue Fund and Housing Capital Project Fund. Approximately 35% of the total fund balances is unrestricted fund balance which is available for appropriation. The remaining 65%, or $28,178, is reserved fund balances. It indicate that funds are not available as a new spendable resources because they have already been committed for: 1) liquidating contracts and purchase orders of the prior period ($5,647), 2) debt service ($663), 3) land held for resale ($6,456), 4) housing capital projects ($3,122), and 5) offsetting other non-current financial resources that are not anticipated to be liquidated in the near telin ($12,290). The General Fund is the chief operating fund of the City. Of the total fund balance, the net unreserved fund balance is $13,390, down approximately $2,934 from the previous fiscal year's net unreserved fund balance of $16,324. It is a result of decline in revenue and an adjustment from Internal Service Fund ($1,136). Revenue and Other Financing Sources (inflow) for the General Fund, including comparative amounts from the preceding year, are shown in the following table: Taxes $ 47,100 68.0% $ 49,254 66.9% (2,154) Licenses and permits 1,372 2.0% 2,487 3.4% (1,115) Fines and forfeitures 1,625 2.3% 1,900 2.6% (275) Investment and rental 5,398 7.8% 5,782 7.8% (384) Intergovernmental revenue 2,357 3.4% 1,088 1.5% 1,269 Charges for services 6,196 8.9% 8,434 11.5% (2,238) Other revenue 2,474 3.6% 2,407 3.3% 67 Total Revenues 66,522 96.0% 71,352 96.9% (4,830) Other financing sources 2,791 4.0% 2,305 3 A % 486 Total Revenues & Other Finance Sources $ 69,313 100.0% $ 73,657 100.0% $ (4,344) See independent auditors' report FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS General Fund Revenues and Other Financing Sources June 30, 2009 and 2008 (amounts expressed in thousand) 2009 Percent of 2008 Percent of Incr Actual Total Actual Total (Decr) - 10 - FINANCIAL ANALYSIS OF THE GOVERNMENTS FUNDS (CONTINUED) The General Fund's total revenues decreased $4,830, or 6.8%, from the previous fiscal year's total revenue of S71,352. All revenue categories declined except intergovernmental revenue and other revenue. The revenue categories with significant decreases were Charge for Services ($2,238), Taxes (S2,154), and License and permits ($1,115). The General Fund's actual revenues of $66,522 are $148 less than final budgeted revenues of $66,670 due to positive variances in Charge for service, Investment and rental and Other revenue of $2,086, S1,636, and $132, respectively offset by negative variances in tax revenue of $3,566, Fine and forfeitures of $218, License and permits of $163, and Intergovernmental revenue of $55. Expenditures and Other Financing Uses for the General Fund, including comparative amounts from the preceding year, are shown in the following table: Other financing uses Total Expenditures & Other Finance Uses See independent auditors' report General Fund Expenditures and Other Financing Uses June 30, 2009 and 2008 (amounts expressed in thousand) 2009 Percent of 2008 Percent of Actual Total Actual Total Incr (Decr) General government: Legislation 337 0.5% $ 259 0.4% $ 78 City attorney 260 0.4% 254 0.4% 6 City clerk 453 0.6% 430 0.6% 23 City management 646 0.9% 593 0.8% 53 Finance 3,346 4.8% 3,783 5.3% (437) Public safety: Police 27,588 39.6% 24,955 34.7% 2,633 Animal control 308 0.4% 308 0.4% - Fire 17,481 25.1% 17,028 23.7% 453 Public works 5,778 8.3% 5,563 7.7% 215 Community service 7,445 10.7% 7,950 I 1.0% (505) Community development 3,027 4.3% 3,412 4.7% (385) Debt Service: Interest and fiscal charges 459 0.7% 435 0.6% 24 Total Expenditures 67,128 96.3% 64,970 90.3% 2,158 2,601 3.7% 6,993 9.7% (4,392) $ 69,729 100.0% $ 71,963 100.0% $ (2,234) The General Fund's total expenditures increased $2,158 or 3.3%, from the previous fiscal year's total expenditures of $64,970. All departments' expenditures increased except the expenditures in Finance, Community service, and Community development departments. The significant increases in Police ($2,633) and Fire ($453) are primarily attributed to their new labor contracts with the City in 2009. The General Fund's actual expenditures were less than the final budget. Of the total final appropriations ($69,322), approximately 3.2% or $2,194 went unspent. This savings is the result of a hiring freeze and a delay of new capital outlay purchases. In response to an anticipated revenue shortfall, the management actively maintained service levels in a prudent and efficient manner. There was only one expenditure center with unfavorable variance - General government - Legislation ($51). FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS (CONTINUED) Transfers out of the General Fund approximated anticipated level. The 2008-09 budget approval resolution contains a provision, which allows for the transfer of these excess General Fund revenues to the Employee Benefit Fund to satisfy future requirements. However, there is no excess General Fund revenue available to be transferred to the Employee Benefit Fund this year. The Gas Tax Special Revenue Fund has a total fund balance of $7,620. The reserved fund balance of S1,602 is committed for contract services and purchase order in prior years. The remaining fund balance is unreserved fund balance which is available for financing street maintenance. The Gas Tax Special Revenue Fund reflects a net positive ending fund balance variance of $6,920, which is a result of positive variance in capital outlay of $11,993 offsetting with a negative variance in revenue of $5,296. The Firestone Debt Service Fund has a total deficit net fund balance of $5,638. Of that amount, $663 is reserved for the payment of debt service for Downey Community Development Commission. The net decrease of $355 in fund balance during the current year in the Debt Service Fund was due to excess of operation cost over tax revenue. The Housing Capital Project Fund has a total fund balance of $7,678 all of which is reserved for the affordable housing capital projects. Almost half of the total reserved fund balances, $3,598, is committed for the land held for resale. The Housing Capital Project Fund actual revenue of $2,277 exceeded final budgeted revenue of $1,901 by $376. The Investment and rental, Intergovernmental revenue and Other revenue have the favorable variances of, $87, $160, and $130, respectively. They offset the unfavorable variances from the taxes ($1). And the actual expenditure of $1,568 is much less than the final budgeted amount of $3,237 which results in a saving of $1,669. Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The Water Fund's net assets decreased $1,044 as a result of transfer out to support other capital project ($631) and the depreciation for capital assets ($596). The Golf Fund's net assets increased $390 during the current fiscal year. The operating income decreased $104 from the previous fiscal year's net operating income of $588. The increase in Golf Fund's net asset is mostly attributable to grant revenue of $762 for a capital project. The Transit Fund's net assets decreased $686 during the current fiscal year. Unlike the two other business-type activities, the Transit Fund receives most of its revenues from voter approved sales and use taxes. For the current year, operating loss of $3,341 was offset by the Non-operating revenue, including Taxes of $3,004 and Investment and rental of $465. Sales and use taxes attributed to 83% of total transit revenues from all sources. CAPITAL ASSET AND DEBT ADMINIST TION Capital assets. The City's investment in capital assets for its government and business-type activities at June 30, 2009 amounted to $236,530, net of accumulated depreciation. This investment in capital assets includes land, projects in progress, buildings, equipment, fixtures and infrastructure. The total changes in the City's investment in capital assets resulted from many various projects, acquisitions and depreciation on assets located throughout the City. See independent auditors' report - 12 - Land and improvements Projects in progress Buildings Land improvements Machinery & equipment Furniture & Fixtures Infrastructure Water sup and dist system Bonds payable Certificates of participation Capital lease payable Advances from County Loans from Federal Gov Compensated absences Claims payable Retiree health benefits CAPITAL ASSET AND DEBT ADMINISTRATION (CONTINUED) CAPITAL ASSETS (net of accumulated depreciation) Governmental activities Business - activities 2009 $ 14,388 40,462 15,904 4,239 7,044 101 110,622 See independent auditors' report 2008 $ 13,890 34,129 16,428 4,349 7,308 127 112,236 $ 192,760 $ 188,467 $ 43,770 $ 44,227 $ 236,530 $ 232,694 Additional information on the City's assets can be found in the notes to basic financial statements in note 8. Long -term liabilities. The City's outstanding long -term liabilities including certificates of participation, bonds, a capital lease, advances, loans, compensated absences, and self - insurance totaled $83,549. Of this, 89.3% ($74,582) was in governmental activities and 10.7% ($8,967) was in business -type activities. The governmental activities long -term liabilities decreased by $3,584 from payment on Certificates of Participation obligation, reduction in claims, elimination of retiree health benefits liability and the establishing an OPEB irrevocable trust account. The decrease of $191 in business -type activities long -term liabilities is due to a net reduction in the Golf Course certificates of participation of $305 and an increase of $103 in compensated absences. LONG-TERM LIABILITIES (amounts expressed in thousands) Governmental activities Business -type activities 2009 2008 2009 2008 $ 10,436 $ 10,436 $ 27,987 $ 28,315 $ - $ 1,365 390 459 13,495 11,674 10,309 10,100 14,027 12,100 8,374 10,041 4,112 - 13 - 9,358 9,165 1,031 130 9,717 9,183 921 140 13,650 13,830 2009 2008 8,347 8,641 620 517 2009 $ 24,824 40,462 25,262 13,404 8,075 231 110,622 13,650 Total 2008 $ 24,326 34,129 26,145 13,532 8,229 267 112,236 13,830 Total 2009 2008 $ 27,987 $ 28,315 8,347 10,006 390 459 13,495 11,674 10,309 10,100 14,647 12,617 8,374 10,041 4,112 Total long -term liabilities $ 74,582 $ 78,166 $ 8,967 $ 9,158 $ 83,549 $ 87,324 Additional information on the City's long -term liabilities can be found in the notes to basic financial statement in note 9. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The decline in home values, the slump in retail sales, and the state's budget problems are concerns in every local government's finance. The City's Total General Fund revenues are projected to decrease 0.3 %. Below is a closer look at two key General Fund revenue resources. • The City's median single family home price in June 2009 was $356 thousands, down 12.6% from January 2008. As home value continues to decline, the city's property tax revenue anticipates a modest increase of 3.6% in 2009 -10 budget. • Sales tax revenue continues to be a strong revenue source for the City. The state's economic recovery is projected to be slow through 2010. The City's 2009 -10 budget anticipates a conservative economic growth with an increase of 4.3 %. In March 2004, California voters approved Proposition 57 which allowed the state to issue bonds to reduce the state budget deficit. The state legislature additionally enacted provisions to fund the debt repayment. This method, referred to as "the triple flip ", redistributes City Sales and use tax, City Property tax and County Property tax. Due to this financing method, the City's fiscal year 2009 -10 budget reflects $3,818 of Sales and use tax to be retained by the state and a relatively equal amount to be returned to the City as an increased Property tax. Due to the recession, the City continues to freeze non - safety employee hiring and new equipment purchases in fiscal year 2009 -10. The City's 2009 -10 budget includes appropriations for on -going City general and public safety services, economic development, capital projects such as improvements on Lakewood Boulevard, operating Columbia Memorial Space Science Learning Center and the specific plan for Downey Studio property and Downtown area. The fiscal year 2010 adopted budget consists of operating budget ($101.5 million) and capital budget ($47.2 million). The total budget amount is increased by 7.5 %, or $10.4 million from the fiscal year 2009. The significant increase is attributable to (1) the capital projects funded by Federal Economic Stimulus package from American Recovery and Reinvestment Act (ARRA) and (2) operating budget of $1 million for Columbia Memorial Space Science Learning Center. In addition, as part of the budget adoption process, the City annually reviews all of its fees for services to ensure, when possible, fees collected fully support the cost of providing City services. For fiscal year 2010, the City kept 582 fees unchanged, increased 19 fees, deleted 9 fees and created 19 new fees. The City's fee resolution covers fees that generate $9.7 million for all city funds ($6.6 million in the General Fund). The proposed changes are projected to increase total fee revenues by approximately $68 thousand. See independent auditors' report -14- REQUESTS FOR INFORMATION This financial report is designated to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance, City of Downey, 11111 Brookshire Avenue, Downey, California 90241 -0607. See independent auditors' report - 15 - This page intentionally left blank CITY OF DOWNEY STATEMENT OF NET ASSETS June 30, 2009 (amounts expressed in thousands) Primary Government Governmental Business -type Activities Activities Total ASSETS: Cash and investments (Note 3) $ 79,710 $ 17,411 $ 97,121 Receivables, net of allowance: Taxes 4,337 4,337 Accounts 2,119 1,382 3,501 Interest 737 136 873 Loans (Note 6) 6,586 6,586 Notes 1,048 1,048 Internal balances 763 (763) - Prepaid expense (Note 12) 18,669 - 18,669 Due from other governments and entities 2,270 805 3,075 Restricted assets (Note 3): Cash and investments 8,063 2,659 10,722 Cash and investments with fiscal agents 1,506 727 2,233 Land held for resale (Note 5) 6,456 6,456 Inventories 181 114 295 Deferred bond issuance costs 173 279 452 Capital assets, not depreciated (Note 8) 54,850 10,436 65,286 Capital assets, net of accumulated depreciation (Note 8) 137,910 33,334 171,244 TOTAL ASSETS 325,378 66,520 391,898 LIABILITIES: Accounts payable and accrued liabilities 7,316 1,369 8,685 Deposits 6 106 112 Interest payable 299 161 460 Unearned revenue (Note 10) 65 65 Noncurrent liabilities (Note 9): Due within one year 8,902 507 9,409 Due in more than one year 65,680 8,460 74,140 TOTAL LIABILITIES 82,268 10,603 92,871 NET ASSETS: Invested in capital assets, net of related debt 176,041 35,423 211,464 Restricted for: Community development 17,901 17,901 Public works 10,196 10,196 Debt service 4,124 4,124 Unrestricted 34,848 20,494 55,342 TOTAL NET ASSETS $ 243,110 $ 55,917 $ 299,027 See independent auditors' report and notes to basic financial statements. - 17 - CITY OF DOWNEY STATEMENT OF ACTIVITIES For the year ended June 30, 2009 (amounts expressed in thousands) Program Revenues Charges Operating Capital for Grants and Grants and Functions /programs Expenses Services Contributions Contributions Governmental activities: General government $ 4,881 $ 154 $ 151 $ Public safety 45,314 4,161 1,825 Public works 7,450 2,273 729 7,634 Community services 9,220 2,536 1,650 Community development 8,732 2,277 3,144 Unallocated infrastructure depreciation 4,965 Interest on long term debt 1,859 Total governmental activities 82,421 11,401 7,499 7,634 Business -type activities: Water 9,739 8,782 - Golf 2,699 2,780 762 Transit 3,486 130 - Total business -type activities 15,924 11,692 762 Total $ 98,345 $ 23,093 $ 8,261 $ 7,634 General revenues: Taxes: Property taxes, levied for general purposes Transient occupancy taxes Sales and use taxes Property taxes in lieu of sales and use tax Franchise taxes Utility users tax Other taxes Earning on investments Gain (loss) on sale of property Miscellaneous Transfers Total general revenues and transfers Change in net assets NET ASSETS - BEGINNING OF YEAR, AS RESTATED (NOTE 18) NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. - 18 - Net (Expense) Revenue and Changes in Net Assets Governmental Business -type Activities Activities Total $ (4,576) $ $ (4,576) (39,328) (39,328) 3,186 3,186 (5,034) - (5,034) (3,311) (3,311) (4,965) (4,965) (1,859) (1,859) (55,887) (55,887) (55,887) (957) (957) 843 843 (3,356) (3,356) (3,470) (3,470) (3,470) (59,357) 25,561 25,561 934 - 934 9,675 3,004 12,679 3,444 - 3,444 2,276 2,276 7,677 7,677 1,632 1,632 4,889 1,436 6,325 49 (28) 21 1,491 1,491 2,304 (2,304) - 59.932 2,108 62,040 4,045 (1,362) 2,683 239,065 57,279 296,344 $ 243,110 $ 55,917 $ 299,027 ASSETS CITY OF DOWNEY BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2009 (amounts expressed in thousands) Gas Tax Firestone General Special Revenue Debt Service Fund Fund Fund ASSETS: Cash and investments $ 11,565 $ 7,104 $ 2,274 Receivables: Taxes 3,286 756 Accounts 1,768 - Interest 426 55 16 Loans (Note 6) Notes Due from other governments and entities 636 584 Due from other funds (Note 4) 668 Restricted assets: Cash and investments 3,647 Cash and investments with fiscal agent - 663 Advances to other funds (Note 4) 8,597 - Land held for resale (Note 5) TOTAL ASSETS $ 30,593 $ 7,743 $ 3,709 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities $ 5,400 $ 123 $ Due to other funds (Note 4) 32 Deposits - Advances from other funds (Note 4) - 9,347 Deferred revenue (Note 10) 421 TOTAL LIABILITIES 5,853 123 9,347 FUND BALANCES (DEFICIT): Reserved (Note 11) 11,350 1,602 663 Unreserved, reported in: General Fund 13,390 Special Revenue Funds 6,018 Debt Service Funds - (6,301) Capital Projects Funds TOTAL FUND BALANCES (DEFICIT) 24,740 7,620 (5,638) TOTAL LIABILITIES AND FUND BALANCES $ 30,593 $ 7,743 $ 3,709 See independent auditors` report and notes to basic financial statements. - 20 - Housing Other Total Capital Projects Governmental Governmental Fund Funds Funds $ 2,773 $ 7,807 $ 31,523 42 253 4,337 - 187 1,955 18 30 545 5,702 884 6,586 1,048 1,048 249 801 2,270 - 32 700 69 203 3,919 825 1,488 - 8,597 3,598 2,858 6,456 $ 13,499 $ 13,880 $ 69,424 $ 26 $ 1,389 $ 6,938 664 696 3 3 6 - 1,900 11,247 5,792 905 7,118 5,821 4,861 26,005 7,678 6,885 28,178 - 13,390 - 2,261 8,279 - (1,289) (7,590) - 1,162 1,162 7,678 9,019 43,419 $ 13,499 $ 13,880 $ 69,424 This page intentionally left blank CITY OF DOWNEY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS June 30, 2009 (amounts expressed in thousands) Fund balances - total governmental funds $ 43,419 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in the governmental funds balance sheet. 185,716 Long -term receivables are not available to pay for current -period expenditures and accordingly are deferred in the governmental funds. 7,097 Internal Service funds are used by management to charge the costs of various city activities to individual governmental and business -like funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Assets. Internal Service funds net assets are: Long-term liabilities applicable to the City governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities, both current and long -term, are reported in the Statement of Net Assets: Tax allocation bonds payable $ (7,910) Advances from County of Los Angeles (13,495) Loans payable (10,309) Claims payable (959) Accrued liabilities in the Statement of Net Assets differ from amounts reported in governmental funds due to accrued interest on long term debt. (196) Interest receivable, not considered to be available to finance current expenditures is not reported in the governmental funds. For the Statement of Net Assets, this amount is accrued. Additional interest receivable at June 30, 2009 is: 193 Net assets of governmental activities $ 243,110 See independent auditors' report and notes to basic financial statements. - 23 - 39,554 (32,673) FUND BALANCES (DEFICIT) - BEGINNING OF YEAR, AS RESTATED (NOTE 18) FUND BALANCES (DEFICIT) - END OF YEAR CITY OF DOWNEY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended June 30, 2009 (amounts expressed in thousands) REVENUES: Taxes $ 47,100 $ $ 2,838 License and permits 1,372 - Fines and forfeitures 1,625 - Investment and rental 5,398 358 117 Intergovernmental revenue 2,357 5,078 Charges for services 6,196 - Other revenue 2,474 - 19 TOTAL REVENUES 66,522 5,436 2,974 EXPENDITURES: Current: General government 5,042 Public safety 45,377 Public works 5,778 Community services 7,445 Community development 3,027 - 978 Capital outlay 1,731 Debt service (Note 9): Principal retirement - 225 Interest and fiscal charges 459 - 1,408 TOTAL EXPENDITURES 67,128 1,731 2,611 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (606) 3,705 363 OTHER FINANCING SOURCES (USES): Transfers in (Note 4) 2,332 Transfers out (Note 4) (2,601) (907) (1,500) Issuance of debt (Note 9) 459 - 782 TOTAL OTHER FINANCING SOURCES (USES) 190 (907) (718) NET CHANGE IN FUND BALANCES (416) 2,798 (355) See independent auditors' report and notes to basic financial statements. - 24 - Gas Tax Firestone General Special Revenue Debt Service Fund Fund Fund 25,156 4,822 (5,283) $ 24,740 $ 7,620 $ (5,638) Housing Other Total Capital Projects Governmental Governmental Fund Funds Funds $ 942 $ 1,140 $ 52,020 - 1,372 - 1,625 242 310 6,425 873 3,958 12,266 - 1,764 7,960 220 220 2,933 2,277 7,392 84,601 - 202 5,244 - 52 45,429 1,856 7,634 - 1,336 8,781 1,568 4,859 10,432 - 8,492 10,223 1,568 1,615 1,840 385 2,252 18,797 91,835 709 (11,405) (7,234) 5,512 7,844 (532) (5,540) 167 1,408 5,147 3,712 709 (6,258) (3,522) 6,969 15,277 46,941 $ 7,678 $ 9,019 $ 43,419 This page intentionally left blank RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Net change in fund balances - total governmental funds CITY OF DOWNEY For the year ended June 30, 2009 (amounts expressed in thousands) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. This is the amount by which capital expenditures exceeded depreciation expense in the current period: Capital expenditures $ 10,522 Depreciation expense (5,964) Repayments on long -term receivables provide current financial resources to governmental funds, while loans provided consume the current financial resources of governmental funds. These transactions, however, have no effect on net assets. Internal service funds are used by management to charge the costs of certain activities, such as employee benefits and equipment management to individual funds. The net revenue (expense) of these internal service funds are reported as governmental activities. The issuance of long term debt provides current financial resources to governmental funds, while the repayment of the principal of long -term debt and changes in other long -term liabilities effects the current financial resources of governmental funds. Neither transaction, however, has an effect on net assets. Debt transactions involved: Principal payments $ 1,840 Proceeds from loans from County of Los Angeles (949) Accrued interest expense added to loan from County of Los Angeles (872) Accretion on loan from Federal Government (459) Claims payable 624 Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds: Accrued interest payable on long -term liabilities Some revenues reported in the Statement of Activities are not considered to be available to finance current expenditures and therefore are not reported as revenues in the governmental funds: Accrued interest receivable $ 19 Accrued sales and use tax (324) (305) Change in net assets of governmental activities $ 4,045 See independent auditors' report and notes to basic financial statements. - 27 - $ (3,522) 4,558 920 2,163 184 47 TOTAL CURRENT ASSETS TOTAL ASSETS ASSETS CITY OF DOWNEY STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2009 (amounts expressed in thousands) CURRENT ASSETS: Cash and investments $ 7,742 $ 2,425 Accounts receivable 1,382 - Interest receivable 58 23 Due from other governments and entities 3 770 Advances to other funds - Inventories 81 33 Restrcted assets: Cash and investments 1,105 1,554 Cash and investments with fiscal agent 727 NONCURRENT ASSETS: Prepaid pension expense Bond issuance costs 279 Capital Assets (Net of Accumulated Depreciation): Land 8,272 Land improvements - 9,148 Buildings and improvements 19 6,827 Furniture and fixtures 130 - Machinery and equipment 104 290 Water supply and distribution plant 13,650 TOTAL NONCURRENT ASSETS 22,175 16,544 See independent auditors' report and notes to basic financial statements. - 28 - Business -type Activities Enterprise Funds Water Golf Fund Fund 10,371 5,532 32,546 22,076 Business -type Activities Enterprise Funds (Continued) Totals Transit Enterprise Fund Funds $ 7,244 $ 17,411 $ 1,382 55 136 32 805 2,164 17 2,512 637 114 2,659 727 7,331 23,234 279 10,436 9,165 9,358 130 1,031 13,650 5,330 44,049 12,661 67,283 Governmental Activities - Internal Service Funds 48,187 164 2,650 181 4,144 18 55,344 18,669 173 7,044 25,886 81,230 (Continued) TOTAL CURRENT LIABILITIES CITY OF DOWNEY STATEMENT OF NET ASSETS PROPRIETARY FUNDS (CONTINUED) June 30, 2009 (amounts expressed in thousands) Business -type Activities Enterprise Funds Water Golf Fund Fund LIABILITIES CURRENT LIABILITIES PAYABLE FROM CURRENT ASSETS: Accounts payable and accrued liabilities $ 988 $ 161 Due to other funds 1 2 Deposits 56 50 Compensated absences 153 - Deferred revenue Claims payable Capital lease payable Pension obligation bonds TOTAL CURRENT LIABILITIES PAYABLE FROM CURRENT ASSETS 1,198 213 CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS: Interest payable 161 Certificates of participation 315 TOTAL CURRENT LIABILrI'I S PAYABLE FROM RESTRICTED ASSETS 476 1,198 689 NONCURRENT LIABILITIES: Compensated absences 378 Claims payable Capital lease payable Pension obligation bonds Certificates of participation 8,032 TOTAL NONCURRENT LIABILITIES 378 8,032 TOTAL LIABILITIES 1,576 8,721 NET ASSETS: Invested in capital assets, net of related debt 22,175 7,918 Restricted for debt service 1,105 1,805 Unrestricted 7,690 3,632 TOTAL NET ASSETS $ 30,970 $ 13,355 Adjustment to reflect the consolidation of internal fund activities related to enterprise funds Net assets of business -type activities See independent auditors' report and notes to basic financial statements. - 30 - Business -type Activities Enterprise Funds (Continued) Totals Transit Enterprise Fund Funds $ 220 $ 1,369 $ 3 - 106 39 192 259 259 50 50 309 5,330 7,022 $ 12,352 Governmental Activities - Internal Service Funds 1,018 1 4,276 44 3,285 72 145 8,841 1,670 161 103 315 476 103 2,146 8,944 428 9,751 3,491 318 - 19,932 8,032 - 8,460 33,492 10,606 42,436 35,423 6,654 2,910 - 18,344 32,140 56,677 $ 38,794 (760) $ 55,917 CITY OF DOWNEY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the year ended June 30, 2009 (amounts expressed in thousands) OPERATING REVENUES: Charges for services: Water sales $ 8,736 $ Golf fees 2,780 Bus fares Other services Miscellaneous 46 TOTAL OPERATING REVENUES 8,782 2,780 OPERATING EXPENSES: Purchased water 4,388 Maintenance and operations 1,432 1,865 General and administrative 3,315 Employee benefits - Amortization 17 Depreciation 596 414 TOTAL OPERATING EXPENSES 9,731 2,296 OPERATING INCOME (LOSS) (949) 484 NONOPERATING REVENUES (EXPENSES): Grant revenue 762 Taxes - Investment and rental 536 435 Interest expense - (404) Gain/(loss) on sale of capital assets (25) TOTAL NONOPERATING REVENUES (EXPENSES) 536 768 INCOME (LOSS) BEFORE TRANSFERS AND CAPITAL CONTRIBUTIONS (413) 1,252 TRANSFERS OUT (631) (862) CAPITAL CONTRIBUTIONS CHANGES IN NET ASSETS (1,044) 390 TOTAL NET ASSETS - BEGINNING OF YEAR, AS RESTATED (NOTE 18) 32,014 12,965 TOTAL NET ASSETS - END OF YEAR $ 30,970 $ 13,355 Adjustment to reflect the consolidation of internal fund activities related to enterprise funds Change in net assets of business -type activities See independent auditors' report and notes to basic financial statements. - 32 - Business -type Activities Enterprise Funds Water Golf Fund Fund Business -type Activities Governmental Enterprise Funds (Continued) Activities - Totals Internal Transit Enterprise Service Fund Funds Funds $ $ 8,736 $ 2,780 130 130 - 26,887 46 969 130 11,692 27,856 4,388 3,196 6,493 1,651 3,315 403 22,931 17 7 275 1,285 1,946 3,471 15,498 26,938 (3,341) (3,806) 918 - 762 607 3,004 3,004 - 465 1,436 1,084 - (404) (1,043) (3) (28) 49 3,466 4,770 697 125 964 1,615 (811) (2,304) - 526 (686) (1,340) 2,141 13,038 36,653 $ 12,352 $ 38,794 (22) $ (1,362) CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers Receipts from user departments Payment to suppliers Payment to employees NET CASH USED BY NONCAPITAL FINANCING ACTIVITIES CITY OF DOWNEY STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the year ended June 30, 2009 (amounts expressed in thousands) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Cash received from other funds Cash paid to other funds (631) (862) Principal paid - Interest paid CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of capital assets (361) (241) Proceeds from sale of capital assets 75 Capital contributions Taxes received Grants received 762 Principal paid on debt (305) Interest paid on debt (398) NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES (361) (107) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 580 462 NET DECREASE IN CASH AND CASH EQUIVALENTS (1,168) (346) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR, AS RESTATED 10,015 5,052 CASH AND CASH EQUIVALENTS - END OF YEAR $ 8,847 $ 4,706 See independent auditors' report and notes to basic financial statements. - 34 - Business -type Activities Enterprise Funds Water Golf Fund Fund $ 8,676 $ 2,010 (6,799) (1,822) (2,633) (27) (756) 161 (631) (862) Business -type Activities Enterprise Funds (Continued) Totals Transit Enterprise Fund Funds $ 130 (2,493) (777) $ 10,816 $ (11,114) (3,437) (3,140) (3,735) (811) (2,304) Governmental Activities - Internal Service Funds 27,756 (18,541) (8,916) 299 (110) (1,019) (811) (2,304) (1,129) (361) (963) (1,703) 32 107 71 526 2,972 2,972 762 607 (305) (69) (398) (20) 2,643 2,175 (588) 501 1,543 1,084 (807) (2,321) (334) 8,051 23,118 52,683 $ 7,244 $ 20,797 $ 52,349 (Continued) CITY OF DOWNEY STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (CONTINUED) For the year ended June 30, 2009 (amounts expressed in thousands) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Business -type Activities Enterprise Funds Water Golf Fund Fund RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ (949) $ 484 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 596 431 Change in assets and liabilities: (Increase) decrease in accounts receivable (99) (Increase) decrease in due from other governments and entities (1) (770) (Increase) decrease in inventories 27 (Increase) decrease in prepaid expenses Increase (decrease) in accounts payable and accrued liabilities (420) 16 Increase (decrease) in deposit payable (6) Increase (decrease) in deferred revenue Increase (decrease) in retiree health payable Increase (decrease) in claims payable Increase (decrease) in compensated absences 96 $ (756) $ 161 CASH AND CASH EQUIVALENTS - FINANCIAL STATEMENT CLASSIFICATION: Current assets $ 7,742 $ 2,425 Restricted assets 1,105 2,281 TOTAL CASH AND CASH EQUIVALENTS FINANCIAL STATEMENT CLASSIFICATION $ 8,847 $ 4,706 See independent auditors' report and notes to basic financial statements. - 36 - Business -type Activities Enterprise Funds (Continued) Totals Transit Enterprise Fund Funds $ (3,341) $ (3,806) $ 275 1,302 (81) (485) (6) (99) (771) 27 7 103 $ (3,140) $ (3,735) $ Governmental Activities - Internal Service Funds 918 1,953 (144) (70) 449 (40) 44 (4,112) (626) 1,927 299 $ 7,244 $ 17,411 $ 48,187 3,386 4,162 $ 7,244 $ 20,797 $ 52,349 CITY OF DOWNEY STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES June 30, 2009 (amounts expressed in thousands) ASSETS: Cash and investments (Note 3) $ 8,668 Receivables 839 TOTAL ASSETS $ 9,507 LIABILITIES: Accounts payable and accrued liabilities $ 777 Deposits payable 8,730 TOTAL LIABILITIES $ 9,507 See independent auditors' report and notes to basic financial statements. - 38 - NOTES TO BASIC FINANCIAL STATEMENTS A. Description of the Reporting Entity CITY OF DOWNEY NOTES TO BASIC FINANCIALSTATEMENTS June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Downey include the activities of the City and the commissions, authorities and non -profit corporations, described below, which are component units of the City. The City of Downey was incorporated in 1956 under the General Laws of the State of California. The City became a charter City in 1964. The City operates under a Council- Manager form of government governed by a five - member council and provides the following services: public safety (police, fire, paramedic and ambulance), highways and streets, parks and recreation, public improvements, planning and zoning, and general administrative services. The Community Development Commission of the City ofDownev was established in January 1976 pursuant to the California Community Redevelopment Laws. The Commission's initial project area consisted of four sub - areas. Two are located in the central downtown area, one in the eastern portion of the City, and one in the southern portion of the City. The objectives of the redevelopment project are the elimination and prevention of blight, the improvement and /or construction of public facilities, roads and other public improvements, and the attraction and facilitation of new developments within the project area for purposes of increasing the City's residential, commercial and industrial resources. The City of Downey Water Facilities Corporation is a non -profit corporation, organized for the purpose of assisting, through the issuance of leasehold mortgage bonds, the financing necessary to acquire and/or construct a water supply and distribution system for the City. The Corporation has no assets and liabilities and during the fiscal year had no activity. The City ofDownev Public Facilities Financinz Corporation, formerly known as City of Downey Civic Center Corporation, is a non -profit corporation organized June 1, 1981 for the purpose of assisting, through the issuance of revenue bonds, the financing necessary to construct public buildings and facilities for the City. The criteria used in determining the scope of the reporting entity are based on the provisions of Government Accounting Standards Board (GASB) Statement 14. The City of Downey is the primary government unit. Component units are those entities which are financially accountable to the primary government, either because the City appoints a voting majority of the component unit's board, or because the component unit provides a financial benefit or imposes a financial burden on the City. Separate financial statements of the Commission and the Corporations may be obtained at City Hall. See independent auditors' report. - 39 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. Description of the Reporting Entity (Continued) The Commission and the Corporations have been accounted for as "blended" component units of the City. Despite being legally separate, the Commission and the Corporations are so intertwined with the City that they are, in substance, part of the City's operations. Accordingly, the balances and transactions of the Commission and the Corporations are reported within the funds of the City. The following specific criteria were used in determining that the Commission and Corporations are blended component units. • The members of the City Council also act as the governing body of the Commission and the Corporations. • The Commission and the Corporations are managed by employees of the City. A portion of the City's salary and overhead expenses are billed to the Commission each year. • The City and Commission are financially interdependent. The City makes loans to the Commission to use for redevelopment purposes. Available property tax revenues of the Commission are used to repay the loans from the City. The City is a participant in two joint ventures (see Note 14), which are not considered part of the reporting entity and the City does not exercise primary oversight responsibilities for their operations. B. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government (including its blended component units) is reported separately from discretely presented component units for which the primary government is financially accountable. The City has no discretely presented component units. See independent auditors' report. - 40 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government -Wide and Fund Financial Statements (Continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be 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. Separate financial statements for the City's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements. These statements display information about major funds individually and other funds in the aggregate for governmental and enterprise funds. Fiduciary statements, even though excluded from the government -wide financial statements includes financial information that primarily represent assets held by the City in a custodial capacity for individuals or other organizations. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements and the proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all assets and liabilities (whether current or noncurrent) associated with their activity are included on their Statements of Net Assets. Operating statements present increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. See independent auditors' report. - 41 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all the eligibility requirements have been satisfied. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under the current financial resources measurement focus, only current assets and current liabilities are generally included on the balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources ". Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Noncurrent portions of long -term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. However, special reporting treatments are used to indicate that they should not be considered "available spendable resources" since they do not represent net current assets. Recognition of governmental fund type revenue represented by noncurrent receivables is deferred until they become current receivables. Noncurrent portions of other long -term receivables are offset by fund balance reserve accounts. Under the modified accrual basis of accounting, revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, except for principal and interest on general long -term liabilities, claims and judgments, and compensated absences which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long -term liabilities are reported as other financing sources. See independent auditors' report. - 42 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government. All governmental and business -type activities and enterprise funds of the City follow Financial Accounting Standards Board (FASB) Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. D. Fund Classifications The funds designated as major funds are determined by a mathematical calculation consistent with GASB Statement No. 34. The City reports the following major governmental funds: The General Fund is the primary operating fund of the City. It is used to account for all revenues and expenditures that are not required to be accounted for in another fund. The Gas Tax Special Revenue Fund is required by state law to account for gas taxes allocated by the State. The State levies various taxes on gasoline and other motor fuels, which are allocated among the State, cities and counties by formula. The Firestone Debt Service Fund is used to account for tax increment revenues, bond proceeds required to be set aside for future debt service and interest related to Firestone Development Project area. The Housing Capital Proiects Fund is used to account for restricted financial resources to be used to increase the supply of available low -and moderate- income housing. The City reports the following major enterprise funds: The Water Enterprise Fund is used to account for the provision of water services to residential, commercial and industrial customers. The Golf Enterprise Fund is used to account for all revenues and expenses related to the City - operated golf course, driving range and clubhouse. The Transit Enterprise Fund is used to account for the City - operated senior citizen and handicapped bus service and the fixed route Downey link bus system. See independent auditors' report. - 43 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Fund Classifications (Continued) The City's fund structure also includes the following fund types: The Special Revenue Funds are used to account for proceeds of specific revenue sources that are legally restricted or otherwise designated for specific purposes. The Debt Service Funds are used to account for the collection, and payment of, resources used to repay long -term debt and related interest. The Capital Proiects Funds are used to account for financial resources used for the acquisition or construction of major capital facilities. The Internal Service Funds are used to account for the financing of special activities that provide services within the City. These activities include compensation and other employee benefits, and equipment purchase and maintenance. The Aaencv Funds are used to account for money and property held by the City as trustee, agent or custodian. Agency funds are custodial in nature and do not involve measurement of results of operations. The City's fund structure also includes the following departmental classifications: Operating expenditures of the City are classified by department. Departmental classifications are defined as follows: General Government Department includes the legislative, city clerk, city attorney, city manager, personnel, finance, purchasing, and information technology divisions. Public Safety Department includes police, fire and paramedic, and animal control operations. Public Works Department includes maintenance and engineering divisions. Community Services Department includes the recreation, theatre, social services, and the library divisions. Community Development Department includes planning, redevelopment and building safety divisions. See independent auditors' report. - 44 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Cash and Investments The City pools idle cash from all funds for purposes of increasing income through investment activities. Investments are stated at fair value (quoted market price or best available estimate thereof). The City intends to either hold the investments until maturity or until market values equal or exceed cost. Interest income on investments is allocated among funds on the basis of average monthly cash and investment balances (see Note 3). F. Inventories and Land Held for Resale Inventories are valued at cost on a first -in first -out basis and are accounted for under the consumption method, whereby inventories are capitalized and recorded as expenditures as used. Water Utility Fund inventories consist primarily of water pipe, valves, and fittings. Inventories of fuel are recorded in the Equipment Fund. Land held for resale is valued at the lesser of cost, net realizable value or contracted sales price. G Capital Assets Capital assets (including infrastructure) are recorded at cost where historical records are available and at an estimated original cost where no historical records exist. Contributed capital assets are valued at their estimated fair market value at the date of contribution. Generally, capital asset purchases in excess of $500 are capitalized if they have an expected useful life of 1 year or more. Capital assets include additions to public domain (infrastructure), certain improvements including pavement, curb and gutter, sidewalks, traffic control devices, streetlights, sewers, bridges and right -of -way corridors within the City. The City has valued and recorded all infrastructure asset data as of June 30, 2009. Capital assets used in operations are depreciated over their estimated useful lives using the straight -line method in the Government -wide Financial Statements and in the Fund Financial Statements of the Enterprise Funds. Depreciation is charged as an expense against operations and accumulated depreciation is reported on the respective Statements of Net Assets. See independent auditors' report. - 45 - H. Compensated Absences I. Claims and Judgments J. Statement of Cash Flows See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G Capital Assets (Continued) The lives used for depreciation purposes of each capital asset class are: Buildings 50 years Improvements other than buildings 20 years Water distribution lines 50 years Water tanks, meters, hydrants, and other equipment 15 to 40 years Vehicles 3 to 15 years Machinery and equipment 5 to 10 years Office furniture, computers and equipment 10 years Infrastructure 20 to 50 years The City is obligated to pay all unused vacation to all employees. All vacation is accrued when incurred in the government -wide and proprietary fund financial statements. Governmental fund types recognize the vested vacation time as an expenditure in the current year to the extent it is paid during the year. Expenditures for claims and judgments are recognized when it is probable that the liability has been incurred at year -end and the amount of the loss can be reasonably estimated. Claims payable include a provision for Incurred But Not Reported (IBNR) claims. Claims payable, which will be liquidated from current resources, are recorded in the General Fund and Internal Service Funds. A substantial portion of the City's investments are in short-term, highly liquid instruments, with original maturities of three months or less (excluding fiscal agent investments). The Enterprise and Internal Service Funds participate in the pooling of City -wide cash and investments. Amounts from the pool are available to these funds on demand. As a result, the cash and investments for the Enterprise and Internal Services Funds are considered to be cash and cash equivalents for the statement of cash flows purposes. - 46 - NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Specifically, the City has made certain estimates and assumptions relating to the collectibility of its accounts and notes receivable, depreciation of capital assets, amounts due from other funds and amounts advanced to other funds, the valuation of property held for resale, and the ultimate outcome of claims and judgments. Actual results could differ from those estimates and assumptions. NOTE 2 - PROPERTY TAXES See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 Prior to the beginning of the fiscal year, Los Angeles County, which administers property tax collections for the City of Downey, establishes the assessed valuation roll on January 1 and property taxes attach as an enforceable lien on that date. After the fiscal year has started on July 1, taxes are levied prior to September 1 and are payable in two installments on November 1 (delinquent December 10) and February 1 (delinquent April 10). Assessed valuation is computed at 100% of full cash value; however, due to the 2% annual increase limit per Article XIII -A of the State Constitution, the roll does not fully reflect cash value. Property is reassessed to full cash value when it is sold or otherwise transferred. When property is sold after the normal January 1 lien date, a supplemental property tax is levied representing the difference between the tax levy based on the property value as of January 1 and the tax based on the new value. -47- NOTE 3 - CASH AND INVESTMENTS A. Cash and Investments CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 Cash and investments at June 30, 2009 are classified in the accompanying financial statements as follows (in thousands): Fiduciary Government Fund Wide Statement of Statement of Assets and Net Assets Liabilities Total Unrestricted assets: Cash and investments $ 97,121 $ 8,668 $ 105,789 Restricted assets: Cash and investments 10,722 10,722 Cash and investments with fiscal agents 2.233 2.233 $ 110.076 $ 8.668 $ 118344 Cash and investments at June 30, 2009 consisted of the following (in thousands): Demand accounts $ 14,529 Petty cash 5 Investments 104.210 Total Cash and Investments $ 118.744 B. Investments Authorized by the California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy. See independent auditors' report. - 48 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 3 - CASH AND INVESTMENTS (CONTINUED) B. Investments Authorized by the California Government Code and the City's Investment Policy (Continued) Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity Allowed in One Issuer United States Treasury Bills, Bonds and Notes 5 years None None United States Government Sponsored Enterprise Securities 5 years None None Small Business Administration Loans 5 years None None California Local Agency Obligations 5 years None None Certificates of Deposits (or Time Deposits) 5 years None None Negotiable Certificates of Deposits 5 years 30% None Medium -Term Corporate Notes 5 years 30% None Bankers' Acceptances 180 days 20% 10% Commercial Paper 270 days 15% 10% Repurchase Agreements 30 days None None Municipal Bonds 5 years None None C. Investments Authorized by Debt Agreements Investment of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. Investments authorized for funds held by bond trustee include, United States Treasury Obligations, United States Government Sponsored Enterprise Securities, Certificates of Deposits, Commercial Paper, Local Agency Bonds, Bankers' Acceptances, Money Market Mutual Funds, Investment Contracts and any other investments permitted by bond insurer. There were no limitations on the maximum amount that can be invested in one issuer, maximum percentage allowed or the maximum maturity of an investment, except for the maturity of Banker's Acceptance and Certificates of Deposits which are limited to one year and 270 days, respectively. See independent auditors' report. - 49 - D. Disclosures Relating to Interest Rate Risk See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 3 - CASH AND INVESTMENTS (CONTINUED) Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity (in thousands): Remainine Maturity (in Months) 12 Months 13 - 24 25 - 60 Over 60 Investment Tyne or Less Months Months Months Total United States Treasury Notes $ - $ - $ - $ 10,292 $ 10,292 United States Govemment Sponsored Enterprise Securities: FFCB 2,034 2,034 FHLMC 2,057 2,057 FHLB 9,286 9,286 FNMA 2,044 11,443 13,487 Medium -Term Corporate Notes 1,012 6,769 16,484 24,265 Money Market Mutual Funds 157 157 Local Agency Investment Funds 41,223 41,223 Held by Bond Trustee: Money Market Mutual Funds 766 766 Investment Agreements 643 643 $ 43.158 $ 8.813 $ 41.304 $ 10.935 $ 104.210 -50- E. Disclosures Relating to Credit Risk N/A - Not Applicable Other: AA, AA +, AA- $ 2,019 A, A +, A- 17,587 BBB +, BBB- 3,902 BB+ 757 $ 24.265 See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 3 - CASH AND INVESTMENTS (CONTINUED) Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required, at the time of purchase, by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the actual rating, as reported by Standard and Poor's, as of year end for each investment type (in thousands): Not Total Minimum Required Investment as of Legal to be Tvoe June 30. 2009 Rating (ll Rated AAA Other Unrated United States Treasury Notes $ 10,292 N/A $ 10,292 $ - $ - $ United States Govemment Sponsored Enterprise Securities: FFCB 2,034 N/A 2,034 FHLMC 2,057 N/A 2,057 FHLB 9,286 N/A 9,286 FNMA 13,487 N/A - 13,487 Medium -term Corporate Notes 24,265 A 24,265 Money Market Mutual Funds 157 AAA 157 Local Agency Investment Funds 41,223 N/A - 41,223 Held by Bond Trustee: Money Market Mutual Funds 766 AAA 766 - Investment Agreements 643 N/A - 643 TOTAL $ 104.210 $ 10.292 $ 27.787 $ 24 265 $ 41.866 The actual ratings for the Medium Term Corporate Notes (MTN) are as follows: (1) Requirement is applicable at the time of investment purchase. All investments at June 30, 2009 were in compliance with the minimum legal rating requirement at time of purchase. - 51 - NOTE 3 - CASH AND INVESTMENTS (CONTINUED) F. Concentration of Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer that represent 5% or more of total City's investments (excluding held by trustees) are as follows (in thousands): Issuer Federal Home Loan Bank Federal National Mortgage Association G Custodial Credit Risk See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 Investment Tyne Amount Investment United States Government Sponsored Enterprise Securities $ 9,286 8.91 % United States Government Sponsored Enterprise Securities Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker - dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The Califomia Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. Califomia law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2009, the City deposits (bank balances) were insured by the Federal Depository Insurance Corporation up to $250,000 and the remaining balance of the deposits were collateralized under California Law. - 52 - Reported Percent of 13,487 12.94 % NOTE 3 - CASH AND INVESTMENTS (CONTINUED) H. Investment in State Investment Pool CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro -rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. NOTE 4 - INTERFUND RECEIVABLES/PAYABLES AND TRANSFERS As of June 30, 2009, amounts due from /to other funds were as follows (in thousands): Due to General Fund from: Other Governmental Funds $ 664 Water Enterprise Fund 1 Golf Enterprise Fund 2 Internal Service Funds 1 Due to Other Governmental Funds from: General Fund 32 700 The amount loaned by the General Fund to the Other Governmental Funds is to provide short-term loans to fund operations of the various funds. As of June 30, 2009, amounts advanced to and from other funds were as follows (in thousands): Advances from General Fund to: Firestone Debt Service Fund $ 6,697 Other Governmental Funds 1,900 Advances from Employee Benefits Internal Service Fund to: Firestone Debt Service Fund 2.650 11.247 The advances from the General Fund and Employee Benefit Internal Service Fund to the Firestone Debt Service Fund are to provide for operations of the Community Development Commission. See independent auditors' report. - 53 - Transfer from General Fund Gas Tax Special Revenue Fund Firestone Debt Service Fund Other Governmental Funds Water Enterprise Fund Golf Enterprise Fund Transit Enterprise Fund See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 4 - INTERFUND RECEIVABLES/PAYABLES AND TRANSFERS (CONTINUED) Interfund transfers at June 30, 2009 consisted of the following (in thousands): Transfer to Other Governmental Funds General Fund Other Governmental Funds Other Governmental Funds General Fund Other Governmental Funds General Fund Other Governmental Funds General Fund Other Governmental Funds - 54 - Amount $ 2,601 830 77 1,500 134 398 506 125 862 811 $ 7.844 The General Fund transferred $2,601,000 to Other Governmental Funds to provide for capital and debt service expenditures. The Gas Tax Special Revenue Fund transferred $830,000 to the General Fund to provide for infrastructure and street maintenance reimbursement and $77,000 to Other Governmental Funds to provide for capital improvement projects. The Firestone Debt Service Fund transferred $1,500,000 to Other Governmental Funds to provide funding for various capital projects. The Water and Golf Funds transferred $506,000 and $862,000 to the General Fund, respectively, to reimburse the General Fund for certain program, administrative and overhead expenditures. The Water Enterprise Fund transferred $125,000 to Other Governmental Funds to provide for capital expenditures. Other Governmental Funds transferred $134,000 to the General Fund for various street related programs expenditures. NOTE 5 - LAND HELD FOR RESALE As of June 30, 2009, the Downey Community Development Commission had acquired properties for redevelopment purposes for resale to developers at a capitalized cost of $6,456,000. NOTE 6 - LOANS RECEIVABLE CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 The City has provided deferred - payment rehabilitation loans to qualifying low- income households in connection with the CDBG Home Investment Partnership and Redevelopment Agency housing rehabilitation programs. Due to the long -term nature of the loans, the City has recorded deferred revenue as an offset to loans receivable which totaled $6,586,000 at June 30, 2009. NOTE 7 - DEFERRED COMPENSATION PLAN The City has adopted a deferred compensation plan in accordance with Internal Revenue Code 457 for its eligible employees wherein they may execute an individual agreement with the City for amounts earned by them to be paid at a future date when certain circumstances are met. These circumstances are termination by reason of death, disability, resignation or retirement, or unforeseeable emergency. The plan permits all city employees to defer a portion of their salaries until future years. Amounts accumulated under the plan have been invested by third party operators at the direction of the employee. Pursuant to changes in August 1996 of IRC Section 457, the City formally established a trust in which it placed the 457 Plan assets and income. The assets, all property and rights purchased with such amounts, and all income attributable to such amounts, property, or rights are held in trust for the exclusive benefit of all participants and their beneficiaries. These assets are not the property of the City, and as such are not subject to the claims of the City's general creditors. As a result, these 457 plan assets are not reported in the City's comprehensive annual financial report. See independent auditors' report. - 55 - NOTE 8 - CAPITAL ASSETS Capital assets, not being depreciated: Land and improvements Projects in progress CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 A summary of changes in the Governmental Activities capital assets at June 30, 2009 is as follows (in thousands): Balances Balances at June 30, at June 30, 2008 Additions Deletions 2009 $ 13,890 $ 498 $ $ 14,388 34,129 9,687 (3.354) 40,462 Total capital assets, not being depreciated 48,019 10.185 (3354) 54.850 Capital assets, being depreciated: Buildings 29,495 66 29,561 Land improvements 9,582 273 - 9,855 Equipment 23,544 1,703 (2,354) 22,893 Furniture and fixtures 185 - 185 Infrastructure 238.163 3.351 - 241,514 Total capital assets, being depreciated 300.969 5.393 (2,354) 304,008 Less accumulated depreciation for: Buildings (13,067) (590) (13,657) Land improvements (5,233) (383) (5,616) Equipment (16,236) (1,946) 2,333 (15,849) Furniture and fixtures (58) (26) (84) Infrastructure (125,927) (4,965) - (130,892) Total accumulated depreciation (160.521) (7.910) 2.333 (166,098) Total capital assets being depreciated, net 140,448 (2.517) (21) 137,910 Governmental activities capital assets, net $ 188.467 $ 7.668 $ (3.375) $ 192.760 See independent auditors' report. - 56 - NOTE 8 - CAPITAL ASSETS (CONTINUED) CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 Governmental Activities depreciation expense, excluding infrastructure, was charged to functions /programs of the primary government as follows (in thousands): General Government $ 318 Public Safety 147 Public Works 30 Community Services 504 Internal Service Funds depreciation charges to program 1.946 Allocated depreciation 2,945 Unallocated infrastructure depreciation 4.965 Total depreciation expense - governmental activities 7.910 A summary of changes in the Business -type Activities capital assets at June 30, 2009 is as follows (in thousands): Capital assets, not being depreciated: Land WATER FUND Balances at Balances at June 30. 2008 Additions Deletions June 30. 2009 $ 8.272 $ $ - $ 8.272 Capital assets, being depreciated: Buildings and improvements 217 217 Furniture and fixtures 324 - 324 Machinery and equipment 323 323 Water supply and distribution system 27.931 361 28.292 Total capital assets being depreciated 28.795 361 - 29.156 Less accumulated depreciation for: Buildings and improvements (194) (4) (198) Furniture and fixtures (184) (10) - (194) Machinery and equipment (178) (41) (219) Water supply and distribution system (14.101) (541) (14.642) Total accumulated depreciation (14.657) (596) - (15253) Total capital assets being depreciated, net 14.138 (235) 13.903 Water Fund capital assets, net $ 22.410 $ (235) $ 22.175 See independent auditors' report. - 57 - NOTE 8 - CAPITAL ASSETS (CONTINUED) June 30, 2009 A summary of changes in the Business -type Activities capital assets at June 30, 2009 is as follows (in thousands) (Continued): Golf Fund capital assets, net Capital assets, not being depreciated: Land CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) GOLF FUND Balances at June 30, 2008 Balances at As Restated Additions Deletions June 30, 2009 Capital assets, being depreciated: Land improvements $ 10,687 $ - $ $ 10,687 Buildings and improvements 8,217 - 8,217 Machinery and equipment 491 241 (176) 556 Total capital assets being depreciated 19,395 241 (176) 19.460 Less accumulated depreciation for: Land improvements (1,522) (17) (1,539) Buildings and improvements (1,096) (294) (1,390) Machinery and equipment (239) (103) 76 (266) Total accumulated depreciation (2.857) (414) 76 (3.195) $ 16.538 $ (173) $ (100) S 16.265 TRANSIT FUND Balances at Balances at June 30. 2008 Additions Deletions June 30, 2009 $ 2,164 $ $ - $ 2.164 Capital assets, being depreciated: Land improvements 277 - 277 Buildings and improvements 2,973 2,973 Machinery and equipment 906 361 (389) 878 Total capital assets being depreciated 4.156 361 (389) 4.128 Less accumulated depreciation for: Land improvements (259) (1) - (260) Buildings and improvements (400) (61) (461) Machinery and equipment (382) (213) 354 (241) Total accumulated depreciation (1.041) (275) 354 (962) Total capital assets, being depreciated 3.115 86 (35) 3,166 Transit Fund capital assets, net $ 5.279 $ 86 $ (35) $ 5.330 See independent auditors' report. - 58 - NOTE 9 - LONG-TERM LIABILITIES See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 Noted below is a summary of changes in long -term liabilities for the year ended June 30, 2009 (in thousands): Balance Balance Amount June 30, June 30, Due Within 2008 Additions Reductions 2009 One Year Governmental Activities: Bonds payable $ 28,500 $ - $ (335) $ 28,165 $ 380 Less deferred charges: Bond discount (185) 7 (178) Total bonds payable 28,315 (328) 27,987 380 Certificates of Participation 1,365 (1,365) Capital lease payable 459 (69) 390 72 Advances from County 11,674 1,821 - 13,495 Loans from Federal Government 10,100 459 (250) 10,309 250 Compensated absences 12,100 5,187 (3,260) 14,027 4,276 Claims payable 10,041 3,615 (5,282) 8,374 3,924 Retiree health benefits 4.112 (4.112) Total governmental activities long -term liabilities $ 78.166 $ 11.082 $ (14.666) $ 74.582 $ 8.902 Business -type Activities: Compensated absences $ 517 $ 276 $ (173) $ 620 $ 192 Golf Course Certificates of Participation 8,775 (305) 8,470 315 Add (less) deferred changes: Bond premium 14 (1) 13 Loss on refunding (148) 12 (136) Total business -type activities long -term liabilities $ 9.158 $ 276 $ (467) $ 8.967 $ 507 - 59 - NOTE 9 - LONG -TERM LIABILITIES (CONTINUED) Governmental Activities Bonds Payable 1997 Tax Allocation Bonds Payable In 1997 the Community Development Commission issued $9,925,000 in Tax Allocation Bonds. Partially to advance refund the existing 1990 Tax Allocation bond issue, which had a balance outstanding of $4,470,000, and to repay the City for advances of $3,970,508 plus interest. The bonds have an average interest rate of 5.1 %. U.S. Bank serves as trustee for payment of principal and interest. The balance outstanding at June 30, 2009 is $7,910,000. The future debt service requirements on these bonds are as follows: Year Ending June 30, See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 Principal Interest Total 2010 $ 235,000 $ 397,694 $ 632,694 2011 250,000 385,988 635,988 2012 260,000 373,363 633,363 2013 275,000 359,988 634,988 2014 290,000 345,681 635,681 2015 - 2019 1,680,000 1,484,200 3,164,200 2020 - 2024 2,155,000 995,403 3,150,403 2025 - 2029 2,765,000 368,360 3,133360 Total $ 7.910.000 $ 4.710.677 $ 12.620.677 - 60 - NOTE 9 - LONG-TERM LIABILITIES (CONTINUED) Governmental Activities (Continued) Bonds Payable (Continued) 2005 Pension Obligation Bonds In June 2005, the City issued $20,635,000 taxable pension obligation bonds. Bond proceeds were used to satisfy a portion of the City's requirement to amortize the unfunded actuarial accrued liability with respect to retirement benefits accruing to members of the City. The par amount of the bonds comprised of $1,955,000 serial bonds and $18,680,000 term bonds. Principal on serial bonds mature in amounts from $90,000 to $395,000, the interest at 4.030% to 4.775% through June 1, 2015. Principal on the term bonds mature on June 1, 2020, 2025 and 2034, the interest rate at 4.885% to 5.083 %. The term bonds are subject to optional redemption prior to their maturity at the option of the City, in whole or in part on any date, at the redemption price equal to the lesser of (a) 100% of the principal amount on the term bonds to be redeemed; or (b) the sum of the present value of the remaining scheduled payments of the principal and interest to be redeemed. The future debt service requirements on these bonds are as follows: Year Ending June 30, 2010 $ 145,000 $ 1,013,823 $ 1,158,823 2011 185,000 1,007,298 1,192,298 2012 235,000 998,806 1,233,806 2013 280,000 987,949 1,267,949 2014 335,000 974,957 1,309,957 2015 - 2019 2,665,000 4,571,275 7,236,275 2020 - 2024 4,775,000 3,721,499 8,496,499 2025 - 2029 4,505,000 2,543,531 7,048,531 2030 - 2034 7,130.000 1.149,520 8,279,520 20,255,000 16,968,658 37,223,658 Less deferred charges on refunding (177.718) (177,718) See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS ( CONTINUED) June 30, 2009 Principal Interest Total Total $ 20.077.282 $ 16.968.658 $ 37.045.940 -61 - Capital Lease Payable Equipment Less: accumulated depreciation Present value of minimum lease payments See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 9 - LONG-TERM LIABILITIES (CONTINUED) Governmental Activities (Continued) 1996 Civic Center Refunding Certificates of Participation On May 29, 1996, the City issued $13,375,000 in Refunding Certificates of Participation with an average interest rate of 5.68% to refund $13,085,000 of outstanding 1986 Certificates of Participation with an average rate of 6.50 %. The Certificates were paid off during the fiscal year. The assets acquired through capital leases are as follows: The future minimum lease obligations and the net present value of these minimum lease payments are as follows: Year Ending Governmental June 30, Activities 2010 $ 88,324 2011 88,324 2012 88,324 2013 88,324 2014 88.324 Total minimum lease payments 441,620 Less: amounts representing interest (51.163) - 62 - Governmental Activities $ 806,560 (127,204) $ 679.356 390.457 CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 9 - LONG -TERM LIABILITIES (CONTINUED) Governmental Activities (Continued) Advances from County As part of the City's redevelopment program, the City and County of Los Angeles have entered into a tax increment pass - through deferral agreement. This agreement specifies that the City will defer the payment of all current tax increment pass - through due to the County, until some future date, when certain conditions are met. Until that time, the County will charge 7% interest on the outstanding deferral amount. During the year pass - through agreement amounts owed to the County totaling $949,000 were deferred. Interest of $872,000 was also accrued during the year on the outstanding deferral amount still owing. The amount owed the County, including accrued interest, at June 30, 2009 was $13,495,000. Loans from Federal Government As part of the City's redevelopment program, the City received a Section 108 Loan from the United States Department of Housing and Urban Development. The payment schedule as of June 30, 2009 is as follows: Year Ending June 30 Principal Interest Total In addition, on April 21, 2000, the City purchased 67 acres of land from the federal government for which the City must pay $14,897,223 on April 21, 2019. The City has recorded this transaction as a loan valued at $8,809,000 as of June 30, 2009. See independent auditors' report. 2010 $ 250,000 $ 66,875 $ 316,875 2011 250,000 55,763 305,763 2012 250,000 44,062 294,062 2013 250,000 31,875 281,875 2014 250,000 19,325 269,325 2015 250,000 6.488 256,488 Total $ 1.500.000 $ 224.388 $ 1.724.388 - 63 - Vacation Sick Leave Compensatory Time Total Amount reported in governmental activities Amount reported in business -type activities Claims Payable (Self - Insurance) Workers' Compensation Employee Health Benefits General Liability See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 9 - LONG -TERM LIABILITIES (CONTINUED) Governmental Activities (Continued) Compensated Absences For the fiscal year ended June 30, 2009, compensated absences are as follows (in thousands): - 64 - Total $ 3,758 9,199 1.690 $ 14.647 $ 14,027 620 14.647 The compensated absences are predominantly associated with the General fund. The City has three types of claims it has to manage and account for. The City is a member of Independent Cities Risk Management Authority (ICRMA), an Authority that provides liability insurance for several California Cities, and employs independent claims administrators to accomplish this task. The three types of claims are workers' compensation, employee health benefits and general liability. The self - insured retention and limits of insurance coverage (each occurrence or per employee, per year) for the respective claims are as follows: Self- Insured Retention $ 750,000 $ 85,000 2,000,000 Limit of Insurance Coverage 50,000,000 1,000,000 20,000,000 NOTE 9 - LONG-TERM LIABILITIES (CONTINUED) Governmental Activities (Continued) Claims Payable (Self - Insurance) (Continued) Changes in the workers' compensation, employee health benefits, and claims liability for the fiscal years ended June 30, 2008 and 2009 were Workers' Compensation $ Employee Health Benefits General Liability Workers' Compensation $ Employee Health Benefits General Liability See independent auditors' report. Claims Payable Balance June 30. 2007 CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) 6,838,000 $ 980,000 2,523,000 Claims Payable Balance June 30. 2008 6,497,000 $ 905,000 2,639,000 June 30, 2009 Current Year Claims and Changes in Estimates 1,770,000 $ 3,545,000 325,000 Curre Pa Year avments 2,111,000 $ 3,620,000 209,000 Current Year Claims and Changes in Current Year Estimates Payments - 65 - 493,000 $ 3,881,000 (759,000) general liability outstanding as follows: 1,171,000 $ 3,829,000 282,000 Claims Payable Balance June 30, 2008 6,497,000 905,000 2,639,000 Claims Payable Balance June 30, 2009 5,819,000 957,000 1,598,000 The amounts payable include Incurred But Not Reported (IBNR) claims. Payments are typically paid from General Fund and Employee Benefits Internal Service Fund. The various amounts are based on information provided by the City's claims administrators. At June 30, 2009, in the opinion of the City Attorney, the City had no other material claims which would require loss provision in the financial statements. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 9 - LONG-TERM LIABILITIES (CONTINUED) Business -type Activities 2002 Golf Course Certificates of Participation The 2002 Certificates of Participation, consisting of $7,045,000 serial certificates and $2,865,000 of term certificates, were issued by the City of Downey Public Facilities Financing Corporation. The proceeds were used to refund in advance the 1970 and 1993 bond issues and for improvements to the facilities. The serial certificates are payable in annual installments ranging from $270,000 to $495,000 through August 1, 2022. The term certificates are due on August 1, 2027. Serial certificates maturing on or after August 1, 2012 are subject to call for prepayment prior to their respective stated maturities, at the option of the Corporation, at prices ranging from 100% to 102% of the principal amount of the certificates. Interest is payable semiannually on February 1 and August 1, with rates ranging from 3.0% to 5.02 %. At June 30, 2009, bonds outstanding were $8,470,000. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $197,756. This difference, reported in the accompanying financial statements as a reduction from bonds payable, is being charged to interest expense through the year 2020. The City completed the advance refunding to obtain an economic gain (difference between the present value of the old and new debt service payments) of approximately $176,000. The advance refunding increased the City's debt service by approximately $1,031,000. Future debt service requirements on these certificates are as follows: Year Ending June 30, Principal Interest Total 2010 $ 315,000 $ 386,485 $ 701,485 2011 325,000 374,879 699,879 2012 340,000 362,410 702,410 2013 350,000 349,035 699,035 2014 365,000 334,553 699,553 2015 -2019 2,075,000 1,414,568 3,489,568 2020 -2024 2,355,000 891,533 3,246,533 2025 -2028 2,345,000 300,250 2,645.250 Subtotal 8,470,000 4,413,713 12,883,713 Add (less) deferred amounts: Bond premium 13,085 13,085 Loss on refunding (136,332) - (136,332) See independent auditors' report. Total $ 8.346.753 $ 4.413.713 $ 12.760.466 - 66 - NOTE 10 - DEFERRED REVENUE NOTE 11 - FUND BALANCE RESERVES CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 Deferred revenue consists of $6,586,000 in deferred loan payments from participants in the City's housing program (see Note 6), $90,000 in notes receivable, $21,000 in grant/advances and $421,000 in long -term receivables. A city may establish "reserves" of fund equity to segregate fund balances which are not appropriable for expenditure in future periods, or which are legally set aside for a specific purpose. The City's reserves at June 30, 2009 are tabulated (in thousands) below, followed by explanations as to the nature and purpose of each reserve. Gas Tax Firestone Housing Special Debt Capital Other General Revenue Service Projects Governmental Fund Fund Fund Fund Funds Totals Encumbrances $ 646 $ 1,602 $ - $ $ 3,399 $ 5,647 Park In Lieu - 74 74 Capital Projects 725 - - 195 920 Debt Service 663 663 Building Replacement - - 359 359 Land Held for Resale - 3,598 2,858 6,456 Housing 3,122 3,122 Workers' Compensation 15 15 Advances to other funds 8,597 - - 8,597 Records management 900 - - 900 General plan 467 - - 467 Long -term receivable - 958 958 Total Reserves A. Reserved for Encumbrances $ 1L350 $ 1.602 $ 663 $ 7.678 $ 6.885 $ 28.178 Amounts reserved for encumbrances are commitments for materials and services on purchase orders and contracts that are unperformed. B. Reserved for Park In Lieu Amounts reserved for park projects. Funds collected from developer. See independent auditors' report. - 67 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 11 - FUND BALANCE RESERVES (CONTINUED) C. Reserved for Capital Projects Amounts reserved for future, unspecified capital projects. D. Reserved for Debt Service These are reserves representing assets held by various trustees pursuant to bond covenants. E. Reserved for Building Replacement Amounts reserved to finance replacement project for City buildings. F. Reserved for Land Held for Resale This is a reserve to reflect that land held for resale by the Community Development Commission is not "available" as a spendable resource. G. Reserved for Housing These funds represent that portion of redevelopment tax increment revenue that must be set aside for housing programs. H. Reserved for Workers' Compensation Amount reserved to future workers' compensation liabilities. I. Reserved for Advances to Other Funds This reserve is provided to indicate that amounts advanced to the Community Development Commission are not available as a spendable source to meet expenditures of the current year. J. Reserved for Records Management Amount reserved to finance future records management. K. Reserved for General Plan Amount reserved to finance the general plan. L. Long -term Receivable This is a reserve to reflect that long -term receivable is not available as a spendable source to meet expenditures of the current year. See independent auditors' report. -68- CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) Plan Description June 30, 2009 NOTE 12 - CITY EMPLOYEE RETIREMENT PLAN The City of Downey contributes to the State of California Public Employees Retirement System (PERS), which is an agent multiple- employer 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 agency for most of the public agencies in 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 - 400 P Street Sacramento, CA 95814, or downloaded from the website at www.calpers.ca.gov. Funding Policy Participants are required to contribute 8% (9% for safety employees) of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. The City is required to contribute at an actuarially determined rate. The contribution rates for the year ended June 30, 2009 were 10.779% for non - safety employees and 18.068% for safety employees. The contribution requirements of plan members and the City are established and may be amended by PERS. Annual Pension Costs The City's annual pension cost and net pension asset to the current year were as follows (in thousands): Annual required contribution $ 7,981 Interest on net pension asset (718) Adjustment to annual required contribution 1,167 Annual pension cost 8,430 Contributions made (7,981) Decrease in net pension asset 449 Net pension asset - beginning of year (19,118) Net pension asset - end of year $ ( 18.669) The net pension asset is reported as part of prepared expense in the Statement of Net Assets. See independent auditors' report. - 69 - Annual Pension Costs (Continued) See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 12 - CITY EMPLOYEE RETIREMENT PLAN (CONTINUED) The required contribution was determined as part of the June 30, 2006, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included: (a) a rate of return on the investment of 7.75% a year (net of administrative expenses), (b) projected annual salary increases that vary by duration of service ranging from 3.25% to 14.45% for miscellaneous members and 3.25% to 13.15% for safety members, (c) inflation of 3.00 %, (d) payroll growth of 3.25% and (e) individual salary growth based on a merit scale varying by duration of employment coupled with an assumed annual inflation component of 3.00% and an annual production growth of 0.25 %. 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 (smoothed market value). The Plans' initial unfunded liabilities are amortized over a closed period that depends on the Plans' date of entry into Ca1PERS. Subsequent plan amendments are amortized as a level percentage of pay over a closed 20 year period. Gains and losses that occur in the operation of the plan are amortized over a rolling period, which results in an amortization of 6% of unamortized gains and losses each year. If the Plans' accrued liability exceeds the actuarial value of plan assets, then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30 year amortization period. The remaining amortization period at June 30, 2009 was 20 years and 32 years for the Miscellaneous Plan and Safety Plan, respectively. Three —Year Trend Information for PERS ($ amounts in thousands) Fiscal Annual Pension Cost Percentage of Net Pension Year (APC) APC Contributed Obligation June 30, 2007 $ 7,570 96% $ (19,512) June 30, 2008 8,246 95% (19,118) June 30, 2009 8,431 95% (18,668) - 70 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 12 - CITY EMPLOYEE RETIREMENT PLAN (CONTINUED) Funded Status and Funding Progress As of June 30, 2008, the most recent actuarial valuation date, the plan was 92.3% funded. The actuarial accrued liability for benefits was $347.8 million, and the actuarial value of assets was $321.1 million, resulting in an unfunded actuarial accrued liability (UAAL) of $26.7 million. The covered payroll (annual payroll of active employees covered by the plan) was $35.4 million, and the ratio of the UAAL to the covered payroll was 75.3 %. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about rates of employee turnover, retirement, mortality, as well as economic assumptions regarding claim costs per retiree, healthcare inflation and interest rates. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. NOTE 13 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Plan Description In connection with the retirement benefits for employees described in Note 12, the City provides post - retirement medical benefits to retirees. These benefits are available to employees who retire with the City with at least 10 years of service or those who satisfy certain disability requirements. The retiree is entitled to participate in the City sponsored medical plan and the City contributes up to $98.00 ($270 for sworn police and fire employees) per month toward the premium for employee only coverage under the City sponsored medical plans. A surviving spouse may continue coverage after the retiree's death, but does so entirely at his or her own expenses. The Plan does not issue a publicly available financial report. See independent auditors' report. - 71 - CITY OF DOWNEY NOTE 13 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) Funding Policy The contribution requirements of plan members and the City are established and may be amended by the City, City council, and/or the employee associations. Currently, contributions are not required from plan members. During the fiscal year ended June 30, 2009, the City elected to fund 100% of the annual required contribution of the employer (ARC) an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The ARC for fiscal year 2008 -09 was $2,140,585. Annual OPEB Cost NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 For fiscal year 2009, the City's annual OPEB cost was $2,140,585 and was equal to the City's required and actual contribution. The required contribution for the fiscal year 2009 was determined as part of the July 1, 2008, actuarial valuation, the entry age normal cost method was used. The actuarial assumptions included: (a) 7.75% investment rate of return (net of administrative expenses), (b) projected annual salary increase of 3.25 %, and (c) medical plan premium cost will increase at a rate ranging from 4.5% to 9.5 %. The City's unfunded actuarial accrued liability will be amortized as a level percentage of pay over closed period of 10 years. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and the plan members at that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets consistent with the long -term perspective of the calculations. Three -Year Trend Information For fiscal year 2009, the City's annual OPEB cost (expense) of $2,141,000 was equal to the ARC. Since this fiscal year is the transition year, information on the annual OPEB costs, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation is only available for the current fiscal year, as presented below: See independent auditors' report. P ercentage Fiscal Annual of Annual Net Year OPEB OPEB Cost OPEB Ended Cost Contributed Asset 6/30/09 $ 2,140,585 100% $ - 72 - Funded Status and Funding Progress NOTE 14 - JOINT VENTURES See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 13 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) As of July 1, 2008, the most current actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $12.07 million and the actuarial value of assets was zero, resulting in an unfunded actuarial accrued liability (UAAL) of $12.07 million. The covered payroll (annual payroll of active employees covered by the plan) was $28.4 million and the ratio of the UAAL to the covered payroll was 42.5 %. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about rates of employee turnover, retirement, mortality, as well as economic assumptions regarding claim costs per retiree, healthcare inflation and interest rates. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi -year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The City is a participant in two joint ventures. The joint ventures are not considered part of the reporting entity, as the City does not exercise primary oversight responsibilities for their operations. Each participating agency in these joint ventures has proportionate control over management, budgets, and financial decisions. The first joint venture is the Southeast Area Animal Control Authority. This joint venture provides animal control services to nine cities in the southeast Los Angeles County area. The Authority is governed by a nine- member board with one representative from each member city. Each member is obligated to contribute annually. The Authority is not currently experiencing financial stress on accumulating significant resources. The City has no equity interest in the Authority and does not receive a share of operating results. Separate audited financial statements for the Authority may be obtained at 9777 S eaaca Street, Downey, CA 90241. - 73 - NOTE 14 - JOINT VENTURES (CONTINUED) NOTE 15 - MORTGAGE REVENUE BONDS CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 The second joint venture is the Joint Fire Dispatching Center which the City operates as a cooperative program with the cities of Santa Fe Springs, Compton and Montebello. The City receives all calls for fire emergency services and dispatches fire units for the four -city area. The program is financed with contributions from each city per a Joint Powers Agreement. Pro -rata expenditures and revenues are reported as part of the Fire Department. Separate audited financial statements are not prepared for the joint venture. On October 1, 1983, the City of Downey issued, in conjunction with Kern County, Residential Mortgage Revenue Bonds, 1983, Series A, to provide funds in the amount of $4,709,125 to purchase mortgage loans to be secured by single - family condominium units in the City. The bonds are special obligations of the County of Kern — City of Downey Housing Finance Agency. On March 13, 1985, the City of Downey issued, in conjunction with the cities of Covina, Rancho Cucamonga, and Calexico, Residential Mortgage Revenue Bonds, 1985, Series A, to provide funds in the amount of $1,937,040 to purchase loans to be secured by single - family condominium units in the City. The bonds are special obligations of the Covina -Rancho Cucamonga - Calexico- Downey Housing Finance Agency. Seattle First National Bank serves as trustee. On May 15, 1985, the City of Downey issued, in conjunction with the cities of El Monte and San Jacinto, Single - Family Residential Mortgage Revenue Bonds, Issue of 1985, to provide funds in the amount of $1,950,000 to purchase loans to be secured by single - family condominium units in the City. The bonds are special obligations of the El Monte - Downey -San Jacinto Housing Finance Agency. Seattle First National Bank serves as trustee. On August 8, 2001, the City of Downey issued, in conjunction with the California Statewide Communities Development Authority, Multi - Family Housing Revenue Bonds, Series S and S -T, to provide funds in the amount of $3,300,000 to purchase loans to be secured by multifamily apartment complex in the City. The bonds are limited obligations of the California Statewide Communities Development Authority payable solely from the revenues from the multifamily apartment complex. U.S. Bank Trust National serves as trustee. The above debt issues are special obligations of the respective Housing Finance Agencies and are payable solely from payments made on mortgage loans and are secured by a pledge of such mortgage loans. Neither the faith and credit nor the taxing power of the City of Downey have been pledged to the payment of the bonds. Accordingly, this debt is not reported as a liability in the accompanying financial statements. See independent auditors' report. - 74 - NOTE 16 - OTHER REQUIRED DISCLOSURES Expenditures in Excess of Appropriations The following departments /funds reported expenditures in excess of appropriations (in thousands): General Fund: General Government: Legislation $ 51 Debt service: Interest and fiscal charges 459 Other Special Revenue Funds: CDBG - Community development 126 CDBG - Capital outlay 26 Grants - Public safety 36 Grants - Public works 33 Grants - Community services 264 Grants - Capital outlay 2,258 Other Capital Projects Fund: Woodruff Redevelopment - Community development $ 233 Deficit Fund Balances The following funds reported a deficit fund balance at June 30, 2009 (in thousands): Major Fund: Firestone Debt Service Fund $ 5,638 Other Debt Service Fund: Woodruff Industrial Project Redevelopment 1,289 The deficits will be eliminated through the receipt of future tax increment revenues and grant revenues. See independent auditors' report. CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 - 75 - CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 17 - COMMITMENTS AND CONTINGENCIES Pursuant to AB 26 4x, a budget trailer bill, California redevelopment agencies will be required to make Supplemental Education Revenue Augmentation Fund (SERAF) contributions totaling $1.7 billion for the fiscal year 2009 -2010 and $350 million for the fiscal year 2010 -2011. Under AB 26 4x, agencies may borrow a portion of the required contributions from their low and moderate income housing fund. Alternatively, sponsoring governmental agencies (the cities or counties) may elect to pay the SERAF contributions on behalf of their redevelopment agencies. On October 20, 2009, the California Redevelopment Association filed a class action lawsuit on behalf of all California redevelopment agencies, challenging the SERAF obligations as unconstitutional. The Agency's proposed SERAF contributions under AB 26 4x are $1,423,825 for the fiscal year 2009 -2010 and $292,862 for the fiscal year 2010 -2011. It is the position of Agency officials that the SERAF contributions required by AB 26 4x are unconstitutional, and that the Agency is not obligated to make these contributions. However, if the class action lawsuit is unsuccessful, and if the Agency were required to make these SERAF contributions, Agency officials have estimated that the Agency would have sufficient funds to make the required contributions. NOTE 18 - RESTATMENT OF NET ASSETS /FUND BALANCES Restatement of Net Assets - Government -wide Financial Statements Beginning net assets balances in the government -wide financial statements were restated as follows: Net assets as previously reported Increased to adjust capital assets Fund balance as previously reported Increase (decrease) to adjust beginning cash balance Business -type Activities $ 57,206,000 73.000 Net assets as restated $ 57.279.000 Restatement of Fund Balances - Governmental Fund Financial Statements Beginning fund balances in the governmental fund financial statements were restated as follows: General Fund $ 24,020,000 1.136.000 Fund balance /net assets as restated $ 25.156.000 See independent auditors' report. - 76 - Internal Service Funds $ 37,789,000 (1.136.000) $ 36.653.000 CITY OF DOWNEY NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 NOTE 18 - RESTATMENT OF NET ASSETS/FUND BALANCES (CONTINUED) Restatement of Net Assets - Proprietary Funds Financial Statements Beginning net assets balances in the proprietary funds financial statements were restated as follows: Net assets as previously reported Increased to adjust capital assets Net assets as restated $ 12.965.000 See independent auditors' report. - 77 - Golf Enterprise Fund $ 12,892,000 71000 This page intentionally left blank REQUIRED SUPPLEMENTARY INFORMATION Note 12 Actuarial Valuation Date 06/30/06 06/30/07 06/30/08 Note 13 07/01/08 $ Pension Actuarial Asset Value (a) $ 286,203,000 304,482,000 321,179,000 Actuarial Actuarial Asset Valuation Value Date (a) CITY OF DOWNEY SCHEDULES OF FUNDING PROGRESS For the year ended June 30, 2009 CITY EMPLOYEE RETIREMENT PLAN Entry Age Actuarial Accrued Liability (b) $ 295,892,000 323,517,000 347,846,000 Entry Age Actuarial Accrued Liability (b) $ 12,070,000 Unfunded Actuarial Accrued Liability (b) - (a) $ 9,689,000 19,035,000 26,667,000 Funded Ratio (a) /(b) 96.73% $ 30,242,000 94.12% 33,061,000 92.33% 35,425,000 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Unfunded Actuarial Accrued Liability (b) - (a) $ 12,070,000 - 80 - Funded Ratio (a) /(b) See accompanying independent auditors' report and notes to basic financial statements. Covered Payroll (c) Covered Payroll (c) 0.00% $ 28,419,000 Unfunded Actuarial Accrued Liability as a Percentage of Covered Payroll [(b) - (a )] /(c) 32.04% 57.58% 75.28% Unfunded Actuarial Accrued Liability as a Percentage of Covered Payroll [(b) (a)] /(c) 42.47% CITY OF DOWNEY BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the year ended June 30, 2009 (amounts expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 50,661 $ 50,666 $ 47,100 $ (3,566) Licenses and permits 1,535 1,535 1,372 (163) Fines and forfeitures 1,843 1,843 1,625 (218) Investment and rental 3,762 3,762 5,398 1,636 Intergovernmental revenue 2,390 2,412 2,357 (55) Charges for services 5,123 4,110 6,196 2,086 Other revenue 2,342 2,342 2,474 132 TOTAL REVENUES 67,656 66,670 66,522 (148) EXPENDITURES: Current: General government: Legislation 231 286 337 (51) City attorney 306 315 260 55 City clerk 451 484 453 31 City management 614 651 646 5 Finance 4,209 4,353 3,346 1,007 Public safety: Police 27,137 27,829 27,588 241 Animal control 325 325 308 17 Fire 17,533 17,588 17,481 107 Public works 5,934 6,058 5,778 280 Community services 7,705 7,931 7,445 486 Community development 3,393 3,502 3,027 475 Debt service: Interest and fiscal charges 459 (459) TOTAL EXPENDITURES 67,838 69,322 67,128 2,194 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (182) (2,652) (606) 2,046 OTHER FINANCING SOURCES (USES): Transfers in 2,574 2,574 2,332 (242) Transfers out (2,129) (2,602) (2,601) 1 Issuance of debt 459 459 TOTAL OTHER FINANCING SOURCES (USES) 445 (28) 190 218 NET CHANGE IN FUND BALANCE 263 (2,680) (416) 2,264 FUND BALANCE - BEGINNING OF YEAR, AS RESTATED 25,156 25,156 25,156 FUND BALANCE - END OF YEAR $ 25,419 $ 22,476 $ 24,740 $ 2,264 See independent auditors' report and note to required supplementary information. - 81 - CITY OF DOWNEY BUDGETARY COMPARISON SCHEDULE GAS TAX SPECIAL REVENUE FUND For the year ended June 30, 2009 (amounts expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment and rental $ 135 $ 135 $ 358 $ 223 Intergovernmental revenue 12,201 10,374 5,078 (5,296) TOTAL REVENUES 12,336 10,509 5,436 (5,073) EXPENDITURES: Capital outlay 12,876 13,724 1,731 11,993 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (540) (3,215) 3,705 6,920 OTHER FINANCING USES: Transfers out (830) (907) (907) NET CHANGE IN FUND BALANCE (1,370) (4,122) 2,798 6,920 FUND BALANCE - BEGINNING OF YEAR 4,822 4,822 4,822 FUND BALANCE - END OF YEAR $ 3,452 $ 700 $ 7,620 $ 6,920 See independent auditors' report and note to required supplementary information. - 82 - NOTE 1- BUDGETARY DATA CITY OF DOWNEY NOTE TO REQUIRED SUPPLEMENTARY INFORMATION June 30, 2009 The City is required by its charter to adopt an annual budget on or before June 30th for the ensuing fiscal year. From the effective date of the budget, the proposed expenditures become appropriations to the various City departments. This "appropriated budget" covers substantially all City expenditures, with the exception of debt service on bonds, which expenditures constitute legally authorized "non- appropriated budget." There are no significant non - budgeted activities. The City Council passes various amendments to the budget during the year. Supplementary appropriations for the year ended June 30, 2009 increased budgeted expenditures from $136,653,004 as adopted in the original budget, to $187,606,240. The City prepares its budgets on the basis of actual expenditures and, accordingly, the budget amounts included in the accompanying financial statements are presented on a basis substantially consistent with generally accepted accounting principles. The level of budgetary control is the department level, classified in accordance with Note 1D, within the fund. However, the City Manager is authorized to transfer amounts between divisions within a department without seeking City Council approval. Encumbrance accounting is utilized during the fiscal year, whereby purchase orders, contracts and other commitments are recorded in order to control appropriations. At year end, all appropriations and encumbrances are canceled (allowed to lapse) and thus they are not included in reported expenditures. However, encumbrances at year end are reported as reservations of fund balance. See independent auditors' report. - 83 - This page intentionally left blank OTHER MAJOR FUND The Other major fund accounts for financial resources to be used for City projects and restricted financial resources to be used to increase supply of available low -and moderate - income housing. Housing Capital Proiects Fund is used to account for restricted financial resources to be used to increase the supply of available low -and moderate - income housing. TOTAL REVENUES See independent auditors' report. CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HOUSING CAPITAL PROJECTS FUND For the year ended June 30, 2009 (amount expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 943 $ 943 $ 942 $ (1) Investment and rental 155 155 242 87 Intergovernmental revenue 713 713 873 160 Other revenue 90 90 220 130 1,901 1,901 2,277 376 EXPENDITURES: Current: Community development 3,237 3,237 1,568 1,669 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (1,336) (1,336) 709 2,045 FUND BALANCE - BEGINNING OF YEAR 6,969 6,969 6,969 FUND BALANCE - END OF YEAR $ 5,633 $ 5,633 $ 7,678 $ 2,045 - 86 - OTHER GOVERNMENTAL FUNDS The combining statements for Other Governmental Funds represent a consolidation of the information for specific funds contained in the Supplementary Financial Statements. These statements summarize the financial information contained in Other Special Revenue Funds, Other Debt Service Funds, Other Capital Projects Funds, Internal Service Funds and Agency Funds. This page intentionally left blank LIABILITIES AND FUND BALANCES See independent auditors' report. CITY OF DOWNEY COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS June 30, 2009 (amounts expressed in thousands) Special Debt Capital Revenue Service Projects Funds Funds Funds Total ASSETS Cash and investments $ 3,714 $ 475 $ 3,618 $ 7,807 Receivables: Taxes 120 133 253 Accounts 49 138 187 Interest 17 3 10 30 Loans 884 - 884 Due from other governments and entities 637 164 801 Due from other funds 32 32 Restricted assets: Cash and investments 203 203 Cash and investments with fiscal agents 636 189 825 Land held for resale 2,858 2,858 TOTAL ASSETS $ 6,292 $ 611 $ 6,977 $ 13,880 LIABILITIES: Accounts payable and accrued liabilities $ 1,046 $ $ 343 $ 1,389 Due to other funds 664 664 Deposits 3 3 Advances from other funds 1,900 1,900 Deferred revenue 905 905 TOTAL LIABILITIES 2,615 1,900 346 4,861 FUND BALANCES (DEFICIT): Reserved for: Encumbrances 1,416 1,983 3,399 Land held for resale - 2,858 2,858 Park in lieu 74 74 Capital projects 195 195 Building replacement 359 359 Unreserved reported in: Special revenue funds 2,261 2,261 Debt service funds - (1,289) (1,289) Capital projects funds 1,162 1,162 TOTAL FUND BALANCES (DEFICIT) 3,677 (1,289) 6,631 9,019 TOTAL LIABILITIES AND FUND BALANCES $ 6,292 $ 611 $ 6,977 $ 13,880 - 89 - CITY OF DOWNEY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS For the year ended June 30, 2009 (amounts expressed in thousands) Special Debt Capital Revenue Service Projects Funds Funds Funds Total REVENUES: Taxes $ 343 $ 797 $ $ 1,140 Investment and rental 109 71 130 310 Intergovernmental revenue 2,508 1,450 3,958 Charges for services 1,764 - 1,764 Other revenue 207 - 13 220 TOTAL REVENUES 4,931 868 1,593 7,392 EXPENDITURES: Current: General government 202 202 Public safety 52 52 Public works 1,856 - 1,856 Community services 1,336 - - 1,336 Community development 2,608 514 1,737 4,859 Capital outlay 3,576 4,916 8,492 Debt service: Principal retirement 250 1,365 1,615 Interest and fiscal charges 77 308 385 TOTAL EXPENDITURES 9,957 2,187 6,653 18,797 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (5,026) (1,319) (5,060) (11,405) OTHER FINANCING SOURCES (USES): Transfers in 2,596 2,916 5,512 Transfers out (210) (170) (152) (532) Issuance of debt 167 - 167 TOTAL OTHER FINANCING SOURCES (USES) 2,386 (3) 2,764 5,147 NET CHANGE IN FUND BALANCES (2,640) (1,322) (2,296) (6,258) FUND BALANCES - BEGINNING OF YEAR 6,317 33 8,927 15,277 FUND BALANCES (DEFICIT) - END OF YEAR $ 3,677 $ (1,289) $ 6,631 $ 9,019 See independent auditors' report. - 90 - OTHER SPECIAL REVENUE FUNDS Special Revenue Funds account for taxes and other revenues set aside in accordance with law or administrative regulations for a specified purpose. Waste Reduction Fund is used to account for funds collected pursuant to AB 939 and used to pay for recycling and other waste reduction programs. Street Li2htin2 Fund is used to account for the property taxes and assessments levied on real property located within the City's Street Lighting District. The revenues in this fund are used to pay for the electric and other costs associated with the street lights, traffic signals and street trees. CDBG Fund is required by federal regulations to account for the use of grant funds received from the federal government. Other revenues in this fund are reimbursements of loans to beneficiaries of a particular housing program or the sale of real property in the furtherance of block grant programs. All such other revenue are "program income" and are considered to be federal revenues. Sewer and Storm Drain Fund is used to account for charges collected for the upkeep of sanitary sewers and federally required drainage upkeep programs. CATV Public Access Fund is used to account for revenues received from the City's cable TV franchise company pursuant to the franchise agreements. Air Oualitv Fund is used to account for all charges related to air quality, such as car pooling, etc. Grants Fund is used to account for revenues received from various grants for park and other non - street capital improvements. TOTAL ASSETS See independent auditors' report. CITY OF DOWNEY COMBINING BALANCE SHEET OTHER SPECIAL REVENUE FUNDS June 30, 2009 (amounts expressed in thousands) Waste Street Reduction Lighting ASSETS Cash and investthents $ 134 $ 1,954 Receivables: Taxes - 61 Accounts 25 24 Interest 13 Loans Due from other governments and entities 9 Due from other funds Restricted assets: Cash and investments Cash and investments with fiscal agents LIABILITIES AND FUND BALANCES $ 168 $ 2,052 LIABILl'1'1t S: Accounts payable and accrued liabilities $ 48 $ 132 Due to other funds 1 Deferred revenue TOTAL LIABILI11hS 49 132 FUND BALANCES: Reserved: Encumbrances 36 Unreserved: Designated: Special revenue purposes 83 1,920 Undesignated TOTAL FUND BALANCES 119 1,920 TOTAL LIABILITIES AND FUND BALANCES $ 168 $ 2,052 - 92 - Sewer and CATV Air CDBG Storm Drain Public Access Quality Grants Totals $ - $ 764 $ 43 $ 589 $ 230 $ 3,714 59 120 - - 49 4 17 884 - 884 593 35 637 32 32 203 203 636 636 $ 1,680 $ 764 $ 43 $ 660 $ 925 $ 6,292 $ 79 $ 99 $ 13 $ 4 $ 671 $ 1,046 663 - - 664 884 - 21 905 1,626 99 13 4 692 2,615 225 259 - 896 1,416 406 30 656 3,095 (171) - (663) (834) 54 665 30 656 233 3,677 $ 1,680 $ 764 $ 43 $ 660 $ 925 $ 6,292 CITY OF DOWNEY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER SPECIAL REVENUE FUNDS REVENUES: Taxes Investment and rental Intergovernmental revenue Charges for services Other revenue TOTAL REVENUES EXPENDITURES: Current: General government Public safety Public works Community services Community development Capital outlay Debt service: Principal retirement Interest and fiscal charges See independent auditors' report. For the year ended June 30, 2009 (amounts expressed in thousands) - 94 - Waste Street Reduction Lighting $ - $ 343 (1) 85 67 - 406 1,222 88 - 560 1,650 379 243 OTHER FINANCING SOURCES (USES): Transfers in 140 Transfers out 1,464 TOTAL EXPENDITURES 622 1,464 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (62) 186 TOTAL OTHER FINANCING SOURCES (USES) 140 NET CHANGE IN FUND BALANCES 78 186 FUND BALANCES - BEGINNING OF YEAR 41 1,734 FUND BALANCES - END OF YEAR $ 119 $ 1,920 Sewer and CATV Air CDBG Storm Drain Public Access Quality Grants Totals $ - $ - $ $ $ - $ 343 1 - (5) 28 1 109 2,173 132 136 2,508 - 136 - 1,764 114 5 207 2,288 136 (5) 160 142 4,931 202 - 202 52 52 1,331 113 33 1,856 400 - 693 1,336 1,144 - 2,608 1,002 113 2,461 3,576 250 250 77 77 2,873 1,444 202 113 3,239 9,957 (585) (1,308) (207) 47 (3,097) (5,026) 456 1,488 207 305 2,596 (114) - (96) (210) 342 1,488 207 209 2,386 (243) 180 47 (2,888) (2,640) 297 485 30 609 3,121 6,317 $ 54 $ 665 $ 30 $ 656 $ 233 $ 3,677 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES See independent auditors' report. CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL WASTE REDUCTION SPECIAL REVENUE FUND For the year ended June 30, 2009 (amounts expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment and rental $ 1 $ 1 $ (1) $ (2) Intergovernmental revenue 71 71 67 (4) Charges for services 410 410 406 (4) Other revenue 2 2 88 86 TOTAL REVENUES 484 484 560 76 EXPENDITURES: Current: Public works 342 389 379 10 Community services 270 270 243 27 TOTAL EXPENDITURES 612 659 622 37 - 96 - (128) (175) (62) 113 OTHER FINANCING SOURCES: Transfers in 140 140 140 NET CHANGE IN FUND BALANCE 12 (35) 78 113 FUND BALANCE - BEGINNING OF YEAR 41 41 41 FUND BALANCE - END OF YEAR $ 53 $ 6 $ 119 $ 113 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL STREET LIGHTING SPECIAL REVENUE FUND For the year ended June 30, 2009 (amounts expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ - $ $ 343 $ 343 Investment and rental 31 31 85 54 Charges for services 1,632 1,632 1,222 (410) TOTAL REVENUES 1,663 1,663 1,650 (13) EXPENDITURES: Current: Community development 1,570 1,570 1,464 93 93 186 93 1,734 1,734 1,734 $ 1,827 $ 1,827 $ 1,920 $ 93 - 97 - 106 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES See independent auditors' report. CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CDBG SPECIAL REVENUE FUND For the year ended June 30, 2009 (amounts expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment and rental $ 36 $ 36 $ 1 $ (35) Intergovernmental revenue 2,165 2,440 2,173 (267) Other revenue 97 197 114 (83) TOTAL REVENUES 2,298 2,673 2,288 (385) EXPENDITURES: Current: Community services - 500 400 100 Community development 1,015 1,018 1,144 (126) Capital outlay 644 976 1,002 (26) Debt service: Principal retirement 250 250 250 Interest and fiscal charges 77 77 77 TOTAL EXPENDITURES 1,986 2,821 2,873 (52) OTHER FINANCING SOURCES (USES): Transfers in 456 456 - Transfers out (311) (311) (114) 197 TOTAL OTHER FINANCING SOURCES (USES) (311) 145 342 197 NET CHANGE IN FUND BALANCE 1 (3) (243) (240) FUND BALANCE - BEGINNING OF YEAR 297 297 297 FUND BALANCE - END OF YEAR $ 298 $ 294 $ 54 $ (240) - 98 - 312 (148) (585) (437) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Charges for services $ 135 $ 135 $ 136 $ 1 Other revenue 395 395 (395) TOTAL REVENUES 530 530 136 (394) EXPENDITURES: Current: Public works 1,330 1,377 1,331 46 Capital outlay 542 495 113 382 TOTAL EXPENDITURES 1,872 1,872 1,444 428 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES: Transfers in 1,602 1,602 1,488 (114) NET CHANGE IN FUND BALANCE 260 260 180 (80) FUND BALANCE - BEGINNING OF YEAR 485 485 485 FUND BALANCE - END OF YEAR $ 745 $ 745 $ 665 $ (80) See independent auditors' report. CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SEWER AND STORM DRAIN SPECIAL REVENUE FUND For the year ended June 30, 2009 (amounts expressed in thousands) - 99 - (1,342) (1,342) (1,308) 34 REVENUES: Investment and rental CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CATV PUBLIC ACCESS SPECIAL REVENUE FUND For the year ended June 30, 2009 (amounts expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1 $ 1 $ (5) $ (6) EXPENDITURES: Current: General government 205 205 202 3 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (204) (204) (207) (3) OTHER FINANCING SOURCES: Transfers in 207 207 207 NET CHANGE IN FUND BALANCE 3 3 (3) FUND BALANCE - BEGINNING OF YEAR 30 30 30 FUND BALANCE - END OF YEAR $ 33 $ 33 $ 30 $ (3) See independent auditors' report. - 100 - REVENUES: Investment and rental Intergovernmental revenue TOTAL REVENUES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AIR QUALITY SPECIAL REVENUE FUND For the year ended June 30, 2009 (amounts expressed in thousands) Budgeted Amounts Original Final $ 4 $ 130 134 4 130 134 EXPENDITURES: Current: Public works 112 117 22 609 $ 631 - 101 - 17 609 $ 626 Actual $ 28 132 160 113 Variance with Final Budget Positive (Negative) $ 24 2 26 4 47 30 609 $ 656 $ 30 CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GRANTS SPECIAL REVENUE FUND For the year ended June 30, 2009 (amounts expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment and rental $ - $ - $ 1 $ 1 Intergovernmental revenue 136 136 Other revenue 317 429 5 (424) TOTAL REVENUES 317 429 142 (287) EXPENDITURES: Current: Public safety 16 52 (36) Public works - 33 (33) Community services 429 429 693 (264) Capital outlay 193 203 2,461 (2,258) TOTAL EXPENDITURES 622 648 3,239 (2,591) EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (305) (219) (3,097) (2,878) OTHER FINANCING SOURCES (USES): Transfers in 305 305 305 Transfers out (96) (96) TOTAL OTHER FINANCING SOURCES (USES) 305 209 209 NET CHANGE IN FUND BALANCE (10) (2,888) (2,878) FUND BALANCE - BEGINNING OF YEAR 3,121 3,121 3,121 FUND BALANCE - END OF YEAR $ 3,121 $ 3,111 $ 233 $ (2,878) See independent auditors' report. - 102 - OTHER DEBT SERVICE FUNDS Downey Civic Center Fund is used to account for the debt payments made on the Civic Center Bonds. Woodruff Industrial Proiect Redevelopment Fund is used to account for tax increment revenue fro the Woodruff Industrial Project redevelopment project area. This revenue is used for the repayment of debt. June 30, 2009 (amounts expressed in thousands) CITY OF DOWNEY Woodruff Downey Industrial Civic Project Center Redevelopment Totals ASSETS Cash and investments $ - $ 475 $ 475 Receivables: Taxes 133 133 Interest 3 3 TOTAL ASSETS $ $ 611 $ 611 LIABILITIES AND FUND BALANCES COMBINING BALANCE SHEET OTHER DEBT SERVICE FUNDS LIABILITIES: Advances from other funds $ $ 1,900 $ 1,900 FUND BALANCES (DEFICIT): Unreserved - undesignated (1,289) (1,289) TOTAL LIABILITIES AND FUND BALANCES $ $ 611 $ 611 See independent auditors' report. - 104 - COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER DEBT SERVICE FUNDS TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICIT) - BEGINNING OF YEAR FUND BALANCES (DEFICIT) - END OF YEAR See independent auditors' report. CITY OF DOWNEY For the year ended June 30, 2009 (amounts expressed in thousands) Woodruff Downey Industrial Civic Project Center Redevelopment Totals REVENUES: Taxes $ - $ 797 $ 797 Investment and rental 51 20 71 TOTAL REVENUES 51 817 868 EXPENDITURES: Community development 514 514 Debt service: Principal retirement 1,365 1,365 Interest and fiscal charges 89 219 308 TOTAL EXPENDITURES 1,454 733 2,187 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (1,403) 84 (1,319) OTHER FINANCING SOURCES (USES): Transfers out (20) (150) (170) Issuance of debt 167 167 - 105 - (20) 17 (3) (1,423) 101 (1,322) 1,423 (1,390) 33 $ $ (1,289) $ (1,289) This page intentionally left blank OTHER CAPITAL PROJECTS FUNDS Firestone Redevelopment Fund is used to account for the administration, capital projects and land transactions of the City's Firestone Boulevard Redevelopment Project Area. Woodruff Redevelopment Fund is used to account for the administration, capital projects and land transactions of the City's Woodruff Industrial Redevelopment Project Area. City Fund is used to account for City projects funded by various sources. LIABILITIES AND FUND BALANCES CITY OF DOWNEY COMBINING BALANCE SHEET OTHER CAPITAL PROJECTS FUNDS June 30, 2009 (amounts expressed in thousands) Firestone Woodruff Redevelopment Redevelopment City Totals ASSETS Cash and investments $ 1,295 $ 138 $ 2,185 $ 3,618 Receivables: Accounts 138 138 Interest 7 3 - I0 Due from other governments and entities 164 164 Restricted assets: Cash and investments with fiscal agents 189 189 Land held for resale 2,858 2,858 TOTAL ASSETS $ 4,298 $ 141 $ 2,538 $ 6,977 LIABILITIES: Accounts payable and accrued liabilities $ 88 $ $ 255 $ 343 Deposits 3 3 TOTAL LIABILITIES 91 255 346 FUND BALANCES: Reserved: Encumbrances 91 1,892 1,983 Land held for resale 2,858 - 2,858 Park in lieu 74 74 Capital projects - 195 195 Building replacement - 359 359 Unreserved - undesignated 1,258 141 (237) 1,162 TOTAL FUND BALANCES 4,207 141 2,283 6,631 TOTAL LIABILITIES AND FUND BALANCES $ 4,298 $ 141 $ 2,538 $ 6,977 See independent auditors' report. - 108 - CITY OF DOWNEY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER CAPITAL PROJECTS FUNDS REVENUES: Investment and rental Intergovernmental revenue Other revenue TOTAL REVENUES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES See independent auditors' report. For the year ended June 30, 2009 (amounts expressed in thousands) Firestone Woodruff Redevelopment Redevelopment City Totals $ - 109 - 58 $ 13 $ 59 $ 130 - 1,450 1,450 1 - 12 13 59 13 1,521 1,593 EXPENDITURES: Current: Community development 1,504 233 1,737 Capital outlay 4,916 4,916 TOTAL EXPENDITURES 1,504 233 4,916 6,653 (1,445) (220) (3,395) (5,060) OTHER FINANCING SOURCES (USES): Transfers in 1,500 150 1,266 2,916 Transfers out (152) (152) TOTAL OTHER FINANCING SOURCES (USES) 1,500 150 1,114 2,764 NET CHANGE IN FUND BALANCES 55 (70) (2,281) (2,296) FUND BALANCES - BEGINNING OF YEAR 4,152 211 4,564 8,927 FUND BALANCES - END OF YEAR $ 4,207 $ 141 $ 2,283 $ 6,631 See independent auditors' report. CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FIRESTONE REDEVELOPMENT CAPITAL PROJECTS FUND For the year ended June 30, 2009 (amounts expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment and rental $ 9 $ 9 $ 58 $ 49 Intergovernmental revenue 2,200 2,200 (2,200) Other revenue 48 48 1 (47) TOTAL REVENUES 2,257 2,257 59 (2,198) EXPENDITURES: Current: Community development 1,491 2,636 1,504 1,132 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 766 (379) (1,445) (1,066) OTHER FINANCING SOURCES: Transfers in 1,500 1,500 NET CHANGE IN FUND BALANCE 766 (379) 55 434 FUND BALANCE - BEGINNING OF YEAR 4,152 4,152 4,152 FUND BALANCE - END OF YEAR $ 4,918 $ 3,773 $ 4,207 $ 434 - 110 - See independent auditors' report. CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL WOODRUFF REDEVELOPMENT CAPITAL PROJECTS FUND For the year ended June 30, 2009 (amounts expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment and rental $ $ $ 13 $ 13 EXPENDITURES: Current: Community development 233 (233) EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (220) (220) OTHER FINANCING SOURCES: Transfers in 150 150 NET CHANGE IN FUND BALANCE (70) (70) FUND BALANCE - BEGINNING OF YEAR 211 211 211 FUND BALANCE - END OF YEAR $ 211 $ 211 $ 141 $ (70) See independent auditors' report. CITY OF DOWNEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CITY CAPITAL PROJECTS FUND For the year ended June 30, 2009 (amount expressed in thousands) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment and rental $ 191 $ 191 $ 59 $ (132) Intergovernmental revenue 2,972 2,972 1,450 (1,522) Other revenue - 43 12 (31) TOTAL REVENUES 3,163 3,206 1,521 (1,685) EXPENDITURES: Capital outlay 7,385 7,795 4,916 2,879 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (4,222) (4,589) (3,395) 1,194 OTHER FINANCING SOURCES (USES): Transfers in 78 1,266 1,188 Transfers out (152) (152) - TOTAL OTHER FINANCING SOURCES (USES) (74) 1,114 1,188 NET CHANGE IN FUND BALANCE (4,222) (4,663) (2,281) 2,382 FUND BALANCE - BEGINNING OF YEAR 4,564 4,564 4,564 FUND BALANCE - END OF YEAR $ 342 $ (99) $ 2,283 $ 2,382 - 112 - INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one City department to other City departments on a cost reimbursement basis. The Internal Service Funds used by the City are as follows: Employee Benefits Fund is used to charge various departments for leave time, medical benefits, retirement benefits and other employee fringe benefits on a cost reimbursement basis. Equipment Fund is used to charge various departments of the City for the use of fleet, office and communications equipment on a cost reimbursement basis. ASSETS CITY OF DOWNEY COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS June 30, 2009 (amounts expressed in thousands) Employee Benefits Equipment Totals CURRENT ASSETS: Cash and investments $ 44,755 $ 3,432 $ 48,187 Accounts receivable 37 127 164 Advances to other funds 2,650 2,650 Inventories 181 181 Restricted assets: Cash and investments 2,072 2,072 4,144 Cash and investments with fiscal agent 18 - 18 TOTAL CURRENT ASSETS 49,532 5,812 55,344 NONCURRENT ASSETS: Prepaid pension expense 18,669 18,669 Bond issuance costs 173 173 Capital Assets (Net of Accumulated Depreciation): Machinery and equipment 7,044 7,044 TOTAL NONCURRENT ASSETS 18,842 7,044 25,886 TOTAL ASSETS 68,374 12,856 81,230 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable and accrued liabilities 756 262. 1,018 Due to other funds 1 1 Interest payable 86 17 103 Compensated absences 4,276 - 4,276 Deferred revenue - 44 44 Claims payable 3,285 - 3,285 Capital lease payable 72 72 Pension obligation bonds 145 - 145 TOTAL CURRENT LIABILI'11ES 8,548 396 8,94-4 NONCURRENT LIABILITIES: Compensated absences 9,751 9,751 Claims payable 3,491 - 3,491 Capital lease payable 318 318 Pension obligation bonds 19,932 19,932 TOTAL NONCURRENT LIABILITIES 33,174 318 33,492 TOTAL LIABILITIES 41,722 714 42,436 NET ASSETS: Invested in capital assets, net of related debt 6,654 6,654 Unrestricted 26,652 5,488 32,140 TOTAL NET ASSETS $ 26,652 $ 12,142 $ 38,794 See independent auditors' report. - 114 - CITY OF DOWNEY COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS INTERNAL SERVICE FUNDS For the year ended June 30, 2009 (amounts expressed in thousands) Employee Benefits Equipment Totals OPERATING REVENUES: Charges for services $ 23,987 $ 2,900 $ 26,887 Miscellaneous 973 (4) 969 TOTAL OPERATING REVENUES 24,960 2,896 27,856 OPERATING EXPENSES: Maintenance and operations - 1,651 1,651 General and administration 403 403 Employee benefits 22,931 22,931 Amortization 7 7 Depreciation 1,946 1,946 TOTAL OPERATING EXPENSES 22,938 4,000 26,938 OPERATING INCOME (LOSS) 2,022 (1,104) 918 NONOPERATING REVENUES (EXPENSES): Grant revenue 607 607 Investment and rental 895 189 1,084 Interest expense (1,026) (17) (1,043) Gain on sale of capital assets 49 49 TOTAL NONOPERATING REVENUES (EXPENSES) (131) 828 697 NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS 1,891 (276) 1,615 CAPITAL CONTRIBUTIONS 526 526 CHANGE IN NET ASSETS 1,891 250 2,141 TOTAL NET ASSETS - BEGINNING OF YEAR AS RESTATED 24,761 11,892 36,653 TOTAL NET ASSETS - END OF YEAR $ 26,652 $ 12,142 $ 38,794 See independent auditors' report. - 115 - See independent auditors' report. CITY OF DOWNEY COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the year ended June 30, 2009 (amounts expressed in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from user departments $ 24,923 $ 2,833 $ 27,756 Payment to suppliers (16,892) (1,649) (18,541) Payment to employees (8,367) (549) (8,916) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (336) 635 299 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Principal paid (110) - (110) Interest paid (1,019) - (1,019) NET CASH PROVIDED (USED) BY NONCAPAITAL FINANCING ACTIVITIES (1,129) - (1,129) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of capital assets (1,703) (1,703) Proceeds from sale of capital assets 71 71 Interest paid on debt - (20) (20) Capital contributions - 526 526 Grants received 607 607 Principal paid on debt - (69) (69) NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES (588) (588) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 895 189 1,084 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (570) 236 (334) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR, AS RESTATED 47,415 5,268 52,683 CASH AND CASH EQUIVALENTS - END OF YEAR $ 46,845 $ 5,504 $ 52,349 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 2,022 $ (1,104) $ 918 Depreciation and amortization 7 1,946 1,953 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (37) (107) (144) (Increase) decrease in inventories - (70) (70) (Increase) decrease in prepaid expenses 449 - 449 Increase (decrease) in accounts payable and accrued liabilities 34 (74) (40) Increase (decrease) in deferred revenue 44 44 Increase (decrease) in retiree health payable (4,112) (4,112) Increase (decrease) in claims payable (626) (626) Increase (decrease) in compensated absences payable 1,927 - 1,927 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (336) $ 635 $ 299 - 116 - Employee Benefits Equipment Totals AGENCY FUNDS Special Denosits Fund is used to account for refundable and performance bond deposits and other deposit funds. Cemetery District Fund is used to account for the financial operations of an independent governmental entity which the City provides accounting services to. 1913 Act Bond Fund is used to account for the revenues associated with the City's 1913 Act projects. Elm Vista Fund is used to account for funds provided by private property owners to construct certain public right -of -way improvements in their neighborhood. Columbia Memorial Space Learnine Center Foundation is used to account for the construction and implementation of educational programs for the Columbia Memorial Space Learning Center. Southeast Area Animal Control Authority (SEAACAI Fund is used to account for the financial operations of an independent governmental entity which the City provides accounting services to. Special Cemetery 1913 Act Deposits District Bond Fund ASSETS Cash and investments $ 7,213 $ 130 $ 112 Receivables 41 5 1 TOTAL ASSETS $ 7,254 $ 135 $ 113 LIABILITIES LIABILI1IES: Accounts payable and accrued liabilities $ 94 $ 135 $ Deposits payable 7,160 113 TOTAL LIABILITIES $ 7,254 $ 135 $ 113 See independent auditors' report. CITY OF DOWNEY COMBINING STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES June 30, 2009 (amounts expressed in thousands) - 118 - Columbia Memorial Space Elm Learning Center Vista Foundation SEAACA Totals $ 2 $ 6 $ 1,205 $ 8,668 3 789 839 $ 5 $ 6 $ 1,994 $ 9,507 $ 5 $ $ 543 $ 777 6 1,451 8,730 $ 5 $ 6 $ 1,994 $ 9,507 SPECIAL DEPOSITS CEMETERY DISTRICT 1913 ACT BOND FUND ELM VISTA LIABILITIES: Accounts payable and accrued Liabilities CITY OF DOWNEY COMBINING STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES For the year ended June 30, 2009 (amounts expressed in thousands) Balance Balance July 1, 2008 Additions Deletions June 30, 2009 ASSETS: Cash and investments $ 6,829 $ 3,084 $ 2,700 $ 7,213 Receivables 70 45 74 41 TOTAL ASSETS $ 6,899 $ 3,129 $ 2,774 $ 7,254 LIABILITIES: Accounts payable and accrued Liabilities $ 44 $ 2,428 $ 2,378 $ 94 Deposits payable 6,855 2,758 2,453 7,160 TOTAL LIABILITIES $ 6,899 $ 5,186 $ 4,831 $ 7,254 ASSETS: Cash and invest tents $ 121 $ 141 $ 132 $ 130 Receivables 5 12 12 5 TOTAL ASSETS $ 126 $ 153 $ 144 $ 135 LIABILITIES: Accounts payable and accrued liabilities $ 126 $ 52 $ 43 $ 135 ASSETS: Cash and investments $ 106 $ 6 $ $ 112 Receivables 1 1 1 1 TOTAL ASSETS $ 107 $ 7 $ 1 $ 113 LIABILITIES: Deposits payable $ 107 $ 7 $ 1 $ 113 ASSETS: Cash and investments $ 2 $ $ - $ 2 Receivables 3 3 TOTAL ASSETS $ 5 $ $ $ 5 $ 5 $ $ $ 5 See independent auditors' report. (Continued) - 120 - COLUMBIA MEMORIAL SPACE LEARNING CENTER FOUNDATION ASSETS: Cash and investments LIABILITIES: Deposits payable SEAACA See independent auditors' report. CITY OF DOWNEY COMBINING STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES (CONTINUED) For the year ended June 30, 2009 (amounts expressed in thousands) Balance Balance July 1, 2008 Additions Deletions June 30, 2009 $ 6 $ $ $ 6 $ 6 $ $ $ 6 ASSETS: Cash and investments $ 972 $ 5,423 $ 5,190 $ 1,205 Receivables 1,310 2,097 2,618 789 TOTAL ASSETS $ 2,282 $ 7,520 $ 7,808 $ 1,994 LIABILITIES: Accounts payable and accrued liabilities $ 608 $ 5,781 $ 5,846 $ 543 Deposits payable 1,674 431 654 1,451 TOTAL LIABILI 1'TES $ 2,282 $ 6,212 $ 6,500 $ 1,994 TOTAL - ALL AGENCY FUNDS ASSETS: Cash and investments $ 8,036 $ 8,654 $ 8,022 $ 8,668 Receivables 1,389 2,155 2,705 839 TOTAL ASSETS $ 9,425 $ 10,809 $ 10,727 $ 9,507 LIABILITIES: Accounts payable and accrued liabilities $ 783 $ 8,261 $ 8,267 $ 777 Deposits payable 8,642 3,196 3,108 8,730 TOTAL LIABILITIES $ 9,425 $ 11,457 $ 11,375 $ 9,507 - 121 - This page intentionally left blank STATISTICAL SECTION DESCRIPTION OF STATISTICAL SECTION CONTENTS June 30, 2009 This part of the City of Downey's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the government's overall financial health. Contents: Pages Financial Trends - These schedules contain trend information to help the reader understand how the City's financial performance and well -being have changed over time. Revenue Capacity - These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity - These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information - These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 124 - 133 134 - 140 141 - 146 147 - 148 149 - 151 CITY OF DOWNEY NET ASSETS BY COMPONENT (amounts expressed in thousands) Last Seven Fiscal Years (accrual basis of accounting) Fiscal Year 2002 -03 2003 -04 2004 -05 2005 -06 Governmental Activities: Invested in capital assets, net of related debt $ 144,453 $ 140,035 $ 158,433 $ 150,882 Restricted 8,853 16,888 24,225 28,039 Unrestricted 52,050 45,558 30,035 44,867 Total governmental activities net assets 205,356 202,481 212,693 223,788 Business -type Activities: Invested in capital assets, net of related debt 31,329 32,802 33,550 35,976 Restricted - - - - Unrestricted 21,890 23,333 24,438 21,345 Total business -type activities net assets 53,219 56,135 57,988 57,321 Primary Government: Invested in capital assets, net of related debt 175,782 172,837 191,983 186,858 Restricted 8,853 16,888 24,225 28,039 Unrestricted 73,940 68,891 54,473 66,212 Total primary government net assets $ 258,575 $ 258,616 $ 270,681 $ 281,109 The City of Downey implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Source: Finance Department, City of Downey 124 Fiscal Year 2006 -07 2007 -08 2008 -09 $ 154,423 $ 172,185 $ 176,041 31,468 28,201 32,221 46,856 38,679 34,848 - 232,747 239,065 243,110 35,662 35,586 35,423 22,903 21,693 20,494 58,565 57,279 55,917 190,085 207,771 211,464 31,468 28,201 32,221 69,759 60,372 55,342 $ 291,312 $ 296,344 $ 299,027 125 Source: Finance Department, City of Downey CITY OF DOWNEY CHANGES IN NET ASSETS - EXPENSES AND PROGRAM REVENUES (amounts expressed in thousands) Last Seven Fiscal Years (accrual basis of accounting) Expenses: Governmental Activities: General government $ 1,839 $ 2,784 $ 5,633 $ 4,510 Public safety 32,314 34,990 37,122 40,767 Public works 11,456 5,424 7,642 8,079 Community services 5,694 6,298 6,179 8,927 Community development 7,430 7,028 6,673 6,269 Unallocated infrastructure depreciation 3,846 4,569 4,614 4,614 Interest on long term debt 1,461 2,109 1,745 1,767 Total governmental activities net expenses 64,040 63,202 69,608 74,933 Business -type Activities: Water 7,147 7,255 7,238 7,977 Golf 2,287 2,232 2,501 2,516 Transit 2,149 1,980 2,170 2,577 Total business -type activities net assets 11,583 11,467 11,909 13,070 Total primary government expenses $ 75,623 $ 74,669 $ 81,517 $ 88,003 Program Revenues: Governmental Activities: Charges for services: General government $ 146 $ 150 $ 146 $ 153 Public safety 3,724 4,176 4,584 3,996 Public works 2,237 5,037 1,860 2,092 Community services 1,448 1,718 2,100 2,648 Community development 1,883 2,577 2,972 3,030 Operating grants and contributions 8,513 7,784 10,901 9,826 Capital grants and contributions 112 3,829 6,342 4,548 Total governmental activities program revenues 18,063 25,271 28,905 26,293 Business -type Activities: Charges for services: Water 8,888 9,526 8,819 9,095 Golf 3,110 3,207 2,649 2,864 Transit 8 9 10 9 Operating grants and contributions 160 18 - Total business -type activities program revenues 12,166 12,760 11,478 11,968 Primary government program revenues $ 30,229 $ 38,031 $ 40,383 $ 38,261 Net (Expense)/Revenue: Governmental activities $ (45,977) $ (37,931) $ (40,703) $ (48,640) Business -type activities 583 1,293 (431) (1,102) Total primary government net expense $ (45,394) $ (36,638) $ (41,134) $ (49,742) The City of Downey implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Fiscal Year 2002 -03 2003 -04 2004 -05 2005 -06 126 2006 -07 $ 6,100 42,379 8,466 7,903 6,556 4,772 1,801 77,977 8,852 2,745 2,634 14,231 $ 92,208 $ 150 $ 4,156 2,236 2,904 2,701 7,409 3,676 23,232 9,543 2,944 7 12,494 35,726 (54,745) $ (1,737) (56,482) $ Fiscal Year 2007 -08 2008 -09 $ 5,891 43,510 7,460 9,390 8,898 4,806 1,823 81,778 10,121 2,765 2,939 15,825 $ 97,603 134 4,202 2,247 2,516 3,795 7,965 3,623 24,482 9,078 2,938 121 12,137 $ 36,619 $ 4,881 45,314 7,450 9,220 8,732 4,965 1,859 82,421 9,739 2,699 3,486 15,924 $ 98,345 $ 154 4,161 2,273 2,536 2,277 7,499 7,634 26,534 8,782 2,780 130 762 12,454 $ 38,988 (57,296) $ (55,887) (3,688) (3,470) (60,984) $ (59,357) 127 CITY OF DOWNEY CHANGES IN NET ASSETS - GENERAL REVENUES (amounts expressed in thousands) Last Seven Fiscal Years (accrual basis of accounting) Fiscal Year 2002 -03 2003 -04 2004 -05 2005 -06 General Revenues and Other Changes in Net Assets: Governmental Activities: Property taxes, levied for general purposes $ 10,247 $ 11,059 $ 16,668 $ 19,813 Transient occupancy taxes 781 814 863 1,022 Sales taxes and use taxes 13,271 12,922 10,475 11,372 Property taxes in lieu of sales and use tax - - 3,511 3,819 Franchise taxes 1,887 1,952 1,985 2,076 Utility users tax 5,965 - - Other taxes - 13,957 8,873 8,574 Business operation tax 988 - - Motor vehicle taxes 6,282 Earning on investments 5,281 81 3,265 2,070 Gain (loss) on sale of capital assets (149) 8,396 1,549 - Miscellaneous 2,052 1,482 1,616 7,459 Transfers 1,201 1,474 1,341 3,530 Total governmental activities 47,806 52,137 50,146 59,735 Business -type Activities: Sales taxes 2,664 2,806 2,978 3,383 Earning on investments 1,749 291 1,166 562 Gain (loss) on sale of capital assets - 4 20 Miscellaneous 1 - - - Transfers (1,201) (1,474) (1,341) (3,530) Total business -type activities 3,213 1,623 2,807 435 Total primary government $ 51,019 $ 53,760 $ 52,953 $ 60,170 Change in Net Assets: Governmental activities $ 1,829 $ 14,206 $ 9,443 $ 11,095 Business -type activities 3,796 2,916 2,376 (667) Total primary government $ 5,625 $ 17,122 $ 11,819 $ 10,428 The City of Downey implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Source: Finance Department, City of Downey 128 Fiscal Year 2006 -07 2007 -08 2008 -09 $ 22,726 $ 23,974 $ 25,561 1,085 1,050 934 12,996 11,706 9,675 3,989 3,856 3,444 2,168 2,142 2,276 - 8,002 7,677 9,489 1,819 1,632 5,405 5,973 4,889 - 24 49 4,126 1,443 1,491 1,720 4,761 2,304 63,704 64,750 59,932 3,330 3,310 3,004 1,371 1,580 1,436 - 28 (28) 2,012 (1,720) (4,761) (2,304) 2,981 2,169 2,108 $ 66,685 $ 66,919 $ 62,040 $ 8,959 $ 7,454 $ 4,045 1,244 (1,519) (1,362) $ 10,203 $ 5,935 $ 2,683 129 Source: Finance Department, City of Downey CITY OF DOWNEY FUND BALANCES OF GOVERNMENTAL FUNDS (amounts expressed in thousands) Last Seven Fiscal Years (modified accrual basis of accounting) Total all other governmental funds $ 18,598 $ 23,975 $ 27,193 $ 26,631 Total general fund $ 23,678 $ 22,144 $ 22,133 $ 23,044 General Fund: Reserved $ 883 $ 1,239 $ 7,756 $ 7,850 Unreserved 22,795 20,905 14,377 15,194 Fiscal Year 2002 -03 2003 -04 2004 -05 2005 -06 All Other Governmental Funds: Reserved $ 12,020 $ 12,884 $ 20,723 $ 16,986 Unreserved, reported in: Special revenue funds 304 4,012 10,699 12,535 Debt service funds (923) (7,195) (1,140) (7,059) Capital projects funds 7,197 14,274 (3,089) 4,169 The City of Downey has elected to show only seven years of data for this schedule. 130 Fiscal Year 2006 -07 2007 -08 2008 -09 $ 8,014 $ 8,832 $ 11,350 15,448 15,188 13,390 $ 23,462 $ 24,020 $ 24,740 $ 27,267 $ 22,833 $ 16,828 3,832 6,288 8,279 (6,655) (7,317) (7,590) 4,403 (19) 1,162 $ 28,847 $ 21,785 $ 18,679 131 CITY OF DOWNEY CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS (amounts expressed in thousands) Last Seven Fiscal Years (modified accrual basis of accounting) Fiscal Years 2002 -03 2003 -04 2004 -05 2005 -06 Revenues: Taxes $ 34,076 $ 34,626 $ 41,641 $ 47,113 License and permits 885 1,043 1,768 1,852 Fines and forfeitures 1,809 1,739 1,878 1,751 Investment and rental 5,689 2,957 4,429 3,719 Intergovernmental revenue 13,257 14,758 14,618 10,103 Charges for services 5,859 6,303 7,574 7,788 Other revenue 6,535 9,782 6,171 10,962 Total revenues 68,110 71,208 78,079 83,288 Expenditures: Current: General government 3,825 4,292 4,658 3,953 Public safety 32,254 34,128 35,979 37,613 Public works 7,585 7,540 6,987 7,343 Community services 5,719 5,848 5,639 7,929 Community development 7,715 8,275 6,821 7,148 ERAF payment - 395 494 271 Capital outlay 9,021 34,040 13,805 8,935 Debt service: Principal 1,300 1,360 1,415 1,730 Interest and fiscal charges 2,173 1,969 2,355 2,383 Total expenditures 69,592 97,847 78,153 77,305 Excess of revenues over (under) expenditures (1,482) (26,639) (74) 5,983 Other Financing Sources (Uses): Transfers in 5,907 6,106 12,205 8,446 Transfers out (8,443) (9,609) (15,819) (15,200) Proceeds from long -term debt 1,071 3,567 Sale of property 30,418 - Issuance of debt 1,002 1,120 Sale of capital assets 5,893 - Total other financing sources (uses) (1,465) 30,482 3,281 (5,634) Net change in fund balances (2,947) 3,843 3,207 349 Fund balances - July 1 45,223 42,276 46,119 49,326 Fund balances - June 30 $ 42,276 $ 46,119 $ 49,326 $ 49,675 Debt service as a percentage of noncapital expenditures 4.99% 3.42% 4.85% 5.34% The City of Downey has elected to show only seven years of data for this schedule. Source: Finance Department, City of Downey 132 Fiscal Year 2006 -07 2007 -08 2008 -09 $ 52,682 $ 53,432 $ 52,020 2,147 2,487 1,372 1,911 1,900 1,625 7,002 7,154 6,425 9,370 7,234 12,266 7,804 10,161 7,960 3,416 3,025 2,933 - 84,332 85,393 84,601 4,905 5,457 5,244 39,555 42,361 45,429 7,902 7,004 7,634 6,769 8,775 8,781 7,589 9,820 10,432 9,105 16,186 10,223 1,800 1,890 1,840 2,370 2,277 2,252 79,995 93,770 91,835 4,337 (8,377) (7,234) 10,653 12,049 7,844 (13,742) (10,440) (5,540) 1,386 1,400 1,408 (1,703) 3,009 3,712 2,634 (5,368) (3,522) 49,675 51,173 46,941 $ 52,309 $ 45,805 $ 43,419 5.21% 4.44% 5.03% 133 CITY OF DOWNEY ASSESSED VALUATION (amounts expressed in thousands) Last Ten Fiscal Years Net Total Percent Fiscal Public Less Net Total Less Net Total Unsecured Increase Year Secured Utilities Exemptions Secured Unsecured Exemptions Unsecured and Secured (Decrease) 1999 -00 $ 4,583,866 $ 2,675 $ 162,973 $ 4,423,568 $ 247,841 $ 268 $ 247,573 $ 4,671,141 2.3 2000 -01 4,714,619 2,190 77,526 4,639,283 248,440 29,029 219,411 4,858,694 4.0 2001 -02 - 4,994,720 2,210 70,792 4,926,138 318,705 87,533 231,172 5,157,310 6.1 2002 -03 5,289,560 963 86,492 5,204,031 251,512 37,603 213,909 5,417,940 5.1 2003 -04 5,718,335 995 73,582 5,645,748 278,562 68,544 210,018 5,855,766 8.1 2004 -05 6,162,620 1,057 97,880 6,065,797 267,325 66,568 200,757 6,266,554 7.0 2005 -06 6,880,678 1,036 83,406 6,798,308 261,287 57,661 203,626 7,001,934 11.7 2006 -07 7,679,717 984 120,776 7,559,925 324,711 110,373 214,338 7,774,263 11.0 2007 -08 8,513,613 830 267,374 8,247,069 334,761 103,999 230,762 8,477,831 9.0 2008 -09 9,159,784 1,172 459,270 8,701,686 333,002 88,819 244,183 8,945,869 5.5 Exemptions include Homeowners and Business Inventory Exemptions. 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U1 r r 0 h en en O eel en Tr 0 0 0 - 0 0 0 0 0 CO 0 CO 0 0 Tr 0 0 O 0 0 0 0 0 0 0 0 0 0 o 0 0 0 0 0 o 0 0 0 O 6600000666 0 666606 6666 N '0 OD 00 0 Tr NO Tr ON h - 0 r o r v = Y1 b '0 VI r O T Tr 0 0 0 - CO 0 0- 0 Tr 0 , 0 0 0 0 0 0 0 0 0 0 o O 0 0 0 0 0 0 0 • • • • ' 0 N ▪ V- 00 ‘.O r r O b - N 0 0 VI 0 N O N 0 VI O •-. O 0 0 N O h O h 0 0 0 0 O O 0 0 0 N 0 4 O O N O O N 0 0 N O O N — 00 ON Tr N ON O • N 04 O O O O O 0 0 0 0 O b — r M1 O 04 04 e a o o 0 0 O O O ▪ 40 ON ON '0 - er 0 o o 0 O O 0 Tr ON 00 1, o o O O VI e O 0 O 0 o o e% 00 r Tr 0 0 0 o o O 00 O O O b O O O O 0 O n V0 V0 O N N o N. o 0 O N CO 0 O M 00 o VI 00 N . 0 o ,—I 0 0 M 00 O 0 trl 0-. m N O .a F CO N 0 0 0 a h 10 n N N VJ V] O 0 'C 40 7 e!1 00 V' oo oo 0' '0 O 0 N N 0 N ~ O O .0 a 0 O N N A A b O N N F. Q E' E Q N N a a v v q G. 0 'a a' v w Wc"a c"av QQ > >�93 ffi C O Vg 9 v q q C A al m ,o g 2 q >> >>> 7 m O e�' v o o= ¢¢ d v v v d d d m m m a 8 m CITY OF DOWNEY PRINCIPAL PROPERTY TAX PAYERS Current Year and Nine Years Ago 2008 -09 1999 - 00 Taxable % of Total City Taxable % of Total City Assessed Taxable Assessed Assessed Taxable Assessed Taxpayer Value Value Value Value Gary L. Ball Trust, Et. Al. $ 100,002,374 1.12% $ 70,910,048 1.52% Coca Cola Bottling Company of Los Angeles 75,772,712 0.85% 44,831,837 0.96% Kaiser Foundation 55,567,194 0.62% 29,513,393 0.63% Macerich Stinewood Limited Partnership 52,486,835 0.59% 42,070,950 0.90% Fremont Rancho Limited 49,006,877 0.55% 27,450,539 0.59% Downey Land Company Limited 43,723,878 0.49% 70,329,866 1.51% RLJ II-EM Downey 31,540,000 0.35% PRC Multi - Family LLC 30,272,091 0.34% Andrews Rancho Del Norte 24,368,043 0.27% Ark Land Management LLC 23,058,928 0.26% Sanwa Jutaku Company Limited 0.00% 32,800,594 0.70% Boeing North American 60,193,719 1.29% LA County Capital Asset Leasing Corporation 25,989,588 0.56% Norbert Gehr 20,767,450 0.44% $ 485,798,932 5.43% $ 424,857,984 9.10% The amounts shown above include assessed value data for both the City and the Redevelopment Agency. Sources: HdL Coren & Cone, Los Angeles County Assessor 1999/00 - 2008/09 Combined Tax Rolls The SBE Non Unitary Tax Roll 139 (1) Information not available Source: Finance Department, City of Downey CITY OF DOWNEY PROPERTY TAX LEVIES AND COLLECTIONS (amounts expressed in thousands) Last Ten Fiscal Years Current Percent of Collections Total Percent of Fiscal Total Tax Levy in Subsequent Tax Total Tax Year Tax Levy Collections Collected Years Collections Collections 1999 -00 $ 5,734 5,734 $ 100 $ 5,734 100.00 2000 -01 6,141 6,045 98.44 96 6,141 100.00 2001 -02 6,505 6,412 98.57 93 6,505 100.00 2002 -03 6,942 6,684 96.28 258 6,942 100.00 2003 -04 7,533 7,459 99.02 74 7,533 100.00 2004 -05 8,079 8,079 100.00 8,079 100.00 2005 -06 8,707 8,707 100.00 8,707 100.00 2006 -07 9,762 9,762 100.00 9,762 100.00 2007 -08 11,844 11,394 96.20 450 11,844 100.00 2008 -09 12,497 11,501 92.03 (1) 11,501 92.03 140 _ $ VO co F G $ i I & N f 69 \ \ \ \ \ \ Ic § R 00 c E= 2 —, / 2 \ 5 < 0.) 1- 2 \ - N rn ON ON R 00 / / Ts E & & co Q \ ® - 7:: c'.) VD m 00 0 69 > ` C k \ \ \ k / : r CO • 6 • Q m 0 2 .E e 3 2 < 0 69 § 0 o o $ ■ / F & E CN CN \ a N \ r C\ 0 C C\ m m g 0 •§ { 5 \ / _ 3 C; 5 M m N — g 17 §.§ N / 7 3 r @ o [. Q 2 & E k N N \ 65 & 0 0 / \ \ 2 // t p ■\ ■2 7 \ § 0 % J $ # $ / \ k rn $ 0 E & ? / ° G \ \ — R a \ a r 0 6 r & — = 0 ■ o — z c 3 ° < / 0 \ 69 % f c ( ( -, \ f � cn \ § cn ® 3 q q q % @ ƒ \ c _ o .) & a $ / \ 6 2 $ cc » / a 8 G k 2§ c@ E $ $ $ E CC CO a CITY OF DOWNEY RATIO OF GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA Debt Ratio of Net Assessed Gross Service Net Bonded Debt Net Bonded Fiscal Value Bonded Monies Bonded to Assessed Debt Per Year Population (in thousands) Debt Available Debt Value Capita 1999 -00 107,323 $ 4,671,141 $ - $ $ 0.0% 0.0% 2000 -01 108,729 4,858,694 0.0% 0.0% 2001 -02 110,441 5,157,310 0.0% 0.0% 2002 -03 111,687 5,417,940 0.0% 0.0% 2003 -04 112,817 5,855,766 0.0% 0.0% 2004 -05 112,938 6,266,554 0.0% 0.0% 2005 -06 113,063 7,001,934 0.0% 0.0% 2006 -07 113,587 7,774,263 0.0% 0.0% 2007 -08 113,607 8,477,831 0.0% 0.0% 2008 -09 113,607 8,945,869 0.0% 0.0% Source: Finance Department, City of Downey Last Ten Fiscal Years 142 City Assessed Valuation Redevelopment Agency Incremental Valuation Total Assessed Valuation Metropolitan Water District* Little Lake City Elem SD 2000 Ser B Debt Svc Little Lake County SD 2005 Refunding Bonds Little Lake City Elem SD 2000 Ser C Whittier Union High SD 2005 Refunding Bonds Cerritos CCD 2004 Ser 2004 A Debt Svc Cerritos CCD 2005 Refunding Bonds Debt Svc Cerritos CCD 2004 Ser 2006 A Debt Svc Compton Comm College Dist 2002 Ser A Debt Svc LA City Community College 2001 Ser A Debt Svc LA City Community College 2003 Ser 2004 B Debt Svc LA CCD DS 2003 Taxable Ser 2004B LA City Community College 2001 Ser 2004 A Debt Svc LA City Community College Ref 2001 Ser 2005 A Debt Svc LA City Community College 2001 Ser 2006 B Debt Svc LA City Community College 2003 Ser 2006 C Debt Svc LACC DS 2001, 2008 Ser E -1 LACC DS 2001, 2008 Taxable Ser E -2 LACC DS 2003, 2008 Ser F -1 LACC DS 2003 Taxable Ser F -2 Rio Hondo Comm College Dist Ser 2004A Rio Hondo Comm College Dist Refunding Bond Rio Hondo CC DS 2004 Ser 2008 Downey Unified SD 1996 Ser C Debt Svc Downey Unified SD Refund Bds 1999 Ser A Debt Svc Downey Unified SD 1996 Ser E Debt Svc Downey Unified SD 2002 Ser A Debt Svc Downey Unified SD 2002 Ser B Debt Svc Downey Unified SD 2002 Ser C Debt Svc Downey Unified SD 2006 Ref. Bonds Debt Svc Downey Unified SD 2007 Ref. Bonds Debt Svc Montebello Unified SD 1998 Ser 98 Debt Svc Montebello Unified SD 1998 Ser 99 Debt Svc Montebello Unified SD 1998 Ser 2001 Debt Svc Montebello Unified SD 1998 Ser 2004 Debt Svc Montebello Unified SD 1998 Ser 2002 Debt Svc Montebello Unified SD 2004 Ser 2005 Debt Svc Montebello Unified DS 2004 Ser 2008 CITY OF DOWNEY SCHEDULE OF DIRECT AND OVERLAPPING DEBT June 30, 2009 Gross Bonded Debt Balance 06/30/009 $ 137,096,151 5,900,000 8,210,000 8,560,000 89,787,133 4,135,000 23,730,994 85,645,000 36,390,000 27,815,000 77,040,000 23,385,000 75,105,000 432,345,000 383,000,000 308,500 276,500,000 15,000,000 364,915,000 425,000,000 9,940,000 46,482,244 64,996,844 4,055,000 7,280,256 1,545,000 14,805,000 6,150,000 18,835,000 9,775,000 20,695,000 14,079,698 13,072,854 13,397,827 14,540,273 13,618,989 27,640,000 35,000,000 $8.,945,868,548 '4.82,416,729 $8,463,451,819 Percent Applicable to City of Downey 0.981 3.826 3.826 3.826 0.629 23.799 23.799 23.799 0.752 0.003 0.003 0.003 0.003 0.003 0.003 0.003 0.003 0.003 0.003 0.003 0.403 0.403 0.403 91.422 91.422 91.422 91.422 91.422 91.422 91.422 91.422 0.128 0.128 0.128 0.128 0.128 0.128 0.128 Total Overlapping Debt repaid through voter - approved property tax indebtedness City Direct Debt Total Direct and Overlapping Debt Notes: * This fund is a portion of a larger agency, and is responsible for debt in areas outside the City. Source: HdL Coren & Cone, Los Angeles County Assessor Combined 2008/09 Lien Date Tax Rolls 143 Net Bonded Debt $ 1,344,761 225,719 314,094 327,485 564,992 984,082 5,647,704 20,382,526 273,529 783 2,168 658 2,113 12,165 10,776 8,680 7,780 422 10,267 11,958 40,050 187,286 261,885 3,707,163 6,655,758 1,412,470 13,535,032 5,622,455 17,219,340 8,936,504 18,919,790 18,074 16,782 17,199 18,666 17,483 35,482 44,930 106,799,011 30,314,490 $ 137,113,501 o■ 00 O O N 00 O ,N C O N n O O O O O M N N o■ 00 00 1rj O■ 00 69 O 00 00 V1 M l" 00 - N C-- n er 00 r. 69 e' o■ o■ kr) M N O O O n — 69 69 ✓ in N M V1 0 V1 l- 00 00 V1 69 69 er O O - VD 00 p 00 00 O it N O 00 r- N 69 O et r- O `O ~ o VD 49 0 O 00 O 00 69 0 o O N 69 o k/1 O 69 0 M 0 00 Cr) 69 0 V1 0 fO M 00 00 00 69 N 00 69 O� O M C-- C-- 69 00 O 00 N C-- 69 0 � o 49 Net Direct Available Fiscal Gross Operating for Debt Debt Service Requirement Year Revenue Expenses Service Principal Interest Total Coverage 1999 -00 $ 9,333 $ 7,754 $ 1,579 $ 475 $ 105 $ 580 2.72 2000 -01 9,633 7,706 1,927 500 77 577 3.34 2001 -02 9,395 7,495 1,900 530 47 577 3.29 2002 -03 9,727 7,647 2,080 560 16 576 3.61 2003 -04 9,653 7,221 2,432 2004 -05 9,329 7,177 2,152 2005 -06 9,340 7,754 1,586 2006 -07 10,167 8,676 1,491 2007 -08 11,090 10,054 1,036 2008 -09 9,318 9,731 (413) Source: Finance Department, City of Downey CITY OF DOWNEY WATER LEASEHOLD MORTGAGE BOND COVERAGE (amounts expressed in thousands) Last Ten Fiscal Years 145 Source: Finance Department, City of Downey WNEY GOLF COURSE REVENUE COVERAGE (amounts expressed in thousands) Last Ten Fiscal Years Net Direct Available Fiscal Gross Operating for Debt Debt Service Requirement Year Revenue Expenses Service Principal Interest Total Coverage 1999 -00 $ 3,501 $ 2,221 $ 1,280 $ 325 $ 368 $ 693 1.85 2000 -01 3,671 2,183 1,488 350 356 706 2.11 2001 -02 3,509 2,283 1,226 370 312 682 1.80 2002 -03 3,880 2,547 1,333 395 379 774 1.72 2003 -04 3,218 1,795 1,423 436 436 3.26 2004 -05 3,091 2,044 1,047 270 482 752 1.39 2005 -06 2,993 2,085 908 280 429 709 1.28 2006 -07 3,361 2,319 1,042 290 422 712 1.46 2007 -08 3,459 2,350 1,109 295 406 701 1.58 2008 -09 3,977 2,296 1,681 305 397 702 2.39 146 CITY OF DOWNEY DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Calendar Years Calif. Metropolitan Calif. Metropolitan Personal Per Capita Calendar Income Personal Unemployment Year Population' (in thousands) Income Rate' 2000 107,323 $ 385,053,436 $ 31,045 4.3% 2001 .108,729 403,518,592 32,155 4.4% 2002 110,441 412,753,239 32,544 5.7% 2003 111,687 427,549,556 33,435 5.9% 2004 112,817 452,200,899 35,170 5.5% 2005 112,938 482,011,274 37,441 4.3% 2006 113,063 513,123,392 39,880 3.8% 2007 113,587 539,163,000 41,875 4.0% 2008 113,607 552,449,876 42,916 5.8% 2009 113,607 Not Available Not Available 9.1% Sources: ' State Department of Finance 2 Bureau of Economic Analysis (data shown is for the metropolitan area of L.A. -Long Beach -Santa Ana) 3 State of California Employment Development Department (data shown is for the City of Downey in June) 147 CITY OF DOWNEY PRINCIPAL EMPLOYERS Current Year and Nine Years Ago 2008 -09 1999 -00 Percent of Percent of Number of Total Number of Total Employer Employees Employment Employees Employment Kaiser Permanente 3,000 6.1% Downey Unified School District 2,000 4.0% 1,500 N Stonewood Shopping Center 1,750 3.5% 1,608 0 Rancho Los Amigos Medical Center 1,374 2.8% 2,600 T Downey Regional Medical Center 955 1.9% 1,300 Coca -Cola Bottling Company 920 1.9% - A Office of Education, County of Los angeles 900 1.8% 800 V Lakewood Park Health Center 325 0.7% A Kirk Xpedex Company 250 0.5% 484 I All American Home Center 180 0.4% - L Internal Service Dept., County of Los Angeles 0.0% 723 A General Telephone Company 0.0% 453 B Source: City of Downey, Community Development Department 148 L E 01 oo ,-r N M r O ---- O M O 00 00 M M i N M 00 00 O O co M N O Cr ' M 01 01 w.i O0 [-- 01 vD 00 N N 'cF O M [� 00 vO co M 00 ,-r M O O 0n o0 %.O 00 M 00 ▪ M ▪ �F M 01 o0 rr ▪ CO O M vO 00 M 00 M M [- W) O i- '. N vO vO 00 ,-r N to M %./D 00 M 00 M M >" • Opt M O O y N w r r 01 M — , C) 00 M 00 M .-r M t� t� to M o �n VD 00 M 00 Cr) Cr) -- Cr) [-- vO r M O .n vO 00 M 00 M M -- M [� M to o0 rO M o' M O M — 00 M 00 N rn O O O N [-- 00 vO 0O N 00 N N M [� 0 Police: Number of arrests 4,327 5,056 4,667 4,785 3,351 4228 4,402 4,984 4,519 4,437 Number of collision reports issued 999 844 901 861 1,272 1,596 L601 1,473 1',402 1,311 Number of traffic citations issued. 45,050 45,462 40,741 47,981 45,611 42,479 41,499 47,508 43,188 42,078 Number of reported crimes & incidents 14,385 13,941 13,891 12,297 13,933 14,129 14,139 15,016 13,543 13,294 Fire: Number of emergency incidents 5,085 4,985 5,086 5,057 5,700 5,413 5,474 5,451 5,983 6,021 Number of fire & other incidents 2,783 2,545 2,892 2,710 2,683 2,344 2,530 2,567 1,881 1,136 Number of special services and other incidents n/a n/a n/a n/a n/a n/a n/a n/a n/a 535 Number of traffic accidents 312 344 312 265 350 350 540 752 735 715 Parks and recreation: Number of general park attendance 500,000 484,000 436,000 506,374 499,576 445,984 513,059 676,731 520,340 929,974 Number of participants in theatre 40,000 40,000 40,000 40,000 40,000 41,000 41,000 40,738 54,114 38,891 Number of library attendance 366,505 387,656 387,656 423,177 428,561 400,700 371,445 359,502 397,002 413,510 Public works: Engineering (CIP related improvement): Street striping (no. of lineal ft) n/a n/a n/a n/a n/a n/a 29,866 39,005 45,148 27,600 Asphalt replacement (no. of tons) n/a n/a n/a n/a n/a n/a 15,947 21,506 3,944 7,981 Trees planted (each) n/a n/a n/a n/a n/a n/a 108 444 434 372 Trees removed (each) n/a n/a n/a n/a n/a n/a 10 20 5 13 Maintenance: Pavement markings (square feet) n/a n/a n/a n/a n/a n/a 84,170 59,201 80,365 102,651 Street striping (no. of lineal ft) n/a n/a n/a n/a n/a n/a 368,109 375,471 191,707 501,357 Asphalt repair (no. of tons) 425 350 400 400 500 550 575 587 466 508 Graffitie removed (square feet) 182,000 250,297 200,000 277,658 380,000 516,093 503,704 627,970 755,485 719,661 Trees trimmed (each) 6,785 8,886 10,208 11,349 5,550 9,503 7,697 8,870 9,870 6,288 Trees planted (each 174 213 240 296 769 718 434 200 239 155 Trees removed (each) 252 256 290 263 159 227 350 234 320 199 Vehicles serviced - Preventative 299 342 152 216 310 265 326 441 469 575 Vehicles serviced - Repairs (each) 414 438 545 655 683 541 397 597 612 498 Water: Number of customers 23,000 23,080 22,339 22,910 22,955 22,955 22,734 22,356 22,806 22,421 Annual supply (acre feet) 18,069 18,306 18,347 17,643 18,925 17,571 18,043 19,313 18,402 17,973 Maximum daily capacity (thousands of gallons) 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 Sewer: Sewer main cleaned (no. of miles) 275 Vector coating applied to sewer manholes n/a Golf course: Golf rounds played Source: Finance Department, City of Downey Fiscal Year 1999 -00 2000 -01 2001 -02 2002 -03 2003 -04 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 n/a CITY OF DOWNEY OPERATING INDICATORS Last Ten Fiscal Years 59 25 187 187 198 187 18 18 25 n/a n/a n/a n/a 1,750 1,818 1,920 2,000 82,857 78,830 74,159 66,744 65,449 64,784 70,071 68,980 67,050 64,105 150 O 00 0 O 00 O N. 0 0 O (^4 O O O O O ^ �• O v) O O M N N N --� ▪ O v) O O N ^ N N Etc --� • O O N O^ v) N -� 00 N N ^ 00 N O M O O N 00 N N O N N O 00 --•1 • O O N O^ N 00 N N O 00 N O M Etc O s 00 N 00 ^ O ^ s 00 r-- •--� • O O O ,--, M N N © M N sD 00 ^ O N ^ N s o v' 00 © N •■•1 • O H O O •--- M N N o M N so 00 — p i N ^ N .0 O 00 O N —, • •■I M N N 00 ^ p 00 ^ • O N O O ". 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