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NEW ISSUE - FULL BOOK-ENTRY
RATING: Standard & Poor’s: “AAA”
BANK QUALIFIED
See “RATING” herein.
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel,
subject, however to certain qualifications described herein, under existing law, the interest on the Refunding Bonds is
excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for
purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for
the purpose of computing the alternative minimum tax imposed on corporations, such interest is taken into account in
determining certain income and earnings and the Refunding Bonds are "qualified tax-exempt obligations" within the
meaning of section 265(b)(3) of the Internal Revenue Code of 1986, as amended. In the further opinion of Bond
Counsel, such interest is exempt from California personal income taxes. See “LEGAL MATTERS - Tax Exemption.”
$4,600,000
CITY OF SAN CARLOS
(San Mateo County, California)
2015 General Obligation Refunding Bonds
Dated: Date of Delivery
Due August 1, as shown on inside front cover
Issuance. The general obligation refunding bonds captioned above (the “Refunding Bonds”) are being issued by
the City of San Carlos, California (the “City”) under provisions of the California Government Code and under a
Resolution adopted by the City Council of the City (the “City Council”) on February 9, 2015 (the “Bond Resolution”).
See “THE REFUNDING BONDS - Authority for Issuance.”
Purpose. The Refunding Bonds are being issued to refinance the City’s outstanding 2005 General Obligation
Refunding Bonds (the “2005 Bonds”). The 2005 Bonds were issued to refund the City’s General Obligations Bonds,
Series 1996. The 2005 Bonds are currently the only outstanding general obligation bonds of the City. See
“REFINANCING PLAN.”
Security. The Refunding Bonds are general obligations of the City, payable solely from ad valorem property
taxes levied by the City and collected by San Mateo County (the “County”). The City Council is empowered and is
obligated to annually levy ad valorem taxes for the payment of interest on, and principal of, the Refunding Bonds
upon all property subject to taxation by the City, without limitation of rate or amount (except certain personal property
which is taxable at limited rates). See “SECURITY FOR THE REFUNDING BONDS.”
Book-Entry Only. The Refunding Bonds will be issued in book-entry form only, and will be initially issued and
registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”).
The Refunding Bonds are issuable as fully registered securities in denominations of $5,000 or any integral multiple of
$5,000. Purchasers of the Refunding Bonds (the “Beneficial Owners”) will not receive physical certificates
representing their interest in the Refunding Bonds. See “THE REFUNDING BONDS” and “APPENDIX E - DTC AND
THE BOOK-ENTRY ONLY SYSTEM.”
Payments. Interest on the Refunding Bonds accrues from the date of delivery and is payable semiannually on
February 1 and August 1 of each year, commencing August 1, 2015. Payments of principal and interest on the
Refunding Bonds will be paid by MUFG Union Bank, N.A., as Paying Agent, to DTC for subsequent disbursement to
DTC Participants, which will remit such payments to the Beneficial Owners of the Refunding Bonds. See “THE
REFUNDING BONDS - Description of the Refunding Bonds.”
No Redemption. The Refunding Bonds are not subject to redemption prior to maturity. See “THE REFUNDING
BONDS - No Redemption.”
Financial Advisor. The following firm, serving as financial advisor to the City, has structured this issue.
Maturity Schedule
(See inside cover)
Cover Page. This cover page contains certain information for general reference only. It is not a summary of all
the provisions of the Refunding Bonds. Prospective investors must read the entire Official Statement to obtain
information essential to making an informed investment decision.
The Refunding Bonds were sold and awarded by competitive bid held on March 5, 2015, subject to the
conditions set forth in the Official Notice of Sale. The Refunding Bonds will be offered when, as and if issued, subject
to the approval as to legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel
to the City, and subject to certain other conditions. Jones Hall is also serving as Disclosure Counsel to the City.
Certain legal matters are being passed upon for the City by the City Attorney. It is anticipated that the Refunding
Bonds, in book entry form, will be available for delivery through the facilities of DTC in New York, New York, on or
about March 24, 2015.
Wells Fargo Bank, National Association
The date of this Official Statement is March 5, 2015.
$4,600,000
CITY OF SAN CARLOS
2015 General Obligation Refunding Bonds
MATURITY SCHEDULE
(Base CUSIP†: 797083)
Maturity Date
(August 1)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Principal
Amount
$410,000.00
250,000.00
265,000.00
290,000.00
320,000.00
365,000.00
390,000.00
415,000.00
435,000.00
460,000.00
485,000.00
515,000.00
Interest
Rate
3.000%
3.000
3.000
3.000
3.000
3.000
3.000
2.000
2.000
2.000
2.000
2.000
Yield
0.200%
0.280
0.550
0.900
1.100
1.300
1.400
1.600
1.750
1.850
1.900
2.000
Price
100.986
103.669
105.718
106.919
108.052
108.761
109.692
102.763
101.933
101.281
100.934
100.000
CUSIP†
CB6
CC4
CD2
CE0
CF7
CG5
CH3
CJ9
CK6
CL4
CM2
CN0
† Copyright 2014, American Bankers Association. CUSIP data herein are provided by Standard & Poor's CUSIP Service
Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the
City nor the Purchaser assumes any responsibility for the accuracy of these CUSIP data.
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds
referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official
Statement is not a contract between any bond owner and the City or the Purchaser.
No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has
been authorized by the City or the Purchaser to give any information or to make any representations other than
those contained in this Official Statement and, if given or made, such other information or representation must
not be relied upon as having been authorized by the City or the Purchaser.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the
solicitation of an offer to buy nor may there be any sale of the Refunding Bonds by a person in any jurisdiction
in which it is unlawful for such person to make such an offer, solicitation or sale.
Information in Official Statement. The information set forth in this Official Statement has been furnished
by the City and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or
completeness.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the
City in any press release and in any oral statement made with the approval of an authorized officer of the City
or any other entity described or referenced herein, the words or phrases “will likely result,” “are expected to”,
“will continue”, “is anticipated”, “estimate”, “project”, “forecast”, “expect”, “intend” and similar expressions
identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to risks and uncertainties that could cause actual results to differ materially from
those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties.
Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and
circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results,
and those differences may be material. The information and expressions of opinion herein are subject to
change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall,
under any circumstances, give rise to any implication that there has been no change in the affairs of the City or
any other entity described or referenced herein since the date hereof.
Involvement of Purchaser. The following statement has been included in this Official Statement on
behalf of the Purchaser of the Refunding Bonds: The Purchaser has reviewed the information in this Official
Statement in accordance with, and as a part of, its responsibilities to investors under the Federal Securities
Laws as applied to the facts and circumstances of this transaction, but the Purchaser does not guarantee the
accuracy or completeness of such information.
Stabilization of and Changes to Offering Prices. The Purchaser may overallot or take other steps that
stabilize or maintain the market prices of the Refunding Bonds at levels above that which might otherwise
prevail in the open market. If commenced, the Purchaser may discontinue such market stabilization at any
time. The Purchaser may offer and sell the Refunding Bonds to certain securities dealers, dealer banks and
banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this
Official Statement, and those public offering prices may be changed from time to time by the Purchaser.
Document Summaries. All summaries of the Bond Resolution or other documents referred to in this
Official Statement are made subject to the provisions of such documents and qualified in their entirety to
reference to such documents, and do not purport to be complete statements of any or all of such provisions.
No Securities Laws Registration. The Refunding Bonds have not been registered under the Securities
Act of 1933, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities.
The Refunding Bonds have not been registered or qualified under the securities laws of any state.
Effective Date. This Official Statement speaks only as of its date, and the information and expressions of
opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this
Official Statement nor any sale of the Refunding Bonds will, under any circumstances, give rise to any
implication that there has been no change in the affairs of the City, the County, the other parties described in
this Official Statement, or the condition of the property within the City since the date of this Official Statement.
Website. The City maintains a website. However, the information presented on the website is not a
part of this Official Statement and should not be relied upon in making an investment decision with respect to
the Refunding Bonds
CITY OF SAN CARLOS
(SAN MATEO COUNTY, CALIFORNIA)
CITY COUNCIL
Ron Collins, Mayor
Cameron Johnson, Vice Mayor
Matt Grocott, Council Member
Robert Grassilli, Council Member
Mark Olbert, Council Member
CITY OFFICIALS AND STAFF
Jeff D. Maltbie, City Manager
Rebecca Mendenhall, Administrative Services Director
Tracy Kwok, Financial Services Manager
Crystal Mui, City Clerk
Gregory J. Rubens, City Attorney
PROFESSIONAL SERVICES
BOND AND DISCLOSURE COUNSEL
Jones Hall, A Professional Law Corporation
San Francisco, California
FINANCIAL ADVISOR
NHA Advisors
San Rafael, California
BOND REGISTRAR, TRANSFER AGENT, AND PAYING AGENT
MUFG Union Bank, N.A.
San Francisco, California
TABLE OF CONTENTS
Page
INTRODUCTION ............................................................................................................................................. 1
THE REFINANCING PLAN ............................................................................................................................. 3
SOURCES AND USES OF FUNDS ............................................................................................................... 4
THE REFUNDING BONDS ............................................................................................................................. 5
Authority for Issuance ................................................................................................................................ 5
Description of the Refunding Bonds........................................................................................................... 5
Payment ..................................................................................................................................................... 6
No Redemption .......................................................................................................................................... 6
Registration, Transfer and Exchange of Bonds ......................................................................................... 6
Defeasance ................................................................................................................................................ 7
DEBT SERVICE SCHEDULE ......................................................................................................................... 8
SECURITY FOR THE REFUNDING BONDS ................................................................................................. 9
Ad Valorem Taxes ...................................................................................................................................... 9
Debt Service Fund...................................................................................................................................... 9
Limited Obligation..................................................................................................................................... 10
PROPERTY TAXATION ............................................................................................................................... 10
Property Tax Collection Procedures ........................................................................................................ 10
Taxation of State-Assessed Utility Property ............................................................................................. 11
Assessed Valuation .................................................................................................................................. 11
Tax Rates ................................................................................................................................................. 12
Tax Levies and Delinquencies ................................................................................................................. 12
Major Taxpayers....................................................................................................................................... 14
Direct and Overlapping Debt .................................................................................................................... 14
CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUES
AND APPROPRIATIONS ............................................................................................................................ 16
Article XIIIA of the State Constitution ....................................................................................................... 16
Legislation Implementing Article XIIIA...................................................................................................... 16
Article XIIIB of the State Constitution ....................................................................................................... 17
Articles XIIIC and XIIID of the State Constitution ..................................................................................... 18
Proposition 62 .......................................................................................................................................... 18
Proposition 1A .......................................................................................................................................... 19
Possible Future Initiatives ........................................................................................................................ 20
LEGAL MATTERS ........................................................................................................................................ 20
Tax Exemption ......................................................................................................................................... 20
Absence of Material Litigation .................................................................................................................. 21
CONTINUING DISCLOSURE ....................................................................................................................... 21
RATING ......................................................................................................................................................... 22
FINANCIAL ADVISOR .................................................................................................................................. 22
COMPETITIVE SALE OF BONDS ................................................................................................................ 22
EXECUTION ................................................................................................................................................. 23
APPENDIX A - FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF SAN
CARLOS AND SAN MATEO COUNTY
APPENDIX B - FISCAL YEAR 2013-14 COMPREHENSIVE ANNUAL FINANCIAL REPORT
APPENDIX C - PROPOSED FORM OF OPINION OF BOND COUNSEL
APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX E - DTC AND THE BOOK-ENTRY ONLY SYSTEM
-i-
__________________________________
OFFICIAL STATEMENT
__________________________________
$4,600,000
CITY OF SAN CARLOS
(San Mateo County, California)
2015 General Obligation Refunding Bonds
The purpose of this Official Statement, which includes the cover page, inside cover page
and attached appendices, is to set forth certain information concerning the sale and delivery of
the Refunding Bonds captioned above (the “Bonds”) by the City of San Carlos, California (the
“City”). All capitalized terms used in this Official Statement, unless noted otherwise, have the
meanings set forth in the Bond Resolution (as defined below).
INTRODUCTION
This Introduction is not a summary of this Official Statement. It is only a brief description
of and guide to, and is qualified by, more complete and detailed information contained in the
entire Official Statement and the documents summarized or described herein. A full review
should be made of the entire Official Statement. The offering of Bonds to potential investors is
made only by means of the entire Official Statement.
The City. The City is located in San Mateo County (the “County”), California (the
“State”). The City was incorporated in 1925. As of January 1, 2014, the City had a population
estimate of 29,219 persons. For demographic and financial information regarding the City and
County, see “APPENDIX A - FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION
FOR THE CITY OF SAN CARLOS AND SAN MATEO COUNTY” and “APPENDIX B - FISCAL
YEAR 2013-14 COMPREHENSIVE ANNUAL FINANCIAL REPORT.”
Purpose of the Issuance. The Refunding Bonds are being issued to refinance the
City’s outstanding City of San Carlos 2005 General Obligation Refunding Bonds, which were
issued on December 20, 2005 in the aggregate principal amount of $8,115,000 (the “2005
Bonds”). The 2005 Bonds are currently outstanding in the aggregate principal amount of
$6,095,000. See “REFINANCING PLAN.”
Authority for Issuance. The Refunding Bonds are being issued under Articles 9 and 11
of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code (the “Bond Law”) and a
resolution adopted by the City Council of the City (the “City Council”) on February 9, 2015 (the
“Bond Resolution”).
Security and Sources of Payment for the Refunding Bonds. The Refunding Bonds
are general obligations of the City payable solely from ad valorem property taxes levied by the
City and collected by the County. The City Council is empowered and is obligated to annually
levy ad valorem taxes for the payment of interest on, and principal of, the Refunding Bonds
upon all property subject to taxation by the City, without limitation of rate or amount (except with
-1-
respect to certain personal property which is taxable at limited rates). See “SECURITY FOR
THE REFUNDING BONDS.”
Payment and Registration of the Refunding Bonds. The Refunding Bonds will be
dated their date of original issuance and delivery (the “Dated Date”) and will be issued as fully
registered bonds, without coupons, in the denominations of $5,000 or any integral multiple of
$5,000, registered in the name of Cede & Co. as nominee of The Depository Trust Company,
New York, New York (“DTC”), and will be available under the book-entry system maintained by
DTC, only through brokers and dealers who are or act through DTC Participants as described
below. Beneficial Owners will not be entitled to receive physical delivery of the Refunding
Bonds. See “THE REFUNDING BONDS” and “APPENDIX E - DTC AND THE BOOK-ENTRY
ONLY SYSTEM.”
Interest on the Refunding Bonds accrues from the Dated Date and is payable
semiannually on February 1 and August 1 of each year, commencing August 1, 2015. See
“THE REFUNDING BONDS - Description of the Refunding Bonds.”
No Early Redemption. The Refunding Bonds are not subject to redemption prior to
their maturity as described in “THE REFUNDING BONDS - Redemption.”
Tax Matters. Assuming compliance with certain covenants and provisions of the
Internal Revenue Code of 1986, in the opinion of Bond Counsel, interest on the Refunding
Bonds will not be includable in gross income for federal income tax purposes although it may be
includable in the calculation for certain taxes. Also, in the opinion of Bond Counsel, interest on
the Refunding Bonds will be exempt from State of California (the “State”) personal income
taxes. See “LEGAL MATTERS – Tax Exemption” herein.
Bank Qualified. The City has designated the Refunding Bonds as "qualified tax-exempt
obligations" pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986. Such section
provides an exception to the prohibition against the ability of a “financial institution” (as defined
in the Internal Revenue Code of 1986) to deduct its interest expense allocable to tax-exempt
interest. See “LEGAL MATTERS – Tax Exemption” herein.
Other Information. This Official Statement speaks only as of its date, and the
information contained herein is subject to change. Copies of documents referred to in this
Official Statement and information concerning the Refunding Bonds are available from the City
of San Carlos City Clerk, 600 Elm Street, San Carlos, California 94070, (650) 802-4100. The
City may impose a charge for copying, mailing and handling.
-2-
THE REFINANCING PLAN
Authority and Purpose of Issue. At an election held on June 4, 1996, more than twothirds of the voters of the City approved a proposition authorizing the issuance by the City of
general obligation bonds in the aggregate principal amount of $8,000,000, for the purpose of
providing funds for the construction of public library facilities (the “1996 Authorization”).
Pursuant to the 1996 Authorization, the City issued bond designated the “City of San Carlos
General Obligation Bonds, Series 1996” in the aggregate principal amount of $8,000,000 (the
“1996 Bonds”). Thereafter, on December 20, 2005, the City refunded the 1996 Bonds in full
from the proceeds of the 2005 Bonds.
The Refunding Bonds are being issued by the City to refund all outstanding maturities of
the 2005 Bonds, as identified in the following tables.
CITY OF SAN CARLOS
Identification of Refunded 2005 Bonds
Maturities to
be Refunded
(August 1)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
CUSIP†
797083 BP6
797083 BQ4
797083 BR2
797083 BS0
797083 BT8
797083 BU5
797083 BV3
797083 BW1
797083 BX9
797083 BY7
797083 BZ4
797083 CA8
Principal
Amount
Redeemed
$330,000
365,000
385,000
415,000
450,000
475,000
515,000
550,000
590,000
630,000
670,000
720,000
$6,095,000
Redemption
Date
4/9/2015
4/9/2015
4/9/2015
4/9/2015
4/9/2015
4/9/2015
4/9/2015
4/9/2015
4/9/2015
4/9/2015
4/9/2015
4/9/2015
Redemption Price
(% of Par Amount
Redeemed)
100.0%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
† CUSIP Copyright American Bankers Association. CUSIP data herein is provided by Standard & Poor’s CUSIP
Service Bureau, a division of McGraw Hill Companies, Inc. Neither the City nor the Purchaser is responsible for
the accuracy of such data.
Irrevocable Escrow Fund Deposit. Pursuant to an Escrow Agreement, dated as of
date of issuance of the Refunding Bonds (the “Escrow Agreement”), between the City and
MUFG Union Bank, N.A., San Francisco, California, as escrow agent for the 2005 Bonds (the
“Escrow Agent”), the City will deliver the net proceeds of the Refunding Bonds, together with a
contribution from the debt service fund established for the 2005 Bonds, for deposit in an escrow
fund (the "Escrow Fund") established under the Escrow Agreement, which is sufficient to cause
the payment and redemption of the 2005 Bonds in accordance with the table above. Such
amounts will be used to pay the principal of and interest on the 2005 Bonds, including the
redemption price of the 2005 Bonds, as set forth above, together with accrued interest to April 9,
2015, being the date of redemption thereof.
The amounts held by the Escrow Bank in the Escrow Fund are pledged solely to the
payment of the 2005 Bonds. The funds deposited in the Escrow Fund will not be available for
the payment of debt service with respect to the Refunding Bonds.
-3-
SOURCES AND USES OF FUNDS
The estimated sources and uses of funds with respect to the Refunding Bonds will be
applied as follows:
Sources of Funds
Principal Amount of Bonds
Original Issue Premium/(Discount)
2005 Debt Service Fund Contribution(1)
Total Sources
$4,600,000.00
174,273.25
1,483,637.19
$6,257,910.44
Uses of Funds
Deposit to Escrow Fund
Costs of Issuance(2)
Total Uses
$6,410,641.22
117,269.22
$6,257,910.44
(1) Represents funds accumulated in the existing debt service fund for the 2005 Bonds,
which will be applied to the redemption of the 2005 Bonds.
(2) All estimated costs of issuance including, but not limited to, Purchaser’s discount, printing
costs, and fees of Bond Counsel, Disclosure Counsel, the Financial Advisor, Escrow Bank,
and the rating agency.
-4-
THE REFUNDING BONDS
Authority for Issuance
The Refunding Bonds are being issued to defease and redeem the 2005 Bonds under
the Refunding Bond Law and the Resolution. The 1996 Authorization provided the original
authority for issuance of general obligation bonds by the City. See “THE REFINANCING
PLAN.”
Description of the Refunding Bonds
Book-Entry Form. The Refunding Bonds will be issued in book-entry form only, and will
be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust
Company, New York, New York (“DTC”). Purchasers of the Refunding Bonds (the “Beneficial
Owners”) will not receive physical certificates representing their interest in the Refunding
Bonds. Payments of principal of and interest on the Refunding Bonds will be paid by the Paying
Agent to DTC for subsequent disbursement to DTC Participants which will remit such payments
to the Beneficial Owners of the Refunding Bonds.
As long as DTC’s book-entry method is used for the Refunding Bonds, the Paying Agent
will send any notice of prepayment or other notices to owners only to DTC. Any failure of DTC
to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any
such notice and its content or effect will not affect the validity or sufficiency of the proceedings
relating to the prepayment of the Refunding Bonds called for prepayment or of any other action
premised on such notice.
The Paying Agent, the City, and the Purchaser of the Refunding Bonds have no
responsibility or liability for any aspects of the records relating to or payments made on account
of beneficial ownership, or for maintaining, supervising or reviewing any records relating to
beneficial ownership, of interests in the Refunding Bonds.
See “APPENDIX E - DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Interest. Interest on the Refunding Bonds is payable semiannually on February 1 and
August 1 of each year (each, an “Interest Payment Date”), commencing August 1, 2015.
Interest on the Refunding Bonds is payable from the Interest Payment Date next
preceding the date of authentication thereof unless:
1.
a Bond is authenticated as of an Interest Payment Date, in which event it
will bear interest from such date,
2.
a Bond is authenticated prior to an Interest Payment Date and after the
close of business on the 15th day of the month preceding the Interest
Payment Date (each, a “Record Date”), in which event it will bear interest
from such Interest Payment Date,
3.
a Bond is authenticated on or before July 15, 2015, in which event it shall
bear interest from the Closing Date, or
-5-
4.
at the time of authentication of a Bond, interest is in default thereon, in
which event it will bear interest from the Interest Payment Date to which
interest has previously been paid or made available for payment thereon.
Interest on the Refunding Bonds will be calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Denominations and Maturity.
The Refunding Bonds shall be issued in the
denomination of $5,000 each or any integral multiple of $5,000. The Refunding Bonds mature
on August 1 in the years and amounts set forth on the inside cover page hereof. See the
maturity schedule on the inside cover page hereof and “DEBT SERVICE SCHEDULE” below.
Payment
Interest on the Refunding Bonds (including the final interest payment upon maturity) is
payable by check of the Paying Agent mailed to the owner thereof at such owner’s address as it
appears on the Registration Books (as defined below) at the close of business on the 15th day of
the month preceding the Interest Payment Date, except that at the written request of the Owner
of at least $1,000,000 aggregate principal amount of the Refunding Bonds, which written
request is on file with the Paying Agent as of any Record Date, interest on such Bonds shall be
paid by wire transfer on the succeeding Interest Payment Date to an account in the United
States of America as shall be specified in such written request.
Principal of and premium (if any) on the Refunding Bonds is payable in lawful money of
the United States of America upon presentation and surrender at the principal office of the
Paying Agent.
No Redemption
The Refunding Bonds are not subject to redemption prior to their respective stated
maturities.
Registration, Transfer and Exchange of Bonds
If the book-entry system as described above and in Appendix E is no longer used with
respect to the Refunding Bonds, the following provisions will govern the registration, transfer,
and exchange of the Refunding Bonds.
Registration Books. The Paying Agent will keep or cause to be kept sufficient books
for the registration and transfer of the Refunding Bonds (the “Registration Books”), which will
at all times be open to inspection by the City upon reasonable notice; and, upon presentation for
such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe,
register or transfer or cause to be registered or transferred, on said books, the Refunding
Bonds.
Transfer. Any Bond may, in accordance with its terms, be transferred, upon the
Registration Books, by the person in whose name it is registered, in person or by his duly
authorized attorney, upon surrender of such Bond for cancellation at the principal office of the
Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by
the Paying Agent, duly executed.
-6-
Whenever any Bond or Bonds are surrendered for transfer, the City will execute and the
Paying Agent will authenticate and deliver a new Bond or Bonds, for like aggregate principal
amount.
Exchange. Bonds may be exchanged at the principal office of the Paying Agent for a
like aggregate principal amount of Bonds of authorized denominations and of the same maturity.
The City may charge a reasonable sum for each new Bond issued upon any exchange.
Defeasance
The City has the option to pay and discharge the entire indebtedness on all or any
portion of the outstanding Bonds in any one or more of the following ways:
(a)
by paying or causing to be paid the principal of and interest on such
Bonds, as and when the same become due and payable;
(b)
by irrevocably depositing, in trust, at or before maturity, money or
securities in the necessary amount to pay such Bonds and all unpaid
interest thereon to maturity; or
(c)
by delivery such Bonds to the Paying Agent for cancellation by it.
“Federal Securities” means: (a) any direct general obligations of the United States of
America (including obligations issued or held in book entry form on the books of the Department
of the Treasury of the United States of America), for which the full faith and credit of the United
States of America are pledged; (b) obligations of any agency, department or instrumentality of
the United States of America, the timely payment of principal and interest on which are directly
or indirectly secured or guaranteed by the full faith and credit of the United States of America.
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DEBT SERVICE SCHEDULE
The following tables show the debt service schedule with respect to the Refunding
Bonds.
CITY OF SAN CARLOS
2015 GENERAL OBLIGATION REFUNDING BONDS
Debt Service Schedule
Year Ending
August 1
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Total
Bonds
Principal
$410,000.00
250,000.00
265,000.00
290,000.00
320,000.00
365,000.00
390,000.00
415,000.00
435,000.00
460,000.00
485,000.00
515,000.00
$4,600,000.00
Bonds
Interest
$40,534.17
102,600.00
95,100.00
87,150.00
78,450.00
68,850.00
57,900.00
46,200.00
37,900.00
29,200.00
20,000.00
10,300.00
$674,184.17
-8-
Total Bonds
Debt
Service
$450,534.17
352,600.00
360,100.00
377,150.00
398,450.00
433,850.00
447,900.00
461,200.00
472,900.00
489,200.00
505,000.00
525,300.00
$5,274,184.17
SECURITY FOR THE REFUNDING BONDS
Ad Valorem Taxes
Bonds Payable from Ad Valorem Property Taxes. The Refunding Bonds are general
obligations of the City, payable solely from ad valorem property taxes levied by the City and
collected by the County. The City is empowered and is obligated to annually levy ad valorem
taxes for the payment of the Refunding Bonds and the interest thereon upon all property within
the City subject to taxation by the City, without limitation of rate or amount (except certain
personal property which is taxable at limited rates).
Levy and Collection. The City will levy and the County will collect such ad valorem
taxes in such amounts and at such times as is necessary to ensure the timely payment of debt
service. Such taxes, when collected, will be deposited into a debt service fund for the
Refunding Bonds, which is maintained by the City and which is irrevocably pledged for the
payment of principal of and interest on the Refunding Bonds when due.
Property taxes within the City are assessed and collected by the County in the same
manner and at the same time, and in the same installments as other ad valorem taxes on real
property, and will have the same priority, become delinquent at the same times and in the same
proportionate amounts, and bear the same proportionate penalties and interest after
delinquency, as do the other ad valorem taxes on real property. As described below, the
County has adopted the Teeter Plan which provides that the City will receive all of the property
taxes which are levied by the City, and that any penalties and interest on delinquent taxes will
be retained by the County. See “PROPERTY TAXATION – Alternative Method of Tax
Apportionment – Teeter Plan.”
Annual Tax Rates. The amount of the annual ad valorem tax levied by the City to repay
the Refunding Bonds will be determined by the relationship between the assessed valuation of
taxable property in the City and the amount of debt service due on the Refunding Bonds.
Fluctuations in the annual debt service on the Refunding Bonds and the assessed value of
taxable property in the City may cause the annual tax rate to fluctuate.
Economic and other factors beyond the City’s control, such as economic recession,
deflation of land values, a relocation out of the City or financial difficulty or bankruptcy by one or
more major property taxpayers, or the complete or partial destruction of taxable property caused
by, among other eventualities, earthquake, flood or other natural disaster, could cause a
reduction in the assessed value within the City and necessitate a corresponding increase in the
annual tax rate.
Debt Service Fund
The City will establish the Debt Service Fund (the “Debt Service Fund”), which will be
established as a separate fund to be maintained distinct from all other funds of the City. All
taxes levied by the City pursuant to the Bond Resolution for the payment of the principal of and
interest and premium (if any) on the Refunding Bonds will be deposited in the Debt Service
Fund by the City promptly upon the receipt from the County. The Debt Service Fund is pledged
for the payment of the principal of and interest and premium (if any) on the Refunding Bonds
when and as the same become due. The City will transfer amounts in the Debt Service Fund, to
the extent necessary to pay the principal of and interest on the Refunding Bonds as the same
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become due and payable, to the Paying Agent as required to pay the principal of and interest
and premium (if any) on the Refunding Bonds.
If, after payment in full of the Refunding Bonds, any amounts remain on deposit in the
Debt Service Fund, the City shall transfer such amounts to its General Fund, to be applied
solely in a manner which is consistent with the requirements of applicable state and federal tax
law.
Limited Obligation
The Refunding Bonds are payable solely from the proceeds of an ad valorem tax levied
by the City, and collected by the County, for the payment of principal and interest on the
Refunding Bonds. Although the County is obligated to collect the ad valorem tax for the
payment of the Refunding Bonds, the Refunding Bonds are not a debt of the County.
PROPERTY TAXATION
Property Tax Collection Procedures
In California, property which is subject to ad valorem taxes is classified as “secured” or
“unsecured.” The “secured roll” is that part of the assessment roll containing state assessed
public utilities’ property and property, the taxes on which are a lien on real property sufficient, in
the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured
property does not become a lien against such unsecured property, but may become a lien on
certain other property owned by the taxpayer. Every tax which becomes a lien on secured
property has priority over all other liens arising pursuant to State law on such secured property,
regardless of the time of the creation of the other liens. Secured and unsecured property are
entered separately on the assessment roll maintained by the county assessor. The method of
collecting delinquent taxes is substantially different for the two classifications of property.
Property taxes on the secured roll are due in two installments, on November 1 and
August 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and
April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition,
property on the secured roll with respect to which taxes are delinquent is declared tax defaulted
on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment
of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1-1/2% per
month to the time of redemption. If taxes are unpaid for a period of five years or more, the
property is subject to sale by the County.
Property taxes are levied for each fiscal year on taxable real and personal property
situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB813
(Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and
taxation of property as of the occurrence of a change of ownership or completion of new
construction. Thus, this legislation eliminated delays in the realization of increased property
taxes from new assessments. As amended, SB813 provided increased revenue to taxing
jurisdictions to the extent that supplemental assessments of new construction or changes of
ownership occur subsequent to the January 1 lien date and result in increased assessed value.
Property taxes on the unsecured roll are due on the January 1 lien date and become
delinquent, if unpaid on the following August 31. A 10% penalty is also attached to delinquent
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taxes in respect of property on the unsecured roll, and further, an additional penalty of 1-1/2%
per month accrues with respect to such taxes beginning the first day of the third month following
the delinquency date. The taxing authority has four ways of collecting unsecured personal
property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the
county clerk specifying certain facts in order to obtain a judgment lien on certain property of the
taxpayer; (3) filing a certificate of delinquency for record in the county recorder’s office, in order
to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal
property, improvements or possessory interests belonging or assessed to the assesse. The
exclusive means of enforcing the payment of delinquent taxes in respect of property on the
secured roll is the sale of the property securing the taxes for the amount of taxes which are
delinquent.
Taxation of State-Assessed Utility Property
The State Constitution provides that most classes of property owned or used by
regulated utilities be assessed by the State Board of Equalization (“SBE”) and taxed locally.
Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is
known as “unitary property,” a concept designed to permit assessment of the utility as a going
concern rather than assessment of each individual element of real and personal property owned
by the utility taxpayer. State-assessed unitary and “operating nonunitary” property (which
excludes nonunitary property of regulated railways) is allocated to the counties based on the
situs of the various components of the unitary property. Except for unitary property of regulated
railways and certain other excepted property, all unitary and operating nonunitary property is
taxed at special county-wide rates and tax proceeds are distributed to taxing jurisdictions
according to statutory formulae generally based on the distribution of taxes in the prior year.
Assessed Valuation
Assessed Valuation History. The table below shows a ten-year history of the City’s
assessed valuation.
Table 1
CITY OF SAN CARLOS
Assessed Valuations of All Taxable Property
Fiscal Years 2005-06 to 2014-15
Fiscal Year
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Local Secured
$5,108,074,277
5,525,277,159
5,925,054,990
6,318,801,937
6,483,444,670
6,545,627,269
6,650,545,810
6,863,241,430
7,277,773,418
7,665,902,586
Net Unsecured
$316,458,147*
316,089,613*
337,894,181
329,100,047
299,137,744
289,541,082
280,928,376
269,345,842
401,155,969
299,060,205
Total
$5,425,236,220
5,841,946,170
6,262,955,875
6,647,908,574
6,782,588,792
6,835,175,513
6,931,483,093
7,132,596,256
7,678,937,110
7,964,970,123
% Change
-1.04%
7.21
6.15
2.03
0.78
1.41
2.90
7.66
3.72
________________* Net Unsecured assessed valuations vary from the numbers in the City’s audited financial
statements which were $316,187,349 for 2005-06 and $316,693,245 for 2006-07.
Source: California Municipal Statistics Inc.
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Tax Rates
The table below summarizes the total ad valorem tax rates levied by all taxing entities in
Tax Rate Area 11-001, the largest tax rate area in the City.
Table 2
CITY OF SAN CARLOS
Summary of Ad Valorem Tax Rates
$1 per $100 of Assessed Valuation
Fiscal Years 2010-11 to 2014-15
(Tax Rate Area 11-001)
Ad Valorem Tax
General Tax Rate
City of San Carlos
San Carlos School District
Sequoia Union High School District
San Mateo Community College District
Total Tax Rate
2010-11
2011-12
2012-13
2013-14
2014-15
1.0000
.0089
.0528
.0311
.0193
1.1121
1.0000
.0089
.0535
.0358
.0199
1.1181
1.0000
.0088
.0528
.0356
.0194
1.1166
1.0000
.0084
.0775
.0313
.0194
1.1366
1.0000
.0082
.0768
.0433
.0190
1.1473
________________________
Source: California Municipal Statistics, Inc.
Tax Levies and Delinquencies
The Board of Supervisors of the County has adopted the Alternative Method of
Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), as
provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Under the
Teeter Plan, each entity levying property taxes in the County may draw on the amount of
uncollected secured taxes credited to its fund, in the same manner as if the amount credited
had been collected. The City participates in the Teeter Plan, and thus receives 100% of
secured property taxes levied in exchange for foregoing any interest and penalties collected on
delinquent taxes.
So long as the Teeter Plan remains in effect, the City’s receipt of revenues with respect
to the levy of ad valorem property taxes will not be dependent upon actual collections of the ad
valorem property taxes by the County. However, under the statute creating the Teeter Plan, the
Board of Supervisors can under certain circumstances terminate the Teeter Plan in part or in its
entirety with respect to the entire County and, in addition, the Board of Supervisors can
terminate the Teeter Plan with respect to the City if the delinquency rate for all ad valorem
property taxes levied within the City in any year exceeds 3%. In the event that the Teeter Plan
were terminated, the amount of the levy of ad valorem property taxes in the City would depend
upon the collections of the ad valorem property taxes and delinquency rates experienced with
respect to the parcels within the City.
Notwithstanding that the City receives its property tax revenues under the Teeter Plan,
irrespective of delinquencies, the following table shows secured tax charges and delinquencies
within the City during the past five years.
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Table 3
CITY OF SAN CARLOS
Secured Tax Charges and Delinquencies
Fiscal Years 2009-10 to 2013-14
2009-10
2010-11
2011-12
2012-13
2013-14
Amt. Del.
Secured Tax
June 30
Charge (1)
$565,557.15
$9,131.70
577,319.20
6,335.19
583,566.37
5,766.35
599,436.91
5,778.18
607,306.90
2,848.77
% Del
June 30
1.61%
1.10
0.99
0.96
0.47
____________________
(1) City’s general obligation bond debt service levy
Source: California Municipal Statistics, Inc.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Major Taxpayers
The following table shows the twenty largest taxpayers in the City as determined by their
secured assessed valuations in 2014-15. The City cannot determine from County assessment
records whether individual persons, corporations or other organizations are liable for tax
payments with respect to multiple properties held in various names that in aggregate may be
larger than is suggested by the table below. A large concentration of ownership in a single
individual or entity results in a greater amount of tax collections which are dependent upon that
property owner’s ability or willingness to pay property taxes.
Table 4
CITY OF SAN CARLOS
Largest 2014-15 Local Secured Taxpayers
Property Owner
1. SPK-Skyway Landing LLC
2. Black Mountain Holdings LLC
3. BMR-201 Industrial Rd. LLC
4. L-3 Communications Corporation
5. Vica Capital LLC
6. San Carlos Retail Venture LP
7. ECI Two San Carlos LLC
8. Longs Drug Stores Inc.
9. Brittan Corners Shopping Center LLC
10. S. Stephen Makashima Trust
11. G.W. Williams Co.
12. Trinity Investment Company
13. Kelly-Moore Paint Co. Inc.
14. ARE-San Francisco No. 29 LLC
15. HD Development of Maryland Inc.
16. LSP Properties LLC
17. California Water Service Co.
18. Tanklage Family Partnership
19. Russell A. Margiotta Trust
20. Delta Star Inc.
Primary Land Use
Office Building
Industrial
Industrial
Industrial
Industrial
Shopping Center
Industrial
Commercial
Shopping Center
Commercial
Industrial
Residential Properties
Industrial
Office Building
Shopping Center
Commercial
Water Company
Industrial
Industrial
Industrial
Assessed Valuation
$ 73,663,990
39,126,518
39,026,759
38,774,635
22,541,876
21,916,865
19,629,468
19,375,161
18,957,518
18,180,158
17,580,943
16,762,184
15,575,678
15,551,404
15,542,411
13,715,797
13,705,738
11,985,518
11,206,309
10,900,796
$453,719,726
Total (1)
0.96%
0.51
0.51
0.51
0.29
0.29
0.26
0.25
0.25
0.24
0.23
0.22
0.20
0.20
0.20
0.18
0.18
0.16
0.15
0.14
5.92%
______________________
(1)
2014-15 Local Secured Assessed Valuation: $7,665,902,586
Source: California Municipal Statistics, Inc.
Direct and Overlapping Debt
Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by
California Municipal Statistics, Inc. and effective February 1, 2015. The Debt Report is included
for general information purposes only. The City has not reviewed the Debt Report for
completeness or accuracy and makes no representation in connection therewith.
The Debt Report generally includes long-term obligations sold in the public credit
markets by public agencies whose boundaries overlap the boundaries of the City in whole or in
part. Such long-term obligations generally are not payable from revenues of the City (except as
indicated) nor are they necessarily obligations secured by land within the City. In many cases,
long-term obligations issued by a public agency are payable only from the general fund or other
revenues of such public agency.
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The contents of the Debt Report are as follows: (1) the first column indicates the public
agencies which have outstanding debt as of the date of the Debt Report and whose territory
overlaps the City; (2) the second column shows the percentage that the City’s assessed
valuation represents of the total assessed valuation of each public agency identified in the first
column; and the third column is an apportionment of the dollar amount of each public agency’s
outstanding debt to property in the City, as determined by multiplying the total outstanding debt
of each agency by the percentage of the City’s assessed valuation represented in the second
column.
Table 5
CITY OF SAN CARLOS
STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT
(As of February 1, 2015)
2014-15 Assessed Valuation:
$7,964,970,123
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
San Mateo Community College District
Sequoia Union High School District
Belmont-Redwood Shores School District
Belmont-Redwood Shores School District
Belmont School Facilities Improvement District
Belmont-Redwood Shores School District
Redwood Shores School Facilities Improvement District
Redwood City School District
San Carlos School District
City of San Carlos
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
% Applicable
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
San Mateo County General Fund Obligations
San Mateo County Board of Education Certificates of Participation
Redwood City School District Certificates of Participation
City of San Carlos General Fund Obligations
Midpeninsula Regional Park District General Fund Obligations
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT
OVERLAPPING TAX INCREMENT DEBT (Successor Agency):
(2)
6.223
0.322
2.797
95.763
100.
4.805%
4.805
2.797
100.
3.838
Debt 2/1/15
$ 25,844,173
50,097,731
1,153,782
2,174,405
73,674
1,010,737
84,888,461
(1)
6,095,000
$171,337,963
$22,106,114
526,148
18,518
8,800,000
5,987,543
$37,438,323
$13,315,000
$222,091,286(2)
COMBINED TOTAL DEBT
(1)
4.805%
11.577
3.656
Excludes issue to be sold.
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital
lease obligations.
Ratios to 2014-15 Assessed Valuation:
Direct Debt ($6,095,000)
Total Direct and Overlapping Tax and Assessment Debt
Combined Total Debt ($14,895,000)
Combined Total Debt
0.08%
2.15
0.19
2.79
Ratio to Redevelopment Incremental Valuation ($657,748,143):
Total Overlapping Tax Increment Debt
2.02
Source: California Municipal Statistics, Inc.
-15-
CONSTITUTIONAL AND STATUTORY PROVISIONS
AFFECTING CITY REVENUES AND APPROPRIATIONS
Principal of and interest on the Refunding Bonds are payable from the proceeds of an ad
valorem tax levied by the City for the payment thereof. See “THE REFUNDING BONDS” and
“SECURITY FOR THE REFUNDING BONDS” above. Articles XIIIA, XIIIB, XIIIC and XIIID of
the State Constitution, Propositions 62, 111, and 218 and 1A, and certain other provisions of
law discussed below are included in this section to describe the potential effect of these
Constitutional and statutory measures on the ability of the City to levy taxes and spend tax
proceeds for operating and other purposes, and it should not be inferred from the inclusion of
such materials that these laws impose any limitation on the ability of the City to levy taxes for
payment of the Refunding Bonds. The tax levied by the City for payment of the Refunding
Bonds was approved by the City’s voters in compliance with Article XIIIA and all applicable
laws.
Article XIIIA of the State Constitution
On June 6, 1978, California voters approved Proposition 13, which added Article
XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad
valorem tax on real property to one percent of the full cash value thereof, except that
additional ad valorem taxes may be levied to pay debt service (i) on indebtedness approved
by the voters prior to July 1, 1978, (ii) on bonded indebtedness approved by a two-thirds
vote on or after July 1, 1978, for the acquisition or improvement of real property or (iii)
bonded indebtedness incurred by a school district, community college district or county
office of education for the construction, reconstruction, rehabilitation or replacement of
school facilities, including the furnishing and equipping of school facilities or the acquisition
or lease of real property for school facilities, approved by 55 percent of the voters voting on
the proposition. Article XIIIA defines full cash value to mean “the county assessor’s
valuation of real property as shown on the 1975-76 tax bill under “full cash value,” or
thereafter, the appraised value of real property when purchased, newly constructed, or a
change in ownership has occurred after the 1975 assessment.” This full cash value may be
increased at a rate not to exceed two percent per year to account for inflation.
Article XIIIA has subsequently been amended to permit reduction of the “full cash
value” base in the event of declining property values caused by damage, destruction or other
factors, to provide that there would be no increase in the “full cash value” base in the event of
reconstruction of property damaged or destroyed in a disaster, and in other minor or technical
ways.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement
Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any
property tax (except to pay voter-approved indebtedness). The one percent property tax is
automatically levied by the County and distributed according to a formula among taxing
agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes
levied prior to 1989.
Increases of assessed valuation resulting from reappraisals of property due to new
construction, change in ownership or from the two percent annual adjustment are allocated
-16-
among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any
such allocation made to a local agency continues as part of its allocation in future years.
All taxable property is shown at full market value on the tax rolls. Consequently, the tax
rate is expressed as $1 per $100 of taxable value. All taxable property value included in this
Official Statement is shown at 100 percent of market value (unless noted differently) and all
tax rates reflect the $1 per $100 of taxable value.
Article XIIIB of the State Constitution
In addition to the limits Article XIIIA imposes on property taxes that may be collected by
local governments, certain other revenues of the State and most local governments are subject
to an annual “appropriations limit” imposed by Article XIIIB which effectively limits the amount of
such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in
June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of
each government entity applies to “proceeds of taxes,” which consist of tax revenues, State
subventions and certain other funds, including proceeds from regulatory licenses, user charges
or other fees to the extent that such proceeds exceed “the cost reasonably borne by such
entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax
refunds and some benefit payments such as unemployment insurance. No limit is imposed on
the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges
or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local
revenues to pay debt service on Bonds existing or authorized by January 1, 1979, or
subsequently authorized by the voters, appropriations required to comply with mandates of
courts or the federal government, appropriations for qualified capital outlay projects, and
appropriation by the State of revenues derived from any increase in gasoline taxes and motor
vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be
exceeded in case of emergency; however, the appropriations limit for the next three years
following such emergency appropriation must be reduced to the extent by which it was
exceeded, unless the emergency arises from civil disturbance or natural disaster declared by
the Governor, and the expenditure is approved by two-thirds of the legislative body of the local
government.
The State and each local government entity has its own appropriations limit. Each year,
the limit is adjusted to allow for changes, if any, in the cost of living, the population of the
jurisdiction, and any transfer to or from another government entity of financial responsibility for
providing services. Proposition 111 requires that each agency’s actual appropriations be tested
against its limit every two years.
If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the
aggregate limit, the excess must be returned to the agency’s taxpayers through tax rate or fee
reductions over the following two years.
The City has never exceeded its appropriations limit. Because the issuance of the
Refunding Bonds has been approved by the voters, the tax levy which is required to pay debt
service on the Refunding Bonds is not subject to the limitations of Article XIIIB.
-17-
Articles XIIIC and XIIID of the State Constitution
On November 5, 1996, the voters of the State approved Proposition 218, known as the
“Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California
Constitution and contains a number of interrelated provisions affecting the ability of the City to
levy and collect both existing and future taxes, assessments, fees and charges. The
interpretation and application of Proposition 218 will ultimately be determined by the courts with
respect to a number of the matters discussed below, and it is not possible at this time to predict
with certainty the outcome of such determination.
Article XIIIC requires that all new local taxes be submitted to the electorate before they
become effective. Taxes for general governmental purposes of the City require a majority vote
and taxes for specific purposes, even if deposited in the City’s General Fund, require a twothirds vote. The voter approval requirements of Proposition 218 reduce the flexibility of the City
to raise revenues for the General Fund, and no assurance can be given that the City will be able
to impose, extend or increase such taxes in the future to meet increased expenditure needs.
Article XIIID also adds several provisions making it generally more difficult for local
agencies to levy and maintain property-related fees, charges, and assessments for municipal
services and programs. These provisions include, among other things, (i) a prohibition against
assessments which exceed the reasonable cost of the proportional special benefit conferred on
a parcel, (ii) a requirement that assessments must confer a “special benefit,” as defined in
Article XIIID, over and above any general benefits conferred, (iii) a majority protest procedure
for assessments which involves the mailing of notice and a ballot to the record owner of each
affected parcel, a public hearing and the tabulation of ballots weighted according to the
proportional financial obligation of the affected party, and (iv) a prohibition against fees and
charges which are used for general governmental services, including police, fire or library
services, where the service is available to the public at large in substantially the same manner
as it is to property owners. If the City is unable to continue to collect these revenues, the
services and programs funded with these revenues would have to be curtailed and/or the City’s
General Fund might have to be used to support them. The City is unable to predict whether or
not in the future it will be able to continue all existing services and programs funded by the fees,
charges and assessments in light of Proposition 218 or, if these services and programs are
continued, which amounts (if any) would be used from the City’s General Fund to continue to
support these activities.
Article XIIIC also removes limitations on the initiative power in matters of reducing or
repealing local taxes, assessments, fees or charges. No assurance can be given that the voters
of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local
taxes, assessments, fees or charges currently comprising a substantial part of the City’s
General Fund.
Proposition 62
Proposition 62 was adopted by the voters at the November 4, 1986, general election and
(a) requires that any new or higher taxes for general governmental purposes imposed by local
governmental entities such as the City be approved by a two-thirds vote of the governmental
entity’s legislative body and by a majority vote of the voters of the governmental entity voting in
an election on the tax, (b) requires that any special tax (defined as taxes levied for other than
general governmental purposes) imposed by a local governmental entity be approved by a twothirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts
-18-
the use of revenues from a special tax to the purposes or for the service for which the special
tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local
governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of
transaction taxes and sales taxes on the sale of real property by local governmental entities,
and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985,
be ratified by a majority vote of the voters voting in an election on the tax within two years of the
adoption of the initiative or be terminated by November 15, 1988.
California appellate court cases have overturned the provisions of Proposition 62
pertaining to the imposition of taxes for general government purposes. However, the California
Supreme Court upheld Proposition 62 in its decision on August 28, 1995, in Fresno County
Transportation Authority v. Guardino.
This decision reaffirmed the constitutionality of
Proposition 62. Certain matters regarding Proposition 62 were not addressed in the Supreme
Court’s decision, such as what remedies exist for taxpayers subject to a tax not in compliance
with Proposition 62, and whether the decision applies to charter cities. The City has not
experienced any substantive adverse financial impact as a result of the passage of this initiative.
Proposition 1A
Proposition 1A, proposed by the Legislature in connection with the State’s Fiscal Year
2004-05 Budget, approved by the voters in November 2004 and generally effective in Fiscal
Year 2006-07, provides that the State may not reduce any local sales tax rate, limit existing
local government authority to levy a sales tax rate or change the allocation of local sales tax
revenues, subject to certain exceptions. Proposition 1A generally prohibits the State from
shifting to schools or community colleges any share of property tax revenues allocated to local
governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004.
Any change in the allocation of property tax revenues among local governments within a county
must be approved by two-thirds of both houses of the Legislature. Proposition 1A provides,
however, that beginning in fiscal year 2008-09, the State may shift to schools and community
colleges up to 8% of local government property tax revenues, which amount must be repaid,
with interest, within three years, if the Governor proclaims that the shift is needed due to a
severe state financial hardship, the shift is approved by two-thirds of both houses and certain
other conditions are met. The State may also approve voluntary exchanges of local sales tax
and property tax revenues among local governments within a county. Proposition 1A also
provides that if the State reduces the motor vehicle license fee rate currently in effect, 0.65
percent of vehicle value, the State must provide local governments with equal replacement
revenues. Further, Proposition 1A requires the State, beginning July 1, 2005, to suspend State
mandates affecting cities, counties and special districts, excepting mandates relating to
employee rights, schools or community colleges, in any year that the State does not fully
reimburse local governments for their costs to comply with such mandates.
Proposition 1A may result in increased and more stable City revenues. The magnitude
of such increase and stability is unknown and would depend on future actions by the State.
However, Proposition 1A could also result in decreased resources being available for State
programs. This reduction, in turn, could affect actions taken by the State to resolve budget
difficulties. Such actions could include increasing State taxes, decreasing spending on other
State programs or other action, some of which could be adverse to the City.
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Possible Future Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 62, 111, 218 and 1A were each
adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From
time to time other initiative measures could be adopted, further affecting revenues of the City or
the City’s ability to expend revenues. The nature and impact of these measures cannot be
anticipated by the City.
LEGAL MATTERS
Tax Exemption
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San
Francisco, California, Bond Counsel, subject, however to certain qualifications set forth below,
under existing law, the interest on the Refunding Bonds is excluded from gross income for
federal income tax purposes, such interest is not an item of tax preference for purposes of the
federal alternative minimum tax imposed on individuals and corporations, provided, however,
that, for the purpose of computing the alternative minimum tax imposed on corporations (as
defined for federal income tax purposes), such interest is taken into account in determining
certain income and earnings and the Refunding Bonds are "qualified tax-exempt obligations"
within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the
"Tax Code"), such that, in the case of certain financial institutions (within the meaning of section
265(b)(5) of the Tax Code), a deduction for federal income tax purposes is allowed for 80% of
that portion of such financial institution's interest expense allocable to interest payable on the
Refunding Bonds .
The opinions set forth in the preceding sentence are subject to the condition that the City
comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance
of the Refunding Bonds in order that such interest be, or continue to be, excluded from gross
income for federal income tax purposes. The City has covenanted to comply with each such
requirement. Failure to comply with certain of such requirements may cause the inclusion of
such interest in gross income for federal income tax purposes to be retroactive to the date of
issuance of the Refunding Bonds, or may cause the Refunding Bonds not to be “qualified taxexempt obligations” within the meaning of section 265(b)(3) of the Tax Code.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to
the public (excluding bond houses and brokers) at which a Bond is sold is less than the amount
payable at maturity thereof, then such difference constitutes “original issue discount” for
purposes of federal income taxes and State of California personal income taxes. If the initial
offering price to the public (excluding bond houses and brokers) at which each Bond is sold is
greater than the amount payable at maturity thereof, then such difference constitutes “original
issue premium” for purposes of federal income taxes and State of California personal income
taxes. De minimis original issue discount and original issue premium is disregarded. Owners of
Bonds with original issue discount or original issue premium, including purchasers who do not
purchase in the original offering, should consult their own tax advisors with respect to federal
income tax and State of California personal income tax consequences of owning such Bonds.
California Tax Status. In the further opinion of Bond Counsel, interest on the
Refunding Bonds is exempt from California personal income taxes.
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Other Tax Considerations. Owners of the Refunding Bonds should also be aware that
the ownership or disposition of, or the accrual or receipt of interest on, the Refunding Bonds
may have federal or state tax consequences other than as described above. Bond Counsel
expresses no opinion regarding any federal or state tax consequences arising with respect to
the Refunding Bonds other than as expressly described above.
Form of Opinion. A copy of the proposed form of opinion of Bond Counsel is attached
hereto as APPENDIX C.
Absence of Material Litigation
No litigation is pending or threatened concerning the validity of the Refunding Bonds,
and a certificate to that effect will be furnished to the purchasers at the time of the original
delivery of the Refunding Bonds. The City is not aware of any litigation pending or threatened
questioning the political existence of the City or contesting the City’s ability to receive ad
valorem taxes or to collect other revenues or contesting the City’s ability to issue and repay the
Refunding Bonds.
CONTINUING DISCLOSURE
The City will covenant for the benefit of owners of the Refunding Bonds to provide
certain financial information and operating data relating to the City to the Municipal Securities
Rulemaking Board by not later than March 31 after the end of each fiscal year of the City
(currently June 30th), commencing by March 31, 2016 with the report for the 2014-15 fiscal year
(the “Annual Report”), and to provide notices of the occurrence of certain enumerated events.
The specific nature of the information to be contained in the Annual Report or the notices of
enumerated events is summarized in “APPENDIX D - FORM OF CONTINUING DISCLOSURE
CERTIFICATE,” attached to this Official Statement. These covenants have been made in order
to assist the Purchaser (as defined below) in complying with Securities Exchange Commission
Rule 15c2-12 (the “Rule”).
The City has made prior undertakings pursuant to the Rule, and has had instances of
noncompliance with its undertakings in the previous five years. Specific instances include (i) the
failure of the City, in its capacity as successor agency to the former Redevelopment Agency, to
file certain financial and operating data with respect to the Association of Bay Area
Government’s 2007A Revenue Bonds and 2007B Revenue Bonds for its 2012 and 2013 annual
reports, (ii) late filings by the City of audited financials and financial and operating data in 2010,
2011 and 2012 for the Silicon Valley Clean Water’s (formerly South Bayside System Authority)
2008 Wastewater Revenue Bonds and of its audited financials for 2011 and 2012 for the 2009
Wastewater Revenue Bonds, and (iii) the late filing of an underlying rating upgrade of the City.
Inclusion of these instances of non-compliance in this Official Statement does not suggest that
there has been a determination made that such instances of non-compliance are material for
purposes of the Rule. The City has made remedial filings with respect to the items identified in
clause (i), except with respect to certain information which is no longer available since the
dissolution of the Redevelopment Agency. See “APPENDIX A – CITY FINANCES Redevelopment Agency Dissolution and Successor Agency Activities” for further information
regarding the dissolution of the Redevelopment Agency.
The City will serve as its own dissemination agent with respect to its undertaking
pursuant to the Rule with respect to the Refunding Bonds.
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Neither the County nor any other entity other than the City shall have any obligation or
incur any liability whatsoever with respect to the performance of the City’s duties regarding
continuing disclosure.
RATING
Upon issuance of the Refunding Bonds, Standard & Poor’s Ratings Services, a division
of the McGraw-Hill Companies, Inc. (“S&P”) will assign the Refunding Bonds a rating of “AAA.”
The City has furnished to S&P information and material which has not been included in this
Official Statement. Generally, rating agencies base their ratings on information and material so
furnished and on investigations, studies and assumptions made by the rating agencies. The
ratings reflect only the view of such organization and an explanation of the significance of such
rating may be obtained from.
There is no assurance that the ratings will continue for any given period of time or that
they will not be revised downward or withdrawn entirely by such rating agency, if, in the
judgment of such rating agency, circumstances so warrant. Any such downward revision or
withdrawal of such rating may have an adverse effect on the market price of the Refunding
Bonds.
FINANCIAL ADVISOR
The City has retained NHA Advisors LLC, San Rafael, California, as financial advisor
(the “Financial Advisor”) in connection with the preparation of this Official Statement and with
respect to the issuance of the Refunding Bonds. The Financial Advisor is not obligated to
undertake, and has not undertaken to make, an independent verification or assume
responsibility for the accuracy, completeness, or fairness of the information contained in this
Official Statement. NHA Advisors LLC is an independent financial advisory firm and is not
engaged in the business of underwriting, trading or distributing municipal securities or other
public securities. The Financial Advisor’s compensation is contingent upon the delivery of the
Refunding Bonds.
COMPETITIVE SALE OF BONDS
The Refunding Bonds were sold pursuant to competitive sale, and were awarded to
Wells Fargo Bank, National Association, whose proposal represented the lowest true interest
rate for the Refunding Bonds (being the rate which, when used in computing the present worth
of all payments of principal to their maturity dates, produces an amount equal to the purchase
price specified in such proposal). The Refunding Bonds are being purchased at a purchase
price of $4,762,957.25, which represents the aggregate principal amount of the Refunding
Bonds ($4,600,000.00) plus an original issue premium ($174,273.25), less a purchaser’s
discount ($11,316.00).
The Purchaser intends to offer the Refunding Bonds to the public at the offering prices
set forth on the cover page of this Official Statement. The Purchaser may offer and sell to
certain dealers and others at a price lower than the offering prices stated on the cover page
hereof. The offering price may be changed from time to time by the Purchaser.
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EXECUTION
The execution and delivery of this Official Statement has been approved by the City
Council.
CITY OF SAN CARLOS
By: ________/s/ Jeff Maltbie_________
City Manager
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APPENDIX A
FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF
SAN CARLOS AND SAN MATEO COUNTY
The City
The City is located in San Mateo County (the “County”) approximately 25 miles south of
San Francisco, and encompasses an area of approximately 4.5 square miles. The City was
incorporated in 1925 and is a general law city pursuant to the California Government Code. The
City has a Council-Manager form of government, with five elected Council members served by a
full-time City Manager and staff. The City Council consists of a Mayor and four other
Councilmembers. The Mayor is selected from among the sitting Councilmembers and serves a
one-year term. Councilmembers are elected at-large for staggered four-year terms. The City
Treasurer is also an elected position. The City Clerk is appointed by the City Manager.
Population
The following table lists population estimates for the City, the County and the State of
California for the last five calendar years, as of January 1.
Table A-1
CITY OF SAN CARLOS, SAN MATEO COUNTY AND STATE OF CALIFORNIA
Population Estimates
Calendar Years 2010 through 2014 as of January 1
City of San Carlos
San Mateo County
State of California
2010
28,406
718,614
37,223,900
2011
28,494
722,372
37,668,804
2012
28,646
727,795
37,678,563
Source: State Department of Finance estimates (as of January 1).
A-1
2013
28,962
736,647
37,984,138
2014
29,219
745,193
38,340,074
Employment and Industry
The City is included in the San Francisco–San Mateo–Redwood City Metropolitan
Division (“MD”), which includes all of the County as well as Marin and San Francisco Counties.
The unemployment rate in the San Francisco-San Mateo-Redwood City MD was 4.2 percent in
November 2014, unchanged from a revised 4.2 percent in October 2014, and below the yearago estimate of 5.0 percent. This compares with an unadjusted unemployment rate of 7.1
percent for California and 5.5 percent for the nation during the same period. The unemployment
rate was 3.9 percent in Marin County, 4.4 percent in San Francisco County, and 4.1 percent in
the County.
The following table summarizes the civilian labor force, employment and unemployment
in the County for the calendar years 2009 through 2013. These figures are county-wide
statistics and may not necessarily accurately reflect employment trends in the City. Annual
figures are not yet available for the calendar year 2014.
Table A-2
SAN FRANCISCO SAN MATEO REDWOOD CITY MD
(MARIN, SAN FRANCISCO AND SAN MATEO COUNTIES)
Annual Average Civilian Labor Force, Employment and Unemployment;
Employment by Industry
(March 2013 Benchmark)
(1)(2)
Civilian Labor Force
Employment
Unemployment
Unemployment Rate
Wage and Salary Employment: (3)
Agriculture
Mining and Logging
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing, Utilities
Information
Finance and Insurance
Real Estate and Rental and Leasing
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Federal Government
State Government
Local Government
Total, All Industries (4)
2013
2009
965,900
883,500
82,400
8.5%
2010
972,000
884,700
87,300
9.0%
2011
989,400
909,300
80,100
8.1%
2012
1,018,300
948,300
70,000
6.9%
1,032,700
975,900
56,800
5.5%
2,500
200
35,100
38,100
24,500
87,700
37,800
39,600
57,300
19,500
200,600
127,800
122,200
38,000
19,000
35,300
81,400
966,400
2,400
200
32,300
37,000
23,900
86,800
36,400
39,100
54,900
19,000
200,200
128,400
122,700
37,800
20,200
35,600
80,600
957,400
2,200
200
33,200
36,300
24,600
87,200
36,000
43,200
53,800
19,500
213,200
128,800
127,700
38,800
19,100
35,900
81,400
980,900
2,100
100
35,500
36,000
26,000
89,500
37,600
49,100
54,400
20,400
231,600
133,900
135,100
40,700
18,700
35,200
81,100
1,027,000
2,200
100
37,900
37,200
27,400
92,200
40,000
51,800
55,000
21,400
244,600
144,000
141,700
42,500
18,300
34,800
81,300
1,072,300
(1)
Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic
workers, and workers on strike.
(2) Civilian Labor Force numbers for years 2006-2008 will be recalculated by the State of California Employment
Development Department.
(3) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic
workers, and workers on strike.
(4) Totals may not add due to rounding.
Source: State of California Employment Development Department.
A-2
Major Employers
The following table shows the major employers in the City.
Table A-3
CITY OF SAN CARLOS
Principal Employers
Number of
Employees
389
350
267
205
188
185
172
170
165
150
110
97
95
93
78
2,714
Business Name
L-3 COMMUNICATIONS CORP
PACIFIC GAS & ELECTRIC
KELLY-MOORE PAINT CO INC
NATERA INC
DELTA STAR INC
WELLS FARGO INSURANCE SERVICES
NOVARTIS PHARMACEUTICALS
CHECK POINT SOFTWARE TECH INC
THE HOME DEPOT
GEORGE P JOHNSON CO
BEST BUY INC
TERADATA OPERATIONS INC
PARCA
TRADER JOE'S
NATUS MEDICAL
Percent of Total
Employment
2.39%
2.15
1.64
1.26
1.15
1.13
1.06
1.04
1.01
0.92
0.67
0.60
0.58
0.57
0.48
16.65%
Source: City of San Carlos, Comprehensive Annual Financial Report, For The Fiscal Year Ended June 30, 2014.
The table below lists the major employers in the County.
Table A-4
SAN MATEO COUNTY
Principal Employers
Employer Name
Ab Sciex Llc
Burlingame Millbrae Yellow Cab
Caltrain
Electronic Arts Inc
Facebook Inc
Forced Dump Debris Box Svc
Franklin Resources Inc
Franklin Templeton Instnl Llc
Gilead Sciences Inc
Guckenheimer Inc
Kaiser Permanente Medical Ctr
Kaiser Permanente Medical Ctr
Oracle Corp
Peninsula Medial Ctr
San Francisco Intl Airport-Sfo
San Mateo County Behavior
San Mateo County Human Svc
San Mateo Medical Ctr
Seton Medical Ctr Health Sci
Sri International Inc
Stanford Linear Accelerator
US Interior Dept
Visa Inc
Visa International Svc Assn
Visa USA Inc
Location
Redwood City
Burlingame
San Carlos
Redwood City
Menlo Park
Burlingame
San Mateo
San Mateo
Foster City
Redwood City
Redwood City
South San Francisco
Redwood City
Burlingame
San Francisco
San Mateo
Belmont
San Mateo
Daly City
Menlo Park
Menlo Park
Menlo Park
Foster City
Foster City
Foster City
Industry
Scientific Apparatus & Instruments-Mfrs
Taxicabs & Transportation Service
Transit Lines
Game Designers (Mfrs)
Internet Service
Garbage Collection
Asset Management
Investments
Biological Products (Mfrs)
Marketing Programs & Services
Hospitals
Hospitals
Computer Software-Manufacturers
Hospitals
Airline Companies
Government Offices-County
County Government-Social/Human Resources
Hospitals
Services NEC
Research Service
Research Service
Federal Government-Conservation Depts
Credit Card & Other Credit Plans
Credit Card & Other Credit Plans
Credit Card & Other Credit Plans
Source: State of California Employment Development Department, extracted from the America's Labor Market
Information System (ALMIS) Employer Database, 2014 2nd Edition.
A-3
Construction Activity
Provided below are the building permits and valuations for the City and the County for
calendar years 2009 through 2013. Annual figures are not yet available for calendar year 2014.
Table A-5
CITY OF SAN CARLOS
Total Building Permit Valuations
(Valuations in Thousands)
2009
2010
2011
2012
2013
Permit Valuation
New Single-family
New Multi-family
Res. Alterations/Additions
Total Residential
$1,150.0
0.0
16,156.6
17,306.6
$0.0
0.0
20,917.7
20,917.7
$2,425.6
0.0
20,808.0
23,233.6
$2,006.7
585.0
21,177.2
23,768.9
$14,222.9
2,620.2
25,237.4
42,080.5
New Commercial
New Industrial
New Other
Com. Alterations/Additions
Total Nonresidential
0.0
0.0
1,270.3
3,692.5
4,962.8
0.0
0.0
1,152.0
7,766.6
8,918.7
2,345.0
0.0
0.0
7,720.2
10,065.2
964.3
45.0
0.0
7,873.9
8,883.2
1,860.3
15,100.0
797.0
41,144.5
58,901.8
2
0
2
0
0
0
New Dwelling Units
Single Family
Multiple Family
TOTAL
2
0
2
3
2
5
22
8
30
Source: Construction Industry Research Board, Building Permit Summary.
Table A-6
SAN MATEO COUNTY
Total Building Permit Valuations
(Valuations in Thousands)
2009
2010
2011
2012
2013
Permit Valuation
New Single-family
New Multi-family
Res. Alterations/Additions
Total Residential
$147,515.5
74,329.6
204,482.0
426,327.0
$189,296.6
21,309.0
262,592.1
473,197.6
$194,950.1
107,040.0
289,619.5
591,609.6
$245,163.9
171,390.4
201,543.1
618,097.4
$292,893.4
151,019.5
299,830.5
743,743.4
New Commercial
New Industrial
New Other
Com. Alterations/Additions
Total Nonresidential
17,942.0
5,000.0
70,410.1
235,373.3
328,725.5
62,510.5
0.0
66,274.8
283,752.5
412,537.8
28,247.6
3,359.4
26,029.4
244,089.0
301,725.4
83,374.0
2,021.6
1,975.6
167,438.8
254,810
165,578.7
15,724.2
58,726.5
263,460.8
503,490.1
New Dwelling Units
Single Family
Multiple Family
TOTAL
236
393
629
216
111
327
Source: Construction Industry Research Board, Building Permit Summary.
A-4
213
545
758
264
671
935
350
840
1,190
Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax
payments, a number often referred to as “disposable” or “after-tax” income. Personal income is
the aggregate of wages and salaries, other labor-related income (such as employer
contributions to private pension funds), proprietor’s income, rental income (which includes
imputed rental income of owner-occupants of non-farm dwellings), dividends paid by
corporations, interest income from all sources, and transfer payments (such as pensions and
welfare assistance). Deducted from this total are personal taxes (federal, state and local),
nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as
“disposable personal income.”
The following table summarizes the total effective buying income for the City, the
County, the State of California and the United States for the period 2009 through 2013.
Effective Buying Income data is not yet available for the calendar year 2014.
Table A-7
City of San Carlos; San Mateo County, State of California and United States
Effective Buying Income
As of January 1, 2009 through 2013
Median
Household
Effective
Buying Income
$82,735
67,466
49,736
43,252
Year
2009
Area
City of San Carlos
San Mateo County
California
United States
Total Effective
Buying Income
(000s Omitted)
$1,228,043
23,925,603
844,823,319
6,571,536,768
2010
City of San Carlos
San Mateo County
California
United States
$1,225,163
23,489,013
801,393,028
6,365,020,076
$80,744
66,508
47,177
41,368
2011
City of San Carlos
San Mateo County
California
United States
$1,247,350
23,717,578
814,578,458
6,438,704,664
$80,227
66,434
47,062
41,253
2012
City of San Carlos
San Mateo County
California
United States
$1,510,000
26,570,648
864,088,828
6,737,867,730
$85,698
68,429
47,307
41,358
2013
City of San Carlos
San Mateo County
California
United States
$1,549,938
26,846,688
858,676,636
6,982,757,379
$91,864
70,427
48,340
43,715
Source: The Nielsen Company (US), Inc.
A-5
Commercial Activity
In 2009, the State Board of Equalization converted the business codes of sales and use
tax permit holders to North American Industry Classification System codes. As a result of the
coding change, retail stores data for 2009 and after is not comparable to that of prior years.
Summaries of historic taxable sales within the City and the County during the past five years in
which data is available are shown in the following tables. Annual figures are not yet available
for calendar year 2013 or 2014.
Total taxable sales during the first three quarters of calendar year 2013 in the City were
reported to be $542,208,000, an 11.19% increase over the total taxable sales of $487,649,000
reported during the first three quarters of calendar year 2012.
Table A-8
CITY OF SAN CARLOS
Taxable Transactions
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
2008
2009(1)
2010(1)
2011(1)
2012(1)
Retail Stores
Number
Taxable
of Permits
Transactions
603
$442,197
712
426,797
707
408,356
721
452,473
763
482,933
Total All Outlets
Number
Taxable
of Permits
Transactions
1,500
$655,367
1,407
594,472
1,399
595,583
1,377
628,819
1,402
667,790
(1)
Not comparable to prior years. “Retail” category now includes “Food Services.”
Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).
Total taxable sales during the first three quarters of calendar year 2013 in the County
were reported to be $10,520,953,000, a 4.25% increase over the total taxable sales of
$10,092,346,000 reported during the first three quarters of calendar year 2012.
Table A-9
SAN MATEO COUNTY
Taxable Transactions
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
2008
2009(1)
2010(1)
2011(1)
2012(1)
(1)
Source:
Retail Stores
Number
Taxable
of Permits
Transactions
9,098
$8,421,727
11,143
7,455,767
11,340
7,846,274
11,470
8,536,043
11,748
9,277,144
Total All Outlets
Number
Taxable
of Permits
Transactions
19,853
$13,137,913
18,840
11,327,022
18,979
11,966,338
18,995
13,020,643
19,189
13,906,978
Not comparable to prior years. “Retail” category now includes “Food Services.”
California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).
A-6
Municipal Government
The City was founded in 1856 and incorporated in 1948 and operates as a general law
city. The City operates under the Council-Manager form of government. The five City Council
members, including the Mayor, are elected-at-large to four-year terms in alternate slates of
three and two every two years. The mayor and vice mayor are chosen annually from among the
members of the City Council.
The City Council appoints the City Manager who heads the executive branch of the
government, implements City Council directives and policies, and manages the administrative
and operational functions through the department directors and the City Clerk. The City
Manager appoints the department directors with the exception of the City Attorney, who is
appointed by the City Council. The City Treasurer is an elected position.
Municipal Services
The City provides a full range of services, including law enforcement (contracted through
the San Mateo County Sheriff’s office) and fire protection (contracted through the City of
Redwood City); the construction and maintenance of highways, streets and other infrastructure;
community development and planning and inspections. In addition, the City manages
recreational activities and cultural activities.
Utilities
Natural gas and electricity are provided by Pacific Gas and Electric Company. Water is
provided by California Water Company. Sewer services are provided through Silicon Valley
Clean Water, a joint powers authority, and solid waste services are provided through South
Bayside Waste Management Authority, a joint powers authority.
A-7
CITY FINANCES
The information in this section concerning the operations of the City and the City’s
general fund finances is provided as supplementary information only, and it should not be
inferred from the inclusion of this information in this Official Statement that the principal of or
interest on the Refunding Bonds is payable from the general fund of the City. The Refunding
Bonds are payable from the proceeds of an ad valorem tax levied by the City in an amount
sufficient for the payment thereof. Amounts in the City’s general fund are not pledged to the
payment of the Refunding Bonds. See “THE REFUNDING BONDS” and “SECURITY FOR THE
REFUNDING BONDS” above.
Accounting Policies and Financial Reporting
The accounts of the City are organized on the basis of funds and account groups, each
of which is considered a separate entity. The operations of each fund are accounted for with a
separate set of self-balancing accounts that comprise its assets, liabilities, fund equity,
revenues, and expenditures or expenses, as appropriate. Government resources are allocated
to and accounted for in individual funds based upon the purposes for which they are to be spent
and the means by which the spending activities are controlled. The basis of accounting for all
funds is more fully explained in the “Notes to Financial Statements” contained in Appendix B.
The City Council employs, at the beginning of each fiscal year, an independent certified
public accountant who, at such time or times as specified by the City Council, at least annually,
and at such other times as he or she shall determine, examines the combined financial
statements of the City in accordance with generally accepted auditing standards, including such
tests of the accounting records and such other auditing procedures as such accountant
considers necessary. As soon as practicable after the end of the fiscal year, a final audit and
report is submitted by such accountant to the City Council and a copy of the financial
statements as of the close of the fiscal year is published. The City’s Independent Auditor’s
Report for fiscal year 2013-14 was prepared by Lance, Soll & Lunghard, LLP, Certified Public
Accountants, Brea, California (“LSL”). LSL has not been requested to consent to the use or to
the inclusion of its report in this Official Statement and has not reviewed this Official Statement.
See “APPENDIX B - FISCAL YEAR 2013-14 COMPREHENSIVE ANNUAL FINANCIAL
REPORT- Note (1) Summary of Significant Accounting Policies” for a description of the
significant accounting policies of the City.
General Fund Financial Summary
The City’s general fund finances the legally authorized activities of the City for which
restricted funds are not provided. General fund revenues are derived from such sources as
taxes, fees, use of money and property, and aid from other governmental agencies. Audited
financial statements for the City for the fiscal year ended June 30, 2014 and earlier are available
for download on the City’s website located at:
http://www.cityofsancarlos.org/depts/administrative/finance/reports/cafr.asp.
The citation to internet websites in this Official Statement are for reference and
convenience only, the information contained within the websites is not incorporated herein by
reference.
A-8
The audited information contained in the following tables is excerpted from the City’s
general fund financial statements for fiscal years 2011-12 through 2013-14, the three most
recent fiscal years for which audited financial statements are available.
Table A-10
CITY OF SAN CARLOS
General Fund Statement of Revenues, Expenditures and Changes in Fund Balances
Fiscal Years 2011-12 through 2013-14
REVENUES:
Sales tax
Property tax
Transient occupancy tax
Franchise tax
Vehicle in-lieu
Business registration
Licenses and permits
From other agencies
Charges for services
Fines and forfeitures
Use of money and property
Other revenue
Total Revenues
EXPENDITURES:
Current:
General governmental
Community development
Public safety
Public works
Parks and recreation
Capital Outlay
Debt Service:
Principal
Interest and fiscal charges
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Capital lease issued
Capital contributions
Total Other Financing Sources (Uses)
2012-13
2013-14
$5,207,102
9,278,560
943,513
1,612,048
2,205,159
647,572
1,435,406
51,354
2,557,464
265,091
1,201,099
1,293,353
26,697,721
$5,712,385
9,451,484
1,120,864
1,767,099
2,155,983
671,145
1,201,045
58,980
2,912,353
234,218
900,463
2,866,255
29,052,274
$6,548,812
10,979,456
1,270,072
1,840,618
2,438,078
685,909
1,452,285
38,903
3,276,334
219,944
1,373,705
1,365,623
31,489,739
4,533,102
1,947,270
12,900,743
731,767
3,438,598
419,629
3,915,033
2,397,049
14,211,302
748,925
3,597,600
134,205
3,942,606
2,608,095
15,268,586
2,837,125
2,574,917
48,963
--23,971,109
--25,004,114
--27,280,292
2,726,612
4,048,160
4,209,447
510,000
(3,293,615)
--(2,783,615)
520,200
(265,165)
8,800,000
-9,055,035
500,000
(325,150)
--174,850
NET CHANGE IN FUND BALANCES
2,901,462
1,264,545
13,264,482
16,842,382
19,743,844
21,008,389
$19,743,844
$21,008,389
$34,272,871
Beginning Fund Balance
Ending Fund Balance
2011-12
Source: City of San Carlos, Basic Financial Statements for fiscal years 2011-12 through 2013-14.
A-9
Table A-11
CITY OF SAN CARLOS
General Fund Balance Sheet
Fiscal Years 2011-12 through 2013-14
2011-12
Assets
Cash and investments
Receivables:
Accounts
Prepaid items
Advances to other funds
Property held for resale
Total Assets
Liabilities, Deferred Inflows of Resources, and
Fund Balances
Accounts payable and accrued liabilities
Accrued benefits
Deposits payable
Unearned revenues
Total Liabilities
Deferred Inflows of Resources
Unavailable revenues
2012-13
2013-14
$21,928,765
$21,288,595
$21,009,336
1,451,902
3,300
710,000
-24,093,967
2,314,197
352,700
710,000
-24,665,492
2,023,478
350,300
710,000
14,070,523
38,163,637
2,717,476
498,903
621,559
450,994
4,288,932
2,304,352
137,367
711,590
405,748
3,559,057
2,483,182
120,775
779,021
399,347
3,782,325
61,191
98,046
108,441
3,300
-710,000
352,700
-710,000
350,300
14,070,523
710,000
--
42,000
--
Fund Balances:
Nonspendable:
Prepaid items
Property held for resale
Advances to other funds
Restricted for:
Parks and recreation
Committed to:
Emergency reserve
Strategic property acquisition
Assigned to:
Unfunded liabilities
Facility/infrastructure improvements
Property acquisitions
Unassigned
Total fund balances
2,706,600
4,146,565
2,900,000
4,251,565
3,200,000
--
3,000,000
6,175,000
-3,002,379
19,743,844
3,200,000
3,500,000
3,000,000
3,052,124
21,008,389
3,200,000
7,000,000
2,701,565
3,040,483
34,272,871
Total liabilities and fund balances
$24,093,967
$24,665,492
$38,163,637
__________________
Source: City of San Carlos, Basic Financial for fiscal years 2011-12 to 2013-14.
A-10
The City has is on a two-year budget cycle. The following table shows fiscal year
2014-15 and 2015-16 budgeted amounts.
Table A-12
CITY OF SAN CARLOS
General Fund Budget
Fiscal Years 2014-15 and 2015-16
2014-15
Adopted
Budget
2015-16
Adopted
Budget
$6,253,100
9,866,600
1,206,500
2,425,700
699,900
1,680,300
46,800
3,428,800
248,400
1,439,400
2,505,400
613,700
$6,503,000
10,064,000
1,254,800
2,425,700
727,900
1,998,400
47,800
3,285,900
253,400
15,656,200
2,559,000
625,900
30,414,600
45,402,000
6,182,900
3,281,300
16,604,500
4,121,400
2,741,300
14,916,200
3,224,900
17,028,100
4,245,500
2,820,500
32,931,400
42,235,200
Allocations in for overhead
General transfers in
Allocations out for overhead
General Transfers out
Total Transfers, Allocations and One-time
2,635,700
541,000
(461,900)
(4,047,600)
2,683,100
562,600
(487,800)
(1,048,500)
(1,332,800)
1,709,400
NET CHANGES
(3,849,600)
4,876,200
Estimated Beginning Fund Balance
15,600,781
11,751,181
Estimated Ending Fund Balance
$11,751,181
$16,627,381
REVENUES:
Sales tax
Property tax
Transient occupancy tax
Vehicle-in lieu
Business registration
Licenses and permits
From other agencies
Charges for services
Fines and forfeitures
Use of money and property
Other taxes
Other revenue
Total Revenues
EXPENDITURES:
Current:
General governmental
Community development
Public safety
Public Works
Parks and recreation
Total Expenditures
TRANSFERS:
Source: City of San Carlos.
A-11
General Fund Revenue Sources
Property Taxes. Property taxes are the City’s largest source of general fund revenue,
generating almost 35% of the City’s 2013-14 general fund revenue. Property tax revenues
continue to increase,
with a 15.2% increase over fiscal year 2012-13, primarily due to
increases in assessed values and receipts from property transfers. See “PROPERTY
TAXATION” in the body of this Official Statement for information about assessed values and
property tax collection procedures in the City.
Sales Taxes. Sales taxes account for approximately 20% of total general fund
revenues. Local general sales tax revenue in fiscal year 2013-14 was $6.55 million, a 14.7%
increase as compared to fiscal year 2012-13 sales tax revenue.
The sales tax is an excise tax imposed on retailers for the privilege of selling or leasing
tangible personal property. The use tax is an excise tax imposed for the storage, use, or other
consumption of tangible personal property purchased from any retailer. The total sales tax rate
within the City is currently 9.00%. The proceeds of sales and uses taxes imposed within the City
are distributed by the State to various agencies, with the City receiving 1.0% of the amount
collected less 0.25% shifted to the State pursuant to a mechanism commonly known as “Triple
Flip.” The 0.25% reduction in local sales tax is used to pay State economic recovery bonds, but
cities and counties are then provided with ad valorem property tax revenues in lieu of these
revenues. See “RISK FACTORS – Impact of State Sales and Use Tax Redirection.”
Collection of the sales and use tax is administered by the California State Board of
Equalization. Under its procedures, the State Board of Equalization projects receipts of the
sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and
use tax to the City on a monthly basis. The amount of each monthly advance is based upon the
State Board of Equalization’s quarterly projection. During the last month of each quarter, the
State Board of Equalization adjusts the amount remitted to reflect the actual receipts of the
sales and use tax for the previous quarter. The Board of Equalization receives an administrative
fee based on the cost of services provided by the Board to the City in administering the City’s
sales tax, which is deducted from revenue generated by the sales and use tax before it is
distributed to the City.
Factors that have historically affected sales tax revenues include the overall economic
growth of the Bay Area, competition from neighboring cities, the growth of specific industries
within the City.
Franchise Taxes. Private utility companies pay franchise fees to the City in exchange
for the use of the City’s rights-of-way. Franchise fees are set through franchise agreements
negotiated between the City and each utility company. Revenue from franchise taxes has been
increasing due to higher utility rates.
Transient Occupancy Taxes. Hotel taxes, or transient occupancy taxes, represent the
fourth largest source of tax income to the City. The City levies a transient occupancy tax on the
daily rental price of a room in a lodging facility when used by visitors staying in the City for less
than 30 days. The tax is collected and remitted by hotel operators, which is allocated directly to
the City’s General Fund.
A-12
Business Registration. The City levies Business Registration fees for the privilege of
operating business within the City. The Business Registration fee is charged annually and
includes a base fee and a unit charge based on the business categories.
Licenses and Permits. The City charges permit, engineering and planning fees to offset
the costs of providing construction inspection and plan review services.
Fines and Forfeitures. The California Vehicle Code and the California Penal Code
impose fines and penalties for traffic and vehicular parking violations.
Recent City Budgets. Due to the economic downturn, for over a decade the City has
made bridging strategies to balance the budget. Savings initiatives instituted by the City include
the outsourcing of police and fire services, payroll, parks maintenance, and dispatch and
communications combined with strategic reductions in service levels. As a result of these cost
reduction strategies, the City has once again been able to budget small surpluses and fund
much needed capital improvements. In addition, the Council is now able to focus on economic
development and large-scale development projects. The City continues to explore options for
shared services with neighboring agencies as well as other reorganization and contract
solutions in order to offer fiscally sustainable services to the public.
Retirement Systems
PERS Safety and Miscellaneous Employees Plan. All City employees meeting
membership requirements participate in pension plans offered by California Public Employees
Retirement System (“PERS”), a cost-sharing multiple employer defined benefit plan which acts
as a common investment and administrative agent for its participating member employers.
PERS provides retirement and disability benefits, annual cost of living adjustments and death
benefits to plan members, who must be public employees and beneficiaries. The City’s
employees participate in the separate Safety (police and fire) and Miscellaneous (all other)
Employee Plans. Benefit provisions under both Plans are established by State statute and City
resolution. Benefits are based on years of credited service, equal to one year of full time
employment. Funding contributions for both Plans are determined annually on an actuarial basis
as of June 30 by PERS; the City must contribute these amounts. The Plans’ provisions and
benefits in effect at June 30, 2014, are summarized as follows:
Safety (Fire)
1st Tier
Miscellaneous
1stTier
2nd Tier
3rd Tier
Benefit vesting schedule
5 years
service
5 years
service
5 years
service
5 years
service
Benefit payments
Monthly
for life
Monthly
for life
Monthly
for life
Monthly
for life
50
55
55
55
Monthly benefit, as % of annual salary
2.00%
2.70%
2.50%
2.00%
Required employee contribution rates
9.0%
8.0%
8.0%
7.0%
Required employee contribution rates
19.900%
22.167%
15.133%
10.773%
Retirement age
A-13
4th Tier
PEPRA
5 years
service
Monthly
for life
62
2.00%
6.5%
6.500%
PERS determines contribution requirements using a modification of the Entry Age
Normal Method. Under this method, the City’s total normal benefit cost for each employee from
date of hire to date of retirement is expressed as a level percentage of the related total payroll
cost. Normal benefit cost under this Method is the level amount the employer must pay annually
to fund an employee’s projected retirement benefit. This level percentage of payroll method is
used to amortize any unfunded actuarial liabilities. The actuarial assumptions used to compute
contribution requirements are also used to compute the actuarial accrued liability. The City uses
the actuarially determined percentages of payroll to calculate and pay contributions to PERS.
This results in no net pension obligations or unpaid contributions. The required contributions,
representing annual pension cost, and related rates for the year ended June 30 were as follows:
Contribution Rate
Safety
Fiscal Year
2012
2013
2014
Contribution
Amount
$2,000,814
2,301,816
1,590,218
Fire
19.169%
19.204
19.900
Miscellaneous
st
1 Tier
20.160%
20.433
22.167
nd
2 Tier
13.817%
14.383
15.133
rd
3 Tier
10.019%
10.197
10.773
th
4 Tier
(PEPRA)
N/A
6.500%
6.500
PERS uses the market related value method of valuing the Plan’s assets. An investment
rate of return of 7.5% is assumed, including inflation at 2.75%. Annual salary increases are
assumed to vary by duration of service. Changes in liability due to plan amendments, changes
in actuarial assumptions, or changes in actuarial methods are amortized as a level percentage
of payroll on a closed basis over twenty years. Gain and losses that occur in the operation of
risk pool are amortized over a rolling thirty year period.
As required by State law, effective July 1, 2005, the City’s Safety and Miscellaneous
Plans were terminated, and the employees in the plan were required by PERS to join a new
State-wide pool. One of the conditions of entry to these pools was that the City true-up any
unfunded liability in the former Plan, either by paying cash or by increasing its future contribution
rates through a Side Fund offered by PERS.
At its April 17, 2013 meeting, the PERS Board of Administration approved a
recommendation to change the PERS amortization and smoothing policies. Prior to this change,
PERS employed an amortization and smoothing policy which spread investment returns over a
15-year period with experience gains and losses paid for over a rolling 30-year period. After this
change, PERS will employ an amortization and smoothing policy that will pay for all gains and
losses over a fixed 30-year period with the increases or decreases in the rate spread directly
over a 5-year period.
The new amortization and smoothing policy will be used for the first time in the June 30,
2013 actuarial valuations. These valuations will be performed in the fall of 2014 and will set
employer contribution rates for the fiscal year 2015-16. The City cannot predict how this change
in amortization and smoothing policies will affect its contribution levels.
State Pensions Trusts. The PERS system is operated on a statewide basis. City
contribution rates to this retirement system vary annually depending on changes in actuarial
assumptions and other factors, such as liability. PERS issues a separate comprehensive
financial report that includes financial statements and required supplemental information.
Copies of such report may be obtained from PERS at: PERS, P.O. Box 942703, Sacramento,
California 94229-2703. More information regarding PERS can also be obtained at its website at
A-14
www.calpers.ca.gov. However, information in the financial reports and on the website is not
incorporated in this Official Statement by reference. See also the following paragraph on recent
pension reform legislation.
Pension Reform Act of 2013 (Assembly Bill 340). On September 12, 2012, Governor
Brown signed AB 340, a bill that will enact the California Public Employees’ Pension Reform Act
of 2013 (“PEPRA”) and that will also amend various sections of the California Education and
Government Codes. AB 340 (i) increases the retirement age for new State, school, and city and
local agency employees depending on job function, (ii) caps the annual PERS and STRS
pension benefit payouts, (iii) addresses numerous abuses of the system, and (iv) requires State,
school, and certain city and local agency employees to pay at least half of the costs of their
PERS pension benefits. PEPRA will apply to all public employers except the University of
California, charter cities and charter counties (except to the extent they contract with PERS.)
The provisions of AB 340 went into effect on January 1, 2013 with respect to new State,
school, and city and local agency employees hired on that date and after; existing employees
who are members of employee associations, including employee associations of the City, will
have a five-year window to negotiate compliance with AB 340 through collective bargaining. If
no deal is reached by January 1, 2018, a city, public agency or school district could force
employees to pay their half of the costs of PERS pension benefits, up to 8 percent of pay for
civil workers and 11 percent or 12 percent for public safety workers.
PERS has predicted that the impact of AB 340 on employers, including the City and
other employers in the PERS system, and employees will vary, based on each employer’s
current level of benefits. To the extent that the new formulas lower retirement benefits, employer
contribution rates could decrease over time as current employees retire and employees subject
to the new formulas make up a larger percentage of the workforce. This change would, in some
circumstances, result in a lower retirement benefit for employees than they currently earn.
Additionally, PERS has noted that changes arising from AB 340 could ultimately have an
adverse impact on public sector recruitment in areas that have historically experienced
recruitment challenges due to higher pay for similar jobs in the private sector.
The City is unable to predict what the amount of PERS liabilities will be in the future or
the amount of the PERS contributions which the City may be required to make, all as a result of
the implementation of AB 340, and as a result of negotiations with its labor unions.
More information about AB 340 can be accessed through the PERS’s web site at
www.calpers.ca.gov/index.jsp?bc=/member/retirement/pension-reform-impacts.xml&pst=ACT&
pca=ST and through the STRS web site at http://www.calstrs.com/Newsroom/whats_new/
AB340_detailed_impact_analysis.pdf. The references to these internet websites are shown for
reference and convenience only; the information contained within the websites may not be
current and has not been reviewed by the City and is not incorporated herein by reference.
Post-Employment Health Benefits
Other Post Employment Benefits Healthcare. During fiscal year 2008-2009, the City
joined the California Employers' Retiree Benefit Trust (“CERBT”), an agent multiple-employer
plan administered by CALPERS, consisting of an aggregation of single-employer plans. The
City Council authorized a deposit of $1,575,000 with CERBT on October 10, 2008 to begin
funding its OPEB liability.
A-15
By Council resolution and through agreements with its labor units, the City provides
certain health care benefits for retired employees (spouse and dependents are not included)
under Public Employees’ Medical Healthcare Act (“PEMHCA”).
Employees are eligible for retiree health benefits if they retire from the City with a
CalPERS pension. For retirees who retired on or before 12/31/2008, the City will reimburse the
retiree only premium, up to the active employee single cap. The cap amount is $734.37 per
month for 2015. The cap for safety (Police) retirees is $718.11 and is not expected to be
increased.
The City will continue to pay the CalPERS minimum contribution for surviving spouses of
retirees as long as they remain enrolled in a health plan sponsored by CalPERS (PEMHCA) For
employees retiring on or after 1/1/2009 from the City of San Carlos and choose to enroll in a
CalPERS retiree health plan, the City contributes the minimum monthly premium amount
specified by CalPERS towards the cost of CalPERS (PEMHCA) medical premiums. The
minimum is $122.00 per month for 2015. As of June 30, 2014, 70 retired employees participated
in the retiree healthcare benefits. Additionally, 90 current employees have met the criteria for
the retiree healthcare benefits and are eligible to participate in the program if they retire from the
City in future years.
Funding Policy and Actuarial Assumptions. The annual required contribution (ARC)
was determined as part of a June 30, 2013, actuarial valuation using the projected unit credit
actuarial cost method. Under this method, the actuarial present value of projected benefits is the
value of benefits expected to be paid for current active and retirees and is calculated based on
the assumptions and census data from the actuarial report. The actuarial assumptions included
(a) 7% investment rate of return, (b) 3% projected annual salary increase, and (c) 2.5% health
inflation increases. The actuarial methods and assumptions used include techniques that
smooth the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets. Actuarial calculations reflect a long-term perspective and actuarial valuations involve
estimates of the value of reported amounts and assumptions about the probability of events far
into the future. Actuarially determined amounts are subject to revision at least biannually as
results are compared to past expectations and new estimates are made about the future. The
City’s unfunded actuarial accrued liability is amortized as a level dollars amount on a closed
basis using a 30 year amortization period.
In accordance with the City's budget, the ARC is to be funded throughout the year as a
percentage of payroll. During the fiscal year 2008-2009, the City Council passed a resolution to
participate in the California Employers Retirees Benefit Trust (CERBT), an irrevocable trust
established to fund OPEB. CERBT is administrated by CalPERS, and is managed by an
appointed board not under the control of the City Council. This Trust is not considered a
component unit by the City and has been excluded from these financial statements. Separately
issued financial statements for CERBT may be obtained from CALPERS at P.O. Box 942709,
Sacramento, CA 94229-2709.
OPEB Longevity Recognition Program (“Program”). As of June 30, 2014, 25 retired
employees were eligible to receive the longevity recognition benefits. Additionally, 38 current
employees have met the criteria for this program and will receive benefits from this program if
they retire from the City of San Carlos in future years.
Funding Policy and Actuarial Assumptions. The annual required contribution (ARC)
was determined as part of a June 30, 2013 actuarial valuation using the projected unit credit
A-16
actuarial cost method. This is a projected benefit cost method, which takes into account those
benefits that are expected to be earned in the future as well as those already accrued. The
actuarial assumptions included (a) 4.5%investment rate of return, (b) 3.0% projected annual
salary increase, and (c) 2.5% inflation increases. The actuarial methods and assumptions used
include techniques that smooth the effects of short-term volatility in actuarial accrued liabilities
and the actuarial value of assets. Actuarial calculations reflect a long-term perspective and
actuarial valuations involve estimates of the value of reported amounts and assumptions about
the probability of events far into the future. Actuarially determined amounts are subject to
revision at least biannually as results are compared to past expectations and new estimates are
made about the future. The City's unfunded actuarial accrued liability is being amortized as a
level dollar amount using a 30-year (closed period) amortization period.
On September 12, 2011, the City amended the agreement with the Public Agency
Retirement Services (PARS) to include the longevity Recognition Program (OPEB program),
and Renaming the Existing Plan to the City of San Carlos PARS Supplementary Retirement
Plan. To complete this change and amend the Services Agreement with PARS, the City
transferred funds of $1,200,000 on September 12, 2011, to PARS and set up an irrevocable
trust to fund future benefit costs.
See “APPENDIX B - FISCAL YEAR 2013-14 COMPREHENSIVE ANNUAL FINANCIAL
REPORT– Note 11” for healthcare cots trend assumptions.
Funding Progress and Funded Status. Generally accepted accounting principles
permits contributions to be treated as OPEB assets and deducted from the Actuarial Accrued
Liability (“AAL”) when such contributions are placed in an irrevocable trust or equivalent
arrangement. In fiscal year 2014, the City made contribution in excess of the ARC and
amortized its net OPEB obligation as presented below (dollars in thousands):
Annual required contribution
Interest on net OPEB asset
Adjustment to annual required contribution
Annual OPEB cost
Contributions
Change in net OPEB obligation/(asset)
Net OPEB obligation – June 30, 2013
Net OPEB obligation/(asset) – June 30, 2014
Healthcare
$285,822
(7,546)
8,519
286,795
461,000
(174,205)
67,199
$(107,006)
Longevity
$620,227
49,191
(69,063)
600,355
311,000
289,355
1,093,137
$1,382,492
The City’s annual required contributions and actual contributions for the years ended
June 30 are set forth below (dollars in thousands):
Fiscal Year
Healthcare
6/30/2012
6/30/2013
6/30/2014
Longevity
6/30/2012
6/30/2013
6/30/2014
Annual OPEB
Costs (AOC)
Actual
Contribution
Percentage of
AOC Contributed
Net OPEB
Obligation
$367,514
414,101
286,795
--$461,000
0%
0
161
$(346,902)
67,199
(107,006)
487,300
499,704
600,355
1,225,722
175,000
311,000
252
35
52
768,433
1,093,137
1,382,492
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The Schedule of Funding Progress presents trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liability for benefits. Trend data from the January 1, 2009, 2011 and 2013 actuarial
study are presented below (dollars in thousands):
Actuarial
Valuation
Date
Healthcare
6/30/2009
6/30/2011
6/30/2013
Longevity
6/30/2009
6/30/2011
6/30/2013
Ending
Actuarial
Value of
Assets
Entry Age
Actuarial
Accrued
Liability
Over (Under)
Funded
Actuarial
Accrued
Liability
$1,629
1,140
1,073
$5,356
5,197
3,895
$(3,727)
(4,057)
(2,822)
-1,200
1,325
3,993
4,714
6,584
(3,993)
(3,514)
(5,259)
Funded Ratio
30.41%
21.94
27.55
0.00
25.46
20.12
Covered
Payroll
$8,974
5,863
4,751
6,380
5,863
4,751
Underfunded
Actuarial
Liability as %
of Covered
Payroll
(41.53)%
(69.20)
(59.40)
(62.59)
(59.94)
(110.69)
Redevelopment Agency Dissolution and Successor Agency Activities
In an effort to balance its budget, the State of California adopted ABx1 26 on June 28,
2011, amended by AB1484 on June 27, 2012, which suspended all new redevelopment
activities except for limited specified activities as of that date and dissolved redevelopment
agencies on January 31, 2012.
The suspension provisions prohibited all redevelopment agencies from a wide range of
activities, including incurring new indebtedness or obligations, entering into or modifying
agreements or contracts, acquiring or disposing of real property, taking actions to adopt or
amend redevelopment plans and other similar actions, except actions required by law or to carry
out existing enforceable obligations, as defined in ABx1 26. In addition, ABx1 26 and AB1484
direct the State Controller to review the activities of all redevelopment agencies and successor
agencies to determine whether an asset transfer between an agency and any public agency
occurred on or after January 1, 2011. If an asset transfer did occur and the public agency that
received the asset is not contractually committed to a third party for the expenditure or
encumbrance of the asset, the legislation purports to require the State Controller to order the
asset returned to the redevelopment agency. The State Controller’s Office has not yet
completed its asset transfer review.
Effective February 1, 2012, the City’s Redevelopment Agency (the “Redevelopment
Agency”) was dissolved. The City elected to become the Housing Successor. Certain assets of
the former Redevelopment Agency Low and Moderate Income Housing Fund were distributed to
the City as a Housing Successor. The activities of the Housing Successor are reported in the
Low and Moderate Income Housing Assets Special Revenue Fund as the City has control of
those assets, which may be used in accordance with the low and moderate income housing
provisions of California Redevelopment Law. The City also elected to become the Successor
Agency, and on January 31, 2012, the Redevelopment Agency’s remaining assets were
distributed to and liabilities were assumed by the Successor Agency (Successor Agency to the
Redevelopment Agency Private-Purpose Trust Fund). ABx1 26 requires the establishment of an
Oversight Board to oversee the activities of the Successor Agency and one was established on
March 19, 2012. The activities of the Successor Agency are subject to review and approval of
the Oversight Board, which is comprised of seven members, including one member of City
Council and one former Redevelopment Agency employee appointed by the Mayor.
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See “APPENDIX B - FISCAL YEAR 2013-14 COMPREHENSIVE ANNUAL FINANCIAL
REPORT– Note 18.”
Potential Financial Liability Arising from Redevelopment Activities
Pursuant to Section 34167.5 of the California Health and Safety Code, the State
Controller’s Office has recently reviewed all asset transfers made by the Redevelopment
Agency to the City after January 1, 2011. Such review has disallowed a transfer by the
Redevelopment Agency to the City of approximately $3,308,092 in repayment of a loan made
by the City to the Redevelopment Agency, and has ordered the City to repay such amount to
the Successor Agency. The City believes that such finding is not legally binding on the City,
and has determined to contest such finding. While the City cannot predict the ultimate outcome
of this matter, any resolution of the matter will not adversely affect the payment of debt service
on the Bonds from ad valorem property taxes levied by the County for that purpose.
Long-Term Debt
General Obligation Bonds. Other than the 2005 Bonds, which will be defeased and
redeemed with proceeds of the Refunding Bonds, the City has no outstanding general obligation
bonds.
ABAG Lease. On June 1, 2014, the City entered into a Lease Agreement with ABAG
Financing Authority for Nonprofit Corporations to finance its acquisition of real property in the
amount of $8,800,000. The land is recorded in the general fund as property held for resale. The
City intends to sell the property by the end of calendar year 2015, and prepay the Lease
Agreement at such time. If not prepaid, the term of the Lease Agreement extends until
December 2019. Interest is calculated at 3.62% to June 1, 2016 and thereafter is reset to a fixed
rate based on the three year LIBOR swap rate as of June 1, 2016, plus 3.0%.
ABAG Revenue Bonds. On December 11, 2007, the Association of Bay Area
Governments issued its 2007 Revenue Bonds, Series A and Series B, in order to purchase
certain tax allocation bonds of three redevelopment agencies, one of which was the
Redevelopment Agency. The Series A bonds were issued in the amount of $38,835,000
($12,875,000 of which was allocated to the Redevelopment Agency) and the Series B bonds
were issued in the amount of $16,590,000 ($3,135,000 of which was allocated to the
Redevelopment Agency) from the 2007 Revenue Bonds are secured by tax increment revenue
in each redevelopment area. The final maturity for the Redevelopment Agency is September 1,
2033, and the bonds allocated to the Redevelopment Agency are currently outstanding in the
amount of $13,315,000.
SVCW Bonds. Silicon Valley Clean Water (formerly South Bayside System Authority,
the “Authority”), of which the City is one of four participating members, issued its $10,000,000
2008 Wastewater Revenue Bonds ($1,510,000 of which was allocated to the City), $55,855,000
2009 Wastewater Revenue Bonds ($7,565,789.47 of which was allocated to the City) and
$60,000,000 2014 Wastewater Revenue Bonds ($10,032,026.50 of which was allocated to the
City). The City’s allocable share of the SVCW Bonds currently outstanding is $18,824,922.
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City Investment Policy
During the year, temporarily idle cash is invested in the Local Agency Investment Fund
or the San Mateo County Investment Pool. The City’s investment policy is to minimize credit and
market risks while maintaining a competitive yield on its portfolio.
Risk Management
Liability Coverage. The City participates in Association of Bay Area Governments
(ABAG) Plan Corporation, a nonprofit public benefit corporation established to provide liability
insurance coverage, claims and risk management and legal defense to its participating
members. The ABAG Plan provides $5,000,000 of general and automobile liability coverage per
occurrence $20,000,000 excess liability coverage per occurrence and is responsible for paying
claims in excess of the City's $100,000 deductible. For the year ended June 30, 2014, the City
paid ABAG Plan $403,059 in premiums.
Workers' Compensation Coverage. The City participates in the Cities Group, created
by a joint powers agreement to provide workers compensation coverage of up to $10,000,000
per occurrence in excess of $1,500,000 for safety officers and $1,000,000 for miscellaneous
employees. Cities Group acts as administrator, claim adjuster and provides other risk
management services as required by State law. Each member of Cities Group pays a premium
commensurate with the level of coverage requested and shares surpluses and deficits
proportionately to its participation in Cities Group. During the year ended June 30, 2014, the
City paid Cities Group $187,055 in premiums. At June 30, 2014, Cities Group reported that the
City's equity for Workers' Compensation program amounted to $230,308.
Liability for Uninsured Claims. The City's liability for uninsured claims at June 30,
2014, was estimated by management based on ABAG Plan's claims experience and recorded
in the Liability Insurance Internal Service Fund. For the years ended June 30, 2014 and 2013,
the amount of settlements did not exceed insurance coverage.
State Budget and its Impact on the City
General. In recent years, the State of California has faced significant financial and
budgetary stress, from which it began to recover in fiscal year 2012-13, experiencing budget
shortfalls in the billions of dollars each of the last several years. State revenues declined
significantly as a result of recent economic conditions and other factors.
2013-14 State Budget. On June 27, 2013, Governor Edmund G. Brown Jr. approved
the 2013-14 Budget Act, projecting $97.1 billion in general fund revenues and adopting a $96.3
billion spending plan, the first balanced budget in many years. Temporary revenues provided by
the passage of Proposition 30 and spending cuts in the past two years mean that the State’s
budget is projected to remain balanced for the foreseeable future. The 2013-14 State Budget
maintains a $1.1 billion reserve and pays down budgetary deficit, to be reduced from $35 billion
to $27 billion in 2013-14 and to below $5 billion by the end of 2016-17. The 2013-14 State
Budget overhauls the State’s system of K-12 education finance. The 2013-14 State Budget
adopts a new allocation formula, known as the Local Control Funding Formula, which moves
from a State-controlled system to a locally-controlled system.
The execution of the 2013-14 Budget Act may be affected by numerous factors,
including but not limited to: (i) shifts of costs from the federal government to the State, (ii)
A-20
national, State and international economic conditions, (ii) litigation risk associated with proposed
spending reductions, (iii) rising health care costs and (iv) other factors, all or any of which could
cause the revenue and spending projections made in the 2013-14 Budget Act to be
unattainable. While the State is not a significant source of City revenues, and the City does not
anticipate that the State’s financial condition will materially adversely affect the financial
condition of the City, there can be no assurances that any of the State’s current financial
pressures, the 2013-14 Budget Act, or future State budgets will not adversely affect the City.
Additionally, the City cannot predict the accuracy of any projections made in the 2013-14
Budget Act. To the extent that the 2013-14 Budget Act or future State budget processes results
in reduced revenues to the City, the City will be required to make adjustments to the General
Fund budget. Decrease in State revenues may have an adverse impact on the City’s ability to
repay the Refunding Bonds.
2014-15 State Budget. On June 20, 2014, Governor Brown approved the 2014-15
Budget Act (the “2014-15 Budget”), projecting $108 billion in general fund revenues, which is
$7.3 million more in general fund revenues than in fiscal year 2013-14. The 2014-15 Budget is
balanced and projects paying down more than $10 billion in unprecedented amounts of
budgetary debt from past years, including paying down deferral of payments to schools by $5
billion, paying off Economic Recovery Bonds, repaying various special fund loans, and funding
$100 million in mandate claims that have been owed to local governments since 2004. The
budgetary deficit is projected to be reduced to below $5 billion by the end of 2016-17. The fiscal
year begins with a 2014-15 State Budget reserve of $2 billion dollars, including $1.6 billion in the
State’s Budget Stabilization Account, also known as the State’s rainy day fund. Temporary
revenues provided by the passage of Proposition 30 (Sales and Income Tax Revenue Increase
approved by State voters at an election held on November 8, 2011) and spending cuts have
allowed for continued economic growth in the State. The 2014-15 State Budget also contains
triggers allowing for additional spending, if various revenue benchmarks are exceeded. If
revenues surpass certain estimates, then the Budget calls for more funds to be applied to higher
education and to pay down debt. Certain highlights of the 2014-15 Budget are described below.
The 2014-15 State Budget included a proposed constitutional amendment which was
approved by State voters in November, 2014. The measure alters the State’s existing
requirements for the Budget Stabilization Account, the State’s existing rainy day account and
will:

Require deposits into the Rainy Day Fund whenever capital gains
revenues rise to more than 8% of general fund tax revenues, and would
set the maximum size of the Rainy Day Fund at 10% of State general
fund revenues.

Require half of each year’s deposit for the next 15 years be used for
supplemental payments of debt or other long-term liabilities.

Allow for withdrawal of funds only for a disaster or if spending remains at
or below the highest level of spending from the past three years. The
maximum amount that could be withdrawn in the first year of a recession
would be limited to half of the Rainy Day Fund’s balance.

Require that the State provide a multiyear budget forecast to better
manage the State’s long-term finances.
A-21

Create a Proposition 98 reserve, known as the Public School System
Stabilization Account, where spikes in funding will be saved for future
years. This is intended to smooth school spending and minimize future
cuts to education funding.
Higher Education and Healthcare. The 2014-15 State Budget includes total funding of
$26.2 billion ($14.7 billion General Fund and local property tax and $11.5 billion other funds). It
also provides for up to a 20 percent increase in General Fund appropriations over a four-year
period. The 2014-15 Budget includes a 5 percent increase in 2014-15 for each university
system, which equals $284 million total. Regarding healthcare, the state’s adoption of the
optional expansion of Medi-Cal under federal law known as the Affordable Care Act created
major new spending commitments. The 2014-15 Budget assumes an additional Medi-Cal
caseload of 2.5 million individuals and a rise in costs of $2.4 billion over fiscal year 2012-13.
Emergency Drought Response. On January 17, 2014, Governor Brown proclaimed a
state of emergency due to the severe drought conditions faced by the state. Legislation was
enacted in February which provided $687.4 million to support drought relief. The 2014-15
Budget includes additional one-time resources to continue immediate drought-related efforts
started in 2014, such as an increase of $53.8 million General Fund and $12.2 million other
funds for firefighting efforts, and an increase of $18.1 million General Fund to aid in assessing
water conditions and provide public outreach regarding water conservation.
Numerous Factors Affecting Budget and Projections. The execution of the 2014-15
State Budget may be affected by numerous factors, including but not limited to: (i) shifts of costs
from the federal government to the State, (ii) national, State and international economic
conditions, (iii) litigation risk associated with spending reductions, including the elimination of
redevelopment agencies, (iv) rising health care costs (v) large unfunded liabilities for retired
State employee’s pensions and healthcare, (vi) deferred maintenance of State’s critical
infrastructure and (vii) other factors, all or any of which could cause the revenue and spending
projections made in 2014-15 State Budget to be unattainable. The City cannot predict the
impact that the 2014-15 State Budget, or subsequent budgets, will have on its own finances and
operations. Additionally, the City cannot predict the accuracy of any projections made in the
State’s 2014-15 State Budget.
The complete 2014-15 State Budget is available from the California Department of
Finance website at www.dof.ca.gov. The City can take no responsibility for the continued
accuracy of this internet address or for the accuracy, completeness or timeliness of information
posted there, and such information is not incorporated in this Official Statement by such
reference. The information referred to above should not be relied upon in making an investment
decision with respect to the Refunding Bonds.
2015-16 Proposed State Budget. On January 9, 2015, Governor Brown presented his
proposed budget for the 2015-16 Fiscal Year (the “2015-16 Proposed State Budget”). The
2015-16 Proposed State Budget proposes a multiyear plan that is balanced, maintains a $3.4
billion reserve, and pays down budgetary debt from past years. Under the 2015-16 Proposed
State Budget, funding levels for K-12 education will increase by $4 billion and funding levels for
workforce education and training will increase by $876 million. Funding is also increased for the
University of California and California State University higher education systems. The 2015-16
Proposed State Budget includes a $115 million allocation from the State’s General Fund to
A-22
address the drought, and addresses deferred maintenance issues with $500 million from the
State’s General Fund.
The complete 2015-16 Proposed State Budget is available from the California
Department of Finance website at www.dof.ca.gov. The City can take no responsibility for the
continued accuracy of this internet address or for the accuracy, completeness or timeliness of
information posted there, and such information is not incorporated in this Official Statement by
such reference. The information referred to above should not be relied upon in making an
investment decision with respect to the Refunding Bonds.
The execution of 2015-16 Proposed State Budget may be affected by numerous factors,
including but not limited to: (i) shifts of costs from the federal government to the State, (ii)
national, State and international economic conditions, (ii) litigation risk associated with proposed
spending reductions, (iii) rising health care costs and (iv) other factors, all or any of which could
cause the revenue and spending projections made in the 2015-16 Proposed State Budget to be
unattainable. The City cannot predict the impact that the 2015-16 Proposed State Budget, or
subsequent budgets, will have on its own finances and operations. Additionally, the City cannot
predict the accuracy of any projections made in the 2015-16 Proposed State Budget.
A-23
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APPENDIX B
FISCAL YEAR 2013-14 COMPREHENSIVE ANNUAL FINANCIAL REPORT
B-1
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CITY OF SAN CARLOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2014
PREPARED BY
CITY OF SAN CARLOS FINANCE DIVISION
CITY OF SAN CARLOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
TABLE OF CONTENTS
Page
Number
INTRODUCTORY SECTION
Letter of Transmittal ............................................................................................................................... i
List of Principal Officials ....................................................................................................................... vii
The Citizens of the City of San Carlos ................................................................................................ viii
Administrative Services Department .................................................................................................... ix
Certificate of Achievement for Excellence in Financial Reporting (GFOA) ........................................... x
FINANCIAL SECTION
INDEPENDENT AUDITORS' REPORT ................................................................................................ 1
MANAGEMENT'S DISCUSSION AND ANALYSIS .............................................................................. 5
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Position ...................................................................................................... 21
Statement of Activities............................................................................................................ 22
Fund Financial Statements:
Balance Sheet - Governmental Funds ................................................................................... 27
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position ............................................................................................ 28
Statement of Revenues, Expenditures and Changes in Fund
Balances - Governmental Funds ........................................................................................... 29
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities............................................................................................................ 31
Budgetary Comparison Statement by Department – General Fund ...................................... 32
Statement of Net Position - Proprietary Funds ...................................................................... 37
Statement of Revenues, Expenses and Changes in Fund
Net Position - Proprietary Funds ............................................................................................ 38
Statement of Cash Flows - Proprietary Funds ....................................................................... 39
Statement of Fiduciary Net Position - Fiduciary Funds .......................................................... 42
Statement of Changes in Fiduciary Net Position - Fiduciary Funds ...................................... 43
Notes to Financial Statements...................................................................................................... 45
CITY OF SAN CARLOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
TABLE OF CONTENTS
Page
Number
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Combining Balance Sheet - Nonmajor Governmental Funds ...................................................... 82
Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Nonmajor Governmental Funds .................................................................... 84
Budgetary Comparison Schedules (Budgetary Basis) –
Special Revenue Funds:
NPDES ............................................................................................................................ 86
Police Grants ................................................................................................................... 87
San Carlos Library Tenant............................................................................................... 88
Capital Project Funds:
Capital Improvement ....................................................................................................... 89
Housing............................................................................................................................ 90
Equipment Replacement ................................................................................................. 91
Measure A ....................................................................................................................... 92
Gas Tax ........................................................................................................................... 93
Park Fee .......................................................................................................................... 94
Parking In-Lieu ................................................................................................................ 95
Debt Service Funds:
San Carlos Library Bonds................................................................................................ 96
Combining Statement of Net Position – Internal Service Funds .................................................. 99
Combining Statement of Revenues, Expenses and
Changes in Net Position – Internal Service Funds ..................................................................... 100
Combining Statement of Cash Flows – Internal Service Funds ................................................. 101
Combining Statement of Net Position – All Agency Funds ........................................................ 104
Combining Statement of Changes in Assets and
Liabilities – All Agency Funds ..................................................................................................... 105
CITY OF SAN CARLOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
TABLE OF CONTENTS
Page
Number
STATISTICAL SECTION
Net Position by Component – Last Ten Fiscal Years .......................................................... 108
Changes in Net Position– Last Ten Fiscal Years ................................................................ 110
Fund Balances of Governmental Funds – Last Ten Fiscal Years ....................................... 112
Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years .......................................................................................................... 114
Assessed and Estimated Actual Value of Taxable Property –
Last Ten Fiscal Years .......................................................................................................... 116
Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ................................. 117
Top Ten Property Tax Payers- Current Year and Ten Years Ago ....................................... 118
Property Tax Levies and Collections – Last Ten Fiscal Years ............................................ 119
Ratio of Outstanding Debt by Type – Last Ten Fiscal Years ............................................... 120
Ratio of General Bonded Debt Outstanding – Last Ten Fiscal Years ................................. 121
Pledged-Revenue Coverage – Last Four Fiscal Years ....................................................... 122
Computation of Direct and Overlapping Debt ...................................................................... 123
Computation of Legal Bonded Debt Margin ........................................................................ 124
Demographic and Economic Statistics – Last Ten Fiscal Years ......................................... 125
Principal Employers ............................................................................................................. 126
Full-Time Equivalent City Government Employees by Function.......................................... 127
Operating Indicators by Function/Program – Last Ten Fiscal Years ................................... 128
Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ............................... 129
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CITY OF SAN CARLOS
CITY COUNCIL
ADMINISTRATIVE SERVICES DEPT
MARK OLBERT, MAYOR
RON COLLINS, VICE MAYOR
ROBERT GRASSILLI
MATTHEW GROCOTT
CAMERON JOHNSON
600 ELM STREET
SAN CARLOS, CALIFORNIA 94070-1309
Email: [email protected]
TELEPHONE (650) 802-4213
FAX (650) 595-6767
November 12, 2014
To the Members of the City Council and Citizens of the City of San Carlos:
It is the policy of the City of San Carlos to annually publish a complete set of financial
statements presented in conformity with generally accepted accounting principles (GAAP) and
audited in accordance with generally accepted auditing standards by an independent firm of
certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive
annual financial statements of the City of San Carlos (“the City”) for the fiscal year ended June
30, 2014.
This report consists of management’s representations concerning the finances of the City.
Consequently, management assumes full responsibility for the completeness and reliability of all
the information presented in this report. To provide a reasonable basis for making these
representations, management of the City has established a comprehensive internal control
framework that is designed both to protect the City’s assets from loss, theft, or misuse and to
compile sufficiently reliable information for the preparation of the City’s financial statements in
conformity with the 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. As management, we assert that, to
the best of our knowledge and belief, this financial report is complete and reliable in all material
respects.
The City’s financial statements have been audited by Lance Soll & Lunghard, LLP, a firm of
certified public accountants. The goal of the independent audit is 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
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 unmodified opinion that the City’s
financial statements for the fiscal year ended June 30, 2014, were fairly presented in conformity
with generally accepted accounting principles. The independent auditor’s report is presented as
the first component of the financial section of this report.
i
Fiscal Year 2014 Transmittal Letter
November 12, 2014
GAAP require 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.
Profile of the Government
The City, incorporated in 1925, is located in the San Francisco Bay Area region of the State of
California, which is considered to be one of the most expensive areas of the State and country in
which to live. The area also is renowned worldwide for technological innovation as home to
Silicon Valley. The City currently occupies a land area of six square miles and serves a
population of approximately 29,200. The City is a General Law city, and empowered to levy a
transient occupancy tax on hotel/motel stays and a business registration fee on for-profit
businesses within its boundaries. It also is empowered by state statute to extend its corporate
limits by annexation, which occurs periodically when deemed appropriate by the City Council.
The City has operated under the council-manager form of government since 1925. Policymaking and legislative authority are vested in a City Council consisting of the Mayor, selected
by the Council, and four other Council Members. The City Council is responsible for, among
other things, passing ordinances, adopting the budget, appointing advisory
commissions/committees, and hiring both the City Manager and City Attorney. The City
Manager is responsible for carrying out the policies and ordinances of the City Council, for
overseeing the day-to-day operations of the City, and for appointing the heads of the various
departments. The City Council is elected on a non-partisan, at large basis. Council Members
serve four-year staggered terms, with two or three Council Members elected every two years.
The Mayor and Vice-mayor are selected from among the five Council Members to serve oneyear terms.
The City provides a full range of services, including police and fire; the construction and
maintenance of highways, streets and other infrastructure; and recreational activities and cultural
events.
Budget Process
The biennial budget serves as the foundation for the City’s financial planning and control. Twice
a year, the City Council participates in a Strategic Planning Session with the Executive
Management staff. The FY 13-14 sessions resulted in the review of the City’s three-year goals
and the creation of numerous accompanying six-month implementation objectives. The sixmonth objectives are included in the budget process.
All departments of the City are required to submit requests for appropriation to the City Manager
each spring. The City Manager uses these requests to develop a proposed budget. The City
Manager then presents this proposed budget to the Council for review prior to the end of May.
ii
Fiscal Year 2014 Transmittal Letter
November 12, 2014
The Council holds a public hearing on the proposed budget and adopts a final budget by the end
of June, the close of the City’s fiscal year. The appropriated budget is prepared by fund,
function/program (e.g., public safety), and department (e.g., Community Development).
Department heads may make transfers of appropriations within a department. Transfers of
appropriations between departments, but within the same fund, can be approved administratively
(by the Administrative Services Director or City Manager). Transfers between funds require the
approval of the City Council. Budget-to-actual comparisons are presented in the supplementary
section of the accompanying financial statements for each individual governmental fund for
which an appropriated annual budget has been adopted.
During the last biennial budget cycle, the City established a two-year program-based operating
budget, maintained the existing line-item department budgets and developed a new format for the
five-year capital budget. During the FY14-16 biennial budget cycle, the City expanded the
details of each department to represent the financial data by program and identified performance
measures. During the next biennial budget cycle and the final phase in our transition, the City
will expand the performance measures by program to reflect future objectives as compared to
prior performance.
Economic Condition and Outlook
The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment of which the City operates.
Local economy
The unemployment rate in San Mateo County has fallen from 5.4% in 2013 to 4.2% in 2014.
The San Carlos unemployment rate has dropped from 3.6% to 2.8%. This compares with an
unemployment rate of 7.3% for California and 6.3% for the nation during the same period. As of
June 2014, there were an estimated 388,100 jobs in the County, an increase of 9,800 jobs from a
year earlier. According to the California Employment Development Department, the total
number of jobs located in the West Bay counties of Marin, San Francisco, and San Mateo
expanded by 11,400 to total 1,037,000 between June 2013 and June 2014.
The National Association of Realtors released a report that shows the national median existing
home price of $223,300 in June 2014. This number reflects an increase of 4.2% from June 2013.
However, the median sales price of existing homes in San Carlos is $1,250,000, a 5.7% increase
from the same period a year ago.
In November 2012, California voters passed Proposition 30. This measure raises the state sales
tax by a quarter-cent for four years and increases income tax rates for individuals who earn more
than $250,000 a year for seven years. Passage of the measure is said to have offset the need to
make $6 billion per year in cuts in the State budget. The passage of Proposition 30, coupled with
growth in the State economy, has enabled the Governor and the State Legislature to predict a
balanced budget and a record surplus at the State level for the upcoming 2014-15 fiscal year.
iii
Fiscal Year 2014 Transmittal Letter
November 12, 2014
This has lessened the likelihood of looking to the local agencies’ revenue sources to balance the
State budget. However, there are still problems ahead with the State budget. The Governor has
talked about the need to be conservative in State spending as plans are made to pay off some of
the State’s bonded debt. There is also the need for the State to increase payments into the
teacher’s “STRS” pension system. The shortfall in State payments is somewhere between $4.5
and $6 billion per year. These challenges suggest that the State may yet be looking for additional
revenues to address its budget in the years ahead.
Sales Tax
Sales tax is a critical general fund revenue as it accounts for approximately 20% of total general
fund revenues. Local general sales tax in FY 2014 was $6.55 million, a 14.7% increase as
compared to FY 2013, reflecting a stable economic growth and an expanded sales tax base from
a new State mandate requiring certain out-of-state internet retailers to collect sales tax. Based on
the latest sales tax data, sales tax growth will be higher in the coming year than the prior year.
Receipts from building and construction categories show solid gains, reflecting the increase in
new construction and remodeling activity. Other categories, such as restaurants and office
furniture are also projected to have modest growth. The increase in the countywide use tax
allocation also contributes to higher sales tax revenues.
Property Tax
Property tax projections for FY 2015 include a 2% increase in revenue based on the annual
inflationary factor on the property tax assessment rolls in January 2014. According to the
information from our independent third-party consultant, while the median existing home prices
have increased, the inventory of homes available for sale remains tight, keeping the growth at
moderate level. The gross assessed values of properties in the City of San Carlos have increased
by 3.8% in 2014 as compared to the 5.6% increase countywide. The annual median single
family residential sales price in 2014 was 5.7% higher than the 2013 median price.
Long-term Financial Planning and Major Initiatives
Long-term financial planning
The City Council and City management continue to emphasize “structural balance” in the City’s
financial planning. The City has established economic reserves to meet future opportunities and
unexpected changes. The City has structurally aligned its revenues and expenditures to provide
for a sustainable financial balance. To that end, the City has taken the following steps over the
years:
•
•
•
Budget revenues conservatively and expenditures at full cost;
Maintain the condition of City facilities and infrastructure in order to optimize the use, as
well as minimize future repair/replacement costs;
Maintain a highly motivated, talented and well trained workforce to serve the needs of
the community;
iv
Fiscal Year 2014 Transmittal Letter
November 12, 2014
•
•
•
Retain municipal ownership of commercial properties and utilize ground leases to
diversify the City’s revenue stream;
Secure outside funding and/or low-cost debt financing, and set aside City resources to
pay for capital improvement projects; and
Limit the growth of on-going expenses for City services to a financially sustainable level.
Major events and initiatives
Highlights of the City’s major events and initiatives that were completed or in progress as of
June 30, 2014 or soon after the year-end are as follows:
•
In June 2014, the City finalized the purchase of three parcels for approximately $14
million with the intent to consolidate the properties and sell the land to a hotel developer
within two years. During the economic downturn in the past several years, very few
hotel rooms were added to the market. Private developers across the state are struggling
to maintain pace with demand for room nights. The City has identified increasing
transient occupancy tax (TOT) revenues as an obvious opportunity. It is estimated that
the development of regional-serving hotel will bring the City approximately $1 million in
TOT per year.
•
The City has received clearance from the State Department of Finance to proceed with
the development of Wheeler Plaza. The development includes 108 new housing units,
new commercial space along San Carlos Avenue and a new parking structure with an
increase of 50 public parking spaces for the downtown. Next steps include preparation of
final design and the planning and building permit process.
•
Phase I of the Sewer Capacity Assurance Plan (CAP) was completed at the end of June.
The project upsized various sewer pipelines and replaced/rehabilitated 26 sanitary sewer
manholes along Brittan Avenue and Arroyo Avenue. The project provided a better and
more reliable sewer system. The next priority in the CAP is the Industrial Road Parallel
Sanitary Sewer Project. This project will improve approximately 5,500 feet of sanitary
sewer pipe from Skyway Road, crosses under U.S. Hwy 101, moves south along
Industrial Road to Brittan Avenue. This project is designed to decrease potential
overflows during storms and construction is expected to complete by April 2016.
•
The Crestview Park Renovation project is finally underway after two years of design
reviews and careful consideration of public input. This project incorporates many ideas
and suggestions from the community and is expected to be completed in fall 2014.
•
The Eastside Connect Project is currently underway. This project includes installation of
new sidewalks and streetlights, widening existing sidewalks, planting new trees, and
bicycle improvements on East San Carlos Avenues for the entire length of Old County
Road. This project is also expected to be completed in fall 2014.
v
vi
City of San Carlos
Directory of Officials
June 30, 2014
CITY COUNCIL
Mark Olbert, Mayor
Ron Collins, Vice Mayor
Cameron Johnson, Councilmember
Bob Grassilli, Councilmember
Matthew Grocott, Councilmember
CITY CLERK
Crystal Mui, City Clerk/Community Relations Director
CITY TREASURER
Michael J. Galvin, City Treasurer
ADMINISTRATION
Jeff Maltbie, City Manager
Gregory J. Rubens, City Attorney
Greg Rothaus, Police Chief
Rebecca Mendenhall, Administrative Services Director
Christine Boland, Parks & Recreation Director
Jay Walter, Public Works Director
Al Savay, Community Development Director
Jim Skinner, Fire Chief
xii
vii
The Citizens of the City of San Carlos
City Treasurer
(Elected)
City Council
City Attorney
Fire
City Manager
City Clerk
Police Bureau
Administrative
Services
Department
Community
Development
Department
Parks and
Recreation
Department
Public Works
Department
Recreation
Maintenance
Finance
Planning
Human
Resources
Building
Engineering
Information
Technology
Economic
Development
& Housing
Traffic Control
Risk
Management
Mechanic
Parks &
Buildings
Maintenance
viii
Administrative Services
Department
Administrative
Services Director
Sr.
Management
Analyst
Administrative
Assistant
Financial Services
Manager
Human Resources
Manager
Senior
Accountant
Human
Resources
Management
Analyst
Senior
Accountant
Account
Tech II
Account
Tech II
ix
Information
Technology
Manager
Sr. Systems
Analyst
Systems
Analyst
x
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
City of San Carlos, California
Report on Financial Statements
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 City of San Carlos,
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 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 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.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from 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 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.
To the Honorable Mayor and Members of the City Council
City of San Carlos, California
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 Carlos, California, as of June 30, 2014,
and the respective changes in financial position and, where applicable, cash flows thereof and the
respective budgetary comparison for the General Fund for the year then ended in accordance with
accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management’s
discussion and analysis 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 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, combining and individual
nonmajor fund financial statements schedules, and statistical section are presented for purposes of
additional analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements and schedules are the responsibility of
management and were 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 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
To the Ho
onorable Mayo
or and Memb
bers of the Citty Council
City of Sa
an Carlos, California
Other Reporting Requ
uired by Gov
vernment Auditing Sta
andards
In accord
dance with Governmentt Auditing Standards, we have a
also issued our report dated
Novembe
er 12, 2014, on
o our conside
eration of the City’s interna
al control ove
er financial re
eporting and o
on our
tests of its
s compliance
e with certain provisions off laws, regula
ations, contra
acts, and gran
nt agreementts and
other mattters. The pu
urpose of thatt report is to describe the scope of ourr testing of in
nternal contro
ol over
financial reporting
r
and compliance and
a the resultts of that testiing, and not tto provide an opinion on in
nternal
control ov
ver financial reporting or on compliance
e. That reporrt is an integrral part of an audit perform
med in
accordanc
ce with Gove
ernment Aud
diting Standards in conssidering City’ss internal con
ntrol over financial
reporting and complian
nce.
Brea, California
Novembe
er 12, 2014
3
THIS PAGE INTENTIONALLY LEFT BLANK
4
MANAGEMENT’S DISCUSSION AND ANALYSIS
This section of the City’s Comprehensive Annual Financial Report presents an overview and
analysis of the City’s financial activities for the fiscal year ended June 30, 2014. We encourage
readers to consider the information presented here in conjunction with the accompanying
transmittal letter and basic financial statements.
FINANCIAL HIGHLIGHTS
•
The City’s total net position increased by $22 million or 11.6%, primarily from the capital
lease financing for the Landmark site acquisition, higher property tax and sales tax
revenues, sewer rate increases, and the reporting restatement in the Sewer Fund for the
change of reporting investment in Silicon Valley Clean Water (SVCW) joint venture.
•
The total expenses for governmental programs increased by $4.6 million or 14.9% over the
prior year mainly due to an increase in capital project related expenses. The total revenues
for governmental programs increased by $7.1 million or 19.1%.
•
In the business-type activities, the revenues exceeded expenses by $4.3 million in the
current fiscal year, which is $2.4 million higher than the prior year as a result of rate
increases.
•
At the close of the fiscal year, the City’s governmental funds reported a combined ending
fund balance of $56.5 million, an increase of $12.3 million or 27.8% in comparison with the
prior year. Approximately $3 million of this amount is classified as unassigned fund balance
in the General Fund.
OVERVIEW OF THE FINANCIAL STATEMENTS
The annual report consists of four parts – management’s discussion and analysis (this section), the
basic financial statements, required supplementary information, and an optional section that
presents combining statements for non-major governmental funds and internal service funds. The
basic financial statements include two kinds of statements that present different views of the City:
•
The first two statements are government-wide financial statements that provide both long-term
and short-term information about the City’s overall financial status.
•
The remaining statements are fund financial statements that focus on individual parts of the City
government, reporting the City’s operations in more detail than the government-wide
statements.
o
The governmental funds statements tell how general government services like public
safety were financed in the short term as well as what remains for future spending.
o
Proprietary fund statements offer short- and long-term financial information about the
activities the government operates like businesses, such as the sewer system.
o
Fiduciary fund statements provide information about fiduciary relationships – like the
agency funds of the City – in which the City acts solely as agent or trustee for the benefit
of others, to whom the resources in question belong.
5
MANAGEMENT’S DISCUSSION AND ANALYSIS
The financial statements also include notes that explain some of the information in the financial
statements and provide more detailed data. The statements are followed by a section of required
supplementary information that provides additional financial and budgetary information.
Figure A-1 summarizes the major features of the City’s financial statements, including the portion of
the City government they cover and the types of information they contain. The remainder of this
overview section of management’s discussion and analysis explains the structure and contents of
each of the statements.
Figure A-1
City of San Carlos Comprehensive Annual Financial Report (CAFR)
Comprehensive Annual Financial Report (CAFR)
Introductory
Section
Introductory Sections
Management's Discussion and Analysis
Government-wide
Financial Statements
Fund Financial Statements
Governmental Funds
Proprietary Funds
Balance Sheet
Statement of Net Position
Reconciliation of the
Governmental
Funds Balance Sheet
Statement of Revenue,
Expenses and changes
in Fund Net Position
Statement of Revenues,
Expenditures
and Changes in Fund Balance
Statement of Cash Flows
Statement of Net
Position
Financial
Section
Statement of
Activities
Reconciliation of the Net
Changes in Fund Balances
Fiduciary Funds
Statement of
Fiduciary Net Postion
Statement of
Changes in
Fiduciary Net Position
NOTES TO THE FINANCIAL STATEMENTS
INFORMATION ON INDIVIDUAL NON-MAJOR FUNDS AND OTHER SUPPLEMENTARY INFORMATION
Statistical
Section
STATISTICAL SECTION
Reporting the City as a Whole
The accompanying government-wide financial statements include two statements that present
financial data for the City as a whole. One of the most important questions asked about the City’s
finances is, “Is the City, as a whole, better off or worse off as a result of the year’s activities?” The
Statement of Net Position and the Statement of Activities report information about the City as a
whole and about its activities in a way that helps answer this question. These statements include all
assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by
most private-sector companies. All of the current year’s revenues and expenses are taken into
account regardless of when cash is received or paid.
These two statements report the City’s net position and changes in them. You can think of the City’s
net position – the difference between assets, deferred outflows of resources, liabilities and deferred
inflows of resources –as one way to measure the City’s financial health, or financial position. Over
time, increases and decreases in the City’s net position are one indicator of whether its financial
health is improving or deteriorating. You will need to consider other non-financial factors, however,
such as changes in the City’s property tax base and the condition of the City’s roads, to assess the
overall health of the City.
6
MANAGEMENT’S DISCUSSION AND ANALYSIS
In the Statement of Net Position and the Statement of Activities, we divide the City services into two
kinds of activities:
•
Governmental activities – Most of the City’s basic services are reported here. Sales taxes,
property taxes, state subventions, and other revenues finance most of these activities.
•
Business-type activities – The City charges a fee to customers to help it cover all or most of the
cost of the services accounted for in these funds.
Reporting the City’s Most Significant Funds
The fund financial statements provide detailed information about the City’s most significant
funds – not the City as a whole. Some funds are required to be established by State law or by bond
covenants. However, City Council establishes many other funds to help it control and manage
money for particular purposes or to show that it is meeting administrative responsibilities for using
certain taxes, grants, or other money. The City’s two kinds of funds – governmental and proprietary
– use different accounting approaches.
•
Governmental funds – Most of the City’s basic services are reported in governmental funds,
which focus on how money flows into and out of those funds and the balances left at year-end
that are available for spending. These funds are reported using an accounting method called
modified accrual accounting, which measures cash and all other current financial assets that can
readily be converted to cash. The governmental fund statements provide a detailed short-term
view of the City’s general government operations and the basic services it provides.
Governmental fund information helps you determine whether there are more or fewer financial
resources that can be spent in the near future to finance the City’s programs. We describe the
relationship or differences between governmental activities (reported in the Statement of Net
Position and the Statement of Activities) and governmental funds in the reconciliation at the
bottom of the fund financial statements.
•
Proprietary funds – When the City charges customers for the services it provides – whether to
outside customers or to other units of the City – these services are generally reported in
proprietary funds. Proprietary funds are reported in the same way that all activities are
reported in the Statement of Net Position and the Statement of Activities. In fact, the City’s
enterprise funds (a component of proprietary funds) are the same as the business-type
activities reported in the government-wide statements but provide more detail and additional
information, such as cash flows, for proprietary funds. We use internal service funds (the other
component of proprietary funds) to report activities that provide supplies and services for the
City’s other programs and activities.
Reporting the City’s Fiduciary Responsibilities
The City is an agent for certain assets held for, and under the control of, other organizations and
individuals. All of the City’s fiduciary activities are reported in a separate Statement of Fiduciary
Net Position. We exclude these activities from the City’s other financial statements because the City
cannot use these assets to finance its operations. The City is responsible for ensuring that the assets
reported in these funds are used for their intended purposes. Agency Funds include: the Pulgas
Drainage Assessment District Special Tax Bonds; the City/County Association of Governments; and
the South Bayside Waste Management Authority (SBWMA). Private Purpose Trust Fund is used to
report resources held in trust for the Successor Agency of the former RDA.
7
MANAGEMENT’S DISCUSSION AND ANALYSIS
Government-Wide Statement Summaries
Net position may over time serve as a useful indicator of a City’s financial position. The City’s assets
exceeded liabilities by $210.9 million at June 30, 2014.
Net Position
Table 1 below reflects the City’s net position as of June 30, 2013 and June 30, 2014:
Table 1
City’s Comparative Statement of Net Position
June 30, 2013 and 2014
(Amounts in Millions)
Governmental
Activities
2013
Current and other assets
Capital assets, net of depreciation
Total Assets
$
55.3
125.9
$ 181.2
2014
2013
$
68.7
130.9
$ 199.6
$
$
9.4
0.5
9.9
2014
$
2013
$
63.4
148.6
$ 212.0
Total
% Change
2014
$
19.9
14.8
34.7
$
88.6
145.7
$ 234.3
39.7%
-2.0%
10.5%
$
0.8
0.8
16.1
7.0
$ 23.1
$
15.2
8.2
23.4
-5.6%
17.1%
1.3%
$ 119.2
8.9
39.9
$ 124.5
9.8
42.7
$
13.3
7.6
$
14.8
19.1
$ 132.5
8.9
47.5
$ 139.3
9.8
61.8
5.1%
10.1%
30.1%
Total Net Position
$ 168.0
$ 177.0
$
20.9
$
33.9
$ 188.9
$ 210.9
11.6%
$
15.2
7.4
22.6
$
8.1
22.7
30.8
All
Government
Long-term debt outstanding
Other liabilities
Total Liabilities
Net Position:
Invested in capital assetsnet of related debt
Restricted
Unrestricted
$
6.7
6.5
13.2
Business - Type
Activities
The largest portion of the net position (66%) reflects the City’s $139.3 million investment in capital
assets less any capital-related outstanding debt. Capital assets are the aggregated value of land,
buildings and improvements that are used to provide services. Their value is reported net of
related debt because the funds to repay the debt come from other sources. The City’s capital assets
cannot be sold and used to liquidate liabilities. This portion increased by $6.8 million or 5.1% from
prior year mainly because of the addition in capital assets associated with the construction projects
that were underway. The adjustments in participation rights and the long-term debt under the
Business-type activities resulted from a change in the way the City reports its investment in the
SVCW joint venture.
Another portion of the City’s net position is subject to external restrictions, such as debt covenants,
grantor’s stipulations, or enabling legislation, on how they may be used. As of June 30, 2014, the
restricted assets were 4.6% or $9.8 million of the total net position. Of this amount, $4.6 million is
restricted for low and moderate income housing, $2.7 million for capital projects such as street
repair and maintenance, and $2 million for debt services. The remaining amount relates to Police
grant and the Park In-Lieu fees. The unrestricted net position of $61.8 million represents the
remaining balance of the net position. Included in this portion of the net position are the property
held for resale ($14 million) under the governmental activities and the investment in the SVCW
joint venture ($9.1 million) under the business-type activities; neither of which are readily available
8
MANAGEMENT’S DISCUSSION AND ANALYSIS
for day-to-day operational spending. The remaining portion of the unrestricted net position may be
used to meet the government’s ongoing and unexpected expenses, including sewer expenses,
facility and infrastructure improvements, pension related liabilities, property acquisition, and
emergency repairs and replacement.
At the end of the current 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.
Statement of Activities and Changes in Net Position
The City’s net position increased by $13.3 million during the current fiscal year as indicated in the
Statement of Activities and Changes in Net Position (see Table 2 below).
Table 2
Statement of Activities and Changes in Net Position
June 30, 2013 and 2014
(Amounts in Millions)
Governmental
Activities
2013
Program Revenues:
Charges for Services
Operating Grants & Contributions
Capital Grants & Contributions
General Revenues:
Property Taxes
Other Taxes
Other General Revenues
Total Revenues
Program Expenses:
General Government
Community Development
Public Safety
Public Works
Parks & Recreation
Sewer Operations
Interest Expenses
Total Expenses
Inc/(Dec) in Net Position
before transfers
Transfers
Change in Net Position
Beginning Net Position
Restatement of Net Position
Ending Net Position
$
$
$
$
$
$
All
Government
Business-Type
Activities
2014
2013
6.3 $
1.6
1.1
7.6
1.9
5.0
$
11.2
10.8
6.2
37.2 $
12.9
11.9
5.0
44.3
6.5 $
2.7
14.6
2.7
4.1
0.3
30.9 $
5.3
3.0
15.6
8.3
3.0
0.3
35.5
$
6.3 $
0.5
6.8 $
8.8
0.2
9.0
$
$
$
$
$ 161.2 $ 168.0
$ 168.0 $ 177.0
$
$
9
2014
2013
10.0 $
0.2
-
12.7
-
$
10.2
$
0.1
12.8
$
7.8
7.8 $
8.3
8.3
$
2.4 $
(0.5)
1.9 $
4.5
(0.2)
4.3
$
$
19.0 $
20.9 $
20.9
8.7
33.9
% change
2014
16.3 $
1.8
1.1
20.3
1.9
5.0
24.5%
5.6%
354.5%
11.2
10.8
6.2
47.4 $
12.9
11.9
5.1
57.1
15.2%
10.2%
-17.7%
20.5%
6.5 $
2.7
14.6
2.7
4.1
7.8
0.3
38.7 $
5.3
3.0
15.6
8.3
3.0
8.3
0.3
43.8
-18.5%
11.1%
6.8%
207.4%
-26.8%
6.4%
0.0%
13.2%
13.3
13.3
52.9%
0.0%
52.9%
$ 180.2 $ 188.9
8.7
$ 188.9 $ 210.9
4.8%
100.0%
11.6%
$
$
8.7
8.7
$
$
MANAGEMENT’S DISCUSSION AND ANALYSIS
The Statement of Activities presents program revenues and expenses, and general revenues in
detail. All of these are elements in the Changes in Net Position summarized in Table 2 of the
previous page.
As of June 30, 2014 the City’s total net position was $210.9 million. This is an increase of $22
million or 11.6% over the prior year. The changes in net position are explained in the following
paragraphs. Total revenue for all government-wide activities was $57.1 million, an increase of $9.7
million or 20.5%, while the total expense of all government-wide activities rose by $5.1 million or
13.2% to $43.8 million.
Governmental Activities
Net position in the governmental activities totaled $177 million, an increase of $9 million or 5.4%
over the prior year. The increase is a result of higher total revenue generated from taxes, charges
for services and grants, offset by an increase in public safety and infrastructure repair and
maintenance expenses.
Total revenue for the City’s governmental activities before transfers has increased by 19.1% to
$44.3 million. Total governmental activity expenses increased by 14.9% to $35.5 million.
As shown in the Statement of Activities, the amount that taxpayers ultimately financed for these
activities through City taxes was $24.8 million as some of the cost was paid by those who directly
benefited from the programs ($7.6 million), or by other governments and organizations that
subsidized certain programs with grants and contributions ($6.9 million), or by other general
revenues ($5 million).
The reasons for significant changes in the revenues and expenses of the City’s governmental
activities are as follows:
•
The combined amount of operating and capital grants and contributions received in the fiscal
year 2013-14 is $4.2 million more than in the prior year. The increase is mainly due to
grantors’ reimbursements for the Bransten Road Green Street project, the East Side Connect
project, the Holly Street/101 Interchange project, the Industrial Road Underground Utilities
project, and the Old County Road Underground Utilities project.
•
Property taxes increased by $1.7 million or 15.2% in comparison with the prior year mainly
because of increases in assessed values and receipts from property transfers.
•
Charges for Services increased by $1.3 million or 20.6% to $7.6 million, mainly from increased
revenues for plan check reviews and zoning as well as building permits.
•
The overall increase in other taxes that include sales taxes, transient occupancy taxes, and
franchise taxes was $1.1 million. Sales tax revenue rose by $0.9 million or 14.1% because of
increase in building and construction supply sales, electronics/appliances, home furnishings
sales, and distribution from the countywide use tax allocation. Transient occupancy taxes
increased by $0.2 million which represents a 18.2% increase over the prior year as a result of
higher occupancy rates.
•
Other general revenues decreased by $1.2 million or 19.4% from prior year. In the fiscal year
2012-13, the City received one-time revenues in rebates from the Sheriff’s Office, claim
settlements from the school districts after the dissolution of the RDA, and refund from the
10
MANAGEMENT’S DISCUSSION AND ANALYSIS
County for excess property tax administration fees charged in prior years. No such one-time
revenues were received in the fiscal year 2013-14.
•
Governmental expenses totaled $35.5 million in the fiscal year 2013-14, an increase of $4.6
million from the prior year’s expenses of $30.9 million. The increase is mainly associated with
public safety, infrastructure repair and large maintenance expenses.
Revenues by Source
for Governmental Activities
($ in millions)
Other General
Revenues
$5.0
11%
Charges for
Services
$7.6
17%
Other Taxes
$11.9
27%
Property Tax
$12.9
29%
11
Grants &
Entitlements
$6.9
16%
MANAGEMENT’S DISCUSSION AND ANALYSIS
Expenses for Governmental Activities
($ in millions)
Parks &
Recreation
$3.0
9%
Interest
Expense
$0.3
1%
General
Government
$5.3
15%
Public Works
$8.3
23%
Community
Development
$3.0
8%
Public Safety
$15.6
44%
Business-Type Activities
Business-type activities’ total net position for the fiscal year 2013-14 was $33.9 million, an increase
of $13 million or 62.2% from the prior fiscal year.
The increase is mainly a result of a restatement of net position in the fiscal year 2013-14. The
restatement is associated with the way in which the SVCW (formerly known as South Bayside
System Authority) joint venture was being reported. The City had been reporting the participation
rights and long-term debt in the Sewer Fund. After discussions with our auditors, it was
determined that a better reporting method would be to report just the net investment in the joint
venture As a result, the Sewer Fund’s beginning net position for the fiscal year 2013-14 was
increased by $8.7 million.
The other main factor that contributed to the increase in net position is higher sewer revenue
collection as a result of the Proposition 218 sewer rate increase. The sewer rates were increased to
reduce the number of sanitary sewer overflows from the wastewater collection system, to fund the
sewer treatment operations, to build up the reserves for emergencies and unforeseen repairs, and
to pay the City’s portion of debt services issued by SVCW for reconstruction of its wastewater
treatment plant. However, due to the delay by SVCW to issue additional bond for the rehabilitation
of the sewer treatment facilities from the original anticipated date in the fall of 2013 to March 2014,
the additional interest payment that the City expected to make did not occur in FY2013-14. Instead,
the City will begin making interest payment for the 2014 bond in FY2014-15. Similar to the prior
year, the current year expenses reflect the ongoing operating expenses such as personnel costs,
payments for wastewater treatment, and other regular maintenance and repairs. The expenses for
major construction projects such as the City’s sewer system rehabilitation project and the
12
MANAGEMENT’S DISCUSSION AND ANALYSIS
wastewater capacity assurance project, totaling $2.4 million in the current fiscal year, have been
capitalized.
The unrestricted portion of the Sewer Fund ending net position includes $9.1 million in Investment
in the SVCW joint venture that is not readily available for day-to-day operational spending. As of
June 30, 2014, SVCW has a balance of $120.5 million in long-term debt that it reports in its financial
statements. Of that amount, the City’s share of the obligation is approximately $19.2 million. Since
the City reports the SVCW joint venture as net investment, this obligation is not directly reported in
the City’s financial statements as long-term debt.
The City uses internal service funds to account for risk management including worker’s
compensation and general liability and property insurances. The longevity benefits fund is used to
account for other post-employment benefits (OPEB) for retired employees.
Financial Analysis of the City’s Funds
As noted earlier, the City uses fund accounting to provide proper financial management of the City’s
resources and to demonstrate compliance with finance-related legal requirements.
Governmental Funds
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, total
fund balance of the general fund was $34.3 million, representing an increase of $13.3 million or
63.3% over the fiscal year 2012-13 fund balance of $21 million. This increase is explained in the
following paragraphs.
In June 2014, the City entered into a lease financing agreement in the amount of $8.8 million with
the ABAG Financing Authority for the purchase of real property located at 595 Industrial Road and
850 East San Carlos Avenues. The lease financing is reported as Other Financing Sources in the
financial statements. See Note 8 for the use of the properties and Note 9b for the term of the lease
financing agreement.
Total revenues were $4.2 million higher than the total expenditures. The general fund revenues
this year were $31.5 million, an increase of $2.4 million or 8.2% from prior year. Expenditures
totaled $27.3 million, an increase of $2.3 million or 9.1% increase from prior year expenditures of
$25 million. As a comparison, the increase in revenue between the fiscal years 2012 and 2013 year
was 9%, and the increase in expenditures was 4.2%.
13
MANAGEMENT’S DISCUSSION AND ANALYSIS
General Fund Revenues & Expenditures
$32
Amounts in Millions
$30
$28
$26
$24
$22
2011
2012
2013
Fiscal Year
2014
Revenue
Expenditure
General Fund Actual Revenues
(Amounts in Millions)
Total Revenue
Dollar Change
Percentage Change
$
FY 11
25.4
N/A
$
$
N/A
FY 12
26.7
1.3
5.1%
$
$
FY 13
29.1
2.4
9.0%
$
$
FY 14
31.5
2.4
8.2%
Significant changes in the revenues of the City’s General Fund from prior year are as follows:
•
Property tax revenues have increased by $1.5 million or 15.8% from the previous year. The
increase is mainly due to increases in assessed values and receipts from property transfers.
•
Sales tax revenues increased by $0.8 million or 14.0% are largely a result of increases in
building and construction supplies sales. Sales in electronics/appliances and home furnishings
were also higher than a year ago. The double digit increase in the countywide use tax allocation
also contributed to the increase.
•
Use of Money and Property increased by $0.5 million or 55.6%. The increase is a result of
higher interest earnings and increase in the monthly property rental rates.
•
Charges for services increased by 13.8% or $0.4 million. The increase reflects revenues from
plan check fees for zoning and plan check reviews.
•
Revenues from Licenses and Permits increased by $0.3 million or 25%. The increase is
primarily due to the increase in volume of activities for building, electrical, plumbing and
mechanical permits.
14
MANAGEMENT’S DISCUSSION AND ANALYSIS
•
Transient Occupancy Tax increased by $0.2 million or 18.2% from the previous year due to
higher demand for hotel occupancy as the local economy continues to rebound.
•
Vehicle In-Lieu (VLF) revenue was $0.2 million or 9.1% higher than last year due to an increase
in apportionment from the County. In the fiscal year 2012-13, the County estimated a shortfall
in VLF allocation from the State and withheld a total of $6.4 million from the County and cities.
A revised estimate in the fiscal year 2013-14 showed that no VLF shortfall occurred and the
County resumed the VLF distributions.
•
Other Revenue decreased by $1.5 million or 51.7%. The decrease is associated with the onetime rebate and settlement received in the fiscal year 2012-13; no such one-time revenues were
received in the fiscal year 2013-14.
General Fund Actual Expenditures
(Amounts in Millions)
FY 11
Total Expenditures
Dollar Change
Percentage Change
$
23.9
N/A
FY 12
$
$
24.0
0.1
N/A
0.4%
FY 13
$
$
25.0
1.0
4.2%
FY 14
$
$
27.3
2.3
9.1%
Significant changes in the expenditures of the City’s General Fund from the prior year are as
follows:
•
Public Safety expenditures are $1.1 million or 7.7% higher than the previous year, primarily
due to the $0.5 million increase in City’s share of pension costs for the dissolved Belmont-San
Carlos Fire JPA and $0.5 million associated with the transfer of full fire and emergency services
to the City of Redwood City.
•
General Government expenditures have increased by $0.6 million or 18.2%. The increase is
mainly associated with legal and other expenditures incurred to address the condition of
PG&E’s high pressure gas pipeline 147 in San Carlos, the one-time information technology
project management, and the addition of a full-time systems analyst position.
•
Public Works expenditures that included park and building maintenance in the fiscal year 201314 have increased by $0.4 million or 16.4%, mainly as a result of having all engineer positions
filled in the fiscal year. In prior year, a few of the positions were vacant for several months.
•
Community Development expenditures rose by $0.2 million or 8.3% as a result of additional
plan checks services associated with increased volume of building permits. This cost increase
was offset by fees collected. The increased economic development activities also contributed to
the higher expenditures.
•
Parks & Recreation expenditures and the capital outlay remained at the same level as in the
prior year.
Capital Improvement Capital Projects Fund has a fund balance of $9.4 million at the close of fiscal
year 2013-14, which represents a decrease of $1.5 million from the prior year. The main reason for
the decrease in fund balance is because several major construction projects, such as City Hall first
15
MANAGEMENT’S DISCUSSION AND ANALYSIS
floor remodel, Crestview Park playground equipment renovation, storm drainage improvements
and cleaning, were underway and did not have any outside funding to offset the expenditures.
Housing Capital Projects Fund is used to account for affordable housing related financial activities.
As of June 30, 2014, it has a fund balance of $4.6 million which is restricted for housing purposes.
The fund balance increased by $0.6 million from prior year mainly due to the interest payments
received for the notes and loans.
Other Governmental Funds – The total fund balance of the Other Governmental Funds for the fiscal
year 2013-14 remains at the same level as the previous year.
Major Enterprise Fund - The City’s proprietary fund statements provide the same type of
information found in the governmental wide financial statements. The Sewer Fund is the only
enterprise fund reported in the proprietary funds Statement of Revenues, Expenses and Changes in
Fund Net Position.
The Sewer Fund’s total net position at the end of the fiscal year was $33.9 million, an increase of
$13 million over the prior year. The increase is largely a result of a restatement of beginning net
position in the amount of $8.7 million and higher sewer revenue collection from sewer rate
increase. The restatement reflects a change in the way the City reports its participation in the
SVCW joint venture. The sewer rates were increased to fund the sewer treatment operations and
sewer system networks improvements as well as to build up the reserve level. The increase is also
used to pay for the City’s portion of debt services issued by SVCW. However, due to delay by SVCW
to issue additional bond for the rehabilitation of the sewer treatment facilities from the original
anticipated date in the fall of 2013 to March 2014, the additional interest payment that the City
expected to make did not occur in FY2013-14. The City will begin making interest payment for the
2014 bond in FY2014-15. The current expenses reflect ongoing operating expenses including
sewer treatment costs, personnel costs, and regular maintenance and repairs. The costs of the
major construction projects such as the sewer system rehabilitation and the wastewater capacity
assurance have been capitalized.
Included in the $33.9 million ending net position is $9.1 million in investment in the SVCW joint
venture that is not readily available for day-to-day operational spending.
General Fund Budgetary Highlights
The final General Fund budget differs from the original adopted budget by $6.7 million mainly
because of the amendments approved by City Council during the year. The increase consisted of
the following changes:
•
•
•
Increase in the capital outlay budget by $5.8 million for the acquisition of the properties at
the Landmark site.
Increase in fire department costs in the amount of $0.3 million for the City’s share of the
pension costs associated with Belmont-San Carlos Fire dissolution.
Increase in the General Government budget by $0.3 million to address the issue with PG&E’s
high pressure gas pipeline in the city.
Major deviations between the final budget of the General Fund and its actual operating results were
as follows: (see accompanying financial statements)
16
MANAGEMENT’S DISCUSSION AND ANALYSIS
Total revenues were greater than the final budget by $3.7 million or 13.4%. The City’s policy is to
budget conservatively. Revenues are estimated using accepted standards and estimates provided
by the State, other governmental agencies and outside consultants.
•
Property taxes exceeded budget by $1.6 million or 17%. The increases reflect higher secured
tax rolls and property transfer activities.
•
Sales taxes exceeded budget by $1.1 million or 20.4%. This is primarily due to stable economic
growth and an expanded sales tax base from a new State mandate requiring certain out-of-state
internet retailers to collect sales tax.
•
Transient occupancy taxes exceeded budget by $0.3 million or 33.3% because of higher hotel
occupancy as a result of economic recovery.
•
VLF exceeded budget by $0.3 million because San Mateo County released the previously
withheld funding after determining no VLF shortfall occurred.
•
Franchise taxes exceeded budget by $0.2 million or 12.5% due to the higher utility rates.
•
Licenses and permits exceeded budget by $0.2 million or 15.4% primarily due to increase in
volume of activities for building, electrical, plumbing, and mechanical permits.
•
Fines and forfeitures were $0.1 million below budget mainly because of decrease in vehicle and
parking fine revenues. The decrease is a result of increased enforcement over time that has
changed behavior patterns.
Total expenditures, excluding the one-time capital outlay, were under budget by $2.3 million or
7.7%.
•
Salaries and benefits were under budget by $1.2 million due to the salary and benefit savings
realized from vacant positions during the fiscal year and lower actual costs to fund public safety
pensions.
•
Operating expenditures were under budget by $1 million, primarily due to reductions in
worker’s compensation and general liability transfers to the internal service fund as well as
reductions in professional services spending.
Capital Assets and Debt Administration
Capital Assets
The City’s investment in capital assets for government and business-type activities amounts to
$145.7 million as of June 30, 2014. The investment in capital assets includes land, buildings,
machinery and equipment, park facilities, roads and streets. Due to a change in the way the City
reports its investment in the SVCW joint venture, $10 million in participation rights have been
removed from the business-type capital assets. See Notes 15c and 16 for additional information.
17
MANAGEMENT’S DISCUSSION AND ANALYSIS
Capital Assets
June 30, 2013 and 2014
(Amounts in Millions)
Governmental
Activities
2013
2014
Land and other assets
not being depreciated
$
66.6
Facilities, infrastructure and
equpment, net of depreciation
Total
$
70.2
59.3
60.7
$ 125.9
$ 130.9
Business Type
Activities
2013
2014
$
10.9
$
0.2
11.8
$
22.7
All
Government
2013
2014
$
$
77.5
$
%
Change
70.4
-9.2%
*
14.6
71.1
75.3
5.9%
14.8
$ 148.6
$ 145.7
-2.0%
For the government-wide statement of net position presentation, all depreciable capital assets are
depreciated from the acquisition date to the end of the current fiscal year.
Governmental fund financial statements record capital asset purchases as expenditures. Ongoing
infrastructure projects are accounted for in construction-in-progress. Additional information about
the City’s capital assets can be found in Note 7 to the financial statements.
Long-Term Obligations
At the end of the fiscal year 2013-14, the City had total outstanding long-term obligations of $15.2
million, a decrease of 5.6%. The contributing factors of the decrease are: (1) a new capital lease of
$8.8 million for the Landmark site (see Note 9b for additional information), and (2) adjustments of
the 2008 and 2009 financing agreements to reflect a change in the way the City reports its
investment in the SVCW joint venture (see Notes 15c and 16 for additional information).
Outstanding Long-Term Obligations
June 30, 2013 and 2014
(Amounts in Millions)
2005 GO Bond
$
ABAG Lease Agreement
Governmental
Activities
Business Type
Activities
2013
2013
6.7
-
2014
$
6.4
$
8.8
-
All
Government
2014
$
-
-
2013
$
6.7
-
%
Change
2014
$
6.4
-4.5%
8.8
100.0%
2008 Financing Agreement
-
-
1.4
-
1.4
-
-100.0%
2009 Financing Agreement
-
-
8.0
-
8.0
-
-100.0%
-
$ 16.1
Total
$
6.7
$ 15.2
$
9.4
$
$ 15.2
-5.6%
On April 24, 2014, Standard & Poor’s raised rating on the City’s General Obligation debt from “AA+”
to “AAA”. As of June 30, 2014, the City’s general obligation limit is $287 million, 3.75% of total
assessed valuation subject to taxation. With outstanding debt of $6.4 million is subject to the legal
debt limit, the City is not at risk of exceeding its legal debt limit.
18
MANAGEMENT’S DISCUSSION AND ANALYSIS
Additional information on the City’s long-term debt can be found in Note 9 to the accompanying
financial statements.
Economic Factors and Next Year’s Budgets and Rates
The following key economic factors were considered in developing the fiscal year 2014-15 budget:
•
Revenue Projections: The overall growth of the general fund revenue is projected to be
approximately 4.1% higher than the fiscal year 2013-14 based on the steady recovery of the
local economy, the increased construction and remodeling activities, the upward sales tax
trends.
•
Expenditures: The overall general fund expenditure is budgeted to be 10% lower than the fiscal
year 2013-14. The fiscal year 2013-14 expenditures include $5.8 million in one-time
expenditures for the Landmark Site acquisition while the fiscal year 2014-15 budget includes
only $0.4 million for one-time expenditures. The salary and benefits expenditures are based on
the known MOU provisions negotiated with bargaining groups. To respond to the rising cost of
employee pensions, the City has made several changes to retirement benefits in prior years.
The employee costs in the fiscal year 2014-15 budget continue to reflect these changes as well
as the changes resulting from the passage of the State’s Pension Reform Act.
•
Capital Improvement Project Funds: An update of the five-year capital improvement plan was
included as part of the fiscal year 2014-15 budget process. Changes to the existing project
budget as well as addition of new projects totaling $8.1 million were approved. The new
projects include (1) Holly street west of El Camino Real improvements, (2) seismic upgrade of
the fire station #16, (3) purchase of new recreation software for registration of activities,
classes and events, (4) traffic calming improvements at Cordilleras avenue, (5) street light
conversion to LED and (6) the purchase of a citizen request management software to track
resident and community concerns and to provide a knowledge base for frequently asked
questions.
•
Sewer Rate Adjustments: The City Council has approved three-year sewer rate increases for the
fiscal years 2013-14 through 2015-16. The increase for the fiscal year 2014-15 is
approximately 20%. These increases will be used to pay for the sewer system rehabilitation
and the City’s share of the SVCW’s sewer treatment plant improvements.
Contacting the City’s Financial Management
This financial report is designed to provide our citizens, taxpayers, customers, investors and
creditors with a general overview of the City’s finances and to show the City’s accountability for the
money it receives. If you have questions about this report or need additional financial information,
contact the Administrative Services Department. All inquiries can be made to:
City of San Carlos
Administrative Services Department
600 Elm Street
San Carlos, CA 94070.
19
THIS PAGE INTENTIONALLY LEFT BLANK
20
CITY OF SAN CARLOS
STATEMENT OF NET POSITION
JUNE 30, 2014
Assets:
Cash and investments
Receivables:
Accounts
Notes
San Carlos Development Corporation
Down payment assistance loan program
Prepaid items
Internal balances
Net OPEB asset - Healthcare
Property held for resale
Investment in joint Sewer Authority
Capital assets, not being depreciated
Land
Rights of way
Construction in progress
Capital assets, net of depreciation
Primary Government
Business-Type
Activities
Total
$ 43,569,059
$ 10,485,167
$ 54,054,226
4,215,067
1,157,045
3,800,000
955,674
350,300
117,614
107,006
14,425,522
-
Total Assets
Liabilities:
Accounts payable and accrued liabilities
Accrued benefits
Deposits payable
Unearned revenue
Claims payable
Due within one year
Due in more than one year
Compensated absences
Due within one year
Due in more than one year
Bonds, notes and loans
Due within one year
Due in more than one year
Net OPEB liability due more than one year
Longevity
Total Liabilities
Net Position:
Net investment in capital assets
Restricted for:
Public safety
Parks and recreation
Public works
Debt service
Housing
Unrestricted
Total Net Position
See Notes to Financial Statements
Governmental
Activities
21
379,893
(117,614)
9,089,714
4,594,960
1,157,045
3,800,000
955,674
350,300
107,006
14,425,522
9,089,714
62,243,493
2,413,714
5,554,280
60,660,596
153,734
14,686,346
62,397,227
2,413,714
5,554,280
75,346,942
199,569,370
34,677,240
234,246,610
3,675,117
120,775
788,292
399,347
732,371
-
4,407,488
120,775
788,292
399,347
237,423
286,472
-
237,423
286,472
274,691
183,127
45,476
30,317
320,167
213,444
310,000
14,895,000
-
310,000
14,895,000
1,382,492
-
1,382,492
22,552,736
808,164
23,360,900
124,467,083
14,840,080
139,307,163
243,214
213,447
2,717,542
2,044,334
4,641,359
42,689,655
19,028,996
243,214
213,447
2,717,542
2,044,334
4,641,359
61,718,651
$ 177,016,634
$ 33,869,076
$ 210,885,710
CITY OF SAN CARLOS
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2014
Expenses
Charges for
Services
Program Revenues
Operating
Capital
Contributions
Contributions
and Grants
and Grants
Functions/Programs
Governmental Activities:
General government
Public safety
Community development
Parks and recreation
Public works
Interest on long-term debt
Total Governmental Activities
Business-Type Activities:
Sewer
Total Business-Type Activities
Total Primary Government
$
5,321,121
15,592,529
2,991,374
3,043,648
8,255,888
276,859
$
1,071,289
527,366
2,625,860
2,206,374
1,201,650
-
$
$
52,528
554,414
4,300,550
-
35,481,419
7,632,539
1,942,020
4,907,492
8,320,370
12,685,252
-
-
8,320,370
12,685,252
-
-
$ 43,801,789
$ 20,317,791
$
General Revenues:
Taxes:
Property taxes, levied for general purpose
Transient occupancy taxes
Sales taxes
Franchise taxes
Motor vehicle in lieu - unrestricted
Use of money and property
Other
Transfers
Total General Revenues and Transfers
Change in Net Position
Net Position at Beginning of Year
Restatement of Net Position
Net Position at End of Year
See Notes to Financial Statements
15,913
124,055
267,497
10,000
1,524,555
-
22
1,942,020
$
4,907,492
Net (Expenses) Revenues and Changes in Net
Position
Primary Government
Governmental
Activities
Business-Type
Activities
$
$
(4,233,919)
(14,941,108)
(45,489)
(272,860)
(1,229,133)
(276,859)
(20,999,368)
-
Total
$
(4,233,919)
(14,941,108)
(45,489)
(272,860)
(1,229,133)
(276,859)
(20,999,368)
-
4,364,882
4,364,882
-
4,364,882
4,364,882
4,364,882
(16,634,486)
(20,999,368)
12,907,307
1,270,072
7,287,136
3,351,838
2,438,078
1,918,054
686,427
172,200
91,110
32,358
(172,200)
12,907,307
1,270,072
7,287,136
3,351,838
2,438,078
2,009,164
718,785
-
30,031,112
(48,732)
29,982,380
9,031,744
4,316,150
13,347,894
167,984,890
20,893,955
188,878,845
-
8,658,971
8,658,971
$ 177,016,634
$ 33,869,076
$ 210,885,710
See Notes to Financial Statements
23
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24
FUND FINANCIAL STATEMENTS
Only individual major funds are presented in the Fund Financial Statements, while non-major funds are
combined in a single column. Major funds are defined generally as having significant activities or
balances in the current year.
MAJOR GOVERNMENTAL FUNDS
The funds described below were determined to be Major Funds by the City. Individual non-major funds
may be found in the Supplemental section.
GENERAL FUND – This is the primary fund of the City and is used to account for all revenues and
expenditures of the City not legally restricted as to use. A broad range of municipal activities are provided
through this fund including City Manager, City Attorney, Administrative Services, City Clerk, Community
Development, Public Safety, Public Works, and Parks and Recreation.
CAPITAL IMPROVEMENT CAPITAL PROJECTS FUND - This fund is used to account for major capital
projects not provided for in one of the other capital projects funds.
HOUSING CAPITAL PROJECTS FUND - This fund is used to account for development fees which must
be used to finance affordable housing for City residents and the housing activities assumed by the City
when the former redevelopment agency was dissolved.
25
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26
CITY OF SAN CARLOS
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2014
Capital Projects Funds
Assets:
Cash and investments
Receivables:
Accounts
Notes
San Carlos Development Corporation
Down payment assistance loan program
Prepaid items
Advances to other funds
Property held for resale
Total Assets
Liabilities, Deferred Inflows of Resources,
and Fund Balances:
Liabilities:
Accounts payable and accrued liabilities
Accrued benefits
Deposits payable
Unearned revenues
Advances from other funds
Total Liabilities
Deferred Inflows of Resources:
Unavailable revenues
Total Deferred Inflows of Resources
Fund Balances:
Nonspendable:
Prepaid items
Property held for resale
Advances to other funds
Restricted for:
Public safety
Parks and recreation
Public works
Debt service
Housing
Committed to:
General government
Community development
Capital projects
Emergency reserve
Assigned to:
Unfunded liabilities
Facility/infrastructure improvements
Property acquisitions
Unassigned
Total Fund Balances
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
See Notes to Financial Statements
Other
Total
Governmental Governmental
Funds
Funds
General
Capital
Improvement
Housing
$ 21,009,336
$ 9,077,000
$ 3,425,500
$ 8,495,191
$ 42,007,027
2,023,478
350,300
710,000
14,070,523
1,567,485
-
46,302
1,157,045
3,800,000
955,674
354,999
577,802
-
4,215,067
1,157,045
3,800,000
955,674
350,300
710,000
14,425,522
$ 38,163,637
$ 10,644,485
$ 9,739,520
$ 9,072,993
$ 67,620,635
$ 2,483,182
120,775
779,021
399,347
-
$
$
$
136,627
610,000
$ 3,547,065
120,775
788,292
399,347
610,000
849,088
-
78,168
9,271
-
3,782,325
849,088
87,439
746,627
5,465,479
108,441
376,699
5,010,722
148,790
5,644,652
108,441
376,699
5,010,722
148,790
5,644,652
350,300
14,070,523
710,000
-
-
-
350,300
14,070,523
710,000
-
-
4,641,359
243,214
213,447
2,717,542
2,044,334
-
243,214
213,447
2,717,542
2,044,334
4,641,359
3,200,000
9,418,698
-
-
1,087,729
69,456
1,801,854
-
1,087,729
69,456
11,220,552
3,200,000
3,200,000
7,000,000
2,701,565
3,040,483
-
-
-
3,200,000
7,000,000
2,701,565
3,040,483
34,272,871
9,418,698
4,641,359
8,177,576
56,510,504
$ 38,163,637
$ 10,644,485
$ 9,739,520
$ 9,072,993
$ 67,620,635
27
CITY OF SAN CARLOS
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2014
Fund balances of governmental funds
$
56,510,504
Amounts reported for governmental activities in the statement of net position are
different because:
Capital assets net of depreciation have not been included as financial resources
in governmental fund activity.
130,872,083
Long-term debt and compensated absences
that have not been included in governmental fund activity.
Bonds payable
Compensated Absences
(15,205,000)
(457,818)
Governmental funds report all OPEB contributions as expenditures,
however in the statement of net position any excesses or deficiencies
in contributions in relation to the Annual Required Contribution (ARC) are
recorded as a asset or liability.
Longevity
Healthcare
(1,382,492)
107,006
Accrued interest payable for the current portion of interest due on
long-term debt has not been reported in the governmental funds.
(125,757)
Revenues reported as unavailable revenue in the governmental funds and recognized
in the statement of activities. These are included in the intergovernmental revenues
in the governmental fund activity.
5,644,652
Internal service funds are used by management to charge the costs of certain
activities, such as equipment management and self-insurance, to individual funds.
The assets and liabilities of the internal service funds must be added to the
statement of net position.
1,053,456
Net Position of governmental activities
See Notes to Financial Statements
$
28
177,016,634
CITY OF SAN CARLOS
STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2014
Capital Projects Funds
Capital
Improvement
General
Revenues:
Sales taxes
Property taxes
Transient occupancy taxes
Franchise taxes
Vehicle in-lieu
Business registration
Licenses and permits
From other agencies
Charges for services
Fines and forfeitures
Use of money and property
Other revenue
Total Revenues
Expenditures:
Current:
General government
Community development
Public safety
Public works
Parks and recreation
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
Other Financing Sources (Uses):
Transfers in
Transfers out
Capital Lease issued
Capital contributions
Total Other Financing
Sources (Uses)
Net Change in Fund Balances
Fund Balances, Beginning of Year
Fund Balances, End of Year
See Notes to Financial Statements
$ 6,548,812
10,979,456
1,270,072
1,840,618
2,438,078
685,909
1,452,285
38,903
3,276,334
219,944
1,373,705
1,365,623
$
1,232,649
1,511,220
75,796
1,522,281
112,773
2,244
708,570
Other
Total
Governmental Governmental
Funds
Funds
Housing
$
594,220
249,355
$
738,324
695,202
57,467
2,557,902
206,339
562,586
$
7,287,136
12,907,307
1,270,072
3,351,838
2,438,078
685,909
1,585,548
4,119,086
3,389,107
219,944
2,176,508
2,886,134
31,489,739
5,165,533
843,575
4,817,820
42,316,667
3,942,606
2,608,095
15,268,586
2,837,125
2,574,917
48,963
2,393,543
6,203,690
251,654
-
772,712
11,073
92,407
1,548,344
1,438,610
4,715,318
2,870,822
15,360,993
6,779,012
2,574,917
7,691,263
-
-
-
285,000
258,604
285,000
258,604
27,280,292
8,597,233
251,654
4,406,750
40,535,929
4,209,447
(3,431,700)
591,921
411,070
1,780,738
520,200
(265,165)
8,800,000
-
358,965
1,550,695
-
766,000
(1,207,800)
-
9,055,035
1,909,660
-
(441,800)
10,522,895
13,264,482
(1,522,040)
591,921
(30,730)
12,303,633
21,008,389
10,940,738
4,049,438
8,208,306
44,206,871
9,418,698
$ 4,641,359
$ 8,177,576
$ 56,510,504
$ 34,272,871
$
29
1,645,165
(1,472,965)
8,800,000
1,550,695
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30
CITY OF SAN CARLOS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2014
Net change in fund balances - total governmental funds
$
12,303,633
Amounts reported for governmental activities in the statement of activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the statement
of activities, the costs of those assets is allocated over their estimated useful lives
as depreciation expense. This is the amount by which capital outlays exceeded
depreciation in the current period.
Capital outlay
Depreciation expense
Retirement of capital assets
7,610,210
(2,445,578)
(154,148)
The issuance of long-term debt provides current financial resources to governmental funds,
while repayment of principal of long-term debt consumes the current financial resources of
governmental funds. Neither transaction, however, has any effect on net position.
Principal repaid on bonds
Debt Issued
285,000
(8,800,000)
Accrued interest for long-term liabilities. This is the net change in accrued interest
for the current period.
(18,255)
Compensated absences expenses reported in the statement of activities do not
require the use of current financial resources and, therefore, are not reported as
expenditures in governmental funds.
824
Governmental funds report all contributions in relation to the annual required
contribution (ARC) for OPEB as expenditures, however in the statement
of activities only the ARC is an expense.
(115,150)
Revenues reported as unavailable revenue in the governmental funds and recognized
in the statement of activities. These are included in the intergovernmental revenues
in the governmental fund activity.
444,006
Internal service funds are used by management to charge the costs of certain
activities, such as equipment management and self-insurance, to individual funds.
The net revenues (expenses) of the internal service funds is reported with
governmental activities.
(78,798)
Change in net position of governmental activities
See Notes to Financial Statements
$
31
9,031,744
CITY OF SAN CARLOS
BUDGETARY COMPARISON STATEMENT BY DEPARTMENT
GENERAL FUND
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
Sales taxes
Property taxes
Transient occupancy taxes
Franchise taxes
Vehicle in lieu
Business registration
Licenses and permits
From other agencies
Charges for services
Fines and forfeitures
Use of money and property
Other revenue
$
5,432,500
9,416,500
940,500
1,640,800
2,144,000
659,700
1,294,100
37,000
3,208,500
328,600
1,363,500
1,280,000
$
5,432,500
9,416,500
940,500
1,640,800
2,144,000
659,700
1,294,100
37,000
3,208,500
328,600
1,363,500
1,280,000
Actual
Amounts
$
6,548,812
10,979,456
1,270,072
1,840,618
2,438,078
685,909
1,452,285
38,903
3,276,334
219,944
1,373,705
1,365,623
Variance with
Final Budget
Positive
(Negative)
$
1,116,312
1,562,956
329,572
199,818
294,078
26,209
158,185
1,903
67,834
(108,656)
10,205
85,623
Total Revenues
27,745,700
27,745,700
31,489,739
Expenditures:
General government:
City Council
City Manager
City Clerk
Administrative services
City Treasurer
City Attorney
General government
149,900
664,000
430,700
2,657,650
13,100
273,500
2,700
149,900
681,650
437,300
2,713,450
13,100
273,500
252,700
111,535
608,440
289,157
2,328,618
9,107
272,742
323,007
38,365
73,210
148,143
384,832
3,993
758
(70,307)
4,191,550
4,521,600
3,942,606
578,994
413,000
1,101,200
593,100
582,500
471,650
1,133,200
656,700
587,500
465,726
1,133,176
590,620
418,573
5,924
24
66,080
168,927
2,689,800
2,849,050
2,608,095
240,955
Public safety:
Police patrol
Police investigation
Police administration
Fire
Communications
5,400
44,000
7,834,400
7,442,400
584,315
5,400
44,000
7,834,400
7,718,587
584,315
4,833
43,327
7,328,784
7,431,973
459,669
567
673
505,616
286,614
124,646
Total public safety
15,910,515
16,186,702
15,268,586
918,116
Public works:
Public works
Garage
Street maintenance
Traffic control
Park maintenance
Building maintenance
663,650
81,000
114,600
287,200
1,163,500
666,200
694,350
83,600
114,600
287,200
1,161,300
728,600
600,456
60,706
98,752
250,652
1,098,015
728,544
93,894
22,894
15,848
36,548
63,285
56
Total public works
2,976,150
3,069,650
2,837,125
232,525
Total general government
Community development:
Administration
Building
Planning
Economic development
Total community development
See Notes to Financial Statements
32
3,744,039
CITY OF SAN CARLOS
BUDGETARY COMPARISON STATEMENT BY DEPARTMENT
GENERAL FUND
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Parks and recreation:
Administration
Recreation
Total parks and recreation
Capital outlay
One-time capital outlay1
Total expenditures
Actual
Amounts
Variance with
Final Budget
Positive
(Negative)
378,485
2,435,700
389,785
2,454,100
343,081
2,231,836
46,704
222,264
2,814,185
2,843,885
2,574,917
268,968
106,800
-
96,600
5,800,000
48,963
-
47,637
5,800,000
28,689,000
35,367,487
27,280,292
8,087,195
4,209,447
11,831,234
Excess (Deficiency) of Revenues
Over (Under) Expenditures
(943,300)
(7,621,787)
Other Financing Sources (Uses):
Transfers out
Transfers in
Capital lease issued
(302,900)
520,200
-
(302,900)
520,200
-
(265,165)
520,200
8,800,000
37,735
8,800,000
217,300
217,300
9,055,035
8,837,735
Total other financing sources (uses)
Net Change in Fund Balance
$
(726,000)
$ (7,404,487)
Beginning Fund Balance
21,008,389
Ending Fund Balance
1
$ 34,272,871
Expenditures were reclassified as property held for resale, see Note 8 for more information.
See Notes to Financial Statements
13,264,482
33
$
11,868,969
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34
MAJOR PROPRIETARY FUND
Proprietary funds account for City operations financed and operated in a manner similar to a private
business enterprise. The intent of the City is that the cost of providing goods and services be financed
primarily through user charges.
The concept of major funds extends to Proprietary Funds.
Budget versus actual comparisons regarding proprietary funds that are major funds are not presented.
SEWER ENTERPRISE FUND - This fund is used to account for sewage treatment, transmission, major
replacements and improvements to the City's sewer system.
35
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36
CITY OF SAN CARLOS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2014
Business-Type
Activities Enterprise
Funds
Assets:
Current:
Cash and investments
Receivables:
Accounts
$
Total Current Assets
Noncurrent:
Investment in Sewer Authority
Capital assets, net
Land
Depreciable capital assets, net
Total Noncurrent Assets
Total Assets
Sewer
Governmental
Activities Internal
Service Funds
10,485,167
$
1,562,032
379,893
-
10,865,060
1,562,032
9,089,714
-
153,734
14,686,346
-
23,929,794
-
$
34,794,854
$
1,562,032
$
732,371
45,476
-
$
2,295
237,423
Liabilities and Net Position:
Liabilities:
Current:
Accounts payable
Compensated absences
Claims payable
Total Current Liabilities
777,847
239,718
100,000
30,317
-
286,472
Total Noncurrent Liabilities
130,317
286,472
Total Liabilities
908,164
526,190
14,840,080
19,046,610
1,035,842
33,886,690
1,035,842
Noncurrent:
Advances from other funds
Compensated absences
Claims payable
Net Position:
Net investment in capital assets
Unrestricted (Note 15c)
Total Net Position
Total Liabilities and Net Position
$
34,794,854
Reconciliation of Net Position to the Statement of Net Position
Net Position per Statement of Net Position - Proprietary Funds
Accumulated adjustment to reflect the consolidation of
internal service funds activities related to the enterprise funds
$
(17,614)
Current years' adjustments to reflect the consolidation of internal
service activities related to enterprise funds
Net Position per Statement of Net Position
See Notes to Financial Statements
$
37
33,869,076
$
1,562,032
CITY OF SAN CARLOS
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2014
Business-Type
Activities Enterprise
Funds
Sewer
Operating Revenues:
Charges for services
Cost reimbursement
$
Total Operating Revenues
12,685,252
-
Governmental
Activities Internal
Service Funds
$
527,470
433,150
12,685,252
960,620
1,570,056
4,521,076
352,480
1,741,900
592,028
597,000
14,843
Total Operating Expenses
8,185,512
1,203,871
Operating Income (Loss)
4,499,740
Operating Expenses:
Salaries and benefits
Sewer operations
Insurance premiums
Claims expense
Depreciation expense
Miscellaneous
(243,251)
Nonoperating Revenues (Expenses):
From other agencies
Investment income
Other non operating revenue
Increase in Investment in Sewer Authority
91,110
2,558
29,800
15,913
13,682
-
Total Nonoperating
Revenues (Expenses)
123,468
29,595
Income (Loss) Before Transfers
4,623,208
Transfers in
Transfers out
348,000
(520,200)
Changes in Net Position
-
4,451,008
Net Position:
Beginning of Year, as
previously reported
Restatements
Beginning of Fiscal Year, as restated
End of Fiscal Year
Changes in Net Position, per the Statement of Revenues,
Expenses and Changes in Fund Net Position - Proprietary Funds
1,249,498
8,658,971
-
29,435,682
1,249,498
$
33,886,690
$
4,451,008
Adjustment to reflect the consolidation of current fiscal year
internal service funds activities related to enterprise funds
(134,858)
Changes in Net Position of Business-Type Activities per Statement of Activities
38
$
(213,656)
20,776,711
Reconciliation of Changes in Net Position to the Statement of Activities:
See Notes to Financial Statements
(213,656)
4,316,150
$
1,035,842
CITY OF SAN CARLOS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2014
Business-Type
Activities Enterprise
Funds
Sewer
Cash Flows from Operating Activities:
Cash received from customers and users
Cash received from/(paid to) interfund service provided
Cash paid to suppliers for goods and services
Cash paid to employees for services
$
Net Cash Provided (Used) by Operating Activities
12,587,016
(5,962,848)
(1,573,895)
Governmental
Activities Internal
Service Funds
$
5,050,273
Cash Flows from Non-Capital
Financing Activities:
Cash transfers in
Cash transfers out
From other agencies
Net Cash Provided (Used) by
Non-Capital Financing Activities
Cash Flows from Capital
and Related Financing Activities:
Acquisition and construction of capital assets
Net Cash Provided (Used) by
Capital and Related Financing Activities
961,875
(1,255,753)
(293,878)
348,000
(520,200)
-
15,913
(172,200)
15,913
(2,445,201)
-
(2,445,201)
-
Cash Flows from Investing Activities:
Investment in joint venture
Interest received
191,615
91,110
13,682
Net Cash Provided (Used) by
Investing Activities
282,725
13,682
Net Increase (Decrease) in Cash
and Cash Equivalents
2,715,597
Cash and Cash Equivalents at Beginning of Year
7,769,570
Cash and Cash Equivalents at End of Year
Reconciliation of Operating Income to Net Cash
Provided (Used) by Operating Activities:
Operating income (loss)
Adjustments to reconcile operating income (loss)
net cash provided (used) by operating activities:
Depreciation
(Increase) decrease in accounts receivable
Increase (decrease) in accounts payable
Increase (decrease) in claims and judgments
Increase (decrease) in compensated absences
Total Adjustments
Net Cash Provided (Used) by
Operating Activities
Non-Cash Investing, Capital, and Financing Activities:
Gain/(Loss) on Investment in Sewer Authority
See Notes to Financial Statements
(264,283)
39
1,826,315
$
10,485,167
$
$
4,499,740
$
1,562,032
(243,251)
352,480
(98,236)
300,128
(3,839)
1,255
1,119
(53,001)
-
550,533
(50,627)
$
5,050,273
$
$
29,800
$
(293,878)
-
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40
FIDUCIARY FUNDS
Fiduciary Funds are presented separately from the Government-wide and Fund Financial Statements.
Agency Funds account for assets held by the City as agent for individuals, governmental entities, and
non-public organizations. These funds include the following:
AGENCY FUNDS - Agency funds are used to account for assets held by the City as an agent for
individuals, private organizations, and other governments. The financial activities of these funds are
excluded from the Entity-wide financial statements, but are presented in separate Fiduciary Fund financial
statements.
SUCCESSOR AGENCY OF THE FORMER RDA PRIVATE PURPOSE TRUST FUND – This fund is
used to account for the activities related to the dissolution of the former San Carlos Redevelopment
Agency.
41
CITY OF SAN CARLOS
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
JUNE 30, 2014
PrivatePurpose Trust
Fund
Successor
Agency of the
Former RDA
Agency
Funds
Assets:
Cash and investments
Cash and investments with fiscal agents
Receivables:
Accounts
Prepaid items
Capital assets:
Capital assets, not being depreciated
Capital assets, net of accumulated depreciation
$ 34,043,706
6,257,859
Total Assets
Liabilities:
Accounts payable and accrued liabilities
Due to members
Deposits payable
Due to assessment district bondholders
Long-term liabilities:
Due in one year
Due in more than one year
-
-
1,331,751
3,875,467
$ 47,831,255
10,277,038
9,710,899
36,868,740
1,239,826
11,790
239,558
-
-
486,647
16,595,990
$ 47,831,255
17,322,195
Net Position:
Held in trust for other purposes
(7,045,157)
Total Net Position
See Notes to Financial Statements
1,223,359
3,846,461
6,804,910
724,780
$
Total Liabilities
$
$
42
(7,045,157)
CITY OF SAN CARLOS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
YEAR ENDED JUNE 30, 2014
PrivatePurpose Trust
Fund
Successor
Agency of the
Former RDA
Additions:
Taxes
Use of money and property
Miscellaneous
$
Total Additions
1,751,154
Deductions:
Administrative expenses
Contractual services
Interest expense
Depreciation expense
235,268
73,411
980,324
79,006
Total Deductions
1,368,009
Changes in Net Position
383,145
Net Position - Beginning of the Year
(7,428,302)
Net Position - End of the Year
See Notes to Financial Statements
1,639,986
107,999
3,169
$
43
(7,045,157)
THIS PAGE INTENTIONALLY LEFT BLANK
44
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2014
Note 1:
Summary of Significant Accounting Policies
a. Reporting Entity
The City of San Carlos (“City”) is a general-law City which operates under the
Council-Manager form of government, with five elected Council members served by a full
time City Manager and staff. The City provides many services including public safety,
streets and roads, parks and recreation and planning and community development. The
accounting policies of the City conform to generally accepted accounting principles as
applicable to governments. The financial statements include the City and its component
units, entities for which the City is financially accountable. Blended component units,
although legally separate entities, are in substance part of the City's operations and data
from these units are combined with data of the City. Their financial activities have been
aggregated and merged (termed "blending") with those of the City in the accompanying
financial statements.
The San Carlos Housing Authority (“Housing Authority”) is a separate government
entity whose purpose is to provide housing to low and moderate income families within
certain areas of the City. The Housing Authority is controlled by the City and has the
same governing board as the City, which also performs all accounting and administrative
functions for the Housing Authority. The Housing Authority is financially dependent on the
City. The financial activities of the Housing Authority have been included in these
financial statements.
Separate statements for the Housing Authority are not prepared.
b. Basis of Presentation
The City's Basic Financial Statements are prepared in conformity with accounting
principles generally accepted in the United States of America. The Government
Accounting Standards Board is the acknowledged standard setting body for
establishing accounting and financial reporting standards followed by governmental
entities in the United States of America. These Statements require that the financial
statements described below be presented.
Government-wide Statements: The Statement of Net Position and the Statement of
Activities display information about the primary government (the City) and its component
units. These statements include the financial activities of the overall City government,
except for fiduciary activities. All fiduciary activities are reported only in the fund financial
statements. Eliminations have been made to minimize the double counting of internal
activities; however, interfund services provided and used are not eliminated in the
process of consolidation. These statements distinguish between the governmental and
business-type activities of the City. Governmental activities generally are financed
through taxes, intergovernmental revenues, and other nonexchange transactions.
Business-type activities are financed in whole or in part by fees charged to external
parties.
The Statement of Activities presents a comparison between direct expenses and program
revenues for each segment of the business-type activities of the City and for each
function of the City's governmental activities. Direct expenses are those that are
specifically associated with a program or function and, therefore, are clearly identifiable to
a particular function. Program revenues include (a) charges paid by the recipients of
goods or services offered by the programs, (b) grants and contributions that are restricted
to meeting the operational needs of a particular program and (c) fees, grants and
45
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 1:
Summary of Significant Accounting Policies (Continued)
contributions that are restricted to financing the acquisition or construction of capital
assets. Revenues that are not classified as program revenues, including all taxes, are
presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about
the City's funds, including fiduciary funds and blended component units. Separate
statements for each fund category - governmental, proprietary, and fiduciary are
presented. The emphasis of fund financial statements is on major individual
governmental and enterprise funds, each of which is displayed in a separate column. All
remaining governmental and enterprise funds are aggregated and reported as nonmajor
funds.
Proprietary fund operating revenues and expenses, such as charges for services and
salaries & benefits, result from exchange transactions associated with the principal
activity of the fund. Exchange transactions are those in which each party receives and
gives up essentially equal values. Nonoperating revenues and expenses, such as
investment earnings and interest expense, result from nonexchange transactions or
ancillary activities.
c. Major Funds
The City's major governmental and business-type funds are identified and presented
separately in the fund financial statements. All other funds, called nonmajor funds, are
combined and reported in a single column.
Major funds are defined as funds that have either assets, deferred outflows of resources,
liabilities, deferred inflows of resources, revenues or expenditures/expenses equal to
ten percent of their fund-type total and five percent of the grand total. The General Fund
is always a major fund. The City may also select other funds it believes should be
presented as major funds.
The City reported the following major governmental funds in the accompanying financial
statements:
General Fund is the primary fund of the City which is used to account for all revenues
and expenditures of the City not legally restricted as to use. A broad range of municipal
activities are provided through this fund including City Council, City Manager, City
Attorney, Administrative Services, City Clerk, Community Development, Public Safety,
Public Works, and Parks and Recreation.
Capital Improvement Capital Projects Fund is used to account for major capital
projects not provided for in one of the other capital projects funds.
Housing Capital Projects Fund is used to account for development fees which must be
used to finance affordable housing for City residents and the housing activities assumed
by the City when the former redevelopment agency was dissolved.
The City reports the following major enterprise funding the accompanying financial
statements:
Sewer Enterprise Fund is used to account for sewage treatment, transmission, major
replacements and improvements to the City's sewer system.
46
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 1:
Summary of Significant Accounting Policies (Continued)
The City also reports the following fund types:
Internal Service Fund: The funds account for worker's compensation, general liability
and other post employment benefits; all of which are provided to other departments on a
cost-reimbursement basis.
Fiduciary Funds: Agency Funds are used to account for assets held by the City as an
agent for 1988 Special Tax Bonds Assessment Districts, City/County Association of
Governments of San Mateo County (C/CAG) and South Bayside Waste Management
Authority (SBWMA). Private-purpose trust funds are used to account for the assets and
liabilities of the former redevelopment agency and the allocated revenue to pay estimated
installment payments of enforceable obligations until the obligations of the former
redevelopment agency are paid in full and assets have been liquidated. All fiduciary
funds, including agency funds, use the accrual, rather than the modified accrual, basis of
accounting.
The financial activities of these funds are excluded from the Government-wide financial
statement, but are presented in separate Fiduciary Fund financial statements.
d. Basis of Accounting
The government-wide, proprietary fund and fiduciary fund financial statements are
reported using the economic resources measurement focus and the full accrual basis of
accounting. Revenues are recorded when earned and expenses are recorded at the time
liabilities are incurred, regardless of when the related cash flows take place.
Governmental funds are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Under this method, revenues are
recognized when measurable and available. The City considers all revenues reported in
the governmental funds to be available if the revenues are collected within 60 days after
year-end. Expenditures are recorded when the related fund liability is incurred, except for
principal and interest on general long-term debt, claims and judgments, and
compensated absences, which are recognized as expenditures to the extent they have
matured. Governmental capital asset acquisitions are reported as expenditures in
governmental funds. Proceeds of governmental long-term debt and acquisitions under
capital leases are reported as other financing sources.
Those revenues susceptible to accrual are property, sales and use, transient occupancy,
franchise and gas taxes, intergovernmental revenues, grants and interest revenue. Fines,
licenses and permits, and charges for services are not susceptible to accrual because
they are not measurable until collected.
Non-exchange transactions are those in which the City gives or receives value without
directly receiving or giving equal value in exchange; include taxes, grants, entitlements,
and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year
for which the taxes are levied or assessed. Revenue from grants, entitlements, and
donations is recognized in the fiscal year in which all eligibility requirements have been
satisfied.
The City may fund programs with a combination of cost-reimbursement grants,
categorical block grants, and general revenues. Thus, both restricted and unrestricted net
position may be available to finance program expenditures. The City's policy is to first
47
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 1:
Summary of Significant Accounting Policies (Continued)
apply restricted grant resources to such programs, followed by general revenues if
necessary.
Certain indirect costs are included in program expenses reported for individual functions
and activities.
e. Property Taxes and Sewer Charges
Revenue is recognized in the period for which the tax and assessment is levied. The
County of San Mateo levies, bills and collects property taxes and sewer charges for the
City; the County remits the entire amount levied and handles all delinquencies, retaining
interest and penalties. Secured and unsecured property taxes are levied on January 1.
Secured property tax is due in two installments, on November 1 and February 1, and
becomes a lien on those dates. It becomes delinquent on December 10 and April 10,
respectively. Unsecured property tax is due on July 1 and becomes delinquent on
August 31.
The term "unsecured" refers to taxes on personal property other than real estate, land,
and buildings. These taxes are secured by liens on the property being taxed. Property tax
revenues are recognized by the City in the fiscal year they are assessed provided they
become available as defined above, generally within 60 days.
f.
Assets, Liabilities, Deferred inflows/outflows, and Net Position or Equity
Investments
For financial reporting purposes, investments are adjusted to their fair value. Changes in
fair value that occur during a fiscal year are recognized as investment income reported
for that fiscal year. Investment income includes interest earnings, changes in fair value,
and any gains or losses realized upon the liquidation or sale of investments. Some
investments are valued on an unamortized cost basis. For these investments, there is no
material difference from fair value.
The City pools cash and investments of all funds, except for assets held by fiscal agents.
Each fund’s share in this pool is displayed in the accompanying financial statements as
cash and investments. Investment income earned by the pooled investments is allocated
to the various funds based on each fund’s average cash and investment balance.
Cash and Cash Equivalents
For purposes of the statement of cash flows, cash equivalents are defined as short-term,
highly liquid investments that are both readily convertible to known amounts of cash or so
near their maturity that they present insignificant risk of changes in value because of
changes in interest rates. Cash equivalents also represent the proprietary fund’s share in
the cash and investment pool of the City. Cash equivalents have an original maturity date
48
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 1:
Summary of Significant Accounting Policies (Continued)
of three months or less from the date of purchase. For purposes of the statement of cash
flows, the entire balance of cash and investments on the combined balance sheet for the
proprietary funds is considered cash and cash equivalents.
Prepaid Items
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.
Capital Assets
All capital assets are valued at historical cost or estimated historical cost if actual
historical cost is not available. Contributed capital assets are valued at their estimated fair
market value on the date contributed. The City's policy is to capitalize all assets with
costs exceeding the $5,000 threshold and a useful life of more than one year.
All capital assets with limited useful lives are depreciated over their estimated useful
lives. The purpose of depreciation is to spread the cost of capital assets equitably among
all users over the life of these assets. The amount charged to depreciation expense each
year represents that year's pro rata share of the cost of capital assets.
Depreciation is provided using the straight line method which means the cost of the asset
is divided by its expected useful life in years and the result is charged to expense each
year until the asset is fully depreciated. The City has assigned the useful lives listed
below to capital assets:
Building and Improvements
Equipment
Infrastructure and Sewer System Network
10-50 years
5-10 years
75-100 years
Major outlays for capital assets and improvements are capitalized as projects are
constructed. Interest incurred during the construction phase of capital assets of the
business-type activities is reflected in the capitalized value of the asset constructed, net
of interest earned on the invested proceeds over the same period.
Deferred outflows/inflows of resources
In addition to assets, the statement of net position and governmental fund balance sheet
will sometimes report a separate section for deferred outflows of resources. This
separate financial statement element, deferred outflows of resources, represents a
consumption of net position or fund balance that applies to a future period(s) and so will
not be recognized as an outflow of resources (expense/ expenditure) until then.
In addition to liabilities, the statement of net position and governmental fund balance
sheet will sometimes report a separate section for deferred inflows of resources. This
separate financial statement element, deferred inflows of resources, represents an
acquisition of net position or fund balance that applies to a future period(s) and so will not
be recognized as an inflow of resources (revenue) until that time. The government has
only one item, which arises only under a modified accrual basis of accounting that
qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is
reported only in the governmental funds balance sheet. The governmental funds report
unavailable revenues from two sources: property taxes and special assessments. These
amounts are deferred and recognized as an inflow of resources in the period that the
amounts become available.
49
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 1:
Summary of Significant Accounting Policies (Continued)
Compensated Absences
Compensated absences comprise unpaid vacation which is accrued as earned. All
employees who hold full-time regular positions are entitled to 12 working days of vacation
pay upon successful completion of their first year of continuous service. The accrual rate
increases as length of service exceeds 4 years. Maximum accumulation of vacation is
two years of vacation accrual. Upon termination or retirement, full-time employees are
entitled to receive compensation at their current base salary for all unused vacation
leave. The City's liability for compensated absences is recorded in various Governmental
funds or Proprietary funds as appropriate. The compensated absences are reported in
governmental funds only if they are matured. The liability for compensated absences is
determined annually. For governmental funds, the portion expected to be permanently
liquidated is recorded as fund liabilities.
Compensated absences are liquidated by the fund that has recorded the liability,
primarily the General Fund.
Fund Balance
In the fund financial statements, governmental funds report the following fund balance
classification:
Nonspendable include 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 include amounts that are constrained on the use of resources by either
(a) external creditors, grantors, contributors, or laws of regulations of other governments
or (b) by law through constitutional provisions or enabling legislation.
Committed include amounts that can only be used for specific purposes pursuant to
constraints imposed by formal action of the government’s highest authority, City Council.
The formal action that is required to be taken to establish, modify, or rescind a fund
balance commitment is Council resolution.
Assigned include amounts that are constrained by the government’s intent to be used for
specific purposes, but are neither restricted nor committed. The City Manager is
authorized to assign amounts to a specific purpose, which was established by the
governing body by resolution.
Unassigned include the residual amounts that have not been restricted, committed, or
assigned to specific purposes.
The City Council adopts and amends committed fund balance amounts through
resolution. The City Council authorizes assigned amounts for specific purposes pursuant
to the policy-making powers granted through resolution.
50
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 1:
Summary of Significant Accounting Policies (Continued)
Fund Balance Flow Assumption
Sometimes the government will fund outlays for a particular purpose from both restricted
and unrestricted resources (the total of committed, assigned, and unassigned fund
balance). In order to calculate the amounts to report as restricted, committed, assigned,
and unassigned fund balance in the governmental fund financial statements a flow
assumption must be made about the order in which the resources are considered to be
applied. It is the government’s policy to consider restricted fund balance to have been
depleted before using any of the components of unrestricted fund balance. Further, when
the components of unrestricted fund balance can be used for the same purpose,
committed fund balance is depleted first, followed by assigned fund balance. Unassigned
fund balance is applied last.
Net Position
Net position is the excess of all the City's assets and deferred outflows over all its
liabilities and deferred inflows, regardless of fund. Net position is divided into
three captions. These captions apply only to net position, which is determined only at the
government-wide level, and are described below:
Net investment in capital assets describes the portion of net position which is represented
by the current net book value of the City's capital assets, less the outstanding balance of
any debt issued to finance these assets.
Restricted describes the portion of net position which is restricted as to use by the terms
and conditions of agreements with outside parties, governmental regulations, laws, or
other restrictions which the City cannot unilaterally alter. These principally include
developer fees received for use on capital projects, debt service requirements, and funds
restricted to low and moderate income purposes.
Unrestricted describes the portion of net position which is not restricted to use.
Net Position Flow Assumption
Sometimes the government will fund outlays for a particular purpose from both restricted
(e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate
the amounts to report as restricted – net position and unrestricted – net position in the
government-wide and proprietary fund financial statements, a flow assumption must be
made about the order in which the resources are considered to be applied. It is the
government’s policy to consider restricted – net position to have been depleted before
unrestricted – net position is applied.
g. Budgets and Budgetary Accounting
The City adopts an annual operating budget on or before June 30 for the ensuing fiscal
year for the General Fund, all Special Revenue Funds, and all Debt Service Funds.
Expenditures for the Capital Projects Funds are budgeted and managed on a project
length basis and budget to actual comparisons for these expenditures have been
excluded from the accompanying financial statements. The City follows a budgeting
process in which the City’s plans and objectives are outlined and budgeted. This work
program is reviewed with the City Council to determine the priority and timing of plans
and objectives. Revisions are made to the work program, which in its final form, is
adopted by the City Council as an operating budget, effective July 1 for the ensuing fiscal
year. From the effective date of the budget, the amounts stated therein as proposed
expenditures become appropriations to the various funds.
51
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 1:
Summary of Significant Accounting Policies (Continued)
City Council may amend the budget by resolution during the fiscal year. The City
Manager may transfer appropriations from one program, activity, or object to another
within the same department or between departments. However, transfers of
appropriations which change total fund appropriations must be approved by the City
Council. Expenditures which exceed appropriations at the fund level must be approved
by the City Council. Budgets are adopted on a basis consistent with generally accepted
accounting principles.
h. Expenditures in Excess of Budget
For the year ended June 30, 2014, there were no functional expenditures exceeding the
budgeted amounts in the General Fund.
Note 2:
Cash and Investments
The City pools cash from all sources and all funds except cash and investments held by
trustees so that it can be invested at the maximum yield consistent with safety and liquidity,
while individual funds can make expenditures at any time.
a. Policies
California Law requires banks and savings and loan institutions to pledge government
securities with a market value of 110% of the City's cash on deposit, or first trust deed
mortgage notes with a market value of 150% of the deposit, as collateral for these
deposits. Under California Law this collateral is held in a separate investment pool by
another institution in the City's name and places the City ahead of general creditors of the
institution. The City Treasurer may waive the collateral requirement for deposits that are
fully insured up to $250,000 by the FDIC.
The City invests in individual investments and in investment pools. Individual investments
are evidenced by specific identifiable securities instruments, or by an electronic entry
registering the owner in the records of the institution issuing the security, called the book
entry system. In order to increase security, the City employs the trust department of a
bank as the custodian of certain City managed investments, regardless of their form.
The City's investments are carried at fair value, as required by generally accepted
accounting principles. The City adjusts the carrying value of its investments to reflect their
fair value at each fiscal year end, and it includes the effects of these adjustments in
income for that fiscal year.
b. Classification
Cash and investments as of June 30, 2014, are classified in the following financial
statements as follows:
Statements of Net Position:
Cash and investments
Subtotal
$
Fiduciary Funds:
Cash and investments
Cash and investments with fiscal agent
Subtotal
Total cash and investments
52
$
54,054,226
54,054,226
35,267,065
10,104,320
45,371,385
99,425,611
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 2:
Cash and Investments (Continued)
Cash and investments as of June 30, 2014, consist of the following:
Cash on hand
Deposits with financial institutions
Investments
Total cash and investments
$
6,000
3,806,508
95,613,103
$
99,425,611
c. Investments Authorized by the California Government Code and the City's
Investment Policy
The table below identifies the investment types that are authorized for the City by the
California Government Code (or the City’s investment policy, where more restrictive). The
table also identifies certain provisions of the California Government Code (or the City’s
investment policy, where more restrictive) that address interest rate risk, credit risk, and
concentration of credit risk. This table does not address investments of debt proceeds
held by bond trustees that are governed by the provisions of bond indentures of the City,
rather than the general provisions of the California Government Code or the City’s
investment policy.
Maximum
Maturity
Minimum
Credit
Quality
Upon Demand
N/A
San Mateo County Investment Pool Upon Demand
N/A
U.S. Treasury Bonds/Notes/Bills
U.S. Government Agency and
Federal Agency Securities
Bankers Acceptances
Commercial Paper
Negotiable Certificates of Deposit
Time Certificates of Deposit Banks or Savings and Loans
Medium Term Corporate Notes
5 Years
Authorized Investment Type
Local Agency Investment Fund
Maximum in
Portfolio
Maximum
Investment
in One
Issuer
N/A
N/A
$40 million
per account
$40 million
per account
100%
5 Years
180 Days
270 Days
5 Years
N/A
N/A
AA
N/A
100%
30%
25%
30%
N/A
(A),(B)
(A),(B)
(A),(B)
5 Years
5 Years
N/A
AA
25%
30%
(A),(B)
(A),(B)
A) 5% of outstanding paper of issuing corporation
B) 5% of the portfolio in one corporation
53
N/A
N/A
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 2:
Cash and Investments (Continued)
d. Investments Authorized by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal
agents under the terms of certain debt issues. These funds are unexpended bond
proceeds or are pledged reserves to be used if the City fails to meet its obligations under
these debt issues. The California Government Code requires these funds to be invested
in accordance with City resolutions, bond indentures or State statutes. The table below
identifies the investment types that are authorized for investments held by fiscal agents.
The table also identifies certain provisions of these debt agreements:
Authorized Investment Type
Securities of the U.S. government or its agencies
Time certificates of deposit
Bankers acceptances
Commercial paper
California Local Agency Investment Fund
Repurchase agreements
Small Business Administration loans
Money market funds
Negotiable certificates of deposit
Investment agreement
Tax-exempt obligations
Medium-term notes
1
2
Minimum Credit
Quality
None
None
A1+
A1
None
None
None
AA-m1, AAA-m2
None
None
AAA
AAA
SBWMA Series 2009A Bond
San Carlos RDA 2007 TAB Series A & B
e. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the
fair value of an investment. Normally, the longer the maturity of an investment, the
greater the sensitivity of its fair value to changes in market interest rates. The City’s
investment policy is to hold investments to maturity to mitigate the interest rate risk.
Information about the sensitivity of the fair values of the City's investments (including
investments held by bond trustees) to market interest rate fluctuations is provided by the
following table that shows the distribution of the City's investments by maturity or earliest
call date:
6 Months or
Less
Investment Type
San Mateo County Investment Pool
California Local Agency Investment
California Asset Management Program
Money market mutual funds
Certificates of Deposit
Total Investments
6 Months to 1
Year
1 to 3 Years
Total
$ 41,173,047
44,336,573
1,065,454
7,550,029
-
$
-
$
1,488,000
$ 41,173,047
44,336,573
1,065,454
7,550,029
1,488,000
$ 94,125,103
$
-
$ 1,488,000
95,613,103
Cash in bank and cash on hand
3,812,508
Total Cash and Investments
$ 99,425,611
54
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 2:
Cash and Investments (Continued)
f.
Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally
recognized statistical rating organization. Presented below is the minimum rating required
by (where applicable) the California Government Code, the City’s investment policy, or
debt agreements, and the actual rating, by Standards and Poor, as of June 30, 2014, for
each investment type:
Investment Type
AAA-m
Money market (U.S. Securities)
Totals
Not rated:
California Local Agency Investment Fund
San Mateo County Investment Pool
California Asset Management Program
Certificates of deposit
Total Investments
$
7,550,029
$
7,550,029
Total
$
7,550,029
7,550,029
44,336,573
41,173,047
1,065,454
1,488,000
95,613,103
Cash on hand and cash in bank
Total Cash and Investments
3,812,508
$ 99,425,611
g. Local Agency Investment Fund
The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by
California Government Code Section 16429 under the oversight of the Treasurer of the
State of California. The City reports its investment in LAIF at the fair value amount
provided by LAIF, which is the same as the value of the pool share. The balance
available for withdrawal is based on the accounting records maintained by LAIF, which
are recorded on an amortized cost basis. Included in LAIF's investment portfolio are
collateralized mortgage obligations, mortgage-backed securities, other asset-backed
securities, loans to certain state funds, and floating rate securities issued by federal
agencies, government-sponsored enterprises, United States Treasury Notes and Bills,
and corporations.
h. San Mateo County Investment Fund
The City is a voluntary participant in the San Mateo County Investment Fund (SMCIF)
that is regulated by California Government Code Section 53600 under the oversight of
the treasurer of the County of San Mateo. The City reports its investment in SMCIF at the
fair value amount provided by SMCIF. The balance available for withdrawal is based on
the accounting records maintained by SMCIF, which are recorded on an amortized cost
basis. Included in SMCIF's investment portfolio are U.S. Treasury Notes, obligations
issued by agencies of the U.S. Government, LAIF, corporate notes, commercial paper,
collateralized mortgage obligations, mortgage-backed securities, other asset-backed
securities, and floating rate securities issued by federal agencies, government-sponsored
enterprises, and corporations. The City reports its investments in SMCIF at the fair value
amounts provided by SMCIF, which is the same as the value of the pool share.
55
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 2:
Cash and Investments (Continued)
i.
California Asset Management Program
The City is a voluntary participant in the California Asset Management Program (CAMP).
CAMP is an investment pool offered by the California Asset Management Trust
(the Trust). The Trust is a joint powers authority and public agency created by the
Declaration of Trust and established under the provisions of the California Joint Exercise
of Powers Act (California Government Code Sections 6500 et seq., or the "Act") for the
purpose of exercising the common power of its Participants to invest certain proceeds of
debt issues and surplus funds. The Pool's investments are limited to investments
permitted by subdivisions (a) to (n), inclusive, of Section 53601 of the California
Government Code.
The City reports its investments in CAMP at the fair value amounts provided by CAMP,
which is the same as the value of the pool share. At June 30, 2014, the fair value
approximated is the City's cost.
Note 3:
San Carlos Development Corporation Receivable
The San Carlos Development Corporation (SCDC) operates a senior care residential facility
for low and moderate income residents of the City. In September 2003, the Agency issued a
Residual Receipts Note in connection with an FHA-issued mortgage loan being made to
refinance the San Carlos Elms. The terms of the note called for interest only payments at a
rate of 9.75% per year with the entire amount of principal due August 1, 2037. On
February 1, 2012, this receivable was transferred to the City who took over the housing
function of the Agency upon dissolution of the San Carlos Redevelopment Agency. As of
June 30, 2014, the balance owed to the City by SCDC totaled $3,800,000.
Note 4:
Down Payment Assistance Loan (DAL) Program Receivable
The Agency offers first time home buyers who qualify as having low and moderate income
loans for use as a down payment on the purchase of a home. These loans bear interest
at 3% and are secured by second deeds of trust on the underlying property. No payments are
due until five years after the date of purchase, at which time the buyer has the option of
converting the loan into shared equity in the property or extending the loan for an additional
ten years with monthly payments and a balloon payment for the unpaid balance at the end of
the ten year term. On February 1, 2012, this receivable was transferred to the City when it
took over the housing function of the Agency upon dissolution. At June 30, 2014, the City
has recorded a receivable totaling $453,398 for loans given out to 8 buyers, consisting of
$383,318 principal and $70,080 in accrued interest.
On April 27, 2009, the City Council approved revisions to the terms of DAL for the first time
home buyer program. Payments are deferred for the term of the loan. Homeowners of units
other than a Below Market Rate unit and/or any unit subject to a resale restriction agreement
will be required to pay shared appreciation in addition to the repayment of principal and
accrued interest at the time the DAL Program loan repayment is due. Interest rate and loan
term remain unchanged. At June 30, 2014, the City has recorded a receivable totaling
$502,276 for loans given out to 9 buyers, consisting of $448,600 principal and $53,676 in
accrued interest.
56
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 5:
Employee Housing Assistance Loans
In accordance with Council resolution, the City has assisted several employees in purchasing
new residences through a loan program. These loans become due within 90 days if
employment is terminated. The loans bear interest of 4.80%. Some loans have rates which
are adjusted annually to equal the Local Agency Investment Fund rate earned as of July 1.
The loans are secured by a second deed of trust on the underlying residence. Interest only is
due bi-weekly until the sixth year, when principal and interest payments are due. The unpaid
balance is due in the eighth year of the loan. In fiscal year 2014, no employees participated in
the program.
Note 6:
Interfund Transactions
a. Transfers Between Funds
The purpose of the majority of transfers is to reimburse a fund which has made an
expenditure on behalf of another fund. Less often, a transfer may be made to open or
close a fund.
Transfers between funds during the fiscal year ended June 30, 2014, were as follows:
Fund Receiving Transfer
General Fund
Capital Improvement
Capital Improvement
Non-Major Governmental Fund
Sewer Enterprise Fund
Non-Major Governmental Fund
(A)
(B)
Amount
Transferred
Fund Making Transfer
Sewer Fund
Non-Major Governmental Fund
General Fund
General Fund
Non-Major Governmental Fund
Non-Major Governmental Fund
$
Total
Capital projects
Sewer right of way
520,200
350,000
8,965
256,200
348,000
509,800
B
A
A
A
A
A
$ 1,993,165
b. Interfund Advances
At June 30, 2014, the amounts of interfund advances were as follows:
Fund Receiving Advance
Non-Major Governmental Fund
Sewer Enterprise Fund
Total
Fund Making
Advance
General Fund
General Fund
Amount
$
610,000
100,000
$
710,000
General Fund has advanced non-major governmental funds to cover storm drain
maintenance. The advance does not bear interest.
General Fund has advanced Sewer Enterprise Fund to cover OPEB trust contribution
payment. The advance does not bear interest.
57
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 7:
Capital Assets
Capital assets as of June 30, 2014, consisted of the following:
Balance
June 30, 2013
Governmental Activities:
Capital assets not depreciated:
Land
Rights of way
Construction in progress
$ 62,243,493
2,341,714
2,030,784
Additions
$
72,000
7,407,910
Retirements
$
(154,148)
$
Transfers
Balance
June 30, 2014
(3,730,266)
$ 62,243,493
2,413,714
5,554,280
Total capital assets not depreciated
66,615,991
7,479,910
(154,148)
(3,730,266)
70,211,487
Capital assets being depreciated:
Buildings and improvements
Equipment
Infrastructure
30,324,065
5,066,036
55,679,845
130,300
-
-
1,143,000
2,587,266
31,467,065
5,196,336
58,267,111
Total capital assets being depreciated
91,069,946
130,300
-
3,730,266
94,930,512
Less accumulated depreciation:
Buildings and improvements
Equipment
Infrastructure
(12,128,234)
(4,020,600)
(15,675,504)
(813,029)
(334,082)
(1,298,467)
-
-
(12,941,263)
(4,354,682)
(16,973,971)
Total accumulated depreciation
(31,824,338)
(2,445,578)
-
-
(34,269,916)
Depreciable capital assets, net
59,245,608
(2,315,278)
-
3,730,266
60,660,596
-
$ 130,872,083
Capital assets, net
$ 125,861,599
$ 5,164,632
$ (154,148)
$
Depreciation expense was charged to governmental functions based on their usage of the
related assets. The amounts allocated to each function or program as follows:
Governmental Activities:
General government
Public safety
Public works
Community development
Parks and recreation
Total Governmental Activities
58
$
316,924
203,222
1,332,954
96,110
496,368
$
2,445,578
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 7:
Capital Assets (Continued)
Business-type Activities:
Capital assets not depreciated:
Land
Participation rights
Construction in progress
Balance
June 30, 2013
Adjustments*
$
$
153,734
9,960,000
739,837
(9,960,000)
-
Additions
$
$
-
$
$
153,734
-
Capital assets being depreciated:
Equipment
Sewer network system
1,247,744
16,262,695
-
389,845
-
(191,799)
(61,535)
2,828,764
1,445,790
19,029,924
Total capital assets being depreciated
17,510,439
-
389,845
(253,334)
2,828,764
20,475,714
Less accumulated depreciation:
Equipment
Sewer network system
(549,872)
(5,106,779)
-
(155,549)
(196,931)
191,799
27,964
-
(513,622)
(5,275,746)
Total accumulated depreciation
(5,656,651)
-
(352,480)
219,763
-
(5,789,368)
Depreciable capital assets, net
11,853,788
-
37,365
(33,571)
$ 2,126,292
$ (33,571)
$
(9,960,000)
-
(2,828,764)
10,853,571
$ 22,707,359
2,088,927
Balance
June 30, 2014
Transfers
Total capital assets not depreciated
Capital assets, net
(9,960,000)
2,088,927
Retirements
(2,828,764)
153,734
2,828,764
14,686,346
-
$ 14,840,080
$
*Adjustment made in the current year relating to the City's investment in the Silicon Valley Clean Water joint venture. See Note 15c for more
information.
Depreciation expense of $352,480 was charged to the Sewer enterprise fund as of
June 30, 2014.
Note 8:
Property Held for Resale
Property held for resale is stated at the lower of historical cost or net realizable value (equal
to agreed-upon sales price if a disposition and development agreement has been reached
with a developer).
In October 2009, the Agency purchased a low income housing unit property. On
February 1, 2012, this property was transferred to the City when it took over the housing
function of the Agency upon dissolution. The unit is being held for future resale to an
individual who is eligible for the low income housing program.
On November 25, 2013 City Council approved the acquisition of three parcels referred to as
“Landmark Sites” for hotel development. The intent is to consolidate the properties and to sell
the land to a developer in order to increase City’s Transient Occupancy Tax.
The properties are reported in governmental activities in the statement of net position as
Assets Held for Resale. The carrying value at June 30 is:
Property Name
Housing Unit
Landmark Site
Landmark Site
Landmark Site
Property Address
633 Elm St #305, San Carlos
595 Industrial Road, San Carlos
850 East San Carlos Avenue, San Carlos
810 East San Carlos Avenue, San Carlos
59
Amount
$
354,999
5,050,859
5,441,885
3,577,779
$
14,425,522
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 9:
Long-Term Debt
The City's debt issues and transactions are summarized below and discussed in detail
thereafter.
Governmental Activities:
2005 Refunding General Obligation Bonds
ABAG Lease Agreement
Total Governmental Activities
Business-type Activities:
2008 Financing Agreement
2009 Financing Agreement
Total Business-type Activities
Balance
June 30, 2013
Adjustments*
Retirements
Balance
June 30, 2014
Due Within
One Year
$
6,690,000
-
$
-
$
8,800,000
$
(285,000)
-
$
6,405,000
8,800,000
$
310,000
-
$
6,690,000
$
-
$ 8,800,000
$
(285,000)
$ 15,205,000
$
310,000
$
1,355,000
8,015,000
$ (1,355,000)
(8,015,000)
$
-
$
-
$
-
$
-
$
9,370,000
$ (9,370,000)
$
-
$
-
$
-
$
-
Additions
*Adjustments made in the current year relating to the City's investement in the Silicon Valley Clean Water joint venture. See Note 15c for more
information.
a. General Obligation Bonds
On December 6, 2005, the City issued $8,115,000 of general obligation bonds
(2005 Refunding Bonds). The 1996 Public Library Bonds were defeased by placing the
proceeds from the 2005 Refunding Bonds in an irrevocable trust to provide for future debt
payments. Accordingly, the trust account assets and the liability for the defeased 1996
Public Library Bonds are not included in the financial statements. On August 1, 2006, all
outstanding principal of the 1996 Public library Bonds were repaid.
Principal payments for the 2005 Refunding Bonds are due annually on August 1. Interest
payments are due semi-annually on February 1 and August 1 ranging from 3.50%
to 4.15%. These bonds are payable from the proceeds of ad valorem property taxes.
Annual debt service requirements for the general obligation bonds are shown below:
Principal
Interest
2015
2016
2017
2018
2019
2020-2024
2025-2029
$
310,000
330,000
365,000
385,000
415,000
2,580,000
2,020,000
$
247,288
235,525
222,576
208,514
193,410
688,378
128,820
Total
$
6,405,000
$
1,924,511
b. ABAG Lease Agreement
On June 1, 2014, the City entered into a Lease Agreement with ABAG Financing
Authority for Nonprofit Corporations to financing its acquisition of real property located at
595 Industrial Boulevard and 850 East San Carlos Avenue in San Carlos in the amount of
$8,800,000. The land is recorded in the general fund as property held for resale. The
Lease Agreement shall end December 2019. Interest is calculated at 3.62% to June 1,
2016 and the rate due on the principal after June 1, 2016 shall be reset to a fixed rate
based on the three year LIBOR swap rate as of June 1, 2016, plus 3.0%.
60
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 9:
Long-Term Debt (Continued)
Lease payments are payable semiannually on June 1 and December 1, commencing in
December 2014. Principal payment will commence in December 2015.
Annual debt service requirements for the ABAG lease agrement are shown below:
Principal
Note 10:
Interest
2015
2016
2017
2018
2019
2020-2024
$
1,846,729
1,889,302
1,965,630
2,045,042
1,053,297
$
302,632
301,997
259,425
183,097
103,686
21,066
Total
$
8,800,000
$
1,171,903
Compensated Absences
The changes in compensated absences for the year ending June 30, 2014, are as follows:
Balance
June 30, 2013
Additions
Retirements
Balance
June 30, 2014
Due Within
One Year
Governmental Activities:
Compensated absences
Total Governmental Activities
$
458,642
$
364,936
$
(365,760)
$
457,818
$
274,691
$
458,642
$
364,936
$
(365,760)
$
457,818
$
274,691
$
79,632
$
45,547
$
(49,386)
$
75,793
$
45,476
$
79,632
$
45,547
$
(49,386)
$
75,793
$
45,476
Business- Type Activities:
Compensated absences
Total Business-type Activities
Note 11:
Fund Balances
a. Fund Balance Commitments
The City has the following committed fund balance shown on the governmental balance
sheet:
Committed to emergency reserve - the City established the amount of 10% of the
General Fund expenditures with a target of increasing to 20% of General Fund
expenditures. Appropriations and access to these funds will be reserved for emergency
situations. Examples of such emergencies include, but are not limited to: catastrophic
disaster (declared by Governor), budgeted revenue taken by another government entity,
or a more than 5% drop in projected revenue to the General Fund. The balance as of
June 30, 2014, was $3,200,000.
The City also has commitments for community development projects, general
government, and capital projects totaling $12,377,737.
61
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 12:
Retirement Benefits
a. CALPERS Safety and Miscellaneous Plans
All employees meeting membership requirements must participate in pension plans. The
City participates in the California Public Employers Retirement System (CALPERS), a
cost-sharing multiple-employer defined benefit pension plan. CALPERS provides
retirement and disability benefits, annual cost of living adjustments and death benefits to
plan members, who must be public employees and beneficiaries. The City's employees
participate in the separate Safety (fire services) and Miscellaneous (all other) Employee
Plans. Benefit provisions under both Plans are established by State statute and City
resolution. Benefits are based on years of credited service, equal to one year of full time
employment. Funding contributions for both Plans are determined annually on an
actuarial basis as of June 30 by CALPERS; the City must contribute these amounts. The
Plans’ provisions and benefits in effect at June 30, 2014, are summarized as follows:
Safety (Fire)
1st Tier
Benefit vesting schedule
5 years service
Benefit payments
monthly for life
Retirement age
50
Monthly benefits, as a % of annual salary
2%
Required employee contribution rates
9.0%
Required employer contribution rates
19.900%
1st Tier
5 years service
monthly for life
55
2.70%
8.0%
22.167%
Miscellaneous
2nd Tier
3rd Tier
5 years service 5 years service
monthly for life
monthly for life
55
55
2.50%
2.00%
8.0%
7.0%
15.133%
10.773%
(4th Tier)PEPRA
5 years service
monthly for life
62
2.00%
6.5%
6.500%
On January 12, 2009, the council adopted the resolution authorizing an amendment to
the contract between the City and the Board of Administration of the California Public
Employees’ Retirement System to provide a 2.5% at age 55 supplemental formula (2nd
Tier) for local miscellaneous members entering membership in the miscellaneous
classification. The change took effect on March 15, 2009.
Effective July 1, 2012, the City consolidated its safety plan to achieve a reduced
employer contribution rate.
The City Council adopted resolution authorizing an amendment to the contract between
the City and the Board of Administration of the California Public Employees’ Retirement
rd
System to provide a 2% at 55 supplemental formula (3 Tier) for local miscellaneous
members entering membership in the miscellaneous classification. The change took
effect on April 23, 2012.
On September 12, 2012, Governor Brown signed the California Public Employees'
Pension Reform Act of 2013 (PEPRA) into law. PEPRA takes effect January 1, 2013.
The new defined retirement formula for all new miscellaneous members hired after
January 1, 2013 is 2% at age 62. With an early retirement age of 52 and a maximum
benefit factor of 2.5% at age 67. New employees are required to pay least 50 percent of
annual normal costs. Employers are precluded from paying any part of the required
employee contribution.
CALPERS determines contribution requirements using a modification of the Entry Age
Normal Method. Under this method, the City's total normal benefit cost for each employee
from date of hire to date of retirement is expressed as a level percentage of the related
total payroll cost. Normal benefit cost under this method is the level amount the employer
must pay annually to fund an employee's projected retirement benefit. This level
percentage of payroll method is used to amortize any unfunded actuarial liabilities. The
62
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 12:
Retirement Benefits (Continued)
actuarial assumptions used to compute contribution requirements are also used to
compute the actuarial accrued liability. The City uses the actuarially determined
percentages of payroll to calculate and pay contributions to CALPERS. This results in no
net pension obligations or unpaid contributions. The required contributions, representing
annual pension cost, and related rates for the year ended June 30 were as follows:
Contribution Rate
Miscellaneous
Safety
Fiscal
Year
2012
2013
2014
Contribution
Amount
$
2,000,814
2,301,816
1,590,218
Fire
1st Tier
2nd Tier
3rd Tier
4th Tier
(PEPRA)
19.169%
19.204%
19.900%
20.160%
20.433%
22.167%
13.817%
14.383%
15.133%
10.019%
10.197%
10.773%
N/A
6.500%
6.500%
CALPERS uses the market related value method of valuing the Plan's assets. An
investment rate of return of 7.5% is assumed, including inflation at 2.75%. Annual salary
increases are assumed to vary by duration of service. Changes in liability due to plan
amendments, changes in actuarial assumptions, or changes in actuarial methods are
amortized as a level percentage of payroll on a closed basis over twenty years.
Investment gains and losses are accumulated as they are realized and amortized over a
rolling thirty year period.
The State-Wide Miscellaneous Plan Tier I, 2 and 3 actuarial value (which differs from
market value) and funding progress over the past three years are set forth below at their
latest available actuarial valuation date of June 30:
State-wide Miscellaneous Plan 2.7% at 55:
Valuation
Date
Entry Age
Accrued Liability
Value of Assets
Unfunded
(Overfunded)
Liability
2010
2011
2012
$ 2,297,871,345
2,486,708,579
2,680,181,441
$ 1,815,671,616
1,981,073,089
2,178,799,790
$ 482,199,729
505,635,490
501,381,651
Funded
Ratio
79.0%
79.7%
81.3%
Annual Covered
Payroll
Unfunded
(Overfunded)
Liability as %
of Payroll
$ 434,023,381
427,300,410
417,600,034
111.1%
118.3%
120.1%
Annual Covered
Payroll
Unfunded
(Overfunded)
Liability as %
of Payroll
$ 352,637,380
350,121,750
339,228,272
104.8%
117.4%
123.0%
State-wide Miscellaneous Plan 2.5% at 55:
Valuation
Date
Entry Age
Accrued Liability
Value of Assets
Unfunded
(Overfunded)
Liability
2010
2011
2012
$ 1,972,910,641
2,135,350,204
2,254,622,362
$ 1,603,482,152
1,724,200,585
1,837,489,422
$ 369,428,489
411,149,619
417,132,940
63
Funded
Ratio
81.3%
80.7%
81.5%
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 12:
Retirement Benefits (Continued)
State-wide Miscellaneous Plan 2% at 55:
Valuation
Date
Entry Age
Accrued Liability
Value of Assets
Unfunded
(Overfunded)
Liability
2010
2011
2012
$ 3,309,064,934
3,619,835,876
4,175,139,166
$ 2,946,408,106
3,203,214,899
3,686,598,343
$ 362,656,828
416,620,977
488,540,823
Funded
Ratio
89.0%
88.5%
88.3%
Annual Covered
Payroll
Unfunded
(Overfunded)
Liability as %
of Payroll
$ 748,401,352
759,263,518
757,045,663
48.5%
54.9%
64.5%
As required by State law, effective July 1, 2005, the City's Safety Plan was terminated,
and the employees in the plan were required by CALPERS to join a new State-wide pool.
One of the conditions of entry was that the City true-up any unfunded liabilities or
overfunded assets in the former Plan, either by paying cash or by increasing or
decreasing its future contribution rates through a Side Fund offered by CALPERS.
The latest available actuarial values of the Safety Plan State-wide pools (which differs
from market value) and funding progress were set forth as follows. The information
presented below relates to the Safety Plan State-wide pools as a whole, of which the City
is one of the participating employers:
State-wide Safety Plan 2% at 50:
Valuation
Date
2010
2011
2012
Entry Age Accrued
Liability
$
469,525,634
503,491,275
475,963,729
Unfunded
(Overfunded)
Liability
Value of Assets
$
396,740,091
421,374,729
407,411,936
$
72,785,543
82,116,546
68,551,793
Funded
Ratio
84.5%
83.7%
85.6%
Annual Covered
Payroll
$
61,878,177
63,392,685
59,986,230
Unfunded
(Overfunded)
Liability as %
of Payroll
117.6%
129.5%
114.3%
In October 2012, the City received written notice from CalPERS that the City’s police
pension liabilities were moved to the Statewide Inactive Agency Risk Pool. As a result of
this decision, the City’s total annual required contribution for the police unfunded liabilities
was $1,012,588 in the fiscal year 2013-14.
State-Wide Inactive Agency Risk Pool
Accrued Liability Actuarial Value Unfunded Liability Funded Ratio
Valuation Date
(AL)
of Assets (AVA)
(UL)
(AVA/AL)
2011
2012
$
677,648,972
839,968,292
$ 608,911,358
743,174,027
$
68,737,614
96,794,265
89.9%
88.5%
Annual
Covered
Payroll
Unfunded
Liability as %
of Payroll
$0
$0
0.0%
0.0%
Audited annual financial statements and ten-year trend information are available from
CALPERS at P.O. Box 942709, Sacramento, CA 94229-2709.
The 2014 Actuarial data for the above retirement plan are not made available by
CALPERS at the time this financial statement was issued.
64
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 13:
Other Post-Employment Benefits
a. Provisions and Benefits
OPEB Healthcare – During fiscal year 2008-2009, the City joined the California
Employers' Retiree Benefit Trust (CERBT), an agent multiple-employer plan administered
by CALPERS, consisting of an aggregation of single-employer plans. City Council
authorized a deposit of $1,575,000 with CERBT on October 10, 2008 to begin funding its
OPEB liability.
By Council resolution and through agreements with its labor units, the City provides
certain health care benefits for retired employees (spouse and dependents are not
included) under Public Employees’ Medical Healthcare Act (PEMHCA). A summary of
eligibility and retiree contribution requirements are described below:
Employees are eligible for retiree health benefits if they retire from the City with a
CalPERS pension.
For retirees who retired on or before 12/31/2008, the City will reimburse the retiree only
premium, up to the active employee single cap. The cap amount is $694.22 per month for
2014. The cap for safety (Police) retirees is $718.11 and is not expected to be increased.
The City will continue to pay the CalPERS minimum contribution for surviving spouses of
retirees as long as they remain enrolled in a health plan sponsored by CalPERS
(PEMHCA)
For employees retiring on or after 1/1/2009 from the City of San Carlos and choose to
enroll in a CalPERS retiree health plan, the City contributes the minimum monthly
premium amount specified by CalPERS towards the cost of CalPERS (PEMHCA)
medical premiums. The minimum is $119.00 per month for 2014.
As of June 30, 2014, 70 retired employees participated in the retiree healthcare benefits.
Additionally, 90 current employees have met the criteria for the retiree healthcare benefits
and are eligible to participate in the program if they retire from the City of San Carlos in
future years.
OPEB Longevity Recognition Program (Program) - The Program's provisions and
benefits in effect at June 30, 2014, are summarized as follows:
65
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 13:
Other Post-Employment Benefits (Continued)
Miscellaneous
Safety
AFSCME
Management and
Clerical
MID
Teamsters
Confidential
Technical
Management
- Hired before 1/1/2009 and 10 years City Service
*2014: $694.22/month
*Adjusted annually by same % as Section 125 plan for active single
employee
- Hired after 1/1/2009 and retire with
15 years continuous City Service
*$350/month
*No future increases
-Hired after 1/1/2009:
-Hired after
-Hired after
-Hired after
*Not Eligible
2/28/2011:
12/13/2010:
3/28/2011:
*Not Eligible
*Not Eligible
*Not Eligible
Fire
*Not
Eligible
As of June 30, 2014, 25 retired employees were eligible to receive the longevity
recognition benefits. Additionally, 38 current employees have met the criteria for this
program and will receive benefits from this program if they retire from the City of
San Carlos in future years.
b. Funding Policy and Actuarial Assumptions
OPEB Healthcare - The annual required contribution (ARC) was determined as part of a
June 30, 2013, actuarial valuation using the projected unit credit actuarial cost method.
Under this method, the actuarial present value of projected benefits is the value of
benefits expected to be paid for current active and retirees and is calculated based on the
assumptions and census data from the actuarial report. The actuarial assumptions
included (a) 7% investment rate of return, (b) 3% projected annual salary increase, and
(c) 2.5% health inflation increases. The actuarial methods and assumptions used include
techniques that smooth the effects of short-term volatility in actuarial accrued liabilities
and the actuarial value of assets. Actuarial calculations reflect a long-term perspective
and actuarial valuations involve estimates of the value of reported amounts and
assumptions about the probability of events far into the future. Actuarially determined
amounts are subject to revision at least biannually as results are compared to past
expectations and new estimates are made about the future. The City’s unfunded actuarial
accrued liability is amortized as a level dollars amount on a closed basis using a 30 year
amortization period.
In accordance with the City's budget, the ARC is to be funded throughout the year as a
percentage of payroll. During the fiscal year 2008-2009, the City Council passed a
resolution to participate in the California Employers Retirees Benefit Trust (CERBT), an
irrevocable trust established to fund OPEB. CERBT is administrated by CalPERS, and is
managed by an appointed board not under the control of the City Council. This Trust is
not considered a component unit by the City and has been excluded from these financial
statements. Separately issued financial statements for CERBT may be obtained from
CALPERS at P.O. Box 942709, Sacramento, CA 94229-2709.
OPEB Longevity Recognition Program (Program) - The annual required contribution
(ARC) was determined as part of a June 30, 2013 actuarial valuation using the projected
unit credit actuarial cost method. This is a projected benefit cost method, which takes into
account those benefits that are expected to be earned in the future as well as those
already accrued. The actuarial assumptions included (a) 4.5%investment rate of return,
66
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 13:
Other Post-Employment Benefits (Continued)
(b) 3.0% projected annual salary increase, and (c) 2.5% inflation increases. The actuarial
methods and assumptions used include techniques that smooth the effects of short-term
volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial
calculations reflect a long-term perspective and actuarial valuations involve estimates of
the value of reported amounts and assumptions about the probability of events far into
the future. Actuarially determined amounts are subject to revision at least biannually as
results are compared to past expectations and new estimates are made about the future.
The City's unfunded actuarial accrued liability is being amortized as a level dollar amount
using a 30-year (closed period) amortization period.
On September 12, 2011, the City amended the agreement with the Public Agency
Retirement Services (PARS) to include the longevity Recognition Program (OPEB
program), and Renaming the Existing Plan to the City of San Carlos PARS
Supplementary Retirement Plan. To complete this change and amend the Services
Agreement with PARS, the City transferred funds of $1,200,000 on September 12, 2011,
to PARS and set up an irrevocable trust to fund future benefit costs.
c. Funding Progress and Funded Status
Generally accepted accounting principles permit contributions to be treated as OPEB
assets and deducted from the Actuarial Accrued Liability (AAL) when such contributions
are placed in an irrevocable trust or equivalent arrangement. In fiscal year 2014, the City
made contribution and amortized its net OPEB asset and obligation as presented below:
Healthcare
Annual required contribution (ARC)
Interest on net OPEB asset
Adjustment to annual required contribution
$
Annual OPEB cost (expense)
Contributions
285,822
(7,546)
8,519
Longevity
$
286,795
461,000
Increase (decrease) in net OPEB asset
Net OPEB obligation (asset) - beginning of year
Net OPEB obligation (asset) - end of year
67
600,355
311,000
(174,205)
67,199
$
(107,006)
620,227
49,191
(69,063)
289,355
1,093,137
$
1,382,492
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 13:
Other Post-Employment Benefits (Continued)
The City's annual required contributions and actual contributions for the three most
recent fiscal years are set forth below:
Fiscal Year
Healthcare
6/30/2012
6/30/2013
6/30/2014
Annual
OPEB Cost
Actual
Contribution
$
$
Longevity
6/30/2012
6/30/2013
6/30/2014
367,514
414,101
286,795
487,300
499,704
600,355
Percentage of
Annual OPEB
Cost
461,000
0%
0%
161%
1,225,722
175,000
311,000
252%
35%
52%
Net OPEB
Obligation
(Asset)
$
(346,902)
67,199
(107,006)
768,433
1,093,137
1,382,492
The Schedule of Funding Progress presents trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the
actuarial accrued liability for benefits. Trend data from the January 1, 2009, 2011 and
2013 actuarial study are presented below:
(in Thousands)
Actuarial
Valuation
Date
Note 14:
Ending
Actuarial
Value of
Assets
(A)
Healthcare
6/30/2009 $
6/30/2011
6/30/2013
1,629
1,140
1,073
Longevity
6/30/2009
6/30/2011
6/30/2013
1,200
1,325
Entry Age
Actuarial
Accrued
Liability
(B)
Overfunded
(Underfunded)
Actuarial
Accrued
Liability
(A-B)
$
$
5,356
5,197
3,895
3,993
4,714
6,584
Funded
Ratio
(A/B)
Covered
Payroll
(C)
(Underfunded)
Actuarial
Liability as
Percentage of
Covered Payroll
[(A-B)/C}
(3,727)
(4,057)
(2,822)
30.41%
21.94%
27.55%
$ 8,974
5,863
4,751
-41.53%
-69.20%
-59.40%
(3,993)
(3,514)
(5,259)
0.00%
25.46%
20.12%
6,380
5,863
4,751
-62.59%
-59.94%
-110.69%
Risk Management
a. Liability Coverage
The City participates in the Association of Bay Area Governments (ABAG), a non-profit
public benefit corporation established to provide liability insurance coverage, claims and
risk management, and legal defense to its participating members. ABAG Plan provides
$5,000,000 of general and automobile liability coverage per occurrence and 20,000,000
excess liability coverage per occurrence and is responsible for paying claims in excess of
the City's $100,000 deductible. For the year ended June 30, 2014, the City paid ABAG
Plan $403,059 in premiums.
68
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 14:
Risk Management (Continued)
Financial statements may be obtained from ABAG Services, PO Box 2050, Oakland, CA
94604-2050.
b. Workers' Compensation Coverage
The City participates in the Cities Group, created by a joint powers agreement to provide
workers compensation coverage of up to $10,000,000 per occurrence in excess of
$1,500,000 for safety officers and $1,000,000 for miscellaneous employees. The Group
acts as administrator, claim adjuster and provides other risk management services as
required by State law. Each member of the Group pays a premium commensurate with
the level of coverage requested and shares surpluses and deficits proportionately to its
participation in the Group. During the year ended June 30, 2014, the City paid the Group
$187,055 in premiums. At June 30, 2014, the Group reported that the City's equity for
Workers' Compensation program amounted to $230,308.
Financial statements may be obtained from the Cities Group, P.O. Box 111,
Burlingame, CA 94011-0111.
c. Liability for Uninsured Claims
The City's liability for uninsured claims at June 30, 2014, was estimated by management
based on ABAG Plan's claims experience and recorded in the Liability Insurance Internal
Service Fund.
For the years ended June 30, 2014 and 2013, the amount of settlements did not exceed
insurance coverage.
The City's liability for uninsured claims is limited to workers' compensation and general
liability claims, as discussed above, and was estimated by management based on prior
years’ claims experience as follows for the year’s ended June 30:
Balance, July 1
Net change in liability for claims
and claims paid but not reported
Claims paid
2014
576,896
$
2013
551,818
273,661
(326,662)
335,919
(310,841)
Balance, June 30
523,895
576,896
Current Portion
237,423
212,348
Long-term Portion
Note 15:
$
$
286,472
$
364,548
Joint Ventures
The City participates in joint ventures through formally organized and separate entities
established under the Joint Exercise of Powers Act of the State of California. As separate
legal entities, these entities exercise full powers and authorities within the scope of the
related Joint Powers Agreements including the preparation of annual budgets, accountability
for all funds, the power to make and execute contracts and the right to sue and be sued.
Each joint venture is governed by a board consisting of representatives from member
municipalities. Each board controls the operations of the respective joint venture, including
selection of management and approval of operating budgets, independent of any influence by
member municipalities beyond their representation on that board. Obligations and liabilities of
69
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 15:
Joint Ventures (Continued)
these joint ventures are not the City's responsibility and the City does not have an equity
interest in the assets of each joint venture except upon dissolution of the joint venture.
a. Belmont-San Carlos Fire Department
South County Fire Authority was formed in 1979 between the Cities of San Carlos and
Belmont on an equal basis to provide more efficient fire protection services for the
two cities. Any assets used by the Fire Authority but owned by the member agencies
prior to the creation of the Fire Authority remain the property of the members. Each
member contributes its pro rata share of operating costs to the Fire Authority.
On April 12, 2010, the City Council adopted a resolution authorizing the City Manager to
send notice to Belmont Fire Protection District of the City's intent to dissolve the joint
powers authority establishing Belmont-San Carlos Fire Department. The service
termination of the Belmont-San Carlos Fire Department took effect on October 1, 2011.
As a result of the termination service with the Belmont-San Carlos Fire Department, the
City is required to make the annual contribution paying for other post-employment
benefits for retirees who have earned lifetime medical coverage; unfunded liabilities of
the safety and miscellaneous retirement plans with CALPERS; outstanding workers
compensation claims from past employees and liability claims or other obligations of the
former Fire Department. The City’s contribution during the year ended June 30, 2014,
was $1,705,602.
b. Fire and Emergency Services Agreement with the City of Redwood City
In July 2011 the City of San Carlos and the City of Redwood City entered into an
agreement for fire and emergency services. This original agreement provided the City of
San Carlos to maintain a fire department, including personnel and infrastructure, at its
sole cost sufficient to provide certain emergency and non-emergency services. The City
of Redwood City provided certain fire and emergency services such as fire administration
and support, fire prevention, investigation, and training. The City of San Carlos pays the
City of Redwood City a fee for the services provided which will be reviewed in January of
each year and amended to reflect actual increases or decreases in cost.
On June 24, 2013, the City Council adopted a resolution to the execution of the amended
and restated agreement between the Cities of Redwood City and San Carlos on full
service model for fire and emergency services. The restated agreement also includes
the transfer of fire services personnel from the City of San Carlos to City of Redwood City
on July 1, 2013. The term of the agreement is 5 years commencing on July 1, 2013 and
expiring on June 30, 2018. Costs of services will be reviewed annually and brought
forward for Council approval each year.
c. Silicon Valley Clean Water
Silicon Valley Clean Water (formerly the South Bayside System Authority) was formed in
1975 between the cities of San Carlos, Belmont, Redwood City and the Menlo Park
Sanitary District to operate a wastewater treatment facility. The cost of operating and
maintaining the facility is divided in proportion to the volume of sewage entering from
each member entity. During the year ended June 30, 2014, the City contributed
$3,035,598 toward the cost of operating and maintaining the facility; paid debt principal
and interest of $999,138 that included the State revolving fund loan and the financing
agreements to finance the construction and rehabilitation of the SVCW’s wastewater
70
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 15:
Joint Ventures (Continued)
system. For the fiscal year 2014-2015, the City is obligated to pay debt principal and
interest payments totaling $1,559,000.
The condensed financial information of the JPA as of June 30, 2014, is as follows:
Total Assets
Total Liability
Total Net Position
$
Total Operating Revenues
Total Operating Expenses
Total Operating Income (loss)
Other Income (loss)
Net Income (loss)
$
Cumulative Agency Balances:
Belmont
San Carlos
Redwood City
West Bay Sanitation District
Total Net Position
$
$
$
$
229,171,497
(154,339,444)
74,832,053
36,298,128
(26,937,851)
9,360,277
(5,755,321)
3,604,956
12,415,848
9,089,714
35,436,691
17,889,800
74,832,053
Of the $154,339,444 liability, $120,520,000 is related to the 2008, 2009 and 2014
revenue bonds, of that amount the City’s direct obligation is $19,187,027.
The City entered into financing agreements with SVCW for repayment of the City’s
allocated share of the 2008, 2009 and 2014 bonds in the amount of $19,992,026. The
financing agreements are secured by a pledge of the City’s Sewer Enterprises Fund Net
Revenue as defined under the financing agreements. For the fiscal year 2013-2014,
gross Sewer Fund Revenues including operating revenues and non-operating interest
earnings amounted to $13,022,397. The operating and maintenance costs, including
operating expenses, transfers out for overhead and administrative cost but excluding
interest, and depreciation or amortization amounted to $7,721,717. Net revenues
available for debt services amounted to $5,300,680 which represented coverage of 6.06
times over the total of debt services of $875,254.
Financial statements may be obtained by mailing a request to the Silicon Valley Clean
Water, 1400 Radio Road, Redwood City, CA 94065.
d. City/County Association of Governments of San Mateo County (C/CAG)
City/County Association of Governments of San Mateo County was formed in 1990
between the various cities in San Mateo County to prepare, adopt, monitor and enforce
state mandated plans for the management of traffic congestion, integrated solid waste,
airport land use and hazardous waste. The City's contribution to C/CAG was $118,553
for the year ended June 30, 2014. Financial statements may be obtained by mailing a
request to the City of San Carlos, 600 Elm Street, San Carlos, CA 94070.
71
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 15:
Joint Ventures (Continued)
e. South Bayside Waste Management Authority (SBWMA)
The South Bayside Waste Management Authority (the Authority) is a joint powers
agreement formed in October 13, 1999. Members of the Authority currently include the
cities of Atherton, Belmont, Burlingame, East Palo Alto, Foster City, Hillsborough,
Menlo Park, Redwood City, San Carlos, San Mateo, as well as the West Bay Sanitary
District and the County of San Mateo. The Members are required by AB939 to reduce,
recycle and reuse solid waste generated within their respective jurisdictions and to
provide source reduction, recycling and composting activities. The Authority's purpose is
to assist its members in meeting these requirements. Financial statements may be
obtained by mailing a request to the City of San Carlos, 600 Elm Street, San Carlos, CA
94070.
Note 16:
Restatement to Net Position
The Sewer Fund reported a restatement of beginning net position of $8,658,971 to change
the way in which the Silicon Valley Clean Water joint venture was being reported. The City
was reporting participation rights and long term debt in the Sewer Fund when only an
investment in the joint venture should have been reported. As a result, beginning net position
was increased due to the reduction in long term debt.
Note 17:
Commitments and Contingent Liabilities
The City is subject to litigation arising in the normal course of business. In the opinion of the
City Attorney there is no pending litigation, which is likely to have a material adverse effect on
the financial position of the City.
The City participates in Federal, State and local grant programs. These programs have been
audited by the City's independent accountants in accordance with the provisions of the
Federal Single Audit Act of 1984 including 1996 amendments and applicable State
requirements. No cost disallowances were proposed as a result of these audits; however,
these programs are still subject to further examination by the grantors and the amount, if any,
of expenditures which may be disallowed by the granting agencies cannot be determined at
this time. The City expects such amounts, if any, to be immaterial.
a. Palo Alto Medical Foundation Development Agreement
After an extensive 3 1/2 year process, on October 8, 2007, the City Council approved a
proposal by the Palo Alto Medical Foundation (PAMF) to develop a regional Medical
Clinic, Medical Office Building and Hospital on an 18 acre site at 301 Industrial Road in
San Carlos that formerly housed the Varian - CPI Eimac plant.
The purchase and transfer of the 18-acre site at 301 Industrial Road took a major parcel
in San Carlos off of the property tax rolls of the City. This occurred when the title to the
site passed from 301 Industrial LLC (the entity performing the site clearance and
remediation activities) to PAMF, which is a tax-exempt entity. In addition, the PAMF
San Carlos Center would generate very little in sales tax revenue to the City.
To offset this impact, a Development Agreement with PAMF was entered into to ensure
that the City would be in substantially the same position financially as the City would
likely have been with use of the Project Site instead for another, economically productive
use.
72
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 17:
Commitments and Contingent Liabilities (Continued)
The key components of the Development Agreement are described in the table below. In
short, the Development Agreement guarantees the City nearly $91,000,000 in revenue
over a 50-year period. When factoring in costs for City services, the Development
Agreement would net the City $43,939,000 over 50 years, resulting in a positive net
present value of $11,642,000. The net amount does not include one-time payments of
$1 million to the City for athletic fields and $1.5 million to the San Carlos Education
Foundation for educational purposes. This amount also does not include the City's share
of any excess returns of the $9 million principal amount to be funded by PAMF under the
agreement, which could be substantial depending on the investment returns received on
the fund.
In May 2009, in their annual report to the City, PAMF stated that funding for the
San Carlos project had been temporarily frozen as a result of the economic environment.
PAMF has the right under the Agreement to an early termination of the Agreement at any
time prior to the issuance of the first building permit for construction of the medical
office/clinic building or hospital building.
In late 2011, Sutter Health, PAMF’s parent organization approved funding for the
first phase construction of their medical facility in San Carlos. This will include
construction of site improvements including utilities, loop access road, landscaping, the
parking garage to serve full facility build-out and the Medical Center which would provide
medical offices, urgent care services, and out-patient surgery. A second phase of the
project, which would construct the Hospital on this site remains unfunded. In May 2012,
PAMF received permits from the City and began construction work including grading
and pile installation on the site. The Medical Center will be open to the public in
November 2014.
The financial impacts of these developments are beneficial to the City. The Guaranteed
Minimum Payments (item “C” in the table below) began in 2010-11 with a payment of
$630,000 in April 2011 after receipt of $250,000 per year payments in the two years prior
as described in the development agreement. Guaranteed Minimum Payments continued
the following year with a payment of $678,400 in April 2014. The next guaranteed
payment will be $695,400 in April 2015.
In addition to receiving the Year 3 Guaranteed Minimum Payments of $630,000 in
April 2011 as specified in the development agreement, the start of construction triggered
two more events.
First, the City will receive the "construction period revenue" for all portions of the PAMF
development except the hospital component during the Phase I construction period
(see item "D" in the table below). Members of the City’s Administrative Services and City
Manager Departments have met with PAMF, Skanska (PAMF’s project management
firm) and HDL Companies (the City’s Sales Tax audit and consultant) to review the
mechanics of this process. PAMF and Skanska are now implementing systems needed
to comply with these provisions of the development agreement.
Under the terms of the Development Agreement, PAMF is obligated to deliver a quarterly
report on use tax payments by their contractors to the City, 90 days after the end of each
quarter. The City will review these reports to verify the amounts of use tax paid to the
City and report the findings to PAMF. Use tax payments made to San Carlos from the
project’s contractors will be credited to PAMF and will reduce the amount of Use Tax
($722,000) that will be received by the City by the end of the project construction. This is
outlined in item “D”.
73
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 17:
Commitments and Contingent Liabilities (Continued)
Second, the start of construction will trigger payment to the City of the "guaranteed
minimum annual operational use tax revenue" one year after construction is completed
(see item "E" in the table below).
The revenue sources contained in the Development Agreement are summarized in the
following table:
Funding Source
A $9 million endowment
fund (called the
Designated Fund)
B 50% of excess returns
on the Designated Fund
at the end of the
payment term
C Guaranteed minimum
payments from the
revenue on the
Designated Fund
Summary Description
At the end of 50 years, the Designated
Fund becomes the City's to administer
In addition to receiving the $9 million
Designated Fund at the end of the term
of the agreement, the City will then
receive 50% of the amount of the
Designated Fund that exceeds $9
million
$250,000 in each of Years 1 and 2
$630,000 in Year 3
$630,000 inflated by 2.5% per year for
the next 49 years
D Guaranteed minimum
$722,000 for the principal construction
construction-related use period
tax revenue
Current Status
No change
No change
The City has received a total of
$3,116,100 from years 1 through 6. City
will receive the year 7 payment of
$695,400 in April 2015 as scheduled.
Upcoming - $722,000 of "construction
period revenue" is dependent on the
construction of the facility. With the
start of construction in May 2012, these
funds (use tax assigned to the project
by the contractors) will begin to flow to
the City's sales tax account by the
State during 2012 and will continue until
the end of the project's construction
period.
Deferred — $152,000 per year
is guaranteed for 50 years starting 1
year after construction of both the
Medical Clinic and Hospital facilities are
completed.
Received - by San Carlos Education
Foundation on Feb 5, 2008.
E Guaranteed minimum
annual operational use
tax revenue
$152,000/year inflated by 3%
per year for 50 years
F $1.5 million
One-time payment to the San Carlos
Education Foundation for health-related
school programs
G $1 million
One-time payment to the City to improve Received — by City of San Carlos on
athletic facilities and fields
Feb 5, 2008 and the funds were used to
install a synthetic turf field at Lower
Highlands Park Field.
Total: $90,804,000 (minimum) over 50 years
74
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 17:
Commitments and Contingent Liabilities (Continued)
b. San Francisco Baykeeper Commitment
On February 16, 2010, the City entered into a consent decree with San Francisco
Baykeeper to reduce the number of sanitary sewer overflows (SSOs) from the
wastewater collection system. The agreement sets forth a timeline for reducing SSOs
from the 2010 level of 64 per 100 miles of sewer line per year to a level of 4 per
100 miles of sewer line per year in 2017. The agreement required payments of $200,000
for an environmental mitigation project, $95,000 for litigation fees and costs, and $55,000
for compliance monitoring and these obligations have been met. The agreement also
commits the City to certain actions regarding SSO investigation, response and reporting;
sewer condition assessment rehabilitation replacement; implementation of a fats, oil and
grease program; sewer cleaning, hot spots, and lateral programs; regulation of private
laterals; and a chemical root control program. An annual report is required commencing
on March 1, 2011 and each year thereafter. The agreement set forth stipulates payments
for failure to file required reports.
c. Construction Commitments
Construction commitments as of June 30, 2014, consisted of the following projects:
Project
Eastside Connect Project
Holly 101 Interchange Study
Old County Road Underground Utility District
Note 18:
Authorized
Expended
Future
Commitment
$ 2,915,000
1,458,500
1,511,685
$ 1,695,000
949,000
1,101,900
$ 1,220,000
509,500
409,785
Successor Agency Trust for Assets of Former Redevelopment Agency
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the Bill”)
that provided for the dissolution of all redevelopment agencies in the State of California. This
action impacted the reporting entity of the City of San Carlos that previously had reported a
redevelopment agency within the reporting entity of the City as a blended component unit.
The Bill provided that upon dissolution of a redevelopment agency, either the City or another
unit of local government will agree to serve as the “successor agency” to hold the assets until
they are distributed to other units of state and local government. On January 9, 2012, the City
Council elected to become the Successor Agency for the former redevelopment agency in
accordance with the Bill.
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the
State of California cannot enter into new projects, obligations or commitments. Subject to the
control of a newly established oversight board, remaining assets can only be used to pay
enforceable obligations in existence at the date of dissolution (including the completion of any
unfinished projects that were subject to legally enforceable contractual commitments).
In future fiscal years, successor agencies will only be allocated revenue in the amount that is
necessary to pay the estimated annual installment payments on enforceable obligations of
75
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 18:
Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)
the former redevelopment agency until all enforceable obligations of the prior redevelopment
agency have been paid in full and all assets have been liquidated.
Additional Information for the Successor Agency of the Former RDA
a. Cash and Investments
Cash and investments reported in the Successor Agency in the accompanying financial
statements consisted of the following:
Cash and investments
Cash and investments with fiscal agent
$
1,223,359
3,846,461
$
5,069,820
b. Capital Assets
Capital assets of the Successor Agency as of June 30, 2014, consisted of the following:
Balance
June 30, 2013
Fiduciary Funds:
Capital assets not depreciated
Land
Construction in progress
$
Additions
1,050,075
481,272
$
Retirements
-
$
-
Balance
June 30, 2014
Transfers
$
(199,596)
$
1,050,075
281,676
Total capital assets not depreciated
1,531,347
-
-
(199,596)
1,331,751
Capital assets being depreciated:
Buildings and improvements
3,950,285
-
-
199,596
4,149,881
Total capital assets being depreciated
3,950,285
-
-
199,596
4,149,881
Less accumulated depreciation:
Buildings and improvements
(195,408)
(79,006)
-
-
(274,414)
Total accumulated depreciation
(195,408)
(79,006)
-
-
(274,414)
Depreciable capital assets, net
Capital assets, net
3,754,877
$
(79,006)
5,286,224
$
76
(79,006)
$
-
199,596
$
-
3,875,467
$
5,207,218
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 18:
Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)
c. Long-term Debt
The Successor Agency long-term debt issues and transactions are summarized below
and discussed in detail thereafter.
Balance
June 30, 2013
Additions
Fiduciary Funds:
Installment Purchase Agreement
$ 2,761,322
Richard A. Berghella Trust Agreement
627,754
2007 Non-Taxable Revenue Bonds, Series A
12,230,000
2007 Taxable Revenue Bonds, Series B
1,925,000
Total Fiduciary Funds
$ 17,544,076
Retirements
$
-
$
(37,832)
(13,607)
(130,000)
(280,000)
$
-
$ (461,439)
Balance
June 30, 2014
Due Within
One Year
$
$
2,723,490
614,147
12,100,000
1,645,000
$ 17,082,637
41,690
14,957
135,000
295,000
$ 486,647
Installment Purchase Agreement
On October 1, 1994, the Redevelopment Agency purchased real property and provided
the bulk of the financing required to construct and equip an 85 unit residential care facility
for elderly low income persons. As part of the transaction, the San Carlos Development
Corporation (SCDC) agreed to purchase and operate the facility, as discussed in Note 3.
The Agency signed an Installment Purchase Agreement in the amount of $2,800,000 to
finance its purchase of the land. Payments are made out of receipts from SCDC. Interest
payments on the Installment Agreement are due monthly and principal payments will
commence on May 1, 2012 through June 1, 2035, bearing interest of 10.9%. As of
June 30, 2014, the total principal and interest remaining on the debt is $6,404,083.
Richard A. Berghella Trust Agreement
In October 2001, the Agency entered into a purchase agreement for $720,156 to
purchase a parcel of land to be used for the construction of a residential facility for low
and moderate income residents of the City. The agreement calls for monthly principal and
th
interest payments of $6,055 due on the 15 day of each month through
August 15, 2032, bearing interest at 9.50% per annum. As of June 30, 2014, the total
principal and interest remaining on the debt is $1,247,378.
Tax Allocation Bonds
In December 2007, the Redevelopment Agency issued $12,875,000 of 2007 Series A
Revenue Bonds, and $3,135,000 of 2007 Series B Taxable Revenue Bonds, to refinance
the 1995 and 1997 Tax Allocation Bonds and to finance various Redevelopment activities
within or of benefit to the Project area. The refunding resulted in an overall debt service
increase of $75,767. The net present value of the savings resulted in an economic gain of
$416,051. The 1995 and 1997 Tax Allocation Revenue Bonds were subsequently retired
in December 2007.
The 2007 Series A and Series B Bonds are special obligations of the Redevelopment
Agency payable solely from and secured by a pledge of tax revenues, including
ad valorem taxes and incremental taxes that are required to be deposited into the
housing fund, generated within the project area. Principal payments are payable annually
77
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 18:
Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)
on September 1 and the last principal payment is scheduled to occur in 2033. Interest
payments are due semi-annually on September 1 and March 1 and bear interest between
3.25% and 5.5%. The pledge of future tax revenue ends upon repayment of the total
2007 Series A and Series B bonds in the amount of $27 million.
On February 1, 2012, this debt was transferred to the Successor Agency which took over
responsibility of winding down the operations of the former Agency upon dissolution.
The Agency pledged, as security for bonds issued, either directly or through the
Financing Authority, a portion of tax increment revenue that it receives. The bonds were
issued to provide financing for various capital projects. Assembly Bill 1X 26 provided that
upon dissolution of the Redevelopment Agency, property taxes allocated to
redevelopment agencies no longer are deemed tax increment but rather property tax
revenues and will be allocated first to successor agencies to make payments on the
indebtedness incurred by the dissolved redevelopment agency. Total principal and
interest remaining on the debt is $21,247,583 with annual debt service requirements as
included below. For the current year, the total property tax revenue recognized by the
Successor Agency for the payment of indebtedness incurred by the dissolved
redevelopment agency was $1,639,986 and the debt service obligation on the bonds was
$1,066,983.
In the prior fiscal year, Moody’s Investors Service (“Moody’s”) downgraded all California
tax allocation bonds rated ‘Baa3’ and above. As such, the Bonds’ insured rating was
downgraded from ‘A3’ to ‘Ba1’ and underlying rating was downgraded from ‘A3’ to ‘Ba1’.
According to Moody’s, all California tax allocation bond ratings remain on review for
possible withdrawal.
Debt Service Requirements
The following schedule illustrates the debt service requirements to maturity for the debt
outstanding as of June 30:
Bonds
Interest
Principal
2015
2016
2017
2018
2019
2020-2024
2025-2029
2030-2034
2035-2039
Total
$
Total
Agreements
Interest
Principal
Total
430,000
455,000
475,000
500,000
520,000
2,985,000
3,715,000
4,665,000
-
$
636,663
615,125
592,450
568,444
542,913
2,342,300
1,598,813
605,875
-
$
1,066,663
1,070,125
1,067,450
1,068,444
1,062,913
5,327,300
5,313,813
5,270,875
-
$
56,647
62,383
68,700
75,656
83,317
561,582
909,660
1,238,282
281,410
$
321,418
315,682
309,366
302,409
294,748
1,328,746
980,668
446,113
14,673
$
378,065
378,065
378,066
378,065
378,065
1,890,328
1,890,328
1,684,395
296,083
$ 13,745,000
$
7,502,583
$
21,247,583
$
3,337,637
$
4,313,824
$
7,651,461
78
CITY OF SAN CARLOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2014
Note 18:
Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)
d. Commitments and Contingent Liabilities
The Successor Agency is subject to litigation arising in the normal course of business. In
the opinion of the Attorney there is no pending litigation, which is likely to have a material
adverse effect on the financial position of the Successor Agency.
Note 19:
Subsequent Events
a. State Controller Office Asset Transfer Review
In October 2014, the State Controller office completed the fieldwork for its review of the
asset transfers between the City and Redevelopment Agency made from January 1,
2011 through January 31, 2012 in accordance with Health and Safety Code section
34167.5. Through the review the State Controller office has identified the repayment of
principal and interest on a loan with the City in the amount of $3,308,092 was deemed
unallowable and should be returned. The results of the review was based on the State
Controller interpretations and understanding of the Code. The City disagreed with the
finding and will appeal once we receive the formal report.
b. Settlement of Litigation in Connection with Event Occurring before Year-End
The City was named as a defendant in a sidewalk trip and fall injury occurring on
September 20, 2012. The plaintiff sustained significant bodily injuries to several parts of
her body as a result of the fall. As a result, on October 24, 2014, the City agreed to pay
$175,000 to the plaintiff in a compromise settlement. The amount is included in the
claims liability of the City as of June 30, 2014.
c. Residual Receipts Note Early Payment
In October 2014, San Carlos Development Corporation notified the City of its intent to
pay off the residual receipts note in November 2014. As of November 12, 2014, a partial
payment has been received and the City expects full payment soon.
79
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80
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS:
NPDES FUND - Used to account for revenues received from assessments levied by the county on
property and disburses funds in compliance with the provisions of the National Pollutant Discharge
Elimination System.
POLICE GRANTS FUND - Used to account for grant activities and services paid for and reimbursed
by grant funding. This fund includes grants from the following funding sources:
• Supplemental Law Enforcement Services Funds (SLESF) - Under the SLESF program, cities
and counties receive state funds to augment public safety expenditures.
• Office of Traffic Safety (OTS) state funding - The program funds a variety of traffic related
projects including equipment, personnel and overhead reimbursement.
SAN CARLOS LIBRARY TENANT FUND - Used to account for the San Carlos Library tenants
activities.
CAPITAL PROJECTS FUNDS:
EQUIPMENT REPLACEMENT FUND - Used to account for the anticipated replacement of general
equipment needs.
MEASURE A FUND - Used to account for the City's share of a one-half cent sales tax restricted for
transportation purposes.
GAS TAX FUND - Used to account for revenue received and expended under the State of California,
Street and Highways Code Sections 2106, 2107, and 2107.5. These revenues must be expended for
maintenance or construction of streets.
PARK FEE FUND - Used to account for development fees collected and used to finance the
acquisition and construction of City parks.
PARKING IN-LIEU FUND - Used to account for fees charged to business in lieu or required parking.
These revenues are used to pay for parking lot improvements and repairs.
DEBT SERVICE FUND:
SAN CARLOS LIBRARY BONDS FUND - Used to accumulate the annual tax levies earmarked for
payment of principle and interest on the general obligation bonds.
81
CITY OF SAN CARLOS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2014
Special Revenue Funds
San Carlos
Police
Library
Grants
Tenant
NPDES
Assets:
Cash and investments
Receivables:
Accounts receivable
Total Assets
Liabilities, Deferred Inflows of Resources,
and Fund Balances:
Liabilities:
Accounts payable and accrued liabilities
Advances from other funds
$
$
49,903
8,127
$ 1,090,813
$
1,802,133
$
433,182
$
$
279
-
$
-
$
243,228
$
3,016
610,000
$
14
-
Total Deferred Inflows of Resources
Fund Balances:
Restricted for:
Public safety
Parks and recreation
Public works
Debt service
Committed to:
General government
Community development
Capital projects
Total Fund Balances
$
3,084
-
$
1,802,133
Measure A
$ 1,090,813
775,885
Deferred inflows of resources:
Unavailable revenues
Equipment
Replacement
235,101
$
Total Liabilities
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
725,982
Capital Projects Funds
$
-
433,182
-
613,016
14
3,084
279
-
-
-
-
-
-
-
-
-
-
-
162,869
-
243,214
-
-
-
433,182
-
-
-
1,087,729
-
1,801,854
-
162,869
243,214
1,087,729
1,801,854
433,182
243,228
$ 1,090,813
775,885
$
82
$
1,802,133
$
433,182
CITY OF SAN CARLOS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2014
Debt Service
Funds
San Carlos
Library
Bonds
Total
Governmental
Funds
69,456
$ 2,044,334
$
-
$ 2,044,334
$
9,072,993
$
$
136,627
610,000
Capital Projects Funds
Gas Tax
Assets:
Cash and investments
Receivables:
Accounts receivable
Total Assets
Liabilities, Deferred Inflows of Resources,
and Fund Balances:
Liabilities:
Accounts payable and accrued liabilities
Advances from other funds
Parking InLieu
Park Fee
$ 1,880,743
$
519,772
213,447
$
-
$ 2,400,515
$
213,447
$
69,456
$
$
-
$
-
130,234
-
-
8,495,191
577,802
Total Liabilities
130,234
-
-
-
746,627
Deferred inflows of resources:
Unavailable revenues
148,790
-
-
-
148,790
148,790
-
-
-
148,790
2,121,491
-
213,447
-
-
2,044,334
243,214
213,447
2,717,542
2,044,334
-
-
69,456
-
-
1,087,729
69,456
1,801,854
2,121,491
213,447
69,456
2,044,334
8,177,576
69,456
$ 2,044,334
Total Deferred Inflows of Resources
Fund Balances:
Restricted for:
Public safety
Parks and recreation
Public works
Debt service
Committed to:
General government
Community development
Capital projects
Total Fund Balances
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
$ 2,400,515
$
83
213,447
$
$
9,072,993
CITY OF SAN CARLOS
COMBINING STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2014
Special Revenue Funds
San Carlos
Police
Library
NPDES
Grants
Tenant
Revenues:
Sales taxes
Property taxes
Licenses and permits
From other agencies
Use of money and property
Other revenue
Total Revenues
Expenditures:
Current:
General government
Community development
Public safety
Public works
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
Other Financing Sources (Uses):
Transfers in
Transfers out
Total Other Financing Sources
(Uses)
Net Change in Fund Balances
Fund Balances, Beginning of Year
Fund Balances, End of Year
$
549,718
6,341
8,172
$
112,461
-
$
159,741
420,000
Capital Projects Funds
Equipment
Replacement
$
-
Measure A
$
738,324
3,778
-
564,231
112,461
579,741
-
742,102
467,709
-
92,407
-
772,712
-
184,895
103,681
-
-
-
-
-
-
467,709
92,407
772,712
184,895
103,681
96,522
20,054
(192,971)
(184,895)
638,421
-
-
-
256,200
(348,000)
(509,800)
-
-
-
(91,800)
(509,800)
96,522
20,054
(276,695)
128,621
66,347
223,160
1,280,700
$ 162,869
$ 243,214
$ 1,087,729
84
(192,971)
2,078,549
$
1,801,854
304,561
$
433,182
CITY OF SAN CARLOS
COMBINING STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2014
Capital Projects Funds
Gas Tax
Revenues:
Sales taxes
Property taxes
Licenses and permits
From other agencies
Use of money and property
Other revenue
Total Revenues
$
Parking InLieu
Park Fee
46,558
1,895,723
16,406
-
$
1,864
134,414
$
10,909
360
-
Debt Service
Funds
San Carlos
Library
Bonds
$
695,202
17,849
-
Total
Governmental
Funds
$
738,324
695,202
57,467
2,557,902
206,339
562,586
1,958,687
136,278
11,269
713,051
4,817,820
976,954
1,253,715
-
11,073
-
-
772,712
11,073
92,407
1,548,344
1,438,610
-
-
-
285,000
258,604
285,000
258,604
2,230,669
-
11,073
543,604
4,406,750
(271,982)
136,278
196
169,447
411,070
509,800
-
(350,000)
-
-
766,000
(1,207,800)
Total Other Financing Sources
(Uses)
509,800
(350,000)
-
-
(441,800)
Net Change in Fund Balances
237,818
(213,722)
196
169,447
(30,730)
69,260
1,874,887
8,208,306
69,456
$ 2,044,334
$ 8,177,576
Expenditures:
Current:
General government
Community development
Public safety
Public works
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
Other Financing Sources (Uses):
Transfers in
Transfers out
Fund Balances, Beginning of Year
Fund Balances, End of Year
1,883,673
$ 2,121,491
427,169
$
85
213,447
$
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
NPDES
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
From other agencies
Use of money and property
Other revenue
$
Total revenues
Expenditures:
Public works
Total expenditures
Net Change in Fund Balance
$
524,000
2,000
5,400
$
524,000
2,000
5,400
Actual
Amounts
$
549,718
6,341
8,172
Variance with
Final Budget
Positive
(Negative)
$
25,718
4,341
2,772
531,400
531,400
564,231
32,831
525,800
525,800
467,709
58,091
525,800
525,800
467,709
58,091
5,600
96,522
5,600
$
Beginning Fund Balance
66,347
Ending Fund Balance
$
86
162,869
$
90,922
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
POLICE GRANTS
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
From other agencies
$
Total revenues
Expenditures:
Public safety
Total expenditures
Net Change in Fund Balance
$
100,000
$
100,000
Actual
Amounts
$
112,461
Variance with
Final Budget
Positive
(Negative)
$
12,461
100,000
100,000
112,461
12,461
140,000
140,000
92,407
47,593
140,000
140,000
92,407
47,593
(40,000)
20,054
(40,000)
$
Beginning Fund Balance
223,160
Ending Fund Balance
$
87
243,214
$
60,054
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
SAN CARLOS LIBRARY TENANT
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
Use of money and property
Other revenue
$
Total revenues
205,000
-
$
159,741
420,000
$
(45,259)
420,000
205,000
579,741
374,741
-
846,159
772,712
73,447
-
846,159
772,712
73,447
(641,159)
(192,971)
Total expenditures
$
205,000
-
205,000
Expenditures:
General government
Net Change in Fund Balance
$
Actual
Amounts
Variance with
Final Budget
Positive
(Negative)
205,000
$
Beginning Fund Balance
1,280,700
Ending Fund Balance
$
88
1,087,729
$
448,188
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
CAPITAL IMPROVEMENT
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
Property taxes
Franchise taxes
Licenses and permits
From other agencies
Charges for services
Use of money and property
Other revenue
$
Total revenues
Expenditures:
Public works
Capital outlay
Total expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
Other Financing Sources (Uses):
Transfers in
Capital contributions
Total other financing sources (uses)
Net Change in Fund Balance
$
700,000
1,300,000
31,200
1,032,000
724,000
$
700,000
1,300,000
31,200
5,520,342
1,024,000
Actual
Amounts
$
1,232,649
1,511,220
75,796
1,522,281
112,773
2,244
708,570
Variance with
Final Budget
Positive
(Negative)
$
532,649
211,220
44,596
(3,998,061)
112,773
2,244
(315,430)
3,787,200
8,575,542
5,165,533
(3,410,009)
2,304,866
4,985,134
2,393,543
17,646,179
2,393,543
6,203,690
11,442,489
7,290,000
20,039,722
8,597,233
11,442,489
(3,502,800)
(11,464,180)
(3,431,700)
8,032,480
246,700
916,000
525,200
1,616,000
358,965
1,550,695
(166,235)
(65,305)
1,162,700
2,141,200
1,909,660
(231,540)
(9,322,980)
(1,522,040)
(2,340,100)
$
Beginning Fund Balance
10,940,738
Ending Fund Balance
$
89
9,418,698
$
7,800,940
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
HOUSING
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
Use of money and property
Other revenue
$
Total revenues
Expenditures:
Community development
Total expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
Net Change in Fund Balance
$
452,500
75,000
$
452,500
75,000
Actual
Amounts
$
594,220
249,355
Variance with
Final Budget
Positive
(Negative)
$
141,720
174,355
527,500
527,500
843,575
316,075
304,100
1,529,100
251,654
1,277,446
304,100
1,529,100
251,654
1,277,446
223,400
(1,001,600)
591,921
1,593,521
(1,001,600)
591,921
223,400
$
Beginning Fund Balance
4,049,438
Ending Fund Balance
$
90
4,641,359
$
1,593,521
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
EQUIPMENT REPLACEMENT
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Expenditures:
Capital outlay
$
Total expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
Other Financing Sources (Uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net Change in Fund Balance
$
755,400
$
1,176,084
Actual
Amounts
$
184,895
Variance with
Final Budget
Positive
(Negative)
$
991,189
755,400
1,176,084
184,895
991,189
(755,400)
(1,176,084)
(184,895)
991,189
355,000
-
355,000
-
256,200
(348,000)
(98,800)
(348,000)
355,000
355,000
(91,800)
(446,800)
(821,084)
(276,695)
(400,400)
$
Beginning Fund Balance
2,078,549
Ending Fund Balance
$
91
1,801,854
$
544,389
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
MEASURE A
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
Sales taxes
Use of money and property
$
Total revenues
Expenditures:
Public works
Total expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
Other Financing Sources (Uses):
Transfers out
Total other financing sources (uses)
Net Change in Fund Balance
618,500
-
$
Actual
Amounts
618,500
-
$
738,324
3,778
Variance with
Final Budget
Positive
(Negative)
$
119,824
3,778
618,500
618,500
742,102
123,602
109,300
109,300
103,681
5,619
109,300
109,300
103,681
5,619
509,200
509,200
638,421
129,221
(509,800)
(509,800)
(509,800)
-
(509,800)
(509,800)
(509,800)
-
$
(600)
$
(600)
128,621
Beginning Fund Balance
304,561
Ending Fund Balance
$
92
433,182
$
129,221
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
GAS TAX
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
Licenses and permits
From other agencies
Use of money and property
$
Total revenues
Expenditures:
Public works
Capital outlay
Total expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
$
Total other financing sources (uses)
$
1,934,155
-
$
46,558
1,895,723
16,406
$
46,558
(38,432)
16,406
922,700
1,934,155
1,958,687
488,600
1,196,000
488,600
2,640,026
976,954
1,253,715
(488,354)
1,386,311
1,684,600
3,128,626
2,230,669
897,957
(761,900)
Other Financing Sources (Uses):
Transfers in
Transfers out
Net Change in Fund Balance
922,700
-
Actual
Amounts
Variance with
Final Budget
Positive
(Negative)
(1,194,471)
24,532
(271,982)
922,489
509,800
-
509,800
(38,000)
509,800
-
38,000
509,800
471,800
509,800
38,000
(722,671)
237,818
(252,100)
$
Beginning Fund Balance
1,883,673
Ending Fund Balance
$
93
2,121,491
$
960,489
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
PARK FEE
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
Use of money and property
Other revenue
$
Total revenues
2,000
112,400
Total other financing sources (uses)
Net Change in Fund Balance
$
$
1,864
134,414
$
(136)
22,014
114,400
136,278
21,878
-
50,000
-
50,000
-
50,000
-
50,000
114,400
64,400
136,278
71,878
(200,000)
(390,500)
(350,000)
40,500
(200,000)
(390,500)
(350,000)
40,500
(326,100)
(213,722)
Total expenditures
Other Financing Sources (Uses):
Transfers out
2,000
112,400
Actual
Amounts
114,400
Expenditures:
Capital outlay
Excess (Deficiency) of Revenues
Over (Under) Expenditures
$
Variance with
Final Budget
Positive
(Negative)
(85,600)
$
Beginning Fund Balance
427,169
Ending Fund Balance
$
94
213,447
$
112,378
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
PARKING IN-LIEU
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
Licenses and permits
Use of money and property
$
Total revenues
Expenditures:
Community development
Total expenditures
Net Change in Fund Balance
$
7,900
400
$
7,900
400
Actual
Amounts
$
10,909
360
Variance with
Final Budget
Positive
(Negative)
$
3,009
(40)
8,300
8,300
11,269
2,969
7,200
51,442
11,073
40,369
7,200
51,442
11,073
40,369
1,100
$
(43,142)
196
Beginning Fund Balance
69,260
Ending Fund Balance
$
95
69,456
$
43,338
CITY OF SAN CARLOS
BUDGETARY COMPARISON SCHEDULE
SAN CARLOS LIBRARY BONDS
YEAR ENDED JUNE 30, 2014
Budget Amounts
Original
Final
Revenues:
Property taxes
Use of money and property
$
637,100
-
$
637,100
-
Actual
Amounts
$
695,202
17,849
Variance with
Final Budget
Positive
(Negative)
$
58,102
17,849
Total revenues
637,100
637,100
713,051
75,951
Expenditures
Debt service:
Principal retirement
Interest and fiscal charges
285,000
260,000
285,000
260,000
285,000
258,604
1,396
545,000
545,000
543,604
1,396
92,100
169,447
Total expenditures
Net Change in Fund Balances
$
92,100
$
Beginning Fund Balance
1,874,887
Ending Fund Balance
$
96
2,044,334
$
77,347
INTERNAL SERVICE FUNDS
Internal Service Funds are used to finance and account for special activities and services performed by a
designated department for other departments in the City on a cost reimbursement basis.
The concept of major funds does not extend to internal service funds because they do not do business
with outside parties. The Statement of Activities, the net revenues or expenses of each internal service
fund is eliminated by netting them against the operations of the other City departments, which generated
them. The remaining balance sheet items are consolidated with these same funds in the Statement of Net
Assets.
However, internal service funds are still presented separately in the Fund Financial Statements, including
the funds below:
WORKERS’ COMPENSATION FUND - Used to account for activities relating workers' compensation
claims and the premiums for coverage.
LIABILITY INSURANCE FUND - Used to account for activities relating to general liability claims against
the City and premiums for coverage above the City's risk retention level.
LONGEVITY BENEFITS FUND - Used to account for activities relating to health care benefits for retired
employees.
97
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98
CITY OF SAN CARLOS
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
JUNE 30, 2014
Governmental Activities - Internal Service Funds
Workers'
Compensation
Assets:
Current:
Cash and investments
$
Total Current Assets
Total Assets
427,183
Liability
Insurance
$
427,183
890,230
Longevity
Benefits
$
890,230
Totals
244,619
$
244,619
1,562,032
1,562,032
$
427,183
$
890,230
$
244,619
$
1,562,032
$
346
11,049
$
1,949
226,374
$
-
$
2,295
237,423
Liabilities and Net Position:
Liabilities:
Current:
Accounts payable
Claims payable
Total Current Liabilities
Noncurrent:
Claims payable
Total Noncurrent Liabilities
Total Liabilities
Net Position:
Unrestricted
Total Net Position
Total Liabilities and Net Position
$
11,395
228,323
-
239,718
99,437
187,035
-
286,472
99,437
187,035
-
286,472
110,832
415,358
-
526,190
316,351
474,872
244,619
1,035,842
316,351
474,872
244,619
1,035,842
427,183
99
$
890,230
$
244,619
$
1,562,032
CITY OF SAN CARLOS
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
INTERNAL SERVICE FUNDS
YEAR ENDED JUNE 30, 2014
Governmental Activities - Internal Service Funds
Workers'
Compensation
Operating Revenues:
Charges for services
Cost reimbursements
$
Total Operating Revenues
Operating Expenses:
Insurance premiums
Claims expense
Miscellaneous
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses):
From other agencies
Investment income
Total Nonoperating
Revenues (Expenses)
Changes in Net Position
Net Position:
Beginning of Year
End of Fiscal Year
$
1,392
51,000
Liability
Insurance
$
778
382,150
Longevity
Benefits
$
525,300
-
Totals
$
527,470
433,150
52,392
382,928
525,300
960,620
187,881
529
404,147
14,314
597,000
-
592,028
597,000
14,843
188,410
418,461
597,000
1,203,871
(136,018)
(35,533)
(71,700)
(243,251)
3,740
15,913
7,785
2,157
15,913
13,682
3,740
23,698
2,157
29,595
(132,278)
(11,835)
(69,543)
(213,656)
448,629
486,707
314,162
316,351
100
$
474,872
$
244,619
1,249,498
$
1,035,842
CITY OF SAN CARLOS
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
YEAR ENDED JUNE 30, 2014
Governmental Activities - Internal Service Funds
Workers'
Compensation
Cash Flows from Operating Activities:
Cash received from/(paid to) interfund service provided
Cash paid to suppliers for goods and services
$
52,392
(189,064)
Net Cash Provided (Used) by Operating Activities
Net Cash Provided (Used) by
Non-Capital Financing Activities
Cash Flows from Investing Activities:
Interest received
Net Cash Provided (Used) by
Investing Activities
Net Increase (Decrease) in Cash
and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Reconciliation of Operating Income to Net Cash
Provided (Used) by Operating Activities:
Operating income (loss)
Adjustments to reconcile operating income (loss)
net cash provided (used) by operating activities:
(Increase) decrease in accounts receivable
Increase (decrease) in accounts payable
Increase (decrease) in claims and judgments
Total Adjustments
Net Cash Provided (Used) by
Operating Activities
$
(136,672)
Cash Flows from Non-Capital
Financing Activities:
From other agencies
Cash and Cash Equivalents at End of Year
Liability
Insurance
384,183
(469,689)
Longevity
Benefits
$
(85,506)
Totals
525,300
(597,000)
$ 961,875
(1,255,753)
(71,700)
(293,878)
-
15,913
-
15,913
-
15,913
-
15,913
3,740
7,785
2,157
13,682
3,740
7,785
2,157
13,682
(132,932)
(61,808)
(69,543)
(264,283)
560,115
952,038
314,162
1,826,315
$
427,183
$
890,230
$
244,619
$ 1,562,032
$
(136,018)
$
(35,533)
$
(71,700)
$ (243,251)
$
(654)
-
1,255
1,773
(53,001)
-
1,255
1,119
(53,001)
(654)
(49,973)
-
(50,627)
(136,672)
There were no non cash items.
101
$
(85,506)
$
(71,700)
$ (293,878)
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102
AGENCY FUNDS
Agency Funds are presented separately from the Government-wide and Fund Financial Statements.
Agency Funds account for assets held by the City as agent for individuals, governmental entities, and
non-public organizations. These funds include the following:
ASSESSMENT DISTRICT FUND - Used to account for the collection and payment to holders of the
1988 Special Tax Bonds.
CITY/COUNTY ASSOCIATION OF GOVERNMNETS OF SAN MATEO COUNTY (C/CAG) - Used to
account for City/County Association of Governments of San Mateo County's activities. The City acts as
fiscal agent for this entity.
SOUTH BAYSIDE WASTE MANAGEMENT AUTHORITY (SBWMA) - Used to account for the South
Bayside Waste Management Authority's activities. The City acts as fiscal agent for this entity.
103
CITY OF SAN CARLOS
COMBINING STATEMENT OF NET POSITION
ALL AGENCY FUNDS
JUNE 30, 2014
City/County
Association of
Government of
San Mateo
County
South Bayside
Waste
Management
Authority
11,790
-
$ 19,089,318
-
$ 14,942,598
6,257,859
-
2,908,683
709,057
3,896,227
15,723
$
11,790
$ 22,707,058
$ 25,112,407
$
47,831,255
$
11,790
$
$
$
9,710,899
36,868,740
1,239,826
11,790
Assessment
Districts
Assets:
Cash and investments
Cash and investments with fiscal agents
Receivables:
Accounts
Prepaid items
Total Assets
Liabilities:
Accounts payable and accrued liabilities
Due to members
Deposits payable
Due to assessment district bondholders
Total Liabilities
$
$
11,790
104
$
4,218,085
18,488,973
22,707,058
$
5,492,814
18,379,767
1,239,826
25,112,407
Totals
$
34,043,706
6,257,859
6,804,910
724,780
$
47,831,255
CITY OF SAN CARLOS
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
YEAR ENDED JUNE 30, 2014
Balance
7/1/2013
Additions
Deductions
Balance
6/30/2014
Assessment Districts
Assets:
Cash and investments
Total Assets
Liabilities:
Due to assessment district bondholders
Total Liabilities
$
11,790
$
-
$
-
$
11,790
$
11,790
$
-
$
-
$
11,790
$
11,790
$
-
$
-
$
11,790
$
11,790
$
-
$
-
$
11,790
$19,418,887
$
-
$ 329,569
$19,089,318
5,568,592
-
709,057
2,659,909
-
2,908,683
709,057
$ 24,987,479
$ 709,057
$ 2,989,478
$ 22,707,058
$ 7,917,788
17,069,691
$
1,419,282
$ 3,699,703
-
$ 4,218,085
18,488,973
$ 24,987,479
$ 1,419,282
$ 3,699,703
$ 22,707,058
$14,324,388
3,727,581
23,919
$ 618,210
168,646
-
$
8,196
$14,942,598
3,896,227
15,723
6,223,842
34,017
-
6,257,859
$ 24,299,730
$ 820,873
$
8,196
$ 25,112,407
$ 3,993,643
19,030,952
1,275,135
$ 1,499,171
-
$
651,185
35,309
$ 5,492,814
18,379,767
1,239,826
$ 24,299,730
$ 1,499,171
$ 686,494
$ 25,112,407
$33,755,065
9,296,173
23,919
$ 618,210
168,646
709,057
$ 329,569
2,659,909
8,196
$34,043,706
6,804,910
724,780
6,223,842
34,017
-
6,257,859
$ 49,298,999
$ 1,529,930
$ 2,997,674
$ 47,831,255
$ 11,911,431
36,100,643
1,275,135
11,790
$ 1,499,171
1,419,282
-
$ 3,699,703
651,185
35,309
-
$ 9,710,899
36,868,740
1,239,826
11,790
$ 49,298,999
$ 2,918,453
$ 4,386,197
$ 47,831,255
City/County Association of Government of San Mateo County
Assets:
Cash and investments
Receivables:
Accounts receivable
Prepaid costs
Total Assets
Liabilities:
Accounts payable and accrued liabilities
Due to members
Total Liabilities
South Bayside Waste Management Authority
Assets:
Cash and investments
Accounts receivable
Prepaid items
Restricted assets:
Cash and investments with fiscal agents
Total Assets
Liabilities:
Accounts payable and accrued liabilities
Due to members
Deposits payable
Total Liabilities
Totals - All Agency Funds
Assets:
Cash and investments
Accounts receivable
Prepaid items
Restricted assets:
Cash and investments with fiscal agents
Total Assets
Liabilities:
Accounts payable and accrued liabilities
Due to members
Deposits payable
Due to assessment district bondholders
Total Liabilities
105
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106
STATISTICAL SECTION
This part of the City'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 City's overall financial health. In contrast to the financial
section, the statistical section information is not subject to independent audit.
Financial Trends
These schedules contain trend information to help the reader understand how the City's financial
performance and well being have changed over time:
1.
2.
3.
4.
Net Position by Component
Changes in Net Position
Fund Balances of Governmental Funds
Changes in Fund Balance of Governmental Funds
Revenue Capacity
These schedules contain information to help the reader assess the City's most significant local revenue
source, property tax:
1.
2.
3.
4.
Assessed Value and Estimated Value of Taxable Property
Property Tax Rates
Top Ten Property Tax Payers
Property Tax Levies and Collections
Debt Capacity
These schedules present information to help the reader assess the affordability of the City's current levels
of outstanding debt and the City's ability to issue additional debt in the future:
1.
2.
3.
4.
5.
Ratio of Outstanding Debt by Type
Ratio of General Bonded Debt Outstanding
Revenue Bond Coverage
Computation of Direct and Overlapping Debt
Computation of Legal Bonded Debt Margin
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the
environment within which the City's financial activities take place:
1. Demographic and Economic Statistics
2. Principal Employers
3. Full Time Equivalent City government Employees by Function
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the City provides and the activities it
performs:
1. Operating Indicators by Function/Program
2. Capital Asset Statistics by Function/Program
Sources
Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual
Financial Reports for the relevant year. The City implemented GASB Statement 34 in 2003; schedules
presenting government-wide information include information beginning in that year.
107
CITY OF SAN CARLOS
Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
Thousands
$250,000
$200,000
$150,000
$100,000
$50,000
$-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Unrestricted
Governmental activities
Capital assets net of related debt
Restricted
Unrestricted
Total governmental activities net position
Restricted
Net of Related Debt
2005
2006
2007
$ 101,789,141
8,906,061
12,819,766
$ 123,514,968
$ 103,315,207
9,745,567
14,181,560
$ 127,242,334
$ 103,630,566
12,058,499
16,869,176
$ 132,558,241
$
$
$
$
Business-type activities
Capital assets net of related debt
Unrestricted
Total business-type activities net position
$
Primary government
Capital assets net of related debt
Restricted
Unrestricted
Total primary government net position
$ 111,362,702
8,906,061
16,484,176
$ 136,752,939
9,573,561
3,664,410
13,237,971
$
9,610,494
3,096,886
12,707,380
$ 112,925,701
9,745,567
17,278,446
$ 139,949,714
108
$
9,660,645
2,845,772
12,506,417
$ 113,291,211
12,058,499
19,714,948
$ 145,064,658
2008
2009
98,247,695
22,849,602
18,741,036
$ 139,838,333
$ 107,041,257
23,426,300
12,724,651
$ 143,192,208
$
$
$
10,667,232
3,064,709
13,731,941
$ 108,914,927
22,849,602
21,805,745
$ 153,570,274
$
11,097,233
3,985,755
15,082,988
$ 118,138,490
23,426,300
16,710,406
$ 158,275,196
2010
2011
2012
2013
2014
$ 101,975,928
23,500,466
19,737,818
$ 145,214,212
$ 113,903,786
12,143,894
26,256,514
$ 152,304,194
$ 119,426,713
7,322,914
34,473,081
$ 161,222,708
$ 119,171,599
8,871,235
39,942,056
$ 167,984,890
$ 124,467,083
9,859,896
42,689,655
$ 177,016,634
$
$
$
$
$
$
11,528,037
4,591,798
16,119,835
$ 113,503,965
23,500,466
24,329,616
$ 161,334,047
$
12,133,706
5,117,936
17,251,642
$ 126,037,492
12,143,894
31,374,450
$ 169,555,836
$
12,798,962
6,210,876
19,009,838
$ 132,225,675
7,322,914
40,683,957
$ 180,232,546
$
13,337,359
7,556,596
20,893,955
$ 132,508,958
8,871,235
47,498,652
$ 188,878,845
109
$
14,840,080
19,028,996
33,869,076
$ 139,307,163
9,859,896
61,718,651
$ 210,885,710
CITY OF SAN CARLOS
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2005
Expenses
Governmental Activities:
General Government
Public Safety
Public Works
Community Development
Parks and Recreation
Interest on Long Term Debt
Total Governmental Activities Expenses
$
Business-Type Activities:
Sewer
Total Business-Type Activities Expenses
Total Primary Government Expenses
Program Revenues
Governmental Activities:
Charges for Services:
General Government
Public Safety
Public Works
Community Development
Parks and Recreation
Operating Grants and Contributions
Capital Grants and Contributions
Total Government Activities Program Revenues
Net (Expense)/Revenue
Governmental Activities
Business-Type Activities
Total Primary Government Net Expense
$
3,697,138
3,697,138
5,951,198
12,559,004
2,202,707
2,633,826
4,611,490
1,111,062
29,069,287
2007
$
4,501,159
4,501,159
5,459,439
13,598,466
2,281,580
3,054,052
4,998,742
1,155,876
30,548,155
Fiscal Year Ended June 30,
2009
2010
2008
$
4,775,915
4,775,915
5,565,910
13,464,481
2,028,532
4,044,214
4,773,862
1,272,432
31,149,431
$
4,801,406
4,801,406
5,627,987
14,188,879
2,195,710
3,656,176
4,618,697
1,409,090
31,696,539
$
5,187,771
5,187,771
5,167,150
14,590,515
2,398,325
3,763,475
4,799,953
1,383,563
32,102,981
2011
$
6,696,224
6,696,224
3,950,781
15,074,068
1,945,532
3,611,267
3,707,647
1,565,337
29,854,632
2012
$
7,314,132
7,314,132
5,663,863
13,449,771
2,493,488
4,081,250
4,018,025
608,784
30,315,181
2013
$
7,887,064
7,887,064
6,475,824
14,574,275
2,687,707
2,766,720
4,117,692
264,260
30,886,478
2014
$
7,874,008
7,874,008
5,321,121
15,592,529
8,255,888
2,991,374
3,043,648
276,859
35,481,419
8,320,370
8,320,370
$
31,618,283
$
33,570,446
$
35,324,070
$
35,950,837
$
36,884,310
$
38,799,205
$
37,168,764
$
38,202,245
$
38,760,486
$
43,801,789
$
1,806,936
178,919
498,356
2,286,660
1,596,020
804,325
669,498
7,840,714
$
2,894,422
330,846
689,990
2,420,980
1,894,200
848,745
926,015
10,005,198
$
2,165,049
321,381
628,830
2,398,167
2,027,135
1,002,118
549,129
9,091,809
$
1,770,920
357,905
642,518
2,570,665
2,604,797
1,210,826
499,261
9,656,892
$
1,463,589
433,521
571,395
1,997,953
2,229,688
925,265
293,889
7,915,300
$
1,485,737
553,269
593,230
2,194,437
2,027,398
1,303,320
270,875
8,428,266
$
1,348,137
468,078
626,538
1,909,598
1,722,864
1,621,920
594,081
8,291,216
$
1,027,189
515,745
2,230,306
2,125,361
1,951,859
1,257,912
1,054,103
10,162,475
$
1,074,928
505,948
597,220
2,017,110
2,122,207
1,591,002
1,070,551
8,978,966
$
1,071,289
527,366
1,201,650
2,625,860
2,206,374
1,942,020
4,907,492
14,482,051
Business-Type Activities:
Charges for Services:
Sewer
Total Business-Type Activities Program Revenue
Total Primary Government Program Revenues
5,213,466
11,848,317
2,649,942
2,514,455
4,371,090
1,323,875
27,921,145
2006
4,581,318
4,581,318
4,516,248
4,516,248
5,709,952
5,709,952
7,077,490
7,077,490
7,756,952
7,756,952
8,020,388
8,020,388
8,993,614
8,993,614
10,195,074
10,195,074
10,222,616
10,222,616
12,685,252
12,685,252
$
12,422,032
$
14,521,446
$
14,801,761
$
16,734,382
$
15,672,252
$
16,448,654
$
17,284,830
$
20,357,549
$
19,201,582
$
27,167,303
$
(20,080,431)
884,180
(19,196,251)
$
(19,064,089)
15,089
(19,049,000)
$
(21,456,346)
934,037
(20,522,309)
$
(21,492,539)
2,276,084
(19,216,455)
$
(23,781,239)
2,569,181
(21,212,058)
$
(23,674,715)
1,324,164
(22,350,551)
$
(21,563,416)
1,679,482
(19,883,934)
$
(20,152,706)
2,308,010
(17,844,696)
$
(21,907,512)
2,348,608
(19,558,904)
$
(20,999,368)
4,364,882
(16,634,486)
$
$
$
$
110
$
$
$
$
$
$
2005
General Revenues and Other Changes in Net Assets
Governmental Activities:
Taxes:
Property Taxes
Sales Taxes
Motor Vehicle In-Lieu
Transient Occupancy Tax
Nonregulatory Franchise
Use of Money & Property
Other
Transfers
Extraordinary gain/(loss) on dissolution of RDA
Total Government Activities
$
Business-Type Activities:
Use of Money & Property
Miscellaneous revenues
Transfers
Total Business-Type Activities
Total Primary Government
Change in Net Assets
Governmental Activities
Business-Type Activities
Total Primary Government
10,539,320
5,237,707
1,680,961
470,650
2,348,952
973,908
482,787
529,320
22,263,605
2006
$
(529,320)
(529,320)
$
(545,680)
(545,680)
$
21,734,285
$
$
2,183,174
354,860
2,538,034
$
$
11,150,320
5,458,154
2,429,602
625,965
1,025,616
918,545
637,573
545,680
22,791,455
2007
$
22,245,775
3,727,366
(530,591)
3,196,775
12,909,094
5,620,178
2,019,204
766,974
2,310,424
1,829,994
181,385
1,135,000
26,772,253
$
(1,135,000)
(1,135,000)
$
$
$
25,637,253
5,315,907
(200,963)
5,114,944
Fiscal Year Ended June 30,
2009
2010
2008
13,878,227
5,503,729
2,105,682
825,070
2,357,789
1,624,497
1,337,838
1,139,799
28,772,631
$
89,239
(1,139,799)
(1,050,560)
14,247,207
5,669,333
2,176,235
750,175
2,520,723
300,513
287,928
1,183,000
27,135,114
$
(35,134)
(1,183,000)
(1,218,134)
12,785,913
5,697,574
2,230,997
682,750
2,663,713
782,328
313,444
540,000
25,696,719
2011
$
38,243
214,440
(540,000)
(287,317)
14,414,923
5,752,468
2,315,671
815,197
2,916,896
1,190,048
853,307
584,600
28,843,110
2012
$
36,925
(584,600)
(547,675)
12,615,467
5,870,214
2,205,159
943,513
3,000,857
1,443,720
818,682
595,000
2,184,427
29,677,039
2013
$
45,186
(595,000)
(549,814)
11,231,717
6,427,400
2,155,983
1,120,864
3,240,864
1,552,992
2,429,874
510,000
28,669,694
2014
$
12,907,307
7,287,136
2,438,078
1,270,072
3,351,838
1,918,054
686,427
172,200
30,031,112
45,509
(510,000)
(464,491)
91,110
32,358
(172,200)
(48,732)
$
27,722,071
$
25,916,980
$
25,409,402
$
28,295,435
$
29,127,225
$
28,205,203
$
29,982,380
$
7,280,092
1,225,524
8,505,616
$
3,353,875
1,351,047
4,704,922
$
2,022,004
1,036,847
3,058,851
$
7,279,694
1,131,807
8,411,501
$
9,524,333
1,758,196
11,282,529
$
6,762,182
1,884,117
8,646,299
$
9,031,744
4,316,150
13,347,894
$
111
$
$
$
$
$
$
CITY OF SAN CARLOS
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modifed Accrual Basis of Accounting)
Thousands
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2005
Reserved
2006
Unreserved
2007
2008
Nonspendable
2009
2010
Restricted
2005
General Fund
Reserved
Unreserved
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total General Fund
All Other Governmental Funds
Reserved
Unreserved, reported in:
Special revenue funds
Capital project funds
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total all other governmental
funds
$
2006
544,916
6,287,360
6,832,276
$
$ 4,244,233
$
(401,813)
8,202,854
$ 12,045,274
2011
2012
Committed
2013
Assigned
Fiscal Year Ended June 30,
2007
$
$
535,053
6,076,082
6,611,135
$
4,426,102
(415,711)
9,453,218
-
$ 13,463,609
$
$
1,110,377
6,757,319
7,867,696
$
7,356,498
2014
Unassigned
2008
2009
$
1,607,405
7,339,240
8,946,645
$ 1,433,666
8,455,536
$ 9,889,202
$
7,950,925
$ 4,725,179
697,046
8,815,326
-
986,318
19,391,338
-
1,038,590
22,213,798
-
$ 16,868,870
$ 28,328,581
$ 27,977,567
In fiscal year 2011, the City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.
The classifications have been changed to accommodate the implementation of this statement.
112
2010
2011
Fiscal Year Ended June 30,
2012
2013
2014
$ 2,556,020
9,207,477
$ 11,763,497
$
-
712,160
2,706,600
2,728,704
10,694,918
$ 16,842,382
$
713,300
6,853,165
9,175,000
3,002,379
$ 19,743,844
$
1,062,700
42,000
7,151,565
9,700,000
3,052,124
$ 21,008,389
$
$ 4,093,846
$
-
$
$
$
1,228,197
23,313,352
$ 28,635,395
1,587,305
10,556,589
5,760,066
5,578,686
(22,835)
$ 23,459,811
1,585,662
5,737,252
9,652,778
(22,610)
$ 16,953,082
-
15,130,823
3,200,000
12,901,565
3,040,483
$ 34,272,871
-
2,538,601
6,290,634
14,369,247
-
9,859,896
12,377,737
-
$ 23,198,482
$ 22,237,633
efinitions.
113
CITY OF SAN CARLOS
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
Fiscal Year Ended June 30,
2006
2007
2008
2005
Revenues
Taxes
Licenses, permits and fees
Fines and forfeitures
Use of money and property
From other agencies
Charges for services
Other revenues
Total Revenues
Expenditures
Current:
General government
Public safety
Public works
Community development
Parks and recreation
Capital outlay
Debt service:
Principal repayment
Interest and fiscal charges
Total Expenditures
Excess (deficiency) of revenues over
(under) expenditures
Other Financing Sources (Uses)
Transfers in
Transfers (out)
Proceeds from sale of capital assets
Proceeds of Debt
Payments to refunded bond escrow
Capital contributions
Total other financing sources (uses)
$ 17,693,351
2,695,016
255,296
1,539,309
3,200,388
2,516,049
1,681,963
$ 21,110,223
1,578,599
241,987
1,744,581
1,888,670
2,434,215
2,630,406
$ 23,625,877
1,698,221
256,093
2,401,578
1,747,099
2,733,524
1,766,054
$24,670,497
1,927,307
260,020
2,471,935
1,496,292
2,727,931
3,557,546
29,581,372
31,628,681
34,228,446
37,111,528
4,475,860
11,659,584
1,178,101
2,461,802
4,179,292
3,270,625
5,114,705
12,584,782
1,284,486
2,559,046
4,248,547
3,654,871
4,670,435
13,418,417
1,053,956
2,967,028
4,416,144
2,687,793
4,475,515
13,451,291
1,236,673
3,932,143
4,347,834
3,699,266
356,680
1,366,332
388,975
1,179,371
446,316
1,088,535
1,298,643
1,229,101
28,948,276
31,014,783
30,748,624
33,670,466
633,096
613,898
3,479,822
3,441,062
5,680,660
(4,498,660)
-
7,401,745
(6,214,006)
16,010,000
(8,100,141)
-
2,640,121
(2,066,164)
573,957
583,296
1,182,000
9,097,598
-
-
-
-
$ 1,207,053
$ 1,197,194
$ 4,661,822
$ 12,538,660
6.8%
5.9%
5.5%
Extraordinary gain/(loss) on dissolution of RDA
Net Change in fund balances
Debt service as a percentage of
noncapital expenditures
3,700,979
(3,108,876)
8,115,000
(8,123,807)
-
114
8.9%
Fiscal Year Ended June 30,
2011
2012
2013
2009
2010
$ 25,363,673
1,541,665
312,853
1,248,692
987,347
2,561,133
1,861,965
$ 24,060,951
1,607,864
397,210
1,693,320
1,385,530
2,725,768
1,621,224
$ 26,868,250
1,020,215
299,364
2,004,508
2,125,347
2,532,268
1,594,824
$ 25,282,782
3,198,769
265,091
1,864,401
2,048,990
2,557,464
1,674,507
$ 24,176,828
2,024,279
234,218
1,805,466
1,824,567
2,912,353
3,878,322
$ 27,254,431
2,271,457
219,944
2,176,508
4,119,086
3,389,107
2,886,134
33,877,328
33,491,867
36,444,776
36,892,004
36,856,033
42,316,667
5,886,424
14,130,234
1,200,883
3,581,043
4,225,018
3,556,380
3,736,126
14,521,349
1,178,543
3,656,015
4,226,263
2,165,396
3,031,272
15,298,099
1,223,829
3,542,118
3,379,167
9,854,906
4,555,802
13,119,914
1,673,870
3,932,661
3,438,598
2,465,296
4,165,249
14,410,769
1,641,955
2,666,132
3,597,600
2,841,083
4,715,318
15,360,993
6,779,012
2,870,822
2,574,917
7,691,263
636,421
1,417,182
624,164
1,391,888
662,049
1,574,187
700,264
843,435
265,000
268,300
285,000
258,604
34,633,585
31,499,744
38,565,627
30,729,840
29,856,088
40,535,929
1,992,123
(2,120,851)
6,162,164
6,999,945
1,780,738
3,981,090
(3,441,090)
-
4,283,631
(3,699,031)
1,509,424
-
2,938,040
(2,293,040)
-
4,303,415
(3,793,415)
-
1,645,165
(1,472,965)
8,800,000
1,550,695
(756,257)
8,380,752
(7,077,952)
45,000
-
$
1,347,800
540,000
2,094,024
-
-
-
591,543
$ 2,532,123
6.5%
6.6%
$
645,000
2014
510,000
10,522,895
(10,412,431)
-
-
(26,827)
$ (3,605,267)
$ 7,509,945
$ 12,303,633
7.5%
5.3%
115
1.9%
1.7%
CITY OF SAN CARLOS
ASSESSED AND ESTIMATED ACTUAL
VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
$8,000
$7,000
$6,000
Millions
$5,000
$4,000
$3,000
$2,000
$1,000
$0
2005
2006
2007
2008
2009
2010
Series1
Fiscal
Year
Residential
Property
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
$ 3,911,496,602
4,254,256,916
4,593,999,057
4,907,682,878
5,237,194,752
5,385,051,647
5,438,326,043
5,532,457,020
5,717,858,710
6,120,011,894
Real Property
Commercial
Industrial
Property
Property
$ 373,753,915
391,089,865
420,186,971
480,488,543
530,328,970
537,954,158
532,479,578
530,784,713
516,269,311
541,914,403
$ 408,475,375
412,066,652
455,972,060
480,178,708
493,030,102
510,871,559
524,446,802
530,206,176
559,907,761
556,804,162
2012
2013
2014
Series2
Other
Total Real
Secured
Property
$ 45,270,826
51,364,640
55,698,472
56,711,565
58,254,703
49,573,684
50,382,008
57,106,808
69,214,632
59,050,682
$ 4,738,996,718
5,108,778,073
5,525,856,560
5,925,061,694
6,318,808,527
6,483,451,048
6,545,634,431
6,650,554,717
6,863,250,414
7,277,781,141
Source: San Mateo County Assessor 2004/05 - 2013/14 Combined Tax Rolls
(a) The State Constitution requires property to be assessed at one hundred percent of the most
recent purchase price, plus an increment of no more than two percent annually, plus any
local over-rides. These values are considered to be full market values.
(b) California cities do not set their own direct tax rate. The state constitution establishes the rate at 1% and
allocates a portion of that amount, by an annual calculation, to all the taxing entities within a tax rate area.
116
2011
Unsecured
Property
$
345,106,310
316,187,349
316,693,245
337,894,181
329,100,047
299,137,744
289,541,082
280,928,376
269,345,842
401,155,969
Total
Assessed (a)
Estimated
Full Market (a)
Total
Direct
Tax Rate (b)
$ 5,084,103,028
5,424,965,422
5,842,549,805
6,262,955,875
6,647,908,574
6,782,588,792
6,835,175,513
6,931,483,093
7,132,596,256
7,678,937,110
$ 5,084,103,028
5,424,965,422
5,842,549,805
6,262,955,875
6,647,908,574
6,782,588,792
6,835,175,513
6,931,483,093
7,132,596,256
7,678,937,110
0.18798%
0.18285%
0.18836%
0.19223%
0.19262%
0.19582%
0.19600%
0.19481%
0.19504%
0.11685%
CITY OF SAN CARLOS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
(Rate per $100 of Taxable Value)
LAST TEN FISCAL YEARS
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Belmont Redwood City Redwood Shore Elementary
Sequoia High School Bond
San Carlos Elementary Bonds
San Mateo Junior College District
Public Library
Basic County Wide Levy
City Direct Rates
Fiscal
Year
Basic
County
Wide
Levy
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
City's share ₁
of 1% Levy
Per
Prop 13
0.13273
0.13273
0.13273
0.13273
0.13273
0.13273
0.13273
0.13273
0.13273
0.13273
Overlapping Rates
Belmont
Public
Library
San Mateo
Junior College
District
San Carlos
Elementary
Bonds
Sequoia
High School
Bond
0.0106
0.0102
0.0098
0.0092
0.0089
0.0088
0.0089
0.0089
0.0088
0.0084
0.0065
0.0065
0.0184
0.0171
0.0165
0.0182
0.0193
0.0199
0.0194
0.0194
0.0303
0.0327
0.0532
0.0520
0.0517
0.0531
0.0528
0.0535
0.0528
0.0775
0.0164
0.0223
0.0208
0.0205
0.0282
0.0277
0.0311
0.0358
0.0356
0.0313
Total Direct
Redwood City Overlapping
Redwood Shore
Elementary
Tax
Rate
Total*
Direct
Rate
0.0381
0.0386
0.0656
0.0612
0.0601
0.0568
0.0598
0.0971
0.0981
0.0945
1.1019
1.1103
1.1678
1.1600
1.1654
1.1646
1.1719
1.2152
1.2147
1.2311
0.18798
0.18285
0.18836
0.19223
0.19262
0.19582
0.19600
0.19481
0.19504
0.11685
₁City's share of 1% Levy is based on the City's share of the general fund tax rate area with the laragest net txable value within the city.
*Total Direct Rate is the weighted average of all individual direct rates applied by the government preparing the statistical section information
Data Source: San Mateo County Assessor 2004/05 - 2013/14 Tax Rate Table
117
CITY OF SAN CARLOS
Top Ten Property Tax Payers
Current Year and Ten Years Ago
2013-2014
Taxpayer
Nektar Therapeutics
SPK-Skyway Landing LLC
Circle Star Center Associates LP
L-3 Communications Corp
Inhale Therapeutic Systems Inc
Mickesson Corporation
Communications and Power Industrials
Brittan Corners Shopping Center LLC
Corio Inc
Kelly Moore Paint Company Inc
Novartis Pharmaceuticals
BMR-201 Industrial RD LLC
Black Mountain Holdings LLC
Vica Capital LLC
San Carlos Retail Venture LP
ECI Two San Carlos LLC
Subtotal
Total Net Assessed Valuation:
Fiscal Year 2013-2014
Fiscal Year 2004-2005
2004-2005
Percentage
of Total City
Assessed
Value
Assessed
Value
Rank
$ 73,331,069
2
0.95%
38,767,187
4
0.50%
24,238,825
6
0.32%
22,792,542
157,876,558
39,774,175
36,098,448
22,440,000
21,817,815
19,540,756
$ 456,677,375
7
1
3
5
8
9
10
0.30%
2.06%
0.52%
0.47%
0.29%
0.28%
0.25%
5.95%
$7,678,937,110
$5,082,994,619
Source: San Mateo County Assessor 2013/14 Combined Tax Rolls.
Top Property Owners Based on Net Values
118
Assessed
Value
Rank
$ 73,437,705
45,000,000
30,000,000
29,540,985
28,962,595
24,498,141
21,840,902
20,993,419
18,689,255
17,836,335
1
2
3
4
5
6
7
8
9
10
$ 310,799,337
Percentage
of Total City
Assessed
Value
1.44%
0.89%
0.59%
0.58%
0.57%
0.48%
0.43%
0.41%
0.37%
0.35%
6.11%
CITY OF SAN CARLOS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
14
12
Millions
10
8
6
4
2
2005
2006
2007
2008
2009
2010
Total Tax Levy (a)
Fiscal
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
Tax Levy (a)
8,908,366
9,341,401
10,408,503
11,389,746
12,171,289
12,695,894
12,829,443
12,955,911
8,138,448
8,879,658
Current
Tax
Collections( b)
8,365,797
8,724,926
10,350,198
11,234,055
11,641,072
12,124,097
12,155,993
11,398,356
8,027,011
8,757,878
2011
2012
2013
2014
Total Tax Collections
Percent
of Levy
Collected
Delinquent
Tax
Collections (c)
93.91%
93.40%
99.44%
98.63%
95.64%
95.50%
94.75%
87.98%
98.63%
98.63%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Total
Tax
Collections
$
8,365,797
8,724,926
10,350,198
11,234,055
11,641,072
12,124,097
12,155,993
11,398,356
8,027,011
8,757,878
Percent
of Total
Tax
Collections
to Tax Levy
93.91%
93.40%
99.44%
98.63%
95.64%
95.50%
94.75%
87.98%
98.63%
98.63%
Source: San Mateo County Assessor 2004/05 - 2013/14 Combined Tax Rolls
2013/14 County of San Mateo Estimated property tax revenue
NOTE: Current tax collections beginning in 1993 have been reduced by a mandatory
tax reallocation imposed by the State of California
a) Prior to the dissolution of Redevelopment Agency in FY 2012; the data in this table includes the general fund property taxes
debt service tax and Redevelopment Agency tax increments. Beginning FY 2013, the amount presented are the secured
and unsecured estimated property tax revenue provided by the County at the beginning of the fiscal year. The tax levy
is subject to adjustment for all increases, decreases and refunds processed throughout the fiscal year.
b) Prior to the dissolution of Redevelopment Agency in FY 2012; the data in this table includes the basic and supplemental
property taxes, debt service tax and Redevelopment Agency tax increments. Beginning FY 2013, the amount presented
includes only the City's general secured and unsecured property taxes collections. The tax collection is subject to adjustment
for all increases, decreases and refunds processed throughout the fiscal year.
c) Beginning fiscal year 1995, the County entered a "Teeter Plan" agreement with the City which allows the City to keep
100% of the secured taxes and the County to keep all interest and delinquency charges collected.
Delinquent tax collection data is not available.
119
CITY OF SAN CARLOS
Ratio of Outstanding Debt by Type
LAST TEN FISCAL YEARS
Total Outstanding Debt
$40
Millions
$30
$20
$10
$2005
Fiscal
Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Tax
Allocation
Bonds
$ 9,890,000
9,660,000
9,415,000
9,160,000
-
2006
2007
2008
2009
2010
2011
2012
2013
2014
Tax Allocation Bonds
General Obligation Bonds Public Library
Installment * Purchase Agreement
California Energy Commission
R. Berghella * Trust Agreement
RDA* Revenue Bonds
2008 ** Financing Agreement
2009** Financing Agreement
ABAG Lease Agreement
Governmental Activities
General
Installment *
California
Obligation Bonds Purchase
Energy
Public Library
Agreement
Commission
$ 7,870,000
7,805,000
8,115,000
7,990,000
7,820,000
7,630,000
7,425,000
7,200,000
6,955,000
6,690,000
6,405,000
$ 2,800,000
2,800,000
2,800,000
2,800,000
2,800,000
2,800,000
2,800,000
2,800,000
-
$ 497,233
441,359
383,795
324,488
263,415
200,475
135,627
68,822
-
R. Berghella *
Trust
Agreement
$
706,398
700,592
694,210
687,193
679,432
671,009
661,683
651,439
-
RDA*
Revenue
Bonds
ABAG
Lease
Agreement
$ 16,010,000
15,635,000
15,290,000
14,930,000
Business Type Activities
2008 **
2009**
Financing
Financing
Agreement
Agreement
$ 1,510,000
1,510,000
1,460,000
1,410,000
1,355,000
$ 8,800,000
$
8,450,000
8,330,000
8,175,000
8,015,000
Total
Primary
Government
Percentage
of Personal
Income (a)
$ 21,763,631
21,406,951
21,408,005
20,961,681
27,572,847
28,446,484
36,272,310
35,440,261
16,540,000
16,060,000
15,205,000
1.39%
1.22%
1.13%
1.14%
1.46%
1.55%
2.38%
2.19%
0.97%
0.91%
(a)
Note : Debt amounts exclude any premiums, discounts, or other amortization amounts.
Sources:
City of San Carlos Debt Schedule
State of California, Department of Finance (population)
U.S. Department of commerce, Bureau of the Census (income)
(a) See Schedule (Demographic Statistics) for personal income and population data.
Data for 2014 is not available
* As a result of the dissolution of Redevelopment Agency on February 1, 2012, long-term debt of the former Redevelopment Agency were transferred to the Successor Agency
when took over responsibility of winding down the operations of the former Agency.
** Adjustments made in the current year relating to the City's investment in the Silcon Valley Water Joint Venture. See Note 15C for more information
120
Per
Capita
785.80
767.77
764.24
742.90
966.04
986.73
1,276.92
1,243.78
577.23
555.11
520.38
CITY OF SAN CARLOS
RATIO OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
300
250
200
150
100
50
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
GO Bond Oustanding Debt Per Capita
Fiscal
Year
2005
General Bonded Debt Outstanding
Less: Amounts
2005 General
Availabe in Debt
Obligation Debt (1)
Service Fund (2)
Total
$
7,805,000
$
112,363
$
Percentage of
Assessed
Value (3)
7,692,637
0.15%
Per
Capita (4)
$
275.90
2006
8,115,000
249,626
7,865,374
0.14%
280.79
2007
7,990,000
251,610
7,738,390
0.13%
274.26
2008
7,820,000
324,388
7,495,612
0.12%
262.62
2009
7,630,000
327,112
7,302,888
0.11%
253.32
2010
7,425,000
331,025
7,093,975
0.10%
249.74
2011
7,200,000
350,365
6,849,635
0.10%
240.39
2012
6,955,000
364,775
6,590,225
0.10%
229.99
2013
6,690,000
401,700
6,288,300
0.09%
217.36
2014
6,405,000
436,396
5,968,604
0.08%
204.27
1. This is the general bonded debt of governmental activities, net of original issurance discounts and premiums
2. This is the amount restricted for debt service principal payments
3. Assessed value has been used because the actual value of taxable property is not readily avaialbe in the State
of California
4. Population data can be found in the Schedule of Demographic and Economic Statistics
121
CITY OF SAN CARLOS
PLEDGED-REVENUE COVERAGE
LAST FIVE FISCAL YEARS
$7,000
$875
$6,000
Thousands
$5,000
880
$4,000
$3,000
$2,000
$1,000
883
5,301
851
$431
3,100
1,854
$1,422
3,001
$0
2010
2011
2012
Available Tax Revenue
Fiscal
Year
2010
2011
2012
2013
2014
Net Revenue
Available for
Debt Services
$
1,422,489
1,853,539
3,099,735
3,000,783
5,300,680
2013
2014
Total Debt Payment
San Carlos Sewer Fund - SBSA 2008, 2009 & 2014 Financing Agreement
Financing Agreement
2014*
2008
2009
Debt Services
Total
$
74,190
117,308
115,308
118,208
$116,008
$
356,691
733,352
765,177
765,278
$759,246
Source: City of San Carlos Annual Financial Statements
*Debt payment begins in August 2014
122
$
-
430,881
850,660
880,485
883,486
$875,254
Coverage
3.30
2.18
3.52
3.40
6.06
CITY OF SAN CARLOS
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
JUNE 30, 2014
2013-14 Assessed Valuation
$
Redevelopment Successor Agency Incremental Valuation
7,678,937,110
637,200,253
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
San Mateo Community College District
Sequoia Union High School District
Belmont-Redwood Shores School District
Belmond-Redwood Shores School Facilities Improvement District
Belmont-Redwood Shores School Facilities Improvement District
Redwood City School District
San Carlos School District
City of San Carlos
$
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
Total Debt
6/30/2014
563,069,994
328,635,000
32,384,348
34,965,000
23,115,000
40,102,854
70,571,841
6,405,000
$
1,099,249,037
$
473,769,816
10,950,000
662,071
133,209,717
TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT
$
618,591,604
OVERLAPPING TAX INCREMENT DEBT (SUCCESSOR AGENCY)
$
13,745,000
OVERLAPPING GENERAL FUND OBLIGATION DEBT:
San Mateo County General Fund Obligations
San Mateo County Board of Education Certificates of Participation
Belmont-Redwood Shores School District Certificates of Participation
Midpenninsula Regional Park District General Fund Obligations
CITY DIRECT DEBT
TOTAL OVERLAPPING DEBT
(1)
Percentage
Applicable
4.891%
11.758%
4.601%
8.173%
0.369%
2.765%
95.807%
100%
City's Share of
Debt
6/30/2014
$ 27,539,753
38,640,903
1,490,004
2,857,689
85,294
1,108,844
67,612,764
6,405,000
$ 145,740,251
4.891%
4.891%
2.765%
3.929%
100%
$
23,172,082
535,565
18,306
5,233,810
$
28,959,763
$
13,745,000
$6,405,000
$ 182,040,014
$ 188,445,014 (2)
COMBINED TOTAL DEBT
(1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by
determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed
value.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.
RATIOS TO 2013-2014 ASSESSED VALUATION:
Direct Debt
Total Gross Direct and Overlapping Tax Assessment Debt
Combined Total Debts
0.08%
1.90%
2.45%
RATIOS TO REDEVELOPMENT INCREMENTAL VALUATION ($637,200,253):
Total Overlapping Tax Increment Debt
2.16%
Source: California Municipal Statistics, Inc.
123
CITY OF SAN CARLOS
COMPUTATION OF LEGAL BONDED DEBT MARGIN
JUNE 30, 2014
Legal Debt Service Limit
(In Thousands)
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$2005
2006
2007
2008
Debt Services Limit
2005
Secured property assessed value, net of
exempt real property
Legal Debt Limit
Debit service limit (3.75% of
property assessed value)(a)
Less: amount applicable to debt service limit(b)
Legal debt margin
Total net debt applicable to the limit
as a percentage of debt limit
4,790,023
$
179,626
$
171,821
7,805
4.54%
2009
2010
2011
Amount Applicate to Debt Services Limit
2006
5,108,778
$ 191,579
2007
2008
5,525,277
$ 207,198
5,925,055
$ 222,190
$ 216,791
2013
2014
Legal Debt Service Limit Margin
Fiscal Year
In Thousands
2009
2010
5,781,085
2012
5,940,600
$ 222,773
2011
5,988,768
$ 224,579
2012
2013
6,085,726
$ 228,215
7,132,596
$
267,472
2014
7,678,937
$ 287,960
8,115
7,990
7,820
7,630
7,425
7,200
6,955
6,690
6,405
$ 183,464
$ 199,208
$ 214,370
$ 209,161
215,348
217,379
221,260
260,782
281,555
3.45%
3.31%
3.14%
2.57%
2.27%
4.42%
4.01%
3.65%
NOTE:
(a) California Government Code, Section 43605 sets the debt limit at 15%. The
Code section was enacted prior to the change in basing assessed value to full market
value when it was previously 25% of market value. Thus, the limit shown as 3.75%
is one-fourth the limit to account for the adjustment of showing assessed valuation
at full cash value.
(b) The amount applicable to debt service limit represents the amount of debt services payment that is the obligation of the City
Source: City Finance Department
San Mateo County Tax Assessor's Office
124
3.65%
CITY OF SAN CARLOS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Personal Income and Unemployment
$70,000
7.0%
6.3%
$60,000
6.0%
5.8%
5.4%
$50,000
5.0%
4.8%
$40,000
4.0%
3.6%
$30,000
3.2%
2.9%
2.8%
2.6%
2.4%
3.0%
$20,000
2.0%
$10,000
1.0%
$0
0.0%
2005
2006
2007
2008
2009
2010
Per Capita Personal Income
Fiscal
Year
City
Population
2005
27,882
2006
2007
2008
2009
2010
2011
2012
2013
2014
28,012
28,216
28,542
28,829
28,406
28,494
28,654
28,931
29,219
Total Personal
Income (amount
express in
thousands)
$
1,562,124
Per Capita
Personal
Income
$
1,725,673
1,842,850
1,888,601
1,830,173
1,524,777
1,614,668
1,696,601
1,769,882
(a)
2011
125
2013
2014
Unemployment Rate
Unemployment
Rate
San Mateo
County
Population
City
Population
% of County
56,026
2.9%
719,655
3.90%
61,605
65,312
66,169
63,484
52,299
56,223
58,643
60,573
(b)
2.4%
2.6%
3.2%
5.8%
6.3%
5.4%
4.8%
3.6%
2.8%
724,104
733,496
739,469
745,858
754,285
724,702
729,443
735,678
745,193
3.90%
3.90%
3.90%
3.87%
3.77%
3.93%
3.93%
3.93%
3.92%
Data Source:
Population: California state Department of finance
Unemployment Data: California Empolyment Development Department
Income Data : ESRI - Demorgraphic Estimates are based on the last available census.
Demorgraphic Data is totaled from census Block Groups that overlap the City's boundaries
Note: (a) & (b) Information is not available
2012
CITY OF SAN CARLOS
Principal Employers
Current Year ( A )
2014
Employer
L-3 COMMUNICATIONS CORP
PACIFIC GAS & ELECTRIC
KELLY-MOORE PAINT CO INC
NATERA INC
DELTA STAR INC
WELLS FARGO INSURANCE SERVICES
NOVARTIS PHARMACEUTICALS
CHECK POINT SOFTWARE TECH INC
THE HOME DEPOT
GEORGE P JOHNSON CO
BEST BUY INC
TERADATA OPERATIONS INC
PARCA
TRADER JOE'S
NATUS MEDICAL
Number of
Employees
Percent of
Total
Employment
389
350
267
205
188
185
172
170
165
150
110
97
95
93
78
2.39%
2.15%
1.64%
1.26%
1.15%
1.13%
1.06%
1.04%
1.01%
0.92%
0.67%
0.60%
0.58%
0.57%
0.48%
2,714
16.65%
"Total Employment (16,300) *" as used above represents the total employment of all employers located
within City limits.
Data Source : City Business License Record
Information is not available for 2005
126
CITY OF SAN CARLOS
Full Time Equivalent City Government Employees by Function
140
120
100
50
48
42
39
22
23
23
22
22
16
15
17
16
17
17
15
21
19
2005
2006
40
38
15
24
27
21
14
14
13
1
12
17
17
21
21
22
23
14
14
14
13
13
12
13
21
23
20
20
19
17
18
19
2007
2008
2009
2010
2011
2012
2013
2014
80
60
40
20
0
General Government
2005
Community Development
2006
2007
2008
General Government
21
19
21
23
Community Development
17
17
15
14
Public Works
16
15
17
16
Parks & Recreation
22
23
23
22
Public Safety
50
48
42
39
**Police services are provided by County of San Mateo Sheriff's Office
*** San Carlos begins Only in FY 2012
**** Transfer of fire services personnnel to City of Redwood City
Total Number Employees
126
122
118
114
Public Works
2009
Parks & Recreation
2010
2011
Public Safety
2012
2014
20
14
17
22
40
20
14
17
21
38
19
13
21
14
15
17
13
21
14
24
18
12
22
13
27
19
13
23
12
1
113
110
82
89
92
68
Source: City budget document
** On October 31, 2010, The County of San Mateo Sheriff's Office assumed law enforcement responsibilities
for the City of San Carlos.
*** On October 12, 2011 the Belmont-San Carlos Fire Department disoloved; and re-establishing a City
of San Carlos Fire Department with Fire Command staff contracted with the City of Redwood City.
**** As of July 1, 2013 City of the Redwood provides full fire and emergecny services including the transfer
of fire services personnel from the City of San Carlos to City of Redwood City.
127
2013
CITY OF SAN CARLOS
Operating Indicators by Function/Program
Last Ten Fiscal Years
2005
Function/Program
Public safety:
* Fire
Fire calls for service
Primary fire inspections conducted
Police:
Communication Center calls answered
Police calls for Service
Law violations:
Part I and Part II crimes
Physical arrests (adult and juvenile)
Traffic violations
Parking violations
Street
Pavement Condition Index
Sewer
Sewer service connections
Average daily flow (millions of gallons)
Maximum Allocated Treatment Capacity,
Average Dry Weather Flow (Millions of Gallons)
Maximum Allocated Treatment Capacity, Peak Wet
Weather Flow (Millions of Gallons)
Culture and recreation:
Community Services:
Adult Registrations
Tot/Youth Registrations
Facility Rentals
Picnic Rentals
Organized Play Participants
Organized Play Hours Permitted
2006
2007
2008
2009
2010
2011
2012
2013
2014
992
240
1,896
465
1,961
356
N/A
13,568
13,856
14,769
14,434
13,638
12,236
11,058
13,490
12,831
N/A
N/A
N/A
N/A
1,737
793
1,041
3,594
2,885
934
749
2,922
2,126
864
1,783
4,698
2,638
1,005
2,916
4,357
2,843
1,060
4,660
5,103
2,446
912
3,701
4,573
2,132
704
2,932
4,533
1,780
657
3,666
4,558
1,988
683
3,224
3,609
64
67
64
64
60
11,309
N/A
11,309
2.60
11,335
1.75
11,355
1.66
11,107
1.66
65
N/A
10,880
2.71
10,900
2.93
4.47
N/A
64
64
11,050
2.50
11,061
2.76
11,192
2.45
4.47
4.47
4.47
4.47
4.47
4.47
4.47
4.47
4.47
14.3
14.3
14.3
14.3
14.3
14.3
14.30
14.30
14.30
14.30
5,116
9,773
68
135
7,446
18,775
5,200
9,029
151
146
7,299
18,085
4,520
7,761
60
162
8,692
19,640
4,373
9,267
62
150
8,724
18,326
3,304
7,577
94
184
6,742
19,329
3,086
6,262
158
146
6,620
17,228
2,312
6,189
185
N/A *
5,454
17,368
2,585
7,117
178
144
8,005
18,611
2,481
7,646
189
166
7,184
17,212
2,750
7,042
133
173
6,761
17,046
Note: N/A denotes information not available.
Due to the Wastewater Treatment Plant had problems with its flow meters last year, the data for average daily flow is not available.
N/A* Due to the budget cut, picnic rental program halted in FY 2011, will reinstate in FY 2012
* The Belmont-San Carlos Fire Department disoloved on October 12, 2011. City restablished the Fire Department in October 2011.
Information prior to the FY 2011 is not available.
Source: Various city department records
128
CITY OF SAN CARLOS
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
2005
Function/Program
Public safety:
Fire stations
Police stations
Streets
Total Length (Miles)
Street lights
Traffic Signals
2006
2
1
2007
2
1
2008
2
1
2009
2010
2011
2012
2013
2014
2
1
2
1
2
1
2
1
2
1
2
1
2
1
87
1,740
19
87
1,740
20
87
1,888
20
87
1,888
20
87
1,888
20
87
1,888
20
87
1,888
21
87
1,740
19
87
1,740
19
87
1,740
19
Parking Lots
Number of City Parking Lots
Number of Public Parking Spaces
Number of Employee Permit
4
356
94
4
356
94
4
356
94
4
356
94
4
356
94
4
356
94
4
356
94
4
356
91
4
356
91
4
356
91
Wastewater
Total Sewer Main Length (Miles)
Sewer Pump Stations
106
6
106
6
106
6
106
6
106
6
106
6
106
6
104
6
104
6
104
6
1,324
3
3,205
1,324
3
3,205
1,324
3
3,205
1,324
3
3,205
1,324
3
3,205
1,324
3
3,205
1,324
3
3,208
1,324
3
3,205
1,324
3
3,205
1,324
3
3,205
Storm water
Catch basins/inlets
Stormwater Pump Stations
Manholes
General government:
City Hall
City Museum
Parks and recreation:
Parks (and associated buildings)
Community centers
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
13
2
13
2
13
2
13
2
13
2
13
2
13
2
13
2
13
2
13
2
Source: Various city department records
129
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130
APPENDIX C
PROPOSED FORM OF OPINION OF BOND COUNSEL
March 24, 2015
City Council
City of San Carlos
600 Elm Street
San Carlos, California 94070
OPINION:
$4,600,000 City of San Carlos
2015 General Obligation Refunding Bonds
Members of the City Council:
We have acted as bond counsel in connection with the issuance by the City of San
Carlos (the “City”) of its City of San Carlos 2015 General Obligation Refunding Bonds issued in
the aggregate principal amount of $4,600,000 (the “Bonds”). The Bonds have been issued by
the City under the Constitution and laws of the State of California and a resolution adopted by
the City Council of the City on February 9, 2015 (the “Bond Resolution”). We have examined
the law and such certified proceedings and other papers as we deem necessary to render this
opinion.
As to questions of fact material to our opinion, we have relied upon representations of
the City contained in the Bond Resolution and in the certified proceedings and certifications of
public officials and others furnished to us, without undertaking to verify the same by
independent investigation.
Based upon the foregoing, we are of the opinion, under existing law, as follows:
1. The City is duly organized and validly existing as a municipal corporation under the
laws of the State of California, with the power to adopt the Bond Resolution, perform the
agreements on its part contained therein and issue the Bonds.
2. The Bond Resolution has been duly adopted by the City Council of the City and
constitutes the valid and binding obligation of the City enforceable against the City in
accordance with its terms.
3. The Bonds have been duly authorized, issued and sold by the City and are valid
and binding general obligations of the City, and the City has the power, is obligated and in the
Bond Resolution has covenanted to levy ad valorem taxes upon all property within the City
which is subject to taxation by the City, without limitation of rate or amount, for the payment
when due of the principal of and interest on the Bonds.
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4. Interest on the Bonds is excluded from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum
tax imposed on individuals and corporations; it should be noted, however, that for the purpose
of computing the alternative minimum tax imposed on such corporations (as defined for federal
income tax purposes), such interest is required to be taken into account in determining certain
income and earnings. The Bonds are “qualified tax-exempt obligations” within the meaning of
Section 265(b)(3) of the Internal Revenue Code of 1986 (the “Tax Code”), and, in the case of
certain financial institutions (within the meaning of Section 265(b)(5) of the Tax Code), a
deduction is allowed for 80 percent of that portion of such financial institutions’ interest expense
allocable to the portion of the Bonds designated as and comprising interest.
The opinions set forth in the preceding paragraph are subject to the condition that the
City comply with all requirements of the Tax Code that must be satisfied subsequent to the
issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross
income for federal income tax purposes, and in order for the Bonds to be “qualified tax-exempt
obligations” within the meaning of Section 265(b)(3) of the Tax Code. The City has covenanted
in the Bond Resolution to comply with each of such requirements. Failure to comply with certain
of such requirements may cause the inclusion of such interest in gross income for federal
income tax purposes to be retroactive to the date of delivery of the Bonds, or may cause the
Bonds not to be “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the
Tax Code. We express no opinion regarding other federal tax consequences arising with
respect to the Bonds.
5. The interest on the Bonds is exempt from personal income taxation imposed by the
State of California.
The rights of the owners of the Bonds and the enforceability of the Bonds may be
subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting
creditors’ rights heretofore or hereafter enacted and may also be subject to the exercise of
judicial discretion in appropriate cases.
Respectfully submitted,
Jones Hall,
A Professional Law Corporation
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APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$4,600,000
CITY OF SAN CARLOS
2015 General Obligation Refunding Bonds
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and
delivered by the City of San Carlos, California (the “City”) in connection with the execution and
delivery of the Refunding Bonds captioned above (the “Bonds”). The Refunding Bonds are
being issued and delivered pursuant to a resolution adopted by the City Council of the City on
February 9, 2015 (the “Bond Resolution”).
The City hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the City for the benefit of the holders and beneficial owners of the
Refunding Bonds and in order to assist the Participating Underwriter in complying with
Securities and Exchange Commission Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth above and in the Bond
Resolution, which apply to any capitalized term used in this Disclosure Certificate unless
otherwise defined in this Section 2, the following capitalized terms shall have the following
meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as
described in, Sections 3 and 4.
“Annual Report Date” means the date not later than April 1 after the end of each fiscal
year of the City (currently June 30th).
“Dissemination Agent” means the City, or any successor Dissemination Agent
designated in writing by the City and which has filed with the City and the Paying Agent a written
acceptance of such designation.
“Listed Events” means any of the events listed in Section 5(a).
“MSRB” means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule.
“Official Statement” means the final official statement executed by the City in connection
with the issuance of the Refunding Bonds.
“Paying Agent” means MUFG Union Bank, N.A. or any successor thereto.
“Participating Underwriter” means any of the original underwriters of the Refunding
Bonds required to comply with the Rule in connection with offering of the Refunding Bonds.
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“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
Section 3. Provision of Annual Reports.
(a)
The City shall, or shall cause the Dissemination Agent to, not later than the
Annual Report Date, commencing April 1, 2016 with the report for the 2014-15 fiscal year,
provide to the MSRB in an electronic format as prescribed by the MSRB, an Annual Report that
is consistent with the requirements of Section 4 of this Disclosure Certificate, with a copy to the
Paying Agent and the Participating Underwriters. Not later than 15 Business Days prior to the
Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if
other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination
Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination
Agent shall contact the City to determine if the City is in compliance with the previous sentence.
The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may include by reference other information as provided in Section 4
of this Disclosure Certificate; provided that the audited financial statements of the City may be
submitted separately from the balance of the Annual Report, and later than the Annual Report
Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such
change in the same manner as for a Listed Event under Section 5(c). The City shall provide a
written certification with each Annual Report furnished to the Dissemination Agent to the effect
that such Annual Report constitutes the Annual Report required to be furnished by the City
hereunder.
(b)
If the City does not provide (or cause the Dissemination Agent to provide) an
Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination
Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in
substantially the form attached as Exhibit A, with a copy to the Paying Agent and Participating
Underwriter.
(c)
With respect to each Annual Report, the Dissemination Agent shall:
(i)
determine each year prior to the Annual Report Date the then-applicable
rules and electronic format prescribed by the MSRB for the filing of annual continuing
disclosure reports; and
(ii)
if the Dissemination Agent is other than the City, file a report with the City,
with a copy to the Paying Agent and the Participating Underwriter, certifying that the
Annual Report has been provided pursuant to this Disclosure Certificate, and stating the
date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or
incorporate by reference the following:
(a)
The City’s audited financial statements prepared in accordance with generally
accepted accounting principles as promulgated to apply to governmental entities from time to
time by the Governmental Accounting Standards Board. If the City’s audited financial
statements are not available by the Annual Report Date, the Annual Report shall contain
unaudited financial statements in a format similar to the financial statements contained in the
final Official Statement, and the audited financial statements shall be filed in the same manner
as the Annual Report when they become available.
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(b)
Unless otherwise provided in the audited financial statements filed on or before
the Annual Report Date, the following information:
(i)
assessed valuation of taxable properties in the City for the
most recently completed fiscal year;
(ii)
assessed valuation of properties of the top ten taxpayers for
the most recently completed fiscal year;
(iii)
property tax collection delinquencies for the City for the most
recently completed Fiscal Year, but only if the collection of ad
valorem property taxes for the repayment of the Refunding
Bonds is no longer covered by the County of San Mateo's
Teeter Plan; and
(iv)
in addition to any of the information expressly required to be
provided under paragraphs (i) through (iii), of this Section, the
City shall provide such further information, if any, as may be
necessary to make the specifically required statements, in the
light of the circumstances under which they are made, not
misleading.
(c)
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the City or related public entities,
which are available to the public on the MSRB’s internet web site or filed with the Securities and
Exchange Commission. The City shall clearly identify each such other document so included by
reference.
Section 5. Reporting of Significant Events.
(a)
The City shall give, or cause to be given, notice of the occurrence of any of the
following events with respect to the Refunding Bonds, if material:
(1)
Principal and interest payment delinquencies.
(2)
Non-payment related defaults.
(3)
Unscheduled draws on debt service reserves reflecting financial difficulties.
(4)
Unscheduled draws on credit enhancements reflecting financial difficulties.
(5)
Substitution of credit or liquidity providers, or their failure to perform.
(6)
Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701TEB) or other material notices or determinations with respect to the tax status of
the security, or other material events affecting the tax status of the security..
(7)
Modifications to rights of security holders.
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(8)
Bond calls, if material, and tender offers.
(9)
Defeasances.
(10) Release, substitution, or sale of property securing repayment of the
securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City.
(13) The consummation of a merger, consolidation, or acquisition involving the
City or the sale of all or substantially all of the assets of the City, other than
in the ordinary course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive agreement
relating to any such actions, other than pursuant to its terms, if material.
(14) Appointment of a successor or additional trustee or the change of name of
a trustee, if material.
(b)
Whenever the City obtains knowledge of the occurrence of a Listed Event, the
City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such
occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely
manner not in excess of 10 business days after the occurrence of the Listed Event.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9)
above need not be given under this subsection any earlier than the notice (if any) of the
underlying event is given to holders of affected the Refunding Bonds under the Resolution.
(c)
The City acknowledges that the events described in subparagraphs (a)(2), (a)(7),
(a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section contain the qualifier
“if material” and that subparagraph (a)(6) also contains the qualifier "material" with respect to
certain notices, determinations or other events affecting the tax status of the Refunding Bonds.
The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any
such event only to the extent that it determines the event’s occurrence is material for purposes
of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of
these Listed Events, the City will as soon as possible determine if such event would be material
under applicable federal securities law. If such event is determined to be material, the City will
cause a notice to be filed as set forth in paragraph (b) above.
(d)
For purposes of this Disclosure Certificate, any event described in paragraph
(a)(12) above is considered to occur when any of the following occur: the appointment of a
receiver, fiscal agent, or similar officer for the City in a proceeding under the United States
Bankruptcy Code or in any other proceeding under state or federal law in which a court or
governmental authority has assumed jurisdiction over substantially all of the assets or business
of the City, or if such jurisdiction has been assumed by leaving the existing governing body and
officials or officers in possession but subject to the supervision and orders of a court or
governmental authority, or the entry of an order confirming a plan of reorganization,
arrangement, or liquidation by a court or governmental authority having supervision or
jurisdiction over substantially all of the assets or business of the City.
Section 6. Identifying Information for Filings with the MSRB. All documents
provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying
information as prescribed by the MSRB.
D-4
Section 7. Termination of Reporting Obligation. The City’s obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Refunding Bonds. If such termination occurs prior to the final maturity of the
Refunding Bonds, the City shall give notice of such termination in the same manner as for a
Listed Event under Section 5(c).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage
a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any Dissemination Agent, with or without appointing a successor
Dissemination Agent. The initial Dissemination Agent shall be The City. Any Dissemination
Agent may resign by providing 30 days’ written notice to the City and the Paying Agent.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this
Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a)
if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it
may only be made in connection with a change in circumstances that arises from a change in
legal requirements, change in law, or change in the identity, nature, or status of an obligated
person with respect to the Refunding Bonds, or type of business conducted;
(b)
the undertakings herein, as proposed to be amended or waived, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the Rule
at the time of the primary offering of the Refunding Bonds, after taking into account any
amendments or interpretations of the Rule, as well as any change in circumstances; and
(c)
the proposed amendment or waiver either (i) is approved by holders of the
Refunding Bonds in the manner provided in the Bond Resolution for amendments to the Bond
Resolution with the consent of holders, or (ii) does not, in the opinion of nationally recognized
bond counsel, materially impair the interests of the holders or beneficial owners of the
Refunding Bonds.
If the annual financial information or operating data to be provided in the Annual Report
is amended pursuant to the provisions hereof, the first annual financial information filed
pursuant hereto containing the amended operating data or financial information shall explain, in
narrative form, the reasons for the amendment and the impact of the change in the type of
operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be
followed in preparing financial statements, the annual financial information for the year in which
the change is made shall present a comparison between the financial statements or information
prepared on the basis of the new accounting principles and those prepared on the basis of the
former accounting principles. The comparison shall include a qualitative discussion of the
differences in the accounting principles and the impact of the change in the accounting
principles on the presentation of the financial information, in order to provide information to
investors to enable them to evaluate the ability of the City to meet its obligations. To the extent
reasonably feasible, the comparison shall be quantitative. A notice of the change in the
accounting principles shall be filed in the same manner as for a Listed Event under Section 5(c).
D-5
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Certificate. If the City chooses to include
any information in any Annual Report or notice of occurrence of a Listed Event in addition to that
which is specifically required by this Disclosure Certificate, the City shall have no obligation
under this Disclosure Certificate to update such information or include it in any future Annual
Report or notice of occurrence of a Listed Event.
Section 11. Default. If the City fails to comply with any provision of this Disclosure
Certificate, the Participating Underwriter or any holder or beneficial owner of the Refunding
Bonds may take such actions as may be necessary and appropriate, including seeking mandate
or specific performance by court order, to cause the City to comply with its obligations under this
Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event
of Default under the Bond Resolution, and the sole remedy under this Disclosure Certificate in
the event of any failure of the City to comply with this Disclosure Certificate shall be an action to
compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent.
(a)
The Dissemination Agent shall have only such duties as are specifically set forth
in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination
Agent, its officers, directors, employees and agents, harmless against any loss, expense and
liabilities which they may incur arising out of or in the exercise or performance of its powers and
duties hereunder, including the costs and expenses (including attorneys fees) of defending
against any claim of liability, but excluding liabilities due to the Dissemination Agent’s
negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to
review any information provided to it by the City hereunder, and shall not be deemed to be
acting in any fiduciary capacity for the City, the Refunding Bond holders or any other party. The
obligations of the City under this Section shall survive resignation or removal of the
Dissemination Agent and payment of the Refunding Bonds.
(b) The Dissemination Agent shall be paid compensation by the City for its services
provided hereunder in accordance with its schedule of fees as amended from time to time, and
shall be reimbursed for all expenses, legal fees and advances made or incurred by the
Dissemination Agent in the performance of its duties hereunder.
Section 13. Notices. Any notice or communications to be among any of the parties to
this Disclosure Certificate may be given as follows:
To the City:
City of San Carlos
600 Elm Street
San Carlos, California 94070
(650) 802-4217
D-6
To the Dissemination Agent: City of San Carlos
600 Elm Street
San Carlos, California 94070
(650) 802-4217
To the Paying Agent:
MUFG Union Bank, N.A.
350 California Street, 11th Floor
San Francisco, California 94104
Fax: (415) 273-2492
Any person may, by written notice to the other persons listed above, designate a
different address or telephone number(s) to which subsequent notices or communications
should be sent.
Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit
of the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial
owners from time to time of the Refunding Bonds, and shall create no rights in any other person
or entity.
Section 15. Counterparts. This Disclosure Certificate may be executed in several
counterparts, each of which shall be regarded as an original, and all of which shall constitute
one and the same instrument.
Date: March 24, 2015
CITY OF SAN CARLOS
By:
Name:
Title:
D-7
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer:
City of San Carlos (the “City”)
Name of Bond Issue:
City of San Carlos 2015 General Obligation Refunding Bonds,
Date of Issuance:
March 24, 2015
NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with
respect to the above-named Bonds as required by the Continuing Disclosure Certificate, dated
as of March 24, 2015. The City anticipates that the Annual Report will be filed by
_____________.
Dated:
DISSEMINATION AGENT:
By:
Its:
cc: Paying Agent and Participating Underwriter
D-8
APPENDIX E
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and
record keeping with respect to beneficial ownership interests in the Refunding Bonds, payment
of principal, interest and other payments on the Refunding Bonds to DTC Participants or
Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Refunding
Bonds and other related transactions by and between DTC, the DTC Participants and the
Beneficial Owners is based solely on information provided by DTC. Accordingly, no
representations can be made concerning these matters and neither the DTC Participants nor
the Beneficial Owners should rely on the foregoing information with respect to such matters, but
should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the City nor the Paying Agent take any responsibility for the information
contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will
distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with
respect to the Refunding Bonds, (b) certificates representing ownership interest in or other
confirmation or ownership interest in the Refunding Bonds, or (c) redemption or other notices
sent to DTC or Cede & Co., its nominee, as the registered owner of the Refunding Bonds, or
that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants
will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on
file with the Securities and Exchange Commission and the current “Procedures” of DTC to be
followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”), New York, NY, will act as securities
depository for the securities (the “Securities”). The Securities will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other
name as may be requested by an authorized representative of DTC. One fully-registered
Security certificate will be issued for each issue of the Securities, each in the aggregate
principal amount of such issue, and will be deposited with DTC. If, however, the aggregate
principal amount of any issue exceeds $500 million, one certificate will be issued with respect to
each $500 million of principal amount, and an additional certificate will be issued with respect to
any remaining principal amount of such issue.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company
organized under the New York Banking Law, a “banking organization” within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a “clearing corporation”
within the meaning of the New York Uniform Commercial Code, and a “clearing agency”
registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity
issues, corporate and municipal debt issues, and money market instruments (from over 100
countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates
the post-trade settlement among Direct Participants of sales and other securities transactions in
deposited securities, through electronic computerized book-entry transfers and pledges
between Direct Participants’ accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is
E-1
a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is
the holding company for DTC, National Securities Clearing Corporation and Fixed Income
Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users
of its regulated subsidiaries. Access to the DTC system is also available to others such as both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing
corporations that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+.
The DTC Rules applicable to its Participants are on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.
The information set forth on such website is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Securities on DTC’s records. The ownership
interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded
on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written
confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive
written confirmations providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interests in the Securities are to be accomplished by
entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their ownership interests in
Securities, except in the event that use of the book-entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with
DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name
as may be requested by an authorized representative of DTC. The deposit of Securities with
DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect
any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Securities; DTC’s records reflect only the identity of the Direct Participants to whose
accounts such Securities are credited, which may or may not be the Beneficial Owners. The
Direct and Indirect Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities
may wish to take certain steps to augment the transmission to them of notices of significant
events with respect to the Securities, such as redemptions, tenders, defaults, and proposed
amendments to the Security documents. For example, Beneficial Owners of Securities may
wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain
and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to
provide their names and addresses to the registrar and request that copies of notices be
provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an
issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
E-2
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting
rights to those Direct Participants to whose accounts Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be
made to Cede & Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s
receipt of funds and corresponding detail information from Issuer or Agent, on payable date in
accordance with their respective holdings shown on DTC’s records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or registered in “street
name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer,
subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such
other nominee as may be requested by an authorized representative of DTC) is the
responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be
the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be
the responsibility of Direct and Indirect Participants.
9. A Beneficial Owner shall give notice to elect to have its Securities purchased or
tendered, through its Participant, to the Paying Agent, and shall effect delivery of such
Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities,
on DTC’s records, to the Paying Agent. The requirement for physical delivery of Securities in
connection with an optional tender or a mandatory purchase will be deemed satisfied when the
ownership rights in the Securities are transferred by Direct Participants on DTC’s records and
followed by a book-entry credit of tendered Securities to the Paying Agent’s DTC account.
10. DTC may discontinue providing its services as depository with respect to the
Securities at any time by giving reasonable notice to Issuer or Agent. Under such
circumstances, in the event that a successor depository is not obtained, Security certificates are
required to be printed and delivered.
11. Issuer may decide to discontinue use of the system of book-entry-only transfers
through DTC (or a successor securities depository). In that event, Security certificates will be
printed and delivered to DTC.
12. The information in this section concerning DTC and DTC’s book-entry system has
been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility
for the accuracy thereof.
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