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CC - Item 3B - Transmittal of FY 2013-14 City of Rosemead and Rosemead Housing Corporation Annual Financial ReportsROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: JEFF ALLRED, CITY MANAGER DATE: JANUARY 27, 2015 SUBJECT: TRANSMITTAL OF FY 2013 -14 CITY OF ROSEMEAD AND ROSEMEAD HOUSING CORPORATION ANNUAL FINANCIAL REPORTS SUMMARY This is to transmit the FY 2013 -14 annual financial reports for the City of Rosemead and the Rosemead Housing Development Corporation to the City Council. The attached reports provide a complete presentation of the finances of each of the above mentioned organizations. The 2013 -14 Fiscal Year was a year of modest increase for the City's General Fund. Due to both Sales Tax and Property Tax revenues showing modest increases along with an improved economic base, the City was able to put money back into reserves at the conclusion of the fiscal year. As noted on page 20 of the Comprehensive Annual Financial Report (CAFR), the General Fund collected $79,626 more than was expended, increasing the fund balance from $17,617,440 to $17,697,066. While some of these funds have been programmed in the 2014 -15 Fiscal Year for budgeted expenditures, the majority of these funds will remain in the fund balance to rebuild reserves. Staff Recommendation Staff recommends that the City Council receive and file the City of Rosemead Comprehensive Annual Financial Report (CAFR) and the Rosemead Housing Development Corporation Annual Financial and Compliance Report for the 2013 -14 Fiscal Year. ANALYSIS Governmental activities, From year to year the net assets of all Governmental activities typically fluctuates a few percentage points which can equal a couple million dollars. These fluctuations are generally the result of new construction for City facilities or changes in long term debt. For Fiscal Year 2013 -14, Governmental activities (all governmental funds) decreased the City of Rosemead's net assets by $1.1 million or 1.6 %. The decrease is the result of an increase in liabilities at year end and a decrease in capital assets as accumulated depreciation exceeds the cost of capital asset ITEM NUMBER: City Council Meeting January 27, 2015 Paae 2 of 3 additions. General Fund highlights are presented below and a detailed presentation of all funds is available in the attached Comprehensive Annual Financial Report (CAFR). General Fund. The general fund is the chief operating fund of the City of Rosemead. At the end of the current fiscal year, the unassigned fund balance of the general fund was $11,607,595, while total fund balance reached $17,697,066. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 65 percent of total general fund expenditures, while total fund balance represents 99 percent of that same amount. The General Fund revenues exceeded expenditures and therefore, the General Fund fund balance had a slight increase of $79,626. Several of the revenues were less than the prior year as outlined below: • The General Fund property tax decreased $1,034,258 over last year. In the prior year the City received a settlement from the County of Los Angeles and also several one -time property tax payments related to the dissolution of redevelopment. Therefore, even though the property tax revenue was less than the prior year, it exceeded the budgeted amount. • The City's franchise tax revenues decreased $1.0 million over the prior year. This resulted from the City's solid waste provider issued an upfront franchise fee payment of $1.6 million in 2012 -13. • The City continued to make payments towards the unfunded portion of the Other Post Employment Benefits liability in the amount of $644,548. While this payment was originally budgeted to be taken from Unassigned General Fund Balance, there was a slight increase in Fund Balance due to the increase of revenues over expenditures. • Operating cost overruns in the Public Works division were caused by additional tree maintenance costs and costs to purchase recycle cans to maintain the community. Both of these items were reimbursed by grant revenue which offset these costs. Operating cost overruns in the City as a whole were minimal. Additional cost overruns, such as those for parking control and building inspections were covered by increases in revenue which more than offset the related costs. There were also additional costs for Water utilities which was related to the California drought. City Council Meeting January 27, 2015 Paqe 3 of 3 PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Submitted by: ( ;,& ads Carolyn A. Chu Acting Finance Director Attachments: (1) City of Rosemead Comprehensive Annual Financial Report (2) Rosemead Housing Development Corporation Financial and Compliance Report ROGERS, ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 735 E. Carnegie Dr. Suite 100 San Bernardino, CA 92408 909 889 0871 T 909 889 5361 F ramscpa.net PARTNERS Brenda L. Odle, CPA, MST To the Honorable City Council Terry P. Shea, CPA City of Rosemead, California Kirk A. Franks, CPA Scott W. Manna, CPA, CGMA Leena Shanbhag, CPA, MST, CGMA Jay H. Zercher, CPA (Partner Emeritus) We have audited the financial statements of the governmental activities, Phillip H. Waller, CPA (Partner Emeritus) each major fund, and the aggregate remaining fund information of the City of Rosemead, California (the City) for the year ended June 30, MANAGERS /STAFF 2014. Professional standards require that we provide you with BradferdA. Welebir, CPA, MBA Jenny Liu, CPA, MST information about our responsibilities under generally accepted auditing Seong -Hyea Lee, CPA, MBA standards (and, if applicable, Government Auditing Standards and OMB Charles De Simon!, CPA Circular A -133), as well as certain information related to the planned Y'iann Fang, CPA P 9 scope and timing of our audit. We have communicated such information Nathan Statham, CPA, MBA N Brigitta Bartha, CPA in our letter to you dated June 30, 2014. Professional standards also '' rdenya Duran, CPA require that we communicate to you the following information related to ( Romero, CPA our audit. .,n Gonzales, CPA, MSA Brianna Pascoe, CPA Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Rosemead, California are described in Note 1 to the financial statements. During the year under audit, the City changed accounting policies related to deferred inflow and outflow of resources by adopting Governmental Accounting Standards Board Statement No. 65, Items Previously Reported as Assets and Liabilities. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in the Statement of Activities. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the MEMBERS proper period. American Institute of Certified Public Accountants Accounting estimates are an integral part of the financial statements PCPS The A(CPA Alliance by management and are based on management's knowledge for CPA Firms prepared and experience about past and current events and assumptions about Governmental Audit future events. Certain accounting estimates are particularly sensitive Quality Center because of their significance to the financial statements and because of California Society of the possibility that future events affecting them may differ significantly tified Public Accountants from those expected. The most sensitive estimates affecting the City's financial statements were: STABILITY. ACCURACY. TRUST. Management's estimate of the fair value of investments is based on information provided by financial institutions. We evaluated the key factors and assumptions used to develop the fair value of investments in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimate of capital asset depreciation is based on historical estimates of each capitalized item's useful life. We evaluated the key factors and assumptions used to develop the estimated useful lives in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimate for the asset or liability for pensions is based on actuarial reports provided by independent actuaries. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were: The disclosure of fair value of investments in the notes to the financial statements represents amounts susceptible to market fluctuations. The disclosure of accumulated depreciation in the notes to the financial statements is based on estimated useful lives which could differ from actual useful lives of each capitalized item. The disclosure of pension and other postemployment benefit obligations in the notes to the financial statements are based on actuarial assumptions. Actual future liabilities may vary from disclosed estimates. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. The following material misstatement was detected as a result of audit procedures were corrected by management: An adjustment to restate beginning net position for the City's unamortized balances of debt issuance costs to conform to GASS Statement No. 65. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated January 20, 2015. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the supplementary information, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. 3 Restriction on Use This information is intended solely for the use of the City Council and management of the City of Rosemead, California and is not intended to be, and should not be, used by anyone other than these specified parties. Very ttruly yours, iC�Ua� Cl'n�Letdoa affocly z S07r LLP San Bernardino, California January 20, 2015 ROSEMEAD HOUSING DEVELOPMENT CORPORATION FINANCIAL AND COMPLIANCE REPORT Fiscal Year Ended June 30, 2014 ROGERS, ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 ROSEMEAD HOUSING DEVELOPMENT CORPORATION FINANCIAL AND COMPLIANCE REPORT Fiscal Year Ended June 30, 2014 TABLE OF CONTENTS Page INDEPENDENT AUDITOR'S REPORT FINANCIAL STATEMENTS Government -wide Financial Statements Statement of Net Position 4 Statement of Activities 5 Fund Financial Statements Balance Sheet 6 Reconciliation of the Balance Sheet of Governmental Fund to the Statement of Net Position 7 Statement of Revenues, Expenditures and Changes in Fund Balance 8 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Fund to the Statement of Activities 9 Notes to the Basic Financial Statements 10 REQUIRED SUPPLEMENTARY INFORMATION Notes to Required Supplementary Information 20 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual 21 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 22 ROGERS, ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 735 E. Carnegie Dr. Suite 100 Board of Directors San Bernardino, CA 92408 909 889 0871 T Rosemead Housing Development Corporation 909 889 5361 F City of Rosemead, California ramscpa.net INDEPENDENT AUDITOR'S REPORT PARTNERS Brenda L. Odle, CPA, MST Terry P. Shea, CPA Kirk A. Franks, CPA Report on the financial Statements Scott W. Manno, CPA, CGMA Leona Shanbhag, CPA, MST, CGMA We have audited the accompanying financial statements of the Jay W Farmer Emeritus) ) Phillip H. governmental activities and the major fund of the Rosemead Housing H. Walle r, , CPA Waller, CPA (Partner Emeritus) Development Corporation (the Corporation), a component unit of the City of MANAGERS /STAFF Rosemead, California, as of and for the year ended June 30, 2014, and the Bradford A. Welebir, CPA, MBA related notes to the financial statements, which collectively comprise the Jenny Liu, CPA, MST Corporation's basic financial statements as listed in the table of contents. Seong -Hyea Lee, CPA, MBA Charles De Stmoni, CPA Yiann Fang, CPA Management's Responsibility for the Financial Statements Nathan Statham, CPA, MBA B, gitta Bartha, CPA Management is responsible for the preparation and fair presentation of these Jua Duran, CPA financial statements In accordance with accounting principles generally Juan n Romero, CPA g p p g enera y n Gonzales, CPA, MSA accepted in the United States of America; this includes the design, - rianna Pascoe, CPA 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 MEMBERS American Institute of amounts and disclosures in the financial statements. The procedures Certified Public Accountants selected depend on the auditor's judgment, including the assessment of the PCPS The AICPA Alliance risks of material misstatement of the financial statements, whether due to for CPA Firms fraud or error. In making those risk assessments, the auditor considers Governmental Audit internal control relevant to the entity's preparation and fair presentation of Qnafity center the financial statements in order to design audit procedures that are California Society of appropriate in the circumstances, but not for the purpose of expressing an Certified Public Accountants 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. -1- STABILITY. ACCURACY. TRUST. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the Corporation, as of June 30, 2014, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter Change in accounting principle As discussed in Note 1 to the financial statements, the Corporation adopted new accounting guidance, GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison information as listed on the table of contents, 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 the 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. Management has omitted Management's Discussion and Analysis that accounting principles generally accepted in the United States of America requires to be presented to supplement the basic financial statements. Such missing 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. Our opinion on the basic financial statements is not affected by this missing information. -2- Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 20, 2015, on our consideration of the Corporation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Corporation's internal control over financial reporting and compliance. �Cgm,a) ftuoa� Vvtly c So7r Ldp Cl'n ►' San Bernardino, California January 20, 2015 -3- FINANCIAL STATEMENTS Rosemead Housing Development Corporation Statement of Net Position June 30, 2014 Governmental Activities ASSETS Cash and investments (note 2) $ 153,164 Accounts receivable 14,939 Capital assets, depreciated, net (note 4) 7,999,972 Total assets 8,168,075 LIABILITIES Accounts payable and accrued liabilities 29 Refundable deposits 37,737 Total liabilities 37,766 NET POSITION Net investment in capital assets 7,999,972 Unrestricted 130,337 Total net position $ 8,130,309 The accompanying notes are an integral part of these financial statements. -4- Rosemead Housing Development Corporation Statement of Activities For the Year Ended June 30, 2014 Program Revenues Operating Capital Charges for Contributions Contributions Governmental Expenses Services and Grants and Grants Activities Governmental activities: General government $ 1,033,434 $ 421,006 $ 417,866 $ $ (194,562) Total governmental activities $ 1,033,434 $ 421,006 $ 417,866 $ (194,562) General revenues: Investment income 11 Other general revenues 4,237 Total general revenues 4,248 Change in net position (190,314) Net position, beginning of year 8,320,623 Net position, end of year $ 8,130,309 The accompanying notes are an integral part of these financial statements. -5- Rosemead Housing Development Corporation Balance Sheet Governmental Fund June 30, 2014 General Fund ASSETS Cash and investments $ 153,164 Accounts receivable 14,939 Total assets $ 168,103 LIABILITIES AND FUND BALANCE Liabilities: Accounts payable and accrued liabilities $ 29 Refundable deposits 37,737 Total liabilities 37,766 Fund balance: Restricted for: Low and moderate income housing 130,337 Total fund balance 130,337 Total liabilities and fund balance $ 168,103 The accompanying notes are an integral part of these financial statements. -6- Rosemead Housing Development Corporation Reconciliation of the Balance Sheet of Governmental Fund to the Statement of Net Position June 30, 2014 Fund balance of governmental fund 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 the governmental fund activity. Capital assets Accumulated depreciation Net position of governmental activities $ 130,337 11,171,141 (3,171,169) $ 8,130,309 The accompanying notes are an integral part of these financial statements. -7- Rosemead Housing Development Corporation Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Fund For the Year Ended June 30, 2014 General Fund REVENUES Rental income $ 421,006 Intergovernmental 417,866 Investment income 11 Other 4,237 Total revenues 843,120 EXPENDITURES Operating 400,503 Administrative services paid to City of Rosemead 226,200 Facility rent paid to City of Rosemead 183,400 Total expenditures 810,103 Net change in fund balance 33,017 Fund balance, beginning of year 97,320 Fund balance, end of year $ 130.337 The accompanying notes are an integral part of these financial statements. -8- Rosemead Housing Development Corporation Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Fund to the Statement of Activities For the Year Ended June 30, 2014 Net change in fund balance - total governmental fund Amounts reported for governmental activities in the statement of activities differ 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. Therefore, depreciation expense is not reported as an expenditure in the governmental funds. Depreciation expense Change in net position of governmental activities $ 33,017 (223,331) $ (190,314) The accompanying notes are an integral part of these financial statements. -9- Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (1) Summary of Significant Accounting Policies (a) Reporting Entity The Rosemead Housing Development Corporation (the Corporation) is a nonprofit corporation whose purpose is to provide assistance to the Rosemead Community Development Commission (the Commission) to account for the construction, financing and operations of low- and moderate - income housing for the benefit of the City of Rosemead (the City). The Corporation currently maintains the Angelus and Garvey Senior Housing facilities. The Corporation is exempt from income taxes under Section 501 (c)(3) of the Internal Revenue Code (IRC) and applicable state statutes. Governmental Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity, defines the reporting entity as the primary government and those component units for which the primary government is financially accountable. Financial accountability is defined as appointment of a voting majority of the component unit's Board and either (a) the primary government has the ability to impose its will or (b) the possibility exists that the component unit will provide a financial benefit to or impose a financial burden on the primary government. Since the Board of Directors of the Commission and the Council members also serve as the Board of Directors of the Corporation, the Commission and the City, in effect, have the ability to influence and control operations. Therefore, the City has oversight responsibility for the Corporation. Accordingly, in applying the criteria of GASB Statement No. 14, the financial statements of the Corporation are included in the City's financial reports. The Corporation has the same fiscal year as the City. These financial statements contain information for the Corporation only. The City's financial report may be obtained by contacting the Financial Department of the City. As a result of the Assembly Bill X1 26 signed into law as part of the State of California's budget package on June 29, 2011, the Rosemead Community Development Commission ceased to exist as of February 1, 2012. On January 10, 2012, the City Council elected to serve as the successor agency to the Commission, and retain the housing assets and functions previously held and performed by the Commission. (b) Basis of Accounting and Measurement Focus The basic financial statements of the Corporation are composed of the following: • Government -wide financial statements • Fund financial statements • Notes to the basic financial statements -10- Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (1) Summary of Significant Accounting Policies (continued) (b) Basis of Accounting and Measurement Focus (continued) Government -wide Financial Statements Government -wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business -type activities of the primary government (including its blended component units), as well as its discretely presented component units. The Corporation has no business -type activities or discretely presented component units. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated), however, general government expenses have not been allocated as indirect expenses to the various functions of the Corporation. Government -wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long -term) economic resources and obligations of the reporting government are reported in the government -wide financial statements. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement No. 33. Program revenues include charges for services and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Amounts paid to acquire capital assets are capitalized as assets in the government -wide financial statements, rather than reported as expenditures. Proceeds of long -term debt are recorded as a liability in the government -wide financial statements, rather than as an other financing source. Amounts paid to reduce long -term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. - 11 - Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (1) Summary of Significant Accounting Policies (continued) (b) Basis of Accounting and Measurement Focus (continued) Fund Financial Statements The underlying accounting system of the Corporation is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements. These statements display information about major funds individually and nonmajor funds in the aggregate for governmental and enterprise funds. Fiduciary statements include financial information for fiduciary funds and similar component units. Fiduciary funds primarily represent assets held by the Corporation in a custodial capacity for other individuals or organizations. The Corporation has no enterprise funds or fiduciary funds. Governmental Funds In the fund financial statements, governmental funds and agency funds are presented using the modified - accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The Corporation uses a sixty day availability period. Revenue recognition is subject to the measurable and available criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., when the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non - exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government- mandated and voluntary nonexchange transactions are recognized as revenues when all applicable eligibility requirements have been met. -12- Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (1) Summary of Significant Accounting Policies (continued) (b) Basis of Accounting and Measurement Focus (continued) Governmental Funds (continued In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Non - current portions of long -term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fund type revenues represented by noncurrent receivables are deferred until they become current receivables. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long -term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long -term debt are recorded as an other financing source rather than as a fund liability. Amounts paid to reduce long -term indebtedness are reported as fund expenditures. When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources. (c) Major Fund The Corporation reports the General Fund as its only major fund. -13- Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (1) Summary of Significant Accounting Policies (continued) (d) Cash and Investments Cash includes amounts in demand and time deposits. Investments, if any, are reported in the accompanying balance sheet at fair value, except for certain money market and investment contracts that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as income from property and investments reported for that fiscal year. Income from property and investments includes interest earnings, changes in fair value, any gains or losses realized upon the liquidation, maturity or sale of investments, property rentals, and the sale of City -owned property. (e) Capital Assets Capital assets, which include buildings and improvements, and furniture and equipment, are reported as part of governmental activities in the government - wide financial statements. Capital assets are defined by the Corporation as assets with an initial, individual cost of more than $10,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost, or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of an asset or materially extend an asset's useful life are not capitalized. Costs associated with construction in progress are recorded in their respective capital assets category upon approval by the Corporation's governing board, which approximates the completion date. Depreciation is charged to operations using the straight -line method based on the estimated useful life of an asset. The estimated useful lives of depreciable assets are as follows: Buildings 50 years Improvement 15 years Furniture and equipment 7 years (f) Income Taxes The Corporation is exempt from federal income taxes under Section 501(c)(3) of the IRC and a similar exemption under state law. -14- Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (1) Summary of Significant Accounting Policies (continued) (g) Fund Equity The Corporation implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions during the year ended June 30, 2011. This statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government's fund balance more transparent. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used: • Nonspendable — amounts that are not in a spendable form (such as inventory) or are required to be maintained intact. • Restricted — amounts constrained to specific purposes by their providers (such as grantors, bondholders and higher levels of government), through constitutional provisions or by enabling legislation. • Committed — amounts constrained to specific purposes by a government itself, using the highest level of decision - making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the constraint. • Assigned — amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. • Unassigned — amounts that are for any purpose; positive amounts are reported only in a general fund. The Board of Directors establishes (and modifies or rescinds) fund balance commitments by passage of an ordinance or resolution. The Board designates the Finance Committee and City Manager as the Corporation officials to determine, define, and make the necessary account or fund transfers for the amounts to those components of fund balance that are classified as "Assigned Fund Balance ". When both restricted and unrestricted resources are available for use when an expenditure is incurred, it is the Corporation's policy to use restricted resources first, then unrestricted resources as they are needed. It is the Corporation's policy to consider committed amounts as being reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. -15- Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (1) Summary of Significant Accounting Policies (continued) (h) Rental Income The management company collects rent payments on the first day of the month and recognizes revenue in the month due. Monthly rental income per unit ranges from $250 to $450 and is approved by the annual budget. (i) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Q) Implementation of New Pronouncements Effective July 1, 2013, the Corporation adopted the provisions of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. GASB 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The Corporation's financial statements do not contain any elements that meet the definition of deferred outflows of resources or deferred inflow of resources. -16- Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (2) Cash and Investments Cash and investments at June 30, 2014 consisted of deposits with financial institutions. The carrying amount of the Corporation's deposits was $153,164. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The Corporation maintains its bank accounts at financial institutions that are collateralized with securities held by the pledging financial institution, or by its Trust Department or agent, but not in the Corporation's name. The primary difference between the carrying amount and the bank balance are deposits in transit and outstanding checks. In accordance with state statutes, the Corporation maintains deposits at those depository institutions insured by the FDIC. The California Government Code (the Code) requires California banks and savings and loan associations to collateralize the deposits of governmental entities by pledging government securities as collateral. The market value of pledge securities must equal at least 110% of those deposits. California law also allows financial institutions to secure the deposits of governmental entities by pledging first trust deed mortgage notes having a collateral value of 150% of a corporation's total deposits. As of June 30, 2014, the Corporation had no deposits with financial institutions in excess of federal depository insurance limits. (3) Reimbursement Agreements and Related -party Transactions The Corporation has entered into a reimbursement agreement with the City for the Corporation's administrative services. The Corporation paid $226,200 for administrative services to the City during the year ended June 30, 2014. The Corporation is funded, in part, by advances from the Commission. The Corporation has also entered into a 55 -year lease agreement with the City for the Angelus Senior Housing facility at $60,000 annually, expiring June 2047. Total lease commitments remaining are $1,886,704 for the Angelus Senior Housing facility at June 30, 2014. The Corporation has also entered into a 55 -year lease agreement with the City for the Garvey Senior Housing facility at $72,000 annually, expiring November 2057. Total lease commitments remaining are $3,065,707 for the Garvey Senior Housing facility at June 30, 2014. The Corporation paid $91,200 and $92,200 in lease payments to the City during the year ended June 30, 2014 for the Angelus and Garvey Senior Housing facilities, respectively. -17- Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (4) (5) Capital Assets During the year ended June 30, 2014, the changes in capital assets were as follows: Balance at Balance at June 30, 2013 Additions Deletions June 30, 2014 Government activities: Capital assets being depreciated: Buildings and improvements $ 11,042,597 $ $ $ 11,042,597 Furniture and equipment 128,544 128,544 Total capital assets being depreciated 11,171,141 - 11,171,141 Less accumulated depreciation: Buildings and improvements (2,819,294) (223,331) - (3,042,625) Furniture and equipment (128,544) - (128,544) Total accumulated depreciation (2,947,838) (223,331) - (3,171,169) Governmental activities capital assets, net $ 8,223,303 $ (223,331) $ - $ 7,999,972 Depreciation expense is allocated to the general government function in the statement of activities. Risk Management The Corporation is exposed to various risks of loss related to torts; thefts of, damage to and destruction of assets; errors and omissions; and natural disasters. The Corporation, through the City, carries commercial liability insurance coverage. The Corporation carries no insurance coverage for natural disasters. Since the Corporation does not have any employees (it uses employees from the City), it is not liable for injury to employees, workers' compensation, or employee health and accident insurance. The City has had no reduction in insurance coverage, nor did the City have any settlements that were in excess of insurance coverage in any of the three preceding years. �iQ Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2014 (6) (7) Property Management and Operations The Corporation has two agreements with a management company, dated July 1994 and April 2002, to operate the development housing. These agreements are automatically renewed for successive periods of one year, unless terminated by the Corporation. The management company is responsible for collecting rents and receipts, employing an on -site manager and maintaining financial records. Total fees paid to the management company were $25,092 for the Angelus Senior Housing facility and $35,424 for the Garvey Senior Housing facility during fiscal year ended June 30, 2014. Excess of Expenditures over Appropriations Excess of expenditures over appropriations in individual funds are as follows: Fund Expenditures Appropriations Excess General $ 810,103 $ 771,000 $ (39,103) -19- REQUIRED SUPPLEMENTARY INFORMATION Rosemead Housing Development Corporation Notes to Required Supplementary Information June 30, 2014 (1) Budgetary Information Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for the governmental fund. All annual appropriations lapse at fiscal year end. On or before the last day in March of each year, all agencies of the government submit requests for appropriations to the government's manager so that a budget may be prepared. Before the first Thursday of June, the proposed budget is presented to the Corporation's governing board for review. The governing board holds public hearings and a final budget must be prepared and adopted no later than June 30. The appropriated budget is prepared by fund, function and department. The Corporation's department heads, with approval of the Finance Director and City Manager, may make transfers of appropriations within a department and between departments within a fund. Transfers of appropriations between funds must be approved by the governing board. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year end do not constitute expenditures or liabilities because the commitments will be re- appropriated and honored during the subsequent year. -20- Rosemead Housing Development Corporation Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund For the Year Ended June 30, 2014 Fund balance, beginning of year 97,320 97,320 97,320 Variance _L 2L9,280) Original Final with Final Budget Budget Actual Budget REVENUES Rental income $ 417,600 $ 417,600 $ 421,006 $ 3,406 Intergovernmental - - 417,866 417,866 Investment income - - 11 11 Other 6,800 6,800 4,237 (2,563) Total revenues 424,400 424,400 843,120 418,720 EXPENDITURES Operating 362,400 362,400 400,503 (38,103) Administrative services paid to City of Rosemead 226,200 226,200 226,200 Facility rent paid to City of Rosemead 182,400 182,400 183,400 (1,000) Total expenditures 771,000 771,000 810,103 (39,103) Net change in fund balance (346,600) (346,600) 33,017 379,617 Fund balance, beginning of year 97,320 97,320 97,320 Fund balance, end of year _L 2L9,280) _L (?L $ 130,337 $ 379,617 21- ROGERS, ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 735 E. Carnegie Dr. Suite 100 San Bernardino, CA 92408 909 889 0871 T 909 889 5361 F Board of Directors ramscpa.net Rosemead Housing Development Corporation City of Rosemead, California PARTNERS Brenda L. Odle, CPA, MST Terry P. Shea, CPA INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER Kii1,A. Franits,CPA FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS Scent W. Manna, CPA, CGMA BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN Leena S Leena hanbhag, CPA, MST, CGMA Jay H. Zercher, CPA (Partner Emeritus) ACCORDANCE WITH GOVERNMENTAL AUDITING STANDARDS Phil lip H. Waller, CPA (Partner Emeritus) MANAGERS (STAFF We have audited, in accordance with the auditing standards generally Bradferd A. Welebir, CPA, MBA accepted in the United States of America and the standards applicable to Jenny Liu, CPA, MST Seong -Hyea Lee, CPA, MBA financial audits contained in Government Auditing Standards issued by the Charles De Simoni, CPA Comptroller General of the United States, the financial statements of the Yiann Fang, CPA governmental activities and the major fund of the Rosemead Housing Nathan Statham, CPA, MBA Development Corporation ( Corporation), p y Brigitte Bartna, CPA p p tion the Cor oration , a component unit of the City of Garden Duran, CPA Rosemead, California, as of and for the year ended June 30, 2014, and the Juan Romero, CPA related notes to the financial statements, which collectively comprise the Gonzales, CPA, MSA Corporation's basic financial statements, and have issued our report thereon anna Pascoe, CPA dated January 20, 2015. p Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Corporation's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control. Accordingly, we do not express an opinion on the effectiveness of the Corporation's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of MEMBERS performing their assigned functions, to prevent, or detect and correct, American Institute of misstatements on a timely basis. A material weakness is a deficiency, or a Certified Public Accountants combination of deficiencies, in internal control, such that there is a PCPs The AfCPA Alliance reasonable possibility that a material misstatement of the entity's financial for CPA Fe t, statements will not be prevented, or detected and corrected on a timely Gevernmentnf Audit basis. A significant deficiency is a deficiency, or a combination of Quality Center deficiencies, in internal control that is less severe than a material weakness, California Societ of yet important enough to merit attention by those charged with governance. Certified Public Accountants -22- STABILITY. ACCURACY. TRUST. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Corporation's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. //n///� /�OQNd� ooi(.2WOti d✓011y S D7 ; ��� San Bernardino, California January 20, 2015 -23- CITY OF ROSEMEAD Rosemead. California Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2014 Prepared by the Finance Department Matthew Hawkesworth Director of Finance CITY OF ROSEMEAD Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2014 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal i Directory of Officials vi Organizational Chart vii 91►LLLy /_1_�9:C1[iW Independent Auditor's Report 1 Management's Discussion and Analysis (Required Supplementary Information) 4 Basic Financial Statements: 59 Government -wide Financial Statements: Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements: 61 Governmental Funds: 62 Balance Sheet 17 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 19 Statement of Revenues, Expenditures, and Changes in Fund Balances 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 22 Proprietary Funds: Statement of Net Position 23 Statement of Revenues, Expenses, and Changes in Fund Net Position 24 Statement of Cash Flows 25 Fiduciary Funds: Statement of Fiduciary Net Position 26 Statement of Changes in Fiduciary Net Position 27 Notes to the Basic Financial Statements 28 REQUIRED SUPPLEMENTARY INFORMATION Notes to the Required Supplementary Information 58 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — General Fund 59 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Rosemead Housing Development Corporation 60 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — HOME Program 61 Schedule of Funding Progress — PARS Retirement Enhancement Plan 62 Schedule of Funding Progress.�Other Post Employment Benefits Plan 62 CITY OF ROSEMEAD Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2014 TABLE OF CONTENTS, (continued) Page FINANCIAL SECTION, (continued) OTHER SUPPLEMENTARY INFORMATION Combining Balance Sheet — Non -Major Governmental Funds 65 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Governmental Funds 68 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Community Development Block Grant 71 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Proposition A 72 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Proposition C 73 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — State Gas Tax 74 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Air Quality Management District 75 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Street Lighting 76 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Narcotics Seizure 77 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Measure R 78 Major Fund Budget and Actual Schedules: Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — City Capital Projects 79 Internal Service Funds Combining Statement of Net Position 81 Combining Statement of Revenues, Expenses and Changes in Fund Net Position 82 Combining Statement of Cash Flows 83 Statement of Changes in Fiduciary Assets and Liabilities — Agency Fund 84 CITY OF ROSEMEAD Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2014 TABLE OF CONTENTS, (continued) Page STATISTICAL SECTION Net Position by Component 86 Changes in Net Position 88 Fund Balances of Governmental Funds 90 Changes in Fund Balances of Governmental Funds 92 Assessed Value and Estimated Actual Value of Taxable Property 94 Direct and Overlapping Property Tax Rates 95 Principal Property Taxpayers 96 Property Tax Levies and Collections 97 Ratios of Outstanding Debt by Type 98 Ratio of General Bonded Debt Outstanding 99 Direct and Overlapping Governmental Activities Debt 100 Legal Debt Margin 101 Pledged- Revenue Coverage 103 Demographic and Economic Statistics 104 Principal Employers 105 Full -time and Part-time City Employees by Function 106 Operating Indicators by Function 107 Capital Assets Statistics by Function 108 MAYOR: VILLIAM ALARCON MAYOR PRO TENI: MARGARET CLARK COUNCIL NIEMBERS: SANPRAARMENTA POLLY Low Steven Ly January 20, 2015 City of /' 8838 E. VALLEY BOULEVARD P.0 BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569 -2100 FAX (626) 307 -9218 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Rosemead: Sound financial practice dictates that all general - purpose local governments publish within six months of the close of each fiscal year 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 a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the City of Rosemead for the fiscal year ended June 30, 2014. This report consists of management's representations concerning the finances of the City of Rosemead. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Rosemead has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Rosemead's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Rosemead'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 of Rosemead's financial statements have been audited by Rogers, Anderson, Malody & Scott, LLP ( "RAMS "), a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Rosemead 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 unqualified opinion that the City of Rosemead's financial statements for the fiscal year ended June 30, 2014, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City of Rosemead was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Rosemead's separately issued Single Audit Report. 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 MD &A and should be read in conjunction with it. The City of Rosemead's MD &A can be found immediately following the report of the independent auditors. Profile of the Government The City of Rosemead, incorporated in 1959, is located in the southwestern part of the state. The City of Rosemead currently occupies a land area of 5.5 square miles and serves a population of more than 54,000. Property tax is levied and collected by the County of Los Angeles. The City and Community Development Commission's portion is remitted to the City by the County. The City of Rosemead has operated under the council- manager form of government since 1959. Policy- making and legislative authority are vested in a governing council consisting of the mayor and four other members. The governing council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees and commissioners, and hiring the government's manager, attorney and clerk. The government's manager is responsible for carrying out the policies and ordinances of the governing council, for overseeing the day -to -day operations of the government, and for appointing the heads of the various departments. The council is elected on a non - partisan basis. Council members serve four -year staggered terms, with three council members elected every two years and two elected the opposite two years. The mayor is selected from among the five council members, by the council members, and serves for a one year term. Many of the functions often provided by municipal government are provided by special districts. Examples of some of Rosemead's special districts, which usually encompass areas larger than the City itself, are the Fire Protection District, the Library District, and the County Flood Control District. Certain other governmental functions are paid for by the City, but performed by a variety of other public and private agencies under contract. Some of the contracts in effect during the fiscal year were for police and street maintenance. The City also has two blended component units: 1) the Rosemead Financing Authority (the Authority) and 2) the Rosemead Housing Development Corporation (RHDC). The City of Rosemead also provides a full range of services, including recreational activities and cultural events. Additional information on all three of these legally separate entities can be found in Note 1(a) in the notes to the financial statements. The annual budget serves as the foundation for the City of Rosemead and its component unit's financial planning and control. All business units and component units of the City of Rosemead are required to submit requests for appropriation to the City Manager in mid -March of each year. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the City Council for review prior to June 30. The City Council is required to hold public hearings on the proposed budget and to adopt a final budget no later than June 30, the close of the City of Rosemead's fiscal year. The appropriated budget is prepared by fund and department (e.g., public safety). Department heads, with City Manager approval, may make transfers of appropriations within a department. Transfers of appropriations between departments, however, require the approval of the City Council. Budget -to- actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund and major special revenue funds, these comparison schedules are presented as part of the required supplementary information in the accompanying financial statements. For governmental funds that have appropriated annual budgets, other than the general fund, and major special revenue funds, these comparison schedules are presented in the other supplementary section of the accompanying financial statements. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Rosemead operates. Local economy. Considering the slow recovery from the recessionary economy, the City of Rosemead currently enjoys a reasonably favorable economic environment and local indicators point to stability with slow growth due to the current economy. The region has a varied retail and industrial base including two national general merchandise stores that historically perform well in a recessionary economy. They have continued to perform fairly well and along with some new restaurants and retail businesses have helped the City's sales tax to show modest growth. A direct comparison with the previous fiscal year will show an increase in sales tax revenues which indicates the economy is slowly improving. It should be noted that while the stability and growth has been positive, sales tax receipts are still down in comparison to the 2008/09 peak. The stability realized in retail has helped keep Rosemead's unemployment rate down to 6.7% whereas the larger Los Angeles, Long Beach, Glendale area rate is 7.9 %. Major employers are listed in the statistical section of the accompanying financial report. TGI Fridays and Olive Garden opened during the prior year and a number of major establishments have signed agreements to locate in Rosemead or have shown serious interest in doing so in the near future. Long -term Financial Planning. On December 8, 2009 the City Council approved its vision for the year 2020 and on January 10, 2012 the City Council amended its implementation plan for the years 2012 and 2013. The implementation plan identifies three Key Organizational Goals: 1) Ensure the City's Continued Financial Viability, 2) Enhance Public Safety and Quality of Life. 3) Beautify Residential Neighborhoods and Commercial Corridors. Many action items designed to meet these goals were started in the 2011 -12 Fiscal Year and continued throughout the 2013/14 Fiscal Year including capital improvement projects for street resurfacing, slurry sealing, curb and ramp improvements and tree planting as well as other park and facility renovations and improvements. Additionally, one of the new implementation strategies that was added is to complete a formal long -term financial plan for the City. The City's first five -year financial plan was developed during the 2012 -13 fiscal year and will be used annually as part of the budget development process to identify capital and operating needs over the next five years. Cash management policies and practices. Cash, temporarily idle during the year, was invested in federally insured certificates of deposit, medium term notes, Federal agency debt issuances and the State Treasurer's Local Agency Investment Fund (LAIF). In accordance with State law, and the City's more conservative investment policy all City investments strictly adhere to the priorities, in order of importance, of: 1) safety, 2) liquidity and 3) yield. Risk Management. The City is a member of the California Joint Powers Insurance Authority (the Authority). The Authority is composed of 122 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 at seq. The purpose of the Authority is to arrange and administer programs for the pooling of self- insured losses, to purchase excess insurance and reinsurance, and to arrange for group - purchased insurance for property and other coverage. Additional information can be found in Note 10 in the notes to the Basic Financial Statements. Pension and other postemployment benefits. The City of Rosemead is contracted with the California Public Employees Retirement System (CaIPERS) for retirement benefits for full -time employees. Supplemental retirement benefits are offered to qualified full -time employees, retirees and part -time employees through Public Agency Retirement Services (PARS). The City also provides health insurance benefits for certain qualified retirees. In accordance with GASB Statement No.45, additional information on the City of Rosemead's pension arrangements and postemployment benefits can be found in Note 11 in the notes to the Basic Financial Statements. Dissolution of the Redevelopment Agency (RCDC). On December 29, 2011 the California State Supreme court upheld the ruling that allows the legislature to dissolve redevelopment agencies. The dissolution became effective on February 1, 2012 thus eliminating nearly $7 million of annual tax increment revenue to the City. The State has continued to provide funding for enforceable obligations such as debt service and the Rosemead Housing Development Corporation's Operating and Assistance agreement and will continue to do so until all of the obligations have been repaid in full. The consequence is that the City lost more than $2 million in funding for economic development and job creation. iv Awards and Acknowledgement The preparation of this report would not have been possible without the efficient and dedicated services of the entire team of the finance and administration departments. We would like to express our appreciation to all members of the departments who assisted and contributed to the preparation of this report. Credit also must be given to the mayor and the city council for their unfailing support for maintaining the highest standards of professionalism in the management of the City of Rosemead's finances. Respectfully submitted, C� ,a.k- Carolyn A. Chu Acting Director of Finance (This page intentionally left blank) CITY OF ROSEMEAD Directory of Officials June 30, 2014 CITY COUNCIL William Alarcon, Mayor Margaret Clark, Mayor Pro Tem Sandra Armenta, Council Member Polly Low, Council Member Steven Ly, Council Member CITY MANAGEMENT Jeff Allred, City Manager Matthew E. Hawkesworth, Assistant City Manager /Finance Director Michelle Ramirez, Community Development Director David Montgomery- Scott, Director of Parks and Recreation Chris Marcarello, Public Works Director Lt. Ignacio Somoano, Chief of Police Gloria Molleda, City Clerk /Director of Public Information & Communications Burke, Williams & Sorensen, LLP, City Attorney vi CITY OF ROSEMEAD Function Based Organizational Chart 1 L 1 1 I L_ 1 1 1 1 1 r -- I I 1 1 L__ I 1 I I Technology & Business Support II Resources I� Finance N Risk Management Public Safety Community Development H Public Works II Parks & Recreation Vii 1 1 1 Assistant:` City Manager - - - - - - - - - City Manager FINANCIAL SECTION (This page intentionally left blank) ROGERS, ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 735 E. Carnegie Dr. Suite 100 The Honorable Mayor and City Council San Bernardino, CA 92408 City of Rosemead 909 889 0871 T 909 889 5361 F Rosemead, California ramscpa.net INDEPENDENT AUDITOR'S REPORT PARTNERS Brenda L. Odle, CPA, MST Report on the Financial Statements Terry P. Shea, CPA Kirk A. Franks, CPA Scott W. Marro, CPA, CGMA We have audited the accompanying financial statements of the Leena Shanbhag, CPA, MST, CGMA governmental activities, each major fund, and the aggregate remaining fund Jay Waller, , CPA( PattnerE amner eritus) meritus) Phillip H. information of the City of Rosemead, California (City), as of and for the year H. W Waallet CPA ( ended June 30, 2014, and the related notes to the financial statements, MANAGERS /STAFF which collectively comprise the City's basic financial statements as listed in Bradferd A. Welebir, CPA, MBA the table of contents. jenny Liu, CPA, MST ea Lee, CPA, MBA Charles De Simon!, CPA Management's Responsibility for the Financial Statements Charles D Yiann Fang, CPA Nathan Statham, CPA, MBA Management is responsible for the preparation and fair presentation of these Bri Bartha, CPA financial statements in accordance with accounting principles generally , rdenya Duran, CPA accepted in the United States of America; this includes the design, rRomero, CPA g ,oan Gonzales, CPA, MSA implementation, and maintenance of internal control relevant to the Briznna Pascoe, CPA _ 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 MEMBERS judgment, American Institute of selected depend on the auditor's ud ment, the assessment of the Certified Public Accountants risks of material misstatement of the financial statements, whether due to PCPS The AICPA Alliance fraud or error. In making those risk assessments, the auditor considers rnr CPA Firms internal control relevant to the entity's preparation and fair presentation of Cavernmentol Audit the financial statements in order to design audit procedures that are Quality Center appropriate in the circumstances, but not for the purpose of expressing an California Society of opinion on the effectiveness of the entity's internal control. Accordingly, we - tified Public Accountants 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. STABILITY. ACCURACY. TRUST. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Rosemead, as of June 30, 2014, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter Implementation of new pronouncements As discussed in Note 1 to the financial statements, in 2014 the City adopted new accounting guidance, GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information and the schedule of funding progress as listed on the table of contents, 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 the 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, nonmajor fund budgetary comparison schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements and nonmajor fund budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion,'the combining and individual nonmajor fund financial statements and nonmajor fund budgetary comparison schedules are fairly stated, in all material respects in relation to the 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 20, 2015, on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. /6-JO La) anietsUDA, 01011y c 1S—CD7T J LUp San Bernardino, California January 20, 2015 (This page intentionally left blank) Management's Discussion and Analysis As management of the City of Rosemead, we offer readers of the City of Rosemead's financial statements this narrative overview and analysis of the financial activities of the City of Rosemead for the fiscal year ended June 30, 2014. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i - v of this report. All amounts, unless otherwise indicated, are in thousands of dollars. Financial Highlights Total fund balance for the general fund increased by $79,626 during the current fiscal year. This is a much smaller increase than in the prior year due to several one time payments received in the prior year. Since the downturn in the economy in 2007 -08 the City has worked diligently to reduce expenditures while maintaining programs and service levels. This increase in fund balance and reserves is the direct result of the difficult decisions that have been made over the last several years to live within our means. The City's staff and elected officials are committed to setting aside funds in the good years to ensure reserves are available during the lean years. • At the end of the current fiscal year, unassigned fund Balance for the general fund was $11,607,595 or 65% of total general fund expenditures. • The assets related to Governmental Activities increased by approximately $477,000 due to an increase in Successor Agency projects that will be reimbursed to the City. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Rosemead's basic financial statements. The City of Rosemead's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplemental information in addition to the basic financial statements themselves. Government -wide Financial Statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of Rosemead's finances, in a manner similar to private- sector business. The statement of net position presents information on all of the City of Rosemead's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Rosemead is improving or deteriorating. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City of Rosemead that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The City of Rosemead does not have any business -type activities. The governmental activities of the City of Rosemead include general government, public safety, public works, community development, and parks and recreation. The government -wide financial statements can be found on pages 15 -16 of this report Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Rosemead, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. All of the funds of the City of Rosemead can be divided into three categories: governmental funds, internal service funds and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on ba lances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long -term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Rosemead and its component units maintain 12 active governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Rosemead Housing Development Corporation, HOME Fund and Capital Project Fund, all four of which are considered to be major funds. Data from the other 8 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. The City of Rosemead adopts an annual appropriated budget for all its funds. A budgetary comparison statement has been provided for the General Fund, Rosemead Housing Development Corporation Fund, HOME Program Fund, Community Development Block Grant Fund, Proposition A Fund, Proposition C Fund, State Gas Tax Fund, Air Quality Management District Fund, Street Lighting Fund, Narcotic Forfeiture and Seizure Fund, Measure R Fund, and City Capital Projects Fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 17 -22 of this report Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reported in the government -wide financial statement because the resources of those funds are not available to support the City of Rosemead's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City of Rosemead maintains two different types of fiduciary funds. The Trust and Agency Fund is used to account for the assets held in a trustee capacity or as an agent. The Private - purpose Trust Fund is used to account for the activity of the Successor Agency to the Community Development Commission of the City of Rosemead. The fiduciary fund financial statements can be found on pages 26 -27 of this report Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 28 -56 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Rosemead's progress in funding its obligation to provide pension benefits to its employees. Required supplementary information and notes can be found on pages 57 -62 of this report. The combining statements referred to earlier in connection with non -major governmental funds and internal service funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on pages 63 -84 of this report. Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City of Rosemead, assets exceeded liabilities (net position) by $70,521,160 at the close of the most recent fiscal year. A significant portion of the City of Rosemead's net position (71 %) reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment); less any related outstanding debt used to acquire those assets. The City of Rosemead uses these capital assets to provide services to the citizens; consequently, these assets are not available for future spending. Although the City of Rosemead's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 0 Long -term liabilities outstanding 2,123 1,432 Other liabilities 2,691 1,727 Total liabilities 4,814 1 3,159 Net position: Net investment in capital assets 50,043 51,133 Restricted 3,110 2,829 Unrestricted 17,368 17,737 Total net position 1 $ 70.521 1 $ 71 An additional portion of the City of Rosemead's net position (4.4 %) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position - ($17,367,841) may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Rosemead is able to report positive net position balances. The situation also held true for the prior fiscal year. The government's net position decreased by $1,177,427 during the current fiscal year. The decrease can be attributed to an increase in liabilities at year end and a decrease in capital assets. Governmental activities. Governmental activities decreased the City of Rosemead's net position by $1,177,427. The main factor contributing to the change in net position is the following single occurrence event described below. • The City's solid waste provider issued an upfront franchise fee in the prior fiscal year of $1.6 million. Since this was a one -time upfront payment per the agreement, franchise payments for trash hauling decreased $1.0 million in the current fiscal year. 7 City of Rosemead's Changes in Net Position Years Ended June 30, 2014 and 2013 (thousands) n= Program revenues: Charges for services $ 3,408 $ 3,277 Operating grants and contributions 6,034 6,362 Capital grants and contributions 887 944 General revenues: Property taxes 8,668 8,900 Other taxes 6,405 6,940 Investment income 216 28 Other 604 1,181 Transfer to Successor Agency - (6,393) Total revenues 26,222 21,239 Expenses: General government 4,271 3,382 Public safety 7,923 7,791 Public works 10,072 11,717 Community development 2,853 2,616 Parks and recreation 2,275 2,595 Interest on long -term debt 6 8 Total expenses 27,400 28,109 Increase in net position (1,178) (6,870) Net position - June 30, 2013 71,699 78,569 Net position - June 30, 2014 $ 70,521 $ 71,699 Expenses and Program Revenues Governmental Activities 12,000,000 - 10,000,000 - 8,000,000 - 6,000,000 - 4,000,C 00 _ 2,000,C 00 M expenses 'A 1:1 revenues 0 0 A \ SA Z�, P 02 Revenues by Source Governmental Activities Investment income Other other revenues Othertaxes 1% 4% 1% es Franchise taxes 7% Transient e nt Transient cytax occupancy tax 0 10% Property taxes 55% Sales and use taxes 22% Expenses and Program Revenues Governmental Activities 12,000,000 - 10,000,000 - 8,000,000 - 6,000,000 - 4,000,C 00 _ 2,000,C 00 M expenses 'A 1:1 revenues 0 0 A \ SA Z�, P 02 Financial Analysis of the Government's Funds The focus of the City of Rosemead's governmental funds is to provide information on the near - term inflows, and balances of spendable resources. Such information is useful in assessing the City of Rosemead's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of Rosemead's governmental funds reported combined fund balances of $19,614,828 a decrease of $43,535 in comparison with the prior year. Approximately 53% of this total amount of $10,414,669 constitutes unassigned, undesignated fund balance, which is available for spending at the government's discretion. The remainder of the fund balance is segregated into nonspendable fund balance, restricted fund balance, committed fund balance or assigned fund balance to indicate that it is not available for new spending because it has already been committed for other purposes. General Fund. The general fund is the chief operating fund of the City of Rosemead. At the end of the current fiscal year, the unassigned fund balance of the general fund was $11,607,595, while total fund balance reached $17,697,066. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 65% of total general fund expenditures, while total fund balance represents 99% of that same amount. The fund balance of the City of Rosemead's general fund increased by $79,626 during the current year. Highlights of the change in fund balance are presented below: The general fund revenues exceeded expenditures and therefore, fund balance had a slight increase of $79,626. Several of the revenues were less than the prior year as outlined below: • The general fund property tax decreased $1,034,258 over last year. In the prior year the City received a settlement from the County of Los Angeles and also several one -time property tax payments related to the dissolution of redevelopment. Therefore, even though the property tax revenue was less than the prior year, it exceeded the budgeted amount. • The City's franchise tax revenues decreased $1.0 million over the prior year. This resulted from the City's solid waste provider issued an upfront franchise fee payment of $1.6 million in 2012 -13. The City continued to make payments towards the unfunded portion of the Other Post Employment Benefits liability in the amount of $805,916. While this payment was originally budgeted to be taken from the general fund's unassigned fund balance, there was a slight increase in fund balance due to the increase of revenues over expenditures. Operating cost overruns in the Public Works division were caused by additional tree maintenance costs and costs to purchase recycle cans to maintain the community. Both of these items were reimbursed by grant revenue which offset these costs. Operating cost overruns in the City as a whole were minimal. Additional costs overruns, such as those for parking control and building inspections were covered by increases in revenue which more than offset the related costs. There were also additional costs for Water utilities which was related to the California drought. 10 General Fund Budget Analysis. The City's general fund collected revenues of slightly more than $1.1 million in comparison to the budgeted estimates or 6.4% more than the budget. This variance resulted from Property Tax increases of $323,000 which partially resulted from the reallocation of former redevelopment tax increment, Sales Tax increases of $226,000 which was driven by an improving economy and the opening of some new restaurants and businesses, and increase of $100,000 in Transient Occupancy Tax from an improving travel industry. In addition Permit revenue increased by $150,000 due to increased development and projects during FY 2013/14. A positive variance of $105,000 in Fines and Forfeitures was a result of increased collections of parking citations by the City's new third -party agent and the continued improvement from our administrative citation process implemented in 2011 -12. Interest earnings were underestimated by approximately $83,000 due to large end of year changes in market valuation. Shortfalls from budgeted estimates were isolated to grant revenue, primarily due to State grants that were flat. Planning Fees and Development Review Fees were underestimated by approximately $42,000 which can be credited to increased development and projects in the City. The general fund original expenditure budget was increased by $48,500. The main contributor to the increase was an increase of $42,000 due to a special Transient Occupancy Tax audit. Additional adjustments were made for the Lunar New Year festival and Public Safety CERT training. Net actual expenditures were $535,170 less than the amended budget. General Government underspent by $279,197 due to Housing Development Corporation obligations being covered by the Successor Agency rather than the General Fund. Public works was over budget by $85,383 due to additional tree maintenance costs as well as larger water utility costs. Also, there was a large expenditure to purchase recycled containers which was offset by grant revenue. Public Safety underspent by $51,772 which was a direct result of some personnel elated costs due to temporary vacancies. The Community Development Department also underspent their budget by $81,692 due to temporary staffing vacancies. There was an increase in the use of contracted services, however this was due to more projects and was offset by revenues. Parks and Recreation had aggregate savings of $207,892 largely due to the reduced reliance on part -time staffing and temporary staffing vacancies, larger than anticipated utility savings at the two new aquatic centers and reduced costs for special events. The department also realized some savings due to the reduced participation in programs such as excursions and the senior lunch program. Proposition A, C and Measure R Funds. These three funds are for transportation purposes and they are all funded with voter approved additions to Sales Tax on gasoline. The Prop A Fund is used mainly for public transportation services (fixed route bus service and Dial -A -Ride services); Proposition C has some transportation elements to it but it is focused more on transportation infrastructure maintenance purposes. Measure R mainly focuses on new transportation infrastructure development. Combined revenues in all three funds exceeded revenue estimated by $118,506. Since the transportation taxes are an enhancement to sales tax we can see that consumer sales is beginning to increase, an early sign of economic recovery. Expenditures for the Proposition A fund are increasing as greater efforts are being made to increase fixed route ridership as are the operating expenditures for Dial -A -Ride in the Proposition C Fund. Measure R, the newest of the funds, is beginning to spend its revenue for future project planning. 11 Rosemead Housing Development Corporation (RHDC). The RHDC Fund receives its funding from tenant rents and subsidies from the Successor Agency. As operational costs have continued to increase and tenant rents have remained relatively constant, the reliance on the subsidy from the Successor Agency has become more important. Through the elimination of redevelopment this obligation was submitted and subsequently approved by the Department of Finance as an enforceable obligation which will ensure ongoing funding for the RHDC into the future. As such, revenues and expenditures in this fund will typically balance out at the end of each fiscal year with just a minimal balance remaining due to timing issues. Vehicle Replacement and Technology Replacement Funds. These funds are utilized to cover the costs of equipment and vehicle replacement over time. Using departments are assessed charges for equipment used by them. The charges are accumulated in the internal service funds for future replacement of vehicles and equipment. Capital Asset and Debt Administration Capital assets. The City of Rosemead's investment in capital assets for its governmental activities as of June 30, 2014, amounts to $50,145,132 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, machinery and equipment, park facilities, roads, highways, bridges and construction in progress. Major capital asset events during the current fiscal year included the following: • Intersection improvements including electrical and replacing asphalt with concrete on Hellman and San Gabriel Drive • Construction of a new public plaza including water features, seating areas and extensive landscaping • Street resurfacing on Mission Drive • City Hall improvements including new furniture • Rosemead Community Recreation Center remodel • Garvey Gym improvements including exterior enhancements and renovation of restrooms Rosemead Park improvements including new playground equipment • Completed residential resurfacing projects in several neighborhoods 12 City of Rosemead's Capital Assets (net of depreciation) (thousands) Land $ 2,912 $ 2,912 Buildings 13,937 14,397 Improvements other than Buildings 335 431 Machinery and equipment 102 141 Autos and trucks 252 215 Furniture and office equipment 360 25 Infrastructure 31,240 32,873 Construction in progress 1,007 17 $ 50,145 1 $ 51,011 Additional information on the City of Rosemead's capital assets can be found in note 7 on pages 43 -44 of this report. Long -term debt. At the end of the current fiscal year, the Successor Agency for the Rosemead Community Development Commission had total bonded debt outstanding of $39,885,000. Of this amount, all of it is backed by future property tax increment revenues. City of Rosemead's Outstanding Debt Revenue Bonds (thousands) ax Allocation Bonds 41.740 The Successor Agency's total bonded debt decreased by $1,855,000 during the current fiscal year due to debt service payments. For more detailed information about the City's long -term debt please refer to note 8 on pages 44 -45 of this report. Economic Factors and Next Year's Budgets and Rates • As discussed throughout this Management's Discussion and Analysis report, there were modest general fund revenue increases in fiscal year 2013 -14. Both Sales Tax and Property Tax revenues have shown modest increases and are projected to continue in a slow but steady growth pattern. 13 During the prior fiscal year, the City had received the Finding of Completion from the State's Department of Finance, which was the final step needed to utilize approximately $7 million in tax increment bond proceeds from the former redevelopment agency. During fiscal year 2013 -14, the City has included capital improvement project funding from these bond proceeds in order to complete several projects that have been on hold for more than two years. These projects included the Rosemead Community Recreation Center Expansion and Downtown Plaza as well as the Rosemead Park Improvements. Progress was made on all of these projects during fiscal year 2013 -14 and should be completed by the end of fiscal year 2014 -15. Requests for Information This financial report is designed to provide a general overview of the City of Rosemead's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Acting Finance Director, 8838 East Valley Boulevard, Rosemead, CA 91770. 14 CITY OF ROSEMEAD Statement of Net Position June 30, 2014 Total assets 75,334,638 Liabilities Accounts payable and accrued liabilities Governmental Accrued salaries and benefits Activities Assets: 113,526 Cash and investments (note 2) $ 19,675,482 Receivables: 162,476 Accounts 1,804,284 Interest 38,915 Notes 394,710 Due from Successor Agency (note 5) 835,766 Prepaid expenses 2,440,349 Capital assets (note 7): Land 2,912,284 Construction in progress 1,006,820 Other capital assets, net 46,226,028 Total assets 75,334,638 Liabilities Accounts payable and accrued liabilities 2,330,898 Accrued salaries and benefits 225,118 Retentions payable 113,526 Due to Successor Agency (note 5) 21,441 Non - current liabilities (note 8): 162,476 Due within one year 487,936 Due in more than one year 1,634,559 Total liabilities 4,813,478 Net position Net investment in capital assets 50,042,631 Restricted for: Public safety 14,475 Public works 2,933,737 Community service 162,476 Unrestricted 17,367,841 Total net position $ 70,521,160 The accompanying notes are an integral part of these financial statements. 15 CITY OF ROSEMEAD Statement of Activities Fiscal Year Ended June 30, 2014 Governmental activities General government Net (expense) $ 92,464 revenue and (2,241,291) changesin Program Revenues net position Operating Capital (6,336,759) Charges for Contributions Contributions Governmental Expenses Services and Grants and Grants Activities Governmental activities General government $ 4,271,354 $ 92,464 $ 1,937,599 $ $ (2,241,291) Public safety 7,923,316 699,061 - 887,496 (6,336,759) Public works 10,072,081 327,385 1 4,029,101 - (5,715,595) Community development 2,853,472 1,564,775 67,733 - (1,220,964) Parks and recreation 2,274,920 724,197 - (1,550,723) Interest and other charges 5,561 - - - (5,561) Total governmental activities $ 27,400,704 $ 3,407,882 $ 6,034,433 $ 887,496 (17,070,893) General revenues: Taxes: Property taxes Sales and use taxes Property taxes in lieu of sales and use taxes Transient occupancy taxes Franchise taxes Othertaxes Investment income Other Total general revenues Change in net position Net position, beginning of year Net position, end of year 7,602,786 3,504,285 1,064,923 1,593,640 1,210,382 96,898 216,499 604,053 15,893,466 (1,177,427) 71,698,587 $ 70,521,160 The accompanying notes are an integral part of these financial statements. 16 CITY OF ROSEMEAD Governmental Funds Balance Sheet June 30, 2014 Assets Cash and investments (note 2) Receivables: Accounts Interest Notes Prepaid items Due from other funds (note 4) Due from Successor Agency (note 5) Special Revenue Special Revenue Rosemead Housing Development General Corporation HOME $ 16,106,430 $ 1,316,230 38,915 394,710 140,893 1,286,427 153,164 $ - 14,939 68,745 Total assets $ 19.283.605 $ 168.103 $ 68.745 Liabilities Accounts payable and accrued liabilities $ 1,131,548 $ Accrued salaries and benefits 182,672 Retentions payable - Due to other funds (note 4) - Due to Successor Agency (note 5) 21,441 _ Total liabilities Deferred Inflows of Resources Unavailable revenues Fund balances Nonspendable Restricted for: Public safety Public works Community services Low and moderate income housing Committed Assigned Unassigned Total.fund balances (deficit) Total liabilities, deferred inflows of resources and fund balances 37,766 $ 4,149 963 533,533 1,335,661 37,766 538;645 250,878 140,893 130,337 5,883,235 - - 65,343 11,607,595 (469,900) 17,697,066 130,337 (469,900) $ 19.283 ,605 _ $ 168.103 $ 68.745 The accompanying notes are an integral part of these financial statements. 17 Capital Projects Non -Major City Governmental Totals $ - $ 3,082,661 $ 19,342,255 404,370 1,804,284 - 38,915 394,710 140,893 1,286,427 835.766 835,766 $ 835,76B $ 3.487.031 23 843 250 $ 746,676 $ 410,759 $ . 2,330,898 3,448 38,169 225,252 113,526 - 113,526 695,142 57,752 1,286,427 21,441 1,558,792 506,680 3,977,544 250,878 140,893 14,475 14,475 2,933,737 2,933,737 32,139 32,139 - 130,337 - 5,883,235 - - 65,343 723.026) - 10.414.669 (723,026) 2,980 351 19,614 828 $ 835.766 _$____3487031 $ 23.843.250 19 (This page intentionally left blank) CITY OF ROSEMEAD Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2014 Fund balances of governmental funds $ 19,614,828 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 the governmental fund activity. Capital assets, net of depreciation Long term debt and compensated absences that have not been included in the governmental fund activity. Compensated absences Retrospective deposits payable Long -term assets that are not available for current use. Amounts are not reported in the governmental funds. Revenues that are measurable but not available. Amounts are recorded as deferred revenue under the modified accrual basis of accounting. 49,921,265 (691,774) (1,328,220) 2,299,456 251,012 Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The assets of the internal service funds must be added to the statement of net assets. 454,593 Net position of governmental activities $ 70,521,160 The accompanying notes are an integral part of these financial statements. 19 CITY OF ROSEMEAD Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances Fiscal Year Ended June 30, 2014 Expenditures: Current: General government Public safety Public works Community development Parks and recreation Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures 3,774,351 - 7,634,328 3,074,483 - _ 1,281,908 810,103 261,763 2,116,108 - 17,881,178 810,103 261,763 1.096,999 33.017 Other financing sources (uses): Transfers in (note 6) _ Transfers out (note 6) (1,017 373) Total other financing sources (uses) (1,017,373) Net change in fund balances 79,626 33,017 175 Fund balances (deficit), beginning of year 17,617440 97,320 (470,075) Fund balances (deficit), end of year $ 17.697,066 _ $ 130.337 $ (469,900) The accompanying notes are an integral part of these financial statements. 20 Special Revenue Special Revenue Rosemead Housing Development General Corporation HOME Revenues: Taxes $ 15,320,806 $ - $ - Intergovernmental 169,530 417,866 261,938 Licenses and permits 1,308,482 - - Charges for services 1,002,497 Fines, forfeitures and penalties 700,126 - - Special assessments - _ _ Investment income 419,283 421,017 - Other 57,453 4.237 Total revenues 18,978 177 843,120 261,938 Expenditures: Current: General government Public safety Public works Community development Parks and recreation Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures 3,774,351 - 7,634,328 3,074,483 - _ 1,281,908 810,103 261,763 2,116,108 - 17,881,178 810,103 261,763 1.096,999 33.017 Other financing sources (uses): Transfers in (note 6) _ Transfers out (note 6) (1,017 373) Total other financing sources (uses) (1,017,373) Net change in fund balances 79,626 33,017 175 Fund balances (deficit), beginning of year 17,617440 97,320 (470,075) Fund balances (deficit), end of year $ 17.697,066 _ $ 130.337 $ (469,900) The accompanying notes are an integral part of these financial statements. 20 Capital Projects Non -Major Citv Governmental Totals $ - $ - $ 15,320,806 124,085 5,093,517 6,066,936 - - 1,308,482 990 83,604 1,087,091 - - 700,126 881,543 881,543 33,331 873,631 61,690 125,075 6,091,995 26,300,305 199,013 3,973,364 - 279,331 7,913,659 187,692 2,922,715 6,184,890 - 492,338 2,846,112 - 41,316 2,157,424 3,193,878 74,513 3,268,391 3,381,570 4,009,226 26,343,840 (3,256,495) 2,082,769 (43,535) 2,869,030 184,575 3,053,605 (99,061) (1,937,171) (3,053,605) 2,769,969 (1,752,596) (486,526) 330,173 (43,535) (236500) 2,650,178 19,658,363 _$ (723.0261 $ 2 980 351 _$____1J614 328 21 CITY OF ROSEMEAD Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Fiscal Year Ended June 30, 2014 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities differs from the amounts reported in the statement of activities 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 depreciation expense exceeded capital outlays in the current year. This activity is reconciled as follows: Cost of assets capitalized, less disposals at net book value (net of Internal Service Fund) Depreciation expense (net of Internal Service Fund) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Increase in OPEB asset Compensated absences and retrospective deposits payable 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. Increase in retrospective deposits payable Increase in compensated absences payable Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Internal service funds used by management to charge the costs of certain activities, such as equipment management, to individual funds. The net revenues (expenses) of the internal service funds are reported with governmental activities. Change in net position of governmental activities $ (43,535) 1,884,733 (2,768,282) 462,474 (671,655) (73,794) (77,028) 109,660 $ (1,177,427) The accompanying notes are an integral part of these financial statements. 22 CITY OF ROSEMEAD Statement of Net Position Internal Service Funds June 30, 2014 Assets Current assets: Cash and investments (note 2) Total current assets Non - current assets: Capital assets: Other capital assets, net (note 7) Total noncurrent assets Total assets Liabilities Current liabilities: Lease payable - current (note 8) Total current liabilities Non- current liabilities: Lease payable (note 8) Total non - current liabilities Total liabilities Net position Net investment in capital assets Unrestricted Total net position $ 333,227 333,227 223,867 223,867 557,094 57,651 57.651 44,850 44,850 102,501 121,366 333,227 $ 454,593 The accompanying notes are an integral part of these financial statements. 23 CITY OF ROSEMEAD Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds Fiscal Year Ended June 30, 2014 Operating revenues: Charges for services $ 279,000 Other operating revenues 2,270 Total operating revenues 281,270 Operating expenses: Contractual services 91,806 Depreciation 74,243 Total operating expenses 166,049 Operating income 115,221 Non - operating revenues (expenses): Interest expense (5,561) Total non - operating revenues (expenses) (5,561) Change in net position 109,660 Net position, beginning of year 344,933 Net position, end of year $ 454,593 The accompanying notes are an integral part of these financial statements. 24 CITY OF ROSEMEAD Statement of Cash Flows Internal Service Funds Fiscal Year Ended June 30, 2014 Cash flows from operating activities: Cash received from users departments $ 284,800 Cash payments to suppliers for goods and services (91,806) Other revenues 2,270 Net cash provided by operating activities 195,264 Cash flows from capital and related financing activities: Principal paid on capital lease (55,288) Interest paid on capital lease (5,561) Cash paid to purchase capital asset (91,969) Net cash (used for) capital and related financing activities (152,818) Net increase in cash and investments 42,446 Cash and investments, beginning of year 290,781 Cash and investments, end of year $ 333,227 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 115,221 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 74,243 (Increase) decrease in due from other funds 5,800 Total adjustments — 80,043 Net cash provided by operating activities $ 195,264 The accompanying notes are an integral part of these financial statements. 25 CITY OF ROSEMEAD Statement of Fiduciary Net Position June 30, 2014 Assets Cash and investments (note 2) Receivables: Interest Notes Due from City of Rosemead (note 5) Total assets Liabilities Accounts payable Deposits payable Accrued interest payable Due to City of Rosemead (note 5) Long -term debt (note 15): Due within one year Due in more than one year Total liabilities Net Position Field in trust for the Successor Agency Total net position (deficit) Successor Agency Private - purpose Agency Trust Fund Fund $ 11,379,694 $ 327,515 94,137 - 1,732,507 - 21,441 - 13,227,779 $ 327,515 6,236 369,589 835,766 327,515 1,925,022 37,981,679 41,118,292 $ 327,515 (27,890,513) $ (27,890,513) The accompanying notes are an integral part of these financial statements. 26 CITY OF ROSEMEAD Statement of Changes in Fiduciary Net Position Fiscal Year Ended June 30, 2014 Successor Agency Private - purpose Trust Fund Additions Property taxes $ 5,517,943 Investment earnings 243,250 Total additions 5,761,193 Deductions Administrative expenses 2,606,970 Affected taxing entities 1,153,985 Interest expense 1,772,981 Total deductions 5,533,936 Change in net position 227,257 Net position (deficit), beginning of period, as restated (28,117,770) Net position (deficit), end of period $ (27,890,513) The accompanying notes are an integral part of these financial statements. 27 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (1) Summary of Significant Accounting Policies (a) Reporting Entity The City of Rosemead, California, ( "the City ") was incorporated in August 1959 under the general laws of the State of California. The City operates under an elected Council /City Manager form of government. It provides a broad range of services to its citizens, including general government, public safety, streets, sanitation and health, cultural and park facilities, and social services. Many of the functions often provided by municipal government are, in the City, provided by special districts. Examples of some of these special districts, which usually encompass areas larger than the City itself, are the Fire Protection District, the Library District, and the County Flood Control District. Certain other governmental functions are paid for by the City, but performed by a variety of other public and private agencies under contract. Some of the contracts now in effect are for police, solid waste disposal, and building and safety. The accounting policies of the City conform to generally accepted accounting principles as applicable to governments. As required by generally accepted accounting principles, these financial statements present the government and its component units, which are entities for which the government is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization's governing body and the City is able to impose its will on that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable if an organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City's financial statements to be misleading or incomplete. Based upon the above criteria, the blended component units of the City are the Rosemead Financing Authority (the Authority) and the Rosemead Housing Development Corporation (the Corporation). Rosemead Financing Authority The Authority provides for the financing or refinancing of public capital improvements and working capital requirements of local agencies that enter into contractual arrangements with the Authority. NE CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (1) Summary of Significant Accounting Policies, (continued) (a) Reporting Entity. (continued) Rosemead Housing Development Corporation The Corporation accounts for the construction, financing and operations of low and moderate - income housing. It is a California nonprofit benefit corporation organized under Section 501(c)(3) of the Internal Revenue Code. The activities of the Corporation are recorded in the RHDC special revenue fund. Separately issued financial statements of the Corporation can be obtained from the Finance Department. Since the City Council and /or other City officials serve as the Governing Board for these component units, all of the City's component units are considered to be blended component units. Blended component units, although legally separate entities, are, in substance, part of the City's operations. Therefore, data from these units are reported with the funds of the primary government, the City. (b) Basis of Accounting and Measurement Focus The basic financial statements of the City are composed of the following: Government -wide financial statements Fund financial statements Notes to the basic financial statements Financial reporting is based upon all Governmental Accounting Standards Board pronouncements. Government -wide Financial Statements Government -wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business -type activities of the primary government (including its blended component units), as well as its discretely presented component units. The City of Rosemead has no discretely presented component units. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by function to which they were allocated). However, general governmental expenses have not been, allocated as indirect expenses to the various functions of the City. 29 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (1) Summary of Significant Accounting Policies, (continued) (b) Basis of Accountinq and Measurement Focus. (continued) Government -wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long -term) economic resources and obligations of the reporting government are reported in the government -wide financial statements. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement No. 33. Program revenues include charges for services, special assessments, and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Amounts paid to acquire capital assets are capitalized as assets in the government - wide financial statements, rather than reported as an expenditure. Proceeds of long- term debt are recorded as a liability in the government -wide financial statements, rather than as other financing source. Amounts paid to reduce long -term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. Fund Financial Statements The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements. These statements display information about major funds individually and non major funds in the aggregate for governmental and enterprise funds. Fiduciary statements include financial information for fiduciary funds and similar component units. Fiduciary funds of the City primarily represent assets held by the City in custodial capacity for other individuals or organizations. 30 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (1) Summary of Significant Accounting Policies, (continued) (b) Basis of Accounting and Measurement Focus (continued) Governmental Funds In the fund financial statements, governmental funds are presented using the modified - accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The City uses a sixty day availability period. Revenue recognition is subject to the measurable and available criteria for the government funds in the fund financial statements. Exchange transactions are recognized as revenues in the period'in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction on which they are based takes place. Imposed non - exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government - mandated and voluntary non - exchange transactions are recognized as revenues when all applicable eligibility requirements have been met. In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Non - current portions of long -term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. However, special reporting treatments are used to indicate that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fund type revenues represented by noncurrent receivables are deferred until they become current receivables. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long -term amounts are not recognized as governmental fund type expenditures or fund liabilities. 31 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (1) Summary of Significant Accounting Policies, (continued) (b) Basis of Accounting and Measurement Focus. (continued) Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long -term debt are recorded as other financing sources rather than as a fund liability. Amounts paid to reduce long -term indebtedness are reported as fund expenditures. When both restricted and unrestricted resources are combined in a fund, expenditures are considered to be paid first from restricted resources, and then from unrestricted resources. Fiduciary Funds The City maintains two fiduciary fund types. The first is a private - purpose trust fund which uses the economic resources measurement focus and the accrual basis of accounting. The second is an agency fund which has no measurement focus. Agency fund is custodial in nature (assets equal liabilities) and do not involve the recording of City revenues and expenses. (c) Major and Fiduciary Fund Types The City's major governmental funds are as follows General Fund - Accounts for all financial resources except those required to be accounted for in another fund. These resources are devoted to financing the general services that the City performs for its citizens. Rosemead Housinq Development Corporation - Accounts for the construction, financing and operations of low and moderate income housing. The Corporation is a blended component unit of the City of Rosemead. HOME Program Fund - This fund is used to account for HOME Investment Partnerships Program monies received to create and retain affordable housing. City Capital Proiects Fund - Accounts for financial resources to be used for the acquisition and construction of major capital facilities within the City. The City's Fiduciary Funds are as follows: Private - purpose Trust Fund - Accounts for the activity of the Successor Agency to the Community Development Commission of the City of Rosemead. Agency Fund - Accounts for the assets held in a trustee capacity or as an agent. The cash being held primarily represents amounts placed on deposit for refundable permits and performance bonds. 32 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (1) Summary of Significant Accounting Policies, (continued) (d) Investments For financial reporting purposes, investments are adjusted to their fair value whenever the difference between fair value and the carrying amount is material. 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. 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. (e) 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 funds' share in the cash and investment pool of the City of Rosemead. Cash equivalents have an original maturity date 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 internal service fund is considered cash and cash equivalents. (f) Capital Assets Capital assets (including infrastructure) are recorded at cost where historical records are available and at an estimated historical cost where no historical records exist. Contributed capital assets are valued at their estimated fair market value at the date of the contribution. Generally, capital asset purchases in excess of $10,000 are capitalized if they have an expected useful life of one or more years. Capital assets include public domain (infrastructure) general capital assets consisting of certain improvements including roads, streets, sidewalks, medians, and storm drains. 33 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 , (1) Summary of Significant Accounting Policies, (continued) (f) Capital Assets, (continued) Capital assets used in operations are depreciated over their estimated useful lives using the straight -line method in the government -wide financial statements and in the fund financial statements of the internal service funds. Depreciation is charged as an expense against operations and accumulated depreciation is reported on the respective balance sheet. The following schedule summarizes capital asset useful lives: Buildings 50 years Improvements other than buildings 15 years Machinery and equipment 7 years Autos and trucks 5 years Furniture and office equipment 7 years Infrastructure: Bridges 50 years Sewer system and storm drain system 50 -100 years Medians and sidewalks 40 years Traffic signals 30 years Streets 20 years (g) Compensated Absences Vacation is payable to employees at the time used or upon termination of employment. All vacation is accrued when incurred in the government -wide level financial statements. The sick leave liability is estimated based on the City's past experience of making termination payments from sick leave, adjusted for the effect of changes in its termination payment policy and other current factors. A liability for these amounts is reported in governmental funds only if it has matured or will be paid from available resources of the current period. City employees accumulate vacation hours that may be paid upon termination, death or retirement. Full -time employees can accumulate up to four weeks of accrued vacation per year depending on the length of employment. The City allows full -time employees who have earned vacation time an opportunity to have the City buy back up'to 40 hours of vacation time per year. CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (1) Summary of Significant Accounting Policies, (continued) (h) Prepaid Items Prepaid items are reported in the governmental funds under the consumption method and are offset by a nonspendable designation in fund balance to indicate that they are not available for appropriation and are not expendable financial resources. (i) Fund Equity The City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions during the year ended June 30, 2011. This statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government's fund balance more transparent. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used: • Nonspendable — amounts that are not in a spendable form (such as inventory) or are required to be maintained intact. • Restricted — amounts constrained to specific purposes by their providers (such as grantors, bondholders and higher levels of government), through constitutional provisions or by enabling legislation. • Committed — amounts constrained to specific purposes by a government itself, using the highest level of decision - making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the constraint. • Assigned — amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. • Unassigned — amounts that are for any purpose; positive amounts are reported only in a general fund. The City Council establishes (and modifies or rescinds) fund balance commitments by passage of an ordinance or resolution. The City Council has designated the Finance Committee and City Manager as the City officials to determine, define, and make the necessary account or fund transfers for the amounts to those components of fund balance that are classified as "Assigned Fund Balance." When both restricted and unrestricted resources are available for use when an expenditure is incurred, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. It is the City's policy to consider committed amounts as being reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. 35 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (1) Summary of Significant Accounting Policies, (continued) Q) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. (k) Implementation of New Pronouncements Effective July 1, 2013, the City adopted the provisions of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. GASB 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The City's financial statements do not contain any elements that meet the definition of deferred outflows of resources or deferred inflow of resources. GASB 65 amended prior guidance with respect to the treatment of debt issuance costs. Under GASB 65, debt issuance costs, except any portion related to prepaid insurance costs, are recognized as an expense in the period incurred rather than reported as an asset on the statement of net position and recognized as an expense in a systematic and rational manner over the duration of the related debt. Accordingly, as noted in Note 15 of the financial statements, the City has restated beginning net position for any unamortized debt issuance costs previously reported on the statement of net position in conformity with GASB 65. (2) Cash and Investments Cash and investments as of June 30, 2014 are classified in the accompanying financial statements as follows: Statement of Net Position: Cash and investments $ 19,675,482 Statement of Fiduciary Net Position: Cash and investments 11,707,209 Total cash and investments $ 31,382,691 36 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (2) Cash and Investments, (continued) Cash and investments as of June 30, 2014 consist of the following: Deposits with financial institutions Investments Total cash and investments $ 13,652,464 17,730,227 $ 31,382,691 Investments Authorized by the California Government Code and the City's Investment Polic The table below identifies the investment types that are authorized for the City by the California Government Code and the City's investment policy. The table also identifies certain provisions of the California Government Code (or the City's investment policy, if 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 trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy. Authorized by Ma>dmum Ma>dmum Investment Types Investment Ma>dmum Percentage Investment in Authorized by State Law Policy Maturity* of Portfolio* One Issuer* US Treasury Obligations US Agency Securities Banker's Acceptances Commercial Paper Negotiable Certificates of Deposit Medium -Term Notes Money Market Mutual Funds Local Agency Investment Funds (LAIF) Yes 5 years None None Yes 5 years None None Yes 180 days 20% 30% Yes 180 days 15% 10% Yes 5 years 30% None Yes 5 years 30% None Yes N/A 20% 10% Yes N/A None $50M Based on state law requirements or investment policy requirements, whichever is more restrictive. Investments Authorized by Debt Agreements Investment of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk. 37 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (2) Cash and Investments, (continued) Maximum Authorized Investment Type Maturity Maximum Percentage of Portfolio Maximum Investment in One Issuer US Treasury Obligations 5 years None None US Agency Securities 5 years None None Banker's Acceptances 270 days 40% 10% Commercial Paper 180 days 10% 10% Money Market Portfolios 1 year None None Investment Agreements None None None Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: Remaining Maturity 12 months 13 to 24 25 to 60 Investment Type Total or less months months State investment pool $ 6,805,233 $ 6,805,233 $ - $ - Certificates of deposits 3,877,576 - - 3,877,576 US agency securities 2,993,261 - 2,993,261 Medium -term notes 1,776,104 - - 1,776,104 Held by bond trustee: Money market mutual funds 1,704,626 1,704,626 - - Certificates of deposit 573,427 - 573,427 Total $ 17,730,227 $ 8,509,859 $ 573,427 $8,646,941 0 . CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (2) Cash and Investments, (continued) Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the actual rating as of year end for each investment type. Minimum Legal Rating as of Year End Investment Type Total Rating A A+ AA- AA+ AAA State investment pool $ 6,805,233 WA $ - $ - $ - $ - $ - $ 6,805,233 Certificates of deposits 3,877,576 WA - - - - - 3,877,576 US agency securities 2,993,261 WA - - - 2,993,261 - - Medium- term notes 1,776,104 A 773,963 512,853 253,183 236,105 - - Held by bond trustee: Money market mutual fund: 1,704,626 WA - - - - 1,143,054 561,572 Certificates of deposit 573,427 WA - - - - - 573,427 Total $17,730,227 $773,963 $512,853 $253,183 $3,229,366 $1,143,054 $11,817,808 Concentration of Credit Risk The investment policy of the City contains certain limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City investments are as follows: Investment Reported Issuer Type Amount Federal Home Loan Mortgage Corporation US Agency Securities $ 991,430 Federal National Mortgage Association US Agency Securities $ 995,480 W CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (2) Cash and Investments, (continued) Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker - dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2014, the City had no deposits with financial institutions in excess of federal depository insurance limits held in uncollateralized accounts. Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro -rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. ,I CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (3) (4) Property Taxes Property tax revenue is recognized in accordance with GASB Codification Section P70; that is, in the fiscal year for which the taxes have been levied providing they become available. Available means due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used to pay liabilities in the current period. Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes are recorded initially in a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of Rosemead accrues only those taxes that are received from the County within sixty days after year -end. Lien date January 1 Levy date July 1 Due dates November 1 and February 1 Collection dates December 10 and April 10 Interfund Receivables and Payables Current interfund receivables and payables balances at June 30, 2014 are as follows: Due from Due to Amount General Fund City Capital Projects Fund $ 695,142 HOME 533,533 Non -Major Governmental Funds 57,752 Total $ 1,286,427 The interfund amounts are for short-term loans to cover temporary cash deficits. 41 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (5) Intergovernmental Receivables and Payables Current intergovernmental receivables and payables balances at June 30, 2014 are as follows: Due from Due to Amount General Fund Successor Agency $ 21,441 Successor Agency City Capital Projects Fund 835,766 Total $ 857,207 Intergovernmental amounts between the Successor Agency and the City are for reimbursement of payroll expenses and short -term loans to cover operations. (6) Interfund Transfers Interfund transfers were as follows for the year ended June 30, 2014: Transfers in Transfers out Amount City Capital Projects Fund General Fund $ 992,497 Non -Major Governmental Funds 1,876,533 2 (A) Non -Major Governmental Funds General Fund 24,876 City Capital Projects Fund 99,061 Non -Major Governmental Funds 60,638 184,575 Total (A) To subsidize various programs and capital projects. $ 3,053,605 CD CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (7) Capital Assets Capital asset activity was as follows for the year ended June 30, 2014: Capital assets, being depreciated: Beginning Ending Governmental activities: balance Additions Deletions balance Capital assets, not being depreciated: - 21,656,755 Improvements other than buildings Land $ 2,912,284 $ - $ - $ 2,912,284 Construction in progress 17,429 1,006,820 (17,429) 1,006,820 - 543,532 Autos and trucks Total capital assets, not being depreciated 2,929,713 1,006,820 (17,429) 3,919,104 Capital assets, being depreciated: Buildings 21,656,755 (460,011) - 21,656,755 Improvements other than buildings 1,265,700 (95,755) - 1,265,700 Machinery and equipment 543,532 - - 543,532 Autos and trucks 897,432 166,481 - 1,063,913 Furniture and office equipment 1,118,088 367,037 - 1,485,125 Infrastructure 61,324,183 453,793 - 61,777,976 Total capital assets, being depreciated 86,805,690 987,311 - 87,793,001 Less accumulated depreciation for: Buildings (7,259,390) (460,011) - (7,719,401) Improvements other than buildings (835,589) (95,755) - (931,344) Machinery and equipment (402,656) (38,600) - (441,256) Autos and trucks (682,660) (129,192) - (811,852) Furniture and office equipment (1,093,302) (32,193) - (1,125,495) Infrastructure (28,450,851) (2,086,774) - (30,537,625) Total accumulated depreciation (38,724,448) (2,842,525) - (41,566,973) Total capital assets, being depreciated, net 48,081,242 (1,855,214) - 46,226,028 Governmental activities capital assets, net of accumulated depreciation $ 51,010,955 $ (848,394) $ (17,429) $ 50,145,132 43 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (7) Capital Assets, (continued) Depreciation expense was charged to functions /programs of the primary government as follows: Governmental activities General government $ 42,256 Public safety 26,330 Public works 2,629,174 Community development 14,529 Parks and recreation 130,236 Total depreciation expense $ 2,842,525 (8) Changes in Long -Term Liabilities Long -term debt consists of the following at June 30, 2014: Beginning Ending Due in Governmental activities: Balance Additions Deletions Balance One Year Computer lease $ 157,789 $ - $ 55,288 $ 102,501 $ 57,651 Retrospective deposit 656,565 671,655 - 1,328,220 132,822 Compensated absences 617,980 294,685 220,891 691,774 297,463 Total long -term debt $ 1,432,334 $ 966,340 $ 276,179 $ 2,122,495 $ 487,936 The City records expenditures related to compensated absences through the City's General Fund. CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 Changes in Long -Term Liabilities, (continued) Capital Lease In 2011, the City entered into a lease agreement for the acquisition of finance computer software. The lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of inception. The equipment acquired during the fiscal year under this lease agreement is recorded at its acquisition cost of $270,125. The outstanding balance at June 30, 2014 was $102,501. The calculation of the present value of the future lease payments is as follows: Amount of future lease payments for the year ending June 30, Governmental Activities 2015 2016 Subtotal Less amount representing interest Present value of future lease payments $ 60,849 45,637 (3,985) $ 102,501 Accumulated depreciation on assets purchased through lease agreements are as follows: Assets: Improvements other than buildings Less: accumulated depreciation Governmental Activities $ 270,125 (154,356) Total $ 115,769 45 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 ( Post Employment Benefit Plan Plan Description: The City administers a single - employer defined benefit plan which provides medical benefits to eligible retirees and their spouses in accordance with various labor agreements. Eligibility: Employees are eligible for retiree health benefits if they retire from the City on or after age 50 with at least 5 years of service, and are eligible for a PERS pension. After age 65, Medicare automatically becomes the primary provider of health coverage. The City's defined benefit plan becomes the secondary provider. Eligible retirees will have no noticeable change in health benefits or plan administration; however, there is a reduction in the City's cost of health coverage as the secondary provider. The City's defined benefit plan administrator establishes the cost of secondary provider rates annually. The City will pay 100% for eligible retirees' health coverage. Membership of the plan consisted of the following at January 1, 2011, the date of the latest actuarial valuation: Retirees and beneficiaries receiving benefits 17 Active plan members 63 Total 80 Funding Policy: The contribution requirements of plan members and the City are established and may be amended by City Council. On May 26, 2009, the City Council passed a resolution to participate in the PARS Public Agencies Post - Retirement Health Care Plan Trust, an irrevocable trust established to fund post - employment benefits for its employees. The purpose of the trust is to accumulate, hold, and distribute medical benefit plan assets for the exclusive benefit of retirees and beneficiaries within the IRS Code Section 115 and in conformance with the accounting standard. The trust is administered by Public Agency Retirement Services (PARS). PARS issues a separate Comprehensive Annual Financial Report. Copies of the PARS annual financial 'report may be obtained from PARS, 4350 Von Karman Avenue, Suite 100, Newport Beach, CA 92660. The contribution required to be made under City Council and labor agreement requirements is based on a pay -as- you -go basis (i.e., as medical insurance premiums become due). For fiscal year 2013 -14, the City contributed $805,916 to the plan. EN CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 ( Post Employment Benefit Plan, (continued) Annual OPEB Cost and Net OPEB Obligation: The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation for these benefits: Annual required contribution $ 309,960 Interest on net OPEB obligation (110,219) Adjustment to annual required contribution 143,701 Annual OPEB cost (expense) 343,442 Contributions made (805,916) Increase in net OPEB obligation (462,474) Net OPEB obligation (asset) - beginning of year (1,836,982) Net OPEB obligation (asset) - end of year $ (2,299,456) The net OPEB asset is reported in the government -wide statements as part of prepaid expenses. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2014 and the two preceding years were as follows: Fiscal Annual OPEB Year OPEB Cost Obligation Contributed 6/30/2012 $ 323,478 6/30/2013 $ 332,733 6130/2014 $ 343,442 Percentage Net of Annual OPEB OPEB Cost Obligation Contributed (Asset) 250% $(1,347,168) 247% $(1,836,982) 235% $ (2,299,456) 47 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (9) Post Employment Benefit Plan, (continued) Annual OPEB Cost and Net OPEB Obligation: Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi -year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for the benefits. Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short -term volatility in actuarial accrued liabilities and the actuarial assets, consistent with the long -term perspective of the calculations. The ARC for the plan for the current fiscal year ended June 30, 2014, was determined as part of the January 1, 2011 actuarial valuation. The actuarial cost method used for determining the benefit obligations is the Entry Age Normal Actuarial Cost Method. The actuarial assumptions included a 6.0% investment rate of return, which is the assumed rate of the expected long -term investment returns on plan assets calculated based on the funded level of the plan at the valuation date, and an annual healthcare cost trend rate of 7.6% initially, reduced by decrements of 0.4 % -0.5% per year to an ultimate rate of 5% after the tenth year. The UAAL is being amortized on a level dollar approach over 30 years on a closed basis. It is assumed the City's payroll will increase 3.25% per year. (10) Risk Management Description of Self- Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 122 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self- insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine- member Executive Committee. Im CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (10) Risk Management, (continued) Self- Insurance Proarams of the Authorit Each member pays an annual contribution to cover estimated losses for the coverage period. This initial funding is paid at the beginning of the coverage period. After the close of the coverage period, outstanding claims are valued. A retrospective deposit computation is then conducted annually thereafter until all claims incurred during the coverage period are closed on a pool -wide basis. This subsequent cost re- allocation among members based on actual claim development can result in adjustments of either refunds or additional deposits required. The total funding requirement for self- insurance programs is estimated using actuarial models and pre- funded through the annual contribution. Costs are allocated to individual agencies based on exposure (payroll) and experience (claims) relative to other members of the risk - sharing pool. Additional information regarding the cost allocation methodology is provided below. Liability In the liability program claims are pooled separately between police and non - police exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs in excess of $750,000 up to the reinsurance attachment point of $5 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $5 million to $10 million are paid under a reinsurance contract subject to a $2.5 million annual aggregate deductible. The $2.5 million annual aggregate deductible is fully covered under a separate policy; as such no portion of it is retained by the Authority. Costs of covered claims from $10 million to $15 million are paid under two reinsurance contracts subject to a combined $3 million annual aggregate deductible. The $3.0 million annual aggregate deductible is fully retained by the Authority. (6) Costs of covered claims from $15 million up to $50 million are covered through excess insurance policies. The overall coverage limit for each member including all layers of coverage is $50 million per occurrence. Costs of covered claims for subsidence losses are paid by reinsurance and excess insurance with a pooled sub -limit of $25 million per occurrence. This $25 million subsidence sub -limit is composed of (a) $5 million retained within the pool's SIR, (b) $10 million in reinsurance and (c) $10 million in excess insurance. The excess insurance layer has a $10 million annual aggregate. we CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (10) Risk Management, (continued) Self- Insurance Programs of the Authority. (continued Workers' Compensation In the workers' compensation program claims are pooled separately between public safety (police and fire) and non - public safety exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs in excess of $100,000 up to the reinsurance attachment point of $2 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $2 million up to statutory limits are paid under a reinsurance policy. Protection is provided per statutory liability under California Workers' Compensation Law. Employer's Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer's Liability losses from $5 million to $10 million are pooled among members. Purchased Insurance Pollution Legal Liability Insurance The City of Rosemead participates in the pollution legal liability insurance program (formerly called environmental insurance) which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of Rosemead. Coverage is on a claims -made basis. There is a $50,000 deductible. The Authority has a limit of $50 million for the 3 -year period from July 1, 2011 through July 1, 2014. Each member of the Authority has a $10 million sub -limit during the 3 -year term of the policy. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2013 -14. As of June 30, 2014 the City had retrospective deposits payable to the Authority in the amount of $1,328,220. The deposit will be repaid through adjustments to premiums over the next three years. The retrospective deposit payable has been included in noncurrent liabilities on the Statement of Net Position. W E CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (11) Retirement Plan Defined Benefit Pension Plan Plan Description: The City of Rosemead contributes to the California Public Employees Retirement System (PERS), a cost - sharing multiple - employer public employee defined benefit pension plan. PERS provides retirement, disability benefits, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statue and City ordinance. For employees hired prior to July 1, 2010, the 2.7% at 55 retirement plan (First -Tier Plan) is applicable. For employees hired after July 1, 2010, the 2% at 55 (Second -Tier Plan) retirement plan is applicable. PERS issues a publicly available financial report that includes financial statements and required supplementary information for the cost sharing plans that are administered by PERS. Copies of PERS' annual financial report may be obtained by writing to 400 "P" Street, Sacramento, California 95814. Funding Policy: Miscellaneous First -Tier and Second -Tier participants are required to contribute 8% and 7 %, respectively, of their annual covered payroll. The City is required to contribute at an actuarially determined rate. The First -Tier and Second -Tier employer contribution rates for the year ended June 30, 2014 were 27,445% and 10.781°/x, respectively, of annual covered payroll. The contribution requirements of plan members and the City are established and may be amended by City Council in conjunction with applicable labor contracts. The City's contributions to the miscellaneous plan for the years ending June 30, 2012, 2013, and 2014 were $1,299,866, $1,149,116 and $1,178,145, respectively, and were equal to the required contributions for each year. Supplemental Defined Benefit Pension Plan Plan Description: Effective July 1, 2000, the City entered into an agreement with Public Agency Retirement Services (PARS) whereby the City contributes to a supplemental employee pension plan (the plan II), a single - employer defined benefit pension plan administered by Phase II Systems. The plan II provides a supplemental retirement benefit of 1% for each year of service to plan members and beneficiaries. Employees with at least 20 years of service and City Council members with at least 20 years of service are eligible to participate at age 55 and receive an annual benefit equal to 3% of the highest annual gross pay for each year of service. Benefits are determined using the same method as CalPERS benefits. PARS issues a publicly available financial report that includes financial statements and required supplementary information for the plan Il. That report may be obtained by writing to PARS, 3961 MacArthur Boulevard, Suite 200, Newport Beach, California, 92660. 51 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (11) Retirement Plan, (continued) Funding Policy: An actuarial valuation of the City of Rosemead Supplemental Defined Benefit Pension Plan was performed as of July 1, 2012 to determine the funding level requirement of the plan for the current fiscal period. Actuarial valuations are performed once every two years. The employer contribution rate for the plan years 2014 and 2015 was 3.95 %. Annual Pension Cost: For fiscal year ended June 30, 2014, the City's annual pension cost of $121,191 for PARS was equal to the City's required and actual contributions. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, shows the recent history of the actuarial value of assets, actuarial accrued liability, their relationship, and the relationship of the unfunded actuarial accrued liability to payroll. Actuarial Methods and Assumptions: A summary of principle assumptions and methods used to determine the ARC is shown below. Valuation Date Actuarial Cost Method Amortization Method Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Inflation Rate Retirement Cost of Living Adjustment July 1, 2012 Entry Age Normal Level Dollar Market Value 6.50% with +/- 1% sensitivity analysis for funding purposes 3% For miscellaneous employees and the contract City Attorney: Retirement rate of 20% at ages 60 and older with between 10 and 20 years of service, and retirement rate of 30% at ages 55 and older with more than 20 years of service. For City Council members: Retirement rates of 30% per year. 2% compounded annually Initial unfunded liabilities are amortized over a closed 20 year period from July 1, 2002, with 9 years remaining at July 1, 2013. Payments are assumed to be made throughout the year. 52 Three -year trend information Annual Pension Cost (Employer Contribution) Fiscal Employer Percentage Net Pension Year Contribution Contributed Obligation 6/30/2012 $ 136,440 100% $ 6/30/2013 $ 113,173 100% $ 6/30/2014 $ 121,191 100% $ The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, shows the recent history of the actuarial value of assets, actuarial accrued liability, their relationship, and the relationship of the unfunded actuarial accrued liability to payroll. Actuarial Methods and Assumptions: A summary of principle assumptions and methods used to determine the ARC is shown below. Valuation Date Actuarial Cost Method Amortization Method Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Inflation Rate Retirement Cost of Living Adjustment July 1, 2012 Entry Age Normal Level Dollar Market Value 6.50% with +/- 1% sensitivity analysis for funding purposes 3% For miscellaneous employees and the contract City Attorney: Retirement rate of 20% at ages 60 and older with between 10 and 20 years of service, and retirement rate of 30% at ages 55 and older with more than 20 years of service. For City Council members: Retirement rates of 30% per year. 2% compounded annually Initial unfunded liabilities are amortized over a closed 20 year period from July 1, 2002, with 9 years remaining at July 1, 2013. Payments are assumed to be made throughout the year. 52 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (12) (13) Commitments and Contingencies The City is a member of the Los Angeles County Liability Trust Fund (the Trust Fund), which was set up to pay for litigation involving the Los Angeles County Sheriffs' Department within any of the 40 cities that are served by the Los Angeles County Sheriffs' Department. The Trust Fund was and is being funded by the 40 cities based upon each city's allocated surcharge, calculated as a percentage of each city's contribution to the total contracted amount with the County paid to Los Angeles County for the use of its deputies. Based upon the agreement signed by all of the 40 cities at the time the Trust Fund originated, the cities will be jointly liable for any and all claims filed against the Los Angeles County Sheriffs' Department, regardless of the location within the 40 cities. The City is a defendant in certain legal actions arising in the normal course of operations. In the opinion of management, any liability resulting from such actions will not have a material adverse effect on the City's financial position. Fund Deficits The following funds had deficit balances as of June 30, 2014: Major Governmental Fund: Capital Projects: City Capital Projects $ 723,026 Special Revenue: HOME Program 469,900 (14) The fund deficits noted above primarily relate to expenditures charged to projects during the fiscal year ended June 30, 2014, which were submitted for reimbursement. Expenditures in Excess of Appropriations. Expenditures exceeded appropriations in the following funds: Fund Rosemead Housing Development Corporation Proposition A Proposition C City Capital Projects Budget 771,000 909,000 569,201 3,025,700 Actual Variance $ 810,103 $ (39,103) 909,762 (762) 595,912 (26,711) 3,381,570 (355,870) 53 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (15) Successor Agency Successor Agency Long -Term Debt The debt of the Successor Agency as of June 30, 2014 is as follows: Successor Agency: Bonds: Tax Allocation Bonds, Series 2006A Tax Allocation Bonds, Series 2006B Tax Allocation Bonds, Series 2010A Subtotal bonds Deferred amounts: Unamortized bond premiums Discount on issuance Total bonds Total long -term debt Beginning Ending Due in Balance Additions Deletions Balance One Year $ 7,905,000 $ - $ 1,000,000 $ 6,905,000 $ 1,035,000 23,555,000 85,000 23,470,000 85,000 10,280,000 770,000 9,510,000 800,000 41,740,000 1,855,000 39,885,000 1,920,000 178,216 (151,494) - 19,801 - (14,780) 158,415 (136,714) 19,802 (14,780) 41,766,722 - 1,860,021 39,906,701 1,925,022 $ 41,766,722 $ - $ 1,860,021 $39,906,701 $ 1,925,022 Future debt service requirements are as follows: Fiscal years ending June 30, Principal Interest 2015 $ 1,920,000 $ 1,718,574 2016 1,995,000 1,635,578 2017 2,085,000 1,545,190 2018 2,180,000 1,453,347 2019 2,265,000 1,360,306 2020 -2024 12,540,000 5,209,489 2025 -2029 7,510,000 2,992,678 2030 -2034 9,390,000 1,084,063 Totals $ 39,885,000 $ 16,999,225 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (15) Successor Agency, (continued) Successor Agency Long -Term Debt (continued) Tax Allocation Bonds, Series 2006A On March 9, 2006, the Commission issued tax allocation bonds in the amount of $14,005,000 (Series 2006A) to: (1) refund a portion of the Commission's outstanding Series 1993A bonds and (2) to finance redevelopment activity in Redevelopment Project Area No.1. The bonds bear interest ranging from 3.25% to 5.00% and mature in annual installments of $780,000 to $1,250,000 on various dates through October 1, 2022. The Commission purchased a surety bond in lieu of cash reserve in the amount of $1,323,238. Portions of the bonds are subject to early redemption, at the option of the Commission, beginning October 1, 2017. Bond premiums are amortized over the life of the bonds. The unamortized balance as of June 30, 2014 was $158,415. As of June 30, 2014 the outstanding balance was $6,905,000. Tax Allocation Bonds, Series 20068 In December 2006, the Commission issued $24,230,000 in Project Area No.1 Tax Allocation Bonds. The bonds mature in amounts ranging from $70,000 to $1,430,000 with interest rates ranging from 3.25% to 4.25% through October 1, 2033. The net proceeds were used to refund the remaining $23,095,000 amount outstanding on the 1993 Tax Allocation Bonds. The securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1993 Bonds. As a result, the entire 1993 Bonds are considered to be defeased and the liability for those bonds has been removed from the government -wide financial statements. A surety bond has been acquired to satisfy the reserve requirements. As of June 30, 2014 the outstanding balance was $23,470,000. Tax Allocation Bonds, Series 2010A In July 2010, the Commission issued $11,230,000 in Merged Project Area Tax Allocation Bonds. The bonds mature in amounts ranging from $200,000 to $1,135,000 with interest rates ranging from 3.00% to 5.00% through December 1, 2023. The bonds were issued to provide funds to finance the costs of certain redevelopment projects within the Merged Project Area including infrastructure improvements and the acquisition of land. Principal is payable annually on December 1, beginning on December 1, 2011. Interest is payable semi - annually on June 1 and December 1. Per the bond indenture, a reserve is required to be maintained. At June 30, 2014, the balance held in the reserve account was $1,134,427. As of June 30, 2014 the outstanding balance was $9,510,000. 55 CITY OF ROSEMEAD Notes to the Basic Financial Statements Fiscal Year Ended June 30, 2014 (15) Successor Agency, (continued) Successor Agency Change in Accountinq Principle As discussed in Note 1, the City implemented GASB Statement No. 65 effective July 1, 2013. GASB 65, among other provisions, amended prior guidance with respect to the treatment of debt issuance costs. Under GASB 65, debt issuance costs, except any portion related to prepaid insurance costs, are recognized as an expense in the period incurred rather than reported as an asset on the statement of net position and recognized as an expense in a systematic and rational manner over the duration of the related debt. The City's unamortized balance of debt issuance costs at the beginning of the year was $481,412. GASB 65 requires that accounting changes adopted to conform to the provisions of the Statement be applied retroactively by restating financial statements. Accordingly, beginning net position on the Statement of Changes in Fiduciary Net Position has been restated for any unamortized debt issuance costs previously reported on the statement of net position as follows: Beginning net position (deficit), as previously reported $(27,636,358) Change in Accounting Principle (481,412) Beginning net position (deficit), as restated $(28.117.7701 56 Required Supplementary Information 57 CITY OF ROSEMEAD Note to the Required Supplementary Information Fiscal Year Ended June 30, 2014 (1) Budgetary Information Annual budgets are legally adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds. All annual appropriations lapse at fiscal year end. On or before the last day in March of each year, all business units and component units of the government submit requests for appropriations to the City Manager so that a budget may be prepared. Before the first Thursday of June, the proposed budget is presented to the City Council for review. The Council holds public hearings and a final budget must be prepared and adopted no later than June 30. The appropriated budget is prepared by fund and department. The City's Department Heads, with approval of the Finance Director and City Manager, may make transfers of appropriations within a department and between departments within a fund. Transfers of appropriations between funds must be approved by the City Council. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level. The Council made several supplemental budgetary appropriations throughout the year. The supplemental budgetary appropriations made in the various governmental funds are detailed in the required supplementary information. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, and contracts) outstanding at year end do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequentyear. RE CITY OF ROSEMEAD General Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Taxes Intergovernmental Licenses and permits Charges for services Fines, forfeitures and penalties Investment income Other Total revenues Expenditures: Current: General government Public safety Public works Community development Park and recreation 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 Variance Original Final Positive Budget Budget Actual (Negative) $ 14,561,400 $ 14,561,400 $ 15,320,806 $ 759,406 195,600 195,600 169,530 (26,070) 1,149,000 1,149, 000 1,308,482 159,482 922,500 922,500 1,002,497 79,997 595,300 595,300 700,126 104,826 336,000 336,000 419,283 83,283 63,600 63,600 57,453 (6,147) 17, 823,400 17, 823,400 18, 978,177 1,154, 777 4,011,548 4,053,548 3,774,351 279,197 7,683,600 7,686,100 7,634,328 51,772 2,989,100 2,989,100 3,074,483 (85,383) 1,363,600 1,363,600 1,281,908 81,692 2,320,000 2,324,000 2,116,108 207,892 18,367,848 18,416,348 17,881,178 535,170 (544,448) (592,948) _ 1,096,999 1,689,947 (1,105,000) (1,105,000) (1,017,373) (1,105,000) (1,105,000) (1,017,373) (1,649,448) (1,697,948) 79,626 87,627 87,627 1,777,574 Fund balance, beginning of year 17,617,440 17,617,440 17,617,440 Fund balance, end of year $ 15,967,992 $ 15,919,492 $ 17,697,066 $ 1,777,574 59 CITY OF ROSEMEAD Rosemead Housing Development Corporation Schedule of Revenue, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Investment income Other Total revenues Expenditures: Current: Community development Variance Original Final Positive Budget Budget Actual (Negative) $ $ - $ 417,866 $ 417,866 417,600 417,600 421,017 3,417 6,800 6,800 4,237 (2,563) 424,400 424,400 843,120 418,720 771,000 771,000 810,103 (39,103) Total expenditures 771,000 771,000 810,103 (39,103) Net change in fund balance (346,600) (346,600) 33,017 379,617 Fund balance, beginning of year 97,320 97,320 97,320 Fund balance, end of year _L __L249,280) $ (249,280) $ 130,337 $ 379,617 We CITY OF ROSEMEAD HOME Program Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Total revenues Expenditures: Current: Community development Total expenditures Net change in fund balance Fund balance (deficit), beginning of year Fund balance (deficit), end of year (399,400) (399,400) (470,075) (470,075) 175 399,575 (470,075) _L __a69,4751 $ (869,475) $ (469,900) $ 399,575 61 Variance Original Final Positive Budget Budget Actual (Negative) $ 210,000 $ 210,000 $ 261,938 $ 51,938 210,000 210,000 261,938 51,938 609,400 609,400 261,763 347,637 609,400 609,400 261,763 347,637 (399,400) (399,400) (470,075) (470,075) 175 399,575 (470,075) _L __a69,4751 $ (869,475) $ (469,900) $ 399,575 61 CITY OF ROSEMEAD Required Supplementary Information Fiscal Year Ended June 30, 2014 (2) Public Agency Retirement Services (PARS) — Retirement Enhancement Plan Schedule of Funding Progress Entry Age Actuarial Unfunded UAAL as a Actuarial Actuarial Accrued Value of AAL Funded Covered % of Covered Valuation Liability (AAL) Assets (UAAL) Ratio Payroll Payroll Date (a) (b) (a - b) b / a (c) ((a -b) /c) 711/2008 $ 2,242,154 $1,910,854 $ 331,300 85.22% Actuarial Actuarial Accrued $ 3,747,667 8.84% 7/1/2010 $ 2,778,943 $1,833,895 $ 945,048 65.99% (a - b) b( / a) (c) $ 3,678,700 25.69% 7/112012 $ 2,847,302 $2,280,495 $ 566,807 80.09% $ 3,244,624 17.47% (3) Other Post Employment Benefits Plan 1/1/2008 Schedule of Funding Progress 3,548,605 Entry Age Actuarial Unfunded UAAL as a Actuarial Actuarial Accrued Value of AAL Funded Covered % of Covered Valuation Liability (AAL) Assets (UAAL) Ratio Payroll Payroll Date (a) (b) (a - b) b( / a) (c) ((a -b) /c) 1/1/2008 $ 3,548,605 $ - $3,548,605 0% $ 1,682,985 211% 1/1/2011 $ 3,378,875 $ 615,576 $2,763,299 18% $ 3,876,698 71% N/A N/A N/A N/A N/A N/A N/A L Other Supplementary Information 63 (This page intentionally left blank) NONMAJOR GOVERNMENTAL FUNDS Community Development Block Grant Fund - Accounts for Community Development Block Grants received from the U.S. Department of Housing and Urban Development. Proposition A Fund - This fund is used to finance public transportation projects. Effective July 1, 1982, this fund accounts for the City's share of additional sales tax collected in the County of Los Angeles as a result of Proposition A. Proposition C Fund - This fund is to be used by the cities for public transit to increase safety and improve road conditions by repairing and maintaining streets heavily used by public transit. State Gas Tax Fund - This fund is used to account for monies that are collected by the State under the title of Motor Vehicle Fuel License Tax and represent an additional + or - $.10 per gallon of gas sold. Air Quality Management District Fund - This fund accounts for the receipt of monies from the Air Quality Maintenance District. These funds shall be used to implement programs to reduce air pollution from mobile sources pursuant to the California Clean Air Act. Street Lighting Fund - This fund is used to account for monies collected by ad valorem property tax based on $0.2495 per $1000 of assessed property value to provide for energy cost and maintenance of the Rosemead Lighting District, whose boundaries, with the exception of the Southern California Edison company property, coincide with the City's boundaries. Proposition 13 has limited the ad valorem tax that can be collected. Narcotics Seizure Fund - This fund is used to account for funds received from the County of Los Angeles for monies forfeited, and the proceeds from the sale of assets seized from illegal narcotic activities within the City of Rosemead. The forfeited funds must be used by the law enforcement and prosecutorial agencies exclusively to support law enforcement and prosecutorial efforts. Measure R Fund - A county -wide one half percent sales tax to fund transportation projects. Receipts can be used to synchronize traffic signals, repair potholes, keep senior, student, and disabled bus fares low and provide community traffic relief. The tax receipts will be used primarily to improve public transit and street maintenance projects. ME CITY OF ROSEMEAD Non -Major Governmental Funds Combining Balance Sheet June 30, 2014 CDBG Grant Assets Cash and investments Receivables: Accounts Revenue Funds Proposition A 296,622 $ Proposition C 117,802 143,426 - - $ 143.426 $ 296,622 - 1 -- i 17.802 Liabilities and Fund Balances Liabilities: Accounts payable and accrued liabilities $ 36,147 $ Accrued salaries and benefits 17,388 Due to other funds 57.752 Total liabilities Fund balances: Restricted for: Public safety Public works Community services Total fund balances Total liabilities and fund balances 47,435 $ 8,828 111,287 56,263 •.1 51.062 - 240,359 66,740 139 - - 32,139 240,359 66,740 $ 143,426 $ 296.622 - 1 -- i 17.802 65 Air Quality State Gas Management Street Tax District Lighting $ 201,582 $ 227,982 $ 2,000,606 219,228 17,590 17,458 $ 420,810 — 1----?45 ,572 $ 2,018,064 $ 100,497 $ 74,513 $ 81,291 3,339 - 3,172 103,836 74,513 84,463 316,974 171,059 1,933,601 316,974 171,059 1,933,601 $ 420,810 — L --- 245 ,572 $ 2,018,064 (continuedT .. (This page intentionally left blank) CITY OF ROSEMEAD Non -Major Governmental Funds Combining Balance Sheet, Continued June 30, 2014 Special Revenue Funds 67 Narcotics Measure Seizure R Totals Assets Cash and investments $ 7,807 $ 230,260 $ 3,082,661 Receivables: Accounts 6,668 - 404,370 $ 14,475 _1__L30 .260 $ 3,487,031 Liabilities and Fund Balances Liabilities: Accounts payable and accrued liabilities $ - $ 22,794 $ 410,759 Accrued salaries and benefits 2,462 38,169 Due to other funds - 57,752 Total liabilities 25,256 506,680 Fund balances: Restricted for: Public safety 14,475 - 14,475 Public works - 205,004 2,933,737 Community services - - 32,139 Total fund balances 14,475 205,004 2,980,351 Total liabilities and fund balances $ 14,475 $ 230,260 $ 3,487,031 67 CITY OF ROSEMEAD Non -Major Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Fiscal Year Ended June 30, 2014 Special Revenue Funds CDBG Proposition Proposition Grant A C Revenues: Intergovernmental Charges for services Special assessments Investment income $ 765,796 $ 952,980 $ 768,325 15,430 32,290 35,884 2,699 730 Total revenues Expenditures: Current: General government Public safety Public works Community development Parks and recreation 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 balances Fund balances (deficit), beginning of year Fund balances (deficit), end of year 781,226 987,969 804,939 4,752 255,294 492,338 41,316 146,091 - - 24,037 763,671 571,875 793,700 909,762 595,912 (12,474) 78,207 209,027 60,638 (60,638) 60,638 (60,638) (12,474) 138,845 148,389 44,613 101,514 (81,649) $ 32,139 $ 240,359 $ 66,740 .. Air Quality State Gas Management Street Tax District Lighting $ 1,954,823 $ 67,733 $ - 881,543 - 2,302 22,810 1,954,823 70,035 904,353 1,793 11,189 717,417 684,911 - 74,513 719,210 74,513 696,100 1,235,613 (4,478) 208,253 123,937 (1,042,751) (188,960) (918,814) (188,960) 316,799 (4,478) 19,293 175 175,537 1,914,308 $ 316,974 $ 171,059 $ 1,933,601 continued 69 (This page intentionally left blank) CITY OF ROSEMEAD Non -Major Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances, Continued Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Charges for services Special assessments Investment income Total revenues Expenditures: Current: General government Public safety Public works Community development Parks and recreation 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 balances Fund balances (deficit), beginning of year Fund balances (deficit), end of year Special Revenue Funds Narcotics Measure Seizure R Totals $ 11,659 $ 572,201 $ 5,093,517 - - 83,604 - 881,543 93 4,697 33,331 11,752 576 6,091,995 35,188 184,841 199,013 279,331 2,922,715 492,338 41,316 74,513 220,029 4,009,226 11,752 356,869 2,082,769 - 184,575 (644,822) (1,937,171) (644,822) (1,752,596) 11,752 (287,953) 330,173 2,723 492,957 2,650,178 $ 14.475 _E__205 ,004 $ 2,980,351 70 CITY OF ROSEMEAD Community Development Block Grant Non -Major Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Charges for services Total revenues Expenditures: Current: General government Public safety Community development Parks and recreation Total expenditures Net change in fund balance Fund balance, beginning of year Fund balance, end of year Variance Final Positive Budget Actual (Negative) $ 928,000 $ 765,796 $ (162,204) - 15,430 15,430 928,000 781,226 (146,774) 4,900 4,752 148 262,100 255,294 6,806 577,900 492,338 85,562 44,600 41,316 3,284 889,500 793,700 95,800 38,500 (12,474) (50,974) 44,613 44,613 - $ 83,113 $ 32,139 $ (50,974) 71 CITY OF ROSEMEAD Proposition A Non -Major Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Charges for services Investment income Total revenues Expenditures: Current: General government Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Net change in fund balance Fund balance, beginning of year 922,800 987,969 65,169 151,000 146,091 Variance Final 763,671 Positive Budget Actual (Negative) 909,000 909,762 (762) $ 893,800 $ 952,980 $ 59,180 29,000 32,290 3,290 - 2,699 2,699 922,800 987,969 65,169 151,000 146,091 4,909 758,000 763,671 (5,671) 909,000 909,762 (762) 13,800 78,207 64,407 - 60,638 60,638 60,638 60,638 13,800 138,845 125,045 101,514 101,514 Fund balance, end of year $ 115,314 $ 240,359 $ 125,045 72 CITY OF ROSEMEAD Proposition C Non -Major Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Charges for services Investment income Final Budget $ 743,000 $ 32,000 Variance Positive Actual (Negative) 768,325 $ 25,325 35,884 3,884 730 730 Total revenues Expenditures: Current: Public safety 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 Fund balance (deficit), beginning of year Fund balance, end of year 775,000 804,939 29,939 17,700 24,037 (6,337) 551,501 571,875 (20,374) 569,201 595,912 (26,711) 205,799 209,027 3,228 (60,638) (60,638) (60,638) (60,638) 205,799 148,389 (57,410) (81,649) (81,649) $ 124,150 $ 66,740 $ (57,410) 73 CITY OF ROSEMEAD State Gas Tax Non -Major Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Total revenues Expenditures: Current: General government Public works 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 Fund balance, beginning of year Variance Final Positive Budget Actual (Negative) $ 2,000,000 $ 1,954,823 $ (45,177) 2,000,000 1,954,823 (45,177) - 1,793 (1,793) 781,000 717,417 63,583 781,000 719,210 61,790 1,219,000 1,235,613 16,613 123,937 123,937 (1,080,000) (1,042,751) 37,249 (1,080,000) (918,814) 139,000 175 316,799 175 161,186 177,799 Fund balance, end of year $ 139,175 $ 316,974 $ 177,799 74 CITY OF ROSEMEAD Air Quality Management District Non -Major Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Investment income Total revenues Expenditures: Current: Capital outlay Total expenditures Net change in fund balance Fund balance, beginning of year Variance Final Positive Budget Actual (Negative) $ 66,000 $ 67,733 $ 1,733 - 2,302 2,302 66,000 70,035 4,035 75,000 74,513 75,000 74,513 (9,000) 175,537 im (4,478) 4,522 175,537 - Fund balance, end of year $ 166,537 $ 171,059 $ 4,522 75 CITY OF ROSEMEAD Street Lighting Non -Major Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Special Assessments Investment income Total revenues Expenditures: Current: General government 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 Fund balance, beginning of year Fund balance, end of year 11,600 11,189 Variance Final 684,911 Positive Budget Actual (Negative) $ 770,000 $ 881,543 $ 111,543 - 22,810 22,810 770,000 904,353 134,353 11,600 11,189 411 751,301 684,911 66,390 762,901 696,100 66,801 7,099 208,253 201,154 (510,000) (188,960) 321,040 (510,000) (188,960) 321,040 (502,901) 19,293 522,194 1,914,308 1,914,308 - $ 1,411,407 $ 1,933,601 $ 522,194 76 CITY OF ROSEMEAD Narcotics Seizure Non -Major Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Investment income Total revenues Total expenditures Net change in fund balance Fund balance, beginning of year Fund balance, end of year Variance Final Positive Budget Actual (Negative) $ - $ 11,659 $ 11,659 93 93 11,752 11,752 - 11,752 11,752 2,723 2,723 - $ 2,723 $ 14,475 $ 11,752 77 CITY OF ROSEMEAD Measure R Non -Major Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Investment income Total revenues Expenditures: Current: General government 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 Fund balance, beginning of year 6,412 4,159 20,571 43,969 50,178 50,178 94,147 Fund balance, end of year $ 110,857 $ 205,004 $ 94,147 Variance Final Positive Budget Actual (Negative) $ 553,500 $ 572,201 $ 18,701 - 4,697 4,697 553,500 576,898 23,398 41,600 35,188 199,000 184,841 240,600 220,029 312,900 356,869 (695,000) (644,822) (695,000) (644,822) (382,100) (287,953) 492,957 492,957 ME CITY OF ROSEMEAD City Capital Projects Major Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fiscal Year Ended June 30, 2014 Revenues: Intergovernmental Charges for services Total revenues Expenditures: Current: Public works 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 Fund balance (deficit), beginning of year (236,500) (486,526) (9,670,326) (236,500) Fund balance (deficit), end of year $ 8,947,300 $ (723,026) $ (9,670,326) Final Budget 244,600 187,692 56,908 781,100 3,193,878 (412,778) $ 2,664,500 $ 124,085 $ (2,540,415) - 990 990 2,664,500 125,075 (2,539,425) 3,025,700 (361,200) (3,256,495) (2,895,295) 9,545,000 2,869,030 (6,675,970) (99,061) (99,061) Actual 3,381,570 (355,870) Variance Positive (Negative) 9,545,000 2,769,969 (6,775,03 79 INTERNAL SERVICE FUNDS The internal service funds are used to account for goods and services provided by one City department to other City departments on a cost reimbursements basis. The City of Rosemead has the following Internal Service Funds: Equipment Replacement - To account for the accumulation and allocation of costs associated with the repair and maintenance of the City's equipment. Technology Replacement - To account for the accumulation and allocation of costs associated with the repair and maintenance of the City's technological equipment. :S (This page intentionally left blank) CITY OF ROSEMEAD Combining Statement of Net Position Internal Service Funds June 30, 2014 Assets Current assets: Cash and investments Equipment Technology Replacement Replacement Total Total current assets Non - current assets: Capital assets: Other capital assets, net Total non - current assets Total assets Liabilities Current liabilities: Lease payable - current Total current liabilities Non - current liabilities: Lease payable Total non - current liabilities Total liabilities Net position Net investment in capital assets Unrestricted Total net position $ 299,997 $ 33,230 $ 333,227 299,997 33,230 333,227 108,098 115,769 223,867 108,098 115,769 223,867 408,095 148,999 557,094 57,651 57,651 57,651 57,651 44,850 44,850 44,850 44,850 102,501 102,501 108,098 13,268 121,366 299,997 33,230 333,227 $ 408,095 $ 46,498 $ 454,593 m CITY OF ROSEMEAD Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds Fiscal Year Ended June 30, 2014 Operating revenues: Charges for services Other revenue Total operating revenues Operating expenses: Contractual services Depreciation Total operating expenses Operating income Non - operating revenues (expenses): Interest expense Total non- operating revenues (expenses) Changes in net position Net position, beginning of year Net position, end of year Equipment Technology Replacement Replacement Total $ 123,000 $ 156,000 $ 279,000 2,270 - 2,270 125,270 156,000 281,270 - 91,806 91,806 35,654 38,589 74,243 35,654 130,395 166,049 89,616 25,605 115,221 (5,561) (5,561) (5,561) (5,561) 89,616 20,044 109,660 318,479 26,454 344,933 $ 408,095 $ 46,498 $ 454,593 m CITY OF ROSEMEAD Combining Statement of Cash Flows Internal Service Funds Fiscal Year Ended June 30, 2014 Cash flows from operating activities: Cash received from users departments Cash payments to suppliers for goods and services Other revenues Net cash provided by operating activities Cash flows from capital and related financing activities: Principal paid on capital lease Interest paid on capital lease Cash paid to purchase capital asset Net cash (used for) capital and related financing activities Net increase in cash and investments Cash and investments, beginning of year Cash and investments, end of year Reconciliation of operating income to net cash provided by operating activities: Operating income Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation (Increase) decrease in due from other funds Total adjustments Net cash (used for) operating activities Equipment Technology Replacement Replacement Total $ 123,000 $ 161,800 $ 284,800 - (91,806) (91,806) 2,270 2,270 125,270 69,994 195,264 - (55,288) (55,288) (5,561) (5,561) (91,969) (91,969) (91,969) (60,849) (152,818) 33,301 9,145 42,446 266,696 24,085 290,781 $ 299,997 $ 33,230 $ 333,227 $ 89,616 $ 25,605 $ 115,221 35,654 38,589 74,243 - 5,800 5,800 35,654 44,389 80,043 $ 125,270 $ 69,994 $ 195,264 IN CITY OF ROSEMEAD Statement of Changes in Fiduciary Assets and Liabilities Agency Fund Fiscal Year Ended June 30, 2014 Balance July 1, 2013 Additions Balance Deductions June 30, 2014 Assets Cash and investments $ 420,105 $ 232,913 $ (325,503) $ 327,515 Total assets $ 420,105 $ 232,913 $ (325,503) $ 327,515 Liabilities Deposits payable $ 420,105 $ 507,754 $ (600,344) $ 327,515 Total liabilities $ 420,105 $ 507,754 $ (600,344) $ 327,515 MH STATISTICAL SECTION This part of the City of Rosemead's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Page Financial Trends 86 These schedules contain trend information to help the reader understand how the government's financial performance and well- being have changed over time. Revenue Capacity 94 These schedules contain trend information to help the reader assess the government's most significant revenue source, property tax. Debt Capacity 98 These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information 104 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 106 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year. W, CITY OF ROSEMEAD Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2005 2006 2007 2008 2009 Governmental activities: Net investment in capital assets $ 12,130,249 $ 13,345,433 $ 10,541,606 $ 12,981,537 $ 11,828,993 Restricted 6,035,250 6,901,454 8,181,231 11,443,583 13,361,249 Unrestricted 31,114,414 30,299,115 35,293,732 27,705,715 24,882,730 Total governmental activities net position $ 49,279,913 $ 50,546,002 $ 54,016,569 $ 52,130,835 $ 50,072,972 The City of Rosemead implemented GASB 34 for the fiscal year ended June 30, 2004. Information prior to the implementation of GASB 34 is not available. ER Fiscal Year 2010 2011 2012 2013 2014 $ 12,712,242 $ 14,760,940 $ 54,010,031 $ 51,132,854 $ 50,042,631 13,199,438 24,806,402 10,870,747 2,829,147 3,110,688 20,489,721 10,748,249 13,688,078 17,736,586 17,367,841 $ 46,401,401 $ 50,315,591 $ 78,568,856 $ 71,698,587 $ 70,521,160 M. CITY OF ROSEMEAD Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Expenses: Governmental activities: General government Public safety Public works Public health Community services Community development Parks and recreation Interest and other charges Total governmental activities expenses Program revenues: Governmental activities: Charges for services: General government Public safety Public works Community services Community development Parks and recreation Total governmental activities program revenues 2005 2006 2007 2008 2009 984,965 900,359 1,598,159 1,547,182 1,512,475 $ 4,800,168 $ 5,629,316 $ 4,980,519 $ 7,259,587 $ 12,176,877 6,058,824 6,065,066 6,618,779 8,043,771 9,081,719 3,252,252 3,403,699 6,120,563 13,550,042 6,465,355 60,828 51,286 - - - 2,862,328 3,223,843 602,114 669,827 773,374 - - 2,467,842 3,645,207 1,290,108 3,456,308 3,959,590 4,178,000 4,078,631 2,030,698 1,830,836 1,832,219 2,698,372 1,790,348 1,523,391 22,321,544 24,165,019 27,666,189 39,037,413 33,341,522 6,299,415 3,288,225 316,849 642,716 547,577 984,965 900,359 1,598,159 1,547,182 1,512,475 3,760,495 4,144,733 7,600,778 11,729,725 7,581,801 1,211,615 814,754 1,403,059 166,118 858,809 - - 3,206,303 1,484,065 621,375 266,398 337,815 - 36,800 36,000 Taxes: 12,522,888 9,485,886 14,125,148 15,606,606 11,158,037 Net revenues (expenses): Governmental activities Total net revenues (expenses) (9,798,656) (14,679,133) (13,541,041) (23,430,807) (22,183,485) General revenues and other changes in net position: Governmental activities: Taxes: Property taxes 4,077,332 3,915,980 9,121,682 13,181,837 12,288,177 Sales and use taxes 3,518,657 3,525,557 2,501,106 3,747,416 4,589,998 Transient occupancy taxes 1,102,756 1,207,298 1,311,697 1,411,421 1,272,092 Othertaxes 765,215 1,076,806 713,821 949,007 761,410 Intergovernmental / in -lieu VLF 3,165,148 2,966,002 - - - Investment income 1,260,095 1,930,059 2,028,128 1,678,791 884,847 Motor vehicle in -lieu, unrestricted 1,716,656 1,290,667 856,701 254,527 195,273 Other general revenues 7,857 32,853 478,473 143,748 133,825 Loss on sale of capital assets - - - - - Transfer to Successor Agency - - - - - Extraordinary item: Gain on dissolution of redevelopment agency - - - - - Total governmental activities 15,613,716 15,945,222 17,011,608 21,366,747 20,125,622 Changes in net position Governmental activities Total primary government $ 5,815,060 $ 1,266,089 $ 3,470,567 $ (2,064,060) $ (2,057,863) The City of Rosemead implemented GASB 34 for the fiscal year ended June 30, 2004. Information prior to the implementation of GASB 34 is not available. M Fiscal Year 2010 2011 2012 2013 2014 $ 5,991,796 $ 3,160,306 $ 3,989,359 $ 3,381,686 $ 4,271,354 8,879,854 8,881,926 7,517,101 7,791,073 7,923,316 11,469,614 11,907,245 11, 588,278 11,717,276 10,072,081 589,650 595,904 - - - 2,141,218 3,969,502 4,080,294 2,616,531 2,853,472 2,733,885 2,362,860 2,532,665 2,594,863 2,274,920 1,491,717 1,681,875 569,045 7,827 5,561 33,297,734 32,559,618 30,276,742 28,109,256 27,400,704 1,573,695 1,048,727 130,450 2,408,362 2,030,063 1,293,677 1,293, 524 1,454,759 1.622.911 1,586,557 8,052,011 9,143,311 4,033,874 3,869,285 4,356,486 186,283 450,004 - - - 597,402 3,753,612 3,501,082 1,896,878 1,632,508 20,800 654,437 704,029 785,611 724,197 11,723,868 16,343,615 9,824,194 10,583,045 10,329,811 (21,573,866) (16,216,003) (20,452,548) (17,526,211) (17,070,893) 12,328,634 13,656,347 10,567,509 8,900,228 8,667,709 4,408,367 3,737,363 3,200,911 3,215,897 3,504,285 1,129,146 1,219,977 1,323,886 1,447,820 1,593,640 562,317 576,904 633,393 2,275;986 1,307,280 389,310 367,961 195,165 28,202 216,499 169,042 263,983 - - - 336,668 307,658 853,956 1,180,688 604,053 - - (2,340,090) - - - - - (6,392,878) - 34,271,082 - - 19,323,484 20,130,193 48,705,812 10,655,943 15,893,466 $ (2250,382) $ 3,914,190 $ 28,253,264 $ (6,870,268) $ (1,177,427) 89 CITY OF ROSEMEAD Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of-accounting) All other governmental funds Reserved $ - $ 7,693,216 Fiscal Year $ 9,000,561 $ 9,000,561 Unreserved, reported in: 2005 2006 2007 2008 2009 General fund: 7,336,247 6,821,660 6,142,833 6,140,289 9,023,487 Reserved $ 1,719,044 $ 256,765 $ 150,000 $ 3,074,496 $ 3,106,917 Unreserved 1 b,896,581 22,228,341 22,460,545 18,633,154 16,135,102 Nonspendable - _ _ - Restricted - - - Committed - - - Assigned - - - Unassigned - — $ - 22,486,106 - _ - Total general fund $ 21,615,625 $ 20,95Q,674 $ 22,610,545 $ 21,707,650 _ All other governmental funds Reserved $ - $ 7,693,216 $ 4,947,087 $ 9,000,561 $ 9,000,561 Unreserved, reported in: Special revenue funds 7,336,247 6,821,660 6,142,833 6,140,289 9,023,487 Debt service funds 2,354,835 - 552 692,475 2,803,910 Capital projects funds 8,433,842 6,435,798 7,397,454 2,490,553 (54,323) Nonspendable - _ _ Restricted - - - Committed - - - Assigned - - - Unassigned - - _ - Total all other governmental funds $ 18,124,924 $ 20,95Q,674 $ 18,487,926 _L1 $ 20,773,635 The City implemented GASS 54 for the fiscal year ended June 30, 2012. The categories of fund balance for governmental funds have been changed as described more fully In the notes to the basic financial statements. Prior year fund balances reflect the guidance In effect when those financial statements were prepared. 90 Fiscal Year 2010 2011 2012 2013 2014 $ 3,327,182 $ $ $ $ 13,626,774 - 2,034 2,034 133,196 140,893 5,107,963 5,294,253 6,415,416 5,883,235 - 5,712 5,712 65,343 - 10,209,075 9,519,173 11,063,116 11,607,595 $ 16,953,956 $ 15,319,072 $ 14,821,172 $ 17,617,440 $ 17,697,066 $ 8,944,112 $ 8,763,359 2,803,910 (1,405,770) $ 19,105,611 27,476,081 10,870,747 2,829,147 3,110,688 (4,402,964) (1,292,405) (788,224) (1,192,926) $ 23,073,117 $ 9,578,342 $ 2,040,923 $ 1,917,762 91 CITY OF ROSEMEAD Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Other financing sources (uses): Transfers in 4,941,103 Transfers out (4,941,103) Transfer to Successor Agency - Issuance of long -term debt - Discount on bonds - Premium on debt issued - Payment to bond escrow agent - Proceeds of capital lease Total other financing sources (uses) Extraordinary item: Gain (loss) on dissolution of redevelopment 13,300,319 26,183,078 2,962,087 (13,300,319) (26,183,078) (2,962,087) 14,005,000 24,230,000 - 316,830 - _ - (9,569,028) (22,075,305) 4,752,802 2,154,695 4,078,483 (4,078,483) agency Net change in fund balances $ 4,187 512 $ 3,695,231 $ (2 339 701) $ (1 245 269) $ (15,87 Debt service as a percentage of noncapital expenditures 9.8% 7,8% 11.8% 7.0% 7.6% 92 Fiscal Year 2005 2006 2007 2008 2009 Revenues: Taxes $ 9,189,326 $ 9,527,384 $ 13,648,306 $ 17,841,792 $ 17,153,625 Intergovernmental 14,379,314 10,785,591 9,419,698 15,716,610 10,992,235 Licenses and permits 1,595,115 1,528,864 1,683,204 1,503,659 1,178,362 Charges for services 550,478 660,890 414,375 537,430 638,244 Fines, forfeitures and penalties 857,135 753,224 437,117 641,566 565,643 Special assessments - - 789,089 687,568 736,213 Investment income 1,260,286 1,947,566 2,028,128 1,678,791 884,847 Other 30,316 29,332 478,473 141,930 381,429 Total revenues 27,861,970 25,232,851 28,898,390 38,749,346 32,530,598 Expenditures Current: General government 3,023,192 3,790,631 4,780,837 7,356,665 11,956,179 Public safety 6,087,918 6,536,043 6,737,912 8,043,771 9,114,009 Public works 5,208,142 6,064,980 8,898,768 12,116,508 4,964,867 Community services 60,828 51,286 1,419,424 669,827 783,452 Community development 3,424,954 3,216,935 2,690,420 3,408,691 1,047,529 Parks and recreation 3,383,358 3,881,469 4,249,462 4,078,631 2,030,698 Capital outlay 184,301 149,641 - 1,647,673 202,752 Debt service: - Principal 465,000 490,000 780,000 1,105,000 915,000 Interest and fiscal charges 1,836,765 1,559,114 2,512,725 1,567,849 1,531,986 Bond issuance costs 550,323 1,323,238 Total expenditures 23,674,458 26,290,422 33,392,786 39,994,615 32,546,472 Excess (deficiency) of revenues over (under) expenditures 4,187,512 (1057,571) (4,494396) (1,245,269) (15,874) Other financing sources (uses): Transfers in 4,941,103 Transfers out (4,941,103) Transfer to Successor Agency - Issuance of long -term debt - Discount on bonds - Premium on debt issued - Payment to bond escrow agent - Proceeds of capital lease Total other financing sources (uses) Extraordinary item: Gain (loss) on dissolution of redevelopment 13,300,319 26,183,078 2,962,087 (13,300,319) (26,183,078) (2,962,087) 14,005,000 24,230,000 - 316,830 - _ - (9,569,028) (22,075,305) 4,752,802 2,154,695 4,078,483 (4,078,483) agency Net change in fund balances $ 4,187 512 $ 3,695,231 $ (2 339 701) $ (1 245 269) $ (15,87 Debt service as a percentage of noncapital expenditures 9.8% 7,8% 11.8% 7.0% 7.6% 92 $ 18,508,896 $ 19,313,094 $ 15,960,662 $ 16,602,329 $ 15,320,806 7,856,792 9,383,256 9,561,918 6,399,282 6,066,936 1,079,429 1,764,162 1,156,719 1,156,968 1,308,482 708,434 677,861 1,055,391 1,072,754 1,087,091 491,574 462,389 619,397 691,548 700,126 680,288 741,382 768,997 937,405 881,543 389,310 367,956 582,176 710,443 873,631 254,610 253,379 658,670 693,123 61,690 29,969,333 32,963,479 30,363,930 28,263,852 26,300,305 5,903,926 3,801,486 4,203,302 3,988,156 3,973,364 8,863,234 8,882,915 7,517,101 7,774,038 7,913,659 11,264,220 19,402,924 6,417,803 6,985,208 6,184,890 584,463 595,904 - - - 1,940,641 3,397,072 3,681,903 2,605,227 2,846,112 2,733,885 2,362,860 2,532,665 2,132,827 2,157,424 290,885 93,121 9,090,076 3,126,669 3,268,391 945,000 975,000 1,210,000 - - 1,501,667 1,882,092 961,506 - - - 275,344 - - - 34,027,921 41,668,718 35,614,356 26,612,125 26,343,840 (4,058,588 (8,705,239) (5,250,426) 1,651,727 L43,53 4,133,554 4,824,919 6,431,374 (4,133,554) (4,824,919) (6,554,374) 11,230,000 (192,139) 102,501 2,772,415 3,053,605 (2,772,415) (3,053,605) (6,392,878) - 102,501 11,037,861 (123,000) (6,392,878 - (8,619,249) - - $ (3,956,087 $ 2,332,622 $ (13 992 675) $ (4,741,151 $ L43,535 7.4% 8.8% 6.8% 0.0% 0.0% 93 (This page intentionally left blank) CITY OF ROSEMEAD Beginning with the fiscal year ended June 30, 2002, exemptions are netted directly against the individual property categories. NOTE: In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2 %). With few exceptions, property is only re- assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: HDL Coren & Cone and Los Angeles County Assessor's Office .. Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands of dollars) City Fiscal Year Taxable Ended SBE Assessed Total Direct June 30 Secured Unsecured Non - Unitary Value Tax Rate 2005 2,345,083,686 57,368,008 20,426,612 2,422,878,306 19.46% 2006 2,561,631,859 64,776,971 18,555,208 2,644,964,038 20.73% 2007 2,826,876,615 55,851,646 19,173,832 2,901,902,093 20.56% 2008 3,085,354,513 61,564,235 18,883,761 3,165,802,509 21.85% 2009 3,277,256,282 66,506,103 18,883,761 3,362,646,146 22.61% 2010 3,333,876,047 62,148,114 3,307,527 3,399,331,688 22.27% 2011 3,364,287,629 64,231,062 3,301,527 3,431,820,218 22.41% 2012 3,458,570,185 71,320,472 3,301,527 3,533,192,184 22.35% 2013 3,531,097,436 68,996,223 3,301,527 3,603,395,186 22.11% 2014 3,654,495,783 68,912,542 1,901,995 3,725,310,320 9.27% Beginning with the fiscal year ended June 30, 2002, exemptions are netted directly against the individual property categories. NOTE: In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2 %). With few exceptions, property is only re- assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: HDL Coren & Cone and Los Angeles County Assessor's Office .. CITY OF ROSEMEAD Direct and Overlapping Property Tax Rates (Rate per $100 of Taxable Value) Last Ten Fiscal Years Agency 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Basic Levy 1 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 County Detention Facilities 1987 Debts 0.00092 0.00080 0.00066 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 El Monte School Districts 0.07246 0.08056 0.06402 0.08067 0.09044 0.11907 0.12388 0.12733 0.13288 0.12735 El Monte Union High School 0.03928 0.05425 0.05846 0.02820 0.05159 0.09654 0.08475 0.09591 0.08992 0.09799 Garvey School Districts 0.02319 0.05221 0.05075 0.05061 0.06835 0.07836 0.08503 0.08404 0.08832 0.09131 La Cod Ds 2008 2012 Series F 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.01119 0.00000 Los Angeles Community College 0.01810 0.01430 0.02146 0.00878 0.02212 0.02311 0.04031 0.03530 0.03756 0.04454 L.A. Co. Flood Control Bonds 0.00024 0.00005 0.00005 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 Metropolitan Water District 0.00580 0.00520 0.00470 0.00450 0.00430 0.00430 0.00370 0.00370 0.00350 0.00350 Montebello Unified School District 0.04172 0.07053 0.06731 0.06681 0.08065 0.09673 0.09792 0.10001 0.09630 0.09457 Pasadena Cod Ds 2002, 2006 Ser D 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00225 0.00000 Pasadena Area Community College 0.00879 0.00410 0.02080 0.01972 0.01741 0.02300 0.01986 0.01956 0.01830 0.01899 Rio Hondo Community College 0.02170 0.01802 0.01469 0.01370 0.02320 0.02714 0.03439 0.03418 0.02812 0.02892 Rosemead Schaal Districts 0.07095 0.07515 0.05420 0.08282 0.06875 0.11358 0.10743 0.10507 0.10240 0.10314 San Gabriel Unified School District 0.05729 0.05284 0.04930 0.05742 0.09294 0.10071 0.10190 0.08454 0.10523 0.10082 San Gabriel Vly Mwd State Water Bond 0.02000 0.02000 0.02000 0.02000 0.01800 0.01800 0.01800 0.01800 0.01800 0.01800 Total Direct & Overlapping Tax Rates 1.38044 1.44801 1.42640 1.43323 1.53775 1.70054 1.71717 1.70764 1.73397 1.72913 City's Share of 1% Levy Per Prop 13 0.09388 0.09388 0.09388 0.09388 0.09388 0.09388 0.09388 0.09388 0.09388 0.09388 General Obligation Debt Rate Redevelopment Rate 1.00697 1.00604 1.00541 1.00450 1.00430 1.00430 1.00370 1.00370 Total Direct Rate 0.19461 0.20733 0.20556 0.21850 0.22614 0.22270 0.22407 0.22351 0.22113 0.09271 Notes: ' In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1,00% is shared by all taxing agencies for which the subjr property resides within. In addition to the 1.00 %fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any vo- approved bonds. Y Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners. 3 City's share of 1 % Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the city. ERAF general fund tax shifts may not be included in tax ratio figures. 4 RDA rate is based on the largest RDA tax rate area (TRA) and includes only rate(s) from indebtedness adopted prior to 1989 per California State statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated Redevelopment from the State of California for the fiscal year 2012 -13 and years thereafter. 5 Total Direct Rate is the weighted average of all individual direct rates applied by the government prepaing the statistical section information and excludes revenues derived from aircraft Beginning in 2013114 the Total Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas. Challenges to recognized enforceable obligations are assumed to have been resolved during 2012/13. For the purposes of this report, residual revenue is assumed to be distributed to the City in the same proportions as general fund revenue. Source: L.A. County Assessor 2004105 - 2013/14 Tax Rate Table and HDL Corso & Cone 95 CITY OF ROSEMEAD Principal Property Taxpayers Current Year and Nine Years Ago Taxpayer Rosemead Place, LLC Walmart Stores, Inc Rosemead Hwang, LLC AFG Investment Fund 5 LLC Metodo Investments LLC 420 Boyd Street LLC Citadel /Panda Express, Inc. Macy's California Inc. Shurland Kay Curci Foundation Sunshine Inn Rosemead Place, LLC Aespace America, Inc. May Department Stores Company Southern California Edison Co. General Electric Credit Auto Auctions California Federal Savings & Loan Assn. Panda Restaurant Group, Inc. Huy Fong Foods, Inc. Sunshine Inn Builder Square, LLC 2013/14 2004/05 Percent of Percent of Total City Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Value Rank Value Value Rank Value $ 47,173,985 1 1.27% 37,447,086 2 1.01% 29,428,000 3 0.79% 25,023,940 4 0.67% 18,868,184 5 0.51% 17,000,000 6 0.46% 15,916,502 7 0.43% 14,221,531 8 0.38% 14,031,441 9 0.38% 10,738,534 10 0.29% $ 21,909,588 1 0.90% 17,277,316 2 0.71% 17,130,008 3 0.71% 17,071,564 4 0.70% 16,016,061 5 0.66% 12,152,732 6 0.50% 11,219,669 7 0.46% 9,107,775 8 0.38% 8,441,171 9 0.35% 7,840,392 10 0.32% Source: Hdl Coren & Cone, Los Angeles County Assessor 2013/14 Combined Tax Rolls. 0. CITY OF ROSEMEAD Property Tax Levies and Collections Last Ten Fiscal Years Information not available. " Note: For these years the information was not available so an estimate was made to reduce the total collections to date to 100 %. Source: HDL Coren & Cone and Los Angeles County Auditor Controller's Office 7r7 Collected within the Fiscal Taxes Levied Fiscal Year of Lev Collections in Total Collections to Date Year Ended for the Percent Subsequent Percent June 30 Fiscal Year Amount of Levy Years Amount of Levy 2005 1,364,266 1,203,406 88.21% - 1,203,406 88.21% 2006 2,054,921 2,054,859 100.00% - 2,054,859 100.00% ** 2007 2,269,752 2,147,626 94.62% - 2,147,626 94.62% 2008 2,442,009 2,406,199 98.53% - 2,406,199 98.53% 2009 2,569,429 2,435,807 94.80% - 2,435,807 94.80% 2010 2,609,456 1,898,973 72.77% - 1,898,973 72.77% 2011 2,633,288 2,595,289 98.56% - 2,595,289 98.56% 2012 2,711,546 2,699,377 99.55% - 2,699,377 99.55% 2013 2,771,913 2,710,893 97.80% - 2,710,893 97.80% 2014 2,865,651 2,850,674 99.48% - 2,850,674 99.48% Information not available. " Note: For these years the information was not available so an estimate was made to reduce the total collections to date to 100 %. Source: HDL Coren & Cone and Los Angeles County Auditor Controller's Office 7r7 CITY OF ROSEMEAD Ratios of Outstanding Debt by Type Last Ten Fiscal Years Notes: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. 1 These ratios are calculated using personal income and population for the prior calendar year. 2 The Rosemead Community Development Commission was dissolved on February 1, 2012. As a result, the tax allocation bonds are not debt of the primary government. Tax Percentage Debt Allocation of Personal Per Fiscal Year Bonds 2 Income 1 Capita 1 2004/05 32,920,000 4.60% 582 2005/06 37,100,000 4.96% 653 2006/07 37,455,000 4.73% 658 2007108 36,350,000 4.44% 639 2008/09 35,435,000 4.28% 622 2009/10 34,490,000 4.25% 601 2010/11 44,745,000 4.76% 775 2011112 43,535,000 4.63% 804 2012113 41,740,000 4.38% 771 2013/14 39,885,000 4.15% 732 Notes: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. 1 These ratios are calculated using personal income and population for the prior calendar year. 2 The Rosemead Community Development Commission was dissolved on February 1, 2012. As a result, the tax allocation bonds are not debt of the primary government. CITY OF ROSEMEAD Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years (In Thousands, except Per Capita) General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (of which, the City has none). 1 Assessed value has been used because the actual value of taxable property is not readily available in the State of California. 2 The Rosemead Community Development Commission was dissolved on February 1, 2012. As a result, the tax allocation bonds are not debt of the primary government. .. Tax Percent of Allocation Assessed Per Fiscal Year Bonds 2 Value 1 Capita 2004105 32,920 1.36% 582 2005106 37,100 1.40% 653 2006107 37,455 1.29% 658 2007/08 36,350 1.15% 639 2008/09 35,435 1.05% 622 2009/10 34,490 1.01% 601 2010111 44,745 1.30% 775 2011/12 43,535 1.23% 804 2012/13 41,740 1.16% 766 2013/14 39,885 1.07% 732 General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (of which, the City has none). 1 Assessed value has been used because the actual value of taxable property is not readily available in the State of California. 2 The Rosemead Community Development Commission was dissolved on February 1, 2012. As a result, the tax allocation bonds are not debt of the primary government. .. CITY OF ROSEMEAD Direct and Overlapping Governmental Activities Debt June 30, 2014 2013 114 Assessed Valuation: $3,090,593,336 After Deducting $634,716,984 1 ncremental Value. Percentage Direct Debt Gross Bonded Applicable Net Bonded Total Debt Debt Balance To City Debt Overlapping Debt Metropolitan Water District $ 64,271,492 0.334% $ 214,667 Garvey SD DS 2000 Series A 174,557 51.382% 89,691 Garvey SD DS 2000 Series B 4,334,519 51.382% 2,227,163 Garvey SD DS 2004 Series 2005 7,243,736 51.382% 3,721,976 Garvey SO DS 2004 Series 2006 9,829,168 51.382% 5,050,423 Garvey SD DS 2004 Series C 8,877,964 51.382% 4,561,675 Garvey SO DS 2011 Refund Bonds 7,085,000 51.382% 3,640,415 Rosemead SD DS 2000 Series C 6,250,000 70.121% 4,382,563 Rosemead SO DS 2007 Series D 13,025,000 70.121% 9,133,260 Rosemead SO DS 2008 Series A 6,326,503 70,121% 5,838,627 Rosemead SD DS 2011 Ref Bond 8,915,000 70.121% 6,251,287 Rosemead SO DS 2012 Ref Bond 5,385,000 70.121% 3,776,016 El Monte Union HS Dist 2002 Series A 1,185,000 14.779% 175,131 El Monte Union HS Dist 2002 Series B 1,210,000 14.779% 178,826 El Monte Union HSD DS 2006 Ref Bds 33,482,675 14.779./ 4,948,405 El Monte Union HSD DS 2002 Series C 27,565,000 14.779% 4,073,831 El Monte Union HSD DS 2008 Series A 52,339,850 14.779% 7,735,306 El Monte Union HSD DS 2008 Series B 30,297,787 14.779% 4,477,710 L.A. CCD DS 2003 Taxable Ser 2004B 74,235,000 0.322% 239,037 L.A. CCD DS 2001 Taxable Series 2004A 8,850,000 0.322% 28,497 LACC DS Ref 2001 Series 2005A 403,320,000 0.322% 1,298,690 LA CCD DS 2001 2006 Series B 266,185,000 0.322% 857,116 LA CCD DS 2003, 2006 Series C 381,585,000 0.322% 1,228,704 LACC DS 2001, 2008 Ser E -1 267,340,000 0.322% 860,835 LACC DS 2003, 2008 Ser F -1 341,565,000 0.322% 1,099,839 LACC DS 2008, 2009 Taxable Set 350,000,000 0.322% 1,127,000 LACC DS 2008, 2009 Taxable Ser B 75,000,000 0.322% 241,500 LACC Debt 2008, 2010 Tax Ser D 219,889,950 0.322% 708,046 LACC Debt 2008, 2010 Tax Ser E (GABS) 900,000,000 0.322% 2,898,000 LACC DS 2008, 2010 Series C 177,885,060 0.322% 572,790 LA CCD DS 2013 Ref Bonds 54,480,000 0.322% 175,426 LA CCD DS 2008 Series G 220,000,000 0.322% 708,400 Pasadena CCD DS 2006 Series B 26,985,000 2.579% 695,943 Pasadena CCD DS 2006 Ref BD Series C 19,443,312 2.579% 501,443 Pasadena CCD DS 2002, 2006 Ser D 25,645,000 2.579% 661,385 Pasadena CCD 2002, 2009 Series E (BABB) 25,295,000 2.579% 652,358 Montebello USD DS 1998 Series 1998 7,783,067 1.366% 106,317 Montebello USD DS 98 Series 1999 9,570,081 1.366% 130,727 Montebello USD DS 1998 Series 2002 15,833,172 1.366% 216,281 Montebello USD DS 2004 Series 2008 31,850,000 1.366% 435,071 Montebello USD DS 2004 Series -1 2009 -1 19,115,000 1.366% 261,111 Montebello USD 2004 Series 2009A -2 BABS 12,640,000 1.366% 172,662 Montebello USD DS 2010 Ref Bonds 11,140,000 1.366% 152,172 Montebello USD DS 2004 Series 2013A 22,155,000 1,366% 302,637 San Gabriel USD DS 2002 Series B 6,111,492 1.212% 74,071 San Gabriel USD DS 2005 Ref Bonds 16,155,000 1.212% 195,799 San Gabriel USD DS 2002 Ser 2007 C 10,557,878 1.212% 127,961 San Gabriel USD DS 2008 Bar 17,748,245 1.212% 215,109 San Gabriel USD DS 2010 Ref Bonds 6,400,000 1.212% 77,568 San Gabriel USD DS 2008 Series B 38,396,424 1.212% 465,365 San Gabriel USD DS 2012 Ref Bonds Series B 2,665,000 1.212% 32,300 2013 114 Assessed Valuation: $3,090,593,336 After Deducting $634,716,984 1 ncremental Value. Debt to Assessed Valutation Ratios: Direct Debt 0.00% Overlapping Debt 2.85% Total Debt 2.85% This fund is a portion of a larger agency, and Is responsible for debt in areas outside the City. This report reflects debt which is being repaid through voter - approved property tax indebtedness. It excludes mortgage revenue, tax allocation bonds, interim financing obligations, non- bonded capital lease obligations, and certificates of participation, unless provided by the City. Source: Hdl Caren & Cone, L.A. County Assessor and Auditor Combined 2013/14 Lien Date Tax Rolls. 100 CITY OF ROSEMEAD Legal Debt Margin Last Ten Fiscal Years Fiscal Year 2005 2006 2007 2008 2009 Assessed valuation 2,422,878,306 Conversion percentage 25% Adjusted assessed valuation 605,719,577 Debt limit percentage 15% 2,644,964,038 2,901,902,093 3,165,802,509 3,362,646,146 25% 25% 25% 25% 661,241,010 725,475,523 791,450,627 840,661,537 15% 15% 15% 15% Debt limit 90,857,936 99,186,151 108,821,328 118,717,594 126,099,230 Total net debt applicable to limit: General obligation bonds Legal debt margin 90,857,936 99,186,151 108,821,328 118,717,594 126,099,230 Total debt applicable to the limit as a percentage of debt limit 0.0% 0.0% The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981 -82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state. Source: Rosemead Finance Department Los Angeles County Tax Assessor's Office 0.0% 0.0% 0.0% 101 Fiscal Year 2010 2011 2012 2013 2014 3,399,331,688 3,431,820,218 3,533,192,184 3,603,395,186 3,725,310,320 25% 25% 25% 25% 25% 849,832,922 857,955,055 883,298,046 900,848,797 931,327,580 15% 15% 15% 15% 15% 127,474,938 128,693,258 132,494,707 135,127,319 139,699,137 127,474,938 128,693,258 132,494,707 135,127,319 139,699,137 0.0% 0.0% 0.0% 0.0% 0.0% 102 CITY OF ROSEMEAD Pledged- Revenue Coverage Last Ten Fiscal Years (In Thousands) Fiscal Year Ended June 30 Tax Increment Tax Allocation Bonds Debt Service Principal Interest Coverage 2005 3,494,330 465,000 1,836,765 1.52 2006 3,310,295 490,000 1,559,114 1.62 2007 4,029,714 780,000 1,505,781 1.76 2008 6,219,884 1,105,000 1,567,849 2.33 2009 5,649,896 915,000 1,531,987 2.31 2010 6,243,948 945,000 1,501,667 2.55 2011 6,893,575 975,000 1,882,092 2.41 2012 2,601,979 1,210,000 961,506 1.20 2013 5,439,677 1,795,000 1,852,123 1.49 2014 5,517,943 1,855,000 1,790,511 1.51 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest or depreciation expenses. 103 CITY OF ROSEMEAD Demographic and Economic Statistics Last Ten Calendar Years Per Personal Capita Unemployment Calendar Population Income Personal Rate Year (1) (in thousands) (2) Income (2) (3) 2004105 56,536 715,679 12,659 5.70% 2005/06 56,786 747,331 13,160 4.70% 2006/07 56,929 791,649 13,906 4.20% 2007/08 56,876 819,088 14,401 4.40% 2008/09 57,003 827,444 14,516 6.50% 2009/10 57,381 812,343 14,157 10.20% 2010/11 57,756 939,575 16,268 11.20% 2011/12 54,172 952,560 17,584 10.80% 2012/13 54,464 959,982 17,626 8.10% 2013/14 54,762 944,918 17,255 6.70% Sources: (1) California State Department of Finance (2) HDL Coren & Cone and based on the last available census (3) State of California Employment Development Department 104 CITY OF ROSEMEAD Principal Employers Current Year and Nine Years Ago 2014 2005* Based upon Employment Development Department's estimate of 24,000 residents employed in 2013 -14. Information for 2005 is not available. Source: City of Rosemead and Rosemead Chamber of Commerce 105 Percent of Percent of Number of Total Number of Total Employer Employees Employment I Employees Employment Southern California Edison 1 4,100 17.08% - 0.00% Garvey School District 2 804 3.35% - 0.00% Wal -Mart 3 389 1.62% - 0.00% Panda Restaurant Group, Inc. 4 400 1.67% - 0.00% Rosemead School District 5 337 1.40% - 0.00% Target 6 200 0.83% - 0.00% Hemetic Seal Corporation 7 189 0.79% - 0.00% Olive Garden 8 115 0.48% - 0.00% Don Bosco Tech 9 90 0.38% - 0.00% Double Tree 10 100 0.42% - 0.00% Based upon Employment Development Department's estimate of 24,000 residents employed in 2013 -14. Information for 2005 is not available. Source: City of Rosemead and Rosemead Chamber of Commerce 105 CITY OF ROSEMEAD Full -time and Part -time City Employees by Function Last Ten Fiscal Years The City of Rosemead contracts with the Los Angeles County Sheriffs Department for all police services with the exception of parking control and crossing guards which are provided by City personnel. The City of Rosemead is part of the Los Angeles County Fire Protection District which provides fire fighting, fire prevention, and plan check services for the City. Source: City Finance Department 1: Full -time and Part -time employees as of June 30, Function 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General government 15 18 17 19 16 22 19 15 13 12 Public safety 1 17 23 22 34 39 42 42 33 15 20 Community development 6 6 11 23 18 23 23 7 8 8 Public Works n/a n/a n/a n/a n/a n/a n/a 26 22 23 Parks and recreation 94 103 101 103 135 112 99 68 81 86 Total 132 150 151 179 208 199 183 149 139 149 The City of Rosemead contracts with the Los Angeles County Sheriffs Department for all police services with the exception of parking control and crossing guards which are provided by City personnel. The City of Rosemead is part of the Los Angeles County Fire Protection District which provides fire fighting, fire prevention, and plan check services for the City. Source: City Finance Department 1: CITY OF ROSEMEAD Operating Indicators by Function Last Ten Fiscal Years Source: City of Rosemead 107 Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Police: Arrests 1,230 1,315 1,786 1,506 1,478 1,733 1,888 1,842 1,186 1,356 Parking citations issued 18,357 15,176 13,210 11,766 10,517 8,450 7,515 7,797 8,765 16,110 Fire: Number of emergency calls 2,617 2,617 2,749 2,846 2,959 2,853 2,745 2,928 2,785 2,823 Inspections - - - 2,518 2,093 2,137 1,845 2,066 2,012 2,026 Public works: Street resurfacing (miles) - 1.3 2.5 1.1 2.8 3.5 3.5 3.6 0.9 1.6 Parks and recreation: Number of recreation classes 530 720 775 484 397 727 617 519 638 724 Number of facility rentals n/a n/a n/a 540 453 236 1,786 3,261 3,124 4,005 Source: City of Rosemead 107 CITY OF ROSEMEAD Capital Asset Statistics by Function Last Ten Fiscal Years Public Safety: Sheriff stations Fire: Fire stations Public works: Streets (miles) Streetlights Traffic signals Parks and recreation: Parks Community centers Source: City of Rosemead Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 76.80 76.80 76.80 77.55 77.55 77.55 77.55 77.55 77.55 77.55 2,702 2,705 2,706 2,712 2,712 2,712 2,712 2,712 2,712 2,712 39 39 41 42 42 42 42 42 42 42 10 10 10 10 10 10 10 10 10 10 2 2 2 2 2 2 2 2 2 2 HE (This page intentionally left blank)