HomeMy WebLinkAbout01-20-2015 B3 Comprehensive Annual Financial Report and Audits
FROM: Wayne Padilla, Director of Finance & Information Technology
Prepared By: Vilma Warner, Finance Operations Manager
SUBJECT: ACCEPTANCE OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT,
SINGLE AUDIT REPORT, AND ANNUAL AUDIT OF TRANSPORTATION
DEVELOPMENT ACT FUNDS FOR 2013-14
RECOMMENDATION
Accept the Comprehensive Annual Financial Report, Single Audit Report, and annual audit of the
Transportation Development Act Funds for Fiscal Year 2013-14.
DISCUSSION
The accompanying Comprehensive Annual Financial Report (CAFR) has been prepared as required by
the City’s Charter and applicable State laws requiring financial reporting. The CAFR provides a final
and audited representation of the City’s financial condition across all funds for the fiscal year that
ended June 30, 2014. The CAFR was also published on the City’s website on December 22, 2014, as
required by City Charter, and hard copies were provided to the City Council in January 2015.
As required by the City Charter, the financial statements have been audited by independent certified
public accountants Glenn, Burdette, Phillips and Bryson. The objective of a financial audit is to provide
users of the financial reports with reasonable assurance from an independent source that the reports are
reliable.
The auditor issued the financial statements with an unqualified opinion which means that they are
presented fairly and in conformity with generally accepted accounting principles (see pages 16-17 of
the CAFR).
The accompanying Single Audit Report, which is prepared by the City’s independent certified public
accountants, Glenn, Burdette, Phillips and Bryson (GBPB), provides information about the City’s
expenditure of federal awards for the period ended June 30, 2014.
The Transportation Development Act annual audit was prepared by the same independent certified
public accounting firm and provides information on the City’s compliance with statutes, rules and
regulations of the Transportation Development Act (TDA), the California Code of Relations, and
instructions and resolutions of San Luis Obispo Council of Government for the period ended on
June 30, 2014. This report did not reflect any negative findings regarding the City’s administration
of the TDA monies.
A representative from GBPB, the City’s independent certified public accountants, will attend the
January 20, 2015 Council meeting to present the results of the audits and to respond to any questions
the Council may have relating to these audits.
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Comprehensive Annual Financial Report for 2013-14 Page 2
Financial Results Highlighted in the CAFR
Within the CAFR, the Transmittal Memorandum and Management’s Discussion and Analysis provide
a comprehensive analysis of the City’s financial position as of June 30, 2014, as well as summaries of
significant City fiscal policies, practices and financial results. Key variances from projected ending
balances for 2013-14 are also highlighted in the Transmittal Memorandum.
Financial results for the year compare favorably with budget estimates in virtually all areas of the
City’s operations. For the General Fund, financial results for the year were better than final
estimates for revenues by $1.4 million, or 2%. Expenditures were $4.3 million or 8%, below final
estimates.
This results in an ending General Fund unassigned fund balance of nearly $1.4 million. Key revenue
sources including sales tax, transit occupancy tax (TOT) and subventions and grants increased
budgeted revenues by almost $1.4 million. With this outcome the city has complied with its policy
of maintaining a minimum unassigned General Fund balance that is at least 20% of operating
expenditures.
Revenues 59,524,946$ 60,922,119$ 1,397,173$ 2%
Expenditures 54,324,55649,992,4024,332,1548%
Other sources (uses)(8,962,145)(9,550,288)(588,143)7%
Excess of revenues and sources
over (under) expenditures & uses (3,761,755)1,379,4295,141,184
Prior Year restatement 0 0
Fund balance, end of year 15,175,945$ 20,317,179$ 5,141,234$
Less:
Nonspendable (3,191,055)
Restricted/Committed (15,431,497)
Debt Service Reserve (312,037)
Unassigned Fund Balance, end of year 1,382,590$
While revenues from the General Fund’s top ten sources, which account for 92% of total revenues,
were on target with projections as a whole, there were variances within the individual sources as
shown below.
2013-142013-14
Top Ten Revenues Budget ActualVariance %
Sales Tax
General 15,394,694$ 15,405,808$ 11,114$ 0%
Measure Y 6,674,000 6,774,365 100,3652%
Property Tax 8,761,050 8,960,010 198,9602%
Transient Occupancy Tax 5,990,329 6,063,232 72,9031%
Utility Users Tax 5,356,018 5,345,342 (10,676)0%
Property tax in lieu of VLF 3,645,690 3,645,692 2 0%
Franchise Fees 2,525,905 2,636,599 110,6944%
Business Tax 2,116,625 2,142,971 26,3461%
Development Review Fees 3,582,638 3,738,750 156,1124%
Recreation Fees 1,578,065 1,732,958 154,89310%
Total 55,625,014$ 56,445,727$ 820,713$ 1.5%
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Comprehensive Annual Financial Report for 2013-14 Page 3
As highlighted in Management’s Discussion and Analysis, the City’s assets across all funds exceed its
liabilities by $358 million, which was a 4.8% increase from the prior year. This increase is primarily
attributable to a decrease in noncurrent liabilities due to the paying down of debt.
The General Accounting Standards Board has created new national accounting standards that go
into effect in 2014-15. The City will adopt the new Government Accounting Standard pronouncement
GASB 68. The pronouncement requires all public agencies to disclose their share of the CalPERS
unfunded liability in the Statement of Net Position (balance sheet). The amount reported on the
balance sheet will reflect the long-term liability and therefore the amount is not “due in full” in the
next fiscal year.
CAFR Organization
In accordance with generally accepted accounting principles for state and local governments, the City’s
CAFR is organized into three major sections: Introduction, Financial Reports and Statistical Tables.
The following is a brief summary of the contents of each of these sections.
Introduction. The Transmittal Memorandum and other information of general interest are presented in
this section, including: directory of officials, advisory bodies, and organization chart.
Financial Reports. This section includes the City’s primary financial statements in five major parts:
1. Auditors’ opinion regarding the financial statements.
2. Management’s discussion and analysis providing a narrative overview of City-wide finances.
3. The basic financial statements presenting the government-wide results combining the activities of
the major funds (General, Capital Outlay and all Enterprise Funds) into governmental and
business-type categories; the fund financial statements; and the notes to the financial statements.
4. Required supplementary information presenting the General Fund actual results with both the
original and final adjusted budgets.
5. Other supplemental schedules and financial statements providing financial information for each of
the City’s non-major governmental and agency funds. This includes a financial schedule
presenting Measure Y revenues and uses in 2013-14.
Statistical Tables. This section provides demographic and financial tables showing current and
historical trend information for the City and is organized into six major parts:
1. Statistical overview. General information about the San Luis Obispo community.
2. General financial trends. Ten-year summary information on net assets, governmental revenues
and expenditures and fund balances.
3. Revenue capacity. Ten-year summary information on property and sales tax trends.
4. Debt capacity. Ten-year summary information on debt service requirements.
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Comprehensive Annual Financial Report for 2013-14 Page 4
5. Economic and demographic trends. Ten-year summaries of taxable sales, building permits and
valuations, housing, population and other demographic trends.
6. Operating information. Ten-year trend information on operating indicators by function.
Recognition for Excellence in Financial Reporting
Beginning in fiscal year 1983-84, all of the City’s CAFRs have been awarded the certificate of
achievement for excellence in financial reporting from the Government Finance Officers Association
of the United States and Canada (GFOA). This is a prestigious national award recognizing the City’s
use of the highest standards in preparing our annual financial report. The City received the award for
its 2012-2013 CAFR and has submitted the award application for the 2013-2014 CAFR.
Additional Reporting
The Federal Single Audit Act requires agencies expending $500,000 or more of Federal assistance
funding to undergo organization-wide audits of their internal controls. Accordingly, the accompanying
Single Audit Report provides a Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters. In the findings section of this report, the auditors noted that an
adjustment to reduce the value of fixed assets that had been declared surplus during the 2012-13 fiscal
year had not been posted in that year and the oversight was corrected in 2013-14. No other findings
were made. In response to this finding, staff has already taken the steps necessary to prevent this from
happening in the future.
FISCAL IMPACT
There is no fiscal impact associated with review of the financial results for the fiscal year.
AVAILABLE FOR REVIEW IN THE COUNCIL READING FILE AND ON THE CITY’S
WEBSITE
Comprehensive Annual Financial Report for 2013-14
Single Audit Report for 2013-14
TDA Funds Audit Report for 2013-14
T:\Council Agenda Reports\2013\2013-05-21\Comprehensive Annual Financial Report for 2011-12 (Padilla-Richardson)\CAFR-Single audit 2011-12.docx
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COMPREHENSIVE ANNUAL FINANCIAL
REPORT
Fiscal Year Ended June 30, 2014
JAN HOWELL MARX, MAYOR
CARLYN CHRISTIANSON, VICE MAYOR
JOHN ASHBAUGH, COUNCiL lViE!viBER
DAN CARPENTER, COUNCIL MEMBER
KATHY SMITH, COUNCIL MEMBER
KATIE LICHTIG, CITY MANAGER
Prepared by the Department of Finance & Information Technology
City of San Luis Obispo, California
www.slocity.org
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City of San Luis Obispo, California
Comprehensive Annual Financial Report
Fiscal Year Ended June 30,2014
Table of Contents
Introductory Section
Transmittal Memorandum
Report Purpose and Organization
Profile ofthe City of San Luis Obispo
Factors Affecting Financial Condition
Financial Condition Overview
Relevant Financial Policies
Major Initiatives
A ward for Excellence in Financial Reporting
Acknowledgments
Directory of Officials and Advisory Bodies
City Council
Advisory Bodies
Appointed Officials and Department Heads
Mission Statement
Organizational Values
Organization of the City of San Luis Obispo
GFOA Certificate of Achievement for Excellence in Financial Reporting
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City of San Luis Obispo, California
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2014
Table of Contents
Page 2
Financial Section
Independent Auditors' Report
Management's Discussion and Analysis
Financial Highlights
Overview of the Financial Statements
Government-wide Overall Financial Analysis
Financial Analysis of the Governmental Funds
General Fund Budgetary Highlights
Capital Assets and Debt Administration
Economic Factors and Next Year's Budgets and Rates
Requests for Additional Information
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position
Statement of Activities
Fund Financial Statements:
Balance Sheet-Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds to the
Government-wide Statement of Net Position
Statement of Revenues, Expenditures and Changes in Fund Balance of
Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balance of Governmental Funds to the Government-wide Statement
of Activities
Statement of Fund Net Position Business-Type Activities-Enterprise Funds
Statement of Revenues, Expenses and Changes in Fund Net Position
Business-Type Activities-Enterprise Funds
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City of San Luis Obispo, California
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2014
Table of Contents
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Statement of Cash Flows Business-Type Activities-Enterprise Funds
Statement of Net Position -Fiduciary Funds -Agency Funds
Notes to the Basic Financial Statements
Required Supplementary Information Section
Budgetary Comparison Schedule-General Fund
Public Employees Retirement Systems Schedule of Funding Progress
Other Post Employment Benefits Plan Schedule of Funding Progress
Notes to Required Supplementary Information
Other Supplementary Information and Combining and Individual Fund Statements and Schedules
Measure Y Funding Schedule
Major Governmental Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
Debt Service Fund
Nonmajor Governmental Funds
Combing Balance Sheet-Nonmajor Governmental Funds
Combining Statement of Revenues Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds
Schedule of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual:
Downtown Business Improvement District Fund
Transportation Development Act (IDA) Fund
Tourism Business Improvement District Fund
Gas Tax Fund
Community Development Block Grant (CDBG) Fund
Law Enforcement Grants Fund
Public Art Contributions Fund
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City of San Luis Obispo, California
Comprehensive Annual Financial Report
Fiscal Year Ended June 30,2014
Table of Contents
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Agency Funds
Combining Statement of Changes in Assets and Liabilities -Agency Funds
Statistical Section
Statistical Section-Overview (Unaudited)
Financial Trends:
Net Positions by Component-Last Ten Fiscal Years
Changes in Net Position-Last Ten Fiscal Years
Governmental Activities Tax and Franchise Revenues by Source -Last Ten Fiscal Years
Fund Balances of Governmental Funds -Last Ten Fiscal Years
Revenues, Expenditures and Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
General Fund Operating Expenditure Trends by Type-Last Ten Fiscal Years
Revenue Capacity:
Assessed and Estimated Actual Value of Taxable Property-Last Ten Fiscal Years
Property Tax Rates-Last Ten Fiscal Years
Principal Property Taxpayers -Current Year and Nine Years Ago
Secured Property Tax Roll Levies and Collections-Last Ten Fiscal Years
Schedule of Taxable Sales and Permits by Category -Last Ten Calendar Years
Historical Sales and Use Tax Rates
Schedule of Business Tax Certificates Issued-Fiscal years Ended June 30, 2014 and 2013
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City of San Luis Obispo, California
Comprehensive Annual Financial Report
Fiscal Year Ended June 30,2014
Table of Contents
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Debt Capacity:
Per Capital Outstanding Debt by Type-Last Ten Fiscal Years
Ratio ofNet General Bonded Debt to Assessed Value and Net Bonded Debt Per Capital
Last Ten Fiscal Years
Direct and Overlapping Long-Term Debt-Fiscal Year Ended June 30, 2014
Computation of Legal Debt Margins-Last Ten Fiscal Years
Revenue Bond Coverage:
Water Fund -Last Ten Fiscal Years
Parking Fund-Last Ten Fiscal Years
Demographic and Economic Information:
Demographic and Economic Statistics -Last Ten Fiscal Years
Principal Employers -Current Year and Nine Years Ago
Regular Authorized Positions-Last Ten Fiscal Years
Operating Information:
Operating Indicators and Capital Asset Statistics by Function-Last Ten Fiscal Years
Water System Statistical Data
Water and Sewer Rates-Last Ten Fiscal Years
Water System Ten Largest Users-Fiscal Year Ended June 30,2014
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INTRODUCTORY SECTION
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Finance & Information Technology
990 Palm Street, San Luis Obispo, CA 93401-3249
805.781.7130
slocity org
December 16, 20 14
TO:
FROM:
SUBJECT:
The Honorable Mayor and Members of the City Council and Citizens of the City of San Luis Obispo
Katie Lichtig, City Manager
Wayne Padilla, Director of Finance & I.T.
Vilma Warner, Finance Operations Manager
TRANSMITTAL MEMORANDUM FOR COMPREHENSIVE ANNUAL FINANCIAL REPORT
FORFISCAL YEAR2013-14
REPORT PURPOSE AND ORGANIZATION
We are pleased to submit the City of San Luis Obispo's Comprehensive Annual Financial Report (CAFR) for the fiscal
year ended June 30, 2014. Section 810 of the City's Charter requires that an independent certified public accountant
conduct an annual audit at the end of each fiscal year and issue a financial report to the City Council. This CAFR is
being issued in compliance with this requirement.
The CAFR consists of management's representations concerning the finances ofthe City of San Luis Obispo (City).
Consequently, management assumes full responsibility for the completeness and reliability of all of the information
presented in this report. We believe that the data presented in this report is accurate in all material respects and all
statements and disclosures needed for the reader to obtain a thorough understanding of the City's financial activities
have been included.
To provide a reasonable basis for making these representations, management of the City has established a
comprehensive internal control framework that is designed both to protect the government's assets from loss, theft or
misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity
with U.S. Generally Accepted Accounting Principles (GAAP). Because the cost of internal controls should not
outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide
reasonable rather than absolute assurance that the financial statements will be free from material misstatement.
Audited Financial Statements.
The City's financial statements have been audited by Glenn Burdette, a firm of licensed certified public accountants.
The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the
fiscal year ended June 30,2014 are free of material misstatement. The independent audit involved examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements; assessing the overall accounting
principles used and significant estimates made by management; and evaluating the overall financial statement
presentation.
The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified
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TRANSMITTAL MEMORANDUM
opinion that the City's financial statements for the fiscal year ended June 30, 2014 are fairly presented in conformity
with GAAP. The independent auditors' report is presented as the first component of the financial section of this report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic
financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is
designed to complement the MD&A and should be read in conjunction with it. The City's MD&A can be found
immediately following the report of the independent auditors.
"Single Audit" for Federal Grant Programs. The independent audit of the financial statements of the City was part
of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The
standards governing Single Audit engagements require the independent auditor to report not only on the fair
presentation of the financial statements, but also on the audited government's internal controls and compliance with
legal requirements, with special emphasis on internal controls and legal requirements involving the administration of
federal awards. This separately prepared report is available from the Department of Finance & Information
Technology upon request.
Organization of Report
This report is presented in three sections: introductory, financial and statistical.
The Introductory section includes this transmittal memorandum and other information to familiarize the reader with
the City, including a directory of officials and advisory bodies, the City's mission statement and organizational values,
and the organization chart.
The Financial section consists of five parts: the independent auditors' report; Management's Discussion and Analysis;
the basic financial statements including the Government-Wide Financial Statements, Fund Financial Statements, and
Notes to the Financial Statements; Required Supplementary Information; and additional supplementary statements
and schedules including the local half-percent sales tax (Measure Y}, non-major governmental funds and agency funds.
The Statistical section includes selected unaudited financial and demographic information generally presented on a
multi-year basis. This information includes Financial Trends, Revenue Capacity, Debt Capacity, Demographics and
Economic Information, and Operating Information.
PROFILE OF THE CITY OF SAN LUIS OBISPO
With a population of approximately 45,500, the City is located eight miles from the Pacific Ocean and is midway
between San Francisco and Los Angeles at the junction of Highway 101 and scenic Highway 1.
The City serves as the commercial, governmental, and cultural hub of California's Central Coast. San Luis Obispo is
the County seat of San Luis Obispo County and a number offederal and State regional offices and facilities are located
here, along with California Polytechnic State University and Cuesta College.
One of California's oldest communities, the City began with the founding of Mission San Luis Obispo de Tolosa in
1772 by Father Junipero Serra as the fifth mission in the California chain of 21 missions. It was first incorporated in
1856 as a General Law City and became a Charter City in 1876. As a Charter City, San Luis Obispo has more local
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authority than cities that incorporate under the general laws of the State of California. The Charter is the City's
governing document and any changes must be approved by the voters. The City's Charter has been amended several
times since its adoption, most recently in August 2011.
Form of Government
As set forth in the City Charter, the City operates under the "Council-Mayor-City Manager" form of government. The
Council has the authority to make and enforce all laws and regulations with respect to municipal affairs, subject only
to the limitations of the City Charter and the State Constitution. There are four Council members, who are elected at-
large and serve overlapping, four-year terms. The Mayor is also elected at-large for a two-year term, and serves as an
equal member of the Council. The Council appoints the City Manager and City Attorney. All other department heads
are appointed by the City Manager.
City Services
The City provides a wide range of municipal services, including police and fire protection, water and sewer utilities,
street maintenance, public transportation, parking, parks and recreation, planning, building and safety, and other
general government services. Several municipal services are provided through other governmental agencies or private
utility companies, including the following:
Senice
Courts, Health and Social
Services
Elementary and Secondary
Schools
Community College
Solid Waste Collection and
Disposal
Gas, Electric and Telephone
County of San Luis Obispo
San Luis Coastal Unified School District
San Luis Obispo County Community
College District
San Luis Garbage Company
Private Utility Companies
Financial data for all funds through which services are provided by the City have been included in this report.
As required by GAAP, these financial statements present the City (the primary government) and its component units
(entities for which the government is considered to be financially accountable). Blended component units (although
legally separate entities) are in substance part of the government's operations, and so data from these units are
combined with data of the primary government. The City has one component unit, the San Luis Obispo Capital
Improvement Board, which provides financing for the construction and acquisition of City facilities. The Board is
comprised solely of members of the City Council. Activities of the Board are accounted for in the applicable City
governmental or enterprise funds.
Budgetary Policy and Control
Budgets are legally adopted annually by the Council by resolution, and are prepared for each fund in accordance with
its basis of accounting. As provided under City Charter, the City Manager is responsible for preparing the budget and
for its implementation after adoption.
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Since the City uses a two-year budget, operating appropriations not expended during the first year may be carried
forward into the second year for specific purposes with the approval of the City Manager. (When applicable, these
amounts are shown as assigned for subsequent year expenditures in the financial statements.) At the end of the final
year of the two-year plan, operating appropriations lapse unless they are encumbered by contract or purchase order.
Multi-year budgets are adopted for capital projects as necessary.
The Council has the legal authority to amend the budget at any time during the fiscal year. The City Manager has the
authority to make administrative adjustments to the budget as long as those changes will not have a significant policy
impact nor affect budgeted year-end fund balances. The City's budgetary policies are more fully described in Note 1
ofthe financial statements.
Expenditure and budgeting detail is maintained by the City for each fund and department by program area at the line
item level. Budgetary control is exercised through an on-line computerized system, which interfaces with the City's
general ledger. The system maintains an ongoing record of budget balances throughout the year based on actual
expenditures and unfilled purchase orders. Open encumbrances at year-end are reported as assignments of fund
balance.
Tt is the City's policy to maintain an unassigned fund halance in the General Fund of at lea~t 20% of operatine;
expenditures. As noted above, this policy objective has been achieved for 2013-14. The City maintains a similar
policy for working capital balances in the water, sewer and parking enterprise funds, and it has been met for these
funds in 2013-14 as well.
FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is perhaps best understood when it is considered from the broader
perspective of the specific environment within which the City operates.
Local Economic Environment
Historically the City has enjoyed a stable economy, largely insulated from economic downturns in other parts of the
State or the nation due to major State and federal employers such as the California Polytechnic State University (Cal
Poly), California Men's Colony, California Department of Transportation (Cal Trans) District 5 offices, Regional
Water Control Board and Camp San Luis. However, these entities have also experienced budgetary pressures and
reductions in the past few years that have affected the local economy.
Employment. Employment in the San Luis Obispo County region has historically been stabilized by a large
government presence and diversity. As noted above, the State has a major university, correctional facility and other
regional offices located in the community. The County government and school districts are also major employers.
Several of these entities have experienced job losses in the last few years due to reduction in State funding. Other
major employers include a real estate investment firm, a regional bank, major hospital facilities, several software
companies and Pacific Gas and Electric.
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Unemployment rose sharply in the San Luis Obispo area in 2008-09 due to the severe economic downturn commonly
referred to as the "Great Recession." The unemployment rate has gradually declined as the economy has begun to
recover and currently stands at 5.4% countywide which is consistent with Beacon Economics Central Coast Forecast.
Key Revenue Sources. As the commercial, governmental, and cultural hub of San Luis Obispo County, the City is
blessed with a diverse array of strong revenue sources. All of the City's top three revenue sources, Sales Tax, Property
Tax, and Transient Occupancy Tax (TOT), substantially exceed the per capita average for the County.
Long-Term Financial Planning.
The City engages in a number of activities focused on long-term financial planning, including:
Five Year Fiscal Forecast. Before the two-year budget process begins, the Council reviews a Five Year General
Fund Fiscal Forecast to help set the stage for long-term decision making. The purpose of the forecast is to identify
the General Fund's ability over the next five years-on an order of magnitude basis-to continue current services,
maintain existing assets and fund new initiatives or acquire new capital assets. The 2013-18 forecast was first
completed in early December 2012 and has been updated numerous times with the last occurring in June 2014 before
the City Council considered the 2013-15 Supplemental Budget for adoption. It is available on the City's web site at
www.slocity.org. An update to that forecast has been prepared which reflects the unaudited financial results which
will be presented to the City Council on December 16, 2014. Further updates will be prepared and presented to the
City Council in February and June 2015.
Major City Goals. The City Council adopts Major City Goals as an integral part of the Financial Plan. These goals
address the highest priority issues and community-wide concerns and needs. The Financial Plan is the City's main
tool for programming implementation of these goals, plans and policies by allocating the resources necessary to do
so.
The following is a brief summary of the four major City goals adopted by the Council as part of the 2013-15 Financial
Plan. Detailed work programs were prepared for each of these and their status is updated three times each year through
presentation to the Council. These Council reports are available on the city's website.
• Implement Comprehensive Strategies to Address Homelessness. In partnership with other entities.
Encourage existing, improved, and expanded services (including advocating to the County and other
organizations for delivery of case management, drug, alcohol, and detoxification services, and mental health
services), support the establishment of a new homeless services center, and pursue good-neighbor, safety,
and quality of life programs (including restrooms), using technology as appropriate.
• Sustain essential services, infrastructure, and fiscal health. Preserve public health and safety and provide
essential services in line with residents' priorities and sustain the City's short and long term fiscal health by
planning future revenues (including renewal of Measure Y or an alternative measure), while implementing
contingency planning, efficiency measures, and cost containment strategies including implementation of the
Compensation Philosophy and monitoring further pension and benefit issues.
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• Expand bicycle and pedestrian paths. Improve connectivity and safety, including continued progress on
Rail Road Bicycle and Pedestrian Safety Trail and Bob Jones Trail, and pursuit of other options contained in
the Bicycle Transportation Plan.
• Continue and Enhance Neighborhood Wellness Initiatives. Continue to support proactive code
enforcement, pursue a residential rental inspection program, improve street cleanliness, increase public safety
enforcement, and support neighborhood led initiatives.
• Economic Development. Implement the adopted Economic Development Strategic Plan (EDSP) -which
includes an emphasis on head-of-household jobs, collaboration, and measureable outcomes.
FINANCIAL CONDITION OVERVIEW
Financial results for the year resulted in better than expected results when compared to the budget estimates in virtually
all areas of the City's operations. For the General Fund, realized revenues were nearly $1.4 million or nearly 2.4%
more than the budget estimate while expenditure and other uses were $4.3 million or almost 8% less than expected in
the budget forecast.
These results helped the General Fund end the year with an unassigned fund balance of$11.8 million of which $10.4
million represents the minimum required reserve under the City's budget policies.
For the Future: Continue to Focus on Sustainability
Through the adoption of the 2013-15 Financial Plan, the City continues to move along the path of financial
sustainability by strategically expanding existing city programs, reinvesting in critical infrastructure and proposes a
few staffing adjustments to address the most pressing community priorities . The Capital Improvement Plan includes
new and significant investment and reinvestment in critical infrastructure .
• Revenue Base Growth. After experiencing the deepest recession since the Great Depression, the local
economy is progressing and major revenues are continuing the growth that was first seen in 2012-13. Sales
tax (including Measure Y), property tax and transient occupancy tax (TOT) account for 61% of all funding
sources in the General Fund. All of these revenues are showing continuing growth over the past two years
which is expected into the future. TOT revenues now exceed their pre-recession peak in 2011-12. Another
revenue source that is seeing significant growth is development review fees. Fueled by strong private
development occurring within the community, the fee levels are also approaching record levels in terms of
amounts received and the level of annual growth. This growth trend is also expected to continue at varying
levels over the next 5 years. It is important to note that Measure G was passed by voters in November 2014
which extends the local sales revenue stream for an additional 8 years.
• Containment of Operating Costs. Compared to the 2012-13 fiscal year, operating costs declined by $3.8
million. This is due in part to prior labor negotiations which lead to concessions by all employee groups
resulting in ongoing savings in the General Fund . The City also implemented 2"d and 3'd Tier retirement
benefit programs which now have a combined participation level of almost 20% of the current employees.
These actions have been instrumental in helping the City contain its current costs and long-term liabilities
related to retirement benefit programs. The City Council also approved two lump sum prepayments against
the safety side fund retirement liability in order to begin making significant reductions in the amount owed.
XII
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TRANSMITTAL MEMORANDUM
The first was paid in May 2014 in the amount of$935,000 and the second was approved as part of the 2014-15
budget in the amount of$300,000.
• Infrastructure and Facilities Maintenance. The estimated cost of adequately maintaining, repairing or
replacing existing General Fund facilities, infrastructure and equipment exceeds $10 million annually. This
excludes any enhancements or "betterments." To place this in context, General Fund contributions to the
Capital Improvement Program (CIP) for the 12 year period ending in 2006-07 averaged about $3.8 million
annually. The budget for the General Fund's contributions to the CIP was reduced to $1.7 million for 2010-
11. It then increased to $3.7 million the following year and in 2012-13, the General Fund contributed nearly
$3.5 million. In 2013-14, that amount grows to nearly $6.5 million with the addition of $2.0 million from
one-time monies taken from the General Fund reserve amount that exceeds the minimum 20% level. In
2014-15, the General Fund contribution will be nearly $4.7 million with an additional $18.0 million coming
from grant sources and $7.5 million will come from tax-exempt debt proceeds. These figures do not include
the General Fund support of the Capital Improvement Program that occurs in the form of annual debt service
payments that approximate $3.0 million per year. The City Council has indicated that funding an adequate
CIP to maintain existing facilities will continue to be a priority.
Ongoing Commitment to Measure Y Priorities
The City remains committed to addressing the priorities identified by the community as established through the budget
process, such as public safety, senior services, code enforcement, neighborhood street paving, open space preservation,
traffic congestion relief and flood protection.
During 2013-14, nearly $12 million in Measure Y revenues were available for use, including unspent, assigned, and
encumbered amounts from prior years. The following summarizes how Measure Y funds were used during 2013-14.
As reflected below, total Measure Y expenditures were $5.3 million; another $1.7 million was placed into a
contingency reserve in the event that Measure Y was not extended in November 2014; $4.3 million remains assigned
or encumbered for on-going capital improvements and projects; and approximately $577,000 remains available for
future expenditures. A more detailed schedule of Measure Y sources and uses is provided in the Financial Section of
this report.
xiii
B3-21
TRANSMITTAL MEMORANDUM
Infrastructure Maintenance
Traffic Congestion Relier
Preservation of Essential Services
Public Safety
Maintenance Services
Neighborhood Code Enforcement
Total Preservation of Essential Services
Open Space Preservation
Total
Measure Y Revenues & Uses Summary
Revenues:
Prior year revenue
Revenue for 2012-13:
Prior year uses
Current Year Uses
Total Revenues
$
$
Total Uses
Measure Y funding available for future year expenditures
Operating
Programs CIP
-$ 2,196,630
92,520 80,990
1,248,005 239,716
751,340 335,754
301,830
2,301,175 575,470
50,967 8,247
2,444,662 $ 2,861,337
Assigned, encumbered or designated for carryover for future year expenditures
Net available for future year appropriations
RELEVANT FINANCIAL POLICIES
Total
$ 2,196,630
173,510
1,487,721
1,087,094
301,830
2,876,645
59,214
$ 5,305,999
$36,238,100
6,774,365
43,012,465
(31 ,019,237)
(5,305,999)
(36,325,236)
6,687,229
(6,064,265)
$ 622,964
The City of San Luis Obispo has adopted a comprehensive set of financial policies to provide guidance for all fiscal
activities and resource allocation decisions. Although the policies cover virtually every aspect of financial
management, several of these policies are particularly relevant to an understanding of the City's financial performance
in 2013-14.
Debt Administration Policies
The City's Capital Financing and Debt Management policies contain general guidelines for refinancing of outstanding
debt. These guidelines call for periodic review of all outstanding debt to determine refinancing opportunities,
particularly to create economic benefit such as lower debt service payment or reduction of principal. Information on
the City's outstanding debt issues and other long-term liabilities is provided in Note 7 in the notes to the financial
statements.
Recently, Standard & Poor's and Fitch credit rating services assigned an issuer credit rating of AA to the 2014 Lease
Revenue Bonds issued by the City in October 2014. Prior to this, in May 2014 Fitch Ratings affirmed its implied
general obligation bond rating of AA+ as well as the AA rating which had been assigned to the 2006, 2009 and 2012
lease revenue bonds.
XIV
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TRANSMITTAL MEMORANDUM
Budgetary Policies
The City of San Luis Obispo has a policy that requires the adoption of a balanced budget over the two-year period of
the Financial Plan. This means that operating revenues must fully cover operating expenditures, including debt
service. Additionally, ending fund balance (or working capital in the enterprise funds) must meet minimum policy
levels. Under this policy it is allowable for total expenditures to exceed revenues in a given year but only when fund
balance is used to pay for capital improvement plan projects or other "one-time," nonrecurring expenditures.
Fund Balance and Reserve Policies
The City's policies recognize the importance of long-range planning in managing the City's fiscal affairs in order to
provide for stable operations, promote more orderly spending patterns, and assure the City's long-term fiscal health.
The reserves contained in the General Fund and Enterprise funds play a pivotal role in this strategy. The reserve
policies call for a minimum fund balance of at least 20% of operating expenditures in the General Fund and a working
capital level of20% of operating expenses in the water, sewer, and parking enterprise funds. The policies also require
the Fleet Management and Information Technology Replacement Funds to provide for the timely replacement of
vehicles and related equipment. In the case of the Facility Maintenance Fund, adequate resources to pay for the costs
of approved maintenance expenditures are required.
Pension and Other Post Employment Benefits
Pension Obligations. The City contributes to the California Public Employees' Retirement System (CalPERS), an
agent multiple-employer public employee defined benefit pension plan. CalPERS provides retirement and disability
benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. CalPERS acts as a
common investment and administrative agent for participating public entities within the State of California. Benefit
provision and all other requirements are established by State statute and City ordinance. The amount of the City's
required annual contribution is determined actuarially and is reported to the City via the Annual Valuation Reports
provided by CalPERS for each retirement plan. It is the policy of the City to fully fund the annual contribution to
ensure that the plan will be able to fully meet its obligation to retired employees on a timely basis. As part of its cost
reduction strategy, the City has implemented second tier and the state mandated third tier benefit programs for new
hires. All employees pay at least the full amount of the member (employee) share of the annual retirement contribution.
Members of the Police Officers Association contribute 3% of pay toward the cost of the City's share ofthe annual
required contribution. These payments were agreed to as part of the last round of labor negotiations.
Other Post Employment Benefits (OPEB). The City's primary OPEB cost obligation is for retiree health benefits
under its election to participate in the CaiPERS Health Benefit Program under the "unequal contribution option."
When the City joined the CalPERS health plan in 1993, it immediately experienced an increase in the plan choices
available along with a significant reduction in rates. And due to CalPERS purchasing power, the City has continued
to experience competitive health care rates since then. However, as a condition of joining the CalPERS health
program, the City agreed to contribute the minimum amount required by law per month towards retiree health care
coverage.
XV
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TRANSMITTAL MEMORANDUM
Additionally, the City has established certain post-retirement health care benefits available to executive management
employees appointed prior to August 2000. For the 6 former employees, one-half of the retiree health insurance
premiums are paid by the City if they elect to remain members ofthe City's group health plan. This provision ceases
upon the death of the retired employee or upon the retired employee reaching age 65. These OPEB benefits were
financed on a pay-as-you-go basis in the past. As directed by Council in May 2008, the City began fully pre-funding
the OPEB obligation via an irrevocable trust in 2008-09.
Additional information on the City's retirement and post-employment benefits can be found in Note 6 in the notes to
the financial statements.
MAJOR INITIATIVES
The City continued its efforts on a number of significant initiatives in 2013-14 which will have a beneficial effect on
fiscal health and quality oflife.
Economic Development Strategic Plan. The City's 2012 Economic Development Strategic Plan (EDSP) provides a
prioritized list of strategic actions aimed at overcoming barriers to job creation and nurturing the conditions,
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consistent basis-while continuing to support the broader economy of the City. To create and implement these efforts,
the EDSP identified the City's fee program and its lack of infrastructure in key areas as barriers to overcome, and is
in the process of implementing strategies to improve the economic environment for job creation in the City. The EDSP
builds on the San Luis Obispo County Economic Strategy, which identified five industry clusters with the greatest
potential to drive local and regional economic prosperity, and job creators. The EDSP focuses on partnerships and
collaborative efforts with community partners including the Economic Vitality Corporation, the Chamber of
Commerce, the Small Business Development Center, Cal Poly and Cuesta College.
In 2013-14, the City implemented an important component ofthe strategic plan by holding a series of study sessions
with the City Council regarding alternatives available for financing new infrastructure projects in the City. The project
resulted in several recommendations that will be implemented in coming years, and provided a "primer" to be used as
a resource for decision makers when considering future decisions about infrastructure financing. There are two major
projects on the horizon that will set the stage for important investments in City infrastructure in the future. These
include the update to the City's impact fee programs following the adoption of the Land Use and Circulation Element
update, and the second is the creation of a method to prioritize and enable City investment in infrastructure projects
that have a public benefit but might not otherwise happen without City action.
Chevron Development Agreement. The City adopted an update to the Airport Area Specific Plan and an
Environmental Impact Report (EIR) for the Chevron project in September 2014. The approval of the EIR and specific
plan update sets the stage for the Chevron remediation project to occur. The project is expected to move forward under
County jurisdiction and take up to three years to complete. In the interim, the City is working with Chevron on the
proposed subdivision design, infrastructure phasing, public facilities, and open space preservation components of the
development project. This work includes planning for the expansion of Tank Farm Road to four lanes, including a
major new intersection controlled by a round-a-bout at Tank Farm and Santa Fe, along with realignment of the Tank
Farm and Santa Fe intersection. In total, Chevron would be responsible for the installation of more than 50% of the
public facilities identified in the Airport Area Specific Plan over a 25-year period. The installation of infrastructure
development phase of the project would be governed by a development agreement that would provide for the phasing
xvi
B3-24
TRANSMITTAL MEMORANDUM
of infrastructure installation and potential reimbursement to Chevron for costs beyond their fair share from the Airport
Area Specific Plan fee program (which consists of fees paid when other Airport Area properties are developed).
Preservation of Essential Services and Fiscal Health
One of the major goals of the City that continued into 2013-14 was to adopt a budget that sustains the City's short and
long-term fiscal health, preserves public health and safety in line with residents' priorities and includes cost reduction
strategies. Key elements ofthis goal include:
• Plan future revenues including renewal of Measure Y or an alternative measure, as well as contingency
planning
• Continuing emphasis on effectiveness and efficiency of the City organization
• Identify and address long-term liabilities that are important to the City's fiscal sustainability
• Continue to monitor personnel costs and develop strategies to effectively manage the cost
• Continuing to closely review and monitor the City's fiscal condition
Two initiatives in this area are particularly worth noting:
Monitoring of the City's Fiscal Condition. A presentation was made to the City Council in April 2014 that addressed
the trend in pension costs and the issues that relate to prepaying portions of the retirement program's unfunded
liabilities. In 2013-14, the City made a prepayment against its unfunded retirement liabilities in the amount of
$935,000. A second prepayment in the amount of$300,000 was made in July 2014. Beginning in 2014-15, the City
is self-assessing one percent of salaries to be used to reduce CalPERS obligation in the future. In preparation for the
changes in pension reporting that are required by Governmental Accounting Standards Board Pronouncement #68,
the City prepared a draft Changes in Net Position document for an interim period during 2013-14 in order to determine
what effect this reporting change would have on the City's solvency level. While the impact was material, the City
maintained a significant margin of solvency after the addition of the unfunded liability estimates were included in that
report. Staff continues to monitor both the cost and liability trends that relate to the retirement program and will be
reporting to the City Council with a policy to begin prepaying unfunded liabilities.
The City also completed a benchmark analysis that provided comparisons between the City's performance in a number
ofkey financial and outcome measures and those of other comparable cities.
Measure Y. In 2006 voters approved Measure Y, the Essential Services Measure, adding a half-percent local sales
tax which sunsets on March 31, 2015 unless reauthorized by the voters at a general election prior to that time. The
added revenue from Measure Y supports major improvements in key areas identified by the community. In 2013 the
City convened a citizen's committee that reviewed the City's stewardship of Measure Y and recommended to the City
Council that a ballot measure should be drafted and placed before the voters at the November 2014 election to
determine if Measure Y should be extended and remain as a general tax. As part of this Major City Goal, staff was
directed to develop a budget contingency plan designed to facilitate budget reductions starting with the 2015-17
Financial Plan in the event that Measure Y was not extended. The Council took further action in 2013-14 to create a
General Fund contingency reserve in the amount of $1.7 million to cover the revenues that would be lost in 2014-15
should Measure Y not be extended. (It is important to note that Measure G, which represented the extension of Measure
XVII
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TRANSMITTAL MEMORANDUM
Yon the November 2014 ballot, was approved by 70% ofthe voters). For further information, refer to the discussion
in the Management Discussion and Analysis.
AWARD FOR EXCELLENCE IN FINANCIAL REPORTING
The Government Finance Officers Association of the United States and Canada (GFOA) has awarded a Certificate of
Achievement for Excellence in Financial Reporting to the City for our CAFR for the fiscal year ended June 30,2013.
The Award Pro~ram
The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards
for preparation of State and local government financial reports. In order to be awarded a Certificate of Achievement,
a government unit must publish an easily readable and efficiently organized comprehensive annual financial report
whose contents conform to program standards. This report must satisfy both U.S . generally accepted accounting
principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. The City of has received a Certificate of
Achievement each year since 1984. We believe our current CAFR continues to conform to the Certificate of
Achievement program requirements, and we are submitting it to GFOA to determine its eligibility for another
certificate.
Value of Program Participation. There are a number of benefits in participating in these programs beyond simply
receiving recognition for our efforts. For example, by striving to meet program standards and goals, the City produces
better reports. Additionally, as part of the review process, comments for improvement from other municipal finance
professionals who review our reports from a "fresh" perspective are received. The City believes that this results in
continuous improvements in reporting our financial results to elected officials, staff and other interested parties such
as bondholders, credit agencies and the public at-large.
ACKNOWLEDGMENTS
The preparation and development of this report would not have been possible without the year-round efficiency of the
Finance Division staff and their special efforts, working in conjunction with the City's independent auditors, to produce
this document. We would like to take this opportunity to compliment all those staff members of both the City and our
independent auditors who were associated with the preparation of this report . We would also like to thank the Council
for their continued interest and support in planning and conducting the financial operations of the City in a responsible
and progressive manner.
xviii
B3-26
DIRECTORY OF OFFICIALS AND ADVISORY BODIES
CITY COUNCIL*
Jan Howell Marx
Carlyn Christianson
John Ashbaugh
Dan Carpenter
Kathy Smith
Mayor
Vice-Mayor
Council Member
Council Member
Council Member
*Reflects office holders as of the date of this report.
ADVISORY BODIES
Architectural Review Commission
Bicycle Committee
Board of Appeals
Downtown Association
Cultural Heritage Committee
Housing Authority
Human Relations Commission
Jack House Advisory Committee
Joint Recreational Use Committee
Mass Transportation Committee
Parks and Recreation Commission
Personnel Board
Planning Commission
Coordinating Committee
Tree Committee
APPOINTED OFFICIALS AND DEPARTMENT HEADS
Appointed Officials
Katie Lichtig
J. Christine Dietrick
City Manager
City Attorney
Department Heads
Wayne Padilla
Michael Codron
Garret Olson
Monica Irons
Derek Johnson
Stephen Gesell
Daryl Grigsby
Carrie Mattingly
Shelly Stanwyck
Director of Finance & Information Tech.
Assistant City Manager
Fire Chief
Director of Human Resources
Director of Community Development
Police Chief
Director of Public Works
Director of Utilities
Director of Parks & Recreation
xix
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B3-28
MISSION STATEMENT
SAN LUIS OBISPO STYLE
Quality with Vision
WHO ARE WE?
People Serving People
• A team that puts high value on each citizen it serves .
• Providers of programs that meet basic service needs of each citizen .
• Enhancers ofthe quality oflife for the community as a whole.
WHAT DO WE STAND FOR?
Quality in all Endeavors -Pride in Results
• Service to the community-the best-at all times .
• Respect -for each other and for those we serve .
• Value-ensuring delivery of service with value for cost.
• Community involvement-the opportunity to participate in attaining the goals of the City .
WHERE ARE WE GOING?
Into the Future with a Design
• Planning and managing for levels of service consistent with the needs of the citizens .
• Offering skills development and organizational direction for employees in order to improve the delivery of
municipal services.
• Developing sources of funding and establishing a sound financial management program which will result
in fiscal independence and flexibility in the delivery of City services.
• Providing the residents of the City with accurate and timely information on issues which affect them, and
encouraging the full utilization of City services.
• Promoting the City as a regional trade, recreational and tourist center and improving the quality of life for
residents and visitor.
XX
B3-29
ORGANIZATIONAL VALUES
We, as an organization, embrace opportunities to improve our services and the quality and effectiveness of
our relationships with the community and our teams. The following values guide and inspire our efforts.
Shared Vision, Mission and Goals
We have a sense of common purpose and direction pursued with passion and translated into concrete
actions.
Service
We are dedicated to the best use of resources to fulfill identified community goals and needs.
Leadership and Support
We recognize that the ability to lead can be found at all levels and that to create an environment to succeed
requires leading by example.
Communication
We foster open and clear discussion that encourages the willingness to speak up and to listen, within a
framework of respect and understanding.
Team Players
We encourage effective working relationships within and between departments and the public to address
issues and achieve valuable results .
Honesty, Respect and Trust
We honor commitments, acknowledge legitimate differences of opinion and accept decisions reached with
integrity.
Initiative and Accountability
We take personal responsibility to do what needs to be done and report the results in a straightforward
manner.
Innovation and Flexibility
We are open to change and willing to try new ways to fulfill the organization's vision, mission, and goals
more effectively.
XXI
B3-30
Employee Development and Recognition
We encourage and support each employee to improve relevant job skills and celebrate personal and team
accomplishments.
Stewardship and Ethics
We promote public trust by using City resources wisely, and through consistent fulfillment of these values.
xxii
B3-31
Police
Patrol
Traffic Safety
Investigations
ORGANIZATION OF THE CITY OF SAN LUIS OBISPO
CITY
ATTORNEY
Fire, Medical & Haz Mat
Emergency Response
Hazard Prevention
CITIZENS
MAYOR AND
CITY COUNCIL
CITY
MANAGER
ll IC
Works
Engineering
Transportation
Creek & Flood Protection
Water
Sewer
Utilities Resource
ADVISORY
BODIES
omm11111ty
Development
Long Range Planning
Development Review
Building & Safety
Neighbomood Services Fire Inspections Maintenance Services: Conservation CDBG Administration
Animal Regulation Disaster Planning
Parks &
RecreatiOn
Recreation Programs
Ranger Services
Park Planning
Golf Course
Public Art
Human
Resources
Recruitment
Labor Relations
Fair Employment
Risk Management
Human Relations
D Appointed by the City Council
Streets, Parks, Bldgs Whale Rock Reservoir Housing
xxiii
F1nance &
lntorrnat1on Tech
Budget
Accounting & Revenue
Information Technology
GIS Management
Support Services
Adrnullstrat1on
Natural Resources
Economic Development
Cultural Activities
City Clerk Services
General Administration
Appointed by the City Manager
B3-32
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of San Luis Obispo
California
For its Cornprehensi ve Annual
Financial Report
for the Fiscal Year Ended
June 30, 2013
Executive Director/CEO
xxiv
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B3-34
FINANCIAL SECTION
B3-35
G GLENN BURDETTE
CERTIFIED PUBLIC ACCOUNTANTS
The Honorable City Council of the
City of City of San Luis Obispo, California
San Luis Obispo, California
Report on the Financial Statements
Independent Auditors' Report
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City of San Luis Obispo, California, (the City) as of and
for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the City's
basic fmancial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these fmancial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the fmancial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions
GLENNBURDETTE.COM
SAN LUIS OBISPO
1150 Palm Street
San Luis Ob1spo, CA 93401
p 805 544 1441
[805544~351
PASO ROBLES
102 South Vine Street, Ste. A
Paso Robles, CA 93446
p 805 23? 3995
f 805 239 9332
SANTA MARIA
2222 South Broadway, Ste A
Santa Maria, CA 93454
p 805 922 4010
f 805 922 4286
B3-36
The Honorable City Council of the
City of City of San Luis Obispo, California
Page 2
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 San Luis Obispo, California, as of June 30, 2014, and the respective changes in financial
position and, where applicable, cash flows thereof for the year then ended, in accordance with accounting principles
generally accepted in the United States of America.
Other Matters
Requirement Supplementary Information
Accounting principles generally accepted in the United States of America require that management's discussion and
analysis on pages 4 through 15, and the budgetary comparison information, PERS schedule of funding progress, and
OPEB schedule of funding progress on pages 79 through 87, be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to
the required supplementary information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
City's basic financial statements. The introductory section, Measure Y funding summary schedules on pages 89 through
91, combining and individual nonmajor fund financial statements and schedules on pages 95 through 111, and statistical
section, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The Measure Y funding summary schedule and combining and individual nonmajor fund financial statements and
schedules are the responsibility of management and were derived from and relate directly to the underlying accounting
and other records used to prepare the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the Measure Y funding summary
schedule and combining and individual nonmajor fund financial statements and schedules are fairly stated in all material
respects in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the
basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.
2
B3-37
The Honorable City Council of the
City of City of San Luis Obispo, California
Page3
Other Reporting Required by Government Auditing Stundurds
In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2014, on our
consideration of the City's internal control over financial reporting and on our tests of its compliance with certain
provisions oflaws, 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 reports or compliance. That report is an integral part of an
audit performed in accordance with Government Auditing Standards in considering the City's internal control over
financial reporting and compliance.
GL~ 'B\)(001( ~~~
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 16, 2014
3
B3-38
Management's Discussion and Analysis
The following provides a narrative overview and analysis ofthe financial activities ofthe City of San Luis Obispo
(City) for the fiscal year ended June 30, 2014. It should be read in conjunction with the accompanying transmittal
memorandum and the basic financial statements.
Financial Highlights
The following outlines financial highlights for the year:
• The assets and deferred outflows of resources of the City exceeded its liabilities at June 30, 2014 by $358 million
(net assets). Of this amount, $87.2 million (unrestricted net assets) may be used to meet the government's ongoing
obligations to citizens and creditors.
• Total unrestricted net assets are $15.6 million higher than last fiscal year, an increase of 22%.
• Total city-wide assets increased by approximately $21.6 million or 5 .0%. In the governmental activities, accounts
receivable from various sources increased by $340,000; cash and investment balances grew by $3.5 million or
12.8%; prepaid expenses increased by $1.1 million and Cash Held with Fiscal Agent increased by $2.4 million.
In business-type activities, accounts receivable increased by $100,000 while cash and investment balances grew
by $12.6 million or 23.7% and amounts due from other governments increased by $480,000. City-wide liabilities
increased by approximately $5 million or 5.2%. Governmental activities experienced a reduction of$151,000 or
0.4% with most of that representing a decrease in long-term liabilities. Business-type activities saw an increase
in long term liabilities $5.1 million or 8.5% while accounts payable decreased by $480,000 and unearned revenue
increased by $740,000.
• The City's governmental funds altogether reported combined ending fund balances of $41.7 million.
Approximately $26.3 million or 63% of this total amount is not available for new spending because it represents
amounts that are: restricted for debt service, grant obligations, prepaid for insurance obligations, or is already
committed to specific programs such as impact fee programs and general capital outlay. The amount of $3.5
million is assigned to meet expenditures in subsequent years in the form of purchase order encumbrances and
unspent appropriations that have been rolled over into the 2014-15 fiscal year in accordance with the City's budget
policies.
• The total General Fund balance increased by $1.4 million to $20.3 million. This reflects the steady increase in
revenues over the prior year and greater than expected expenditure savings. After adjustments to reflect amounts
committed to the Measure Y Contingency Reserve ($1.7 million); debt service reserve ($300,000); prepaid
insurance costs ($3.2 million); purchase encumbrances and other future expenses ($3.2 million) and the amount
required to be maintained to meet the 20% minimum reserve requirement ($10.4 million), $1.4 million remains
as an unassigned amount.
Overview of the Financial Statements
The basic financial statements are comprised of three components: Government-wide Financial Statements; Fund
Financial Statements; and Notes to the Financial Statements.
4
B3-39
Management's Discussion and Analysis
Governmental Funds. Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the government-wide financial
statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources,
as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful
in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is
useful to compare the information presented for 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 government's near-term financing decisions. Both the governmental funds balance sheet and
the governmental funds 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 sixteen individual governmental funds. Information is presented in the governmental funds
balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances. The
General Fund, Capital Outlay Fund, Transportation Impact Fee Fund, and the Los Osos Valley Road (LOVR) Fund
are considered to be major funds. Data from the major governmental funds are combined into a single, aggregated
presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining
statements in the supplementary information section in this report.
Of the major funds, the City only adopts an annual appropriated budget for the General Fund. A budgetary comparison
statement has been provided as required supplementary information to demonstrate compliance with the budget.
Budgetary information for non-major governmental funds with annual budgets has been provided with the fund
financial statements in the supplementary information section in this report. During the fiscal year ended June 30,
2014, the City implemented no new GASB statements.
Proprietary Funds. The only type of proprietary fund the City maintains is enterprise funds. The Water, Sewer,
Parking and Transit Funds are presented as business-type activities in the government-wide financial statements.
Proprietary fund financial statements provide the same type of information as the government-wide financial
statements, only in more detail. The City considers all four of its enterprise funds to be major funds. The City closed
its Golf Fund at the end of 2010-11 and merged the activity's assets into the General Fund. This accounts for the
reduction in capital assets in business-type activities shown in the table below.
Fiduciary Funds. Agency funds are the only type of fiduciary funds maintained by the City. These are used to
account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the
government-wide financial statements because the resources of those funds are not available to support the City's own
programs.
The accounting used for fiduciary funds is much like that used for proprietary funds. The Agency Funds are presented
with the fund financial statements in the supplementary information section.
Notes to the Financial Statements. The notes provide additional information that is essential to the reader for a full
understanding of the data provided in the government-wide and fund financial statements.
5
B3-40
Management's Discussion and Analysis
Other Information. In addition to the basic financial statements and accompanying notes, this report also presents
required supplementary information, including budgetary comparison schedules and more detailed information
regarding the progress of funding for retirement benefits and other postemployment benefits.
Government -wide Overall Financial Analysis
Statement of Net Position. Net assets may serve over time as an indicator of a government's financial position. As
noted earlier, for the City, assets exceeded liabilities by $358 million at June 30, 2014, which is a 4.8% increase from
the prior fiscal year.
The following is the condensed statement of net assets for the fiscal years ended June 30, 2014 and 2013.
C·G~G'oism s.1~1\'mMii!NT .o 'll'Nmf P.0S1!:nO N: FV 211'1 !.-it'S .& t•v Z lltJ~ilf4
Governmental Activities Business-Type Activities Total
2013-14 2012-13 2013-14 2012-13 2013-14 2012-13
Current and other assets $ 47,571,292 $ 40,251,900 $ 61,379,987 $ 48,103,500 $ 108,951,279 $ 88,355,400
Capital assets 169,371,611 168,887,700 175 ,000 ,731 174,455,600 344,372,342 343 ,343 ,300
Total assets 216,942,903 209,139,600 236,380,718 222,559,100 453,323,621 431,698,700
Current liabilities 8,247,200 5,292,100 6,525,654 3,541,400 14,772,854 8,833,500
Noncurrent liabilities 26,079,726 29,185,800 53,954,762 51,826,800 80,034,488 81,012,600
Total liabilities 34,326,926 34,477,900 60,480,416 55,368,200 94,807,342 89,846,100
Net position:
Net investment in
capital assets 145,266,043 142,239,500 119,116,303 123,510,200 264,382,346 265,749,700
Restricted 4,825,662 2,374,800 2,248,979 2,254,200 7,074,641 4,629,000
Unrestricted 32 ,524 ,272 29 ,927,200 54 ,766,319 41 ,712 200 87 ,290,591 71 ,639 400
Total Net Position $ 182,615 ,977 $ 174,541 ,500 $ 176,131,601 $ 167.476.600 $358,747.578 $342.018.100
At the end of the 2013-14 fiscal year, the City is able to report positive balances in all three categories of net position,
both for the government as a whole, as well as for its separate governmental and business-type activities. The same
situation held true for the prior fiscal year. The largest portion of the City's net assets (74%) reflects its investment in
capital assets, less any related debt used to acquire those assets that is still outstanding. The City uses these capital
assets to provide services to citizens; consequently, these assets are not available for future spending. Although the
City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate
these liabilities.
A small portion (2%) of the City's net assets represents resources that are subject to restrictions on how they may be
used. The remaining balance of unrestricted net assets ($87.2 million) may be used to meet the government's ongoing
obligations to citizens and creditors.
6
B3-41
Management's Discussion and Analysis
Information about changes in net assets for 2013-14 and 2012-13 is summarized below. Reasons for the changes are
discussed in the following sections for governmental activities and business-type activities .
SflMMAilY ll1i"'£1!1ANG:ES IN:N£1' PO\SI!f'l(i)1f,
Governmental Activities Bu.siness·T~ e Activities Total
2013-14 2012-13 20 13-14 2012-13 2013-14 2012-13
Rewnues:
Program Revenues:
Charges for services $ 10,940,086 $ 7,873,400 s 41,594,436 $ 39 ,734 ,500 $ 52,534,522 $ 47,607,900
Operating grants and contributions 2,412,469 2,814,700 2,458,640 2,673,500 4,871,109 5,488,200
Capital grants and contributions 3,680,440 1,991,900 82,359 731,300 3,762,799 2,723,200
General Revenues:
Sales t"""" 22,180,173 20,736,000 0 22,180,173 20,736,000
Property t=s 8,%0,010 9,176,600 -8,960,010 9,176,600
Transient occupancy tax 6,063,232 5,572,400 --6,063,232 5,572,400
Utility users tax 5,345,342 4,916,100 -5,345,342 4,916,100
Property tax in lieu ofVLF 3,645,692 3,533,200 --3,645,692 3,533,200
Other t.,.,. and fees 4,779,570 4,607,600 4,779,570 4,607,600
Investment earning~ 566,930 237,100 364,551 73,500 931 ,481 310,600
M iscellaneous and other 679,U7 338 900 679,127 338,900
Total revenues 69.253.071 61,797,900 44,499,986 43 ,212,800 ll3,753,057 105,010,700
Program expenses:
Public safety 29,651,702 28,859,200 29,651,702 28,859,200
Public utilities 28,223,216 27,206,500 28,223,216 27,206,500
Transportation 8,975,047 8,551,500 7,695,745 7,582 ,500 16,670,792 16,134,000
Leisure, Cultural & Soc Serv 10,239,853 10,078,700 10,239,853 10,078,700
Community development 10,183,782 8,866,900 10,183,782 8,866,900
Interest on long-term debt 1.221.205 1.217.200 1.221.205 1.217.200
Total expenses 60,271,589 57,573,500 35,918,961 34,789,000 96,190,550 92,362,500
Increase (decrease) in net position before transfers 8,981 ,482 4,224,400 8,581,025 8,423 ,800 17,562,507 12,648,200
Transfers (73 ,771 115 ,100 73 ,771 (115 100 --
Change in net position before transfers 8,907,7ll 4,339 ,500 8,654,796 8,308,700 17,562,507 12,648,200
Net position-beginning of year 174,541 ,500 167,890,300 167,476,805 160,010,500 342,018,305 327,901,000
Prior year restatement (833,234) 2,657,100 -(833,234) 2,657,100
Cumulative effect from chanpp in accountin!l principle -(345,400 (842 ,600 -(1.188,000)
Net position-end ofvear $ 182,615 .977 $ 174,541 500 $ 176,131 ,601 $ 167,476 ,600 $ 358,747.578 $ 342,018,300
Governmental Activities. The City's net position in the Governmental activities increased $8.1 million, accounting
for approximately 50% of the total increase in net assets. As noted previously, the City is continuing to see growth in
its revenue base and realized savings in the General Fund above the level anticipated in the 2013-14 budget. As part
of this growth trend, more private development is taking place which is generating significantly more revenues in the
form of development-related impact and in-lieu fees which are held until needed for planned capital outlay.
7
B3-42
Management's Discussion and Analysis
Top Governmental Activity Revenue Sources. As shown in the shaded areas below, our top five tax revenues
accounted for almost 70% of total revenues, with service charges accounting for another 16%. Generally, revenues
for 2013-14 increased from those ofthe prior fiscal year.
$2,245,238
Development
Impact Fees
$10,940,086
Services Charges
$3,645,692
VLF Swap
Governmental Revenues
$6,092,909 $3 ,721 •541
Other
$5,345,342
Utility User Tax
$22,180,173
Sales Tax
The following narrative addresses the significant variances in key revenues from the prior fiscal year:
I. Sales Tax. General sales tax receipts were $1.4 million or 8.2% higher than in 2012-13. This reflects
continuing economic recovery in nearly every major business category. This is a somewhat greater increase
than experienced statewide. Revenues from the local one-half percent sales tax (Measure Y) were $280,565
higher than the prior year, also a reflection of the current economic climate.
2 . Property Tax. Property tax revenue increased by $407,000 or 4.6% after adjusting for the $620,000 refund
of property tax fees that was received in 2012-13. Property taxes continue to grow at a steady pace.
3 . Transient Occupancy Tax (TOT). These revenues increased by $490,800 or 8.8% over the prior year and
continue to exceed their pre-recession peak. The increase in the local tourism industry has been impacted
positively by the economic recovery and by the efforts of the Tourism Business Improvement District's
efforts to market the area as a destination.
4 . Charges for Services. These revenues increased by approximately $3.0 million over 2012-13. In the General
Fund, charges for services increased significantly over the prior year due to the growth in private development
application fees ($1.2 million) that is continuing to remain strong. Directly related to this is the receipt of
nearly $1.9 million more in development-related capital fees over the prior year that were recognized in the
development fee programs.
8
B3-43
Management's Discussion and Analysis
5. Capital Grants and Contributions. These revenues increased by nearly $1.7 million as progress on City
infrastructure projects resulted in an increased amount of grant reimbursements.
6. Program Expenses: Governmental Activities. Program expenses increased by approximately $2.7 million or
4.3% over the prior fiscal year. The most significant increase is in Community Development activity which
reflects an increase in costs related to the growing demand for development review and inspection services in the
General Fund and expenses from the CDBG program for project investments which totaled $855,000 in 2013-14.
The following chart compares program revenues and expenses:
Expenses and Program Revenues : Governmental Activities
30,000,000
20,000,000
10,000,000
0
•Expenses
·: Revenues
Business-Type Activities. Business-type activities accounted for 50% of the total growth in net position.
Revenue Sources: Business-Type Activities. Operating revenues for services reflect an increase of nearly $1.8 mill ion
or 4.5% over the prior fiscal year. This reflects growth in service charges in all of the enterprise funds. Significant
variances are as follows:
I . Water revenues. Total operating revenues increased $1.6 million. Of this amount, revenues from the sale of water
increased by $2.2 million or 13.9%. Warmer weather which increased consumption, coupled with the
implementation of the new fixed charge for service and the implementation of a 7.5% rate increase that became
effective on July 1, 2013 were responsible for the increase. General water impact fees were down compared to
the prior year by $759,000.
9
B3-44
Management's Discussion and Analysis
2. Sewer charges. The overall increase of nearly $1 million over the prior year is due to the implementation of a
fixed charge for service and a 4% rate increase that became effective on July 1, 2013.
3. Parking Fees. In 2012-13 the Parking Fund received $800,000 for in-lieu payments from developers. No such
payments were received in 2013-14, accounting for most ofthe year-to-year change in revenues.
Program Expenses: Business Type Activities. The program expenses for the proprietary funds increased by $1.5
million or 4.5% over the prior fiscal year. The increase reflects the fact that each of the enterprise funds saw increases
in their operating program costs. The Water and Sewer Funds each saw an increase in spending over the prior year of
approximately $400,000 due to increases in the cost of supplies and maintenance. The Sewer Fund also saw an
increase in its reimbursements to the General Fund for administrative overhead in the amount of $215,000.
20,000,000
15,000,000
10,000,000
5,000,000
0
Expenses and Program Revenues: Business-Type Activities
Water Sewer Parking Transit
•Expenses
· Revenues
Financial Analysis of Governmental Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. The following funds have been classified as either governmental or proprietary fund types.
Governmental Funds. The focus of the City's governmental funds is on near-term inflows, outflows and balances of
spendable resources. Such information is useful in assessing the City's financing requirements. In particular,
unassigned fund balance serves as a useful measure of a government's net resources available for spending at the end
ofthe fiscal year.
• As of June 30,2014, the City's governmental funds reported combined ending fund balances of$41.7 million, or
an increase of$7.4 million compared to the prior fiscal year. Approximately 71% of this total amount ($26.3
10
B3-45
Management's Discussion and Analysis
million) is not available for new spending because it is restricted for debt service, has already been committed to
specific programs like impact fee programs or is assigned to meet expenditures in subsequent years.
The remaining balance, $11.8 million (29%) is unassigned and available for spending in the future at the government's
discretion. This includes approximately $577,000 in unspent and unassigned Measure Y funds. However,
approximately $10.4 million of the General Fund's unassigned fund balance is needed to comply with the City's
minimum fund balance policy for 2013-14 which is based on 20% of operating expenses.
Major Governmental Funds . There are three major governmental funds: the General Fund, the Capital Outlay and
Debt Service Fund. Changes in the General Fund are highlighted in the Financial Highlights section above. The
following information highlights changes in the Capital Outlay and Debt Service Funds:
Capital Outlay Fund. This fund was established to account for all of the City's capital facility and infrastructure
improvement program projects and where the cost will be at least $25,000. Not counted in this fund are costs that are
programmed into one or more of the following funds: Parkland Development, Transportation Impact Fees, Open Space
Protection, A.lrpor!: .A .. rea !!!!pact Fees, F!eet F_ep!~cement, .A~ffordabte Housing, Los Osos VaHey f{oad. Sub-Area Fees,
Information Technology Replacement and Enterprise Funds. The Capital Outlay fund relies primarily on resources
provided by the General Fund and grants from the state and federal government.
At June 30, 2014, the Capital Outlay Fund had a total fund balance of $6 million. The entire amount of the fund
balance has been committed to capital projects or is assigned to liquidate contracts and purchase orders. The fund
balance increased by $3.3 million over the prior fiscal year due to the fact that funding for projects received is spent
incrementally as the projects proceed to completion and a number of projects were in progress at June 30, 2014. From
year to year, spending activity in the Capital Outlay Fund may show significant fluctuations depending on the phase
of completion of the various capital projects in progress. Significant variances from the prior year include:
I. Grant revenues were approximately $450,000 (41%) higher than the prior year. Grant revenues are received as
reimbursements for costs incurred and reflect the level of activity in the grant-funded projects.
2. Capital expenditures of $5.3 million reflect a 36% increase from the prior year. This reflects progress made on
capital projects during the year.
3. Transfers from the General Fund of approximately $6 .5 million to support capital expenditures reflect an increase
of$3.0 million compared to the prior year. Major projects undertaken during the year include street reconstruction
($1 ,050,000) and the LED streetlight conversion ($851 ,000), Santa Rosa Skate Park Construction ($1.2 million),
bike trail improvements ($140,000) and park playground equipment replacement ($500,000).
The Debt service fund was established to account for the activities related to the city's general long term liabilities.
This is the first year this fund qualifies as a major fund as a result of transactions that relate to payment of insurance
program liabilities.
11
B3-46
Management's Discussion and Analysis
Non-Major Governmental Funds. Non-major funds include the Transportation Impact Fee Fund, the Los Osos
Valley Road Sub-Area Fee Fund, the Downtown Business Improvement District Fund, the Tourism Business
Improvement Fund, the Gas Tax Fund, the Transportation Development Act Fund, the Community Development
Block Grant Fund, the Law Enforcement Grants Fund and the Public Art Contributions Fund. These funds are
presented in the basic financial statements in the aggregate.
A significant number of these funds represent activity for capital projects. At June 30, 2014, these funds had an
aggregate fund balance of$13.2 million. Of this total, 73% ($9. 7 million) is restricted for payment oflaw enforcement
grant programs and committed for specific future capital projects and other City programs.
The remaining balance of$3.5 million is assigned to expenditures in subsequent years. More information about these
aggregated non-major funds can be found in the combining and individual fund statements and schedules immediately
following the required supplementary information.
Proprietary Funds. The City's four enterprise funds provide the same type of information found in the government-
wide financial statements, but in more detail. Highlights of the annual activity for these funds have already been
presented in the discussion of the business-type activities.
General Fund Budgetary Highlights
A detailed budgetary comparison schedule for the year ended June 30, 2014, is presented as required supplementary
information following the notes to the financial statements. The final budget amounts include changes that were
approved by the City Council at the February 2014 Mid-year Budget Update.
The following summarizes the original budget compared with the final budget for 2013-14.
'BUdgetary ;ffighligbts
General Fund Original Budget Final Budget Variance
Revenues $55,462,200 $59,524,946 $4,062,746
Expenditures 50,476,009 54,324,556 3,848,547
Other sources (uses) (7, 115,000) (8,962, 145) (1,847,145)
Beginning fund balance 12 916.400 18.937,700 6.021 ,300
Ending fund balance $10,787,591 $15.175 ,945 $4,388,354
As discussed below, differences between the original budget and the final amended budget reflect the following key
changes:
Key revenue source estimates including sales tax, transient occupancy tax (TOT) and subventions and grants were
updated at Mid-Year and with the Financial Plan Supplement, resulting in an increase in overall budgeted revenues of
almost $3.6 million or 6% over the original budget estimate. The remaining increase to the originally budgeted
revenues is the result of budget adjustments made subsequent to the Mid-Year budget update, before the end of the
fiscal year.
12
B3-47
Management's Discussion and Analysis
The increase in the beginning fund balance results from the use of an estimate for the original budget and the use of
the actual, audited amount for the final budget. Operating program increases resulted primarily from the carryover of
unspent contractual obligations from the prior year, increases related to Mutual Aid program costs for the Fire
Department and the changes related to the Community Development Department's use of excess revenues to fund
development review costs to maintain timely responses per the government code. .
The following table contains a comparison of actual results for revenues, expenditures, and fund balance with the final
budget for the General Fund. As the table shows, revenues exceeded the final budget by nearly $1.4 million, while
expenditures and other uses were below the final budget figure by nearly $4.3 million. The net amount of other sources
was more than budgeted by $588,000. The net result of these differences lead to the ending fund balance increasing
by more than $5.1 million over the amount anticipated in the budget.
Budget •Ac.tttal CGJil'lpat'iS<lm
Final Positive (Negative)
General Fund Budget Actual Variance
Revenues $59,524,946 $60,922,119 $1,397,173
Expenditures 54,324,556 49,992,402 (4,332,154)
Other sources (uses) (8,962, 145) (9,550,288) (588,143)
Beginning fund balance 18,937,700 18,937,750 50
Ending fund balance $15 ,175 ,945 $20 ,317,179 $5,141 ,234
Ending fund balance
Nonspendable 3,191,055 3,191,055
Restricted 312,037 312,037
Commited 4,973,497 4,973,497
Assigned
Unassigned 15,175,945 11 ,840 ,590 (3,335,355)
Total ending fund balance 15,175,945 20,317,179 5 ,141 ,234
Capital Assets and Debt Administration
Capital Assets. Capital assets, including infrastructure, are those assets that are used in the performance of the City's
functions. As of June 30,2014, the City's investment in capital assets for its governmental and business type activities
amounts to $343.9 million (net of accumulated depreciation).
The investment in capital assets includes land, park improvements, buildings and improvements, vehicles and
equipment, streets, bikeways, water, wastewater and storm drain systems.
13
B3-48
Management's Discussion and Analysis
Capital Assets( Net ofDepreciation) Govemrrental Business-Type Total
Activities Activities
2014 2013 2014 2013 2014 2013
Nondepreciable capital assets $ 44,891,130 $ 41,428,800 $ 17,261,492 $ 12,411,504 $ 62,152,622 $ 53,840,304
Depreciable capital assets (net of
accumulated depreciation ) 124,480,481 126,625.766 157,739,239 162.044.171 282,219,720 288,669,937
Total Capital Assets $ 169,371 ,611 $ 168,054,566 $ 175 ,000,731 $ 174,455 ,675 $ 344,372,342 $342,510,241
Major capital asset expenditures during the fiscal year include the following:
• $1,050,000 for street reconstruction and resurfacing.
• $300,000 for Los Osos Valley Road/US 101 interchanges design work.
• $900,000 for Bob Jones Trail Connection-South Bridge project.
• $590,000 for Trench repairs a water line replacement projects.
• $2.8 million for WRF Energy Efficiency project
• $800,000 in sewer line improvements.
• $500,000 for the Santa Rosa sewer line replacement
• $217,000 for Jack House Remodel
• $422,000 for Fleet replacement.
• $644,000 for Parks improvements and equipment replacement.
• $490,000 for Streets signs and traffic signal upgrades.
Additional information on the City's capital assets can be found in Note 5 to the basic financial statements.
Long-Term Debt. At June 30,2014, the City had $85.6 million in long-term debt outstanding as summarized below.
This represents an increase of$4.5 million or 6% compared to the prior year.
Long-Term Debt Governmental Business-Type Total
Activities Activities
2014 2013 2014 2013 2014 2013
Revenue bonds $ 22,543,171 $ 23,989,125 $ 27,689,883 $ 29,301,898 $ 50,233,054 $ 53,291,023
Lease-purchase fmancing 711,622 823,400 20,309,200 711,622 21,132,600
Claims & Liabilities 2,371,519 2,025,100 19,446,946 -21,818,465 2,025,100
Installment sale agreement 8,979,000 1,620,000 8,979,000 1,620,000
Compensated absences 2,465,248 2,537,600 562,540 3,027,788 2,537,600
Conservation Loan 850,775 595 ,800 850,775 595 ,800
$ 28,942,335 $ 29,375,225 $ 56,678,369 $ 51 ,826,898 $ 85 ,620,704 $ 81 ,202,123
The California Government Code provides for a limit on debt secured by real property of 3.75% based on market
value. The City's debt management policy, however, sets a lower debt limit of2% of assessed valuation. At June 30,
2014, the City did not have any general obligation debt subject to the limit. Additional information about the City's
long-term debt can be found in Note 7 to the basic financial statements.
14
B3-49
Management's Discussion and Analysis
Economic Factors and Next Year's Budgets and Rates
On June 17,2014, the City Council adopted the 2013-15 Financial Plan Supplement and approved 2014-15 Budget,
with total appropriations of $134.2 million. Adequate resources are available to fund the proposed expenditures. For
the General Fund, the 2014-15 budget reflects a margin of current revenues and other sources exceeding expenses and
other uses by $655,000 or 1.2% of the General Fund operating budget. The City Council approved the use of reserves
in excess of the 20% required minimum amount to pay for one-time expenses. These costs include $300,000 to make
a prepayment against the safety side fund retirement liability owed to the California Public Employees Retirement
System; $2.438 million to pay off the retrospective insurance charges owed to the California Joint Powers Insurance
Authority; $196,000 to pay for one-time costs associated with a request for supplemental funding from the Community
Development Department to fulfill its obligation to provide timely development inspection services. Consistent with
the City's balanced budget policy the ending unassigned fund balance meets the City's policy minimum of 20% of
operating expenditures.
Measure Y. The passage of Measure Y in November 2006 increased the City sales tax rate by one half-percent
effective April!, 2007. Tn 2013-14, the seventh full year ofMea-.ure Y revenues, the City received nearly $6.8 million
from this source. Measure Y has continued to significantly improve the City's fiscal capacity to retain key services
and maintain infrastructure by mitigating deeper program reductions than would otherwise be the case, as well as to
consider new initiatives that are important to the community. Measure Y is scheduled to expire in March 2015 if not
reauthorized by voters.
It is important to note that while the budget's revenue forecast assumes that Measure Y will be extended when the
community votes on the ballot measure at the November 2014 election, the City Council has designated $1.7 million
as a contingency reserve in case Measure Y is not extended. Further, staff has presented the City Council with a
conceptual contingency plan that will be put into place as part of the 2015-17 financial plan development process
should Measure Y not be extended.
(It is important to note that Measure G, which represented the extension of Measure Yon the November 2014 ballot,
was approved by 70% of the voters.)
Utility Rates. Effective July 1, 2014, water rates increased by 7.5% based on action previously adopted by Council
during a public hearing held on June 10, 2013. Sewer rates were increased by 4% through the same Council action.
Requests for Additional Information
This financial report is designed to provide a general overview of the City's finances for all those with an interest in
our finances. Questions concerning any of the information provided in this report or requests for additional financial
information should be addressed to the Department of Finance & Information Technology, 990 Palm Street, San Luis
Obispo, CA 93401.
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B3-50
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B3-51
BASIC FINANCIAL STATEMENTS
B3-52
City of San Luis Obispo, California
Statement of Net Position
June 30, 2014
Governmental Business-Type
Activities Activities Total
Assets
Cash and cash equivalents $ 2,093,220 $ 2,172,408 $ 4,265,628
Investments 28,864,957 51,412,535 80,277,492
Taxes receivable I ,489,317 1,489,317
Accounts receivable 1,447,796 3,527,791 4,975,587
Accrued interest receivable 77,533 119,492 197,025
Due from other governments 4,991,680 1,898,782 6,890,462
Prepaid expenses and other assets 3,808,272 3,808,272
Cash held by fiscal agent 4,798,517 2,248,979 7,047,496
Nondepreciable capital assets 44,891,130 17,261,492 62,152,622
Depreciable capital assets (net of accumulated
depreciation) 124,480,481 157,739,239 282,219,720
Total assets 216,942,903 236,380,718 453,323,621
Deferred Outflows of Resources
Deferred amounts from refunding of debt 231,299 231,299
Liabilities
Accounts payable 2,564,813 2,119,539 4,684,352
Accrued salaries 1,799,344 223,957 2,023,301
Deposits payable 30,960 30,960
Unearned revenue 888,574 1,105,307 1,993,881
Interest payable 100,927 322,284 423,211
Due to other funds
Other liabilities 30,933 30,933
Noncurrent liabilities:
Due within one year 2,862,609 2,723,607 5,586,216
Due in more than one year 26,079,726 53,954,762 80,034,488
Total liabilities 34,326,926 60,480,416 94,807,342
Net Position
Net investment in capital assets 145,266,043 119,116,303 264,382,346
Restricted for:
Debt service 4,798,517 2,248,979 7,047,496
Grant program 27,145 27,145
Unrestricted 32,524,272 54,766,319 87,290,591
Total net position $ 182,615,977 $ 176,131,601 $ 358,747,578
The accompanying notes are an integral part of these financial statements.
17
B3-53
City of San Luis Obispo, California
Statement of Activities
For the Fiscal Year Ended June 30,2014
Functions/Programs
Governmental activities:
Public safety
Transportation
Culture and recreation
Community development
General government
Interest on long-term debt
Total governmental activities
Business-type activities:
Water
Parking
Transit
Total business-type activities
General revenues and transfers:
General sales and use taxes
Measure Y 1/2 cent sales and use tax
Prope1iy taxes
Transient occupancy tax (TOT)
Utility users tax
Property tax-in-lieu of vehicle license fees
Franchise taxes
Business tax
Unrestricted investment earnings
Other taxes
Transfers
Total general revenues and transfers
Change in net position
Net position, beginning of year
Prior year restatement
Net position, beginning of year restated
Net position, end of year
Expenses
$ 25,642,077
6,330,653
7,994,146
9,190,527
10,701,534
1,221,205
61,080,142
17,575,961
10,647,255
3,636,607
4,059,138
35,918,961
$
Indirect
Expense
Allocation
4,009,625
2,644,394
2,245,707
993,255
(9,892,981)
The accompanying notes are an integral part of these financial statements.
18
Charges for
Services
$ 1,589,278
1,321,323
3,048,274
4,981,211
734,599
11,674,685
19,755,909
17,151,212
3,998,730
688,585
41,594,436
ProGram Revenues
Operating Capital Grants
Grants and and
Contributions Contributions
$ 1,105,294 $ 176,980
1,285,019 3,503,460
22,156
73,954
2,486,423 3,680,440
2,458,640 82,359
2,458,640 82,359
B3-54
Net Revenues (Expenses) and
Changes in Net Position
Governmental Business-type
Activities Activities Total
$ (26,780,150) $ $ (26,780,150)
(2,865,245) (2,865,245)
(7,191,579) (7,191,579)
(5,180,415) (5,180,415)
(1,221,205) (1,221,205)
( 43,238,594) ( 43,238,594)
2,179,948 2,179,948
6,503,957 6,503,957
362,123 362,123
{829,554) {829,5542
8,216,474 8,216,474
$ 15,405,808 $ $ 15,405,808
6,774,365 6,774,365
8,960,010 8,960,010
6,063,232 6,063,232
5,345,342 5,345,342
3,645,692 3,645,692
2,636,599 2,636,599
2,142,971 2,142,971
566,930 364,551 931,481
679,127 679,127
(73,771) 73,771
52,146,305 438,322 52,584,627
8,907,711 8,654,796 17,562,507
174,541,500 167,476,805 342,018,305
(833,234) (833,234)
173,708,266 167,476,805 341,185,071
$ 182,615,977 $ 176,131,601 $ 358,747,578
19
B3-55
City of San Luis Obispo, California
Balance Sheet
Governmental Funds
June 30,2014
Other Total
Governmental Governmental
General Capital Outla~ Debt Service Funds Funds
Assets
Cash and cash equivalents $ 708,485 $ 593,471 $ 39,403 $ 751,861 $ 2,093,220
Investments 11,723,302 4,668,685 12,472,970 28,864,957
Taxes receivable 1,489,317 1,489,317
Accounts receivable 218,472 578,310 557,002 1,353,784
Other receivables 94,012 94,012
Due from other governments 3,953,398 718,101 320,181 4,991,680
Due from other funds 2,595,035 2,595,035
Accrued interest receivable 39,668 9,652 28,213 77,533
Prepaid expense 3,191,055 3,191,055
Cash held by fiscal agent 312,037 4,486,480 4,798,517
Total assets $ 24,324,781 $ 6,568,219 $ 4,525,883 $ 14,130,227 $ 49,549,110
Liabilities, Deferred Inflows of Resources and Fund Balance
Liabilities:
Accounts payable $ 1,751,235 $ 151,245 $ 39,402 $ 622,931 $ 2,564,813
Accrued liabilities 1,708,743 90,601 1,799,344
Due to other funds 2,443,259 151,776 2,595,035
Unearned revenue 516,691 371,883 888,574
Other liabilities 30,933 30,933
Total liabilities 4,007,602 523 ,128 2,482,661 865,308 7,878,699
Fund balance:
Nonspendable 3,191,055 3,191,055
Restricted for:
Debt service 312,037 2,043,222 2,355,259
Law enforcement grant programs 27,145 27,145
Committed to:
Affordable housing programs 2,946,847 2,946,847
Capital outlay 6,045,091 6,045,091
General government programs 3,273,497 4,743,552 8,017,049
Impact fee programs 411,592 411,592
Open space programs 1,582,425 1,582,425
Contingency fund 12,158,000 12,158,000
Assigned to:
Subsequent years expenditures 3,553,441 3,553,441
Unassigned 1,382,590 (83) 1,382,507
Total fund balance 20,317,179 6,045,091 2,043,222 13,264,919 41,670,411
Total liabilities and fund balance $ 24,324,781 $ 6,568,219 $ 4,525,883 $ 14,130,227 $ 49,549,110
The accompanying notes are an integral part of these financial statements.
20
B3-56
City of San Luis Obispo, California
Reconciliation of the Governmental Funds Balance Sheet
to the Government-wide Statement of Net Position
June 30, 2014
Total fund balance -governmental funds
Capital assets used in governmental activities are not financial resources and therefore are not
reported in the funds.
Capital assets at estimated historical cost
Accumulated depreciation
245,484,522
(76,112,911)
Other long-term assets are not available to pay for current period expenditures and therefore are
not reported in the funds.
Long-term liabilities, including related interest payable, are not due and payable in the current
period and therefore are not reported in the funds.
Lease revenue bonds
Lease purchase financing
Compensated absences
Conservation loan
Bond premium
Other liabilities -estimated claims
Accrued interest payable
Total net position -governmental activities
The accompanying notes are an integral part of these financial statements.
21
22,152,010
711,622
2,465,248
850,775
391,161
2,371,519
100,927
$ 41,670,411
169,371,611
617,217
(29,043,262)
$ 182,615,977
B3-57
City of San Luis Obispo, California
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended June 30,2014
General Capital Outlay Debt Service
Revenues:
Sales and use tax -general
Sales and use tax -Measure Y
Sales tax -Prop 1 72
Property tax
Transient occupancy tax
Utility users tax
Property tax in lieu ofVLF
Franchise taxes
Business tax
Real property transfer tax
Fines, forfeitures and penalties
Use of money and property
Subventions and grants
Charges for services
Miscellaneous
Total revenues
Expenditures:
Current:
General government
Public safety
Transportation
Leisure, cultural and social services
Community development
Debt service:
Principal
Interest
Capital outlay:
Public safety
Transportation
Leisure, cultural and social services
Community development
General government
Total expenditures
Excess (deficiency) of revenues over
(under) expenditures
$ 15,405,808
6,774,365
391,567
8,960,010
6,063,232
5,345,342
3,645,692
2,636,599
2,142,971
287,560
150,185
372.655
1,238,410
7,364,616
143,107
60,922,119
9,329,406
23,863,500
2,882,241
7,155,619
6,748,307
13,329
49,992,402
10,929,717
$
The accompanying notes are an integral part of these financial statements.
22
37.748
1,539,622
1,500
1,578,870
97,667
4,127,342
977,163
16,459
131,870
5,350,501
(3,771,6312
$
32,625
935,000
1,534,668
1,048,671
3,550,964
(3,550 ,964)
B3-58
Other Total
Governmental Governmental
$
Funds Funds
156,527
3,211,849
3,802,417
212,862
7,383,655
1,641,650
794,684
732,521
295,347
922,558
4,386,760
2,996,895
$ 15,405,808
6,774,365
391,567
8,960,010
6,063,232
5,345,342
3,645,692
2,636,599
2,142,971
287,560
150,185
566,930
5,989,881
11,167,033
357,469
69,884,644
9,362,031
24,798,500
2,882,241
7,155,619
8,389,957
1,534,668
1,048,671
892,351
4,859,863
1,272,510
939,017
145,199
63,280,627
6,604,017
23
B3-59
City of San Luis Obispo, California
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds, continued
For the Fiscal Year Ended June 30,2014
Page 2
Other Financing Sources (Uses):
Proceeds from debt issuance
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balance
Fund balance, beginning of year
Fund balance, end of year
$
$
General Ca~ital Outlal:
$
1,636,815 7,337,181
{11,187,103~ {211,3062
(9,550,288) 7,125,875
1,379,429 3,354,244
18,937,750 2,690,847
20,317,179 $ 6,045,091
The accompanying notes are an integral part of these financial statements.
24
Debt Service
$ 850,775
3,550,964
{850 ,775}
3,550,964
2,043 ,222
$ 2,043,222
B3-60
Other Total
Governmental Governmental
Funds Funds
$ $ 850,775
1,310,038 13,834,998
~1,659,585) ~13,908,769~
(349,547) 777,004
2,647,348 7,381,021
10,617,571 34,289,390
$ 13,264,919 $ 41,670,411
25
B3-61
City of San Luis Obispo, California
Reconciliation ofthe Governmental Funds Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Government-wide Statement of Activities and Changes in Net Position
For the Fiscal Year Ended June 30,2014
Total net change in fund balance -governmental funds $ 7,381,021
Capital outlay net of depreciation expense and disposal
Expenditures for capital outlay -governmental funds 6,797,679
Depreciation expense {5,421,7862
1,375,893
Loss on disposal of capital asset (58,848)
Principal paid on long-term debt 1,534,668
Acquisition of new financing (1,197,194)
Change in accrued interest on debt (195,598)
Change in unamortized discount/premium (netted with debt) 23,064
Change in other long-term asset (27,647)
Change in compensated absences 72,352
Total change in net position -governmental activities $ 8,907,711
The accompanying notes are an integral part of these financial statements.
26
B3-62
THIS PAGE INTENTIONALLY LEFT BLANK
B3-63
Assets
Current assets:
Cash and cash equivalents
Investments
Accounts receivable
Accrued interest receivable
Prepayments
Due from other governments
Total current assets
Noncurrent assets:
City of San Luis Obispo, California
Statement of Fund Net Position
Business-Type Activities -Enterprise Funds
June 30,2014
Enterl!rise Funds
Water Sewer Parking
$ 621,194 $ 1,123,915 $ 396,537
17,266,322 26,250,956 7,198,575
1,903,979 1,544,467 16,563
39,048 61,193 17,503
58,125
71,622 59,888
19,902,165 29,098,544 7,629,178
Cash and investments held by fiscal agent 1,642,349 58,420 548,210
Capital assets:
Land 915,926 2,176,114 5,515,137
Public art 74,100
Infrastructure 96,258,042 71,527,980 29,494,909
Buildings and improvements 19,134,912 5,024,409 877,033
Equipment 3,763,752 4,090,243 383,111
Construction in progress 991,395 6,976,165 573,617
Total capital assets 121,064,027 89,794,911 36,917,907
Less accumulated depreciation ( 42,837,003) (27,052,8152 (10,605,237)
Capital assets, net of
accumulated depreciation 78,227,024 62,742,096 26,312,670
Total noncurrent assets 79,869,373 62,800,516 26,860,880
Total assets 99,771,538 91,899,060 34,490,058
Deferred Outflows of Resources
Deferred amounts from refunding debt 231,299
The accompanying notes are an integral part of these financial statements.
27
Transit Totals
$ 30,762 $ 2,172,408
696,682 51,412,535
4,657 3,469,666
1,748 119,492
58,125
1,767,272 1,898,782
2,501,121 59,131,008
2,248,979
8,607,177
74,100
197,280,931
5,016,142 30,052,496
7,618,590 15,855,696
39,038 8,580,215
12,673,770 260,450,615
~ 4,954,829) (85,449,8842
7,718,941 175,000,731
7,718,941 177,249,710
10,220,062 236,380,718
231,299
B3-64
City of San Luis Obispo, California
Statement of Fund Net Position
Business-Type Activities -Enterprise Funds, continued
June 30, 2014
Page 2
Water Sewer
Liabilities
Current liabilities:
Accounts payable $ 262,704 $ 1,345,817
Accrued liabilities 88,127 98,663
Compensated absences 102,736 111,460
Deposits payable 30,960
Unearned revenue
Interest payable 172,942 49,879
Current portion of long-term debt 1,244,700 791,927
Total current liabilities 1,902,169 2,397,746
Noncurrent liabilities:
Compensated absences 147,844 160,393
Lease revenue bonds 18,172,495 569,960
Bond premium 603,643
Installment sale agreement 8,481,073
State loan/note payable 4,598,807 8,615,759
Total noncurrent liabilities 23,522,789 17,827,185
Total liabilities 25,424,958 20,224,931
Net Position
Net investment in capital assets 53,838,678 44,283,377
Restricted -expendable for debt service 1,642,349 58,420
Unrestricted 19,0 96 ,852 27,332,332
Total net position $ 74,577,879 $71,674,129
The accompanying notes are an integral part of these financial statements.
28
Enterl!rise Funds
Parking Transit Totals
$ 140,943 $ 370,075 $ 2,119,539
31,184 5,983 223,957
20,939 3,883 239,018
30,960
1,105,307 1,105,307
99,463 322,284
447,962 2,484,589
740,491 1,485,248 6,525,654
13,387 2,000 323,624
7,240,800 25,983,255
3,194 606,837
8,481,073
5,345,407 18,559,973
12,602,788 2,000 53,954,762
13,343,279 1,487,248 60,480,416
13,275,307 7,718,941 119,116,303
548,210 2,248,979
7,323,262 1,013,873 54,766,319
$ 21,146,779 $ 8,732,814 $176,131,601
B3-65
City of San Luis Obispo, California
Statement of Revenues, Expenses and Changes in Fund Net Position
Business-Type Activities -Enterprise Funds
For the Fiscal Year Ended June 30,2014
EnterErise Funds
Water Sewer Parking Transit Total
Operating revenues:
Charges for sales and service $ 18,645,973 $ 16,799,287 $ 3,409,516 $ 664,069 $ 39,518,845
Impact fees 819,477 268,132 1,087,609
Fines and forfeitures 585,783 585,783
Other revenues 210,749 46,371 10,464 267,584
Total operating revenues 19,676,199 17,113,790 4,005,763 664,069 41,459,821
Operating expenses:
Salaries and benefits 2,926,028 3,241,016 1,055,544 190,353 7,412,941
Supplies and maintenance 1,506,090 2,200,206 192,105 489,962 4,388,363
Contract services 8,295,509 1,288,295 631,828 2,173,245 12,388,877
General government 1,268,800 1,609,600 609,320 320,400 3,808,120
Depreciation 2,716,681 2,037,021 628,586 885 ,178 6,267,466
'T',....+..,I ,.........,,... .. ,...+~ .... ..._. ,...,r ...... ,.......,,..,,....,.., 11: '71'1 1f\Q 1f\ 'l'7t: 1'lQ 'l 1 1 '7 'l Q'l A f\<;O 1 'l Q 'lA ")t;<; "71:"7
..L VLU.I VtJ\o.IIU.l.lll5 \o,l.llt..}-1\o.llh)\o.l.;) ..LV, I J.J~J.VU JV,.J/V,l..JU _..,._ .1. I,_,...,_, ---r,v...J/,.J.JV _..---r,""v-','V'
Operating income (loss) 2,963,091 6,737,652 888,380 (3,395,069) 7,194,054
Nonoperating revenues (expenses)
Interest 136,205 98,087 124,130 6,129 364,551
Grants 2,458,640 2,458,640
Interest expense (862,853) (271,117) (519,224) (1,653,194)
Miscellaneous nonoperating
revenues (expenses) 79,710 37,422 ~7,033~ 24,516 134,615
Total nonoperating revenues
(expenses) (646,938) (135,608) (402,127) 2,489,285 1,304,612
Income (loss) before transfers 2,316,153 6,602,044 486,253 (905,784) 8,498,666
and capital contributions
Capital Contributions 82,359 82,359
Transfers 73 771 73 771
Total contributions and transfers 73 ,771 82,359 156 ,130
Change in net position 2,316,153 6,675,815 486,253 (823,425) 8,654,796
Net position, beginning of year 72,261,726 64,998,314 20,660,526 9 ,556,239 167,476,805
Net position, end of year $ 74,577,879 $ 71,674,129 $ 21,146,779 $ 8,732,814 $ 176,131,601
The accompanying notes are an integral part of these financial statements.
29
B3-66
City of San Luis Obispo, California
Statement of Cash Flows
Business-Type Activities -Enterprise Funds
For the Fiscal Year Ended June 30,2014
Enter~rise Funds
Water Sewer Parkin~
Cash flows from operating activities:
Cash received from customers $19,513,858 $17,205,935 $ 4,024,400
Cash payments to suppliers for goods and services (10,132,495) (2, 764,409) (I, 194,890)
Cash payments to General Fund for interfund services (1 ,268,800) (I ,609,600) (609,320)
Cash payments to employees for services (2,930,62I) (3,253,900) (1,075,434)
Other operating cash receipts (payments) 79 ,710 37,422 {7,033}
Net cash provided by (used in)
operating activities 5,261,652 9,615,448 1,137,723
Cash flows from noncapital financing activities:
Operating grants received
Cash received for interfund services 73 77I
Net cash provided by noncapital
financing activities 73,77I
Cash flows from capital and related
financing activities:
Acquisition and construction of capital assets (655,205) (5,705,7I7) (389,956)
Principal paid on debt financing (I, I98,898) (405,08I) (920,531)
Interest paid on debt financing (9II,267) (254,238) (502, I67)
Proceeds from issuance of debt 7,479,000
Net cash provided by (used in) in capital and
related financing activities {2, 765,370} I,I13,964 {I ,8I2,654)
Cash flows from investing activities:
Interest on investments 140,383 84,608 130,653
Net cash provided by
investing activities I40,383 84,608 130,653
Net change in cash and cash equivalents 2,636,665 10,887,791 (544,278)
Cash and cash equivalents, beginning of year 16,893,200 16,545,500 8,687,600
Cash and cash equivalents, end of year $ I9,529,865 $ 27,433,29I $ 8,I43,322
The accompanying notes are an integral part of these financial statements.
30
Transit Total
$ 926,147 $41,670,340
(3,221 ,432) (17,313,226)
(320,400) (3,808, I20)
( 190,487) (7 ,450,442)
24,516 134,615
(2,78I,656) 13,233,I67
2,458,640 2,458,640
82,359 I56,I30
2,540,999 2,614,770
(6I,7I9) (6,8I2,597)
(2,524,510)
(I,667,672)
7,479,000
{61,7I9} (3,525, 779}
5,I20 360 ,764
5,I20 360,764
(297,256) I2,682,922
I,024,700 43,I5I,OOO
$ 727,444 $55,833,922
B3-67
City of San Luis Obispo, California
Statement of Cash Flows
Business-Type Activities -Enterprise Funds, continued
For the Fiscal Year Ended June 30,2014
Page 2
Water
Reconciliation of operating income (loss) to
net cash provided by (used in) operating activities:
Operating income (loss) $ 2,963,091
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation 2,716,681
Other revenues and expenses 79,710
Change in assets and liabilities:
Accounts receivable (160,601)
Prepaid expense
Accounts payable (330,896)
Deposits payable (1,740)
Unearned revenue
Accrued salaries and compensated absences (4,593)
Net cash provided by (used in)
operating activities $ 5,261,652
Reconciliation of cash and investments to the balance sheet:
Cash and cash equivalents
Investments
Cash and investments held by fiscal agent
Total cash and investments
Noncash investing, capital, and financing activities:
None
$ 621,194
17,266,322
1,642,349
$ 19,529,865
Enterprise Funds
Sewer Parking
$ 6,737,652
2,037,021
37,422
92,145
(58,125)
782,217
(12,884)
$ 9,615,448
$ 1,123,915
26,250,956
58,420
$27,433,291
$ 888,380
628,586
(7,033)
18,637
(370,957)
(19,890)
$ 1,137,723
$ 396,537
7,198,575
548,210
$ 8,143,322
The accompanying notes are an integral part of these financial statements.
31
Transit
$(3,395,069)
885,178
24,516
(481,629)
(558,225)
743,707
(134)
$(2, 781 ,656)
$ 30,762
696,682
$ 727,444
Total
$ 7,194,054
6,267,466
134,615
(531,448)
(58, 125)
(477,861)
(1 ,740)
743,707
(37,501)
$13,233,167
$ 2,172,408
51,412,535
2,248,979
$55,833,922
B3-68
Assets
Current assets:
Cash and cash equivalents
Investments
Accounts receivable
City of San Luis Obispo, California
Statement of Net Position-Fiduciary Funds
Agency Funds
June 30,2014
$ 204,943
2,885,537
109,362
Accrued interest receivable 5,098
Due from other governments 40,084
Other assets 27,935
Total assets $ 3,272,959
Liabilities
Current liabilities:
Accounts payable $ 103,037
Accrued liabilities 22,638
Other liabilities 1,649,460
Due to agency participants 1,497,824
Total liabilities $ 3,272,959
The accompanying notes are an integral part of these financial statements.
32
B3-69
THIS PAGE INTENTIONALLY LEFT BLANK
B3-70
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Note 1: Summary of Significant Accounting Policies
Description of the Reporting Entity
Government-wide and Fund Financial Statements
Measurement Focus, Basis of Accounting and Basis of Presentation
Assets, Liabilities, and Net Position or Equity
Budgets and Budgetary Accounting
Note 2: Cash and Investments
Investments
Funds with Fiscal Agent
Note 3: Property Taxes
Note 4: Due from Other Governments
Note 5: Capital Assets
Note 6: Employee Retirement Benefits
California Public Employees' Retirement System (CalPERS)
Other Post-Employment Benefits (OPEB)
Note 7: Long-Term Debt
Summary of Long-Term Debt
Governmental Activities Summary
Revenue Bonds
Lease-Purchase Financing
Conservation Loan
Business-Type Activities Summer
Revenue Bonds
Loans
Installment Sale Agreements
Note 8: Interfund Transactions
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B3-71
City of San Luis Obispo, California
Notes to the Financial Statements
Table of Contents
June 30, 2014
Page 2
Note 9: Joint Ventures, Jointly Governed Organizations and Operating Agreements
Whale Rock Commission
San Luis Obispo Regional Transit Authority
San Luis Obispo Council of Governments
Nacimiento Water Supply Project
Note 10: Risk Management
California Joint Powers Insurance Authority
Self-Insurance Programs of the Authority
Purchased Insurance
Adequacy ofProtection
Self Insurance
Note II: Commitments and Contingencies
Litigation
Grant A wards
Note 12: Construction and Other Significant Commitments
Note I3: Fund Balance Deficiency
Note I4: Subsequent Events
Measure Y
Claims Liability
Lease Purchasing
Joint Powers Agreement
Lease Purchasing
Bonds
Note I5: New Accounting Standards
Accounting Standards Adopted
New Accounting Standards
Note I6: Prior Year Restatement
34
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B3-72
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Note 1: Summary of Significant Accounting Policies
The basic financial statements of the City of San Luis Obispo (City) have been prepared in conformity with U.S. Generally
Accepted Accounting Principles (GAAP), as applied to governmental agencies. The Governmental Accounting Standards
Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting
principles.
The following is a summary of the more significant policies:
Description of the Reporting Entity
The City is a California charter city. It was incorporated on February 19, 1856 and chartered on May 1, 1876. It is
organized in accordance with the Council-Mayor-City Manager form of government. With a population of approximately
45,500, the City provides a broad range of municipal services, including police and fire protection, parks and recreation,
water and sewer utilities, street maintenance, public transportation, parking, planning, building and safety, and other
general government services.
As required by GAAP, these financial statements present the City (the primary government) and its component units,
entities for which the government is considered to be financially accountable. Blended component units, although legally
separate entities, are in substance part of the government's operations which creates the need to include their financial
information with that of the primary government. The City has no component units that require discrete presentation in
accordance with GASB standards.
Blended Component Unit. The San Luis Obispo Capital Improvement Board provides financing for the construction and
acquisition of City facilities. The Board consists of members of the City Council. Activities of the Board are accounted
for in the applicable City governmental fund and consist of the issuance of debt secured by the lease of property. Separate
financial statements are not prepared for the San Luis Obispo Capital Improvement Board.
Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report
information on all of the nonfiduciary activities of the primary government and its component unit. 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 services.
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. The
indirect expense allocation transfers general support services to operating programs based on the most current Cost
Allocation Plan. 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
35
B3-73
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 2
Note 1: Summary of Significant Accounting Policies (Continued)
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.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though
the latter are excluded from the government-wide financial statements. Major individual governmental funds and major
individual enterprise funds are reported as separate columns in the fund financial statements.
Measurement Focus, Basis of Accounting and Basis of Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting, as are the proprietary funds. Revenues are recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of related cash tlows. Property taxes are recognized as revenues in the year
for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements
imposed by the provider have been met.
As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements.
Exceptions to this general rule are charges between the government's enterprise funds and various other functions of the
government. Elimination of these charges would distort the direct costs and program revenues reported for the various
functions concerned.
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to
pay liabilities of the current period. For this purpose, the government generally considers revenues to be available if they
are collected within 60 days of the end of the current fiscal period. An exception to this timeframe is made to allow for
the recognition of the final property tax distributions received from the County, if necessary, as well as for sales tax
revenues received in September. This later provision is made in order for the City's revenue stream to match that
recognized by the State of California. Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and
judgments, are recorded only when payment is due.
Property taxes, sales taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered
to be susceptible to accrual and so 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.
The City reports the following major governmental funds :
General Fund. This fund is the government's primary operating fund. It accounts for all financial resources ofthe general
government, except those required to be accounted for in another fund.
36
B3-74
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page3
Note 1: Summary of Significant Accounting Policies (Continued)
Capital Outlay Fund. This fund was established to account for all of the City's construction projects and capital purchases
in excess of $25,000 with the exception of those funded through non-major capital project funds and Enterprise Funds.
Financing is provided primarily through transfers in from the General Fund, and from State and Federal grants.
Debt Service Fund. This fund was established to account for the payment and accumulation of resources related to
governmental activities long-term debt principal and interest obligations.
The only proprietary funds the City reports are the Enterprise Funds, all of which are major funds. Proprietary Funds are
accounted for on the economic resources measurement focus and the accrual basis of accounting. Under this method,
revenues are recorded when earned and expenses are recorded at the time liabilities are incurred.
Water Fund. This fund accounts for the provision of water services to the residents of the City as well as some customers
in the County. All activities necessary to provide such services are accounted for in this fund, including, but not limited
to, administration, operations, maintenance, capital improvements and debt service.
Sewer Fund. This accounts for the provision of wastewater collection and treatment services to the residents of the City
as well as some customers in the County. All activities necessary to provide such services are accounted for in this fund,
including, but not limited to, administration, operations, maintenance, capital improvements and debt service.
Parking Fund. This fund accounts for activities related to the implementation of the Access and Parking Management
Plan, including the operation of municipal parking lots, parking structures, parking meters and residential parking districts.
All activities necessary to provide such services are accounted for in this fund, including, but not limited to,
administration, operations, maintenance, capital improvements and debt service.
Transit Fund. This fund accounts for the operation and maintenance of the City's transit system. Although user fees are
not the primary funding source for the operation of the system, the State of California and the Federal government, which
provide the major funding sources for the system, require that local transit systems be accounted for on an enterprise fund
basis.
Proprietary funds distinguish operating revenues and expenses from non-operating 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. The principal operating revenues of the enterprise funds are charges to customers
for sales and services. Operating expenses for enterprise 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 non-
operating revenues and expenses.
37
B3-75
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 4
Note 1: Summary of Significant Accounting Policies (Continued)
The City has established thirteen Agency Funds, which are used to account for funds held by the City as an agent for
private individuals, organizations or other governmental agencies. Agency funds are accounted for using the accrual basis
of accounting. Significant Agency Funds include Whale Rock Fund, Boysen Ranch Conservation Easement Fund, and
the General Agency Fund. See page 113 for a complete list of Agency Funds.
Assets, Liabilities, and Net Position or Equity
Cash, Cash Equivalents and Investments. The City pools cash resources of its various funds to facilitate cash
management. Cash in excess of current requirements is invested and reported as investments. It is the City's intent to
hold investments until maturity. However, the City may, in response to market conditions, sell investments prior to
maturity in order to improve the quality, liquidity or yield of the portfolio.
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with
original maturities of three months or less from the date of acquisition. Cash and investments held by fiscal agents are
treated as cash equivalents for purposes of the statement of cash flows.
Highly liquid investments with maturities of one year or less at time of purchase are stated at the amortized cost. All
other investments are stated at fair value. Market value is used as fair value for those investments where market quotations
are readily available.
Receivables and Payables. Activity between funds that are representative oflending/borrowing arrangements outstanding
at the end of the fiscal year are referred to as "due to/from other funds".
All receivables are shown net of any allowance for uncollectible accounts if material. Charges for utility services rendered
but unbilled as of June 30 are accrued and are recognized as revenues.
Prepaids and Inventories. The City has no significant inventories. The cost of any inventoriable item has been recorded
as an expenditure or expense at the time of purchase. Certain payments to vendors reflect costs applicable to future
accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.
Restricted Assets. Certain proceeds of debt financings, as well as resources set aside for their repayment, are classified
as restricted assets on the balance sheet because they are maintained in separate trust bank accounts and their use is limited
by applicable debt covenants. Notes 2 and 7 have additional information on funds held by fiscal agents.
38
B3-76
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 5
Note 1: Summary of Significant Accounting Policies (Continued)
Capital Assets. Capital assets, which include property, plant, equipment and infrastructure assets (such as streets,
sidewalks and bridges), are reported in the applicable governmental or business-type activities columns in the
government-wide financial statements, and in the proprietary funds statement of net position. Capital assets are defined
by the City as assets with an initial, individual cost of more than $25,000. The City does not have any intangible assets.
Detailed information on the City's capital assets can be found in Note 5.
Property, plant and equipment of the City are depreciated using the straight line method over the following estimated
useful lives:
Infrastructure
Buildings and structures
Improvements other than buildings
Equipment
Years
20-100
20-50
10-100
3-21
Compensated Absences. City employees are granted vacation and sick leave in varying amounts. In the event of
termination, employees are reimbursed for the total value of their accumulated vacation days. Employees are reimbursed
for 10% to 30% of the accumulated sick leave only upon retirement and only after at least 10 years of service. In selected
cases, similar accumulated sick leave reimbursements may be available after 20 years of continuous employment. An
employee's estate is reimbursed for 30% of the employee's accumulated sick leave in the event of death while in the City's
employ. A liability for compensated absences is accrued in the government-wide and proprietary funds financial
statements.
Long-Term Obligations. In the government-wide financial statements, and proprietary funds in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental
activities, business-type activities, or proprietary funds statement of net position. Bond premiums and discounts and
deferred amounts on refunding are deferred and amortized over the life of the bonds. Deferred amounts on refunding are
reported separately from assets and liabilities in the Statement of Net Position. Bonds payable are reported net of the
applicable bond premium or discount. Bond issuance costs are expensed as incurred.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond
issuance costs, during the period they originate. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are
reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
39
B3-77
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 6
Note 1: Summary of Significant Accounting Policies (Continued)
Fund Equity. In the fund financial statements, fund balance for governmental funds is reported in classifications that
comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purpose
for which amounts in the funds can be spent. Fund balance is reported in five components in accordance with GASB
Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions -nonspendable, restricted,
committed, assigned and unassigned. The City Council may take action via minute order to add, delete or amend a fund
balance commitment that is not required as a condition of a bond covenant or other external, legal requirement.
Nonspendable. This component includes amounts that cannot be spent because they are either (a) not in spendable form
or (b) legally or contractually required to be maintained intact.
Restricted. This component consists of amounts that have constraints placed on them either externally by third-parties
(creditors, grantors, contributors, or laws or regulations of other governments) or by law through constitutional provisions
or enabling legislation. Enabling legislation authorizes the City to assess, levy, charge or otherwise mandate payment of
resources (from external resource providers) and includes legally enforceable requirements (compelled by external
parties) that those resources be used only for the specific purposes stipulated in the legislation.
Committed. This component consists of amounts that can only be used for specific purposes pursuant to constraints
imposed by minute order authorized by the City Council. Also included in this component are encumbrances which
represent legal and binding obligations for the acquisition of future goods and services. Those committed amounts
established by minute order cannot be used for any other purpose unless the City Council adopts a new minute order so
directing. With respect to encumbered amounts, the City may take steps to cancel the order for goods or services and
thereby terminate the obligation.
Assigned. This component consists of amounts that are constrained by the City's intent to be used for specific purposes,
but are neither restricted nor committed. The City Manager or Director of Finance are authorized to assign amounts to a
specific purpose. Constraints imposed on the use of assigned amounts can be removed with no formal Council actions.
Unassigned. This classification represents amounts that have not been restricted, committed or assigned to specific
purposes.
Fund Balance Spending Practice. The City follows a practice in which restricted, committed, assigned, and unassigned
fund balances are spent when more than one amount is available for a specific purpose. When both restricted and
unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted
resources (committed, assigned and unassigned) as they are needed. When unrestricted resources (committed, assigned
and unassigned) are available for use, it is the City's policy to use committed resources first, then assigned, and then
unassigned as they are needed.
40
B3-78
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 7
Note 1: Summary of Significant Accounting Policies (Continued)
Budgets and Budgetary Accounting
Overview. The City has received national recognition for its use of a two-year Financial Plan and budgetary process that
emphasizes long-range planning and effective program management. Significant features of the City's two-year Financial
Plan include the integration of Council goal-setting into the budgetary process and the extensive use of formal policies
and measurable objectives. The Financial Plan includes operating budgets for two years and a capital improvement plan
(CIP) covering five years.
Under this multi-year approach, appropriations continue to be made annually; however, the Financial Plan is the
foundation for preparing the budget for the second year. Additionally, unexpended operating appropriations from the first
year may be carried over for specific purposes into the second year with the approval of the City Manager.
Management Policies. The overall goal of the City's Financial Plan is to link what the City wants to accomplish over the
next two years with the resources required to do so. Formal statements of budgetary policies and major objectives provide
the foundation for achieving this goal. Key budget principles include: maintaining fund balances at levels which will
protect the City from future uncertainties; estimating revenues at realistic levels; making current expenditures with current
revenues; maintaining the City's traditional commitment to a strong General Fund; and complying with provisions of the
State constitution, City charter, municipal code, and sound fiscal policy. Key revenue policies include: maintaining a
diversified and stable revenue base; setting enterprise fund rates at levels that fully recover the total cost of providing
services in the Water, Sewer and Parking Funds; and at policy levels for cost recovery in the Transit Fund; charging fees
for General Fund programs in accordance with adopted user fee cost recovery goals; and ensuring that new development
pays its fair share of the cost of constructing necessary community facilities.
• Budget Process. The City Manager is responsible for preparing the budget and submitting it to the Council for
approval. Although specific steps will vary from year to year, the following is an overview of the general
approach used under the City's two-year budgetary process:
• First Year. The Financial Plan process begins with City Council goal-setting to determine major objectives to
be accomplished over the next two years. As part of this process, community groups, interested individuals, and
Council advisory bodies present their recommendations to the Council. Goals approved by the City Council are
incorporated into the budget instructions issued to the operating departments, who are responsible for submitting
initial budget proposals. After these proposals are comprehensively reviewed and a detailed financial forecast
is prepared, the City Manager issues the Preliminary Financial Plan for public comment. A series of study
sessions and public hearings are then held leading to Council adoption of the Financial Plan and Budget prior to
the start of the fiscal year.
41
B3-79
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 8
Note 1: Summary of Significant Accounting Policies (Continued)
• Second Year. Before the beginning of the second year of the two-year cycle, the Council reviews the progress
during the first year, makes adjustments as necessary and approves appropriations for the second fiscal year.
Unspent operating appropriations from the first year may be carried over for specific purposes into the second
year with the approval of the City Manager. Unspent and unencumbered operating appropriations lapse at the
end of the second year. The fiscal year which ended June 30, 2014 was the first year of the 2013-15 two-year
cycle.
• Mid-Year Reviews. The Council formally reviews the City's financial condition and amends appropriations, if
necessary, each February.
• Status Reports. Financial reports are prepared monthly to monitor the City's fiscal condition; more formal
reports are issued to the Council and Uepartment Heads on a quarterly basis. Additionaiiy, more focused reports
are issued on key revenues, such as sales tax, transient occupancy tax and quarterly reports on investments. The
status of major goals and program objectives, including CIP projects, are also formally reported to the Council
on an ongoing basis.
Accounting and Budget Administration. Budgets are prepared for each fund in accordance with its respective basis of
accounting consistent with U.S. Generally Accepted Accounting Principles (GAAP). All governmental funds have legally
adopted budgets annually. While budgets are prepared for the City's capital projects funds, the capital projects generally
span more than one year and are effectively controlled at the project level; accordingly, budgetary comparisons are not
presented in the accompanying other supplementary information following the basic financial statements.
As provided under the City Charter, the Council may amend or supplement the budget at any time after its adoption by
majority vote of the Council members. The legal level of budgetary control-the level at which expenditures are not to
exceed appropriations -is the fund level.
For management control purposes, the City Manager has the authority to make or approve administrative adjustments to
the budget as long as those changes will not have a significant policy impact nor affect budgeted year-end fund balances.
Department heads have the authority to transfer line-item budgets within the department within a fund. During fiscal year
2014 several supplemental budget appropriations were made to reflect the inclusion of costs related to prior year
encumbered amounts as well as the rollover of unspent capital appropriations. Additional appropriations were added to
fund a prepayment made to the retirement system as well as to provide additional resources for the Community
Development Department to ensure that it maintained a development review process that complied with State law in light
of the increased demand for services. These adjustments were material when compared to the original appropriations.
Both the original and final amended budgets of the general fund are presented as required supplementary information
following the notes to the financial statements. Budget information for non-major governmental funds with annual
budgets is presented in other supplementary information following the notes to the financial statements.
42
B3-80
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 9
Note 1: Summary of Significant Accounting Policies (Continued)
Encumbrances. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the
expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an
extension of formal budgetary integration in the governmental funds. Encumbrances outstanding at the end of the year
are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Amounts encumbered
at year end are re-appropriated in the following year.
Indirect Cost Reimbursement. All of the City's general government and engineering programs are accounted and
budgeted for in the General Fund. However, some of these support service programs also benefit the City's enterprise
and agency fund operations, and accordingly, transfers are made from these funds to reimburse the General Fund for these
services. The transfers are based on a Central Service Cost Allocation Plan prepared for this purpose, which distributes
these shared costs in a uniform, consistent manner in accordance with GAAP.
Note 2: Cash and Investments
The City follows the practice of pooling cash and investments for all funds under its direct daily control. Funds held by
outside fiscal agents under provisions of bond indentures are maintained separately.
Interest earned on pooled cash and investments is allocated quarterly to the various funds based on the respective fund's
average quarterly cash balance. Interest earned from cash and investments with fiscal agents is credited directly to such
funds.
Investments
The City is authorized by its investment policy, in accordance with Section 53601 ofthe California Government Code, to
invest in the following instruments:
• Treasury bills and notes
• Government Sponsored Enterprises
• Commercial paper
• Repurchase agreements
• Bankers' acceptances
• Corporate medium-term notes
• Negotiable certificates of deposit
• Collateralized bank deposits
• Money market mutual funds
• State Local Agency Investment Fund (LAIF)
43
B3-81
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 10
Note 2: Cash and Investments (Continued)
Investments are stated at fair value, based on quoted market prices, except for discount notes which are stated at amortized
cost which approximates fair value, in accordance with GASB standards. Investment income has been adjusted to reflect
any unrealized gains and losses resulting from the fair value adjustment annually. While U.S. generally accepted
accounting principles require recording any increases or decreases in the market value of the City's investments, it is the
City's policy to make all investment decisions based on holding them through maturity, and therefore the City may not
realize the gains or losses resulting from the fair value adjustment. As such, changes in market value generally do not
affect the long-term results of the portfolio, but they can result in significant fluctuations from year-to-year.
The fair value of the City's position in the State LAIF pool is the same as the value of the pool shares. The State LAIF
pool credit quality is unrated. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five
members, in accordance with State statute. The State Treasurer's Office audits the fund annually.
Funds with Fiscal Agent
The City has monies held by trustees or fiscal agents pledged to the payment or security of certain bonds. The California
Government Code provides that these funds, in the absence of specific statutory provisions governing the issuance of
bonds, may be invested in accordance with the ordinance, resolutions, or indentures specifying the types of investments
its trustees or fiscal agents may make. These ordinances, resolutions, or indentures are generally more restrictive than the
City's general investment policy . In no instance have additional types of investments been authorized which are not
permitted by the City's investment policy.
Cash and investments at June 30, 2014 consisted of the following:
Fair Percent of
Cash and Investments : Value Portfolio
Cash and Cash Equivalents $ 3,782,085 4.13%
State Local Agency Investment Fund 35,184,297 38.41%
U.S. Treasury Securities 12,592,945 13.75%
U.S. Government-Sponsored Enterprise
Agency Securities 29,481,642 32.19%
Guaranteed Investment Contracts 2,036,161 2.22%
U.S. Corporate Bonds 6,706,677 7.32%
Collateralized Certificates of Deposit 1,000,000 1.09%
Money Market Funds 806,809 0.88%
Total Cash and Investments $ 91,590,616 100%
44
B3-82
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 11
Note 2: Cash and Investments (Continued)
Cash and investments are reflected in the financial statements as follows:
Governmental Enterprise
Funds Funds
Cash and cash equivalents $ 2,093,220 $ 2,172,408
Investments 28,864,957 51,412,535
Cash and investments held by fiscal agents 4,798,517 2,248,979
Total Cash and Investments $ 35,756,694 $ 55,833,922
Total
$ 4,265,628
80,277,492
7,047,496
$ 91,590,616
Cash and cash equivalents of $4,265,628 differ from that shown in the previous table ($3,782,085) due to the
reclassification of the negative cash allocation in several funds (including CDBG Fund, Law Enforcement Grant Fund,
and the General CIP Grant Fund) to accounts payable for financial statement purposes. The negative cash allocation is
the result of timing differences between the receipt of revenue, the payment of expenses and the investment activity within
the funds, but does not indicate any cash or investment accounts held are negative as of June 30, 2014.
Custodial Credit Risk-Deposits with Financial Institutions. The custodial credit risk for deposits is the risk that, in the
event of the failure of a depository financial institution, the City will not be able to recover deposits. Deposits with
financial institutions, including certificates of deposit, totaling $5,761,336 at June 30, 2014 were insured or collateralized
with securities held by the pledging financial institution's trust department or agent in the City's name.
The California Government Code requires California financial institutions to secure the City's deposits by pledging
government securities as collateral. The market value of the pledged securities must equal 110% of the City's deposits.
California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes equal
to 150% of the City's deposits or letters of credit issued by the Federal Home Loan Bank of San Francisco having a value
of 105% in excess of the total amount of deposits.
Custodial Credit Risk-Investments. This is the risk that in the event of the failure of a counterparty, the City will not
be able to recover the value of its investments that are in the possession of an outside party. All of the City's investments
in securities are insured or registered and held by a counterparty in the City's name in accordance with the City's policies.
Interest Rate Risk. This is the risk that the market value of securities in the portfolio will fall due to changes in general
interest rates. In accordance with its policies in the Investment Management Plan, the City mitigates interest rate risk by:
• Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations,
thereby avoiding the need to sell securities on the open market before maturity.
• Investing operating funds primarily in shorter-term securities.
45
B3-83
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 12
Note 2: Cash and Investments (Continued)
The City's investment policy also includes portfolio maturity targets. A minimum of20% of the portfolio will be invested
in securities maturing in one year or less. Up to 80% of the portfolio can be invested in securities with a maturity over
one year, with no more than 10% of the portfolio invested in securities with a maturity over five years.
Maturities using the segmented time distribution method for those investments requiring this disclosure are as follows:
Fair Less Than One Month to One to Five Over Five
Value One Month One Year Years Years
U.S. Treasury Securities $ 12,592,945 $ $10,922,995 $ 1,144,730 $ 525,220
U .S. Government-Sponsored
Enterprise Agency Securities 29,481,642 29,481,642
Certificates of Deposit 1,000,000 1,000,000
Guaranteed Investment Contract 2,036,161 2,036,161
U.S. Corporate Bonds 6,706,677 6,706,677
State LAIF 35,184,297 35,184,297
Money Market Funds 806,809 806,809
Total Maturities $ 87,808,531 $35,991,106 $11,922,995 $ 37,333,049 $ 2,561,381
fnvestments held by fiscal agents are structured with maturity dates that correspond to the payment of final debt service
of the respective bond indenture.
Credit Risk. This is the risk of loss due to the failure of the security issuer or backer. The City's policies to mitigate
credit risk include:
• Limiting investments to the safest types of securities . As noted above, the California Government Code limits
the investment vehicles available to local agencies . The credit risk of these securities is measured by the
assignment of a rating by a nationally recognized statistical rating organization. The table below presents the
rating for each investment type as provided by Standard & Poor's except as noted.
• Pre-qualifying the financial institutions, broker/dealers, intermediaries and advisors with which the City will do
business.
46
B3-84
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 13
Note 2: Cash and Investments (Continued)
The following table identifies the Standard & Poor's credit quality ratings for those investments requiring this disclosure
as of June 30, 2014:
Fair Value AAA AA+ AA AA-Not Rated
Investments:
U.S. Treasury Securities $ 12,592,945 $ $ $ $ $12,592,945
U.S. Government-Sponsored
Enterprise Agency Securities 29,481,642 29,481,642
Certificates of Deposit 1,000,000 1,000,000
Guaranteed Investment Contracts 2,036,161 2,036,161
U.S. Corporate Bonds 6,706,677 1,309,949 1,803,160 2,663,564 930,004
State LAIF 35,184,297 35,184,297
Money Market Funds 806,809 806,809
Total $ 87,808,531 $ 1,309,949 $31,284,802 $ 2,663,564 $ 930,004 $51,620,212
U.S. Treasury securities are exempt from credit rating disclosures.
Concentration Credit Risk. The City's policies contained in the Investment Management Plan provide guidelines (by
type of investment that limits either the dollar amount, the percent of the portfolio or the maturity term) for diversifYing
the investment portfolio so that potential losses on individual securities will be minimized.
The City's Investment Management Plan outlines the following criteria related to portfolio diversification :
• No more than 5% of the City's portfolio (exclusive of government agency issues or LAIF) shall be placed with
any financial institution.
• No more than 25% of the City's portfolio shall be invested in collateralized certificates of deposit issued by
financial institutions.
• Certificates of deposit (negotiable and collateralized) placed by the City shall not constitute more than 15% of
the total assets of the institution; and negotiable certificates of deposit will only be placed with institutions with
total assets in excess of $200 million and that maintain a ratio of equity to total assets of at least 5%.
47
B3-85
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 14
Note 2: Cash and Investments (Continued)
Investments that exceed 5% of the portfolio by issuer are summarized below:
Federal Home Loan Bank
Federal National Mortgage Association
Federal Home Loan Mortgage Corp
Federal Farm Credit Bank
Fair Value
$ 6,559,584
7,401,578
7,818,837
6,609,219
Percent of
Portfolio
7.47%
8.43%
8.90%
7.53%
These U.S. government-sponsored enterprise agency securities are not explicitly guaranteed by the U.S. government.
Approximately 14% of the City's portfolio is comprised of U.S. Treasury securities, which are exempt from this
disclosure.
Foreign Currency Risk. The City does not hold any investment that is based foreign currency exchange rates.
Note 3: Property Taxes
Property taxes in the State of California (State) are administered for all local agencies at the county level, and consist of
secured, unsecured and utility tax rolls. The following is a summary of major policies and practices relating to property
taxes:
• Property Valuation. Valuations are established by the Assessor of the County of San Luis Obispo (County) for
the secured and unsecured property tax rolls; the utility property tax roll is valued by the State Board of
Equalization. Under the provisions of Article XIIIA of the State Constitution (Proposition 13 adopted by the
voters on June 6, 1978), properties are assessed at 100% of full value. Proposition 13 also modified the value of
taxable real property for fiscal 1979 by rolling back values to fiscal 1976 levels. From this base of assessment,
subsequent annual increases in valuation are limited to a maximum of2%. However, increases to full value are
allowed for property improvements or upon change in ownership. Personal property is excluded from these
limitations and is subject to annual reappraisal.
• Tax Levies. Under the provisions of Proposition 13, the County wide tax levy for general revenue purposes is
limited to 1% of full market value, which results in a tax rate of $1.00 per $100 assessed valuation. Tax rates
for voter approved indebtedness are excluded from this limitation.
• Tax Levy Dates. All lien dates attach annually on January 1 preceding the fiscal year for which the taxes are
levied. The fiscal year begins July 1 and ends June 30 of the following year. Taxes are levied on both real and
unsecured personal property as it exists at that time. The lien against real estate as well as the tax on personal
property is not relieved by subsequent renewal or change in ownership.
48
B3-86
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 15
Note 3: Property Taxes (Continued)
• Tax Collections. The County Treasurer/Tax Collector is responsible for all property tax collections. Taxes and
assessments on the secured and utility rolls, which constitute a lien against the property, may be paid in two
installments: the first installment is due on November 1 of the fiscal year and is delinquent if not paid by
December 1 0; and the second installment is due on March 1 of the fiscal year and is delinquent if not paid by
April 10. Unsecured personal property taxes do not constitute a lien against real property. However, if the taxes
become delinquent the lien is attached against anything the individual owns, which could include real property.
Payment must be made in one installment, which is delinquent if not paid by August 31 of the fiscal year.
Significant penalties are imposed by the County for late payments.
• Teeter Plan. In 1993-94 the City elected to receive property tax revenue in accordance with the alternative
method of distribution prescribed by Sections 4701-4717 of the California Revenue and Taxation Code, which
is commonly known as the "Teeter Plan" whereby the County remits 100% of taxes levied without regard to
delinquencies. The County then pursues collection, retaining any delinquent taxes and related penalties and
interest.
• Tax Levy Apportionments. Due to the nature of the County wide maximum levy, it is not possible to identifY
general purpose tax rates for specific entities. Under State legislation adopted subsequent to the passage of
Proposition 13, apportionments to local agencies are made by the County Auditor Controller based primarily on
two factors: the ratio that each agency represented ofthe total County wide levy for the three years prior to fiscal
1979; and subsequent adjustments to these apportionments and transfers to the "Educational Revenue
Augmentation Fund" (ERAF) as determined by the State.
• City Property Tax Distribution Policy. Property taxes are recorded in the General Fund as general purpose
revenue. Transfers are made from the General Fund as needed to support expenditures in the Capital Outlay,
Open Space Protection, Fleet Replacement, Information Technology Replacement, Major Facility Replacement
and Debt Service Funds. Property taxes receivable at June 30, 2014 have been accrued since they will be
collected within 60 days subsequent to year-end.
49
B3-87
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 16
Note 4: Due from Other Governments
The following is a summary of amounts due to the City from other governmental agencies:
General Fund
Capital Outlay Fund
Other Governmental Funds
Enterprise Funds
Water Fund
Sewer Fund
Transit Fund
Total
Note 5: Capital Assets
County of San
Luis ObisEo
$ 377,954 $
118,200
474,453
$ 970,607 $
State of
California Other Asencies Total
3,363,801 $ 211,643 $3,953,398
355,129 362,972 718,101
201,981 320,181
71,622 71,622
59,888 59,888
1,292,819 1,767,272
4,052,421 $ 1,867,434 $6,890,462
GASB standards require that the City report in the government-wide statements the value of all capital assets net of
accumulated depreciation, including infrastructure assets, in accordance with GAAP. Infrastructure assets are defined as
long-lived capital assets that are stationary in nature and normally can be preserved for a significantly greater number of
years than most capital assets.
The minimum requirement for compliance with GASB standards is to provide infrastructure valuations for all assets
constructed, acquired, or placed into service on or after July 1, 1980. Relevant assets for the City were valued at one of
two dates: I) the original date of construction, if available, or 2) the incorporation date of the City. Each asset was reviewed
to determine the adequacy of the data to value the asset prior to July 1, 1980 using historical cost or estimated historical
cost.
50
B3-88
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 17
Note 5: Capital Assets (Continued)
Capital assets activity for the fiscal year ended June 30, 2014 was as follows:
Balance Balance
June 30, 2013 Increases Decreases June 30, 2014
Governmental activities:
Capital assets not being depreciated:
Land $ 32,043,900 $ $ $ 32,043,900
Construction in progress 8,738,300 4,560,655 (1,098,325) 12,200,630
Public art 646,600 646,600
Total capital assets not
being depreciated 41,428,800 4,560,655 (1 ,098,325) 44,891,130
Capital assets being depreciated:
Infrastructure 140,610,700 2,200,070 142,810,770
Accum. Depreciation ( 41 ,622,200) (3,228,003) ( 44,850,203)
Buildings and improvements 35,140,800 217,024 35,357,824
Accum. Depreciation (15,126,300) (869, 134) (15,995,434)
Equipment 21,941,617 918,255 (435,074) 22,424,798
Accum. Depreciation (14,318,851) (I ,324,649) 376,226 (15,267,274)
Total capital assets being
depreciated, net 126,625,766 (2,086,437) (58,848) 124,480,481
Governmental activities,
capital assets, net 168,054,566 2,474,218 p,l57,173) 169,371,611
Business-type activities:
Capital assets not being depreciated:
Land 8,607,177 8,607,177
Construction in progress 3,730,227 5,379,967 (529,979) 8,580,215
Public art 74,100 74,100
Total capital assets not
being depreciated 12,411,504 5,379,967 (529,979) 17,261,492
Capital assets being depreciated:
Infrastructure 195,850,244 1,430,687 197,280,931
Accum. Depreciation (60,749,300) ( 4,506,191) (65,255,491)
Buildings and improvements 30,052,496 30,052,496
Accum. Depreciation (10,461,900) (625,360) (11,087,260)
Equipment 16,310,172 583,452 (1,037,928) 15,855,696
Accum. Depreciation (8,957,541) (1,135,915) 986,323 (9,107,133)
Total capital assets being
depreciated, net 162,044,171 ~ 4,253,327) ~51,6052 157,739,239
Business-type activities,
capital assets, net 174,455,675 1,126,640 (581,584) 175,000,731
Total Government-wide $ 342,510,241 $ 3,600,858 $ (1,738,757) $ 344,372,342
51
B3-89
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 18
Note 5: Capital Assets (Continued)
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
Public safety
Transportation
Leisure, cultural and social services
Community development
General government
Total depreciation -governmental activities
Business-type activities:
Water
Sewer
Parking
Transit
Total depreciation -business-type activities
Total Government-wide
Note 6: Employee Retirement Benefits
$
$
758,441
3,022,225
719,375
1,194
920,551
5,421,786
2,716,681
2,037,021
628,586
885,178
6,267,466
11,689,252
California Public Employees' Retirement System (CalPERS)
Plan Description. The City contributes to the California Public Employees' Retirement System (CaiPERS), which
provides agent multiple-employer public employee defined benefit pension plans and cost-sharing multiple employer
defined benefit pension plans. CaiPERS provides retirement and disability benefits, annual cost-of-living adjustments,
and death benefits to plan members and beneficiaries. CaiPERS acts as a common investment and administrative agent
for participating public entities within the State of California. Benefit provision and all other requirements are established
by State statute and City ordinance. Copies of CaiPERS' annual financial report may be obtained from their Executive
Office, 400 P Street, Sacramento, CA 95814.
The City maintains separate retirement benefit programs for safety employees (sworn police and firefighters) and
miscellaneous employees (all other eligible employees). For both programs, benefits vest after five years of service. City
employees who retire after vesting are entitled to an annual retirement benefit, payable for life, in an amount equal to a
fixed percentage of their highest annual salary as determined by the benefit program they participate in.
Effective July 1, 2007, the City's Safety Employee Plan (sworn police and fire employees) became a member of the
CaiPERS Safety 3% at 50 Risk Pool. CaiPERS' regulations require that public agency plans with less than 100 active
members participate in a risk pool which meets the requirements for a cost-sharing multiple employer defined benefit
pension plan. In the past, the City's Safety Employee Plan had more than 100 members and as such was a stand-alone
plan. After joining a risk pool, a plan cannot at a future date request to leave the risk pool structure and become a stand-
alone plan. Therefore, even ifthe City were to exceed 100 active members in the future, the Safety Employee Plan will
52
B3-90
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 19
Note 6: Employee Retirement Benefits (Continued)
remain in the risk pool. As a member of the risk pool, the City receives specific information on its plan, which is reflected
in the tables that appear later in this footnote.
Within each retirement program, there are three benefit tier programs described below :
• For employees who retire from the first tier benefit program, the service retirement benefit for public safety is
capped at 90% of final compensation. There is no cap on retirement benefits for miscellaneous employees.
• The second tier benefit program provides a lower level of retirement benefits than the first tier benefit program.
Employees hired after August 30, 2012 (sworn fire personnel) and after December 6, 2012 (miscellaneous and
sworn police safety personnel) who meet eligibility requirements, are enrolled in the second tier benefit program.
• The third tier benefit program was implemented in January 2013 following the passage of AB 340 by the
California Legislature. Employees hired after December 31, 2012 who were not previously enrolled in the
CalPERS system elsewhere or who have had a break in service of at least 6 months are required to be enrolled
in this retirement program which provides a benefit level that is lower than the first two tiers.
Funding Policy. Unless otherwise noted, the following table information is presented for all of the retirement programs
maintained by the City with CalPERS. Through December 2011, the City made the contributions required of City
employees on their behalf and for their account (except for the Fire Battalion Chiefs and sworn Police Officers, who paid
the 9% member contribution; non-sworn police members who paid the 8% member contribution). Beginning in January
2012, unrepresented management personnel began contributing the 8% or 9% full member contribution as appropriate.
Subsequent negotiations with bargaining units resulted in agreements that resulted in the remaining employees paying the
full member contributions. As of January 2014, members ofthe Police Officers Association are also paying 3% of the
City's share of the annual required contribution.
For the year ended June 30, 2014, the City's actuarially determined employer contribution rate was 24.684% of annual
covered payroll for miscellaneous employees. This employer contribution rate represents a composite value provided by
CalPERS for all three of the miscellaneous program's benefit programs. For the safety program's first tier benefits, the
employer contribution rate was 42.163% The employer rates for the second tier safety benefit program were 22.502%
(Fire) and 21.303% (Police). The contribution requirements of plan members and the City are established and may be
amended by CalPERS. The following table provides the three year employer contribution rates when applicable, for the
City's retirement programs, as taken from the applicable CalPERS Valuation Report.
53
B3-91
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 20
Note 6: Employee Retirement Benefits (Continued)
Retirement Program/Tier
First Tier Second Tier
Fiscal Year Miscellaneous Safety Police Fire
6/30/2012 21.966% 38.901% n/a n/a
6/30/2013 23.154% 39.910% 20.560% 21.802%
6/30/2014 24.684% 42.163% 21.303% 22.502%
Third Tier
Police
n/a
n/a
12.250%
Fire
n/a
n/a
12.250%
Annual Pension Cost. For the year ended June 30, 2014, the City's annual required contributions for CaiPERS was
$4,528,325 for miscellaneous employees and $4,152,103 for all safety employees, which were equal to the City's annual
expense and the ARC. The ARC was determined as part of the actuarial valuation dated June 30, 2011 using the entry
age normal actuarial cost method. CaiPERS indicates that the lag time in reporting is necessary due to the amount of time
needed for them to extract and test the membership and financial data, and due to the need to provide public agencies with
their employer contribution rates well in advance of the start of the fiscal year for budgeting purposes.
The actuarial assumptions included: (a) 7.5% investment rate of return (net of administrative expenses); (b) projected
salary increases that vary by duration of service ranging from 3.3% to 14.2% for both miscellaneous and safety members;
and (c) an inflation factor of 2.75% compounded annually; and (d) 2.0% annual cost-of-living adjustments for
miscellaneous and safety members. No other post-retirement assumptions are included.
The actuarial values of the miscellaneous and safety plans' assets were determined using a technique that smoothes the
effect of short-term volatility in the market value of investments over a fifteen year period. The unfunded actuarial
accrued liability (or surplus) is amortized as a level percentage of projected payrolls on a closed basis. As shown in the
June 30, 2013 valuation report, the unfunded liability for both plans is comprised of several amounts or bases. For the
Safety Plan these include the side fund and the plan's share of the pre-2013 pool unfunded liability. These amounts are
amortized over 21 years and 22 years respectively. The unfunded liability of the Miscellaneous Plan is comprised of the
liability related to benefits changes and changes in actuarial assumptions. These are amortized over 10 years and 16 years
respectively. For both plans, the liability attributed to asset gains and losses is amortized over a 30 year period. These
changes in the amortization methods and period are based on the April 17, 2013 action taken by the CalPERS Board of
Administration. In addition, the CalPERS board approved changes in actuarial assumptions regarding retiree mortality
which will have an effect on employer rates starting in 2016-17. The CaiPERS board caused all public safety pools to
merge into one pool while also changing the allocation of the pool's unfunded liability so that it will be based on each
member agency's share of the total pool liability rather than the member's share of the total payroll of the pool. Finally,
the board approved a change in funding the unfunded liability by creating a fixed charge that must be paid by the member
agency to replace an amount that is determined by a charge against the member's payroll expense starting in 2015-16.
54
B3-92
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 21
Note 6: Employee Retirement Benefits (Continued)
The following table provides the amount of annual contributions made to each of the retirement plans for the three fiscal
years ending on June 30,2012,2013, and 2014.
Annual Pension Cost %of APC Net Pension
Fiscal Year (APC) Contributed Obli~ation
Safety Employee Plan (all employees):
6/30/2012 $ 4,226,700 100%
6/30/2013 4,609,500 100%
6/30/2014 4, 152,103 100%
Miscellaneous Employee Plan (all employees):
6/30/2012 $ 4,202,200 100%
6/30/2013 4,136,700 100%
6/30/2014 4,528,325 100%
Funded Status and Funding Progress. The City has chosen to provide the following table which provides the funded
status of the 3% at 50 Risk Pool based on the City's share of the Pool's unfunded liability and the miscellaneous retirement
program as of June 30, 2013, the plan's most recent actuarial valuation date. The information shown below is based on
the market value of assets as of June 30, 2013.
First Tier Benefit Plans Only (amounts in thousands)
Actuarial accured liability (AAL)
Market value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio (actuarial value ofplan assets/AAL)
Covered payroll (active Plan members)
UAAL as a percentage of covered payroll
3% at 50 Safety
Risk Pool
$ 154,746
100,910
53,836
65.2%
9,981
539.4%
Miscellaneous
Employee Plan
$ 163,765
101,989
61,776
62.3%
18,676
330.8%
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 future employment, mortality,
and pension cost trends. 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, included in required supplementary information following the notes to the financial
statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liabilities for benefits.
55
B3-93
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 22
Note 6: Employee Retirement Benefits (Continued)
Other Post-Employment Benefits (OPEB)
The City's primary OPEB cost obligation is for retiree health benefits under the election to participate in the California
Public Employees' Retirement System (CalPERS) Health Benefit Program, an agent multiple-employer defined benefit
OPEB plan, under the "unequal contribution option." The City entered the CalPERS medical insurance program in 1993
under the Public Employees' Medical and Hospital Care Act (PEMHCA). The required employer contribution was
$119.00 per month in 2013-14. Retirees pay the differential monthly amount of the premium, which varies depending on
the health benefits they select.
Additionally , the City has established certain post-retirement health care benefits available to executive management
employees appointed prior to August 2000. For 6 former employees, the City contributes to the cost of the retiree health
insurance premiums if they elect to remain members of the City's group health plan. This provision ceases upon the death
of the employee or upon the retired employee reaching age 65 .
During the fiscal year ended June 30,2009, the City entered into an agreement with California Employers' Retiree Benefit
Trust (CERBT) to pre-fund the City's OPEB liability.
Funding Policy. The contribution requirements of the plan members and the City are established and may be amended
by the City . The City prefunds the plan through CERBT by contributing at least 100% of the annual required contribution.
The annual required contribution (ARC) is an amount actuarially determined in accordance with the parameters ofGASB
standards. The City's ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal
cost each year and amortize the unfunded actuarial liability over a period of30 years. The ARC for 2013-14 was $576,000.
For fiscal year 2013-14, the City contributed $576,000 to the Plan, which fully funded the ARC. The City paid $254,600
to the CalPERS Health Benefit Program and retirees during the year and $321,400 to the CERBT.
CERBT is a tax-qualified irrevocable trust organized under Internal Revenue Code Section 115 and established to pre-
fund retiree healthcare benefits . CERBT issues a publicly available financial report including GASB disclosure
information in aggregate with other CERBT participating employers. That report may be obtained by contacting
CalPERS, 400 P Street, Sacramento, CA 95814.
Annual OPEB Cost and Net OPEB Obligation. For the fiscal year ended June 30, 2014, the City's annual OPEB cost
(expense) of$576,000 was equal to the annual required contribution.
56
B3-94
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 23
Note 6: Employee Retirement Benefits (Continued)
The City's Annual OPEB Cost, the percentage of Annual OPEB Cost contributed to the Plan (as described in the funding
policy above) and the Net OPEB Obligation for fiscal years 2012-13 and 2013-14 is as follows:
Fiscal Year Annual Percentage of Annual NetOPEB
Ended OPEB Cost OPEB Cost Contributed ObliBation
6/30/2014 $ 576,000 100%
6/30/2013 558,000 100%
6/30/2012 536,000 100%
Funded Status and Funding Progress. The funded status of the plan as ofJune 30,2013, the plan's most recent actuarial
valuation date, was as follows:
Actuarial accured liability (AAL)
Actuartial value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio (actuarial value of plan assets/AAL)
Covered payroll (active Plan members)
UAAL as a percentage of covered payroll
$ 6,954,000
2,527,000
4,427,000
36.3%
27,163,000
16.3%
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 future employment, mortality,
and the healthcare cost trend. 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 is presented as required supplementary information following the notes to the financial
statements. The schedule presents multiyear trend information about whether the actuarial value of Plan assets is
increasing or decreasing over time relative to the actuarial accrued liability for benefits, and will include additional years
in the future as information becomes available.
Actuarial Methods and Assumptions. 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 plan members to 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.
57
B3-95
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 24
Note 6: Employee Retirement Benefits (Continued)
In the June 30, 2013 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions
included a 7.00% investment rate of return (net of administrative expenses), which is below the expected 7.61% long-
term investment return on CERBT investments and a 3% inflation assumption. The projected health care cost trend rates
range from 8-8.3% for 2015 down to 5% after 2021. The actuarial value of assets (A VA) at June 30, 2014 were projected
to be less than market value (MV A) ($3,083,000 AVA vs. $3,351,000 MV A). The unfunded actuarial accrued liability
(UAAL) is being amortized over 30 years based on a level percentage of payroll. The remaining amortization period at
June 30,2014 was 24 years.
Note 7: Long-Term Debt
Summary of Long-Term Debt
The following is a summary of the City's long-term debt transactions for the year ended June 30,2014:
Balance Balance Due Within
June 30, 2013 Additions Deductions June 30, 2014 One Year
Governmental activities:
Revenue bonds $23,574,900 $ $ (I ,422,890) $ 22,152,010 $ I, 175,295
Unamortized bond premium 414,225 (23,064) 391,I61
Lease-purchase financing 823,400 (111,778) 711,622 116,778
Claims and liabilities 2,025,100 346,419 2,371,519 429,500
Compensated absences 2,537,600 1,984,265 (2,056,617) 2,465,248 1,056,353
Conservation Loan 850,775 850,775 84,683
Total long-term debt,
governmental activities $29,375,225 $ 3,181,459 $ (3,614,349) $ 28,942,335 $ 2,862,609
Business-type activities:
Revenue bonds $28,625,150 $ $ (I ,542, II 0) $ 27,083,040 $ 1,099,705
Unamortized bond premium 676,748 (69,905) 606,843
Loans 20,309,200 (862,254) 19,446,946 886,933
Installment sale agreements 1,620,000 7,479,000 ( 120,000) 8,979,000 497,958
Compensated absences 595,800 401 ,341 ~434,601~ 562,540 239,011
Total long-term debt,
business-type activities 51,826,898 7,880,341 ~3,028,8702 56,678,369 2,723,607
Total Government-wide $81,202, I23 $II,061,800 $(6,643,2I9) $ 85,620,704 $ 5,586,216
Compensated absences in the governmental funds are generally liquidated by the General Fund on a pay as you go basis.
Total interest incurred during the year ended June 30, 20I4 was $3,313,399 of which $439,000 was capitalized into
construction in progress. See Note I 0 for detail of estimated claims and liabilities.
58
B3-96
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 25
Note 7: Long-Term Debt (Continued)
The San Luis Obispo Capital Improvement Board has entered into a number of lease agreements with the City of San
Luis Obispo wherein the City is obligated to make all debt service payments. The transactions between the Board and
the City have been eliminated from these financial statements.
Governmental Activities Summary:
Revenue Bonds
2005 Revenue Refunding Bonds. In 2005, the Board issued lease revenue refunding bonds in the amount of$6,550,000
to refinance the 1996 lease revenue bonds. The purpose of these bonds was to construct several high priority capital
improvement projects, including the fire station headquarters, seismic safety and HVAC improvements to City Hall,
Mission Plaza expansion, and various properties and street lighting system purchases. The bonds bear interest from 3.4%
to 4.5%, and are due in annual installments on June 1 through June 1, 2026 that range from $195,000 to $565,000. At
June 30, 2014, the principal amount outstanding on the bonds was $4,395,000. The bond indenture agreement specifies
reserve requirements equal to the maximum debt service in any particular year to be held in the Trustee's reserve
funds. The reserve requirement has been met for the year ended June 30, 2014.
2006 Lease Revenue Bonds. In 2006, the Board issued lease revenue bonds in the amount of$16,160,000 to finance the
costs of acquisition and construction of public parking facilities and for purposes of the City's administrative office. Of
the original bond issuance, $7,433,600 was used for financing governmental activities related to this project and the
remainder was used for business-type activities. The bonds bear interest from 4.00% to 4.70%, and are due in annual
installments on June I through June I, 2036 that range from $1I6,100 to $515,700. At June 30, 2014, the principal
amount outstanding that pertains to governmental activities was $6,279,000 of the total $13,650,000 outstanding. The
bond indenture agreement specifies reserve requirements equal to the maximum debt service in any particular year to be
held in the Trustee's reserve funds. The reserve requirement has been met for the year ended June 30, 2014.
2009 Lease Revenue Bonds. In 2009, the Board issued lease revenue bonds in the amount of$10,705,000 to finance the
public safety communications and emergency operations center project. Ofthe original bond issuance, $9,067,135 was
used for financing governmental activities related to this project and the remainder was used for business-type activities.
The bonds bear interest from 3.0% to 5.75%, and are due in annual installments on June I through June 1, 2039 that range
from $355,740 to $563,255. At June 30, 2014, the principal amount outstanding that pertains to governmental activities
was $6,848,010 of the total $8,085,035 outstanding. The bond indenture agreement specifies reserve requirements equal
to the maximum debt service in any particular year to be held in the Trustee's reserve funds. The reserve requirement has
been met for the year ended June 30, 2014.
59
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City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 26
Note 7: Long-Term Debt (Continued)
2012 Refunding Lease Revenue Bonds. In 2012, the Board issued refunding lease revenue bonds in the amount of
$5,050,000 to refinance the outstanding 2001 lease revenue bonds, Series C. The purpose of these bonds is to purchase
property and build athletic fields, purchase property for police station expansion, and purchase Downton Plan properties.
The bonds bear interest from 2.0% to 4.0%, and are due in annual installments on December 1 through December 1, 2029
that range from $210,000 to $390,000. At June 30, 2014, the principal amount outstanding on the bonds was $4,630,000.
The bond indenture agreement specifies reserve requirements equal to the maximum debt service in any particular year
to be held in the Trustee's reserve funds. The reserve requirement has been met for the year ended June 30, 2014.
At June 30, 2014, the aggregate maturities of the aforementioned governmental activities revenue bonds were as
follows:
For the Year Ending June 30, Princi(!ai interest Totai
2015 $ 1,175,295 $ 980,556 $ 2,155,851
2016 1,212,200 938,124 2,150,324
2017 1,246,040 892,622 2,138,662
2018 1,299,115 844,792 2,143,907
2019 1,345,255 793,416 2,138,671
2020-2024 5,109,840 3,277,526 8,387,366
2025-2029 5,038,675 2,099,576 7,138,251
2030-2034 3,398,130 1,113,884 4,512,014
2035-2039 2,327,460 323,476 2,650,936
$ 22,152,010 $ 11,263,972 $ 33,415,982
Lease-Purchase Financing
Fire Apparatus. In 20IO the Board obtained lease-purchase financing in the amount of $I,080,000 to purchase a fire
truck. The gross amount of assets under this lease is $1,047,927 million with accumulated depreciation of $213,909
included in equipment at June 30, 2014. Amortization of the equipment is included in depreciation expense. The lease
agreement bears an interest rate of 2.99% due in annual installments on February I through February I, 2020 that range
from $80,000 to $125,100. At June 30, 20I4 the principal amount outstanding is $695,000.
Police Vehicle. In 2012, the City obtained \ease-purchase financing in the amount of$30,264 to purchase a police vehicle.
The gross amount of assets under this lease is $30,264 with accumulated depreciation of $16, 14I included in equipment
at June 30, 2014. Amortization of the equipment is included in depreciation expense. The note bears an interest rate of
3.89% due in annual installments of$6,778 on October 1 with the remainder due at maturity on October 1, 2015. At June
30, 2014 the principal amount outstanding is $16,622.
60
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City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 27
Note 7: Long-Term Debt (Continued)
At June 30, 2014, the aggregate maturities of the aforementioned governmental activities lease-purchase financing were
as follows:
For the Year Ending June 30, Princi~al Interest Total
2015 $ 116,778 $ 20,781 $ 137,559
2016 116,778 17,492 134,270
2017 118,066 14,203 132,269
2018 115,000 10,764 125,764
2019 120,000 7,326 127,326
2020 125,000 3,738 128 ,738
$ 711,622 $ 74,304 $ 785,926
2014 Energy Sources Conservation State Loan.
In 2014, the City obtained a note in the amount of$850,775. The note bears an interest rate of 1% due in semi-annual
installments on December 22 and June 22 through December 22, 2023 in the amount of $92,242. At June 30, 2014 the
principal amount outstanding is $850,775.
At June 30, 2014, the aggregate maturities of the aforementioned governmental activities conservation loan is as follows :
For the Year Ending June 30, Princi~al Interest Total
2015 $ 84,683 $ 9,559 $ 94,242
2016 86,778 7,465 94,243
2017 87,667 6,575 94,242
2018 88,546 5,696 94,242
2019 89,434 4,809 94,243
2020-2024 413,667 10,423 424,090
$ 850 ,775 $ 44,527 $ 895,302
Business-Type Activities Summary:
Revenue Bonds
2006 Lease Revenue Bonds. In 2006, the Board issued lease revenue bonds in the amount of$16,160,000 to finance the
costs of acquisition and construction of public parking facilities and for purposes ofthe City's administrative office. Of
the original bond issuance, $8,726,400 was used for financing business-type activities related to this project and the
remainder was used for governmental activities. The bonds bear interest from 4.00% to 4.70%, and are due in annual
installments on June 1 through June 1, 2036 that range from $116,100 to $515,700. At June 30, 2014, the principal amount
61
B3-99
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 28
Note 7: Long-Term Debt (Continued)
outstanding that pertains to business-type activities was $7,371,000 of the total $13,650,000 outstanding. The bond
indenture agreement specifies reserve requirements equal to the maximum debt service in any particular year to be held
in the Trustee's reserve funds. The reserve requirement has been met for the year ended June 30, 2014.
2009 Lease Revenue Bonds. In 2009, the Board lease revenue bonds in the amount of$1 0, 705,000 were issued to finance
the public safety communications and emergency operations center project. Of the original bond issuance, $1,637,865
was used for financing business-type activities related to this project and the remainder was used for governmental
activities. The bonds bear interest from 3.0% to 5.75%, and are due in annual installments on June 1 through June 1,
2039 that range from $64,260 to $58,905. At June 30, 2014, the principal amount outstanding that pertains to business-
type activities was $1,237,040 of the total $8,085,035 outstanding. The bond indenture agreement specifies reserve
requirements equal to the maximum debt service in any particular year to be held in the Trustee's reserve funds. The
reserve requirement has been met for the year ended June 30, 2014.
2012 Water Revenue Refunding Bonds. In 2012, the City issued water revenue refunding bonds in the amount of
$4,960,000 to refund the 2002 water revenue bonds, which were originally issued to fund water system improvements.
The bonds bear interest from 2.0% to 4.0%, and are due in annual installments on June 1 through June I, 2023 than range
from $340,000 to $550,000. At June 30,2014, the principal amount outstanding on the bonds was $4,240,000. The bond
indenture agreement specifies reserve requirements equal to the maximum debt service in any particular year to be held
in the Trustee's reserve funds. The reserve requirement has been met for the year ended June 30, 20 I4.
The City has pledged future water system revenues, net of specific operating expenses, to repay the bonds on parity with
a pledge that services all parity obligations. The bonds are payable solely from water customer net revenues and any
moneys in the bond service fund and the reserve fund. The principal and interest payments on the bonds required less
than I1% of net revenues. For the year ended June 30, 2014, principal and interest paid and total customer net revenues
were $564,800 and $5,076,210 respectively.
2006 Water Revenue Bonds. In 2006, the City issued water revenue bonds in the amount of $16,905,000 to construct
improvements to the water treatment plant. The bonds bear interest from 3.75% to 4.625%, and are due in annual
installments on June I through June 1, 2036 that range from $235,000 to $985,000. At June 30, 2014, the principal
amount outstanding on the bonds was $I4,235,000. The bond indenture agreement specifies reserve requirements equal
to the maximum debt service in any particular year to be held in the Trustee's reserve funds. The reserve requirement has
been met for the year ended June 30, 2014.
The City has pledged future water system revenues, net of specific operating expenses, to repay the bonds on parity with
a pledge that services all parity obligations. The bonds are payable solely from water customer net revenues and any
moneys in the bond service fund and the reserve fund. The principal and interest payments on the bonds required less
than 20% of net revenues. For the year ended June 30, 20I4, principal and interest paid and total customer net revenues
were $I ,034,548 and $5,076,210, respectively.
62
B3-100
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 29
Note 7: Long-Term Debt (Continued)
At June 30, 2014, the aggregate maturities of the business-type revenue bonds were as follows :
For the Year Ending June 30, PrinciJ!al Interest Total
2015 $ 1,099,705 $ 1,192,682 $ 2,292,387
2016 1,142,800 1,148,916 2,291,716
2017 1,188,960 1,103,204 2,292,164
2018 1,235,885 1,055,366 2,291,251
2019 1,289,745 1,003,912 2,293,657
2020-2024 6,250,170 4,212,514 10,462,684
2025-2029 5,181,335 2,993,800 8,175,135
2030-2034 6,491,870 1,696,176 8,188,046
2035-2039 3,202,570 253,793 3,456,3 63
$ 27,083,040 $ 14,66 0,36 3 $ 41,743,403
Loans
2004 State Water Control Board Loan. In 2004, the City obtained a note in the amount of$8,883,200 to go towards the
water reuse project. The note bears an interest rate of 2.5% due in annual installments on August 31 through August 31,
2024 that range from $296,000 to $512,600. At June 30, 2014, the principal amount outstanding on the loan was
$4,999,306.
2001 CJEDB State Loan. In 2001, the City obtained a note in the amount of$7,765,900 to go towards expanding the
March Street parking structure. The note bears an interest rate of3.37% due in semi-annual installments on February 1
and August 1 through August 31, 2031 that range from $169,000 to $396,000. At June 30, 2014, the principal amount
outstanding on the loan was $5,582,219.
2009 Infrastructure and Economic Development Bank Loan-Tank Farm Lift Station. In 2009, the City obtained a
note in the amount of $10,000,000 to go towards the Tank Farm lift station and main sewer project. The note bears an
interest rate of3.25% due in annual installments on December I through December 1, 2039 that range from $212,600 to
$520,744. At June 30,2014, the principal amount outstanding on the loan was $8,865,421.
The City has pledged future sewer system revenues, net of specific operating expenses, to repay the loan. The loan is
payable solely from sewer customer net revenues. The principal and interest payments on the bonds required less than
5% of net revenues. For the year ended June 30, 2014, principal and interest paid and total customer net revenues were
$422,197 and $8,275,831, respectively.
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B3-101
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 30
Note 7: Long-Term Debt (Continued)
At June 30, 20 I 4, the aggregate maturities of the aforementioned business-type loans were as follows:
For the Year Ending June 30, Princi(!al Interest Total
2015 $ 886,933 $ 451,806 $ 1,338,739
2016 912,329 436,179 1,348,508
2017 938,460 420,057 1,358,517
2018 965,353 403,426 1,368,779
2019 993,026 386,268 1,379,294
2020-2024 5,409,102 1,654,347 7,063,449
2025-2029 4,050,280 I, 136,190 5,186,470
2030-2034 3,304,624 555,921 3,860,545
2035-2039 1,986 ,839 131,551 2,ll8,390
$ 19.446.946 $ 5.575.745 $ 25.022.691
Installment Sale Agreements
2008 Suntrust Bond. In 2008, the Board entered into an installment sale contract financing $2,050,000 to finance the
Tank Farm lift station. The terms state an interest rate of 4.2% due in annual installments through 2023 that range from
$372,900 to $607,200. At June 30, 2014, the principal amount outstanding on the loan was $1,500,000.
US Bank 2014 Wastewater Lease. In 2013, the Board entered into an installment sale contract financing $7,479,000 to
finance the acquisition and installation of improvements to its water reclamation facility. The note bears an interest rate
of2.8994% due in annual installments on June 1 and December 1 through December 1, 2028 that range from $372,900
to $607,200. At June 30, 2014, the principal amount outstanding on the loan was $7,479,000.
At June 30, 2014, the aggregate maturities of the aforementioned business-type installment sale agreements were as
follows:
For the Year Ending June 30, Princi(!al Interest Total
2015 $ 497,958 $ 271,859 $ 769,817
2016 548,746 255,024 803,770
2017 565,859 237,140 802,999
2018 583,354 218,689 802,043
2019 601,211 199,660 800,871
2020-2024 3,312,351 823,006 4,135,357
2025-2029 2,869,521 212,796 3,082,317
$ 8,979,000 $ 2,218,174 $ 11,197,174
There are a number of limitations and restrictions contained in the various bond indentures. City management believes
that the City has complied with the indenture requirements. Security for revenue bonds is paid from receipts or net income
and amounts in funds or accounts established under bond indentures.
64
B3-102
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 31
Note 8: lnterfund Transactions
Interfund receivable and payable balances as of June 30, 2014 consist of the following :
Interfund Interfund
Receivables Pa~ables
General Fund $ 2,595,035 $
Debt Service Fund 2,443,259
Nonmajor Governmental Funds:
TDA Bike Fund 12,292
Gas Tax Fund 139,484
Total $ 2,595,035 $ 2,595,035
Interfund receivables and payables include temporary negative cash balances that result from the timing of cash flows at
year end and the time lag between the dates that transactions are recorded in the accounting system and payment between
funds are made. Liquidation of interfund receivables and payables typically occurs in the first quarter of the subsequent
fiscal year. Interfund balances between governmental funds are not included in the government-wide Statement of Net
Position.
Interfund transfers are used to move revenues from the fund with collection authorization to the debt service fund as debt
service principal and interest payments become due or to move unrestricted revenues to finance various programs that the
government must account for in other funds in accordance with budgetary authorizations. This may include amounts
provided as matching funds for various grant programs. Transfers are also made from special revenue funds to reimburse
expenditures made in the General Fund.
65
B3-103
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 32
Note 8: Interfund Transactions (continued)
Interfund transfers for the year ended June 30, 2014 consist of the following:
Transfers In Transfers Out
General Fund $ 1,636,815 $11,187,103
Capital Outlay 7,337,181 211,306
Debt Service Fund 3,550,964 850,775
Nonmajor Governmental Funds:
Tourism Business Improvement District 24,356
Wastewater 73,770
Gas Tax Fund 1,460,290
TDA Fund 49,169
Community Development Block Grand Fund 52,493
TT RPnl,.rPmPnt Funtl 565,500 ~----r&----··-···--·--
Open Space Protection Fund 200,000
Public Art Fund 80,685
Fleet Replacement Fund 411,360 35,000
Affordable Housing 17,000
Enterprise Funds:
Sewer Fund 73 771
Total $13,908,769 $13,908,769
Note 9: Joint Ventures, Jointly Governed Organizations and Operating Agreements
The City participates in three multi-governmental organizations: the Whale Rock Commission, the San Luis Obispo
Regional Transit Authority, and the San Luis Obispo Council of Governments. The City also has an operating agreement
related to Nacimiento Water Supply Project. The following provides a general description of each of these agencies and
operating agreements along with a summary of financial information and indebtedness:
Whale Rock Commission
General Description. The Whale Rock Commission (Commission) was established on December 12, 1960 to govern the
operations of the Whale Rock Reservoir. The Commission is composed of six voting members and two non-voting
members: three voting members are appointed by the City; one is appointed by California Polytechnic State University;
one by California Men's Colony; and one by the Director of Finance, State of California. The two non-voting members
are position appointments: the Director of Water Resources, State of California; and the Water Superintendent, City of
San Luis Obispo. The Commission is authorized by their respective agencies to establish policies for the operation of the
Reservoir, to contract for the sale of excess water, and to approve the annual budget.
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B3-104
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 33
Note 9: Joint Ventures, Jointly Governed Organizations and Operating Agreements (Continued)
The City, in accordance with established policies of the Commission, operates and maintains the Reservoir; prepares and
recommends the annual budget; and maintains the fiscal records and funds of the Commission. The Whale Rock Agency
Fund is used to account for the Commission's ongoing operating activities. The Commission has no long term debt.
Ownership in the Reservoir is as follows: 55.05%, City of San Luis Obispo; 33.71%, California Polytechnic State
University; and 11.24%, California Men's Colony. The City's share of the Commission's expenses are recorded as
expenses of the Water Fund. All receipts and disbursements of the Commission are included in an Agency Fund.
Financial Information and Indebtedness. In 1959, the City issued general obligation bonds to secure a future water
supply to City residents. Some of the proceeds from the bonds were used to participate with the State of California in the
development of the Reservoir. Participation, which is in proportion to the original investment, includes continued
operation and maintenance of the facilities. Such indebtedness was directly attributable to provision of water service, and
as such, all related indebtedness was recorded in the City's Water Enterprise Fund. These bonds matured in August 1999.
The City's original investment in the Reservoir project aggregates $3,900,000, and was amortized on a straight-line basis
over thirty-five years. Separate financial statements are available from the Whale Rock Commission, 879 Morro Street,
San Luis Obispo, CA 93401.
The following segment financial information for the Whale Rock Commission is presented as of and for the year ended
June 30, 2014:
Total assets
Total liabilities
Fund balance
Total revenues
Total expenditures
Excess of revenues over (under) expenditures
San Luis Obispo Regional Transit Authority
Joint Venture
$ 1,261,232
87,225
1,348,457
985,973
968,707
$ 17,266
City Portion
$ 694,300
48,000
742,300
542,800
533,300
$ 9,500
General Description. The City is a member of the San Luis Obispo Regional Transit Authority (Authority), which was
established on February 27, 1990, to operate a joint public transportation system. The Authority is composed ofthe Cities
of Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach, and San Luis Obispo, as well as
the County of San Luis Obispo. The Authority is governed by a Board of Directors comprised of representatives of each
of the seven cities, in addition to the five members of the Board of Supervisors. Each member of the Board has one vote.
The Board has the authority to establish policies for the operation of the transit system and to adopt an annual budget.
Each member makes an annual contribution to the agency for funding the adopted budget.
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City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 34
Note 9: Joint Ventures, Jointly Governed Organizations and Operating Agreements (Continued)
Financial Information. The City allocates a portion of its Transportation Development Act funds directly to the
Authority. During 2013-14 the City contributed approximately $676,192 of these funds to the Authority. The City's share
of assets, liabilities, and fund equity has not been calculated by the Authority and therefore is not known to the City;
however, based on the City's limited financial participation in the Authority, any such assets , liabilities, or equity are not
believed to be significant to the basic financial statements taken as a whole. Separate financial statements are available
from the Authority, 179 Cross Street, Suite A, San Luis Obispo, CA 93401.
San Luis Obispo Council of Governments
General Description. The San Luis Obispo Council of Governments (SLOCOG) was formed in 1968 through a joint
powers agreement among the incorporated cities and the County of San Luis Obispo. It acts as the regional transportation
planning agency for the county and is the metropolitan planning organization and the congestion management agency for
the region. The governing board consists oftwelve delegates, each with one vote that includes the five members of the
County Board of Supervisors and one representative from each of the seven cities in the County.
Financial Information. A portion of the City's Transportation Development Act funds are directly allocated to the
SLOCOG. The City's share of assets, liabilities, and fund equity has not been calculated by SLOCOG and therefore is
not known to the City; however, based on the City's limited financial participation in SLOCOG, any such assets, liabilities,
or equity are not believed to be significant to the basic financial statements taken as a whole. Separate financial statements
are available from SLOCOG, 1114 Marsh Street, San Luis Obispo, CA 93401.
Nacimiento Water Supply Project
General Description. In 2004, the Council adopted a resolution approving an agreement with the San Luis Obispo County
Flood Control and Water Conservation District (District) for the design, construction and operations of the facilities
required for the delivery of 3,380 acre-feet of water per year to the City of San Luis Obispo from the Nacimiento Water
Supply Project (Project). The agreement includes conditions relative to the costs associated with the project and how
these costs will be shared and paid by the participants in the project.
Each project participant, including the City, has entered into an agreement in order to provide for the development,
financing, construction, operation and maintenance of the Project. The agreement is a "take-or-pay" obligation: the City
is obligated to pay amounts specified in the agreement whether or not water is delivered. The City is required to pay an
amount equal to its share of various capital expenses relating to the funding of design costs, engineering, planning,
environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration
and management, installation, grading, razing and building the Project. The City is also required to pay for its share of
operating and maintenance costs . The City records these payments as operating expenses in its water enterprise fund.
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B3-106
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 35
Note 9: Joint Ventures, Jointly Governed Organizations and Operating Agreements (Continued)
The City is required to make payments under its agreement solely from the revenues of its water system. The City agreed
to establish, fix and collect rates and charges from the customers of the City's water enterprise fund at levels sufficient to
produce revenues equal to: (1) the costs of operating and maintaining the City's water enterprise; plus (2) the contract
payments, calculated in accordance with the delivery contract including the amounts allocated as the City's share of
capital projects installment debt service; plus (3) the coverage factor for the amounts allocated as the City's share of
capital projects installment debt service; and (4) under certain circumstances, that the City understands and agrees that
the delivery contract may impose a surcharge following the occurrence of any payment default.
Financial Information. In September 2007, the District sold water revenue bonds in the amount of $196 million for the
construction of the Project. Based on the City's share of construction costs, debt service and operating and maintenance,
the following summarizes the City's Project obligations for 2013-14 and five year projections.
Nacimento Water Supply Obligations
Actual2013-14 $
Projected:
2014-15
2015-16
2016-17
2017-18
2018-19
5,362,699
6,190,000
6,234,900
6,280,300
6,330,500
6,372,900
Separate financial statements are available from the San Luis Obispo County Flood Control and Water Conservation
District, 1050 Monterey Street, San Luis Obispo, CA 93401.
Note 10: Risk Management
California Joint Powers Insurance Authority
General Description
The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 119
California public entities and is organized under a joint powers agreement pursuant to California Government Code§
6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to
purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of
coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected
official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee.
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B3-107
City of San Luis Obispo, California
Notes to the Financial Statements
June 30,2014
Page 36
Note 10: Risk Management (Continued)
Each member pays an annual contribution to cover estimated losses for the coverage period . This initial funding is paid
at the beginning of the coverage period. After the close of the coverage period, outstanding claims are valued. A
retrospective deposit computation is then conducted annually thereafter until all claims incurred during the coverage
period are closed on a pool-wide basis. This subsequent cost reallocation among members based on actual claim
development can result in adjustments of either refunds or additional deposits required.
The total funding requirement for self-insurance programs is estimated using actuarial models and prefunded through the
annual contribution. Costs are allocated to individual agencies based on exposure (payroll) and experience (claims)
relative to other members of the risk-sharing pool. Additional information regarding the cost allocation methodology is
provided below .
Self-Insurance Programs ofthe Authority
Liability. In the liability program claims are pooled separately between police and non-police exposures. (1) The payroll
of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each
member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first
layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool's
total incurred costs within the first layer . (3) The second layer oflosses includes incurred costs from $30,000 to $750,000
for each occurrence and is evaluated as a percentage ofthe pool's total incurred costs within the second layer. ( 4) Incurred
costs in excess of $750,000 up to the reinsurance attachment point of $5 million are distributed based on the outcome of
cost allocation within the first and second loss layers. (5) Costs of covered claims from $5 million to $10 million are paid
under a reinsurance contract subject to a $2.5 million annual aggregate deductible. The $2.5 million annual aggregate
deductible is fully covered under a separate policy; as such no portion of it is retained by the Authority. Costs of covered
claims from $10 million to $15 million are paid under two reinsurance contracts subject to a combined $3 million annual
aggregate deductible. The $3.0 million annual aggregate deductible is fully retained by the Authority. (6) Costs of
covered claims from $15 million to $20 million are paid under reinsurance agreements. (7) Costs of covered claims from
$20 million to $50 million are paid under excess insurance policies.
The overall coverage limit for each member including all layers of coverage is $50 million per occurrence.
Costs of covered claims for subsidence losses are paid by reinsurance and excess insurance with a pooled sub-limit of
$30 million per occurrence. This $30 million subsidence sub-limit is composed of (a) $5 million retained within the
pool's SIR, (b) $15 million in reinsurance, subject to the same annual aggregate deductibles previously stated, and (c)
$10 million in excess insurance. The excess insurance layer has a $10 million annual aggregate limit.
Workers' Compensation . In the workers' compensation program claims are pooled separately between public safety
(police and tire) and non-public safety exposures. (I) The payroll of each member is evaluated relative to the payroll of
other members. A variable credibility factor is determined for each member, which establishes the weight applied to
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B3-108
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 37
Note 10: Risk Management (Continued)
payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to
$50,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3)
The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a
percentage of the pool's total incurred costs within the second layer. (4) Incurred costs in excess of$100,000 up to the
reinsurance attachment point of $2 million are distributed based on the outcome of cost allocation within the first and
second loss layers. (5) Costs of covered claims from $2 million up to statutory limits are paid under a reinsurance
policy. Protection is provided per statutory liability under California Workers' Compensation Law.
Employer's Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is
purchased as part of a reinsurance policy, and Employer's Liability losses from $5 million to $10 million are pooled
among members.
Purchased Insurance
Pollution Legal Liability Insurance. The City of San Luis Obispo participates in the pollution legal liability insurance
program (formerly called environmental insurance) which is available through the Authority. The policy covers sudden
and gradual pollution of scheduled property, streets, and storm drains owned by the City of San Luis Obispo. Coverage
is on a claims-made basis. There is a $50,000 deductible. The Authority has a limit of $50 million for the 3-year period
from July 1, 2011 through July 1, 2014. Each member of the Authority has a $10 million sub-limit during the 3-year term
of the policy.
Property Insurance. The City of San Luis Obispo participates in the all-risk property protection program of the
Authority. This insurance protection is underwritten by several insurance companies. City of San Luis Obispo property
is currently insured according to a schedule of covered property submitted by the City of San Luis Obispo to the
Authority. City of San Luis Obispo property currently has all-risk property insurance protection in the amount of
$215,923,324. There is a $5,000 deductible per occurrence except for non-emergency vehicle insurance which has a
$1,000 deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments.
Earthquake and Flood Insurance. The City of San Luis Obispo purchases earthquake and flood insurance on a portion
of its property. The earthquake insurance is part ofthe property protection insurance program ofthe Authority. City of
San Luis Obispo property currently has earthquake protection in the amount of $0. There is a deductible of 5% per unit
of value with a minimum deductible of $100,000. Premiums for the coverage are paid annually and are not subject to
retrospective adjustments.
Crime Insurance. The City of San Luis Obispo purchases crime insurance coverage in the amount of $1,000,000 with a
$2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid annually and are not
subject to retrospective adjustments.
71
B3-109
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 38
Note 10: Risk Management (Continued)
Special Event Tenant User Liability Insurance. The City of San Luis Obispo further protects against liability damages
by requiring tenant users of certain property to purchase low-cost tenant user liability insurance for certain activities on
agency property. The insurance premium is paid by the tenant user and is paid to the City of San Luis Obispo according
to a schedule. The City of San Luis Obispo then pays for the insurance. The insurance is arranged by the Authority.
Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that
exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage
from coverage in 2013-14.
Claim Liability. During 2013, the Authority assessed a retrospective claims liability balance to pool members. The City's
General Fund share of the liability was $2,025,193 at June 30, 2013 and was recorded as a governmental activity liability
with a five year repayment requirement. During the year ended June 30, 2014, an additional retrospective liability of
$346,419 was assessed with a total outstanding balance of$2,371 ,519 as of June 30, 2014. The five year repayment plan
includes interest at 1.990%. Subsequent to June 30, 2014, the City repaid the full balance of this liability.
Separate financial statements are available from the California Joint Powers Insurance Authority, 8081 Moody Street, La
Palma, CA 90623.
Self-Insurance
The City retains the risk for workers' compensation losses incurred prior to joining the California Joint Powers Insurance
Authority. Several member agencies of the now dissolved Central Coast Cities Self-Insurance Fund continue to
participate in a non-risk sharing arrangement for claims management and the purchase of excess insurance. The
participating agencies share a set of common guidelines and annually set aside premiums to pay their individual losses
within their self-insured retentions. Losses are debited and investment income is credited to specific member accounts.
The City has not incurred any losses in excess of insurance coverage. Claims liabilities in the governmental funds are
generally liquidated by the General Fund.
The last actuarial study to determine the undiscounted outstanding claims liability was completed for the year ended June
30, 2013. The liability was estimated based on the actuarial study and considered claims asserted and paid, and the time
limitations for filing claims. There are no estimates for claims incurred but not reported because the time limit for filing
claims has elapsed. The estimated asset (liability) at June 30, 2014 is calculated as follows:
72
B3-110
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 39
Note 10: Risk Management (Continued)
Self-insurance activity as of and for the year ended June 30, 2014
is summarized is as follows:
Interest earnings
Claims expense
Estimated liability for reported claims and settlement expenses
Assets on deposit
Estimated unpaid claims asset (liability)
Changes in the balances of claim liabilities during the past two fiscal years
are as follows:
Estimated unpaid claims asset (liability) June 30, 2012
(Claim payments and related expenditures) reimbursement
Decrease in estimated claims liability June 30, 2013
Interest earnings
Estimated unpaid claims asset (liability) June 30, 2013
(Claim payments and related expenditures) reimbursement
Decrease in estimated claims liability June 30, 2014
Interest earnings
Estimated unpaid claims asset (liability) June 30, 2014
Note 11: Commitments and Contingencies
Litigation
$
$
$
$
4,297
(126,507)
(945,830)
1,563,047
617,217
144,027
(117,376)
428,900
6,506
462,057
(126,507)
277,370
4,297
617,217
The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City
business. City management believes, based upon consultation with the City Attorney, that these cases, in the aggregate,
are adequately covered by insurance and not expected to result in a material adverse financial impact on the City.
Grant Awards
Under the terms of Federal and State grants, audits may be required and certain costs may be questioned as not being
appropriate expenditures under the terms of the grants. Such audits could lead to requests for reimbursement to the grantor
agencies. City management believes disallowances, if any, will be immaterial.
73
B3-111
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 40
Note 12: Construction and Other Significant Commitments
Construction and other significant commitments as of June 30, 2014, including encumbrances outstanding at year-end,
are as follows:
General Fund $ 1,211,928
Special Revenue Funds 194,500
Capital Project Funds 4,507,749
Enterprise Funds:
Water 437,615
Sewer 2,669,354
Parking 84,884
Transit 3,019
Total $ 9,109,049
Long term construction contracts are billed and paid on a percentage completion basis by construction phase.
Note 13: Fund Balance Deficiency
At June 30, 2014, the City had a negative fund balance in the Community Development Block Grant (CDBG) Fund of
$83.
Note 14: Subsequent Events
Measure Y. In July 2014 the City Council approved a ballot measure that would seek voter approval for the extension of
Measure Y for another 8 years. Measure Y is the existing one-half percent general sales tax. In November 2014 the ballot
measure was approved by a margin of slightly more than 70%. An affirmative vote of only 50% + 1 was needed for the
measure to pass. This means that the existing revenue stream created by Measure Y will continue uninterrupted and will
remain available for any general purpose.
Claims Liability. As mentioned in Note 10, the City has recognized claims liability amounts totaling $2,371,519 based
on retrospective deposits that are required by the City's liability and workers compensation pool program. One portion
of the total claim liability ($2,025, 193) had been previously recognized with a 5 year repayment term however the City
retired the full amount of the claims liability on July I, 2014.
Lease Purchasing. In September 2014, the City Council approved the use of a lease purchase line of credit in the amount
of $1.5 million for the financing of various information technology equipment items. The City has financed $102,304
over a 5 year term at 1. 7% for the acquisition of photocopiers for use throughout the City. Annual payments will be
approximately $21,500. The City plans to finance an additional $688,500 over a 4 year term at 1.5% to acquire mobile
computers for the police and fire departments upon their delivery.
74
B3-112
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 41
Note 14: Subsequent Events (continued)
This credit line can be accessed over a period of2 years and any amounts financed during that time must be repaid in full
within 6 years from the date of the initial lease. The City may finance equipment over 3, 4 and 5 year terms. Future rates
will be set according to the Federal Reserve Board interest rate swap index that corresponds to the term of the proposed
borrowing. The period of time during which the credit line can be accessed may be extended upon the City's request for
an additional year.
Joint Powers Agreement. In September 2014, the City of San Luis Obispo formed the City of San Luis Obispo Public
Financing Authority under a joint powers agreement with the City of San Luis Obispo Parking Authority. The Financing
Authority serves as third party to debt issuance transactions that involve the leasing of an asset which serves as the
collateral for the debt. The Public Financing Authority will replace the Capital Improvement Board when the City
considers issuing new debt transactions involving certain forms of a lease arrangement. The City Council serves as the
governing body of the Public Financing Authority and the City Manager, City Clerk, City Attorney and City Finance
Director serve as officers of the authority in order to carry out the functions that are related to each debt issuance.
Lease Purchasing. In September 2014 the City took possession of a new fire truck that had been acquired under a lease
purchase agreement with Oshkosh Capital that was approved by the City Council in November 2013. The total cost of
the vehicle was $548,351 and the lease purchase agreement is based on a 5 year term with interest at 2.108%.
Bonds. In October 2014 the City of San Luis Obispo Public Financing Authority issued $7.58 million par value tax
exempt bonds via competitive sale. The proceeds will be used for the construction of the Los Osos Valley Road/Highway
101 overpass expansion project. The bonds mature in 30 years with interest set between 3-4% depending on the maturity
date of the bond. The parking garage located at 842 Palm Street serves as the collateral for the underlying lease agreement.
Note 15: New Accounting Standards
Accounting Standards Adopted
In March 2012, GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities, which establishes
accounting and financial reporting standards that reclassifY, as deferred outflows of resources or deferred inflows of
resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or
inflows of resources, certain items that were previously reported as assets and liabilities. The provisions of Statement
No. 65 are effective for periods beginning after December 15, 2012. Early implementation of this Statement during the
year ended June 30, 2013 resulted in the write-off of bond issuance costs and underwriter's discount that had previously
been amortized over the life of the bonds.
75
B3-113
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 42
Note 15: New Accounting Standards (continued)
In March 2012, GASB issued Statement No. 66, Technical Corrections -2012-an amendment ofGASB Statement No .
I 0 and No. 62. This statement improves accounting and financial reporting for a governmental financial reporting entity
by resolving conflicting guidance. The provisions of Statement No. 66 are effective for periods beginning after
December 12, 2012. Implementation of this Statement did not have a significant impact on the financial statements of
the City.
In January 2013, GASB issued Statement No. 69, Government Combinations and Disposals of Government Operations .
This Statement requires disclosures to be made about government combinations and disposals of government operations
to enable financial statement users to evaluate the nature and financial effects of those transactions. The provisions of
this Statement are effective for periods beginning after December 31, 2013. Management has not yet determined the
impact of this Statement on its financial statements.
In April 2012, GASB issued Statement No. 70, Accounting and Financial Reporting for Non-exchange Financial
Guarantees. This Statement specifies the information required to be disclosed by governments that extend non-exchange
financial guarantees. In addition, this Statement requires new information to be disclosed by governments that receive
non-exchange financial guarantees. The provisions of Statement No. 70 are effective for periods beginning after June 15,
2013 . Implementation of this Statement did not have a significant impact on the financial statements of the City.
New Accounting Standards
In June 2012, GASB issued Statement No. 67, Financial Reporting/or Pension Plans -an amendment ofGASB Statement
No . 25, which revises existing standards of financial reporting for most pension plans. The provisions of Statement No.
67 are effective for periods beginning after June 15, 2013. Since this pronouncement is only applicable to pension plans,
it does not apply to the City .
In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions -an amendment of
Statement No. 27, which addresses accounting and financial reporting for pensions that are provided to the employees of
state and local governmental employers. The provisions of Statement No. 68 are effective for fiscal years beginning after
June 15,2014. Management has not yet determined the impact of this Statement on its financial statements.
In November 2013, GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date -an amendment ofGASB Statement No. 68. This Statement addresses an issue regarding application
of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to
amounts associated with contributions, if any, made by a state or local government employer on non-employer
contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension
liability. The provisions of Statement No. 71 are required to be applied simultaneously with the provisions of Statement
No . 68 , effective for fiscal years beginning after June 15, 20 14 . Management has not yet determined the impact of this
Statement on its financial statements.
76
B3-114
City of San Luis Obispo, California
Notes to the Financial Statements
June 30, 2014
Page 43
Note 16: Prior Year Restatement
A prior year restatement was recorded to reflect equipment capital assets that had been disposed in prior years. The effect
was to decrease capital assets and beginning net position of governmental activities by $833,234 as of June 30, 2014.
77
B3-115
THIS PAGE INTENTIONALLY LEFT BLANK
B3-116
REQUIRED SUPPLEMENTARY INFORMATION
(UNAUDITED)
B3-117
Revenues:
Taxes and franchise fees:
Sales and use tax -general
City of San Luis Obispo, California
Budgetary Comparison Schedule
General Fund
For the Fiscal Year Ended June 30,2014
Original
Budget
$ 14,515,400 $
Sales and use tax-Measure Y 1/2 percent add-on tax 6,600,000
Sales tax -Prop 172 284,600
Property tax 8,740,700
Transient occupancy tax 5,749,400
Utility users tax 4,756,000
Property tax in lieu of VLF 3,586,220
Franchise taxes 2,523,000
Business tax 2,i i6,200
Real property transfer tax 180 ,000
Total taxes 49,051,520
Fines, forfeitures and penalties 167,200
Use of money and property 324,200
Subventions and grants:
Homeowners' property tax relief 75,000
Other in-lieu 21,700
Police training grant (POST) 50,000
COPS grant AB 3229 100,000
Mutual aid reimbursements
State SB90 refunds
Transportation grants 85,000
Other State and Federal grants
Total subventions and grants 331,700
79
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
15,394,694 $ 15,405,808 $ 11,114
6,674,000 6,774,365 100,365
338,850 391,567 52,717
8,761,050 8,960,010 198,960
5,990,329 6,063,232 72,903
5,356,018 5,345,342 (10,676)
3,645,690 3,645,692 2
2,525,905 2,636,599 110,694
2,i i6,625 2,i42,97i 26,346
200,000 287,560 87,560
51,003,161 51,653,146 649,985
156,000 150,185 (5,815)
179,000 372,655 193,655
72,760 73,954 1,194
22,156 22,156
40,000 36,787 (3,213)
100,000 100,000
298,944 456,288 157,344
11,200 12,087 887
85,000 37,007 (47,993)
642,808 500,131 ~142,6772
1,272,868 1,238,410 (34,458)
B3-118
City of San Luis Obispo, California
Budgetary Comparison Schedule
General Fund, continued
For the Fiscal Year Ended June 30, 2014
Page2
Variance with
Final Budget
Original Final Positive
Budget Budget Actual (Negative)
Charges for services:
Public safety:
Police $ 431,000 $ 418,317 $ 587,601 $ 169,284
Fire:
Cal Poly fire services 265,000 270,684 270,684
Medical emergency recovery 168,000 '168,800 168,831 31
Fire safety/hazardous materials permits 130,800 84,800 128,544 43,744
Multi-dwelling unit inspections 193,000 193,000 193,721 721
Other fire revenues 115,000 124,688 87,096 (37,592)
Development review:
Planning and zoning fees 423,900 800,316 1,023,984 223,668
Construction plan and check inspections 982,900 1,750,000 1,547,462 (202,538)
Infrastructure plan check and inspections 427,400 602,322 695,203 92,881
Fire plan check and inspections 155,000 280,000 308,755 28,755
Encroachment permits 154,500 150,000 163,346 13,346
Leisure, cultural and social services:
Adult athletic fees 122,400 122,400 124,158 1,758
Youth athletic fees 33,700 33,700 30,055 (3,645)
Instruction fees 83,900 83,900 95,708 11,808
Special event fees 72,700 92,700 110,414 17,714
Rental and use fees 161,500 162,024 216,711 54,687
Children services 511,600 550,000 618,599 68,599
Teens & seniors 500 500 6,304 5,804
Aquatics 241,200 241,141 194,266 (46,875)
Golf course 291,700 291,700 336,743 45,043
General government:
Other service charges 459,380 395 ,127 456,431 61,304
Total charges for services 5,425,080 6,816,119 7,364,616 548,497
Other revenues:
Insurance refunds 12,500 45,000 59,417 14,417
Sale of surplus property 6,024 6,024
Other 150,000 52,798 77,666 24,868
Total other revenues 162,500 97,798 143,107 45,309
Total Revenues 55,462,200 59,524,946 60,922,119 1,397,173
80
B3-119
City of San Luis Obispo, California
Budgetary Comparison Schedule
General Fund, continued
For the Fiscal Year Ended June 30, 2014
Page3
Variance with
Final Budget
Original Final Positive
Budget Budget Actual (Negative)
Expenditures:
Public Safety:
Police protection:
Administration $ 1,459,700 $ 1,472,867 $ 1,358,810 $ 114,057
Investigations 2,346,900 2,348,981 2,408,762 (59,781)
Neighborhood services 261,300 261,677 222,690 38,987
Support services 2,347,800 2,352,561 2,231,553 121,008
Patrol services 7,580,987 7,604,972 7,221,221 383,751
Traffic safety 966,300 1,017,495 772,454 245,041
Total police protection 14.962.987 15 ,058.553 14.215.490 843,063
Fire and environmental safety:
Administration 793,000 873,091 833,740 39,351
Emergency response 7,911,500 8,256,265 7,957,181 299,084
Hazard protection 622,900 770,610 702,845 67,765
Training 155,000 162,541 101,177 61,364
Technical services 24,800 27,569 30,600 (3,031)
Disaster preparedness 9,700 20,734 22,467 (1,733)
Total fire and environmental safety 9,516,900 10,110,810 9,648,010 462,800
Total public safety 24,479,887 25,169,363 23,863,500 1,305,863
Transportation:
Transportation planning and engineering 502,900 743,889 666,276 77,613
Street and sidewalk maintenance 1,319,500 1,330,171 1,189,053 141,118
Traffic signals and street lights 508,700 509,219 339,080 170,139
Creek and flood protection 779,622 822,419 687,832 134,587
Total transportation 3,110,722 3,405,698 2,882,241 523,457
81
B3-120
City of San Luis Obispo, California
Budgetary Comparison Schedule
General Fund, continued
For the Fiscal Year Ended June 30, 2014
Page 4
Variance with
Final Budget
Original Final Positive
Budget Budget Actual (Negative)
Leisure, Cultural and Social Services:
Recreation programs:
Recreation administration $ 696,500 $ 732,059 $ 676,882 $ 55,177
Aquatics/Sinsheimer park facilities 321,600 321,557 282,191 39,366
Children's services 879,650 879,091 882,978 (3,887)
Facilities 233,300 234,219 205,165 29,054
Special events 259,400 260,435 218,085 42,350
Recreational sports 314,550 320,168 318,806 1,362
Golf course 554,000 554,534 516,018 38,516
Ranger services 313,900 315,428 275,109 40,319
Maintenance programs:
Swim center maintenance 449,000 449,748 449,327 421
Parks and landscape maintenance 2,324,200 2,341,970 2,325,457 16,513
Tree maintenance 428,300 444,547 443,189 1,358
Cultural and social service programs:
Human relations 283,100 287,100 271,836 15,264
Cultural activities 290,600 290,600 290,576 24
Total leisure, cultural and social services 7,348,100 7,431,456 7,155,619 275,837
Community Development:
Planning:
Commissions and communities 34,600 31,526 30,443 1,083
Community development administration 510,200 713,725 673,580 40,145
Long-range planning 527,500 1,258,228 1,047,905 210,323
Development review 525,500 586,775 542,689 44,086
Development services 870,802 241,426 629,376
Natural resource protection 342,800 343,715 322,600 21,115
Construction regulation:
Building and safety 1,146,000 1,213,829 1,167,055 46,774
Engineering development review 450,100 481,644 463,670 17,974
CIP project engineering 1,771,500 1,772,377 1,634,261 138,116
Economic health:
Community promotion 386,700 416,686 404,511 12,175
Economic development 234,100 295,258 220,167 75,091
Total community development 5,929,000 7,984,565 6,748,307 1,236,258
82
B3-121
City of San Luis Obispo, California
Budgetary Comparison Schedule
General Fund, continued
For the Fiscal Year Ended June 30,2014
Page 5
Variance with
Final Budget
Original Final Positive
Budget Budget Actual (Negative)
General Government:
Legislation:
Council $ 138,900 $ 138,651 $ 116,941 $ 21,710
General administration:
City administration 741,500 741,262 684,299 56,963
Public works administration 918,900 922,712 872,263 50,449
Legal services:
City attorney 548,600 740,561 605,851 134,710
City clerk services:
Administration and records 373,000 376,587 390,902 (14,315)
Organization support services:
Human resource administration 551,900 594,681 560,928 33,753
Risk management 3,112,000 3,037,478 2,979,121 58,357
Finance and information technology administration 479,600 491,505 328,180 163,325
Revenue management 796,700 871,234 712,611 158,623
Accounting 621,500 651,400 553,531 97,869
Network services 2,233,200 2,596,605 2,441,369 155,236
Geographic information services 436,000 440,075 434,345 5,730
Support services 265,300 267,847 197,483 70,364
Wellness program 16,800 16,800 14,831 1,969
Building and vehicle maintenance:
Buildings 1,103,800 1,107,117 1,068,592 38,525
Vehicle and equipment maintenance 1,168,000 1,236,359 1,278,908 (42,549)
Total general government
before cost reimbursement 13,505,700 14,230,874 13,240,155 990,719
Cost reimbursement (Note 3 to RSI) (3,897,400) (3,897,400) (3,897 ,420~ 20
Total general government 9,608,300 10,333,474 9,342,735 990,739
Total Expenditures 50,476,009 54,324,556 49,992,402 4,332,154
Excess of Revenues Over Expenditures 4,986,191 5,200,390 10,929,717 (2,934,981)
Other Financing Sources (Uses)
Expenditure savings 914,700 914,700 914,700
Transfers in 1,446,300 1,457,300 1,636 ,815 (179,515)
Transfers out ~9,476,000) (11 ,334, 145~ ~ 11 ,187 I 03) ~147,042)
Total other financing sources (uses) (7,115,000) (8,962, 145) (9 ,550 288) 588,143
Net Change in Fund Balance (2, 128,809) (3,761,755) 1,379,429 (2,346,838)
Fund Balance, Beginning of the Year 12,916,400 18,937,700 18,937,750 50
Fund Balance, End of Year $ 10,787,591 $ 15,175,945 $ 20,317,179 $ (2,346, 788)
83
B3-122
Actuarial Actuarial
Valuation Value
Date of Assets
6/30/2010 $8,470,235
6/30/2011 $9,135,654
6/30/2012 $9,854,788
City of San Luis Obispo, California
Public Employees Retirement System
Schedule of Funding Progress
For the Fiscal Year Ended June 30,2014
(Amounts in Thousands)
Safety Employee Plan 3% at 50 Safety Risk Pool*
Entry Age Unfunded
Actuarial Actuarial Accrued Funded
Accrued Liability Liability Ratio
$ 10,165,475 $ 1,695,240 83.3%
$ 10,951,745 $ 1,816,091 83.4%
$ 11,724,021 $ 1,869,233 84.1%
*Information for the period ending June 30, 2012 is the latest available from CalPERS.
Amounts represent the entire pool and are not limited to the City's share of the pool.
Miscellaneous Employee Plan
Actuarial Actuarial* Entry Age Unfunded
Valuation Value Actuarial Actuarial Accrued Funded
Date of Assets Accrued Liability Liability Ratio
6/30/2011 $ 103,392 $ 150,651 $ 47,259 68.6%
6/30/2012 $ 108,926 $ 157,223 $ 24,296 69.3%
6/30/2013 $ 101,989 $ 163,765 $ 61,776 62.3%
Unfunded
Actuarial
Liability as a
Covered Percentage of
Payroll Covered Payroll
$955,981 177.3%
$949,833 191.2%
$947,735 197.2%
Unfunded
Actuarial
Liability as a
Covered Percentage of
Payroll Covered Payroll
$ 19,946 236.9%
$ 19,275 250.6%
$ 18,676 330.8%
*Beginning with the June 20, 2013 valuation report, the Actuarial Value of Assets equals the Market Value
of Assets per the CalPERS Direct Rate Smoothing Policy.
84
B3-123
City of San Luis Obispo, California
Other Post-Employment Benefits Plan Schedule
For the Fiscal Year Ended June 30, 2014
The table below shows an analysis of the actuarial value of assets as a percentage of the actuarial accrued liability and the
unfunded actuarial accrued liability (UAAL) as a percentage of the annual covered payroll as of the most recent actuarial
report for the period ending June 30, 2014.
Actuarial Actuarial Entry Age Unfunded UAAL as a
Valuation Value Actuarial Actuarial Accrued Funded Covered Percentage of
Date of Assets Accrued Liability Liability Ratio Payroll Covered Payroll
6/30/2013 $2,527,000 $ 6,954,000 $ 4,427,000 36.3% $27,163,000 16.3%
6/30/2011 $1,611,000 $ 6,063,000 $ 4,452,000 26.6% $26,960,000 16.5%
6/30/2009 $ 540,000 $ 4,748,000 $ 4,208,000 11.4% $30,006,000 14.0%
85
B3-124
City of San Luis Obispo, California
Notes to Required Supplementary Information
June 30,2014
Budgetary Comparison Schedule
1. The budget is prepared using the modified accrual basis of accounting consistent with U.S. generally accepted
accounting principles.
2. Outstanding encumbrances from the prior fiscal year are not reflected in the original budget column but are
included in the final budget amounts.
3. All the City's general government and engineering programs are initially accounted and budgeted for in the
General Fund. However, certain of these support service programs also benefit the City's enterprise and agency
fund operations, and accordingly, transfers are made from these funds to reimburse the General Fund for these
services. The transfers are based on a Cost Allocation Plan prepared for this purpose which distributes the shared
costs in a uniform, consistent manner in accordance with U.S. generally accepted accounting principles.
Excess of Expenditures Over Appropriations
I . At June 30, 2014 expenditures exceeded appropriations in the General Fund as noted below. This does not
represent a violation of City budget policies because no department's total expenditures exceeded their total
appropriations within the General Fund.
Department/Division
Police:
Investigations
Fire:
Technical services
Disaster preparedness
Recreation:
Children's services
City Clerk:
Administration and records
Public Works
Vehicle and equipment maintenance
Budget Variance
$ 59,781
3,031
1,733
3,887
14,315
42,549
Public Employees Retirement System Schedule of Funding Progress
1. The City participates in the CaiPERS 3% at 50 Safety Risk Pool. Information shown in the preceding table is for
the entire pool and is not specific to the City. For non-safety members, the City participates in the miscellaneous
plan.
2. The schedules show an analysis ofthe actuarial value of assets as a percentage ofthe actuarial accrued liability
and the unfunded actuarial accrued liability (UAAL) as a percentage of the annual covered payroll as of the three
most recent actuarial reports.
86
B3-125
City of San Luis Obispo, California
Notes to Required Supplementary Information
June 30, 2014
Page 2
3. This schedule of funding progress presents multiyear trend information about whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial liabilities for benefits.
Other Post-Employment Benefits Plan Schedule of Funding Progress
I . The schedule shows an analysis of actuarial value of assets as a percentage of the actuarial accrued liability and
the unfunded actuarial accrued liability (UAAL) as a percentage of the annual covered payroll as of the most
recent actuarial report for the period ending June 30, 2013. The actuarial report for the period ending June 30,
2011 was used to determine the 2012-13 ARC.
2. This schedule of funding progress presents multiyear trend information about whether the actuarial value of Plan
assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Additional
years will be presented in the future as the information becomes available. The City prospectively implemented
GAStl Statement No. 45 ior the fiscai year ending june 30, 2009.
87
B3-126
THIS PAGE INTENTIONALLY LEFT BLANK
B3-127
OTHER SUPPLEMENTARY INFORMATION
AND COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
B3-128
City of San Luis Obispo, California
Measure Y Funding Schedule
For the Fiscal Year Ended June 30,2014
The following summarizes revenues and expenditures for the current year in responding to Measure Y priorities.
O~erating Programs Ca~ital Im~rovement Plan
Encumbered/
Actual Actual Assigned
Preservation of Essential Services
Public Safety
Police Services $ 850,029 $ $
Police Vehicles 31,421 141,379
Public Safety Mobile Data Computers 184,500
Fire Prevention & Training 397,976
Extrication Equipment 60,115
Fire Engine/Truck Replacement: Debt Service 128,920
Fire Station #2 Remodel 630 2,070
Quickest Route Software 18,630 1,970
Maintenance Services
Streets, Sidewalks and Traffic Signal Operations 163,488
Creek & Flood Protection 412,133 285,379 31,021
Parks 73,102 50,375 569,625
Project Management & Inspection 102,617
Neighborhood Wellness
Enhanced Building & Zoning Code Enforcement 110,846
"SNAP" Enhancement 53,079
Neighborhood Code Enforcement Specialists 137,905
Traffic Congestion Relief
Traffic Safety Report Implementation 25,000
Traffic Operations Report Implementation 30,000
Traffic Engineer 92,520
Bicycle Facility Improvements 18,936 81,064
Neighborhood Traffic Improvements 4,846 15,154
Open Space Preservation
Open Space Acquisition 200,000
Ranger Services Staffing 47,534
Open Space Wildfire Reduction 3,433
89
B3-129
City of San Luis Obispo, California
Measure Y Funding Schedule, continued
For the Fiscal Year Ended June 30,2014
Page 2
O~erating Programs Ca[!ital Im~rovement Plan
Encumbered/
Actual Actual Assigned
Infrastructure Maintenance & Improvements
Santa Rosa Skatepark $ 16,313 $ 1,209,987
Street Reconstruction & Resurfacing 939,572 461 '128
Central Irrigation Controller Replacement 163,323
Facility Maintenance 26,029 27,971
Jack House Exterior Painting 25,000
Johnson Avenue Underpass Pump 190,000
Library Restroom Remodel 39,000
Marsh Street Bridge Replacement 19,300
Mission Plaza Railing Upgrade 30,000
Olympic Pool Replastering 5,525 19,475
Pedestrian and Bicycle Pathway Maintenance 60,000
Sidewalk Repairs 25,000
Tree Maintenance Equipment 100,400
Sinsheimer Parking Lot Paving 166 79,834
Mission Plaza Master Plan 100,000
l.T. Replacement Fund 116,066 383,934
Facility Maintenance Reserve 293,479 206,521
Total Current Projects $ 2,444,662 $ 2,303,025 $ 4,116,033
Prior Year Encumbered/Assigned Amounts
Transportation (Mobility and Safety)
Traffic Safety Report Implementation 12,608
Traffic Sign Maintenance 44,600
Open Space Preservation
Froom Ranch Improvement 8,247 2,687
Infrastructure Maintenance and Improvements
Street Reconstruction & Resurfacing 114,516
Broad Street Creek Bank Reinforcement 2,689 15,629
Olympic Pool Heater Replacement 166,345
Playground Equipment Replacement 169,942 203,141
Maintenance Services
Streets, Sidewalks and Traffic Signal Repairs 31,584
Creek & Flood Protection
Sinsheimer Stadium Bldg. Assessment 7,780 26,776
Sub-Total Prior Year Amounts 558,311 248,233
Totals $ 2,444,662 $ 2,861,336 $ 4,364,266
90
B3-130
City of San Luis Obispo, California
Measure Y Funding Schedule
For the Fiscal Year Ended June 30,2014
The following summarizes revenues and expenditures for all years in responding to Measure Y priorities.
Measure Y Revenues & Uses Summary
Revenues:
Carryover from 2006-07 $ 1,000,000
Revenues for 2007-08 5,996,595
Revenues for 2008-09 5,641,393
Revenues for 2009-10 5,252,509
Revenues for 2010-11 5,616,332
Revenues for 2011-12 6,237,468
Revenues for 2012-13 6,493,836
Revenues for 2013-14 6,774,365
Total Revenues 43,012,498
Uses:
Operating programs 2007-08 (1,463,693)
Capital improvement plan 2007-08 (2,434, 107)
Operating programs 2008-09 (2,418,295)
Capital improvement plan 2008-09 (3,684,405)
Operating programs 2009-10 {2,267,103)
Capital improvement plan 2009-10 (2, 161 '197)
Operating programs 2010-11 (2,430, 185)
Capital improvement plan 2010-11 (3,443,0 15)
Operating programs 2011-12 (2,203,890)
Capital improvement plan 2011-12 (3,967,510)
Operating programs 2012-13 (2,225,125)
Capital improvement plan 2012-13 (2,320,712)
Operating programs 2013-14 (2,444,662)
Capital improvement plan 2013-14 (2,861 ,336)
Total Uses (36,325,235)
Contingency Reserve 2014 (1, 700,000)
Encumbered or assigned for carryover for future year expenditures ~ 4,364,266~
Net available for future year appropriations $ 622,997
91
B3-131
City of San Luis Obispo, California
Major Governmental Funds
For the Fiscal Year Ended June 30,2014
The City maintains the following major governmental fund :
Debt Service Fund
The City has established one debt service fund to account for the payment and accumulation of resources related to
governmental activities long-term debt principal and interest for the following debt issues. Budgets are prepared using
the modified accrual basis of accounting consistent with U.S. generally accepted accounting principles. The following
governmental activity debt issuances are serviced by this fund.
2003 Energy Conservation Lease-Purchase Financing. Lease financing was obtained in order to construct energy
conservation improvements at various City locations. Debt service obligations are recorded in the Debt Service Fund for
the General Government share of the projects. In addition, the Water and Sewer Funds record debt service for their share
of the projects.
Capital Improvement Board 2004 Lease Revenue Refunding Bonds. These bonds were issued to refinance the 1994
Lease Revenue Refunding Bonds. The 1994 bonds were issued to refinance the 1986 Lease Revenue Bonds, which were
issued to finance parking structures and various road improvement and property acquisition projects.
The Board has entered into a lease agreement with the City under which the City is responsible for making lease payments
to fund the annual debt service requirements. Debt service related to parking structures is recorded directly in the Parking
Fund while debt service related to the road improvement and property acquisition projects is recorded in the Debt Service
Fund.
Capital Improvement Board 2005 Refunding Revenue Bonds. These bonds were issued to refinance the 1996 Lease
Revenue Bonds. The original 1996 bonds were issued to accomplish several high priority capital improvement projects
including the headquarters fire station, seismic safety and HV AC improvements to City Hall, Mission Plaza expansion,
and various properties and street lighting system purchases.
The Board has entered into a lease agreement with the City under which the City is responsible for making lease payments
to fund the annual debt service requirements.
Capital Improvement Board 2006 Lease Revenue Bonds. The bonds were issued to finance the purchase of a parking
structure and office building at 919 Palm Street. Debt service related to the parking structure is recorded directly in the
Parking Fund while debt service related to the City office building is recorded in the Debt Service Fund.
The Board has entered into a lease agreement with the City under which the City is responsible for making lease payments
to fund the annual debt service requirements.
Capital Improvement Board 2009 Lease Revenue Bonds. The bonds were issued to finance the construction of the
Public Safety Communications and Emergency Operations Center project. Debt service obligations on the bonds are
recorded in the Water, Sewer and Parking and Debt Service Funds based on a proportionate share of the project benefits
92
B3-132
City of San Luis Obispo, California
Major Governmental Funds
For the Fiscal Year Ended June 30,2014
Page2
The Board has entered into a lease agreement with the City under which the City is responsible for making lease payments
to fund the annual debt service requirements.
2010 Fire Engine/Truck Lease-Purchase Financing. Lease-purchase financing was obtained in order to purchase a fire
apparatus with 100-foot ladder. Debt service obligations are recorded in the Debt Service Fund.
Capital Improvement Board 2012 Refunding Lease Revenue Bonds. On May 24, 2012 the Board issued $5,050,000 of
2012 Lease Revenue Refunding Bonds. These bonds were issued to refinance the outstanding 2001 Lease Revenue
Bonds, Series C, which will be redeemed on December 1, 2029. The 2001 bonds were used to purchase property and
build athletic fields; purchase property for police station expansion; purchase Downtown Plan properties.
The Board has entered into a lease agreement with the City under which the City is responsible for making lease payments
to fund the annual debt service requirements.
Capital Outlay Fund
This fund was established to account for all of the City's construction projects and capital purchases in excess of$25,000
with the exception of those funded through non-major capital project funds and Enterprise Funds. Financing is provided
primarily through transfers from the General Fund, and from State and Federal grants. While budgets are prepared for the
City's capital outlay fund, the capital projects generally span more than one year and are effectively controlled at the
project level; accordingly, budgetary comparisons are not presented.
93
B3-133
City of San Luis Obispo, California
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
Debt Service Fund
For the Fiscal Year Ended June 30,2014
Variance with
Final Budget
Budget Positive
Original Final Actual (Negative)
Expenditures
General government $ $ $ 32,625 $ 32,625
Public safety 935,000 935,000
Principal 1,664,800 1,664,800 1,534,668 (130,132)
Interest 1,095,400 1,095,400 1,048,671 (46,729)
Total Expenditures 2,760,200 3,695,200 3,550,964 (144,236)
Other Financing Sources:
Proceeds from debt issuance 850,775 850,775
Transfers in 2,760,200 3,695,200 3,550,964 (144,236)
Transfers out (850.775) (850 ,775)
Total Other Financing Sources 2,760,200 3,695,200 3,550,964 (144,236)
Net Change in Fund Balance
Fund Balance, Beginning of Year 2,285,700 2,176,100 2,043,222 (132,900)
Fund Balance, End of Year $ 2,285,700 $ 2,176,100 $ 2,043,222 $ {132,900)
94
B3-134
City of San Luis Obispo, California
Nonmajor Governmental Funds
For the Fiscal Year Ended June 30,2014
The City maintains the following nonmajor governmental funds :
Special Revenue Funds
The City has established the following seven special revenue funds in order to account for the proceeds from revenue
sources that are restricted or committed to expenditures for specified purposes. Budgets are prepared using the modified
accrual basis of accounting consistent with U.S. generally accepted accounting principles.
Downtown Business Improvement District (BID) Fund. This fund has been established to account for the receipt of a
surcharge derived from a supplemental assessment upon businesses within the Downtown Business Improvement
District's boundaries. Pursuant to the provisions of the Municipal Code, this surcharge is equal to $150.00 per year.
Expenditures from the fund are limited to four basic purposes: decorating public places within the downtown; promoting
public events in the downtown core; promoting trade activities; and improving parking in the downtown core.
Transportation Development Act (TDA) Fund. The State of California has designated 1/4% of the sales tax levied
statewide for local transportation purposes. Funding for this program was provided during the 1971 legislative session
with the enactment of the Transportation Development Act, which extended the State sales tax to include purchases of
gasoline. Revenues allocated to the City of San Luis Obispo under this program are divided into two categories: Article
3 funds, which are restricted for the improvement and maintenance of street systems including pedestrian and bicycle
facilities; and Article 4 funds, which are restricted for public transit systems and are recorded directly in the Transit Fund.
Under the City's Financial Plan policies, all TDA Article 3 revenues are allocated for alternative transportation purposes.
The purpose of this fund is to account for these revenues.
Tourism Business Improvement District (BID) Fund. This fund has been established to account for the receipt of a
surcharge derived from assessments upon the lodging establishments within the City. The surcharge is equal to 2% of
gross room rents. Expenditures from the fund are limited to the marketing and promotion of tourism.
Gas Tax Fund. Portions of the tax rate per gallon levied by the State of California on all gasoline purchases are allocated
to cities throughout the State on a population basis. These funds are restricted for expenditures by the State of California
for street-related purposes only. Under the City's Financial Plan policies, all gas tax revenues are transferred to the General
Fund for street maintenance purposes.
Community Development Block Grant (CDBG) Fund. This fund has been established to account for federal funds
received by the City specifically to benefit low and moderate income persons, aid in the elimination of blight, and meet
other community development needs as allowed by block grant regulations.
Law Enforcement Grants Fund. This fund has been established to account for public safety grant funds.
Public Arts Contribution Fund. Public contributions to the public art program are accounted for in this fund along with
the expenditures for public art projects funded by this revenue source
95
B3-135
City of San Luis Obispo, California
Nonmajor Governmental Funds
For the Fiscal Year Ended June 30, 2014
Page 2
Capital Projects Funds
The following nine capital project funds are used by the City to account for the financial resources used in the construction
or acquisition of major capital facilities or equipment (with the exception of those financed primarily through proprietary
funds). The City also has two other capital projects funds that are considered m~or governmental funds. Budgets are
prepared using the modified accrual basis of accounting consistent with U.S. generally accepted accounting principles on
a multi-year project basis. Accordingly, budgetary comparisons for the capital projects funds are not presented in the
accompanying other supplementary information.
Parkland Development Fund. This fund was established to account for construction projects related to park acquisition
and development that will be financed primarily with park in-lieu fees.
Transportation Impact Fee Fund. This fund was established to account for construction projects that will be financed
primarily with transportation impact fees.
Open Space Protection Fund. This fund was established to account for projects funded as part of the City's open space
protection program to enhance open space and agricultural conservation on lands within and surrounding the City,
improve passive recreational and nature study opportunities, and restore and enhance wildlife habitat. Projects in this
fund will be financed with General Fund contributions, outside contributions, and State and Federal grants.
Airport Area Impact Fee Fund. This fund was established to account for interim annexation fees collected for the specific
plan and related infrastructure master plans for annexing the airport area to the City.
Los Osos Valley Road (LOVR) Sub-Area Fee Fund. This fund was established to account for sub-area impact fees
collected from development activity in the Los Osos Valley Road sub-area boundary.
Waste Water Impact Fee Fund. This fund was established to account for the collection of development impact fees
collected from the Tank Farm Road, Irish Hills, and Silver City sub-areas.
Fleet Replacement Fund. This fund was established to account for the financing and replacement of vehicles for all
General Fund programs ofthe City. Financing is primarily provided through operating transfers from the General Fund
as well as from interest earnings and sales of surplus property.
Information Technology Replacement Fund. This fund was established in FY 12-13 to account for the financing and
replacement of information technology for all General Fund programs of the City. Financing is primarily provided
through operating transfers from the General Fund as well as from interest earnings.
Affordable Housing Program. This fund accumulates revenues from inclusionary housing fees for capital projects related
to affordable housing programs and projects.
96
B3-136
City of San Luis Obispo, California
Combining Balance Sheet
Nonmajor Governmental Funds
For the Fiscal Year Ended June 30,2014
Special Revenue Funds
Transportation
Downtown Development
BID Act ~TDA~ Tourism BID Gas Tax
Assets
Cash and cash equivalents $ 3,983 $ $ 9,530 $
Investments 158,936
Accounts receivable 150 145,490
Due from other governments 12,292 139,484
Accrued interest receivable 291
Total assets $ 4,133 $ 12,292 $ 314,247 $ 139,484
Liabilities and Fund Balances
Liabilities:
Accounts payable $ 3,011 $ $ 63,430 $
Accrued liabilities 2,415
Due to other funds 12,292 139,484
Total liabilities 3,011 12,292 65,845 139,484
Fund balance:
Restricted for:
Law enforcement grant programs
Committed to:
Affordable housing programs
Impact fee programs
Open space programs
Parkland development programs
Assigned to:
Subsequent years expenditures 1,122 248,402
Unassigned
Total fund balance 1,122 248,402
Total liabilities and fund balance $ 4,133 $ 12,292 $ 314,247 $ 139,484
97
B3-137
Sf!edal Revenue Funds
Community
Development Law
Block Grant Enforcement Public Art
(CDBG) Grants Contributions
$ $ $ 23,483
391,640
52,362
118,200
101 980
$ 118,200 $ 52,463 $ 416,103
$ 114,534 $ 25,318 $
3,749
118,283 25,318
27,145
416,103
___ ____,(._83 ...... ) ----------
___ ___,(_83....!..) __ __:2:..:..7.!..:1...;.;45:.... ___ 4.;..:1..;:.6:...:., 1.:..:03:....
$ 118,200 $ 52,463 =$===4=1=6!:::::, 1=03=
98
B3-138
City of San Luis Obispo, California
Combining Balance Sheet
Nonmajor Governmental Funds, continued
For the Fiscal Year Ended June 30,2014
Page2
Capital Projects Funds
Parkland Transportation Open Space
Development Impact Fee Protection
Assets
Cash and cash equivalents $ 74,175 $ 188,664 $ 21,100
Investments 1,237,077 3,146,508 351,906
Accounts receivable 359,000
Due from other governments 50,205
Accrued interest receivable 2,880 7,014 770
Total assets $ 1,314,132 $ 3,701,186 $ 423 ,981
Liabilities and Fund Balances
Liabilities:
Accounts payable $ 147,810 $ 56,045 $ 12,389
Accrued liabilities 3,440
Due to other funds
Total liabilities 147,810 59,485 12,389
Fund balance:
Restricted for:
Law enforcement grant programs
Committed to:
Affordable housing programs
Impact fee programs 3,641,701
Open space programs 411,592
Parkland development programs 1,166,322
Assigned to:
Subsequent years expenditures
Unassigned
Total fund balance 1,166,322 3,641,701 411,592
Total liabilities and fund balance $ 1,314,132 $ 3,701,186 $ 423,981
99
B3-139
Capital Projects Funds
Airport Area LOVRSub-Waste Water Fleet Info Tech Affordable
Impact Fee Area Fee Impact Fee Replacement Replacement Housing
$ 54,445 $ 18,352 $ $ 153,307 $ 38,475 $ 166,347
908,031 306,064 2,556,827 641,673 2,774,308
2,124 700 5,868 1,293 6,192
$ 964,600 $ 325 ,116 $ $ 2,716,002 $ 681,441 $ 2,946,847
$ 7,959 $ 179,906 $ $ 12,371 $ 158 $
80,997
7,959 179,906 93,368 158
2,946,847
956,641 145,210
2,622,634 681,283
956,641 145,210 2,622,634 681,283 2,946,847
$ 964,600 $ 325,116 =$======= $ 2,716,002 $ 681,441 $ 2,946,847
100
B3-140
City of San Luis Obispo, California
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds
For the Fiscal Year Ended June 30,2014
Special Revenue Funds
Transportation
Downtown Development
BID Act (TDA) Tourism BID Gas Tax
Revenues:
Use of money and property $ $ $ 9,040 $
Subventions and grants 49,169 1,460,290
Charges for services 218,267 1,217, 781
Other revenues 150
Total revenues 218,417 49,169 1,226,821 1,460,290
Expenditures:
Current:
Community development 218,417 1,175,402
Capital:
Public safety
Transportation
Leisure, cultural and social services
Community development
Total expenditures 218,417 1,175,402
Excess (deficiency) of revenues over
(under) expenditures 49,169 51,419 1,460,290
Other financing sources (uses):
Transfers in
Transfers out (49,169} {24,356} {1,460,290}
Total other financing
sources (uses) (49,169) (24,356) (1,460,290)
Net change in fund balance 27,063
Fund balance, beginning of year 1,122 221 ,339
Fund balance, end of year $ 1,122 $ $ 248,402 $
101
B3-141
S~ecial Revenue Funds Ca~ital Projects Funds
Community
Development Law
Block Grant Enforcement Public Art Parkland Transportation Open Space
(CDBG) Grants Contributions Development Impact Fee Protection
$ 351 $ 2,167 $ 3,148 $ 9,500 $ 28,352 $ 4,560
1,012,873 256,149 282,208 50,205
2,616 97,535 1,002,592 20,980
18,951 106,940
1,032,175 260,932 110,088 107 ,035 1,313,152 75,745
247,831
256,511
709,600
122,227 173,120
834,106 58,452
1,081,937 256,511 122,227 173,120 709,600 58,452
(49,762) 4,421 (12,139) (66,085) 603,552 17,293
52,493 80,685 200,000
52,493 80,685 200,000
2,731 4,421 68,546 (66,085) 603,552 217,293
(2,814) 22 ,724 347,557 1,232,407 3,038,149 194,299
$ ~83) $ 27,145 $ 416,103 $ 1,166,322 $ 3,641,701 $ 411,592
102
B3-142
City of San Luis Obispo, California
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds, continued
For the Fiscal Year Ended June 30,2014
Page 2
Capital Pro.jects Funds
Airport Area LOVRSub-Waste Water
lm(!act Fee Area Fee lm(!act
Revenues:
Use of money and property $ 6,676 $ 8,939 $ 744
Subventions and grants
Charges for services 255,011 3,097 73,026
Other revenues
Total revenues 261,687 12,036 73,770
Expenditures:
Current:
Community development
Capital:
Public safety
Transportation 9,845 13,076
Leisure, cultural and social services
Community development
Total expenditures 9,845 13,076
Excess (deficiency) of revenues over
(under) expenditures 251,842 (1,040) 73,770
Other financing sources (uses):
Transfers in
Transfers out (73,770)
Total other financing
sources (uses) (73,770)
Net change in fund balance 251,842 (1,040)
Fund balance, beginning of year 704,799 146,250
Fund balance, end of year $ 956,641 $ 145,210 $
103
B3-143
Capital Projects Funds
Total Nonmajor
Fleet Info Tech Affordable Governmental
Replacement Replacement Housing Funds
$ 19,074 $ 4,252 $ 59,724 $ 156,527
100,955 3,211,849
911,512 3,802,417
59,123 27,947 {2492 212,862
78,197 32,199 1,071,942 7,383,655
1,641,650
422,107 116,066 794,684'
732,521
295,347
30,000 922,558
422,107 116,066 30,000 4,386,760
(343,910) (83,8672 1,041,942 2,996,895
411,360 565,500 1,310,038
(35,000) (1 7,000) (1,659,585)
376,360 565,500 (17,000) (349,547)
32,450 481,633 1,024,942 2,647,348
2,590,184 199,650 1,921,905 10,617,571
$ 2,622,634 $ 681,283 $ 2,946,847 $ 13,264,919
104
B3-144
City of San Luis Obispo, California
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
Downtown Business Improvement District Fund
For the Fiscal Year Ended June 30,2014
Variance with
Final Budget
Budget Positive
Original Final Actual (Negative)
Revenues
Charges for services
Assessments $ 205,000 $ 205,000 $ 218,267 $ 13,267
Other revenues 150 150
Total Revenues 205,000 205,000 218,417 13,417
Expenditures
Current
Community development 205,000 205,000 218,417 13,417
Total Expenditures 205,000 205,000 218,417 13,417
Excess of Revenues Over Expenditures
Net Change in Fund Balance
Fund Balance, Beginning of Year 102,000 135,165 1,122 128,035
Fund Balance, End of Year $ 102,000 $ 135,165 $ 1,122 $ 128,035
105
B3-145
City of San Luis Obispo, California
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
Transportation Development Act (TDA)
For the Fiscal Year Ended June 30,2014
Revenues
Subventions and grants
Total Revenues
Excess ofRevenues Over Expenditures
Other Financing Uses:
Operating transfers out
Net Change in Fund Balance
Fund Balance, Beginning of Year
Fund Balance, End ofYear
$
$
Budget
Original Final
49,100 $ 49,100 $
49,100 49,100
49,100 49,100
(49,100) (49,100)
$ $
106
Actual
Variance with
Final Budget
Positive
(Negative)
49,169 ....;$;:;..._ __ _;6:;.;,9_
49,169 69
49,169 69
( 49, 169) (69)
$
B3-146
City of San Luis Obispo, California
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
Tourism Business Improvement District Fund
For the Fiscal Year Ended June 30,2014
Variance with
Final Budget
Budget Positive
Original Final Actual (Ne~ative)
Revenues
Use of money and property $ 1,500 $ 1,500 $ 9,040 $ 7,540
Charges for services
Assessments 1,149,900 I, 198,000 1,217,781 19,781
Total Revenues 1,151,400 1 '199,500 1,226,821 27,321
Expenditures
Current
Community development 1,128,400 1,250,604 1,175,402 ~75,2022
Total Expenditures 1,128,400 1,250,604 1,175,402 (75,202)
Excess of Revenues Over (Under) Expenditures 23,000 (51,104) 51,419 102,523
Other Financing Uses:
Operating transfers out (23,000) (23,000) (24,356) (1,356)
Net Change in Fund Balance (74,104) 27,063 101,167
Fund Balance, Beginning of Year 102,000 135,165 221,339 128,035
Fund Balance, End ofYear $ 102,000 $ 61,061 $ 248,402 $ 229,202
107
B3-147
City of San Luis Obispo, California
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
Gas Tax Fund
For the Fiscal Year Ended June 30,2014
Revenues
Subventions and grants
Total Revenues
Excess ofRevenues Over Expenditures
Other Financing Uses:
Operating transfers out
Net Change in Fund Balance
Fund Balance, Beginning of Year
Fund Balance, End of Year
Budget
Original Final
$ 1,357,200 $ 1,282,200
1,357,200 1,282,200
1,357,200 1,282,200
(1,357,200) (I ,282,200)
$ $
108
Actual
Variance with
Final Budget
Positive
(Negative)
$ I ,460,290 _$;.___1_78-'-,0_9_0_
1,460,290 178,090
1,460,290 178,090
(I ,460,290) (178,090)
$ $
B3-148
City of San Luis Obispo, California
Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual
Community Development Block Grant (CDBG) Fund
For the Fiscal Year Ended June 30,2014
Variance with
Final Budget
Budget Positive
Original Final Actual (Negative)
Revenues
Subventions and grants $ 512,805 $ 1,251,041 $ 1,012,873 $ (238,168)
Other revenues 19,302 19,302
Total Revenues 512,805 1,251,041 1,032,175 (218,866)
Expenditures
Current
Community development 472,600 259,320 247,831 (11 ,489)
Capital Projects 105,000 1,062,276 834,106 {228,1702
Total Expenditures 577,600 1,321,596 1,081,937 (239,659)
Excess of Revenues Over (Under) Expenditures (64,795) (70,555) (49,762) 20,793
Other Financing Uses:
Operating transfers in 71,000 73,200 52,493 (20,707)
Net Change in Fund Balance 6,205 2,645 2,731 86
Fund Balance, Beginning of Year 266,100 573 500 (2,8142 576,000
Fund Balance, End ofYear $ 272,305 $ 576,145 $ (83) $ 576,086
109
B3-149
City of San Luis Obispo, California
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
Law Enforcement Grants Fund
For the Fiscal Year Ended June 30,2014
Variance with
Final Budget
Budget Positive
Original Final Actual (Negative)
Revenues
Use of money and property $ 100 $ 100 $ 2,167 $ 2,067
Subventions and grants 325,390 325,390 256,149 (69,241)
Other revenues 2,000 2,000 2,616 616
Total Revenues 327,490 327,490 260,932 (66,558)
Expenditures
Capital Projects 121 886 328,390 256,511 ~71 879}
Total Expenditures 121,886 328,390 256,511 (71 879)
Excess of Revenues Over (Under) Expenditures 205,604 (900) 4,421 5 32 1
Net Change in Fund Balance 205,604 (900) 4,421 5,321
Fund Balance, Beginning of Year 21,400 21,600 22,724 1,400
Fund Balance, End ofYear $ 227,004 $ 20,700 $ 27,145 $ 6,721
110
B3-150
City of San Luis Obispo, California
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
Public Art Contributions Fund
For the Fiscal Year Ended June 30,2014
Variance with
Final Budget
Budget Positive
Original Final Actual (Negative)
Revenues
Use of money and property $ 2,100 $ 2,100 $ 3,148 $ 1,048
Other revenues 2,000 100,523 106,940 6,417
Total Revenues 4,100 102,623 110,088 7,465
Expenditures
Capital Projects 504,929 122,227 (382, 702)
Total Expenditures 504,929 122,227 (382,702)
Excess of Revenues Over (Under) Expenditures 4,100 (402,306) (12,139) 390,167
Other Financing Uses:
Operating transfers in 806,855 80,685 (726,170)
Net Change in Fund Balance 4,100 404,549 68,546 (336,003)
Fund Balance, Beginning of Year 166,300 373,800 347,557 7,000
Fund Balance, End ofYear $ 170,400 $ 778,349 $ 416,103 $ p29,003)
Ill
B3-151
City of San Luis Obispo, California
Agency Funds
For the Fiscal Year Ended June 30,2014
The City of San Luis Obispo has established the following agency funds, which are used to account for funds held by the
City as an agent for private donations and programs operated jointly with other local agencies:
Whale Rock Fund. This fund was established to account for the financial activities of the Whale Rock Commission, a
joint venture providing water service to the City, the California Polytechnic State University, and the California Men's
Colony.
Jack House Fund. This fund was established to account for the financial activities of the Jack House Committee, which
includes the rehabilitation and use of a use of the historic Jack House property.
Joint Recreational Use Fund. This fund was established to account for the financial activities of the committee on Joint
Recreational Use, which includes the development and use of recreational facilities built on school district property.
Mayor's Youth Task Force Fund. This fund was established to account for the financial activities of this community
task force.
Narcotics Task Force Fund. This fund was established to account for the financial activities of the County task force.
Bomb Task Force Fund. This fund was established to account for the financial activities of the County task force.
Hazardous Materials Task Force Fund. This fund was established to account for the financial activities of the County
task force .
General Agency Fund. This fund was established to account for a broad category of funds , including donations, provided
to the City to be utilized for specific purposes.
Duvall Fund. This fund was established to account for a bequest by Mary Jane Duvall to assist in civic and beautification
projects in the Mission Plaza area and extensions.
Boysen Ranch Conservation Easement Fund. This fund was established to account for contributions toward obtaining
a conservation easement on the Boysen Ranch property .
Cable Television Public, Educational and Government Funds for the City of San Luis Obispo, San Luis Coastal Unified
School District (SLCUSD) and San Luis Obispo County Public Access, Inc. Public Access Television (PAT). These funds
account for collections by Charter Communications from its customers for PEG access equipment and facilities. The City
of San Luis Obispo, SLCUSD and PAT annually receive equal shares of collections, restricted for approved uses as
stipulated in the cable franchise agreement.
112
B3-152
City of San Luis Obispo, California
Combining Statement of Changes in Assets and Liabilities
Agency Funds
For the Fiscal Year Ended June 30,2014
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Whale Rock Fund
Assets
Cash and cash equivalents $ 137,800 $1,071,016 $ 1,140,684 $ 68,132
Investments 1,162,800 19,340 1,143,460
Accounts receivable 9,647 9,647
Accrued interest receivable 4,000 2,800 3,962 2,838
Prepaid expense 24,600 10,571 38,100 (2,929)
Due from other governments 38 100 26,584 24,600 40,084
Total Assets $ 1,367,300 $1,120,618 $ 1,226,686 $ 1,261,232
Liabilities
Accounts payable $ 99,100 $ 540,952 $ 606,726 $ 33,326
Accrued salaries 71,000 47,158 95,520 22,638
Other liabilities 30,800 462 31,262
Due to agency participants 1,166,400 1,168,033 1,160,427 1,174,006
Total Liabilities $ 1,367,300 $1,756,605 $ 1,862,673 $ 1,261,232
Balance Balance
June 30,2013 Additions Deductions June 30, 2014
Jack House Fund
Assets
Cash and cash equivalents $ 2,000 $ 11,058 2,408 $ 10,650
Investments 8,500 8,500
Accounts receivable 50 50
Accrued interest receivable 26 26
Total Assets $ 10,500 $ 11' 134 $ 10,908 $ 10,726
Liabilities
Accounts payable 56 56
Other liabilities 10,500 170 10,670
Total Liabilities $ 10,500 $ 226 $ $ 10,726
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Joint Recreational Use Fund
Assets
Investments $ 200 $ 15 $ 215
Total Assets 200 15 215
Liabilities
Other liabilities 200 15 215
Total Liabilities $ 200 $ 15 $ $ 215
113
B3-153
City of San Luis Obispo, California
Combining Statement of Changes in Assets and Liabilities
Agency Funds, continued
For the Fiscal Year Ended June 30,2014
Page 2
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Mayor's Youth Task Force Fund
Assets
Cash and cash equivalents $ 100 $ 100 $
Investments 2,100 147 2,247
Total Assets 2,200 147 100 2,247
Liabilities
Other liabilities 2,200 47 2,247
Total Liabilities $ 2,200 $ 47 $ 2,247
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
CDBG Loan Program Fund
Assets
Cash and cash equivalents $ 3,900 $ 3,900 $
Investments 35,300 35,300
Total Assets $ 39,200 $ $ 39,200 $
Liabilities
Due to agency participants 39,200 39,200
Total Liabilities $ 39,200 $ $ 39,200 $
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Narcotics Task Force Fund
Assets
Cash and cash equivalents $ 7,900 $ 215,788 $ 187,338 $ 36,350
Investments 69,900 69,900
Accrued interest receivable 300 91 300 91
Total Assets $ 78,100 $ 215,879 $ 257,538 $ 36,441
Liabilities
Accounts payable 100 195,135 193,953 1,282
Due to agency participants 78,000 195,905 238 ,746 35,159
Total Liabilities $ 78,100 $ 391,040 $ 432,699 $ 36,441
114
B3-154
City of San Luis Obispo, California
Combining Statement of Changes in Assets and Liabilities
Agency Funds, continued
For the Fiscal Year Ended June 30,2014
Page3
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Bomb Task Force Fund
Assets
Cash and cash equivalents $ 14,700 $ 43,467 $ 58,167
Investments 134,800 78,388 213,188
Accrued interest receivable 300 463 300 463
Total Assets $ 149,800 $ 122,318 $ 58,467 $ 213,651
Liabilities
Accounts payable 300 5,040 5,078 262
Due to agency participants 149,500 225,763 161,874 213,389
Total Liabilities $ 149,800 $ 230,803 $ 166,952 $ 213,651
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Hazardous Materials Task Force Fund
Assets
Cash and cash equivalents $ 7,200 $ 27 $ 7,227 $
Investments 62,900 12,430 75,330
Total Assets 70,100 12,457 7,227 75,330
Liabilities
Accounts payable 60 60
Due to agency participants 70,100 49,240 44,070 75,270
Total Liabilities $ 70,100 $ 49,300 $ 44,070 $ 75,330
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
General Agency Fund
Assets
Cash and cash equivalents $ 98,300 $1,314,245 $ 1,377,209 $ 35,336
Investments 901,200 311,877 589,323
Accounts receivable 100 110,369 31,314 79,155
Other assets 30,900 36 30,864
Total Assets 1,030,500 1,424,614 1,720,400 734,678
Liabilities
Accounts payable 61,500 325,496 345,067 41,929
Other liabilities 969,000 505,196 781 ,447 692,749
Total Liabilities $ 1,030,500 $ 830,692 $ 1,126,514 $ 734,678
115
B3-155
City of San Luis Obispo, California
Combining Statement of Changes in Assets and Liabilities
Agency Funds, continued
For the Fiscal Year Ended June 30, 2014
Page 4
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Duvall Fund
Assets
Cash and cash equivalents $ 15,400 $ $ 3,928 $ 11,472
Investments 139,400 5,192 144,592
Accrued interest receivable 700 356 344
Total Assets $ 155,500 $ 5,192 $ 4,284 $ 156,408
Liabilities
Other liabilities 155,500 908 156,408
Total Liabilities $ 155,500 $ 908 $ 156,408
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Boysen Ranch Conservation Easement
Assets
Cash and cash equivalents $ 38,300 $ 10,448 $ 26,661 $ 22,087
Investments 348,900 19,456 368,356
Accrued interest receivable 1,800 862 1,800 862
Total Assets $ 389,000 $ 30,766 $ 28,461 $ 391,305
Liabilities
Accounts payable 24,600 33 24,567
Other liabilities 364,400 2,338 366,738
Total Liabilities $ 389,000 $ 2,338 $ 33 391,305
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Peg -City of San Luis Obispo
Assets
Cash and cash equivalents $ 14,400 $ 104,648 $ 109,915 $ 9,133
Investments 130,300 22,017 152,317
Accounts receivable 10,405 150 10,255
Accrued interest receivable 600 474 600 474
Total Assets $ 145,300 $ 137,544 $ 110,665 $ 172,179
Liabilities
Accounts payable 14,000 70,311 82,756 1,555
Other liabilities 131,300 48,196 8,872 170,624
Total Liabilities $ 145,300 $ 118,507 $ 91,628 $ 172,179
116
B3-156
City of San Luis Obispo, California
Combining Statement of Changes in Assets and Liabilities
Agency Funds, continued
For the Fiscal Year Ended June 30,2014
Page 5
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Peg-SLCUSD
Assets
Cash and cash equivalents $ 300 $ 11,483 $ $ 11,783
Investments 2,500 194,009 196,509
Accounts receivable 10,255 10,255
Total Assets $ 2,800 $ 215,747 $ $ 218,547
Liabilities
Other liabilities 2,800 215,747 218,547
Total Liabilities $ 2,800 $ 215,747 $ $ 218,547
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Peg-PAT
Assets
Cash and cash equivalents $ 27,000 $ $ 27,000 $
Investments 244,300 244,300
Accrued interest receivable 1,100 1,100
Total Assets $ 272,400 $ $ 272,400 $
Liabilities
Due to agency participants 272,400 272,400
Total Liabilities $ 272,400 $ $ 272,400 $
Balance Balance
June 30, 2013 Additions Deductions June 30, 2014
Totals -All Agency Funds
Assets
Cash and cash equivalents $ 367,300 $2,782,180 $ 2,944,537 $ 204,943
Investments 3,243,100 331,654 689,217 2,885,537
Accounts receivable 100 140,726 31,464.00 109,362
Accrued interest receivable 8,800 4,716 8,418 5,098
Other assets 55,500 10,571 38,136 27,935
Due from other governments 38,100 26,584.00 24,600 40,084
Total Assets $ 3,712,900 $3 ,29 6,431 $ 3,736,372 $ 3,272,959
Liabilities
Accounts payable $ 199,600 $1,137,050 $ 1,233,613 $ 103,037
Accrued salaries 71,000 47,158.00 95,520 22,638
Other liabilities 1,666,700 773,079 790,319 1,649,460
Due to agency participants 1,775,600 1,638,941 1,916,717 1,497,824
Total Liabilities $ 3,712,900 $3,596,228 $ 4,036,169 $ 3,272,959
117
B3-157
THIS PAGE INTENTIONALLY LEFT BLANK
B3-158
STATISTICAL SECTION (UNAUDITED)
B3-159
City of San Luis Obispo, California
Statistical Section Overview
June 30, 2014
This part of the City of San Luis Obispo'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 says about the government's overall financial health.
Contents
Financial Trends-Schedules 1-6. 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-Schedules 7-13. These schedules contain information to help the reader assess the government's
most significant local revenue sources, sales and property taxes.
Debt Capacity -Schedules 14-19. 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 -Schedules 20-22. These schedules offer demographic and economic
indicators to help the reader understand the environment within which the government's financial activities take place.
Operating Information -Schedules 23-26. 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 government provides and the
activities it performs.
119
B3-160
Schedule 1
City of San Luis Obispo, California
Net Positions by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
For the Fiscal Year Ended June 30
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Governmental activities:
Net investment in capital assets $ 107 ,663 ,800 $ 113 ,263,400 $ 115 ,149,100 $ 121 ,24 7' 100 $ 119,425,100 s 129 ,416,800 s 133 ,145,800 $ 141 ,686 ,600 $ 142,239,500 $ 145 ,266 ,043
Restricted 1,185 ,000 4,512,200 3,452 ,100 1,822)00 2,510,500 2,569,800 2,543,800 2,620,700 2,374,800 4,825 ,662
Unrestricted 19.446.800 20,321 ,700 28,786,300 30,935,700 38.928.500 26.204_500 26.401.500 23 ,583 ,000 29,927.200 ____.E...524.272
Total goverrunental activities net position $ 128.295 ,600 $ 138,097,300 $ 14 7,387,500 $ 154,005,100 $ 160 ,864 ,100 $ 158,191,100 $ 162,091,100 $ 167,890,300 $ 174.541,500 $ 182 ,615 ,977
Business-type activities:
Net investment in capital assets $ 91,869,500 $ 96,024,900 $ 95,526,800 $ 102,540,500 $ 109,675,900 s 112,395,800 s 117,314,700 s 119,957,600 s 123,510,200 $ 119,116,303
Restricted 1,568,700 4,401,900 8,009,800 2,506,200 3,918,600 2,763,700 2,777,100 2,293,900 2,254,200 2,248,979
Unrestricted 24.742.600 24.327,400 27,327.200 31 ,873 ,200 31,329,500 38,245,900 36.493.600 37.759.000 41.712.200 54.766.319
Total business-type activities net position $ 118,180,800 $ 124,754,200 $ I 30.863.800 $ 136,919,900 $ 144,924,000 $ 153 ,405,400 $ 156,585,400 $ 160,0 I 0,500 $ 167,476,600 $ 176.131 .601
Primary government (City wide totals):
Net investment in capital assets $ 199,533 ,300 $ 209,288,300 $ 210,675,900 $ 223 ,78 7,600 $ 229,101,000 $ 241,812 ,600 s 250,460,500 s 261 ,644,200 $ 265,749,700 $ 264,382 ,346
Restricted 2,753 ,700 8,914 ,100 11,461,900 4,328 ,500 6,429 ,100 5,333 ,500 5,320,900 4,914,600 4,629,000 7,074,641
Unrestricted 44 ,189,400 44,649,100 56,113,500 62 .808.900 70.258.000 64.450.400 62,895.100 61 .342.000 71.639.400 87.290.591
Total primary government net position $ 246.4 76.400 $ 262,851,500 $ 278,251 ,300 $ 290,925,000 $ 305,788,100 $ 311,596,500 $ 318 ,676,500 $ 327.900.800 $ 342.018.100 $ 358.747.578
Note:
The City implemented GASB Statement No . 34 in the 2002-03 fiscal year The infonnation in this schedule is therefore set forth prospectively from the year of implementation.
120
B3-161
Schedule 2
City of San Luis Obispo, Californiia
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
For The Fiscal Year Ended June 30
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Expenses:
Governmental activities:
Public safety $ 20,901,500 $ 22,018,800 $ 23,083,200 s 28,189,900 $ 29,330,300 $ 27,687,200 $ 26,774,800 $ 27,993,900 $ 28,859,200 $ 29,651 ,702
Transportation 4,548,400 5,142,200 6,276,600 6,463,200 6,619,300 7,116,400 8,809,400 7,778,000 8,551,500 8,975,047
Leisure, cultural and social services 7,662,700 7,973,800 7,688,000 9,518,400 9,778,900 9,445,600 9,299,200 9 ,500,300 10,078,700 10,239,853
Community development 5,739,700 5,503,700 6,953,500 7,822,300 8,233,600 11 ,020,400 8,166,300 8,782,200 8,866,900 10,183 ,782
Interest on long-tenn debt 1.365.700 730,200 1,021 ,100 950.600 951,501~ 1.348 ,100 1,248,400 1.198,000 1,217,200 1.221.205
Total governmental activities expenses 40,218 ,000 41,368,700 45,022,400 52.944.400 54,913,600 56 .617.700 54,298,100 55.252.400 57,573,500 60.271.589
Business-type activities:
Water 7,942,000 8,338,000 11,208,800 10,656,200 I 1,532,900 11,323,200 16,106,300 17,455,200 17,019,000 17,575,961
Sewer 7,451 ,700 7,403,700 7,885,100 8,51 I ,300 9,250,200 9,153,200 9,633,900 9,530,400 10,189,400 10,647,255
Parking 2,491,900 2,741,800 3,444,000 3,416,400 3,704,700 3,494,300 3,501,500 3,598,000 3,678,600 3,636,607
Transit 2,384,500 2,556,000 2,894,700 3,060,100 3,199,200 3,295,500 3,409,700 3,778,900 3,903,900 4,059,138
Golf 504.6!!2.._ 539,300 609,200 633.600 722,100 708.400 724,100
Total business-type activities expenses 20.774 .700 21,578,800 26 ,041,800 26.277 .600 28,409,100 27 .974.600 33,375,500 34.362.500 34,790,900 35 .9 18 .961
Total primruy government expenses $ 60.992.700 $ 62,947,500 $ 71.064.200 $ 79.222,000 s 83,322,700 $ 84.592.300 $ 87,673,600 $ 89,614,900 $ 92,364,400 $ 96.190.550
Program Revenues:
Governmental activities:
Charges for services:
Public safety $ 626,100 $ 1,371,900 $ 1,515,100 s. 1,441,200 $ 1,508 ,600 $ 1,501,500 $ 1,745,200 $ 1,750,700 $ 1,599,000 $ 1,589,278
Transportation 636,700 1,781,200 697,700 1,150,000 1,492,800 241,700 2,690,200 418,000 221,200 1,321,323
Leisure, cultural and social services 1,331,500 1,562,100 1,257,600 2,190,500 1,470,000 1,304,700 1,421,600 1,834,200 1,926,800 3,048,274
Community development 3,267,200 5,268,800 5,067,400 3,981,400 3,107,400 2,917,700 3,166,200 4,563,200 4,126,400 4,981,211
Operating grants and contributions 1,234,700 2,071,500 3,083,100 2,835,700 3,671,200 2,052,000 1,885 ,100 2,152,700 2,814,700 2,412,469
Capital grants and contributions 4.826.100 2,907,200 l ,657.200 1.985 ,500 5,320,500 2.946.800 3,066,300 2.021.800 1,991 ,900 3.680.440
Total governmental activities program revenues 11 .922 ,300 __ 14, 962,1()Q_ 13278100 L3.584.300 16,570 ,500 1(),964.400 -13 974,600 12.740.600 12 ,680,000 17.032.995
121
B3-162
Schedule 2
City of San Luis Obispo, California
Changes in Net Position, continued
Last Ten Fiscal Years
(Accrual Basis of Accounting)
For The Fiscal Year Ended June 30
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 __ 2013-14
Business-type activities:
Charges for services:
Water $ 9,214,800 $ 10,5 12 ,500 s 11 ,603,100 $ 12 ,6 91 ,900 s. 13 ,836 ,000 $ 13 ,8 12,100 s 14,298,100 $ 16 ,753,100 $ 18,148,200 s 19,755 ,909
Sewer 8,872,400 10,236,000 10,868 ,800 10,205,500 11,785,200 13 ,225,100 13,320,400 14 ,789,700 16,212,000 17 ,151 ,2 12
Parking 3,719,500 3,668,200 3,740,600 3,508,100 3,496,100 3,564,700 3,533,300 4,693,400 3,998,7 30
Transit 435 ,000 452,100 766,000 520,500 607,000 551,600 593,100 552,900 682,700 688,5 85
Golf 314,800 343,000 380,000 349,000 382,200 394,600 364,000
Operating grants and contributions 1,737,900 1,685,500 1,879,100 1,841,500 2,192,200 2,350,200 2,220,700 2,502,500 2,673,500 2,458,640
Capital grants and contributions 2,034.000 332.200 457,800 1,960,900 1.627.300 952.,300 1,242 ,000 750.900 731,300 82,359 --
Total business-type activities programs revenues 26,328.400 27,229,500 29,695,400 27,569.300 33,938,000 34,782,000 35,603,000 38.882.400 43,141,100 44,135 ,435
Total primary government program revenues $ ~8~25Q,7_Q()_ $ 42,192,200 _!__42,973 ,50_() $ 41,153,600 $ 50,508,500 $ 45.746.400 $ 49,577,600 $ 51.623.000 $ 55,821,100 $ 61 ,168,430
Net Revenues (Expenses):
Goverrunental activities $ (28,295, 700) $ (26,406,000) $ (31,744,300) $ (39,360, 100) $ (38 ,343 , 100) $ (45,653,300) $ (40,323,500) $ (42,511,800) $ (44,893,500) $ (43,238,594)
Business-type activities 5.553.700 5.650,700 3,653 ,600 1.291.700 5,528 900 6.807,400 2,227 ,500 4 .51 9.900 8,350,200 8.216.474
Total primary government _LQ2,742 ,000) $ (20 ,755 ,300) $ -(28 ,090,7QQl $ (38.068.400) $ (32 ,814 ,200[ $ Jl8 ,8i5~00) s (38,096,000) $ (37,991 ,900) s (36 ,543,300) $ (35.022, 120)
General Revenues and Other Changes in Net Position:
Governmental activities:
Sales and use taxes s 11 ,745 ,400 $ 12,675,900 s 14,993,800 $ 19,578,300 s 17,712,100 $ 15,976,400 $ 17,714,900 $ 19,527,500 $ 20,736,000 s 22,180,173
Property taxes 6,709,400 7,596,700 8,255 ,000 8,374,200 8,788,400 8,579,300 8,441,100 8,367,000 9,176,600 8,960,010
T ransicnt occupancy tax 4,079,800 4,539,200 4,786 ,000 5,054,700 4,679,500 4,496,100 4,844,200 5,222,000 5,572,400 6,063,232
Utility users tax 3,670,200 3,947,300 4,096 ,100 4,177,700 4,358,500 4,862,400 4,592,300 4,584,100 4,916,100 5,345,342
Property tax in-lieu of vehicle license fees 2,187,000 2,486,400 3,358 ,200 3,280,100 3,504,700 3,565,100 3,551,100 3,492,400 3,533,200 3,645 ,692
Other taxes and fees 3,838,800 4,069,900 3,860,400 4,228,100 4,317,900 4,226,800 4,149,900 4,299,800 4,607,600 4,779,570
Investment earnings 632 ,500 536,200 1,675,400 1,605,300 1,775 ,300 1,239,500 742 ,500 770 ,100 237,100 566,931
Miscellaneous and other 63 ,600 671,800 360,500 478,400 400,800 339,600 414 ,700 227,200 349,900 679,127
Gain (loss) on disposal of capital assets (337, 100) (3,400) (11,000)
Prior period adjustment 2,657 ,100 (833,234)
Cumulative change in accounting principle (GASB 65) (345,400)
Transfers ~176,9001 (2 55 .300) ~350,9001 (462,0001 p35,000l (301.500} ~227,2001 1.820.900 115.100 ___ (73,771)
Total governmental activities 32 ,749,80Q_ 36,268,100 41 ,034,500 45,977,700 45,202,200 42.980.300 44,223,500 48.311.000 51.544.700 51.313 .072
122
B3-163
Business-type activities
Investment earnings
Cwnulative change in accounting principle
Trans furs
Total business-type activities
Total primary government
Change in net position:
Governmental activities
Business-type activities
Total primary govenunent
Note:
$
$
$
2004-05 200~6
658,200 667,400
176,900 255.300
835,100 922.700
33,584,900 $ 37,190,800
4 ,454,100 $ 9,862,100
6~ 6.573.400
10,842 ,900 $ 16 ,435500
Schedule 2
City of San Luis Obispo, California
Changes in Net Position, continued
Last Ten Fiscal Years
(Accrual Basis of Accounting)
For The Fis<:al Year Ended June 30
2006-07 2007-08 2008-0!1 2 009-10
2,105 ,100 1,413,400 1,699 .600 1,372 ,500
350.900 462,000 335 000 301 ,500
2 ,456,000 1,875,400 2,034 600 1,674,000
$ 43,490,500 $ 47,853,100 $ 47,236 800 $ 44,654,300
$ 9,290,200 $ 6,617,600 $ 6,859 100 $ (2,673,000)
6,109,600 3,167,100 7,563 500 &.481.400
$ 15,399,800 $ 9,784,700 $ 14.422 600 $ 5,808,400
The City implemented GASB Statement No . ~4 in the 2003 fiscal year. The infOrmation in this schedule is therefore set forth prospectively from the year of implementation,
123
201 0-11 20 11 -12 2012-13 2 013-14
725,300 726,100 73,500 364,551
(842,600)
227.200 !I ,820,900) (115,100} 73 ,771
952,500 !1,094,800) (884,200} 438,322
$ 45.176,000 $ 47,216,200 $ 50.660.500 $ 51 ,751,394
$ 3,900,000 $ 5,799,200 $ 6,651,200 $ 8,074,478
3.180.000 3,425,100 7.466.000 8,654,796
$ 7.080.000 $ 9,224,300 $ 14.117.200 $ 16,729,274
B3-164
Schedule 3
City of San Luis Obispo, California
Governmental Activities Tax and Franchise Revenues by Source
Last Ten Fiscal Years
(Accrual Basis of Accounting)
Fiscal Sales Measure Y Property Transient Utility Property
Year and Use 1/2 cent (Note 1) Occul!ancy Users in-lieu of VLF
2004-05 11,745,400 6,630,600 4,079,800 3,670,200
2005-06 (Note 2) 12 ,675 ,900 7,519,600 4,539 ,200 3,947 ,300 1,530,800
2006-07 (Note 3) 13,993 ,800 1,000 ,000 8,255 ,000 4,786 ,000 4,096 ,100 3,061,500
2007-08 13,581,700 5,996 ,600 8,374,200 5,054,700 4,177,700 3,280,100
2008-09 12,070,700 5,641 ,400 8,788,400 4,679,500 4,358,500 3,504 ,700
2009-10 10,723,900 5,252 ,500 8,579,300 4 ,496,100 4,862,400 3,565,100
2010-11 12,098,600 5,616 ,300 8,441,100 4 ,844 ,200 4,592,300 3,551 ,100
2011-12 13 ,290 ,000 6 ,237 ,500 8,367,000 5,222 ,000 4,584,100 3,492,400
2012-13 14,242,200 6,493 ,800 9,176,600 5,572,400 4,916,100 3,533 ,200
2013-14 15,405,808 6,774,365 8,960,010 6,063,232 5,345,692 3,645,692
Notes:
I. Property tax revenues are presented net of SB2557 County administrative fees (approximately 3% of total property tax revenues).
The City has elected to receive its property tax revenues based on the Teeter Plan method of collection whereby the
County remits 100% of taxes levied, pursues collection and retains any delinquent taxes and related penalties and interest
2 . GASB 34 was implemented in 2002-03 and prior information is not available.
3. Beginning in 2005-06, the State implemented a "VLF Swap," under which an equal amount of Vehicle License Fees was "swapped " for an equal
amount of revenues to be collected with the property tax roll
4 In November 2006 , voters in San Luis Obispo approved a local sales and use tax measure (Measure Y) increasing the City rate by 1/2%,
which became effective April I, 2007. The sales tax measure has a sunset provision of 8 years
124
Franchise
Fees
2,005,600
2,101 ,300
2,153,700
2,361,700
2,439,400
2,396,700
2,352,100
2,462 ,300
2,552 ,300
2,636,599
Business Other
Tax Taxes Total
1,518,800 314,400 29,964,800
1,578 ,000 390,600 34 ,282,700
1,706,700 360,500 39,413,300
1,866 ,400 288,100 44 ,981 ,200
1,878,500 234,300 43 ,595 ,400
I ,830 ,100 204,600 41 ,910,700
1,797,800 209,100 43 ,502 ,600
1,837,500 227,200 45 ,720 ,000
2,055 ,300 349 ,900 48 ,891 ,800
2,142 ,971 679,127 51 ,653 ,496
B3-165
Schedule 4
City of San Luis Obispo, California
Fund Balances of Governmental Fulllds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
For the Fisc• I Year Ended June 30
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
General fund:
Reserved $ 345,000 $ 311,500 $ 437,800 $ 808,100 $ 29l,:i00 $ 201,800
Unreserved:
Designated 1,623,300 743,500 1,093,900 125,000 923,500
Undesignated 9,398,!00 11,625,100 17,648,700 12,927, !00 13,575,400 9,988,800
Nonspendable:
Prepaid items 2,777,000 3,191,055
Restricted for: ("'ote l)
Debt service 258,100 602,800 331,600 312,037
Committed to: ("'ote l)
General government programs 317,500 1,288,200 1,768,200 3,273,497
Contingency fund 12,158,000
Assigned to:
Subsequent yoars expenditures 8,200 11,900
Unassigned --------·---12,324,100 11.781.500 14,060,900 1.382.590
Total general fur.d 9,743,100 13,559,900 18,830,000 14,829,100 13,991,900 1Ul4,100 12,907,900 13,684,400 18 ,937,700 20,317)79
All other goveramental funds:
Reserved 3,618,200 3,001,100 3,412,200 8,557,100 10,038,:100 6,932,600
Unreserved reported in:
Capital projects funds 7,003,500 11,936,700 11,441,300 10,962,000 19,748,900 1,245,000
Special reve!llle funds 267,000 615,900 458,700 585,500 626,900 920,300
Restricted for: (Note l)
Debt service 2,285,700 2,017,900 2,043,200 2,043,222
Law enforcement grant programs 42,000 20,500 22,900 27,1 45
Committed to:
Affordable housing programs 294,000 1,052,000 1,254,900 2,946,847
Assessment district programs 170,700 183,000
Capital outlay 1,172,800 1,227,700 1,326,000 6,045,091
General governrnent programs 4,743,552
Impact Fees Programs 4,350,000 4,069,800 3,542,700 411,592
Open space programs 183,400 194,300 1,582,425
Parkland development programs 998,900 1,057,100 1,209,600
Public art programs 293,700 373,700 347,400
Assigned to:
Subsequent years expenditures 8,997,800 4,359,300 5,413,900 3,553,441
Unassigned (2,500) (83l
Total all other governrnental
funds 10,888,700 15,553,700 15,312,200 20,104,600 9,097,900 18,605 ,600 14,544,400 15 ,352,400 21,353,232
Total all governrnental fimds $ 20,631,800 $ 29,113,600 $ 34,142,200 $ 34,933,700 $ l3,99L900 $ 20,212,000 $ 31.513.500 $ 28,228,800 $ 34,290,100 $ 41,670,411
Note:
The City implemented GASB Statement No, 54 in the 2010-11 fiscal year which requires the City to use new designations of ending fimd balances,
125
B3-166
Schedule 5
City of San Luis Obispo, California
Revenues, Expenditures and Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
For The Fiscal Year Ended June 30
2004-05 2005-06 200&-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Revenues:
Taxes
Sales and Use -general $ 11 ,745 ,400 $ 12 ,675 ,900 $ 13,993,800 $ 13 ,581 ,7 00 $ 12 ,070,700 $ 10 ,723 ,900 s 12,098 ,600 $ 13 ,290,000 $ 14,242 ,200 $ 15,405,808
Sales and Use -Measure Y 1,000 ,000 5,996,600 5,641 ,400 5,25 2,500 5,616,300 6 ,237,500 6 ,493,800 6,774,365
Prop. 172 Public Sarety 276,200 301,200 308,700 288 ,400 308,400 25 7,900 27 1,300 307,400 327,700 391 ,56 7
Property 6,630 ,600 7,519,600 8,255 ,000 8,374,200 8,788,400 8,579,300 8,441 ,100 8,367,000 9,176,600 8,960 ,010
Transient Occupancy 4,079,800 4,539,200 4,786,000 5,054,700 4,679 ,500 4,496 ,100 4,844 ,200 5,2 22,000 5,572,400 6,063 ,232
Utility Users 3,670,200 3,947,300 4,096,100 4,177,700 4,358,500 4,862,400 4,592 ,300 4,584 ,100 4,916,100 5,345,342
Property tax in-lieu ofVLF (Note I) 1,530,800 3,061,500 3,280,100 3,504,700 3,565,100 3,551 ,100 3,492,400 3,533,200 3,645 ,692
Franchise Fees 2,005 ,600 2,101 ,300 2,153 ,700 2,361 ,700 2,439,400 2,396,700 2,352,100 2,462,300 2,552,300 2,636,599
Business Tax 1,518,800 1,578,000 1,706,700 1,866,400 1,878,500 1,830,100 1,797,800 1,837,500 2,055,300 2,142 ,971
Real Property Transrer 314,400 390,600 283,900 213,000 159,100 129,000 133,700 144,000 256,300 287,560
Fines, forfuitures and penalties 243 ,500 213,900 236 ,500 228,200 261,000 201,700 171,400 174,300 159,700 150,185
Use of money and property 600,000 601 ,900 1,751,400 1,605 ,300 1,775,300 1,239,500 742,500 770,100 237 ,100 566,931
Subventions and grants
Vehicle License Fees 9Note I) 2,187,000 955 ,600 296 ,700 190,300 166 ,500 135 ,000 205 ,600 45 ,600 19,300
Other subventions and grants 5,863 ,400 4,872 ,500 4,686 ,800 4,679,000 8,774 ,200 4,837,000 4,776,500 3,932 ,100 4,603 ,140 4,450,259
Charges for services 5,959,400 9,460 ,000 8,448 ,700 8,409,500 6,677,700 5,865 ,700 9,209 ,300 8,954 ,500 8,106 ,600 12 ,706 ,655
Other revenues 222 .800 1.500 .800 250,800 633,800 1.810.300 398.000 270.500 36.500 526.500 357.469
Total revenues 45.317.100 52.188.600 55 .316,300 60,940,600 63 .293.600 54.769.900 59.074.300 59.857.300 62 ,778,240 69,884.645
Expenditures:
Current:
General Government 4,887 ,000 4,988,200 6,093,700 6,333,900 6,793,100 7,253,500 6,828,700 8,175,200 8,723,300 9,362 ,031
Public safety 17,824,200 19,247,000 20,659,600 25,055,900 26,002,400 24,203,800 23,506,100 23 ,953,200 23,973,400 24,798,500
Transportation 2,020,300 1,967,800 2,173,500 2,539,800 3,224,200 3,019,700 2,901 ,900 2,865,100 2,798 ,200 2,882 ,241
Leisure, cultural and social services 5,376,000 5,541,900 5,705,000 6,398,600 6,598,900 6 ,279,900 6,268,700 6,704 ,200 6,790,300 7,155 ,619
Commurrity development 4,815 ,400 4,799,500 5,620 ,100 6,341,600 6,280,800 6,690,200 7,053,500 6,986 ,300 7,777,400 8,389,957
Debt service:
Principal 1,011 ,800 918,100 1,062 ,400 1,124,300 1,159,900 1,550 ,200 1,774,000 1,493 ,200 1,543,000 1,534 ,668
Interest 989 ,700 702 ,200 1,021 ,100 953,700 915 ,900 1,358,500 1,249 ,200 1,211 ,800 1,192 ,700 1,048,671
Debt issuance costs 261 ,400 217,100 36,000
126
B3-167
Capital:
Public safety
Transportation
Leisure, cultural and social services
Community development (Note 2)
General government
Total expenditures
Excess of revenues
over( under)
expenditures
Other Financing
Sources(Uses):
Sale of surplus property
Issuance of debt/refunding debt
Cost of debt issuance
Payment to refunded bond escrow agent
Transfers in
Transfers out
Total other financing
Schedule 5
City of San Luis Obispo, California
Revenues, Expenditures and Changes in Fund Balances of Governmental Funds, continued
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
For Tbe Fiscal Y"ar Ended June 30
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
249,900 503,000 1,384,500 1,541,500 1,652,700 4,704,400 494,100
4,367,400 2,762,200 6,404,200 6,177,600 4,237,200 6,913,200
1,241,700 898,800 I ,253,200 670,200 1,213,900 I, 188,500 584,500
162,900 109,700 I ,288,600 1,270,000 1,382,500 3,893,700 884,100
519,100 6,624.400 379,500 1.053,400 869.700 3.076.800 1.731.400
39,359,400 50,885,100 49.403,400 59.687.100 62.271.600 67.456.400 60.225.400
5.957,700 1,303,500 5,912 ,900 1,253 ,500 1.022.000 (12 ,686 ,500) (1,151,100)
393,900
6,558,800 7,433,600 9,067,000 1,080,000
(6,298,000) (281,800)
4,892,700 5,798,200 7,215,700 15,350,100 8,655,400 8,081,900 6,464,100
15.069.600) (6.053.500) (7.566,600) (15.812.100) (8.990.400) __ (8 ,383.400) (6,691,300)
2011-12
447,900
9,121,000
862,000
705,300
274.900
62.800.100
(2. 942,800)
30,200
5,050,000
(5,442,200)
8,121,200
(8,101.100)
sources( uses) 83 ,900 7,178,300 (350,900) 1462.000) 8.450,200 (301,500) 1,246 ,700 ___ (341,900)
Net change in fund
balance $ 6,041,600 $ 8,481,800 $ 5.562,000 $ 791,500 $ 9.472.200 $ (12.988.000) $ 95.600 $ (3.284.700)
Debt service as a
percentage of noncapital
expenditures 6.66% 5.13% 6.10% 5.15% 4.93% 7.24% 7.61% 668%
Notes:
I. Beginning in 2005-06 the State implemented a "VLF swap," under which an equal amount of Vehicle License Fees was "swapped" for an equal amount of revenues
to be collected on the property tax roll,
2. Community Development Block Grant (CDBG) expenditures are included in the Community Development total for purposes of this schedule.
127
2012-13 2013-14
457,700 892,351
5,228,300 4,859,863
395,500 1,272,510
70,900 939,017
429.700 145.1 99
59.380.400 63.280.627
3.397.840 6.604.018
850,775
(11,500)
8,407,600 13,834,998
(8 ,292 ,500) ( 13 ,908, 769)
103 ,600 777.004
$ 3.501.440 $ 7.381.022
6.62% 5.98%
B3-168
Schedule 6
City of San Luis Obispo, California
General Fund Operating Expenditure Trends by Type
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting
For The Fiscal Year Ended June 30
2004-05 2005-06 200CHJ7 2007-08 2008-09 2009-IU 2010-11 2011-12 2012-13 2013-14
Staffing:
Salaries and wages:
Regular salaries $ 17,45 7,000 $ 17 ,388 ,200 s 18,491 ,700 $ 22,745 ,800 $ 24,310,100 $ 24,180,400 $ 23 ,848,400 $ 23,432 ,400 s 23,214,900 $ 23 ,242 ,170
Temporary salaries 1,654 ,100 1,956,900 2,108,000 2,026,800 1,851 ,700 1,592 ,700 I ,507,300 1,626,900 1,812,700 2,191 ,214
Ovenime 1,657,700 2,184 ,000 2,484 ,600 2,876,000 3,009,200 2,397,500 2,162 ,500 2,763 ,100 3,309,000 3,018,181
Benefits:
Retirement 4,936,400 5,686,000 6 ,278 ,300 7,485,200 8,006,100 7,915,900 7,899,200 8,444,000 7,661 ,900 7,637,931
Group health/disability ins (Note I) 2,140,800 2,114,400 2,399,900 2,710,000 3,579,400 3,744,200 3,407,500 3,441,700 3,463,500 3,387,101
Medicare 231 ,600 246,700 271 ,700 339,600 363 ,700 370,300 367,100 371,200 384,400 393,913
Unemployment Reimbursements 16.100 14,800 19600 42,900 24,100 87,600 35.500 26,200 28,800 31,634
Total staffing 28,093,700 29,591,000 32,053,800 38,226,300 41,144,300 40,288,600 39,227,500 40,105,500 39,875,200 39,902,144
Contract services 4,796 ,600 3,764,900 4,300,300 4,546,400 4,228,700 3,812 ,400 3,728,100 4,306,000 5,208,900 5,725 ,290
Other operating expenditures
Communications & utilities 1,334,500 1,221 ,400 1,489,900 1,539,700 1,662,000 1,538,000 1,629,500 1,658,000 1,842 ,300 2,034,997
Rents & leases 192,000 134 ,200 133,400 142,100 147 ,700 130,500 141 ,800 136,800 139,600 197 ,104
Insurance:
General liability & property 785 ,000 901 ,000 830,300 1,054,900 1,051 ,500 1,447,300 1,434 ,600 1,475 ,600 1,320 ,700 1,425 ,450
Worl<ers compensation 1,599,300 1,441 ,200 1,423,600 1,514,400 1,017 ,000 760,500 447 ,100 594 ,400 918 ,000 1,405,916
Other operating expenditures 709,500 2,229,600 2,874,900 2,699,900 3,061 ,900 2,399,300 2,544 ,400 2,696 ,500 2.910 ,900 2.991 ,619
Total operating expenditures 4,620,300 5,927,400 6,752 ,100 6,951,000 6,940,100 6 ,275,600 6,197 ,400 6,561,300 7,131,500 8,055,086
Minor capital 102 .. 600 77,800 195,800 162,500 90.600 38.300 10 ,800 14.200 99.400 195,473
Total program expenditures 37,613,200 39,361,100 43,302,000 49,886,200 52,403,700 50,414,900 49,163,800 50 ,987,000 52,315,000 53 ,877,993
Reimbursed expenditures (3,430,400) 13 ,590,000) p,786,700) 14,075,300) 14,210,800) 14 ,264,000) 14,449,900l (3,774 ,900) 13,732,100) p,897,420)
Total general fund operating expenditures $ 34,182,800 $ 35,771,100 $ 39,515,300 $ 45 ,810 ,900 $ 48,192,900 $ 46,150,900 $ 44,713,900 $ 47,212 ,100 $ 48,582,900 $ 49,980,573
Note:
1. Beginning in 2008-09, the City began to fund retiree health costs on a full accrual basis The added cost compared with the prior "pay·as-you·go" approach in 20 I 1-12 is $364 ,800 . While this change in accounting
increases costs initially, in the not:so-distant future (about 12 years), it becomes a much less expensive option than continuing "pay·as-you-go" cash funding
128
B3-169
Fiscal Year
2004-05
2005-06
2006-07
2007-08 (Note 3)
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Notes:
Source:
Schedule 7
City of San Luis Obispo, Californiia
Assessed and Estimated Actual Value ofTax:lible Property
Last Ten Fiscal Years
Gross Assessed Valuation (Notes 1 and 2)
Homeowners Secured Roll Unitary Unsecured Total Direct Market Value Percentage of Market
ExemEtions Gross Value Roll TOTAL Tax Rate (Note 1) Value
43,170,300 4,189,832,800 4,245,700 219,487,300 4,413,565,800 1.00% 4,413,565,800
42,891,200 4,538,762,000 4,018,800 238,164,900 4, 780,945,700 1.00% 4,780,945,700
42,698,000 5,085,935,700 6,905,800 240,871 '700 5,333,713,200 1.00% 5,333,713,200
42,600,200 5,456,264,900 5,678,500 254,783,200 5, 716,726,600 1.00% 5,716,726,600
42,384,800 5,828,492,800 5,582,800 27 4, 186,700 6,108,262,300 1.00% 6,108,262,300
42,222,400 6,008,936,600 4,904,100 277,718,500 6,291,5 59,200 1.00% 6,291,559,200
41,929,800 5,985,294,700 5,505,000 279,434,500 6,270,234,200 1.00% 6,270,234,200
41,988,100 5,894,189,700 6,842,300 275,800,100 6, 176,832, I 00 1.00% 6, 176,832,100
41,572,300 5,963,182,500 19,545,500 279,203,900 6,261,931,900 1.00% 6,261,931,900
41,327,300 6,152,693,400 19,280,800 295,626,200 6,467,600,400 1.00% 6,467,600,400
1. Valuations are established by the County Assessor ofthe County of San Luis Obispo, except for property owned by private utility companies,
which is valued by the State of California. The City assumes that Market Values are equal to total Assessed Valuation.
2 . For comparison purposes, gross assessed valuations include homeowners' exemptions. Although these exemptions reduce property tax
collections, the revenue loss is reimbursed by the State of California. As such, gross as~.essed valuation is the revenue base used in establishing
property tax-related revenues.
3. The decrease in value of utility taxable property in 2007-08 is due to a federally mandated decrease in the assessment ratio on railroad property.
129
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
B3-170
Proposition 13 maximum tax rate (Note 2)
Voter approved indebtedness:
State water project
Elementary and high school
Bond and lease agreements
Total (Notes 1 and 3)
San Luis Coastal Unified School District
San Luis Obispo County -General Fund
City of San Luis Obispo
San Luis Obispo Community College District
County School Services
City/County Library
Port San Luis Harbor
Other Agencies
Education Revenue Augmentation Fund (ERAF)
Total
Schedule 8
City of San Luis Obispo, California
Property Tax Rates
Last Ten Fiscal Years
For The Fiscal Year Ended June 30
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-ll
1000 1.000 1.000 1.000 1.000 1.000
0.002 0.002 0 .002 0.002 0 002 0.002
0.000 0 000 0 .000 0.000 0,000 0.000
Lo02 1.002 1.002 1.002 1 002 1.002
Notes:
I Property tax rates are levied per $1 00 of assessed valuation. The tax rate information provided is for Tax Rate Area 003-000, which is the
largest tax rate area in the City.
1.000
0 .003
0 .000
1.003
2. The passage of Proposition 13 on June 6, 1978 established a maximum Cowtty-wide levy for general revenue pw-poses of I% of market value
Voter-approved tax rates for the retirement oflong-term liabilities were excluded from this limit.
3. It is not possible to identifY tax rates for individual agencies however, the following is a summary of derived property tax
allocations within Tax Rate Area 003-000 for Fiscal Year 2008-09:
Base ERAF Net
Rate Allocation Aj!j!Orrionrnent
36.1 36,1
30.3 (8 2) 22 I
18.4 • (3.5) 14.9
6.4 6.4
3.8 3.8
2 00 (0 3) 1.7
16 (0 4) 12
1.4 (0 ,1) 1.3
12.5 12.5
100% 0% 100%
*The County further adjusts the 18.4% base rate for revenue shifts to school districts as directed by the State as part of their cuts to local agencies,
resulting in an effective rate for the City of approxiroately 14.9%.
Source: Prepared by HdL, Coren & Cone
Data source: San Luis Obispo County Assessor 2013/14 Annual Tax Increment Tables
130
2011-12 2012-13 2013-14
1.000 1.000 1.000
0 .003 0 ,004 0.004
0 .000 0000 0.000
1.003 1.004 1.004
B3-171
Schedule 9
City of San Luis Obispo, Californiia
Principal Property Taxpayers
Current Year and Nine Years Ago
2013-14 2004-05
Number of Secured Percent of Total Number of Secured Percent of Total
Owner Parcels Assessed Value Rank City Assessed Value Parcels Assessed Value Rank ~Assessed Value
Mustang-Veal LLC 4 $ 78,483,289 1 1.28% 4
Sierra Vista Hospital Inc . 7 73,465,824 2 1.20% 7 $ 46,630,097 I 1.11%
Charles Pasquini Jr Trust 9 59,599,763 3 0.97% 9
Jamestown Premir SLO Court Eta] 9 49,128,994 4 0.80% 9
Irish Hills Plaza West II LLC 3 35,458,731 5 0.58% 3
Costco Wholesale Corporation I 33,192,009 6 0.54% I
SLO Promenade Limited Partnership 9 31,785,000 7 049% 9 29,485,335 4 0.70%
Marigold Center LLC 9 26,160,839 8 0.43% 9 22,658,136 6 0 ,54%
Target Corporation I 24,749,747 9 0.40% 1
Stephen N. Dorsi Trust 9 23,296,525 10 0.38% 9
Cal Poly I -University Housing 41,886,517 2 I 00%
UHS-Corona Inc . LP Etal 33,736,448 3 0 .80%
John E. & Carole D. King 26,946,279 5 0 .64%
MRP Institutional Associates, Et,Al 19,385,033 7 0 .46%
Charter Communications Properties 11,176,733 8 0.27%
Wallance Business Forrnas Inc . 16,559,081 9 0.39%
San Luis Obispo Downtown Centre LLC . 16,502,504 10 0 39%
Total $ 435,320,721 7.07% $ 264,966,163 6 .30%
Source: Cal Muni
131
B3-172
Schedule 10
City of San Luis Obispo, California
Secured Property Tax Roll Levies and Collections
Last Ten Fiscal Years
Total Secured Current Year Percent
Fiscal Tax Levy Current Year Percent Delinquencies Delinquent
Year (Notes 1 and ~ Collections Collected (Note 3) (Note 3)
2004-05 6,145,900 6,145,900 100% 0 0
2005-06 6,639,000 6,639,000 100% 0 0
2006-07 7,354,900 7,354,900 100% 0 0
2007-08 7,868 ,700 7,868,700 100% 0 0
2008-09 8,335,400 8,335,400 100% 0 0
2009-10 8,456,800 8,456 ,800 100% 0 0
2010-11 8,405,600 8,405,600 100% 0 0
2011-12 8,269,300 8,269,300 100% 0 0
2012-13 8,151,000 8,151,000 100% 0 0
2013-14 8,601,630 8,601,630 100% 0 0
Notes:
1. The secured property tax roll is composed of ad valorem taxes as well as special assessments, and is calculated by the San Luis
Obispo County Auditor-Controller. The San Luis Obispo County Tax Collector is responsible for all property tax roll collections within the
City of San Luis Obispo. The amount reported is before the SB25 57 County administrative fees of approximately 3% of total property tax
revenues.
2. The secured levy does not include supplemental assessments, unsecured tax revenues, or prior year adjustments, which can be significant. For example, in 2012-13
revenue to the City from supplemental assessments was $99,500 and $215,100 from unsecured. A one-time refund was received from the County
Auditor-Controller, refunding $632,800 representing prior overcharges for the SB2557 fee. Property tax revenues totaled $8,740,762.
3. The City has elected the Teeter Plan method of property tax collection, whereby the County remits 100% of taxes levied and
pursues collection and retains any delinquent taxes and related penalties and interest.
Source: San Luis Obispo County Auditor-Controller
132
B3-173
Schedule 11
City of San Luis Obispo, Californiia
Schedule of Taxable Sales and Permits by Category
Last Ten Calendar Years
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
Sales
In Thousands of Dollars
Apparel stores $ 33,265 $ 42,488 $ 49,051 $ 54,345 $ 59,309 $ 77,252 $ 80,562 $ 76,229 $ 73,441 $ 75 ,136
General merchandise stores 89,933 111 ,339 171,001 172,347 167,887 124,576 126,079 152,044 171,942 174,094
Food and drug stores 43,218 46,575 44,768 45,703 48,084 55,870 54,729 58 ,556 45 ,284 46,725
Eating & drinking places 105 ,332 113,866 122,292 126,865 127,274 124,060 122,777 130,853 140,337 145 ,602
Home furnishings & appliances 44,366 49,195 52,454 54,932 63,568 69,187 67,337 65 ,903 69 ,138 65 ,835
Building materials & farm tools 109,562 119,603 124,900 108,793 82,154 73,812 74,342 83,735 112,229 127 ,035
Auto dealers & supplies 263,973 264,268 251,173 241,008 196,579 157,271 174,302 191 ,495 231,097 273,692
Service stations 60,508 76,331 83,495 81,030 82,142 71,512 85,017 103,286 109,072 104,420
Other retail stores 171,361 179,825 181,231 177,222 151 '130 117,825 121 ,504 128,522 259,218 256,955
Total retail stores 921,518 1,003 ,490 1,080,365 1,062 ,245 978,127 871 ,365 906,649 990,623 1,211,758 1,269,494
All other outlets 129,441 136,673 147,714 163.925 185,666 160,931 173,589 197,831 267,561 295 ,961
Total 1,050,959 1,140,163 1,228,079 1,226,170 1,163,793 1,032,296 1,080,238 1,188,454 1,479,319 1.565 ,455
Permits
Apparel stores 67 71 78 91 103 113 120 111 122 131
General merchandise stores 20 20 20 20 27 14 14 14 12 12
Food and drug stores 37 39 37 33 34 42 45 49 53 55
Eating & drinking places 190 190 185 187 196 180 185 188 204 213
Home furnishings & appliances 68 74 75 74 73 88 91 86 88 84
Building materials & farm tools 31 30 30 30 30 40 40 39 41 39
Auto dealers & supplies 58 65 53 63 58 69 70 64 62 60
Service stations 18 17 22 24 21 21 21 17 17 17
Other retail stores 358 352 364 358 348 610 590 579 602 661
Total retail stores 847 858 864 880 890 1,177 1,176 1,147 1,201 1,272
All other outlets 1,161 1,106 1,075 1,074 1,024 672 688 656 666 664
Total 2 ,008 1,964 1,939 1,954 1,914 1,849 1,864 1,803 1,867 1,936
*Source: State Board of Equalization, State of California Taxable Sales in California, and The HDL Companies.
2013 Information is thru June.
133
B3-174
Effective End
Date Date
811/1933 6/30/1935 (Note 2)
71111935 6/30/1943
7/l/1943 6/30/1949
7/l!I949 12/31/1961
lll/l962 7 /3I/l967
8/l/1967 6/30/l972
711/I972 6/30/1973
7/l/1973 9/30/1973
I 0/l/l973 3/3I/l974
4/l/1974 11/30/1989
12/l/1989 12/31/1990
l/l/1991 7/14/1991
7/15/1991 12/31/2000
l/l/2001 12/31/2001
l/l/2002 6/30/2004
7/l/2004 3/31/2007 (Note 3)
4/l/2007 3/3l/2009
4/l/2009
7/l/2011
l/l/2013
111/2014
Notes:
State
Jurisdiction
2.50%
3.00%
2 .50%
3.00%
3.00%
4.00%
3.75%
4 .75%
3.75%
4.75%
5.00%
4.75%
6.00%
5.75%
6.00%
6.25%
6.25%
7.2 5%
6.2 5%
7.25%
7.25%
Schedule 12
City of San Luis Obispo, California
Historical Sales and Use Tax Rates
Local
Transportation Fund
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
City
Rate
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
0.75% (Note 3)
1.25% (Note 4)
1.25%
1.25%
0.50%
0.50%
Combined
Rate
2.50%
3.00%
2.50%
3.00%
4.00%
5.00%
5.00%
6.00%
5.00%
6.00%
6.25%
6.00%
7.25%
7.00%
7.2 5%
7.25%
7.75%
8.75%
7.75%
8.00%
8.00%
I. The Bradley-Bums Uniform Local Sales and Use Tax Law was enacted in 1955 . The law authorizes cities and counties to impose a sales and use
tax. Effective January I, 1962, all cities and counties have adopted ordinances for the State Board of Equalization to collect the local tax .
2. Sales tax only. The use tax was enacted effective July 1, 1935.
3. In March 2004, a State ballot measure was passed issuing deficit reduction bonds for State purposes. Funding was provided effective July 1, 2004 by
repealing 25% of the Iocali% sales tax and then adopting a new 1/4-cent sales tax dedicated to repayment of the deficit reduction bonds. Cities and
counties would then be "made whole" by the State from increased property tax allocations via reduced contributions to ERAF. This "triple flip"
is theoretically revenue-neutral, and as such, the effective rate for revenue purposes remains at I%.
4. In November 2006, voters in San Luis Obispo approved a local sales tax measure increasing the City rate by 1/2%, which became effective
Aprii1, 2007. The sales tax measure has a sunset provision of8 years. The local Sales Tax was extended as Measure Gin the November 2014 election for 8 years.
Source: State Board of Equalization, State of California
134
B3-175
Construction
Manufacturing
Transportation/Utilities
Wholesale
Retail
Professional
Residential Rental
Commercial Rental
Services
Schedule 13
City of San Luis Obispo, California
Schedule of Business Tax Certificates Issued
Fiscal Years Ended June 30,2014 and 2013
2014
No. of
Certificates
920
130
37
130
786
829
2,749
232
1,765
Percent
12.1%
1.7%
0.5%
1.7%
10.4%
10.9%
36.3%
3.1%
23.3%
Total business certificates issued 7,578 100%
Home occupations
Located outside City limits
Located in Downtown Business Improvement District
661
1,583
593
Source: City of San Luis Obispo Finance & Information Technology Department
135
8.7%
20.9%
7.8%
2013
No. of
Certificates
886
131
37
130
986
954
2,747
317
1,768
7,956
638
1,512
590
Percent
11.1%
1.6%
0.5%
1.6%
12.4%
12.0%
34.5%
4.0%
22.2%
100%
8.0%
19.0%
7.4%
B3-176
Schedule 14
City of San Luis Obispo, California
Per Capita Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities Business-Tyee Activities
Lease Lease Installment Total Percentage of
Fi scal Purchase Purchase Sales Primary Per Gross Assessed
Year Bonds FinancinJL._ Loans Bonds Financing Agreement Loans Government ~ita Value
2004-05 17,533,100 391,300 13,846,900 2,117,900 29,109,700 62,998,900 1,415 1.43%
2005-06 24,091,000 348,900 21,499 ,000 1,888,300 27,259,200 75 ,086,400 1,690 1.57%
2006-07 23,072,700 304,800 36,947,300 1,649,400 25,922,200 87,896,400 1,987 1.65%
2007-08 21,994,400 258,900 35,345,600 1,400,400 2,050,000 23,600,700 84,650,000 1,894 1.48%
2008-09 29,949,300 211,200 35,330,700 1,142,100 2,050,000 31,219,700 99 ,903,000 2,232 1.64%
2009-10 28,448,900 161,400 33,946,100 872,900 1,950,000 28,554,000 93,933,300 2,090 1.49%
2010-11 26,806,500 1,109,800 32,503,500 593,500 1,845,000 25,807,000 88,665,300 1,973 1.41%
2011-12 24,962,100 955,900 30,082,900 302,300 1,735,000 22,976,300 81,014,500 1,788 1.31%
2012-13 23,574,900 823,400 2,025,100 28,625,150 1,620,000 20,309,200 76,977,750 1,690 1.23%
2013-14 22,152,010 711,622 850,775 27,083,025 8,979,000 19,446,784 79,223,216 1,742 1.27%
Notes:
1. See Schedule of Demographic and Economic Statistics for population data.
2. Total personal income statistics not available.
Source: City of San Luis Obispo Finance & Information Technology Department
136
B3-177
Schedule 15
City of San Luis Obispo, California
Ratio of Net General Bonded Debt to Assessed Value and Nt~t Bonded Debt per Capital
Last Ten Fiscal Years
Service Ratio of Net
Net Taxable General Payable from Net Bonded Debt Net Bonded
Assessed Bonded Enterprise Bonded to Assessed Debt per
Fiscal Year Population Value Debt Revenues Debt Value Capita
2004-05 44,519 4,413,565,800 ---0.0%
2005-06 44,439 4,780,945,700 ---0.0%
2006-07 44,239 5,333, 713,200 ---0.0%
2007-08 44,697 5,716,726,600 ---0.0%
2008-09 44,750 6, I 08,262,300 ---0.0%
2009-10 44,948 6,291,559,300 ---0.0%
2010-11 45,418 6,270,234,200 ---0.0%
2011-12 45,308 6, 176,832,100 ---0.0%
2012-13 45,541 6,261,931,900 ---0.0%
2013-14 45,473 6,454,835,328 ---0.0%
Notes:
I. Valuations are established by the County Assessor of the County of San Luis Obispo, <:xcept for property owned by private utility
companies, which is valued by the State of California.
2. See Schedule of Demographic and Economic Statistics for population data.
3. Personal income information is not available. Net Bonded Debt is expressed as a ratio to Assessed Value.
Sources: California Department of Finance.
San Luis Obispo County Assessor Combined Tax Rolls.
137
B3-178
Schedule 16
City of San Luis Obispo, California
District and Overlapping Long-Term Debt
Fiscal Year Ended June 30,2014
Direct Jong-tenn debt:
City of San Luis Obispo 2001 Refimding Lease Revenue Bonds (1999)
City of San Luis Obispo 2002 Water Revenue Refimding Bonds (1993)
City of San Luis Obispo 2004 Refimding Lease Revenue Bonds (1994)
City of San Luis Obispo 2005 Refimding Revenue Bonds (1996)
City of San Luis Obispo 2006 Lease Revenue Bonds
City of San Luis Obispo 2006 Water Revenue Bonds
City of San Luis Obispo 2009 Lease Revenue Bonds
City of San Luis Obispo 2012 Refimding Revenue Bonds (2001)
City of San Luis Obispo 2012 Water Revenue Refimding Bonds (2002)
Overlapping long-term debt (percentage of overlapping agency's assessed valuation located within boundaries of the City):
San Luis Obispo County Certificates ofPanicipation
San Luis Obispo County Pension Obligations
San Luis Corrnnunity College District Certificates of Participation
Total gross direct and overlapping long-term debt
Less self-supporting issues:
City of San Luis Obispo 2001 Refimding Lease Revenue Bonds (1999)-Water Fund supported portion
City of San Luis Obispo 2002 Water Revenue Refimding Bonds ( 1993)
City of San Luis Obispo 2004 Refimding Lease Revenue Bonds (1994)-Parking Fund supported portion
City of San Luis Obispo 2006 Lease Revenue Bonds-Parking Fund supported portion
City of San Luis Obispo 2006 Water Revenue Bonds
City of San Luis Obispo 2009 Lease Revenue Bonds-Parking/Sewer/Water Funds supported portion
City of San Luis Obispo 2012 Water Revenue Refimding Bonds (2002)
Total self-supporting issues
Ratio of long-term debt to assessed valuation and population
Gross Assessed Valuation
Population
Direct and Overlapping Debt:
Direct Debt:
Gross
Net
Gross
Net
SOURCE: Califumia Municipal Statistics, Inc .
Amount
$74,770,012
47,686,987
$49,235,035
22,152,010
138
Percent Applicable
to the City of
San Luis Obispo
100.000%
100.000%
100.000%
100.000%
100,000%
100.000%
100.000%
100.000%
100.000%
15 ,924%
15 .924%
15 ,861%
Percent of Gross
Assessed Valuation
1.2%
07%
0.8%
0.3%
s
$
Amount Applicable
to the City of
San Luis Obispo
as of June 30. 2014
4 ,395 ,000
13,650,000
14,235,000
8,085 ,035
4,630,000
4,240,000
49,235,035
4,722,587
17,696,280
3,116,110
25,534,977
74.770.012
7,371,000
14,235,000
1,237,025
4,240,000
27,083,025
47,686,987
6,448,319,651
45,473
Per Capita
Long-Term Debt
$1,644,27
1,049
$1,082 .73
487
B3-179
Legal debt limit
Total debt applicable to limit
Legal debt margin
Total debt applicable to the limit
as a percentage of debt limit
2004-05 2005-06
165,509 179,285
165,509 165,509
0.00% 0.00%
Schedule 17
City of San Luis Obispo, Californiia
Computation of Legal Debt Margins
Last Ten Fiscal Years
(amounts expressed in thousands)
2006-07 2007-08 2008-09 2009-10 2010-11
199,755 214,377 229,059 235,815 234,887
199,755 214,377 229,059 235,815 234,887
0.00% 0.00% 0.00% 0.00% 0.00%
2011-12
231,384
231,384
0.00%
Legal Debt Margin Calculation for Fiscal Year 2013-14
Gross Assessed Valuation
Legal Debt Limit-3.75% of Gross Assessed Valuation
Long-term Debt:
Revenue Bonds Secured by Capital Leases
Water Revenue Bonds
Less deductions allowed by law:
Revenue Bonds Secured by Capital Leases
Water Revenue Bonds
Total debt applicable to computed limit
Legal debt margin
2012-13
234,822
234,822
0.00%
2013-14
$241,812
241,812
0.00%
$ 6,448,319,651
$ 241,811.987
$30,760
18,475
49,235
30,760
18,475
49,235
$!1
$ 241,811,987
Note: The California Government Code provides for a legal debt limit of 15% of gross assessed valuation based on 25% of market value, or a legal debt limit of 3. 75%.
The City's debt management policy, however, sets a more restrictive debt limit of2% of assessed valuation.
139
B3-180
Schedule 18
City of San Luis Obispo, California
Revenue Bond Coverage-Water Fund
Last Ten Fiscal Years
Less Operating & Net Revenue
Fiscal Operating Development Other Maintenance Available for Bonded Debt Service Reguirements
Year Revenues lmJ!aCt Fees Revenues EXJ!enses Bond Debt Service PrinciJ!al Interest Total Coverage
2004-05 9,197,100 (820,200) 378,900 (5,788,600) 2,967,200 670,000 406,900 1,076,900 276%
2005-06 10,495,900 (1,822,200) 255,000 (6, 175,000) 2,753,700 690,000 437,900 1,127,900 244%
2006-07 11,565,200 (1 ,479,900) 1,669,400 (7 ,999,700) 3,755,000 950,000 941,200 1,891,200 199%
2007-08 12,668,800 (1 ,386,300) 759,IOO (7,III,600) 4,930,000 1,045,000 1,064,600 2,109,600 234%
2008-09 13,447,400 (663,000) 1,339,700 (7,877,500) 6,246,600 1,075,000 1,023,600 2,098,600 298%
2009-10 13,755,800 (448,200) 719,800 (7 ,603,500) 6,423,900 753,100 1,038,500 1,79I,600 359%
2010-II 14,256,IOO (639,600) 384,500 (12,389,200) 1,6I1,800 780,500 1,006,300 1,786,800 90%
20I1-12 16,266 ,300 (643,200) 825,400 (13,666,100) 2,782,400 396,500 704,300 1,I00,800 253%
2012-13 18,250,700 (I ,578, I 00) 97,500 (13,353,300) 3,416,800 752,200 880,400 1,632,600 209%
2013-14 19,676,199 (8I9,477) 215,915 (13,996,427) 5,076,210 808,I90 857,514 1,665,704 305%
Notes:
1. Debt service requirements include 2012 Refunding Revenue Bonds, 2006 Refunding Revenue Bonds, and the 2009 Lease Revenue Bonds.
2. Principal and interest amounts do not include loans, lease purchase financing or other forms oflong-term debt.
3. Net revenues available for debt service exclude development impact fees.
4. Operating expenses exclude depreciation and amortization.
Source: City of San Luis Obispo Finance & Information Technology Department
140
B3-181
Schedule 19
City of San Luis Obispo, California
Revenue Bond Coverage-Parking F'und
Last Ten Fiscal Years
Net Revenue
Fiscal Gross Operating Available for Bond,ed Debt Service Reguirements
Year Revenues Ex[!enses Bond Debt Service PrinciE1al Interest Total Coverage
2004-05 3,896,700 {1,661,100) 2,235,600 534,200 385,900 920,100 243%
2005-06 3,921,800 (1,871,700) 2,050,100 384,300 167,300 551,600 372%
2006-07 4,265,500 (2,021 ,000) 2,244,500 390,600 534,700 925,300 243%
2007-08 4,027,500 (2,032,500) 1,995,000 400 ,100 480,700 880,800 226%
2008-09 4,007,900 (2,344,300) 1,663,600 415,800 462,500 878,300 189%
2009-10 3,788,300 (2,142,400) 1,645,900 599,600 449,200 1,048,800 157%
2010-11 3,730,100 (2, 190,200) 1,539,900 621,800 428,700 1,050,500 147%
2011-12 3,688,200 (2,351 ,400) 1,336,800 642,600 408,100 1,050,700 127%
2012-13 4,726,000 (2,440,600) 2,285,400 663,500 386,000 1,049,500 218%
2013-14 4,122,860 (2,488, 797) 1,634,063 690,600 361,822 1,052,422 155%
Notes:
l. In 1994 the Capital Improvement Lease Revenue Bonds were refinanced resulting in new debt of $11,780,000, of which $7,421,400
is designated for the Parking Fund. In 2004 the 1994 bonds were refinanced with a maturity date of 2014. In 2006 Lease Revenue
Bonds were issued resulting in new debt of$16,160,000, ofwhich $8,726,400 is allocated to the Parking Fund.
2. Operating expenses exclude depreciation.
Source: City of San Luis Obispo Finance & Information Technology Department.
141
B3-182
Schedule 20
City of San Luis Obispo, California
Demographic and Economic Statistics
Last Ten Fiscal Years
Median Public Elementary and Cuesta Community
Fiscal Household Median Secondary School College Unemployment
Year PoJ!ulation ~1) Income ~2~ Age ~12 Enrollment ( 4) Enrollment ~32 Rate ~Q
2004-05 44,519 33,918 27.0 7,324 8,330 4.10%
2005-06 44,439 46,499 30.9 7,098 8,373 4.00%
2006-07 44,239 38,328 30.1 6,989 8,671 4.10%
2007-08 44,697 49,827 30.1 6,982 8,983 4.30%
2008-09 44,750 42,526 37.3 7,123 9,720 9.10%
2009-10 44,948 40,579 27.0 7,112 8,433 9.70%
2010-11 45,418 53,978 23.4 7,226 7,890 9.60%
2011-12 45,308 57,365 24.5 7,402 7,339 7.50%
2012-13 45,541 58,630 24.5 7,368 7,289 6.40%
2013-14 45,473 59,628 25.3 7,366 7,389 5.70%
Sources:
I. 2013-14 CAFR Statistical Reports by the HdL Companies.
2. U.S. Census Bureau. Information is based on all of San Luis Obispo County .
3 . Cuesta Community College Admissions Office.
Note: Enrolled students (head count) San Luis Obispo campus only.
4. San Luis Coastal Unified School District ADA Annual Report.
Note: The boundaries ofSLCUSD are significantly larger than the City. The above school enrollment also includes these outlaying areas, most notably
Los Osos, Morro Bay, and Avila Beach.
142
B3-183
Schedule 21
City of San Luis Obispo, California
Principal Employers
Current Year and Nine Years Agl[)
2013-14 2004-05
Percentage Percentage
Number of Total City Number of Total City
Employer Employees Rank ---Employment Employees Rank Employment
Cal Poly State University 3,055 1 10.70% 2422 2 5.91%
County of San Luis Obispo 2,465 2 8.80% 3002 1 7.32%
P.O. & E (Diablo Canyon) 1,900 3 6.70% 1955 3 4.77%
California Men's Colony 1,540 4 5.40% 1700 4 4.15%
Cal Poly Foundation (Corporation) 1,400 5 4.90% 1365 5 3.33%
San Luis Coastal Unified School District 902 6 3.20% 825 6 2.01%
Mind body 650 7 2.30%
California Department of Transportation 544 8 1.90%
Cuesta Community College 440 9 1.50% 742 8 1.81%
Community Action Partnership 410 10 1.40%
City of San Luis Obispo 520 9 1.27%
Sierra Vista Regional Medical Center 780 7 1.90%
French Hospital 466 10 1.14%
Total 13,306 46.80% 13,777 33.61%
Note: Source for the 2013-14 employers information is the August 15-21, 2014 Pacific Coast Business Times (The List). This information represents
employers in San Luis Obispo County.
143
B3-184
Schedule 22
City of San Luis Obispo, California
Regular Authorized Positions
Last Ten Fiscal Years
Function 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Public Safety
Police
Sworn 61.0 58.0 58.0 64 .0 64 .0 59.0 59.0 57.0 57 .0 60.0
Non-sworn 28.0 27 .0 27.0 28.0 28.0 27.5 27.5 26.5 25.5 25.5
Fire
Sworn 46.0 43.0 43.0 44.0 44.0 44.0 44.0 44.0 44.0 49.0
Non-sworn 9.0 9 .0 9.0 10.0 10.0 9.8 9.0 7.8 6.8 4.0
Public Utilities 56.8 58.8 63.8 66.8 66.8 63 .8 63.8 60 .9 61.9 64.8
Transportation 25.0 25.5 25 .5 32.0 32.0 30.0 29.2 31.8 31.8 28.9
Leisure, Cultural and Social Services 28.0 28.0 28.0 33.0 33.0 33.0 33.0 32.0 32.0 34.0
Community Development 39.6 37.6 38.6 40.3 40.3 37.3 37.3 42.8 43.8 39 .5
General Government 55.9 54 .9 55 .9 58 .5 59.5 54.8 54.8 50.5 52.2 56.0
Total 349.3 341.8 348.8 376.6 377.6 359.2 357.6 353.3 355 .0 361.7
Ratio of Sworn Police Personnel per 1,000 Population:* 1.37 1.31 1.31 1.43 1.43 1.31 1.30 1.26 1.25 1.32
Ratio of Sworn Fire Personnel per 1,000 Population:* 1.03 0.9 7 0.97 0.98 0.98 0.98 0.97 0.97 0.97 1.08
*Does not include the Cal Poly student and faculty population served .
Note: See Schedule of Demographic and Economic Statistics for population data.
Source : City of San Luis Obispo Finance & Information Technology Department
144
B3-185
Schedule 23
City of San Luis Obispo, California
Operating Indicators and Capital Asset Statistks by Function
Last Ten Fiscal Years
For The Fi:ical Year Ended June 30
2004-05 2005-06 2006-07 2007-08 2008--09 2009-10 2010-11 2011-12 2012-13 2013-14
Function/Program:
Police:
Calls for police/fire service 33,563 35,018 33,832 33,580 33,211 32,057 32,074 34,751 36,236 34,659
Incident numbers issued 29,464 30,984 29,652 29,275 28,855 27,555 27,595 29,991 31,156 29,277
Police reports written 7,958 8,255 7,705 8,053 7,839 7,454 7,661 8,322 9,192 8,665
Traffic citations issued 4,113 3,713 7,635 6,389 7,099
Other citations issued 695 660 629 703 1,315
Violations cited 4,808 4,373 5,264 6,389 8,410 8,471 5,939 8,119 7,213 5,793
Citations issued 4,262 3,935 4,774 5,811 7,737 7,398 5,380 7,718 6,665 5,275
Collision reports 1,207 1,092 870 871 693 718 728 669 643 625
Violent crimes:** 183 170 162 163 136 140 126 134 117 158
Willful homicide** 1 2 3 2 1 0
Forcible rape** 25 23 22 27 32 30 27 24 18 31
Robbery** 29 35 25 39 38 39 35 34 19 26
Aggravated assault** 128 110 115 99 66 71 64 74 79 101
Property crimes: • * 760 709 726 702 649 620 640 714 804 713
Burglary** 399 361 358 312 334 324 372 330 414 328
Motor vehicle theft** 131 97 96 84 55 68 54 107 81 63
Larceny-theft:** 1,442 1,335 1,273 1,450 1,328 1,240 1,260 1,345 1,476 1,384
Over $400** 230 251 272 306 260 228 214 277 309 322
$400 and under** 1,212 1,084 1,001 1,144 1,068 1,012 1,046 1,068 1,167 1,062
Fire·
Medical responses***(Note 4) 2,742 2,727 2,564 2,788 2,613 3,325 2,799 2,856 2,985 3,232 1
Fire suppression responses***(Note 4) 143 173 100 321 110 133 101 102 95 105
Hazardous materials responses***(Note 4) 70 44 36 29 26 36 23 17 21 15
Other responses***(Note 4) 1,308 1,214 1,504 1,302 1,897 1,224 1,528 1,552 1,812 1,840
Total service responses*** 4,263 4,/58 4,204 4,440 4,646 4,7/8 4,45/ 4,527 4,913 5,/92
Fire and life-safety inspections*** 1,750 2,010 2,063 1,684 1,977 1,110 2,489 2,431 2,494 644
Arson investigations*** 33 47 47 38 29 47 22 18 49 44
Education activities(# of people)*** 8,000 15,900 17,200 18,000 15 ,000 14,000 20 ,106 23 ,120 23 ,377 23 ,945
145
B3-186
Function/Program:
Public Utilities :
Wa ter/Sewer customer accounts
M il es ofsewerline
M iles of waterline
Water service line repairs and renewals*****
Sewer main stoppages
Ac re feet of water delivered-Nacimento
Acre feet of water deli vered -Salinas
Ac re feet of water delivered-Whale Rock
T rnnsportauon :
Signals and lights :
Intersections with traffic signals
Traffic signal service requests
Streetlights operated & maintained
Streetlight service requests
Parking spaces :
Estimated miles of paved streets
Pavement condition index
Number of street lights
Traffic collisions
Parking spaces provided (lot, garage & street)
Parking citations written
Total transit passengers
Schedule 23
City of San Luis Obispo, California
Operating Indicators and Capital Asset Statistics by Function, continued
Last Ten Fiscal Years
For Tbe Fiscal Year Ended June 30
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
14,270 14 ,425 14 ,260 14 ,380 14 ,682 14,875
130 133 133 133 137 137
165 170 170 182 182
175 249 250 225 142 95
25 13 12 8 12 10
1,000 1,652 1,818 1,944 2,473 2,736
5,700 4,688 5,003 4,855 4,280 3,4 02
60
100
220
285
122 125 125 125 125 125
75 75 75 74 74 73
2,238 2 ,2 58 2,260 2,300 2 ,300 2,179
1,206 1,0 89 871 865 789 708
2,819 2,869 3,065 3,059 3,060 3,059
38,800 46,068 43,080 39,234 40,062 30,087
875 ,354 963 ,415 934,534 1,003,80 5 1.032,232 1,019 ,852
146
2010-11 2011-12 2012-13 2013-14
14 ,734 14,695 14 ,742 14 ,899
137 137 137 197
185 185 194 187
86 50 66 58
9 7 12 15
981 2 ,321 663 1,506
2,640 2 ,149 2 ,378 1,444
1,277 2,875 3,212
67 70
80 85
2,230 2,300
500 180
130 132 132 133
74 72 71 72
2,270 2,270 2,270 2,300
597 621 593 660
3 ,067 3,065 3,071 3,119
30,278 26,515 28,690 23 ,957
1,045 ,299 1,118 ,519 1,109,600 1,122 .000
B3-187
Function/Program:
Leisure, Cultural and Social Services·
Open space acres maintained
Open space easement acres
Trail mileage
Total golf rounds played
Acres of park landscape maintained
Trees in City jurisdiction
Children's services enrollment totals
Triathlon:
participants, spectators and volunteers
Annual senior attendance (total)
Facility permits processed
Annual aquatics attendance (total)
Adull athletic teams registered
Youth athletic participants registered
Special event applications processed
Banner permits processed
Instructional class enrollments
Schedule 23
City of San Luis Obispo, California
Operating Indicators and Capital Asset Statistics by Function, continued
Last Ten Fiscal Years
For The F'iscal Year Ended June 30
2004-05 2005-06 2006-07 2007-08 2001J-09 2009-10 2010-11
2,498 2,689 3,015 3,015 3,015 3,420 3,420
2,018 2,089 2,479 2,482 3,139 3,161 161
18 32 35 35 38 40 40
42,000 42,603 45,635 40,216 42,438 34,376 32,228
156 157 157 157 157 157 157
23,800 18,600 18,600 18,600 18,600 17,779 18,700
829 825 811 920 816 900 1,664
4,800 4,800 4,800 6,470 6,600 6,700 5,400
14,800 14,825 14,900 13,915 14,576 14,250 14,500
1,807 2,009 2,020 1,645 1,273 1,971 1,806
46,069 46,521 49,174 55,691 51,264 60,052 56,676
194 197 229 235 229 255 245
848 866 1,065 1,500 1,625 1,650 1,320
98 57 50 55 53 57 68
74 59 75 62 71 65 72
1,422 1,369 1,539 1,905 2,017 1,837 1,628
147
2011-12 2012-13 2013-14
3,510 3,510 3,510
3,200 3,200 3,200
45 47 49
34,699 33,067 34,766
157 157 157
18,700 18,700 18,700
1,755 1,605 2,338
6,000 6,525 6,000
14,000 14,200 •
1,803 1,269 1,416
56,042 67,000 73,903
320 325 338
1,400 1,300 1,200
78 84 103
86 76 82
1,400 1.308 l ,42A
B3-188
Function/Program:
Community Deve lopment:
Housing characteristics:
Single family units
2-4 units
5 or more unit structures
Mobile homes
Total
Housing units (replaces above categories)
Households (replaces above categories)
Building permits issued (Note 1 ):
Residential:
Single family residential (Note 2)
Multi-family residential
Non-residential
Other permits :
Additions, alterations, demolitions (Note 3)
Other improvements
Total
Approximate value of building permits (in thousands)
Residential :
Single family residential
Multi-family residential
Non-residential
Other permits :
Additions, alterations, demolitions (Note 3)
Other improvements
Total
Building inspections conducted
Home occupation permits processed
Development perm it app licat ions received
Schedule 23
City of San Luis Obispo, California
Operating Indicators and Capital Asset Statistics by Function, continued
Last Ten Fiscal Years
For The Fiscal Year Ended June 30
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 --
10,627 10,670 10,691 \0,729 10 ,793 10,808
2,225 2 ,242 2,253 2,337 2,337 2 ,350
5,608 5,648 5,656 5,654 5,654 5,702
1,502 1,502 1,502 1.502 1,534 1,534
19,962 20,062 20,102 20,222 20,318 20,394
607 641 601 544 475 438
45 34 31 25 28 16
II 25 16 19 5 5
19 24 31 19 4 I
568 559 523 498 454 416
643 642 601 561 491 438
$ 9 ,354 $ 5,631 $ 6,521 $ 6,172 $ 6,800 $ 4 ,424 $
3,143 8,640 9,592 11,843 4,286 2,528
15,736 31,274 15,209 20,340 10,482 525
20,548 22 ,652 17,689 21,741 21 ,080 26,464
$ 48 ,781 $ 68 ,197 $ 49 ,011 $ 60,096 $ 42 ,648 $ 33,941 $
10,327 6,950 8,888 8,477 10,371 8,359
186 140 151 149 175 146
346 383 323 286 223 194
148
2011-12 2012-13 2013-14
\0,951 10 ,969 10,994
2 ,634 2,650 2,656
5,596 5,596 5,647
1,482 1,482 1,482
20,663 20 ,697 20 ,779
20 ,578
1,361
442 463 566 511
7 13 48 59
3 10 6 8
7 5 7 9
499 459 530 458
516 487 591 534
6 ,085 $ 3,278 $ 15 ,698 $ 15 ,412
926 3,847 1,560 6,744
16,608 5,142 1,935 15,310
15 ,948 16,589 20 ,761 19,139
39,567 $ 28,856 $ 39,954 56 ,605
10,210 13 ,685 10 ,543 8,996
126 117 142 129
172 148 217 31 I
B3-189
Schedule 23
City of San Luis Obispo, California
Operating Indicators and Capital Asset Statistics by Function, continued
Last Ten Fiscal Years
For Tbe Fiscal Year Ended June 30
2004-05 2005-06 2006-07 2007-08 20011-09 2009-10 2010-11
Function/Program:
General Government'
Business tax certificates issued :
Located outside city limits
Total certificates issued
Human resources recruitments (total)
Fleet vehicles maintained
City-wide fleet & equipment assets
Replaces prior category
Telephone lines managed
Cell phones supported****
IT users supported
• Data Not Available
•• Data from California Department of Justice based on calendar year
*** Data is based on calendar year
****Includes cellular modems (70) (90 for 11-12)
*****The 2013-14 amount now includes recycled waterline ,
Notes: Some workload indicators are projections.
1,044
6,590
43
208
675
170
450
1,618 1,555
7,072 7,190
72 68
208 200
700 740
195 240
450 450
I. Excludes special permits such as plumbing, mechanical , electrical , signs, and grading as well as plan check permits .
2. Condominiums are included with single family residential.
3, Swimming pools are included with additions, alterations and demolitions.
4. In Fiscal year 2010-11 , numbers reported used observed code from Spillman rather than condition code.
Source: City of San Luis Obispo
149
1,452 1,487 1,548 1,569
7,297 7,458 7,090 6,873
96 46 46 42
241 280 301
290
800 925 1,003 1,003
260 343 348 351
450 450 450 450
2011-12 2012-13 2013-14
1,670 1,670 1,472
7,086 7,086 7,578
59 9\ \05
290 290 290
1,024 981 995
338 344 383
498 498 490
B3-190
Schedule 24
City of San Luis Obispo, California
Water System
Statistical Data
Fiscal Historic Increase/ Sales Increase/ Deliveries Increase/
Year Connections (Decrease) Revenues (Decrease) In Acre Feet ..JQ_ecrease)
1996-97 42,074 $43,300 4.80% 42,074 $43,300
2003-04 14,036 0.59% 7,873,000 5.27% 6,802 4.68%
2004-05 14,270 1.67% 8,139,300 3.38% 6,620 -2.68%
2005-06 14,425 1.09% 8,442,100 3.72% 6,507 -1.71%
2006-07 14,260 -1.14% 9,850,800 16.69o/O 6,986 7.36%
2007-08 14,380 0.84% 11,030,400 11.97% 6,988 0.03%
2008-09 14,493 0.79% 12,513,900 13.45% 6,320 -9.56%
2009-10 14,875 2.64% 13,025,900 4.09% 5,612 -11.21%
2010-11 14,777 -0.66% 13,302,800 2.13% 5,909 5.30%
2011-12 14,537 -1.62% 15,385,000 15.65% 5,999 1.52%
2012-13 14,758 1.52% 16,347,900 6.26% 5,823 -2.93%
2013-14 14,899 0.01% 16,950,100 3.68% 5,933 1.89%
Source: City of San Luis Obispo Finance & Infonnation Technology Department.
150
B3-191
Schedule 25
City of San Luis Obispo, California
Water and Sewer Rates
Last Ten Fiscal Years
Water Rates (Note 1)
As of Monthly
June 30 of Each Year Consuml!tion Price e!;r hcf*
2005 0-5 hcf $2 71
6-10 hcf $3.40
2006 0-5 hcf $2 .93
6-10 hcf $3 67
2007 0-5 hcf $3 28
6-25 hcf $4 II
26 + hcf(note 2) $5.14
2008 0-5 hcf $3 .71
6-25 hcf $464
26 + hcf(note 2) $5 81
2009 0-5 hcf $4.19
6-25 hcf $5 .24
26 + hcf(note 2) $6.57
2010 0-5 hcf $4 ,69
6-25 hcf $5 .87
26 + hcf(note 2) $7 .36
2011 0-5 hcf $5 .21
6-25 hcf $6.52
26 + hcf(note 2) $8 ,17
2012 0-5 hcf $5 .73
6-25 hcf $7 .17
26 + hcf(note 2) $8 .99
2013 Base Fee $5 .00
0-8 hcf $6.56
8 +hcf $8 .20
2014 Base Fee $5 .28
1-8 hcf 692
8 +hcf 8 65
*hcf ~ l 00 cubic feet
** Total monthly volwne charge capped based on average winter water consumption
Notes:
I. Rates are for services inside the City, outside the City rates are double.
2. Third tier applies only to single-fumily residential customers.
Source: City of San Luis Obispo Utilities Department
151
Single family
dwellin~
$28 36
$32 .33
$35 56
$5 .00 min. charge :oer
dwelling wut
$5.05/Wlit volwne charge**
$5 .50 olin. charge :oer
dwelling wut
$5 .56/Wlit volwne charge**
$6 00 olin charge :oer
dwelling wut
$6 .63/Wlit volwne charge **
$6 .5 5 olin. charge per
dwelling uut
$7.22/Wlit volume charge **
$7.01 olin. charge per
dwelling uut
$7 .73 olin. charge per
dwelling uut
$8 .52/Wlit volwne charge **
$7.96 olin cha:ge per
dwelling uut
$8 77 /Wlit volwne charge**
Sewer Rates (Monthly)
Multi-family dweUing
$22 33
$25.46
$28 ,01
$5.00 min . charge per
accoLUlt
$5 05/Wlit volwne charge**
$5 .50 min . charge per
accowtt
$5 56/Wlit volwne charge**
$6 ,00 min charge per
account
$6 .63/Wlit volwne charge**
$6 55 min . charge per
accmmt
$7 22/Wlit volume charge **
$7 .0 l min . charge per
accmmt
$7.73/Wlit volwne charge**
$7.73 min. charge per
accoWlt
$8.52/wlit volwne charge **
$7 96 min, charge per
dwelling Wlit
$8 77 /Wlit volwne charge**
B3-192
Schedule 26
City of San Luis Obispo, California
Water System
Ten Largest Water Users
Fiscal Year Ended June 30, 2014
Service
Name Type
Silver City Mobile Home Park Mobile Homes
Mustang Village Apartments
Sierra Vista Hospital Care Facilities
Laguna Lake Mobile Homes Mobile Homes
City of San Luis Obispo Parks Landscape
Creekside Mobile Homes Mobile Homes
Irish Hills Hamlet Apartments
Embassy Suites Hotel
San Luis Coastal Unified School Landscape
Chumash Village Mobile Homes
Total
Source : City of San Luis Obispo
152
Water Use Percent of
(acre-feet) Total
57 .0 15.3%
54.7 14.7%
41.5 11.1%
34.7 9.3%
32.5 8.7%
32.4 8.7%
32.1 8.6%
30.1 8.1%
29.3 7.9%
28.0 7.5%
372.3 100 .00%
B3-193
B3-194
B3-195
City of San Luis Obispo, California
Federal Awards
Reports and Schedule
Year Ended June 30, 2014
B3-196
City of San Luis Obispo, california
Table of Contents
June 30, 2014
Independent Auditors' Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance With Government Auditing Standards
Independent Auditors' Report on Compliance for Each Major Program and on
Internal Control Over Compliance Required by OMB Circular A-133
Schedule of Expenditures of Federal Awards
Note to Schedule of Expenditures of Federal Awards
Findings and Recommendations Section
Schedule of Audit Findings and Questioned Costs and Status of Prior Audit Findings and
Questioned Costs
2
Page
3-4
5-7
8
9
10-12
B3-197
G GLENN BURDETTE
CERTIFifO P BLIC ACCOUNlA'IlS
Independent Auditors' Report on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
The Honorable Oty Council of the
City of San Luis Obispo, california
San Luis Obispo, California
We have audited, in accordance with the 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, the financial statements of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City of San Luis Obispo, California as of and for the
year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise City of San
Luis Obispo's basic financial statements and have issued our report thereon dated December 16, 2014 .
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of San Luis Obispo's internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of City of San Luis Obispo's internal control. Accordingly, we do not express
an opinion on the effectiveness of City of San Luis Obispo's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not
designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies,
and therefore, material weaknesses or significant deficiencies, may exist that were not identified. However, as
described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal
control over financial reporting that we consider to be material weaknesses and significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal
control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will
not be prevented, or detected and corrected, on a timely basis. We consider the deficiency described in the
accompanying schedule of audit findings and questioned costs as finding 2014.1 to be a material weakness.
GLENNBURDETTE.COM
3
SAN LUIS OBISPO
1 1 50 Pa lm Street
San Luis Ob ispo, CA 93401
p 8 0 5 544 1441
f 805 544 43 5 1
PASO ROBLES
102 South Vine 5t reet, Ste . A
Paso Robies , CA 93446
p 805 2 3? ]995
J 805 7.39 93 12
SANTA MARIA
2 2 2 2 Sout h Broadway, Ste A
Sant a Maria, CA 93454
p 805 922 4010
J 80 5 922 4 2 85
B3-198
The Honorable City Council of the
City of San Luis Obispo, California
San Luis Obispo; California
Page 2
A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a
material weakness, yet important enough to merit attention by those charged with governance.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of San Luis Obispo's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements, noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
City of San Luis Obispo's Responses to Findings
The City of San Luis Obispo's responses to the findings identified in our audit are described in the accompanying
schedule of audit findings and questioned costs. We did not audit City of San Luis Obispo's responses and,
accordingly, we express no opinion on them.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on
compliance. This report is an integral part of the audit performed in accordance with Government Auditing Standards
in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any
other purpose.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 30, 2014
4
B3-199
GLENN BURDETTE
C ER TI FIED P U B LI C AC CO UN T AN f S
Independent Auditors' Report on Compliance For
Each Major Procram and on Internal Control
Over Compliance Required by OMB Circular A-133
The Honorable City Council of the
City of San Luis Obispo, California
San Luis Obispo, California
Report on Compliance for Each Major Federal Program
We have audited the City of San Luis Obispo's compliance with the types of compliance requirements described in the
OMS Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City of San Luis
Obispo, California's major federal programs for the year ended June 30, 2014. The City of San Luis Obispo, California's
major federal programs are identified in the summary of auditors' results section of the accompanying schedule of
audit findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable
to each of its major federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the City of San Luis Obispo, California's major
federal programs based on our audit of the types of compliance requirements referred to above. We conducted our
audit of compliance in accordance with auditing standards generally accepted in the United States of America; the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements referred to above
that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a
test basis, evidence about the City of San Luis Obispo's compliance with those requirements and performing such
other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program.
However, an audit does not provide a legal determination of the City of San Luis Obispo, California's compliance.
GLENNBURDETTE.COM
5
SAN LUIS OBISPO
1150 Palm Streel
Sa n Lu is Obi s po, CA 9 3 401
p 805 544 1 441
f 8 05544~351
PASO ROBLES
1 02 Sou th Vine St reet , Ste. A
Paso Robles, CA 93446
p 805 2 37 39 95
1 805 239 9332
SANTA MARIA
22 2 2 Sout h Bro adway , Ste A
San ta Ma ri a . CA 93454
p 80 5 922 4010
1 805 9 2? 428 6
B3-200
The Honorable City Council of the
City of San Luis Obispo, California
San Luis Obispo, California
Page 2
Opinion on Each Major Federal Program
In our opinion, the City of San Luis Obispo, California, complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major federal programs for
the year ended June 30, 2014.
Report on Internal Control Over Compliance
Management of the City of San Luis Obispo, California, is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above.
In planning and performing our audit, we considered the City of San Luis Obispo, California's internal control over
compliance with the requirements that could have a direct and material effect on a major federal program to
determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion
on compliance for each major federal program and to test and report on internal control over compliance in
accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of San Luis
Obispo, California's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does
not allow management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A
material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal
control over compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal
control over compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control over compliance that might be material
weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we
consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133
We have audited the financial statements of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City of San Luis Obispo, California, as of and for the year ended
June 30, 2014, and the related notes to the financial statements, which collectively comprise the City of San Luis
Obispo, California's basic financial statements. We issued our report thereon dated December 16, 2014, which
contained unmodified opinions on those financial statements . Our audit was conducted for the purpose of forming
6
B3-201
The Honorable City Council of the
City of San Luis Obispo, California
San Luis Obispo, California
Page 3
opinions on the basic financial statements. The accompanying schedule of expenditures of federal awards is
presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic
financial statements. Such information is the responsibility of management and was derived from and relates directly
to the underlying accounting and other records used to prepare the financial statements or to the financial statements
themselves, and additional procedures in accordance with auditing standards generally accepted in the United States
of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in
relation to the financial statements as a whole.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal
control over compliance and the results of that testing based on the requirements of OMB Circular A-133.
Accordingly, this report is not suitable for any other purpose.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 30, 2014
7
B3-202
City of San luis Obispo, California
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2014
Federal Grantor/ Federal
Pass-Through Grantor/ CFDA
Program Title Number
Major Programs:
U.S. Department of Transportation:
Passed through the State of California:
Bob Jones Trail Connection at LOVR 20.205
Highway and Bridges Rehabilitation
and Replacement Program 20.205
Subtotal U.S. Department of Transportation
U.S. Department of Transportation:
Urban Mass Transportation-
Section 9 Capital and Operating
Assistance Formula Grants 20.507
New Freedoms Grant 20.507
Subtotal U.S. Department of Transportation
Total Major Programs
Non-Major Programs:
U.S. Department of Housing and Urban Development:
Passed through the County of San Luis Obispo:
Community Development Block Grant 14.218
Subtotal U.S. Department of Housing and Urban Development
U.S. Department of Justice:
Edward Byrne Memorial Justice Assistance Grant Program 16.804
U.S. Office of Emergency Services:
Assistance to Firefighters Grant 97.044
Passed through the State of California:
Hazard Mitigation Grant 97 .047
Subtotal U.S . Office of Emergency Services
Total Non-Major Programs
Total Expenditures of Federal Awards
See independent auditors' report.
See the accompanying note to schedule .
8
Pass-Through
Grantor's Federal
Number Expenditures
N/A $ 600,000
N/A 140,024
740,024
N/A 1,297,893
N/A 2,340
1,300,233
2,040,257
B-11-UC-06-0508 1,012,891
1,012,891
N/A 10,150
N/A 69,470
2012-0004 35,380
104,850
1,127,891
$ 3,168,148
B3-203
City of San Luis Obispo, California
Note to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2014
Note 1: Basis of Presentation
The purpose of the accompanying schedule of expenditures of federal awards (the schedule) is to present a summary
of those activities of the City of San Luis Obispo, California (the City) for the year ended June 30, 2014, which have
been financed by federal awards. For purposes of the schedule, federal awards include all federal contracts and grants
received directly from the federal government and sub-awards from nonfederal organizations made under federally
sponsored agreements. Because the schedule presents only a selected portion of the activities of the City, it is not
intended to and does not present either the financial position or changes in net assets of the City.
The information in the accompanying schedule is presented in accordance with the requirements of OMB Circular
A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this
schedule may differ from amounts presented in the basic financial statements. The accounting principles followed by
the City and used in preparing the schedule are as follows:
Expenditures for direct costs are recognized as incurred using the modified accrual basis of accounting and the cost
accounting principles contained in OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments
and Administrative Requirement for Grants and Cooperative Agreements to State and Local Governments (OMB
Common Rule). Under those cost principles, certain types of expenditures are not allowable or are limited as to
reimbursement. Additionally, expenditures include a portion of costs associated with general City activities (indirect
costs) which are allocated to federal awards under negotiated formulas commonly referred to as indirect cost rates.
9
B3-204
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2014
Section 1: Summary of Auditors' Results
Financial Statements
(a) Type of auditors' report issued on financial statements: Unqualified.
(b) Internal control over financial reporting:
• Material weakness(es) identified: Yes. See Finding 2014.1.
• Significant deficiencies identified not considered to be material weaknesses: None reported.
(c) Noncompliance material to financial statements noted: No.
Federal Awards
(d) Internal control over major programs:
• Material weakness(es) identified: No.
• Significant deficiencies identified not considered to be material weaknesses: None reported .
(e) Type of auditors' report issued on compliance for major programs: Unqualified.
(f) Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section .510(a): No.
(g) Dollar threshold used to distinguish between Type A and Type B programs: $300,000.
(h) Major Programs:
• Highway Planning and Construction (CFDA Number 20.205)
• Federal Transit Formula Grants (CFDA Number 20.507)
(i) Auditee qualified as low-risk auditee: No.
10
B3-205
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2014
Page 2
Section II: Findings Relating to the Financial Statements which are Required to be Reported in
Accordance with Government Auditing Standards
Finding 2014.1: Capital Assets-Material Weakness
Criteria: Generally accepted accounting principles for state and local governments require the reporting of
governmental activity type capital assets, related depreciation and depreciation expense at the government-wide
financial statement level.
Condition: The City has established procedures to ensure that capital asset additions are properly capitalized, capital
asset disposals are properly released, and current year depreciation expense for capital assets are recorded in the
capital assets tracking system and these are reconciled regularly at the fund-financial statement level for Proprietary
funds. However, there were differences noted between the capital assets tracking system and governmental activity
type capital assets recorded at the government-wide financial statement level.
Effect: A prior year restatement of $833,234 was recorded to reduce capital assets and net position related to
disposals from prior years that had been properly recorded in the capital asset tracking system but not recorded at the
government-wide financial statement level.
Recommendation: We recommend that in addition to the regular reconciliation process performed for Proprietary
fund types, the City perform a review of governmental activity type capital assets and reconcile to the balances
recorded at the government-wide financial statement level.
City Response: The City is implementing a checklist of items to be completed prior to the preparation of the annual
financial statements. This checklist will contain a requirement for staff to reconcile the capital asset sub-system ledgers
with the balances shown in both the governmental and proprietary funds at both the fund and government-wide
financial statement levels .
11
B3-206
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2014
PageS
Section Ill: Findings and Questioned Costs for Federal Awards
None.
Section IV: Status of Prior Year Findings and Questioned Costs-2013/2014
Finding 13.1: Reimbursements for Project Expenditures-Material Weakness
Finding: During the year ended June 30, 2013, the City performed reconciliation and review procedures over the
granting process and noted two grants that had expenditures from a prior period that had not yet been submitted for
reimbursement from the granting agency.
Recommendation: We recommended the City continue to regularly monitor and reconcile expenditures on all projects
in progress so that the City can request reimbursement from granting agencies on a timely basis.
Status: Implemented
Finding 13.2: Utility Billing Year-End Accounts Receivable -Significant Deficiency
Finding: During audit testwork, we noted errors in the spreadsheets used for both the Water and Sewer Funds. There
was an error due to incorrect formulas that resulted in accruing amounts for July 2013 utility services into accounts
receivable as of June 30, 2013 . In addition, we noted that billings for June 2013 industrial charges, service charges and
late charges were accounted for twice in the Sewer Fund.
Recommendation: We recommended the City implement additional review procedures of spreadsheets for manual
and formula errors.
Status: Implemented.
12
B3-207
City of San Luis Obispo
Transportation Development Act Funds
Report and Financial Statements
Year Ended June 30,2014 and 2013
San Luis Obispo, California
B3-208
City of San Luis Obispo, California
Transportation Development Act Funds
Report and Financial Statements
Years Ended June 30, 2014 and 2013
B3-209
Transit Fund
Independent Auditors' Report
City of San Luis Obispo, California
Transportation Development Act Funds
Report and Financial Statements
Year Ended June 30, 2014 and 2013
Table of Contents
Statements of Fund Net Position-June 30, 2014 and 2013
Statements of Revenues, Expenses and Changes in Fund Net Position-
Years Ended June 30, 2014 and 2013
Statements of Cash Flows-Years Ended June 30, 2014 and 2013
Notes to Financial Statements
Independent Auditors' Report on Transportation Development Act Compliance
and State Bond Compliance
Transportation Development Act (TDA) Fund
Independent Auditors' Report
Balance Sheets-June 30, 2014 and 2013
Statements of Revenues, Other Uses and Changes in Fund Balance-
Years Ended June 30, 2014 and 2013
Notes to Financial Statements
Independent Auditors' Report on Transportation Development Act Compliance
TDA Fund Supplementary Information
Schedule of Revenues and Other Uses-Budget and Actual-
Years Ended June 30, 2014 and 2013
2
Page
3-4
5
6
7-8
9-15
16-17
18-19
20
21
22-24
25-26
27
B3-210
G GLENN BURDETTE
CERriFIED PUB L I C ACCOU N TANTS
Independent Auditors' Report
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
San Luis Obispo, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Transit Fund of the City of San Luis Obispo,
California, as of June 30, 2014 and 2013, and the related notes to the financial statements, as listed in the table
of contents.
Management's Responsibility for the Finandal Statements
Management is responsible for the preparation and fair presentation of the these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audits 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements . The procedures selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly,
we do not express such an opinion. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
GLENNBURDETTE.COM
3
SAN LUIS OBISPO
1 150 Pa lm Stree t
San Luis Obi s po, CA 93 401
p 80 5 544 1441
f 805 544 435.1
PASO ROBLES
102 South Vine St reet, Ste A
Paso Ro b les , CA 9 3 44 6
p 805 2 37 3995
f 805 2 39 9 33 2
SANTA MARIA
2222 So uth Broadway , Ste A
Santa Maria, CA 93454
p 805 922 4010
f 805 922 4 285
B3-211
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
Page2
Opinions
In our opinion, the financial statements referred above present fairly, in all material respects, the financial
position of the Transit Fund the City of San Luis Obispo, California, as of June 30, 2014 and 2013, and the changes
in financial position and cash flows thereof for the years then ended in accordance with accounting principles
generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the Transit Fund of the City of San Luis Obispo,
California and do not purport to, and do not, present fairly the financial position of the City of San Luis Obispo,
California, as of June 30, 2014 and 2013, the changes in its financial position, or, where applicable, its cash flows
for the years then ended in accordance with accounting principles generally accepted in the United States of
America. Our opinion is not modified with respect to this matter.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 29, 2014
4
B3-212
Assets
Current assets:
Cash and cash equivalents
Investments
Accounts receivable
Interest receivable
Due from other governments
Total current assets
Capital assets:
Buildings and improvements
Transit operating equipment
Construction in progress
Total capital assets
City of San Luis Obispo, California
Transit Fund
Statements of Fund Net Position
June 30,2014 and 2013
Less accumulated depreciation
Total capital assets, net of accumulated depreciation
Total assets
liabilities
Current liabilities:
Accounts payable
Accrued salaries and compensated absences
Unearned revenue
Total current liabilities
Noncurrent liabilities:
Compensated absences, net of current portion
Total liabilities
Net Position
Net investment in capital assets
Unrestricted
Total net position
The accompanying notes are an integral part of these financial statements.
5
2014 2013
$ 30,800 $
696,700 1,024,700
4,700
1,700 700
1,767,300 1,290,300
2,501,200 2,315,700
5,016,100 5,016,100
7,618,600 8,308,400
39,000 36,300
12,673,700 13,360,800
(4,954,800) (4 ,818,400)
7,718,900 8,542,400
10,220,100 10,858,100
370,100 928,300
9,900 12,000
1,105,300 361,600
1,485,300 1,301,900
2,000
1,487,300 1,301,900
7,718,900 8,542,400
1,013,900 1,013,800
$ 8,732,800 $ 9,556,200
B3-213
City of San Luis Obispo, California
Transit Fund
Statements of Revenues, Expenses and Changes in Fund Net Position
Years Ended June 30, 2014 and 2013
2014
Operating revenues:
Passenger fares $ 261,000
Special transit fares 403,100
Total operating revenues 664,100
Operating expenses:
Purchased transportation 1,787,000
Other transportation services 386,300
Fuel and lubricants 434,000
Other materials and supplies 56,000
Salaries and wages 136,200
Fringe benefits 54,200
General and administrative 320,400
Depreciation 885,200
Total operating expenses 4,059,300
Operating loss (3,395,200)
Nonoperating revenues and expenses:
Transportation Development Act operating grants 1,113,000
Transportation Development Act capital grants 82,400
Federal Transit Administration operating grants 1,263,400
Federal Transit Administration capital and planning grants 36,900
State Prop 1B grant
State EMA grant 45,500
Interest 6,100
Other nonoperating revenues (expenses) 24,500
Total nonoperating revenues and expenses 2,571,800
Income (loss) before capital contributions (823,400)
Net position -beginning of year 9,556,200
Net position -end of year $ 8,732,800
The accompanying notes are an integral part of these financial statements.
6
2013
$ 259,700
395,200
654,900
1,768,100
306,200
435,300
13,500
160,700
62,800
416,900
740,400
3,903,900
(3,249,000)
1,391,800
1,281,700
408,400
308,600
14,300
3,100
27,800
3,435,700
186,700
9,369,500
$ 9,556,200
B3-214
City of San Luis Obispo, California
Transit Fund
Statements of Cash Flows
Years Ended June 30, 2014 and 2013
Cash flows from operating activities:
Cash received from customers
Cash payments to suppliers for goods and services
Cash payments to General Fund for interfund services
Cash payments to employees for services
Other nonoperating cash receipts (payments)
Net cash used in operating activities
Cash flows from noncapital financing activities:
Operating grants received
Cash received for interfund services
Other nonoperating revenues (expense)
Net cash provided by noncapital financing activities
Cash flows from ca!lital and related financing activities:
Capital grants received
Acquisition and construction of capital assets
Net cash used in capital and related financing activities
Cash flows from investing activities:
Interest on investments
Net cash provided by investing activities
Net increase (decrease) in cash and cash equivalents and investments
Cash and cash equivalents and investments-beginning of year
Cash and cash equivalents and investments-end of year
The accompanying notes are an integral part of these financial statements.
7
2014 2013
$ 926,100 $ 685,700
(3,221,500) (1,976,500)
{320,400) (416,900)
(190,500) (222,200)
24,500
(2, 781,800) (1,929,900)
2,458,600 2,661,500
82,600
(1,200)
2,541,200 2,660,300
571,100
{61,700) {903,200)
{61,700) (332,100)
5,100 5,500
5,100 5,500
{297,200) 403,800
1,024,700 620,900
$ 727,500 $ 1,024,700
B3-215
City of San Luis Obispo, California
Transit Fund
Statements of Cash Flows, Continued
Years Ended June 30, 2014 and 2013
Reconciliation of operating loss to net cash used in operating activities:
Operating loss
Adjustments to reconcile operating loss to net cash used in operating activities:
Depreciation
Other revenues and expenses
Changes in operating assets and liabilities:
Accounts receivable
Accounts payable
Unearned revenue
Accrued salaries and compensated absences
Net cash used in operating activities
Reconciliation of cash and cash equivalents and investments to the statement
of fund net position:
Cash and cash equivalents
Investments
Total cash and cash equivalents and investments
The accompanying notes are an integral part of these financial statements.
8
2014
$ (3,395,200)
885,200
24,500
(481,700)
(558,200)
743,700
(100)
$ (2,781,800)
$ 30,800
696,700
$ 727,500
2013
$ (3,249,000)
740,400
27,800
3,000
546,600
1,300
$ (1,929,900)
$
1,024,700
$ 1,024,700
B3-216
Note 1: The Reporting Entity
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30,2014 and 2013
The City of San Luis Obispo (the City) operates a fixed route public transportation system within the City limits and
to the California Polytechnic State University (Cal Poly). Vehicle operations and vehicle maintenance are provided
under contract by a private transportation company. Nonvehicle-related support and administrative services are
provided by City staff.
The Transit Fund (the Fund) is an enterprise fund of the City created by resolution of the City Council to account for
the revenues received pursuant to the Transportation Development Act (TDA), Federal Transit Authority (FTA) and
the revenues received from the transit operations described above. Such revenues are allocated under specific
statutes and are legally restricted to finance expenditures made for transit operations, the development of public
transportation systems and transportation planning. When both restricted and unrestricted resources are available
for the same purpose, it is the City's policy to use restricted funds first.
Note 2: Summary of Significant Accounting Policies
Measurement Focus, Basis of Accounting and Basis of Presentation
The Fund's financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred regardless
of the timing of related cash flows. The Fund distinguishes operating revenues and expenses from nonoperating
items. Operating revenues and expenses generally result from providing services in connection with the Fund's
principal ongoing operations. The principal operating revenues of the Fund are charges to customers for transit
services. Operating expenses for the Fund include cost of services, administrative expenses, and depreciation on
capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and
expenses, including non-exchange transactions such as TDA and FTA grants.
Nonexchange transactions, in which the Fund receives value without directly giving equal value in return, include
grants. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied.
Eligibility requirements include timing requirements, which specify the fiscal year when the resources are to be used
or the fiscal year when use is first permitted; matching requirements, in which the Fund must provide local resources
to be used for a specific purpose; and expenditures requirements, in which the resources are provided to the Fund
on a reimbursement basis.
Cash, Cash Equivalents and Investments
Cash and cash equivalents consist of cash on hand, cash balances in checking and money market accounts and short-
term investments, with an original maturity of three months or less. Investments which are in the City's internal
investment pool are also treated as cash equivalents for the purposes of the statement of cash flows.
9
B3-217
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2014 and 2013
Note 2: Summary of Significant Accounting Policies (Continued)
Amounts Due from Other Governments
Generally, amounts due from other governments are recorded as revenues when earned. However, when the use
of funds is the prime factor for determining eligibility for grants, revenue is accrued when the related expenses have
been made on an approved grant.
Capital Assets
Capital assets are recorded at cost and depreciated using the straight-line method over their estimated useful lives,
ranging from 5 to 20 years.
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 certain reported amounts
and disclosures. Accordingly, actual results could differ from those estimates.
Subsequent Events
Events subsequent to June 30, 2014 have been evaluated through December 29, 2014, which is the date the financial
statements were available to be issued. Management did not identify subsequent events that required disclosure.
Note 3: Cash and Cash Equivalents and Investments
At June 30, 2014 and 2013, cash and cash equivalents consisted of the following:
2014 2013
Deposits:
Cash in bank $ 30,800 $
Custodial Credit Risk-Deposits
Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned to it. Cash
balances held in banks are insured up to $250,000 by the Federal Depository Insurance Corporation. For custodial
credit risk associated with deposits, the City follows California Government Code, which requires California financial
institutions to secure the City's deposits by pledging government securities as collateral. The market value of the
pledged securities must equal 110% of the City's deposits. California law also allows financial institutions to secure
the City's deposits by pledging first trust deed mortgage notes equal to 150% of the City's deposits. All deposits held
by financial institutions are fully insured or collateralized with securities, held by the pledging financial institutions'
trust departments in the City's name.
10
B3-218
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2014 and 2013
Note 3: Cash and Cash Equivalents and Investments (Continued)
At June 30, 2014 and 2013, investments consisted of the following:
Pooled Investment Funds:
Local Agency Investment Fund (LAIF)
2014 2013
$ 696,700 $1,024,700
The City follows the practice of pooling cash and investments for all funds under its direct daily control. Funds held
by outside fiscal agents under provisions of bond indentures are maintained separately.
Interest earned on pooled cash and investments is allocated quarterly to the various funds based on the respective
fund's average quarterly cash balance. Interest earned from cash and investments with fiscal agents is credited
directly to such funds.
Interest Rate Risk
This is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. In
accordance with its policies in the Investment Management Plan, the City mitigates interest rate risk by:
• Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing
operations, thereby avoiding the need to sell securities on the open market before maturity.
• Investing operating funds primarily in shorter-term securities.
The City's investment policy also includes portfolio maturity targets. A minimum of 20% of the portfolio will be
invested in securities maturing in one year or less. Up to 80% of the portfolio can be invested in securities with a
maturity over one year, with no more than 10% of the portfolio invested in securities with a maturity over five years.
Credit Risk
This is the risk of loss due to the failure of the security issuer or backer . The City's policies to mitigate credit risk
include:
• Limiting investments to the safest types of securities. The California Government Code limits the investment
vehicles available to local agencies. The credit risk of these securities is measured by the assignment of a
rating by a nationally recognized statistical rating organization.
11
B3-219
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2014 and 2013
Note 3: Cash and Cash Equivalents and Investments (Continued)
• Pre-qualifying the financial institutions, broker/dealers, intermediaries and advisors with which the City will
do business.
Concentration of Credit Risk
The City's policies contained in the Investment Management Plan provide guidelines (by type of investment that
limits either the dollar amount, the percent of the portfolio or the maturity term) for diversifying the investment
portfolio so that potential losses on individual securities will be minimized.
The City's Investment Management Plan outlines the following criteria related to portfolio diversification :
• No more than 5% of the City's portfolio (exclusive of government agency issues or LA IF) shall be placed with
any financial institution.
• No more than 25% of the City's portfolio shall be invested in collateralized certificates of deposit issued by
financial institutions.
• Certificates of deposit (negotiable and collateralized) placed by the City shall not constitute more than 15%
of the total assets of the institution; and negotiable certificates of deposit will only be placed with
institutions with total assets in excess of $200 million and that maintain a ratio of equity to total assets of
at least 5%.
Additional Cash and Investment Disclosures
See the City of San Luis Obispo June 30, 2014 Comprehensive Annual Financial Report for additional cash and
investment disclosures.
Note 4: Due from Other Governments
At June 30, 2014 and 2013, the amounts due from other governments were as follows:
2014 2013
Federal Transit Administration-capital and operating grants $ 1,292,800 $ 1,279,000
San Luis Obispo County of Governments-TDA 4th Quarter 474,500 6,300
Other 5,000
$ 1,767,300 $ 1,290,300
12
B3-220
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2014 and 2013
Note 5: Capital Assets
Capital assets activity for the fiscal year ended June 30, 2014, was as follows :
Balance
June 30, 2013
Capital assets not being depreciated:
Construction in progress $ 36,300
Capital assets being depreciated:
Buildings and improvements 5,016,100
Transit operating equipment 8,308,400
Total capital assets being depreciated 13,324,500
Less accumulated depreciation (4,818,400)
Total capital assets, net of accumulated depreciation $ 8,542,400
Capital assets activity for the fiscal year ended June 30, 2013, was as follows :
Balance
June 30, 2012
Capital assets not being depreciated:
Construction in progress $ 154,500
Capital assets being depreciated:
Buildings and improvements 4,880,200
Transit operating equipment 7,425,400
Total capital assets being depreciated 12,305,600
Less accumulated depreciation (4,078,000)
Total capital assets, net of accumulated depreciation $ 8,382,100
13
Additions and Deletions and Balance
Transfers Transfers June 30, 2014
$ 17,000 $ (14,300) $ 39,000
5,016,100
44,700 (734,400) 7,618,700
44,700 (734,400) 12,634,800
(885,200) 748,700 (4,954,900)
$ (823,500) $ $ 7,718,900
Additions and Deletions and Balance
Transfers Transfers June 30, 2013
$ $ (118,200) $ 36,300
135,900 5,016,100
883,000 8,308,400
1,018,900 13,324,500
(740,400) (4,818,400)
$ 278,500 $ (118,200) $ 8,542,400
B3-221
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2014 and 2013
Note 6: Intergovernmental Allocations
The City has been allocated the following funds from the State Transit Assistance Fund (STAF) and Local
Transportation Fund (LTF) for the years ended June 30, 2014 and 2013. The amounts have been used for both
operating expenses and capital assets .
LTF
STAF
STAF
Applicable
Allocating TDA Statute
Article
4.0
6.5
6.5
Section
99260
99313
99314
Total Transportation Development Act revenue
$
$
Amount
2014 2013
1,013,000 $ 1,118,000
143,600 232,900
38,800 40,900
1,195,400 $ 1,391,800
The City also directly allocated for the years ended June 30, 2014 and 2013, $676,192 and $598,269, respectively of
LTF Article 4.0, Section 99260 funds to San Luis Obispo Regional Transit Authority (SLORTA), which are not shown in
the accompanying financial statements.
Note 7: Fare Revenue Ratios
The City had a fare revenue ratio of 23% and 22% for the years ended June 30, 2014 and 2013, respectively,
computed as follows:
2014 2013
Operating revenues-fares $ 664,100 $ 654,900
(a) Net Operating revenues-fares 664,100 654,900
Net operating costs, net of depreciation and vehicle lease costs 3,174,100 3,163,500
Exclude capital expenses under uniform system of accounts
for purposes of calculating fare revenue ratios but
treated as operating expenses for financial statements (228,800) (187,500)
(b) Adjusted operating costs for purposes of calculating fare revenue ratios $ 2,945,300 $ 2,976,000
(c) Fare revenue ratio [(a) I (b)] 23% 22%
The City is in compliance with applicable TDA regulations pertaining to acceptable fare revenue ratios which require
a minimum ratio of 20%.
14
B3-222
Note 8: PTMISEA
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2014 and 2013
The Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006 (Bond Act), approved by the
voters as Proposition 1B in November 2006, included a program of funding in the amount of $4.0 billion to be
deposited in the Public Transportation Modernization, Improvement, and Service Enhancement Account (PTMISEA).
Of this amount, $3.6 billion in the PTMISEA was made available to project sponsors in California for allocation to
eligible public transportation projects for rehabilitation, safety, or modernization improvements; capital service
enhancements or expansions; new capital projects; bus rapid transit improvements; or rolling stock procurement,
rehabilitation, expansion or replacement. The fiscal year 2007-08 PTMISEA eligibility is based on STA allocations to
each project sponsor during fiscal years 2004-05, 2005-06 and 2006-07 and is available for allocation until June 30,
2010. The fiscal year 2008-09 PTMISEA eligibility is based on similar guidelines. Qualifying expenditures must be
encumbered within three years from the date of allocation and expended within three years from the date of the
encu mbra nee.
1 he fund was aiiocated and received an addttionai $475,000 under GC; isist9.~S(aj(2j for fiscai year lUU/-U!:! and
2008-09 PTMISEA which became available during the year ended June 30, 2010 to be used for vehicle procurement,
which was fully expended as of June 30, 2013. The Fund was allocated and received an additional $25,700 during
the year ended June 30, 2011 to be used for radio system upgrades, which was fully expended as of June 30, 2012.
During the year ended June 30, 2012, the Fund received an additional $445,200 to be used for vehicle procurement
which was fully expended as of June 30, 2013.
As of June 30, 2014 and 2013, PTMISEA funds received and expended were as follows:
Proceeds received :
PTMISEA
Interest earned
Expenditures incurred:
Vehicle procurement
Radio system upgrade
Unexpended proceeds from prior years
Unexpended proceeds
$
$
15
2014 2013
$
1,100
1,100
(314,900)
313,800
$
B3-223
G GLENN BURDETTE
CERT I !'I EO PU B L I C 1\CC OUNTANf S
Independent Auditors' Report On
Transportation Development Act Compliance
and State Bond Compliance
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
San Luis Obispo, California
We have audited the financial statements of the Transit Fund of the City of San Luis Obispo as of and for the years
ended June 30, 2014 and 2013, and have issued our report thereon, dated December 29, 2014 .
Management's Responsibility
Management is responsible for the compliance with the applicable statutes, rules and regulations of the
Transportation Development Act (TDA), the California Code of Regulations (CCR) and the allocation instructions and
resolutions of San Luis Obispo Council of Governments as required by Section 6662 of the CCR .
Auditors' Responsibility
Our responsibility is to express an opinion on compliance with the applicable statutes, rules and regulations referred
to above.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America;
the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States; and the applicable statutes, rules and regulations referred to above. Those standards
and the applicable statutes, rules and regulations referred to above require that we plan and perform the audit to
obtain reasonable assurance about whether noncompliance with the applicable statutes, rules and regulations
referred to above occurred. An audit also includes examining, on a test basis, evidence about the City's compliance
with the applicable statutes, rules and regulations and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit
does not provide a legal determination of the City's compliance with the applicable statutes, rules and regulations
referred to above.
In connection with our audit, we performed tests of the City's compliance with applicable statutes, rules and
regulations of the Transportation Development Act (TDA), the California Code of Regulations (CCR) and the allocation
instructions and resolutions of San Luis Obispo Council of Governments as required by Section 6662 of the CCR.
During our audit, we performed to the extent applicable the tasks contained in Section 6667 of the CCR. Such audit
tests would not necessarily disclose all instances of noncompliance because they were based on selective tests of
aq:ounting records and related data.
GLENNBURDETTE.COM
16
SAN LUIS OBISPO
J 150 Palrn Street
San Luis Obispo , CA !;l:J40 1
p 805 5441441
[8055444351
PASO ROBLES
102 South Vine Street, St e A
~aso Robles, CA 93446
p 805 23? 3995
f 805 239 9332
SANTAMARIA
2222 South Broadway, Ste A
Santa Maria, CA 9345 4
p 805 92 2 401 0
f 805 922 4 286
B3-224
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
Page 2
Opinion
In our opinion, the funds allocated to and received by the Transit Fund of the City of San Luis Obispo, California,
pursuant to the TDA were expended and accounted for in compliance with the applicabie statutes, rules and
regulations of the TDA, the CCR and the allocation instructions and resolutions of the San Luis Obispo Council of
Governments, in all material respects, for the year ended June 30, 2014.
The purpose of this report over compliance is solely to describe the scope of our testing of compliance and the
results of that testing based on the applicable statutes, rules and regulations of the Transportation Development Act
(TDA), the California Code of Regulations (CCR) and the allocation instructions and resolutions of San Luis Obispo
Council of Governments as required by Section 6662 of the CCR. Accordingly, this report is not suitable for any other
purpose.
bLOiu~~~~
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 29, 2014
17
B3-225
G GLENN BURDETTE
CERT IF IED P UB LIC ACCOUNTANTS
Independent Auditors' Report
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
San Luis Obispo, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Transportation Development Act (TDA) Fund of the
City of San Luis Obispo, California, as of June 30, 2014 and 2013, and the related notes the financial statements, as
listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audits 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we do not express such
an opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
GLENNBURDETTE.COM
18
SAN LUIS OBISPO
11 50 Palm St reet
San Luis Obispo, CA 93401
p 805 544 1441
J 805 544 4351
PASO ROBLES
102 South Vin e Street , Ste . A
Paso Robles, CA 93445
"805 23? 3995
J 805 239 9332
SANTAMARIA
2222 South Broadway . Ste A
Santa Maria, CA 93454
"805 922 4010
J 805 922 428 6
B3-226
The Honorable City Council of the City of San Luis Obispo, California
and San luis Obispo Council of Governments
Page 2
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinions
In our opinion, the financial statements referred above present fairly, in all material respects, the financial position
of the Transportation Development Act (TDA) Fund the City of San Luis Obispo, California, as of June 30, 2014 and
2013, and the changes in financial position and cashflows thereof for the years then ended in accordance with
accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the TDA Fund of the City of San Luis Obispo, California
and do not purport to, and do not, present fairly the financial position of the City of San Luis Obispo, California, as
of June 30, 2014 and 2013, the changes in its financial position, or, where applicable, its cash flows for the years then
ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is
not modified with respect to this matter.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the Transportation Development Act (TDA) Fund of the City of San Luis Obispo, California's basic financial
statements. The schedule of revenues and other uses -budget and actual is presented for purposes of additional
analysis and is not a required part of the financial statements. The schedule of revenues and other uses-budget
and actual is the responsibility of management and was derived from and relates directly to the underlying
accounting and other records used to prepare the basic financial statements. Such information has been subjected
to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other records used
to prepare the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion,
the schedule of revenues and other uses-budget and actual is fairly stated, in all material respects, in relation to
the basic financial statements as a whole.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 29, 2014
19
B3-227
Assets
Total assets
Liabilities
Total liabilities
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Balance Sheets
June 30, 2014 and 2013
2014
s 12,300
s (12,300)
The accompanying notes are an integral part of these financial statements.
20
2013
s
s
B3-228
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Statements of Revenues, Other Uses and Changes in Fund Balance
June 30, 2014 and 2013
2014
Revenues-intergovernmental allocations $ 49,200 $
Other financing uses-operating transfers to City of
San Luis Obispo (49,200)
Excess of revenues over other financing uses
Fund balance-beginning of year
Fund balance -end of year $ $
The accompanying notes are an integral part of these financial statements.
21
2013
38,300
(38,300)
B3-229
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Notes to Financial Statements
June 30, 2014 and 2013
Note 1: The Reporting Entity
The Transportation Development Act (TDA) Fund (the Fund) of the City of San Luis Obispo, California (the City) is a
special revenue fund created by resolution of the City Council to account for the revenues received pursuant to the
TDA. Such revenues allocated under specific state statutes are legally restricted to financial expenditures made of
the development and construction of local streets and roads, including pedestrian and bicycle facilities.
Note 2: Summary of Significant Accounting Policies
Measurement Focus and Basis of Accounting
The Fund's financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized when measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon enough thereafter to pay the
liabilities of the current period. For this purpose, the City considers interest and grant revenues earned but not
received as susceptible to accrual under this method. Expenditures are generally recognized at the time liabilities
are incurred.
Fund Equity
The Fund's financial statements report fund balance in classifications that compromise a hierarchy based primarily on
the extent to which the City is bound to honor constraints on the specific purpose for which amounts in the funds can be
spent. The Fund does not have a fund balance in the current fiscal year, therefore classification is not necessary.
However, GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, identifies five
components of fund balance-nonspendable, restricted, committed, assigned and unassigned.
Nonspendable. This component includes amounts that cannot be spent because they are either (a) not in spendable
form or (b) legally or contractually required to be maintained intact.
Restricted. This component consists of amounts that have constraints placed on them either externally by third-parties
(creditors, grantors, contributors, or laws or regulations of other governments) or by law through constitutional
provisions or enabling legislation. Enabling legislation authorizes the City to assess, levy, charge or otherwise mandate
payment of resources (from external resource providers) and includes legally enforceable requirements (compelled by
external parties) that those resources be used only for the specific purposes stipulated in the legislation.
Committed. This component consists of amounts that can only be used for specific purposes pursuant to constraints
imposed by minute order authorized by the City Council. Also included in this component are encumbrances which
represent legal and binding obligations for the acquisition of future goods and services. Those committed amounts
established by minute order cannot be used for any other purpose unless the City Council adopts a new minute order so
directing. With respect to encumbered amounts, the City may take steps to cancel the order for goods or services and
thereby terminate the obligation.
22
B3-230
City of San Luis Obispo, california
Transportation Development Act (TDA) Fund
Notes to Financial Statements
June 30, 2014 and 2013
Note 2: Summary of Significant Accounting Policies (Continued)
Assigned. This component consists of amounts that are constrained by the City's intent to be used for specific purposes,
but are neither restricted nor committed. The City Manager or Director of Finance are authorized to assign amounts to
a specific purpose. Constraints imposed on the use of assigned amounts can be removed with no formal Council actions.
Unassigned. This classification represents amounts that have not been restricted, committed or assigned to specific
purposes.
Fund Balance Spending Policy
The City follows a practice in which restricted, committed, assigned, and unassigned fund balances are spent when
morP than onP amount is available for a specific purpose . When both restricted and unrestricted resources are
available for use, it is the City's police to use restricted resources first, then unrestricted resources (committed,
assigned and unassigned) as they are needed. When unrestricted resources (committed, assigned and unassigned)
are available for use, it is the City's policy to use committed resources first, then assigned, and then unassigned as
they are needed.
Budgets and Budgetary Accounting
The City has received national recognition for its use of a two-year Financial Plan and budgetary process that
emphasizes long-range planning and effective program management. Significant features of the City's two-year
Financial Plan include the integration of Council goal-setting into the budgetary process and the extensive use of
formal policies and measureable objectives. The Financial Plan includes operating budgets for two years and a
capital improvement plan (CIP) for five years.
Under this multi-year approach, appropriations continue to be made annually; however, the Financial Plan is the
foundation for preparing the budget for the second year . Additionally, unexpended operating appropriations from
the first year may be carried over for specific purposes into the second year with the approval of the City Manager.
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 certain reported amounts
and disclosures. Accordingly, actual results could differ from those estimates.
23
B3-231
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Notes to Financial Statements
June 30, 2014 and 2013
Note 2: Summary of Significant Accounting Policies (Continued)
Subsequent Events
Events subsequent to June 30, 2014 have been evaluated through December 29, 2014, which is the date the financial
statements were available to be issued. Management did not identify subsequent events that required disclosure.
Note 3: Intergovernmental Allocations
For the years ended June 30, 2014 and 2013, the City has been allocated the following funds from the Local
Transportation Funds (LTF):
LTF
Note 4: Operating Transfers
Applicable
Allocating TDA Statute
Article Section
3.0 99233.3 $
Amount
2014 2013
49,200 $ 38,300
The City expends all amounts for alternate transportation projects in its General Fund or Capital Outlay Fund. LTF
monies received by the City are initially deposited in the Fund and subsequently transferred to the General Fund,
where such funds are expended or transferred to the Capital Outlay Fund to be expended on designated
transportation projects.
24
B3-232
G GLENN BURDETTE
CERf i F IE D PUB LI C A C C OU NTA N T S
Independent Auditors' Report On
Transportation Development Act Compliance
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
San Luis Obispo, California
We have audited the financial statements of Transportation Development Act (TDA) Fund of the City of San Luis
Obispo, California as of and for the years ended June 30, 2014 and 2013, and have issued our report thereon, dated
December 29, 2014.
Management's Responsibility
Management is responsible for the compliance with the applicable statutes, rules and regulations of the
Transportation Development Act (TDA), the California Code of Regulations (CCR) and the allocation instructions and
resolutions of San Luis Obispo Council of Governments as required by Section 6662 of the CCR.
Auditors' Responsibility
Our responsibility is to express an opinion on compliance with the applicable statutes, rules and regulations referred
to above.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America;
the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States; and the applicable statutes, rules and regulations referred to above. Those standards
and the applicable statutes, rules and regulations referred to above require that we plan and perform the audit to
obtain reasonable assurance about whether noncompliance with the applicable statutes, rules and regulations
referred to above occurred. An audit also includes examining, on a test basis, evidence about the City's compliance
with the applicable statutes, rules and regulations and performing such other procedures as we considered
necessary in the circumstances . We believe that our audit provides a reasonable basis for our opinion. Our audit
does not provide a legal determination of the City's compliance with the applicable statutes, rules and regulations
referred to above.
In connection with our audit, we performed tests of the City's compliance with applicable statutes, rules and
regulations of the Transportation Development Act (TDA), the California Code of Regulations (CCR) and the allocation
instructions and resolutions of San Luis Obispo Council of Governments as required by Section 6662 of the CCR.
GLENNBURDETTE.COM
25
SAN LUIS OBISPO
1150 Palm S1ree 1
San Lu is Ob is p o, CA 9340 1
p 8 0 5 544 144 1
1 805 54 4 4 351
PASO ROBLES
102 South Vine S1ree l, Ste. A
Paso Rob les , CA 93446
p 805 2 3 7 3995
1 80 5 239 933?
SANTAMARIA
22 22 So uth Broadway , S1e A
Santa Mari a, CA 93454
p 805 922 4010
1 805 922 4 286
B3-233
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
Page 2
During our audit, we performed to the extent applicable the tasks contained in Section 6667 of the CCR. Such audit
tests would not necessarily disclose all instances of noncompliance because they were based on selective tests of
accounting records and related data.
Opinion
In our opinion, the funds allocated to and received by the Transportation Development Act (TDA) Fund of the City of
San Luis Obispo, California, pursuant to the TDA were expended and accounted for in compliance with the applicable
statutes, rules and regulations of the TDA, the CCR and the allocation instructions and resolutions of San Luis Obispo
Council of Governments, in all material respects, for the year ended June 30, 2014.
The purpose of this report over compliance is solely to describe the scope of our testing of compliance and the
results of that testing based on the applicable statutes, rules and regulations of the Transportation Development Act
(TDA), the California Code of Regulations (CCR) and the allocation instructions and resolutions of San luis Obispo
Council of Governments as required by Section 6662 of the CCR. Accordingly, this report is not suitable for any other
purpose.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 29, 2014
26
B3-234
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Supplementary Information
Schedules of Revenues and Other Uses-Budget and Actual
June 30, 2014 and 2013
Budget
2014 Original Final Actual
Revenues -intergovernmental allocations $ 49,100 $ 49,100 $ 49,200
Other financing uses-operating transfers
to City of San Luis Obispo (49,100) (49,100) (49,200)
Excess of revenues over other financing uses $ $ $
Budget
2013 Original Final Actual
Revenues-intergovernmental allocations $ 26,200 $ 26,200 $ 38,300
Other financing uses-operating transfers
to City of San Luis Obispo (26,200) (26,200) (38,300)
Excess of revenues over other financing uses $ $ $
27
Variance with
Final Budget
Positive (Negative)
$ 100
(100)
$
Variance with
Final Budget
Positive (Negative)
$ 12,100
(12,100)
$
B3-235
B3-236