Loading...
CC - Item 5C - Transmittal of Fiscal Year 2016/17 City of Rosemead and Housing Corporation Annial Financial Reports E M F p te, ROSEMEAD CITY COUNCIL STAFF REPORT "tORI TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: GLORIA MOLLEDA, CITY MANAGER DATE: JANUARY 23. 2018 Lt SUBJECT: TRANSMITTAL OF FISCAL YEAR 2016/17 CITY OF ROSEMEAD AND ROSEMEAD HOUSING CORPORATION ANNUAL FINANCIAL REPORTS SUMMARY This report provides the Fiscal Year (FY) 2016/17 annual financial reports for the City of Rosemead and the Rosemead Housing Development Corporation to the City Council. The City of Rosemead Comprehensive Annual Financial 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. DISCUSSION After the close of each fiscal year, the Finance Department is responsible for the preparation and publication of the City's CAFR following an independent, certified audit. The goal of the financial audit and report is to provide users with a reasonable assurance that the information presented in the statements is accurate and timely. The CAFR presents information on the status of the City's financial affairs, first on a citywide basis (Government-Wide Financial Statements) in which all City activities are reported as governmental activities. A second set of statements (Fund Financial Statements) report separately, the activities of all City funds. The CAFR is organized into three primary sections: 1. Introductory Section — which includes the Finance Director's Letter of Transmittal, List of Principal Officials, and the Organizational Chart. 2. Financial Section — which includes the Independent Auditor's Report, Management's Discussion and Analysis, and the general purpose financial statements consisting of the combined financial statements, notes to the financial statements, and supplemental statements. rrEM NUMBER: Sc City Council Meeting January 23,2018 Page 2 of 7 3. Statistical Section — which includes comparative information on pertinent City data such as expenditures, revenues, assessed valuations, tax levies, demographic data, and performance measurements. The CAFR is utilized by the investment community, including bond buyers, underwriters, bond issuers, and credit rating agencies. The CAFR serves as a public information tool in the form of a comprehensive presentation of all the City's financial activities. ANALYSIS For FY 2016/17, the accounting firm of Rogers, Anderson, Malody & Scott, LLP performed an independent audit to determine the financial statements are fairly presented and free from material misstatement. The independent auditor concluded there was a reasonable basis for rendering an unmodified opinion, and that the City's financial statements are fairly presented in conformity with Generally Accepted Accounting Principles (GAAP). An unmodified opinion provides a high level of assurance that a professional, independent examination of financial statements has not revealed any actual or possible material misstatements in those financial statements. Listed below are the financial highlights for FY 2016/17: • General Fund fund balance at the end of Fiscal Year 2016/17 increased $566 thousand. This increase is largely due to an increase in sales tax and transient occupancy tax revenues. • At the end of the current fiscal year, unassigned fund balance for the General Fund was $11.3 million or 54% of total General Fund expenditures. $6.9 million or 31% is set aside to meet the City's reserve policy. • The assets related to Governmental Activities has increased by approximately $2.8 million, which is largely due to an increase in both cash and investments and capital assets. There are two primary citywide financial statements: the Statement of Net Position and the Statement of Activities. Like a balance sheet in private sector accounting, the Statement of Net Position presents the City's overall financial position at a specific point in time — in the City's Comprehensive Annual Financial Report for Fiscal Year Ending June 30, 2017 case, this is as of the last day of the fiscal year (i.e., June 30). The Statement of Activities is similar to the income statement, presenting the City's results of operations over a period of time. City Council Meeting January 23,2018 Page 3 of 7 City of Rosemead's Net Position As of June 30, 2017 and 2016 (thousands) Current and other assets 27,620 26,130 Capital assets 52,806 51,542 Total assets 80,426 77,672 Deferred outflows of resources 5,018 2,937 Long-term liabilities outstanding 8,876 8,826 Other liabilities 2,652 2,216 Total liabilities 11,528 11,042 Deferred inflows of resources 1,033 910 Net assets: Invested in capital assets, net of related debt 52,806 51,542 Restricted 4,387 4,006 Unrestricted 15,690 13,109 Total net position $ 72,883 $ 68,657 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 $72.9 million at the close of the most recent fiscal year. A significant portion of the City of Rosemead's net position (72%) 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. An additional portion of the City of Rosemead's net position (6%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted City Council Meeting January 23, 2018 Page 4 of 7 net position ($15.7 million) may he used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Rosemead is able to report positive net position balances. The situation also held true for the prior fiscal year. City of Rosemead's Changes in Net Position Years Ended June 30, 2017 and 2016 (thousands) Program revenues: Chargesforservices $ 4,646 $ 4,400 Operating grants and contributions 5,636 5,848 Capital grants and contributions 1,019 973 General revenues: Property taxes 8,643 9,158 Other taxes 8,804 7,333 Investment income 20 349 Other 738 945 Total revenues 29,506 29,006 Expenses: General government 3,706 3,217 Public safety 8935 8,382 Public works 7,324 8739 Community development 3,161 3,246 Parks and recreation 2,154 2,073 Interest on long-term debt - 1 Total expenses 25,280 25,658 Change in net position 4,226 3,348 Net position -lune 30,2016 68657 65,309 Net position -June 30, 2017 $ 72,883 $ 68,657 City Council Meeting January 23,2018 Page 5 of 7 Governmental activities increased the City of Rosemead's net position by $4.2 million. General revenue and program revenue exceeded expenses by this amount. The expenses increased in General Government and Public Safety; 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. 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 $11.3 million, while total fund balance reached $19 million. 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 54% of total General Fund expenditures, while total fund balance represents 91% of that same amount. The fund balance of the City of Rosemead's General Fund increased by $566 thousand 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 $566 thousand. Several revenues had large increases including Sales Tax, transient occupancy tax (TOT), and Licenses and Permits. Additional highlights of the change in fund balance are presented below. • General Fund revenues increased $816 thousand in FY 2016/17 over the prior year. The largest revenue categories were: property tax increased $130 thousand, sales tax increased $1.2 million, TOT increased $214 thousand and building permits and public works permits increased $189 thousand. The substantial increase in both building permits and public works permits is a result of increased development projects in the City. The TOT increase is a result of the improved economy and tourism activity within California on the rise. Sales tax growth is attributed to growth in the overall economy and in consumer spending. In the prior year, the City no longer received property tax in lieu. This attributed to a$912 thousand decrease in property tax in lieu: therefore, causing the net increase in the general fund to be only $816 thousand for the current year. • General Fund expenditures increased $2.2 million over the prior year due to an increase in legal fees of $146 thousand as a result of attorney fee increases and litigations, IIR consultant fees of $42 thousand, and general liability and worker's comp insurance increase of$149 thousand relating to retrospective deposits billed from CJPIA. • Sales tax consultant fees increased $60 thousand. As a result of the sales tax audits conducted, the City saw an increase in sales tax revenues. City Council Meeting January 23,2018 Page 6 of 7 • Community development expenditures increased $134 thousand due to an increase in building and planning costs; however, these costs were offset by building permit and plan check revenues. • Public safety expenditures is one of the City's largest area of expenditures. The Los Angeles County's Sheriffs Department contract increased by 3.8% over the previous year and the Liability Trust Fund increased as well. This attributed to an increase in public safety expenditures of$485 thousand. • Public works expenditures increased $318 thousand primarily due to $200 thousand increase in engineering costs, $58 thousand in tree maintenance costs, and $49 thousand in water costs. In the prior year, the City had turnover in the Public Works department causing a backlog in capital improvement projects. In the current year, the City was able to complete some of the capital improvement projects that were delayed in the prior year, which attributed to increased engineering costs and tree maintenance costs. The increase in water costs is a result of new parks and facilities in the City. • Parks and recreation expenditures increased primarily due to additional staffing in FY 2016/17. The department hired a new Parks and Recreation Manager and converted a'/, part-time staff into a full-time staff. This attributed to the increase of $134 thousand in parks and recreation expenditures. • The City was also faced with an increase in retirement costs as a result of the discount rate and assumption changes approved by the CaIPERS board, which impacted the actuarial valuation performed and this caused an increase to participants' retirement contributions. Rosemead Housing Development Corporation(RI-MCI 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. In conclusion, the City continues to remain in satisfactory financial condition thanks to a relatively diverse and stable revenue base including sales tax, property tax, TOT, and various licenses and permits. Property tax is the City's largest tax source at $8.6 million, sales tax as the second largest revenue source at $5.4 million, and "f0T at $2.2 million. The aggregate debt service payments are reduced by $3.1 million due to the City's prudent decision to refinance the Series 2006A and 2006B Tax Allocation Bonds. This resulted in a present value economic gain City Council Meeting January 23,2018 Page 7 of 7 of$2.3 million. The City is ending its fiscal year 2016/17 with a healthy General Fund Balance of$19 million. The preparation and publication of this report is made possible through the dedication of the entire Finance Department staff The department coordinated the closing of the books for the fiscal year, ensuring timely and accurate reporting. This report would also not have been possible without the leadership of the City Manager and continued commitment from the Mayor and City Council in conducting the financial operations and corresponding financial disclosures of the City in an open, public and transparent manner. STAFF RECOMMENDATION It is recommended that the City Council receive and file the City of Rosemead Comprehensive Annual Financial Report (CAFR) and the Rosemead Housing Development Corporation (RHDC) Annual Financial and Compliance Report for the Fiscal Year ending June 30, 2017. 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. PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Prepared ep _ by: Pearl Lieu, Finance Director Attachment A:City of Rosemead Comprehensive Annual Report Attachment B:Rosemead Housing Development Corporation Financial and Compliance Report AE M� 9 O CIVIC PRIDE '4110/1h.L :" /NCDRPORATED 1059 Attachment A City of Rosemead Comprehensive Annual Report City of osemea Comprehensive Annual Financial Report Fiscal Year EndedJune 30, 2017 ., „. „ -lig , ..., • _ ` { . I. F 1 i F � ' I40b 1 _, 1: ,1' i =� <- _ ,z . • , • , :„• 4. 1 .' r. i .1%-ii, ' ' . Limo-- - , 1 *07— ---_______ _ \ —.6,...,1. • • < xY Air It Vrtill eseei04441, kOSEWAD Today's Small Town America CITY OF ROSEMEAD Rosemead, California Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2017 4 Prepared by the Finance Department Pearl Lieu Director of Finance (This page intentionally left blank) CITY OF ROSEMEAD Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2017 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 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 73 Budgetary Comparison Schedule: General Fund 74 Rosemead Housing Development Corporation —Special Revenue Fund 75 City Capital Project— Capital Projects 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, 2017 TABLE OF CONTENTS, (continued) Page FINANCIAL SECTION, (continued) OTHER SUPPLEMENTARY INFORMATION Combining Balance Sheet— Nonmajor Governmental Funds 84 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances— Nonmajor Governmental Funds 88 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual— Community Development Block Grant 92 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Proposition A 93 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Proposition C 94 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual —State Gas Tax 95 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual —Air Quality Management District 96 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual— Street Lighting 97 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual— HOME Program 98 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Measure R 99 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Development Impact Traffic 100 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Development Impact Public Safety 101 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Development Impact General Government 102 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Development Impact Parks 103 Combining Statement of Net Position — Internal Service Funds 105 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position — Internal Service Funds 106 Combining Statement of Cash Flows 107 Statement of Changes in Fiduciary Assets and Liabilities—Agency Fund 108 CITY OF ROSEMEAD Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2017 TABLE OF CONTENTS, (continued) Page STATISTICAL SECTION Net Position by Component 109 Changes in Net Position 111 Fund Balances of Governmental Funds 113 Changes in Fund Balances of Governmental Funds 115 Assessed Value and Estimated Actual Value of Taxable Property 117 Direct and Overlapping Property Tax Rates 118 Principal Property Taxpayers 119 Property Tax Levies and Collections 120 Ratios of Outstanding Debt by Type 121 Ratio of General Bonded Debt Outstanding 122 Direct and Overlapping Governmental Activities Debt 123 Legal Debt Margin 124 Pledged-Revenue Coverage 126 Demographic and Economic Statistics 127 Principal Employers 128 Full-time and Part-time City Employees by Function 129 Operating Indicators by Function 130 Capital Assets Statistics by Function 131 MAYOR: City of tisemead ]tat UH PlnllEH; 1438 I .VLI.I Y1101 IA ARD CU BOX 399 Yn‘i>Lr KOAPmi..m) < AI II RNIA0IT)1 tut M IL AIY:AItlERS I LLLI'IIUAL(6261569-210o N'uivv.Ai yO n� P.AXH261]7-91111 December 28, 2017 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Rosemead: We proudly present to you the City of Rosemead's Comprehensive Annual Financial Report (CAFR). This report consists of management's representations concerning the finances of the City of Rosemead. It was prepared by the Finance Department in accordance with Generally Accepted Accounting Principles (GAAP) as promulgated by the Government Accounting Standards Board (GASB). Management assumes full responsibility for the completeness and reliability of all of the information presented in this report. We believe that the data presented is complete and reliable in all material respects; that it is presented in a manner designed to fairly set forth the financial activity of the City's various funds; and that all disclosures necessary to enable the reader to gain a good understanding of the City's financial activity have been included. The City of Rosemead's financial statements have been audited by Rogers, Anderson, Malody & Scott, LLP ("RAMS"), a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Rosemead for the fiscal year ended June 30, 2017, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Rosemead's financial statements for the fiscal year ended June 30, 2017, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City of Rosemead was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Rosemead's separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City 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 occupies a land area of 5.5 square miles and serves a population of more than 55,000. The City 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. The City Council consists of five members elected to four-year staggered terms of office. The Mayor is selected from among the City Council members and serves a one year term. Many of the functions often provided by municipal government are provided by special districts. Examples of some of Rosemead's special districts, which usually encompass areas larger than the City itself, are the Fire Protection District, the Library District, and the County Flood Control District. Certain other governmental functions are paid for by the City, but performed by a variety of other public and private agencies under contract. Some of the contracts in effect during the fiscal year were for police and street maintenance. The City also has two blended component units: 1) the Rosemead Financing Authority (the Authority) and 2) the Rosemead Housing Development Corporation (RHDC). The City of Rosemead also provides a full range of services, including recreational activities and cultural events. Additional information on all three of these legally separate entities can be found in Note 1(a) in the notes to the financial statements. The annual budget serves as the foundation for the City of Rosemead and its component unit's financial planning and control. All business units and component units of the City of Rosemead are required to submit requests for appropriation to the City Manager in mid-March of each year. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the City Council for review prior to June 30. The City Council is required to hold public hearings on the proposed budget and to adopt a final budget no later than June 30, the close of the City of Rosemead's fiscal year. The appropriated budget is prepared by fund and department (e.g., public safety). Department heads, with City Manager approval, may make transfers of appropriations within a department. Transfers of appropriations between departments, however, require the approval of the City Council. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund and major special revenue funds, these comparison schedules are presented as part of the required supplementary information in the accompanying financial statements. For governmental funds that have appropriated annual budgets, other than the general fund, and major special revenue funds, these comparison schedules are presented in the other supplementary section of the accompanying financial statements. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Rosemead operates. Local Economy The City of Rosemead continues to remain in satisfactory financial condition thanks to a relatively diverse and stable revenue base including sales tax, property tax, transient occupancy tax, and various licenses and permits. The region has a varied retail and industrial base including two national general merchandise stores that continues to perform well along with some new restaurants and retail businesses have helped the City's sales tax to show modest growth. Property tax is the City's largest tax source at $8.6 million and make up approximately 38% of the General Fund revenues. The City experienced a net taxable value increase of 4% for the 2017/18 tax roll, while Los Angeles County experienced an increase in assessed values of 6% over the prior year due to an increase in residential real estate values. In the City of Rosemead, assessed values increased by $170 million over FY 2016/17. The housing market has fully recovered from the recent recession. Current median home prices are at or above the pre- recession peak values. Inventory constraints are the main contributor to increases in home prices over the last year. Lack of significant new home construction is one of the main factors affecting supply. The median sale price of a detached single family residential home in Rosemead from January through September 2017 was $553,500, which represents a 10.7% increase in median sale price from 2016. Rosemead's assessed values and property taxes are expected to continue performing strongly as the general economy improves. Data also show that Rosemead retains $0.0668 for every dollar of property tax collected within the City. Sales tax is the second largest revenue source for the General Fund, at $5.4 million and make up approximately 24% of the General Fund revenues. Our City receives only one cent for every dollar of sales tax collected within the City. The City has three large general consumer goods businesses, Walmart, Target and Macy's, who generate 40% of sales tax revenues to the City's General Fund. Long-term Financial Planning In 2009, the City Council embraced the strategic plan process, which enabled us to identify our threats and opportunities as well as develop strategies and action items to accomplish key organizational goals. In the summer of 2016, the City Council held several community workshops that resulted in an updated two-year strategic plan that was adopted by the City Council. The updated strategic plan serves as a "roadmap' to help City staff navigate the goals of the community through June 2018. Through the development and refinement of this vital document, the City Council has affirmed three Key Organizational Goals: 1) Ensure the City's continued financial viability by actively pursuing quality economic development. 2) Beautify residential neighborhoods and commercial corridors. 3) Enhance public safety and quality of life. Many action items designed to meet these goals include pursuing economic development, combating crime, enhancing the City's public infrastructure and public right-of-way, exploring parks facilities, and maintaining a structurally balanced General Fund budget. The City's five- year financial plan is used annually as part of the budget development process to identify capital and operating needs over the next five years. iii 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 in the notes to the Basic Financial Statements. Pension and other postemployment benefits The City of Rosemead is contracted with the California Public Employees Retirement System (CaIPERS)for retirement benefits for full-time employees. Supplemental retirement benefits are offered to qualified full-time employees, retirees and part-time employees through Public Agency Retirement Services (PARS). The City also provides health insurance benefits for certain qualified retirees. In accordance with GASB Statement No.45, additional information on the City of Rosemead's pension arrangements and postemployment benefits can be found in Note 11 in the notes to the Basic Financial Statements. Debt Administration The City has no outstanding general obligation bonds as of June 30, 2017. Debt outstanding of the Successor Agency to the Rosemead Community Development Commission includes the 2016 Tax Allocation Bonds for$24,730,000 and 2010A Tax Allocation Bonds for$7,045,000. 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 implementing the Quality of Life Team, completion of the Rosemead Skate Plaza, City Maintenance Yard, and Temple City Resurfacing project, and improvements to various roadways, sidewalks, parks, storm water, and traffic signal upgrades. Way Finding signs were installed throughout the community during fiscal year 2016/17. iv Future Initiatives The City anticipates an increase in TOT due to the opening of the Hartford Hotel in July 2017. The City anticipates the opening of the Starbucks Drive-Thru and Lucille's Smokehouse BBQ restaurant. Future projects include Ross, Panda Express, and Hampton Inn and Suites. There are several mixed-use projects under construction that will be completed in FY 2017/18. All of these are expected to increase our revenues in the upcoming year. During fiscal year 2017/18, the City will continue to work on the Garvey Specific Plan which will help revitalize Garvey Avenue and bring more economic development to the area. Acknowledgements The preparation and publication of this report is made possible through the dedication of the entire Finance Department staff, and especially from Colleen Ishibashi, Finance Services Supervisor. The department coordinated the closing of the books for the fiscal year, ensuring timely and accurate reporting. This report would also not have been possible without the leadership of the City Manager, Bill R. Manis, and continued commitment from the Mayor and City Council in conducting the financial operations and corresponding financial disclosures of the City in an open, public and transparent manner. Finally, thanks are extended to the firm of Rogers, Anderson, Melody & Scott, LLP for their contributions towards improving our financial reporting. Respectfully submitted, Pearl Lieu Director of Finance v (This page intentionally left blank) CITY OF ROSEMEAD Directory of Officials June 30, 2017 CITY COUNCIL Polly Low, Mayor Steven Ly, Mayor Pro Tern William Alarcon, Council Member Sandra Armenta, Council Member Margaret Clark, Council Member CITY MANAGEMENT William R. Manis, City Manager Brad McKinney, Assistant City Manager Lt. Robert Hahnlein, Chief of Police Jason C. Chacon, Parks and Recreation Director Pearl Lieu, Finance Director Michelle Ramirez, Community Development Director Vacant, Public Works Director Marc Donohue, City Clerk Rachel H. Richman, City Attorney vi CITY OF ROSEMEAD Function Based Organizational Chart The People IPlanning � Traffic Commission Commission —1 11 City Clerk I City Attorney I l I L—I Assistant City Manager J City Manager —technology& Public Safety I-- Business Support Human Community r_—1 ROSOUralS Development L—— Finance C Public Works I IRisk Parks& L-- Management I Recreation VII FINANCIAL SECTION (This page intentionally left blank) RA ROGERS, ANDERSON. MALOOY& SCOTT, LLP MCERTIFIED PUBLIC ACCOUNTANTS.SINCE 1948 S 735 E.Carnegie Dr. Suite 100 San Bernardino,CA 92408 909 889 0871 T 909 889 5361 F The Honorable Mayor and City Council ramscpa net City of Rosemead Rosemead, California PARTNERS Brenda L.Odle,CPA MST Terry P.Shea,CPA Independent Auditor's Report Kirk A.Franks,CPA Scott W. Manno.CPA.CGMA Leena Shanbhag,CPA MST.CGMA Bradlerd A.Welehir,CPA.MBA.CGMA Report on the Financial Statements lay H.Zercher,CPA(Partner Emeritus) Phillip H.Waller,CPA(Partner Emeritus) We have audited the accompanying financial statements of the MANAGERS/STAFF governmental activities, each major fund, and the aggregate remaining Jenny Lill,CPA.MST fund information of City of Rosemead (City), as of and for the year ended Senng-Hyea Lee CPA,MBA June 30, 2017, and the related notes to the financial statements, which Charles De Samoni,CPA Nathan Statham.CPA MBA collectively comprise the City's basic financial statements as listed in the Gardenya Duran,CPA table of contents. erianna Schultz,CPA Lisa Dongsue Guo.CPA.MSA 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 MEMBERS assurance about whether the financial statements are free from material American Institute of Certified Public Accountants misstatement. PCPS the AICPA Affiance for CPA Firers Go. enol Audi Quality Censer California Society of Corn fled Public Accountants 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 City'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 City'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, 2017, 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 December 28, 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. titacetttoa, Mw4m4� z Jceit/ LLP. SanBernardino, California l/ December 28, 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, 2017. 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 2016/17 increased $566 thousand. This increase is largely due to an increase in sales tax and transient occupancy tax revenues. • At the end of the current fiscal year, unassigned fund balance for the General Fund was $11.3 million or 54% of total General Fund expenditures. $6.9 million or 31% is set aside to meet the City's reserve policy. • The assets related to Governmental Activities has increased by approximately $2.8 million which is largely due to an increase in both cash and investments and capital assets. 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 and liabilities, deferred inflows of resources with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Rosemead is improving or deteriorating. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). 4 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 16 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 and Capital Project Fund, all three of which are considered to be major funds. Data from the other 13 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non- major governmental funds is provided in the form of combining statements elsewhere in this report. 5 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, City Capital Projects Fund, Community Development Block Grant Fund, Proposition A Fund, Proposition C Fund, Measure R, State Gas Tax Fund, Air Quality Management District Fund, Street Lighting Fund, HOME Program Fund, DIF Traffic Fund, DIF Public Safety Fund, DIF General Government Fund, and DIF Parks Fund and 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 page 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 28-72 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 73-81 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 84-108 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 $72.9 million at the close of the most recent fiscal year. A significant portion of the City of Rosemead's net position (72%) 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, 2017 and 2016 (thousands) Current and other assets $ 27,620 $ 26,130 Capital assets 52,806 51,542 Total assets 80,426 77,672 Deferred outflows of resources 5,018 2,937 Long-term liabilities outstanding 8,876 8,826 Other liabilities 2,652 2,216 Total liabilities 11,528 11,042 Deferred inflows of resources 1,033 910 Net position: Net investment in capital assets 52,806 51,542 Restricted 4,387 4,006 Unrestricted 15,690 13,109 Total net position $ 72,883 $ 68,657 An additional portion of the City of Rosemead's net position (6%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position ($15.7 million) may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Rosemead is able to report positive net position balances. The situation also held true for the prior fiscal year. Governmental activities. Governmental activities increased the City of Rosemead's net position by $4.2 million. General revenue and program revenue exceeded expenses by this amount. The expenses increased in General Government and Public Safety; 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, 2017 and 2016 (thousands) ill.11/11 Program revenues: Charges for services $ 4,646 $ 4,400 Operating grants and contributions 5,636 5,848 Capital grants and contributions 1,019 973 General revenues: Property taxes 8,643 9,158 Other taxes 8,804 7,333 Investment income 20 349 Other 738 945 Total revenues 29,506 29,006 Expenses: General government 3,706 3,217 Public safety 8,935 8,382 Public works 7,324 8,739 Community development 3,161 3,246 Parks and recreation 2,154 2,073 Interest on long-term debt - 1 Total expenses 25,280 25,658 Change in net position 4,226 3,348 Net position-June 30, 2016 68,657 65,309 Net position-June 30, 2017 $ 72,883 $ 68,657 8 Revenues by Source Governmental Activities Investment income Other revenues Other taxes 1% 4% 1% Franchisetaxes_ , 7% Transient occupancy taxes 10% Property taxes 55% Sales and use taxes 22% Expenses and Program Revenues Governmental Activities 10,000,000 - 8,000,000 6,000,000 ■expenses 4,000,000 ®revenues 2,000,000 General Public Public Community Parks and government safety works development recreation 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$22.8 million, an increase of$1.1 million in comparison with the prior year. Approximately 47% of this total amount, $10.6 million constitutes unassigned 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 $11.3 million, while total fund balance reached $19 million. 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 54% of total General Fund expenditures, while total fund balance represents 91% of that same amount. The fund balance of the City of Rosemead's General Fund increased by $566 thousand 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 $566 thousand. Several revenues had large increases including Sales Tax, TOT and Licenses and Permits. Additional highlights of the change in fund balance are presented below. • General Fund revenues increased $816 thousand in 2016/17 over the prior year. The largest revenue categories were: property tax increased $130 thousand, sales tax increased $1.2 million, TOT increased $214 thousand and building permits and public works permits increased $189 thousand. The substantial increase in both building permits and public works permits is a result of increased development projects in the City. The TOT increase is a result of the improved economy and tourism activity within California on the rise. Sales tax growth is attributed to growth in the overall economy and in consumer spending. In the prior year, the City no longer received property tax in lieu. This attributed to a $912 thousand decrease in property tax in lieu; therefore, causing the net increase in the General Fund to be only $816 thousand for the current year. • General Fund expenditures increased $2.2 million over the prior year due to an increase in legal fees of $146 thousand as a result of attorney fee increases and litigations, HR consultant fees of $42 thousand, and general liability and worker's comp insurance increase of$149 thousand relating to retrospective deposits billed from CJPIA. • Sales tax consultant fees increased $60 thousand. As a result of the sales tax audits conducted, the City saw an increase in sales tax revenues. 10 • Community development expenditures increased due to building and planning costs increased $134 thousand; however, these costs are offsetted by building permit and plan check revenues. • Public safety expenditures is one of the City's largest areas of expenditures. The Los Angeles County's Sheriffs Department contract increased by 3.8% over the previous year and the Liability Trust Fund increased as well. This attributed to an increase in public safety expenditures of$485 thousand. • Public works expenditures increased $318 thousand primarily due to $200 thousand increase in engineering costs, $58 thousand in tree maintenance costs, and $49 thousand in water costs. In the prior year, the City had turnover in the Public Works department causing a backlog in capital improvement projects. In the current year, the City was able to complete some of the capital improvement projects that were delayed in the prior year, which attributed to increased engineering costs and tree maintenance costs. The increase in water costs is a result of new parks and facilities in the City. • Parks and recreation expenditures increased primarily due to additional staffing in FY 2016/17. The department hired a new Parks and Recreation Manager and converted a part-time staff into a full-time staff. This attributed to the increase of$134 thousand in parks and recreation expenditures. • The City was also faced with an increase in retirement costs as a result of the discount rate and assumption changes approved by the CaIPERS board, which impacted the actuarial valuation performed and this caused an increase to participants' retirement contributions. General Fund Budget Analysis. The City's General Fund collected revenues of slightly more than $1.4 million in comparison to the budgeted estimates or 7% more than the budget. Sales tax increases of$344 thousand was driven by an improving economy and the opening of some new restaurants and businesses and the increase of $213 thousand in Transient Occupancy Tax was due to an improving travel industry. In addition Licenses and Permit revenue increased almost $680 thousand due to increased development and projects during FY 2016/17. The General Fund expenditure budget to actual variance of $232 thousand was due to the City not budgeting for unexpected litigation costs, sales tax consultant fees, and general liability and worker's compensation insurance retrospective payments from CJPIA. Additionally, the City budgeted conservatively for building and planning expenditures, the costs went over by $287 thousand due to more projects than anticipated and the costs were 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. Expenditures for the Proposition A fund are increasing as greater efforts are being made to increase fixed route ridership as are the operating expenditures for Dial-A-Ride in the Proposition C Fund. The City is utilizing Measure R funds for capital improvement projects for street improvements, paving, sidewalk installation, traffic study, and transportation program planning. 11 Rosemead Housing Development Corporation (RHDC). The RHDC Fund receives its funding from tenant rents and subsidies from the Successor Agency. As operational costs have continued to increase and tenant rents have remained relatively constant, the reliance on the subsidy from the Successor Agency has become more important. Through the elimination of redevelopment this obligation was submitted and subsequently approved by the Department of Finance as an enforceable obligation which will ensure ongoing funding for the RHDC into the future. As such, revenues and expenditures in this fund will typically balance out at the end of each fiscal year with just a minimal balance remaining due to timing issues. City Capital Protects Fund. The City Capital Projects Fund accounts for financial resources to be used for the acquisition and construction of major capital facilities within the City. During the fiscal year ending June 30, 2017, the City constructed a new Rosemead Skate Park Plaza, acquired a new building for the City Maintenance Yard, purchased three new Public Safety vehicles, and used funding on street and park improvements projects. 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, 2017, amounts to $52.8 million (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 the new Rosemead Skate Park Plaza • Completion of the new building on River Avenue for City Maintenance Yard • Completion of the Temple City Resurfacing project • Purchase of three new Ford F150 trucks for the Public Safety Department • Construction in progress for Hellman/Del Mar CIP project • Construction in progress for Rosemead Pedestrian Lighting CIP project • Construction in progress for Zapopan Park • Construction in progress for Jay Imperial Park Land $ 4,417 $ 4,417 Buildings 14,897 14,795 Improvements other than buildings 995 555 Machinery and equipment 52 73 Autos and trucks 521 621 Furniture and office equipment 189 245 Infrastructure 28,725 30,271 Construction in progress 3,010 565 Total $ 52,806 $ 51,542 12 Additional information on the City of Rosemead's capital assets can be found in note No. 7, found on page 44 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 $31,775,000. Of this amount, all of it is backed by future property tax increment revenues. City of Rosemead's Outstanding Debt Revenue Bonds (thousands) Tax Allocation Bonds $ 31,775 $ 35,970 • The Successor Agency's total bonded debt decreased by $4.2 million during the current fiscal year due to the refinance of the Series 2006A and 20068 bonds. For more detailed information about the Successor's Agency Long Term Debt, please refer to Note No. 17 on page 71 of the Basic Financial Statements. 13 Economic Factors and Next Year's Budgets and Rates • The City has included in the FY 2017/18 budget, capital improvement projects that were funded from the bond proceeds from the former redevelopment agency. The final projects to be funded from these bond proceeds include the Zapoppan Park project, which will be completed early in the 2017/18 fiscal year. • As discussed throughout this Managements Discussion and Analysis report, there were large General Fund revenue increases in FY 2016/17. Property tax revenues have shown modest increases and are projected to continue with steady growth pattern. Sales taxes are expected to increase significantly due to new restaurants and stores addition to the community. License and permit revenues are expected to increase due to an increase in growth and development in the City. Additionally, TOT revenues are expected to increase as a result of the new Hartford Hotel opening in July 2017 and future projects with the Hampton Inn & Suites. • The local economy is projected to continue its modest growth in the coming year and has been reflected in the City's FY 2017/18 Revenue budget. At the time of budget preparation and up to its adoption, General Fund Revenue is projected to increase 6% over the FY 2016/17 budgeted amount. • The City adopted the General Fund FY 2017/18 budget with a projected $17.9 million fund balance reserve. The Operating Budget for Fiscal Year 2017/18 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, CA 91770. 14 (This page intentionally left blank) City of Rosemead Statement of Net Position Government-wide Financial Statement June 30, 2017 Governmental Activities ASSETS Cash and investments (note 2) $ 21,709,010 Receivables: Accounts 2,840,338 Interest 49,945 Loans(note 3) 369,949 Due from Successor Agency(note 6) 220,018 Prepaid expenses 765,218 OPEB asset(note 9) 1,665,840 Capital assets (note 7): Land 4,417,104 Construction in progress 3,009,630 Other capital assets, net 45,379459 Total assets 80,426,511 DEFERRED OUTFLOWS OF RESOURCES Pension related(note 11,12) 5,017,945 LIABILITIES Accounts payable and accrued liabilities 1,974,805 Accrued salaries and benefits 246,114 Retentions payable 150,523 Unearned revenue 8,000 Non-current liabilities (note 8): Due within one year 272,602 Due in more than one year 8,875,940 Total liabilities 11$27,984 DEFERRED INFLOWS OF RESOURCES Pension related(note 11,12) 1,032,503 NET POSITION Net investment in capital assets 52,806,193 Restricted for: Public works 4,141,615 Community service 245,440 Unrestricted 15,690,721 Total net position $ 72,883,969 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, 2017 Net(expense) 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 $ 3.705,685 $ 211,217 $1,980,387 $ - $ (1,514,081) Public safety 8,935.164 560,787 - 1,004488 (7,369,889) Public arks 7,323,865 648,141 3,584,170 - (3,091,554) Community development 3,161,310 2.437,458 71,164 14,728 (637,960) Parks and recreation 2.153.986 788,931 - - (1,365,055) Total governmental activities $25,280,010 $4,646,534 $5,635,721 $ 1,019,216 (13,978,539) General revenues: Taxes: Property taxes 8,643,019 Sales and use taxes 5,366,975 Transient occupancy taxes 2,213,286 Franchise taxes 1,123,383 Other taxes 100,847 Investment income 20,526 Other 737,721 Total general revenues 18,205,757 Change in net position 4.227.218 Net position, beginning of year 68R56,751 Net position, end of year $ 72,883,969 The accompanying notes are an integral part of these financial statements. 16 City of Rosemead Balance Sheet Governmental Funds June 30, 2017 Special Revenue Capital Projects Rosemead Housing Development General Corporation City ASSETS Cash and investments(note 2) $ 16.554,162 $ 266,710 $ - Receivables: Accounts 1,860,843 9,003 546340 Interest 49945 - - Loans(note 3) 369,949 - - Prepaid items 765.218 - - Due from other funds(note 5) 1,165.392 - - Due from Successor Agency(note 6) 12532 207,486 - Total assets $ 26778041 $ 283199 $ 5481340 LIABILITIES,DEFERRED INFLOWS OF RESOURCES,AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 1,230,572 $ 51,130 $ 258,243 Accrued salaries and benefits 210,238 - 3,332 Retention payable - - 133101 Due to other funds(note 5) - 204.800 639,653 Unearned revenue - - - Total liabilities 1,440,810 255.930 1.034,429 Deferred inflows of resources: Unavailable revenues 302,955 - - Total deferred inflows of resources 302,955 - - Fund balances: Nonspendable 765,218 - - Restricted for: Public works - - - Community services - - - Low and moderate income housing - 227,269 - Committed 6,935,969 - - Assigned 63,298 - - Unassigned 11,269,791 - (486089) Total fund balances(deficit) 19634176 227,269 (486,089) Total liabilities,deferred inflows of resources and fund balances $ 20 778,041 $ 483,199 $ 548.340 The accompanying notes are an integral part of these financial statements. 17 Total Nonmajor Total Governmental Governmental Funds Funds $ 4,387770 $ 21,208,642 422,152 2,840,338 49,945 369,949 765,218 1,165,392 220,018 $ 4,809,922 $ 26619,502 $ 434,827 $ 1,974,772 32,544 246,114 17,322 150,523 32Q939 1,165,392 8,000 8,000 813,632 3,544,801 302,955 302,955 765,218 4,141,615 4,141,615 18,171 18,171 227,269 6,935,969 63,298 (163.496) 10,620,206 3,996,290 22,771,746 $ 4.809,922 $ 26.619.502 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, 2017 Fund balances of governmental funds $ 22,771,746 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) 102,121,595 Accumulated depreciation (net of Internal Service Funds) (49,471,113) Long-term assets that are not available for current use.Amounts are not reported in the governmental funds. OPEB asset 1665,840 Long term liabilities and compensated absences that have not been included in the governmental fund activity. Compensated absences (633,958) Retrospective deposits payable (231,905) Net pension liability (8,282,679) Long-term notes receivable are not current financial resources and, therefore, are deferred in the governmental funds. 302,955 Deferred inflows and outflows of resources related to pensions are not reported in the governmental funds. Net deferred inflows of resources (1,032,503) Net deferred outflows of resources 5,017,945 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. 656,046 Net position of governmental activities $ 72,883,969 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, 2017 Special Revenue Capital Projects Rosemead Housing Development General Corporation City REVENUES Taxes $ 17447,510 $ - $ - Intergovernmental 209,332 412,286 589,523 Licenses and permits 2.754,881 - - Chargesforservices 923,412 - 1,240 Fines,forfeitures and penalties 607,754 - - Special assessments - - - Investment income 229,378 433,130 - Other 201,825 5,767 23,953 Total revenues 22,374,092 851,183 614,716 EXPENDITURES Current: General government 4,104,242 - - Public safety 8,868,713 - - Public works 3,718525 - 159,013 Community development 2834,505 810,847 - Parks and recreation 2,284,393 - - Capital outlay - - 2,790,493 Total expenditures 21,010,378 810847 2,949,506 Excess(deficiency)of revenues over(under)expenditures 1,363714 40,336 (2,334,790) OTHER FINANCING SOURCES(USES) Transfers in(note 5) - - 2,421.611 Transfers out(note 5) (797,587) - - Total other financing sources (uses) (797,587) - 2,421,611 Net change in fund balances 566,127 40,336 86,821 Fund balances (deficit), beginning of year 18,468,149 186,933 (572,910) Fund balances (deficit),end of year $ 19,034,276 $ 227,269 $ (486,089) The accompanying notes are an integral part of these financial statements. 20 Total Nonmajor Total Governmental Governmental Funds Funds $ - $ 17,447,510 4,512,899 5,724,040 2,754,881 87,905 1,012557 607,754 1,002,239 1,002,239 4,460 666,968 231,545 5,607,503 29,447,494 176,583 4,280,825 192127 9,060,840 2621,682 6,499,220 540,103 3,385,455 16,513 2,300,906 2,790,493 3,547,008 28,317,739 2,060,495 1,129,755 2Q 830 2,442,441 (1,644,854) (2,442,441) (1,624,024) - 436,471 1,129,755 3,559,819 21,641,991 $ 3,996,290 $ 22771 746 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 Government Funds For the year ended June 30, 2017 Net change in fund balances-total governmental funds $ 1,129,755 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) 3,992,351 Depreciation expense(net of Internal Service Funds) (2,696,700) Some expenses reported in the statement of activities do not require the use of current financial resources and,therefore,are not reported as expenditures in governmental funds. Increase in OPER asset 59,851 Pension related adjustments 1530,823 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 137,600 Increase in compensated absences payable (31,960) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 59,734 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. 45 764 Change in net position of governmental activities $ 4,227218 The accompanying notes are an integral part of these financial statements. 22 City of Rosemead Statement of Net Position Internal Service Funds June 30, 2017 Governmental Activities Internal Service Funds ASSETS Current assets: Cash and investments (note 2) $ 500,368 Total current assets 500,368 Non-current assets: Capital assets: Other capital assets, net(note 7) 155,711 Total non-current assets 155,711 Total assets 656,079 LIABILITIES Current liabilities: Accounts payable 33 Total current liabilities 33 Total non-current liabilities - Total liabilities 33 NET POSITION Net investment in capital assets 155,711 Unrestricted 500,335 Total net position $ 656,046 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, 2017 Governmental Activities Internal Service Funds OPERATING REVENUES Charges for services $ 269,400 Total operating revenues 269,400 OPERATING EXPENSES Contractual services 118.329 Depreciation 104,307 Total operating expenses 223,636 Change in net position 45,764 Net position, beginning of year 610,282 Net position, end of year $ 656,046 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, 2017 Governmental Activities Internal Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from users departments $ 269,400 Cash payments to suppliers for goods and services (122,915) Net cash provided by operating activities 146,485 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Cash paid to purchase capital asset (72,819) Net cash used for capital and related financing activities (72,819) Net increase in cash and investments 73,666 Cash and investments, beginning of year 426,702 Cash and investments, end of year $ 500,368 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 45,764 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 104,307 Increase (decrease) in accounts payable (3,586) Total adjustments 100,721 Net cash provided by operating activities $ 146,485 The accompanying notes are an integral part of these financial statements. 25 City of Rosemead Statement of Fiduciary Net Position Fiduciary Funds June 30, 2017 Successor Agency Private-purpose Agency Trust Fund Fund ASSETS Cash and investments (note 2) $ 7,240,319 $ 399,361 Receivables: Notes 201,314 - Prepaid 172,278 - Total assets 7,613,911 $ 399,361 LIABILITIES Accounts payable 3,507 $ - Deposits payable - 399,361 Accrued interest payable 299,366 - Due to City of Rosemead(note 6) 220,018 - Long-term debt(note 17): Due within one year 2,412,014 - Due in more than one year 30,979,320 - Total liabilities 33,914,225 $ 399,361 NET POSITION (DEFICIT) Held in trust for the Successor Agency (26,300,314) Total net position (deficit) $ (26,300,314) 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, 2017 Successor Agency Private-purpose Trust Fund ADDITIONS Property taxes $ 4,711,788 Investment earnings 59,874 Total additions 4,771,662 DEDUCTIONS Administrative expenses 2,033,687 Interest expense 1,155,821 Debt financing 544,754 Total deductions 3,734,262 Change in net position 1,037,400 Net position (deficit), beginning of year (27,337,714) Net position (deficit), end of year $ (26,300,314) 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, 2017 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, 2017 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, 2017 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 generally accepted accounting principles. Program revenues include charges for services, special assessments, and payments made by parties outside of the reporting governments 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, 2017 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, 2017 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 Projects 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, 2017 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, 2017 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, 2017 ._. 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, 2017 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, 2015 Measurement Date (MD) June 30, 2016 Measurement Period (MP) July 1, 2015 to June 30, 2016 PARS-Single Employer Agent Plan: Valuation Date (VD) June 30, 2016 Measurement Date (MD) June 30, 2017 Measurement Period (MP) July 1, 2016 to June 30, 2017 36 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 2: Cash and Investments Cash and investments as of June 30, 2017, are classified in the accompanying financial statements as follows: Statement of Net Position: Cash and investments $ 21,709,010 Statement of Fiduciary Net Position: Cash and investments 7,639,680 Total cash and investments $ 29,348,690 Cash and investments as of June 30, 2017, consist of the following: Deposits with financial institutions $ 11,679,533 Investments 17,669,157 Total cash and investments $ 29,348,690 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* U.S. Treasury Obligations Yes 5 years None None U.S. 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 565M Based on state law requirements or investment policy requirements, whichever is more restrictive. 37 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 2: Cash and Investments, (continued) 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. Maximum Maximum Maximum Percentage of Investment in Authorized Investment Type Maturity Portfolio One Issuer U.S. Treasury Obligations 5 years None None U.S. 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 $ 6,070,651 $ 6,070,651 $ - $ - Certificates of deposits 5,186,402 - - 5,186,402 U.S. agency securities 2,105,960 - - 2,105,960 Medium-term notes 2,008,629 - 226,498 1,782,131 Held by bond trustee: Money market mutual funds 1,149,079 1,149,079 - - Certificatesofdeposit 1,148,436 - - 1,148,436 Total $ 17,669,157 $ 7,219,730 $ 226,498 $10,222,929 38 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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. Mnim,m Legal Rating as of Year End hvestnent Type Total Rating AAA AA+ A+ A A- Not Rated State investment pool $ 6070651 N/A $ - 5 - $ 5 - $ 8 6,074651 Certflcates of deposes 5.186,402 WA - - - - - 5,186,402 U.S.agency securities 2.105,960 WA - 2,105,960 - - - Medlumtermnotes 2008,629 A - - 251480 1,261.916 495,233 - 14d by bond trustee: - - - Moneyrrerketrutualfunds 1.149,079 Multiple 1,143058 - - - - 5021 Certdicates of depose 1.148,436 WA - - - - - 1,148436 Total $ 17.669,157 81,143 058 52,105960 $ 251480 $1261916 $ 495.233 $ 12411510 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 $ 1,618,775 39 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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, 2017, the City had deposits with financial institutions in excess of federal depository insurance limits by $7,348,034 that were held in collateralized accounts. As of June 30, 2017, the Successor Agency had deposits with financial institutions in excess of federal depository insurance limits by $5,828,269 that were held in collateralized accounts. Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. 40 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 2: Cash and Investments, (continued) Fair Value Measurements Generally accepted accounting principles, 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, 2017: Investments by Total Level 1 Level 2 Level 3 Fair Value Level Certificates of deposits $ 6,334,838 $ - $ 6,334,838 $ - U.S. agency securities 2,105,960 - 2,105,960 - Medium-term notes 2.008,629 - 2,008,629 - Total investments by fair value 10,449,427 $ - $ 10,449,427 $ - Investments measured at the Net Asset Value(NAV) State investment pool 6,070,651 Money market mutual funds 1,149,079 Total $ 17,669,157 Note 3: Loans receivable Loans receivable consisted of the following at June 30, 2017: Balance Balance June 30, 2016 Additions Deletions June 30, 2017 Computer Loans $ 9,218 $ 11,106 $ (9,312) $ 11,012 San Gabriel Valley Water Co.Loan-Phase I 90,530 - (8,230) 82,300 San Gabriel Valley Water Co.Loan-Phase II 45,266 - (4,115) 41,151 Rio Hondo Community Development Co. Loan 227,086 - - 227,086 El Monte Cemetery Association Loan 9,600 - (1,200) 8,400 Total $ 381,700 $ 11,106 $(22,857) $ 369,949 41 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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, 2017, consisted of the following: Receivable Funds Payable Funds Amount General Fund RHDC $ 204,800 Capital Projects - City 639,653 Nonmajor Governmental Funds 320,939 Total $1,165,392 The due to General Fund from various funds was a result of temporary deficit cash balances in those funds. 42 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 5: Interfund Transactions, (continued) Transfers Interfund transfers for the year ending June 30, 2017, consisted of the following: Transfers In City Capital Non- Major Transfers out Governmental Projects Fund Funds Total General Fund $ 797,587 $ - $ 797,587 Nonmajor Governmental Funds 1,624,024 20,830 1,644,854 Total $ 2,421,611 $ 20,830 $ 2,442,441 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, 2017, are as follows: Due to City Due from Successor Agency Amount Successor Agency RHDC $ 207,486 General Fund 12,532 Total $ 220,018 Intergovernmental amounts between the Successor Agency and the City are for reimbursement of payroll expenses and short-term loans to cover operations. 43 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 7: Capital Assets Capital asset activity was as follows for the year ended June 30, 2017: Beginning Ending Governmental activities balance Additions Deletions Reclassifications balance Capital assets, not being depreciated: Land $ 4,417,104 $ - $ - $ - $ 4,417.104 Construction in progress 564,500 2,916386 (473,256) - 3,006630 Total capital assets, not being depreciated 4,981,604 2,918,386 (473,256) - 7,426734 Capital assets, being depreciated: Buildings 23,423,486 588,075 - - 24,011,561 Improvements other than buildings 1,732,805 932,413 - (452,986) 2,212,232 Machinery and equipment 582,225 - - - 582,225 Autos and trucks 1.686131 72,819 - - 1,757,950 Furniture and office equipment 1.465,125 - - - 1485,125 Infrastructure 64.851,063 26,733 - 452,966 65,330,782 Total capital assets, being depreciated 93,759,835 1,620,040 - - 95.379,875 Less accumulated depreciation for: Buildings (8,628,581) (486,002) - - (9.114,583) Improwments other than buildings (1,177,369) (99,621) - 59,703 (1,217,287) Machinery and equipment (509,546) (20,559) - - (530,105) Autos and trucks (1,063,845) (173,216) - - (1,237,061) Furniture and office equipment (1,239.761) (55,991) - - (1,295,752) Infrastructure (34.580,307) (1,965,618) - (59,703) (36,605,628) Total accumulated depreciation (47,199,409) (2,801,007) - - (50,000,416) Total capital assets, being depreciated, net 46.560,426 (1,180,967) - - 45,379,459 Go emmental activities capital assets, net of accumulated depreciation $51,542,030 $ 1,737,419 $ (473.256) $ - $52,806,193 44 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 7: Capital Assets, (continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 39,180 Public safety 39,744 Public works 2,568,968 Community development 14,352 Parks and recreation 138,763 Total depreciation expense $ 2,801,007 Note 8: Changes in Long-Term Liabilities Long-term debt consists of the following at June 30, 2017: Beginning Ending Due in Governmental activities Balance Additions Deletions Balance One Year Net pension liability(see Note 11,12) $ 7,854,302 $ 1,542,252 $ 1,113,875 $ 8,282,679 $ Retrospective deposit 369,505 451,479 589,079 231,905 Compensated absences 601,998 299,529 267,569 633,958 272,602 Total long-term debt $ 8,825,805 $ 2,293260 $ 1,970523 $ 9,148,542 $ 272,602 The City records expenditures related to compensated absences through the City's General Fund. 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, 2017, the City's retrospective deposit payable for the Worker's compensation portion is $231,905. 45 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 2016-17, the City contributed $145,293. 46 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 (96,359) Adjustment to annual required contribution 133,370 Annual OPEB cost(expense) 85,442 Contributions made (145,293) Increase in net OPEB obligation (59,851) Net OPEB obligation (asset) beginning of year (1,605,989) Net OPEB obligation (asset) - end of year $ (1,665,840) 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 2017, and the two preceding years were as follows: Percentage Net of Annual OPEB Fiscal Annual OPEB OPEB Cost Obligation Year Cost Contributed (Asset) 6/30/2015 $ 83,336 0% $(1,690,389) 6/30/2016 $ 84,400 0% $(1,605,989) 6/30/2017 $ 85,442 170% $(1,665,840) 47 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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, 2017, 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. 48 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 2013A4 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 2016-17 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 xis $2 million layer, and (b) $3 million annual aggregate deductible in the $5 million xis $10 million layer. There is a third annual aggregate deductible in the amount of $2.5 million in the $5 million xis $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. 49 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 2016-17 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. 50 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 $25,000,000. 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 2016-17. As of June 30, 2017, the City had retrospective deposits payable to the Authority in the amount of $231,905. 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. 51 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 Plan consists 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 safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors three miscellaneous rate plans. Benefit provisions under the Plan are established by State statute and City resolution. CaIPERS issues publicly available reports that include a full description of the pension plan 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, 2017, are summarized as follows: Miscellaneous Tier I Miscellaneous Tler II Miscellaneous PEPRA Prior to From July 1,2010 to On or after Hire date July 1,2010 December 31. 2012 January 1,2013 Benefit formula 2.7%@ 55 2%@ 55 2%@ 62 Benefit resting schedule 5 years sensce 5 years serace 5 years serce Benefit payments monthly for if monthly for life monthly for life Retirement age 50 to 55883 5010 638 up 52 to 678up Monthly benefits,as a%of eligible compensation 2.0%to 2.7% 1.426 to 2.418 1.0%to 2.5% Required employee contnbution rates 8.000% 7.000% 6250% Required employer contribution rates 10 958% 8.512% 6.237% 52 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 11: Defined Benefit Pension Plans -CaIPERS, (continued) A. General Information about the Pension Plan, (continued) 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. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. Employer Contributions to the Plan for the fiscal year ended June 30, 2017 were $1,204,223. The actual employer payments of $1,113,875 made to CaIPERS by the City during the measurement period ended June 30, 2016 differed from the City's proportionate share of the employer's contributions of $673,753 by $440,122 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 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, 2015 rolled forward to June 30, 2016 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is as follows. 53 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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, 2015 Measurement Date June 30, 2016 Actuarial Cost Method Entry Age Normal Asset Valuation Method Market Value Actuarial Assumptions'. Discount Rate(2) 765% Inflation 2.75% Salary Increasesl1' 3.3%-14.2% lnwstment Rate of Return 121 7.65% Deriwd using CALPERS'membership data for all Mortality Rate Table(31 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 pension plan invesNents and administrative expenses,Includes Inflation (3)The mortality table used w as developed based on CaIPERs specnic data.The table includes 20 years of mortality improvements using Socety of Actuaries Scale BB.For more details on this table,please refer to the 2014 experience 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 CaIPERS' website under Forms and Publications. Change of Assumptions There were no changes of assumptions. 54 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 was 7.65 percent. To determine whether the municipal bond rate should be used in the calculation of the 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. The tests 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 (PERE). The cash flows used in the testing were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. 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 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 (PERF) cash flows. Taking into account historical returns of all the PERF asset classes (which includes the agent plan and two cost-sharing plans or PERF A, B and C funds), 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 equal to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. 55 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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, 2015. 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 20.0% 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 1.0% (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 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 the plan. 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. 56 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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: 6/30/2015(VD) $ 25,183,842 $ 17,545,778 $ 7,638,064 Balance at 6/30/2016(MD) 26,709,970 18,092,554 8,617,416 Net changes during 2015-16 $ 1,526,128 $ 546,776 $ 979,352 Valuation Date (VD), Measurement Date (MD). The City's net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2016, 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, 2015 rolled forward to June 30, 2016 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 the June 30, 2015 and 2016 measurement dates was as follows: Plans Proportionate Share - June 30, 2015 0.27841% Proportionate Share- June 30, 2016 0.24806% Change- Increase (Decrease) -0.03035% 57 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 $12,213,411 $ 8,617,416 $ 5,645,506 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 58 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 3.7 years, which was obtained by dividing the total service years of 475,689 (the sum of remaining service lifetimes of the active employees) by 127,009 (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, 2015), the City's net pension liability was $7,638,064. For the measurement period ending June 30, 2016 (the measurement date), the City incurred a pension expense of$739,402. As of June 30, 2017, 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 $ 41,201 $ 9,020 Changes of Assumptions - 389,803 Net Difference between Projected and Actual Earnings on Pension Plan Investments 2,407,830 - Adjustment due to Differences in Proportions - 26,488 Change in Employees Proprotion 703,319 305,640 Difference in Actual vs Projected Contributions 573,771 - Pension Contributions Subsequent to Measurement Date 1,204,223 - Total $ 4,930,344 $ 730,951 59 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 inflows recognized in the 2015-16 measurement period expense. Contributions subsequent to the measurement date of $1,204,223 reported with deferred outflows of resources will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other 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 Outflowsf(Inflows) of June 30: Resources 2017 $ 850,393 2018 750,364 2019 892,328 2020 502,085 2021 - Thereafter - E. Payable to the Pension Plan At June 30, 2017, the City reported a payable of $0 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2017. 60 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 3.0% 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"). 61 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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, 2017, (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 vesting schedule from date of hire Benefit payments life only annuity Retirement age 55 Monthly benefits, as a % of eligible compensation 0.576% Required employee contribution rates none Required employer contribution rates 3.790% Employees Covered At June 30, 2017, the following employees were covered by the benefit terms: Supplemental Inactive employees or beneficiaries currently receiving benefits 12 Active employees 41 53 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, 2017 (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, 2017 are $164,389. 62 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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, 2017, using an annual actuarial valuation as of June 30, 2016. 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, 2016 Measurement Date June 30, 2017 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 Living 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 (ANAa 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. 63 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 30,2016 June 30,2017 Discount rate 6.50% 6.50% Long-term expected rate of return, net of investment expense 6.50% 6.50% Municipal bond rate N/A 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. 64 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 Net Pension Pension Fiduciary Liability Liability Net Position (Asset) (a) (b) (c)= (a)-(b) Balances as of June 30, 2016 $ 3,022,967 $ 2,806,729 $ 216,238 Changes for the year: • Service Cast 36.410 - 36,410 • Interest on the Total Pension Liability 192,440 - 192,440 • Effect of plan changes - - - • Effect of economic Demographic gains or Losses (355,400) - (355,400) • Effect of assumptions Changes or inputs - - - • Benefit Payments (200,693) (204693) - • Employer contributions - 164,389 (164,389) • Member contributions - - - • Net Investment Income - 266,884 (266,884) • Administrative expenses - (6,848) 6,848 Net Changes during 2016-17 $ (327,243) $ 223,732 $ (550,975) Balance as of June 30, 2017 $ 2,695,724 $ 3,030,461 $ (334,737) 65 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 (asset) 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) $ (22,815) $ (334,737) $ (600,185) 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, 2016), the net pension liability is $216,238. For the measurement period ending June 30, 2017 (the measurement date), the City incurred a pension expense of $43,412 for the Plan. A complete breakdown of the pension expense is as follows: 66 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 $ 36,410 Interest on the Total Pension Liability 192,440 Administrative expenses 6,848 Expected investment return net of investment expenses (181,057) Recognition of Deferred Inflows/Outflows of Resources: Recognition of economic/demographic gains or losses (53,848) Recognition of investment gains or losses 42,619 Total Pension Expense $ 43,412 As of June 30, 2017, 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 $ - $ 301,552 Net Difference between Projected and Actual Earnings on Pension Plan 87,601 _ - Total $ 87,601 $ 301,552 67 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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 2018 $ (11,229) 2019 (11,229) 2020 (34,318) 2021 (71,015) 2022 (53,848) Thereafter* (32,312) E. Payable to the Pension Plan At June 30, 2017, the City reported a payable of$6,289 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2017. 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 $26,265 to the plan. 68 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 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, 2017: Major Governmental Fund: City Capital Projects Fund $ (486,089) Nonmajor Governmental Funds: HOME Program (163,496) 69 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 16: Expenditures in Excess of Appropriations Expenditures exceeded appropriations in the following funds: Fund Budget Actual Variance Major Governmental Fund: General Fund General Government $ 3,974,800 $ 4,104,242 $ (129,442) Community Development 1,747,700 2,034,505 (286,805) Note 17: Successor Agency Successor Agency Long-Term Debt The debt of the Successor Agency as of June 30, 2017, is as follows: Beginning Ending Due in Successor Agency: Balance Additions Deletions Balance One Year Bonds: Tax Allocation Bonds. Series 2006A $ 4,780000 $ - $ 4,780000 $ - $ - Tax Allocation Bonds, Series 2006B 23,295,000 - 23,295,000 - - Tax Allocation Bonds, Series 2010A 7,895,000 - 850,000 7,045000 885,000 Tax Allocation Bonds, Series 2016 - 24,730000 - 24,730,000 1,435000 Subtotal bonds 35970,000 24,730000 28,925,000 31,775.000 2,320000 Deferred amounts. Unamodized bond premiums 118,811 1,815,502 225,605 1,708,708 106,794 Discount on issuance (107,154) - (14,780) (92,374) (14,780) Total bonds 35981,657 26,545,502 29,135825 33,391,334 2,412,014 Total long-term debt $ 35,981.657 $ 26,545,502 $ 29,135825 $ 33,391,334 $ 2,412,014 70 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 17: Successor Agency, (continued) Future debt service requirements are as follows: Fiscal years ending June 30, • Principal Interest 2018 $ 2,320,000 $ 1,386,038 2019 2,160,000 1,314,191 2020 2,205,000 1,229,000 2021 2,295,000 1,126,375 2022 2,405,000 1,010,125 2023-2027 8,770,000 3,487,000 2028-2032 7,930,000 1,664,900 2033 3,690,000 149,000 Totals $ 31,775,000 $ 11,366,629 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. As of June 30, 2017, the Tax Allocation Bonds, Series 2006A were refinanced with proceeds from the 2016 Subordinate Tax Allocation Refunding Bonds. 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 deceased and the liability for those bonds has been removed from the government-wide financial statements. As of June 30, 2017, the Tax Allocation Bonds, Series 2006B were refinanced with proceeds from the 2016 Subordinate Tax Allocation Refunding Bonds. 71 City of Rosemead Notes to the Basic Financial Statements For the year ended June 30, 2017 Note 17: Successor Agency, (continued) Tax Allocation Bonds, Series 2010,4 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, 2017, the balance held in the reserve account was $1,125,671. As of June 30, 2017 the outstanding balance was $7,045,000. 2016 Subordinate Tax Allocation Refunding Bonds In October 2016, the Successor Agency to the Rosemead Redevelopment Agency (Successor Agency) issued the 2016 Subordinate Tax Allocation Refunding Bonds in the amount of $24,230,000 for the purpose of refunding, 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 20068, initially issued in the principal amount of$24,230,000. Interest is payable semi-annually on April 1 and October 1. As of June 30, 2017 the outstanding balance was $24,730,000. The Successor Agency reduced its aggregate debt service payments by $3,102,962, which resulted in an economic gain of$2,308,787. 72 (This page intentionally left blank) Required Supplementary Information (This page intentionally left blank) City of Rosemead Notes to the Required Supplementary Information Fiscal Year Ended June 30, 2017 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 appropriated and honored during the subsequent year. 73 City of Rosemead Required Supplementary Information Budgetary Comparison Schedule General Fund Fiscal Year Ended June 30, 2017 Variance Original Final Positive Budget Budget Actual (Negative) REVENUES Taxes $ 16,554,500 $ 16754,500 $ 17,447,510 $ 693010 Intergovernmental 239,600 239,600 209,332 (30,268) Licenses and permits 1,919,700 2,075,000 2,754,881 679,881 Charges for services 846,600 846,600 923,412 76,812 Fines,forfeitures and penalties 634,300 634,300 607,754 (26,546) Investment income 288,300 288,300 229,378 (58,922) Other 156,200 156,200 201,825 45,625 Total revenues 20,639,200 20,994,500 22,374092 1,379,592 EXPENDITURES Current: General government 3.674,300 3,974800 4.104,242 (129,442) Public safety 8,940,700 8,941,900 8,868,713 73,187 Public works 3,613200 3,761,200 3,718,525 42,675 Community development 1,639,000 1,747,700 2,034,505 (286,805) Park and recreation 2,352,100 2,352,100 2,284,393 67,707 Total expenditures 20,219,300 20777,700 21,010,378 (232,678) Excess (deficiency)of revenues over(under)expenditures 419,900 216,800 1,363714 1,146,914 Other financing sources (uses): Transfers out (835000) (835,000) (797,587) 37,413 Total other financing sources (uses) (835,000) (835,000) (797,587) 37413 Net change in fund balance (415,100) (618,200) 566127 1,184,327 Fund balance, beginning of year 18,468,149 18,468,149 18468,149 - Fund balance,end of year $ 18,053,049 $ 17,849,949 $ 19,034,276 $ 1,184,327 74 City of Rosemead Required Supplementary Information Budgetary Comparison Schedule Rosemead Housing Development Corporation -Special Revenue Fund Fiscal Year Ended June 30, 2017 Variance Original Final Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ - $ - $ 412,286 $ 412286 Investment income 437,400 437,400 433,130 (4,270) Other 8,100 8100 5,767 (2333) Total revenues 445,500 445,500 851,183 405,683 EXPENDITURES Current: Community development 643,600 843,600 810,847 32,753 Total expenditures 843,600 843,600 810,847 32,753 Net change in fund balance (398,100) (398,100) 40,336 438,436 Fund balance, beginning of year 186,933 186,933 186,933 - Fund balance,end of year $ (211,167) $ (211,167) $ 227269 $ 438,436 75 City of Rosemead Required Supplementary Information Budgetary Comparison Schedule City Capital Project—Capital Projects Fund Fiscal Year Ended June 30, 2017 Variance Original Final Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ - $ - $ 589,523 $ 589,523 Charges for services - - 1,240 1 240 Other - - 23,953 23.953 Total revenues - - 614,716 614,716 EXPENDITURES Current: Public works 226,800 226,800 159,013 67,787 Capital outlay 3,955,000 3,955,000 2,790.493 1,164,507 Total expenditures 4,181,800 4,181,800 2,949,506 1232,294 Excess(deficiency)of revenues over(under)expenditures (4,181,800) (4,181,800) (2,334,790) 1847,010 Other financing sources(uses): Transfers in 3,754,300 3,754,300 2,421,611 (1,332,689) Total other financing sources(uses) 3254,300 3,754,300 2421,611 (1232,689) Net change in fund balance (427,500) (427,500) 86,821 514,321 Fund balance(deficit),beginning of year (572,910) (572,910) (572,910) - Fund balance(deficit),end of year $ (1,000410) $ (1,000410) $ (480089) $ 514,321 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 $ - $ 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* CaIPERS Measurement Date 6/30/2014 6/30/2015 6/30/2016 Employers Proportion of the Net Pension Liability' 0.10996% 027841% 0.24806% Employers Proportionate Share of the Net Pension Liability $6,841230 $ 7,638,064 $ 8,617,416 Employees Covered payroll $3,543.958 $3.388.767 $ 3,690780 Employees Proportionate Share of the Net Pension Liability as a percentage of its Employer's Covered Payroll 193.07% 225.39% 233.48% Pension Plan's Fiduciary Net Position as a percentage of the Total Pension Liability 155.32% 69.67% 67.74% 'Proportion of the Net Pension Liability represents the plan's proportion of PERF C,which includes both the Miscellaneous and Safety Risk Pools excluding the 1959 SuMwrs Risk 'Measurement date 6/30/2014(fiscal year 2015)was the 1st year of implementation. therefore,only three years are shown. 78 City of Rosemead Required Supplementary Information Schedule of Plan Contributions - Last 10 Years* CalPers Fiscal Year 2014-2015 2015-2016 2016-2017 Actuarially Determined Contribution $ 1,183,855 $ 1,276,087 $ 1,113,875 Contributions in Relation to the Actuarially Determined Contribution (1,183,855) _ (1,276,087) (1,113,875) Contribution Deficiency (Excess) Covered Payroll $ 3,543,958 $ 3,388,767 $ 3,690,780 Contributions as a Percentage of Covered Payroll 33.40% 37.66% 30.18% * Fiscal year 2014-15 was the 1st year of implementation, therefore, only three years are shown. Notes to Schedule: Change in Benefit Terms: None Change in Assumptions: None 79 City of Rosemead Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios—Last 10 Years* Retirement Enhancement Plan Measurement Penod 2014-15 2015-16 2016-17 TOTAL PENSION LIABILITY Service Cost $ 44,112 $ 45435 $ 36410 Interest on total pension liability 190.667 191.270 192,440 Effect of plan changes - - - Effect ofeconomic/demographic gains or losses - - (355,400) Effect of assumptions changes or inputs - - Benefit payments (234.960) (218.411) (200,693) Net Change in Total Pen>on Liability (181) 18,294 (337,243) Total Pension Liability-Beginning 3.004,854 3,004,673 3,022,967 Total Pension Liability-Ending(a) 33,004,673 $3,022,967 $2,695,724 PLAN FIDUCIARY NET POSITION Contnbutions-Employer $ 273711 $ 265,241 5 164.389 ContdbNwns-Employee Paid Member Contributions - - Contdbuticns-Employee - - - NetlmestmentIncome 59,329 (2345) 266.884 Benefit Payments (234,960) (218.411) (200.693) Administrative expenses (5,864) (2624) (6.848) Net Change in Fiduciary Net Position 92,216 41,861 223,732 Plan Fiduciary Net Position-Beginning 2,672,652 2,764,868 2,806,739 Plan Fiduciary Net Position-Ending(b) $ 2,764,868 52,806,739 $3,030,461 Plan Net Position Liability-Ending(a)-(b) S 239,805 $ 216,238 $ (334,737) Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 92.02% 92 11242% Covered Payroll $ 3,049,663 $2,678,466 $3,376,888 Plan Net Pension Liability as a Percentage of Covered Payroll 7.86% 8.07% -14.08% Measurement date 6/3 012 01 5(fiscal year 2015)was the 1st year of implementation, therefore,only three years are shown. Notes to Schedule: Changes in Benefit Terms:The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30.2015.This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit(ak 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 Ending 613012015 6/3012016 6/30/2017 Actuarially Determined Contribution $ 133,267 $ 116,244 $ 88,845 Contributions in Relation to the Actuarially Determined Contribution (273.711) (265.241) (164,389) Contribution Deficiency(Excess) $ (140444) $ (148,997) $ (75,544) Covered Payroll 53049,663 $2,678466 $2,376888 Contributions as a Percentage of Colered Payroll 437% 4.34% 374% 'Fiscal year 2015 was the 1st year of implementation,therefore. only three years 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 Lerel 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 prodded by Public Agency Retirement Serces. Inflation 2.75% Salary Increases Varies by years of Serce Cost of Lldng 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 seMce, and retirement rate of 30%at ages 55 and older with more than 20 years of seMce. For City Council members'. Retirement rates of 30% per year staffing 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 Mortality Tables (sex-distinct) with an assumed base year of 2008 and full generational improvements using Scale AA. 81 (This page intentionally left blank) Other Supplementary Information City of Rosemead Nonmajor Governmental Funds June 30, 2017 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. Development Impact Fee Traffic Fund - This fund is used to account for monies received by development projects for the purpose of mitigating the impact of the development on the ability of the City to provide specified public improvements and service, specifically for Traffic. 82 City of Rosemead Nonmajor Governmental Funds June 30, 2017 Special Revenue Funds, continued: Development Impact Fee Public Safety Fund - This fund is used to account for monies received by development projects for the purpose of mitigating the impact of the development on the ability of the City to provide specified public improvements and service, specifically for Public Safety. Development Impact Fee General Government Fund - This fund is used to account for monies received by development projects for the purpose of mitigating the impact of the development on the ability of the City to provide specified public improvements and service, specifically for General Government. Development Impact Fee Parks Fund - This fund is used to account for monies received by development projects for the purpose of mitigating the impact of the development on the ability of the City to provide specified public improvements and service, specifically for Parks. 83 City of Rosemead Combining Balance Sheet Nonmajor Governmental Funds June 30, 2017 Special Revenue Funds CDBG Proposition Proposition Grant A C ASSETS Cash and investments $ - $ 251,588 $ 697,931 Receivables: Accounts 157,483 76,413 - Total assets $ 157,483 $ 328,001 $ 697,931 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 10,113 $ - $ 143,259 Accrued salaries and benefits 12,782 6,592 3,301 Retentions payable - - - Due to other funds 128,782 - - Unearned revenue - - - Total liabilities 151,677 6,592 146,560 Fund balances: Restricted for: Public works - 321,409 551,371 Community services 5,806 - - Unassigned - - - Total fund balances (deficit) 5,806 321,409 551,371 Total liabilities and fund balances $ 157483 $ 328,001 $ 697,931 84 Special Revenue Funds Air Quality State Gas Management Street HOME Tax District Lighting Program $ 890,829 $ 197,151 $ 1,131,020 $ - 81,146 17,929 33,230 55,951 $ 971,975 $ 215,080 $ 1,164,250 $ 55,951 $ 121,407 $ - $ 148,899 $ 9,514 3,265 - 4,181 454 17,322 - - - 192,157 8,000 - - - 132,672 - 153,080 219,447 839,303 215,080 1,011,170 - (163,496) 839,303 215,080 1,011,170 (163,496) $ 971,975 $ 215,080 $ 1,164,250 $ 55,951 85 City of Rosemead Combining Balance Sheet Nonmajor Governmental Funds June 30, 2017 Special Revenue Funds Narcotics Measure DIF Seizure R Traffic ASSETS Cash and investments $ - $ 1,204,523 $ 1,951 Receivables: Accounts - - - Total assets $ - $ 1,204,523 $ 1,951 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ - $ 1,635 $ - Accrued salaries and benefits - 1,969 - Retentions payable - - - Duetootherfunds - - - Unearned revenue - - - Total liabilities - 3,604 - Fund balances: Restricted for: Public works - 1,200,919 Community services - - 1,951 Unassigned - - - Total fund balances - 1,200,919 1,951 Total liabilities and fund balances $ - $1 204,523 $1 951 86 Special Revenue Funds DIF DIF General DIF Public Safety Government Parks Totals $ 339 $ 2,363 $ 10,075 $ 4,387,770 - - - 422,152 $ 339 $ 2,363 $ 10,075 $ 4,809,922 $ - $ - $ - $ 434,827 32,544 17,322 320,939 8,000 - - - 813,632 - 2,363 - 4,141,615 339 - 10,075 18,171 - - (163,496) 339 2,363 10,075 3,996,290 $ 339 $ 2,363 $ 10,075 $ 4,809,922 87 City of Rosemead Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the year ended June 30, 2017 Special Revenue Funds CDBG Proposition Proposition Grant A C REVENUES Intergovernmental $ 470,492 $ 1,080,328 $ 834,641 Charges for services 13,819 21,485 37,873 Special assessments - - - Investment income - 232 692 Total revenues 484,311 1,102,045 873,206 EXPENDITURES Current: General government 7,289 116,050 - Public safety 156,253 - 25,424 Public works - 832,242 295,333 Community development 321775 - - Parks and recreation 16,513 - - Total expenditures 501,830 948,292 320757 Excess (deficiency)of revenues over(under)expenditures (17,519) 153,753 552,449 Other financing sources(uses): Transfers in - - - Transfers out - - (388,362) Total other financing sources (uses) - - (388,362) Net change in fund balances (17,519) 153,753 164,087 Fund balances (deficit), beginning of year 23,325 167,656 387,284 Fund balances (deficit), end of year $ 506 $ 321,409 $ 551,371 88 Special Revenue Funds Air Quality State Gas Management Street HOME Tax District Lighting Program $ 1,117,655 $ 71,164 $ - $ 313,927 - - 1,002,239 - 826 149 1,635 - 1,118,481 71,313 1,003,874 313,927 2,168 - 16,867 - 719,026 - 736,465 - - - 218,328 721,194 - 753,332 218,328 397,287 71,313 250,542 95599 (160,668) - (1,031,381) - (160,668) - (1,031,381) - 236,619 71,313 (780,839) 95599 602,684 143,767 1,792,009 (259,095) $ 839303 $ 215,080 $1011)70 $ (163,496) 89 City of Rosemead Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the year ended June 30, 2017 Special Revenue Funds Narcotics Measure DIF DIF Seizure R Traffic Public Safety REVENUES Intergovernmental $ - $ 624,692 $ - $ - Chargesforservices - - 1,951 339 Special assessments - - - - Investment income - 926 - - Total revenues - 625,618 1,951 339 EXPENDITURES Current: General government - 34,209 - - Public safety 10,450 - - - Public works - 38,616 - - Community development - - - - Parks and recreation - - - - Total expenditures 10,450 72,825 - - Excess (deficiency)of revenues over(under)expenditures (10,450) 552,793 1,951 339 Other financing sources (uses): Transfers in - 20,830 - - Transfers out - (64443) - Total other financing sources(uses) - (43,613) - - Net change in fund balances (10,450) 509,180 1,951 339 Fund balances(deficit), beginning of year 10,450 691739 - - Fund balances(deficit),end of year $ - $ 1,200,919 $ 1,951 $ 339 90 Special Revenue Funds DIF General DIF Government Parks Totals $ - $ - $ 4,512,899 2,363 10,075 ' 87,905 - - 1,002,239 4,460 2,363 10,075 5,607,503 176,583 192,127 2,621,682 540,103 16,513 - - 3,547,008 2,363 10,075 2,060495 20,830 (1,644,854) (1,624,024) 2,363 10,075 436,471 3,559,819 $ 2,363 $ 10075 $ 3,996,290 91 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, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 667,700 $ 470,492 $ (197,208) Charges for services 14,000 13,819 (181) Total revenues 681,700 484,311 (197,389) EXPENDITURES Current: General government 6,600 7,289 (689) Public safety 156,100 156,253 (153) Community development 493,600 321,775 171,825 Parks and recreation 25,400 16,513 8,887 Total expenditures 681,700 501,830 179,870 Net change in fund balance - (17,519) (17,519) Fund balance, beginning of year 23,325 23,325 - Fund balance, end of year $ 23,325 $ 5,806 $ (17,519) 92 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Proposition A For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 1,078,000 $ 1,080,328 $ 2,328 Charges for services 28,000 21,485 (6,515) Investment income - 232 232 Total revenues 1,106,000 1,102,045 (3,955) EXPENDITURES Current: General government 146,000 116,050 29,950 Public works 911,000 832242 78,758 Total expenditures 1,057,000 948,292 108,708 Net change in fund balance 49.000 153,753 104,753 Fund balance, beginning of year 167,656 167,656 - Fund balance, end of year $ 216,656 $ 321,409 $ 104,753 93 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Proposition C For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 836,100 $ 834,641 $ (1,459) Charges for services 41,500 37,873 (3,627) Investment income - 692 692 Total revenues 877,600 873,206 (4,394) EXPENDITURES Current: Public safety 18,300 25,424 (7,124) Public works 314,000 295,333 18,667 Total expenditures 332,300 320,757 11,543 Excess (deficiency) of revenues over(under) expenditures 545,300 552,449 7,149 Other financing sources (uses): Transfers out (60,000) (388,362) (328,362) Total other financing sources (uses) (60,000) (388,362) (328,362) Net change in fund balance 485,300 164,087 (321,213) Fund balance, beginning of year 387,284 387,284 - Fund balance, end of year $ 872,584 $ 551,371 $ (321,213) 94 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual State Gas Tax For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 2,081,900 $ 1,117,655 $ (964,245) Investment income - 826 826 Total revenues 2,081,900 1,118,481 (963,419) EXPENDITURES Current: General government 2,000 2,168 (168) Public works 814,700 719,026 95,674 Total expenditures 816,700 721,194 95,506 Excess (deficiency) of revenues over(under) expenditures 1,265,200 397,287 (867,913) Other financing sources (uses): Transfers out (1,253,300) (160,668) 1,092,632 Total other financing sources (uses) (1,253,300) (160,668) 1,092,632 Net change in fund balance 11,900 236,619 224,719 Fund balance, beginning of year 602,684 602,684 - Fund balance, end of year $ 614,584 $ 839,303 $ 224,719 95 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, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 67,000 $ 71,164 $ 4,164 Investment income - 149 149 Total revenues 67,000 71,313 4,313 EXPENDITURES Current: Capital outlay 16,000 - 16,000 Total expenditures 16,000 - 16,000 Net change in fund balance 51,000 71,313 20,313 Fund balance, beginning of year 143,767 143,767 - Fund balance, end of year $ 194,767 $ 215,080 $ 20,313 96 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Street Lighting For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Special assessments $ 849,000 $ 1,002,239 $ 153,239 Investment income - 1,635 1,635 Total revenues 849,000 1,003,874 154,874 EXPENDITURES Current: General government 15,500 16,867 (1,367) Public works 762,400 736,465 25,935 Total expenditures 777,900 753,332 24,568 Excess (deficiency) of revenues over (under) expenditures 71,100 250,542 179,442 Other financing sources (uses): Transfers out (1,105,000) (1,031,381) 73,619 Total other financing sources (uses) (1,105,000) (1,031,381) 73,619 Net change in fund balance (1,033,900) (780,839) 253,061 Fund balance, beginning of year 1,792,009 1,792,009 - Fund balance, end of year $ 758,109 $ 1,011,170 $ 253,061 97 City of Rosemead Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual HOME Program For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 752,200 $ 313,927 $ (438,273) Total revenues 752,200 313,927 (438,273) EXPENDITURES Current: Community development 752,200 218,328 533,872 Total expenditures 752,200 218,328 533,872 Net change in fund balance - 95,599 95,599 Fund balance (deficit), beginning of year (259,095) (259,095) - Fund balance (deficit), end of year $ (259,095) $ (163,496) $ 95,599 98 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Measure R For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Intergovernmental $ 627,000 $ 624,692 $ (2,308) Investment income - 926 926 Total revenues 627,000 625,618 (1,382) EXPENDITURES Current: General government 45.500 34,209 11,291 Public works 442,600 38,616 403,984 Total expenditures 488,100 72,825 415,275 Excess (deficiency) of revenues over(under)expenditures 138,900 552,793 413,893 Other financing sources (uses): Transfers in - 20,830 20,830 Transfers out (501,000) (64,443) 436,557 Total other financing sources (uses) (501,000) (43,613) 436,557 Net change in fund balance (362,100) 509,180 850,450 Fund balance, beginning of year 691,739 691,739 - Fund balance, end of year $ 329,639 $ 1,200,919 $ 850,450 99 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Development Impact Traffic For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Charges for services $ 44,900 $ 1,951 $ (42,949) Total revenues 44,900 1,951 (42,949) EXPENDITURES Current: General government 44,900 - 44,900 Total expenditures 44,900 - 44,900 Net change in fund balance - 1,951 1,951 Fund balance, beginning of year - - - Fund balance, end of year $ - $ 1,951 $ 1,951 100 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Development Impact Public Safety For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Charges for services $ 3,400 $ 339 $ (3,061) Total revenues 3,400 339 (3,061) EXPENDITURES Current: General government - - - Total expenditures - - - Net change in fund balance 3,400 339 (3,061) Fund balance, beginning of year - - - Fund balance, end of year $ 3,400 $ 339 $ (3,061) 101 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Development Impact General Government For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Charges for services $ 24,000 $ 2,363 $ (21,637) Total revenues 24,000 2,363 (21,637) EXPENDITURES Current: General government - - - Total expenditures - - - Net change in fund balance 24,000 2,363 (21,637) Fund balance, beginning of year - - - Fund balance, end of year $ 24,000 $ 2,363 $ (21,637) 102 City of Rosemead Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Development Impact Parks For the year ended June 30, 2017 Variance Final Positive Budget Actual (Negative) REVENUES Charges for services $ 80,900 $ 10,075 $ (70,825) Total revenues 80,900 10,075 (70,825) EXPENDITURES Current: General government - - - Total expenditures - - - Net change in fund balance 80,900 10,075 (70,825) Fund balance, beginning of year - - - Fund balance, end of year $ 80,900 $ 10,075 $ (70,825) 103 (This page intentionally left blank) City of Rosemead Internal Service Funds June 30, 2017 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. 104 City of Rosemead Combining Statement of Net Position Internal Service Funds June 30, 2017 Equipment Technology Replacement Replacement Total ASSETS Current assets: Cash and investments $ 424,620 $ 75,748 $ 500,368 Total current assets 424,620 75,748 500,368 Non-current assets: Capital assets: Other capital assets, net 155,709 2 155,711 Total non-current assets 155,709 2 155,711 Total assets 580,329 75,750 656,079 LIABILITIES Current liabilities: Accounts payable - 33 33 Total current liabilities - 33 33 Total liabilities - 33 33 NET POSITION Net investment in capital assets 155,709 2 155,711 Unrestricted 424,620 75,715 500,335 Total net position $ 580,329 $ 75,717 $ 656,046 105 City of Rosemead Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the year ended June 30, 2017 Equipment Technology Replacement Replacement Total OPERATING REVENUES Charges for services $ 110,400 $ 159,000 $ 269,400 Total operating revenues 110,400 159,000 269,400 OPERATING EXPENSES Contractual services - 119,329 119,329 Depreciation 65,718 38,589 104,307 Total operating expenses 65,718 157,918 223,636 Operating income 44,682 1,082 45,764 Changes in net position 44,682 1,082 45,764 Net position, beginning of year 535,647 74,635 610,282 Net position, end of year $ 580,329 $ 75,717 $ 656,046 106 City of Rosemead Combining Statement of Cash Flows Internal Service Funds For the year ended June 30, 2017 Equipment Technology Replacement Replacement Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from users departments $ 110,400 $ 159,000 $ 269,400 Cash payments to suppliers for goods and services - (122,915) (122,915) Net cash provided by operating activities 110,400 36,085 146,485 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Cash paid to purchase capital asset (72,819) - (72,819) Net cash(used for)capital and related financing activities (72,819) - (72,819) Net increase in cash and investments 37,581 36,085 73,666 Cash and investments, beginning of year 387,039 39,663 426,702 Cash and investments,end of year $ 424,620 $ 75,748 $ 500,368 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 44,682 $ 1,082 $ 45,764 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 65,718 38,589 104,307 Increase(decrease)in accounts payable - (3,586) (3,586) Total adjustments 65,718 35,003 100,721 Net cash provided by operating activities $ 110,400 $ 36,085 $ 146,485 107 City of Rosemead Statement of Changes in Fiduciary Assets and Liabilities Agency Fund For the year ended June 30, 2017 Balance Balance July 1, 2016 Additions Deductions June 30, 2017 Assets Cash and investments $ 355,426 $ 304,296 $ (260,361) $ 399,361 Total assets $ 355,426 $ 304,296 $ (260,361) $ 399,361 Liabilities Deposits payable $ 355,426 $ 304,296 $ (260,361) $ 399,361 Total liabilities $ 355,426 $ 304,296 $ (260,361) $ 399,361 108 (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 109 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 117 These schedules contain trend information to help the reader assess the government's most significant revenue source, property tax. Debt Capacity 121 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 127 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 130 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 2008 2009 2010 2011 Governmental activities: Net investment in capital assets, net of related debt $ 12,981,537 $ 11,828,993 $ 12,712,242 $ 14,760,940 Restricted 11,443,583 13,361,249 13,199,438 24,806,402 Unrestricted 27,705,715 24,882,730 20,489,721 10,748,249 Total governmental activities net position $ 52,130,835 $ 50,072,972 $46,401,401 $ 50,315,591 109 Fiscal Year 2012 2013 2014 2015 2016 2017 $54,010,031 $ 51,132,854 $50,042,631 $ 52,038,429 $ 51,542,030 $ 52,806,193 10,870,747 2,829,147 3,110,688 3,419,068 4,005,847 4,387,055 13,688,078 17,724,709 17,367,841 11,018,153 13,108,874 15,690,721 $ 78,568,856 $ 71,686,710 $ 70,521,160 $ 66,475,650 $ 68,656,751 $ 72,883,969 110 CITY OF ROSEMEAD Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) 2008 2009 2010 2011 Expenses: Governmental activities: General government $ 7,259,587 $12,176,877 $ 5,991,796 $ 3,160,306 Public safety 8,043,771 9,081719 8.879,854 8,881,926 Public works 13.550,042 6,465,355 11,469,614 11,907,245 Community services 669,827 773,374 589,650 595,904 Community development 3,645,207 1,290,108 2,141,218 3,969,502 Parks and recreation 4,078.631 2,030,698 2,733,885 2,362,860 Interest and other charges 1790.348 1,523,391 1A91717 1,681,875 Total governmental activities expenses 39,037 413 33,341,522 33,297,734 32,559,618 Program revenues: Governmental activities: General government 642,716 547,577 1,573,695 1,048,727 Public safety 1,547,182 1,512 475 1,293,677 1,293,524 Public works 11,729,725 7,581,801 8,052,011 9,143,311 Community services 166,118 858,809 186,283 450,004 Community development 1,484,065 621,375 597,402 3,753,612 Parks and recreation 36,800 36,000 20,800 654,437 Total governmental activities program revenues 15,606,606 11.158,037 11,723,868 16,343,615 Net revenues(expenses): Governmental activities Total net revenues(expenses) (23,430,807) (22,183,485) (21,573,866) (16,216,003) General revenues and other changes in net position: Governmental activities: Taxes: Property taxes 13,181,837 12,288,177 12,328,634 13,656,347 Sales and use taxes 3,747,416 4,589,998 4,408,367 3,737,363 Transient occupancy taxes 1,411,421 1,272,092 1,129,146 1,219,977 Other taxes 949,007 761,410 562,317 576,904 Intergovernmental/in-lieu VLF - - - - Investment income 1.678,791 884,847 389,310 367,961 Motor vehicle in-lieu, unrestricted 254,527 195,273 169,042 263,983 Other general revenues 143.748 133,825 336.668 307,658 Loss on sale of capital assets - - - - Transfer to Successor Agency - - - - Extraordinary item: Gain on dissolution of redevelopment agency - - - - Total governmental activities 21,366,747 20,125,622 19,323,484 20,130,193 Changes in net position Governmental activities Total primary government $(2,064,060) $(2,057,863) $(2,250,382) $ 3,914,190 111 2012 2013 2014 2015 2016 2017 $ 3,989,359 $ 3,381,686 $ 4,271,354 $ 2,739,281 $ 3218,363 $ 3,705,685 7,517,101 7,791573 7,923,316 7,747,949 8,381,588 8.935,164 11,588,278 11,717,276 10,072,081 8,703,817 8,738,495 7,323,865 4,080,294 2,616,531 2,853,472 2,879,028 3,246,081 3,161,310 2,532,665 2,594,863 2,274,920 2,049,540 2.073,145 2,153,986 569545 7,827 5561 3,198 787 - 30,276,742 28,109,256 27,400,704 24,122,813 25,658,459 25280,010 130,450 2,408,362 2,030,063 2,725291 2,203,233 2,191,604 1.454,759 1,622,911 1,586,557 1,573,532 1,563,652 1,565,275 4.033,874 3,869,285 4,356,486 4,627,331 4,360,908 4,232,311 3,501,082 1,896,876 1532,508 1.915.557 2,352,137 2,523,350 704,D29 785,611 724,197 713,484 741,171 788,931 9,824,194 10,583,045 10,329,811 11.555,195 11,221,101 11,301,471 (20,452,548) (17,526211) (17,070,893) (12,567,618) (14,437,358) (13,978539) 10,567,509 8,900,228 8,667,709 9,034,141 9,158,499 8,643,019 3,200,911 3,215,897 3,504,285 3,452,605 4,124,745 5.366,975 1,323,886 1,447,820 1,593,640 1,575,401 1.998,954 2,213,286 633,393 2 275,986 1,307,280 1,247,941 1209,249 1,224,230 195,165 28,202 216,499 97,589 348,651 20,526 853,956 1,180,688 604.053 793,680 945,372 737,721 (2,340,090) - - - - - - (6,392,878) - - - - 34,271,082 - - - - - 48..705,812 10,655,943 15,893,466 16.201,357 17 785,470 18,205,757 $ 28,253,264 J6,870,268) $(1,177,427) $ 3,633,739 $ 3,348,112 $ 4,227,218 112 CITY OF ROSEMEAD Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2008 2009 2010 2011 General fund: Reserved $ 3,074,496 $ 3,106,917 $ 3,327,182 $ - Unreserved 18,633,154 16,135,102 13,626,774 - Nonspendable - - - 2,034 Restricted - - - - Committed - - - 5,107,963 Assigned - - - Unassigned - - - 10,209,075 Total general fund $ 21,707,650 $ 19,242,019 $ 16,953,956 $ 15,319,072 All other governmental funds: Reserved $ 9,000,561 $ 9,000,561 $ 8,944,112 $ - Unreserved, reported in: Special revenue funds 6,140,289 9,023,487 8,763,359 - Debt service funds 692,475 2,803,910 2,803,910 - Capital projects funds 2,490,553 (54,323) (1,405,770) - Nonspendable - - - - Restricted - - - 27,476,081 Committed - - - - Assigned - - - - Unassigned - - - (4,402,964) Total all other governmental funds $ 18,323,878 $ 20,773,635 $ 19,105,611 $ 23,073,117 The City implemented GASB 54 for the fiscal year ended June 30, 2(114. The categories of fund balanceforovernmentalfunds have been changed as described more fully in the notes to the basic financial statements. Prior vear fund balances reflect the gaidance in effect when those"financial statements were prepared. 113 2012 2013 2014 2015 2016 2017 $ - $ - $ - $ - $ - $ _ 2,034 2,034 140,893 143,560 187,247 765,218 5,294,253 6,415,416 5,883,235 6,120,361 6,682,495 6,935,969 5,712 5,712 65,343 78,280 83,513 63,298 9,519,173 11,194,278 11,607,595 10,128,160 11514,894 11,269,791 $ 14,821,172 $ 17,617,440 $ 17,697,066 $ 16,470,361 $ 18,468,149 $ 19,034276 $ - $ - $ - $ - $ - $ _ 10,870,747 2,829,147 3,110,688 3,419,068 4,005,847 4,387,055 (1,292,405) (788,224) (1,192,926) (1,643,527) (832,005) (649,585) $ 9,578342 $ 2,040,923 $ 1,917,762 $ 1775,541 $ 3,173,842 $ 3,737,470 114 CITY OF ROSEMEAD Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2008 2009 2010 2011 Revenues: Taxes $ 17,841,792 $17,153,625 $ 18,508,896 $ 19,313,094 Intergovernmental 15,716,610 10,992,235 7,856,792 9,383,256 Licenses and permits 1,503,659 1,178,362 1,079,429 1,764,162 Charges for services 537,430 638,244 708,434 677,861 Fines, forfeitures and penalties 641,566 565,643 491,574 462,389 Special assessments 687,568 736,213 680,288 741,382 Investment income 1,678,791 884,847 389,310 367,956 Other 141,930 381,429 254,610 253,379 Total revenues 38,749,346 32,530,598 29,969,333 32,963,479 Expenditures Current: General government 7,356,665 11,956,179 5,903,926 3,801486 Public safety 6,043,771 9,114,009 8,863,234 8,882,915 Public works 12,116,508 4,964,867 11,264,220 19,402,924 Community services 669,827 783,452 584,463 595,904 Community development 3,408,691 1,047,529 1,940,641 3,397,072 Parks and recreation 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 1,105,000 915,000 945,000 975,000 Interest and fiscal charges 1,567,849 1,531,986 1,501,667 1,882,092 Bond issuance costs - - - 275,344 Total expenditures 39,994,615 32,546,472 34,027,921 41,668,718 Excess (deficiency)of revenues over(under) expenditures (1,245,269) (15,874) (4,058,588) (8,705,239) Other financing sources (uses): Transfers in 2,962,087 4,078,483 4,133,554 4,824,919 Transfers out (2,962,087) (4,078,483) (4,133,554) (4,824,919) Transfer to Successor Agency - - - Issuance of long-term debt - - - 11,230,000 Discount on bonds - - - (192,139) Proceeds of capital lease - - 102,501 - Total other financing sources (uses) - - 102,501 11,037,861 Extraordinary item: Gain (loss)on dissolution of redevelopment agency - - - - Net change in fund balances $ (1,245,269) $ (15,874) $ (3,956,087) $ 2,332,622 Debt service as a percentage of noncapital expenditures 7.0% 7.6% 7.4% 8.8% 115 2012 2013 2014 2015 2016 2017 $ 15,960,662 $ 16,602,329 $ 15,320,806 $ 15,537,262 $ 16,491,447 $ 17,447,510 9,561,918 6,435,473 6566,936 6,168,603 6,765,125 5,724,040 1,156,719 1,156,968 1,308,482 1,846,997 2,520,937 2,754,881 1,055,391 1,036,563 1,087,091 1,138,731 1,191,275 1,012,557 619,397 691,548 700,126 676,830 597,373 607,754 768,997 937,405 881,543 923,538 969,870 1,002,239 582,176 474,970 873,631 754,865 1,002,835 666,968 658,670 928,596 61590 114,074 71,152 231,545 30,363,930 28,263,852 26,300,305 27,160,900 29,610514 29,447,494 4,203,302 3,988,156 3,973,364 3,879,122 3564,633 4,280,825 7,517,101 7,773,611 7,913,659 8,156,485 8,452,932 9,060,840 6,417,803 6,909,471 6,184,890 6,348,101 6,346,179 5499,220 - - - - 3,323,933 3,385,455 3,681,903 2,605,654 2,846,112 3,150,240 2,123,274 2,300,906 2,532,665 2,208,564 2,157,424 2,071,443 2,302,974 2,790 493 9,090,076 3,126,669 3,268,391 4,924435 - - 1,210,000 - - - - - 961,506 - - - - - 35,614,356 26,612,125 26,343,840 28,529,826 26,213,925 28,317,739 (5,250,426) 1,651,727 (43,535) (1,368,926) 3,396,089 1,129,755 6,431,374 2,772,415 3,053,605 2,433,974 1,386471 2,442,441 (6,554,374) (2,772,415) (3,053,605) (2,433,974) (1,386,471) (2,442,441) - (6,392578) - - - - (123,000) (6,392,878) - - - - (8,619,249) - - - - - $ (13,992,675) $ (4,741,151) $ (43,535) $ (1368,926) $ 3,396,089 $ 1,129,755 6.8% 0.0% 0.0% 0.0% 0.0% 0.0% 116 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 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% 2017 4,202,108,491 63,820,415 2,051,995 4,267,980,901 9.27% ' Beginning with the fiscal year ended June 30, 2002, exemptions are netted directly against the individual property categories. NOTE: In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (United 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 2007/08 -2016/17 Combined Tax Rolls and HDL Goren & Cone 117 Cm OF ROSEMEAD Direct and Overlapping Properly Tax Rales (Rale per 00 M Taxable Value) Las'Ten Fiscal Years Agency 2007108 2008109 2009110 2010/11 2011112 2012/13 2013114 2014,15 201518 2016/17 Basic Levi '00000 100000 1 0000 100000 Im0N 100000 '00000 100000 100000 '00000 County Detention Facilities 1981 Debt 000000 000000 000000 0.00000 000008 000000 000000 000000 000000 000000 El Monte CaySchool Dtstnc1 008000 000080 0000.'U 0.08008 000008 000000 000000 011822 014842 014682 El Monte Union High School 002820 005159 009654 008475 009591 008992 009799 008418 009155 008469 Garvey SNool Drstnct 005060 004953 0.05378 005733 005606 008037 005970 005947 005074 00606] Garvey-Alhambra0000.00 007458 002770 002718 002795 0.03154 002912 002906 002806 Los Angeles Community College Oislnct 000879 0.02217 002311 004031 003530 004875 004451 004017 003575 003596 L A.Co.Flood Conlml 0.00000 0 CA000 0 00000 000000 000000 000008 000010 0.08008 008000 0.00308 Metropolitan Water District 002000 001600 001800 001800 001800 001800 0.01800 001800 0.01000 002300 Montebello Unified School District 006081 008055 009673 009792 010001 009630 009457 008750 008715 014705 Pasadena Community College District 0 01572 001741 002300 001986 001956 0.02056 001899 001032 000872 0 0085 Rio Hondo Communed College Dislritl 000000 000000 0.00000 000000 0.08000 000000 000000 002821 002712 002808 Rosemead School District 008283 006075 011358 0.10743 010507 010240 010314 009886 009997 008533 San Gabriel Unified School District 0 05742 009294 0.10070 010190 008454 010523 0.10082 0 11444 010684 0 10534 Total Direct 6 OverlappInga Tax Rates 1.3343? 1.41961 1,55082 1.55520 154143 1.56904 1.56937 1.6.9549 1.]0992 2.]5]85 Gaya Share of 1%Lary Per Prop 13' 009388 0.09388 009388 008388 009388 009388 009388 009388 0,09388 009385 Voter Approved City Debt Rare Redevelopment Rab' 100450 100430 I 00430 100370 1 00370 Total Direct Rates 021850 072614 022270 022407 022351 022113 009271 009271 0.09273 009274 No n11970.calitoma voters passed Proposition 13 which set the property tax rale al a 100%fixed amount This 100°%15 shared by all taxing agencies for which the subject property sides within In addition to the 1.OM fixed amount,property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. 'Overlapping rales are those of local and county governments.thal apply to properly owners within the Oily. Not all overlapping rates apply to all city property owners 3City's share of 1%Levy is based on the City share of the general fund lax rate area with the largest net taxable value within the city ERA F general fund tax shits may not be included in tax ratio figures. r RDA rate is based on the largest RDA tax rate area(TRA(and incudes only rate(s)from indebtedness adopted prior to 1999 per Ca libmia Stale statute RDA direct and overlapping ales are applied only to The incremental property values The approval of As%125 eliminated Redevelopment Imre the State of California for fiscal year 017-13 and years thereafter. Total Direct Rateis the we i9hted average or allindividual direct rates applied by the government prepaing thset or information andexcludes r nes dewed from aircraft Beginning In 2013/14 the Total Direct Rate no longer includes revenue generated from the bone r redevelopment tax rate areas Challenges ges to recognized enforceable obligations are assumed to have been resolved during 2012)13. For the purposes of this report residual revenue b ass timed to be distnbutej to the Oily in the same proportions as general fund revenue. Source L A County Assessor 2007/08-7016/17 Tax Rate Table and HDL Doren 8 Cone 118 CITY OF ROSEMEAD Principal Property Tax Payers Current Year and Nine Years Ago 2016/17 2007/08 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 $ 48,976,049 1 1.15% Walmart Stores, Inc 38,364,014 2 0.90% Rosemead Hwang, LLC 35,030,575 3 0.82% Sunshine Inn 28,827,809 4 0.68% AFG Investment Fund 5 LLC 26,030,793 5 0.61% Meodo Investments LLC 19,627,334 6 0.46% 420 Boyd Street LLC 18,398,441 7 0.43% MHI Rosemead LP 16,423,576 8 0.38% Panda Express Inc 14,935,557 9 0.35°/ Macy's California Inc 14,793,740 10 0.35% Rosemead Place, LLC $ 43,358,557 1 1.37% Walmart Real Estate Business Trust 40,245,414 2 1.27% Rosemead Hwang LLC 30,951,900 3 0.98% AFG Investment Fund 5 LLC 23,000,000 4 0.73% General Electric Cred Auto Auctions Inc 20,963,078 5 0.66% Macy's California Inc 15,738,600 6 0.50% Southern California Edison 15,628,091 7 0.49% California Federal Savings and Loan Assoc 12,896,573 8 0.41% Sunshine Inn 9,906,049 9 0.31% Rosemead Assisted LLP 9,521,505 10 0.30% Source: Hdl Coren & Cone, Los Angeles County Assessor 2016/17 Combined Tax Rolls. 119 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 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% 2017 3,187,187 2,632,109 82.58% - 2,632,109 82.58% * Information not available. ** Note: For these years the information was not available so an estimate was made to reduce the total collections to date to 100%. Source: HDL Coren & Cone and Los Angeles County Auditor Controller's Office 120 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 1 2007/08 $ 36,350,000 4.44% $ 639 2008/09 35,435,000 4.28% 622 2009/10 34,490,000 4.25% 601 2010/11 44,745,000 4.76% 775 2011/12 43,535,000 4.57% 804 2012/13 41,740,000 4.35% 766 2013/14 39,885,000 4.22% 728 2014/15 37,965,000 3.97% 693 2015/16 35,970,000 3.86% 651 2016/17 31,775,000 3.31% 578 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. 121 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 2007/08 $ 36,350 1.15% $ 639 2008/09 35,435 1.05% 622 2009/10 34,490 1.01% 601 2010/11 44,745 1.30% 775 2011/12 43,535 1.23% 804 2012/13 41,740 1.16% 766 2013/14 39,885 1.07% 728 2014/15 37,965 0.98% 693 2015/16 35,970 0.88% 651 2016/17 31,775 0.74% 578 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. 122 (This page intentionally left blank) CITY OF ROSEMEAD Direct and Overlapping Governmental Activities Debt June 30,2017 Percentage Gross Bonded Applicable Net Bonded Debt Balance To City Debt Overlapping Debt 'Metropolitan Water District $ 36.281974 0.327% 118.641 Garvey SD DS 2004 Series 2006 13,567423 50.797% 6,891.844 Garvey SD DS 2004 Series C 8612,964 50797% 4375,127 Garvey SD DS 2011 Refund Bonds 3960,000 50797% 2.011.561 Garvey SD DS 2013 Ref Bonds 1,725,000 50 797% 876.248 Garvey SD DS 2014 Ref Bonds 14.850,000 50797% 7,543.355 Rosemead SD DS 2007 Series D 335.000 69 656% 233.348 Rosemead SD DS 2008 Series A 615.000 69 656% 428.384 Rosemead SD DS 2011 Ref Bond 7.335.000 69.656% 5,109.268 Rosemead SD DS 2012 Ref Bond 5.250,000 69.656% 3,658940 Rosemead SD DS 2008 Series T 1 8.041.503 69 656% 5,601 389 Rosemead SD DS 2014 Ref Bonds 5,975,000 69656% 4,161.946 Rosemead SD DS 2016 Ref Bonds 12,550,000 69.656% 8741.828 El Monte Union HSD DS 2008 Series A 1,209,213 14.832% 179.350 EI Monte Union HSD DS 2008 Series B 30,187,623 14.832% 4477.428 El Monte Union HSD DS 2015 Ref Bonds 26325.000 14.832% 9904 524 El Monte Union HSD DS 2016 Ref Olyd Dlvr 22,950,000 14.832% 3,403 944 LA CCD DS 2003,Taxable Series 20048 33,670,000 0308% 103.704 to CCD DS 2001,2006 Series B 4,880,000 0.308% 15.030 LA CCD DS 2001,2008 Ser E-1 14440 000 0 308% 44.475 LA COD DS 2003,2008 Ser F-1 14,320 000 0.308% 44.106 LA CCD DS 2008,2009 Taxable Ser B 75,000.000 0308% 231.000 to CCD DS 2008.2010 Tax Ser D 125,000.000 0.308% 385.000 LA CCD Debt 2008,2010 Tax Ser E(BASS) 908000000 0.308% 2,772,000 LA CCD DS 2013 Ref Bonds 254,505000 0308% 783,875 LA CCD DS 2008 Series G 224,160,000 0.308% 699413 LA CCD DS 2015 Ref Series A 1459309000 0.308% 4,494,644 LA COD DS 2015 Ref Series B 37,655000 0.308% 115,977 LA COD DS 2015 Ref Senes C 289,955000 0.308% 893,061 LA CCD DS 2008 Ser J 414,995,000 0308% 1,278,185 Pasadena CCD DS 2002,2006 Series O 5,265,000 2 494% 131,309 Pasadena CCD DS 2002,2009 Series E(DABS) 25,295,000 2 494% 630,857 Pasadena CCD DS 2014 Ref Series A 16,680,000 2494% 415.999 Pasadena CCD DS 2016 Ref Series A 33,399000 2494% 832.747 Montebello USD DS 1998 Series 1998 5.165,072 1 586% 81.918 Montebello USD DS 1998 Series 1999 7421,320 1 586% 117,702 Montebello USD DS 1998 Series 2002 13,557,028 1586% 215,014 Montebello USD DS 2004 Series 2008 1,540,000 1.586% 24,424 Montebello USD DS 2004 Series 2009-1 2,560,000 1.586% 40,602 Montebello USD DS 2004 Series 2O09A-2 GABS 12640 000 1.586% 200,470 Montebello USD DS 2010 Ref Bonds 5,500,000 1 586% 87,230 Montebello USD OS 2004 Series 2013A 19,310,000 1.586% 306,257 Montebello USD CS Ref Bond Series 2015 28 215,000 1.586% 447,490 Montebello USD DS Ref Bonds 2016 Series A 14,935,000 1.586% 236,869 Montebello USD DS 2016 Series A 100 000,000 1.586% 1.586,000 San Gabriel USD DS 2002 Ser 2007 C 8,604,370 1.217% 104,715 San Gabriel USD DS 2008 Series A 1,608.245 1.217% 19.572 San Gabriel USD DS 2010 Ref Bonds 5,235.000 1.217% 75.880 San Gabriel USD DS 2012 Ref Bond Series B 37,571 424 1.217% 457,244 San Gabriel USD DS 2015 Ref Bond Series A 32,680,000 1.217% 397,716 San Gabriel USD DS 2015 Ref Bond Series B 2,000,000 1.217% 24340 Total Overlapping Debt 80.O00,952I 2016117 Assessed Valuation.$3,540.381060 After Deducting$727,598941 Incremental Value. Debt to Assessed Valutation Ratios. Direct Debt 0 90% Overlapping Debt 2.26% Total Debt 3.16% This fund is a portion of a larger agency,and is repsonsible tor debt in areas outside the city This report reflects debt which is being repaid through voter-approved property tax indebtedness. It excludes mortgage revenue,tax allocation bonds,interim financing obligations,non-bonded capital lease obligations,ant certificates of participation,unless provided by the city. Overlapping governments are those that coincide,at least in part,with the geographic boundaries of the city. The percentage of overlapping debt applicable is estimated by using taxable assessed values. Applicable percentages were estimated 9 determining the portion of another governmental units taxable assessd value that is within the city's boundaries and dividing it by each units total taxable assessed value. Source. Hdl Goren 8 Cone,L A.County Assessor and Auditor Combined 2016/17 Lien Date Tax Rolls. 123 CITY OF ROSEMEAD Legal Debt Margin Information Last Ten Fiscal Years 2007/08 2008109 2009/10 2010/11 Assessed valuation $ 3,165,802,509 $ 3,362,646,146 $ 3,399,331,688 $ 3431,820,218 Conversion percentage 25% 25% 25% 25% Adjusted assessed valuation 791,459627 840,661,537 849,832922 857,955,055 Debt limit percentage 15% 15% 15% 15% Debt limit 118,717,594 126.099,230 127 474,938 128,693258 Total net debt applicable to limit: General obligation bonds - - - - Legal debt margin $ 118,717,594 $ 126,099,230 $ 127474,938 $ 128,693,258 Total debt applicable to the limit as a percentage of debt limit 00% 00% 0.0% 0.0% The Government Code of the State of California provides for a legal debt limit of 15%of gross assessed valuation. However,this provision was enacted when assessed valuation was based upon 25%of market value. Effective with the 1981-82 fiscal year,each parcel is now assessed at 100%of market value(as of the most recent change in ownership for that parcel).The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25%level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state. Source: Rosemead Finance Department Los Angeles County Tax Assessor's Office 124 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 $ 3,533,192,184 $ 3,603,395,186 $ 3,725,310,320 $ 3,879,248441 $ 4,077,097,445 $ 4,267,980,901 25% 25% 25% 25% 25% 25% 883,298,046 900,848,797 931,327,580 969,812,110 1,019,274,361 1,066,995,225 15% 15% 15% 15% 15% 15% 132,494,707 135,127,319 139,699,137 145 471,817 152,891,154 160,049,284 $ 132,494,707 $ 135,127,319 $ 139,699,137 $ 145,471,817 $ 152,891.154 $ 160,049,284 0.0% 0.0% 0.0% 0.0% 0 0% 0.0% 125 CITY OF ROSEMEAD Pledged-Revenue Coverage Last Ten Fiscal Years (In Thousands) Tax Allocation Bonds Fiscal Year Ended Tax Debt Service June 30 Increment Principal Interest Coverage 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 2017 4,711,788 850,000 1,635,578 1.90 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. 126 CITY OF ROSEMEAD Demographic and Economic Statistics Last Ten Calendar Years Per Personal Capita Unemployment Fiscal Population Income Personal Rate Year (1) (in thousands) (2) Income (2) (3) 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% 2016/17 54,984 960,740 17,473 6.10% Sources: (1) California State Department of Finance (2) HDL Goren & Cone and based on the last available census. (3) State of California Employment Development Department 127 CITY OF ROSEMEAD Principal Employers Current Year and Nine Years Ago 2017 2007* Percent of Percent of Number of Total Number of Total Employer Employees Employment ' Employees Employment Southern California Edison 1 4,100 16.73% - 0.00% Garvey School District 2 837 3.42% - 0.00% Panda Restaurant Group, Inc. 3 500 2.04% - 0.00% Wal-Mart 4 468 1.91°% - 0.00% Rosemead School District 5 450 1.84% - 0.00% Target 6 220 0.90% - 0.00% Hemetic Seal Corporation 7 150 0.61% - 0.00% Olive Garden 8 130 0.53% - 0.00% Double Tree 9 120 0.49% - 0.00% Don Bosco Tech 10 90 0.37% - 0.00% 128 CITY OF ROSEMEAD Full-time and Part-time City Employees by Function Last Ten Fiscal Years Function 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 General government 19 16 22 19 15 13 12 12 11 13 Public safety ' 34 39 42 42 33 15 20 18 20 21 Community development 23 18 23 23 7 8 8 7 8 8 Public Works n/a n/a n/a n/a 26 22 23 23 21 24 Parks and recreation 103 135 112 99 68 81 86 80 83 109 Total 179 208 199 183 149 139 149 140 143 175 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 129 CITY OF ROSEMEAD Operating Indicators by Function Last Ten Fiscal Years 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Police: Arrests 1,506 1,478 1,733 1,888 1,842 1,186 1,356 1,585 1,339 1,046 Parking citations issued 11,766 10,517 8,450 7,515 7,797 8,765 16,110 7,863 8,047 7,676 Fire: Number of emergency calls 2,846 2,959 2,853 2,745 2,928 2,785 2,823 3,212 3,352 3,206 Inspections 2,518 2,093 2,137 1,845 2,066 2,012 2,026 2,793 2,564 2311 Public works: Street resurfacing (miles) 1.1 2.8 3.5 35 3.6 0.9 1.6 0.6 1.0 0.7 Parks and recreation: Number of recreation classes 484 397 727 617 519 638 724 839 871 873 Number of facility rentals 540 453 236 1,786 3,261 3,124 4,005 2,607 3,070 6,226 Source: City of Rosemead 130 CITY OF ROSEMEAD Capital Asset Statistics by Function Last Ten Fiscal Years 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Public Safety: Sheriff stations 1 1 1 1 1 1 1 1 1 1 Fire: Fire stations 2 2 2 2 2 2 2 2 2 2 Public works: Streets(miles) 0.75 77.55 77.55 77.55 77.55 77.55 77.55 77.55 81.90 81.90 Streetlights 6 2,712 2,712 2,712 2,712 2,712 2,712 2.712 2,712 2,712 Traffic signals 1 42 42 42 42 42 42 42 41 42 Parks and recreation: Parks 10 10 10 10 10 10 10 10 10 10 Community centers 2 2 2 2 2 2 2 2 2 2 131 E M AS O CIVIC PRIDE 41411117;t1 /4CORPORATED 9h9 Attachment B Rosemead Housing Development Corporation Financial and Compliance Report ROSEMEAD HOUSING DEVELOPMENT CORPORATION FINANCIAL AND COMPLIANCE REPORT Fiscal Year Ended June 30, 2017 RA ROGERS, ANDERSON, MALODY & SCOTT, LLP MCERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 ROSEMEAD HOUSING DEVELOPMENT CORPORATION FINANCIAL AND COMPLIANCE REPORT Fiscal Year Ended June 30, 2017 • 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 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 MCERTIFIFfl PUBLIC ACCOUNTANTS,SINCE 1948 735 E. Carnegie Dr.Suite 100 Board of Directors San Bernardino.CA 92408 Rosemead Housing Development Corporation 909 889 0871 T City of Rosemead, California 909 889 5361 F ramscpa.net INDEPENDENT AUDITOR'S REPORT PARTNERS Brenda L.Odle.CPA.MST Report on the Financial Statements Terry P Shea.CPA Kirk A.Franks,CPA Scott W. Manno.CPA,CGMA We have audited the accompanying financial statements of the Leena Shanbhag.CPA,MST,CGMA governmental activities and the major fund of the Rosemead Housing Bradferd A.Welebir,CPA.MBA,CGMA Development Corporation (the Corporation), a component unit of the City of Jay H.Zercher,CPA(Partner Emeritus) Philp H Waller.CPA;PartnerEmentus) Rosemead, California, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the MANAGERS/STAFF Corporation's basic financial statements as listed in the table of contents. Jenny Liu.CPA MST Seong-Hyea Lee.CPA,MBA Charles De Simon',CPA Management's Responsibility for the Financial Statements Nathan Statham,CPA.MBA Garoenya Duran,CPA Management is responsible for the preparation and fair presentation of these Bnanna Schultz,CPA Lisa Dongxue Gua,CPA.MSA 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 MEMBERS selected depend on the auditor's judgment, includingthe assessment of the American Institute of p g Certified Public Accountants risks of material misstatement of the financial statements, whether due to POPS the AICPA Adiance fraud or error. In making those risk assessments, the auditor considers for CPA Firms internal control relevant to the entity's preparation and fair presentation of Governmental Audit the financial statements in order to design audit procedures that are Quality Center appropriate in the circumstances, but not for the purpose of expressing an California Society of opinion on the effectiveness of the entity's internal control. Accordingly, we Certified Public Accountants express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. - 1 - STABILITY. ACCURACY. TRUST. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the Corporation, as of June 30, 2017, 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, 2017, 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 December 28. 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. kit.te t.t-o u-, M �t ,ec o 1t LLP. San Bernardino, California December 28, 2017 - 3- 1 FINANCIAL STATEMENTS Rosemead Housing Development Corporation Statement of Net Position June 30, 2017 Governmental Activities ASSETS Cash and investments (note 2) $ 266,710 Accounts receivable 9,003 Capital assets, net (note 4) 7,330,536 Due from City 207,486 Total assets 7.813,735 LIABILITIES Refundable deposits 51,130 Due to City 204,800 Total liabilities 255,930 NET POSITION Net investment in capital assets 7,330,536 Unrestricted 227,269 Total net position $ 7,557,805 I 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, 2017 Program Revenues Operating Capital Charges for Contributions Contributions Governmental Expenses Services and Grants and Grants Activities Governmental activities: General government $ 1,033.621 $ 433.118 $ 412,286 $ - $ (188,217) Total governmental activities $ 1,033.621 $ 433,118 $ 412,286 $ - (188,217) General revenues: Investment income 12 Other general revenues 5,767 Total general revenues 5,779 Change in net position (182,438) Net position. beginning of year 7,740,243 Net position, end of year $ 7,557.805 The accompanying notes are an integral part of these financial statements. - 5 - r Rosemead Housing Development Corporation Balance Sheet Governmental Fund June 30, 2017 General Fund ASSETS Cash and investments $ 266,710 Accounts receivable 9,003 Due from City 207,486 Total assets $ 483.199 LIABILITIES AND FUND BALANCE Liabilities: Refundable deposits $ 51.130 Due to City 204.800 Total liabilities 255,930 Fund balance: Restricted for: Low and moderate income housing 227,269 Total fund balance 227,269 Total liabilities and fund balance $ 483,199 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, 2017 Fund balance of governmental fund S 227.269 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 (3,840.605) Net position of governmental activities S 7,557.805 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, 2017 General Fund REVENUES Rental income $ 433,118 Intergovernmental 412,286 Investment income 12 Other 5,767 Total revenues 851,183 EXPENDITURES Operating 401,247 Administrative services paid to City of Rosemead 226,200 Facility rent paid to City of Rosemead 183,400 Total expenditures 810,847 Net change in fund balance 40,336 Fund balance, beginning of year 186,933 Fund balance, end of year $ 227.269 The accompanying notes are an integral part of these financial statements. - 8 - firomor vrrrr 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, 2017 Net change in fund balance -total governmental fund $ 40,336 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 (222.774) Change in net position of governmental activities $ (182.438) The accompanying notes are an integral part of these financial statements. - 9 - wistrammosse Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2017 (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, 2017 (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. 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, 2017 (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, 2017 (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 - V Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2017 (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, 2017 (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 - 1011.11_ Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2017 (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. 2017 consisted of deposits with financial institutions. The carrying amount of the Corporation's deposits was $266,710. 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, 2017, 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, 2017. The Corporation is funded, in part, by advances from the Commission. - 16 - Rosemead Housing Development Corporation Notes to the Basic Financial Statements June 30, 2017 (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 $1,613,104 for the Angelus Senior Housing facility at June 30, 2017. 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 $2,789,107 for the Garvey Senior Housing facility at June 30, 2017. The Corporation paid $91,200 and $92.200 in lease payments to the City during the year ended June 30, 2017 for the Angelus and Garvey Senior Housing facilities, respectively. (4) Capital Assets During the year ended June 30, 2017, the changes in capital assets were as follows: Balance at Balance at June 30. 2016 Additions Deletions June 30, 2017 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 (3.489,287) (222,774) - (3,712.061) Furniture and equipment (128,544) - - (128.544) Total accumulated depreciation (3.617,831) (222,774) - (3.840.605) Governmental activities capital assets, net $ 7.553,310 S (222,774) $ - $ 7.330.536 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, 2017 (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. 2017. - 18 - REQUIRED SUPPLEMENTARY INFORMATION Rosemead Housing Development Corporation Notes to Required Supplementary Information June 30, 2017 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. - 19- Rosemead Housing Development Corporation Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund For the Year Ended June 30, 2017 Variance Original Final with Final Budget Budget Actual Budget REVENUES Rental income $ 437,400 $ 437,400 $433.118 $ (4,282) Intergovernmental - - 412,286 412,286 Investment income - - 12 12 Other 8,100 8,100 5.767 (2,333) Total revenues 445,500 445,500 851,183 405,683 EXPENDITURES Operating 434,000 434,000 401,247 32.753 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 843,600 843,600 810,847 32,753 Net change in fund balance (398,100) (398;100) 40,336 438,436 Fund balance, beginning of year 186,933 186.933 186,933 - Fund balance, end of year $ (211,167) $ (211,167) $227,269 $ 438,436 -20- RA . ROGERS. ANDERSON. MALODY&SCOTT. LLP MCERTIFIED PUBLIC ACCOUNTANTS.SINCE 1948 735 E. Carnegie Dr.Suite :00 San Bernardino.CA 92408 909 889 0871 T 909 889 5361 F Board of Directors ramscpa.net Rosemead Housing Development Corporation City of Rosemead, California PARTNERS Brenda L.Odle.CPA.MST Terry P.Shea.CPA REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND Kirk A.Franks,CPA Scott W. Manno,CPA.CGMA ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF Leena Shanbhag,CPA.MST.CGMA FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH Bradferd A.Welebir,CPA.MBA.CGMA GOVERNMENT AUDITING STANDARDS Jay H. Zercher,CPA(Partner Emeritus) Phillip H.Waller.CPA(Partner Emeritus) INDEPENDENT AUDITOR'S REPORT MANAGERS/STAFF Jenny Liu,CPA.MST Seong-Hyea Lee.CPA.MBA Charles De Simoni,CPA We have audited, in accordance with auditing standards generally accepted Nathan Statham.CPA.MBA in the United States of America and the standards applicable to financial Gardenya Duran,CPA audits contained in Government Auditing Standards issued by the Brianna Schultz,CPA Lisa Dongxue Guo,CPA,MSA 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, 2017, and the related notes to the financial statements, which collectively comprise the Corporation's basic financial statements, and have issued our report thereon dated December 28, 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. MEMBERS American Institute of designoperation deficiencyin internal control exists when the or o eration of a Certified Public Accountants control does not allow management or employees in the normal course of PCPS The AICPA Allimue performing their assigned functions, to prevent, or detect and correct for CPA Finns misstatements on a timely basis. A material weakness is a deficiency, or a Gaver:n,entut Audit combination of deficiencies, in internal control, such that there is a Quality Center reasonable possibility that a material misstatement of the entity's financial California Society of statements will not be prevented, or detected and corrected on a timely Certifies Public Accountants 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. I 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. 43€4.s, i itekt cou,, ls'f ift, LLP.a,�o San Bernardino, California December 28, 2017 I I - 22 -