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2002 12 11 IABV P.O. Box 1504 78-495 CALLE TAMPICO LA QUINTA, CALIFORNIA 92253 (760) 7 7 7 - 7 0 0 0 FAX (760) 777-7101 AGENDA INVESTMENT ADVISORY BOARD Study Session Room 78-495 Calle Tampico- La Quinta, CA 92253 December 11, 2002 - 5:30 P.M. Board Member Felice(Video Conference Location) Cisco Systems 170 West Tasman Dr., Bldg. 17, San Jose, California, 95134 I CALL TO ORDER a. Pledge of Allegiance b. Roll Call 11 PUBLIC COMMENT - IThis is the time set aside for public comment on any matter not scheduled on the agenda.) III CONFIRMATION OF AGENDA IV CONSENT CALENDAR Approval of Minutes of Meeting on November 13, 2002 for the Investment Advisory Board. V BUSINESS SESSION A. Transmittal of Treasury Report for October, 2002 VI CORRESPONDENCE AND WRITTEN MATERIAL A. City of La Quinta FY 02/03 Audited Financial Statements B. Month End Cash Report — November, 2002 C. Pooled Money Investment Board Report — September, 2002 VII BOARD MEMBER ITEMS A. Fannie Mae and Freddie Mac Article VIII ADJOURNMENT T4ht 4 stPQ�t«rw MEMORANDUM TO: La Quinta City Council FROM: John M. Falconer, Finance Director/Treasurer SUBJECT: Treasurer's Report for October 31, 2002 DATE: November 27, 2002 Attached is the Treasurer's Report for the month ending October 31, 2002. The report is submitted to the City Council each month after a reconciliation of accounts is accomplished by the Finance Department. The following table summarizes the changes in investment types for the month: Investment Beginning Purchased Notes Sold/Matured Other Ending Change Cash $677,838 (1) ($1,124,125) ($446,287) ($1,124,125) LAIF $17,159,597 519,142 17,678,739 519,142 US Treasuries (2) $57,908,893 50,948 57,959,841 50,948 US Gov't Agencies (2) $14,921,162 3,000,135 (3,000,000) 35,201 14,956,498 35,336 Commercial Paper (2) $0 0 0 Mutual Funds $10,129,991 1 458,908 9,671,083 458,908 Total $100,797,481 $3,519,277 $4,583,033 $86,149 $99,819,874 $977,607 I certify that this report accurately reflects all pooled investments and is in compliance with the California Government Code; and is in conformity with the City Investment Policy. As Treasurer of the City of La Quinta, I hereby certify that sufficient investment liquidity and anticipated revenues are available to meet the pools expenditure requirements for the next six months. the City of La Quinta used the Bureau of the Public Debt, U.S. Bank Monthly Statement and the Bank of New York Monthly Custodian Report to determine the fair market value of investments at month end. /L o2-- Date Director/Treasurer Footnote (1) The amount reported represents the net increase (decrease) of deposits and withdrawals from the previous month. (2) The amount reported in the other column represents the amortization of premium/discount for the month on US Treasury, Commercial Paper and Agency investments. E E E m O o v v m 0 0 x z z z z z z z z o ` Cb €� N C O = d_ o m U U U a eD ¢ 7 m N N U 0 LL 0 LL p m T ZO a o n c y QQQ N > c c Q Q w p a c IT) f0 E > Et= w v w af0i T N T N Ct N C N C N O p 4 O J O y C N 41 N it v D V7 0 U Oca m N C C CL. 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O NtD O .- t0 � tD O N N N 0 n M M M M M E M O O M O � ID N a,M M R N N M M M C (n N � M M M M M V M O M O .. M N M N N l0 N O O to co 10 U) O N n n v m O o o to o y M M M M O M 10 to N O w O , O N O) M 10 N , R M M N t0 Q 7 M M M a Q 1D O t0 co tD p M M M M M O M M M M M W co q O M M M M O M n� SON V OONM�� 7 0 0 n n Q)OO n V <n V V O M M N N? N N N -Oj V M 7 M ' (O O O 1D tD N N C C N to C C N N C C E E E E y U U E E IA M H N lU 0) N tU d M N > > C C N > > C C N > > C C N C L C lU C L C N C y C 0) f0oy E m4)E U cm Ma)E U y U Q Q a Q > p V C O y > O U C O > O o!� = M O!� — M 0 c M Q. LLQK.-. LLLL <W Q. iz< C 0 0 0— j, m M 0 0 0— j, N 0 0 m M 0 0 0— 0 0 0 m M O 0 0 0 OOO) OO m �+. O1O1 O) o o E E E N 1° E E E N? t0 E E E ti M M M c �O N M M M W W W E o Co M M M _� W W W M W W W y, vas~ J Co Cl) N IJ` C M N N y N C 0) M .� N .� C M M U N O p .� M M M O OR >> M N M M M O mQ' 0 7 0 T M M M O O� >>> LL !� U LL C C C y— ?S C C C > LL C C C O— C C G X> C C C O) — C C C L> Q G=o QQQinQg QQQcnQ3 QQQinQ� CITY OF LA QUINTA CITY FIXED CITY LONG TERM RDA FIXED RDA LONG TERM FINANCING FA LONG TERM GRAND BALANCE SHEET 10131/02 CITY ASSETS DEBT RDA ASSETS DEBT AUTHORITY DEBT TOTAL ASSETS: POOLED CASH 3.153,076.40 0.00 0.00 /3,337,222.77 0.00 0.00 7,771.01 0.00 16,498,070.78 LORP INVESTMENT IN POOLED CASH 0.00 0.00 670,000.00 0.DO O.DO 0.D0 0.00 670,000.00 INVESTMENT T-BILLINOTES 43,000,000.00 0.00 0.00 0.00 0.00 0.00 0,00 0,00 43,000.OD0.00 AUTO MALL CASH LORP CASH 0.00 0.00 0.00 0.00 0.00 80,227.28 0,00 0.DO 0,00 0,00 0.00 80,227.28 BOND REDEMPTION CASH 0.00 0.D0 OAO 4,528.38 0.00 0.00 338.94 0.00 4.867.32 0.DO BOND RESERVE CASH 0.00 0.DO 0.00 0.00 0.00 0,00 39,648,844,42 0.00 0.00 0.00 0.00 0.00 527,27 0.00 0.00 39.649,371.69 BOND PROJECT CASH 0.00 0,00 0.00 0.00 0,00 0.DO 0.00 0.00 0.00 0.00 BOND ESCROW CASH PETTY CASH 1,000.00 0.D0 0.00 0.00 0.00 0.00 0,00 0.00 1,000.00 CASH B INVESTMENT TOTAL 46,154,076A0 0,00 0.00 53,740,822.85 0,00 0.00 8,637.22 0,00 99,903.536 47 INVESTMENT IN LAND HELD FOR RESALE 0.D0 0.DO 0.00 0.00 0.00 0.00 0.00 0.00 0,00 ACCOUNTS RECEIVABLE 141.372,16 0.00 0.00 60.900,00 0.00 0.00 0.D0 0.00 0.00 0.DO 202,272.16 (83,662,02) PREMIUMIDISCOUNT ON IN\ 15,028,53) 0.00 0.00 (78,633.49) 49,305.94 0.00 0.00 0,00 0.00 0.00 0.00 49,305,94 LORP-ACCOUNTS RECEIVAI INTEREST RECEIVABLE 0,00 239,344.75 0.00 0,00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 239,344.75 LOAN/NOTES RECEIVABLE (59.06) 0.00 0.00 13,215.683.11 0,00 0.00 0.00 0.00 13,215,624.05 DUE FROM OTHER AGENCIE 1.164,702.00 B6,040.17 0.00 0,00 0.00 0,00 1,250,742,17 2.299,096 69 DUE FROM OTHER AGENCIE 2,299,096.69 0.00 0.00 (2.299,096.69) CVAG ALLOWANCE (2.299,096.69) 0,00 0,00 0.00 0,00 0.00 0,00 0.00 30.600.37 DUE FROM OTHER GOVERN 30,600.37 0.00 98,836.34 0.D0 0.00 0.00 0,00 98.836.34 DUE FROM OTHER FUNDS DUE FROM RDA 0.00 8,497,550.20 0.00 0.00 0.00 0,00 0.D0 0.00 0.00 8.497,550.20 INTEREST ADVANCE -DUE FI 4,458,773.60 0.00 0.00 0.00 0.00 0.00 0.D0 0.00 4,458,773,60 3.010.448,19 ADVANCES TO OTHER FUN[ 1,100,000.00 0.00 1,910.448.19 0.00 0.00 0.00 0.00 0.00 3.561.86 NSF CHECKS RECEIVABLE 3,561,86 0.00 0.00 0.00 0.00 0.00 0,00 0,00 0.00 ACCRUED REVENUE 0.00 0.00 2 FIXED ASSETS 0.00 20,359,334.94 1,.9 ACCUMULATED DEPRECIAT 1,018.482.90 0.00 0.00 0.00 0.00 0,00 0.00 0.00 0,00 ,018,18,48282.90 2.300.00 TRAVEL ADVANCES 2,300.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 EMPLOYEE ADVANCES 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0,00 0,00 PREPAID EXPENSES RECEIVABLE TOTAL 0.00 16.651,600.25 20,359,334.94 0.00 15.342,580.26 0.00 0.00 0.00 0.00 52.353.515.45 WORKER COMPENSATION E 148,445.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 148,445.00 0.D0 RENT DEPOSITS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 75,00 UTILITY DEPOSITS 75.00 0.00 0,00 0.00 0.00 0.00 0.00 0,00 0.00 (951.79) MISC. DEPOSITS (951 79) 0.00 0.00 0.00 0.D0 0.00 0.00 0.00 147,568.21 DEPOSITS TOTAL 147,568.21 0,00 GENERAL FIXED ASSETS 0.00 0.00 0.00 0.00 52.290,306.05 0.00 0,00 0,00 52,290,306.05 0,00 ACCUMULATED DEPRECIAT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0,00 AMOUNT AVAILABLE TO RE" 0.00 0,00 0.00 0.00 1,694.231.51 0.00 0.00 160,998,172.00 0.00 7,475,000.00 170,167A03.51 AMOUNT TO BE PROVIDED I 0.00 0.00 52,290,306.05 160,998.172+00 0.00 7,475.000.00 222,457,709.56 TOTAL OTHER ASSETS 0,00 0.00 1,694,231.51 TOTAL ASSETS 62,953.244,86 20,359,334.94 1.694.231.51 69.083,403. 11 52.290,306.05 160.998,172.00 8,637,22 7.475.000.00 374,862,329.69 LIABILITIES: ACCOUNTS PAYABLE 389,999.52 0.00 0.00 (345,504.00) 0.00 0.00 0.00 0.00 0.00 44,495.52 97,017.32 DUE TO OTHER AGENCIES 97,017.32 0.00 0.00 0.00 0,00 1,572,790,22 0.00 0.00 0.00 0,00 0.00 0.00 0.00 1.671.626.56 DUE TO OTHER FUNDS INTEREST ADVANCE -DUE T� 98.836.34 1,910.448. 19 0.00 0.00 0.00 12,483,537,00 0.00 0.00 0.00 0,00 14,393,985.19 ACCRUED EXPENSES 0.00 0.00 0.00 0,00 0.00 0.00 0.00 0.00 0.00 95,538.44 INTEREST PAYABLE 0.00 0.00 95.538.44 0.00 0.00 0.00 0.00 0.00 60.187.24 PAYROLL LIABILITIES 60,187.24 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.329.17 STRONG MOTION INSTRUMI 2,329.17 0.00 0.00 0.00 0,00 0.00 0.00 0.00 24.000,00 FRINGE TOED LIZARD FEES 24,000.00 0.00 0.00 0.00 0.00 0.00 0.00 (622,26) SUSPENSE (622,26) 0.00 0,00 0.00 0.00 0.00 0.00 0.00 0.D0 0,00 DUE TO THE CITY OF LA OU PAYABLES TOTAL 0.00 2,582.195,52 0.00 0.00 13.806,361.66 0.00 0.00 0.00 0.00 16.388,557. 18 ENGINEERING TRUST DEPC 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 SO, COAST AIR QUALITY DE 0.00 0.00 0.00 0.00 0.00 17,220.010 0,00 0.00 0.00 0.00 0.00 17,220,00 LORP DEPOSITS DEVELOPER DEPOSITS 0.00 960,479.91 0.00 0.00 0.00 25,000.00 0.00 0.00 0.00 0.00 985,479.91 465,918,66 MISC. DEPOSITS 440,918.66 0.00 0.00 25,000.00 0,00 0.00 0.00 0.00 0,00 0,00 0.00 0.00 1,072,372.63 AGENCY FUND DEPOSITS 1,072,372.63 0.00 0.00 0.00 67,220.00 0.00 0.00 0.00 0,00 2,540.991.20 TOTAL DEPOSITS 2,473,771.20 0.00 0.00 DEFERRED REVENUE 1,164,702,00 0,00 0,00 11,079,695.08 0.00 0.00 0.00 0.00 0.00 0.00 12,244,397.08 12,244,397.08 OTHER LIABILITIES TOTAL 1,164,702.00 0,00 0.00 11,079,695.08 0,00 0.00 COMPENSATED ABSENCES 0.00 0.00 422.197,92 0.00 0.00 0.00 0.00 0.00 422,197.92 59 DEVELOPER AGREEMENT 0.00 743,722.59 528,311.00 0.00 0,00 0.00 0.00 0.00 528.311.00 DUE TO THE CITY OF LA OU 0.00 0.00 0.00 0.00 0.00 2,250,000.00 0.00 0.00 2,250.000.00 DUE TO COUNTY OF RIVER: 0.00 0.00 0.00 0,00 0.00 8,063,172.00 0,00 0.00 8,063.172.00 DUE TO C.V. UNIFIED SCHO, 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 DUE TO DESERT SANDS SC 0.00 0.00 0.00 0.00 0.00 0.00 150,685,000.00 0.00 7475,000.00 158,160,000.00 BONDS PAYABLE 0.00 0.00 1.694,231,51 0.00 0.00 160.998,172,00 0.00 7.475,000,00 170,167,403.51 TOTAL LONG TERM DEBT 0.00 6.220,668,72 0.00 1,694,231,51 24,953,276,74 0.00 160,998,172.00 0.00 7,475,000.00 201,341,348,97 TOTAL LIABILITIES EQUITY -FUND BALANCE 56,732,576.14 20,359,334.94 0.00 44,130,126. 37 52,290,306.05 0.00 8,637.22 0.00 173,520.980.72 TOTAL LIABILITY 3 EQUITY 62,953,244.86 20,359,334.94 1,694,231.51 69.083,403.11 52.290,306,05 160,998.172.00 8,637.22 7,475.000.00 374,862,329.69 0.00 D.00 0.00 0.00 0,00 0.00 0.00 0.00 0,00 CASH d INVESTMENT TOTA 99,903,536.47 PREMIUM/DISCOUNT ON 1W (83,662.02) TOTAL 99,819,874.45 INVESTMENT ADVISORY BOARD Meeting Date: December 11, 2002 ITFM TITLE City of La Quinta Fiscal Year 2002-03 Audited Financial Statement BACKGROUND: Correspondence & Written Material Item A Mr. Mike Harrison, Audit partner with Conrad & Associates will review the City Cash and Investments presented in the report and answer Board Members questions. RECOMMENDATION: Information item only. John M. FalconeW, Finance Director CITY OF LA QUINTA La Quinta, California Comprehensive Annual Financial Report Year Ended June 30, 2002 CITY OF LA QUINTA La Quinta, California Comprehensive Annual Financial Report Year ended June 30, 2002 Prepared by FINANCE DEPARTMENT JOHN M. FALCONER Director of Finance CITY OF LA QUINTA Comprehensive Annual Financial Report Year ended June 30, 2002 TABLE OF CONTENTS EADZ INTRODUCTORY SECTION Letter of Transmittal 1 List of Principal Officials xi Organizational Chart xii Certificate of Award for Outstanding Financial Reporting (CSMFO) xiii Certificate of Achievement for Excellence in Financial Reporting (GFOA) xiv FINANCIAL SECTION Independent Auditors' Report Management's Discussion and Analysis (Required Supplementary Information) 3 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 16 Statement of Activities 17 Fund Financial Statements: Governmental Funds: Balance Sheet 18 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 70 Statement of Revenues, Expenditures and Changes in Fund Balances 22 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 24 Proprietary Funds: Statement of Net Assets 25 Statement of Revenues, Expenses and Changes in Net Assets 26 Statement of Cash Flows 27 Fiduciary Funds: Statement of Fiduciary Assets and Liabilities — Agency Funds 28 CITY OF LA QUINTA Comprehensive Annual Financial Report Year ended June 30, 2002 TABLE OF CONTENTS, (Continued Pale FINANCIAL SECTION, (Continued) Notes to the Basic Financial Statements 29 REQUIRED SUPPLEMENTARY INFORMATION: Notes to Required Supplementary Information 75 Budgetary Comparison Schedules: General Fund 76 Low/Moderate Income Housing Project Area No. 2 Fund 78 SUPPLEMENTARY SCHEDULES: Non -Major Governmental Funds: Combining Balance Sheet 80 Combining Statement of Revenues, Expenditures and Changes in Fund Balance 81 Non -Major Special Revenue Funds: Combining Balance Sheet 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balance 86 Budgetary Comparison Schedules: State Gas Tax Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 88 Federal Assistance Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 89 Urban Forestry Grant Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 90 Lighting and Landscape Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 91 CITY OF LA QUINTA Comprehensive Annual Financial Report Year ended June 30, 2002 TABLE OF CONTENTS, (Continued Pa(c FINANCIAL SECTION, (Continued State Law Enforcement Block Grant (SLESF): Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 92 Quimby Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 93 Public Safety Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 94 Arts in Public Place Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 95 South Coast Air Quality Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 96 Local Law Enforcement Block Grant (LLEBG): Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 97 Coachella Valley Violent Crime Task Force Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 98 Low/Moderate Income Housing Project Area No. 1 Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 99 Low/Moderate Bond — Project Area No. 1 Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 100 Low/Moderate Bond — Project Area No. 2 Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 101 CITY OF LA QUINTA Comprehensive Annual Financial Report Year ended June 30, 2002 TABLE OF CONTENTS, (Continued) Page FINANCIAL SECTION, (Continued) Major and Non -Major Debt Service Funds: Budgetary Comparison Schedules: Financing Authority Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 104 Redevelopment Agency Project Area No. 1 Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 105 Redevelopment Agency Project Area No. 2 Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 106 Major and Non -Major Capital Projects Funds: Budgetary Comparison Schedules: Combining Balance Sheet 108 Combining Statement of Revenues, Expenditures and Changes in Fund Balance 110 Infrastructure Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 112 Capital Improvement Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 113 Transportation Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 114 Parks and Recreation Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 115 CITY OF LA QUINTA Comprehensive Annual Financial Report Year ended June 30, 2002 TABLE OF CONTENTS, (Continued Pale FINANCIAL SECTION, (Continued Civic Center Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 116 Library Development Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 117 Community Center Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 118 Street Facility Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 119 Park Facility Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 120 Fire Facility Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 121 Assessment District 97-1 La Quinta Norte Construction Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 122 Assessment District 2001-1 Phase VI Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 123 Financing Authority Capital Projects Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 124 Redevelopment Agency Project Area No. 1 Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 125 CITY OF LA QUINTA Comprehensive Annual Financial Report Year ended June 30, 2002 TABLE OF CONTENTS (Continued) Page FINANCIAL SECTION, (Continued Redevelopment Agency Project Area No. 2 Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual 126 Internal Service Funds: Statement of Net Assets 128 Combining Statement of Revenues, Expenditures and Changes in Fund Balance 129 Combining Statement of Cash Flows 118 Agency Funds: Combining Balance Sheet 130 Statement of Changes in Assets and Liabilities 132 Capital Assets Used in the Operation of Governmental Funds: Schedule by Source 138 Schedule by Function and Activity 139 Schedule of Changes by Function and Activity 140 CITY OF LA QUINTA Comprehensive Annual Financial Report Year ended June 30, 2002 TABLE OF CONTENTS, (Continued) Table No. Page STATISTICAL SECTION General Fund Expenditures by Function 1 142 General Fund Revenues by Source 2 143 Property Tax Levies and Collections ; 144 Schedule of Net Taxable Value 4 145 Property Tax Rates - Direct and Overlapping Governments 5 146 Special Assessment Billings and Collections 6 147 Schedule of Direct and Overlapping Bonded Debt 7 148 Computation of Legal Debt Margin 8 149 Revenue Bond Coverage 9 150 Demographic Statistics 10 151 Property Value, Construction Activity, and Bank Deposits 11 152 Principal Taxpayers 12 153 Major Employers I I 154 Schedule of Insurance in Force 14 155 Miscellaneous Statistical Data 15 156 General Fund Balance Trends 16 157 P.O. Box 1504 78-495 CALLS TAMPICO (760) 7 7 7 - 7 000 LA QUINTA, CALIFORNIA 92253 FAX (7 60) 7 7 7- 7 101 November 19, 2002 Honorable Mayor, City Council, and City Manager City of La Quinta La Quinta, California FY 2001-02 COMPREHENSIVE ANNUAL FINANCIAL REPORT LETTER OF TRANSMITTAL We are pleased to present the 2002 CAFR of the City of La Quinta to the City Council and the City Manager. This report includes financial statements of the: • City of La Quinta; • La Quinta Redevelopment Agency; and, • La Quinta Financing Authority. Our independent auditors, Conrad & Associates have expressed their opinion as to the fairness of these financial statements. The completion of the independent audit is an important part of the total financial management program for the City of La Quinta. The information found in this report is provided by management to the Council and the public to assist those interested in understanding the fiscal condition of the City as of June 30, 2002. Responsibility for both the accuracy of the data, its completeness and its fairness of presentation, including all disclosures rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City of La Quinta. All disclosures necessary to enable this reader to gain an understanding of the government's financial activities have been included. This is the second year of financial statement presentation under the financial and reporting requirements of Government Accounting Standards Board Pronouncement No. 34 — The New Financial Reporting Model. The City elected early implementation of the standards in Fiscal Year 2001. In its most elementary terms, the new model attempts to present the financial position and activities of a government organization on a basis comparable to a for -profit organization. Honorable Mayor, City Council, and City Manager Document Structure The CAFR is presented in three sections: • Introductory; • Financial; and, • Statistical. The introductory section includes this transmittal letter, the City's organizational chart, a list of principal officials, and awards for excellence in financial reporting. The financial section consists of the audit opinion, management's discussion and analysis of the financial statements and footnotes, and required supplementary information. The statistical section includes selected financial and demographic information, generally on a multi -year basis. The following governmental agencies that provide services to the citizens of the City of La Quinta have been excluded from this report because the City does not have financial accountability over these agencies: State of California and its departments, County of Riverside and its departments, Coachella Valley Association of Governments, Riverside County Transportation Commission, Riverside County Waste Management District, Desert Sands Unified School District, County Superintendent of Schools, Coachella Valley Unified School District, Desert Community College District, Mosquito Abatement District, and Coachella Valley Water District, Sunline Transit, Palm Springs Desert Resorts Convention and Visitors Authority, and the Desert Regional Resorts Airport Authority. Background The City of La Quinta is located 120 miles east of Los Angeles in the eastern portion of Riverside County known as the Coachella Valley. The City motto is "The Gem of the Desert". The City is governed by a five member City Council under the Council/Manager form of government. The Mayor is directly elected by the citizens. The City was originally incorporated in 1982 as a general law City and it became a charter City in November 1996. Significant 10-year demographic data is as follows: • Population as of January 1, 2002 was 28,715 an increase of 95% from 1991. • Retail Sales of $270 million, a 692% increase from 1991; • Taxable Sales of $340 million, a 437% increase from 1991; • Assessed Valuation of $3.822 billion, a 140% increase from 1991; and, • Hotel Room sales over $37.0 million, a 92% increase from 1991. 11 Honorable Mayor, City Council, and City Manager The City area includes the La Quinta Resort, several world class golf resorts, quality neighborhoods of single family and multi -dwelling homes, and light commercial industries. The City has a beautiful 10,000 sq. ft Senior Center. The Desert Sands Unified School District and Coachella Valley Unified School District provide educational opportunities for school -age children in La Quinta. The Cityhas been experiencing rapid growth in population. During 2001, the population grew 8.58%, making it one of the fastest growing cities in California. With this growth comes a demand on local government to meet the needs of its citizens. The total number of full time authorized positions for 2001-2002 is 76. In addition to the 28,715 permanent residents, approximately 12,600 seasonal residents spend three to six months in the City. Services Provided by the Citv City services can be divided into those services provided directly by City staff and those services contracted out or provided by other government agencies and organizations. Direct services provided by City staff in the following areas include: General Government - Legislative - City Manager - Economic Development - Personnel Finance - Fiscal Services - Central Services Building and Safety - Administration - Code Compliance - Animal Control - Building - Emergency Services - Fire - Civic Center Building Public Works - Administration - Development/Traffic - Street & Landscape Maintenance - Capital Projects i i i City Clerk - City Clerk Community Services - Administration - Recreation - Senior Center Community Development - Administration - Planning - South Coast Air Quality - Redevelopment Honorable Mayor, City Council, and City Manager Services are also provided to the City and its citizens by contract and by the direct services of other government agencies and organizations. These services include police and fire protection through the County of Riverside, library services through the County of Riverside, visitor & tourist information through Palm Springs Desert Resorts Convention Visitors Authority, City promotion through the La Quinta Chamber of Commerce, water service through the Coachella Valley Water District, electricity service through the Imperial Irrigation District, refuse collection through Waste Management Company, public transit through Sunline Transit Agency, and cable service through Time Warner. Significant Events and Accomplishments During 2001-02 the City experienced many significant events and accomplishments that may not be readily evident from a review of the financial statements. Some of the more important of these items are: Real Estate Single family construction accounted for $178 million in building permits while multifamily construction totaled $15 million last year. La Quinta issued $1.4 billion worth of building permits during the last ten years, averaging over $143 million per year. In 2001, construction totaled $221 million, 55% above the ten-year average. Major retail developments continue to diversify and enhance La Quinta's economic base. The Centre at La Quinta auto mall site includes three new dealerships and can accommodate up to nine dealerships, plus 400,000 square feet of retail. A number of exciting new developments are planned or are near completion, including Fairway Plaza, anchored by Albertsons and Sav-on; La Quinta Corporate Center, which contains a fitness center, offices, and a post office site; La Quinta Court, a specialty shopping center with fine restaurants and a gourmet food market; La Quinta Professional plaza, under construction, which includes Palm Desert National bank, professional offices and restaurants; Jefferson Plaza, anchored by Home Depot, I -Hop, and Jack in the Box, which has been completed; One Eleven Center, anchored by Wal Mart, Staples, and coming soon, a Big 5 Sporting goods store; Point Happy, anchored by two restaurants; and Old Town La Quinta, a 127,500 square foot commercial/retail center planned for the Village area. Several resort -oriented projects are also planned which will add to the economic diversity of the City, including approval of an Embassy Suites hotel, a Marriott Residence Inn, and development of a 50-acre site at the corner of Miles Avenue and Washington Street which will include resort hotels, a casitas hotel, upscale restaurants, and commercial/retail uses. A residential component is also part of the project, consisting of single family homes, townhomes, and a 5- acre neighborhood park. Quality residential communities, including PGA West, Rancho La Quinta and the Traditions have increased the assessed valuation of the City, and several other large projects have been approved and are moving forward. Since 1991, assessed valuations have grown to $3.822 billion in 2001. In the last decade, assessed values have increase 140%, substantially higher than the region's average growth rate. IV Honorable Mayor, City Council, and City Manager Housing La Quinta has a wide spectrum of housing types and values, ranging from the affordable to exclusive luxury estates. The median home prices in La Quinta have been relatively stable and are significantly lower than other areas of the Coachella Valley mostly due to the reasonably priced land values and available housing inventory. The U.S. Census has established the median home price at $160,000, which is lower than averages for San Diego and Los Angeles Counties and the State of California. There were 2,210 housing units built during fiscal year 2002, which brings the number of total units within the City to 15,732. The 15,732 units consist of 12,228 detached single family residences, 2360 attached single family residences, 897 multi family residences, and 247 mobile homes. Tourism La Quinta is well known for its many championship golf courses. The City is home to 16 championship courses, and many more are in the planning or development stages. In addition to quantity, La Quinta has some of the highest rated courses in the world of golf. Various golf tournaments, including the prestigious Bob Hope Chrysler Classic, are exposing La Quinta internationally as a quality destination and golf resort area. The City acquired 525 acres of undeveloped property adjacent to Jefferson Street and Avenue 52. This project, r,� ferred to as "The Ranch," will include two championship public golf courses, as well as hotel and commercial developments. The nationally recognized La Quinta Arts Festival attracts many visitors from around the country each year to the City of La Quinta and the Coachella Valley, and has relocated to a new site along Washington Street. Hotel room sales in La Quinta enjoyed dramatic growth to a record S40 million in 2001. The La Quinta Hotel, the second largest destination resort in the Coachella Valley, was the largest contributor to this increase. Capital Improvements The City completed almost $55 million in capital improvements and land acquisitions during 2001-02. Projects completed or nearing completion include Eisenhower Mini -Park Expansion, Velasco Mini -Park, Calle Estado Prototypical street, Jefferson Street Phase I widening, Fritz Burns Park Improvements Phase II, and various traffic signal improvements. Several significant projects are continuing, including museum expansion, Village/Cove neighborhood improvements, Civic Center Campus development, and several street and lighting improvement projects. A site for the City's third fire station was acquired, and the design phase begun. he City's Capital Improvement Program (CIP) continues to increase to meet the demands of growth, and totals S42.4 million for the 2002-2003 program. This major commitment in infrastructure will continue to provide for both the current and future growth that the City has experienced. Honorable Mayor, City Council, and City Manager Community Facilities The City has several significant community facility projects underway. The Civic Center Campus is nearing completion, Phase 1 of the Municipal Library is being designed, and projects will begin soon for the 18-acre Community Park and La Quinta Historical Museum expansion. In addition, the development of the City's first municipal golf course, to be located at Avenue 52 at Jefferson Street, will significantly add to amenities available to residents of La Quinta. Citv Operations The following is a partial listing of the accomplishments for the citizens of La Quinta for fiscal year 2001-2002: Continued development of GIS data base for city-wide planning, obtained aerial photos of City boundaries and planning areas, and developed enhanced mapping capabilities; Initiated features on City web page making maps and permit detail available to the general community; Implemented an enhanced promotional program and ad campaign, supporting local businesses; Implemented an improved Optical Imaging system for document storage and record retrieval, including scanning and indexing existing improvement plans into digital archives; Received several grant awards for public safety, tire recycling and bicycle lanes; Received awards in excellence for financial and budget reports; Implemented upgrades in management information services, including additional servers, enhanced security, and improvements in City web site; Organized and coordinated the City's 20`h Anniversary Celebration; Continued on- and off -site improvements, and continued construction of the Redevelopment Agency low - moderate housing project on Avenue 48; Installed a Community Emergency Notification System, and improved the City's Emergency preparedness equipment resources; Completed the Specific Plan for the Redevelopment Agency owned property on Washington Street and Miles Avenue, completed bond funding for the Senior housing component, and started processing the third Affordable Housing project; Prepared the Development Impact Fee Program update, adopted by the City in March, 2002; Completed annexation of two areas east of the City; Continued update of General Plan and Housing Element, and completed the first draft of City=s Design Standards for development and traffic. Future developments Future developments include: continued commercial development along the Highway III corridor, redevelopment financed property development on Avenue 48 and completion of residential projects in the northern part of the City. Additionally, construction of the City's third fire station, and development of the City's first municipal golf course will significantly add to the services offered to La Quinta residents. Construction of both a library and historic museum are in the planning stages. vi Honorable Mayor, City Council, and City Manager Financial Information GASB 34 requires a separate "matter of fact" discussion of the City's financial condition that can be found in the required supplementary information section entitled "Management Discussion and Analysis (MDA)". The operating results for the City ofLa Quinta for FY2001102 were verygood and our financial condition is the strongest since incorporation. The City will be faced with future funding challenges that will require a dedicated effort to fulfill our economic developmentplan to garner new and additional revenues. Management believes that the following items will impact future budgets of the City ofLa Quinta that will have to be addressed with future revenues or the use of our reserves: The need for additional police services — As the population grows the City will be faced with the need to add additional public safety officers. The need for additional fire services — Coupled with the growth in population and the desire by fire professionals to have three and four person crews, the City will need to address the need for additional fire service resources. The need for a third fire station — The City has two fire stations and the City has made a commitment to build and maintain a third fire station in the north part of the City. Additional personnel and paramedic services will continue to be needed. The need to fund additional landscaping costs — As a result of Proposition 218, the City has been limited on the use of City -Wide Lighting and Landscape Assessment District funding for the maintenance of landscaping in the City. The City has continued to add additional street medians and is developing both the Civic Center Campus and the 18 acre Community park that will require additional funds to maintain these facilities. The need to pay for the operations of additional public facilities — In the five year Capital Improvement Plan the City has plans to build a municipal library, expand the museum, and expand City Hall. The following paragraphs outline several of the major polices of the City and attempt to supplement, not supplant, the MD & A which can be found later in this report. Management of the City of La Quinta is responsible for establishing and maintaining a framework of internal controls designed to ensure that assets of the City are protected from loss, theft, or misuse and to ensure that adequ: to accounting data are compiled to allow for the preparation of financial statements in conformity with genera lily accepted accounting principles. The framework of internal controls is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Accocriting Controls - The City of La Quinta's accounting system is designed upon the following principles: In the public sector, a city government maintains a variety of "funds" that provide the basis for separately recording the financial data related to a specific activity. A fund is an accounting entity with a complete set of self -balancing accounting records. Each fund has been established because of some restriction on the use of the resources received by that fund. In the private sector, a corporation may have many subsidiaries that make up vii Honorable Mayor, City Council, and City Manager the parent corporation. Likewise in the public sector, all of the funds make up the complete financial resources of the City of La Quinta. This report includes the transactions of all entities over which the City Council of the City of La Quinta has authority (as defined by the Governmental Accounting Standards Board). The City's accounting system operates on a modified accrual basis of accounting for all governmental and agency type funds. Governmental funds include the General, Special Revenue, Debt Service, and Capital Projects Funds. Under the modified accrual basis of accounting, revenues are recorded when received in cash or accrued when they are both measurable and collectible within the accounting period or soon enough after the end of the period to pay liabilities of the period. Expenditures, other than interest or long term debt, are recorded when liabilities are incurred. At year end, the City has prepared the required entries necessary to report the City financial position and activities on an accrual basis of accounting which recognizes revenues when earned and expenses when incurred. The City maintains two Internal Service Funds and no Enterprise Funds. These types of funds use the accrual basis of accounting. Revenues are recorded when earned and expenses when incurred. In addition to maintaining funds to record accounting transactions, internal controls exist within the accounting system to ensure the safety of assets from misappropriation, unauthorized use or disposition, and to maintain the accuracy of financial record keeping. These internal controls must be established consistent with sound management practices based upon the cost/benefit of the controls imposed. The cost of a control should not be excessive to its derived benefit as viewed by City management. The internal controls in existence at the City of La Quinta are sufficient to ensure, in all material respects, both the safety of the City's assets and the accuracy of the financial record keeping system. The City plans to acquire new financial accounting software in the coming year, to improve reporting capabilities and enhance internal controls in all areas of financial records. Budgetary Controls - The City Manager submits a preliminary budget to the City Council before each fiscal year. A public meeting is then held prior to July 1 to receive public comment. A budget is required to be adopted before the beginning of the fiscal year. Amendments to the budget or budget transfers between funds require Council approval. Budget transfers within funds require City Manager approval. The City also maintains an encumbrance system as one budget technique. All fiscal year end appropriations and encumbrances lapse at year end unless specifically approved by the Council for inclusion in the following year's appropriations. Each Department receives a monthly budget -to -actual expenditure report. In addition, each department can access on-line budgetary data from the financial information system available throughout the City-wide computer network. The City Council is also given an Executive level Summary of Revenues and Expenditures on a monthly basis. Gann Limit - Appropriations Subject to the Limit - In 1979, Proposition 4, the "Gann" initiative, was passed by the voters of California. The purpose of this law was to limit government spending by putting a capon the total proceeds of taxes that may be appropriated each year. This limit is increased each year through a formula that takes into consideration changes in the Consumer Price Index and state per -capita income. If a city reaches this limit, excess tax revenue must be returned to the State or citizens through a process of refunds, rebates, or other means that may be defined at that time. The Gann Limit for the City of La Quinta has increased steadily since viii Management Discussion and Analvsis The Management Discussion and Analysis (MDA) is intended to provide the reader of the statements with a concise analysis of the financial results and financial position of the City of La Quinta. The New Reporting Model As mentioned in the prior year MDA, the impact of the new reporting model on the financial statements constitutes the biggest change in the way governmental activities have previously been reported. We have to return to the original "blue book" in the mid 1980's to recall such a major change in the accounting and reporting of governmental activities. Overall, we believe that from a financial reporting standpoint, the preparation of this document continues to be one of the most challenging for the governmental accounting profession. As will be discussed later in detail, most discussion on the new reporting model has focused on infrastructure reporting. This year a major effort was needed to update the infrastructure reporting for additions and deletions during the year. Two new statements have been presented entitled the Statement of Net Assets and Statement of Activities. The purpose of the Statement of Net Assets is to report on the financial and capital resources for all governmental funds in a single statement. The purpose of the Statement of Activities is to report on the activity of the government's operations and is presented in a format that reports the net (expense)/revenue of its various functions. In addition, the Governmental Funds Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balances have been classified into major and non -major funds. These major and non -major funds are determined based upon criteria set forth by the GASB. The GASB believed that this major and non -major classification allows the reader to review the significant funds in one report rather than have the reader determine what is a major fund and what is non -major. Executive Summary As was the case last year, the overall financial results of the City of La Quinta for FY 2002/03 were very good and our financial condition is the strongest since incorporation. Although our financial results were not as strong as the prior year, the City was generally able to see increases in its reserves. Several events led to the decrease from the prior year including lower interest rates on investments, lower Transient Occupancy Tax collections, and a slight reduction in permits and fees. These decreases were offset by higher than expected sales tax revenues resulting from an increase in population and an increase in the number of new businesses locating to the City. As a fast growing municipality, the City of La Quinta has been able to add to its general reserves with both increases in development related activities and on -going taxes and fees for FY 2001/02. The future challenge will be to ensure that these reserves and the on -going taxes and fees will meet the demands for public services that a community at build -out will require. 3 Certificate of Achievement for Excellence in Financial Reporting Presented to City of La Quinta, California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2001 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. GE OFPk� �� t ST ATES � N GMAQA � MVMTNs President cySIE I�a 9WICA0 (� zerloee Executive Director xiv The GASB requires that governmental agencies provide two years worth of financial information so that the reader will be able to draw comparisons on the results of operations and the financial position from year to year. Assets The following chart lists a condensed Statement of Net Assets for the fiscal year ending June 30, 2002 and 2001. Total net assets increased $19 million from the previous year. Current and other assets Capital assets Total assets Current and other liabilities Long term liabilities Total liabilities Net assets Investment in capital assets, net of related debt Restricted Unrestricted Total net assets CITY OF LA QUINTA Statement of Net Assets Governmental Governmental Governmental Activities Activities Activities 2002 2001 Change S 123,522,074 83,113,424 40,408,650 361,734,987 310,193,823 51,541,164 485,257,061 393,307,247 91,949,814 5,917,187 6,975,872 (1,058,685) 166,682,239 92,774,099 73,908,140 172,599,426 99,749,971 72,849,455 195,474,945 217,419,724 (21,944,779) 74,156,691 45,438,930 28,717,761 43,025,999 30,698,622 12,327,377 S 312,657,635 293,557,276 19,100,359 Employees One major asset of the City of La Quinta is its employees. While not quantified on the books, the City has 76 authorized full time equivalent positions to provide the services required by the community. Cash and Investments The City of La Quinta has cash and investments on hand to meet both immediate and long-term needs. The City Finance Director serves as the Treasurer and is appointed by the City Manager. The City has a seven member Investment Advisory Board. It is appointed by the City Council and meets monthly to review the Treasurer's Report and provide valuable assistance to the Treasurer on current trends and topics in this area, as well as annually reviewing the Investment Policy. 5 The Honorable Mayor and City Council City of La Quinta La Quinta, California In accordance with Government Auditing Standards, we have also issued a report dated August 16, 2002 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 grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. l�-4d(&*--dl ry350GcaZ;1�/L.L./' August 16, 2002 Receivables/Advances to Other Funds The City of La Quinta does not have large receivable balances. We do not have any enterprise activities such as a water or sewer department, which typically generate receivable balances. One of the interesting impacts of GASB 34 is the accounting for advances to and from other funds which will be discussed in greater depth under the Advances from other funds section of the MDA. The City has advanced funds to the City Redevelopment Agency to promote economic activities within its boundary areas. The advances have no specified due date and accrue interest at 10% per year. The intent is to repay these advances with interest before the expiration of the Redevelopment Project Area Plan in approximately thirty years. In addition, an outstanding advance from the Redevelopment Project Agency to the Park and Recreation Development Impact Fee Fund has been made to accelerate Park development. During the year, an early repayment of the 1994 Educational Relief Augmentation Fund (ERAF) advance from the Low and Moderate Housing Project Area 1 to the Project Area 1 Debt Service Fund was made. The 1994 Educational Relief Augmentation Fund (ERAF) advance from the Low and Moderate Housing Project Area 2 to the Project Area 2 Debt Service Fund remained outstanding at year end. The total outstanding balances as of June 30, 2002 and 2001 are $13,810,753 and $12,024,009, respectively. Under GASB 34 these advances to and from other funds have been eliminated from the Statement of Net Assets. Capital Assets The most debated topic of the new reporting model is the recording of fixed assets including the City infrastructure assets and accumulated depreciation. In some respects the second year of implementing GASB 34 in this area were harder than the first year. In the first year the City relied on a professional study to value the infrastructure. During FY O1/02, the City had to begin to track the addition and deletion of fixed assets. These additions and deletions took the form of developer contributions, and completed Capital Improvement Projects. The primary purpose of including infrastructure assets in the financial statements is to report the total amount of improvements and the amount that these assets have been depreciated. At year-end, General Fixed Assets were 31 % depreciated at year end compared to 28% in the previous year, Internal Service assets were 56.6% depreciated compared to 51% last year and infrastructure improvements were 60.55% depreciated compared to 57.5% in the prior year. The higher depreciation percentage indicates that the assets are older and will require accelerated future expenditures in the future to replace aging assets. In each case cited above, the depreciation percentage increased which indicates that the City infrastructure assets are aging faster than they are being replaced. The City has an internal service fund for the replacement of equipment and major capital items such as the roofs and air conditioners in the City Hall and Senior Center. In FY 01-02, the City created a new internal service fund entitled Information Technology to fund the replacement of computers and related equipment and to charge departments for their fair share of computer related services. The information technology fund was initially funded with a transfer from the General Fund of $1 million. In addition to the general fixed assets, such as buildings, parks, computers and internal service assets, the City has included its infrastructure assets in the Statement of Net Assets. Infrastructure assets included in the Statement of Net Assets were City rl Background In this MDA section, the Finance Director departs from the past, which required a "just present the reader with the facts" approach and enters into the future with a requirement to "tell it like it is' The analysis also is required to convey the financial results with an element of subjectivity. This subjectivity is based upon the Finance Director's knowledge of the City's "business cycle" and the possible economic factors that may impact the City. The Government Accounting Standards Board is the rule making body that promulgates or sets the accounting rules. This rule making body is slowly but surely moving toward a standard of accounting based upon the full accrual basis of accounting, which is required for for -profit companies. To accomplish this move toward a full accrual basis of accounting, many of the government accounting software providers are incorporating features that will generate two separate sets of statements. One set is produced on the modified accrual basis of accounting and the other on the full accrual basis of accounting. The intent of this software is to capture the data throughout the year necessary to push a button at the end of the year and print out a statement based upon the modified accrual basis of accounting and another statement based upon the full accrual basis of accounting. The City accounting system is based upon the modified basis of accounting throughout the year. Once a year, at year-end, the City prepares memo entries to convert the modified basis of accounting throughout the year to the full accrual basis of accounting. This conversion is prepared on a spreadsheet program and is given to our outside auditors. No formal entries are entered into the accounting system to convert to the accrual basis of accounting. Management believes this less formal conversion process is simpler, more flexible and less costly for the City of La Quinta. You may be asking yourself how significant is the change in the two reporting methods? The following table summarizes the differences for FY 01/02: Description Modified Accrual Accrual Change Assets 140,239,067 485,257,061 345,017,994 Liabilities 34;943,009 172,599,426 137,656,417 Revenues 64,987,678 51,929,073 (13,058,605) Expenditures 114,913,074 33,512,175 (81,400,899) Fund Balance/Net Assets 105,296,058 312,657,635 207,361,577 Revenues over (under) expenditures (49,925,396) 18,416,898 68,342,294 It is apparent that the change in accounting methods dramatically changes the way the reader of the financial statements interprets the financial condition and operations of the City. Management will attempt to present the reader with an analysis that is simpler to understand and draws distinctions between the two accounting methods where possible. 4 Liabilities The City of La Quinta has incurred both short and long term debt. Most readers are familiar with accounts payable, accrued salary, payroll taxes and developer deposits, while others may be familiar with advances from other funds and bonds payable. The City of La Quinta is current in meeting its short and long-term commitments and there is no known violation of any bond indenture covenant. In addition, all bonds have been insured and carry a "AAA" rating by a major rating agency. During the fiscal year, the Redevelopment Agency (RDA) Project Area 1 issued $88 million of "AAA" insured Tax Allocation Bonds. At the RDA's request, they asked Standard and Poors to rate Project Area 1 on a stand-alone basis, which is without bond insurance, and are pleased that it both cases the bond issues received an "A" rating. Similar stand-alone ratings for the City of La Quinta, RDA Project Area 2 and the Financing Authority are not available. Advances From Other Fund The General Fund has advanced funds to both the Redevelopment Project Area 1 and 2 Debt Service Funds. The City created the La Quinta Redevelopment Agency (RDA) and its two project areas in accordance with State law to promote economic activities, remove blight and prop ide low and moderate housing to its residents using property taxes generated in each of the Project Areas. The Redevelopment Areas were created to keep property tax revenues generated in its boundaries for projects in the project areas and to be able to accelerate projects by issuing bonds and incurring other debt. Examples of the projects funded to date include flood control projects at the top of the Cove, and resurfacing of street, curb, and gutter in the Cove and Westward Ho areas. These types of projects could not have been accomplished without the use of advances and bonds. As of June 30, 2002, the City of La Quinta has advanced the RDA Project Debt Service Area 1 $4,907,565 and Debt Service Project Area 2 $7,614,325. The advances carry a 10% interest rate with no specified repayment date. Since the RDA Board is comprised of the City Council, GASB requires that the activities of the RDA be included with the activities of the City. In the past these advances were recorded in the General Long Term Debt Group of Accounts. Under the new reporting model these advances have been recorded as liabilities in the individual fund statements. As a result of this accounting change, the Debt Service Area 2 fund has a negative fund balance of $ (5,622,884) as of June 30, 2002 compared to a fund deficit as of June 30, 2001 of $ (6,258,943). While it is preferable to have funds with positive balances, it should be noted that this negative balance was a result of the City advances. This advance has no specified re -payment date and it is not the intent of Management to request repayment of the advance in the near future. Rather, Management will seek future repayments from the debt service funds when fund balances are available, which would be sometime before the project areas expire — in approximately 30 years. Under GASB 34 these advances to and from other funds have been eliminated from the Statement of Net Assets. Long Term Liabilities Long term liabilities consist of notes, bonds and pass -through agreements that have been separated into the amount due in the next year and the amount due beyond. In order to accelerate capital or housing projects, the City and RDA have issued bonds. These bonds have also been 6 The City has a conservative investment policy, which is more restrictive than the policy limitations set forth in 53601 of the Government Code of the State of California. The Treasurer is required to prepare a monthly Treasurer's Report that certifies that he/she believes that the City has, to the best of its ability, the cash to meet its obligations for the next six months. During FY O1/02, the City has met this six-month liquidity requirement. In addition, the City has a two- year (730-day) limitation on the maximum maturity of our investments and has a buy/hold investment strategy, which does not promote actively selling securities before their maturity, except for liquidity purposes. During FY O1/02, the City did not sell an investment before maturity. Therefore, the financial statements do not report any gains or losses on investments. The following table lists the earnings rates and average maturity of the portfolio: Summary of FY O1/02 Interest Rates/Earnings: Month 6 Month Benchmark (%) Average Maturity Days Pool Interest Rate (%) Fiscal Agent Interest Rate (%) Total Rate All Earnings (%) July 2001 3.49 48 4.79 3.40 4.58 August 3.39 51 4.90 3.20 3.91 September 3.39 43 4.63 3.20 3.98 October 2.01 27 4.04 2.20 3.57 November 1.99 62 3.05 1.70 2.49 December 1.85 44 2.83 1.40 2.34 January 2002 1.83 27 2.37 1.60 1.97 February 1.85 53 2.26 1.50 1.95 March 2.16 35 2.25 1.50 1.99 April 1.92 79 2.35 1.50 2.05 May 1.89 122 2.59 1.00 1.78 June 2002 1.77 132 2.42 1.00 1.93 Average FY 01-02 2.29 60 3.21 1.93 2.71 Average FY 00-01 5.16 149 6.09 5.22 5.93 Ending Cash balances Interest Earnings June 2002 June 2001 $106,751,100 $72,819,549 $4,354,718 $5,135,466 During FY O1/02, interest rates dropped throughout the year with an inverted yield curve. The average maturity of the portfolio was shortened to take advantage of the higher yields on shorter - term investments. The Treasurer exceeded the benchmark 6 month Treasury Bill rate in 10 of the 12 twelve months and overall for the year. Interest earned on all funds totaled $4.35 million for FY O1/02 versus $5.1 million for FY 00/01 and the total portfolio at June 30, 2002 was $106.7 million versus $73.5 million for the previous year. 6 The following chart lists a condensed version of the Changes in Net Assets for the fiscal years ending June 30, 2002 and 2001. CITY OF LA QUINTA Changes in Net Assets 2002 2001 CHANGE Revenues Program revenues: Charges for services $ 4,850,755 5,337,970 (487,215) Operating grants and Contributions 1,699,255 1,601,716 97,539 Capital grants 11,662,424 14,375,463 (2,713,039) General revenues: Taxes 28,544,634 25,656,153 2,888,481 Investment income 3,006,097 3,578,206 (572,109) Motor Vehicle in lieu 1,473,217 1,496,620 (23,403) Gain (loss) on sale of capital assets (21,397) - (21,397) Other 692,691 292,036 400,655 Total revenues 51,907,676 52,338,164 (430,488) Expenses General government 3,241,576 3,146,699 94,877 Public safety 7,522,532 5,776,628 1,745,904 Community services 1,411,943 940,881 471,062 Planning and development 7,110,125 6,146,998 963,127 Public works 6,434,239 5,968,911 465,328 Interest 7,791,759 5,861,632 1,930,127 Total expenses 33,512,174 27,841,749 5,670,425 Excess (deficiency) $ 18,395,502 24,496,415 (6,100,913) The Statement of Activities starts with functional expenses, subtracts out functional revenues to arrive at a net number for each function, and then subtracts out all general revenues to arrive at the net change in net assets for the reporting period. The functional revenue for FY 01/02 were $51,907,676 versus $52,338,164 for FY 00/01. The decrease can be attributed to a reduction in capital grants from the prior year related to construction projects. The functional expenses for FY 01/02 were $33,512,174 versus $27,841,749 FY 00/01. The increase can be attributed to greater debt service and public safety expenses. The debt service increases are a result of new bond issues, which result in higher debt service payments. The public safety increases are a result of higher police service levels/costs and recording fire service costs as an expense in accordance with a new contract with the County I maintained streets, street medians, curb and gutter, traffic signals, sidewalks, bridges, artwork, sound walls, bike paths, storm drains and retention basins. Infrastructure assets not included in the Statement of Net Assets were the construction costs of State Highway 111, private streets — generally behind gates, and public water, sewer, electricity, gas and cable utilities maintained by others. Infrastructure assets, except for land, have been depreciated to reflect a net infrastructure amount. In addition to the fixed assets and infrastructure assets, capital assets also include construction in progress. Under the modified accrual basis of accounting, the costs of these construction projects have previously been expenditures and not reported in the Statement of Net Assets. Under the new reporting model, these costs have been reported in the Statement of Assets. Projects still in progress at year-end included the Phase 1 Jefferson Street project, Assessment District 2000-1 improvements including the Village, the Civic Center Project, and the Miraflores Housing and Apartment Project. The following chart details the fixed assets, infrastructure assets, and construction in progress as of the end of the fiscal year: CITY OF LA QUINTA Fixed Assets and Construction on Progress 2002 Accumulated Depreciated Type Life years Total Depreciation Remaining Percent Fixed Assets Land N/A $56,467,549 N/A 56,467,549 General Fixed Assets 5-30 16,182,093 4,956,300 11,225,793 30.63% Internal Service Fixed Assets 3-15 2,346,555 1,328,071 1,018,484 56.60% Total Fixed Assets 74,996,197 6,284,371 68,711,826 Infrastructure Assets Right of Way (ROW) N/A 230,148,147 N/A 230,148,147 Art in Public Places N/A 1,018,163 N/A 1,018,163 Subtotal 231,166,310 N/A 231,166,310 Street Pavement 20-25 45,475,851 36,286,295 9,189,556 Curbs/Gutters 50 7,316,410 2,537,078 4,779,332 Sidewalks 20 5,439,145 4,482,123 957,022 Median 50 5,318,736 1,449,706 3,869,030 Parking Medians 50 21,301 8,520 12,781 Bridges 35 9,933,145 1,792,114 8,141,031 Traffic Signals 20 3,847,342 1,225,611 2,621,731 Bike Paths 20 642,304 231,913 410,391 Sound Wall 20 74,200 7,420 66,780 Retention Basin 10 957,019 785,954 171,065 Storm Drains 50 2,028,035 270,016 1,758,019 Subtotal 81,053,488 49,076,750 31,976,738 60.55% Total Infrastructure Assets $312,219,798 49,076,750 263,143,048 Construction in Progress 29,880,113 Total Capital Assets, net $361,734,987 8 Other Revenues The Statement of Activities lists FY 01/02 tax increment funds collected of S1S,899,339 versus S15,324,183 in FY 00/01. As previously discussed, these funds are used for repayment of RDA debt and low and moderate housing. This year the two RDA Project Areas (1 and 2) propene tax valuations have increased an average of 23% based upon new growth and hill e, County Tay Assessor's assessments on existing properties. In addition, far fewer assessment appeals at the County Assessor's office are outstanding. EXPENSES The Statement of Activities lists S33,512,175 in expenses for FY 01/02 as compared to S27,841,749 for the prior year. Of this amount the three largest categories are S7.1 million (6.1 million in FY 00/01) in Planning and Development which includes the RDA, 57.8 million (5.8 million in FY 00/01) in interest debt service costs for outstanding debt, and S7.5 million (5.8 million in FY 00/01) in Public Safety, which includes the costs of the County of Riverside Sheriff's and Fire contracts. The City contracts with the California Department of Forestry through the County of Riverside for fire services and with a private vendor for library services. Through an agreement with the County of Riverside, S836,310 in library services (S826,510 in FY 00/01) was withheld from our property tax increment payments and not remitted to the City. The Statement of Activities includes fire protection service costs this year of S1,565,220 (offset by a like amount of intergovernmental revenue from tax increment payments) which has not been the case in prior years. The City has entered into an agreement with the County of Riverside to annually set forth the level of service for fire services. Any service level over the amount of tax increment generated from the RDA would require additional payments to the County. General Fund Expenses The following table lists the $13,840,277 in general fund expenditures included in the Statement of Activities. Expenditures Original Budget Final Budget 2002 Actual Favorable/ (Unfavorable) 2001 Actual General government $3,196.533 S3,094.940 S2,954,060 S 140,880 3,063,641 Public safety 5,821,047 7,937,773 7,609,121 328,652 5,636,154 Community services 1,054,200 1,159,533 1,014,474 145.059 817,460 Planning and development 769,392 1,078,557 726,589 351.968 733,579 Public works 1,947A19 2,016.424 1,536,033 480,391 1,417,528 Total expenditures $12,788,591 S 15,287.2271 S 13.840,277 S 1,446,950 11,668,362 The major increases in the original and final budget for public safety consisted of increases in the Building and Police divisions. The Building Division increases were additional contract building inspectors and plan check services to deal with the increased building activity in the City of La Quinta. Police services were increased for enhanced special projects, which were 100% offset by grant funding. The major increase between the original and final budget for planning and 13 insured to take advantage of lower debt service costs and provide the investor with an added comfort level. In addition, as with a home mortgage, we have refunded several of our bond issues to take advantage of lower interest rates, which in turn has resulted in lower debt service costs. As previously discussed the RDA issued $88 million in bonds during FY 2002. The Statement of Net.Assets has a long-term liability amount due within one year of $3,312,895 and an amount due in more than one year of $163,369,344. The $11.4 million in one-year debt service reflected as of June 30, 2001 was more than the normal annual debt service. The $11.4 million debt service included an advance pass through payment of $8.6 million to the County of Riverside for RDA Project Area 1. This payment was made earlier than required, at the sole option of the RDA, from bond proceeds of a $48 million RDA Tax Allocation Bond Issue executed after year-end. The $81.3 million of long-term liability due in more than one year reported last year increased to $163.3 million, primarily as a result of the two RDA bond issues totaling $88 million. NET ASSETS AND INTERNAL SERVICE FUNDS The objective of the Statement of Net Assets is to provide a consolidated summary of the City's assets, liabilities and net assets that reflects the City's fiscal worth and liquidity as a whole. Over time the increases or decreases in total net assets will reflect the health of the City. In order to report the unrestricted net assets of the City, the City must subtract from its assets related liabilities, net investments in capital assets and restricted net assets. Under the new reporting model, the total unrestricted net assets of the City of La Quinta, RDA and Financing Authority is $43,025,999 as reported in the Statement of Net Assets. This is an increase of $12,327,377 from last year: As in the past, Management has elected, as detailed in the footnotes, to further restrict and designate general fund balances that have not been reflected in the new Statement of Net Assets. Management believes that these restrictions and designations reflect the Council's desire to set aside funds to meet the requirements of a growing City and to be available for future projects. The total equity and other credits of the City is $312,657,635 of which $195,474,945 consists of capital assets, net of the related debt that was used in acquisition. $74,156,691 consists of restrictions placed upon special revenue, capital projects, and debt service funds leaving total unrestricted net assets of $43,025,999. The City has two internal service funds — Equipment Replacement and Information Technology Funds that primarily receive its revenues from charges for services from other City departments. Under the new reporting model, the assets and liabilities of these internal service funds have been included in the Statement of Net Assets. ACTIVITIES The objective of the Statement of Activities is to report the full cost of providing government services for that year. The format also permits the reader to ascertain the extent to which each function is either self-financing or draws from the general funds of the government. 10 of Riverside. The net excess decreased $6,100,913 from FY 00/01 as a result of lower revenues and greater expenses from the prior year. As mentioned earlier, this net increase of $18,395,502 reported in the Statement of Activities compares to a net decrease of ($49,925,396) under the modified accrual basis of accounting. The primary reasons for the differences between the two amounts are: 1) the net capitalization of $53.3 in infrastructure improvements, 2) the reclassification of $14.9 million of long-term principal debt, and 3) the revenue recognition of $3.5 million in deferred revenue. REVENUES General Fund Revenues With the economic slow down that occurred during FY 01/02, the City was concerned about the impacts it would have on our tourist industry and sales tax receipts. While we did experience lower Transient Occupancy Taxes (5%) than the year before it did not have as dramatic an impact as other parts of the country. Sales taxes actually increased under the modified accrual basis of accounting which was a primary result of population increases. Under the accrual basis of accounting, sales tax was reduced by just under $800,000 under terms of an agreement for reimbursement of public improvements from the generation of sales taxes. The City has been seen by homebuilders and by homebuyers as a suitable place to build and live. Homebuilders have seen La Quinta as a place to build homes because of the availability of land and labor which has resulted in greater than budgeted development fees and charges for services. Homebuyers have seen La Quinta as a place to buy because of lower interest rates and good home values which has resulted in greater property taxes, sales taxes and motor vehicle registration taxes. As a result of the increased population, and because of available land along the Highway 111 corridor, the City is experiencing retail growth that has added sales taxes to the City. The City is home to a world class destination resort which continues to generate transient occupancy taxes. Actual FY 01/02 revenues were generally higher than normal which is explained by the $4.5 million favorable variance with the budget and $800,000 higher than last year. Compared to last year, taxes were relatively flat with development permits and fees lower than last year's record setting pace. Interest income was lower than last year based upon a lower interest rate market which saw the average earnings decrease by 3% which was partially offset by higher invested cash balances. The increase in intergovernmental revenues is discussed in the Expenses Section. With this as background, the following chart reflects the major revenue categories of the General Fund for the last two years: Revenues: Original Budget Final Budget 2002 Actual Favorable/ (Unfavorable) 2001 Actual Taxes $8,701,220 $8,701,200 $10,443,436 $1,742,236 10,331,970 Licenses and permits 819,600 819,600 1,857,691 1,038,091 2,057,423 Charges for services 1,208,475 1,208,475 1,757,744 549,269 1,998,589 Intergovernmental 1,765,500 3,437,051 3,683,490 246,439 2,164,891 Investment income 1,617,200 1,555,600 2,030,346 474,746 2,513,789 Miscellaneous 27,700 27,700 529,190 501,490 43,545 Total revenues $14,139,6951 $15,749,626 $20,301,8971 $4,552,271 19,110,207 12 CITY OF LA QUINTA Statement of Activities Year ended June 30, 2002 Proeram Revenues Operating Capital Chartres for Contributions Contributions Expenses Services and Grants and Grants Governmental activities: General government $ 3.241,576 253,891 Public safetv 7,522.532 2,544,528 Community services 1,411,943 170,865 Planning and development 7.110,125 565,098 Public works 6,434.239 1,316,373 Interest expense 7,791,759 - Total governmental activities $ 33,512.174 4,850,755 150.967 431,188 311,533 805,567 268,132 Net Governmental Activities 2002 (2,987,68-5) (4,827,037) (5 41,738) 2001 (2,922.098) (2,735,534) (588,053) - (6,233,494) (4,983,828) 11,394.292 7,081,993 10,564,545 - (7,791,759) (5,861,632) 1,69U55 11,662,424 (15,299,740) (6,526,600) General revenues: Taxes: Property taxes Tax increment Sales taxes Transient occupancy taxes Franchise taxes Other taxes Investment income Motor vehicle in lieu Gain (loss) on sale of capital assets Miscellaneous revenues Total general revenues Change in net assets Net assets at beginning of year, as restated (note 20) Net assets at end of vear 1.4-50,196 1,162,534 18.899,329 15,324,183 3,093.588 3.778.583 3.967,003 4,249,753 654,696 625.790 479,822 515,310 3,006,097 3,578,206 1,473,217 1,496,620 (21,397) - 33,695,242 31,023,015 18,395,502 24,496,415 294,262,133 269,060,861 $ 3 12,65 7,635 293,557,276 See accompanying notes to the basic financial statements. 17 CITY OF LA QUINTA Governmental Funds - Balance Sheet June 30, 2002 Special Revenue Low/Moderate Income Housing - General PA No. 2 Debt Service Funds Redevelopment Redevelopment Agency - Agency - A A 'KT- 1 n A rr_ 1) Assets Cash and investments $ 26,120,392 4,633,313 9,584,722 1,768,561 Cash with fiscal agent - - 115,367 - Accounts receivable 80,610 - Taxes receivable 235,029 - Prepaid items 226,485 - Interest receivable 226,787 - Notes receivable - 10,205.840 Due from other funds (note 18) 2,838,028 _ Due from other governments 2,012,220 66.138 290,015 264,553 Advances to other funds (note 18) 12,521,890 39,135 - _ Deposits 149.518 - _ _ Total assets $ 44,410.959 14,944.426 9,990.104 2.033,1 14 Liabilities and Fund Balances Liabilities: Accounts payable $ 817,302 26,805 97.068 - Accrued salaries and benefits 240,398 - Deferred revenue 1,291,402 10,205,840 Deposits payable 1,182,254 - Due to other funds (note 18) _ 5.688 _ 2 538 Due to other governments _ _ - _ Advances from other funds (note 18) - - 4,907.565 7,653.460 Total liabilities 3.531,356 10,238.333 5,004,633 7.655.998 Fund Balances: Fund balances (deficits) (note 23). Reserved for: Debt service _ _ 4,985,471 - Bond projects _ _ _ _ Prepaid items 226,485 Deposits 149.518 - Advances to other fiords 12,521,890 39,135 Notes receivable _ Unreserved, reported in: General fund 27,981,710 - Special revenue funds - 4,666,958 Debt service funds - - - (5,622,884) Capital projects funds _ _ Total fiord balances 40.879,603 4,706.093 4,985,471 (5,622,884) Total liabilities and fund balances $ 44,410,959 14.944.426 9.990,104 21033,114 See accompanying notes to the basic financial statements. 18 Capital Projects Redevelopment Other Capital Agency - Governmental Totals Improvement PA No. 1 Funds 2002 2001 1,085,708 - 19,108,699 62,301,395 58320,968 - 37,087,727 2,245,152 39,448,246 10,258,354 334,189 - 166,984 581,783 221,420 - - - 235,029 242,764 1,748 - - 228,233 274,580 - - - 226,787 477,890 - - 3,009,966 13,215,806 13 488,554 11,388 2,176,682 180,999 51207,097 2,128,237 2,050,817 - 150,677 4,834,420 2,328,315 - 1,249,728 - 13,810,753 12,024,009 - - - 149,518 2,175 3,483,850 40,514,137 24.862.477 140,239,067 99.767,266 980,398 29,334 47,837 1,998,744 3,166,108 - - - 240,398 197,842 - - 873,855 12,371,097 12,753,771 116,878 - 15,788 1,3141.920 17396,422 2,386,574 2,642,491 169,806 5,207,097 2,128,237 - - - - 730,884 - - 1,249,728 13,810.753 12.024.009 3,483,850 2,671,825 2,357,014 34,943,009 32,397,273 - - 10,615 4,996,086 9,909 - 37,087,727 - 37 087,727 10 054,701 - - - 226,485 274,580 - - - 149,518 2,175 - 1,249,728 - 13,810,753 12,024,009 - - 2,136,111 2,136,111 2,861,382 - - - 27,981,710 23,878,259 - - 7,440,347 12,107,305 6,352,995 - - - (51622,884) (6,800,030) - (495,143) 12,918,390 12,423,247 18,712,013 - 37,842,312 22,505,463 105,296,058 67,369,993 3,483,850 40,514,137 24,862,477 140,239,067 99,767,266 19 CITY OF LA QUINTA Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2002 Fund balances of governmental funds $ 105,296,058 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets, net of depreciation, have not been included as financial resources in governmental fund activity. 360,716,503 Long term debt and compensated absences from the General Long Term Debt Account Group that have not been included in the governmental fund activity: Bonds payable (154,674,836) Compensated absences (422,197) Other long term liabilities (11,585,206) Accrued interest payable for the current portion of interest due on bonds payable has not been reported in the governmental funds. (2,322,557) Revenues that are measurable but not available. Amounts are recorded as deferred revenue under the modified accrual basis of accounting. 11,665,257 Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net assets 3,984,613 Net assets of governmental activities $ 312,657,635 See accompanying notes to the basic financial statements. 20 CITY OF LA QUINTA Governmental Fund Types - Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 2002 General Revenues: Taxes $ 10,443,436 Licenses and permits 1,857,691 Charges for services 1,757,744 Developer fees - Intergovernmental 3,683,490 Investment income 2,030,346 Special assessments - Rental income - Miscellaneous 529,190 Total revenues 20,301,897 Expenditures: Current: General government 2,954,060 Public safety 7,609,121 Community services 1,014,474 Planning and development 726,589 Public works 1,536,033 Capital projects - Debt service: Principal - Interest - Payments under pass -through obligations - Total expenditures 13,840,277 Excess (deficiency) of revenues over (under) expenditures 6,461,620 Other financing sources (uses): Proceeds of tax allocation bonds - Sale of capital assets - Transfers in (note 21) 189,072 Transfers out (note 21) (1,395,559) Total other financing sources (uses) (1,206,487) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 5,255,133 Fund balances (deficit) at beginning Special Revenue Low/Moderate Income Housing - nA 7,T_ It 2,025,212 115,747 Debt Service Funds Redevelopment Agency - D A AT.. 1 17,953,949 344,259 2,140,959 18.298.208 682,702 285,551 10,126,122 5,255,819 Redevelopment Agency - D A AT.. q 8,100, 847 28,768 8,129,615 123,146 947,956 1,286,179 - 8.194.449 5,474,717 682,702 23.861.941 7,831,998 1,458,257 (5,563,733) 297,617 (503,010) (503,010) 955,247 11,090,291 11,090,291 5,526,558 338,442 338,442 636,059 of year, as restated (note 20) 35,624,470 3,750,846 (541,087) (6,258,943) Fund balances at end of year $ 40,879,603 4,706,093 4.985,471 (5,622,884) See accompanying notes to the basic financial statements. 22 Capital Projects Redevelopment Other Capital Agency - Governmental Improvement PA No. 1 Funds Totals 2002 2001 - - 4,488,487 43,011,931 36,605,534 - - - 1,857,691 2,057,423 - - - 1,757,744 1,998,589 97,150 - 2,201,497 2,298,647 2.5921,398 4,782,293 - 11117,668 9,583,451 9,400,340 - 728,658 887,231 4,135,009 4,893,919 - - 757,619 757,619 782,610 - - 1,001,389 1,001,389 1,067,076 - - 55,007 584,197 96,256 4,879,443 728,658 10,508,898 64,987,678 59,494,145 - - 207,536 3,161,596 3,275,624 - - 1,187 7,610,308 5,636,154 - - 53,363 1,067,837 817,460 - 4,901,601 3,973,785 10,693,374 6,344,764 - - 1,361,279 2,897,312 21613,928 57,342,978 - - 57,342,978 14,456,314 104,409 - 275,000 11,453,487 4,510,420 67,841 - 407,177 7,017,016 5,942,929 - - - 13,669,166 10,949,381 57,515,228 4,901,601 6,279,327 114,913,074 54,546,974 (52,635.785) (4,172 943) 4,229,571 (49 925,396) 4 947 171 - 88,000,000 - 88,000,000 - - - 146,603 146,603 406,461 52,635,785 - 2,000 64,255,590 17,911,515 - (54,289,302) (9,067,719) (65,255,590) (17,911,515) 52,635,785 33,710,698 (8,919,116) 87,146,603 406.461 - 29,537,755 (4,689,545) 37,221,207 5,353,632 8,304,557 27,195,008 68,074,851 62,016,361 - 37,842,312 22,505,463 105,296,058 67,369,993 23 CITY OF LA QUINTA Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year ended June 30, 2002 Net changes in fund balances - total governmental funds $ 37,221,207 Amounts reported for governmental activities in the statement of activities is different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. 51,515,839 Proceeds from the issuance of bonds is reported as other financing sources in governmental funds. The issuance of bonds increases liabilities in the statements of net assets, but does not result in an increase in the statement of activities. (88,000,000) Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 11,453,487 Bond issuance costs are recorded as an expenditure in the governmental funds while full accrual requires the amortization of these costs over the life of the debt. 2,687,033 The statement of net assets includes accrued interest on long term debt. (842,584) To record as an expense the net change in compensated absences in the statement of activities. (48,660) Revenues that are measurable but not available. Amounts are not recorded as revenue under the modified accrual basis of accounting. 3,538,658 Internal service funds are 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 is reported with governmental activities. 870,522 Change in net assets of governmental activities $ 18,395,502 See accompanying notes to the basic financial statements. 24 CITY OF LA QUINTA Proprietary Funds Statement of Net Assets June 30, 2002 Governmental Activities - Internal Service Funds 2002 2001 Assets Current assets: Cash and investments $ 3,006,697 2,125,576 Capital assets, net 1,018,484 711,534 Total assets 4,025,181 2,8317,110 Liabilities Current liabilities: Accounts payable 40,568 4,643 Net Assets Invested in capital assets, net of related debt 1,018,484 711,534 Unrestricted 2,966,129 2,120,933 Total net assets $ 3,984,613 2,832,467 See accompanying notes to the basic financial statements. 25 CITY OF LA QUINTA Proprietary Funds Statement of Revenues, Expenses and Changes in Net Assets Year ended June 30, 2002 Governmental Activities - Internal Service Funds 2002 2001 Operating revenues Charges for services $ 304,982 364,748 Miscellaneous - 10,000 Total operating revenues 304,982 374,748 Operating expenses: Fuel and oil 30,282 34,057 Maintenance and parts 119,212 104,237 Contract services 189,567 - Soffivare and supplies 39,060 - Depreciation 253,823 106,760 Other operating expenses 8,597 295 Total operating expenses 640.541 245,349 Operating income (loss) (335,559) 129,399 Non -operating revenues (expenses) Investment income 97,586 119,427 Total non -operating revenues (expenses) 97,586 119,427 Income (loss) before transfers and capital contributions (237,973) 248,826 Transfers in (note 21) 1,000,000 - Capital contributions 108,495 22,882 Changes in net assets 870,522 271,708 Net assets at beginning of year, as restated (note 20) 3,114,091 2,560,759 Net assets at end of year $ 3,984,613 2,832,467 See accompanying notes to basic financial statements. 26 CITY OF LA QUINTA Proprietary Funds Statement of Cash Flows Year ended June 30, 2002 Governmental Activities - Internal Service Funds 2002 2001 Cash flows from operating activities: Cash received from other customers $ 304,982 374,748 Cash payments to suppliers for goods and services (347,253) (139,288) Net cash provided by (used for) operating activities (42,271) 235,460 Cash flows from non -capital financing activities: Transfer from other funds 1,000,000 - Net cash provided by (used for) non -capital financing activities 1,000,000 - Cash flows from capital and related activities Purchase of fixed assets (174,194) (84,760) Net cash provided by (used for) capital and related activities (174,194) (84,760) Cash flows from investing activities: Interest received on investments 97,586 119,427 Net cash provided by (used for) investing activities 97,586 119,427 Net increase (decrease) in cash and cash equivalents 881,121 270,127 Cash and cash equivalents at beginning of year 2,125,576 1,855,449 Cash and cash equivalents at end of year $ 3,006,697 2,125,576 Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) $ (335,559) 129,399 Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 253,823 106,760 Adj ustments: Decrease (increase) in accounts payable 39,465 (699) Net cash provided by (used for) operating activities $ (42,271) 235,460 Noncash capital, financing and investing activities: Fixed assets contributed by other funds $ 108,495 22,882 See accompanying notes to the basic financial statements. 27 CITY OF LA QUINTA Agency Funds Statement of Fiduciary Assets and Liabilities June 30, 2002 2002 2001 Assets Cash and investments (note 2) $ 1,994,762 2,114,651 Total assets $ 1,994,762 2,114,651 Liabilities Due to bondholders $ 1,994,762 2,114,651 Total liabilities $ 1,994,762 2,114,651 See accompanying notes to the basic financial statements. 28 CITY OF LA QUINTA Notes to the Basic Financial Statements Year ended June 30, 2002 (1) Summary of Significant Accounting Policies (a) Reporting Entity The City of La Quinta ("the City") was incorporated May 1, 1982 under the general laws of the State of California. In November 1996, the City became a charter City. The City operates under the Council - Manager form of government. The City provides many community services including public safety, highway and street maintenance, health and social services, cultural and leisure services, public improvements, planning and zoning services, and community development services. 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. 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 government's operations and so data from these units are reported with the interfund data of the primary government. The following organizations are considered to be component units of the City: La Quinta Redevelopment Agency The La Quinta Redevelopment Agency (Agency) has established two redevelopment project areas pursuant to the State of California Health & Safety Code, Section 33000 entitled "Community Redevelopment Law". On November 29, 1983 and May 16, 1989, the City Council approved and adopted the Redevelopment Plans for the La Quinta Redevelopment Project Areas No. 1 and No. 2, respectively. These plans provide for the elimination of blight and deterioration, which was found to exist in the project areas. Although the Agency is legally separate, it is reported as if it were part of the City because the City 29 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Polices, (Continued) Council also serves as the governing board of the Agency. Separate financial statements of the Agency can be obtained at City Hall. City of La Quinta Public Financing Authority The La Quinta Public Financing Authority (Authority) was established pursuant to a Joint Exercise of Powers Agreement dated November 19, 1991 between the City of La Quinta and the La Quinta Redevelopment Agency. The purpose of the Authority is to provide financing necessary for the construction of various public improvements through the issuance of debt. Although the Authority is legally separate, it is reported as if it were part of the City because the City Council also serves as the governing board of the Authority. Separate financial statements of the Authority are not prepared. (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 financial statements Financial reporting is based upon all GASB pronouncements, as well as the FASB Statements and Interpretations, APB Opinions, and Accounting Research Bulletins that were issued on or before November 30, 1989 that do not conflict with or contradict GASB pronouncements. FASB Pronouncements issued after November 30, 1989 are not followed in the preparation of the accompanying financial statements. 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 discreetly presented component units. The City of La Quinta has no business -type activities or discretely presented component units. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by function to which they were allocated). However, general governmental expenses have not been allocated as indirect expenses to the various functions of the City. 30 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Polices, (Continued) Government -wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government -wide financial statements. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement No. 33. Program revenues include charges for services, special assessments, and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Amounts paid to acquire capital assets are capitalized as assets in the government - wide financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the government -wide financial statements, rather than as 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. 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 nonmajor funds in the aggregate for governmental and enterprise funds. Fiduciary statements include financial information for fiduciary finds and similar component units. Fiduciary funds of the City primarily represent assets held by the City in a custodial capacity for other individuals or organizations. 31 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Polices, (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 thirty day availability period. Revenue recognition is subject to the measurable and availability 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., 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. 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. Noncurrent portions of other long-term receivables are offset by fund balance reserve accounts. 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. 32 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Polices, (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 an 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, expenses are considered to be paid first from restricted resources, and then from unrestricted resources. Proprietary Funds The City's internal service funds are proprietary funds. In the fund financial statements, proprietary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using .the economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net assets. Amounts paid to acquire capital assets are capitalized as assets in the internal service fund financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the internal service fund financial statements, rather than as an other financing source. Amounts paid to reduce long- term indebtedness of the internal service fund are reported as a reduction of the related liability, rather than as an expenditure. Fiduciary Funds The City's fiduciary funds are agency funds. Agency funds are custodial in nature. Assets equal liabilities. Agency funds use the accrual basis of accounting. (c) Major Funds, Internal Service Funds and Fiduciary Fund Types The City's major funds are as follows: General Fund — The primary fund of the City is used to account for all revenue and expenditures of the City not legally restricted as to use. A broad range of municipal activities are provided through this fund including City Manager, City Attorney, Finance, City Clerk, Community Development, Police Services, Public Works, Building and Safety, and Community Services. 33 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Polices, (Continued) Low/Moderate Income Housing — Project Area No. 2 Fund — This special revenue fund is used to account for the required 20% set aside of property tax increments that is legally restricted for increasing or improving housing for low and moderate income households. Redevelopment Agency Debt Service — Project Area No 1 Fund — This debt service fund is used to account for the accumulation of resources for the payment of debt service for bond principal and interest and trustee fees for Project Area No. 1. Redevelopment Agency Debt Service — Project Area No 2 Fund — This debt service fund is used to account for the accumulation of resources for the payment of debt service for bond principal and interest and trustee fees for Project Area No. 2. Capital Improvement Fund — This capital projects fund is used to account for the planning, design and construction of various capital projects throughout the City of La Quinta and the Redevelopment Agency. Redevelopment Agency Capital Projects — Project Area No 1 Fund — This fund is used to account for the bond proceeds, interest and other funding that will be used for development, planning, construction and land acquisition within the project area. Other fund types of the City are as follows: Internal Service Funds: Equipment Replacement Fund — This fund accounts for equipment and vehicle maintenance and replacement services provided to other departments on a cost - reimbursement basis. Information Technology Fund — This fund is used to account for the acquisition of computer equipment, maintenance, and services to support information systems within the City. Costs are reimbursed by the benefiting departments. Agency Funds — These funds account for assets held by the City as an agency for assessment district bondholders and for Arts in Public Places donations. (d) Investments For financial reporting purposes, investments are adjusted to their fair value whenever the difference between fair market value and the carrying amount is material. 34 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Polices (Continued) (d) Investments, (Continued) 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 La Quinta. 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 fixed assets are valued at their estimated fair market value at the date of the contribution. Generally, fixed asset purchases in excess of $500 are capitalized if they have an expected useful life of three years or more. Capital assets include public domain (infrastructure) general fixed assets consisting of certain improvements including roads, streets, sidewalks, medians, and storm drains. 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. 35 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Polices, (Continued) (fl Capital Assets, (Continued) The following schedule summarizes fixed asset useful lives: Buildings and improvements 10-30 years Equipment and furniture 3-20 years Vehicles 5-10 years Infrastructure 10-50 years (g) Employee Leave Benefits Sick time is vested on a percentage based on number of years employed at the City. Maximum accumulation of sick and vacation is 30 and 40 days, respectively. Upon termination or retirement, permanent employees are entitled to receive compensation at their current base salary for all unused vacation leave. If an employee terminates with a minimum of two years service, the employee is entitled to receive 25% of the value of his unused sick leave. The percentage increases by 25% for each five-year period until the employee is entitled to 75% of the value of his unused sick leave. This will occur upon the completion of ten years of continuous employment. (h) Postemployment Benefits The City does not provide postemployment benefits (other than pension benefits) to its employees. 36 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) .. MAN] , "Total fund balances" of the City's governmental funds of $105,296,058 differs from "net assets" of governmental activities of $312,657,635 reported in the statement of net assets. This difference is primarily a result from the long-term economic focus of the statement of net assets versus the current financial resources focus of the governmental fund balance sheets. When capital assets (land, buildings, equipment) that are to be used in governmental activities are purchased or constructed, the cost of those assets are reported as expenditures in governmental funds. However, the statement of net assets includes those capital assets among the assets of the City as a whole: Increases Decreases Balance - $ 105,296,058 Infrastructure 312,219,798 Construction in progress 29,880,113 _ Cost of capital assets 72,649,641 Accumulated depreciation _ (54,033,049) Long -Term Liabilities 414,749,552 (54,033,049) Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities, both current and long term are reported in the statement of net assets. Balances at June 30, 2002 were: Compensated absences Bonds payable Other long term liabilities Intere Payable Accrued liabilities in the statement of net assets differs from the amount reported in the governmental funds due to accrued interest on bonds payable. 38 - (422,197) - (154,674,836) (11,585,206) (166,682,239) (2,322,557) CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) �l Summary of Significant Accounting Policies. (Continued) (i) Explanation of Differences between Governmental Funds Balance Sheet and the Statement of Net Assets. (Continued) Increases Decreases Balance Deferred Revenue Because the focus of governmental funds is on short term financing, some assets will not be available to pay for current period expenditures. Those assets are offset by deferred revenue in governmental funds, and thus are not included in fund balances. 11,665,257 Internal Service Fund Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The assets and liabilities of the internal service funds is included in governmental activities in the statement of net assets. 3,984,613 Reclassifications and Eliminations Interfund balances must generally be eliminated in the governmental statements, except for residual amounts due between governmental activities. Amounts involving fiduciary funds should be reported as external transactions. Any allocations must reduce the expenses of the function from which the expenses are being allocated, so that expenses are reported only once in the function in which they are allocated. Net change 430,399,422 (223,037,845) 207,361,577 Net assets of governmental activities $ 312,657,635 39 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summaiof Significant Accounting Policies. (Continued) (i) Explanation of Differences between Governmental Funds Balance Sheet and the Statement of Net Assets. (Continued) Total Other Governmental Capital Accumulated Funds Infrastructure Assets Depreciation Assets: Cash and investments $ 62,301,395 - - - Cash with fiscal agent 39,448,246 - - - Accounts receivable 581,783 - - - Taxes receivable 235,029 - - - Prepaid items 228,233 - - - Interest receivable 226,787 - - - Notes receivable 13,215,806 - - - Due from other funds 5,207,097 - - - Due from other governments 4,834,420 - - - Advances to other funds 13,810,753 - - - Deposits 149,518 - - - Capital assets, net - 342,099,911 727649,641 (547033.049) Total assets $ 140,239,067 342,099,911 72.649.641 (54,033,049) Liabilities: Accounts payable $ 1,998,744 - - - Accrued salaries and benefits 240,398 - - - Interest payable - Deferred revenue 12,371,097 - - - Deposits payable 1,314,920 - - - Due to other funds 5,207,097 - - - Advances from other funds 13,810,753 - - - Long term liabilities - Total liabilities 34,943,009 - - - Fund balances/net assets 105,296,058 342,099,911 72.649.641 (54,033,049) Total liabilities and fund balances/net assets $ 140,239,067 342,099,911 72.649.641 (54,033,049) 40 Long-term Certain Internal Reclassifications Statement of Debt Interest Compensated Deferred Service and Net Assets Transactions Payable Absences Revenue Fund Eliminations Totals 3,006,697 - 65,308,092 - - 39,448,246 - - 581,783 - - 235,029 _ - - 228,233 - - 226,787 (705,840) - - 12,509,966 - (5,207,097) - _ 4,834,420 (13,810,753) - - 149,518 1,018,484 - 361,734,987 (705,840) 4,025,181 (19,017,850) 485,257,061 40,568 - 2,039,312 - - 240.398 2,322,557 - - - - 2,322,557 - - (12,371,097) - - - _ 1,314,920 - (5,207,097) - _ _ _ - (13,810,753) - 166,260,042 - 422,197 - - - 166,682,239 166.260,042 2-322,557 422,197 (12,371,097) 40.568 (19,017,850) 172,599,426 (166.260,042) (2,322,557) (422,197) 11,665,257 3,984,613 - 312,657,635 (705,840) 4,025,181 (19,017,850) 485,257,061 41 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) 11 l Summary of Significant Accounting Policies. (Continued) 0) Exl2]anation of Differences between Governmental Funds Operating Statements and the Statement of Activities Increases Decreases Balance The "net changes in fund balances" for governmental funds of $37,221,207 differs from the "changes in net assets" for the governmental activities of $18,395,502 reported in the statement of activities. The differences arise primarily from the long term economic focus of the statement of activities versus the current financial resources focus of the governmental funds. The effects of the differences is illustrated below. - - $ 37,221,207 Capital Related Items When capital assets (land, buildings, equipment) that are to be used in governmental activities are purchased or constructed, the cost of those assets are reported as expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balance increases by the amount of financial resources expended, whereas net assets decrease by the amounts of depreciation expense charged for the year. Capital outlay 55,594,450 - Depreciation expense - (4,078,611) 55,594,450 (4,078,611) Long -Term Liabilities 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. Net change in compensated absences - (48,660) Repayment of bond principal and bond issuance costs are reported as an expenditure in governmental funds and, thus, has the effect of reducing fund balance because current financial resources have been used. For the City as a whole, however, the principal payments reduce the liabilities in the statement of net assets and do not result in an expense in the statement of activities. Principal payments made 11,453.487 - Cost of issuance 2,687,033 - 14,140,520 - 42 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accountine Policies. (Continued) (j) Explanation of Differences between Governmental Funds Operating Statements and the Statement of Activities (Continued,) Increases Decreases Long Term Liabilities. (Continued) Proceeds from the issuance of bonds is reported as other financing sources in governmental funds. The issuance of bonds increases liabilities in the statement of net assets and does not result in an increase in net assets in the statement of activities. - (88,000,000) Accrued Interest Beginning fund balance in the statement of activities has been restated to reflect the retroactive recording of accrued interest on bonds payable. - (842,584) Deferred Revenue Because the focus of governmental funds is on short term financing, some assets will not be available to pay for current period expenditures. Those assets are offset by deferred revenue in governmental funds, and thus are not included as revenues. 3,538,658 Internal Service Fund Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The adjustments for internal service funds "closes" those funds by charging additional amounts to participating governmental activities to completely cover the internal service fund's costs for the year. 870,522 Reclassifications and Eliminations Interfund balances must generally be eliminated in the governmental statements, except for residual amounts due between governmental activities. Amounts involving fiduciary funds should be reported as external transactions. Any allocations must reduce the expenses of the function from which the expenses are being allocated, so that expenses are reported only once - in the function in which they are allocated. Net change Net assets of governmental activities Balance 74,144,150 (92,969.855) (18,825,705) S 18,395,502 43 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies (Continued) 0) Explanation of Differences between Governmental Funds Operating Statements and the Statement of Activities (Continued) Total Other Governmental Capital Accumulated R Funds Infrastructure Assets Depreciation evenues: Taxes $ 43,011,931 Licenses and permits 1,857 691 Charges for services 1,737,744 - _ Developer fees 2,298,647 1,821,922 _ Intergovernmental 9,583,451 (3,477,724) Investment income 4,135,009 _ _ Special assessments _ 757,619 _ Rental income 1,001,389 - - - Miscellaneous 584,197 - _ _ Total revenues 64,987,678 (1,655,802) - _ Expenditures: Current: General government 3,161,596 - 2,214 80,980 Public safety Community services 7,610,308 1,067,837 - (258,298) 388,138 Planning and development 10 693374 - - (17,292) 97675 330,466 35,039 Public works Capital 2,897,312 164,938 (4.670) 3,251,988 projects Debt service: 57,342,978 (14,725,269) (42,617,709) - Principal 11,453,487 _ Interest 7,017,016 (67,841) Payments under pass -through obligations 13,669,166 _ _ _ Total expenditures 114,913,074 (14,628.172) (42,798,080) 4,086,611 Other financing sources (uses): Proceeds of tax allocation bonds Sale of capital assets Transfers in Transfers out Total other financing sources (uses) Net change in fund balances/net assets Fund balances/net assets, beginning of year, as restated Fund balances/net assets, end of year 88,000,000 _ _ 146,603 - (176,000) 8,000 64,255,590 _ _ _ (65,255,590) _ _ - 87,146,603 - (176,000) 8,000 37,221,207 12,972,370 42,622,080 (4,078,611) 68,074,851 329,127,541 30,027,561 (49,954,438) $105,296,058 342_ 099,911 72,649,641 (54,033,049) 44 Long-term Internal Reclassifications Statement Debt Interest Compensated Deferred Service and of Activities Transactions Payable Absences Revenue Funds Eliminations Totals (798,131) - - - - (13,669,166) 28,544,634 ' - - - 1,857,691 ' - - - - 1,757,744 - - - 3.500,000 - - 7,620 569 - - - (83,465) - - 6,022,262 - - - 122,123 97,586 - 4,354,718 _ - - - - - 757,619 ' - - - (680,244) 321,145 - - - - 108,494 - 692,691 (798.131) - - 3.538,658 206,080 (14,349,410) 51,929,073 - - 43,207 - 157.652 (204,073) 3,241.576 - - (11,482) - (2,061) (204,073) 71522.532 6,786 - 24,146 - 1,411,943 (3,485,164) - 11,297 - 30,002 (272,098) 7,110,125 - - (1,148) - 125.819 - 6,434,239 (11,453,487) - 842,584 - - - - 7,791,759 - - - - (13,669,166) - (14,938,651) 842,584 48,660 - 335,558 (14,349,410) 33,512,174 (88,000,000) - - (21,397) 1,000,000 (65,255,590) - - 65,255,590 (88,000,000) - - - 1.000.000 - (21397) (73,859,480) (842,584) (48,660) 3,538,658 870,522 - 18 395,502 (92,400,562) (1,479,973) (373,537) 8,126,599 3.114.091 - 294,262,133 (166,2%042) (2,322,557) (422,197) 11,665.257 3,984.613 - 312,657.635 45 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (2) Cash and Investments Cash and investments are reported as follows: Statement of Net Assets: Cash and investments Cash and investments with fiscal agent Statement of Fiduciary Net Assets: Cash and investments Total $ 65,308,092 39,448,246 1,994,762 $106,751,100 Cash and investments held by the City at June 30, 2002 consisted of the following: Petty cash $ 500 Demand deposits (2,375,589) Investments 109,126,189 Total $106,751,100 The City and its component units are authorized by its investment policy to invest in the following types of investments: Investment Type Government pools U.S. government and agency securities Commercial Paper Mutual Funds Certificates of Deposit Restriction $40 million and 20% of portfolio 100% of portfolio $2 million per issuer, 30% of portfolio and 90 days 20% 60% Additionally, no investment may exceed a maximum maturity of two years. Under the California Government Code, a financial institution is required to secure deposits made by state or local governmental units by pledging securities held in the form of an undivided collateral pool. The market 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. 46 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (2) Cash and Investments, (Continued) Deposits of cities and other state or local governments are classified in three categories to give an indication of the level of credit risk assumed by the City, as follows: Category 1 - includes deposits that are insured or collateralized with securities held by the City or its agent in the City's name. Category 2 - includes deposits collateralized with securities held by the pledging financial institution's trust department or agent in the City's name. Category 2 also includes deposits collateralized by an interest in an undivided collateral pool held by an authorized .-agent or Depository and subject to certain regulatory requirements under State law. Category 3 - includes deposits collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the City's name. Category 3 also includes any uncollateralized deposits. Category Bank Book Form of Deposit 1 2 3 Balance Balance Deposits held by the City: Demand deposits $100,000 516,879 2,321,976 293 ,8,855 (2,375,589) Investments of cities in securities are classified in three categories to give an indication of the level of custodial risk assumed by the entity. Category 1 - includes investments that are insured or registered or for which the securities are held by the City or the City's custodial agent (which must be a different institution other than the party through which the City purchased the securities) in the City's name. Investments held "in the City's name" include securities held in a separate custodial or fiduciary account and identified as owned by the City in the custodian's internal accounting records. Category 2 - includes uninsured and unregistered investments for which the securities are held in the City's name by the dealer's agent (or by the trust department of the dealer if the dealer was a financial institution and another department of the institution purchased the securities for the City). Category 3 - includes uninsured and unregistered investments for which the securities are held by the dealer's trust department or agent, but not in the City's name. Category 3 also includes all securities held by the broker -dealer agent of the City (the party that purchased the securities for the City) regardless of whether or not the securities are being held in the City's name. 47 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (2) Cash and Investments, (Continued) Investments held by the City: U.S. Treasury Notes U.S. Treasury Bills Government Agency Securities Commercial Paper Category Carrying 1 2 3 Value $ 19,081,041 - - 19,081,041 11,926,350 - - 11,926,350 12,849,590 - - 12,849,590 5,992,667 - - 5,992,667 49,849,648 - - 49,849,648 Investments held by the City not subject to categorization: Investment in State of California Local Agency Investment Fund 19,828,295 Investments held by fiscal agent not subject to categorization: Investment in mutual funds: First American Treasury Obligation Fund 39,448,246 109,126,189 Investments are adjusted at year-end to fair value, except when the difference between fair value and book value is immaterial. The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The 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. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage -backed securities, other asset -backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government -sponsored enterprises, and corporations. (3) Property Taxes 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 La Quinta accrues only those taxes that are received from the County within sixty days after year-end. 48 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (3) Property Taxes, (Continued) Lien date January 1 Levy date July 1 Due dates November 1 and February 1 Collection dates December 10 and April 10 The La Quinta Redevelopment Agency's primary source of revenue comes from property taxes. Property taxes allocated to the Agency are computed in the following manner: (a) The assessed valuation of all property within the project area is determined on the date of adoption of the Redevelopment Plan. (b) Property taxes related to the incremental increase in assessed values after the adoption of the Redevelopment Plan are allocated to the Agency; all taxes on the "frozen" assessed valuation of the property are allocated to the City and other districts. The Agency has no power to levy and collect taxes and any legislative property tax shift might reduce the amount of tax revenues that would otherwise be available to pay the principal of, and interest on, debt. Broadened property tax exemptions could have a similar effect. Conversely, any increase in the tax rate or assessed valuation, or any reduction or elimination of present exemptions would increase the amount of tax revenues that would be available to pay principal and interest on debt. 49 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (4) Notes Receivable In September 1994, the Redevelopment Agency sold certain real property to LINC Housing for $2,112,847. The property was used to construct single-family homes and rental units to increase the City's supply of low and moderate income housing. The note bears interest at 6% per annum and is due in full on June 15, 2029. In December 2000, the Redevelopment Agency entered into an agreement with DC&TC, LLC to receive $9,500,000 as a reimbursement for Agency costs incurred for the construction of infrastructure related to the development of senior apartments. Payments are due to the Agency in the amount of annual positive cash flow generated by the rental of the units. All unpaid principal and interest on the note are due fifty-five years after the completion of the project. Interest on the note accrues at 3% per annum. Other notes receivable Total 50 Outstanding Balance at June 30, 2002 $ 2,909,244 9,500,000 100,722 12,509,966 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (5) Capital Assets Capital asset activity for the year ended June 30, 2002 is as follows: Buildings and improvements Equipment and furniture Vehicles Infrastructure Total cost of depreciable assets Less accumulated depreciation: Buildings and improvement Equipment and furniture Vehicles Infrastructure Total accumulated depreciation Net depreciable assets Capital assets not depreciated: Land Right of way Construction in progress Capital assets, net Balance at June 30, 2001 Additions $ 15,608,355 28,467 1,677,764 357,168 883,769 88,082 80,747,308 1,324,343 Balance at Deletions June 30, 2002 (40,000) 15,596,822 (48,957) 1,985,975 (26,000) 945,851 98,917,196 1,798,060 . (114,957) 100,600,299 3,710,321 748,290 (8,000) 4,450,611 962,595 320,448 (44,500) 1,238,543 528,559 92,658 (26,000) 595,217 45,883,300 3,193,450 - 49,076,750 51,084,775 4,354,846 (78,500) 55,361,121 47,832,421 (2,556,786) (36,457) 45,239,178 13,981,170 42,622,379 (136,000) 56,467,549 228,992,358 1,155,789 - 230,148,147 19,387,875 12,723,371 (2,231,133) 29,880,1 13 $ 310,193,824 53,944,753 (2,403,590) 3611,734,987 Depreciation expense was charged in the following functions in the Statement of Activities: General government $ 238,632 Public safety 386,077 Community services 354,612 Planning and development 65,041 Public works 3,310,483 $ 4,354,845 51 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (6) General Long -Term Debt Changes in general long-term debt for the year ended June 30, 2002 were as follows: City: Compensated absences payable Due to the Coachella Valley Association of Governments Developer Agreement Payable RDA Project Area No. 1: Tax allocation bonds Housing tar allocation bonds Pass -through agreements payable: Due to County of Riverside Coachella Valley Unified School District RDA Project Area No. 2: Tax allocation bonds Housing tax allocation bonds Due to County of Riverside Financing Authority: Revenue bonds Total Balance at June 30. 2001 Additions $ 373,537 460,544 578,311 - - 798,132 Amounts Balance at due within Deletions June 30, 2002 one year (411,884) 422,197 379,977 (50,000) 528,311 50.000 (54,409) 743.723 60,000 36,625,000 84,514,836 (1,195,000) 119.944,836 1,260,000 16,625,149 - (291,277) 16,333,872 307.022 8,639,846 - (8,639.846) - - 8,747,405 - (684,233) 8,063,172 697,918 6,590,000 - (85,000) 6,505,000 90,000 4,494,851 - (78,723) 4,416,128 82,978 2,350,000 - (100,000) 2,250,000 100,000 7,750,000 (275.000) 7.475,000 285,000 V2 774 099 85 773,512 _01 1,865,372 1.66,682 239 _3,3_12,895 7) Due to the Coachella Valley Association of Governments The City of La Quinta entered into an Interchange Reimbursement Agreement with the Coachella Valley Association of Governments (CVAG) to finance capital improvements at the Washington Street I-10 interchange. The City will reimburse CVAG $828,311 over a period of seventeen years beginning July 31, 1996. The annual payments to CVAG range from $28,311 to $50,000. At June 30, 2002, the balance was $528,311. 52 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (7) Due to the Coachella Valley Association of Governments, (Continued) The minimum annual requirements to amortize payable to Coachella Valley Association of Governments as of June 30, 2002 are as follows: June 30 Principal 2003 $ 50,000 2004 50,000 2005 50,000 2006 50,000 2007 50,000 2008 50,000 2009 50,000 2010 50,000 2011 50,000 2012 50,000 2013 28.311 528 311 (8) Tax Allocation Bonds As of June 30, 2002, the following issuances of Tax Allocation Bonds were outstanding: Series 1994 Tax Allocation Refunding Bonds, Series 1994, were issued by the Agency on May 5, 1994, in the amount of $26,665,000 to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1989 and 1990. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds range from 3.80% to 8% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest on and principal of the bonds are payable solely from pledged tax increment revenues. The bonds are not subject to redemption prior to maturity. There are certain limitat.ons regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2002 is $19,670,000. 53 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) D Tax Allocation Bonds, (Continued Series 1998, Project Area No. 1 Tax allocation refunding bonds, Series 1998, in the amount of $15,760,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1991. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds range from 5.20% to 5.25% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable from pledged tax increment revenues. Term Bonds maturing September 1, 2028 are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2013 and on each September 1 thereafter, through September 1, 2028, at a price equal to the principal amount thereof plus accrued interest. There are certain limitations regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2002 is $15,760,000. Series 1998, Project Area No. 2 Tax allocation refunding bonds, Series 1998, in the amount of $6,750,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1992. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 2. Interest rates on the bonds range from 3.75% to 5.28% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable solely from pledged tax increment revenues of Project Area No. 2. Term Bonds maturing September 1, 2028 and September 1, 2033 are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2009 and September 1, 2019, respectively, and on each September 1 thereafter at a price equal to the principal amount thereof plus accrued interest. There are certain limitations regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2002 is $6,505,000. 54 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) 8) Tax Allocation Bonds, (Continued) Tax Allocation Bonds, Series 2001 — Proiect Area No. 1 On August 15, 2001, the Agency issued tax allocation bonds in the amount of $48,000,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2001 tax allocation bonds were issued at a discount of $422,400 and issuance costs of $1,517,325. The bonds consist of $17,280,000 of term bonds that accrue interest at 5.00% and mature on September 1, 2021 and $30,720,000 of term bonds that accrue interest at 5.18% and mature on September 1, 2031. The interest and principal on the bonds are payable from pledged tax increment revenues. A portion of the proceeds were used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2002 is $46,124,932 ($48,000,000 net of unamortized discount and issuance costs of $1,875,068). Tax Allocation Bonds, Series 2002 — Project Area No. 1 On June 12, 2002, the Agency issued tax allocation bonds in the amount of $40,000,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. the 2002 tax allocation bonds were issued at a discount of $360,000 and issuance costs of $1,250,096. At June 30, 2002, the unexpended balance of bond proceeds is $37,087,727. The bonds consist of $6,355,000 of serial bonds and $33,645,000 of term bonds. Interest rates on serial bonds range from 1.75% and 4.00% and are payable semi-annually on March 1 and September 1 of each year until maturity. Term bonds accrue interest at 5.00% and 5.125% and mature on September 1, 2022 and September 1, 2023. The interest and principal on the bonds are payable from pledged tax increment revenues. A portion of the proceeds were used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2002 is $38,389,904 ($40,000,000 net of unamortized discount and issuance costs of $1,610,096). 55 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (8) Tax Allocation Bonds, (Continued) The minimum annual requirements (including sinking fund requirements) to amortize tax allocation bonds as of June 30, 2002 are as follows: Project Area No. 1 Project Area No. 2 1994 Tax Allocation Bonds 1998 Tax Allocation Bonds 2001 Tax Allocation Bonds 2002 Tax Allocation Bonds June 30 Principal Interest Principal Interest Principal Interest 1998 Tax Allocation Bonds Principal Interest 2003 $ 1,260,000 1,360,855 - 819,520 2,430,720 Principal Interest 2004 2005 1,325,000 1,274,465 - 819.520 2,430,720 565,000 1,433,076 1,905,825 90,000 90,000 330,747 327,080 2006 1,430,000 1,182,140 1,510,000 1,087.700 819.520 2,430,720 575,000 1,895,131 95,000 323,264 2007 1,620,000 973,455 - 819.520 819.520 2,430,720 585,000 1,882,361 100,000 319,168 2008 1,740,000 850,815 - 819.520 - 2,430,720 600,000 1,867,091 105,000 314,785 2009 1,865,000 719,233 819.520 - 2,430,720 615,000 1,849,617 110,000 310,135 2010 2,000,000 578,160 819.520 2,430,720 635,000 1,829,914 115,000 305,I84 2011 2,145,000 426,868 - 819.520 2,430,720 660,000 1,807,557 120.000 299,550 2012 2,305,000 264,443 - 819.520 2,430,720 680,000 1,782,926 125,000 293,272 2013 2,470,000 90,155 - 819,520 2,430,720 705,000 1,756,430 130,000 286,737 2014 - - 655,000 802.490 1,565,000 2,430,720 2,391,595 735,000 705,000 1,727,981 1,695,656 140.000 145,000 279,819 2015 2016 - - 690,000 767.520 1,645,000 2,311,345 735,000 1,659,656 150,000 272,516 264,956 2017 - - 725,000 730.730 1,730,000 2,226,970 770,000 1.622,031 160,000 257,013 2018 - - 765,000 691.990 1,815,000 2,138,345 810,000 1,582,531 170.000 248,556 2019 - - 800,000 651.300 1,905,000 2,045,345 855,000 1,540,906 175.000 239,716 2020 - - 845,000 608.530 2,000,000 1,947,720 895,000 1,497,156 185,000 230,491 2021 - - 890,000 563,420 2,100,000 1,845,220 940,000 1,451,281 195,000 220,631 2022 - - 935,000 515,970 2,205,000 1,737,595 985,000 1,403,156 205,000 210,131 2023 - - 985,000 466.050 2,315,000 1,624,595 1,035,000 1,352,656 215,000 199,106 2024 - - 1,035,000 413.530 2,430,000 1,504,755 1.090.000 1,299,531 230,000 187,425 2025 - - 1,090,000 358.280 2,555,000 1,377,637 1,140,000 1,243.069 240,000 175,087 2026 - 1,145,000 300,170 2,685,000 1,244,018 1,200,000 1,183,106 255,000 162,094 2027 - 1,205,000 239.070 2,820,000 1,103,640 1,265,000 1,119,941 265,000 148.444 2028 - - 1,265,000 174,850 2,965,000 956,123 1.330,000 1,053,444 280,000 134,138 2029 - - I,330,000 107.380 3,120,000 800,955 1.395,000 983,615 295,000 119,044 2030 - - - 1,400,000 36.400 3,275,000 637,882 1,470,000 910,200 310,000 103,163 2031 - - - - 3,445,000 466,523 3,015,000 795,272 325,000 86,494 20 - - - 3,620,000 286,365 3,170,000 636,781 345,000 68,906 2033 33 - _ _ - 3,805,000 97,027 3,335,000 470,091 360,000 50,400 2034 _ _ _ - - 7,505,000 192,316 380,000 30,975 400.000 10,500 $ 19,670,000 8,808,289 '� 15,760,000 16,442.400 48,000,000 53,481,575 40,000,000 43,430,304 6,505,000 6,809,527 56 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (9) 1995 Housing Tax Allocation Bonds (TABS) La Quinta Redevelopment Project Areas No. 1 and 2 1995 Housing Tax Allocation Bonds were issued by the Agency on July 1, 1995, in the amount of $22,455,000 to increase, improve and/or preserve the supply of low and moderate income housing in the City. Interest is payable semi-annually on March 1 and September 1 of each year commencing March 1, 1996. Interest payments range from 4% to 6% per annum. The interest and principal of the bonds are payable from pledged tax increment revenues of both project areas. Term Bonds maturing on September 1, 2025 are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2011 and on each September 1 thereafter, through September 1, 2025, at a price equal to the principal amount plus accrued interest. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. There are certain limitations regarding the issuance of parity debt as further described in the official statement. The principal balance of outstanding bonds at June 30, 2002 is $20,750,000. 57 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (9) 1995 Housing Tax Allocation Bonds (TABS), (Continued) The minimum annual requirements (including sinking fund requirements) to amortize housing tax allocation bonds as of June 30, 2002 are as follows: 1995 Housing TAB's June 30 Principal Interest 2003 $ 390,000 1,202,820 2004 2005 405,000 1,183,538 2006 425,000 450,000 1,162,990 1,140,890 2007 2008 530,000 1,115,502 2009 560,000 590,000 1,086,470 1,055,125 2010 620,000 1,021,540 2011 2012 655,000 985,840 2013 695,000 735,000 946,650 903,750 2014 2015 780,000 858,300 2016 825,000 875,000 810,150 759,150 2017 2018 925,000 705,150 2019 985,000 1,040,000 647,850 587,100 2020 2021 1,105,000 522,750 2022 1,170,000 454,500 2023 1,240,000 1,315,000 382,200 305,550 2024 1,395,000 224,250 2025 2026 1,475,000 138,150 1,565,000 46,950 Q,750,000 18,247,165 (10) 1996 Lease Revenue Refunding Bonds On November 15, 1996, the Authority issued $8,790,000 of 1996 Lease Revenue Refunding Bonds to defease the remaining 1991 Local Agency Revenue Bonds in the amount of $8,200,000 and to provide funds for construction of remaining improvements to the La Quinta Civic Center site. 58 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (10) 1996 Lease Revenue Refunding Bonds, (Continued) The bonds consist of $3,630,000 of serial bonds and $5,160,000 of term bonds. The serial bonds will accrue interest at rates between 3.70% and 5.30% and principal amounts mature between October 1, 1997 to October 1, 2008 in amounts ranging from $285,000 to $380,000. The term bonds accrue interest at a rate of 5.55% and mature on October 1, 2018. A surety agreement has been purchased to satisfy the bond reserve requirement. There are certain limitations regarding the issuance of parity debt as further described in the official statement. The amount of principal outstanding on the 1996 Lease Revenue Refunding Bonds at June 30, 2002 is $7,475,000. T'he minimum annual requirements (including sinking fund requirements) to amortize revenue bonds as of June 30, 2002 are as follows: 1996 Revenue Bonds June 30 Principal Interest 2003 $ 285,000 394,435 2004 300,000 380,830 2005 315,000 366,220 2006 330,000 350,575 2007 345,000 333,865 2008 360,000 315,880 2009 380,000 296.450 2010 400,000 275,280 2011 420,000 252,525 2012 445,000 228,521 2013 470,000 20'' 1' 0 2014 495,000 176,351 2015 525,000 148,046 2016 555,000 118,076 2017 585,000 86,441 2018 615,000 53,141 2019 650,000 18,038 7 475 000 3,997,804 (1 1) Due to County of Riverside Project Area No. 2 Based on an agreement dated July 5, 1989 between the Agency and the County, until the tax increment reaches $5,000,000 annually in Project Area No. 2, the Agency will pay to 59 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (11) Due to County of Riverside, (Continued) the County 50% of the County portion of tax increment. At the County's option, the County's pass -through portion can be retained by the Agency to finance new County facilities or land costs that benefit the County and serve the La Quinta population. Per the agreement, the Agency must repay all amounts withheld from the County. The tax increment is to be paid to the County in amounts ranging from $100,000 to $250,000 over a payment schedule through June 30, 2015. Interest does not accrue on this obligation. The balance at June 30, 2002 is $2,250,000. The minimum annual requirements to amortize amounts due to the County of Riverside as of June 30, 2002 are as follows: June 30 Principal 2003 $ 100,000 2004 100,000 2005 100,000 2006 100,000 2007 100,000 2008 150,000 2009 200,000 2010 200,000 2011 200,000 2012 250,000 2013 250,000 2014 250,000 2015 250.000 2 250 000 (12) Notes Payable to Coachella Valley Unified School District An agreement was entered into in 1991 between the Agency, the City of La Quinta and the Coachella Valley Unified School District (District), which provides for the payment to the District a portion of tax increment revenue associated with properties within District confines. Such payments are subordinate to other indebtedness of the Agency incurred in furtherance of the Redevelopment Plan for Project Area No. 1. This tax increment is paid to the District over a payment schedule through August 1, 2012, in amounts ranging from $474,517 to $834,076, for a total amount of $15,284,042. Tax increment payments outstanding at June 30, 2002 totaled $8,063,172. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school busses, and expansion or rehabilitation of current facilities. 60 CITY OF LA QUINTA Notes to the. Basic Financial Statements (Continued) (12) Notes Payable to Coachella Valley Unified School District, (Continued) The minimum annual requirements to amortize payable to Coachella Valley Unified School District as of June 30, 2002 are as follows: June 30 Principal 2003 $ 697,918 2004 711,877 2005 726,114 2006 740,636 2007 755,449 2008 770,558 2009 785,968 2010 801,688 2011 817,722 2012 834,076 2013 421,166 $8,063,172 (13) Developer Agreement Payable In December 1998, the City entered into a tax sharing agreement with Stamko Development Co. in relation to the development of an auto mall located within the City. For a period of ten years, the agreement requires the City to make quarterly payments to the developer in the amount of 33% of the sales and use tax revenues generated by the site up to a maximum amount of $122,250 in any twelve month period. Additionally, if the sales and use tax revenues generated exceed $530,000, adjusted annually by the CPI index, the City is required to pay $76,411 for that year for a maximum of ten years. During the year ended June 30, 2002, the developer completed all the requirements to be entitled to begin receiving payments from the City. However, sales and tax revenues for the year ended June 30, 2002 did not exceed $530,000. Therefore, the additional $76,411 was not paid to the developer. 61 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (13) Developer Agreement Payable, (Continued) The minimum annual requirements to amortize the developer agreement payable as of June 30, 2002 are as follows: June 30 Principal Interest Total 2003 $ 60,000 62,250 122,250 2004 62,051 60,199 122,250 2005 67,496 54,754 122,250 2006 73,403 48,847 122,250 2007 79,812 43,438 122,250 2008 86,772 35,478 122,250 2009 96,311 25,939 122,250 2010 104,498 17,752 122,250 2011 113,380 8,870 122,250 743 723 357,527 1,101,250 (14) Debt Without Governmental Commitment The City of La Quinta sold Improvement Bonds issued pursuant to the California State Improvement Act of 1915. The Bonds are payable from the annual installments collected on the regular property tax bills sent to owners of property having unpaid assessments levied against land benefited by the projects. The Bonds are neither general obligations of the City nor any other political subdivision and the full faith and credit of the City is not pledged for repayment thereof. The City is not liable for repayment of the debt, but is only acting as agent for the property owners in collecting the assessments and forwarding the collections to bondholders. The Bonds do not constitute an obligation of the City; therefore, they are not included in the general long-term debt account group in the accompanying financial statements. The following is a summary of Improvement Bonds outstanding at June 30, 2002: Amount Outstanding Proceeds Maturity Date Interest Rate at June 30, 2002 Assessment District No. 88-1 $ 855,984 9/2/04 5.50%-7.25% $ 85,000 Assessment District No. 89-2 1,153,974 9/2/04 6.65%-6.75% 200,000 Assessment District No.90-1 1,227,155 9/2/05 6.50%-7.00% 305,000 Assessment District No. 91-1 2,240,866 9/2/06 6.70%-6.80% 685,000 Assessment District No.92-1 1,880,891 9/2/08 5.00%-5.40% 915,000 Assessment District No. 97-1 705,262 9/2/18 4.10%-5.20% 695,000 Assessment District No. 200 1 -1 2,285,000 9/2/15 5.00%-6.60% 2,095,000 62 CITY OF LA QUINTA Notes to the Basic Financial Statements (Contii.ued) Defined Benefit Pension Plan Plan Description The City of La Quinta contributes to the California Public Employees Retirement System (PERS), an agent multiple -employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their executive office: 400 P Street, Sacramento, California 95814. Funding Policy Participants are required to contribute 7% of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. The City is required to contribute at an actuarially determined rate. For the year ended June 30, 2002, the rate was .041 % of annual covered payroll. The contribution requirements of plan members and the City are established and may be amended by PERS. Annual Pension Cost '-or 2002, the City's annual pension cost (employer contribution) in the amount of $1,369 ,. as equal to the City's required and actual contributions. The required contribution was ,;;,termined as part of the June 30, 1999, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8.25% investment rate of return (net of administrative expenses), (b) projected annual salary increases that vary by duration of service, and (c) 2% per year cost -of -living adjustments. Both (a) and (b) included an inflation component of 3.5%. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a four-year period (smoothed market value). Any unfunded actuarial accrued liability is amortized as a level percentage of projected payroll on a closed basis. PERS combines the prior service unfiinded liability and the current service unfunded liability into a single initial unfunded liability. The single funding horizon for the unfunded liability is June 30, 2011. 63 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (15) Defined Benefit Pension Plan, (Continued) Miscellaneous Employees Three -Year Trend Information Annual Pension Percentage of Net Pension Fiscal Year Cost (APC) APC Contributed Obligation 6/30/00 $128,123 100% -0- 6/30/01 70,752 100% -0- 6/30/02 1,369 100% -0- Required Supplementary Information (S amount in thousands) Entry Age Normal Actuarial Unfunded Annual UAAL Accrued Value Liability/ Covered As a % of Valuation Date Liability of Assets (Excess Assets) Funded Status Payroll Payroll 06/30/99 $4,989,981 7,206,658 (2,216,677) 144.4% 3,087,175 (71.8%) 06/30/00 5,704,327 8,340,014 (2,635,687) 146.2% 3,146,845 (83.8%) 06/30/01 6,314,188 8,806,753 (2,492,565) 139.5% 3,349,776 (74.4%) (16) Claims Payable/Self Insurance The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 92 California public entities and is organized under a joint powers agreement pursuant to California Government Code Section 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 coverages. The Authority's pool began covering claims of its members in 1978. Each member government has a representative on the Board of Directors. The Board operates through a 9-member Executive Committee. General Liability Each member government pays a primary deposit to cover estimated losses for a fiscal year (claims year). Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Costs are spread to members as follows: the first $30,000 of each occurrence is charged directly to the city; costs from $30,001 to $750,000 are pooled based on a members share of costs under $30,000; costs from $750,001 to $5,000,000 are pooled based on payroll. Costs to covered claims above $5,000,000 are currently paid by reinsurance. The protection for the City is $50,000,000 per occurrence and $50,000,000 annual aggregate. 64 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (16) Claims Payable/Self Insurance Workers Compensation The City also participates in the workers compensation pool administered by the Authority. Pool deposits and retrospective adjustments are valued in a manner similar to the General Liability pool. The City of La Quinta is charged for the first $10,000 of each claim. Costs above that level are pooled to $50,000. Costs from $50,001 to $100,000 per claim are pooled based on the City's losses under its retention level. Costs between $100,001 and $2,000,000 per claim are pooled based on payroll. Costs in excess of $500,000 are paid by excess insurance purchased by the Authority. The excess insurance provides coverage of $50,000,000 per occurance. During the past three fiscal years none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage provided for the prior year. (17) Contingencies Various claims and suits have been filed against the City in the normal course of operations. Although the outcome of these lawsuits is not presently determinable, in the opinion of management, the resolution of these matters will not have a material adverse effect on the financial position of the City. CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (18) Interfund Receivables and Payables Current interfund receivables and payables balances at June 30, 2002 are as follows: Due to General Fund from: Low/Moderate Income Housing — PA No. 2 Fund $ 5,688 Capital Improvement Fund 32,168 RDA Capital Projects — PA No. 1 Fund 2,642,491 Other governmental funds 157,681 Total due to General Fund from other funds 2,838,028 Due to Capital Improvement Fund from: Other governmental funds 11,388 Due to RDA Capital Projects — PA No. 1 Fund from: Capital Improvement Fund 2,176,682 Due to other government funds from: RDA Debt Service — PA No. 2 2,538 Capital Improvement Fund 177,724 Other governmental funds 737 Total due to other governmental funds from other funds 180,999 Total $5,207,097 Noncurrent interfund receivable and payable balances at June 30, 2002 are as follows: Advances from General Fund to other funds: RDA Debt Service — PA No. 1 $ 4,907,565 RDA Debt Service — PA No. 2 7,614,325 Total advances from General Fund to other funds 12,521,890 Advances from Low/Moderate Income Housing — PA No. 2 Fund to other funds: RDA Debt Service — PA No. 2 39,135 Advances from RDA Capital Projects — PA No. 1 to other funds: Other governmental funds 1,249,728 Total $13,810,753 As of June 30, 2002 the amount due to the General Fund from RDA Debt Service 1 was $4,907,565 and from RDA Debt Service 2 was $7,614,325. These outstanding advances 66 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (18) Interfund Receivables and Payables, (Continued) consist of monies loaned to the Redevelopment Agency with no required repayment date and accrue an interest of 10%. Construction Commitments The following material construction commitments existed at June 30, 2002: Expenditures as of Remaining Project Name June 30, 2002 Commitments Civic Center Campus Improvements $2,142,137 1,314,427 Nliraflores Senior Apartments 2,183,427 6,426,397 UVAG/Jefferson Phase I 13,253,919 2,941,814 18 Acre Park Site at Westward Ho 224,154 2,500,846 Jefferson Street Improvements — Phase II 4,141 18,514,955 Washington/Eisenhower Design 80,655 1,785,335 Highway 111 Corridor Improvements - 1,970,118 Fire Station 173,254 1,213,264 20) Restatement of Fund Balances Fund balances have been restated at June 30, 2001 as follows: Non -major Internal Governmental Service Funds Funds Fund balances at June 30, 2001, as previously reported $26,490,150 2,832,467 To move the Arts in Public Places fund from an Agency to a Special Revenue Fund 704,858 - To record the transfer of capital assets purchased by governmental funds in prior years to establish the Information Technology Fund - 281,624 Fund balances (deficit) at June 30, 2001, as restated $27,195,008 3,1 14,091 67 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (21) Interfund Transfers Interfund transfers were as follows for the year ended June 30, 2002: Transfers to General Fund from: Other governmental funds $ 189,072 Transfers to RDA Debt Service — PA No. 1 Fund from: RDA Capital Projects — PA No. 1 Fund 9,353,284 Other governmental funds 1,737,007 11,090,291 Transfers to RDA Debt Service — PA No. 2 Fund from: Low/Moderate Income Housing — PA No. 2 Fund 338,442 Transfers to Capital Improvement Fund from: General Fund 393,559 Low/Moderate Income Housing — PA No. 2 164,568 RDA Capital Projects — PA No. 1 Fund 44,936,018 Other governmental funds 7,141,640 52,635,785 Transfers to non -major funds from: General fund 2,000 Transfers to internal service funds from: General fund I,000.000 Total $65,255,590 The following lists the major transfers in and transfers out included in the financial statements: Transfers to Major Funds $9,353,284 was transferred to the RDA Debt Service — PA No. 1 Fund from the RDA Capital Projects — PA No. 1 Fund for debt service payments on amounts due to the County of Riverside and the Coachella Valley Unified School District. $1,737,007 was transferred to the RDA Debt Service — PA No. 1 Fund from the RDA Low/Moderate Income Housing — PA No. 1 Fund for debt service payments on the 1995 Housing Bonds. $44,936,018 was transferred to the Capital Improvement Fund from the RDA Capital Projects — PA No. 1 Fund for reimbursements of capital outlay benefiting RDA Project Area No. 1. 68 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (21) Interfund Transfers, (Continued) $7,141,640 was transferred to the Capital Improvement Fund from other governmental funds for reimbursements of various capital projects. Transfers to Internal Service Funds $1,000,000 was transferred to the Information Technology Fund from the General Fund to establish reserves for future information system purchases. (22) Fund Deficits The following fund had a deficit balance at June 30, 2002: Debt Service Funds: Redevelopment Agency — PA No. 2 $(5,622,884) Capital Projects Funds: Financing Authority (324) (23) Unreserved Fund Balances Unreserved fund balances at June 30, 2002 consisted of the following: Special Revenue Capital Low/Moderate Debt Service Projects Other General Income Housing iR6A— RM Governmental Fund PA No. 1 PA No. 2 PA No. 1 Funds Totals Designated for: Emergency reserve $9,186,650 - - - - 9,186,650 Cash Flows 1,800,000 - - - - 1,800,000 Operations/projects/ transfers 16,995,060 4,666,958 - - 20,359.061 42,021,079 Undesignated - (5,622,884) 49( 5,143) (324) (6.118.351) Total unreserved fund balance (deficit) $2 9981.710 4 666 958 _(5622,884) 4995=143) 20,358,73.7 46,889 378 69 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (24) Expenditures in Excess of Appropriations Expenditures for the year ended June 30, 2002 exceeded the appropriations of the following funds/departments: Budget Actual Variance General Fund: City manager $ 231,341 247,986 (16,645) Fiscal services 289,872 372,339 (82,467) Building and safety administration 153,900 172,423 (18,523) Public works administration 178,261 205,971 (27,710) Capital projects administration (624,837) (113,843) (510,994) Special revenue funds: South Coast Air Quality - 9,646 (9,646) CV Violent Crime Task Force - 1,187 (1,187) Debt services funds: Redevelopment Agency Project Area No. 2 7,801,274 7,831,998 (30,724) Capital projects funds: Civic Center Fund 204,660 207,536 (2,876) A.D. 97-1 LQ Norte Construction Fund - 63,580 (63,580) (25) Conduit Debt Financing 2002 Series A Variable Rate Multifamily Housing Revenue Bonds In March 2002, the La Quinta Redevelopment Agency issued $5,000,000 of 2002 Series A Variable Rate Multifamily Housing Revenue Bonds to provide financing for the acquisition, construction and equipping of a multifamily senior rental housing project known as Miraflores Apartments located in the City of La Quinta. The bonds mature on May 15, 2035. Outstanding bonds at June 30, 2002 are $5,000,000. The bonds are secured solely by the credit facility, Fannie Mae, and by a pledge of the trust estate comprised of bond proceeds and property. The bonds are not obligations of the issuer, but payable solely from the security. 70 CITY OF LA QUINTA Notes to the Basic Financial Statements (Continued) (25) Conduit Debt Financing, (Continued) 2002 Series B Multifamily Housing Revenue Bonds In April 2002, the La Quinta Redevelopment Agency issued $3,000,000 of 2002 Series B Multifamily Housing Revenue Bonds to provide financing for the acquisition, construction and equipping of a multifamily senior rental housing project known as Miraflores Apartments located in the City of La Quinta. The bonds mature on June 1, 2035 and bear interest at 5.5% per annum. Outstanding bonds at June 30, 2002 are $3,000,000. The bonds are secured solely by the credit facility, Fannie Mae, and by a pledge of the trust estate comprised of bond proceeds and property. The bonds are not obligations of the issuer, but payable solely from the security. 71 REQUIRED SUPPLEMENTARY INFORMATION 73 GENERAL FUND GENERAL FUND - The primary fund of the City used to account for all revenue and expenditures of the City not legally restricted as to use. A broad range of municipal activities are provided through this fund including City Manager, City Attorney, Finance, City Clerk, Community Development, Police Services, Public Works, Building and Safety, and Community Services. SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues (other than major capital projects) and the related expenditures that are legally required to be accounted for in a separate fund. The following fund has been classified as a major fund. The budget -actual comparison for this fund has been presented in the accompanying financial statements as required supplementary information: Redevelopment Agency, Low and Moderate Income Housing the required 20% set aside of property tax increments that is improving housing for low and moderate income households. 74 P.A. No. 2 Fund — To account for for increasing or CITY OF LA QUINTA Notes to Required Supplementary Information Year ended June 30, 2002 (1) Budgets and Budgetary Accounting The City adopts an annual budget prepared on the modified accrual basis of accounting for its governmental funds and on the accrual basis of accounting for its proprietary funds. The City Manager or his designee is authorized to transfer budgeted amounts between the accounts of any department. Revisions that alter the total appropriations of any department or fund are approved by City Council. Additional appropriations in the amount of $99,675,057 were made during the year. Prior year appropriations lapse unless they are approved for carryover into the following fiscal year. Expenditures may not legally exceed appropriations at the department level. Reserves for encumbrances are not recorded by the City of La Quinta. (2) Expenditures in Excess of Appropriations Expenditures for the year ended June 30, 2002 exceeded the appropriations of the following funds/departments: Budget Actual Variance General Fund: City manager $ 231,341 247,986 (16,645) Fiscal services 289,872 372,339 (82,467) Building and safety administration 153,900 172,423 (18,523) Public works administration 178,261 205,971 (27,710) Capital projects administration (624,837) (113,843) (510,994) 75 CITY OF LA QUINTA General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Variance with Prior Budget Final Budget Year Original Final Actual Positive (Negative) Actual Revenues: Taxes $ 8,701,220 8,701,200 10,443,436 1,742,236 10,331,970 Licenses and permits 819,600 819,600 1,857,691 1,038,091 2,057,423 Charges for services 1,208,475 1,208,475 1,757,744 549,269 1,998,589 Intergovernmental 1,765,500 3,437,051 3,683,490 246,439 2,164,891 Investment income 1,617,200 1,555,600 2,030,346 474,746 2,313,789 Miscellaneous 27,700 27,700 529,190 501,490 43,545 Total revenues 14,139,695 15,749,626 20,301,897 4,552,271 19,110,207 Expenditures: General government: Legislative 582,800 585,800 535,735 50,065 690,118 City manager 310,703 231,341 247,986 (16,645) 253,211 Economic development 910,000 935,000 784,007 150,993 890,901 Personnel 448,500 450,672 440,464 10,208 265,766 Fiscal services 359,375 289,872 372,339 (82,467) 295,671 Central services 306,205 311,205 288,355 22,850 407,638 City clerk 278,950 291,050 285,174 5,876 260,336 Total general government 3,196,533 3,094,940 2,954,060 140,880 3,063,641 Public safety: Police 3,812,118 4,189,386 3,990,644 198,742 3,650,632 Building and safety administrative 153,900 153,900 172,423 (18,523) 160,081 Code compliance 478,484 478,484 430,897 47,587 415,552 Animal control 166,043 166,043 156,219 9,824 139,803 Building 605,188 700,188 686,683 13,505 717,419 Emergency services 96,524 96,524 80,794 15,730 20,671 Fire 20,000 1,663,257 1,602,204 61,053 5,406 Civic center building 488,790 489,991 489,257 734 526,590 Total public safety 5,821,047 7,937,773 7,609,121 328,652 5,636,154 Community services: Senior center 257,300 265,475 247,073 18,402 2191,143 Parks and recreation administration 706,100 803,258 691,439 1111,819 534,836 Parks and recreation programs 90,800 90,800 75,962 141,838 63,481 Total community services 1,054,200 1,159,533 1,014,474 145,059 817,460 (Continued) 76 CITY OF LA QUINTA General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Continued) Planning and development: Community development administration Current planning Total planning and development Public works: Public works administration Development and traffic Maintenance/operations - St. Maintenance/operations - L & L Capital projects administration Total public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Total a' icr financing sourc i uses) Budget Original Final Actual Variance with Final Budget 2001 Positive (Negative) Actual 371,100 374,550 273,239 101,311 280,049 398,292 704,007 453,350 250,657 453,530 769,392 1,078,557 726,589 351,968 733,579 141,441 178,261 205,971 (27,710) 154,870 555,857 888,968 842,547 46,421 706,364 659,535 995,761 200,330 795,431 96,345 568,599 578,271 401,028 177,243 543,299 21,987 (624,837) (113,843) (510,994) (83.350) 1,947,419 2,016,424 1,536,033 480,391 1,417,528 12,788,591 15,287,227 13,840,277 1,446,950 11,668,362 1,351,104 462,399 6,461,620 5,999,221 7,441,845 - 108,972 189,072 80,100 238,565 (11124,500) (1,633,242) (1,395,559) 237,683 (828,438) (1,124,500) (1,524,270) (1,206,487) 317,783 (589,873) Excess -,ficiency) of revenues and c r financing sources over . der) expenditures and other Financing uses 226,604 (1,061,871) 5,255,133 6,317,004 6,851,972 Fund balance at beginning of year 35,624,470 35,624,470 35,624,470 - 28,772,498 Fund balance at end of year S 35,851,074 34,562,599 40,879,603 6,317,004 35,624,470 77 CITY OF LA QUINTA Special Revenue Funds Low/Moderate Income Housing Project Area No. 2 Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Taxes Investment income Total revenues Expenditures: Current: Planning and development Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 17452,654 1,841,110 2,025,212 184,102 1,517,600 20,700 20,700 115,747 95,047 185,625 1,473,354 1,861,810 2,140,959 279,149 1,703,225 2,827,167 2,027,896 682,702 1,345,194 837.605 27827,167 2,027,896 682,702 1,345,194 837,605 (1,353,813) (166,086) 1,458,257 1,624.343 865.620 (338,442) (2,787,701) (503,010) 2,284,691 (492,139) (338,442) (2,787,701) (503,010) 2,284,691 (492,139) (1,692,255) (2,953,787) 955,247 3,909,034 373,481 3,750,846 3,750,846 3,750,846 - 3,377,365 $ 2.058.591 797,059 4,706,093 3,909,034 3,750,846 78 SUPPLEMENTARY SCHEDULES 79 Assets Cash and investments Cash with fiscal agent Accounts receivable Interest receivable Notes receivable Due from other funds Due from other governments Advances to other funds Total assets Liabilities and Fund Balances Liabilities: Accounts payable Deferred revenue Deposits payable Due to other funds Advances from other funds Total liabilities Fund balances: Reserved for: Debt service Bond projects Advances to other funds Notes receivable Unreserved, reported in: Special revenue funds Capital projects funds Total fund balances Total liabilities and fund balances CITY OF LA QUINTA Non -Major Governmental Funds Combining Balance Sheet June 30, 2002 Debt Special Service Fund Capital Revenue Financing Projects Funds Authority Funds Totals 2002 2001 $ 5,147,673 9,876 13,951,150 19,108,699 20,907,317 2,243,769 2 1,381 2,245,152 4,699,228 106,084 - 60,900 166,984 149,199 - - - - 833 3,009,966 - - 3,009,966 2,861,382 2,538 737 177,724 180,999 259,634 150,677 - - 150,677 331,886 - - - - 511,903 $ 10,660,707 10,615 14,191,155 24,862,477 29,721,382 $ 38,351 - 9,486 47,837 63,176 873,855 - - 873,855 1,025,536 15,788 - - 15,788 14,283 156,255 - 13,551 169,806 2,128,237 - - 1,249,728 1,249,728 - 1,084,249 - 1,272,765 2,357,014 3,231,232 - 10,615 - 10,615 9,909 - - - - 756,396 - - - - 511,903 2,136,111 - - 2,136,111 2,861,382 7,440,347 - - 7,440,347 6,582,570 - - 12,918,390 12,918,390 15,767,990 9,576,458 10,615 12,918,390 22,505,463 26,490,150 $ 10,660,707 10,615 14,191.155 24,862,477 29,721,382 80 CITY OF LA QUINTA Non -Major Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 2002 Revenues: Taxes Developer fees Intergover-::mental Investmer income Special a .ssments Rental ir. : ;ne Miscellat ...-us Total enues Expenditurc _ Current: General uovernment Public safety Community services Planning and development Public works Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Sale of capital assets Transfers in Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year, as restated Fund balances at end of year Debt Special Service Fund Capital Revenue Financing Projects Totals Funds Authority Funds 2002 2001 $ 4,488,487 - - 4,488,487 3,737,113 278,061 - 1,923,436 2,201,497 2,316.249 1,117,668 - - 1,117,668 820,906 402,186 455 484,590 887,231 1,467.251 757,619 - - 757,619 782,610 321,145 680,244 - 1,001,389 1,067,076 45,418 9,589 - 55,007 52,711 7,410,584 690,288 2,408,026 10,508,898 10,243,916 - - 207,536 207,536 211,983 1,187 - - 1,187 - 53,363 - - 53,363 - 3,738,979 7,405 227,401 3,973,785 3,607,201 1,293,029 - 68,250 1,361,279 1,264,319 - 275,000 - 275,000 260,000 - 407,177 - 407,177 418,955 5,086,558 689,582 503,187 6,279,327 5,7621,458 2,324,026 706 1,904,839 4,229,571 4,481,458 146,603 - - 146,603 406,461 2,000 - - 2,000 3,197,756 (3,556,884) - (5,510,835) (9,067,719) (8,683,907) (3,408,281) (1,084,255) 706 (5,510,835) (8,919,116) (5,079,690) (3,605,996) (4,689,545) (598,232) 10,660,713 9,909 16,524,386 27,195,008 27,088,382 $ 9,576,458 10,615 12,918,390 22.505,463 26,490,150 81 NON -MAJOR SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues (other than expendable trusts and major capital projects) and the related expenditures that are legally required to be accounted for in a separate fund. The City of La Quinta has the following Special Revenue Funds: State Gas Tax Fund - To account for gasoline allocations made by the State of California. These revenues are restricted by the State to expenditures for street -related purposes only. Federal Assistance Fund - To account for revenues from the Community Development Block Grants received from the Federal Government and the expenditures of those resources. Urban Forestry Grant Fund — To account for state Urban Forestry grant funds. Uses of funds from the State Department of Forestry are limited to projects approved by the grantor. Lighting and Landscape Special Assessment District 89-1 Fund - To account for special assessments levied on real property and the expenditure thereof from City-wide lighting and landscape maintenance and improvements. State Law Enforcement Block Grant (SLEBG) Fund - To account for state funded "Citizens for Public Safety" (COPS) program activities, as per Assembly Bill 3229, which supplements frontline police services such as anti -gang community crime prevention. Quimby Fund - To account for the accumulation of developer fees received under the provisions of the Quimby Act for park development and improvements. Capital projects to be funded from this source will be budgeted and expended in a separate capital projects fund. La Quinta Public Safety Officer Fund - To account for contributions to be distributed to public safety officers disabled or killed in the line of duty. Ar-s in Public Places — To account for development fees paid in lieu of acquisition and installation of approved artworks in a development with expenditures restricted to acquisition, installation, maintenance and repair of artworks at approved sites. South Coast Air Quality Fund - To account for contributions from the South Coast Air Quality Management District. Use of such contributions is limited to reduction and control of airborne pollutants. Local Law Enforcement Block Grant (LLEBG) Fund - To account for Federal Bureau of Justice Block Grant program, which may be used for the purpose of reducing crime and improving public safety. Coachella Valley Violent Crime Task Force Fund — To account for the activities of the Coachella Valley Violent Crime Task Force. Redevelopment Agency, Low and Moderate Income Housing P.A. No. 1 Fund - To account for the required 20% set aside of property tax increments that is legally restricted for increasing or improving housing for low and moderate income households. Redevelopment Agency, Low and Moderate Bond Fund P.A. No. 1 and No. 2 Funds - To account for bond proceeds and expenditures of bond -financed low and moderate income housing programs. 83 CITY OF LA QUINTA Non -Major Special Revenue Funds Combining Balance Sheet June 30, 2002 Urban Lighting State Federal Forestry and Public Gas Tax Assistance Grant Landscape SLESF Quimby Safety Assets Cash and investments $ 331,111 - - - 7,147 362,670 13,965 Cash with fiscal agent - - - - - - - Accounts receivable - - - _ _ _ _ Interest receivable - - - _ _ _ _ Notes receivable - - - - _ _ _ Due from other funds - - - _ _ _ _ Due from other governments 47,418 - - 23,455 - - - Advances to other funds - - - - - Total assets $ 378,529 - - 23,455 7,147 362,670 13,965 Liabilities and Fund Balances Liabilities: Accounts payable Deferred revenue Deposits payable Due to other funds Total liabilities Fund balances: Reserved for: Advances to other funds Notes receivable Unreserved 378,529 - - 23,455 7,147 362,670 13,965 Total fund balances 378,529 - - 23,455 7,147 362,670 13,965 Total liabilities and fund balances $ 378,529 - - 23,455 7,147 362,670 13,965 84 Low/ Moderate Low/ Low/ Arts in CV Violent Income Moderate Moderate Public South Coast Crime Task Housing- Bond- Bond- Totals Places Air Quality LLEBG Force PA No. 1 PA No. 1 PA No. 2 2002 2001 681,087 77,742 32,291 20,039 3,278,978 - 342,643 5,147,673 4,417,414 - - - - - 213,022 2,030,747 2,243,769 3,941,286 - - - - 106,084 - - 106,084 88,299 - - - - - - - - 833 - - - - 3,009,966 - - 3,009,966 2,861,382 - - - - - - 2,538 2,538 - - 7,300 - - 72,504 - - 150,677 331,886 - - - - - - - - 511,903 681.087 85,042 32,291 20,039 6,467,532 213,022 2,375,928 10.660,707 12,153,003 2,668 - 1,187 34,496 - - 38,351 16,355 - - - 873,855 - - 873,855 1,025,536 - - 15,788 - - 15,788 14,283 5,907 150,348 - 156,255 1,140,974 2,668 - 1,187 930,046 150,348 - 1,084,249 2,197,148 - - - - 511,903 - - - - 2,136,111 - - 2,136,111 2,861,382 681,087 82,374 32,291 18,852 3,401.375 62,674 2,375,928 7,440,347 6,582,570 681,087 82,374 32,291 18,852 5,537,486 62,674 2,375,928 9,576,458 9,955,855 681,087 85,042 32,291 20,039 6,467,532 213,022 2,375,928 10,660.707 12,153,003 85 CITY OF LA QUINTA Non -Major Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 2002 Urban Lighting Gas Federal Forestry and Public Tax Assistance Grant Landscape SLEBG Quimbv Safety Revenues: Taxes $ Developer fees - - - - - 126,375 - Intergovernmental 609,016 335,618 9,900 - 100.192 - - Investment income 12,232 - - - 2,086 15,699 422 Special assessments - - - 757,619 - _ _ Rental income Miscellaneous Total revenues 621,248 335,618 9,900 757,619 102,278 142,074 422 Expenditures: Current: Public safety _ _ _ _ Community services - Planning and development _ _ _ _ Public works 435,298 - - 857,731 Total expenditures 435,298 - - 857,731 - _ _ Excess (deficiency) of revenues over (under) expenditures 185,950 335,618 9,900 (100,112) 102,278 142,074 422 Other financing sources (uses): Sale of capital assets - _ - Transfers in - - - 2,000 Transfers out (159,080) 61,814) (9,900) - (149,271) (284,681) - Total other financing sources (uses) (159,080) (61,814) (9,900) - (149,271) (284,681) 2,000 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 26,870 273,804 - (100,112) (46,993) (142,607) 2,422 Fund balances (deficits) at beginning of year, as restated 351,659 (273,804) - 123,567 54,140 505,277 11,543 Fund balances at end of year $ 378,529 - - 23,455 7,147 362,670 13,965 86 Low/ Moderate Low/ Low/ Arts in CV Violent Income Moderate Moderate Public South Coast Crime Task Housing- Bond- Bond- Totals Places Air Quaility LLEBG Force PA No. 1 PA No. 1 PA No. 2 2002 2001 - - - - 4,488,487 - - 4,488,487 3,737,113 103,102 - - - 481,584 - - 278.061 49,598 - 36,238 26,704 - - - - 1,117,668 820,906 22,955 1,972 841 39 266,302 62,674 16.964 402.186 501,132 - _ - _ - - - 757,619 782,610 - - - - 321,145 - - 321,145 388,121 - - - 20,000 25,418 - - 45,418 25,096 126,057 38,210 27,545 20,039 5,149,936 62,674 16,964 7,410.584 6,304,576 - - - 1,187 - - - 1.187 - 53,363 - - - - - - 53.363 - - 9,646 - - 3,729,333 - - 3,738.979 3,275,707 _ _ _ - _ - - 1.293.029 1,196,400 53.363 9,646 - 1,187 3,729,333 - - 5,086.558 4,472,107 72,694 28,564 27,545 18,852 1,420,603 62,674 16,964 2,324.026 1,832.469 - - - - 146,603 - - 146,603 406,461 _ - - - - - - 2.000 2,000 (96,465) - (1,820) - (1,737,006) (832,930) (223,917) (3,556,884) (3,508,542) (96,465) - (1,820) - (1,590,403) (832,930) (223,917) (3,408.281) (3,100,081) (23,771) 28,564 25,725 18,852 (169,800) (770,256) (206,953) (1,084,255) (1,267,612) 704,858 53,810 6,566 - 5,707,286 832,930 2,582,881 10,660,713 11,223,467 681,087 82,374 32,291 18,852 5,537,486 62,674 2,375,928 9,576.458 9,955,855 87 CITY OF LA QUINTA Special Revenue Funds State Gas Tax Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Intergovernmental Investment income Total revenues Expenditures: Current: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 413,900 427,618 609,016 181,398 629,332 7,700 7.700 12.232 4,532 17,142 421,600 435.318 621,248 185,930 646,474 421,600 435.298 435,298 - 418,400 421,600 435.298 435,298 - 418,400 - 20 185,950 185,930 228,074 - (159.080) (159,080) - - - (159,060) 26,870 185,930 228,074 351,659 351.659 351,659 - 123,585 $ 351,659 192.599 378,529 185,930 351,659 88 CITY OF LA QUINTA Special Revenue Funds Federal Assistance Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Intergovernmental Total revenues Other financing sources (uses): Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources ov.r (under) expenditures and other financing uses Fund balar. (deficit) at beginning- o. year Fund balan: s at end of year Budget Original Final Actual $ 409,000 543,825 335.618 409.000 543,825 335,618 - (166,639) (61,814) (166,639) (61,814) 409,000 377,186 273,804 (273,804) (273,804) (27304) $ 135,196 103,382 - 89 Variance with Prior Final Budget Year Positive (negative) Actual (208,207) 15,830 (208.207) 15,830 104.825 (289,634) 104.825 (289,634) (103.382) (273,804) (103,382) (273,804) CITY OF LA QUINTA Special Revenue Funds Urban Forestry Grant Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Intergovernmental Total revenues Other financing sources (uses): Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Budget Final Budget Original Final Actual Positive (negative) $ 11,000 11,000 9,900 (1,100) 11,000 11,000 9,900 (1,100) - (11,000) (9,900) 1,100 (11,000) (9,900) 1,100 11,000 - $ 11,000 & Prior Year Actual CITY OF LA QUINTA Special Revenue Funds Lighting and Landscape Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Developer fees Investment income Special assessments Total revenues Expenditures: Current: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Fund balances at beginning of year Fund balances at end of year Budget Original Final 781,400 781,400 781,400 781,400 781,400 781,400 781,400 781,400 123,567 123,567 $ 123,567 123,567 01 Variance with Prior Final Budget Year Actual Positive (negative) Actual - - 3,750 - - 1,495 757,619 (23,781) 782,610 757,619 (23,781) 787,855 857,731 857,731 (100,112) 123,567 23,455 (76,331) 778,000 (76,331) 778.000 (100,112) 9,855 113,712 (100,112) 123,567 CITY OF LA QUINTA Special Revenue Funds State Law Enforcement Block Grant Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual Revenues: Intergovernmental $ - 100,192 100,192 - 100,028 Investment income 2,200 2,200 2,086 (114) 5,946 Total revenues 2,200 102,392 102,278 (114) 105,974 Other financing sources (uses): Transfers out - (100,192) (149,271) (49,079) (125,565) Total other financing sources (uses) - (100,192) (149,271) (49,079) (125,565 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 2,200 2,200 (46,993) (49,193) (19,591) Fund balances at beginning of year 54,140 54,140 54,140 - 73,731 Fund balances at end of year $ 56,340 56,340 7,147 (49,193) 54,140 92 CITY OF LA QUINTA Special Revenue Funds Quimby Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Developer fees Investment income Total revenues Other ' -.ancing sources (uses): Tra _ rars out )tal other financing sources (uses) �cess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund i-a lances at beginning of year Fund balances at end of year Variance with Budget Final Budget Original Final Actual Positive (negative) $ - - 126,375 126,375 16,500 16,500 15,699 801 16,500 16,500 142,074 125,574 (96,480 382,806 284,681 98,125 96,480) 382,806) (284,681) 98,125 (79,980) (366,306) (142,607) 505,277 505,277 505,277 $ 425,297 138,971 362,670 93 223,699 223,699 Prior Year Actual 31,282 31,282 100,783 100,783 (69,501) 574,778 505,277 CITY OF LA QUINTA Special Revenue Funds Public Safety Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Investment income Total revenues Other financing sources (uses): Transfers in Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 200 200 422 222 633 200 200 422 222 633 2,000 2,000 2,000 - 2,000 2,000 2,000 2,000 - 2,000 2,200 2,200 2,422 222 2,633 11,543 11,543 11,543 - 8,910 $ 13,743 13,743 13,965 222 11,543 CITY OF LA QUINTA Special Revenue Funds Arts in Public Places Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Developer fees Investment income Total revenues Expenditures: Current: Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year, as restated Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 111,300 111,300 103,102 (8,198) - 21,600 21,600 22,955 1,35 5- 132.900 132,900 126.057 (6,843) - 132.900 272.340 53,363 218,977 - 132.900 272.340 53,363 218.977 - - (139,440) 72,694 212,134 - (50,000) (417,176) (96,465) 320,711 - (50,000) (556,616) (23,771) 704.858 704,858 704,858 $ 654.858 148.242 681.087 95 532,845 - 532,845 - CITY OF LA QUINTA Special Revenue Funds South Coast Air Quality Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Intergovernmental Investment income Total revenues Expenditures: Current: Planning and development Total expenditures Excess (deficiency) of revenues over (under) expenditures Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 21,881 21,881 36,238 14,357 25,944 2,600 2,600 1,972 628) 2,656 24,481 24,481 38,210 13,729 28,600 - - 9,646 (9,646) 10,699 - - 9,646 (9,646 10,699 24,481 24,481 28,564 4,083 17,901 53,810 53,810 53,810 - 35,909 $ 78,291 78,291 82,374 4,083 53,810 CITY OF LA QUINTA Special Revenue Funds LLEBG Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Intergovernmental Investment income Total revenues Other financing sources (uses): Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 28,000 26,704 26,704 - 49,772 300 300 841 541 2,032 28,300 27,004 27,545 541 51,804 - - (1,820) (1,820) (45,400 - - (1,820) (1,820 (45,400 28,300 27,004 25,725 (1,279) 6,404 6,566 6,566 6,566 - 162 $ 34,866 33,570 32,291 (1,279) 6,566 97 CITY OF LA QUINTA Special Revenue Funds CV Violent Crime Task Force Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Investment income Miscellaneous Total revenues Expenditures: Current: Public safety Total expenditures Excess (deficiency) of revenues over (under) expenditures Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ - - 39 39 20,000 20,000 20,039 20,039 1,187 1,187 1,187 1,187) - 18,852 18,852 $ - 18,852 18,852 CITY OF LA QUINTA Special Revenue Funds Low/Moderate Income Housing Project Area No. I Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Taxes Developer fees Investment income Rental income Miscellaneous Total revenues Expenditures: Current: Planning and development Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Sale of capital assets Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Budget Final Budget Original Final Actual Positive (negative) $ 3,591,327 472057626 4,488,487 282,861 - - 48,584 48,584 200,000 50,000 266,302 216,302 341,000 341,000 321,145 (197855) - - 25,418 25.418 4.132,327 4.596,626 5.149,936 553.310 4,640,731 5,345.808 3,729,333 1,616,475 4,640.731 5.345,808 3.729,333 1,616,475 (508,404) (7497182) 1.420,603 2,169,785 150,000 150,000 146,603 (3,397) (1,737,006) (3,951,649) (1,737.006) 2,214,643 (1,587,006) (3,8011.649) (1,590A03) 2.211,246 (2,095,410) (4,550,831) (169,800) 5,707.286 5.707,286 5,707,286 $ 3,61 L876 1.156.455 5.537,486 4,381,031 4.381,031 Prior Year Actual 3,737,113 45,848 96,383 388,121 25,096 4,292,561 3,265.008 3,265,008 1,027,553 406,461 (1,739,031) (1,332,570) (305,017) 6,012,303 5,707,286 99 CITY OF LA QUINTA Special Revenue Funds Low/Moderate Bond - Project Area No. 1 Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Investment income Total revenues Other financing sources (uses): Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ - - 62.674 62,674 268,391 62.674 62,674 268,391 (832,930) (832.930) - (1,177,000) (832,930) (832,930) - (1,177,000) - (832,930) (770,256) 62,674 (908,609) 8327930 832,930 832,930 - 1,741,539 $ 832,930 - 62,674 62.674 832,930 100 CITY OF LA QUINTA Special Revenue Funds Low/Moderate Bond - Project Area No. 2 Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual Revenues: Investment income $ - - 16,964 16,964 74,163 Total revenues - - 16,964 16,964 74,163 Other financing sources (uses): Transfers out - (2,582,881) (223,917) 2,358,964 - Total other financing sources (uses) - (2,582,881) (223,917) 2.358,964 - Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses - (2,582,881) (206,953) 2,375,928 74,163 Fund balances at beginning of year 2,582,881 2,582.881 2_582,881 - 2508,718 Fund balances at end of year $ 2.582.891 - 2.375.928 2.375.928 2.582.881 101 MAJOR AND NON -MAJOR DEBT SERVICE FUNDS Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. The City of La Quinta has the following Debt Service Funds: La Quinta Financing Authority Fund - To account for rental activity for the Civic Center and rental income used to pay the Financing Authority Civic Center debt obligation. Redevelopment Agency, P.A. No. 1 and No. 2 - To account for the accumulation of resources for the payment of debt service for bond principal interest and trustee fees. tot CITY OF LA QUINTA Debt Service Funds Financing Authority Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Investment income Rental income Miscellaneous Total revenues Expenditures: Current: Planning and development Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Fund balances (deficit) at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ - - 455 455 1,514 678,955 678,955 680,244 1,289 678,955 9,175 9,589 9,589 - 27,615 688,130 688,544 690,288 1,744 708,084 9,589 9,589 7,405 2,184 9,133 275,000 275,000 275,000 - 260,000 407,178 407,177 407,177 - 418,955 691,767 691,766 689,582 2,184 688,088 (3,637) (3,222) 706 3,928 19,996 9,909 9,909 9,909 - 10,087 $ 6,272 6,687 10,615 3,928 9,909 104 CITY OF LA QUINTA Debt Service Funds Redevelopment Agency Project Area No. 1 Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: ,Taxes Investment income Total revenues Expenditures: Current: Planning and development Debt service: Principal Interest Payments under pass -through obligations Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances (deficit) at beginning of year Fund balances (deficit) at end of year Budget Original Final Variance with Final Budget Actual Positive (negative) Prior Year $ 14,365,308 16,822,503 17,953,949 1,131,446 14,948,451 - 95,538 344,259 248,721 575,845 14,365,308 16,918,041 18,298,208 1,380,167 15,524,296 249,834 249,834 285,551 (35,717) 237,341 2,170,510 10,638,025 10,126,122 511,903 3,3497544 3,651,948 5,317,965 5,255,819 62,146 4.228,397 8,385,420 8,120.111 8,194.449 (74.338) U31,592 14,457,712 24,325,935 23,861,941 463,994 14.046,874 (92,404) (7,407,894) (5,563,733) 1,737,006 11,109,589 11,090,291 1.844,161 (19,298) 1.477,422 1,739,031 (3,888,672) 1,737,006 11,109,589 11,090,291 (19,298) (2349,641) 1,644,602 3,701,695 5,526,558 1,824,863 (672,219) (541,087) (541,097) (541,087) - 13 1, 132 $ 1,103 515 3,160,608 4,985,471 1,824,863 (541,087) 105 CITY OF LA QUINTA Debt Service Funds Redevelopment Agency Project Area No. 2 Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual Revenues: Taxes $ 5,810,615 7,364,440 8,100,847 736,407 6,070.400 Investment income - - 28,768 28,768 84.159 Total revenues 5,810,615 7,364,440 8,129,615 765,175 6,154.559 Expenditures: Current: Planning and development 94,120 94,120 123,146 (29,026) 98,580 Debt service: Principal 263,723 947,956 947,956 - 155.531 Interest 1,286,179 1,286,179 1,286,179 - 11229,894 Payments under pass -through obligations 5,114,784 5,473,019 5,474,717 (1,698) 4,717.789 Total expenditures 6,758,806 71801,274 7,831,998 (30,724) 6,201.794 Excess (deficiency) of revenues over (under) expenditures (948,191) (436,834) 297,617 734,451 (47.235) Other financing sources (uses): Transfers in 338,442 338,442 338,442 - 338.760 Transfers out - - - - (1,230.180) Total other financing sources (uses) 338,442 338,442 338,442 - (891.420) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (609,749) (98,392) 636,059 734,451 (938,655) Fund balances (deficit) at beginning of year (6,258,943) (6,258,943) (6,258,943) - (5,320,288) Fund balances (deficit) at end of year $ (6,868,692) (6,357,335) (5,622,884) 734,451 (612587943) MAJOR AND NON -MAJOR CAPITAL PROJECTS FUNDS Capital projects funds account for the financial resources to be used for the acquisition, construction or improvements of major capital facilities and infrastructure. The City of La Quinta has the following Capital Projects Funds: Infrastructure Fund - To account for the accumulation of resources provided through developer fees for the acquisition, construction or improvement of the City's infrastructure, prior to adoption of the new Developer Impact Fee Structure on August 16, 1999. This fund accounts for all developer resources received prior to this date, and is budgeted by the Council through adoption of the annual capital improvement program budget. Capital Improvement Fund - To account for the planning, design and construction of various capital projects throughout the City of La Quinta and the Redevelopment Agency. acquisition, construction, or improvement of the City's infrastructure. The Developer Impact Fee was adopted by the City Council on August 16, 1999. Six new funds have been established to account for the specific impact areas of these fees, and are budgeted by the Council through adoption of the annual Capital Improvement Program budget. Assessment District 97-1 La Quinta Norte Construction Fund - To account for the bond proceeds and other funding that will be used for improvements to Assessment District 97-1. Assessment District 2000-1 Phase VI Fund — To account for the bond proceeds and other funding that will be used for improvements to Assessment District 2000-1. Financing Authority Capital Projects Fund - To account for the Public Financing Authority bond proceeds that will be used for specific projects and programs of the City. Redevelopment Agency, Capital Projects Funds Area 1 and 2 - To account for the bond proceeds, interest and other funding that will be used for development, planning, construction and land acquisition. 107 CITY OF LA QUINTA Non -Major Capital Projects Funds Combining Balance Sheet June 30, 2002 Parks & Civic Library Community Infrastructure Transportation Recreation Center Development Center Assets Cash and investments $ 4,009,998 3,396,986 1,408,690 1,619,441 835,579 383,778 Cash with fiscal agent - - _ _ _ _ Accounts receivable - Due from other funds 60,300 Total assets $ 4,070,298 3,396,986 1,408,690 1,619.441 835,579 383,778 Liabilities and Fund Balances Liabilities: Accounts payable $ - - - _ - _ Due to other funds 8,043 - - - _ _ Advances from other funds - - 1,249.728 - _ _ Total liabilities 8,043 - 1.249.728 - _ _ Fund balances: Reserved for: Bond projects - - _ _ _ _ Unreserved: Designated for capital projects 4,062,255 3,396,986 158,962 1,619,441 835,579 383,778 Undesigated - - _ _ - Total fund balances 4,062,255 3,396,986 158,962 1,619,441 835,579 383,778 Total liabilities and fund balances $ 4,070,298 3,396,986 1,408,690 1,619,441 835,579 383,778 108 A.D.97-1 Financing Redevelopment Street Park Fire LQ Norte A.D. 2000-1 Authority Agency Totals Facility Facility Facility Construction Phase VI Projects PA No.2 2002 2001 84,860 22,213 1,847 - 437,700 - 1,750,058 13,951,150 16,481,540 - - - - - 413 968 1,381 756,396 - - - - - - 60,900 60,900 60,900 - - - - - - 117,424 177,724 259,634 84,860 22,213 1,847 - 437,700 413 1,929,350 14,191,155 17.558,470 - - 9,486 9,486 46,821 - - 3,345 737 1,426 13,551 987,263 - - 1,249,728 - - - - - 3,345 737 10,912 1,272,765 1,034,084 - - - - - - 756,396 84,860 22,213 1,847 - 434,355 - 1,918,438 12,918,714 15,767,990 - - - - - (324) - (324) - 84,860 22,213 1,847 - 434,355 (324) 1,918,438 12,918,390 16,524,386 84,860 22,213 1,847 - 437,700 413 1,929,350 14,191,155 17,558,470 109 CITY OF LA QUINTA Non -Major Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 2002 Parks & Civic Library Community Infrastructure Transportation Recreation Center Development Center Revenues: Developer fees $ - 655,885 374,275 549,487 216,972 98,093 Investment income 126.855 115,507 58,436 44,268 23,812 10,238 Total revenues 126,855 771.392 432,711 593,755 240,784 108,331 Expenditures: Current: General government - - - 207,536 - - Planning and development - - - - - - Public works 4,670 - - - Total expenditures 4,670 - - 207,536 - - Excess (deficiency) of revenues over (under) expenditures 122,185 771,392 432,711 386,219 240,784 108,331 Other financing sources (uses): Transfers in - - - - - _ Transfers out (567,740) (893,966) (1,309,728) - (68,106) - Total other financing sources (uses) (567,740) (893,966) (1,309,728) - (68,106) - Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (445,555) (122,574) (877,017) 386,219 172,678 108,331 Fund balances at beginning of year 4,507,810 3,519,560 1,035,979 1.233,222 662,901 275,447 Fund balances (deficit) at end of year $ 4,062,255 3,396,986 158,962 1,619,441 835,579 383,778 110 A.D.97-1 Financing Redevelopment Street Park Fire LQ Norte A.D. 2000-1 Authority Agency Totals Facility Facility Facility Construction Phase VI Projects PA No.2 2002 2001 21,413 5,468 1,843 - - - - 1,923,436 2,266,651 2,256 596 4 451 16,555 12,991 72,621 484.590 964,605 23,669 6,064 1,847 451 16,555 12,991 72,621 2,408,026 3,231,256 - _ _ - - - - 207,536 211,983 _ _ _ 227,401 227,401 322,361 63,580 - - - 68.250 67,919 - 63,580 - - 227,401 503,187 602,263 23,669 6,064 1,847 (63,129) 16,555 12,991 (154,780) 1,904,839 2,628,993 _ _ _ _ - - - - 3,195,756 (539,896) (649,524) (1,481,875) (5,510,835) (5,175,365) (539,896) (649,524) (1,481,875) (5,510,835) (1,979,609) 23,669 6,064 1,847 (63,129) (523,341) (636,533) (1,636,655) (3,605,996) 649,384 61,191 16,149 - 63,129 957,696 636,209 3,555,093 16,524,386 15,875,002 84,860 22,213 1,847 - 434,355 (324) 1,918,438 12,918,390 16,524,386 III CITY OF LA QUINTA Capital Projects Funds Infrastructure Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Investment income Total revenues Expenditures: Current: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 11,000 11,000 126.855 115.855 210,806 11,000 11,000 126,855 115,855 210,806 - 4,670 4,670 - 42,030 - 4,670 4,670 - 42,030 11,000 6,330 122,185 115,855 168,776 (1,495,518) (2,995,465) (567,740) 2,427,725 (2,253,879) (1,495,518) (2,995,465) (567,740) 2,427,725 (2,253,879) (1,484,518) (2,989,135) (445,555) 2,543,580 (2,085,103) 4,507,810 4,507,810 4,507,810 - 6,592,913 $ 3,023,292 1,518,675 41062,255 2,543,580, 4,507,810 112 CITY OF LA QUINTA Capital Projects Funds Capital Improvement Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Developer fees Intergovernmental Total revenues Expenditures: Capital projects Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ - 182,143 97,150 (84,993) 276,149 15,835,214 28,0341123 4.782293 (23,251.830) 6,414,543 15,835.214 28216266 4,879A43 (23.336,823) 6,690.692 18,649,657 101,124,343 57,342,978 43,781,365 14388,395 104,409 104,409 104,409 - 745,345 67,841 67,841 67,841 - 65,683 18.821,907 101,296,593 57,515.228 43.7812365 15,199,423 (2,986,693) (73 080.327) (52,635,785) 20.444,542 (8,508,731) 2,986,693 73,080,327 52.635.785 (20,444,542) 2,986,693 73,080,327 52.635.785 (20,444,542) 113 8,508,731 8,508,731 CITY OF LA QUINTA Capital Projects Funds Transportation Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Revenues: Developer fees Investment income Total revenues Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Year ended June 30, 2002 Variance �xlth Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 284,000 284,000 655,885 371,885 823.412 23,100 23,100 115,507 92,407 184.044 307,100 307.100 771,392 464,292 1,007,456 (1,524,600) (3,035,989 (893,966) 2,142,023 080 1,88 ,903 180,903) (1,524,600) (3,035,989) (893,966) (1,217,500) (2,728,889) (122,574) 3,519,560 3,519,560 3,519,560 $ 2,3_ 02=060 790,671 3,396,986, 114 2,142,023 1,710,177 2,606,315 2,6067315 2,717,633 801,927 3,519,560 CITY OF LA QUINTA Capital Projects Funds Parks and Recreation Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual Revenues Developer fees $ 201,000 201,000 374,275 173,275 Investment income 20,500 20,500 58,436 37,936 Total revenues 221,500 221,500 432,711 211,211 Other financing sources (uses): Transfers out (40,000) (4,508,263) (1,309,728) 3,198,535 Total other financing sources (uses) (40,000) (4,508,263) 1,309,728) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 181,500 (4,286,763) (877,017) Fund balances at beginning of year 1,035,979 1,035,979 1,035,979 Fund balances at end of year $ 1,217,479 (3,250,784 158,962 115 3,198,535 3,409,746 413,975 464,561 464,561 3,409,746 1,035,979 CITY OF LA QUINTA Capital Projects Funds Civic Center Fund Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Year ended June 30, 2002 Revenues: Developer fees Investment income Total revenues Expenditures: Current: General government Total expenditures Excess (deficiency) of revenues over (under) expenditures Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 284,500 284,500 549,487 38,600 38,600 44,268 323,100 323,100 593,755 204,660 204,660 207,536 204,660 204,660 207,536 118,440 118,440 386,219 1,233,222 1,233,222 1,233,222 $ 1,351,662 1,351,662 1,619,441 116 264,987 5,668 270,655 (2,876) 2,876) 267,779 267,779 637,564 61,369 698,933 211,983 211,983 486,950 746,272 1,233,222 CITY OF LA QUINTA Capital Projects Funds Library Development Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual Revenues: Developer fees $ 150,000 150,000 216,972 66,972 242,803 Investment income 17,900 17,900 23,812 5,912 86,245 Total revenues 167,900 167,900 240.784 72,884 329,048 Other financing sources (uses): Transfers out - (623,324) (68.106) 555,218 (1,676) Total other financing sources (uses) - (623,324) (68,106) 555,218 (1,676) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 167,900 (455,424) 172,678 628,102 327.372 Fund balances at beginning of year 662.901 662,901 662.901 - 335,529 Fund balances at end of year $ 830,801 207,477 835.579 628.102 662.901 117 CITY OF LA QUINTA Capital Projects Funds Community Center Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Developer fees Investment income Total revenues Budget Original Final Variance with Final Budget Actual Positive (negative) $ 53,500 53,500 98,093 5,100 5,100 10,238 58,600 58,600 108,331 Fund balances at beginning of year 275,447 275,447 275,447 Fund balances at end of year $ 334,047 334,047 383,778 118 44,593 5,138 49,731 Prior Year Actual 110,033 13,457 123,490 151,957 49,731 275,447 CITY OF LA QUINTA Capital Projects Funds Street Facility Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Developer fees Investment income Total revenues Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 9,500 9,500 21,413 1,000 1,000 2,256 10,500 10,500 23,669 Fund balances at beginning of year 61,191 61,191 61,191 Fund balances at end of year $ 71,691 71,691 84,860 119 11,913 27,696 1 nc4 11 0ii 13,169 30,529 30,662 13,169 61,191 CITY OF LA QUINTA Capital Projects Funds Park Facility Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Developer fees Investment income Total revenues Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 3,000 3,000 5,468 200 200 596 3,200 3,200 6,064 Fund balances at beginning of year 16,149 16,149 16,149 Fund balances at end of year $ 19,349 19,349 22,213 120 2,468 6,168 396 793 2,864 6,961 9,188 2,864 16,149 CITY OF LA QUINTA Capital Projects Funds Fire Facility Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual Revenues: Developer fees $ - - 1,843 1,843 - Investment income - - 4 4 - Total revenues - - 1,847 1,847 Fund balances at beginning of year - - - - - Fund balances at end of year $ - - 1,847 1,847. - 121 CITY OF LA QUINTA Capital Projects Funds A.D. 97-1 LQ Norte Construction Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Investment income Total revenues Expenditures: Current: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ - - 451 451 63,580 63,580 - - (63,129) 63,129 63,129 63,129 $ 63,129 63,129 - 122 451 3,475 451 3,475 63,580) (63,580) (63,129) 63,129) 3,475 59,654 63,129 CITY OF LA QUINTA Capital Projects Funds A.D. 2000-1 Phase VI Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Investment income Total revenues Expenditures: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ - - 16,555 16,555 135,651 16.555 16.555 135.651 - - - 25,889 - - 25.889 16,555 16,555 109,762 - - 74.496 (682.553) (539.896) 142.657 (1,5807002) (682,553) (539,896) 142.657 (1,505,506) - (682,553) (523,341) 159,212 (1,395,744) 957.696 957,696 957,696 - 27353,440 $ 957,696 275.143 434.355 159.212 957.696 123 CITY OF LA QUINTA Capital Projects Funds Financing Authority Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Investment income Total revenues Other financing sources (uses): Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances (deficit) at end of year Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ - - 12,991 12,991 517,732) 649,524) 517,732 649,524 - (517,732) (636,533) 636,209 636,209 636,209 $ 636,209 118,477 324 124 12,991 48,514 12,991 48,514 131,792) - 131,792) - (118,801) 118,801 48,514 587,695 636,209 CITY OF LA QUINTA Capital Projects Funds Redevelopment Agency Project Area No. I Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Revenues: Investment income Total revenues Expenditures: Current: Planning and development Total expenditures Excess (deficiency) of revenues over (under) expenditures Variance with Prior Budget Final Budget Year Original Final Actual Positive (negative) Actual $ 125,000 125.000 728.658 603.658 67.250 125,000 125.000 728,658 603.658 67,250 1.571.614 5.253.973 4.,901,601 352.372 830.458 1.571.614 5.253,973 4.901.601 352.372 830.458 (1.446.614) (5,128,973) (4,172,943) 956.030 (763.208) Other financing sources (uses): Proceeds of tax allocation bonds - 88,000,000 88,000,000 - - Transfers in - - - - 3 888,672 Transfers out (I,044,113) (58,611,734) (54,289.302) 4.322.432 (2,788,179) Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year (1.044,113) 29,388,266 33.7101698 4.322.432 1,100.493 (2,490,727) 24,259,293 29,537,755 8,3047557 8,304,557 8,304,557 $ 5,813,830 32,563,850 37,842,312 125 5,278.462 5.278.462 337,285 7,967,272 8,304,557 CITY OF LA QUINTA Capital Projects Funds Redevelopment Agency Project Area No. 2 Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2002 Variance with Prior Budget Final Budget year Original Final Actual Positive (negative) Actual Revenues: Developer fees $ - - - 5,000 Investment income 20,000 20,000 72,621 52,621 166,832 Total revenues 20,000 20,000 72,621 52,621 171,832 Expenditures: Current: Planning and development 244,206 289,278 227,401 61,877 322,361 Total expenditures 244,206 289,278 227,401 61,877 322,361 Excess (deficiency) of revenues over (under) expenditures (224,206) 269,278 154,780 114,498 150,529) Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year - 1,230,180 1,353,442 1,481,875) 128,433 1,158,905) 1,353,442 1,481,875) 128,433 71,275 (224,206) (1,622,720) (1,636,655) (13,935) (79,254) 3,555,093 3,555,093 3,555,093 - 3,634,347 $ 3,330,887 1,932,373 1,918,438 13,935) 3,5_5,093 126 INTERNAL SERVICE FUNDS Internal service funds are used to account for activities involved in rendering services to departments within the City. Costs of materials and services used are accumulated in this fund and charged to the user departments as such goods are delivered or services rendered. The City of La Quinta has the following Internal Service Funds: Equipment Replacement Fund — used to account for the ultimate replacement of City owned and operated vehicles and equipment. Information Technology Fund — used to account for the purchase and replacement of information systems. 127 CITY OF LA QUINTA Internal Service Funds Combining Statement of Net Assets June 30, 2002 Equipment Information Totals Replacement Technology 2002 2001 Assets Current assets: Cash and investments $ 2,306,271 700,426 3,006,697 2,125,576 Capital assets, net 679,303 339,181 1,018,484 711,534 Total assets 2,985,574 1,039,607 4,025,181 21837,110 Liabilities Current liabilities: Accounts payable 25,721 14,847 40,568 4,643 Net Assets Invested in capital assets, 679,303 339,181 1,018,484 711,534 net of related debt Unrestricted 2,280,550 685,579 2,966,129 2,120,933 Total net assets $ 2,959,853 1,024,760 3,984,613 2,832,467 128 CITY OF LA QUINTA Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Net Assets Year ended June 30, 2002 Equipment Information Totals Replacement Technology 2002 2001 Operating revenues: Charges for services $ 304,982 - 304,982 364,748 Miscellaneous - - - 10.000 Total operating revenues 304.982 - 304.982 374.748 Operating expenses: Fuel and oil 30,282 - 30,282 34,057 Maintenance and parts 118,919 293 119,212 1047237 Contract services - 189,567 189.567 - Soffivare and supplies - 3.9,060 39,060 - Depreciation 136,739 117,084 253,823 106,760 Other operating expenses 7,809 788 8,597 295 Total operating expenses 293,749 346,792 640.541 245.349 Operating income (loss) 11,233 (346.792) (335,559) 129,399 Non -operating revenues (expenses): Investment income 73.311 24,275 97.586 119A27 Total non -operating revenues (expenses) 73311 24,275 97.586 1197427 Income (loss) before transfers and capital contributions 84,544 (322,517) (237,973) 248,826 Transfer in - 1,000,000 1,000,000 - Capital contributions 42.842 65.653 108.495 22.882 Changes in net assets 127,386 743,136 870,522 271,708 Net assets at beginning of year, as restated 2,832,467 281,624 3,114,091 2,560,759 Net assets at end of year $ 2,959,853 1,024,760 3.984,613 2,832.467 129 CITY OF LA QUINTA Internal Service Funds Combining Statement of Cash Flows Year ended June 30, 2002 Cash flows from operating activities: Cash received from other customers Cash payments to suppliers for goods and services Net cash provided by (used for) operating activities Cash flows from non -capital financing activities: Transfer from other funds Net cash provided by (used for) non -capital financing activities Cash flows from capital and related activities: Purchase of fixed assets Net cash provided by (used for) capital and related activities Cash flows from investing activities: Interest received on investments Net cash provided by (used for) investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation Adjustments: Decrease (increase) in accounts payable Net cash provided by (used for) operating activities Noncash capital, financing and investing activities: Fixed assets contributed by other funds 130 Equipment Information Replacement Technology Totals 2002 2001 $ 304,982 - 304,982 374,748 (135,932) (211,321) (347,253) (1397288) 169,050 (211,321) (42,271) 235.460 1,000,000 1.000,000 - 1,000,000 1,000,000 - (61,666) (112,528) (174,194) (84.760) (61,666) (112,528) (174,194) (84,760) 73,311 24,275 97,586 119.427 73,311 24,275 97,586 119,427 180,695 700,426 881,121 270,127 2,125,576 - 2,125,576 1,855,449 $ 2,306,271 700,426 3,006,697 2,125,576 $ 11,233 (346,792) (335,559) 129,399 136,739 117,084 253,923 106,760 21,078 18,387 39,465 (699) $ 169,050 (211,321) (42,271) 235,460 $ 42,842 65,653 108,495 22,882 AGENCY FUNDS Agency funds are used to account for assets held by the City as an agent for an individual, private organizations and other governmental units. The agency funds and their purposes are as follows: The City of La Quinta has the following agency funds: Assessment District No. 88-1, 89-2, 90-1, 91-1, 92-1, 97-1, 2000-1 - To account for assessments paid to the City for debt service payments on bond issues used to finance sewer improvements. 131 CITY OF LA QUINTA Agency Funds Combining Balance Sheet June 30, 2002 Assessment Assessment Assessment Assessment District District District District No.88-1 No.89-2 No.90-1 No. 91-1 Assets Cash and investments $ 169,330 238,571 241,997 421,726 Total assets $ 169,330 238,571 241,997 421,726 Liabilities Due to bondholders $ 169,330 238,571 241,997 421,726 Total liabilities $ 169,330 238,571 241,997 421,726 132 Assessment District No. 92-1 Assessment District r , 344,296 182,474 344,296 182,474 Assessment District No. 2000-1 Totals 2002 2001 396,368 1,994,762 2,114,651 396,368 1,994,762 2,114,651 344,296 182,474 396,368 1,994,762 2,114,651 344,296 182,474 396,368 1,994,762 2,114,651 133 CITY OF LA QUINTA Agency Funds Combining Statement of Changes in Assets and Liabilities Year ended June 30, 2002 Balance at June 30, 2001 Additions ASSESSMENT DISTRICT NO 88-1 Assets Cash and investments $ 202,741 89,885 Liabilities Due to bondholders $ 202,741 180,501 ASSESSMENT DISTRICT NO 89-2 Assets Cash and investments $ 250,979 142,821 Liabilities Due to bondholders $ 250,979 174,935 ASSESSMENT DISTRICT NO 90-1 Assets Cash and investments $ 243,696 147,979 Liabilities Due to bondholders $ 243,696 177,253 ASSESSMENT DISTRICT NO 91-1 Assets Cash and investments $ 503,421 277,442 Liabilities Due to bondholders $ 503,421 333,385 134 Deletions (123,296) Balance at June 30, 2002 169,330 213,912) 169,330 155,229) 238,571 (187,343) 238,571 (149,678) 241,997 178,952 241,997 359,137 421,726 (415,080) 421,726 (Continued) CITY OF LA QUINTA Agency Funds Combining Statement of Changes in Assets and Liabilities (Continued) Balance at June 30, 2001 Additions Deletions ASSESSMENT DISTRICT NO. 92-1 Assets Cash and investments $ 390,903 Liabilities Due to bondholders $ 390,903 ASSESSMENT DISTRICT NO. 97-1 Assets Cash and investments $ 123,072 Liabilities Due to bondholders $ 123,072 ASSESSMENT DISTRICT NO. 2000-1 Assets Cash and investments $ 399,839 Liabilities Due to bondholders $ 399,839 TOTALS -ALL AGENCY FUNDS Assets Cash and investments $ 2,114,651 Total assets $ 2,114,651 Liabilities Due to bondholders Total liabilities 209,042 245,290 (2) (291,897) 129,614 (70,212) 143,810 (84,408) Balance at June 30, 2002 344,296 344,296 182,474 182,474 245,942 (249,413 396,368 268,063 1,242,725 1,242,725 $ 2,114,651 1,523,237 $ 2,114,651 1,523,237 135 (271,534 (1,362,614) (1,362,614) 1,643,126) (1,643,126) 396,368 1,994,762 1,994,762 1,994,762 1,994,762 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 137 CITY OF LA QUINTA Capital Assets Used in the Operation of Governmental Funds by Source June 30, 2002 Governmental funds capital assets: Land $ 56,467,549 Buildings and improvements 14,974,990 Equipment and furniture 1,046 049 Vehicles 161,052 Infrastructure 312,219,798 Construction in progress 29,880,113 Total governmental funds capital assets $414,749,551 Investment in general fixed assets by source: Capital projects funds $357,156,449 Redevelopment agency 57,593,102 Total government funds capital assets $414,749,551 This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service fund are excluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental activities in the statement of net assets. 138 CITY OF LA QUINTA Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity June 30, 2002 Buildings and Equipment Construction Function and Activity Land Improvements and Furniture Vehicles Infrastructure in Progress Totals General government Le_islative $ - - 5,146 - - - 5,146 Cin manager 6,951,091 121,868 132,662 - - - 7,205,621 Economic development - - 10,208 - - - 10,208 Personnel - 25,304 4,036 - - - 29,340 Finance - - 5,976 - - - 5,976 Central services - - - - 45,877 145,411 - - - - - - 45,877 145,411 Cin clerk Total general government 6,951,091 147,172 349,316 - - - 7,447,579 Public safety Police - - 142,571 - - - 142,571 Building and safety administration - - 52,670 - - - 52,670 Code compliance - - 4,104 - - - 4,104 Animal control - - 2,546 - - - 2,546 Building - - 1,250 - - - 1,250 Emergency services - 1,792 61,788 - - - 63,580 Fire 101,392 - - 161,052 - 71,862 334,306 Civic center building operations - 9,753,660 93,380 - - 69,782 9,916,822 Total public safety 101,392 9,755,452 358,309 161,052 - 141,644 10,517,849 Community services Community services administration - 2,024,311 25,064 - 1,018,163 75,065 3,142,603 Park and recreation programs - 1,990,243 8,345 - - - - 1,998,588 2,591 Senior center - - 2,591 - - Total community services - 4,014,554 36,000 - 1,018,163 75,065 5,143,782 Community development Community development administration Redevelop, .ent agency 49,415,066 840,000 47,625 - - - - - 7,338,036 47,625 57,593,102 Total ci mmunity development 49,415,066 840,000 47,625 - - 7,338,036 57,640,727 Public work; Public works administration - 4,000 12,728 - - - 16,728 Development and traffic - - 19,289 - 301,421,589 19,240,492 320,681,370 Street ma,,itenance and operations - 12,742 80,151 - 7,752,011 1,352 7,846,256 Lighting landscape maintenance and operations - 201,070 141,029 - 2,028,035 3,083,524 5,453,658 Capital projects - - 1,602 - - - 1,602 Total public works - 217,812 254,799 - 311,201,635 22,325,368 333,999,614 Total eo _ ,rnmental funds capial a=,ets $56,467,549 14,974,990 1,046,049 161,052 312,219,798 29,880,113 414,749,551 Thi: schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service fund are excluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental activities in the statement of net assets. 139 CITY OF LA QUINTA Capital Assets Used in the Operation of Governmental Funds Schedule of Changes by Function and Activity Year ended June 30, 2002 General government Legislative City manager Economic development Personnel Finance Central services City clerk Total general government Public safety Police Building and safety administration Code compliance Animal control Building Emergency services Fire Civic center building operations Total public safety Community services Community services administration Park and recreation programs Senior center Total community services Community development Community development administration Redevelopment agency Total community development Public works Governmental Governmental Funds Capital Funds Capital Assets Assets July 1. 2001 Additions Deletions June 30. 2002 8,573 - (3,427) 5,146 7,229,485 - (23,864) 7,205,621 13,551 - (3,343) 10,208 29,340 - - 29,340 91,340 - (85,364) 5,976 197,311 42,843 (194,277) 45,877 204,454 5,082 (64,125) 145,411 7,774,054 47,925 (374,400) 7,447,579 33,790 108,781 - 142,571 75,503 - (22,833) 52,670 20,172 - (16,068) 4,104 2,546 - - 2,546 12,110 - (10,860) 1,250 55,506 14,772 (6,698) 63,580 161,052 173,254 - 334,306 9,828,050 103,135 (14,363) 9,916,822 10,18&729 399.942 (70,822) 10,517,849 3,139,104 24,387 (20,888) 3,142,603 1,987,376 23,730 (12,518) 1,998,588 997 1,594 - 2,591 5.127,477 49,711 (33,406) 5,143,782 107,206 3,717 (63,298) 47,625 13,990,038 43,779,064 (176,000) 57,593,102 14,097,244 43,782,781 (239,298) 57,640,727 Public works administration 74,514 - (57,786) 16,728 Development and traffic 311,670,799 9,132,789 (122,218) 320,681,370 Street maintenance and operations 7,722,904 291,621 (168,269) 7,846,256 Lighting landscape maintenance and operation Capital 3,165,912 5,930 2,288,789 1,043 5,453,658 projects - (4,328) 1.602 Total public works 322,640,059 11,713,199 (353.644) 333,999,614 Total governmental funds capital assets 359,827,563 55,993,558 (1,071,570) 414,749,551 This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service fund are excluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental activities in the statement of net assets. 140 STATISTICAL SECTION 141 TABLE 1 CITY OF LA QUINTA General Fund Expenditures by Function Last Ten Fiscal Years Fiscal Year Ending General Public Public Community Planning & Capital June 30 Government Safety Works Service Development Projects Total 1992 1,921,155 2,155,813 618,612 157,897 904,171 11,813 5,769,461 1993 1,807,205 2,393,202 600,253 146,686 884,537 - 5,831,883 1994 2,359,673 2,786,575 673,144 119,265 511,416 - 6,450,073 1995 1,565,265 3,143,697 576,304 199,115 538,610 282,113 6,305,104 1996 1,793,301 3,227,438 813,352 413,142 453,656 201,475 6,902,364 1997 2,376,935 3,442,056 889,694 469,110 455,563 170,000 7,803,358 1998 2,229,389 4,099,523 1,159,372 494,402 345,054 - 8,327,740 1999 2,473,241 4,468,294 1,546,650 732,741 626,074 - 9,847,000 2000 2,814,604 4,992,811 1,704,996 768,528 748,949 - 11,029,888 2001 3,063,640 5,636,154 1,417,529 817,460 733,579 - 11,668,362 2002 2,960,339 7,609,121 1,536,033 1,014,474 726,589 - 13,846,556 Source: City of La Quinta Audited Financial Statements 142 TABLE 2 CITY OF LA QUINTA General Fund Revenue by Source Last Ten Fiscal Years Fiscal Year Licenses Charges Litigation Ending and Inter- for Settlement June 30 Taxes Permits Governmental Services Proceeds Interest Miscellaneous Total 1992 3,135,044 576,293 930,503 488,015 (1) 261,380 120,867 5,512,101 1993 3,581,830 622,107 1,157,587 384,000 (1) 238,321 219,641 6,203,485 1994 4,212,604 777,241 1,600,032 469,695 (1) 585,264 1,042,872 8,687,707 1995 4,946,304 902,914 747,784 551,727 477,872 718,310 137,028 8,481,939 1996 5,393,456 998,030 815,980 610,873 12,386 905,420 230,705 8,966,850 1997 5,942,698 793,689 1,072,803 976,897 40,593 941,327 22,712 9,790,719 1998 6,764,355 1,144,562 1,110,553 1,228,269 281,382 1,164,145 114,969 11,808,235 1999 8,101,191 1,951,981 1,466,788 1,965,219 740,985 1,569,796 74,529 15,870,489 2000 8,888,825 2,493,360 2,388,749 1,922,097 - 1,868,073 106,371 17,667,475 2001 10,331,970 2,057,423 2,164,891 1,998,589 - 2,513,789 43,547 19,110,209 2002 10,443,436 1,857,691 3,683,490 1,757,744 - 2,030,346 529,190 20,301,897 (1) 1995 was the first year Litigation Settlement Proceeds was identified as a revenue source Source: City of La Quints Audited Financial Statements 143 TABLE 3 CITY OF LA QUINTA Property Tax Levies and Collections Last Ten Fiscal Years Percent of Fiscal Year Total Current Percent Delinquent Total Ending Tax Tax of Levy Tax Collections June 30 Le vv Collection Collected Collections to Tax Levy 1992 282,201 260,365 92.3% 25,703 101.4% 1993 282,630 244,731 86.6% 14,824 91.8% 1994 288,407 275,752 95.6% 900 95.9% 1995 549,273 487,043 88.7% 786 88.8% 1996 670,398 643,309 96.0% 2,312 96.3% 1997 824,073 760,350 92.3% - 92.3% 1998 886,175 980,838 110.7% - 110.7% 1999 991,001 1,148,040 115.8% - 115.8% 2000 1,001,074 1,005,983 100.5% - 100.5% 2001 $1,071,723 $1,091,128 101.8% - 101.8% 2002 $1,218,823 $1,409,828 115.7% - 115.7% Note: 1. Proposition 13 limits cities to levying a tax rate for bonded indebtedness only after 1978. 2. Levies and collections are for General Fund only excluding supplemental property taxes. Source: City of La Quinta and County of Riverside 144 TABLE 4 CITY OF LA QUINTA Schedule of Net Taxable Value Last Ten Fiscal Years Assessed Less Less Net Fiscal Year Ending Secured Unsecured Property Property Homeowner's Taxable June 30 Propegy Pro e Value Exemptions Exemptions Value 1992 1,594,767,374 6,396,816 1,601,164,190 3,605,829 (1) 1,597,558,361 1993 1,773,323,102 6,943,559 1,780,266,661 3,814,434 (1) 1,776,452,227 1994 1,872,768,156 8,119,527 1,880,887,683 3,946,378 18,901,202 1,858,040,103 1995 1,927,834,908 22,822,285 1,950,657,193 4,357,954 20,518,400 1,925,780,839 1996 2,043,276,054 23,801,872 2,067,077,926 6,936,774 22,399,068 2,037,742,084 1997 2,164,204,951 22,511,720 2,186,716,671 6,919,376 22,407,418 2,157,389,877 1998 2,305,593,987 18,844,880 2,324,438,867 9,676,787 24,877,018 2,289,885,062 1999 2,674,887,437 18,756,736 2,693,644,173 10,998,340 27,581,722 2,655,064,111 2000 2,665,520,656 18,712,736 2,684,233,392 11,655,584 28,259,200 2,644,318,608 2001 3,162,945,116 30,599,753 3,193,544,869 19,757,668 30,391,400 3,143,395,801 2002 3,789,678,041 32,607,713 3,822,285,754 20,732,503 33,993,800 3,767,559,451 (1) Homeowner's exemption not available Source: County of Riverside 145 TABLE 5 CITY OF LA QUINTA Property Tax Rates - Direct and Overlapping Governments Last Five Fiscal Years (per $100 of Assessed Value) 2001/02 2000/01 1999/00 1998/99 1997/98 General 1.00000 1.00000 1.00000 1.00000 1.00000 County of Riverside 0.00985 - - - - Riverside County Office of Education 0.00985 - - - - Desert Sands Unified 0.35177 0.09750 0.09750 0.09750 0.09750 Coachella Valley Unified School District 0.05022 - - - - Coachella Valley Water District 0.56885 0.02080 0.02080 0.02080 0.02080 Total Tax Rate 1.99054 1.11830 1.11830 1.11830 1.11830 Source: County of Riverside 146 TABLE 6 CITY OF LA QUINTA Special Assessment Billings and Collections Last Ten Fiscal Years Year Special Special Ratio of Ended Assessment Assessment Collections June 30 Billings Collections (1) to Billings 1992 557,574 552,249 99.0% 1993 559,029 548,291 98.0% 1994 766,011 734,560 95.9% 1995 836,502 737,700 88.2% 1996 729,647 699,351 95.9% 1997 791,012 757,256 95.7% 1998 791,012 761,109 96.2% 1999 790,532 770,164 97.4% 2000 833,630 800,825 96.0% 2001 835,577 803,756 96.2% 2002 1,068,994 992,226 92.8% (1) Includes Prepayments and Foreclosures Source: Muni Financial Services l A -7 Note: CITY OF LA QUINTA Schedule of Direct and Overlapping Bonded Debt June 30, 2002 Percent June 30, 2002 Direct and Overlapping Bonded Debt Applicable Bonded Debt Riverside County General Fund Obligations 0.985% $6,315,737 Riverside County Board of Education Certificates of Participation 0.985% 147,377 Desert Sands Unified School District Certificates of Participation 8.340 2,072,151 Desert Sands Unified School District Lease Tax Obligation 8.340 3,350,595 Desert Sands Unified School District Community Facilities No.1 100.000 2,245,000 Coachella Valley County Water District, I.D. #71 Storm Water Unit Certificates of Participation 6.190 759,823 Coachella Valley County Water District, I.D. #55 64.580 6,280,405 Coachella Valley County Water District, I.D. #58 2.821 181,390 Coachella Valley Unified School District 5.022 958,161 City of La Quinta General Fund Obligations (Finance Authority) 100.000 7,475,000 City of La Quinta 1915 Act Bonds 100.000 5,450,000 Total Direct and Overlapping Bonded Debt $35,235,639 Excludes tax and revenue anticipation notes, revenue, mortgage revenue, tax allocation bonds and nonbonded-capital lease obligations. Source: California Municipal Statistics, Inc. TABLE 7 148 CITY OF LA QUINTA Computation of Legal Debt Margin June 30, 2002 Net Assessed Valuation Debt Limit - 15 % of Assessed Valuation Amount of Debt Applicable to Debt Limit Legal Debt Margin $3,767,559,451 565,133,918 -0- $565,133,918 TABLE 8 Notes: Section 43605 of the Government Code of the State of California limits the amount of indebtedness for public improvements to 15% of the assessed valuation of all real and personal property of the City. The City of La Quinta has no general bonded indebtedness. Source: City of La Quinta 149 TABLE 9 CITY OF LA QUINTA Revenue Bond Coverage Local Agency Revenue Bonds (City Hall Project) Last Ten Fiscal Years Fiscal Year Debt Service Requirements Ending Revenue Available June 30 for Debt Service Principal Interest Total Coverage 1992 $ 182,784 - 182,784 182,784 1.00 1993 548,352 - 548,352 548,352 1.00 1994 548,352 - 548,352 548,352 1.00 1995 699,477 155,000 544,477 699,477 1.00 1996 696,402 160,000 536,402 696,402 1.00 1997 607,950 170,000 437,950 607,950 1.00 1998 734,623 285,000 449,623 734,623 1.00 1999 684,573 245,000 439,573 684,573 1.00 2000 679,670 250,000 429,670 679,670 1.00 2001 678,955 260,000 418,955 678,955 1.00 2002 682,178 275,000 407,178 682,178 1.00 Note: Revenue available consists of lease payments made by the City of La Quinta to the La Quinta Financing Authority. Source: City of La Quinta 1nn TABLE 10 CITY OF LA QUINTA Demographic Statistics Last Ten Fiscal Years Total City Fiscal Year Population Riverside Population Ending Square Percent County Percent June 30 Miles (1) Population (2) Change Population (2) Of County 1992 28.0 14,727 12.7% 1,281,000 1.1% 1993 28.2 15,589 5.9% 1,323,500 1.2% 1994 28.2 16,680 7.0% 1,357,400 1.2% 1995 31.2 17,591 5.5% 1,393,500 1.3% 1996 31.2 18,050 2.6% 1,381,879 1.3% 1997 31.2 18,931 4.9% 1,379,956 1.4% 1998 31.2 20,444 8.0% 1,441,237 1.4% 1999 31.2 21,763 6.5% 1,473,307 2.2% 2000 31.2 24,240 10.77% 1,522,900 1.6% 2001 31.2 26,321 8.58% 1,545,387 1.7% 2002 31.8 28,715 9.09% 1,545,387 1.9% Source: (1) City of La Quinta (2) State of California Department of Finance 151 Fiscal Year Ending June 30 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 (1) Source: CITY OF LA QUINTA Property Value and Construction Activity Last Ten Fiscal Years Property Value 1 1,594,767,374 1,773,323,102 1,872,768,156 1,927,834,908 2,043,276,054 2,164,204,951 2,305,593,987 2,674,887,437 2,665,520,656 3,162,945,116 3,789,678,041 Commercial Construction Units Value 12 7,334,871 7 2,441,392 13 6,081,796 4 1,100,119 8 1,018,940 11 1,876,747 14 2,689,642 19 8,894,767 40 13,071,684 39 15,289,134 66 6,739,720 From Schedule of Net Taxable Value City of La Quinta TABLE 11 Residential Construction Units Value 320 35,744,443 324 39,145,539 531 79,318,969 238 29,163,494 336 53,973,239 322 36,971,047 461 70,403,691 770 132,521,054 1,590 292,524,629 1,069 195,774,186 858 171,189,651 152 CITY OF LA QUINTA Principal Taxpayers June 30, 2002 Taxpayer Type of Activity KSL La Quinta Hotel Corp. Hotel KSL PGA West Corporation Residences Sunrise Desert Partners Condominiums KSL Landmark Corporation Vacant Land KSL Land Corporation Residential Land KSL La Quinta Corporation Golf Courses TD Desert Development Residential Land La Quinta Golf Properties, Inc. Golf Course M & H Realty Partnership Shopping Centers Washington Adams Partnership Commercial Source: City of La Quinta TABLE 12 153 TABLE 13 CITY OF LA QUINTA Major Employers June 30, 2002 Employer Employees Activily La Quinta Hotel and Golf Resort 1,500 Resort Hotel PGA West 1,100 Golf Resort Desert Sands Unified School District 550 School District Administration Wal-Mart 250 Retailer The Home Depot 180 Retailer Lowe's Home Improvement 150 Retailer Stater Brothers 126 Groceries Vons 103 Groceries Ralphs 100 Groceries City of La Quinta 76 Municipal Government Source: City of La Quinta 154 TABLE 14 CITY OF LA QUINTA Schedule of Insurance in Force June 30, 2002 Company Name Policy Number Coverage Limits Term Premium Hartford PEBAO7068 Employee Dishonesty, $1,000,000 12/03/01 - 02 $2,500 Forgery, Computer Fraud General Star IAG371825A All Risk Property Insurance 25,139,000 07/01/02 - 03 16,505 Indemnity & Westchester FPL388464 Including Auto Physical Damage Fire (Excluding Quake & Flood) Agricultural Ins. CCP5629789 Earthquake & Flood 4,500,000 02/07/02 - 03 15,780 Company Real & Personal Property Part of $7,500,000 Including Contigent Tax Interruption California Certificate #5 Comprehensive General $0 Deductible Retention 12/03/01 - 02 60,300 Joint Powers Liability $50 Million Insurace Authority California Certificate Joint Powers #5009-056 Insurance Authority Greenwich Ins. Co. AC63329789 Chubb Custom Insurance Source: City of La Quinta Worker's Compensation 5,000,000 Earthquake & Flood 3,000,000 Real & Personal Property Part of $7,500,000 Including Contigent Tax Interruption Special Events $1,000,000 12/03/01 - 02 37,637 02/07/02 - 03 9,970 02/01/02 - 03 N/C 155 TABLE 15 CITY OF LA QUINTA Miscellaneous Statistical Data June 30, 2002 Date of Incorporation ................ ..............May 2, 1982 Type of City ................................ Charter City Form of Government...........................CounciL/ Manager City Employees 76 City Land Area (square miles) .................................... 31.8 Population .................................. 28,715 Number of Parks .................................. 9 Total Acreage.......I.......................... 40 Miles of Streets Miles of Bike Paths Number of Major Intersections ...... Number of Traffic Signals and Safety I Number of Traffic Signs Number of Street Lights Public Schools Private Schools Churches Banks / Savings and Loan .................................. 170.0 .................................. 9.7 ........................ 45 ting....................... 40 .................................. 2,630 .................................. 56 .................................. 4 .................................. 1 Number of Single Family Units - Detached .......................... Number of Single Family Units - Attached .......................... Number of Multiple Family Units ................................ Number of Mobile Homes .................................. Source: City of La Quinta 3 7 12,228 2,360 897 247 ir,r- TABLE 16 CITY OF LA QUINTA General Fund Balance Trends Last Ten Fiscal Years Fiscal Year Ending Reserved Unreserved Totals June 30 Designated Undesignated 1992 6,227,579 76,323 (662,573) 5,641,329 1993 5,372,575 82,056 508,301 5,962,932 1994 4,354,139 3,792,864 -- 8,147,003 1995 6,100,309 4,228,680 -- 10,328,989 1996 6,680,048 5,686,027 -- 12,366,075 1997 8,202,641 5,936,591 -- 14,139,232 1998 8,915,742 8,568,017 -- 17,483,759 1c99 8,879,558 14,439,998 -- 23,319,556 200 10,565,563 18,111,835 -- 28,677,398 2001 11,746,211 23,878,259 -- 35,624,470 2002 15,351,251 25,522,073 -- 40,873,324 Source: City of La Quinta 157 INVESTMENT ADVISORY BOARD Meeting Date: December 11, 2002 TITLE: Month End Cash Report - November 2002 and Other selected Financial Data BACKGROUND: Correspondence & Written Material Item B This cash report is not a complete Treasury Report (exclude petty cash, deferred compensation and fiscal agent balances, but would report in a timely fashion selected cash balances. RECOMMENDATION: Information item only. JohrY M. Falconer, -9�� ince Director r 0 M N r- 0 CO M a)n r c00 1p(D cli C) Cl 000 LO M W 00000� NO O) O 04 00 a0MOM00000N 0O (D (D (O 0 n 00000 0 (D M .r- CC) N M O O N N"t N (n O O O O O M N 10 N .... 00 m N N N a0 0)i 0) CO 0 CO CO 0 N V r F- co (0 O u W E 00 00 M r O N (D i0 N N V f� O (DM > CO OMO (D oc Cf) CO V O p C N N N N N 0 (") r r O O t` ¢ LL 0 N N N N O 0) (D t0 Q N N N M O CO M (M M n Cl) (D CD CO (D _T N CO N CO N CO LO CC} Cfl U Q (0 (D m C? M N 0 N (fl N (D Cl) co N N 0) 0) 0) A O rn O N M p M M [04 'C V O M M Cl) N 0 N" N N 0) (n (n 01 m 00 0 M N M 0 M co N 00 N C r O M p 0 O N (� U m toCDO O W N 0) M M (n L wi (OM 'Co" N (D 6 0 U �! N (0 m N � O U r N M rn N U N N CV O O r (D N Co ,.,, a) 00) U ¢ Cn N 0) O 4) U N U c N N N m n c a a) C m c m m 0 0) m E Eyrn m .D cC] c O o c @@ m 3 �' m m wEa)EE m E o>?= a) Y ad') T� aa'i m am) c a d a w >> ami o a�i m n a omoan oW ¢a ¢ W <00zOu.�¢��¢ 0 U-) O O O N O r CA CO N r o O 0 l0 � _ 0 O c N O r M V cR W o o n p n C04 O CC) O 0 N (D CA u� o CO n (M N O N co N U a d ac) m E C N U > C N a o� d m K E N O a) 0 G c a) o a) CO c L 0- a�7 N O U Cn Ca F a) m w m m� a) 0 3: a) t '— ac) w HF �_ a) o E f6 (4 N L 7 'O C_ a) 'C N ¢ ¢ C N O d > LL w O U CT m co O. H O C O. N N N rn C QI w `O N C N a) Ex E a O N (0 m O C O "0 N N X.0 C � a) Co C C ¢ O O TH N L C X N O U a) E � 2 L a a) E 00 � r m m U CO a) w o m Cc: 0 NC N N 0 U N N,E mL)T(A m w L T c d UO E D cu y aI o.N av E 7 CO C.0 � 7 N w4 C a) a) U U 72 CO m .� > O CU d O C E O O U CO S N m H o m "�" N a a.)L U N O 'C... o a) 'O N Q. C m r ') a) m �6 j 'O (O N N U U X O a) C N Co m ¢ O G 0 C w N T L E N N C O y m'N 00 E- r• —c E O N a) �> c o c no C a) w U '0 O O = aa)) m 0 c U a1 C w C V eCi Q a) L N C LL H w ~ w m t.. _ _ 0 G 2 Local Agency Investment Fund LAIF Performance Report Reporting Date: Effective Date: Quarter Yield: Daily: Year: Life: Quarter Ending 9/30/02 Apportionment Rate: Earnings Ratio: Fair Value Factor: Monthly Average For October Commercia Paper 23.93% 11 /27/02 11 /27/02 2.39% 2.27% 2.53% 211 2.63% .00007199563637577 1.005020041 2.487% Pooled Money Investment Account Portfolio Composition $48.3 Billion 10/31 /02 Loans Corporate 6.02% Treasuries Bonds 1427% ueposits 10.58% CD's/BN's 17.15% ■Treasuries tgages ❑ Mortgages 010/( ❑Agencies ■ CD's/BN's ❑Time Deposits Agencies 13 Bankers Acceptances 23.08% ■Repo ■Commercial Paper Corporate Bonds ❑ Loans ■ Reverses r FRB:Commercial Paper Rates and Outstandings of 3 1 ederal Resenre Release ulommercial Paper 'I ."l- - Release I About Outstandings I I-Iistori_cal discount rates I Historical outstandin s Year end Data as of November 29, 2002 Commercial Paper Rates and Outstandings Derived from data supplied by The Depository Trust Company Trade data insufficient to support calculation of 90-day AA nonfinancial rate. Posted December 2, 2002 Discount rates A2/P2 nonfinancial 1-day 1.35 1.37 1.63 7-day 1.36 1.34 1.46 15-day 1.32 1.31 1.54 30-day 1.20 1.30 1.46 60-day 1.33 E=I 1.87 =90-day =1 ND 1 1 1.98 Yield curve Monev market basis Pagel Percent 2.0 1.8 1.� 1.4 1.2 1.0 0.8 L1.6 0.4 0. 0.0 1 7 15 30 60 90 [may® b3 Maturity Financial --- ftlmfinancial ••••• A2/P2 htip://www.federalreserve.gov/Releases/CP/ 12/2/2002 FRB:Commercial Paper Rates and Outstandings Page 2 of 3 Discount rate spread Thirty -day A2/P2 less AA nonfinancial commercial paper (daily) Basis points t '6,A#t % JI � # 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 01JUL99 01AN00 01JUL00 01JAN01 01JUL01 01JAN02 01JUL02 01uAN03 --- A2/P2 spread. 5—day moving average Discount rate history Thirty -day commercial paper (daily) Percent a 7 3 2 1 01 J U L99 01 JAh100 01 J U L00 01 JAN01 01 JU L01 01 JAN02 01 J U L02 01 AN03 Financial --- Nonfinancial •• A2/P2 Outstandings Weekly (Wednesday), seasonally adjusted Billions of dollars Billions of dollars http://www.federalreserve.gov/Releases/CP/ 12/2/2002 FRB:Commercial Paper Rates and Outstandings Page 3 of 3 1300 1200 1100 1000 900 �— 01JUL99 360 340 320 300 280 260 240 220 200 180 160 140 01 JAN00 01 JUL00 01 AN 01 01 JUL01 01 JAN02 01 JUL02 01 JAN03 — Financial — — — Ncnfinandal The daily commercial paper release will usually be available before 11:00am EST. However, the Federal Reserve makes no guarantee regarding the timing of the daily commercial paper release. When the Federal Reserve is closed on a business day, yields for the previous business day will appear in the historical discount rates table. This policy is subject to change at any time without notice. Commercial_v_a_per outstanding Commercialraper outstanding, -miscellaneous categories Volume Statistics_200203 Release I About Outstandin s I Historical_ discount rates I Historical outstandings I Year-end Horne Statistical releases Accessibility) Contact_Us Last update: December 2, 2002 http://www.federalreserve.gov/Releases/CP/ 12/2/2002 FRB: H.15--Selected Interested Rates, Web -Only Daily Update --November 29, 2002 Page 1 of 3 Federal Reserve Statistical Release -1.15 Selected Interest Rates (Daily) Release Date: November 29, 2002 Weekl} release lease dates and announcements I Historical data I About Daily update Other formats: Screen reader I I SCII "R-P to Conics The weekly release is posted on Monday. Daily updates of the weekly release are posted Tuesday throug H.15 DAILY UPDATE: WEB RELEASE ONLY For immediate release SELECTED INTEREST RATES November 29, 2002 Yields in percent per annum 2002 2002 2002 2002 Nov Nov Nov Nov Instruments 25 26 27 28 Federal funds (effective) 1 2 3 1.32 1.26 1.27 1.27 Commercial paper 3 4 5 6 Nonfinancial 1-month 1.28 1.30 1.31 2-month 1.33 1.30 1.33 3-month 1.34 1.32 1.33 Financial 1-month 1.26 1.27 1.27 2-month 1.31 1.33 1.33 3-month 1.34 1.34 1.33 CDs (secondary market) 3 7 !-month 1.34 1.34 1.34 3-month 1.36 1.36 1.37 6-month 1.40 1.38 1.39 Eurodollar deposits (London) 3 8 1-month 1.31 1.31 1.30 3-month 1.37 1.36 1.36 6-month 1.41 1.40 1.37 Bank prime loan 2 3 9 4.25 4.25 4.25 4.25 Discount window borrowing 2 10 0.75 0.75 0.75 0.75 U.S. government securities Treasury bills (secondary market) 3 4 4-week 1.22 1.25 1.26 3-month 1.22 1.20 1.21 6-month 1.28 1.26 1.28 Treasury constant maturities 11 1-month 1.24 1.27 1.28 3-month 1.24 1.22 1.23 6-month 1.30 1.28 1.30 1-year 1.56 1.51 1.58 2-year 2.09 1.97 2.13 3-year 2.51 2.38 2.58 5-year 3.26 3.14 3.34 7-year 3.85 3.71 3.93 10-year 4.19 4.08 4.26 http://www.federalreserve.gov/Releases/H15/update/ 12/2/2002 FRB: H.15--Selected Interested Rates, Web -Only Daily Update --November 29, 2002 Page 2 of 3 20-year Treasury long-term average (25 years and above) 12 13 Interest rate swaps 14 1-year 2-year 3-year 4-year 5-year 7-year 10-year 30-year Corporate bonds Moody's seasoned Aaa 15 Baa State & local bonds 16 Conventional mortgages 17 See overleaf for footnotes * Markets closed FOOTNOTES 5.13 5.03 5.23 5.17 5.08 5.25 1.72 1.65 1.73 2.43 2.34 2.45 2.98 2.90 3.02 3.37 3.30 3.43 3.69 3.61 3.75 4.18 4.09 4.23 4.64 4.56 4.69 5.43 5.38 5.48 6.37 6.30 7.61 7.53 5.00 1. The daily effective federal funds rate is a weighted average of rates on brokered trades. 2. Weekly figures are averages of 7 calendar days ending on Wednesday of the current week; monthly figures include each calendar day in the month. 3. Annualized using a 360-day year or bank interest. 4. On a discount basis. 5. Interest rates interpolated from data on certain commercial paper trades settled by The Depository Trust Company. The trades represent sales of commercial paper by dealers or direct issuers to investors (that is, the offer side). See Board's Commercial Paper Web pages (http://www.federalreserve.gov/releases/cp) for more information. 6. The 1-, 2-, and 3-month rates are equivalent to the 30-, 60-, and 90-day dates reported on the Board's Commercial Paper Web page. 7. An average of dealer offering rates on nationally traded certificates of deposit. 8. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. 9. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered commercial banks. Prime is one of several base rates used by banks to price short-term business loans. 1.0. Rate for the Federal Reserve Bank of New York. 11. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Treasury. 12. Based on the unweighted average of the bid yields for all Treasury fixed -coupon securities with remaining terms to maturity of 25 years and over. 13. A factor for adjusting the daily long-term average in order to estimate a 30-year rate can be found at http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/l.t 14. International Swaps and Derivatives Association (ISDA) mid -market par swap rates. Rates are for a Fixed Rate Payer in return for receiving three month LIBOR, and are based on rates collected at http://www.federalreserve.gov/Releases/H15/update/ 12/2/2002 FRB: H.15--Selected Interested Rates, Web -Only Daily Update --November 29, 2002 Page 3 of 3 11:00 a.m. by Garban Intercapital plc and published on Reuters Page ISDAFIXI. Source: Reuters Limited. 15. Moody's Aaa rates through December 6, 2001 are averages of Aaa utility and Aaa industrial bond rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds only. 16. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Thursday quotations. 17. Contract interest rates on commitments for fixed-rate first mortgages. Source: FHLMC. DESCRIPTION OF THE TREASURY CONSTANT MATURITY SERIES Yields on Treasury securities at "constant maturity" are interpolated by the U.S. Treasury from the daily yield curve. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. These market yields are calculated from composites of quotations obtained by the Federal Reserve Bank of New York. The constant maturity yield values are read from the yield curve at fixed maturities, currently 1, 3 and 6 months and 1, 2, 3, 5, 7, 10 and 20 years. This method provides a yield for a 10-year maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity. Meek ly releasc dates find announcements I Historical data I About Daily update Other formats: Scrcen reader I ASCII Statistical releases l lome I I.ccniomic research acid data 1uessibiliLv I Contact U_ Last update: November 29, 2002 http://www.federalreserve.gov/Releases/H 15/update/ 12/2/2002 N a) C a7 cc � C d a o ax) L Q N 'a > 0 d N U w G co a C 0) 0 O a c > a D N N d m N N � z C U d a — Q a) N aJ N 00 Le)a0 N Cl)N (D N CDC a (O O O O r M O (D N CD m GO nj O O 00 h t0 Y6 O ~ N 00 N 0)0tor Go )O O IDW � r M T N M n O O p ` � 'ri a j O N N L M 0-'t O N M V) Q � C N (6 2 E N 0 O 0000 00 O U U � Q Q N N 0 O D) O (p N O 00 N O O 00 L O M a0 M 1% 2 N 0 (p n O fcz � 7 tr M w L N U O Q V a7 N n p L,2 N 00 0 T V as O r U O N N M M Cl) U) N of O 00 LO N tco o U') p0 � � N 11Y r N N T O) O a O O D r O O Cl) C a00 7 p CD O In O N CD 00 r O a0 p C W M N coa7 L O L N a7 n. N a) y N a) N N E c v m c C C m m N C allx m X m d Q _ 7 N d O) C ,�, N d a' N NU G a) Li- E N H x > a3 N 0 xnLL O Z K j C a) N C C H 7 � N N N N C C > Y9 U) W _ a) a' O C. C N L% a) L d L a d U O (LO N O N X fa a) a) a) a LU a, C) o� O z Q CL N INVESTMENT ADVISORY BOARD Meeting Date: December 11, 2002 TITLE: Pooled Money Investment Board Report for September 2002 BACKGROUND: Correspondence & Written Material Item C The Pooled Money Investment Board Report for September 2002 is included in the agenda packet. Staff spoke to Ms. Elaine Parks, LAIF Administrator regarding the AB55 Loans and General Fund Loans. She stated that because of the delay in adopting the budget the loan percentage had increased above normal. There is no formal percentage limitation e.g. 20%. The Controller's Office determines which funds are borrowable for any loans, which LAIF is not. The loans when repaid include interest of which LAIF shares in. Attached please find the description of the AB55 and General Fund Loan program from the LAIF answer book. RECOMMENDATION: Receive & File Avxl M W-64-m�, n M. Falconer, AFinance Director NOTES TO MONTHLY SELECTED INVESTMENT DATA Reverse Repurchase - The temporary sale of owned securities, with the simultaneous agreement to repurchase the same securities at a predetermined cost and rate on a specified future date. The Pooled Money Investment Account from time to time enters into Reverse Repurchase Agreements with major pre -approved securities dealers. The intent is to earn incremental interest for pool partici- pants. Because it is viewed as incremental, earnings derived from reverses are never projected or anticipated. All reverses are in compliance with Government Code Sec. 16480.4, and are further discussed in the Treasurer's Statement of Investment. Policies, Goals and Objectives. --a AB 55 Loans - Named for Assembly Bill 55, these loans are made from the Pool to state agencies which have pre -approved authority to issue bonds for specific projects. The AB 55 loan program allows an agency to borrow money for up -front and progress expenses when funding a specific project. Toward the end of the project construction, the already approved bond issue is brought to market, the proceeds of which are used to pay off principal and interest due on the AB 55 loan. This method eliminates the need for an arbitrage tracking system, had the bonds been sold "up front." The maximum term for AB 55 loans is 364 days, with many retired earlier. —=� General Fund Loans - Loans made by the Pool to the General Fund in anticipation of evening out cash flow. The average life of these loans is well below 30 days. Unlike the on -going AB 55 loan program, General Fund loans are much more infrequently requested. Both AB 55 and General Fund Loans have the following characteristics: 1. Amount available for loans is determined by the State Controller and EXCLUDES certain trust monies, such as LAIF balances; 2. LAIF participants do share in the interest income paid to the Pool on each loan balance; 3. The decision to approve these loans rests in the authority of the Pooled Money Investment Board; 4. A predetermined maximum total loan balance is capped as a specific percentage of identified borrowable resources as determined by the State Controller. 5. No surplus monies may be loaned if such a loan would inhibit carrying out the purpose for which the monies were originally designated. 6. Since the granting of these loans is not an investment function, the loans (AB 55,GF)"are not included in records of daily investment activity. 7. Since interest is commingled with other investment revenue, both AB 55 and General Fund loans are included in Selected Data Reports and portfolio accountability. 8. The total monies in AB 55 and General Fund loans are figured into the Portfolio book value when reporting portfolio size and yield. 11 Revised September 30, 1998 Philip Angelides "69k,�-Ij September 2002 STATE OF CALIFORNIA STATE TREASURER'S OFFICE POOLED MONEY INVESTMENT BOARD REPORT SEPTEMBER 2002 TABLE OF CONTENTS SUMMARY................................................................. 01 SELECTED INVESTMENT DATA .................................... 02 PORTFOLIO COMPOSITION ........................................ 03 INVESTMENT TRANSACTIONS ..................................... 04 TIME DEPOSITS........................................................ 14 BANK DEMAND DEPOSITS .......................................... 27 POOLED MONEY INVESTMENT BOARD DESIGNATION... 28 POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENT DATA A COMPARISON OF A SEPTEMBER 2002 WITH SEPTEMBER 2001 (DOLLARS IN THOUSANDS) SEPTEMBER 2002 SEPTEMBER 2001' CHANGE Average Daily Portfolio $ 46,004,008 $ 48,017,074 $ -2,013,066 Accrued Earnings $ 98,474 $ 169,237 -70,763 Effective Yield 2.604 4.288 -1.684 1 Average Life -Month End (In Days) 188 169 +19 1 Total Security Transactions Amount $ 12,967,316 $ 21,343,348 -8,376,032 Number 287 466 -179 Total Time Deposit Transactions Amount $ 1,914,500 $ 1,388,500 +526,000 Number 139 98 +41 Average Workday Investment Activity $ 744,091 $ 1,196,413 -452,322 Prescribed Demand Account Balances For Services $ 694,877 $ 327,851 +367,026 For Uncollected Funds $ 175,429 $ 205,061 -29,632 1 PHILIP ANGELIDES TREASURER STATE OF CALIFORNIA INVESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED) September 30, 2002 DIFFERENCE IN PERCENT OF PERCENT OF PORTFOLIO FROM TYPE OF SECURITY AMOUNT PORTFOLIO PRIOR MONTH Government Bills $ 991,399 2.22 -.12 Bonds 0 0.00 0.00 Notes 5,923,896 13.25 +.29 Strips 0 0.00 0.00 Total Government $ 6,915,295 15.47 +.17 Federal Agency Coupons $ 4,877,776 10.91 +.35 Certificates of Deposit 4,870,056 10.90 +.79 Bank Notes 865,088 1.94 -1.21 Bankers' Acceptances 0 0.00 0.00 Repurchases 0 0.00 0.00 Federal Agency Discount Notes 3,459,672 7.74 -1.96 Time Deposits 5,094,290 11.40 +.48 GNMAs 728 0.00 0.00 Commercial Paper 10,455,514 23.40 +3.03 FHLMC 6,655 0.01 0.00 Corporate Bonds 2,384,630 5.34 -.01 Pooled Loans 3,004,937 6.72 +.75 GF Loans 2,858,500 6.40 -2.39 Reversed Repurchases -105,625 -.23 0 Total (All Types) $ 44,687,516 100.00 . ,.,,ia "�%ea „p.�: .< 'k,caau:,a t �.�r-``'°nia;•it;,r�`€tea 6 eF,,.n l .Ga,i7;o, ! _ , INVESTMENT ACTIVITY SEPTEMBER 2002 AUGUST 2002 NUMBER AMOUNT NUMBER AMOUNT Pooled Money 287 $ 12,967,316 413 $ 18,333,588 Other 19 141,742 41 808,860 Time Deposits 139 1,914,500 157 2,579,695 Totals 445 $ 15,023,558 611 $ 21,722,143 PMIA Monthly Average Effective Yield 2.604 2.594 Year to Date Yield Last Day of Month 2.640 2.654 F Pooled Money Investment Account Portfolio Composition $44.6 Billion Reverses -0.23% Loans Treasuries 13.12% 15.47% Corporate Mortgages Bonds 0.01 % 5.34% 3 9/30/02 8 Treasuries ® Mortgages Agencies 0 CD's/BN's ® Time Deposits ❑ Bankers Acceptances ■ Repo Commercial Paper Corporate Bonds ❑ Loans ❑ Reverses POOLED MONEY INVESTMENT ACCOUNT a/ a/ DATE TYPE DESCRIPTION 09/03/02 REDEMPTIONS AMOUNT EFFECTIVE EARNED YIELD CB W/F 6.500% 09/03/02 6.565 $ 20,000 1016 $ 3,649,922.22 6.567 CB W/F 6.500% 09/03/02 6.487 25,000 1075 4,773,208.34 6.480 BN WORLD 1.750% 09/03/02 1.750 50,000 81 196,875.00 1.774 BN WORLD 1.750% 09/03/02 1.750 50,000 81 196,875.00 1.774 BN WORLD 1.750% 09/03/02 1.750 50,000 81 196,875.00 1.774 BN WORLD 1.750% 09/03/02 1.750 50,000 81 196,875.00 1.774 CP GECC 09/03/02 1.900 35,000 4 7,388.89 1.926 CP GECC 09/03/02 1.900 50,000 4 10,555.56 1.926 CP GECC 09/03/02 1.900 50,000 4 10,555.56 1.926 CP GECC 09/03/02 1.900 50,000 4 10,555.56 1.926 CP GECC 09/03/02 1.900 50,000 4 10,555.56 1.926 CP SALOMON 09/03/02 1.770 35,000 6 10,325.00 1.795 CP AMER EXP 09/03/02 1.770 50,000 6 14,750.00 1.795 CP AMER EXP 09/03/02 1.770 50,000 6 14,750.00 1.795 CP SALOMON 09/03/02 1.770 50,000 6 14,750.00 1.795 CP SALOMON 09/03/02 1.770 50,000 6 14,750.00 1.795 CP GECC 09/03/02 1.730 50,000 26 62,472.22 1.756 CP GECC 09/03/02 1.730 50,000 26 62,472.22 1.756 CP GECC 09/03/02 1.730 50,000 26 62,472.22 1.756 CP GECC 09/03/02 1.730 50,000 26 62,472.22 1.756 CP COUNTRY 09/03/02 1.810 47,500 33 78,810.42 1.838 CP CAMPBELL 09/03/02 1.780 50,000 33 81,583.33 1.807 CP COUNTRY 09/03/02 1.810 50,000 33 82,958.33 1.838 CP AMER EXP 09/03/02 1.740 50,000 36 87,000.00 1.767 CP AMER EXP 09/03/02 1.740 50,000 36 87,000.00 1.767 CP COUNTRY 09/03/02 1.820 50,000 43 108,694.44 1.849 CP GECC 09/03/02 1.750 15,000 47 34,270.83 1.778 CP GECC 09/03/02 1.750 50,000 47 114,236.11 1.778 CP GEN MILLS 09/03/02 2.000 20,000 76 84,444.44 2.036 CP FMCC 09/03/02 2.080 10,000 92 53,155.56 2.120 CP SRAC 09/03/02 2.160 25,000 92 138,000.00 2.202 CP BARCLAYS 09/03/02 1.810 50,000 92 231,277.80 1.843 CP BARCLAYS 09/03/02 1.810 50,000 92 231,277.80 1.843 CP BARCLAYS 09/03/02 1.810 50,000 92 231,277.80 1.843 CP FMCC 09/03/02 2.080 50,000 92 265,777.78 2.120 CP GMAC 09/03/02 2.120 50,000 105 309,166.67 2.162 CP GMAC 09/03/02 2.150 50,000 130 388,194.44 2.196 CP GECC 09/03/02 2.020 50,000 151 423,638.89 2.065 CP GECC 09/03/02 2.020 50,000 151 423,638.89 2.065 CP GECC 09/03/02 2.020 50,000 151 423,638.89 2.065 CP GECC 09/03/02 2.020 50,000 151 423,638.89 2.065 PURCHASES CP CAMPBELL 10/01/02 1.780 25,000 CP KODAK 10/04/02 2.050 25,000 CP DISNEY 10/15/02 1.900 25,000 CP SAFEWAY 11/01/02 1.830 50,000 4 POOLED MONEY INVESTMENT ACCOUNT a/ a/ MATURITYTRAN DATE TYPE DESCRIPTION DATE YIEL[ 09/03/02 PURCHASES (continued) ai PAR DAYS AMOUNT EFFECTIVE LOIJO HELD EARNED YIELD CP WYETH 11 /04/02 1.950 10,000 CP WYETH 11/04/02 1.950 50,000 CP FMCC 12/02/02 2.060 25,000 CP SRAC 12/02/02 2.070 25,000 CP FMCC 12/02/02 2.060 50,000 CP GMAC 12/02/02 2.060 50,000 CP GMAC 12/02/02 2.060 50,000 CP GMAC 12/02/02 2.060 50,000 CP GMAC 12/02/02 2.060 50,000 MTN B/A 7.625% 04/15/05 3.200 14,913 09/04/02 NO SALES PURCHASES CP AMER EXP 10/15/02 1.740 25,000 CP ASCC 10/15/02 1.770 25,000 CP AMER EXP 10/15/02 1.740 50,000 CP AMER EXP 10/15/02 1.740 50,000 CP GECC 11/01/02 1.750 50,000 CP GECC 11/01/02 1.750 50,000 CP GECC 11/01/02 1.750 50,000 CP GECC 11/01/02 1.750 50,000 CP W/F 11/27/02 1.720 50,000 CP W/F 11/27/02 1.720 50,000 09/05/02 NO SALES NO PURCHASES 09/06/02 REDEMPTIONS CP SRAC 09/06/02 1.900 50,000 7 18,472.22 1.927 NO PURCHASES 09/09/02 REDEMPTIONS CP W/F 09/09/02 1.750 50,000 12 29,166.67 1.775 CP W/F 09/09/02 1.750 50,000 12 29,166.67 1.775 NO PURCHASES 09/10/02 REDEMPTIONS CP GMAC 09/10/02 2.000 50,000 27 75,000.00 2.030 CP SALOMON 09/10/02 1.700 50,000 33 77,916.67 1.726 CP SALOMON 09/10/02 1.700 50,000 33 77,916.67 1.726 5 POOLED MONEY INVESTMENT ACCOUNT 0-/ a/ al MATURITYTRANS PAR DAYS AMOUNT EFFECTIVE DATE TYPE DESCRIPTION DATE YIELD 000 HELD EARNED' YIELD 09/10/02 REDEMPTIONS (continued) CP WYETH 09/10/02 1.870 50,000 34 88,305.55 1.899 CP WYETH 09/10/02 1.890 50,000 39 102,375.00 1.920 CP MORG STAN 09/10/02 1.760 50,000 40 97,777.77 1.787 CP MORG STAN 09/10/02 1.760 50,000 40 97,777.77 1.787 CP GEN MILLS 09/10/02 2.050 20,000 111 126,416.67 2.091 MTN FMCC 6.550% 09/10/02 3.749 17,630 209 386,317.37 3.767 MTN FMCC 6.550% 09/10/02 3.501 13,290 230 299,043.46 3.504 MTN FMCC 6.550% 09/10/02 4.854 20,507 474 1,309,353.80 4.815 MTN FMCC 6.550% 09/10/02 5.950 10,000 593 988,774.48 6.030 PURCHASES MTN GECC 6.800% 11/01/05 3.171 10,000 09/11/02 NO SALES NO PURCHASES 09/12/02 NO SALES NO PURCHASES 09/13/02 SALES TREAS BILLS 12/19/02 1.655 50,000 81 205,965.28 1.872 TREAS BILLS 12/19/02 1.655 50,000 81 205,965.28 1.872 TREAS NOTES 4.250% 05/31/03 1.711 50,000 465 2,604,631.63 5.482 TREAS NOTES 4.250% 05/31/03 1.711 50,000 465 2,604,631.63 5.482 REDEMPTIONS DISC NOTES FNMA 09/13/02 2.360 50,000 344 1,127,555.56 2.447 DISC NOTES FNMA 09/13/02 2.360 50,000 344 1,127,555.56 2.447 DISC NOTES FNMA 09/13/02 2.360 50,000 344 1,127,555.56 2.447 DISC NOTES FNMA 09/13/02 2.360 50,000 344 1,127,555.56 2.447 PURCHASES CD MONTREAL 1.750% 10/01/02 1.750 50,000 CD CR AGRIC 1.750% 11/04/02 1.750 30,000 CD CR AGRIC 1.750% 11/04/02 1.750 50,000 CP ASCC 10/11/02 1.760 50,000 CP SAFEWAY 10/16/02 1.900 20,000 CP TEXT FIN 10/21/02 1.890 25,000 CP MORG STAN 10/21/02 1.760 50,000 CP TEXT FIN 11/01/02 1.900 25,000 CP WYETH 11/27/02 1.950 50,000 CP CRC 12/02/02 1.750 50,000 L POOLED MONEY INVESTMENT ACCOUNT a/ a/ MATURITY" TRANS PAR DAYS AMOUNT EFFECTIVE DATE TYPE DESCRIPTION DATE YIELD 000 HELD EARNED YIELD 09/13/02 PURCHASES (continued) CP CRC 12/02/02 1.750 50,000 CP CRC 12/02/02 1.750 50,000 09/15/02 REDEMPTIONS MTN AT&T 6.500% 09/15/02 7.110 10,000 786 1,518,400.00 7.137 NO PURCHASES 09/16/02 REDEMPTIONS MTN FR CITICORP 5.310% 09/16/02 4.969 25,000 1320 4,464,032.76 4.949 PURCHASES CP GECC 10/01/02 1.770 30,000 CP MORG STAN 11/08/02 1.750 50,000 CP MORG STAN 11/08/02 1.750 50,000 CP MORG STAN 11/08/02 1.750 50,000 CP BEAR 11/27/02 1.760 50,000 CP BEAR 11/27/02 1.760 50,000 CP BEAR 11/27/02 1.760 50,000 CP DFC 12/10/02 1.760 644 CP DFC 12/10/02 1.760 50,000 CP DFC 12/10/02 1.760 50,000 CP DFC 12/10/02 1.760 50,000 DISC NOTES FNMA 11/27/02 1.700 22,805 DISC NOTES FNMA 11/27/02 1.700 50,000 DISC NOTES FNMA 11/27/02 1.700 50,000 DISC NOTES FNMA 11/27/02 1.700 50,000 DISC NOTES FNMA 11/27/02 1.700 50,000 DISC NOTES FNMA 11/27/02 1.700 50,000 09/17/02 NO SALES PURCHASES CD HYPO 1.760% 11/27/02 1.760 50,000 CD W/F 1.760% 12/27/02 1.760 50,000 CD W/F 1.760% 12/27/02 1.760 50,000 CP ASCC 10/08/02 1.760 25,000 CP CAMPBELL 11/27/02 1.800 25,000 CP WYETH 11/27/02 1.950 25,000 CP WYETH 11/27/02 1.950 50,000 CP GMAC 12/02/02 2.060 50,000 CP GMAC 12/02/02 2.060 50,000 CP GMAC 12/02/02 2.060 50,000 CP GMAC 12/02/02 2.060 50,000 7 POOLED MONEY INVESTMENT ACCOUNT d/ a/ MATURITY TRANS PAR DAYS AMOUNT EFFECTIVE DATE TYPE DESCRIPTION DATE YIELD (000) HELD EARNED YIELD 09/17/02 PURCHASES (continued) CID GECC CID GECC CID GECC 09/18/02 REDEMPTIONS 12/27/02 1.760 25,000 12/27/02 1.760 50,000 12/27/02 1.760 50,000 DISC NOTES FHLMC 09/18/02 2.400 40,600 352 952,746.67 2.491 DISC NOTES FHLMC 09/18/02 2.400 50,000 352 1,173,333.33 2.491 DISC NOTES FHLMC 09/18/02 2.400 50,000 352 1,173,333.33 2.491 DISC NOTES FNMA 09/18/02 2.360 50,000 352 1,153,777.78 2.449 DISC NOTES FNMA 09/18/02 2.360 50,000 352 1,153,777.78 2.449 PURCHASES CID MORG STAN 10/07/02 1.760 50,000 CID MORG STAN 10/07/02 1.760 50,000 CID MORG STAN 10/08/02 1.760 50,000 CID MORG STAN 10/08/02 1.760 50,000 CID GEN MILLS 10/10/02 1.950 30,000 CID ASCC 10/10/02 1.770 50,000 CID MORG STAN 10/10/02 1.760 50,000 CID MORG STAN 10/10/02 1.760 50,000 CID SALOMON 10/11/02 1.760 50,000 CID SALOMON 10/11/02 1.760 50,000 CID SALOMON 10/11/02 1.760 50,000 CID SALOMON 10/11/02 1.760 50,000 CID GMAC 10/21/02 2.000 50,000 CID GMAC 10/21/02 2.000 50,000 CID SRAC 10/29/02 2.010 20,000 09/19/02 NO SALES PURCHASES CID MORG STAN 10/01/02 1.770 50,000 CID MORG STAN 10/01/02 1.770 50,000 CID MORG STAN 10/01/02 1.770 50,000 CID MORG STAN 10/01/02 1.770 50,000 CID SALOMON 10/08/02 1.760 50,000 CID SALOMON 10/08/02 1.760 50,000 09/20/02 REDEMPTIONS DISC NOTES FNMA 09/20/02 2.400 5,792 354 136,691.20 2.492 DISC NOTES FNMA 09/20/02 2.400 50,000 354 1,180,000.00 2.492 DISC NOTES FNMA 09/20/02 2.400 50,000 354 1,180,000.00 2.492 E POOLED MONEY INVESTMENT ACCOUNT al a/ a/ MATURITY TRANS PAR DAYS AMOUNT EFFECTIVE DATE TYPE DESCRIPTION DATE YIELD (000) HELD EARNED YIELD 09/20/02 PURCHASES CP MORG STAN 10/01/02 1.770 50,000 CP MORG STAN 10/01/02 1.770 50,000 09/23/02 NO SALES PURCHASES CP MORG STAN 10/11/02 1.770 50,000 CP MORG STAN 10/11/02 1.770 50,000 CP MORG STAN 10/11/02 1.770 50,000 CP MORG STAN 10/11/02 1.770 50,000 CP MORG STAN 10/11/02 1.770 50,000 09/24/02 NO SALES PURCHASES CD HYPO 1.760% 11/27/02 1.750 10,000 CD HYPO 1.760% 11/27/02 1.750 50,000 CD COMMERZ 1.780% 11/27/02 1.780 50,000 CD COMMERZ 1.780% 11/27/02 1.780 50,000 CD MONTREAL 1.720% 12/27/02 1.720 50,000 CD MONTREAL 1.720% 12/27/02 1.720 50,000 CP COUNTRY 09/30/02 1.800 41,250 CP COUNTRY 09/30/02 1.800 50,000 CP COUNTRY 09/30/02 1.800 50,000 CP COUNTRY 09/30/02 1.800 50,000 CP GECC 10/02/02 1.760 50,000 CP GECC 10/04/02 1.760 50,000 CP CITICORP 10/25/02 1.740 50,000 CP CITICORP 10/25/02 1.740 50,000 CP CITICORP 01/14/03 1.750 50,000 CP CITICORP 01/14/03 1.750 50,000 CP CITICORP 01/14/03 1.750 50,000 DISC NOTES FNMA 10/25/02 1.680 50,000 DISC NOTES FNMA 10/25/02 1.680 50,000 DISC NOTES FNMA 10/25/02 1.680 50,000 09/25/02 REDEMPTIONS DISC NOTES FHLMC 09/25/02 2.400 20,000 359 478,666.67 2.492 DISC NOTES FHLMC 109/25/02 2.390 30,000 359 715,008.33 2.482 DISC NOTES FHLMC 09/25/02 2.390 50,000 359 1,191,680.56 2.482 DISC NOTES FHLMC 09/25/02 2.390 50,000 359 1,191,680.56 2.482 DISC NOTES FHLMC 09/25/02 2.390 50,000 359 1,191,680.56 2.482 DISC NOTES FHLMC 09/25/02 2.390 50,000 359 1,191,680.56 2.482 DISC NOTES FHLMC 09/25/02 2.390 50,000 359 1,191,680.56 2.482 9 POOLED MONEY INVESTMENT ACCOUNT a/ of MATURITY TRANS PAR DAYS AMOUNT ' EFFECTIVE DATE TYPE DESCRIPTION DATE YIELD 000 HELD EARNED YIELD 09/25/02 PURCHASES CD NOVA SCOT 1.730% 10/25/02 1.730 50,000 CD NOVA SCOT 1.730% 10/25/02 1.730 50,000 CD UBS 1.740% 10/25/02 1.730 50,000 CD UBS 1.740% 10/25/02 1.730 50,000 CD UBS 1.740% 10/25/02 1.730 50,000 CP COUNTRY 09/30/02 1.800 50,000 CP COUNTRY 09/30/02 1.800 50,000 CP GEN MILLS 10/10/02 1.980 49,500 CP SAFEWAY 10/21/02 1.880 50,000 CP FMCC 10/25/02 2.000 50,000 09/26/02 REDEMPTIONS BN US BANK 1.900% 09/26/02 1.900 50,000 149 393,194.44 1.926 BN US BANK 1.900% 09/26/02 1.900 50,000 149 393,194.44 1.926 BN US BANK 1.900% 09/26/02 1.900 50,000 149 393,194.44 1.926 BN US BANK 1.900% 09/26/02 1.900 50,000 149 393,194.44 1.926 BN US BANK 1.940% 09/26/02 1.940 50,000 157 423,027.78 1.966 BN US BANK 1.940% 09/26/02 1.940 50,000 157 423,027.78 1.966 BN US BANK 1.940% 09/26/02 1.940 50,000 157 423,027.78 1.966 BN US BANK 1.940% 09/26/02 1.940 50,000 157 423,027.78 1.966 CD SVENSKA 1.900% 09/26/02 1.890 50,000 150 393,766.27 1.916 CD SVENSKA 1.900% 09/26/02 1.890 50,000 150 393,766.27 1.916 CD BNPARIS 1.890% 09/26/02 1.890 50,000 150 393,750.00 1.916 CD BNPARIS 1.890% 09/26/02 1.890 50,000 150 393,750.00 1.916 CD SOC GEN 1.900% 09/26/02 1.890 20,000 154 161,706.87 1.916 CD SOC GEN 1.900% 09/26/02 1.890 50,000 154 404,267.16 1.916 CD SOC GEN 1.900% 09/26/02 1.890 50,000 154 404,267.16 1.916 CD RABO 1.880% 09/26/02 1.870 50,000 154 399,989.20 1.895 CD RABO 1.880% 09/26/02 1.870 50,000 154 399,989.20 1.895 CD U/B CALIF 1.960% 09/26/02 1.960 50,000 157 427,388.89 1.987 CD U/B CALIF 1.960% 09/26/02 1.960 50,000 157 427,388.89 1.987 CD CR AGRIC 1.940% 09/26/02 1.940 50,000 157 423,027.78 1.966 CD CR AGRIC 1.940% 09/26/02 1.940 50,000 157 423,027.78 1.966 CID WYETH 09/26/02 1.870 50,000 49 127,263.88 1.900 CID WYETH 09/26/02 1.870 50,000 49 127,263.88 1.900 CID FMCC 09/26/02 2.160 50,000 150 450,000.00 2.209 CP GECC 09/26/02 1.900 50,000 150 395,833.33 1.941 CP GECC 09/26/02 1.900 50,000 150 395,833.33 1.941 CP GECC 09/26/02 1.900 50,000 150 395,833.33 1.941 CP GECC 09/26/02 1.900 50,000 150 395,833.33 1.941 CP FMCC 09/26/02 2.250 50,000 153 478,125.00 2.303 CP FMCC 09/26/02 2.250 50,000 153 478,125.00 2.303 CP HOUSEHOLD 09/26/02 1.870 50,000 154 399,972.22 1.911 CP HOUSEHOLD 09/26/02 1.870 50,000 154 399,972.22 1.911 CP HOUSEHOLD 09/26/02 1.870 50,000 154 399,972.22 1.911 CID HOUSEHOLD 09/26/02 1.870 50,000 154 399,972.22 1.911 CP GECC 09/26/02 1.940 50,000 157 423,027.78 1.983 10 POOLED MONEY INVESTMENT ACCOUNT d/ a/ a/ MATURITYTRANS PAR DAYS AMOUNT EFFECTIVE DATE TYPE DESCRIPTION DATE YIELD 000 HELD EARNED YIELD 09/26/02 REDEMPTIONS (continued) CP GECC 09/26/02 1.940 50,000 157 423,027.78 1.983 CP GECC 09/26/02 1.940 50,000 157 423,027.78 1.983 CP GECC 09/26/02 1.940 50,000 157 423,027.78 1.983 CP GECC 09/26/02 2.000 50,000 164 455,555.56 2.046 CP GECC 09/26/02 2.000 50,000 164 455,555.56 2.046 CP GECC 09/26/02 2.000 50,000 164 455,555.56 2.046 CP GECC 09/26/02 2.000 50,000 164 455,555.56 2.046 PURCHASES FIR SBA 2.050% 09/25/27 2.050 10,952 09/27/02 NO SALES PURCHASES CP COUNTRY 09/30/02 1.880 40,000 CP COUNTRY 09/30/02 1.880 50,000 MTN GECC 6.800% 11/01/05 3.163 10,000 09/30/02 REDEMPTIONS CP COUNTRY 09/30/02 1.880 40,000 3 6,266.67 1.906 CP COUNTRY 09/30/02 1.880 50,000 3 7,833.33 1.906 CP COUNTRY 09/30/02 1.800 50,000 5 12,500.00 1.825 CP COUNTRY 09/30/02 1.800 50,000 5 12,500.00 1.825 CP COUNTRY 09/30/02 1.800 41,250 6 12,375.00 1.825 CP COUNTRY 09/30/02 1.800 50,000 6 15,000.00 1.825 CP COUNTRY 09/30/02 1.800 50,000 6 15,000.00 1.825 CP COUNTRY 09/30/02 1,800 50,000 6 15,000.00 1.825 CP GECC 09/30/02 1.900 50,000 157 414,305.56 1.942 CP GECC 09/30/02 1.900 50,000 157 414,305.56 1.942 CP GECC 09/30/02 1.940 50,000 161 433,805.56 1.984 CP GECC 09/30/02 1.940 50,000 161 433,805.56 1.984 CP GECC 09/30/02 1.940 50,000 161 433,805.56 1.984 CP GECC 09/30/02 1.940 50,000 161 433,805.56 1.984 DISC NOTES FNMA 09/30/02 1.660 50,000 35 80,694.44 1.685 DISC NOTES FNMA 09/30/02 1.820 50,000 157 396,861.11 1.860 DISC NOTES FNMA 09/30/02 1.820 50,000 157 396,861.11 1.860 DISC NOTES FNMA 09/30/02 1.820 50,000 157 396,861.11 1.860 DISC NOTES FNMA 09/30/02 1.820 50,000 157 396,861.11 1.860 DISC NOTES FNMA 09/30/02 1.870 50,000 161 418,152.78 1.911 DISC NOTES FNMA 09/30/02 1.870 50,000 161 418,152.78 1.911 DISC NOTES FNMA 09/30/02 1.870 50,000 161 418,152.78 1.911 DISC NOTES FNMA 09/30/02 1.870 50,000 161 418,152.78 1.911 DISC NOTES FNMA 09/30/02 1.870 50,000 161 418,152.78 1,911 DISC NOTES FNMA 09/30/02 1.870 50,000 161 418,152.78 1.911 11 POOLED MONEY,,INVESTMENT ACCOUNT a/ DATE' TYPE DESCRIPTION 09/30/02 REDEMPTIONS (continued) DISC NOTES FNMA DISC NOTES FNMA PURCHASES IOUNT EFFECTIVE RNED YIELD 09/30/02 1.870 50,000 161 418,152.78 1.911 09/30/02 1.870 50,000 161 418,152.78 1.911 CP NCAT 10/01/02 1.970 50,000 CP MORG STAN 10/01/02 2.000 50,000 CP MORG STAN 10/01/02 2.000 50,000 CP MORG STAN 10/01/02 2.000 50,000 CP MORG STAN 10/01/02 2.000 50,000 CP MORG STAN 10/01/02 2.000 50,000 CP MORG STAN 10/01/02 2.000 50,000 12 a/ The abbreviations indicate the type of security purchased or sold; Le., (U.S.) Bills, Bonds, Notes, Debentures, Discount Notes and Participation Certificates: Federal National Mortgage Association (FNMA), Farmers Home Administration Notes (FHA), Student Loan Marketing Association (SLMA), Small Business Association (SBA), Negotiable Certificates of Deposit (CD), Negotiable Certificates of Deposit Floating Rate (CD FIR), Export Import Notes (EXIM), Bankers Acceptances (BA), Commercial Paper (CP), Government National Mortgage Association (GNMA), Federal Home Loan Bank Notes (FHLB), Federal Land Bank Bonds (FLB), Federal Home Loan Mortgage Corporation Obligation (FHLMC PC) & (FHLMC GMC), Federal Farm Credit Bank Bonds (FFCB), Federal Farm Credit Discount Notes (FFC), Corporate Securities (CB), US Ship Financing Bonds (TITLE XI'S), International Bank of Redevelopment (IBRD), Tennessee Valley Authority (TVA), Medium Term Notes (MTN), Real Estate Mortgage Investment Conduit (REMIC). b/ Purchase or sold yield based on 360 day calculation for discount obligations and Repurchase Agreements. c/ Repurchase Agreement. d/ Par amount of securities purchased, sold or redeemed. e/ Securities were purchased and sold as of the same date. f/ Repurchase Agreement against Reverse Repurchase Agreement. g/ Outright purchase against Reverse Repurchase Agreement. h/ Security "SWAP" transactions. 1 Buy back agreement. RRS Reverse Repurchase Agreement. RRP Termination of Reverse Repurchase Agreement. 13 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE I CEI&lIX111 Bank of East Asia (USA) 08/13/02 1.610 3,000,000.00 02/13/03 Grand National Bank 05/17/02 1.960 6,000,000.00 11/13/02 Grand National Bank 07/12/02 1.770 3,095,000.00 01/14/03 Omni Bank 04/23/02 1.970 2,000,000.00 10/21/02 Omni Bank 05/20/02 1.950 2,000,000.00 11/20/02 Omni Bank 08/27/02 1.720 3,000,000.00 02/25/03 Omni Bank 09/05/02 1.710 3,000,000.00 03/07/03 ARROYO GRANDE Mid -State Bank 04/15/02 2.000 5,000,000.00 10/16/02 Mid -State Bank 05/17/02 1.960 5,000,000.00 11/13/02 Mid -State Bank 06/14/02 1.870 5,000,000.00 12/11/02 Mid -State Bank 07/16/02 1.750 5,000,000.00 01/16/03 Mid -State Bank 08/13/02 1.610 5,000,000.00 02/13/03 Mid -State Bank 09/11/02 1.700 5,000,000.00 03/12/03 BEVERLY HILLS City National Bank 04/16/02 1.970 25,000,000.00 10/17/02 City National Bank 06/03/02 1.930 10,000,000.00 12/09/02 City National Bank 06/03/02 1.930 25,000,000.00 12/09/02 City National Bank 09/09/02 1.640 10,000,000.00 03/10/03 BREA Jackson Federal Bank 07/22/02 1.780 10,000,000.00 01/22/03 Jackson Federal Bank 08/12/02 1.620 10,000,000.00 02/11/03 CALABASAS First Bank of Beverly Hills FSB 08/07/02 1.650 10,000,000.00 02/06/03 First Bank of Beverly Hills FSB 08/28/02 1.740 10,000,000.00 03/03/03 First Bank of Beverly Hills FSB 09/18/02 1.750 10,000,000.00 03/19/03 CAMARILLO First California Bank 07/29/02 1.730 4,000,000.00 10/29/02 First California Bank 09/25/02 1.650 3,000,000.00 03/24/03 CAMERON PARK Western Sierra National Bank 07/16/02 1.770 7,000,000.00 01/16/03 14 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE CAMERON PARK (continued) Western Sierra National Bank 08/15/02 1.650 6,000,000.00 02/14/03 CHICO North State National Bank 07/26/02 1.680 5,000,000.00 01/24/03 North State National Bank 08/16/02 1.630 1,500,000.00 02/14/03 North State National Bank 09/11/02 1.710 1,000,000.00 03/12/03 Tri Counties Bank 09/10/02 1.700 10,000,000.00 12/09/02 Tri Counties Bank 09/17/02 1.700 10,000,000.00 12/16/02 CHULA VISTA North Island Federal Credit Union 08/27/02 1.690 5,000,000.00 10/01/02 North Island Federal Credit Union 07/17/02 1.780 20,000,000.00 12/17/02 CITY OF INDUSTRY EverTrust Bank 06/11/02 1.890 6,000,000.00 12/10/02 EverTrust Bank 07/29/02 1.710 6,000,000.00 01/27/03 CONCORD CA State 9 Credit Union 08/20/02 1.670 10,000,000.00 11/18/02 DUBLIN Operating Engineers FCU 04/09/02 2.080 5,000,000.00 10/10/02 Operating Engineers FCU 06/12/02 1.900 10,000,000.00 12/11/02 Operating Engineers FCU 08/13/02 1.610 5,000,000.00 02/13/03 EL CENTRO Valley Independent Bank 04/30/02 1.900 20,000,000.00 10/28/02 Valley Independent Bank 05/15/02 1.920 7,500,000.00 11/20/02 Valley Independent Bank 05/28/02 1.950 25,000,000.00 11/20/02 ELSEGUNDO Hawthorne Savings FSB 04/04/02 2.170 30,000,000.00 10/01/02 Hawthorne Savings FSB 07/09/02 1.770 30,000,000.00 01/09/03 Xerox Federal Credit Union 08/16/02 1.640 20,000,000.00 11/15/02 Xerox Federal Credit Union 09/06/02 1.640 7,000,000.00 03/06/03 15 NAME FRESNO United Security Bank United Security Bank United Security Bank United Security Bank FULLERTON Fullerton Community Bank Fullerton Community Bank GLENDALE Verdugo Banking Company Verdugo Banking Company GOLETA Pacific Capital Bank Pacific Capital Bank Pacific Capital Bank Pacific Capital Bank Pacific Capital Bank Pacific Capital Bank GRANADA HILLS First State Bank of California First State Bank of California HUNTINGTON BEACH First Bank and Trust First Bank and Trust First Bank and Trust IRVINE Commercial Capital Bank Commercial Capital Bank Commercial Capital Bank TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE 04/10/02 2.030 5,000,000.00 10/11/02 05/10/02 1.930 10,000,000.00 11 /14/02 05/14/02 1.930 10,000,000.00 11 /14/02 08/05/02 1.700 15,000,000.00 02/05/03 05/17/02 1.960 9,000,000.00 11/13/02 07/26/02 1.710 8,000,000.00 01/23/03 04/02/02 2.150 5,000,000.00 10/01/02 07/02/02 1.850 5,000,000.00 01/07/03 09/17/02 1.710 15,000,000.00 03/14/03 06/03/02 1.920 30,000,000.00 12/09/02 06/14/02 1.870 30,000,000.00 12/11/02 07/25/02 1.740 45,000,000.00 01/23/03 08/15/02 1.630 16,000,000.00 02/14/03 09/09/02 1.630 10,000,000.00 03/14/03 04/23/02 1.970 3,000,000.00 10/21/02 09/18/02 1.730 2,000,000.00 03/19/03 04/26/02 1.960 3,000,000.00 10/24/02 08/26/02 1.680 2,000,000.00 02/24/03 09/09/02 1.650 12,000,000.00 03/11/03 06/19/02 1.880 10,000,000.00 12/16/02 07/01/02 1.810 6,000,000.00 01/08/03 08/26/02 1.670 14,000,000.00 02/21/03 16 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE LA JOLLA Silvergate Bank 08/02/02 1.760 5,000,000.00 01/31/03 Silvergate Bank 09/11/02 1.730 5,000,000.00 03/12/03 LAKEPORT Lake Community Bank 06/26/02 1.900 2,000,000.00 01/15/03 LODI Farmers & Merchant Bk Cen CA 07/10/02 1.790 10,000,000.00 01/10/03 LOS ANGELES Broadway Federal Bank 07/08/02 1.800 2,500,000.00 01/09/03 Broadway Federal Bank 09/09/02 1.660 3,000,000.00 03/11/03 California Center Bank 04/03/02 2.150 10,000,000.00 10/01/02 California Chohung Bank 04/02/02 2.130 1,500,000.00 10/02/02 California Chohung Bank 03/28/02 2.140 4,000,000.00 10/02/02 California Chohung Bank 04/11/02 2.000 800,000.00 10/16/02 California Chohung Bank 07/17/02 1.750 1,000,000.00 01/16/03 California Chohung Bank 08/19/02 1.660 4,000,000.00 02/19/03 California Chohung Bank 09/06/02 1.630 5,000,000.00 03/07/03 Cathay Bank 04/08/02 2.100 19,000,000.00 10/09/02 Cathay Bank 06/06/02 1.950 30,000,000.00 12/10/02 Cathay Bank 09/25/02 1.660 19,000,000.00 03/24/03 Cedars Bank 04/25/02 1.990 4,000,000.00 10/24/02 Cedars Bank 08/19/02 1.690 2,000,000.00 02/19/03 Cedars Bank 09/06/02 1.650 4,500,000.00 03/05/03 Eastern International Bank 05/07/02 1.890 900,000.00 11/07/02 Eastern International Bank 06/10/02 1.910 1,000,000.00 12/10/02 Hanmi Bank 08/01/02 1.730 20,000,000.00 10/31/02 Hanmi Bank 08/29/02 1.700 25,000,000.00 12/02/02 Hanmi Bank 07/18/02 1.760 25,000,000.00 01/17/03 Hanmi Bank 09/19/02 1.710 25,000,000.00 03/18/03 Manufacturers Bank 07/31/02 1.760 10,000,000.00 01/27/03 Manufacturers Bank 09/20/02 1.700 20,000,000.00 03/10/03 Manufacturers Bank 09/09/02 1.650 30,000,000.00 03/10/03 Marathon National Bank 07/12/02 1.790 2,000,000.00 01/14/03 Marathon National Bank 08/05/02 1.700 2,000,000.00 02/05/03 Mellon First Business Bank 09/26/02 1.650 25,000,000.00 10/29/02 Mellon First Business Bank 07/31/02 1.730 25,000,000.00 10/29/02 Mellon First Business Bank 09/18/02 1.730 25,000,000.00 12/17/02 17 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE LOS ANGELES (continued) Mellon First Business Bank 07/10/02 1.780 25,000,000.00 01/10/03 Nara Bank, NA 04/22/02 2.000 5,000,000.00 10/21/02 Nara Bank, NA 04/18/02 2.000 10,000,000.00 10/21/02 Nara Bank, NA 06/17/02 1.870 5,000,000.00 12/16/02 Nara Bank, NA 08/08/02 1.640 10,000,000.00 02/07/03 Pacific Union Bank 07/02/02 1.830 10,000,000.00 01/07/03 Pacific Union Bank 09/04/02 1.650 20,000,000.00 03/06/03 Preferred Bank 07/16/02 1.780 6,000,000.00 01/16/03 Preferred Bank 08/08/02 1.670 4,000,000.00 02/07/03 Preferred Bank 08/29/02 1.750 7,000,000.00 02/26/03 Preferred Bank 09/10/02 1.730 9,000,000.00 03/05/03 Preferred Bank 09/18/02 1.740 9,000,000.00 03/21/03 Sae Han Bank 07/15/02 1.750 6,000,000.00 01/15/03 Western Federal Credit Union 04/22/02 2.000 5,000,000.00 10/21/02 Western Federal Credit Union 04/22/02 2.000 25,000,000.00 10/21/02 Wilshire State Bank 05/06/02 1.940 4,000,000.00 11/06/02 Wilshire State Bank 06/17/02 1.870 2,000,000.00 12/17/02 Wilshire State Bank 06/18/02 1.890 8,000,000.00 12/17/02 Wilshire State Bank 08/06/02 1.680 4,000,000.00 02/05/03 Wilshire State Bank 08/26/02 1.680 4,000,000.00 02/24/03 Wilshire State Bank 05/14/02 2.420 2,000,000.00 05/13/03 Wilshire State Bank 07/12/02 2.060 4,000,000.00 07/10/03 MANTECA Delta National Bank 04/10/02 2.040 2,000,000.00 10/11/02 Delta National Bank 07/10/02 1.810 1,000,000.00 01/10/03 MERCED County Bank 04/15/02 2.020 5,000,000.00 10/16/02 County Bank 06/06/02 1.930 10,000,000.00 12/10/02 County Bank 07/16/02 1.770 5,000,000.00 01/16/03 County Bank 08/26/02 1.680 5,000,000.00 02/24/03 MONTEREY PARK Trust Bank FSB 04/02/02 2.160 3,000,000.00 10/01/02 Trust Bank FSB 07/01/02 1.800 3,000,000.00 01/02/03 18 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE NORTH HIGHLANDS Safe Credit Union 07/15/02 1.750 5,000,000.00 01/15/03 Safe Credit Union 08/15/02 1.630 20,000,000.00 02/14/03 OAKDALE Oak Valley Community Bank 09/10/02 1.680 1,500,000.00 12/09/02 Oak Valley Community Bank 07/12/02 1.770 2,500,000.00 01/14/03 Oak Valley Community Bank 03/22/02 2.640 2,000,000.00 03/20/03 OAKLAND Metropolitian Bank 04/29/02 1.930 1,000,000.00 10/28/02 Metropolitian Bank 05/28/02 1.940 1,000,000.00 11/25/02 Metropolitian Bank 09/25/02 1.650 1,000,000.00 03/24/03 People's Community Partnership FCU 08/21/02 1.680 95,000.00 11/20/02 ONTARIO Citizens Business Bank 04/05/02 2.110 25,000,000.00 10/04/02 Citizens Business Bank 05/07/02 1.910 10,000,000.00 11/07/02 Citizens Business Bank 08/22/02 1.690 30,000,000.00 11/20/02 Citizens Business Bank 09/05/02 1.660 25,000,000.00 12/06/02 Citizens Business Bank 09/25/02 1.640 30,000,000.00 03/24/03 PALO ALTO Bank of Petaluma 08/23/02 1.670 3,500,000.00 02/19/03 Bank of Petaluma 09/11/02 1.720 12,000,000.00 03/10/03 Bank of Santa Clara 08/23/02 1.670 20,000,000.00 02/19/03 Bay Area Bank 04/29/02 1.880 5,000,000.00 10/28/02 Bay Area Bank 07/15/02 1.750 5,000,000.00 01/15/03 Bay Bank of Commerce 04/29/02 1.900 5,000,000.00 10/28/02 Coast Commercial Bank 07/15/02 1.770 5,000,000.00 01/15/03 Coast Commercial Bank 08/23/02 1.680 20,000,000.00 02/19/03 Cupertino National Bank 07/15/02 1.780 10,000,000.00 01/15/03 Cupertino National Bank 07/30/02 1.730 35,000,000.00 01/28/03 Cupertino National Bank 08/23/02 1.680 20,000,000.00 02/19/03 Cupertino National Bank 09/11/02 1.730 10,000,000.00 03/10/03 Golden Gate Bank 08/23/02 1.680 9,000,000.00 02/19/03 Mid -Peninsula Bank 04/29/02 1.890 35,000,000.00 10/28/02 Mid -Peninsula Bank 08/23/02 1.680 5,000,000.00 02/19/03 Mid -Peninsula Bank 09/11/02 1.730 10,000,000.00 03/10/03 19 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE PALO ALTO (continued) Mt. Diablo National Bank 09/11/02 1.730 10,000,000.00 03/10/03 Peninsula Bank of Commerce 08/23/02 1.680 15,000,000.00 02/19/03 PALOS VERDES ESTATES Malaga Bank 04/26/02 1.900 4,000,000.00 10/24/02 Malaga Bank 06/25/02 1.840 4,000,000.00 12/23/02 Malaga Bank 08/22/02 1.710 2,000,000.00 02/20/03 Malaga Bank 09/12/02 1.710 2,000,000.00 03/13/03 PASADENA Community Bank 07/11/02 1.750 10,000,000.00 10/15/02 Community Bank 04/25/02 1.910 5,000,000.00 10/23/02 Community Bank 08/09/02 1.610 15,000,000.00 11/08/02 Community Bank 06/21/02 1.810 20,000,000.00 12/19/02 Community Bank 07/11/02 1.780 20,000,000.00 01/10/03 Wescom Credit Union 05/13/02 1.940 10,000,000.00 11/13/02 PLACERVILLE El Dorado Savings Bank 02/08/02 2.250 5,000,000.00 02/07/03 El Dorado Savings Bank 03/07/02 2.390 5,000,000.00 03/07/03 El Dorado Savings Bank 03/22/02 2.640 5,000,000.00 03/20/03 El Dorado Savings Bank 04/12/02 2.640 10,000,000.00 04/10/03 El Dorado Savings Bank 05/02/02 2.390 5,000,000.00 04/30/03 El Dorado Savings Bank 06/10/02 2.360 20,000,000.00 06/10/03 PLEASANTON Valley Community Bank 09/12/02 1.750 5,000,000.00 03/13/03 POMONA PFF Bank and Trust 06/03/02 2.000 20,000,000.00 12/09/02 PFF Bank and Trust 08/30/02 1.720 8,000,000.00 02/27/03 PORTERVILLE Bank of the Sierra 04/22/02 2.020 10,000,000.00 10/21/02 20 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE RANCHO SANTA FE La Jolla Bank, FSB 05/28/02 1.920 10,000,000.00 11/19/02 La Jolla Bank, FSB 05/23/02 1.960 15,000,000.00 11/19/02 La Jolla Bank, FSB 08/06/02 1.670 25,000,000.00 02/05/03 La Jolla Bank, FSB 09/04/02 1.660 10,000,000.00 03/06/03 REDDING North Valley Bank 06/12/02 1.920 3,000,000.00 12/11/02 REDWOOD CITY Provident Central Credit Union 05/01/02 1.900 20,000,000.00 10/29/02 ROCKLIN Five Star Bank 04/04/02 2.150 2,000,000.00 10/01/02 RICHMOND Mechanics Bank 10/12/01 2.380 10,000,000.00 10/15/02 Mechanics Bank 05/07/02 1.890 10,000,000.00 11/07/02 Mechanics Bank 03/07/02 2.390 10,000,000.00 03/07/03 Mechanics Bank 04/05/02 2.710 10,000,000.00 04/01/03 Mechanics Bank 04/25/02 2.440 10,000,000.00 04/23/03 Mechanics Bank 06/12/02 2.340 10,000,000.00 06/12/03 Mechanics Bank 07/11/02 2.110 10,000,000.00 07/09/03 Mechanics Bank 08/13/02 1.710 10,000,000.00 08/08/03 Mechanics Bank 09/12/02 1.800 10,000,000.00 09/12/03 RIVERSIDE Provident Savings Bank 09/27/02 1.630 25,000,000.00 03/27/03 SACRAMENTO American River Bank 04/10/02 2.010 1,500,000.00 10/11/02 American River Bank 06/26/02 1.820 1,000,000.00 12/23/02 American River Bank 07/10/02 1.780 1,000,000.00 01/10/03 American River Bank 01/14/02 2.200 1,500,000.00 01/14/03 American River Bank 08/29/02 1.720 2,000,000.00 02/26/03 American River Bank 09/25/02 1.680 2,000,000.00 03/27/03 Bank of Sacramento 05/28/02 1.970 2,000,000.00 11/25/02 21 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE SACRAMENTO (continued) Bank of Sacramento 08/12/02 1.610 1,500,000.00 02/11/03 Bank of Sacramento 09/20/02 1.720 2,000,000.00 03/19/03 Golden One Credit Union 07/19/02 1.740 10,000,000.00 10/18/02 Golden One Credit Union 04/25/02 1.910 10,000,000.00 10/23/02 Golden One Credit Union 05/23/02 1.950 10,000,000.00 11/19/02 Golden One Credit Union 06/07/02 2.010 10,000,000.00 01/09/03 Merchants National Bank 04/17/02 1.960 2,000,000.00 10/17/02 Merchants National Bank 07/23/02 1.750 2,000,000.00 01/22/03 River City Bank 04/02/02 2.150 4,000,000.00 10/01/02 River City Bank 07/01/02 1.790 2,000,000.00 01/08/03 River City Bank 07/29/02 1.740 3,000,000.00 01/27/03 River City Bank 08/27/02 1.720 2,000,000.00 02/25/03 U.S. Bank 05/06/02 1.940 50,000,000.00 11/06/02 U.S. Bank 07/03/02 1.810 100,000,000.00 01/08/03 U.S. Bank 08/02/02 1.750 25,000,000.00 01/31/03 U.S. Bank 08/23/02 1.670 25,000,000.00 02/19/03 Union Bank of California 04/17/02 1.960 150,000,000.00 10/17/02 Union Bank of California 05/08/02 1.890 150,000,000.00 11/05/02 Union Bank of California 06/18/02 1.820 100,000,000.00 12/16/02 SAN BERNARDINO Business Bank of California 07/12/02 1.800 8,000,000.00 01/14/03 Business Bank of California 09/16/02 1.730 12,000,000.00 03/18/03 SAN DIEGO First Future Credit Union 05/29/02 1.930 5,000,000.00 11/25/02 First Future Credit Union 06/21/02 1.810 3,000,000.00 12/18/02 First Future Credit Union 08/30/02 1.710 5,000,000.00 02/27/03 First United Bank 07/18/02 1.760 2,000,000.00 01/17/03 First United Bank 02/15/02 2.300 1,000,000.00 02/14/03 Neighborhood National Bank 08/22/02 1.730 2,000,000.00 02/21/03 SAN FRANCISCO America California Bank 09/27/02 1.730 2,000,000.00 10/30/02 America California Bank 09/27/02 1.710 2,000,000.00 01/08/03 Bank of Canton California 04/12/02 2.030 15,000,000.00 10/10/02 Bank of Canton California 07/16/02 1.740 25,000,000.00 10/10/02 Bank of Canton California 05/22/02 1.930 25,000,000.00 12/03/02 Bank of Canton California 06/11/02 1.970 20,000,000.00 01/15/03 22 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE SAN FRANCISCO (continued) Bank of Canton California 03/08/02 2.390 20,000,000.00 03/07/03 Bank of Canton California 08/30/02 1.920 20,000,000.00 08/28/03 Bank of the West 08/20/02 1.650 100,000,000.00 11/18/02 Bank of the West 08/21/02 1.650 142,000,000.00 11/18/02 Bank of the West 07/01/02 1.750 134,000,000.00 12/30/02 Bank of the West 07/23/02 1.760 76,500,000.00 01/22/03 Bank of the West 09/20/02 1.690 82,000,000.00 03/19/03 California Federal Bank 04/15/02 2.010 100,000,000.00 10/16/02 California Federal Bank 09/05/02 1.650 50,000,000.00 11/21/02 California Federal Bank 08/22/02 1.700 50,000,000.00 11/21/02 California Federal Bank 07/03/02 1.780 50,000,000.00 12/30/02 Oceanic Bank 09/12/02 1.800 4,000,000.00 09/12/03 Trans Pacific National Bank 08/05/02 1.700 1,000,000.00 02/05/03 Trans Pacific National Bank 09/19/02 1.730 1,000,000.00 03/25/03 United Commercial Bank 07/02/02 1.800 25,000,000.00 12/30/02 United Commercial Bank 07/10/02 1.800 30,000,000.00 01/10/03 United Commercial Bank 07/31/02 1.760 40,000,000.00 01/27/03 United Commercial Bank 08/30/02 1.750 30,000,000.00 02/28/03 United Commercial Bank 09/10/02 1.710 30,000,000.00 03/21/03 United Commercial Bank 09/10/02 1.710 35,000,000.00 03/21/03 SANJOSE Comerica Bank of California 07/12/02 1.770 71,000,000.00 10/15/02 Comerica Bank of California 08/07/02 1.680 183,000,000.00 11/05/02 Comerica Bank of California 09/05/02 1.690 63,000,000.00 12/04/02 Heritage Bank of Commerce 08/15/02 1.640 2,000,000.00 02/14/03 Meriwest Credit Union 07/19/02 1.770 5,000,000.00 10/18/02 Meriwest Credit Union 05/07/02 1.920 5,000,000.00 11/07/02 Meriwest Credit Union 06/18/02 1.900 5,000,000.00 12/17/02 Meriwest Credit Union 08/28/02 1.730 5,000,000.00 02/25/03 San Jose National Bank 07/30/02 1.730 20,000,000.00 01/28/03 San Jose National Bank 08/14/02 1.660 20,000,000.00 02/19/03 Santa Clara Co. Fed. C.U. 08/06/02 1.700 5,000,000.00 11/05/02 Santa Clara Co. Fed. C.U. 08/06/02 1.680 10,000,000.00 02/05/03 SAN LUIS OBISPO First Bank Of San Luis Obispo 08/12/02 1.690 6,000,000.00 11/12/02 First Bank Of San Luis Obispo 09/10/02 1.750 7,000,000.00 03/11/03 First Bank Of San Luis Obispo 09/24/02 1.690 5,000,000.00 03/26/03 Mission Community Bank 04/09/02 2.030 2,500,000.00 10/10/02 23 NAME SAN LUIS OBISPO (continued) Mission Community Bank Mission Community Bank San Luis Trust Bank San Luis Trust Bank SAN MARINO East West Federal Bank East West Federal Bank East West Federal Bank East West Federal Bank SAN RAFAEL Westamerica Bank Westamerica Bank Westamerica Bank SAN RAMON EBTEL Federal Credit Union EBTEL Federal Credit Union EBTEL Federal Credit Union SANTA BARBARA FNB of Central California Santa Barbara Bank & Trust Santa Barbara Bank & Trust SANTA CLARITA Valencia Bank & Trust SANTA MARIA Hacienda Bank SANTA ROSA National Bank of the Redwoods TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE 06/ 11 /02 1.920 1, 000, 000.00 12/ 10/02 09/05/02 1.650 1,000,000.00 03/04/03 04/24/02 1.930 1,000,000.00 10/23/02 07/11/02 1.800 1,350,000.00 01/10/03 07/09/02 1.780 42,000,000.00 01/09/03 02/07/02 2.260 35,000,000.00 02/07/03 09/10/02 1.700 35,000,000.00 03/11/03 05/15/03 2.370 38,000,000.00 05/15/03 07/ 18/02 1.740 15, 000, 000.00 10/ 18/02 07/30/02 1.700 10,000,000.00 01/28/03 04/09/02 2.570 35,000,000.00 04/10/03 07/01 /02 1.770 1,000,000.00 12/30/02 07/12/02 1.780 2,000,000.00 12/30/02 07/18/02 1.790 750,000.00 01/17/03 04/10/02 2.020 10,000,000.00 10/11/02 04/02/02 2.130 10,000,000.00 10/01/02 05/01 /02 1.900 10,000,000.00 10/29/02 09/19/02 1.740 4,000,000.00 12/18/02 09/09/02 1.670 1,000,000.00 03/10/03 04/26/02 1.970 10, 000,000.00 10/24/02 24 NAME STOCKTON TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE Pacific State Bank 04/10/02 2.040 1,000,000.00 10/11/02 Pacific State Bank 07/02/02 1.860 1,000,000.00 01/07/03 Union Safe Deposit Bank 04/11/02 2.070 10,000,000.00 10/10/02 Union Safe Deposit Bank 05/07/02 1.930 10,000,000.00 11/07/02 Union Safe Deposit Bank 06/12/02 1.940 10,000,000.00 12/11/02 Union Safe Deposit Bank 07/25/02 1.780 15,000,000.00 01/23/03 Union Safe Deposit Bank 08/15/02 1.670 15,000,000.00 02/14/03 Union Safe Deposit Bank 09/04/02 1.680 15,000,000.00 03/06/03 Washington Mutual Bank 06/17/02 1.870 45,000,000.00 12/16/02 Washington Mutual Bank 07/26/02 1.700 15,000,000.00 01/22/03 Washington Mutual Bank 07/23/02 1.740 60,000,000.00 01/22/03 Washington Mutual Bank 08/19/02 1.660 60,000,000.00 02/19/03 TORRANCE China Trust Bank (USA) 08/16/02 1.650 20,000,000.00 11/15/02 China Trust Bank (USA) 09/12/02 1.730 35,000,000.00 12/11/02 China Trust Bank (USA) 07/19/02 1.790 30,000,000.00 01/22/03 South Bay Bank 08/26/02 1.750 1,000,000.00 10/01/02 South Bay Bank 08/29/02 1.750 3,000,000.00 10/01/02 South Bay Bank 09/12/02 1.760 7,000,000.00 10/22/02 South Bay Bank 09/16/02 1.760 4,000,000.00 12/18/02 TRACY Service 1st Bank 09/24/02 1.680 2,000,000.00 03/20/03 Service 1st Bank 09/17/02 1.750 2,000,000.00 03/20/03 TUSTIN First Fidelity Investment & Loan 07/18/02 1.760 10,000,000.00 10/17/02 First Fidelity Investment & Loan 08/08/02 1.670 15,000,000.00 11/06/02 First Fidelity Investment & Loan 09/10/02 1.720 15,000,000.00 11/15/02 Sunwest Bank 07/12/02 1.760 6,000,000.00 10/15/02 Sunwest Bank 08/12/02 1.640 7,800,000.00 11/08/02 Sunwest Bank 09/10/02 1.700 1,000,000.00 12/09/02 VACAVILLE Travis Credit Union 08/28/02 25 1.730 40,000,000.00 02/25/03 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE WATSONVILLE Monterey Bay Bank 04/12/02 2.000 3,000,000.00 10/10/02 Monterey Bay Bank 06/17/02 1.890 3,000,000.00 12/16/02 Monterey Bay Bank 07//10/02 1.800 8,000,000.00 01/14/03 Monterey Bay Bank 09/06/02 1.650 6,000,000.00 03/04/03 Monterey Bay Bank 09/19/02 1.730 8,000,000.00 03/25/03 WHITTIER Quaker City Bank 04/05/02 2.110 16,000,000.00 10/04/02 Quaker City Bank 05/24/02 1.930 25,000,000.00 12/03/02 Quaker City Bank 07/12/02 1.770 24,000,000.00 01/14/03 TOTAL TIME DEPOSITS SEPTEMBER 2002 26 5,094,290,000.00 BANK DEMAND DEPOSITS SEPTEMBER 2002 ($ in thousands) DAILY BALANCES DAY OF BALANCES WARRANTS MONTH PER BANKS OUTSTANDING 1 $ 493,119 $ 2,340,914 2 493,119 2,340,914 3 1,152,041 1,800,065 4 598,909 1,535,192 5 608,451 3,267,140 6 758,597 3,470,826 7 758,597 3,470,826 8 758,597 3,470,826 9 536,669 3,597,968 10 529,926 3,626,293 11 492,181 3,494,363 12 728,996 3,729,090 13 766,317 3,924,385 14 766,317 3,924,385 15 766,317 3,924,385 16 1,129,896 3,835,611 17 915,307 4,025,423 18 757,201 4,107,136 19 787,354 4,090,364 20 1,013,150 4,109,411 21 1,013,150 4,109,411 22 1,013,150 4,109,411 23 924,567 3,811,864 24 1,034,038 3,831,778 25 768,399 3,770,564 26 772,765 3,885,740 27 929,392 3,983,205 28 929,392 3,983,205 29 929,392 3,983,205 30 1,316,461 3,941, 979 AVERAGE DOLLAR DAYS $ 814,726 a/ a� The prescribed bank balance for September was $870,306. This consisted of $694,877 in compensating balances for services, balances for uncollected funds of $181,765 and a deduction of $6,336 for September delayed deposit credit. 27 DESIGNATION BY POOLED MONEY INVESTMENT BOARD OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS No. 1639 In accordance with sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board, at its meeting on September 18, 2002, has determined and designated the amount of money available for deposit and investment under said sections. In accordance with sections 16480.1 and 16480.2 of the Government Code, it is the intent that the money available for deposit or investment be deposited in bank accounts and savings and loan associations or invested in securities in such a manner so as to realize the maximum return consistent with safe and prudent treasury management, and the Board does hereby designate the amount of money available for deposit in bank accounts, savings and loan associ- actions, and for investment in securities and the type of such deposits and investments as follows: 1. In accordance with law, for deposit in demand bank accounts as Compensating Balance for Services $ 694,877,000 The active noninterest-bearing bank accounts designation constitutes a calendar month average balance. For purposes of computing the compensating balances, the Treasurer shall exclude from the daily balances any amounts contained therein as a result of nondelivery of securities purchased for "cash" for the Pooled Money Investment Account and shall adjust for any deposits not credited by the bank as of the date of deposit. The balances in such accounts may fall below the above amount provided that the balances computed by dividing the sum of daily balances of that calendar month by the number of days in the calendar month reasonably approximates that amount. The balances may exceed this amount during heavy collection periods or in anticipation of large impending warrant presentations to the Treasury, but the balances are to be maintained in such a manner as to realize the maximum return consistent with safe and prudent treasury management. 2. In accordance with law, for investment in securities authorized by section 16430, Government Code, or in term interest - bearing deposits in banks and savings and loan associations as follows: Time Deposits in Various Financial Institutions In Securities (sections 16503a Estimated From To Transactions (section 16430)' and 16602)' Total (1) 9/16/2002 9/20/2002 $ 2,693,200,000 $ 39,017,210,000 $ 5,077,790,000 $ 44,095,000,000 (2) 9/23/2002 9/27/2002 $ 51,800,000 $ 39,069,010,000 $ 5,077,790,000 $ 44,146,800,000 (3) 9/30/2002 10/4/2002 $ (2,026,200,000) $ 37,042,810,000 $ 5,077,790,000 $ 42,120,600,000 (4) 10/7/2002 10/11/2002 $ (86,700,000) $ 36,956,110,000 $ 5,077,790,000 $ 42,033,900,000 (5) 10/14/2002 10/18/2002 $ 527,600,000 $ 37,483,710,000 $ 5,077,790,000 $ 42,561,500,000 From any of the amounts specifically designated above, not more than 30 percent in the aggregate may be invested in prime commercial paper under section 16430(e), Government Code. Additional amounts available in treasury trust account and in the Treasury from time to time, in excess of the amounts and for the same types of investments as specifically designated above. Provided, that the availability of the amounts shown under paragraph 2 is subject to reduction in the amount by which the bank accounts under paragraph 1 would otherwise be reduced below the calendar month average balance of $ 694,877,000. POOLED MONEY INVESTMENT BOARD: Signature on file at SCO STO Chairperson Member Dated: September 18, 2002 Government Code Member BOARD MEMBER ITEMS Investment Advisory Board September 18, 2002 Minutes Other Handout Mr. Falconer suggested to the Board that the memo handout on FNMA and Freddie Mac be added to the December Agenda for further discussion and consideration with other investment options. VII ADJOURNMENT MOTION - It was moved by Board Members Lewis/Moulin to adjourn the meeting at 6:30 p.m. Motion carried unanimously. Submitted by, Vianka Orrantia Secretary 5 WSJ.com - Major Business News Page 1 of 7 Search Quotes & Resear( GMEWAI1L STREET JOURNAL,• N L 1 N Advail iced Search , iyrnert O other Journal Sites In Today's Paper Columnists Portfolio Setup Center Discussions Site Map Help Contact Us Log Out As of Tuesday, August 6, 2002 Are Fannie Mae, Freddie Mae Running Out of Room to Grow? By PATRICK BARTA Staff Reporter or THE WALL STREET JOURNAL When it comes to increasing home ownership in America, the past five years have been a golden age. Richmond, Va., is an example of why. TIIF aPrint diti J4URN.1L Low interest rates, easy credit and Print Editions Customer Service strong job growth combined to push the homeownership rate in Richmond Today In: above 76%, from about 62% in 1997. BARRON'S Online The gains are helping revitalize some of the city's most troubled neighborhoods. @ Your Service Give a perfect (lift But when asked whether the rate will go The Online Journal OPEN: The Small much higher, economic development Business NetworkSM. director John Woodward pauses. Many Go! who aren't homeowners prefer to rent, he says, and others aren't ready financially to own. "At some point, you reach saturation," he says. Markets such as Richmond raise a tough question for Fannie Mae and Freddie Mac, the two financial giants that purchase home mortgages, thereby freeing lenders to make new home loans. With homeownership already so high, are Fannie and Freddie running out of room to grow? Rapid Growth They have more than tripled in size in a decade, with Fannie becoming America's second-largest company in HITTING THE CEILING? • Freddie; s Profit Increases 21 %. but Loan Expans Crimped 07/24/02 • Fannie's Growth Incentives Raise Concern Arnor 07/17/02 • Fannie's Net Rises 4.4",', Despite Withered Portt( 07/16/02 COMPANIES DOW Jo Fannie Mae (FNM) PRICE 71.51 CHANGE -1.50 U.S. dollars 4:00 p.m. Freddie Mac (FRE) PRICE 59.70 CHANGE -1,31 U.S, dollars 4 01 p.m. 'Ai RELATED INDUSTRIES • Real Estate Personalized Home Page Setup Put headlines on your homepage about the coral industries and topics that interest you most. http:Honline.wsj.com/article/0„SB 102858052018332880-search,00.html?collection=wsjie/3(... 8/6/2002 WSJ.com - Major Business News Page 2 of 7 assets (after C:itiroup) and Freddie the fifth largest. This huge size and rapid grove coupled with their concentration in a single industry, has brought concern about pe risk to the U.S. economy should one of them ever fail. Efforts in Congress to curb growth have, for the most part, gone nowhere. But now, a new possibility is emerl that the natural forces of the marketplace could tame Fannie and Freddie. Fannie and Freddie have "already gotten all the low -hanging fruit," says James Bi; president of Bianco Research in Chicago. Research firm Fulcrum Global Partners in a report earlier this year that Fannie and Freddie face "the mathematical inevital market saturation," in part because of the difficulty in finding new, untapped pock new homeowners nationwide. They face an eventual future of slower growth and decreasing profit margins, said the report, and "we believe the only quibble is over exact timing." Concerns about the finite size of the market come amid a new challenge to Fannie Freddie's share of it. Many of the dozen Federal Home Loan Banks -- which, like 1 and Freddie, operate under a government charter -- have begun aggressively prom. program to provide some of the same mortgage services to lenders, often at lower The Federal Home Loan Banks have a low cost of borrowin as Fannie and Freddie do. They, too, benefit from a market perception that they would be bailed out by the federal gove in a crisis. They also share with Fannie and Freddie an exerr from some state and local taxes. However, unlike Famiie an, Freddie, they don't have public shareholders. That means the needn't aim for as high a return on equity and thus can charE for services, says Alex Pollock, president of the Federal Hoi Bank of Chicago, who designed a mortgage -buying progran nine of the banks now use. t Other mature companies that begin to saturate their markets Alex Pollock about for new ones to enter. But Fannie and Freddie have government charters that bar them from doing business outside the mortgage indu: No one expects Fannie and Freddie to stop growing altogether, and any meaningft slowdown, analysts say, is still several years away. Donald Gher, chief investment of money manager Coldstream Capital Management in Bellevue, Wash., calls the possibility of slower growth "the critical issue for these companies" but believes it be five to 10 years before their growth slows. Fannie and Freddie don't deny the possibility that growth won't always be as strong as it has been in recent years -- h their loan portfolios grew 16% and 28%, respectively -- but they say there's still pl room to grow. Fannie and Freddie were created by the federal government decades ago to improN efficiency of the mortgage market. By purchasing mortgages that banks and other make, they quickly replenish the lenders' capital. The companies' importance was underscored after Sept. 11, when capital continued to flow to the homebuying mar despite the economic uncertainty. Fannie and Freddie earn the bulk of their money by pocketing the interest on the lc http://online.wsj.com/article/0„SB 102858052018332880-search,00.html?collection=wsjie/3(... 8/6/2002 WSJ.com - Major Business News Page 3 of 7 they purchase and hang onto. In other cases, they package home loans into securiti sale on Wall Street, while issuing a guarantee that the loans will be repaid. THE GIANTS' TURF Fannie Mae and Freddie Mac's increasing size and reach have sparked speculation that the two companies will eventually face growth oonstraints. In addition, the Federal Horne Loan Banks' program may pose a challenge to Fannie and Freddie's hold on the mortgage market. Fannie and Freddie dominate... Percentage of total residential mortgage debt outstanding' owned w guaranteed by Fannie Mae or Freddie Mac. 40% 30 20 10 0 1975 '90 '85 '90 '95 '00 But face a new competttor Value of loans In Federal Home Loan Banks' new competing mortgage program $30 billion 20 10 r r$0.03 $0.00 I I . r $0919 ----..raral'' 1997 low1999 2000 2001 2002 After doubling their sizes roughly every six years recently, Fannie and Freddie no own or guarantee 44% of home mortgagf according to the Mortgage Bankers Asso of America. The figures are more impres in view of the companies' limitations -- s ban on buying "jumbo" mortgages larger $300,700 and lenders' disinclination to s( adjustable -rate loans. In the prime-qualit; vanilla home mortgages that have historil made up the bulk of Fannie and Freddie', operations, the percentage they own or gi is more than 80%. Contrary to those seeing a slowdown, Fa Mae Chief Economist David Berson exp U.S. mortgage debt outstanding to grow faster this decade than its 7%-a-year pace 1990s. He sees the total such debt at bete $11.5 trillion and $14 trillion by 2010, cc with about $6 trillion now. His estimates based on various assumptions, such as th homeownership will continue to grow, particularly among low-income and min( families, and that home prices will keep i producing bigger mortgages. Some lende economists say his estimates are too bulli •rne current ffwv*ot hac SO trillion In debt outmandi"Q. In any case, Ken Posner, a mortgage-fina aa: Z Saimrtp" i9w*ws Amoc.(adon of Amerkw, analyst at Morgan Stanley, says skeptics Fsdento Hw re Loan Bank ofChkdga Fannie's and Freddie's potential are in soi missing the point. Whatever happens to mortgages' growth rate, he says, the companies can continue to use their cost adva to buy up existing pools of mortgages that currently are held by others, such as institutional investors. Fannie and Freddie make the same point. More Like Funds Such purchasing, however, makes Fannie and Freddie more and more like investrr funds and less like financiers of new lending, which some believe is a departure fr mission. Already, the companies generate much of their growth by buying mortga. backed securities they previously issued and then putting them in their portfolios, that boosts their profits considerably. But critics say that strategy doesn't do much promote homeownership, while adding even more risk to the economy, since the companies arc taking on interest -rate risk in opting to own the securities. Mr. Posner figures Fannie and Freddie could own or guarantee $13.3 trillion in m( by 2020, reflecting a double-digit growth rate for the next 20 years or so, and that http://online.wsj .comlarticle/0„SB 102858052018332880-search,00.html?collection=wsjie/3(... 8/6/2002 WSJ.com - Major Business News Page 4 of 7 some point, they own the whole market." Even this sort of growth could face some risks, he says. For one thing, sustained p of more and more mortgages would require Fannie and Freddie to issue a staggeril amount of debt in order to have the funds to buy them. It would also require them to do a breathtaking volume of hedging. Every time Fai Freddie buy a mortgage loan, they take on risks, especially risk based on what intc rates will do. They hedge this risk by buying derivatives that shelter them from the harm interest -rate swings could cause. But with demand for derivatives swelling, r from Fannie and Freddie, "there just isn't enough hedging product" to fulfill the m market's needs, says Howard Shapiro, an analyst at Goldman Sachs. He nonethele: maintains a "strong buy" rating on the companies because he thinks they look bett( short-term basis than many other stocks. Fannie and Freddie also seek growth by trying to squeeze out more revenue from parts of the mortgage market, including subprime loans and home appraisals. But subprime loans -- to home -buyers with blemished credit -- carry much higher risk: a relatively small market. And expansion into businesses such as appraisals only it criticism from banks and entrenched real-estate interests, which have long compla that Fannie and Freddie have an unfair advantage because their government spons. gives them cheaper capital. Partly to blunt the unfair -advantage argument, Fannie Freddie recently agreed to file financial statements with the Securities and Exchan Commission, a move they had long fought. Exacerbating these pressures is the Federal Home Loan Bank program shepherded Pollock. The Federal Home Loan Banks, known as "Flubs," borrow money on Wa on behalf of member lenders that don't have easy access to capital markets and the to those banks. Mr. Pollock has now added to this function a mortgage program la in the mid- 1990s: The Flubs buy mortgages directly from their member lenders, pl those loans in their portfolios just as Fannie and Freddie do. One difference is what happens to the mortgages' "credit risk," the risk that loans paid back. When Fannie and Freddie buy a loan, they absorb the credit risk. They for doing so. But when the Federal Home Loan Banks purchase a loan, they let the retain much of the credit risk and pay it a fee to do so. Mr. Pollock says he came up with the idea while looking out his office window o'V downtown Chicago in 1994, "brooding" about Fannie's and Freddie's growing mar power. By his reckoning, the expansion of Fannie and Freddie was initially a goof introducing more efficiency and reducing risk in the mortgage market. But he cone the companies grew too big, along the way squeezing smaller banks and thrifts by too big a portion of the profits from each mortgage. Giving lenders another place t mortgages, Mr. Pollock says, will weaken Fannie's and Freddie's lock on the mark ultimately result in lower prices for consumers. He is picking up converts, such as Plantation Federal Bank, a community bank in Island, S.C., named after the rice plantations that once dotted the region. Over 18 1 Plantation Federal has shifted a big chunk of home -loan business to the Federal H1 Loan Bank system from Fannie and Freddie, selling the Flubs about $36 million o http://online.wsj.com/article/0„SB 102858052018332880-search,00.html?collection=wsjie/3(... R/6/2002 WSJ.com - Major Business News Page 5 of 7 mortgage loans it made. Although "Freddie and Fannie do an excellent job from our standpoint," says Plan president, J. Edward Norris III, "we like it from the competitive standpoint that we have an alternative." He says Freddie has offered better prices for its services sines started selling loans to the Federal Home Loan Banks. Mr. Pollock was so pleased with his invention that he got a patent on its software enshrined it in a plaque that hangs in his Chicago bank's headquarters. His prograr little more than a gnat to Fannie and Freddie -- it has just $31 billion in loans -- bu at a 47% annual clip in the first six months of this year, compared with less than 1 Fannie and Freddie. The Federal Home Loan Banks pay part of their profits to member lenders in the f dividends. So the more business lenders do with the program, the more they stand paid back in dividends. "On a basic economic model, [the Flub program] is better" Fannie and Freddie, says Bruce Morrison, a former chairman of Mr. Pollock's regi the Federal Housing Finance Board. "There is no conceptual reason why this prog couldn't be a major alternative." There remains some doubt as to how big a threat it will pose in the long run. The I haven't yet found a way to securitize their loans for sale in the secondary market. ( obstacle: The market likes simple and uniform securities, which is what Fannie an Freddie give them. Flub mortgages, with the credit risk divided up, are harder to g handle on. There's also considerable infighting among the 12 bank presidents. "I think everyone involved expected [the program] to be further along" by now, sa Angelo Mozilo, the chairman of Countrywide Credit Industries Inc. in Calabasas, Fannie Mae wasted little time reacting to the program when it first emerged in the 1990s. In a confidential memo drafted for Chairman Franklin Raines in February Fannie Mae's head of investor relations warned that the program posed a threat an, need to focus on "minimizing" its success. The memo suggested a strategy of cony the Flubs that "our business is NOT a business in which they want to compete." 'Disturbing Similarities' In another company document, a Fannie Mae executive described possible macroeconomic risks of the program, saying it bore "some disturbing similarities t S&L crisis of the late 1980s." The document argued that Flubs, with little experier owning mortgages, were exposed to "catastrophic" credit risk, even though they st some of this risk with the lender that originated the loan. Fannie and Freddie say they don't oppose competition but think the Federal Home Bank program is unfair because Flubs have different standards on how much capit have to hold. The Flubs also don't have to follow the same congressionally manda, affordable -housing goals as Fannie and Freddie. Fannie and Freddie have recently increasing their outreach to smaller lenders, which remain the most common users Flub program. http://online.wsj.com/article/0„SB 102858052018332880-search,00.html?collection=wsjie/3(... 8/6/2002 WSJ.com - Major Business News Page 6 of 7 In 2000, opponents considered seeking a cap on the volume of loans the Flubs cou purchase. Mr. Pollock and his backers barraged lawmakers with letters of support by numerous banks and trade associations. The efforts to impose a cap died. Many major mortgage lenders support the Flub program, seeing it as a way to exec competitive pressure on Fannie and Freddie. Smaller lenders see it simply as a eha get a better deal. At Community National Bank in Oregon, Wis., Chief Executive Behrend, though skeptical at first, now sends the majority of his loans through Mr Pollock's system at the Federal Home Loan Bank of Chicago. "We're small-time for Fannie and Freddie, Mr. Behrend believes. Noting that stal the Chicago Federal Home Loan Bank return his calls quickly, he adds that there, treated like an MVP." Write to Patrick Barta at patrick.barta(u wsj.com Updated August 6, 2002 C,� SAW E THIS (,:.0 EM1:.IL THIS Q FC+RPA»T FOR RR..INTUAG REPRINTS INFORMATION: To distribute multiple copies of this article; visit the Dow Jones Reprints site. Return To Top Corrections Contact Us Help About Dow Jones Mobile Devices E-mail Setup Account Information Privacy Policy Subscriber Agreement Copyright ©2002 Pow Jones & Company, Inc. 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