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CC - Item 5D - Transmittal of Fiscal Year 2015-16 City of Rosemead and Rosemead Housing Corporation Annual Financial Reports E M e ® 9 ° ROSEMEAD CITY COUNCIL of STAFF REPORT CIRPORATED'15e TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: BILL R. MANIS, CITY MANAGERtQ,es DATE: JANUARY 24, 2017 SUBJECT: TRANSMITTAL OF FISCAL YEAR 2015-16 CITY OF ROSEMEAD AND ROSEMEAD HOUSING CORPORATION ANNUAL FINANCIAL REPORTS SUMMARY This report provides the Fiscal Year (FY) 2015-16 annual financial reports for the City of Rosemead and the Rosemead Housing Development Corporation to the City Council. The City of Rosemead Comprehensive Annual Report (CAFR) (Attachment A) and Rosemead Housing Development Corporation Financial and Compliance Report (Attachment B) provide a complete presentation of the finances of each of the above-mentioned organizations. FY 2015-16 provided positive revenues for the City. The City's General Fund showed higher than budgeted revenues and lower than budget expenditures, resulting in an increase in the General Fund balance of almost $2 million. A summary of impacts on the City's General Fund balance is included in this report. STAFF RECOMMENDATION That the City Council receive and file the City of Rosemead Comprehensive Annual Financial Report and the Rosemead Housing Development Corporation Annual Financial and Compliance Report for the 2015-16 FY. ANALYSIS Governmental Activities. From year to year the net assets of all Governmental activities typically fluctuates a few percentage points, which can equal millions of dollars. These fluctuations are generally the result of new construction for City facilities or changes in long- term debt. FY 2015-16, Governmental Activities (all governmental funds) increased the City of Rosemead's net assets by $3.3 million or 4.9%. This increase is a result of both general and program revenues exceeding expenses. General Fund highlights are presented below and a detailed presentation of all funds is available in the CAFR. ;� rrkM NUMBER: 57 City Council Meeting January 24.2017 Page 2 of 3 General Fund The General Fund is the main operating fund of the City of Rosemead. At the end of the current FY.the unassigned fund balance of the General Fund was $11,514,894, while total fund balance reached $18,468,149. 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 61 percent of total General Fund expenditures, while total fund balance represents 97 percent of that same amount. The fund balance of the City of Rosemead's General Fund increased by $1,997,788 during the FY. Highlights of the change in fund balance are presented below: • Several revenues had large increases including Sales Tax, Property Tax, Transient Occupancy Tax (TOT) and Licenses and Permits. • General Fund 2015/16 revenues increased by $1,813,336 over the prior year. The largest revenue category increases were property tax by $124,000, sales tax by $672,000, TOT by $423,500 and building permits and public works permits by $474,000. Sales tax growth is attributed to growth in the overall economy and in consumer spending. The TOT increase is a result of the improved economy, as well as the expansion of rooms at the Doubletree Hotel. The substantial increase in both building permits and public works permits is a result of an increase in development projects in the City as well as an indication of an improving economy. • General Fund 2015/16 expenditures decreased by $1,440.474 over the prior FY due to the large property purchase expenditure in the prior year. This decrease in expenditures was also the result of vacancies in several key management positions for most of FY 15/16, which resulted in salary and benefit savings. • In addition, Risk Management expenditures decreased $190,000 due to positive actual experience. • These decreases in expenditures were partially offset by an increase in Public Safety expenditures in 2015/16 of approximately $331,600. These expenditures were a result of additional law enforcement costs in FY 2015/16. FISCAL IMPACT There is no fiscal impact as this is a receive and file item. STRATEGIC PLAN IMPACT This item relates to the Strategic Plan's Strategy 5: Finance, Action Item A; to improve transparency and communication with the public regarding continuous monitoring and internal controls of City finances. City Council Meeting January 24,2017 Page 3 of3 PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Prepared by: Cd. ( -- Carolyn A. Chu, Finance Director Attachment A:City of Rosemead Comprehensive Annual Report Attachment B:Rosemead Housing Development Corporation Financial and Compliance Report rE M F S O 9 s FR-or � y iLir° i� \�RPGRATED 1019 Attachment A City of Rosemead Comprehensive Annual Report CITY OF ROSEMEAD Rosemead, California Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2016 Prepared by the Finance Department Carolyn A. Chu Director of Finance CITY OF ROSEMEAD Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2016 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal Directory of Officials vi Organizational Chart vii FINANCIAL SECTION Independent Auditor's Report 1 Management's Discussion and Analysis (Required Supplementary Information) 4 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements: Governmental Funds: Balance Sheet 17 Reconciliation of the Governmental Funds Balance Sheet to the Government Wide Statement of Net Position 19 Statement of Revenues, Expenditures, and Changes in Fund Balances 20 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Government Wide Statement of Activities and Changes in Net Position 22 Internal Service Funds: Statement of Net Position 23 Statement of Revenues, Expenses, and Changes in 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 74 Budgetary Comparison Schedule: General Fund 75 Rosemead Housing Development Corporation —Special Revenue Fund 76 Other Post-Employment Benefits Plan - Schedule of Funding Progress 77 Schedule of the City's Proportionate Share of the Plan's Net Pension Liability And Related Ratios as of the Measurement Date— Last 10 Years* 78 Schedule of Plan Contributions— Last 10 Years 79 Schedule of Changes in Net Pension Liability and Related Ratios - Last 10 Years— Retirement Enhancement Plan 80 Schedule of Plan Contributions— Last 10 Years— Retirement Enhancement 81 Plan CITY OF ROSEMEAD Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2016 TABLE OF CONTENTS, (continued) Page FINANCIAL SECTION, (continued) OTHER SUPPLEMENTARY INFORMATION Combining Balance Sheet— Nonmajor Governmental Funds 83 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances— Nonmajor Governmental Funds 86 Schedule of Revenues, Expenditures, and Changes in Fund Balance- Budget and Actual—Community Development Block Grant 89 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Proposition A 90 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Proposition C 91 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — State Gas Tax 92 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual —Air Quality Management District 93 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Street Lighting 94 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — HOME Program 95 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Measure R 96 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual —City Capital Project— Major Fund 97 Combining Statement of Net Position— Internal Service Funds 99 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position— Internal Service Funds 100 Combining Statement of Cash Flows 101 Statement of Changes in Fiduciary Assets and Liabilities—Agency Fund 102 CITY OF ROSEMEAD Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2016 TABLE OF CONTENTS. (continued) Page STATISTICAL SECTION Net Position by Component 103 Changes in Net Position 105 Fund Balances of Governmental Funds 107 Changes in Fund Balances of Governmental Funds 109 Assessed Value and Estimated Actual Value of Taxable Property 111 Direct and Overlapping Property Tax Rates 112 Principal Property Taxpayers 113 Property Tax Levies and Collections 114 Ratios of Outstanding Debt by Type 115 Ratio of General Bonded Debt Outstanding 116 Direct and Overlapping Governmental Activities Debt 117 Legal Debt Margin 118 Pledged-Revenue Coverage 120 Demographic and Economic Statistics 121 Principal Employers 122 Full-time and Part-time City Employees by Function 123 Operating Indicators by Function 124 Capital Assets Statistics by Function 125 NIASANDRA of psemeaW D'YO R: City ARartvl.\ MAYOR PRO TEM; POLLY Low I SUS E.VALLEY BOULEVARD P.O BOX 399 ROSF.MEAD,CALIFORNIA 91770 COUNCIL I M A ARCO N1RHS: TELEPHONE(626)369-2100 WILLIAM CLARK hl,wnnneT CL,v,n FAX(626)30]-93I R STEVEN Lr January 16, 2017 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Rosemead: It is with great pleasure that we present to you the City of Rosemead's Comprehensive Annual Financial Report (CAFR) for the 2015/16 fiscal year. Sound financial practice dictates that all general-purpose local governments publish within six months of the dose 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, 2016. 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, Malady & 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, 2016, 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, 2016, 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 tingle 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 (MOM). 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 55,000. 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 (RHOC). 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 The City of Rosemead has a diverse revenue base Including sales tax, property tax, transient occupancy tax and various licenses and permits. 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 moderate growth. 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 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 7.7%. Major employers are listed In the statistical section of the accompanying financial report. Several stores and restaurants including Ulta, PetSmart, The Grocery Outlet, and Boiling Crab opened during the prior two years and Lucille's BBQ has signed an agreement to locate in Rosemead in the near future. Long-term Financial Planning On December 8, 2009 the City Council approved its vision for the year 2020 and on February 11, 2014 the City Council amended its implementation plan for the years 2014 and 2015. 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 2015116 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 has been 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 over 120 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 and reinsurance, and to arrange for group-purchased insurance for property and other coverage. Additional Information can be found In Note 10 on page 49 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 on page 52 in the notes to the Basic Financial Statements. Debt Administration The City has no outstanding general obligation bonds as of June 30, 2016. Debt outstanding of the Successor Agency to the Rosemead Community Development Commission includes 2006A Tax Allocation Bonds for $4,780,000 and 2006 B Tax Allocation Bonds for $23,295,000 and 2010A Tax Allocation Bonds for $7,895,000. The Successor Agency refinanced the Series 2006A and 2006B bonds in fiscal year 2016/17. Major Accomplishments Substantial progress has been made during the past fiscal year toward responding to priorities previously Identified by City Council and staff. Some of those accomplishments include iv implementing four new Development Impact Fees; completion of Rosemead Community Recreation Center remodel with new facade and lighting; completion of City Hall facade improvements Including painting, trim and lighting; and, the Lighting project at Duff School and Garvey Park. The City also purchased five new buses with propane tanks to be used for the Rosemead Explorer program. The City also opened several new stores and restaurants including The Grocery Outlet, Ulta, PetSmart, the Boiling Crab and Is also anticipating the opening of a Lucille's BBQ Restaurant in FY 2016/17. Future Initiatives The City continues to work on the Garvey Specific Plan which will help revitalize Garvey Avenue and bring more economic development to the area. Lucille's BBQ restaurant will be opening in 2016/17. The City will finalize the refurbishment of the new City Maintenance Yard including the addition of new conference room, new showers and additional tenant improvements. Also, the Successor Agency will finalize the last two projects funded from the redevelopment bond proceeds which are the Zapopan Park project and the Skate Plaza project. The Successor Agency will refinance the 2006A and 20068 tax allocation bonds In December 2016. The City continues to work with developers interested in developing In our City. The elimination of Redevelopment Agencies In 2011 was a significant event which eliminated nearly $7 million of annual tax Increment revenue to the City. However, even without redevelopment, we are committed to bringing new projects to the area. Acknowledgements The City's Comprehensive Annual Financial Report was prepared through the combined efforts of City staff. Special recognition is due the Finance Department. The department coordinated the closing of the books for the fiscal year, ensuring timely and accurate reporting. We would also like to express our appreciation to all members of the departments who assisted and contributed to the preparation of this report. Lastly, a special thank you goes to the Mayor, City Council and the City Manager for their unfailing support In maintaining the highest standards of professionalism in the management of the City of Rosemead's finances. Respectfully submitted, Carolyn A. Chu Director of Finance Iv (This page intentionally left blank) CITY OF ROSEMEAD Directory of Officials June 30, 2016 CITY COUNCIL Sandra Armenta, Mayor Polly Low, Mayor Pro Tem William Alarcon, Council Member Margaret Clark, Council Member Steven Ly, Council Member CITY MANAGEMENT William R. Manis, City Manager Carolyn A. Chu, Finance Director Michelle Ramirez, Community Development Director Jason Chacon, Director of Parks and Recreation Rafael Fajardo, Interim Director of Public Works Lt. Ignacio Somoano, Chief of Police Ericka Hernandez, Interim City Clerk Burke, Williams & Sorensen, LLP, City Attorney vi CITY OF ROSEMEAD Function Based Organizational Chart The People I Planning Traffic Commission Commission —I City Clerk I I City Attorney i I I I L—I Assistant I City Manager - J I City Manager us �ypI 1 I Public Safety r--- i� u r--y Human I I Develpment I L--I Finance i I Public Works I Risk Parks& j L——1 Management I I Recreation vii FINANCIAL SECTION (This page intentionally left blank) RA ROGERS, ANDERSON, MALODY& SCOTT, LLP M S 735 E.Carnegie D, Slue 100 San Bernardino.CA 92408 9098890871 T 909 889 5361 r The Honorable Mayor and City Council ramscpa.net City of Rosemead Rosemead, California Independent Auditor's Report Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of City of Rosemead (City), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements The City's management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 1 STABILITY. ACCURACY. TRUST. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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 City of Rosemead, as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Budgetary Comparison Schedules, Other Post- Employment Benefits Plan-Schedule of Funding Progress, Schedule of the City's Proportionate Share of the Plan's Net Pension Liability and Related Ratios as of the Measurement Date-Last 10 Years, Schedule of Plan Contributions-Last 10 Years, Schedule of Changes in Net Pension Liability and Related Ratios-Last 10 Years-Retirement Enhancement Plan, Schedule of Plan Contributions-Last 10 Years-Retirement Enhancement Plan, as listed in 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 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. 2 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise 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 basic 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 basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 16, 2017 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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. Kos ers,{lndersoq,Mcdodla&Scott,I,LP San Bernardino, California January 16, 2017 3 (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, 2016. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal and the City's financial statements. Financial Highlights • General Fund fund balance at the end of Fiscal Year 2015-16 increased $1,997,788. This increase is largely due to increases in several different revenue categories as well as a decrease in several expenditure categories: • Since the downturn in the economy back in 2007-08 the City has worked diligently to reduce expenditures while maintaining programs and service levels. The fund balance has increased significantly this year. The increase in fund balance relates to several increases in revenues including Property Tax, Sales Tax, Licenses and Permits and Transient Occupancy Tax (TOT). The licenses and permit revenues increase is a good sign of the economy improving as well as continued development in the City. The City has made difficult decisions 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 $11,514,894 or 61 percent of total General Fund expenditures. • The assets related to Governmental Activities has increased by approximately $1.6 million which is largely due to an increase in both Cash and Investments as well as an increase in Accounts Receivable at year end. 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, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between them reported as net position. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Rosemead is improving or deteriorating. 4 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 include not only the City of Rosemead itself (known as the primary government), but also a legally separate Successor Agency, for which the City of Rosemead is financially accountable. Financial information for the component units is reported separately from the financial information presented for the primary government itself. 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 balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental 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 14 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, Successor Agency Private Purpose Trust Fund, and Capital Project Fund, all four of which are considered to be major funds. Data from the other 10 governmental funds are combined into a single, aggregated 5 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, Community Development Block Grant Fund, Proposition A Fund, Proposition C Fund, State Gas Tax Fund, Air Quality Management District Fund, Street Lighting Fund, HOME Program Fund, Measure R 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 reflected 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 basic 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 Basic Financial Statements can be found on pages 28-73 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 beginning on pages 74-81 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 83-102 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 $68,656,751 at the close of the most recent fiscal year. A significant portion of the City of Rosemead's net position (75 percent) 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. 6 City of Rosemead's Summarized Statement of Net Position As of June 30, 2016 and 2015 (thousands) Current and other assets $ 26,130 $ 24,316 Capital assets 51,542 52,251 Total assets 77,672 76,567 Deferred outflows of resources 2,937 2,779 Other liabilities 2,216 3,198 Long-term liabilities outstanding 8,826 8,378 Total liabilities 11,042 11,576 Deferred inflows of resources 910 1,294 Net position: Net investment in capital assets 51,442 52,038 Restricted 4,006 3,420 Unrestricted 13,109 11,018 Total net position $ 68,557 $ 66,476 An additional portion of the City of Rosemead's net position (5.8 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position - ($13.1 million) may be used to meet the governments 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. Governmental activities. Governmental activities increased the City of Rosemead's net position (as restated) by $3,348,112. General revenue and program revenue exceeded expenses by this amount. The expenses increased in General Government, Public Safety, Public Works, Community Development, and Parks and Recreation; however, the total Program and General Revenues offset these increases. These expense increases are largely due to salary and benefit costs as well as law enforcement increases. 7 City of Rosemead's Sumarized Statement of Activities Years Ended June 30, 2016 and 2015 (thousands) Program revenues: Charges for services $ 4,400 $ 4,542 Operating grants and contributions 5,848 6,067 Capital grants and contributions 973 947 General revenues: Property taxes 9,158 9,034 Other taxes 7,333 6,275 Investment income 349 98 Other 945 794 Total revenues 29,006 27,757 Expenses: General government 3,217 2,739 Public safety 8,382 7,748 Public works 8,739 8,704 Community development 3,246 2,879 Parks and recreation 2,073 2,050 Interest on long-term debt 1 3 Total expenses 25,658 24,123 Change in net position 3,348 3,634 Net position - June 30, 2015 (as restated) 65,309 62,842 Net position - June 30, 2016 $ 68,657 $ 66,476 8 Revenues by Source Governmental Activities Investment I ncome Other revenues 1% 4% Other taxes 1% Franchisetaxes 7% Transient occupancytaxes 10% Property taxes 55% Sales and use taxes 22% Expenses and Program Revenues Governmental Activities 10,000,000 — s,000,000 6,000,030 4,000,000 ' 2,000,000 s„ •expenses �¢c` sati¢S �o. �¢c• a�oc a¢tl� revenues O O d¢ ¢ 2 (^\�o ¢° C° ola¢ ca ♦oO es, o OS' SS Q1,,FSS' Slot Cf ` ¢ 9 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$21,641,991 an increase of $3,396,089 in comparison with the prior year. Approximately 49% of this total amount $10,682,889 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 $11,514,894, while total fund balance reached $18,468,149. 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 61 percent of total general fund expenditures, while total fund balance represents 97 percent of that same amount. The fund balance of the City of Rosemead's General Fund increased by $1,997,788 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 an increase of $1,997,788. Several revenues had large increases including Sales Tax, Property Tax, TOT and Licenses and Permits. Additional highlights of the change in fund balance are presented below. • General Fund revenues increased $1,813,336 in 2015/16 over the prior year. The largest revenue categories were: property tax increased $124,000, sales tax increased $672,000, TOT increased $423,500 and building permits and public works permits increased $474,000. The substantial increase in both building permits and public works permits is a result of increased development projects in the City as well as an indication of an improving economy. The TOT increase is a result of the improved economy and tourism activity within California on the rise, as well as the expansion of rooms at the Doubletree Hotel. Sales tax growth is attributed to growth in the overall economy and in consumer spending. • General Fund expenditures decreased $1,440,474 over the prior year due to the large property purchase expenditure in the prior year. This decrease in expenditures was also the result of vacancies in several key management positions for most of FY 15/16 which resulted in salary and benefit savings as well. 10 • In addition, Risk Management expenditures decreased $190,000 due to positive actual experience. • These decreases in expenditures were partially offset by an increase in Public Safety expenditures in 2015/16 of approximately $331,600. These expenditures were a result of additional law enforcement costs in the 2015/16 fiscal year. General Fund Budget Analysis. The City's General Fund collected revenues of slightly more than $1,713,437 in comparison to the budgeted estimates or 8.63% more than the budget. This variance resulted from Property Tax increases of$152,000 which partially resulted from the reallocation of former redevelopment tax increment, Sales Tax increases of $263,000 which was driven by an improving economy and the opening of some new restaurants and businesses, and increase of $269,000 in Transient Occupancy Tax from an improving travel industry as well as increased expansion in the DoubleTree Hotel. In addition Licenses and Permit revenue increased almost $630,000 due to increased development and projects during FY 2015/16. Interest earnings were underestimated by approximately $200,000 due to slightly higher interest rates as well as end of year changes in market valuation. Shortfalls from budgeted estimates were mostly due to Finess and Forfeitures as the revenue from parking citations came in less than the prior year. The General Fund original expenditure budget was increased by $434,500. The main contributors to this increase was an additional $100,000 for professional services for the Sewer System Comprehensive Study, an additional $175,000 for Plan Checks due to increased projects and an additional $73,600 to retrofit the Garvey Median. Additional adjustments were made for expenditures such as legal advertising, human resources recruiting expenses and Information Technology contract services. These three items increased the budget by $85,900. Net actual expenditures were $529,323 less than the amended budget. There were significant budget savings in most departments, including General Government, Parks and Recreation and Public Works. These budget savings were achieved through staffing vacancies and other cost saving measures implemented by the City's operating departments. The Community Development Department was slightly over budget by $83,260 due to higher building inspection costs, however this was due to more projects and was offset by revenues. 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 $135,000. 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 11 ridership as are the operating expenditures for Dial-A-Ride in the Proposition C Fund. Also, the City purchased five buses from the Proposition A funds in 2015/16 to be used for the Rosemead Explorer program. Measure R, the newest of the funds, is beginning to spend its revenue for future project planning. 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, 2016, amounts to $51,542,030 (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: • Completion of Rosemead Community Recreation Center remodel including new facade and lighting. • Completion of City Hall façade improvements including painting, trim and lighting. • Refurbishment of new building on River Avenue for City Maintenance Yard, including addition of new conference room, new showers and additional tenant improvements. • Zapopan Park project with new walking trail, basketball and volleyball courts and new parking lot. • New Skate Park Plaza at Rosemead Park. • Completion of Lighting project at Duff School and Garvey Park. • Installation of Garvey Avenue sewer relief line. • Completion of new medians, sidewalks and landscaping on Walnut Grove. Purchase of five new vehicles (buses) to be used for the Rosemead Explorer program. 12 City of Rosemead's Capital Assets (net of depreciation) (thousands) Land $ 4 417 $ 4,417 Buildings 14795 13,819 Improvements other than buildings 555 363 Machinery and equipment 73 92 Autos and trucks 621 239 Furniture and office equipment 245 302 Infrastructure 30,271 30,851 Construction in progress 565 2,168 Total $ 51,542 $ 52,251 Additional information on the City of Rosemead's capital assets can be found in note 7, found on page 45 of the Basic Financial Statements. 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 $35,970,000. Of this amount, all of it is backed by future properly tax increment revenues. City of Rosemead's Outstanding Debt Revenue Bonds (thousands) Tax Allocation Bonds $ 35,970 $ 37,965 • The Successor Agency's total bonded debt decreased by $1,995,000 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 No. 8, Changes in Long-Term Liabilities found on page No. 46 of the Basic Financial Statements. The Successor Agency has since refinanced the Series 2006A and 2006B bonds in fiscal year 2016/17. Economic Factors and Next Year's Budgets and Rates • The City has included in the FY 2016/17 budget, capital improvement projects that were funded from the bond proceeds from the former redevelopment agency. The final 13 projects to be funded from these bond proceeds include the Zapoppan Park project and the Skate Plaza project. Progress was made on both of these projects during 2015/16 and they are projected to be completed by the end of the 2016/17 fiscal year • As discussed throughout this Management's Discussion and Analysis report, there were large General Fund revenue increases in FY 2015/16. Both Sales Tax and Property Tax revenues have shown modest increases and are projected to continue in a slow but steady growth pattern. In addition the Licenses and Permits revenue increased substantially due to increased growth and development in the City. Also, TOT revenue showed a large increase over the prior year due to most hotels showing strong occupancy rates and the expansion at the Doubletree Hotel. • The local economy is projected to continue its modest growth in the coming year and has been reflected in the City's FY 2016/17 Revenue budget. At the time of budget preparation and up to its adoption, General Fund Revenue is projected to increase 4.0% over the FY 2015/16 budgeted amount. • The City adopted the General Fund FY 2016/17 budget with a projected $16 million fund balance reserve. The Operating Budget for Fiscal Year 2016/17 is a well balanced budget. In order to maintain a balanced budget, it will be essential for the City to continue its history of conservative spending. 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: Finance Director 8838 East Valley Boulevard Rosemead, GA 91770. 14 (This page intentionally left blank) City of Rosemead Statement of Net Position Government-wide Financial Statement June 30, 2016 Governmental Activities ASSETS Cash and investments (note 2) $ 20,642,885 Receivables: Accounts 3,068,964 Interest 39,569 Loans (note 3) 381,700 Due from Successor Agency(note 6) 204,029 Prepaid expenses 187.247 OPEB asset(note 9) 1,605,989 Capital assets(note 7): Land 4,417,104 Construction in progress 564,500 Other capital assets, net 46,560426 Total assets 77,672,413 DEFERRED OUTFLOWS OF RESOURCES Pension related(note 11,12) 2,936,578 LIABILITIES Accounts payable and accrued liabilities 1,871,427 Accrued salaries and benefits 208,369 Retentions payable 134,609 Unearned revenue 1,694 Non-current liabilities (note 8): Due within one year 548,789 Due in more than one year 8,277,016 Total liabilities 11,041.904 DEFERRED INFLOWS OF RESOURCES Pension related (note 11,12) 910,336 NET POSITION Net investment in capital assets 51,542,030 Restricted for: Public safety 10,450 Public works 3,785,139 Community service 210,258 Unrestricted 13,108,874 Total net position $ 68,656,751 The accompanying notes are an integral part of these financial statements. 15 (This page intentionally left blank) City of Rosemead Statement of Activities Government-wide Financial Statement For the year ended June 30, 2016 Net(eq,ense) revenue and changes in Program Revenues net position Operating Capital Charges for Contributions Contributions Governmental Expenses Services and Grants and Grants Activities Governmental activities: General government $ 3218,363 $ 168,194 $2,035,039 $ - $ (1,015,130) Public safety 8,381.588 590,533 - 973,119 (6,817,936) Public works 8,738.495 617,375 3743,533 - (4,377,587) Community development 3,246,081 2282580 69,557 - (893,944) Parks and recreation 2,073,145 741,171 - - (1,331,974) Interest and other charges 787 - - - (787) Total governmental activities $25,658,459 $4,399,853 $5,848,129 $ 973,119 (14,437,358) General revenues: Taxes' Property taxes 8,245,944 Sales and use taxes 4,124,745 Property taxes in lieu of sales and use taxes 912,555 Transient occupancy taxes 1,998,954 Franchise taxes 1,116,978 Other taxes 92,271 Investment income 348,651 Other 945,372 Total general revenues 17,785,470 Change in net position 3,348,112 Net position, beginning of year, as restated(see note 18) 65,308,639 Net position, end of year $ 68,656,751 The accompanying notes are an integral part of these financial statements. 16 City of Rosemead Balance Sheet Governmental Funds June 30, 2016 Special Revenue Capital Projects Rosemead Housing Development General Corporation City ASSETS Cash and investments(note 2) $ 15,969,077 $ 214,594 $ - Receivables: Accounts 2201,983 11,546 664.086 Interest 39,569 - - Loans(note 3) 361,700 - - Prepaid items 187247 - - Due from other funds(note 5) 1,164,073 - - Due from Successor Agency(note 6) - - 204,029 Total assets $ 19.943,649 $ 226.140 $ 868.115 LIABILITIES,DEFERRED INFLOWS OF RESOURCES,AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 1065,788 $ 39,207 $ 464,086 Accrued salaries and benefits 166491 - 7,037 Retention payable - - 125,264 Due to other funds(note 5) - - 844,638 Unearned revenue - - - Total liabilities 1.232.279 39,207 1,441,025 Deferred inflows of resources. Deferred loans 227,086 - - Unavailable revenues 16135 - - Total deferred inflows of resources 248221 - - Fund balances: Nonspendable 187247 - - Restricted for: Public safety - - - Public works - - - Community services - - - Low and moderate income housing - 186,933 - Committed 6,682495 - - Assigned 88513 - - Unassigned 11,514,694 - (572910) Total fund balances(deficit) 18,468,149 186,933 (572,910) Total liabilities,deferred inflows of resources and fund balances $ 19.943 649 $ 226 140 $ 868.115 The accompanying notes are an integral part of these financial statements. 17 Total Nonmajor Total Governmental Governmental Funds Funds $ 4032,512 $ 20216,183 191249 3068,964 39,569 381,700 187247 1,164,073 204,029 $ 4,223,861 $5261,765 $ 296727 $ 1,867,808 34,841 208,369 9,345 134,609 319,435 1,164073 1,694 1,694 664,042 3,376,553 227,086 16,135 243,221 187,247 10450 10450 2785,139 3.786139 23325 23.325 186 933 - 6.682495 83513 (259.095) 10682.889 3.559.819 21641,991 $ 4.223 861 $ 25.261,765 18 (This page intentionally left blank) City of Rosemead Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Government Funds June 30, 2016 Fund balances of governmental funds $ 21,641,991 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 Internal Service Funds) 98,129,244 Accumulated depreciation(net of Internal Service Funds) (46,774,413) Long-term assets that are not available for current use.Amounts are not reported in the governmental funds. OPEB asset 1,605,989 Long term liabilities and compensated absences that have not been included in the governmental fund activity. Compensated absences (601,998) Retrospective deposits payable (369,505) Net pension liability (7,854,302) Long-term notes receivable are not current financial resources and, therefore, are deferred in the governmental funds. 227,086 Revenues that are measurable but not available.Amounts are recorded as deferred revenue under the modified accrual basis of accounting. 16,135 Deferred inflows and outflows of resources related to pensions are not reported in the governmental funds. Net deferred inflows of resources (910,336) Net deferred outflows of resources 2,936,578 Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The net positon of the internal service funds must be added to the statement of net position. 610,282 Net position of governmental activities $ 68,656,751 The accompanying notes are an integral part of these financial statements. 19 City of Rosemead Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the year ended June 30, 2016 Special Revenue Capital Projects Rosemead Housing Development General Corporation City REVENUES Taxes $ 16,491,447 $ - $ - Intergovernmental 278,898 414,986 1,164181 Licenses and permits 2,520,937 - - Charges for services 1,109,558 - 1,623 Fines,forfeitures and penalties 597,373 - - Special assessments - - - Investment income 491,148 440871 - Other 67,076 4,076 - Total revenues 21,556,437 859,933 1,161,804 EXPENDITURES Current: General government 3492,072 - - Public safety 8,203,948 - - Public works 3,400,220 - 139,908 Community development 1,756060 839,201 - Parks and recreation 2,107,611 - - Capital outlay 466 - 1,795,357 Total expenditures 18,962,377 839,201 1,935,265 Excess(deficiency)of revenues over(under)expenditures 2,594,060 20,732 (773,461) OTHER FINANCING SOURCES(USES) Transfers in(note 5) - - 1,371,223 Transfers out(note 5) (596,272) - - Total other financing sources(uses) (596,272) - 1.371,223 Net change in fund balances 1,997,788 20,732 597,762 Fund balances (deficit).beginning of year 16,470,361 166.201 (1,170672) Fund balances (deficit), end of year $ 18,468.149 $ 186,933 $ (572,910) The accompanying notes are an integral part of these financial statements. 20 Total Nonmajor Total Governmental Governmental Funds Funds S - $ 16,491447 4,911,060 6,765,125 2,520,937 80,094 1,191,275 597,373 969,870 969,870 70,816 1,002,835 71,152 6,031,840 29,61Q014 172,561 3,664,633 248984 8,452,932 2,806,051 6,346,179 726,672 3,323,933 15,663 2,123,274 507.151 2,302,974 4,477,082 26,213,925 1,554,758 3,396,089 15,248 1,386,471 (790,199) (1,386,471) (774,951) - 779,807 3.396,089 2,780,012 18,245,902 S 3,559,819 $ 21,641,991 21 City of Rosemead Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Government Wide Statement of Activities and Changes in Net Position Government Funds For the year ended June 30, 2016 Net change in fund balances-total governmental funds $ 3,396,089 Amounts reported for governmental activities in the statement of activities differ 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 Funds) 2,119,298 Depreciation expense(net of Internal Service Funds) (2,789,186) 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. Decrease in OPEB asset (84,400) Pension related adjustments 936,134 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. Decrease in retrospective deposits payable 199,961 Decrease in compensated absences payable 80,070 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (603,443) 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. 93,589 Change in net position of governmental activities $ 3,348,112 The accompanying notes are an integral part of these financial statements. 22 City of Rosemead Statement of Net Position Internal Service Funds June 30, 2016 Governmental Activities Internal Service Funds ASSETS Current assets: Cash and investments (note 2) $ 426,702 Total current assets 426,702 Non-current assets: Capital assets: Other capital assets, net(note 7) 187,199 Total non-current assets 187,199 Total assets 613,901 LIABILITIES Current liabilities: Accounts payable 3,619 Total current liabilities 3,619 Total liabilities 3,619 NET POSITION Net investment in capital assets 187,199 Unrestricted 423,083 Total net position $ 610,282 The accompanying notes are an integral part of these financial statements. 23 City of Rosemead Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the year ended June 30, 2016 Governmental Activities Internal Service Funds OPERATING REVENUES Charges for services $ 297,600 Other revenue 4,840 Total operating revenues 302,440 OPERATING EXPENSES Contractual services 101,061 Depreciation 107,003 Total operating expenses 208,064 Operating income 94,376 NON-OPERATING REVENUES (EXPENSES) Interest expense (787) Total non-operating revenues (expenses) (787) Change in net position 93,589 Net position, beginning of year 516,693 Net position, end of year $ 610,282 The accompanying notes are an integral part of these financial statements. 24 City of Rosemead Statement of Cash Flows Internal Service Funds For the year ended June 30, 2016 Governmental Activities Internal Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from users departments $ 301,333 Cash payments to suppliers for goods and services (100,691) Net cash provided by operating activities 200,642 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid on capital lease (44,850) Interest paid on capital lease (787) Cash paid to purchase capital asset (67,697) Net cash used for capital and related financing activities (113,334) Net increase in cash and investments 87,308 Cash and investments, beginning of year 339,394 Cash and investments, end of year $ 426,702 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 94,376 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 107,003 Increase (decrease) in accounts payable (737) Total adjustments 106,266 Net cash provided by operating activities $ 200,642 The accompanying notes are an integral part of these financial statements. 25 City of Rosemead Statement of Fiduciary Net Position Fiduciary Funds June 30, 2016 Successor Agency Private-purpose Agency Trust Fund Fund ASSETS Cash and investments (note 2) $ 7,967,565 $ 355,426 Receivables: Interest 59,866 - Notes 1,159,165 - Total assets 9,186,596 $ 355,426 LIABILITIES Accounts payable 1,611 $ Deposits payable - 355,426 Accrued interest payable 337,013 - Due to City of Rosemead (note 6) 204,029 - Long-term debt(note 17): Due within one year 2,090,022 - Due in more than one year 33,891,635 - Total liabilities 36,524,310 $ 355,426 NET POSITION (DEFICIT) Held in trust for the Successor Agency (27,337,714) Total net position (deficit) $ (27,337,714) The accompanying notes are an integral part of these financial statements. 26 City of Rosemead Statement of Changes in Fiduciary Net Position Fiduciary Funds For the year ended June 30, 2016 Successor Agency Private-purpose Trust Fund ADDITIONS Property taxes $ 5,724,292 Investment earnings 105,656 Other 3,000 Total additions 5,832,948 DEDUCTIONS Administrative expenses 1,877,629 Affected taxing entities 1,382,894 Interest expense 1,613,745 Total deductions 4,874,268 Change in net position 958,680 Net position (deficit), beginning of period (28,296,394) Net position (deficit), end of period $ (27,337,714) The accompanying notes are an integral part of these financial statements. 27 (This page intentionally left blank) City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 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 28 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 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 business-type activities and 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 For the year ended June 30, 2016 Note 1: Summary of Significant Accounting Policies, (continued) (b) Basis of Accounting 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 For the year ended June 30, 2016 Note 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 For the year ended June 30, 2016 Note 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. The agency fund is custodial in nature (assets equal liabilities) and does 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 Housing Development Corporation Special Revenue Fund. 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. 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 For the year ended June 30, 2016 Note 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 For the year ended June 30, 2016 Note 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. 34 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 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 Balance 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 For the year ended June 30, 2016 Note 1: Summary of Significant Accounting Policies, (continued) (j) 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) Pension plans For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported by the Plan Administrators. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. CaIPERS audited financial statements are publicly available reports that can be obtained at CaIPERS' website, at www.calpers.ca.gov. Copies of the PARS annual financial report may be obtained from PARS, 4350 Von Karman Avenue, Suite 100, Newport Beach, CA 92660. GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used. PERS-Cost sharing Multiple-Employer Plan: Valuation Date (VD) June 30, 2014 Measurement Date (MD) June 30, 2015 Measurement Period (MP) July 1, 2014 to June 30, 2015 PARS-Single Employer Agent Plan: Valuation Date (VD) June 30, 2015 Measurement Date (MD) June 30, 2016 Measurement Period (MP) July 1, 2015 to June 30, 2016 36 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 1: Summary of Significant Accounting Policies, (continued) (I) Implementation of new GASB pronouncements The City implemented GASB Statement No. 72, Fair Value Measurement and Application. The objective of this statement is to address accounting and financial reporting issues related to fair value measurement. The statement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between two market participants. This statement provides guidance for determining a fair value measurement for financial reporting purposes and also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The City implemented GASB Statement No. 82, Pension Issues. The objective of this statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. The statement addresses the presentation of payroll-related measures in required supplementary information, the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes and the classification of payments made by employers to satisfy employee (plan member) contribution requirements. Note 2: Cash and Investments Cash and investments as of June 30, 2016, are classified in the accompanying financial statements as follows: Statement of Net Position: Cash and investments $ 20,642,885 Statement of Fiduciary Net Position: Cash and investments 8,322.991 Total cash and investments $ 28,965,876 37 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 2: Cash and Investments, (continued) Cash and investments as of June 30, 2016, consist of the following: Deposits with financial institutions $ 10,938,965 Investments 18,026,911 Total cash and investments $ 28,965,876 Investments Authorized by the California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code 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 Maximum Maximum Investment Types Investment Maximum Percentage Investment in Authorized by State Law Policy Maturity' of Portfolio' One Issuer' US Treasury Obligations Yes 5 years None None US Agency Securities Yes 5 years 70% 35% Banker's Acceptances Yes 180 days 20% 30% Commercial Paper Yes 180 days 15% 10% Negotiable Certificates of Deposit Yes 5 years 30% None Medium-Term Notes Yes 5 years 30% None Money Market Mutual Funds Yes N/A 20% 10% Local Agency Investment Funds (LAIF) Yes N/A None $65M * Based on state law requirements or investment policy requirements, whichever is more restrictive. Investments Authorized by Debt Agreements Investments 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. 38 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 2: Cash and Investments, (continued) Maximum Maximum Maximum Percentage of Investment in Authorized Investment Type Maturity Portfolio One Issuer US Treasury Obligations 5 years None None US Agency Securities 5 years None None Banker's Acceptances 180 days 40% 10% Commercial Paper 180 days 10% 10% Money Market Portfolios 1 year None None Investment Agreements None None None 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 $ 7,129,782 $ 7,129,762 $ - $ - Certificates of deposits 5,557,264 - 248,208 5,309,056 US agency securities 1,005,300 - - 1,005,300 Medium-term notes 2,037,070 - 276,650 1,760,420 Held by bond trustee: Money market mutual finds 1,149,079 1,149,079 - - Certificates of deposit 1,148,436 - - 1,148,436 Total $ 18,026,911 $ 8,278,841 $ 524,858 $9,223,212 39 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 2: Cash and Investments, (continued) 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. Mnl um Legal Rating as of Year End hvestnent Type Total Rating AAA AA. Aa A A- Not Rated State investment pool $ 7,129,762 WA S - $ - $ - $ - $ - $ 7,120762 Certificates of deposits 5,557,264 WA - - - - - 5057,264 US agency securities 1005300 WA - 1,005300 - - - - fvbdium-termnotes 2037.070 A - - 500227 528.520 1008323 - Held by bond trustee: Money market mutual funds 1,149,079 Multiple 1,143.058 - - - - 6,021 Certificates of depose 1,148436 N/A - - - - - 1,148 436 Total 510026.911 $1,143,058 $1005300 $ 500.227 $ 528,520 51.008323 513841.483 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 National Mortgage Association US Agency Securities $ 1,005,300 40 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 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, 2016, 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 On 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. 41 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 2: Cash and Investments, (continued) Fair Value Measurements GASB Statement No. 72, Fair Value Measurements and Application, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels: Level 1 inputs consist of quoted prices (unadjusted) for identical assets and liabilities in active markets that a government can access at the measurement date, Level 2 inputs that are observable for an asset or liability, either directly or indirectly, and Level 3 inputs have the lowest priority and consist of unobservable inputs for an asset or liability. The District has the following fair value measurements as of June 30, 2016: Fair Value Measruement Using Investments by Total Levell Level 2 Level 3 Fair Value Level Certificates of deposits $ 6,705,700 $ - $ 6,705,700 $ - US agency securities 1,005,300 - 1,005,300 - Medium-term notes 2,037,070 - 2,037,070 - Total investments by fair value 9,748,070 $ - $ 9,748,070 $ - Investments measured at the Net Asset Value (NAV) Slate investment pool 7,129,762 Money market mutual funds 1,149,079 Total $ 18,026,911 Note 3: Loans receivable Loans receivable consisted of the following at June 30, 2016: Balance Balance June 30, 2015 Additions Deletions June 30, 2016 Computer Loans $ 12,601 $ 5,945 $ (9,328) $ 9,218 San Gabriel Valley Water Co.Loan- Phase I 98,760 - (8,230) 90,530 San Gabriel Valley Water Co.Loan- Phase II 49,381 - (4,115) 45,266 Rio Honda Community Development Co. Loan 227,086 - - 227,086 El Monte Cemetary Association Loan 10,800 - (1,200) 9,600 Total $ 398,628 $ 5,945 $(22,873) $ 381,700 42 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 4: Property Taxes Property tax revenue is recognized 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 Note 5: Interfund Transactions Due to/due from other funds for the year ending June 30, 2016, consisted of the following: Receivable Funds Payable Funds Amount General Fund City Capital Projects Fund $ 844,638 Nonmajor Governmental Funds 319,435 Total $ 1,164.073 The due to General Fund from various funds was a result of temporary deficit cash balances in those funds. 43 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 5: Interfund Transactions, (continued) Transfers Interfund transfers for the year ending June 30, 2016, consisted of the following: Transfers in Transfers out Amount City Capital Projects Fund General Fund $ 581,024 Nonmajor Governmental Funds 790,199 1,371,223 Nonmajor Governmental Funds General Fund 15,248 15,248 Total $ 1,386,471 Transfers were made to subsidize various programs and capital projects. Note 6: Intergovernmental Transactions Due to/Due from Successor Agency Current intergovernmental receivables and payables balances at June 30, 2016, are as follows: Due to City Due from Successor Agency Amount Successor Agency City Capital Projects Fund $ 204,029 Total $ 204,029 Intergovernmental amounts between the Successor Agency and the City are for reimbursement of payroll expenses and short-term loans to cover operations. 44 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 7: Capital Assets Capital asset activity was as follows for the year ended June 30, 2016: Beginning Ending Governmental activities: balance Additions Deletions balance Capital assets, not being depreciated: Land $ 4,417,104 $ - $ - $ 4,417,104 Construction in progress 2,167,976 564,500 (2,167,976) 564,500 Total capital assets, not being depreciated 6,585,080 564,500 (2,167,976) 4,981,604 Capital assets, being depreciated: Buildings 21,987,078 1,436,408 - 23,423,486 Improvements other than buildings 1,397,090 335,715 - 1,732,805 Machinery and equipment 566,225 16,000 - 582,225 Autos and trucks 1,160,013 558,848 (33,730) 1,685,131 Furniture and office equipment 1,485,125 - - 1,485,125 Infrastructure 63,407,563 1,443,500 - 64,851,063 Total capital assets, being depreciated 90,003,094 3,790,471 (33,730) 93,759,835 Less accumulated depreciation for: Buildings (8,168,333) (460,248) - (8,628,581) Improvements other than buildings (1,034,080) (143,289) - (1,177,369) Machinery and equipment (474,383) (35,163) - (509,546) Autos and trucks (921,439) (176,136) 33,730 (1,063,845) Furniture and office equipment (1,182,628) (57,133) - (1,239,761) Infrastructure (32,556,087) (2,024,220) - (34,580,307) Total accumulated depreciation (44,336,950) (2,896,189) 33,730 (47,199,409) Total capital assets, being depreciated, net 45,666,144 894,282 - 46,560,426 Governmental activities capital assets, net of accumulated depreciation $52,251,224 $ 1,458,782 $(2,167,976) 551,542,030 45 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 7: Capital Assets, (continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 40,978 Public safety 36,065 Public works 2,617,242 Community development 71,669 Parks and recreation 130,235 Total depreciation expense $ 2,896,189 Note 8: Changes in Long-Term Liabilities Long-term debt consists of the following at June 30, 2016: Beginning Ending Due in Governmental activities Balance Additions Deletions Balance One Year Net pension liability(see Note 11,12) $ 7.082,035 $ 2,238.653 $ 1,466,386 $ 7,854,302 $ - Computer lease 44,850 - 44,850 -Retrospective deposit 569,466 408784 608,745 369.505 289,930 Compensated absences 682,068 257,898 337,968 601,998 258,859 Total long-term debt $ 8,378,419 $ 2,909335 $ 2,457,949 $ 8,825,805 $ 548,789 The City records expenditures related to compensated absences through the City's General Fund. Capital Lease In 2011, the City entered into a tease 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, 2016 was $-0-. JPIA Retrospective Deposit Liability and workers' compensation coverage are pooled self-insurance programs administered by the California JPIA. Since its inception, the California JPIA, "Authority," has operated under a retrospective funding model for its liability and workers' compensation programs. Retrospective adjustments are based on the ongoing claim development of past coverage periods, and can result in either an additional deposit or a refund. As of June 30, 2016, the City's retrospective deposit payable for the Worker's compensation portion is $369,505. 46 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 9: 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, 2014, the date of the latest actuarial valuation: Retirees and beneficiaries receiving benefits 18 Active plan members 56 Total 74 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 2015-16, the City contributed $0 to the plan. 47 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 9: 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 $ 48,431 Interest on net OPEB obligation (101,423) Adjustment to annual required contribution 137,392 Annual OPEB cost(expense) 84,400 Contributions made - Increase in net OPEB obligation 84,400 Net OPEB obligation (asset) beginning of year (1,690,389) Net OPEB obligation (asset) -end of year $ (1,605,989) The net OPEB asset is reported in the government-wide statements as a separate line item. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2016, and the two preceding years were as follows: Percentage Net of Annual OPEB Fiscal Annual OPEB OPEB Cost Obligation Year Cost Contributed (Asset) 6/30/2014 $ 343,442 235% $(2,299,456) 6/30/2015 $ 83,336 0% $(1,690,389) 6/30/2016 $ 84,400 0% $(1,605,989) 48 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 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, 2016, was determined as part of the January 1, 2014 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 6.8% initially, reduced by decrements of 0.3%-0.4% per year to an ultimate rate of 5% after the fifth 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. Note 10: Risk Management Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City of Rosemead is a member of the CALIFORNIA JOINT POWERS INSURANCE AUTHORITY (Authority). The Authority is composed of 116 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. 49 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 10: Risk Management, (continued) Self-Insurance Programs of the Authority Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Retrospective adjustments are scheduled to continue indefinitely on coverage years 2012-13 and prior, until all claims incurred during those coverage years 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. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. 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 general government 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 from $750,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers. For 2015-16 the Authority's pooled retention is $2 million per occurrence, with reinsurance to $20 million, and excess insurance to $50 million. The Authority's reinsurance contracts are subject to the following additional pooled retentions: (a) $2.5 million annual aggregate deductible in the $3 million x/s $2 million layer, and (b) $3 million annual aggregate deductible in the $5 million x/s $10 million layer. There is a third annual aggregate deductible in the amount of $2.5 million in the $5 million x/s $5 million layer, however it is fully covered under a separate policy and therefore not retained by the Authority. The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Costs of covered claims for subsidence losses have a sub-limit of $30 million per occurrence. 50 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 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 general government 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 from $100,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers. For 2015-16 the Authority's pooled retention is $2 million per occurrence, with reinsurance to statutory limits 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 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, 2014 through July 1, 2017. Each member of the Authority has a $10 million sub-limit during the 3-year term of the policy. 51 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 10: Risk Management, (continued) Purchased Insurance, (continued) Property Insurance The City of Rosemead participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City of Rosemead property is currently insured according to a schedule of covered property submitted by the City of Rosemead to the Authority. City of Rosemead property currently has all-risk property insurance protection in the amount of $65,835,925. There is a $5,000 deductible per occurrence except for non- emergency vehicle insurance which has a $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Crime Insurance The City of Rosemead purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid annually and are not subject to retrospective adjustments. Special Event Tenant User Liability Insurance The City of Rosemead further protects against liability damages by requiring tenant users of certain property to purchase low-cost tenant user liability insurance for certain activities on agency property. The insurance premium is paid by the tenant user and is paid to the City of Rosemead according to a schedule. The City of Rosemead then pays for the insurance. The insurance is arranged by the Authority. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2015-16. As of June 30, 2016, the City had retrospective deposits payable to the Authority in the amount of $369,505. 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. 52 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 11: Defined Benefit Pension Plans -CaIPERS A. General Information about the Pension Plan Plan Description All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by the California Public Employees' Retirement System (CaIPERS.) The Plans consist of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the miscellaneous pool. Accordingly, rate plans within the miscellaneous pool are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous pool. The City sponsors three miscellaneous rate plans. Benefit provisions under the Plans are established by State statute and City resolution. CaIPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CaIPERS' website, at www.calpers.ca.gov. Benefits Provided CaIPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 5 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law. The Plans operate under the provisions of the California Public Employees' Retirement Law (PERL), the California Public Employees' Pension Reform Act of 2013 (PEPRA), and the regulations, procedures and policies adopted by the CaIPERS Board of Administration. The Plan's authority to establish and amend the benefit terms are set by the PERL and PEPRA, and may be amended by the California state legislature and in some cases require approval by the CaIPERS Board. The Plan's provisions and benefits in effect at June 30, 2016, are summarized as follows: Miscellaneous Tier I Miscellaneous Tier II Miscellaneous PEPRA Pnor to From July 1,2010 to On or after Hire date July 1.2010 December 31, 2012 January%2013 Benefit formula 27%@55 2%@55 2%@62 Benefit testing schedule 5 years service 5 years service 5 years serce Benefit payments monthly for life monthly for life monthly for life Retirement age 50 to 558 up 50 to 638up 52 to 678up Monthly benefits,as a%of eligible compensation 2.0%to 27% 1.426 to 2.418 1.0%10 2.5% Required employee contribution rates 8.000% 7.000% 6.250% Required employer contribution rates 10.958% 8.512% 6.237% 53 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 11: Defined Benefit Pension Plans - Ca1PERS, (continued) A. General Information about the Pension Plan, (continued) Beginning in fiscal year 2016, CaIPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability. The dollar amounts are billed on a monthly basis. The District's required contribution for the unfunded liability was $761,820. Contributions Section 20814(c) of the California Public Employees' Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CaIPERS' annual actuarial valuation process. For public agency cost-sharing plans covered by either the Miscellaneous or Safety risk pools, the Plan's actuarially determined rate is based on the estimated amount necessary to pay the Plan's allocated share of the risk pool's costs of benefits earned by employees during the year, and any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Employer Contributions to the Plan for the fiscal year ended June 30, 2016 were $1,113,875. The actual employer payments of $999,981 made to CaIPERS by the City during the measurement period ended June 30, 2015 differed from the City's proportionate share of the employer's contributions of $606,923 by $393,058, which is being amortized over the expected average remaining service lifetime in the Public Agency Cost-Sharing Multiple Employer Plan, B. Net Pension Liability The City's net pension liability for the Plans is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of the Plans were measured as of June 30, 2015, using an annual actuarial valuation as of June 30, 2014 rolled forward to June 30, 2015 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is as follows. 54 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 11: Defined Benefit Pension Plans - CaIPERS, (continued) B. Net Pension Liability, (continued) Actuarial Methods and Assumptions Used to Determine Total Pension Liability Miscellaneous Plans Valuation Date June 30. 2014 Measurement Date June 30, 2015 Actuarial Cost Method Entry Age Normal Asset Valuation Method Market Value Actuarial Assumptions: Discount Rate 121 7.65%. For measurement date June 30, 2014, 7.50%. Inflation 2.75% Salary Increases(1) 3.3%-14.2% Investment Rate of Return CI 7.65%. For measurement date June 30, 2014, 7.50%. Derived using CALPERS'membership data for all Mortality Rate Table 131 Funds Post Retirement Benefit Increase Contract COLA up to 2.75% until purchasing power protection allowance floor on purchasing power applies, 2.75%thereafter (1)Annual Increases vary by category,entry age.and duration of service (2)Net of pennon plan investments and admnlstratbe expenses,includes inflation (3)The mortality table used was developed based on CaIFU S spacdic data.The table includes 20 years of modality improvements using Society of Actuaries Scale BB.For more details on this table,please refer to the 2014 experence study report. All other actuarial assumptions used in the June 30, 2014, valuation were based on the results of an actuarial experience study for the period from 1997 to 2011, including updates to salary increase, mortality and retirement rates. The Experience Study report can be obtained at CaPPERS' website under Forms and Publications. Change of Assumptions GASB 68, paragraph 68 states that the long long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50 percent used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65 percent used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense. 55 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 11: Defined Benefit Pension Plans -CaIPERS, (continued) B. Net Pension Liability, (continued) Discount Rate The discount rate used to measure the total pension liability for measurement date June 30, 2015 was 7.65 percent. The discount rate used to measure the total pension liability in the previous year was 7.50 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CaIPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing of the plan, the test revealed the assets would not run out. Therefore, the current 7.65 percent discount rate is appropriate and the use of the municipal bond rate calculation is not deemed necessary. The long-term expected discount rate of 7.65 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called "GASB Crossover Testing Report" that can be obtained at CaIPERS' website under the GASB 68 section. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CaIPERS took into account both short-term and long-term market return expectations as well as the expected pension fund (Public Employees' Retirement Fund) cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds' asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building- block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. 56 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 11: Defined Benefit Pension Plans -CaIPERS, (continued) B. Net Pension Liability, (continued) The following table reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The target allocation shown was adopted by the CaIPERS Board effective on July 1, 2014. New Strategic Real Return Real Return Asset Class Allocation Years 1 -101 Years 11+2 Global Equity 51.0% 5.25% 5.71% Global Fixed Income 19.0% 0.99% 2.43% Inflation Sensitive 6.0% 0.45% 3.36% Private Equity 10.0% 6.83% 6.95% Real Estate 10.0% 4.50% 5.13% Infrastructure and Forestland 2.0% 4.50% 5.09% Liquidity 2.0% (0.55%) (1.05%) Total 100% An expected inflation of 2.5% used for this period 2 An expected inflation of 3.0% used for this period Pension Plan Fiduciary Net Position Information about the pension plan's assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fiduciary net position are presented in CaIPERS' audited financial statements, which are publicly available reports that can be obtained at CaIPERS' website, at www.calpers.ca.gov. The plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis used by the pension plans, which is the economic resources measurement focus and the accrual basis of accounting. Benefits and refunds are recognized when due and payable in accordance with the terms of the plans. Investments are reported at fair value. The plan fiduciary net position disclosed in the GASB 68 accounting valuation report may differ from the plan assets reported in the funding actuarial valuation report due to several reasons. First, for the accounting valuations, CaIPERS must keep items such as deficiency reserves, fiduciary self-insurance and Other Post-Employment Benefits (OPEB) expense included as assets. These amounts are excluded for rate setting purposes in the funding actuarial valuation. In addition, differences may result from early Comprehensive Annual Financial Report closing and final reconciled reserves. 57 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 11: Defined Benefit Pension Plans -CaIPERS, (continued) C. Proportionate Share of Net Pension Liability The following table shows the Plan's proportionate share of the net pension liability over the measurement period. Increase (Decrease) Plan Total Plan Net Miscellaneous Plans Pension Plan Fiduciary Pension Liability Net Position Liability (a) (b) (c ) = (a)-(b) Balance at: 6/30/2014(VD) $24,689,181 $ 17,846,951 $ 6,842,230 Balance at: 6/30/2015(MD) 25,183,842 17,545,778 7,638,064 Net changes during 2014-15 $ 494,661 $ (301,173) $ 795,834 Valuation Date(VD), Measurement Date (MD). The City's net pension liability for the Plan are measured as the proportionate share of the net pension liability. The net pension liability of the Plan are measured as of June 30, 2015, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2014 rolled forward to June 30, 2015 using standard update procedures. The City's proportion of the net pension liability was determined by CaIPERS using the output from the Actuarial Valuation System and the fiduciary net position, as provided in the CaIPERS Public Agency Cost-Sharing Allocation Methodology Report, which is a publicly available report that can be obtained at CaIPERS' website, at www.calpers.ca.gov. The City's proportionate share of the net pension liability for the Plan as of June 30, 2014 and 2015 was as follows. Plans Proportionate Share-June 30, 2014 0.27685% Proportionate Share-June 30, 2015 0.27841% Change- Increase (Decrease) 0.00156% 58 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 11: Defined Benefit Pension Plans -CaIPERS, (continued) C. Proportionate Share of Net Pension Liability, (continued) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City's proportionate share of the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 7.65 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.65 percent) or 1 percentage-point higher (8.65 percent) than the current rate: Discount Current Discount Plans Rate- 1% Discount Rate + 1% (6.65%) Rate (7.65%) (8.65%) Net Pension Liability $11,067,768 $ 7,638,064 $ 4,806445 Subsequent Events There were no subsequent events that would materially affect the results presented in this disclosure. Recognition of Gains and Losses Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss: Difference between projected 5 year straight-line amortization and actual earnings All other amounts Straight-line amortization over the average expected remaining service lives of all members that are provided with benefits (active, inactive and retired) as of the beginning of the measurement period 59 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 11: Defined Benefit Pension Plans - CaIPERS, (continued) C. Proportionate Share of Net Pension Liability, (continued) The expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired) in the Public Agency Cost-Sharing Multiple-Employer Plan (PERF C). The EARSL for the Plan for the 2014-15 measurement period is 3.8 years, which was obtained by dividing the total service years of 467,023 (the sum of remaining service lifetimes of the active employees) by 122,410 (the total number of participants: active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to 0. Also note that total future service is based on the members' probability of decrementing due to an event other than receiving a cash refund. D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions As of the start of the measurement period (July 1, 2014), the net pension liability for the plan was $6,842,230. For the measurement period ending June 30, 2015 (the measurement date), the City incurred a pension expense of$321,941 for the Plan. As of June 30, 2016, the City has deferred outflows and deferred inflows of resources related to pensions as follows: Miscellaneous Plans Deferred Outflows of Deferred Inflows of Resources Resources Differences between Expected and Actual Experience $ 64,091 S - ChangesofAssumptions - (606,360) Net Difference between Projected and Actual Earnings on Pension Plan Investments - (303,976) Change in Employees Proprotion 1,050,138 - Difference in Actual vs Projected Contributions 492,427 - Pension Contributions Subsequent to Measurement Date 1,113,875 - Total $ 2,720,531 $ (910,336) 60 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 11: Defined Benefit Pension Plans • CaIPERS, (continued) D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions, (continued) These amounts above are net of outflows and inflow recognized in the 2014-15 measurement period expense. $1,113,875 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows: Deferred Measurement Period Ended Outflows/(Inflows) of June 30: Resources 2016 $ 236,163 2017 218,511 2018 87,786 2019 153,860 2020 - Remaining - E. Payable to the Pension Plan At June 30, 2016, the City reported a payable of $14,142 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2016. 61 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 12: Defined Benefit Pension Plans—Retirement Enhancement Plan A. General Information about the Pension Plan Plan Description The Plan is a single-employer, agent, supplemental employee defined benefit pension plan (the plan II) administered by the Public Agency Retirement Services (PARS) Phase II Systems. A full description of the pension plan regarding number of employees covered, benefit provisions, assumptions (for funding, but not account purposes), and membership information are listed in the July 1, 2015 Annual Actuarial Valuation Report. Details of the benefits provided can be obtained from the actuarial valuation reports. PARS issues a publicly available financial report that includes financial statement and required supplementary information for the plan II. That report may be obtained writing to PARS, 3961 MacArthur Boulevard, Suite 200, Newport Beach, California, 92660. Benefits Provided The Retirement Enhancement Plan provides a benefit equal to the PARS "3.0% at 55" plan factor (formula is a static 10% at age 55 and older), less the CaIPERS "2.7% at 55" plan factors (a static 2.7% at age 55 and older) for all years of full-time continuous City service. The benefit from this plan when added to the CaIPERS benefit may not exceed 90% of final compensation. The Plan includes a pre-retirement death benefit for those eligible employees who die while actively employed with the City and meet the age and service eligibility requirements for a supplemental retirement benefit. The benefit will be paid to a surviving spouse or domestic partner as a life annuity equal to the employee's supplemental retirement benefit actuarially reduced as if the employee had elected a 100%joint-and-survivor annuity. The Plan is closed to all employees in the eligible classes hired on or after July 1, 2010 ("soft- freeze"). 62 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 12: Defined Benefit Pension Plans— Retirement Enhancement Plan, (continued) A. General Information about the Pension Plan, (continued) Benefits Provided, continued The Plan's provisions and benefits in effect at June 30, 2016, (measurement date) are summarized as follows: Supplemental On or after September 25, 2007 Hire date On or before June 30, 2010 Benefit formula 3% @ 55 less CaIPERS 2.7% @55 Benefit jesting schedule from date of hire Benefit payments life only annuity Retirement age 55 Monthly benefits, as a % of eligible compensation 0.680% Required employee contribution rates none Required employer contribution rates 3.790% Employees Covered At June 30, 2016, the following employees were covered by the benefit terms: Supplemental Inactive employees or beneficiaries currently receiving benefits 13 Active employees 51 Total 64 Contributions Section 20814(c) of the California Public Employees' Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through PARS' annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. For the measurement period ended June 30, 2016 (the measurement date), the employer's contribution rate is 8.41 percent of annual payroll. Employer contribution rates may change if plan contracts are amended. Employer Contributions for the measurement period ended June 30, 2016 are $265,241. 63 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 12: Defined Benefit Pension Plans— Retirement Enhancement Plan, (continued) B. Net Pension Liability The City's net pension liability for the Retirement Enhancement Plan is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2016, using an annual actuarial valuation as of June 30, 2014. A summary of principal assumptions and methods used to determine the net pension liability is as follows. Actuarial Methods and Assumptions Used to Determine Total Pension Liability Supplemental Valuation Date June 30, 2015 Measurement Date June 30, 2016 Actuarial Cost Method Entry Age Normal Asset Valuation Method None Actuarial Assumptions: Discount Rate 6.50% Inflation 2.75% Salary Increases (1) 3.5% - 12.2% Investment Rate of Return 6.50% Cost of Ling Adjustment 2.00% Mortality Rate Table Pre-retirement: CaIPERS Miscellaneous Non-Industrial Rates. Post-retirement: CaIPERS 1997-2011 Healthy Retiree Tables(sex distinct) projected using Scale AA and base year of 2008. (1)Includes inflation.Graded based on years of service,3.50%after 30 years of service. Discount rate GASB 67 and 68 generally require that a blended discount rate be used to measure the Total Pension Liability (the Actuarial Accrued Liability calculated using the Individual Entry Age Normal Cost Method). The long-term expected return on plan investments may be used to discount liabilities to the extent that the plan's Fiduciary Net Position (fair market value of assets) is projected to cover benefit payments and administrative expenses. A 20-year high quality (AA/Aa or higher) municipal bond rate must be used for periods where the Fiduciary Net Position is not projected to cover benefit payments and administrative expenses. Determining the discount rate under GASB 67 and 68 will often require that the actuary perform complex projections of future benefit payments and asset values. 64 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 12: Defined Benefit Pension Plans — Retirement Enhancement Plan, (continued) B. Net Pension Liability, (continued) Discount rate, continued GASB 67 and 68 (paragraph 29) do allow for alternative evaluations of projected solvency, if such evaluation can reliably be made. GASB does not contemplate a specific method for making an alternative evaluation of sufficiency; it is left to professional judgment. The following circumstances justify an alternative evaluation of sufficiency for the City of Rosemead. • The City of Rosemead has at least a 5-year history of generally paying at least 100% of the Actuarially Determined Contribution (previously termed the Annual Required Contribution). • The Actuarially Determined Contribution is based on a closed amortization period, which means that payment of the Actuarially Determined Contribution each year will bring the plan to a 100% funded position by the end of the amortization period. • GASB 67 and 68 specify that the projections regarding future solvency assume that plan assets earn the assumed rate of return and there are no future changes in the plan provisions or actuarial methods and assumptions, which means that the projections would not reflect any adverse future experience which might impact the plan's funded position. Based on these circumstances, the City believes that the detailed depletion date projections outlined in GASB 67 and 68 will show that the Fiduciary Net Position is always projected to be sufficient to cover benefit payments and administrative expenses. June 30, 2015 June 30, 2016 Discount rate 6.50% 6.50% Long-term expected rate of return, net of investment expense 6.50% 6.50% Municipal bond rate NIA WA The plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. 65 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 12: Defined Benefit Pension Plans — Retirement Enhancement Plan, (continued) B. Net Pension Liability, (continued) Pension Plan Fiduciary Net Position Information about the pension plan's assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fiduciary net position are presented in the City's GASB 68 Employer Accounting Information report. The plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis used by the pension plan, which is the economic resources measurement focus and the accrual basis of accounting. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Investments are reported at fair value. C. Changes in the Net Pension Liability The following table shows the changes in net pension liability recognized over the measurement period. Increase(Decrease) Total Plan Pension Fiduciary Net Pension Liability Net Position Liability (a) (b) (c)= (a)-(b) Balances as of June 30, 2015 $ 3,004,673 $ 2,764,868 $ 239,805 Changes for the year: • Service Cost 45,435 - 45,435 • Interest on the Total Pension Liability 191,270 - 191,270 • Effect of plan changes - -• Effect of economic Demographic gains or Losses - -• Effect of assumptions - - - Changes or inputs - -• Benefit Payments (218,411) (218,411) • Employer contributions - 265,241 (265241) • Member contributions - -• Net Investment Income - (2,345) 2,345 • Administrative expenses - (2,624) 2,624 Net Changes during 2015-16 $ 18,294 $ 41,861 $ (23,567) Balance as of June 30, 2016 $ 3,022,967 $ 2,806,729 $ 216,238 66 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 12: Defined Benefit Pension Plans —Retirement Enhancement Plan, (continued) C. Changes in the Net Pension Liability, (continued) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City of Rosemead Retirement Enhancement Plan, calculated using the discount rate of 6.50%, as well as what the City of Rosemead Retirement Enhancement Plan's net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.50%) or 1 percentage point higher (7.50%) than the current rate. Discount Rate -1% Current Discount Discount Rate + 1% (5.50%) Rate (6.50%) (7.50%) Net Pension Liability/(Asset) $ 572,516 $ 216,238 $ (84,008) Subsequent Events There were no subsequent events that would materially affect the results presented in this disclosure. Recognition of Gains and Losses Investment gains/losses are recognized in pension expense over a period of five years; economic/demographic gains/losses and assumption changes or inputs are recognized over the average remaining service life for all active and inactive members. D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions As of the start of the measurement period (July 1, 2015), the net pension liability is $239,805. For the measurement period ending June 30, 2016 (the measurement date), the City incurred a pension expense of $117,984 for the Plan. A complete breakdown of the pension expense is as follows: 67 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 12: Defined Benefit Pension Plans— Retirement Enhancement Plan, (continued) D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions, (continued) Description Amount Service Cost $ 45,435 Interest on the Total Pension Liability 191,270 Effect of plan changes - Administrative expenses 2,624 Member contributions - Expected investment return net of investment expenses (181,129) Recognition of Deferred Inflows/Outflows of Resources: Recognition of economic/demographic gains or losses - Recognition of assumption changes or inputs - Recognition of investment gains or losses 59,784 Total Pension Expense $ 117,984 As of June 30, 2016, the City has deferred outflows and deferred inflows of resources related to pensions as follows: Deferred Outflows Deferred Inflows of of Resources Resources Differences between Expected and Actual Experience $ - $ - Changes of Assumptions - - Net Difference between Projected and Actual Earnings on Pension Plan 216,047 - Pension Contributions Subsequent to Measurement Date - - Total $ 216,047 $ - 68 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 12: Defined Benefit Pension Plans —Retirement Enhancement Plan, (continued) D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions, (continued) Amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows: Measurement Deferred Period Ended Outflows/(Inflows) of June 30: Resources 2017 $ 59,784 2018 59,784 2019 59,784 2020 36,695 2021 - Thereafter - E. Payable to the Pension Plan At June 30, 2016, the City reported a payable of$3,825 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2016. Note 13: Employees Retirement Plan PARS Alternate Retirement System (ARS) (Plan) The City currently offers an alternative plan for employees classified as part-time, seasonal or temporary (PST). The plan is administered by the Public Agency Retirement Services (PARS) and is a qualified deferred compensation plan created in accordance with Internal Revenue Code Section 457(b). All amounts of compensation deferred under the plan, all property, or rights are solely the property and rights of the employee and beneficiaries of the plan. Deferred compensation funds are not subject to claims of the City's general creditor; consequently the assets and related liabilities of the plan are not included within the City's financial statements. The City contributes 3.75% percent of the employee's compensation. In addition, each participant is required to contribute 3.75% of their salary. During the current fiscal year, the City contributed $25,011 to the plan. 69 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 14: 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. Note 15: Fund Deficits The following funds had deficit balances as of June 30, 2016: Major Governmental Fund: City Capital Projects Fund $ (572,910) Nonmajor Governmental Funds: HOME Program (259,095) Note 16: Expenditures in Excess of Appropriations Expenditures exceeded appropriations in the following funds: Fund Budget Actual Variance Major Governmental Fund: Rosemead Housing Development Corporation $ 825,500 $ 839,201 $ (13,701) Nonmajor Governmental Funds: Proposition A 1,200,360 1,333,205 (132,845) Air Quality Management 130,140 146,140 (16,000) 70 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 17: Successor Agency Successor Agency Long-Term Debt The debt of the Successor Agency as of June 30, 2016, is as follows: Beginning Ending Due in Successor Agency: Balance Additions Deletions Balance One Year Bonds: Tax Allocation Bonds, Series 2006A $ 5,870,000 $ - $ 1,090,000 $ 4,780,000 $ 1,145,000 Tax Allocation Bonds, Series 2006B 23,385,000 - 90,000 23,295,000 9Q000 Tax Allocation Bonds, Series 2010A 8,710000 - 815,000 7,895,000 85Q000 Subtotal bonds 37,965.000 - 1,995,000 35,970,000 2,085,000 Deferred amounts: Unamortized bond premiums 138,613 - 19,802 118,811 19,802 Discount on issuance (121,934) - (14,780) (107,154) (14,780) Total bonds 37,981,679 - 2,000022 35,981,657 2,090022 Total long-term debt $ 37,981,679 $ - $ 2,000,022 $ 35,981,657 $ 2,090,022 Future debt service requirements are as follows: Fiscal years ending June 30, Principal Interest 2017 $ 2,085,000 $ 1,545,190 2018 2,180,000 1,453,347 2019 2,265,000 1,360,306 2020 2,365,000 1,261,152 2021 2,465,000 1,157,221 2022-2026 10,515,000 4,188,559 2027-2031 8,215,000 2,279,891 2032-2034 5,880,000 399,406 Totals $ 35,970,000 $ 13,645,072 71 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 17: 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, 2016 was $118,811. As of June 30, 2016 the outstanding balance was $4,780,000. Tax Allocation Bonds, Series 2006B 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, 2016 the outstanding balance was $23,295,000. 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, 2016, the balance held in the reserve account was $1,148,436. As of June 30, 2016 the outstanding balance was $7,895,000. 72 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2016 Note 18: Prior period restatements A total prior period adjustment of $1,167,011 was made to decrease beginning net position due to an overstatement of deferred outflow of resources, pension contributions subsequent to the measurement date, in the prior year. Government Wide Statement of Activities Beginning net position, as previously reported $ 66,475,650 Restatement due to error correction (1,167,011) Beginning net position, as previously restated $ 65,308,639 Note 19: Subsequent event The Successor Agency approved the issuance of the 2016 Subordinate Tax Allocation Refunding Bonds by resolution adopted on August 23, 2016. The DOF released its letter approving the resolution approving the issuance of the 2016 Bonds on October 14, 2016. The 2016 bonds are being issued to refund, on a current basis, all of the outstanding Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A, initially issued in the principal amount of $14,005,000, and the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds, Series 2006B, initially issued in the principal amount of$24,230,000. 73 Required Supplementary Information (This page intentionally left blank) City of Rosemead Notes to the Required Supplementary Information Fiscal Year Ended June 30, 2016 Note 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. Budgets were legally adopted for all governmental funds with the exception of the Narcotics Seizure Fund. 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 subsequent year. 74 City of Rosemead Required Supplementary Information Budgetary Comparison Schedule General Fund Fiscal Year Ended June 30, 2016 Variance Original Final Postve Budget Budget Actual (Negative) REVENUES Taxes $ 16679,200 $ 15,799,200 $ 16,491,447 $ 692247 Intergovernmental 162,000 257,000 278,898 21,898 Licenses and permits 1,656,200 1,881,200 2,520,937 639,737 Charges for services 877,400 877400 1,109658 232,158 Fines,forfeitures and penalties 709,300 709,300 597,373 (111,927) Investment income 288,300 288,300 491,148 202,848 Other 30,600 30,600 67,076 36,476 Total revenues 19403,000 19,843,000 21,556,437 1,713,437 EXPENDITURES Current: General government 3,622,100 3,708,000 3,492,072 215,928 Public safety 8,290,700 8,290,700 8,203,948 86,752 Public works 3.315,800 3,489400 3,400,220 89,180 Community development 1499,800 1,674,800 1,758,060 (83,260) Park and recreation 2,328,800 2,328,800 2,107,611 221,189 Capital outlay - - 466 (466) Total expenditures 19,057,200 19,491,700 18,962,377 529,323 Excess (deficiency)of revenues over(under)expenditures 345,800 351,300 2,594,060 2,242,760 Other financing sources (uses): Transfers out (1,050,000) (1,050,000) (596,272) 453,728 Total other financing sources (uses) (1,050,000) (1,050,000) (596,272) 453,728 Net change in fund balance (704,200) (698,700) 1,997,788 2696,488 Fund balance,beginning of year 16,470,361 16,470,361 16,470,361 - Fund balance,end of year $ 15,766,161 $ 15,771,661 $ 18468,149 $ 2696,488 75 City of Rosemead Required Supplementary Information Budgetary Comparison Schedule Rosemead Housing Development Corporation -Special Revenue Fund Fiscal Year Ended June 30, 2016 Variance Original Final Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ - $ - $ 414,986 $ 414,986 Investment income 422,900 422,900 440,871 17,971 Other 6,300 6,300 4,076 (2224) Total revenues 429,200 429,200 859,933 430,733 EXPENDITURES Current: Community development 825,500 825,500 839,201 (13,701) Total expenditures 825,500 825,500 839,201 (13,701) Net change in fund balance (396,300) (396,300) 20,732 417,032 Fund balance, beginning of year 166,201 166,201 166,201 - Fund balance, end of year $ (230,099) $_(23(099) $ 186,933 $ 417,032 76 City of Rosemead Required Supplementary Information Other Post-Employment Benefits 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) 1/1/2008 $ 3,548,605 $ - S 3,548,605 0% $ 1,682,985 211% 1/1/2011 3,378,875 615,576 2,763,299 18% 3,876,698 71% 1/1/2014 2,920,067 3,361,427 (441,360) 115% 3,248,298 -14% 77 City of Rosemead Required Supplementary Information Schedule of the City's Proportionate Share of the Plan's Net Pension Liability And Related Ratios as of the Measurement Date - Last 10 Years* Measurement Dale 6/30/2014 Measurement Date 6/30/2015 Mlsellaneus Plans Miscellaneus Plans Employers Proportion of the Net Pension Liability1 0.10995% 0 27841% Employers Proportionate Share of Net Pension Liability 5 6642.230 $ 7638064 Employers Covered payrolls 5 4604.511 $ 3444.503 Employers Proportionate Share of the Net Pension Liability as a percentage of its Employers Covered Payroll 14860% 221 75% Pension Plan's Fiduciary Net Position as a percentage of the Total Pension Liability 155.32% 6967% 'Proportion of the Net Pension Liability represents the plans proportion of PERF C.which'includes both the Miscellaneous and Safety Risk Pools excluding the 1959 Survivors Risk Pool. 'Cohered payroll is defined as the payroll on which contributions to a pension plan are based, in accordance with GASS 82. 'Measurement date 6/30/2014(fiscal year 2015)was the 1st year of implementation therefore,only two years are shown. 78 City of Rosemead Required Supplementary Information Schedule of Plan Contributions— Last 10 Years* Fiscal Year Fiscal Year 2014-2015 2015-2016 Actuarially Determined Contribution $ 910,907 $ 1,113,875 Contributions in Relation to the Actuarially Determined Contribution (910,907) (1,113,875) Contribution Deficiency (Excess) Covered Payroll' $ 4,604,511 $ 3,444,503 Contributions as a Percentage of Covered Payroll 19.78% 32.34% 1 Covered payroll is defined as the payroll on which contributions to a pension plan are based, in accordance with GASB 82. ' Fiscal year 2014-15 was the 1st year of implementation. therefore, only two years are shown. Notes to Schedule: Change in Benefit Terms: None Change in Assumptions: The discount rate was changed from 7.5 percent (net of admi to 7.65 percent to correct for an adjustment to exclude administrative expenses. 79 City of Rosemead Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios— Last 10 Years Retirement Enhancement Plan Measurement Period 2014-15 2015-16 TOTAL PENSION LIABILITY Serce Cost $ 44,112 $ 45,435 Interest on total pension liability 190667 191.270 Effect of plan changes - - Effect of economic/demographic gains or losses - - Effect of assumptions changes or inputs - - Benefit payments (234,960) (218,411) Net Change in Total Pension Liability (181) 18,294 Total Pension Liability-Beginning 3,004,854 3,004,673 Total Pension Liability-Ending(a) $ 3,004,673 $3,022,967 PLAN FIDUCIARY NET POSITION Contributions-Employer $ 273,711 $ 265,241 Contributions-Employee Paid Member Contributions - - Contributions-Employee - - Net Investment Income 59,329 (2,345) Benefit Payments (234,960) (218,411) Administrative expenses (5,864) (2,624) Net Change in Fiduciary Net Position 92,216 41,861 Plan Fiduciary Net Position-Beginning 2,672,652 2,764,868 Plan Fiduciary Net Position-Ending (b) $ 2,764,868 $2,806,729 Plan Net Position Liability-Ending(a)-(b) $ 239,805 $ 216,238 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 92.02% 92.85% Covered Payroll $ 3,049,663 $2,678,466 Plan Net Pension Liability as a Percentage of Covered Payroll 7.86% 8.07% Measurement date 6/30/2015(fiscal year 2015)was the 1st year of implementation, therefore, only two yeas are shown. Notes to Schedule: Changes in Benefit Terms.The figures above do not include any liability impact that may haw resulted from plan changes which occurred after June 30. 2015. This applies for wluntary benefit changes as well as any offers of Two Years Additional Serce Credit(a.k.a. Golden Handshakes). Changes in Assumptions.There were no changes in assumptions. 80 City of Rosemead Required Supplementary Information Schedule of Plan Contributions - Last 10 Years Retirement Enhancement Plan Fiscal Year Fiscal Year 2014-15 2015-16 Acfuanally Determined Contribution $ 13%267 $ 116,244 Contributions in Relation to the Actuarially Determined Contribution (273711) (265,241) Contribution Deficiency(Excess) $ (140,444) $ (148,997) Covered Payroll $ 5049.663 $ 2678466 Contributions as a Percentage of Covered Payroll 4.37% 4.34% Fiscal year 2015 was the 1st year of implementation,therefore.only two yeas are shown. Notes to Schedule: The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2014-15 were from the July 1,2014 public agency valuations. Actuarial Cost Method Entry Age Normal Amortization Method/Penod Level dollar,closed periods, 8 years amortization period 0.00%growth rate Asset Valuation Method The actuarial value of assets is the market value of assets as provided by Public Agency Retirement Services. Inflation 2.75% Salary Increases vanes by years of Service Cost of Living Adjustments 2 00% Investment Rate of Return 6.50% Retirement Age 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 staling at age 55. Modality Pre-Retirement- Consistent with the Non-Industrial rates used to value the Miscellaneous CaIPERS Pension Plans. Post-Retirement: CaIPERS 1997-2001 Healthy Retiree Modality Tables (sex-distinct) with an assumed base year of 2008 and full generational impmcements using Scale AA. 81 Other Supplementary Information (This page intentionally left blank) City of Rosemead Nonmajor Governmental Funds June 30, 2016 Special Revenue Funds: Community Development Block Grant (CDBG) 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. HOME Program Fund - This fund is used to account for HOME Investment Partnerships Program monies received to create and retain affordable housing. 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. No budget has been adopted for this fund. 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. 82 City of Rosemead Combining Balance Sheet Nonmajor Governmental Funds June 30, 2016 Special Revenue Funds CDBG Proposition Proposition Grant A C ASSETS Cash and investments $ - $ 242,605 $ 396,126 Receivables: Accounts 117,404 - - Total assets $ 117,404 $ 242 605 $ 396,126 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 21,713 $ 69,154 $ 6,096 Accrued salaries and benefits 16,615 5,795 2,746 Retentions payable - - - Due to other funds 54,057 - - Deferred revenue 1,694 - - Total liabilities 94,079 74,949 8,842 Fund balances: Restricted for: Public safety - - - Public works - 167,656 387,284 Community services 23,325 - - Unassigned - - - Total fund balances 23,325 167,656 387,284 Total liabilities and fund balances $ 117,404 $ 242,605 $ 396,126 83 Air Quality State Gas Management Street HOME Tax District Lighting Program $ 701,954 $ 125,577 $ 1,848,616 $ 13,132 9,417 18,190 17,361 28,977 $ 711,371 $ 143,767 $ 1,865,977 $ 42109 $ 102,311 $ - $ 70,179 $ 28,886 3,371 - 3,789 600 3,005 - - 6,340 - - - 265,378 108,687 - 73,968 301,204 602,684 143,767 1,792,009 - - - (259,095) 602,684 143,767 1,792,009 (259,095) $ 711,371 $ 143,767 $ 1,865,977 $ 42,109 84 (This page intentionally left blank) City of Rosemead Combining Balance Sheet Nonmajor Governmental Funds June 30, 2016 Special Revenue Funds Narcotics Measure Seizure R Totals ASSETS Cash and investments $ 10,838 $ 693,664 $ 4,032,512 Receivables: Accounts - - 191,349 Total assets $ 10 838 $ 693,664 $ 4,223,861 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 388 $ - $ 298,727 Accrued salaries and benefits - 1,925 34,841 Retentions payable - - 9,345 Due to other funds - - 319,435 Deferred revenue - - 1,694 Total liabilities 388 1,925 664,042 Fund balances: Restricted for: Public safety 10,450 - 10,450 Public works - 691,739 3,785,139 Community services - - 23,325 Unassigned - - (259,095) Total fund balances 10,450 691,739 3,559,819 Total liabilities and fund balances $ 10,838 $ 693,664 $ 4,223,861 85 City of Rosemead Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the year ended June 30, 2016 Special Revenue Funds CDBG Proposition Proposition Grant A C REVENUES Intergovernmental $ 618863 $ 1,119,672 $ 821,375 Charges for services 13,177 26,228 40,689 Special assessments - - - Investment income - 2,986 4,462 Total revenues 632,040 1,148,886 866,526 EXPENDITURES Current: General government 5,739 116,651 - Public safety 221,647 - 23,074 Public works - 855,543 363,577 Community development 399,716 - - Parks and recreation 15,663 - - Capital outlay - 361,011 - Total expenditures 642,765 1,333,205 386,651 Excess (deficiency)of revenues over (under)expenditures (10,725) (184,319) 479,875 Other financing sources (uses): Transfers in - - - Transfers out - - (21,524) Total other financing sources (uses) - - (21,524) Net change in fund balances (10,725) (184,319) 458,351 Fund balances (deficit), beginning of year 34,050 351,975 (71,067) Fund balances (deficit), end of year $ 23 325 $ 167,656 $ 387,284 86 Air Quality State Gas Management Street Home Tax District Lighting Program $ 1,195,259 $ 69,557 $ - $ 469,649 - - 969,870 - 17,587 3,340 33,456 - 1,212,846 72,897 1,003,326 469,649 2,238 - 12,005 - 856,454 - 633,027 - - 326,956 - 146,140 - - 858,692 146,140 645,032 326,956 354,154 (73,243) 358,294 142,693 15,248 - - - (478,628) - (283,344) - (463,380) - (283,344) - (109,226) (73,243) 74,950 142,693 711,910 217,010 1,717,059 (401,788) $ 602,684 $ 143,767 $ 1,792,009 $ (259,095) 87 City of Rosemead Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the year ended June 30, 2016 Special Revenue Funds Narcotics Measure Seizure R Totals REVENUES Intergovernmental $ 1,383 $ 615,302 $ 4,911,060 Charges for services - - 80,094 Special assessments - - 969,870 Investment income 204 8,781 70,816 Total revenues 1,587 624,083 6,031,840 EXPENDITURES Current: General government - 35,928 172,561 Public safety 4,263 - 248,984 Public works - 97,450 2,806,051 Community development - - 726,672 Parks and recreation - - 15,663 Capital outlay - - 507,151 Total expenditures 4,263 133,378 4,477,082 Excess (deficiency)of revenues over (under) expenditures (2,676) 490,705 1,554,758 Other financing sources (uses): Transfers in - - 15,248 Transfers out - (6,703) (790,199) Total other financing sources (uses) - (6,703) (774,951) Net change in fund balances (2,676) 484,002 779,807 Fund balances (deficit), beginning of year 13,126 207,737 2,780,012 Fund balances (deficit), end of year $ 10,450 $ 691,739 $ 3,559,819 88 City of Rosemead Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual Community Development Block Grant(CDBG) Fund For the year ended June 30, 2016 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 759,000 $ 618,863 $ (140,137) Charges for services 18,000 13,177 (4,823) Total revenues 777,000 632,040 (144,960) EXPENDITURES Current: General government 5,900 5,739 161 Public safety 216,500 221,647 (5,147) Community development 523,100 399,716 123,384 Parks and recreation 31,500 15,663 15,837 Total expenditures 777,000 642,765 134,235 Excess (deficiency) of revenues over (under) expenditures - (10,725) (10,725) Net change in fund balance - (10,725) (10,725) Fund balance, beginning of year 34,050 34,050 - Fund balance, end of year $ 34,050 $ 23,325 $ (10,725) 89 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Proposition A For the year ended June 30, 2016 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 1,030,000 $ 1,119,672 $ 89,672 Charges for services 30,000 26,228 (3,772) Investment income - 2,986 2,986 Total revenues 1,060,000 1,148,886 88,886 EXPENDITURES Current: General government 166,000 116,651 49,349 Public works 673,300 855,543 (182,243) Capital outlay 361,060 361,011 49 Total expenditures 1,200,360 1,333,205 (132,845) Excess (deficiency) of revenues over(under)expenditures (140,360) (184,319) (43,959) Net change in fund balance (140,360) (184,319) (43,959) Fund balance, beginning of year 351,975 351,975 - Fund balance, end of year $ 211,615 $ 167,656 $ (43,959) 90 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Proposition C For the year ended June 30, 2016 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 807,800 $ 821,375 $ 13,575 Charges for services 35,000 40,689 5,689 Investment income - 4,462 4,462 Total revenues 842,800 866,526 23,726 EXPENDITURES Current: Public safety 16,600 23,074 (6,474) Public works 385,300 363,577 21,723 Total expenditures 401,900 386,651 15,249 Excess (deficiency) of revenues over(under) expenditures 440,900 479,875 38,975 Other financing sources (uses): Transfers out (475,000) (21,524) 453,476 Total other financing sources (uses) (475,000) (21,524) 453,476 Net change in fund balance (34,100) 458,351 492,451 Fund balance, beginning of year (71,067) (71,067) - Fund balance (deficit), end of year $ (105,167) $ 387,284 $ 492,451 91 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual State Gas Tax For the year ended June 30, 2016 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 1,233,100 $ 1,195,259 $ (37,841) Investment income - 17,587 17,587 Total revenues 1,233,100 1,212,846 (20,254) EXPENDITURES Current: General government 2,000 2,238 (238) Public works 871,800 856,454 15,346 Total expenditures 873,800 858,692 15,108 Excess (deficiency) of revenues over(under) expenditures 359,300 354,154 (5,146) Other financing sources (uses): Transfers in - 15,248 15,248 Transfers out (575,000) (478,628) 96,372 Total other financing sources (uses) (575,000) (463,380) 111,620 Net change in fund balance (215,700) (109,226) 106,474 Fund balance, beginning of year 711,910 711,910 - Fund balance, end of year $ 496,210 $ 602,684 $ 106,474 92 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Air Quality Management District For the year ended June 30, 2016 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 66,000 $ 69,557 $ 3,557 Investment income - 3,340 3,340 Total revenues 66,000 72,897 6,897 EXPENDITURES Current: Capital outlay 130,140 146,140 (16,000) Total expenditures 130,140 146,140 (16,000) Net change in fund balance (64,140) (73,243) (9,103) Fund balance, beginning of year 217,010 217,010 - Fund balance, end of year $ 152,870 $ 143,767 $ (9,103) 93 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Street Lighting For the year ended June 30, 2016 Variance Final Positive Budget Actual (Negative) REVENUES Special assessments $ 816,400 $ 969,870 $ 153,470 Investment income - 33,456 33,456 Total revenues 816,400 1,003,326 186,926 EXPENDITURES Current: General government 14,400 12,005 2,395 Public works 779,100 633,027 146,073 Total expenditures 793,500 645,032 148,468 Excess (deficiency) of revenues over(under) expenditures 22,900 358,294 335,394 Other financing sources (uses): Transfers out (225,000) (283,344) (58,344) Total other financing sources (uses) (225,000) (283,344) (58,344) Net change in fund balance (202,100) 74,950 277,050 Fund balance, beginning of year 1,717,059 1,717,059 - Fund balance, end of year $ 1,514,959 $ 1,792,009 $ 277,050 94 City of Rosemead Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual HOME Program For the year ended June 30, 2016 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 222,300 $ 469,649 $ 247,349 Total revenues 222,300 469,649 247,349 EXPENDITURES Current: Community development 736,100 326,956 409,144 Total expenditures 736,100 326,956 409,144 Net change in fund balance (513,800) 142,693 656,493 Fund balance (deficit), beginning of year (401,788) (401,788) - Fund balance (deficit), end of year $ (915,588) $ (259,095) $ 656,493 95 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Measure R For the year ended June 30, 2016 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 601,800 $ 615,302 $ 13,502 Investment income - 8,781 8,781 Total revenues 601,800 624,083 22,283 EXPENDITURES Current: General government 44,400 35,928 8,472 Public works 187,600 97,450 90,150 Total expenditures 232,000 133,378 98,622 Excess (deficiency) of revenues over (under)expenditures 369,800 490,705 120,905 Other financing sources (uses): Transfers out - (6,703) (B703) Total other financing sources (uses) - (6,703) (6,703) Net change in fund balance 369,800 484,002 114,202 Fund balance, beginning of year 207,737 207,737 - Fund balance, end of year $ 577,537 $ 691,739 $ 114,202 96 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual City Capital Project— Major Fund For the year ended June 30, 2016 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ - $ 1,160,181 $ 1,160,181 Charges for services - 1,623 1,623 Total revenues - 1,161,804 1,161,804 EXPENDITURES Current: Public works 203,000 139,908 63,092 Capital outlay 3,709,000 1,795,357 1,913,643 Total expenditures 3,912,000 1,935,265 1,976,735 Excess (deficiency) of revenues over(under)expenditures (3,912,000) (773,461) 3,138,539 Other financing sources (uses): Transfers in 2,825,000 1,371,223 (1,453,777) Total other financing sources (uses) 2,825,000 1,371,223 (1,453,777) Net change in fund balance (1,087,000) 597,762 1,684,762 Fund balance(deficit), beginning of year (1,170,672) (1,170,672) - Fund balance(deficit), end of year $ (2,257,672) $ (572,910) $ 1,684,762 97 (This page intentionally left blank) City of Rosemead Internal Service Funds June 30, 2016 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. 98 City of Rosemead Combining Statement of Net Position Internal Service Funds June 30, 2016 Equipment Technology Replacement Replacement Total ASSETS Current assets: Cash and investments $ 387,039 $ 39,663 $ 426,702 Total current assets 387,039 39,663 426,702 Non-current assets: Capital assets: Other capital assets, net 148,608 38,591 187,199 Total non-current assets 148,608 38,591 187,199 Total assets 535,647 78,254 613,901 LIABILITIES Current liabilities: Accounts payable - 3,619 3,619 Total current liabilities - 3,619 3,619 Total liabilities - 3,619 3,619 NET POSITION Net investment in capital assets 148,608 38,591 187,199 Unrestricted 387,039 36,044 423,083 Total net position $ 535,647 $ 74,635 $ 610,282 99 City of Rosemead Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the year ended June 30, 2016 Equipment Technology Replacement Replacement Total OPERATING REVENUES Charges for services $ 123,000 $ 174,600 $ 297,600 Other revenue 4,840 - 4,840 Total operating revenues 127,840 174,600 302,440 OPERATING EXPENSES Contractual services - 101,061 101,061 Depreciation 68,414 38,589 107,003 Total operating expenses 68,414 139,650 208,064 Operating income 59,426 34,950 94,376 Non-operating revenues (expenses): Interest expense - - (787) (787) Total non-operating revenues (expenses) - (787) (787) Changes in net position 59,426 34,163 93,589 Net position, beginning of year 476,221 40,472 516,693 Net position, end of year $ 535,647 $ 74,635 $ 610,282 100 City of Rosemead Combining Statement of Cash Flows Internal Service Funds For the year ended June 30, 2016 Equipment Technology Replacement Replacement Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from users departments $ 126,733 $ 174,600 $ 301,333 Cash payments to suppliers for goods and services - (100,691) (100,691) Net cash provided by operating activities 126,733 73,909 200,642 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid on capital lease - (44,850) (44,850) Interest paid on capital lease - (787) (787) Cash paid to purchase capital asset (67,697) - (67,697) Net cash(used for)capital and related financing activities (67,697) (45,637) (113,334) Net increase in cash and investments 59,036 28,272 87,308 Cash and investments, beginning of year 328,003 11,391 339,394 Cash and investments, end of year $ 387,039 $ 39,663 $ 426,702 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 59,426 $ 34,950 $ 94,376 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 68,414 38,589 107,003 Increase(decrease)in accounts payable (1,107) 370 (737) Total adjustments 67,307 38,959 106,266 Net cash provided by operating activities $ 126,733 $ 73,909 $ 200,642 101 City of Rosemead Statement of Changes in Fiduciary Assets and Liabilities Agency Fund For the year ended June 30, 2016 Balance Balance July 1, 2015 Additions Deductions June 30, 2016 Assets Cash and investments $ 460,445 $ 160,760 $ (265,779) $ 355,426 Total assets $ 460,445 $ 160,760 $ (265,779) $ 355,426 Liabilities Deposits payable $ 460,445 $ 160,760 $ (265,779) $ 355,426 Total liabilities $ 460,445 $ 160,760 $ (265,779) $ 355,426 102 (This page intentionally left blank) 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 103 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 111 These schedules contain trend information to help the reader assess the government's most significant revenue source, property tax. Debt Capacity 115 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 121 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 124 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. CITY OF ROSEMEAD Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2007 2008 2009 2010 2011 Governmental activities: Invested in capital assets, net of related debt 5 10,541,606 S 12,981,537 S 11,828,993 S 12,712,242 S 14,760,940 Restricted 8,181,231 11,443.583 13,361,249 13,199,438 24,806,402 Unrestricted 35,293,732 27,705,715 24,882,730 20,489,721 10,748,249 Total governmental activities net position S 54,016,569 S 52,130,835 S 50,072,972 S 46,401,401 S 50,315,591 103 Fiscal Year 2012 2013 2014 2015 2016 $ 54,010,031 S 51,132,854 S 50,042,631 S 52,038,429 S 51,542,030 10,870,747 2,829,147 3,110,688 3,419,068 4,005,847 13,688,078 17,724,709 17,367,841 11,018,153 13,108,874 $ 78,568,856 S 71,686,710 S 70,521,160 5 66,475,650 S 68,656,751 104 CITY OF ROSEMEAD Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) 2007 2008 2009 2010 2011 Expenses: Governmental activities: General government $ 4,980,519 5 7,259.587 $ 12,176.877 S 5,991796 $ 3,160306 Public safely 6,618,779 8,043771 9,081319 8,879.854 8,881926 Public works 6,120,563 13,550,042 6,465,355 11469,614 11.907.245 Community services 602,114 669,827 773,374 589,650 595.904 Community development 2,467,842 3.645,207 1290,108 2,141218 3,969502 Parks and recreation 4,178.000 4,07R 631 2.030,698 2,733,885 2,362,860 Interest and other charges 2,698372 1790.348 1,523391 1,491,717 1,681,873 Total governmental activilies expenses 27.666,189 39.03 7,413 33,341522 33797,734 32559.618 Program revenues: Governmental activities- Charges for sen ices: General government 316,849 642,716 547,577 1.573,695 1,048727 Public safety 1598,159 1.547,182 1.512,475 1.293,677 1,293,524 Public works 7,600,778 11,729725 7,581,801 8.052.011 9,143,311 Community services 1,403,059 166,118 858,809 186,283 450.004 Community development 3,206,303 1.484,065 621,375 397,402 3,753,612 Parks and recreation - 36,800 36,000 20.800 654,437 Total governmental activities program revenues 14,125,148 13,606.606 11,158,037 11,723,868 16,343,615 Net revenues(expenses): Governmental activities Total net revenues(expenses) (13541,041) (23,430,807) (22.183,485) 1.573,866) (16,216,003) General revenues and other changes in net assets: Governmental activities Taxes: Property taxes 9,121,682 13,181 337 12.288.177 12.328.634 13.656.347 Sales and use taxes 1501.106 3,747.416 4589,998 4,408,367 3337.363 Transient occupancy taxes 1311 697 1,411,421 1.272,092 1,129,146 1,219,977 Other taxes 713.821 949,007 761.410 562,317 376,904 Investment income 2,028.128 1,678,791 884,847 389310 367.961 Motor vehicle in-lieu,unrestricted 856.701 234,327 195,273 169,042 263.983 Other general revenues 478,473 143,748 133,825 336,668 307,658 Loss on sale of capital assets - - - _ Transfer to Successor Agency - - - . - Extraordinary item, Gain on dissolution of redo clopman agency - - - - - Total governmental activities 17,011,608 21.366,747 20,125,61 19,323,484 20.130,193 Changes in net position Governmental activities Total primary government $ 3,470,567 S (2.064.060) $ (2,057,863) S (2)50,382) $ 3,914.190 105 2012 2013 2014 2015 2016 $ 3,989,359 $ 3,381,686 S 4,271354 $ 2,739,281 $ 3,218.363 7,517,101 7,791.073 7,923.316 7,747,949 8,38088 11,588278 11,717,276 10,072.081 8,703,817 8.738495 4,080,294 2,616,531 2.853.472 2879,028 3,246,081 2,532,665 2,594,863 2.274,920 2,049,541) 2,073,145 569,045 7,827 5,561 3,198 787 30.276,742 28,109.256 27,400,704 24,122,813 25.658,459 130.450 2,408,362 2,030,063 2,725,291 2,203,233 L454,759 1 622,911 1,586557 1,573.532 1563,652 4,033,874 3.869.285 4356.486 4,627,331 4.360,908 3.501082 1.896.876 1.632,508 1,915,557 2,352,137 704.029 785.611 724,197 713,484 741,171 9,824,194 10,583.045 10,329.811 11,555,195 1 I_21,101 (20,452.548) (8526211) (17,070,893) (12,567.618) (14,437.358) 10.567509 8,900.228 8,667,709 9034,141 9.158,499 3200,911 3.215,897 3.504,285 3.452,605 4,124.745 I 32i 886 1,447,820 1,593,640 1,575,401 1,998,954 633,393 2.271986 130 7,280 1247.941 1109,249 195.165 2_8.2_02 216,499 97,589 348,651 853.956 1180.688 604,053 793,680 945.372 (2,340.090) - - - - (6,392,878) - - - 34,271.082 - - - - 48,705.812 10,655,943 15,893,466 16,201,357 17.785.470 $ 28,253,264 $ (6,870,268) $ (1,177,427) $ 3.633.739 $ 3,348,112 106 CITY OF ROSEMEAD Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2007 2008 2009 2010 2011 General fund: Reserved S 150,000 S 3,074,496 $ 3,106,917 S 3,327,182 $ - Unreserved 22,460,545 18,633,154 16,135,102 13,626,774 - Nonspendable - - - - 2,034 Committed - - - - 5,107,963 Assigned - - - - - Unassigned - - - - 10,209,075 Total general fund 22,610,545 21,707,650 19,242,019 16,953,956 15,319,072 All other governmental funds: Reserved 4,947,087 9,000,561 9,000,561 8,941,112 - Unreserved,reported in: Special revenue funds 6,142,833 6,140,289 9,023,487 8,763,359 Debt service funds 552 692475 2,803,910 2,803,910 - Capital projects funds 7,397,454 2,490,553 (54,323) (1,405,770) - Nonspendable - - - _ - Restricted - - - - 27,476,081 Unassigned - - - - (4,402,964) Total all other governmental funds $ 18,487,926 8 18,323,878 $ 20,773,635 $ 19,105,611 5 23,073,117 The City implemented GASB 54 for the fiscal year ended June 30. 2014. The categories of fund balancefor governmental funds have been changed as described more filly in the notes to the basic financial statements. Prior year fund balances reflect the guidance in effect when thoseftnancial statements were prepared 107 2012 2013 2014 2015 2016 S - $ - $ - S - $ - 2,034 2.034 140.893 143,560 187,247 5,294,253 6,415,416 5,883,235 6,120,361 6.682,495 5,712 5,712 65,343 78,280 83,513 9,519,173 11,194,278 11,607.595 10,128,160 11,514,894 14,821,172 17,617,440 17,697,066 16,470,361 18,468,149 10,870,747 2,829.147 3,110,688 3,419,068 4,005,847 (1,292,405) (788.224) (1.192,926) (1,643,527) (832,005) $ 9,578,342 $ 2,040,923 $ 1.917,762 $ 1,775,541 S 3,173,842 108 CITY OF ROSEMEAD Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis ofaccounting) 2007 2008 2009 20W 2011 Revenues: Taxes S 13,648,306 S 17,841,792 8 17,153,625 S 18,508,896 S 19,313,094 Intergovernmental 9,419,698 15,716,610 10,992,235 7,856,792 9,383,256 Licenses and permits 1,683,204 1,503,659 1,178,362 1,079,429 1,764,162 Charges for services 414,375 537,430 638,244 708,434 677,861 Fines,forfeitures and penalties 437,117 641,566 565,643 491,574 462,389 Special assessments 789,089 687,568 736,213 680.288 741,382 Investment income 2,028,128 1,678,791 884,847 389,310 367,956 Other 478,473 141,930 381,429 254,610 253,379 Total revenues 28,898,390 38,749,346 32,530,598 29,969,333 32,963,479 Expenditures Current: General government 4,780,837 7356,665 11,956,179 5,903,926 3,801,486 Public safety 6,737,912 8.043,771 9,114,009 8,863 234 8,882,915 Public works 8,898,768 12,116,508 4,964,867 11,264,220 19,402,924 Community services 1,419,424 669,827 783,452 584,463 595,904 Community development 2,690,420 3,408,691 1,047,529 1,940,641 3,397,072 Parks and recreation 4,249,462 4.078,631 2,030,698 2,733,885 2,362,860 Capital outlay - 1,647,673 202,752 290,885 93,121 Debt service: Principal 780,000 1.105,000 915,000 945,000 975,000 Interest and fiscal charges 2.512,725 1.567,849 1,531,986 1,501,667 1,882,092 Bond issuance costs 1,323,238 - - - 275,344 Total expenditures 33,392,786 39.994,615 32,546,472 34,027,921 41,668,718 Excess(deficiency)of revenues over(under) expenditures (4,494,396) (1,245,269) (15,874) (4,058,588) (8,705,239) Other financing sources(uses): Transfers in 26,183,078 2,962,087 4,078,483 4,133,554 4,824,919 Transfers out (26,183,078) (2,962,087) (4,078,483) (4,133,554) (4,824,919) Transfer to Successor Agency - - - _ Issuance of long-term debt 24,230,000 - - - 11,230,000 Discount on bonds - - - - (192,139) Payment to bond escrow agent (22,075,305) - - - - Proceeds of capital lease - - - 102,501 - Total other financing sources(uses) 2,154,695 - - 102,501 11,037,861 Extraordinary item: Gain(loss)on dissolution of redevelopment agency - - - - - Net change in fund balances S (2.339,701) $ (1,245,26) $ (15,874) $ (3,956,087) S 2,332_,622 Debt service as a percentage of noncapital expenditures 11.8% 7.0% 7.6% 7.4% 8.8% 109 2012 2013 2014 2015 2016 S 15,960,662 S 16,602,329 S 15320,806 S 15,537,262 S 16,491347 9,561,918 6,435,473 6,066,936 6,168,603 6,765,125 1,156,719 1.156,968 1.308,482 1,846,997 2,520.937 1,055391 1,036,563 1,087,091 1.138.731 1,191,275 619,397 691,548 700,126 676,830 597,373 768,997 937,405 881.543 923,538 969,870 582,176 474,970 873,631 754,865 1,002,835 658,670 928,596 61,690 114,074 71,152 30,363,930 28,263,852 26,300,305 27,160.900 29,610,014 4.203,302 3,988,156 3,973,364 3,879,122 3,664,633 7,517,101 7,773,611 7,913,659 8.156,485 8,452,932 6,417,803 6,909,471 6,184.890 6,348,101 6,346,179 - 3.323,933 3,681,903 2,605,654 2,846.112 3.150,240 2,123,274 2,532,665 2,208,564 2,157,424 2,071,443 2.302,974 9,090,076 3,126,669 3,268,391 4.924,435 - 1,210.000 - - - - 961,506 - - - - 35,614,356 26,612,125 26,343,840 28,529,826 26,213,925 (5,250,426) 1,651,727 (43,535) (1,368,926) 3,396,089 6,431,374 2,772,415 3,053,605 2,433,974 1,386,471 (6,554,374) (1772,415) (3,053,6051 (2,433,974) (1,386,471) (6,392,878) - - - (123,000) (6,392,878) - - - (8,619.249) - - - - $(13,992,675) S (4,741,151) S (43,535) $ (1,368,926) $ 3,396,089 6.8% 0.0% 0.0% 0.0% 0.0% 110 CITY OF ROSEMEAD 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 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% 2015 3,806,028,086 71,498,360 1,901,995 3,879,428,441 9.27% 2016 4,012,426,717 62,768,733 1,901,995 4,077,097,445 9.27% 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 as a result of new construction activity or at the time it is sold to a new owner. At that point, the property is reassessed based upon the added value of the construction or at the purchase price (market value) or economic value 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: L.A. County Assessor 2006/07-2015/16 Combined Tax Rolls and 1-IDL Coren&Cone 111 CITY OF ROSEMEAD Direct and Overlapping Property Tax Rates (Rate per$100 of Taxable Value) Last Ion Fiscal Years Agency 2006/07 2007/08 2008/09 2009/10 2010111 2011/12 2012/13 2013/14 2014/15 2015/16 Basic Levi 100000 1.00000 100000 1.00000 1.00000 100000 100000 100000 1-00000 I 0000 County Detention Facilities 198'Debt 0.00066 000000 0-00000 000000 0.00000 000000 0.00000 000000 000000 000000 El Monte City School District 800000 0.00000 000000 000000 0.00000 000000 0.00000 0.00000 0.1182_2 0.14642 El Monte Union I rich School 005847 002620 015159 0.09654 008475 009591 008992 009799 008418 0.09155 Garvey School District 0.05074 005060 000953 0.05378 0.05733 005686 006037 005078 005947 0.05874 Garvey-Alhambra 000000 0.00000 0.01882 0.02458 0.02770 0.02718 0.02795 0.03154 002912 0.02906 Los Angeles Community College District 002146 0.00879 002212 0.02111 004031 0.03530 0.04875 0.04454 0.04017 0.03575 I.A.Co.Flood Control 000005 000000 000000 0.06000 0110060 0.000110 000000 0.00000 0.00000 000010 Metropolitan Water District 002000 1[02_000 0.01800 001800 0.01800 0.01800 001800 001800 001800 0.01800 Montebello Unified School District 0.06731 006681 0.08065 0.096731 009792 0.10001 000630 009457 008750 0.08711 Pasadena Community College Di grid 002080 0.01972 001741 0.02300 001986 001956 0.02050 001899 0.01032 000872 Rio I Tondo Community College District 000000 0.00000 000000 000000 0.00000 000000 OAWW 000000 002821 0.02712 Rosemead School District 0.05420 008283 0.00875 011358 0.10743 0.10507 0.10240 0.10314 0119886 009907 San Gabriel Unified School District 0114030 0.05742 0.09294 0.10070 0.10190 0.08454 0.10523 0.10082 0.11444 0.10684 Total Direct&Overlapping2 Tax Rates 1.34299 1.33437 1.41981 1.58002 1.55520 1.54243 156948 1.56937 1.68849 1.70932 (1t3's Share of l%Levy Per Prop 13 3 009388 009388 009388 009388 009388 0.09388 009388 009388 009388 0119388 Voter Approved Cily Debt Rate Redevelopment Rate 1 00541 100450 1.00430 100430 100370 100370 Total Direct Rale s 020556 021850 0.22614 0.22270 0.22407 0.22351 0.22113 009271 009271 0.09273 Notes: 'In 1978 CU6f iavotersspassed Proposition 13 which set he properly lax rate at a 100°I fixed amount This 1100%is shared by all rasing agencies for which the subject properly re within. In addition to the 1.00%fixed amount property owners are charged taxes as a percentage of assessed pmpen>value'for the payment of any voter approved bends. Overlapping roves are Nose of local and county governments that apply to properl3 maners within the(So Not all overlapping rates apply to all cip property owners. [ ashare rfl o Levy- bsed on the City's share of the general fund tax rate area v h th Inmost net taxable sake within the city. 1-RAF general fund tax shifts ay not he mdud tax ratio flares. RDA rate is based an the largest RDA tax rate area 1IR4)and includes only ratelsl from indebtedness adopted prior a 1989 per California State statute. RDA direct and overlapping rates are applied enL to the incremental properly values apprvval o(ABXI 20 eliminated Rede ye loptt eat from the State of California for the lm'year 2012-13 and years tIeraa IM 9 Direct Rale is the igh d average of all indr dual dim:Mates applied by the givemment prepi lg the statist tl section inffirinuti011- d excludes revenues derived from a'ucr. Bediml ing In2013,14 the l otal Direct Rate no Ioniser includes revenue generated rntm the fowler cede%elop'c envay rate areas. Challenges to recognized enforceable obligations area su have been remked during 2012':3. Iorthe purposes of this upon residual revenue is assumed to he distributed co the City in the same proportions as general fund revenue. Source: 1.A County Assessor 2006.07•2013/16 Tax Rate Table and IIDL Coren&Cone 112 CITY OF ROSEMEAD Principal Property Tax Payers Current Year and Nine Years Ago 2015/16 2006/07 Percent of Percent of Total City Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Rosemead Place,LLC $ 48,240,384 I 1.18% Wahnart Stores, Inc 37,961,383 2 0.93% Rosemead Hwang,LLC 34,504,384 3 0.85% AEG Investment Fund 5 LLC 25,639,791 4 0.63% Metodo Investments LLC 19,332,521 5 0.47% 420 Boyd Street LLC 18,122,081 6 0.44% Rosemead Health holdings LLC 16,176,881 7 0.40% Panda Express, Inc. 15,353,993 8 0.38% Macy's California Inc 14,571,528 9 0.36% Shurl and Kay Curd Foundation Lessor 14,376,763 10 0,35% Rosemead Place, LLC S 42,508,398 1 1.46% Rosemead Hwang, LLC 30,361,500 2 1.05% General Electric Credit Auto Auctions 20,400,550 3 0.70% Rosemead Assisted LP 20,120,127 4 0.69% Southern California Edison Co. 15,841,947 5 0.55% May Department Stores Company 15,430,000 6 0.53% California Federal Savings&Loan Assn. 12,643,700 7 0.44% Sunshine Inn 9,724,130 8 0.34% Huy Fong Foods, Inc. 9,393,999 9 0.32% 1683 Walnut Grove LLC 8,543,336 10 0.29% Source: Hdl Coren&Cone,Los Angeles County Assessor 2015/16 Combined Tax Rolls. 113 CITY OF ROSEMEAD Property Tax Levies and Collections Last Ten Fiscal Years Collected within the Fiscal Taxes Levied Fiscal Year of Levy Collections in Total Collections to Date Year Ended for the Percent Subsequent Percent June 30 Fiscal Year Amount of Levy Years Amount of Levy 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% 2015 2,981,810 2,935,129 98.43% - 2,935,129 98.43% 2016 3,134,303 3,114,233 99.36% - 3,114,233 99.36% * Information not available. Source: HDL Coren&Cone and Los Angeles County Auditor Controller's Office 114 CITY OF ROSEMEAD Ratios of Outstanding Debt by Type Last Ten Fiscal Years Tax Percentage Debt Allocation of Personal Per Fiscal Year Bonds 2 Income Capita' 2006/07 S 37,455,000 5.01% S 660 2007/08 36,350,000 4.59% 639 2008/09 35,435,000 4.33% 623 2009/10 34,490,000 4.17% 605 2010/11 44,745,000 5.51% 780 2011/12 43,535,000 4.63% 754 2012/13 41,740,000 4.38% 771 2013/14 39,885,000 4.15% 732 2014/15 37,965,000 4.02% 693 2015/16 35,970,000 3.76% 657 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 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. 115 CITY OF ROSEMEAD Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years (In Thousands, except Per Capita) Tax Percent of Allocation Assessed Per Fiscal Year Bonds Value ' Capita 2006/07 S 37,455 129% $ 658 2007/08 36,350 1.15% 639 2008/09 35,435 1.05% 622 2009/10 34,490 1.0I% 601 2010/11 44,745 130°% 775 2011/12 43,535 1.23% 804 2012/13 41,740 1.16% 766 2013/14 39,885 1.07% 728 2014/15 37,965 0.98% 693 2015/16 35,970 0.88% 651 General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (of which,City has none). ' 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. 116 (This page intentionally left blank) CITY OF ROSEMEAD Direct and Overlapping Governmental Activities Debt June 30,2016 Percentage Gross Bonded Applicable Net Bonded Debt Balance To City Debt Overlapping Debt •Metropolitan Water District S 44916.91(s 0.328% $ 147,327 Gan ey SD 1)5 2004 Series 2006 13,992.423 509(12% 7,122,423 Ganey SD DS 2004 Series C 8,722964 50.902% 4,440,163 Ganey SD DS 2011 Refund Bonds 4,415.000 50902% 2)47223 Gann)SD DS 2013 Ref Bonds 1,945.000 50.902% 990.044 Garvey SD 0S 2014 Ref Bonds 5,415,000 50902°0 2,756,341 Rmcinwd SD DS 2007 Series D 1,230000 7036% 864,875 Rosemead SD DS 2008 Series A 7.880000 70.315% 5,540,822 Rosemead SD DS 2011 Ref Bond 5,295,000 70.315% 3.723.179 Rosemead SD DS 2012 Ref Bond 8,216,503 70.315% 5.77 7,434 Rosemead SD DS 2008 Series T l 6,180,000 70315% 4,345,467 Rosemead SD DS 2014 Ref Bonds 12.800.00(1 70315% 9,000,320 El Monte Gn'mn HSD 2002 Series A 1.772,970 14901% 264,190 El Monte Union USD 2006 Refund Bonds 30.241 492 14.901% 4,506,285 El Monte Union USD 2002 Series C 26,525,000 14901% 3,952,490 El Monte Union HSD DS 2008 Series A 23,315,000 14.901% 4,219218 El Monte Union HSD DS 2008 Sales B 53,785,000 14.9(11% 8,014503 LA CCD DS 2001,2006 Series B 53.535000 0312% 167,029 LA CCD US 2001,2008 Ser E-I 20,620,000 0.312% 64,334 A CCD DS 2003,2008 Ser F-I 20 270,000 0.312% 63,242 LA CCD DS 2008.2009 Taxable Set'B 754)00,000 0.312% 234,000 LA CCD Debt 2003,21110 lax Ser D 175000,000 0312% 546,000 LA CCD Debt 2008,2010 Tax Ser E WARS) 900,000,000 0312% 2,303,000 LA CCD DS 2008,2010 Series C 125.000,000 0.312% 390,000 I A CCD DS 2013 Ref Bonds 261.585,000 0312% 816.145 IA CCD DS 2015 Ref Series A 250000,000 0.312% 717,600 LA CCD DS 2015 Ref Series B 1.462,085.000 03122% 4,561,705 LA CCD US 2015 Ref Series C 42,000,000 0312% 131,040 LA CCD DS 2015 305.905,000 0311% 954,424 Pasadena OCT/DS 2006 Series B 1,740,000 2_905% 43,587 Pasadena CCD DS 2002.2009 Series D 6,370,0151 2.505% 172,094 Pasadena CCD 2002,2009 Series L(BABS) 25,295,000 1505% 633,640 Pasadena CCD DS 2014 Ref Series A 50,725,000 2.505% 1.270.661 Montebello USD D51998 Sete 1993 6,007,949 .466% 88,077 Montebello USD DS 1998 Series 1999 8.110,352 .466% 118,898 Montebello USD DS 1998 Series 2002 14,283,040 .466% 209,389 Montebello USD DS 2004 Senses 2008 2,135,000 .466% 31,299 Montebello USD US 2004 Series 2009-1 3,220000 .466% 42,205 Montebello USD DS 2004 Series 2009.42 BABS 12,640,000 .466% 185.302 Montebello USD US 2010 Ref Bonds 7,495000 .466% 109877 Montebello USU DS 2004 Series 2013A 20.285,000 .466% 297,378 Montebello 1 151)DS Ref Bond Series 2015 43,26(1.000 .466% 634,192 San Gabriel USD DS 22002 Series B 1,112,600 233% 13,718 San Gabriel LSD DS 2005 Ref-Bonds 2,3(18,395 .233% 28,469 San Gabriel USD US 2015 36,530,0011 .233% 450.415 San Gabriel LSD US 2008 Series A 5,357,878 233°% 66,163 San Gabriel USD DS 2010 Ref Bonds 1.658,:45 ±3346 20,446 San Gabriel USD DS 2008 Series B 6,380,000 .233% 78.665 San Gabriel USD DS 2012 Ref Bond Series B 15,563,464 .233% 191,898 San Gabriel LSD DS 2008 Series C 22,997,960 .233% 283.565 Iota)Overlapping Debt S 84,340,164 2015116 Assessed Valuation;S3.:79.759,756 After Deducting$697.337,689 Incremental Value. Debt to Assessed Valutation Ratios: Direct Debt 0 00% Overlapping Debt 2.50% Talal Debt 250% * Ihis fund is a portion eta larger a€enry,and is repsonsible for debt in areas outside the city. I his report reflects debt which is being repaid through voter-approved property tax indebtedness. It excludes mortgage e,tax allocation bonds,interim financing obligations.non-bonded capital lease obligations,and rtitleates of panic ipation,unless provided by the ci . Overlapping governments are those that coincide,at least in part,with the geographic boundaries of the city. the percentage ofocerlapping debt applicable is estimated by using taxable assessed values. Applicable percentages were estimated by determining the portion of another governmental units taxable asscssd value that is within the city's boundaries and dividing it by each units total taxable assessed value. Source I Idl Coen&Cone,L.A.Count Assessor and Auditor Combined 201516 Lien Date fax Rolls. 117 CITY OF ROSEMEAD Legal Debt Margin Information Last Ten Fiscal Years 200 6 07 2007.08 200809 2009/10 2010(11 Assessed valuation S 2,901,902,093 S 3,165,802309 $ 3362.646146 $ 3,399,331,688 $ 3.431,820,218 Conversion percentage - 23% 25% Adjusted assessed valuation 725,475,523 791,450.627 840.661537 849,832,922 857,955,055 Debt limit percentage 15% I5% 15% 15% 15% Debt limit 108,821,328 118,717,594 125 099,230 127.474 938 128.693 258 Total net debt applicable to limit: General obligation bonds - - - - Legal debt margin S 108,821,328 $ 118,717,594 S 126,099,230 $ 127,474,938 $ 128,693,258 Total debt applicable to the limit as a percentage of debt limit 0.0% 0.0% 0.0% 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 pros ision was enacted when assessed ssed valuation was based upon 25%of market value.Effective with the 1981-82 fiscal year.each parcel is now assessed at 100%of market sal uc(as of the most recent change in ownership for that parcel).The computations shown above mnect 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 Tay Assessor's Office 118 2011/12 2012713 701 ]I4 2014/15 2015/16 $ 3,533.192.184 $ 3,60395.186 $ 3.725310,320 5 3,879,248,441 $ 4,077,097,445 25% _5% 8827 298,046 900,848.797 931,327,580 969,812,110 1.019.274361 15°o IS% 6°0 IS:o 15°6 132,494.707 135,127,319 139,699,137 145,471.817 152,891,154 S 132.494.707 $ 135,127,319 $ 139.699,137 S 145,471.817 5 152,891,154 00% 00% 00% 0.0% 0.0% 119 CITY OF ROSEMEAD Pledged-Revenue Coverage Last Ten Fiscal Years (In Thousands) Tax Allocation Bonds Fiscal Year Ended Tax Debt Service June30 Increment Principal Interest Coverage 2006 S 3,310,295 S 490,000 S 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 2015 5,521,038 1,920,000 1,718,573 1.52 2016 5,724,292 1,995,000 1,635,578 1.58 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. 120 CITY OF ROSEMEAD Demographic and Economic Statistics Last Ten Calendar Years Per Personal Capita Unemployment Fiscal Population Income Personal Rate Year (I) (in thousands)(2) Income(2) (3) 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% 2014/15 54.786 956,180 17,453 9.50% 2015/16 55,231 932,800 16,889 7.70% 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 121 CITY OF ROSEMEAD Principal Employers Current Year and Nine Years Ago 2016 2006 * Percent of Percent of Number of Total Number of Total Employer Employees Employment I Employees Employment Southern California Edison 1 4,100 16.73% - 0.00% Garvey School District 2 804 3.28% - 0.00% Wal-Mart 3 435 1.78% - 0.00% Panda Restaurant Group, Inc. 4 400 1.63% - 0.00% Rosemead School District 5 337 1.38% - 0.00% Target 6 253 1.03% - 0.00% Hemetic Seal Corporation 7 150 0.61% - 0.00% Olive Garden 8 111 0.45% - 0.00% Double Tree 9 120 0.49% - 0.00% Don Bosco Tech 10 90 0.37% - 0.00% 1 Based upon Employment Development Department's estimate of 24,500 residents employed in 2015-16. * Information for 2006 is not available. Source: City of Rosemead 122 CITY OF ROSEMEAD Full-time and Part-time City Employees by Function Last Ten Fiscal Years Function 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General government 17 19 16 22 19 15 13 12 12 11 Public safety I 22 34 39 42 42 33 15 20 18 20 Community development 11 23 18 23 23 7 8 8 7 8 Public Works tda n/a n/a n/a n/a 26 22 23 23 21 Parks and recreation 101 103 135 112 99 68 81 86 80 83 Total 151 179 208 199 183 149 139 149 140 143 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 123 CITY OF ROSEMEAD Operating Indicators by Function Last Ten Fiscal Years 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Police: Arrests 1,786 1,506 1,478 1,733 1,888 1,842 1,186 1,356 1,585 1,339 Parking citations issued 13,210 11,766 10,517 8,450 7,515 7,797 8,765 16,110 7,863 8.047 Fire: Number of emergency calls 2,749 2,846 2,959 2,853 2,745 2,928 2,785 2.823 3,212 3.352 Inspections - 2,518 2.093 2,137 1,845 2,066 2,012 2.026 2,793 2564 Public works: Street resurfacing(miles) 2.5 1.1 2.8 3.5 3.5 3.6 0.9 1.6 0.6 1.0 Parks and recreation: Number of recreation classes 775 484 397 727 617 519 638 734 839 871 Number of facility rentals n/a 540 453 236 1,786 3,261 3.124 4,005 2,607 3,070 Source: City of Rosemead 124 CITY OF ROSEMEAD Capital Asset Statistics by Function Last Tcn Fiscal Years 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Public Safety: Sheriff stations I 1 I 1 1 I I I I I Fire: Fire stations 2 2 _ 2 2 _ _ _ 2 Public works: Streets(miles) 76.80 77.55 77.55 77.55 77.55 77.55 77.55 77.55 77.55 81.90 Streetliahts 2,706 2,712 2,712 2,712 2.712 7,717 2,712 2,712 2,712 2,712 I raffle signals 41 42 42 42 42 42 42 42 42 41 Parks and recreation: Parks 10 10 10 10 10 10 10 10 10 10 Community centers 2 1 2 _ 2 _ 2 2 2 2 2 Source:City of Rosemead 125 (This page intentionally left blank) A E M E,ate 9 C FRIDC "toReoRnreo as s Attachment 13 Rosemead Housing Development Corporation Financial and Compliance Report ROSEMEAD HOUSING DEVELOPMENT CORPORATION FINANCIAL AND COMPLIANCE REPORT Fiscal Year Ended June 30, 2016 RA ROGERS, ANDERSON, MALODY & SCOTT, LLP MS CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 ROSEMEAD HOUSING DEVELOPMENT CORPORATION FINANCIAL AND COMPLIANCE REPORT Fiscal Year Ended June 30, 2016 TABLE OF CONTENTS Page INDEPENDENT AUDITOR'S REPORT 1 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 19 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual —General Fund 20 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 21 RA ROGERS, ANDERSON, MALODY & SCOTT, LLP M S 735 E.Carnegie Dt.Suite ioo Board of Directors San Bernardino,CA 97408 Rosemead Housing Development Corporation 909 889 0871 T City of Rosemead, California 909 889 5361 F rarnscpa net INDEPENDENT AUDITORS REPORT Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and the major fund of the Rosemead Housing Development Corporation (the Corporation), a component unit of the City of Rosemead, California, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Corporation's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. � - 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, 2016, 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 As discussed in Note 1, the financial statements present only the Rosemead Housing Development Corporation and do not purport to, and do not present fairly the financial position of the City of Rosemead, California, as of June 30, 2016, the changes in its financial position, or, where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other 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 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 require 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 16, 2017 on our consideration of the Corporation's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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. g{oger5,11ndersorl,Malods&Scott,LLP San Bernardino, California January 16, 2017 - 3 - FINANCIAL STATEMENTS Rosemead Housing Development Corporation Statement of Net Position June 30, 2016 Governmental Activities ASSETS Cash and investments (note 2) $ 214,594 Accounts receivable 11,546 Capital assets, depreciated, net (note 4) 7,553,310 Total assets 7,779,450 LIABILITIES Refundable deposits 39,207 Total liabilities 39,207 NET POSITION Net investment in capital assets 7,553,310 Unrestricted 186,933 Total net position $ 7740,243 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, 2016 Program Revenues Operating Capital Charges for Contributions Contributions Governmental Expenses Services and Grants and Grants Activities Governmental activities: General government $ 1,062,532 $ 440,860 $ 414,986 $ - $ (206,686) Total governmental activities $ 1,062,532 $ 440,860 $ 414,986 $ - (206,686) General revenues: Investment income 11 Other general revenues 4,076 Total general revenues 4,087 Change in net position (202,599) Net position, beginning of year 7,942,842 Net position, end of year $ 7,740,243 The accompanying notes are an integral part of these financial statements. - 5 - Rosemead Housing Development Corporation Balance Sheet Governmental Fund June 30, 2016 _ General Fund ASSETS Cash and investments $ 214,594 Accounts receivable 11,546 Total assets $ 226,140 LIABILITIES AND FUND BALANCE Liabilities: Refundable deposits $ 39,207 Total liabilities 39,207 Fund balance: Restricted for: Low and moderate income housing 186,933 Total fund balance 186,933 Total liabilities and fund balance $ 226,140 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, 2016 Fund balance of governmental fund $ 186,933 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 11,171,141 Accumulated depreciation (3,617,831) Net position of governmental activities $ 7,740,243 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, 2016 General Fund REVENUES Rental income $ 440,860 Intergovernmental 414,986 Investment income 11 Other 4,076 Total revenues 859,933 EXPENDITURES Operating 429,601 Administrative services paid to City of Rosemead 226,200 Facility rent paid to City of Rosemead 183,400 Total expenditures 839,201 Net change in fund balance 20,732 Fund balance, beginning of year 166,201 Fund balance, end of year $ 186,933 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, 2016 Net change in fund balance -total governmental fund $ 20,732 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense. Therefore, depreciation expense is not reported as an expenditure in the governmental funds. Depreciation expense (223,331) Change in net position of governmental activities $ (202,599) The accompanying notes are an integral part of these financial statements. - 9 - Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2016 (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, 2016 (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, 2016 (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 balance, 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. 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, 2016 (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, 2016 (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, 2016 (1) Summary of Significant Accounting Policies (continued) (g) Fund Balance The Corporation reports fund balance in classifications that 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, 2016 (1) Summary of Significant Accounting Policies (continued) (h) Rental Income A management company collects rent payments on the first day of the month and the corporation 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. (2) Cash and Investments Cash and investments at June 30, 2016 consisted of deposits with financial institutions. The carrying amount of the Corporation's deposits was $214,594. 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, 2016, 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, 2016. The Corporation is funded, in part, by advances from the Commission. - 16 - Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2016 (3) Reimbursement Agreements and Related-party Transactions (continued) 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 $1,704,304 for the Angelus Senior Housing facility at June 30, 2016. 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 $2,881,307 for the Garvey Senior Housing facility at June 30, 2016. The Corporation paid $91,200 and $92,200 in lease payments to the City during the year ended June 30, 2016 for the Angelus and Garvey Senior Housing facilities, respectively. (4) Capital Assets During the year ended June 30, 2016, the changes in capital assets were as follows: Balance at Balance at June 30, 2015 Additions Deletions June 30, 2016 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 (3,265,956) (223,331) - (3,489,287) Furniture and equipment (128,544) - - (128,544) Total accumulated depreciation (3,394,500) (223,331) - (3,617,831) Governmental activities capital assets, net $ 7,776,641 $(223,331) $ - $ 7,553,310 Depreciation expense is allocated to the general government function in the statement of activities. - 17 - Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2016 (5) 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. (6) 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, 2016. (7) Excess of Expenditures over Appropriations Excess of expenditures over appropriations in individual funds are as follows: Fund Expenditures Appropriations Excess General $ 839,201 $ 825,500 $ (13,701) - 18 - REQUIRED SUPPLEMENTARY INFORMATION Rosemead Housing Development Corporation Notes to Required Supplemental Information June 30, 2016 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. - 1 9-- Rosemead Housing Development Corporation Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual • General Fund For the Year Ended June 30, 2016 Variance Original Final with Final Budget Budget Actual Budget REVENUES Rental income $ 422,900 $ 422,900 $440,860 $ 17,960 Intergovernmental - - 414,986 414,986 Investment income - - 11 11 Other 6,300 6,300 4,076 (2,224) Total revenues 429,200 429,200 859,933 430,733 EXPENDITURES Operating 415,900 415,900 429,601 (13,701) Administrative services paid to City of Rosemead 226,200 226,200 226,200 - Facility rent paid to City of Rosemead 183,400 183,400 183,400 - Total expenditures 825,500 825,500 839,201 (13,701) Net change in fund balance (396,300) (396,300) 20,732 417,032 Fund balance, beginning of year 166,201 166,201 166,201 - Fund balance, end of year $ (230,099) $ (230,099) $ 186,933 $ 417,032 - 20 - RA ROGERS, ANDERSON, MALODY 8 SCOTT, LLP M S 735 E. Carnegie Dr.Suite 100 San Bei nard'no.CA 92408 909 889 0871 T 909 889 5361 F Board of Directors ramscpa net Rosemead Housing Development Corporation City of Rosemead, California 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 We have audited, 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, the financial statements of the governmental activities and the major fund of the Rosemead Housing Development Corporation (the Corporation), a component unit of the City of Rosemead, California, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Corporation's basic financial statements, and have issued our report thereon dated January 16, 2017. 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 performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. - 21 - STABILITY. ACCURACY. TRUST. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting 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 Corporation'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 Corporation's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Ro5er9,Rlndereorq,Ma1od8&Scott,Lt-P San Bernardino, California January 16, 2017 - 22 -