2004 12 08 IABT 4b 0
WT 4
P.O. Box 1504
78-495 CALLE TAMPICO (760) 777-7000
LA QUINTA, CALIFORNIA 92253 FAX (760) 777-7101
AGENDA
INVESTMENT ADVISORY BOARD
Study Session Room
78-495 Calls Tampico- La Quinta, CA 92253
December 8, 2004 - 5:30 P.M.
I CALL TO ORDER
a. Pledge of Allegiance
b. Roll Call
11 PUBLIC COMMENT- (This 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 10, 2004 for the Investment
Advisory Board.
V BUSINESS SESSION
A. Transmittal of Treasury Report for October, 2004
B. Timeline for Work Plan
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. City of La Quinta FY 04/05 Audited Financial Statements
B. Month End Cash Report — November, 2004
C. Pooled Money Investment Board Report — September, 2004
VII BOARD MEMBER ITEMS
Vill ADJOURNMENT
INVESTMENT ADVISORY BOARD Business Session: A
Meeting Date: December 8, 2004
ITEM TITLE:
Transmittal of Treasury Report
for October 31, 2004
BACKGROUND:
Attached please find the Treasury Report October 31, 2004.
RECOMMENDATION:
Review, Receive and File the Treasury Report for October 31, 2004.
4d-t-e�-
ohn M. Falconer, Finance Director
CV
4
MEMORANDUM
TO: La Quinta City Council
FROM: John M. FaM.oner, Finance DirectorfTreasurer
SUBJECT: Treasurer's Report for October 31, 2004
DATE: November 24, 2004
Attached is the Treasurers Report for the month ending October 31, 2004. 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 charges in investment types for the month:
Investment
Beglinning
Purchased
Notes
Sold/Matured
Other
Ending
Change
Cash (3)
$ 3,884,181
(1)
$ (3,244,976)
.
$639,205
($3,244,976)
LAW
9,303,263
5,670,309
(5,300,000)
9,673,572
370,309
US Treasuries (2)
122,522,588
130,900
122,653,488
130,900
US Gov't Agencies (2)
27,363,913
(16,456)
27,347,457
(16,456)
Commercial Paper (2)
-
0
0
Corporate Notes
-
0
0
Mutual Funds
7,925,497
1
(497,028)
7,428,469
(497,028)
Total
$ 170,999,442
$ 5,670 309
$ 9,042 004
$ 114,444
i 167,742 191
S 3 257 251
I certify that this report accurately reflects all pooled investments and is in compliance with the Califomia
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.
Y
M. Falconer Date
ce Direatorfrreasurer
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.
(3) The cash account may reflect a negative balance. This negative balance will be offset with transfers from other investments
before warrants are presented for payment by the payee at the bank.
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City of La Quints
Reconciliation of Actual and Surplus Funds
City, Redevelopment Agency and Financing Authority
October 31, 2004
Balance of Actual Funds 167,742.191
Less Petty cash Funds (1,000)
Less Non -Surplus Funds (750,000)
Balance of Surpluis Funds $166,991,191
City Cash i Investments
Bank Accounts
Name - Availability
Surplus
Type
Book
Wells Fargo - Demand
No
Checking
$ 573,202
Petty Cash - Demand
No
N/A
1,000
Wells Fargo/Housing - Demand
Yes
Checking
65 003
Total - Bank Accounts
s 639,205
U. S. Treasury
Amortized
Custodian - Availability
Surplus
Issuer/Type
Value
Bank of New York - Demand
Yes
U.S. Treasury Note
4,985,862
Bank of New York - Demand
Yes
U.S. Treasury Note
4,968,490
Bank of New York - Demand
Yes
U.S. Treasury Note
5,006,733
Bank of New York - Demand
Yes
U.S. Treasury Note
3,985,088
Bank of New York - Demand
Yes
U.S. Treasury Note
5,011,103
Bank of New York - Demand
Yes
U.S. Treasury Note
4,986,583
Bank of New York - Demand
Yes
U.S. Treasury Note
3,968,534
Bank of New York - Demand
I Yet
I U.S. Treasury Note
5 002 779
Total - U.S. Treasury
37,915:172
U.S. Government Securities
Custodian - Availability
Surplus
Issuer/Type
Amortized
Value
Banc of New York - Demand
Yes
FARM CREDIT
5,032,635
Bank of New York - Demand
Yes
FHLB
2,005,822
Bank of New York - Demand
Yes
FHLB
2,011,715
Bank of New York - Demand
Yes
FHLB
2,371,188
Banc of New York - Demand
Yes
FHLB
1,009,304
Bank of New York - Demand
Yes
FNMA -Discount
4,988,416
Bank of New York - Demand
Yes
FreddieMac
7,509,947
Bank of New York - Demand
I Yes
I FreddieMac - Discount
1 2 418 430
Total - U.S. Government Securities
I
1
1 27,347,457
Local Agency Investment Fund
Name - Availability
Surplus
Type
Book
LAW - City -Demand
Yes
State Pool
6,099,636
LAW - RDA - Demand
Yes
State Pool
3,573,936
Total - State Pool
9,673,572
Total City Investments
Total City Cash 3 Investments
Fiscal Agent Investments
Surplus
Yes
Adi
Surplus
Yes
s
s
65,003
65,003
$ 65,003
$ -
$ 65,003
Surplus
Surplus
Yes
Ad'
Yes
4,985,862
4,985,862
4.968,490
4,968,490
5,006,733
5.006,733
3,985,088
3,985,088
5,011,103
5.011,103
4,986,583
4,986,683
3,968,634
3,968,634
5002779
5 002 779
37,915,172
37. 15.172
Surplus
Yes
AdJ
Surplus
Yes
5,032,635
5,032,635
2,005,822
2,005,822
2,011,715
2,011,715
2,371,188
2,371,188
1,009,304
1,009,304
4,988,416
4,988,416
7,509,947
7,509,947
2,418 430
1
2418,430
27,347,457
1
27,347 457
Surplus
Surplus
Yes
Adi
Yes
6,099,636
(176,798)
5,922,838
3,573,936
3,573,936
9,673,572
176,798
9,496.774
74,836,2011 74,936,201 176,788 74,759,403
Surplus
No
Adi
Surplus
No
$ 573,202
_
$ 176,798
$ 750,000
1,000
1,000
$ 574,202
$ 176,798
$ 75500
Surpkis
No
Ad'
Surplus
No
Surplus Surplus
No AdJ No
All Funds Surplus
Actual % Yes
0.3811 % 0.0389%
All Funds Surplus
Actual % Yes
22.6032% 1 22.7049% 11
All Funds Surplus
Actual % Yes
16.3033% 1 16.3766%
Surplus Surplus All Funds Surplus
No Adi No Actual % Yes
5.7669% 5.6870%
75,575,406 75,001,204 176,798 74,824, 006 1 574,2021 176,798 1 751,000 145.0545% 1 44.8074%
Portfolio - City Investments
Amortized
Custodian - Availability
Surplus
Issuer/Type
Value
2002 RDA U.S. Bank-CIP
Yes
U.S.Tressury BID
27,932,765
2003 Tax" RDA U.S. Bank -CIP
Yes
U.S.Tressury Bill
1,994,724
2004 Finance Authority -CIP
Yes
U.S.Treasury Bill
9,918,863
2004 Finance Authority -CIP
Yes
U.S.Tressury Bill
44,891,964
Yes
Total - U.S. Treasury
84,738,316
Portfolio - Mutual Funds
Trustee - Availability
Surplus
Money Market
Mutual Fund
Book
Value
Civic Center U.S.Bank - Project
YES
1 st American
Civic Center U.S.Bank - Debt Svc
YES
1 st American
21
1994 RDA U.S. Bank -Debt Svc
YES
1 st American
1995 RDA U.S.Bank - CIP
YES
1st American
1995 RDA U.S.Sank - Special Fund
YES
1st American
2004 Fin Auth -1995 US Bank - Escrow
YES
1st American
101
1998 RDA U.S.Sank - CIP
YES
13t American
1998 RDA U.S.Bank - Dbt Svc
YES
1 st American
1998 Rat U.S.Sank - Special Fund
YES
1 st American
1998 RDA U.S.Sank - CIP
YES
1 st American
2001 RDA U.S. Bank - Dbt Svc
YES
1 st American
2001 RDA U.S. Bank - CIP
YES
1 st American
2002 RDA U.S. Bank - Dbt Svc
YES
1st American
2002 RDA U.S. Banc - CIP
YES
1st American
1,498,939
2003 Taxable RDA U.S. Bank - DS
YES
1 st American
2003 Taxable RDA U. S. Bank -COI
YES
1 st American
2003 Taxable RDA U. S. Bank-CIP
YES
1st American
2,758,141
2004 Fin Auth US Bank - CIP
YES
1st American
3,166,228
2004 FM Auth US Bank - COI
YES
1 st American
5,039
Subtotal - Mutual Fund
7,428,469
Surplus
Surplus
Yes
AdJ
Yes
27,932,765
27,932.765
1,994.724
1,994,724
9,918,863
9,918,863
44,891,%4
44,891,964
84,738,316
84,738,316
Surplus
Yes
AdJ
Surplus
Yes
21
21
101
101
1,498,939
1,498,939
2,758,141
2,758,141
3,166,228
3,166,228
5,039
5,039
7,428,469
7,428,469
MEN
Surplus
No
AdJ
Surplus
No
All Funds Surplus
Actual % Yes
50.5170% 50.7442%
All Funds Surplus
Actual % Yes
4.4285% 4.4484%
Total Fiscal Agent Investments 92,168 785 92,166,785 92.1"77-85-1 154.9455%155.1926%
Grand Total 167,742,181 167,167,989 176,788 166,991,1911 1 574,2021 176,7981 751.00 1100.0000% 100.0000%
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CITY OF LA QUINTA
BALANCE SHEET 10/31/04
CITY CITY RDA RDA FA
FIXED LONG TERM FIXED LONG TERM FINANCING LONGTERM GRAND
CITY ASSETS DEBT RDA ASSETS DEBT AUTHORITY DEBT TOTAL
ASSETS:
POOLED CASH
(19.131,179.97)
0.00
0.00
28,760,687.93
0.00
0.00
3,095.61
0.00
9,632.603.57
LORD INVESTMENT IN POOLED CASH
0.00
0.00
0.00
612.000.00
0.00
0.00
0.00
0.00
612,000.00
INVESTMENT T-BILLNOTES 8 OTHER
65,331,000.00
0.00
0.00
$5,000,000.00
0.00
0.00
0.00
0.00
150,331,000.00
AUTO MALL CASH
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
LORP CASH
0.00
0.00
0.00
67.175.70
0.00
0.00
0.00
0.00
67.175.70
BOND REDEMPTION CASH
0.00
0.00
0.00
100.55
0.00
0.00
21.38
0.00
121.93
BOND RESERVE CASH
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
BOND PROJECT CASH
0.00
0.00
0.00
7.423.307.36
0.00
0.00
5.038.71
0.00
7,428.346.07
BOND ESCROW CASH
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
PETTY CASH
1 000 00
0.00
0.1
0.00
0.00
0.00
0.00
0.00
1,000.00
CASH & INVESTMENT TOTAL
46 200,820.Q3
0.00
0.00
,,;
121,883,271.54
0.00
0.00
8,155.70
0.00
168,072,247.27
INVESTMENT IN LAND HELD FOR RESALE
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
ACCOUNTS RECEIVABLE
155,135.93
0.00
0.00
80.900.00
0.00
0.00
0.00
0.00
216,035.93
PREMIUMIDISCOUNT ON INVESTMENT
(68,372.41)
0.00
0.00
(261,683.45)
0.00
0.00
0.00
0.00
(330,055.86)
LORP-ACCOUNTS RECEIVABLE
0.00
0.00
0.00
93,364.59
0.00
0.00
0.00
0.00
$3.364.59
INTEREST RECEIVABLE
(7,531.25)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
(7,531.25)
LOANINOTES RECEIVABLE
0.00
0.00
0.00
12.741.527.47
0.00
0.00
90,000,000.00
0.00
102.741,527.47
DUE FROM OTHER AGENCIES
3,815,311.75
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3,815,311.75
DUE FROM OTHER AGENCIES-CVAG
879.096.69
0.00
0.00
0.00
0.00
0.00
0.00
0.00
879,096.69
CVAG ALLOWANCE
(879,096.69)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
(879.096.69)
DUE FROM OTHER GOVERNMENTS
14,033.81
0.00
0.00
0.00
0.00
0.00
0.00
0.00
14,033.81
DUE FROM OTHER FUNDS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
ADVANCES TO OTHER FUNDS - PRINCIPAL
21,422,880.21
0.00
0.00
0.00
0.00
0.00
0.00
0.00
21,422,880.21
ADVANCES TO OTHER FUNDS - INTEREST
7,988,794.42
0.00
0.00
5,346,562.21
0.00
0.00
0.00
0.00
13.335,356.63
ADVANCES TO OTHER FUNDS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
NSF CHECKS RECEIVABLE
2.228.90
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2.228.90
ACCRUED REVENUE
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
FIXED ASSETS
14,378,415.00 376.066,301.00
0.00
0.00
69,200,415.00
0.00
0.00
0.00
459,645,131.00
ACCUMULATED DEPRECIATION
(2,523,432.00) (58,159,116.00)
0.00
0.00
(234,000.00)
0.00
0.00
0.00
(60,916,548.00)
TRAVEL ADVANCES
1.472.40
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1,472.40
EMPLOYEE ADVANCES
13,015.70
0.00
0.00
0.00
0.00
0.00
0.00
0.00
13.015.70
PREPAID EXPENSES
561,850.70
0.00
0.00
0.00
0.00
0.00
0.00
0.00
561,850.70
RECEIVABLE TOTAL
45.753.803.16 317,907,185.00
0.00
17,970,670.82
68.966.415.00
0.00
90,000,000.00
0.00
540.596.073.98
0.00
0.00
0.00
WORKER COMPENSATION DEPOSIT
240,955.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
240,955.00
RENT DEPOSITS
4.830.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
4,830.00
UTILITY DEPOSITS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
MISC. DEPOSITS
1,073.21
0.00
0.00
360.00
0.00
0.00
0.00
0.00
1,433.21
DEPOSITS TOTAL
246.858.21
0.00
0.00
360.00
0.00
0.00
0.00
0.00
247,218.21
GENERAL FIXED ASSETS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
ACCUMULATED DEPRECIATION
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
AMOUNT AVAILABLE TO RETIRE LIT DEBT
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
AMOUNT TO BE PROVIDED FOR LIT DEBT
0.00
0.00
1.970.552.85
0.00
0.00
247.549.965.00
0.00
94.814,343.00
344,334,860.85
TOTAL OTHER ASSETS
0.00
0.00
1,970,552.85
0.00
0.00 247,549,965.00
0.00
94,814,343.00
344,334,860.85
TOTAL ASSETS
92,201,481.40 317,907,185.00
1,970,552.85 139,834,302.36
68,966,415.00 247,549,965.00
90,008,155.70
94,814,343.00 1,053,252,100.31
LIABILITIES:
ACCOUNTS PAYABLE
563.174.71
0.00
0.00
19.645.49
0.00
0.00
0.00
0.00
572.920.20
DUE TO OTHER AGENCIES
117.520.99
0.00
0.00
0.00
0.00
0.00
0.00
0.00
117,520.99
DUE TO OTHER FUNDS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
ADVANCES FROM OTHER FUNDS - PRINCIPAL
5,371,892.21
0.00
0.00
21,397.550.21
0.00
0.00
0.00
0.00
26,769,442.42
ADVANCES FROM OTHER FUNDS - INTEREST
0.00
0.00
0.00
7,988,795.52
0.00
0.00
0.00
0.00
7,988,795.52
INTEREST PAYABLE
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
RETENTION PAYABLE
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
PAYROLL LIABILITIES
171,909.34
0.00
0.00
0.00
0.00
0.00
0.00
0.00
171.909.34
STRONG MOTION INSTRUMENTS
2.224.98
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2.224.98
FRINGE TOED LIZARD FEES
4,688.87
0.00
0.00
0.00
0.00
0.00
0.00
0.00
4,688.87
SUSPENSE
127.70
0.00
0.00
0.00
0.00
0.00
0.00
0.00
127.70
DUE TO THE CITY OF LA QUINTA
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
PAYABLE$ TOTAL
6.221,536.80
0.00
0.00
29,405,991.22
0.00
0.00
0.00
0.00
35,627,530.02
ENGINEERING TRUST DEPOSITS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
SO. COAST AIR QUALITY DEPOSITS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
LORP DEPOSITS
0.00
0.00
0.00
18,664.00
0.00
0.00
0.00
0.00
18,664.00
DEVELOPER DEPOSITS
1.457,032.60
0.00
0.00
2.835.00
0.00
0.00
0.00
0.00
1,459.867.60
MISC. DEPOSITS
627,240.32
0.00
0.00
25.000.00
0.00
0.00
0.00
0.00
652,240.32
AGENCY FUND DEPOSITS
879,028.79
0.00
0.00
0.00
0.00
0.00
0.00
0.00
879,028.79_
TOTAL DEPOSITS
2,963.301.71
0.00
0.00
46,499.00
0.00
0.00
0.00
0.00
3,009,800.71
DEFERRED REVENUE
3,767,177.88
0.00
0.00
10 618101.84
0.00
0.00
90 000,000.00
0.00
104 385 279.72
OTHER LIABILITIES TOTAL
3,767,177.88
0.00
0.00
10,618,101.84
0.00
0.00
90,000,000.00
0.00
104,385,279.72
COMPENSATED ABSENCES PAYABLE
0.00
0.00
531,553.26
0.00
0.00
0.00
0.00
0.00
531.553.26
DEVELOPER AGREEMENT
0.00
0.00
1,010,688.59
0.00
0.00
0.00
0.00
0.00
1,010.668.59
DUE TO THE CITY OF LA QUINTA
0.00
0.00
428.311.00
0.00
0.00
0.00
0.00
0.00
428.311.00
DUE TO COUNTY OF RIVERSIDE
0.00
0.00
0.00
0.00
0.00
2,050.000.00
0.00
0.00
2,050,000.00
DUE TO C.V. UNIFIED SCHOOL DIST.
0.00
0.00
0.00
0.00
0.00
6,667.336.00
0.00
0.00
6.667,336.00
DUE TO DESERT SANDS SCHOOL DIST.
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
LOANS PAYABLE
0.00
0.00
0.00
0.00
0.00
90.000,000.00
0.00
0.00
90,000,000.00
BONDS PAYABLE
0.00
0.00
0.00
0.00
0.00 148,832 629.00
0.00
94 614,343.00
243,646,972.00
TOTAL LONG TERM DEBT
0.00
0.00
1,970,552.85
0.00
0.00
247,549,965.00
0.00
94,814,343.00
344,334.860.85
TOTAL LIABILITIES 12,952,018.39 0.00 1,970,552.85 40,070,592.06 0.00 247,549,965.00 90,000,000.00 94,814,343.00 487,357,471.30
EQUITY -FUND BALANCE 79,249.463.01 317,907,185.00 0.00 99.763.710.30 68,966,415.00 0.00 8,155.70 0.00 565.894,929.01
TOTAL LIABILITY 3 EQUITY 92,201,481.40 317,907,185.00 1,970,552.85 139,834,302.36 68,966 41.5.00 247,549,965.00 90,008,155.70 94,814,343.00 1.053.252,400.31
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CASH & INVESTMENT TOTAL 168,072,247.27
PREMIUMIDISCOUNT ON INVESTMENT (330,055.86)
TOTAL 167,742.191.41:
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INVESTMENT ADVISORY BOARD Business Session: B
Meeting Date: December 8, 2004
ITEM TITLE:
Timeline. for Work Plan
BACKGROUND:
Chairman Lewis asked that this item be placed on the Agenda for the December 8,
2004 agenda to discuss the process for addressing Work Plan items.
RECOMMENDATION:
onal item only.
ohn M. Falconer, Finance Director
AGENDA CATEGORY:
BUSINESS SESSION: 3
-00-
COUNCIL/RDA MEETING DATE: October 19, 2004 CONSENT CALENDAR:
STUDY SESSION:
ITEM TITLE: Consideration of Investment Advisory PUBLIC HEARING:
Board 2004/2005 Work Plan
RECOMMENDATION:
Approve the Investment Advisory Board 2004/2005 Work Plan.
FISCAL IMPLICATIONS:
Fiscal implications consist of Board Members meeting expenses, budgeted at
$4, 500, and staff support time.
CHARTER CITY IMPLICATIONS:
None.
BACKGROUND AND OVERVIEW:
The Investment Advisory Board's 2004/2005 Work Plan at their July 14, 2004
meeting consisted of the following:
• Meeting with the City Council to discuss using a Portfolio Manager, which if
acceptable, would require an Ordinance change;
• Consider alternative investments based upon the increase in the size of the
portfolio;
• Continue to monitor developments regarding Government Sponsored
Enterprises (GSE's), LAIF, Corporate Notes and Commercial Paper; and
• Discuss extending the maturity limit from the two year maximum on the
portfolio — currently $5 million in Treasury instruments may exceed the two
year limit and may be invested up to five years.
FINDINGS AND ALTERNATIVES:
The alternatives available to the City Council include:
1. Approve the Investment Advisory Board 2004/2005 Work Plan; or
2. Do not approve the Investment Advisory Board 2004/2005 Work Plan; or
3. Provide staff with alternative direction.
Respectfully submitted,
M. Falconer, Finance Director
Approved for submission by:
Thomas P. Genovese, City Manager
2
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item A
Meeting Date: December 8, 2004
ITEM TITLE:
City of La Quinta Fiscal Year 2004-05
Audited Financial Statement
BACKGROUND:
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. Falconer, Finance Director
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item B
Meeting Date: December 8, 2004
TITLE:
Month End Cash Report November 2004 and
Other selected Financial Data
BACKGROUND:
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.
ohn M. Falconer, Finance Director
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Phil Angelides, State Treasurer
Inside the State Treasurer's Office
Local Agency Investment Fund (LAIF)
PMIA Performance Report
LAIF Performance Report
Quarter Ending 09/30/04
Apportionment Rate: 1.67%
Earnings Ratio: .00004580259912957
Fair Value Factor: .998736821
PMIA Average Monthly Effective Yields
August 2004 1.672%
September 2004 1.771 %
October 2004 1.890%
Pooled Money Investment Account
Portfolio Composition
$51.9 Billion
10/31/04
Loans Treasuries
Corporate 8.56% 14.18%
[]��J�
Commercial
Paper
16.80%
Tin
Depc
12.1
CD's/BN's
19.75%
gages
56%
Agencies
24.73%
■ Treasuries
0 Mortgages
M Agencies
■ CD's/BN's
OTime Deposits
® Bankers Acceptances
■ Repo
■ Commercial Paper
0 Corporate Bonds
0 Loans
■ Reverses
.., ... -. 0s
Recent Treasury Bill Auction Results
Pagel of 2
TreasuryDirect
;� @urn cif t�
- Pu bl 1c Debt
Savings Bonds
Treasury.Direct
Accounts and
Information
Savings..Bonds
Tools
Treasury-541s}
Notes.,.
and Bonds
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Information
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Resources
Site Map
Search
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FAQs
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FOIA
Privac._and.-_Legal
Notices
.......................................
Recent Treasury Bill Auction Results
Issue
Maturity
Discount
Investment
Term
Date
Date
Rate %
Rate %
12-DAY
12-03-2004
12-15-2004
1.960
1.989
28-DAY
12-02-2004
12-30-2004
2.035
2.067
91-DAY
12-02-2004
03-03-2005
2.195
2.238
182-DAY
12-02-2004
06-02-2005
2.395
2.458
14-DAY
12-01-2004
12-15-2004
1.950
1.979
27-DAY
11-26-2004
12-23-2004
1.950
1.980
90-DAY
11-26-2004
02-24-2005
2.155
2.197
181-DAY
11-26-2004
05-26-2005
2.365
2.427
23-DAY
11-23-2004
12-16-2004
1.925
1.954
5-DAY
11-18-2004
11-23-2004
1.890
1.917
91-DAY
11-18-2004
02-17-2005
2.075
2.115
182-DAY
11-18-2004
05-19-2005
2.280
2.339
27-DAY
11-12-2004
12-09-2004
1.900
1.929
90-DAY
11-12-2004
02-10-2005
2.045
2.084
181-DAY
11-12-2004
05-12-2005
2.260
2.318
28-DAY
11-04-2004
12-02-2004
1.835
1.863
91-DAY
11-04-2004
02-03-2005
1.950
1.987
182-DAY
11-04-2004
05-05-2005
2.140
2.193
29-DAY
10-28-2004
11-26-2004
1.760
1.787
91-DAY
10-28-2004
01-27-2005
1.855
1.890
182-DAY
10-28-2004
04-28-2005
2.040
2.090
28-DAY
10-21-2004
11-18-2004
1.570
1.594
91-DAY
10-21-2004
01-20-2005
1.770
1.803
182-DAY
10-21-2004
04-21-2005
1.990
2.038
29-DAY
10-14-2004
11-12-2004
1.555
1.579
91-DAY
10-14-2004
01-13-2005
1.680
1.711
182-DAY
10-14-2004
04-14-2005
1.955
2.002
2-DAY
10-13-2004
10-15-2004
1.680
1.703
28-DAY
10-07-2004
11-04-2004
1.530
1.553
91-DAY
10-07-2004
01-06-2005
1.685
1.716
182-DAY
10-07-2004
04-07-2005
1.990
2.038
14-DAY
10-01-2004
10-15-2004
1.595
1.618
28-DAY
09-30-2004
10-28-2004
1.590
1.614
91-DAY
09-30-2004
12-30-2004
1.710
1.741
182-DAY
09-30-2004
03-31-2005
1.950
1.997
28-DAY
09-23-2004
10-21-2004
1.605
1.629
91-DAY
09-23-2004
12-23-2004
1.685
1.716
Price
Per CUSIP
$100
99.934667 912795TF8
99.841722 912795RTO
99.445153 912795SC6
98.789194 912795SR3
99.924167 912795TF8
99.853750 912795RS2
99.461250 912795SB8
98.810931 912795SQ5
99.877014 912795RR4
99.973750 912795TE1
99.475486 912795SAO
98.847333 912795SP7
99.857500 912795RQ6
99.488750 912795RZ6
98.863722 912795SN2
99.857278 912795RP8
99.507083 912795RY9
98.918111 912795SM4
99.858222 912795RN3
99.531097 912795RX1
98.968667 912795SL6
99.877889 912795RM5
99.552583 912795RW3
98.993944 912795SK8
99.874736 912795RL7
99.575333 912795RV5
99.011639 912795SJ1
99.990667 912795TD3
99.881000 912795RK9
99.574069 912795RU7
98.993944 912795SH5
99.937972 912795TD3
99.876333 912795RJ2
99.567750 912795RTO
99.014167 912795SG7
99.875167 912795RH6
99.574069 912795RS2
1 4
http://wwws.publicdebt.treas.gov/AI/0FBills 12/1 /2004
Recent Treasury Bill Auction Results Page 2 of 2
182-DAY 09-23-2004 03-24-2005 1.870 1.914 99.054611 912795SF9
28-DAY 09-16-2004 10-14-2004 1.525 1.553 99.881 912795RG8
91-DAY 09-16-2004 12-16-2004 1.640 1.671 99.585 912795RR4
Effective with the 11 /2/98 auction, all bills are auctioned using the single -priced
method.
Return to Auction Information Page
Updated December 1, 2004 2:15:16 PM EST
http://wwws.publicdebt.treas.gov/AI/OFBills 12/1 /2004
FRB:Commercial Paper Rates and Outstandings
Pagel of 3
Federal Reserve release
Release I About Outstandings I Historical discount rates I Historical outstaridings I Year End
Data as of November 30, 2004
Commercial Paper Rates and-Outstandings
Derived from data supplied by The Depository Trust Company
Trade data insufficient to support calculation of the 90-day AA nonfinancial rate(s) for November 30, 2004 .
Posted December 1, 2004
Discount rates
AA
AA
A2/P2
Term
financial
nonfinancial
nonfinancial
1-day 2.04 2.05 2.10
-11
7-day 2.00 2.00 2.09
15-day 2.01 2.00 1 2.13
30.day 2.13 2.09 2.27
60-day 2.24 2.17 237
-]1
190-day 11 2.31 11 ND 2.42
Yield curve
Money market basis
`financial
Nonfinancial
........... A2/P2
1 7 1-5 .10
Days to Maturity
.R
Percent
Fill
2.5
2.5
2.4
2.3
2.2
2.1
2.0
1.9.
http://www.federalreserve.gov/Releases/CP/ 12/1 /2004
FRB:Commercial Paper Rates and Outstandings
Page 2 of 3
Discount rate spread
Basis points l2C}
00
80
60
40
20
0
2001 2002 2003 2004
Discount rate history
Thirty -day commercial paper (daily)
Financial
-- — — N of nanrial
........... A2/P2
ii
Outstandings
Weekly (Wednesday), seasonally adjusted
Ii
Percent
--15
4
3
2
m
U
http://www.federalreserve.gov/Releases/CP/
12/1/2004
FRB:Commercial Paper Rates and Outstandings
Page 3 of 3
Billions of dollan
1260
1.240
I
12(
111
1.1(
1 14t1
200I
Billions of dollan
Z
20M. 23 20D4
U
9
I
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 paper outstanding
Commercial paper outstanding, miscellaneous categories
Volume Statistics 2004 :Q3
Release I About I Outstandings I Historical discount rates I Historical outstandings ( Year End
Home I Statistical releases
Accessibilitvl Contact Us
Last update: December 1, 2004
http://www.federalreserve.gov/Releases/CP/
L. 8
12/1/2004
FRB: H.15 Release --Selected Interest Rates --November 29, 2004
Pagel of 3
Federal Reserve Statistical Release
H.15
selected Interest Rates
Release Date: November 29, 2004
Release dates I Daily update I Historical data I About
Current release Other formats: Screen_reader I ASCII I PDF _Q 7_ KB.)
FEDERAL RESERVE STATISTICAL RELEASE
H.15 (519)
SELECTED INTEREST RATES
Yields in percent per annum
Instruments
Federal funds (effective) 1 2 3
Commercial paper 3 4 5
Nonfinancial
1-month
2-month
3-month
Financial
1-month
2-month
3-month
CDs (secondary market) 3 6
1-month
3-month
6-month
Eurodollar deposits (London) 3 7
1-month
3-month
6-month
Bank prime loan 2 38
Discount window primary credit 2 9
U.S. government securities
Treasury bills (secondary market) 3 4
4-week
3-month
6-month
Treasury constant maturities
Nominal 10
1-month
3-month
6-month
1-year
2-year
http://www.federalreserve.gov/Releases/H 15/Current/
2004
2004
2004
2004
2004
Nov
Nov
Nov
Nov
Nov
22
23
24
25
26
2.01
2.00
2.02
2.02
2.01
2.06
2.06
2.07
2.07
2.13
2.18
n.a.
n.a.
2.23
2.22
n.a.
n.a.
2.06
2.07
2.08
2.10
2.16
2.21
2.22
2.18
2.26
n.a.
2.27
2.18
2.11
2.16
2.16
2.18
2.32
2.34
2.34
2.35
2.54
2.55
2.55
2.58
2.09
2.10
2.11
2.13
2.28
2.31
2.31
2.33
2.48
2.51
2.52
2.56
5.00
5.00
5.00
5.00
5.00
3.00
3.00
3.00
3.00
3.00
1.93
1.96
1.95
1.97
2.16
2.13
2.14
2.16
2.37
2.35
2.34
2.34
1.98
1.99
1.98
2.01
2.20
2.19
2.18
2.21
2.43
2.41
2.40
2.40
2.60
2.60
2.60
2.61
2.95
2.98
3.01
3.03
12/1/2004
FRB: H.15 Release --Selected Interest Rates --November 29, 2004
Page 2 of 3
3-year
3.18
3.20
3.23
3.25
5-year
3.56
3.58
3.61
3.64
7-year
3.90
3.92
3.93
3.98
10-year
4.18
4.19
4.20
4.24
20-year 11
4.85
4.85
4.85
4.90
Inflation -indexed 12
5-year
0.89
0.93
0.93
0.94
7-year
1.23
1.26
1.26
1.27
10-year
1.62
1.65
1.64
1.66
20-year
2.01
2.04
2.03
2.06
Inflation -indexed
long-term average 13
2.08
2.04
2.04
2.07
Interest rate swaps 14
1-year
2.93
2.94
2.95
2.97
2-year
3.32
3.34
3.34
3.39
3-year
3.57
3.58
3.58
3.64
4-year
3.78
3.78
3.79
3.84
5-year
3.96
3.97
3.96
4.02
7-year
4.27
4.26
4.26
4.31
10-year
4.59
4.57
4.57
4.63
30-year
5.22
5.18
5.18
5.24
Corporate bonds
Moody's seasoned
Aaa 15
5.44
5.45
5.45
5.50
Baa
6.14
6.15
6.15
6.20
State & local bonds 16
4.53
Conventional mortgages 17
5.72
See overleaf for footnotes
* Markets closed
n.a.-- not available
FOOTNOTES
1. The daily effective federal funds rate is a weighted average of rates on broke
2. Weekly figures are averages of 7 calendar days ending on Wednesday of the curr
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 settl
Trust Company. The trades represent sales of commercial paper by dealers or d
investors (that is, the offer side). The 1-, 2-, and 3-month rates are equiva
90-day dates reported on the Board's Commercial Paper Web page (www.federalres
6. An average of dealer offering rates on nationally traded certificates of depos
7. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time.
8. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.
banks. Prime is one of several base rates used by banks to price short-term b
http://www.federalreserve.gov/Releases/Hl 5/Current/
,. 10
12/1/2004
FRB: H.15 Release --Selected Interest Rates --November 29, 2004
Page 3 of 3
9. The rate charged for discounts made and advances,extended under the Federal Re
discount window program, which became effective January 9, 2003. This rate rep
adjustment credit, which was discontinued after January 8, 2003. For further
www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm.
The rate reported is that for the Federal Reserve Bank of New York. Historica
adjustment credit is available at www.federalreserve.gov/releases/hl5/data.htm
10. Yields on actively traded non -inflation -index issues adjusted to constant matu
Treasury.
11. A factor for adjusting the daily nominal 20-year constant maturity in order to
be found at www.treas.gov/offices/domestic-finance/debt-management/interest-ra
12. Yields on Treasury inflation protected securities (TIPS) adjusted to constant
Treasury. Additional information on both nominal and inflation -indexed yields
www.treas.gov/offices/domestic-finance/debt-management/interest-rate/index.htm
13. Based on the unweighted average bid yields for all Inflation Protected Securit
to maturity of more than 10 years.
14. International Swaps and Derivatives Association (ISDA®) mid -market par swap ra
Rate Payer in return for receiving three month LIBOR, and are based on rates c
time by Garban Intercapital plc and published on Reuters Page .ISDAFIX®1. ISDA
mark of ISDA. Source: Reuters Limited.
15. Moody's Aaa rates through December 6, 2001 are averages of Aaa utility and Aaa
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; Thu
17. Contract interest rates on commitments for fixed-rate first mortgages. Source
Note: Weekly and monthly figures on this release, as well as annual figures availab
H.15 web site (see below), are averages of business days unless otherwise not
Current and historical H.15 data are available on the Federal Reserve Board'
(www.federalreserve.gov/). For information about individual copies or subsc
Publications Services at the Federal Reserve Board (phone 202-452-3244, fax
For paid electronic access to current and historical data, call STAT-USA at
202-482-1986.
DESCRIPTION OF THE TREASURY NOMINAL AND INFLATION -INDEXED
CONSTANT MATURITY SERIES
Yields on Treasury nominal securities at "constant maturity" are interpolated by.th
the daily yield curve for non -inflation -indexed Treasury securities. This curve, wh
yield on a security to its time to maturity, is based on the closing market bid yie
Treasury securities in the over-the-counter market. These market yields are calcula
of quotations obtained by the Federal Reserve Bank of New York. The constant maturi
read from the yield curve at fixed maturities, currently 1, 3 and 6 months and 1, 2
years. This method provides a yield for a 10-year maturity, for example, even if no
has exactly 10 years remaining to maturity. Similarly, yields on inflation -indexed
"constant maturity" are interpolated from the daily yield curve for Treasury inflat
in the over-the-counter market. The inflation -indexed constant maturity yields are
curve at fixed maturities, currently 5, 7, 10, and 20 years.
Release I Daly..._update I Historical I About
Current release Other formats: Screen. reader I ASCII I PDF (17 KB)
Statistical releases
Home I Economic research and data
Accessibility CClIlta-1 Us.
Last update: November 29, 2004
http://www.federalreserve.gov/Releases/H 15/Current/
12/1 /2004
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12
INVESTMENT ADVISORY BOARD
Meeting Date: December 8, 2004
TITLE:
Pooled Money Investment Board Report
for September 2004
BACKGROUND:
Correspondence
& Written Material Item C
The Pooled Money Investment Board Report for September 2004 is included in the
agenda packet.
RECOMMENDATION:
Receive & File
ohn M. Falconer, Finance Director
K"wx".. .
STATE OF CALIFORNIA
STATE TREASURER'S OFFICE
POOLED MONEY INVESTMENT BOARD REPORT
September 2004
TABLE OF CONTENTS
SUMMARY................................................................. 01
SELECTED INVESTMENT DATA..... ............................. 02
PORTFOLIO COMPOSITION ........................................ 03
INVESTMENT TRANSACTIONS......... .......................... 04
TIMEDEPOSITS........................................................ 13
BANK DEMAND DEPOSITS .......................................... 25
POOLED MONEY INVESTMENT BOARD DESIGNATION... 26
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF SEPTEMBER 2004 WITH SEPTEMBER 2003
(DOLLARS IN THOUSANDS)
Average Daily Portfolio
Accrued Earnings
Effective Yield
Average Life -Month End (In Days)
SEPTEMBER 2004' SEPTEMBER'2003CHANGE
$ 49,406,088 $
$ 71,928
1.771
Total Security Transactions
Amount $
Number
Total Time Deposit Transactions
Amount $
Number
Average Workday Investment Activity $
Prescribed Demand Account Balances
For Services $
For Uncollected Funds $
61,979,704 $-2,573,616 1
69,643 +2,285 1
1.636 +0.136 1
182 214 -32
12,164,106 $ 20,322,273 $-8,168,167
263 441 -178
2,886,000
$
2,873,000
$
+12,000
176
151
+26
716,624
$
1,104,537
$
-387,913
747,741
$
1,173,600
$
-425,859
206,357
$
148,915
$
+57,442
1
PHIL ANGELIDES
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
September 30, 2004
DIFFERENCE IN
PERCENT OF
PERCENT OF PORTFOLIO
FROM
TYPE OF SECURITY
AMOUNT PORTFOLIO
PRIOR MONTH
Government
Bills
$ 2,464,369 4.86
-0.01
Bonds
0 0.00
0.00
Notes
4,608,280 9.09
-0.22
Strips
0 0.00
0.00
Total Government
$ 7,072,649 13.95
-0.23
Federal Agency Coupons
$ 4,853,077
9.57
+0.31
Certificates of Deposit
7,840,048
15.47
-0.52
Bank Notes
200,000
0.39
-0.30
Bankers' Acceptances
0
0.00
0
Repurchases
0
0.00
0
Federal Agency Discount Notes
8,966,696
17.68
-1.92
Time Deposits
6,226,295
12.28
+0.15
GNMAs
404
0.00
0
Commercial Paper
7,849,365
15.48
+5.38
FHLMCIRemics
354,062
0.70
-0.02
Corporate Bonds
1,639,729
3.24
+0.22
AB 55 Loans
4,645,734
9.16
-0.19
GF Loans
1,054,400
2.08
-2.88
Reversed Repurchases
0
0.00
0.00
Total (All Types)
$ 60,701,459
100.00
INVESTMENT ACTIVITY
Pooled Money
Other
Time Deposits
Totals
PMIA Monthly Average Effective Yield
Year to Date Yield Last Day of Month
SEPTEMBER 2004
NUMBER
AMOUNT
263
$ 12,164,106
14
59,111
176
2,885,000
453
$ 15,108,217
1.771
1.679
2
AUGUST 2004
NUMBER
AMOUNT
314
$ 14,704,996
9
335,270
138
2,757,600
461
$ 17,797,866
1.672
1.637
Co
E
3
Commercial
Paper
15.48%
l
De
1e
Pooled Money Investment Account
Portfolio Composition
$50.7 Billion
09/30/04
Loans
11.24% Treasuries
12 09ZO
CD's/BN's
15.86%
3
)rtgages
).70%
Agencies
27.25%
■ Treasuries
Mortgages
Agencies
■ CD's/BN's
Time Deposits
E Bankers Acceptances
■ Repo
■ Commercial Paper
■ Corporate Bonds
Loans
■ Reverses
09/01/04 REDEMPTIONS
BN
BANK ONE
1.120%
09/01/04
1.120
50,000
133
206,888.89
1.136
BN
BANK ONE
1.120%
09/01/04
1.120
50,000
133
206,888.89
1.136
CD
NOVA SCOT
1.070%
09/01/04
1.070
50,000
128
190,222.22
1.085
CD
NOVA SCOT
1.070%
09/01/04
1.070
50,000
128
190,222.22
1.085
CD
NOVA SCOT
1.070%
09/01/04
1.070
50,000
128
190,222.22
1.085
CD
NOVA SCOT
1.070%
09/01/04
1.070
50,000
128
190,222.22
1.085
CD
ABN AMRO
1.115%
09/01/04
1.110
50,000
131
201,962.00
1.125
CD
ABN AMRO
1.115%
09/01/04
1.110
50,000
131
201,962.00
1.125
CD
ABN AMRO
1.115%
09/01/04
1.110
50,000
131
201,962.00
1.125
CD
RABO
1.125%
09/01/04
1.120
50,000
131
203,781.47
1.135
CD
RABO
1.125%
09/01/04
1.120
50,000
131
203,781.47
1.135
CD
RB SCOT
1.110%
09/01/04
1.110
50,000
131
201,958.33
1.125
CD
RB SCOT
1.110%
09/01/04
1.110
50,000
131
201,958.33
1.125
CP
GECC
09/01/04
1.520
5,000
2
422.22
1.541
CP
GECC
09/01/04
1.520
50,000
2
4,222.22
1.541
CP
GECC
09/01/04
1.520
50,000
2
4,222.22
1.541
CP
GECC
09/01/04
1.520
50,000
2
4,222.22
1.541
CP
GECC
09/01/04
1.520
50,000
2
4,222.22
1.541
CP
GMAC
09/01/04
1.520
50,000
37
78,111.11
1.544
CP
GMAC
09/01/04
1.520
50,000
37
78,111.11
1.544
CP
GMAC
09/01/04
1.520
50,000
37
78,111.11
1.544
CP
GMAC
09/01/04
1.520
50,000
37
78,111.11
1.544
CP
B/A
09/01/04
1.240
50,000
92
158,444.44
1.261
CP
B/A
09/01/04
1.240
50,000
92
158,444.44
1.261
CP
B/A
09/01/04
1.240
50,000
92
158,444.44
1.261
CP
B/A
09/01/04
1.240
50,000
92
158,444.44
1.261
CP
B/A
09/01/04
1.240
50,000
92
158,444.44
1.261
CP
NCAT
09/01/04
1.200
35,000
114
133,000.00
1.221
CP
CITI GLOBAL
09/01/04
1.120
50,000
114
177,333.33
1.140
CP
CITI GLOBAL
09/01/04
1.120
50,000
114
177,333.33
1.140
CP
CITI GLOBAL
09/01/04
1.120
50,000
114
177,333.33
1.140
09/01/04 NO PURCHASES
09/02/04 REDEMPTIONS
CD
W/F
1.510% 09/02/04
1.510
40,000
13
21,811.11
1.531
CD
W/F
1.510% 09/02/04
1.510
50,000
13
27,263.89
1.531
CP
MORG STAN
09/02/04
1.520
50,000
3
6,333.33
1.541
CP
MORG STAN
09/02/04
1.520
50,000
3
6,333.33
1.541
CP
CITI GLOBAL
09/02/04
1.120
50,000
115
178,888.89
1.140
CP
CITI GLOBAL
09/02/04
1.120
50,000
115
178,888.89
1.140
CP
FCAR
09/02/04
1.110
20,000
143
88,183.33
1.130
09/02/04 NO PURCHASES
09/03/04 SALES
TREAS NOTE 2.250% 04/03/06 2.287 50,000 115 416,312.50 2.647
TREAS NOTE 2.250% 04/03/06 2.287 50,000 115 416,312.50 2.647
4
09/03/04 REDEMPTIONS
CD SOC GEN 1.120% 09/03/04 1.120 50,000 130 202,222.22 1.136
09/03/04 PURCHASES
FHLB
FHLB
09/07/04
REDEMPTIONS
CD
RB SCOT
CD
RB SCOT
CP
BAXTER
DISC NOTE
FHLB
DISC NOTE
FHLB
09/07/04
PURCHASES
CP
GMAC
CP
GMAC
CP
GECC
CP
GECC
09/08/04
NO REDEMPTIONS
09/08/04
NO PURCHASES
09/09/04
NO REDEMPTIONS
09/09/04
PURCHASES
CP
GECC
MTN
COUNTRY
MTN
GECC
09/10/04
REDEMPTIONS
CP
GECC
DISC NOTE
FNMA
DISC NOTE
FNMA
09/10/04
NO PURCHASES
09/13/04
NO REDEMPTIONS
09/13/04
PURCHASES
CP
SARA LEE
CP
GECC
CP
GECC
CP
GECC
3.000% 05/15/06 2.500 50,000
3.000% 05/15/06 2.500 50,000
1.130% 09/07/04
1.130
50,000
134
210,305.56
1.146
1.130% 09/07/04
1.130
50,000
134
210,305.56
1.146
09/07/04
1.500
40,000
43
71,666.67
1.523
09/07/04
1.170
50,000
102
165,750.00
1.190
09/07/04
1.170
50,000
102
165,750.00
1.190
12/01/04
1.880
50,000
12/01/04
1.880
50,000
12/13/04
1.770
50,000
12/13/04
1.770
50,000
09/10/04 1.520 50,000
5.500% 08/01/06 3.020 20,000
2.800% 01 /15/07 3.100 31,000
09/10/04 1.520 50,000 1 2,111.11 1.541
09/10/04 1.100 50,000 148 226,111.11 1.120
09/10/04 1.100 50,000 148 226,111.11 1.120
09/30/04
1.640
40,000
01 /27/05
1.860
10,000
01 /27/05
1.860
50,000
01/27/05
1.860
50,000
5
09/14/06 NO REDEMPTIONS
09/14/04 PURCHASES
CB
W/F
7.250% 08/24/05
2.250
10,755
CP
CITI GLOBAL
01/10/05
1.850
50,000
CP
CITI GLOBAL
01/10/05
1.850
50,000
CP
CITI GLOBAL
01/10/05
1.850
50,000
CP
CITI GLOBAL
01/10/05
1.850
50,000
CP
GECC
01 /14/05
1.860
23,000
CP
GECC
01/14/05
1.860
50,000
CP
FCAR
01 /20/05
1.860
17,000
CP
FCAR
01 /20/05
1.860
50,000
CP
FCAR
01/20/05
1.860
50,000
09/16/04 REDEMPTIONS
MTN GECC 7.375% 09/15/04 4.310 23,850 911 2,670,140.00 4.197
09/15/04 PURCAASES
CD
US BANK
1.900%
01/27/05
1.900
50,000
CD
US BANK
1.900%
01/27/05
1.900
50,000
CD
CS/FST BOSTON
1.895%
01/27/05
1.880
50,000
CD
CS/FST BOSTON
1.895%
01/27/05
1.880
50,000
CD
SVENSKA
1.880%
01/28/05
1.870
50,000
CD
SVENSKA
1.880%
01/28/05
1.870
50,000
CD
SOC GEN
1.910%
02/18/05
1.910
40,000
CD
BNP PARIBAS
1.920%
02/18/05
1.920
50,000
CD
BNP PARIBAS
1.920%
02/18/05
1.920
50,000
CD
BNP PARIBAS
1.920%
02/18/05
1.920
50,000
CD
BNP PARIBAS
1.920%
02/18/05
1.920
50,000
CP
CHEVRON
10/01/04
1.550
50,000
CP
CHEVRON
10/01/04
1.550
50,000
CP
CHEVRON
10/01/04
1.550
50,000
CP
CHEVRON
10/01/04
1.550
50,000
CP
CITI GLOBAL
02/01/05
1.850
50,000
CP
CITI GLOBAL
02/01/05
1.850
50,000
CP
CITI GLOBAL
02/01/05
1.850
50,000
CP
CITI GLOBAL
02/01/05
1.850
50,000
CP
HOUSEHOLD
02/16/05
1.920
50,000
CP
HOUSEHOLD
02/16/05
1.920
50,000
CP
HOUSEHOLD
02/16/05
1.920
50,000
CP
FCAR
02/18/05
1.920
14,000
CP
FCAR
02/18/05
1.920
50,000
CP
FCAR
02/18/05
1.920
50,000
09/16/04 NO REDEMPTIONS
09/16/04 PURCHASES
CD W/F 1.670% 10/01/04 1.670 50,000
6
09/16/04 PURCHASES (continued)
CD
W/F
1.670%
10/01/04
1.670
50,000
CD
W/F
1.670%
10/01/04
1.670
50,000
CD
W/F
1.670%
10/01/04
1.670
50,000
CP
COUNTRY
09/28/04
1.710
48,630
CP
COUNTRY
09/28/04
1.710
50,000
CP
COUNTRY
09/28/04
1.71.0
50,000
CP
SARA LEE
09/30/04
1.710
25,000
CP
GECC
10/01/04
1.650
50,000
CP
GECC
10/01/04
1.650
50,000
CP
GECC
10/01/04
1.650
50,000
CP
GECC
10/01/04
1.650
50,000
CP
GECC
10/01/04
1.650
50,000
CP
GECC
10/01/04
1.650
50,000
CP
GECC
10/01/04
1.650
50,000
CP
GECC
10/01/04
1.650
50,000
CP
NCAT
02/01/05
1.890
30,000
CP
NCAT
02/01/05
1.890
50,000
CP
NCAT
02/01/05
1.890
50,000
09/17/04
NO REDEMPTIONS
09/17/04
PURCHASES
CP
GECC
09/20/04
1.550
50,000
CP
GECC
09/20/04
1.550
50,000
09/20/04
REDEMPTIONS
CP
GECC
09/20/04
1.550
50,000 3 6,458.33 1.572
CP
GECC
09/20/04
1.550
50,000 3 6,458.33 1.572
09/20/04
PURCHASES
CB FR
GECC
1.850%
05/12/06
1.848
12,625
CB FR
W/F
1.970%
09/15/06
1.878
25,000
09/21/04
NO REDEMPTIONS
09/21/04
PURCHASES
CP
COUNTRY
09/27/04
1.770
50,000
CP
COUNTRY
09/27/04
1.770
50,000
CP
COUNTRY
09/27/04
1.770
50,000
CP
COUNTRY
09/28/04
1.770
14,000
CP
COUNTRY
09/28/04
1.770
50,000
CP
COUNTRY
09/28/04
1.770
50,000
CP
SRAC
10/01/04
1.780
25,000
CP
FCAR
02/14/05
1.950
27,000
CP
FCAR
02/14/05
1.950
50,000
CP
FCAR
02/14/05
1.950
50,000
7
09/21/04 PURCHASES (continued)
CP
FCAR
02/14/05
1.950
50,000
CP
FCAR
02/14/05
1.950
50,000
CP
NCAT
02/18/05
1.950
35,000
CP
NCAT
02/18/05
1.950
50,000
CP
NCAT
02/18/05
1.950
50,000
09/22/04 NO REDEMPTIONS
09/22/04 PURCHASES
CP
CITI GLOBAL
09/30/04
1.700
50,000
CP
CITI GLOBAL
09/30/04
1.700
50,000
CP
CITI GLOBAL
09/30/04
1.700
50,000
CP
CITI GLOBAL
09/30/04
1.700
50,000
09/23/04 NO REDEMPTIONS
09/23/04 PURCHASES
CD
RB SCOT
1.850%
12/29/04
1.845
50,000
CD
RB SCOT
1.850%
12/29/04
1.845
50,000
CD
CS/FST BOSTON
1.950%
02/01/05
1.950
50,000
CD
CS/FST BOSTON
1.950%
02/01/05
1.950
50,000
CP
SARA LEE
10/01/04
1.770
20,000
CP
CITI GLOBAL
10/05/04
1.750
50,000
CP
CITI GLOBAL
10/05/04
1.750
50,000
CP
CITI GLOBAL
12/01/04
1.800
50,000
CP
CITI GLOBAL
12/01/04
1.800
50,000
CP
TOYOTA
12/02/04
1.800
50,000
CP
TOYOTA
12/02/04
1.800
50,000
CP
TOYOTA
12/02/04
1.800
50,000
CP
GECC
12/02/04
1.800
50,000
CP
GECC
12/02/04
1.800
50,000
CP
GECC
12/02/04
1.800
50,000
CP
GECC
12/02/04
1.800
50,000
CP
CITI GLOBAL
02/01/05
1.900
30,000
CP
CITI GLOBAL
02/01/05
1.900
50,000
CP
CITI GLOBAL
02/01/05
1.900
50,000
DISC NOTE
FNMA
10/01/04
1.720
50,000
DISC NOTE
FNMA
10/01/04
1.720
50,000
09/24/04 NO REDEMPTIONS
09/24/04 PURCHASES
FHLB
CD
BNP PARIBAS
CD
BNP PARIBAS
CD
CALYON
CD
CALYON
2.625%
10/16/06
2.760
50,000
1.725%
10/01/04
1.725
50,000
1.725%
10/01/04
1.725
50,000
1.825%
12/02/04
1.825
50,000
1.825%
12/02/04
1.825
50,000
8
09/24/04 PURCHASES (continued)
CD CALYON 1.825% 12/02/04 1.825 50,000
CID B/A 12/29/04 1.880 50,000
CID B/A 12/29/04 1.880 50,000
09/27/04 REDEMPTIONS
CD
US BANK
1.200% 09/27/04
1.200
50,000
154
256,666.67
1.217
CD
US BANK
1.200% 09/27/04
1.200
50,000
154
256,666.67
1.217
CID
COUNTRY
09/27/04
1.770
50,000
6
14,750.00
1.795
CID
COUNTRY
09/27/04
1.770
50,000
6
14,750.00
1.795
CID
COUNTRY
09/27/04
1.770
50,000
6
14,750.00
1.795
DISC NOTE
FNMA
09/27/04
1.120
50,000
154
239,555.56
1.141
DISC NOTE
FNMA
09/27/04
1.120
50,000
154
239,555.56
1.141
09/27/04 PURCHASES
CB FR GMAC 2.595% 05/18/06 2.571 10,000
CB FR GMAC 2.595% 05/18/06 2.571 16,690
CB FR SBA 1.550% 08/25/29 1.550 23,702
09/28/04 REDEMPTIONS
CD
SVENSKA
1.158%
09/28/04
1.150
50,000
159.
253,966.70
1.165
CD
SVENSKA
1.150%
09/28/04
1.155
50,000
160
256,661.00
1.171
CD
SVENSKA
1.150%
09/28/04
1.155
50,000
160
256,661.00
1.171
CD
WASHINGTON
1.160%
09/28/04
1.170
50,000
161
261,613.36
1.186
CD
ANZ
1.120%
09/28/04
1.120
50,000
165
'256,666.67
1.136
CD
ANZ
1.120%
09/28/04
1.120
50,000
165
256,666.67
1.136
CD
STNRD CH
1.130%
09/28/04
1.130
50,000
165
258,958.33
1.146
CD
STNRD CH
1.130%
09/28/04
1.130
50,000
165
258,958.33
1.146
CD
SOC GEN
1.140%
09/28/04
1.140
50,000
166
262,833.33
1.156
CD
SOC GEN
1.140%
09/28/04
1.140
50,000
166
262,833.33
1.156
CD
WASHINGTON
1.220%
09/28/04
1.220
50,000
166
281,277.78
1.237
CD
WASHINGTON
1.220%
09/28/04
1.220
50,000
166
281,277.78
1.237
CD
WASHINGTON
1.220%
09/28/04
1.220
50,000
166
281,277.78
1.237
CD
WASHINGTON
1.220%
09/28/04
1.220
50,000
166
281,277.78
1.237
CD
CR AGRIC
1.160%
09/28/04
1.160
50,000
167
269,055.56
1.176
CD
CR AGRIC
1.160%
09/28/04
1.160
50,000
167
269,055.56
1.176
CD
CR AGRIC
1.160%
09/28/04
1.160
50,000
167
269,055.56
1.176
CD
STNRD CH
1.170%
09/28/04
1.170
50,000
167
271,375.00
1.186
CD
STNRD CH
1.170%
09/28/04
1.170
50,000
167.
271,375.00
1.186
CD
TORONTO
1.125%
09/28/04
1.120
50,000
168
261,339.40
1.136
CD
UBS
1.125%
09/28/04
1.120
50,000
168
261,339.40
1.136
CID
COUNTRY
09/28/04
1.770
14,000
7
4,818.33
1.795
CID
COUNTRY
09/28/04
1.770
50,000
7
17,208.33
1.795
CID
COUNTRY
09/28/04
1.770
50,000
7
17,208.33
1.795
CID
COUNTRY
09/28/04
1.710
48,630
12
27,719.10
1.735
CID
COUNTRY
09/28/04
1.710
50,000
12
28,500.00
1.735
CP
COUNTRY
09/28/04
1.710
50,000
12
28,500.00
1.735
DISC NOTE
FHLMC
09/28/04
1.120
50,000
155
241,111.11
1.141
9
09/28/04 REDEMPTIONS (continued)
DISC NOTE
FHLMC
09/28/04
1.120
50,000
155
241,111.11
1.141
DISC NOTE
FHLMC
09/28/04
1.135
50,000
155
244,340.28
1.156
DISC NOTE
FNMA
09/28/04
1.120
50,000
155
241,111.11
1.141
DISC NOTE
FNMA
09/28/04
1.120
50,000
155
241,111.11
1.141
DISC NOTE
FNMA
09/28/04
1.110
50,000
159
245,125.00
1.131
DISC NOTE
FNMA
09/28/04
1.110
50,000
159
245,125.00
1.131
DISC NOTE
FHLMC
09/28/04
1.105
50,000
166
254,763.89
1.126
DISC NOTE
FHLMC
09/28/04
1.105
50,000
166
254,763.89
1.126
DISC NOTE
FNMA
09/28/04
1.100
50,000
166
253,611.11
1.121
DISC NOTE
FNMA
09/28/04
1.100
50,000
166
253,611.11
1.121
DISC NOTE
FHLMC
09/28/04
1.100
50,000
167
255,138.89
1.121
DISC NOTE
FHLMC
09/28/04
1.100
50,000
167
255,138.89
1.121
DISC NOTE
FHLMC
09/28/04
1.100
50,000
167
255,138.89
1.121
DISC NOTE
FHLMC
09/28/04
1.100
50,000
167
255,138.89
1.121
09/28/04 PURCHASES
CB FR COUNTRY 2.280% 06/02/06 2.085 .15,000
09/29/04 NO REDEMPTIONS
09/29/04 PURCHASES
CD
SOC GEN
1.960%
02/01/05
1.960
50,000
CD
SOC GEN
1.960%
02/01/05
1.960
50,000
CD
CALYON
1.980%
02/01/05
1.980
50,000
CD
CALYON
1.980%
02/01/05
1.980
50,000
CD
US BANK .
2.000%
02/01/05
2.000
50,000
CD
US BANK
2.000%
02/01/05
2.000
50,000
CID
CITICORP
10/04/04
1.700
50,000
CID
CITICORP
10/04/04
1.700
50,000
CID
SRAC
11/17/04
1.850
40,000
CID
FCAR
12/14/04
1.840
35,000
CID
FCAR
. 12/14/04
1.840
50,000
CID
GE CO
12/20/04
1.810
50,000
CID
GE CO
12/20/04
1.810
50,000
CID
GE CO
12/20/04
1.810
50,000
09/29/04 PURCHASES c/
DISC NOTE FNMA
DISC NOTE FNMA
DISC NOTE FNMA
09/30/04 REDEMPTIONS
02/02/05 1.730 2,730
02/02/05 1.730 50,000
02/02/05 1.730 50,000
BN 1.120% 09/30/04 1.120 50,000 164 255,111.11 1.136
09/30/04 1.700 50,000 8 18,888.89 1.724
09/30/04 1.700 50,000 8 18,888.89 1.724
09/30/04 1.700 50,000 8 18,888.89 1.724
BANC ONE
CID
CITI GLOBAL
CID
CITI GLOBAL
CID
CITI GLOBAL
10
09/30/04 REDEMPTIONS (continued)
CID
CITI GLOBAL
09/30/04
1.700
50,000
8
18,888.89
1.724
CID
SARA LEE
09/30/04
1.710
25,000
14
16,625.00
1.735
CID
SARA LEE
09/30/04
1.640
40,000
17
30,977.78
1.664
09/30/04 SALES c/
DISC NOTE
FNMA
02/02/05
1.730
2,730
1
127.73
1.754
DISC NOTE
FNMA
02/02/05
1.730
50,000
1
2,338.91
1.754
DISC NOTE
FNMA
02/02/05
1.730
50,000
1
2,338.91
1.754
09/30/04 PURCHASES
CD
W/F
1.870%
12/29/04
1.870
50,000
CD
W/F
1.870%
12/29/04
1.870
50,000
CD
CS/FST BOSTON
1.950%
01/03/05
1.950
50,000
CD
CS/FST BOSTON
1.950%
01/03/05
1.950
50,000
CID
CITI GLOBAL
01/20/05
1.930
50,000
CID
CITI GLOBAL
01/20/05
1.930
50,000
CID
CITI GLOBAL
02/08/05
1.960
50,000
CID
CITI GLOBAL
02/08/05
1.960
50,000
CID
GECC
03/29/05
2.010
50,000
CID
GECC
03/29/05
2.010
50,000
CID
GECC
03/29/05
2.010
50,000
CID
GECC
03/29/05
2.010
50,000
11
a/ The abbreviations indicate the type of security purchased or sold;
i.e., (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 FR), 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.
-// Outright purchase against Reverse Repurchase Agreement.
h/ Security "SWAP" transactions.
1:11 Buy back agreement.
RRS Reverse Repurchase Agreement.
RRP Termination of Reverse Repurchase Agreement.
12
TIME DEPOSITS
DEPOSIT PAR MATURITY
NAME DATE YIELD AMOUNT DATE
ALHAMBRA
The Bank of East Asia (USA)
07/14/04
1.360
3,095,000.00
10/14/04
The Bank of East Asia (USA)
08/11/04
1.750
3,000,000.00
02/09/05
The Bank of East Asia (USA)
08/18/04
1.820
6,000,000.00
02/16/05
Omni Bank
04/02/04
1.050
2,000,000.00
10/01/04
Omni Bank
08/13/04
1.490
2,000,000.00
11/12/04
Omni Bank
08/20/04
1.520
4,000,000.00
11/19/04
Omni Bank
05/27/04
1.450
2,000,000.00
11/23/04
Omni Bank
08/25/04
1.560
2,000,000.00
12/01/04
Omni Bank
09/03/04
1.640
6,000,000.00
12/10/04
Omni Bank
09/15/04
1.710
2,000,000.00
12/17/04
ARROYO GRANDE
Mid -State Bank and Trust
04/14/04
1.090
5,000,000.00
10/13/04
Mid -State Bank and Trust
05/19/04
1.380
5,000,000.00
11/17/04
Mid -State Bank and Trust
06/11/04
1.670
5,000,000.00
12/10/04
Mid -State Bank and Trust
07/15/04
1.740
5,000,000.00
01/13/05
Mid -State Bank and Trust
08/11/04
1.730
5,000,000.00
02/09/05
Mid -State Bank and Trust
09/09/04
1.930
5,000,000.00
03/10/05
BREA
Jackson Federal Bank
08/18/04
1.510
10,000,000.00
11/18/04
Pacific Western National Bank
08/04/04
1.080
4,000,000.00
02/02/05
CALABASAS
First Bank of Beverly Hills FSB
05/06/04
1.230
10,000,000.00
11/04/04
First Bank of Beverly Hills FSB
06/16/04
1.770
10,000,000.00
12/15/04
First Bank of Beverly Hills FSB
09/02/04
1.850
10,000,000.00
03/03/05
CAMARILLO
First California Bank
06/09/04
1.570
2,000,000.00
12/03/04
First California Bank
06/04/04
1.500
2,000,000.00
12/03/04
First California Bank
07/28/04
1.810
6,000,000.00
01/26/05
First California Bank
09/22/04
1.960
6,000,000.00
03/23/05
CAMERON PARK
Western Sierra National Bank 07/14/04 1.660 7,000,000.00 01/12/05
13
NAME
CHATSWORTH
Premier America Credit Union
Premier America Credit Union
Premier America Credit Union
CHICO
Tri Counties Bank
CHULA VISTA
North Island Federal Credit Union
CITY OF INDUSTRY
EverTrust Bank
EverTrust Bank
CONCORD
Bank of the West
Bank of the West
Bank of the West
Bank of the West
DUBLIN
Operating Engineers Local #3 FCU
Operating Engineers Local #3 FCU
Operating Engineers Local #3 FCU
EL CENTRO
Valley Independent Bank
Valley Independent Bank
Valley Independent Bank
EL SEGUNDO
First Coastal Bank, N.A.
First Coastal Bank, N.A.
First Coastal Bank, N.A.
Xerox Federal Credit Union
TIME DEPOSITS
DEPOSIT PAR MATURITY
DATE YIELD AMOUNT ($) DATE
07/21 /04 1.380 10,000,000.00 10/20/04
05/12/04 1.360 10,000,000.00 11 /10/04
09/22/04 1.770 10,000,000.00 01/06/05
09/16/04 1.700 20,000,000.00 12/16/04
04/09/04 0.980 5,000,000.00 10/08/04
07/29/04 1.520 6,000,000.00 10/28/04
09/10/04 1.710 6,000,000.00 12/10/04
07/09/04
1.360
134, 000, 000.00
10/08/04
07/30/04
1.510
176, 500, 000.00
10/29/04
08/20/04
1.520
242,000,000.00
11/19/04
09/16/04
1.710
82, 000, 000.00
12/16/04
04/07/04 0.970 5,000,000.00 10/06/04
06/11 /04 1.650 10, 000, 000.00 12/10/04
08/11/04 1.710 5,000,000.00 02/09/05
07/16/04 1.390 20,000,000.00 10/15/04
07/23/04 1.420 32,500,000.00 10/22/04
09/29/04 1.800 20, 000, 000.00 01 /07/05
09/01 /04
1.620
2, 000, 000.00
12/01 /04
09/17/04
1.720
5,000,000.00
12/17/04
07/21 /04
1.720
2,000,000.00
01 /20/05
05/20/04
1.400
20,000,000.00
11/17/04
14
TIME DEPOSITS
DEPOSIT
PAR
MATURITY
NAME
DATE
YIELD
AMOUNT
DATE
EL SEGUNDO (continued)
Xerox Federal Credit Union
09/02/04
1.670
20,000,000.00
12/02/04
Xerox Federal Credit Union
09/09/04
1.940
7,000,000.00
03/14/05
FAIRFIELD
WestAmerica Bank
07/09/04
1.360
60,000,000.00
10/08/04
WestAmerica Bank
07/15/04
1.390
65,000,000.00
10/14/04
WestAmerica Bank
08/16/04
1.490
50,000,000.00
11/17/04
FRESNO
United Security Bank
04/21/04
1.150
40,000,000.00
10/20/04
FULLERTON
Fullerton Community Bank
05/19/04
1.390
9,000,000.00
11/17/04
Fullerton Community Bank
07/23/04
1.770
8,000,000.00
01/21/05
GOLETA
Pacific Capital Bank
04/01/04
1.050
78,000,000.00
10/01/04
Pacific Capital Bank
06/09/04
1.560
85,000,000.00
12/08/04
Pacific Capital Bank
08/13/04
1.750
11,000,000.00
02/11/05
Pacific Capital Bank
08/13/04
1.775
61,000,000.00
02/11/05
GRANADA HILLS
First State Bank of California
04/22/04
1.170
3,000,000.00
10/21/04
First State Bank of California
09/17/04
1.930
2,000,000.00
03/18/05
HAWTHORNE
Western Federal Credit Union
07/23/04
1.420
30,000,000.00
10/22/04
IRVINE
Commercial Capital Bank
07/08/04
1.310
10,000,000.00
10/14/04
Commercial Capital Bank
04/15/04
1.090
10,000,000.00
10/14/04
Commercial Capital Bank
07/14/04
1.320
35,000,000.00
10/14/04
Commercial Capital Bank
07/07/04
1.300
50,000,000.00
10/14/04
Commercial Capital Bank
07/29/04
1.560
10,000,000.00
11/17/04
Commercial Capital Bank
08/05/04
1.540
15,000,000.00
11/17/04
15
TIME DEPOSITS
DEPOSIT PAR MATURITY
NAME DATE YIELD AMOUNT ($) DATE
IRVINE (continued
Commercial Capital Bank
07/30/04
1.560
20,000,000.00
11/17/04
Commercial Capital Bank
08/18/04
1.470
45,000,000.00
11/17/04
Commercial Capital Bank
09/15/04
1.680
10,000,000.00
12/15/04
Commercial Capital Bank
08/26/04
1.550
14,000,000.00
12/15/04
Commercial Capital Bank
08/19/04
1.590
15,000,000.00
12/15/04
Commercial Capital Bank
09/29/04
1.780
60,000,000.00
01/07/05
LA JOLLA
Silvergate Bank 09/10/04 1.740 5,000,000.00 12/10/04
LODI
Bank of Lodi, N.A.
06/17/04
1.760
5,000,000.00
12/16/04
Bank of Lodi, N.A.
09/22/04
1.960
5,000,000.00
03/23/05
Farmers & Merchants Bk Cen CA
04/08/04
1.080
10,000,000.00
10/07/04
Farmers & Merchants Bk Cen CA
06/23/04
1.720
25,000,000.00
12/22/04
Farmers & Merchants Bk Cen CA
09/22/04
1.770
25,000,000.00
01/06/05
LOS ANGELES
Broadway Federal Bank, FSB
07/09/04
1.680
2,500,000.00
01/07/05
Broadway Federal Bank, FSB
09/10/04
1.940
3,000,000.00
03/11/05
Cathay Bank
04/08/04
1.100
38,000,000.00
10/07/04
Cathay Bank
05/12/04
1.370
25,000,000.00
11/10/04
Cathay Bank
08/18/04
1.540
15,000,000.00
11/18/04
Cathay Bank
09/01/04
1.620
17,000,000.00
12/01/04
Cathay Bank
09/09/04
1.700
25,000,000.00
12/09/04
Cathay Bank
09/09/04
1.700
30,000,000.00
12/09/04
Cedars Bank
07/07/04
1.320
5,000,000.00
10/06/04
Cedars Bank
09/10/04
1.710
4,500,000.00
12/10/04
Cedars Bank
09/29/04
1.780
4,000,000.00
01/07/05
Cedars Bank
09/22/04
1.950
5,000,000.00
03/23/05
Center Bank
04/08/04
1.080
10,000,000.00
10/07/04
Center Bank
06/23/04
1.720
5,000,000.00
12/22/04
Center Bank
09/15/04
1.710
20,000,000.00
12/22/04
Center Bank
07/21/04
1.710
5,000,000.00
01/20/05
Center Bank
09/15/04
1.920
20,000,000.00
03/16/05
CHB America Bank
07/15/04
1.390
4,300,000.00
10/14/04
CHB America Bank
08/20/04 ,
1.780
4,000,000.00
02/18/05
CHB America Bank
09/01/04
1.850
4,000,000.00
03/02/05
Eastern International Bank
05/05/04
1.210
900,000.00
11/03/04
16
TIME DEPOSITS
DEPOSIT PAR MATURITY
NAME DATE YIELD AMOUNT ($) DATE
LOS ANGELES (continued
Eastern International Bank
06/10/04
1.600
1,000,000.00
12/09/04
Hanmi Bank
07/08/04
1.330
10,000,000.00
10/07/04
Hanmi Bank
07/16/04
1.380
25,000,000.00
10/15/04
Hanmi Bank
07/30/04
1.510
10,000,000.00
10/29/04
Hanmi Bank
08/05/04
1.540
25,000,000.00
11/04/04
Hanmi Bank
09/02/04
1.660
25,000,000.00
12/02/04
Hanmi Bank
09/15/04
1.710
25,000,000.00
12/15/04
Hanmi Bank
09/02/04
1.850
20,000,000.00
03/03/05
Hanmi Bank
09/15/04
1.920
20,000,000.00
03/16/05
Mellon First Business Bank, N.A.
07/09/04
1.360
50,000,000.00
10/08/04
Mellon First Business Bank, N.A.
09/16/04
1.700
50,000,000.00
12/16/04
Mirae Bank
04/16/04
1.160
4,000,000.00
10/15/04
Mirae Bank
09/23/04
1.980
2,500,000.00
03/24/05
Nara Bank, NA
04/08/04
1.080
5,000,000.00
10/07/04
Nara Bank, NA
07/22/04
1.400
15,000,000.00
10/21/04
Nara Bank, NA
08/18/04
1.510
5,000,000.00
11/18/04
Nara Bank, NA
07/22/04
1.730
10,000,000.00
01/20/05
Nara Bank, NA
08/04/04
1.800
10,000,000.00
02/02/05
Nara Bank, NA
08/12/04
1.760
5,000,000.00
02/10/05
Nara Bank, NA
09/10/04
1.940
10,000,000.00
03/11/05
One United Bank
07/14/04
1.350
5,000,000.00
10/13/04
One United Bank
09/08/04
1.700
10,000,000.00
12/08/04
Preferred Bank
09/17/04
1.930
16,000,000.00
03/18/05
Preferred Bank
08/06/04
1.530
4,000,000.00
11/05/04
Preferred Bank
09/17/04
1.710
15,000,000.00
12/17/04
Saehan Bank
08/20/04
1.500
2,000,000.00
11/19/04
State Bank of India (California)
07/07/04
1.350
3,000,000.00
10/06/04
State Bank of India (California)
05/20/04
1.440
2,000,000.00
11/18/04
Wilshire State Bank
04/09/04
1.080
7,000,000.00
10/08/04
Wilshire State Bank
06/17/04
1.480
12,000,000.00
10/08/04
Wilshire State Bank
08/12/04
1.540
8,000,000.00
11/10/04
Wilshire State Bank
08/25/04
1.560
7,000,000.00
11/30/04
Wilshire State Bank
07/30/04
1.600
8,000,000.00
11/30/04
Wilshire State Bank
09/03/04
1.640
15,000,000.00
12/03/04
Wilshire State Bank
09/17/04
1.710
8,000,000.00
12/17/04
MERCED
County Bank 07/16/04 1.390 10,000,000.00 .10/15/04
County Bank 09/03/04 1.650 5,000,000.00 12/03/04
County Bank 09/09/04 1.940 10,000,000.00 03/10/05
`b
TIME DEPOSITS
DEPOSIT PAR MATURITY
NAME DATE YIELD AMOUNT ($) DATE
MONTEREY PARK
Trust Bank FSB
07/01/04
1.360
2,000,000.00
10/01/04
Trust Bank FSB
04/01/04
1.050
3,000,000.00
10/01/04
Trust Bank FSB
07/07/04
1.330
3,000,000.00
10/06/04
NEWPORT BEACH
Orange County Business Bank
09/23/04
1.780
4,000,000.00
01/06/05
Orange County Business Bank
09/22/04
1.960
4,000,000.00
03/23/05
NORTH HIGHLANDS
Safe Credit Union
07/16/04
1.380
5,000,000.00
10/15/04
Safe Credit Union
08/13/04
1.490
20,000,000.00
11/12/04
OAKDALE
Oak Valley Community Bank
07/16/04
1.380
2,500,000.00
10/15/04
Oak Valley Community Bank
09/16/04
1.680
3,500,000.00
12/16/04
OAKLAND
Metropolitian Bank
06/03/04
1.450
500,000.00
12/02/04
Metropolitian Bank
06/03/04
1.450
1,000,000.00
12/02/04
Metropolitian Bank
07/23/04
1.760
1,000,000.00
01/21/05
Metropolitian Bank
07/29/04
1.830
1,500,000.00
01/27/05
Metropolitian Bank
08/26/04
1.860
1,000,000.00
02/24/05
Metropolitian Bank
09/22/04
1.950
2,000,000.00
03/23/05
ONTARIO
Citizens Business Bank
04/02/04
1.050
25,000,000.00
10/01/04
Citizens Business Bank
08/06/04
1.530
30,000,000.00
11/05/04
Citizens Business Bank
05/20/04
1.420
30,000,000.00
11/18/04
Citizens Business Bank
09/03/04
1.840
25,000,000.00
03/04/05
Citizens Business Bank
09/22/04
1.950
30,000,000.00
03/23/05
PALO ALTO
Mid Peninsula Bank
07/14/04
1.680
15,000,000.00
01/12/05
Mid Peninsula Bank
07/29/04
1.830
95,000,000.00
01/27/05
Mid Peninsula Bank
08/18/04
1.790
30,000,000.00
02/16/05
Mid Peninsula Bank
08/19/04
1.800
'63,500,000.00
02/16/05
18
NAME
PALO ALTO (continued
Mid Peninsula Bank
Mid Peninsula Bank
PALOS VERDES ESTATE
Malaga Bank, SSB
Malaga Bank
Malaga Bank
Malaga Bank
PASADENA
Community Bank
Community Bank
Community Bank
Community Bank
Community Bank
Community Bank
Community Bank
Wescom Credit Union
Wescom Credit Union
Wescom Credit Union
Wescom Credit Union
Wescom Credit Union
Wescom Credit Union
PLACERVILLE
El Dorado Savings Bank
El Dorado Savings Bank
PLEASANTON
Valley Community Bank
POMONA
PFF Bank and Trust
PFF Bank and Trust
PFF Bank and Trust
PFF Bank and Trust
TIME DEPOSITS
DEPOSIT PAR MATURITY
DATE YIELD AMOUNT ($) DATE
08/20/04 1.780 49, 000, 000.00 02/18/05
09/09/04 1.930 42,000,000.00 03/10/05
05/13/04
1.370
7,000,000.00
11/10/04
06/16/04
1.750
9,000,000.00
12/15/04
08/20/04
1.780
10, 000, 000.00
02/18/05
09/03/04
1.840
4,000,000.00
03/04/05
04/08/04
1.080
10, 000, 000.00
10/07/04
04/14/04
1.090
15, 000, 000.00
10/13/04
05/06/04
1.230
15,000,000.00
11 /04/04
06/16/04
1.770
10, 000, 000.00
12/15/04
07/09/04
1.680
10,000,000.00
01/07/05
08/04/04
1.800
25,000,000.00
02/02/05
09/15/04
1.920
10,000,000.00
03/16/05
07/14/04
1.350
25,000,000.00
10/13/04
08/18/04
1.520
10,000,000.00
11 /18/04
08/18/04
1.520
25,000,000.00
11/18/04
09/22/04
1.760
25,000,000.00
12/22/04
09/22/04
1.760
25,000,000.00
12/22/04
07/29/04
1.840
25,000,000.00
01/27/05
04/30/04 1.560 5,000,000.00
06/04/04 1.920 20,000,000.00
09/17/04 1.940 6,000,000.00
04/29/05
06/03/05
03/18/05
07/01 /04
1.610
20, 000, 000.00
11 /04/04
06/09/04
1.560
20, 000, 000.00
12/08/04
08/27/04
1.830
8,000,000.00
02/25/05
08/30/04
1.830
12,000,000.00
02/25/05
19
NAME
PORTERVILLE
Bank of the Sierra
RANCHO SANTA FE
La Jolla Bank, FSB
La Jolla Bank, FSB
La Jolla Bank, FSB
La Jolla Bank, FSB
La Jolla Bank, FSB
La Jolla Bank, FSB
La Jolla Bank, FSB
REDDING
North Valley Bank
REDWOOD CITY
Provident Central Credit Union
Provident Central Credit Union
ROCKLIN
Five Star Bank
Five Star Bank
The Mechanics Bank
The Mechanics Bank
The Mechanics Bank
The Mechanics Bank
The Mechanics Bank
The Mechanics Bank
The Mechanics Bank
The Mechanics Bank
The Mechanics Bank
The Mechanics Bank
RIVERSIDE
Provident Savings Bank
TIME DEPOSITS
DEPOSIT PAR
DATE YIELD AMOUNT ($)
MATURITY
DATE
04/22/04
1.170
10, 000, 000.00
10/21 /04
08/04/04
1.490
25,000,000.00
11/03/04
08/13/04
1.470
15, 000, 000.00
11 /12/04
09/02/04
1.640
10, 000, 000.00
12/02/04
06/17/04
1.720
10, 000, 000.00
12/16/04
08/18/04
1.770
25,000,000.00
02/16/05
09/02/04
1.830
10,000,000.00
03/03/05
09/23/04
1.960
5,000,000.00
03/24/05
06/11/04
1.670
3,000,000.00
12/10/04
04/29/04
1.210
20,000,000.00
10/28/04
06/03/04
1.430
20,000,000.00
12/02/04
07/28/04
1.780
2,000,000.00
01/26/05
09/29/04
2.010
2,000,000.00
03/30/05
10/15/03
1.260
10, 000, 000.00
10/15/04
10/31 /03
1.300
10, 000, 000.00
10/29/04
11 /07/03
1.380
10, 000, 000.00
11 /05/04
03/03/04
1.260
10,000,000.00
03/03/05
04/01/04
1.260
10,000,000.00
04/01/05
04/21/04
1.450
10,000,000.00
04/21/05
06/09/04
1.960
10,000,000.00
06/09/05
07/08/04
2.070
10,000,000.00
07/08/05
08/04/04
2.180
10,000,000.00
08/04/05
09/10/04
2.180
10,000,000.00
09/14/05
09/23/04 1.980 25,000,000.00 03/24/05
20
TIME DEPOSITS
DEPOSIT PAR MATURITY
NAME DATE YIELD AMOUNT ($) DATE
SACRAMENTO
American River Bank
04/07/04
0.970
1,500,000.00
10/06/04
American River Bank
06/18/04
1.720
1,000,000.00
12/16/04
American River Bank
06/17/04
1.720
1,250,000.00
12/16/04
American River Bank
07/09/04
1.660
1,000,000.00
01/07/05
American River Bank
07/29/04
1,810
1,500,000.00
01/27/05
American River Bank
08/27/04
1.840
2,000,000.00
02/25/05
American River Bank
09/17/04
1.910
1,250,000.00
03/18/05
American River Bank
09/23/04
1.960
2,000,000.00
03/24/05
Bank of Sacramento
08/11/04
1.520
1,500,000.00
11 /10/04
Bank of Sacramento
09/01/04
1.610
2,000,000.00
12/01/04
Bank of Sacramento
06/18/04
1.740
2,000,000.00
12/17/04
Merchants National Bank of Sacramento
04/14/04
1.090
2,000,000.00
10/13/04
Merchants National Bank of Sacramento
07/21/04
1.710
2,000,000.00
01/02/05
River City Bank
04/07/04
1.000
2,000,000.00
10/06/04
River City Bank
07/30/04
1.850
3,000,000.00
01/28/05
River City Bank
08/25/04
1.820
2,000,000.00
02/24/05
U.S. Bank
08/11/04
1.740
50,000,000.00
02/09/05
U.S. Bank
07/08/04
1.650
100,000,000.00
01/06/05
U.S. Bank
08/04/04
1.800
25,000,000.00
02/02/05
U.S. Bank
08/11/04
1.740
50,000,000.00
02/09/05
U.S. Bank
08/20/04
1.800
50,000,000.00
02/18/05
U.S. Bank
08/20/04
1.800
50,000,000.00
02/18/05
Union Bank of California
07/16/04
1.380
175,000,000.00
10/15/04
Union Bank of California
08/05/04
1.540
150,000,000.00
11/04/04
Union Bank of California
09/16/04
1.700
150,000,000.00
12/16/04
SAN DIEGO
First Future Credit Union
08/27/04
1.830
5,000,000.00
02/25/05
First Future Credit Union
08/27/04
1.830
10,000,000.00
02/25/05
First Future Credit Union
09/03/04
1.840
15,000,000.00
03/04/05
First Future Credit Union
09/15/04
1.920
8,000,000.00
03/16/05
First United Bank
04/15/04
1.120
2,000,000.00
10/14/04
First United Bank
08/13/04
1.770
1,000,000.00
02/11/05
Mission Federal Credit Union
07/15/04
1.750
10,000,000.00
01/13/05
Mission Federal Credit Union
09/01/04
1.850
10,000,000.00
03/02/05
Neighborhood National Bank
08/20/04
1.710
2,000,000.00
01/21/05
Neighborhood National Bank
08/04/04
1.820
2,000,000.00
02/02/05
21
TIME DEPOSITS
DEPOSIT PAR MATURITY
NAME DATE YIELD AMOUNT ($) DATE
SAN FRANCISCO
America California Bank
09/03/04
1.640
2,000,000.00
12/03/04
America California Bank
07/08/04
1.650
4,000,000.00
01/06/05
America California Bank
09/29/04
1.780
2,000,000.00
01/07/05
Citibank (West) FSB
07/08/04
1.700
150,000,000.00
01/06/05
Citibank (West) FSB
07/15/04
1.750
100,000,000.00
01/13/05
Citibank (West) FSB
07/21/04
1.750
.100,000,000.00
01/20/05
Citibank (West) FSB
07/28/04
1.800
25,000,000.00
01/26/05
Citibank (West) FSB
07/15/04
1.750
25,000,000.00
01/26/05
Oceanic Bank
09/10/04
2.160
4,000,000.00
09/13/05
Trans Pacific National Bank
06/23/04
1.730
1,000,000.00
12/22/04
Trans Pacific National Bank
08/05/04
1.830
1,000,000.00
02/03/05
Trans Pacific National Bank
09/23/04
1.980
1,000,000.00
03/24/05
United Commercial Bank
04/08/04
1.090
40,000,000.00
10/07/04
United Commercial Bank
07/09/04
1.370
55,000,000.00
10/08/04
United Commercial Bank
07/14/04
1.350
50,000,000.00
10/14/04
United Commercial Bank
07/28/04
1.470
40,000,000.00
10/27/04
United Commercial Bank
08/25/04
1.570
20,000,000.00
11/24/04
United Commercial Bank
09/01/04
1.620
50,000,000.00
12/01/04
United Commercial Bank
09/03/04
1.620
25,000,000.00
12/03/04
United Commercial Bank
09/10/04
1.720
25,000,000.00
12/10/04
United Commercial Bank
09/17/04
1.710
65,000,000.00
12/17/04
SANJOSE
Comerica Bank
07/01/04
1.370
25,000,000.00
10/01/04
Comerica Bank
09/23/04
1.800
25,000,000.00
01/07/05
Heritage Bank of Commerce
08/11/04
1.740
4,000,000.00
02/09/05
Meriwest Credit Union
04/14/04
1.100
10,000,000.00
10/13/04
Medwest Credit Union
07/21/04
1.690
5,000,000.00
01/20/05
Meriwest Credit Union
09/15/04
1.900
5,000,000.00
03/16/05
Santa Clara Co. Fed. C.U.
08/06/04
1.560
10,000,000.00
11/05/04
Santa Clara Co. Fed. C.U.
05/07/04
1.230
5,000,000.00
11/05/04
SAN LUIS OBISPO
First Bank Of San Luis Obispo
06/04/04
1.500
4,500,000.00
12/03/04
First Bank Of San Luis Obispo
08/11/04
1.740
6,000,000.00
02/09/05
First Bank Of San Luis Obispo
09/15/04
1.930
7,000,000.00
03/16/05
First Bank Of San Luis Obispo
09/24/04
1.970
5,000,000.00
03/25/05
Mission Community Bank
04/07/04
0.990
2,500,000.00
10/06/04
Mission Community Bank
04/28/04
1.220
2,500,000.00
10/27/04
Mission Community Bank
06/10/04
1.600
1,000,000.00
12/09/04
22
TIME DEPOSITS
DEPOSIT PAR MATURITY
NAME DATE YIELD AMOUNT DATE
SAN LUIS OBISPO (continued
Mission Community Bank
09/02/04
1.850
1,000,000.00
03/03/05
San Luis Trust Bank
04/21 /04
1.110
1,700,000.00
10/20/04
SAN MARINO
East West Bank
07/09/04
1.360
42,000,000.00
10/08/04
East West Bank
08/06/04
1.530
35,000,000.00
11/05/04
East West Bank
08/18/04
1.530
38,000,000.00
11/18/04
East West Bank
09/10/04
1.710
85,000,000.00
12/10/04
SANTA ROSA
National Bank of the Redwoods
04/29/04
1.210
5,000,000.00
10/28/04
National Bank of the Redwoods
07/21/04
1.710
10,000,000.00
01/20/05
National Bank of the Redwoods
08/11/04
1.730
5,000,000.00
02/09/05
SONORA
Central California Bank
09/24/04
1.970
5,000,000.00
03/25/05
STOCKTON
Pacific State Bank
04/07/04
0.990
1,000,000.00
10/06/04
Pacific State Bank
07/08/04
1.630
1,000,000.00
01 /06/05
Union Safe Deposit Bank
07/16/04
1.390
10,000,000.00
10/15/04
Union Safe Deposit Bank
07/23/04
1.420
15,000,000.00
10/22/04
Union Safe Deposit Bank
08/05/04
1.550
15,000,000.00
11/04/04
Union Safe Deposit Bank
08/13/04
1.500
15,000,000.00
11/12/04
Union Safe Deposit Bank
09/02/04
1.670
15,000,000.00
12/02/04
Union Safe Deposit Bank
09/10/04
1.720
10,000,000.00
12/10/04
Washington Mutual Bank
06/16/04
1.780
45,000,000.00
12/15/04
Washington Mutual Bank
07/21/04
1.720
75,000,000.00
01/20/05
Washington Mutual Bank
08/20/04
1.790
60,000,000.00
02/18/05
TORRANCE
China Trust Bank (USA)
07/16/04
1.390
40,000,000.00
10/15/04
China Trust Bank (USA)
07/23/04
1.420
30,000,000.00
10/22/04
China Trust Bank (USA)
08/13/04
1.500
20,000,000.00
11/12/04
China Trust Bank (USA)
09/10/04
1.720
35,000,000.00
12/10/04
23
TIME DEPOSITS
DEPOSIT PAR MATURITY
NAME DATE YIELD AMOUNT DATE
TRACY
Service 1st Bank
06/17/04
1.750
2,000,000.00
12/16/04
TUSTIN
Sunwest Bank
07/16/04
1.380
6,000,000.00
10/15/04
Sunwest Bank
08/12/04
1.540
7,800,000.00
11/10/04
Sunwest Bank
09/08/04
1.690
1,000,000.00
12/08/04
VACAVILLE
Travis Credit Union
06/02/04
1.410
40,000,000.00
12/01/04
WHITTIER
Quaker City Bank
06/04/04
1.490
25,000,000.00
12/03/04
Quaker City Bank
07/14/04
1.680
24,000,000.00
01/12/05
Quaker City Bank
09/29/04
1.850
16,000,000.00
01/28/05
TOTAL TIME DEPOSITS SEPTEMBER 2004
6,226,296,000.00
24
BANK DEMAND DEPOSITS
September 2004
($ In thousands)
DAILY BALANCES
DAY OF
BALANCES
WARRANTS
MONTH
PER BANKS
OUTSTANDING
1
$ 779,096
$ 2,175,919
2
1,074,663
2,123,313
3
1,152,219
2,247,440
4
1,162,219
2,247,440
5
1,162,219.
2,247,440
6
1,152,219
2,247,440
7
1,004,862
2,144,207
8
1,106,331
2,149,458
9
1,072,566
2,059,769
10
1,288,623
2,141,500
11
1,288,623
2,141,500
12
1,288,623
2,141,600
13
1,150,200
1,825,372
14
928,097
1,713,430
15
1,434,063
1,903,514
16
1,027,026
2,471,869
17
1,099,627
2,285,462
18
1,099,627
2,285,462
19
1,099,627
2,285,462
20
794,212
1,598,335
21
906,182
1,497,611
22
1,320,266
1,398,412
23
1,187,808
1,756,197
24
1,200,318
1,887,292
25
1,200,318
1,887,292
26
1,200,318
1,887,292
27
1,252,600
1,733,434
28
1,274,221
1,830,894
29
1,497,527
2,064,223
30
1,020,980
2,403,269
a
AVERAGE DOLLAR DAYS
$ 1,140,166
The prescribed bank balance for September was $954,098. This consisted of
$747,741 in compensating balances for services, balances for uncollected
funds of $212,071 and a deduction of $5,714 for September delayed
deposit credit
25
DESIGNATION BY POOLED MONEY INVESTMENT BOARD
OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS
No. 1663
In accordance with sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board, at its
meeting on September 15, 2004, 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
$ 747,740,000
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:
From To
( 1) 09/13104
(2) 09/20/04
(3) 09/27/04
(4) 10/04/04
(5) 10/11 /04
(6) 10/18/04
09/17/04
09/24/04
10/01/04
10/08/04
10/15/04
10/22/04
Time Deposits in
Various Financial
Institutions
In Securities (sections 16503a
Transactions (section 16430)* and 16602)*
$ 3,367,600,000 $ 48,085,555,000 $ 6,160,795,000
$ 2,720,200,000 $ 50,805,755,000 $ 6,160,795,000
$ (3,516,350,000) $ 47,289,405,000 $ 6,160,795,000
$ 6,253,400,000 $ 53,542,805,000 $ 6,160,795,000
$ 1,216,100,000 $ 54,758,905,000 $ 6,160,795,000
$ 1,266,500,000 $ 56,025,405,000 $ 6,160,795,000
Estimated
Total
$ 54,246,350,000
$ 56,966,550,000
$ 53,450,200,000
$ 59,703,600,000
$ 60,919,700,000
$ 62,186,200,000
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 $ 747,740,000.
Dated: September 15, 2004
* Government Code
POOLED MONEY INVESTMENT BOARD:
Signatures on file at SCO and STO
Chairperson
Member
Member
BOARD MEMBER ITEMS
CITY OF LA QUINTA
La Quinta, California
Comprehensive Annual Financial Report
Year Ended June 30, 2004
CITY OF LA QUINTA
La Quinta, California
Comprehensive Annual Financial Report
Year ended June 30, 2004
Prepared by
FINANCE DEPARTMENT
JOHN M. FALCONER
Director of Finance
CITY OF LA QUINTA
--- Comprehensive Annual Financial Report
Year ended June 30, 2004
TABLE OF CONTENTS
Page
-- INTRODUCTORY SECTION
Letter of Transmittal
i
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
I
r- Management's Discussion and Analysis (Required Supplementary Information)
3
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Assets
18
Statement of Activities
19
Fund Financial Statements:
Governmental Funds:
Balance Sheet
20
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
22
Statement of Revenues, Expenditures and Changes in Fund Balances
24
Reconciliation of the Statement of Revenues, Expenditures and Changes
-- in Fund Balances of Governmental Funds to the Statement of Activities
26
Proprietary Funds:
_ Statement of Net Assets
27
Statement of Revenues, Expenses and Changes in Net Assets
28
Statement of Cash Flows
29
Fiduciary Funds:
Statement of Fiduciary Assets and Liabilities — Agency Funds
30
CITY OF LA QUINTA
Comprehensive Annual Financial Report
Year ended June 30, 2004
TABLE OF CONTENTS. (Continued
Page
FINANCIAL SECTION. (Continued
Notes to the Basic Financial Statements
31
REQUIRED SUPPLEMENTARY INFORMATION:
Notes to Required Supplementary Information
69
Budgetary Comparison Schedules:
General Fund
70
SUPPLEMENTARY SCHEDULES:
Non -Major Governmental Funds:
Combining Balance Sheet
74
Combining Statement of Revenues, Expenditures and Changes
in Fund Balance
75
Non -Major Special Revenue Funds:
Combining Balance Sheet
78
Combining Statement of Revenues, Expenditures and Changes
in Fund Balance
80
Budgetary Comparison Schedules:
State Gas Tax Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 82
Federal Assistance Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 83
Lighting and Landscape Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 84
State Law Enforcement Block Grant (SLESF):
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 85
CITY OF LA QUINTA
Comprehensive Annual Financial Report
Year ended June 30, 2004
TABLE OF CONTENTS, (Continued)
Page
�- FINANCIAL SECTION, (Continued)
Quimby Fund:
... Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual
86
Public Safety Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual
87
Arts in Public Place Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual
88
•- South Coast Air Quality Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual
89
Intermodal Surface Transportation Act (ISTEA):
Schedule of Revenues, Expenditures and Changes in Fund
,.... Balances - Budget and Actual
90
Local Law Enforcement Block Grant (LLEBG):
Schedule of Revenues, Expenditures and Changes in Fund
"- Balances - Budget and Actual
91
Coachella Valley Violent Crime Task Force Fund:
-- Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual
92
Low/Moderate Income Housing Project Area No. 1 Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual
93
Low/Moderate Income Housing Project Area No. 2 Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual
94
Low/Moderate Bond - Project Area No. 1 Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual
95
CITY OF LA QUINTA
Comprehensive Annual Financial Report
Year ended June 30, 2004
TABLE OF CONTENTS, (Continued)
Page
FINANCIAL SECTION, (Continued)
Major and Non -Major Debt Service Funds:
Budgetary Comparison Schedules:
Redevelopment Agency Project Area No. 1 Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 98
Redevelopment Agency Project Area No. 2 Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 99
Financing Authority Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 100
Major and Non -Major Capital Projects Funds:
Budgetary Comparison Schedules:
Combining Balance Sheet
102
Combining Statement of Revenues, Expenditures
and Changes in Fund Balance 104
Capital Improvement Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 106
Redevelopment Agency Project Area No. 1 Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 107
2004 Low/Moderate Income Bond Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 108
Infrastructure Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual 109
CITY OF LA QUINTA
Comprehensive Annual Financial Report
Year ended June 30, 2004
TABLE OF CONTENTS, (Continued)
Page
-- FINANCIAL SECTION, (Continued)
Transportation Fund:
,.._ Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
110
Parks and Recreation Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
111
Civic Center Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
112
�- Library Development Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
113
County Library Development Fund:
Schedule of Revenues, Expenditures and Changes in Fund
_ Balances — Budget and Actual
114
Community Center Fund:
Schedule of Revenues, Expenditures and Changes in Fund
'- Balances — Budget and Actual
115
Street Facility Fund:
-- Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
116
Park Facility Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
117
Fire Facility Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
118
Assessment District 2001-1 Phase VI Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
119
CITY OF LA QUINTA
Comprehensive Annual Financial Report
Year ended June 30, 2004
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
120
Redevelopment Agency Taxable Bond Project Area No. 1 Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
121
Financing Authority Capital Projects Fund:
Schedule of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual
122
Internal Service Funds:
Combining Statement of Net Assets
124
Combining Statement of Revenues, Expenditures and Changes
in Fund Balance
125
Combining Statement of Cash Flows
126
Agency Funds:
Combining Balance Sheet
128
Statement of Changes in Assets and Liabilities
130
Capital Assets Used in the Operation of Governmental Funds:
Schedule by Source
134
Schedule by Function and Activity
135
Schedule of Changes by Function and Activity
136
CITY OF LA QUINTA
Comprehensive Annual Financial Report
Year ended June 30, 2004
TABLE OF CONTENTS, (Continued)
Table No. Page
STATISTICAL SECTION
General Fund Expenditures by Function
1
138
General Fund Revenues by Source
2
139
Property Tax Levies and Collections
3
140
Schedule of Net Taxable Value
4
141
Property Tax Rates - Direct and Overlapping Governments
5
142
Special Assessment Billings and Collections
6
143
Schedule of Direct and Overlapping Bonded Debt
7
144
Computation of Legal Debt Margin
8
145
Revenue Bond Coverage
9
146
Demographic Statistics
10
147
Property Value, Construction Activity, and Bank Deposits
11
148
Principal Taxpayers
12
149
Major Employers
13
150
Schedule of Insurance in Force
14
151
Miscellaneous Statistical Data
15
152
General Fund Balance Trends
16
153
(This page intentionally left blank)
P.O. Box1504 '
78-495 CALLE TAMPICO (760) 777-7000
LA QUINTA, CALIFOPNIA 92253 FAX (760) 777-7101
November 15, 2004
Honorable Mayor, City Council,
and City Manager
City of La Quinta
La Quinta, California
FY 2003-04 COMPREHENSIVE ANNUALFINANCIAL REPORT OF TRANSMITTAL
We are pleased to present the 2004 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, 2004. 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 Fourth 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.
i
t
t
t
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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, Coachella Valley Mosquito and Vector Control District, Coachella
Valley Water District, Sunline Transit Agency, 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 one-year demographic data is as follows:
R Population as of January 1, 2003 was 32,522, an increase of 6.8% from 2003.
• Commercial and residential units issued was 1,560, a 73% increase from 2003;
• Taxable Sales of $524 million, a 20.6% increase from 2003;
• Assessed Valuation of $6.333 billion, a 16% increase from 2003; and,
Hotel Room sales over $39.1 million, a 3% increase from 2003.
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 Senior Center,
which borders the newly opened Civic Center Campus. The Desert Sands Unified School District and
Coachella Valley Unified School District provide educational opportunities for school -age children in La Quinta.
ii
Honorable Mayor, City Council,
and City Manager
The City has been experiencing rapid growth in population. During 2003, the population grew 6.8%. 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 2003-2004 is 78. In addition to the 32,522 permanent residents, approximately 12,000
seasonal residents spend three to six months in the City. La Quinta was recently named "the best place to live
for golfing" by the Robb Report, and has been one of the fastest growing cities in Riverside County and
`- California in recent years.
Services Provided by the
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
Ci Clerk
- Legislative
- City Clerk
- City Manager
- Economic Development
Community Services
- Personnel
- Administration
---
- Recreation
Finance
- Senior Center
- Fiscal Services
-- - Central Services
Community D, evelo ment
- Administration
Building and Safety
- Planning
-- - Administration
- South Coast Air Quality
- Code Compliance
- Redevelopment
- Animal Control
- Building
- Emergency Services
- Fire
.- - Civic Center Building
Public Works
.-. - Administration
- Development/Traffic
- Street & Landscape Maintenance
- Construction
iii
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 and Visitors Authority, City promotion through the La Quinta Chamber of Commerce, water
and sewer service through the Coachella Valley Water District, electricity service through the Imperial Irrigation
District, refuse collection through Waste Management Company, public transit through Suniine Transit Agency,
and cable service through Time Warner.
Significant Events and Accomplishments
During 2003-04 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
Building permits issued exceeded $282.6 million in valuation for the fiscal year ending June 30, 2004. One
thousand four hundred and six new housing units were built in 2004, and La Quinta's growth continues to be
faster than the average recorded in Riverside County and in the Coachella Valley.
Major retail developments continue to diversify and enhance La Quinta's economic base. The Centre at La
Quinta auto mall site includes three auto dealerships and can accommodate up to nine dealerships, plus 400,000
square feet of retail anchored by a Super Walmart, which opened in 2004; Washington Park, anchored by a
Target also opened in 2004 ,as well as Washington Mutual Bank, Stein Mart; 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, offices and a gourmet food market; La Quinta Professional Plaza,, which includes Palm Desert
National Bank, professional offices and restaurants; Jefferson Plaza, anchored by Home Depot, I -Hop, and Jack
in the Box; One Eleven Center, anchored by a future Kohl's Department Store, Staples, Ross Dress 4 Less, and
a Big 5 Sporting goods store; Point Happy, anchored by two restaurants and Bank of America; and Old Town
La Quinta, a 140,000 square foot commercial/retail center recently opened in the Village area.
Several resort -oriented projects which will expand the economic diversity of the City are planned or already
approved, including an Embassy Suites hotel, scheduled to open in early 2005, development of Centre Point, a
50-acre site at the corner of Miles Avenue and Washington Street which will include a mid -priced hotel, and a
165,000 square foot medical facility. A residential component is also part of the Centre Point project, with a
neighborhood park.
Quality residential communities, including Trilogy, 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 including Andalusia and Coral Mountain.
iv
Honorable Mayor, City Council,
and City Manager
7 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 dramatically increased during FY 03/04. The median home
price in La Quinta stands at approximately $350,000, which is still lower than averages for San Diego and Los
Angeles Counties. New home construction is now in the $500,000 to $1,000,000 range.
Sales of new and existing homes in La Quinta continue to be amongst the highest volume in the Coachella
Valley as the east valley continues to development at a faster rate than the west valley. New construction has
�-- brought the number of housing units available in -the City to 15,942. The 15,942 units consist of 13,164
detached single family residences,1,448 attached single family residences,1, 071 multi family residences, and
259 mobile homes.
Tourism
La Quinta is well known for its many championship golf courses. The City is home to 21 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. La
Quinta's Trilogy Golf Club will be hosting the internationally televised Skins Game in 2004.
The City acquired 525 acres of previously undeveloped property adjacent to Jefferson Street and Avenue 52 in
2002. This project, SilverRock Resort, will include two 18-hole golf courses, hiking trails, residential casita
units, as well as two or three hotels and commercial areas for retail and restaurants. The first golf course, an
Arnold Palmer design will open in early 2005 and the City is actively marketing the surrounding property for
hotel and timeshare developers. The first course will be the host golf course for the Bob Hope Chrysler Classic
in 2006.
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.
Hotel room sales in La Quinta enjoyed dramatic growth to a record $39.1 million in fiscal year 2003/04. The La
Quints Hotel, the largest destination resort in the Coachella Valley, was the largest contributor to this increase.
V
Honorable Mayor, City Council,
and City Manager
Capital Improvements
The City completed $43.2 million in capital improvements during fiscal year 03-04, up from $16 million in
fiscal year 2002/03. Projects completed or nearing completion include Phase 1 of SilverRock Resort, the La
Quinta Park, the third fire station, Jefferson Street widening Phase II property acquisition, the Hammer Property
acquisition, completion of the Mira Flores Senior Apartment Project.
Several significant projects which are continuing, planned or already approved include Civic Center expansion,
the construction of the new City library, widening the Eisenhower Dr. bridge and landscape improvements to
Washington Street and the Vista Dunes Mobile Home Project.
The City's Capital Improvement Program (CIP) continues to increase to meet the demands of growth, and totals
$10.5 million for fiscal year 2004-2005. This major commitment in infrastructure will continue to provide for
both the current and future growth that the City has experienced.
The City has several significant community facility projects under way. A second skateboard park is nearing
completion and the 18 acre La Quints Park has been completed. This park hosts a variety of community
amenities, including lighted soccer fields, ball fields, a basketball court, a children's in service area and space
for the future skateboard park previously mentioned. Development of the City's first municipal golf course,
SilverRock Resort, will significantly add to amenities available to residents of La Quinta. SilverRock will open
early in 2005.
The Redevelopment Agency completed a $26.4 million taxable bond issue to be used for the development of the
SilverRock resort while the La Quinta Financing Authority issued $90 million in bonds to provide low and
moderate housing opportunities.
City Operations
The. following is a partial- listing of the accomplishments for the citizens of La Quinta for fiscal year2003-2004:
Continued development of GIS data base for city-wide planning, obtained aerial photos of City boundaries and
planning areas, and developed enhanced mapping ,capabilities, including public safety analysis;
Continued features on City web page, making the, municipal code, maps and permit detail available to the
general community;
Implemented economic development marketing program to support local businesses;
Applied for, and received, several grant awards for community projects to enhance public safety, environmental
issues, and improved traffic systems;
Improved on the Optical Imaging system for document storage and record retrieval, including scanning and
indexing existing improvement plans into digital archives;
Received awards in excellence for financial and budget reports;
Implemented upgrades in management information services, including additional servers, enhanced firewall
security, and improvements in City web site;
Implementation of new software, integrating financial records and departmental operations for improved
efficiency and information retrieval;
Vi
Honorable Mayor, City Council,
and City Manager
Continued expansion of recreation and Senior Center programs available for community education, leisure
enrichment, and health;
Implemented special enforcement programs for improved public safety and neighborhood security;
Construction of the City's third fire station and participated in emergency management training;
Negotiated development agreements to provide for quality housing in several projects, including very low and
low income seniors and low and moderate income family households;
Continued implementation of the community Emergency Notification System, and improved the City's
Emergency preparedness resources.
Future developments
Future developments include: continued commercial development along the Highway 111 corridor and
residential growth in the southern part of the City, redevelopment financed property development on Avenue 48,
Eisenhower Street and Calle Tampico. The City has budgeted funds to widen Highway 111 to its ultimate width
in anticipation of the increased commercial activity along the corridor.
Construction of the Library is in the pre -construction stage and will be completed in 2005. The City will
continue coordination with commercial development, ensuring quality enhancements in both new and existing
projects, and continue development of resort, hotel and destination tourist opportunities.
,... 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 of La Quinta for FY 2003/04 were very good 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
development plan to garner new and additional revenues. Management believes .that the following items will
impact future budgets of the City of La 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 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 landscaped street medians and developed park facilities that will require
additional funds for maintenance.
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 and expand City Hall.
vii
Honorable Mayor, City Council,
and City Manager
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
adequate accounting data are compiled to allow for the preparation of financial statements in conformity with
generally 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.
Accounting 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
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 began implementation of new integrated financial accounting software, to improve reporting
capabilities and enhance internal controls in all areas of financial records.
Honorable Mayor, City Council,
u and City Manager
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 cap on 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
1979 and still provides the City with a comfortable operating margin.
Risk Mana ement - The California Joint Powers Insurance Authority (CJPIA) was formed in 1997 under a joint
exercise of powers agreement between local governments for the purpose of jointly funding programs of
_ insurance under Section 990 of the California. Government Code. The Authority is governed by a Board of
Directors, which is composed of one director from each member organization which maintains membership in
the Liability program. The City of La Quinta joined the CJPIA in order to achieve long-term premium stability.
Each member city must remain in the pool for three years. Each year, the self -insured pool undergoes a
retrospective deposit computation based on current incurred loss valuations. Appropriate adjustments are then
made over a three-year period. The likelihood of the need for excess premiums is remote given the claims
' history of the cities involved and the length of time necessary to settle large claims. Generally, individual claims
in excess of the self -insured amount for workers compensation and general liability fall under.the insurance
policies purchased by the City. The CJPIA provides for liability insurance coverage with a maximum of
$50,000,000 per claim. All reserves are invested and earnings are credited to members in proportion to their
.equity. At present, the CJPIA has invested reserves in excess of $100,000,000.
City Retirement Costs - The City is a member of the California Public Employers Retirement System (PERS).
Employer contribution rates are reviewed and adjusted annually to achieve full funding for retirement benefits by
the year 2011.
Cash Management - The City Council annually adopts an investment policy that is intended to provide the
highest investment return with the maximum security while meeting the daily cash flow demands of the City and
conforming to all state and local statutes governing the investment of public funds. At all times there 'was
compliance with the City's investment policy, and safety and liquidity objectives were placed above rates of
return considerations in making deposits and investments.
Honorable Mayor, City Council,
and City Manager
Certificate of Award for Outstanding Financial Reporting
The California Society of Municipal Finance Officers (CSMFO) and the Government Financial Officers
Association (GFOA) both present an annual Certificate of Award for Outstanding Financial Reporting. We
believe that our current report conforms to their program requirements and we are submitting this report to their
organizations for considetation. If received, the Certificates are valid for one year only. The City has received
the GFOA and CSMFO awards in prior years and hope to continue to receive these awards.
Acknowledgments
This report could not have been accomplished without the dedicated services of the Finance Department staff.
Recognition is given to Vianka Orrantia, Secretary for her report preparation skills, to Sharon Christensen,
Misaela Mendoza, Diane Martin and Pat Parker for their diligence in processing most of the transactions
reported upon in the financial section of this report, and to Mason Lord for his diligence in maintaining the
information system. Again, we also appreciate the City Manager and City Council for providing the resources
necessary to prepare this report and for their role in preserving the City's frame work of internal controls and
again wish to express our appreciate for the efforts of the Conrad & Associates, CPA's audit team, for their
professionalism in conducting the annual audit for the City of La Quinta.
Respectfully submitted,
John M. Falconer
Finance Director and Treasurer
X
City of La Quinta
Directory of Officials
June 30, 2004
CITY COUNCIL
Don Adolph, Mayor
Stanley Sniff, Mayor Pro Tern
Terry Henderson, Council Member
Lee Osborne, Council Member
Ronald Perkins, Council Member
ADMINISTRATION
Thomas P. Genovese, City Manager
Mark Weiss, Assistant City Manager
John M. Falconer, Finance Director
Tom Hartung, Building & Safety Director
Jerry Herman, Community Development Director
Kathy Jenson, City Attorney
Dodie Horvitz, Community Services Director
June Greek, City Clerk
Tim Jonasson, Public Works Director/City Engineer
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xiv
CONRADAND
CERTIFIED PUBLIC ACCOUNTANTS
2301 DUPONT DRIVE, SUITE 200
ASSOCIATES, L.L.P. IRVINE, CALIFORNIA92612
(949) 474-2020
Fax (949) 263-5520
The Honorable Mayor and City Council
City of La Quinta
La Quinta, California
Independent Auditors' Report
We have audited the accompanying financial statements of the governmental activities, each
major fund, and the aggregate remaining fund information of the City of La Quinta, California as
of and for the year ended June 30, 2004, which collectively comprise of the City's basic financial
statements, as listed in the accompanying table of contents. These financial statements are the
responsibility of the management of the City of La Quinta, California. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, each major fund, and the
aggregate remaining fund information of the City of La Quinta, California, as of June 30, 2004,
and the respective changes in financial position and cash flows, where applicable, of the City of
La Quinta, California and the respective budgetary comparison information for the general fund
and major special revenue funds of the City for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
The information identified in the accompanying table of contents as management's discussion
and analysis and required supplementary information is not a required part of the basic financial
statements but is supplementary information required by the Governmental Accounting
Standards Board. We have applied certain limited procedures, which consisted principally of
inquiries of management regarding the methods of measurement and presentation of the
supplementary information. However, we did not audit the information and express no opinion
on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the City of La Quinta's basic financial statements. The introductory section
combining and individual nonmajor fund financial statements and statistical schedules listed in
the table of contents are presented for purposes of additional analysis and are not a required part
of the basic financial statements. The combining and individual nonmajor fund financial
statements have been subjected to the auditing procedures applied in the audit of the basic
financial statements, and in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole. The introductory section and statistical tables have
not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them.
N
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
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 20, 2004 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.
August 20, 2004
Management Discussion and Analysis
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 2003/04
were very good and our financial condition is the strongest since incorporation. Our financial
results were stronger than the prior year despite lower interest income and higher costs and the
-- City was generally able to see increases in its reserves. Offsetting our lower interest income and
higher costs were increases in transient occupancy, sales tax collections, and permits and fees. In
addition, with our higher population, we were able to collect more in State subventions; however,
as mentioned earlier, the City incurred higher costs for servicing the larger population.
As a fast growing municipality, the City of La Quinta has been able to add to its general reserves.
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.
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 03/04:
Description
Modified Accrual
Accrual
Change
Assets
330,178,668
605,173,755
274,995,087
Liabilities
150,209,978
266,528,961
116,318,983
Revenues
88,623,817
63,710,468
(24,913,349)
Expenditures
110,757,923
39,212,009
(71,545,914)
Fund Balance/Net Assets
179,968,690
338,644,794
158,676,104
Revenues over (under) expenditures
1 74,310,894
24,498,459
1 (49,812,435)
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.
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.
4
Assets
The following chart lists a condensed Statement of Net Assets for the fiscal year ending June 30,
2004 and 2003. Total net assets increased $24.5 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
Activities
Governmental
Activities
Governmental
Activities
2004
2003
Changes
206,488,111
398,685,644
129,398,242
359,245,168
77,089,869
39,440,476
605,173,755
488,643,410
116,530,345
17,224,823
249,304,138
14,609,508
159,887,567
2,615,315
89,416,571
266,528,961
174,497,075
92,031,886
249,059,500
443,415,966
45,169,328
225,818,022
40,038,313
48,290,000
23,241,478
4,377,653
(3,120,672)
338,644,794
314,146,335
24,498,459
Employees
One major asset of the City of La Quinta is its employees. While not quantified on the books, the
City has 78 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 five 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.
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
_ 03/04, 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 03/04, 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:
5
Summary of FY 03/04 Interest Rates/Earnings
Month
6 Month
Benchmark (%)
Average
Maturity
Days
Pool
Interest
Rate (%)
Fiscal Agent
Interest
Rate (%)
Total
Rate
All Earnings (%)
July 2003
0.98%
131
1.66%
0.52%
1.43%
August
1.06%
110
1.65%
0.45%
1.35%
September
1.01 %
80
1.65%
0.49%
1.26%
October
1.04%
121
1.59%
0.48%
1.36%
November
1.03%
98
1.64%
0.48%
1.38%
December
0.99%
117
1.67%
0.57%
1.41%
January 2004
1.00%
140
1.58%
0.30%
1.37%
February
1.01%
120
1.65%
0.30%
1.38%
March
1.01 %
155
1.50%
0.50%
1.33%
April
1.19%
137
1.50%
0.50%
1.33%
May
1.38%
137
1.54%
0.50%
1.36%
June 2004
1.73%
234
1.69%
0.47%
1.62%
Average FY 03/04
1.12%
132
1.61 %
0.46%
1.38%
Average FY 02/03
1 1.29%
125
2.10%
0.75%
1.73%
Ending Cash balances
Interest Earnings
June 2004 June 2003
$187,392,966 $113,060,020
$1,738,505 $1,353,868
During FY 03/04, interest rates dropped throughout the year across the yield curve. The
Treasurer exceeded the benchmark 6 month Treasury Bill rate in 10 of the 12 twelve months and
overall for the year by an average of 26 basis points. Interest earned on all funds totaled $1.7
million for FY 03/04 versus $1.4 million for FY 02/03 and the total portfolio at June 30, 2004 was
$187.4 million versus $113.0 million for the previous year.
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
between 7 and 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 Agency to the Park and Recreation Development
Impact Fee Fund has been made to accelerate Park development. The total outstanding balances
between the General Fund and the Redevelopment Agency as of June 30, 2004 and 2003 are
$28,671,083 and $21,081,322, respectively. The major increase included a $5.8 million advance
to fund purchase of a portion of property at Dune Palms and Highway 111. The total outstanding
balances between the Redevelopment Agency and the Park & Recreation Capital Fund as of June
30, 2004 and 2003 are $4,075,463 and $4,921,720, respectively. The decrease included
repayment of the advance used for the construction of the La Quinta Park from available Park and
Recreation funds. In FY 03/04 the Redevelopment Agency advanced funds for the construction
6
of a third fire station on Adams St. The total outstanding balance between the Redevelopment
Agency and the Fire Facility Capital Fund as of June 30, 2004 is $1,260,695. 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 years following the
first year of implementing GASB 34 were harder than the first year. In the first year the City
relied on a professional study to value the infrastructure. During FY 03/04, the City continued 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 25% depreciated at year end compared to 33% in the previous year, Internal
Service assets were 57% depreciated compared to 61% last year and infrastructure improvements
were 56% depreciated compared to 61 % in the prior year. The lower depreciation percentage is
indicative of the change in the capitalization minimum amount being raised from $500 to $5,000
to be in conformity with General Accounting Standards Board recommendations. This increase in
the capitalization policy generally resulted in the removal of fully depreciated assets.
The City has two internal service funds - equipment replacement and information technology.
-' The Equipment Replacement Fund is for the replacement of vehicles, and major capital items
such as the roofs and air conditioners in the City Hall and Senior Center. The Information
Technology fund is for the replacement of computers and related equipment and to charge
"-' departments for their fair share of computer related services. 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 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 third fire
station, SilverRock Resort, Assessment District 2000-1 improvements including the Village, the
Civic Center Project and the Vista Dunes Mobile Home Park project. The following chart details
the fixed assets, infrastructure assets, and construction in progress as of the end of the fiscal year:
7
CITY OF LA QUINTA
Fixed Assets and Construction in Progress
2004
Accumulated
Depreciated
Type
Life
Total
Depreciation
Remaining
Percent
ears
Fixed Assets
Land
N/A
731505,659
N/A
$73,505,659
25.28%
General Fixed Assets
Internal Service Fixed Assets
5-30
3-15
24,912,497
2,572,807
6,297,306
1,460,883
18,615,191
1,111,924
56.78%
100,990,963
7,758,189
93,232,774
Total Fixed Assets
Infrastructure Assets
Right of Way (ROW)
N/A
234,280,023
N/A
234,280,023
Art in Public Places
N/A
1,640,039
N/A
1,640,039
235,920,062
N/A
235,920,062
Subtotal
Street Pavement
20-25
54,287,843
38,725,874
15,561,969
Curbs/Gutters
50
7,481,027
2,831,381
4,649,646
Sidewalks
20
6,173,436
4,641,537
1,531,899
Median
50
7,863,019
1,687,903
6,175,116
Parking Medians
50
720,462
73205
713,257
Bridges
35
M152,665
2,362,856
7,789,809
Traffic Signals
20
4,543,605
1,640,556
2,903,049
Bike Paths
20
642,304
296,145
346,159
Sound Wall
20
189,394
17,720
171,674
Retention Basin
10
957,019
876,503
80,516
Storm Drains
50
2,028,035
351,144
1,676,891
Subtotal
95,038,809
53,438,824
41,599,985
56.23%
Total Infrastructure Assets
$330,958,871
$53,438,824
$277,520,047
Construction in Progress
27,932,823
Total Capital Assets, net
$398,685,644
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 City did not issue new debt; however, the
Redevelopment Agency issued $26.4 million in taxable tax increment financing to be used toward
the SilverRock project and the Financing Authority issued $90 million debt for housing purposes.
Of the $90 million debt issue, approximately $20 million was used to retire the outstanding 1995
Redevelopment Agency Housing bonds and the balance net of issue costs used for future housing
projects. The Financing Authority bond issue was completed in the last week of June 2004 which
is the primary reason for the increase in cash balances at year end. 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 we have maintained our "A" rating. Similar stand-alone ratings
for the City of La Quinta, RDA Project Area 2 and the Financing Authority are not available.
71- 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
provide 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, 2004 and 2003, the City of La Quinta has advanced the RDA
Project Debt Service Area 1 $12,335,283 and $11,503,322, respectively and Debt Service Project
Area 2 $16,335,800 and $9,578,000, respectively. The advances carry an interest rate of between
7-10% 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 $ (11,104,297) as of June 30,
2004 compared to a fund deficit as of June 30, 2003 of $ (6,182,506). As mentioned previously
the General Fund advanced the Agency $5.8 million to purchase a piece of property at Dune
Palms Road and Highway 111. This advance agreement requires the repayment of the advance
from available proceed, if the property is sold at a future date. 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. The outstanding advances have 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.
The La Quinta Redevelopment Agency has advanced funds to the Capital Project - Park and
Recreation Fund to construct the Civic Center Campus and the La Quinta Park. The advances
were made to accelerate the construction of these facilities which would have not been
constructed to meet the growing needs of the community. During FY 03/04, the original advance
of $1.1 million advance for the construction of the La Quinta Park from RDA Project Area 2 was
repaid. The advances carry an interest rate that fluctuates with the average earnings of the
investment pool and were $4,075,463 for FY 03/04 and $4,921,720 for FY 02/03. This advance
-' has no specified re -payment date.
The La Quinta Redevelopment Agency has advanced funds to the Capital Project - Fire Facilities
-' Fund to construct the third fire station on Adams Street. The advances were made to accelerate
the construction of this facility which would have not been constructed to meet the growing needs
of the community. The advances carry an interest rate that fluctuates with the average earnings of
-' the investment pool and were $1,260,695 for FY 03/04. This advance has no specified re -payment
9
date. 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 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 $26.4 million in bonds during
FY 03/04 and the Financing Authority issued $90 million of housing bonds, however, no bonds
were issued in FY 02/03.
The Statement of Net Assets has a long-term liability amount due within one year of $5,016,762
and an amount due in more than one year of $249,304,138 for FY 03/04, as compared to
$450215110 due within one year and $159,887,567 from FY 02/03.
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
$45,169,328 as reported in the Statement of Net Assets. This is a decrease of $3,120,672 from
last year. As in the past, Management has elected, as detailed in the basic financial statements, 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 $338,644,794 of which $249,059,500 consists of
capital assets, net of the related debt that was used in acquisition. $44,415,966 consists of
restrictions placed upon special revenue, capital projects, and debt service funds leaving total
unrestricted net assets of $45,169,328.
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
The following chart lists a condensed version of the Changes in Net Assets for the fiscal years
�- ending June 30, 2004 and 2003.
CITY OF LA QUINTA
Changes in Net Assets
2004
2003
Change
Revenues
Program revenues
Charges for services
$ 7,071,404
5,627,924
1,443,480
Operating grants and
1,799,503
1,797,031
2,472
contributions
Capital grants
12,090,143
5,160,405
6,929,738
General revenues
�-- Taxes
37,913,150
32,764,817
5,148,333
Investment income
1,738,505
1,353,868
3842637
Motor Vehicle in lieu
12608,151
12768,091
(159,940)
,... Gain (loss) on sale of
capital assets
-
-
Other
1,489,612
513,876
975,736
,._ Total revenues
63,710,468
48,986,012
14,724,456
Expenses
General government
4,319,778
3,2032462
1,116,316
Public safety
10,256,463
8,547,005
1,709,458
Community services
1,446,999
1,321,825
125,174
Planning and development
7,526,977
19,083,860
(11,556,883)
Public works
6,003,013
6,785,759
(782,746)
Interest
9,6582779
8,555,401
1,103,378
Total expenses
39,212,009
472497,312
(82285,303)
Excess (deficiency)
$ 24,498,459
1,488,700
23,009,759
Net assets - 6/30/2002
312,657,635
Net assets - 6/30/2003
314,146,335
314,146,335
Net assets - 6/30/2004
$ 338,644,794
The following graph depicts the revenue by source for governmental activities for FY 03/04
which totaled $65,644,292.
Revenues by Source -Governmental Activities
25,000,000
20,000,000
15,000,000
10, 000, 000
5,000,000
.}�� +o�
c� , �` ,�,�• �a ,�' o; act` �a ��a •`�� �S O'`
O
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 following graph depicts the expenses and program revenues for governmental activities for
FY 03/04:
Expenses and Program Revenues - Governmental
Activities ��h
12
The functional revenue for FY 03/04 was $65,644,292 versus $48,986,012 for FY 02/03. The
increase can be attributed to an increase in capital grants from the prior year related to
construction projects, increased property taxes and one time charges for services.
The functional expenses for FY 03/04 were $41,145,833 versus $47,497,312 for FY 02/03. There
was an overall decrease which was attributable to less Community and Development
expenditures. In FY 02/03, the RDA made a large investment in the Miraflores Housing and
Senior Apartment Projects. Increases can be attributed to greater debt service, and public safety
expenses. The debt service increases are a result of a full year of the FY 01/02 bond issues debt
service being due and the new $26.4 bond issue resulted in higher debt service payments. The
public safety increases are a result of higher police service levels/costs and fire service
levels/costs. The net excess increased $25,009,759 from FY 02/03 as a result of higher revenues
and lower expenses from the prior year.
As mentioned earlier, this net increase of $24,498,459 reported in the Statement of Activities
compares to a net increase of $74,310,894 under the modified accrual basis of accounting. The
primary reason for the differences between the two amounts is the net increase in the
capitalization of $23.2 million in infrastructure improvements.
REVENUES
General Fund Revenues
For the second year in a row, Transient Occupancy Taxes have returned to the FY 00/01 levels
and were just over $4 million, while sales taxes increased from $4.3 million in FY 02/03 to $5.2
million in FY 03/04. 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 I I I corridor, the City is experiencing retail growth that has added sales
taxes to the City. It should be noted that the area north of Highway 111 has been fully developed
with new home development generally occurring in the central and recently annexed southern
portions of the City. e ThCityis home to a world class destination resort which continues to
generate transient occupancy taxes. Compared to last year, taxes increased by $1.6 million, with
increases in property taxes, sales taxes, transient occupancy taxes, franchise taxes, document
transfer taxes. Licenses and permits increased $1.1 million from FY 02/03 due to the strong
building demand, intergovernmental revenues increased $500,000 through greater fire service
protection draws, investment income increased $440,000 to $2.3 million based upon higher
invested cash balances and higher outstanding advances from the RDA, despite slightly lower
interest rates. The General Fund investment income is greater than the Statement of Activities
investment income due to the interest earned on the RDA advances, which is eliminated when
preparing the Statement of Activities. With this as background, the following chart and graph
reflects the major revenue categories of the General Fund for the last two years:
13
Revenues:
Original
Budget
Final
Budget
2004
Actual
Favorable/
Unfavorable
2003
Actual
Actual
Change
Taxes
$ 10,721,600
10,721,600
13,184,050
2,462,450
11,572,985
1,611,065
Licenses and permits
857,500
1,087,500
3,096,145
2,008,645
1,982,127
1,114,018
Charges for services
1,404,023
1,080,123
2,619,578
1,539,455
2,302,759
316,819
Intergovernmental
4,073,400
4,679,563
4,895,986
216,423
4,394,046
501,940
Investment income
1,468,800
2,417,882
2,335,154
(82,728)
1,894,303
440,851
Miscellaneous
3,000
-
109,388
109,388
87,236
22,152
$ 18,528,323
19,986,6681
26,240,3011
6,253633
22 2 33,4561
4,006.845
Total revenues
Other Revenues
The Statement of Activities lists FY 03/04 tax increment funds collected of $24,450,337 versus
$21,191,832 in FY 02/03. 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) property tax
valuations have increased an average of 17% based upon new growth and higher County Tax
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 $39,212,009 in expenses for FY 03/04 as compared to
$47,497,312 for the prior year. Of this amount the three largest categories are $7.5 million (19.1
million in FY 02/03) in Planning and Development which includes the RDA, $9.6 million (8.5
million in FY 02/03) in interest debt service costs for outstanding debt, and $10.3 million (8.5
million in FY 02/03) 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, $1.2 million in library services ($1 million
in FY 02/03) 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 $2.25 million
(offset by a like amount of intergovernmental revenue from tax increment payments). 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 $18,444,035 in general fund expenditures included in the Statement
of Activities.
Expenditures
Original
Budget
Final
Budget
2004
Actual
Favorable/
Unfavorable
2003
Actual
Actual
Change
General government
$ 4,007,684
4,458,685
3,892,220
566,465
3,140,576
751,644
Public safety
9,634,963
10,115,723
9,672,180
443,543
8,202,408
1,469,772
Community services
999,142
1,212,929
1,025,397
187,532
991,558
33,839
Planning and development
863,937
1,301,781
750,444
551,337
674,450
75,994
Public works
2,946,1131
4,263,4911
3,103,7941
1,159,6971
2,311,4361
792,358
$ 18 451 8391
21,352,609
1 18,444,0351
2,908,5741
15,320,4281
3,123,6071
Total expenditures
14
The major increases in the original and final budget for public safety consisted of increases in the
plan check services for the Building Division to deal with the increased building activity in the
City of La Quinta. The major increase between the original and final budget in public works
budgets consisted of increases in plan check contracts to service new developments and additional
slurry seal projects for road repair. The major increase in the original and final budget for general
government consisted of additional legal costs.
Major increases in actual costs for FY 03/04 can be attributed to added police positions and
salaries, additional fire service personnel and costs, additional building inspection contract
services, additional building plan check contract services, and additional engineering plan check
contract services.
Maior and Non-Maior Funds
The City has identified seven major funds for FY 03/04 — General Fund, Debt Service RDA No.I
Fund, Debt Service RDA No.2 Fund, Financing Authority Debt Service Fund, Capital Projects
Fund, RDA No.l Capital Projects Fund and the 2004 Low & Moderate Bond Fund. GASB has
set forth criteria for identifying major funds based upon the size of their balance statements or
financial activity during the year. Major funds can change from year to year except for the
General Fund, which is always considered a major fund. In addition, management is given the
latitude to identify any additional major funds, even though the funds may not meet the GASB
criteria. For this year, the City of La Quinta has not identified a non -major fund to classify as a
major fund.
The purpose of this major and non -major classification is to highlight for the reader those funds
that have a material impact on the City financial statement which may warrant closer review by
the reader.
Conclusion
As was mentioned in the Executive Summary, Management is pleased to report that the City of
La Quinta was able to add to its reserves for FY 03/04. We hope you find this financial report,
based upon the third year of implementing GASB 34 reporting model, helpful in your evaluation
of the financial position and the operations of the City of La Quinta. If you have any questions
about this report, please feel free to give me a call, John Falconer, CPA at 760-777-7150.
15
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16
BASIC FINANCIAL STATEMENTS
17
CITY OF LA QUINTA
Statement of Net Assets
June 30, 2004
Governmental Activities
2004
2003
Assets:
Cash and investments (note 2)
$ 89,936,019
81,299,937
Accounts receivable
515,984
264,272
Taxes receivable
353,361
263,555
Prepaid items
2921)816
17,515
Interest receivable
415,681
173,789
Notes receivable (note 4)
12,741,527
12,613,565
Due from other governments
6,511,052
4,560,265
Deposits
246,858
186,073
Restricted assets:
Cash and investments with fiscal agent (note 2)
951,4745813
30,0191,271
Capital assets (note 5):
Land
73,505,659
56,467,549
Right of way
234,280,023
230,148,147
Construction in progress
27,932,823
29,604,242
Other capital assets, net
62,967,139
43,025,230
Total assets
605,173,755
488,643,410
Liabilities:
Accounts payable
Accrued salaries and benefits
Interest payable
Deposits payable
Retentions payable
Due to other governments
Noncurrent liabilities (notes 6 to 12):
Due within one year
Due in more than one year
Total liabilities
Net assets:
Invested in capital assets, net of related debt
Restricted for:
Public safety
Community services
Planning and development
Public works
Unrestricted
5,393,144
376,210
3,423,766
2,125,23 8
726,299
163,404
5,363,158
270,617
2,767,256
1,768,499
418,868
5,016,762 4,021,110
249,304)138 159,887,567
266, 528,961 174,497,075
249,059,500 225,818,022
8,413
40,210
736,650
573,981
17,408,711
18,540,558
26,262,192
20,883,564
45,169,328
48,2901p000
Total net assets $ 338,644,794 31411146,335
See accompanying notes to the basic financial statements.
18
CITY OF LA QUINTA
Statement of Activities
Year ended June 30, 2004
Program Revenues
Operating Capital
Charges for Contributions Contributions
Expenses Services and Grants and Grants
Net Governmental
Activities
2004 2003
Governmental activities:
General government
$ 4,319,778
3371)376
-
- (3,982,402)
(2,904,713)
Public safety
10,2565463
45004,621
119,862
- (6,131,980)
(3,871,758)
Community services
1,446,999
2525677
734,325
6535217 1932220
(233,829)
Planning and
development
7,526,977
662,737
120,490
- (6,743,750)
(17,513,806)
Public works
65003,013
1,813,993
824,826
11,436,926 8,072,732
(1,934,669)
Interest expense
916581779
-
-
- (9,658,779)
(8,555,401)
Total governmental
activities
$39,212,009
7,071,404
15,799>503
12,090,143 (18,250,959)
(35,014,176)
General revenues:
Taxes:
Property taxes
Tax increment
Sales taxes
Transient occupancy taxes
Franchise taxes
Other taxes
Investment income
Motor vehicle in lieu
Miscellaneous revenues
Total general revenues
Change in net assets
Net assets at beginning of year
Net assets at end of year
2,198,141
1,8001616
2411450,337
211,191,832
5,2401037
4,345,381
4,261,767
4,036,290
895,810
690,544
8673058
700,154
1.17381,505
1,3535868
1,608,151
11,8701,315
1,4892612
513,876
42,7491418 36,502,876
243,498.1459 1,4881-700
314,146,335 3125,657,635
$ 338,644,794 314.1146,335
See accompanying notes to the basic financial statements.
19
Assets
Cash and investments
Cash with fiscal agent
Accounts receivable
Taxes receivable
Prepaid items
Interest receivable
Notes receivable (note 4)
Due from other funds (note 18)
Due from other governments
Advances to other funds (note 18)
Deposits
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Accrued salaries and benefits
Deferred revenue
Deposits payable
Retentions payable
Due to other governments
Due to other funds (note 18)
Advances from other funds (note 18)
Total liabilities
Fund Balances:
Fund balances (deficits) (note 21):
Reserved for:
Debt service
Bond projects
Prepaid items
Deposits
Advances to other funds
Notes receivable
Unreserved, reported in (note 24):
General fund
Special revenue funds
Debt service funds
Capital projects funds
CITY OF LA QUINTA
Governmental Funds - Balance Sheet
June 30, 2004
Debt Service Funds
Redevelopment
Redevelopment
Agency -
Agency -
Financing
General
PA No. 1
PA No. 2
Authority
$ 27,694,719
16,134,876
5,021,687
5,006
-
309
11
6
369,198
-
-
40
353,361
-
-
-
292,816
-
-
-
1875163
53,535
2%892
-
-
-
-
90,00%000
265580
-
-
-
5,238,738
235,743
188,913
-
28,671,083
-
-
-
246,858
-
-
-
$ 6300,516
165424,463
5,231,503
90,005,052
$ 1,841,898
1,109 - -
376,210
- - -
4,031,907
- - 90,000,000
1,961,861
- - -
163,404
- - -
-
12,33531283 16,335,800 -
8,375,280
12,336,392 16,335,800 90,000,000
-
4,088,071 - -
292,816
- - -
246,858
- - -
28,671,083
- - -
25,494,479
- - -
-
- (11,104,297) 5,052
Total fund balances 54,705,236 4,088,071 (11,104,297) 5,052
Total liabilities and fund balances $ 63,080,516 161,424)463 5,231,503 90,005,052
See accompanying notes to the basic financial statements.
all
Capital Projects Funds
Redevelopment
Other
Capital
Agency - 2004
Governmental
Totals
Improvement
PA No. 1 Low/Mod Bond
Funds
2004
2003
840,279
14,011,979 -
23,143,081
86,851,627
78,350,979
-
29,272,059 57,656,982
8,545,446
95,474,813
30,019,271
_
- -
146,746
515,984
249,272
-
353,361
263,555
_
_ _
-
292,816
17,515
-
60,403 -
82,045
404,038
173,789
_
- -
12,741,527
102,741,527
12,613,565
2,756,703
- -
-
2,783,283
95,890
7021011
- -
141,715
6,507,120
4,560,265
-
43,075,463 -
1,260,695
34,007,241
26,003,042
_
_ _
-
2462858
186,073
4,298,993
47,419,904 57,656,982
46,061,255
330,178,668
152,533,216
3,441,782
16,531 -
62,940
5,364,260
5,326,444
_
_ _
-
376,210
270,617
14,034
- -
10,618,102
104,664,043
12,992,060
116,878
- -
46,499
2,125,238
1,768,499
726,299
- -
-
726,299
-
-
_ _
-
163,404
418,868
_
_ -
2,783,283
2,783,283
95,890
_
_ -
5,336,158
34,007,241
26,003,042
4,298,993
16,531 -
18,846,982
150,209,978
46,875,420
_
_ _
-
4,088,071
2,273,588
-
29,272,059 57,656,982
-
86,929,041
30,016,934
_
- -
-
292,816
17,515
_
- -
-
246,858
186,073
-
4,075,463 -
1,260,000
34,006,546
24,893,196
_
- -
2,123,425
2,123,425
2,117,586
-
25,494,479
26,584,773
-
- -
9,286,459
9,286,459
9,382,431
_
_ _
-
(11,099,245)
(6,182,505)
-
14,055,851 -
14,544,389
28,600,240
16,368,205
-
47,403,373 57,656,982
27,214,273
179,968,690
105,657,796
4,298,993
47,419,904 57,656,982
46,061,255
330,178,668
152,533,216
21
CITY OF LA QUINTA
Governmental Funds
Reconcilation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
June 30, 2004
Fund balances of governmental funds
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 resouces in governmental fund activity.
Infrastructure
Other capital assets
Accumulated depreciation
Long term debt and compensated absences that have not been included
in the governmental fund activity:
Bonds payable
Compensated absences
Other long term liabilities
Accrued interest payable for the current portion of interest due on
bonds payable has not been reported in the governmental funds.
Revenues that are measurable but not available. Amounts are recorded
as deferred revenue under the modified accrual basis of accounting.
$ 17%968,690
358,891,693
1001,990,963
(61,197,012)
(243,111,094)
(5315553)
(10,678,253)
(3,423,766)
14,664,043
Internal service funds are used by mangement 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 3,071,083
Net assets of governmental activities $ 338,644,794
See accompanying notes to the basic financial statements.
22
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23
CITY OF LA QUINTA
Governmental Fund Types - Statement of Revenues, Expenditures and Changes in Fund Balances
Year ended June 30, 2004
Revenues:
Taxes
Licenses and permits
Charges for services
Developer fees
Intergovernmental
Investment income
Special assessments
Rental income
Miscellaneous
Total revenues
Expenditures:
Current:
General government
Public safety
Community services
Planning and development
Public works
Capital projects
Debt service:
Principal
Interest
Fiscal charges
Payment to bond escrow
Payments under pass -through
obligations
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses):
Issu f t 11 t' b d
Debt Service Funds
Redevelopment Redevelopment
Agency - Agency -
General PA No. 1 PA No. 2
$ 13,184,050
3,096,145
2,619,578
4,895,986
2,335,154
109,388
26,240,301
3,892,220
9,672,180
1,025,397
750,444
3,103,794
18,444,035
23,966,954 12,126,671
201,721 75,625
24,168,675 12,202,296
Financing
Authority
100
680,772
9,686
690,558
377,920 168,983 5,205
2,920,707
276,169 300,000
9,018,569
1,536,694 380,830
1,253,848
337,259 -
11,767,922
9,680,225 -
25,338,966
11,999,330 686,035
7,796,266 (1,170,291)
ance o ax a oca ion on s
-
-
Issuance of revenue bonds
Payment to bond escrow
-
(15,708,019)
Transfers in (note 20)
183,289
18,693,322
Transfers out (note 20)
(959,002
-
Total other financing sources (uses)
(775,713)
2,985,303
Net change in fund balances
7,020,553
1,815,012
Fund balances (deficit) at beginning of year
47,684,683
2,273,059
Fund balances (deficit) at end of year
$ 54,705,236
4,088,071
See accompanying notes to the basic financial statements
202,966 4,523
(4,246,981) -
4,922,224 -
(5,800,000) -
(5,124,757) -
(4,921,791) 4,523
(6,182,506) 529
11,104,297 5,052
24
Capital Projects Funds
Redevelopment
Other
Capital
Agency - 2004
Governmental
Totals
Improvement
PA No. 1 Low/Mod Bond
Funds
2004
2003
-
- -
9,023,407
58,301,082
50,326,811
-
- -
-
3,096,145
1,982,127
-
- -
-
2,619,578
2,302,759
-
- -
5,718,073
5,718,073
3,021,245
5,931,382
- -
1,031,259
11,858,627
7,194,521
-
635,823 2,781
484,780
3,735,984
3,368,709
-
- -
816,045
816,045
780,259
-
6,794
431,178
1,118,744
1,094,510
153,000
- -
1,087,465
1,359,539
483,777
6,084,382
642,617 2,781
18,592,207
88,623,817
70,554,718
1,832,408 -
43,207,098 - -
43,207,098 1,832,408 -
207,156
4,099,376
3,344,406
528
9,672,708
8,344,428
-
1,025,397
993,964
4,345,461
7,480,421
7,804,294
1,432,795
4,536,589
3,685,050
124,821
43,331,919
16,057,578
113,662
3,610,538
2,931,952
-
10,936,093
9,469,314
3,025,628
3,025,628
-
-
1,591,107
-
- 21,448,147 17,561,994
9,250,051 110,757,923 70,192,980
(37,122,716)
(1,189,791)
2,781
9,342,156
(22,134,106)
361,738
-
-
-
26,400,000
26,400,000
-
-
-
-
90,000,000
90,000,000
-
-
-
-
-
(19,955,000)
-
44,625,348
14,064,243
66,323,236
5,802,000
154,613,662
23,887,256
(7,502,632)
(6,561,612)
(8,669,035)
(125,121,381)
(154,613,662)
(23,887,256)
37,122,716
7,502,631
57,654,201
(2,919,381)
96,445,000
-
-
6,312,840
57,656,982
6,422,775
74,310,894
361,738
-
41,090,533
-
20,791,498
105,657,796
105,296,058
-
47,403,373
57,656,982
27,214,273
179,968,690
105,657,796
25
CITY OF LA QUINTA
Reconcilation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Year ended June 30, 2004
Net changes in fund balances - total governmental funds $ 74,310,894
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.
Capital outlay 43,331,919
Depreciation (2,590,779)
Proceeds from the issuance of bonds is reported as other financing sources in the
governmental funds. The issuance of bonds increases liabilities in the statement of
net assets, but does not result in an increase in the statement of activities. (116,400,000)
Retirement of bonds reduces the long-term liability in the statement of net assets
as opposed to being recorded as an other financing use in the fund statements. 21,328,088
Repayment of bond principal is an expenditure in the governmental funds,
but the repayment reduces long-term liabilities in the statement of net assets. 3,245,605
The statement of net assets includes accrued interest on long term debt. (656,510)
To record as an expense the net change in compensated absences in the
statement of activities. (69,293)
Revenues that are measurable but not available. Amounts are not recorded
as revenue under the modified accrual basis of accounting. 1,671,983
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. 3265552
Change in net assets of governmental activities $ 24,498,459
See accompanying notes to the basic financial statements.
26
CITY OF LA QUINTA
Proprietary Funds
Statement of Net Assets
June 30, 2004
Governmental Activities -
Internal Service Funds
2004 2003
Assets
Current assets:
Cash and investments
$ 3,084,392 2,9489,958
Interest receivable
119643 -
Due from other governments
39932 159000
Capital assets, net
191119924 9299210
Total assets
4,2115,891 31,893,168
Liabilities
Current liabilities:
Accounts payable
Net Assets
Invested in capital assets, net of related debt
Unrestricted
Total net assets
289,884 365,713
1,111,924
3,071,083
$ 4,1833,007
See accompanying notes to the basic financial statements.
9299210
2,927,245
3,856,455
27
CITY OF LA QUINTA
Proprietary Funds
Statement of Revenues, Expenses and Changes in Net Assets
Year ended June 30, 2004
Governmental Activities -
Internal Service Funds
2004 2003
Operating revenues:
Charges for services
$ 694,960 451,512
Miscellaneous
- 2,382
Total operating revenues
6949960 453,894
Operating expenses:
Salaries and benefits
51,862
-
Fuel and oil
33,390
349213
Maintenance and parts
1385406
119,032
Contract services
124,037
1725755
Software and supplies
120,098
70,749
Depreciation
305,834
2769517
Other operating expenses
-
115784
Total operating expenses
773,627
6855050
Operating income (loss)
(78,667)
(231,156
Non -operating revenues (expenses):
Investment income
583,469
729899
Total non -operating revenues (expenses)
5831469
72,899
Income (loss) before transfers
and capital contributions
(20,198)
(158,257)
Capital contributions
346,750
30,099
Changes in net assets
326,552
(128,158)
Net assets at beginning of year
35856,455
3,9845613
Net assets at end of year
$ 4,1831,007
3,856,455
See accompanying notes to the basic financial statements.
28
CITY OF LA QUINTA
Proprietary Funds
Statement of Cash Flows
Year ended June 30, 2004
Governmental
Activities -
Internal Service Funds
2004
2003
Cash flows from operating activities:
Cash received from other customers
$ 706,028
438,894
'-- Cash payments to suppliers for goods and services
427,627
(393,873)
Net cash provided by (used for) operating activities
278,401
45,021
Cash flows from capital and related activities:
Purchase of fixed assets
_ 189,793
(175,659
.— Net cash provided by (used for) capital and related activities
189,793)
(175,659)
Cash flows from investing activities:
Interest received on investments
46,826
72,899
Net cash provided by (used for) investing activities
462826
722899
-- Net increase (decrease) in cash and cash equivalents
1355,434
(57,739)
Cash and cash equivalents at beginning of year
25,948,958
3,0061-697
'— Cash and cash equivalents at end of year
$ 3,084,392
25,9482958
Reconciliation of operating income to net cash provided by
operating activities:
Operating income (loss)
$ (78,667)
(231,156)
Adjustments to reconcile operating income (loss) to net
cash provided by operating activities:
Depreciation
3051,834
276,517
Adjustments:
(Increase) decrease in due from other governments
11,068
(15,000)
(Increase) decrease in other assets
471)995
182515
.— Increase (decrease) in accounts payable
_ 7,829)
3,855
Net cash provided by (used for) operating activities
$ 2783,401
45,021
Noncash capital, financing and investing activities:
Fixed assets disposals
$ (511,491)
-
Fixed assets contributed by other funds
346,750
30,099
See accompanying notes to the basic financial statements.
29
CITY OF LA QUINTA
Agency Funds
Statement of Fiduciary Assets and Liabilities
June 30, 2004
Assets
Cash and investments (note 2)
Accounts receivable
Total assets
--
Due to bondholders
Total liabilities
AOA
$ 119829134
A Gill
1,740,812
44,846
$ 1,989,107 1,785,658
$ 1,989,107 1,785,658
$ 1,989,107 1,785,658
See accompanying notes to the basic financial statements.
CITY OF LA QUINTA
Notes to the Basic Financial Statements
Year ended June 30, 2004
(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:
r-- 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
31
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
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 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.
32
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
Government -wide Financial Statements
Government -wide financial statements display information about the reporting
government as a whole, except for its fiduciary activities. These statements
include separate columns for the governmental and business -type activities of the
primary government (including its blended component units), as well as its
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.
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.
33
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(1) Summga of Significant Accounting Policies, (Continued)
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 funds 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.
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.
34
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
11 Summary of Significant Accounting Policies, (Continued
In the fund financial statements, governmental funds are presented using the
current financial resources measurement focus. This means that only current
assets and current liabilities are generally included on their balance sheets. The
reported fund balance (net current assets) is considered to be a measure of
-- "available spendable resources." Governmental fund operating statements present
increases (revenues and other financing sources) and decreases (expenditures and
other financing uses) in net current assets. Accordingly, they are said to present a
summary of sources and uses of "available spendable resources" during a period.
Non -current portions of long-term receivables due to governmental funds are
reported on their balance sheets in spite of their spending measurement focus.
Special reporting treatments are used to indicate, however, that they should not be
considered "available spendable resources," since they do not represent net
current assets. Recognition of governmental fund type revenues represented by
noncurrent receivables are deferred until they become current receivables.
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.
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.
35
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
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.
FiduciM 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.
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.
36
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
1) Summary of Significant Accountim_Policies, (Continued
Financing Authority Debt Service Fund — To account for the Public Financing
Authority bond proceeds that will be used for specific projects and programs of
the City.
r-- 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.
2004 Low/Moderate Bond Fund — To account for the 2004 revenue bond proceeds
that will be used to finance projects benefiting low and moderate income housing
in La Quinta Redevelopment Project Area No. 1 and Project Area No. 2.
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.
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.
37
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(l� Summary of Significant Accounting Policies, Continued)
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.
(0 Capital Assets
Capital assets (including infrastructure) are recorded at cost where historical
records are available and at an estimated historical cost where no historical
records exist. Contributed capital assets are valued at their estimated fair market
value at the date of the contribution. Generally, capital asset purchases in excess
of $5,000 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.
38
CITY OF LA QUI TTA
Notes to the Basic Financial Statements
-' (Continued)
�1) Summary of Significant Accounting Policies, (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.
(i)
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods
and are recorded as prepaid items in both government -wide and fund financial
statements.
(j)
Fund Equity
—
In the fund financial statements, governmental funds report reservations of fund
balance for amounts that are not available for appropriation or are legally
restricted by outside parties for use for a specific purpose. Designations of fund
—
balance represent tentative management plans that are subject to change.
W
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 Assets and Liabilities:
Cash and investments
Total
$ 89,936,019
95,474,813
1,982,134
$187,392,966
Cash and investments held by the City at June 30, 2004 consisted of the following:
Petty cash
$ 1,000
Demand deposits
765,613
Investments
186,626,353
Total
$187,392,966
The City and its component units are authorized by its investment policy to invest in the
following types of investments:
Investment Tvne
U.S. treasuries and Government National
Mortgage Association
FHLB, FFCB, FLB, FNMA, FHLMC
Government pools
U.S. government and agency securities
Commercial Paper
Mutual Funds
Certificates of Deposit
40
None
$7.5 million per issuer
$40 million and 25% of portfolio
100% of portfolio
$3 million per issuer, 15% of portfolio
and 90 days
20%
None
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(2) Cash and Investments, (Continued)
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.
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 $1 -3,654, 765,613
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.
41
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(2) Cash and Investments, (Continued)
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.
Category Carrying
1 2 3 Value
Investments held by the City:
U.S. Treasury Notes $42,890,220 - - 42,890,220
Government Agency Securities 27,511,851 - - 27,511,851
Investments held by fiscal agent:
U.S. Treasury Bills - 89,363,631 - 89,363,631
70,402,071 89,363,631 - 1593,765,702
Investments held by the City not subject to categorization:
Investment in State of California Local Agency Investment Fund
Investments held by fiscal agent not subject to categorization:
Investment in mutual funds:
First American Treasury Obligation Fund
20,749,469
6,111,182
$186,626,353
42
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
21 Cash and Investments, (Continued
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
r' reported in the accompanying financial statements at amounts based upon the City's pro -
rats 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.
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.
43
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(3) Property Taxes, (Continued)
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.
(4) Notes Receivable Outstanding
Balance at
June 30, 2004
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. $ 3,153,490
In December 2000, the Redevelopment Agency entered into an
agreement with LINC Housing 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. %500,000
Other notes receivable 88,037
Total notes receivable reported on the statement of net assets 125741,527
In June 2004, the Redevelopment Agency entered into an
agreement to borrow $90,000,000 from the Financing
Authority Debt Service Fund to provide for the advance
refunding of the Agency's Redevelopment Project Areas No. 1
and 2, 1995 Housing Tax Allocation Bonds and to finance
projects benefiting low and moderate income housing within
the project areas. The funding was provided through the
issuance of the 2004 Series A Local Agency Revenue Bonds
issued by the Financing Authority. The note accrues interest
between 3% and 5.25% per annum, payable semi-annually.
Principal payments ranging from $735,000 to $5,660,000 are
payable annually through September 2034. 9000,000
Total notes receivable reported in the Governmental Funds —
Balance Sheet $102P741,527
44
r-
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(5) Capital Assets
Capital asset activity for governmental activities for the year ended June 30, 2004 is as
follows:
Balance at
Balance at
June 30, 2003
Additions
Deletions
June 30, 2004
Buildings and improvements
$ 16,428,276
8,392,389
(1439,235)
24,6773430
Equipment and furniture
1,9883,280
2519548
(656,101)
1,5839727
Vehicles
9549339
441,940
(I72,132)
192243,147
Infrastructure
82,869,720
13,818,073
(8,946
96,678,847
Total cost of depreciable
assets
102,240,615
22,903,950
(980,414)
124,164,151
Less accumulated
depreciation:
Buildings and
improvements
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
5,2009446
916,053
(5%413)
62057,086
15,2169895
248,795
(5229867)
9429823
6789237
97,543
(17,500)
7589280
52,119,807
1,328,388
_ (9,372
53,438,823
59,215,385 2,590,779 (609,152 61,197,012
43,0251,230 20,3133,171 (371,262) 62,967)139
569467,549 173,1749110 (1369000) 73,5052659
2305,1489,147 41,1311,876 - 2345,2809023
29,604,242 21,512,556 (23.183.975) 27,932,823
$359,245,168 63,131M_ (23,621,237) 398.685.644
45
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(5) Capital Assets, (Continued)
Depreciation expense was charged in the following functions in the Statement of
Activities:
General government $ 163,327
Public safety 461,038
Community services 498,000
Planning and development 31,821
Public works 1.436.593
Total SIL90,779
(6) Changes in Long -Term Liabilities
Changes in long-term liabilities for the year ended June 30, 2004 were as follows:
City:
Compensated absences payable
Due to the Coachella Valley Association
of Governments
Developer Agreement Payable
Redevelopment Agency:
RDA Project Area No. 1:
Tax allocation bonds
Housing tax allocation bonds
Pass -through agreements payable:
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
Amounts
Balance at Balance at due within
June 30, 2003 Additions Deletions June 30, 2004 one year
$ 462,260 591,451 (522,158)
478,311 - (50,000)
684,688 429,758 (103,758)
531,553
428,311
1,010,688
478,398
50,000
122,250
118,803,164 25,594,464 (1,890,000) 142,507,628 2,395,000
16,026,850 - (16,026,850) - -
7,365,254 - (711,877) 6,653,377 726,114
6,415,000 - (90,000) 6,325,000 95,000
4,333,150 - (4,333,150) - -
2,150,000 - (100,000) 2,050,000 100,000
7,190,000 87.924,343 (300,000) 94,814,343 1,050,000
$163.908.677 114.540.016 (24.127.793) 254,320,900
46
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(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, 2004, the balance is $428,311.
The minimum annual requirements to amortize payable to Coachella Valley Association
of Governments as of June 30, 2004 are as follows:
June 30 Principal
2005 $ 503,000
2006 509000
2007 502000
2008 502000
2009 509,000
2010 502000
2011 505,000
2012 502000
2013 28,311
(8) Tax Allocation Bonds
As of June 30, 2004, 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 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, 2004 is $17,085,000.
47
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
8) Tax Allocation Bonds, (Continued
Series 1998, Proi ect 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, 2004 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, 2004 is $6,325,000.
48
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
81 Tax Allocation Bonds, (Continued
Tax Allocation Bonds, Series 2001 _- Project 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, 2004 is
$461,254,248 ($48,000,000 net of unamortized discount and issuance costs of
$13,7452752).
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
$13,2502096.
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, 2004 is
$375,932,244 ($39,435,000 net of unamortized discount and issuance costs of
$15,5029756).
Tax Allocation Bonds, Series 2003 - Project Area No. 1
On September 1, 2003, the Agency issued tax allocation bonds in the amount of
$26,400,000 to finance capital projects benefiting the La Quinta Redevelopment Project
Area No. 1. The 2003 tax allocation bonds were issued at a discount of $277,200
issuance costs of $629,191.
49
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(8) Tax Allocation Bonds, (Continued)
Tax Allocation Bonds, Series 2003 - Project Area No. 1, (Continued)
Interest is payable semi-annually on March 1 and September 1 of each year, commencing
March 1, 2004. Interest payments range from 4.24% to 6.44% per annum. The interest
and principal on the bonds are payable from pledged tax increment revenues.
Term bonds maturing on September 1, 2013 through September 1, 2032 are subject to
mandatory redemption from minimum sinking fund payments, in part by lot, on
September 1, 2004, September 1, 2014, and September 1, 2024, respectively, and on each
September 1 thereafter at a redemption price equal to the principal amount thereof plus
accrued interest to the redemption date.
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, 2004 is $25,594,464 ($26,400,000 net of unamortized discount and issuance
costs of $923,864).
The minimum annual requirement (including sinking fund requirements) to amortize tax
allocation bonds as of June 30, 2004 are as follows:
Proiect Area No. 1
1994 Tax Allocation Bonds 1998 Tax Allocation Bonds 2001 Tax Allocation Bonds 2002 Tax Allocation Bonds 2003 Tax Allocation Bonds
June 30 Principal Interes Principal Interes Principal Interes Principal Interest PrinciRal Intere
2005 $ 1.430.000 1.182.140 - 819.520 - 2.430.720 575.000 1.895.131 390.000 1.602.458
2006 1.510.000 1.087.700 - 819.520 - 2.430.720 585.000 1.882.361 405.000 1.585.604
2007 1.620.000 973.455 - 819.520 - 2.430.720 600.000 1.867.091 420.000 1.568.114
2008 1.740.000 850.815 - 819.520 - 2.430.720 615.000 1.849.617 440.000 1.549.882
2009 1.865.000 719.233 - 819.520 - 2.430.720 635.000 1.829.914 460.000 1.530.802
2010 2.000.000 578.160 - 819.520 - 2.430.720 660.000 1.807.557 475.000 1.508.106
2011 2.145.000 426.868 - 819.520 - 2.430.720 680.000 1.782.926 505.000 1.481.401
2012 2.305.000 264.443 - 819.520 - 2.430.720 705.000 1.756.430 530.000 1.453.198
2013 2.470.000 90.155 - 819.520 - 2.430.720 735.000 1.727.981 560.000 1.423.496
2014 - - 655.000 802.490 1.565.000 2.391.595 705.000 1.695.656 590.000 1.392.158
2015 - - 690.000 767.520 1.645.000 2.311.345 735.000 1.659.656 620.000 1.356.736
2016 - - 725.000 730.730 1.730.000 2.226.970 770.000 1.622.031 660.000 1.316.800
2017 - - 765.000 691.990 1.815.000 2.138.345 810.000 1.582.531 700.000 1.274.368
2018 - - 800.000 651.300 1.905.000 2.045.345 855.000 1.540.906 745.000 1.229.284
2019 - - 845.000 608.530 2.000.000 1.947.720 895.000 1.497.156 790.000 1.181.392
2020 - - 890.000 563.420 2.100.000 1.845.220 940.000 1.451.281 840.000 1.130.536
2021 - - 935.000 515.970 2.205.000 1.737.595 985.000 1.403.156 895.000 1.076.404
2022 - - 985.000 466.050 2.315.000 1.624.595 1.035.000 1.352.656 950.000 1.018.840
2023 - - 1.035.000 413.530 2.430.000 1.504.755 1.090.000 1.299.531 1.010.000 957.688
2024 - - 1.090.000 358.280 2.555.000 1.377.637 1.140.000 1.243.069 1.075.000 892.636
2025 - - 1.145.000 300.170 2.685.000 1.244.018 1.200.000 1.183.106 1.140.000 822.388
2026 - - 1.205.000 239.070 2.820.000 1.103.640 1.265.000 1.119.941 1.215.000 746.557
2027 - - 1.265.000 174.850 2.965.000 956.123 1.330.000 1.053.444 1.290.000 665.896
2028 - - 1.330.000 107.380 3.120.000 800.955 1.395.000 983.615 1.375.000 580.083
2029 - - 1.400.000 36.400 3.275.000 637.882 1.470.000 910.200 1.465.000 488.635
2030 - - - - 3.445.000 466.523 3.015.000 795.272 1.555.000 391.391
2031 - - - - 3.620.000 286.365 3.170.000 636.781 1.655.000 288.029
2032 - - - - 3.805.000 97.027 3.335.000 470.091 1.765.000 177.905
2033 - - - - - - 7.505.000 192.316 1.880.000 60.536
2034
Proiect Area No. 2
1998 Tax Allocation
Principal InteTest
95.000 323.264
100.000 319.168
105.000 314.785
110.000 310.135
115.000 305.184
120.000 299.550
125.000 293.272
130.000 286.737
140.000 279.819
145.000 272.516
150.000 264.956
160.000 257.013
170.000 248.556
175.000 239.716
185.000 230.491
195.000 220.631
205.000 210.131
215.000 199.106
230.000 187.425
240.000 175.087
255.000 162.094
265.000 148.444
280.000 134.138
295.000 119.044
310.000 103.163
325.000 86.494
345.000 68.906
360.000 50.400
380.000 30.975
400,000 10.500
50
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(9) Revenue Bonds
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.
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 panty debt as further described in the official
statement. The amount of principal outstanding on the 1996 Lease Revenue Refunding
- Bonds at June 30, 2004 is $6,890,000.
2004 Series A Local Agency Revenue Bonds
On June 29, 2004, the La Quinta Financing Authority issued revenue bonds in the amount
of $90,000,000 to finance projects benefiting low and moderate income housing in La
Quinta Redevelopment Project Area No. 1 and the La Quinta Redevelopment Project
Area No. 2 and to advance refund the Agency's Redevelopment Project Areas No. 1 and
2, 1995 Housing Tax Allocation Bonds. The 2004 local agency revenue bonds were
issued at a discount of $607,500, issuance costs of $944,653 and a premium of $476,496.
Interest is payable semi-annually on March 1 and September 1 of each year, commencing
September 1, 2004. Interest payments range from 3% to 5.25% per annum. The interest
and principal on the bonds are payable from pledged tax increment revenues.
Term bonds maturing on September 1, 2024, September 1, 2029 and September 1, 2034
are subject to mandatory redemption from minimum sinking fund payments, in part by
-- lot, on September 1, 2017, September 1, 2025, and September 1, 2030, respectively, and
on each September 1 thereafter at a redemption price equal to the principal amount
thereof plus accrued interest to the redemption date.
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, 2004 is $87,924,343 ($90,000,000 net of unamortized discount and issuance
costs of $2,075,657).
51
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(9) Revenue Bonds, (Continued)
The minimum annual requirements (including sinking fund requirements) to amortize
revenue bonds as of June 30, 2004 are as follows:
1996
Lease Revenue
2004 Series
A Revenue Bonds
June 30
Principal
Interest
Principal
Interest
2005
$ 315,000
366,220
735,000
2,990,049
2006
330,000
350,575
1,520,000
4,436,981
2007
345,000
333,865
1,570,000
4,403,156
2008
360,000
315,880
1,615,000
4,356,806
2009
380,000
296,450
1,670,000
4,304,994
2010
400,000
275,280
1,740,000
4,243,332
2011
420,000
252,525
1,805,000
4,175,132
2012
445,000
228,521
1,890,000
4,099,719
2013
470,000
203,130
1,975,000
4,016,581
2014
495,000
176,351
2,075,000
3,924,681
2015
525,000
148,046
2,175,000
3,823,431
2016
555,000
118,076
2,290,000
3,714,462
2017
585,000
86,441
2,410,000
3,597,256
2018
615,000
53,141
2,535,000
3,473,881
2019
650,000
18,038
2,670,000
3,344,075
2020
-
-
2,810,000
3,207,444
2021
-
-
2,960,000
3,063,594
2022
-
-
3,115,000
2,912,132
2023
-
-
3,275,000
2,752,663
2024
-
-
3,450,000
2,584,925
2025
-
-
3,630,000
2,408,394
2026
-
-
3,810,000
2,227,082
2027
-
-
4,000,000
2,041,082
2028
-
-
4,200,000
1,845,832
2029
-
-
4,410,000
1,640,832
2030
-
-
4,635,000
1,425,582
2031
-
-
4,870,000
1,196,560
2032
-
-
5,120,000
952,994
2033
-
-
5,3 80,000
697,000
2034
-
$ 6.890.000
3.222.539
5,660,000
90.000.000
572,969
88.433.621
52
r--
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
10) Due to Countv of Riverside
Proi ect 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
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, 2004 is $2,050,000.
The minimum annual requirements to amortize amounts due to the County of Riverside
as of June 30, 2004 are as follows:
June 30 Principal
2005 $ 1005,000
2006 10%000
2007 1005,000
2008 1505,000
2009 20%000
2010 2003,000
2011 2001,000
2012 2509000
2013 25%000
2014 2509,000
2015 250.000
53
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(11) Pass -through Aigreements Payable
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 $421,166 to $834,076, for a total amount of $15,284,042. Tax
increment payments outstanding at June 30, 2004 totaled $6,653,377. 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.
The minimum annual requirements to amortize payable to Coachella Valley Unified
School District as of June 30, 2004 are as follows:
June 30 Principal
2005
$ 7263,114
2006
740,636
2007
755,449
2008
770,558
2009
785,968
2010
801,688
2011
817,722
2012
834,076
2013
421,166
$6,653,377
(12) Developer Agreement Pam
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, based
54
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
12) Developer Agreement Payable, (Continued
upon a $500,000 note at an interest rate of 8.5%. During the year ended June 30, 2004,
the developer completed all the requirements to be entitled to begin receiving payments
from the City. For the year ended June 30, 2004, the City paid the developer $122,250 in
sales tax reimbursement and $76,204 since the sales tax generated exceeded the required
amount. The balance at June 30, 2004 is $390,050.
The minimum annual requirements to amortize the developer agreement payable as of
June 30, 2004 are as follows:
June 30 Principal Interest Total
2005
$ 693,496
52,754
1223,250
2006
753,403
465,847
1221,250
2007
815,812
409438
122,250
-- 2008
885,766
333,484
1223,250
2009
96,311
253,939
1223,250
2010
104,498
17,752
1229250
2011
104,352
624�$
17,898
122,250
(13) 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 long-term liability in the accompanying financial
statements. The following is a summary of Improvement Bonds outstanding at
_. June 30, 2004:
Amount Outstanding
Proceeds Maturity Date Interest Rate at June 30, 2004
Assessment District No. 90-1
$1,227,155
9/2/05
6.5%-7.00%
$ 155,000
Assessment District No. 91-1
2,240,866
9/2/06
6.70%-6.80%
420,000
Assessment District No. 92-1
1,880,891
9/2/08
5.00%-5.40%
680,000
-- Assessment District No. 97-1
705,262
9/2/18
4.10%-5.20%
600,000
Assessment District No. 2001-1
2,285,000
9/2/15
5.00%-6.60%
1,880,000
55
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(14) 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, disability benefits, and death benefits to plan members and
beneficiaries. PERS acts as a common investment and administrative agent for
participating public entities within the State of California. Copies of PERS' annual
financial report may be obtained from its executive office at 400 "P" Street, Sacramento,
California 95814.
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.
Benefit provisions and all other requirements are established by state statute and town
contract with employee bargaining groups.
Under GASB 27, an employer reports an annual pension cost (APC) equal to the annual
required contribution (ARC) plus an adjustment for the cumulative difference between
the APC and the employer's actual plan contributions for the year. The cumulative
difference is called the net pension obligation (NPO). The ARC for the period July 1,
2003 to June 30, 2004 has been determined by an actuarial valuation of the plan as of
June 30, 2001. The contribution rate indicated for the period is 0.000% of payroll for the
miscellaneous plan. In order to calculate the dollar value of the ARC for inclusion in
financial statements prepared as of June 30, 2004, this contribution rate would be
multiplied by the payroll of covered employees that was actually paid during the period
July 1, 2003 to June 30, 2004.
56
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(14) Defined Benefit Pension Plan, (Continued)
A summary of principle assumptions and methods used to determine the ARC is shown
below.
Valuation Date
�-- Actuarial Cost Method
Amortization Method
Average Remaining Period
Asset Valuation Method
Actuarial Assumptions
Investment Rate of Return
Projected Salary Increases
Inflation
Payroll Growth
Individual Salary Growth
June 30, 2001
Entry Age Actuarial Cost Method
Level Percent of Payroll
16 Years as of the Valuation Date
3 Year Smoothed Market
8.25% (net of administrative expenses)
3.75% to 14.20% depending on Age,
Service, and type of employment
3.50%
3.75%
A merit scale varying by duration of
employment coupled with an assumed
annual inflation component of 3.5%
and an annual production growth of
0.25%.
Initial unfunded liabilities are amortized over a closed period that depends on the plan's
date of entry into Ca1PERS. Subsequent plan amendments are amortized as a level % of
pay over a closed 20-year period. Gains and losses that occur in the operation of the plan
are amortized over a rolling period, which results in an amortization of 10% of
unamortized gains and losses each year. If the plan's accrued liability exceeds the
actuarial value of plan assets, then the amortization period may not be lower than the
payment calculated over a 30 year amortization period.
For the miscellaneous plan, the City was overfunded for the year ended June 30, 2004.
Amortization periods are not determined for overfunded plans.
The Schedule of Funding Progress below shows the recent history of the actuarial value
of assets, actuarial accrued liability, their relationship, and the relationship of . the
unfunded accrued liability to payroll.
Funding Polic
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, 2004, the rate was 0% of annual covered payroll. The contribution requirements
of plan members and the City are established and may be amended by PERS.
M
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(14) Defined Benefit Pension Plan, (Continued)
Annual Pension Cost
For 2004, the City's annual pension cost (employer contribution) in the amount of $0 was
equal to the City's required and actual contributions. The required contribution was
determined as part of the June 30, 2001, 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 4.5%. 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 unfunded 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.
Miscellaneous Employees
Three -Year Trend Information
Annual Pension
Percentage of
Net Pension
Fiscal Year
Cost (APC)
APC Contributed
Obh ation
6/30/02
$1,369
100%
-0-
6/30/03
0
100%
-0-
6/30/04
0
100%
-0-
Required Supplementary Information ($ amount in thousands)
Entry Age
Normal Actuarial
Unfunded
Annual UAAL
Accrued Value
Liability/
Covered As a % of
Valuation Date
Liabili1y of Assets
(Excess Assets) Funded Status
Payroll Payroll
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%)
06/30/02
8,374,878 8,708,115
(333,237) 104.0%
3,783,079 (8.8%)
Information for the June 30, 2003 valuation date was not available
for inclusion in the
financial statements.
58
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(15) Claims Payable/Self Insurance
The City is a member of the California Joint Powers Insurance Authority (Authority).
The Authority is composed of 106 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
r- 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 $15,000,000 are pooled based on payroll.
Costs to covered claims above $15,000,000 are currently paid by reinsurance. The
protection for the City is $50,000,000 per occurrence and $50,000,000 annual aggregate.
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 between
$2,000,000 and $50,000,000 are paid by excess insurance purchased by the Authority.
Costs in excess of $50,000,000 are pooled by the members based on payroll.
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.
59
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(16) 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.
(17) Educational Revenue Augmentation Fund (ERAF) Pam
During fiscal year ended June 30, 2004, Chapter 1127 of the 2002 Statutes of the State of
California require redevelopment agencies to shift $135,000,000 in property tax revenue
to kindergarten through twelfth grade schools and community colleges. The State
Department of Finance has determined that the La Quinta Redevelopment Agency
amount is $1,467,995 of the $135,000,000, which was forwarded to the Riverside County
Auditor in accordance with the statute.
(18) Interf ind Receivables and Pa, ambles
Current interfund receivables and payables balances at June 30, 2004 are as follows:
Due from other funds
General Fund
Capital Improvement Fund
Due to other funds
Other governmental funds
Other governmental funds
Capital Improvement Fund Other governmental funds
(A) Short term borrowing to cover temporary cash shortfalls.
Amount
$ 261,580 (A)
2,756,703 (B)
7 28
(B) Short term borrowing to cover June 2004 construction project expenditures.
Noncurrent interf nid receivable and payable balances at June 30, 2004 are as follows:
Advances to other funds Advances from other funds
General Fund RDA Debt Service — PA No. 1
RDA Debt Service — PA No. 2
Subtotal
RDA Capital Projects — PA No. 1 Other governmental funds
Other governmental funds Other governmental funds
Total
Amount
$12,335,283 (C)
16,335,800 (D)
28,671,083
4,075,463 (E)
1,260,695 (F)
$34.007.241
60
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
18) Interfund Receivables and Payables, (Continued
(C) As of June 30, 2004, the amount due to the General Fund From RDA Debt
Service — PA No. 1 was $12,335,283. This consists of an outstanding advance of
$5,938,154 loaned to the Redevelopment Agency with no required repayment
date and accrues interest at 10% per annum. Also, in April 2003, the General
Fund advanced $6,105,000 to the RDA Debt Service PA No. 1 to provide funding
for capital projects within the project area. As of June 30, 2004, the outstanding
advance amount is $6,397,129. The advance accrues interest at 7% per annum
and is to be repaid by November 29, 2033.
(D) As of June 30, 2004, the amount due to the General Fund From RDA Debt
Service — PA No. 2 was $16,335,283. This consists of an outstanding advance of
$10,535,800 loaned to the Redevelopment Agency with no required repayment
date and accrues interest at 10% per annum.
In June 2004, an advance of $5,800,000 was made to provide funding for
purchase of land for affordable housing and commercial development. The
advance accrues interest at 7% per annum and is to be repaid by the date of the
sale of the commercial property or May 1, 2030, whichever comes first.
(E) In January 2002, the Redevelopment Agency Capital Projects — PA No. 1 Fund
advanced $2,448,263 to the Parks and Recreation Fund to provide funding for
civic center campus improvements. The advance accrues interest at the earnings
rate of the City's investment pool funds. Annual installments due July 31, 2002
and 2003 shall not be less than the amount of park facility developer impact fees
collected by the City during the period to which a particular installment payment
applies.
In July 2002, another advance of $1,908,192 was made to provide funding for the
development of the publicly owned improvements to the La Quints Community
Park. Annual payments will be determined by City Council. The remaining
balance of these advances at June 30, 2004 is $4,075,463.
(F) In February 2003, the Redevelopment Agency Capital Projects — PA No. 2 Fund
advanced $1,500,000 to the Fire Facility Fund to provide funding for the
development of the City's north fire station. The advance accrues interest equal
to the earning rate of the City's Investment Pool Funds and is to be repaid by the
year 2039. As of June 30, 2004, the remaining balance of the advances at June 30,
2004 is $1,260,695.
61
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(19) Construction Commitments
The following material construction commitments existed at June 30, 2004:
Expenditures as of
Project Name June 30, 2004
Silver Rock Resort $11,378,482
Phase 2 — Jefferson Street Improvements (Hwy. 111) 5,750,929
Vista Dunes Mobile Home Park 3,096,325
Municipal Library 328,480
Phase 2 — Washington Street Improvements and
Median Landscaping 80,130
(20) Interfund Transfers
Interfund transfers were as follows for the year ended June 30, 2004:
Transfer In
General Fund
RDA Debt Service — PA No. 1 Fund
RDA Debt Service — PA No. 2 Fund
Subtotal RDA Debt Service — PA No. 2 Fund
Capital Improvement Fund
Capital Improvement Fund
Capital Improvement Fund
Subtotal Capital Improvement Fund
RDA Capital Projects — PA No. 1 Fund
Non -Major Funds
Non -Major Funds
2004 Low/Moderate Bond Fund
Transfer Out
Non -Major Funds
Non -Major Funds
Non-Maj or Funds
General Fund
2004 Low/Moderate Bond Fund
Non-Maj or Funds
Capital Improvement Fund
General Fund
RDA Debt Service — PA No. 2 Fund
Non-Maj or Funds
Remaining
Commitments
36,198,543
7,128,094
3,308,134
49555,587
1,334,038
Amount
$ 183,289
18,6933,322 (A)
4,922,224 (B)
957,002
8,669,035 (C)
34,999,311 (D)
44,625,348
1450645243 (E)
2,000
5,800,000 (F)
66,323,236 (G)
$154,613,662
62
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(20) Interfund Transfers, (Continued)
The following describes the major transfers in and transfers out included in the financial
statements:
Transfers to Major Funds
(A) $16,961,867 was transferred to the RDA Debt Service — PA No. 1 Fund from the
2004 Financing Authority Capital Projects fund to provide funding for the
defeasance of a portion of the 1995 Housing Tax Allocation Bonds. $1,731,455
was transferred to the RDA Debt Service — PA No. 1 Fund from the Low and
Moderate Income Housing Fund — Project Area No. 1 Fund for debt service
payments on amounts due to the 1995 Housing Tax Allocation Bonds.
(B) $4,584,240 was transferred to the RDA Debt Service — PA No. 2 Fund from the
2004 Financing Authority Capital Projects Fund to provide funding for the
defeasance of a portion of the 1995 Housing Tax Allocation Bonds.
(C) $8,669,035 was transferred to the Capital Improvement Fund from the 2004
Financing Authority Bond Fund for the production of low and moderate income
housing units.
(D) $19,777,414 was transferred to the Capital Improvement Fund from RDA Capital
Projects — PA No. 1 Taxable Fund to fund the construction of the SilverRock
resort capital project. $5,623,604 was transferred to the Capital Improvement
Fund from the RDA Capital Projects — PA No. 2 Fund for various capital projects.
(E) $14,064,243 was transferred to the Capital Improvement Fund from the RDA
Capital Projects — PA No. 1 Fund for various capital projects.
(F) $5,800,000 was transferred to the RDA Capital Projects — PA No. 2 Fund from
the RDA Debt Service — PA No. 2 Fund to purchase property in the Project Area.
(G) $66,323,236 was transferred to the 2004 Financing Authority Bond Fund from the
2004 Financing Authority Capital Projects Fund to fund the production of low and
moderate income housing units.
63
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(21) Fund Deficits
The following fund had a deficit balance at June 30, 2004:
Special Revenue Fund:
Federal Assistance
Debt Service Fund:
Redevelopment Agency — PA No. 2
Capital Projects Fund:
Parks and Recreation
Fire Facility
Redevelopment Agency — PA No. 2
$ 10,073
11,104)297
3,861,652
1,260,889
The deficit was created by outstanding advances from the General Fund which are
intended to be paid back in the future with anticipated tax increment revenues.
Parks and Recreation
The deficit was created by outstanding advances from Capital Projects Funds — PA No. 1
and 2 to accelerate park projects. The advances are intended to be paid back in the future
with future park developer impact fee collections.
Fire Facility
The deficit was created by transfers to the Capital Improvements Capital Projects Fund
for the construction of a fire station. The cost for the current year exceeded the developer
fees collected in this fund.
(22) Expenditures in Excess of Appropriations
Expenditures for the year ended June 30, 2004 exceeded the appropriations of the
following funds/departments:
General Fund:
City Manager
Building
Civic Center Building
Parks and Recreation Programs
Capital Projects Administration
Budget
Actual
Variance
$523,646
562,001
(38,355)
868,139
1,1315823
(263,684)
467,714
484,455
(16,741)
100,048
135,285
(35,237)
127,263
565,551
(438,288)
64
W
CITY OF LA QUINTA
Notes to the Basic Financial Statements
(Continued)
(22) Expenditures in Excess of Appropriations, (Continued)
Special Revenue Funds:
South Coast Air Quality
Budget Actual
14,827 175,386
Capital Projects Funds:
Parks and Recreation -
Civic Center 2045251
Redevelopment Agency Project Area No. 1 115,953
103,476
207,156
1749152
Variance
(2,559)
(103,476)
(2,905)
(5 8,199)
(23) Conduit Debt Financing
C'
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, 2004 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.
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, 2004 are
�~- $33,0002000.
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.
F
65
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.
68
CITY OF LA QUINTA
Notes to Required Supplementary Information
Year ended June 30, 2004
1) Budgets and Budgetary Accountin
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
r- any department or fund are approved by City Council. Additional appropriations in the
amount of $32,573,559 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,
2004 exceeded
the appropriations of the
-- following funds/departments:
Budget
Actual
Variance
General Fund:
City Manager
$523,646
5625001
(38,355)
Building
868,139
1,131,823
(263,684)
Civic Center Building
467,714
484,455
(163,741)
Parks and Recreation Programs
100,048
135,285
(35,237)
Capital Projects Administration
127,263
565,551
(4383,288)
69
Revenues:
Taxes
Licenses and permits
Charges for services
Intergovernmental
Investment income
Miscellaneous
Total revenues
Expenditures:
General government:
Legislative
City manager
Economic development
Personnel
Fiscal services
Central services
City clerk
Total general government
Public safety:
Police
Building and safety
administrative
Code compliance
Animal control
Building
Emergency services
Fire
Civic center building
Total public safety
Community services:
Senior center
Parks and recreation
administration
Parks and recreation programs
Total community services
CITY OF LA QUINTA
General Fund
Schedule of Revenues, Expenditures and Changes
in Fund Balances - Budget and Actual
Year ended June 30, 2004
Budget
Original Final
Variance with
Final Budget
Actual Positive (Negative)
Prior
Year
A .,4-1
$ 10,721,600
10,721,600
13,184,050
2,462,450
11,572,985
857,500
1,087,500
3,096,145
2,008,645
1,982,127
1,404,023
1,080,123
2,619,578
1,539,455
2,302,759
4,073,400
4,679,563
4,895,986
216,423
4,394,046
1,468,800
2,417,882
2,335,154
(82,728)
1,894,303
3,000
-
109,388
109,388
87,236
18,528,323
19,986,668
26,240,301
6,253,633
22,233,456
677,100
919,600
640,438
279,162
562,397
580,556
523,646
562,001
(38,355)
424,596
772,850
821,350
720,748
100,602
774,128
631,002
631,502
584,127
47,375
376,300
496,651
456,038
440,735
15,303
375,027
501,562
748,086
6133,912
134,174
331,493
347,963
358,463
330,259
28,204
296,635
4,007,684
4,458,685
3,892,220
566,465
3,140,576
5,186,869
5,293,749
5,285,180
8,569
4,485,189
209,425
209,425
203,616
5,809
178,681
655,449
655,449
520,714
134,735
521,909
229,922
229,922
188,718
41,204
170,115
680,639
868,139
1,131,823
(263,684)
867,135
48,945
48,945
26,316
22,629
23,159
2,180,000
2,342,380
1,831,358
511,022
1,525,113
443,714
467,714
484,455
(16,741)
431,107
9,634,963
10,115,723
9,672,180
443,543
8,202,408
324,574
347,635
312,606
35,029
269,386
574,520
765,246
577,506
187,740
619,777
100,048
100,048
135,285
(35,237)
102,395
999,142
1,212,929
1,025,397
187,532
991,558
70
(Continued)
CITY OF LA QUINTA
General Fund
Schedule of Revenues, Expenditures and Changes
in Fund Balances - Budget and
Actual
(Continued)
Variance with
Prior
Budget
Final Budget
Year
Original
Final
Actual
Positive (Negative)
Actual
Planning and development:
Community development
administration
416,160
710,352
350,514
359,838
280,908
Current planning
4471,777
591,429
399,930
1915,499
3935-542
Total planning
and development
8632937
1,301,781
750,444
551,337
674,450
Public works:
Public works administration
182,218
154,509
91,738
62,771
139,120
Development and traffic
753,443
1,131,325
1,046,022
85,303
1,060,949
Maintenance/operations - St.
582,196
1,703,252
501,650
1,20102
181,228
Maintenance/operations - L & L
1,077,008
1,147,142
127,263
898,833
565,551
248,309
(438,288)
789,483
140,656
Capital projects administration
3513-248
Total public works
2,9465,113
4,263)491
3,103,794
1,159,697
2,311,436
Total expenditures>28
18 451 839
21,35209
18,444,035
2,908 574
15,320 4
Excess (deficiency) of
revenues over (under)
expenditures
76,484
(1,365,941)
7,796)1266
9,162,207
6,9133-028
Other financing sources (uses):
Transfers in
130,000
302,989
183,289
(119,700)
162,398
Transfers out
(200,454)
(1,736,853)
(959,002)
777X I.
270,346
Total other financing
sources (uses)
(70,454)
(1,433,864)
(775,713)
6585,151
_ (107,9
Net change in fund balance
6,030
(2,799,805)
7,020$53
9,820,358
6,805,080
Fund balance at beginning of year
47,684,683
47,68403
47,684,683
-
40879 ,603
Fund balance at end of year
$ 47,690,713
44,884,878
54,705,236
9,820,358
47,684,683
--
71
CITY OF LA QUINTA
Non -Major Governmental Funds
Combining Balance Sheet
June 30, 2004
Special Capital
Revenue Projects
Totals
Funds
Funds
2004
2003
Assets
Cash and investments
$ 9,128,781
14,014,300
23,143,081
22,215,751
Cash with fiscal agent
-
8,545,446
8,545,446
17
Accounts receivable
83,642
63,104
146,746
139,347
Interest receivable
33,377
48,668
82,045
-
Notes receivable
12,741,527
-
12,741,527
12,613,565 _
Due from other governments
141,715
-
141,715
165,249
Advances to other funds
-
1,260,695
1,260,695
1,109,846
Deposits
-
-
-
185,000 l __
Total assets
$ 22,129,042
23,932,213
46,061,255
36,428,775
Liabilities and Fund Balances
Liabilities:
Accounts payable
$ 46,046
16,894
62,940
78,363 r
Deferred revenue
10,618,102
-
10,618,102
10,495,979
Deposits payable
18,664
27,835
46,499
47,143
Due to other governments
-
-
-
21,694
Due to other funds
36,346
2,746,937
2,783,283
72,378
Advances from other funds
-
5,336,158
5,336,158
4,921,720
Total liabilities
10,719,158
8,127,824
18,846,982
15,637,277
Fund balances:
Reserved for:
Notes receivable
2,123,425
-
2,123,425
12,613,565
Deposits
-
-
-
185,000
Unreserved:
Designated for
_
capital projects
-
23,673,560
23,673,560
9,106,480
Undesignated
9,286,459
(7,869,171)
1,417,288
(1,113,547)
Total fund balances
11,409,884
1504,389
27,214,273
20,791,498
Total liabilities and
fund balances
$ 22,129,042
23,932,213
46,061,255
36,428,775
74
-
CITY OF LA QUINTA
Non -Major Governmental Funds
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Year ended June 30, 2004
Revenues:
Taxes
Developer fees
Intergovernmental
Investment income
Special assessments
r- Rental income
Miscellaneous
Total revenues
Expenditures:
Current:
General government
Public safety
Community services
Planning and development
Public works
Capital outlay
Debt service:
Principal
_ Interest
Fiscal charges
Total expenditures
Excess (deficiency) of
revenues over (under)
expenditures
Other financing sources (uses):
Issuance of tax allocation bonds
Issuance of revenue bonds
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balances
Fund balances at
beginning of year
Fund balances at end of year
Special
Capital
Revenue
Projects
Totals
Funds
Funds
2004
2003
$ 9,023,407
-
9,023,407
7,750,765
1,273,832
4,444,241
5,718,073
3,021,245
831,259
200,000
1,031,259
8611001
141,461
343,319
484,780
549,082
816,045
-
816,045
780,259
431,178
-
4315178
376,863
1,087,465
-
1,087,465
280,752
13,604,647
4,987,560
18,592,207
13,619,967
-
207,156 207,156
203,831
528
- 528
142,020
-
- -
2,406
41,171,309
174,152 4,345,461
5,094,500
1,369,745
63,050 1,432,795
1,373,614
124,821
- 124,821
111,945
- 113,662 113,662 -
- - 52,523
- 3,025,628 3,025,628 -
5,666,403 3,583,648 9,250,051 65,980,839
7,938,244 1,403,912 9,342,156 6,639,128
26,400,000 26,400,000 -
- 90,000,000 90,000,000 -
2,000 5,800,000 5,802,000 1,310,913
(8,215,378) (116,906,003) (125,121,381 (14,577,346
(8,213,378) 5,293,997 (2,919,381) (13,266,433)
(275,134) 6,697,909 6,422,775 (6,627,305)
113,685,018 9,106,480 20,791,498 27,418,803
$ 11,409,884 15,804,389 27,214,273 20,791,498
75
(This page intentionally left blank)
76
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
y— 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.
-- 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.
Arts 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.
ISTEA Fund — To account for funds provided by the Intermodal Surface Transportation Act.
~- Funds are designated for use on transportation -related projects.
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 and No. 2 Funds - 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 Fund - To account for bond
proceeds and expenditures of bond -financed low and moderate income housing programs.
77
Assets
Cash and investments
Cash with fiscal agent
Accounts receivable
Interest receivable
Notes receivable
Due from other
governments
Deposits
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Deferred revenue
Deposits payable
Due to other governments
Due to other funds
Total liabilities
Fund balances:
Reserved for:
Notes receivable
Deposits
Unreserved
Total fund balances
Total liabilities and
fund balances
CITY OF LA QUINTA
Non -Major Special Revenue Funds
Combining Balance Sheet
June 30, 2004
Lighting Arts in
State Federal and Public Public South Coast
Gas Tax Assistance Landscape SLEBG Quimby Safety Places Air Quality
$ 408,042 - - - 592,809 8,377 761,725 123,395
- - - - - - 2,963 466
1,492 2,226 36
26,273 - - - - 9,278
$ 409,534 - 26,273 - 595,035 8,413 764,688 133,139
10,073 26,273
10,073 26,273
3,093
3,093
409,534 (10,073) -
- 595,035
8,413
764,688
130,046
409,534 10,073 -
- 595,035
8,413
764,688
130,046
$ 409,534 - 26,273
- 595,035
8,413
764,688
133,139
78
Low/
Low/
Moderate
Moderate Low/
CV Violent Income
Income Moderate
Crime Task Housing-
Housing- Bond-
Totals
ISTEA LLEBG Force PA No. 1
PA No. 2 PA No. 1
2004
2003
- - - 1,588,670
5,645,763 -
9,128,781
9,286,031
- - - -
- -
-
17
- - - 71,713
8,500 -
83,642
78,447
7,370
22,253 -
33,377
-
- - - 3,241,527
9,500,000 -
12,741,527
12,613,565
- - - 58,936
47,228 -
141,715
165,249
-
- _
-
185,000
- - - 4,968,216
15,223,744 -
22,129,042
22,328,309
21,302 21,651
- 46,046
52,010
1,118,102 9,500,000
- 10,618,102
10,495,979
18,664 -
- 18,664
19,308
- -
- -
21,694
- -
- 36,346
54,300
1,158,068 9,521,651
- 10,719,158
10,643,291
- - - 2,123,425 -
- 2,123,425
12,613,565
- -
- -
185,000
- - - 1,686,723 5,702,093
- 9,286,459
(1,113,547)
- - - 3,810,148 5,702,093
- 11,409,884
11,685,018
- - - 4,968,216 15,223,744
- 22,129,042
22,328,309
79
CITY OF LA QUINTA
Non -Major Special Revenue Funds
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Year ended June 30, 2004
Lighting Arts in
Gas Federal and Public Public
Tax Assistance Landscape SLEBG Quimby Safety Places
Revenues:
Taxes $ - - - - - - -
Developer fees - - - - 344,198 - 2875054
Intergovernmental 605,143 30,000 - 1001,000 - - -
Investment income 7,116 - - 122 8,387 159 13,578
Special assessments - - 816,045 - - - -
Rental income - - -
Miscellaneous
Total revenues 612,259 30,000 816,045 100,122 352,585 159 300,632
Expenditures:
Current:
Public safety - - - -
Community services - - - -
Planning and
development - - -
Public works 553,700 - 816,045 -
Capital outlay - - - -
Total expenditures 553,700 - 816,045 -
Excess (deficiency) of
revenues over (under)
expenditures 58,559 30,000
Other financing sources (uses):
- - 124,821
124,821
1005122 352,585 159 175,811
Transfers in
-
-
- -
-
2,000
-
Transfers out
23,725
_ 32,753
- 107,974
146,321
-
19,166
Total other financing
sources (uses)
23,725
32,753
- 107,974
146,321
2,000
19,166
Net change in fund balances
34,834
(2,753)
- (7,852)
206,264
2,159
156,645
Fund balances at
beginning of year
374,700
7,320
- 7,852
388,771
6,254
608,043
Fund balances (deficit)
at end of year
$$ 4�
10,073
-
59�
8,413
764,688
80
South Coast
Air Quaility ISTEA LLEBG
35,448 41,450 19,218
2,072 - 523
37,520 4131450 19,741
Low/
Low/
Moderate
Moderate Low/
CV Violent Income
Income Moderate
Crime Task Housing-
Housing- Bond-
Totals
Force PA No. 1
PA No. 2 PA No. 1
2004
2003
- 5,991,739
3,031,668 -
91)023,407
7,750,765
- 20,275
622,305 -
15273,832
319,970
_ -
- -
831,259
859,001
- -
109,504 -
141,461
216,015
_ -
- -
816,045
780,259
- 367,598
63,580 -
431,178
376,863
- 856,474
230,991 -
1,087,465
280,752
- 7,236,086
4,058,048 -
13,604,647
10,583,625
- 528
17,386 - - -
17,386 - - 528
- - - 528
1421020
- - - -
2,406
3,591,028 56205 - 4,171,309
4,876,898
- - - 1,369,745
1,373,614
- - - 124,821
111,948
3,591,028 562,895 - 5,666,403
6,506,886
20,134 41,450 19,741
528 3,645,058
3,495,153
-
7,938,244
4,076,739
- - -
_ _
_
-
2,000
2,000
- 41,450 45,316
- (3,948,080)
(3,775,970)
74,623
(8,215,378)
(6,6965134)
- 415450 45,316
- 3,948,080
35775,970
74,623
(8,213,378)
6,694,134
20,134 - (255575)
(528) (303,022)
(280,817)
(74,623)
(275,134)
(256175395)
109,912 - 255575
528 4,113,170
5,982,910
74,623
115685,018
14,302,413
130,046
- 3,810,148
5,702,093
-
115,409,884
1156855018
81
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, 2004
Budget
Original Final
Revenues:
Intergovernmental $
546,100
506,800
Investment income
7,600
700
Total revenues
553,700
514,400
Expenditures:
Current:
Public works
553,700
553,700
Total expenditures
553,700
5535700
Excess (deficiency) of revenues
over (under) expenditures
-
(39,300)
Other financing sources (uses):
Transfers out
-
205 206
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
- (244,506)
374,700 374,700
$ 374,700 130,194
Variance with
Final Budget
Actual Positive (negative)
605,143
7,116
612,259
553,700
553,700
58,559
23,725
34,834
374,700
40%534
98,343
484
97,859
97,859
1815481
279,340
2795340
Prior
Year
558,086
7,985
566,071
569,900
569,900
(3,829)
(3,829)
378,529
374,700
CITY OF LA Q INTA
Special Revenue Funds
Federal Assistance Fund
k Schedule of Revenues, Expenditures and Changes
--
in Fund Balances - Budget and Actual
Year ended June 30, 2004
k
Variance with
Prior
Budget
Final Budget
Year
Original Final Actual Positive (negative)
Actual
Revenues:
Intergovernmental
$ 165,000 339,427 30,000
30%427
30,000
Total revenues
165,000 33%427 302000
3092427
30,000
Other financing sources (uses):
Transfers out
(30,000) (3312932) (32,753
299,179
37,320
Total other financing
-- sources (uses)
30,000 331,932 32,753
299,179
37,320
Net change in fund balances
135,000 72495 (2,753)
(10,248)
(7,320)
r' Fund balances (deficit) at
beginning of year
72320 7,320 7,320
-
-
.— Fund balances (deficit) at end of year
$ 127,680 175 102073
10,248
7,320
83
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, 2004
Revenues:
Special assessments
Total revenues
Expenditures:
Current:
Public works
Total expenditures
Net change in fund balances
Budget
Original Final
$ 854,600 8545600
854,600 854,600
854,600 854,600
854,600 8549600
Fund balances at beginning of year - -
Fund balances at end of year $ - -
Variance with
Prior
Final Budget
Year
Actual Positive (negative)
Actual
816,045 38,555
7801259
816,045 38,555
780,259
816,045 38,555 8035714
816,045 38,555 8035714
- - (23,455)
23,455
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 3 0, 2004
Budget
Original Final Actual
Revenues:
Intergovernmental
$ 100,000
I K000
100,000
Investment income
700
700
122
Total revenues
1002700
1002700
100,122
Other financing sources (uses):
Transfers out
-
107,92
(107,974
Total other financing
sources (uses)
-
107,926
107,974
Net change in fund balances
100,700
(7,226)
(7,852)
Fund balances at beginning of year
73,852
7,852
7,852
Fund balances at end of year
$ 1083,552
626
-
Variance with
Prior
Final Budget
Year
Positive (negative)
Actual
1005713
578 279
578 1001,992
48 100,287
4� 100,287
(626) 705
- 7,147
626 7,852
85
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, 2004
Revenues:
Developer fees
Investment income
Total revenues
Other financing sources (uses):
Transfers out
Total other financing
sources (uses)
Net change in fund balances
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
$ 25,000
25,000
344,198
319,198
91,926
3,900
3,900
8,387
4,487
%103
28,900
28,900
352,585
323,685
101,029
-
301,583
1463,321
155,262
74,928
-
301,583
1463,321
155,262
74,928
28,900
(272,683)
206,264
478,947
26,101
388,771
388,771
388,771
-
362,670
$ 417,671
116,088
5953,035
478,947
388,771
:•
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, 2004
Variance with
Prior
Budget
Final Budget
Year
"-
Original Final Actual
Positive (negative)
Actual
Revenues:
Investment income
$ 300 300
159
141
289
Total revenues
300 300
159
_ (141)
289
Expenditures:
Current:
Public safety
- 2,000
-
2,000
109000
Total expenditures
- 23,000
-
2,000
109000
Excess (deficiency) of revenues
over (under) expenditures
300 1,700
159
19,859
9,711
Other financing sources (uses):
Transfers in
- 29000
23,000
-
2,000
Total other financing
sources (uses)
25,000 2,000
23,000
-
2,000
Net change in fund balances
29300 300
2,159
19859
(71,711)
Fund balances at beginning of year
63,254 63,254
69,254
-
13,965
Fund balances at end of year
$ 8,554 69554 -
89413
1,859
6,254
87
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, 2004
Variance with
Prior
Budget
Final Budget
Year
Original
Final
Actual
Positive (negative)
Actual
Revenues:
Developer fees
$ 97,500
975500
287,054
189,554
228)044
Investment income
5,100
5,100
13,578
85478
13,374
Total revenues
102,600
10200
300,632
1985032
2415418
Expenditures:
Current:
Community services
-
-
-
-
2,406
Capital outlay
330,540
5075709
124,821
382,888
111,948
Total expenditures
330,540
507,709
124,821
382,888
114,354
Excess (deficiency) of revenues
over (under) expenditures
(227,940)
405,109
1755811
580,920
1275064
Other financing sources (uses):
Transfers out
-
285,153
19,166
265,987
(200,108
Net change in fund balances
(2275940)
(6905262)
1565645
846,907
(73,044)
Fund balances at beginning of year
6085043
608,043
608,043
-
68107
Fund balances at end of year
$ 380,103
(825219
76408
846,907
608)043
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, 2004
Revenues:
Intergovernmental
Investment income
Total revenues
Expenditures:
Current:
Planning and development
Total expenditures
Net change in fund balances
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
$ 21,800
2385204
355448
29000
25000
2,072
235800
2409,204
379520
- 149827
173,386
- 14,827
179,386
23,800 225,377
203,134
109, 912 109, 912
109, 912
$ 1339712 335,289
130,046
(202,756)
72
202,684
2,559
2,559
(205,243)
205,243
33,538
2,043
35,581
8,043
8,043
27,538
82,374
1099912
XG
CITY OF LA QUINTA
Special Revenue Funds
ISTEA
Schedule of Revenues, Expenditures and Changes
in Fund Balances - Budget and Actual
Year ended June 30, 2004
Variance with Prior
Budget
Final Budget Year
Original Final
Actual
Positive (negative) Actual
Revenues:
Intergovernmental
$ - 595,235
41,450
(553,785) -
Investment income
- -
-
- -
Total revenues
- 595,235
411,450
553,785 -
Other financing sources (uses):
Transfers out
- (595,235
41,450
553,785 -
Total other financing
sources (uses)
- 595,235
41,450
5531,785
Net change in fund balances
- -
-
- -
Fund balances at beginning of year
- -
-
- -
Fund balances at end of year
$ - -
-
- -
.0
r-�
CITY OF LA QUINTA
Special Revenue Funds
LLEBG
Schedule of Revenues, Expenditures and Changes
in Fund Balances - Budget and Actual
Year ended June 30, 2004
Variance with Prior
Budget Final Budget Year
Original Final Actual Positive (negative) Actual
Revenues:
Intergovernmental
$ -
1 %218
192218
Investment income
700
700
523
Total revenues
700
1 %918
199,741
Other financing sources (uses):
Transfers out
-
_ (253,778)
(459316
Total other financing
sources (uses)
-
(259778)
(451,316
Net change in fund balances
700
(5,860)
(253,575)
Fund balances at beginning of year
25,575
25,575
25,575
Fund balances at end of year
$ 26,275
199715
-
177
177
24,243
1,152
25,395
(193,538) (32,111
195538) 323,111)
(199715) (69716)
- 32,291
19,715 25,575
91
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, 2004
Variance with Prior
Budget Final Budget Year
Original Final Actual Positive (negative) Actual
Revenues:
Intergovernmental $ -
-
-
- 112,421
Investment income -
-
-
- 1,274
Miscellaneous -
-
-
- -
Total revenues -
-
-
- 113,695
Expenditures:
Current:
Public safety -
528
528
- 132,020
Total expenditures -
528
528
- 132,020
Net change in fund balances -
(528)
(528)
- (18,325)
Fund balances at beginning of year 528
528
528
- 18,853
Fund balances (deficit) at end of year $ 528
-
-
- 528
92
CITY OF LA QUINTA
Special Revenue Funds
Low/Moderate Income Housing Project Area No. 1 Fund
Schedule of Revenues, Expenditures and Changes
"^ in Fund Balances - Budget and Actual
Year ended June 30, 2004
Variance with
Prior
Budget
Final Budget
Year
,.._
Original
Final
Actual
Positive (negative)
Actual
Revenues:
Taxes
$ 5,186,084
5,783,697
529912739
2082042
51,271,524
Developer fees
-
-
202275
20,275
-
Investment income
49400
49400
-
(4,400)
36,406
-- Rental income
3412000
341,000
367,598
26,598
376,863
Miscellaneous
1501,000
1503,000
856,474
7062474
2809752
,�. Total revenues
5,6819484
6,2792097
7,2369086
9561,989
53,965,545
Expenditures:
Current:
Planning and development
316973,992
65043,599
315912028
22452,571
421039060
Total expenditures
32697,992
6,043,599
3,591,028
2,4522571
4,1032060
Excess (deficiency) of revenues
over (under) expenditures
1,983,492
235,498
3,645,058
3,4091,560
19862,485
Other financing sources (uses):
Transfers out
(1,7319455)
(3,9485080)
32948,080
-
3,286,801
Total other financing
sources (uses)
(1,7313455)
(3,9482080)
3,9482080
-
3,286,801
-' Net change in fund balances
252,037
(33,7125,582)
(3032022)
3,40%560
(1,424,316)
Fund balances at beginning of year
45113,170
4,113,170
4,113,170
-
5,537,486
Fund balances at end of year
$ 4,365,207
4002588
3,810,148
3,409,560
45113,170
�c
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, 2004
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):
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balances
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
$ 2,730,853 2,871,265 3,031,668
7,054,074 7,054,074 622,305
27,400 27,400 109,504
- - 63,580
230,991
9,812,327 9,952,739 4,058,048
160,403 2,479,241
(6,431,769) 129,263
82,104 -
63,580 -
230,991 -
(5,894,691) 2,608,504
5,037,558
5,709,205
562,895
5,146,310
765,795
5,037,558
5,709,205
562,895
5,146,310
765,795
4,774,769
4,243,534
3,495,153
(748,381)
1,842,709
(3,442,855) (10,131,066) (3,775,970) 6,355,096
(3,442,855)
(10, 13 1 ,066)
3,775,970
1,331,914
(5,887,532)
(280,817)
5,982,910
5,982,910
5,982,910
$ 7,314,824
95,378
5,702,093
6,355,096
5,606,715
5,606,715
19,861
(585,753)
(565,892)
1,276,817
4,706,093
5,982,910
94
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, 2004
Variance with Prior
Budget Final Budget Year
Original Final Actual Positive (negative) Actual
Revenues:
Investment income $ - -
Total revenues - - -
Other financing sources (uses):
Transfers out - (749623) 745,623)
Total other financing
sources (uses) - (749623) 745623
Net change in fund balances - (74,623) (745623)
Fund balances at beginning of year 74,623 745623 741,623
Fund balances at end of year $ 745623 - -
11,949
11,949
11,949
- 62,674
74,623
95
(This page intentionally left blank)
96
MAJOR DEBT SERVICE FUNDS
Debt Service Funds are used to account for the accumulation of resources for, and the payment
of, governmental 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.
97
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, 2004
Revenues:
Taxes
Investment income
Total revenues
Expenditures:
Current:
Planning and development
Debt service:
Principal
Interest
Payment to bond escrow
Payments under pass -through
obligations
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses):
Payment to bond escrow
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
Budget
Original Final Actual
Variance with
Prior
Final Budget
Year
Positive (negative)
Actual
$ 20,744,336
23,134,787
23,966,954
832,167
21,086,099
1,033,182
66,000
201,721
135,721
204,789
21,777,518
23,200,787
24,168,675
967,888
21,290,888
464,591
376,826
377,920
(1,094)
316,567
2,920,707
2,920,707
2,920,707
-
2,264,940
9,027,416
9,027,416
9,018,569
8,847
7,491,294
-
1,253,848
1,253,848
-
-
12,479,798
12,479,798
11,767,922
711,876
9,669,282
24,892,512
26,058,595
25,338,966
719,629
19,7425083
(3,114,994)
(2,857,808)
(1,170,291)
15687,517
1,548,805
-
(15,708,019)
(155708,019)
-
-
11,731,455
18,693,322
185693,322
-
1,738,783
-
-
-
-
(6,000,000)
1,731,455
2,985,303
2,985,303
-
(4,261,217)
(1,383,539)
127,495
13815,012
1,687,517
(25712,412)
2,2735059
2,273,059
2,273,059
-
4,985,471
$ 889,520
2,400,554
4,088,071
1,687,517
2,273,059
98
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, 2004
...
Variance with
Prior
Budget
Final Budget
Year
-
Original
Final
Actual
Positive (negative)
Actual
Revenues:
Taxes
$ 9,723,411
11,4851062
12,126,671
641,609
9,9161-962
-- Investment income
-
-
753625
75,625
67,844
Total revenues
9,723,411
11,485,062
12,202,296
717,234
9,9841806
Expenditures:
Current:
- Planning and development
177,700
177,700
168,983
8,717
149,787
Debt service:
Principal
276,169
276,169
2761,169
-
272,978
Interest
1,536,694
15536,694
1,536,694
-
1,467,846
Payment to bond escrow
-
337,259
337,259
-
-
Payments under pass through
— obligations
8,128,871
11,39231
9,680,225
1,711,864
7,892,712
Total expenditures
10,119,434
13,719,911
11,999,330
1,7207581
9,7831323
— Excess (deficiency) of revenues
over (under) expenditures
(396,023)
(2,234,849)
202,966
2,43751815
201.1483
— Other financing sources (uses):
Payment to bond escrow
-
(4,246,981)
(4,246,981)
-
-
Transfers in
31,4421,855
8,0275095
4,922,224
(3,104,871)
338,895
-- Transfers out
-
-
(5,800,000)
(5,800,000)
1 100,000
Total other financing
— sources (uses)
31442,855
3,780,114
(5,124,757)
(82904,871)
(761,10
Net change in fund balances
33,046,832
1,5451)265
(4,921,791)
(6,467,056)
(559,622)
-- Fund balances (deficit) at
beginning of year
(6,182,506)
6,182 506
(6,182,506)
-
5,622,884
Fund balances (deficit) at end of year $ (3,135,674 (4,6375,241) (11,104,297) (6,467,056) 6,182,506)
99
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, 2004
Revenues:
Investment income
Rental income
Miscellaneous
Total revenues
Expenditures:
Current:
Planning and development
Debt service:
Principal
Interest
Total expenditures
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
Budget
Original Final
Variance with
Final Budget
Actual Positive (negative)
$ - - 100
680,830 680,830 680,772
9,500 9,500 9,686
690,330 690,330 690,558
9,686 91686 5,205
300,000 300,000 300,000
380,830 380,830 380)830
690,516 690,516 686,035
(186) (186) 4,523
$ 343 343 5,052
100
Prior
Year
A . 1
100 80
(58) 678,955
186 -
228 679,03 5
4,481
4,481
4,709
4,709
2852000
3 94,43 5
689,121
(10,086)
10,615
529
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 Major Capital Projects Funds:
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.
Redevelopment Agency, Capital Projects Fund Area 1 — To account for the bond proceeds,
interest and other funding that will be used for development, planning, construction and land
acquisition.
` 2004 Low/Moderate Bond Fund — To account for the 2004 revenue bond proceeds that will be
used to finance projects benefiting low and moderate income housing in La Quinta
Redevelopment Project Area No. 1 and Project Area No. 2.
The City of La Quinta has the following Non -Major 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.
Transportation Fund, Parks and Recreations Fund, Civic Center Fund, Library Development
Fund, Community Center Fund, Street Facility Fund, Park Facility Fund, Fire Facility Fund — To
account for the accumulation of resources provided through developer fees for the 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.
County Library Development Fund — To account for the accumulation of County resources for
the acquisition, construction or improvement of the City's library.
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.
Redevelopment Agency, Capital Projects Fund Area 2 - To account for the bond proceeds,
interest and other funding that will be used for development, planning, construction and land
acquisition.
Redevelopment Agency Taxable Capital Projects Fund Area 1 — To account for the bond
proceeds, interest and other funding that will be used to finance capital projects.
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.
101
Assets
Cash and investments
Cash with fiscal agent
Accounts receivable
Interest receivable
Advances to other funds
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Deposits payable
Due to other funds
Advances from other funds
Total liabilities
Fund balances:
Unreserved:
Designated for
capital projects
Undesigated
Total fund balances
Total liabilities and
fund balances
CITY OF LA QUINTA
Non -Major Capital Projects Funds
Combining Balance Sheet
June 30, 2004
County
Parks and
Civic
Library
Library
Community
Infrastructure
Transportation
Recreation
Center
Development
Development
Center
$ 1,143,396
6,320,534
209,295
1,883,375
931,565
406,612
641,581
5,713
20,756
5,520
7,144
3,504
1,570
2,329
$ 1,149,109
6,341,290
214,815
1,890,519
935,069
408,182
643,910
$ - 2,196 1,004 732 450 - 194
- 4,075,463 - - - -
- 2,196 4,076,467 732 450 - 194
1,149,109 6,339,094 - 1,889,787 934,619 408,182 643,716
- - (3,861,652) - - - -
1,149,109 6,339,094 (3,861,652) 1,889,787 934,619 408,182 643,716
$ 1,149,109 6,341,290 214,815 1,890,519 935,069 408,182 643,910
102
Redevelopment
Redevelopment Agency Financing
Street Park Fire A.D. 2000-1 Agency Taxable Bond Authority
Facility Facility Facility Phase VI PA No. 2 PA No.1 Projects
2004
Totals
2003
145,266 36,836 - 450,706 1,845,134 - - 14,014,300 12,929,720
- 8,490,446 55,000 8,545,446 -
536 - - 1,668 60,900 - - 63,104 60,900
- 143 307 - 1,682 - - 48,668 -
1,260,695 - - 1,260,695 1,109,846
145,802 36,979 307 452,374 3,168,411 8,490,446 55,000 23,932,213 14,100,466
30 10 194 - 12,084 - - 16,894 26,353
- 27,835 - - 27,835 27,835
307 - - 2,746,630 - 2,746,937 18,079
1,260,695 - - - - 5,336,158 4,921,720
30 10 1,261,196 - 39,919 2,746,630 - 8,127,824 4,993,986
145,772 36,969 - 452,374 3,128,492 8,490,446 55,000 23,673,560 9,106,480
- - (1,260,889) - - (2,746,630) - (7,869,171 -
145,772 36,969 1,260,889 452,374 3,128,492 5,743,816 55,000 15,804,389 9,106,480
145,802 36,979 307 452,374 3,168,411 8,490,446 55,000 23,932,213 14,100,466
103
CITY OF LA QUINTA
Non -Major Capital Projects Funds
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Year ended June 30, 2004
County
Parks and
Civic
Library
Library
Community
Infrastructure
Transportation
Recreation
Center
Development
Development
Center
Revenues:
Developer fees
$ -
2,358,474
837,411
539,955
356,492
-
153,585
Intergovernmental
-
-
-
-
-
200,000
-
Investment income
31,458
90,615
21,823
33,929
17,177
5,879
10,338
Total revenues
31,458
2,449,089
859,234
573,884
373,669
205,879
163,923
Expenditures:
Current:
General government
-
-
-
207,156
-
-
-
Planning and
development
-.
-
-
-
Public works
-
63,050
-
-
-
-
-
Debt service:
Interest
-
-
103,476
-
-
-
-
Fiscal charges
-
-
-
-
Total expenditures
-
63,050
103,476
207,156
-
-
-
Excess (deficiency) of
revenues over (under)
expenditures
31,458
2,386,039
755,758
366,728
373,669
205,879
163,923
Other financing sources (uses):
Issuance of tax allocation bonds
-
-
-
-
-
_
_
Issuance of revenue bonds
Transfers in
-
-
-
-
Transfers out
(1,120,840)
(22,420)
(403,751)
(260,154)
(328,480)
-
-
Total other financing
sources (uses)
(1,120,840)
(22,420)
(403,751)
(260,154)
(328,480)
-
-
Net change in fund balances
(1,089,382)
2,363,619
352,007
106,574
45,189
205,879
163,923
Fund balances (deficit) at
beginning of year
2,238,491
3,975,475
(4,213,659)
1,783,213
889,430
202,303
479,793
Fund balances (deficit) at end of year
$ 1,149,109
6,339,094
(3,861,652)
1,889,787
934,619
408,182
643,716
104
Redevelopment
Redevelopment
Agency Financing
Street
Park
Fire
A.D. 2000-1
Agency
Taxable Bond Authority
Totals
Facility -Facility
Facility
Phase VI
PA No. 2
PA No.1 Projects
2004
2003
31,828
9,151
157,345
-
-
- -
4,444,241
2,701,275
_
_
_ -
200,000
2,000
2,435
637
598
8,013
49,219
71,198 -
343,319
332,743
34,263
9,788
157,943
8,013
49,219
71,198 -
4,987,560
3,036,018
207,156 203,831
174,152
-
-
174,152
217,599
_
-
-
63,050
-
- -
10,186
-
-
-
-
113,662
52,523
-
-
-
949,968
2,075,660
3,025,628
-
- -
10,186
-
174,152
949,968
2,075,660
3,583,648
473,953
34,263 9,788
147,757
8,013
(124,933)
(878,770)
(2,075,660)
1,403,912
2,562,065
_ _
_
-
-
26,400,000
-
26,400,000
-
_
-
-
90,000,000
90,000,000
-
"'
5,800,000
-
-
5,800,000
1,308,913
- -
(1,500,000)
-
(5,623,604)
(19,777,414)
(87,869,340)
(116,906,003)
7,881,212
- -
1,500,000)
-
176,396
6,622,586
2,130,660
5,293,997
6,572,299
34,263 9,788
(1,352,243)
8,013
51,463
5,743,816
55,000
6,697,909
(4,010,234)
111,509 27,181
91,354
444,361
3,077,029
-
-
9,106,480
13,116,714
145,772 36,969
1,260,889
452,374
3,128,492
5,743,816
55,000
15,804,389
9,106,480
105
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, 2004
Budget
Original Final
Revenues:
Variance with
Final Budget
Actual Positive (negative)
Developer fees
$ - 2,000 -
Intergovernmental
- 14,349,076 5,931,382
Miscellaneous
I K1000 153,000 1535000
Total revenues
100,000 14,5041)076 6,084,382
Expenditures:
Capital projects
-
106,197,827
43,207,098
Debt service:
Principal
-
-
-
Interest
-
-
-
Total expenditures
-
106,197,827
43,207,098
Excess (deficiency) of revenues
over (under) expenditures
I K1000
(91,693,751)
(37,122,716)
Other financing sources (uses):
Transfers in
22>905,585
91,692,753
44,625,348
Transfers out
-
-
(7,502,632)
Total other financing
sources (uses)
22,905,585
91,6923,753
37,122,716
Net change in fund balances
23,005,585
(998)
-
Fund balances at beginning of year
-
-
-
Fund balances at end of year
$ 23,005,585
(998)
-
106
(2,000)
(8,417,694)
Prior
Year
97,150
4,782,293
(8,419,694) 41)879,443
62,990,729 57,342,978
- 104,409
- 67,841
62,990,729 57,515,228
54,571,035
(47,067,405)
(7,502,632)
(52,635,785)
52,635,785
(54,570,037) 52,635,785
998 -
998 -
CITY OF LA QUINTA
Capital Projects Funds
Redevelopment Agency Project Area No. 1 Fund
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Year ended June 30, 2004
Revenues:
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):
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balances
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
$ 437,100
437,100
635,823
1981,723
6525,611
-
4,530
6,794
2,264
38,692
_
-
-
-
55,789
4373,100
4413,630
642,617
200,987
7471092
15,42131427
1,840,727
1,832408
85319
1555%307
1)421,427
15840,727
13832,408
8,319
1,5595,307
(984,327)
(1,399,097)
(1,189,791)
2092306
(812,215)
14)045,238 14,0641243
(19,535,000) (41,673,317) (6,561,612)
(19,535,000)
(27,628,079)
7,502,631
(20,519,327)
(29,027,176)
6,312,840
41,090,533
41,0902533
41,090,533
$ 20,571,206
12,063,357
47,403,373
19,005 65-0001000
35,111,705 (1,939,564)
35,1302710 42060,436
3511340,016 3,248,221
37,842,312
35,3402016 41,090,533
107
CITY OF LA QUINTA
Capital Projects Funds
2004 Low/Moderate Income Bond Fund
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Year ended June 30, 2004
Revenues:
Investment income
Total revenues
Other financing sources (uses):
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balances
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
$ - - 2,781 2,781 -
- 2,781 2,781 -
665323,236 66,323,236 - -
(8,720,000) (8,669,035) 50,965
57,603,236 57>654,201 50,965 -
- 57,603,236 57,656,982 53,746 -
- 57,603,236 571,656,982 53,746 -
108
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, 2004
Variance with
Prior
Budget
Final Budget
Year
Original
Final
Actual
Positive (negative)
Actual
Revenues:
Investment income
$ 1500
15,600
31,458
155,858
70,822
_.. Total revenues
15,600
15,600
313458
15,858
70)822
Other financing sources (uses):
Transfers out
(374,008)
(2,264,620)
(1,120,840)
1,14311780
1,894,586)
Total other financing
sources (uses)
(374,008)
2 264,620)
(1,120,840)
1,143,780
(1,894,586)
Net change in fund balances
(358,408)
(2,249,020)
(1,089,382)
11-1591-638
(1,823,764)
_ Fund balances at beginning of year
2>2383,491
222385,491
2,2385491
-
45062,255
Fund balances at end of year
$ 1,880,083
10,529)
1,149,109
1,159,638
2,238,491
--
109
CITY OF LA QUINTA
Capital Projects Funds
Transportation Fund
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Year ended June 30, 2004
Revenues:
Developer fees
Investment income
Total revenues
Budget
Original Final
Variance with
Final Budget
Actual Positive (negative)
Prior
Year
A _-__1
$ 549,000
549,000
2,358,474
1,809,474
1,517,388
531)300
53,300
901,615
37,315
80,281
602,300
602,300
2,449,089
1,846,789
17597,669
Expenditures:
Current:
Public works - 631P050 63,050
Total expenditures - 63,050 63,050
Excess (deficiency) of revenues
over (under) expenditures 602,300 539,250 2,386,039
Other financing sources (uses):
Transfers out (1,988,986) (1,302,363) 221420
Total other financing
sources (uses)
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
(1,988,986) (1,302,363) (22,420)
(1,386,686) (763,113) 2,363,619
3,9751,475 3,975,475 3,975,475
$ 2,588,789 3,2121,362 6,339,094
110
1,846,789 1,597,669
1,279,943
1,279,943
3,126,732
3,126,732
1,019,180
(1,019,180)
578,489
3,396,986
3,975,475
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, 2004
Revenues:
Developer fees
Investment income
Total revenues
Expenditures:
Debt service:
Interest expense
Total expenditures
Excess (deficiency) of
revenues over (under)
expenditures
Other financing sources (uses):
Transfers out
Total other financing
sources (uses)
Net change in fund balances
Fund balances (deficit) at
beginning of year
Fund balances (deficit)
at end of year
Variance with Prior
Budget Final Budget Year
Original Final Actual Positive (negative) Actual
$ 251,000 251,000 837,411 5861,411 4242762
- - 21,823 21,823 28,503
2513,000 251,000 859,234 6082234 453,265
1031,476 (103,476) 52,523
103,476 (103,470 52,523
2515,000 251,000
755,758
504,758
400,742
- 618,564
(403,751)
214,813
(4,773,363)
(618,564) (403,751) 2145P813
251,000 (367,564) 352,007 719,571
(4,213,659) (4,213,659 4,213,659) -
$ 3,962,659 (4,581,223) (3,861,652) 719,571
4,773,363)
(4,372,621)
158,962
(4,213,659
III
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 3 0, 2004
Revenues:
Developer fees
Investment income
Total revenues
Expenditures:
Current:
General government
Total expenditures
Excess (deficiency) of
revenues over (under)
expenditures
Other financing sources (uses):
Transfers out
Total other financing
Variance with
Prior
Budget
Final Budget
Year
Original
Final
Actual
Positive (negative)
Actual
$ 183,000
183,000
539,955
356,955
365,776
21,200
21,200
33,929
12,729
38,796
204,200
2041,200
573,884
369,684
404,572
204,251
204,251
207,156
2,905
203,831
204,251
204,251
207,156
2,905
2031,831
51 51 366,728 366,779 2001,741
481,844 260,154 221,690
sources (uses) - 4811,844) 260,154
Net change in fund balances (51) (481,895) 106,574
Fund balances at beginning of year 1,783,213 1,783,213 1,783,213
Fund balances at end of year $ 1,7831162 11,3011,318 11,889,787
112
221,690
588,469
588,469
36,969
36,969
163,772
1,619,441
1,783,213
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 3 0, 2004
Variance with Prior
Budget Final Budget Year
Original Final Actual Positive (negative) Actual
Revenues:
Developer fees
$ 112,500
112,500
3561,492
243,992
1901,171
Investment income
-
-
17,177
17,177
20,644
Total revenues
112,500
1123,500
3733,669
2613,169
210,815
Other financing sources (uses):
Transfers out
-
4,074,930
328,480
3,746,450
156,964
Total other financing
sources (uses)
-
4,074,930
328,480
3,7461,
156,964
Net change in fund balances
1121P500
(3,962,430)
45,189
411007,619
535,851
Fund balances at beginning of year
8897430
8893,430
8895,430
-
8353,579
Fund balances at end of year
$ 11,0013,930
3,073,000
934,619
43P0073,619
8893,430
113
CITY OF LA QUINTA
Capital Projects Funds
County Library Development Fund
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Year ended June 30, 2004
Variance with
Prior
Budget
Final Budget
Year
Original
Final
Actual
Positive (negative)
Actual
Revenues:
Intergovernmental
$ 2005000
200,000
200,000
-
2001)000
Investment income
41100
4,100
5,879
1,779
2,303
Total revenues
204,100
204,100
205,879
12779
202,303
Other financing sources (uses):
Transfers out
(400,000)
400,000 -
4001000 -
Total other financing
sources (uses)
(400,000)
400,000 -
400,000 -
Net change in fund balances
204,100
204,100 205,879
1,779 202,303
Fund balances at beginning of year
202,303
202>303 202,303
- -
Fund balances at end of year
$ 406,403
406,403 408,182
1,779 202,303
114
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, 2004
Variance with Prior
Budget Final Budget Year
Original Final Actual ositive (negative Actual
Revenues:
Developer fees
$ 48)500
48,500
15311585
105,085
86,022
Investment income
8,700
81)700
10,338
1,638
9,993
Total revenues
57,200
57,200
163,923
1061,723
9631015
Fund balances at beginning of year
479,793
479,793
479,793
-
383,778
Fund balances at end of year
$ 536,993
536 993
643716
106,723
47�9,793_
115
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, 2004
Variance with
Prior
Budget
Final Budget
Year
Original
Final
Actual
Positive (negative)
Actual
Revenues:
Developer fees
$ 7,500
7,500
31,828
24,328
24,354
Investment income
1,900
1,900
2,435
535
2,295
Total revenues
9,400
9,400
34,263
247863
26,649
Fund balances at beginning of year
111,509
111,509
111,509
-
84,860
Fund balances at end of year
$ 120,909
120,909
145,772
24,863
111,509
116
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, 2004
Revenues:
Developer fees
Investment income
Variance with
Prior
Budget
Final Budget
Year
Original Final
Actual Positive (negative)
Actual
$ 2,500 2,500
91,151 67651
4,425
500 500
637 137
543
Total revenues
3,000
3,000
97788
Fund balances at beginning of yea
27,181
27,181
27,181
Fund balances at end of year
$ 3 0,181
3 0,181
3 6, 969
61>788 4,968
- 22,213
6,788 27)181
117
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, 2004
Variance with
Prior
Budget
Final Budget
Year
Original
Final
Actual
Positive (negative)
Actual
Revenues:
Developer fees
$ 32,100
32,100
15711345
125,245
88,377
Investment income
1,000
1,000
598
402
1,130
Total revenues
33,100
33,100
157,943
124,843
89,507
Expenditures:
Debt service:
Interest expense
-
-
10,186
10,186
-
Total expenditures
-
-
10,186
_ 10,186)
-
Excess (deficiency) of
revenues over (under)
expenditures
33,100
33,100
1471757
114,657
-
Other financing sources (uses):
Transfers out
-
(1,500,000)
1,500)000
-
-
Total other financing
sources (uses)
-
(1,500,000)
(1,500,000)
-
-
Net change in fund balance
331100
(1,466,900)
(1,352,243)
114>657
89,507
Fund balances at beginning of yea
91,354
91,354
91,354
-
1,847
Fund balances (deficit)
at end of year
$ 124,454
1,375,546
1,260,889
114>657
91,354
118
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 3 0, 2004
Variance with
Prior
Budget
Final Budget
Year
Original
Final
Actual
Positive (negative
Actual
Revenues:
Investment income
$ -
-
8)013
8,013
102156
Total revenues
-
-
8,013
82013
10,156
Other financing sources (uses):
Transfers out
-
142,657
-
142,657
150
Total other financing
sources (uses)
-
142 657
-
142,657
150
Net change in fund balances
-
(142,657)
87013
150,670
107006
Fund balances at beginning of year
434,355
343,355
444,361
101,006
434,355
Fund balances at end of year
$ 434,355
200,698
452,374
251,676
444,361
119
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, 2004
Variance with
Budget Final Budget
Original Final Actual Positive (negative)
Revenues:
Investment income $ 20,000 20,000 49,219 29,219
Total revenues 20,000 20,000 49,219 29,219
Expenditures:
Current:
Planning and development
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
314,085 115,953 174,152 (58,199)
314,085 115,953 174,152 58,199
Prior
Year
A_�_ 1
67,277
67,277
217,599
217,599
(294,085) 95,953) (124,933) 28,980 150,322
1,100,000 1,345,583 5,800,000
5,763,330 (5,623,604)
1,100,000
(4,417,747)
176,396
805,915
(4,513,700)
51,463
3,077,029
3,077,029
3,077,029
$ 3,882,944
1,436,671
3,128,492
120
4,454,417
139,726
4,594,143
4,565,163
4,565,163
1,308,913
1,308,913
1,158,591
1,9181438
3,077,029
CITY OF LA QUINTA
Capital Projects Funds
Redevelopment
Agency Taxable Bond Project Area
No. 1
Schedule of Revenues,
Expenditures and Changes in Fund Balances - Budget and Actual
Year ended June 30, 2004
Variance with Prior
_
Budget
Final Budget Year
Original Final Actual
Positive (negative) Actual
.— Revenues:
Investment income
$ - - 71,198
71 J 98 -
Total revenues
- - 71,198
71,198 -
P
�— Expenditures:
Debt service:
Fiscal charges
- 9553,822 94%968
53854 -
Total expenditures
- 955.1822 949,968
55,854 -
Excess (deficiency) of
revenues over (under)
expenditures
- (955,822) (878,770)
77,052 -
Other financing sources (uses):
Issuance of revenue bonds
- 26540011000 26,400,000
-
.— Transfers out
- (25,444,178) (19,7772414)
5,666,764 -
Total other financing
sources (uses)
- 955.1822 6,622,586
5)666,764 -
Net change in fund balances
- - 55743,816
531743,816 -
'� Fund balances at
beginning of year
- -
- -
�- Fund balances at end of year
$ - - 5,743,816
5,743,816 -
121
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, 2004
Revenues:
Investment income
Total revenues
Expenditures:
Debt service:
Fiscal charges
Total expenditures
Excess (deficiency) of
revenues over (under)
expenditures
Other financing sources (uses):
Issuance of revenue bonds
Transfers out
Total other financing
sources (uses)
Net change in fund balances
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
324
- 2,130,657
2,075,660
54,997 -
- 2,130,657
2,075,660
54,997 -
- (2,130,657)
(2,075,660)
54,997 -
90,000,000
90,000,000
- (87,737,551)
(87,869,340)
(131,789) -
- 2,262,449
2,130,660
(131,789) -
- 131,792
55,000
(76,792) 324
- -
-
- (324)
$ - 131,792
55,000
(76,792) -
122
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.
123
CITY OF LA QUINTA
Internal Service Funds
Combining Statement of Net Assets
June 30, 2004
Assets
Current assets:
Cash and investments
Interest receivable
Due from other governments
Capital assets, net
Total assets
Liabilities
Current liabilities:
Accounts payable
Net Assets
Invested in capital assets,
net of related debt
Unrestricted
Total net assets
Equipment Information
Replacement Technology
Totals
2004 2003
$ 2,612,332 472,060 3,084,392 2,948,958
9,841 1,802
11,643 -
- 3,932
3,932 15,000
715,864 396,060
1,1111924 929,210
313387037 873,854
47211,891 3,893,168
2,899 25,985 28,884 36,713
715,864
396,060
1)111)924
929,210
21619,274
451,809
31071,083
2,927,245
$ 3,3357138
847,869
4,183)007
3,856,455
124
CITY OF LA QUINTA
Internal Service Funds
Combining Statement of Revenues, Expenses and Changes in Net Assets
Year ended June 30, 2004
Operating revenues:
Charges for services
Miscellaneous
Total operating revenues
Operating expenses:
Salaries and benefits
Fuel and oil
Maintenance and parts
Contract services
Software and supplies
Depreciation
Other operating expenses
Total operating expenses
Operating income (loss)
Non -operating revenues (expenses):
Investment income
Total non -operating
revenues (expenses)
Income (loss) before transfers
and capital contributions
Capital contributions
Changes in net assets
Net assets at beginning of year
Net assets at end of year
Equipment Information
Replacement Technology
Totals
2004 2003
$ 3171,678
3771P282
6945,960
4511)512
-
-
-
2,382
317>678
377,282
694,960
453,894
-
5111862
51,862
-
33,390
-
33,390
34,213
13 8,406
-
13 8,406
1193032
-
1241)03 7
124,03 7
172,755
-
120,098
120,098
70,749
143,311
162,523
305,834
276,517
-
-
-
11,784
315,107 4587520 7737627 68511050
2,571 (81,238) 78 667) 231 156
48,203
10,266
58,469
72,899
48,203
10,266
58,469
72,899
50,774
(70,972)
(20,198)
(158,257)
246,560
100,190
3467750
30,099
297,334
290218
326,552
(128,158)
3,037,804
818,651
3,856,455
3,9841613
$ 3,335,138
847,869
4,1832007
3,856,455
125
CITY OF LA QUINTA
Internal Service Funds
Combining Statement of Cash Flows
Year ended June 30, 2004
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 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:
(Increase) decrease in due from other governments
(Increase) decrease in other assets
Increase (decrease) in accounts payable
Net cash provided by (used for) operating activities
Noncash capital, financing and investing activities:
Fixed asset disposals
Fixed assets contributed by other funds
126
Equipment Information
Replacement Technology
Totals
')AAA I)nn12
$ 332,678
373,350
706,028
438,894
(175,705)
(251,922)
(427,627)
(393,873)
156,973
1211428
278,401
45,021
(56,745) (133,048) (189,793) (175,659)
(56,745) (133,048) (189,793) (175,659)
38,362
8,464
461X6
72,899
38,362
8,464
46,826
72,899
138,590
(3,156)
135,434
(57,739)
2,473,742 475,216 25948,958 3,006,697
$ 2,612,332 472,060 3,084,392 2,948,958
$ 2,571
(81,238)
(78,667)
(231,156)
143,311
162,523
305,834
276,517
15,000
(3,932)
11,068
(15,000)
612
47,383
47,995
18,515
(4,521)
(3,308)
(7,829)
(3,855)
$ 156,973
121,428
278,401
45,021
$ (219,466)
(292,025)
(511,491)
-
246,560
100,190
346,750
30,099
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, 9771, 2000-1 - To account for assessments
paid to the City for debt service payments on bond issues used to finance sewer improvements.
127
Assets
Cash and investments
Accounts receivable
Total assets
Liabilities
Due to bondholders
Total liabilities
CITY OF LA QUINTA
Agency Funds
Combining Balance Sheet
June 30, 2004
Assessment Assessment Assessment Assessment
District District District District
$ 901,318
57,128
2627280
560,846
319
178
949
1,998
$ 90,637
57,306
263,229
562,844
$ 9037 57,306
$ 90,637 57,306
128
263,229
263,229
5 62, 844
562,844
Assessment
Assessment
Assessment
District
District
District
Totals
No. 92-1
No. 97-1
No. 2000-1
2004 2003
385,734
140,851
484,977
1,982,134 11)74051812
1,345
506
1,678
6,973 442846
38� 079
141,357
48�6,65_5
1,989,107 1,785,658
387,079 141,357 486,655 1,989,107 1,785,658
38_7,07_9 141,357 48_ 1,989,107 1,785,658
129
CITY OF LA QUINTA
Agency Funds
Combining Statement of Changes in Assets and Liabilities
Year ended June 30, 2004
Balance at
June 30, 2003
Additions
ASSESSMENT DISTRICT NO. 88-1
Assets
Cash and investments
$
88,498
3,711
Accounts receivable
1,316
319
Total assets
$
89,814
4,030
Liabilities
Due to bondholders
$
89,814
4,212
ASSESSMENT DISTRICT NO. 89-2
Assets
Balance at
Deletions June 30, 2004
(1,891) 90,318
(1,316) 319
3,207 90,637
3,389 90,637
Cash and investments $ 48,889 10,624 (2,385)
Accounts receivable 1,166 178 1,166
Total assets $ 50,055 10,802 3,551
Liabilities
Due to bondholders
$
50,055
93,716
ASSESSMENT DISTRICT NO. 90-1
Assets
Cash and investments
$
228,191
126,270
Accounts receivable
5,722
948
Total assets
$
233,913
127,218
Liabilities
Due to bondholders
$
233,913
124,660
130
57.128
2,465 57,306
(92,181)
(5,721)
97,902
262,280
263,229
95,344 263,229
(Continued)
CITY OF LA QUINTA
Agency Funds
-- Combining Statement of Changes in Assets and Liabilities
(Continued)
Balance at
Balance at
June 30, 2003
Additions
Deletions
June 30, 2004
ASSESSMENT DISTRICT NO. 91-1
Assets
Cash and investments
$
477,542
2541,220
(170,916)
5601,846
--- Accounts receivable
143,668
1,146
13,816
11,998
Total assets
$
4923,210
255,366
184,732
562,844
Liabilities
-- Due to bondholders
$
492,210
2455,922
175,288
562,844
ASSESSMENT DISTRICT NO. 92-1
Assets
Cash and investments
$
3585764
1951,577
(168,607)
3851)734
Accounts receivable
71-367
1,345
7,367
1,345
Total assets
$
3662131
1961,922
175,974
387,079
Liabilities
"`- Due to bondholders
$
3665,131
1963,505
175,557
3873,079
ASSESSMENT DISTRICT NO. 97-1
Assets
Cash and investments
$
1411o883
69,629
(70,661)
140,851
Accounts receivable
21Y068
507
2,069
506
.._ Total assets
$
1431,951
705136
72,730
1411,357
Liabilities
Due to bondholders
$
1435951
703,048
72,642
1411,357
,._.
131
(Continued)
CITY OF LA QUINTA
Agency Funds
Combining Statement of Changes in Assets and Liabilities
(Continued)
Balance at
Balance at
June 30, 2003
Additions
Deletions
June 30, 2004
ASSESSMENT DISTRICT NO. 2000-1
Assets
Cash and investments
$
397,045
329,169
(241,237)
484,977
Accounts receivable
12,539
1,678
(12,539)
1,678
Total assets
$
409,584
330,847
253,776
486,655
Liabilities
Due to bondholders
$
409,584
3231,518
246,447
486,655
TOTALS -ALL AGENCY FUNDS
Assets
Cash and investments
$
11,740,812
989,200
(747,878)
1,982,134
Accounts receivable
44,846
6,121
43,994
61)973
Total assets
$
11,785,658
995,321
791,872
1,989,107
Liabilities
Due to bondholders
$
1,785,658
974,581
(771,132)
1,989,107
Total liabilities
$
1,7855658
974,581
771,132
1,989,107
132
CAPITAL ASSETS USED IN THE
OPERATION OF GOVERNMENTAL FUNDS
133
CITY OF LA QUINTA
Capital Assets Used in the Operation of Governmental
Funds by Source 1
June 30, 2004 and 2003
2004
2003
Governmental funds capital assets:
Land
$ 73,505,659
56,467,549
Buildings and improvements
245032,644
15,799,488
Equipment and furniture
718,801
1,0545971
Vehicles
1615052
161,052
Infrastructure
330,958,870
313,017,867
Construction in progress
27,932,823
29,604,242
Total governmental funds capital assets
457309,849
416,105,169
Investment in general fixed assets by source:
Capital projects funds
388,021,434
365,5405462
Redevelopment agency
69,288,415
5055645707
Total government funds capital assets
$457,309,849
416,105,169
' 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.
134
^-
CITY OF LA QUINTA
Capital Assets Used in the
Operation of Governmental
Funds
Schedule of Fuction and Activity 1
June 30, 2004
Buildings and
Equipment
Construction
Land Improvements
and Furniture Vehicles
Infrastructure
in Progress
Totals
Function and Activity
General government:
City manager
$ 6,951,091 121,868
98,365 -
-
-
7,171,324
Economic development
- -
10,208 -
-
-
-
10,208
24,299
Personnel
Central services
- 24,299
- -
- -
45,878 -
-
-
-
45,878
City clerk
- -
135,366 -
-
-
135,366
Total general government
6,951,091 146,167
289,817 -
-
-
7,387,075
Public safety:
Police
- -
105,109 -
-
-
105,109
Building and safety
administration
- -
10,030 -
-
-
10,030
33,475
Emergency services
Fire
- -
101,392 -
33,475 -
- 161,052
-
-
-
3,589,493
3,851,937
Civic center building
operations
- 9,712,796
64,599 -
-
852,349
10,629,744
Total public safety
101,392 9,712,796
213,213 161,052
-
4,441,842
14,630,295
Community services:
Community services
administration
- 11,151,377
- -
1,640,039
69,025
12,860,441
Parks and recreation progra
- -
8,045 -
-
7,601
-
15,646
2,024,743
-- Senior center
- 2,019,454
5,289 -
-
Total community services
- 13,170,831
13,334 -
1,640,039
76,626
14,900,830
r- Community development:
Community development
administration
Redevelopment agency
- -
66,453,176 800,000
48,025 -
- -
-
-
-
12,212,286
48,025
79,4652462
Total community
development
66,453,176 800,000
48,025 -
-
12,212,286
79,513,487
Public works:
Public works administration
- -
5,374 -
-
-
5,374
Development and traffic
- -
18,555 -
316,295,341
4,307,694
320,621,590
Street maintenance and
"- operations
- 5,200
22,618 -
2,028,035
4,352
2,060,205
Lighting and landscape
maintenance and operations
- 197,650
107,865 -
10,995,455
6,890,023
18,190,993
Capital projects
- -
- -
-
-
Total public works
- 202,850
154,412 -
329,318,831
11,202,069
340,878,162
Total governmental funds
capital assets
$ 73,505,659 24,032,644
718,801 161_,052s
330,958,870
27,932,823
457,309,849
'This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the
internal service funds 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.
135
CITY OF LA QUINTA
Capital Assets Used in the Operation of Governmental Funds
Schedule of Changes by Fuction and Activity'
June 30, 2004
Governmental
Funds Capital
Assets
Function and Activity
July 1, 2003
General government:
Legislative
$ 5,146
City manager
7,205,621
Economic development
10,208
Personnel
29,340
Finance
5,976
Central services
45,877
City clerk
145,411
Total general government 7,447,579
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
Parks and recreation program
Senior center
Total community services
Community development:
Community development administration
Redevelopment agency
Total community development
Public works:
Public works administration
Development and traffic
Street maintenance and operations
Lighting and landscape
maintenance and operations
Capital projects
Total public works
Total governmental funds capital assets
Additions Deletions
Governmental
Funds Capital
Assets
June 30, 2004
- (5,146)
-
- (34,297)
7,171,324
- -
10,208
- (5,041)
24,299
- (5,976)
-
- -
45,877
(10,045)
135,366
(60,505) 7,387,074
143,135
- (38,026)
105,109
52,670
- (42,640)
10,030
4,104
- (4,104)
-
2,546
- (2,546)
-
1,250
- (1,250)
-
68,597
- (35,122)
33,475
1,167,736
2,687,542 (3,341)
3,851,937
10,116,755
588,634 (75,646)
10,629,743
11,556,793 3,276,176 (202,675) 14,630,294
4,409,034 8,552,148 (41,909) 12,919,273
1,998,588 - (2,591) 1,995,997
6,443 7,601 (28,484) (14,440)
6,414,065 8,559,749 (72,984) 14,900,830
47,625 10,265 (9,864) 48,026
50,564,707 29,076,755 (176,000) 79,465,462
50,612,332 29,087,020 (185,864) 79,513,488
16,728 - (11,354) 5,374
321,214,191 20,697,758 (21,290,357) 320,621,592
7,845,268 3,988 (65,075) 7,784,181
10,996,611 3,406,625 (1,936,220) 12,467,016
1,602 - (1,602) -
340,074,400 24,108,371 (23,304,608) 340,878,163
$ 416,105,169 65,031,316 23,826,636 457,309,849
'This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported
in the internal service funds 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.
136
STATISTICAL SECTION
137
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
1994
2,359,673
2,786,515
673,144
119,265
511,416
-
62450,073
1995
1,565,265
3,143,697
576,304 -
199,115
538,610
282,113
6,305,104
1996.
1,793,301
3,2272438
813,352.
413,142
4532656
201,475
6,902,364
1997
2,3761,935
33,442,056
889,694
469,110
455,563
170,000
73803,358
1998
21229,389
4,099,523
1,1592372
494,402
345,054
-
8,327,740
1999
21473,241
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
1.1417,529
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
2003
311402576
8,2022407
2,311,436
9913,558
674,450
-
15,32%427
2004
33892,220
9,672,180
3,103,794
1,025,397
750,444
-
18,444,035
Source: City of La Quinta Audited Financial Statements
M t1
TAB 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
Taxes
permits
C�vernmental
Services
Premeds
to
MiscellaacousQW
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
740,995
1,569,796
74,529
15,870,489
2000
8,898,825
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
1,998,599
-
2,513,789
43,547
19,110,209
2002
10,443,436
1,857,691
3,683,490
1,757,744
-
2,036,346
529,190
20,301,897
2003
11,572,985
1,982,127
4,394,045
2,302,759
-
1,894,303
87,240
22,233,459
2004
13,184,050
3,096,145
4,895,986
2,619,578
2,335,154
109,388 - _
26,240,301
(1)
1995 was the first year Litigation Settlement Proceeds was identified as a revenue source
Source: City -of La Quinta Audited Financial Statements
139
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
Collection
Collected
Collections
to Tax Lew
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
$1,4092828
115.7%
-
115.7%
2003
$1,432,528
$1,437,908
100.4%
-
100.4%
2004
$1,724,861
$1,767,764
102.5%
-
102.5%
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
140
TABLE 4
CITY OF LA QUINTA
Schedule of Net Taxable Value
Last Ten Fiscal Years
Fiscal Year
Assessed
Less
Less
Net
Ending
Secured
Unsecured
Property
Properly
Homeowners
Taxable
Lune 30
hzigm,
EmRa v
Value
Exemptions
Exemptions
Value
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
1,186,716,671
6,919,376
22,407,419
2,157,389,877
1998
2,305,593,987
18,844,880
2,3249438,867
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
2003
5,412,382,710
40,940,877
5,453,323,587
50,878,475
44,541,600
5,357,903,512
2004
6,289,493,552
44,014,548
6,333,508,100
67,025,403
46,011,600
6,220,471,097
Source: County of Riverside
141
CITY OF LA QUINTA
Property Tax Rates - Direct and Overlapping Governments
Last Five Fiscal Years (per $100 of Assessed Value)
General
County of Riverside
Riverside County Office of Education
Desert Sands Unified
Coachella Valley Unified School District
Coachella Valley Water District
Coachella Valley Recreation & Park District
Total Tax Rate
TABLE 5
2003/04
2002/03
2001/02
2000/01
1999/00
1.00000
1.00000
1.00000
1.00000
1.00000
0.00905
0.00938
0.00985
-
-
0.00905
0.00938
0.00985
-
-
0.27443
0.46088
0.35177
0.09750
0.09750
0.09267
0.06845
0.05022
-
-
0.55458
0.62057
0.56885
0.02080
0.02080
0.07762
0.07856
-
-
-
Source: County of Riverside
2.01740 2.24722 1.99054 1.11830 1.11830
142
r--
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_
1993
5592029
548,291
98.0%
1994
766,011
7341,560
95,9%
1995
836,502
7379700
88.2%
• 1996
. 729,647
6999351
95.9%
1997
791$012
7572256
95.7%
1998
791,012
7612109
96.2%
1999
7902,532
770,164
97.4%
2000
833,630
80%825
96.0%
2001
835,577
8032756
96.2%
2002
110682994
992,226
92.8%
2003
86%684
790t555
91.9%
2004
871,833
804,818
92.3%
{1} Includes Prepayments and Foreclosures
Source: .•Muni Financial Services
• 143
TABLE 7
CITY OF LA QUINTA
Schedule of Direct and Overlapping Bonded Debt
June 30, 2004
Percent
June 30, 2004
Direct and Overlapping Bonded Debt
Applicable
Bonded Debt
Riverside County General Fund Obligations
0.905%
$5,910,417
Riverside County Board of Education- Certificates of Participation
0.905%
119,098
Desert Sands Unified School District Certificates of Participation
7.733
1,199,388 -
Desert Sands Unified School District Lease Tax Obligation
7.733
1,939,050
Desert Sands Unified School District Community Facilities No.l
100.000
2,155,000
Desert Sands Unified School District
7.733
4,794,460
Coachella Valley County Water District, I.D. #71 Storm Water Unit
Certificates of Participation
6.298
660,345
Coachella Valley County Water District, I.D. #55
66.678
5,087,531
Coachella Valley County Water District, I.D. #58
4.216
191,406
Coachella Valley Unified School District Certificates of Participation
9.267
1,760,730
Coachella Valley Unified School District
9.267
1,690,234
Coachella Valley Water District, AD No. 68
86.247
2,160,487
Coachella Valley Recreation and Park District Certificates of Participation
7.762
210,350
City of La Quints General Fund Obligations (Finance Authority)
100.000
6,890,000
City of La Quinta 1915 Act Bonds
100.000
3,735,006
Total Direct and Overlapping Bonded Debt
$38,503,496 (1)
Note: (1) Excludes tax and revenue anticipation notes, revenue, mortgage revenue,
s tax allocation bonds and nonbonded capital lease obligations.
Source: California Municipal Statistics, Inc.
144
CITY OF LA QUINTA
Computation of Legal Debt Margin
June 30, 2004
Net Assessed Valuation
Debt Limit - 15 % of Assessed Valuation
Amount of Debt Applicable to Debt Limit
Legal Debt Margin
$6222024712097
9333,0709665
-0-
$9339070,665
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
145
Fiscal Year
Ending
June 30
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Note:
Source:
TABLE 9
CITY OF LA QUINTA
Revenue Bond Coverage
Local Agency Revenue Bonds (City Hall Project)
Last Ten Fiscal Years
Debt Service Requirements
Revenue Available
for Debt Service
Principal
Interest
Total
Coverage
548,352
-
548,352
5485,352
1.00
699,477
1552000
54410477
6993,477
1.00
6967402
160,000
536,402
6963,402
1.00
607,950
17%000
437,950
607,950
1.00
7342623
285,000
4492623
7341623
1.00
684,573
245,000
439,573
6842573
1.00
6793,670
250,000
4291,670
679,670
1.00
6783,955
2603,000
418,955
678,955
1.00
682,178
2752000
4071,178
6823,178
1.00
6791,435
2853000
394,435
679,435
1.00
.680,830
300,000
38%830
6805830
1.00
Revenue available consists of lease payments made by the City of La Quinta to
the La Quinta Financing Authority.
City of La Quinta
146
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
1994
28.2
16,680 7.0%
1,3571,400
1.2%
1995
31.2
179591 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%
13,379,956
1.4%
1998
31.2
203,444 8.0%
11441,237
1.4%
1999
31.2
211,763 6.5%
1,473,307
2.2%
2000
31.2
24,240 10.77%
1,5222900
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%
2003
34.8
30,452 6.00%
1,6531,564
1.8%
.— 2004
35.1
32,522 6.80%
19782,650
1.8%
Source:
(1) City of La Quinta
(2) State of California Department.of Finance
147
Fiscal Year
Ending.
June 30
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
{1)
Source:
CITY OF LA QUiNTA
Property Value and Construction Activity
Last Ten Fiscal Years
Property
Value 1
1,872,768,156
1,927,834,908
2,043,276,054
23,164,204,951
2,305,593,987
2,674;887,437
2,665,520,656
33,162,945,116
3,789,678,041
5,412,382,710
6,289,493;552
Commercial
Construction
Units
Value
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
69
27,184,625
154
38,232,129
From Schedule of Net Taxable Value
City of La Quinta
TABLE 11
Residential
Construction
Units
Value
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
831
176,514,682
1,406
244,446,101
148
CITY OF LA QUINTA
Principal Taxpayers
June 30, 2004
Taxpayer
Tyne of Activit�r
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 Quints Golf Properties, Inc.
Golf Course
M & H Realty Partnership
Shopping Centers
Washington Adams Partnership
Commercial
Source: City of La Quinta
TABLE 12
149
TABLE 13
CITY -OF LA QUINTA
Major Employers
June 30, 2004
Em Igyer
Employees
Activi
La Quinta Hotel and Golf Resort 12500
Resort Hotel
PGA West
12100
Golf Resort
Desert Sands Unified School
District 550
School District Administration
Wal-Mart
250
Retailer
Rancho La Quints
200
Golf Resort
The Home Depot
180
Retailer
Lowe's Home Improvement
150
Retailer
Stater Brothers
126
Groceries
Imperial Irrigation District
110
Utility Company
Vons
103
Groceries
Ralph's
100
Groceries
Tradition
97
Golf Resort
City of La Quinta
78
Municipal Government
Cliff House
75
Restaurant
Source:. City of La Quinta
150
TABLE 14
CITY OF LA QUINTA
Schedule of insurance in Force
June 30, 2004
Company Name
Policy Number
Covera
Limits
T1 .
Rmiurn
Hartford
PEBA07068
Employee Dishonesty,
$1,0001000
12/03/03 - 04
$3,000
Forgery, Computer Fraud
Lexington
7818689
All Risk Property Insurance
29,683,900
07/01/04 - 05
27,135
Including Auto Physical Damage
(Excluding Earthquake) .
Landmark Amer
K2HQ407478
Earthquake & Flood
7,500,000
02/07/04 - 05
32,510
Real & Personal Property
Including Contigent Tax Interruption
California
Certificate #5
Comprehensive General
$0 Deductible Retention
07/01/04 - 05
272,578
Joint Powers
Liability
• $50 Million
Insurace Authority
California
Certificate
Worker's Compensation
5,000,000
07/01/04 - 05
240,955
Joint Powers
#5009-056
Insurance Authority
Source: City of La Quinta
151
TABLE 15
CITY 4F LA QUINTA
Miscellaneous Statistical Data
June 30, 2004
Date of Incorporation
................................May 2, 1982
Type of City
................................ Charter City
Form of Government
........................... Council / Manager
CityEmployees
............I..................... 78
City Land Area (square miles) ....................................
35.1
Population
................................... 32,522
Number of Parks
......... I ... I ............ I ....... 12
Total Acreage
.................................. .211
Miles of Streets
................................... 118.0
Miles of Bike Paths
.................................. 9.7
Number of Major Intersections .................................. 45
Number of Traffic Signals and Safety Lighting ....................... 42
Number of Traffic Signs
................................... 2,712
Number of Street Lights
.................................. 84
Public Schools
.................................. 4
Private Schools
.................................. 1
Churches
.................................. 3.
Banks / Savings and Loan
.................................. 7
Number of Single Family Units - Detached
.......................... 13,164
Number of Single Family Units - Attached
.......................... 2,360
Number of Multiple Family Units ................................
1,071
Number of Mobile Homes
.................................. 259
Source: City of La Quints
152
CITY 4F LA QUINTA
General Fund Balance Trends
Last Ten Fiscal Years
Fiscal Year
Ending
Reserved
Unreserved
Totals
June 30
Desi m- atoll Undesimated
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
1999
8,879,558
14,439;998 --
23,319,556
2000
10,565,563
18,111,835 --
28,677,398
2001
11,746,211
23,878,259 —
352624,470
2002
15,351,251
25,522,073 --
40,873,324
2003
21,099,910
26,584,773 --
47,684,683
2004
29,210,757
25,494,479 --
54,705,236
Source:
City of La Quints
153
(This page intentionally left blank)
An Introduction to
l Investment Advisers for
State and Local Governments
by M. Corinne Larson
GOVERNMENT FINANCE OFFICERS ASSOCIATION
1
An Introduction to
Investment Advisers
for State and Local Governments
by M. Corinne Larson
October 1996
Government Finance Officers Association
Copyright 1996
Government Finance Officers Association
180 North Michigan Avenue, Suite 800
Chicago, Illinois 60601-7476
312/977-9700
ISBN 0-89125-208-8
This publication is designed to provide accurate
and authoritative information with regard to the
subject matter covered. It is written with the
understanding that neither the publisher nor the
authors are engaged in rendering legal advice. If
legal or other expert assistance is required, the
reader should solicit the services of a competent
professional in the field.
The publisher and the authors specifically
disclaim any personal liability for loss or risk
incurred as a consequence of the use and
application, either directly or indirectly, of any
advice or information presented herein.
Contents
Foreword........................................................................................................................................ v
Introduction.................................................................................................................................... 1
Section 1: Why Hire an Investment Adviser?.................................................................................. 2
Section 2: Steps to Selecting an Investment Adviser.................................................................... 6
Section 3: Important Elements of an Investment Advisory Agreement......................................15
Section 4: Evaluating Performance.............................................................................................19
Appendix: Sample Investment Advisory Agreement...................................................................21
iii
Foreword
While government officials have employed investment advisers to manage their pension funds for
many years, the use of investment advisers for shorter -term investments is a more recent and growing
trend. Governments use investment advisers for many reasons but mainly as a way to enhance
investment yields and to increase the safety of the investment portfolio. Investment advisers and
investment advisory firms come in many shapes and sizes. However, as in any profession, some
investment advisers are highly skilled while others are less qualified to manage public funds.
In an effort to help government officials employ qualified, skilled professionals and to protect state
and local governments from unscrupulous investment advisers, this publication provides guidelines
to assist public officials in analyzing, selecting, and evaluating investment advisory firms. As with
any contractual service, investment advisory services should be governed by written agreements. This
publication describes the key provisions commonly found in investment advisory agreements and
presents a sample document in the appendix.
A special debt of gratitude is owed to Stan Helgerson, Finance Director for the Village of Carol
Stream, Illinois, who recognized the need for a sample agreement and a publication to explain the
important components of a sound agreement. Helgerson was assisted by the Subcommittee on
Investments and Money Management that helped develop the sample agreement and by the collective
efforts of the Committee on Cash Management. A special thanks is extended to the following
individuals whose comments and suggestions enhanced this publication: J. Virgil Moon, Director of
Finance/Comptroller for Cobb County, Georgia; Gary R. Norstrem, Senior Vice President for Piper
Capital Management, Minneapolis, Minnesota; Maureen P. Oster, Development Officer for the Office
of Treasurer/Tax Collector, Los Angeles County, California; Nathan R. Tubergen, Director of
Finance and Administrative Services for the City of Billings, Montana; and Ellen West, Treasurer,
American Money Management Associates, Denver, Colorado.
Our appreciation also goes to M. Corinne Larson, Assistant Director for Cash Management, GFOA's
Government Finance Research Center, who prepared this publication.
Jeffrey L. Esser
Executive Director
Government Finance Officers Association
of the United States and Canada
u
Introduction
With the shift toward privatization and as a
result of well -publicized investment losses,
many governments are turning to investment
advisers for assistance in managing their short -
and intermediate -term portfolios. Government
Finance Officers Association's Committee on
Cash Management felt that there was a need for
information and guidance on the use of outside
investment advisers.
In 1992, the committee approved a
recommended practice that urges state and local
governments to exercise caution in the selection
of investment advisers and to implement an
ongoing risk control management program. The
recommended practice further advises
governments using or considering using
investment advisers to carefully review the
credentials, procedures, and controls of firms
offering investment advisory services.
The recommended practice went on to describe
good business procedures that should be
followed. These procedures include: the use of
delivery -versus -payment (DVP) procedures with
third -party custody arrangements for investment
transactions, prohibitions against self -dealing,
audits, timely reconciliations, and other
appropriate internal controls.
In 1995, the committee approved a
recommended practice on the use and
application of voluntary agreements and
guidelines that encourages public cash managers
to exercise caution when entering into
boilerplate agreements with outside parties and
1
encourages the use of sample agreements, such
as the committee's sample investment advisory
agreement. This agreement was developed by
collecting and analyzing investment adviser
agreements in use by various jurisdictions,
identifying the best parts of each agreement, and
defining important contract language.
Purpose of this Publication
The purpose of this publication is to assist
government officials with the evaluation and
drafting of investment advisory agreements.
However, before an agreement may be entered
into, government officials must select and then
monitor the investment adviser chosen.
The following sections will outline practices and
procedures that government officials can use to
analyze and evaluate investment advisers and
detail the essential components of a sound
agreement. A sample investment advisory
agreement is presented in the Appendix.
Government officials may find this sample
agreement useful as a tool for developing a
comprehensive agreement or for analyzing an
existing agreement to ensure that the critical
components have been included.
While this publication is not a substitute for
proper legal advice, it can serve as a guide to a
well -written, comprehensive contract that
protects public funds. Legal counsel should be
involved in the development, execution, and
review of all legally binding agreements.
Section 1
Why Hire an Investment Adviser?
The use of investment advisers is growing in the
public sector. As the duties and responsibilities
of the finance officer continue to increase, one
solution is to look at outsourcing the cash
management function to the private sector.
When contemplating the decision to outsource
the investment function, there are several key
questions that should be considered. The first
question is why hire an investment adviser?
There are many reasons why a government may
wish to hire an investment adviser to manage its
investable funds, the most obvious reason being
to enhance investment returns. As professional
money managers, investment advisers should be
able to earn a higher rate of return than investors
could do on their own. In the public sector,
however, this may be difficult to achieve if an
entity has a fairly restrictive investment policy.
An investment adviser may only be able to earn
an average market rate of return.
Why then hire an investment adviser? To
answer this question, it will be necessary to
explore the various types of investment advisers
the type of authority given them, the types of
services that are commonly provided, and the
benefits of using investment advisory services.
Types of Investment Advisers
There are a wide variety of investment advisers
offering investment advice for a fee. These
advisers differ in the size of the firm, the range
of services offered, and the amount of fees
charged. Investment advisory firms may be
bank trust departments, national investment
management firms, specialized boutique firms,
or small independent consultants. Some
investment advisory firms offer prepackaged
investments, such as mutual funds or investment
2
pools, while other firms offer customized
portfolio services that may include consulting
activities for the cash management function,
such as cash flow forecasting.
Investment advisers may also act as
broker/dealers. If this is the case, the investment
advice offered may not be the sole objective
since trading securities generates income for the
firm. Government entities exploring the use of
an investment adviser should determine whether
the adviser is acting solely as an adviser or as a
broker/dealer too.
Discretionary vs Non -Discretionary
When hiring an investment adviser, the
government entity must determine if it wants to
give an adviser discretionary or non -
discretionary authority. There are advantages
and disadvantages to both forms of authority.
Discretionary. Discretionary authority refers to
granting an investment adviser complete
authority to execute investment transactions,
subject to general constraints set by the entity's
investment policy or by the contract with the
investment adviser. Discretionary authority
provides the benefits of outside professional
portfolio management and quicker response time
to market opportunities, but takes the specific
decision -making process away from the
government entity. Examples of advisers
commonly granted discretionary authority
include investment pools, mutual funds, and
separate account management.
Non -discretionary. In a non -discretionary
arrangement, the investment adviser must obtain
approval for individual transactions. The
advantage to this type of arrangement is that the
Section 1
Why Hire an Investment Adviser?
The use of investment advisers is growing in the
public sector. As the duties and responsibilities
of the finance officer continue to increase, one
solution is to look at outsourcing the cash
management function to the private sector.
When contemplating the decision to outsource
the investment function, there are several key
questions that should be considered. The first
question is why hire an investment adviser?
There are many reasons why a government may
wish to hire an investment adviser to manage its
investable funds, the most obvious reason being
to enhance investment returns. As professional
money managers, investment advisers should be
able to earn a higher rate of return than investors
could do on their own. In the public sector,
however, this may be difficult to achieve if an
entity has a fairly restrictive investment policy.
An investment adviser may only be able to earn
an average market rate of return.
Why then hire an investment adviser? To
answer this question, it will be necessary to
explore the various types of investment advisers
the type of authority given them, the types of
services that are commonly provided, and the
benefits of using investment advisory services.
Types of Investment Advisers
There are a wide variety of investment advisers
offering investment advice for a fee. These
advisers differ in the size of the firm, the range
of services offered, and the amount of fees
charged. Investment advisory firms may be
bank trust departments, national investment
management firms, specialized boutique firms,
or small independent consultants. Some
investment advisory firms offer prepackaged
investments, such as mutual funds or investment
2
pools, while other firms offer customized
portfolio services that may include consulting
activities for the cash management function,
such as cash flow forecasting.
Investment advisers may also act as
broker/dealers. If this is the case, the investment
advice offered may not be the sole objective
since trading securities generates income for the
firm. Government entities exploring the use of
an investment adviser should determine whether
the adviser is acting solely as an adviser or as a
broker/dealer too.
Discretionary vs Non -Discretionary
When hiring an investment adviser, the
government entity must determine if it wants to
give an adviser discretionary or non -
discretionary authority. There are advantages
and disadvantages to both forms of authority.
Discretionary. Discretionary authority refers to
granting an investment adviser complete
authority to execute investment transactions,
subject to general constraints set by the entity's
investment policy or by the contract with the
investment adviser. Discretionary authority
provides the benefits of outside professional
portfolio management and quicker response time
to market opportunities, but takes the specific
decision -making process away from the
government entity. Examples of advisers
commonly granted discretionary authority
include investment pools, mutual funds, and
separate account management.
Non -discretionary. In a non -discretionary
arrangement, the investment adviser must obtain
approval for individual transactions. The
advantage to this type of arrangement is that the
government retains control over the purchase
and sale of securities and provides input into the
decision -making process.
The disadvantages include ,the fact that staff time
may be tied up in making or handling
investment transactions and the investment
adviser's performance may be more difficult to
evaluate. This type of arrangement is common
in cases where a government hires an adviser to
make investment recommendations and to act as
an intermediary with the broker/dealer
community.
Regulation of Advisers. All investment
advisers are required to register with the
Securities and Exchange Commission (SEC)
unless their activities qualify for an exemption.
Bank trust departments and brokerage firms that
provide investment advice in conjunction with
offering securities are often granted an
exemption because their activities are regulated
by other federal and state agencies. Some
investment advisory activities involving exempt
securities, such as U. S. Treasury securities, may
qualify for an exemption. In these cases, it is
possible for an independent investment adviser
to bypass registering with the SEC. Government
officials should ask if the adviser is registered
with the SEC. Any non -bank adviser generally
should be registered.
Because regulation for investment advisers
differs, any government seeking investment
advisory services should determine whether the
regulatory structure provides meaningful
protection. For example, SEC registration alone
may not provide sufficient oversight to protect
investors from unsavory investment practices as
the registration fee is nominal and compliance
audits are infrequent.
Many state securities laws require investment
advisers to register at the state level to do
business in that state. State registration provides
3
added protection. Government officials should
ask investment advisers if they are registered in
their state and should only do business with
those advisers that are registered.
As part of the due diligence process, government
officials should contact the SEC and other
regulatory agencies directly to see if the adviser
has had any history of complaints, regulatory
censure or litigation with institutional clients.
Common Services Provided
Investment advisers often provide a broad range
of services. The most common service is to
manage the portfolio under advisement within
parameters of the entity's investment policy.
Other services include providing fundamental
and technical market research to help the
government entity choose investments
appropriate to the current or projected interest
rate environment. In addition, investment
advisers can assist the entity in developing and
implementing investment strategies based on
cash flow projections and expected liquidity
needs.
Investment advisers often provide consulting
services for the cash and investment area in
general. Such services may include establishing
procedures for assuring competitive prices for
securities transactions; training staff on
investment -related topics; reviewing present
cash and investment management procedures
and documentation; analyzing cash flow
projections and assisting in the implementation
of cash flow forecasts; and evaluating
safekeeping and custodial procedures.
In addition, some investment advisory firms may
assist in establishing relationships with financial
institutions and securities dealers by reviewing
and analyzing existing banking services
agreements; establishing guidelines for selecting
financial institutions and securities dealers; and
monitoring the creditworthiness of financial
institutions and investments in the portfolio.
Potential Benefits
Hiring an investment adviser can be beneficial in
many ways. Common benefits are described
below:
Diversification. Investment advisers can
provide access to capital markets that would
otherwise be beyond the government's scope of
expertise. , Greater access to markets allows
governments to diversify their portfolio holdings
by investing in a broader range of instruments,
as allowed by the government's investment
policy.
Governments also can enhance the credit quality
of their portfolio by taking advantage of the
investment adviser's access to credit research for
unsecured debt instruments, such as commercial
paper and bankers' acceptances. In addition,
some investment advisers have expertise in
specific sectors of the market, such as zero -
coupon bonds or medium -term corporate notes,
and can enhance returns by developing
investment strategies to make the most of market
opportunities in those sectors. Finally, larger
government entities may have several outside
investment managers, each with a different
market specialty, therefore, resulting in a more
diversified portfolio.
Economies of Scale. Governments utilizing the
services of an investment adviser with
discretionary authority can benefit from
economies of scale as investment advisers often
generate large investment transactions for a
number of clients, which tends to be more cost
effective as the expenses are shared by all parties
to the transaction.
Complement to Internal Resources. Some
governments with limited resources to devote to
4
the investment function use advisers to
complement internal resources. In these
situations, investment advisers may manage
either the entire portfolio or a designated portion
of the portfolio. For example, a government
might handle a portion needed for liquidity
purposes and hire an investment adviser to
manage the longer -term portion of the portfolio.
Using the services of an investment adviser then
frees up staff time to pursue other duties or
functions.
Enhanced Internal Controls. Some
governments with limited staff may hire an
investment adviser to strengthen internal
controls. The use of an independent third -party
can help the government achieve a segregation
of duties for the investment function. In
addition, competent investment advisers can
help a government safeguard its funds by
providing sound advice on investment strategies
and investment instrument selection.
Potential Disadvantages
There can be disadvantages to using an
investment adviser as well. The following
disadvantages should be considered when
making the decision to use an investment
adviser. One consideration is the overall costs
an adviser may add to the portfolio management
process. In some cases, investment advisers will
be unable to produce sufficiently higher returns
to offset the cost of the service. This potential
disadvantage should be weighed against the
benefits received.
Another consideration is responsibility for the
portfolio. Even though an outside adviser is
handling the portfolio, the government officials
are still responsible for the government's funds
and must monitor the portfolio to make sure the
adviser is staying within the parameters of the
investment policy and is producing adequate
returns on a risk -adjusted basis. The most
monitoring the creditworthiness of financial
institutions and investments in the portfolio.
Potential Benefits
Hiring an investment adviser can be beneficial in
many ways. Common benefits are described
below:
Diversification. Investment advisers can
provide access to capital markets that would
otherwise be beyond the government's scope of
expertise. Greater access to markets allows
governments to diversify their portfolio holdings
by investing in a broader range of instruments,
as allowed by the government's investment
policy.
Governments also can enhance the credit quality
of their portfolio by taking advantage of the
investment adviser's access to credit research for
unsecured debt instruments, such as commercial
paper and bankers' acceptances. In addition,
some investment advisers have expertise in
specific sectors of the market, such as zero -
coupon bonds or medium -term corporate notes,
and can enhance returns by developing
investment strategies to make the most of market
opportunities in those sectors. Finally, larger
government entities may have several outside
investment managers, each with a different
market specialty, therefore, resulting in a more
diversified portfolio.
Economies of Scale. Governments utilizing the
services of an investment adviser with
discretionary authority can benefit from
economies of scale as investment advisers often
generate large investment transactions for a
number of clients, which tends to be more cost
effective as the expenses are shared by all parties
to the transaction.
Complement to Internal Resources. Some
governments with limited resources to devote to
4
the investment function use advisers to
complement internal resources. In these
situations, investment advisers may manage
either the entire portfolio or a designated portion
of the portfolio. For example, a government
might handle a portion needed for liquidity
purposes and hire an investment adviser to
manage the longer -term portion of the portfolio.
Using the services of an investment adviser then
frees up staff time to pursue other duties or
functions.
Enhanced Internal Controls. Some
governments with limited staff may hire an
investment adviser to strengthen internal
controls. The use of an independent third -party
can help the government achieve a segregation
of duties for the investment function. In
addition, competent investment advisers can
help a government safeguard its funds by
providing sound advice on investment strategies
and investment instrument selection.
Potential Disadvantages
There can be disadvantages to using an
investment adviser as well. The following
disadvantages should be considered when
making the decision to use an investment
adviser. One consideration is the overall costs
an adviser may add to the portfolio management
process. In some cases, investment advisers will
be unable to produce sufficiently higher returns
to offset the cost of the service. This potential
disadvantage should be weighed against the
benefits received.
Another consideration is responsibility for the
portfolio. Even though an outside adviser is
handling the portfolio, the government officials
are still responsible for the government's funds
and must monitor the portfolio to make sure the
adviser is staying within the parameters of the
investment policy and is producing adequate
returns on a risk -adjusted basis. The most
important point to remember is that government portfolio to the adviser, but must remain actively
officials cannot delegate responsibility for the involved in the process.
Section 2
Steps to Selecting an Investment Adviser
Choosing the right investment adviser is vital.
Newspaper accounts of reported losses by
governments investing their funds with
unscrupulous investment advisers have shown
that, in each instance, there are many common
lessons that have been learned painfully.
However, following certain steps and per-
forming the necessary due diligence in
searching for a qualified investment adviser
will help a government protect its funds from
unnecessary losses.
The Step-by-step Process
The key to finding a competent investment
adviser is to follow a step-by-step process that
begins with identifying the government's
investment goals and objectives. It also is
important to define clearly what type of
investment advice is being sought. Will the
adviser be given discretionary authority and
conduct investment transactions on behalf of
the government, or will the adviser be given
nondiscretionary authority? Is the adviser
being hired to provide investment advice only
or will other consulting -type services be
required?
Once the government knows what type of
services it needs, a request for proposal (RFP)
can be prepared and sent to several
prospective advisers. A sample RFP appears
at the end of this section to give governments
an idea of the types of questions to ask. Not
all of the questions may apply to a particular
situation. Government officials should review
the suggested questions and choose those
questions that are appropriate for the types of
services being sought.
In addition, the RFP should include a brief
introductory paragraph that describes the
government in terms of its size, the size of its
portfolio, and its cash flow characteristics, as
well as the types of services the government is
seeking. A copy of the government's
investment policy also should be included
with the RFP.
The next step involves compiling the
responses to the RFP and analyzing and
verifying the data provided. A risk/return
analysis should be conducted to measure the
benefits of using an investment adviser against
the added costs of the service. Some
governments may be unable to pick up added
value because of conservative investment
objectives and low risk tolerance, but may be
able to benefit in other ways, as mentioned
earlier. All of these factors should be
considered in the analysis.
Finalists should be interviewed face to face.
Following the interviews, another analysis
should be completed to incorporate
information that was received during the
interviews.
The candidate that most closely meets the
jurisdiction's needs should be chosen. If those
involved in the selection process are not
excited about the finalists, the process should
be started over again. The investment adviser
chosen must meet the government's needs and
the government's staff must feel comfortable
working with the adviser.
When looking to hire an adviser, the
government official may wish to seek the help
of an investment professional who is in no
way connected to the potential advisers. An
investment professional, such as bond counsel
6
Section 2
Steps to Selecting an Investment Adviser
Choosing the right investment adviser is vital.
Newspaper accounts of reported losses by
governments investing their funds with
unscrupulous investment advisers have shown
that, in each instance, there are many common
lessons that have been learned painfully.
However, following certain steps and per-
forming the necessary due diligence in
searching for a qualified investment adviser
will help a government protect its funds from
unnecessary losses.
The Step-by-step Process
The key to finding a competent investment
adviser is to follow a step-by-step process that
begins with identifying the government's
investment goals and objectives. It also is
important to define clearly what type of
investment advice is being sought. Will the
adviser be given discretionary authority and
conduct investment transactions on behalf of
the government, or will the adviser be given
nondiscretionary authority? Is the adviser
being hired to provide investment advice only
or will other consulting -type services be
required?
Once the government knows what type of
services it needs, a request for proposal (RFP)
can be prepared and sent to several
prospective advisers. A sample RFP appears
at the end of this section to give governments
an idea of the types of questions to ask. Not
all of the questions may apply to a particular
situation. Government officials should review
the suggested questions and choose those
questions that are appropriate for the types of
services being sought.
In addition, the RFP should include a brief
introductory paragraph that describes the
government, in terms of its size, the size of its
portfolio, and its cash flow characteristics, as
well as the types of services the government is
seeking. A copy of the government's
investment policy also should be included
with the RFP.
The next step involves compiling the
responses to the RFP and analyzing and
verifying the data provided. A risk/return
analysis should be conducted to measure the
benefits of using an investment adviser against
the added costs of the service. Some
governments may be unable to pick up added
value because of conservative investment
objectives and low risk tolerance, but may be
able to benefit in other ways, as mentioned
earlier. All of these factors should be
considered in the analysis.
Finalists should be interviewed face to face.
Following the interviews, another analysis
should be completed to incorporate
information that was received during the
interviews.
The candidate that most closely meets the
jurisdiction's needs should be chosen. If those
involved in the selection process are not
excited about the finalists, the process should
be started over again. The investment adviser
chosen must meet the government's needs and
the government's staff must feel comfortable
working with the adviser.
When looking to hire an adviser, the
government official may wish to seek the help
of an investment professional who is in no
way connected to the potential advisers. An
investment professional, such as bond counsel
6
Steps to Selecting an Investment Adviser
1. Write out the investment goals and
objectives
2. Prepare a questionnaire
3. Send a request for proposal (RFP)
to potential candidates
4. Compile the data
5. Analyze the data
6. Interview selected candidates
7. Analyze the above
8. Select an adviser that most closely
meets the jurisdiction's needs
pension fund adviser, or other government or
corporate treasurer who has been through the
process and currently works with advisers, can
help the government's staff properly interpret
the information that will be received from the
potential advisers.
Questions To Ask
To help the selection process, there are several
questions prospective advisers should be
asked:'
What is your minimum account size? Some
government funds may be too small for a
particular adviser. It also is important to find
out how many accounts the adviser feels can
be managed at one time while retaining a high
level of service and quality.
What are the total assets under
management? This question is important and
seeks to find out what types of clients the firm
may serve. Has the firm's experience been
mostly small, retail customers? Will the
government entity be its largest client?
How is the firm organized, who will manage
the funds, and what are their backgrounds
and qualifications? It is a good idea to find
out if the fund manager is a principal or
partner in the firm and if their performance
track record confirms what they said about
their education and background. Also, if the
fund will be managed by an account
representative, information concerning that
person's background should be obtained as
well.
' "Twelve questions to ask a prospective money manager,"
Pension World, December 1987.
Over the years, there has been an increasing
number of key personnel departures at various
money management firms. Many of those
departures involved the personnel that made
the company successful. As a result, it is
important to identify and understand who the
key personnel are; whether or not there have
been any recent changes, and if not, to know
how the firm would be affected in the future,
if they were to subsequently leave.
How often will the portfolio manager review
the account and meet to review and discuss
performance? The manager should review the
government's account at least weekly, more
often for more active accounts. The volatility
of the account will dictate how often the
portfolio needs to be reviewed. Each entity
must determine, based on the makeup of its
portfolio, what its comfort level is and set the
review period accordingly.
How are fees set? Fees may be set in a
variety of ways. Generally fees are charged as
a percent of total assets managed and are
based on a sliding scale, descending as the
account size increases.
7
Smaller portfolios may be charged a flat fee.
If this is the case, it will be important to
determine what percentage the fee works out
to be. For example, a $5,000 fee on a $10
million portfolio is 5 basis points, whereas a
$5,000 fee on a $1 million portfolio is 50
basis points.
Fees can range anywhere from a few basis
points to full percentage points of assets,
depending on the type of management (active
versus passive) and type of investments (fixed
income versus equities for longer -term funds).
Larger portfolios generally have lower fees.
Fees often are negotiable.
What is the minimum account fee and what
is the expected fee for this account?
Governments should consider how fees fit into
the total picture of choosing an adviser.
Before selecting an adviser, a government
should establish a track record minimum for
the account, choose an investment style that it
is comfortable with, set a time frame in which
to achieve it, and then look at the fee.
What is the portfolio manager's track record,
net of fees? Governments should evaluate the
portfolio manager's past performance based
on both composite portfolio figures as well as
individual portfolios with similar
characteristics. It is also a good idea to look
at how that portfolio manager compares with
other money managers.
What is the portfolio manager's investment
style? When selecting an investment adviser,
it is important to choose an adviser whose
investment style fits within the parameters of
the entity's investment policy and risk
tolerance levels. Again, the government's
staff should feel comfortable with the firm
chosen.
How many public sector clients does the firm
handle? Governments should be sure to
check references. The advisers probably will
only give their best clients as references. As
part of the due diligence process, government
officials should look for past or present clients
that were or are dissatisfied; one way is by
networking with peers as bad news tends to
travel fast. Most important, remember teat
past performance does not always inc'
future results.
Common Mistakes
There also are several common mistakes that
often are made when hiring an investment
adviser. These mistakes' include the
following:
Past performance is too good to pass up.
Impressive numbers probably are the most
overrated criterion for selecting an investment
adviser. Again, past performance is no
guarantee of future performance.
Also, government officials should watch out
for the presentation of composite and
individual portfolio numbers. Compare
composite to composite numbers and
individual performance numbers to individual
portfolios. Investment portfolios should be
compared using the same time frames; e.g,
compare long-term to long-term and short-
term to short-term. It also is important to get
portfolio performance figures on individual
portfolios that most closely resemble the kind
of portfolio the firm will be managing in
terms of size, investment style, and objectives.
The firm is "hot." Today's "hot" manager
could be tomorrow's loser.
8
'James P. Owen, "What Every Trustee Should Know About
Hiring a Money Manager," Employee Benefits Journal,
(International Foundation of Employee Benefit Plans,
December 1990), pp. 28-29.
Smaller portfolios may be charged a flat fee.
If this is the case, it will be important to
determine what percentage the fee works out
to be. For example, a $5,000 fee on a $10
million portfolio is 5 basis points, whereas a
$5,000 fee on a $1 million portfolio is 50
basis points.
Fees can range anywhere from a few basis
points to full percentage points of assets,
depending on the type of management (active
versus passive) and type of investments (fixed
income versus equities for longer -term funds).
Larger portfolios generally have lower fees.
Fees often are negotiable.
What is the minimum account fee and what
is the expected fee for this account?
Governments should consider how fees fit into
the total picture of choosing an adviser.
Before selecting an adviser, a government
should establish a track record minimum for
the account, choose an investment style that it
is comfortable with, set a time frame in which
to achieve it, and. then look at the fee..
What is the portfolio manager's track record,
net of fees? Governments should evaluate the
portfolio manager's past performance based
on both composite portfolio figures as well as
individual portfolios with similar
characteristics. It is also a good idea to look
at how that portfolio manager compares with
other money managers.
What is the portfolio manager's investment
style? When selecting an investment adviser,
it is important to choose an adviser whose
investment style fits within the parameters of
the entity's investment policy and risk
tolerance levels. Again, the government's
staff should feel comfortable with the firm
chosen.
How many public sector clients does the firm
handle? Governments should be sure to
check references. The advisers probably will
only give their best clients as references. As
part of the due diligence process, government
officials should look for past or present clients
that were or are dissatisfied; one way is by
networking with peers as bad news tends to
travel fast. Most important, remember trat
past performance does not always in(I
future results.
Common Mistakes
There also are several common mistakes that
often are made when hiring an investment
adviser. These mistakes' include the
following:
Past performance is too good to pass up.
Impressive numbers probably are the most
overrated criterion for selecting an investment
adviser. Again, past performance is no
guarantee of future performance.
Also, government officials should watch out
for the presentation of composite and
individual portfolio numbers. Compare
composite to composite numbers and
individual performance numbers to individual
portfolios. Investment portfolios should be
compared using the same time frames; e.g,
compare long-term to long-term and short-
term to short-term. It also is important to get
portfolio performance figures on individual
portfolios that most closely resemble the kind
of portfolio the firm will be managing in
terms of size, investment style, and objectives.
The firm is "hot." Today's "hot" manager
could be tomorrow's loser.
'James P. Owen, "What Every Trustee Should Know About
Hiring a Money Manager," Employee Benefits Journal,
(International Foundation of Employee Benefit Plans,
December 1990), pp. 28-29.
8
Sample Request for Proposal
for Investment Advisory Firms
The government of (name of government entity) is soliciting proposals from investment advisory firms
for .portfolio management services for the government operating and capital funds (non -pension
funds).
Investment practices and procedures must comply with (name of state) law and the (name of
government entity) written investment policies. Firms responding to this request for proposal are
invited to suggest changes that might be appropriate in the investment policies that would govern the
segment of the portfolio to be managed externally.
I. Criteria for Selection
• Understanding of the (name of government entity) overall investment program and the
investment objectives and constraints unique to (name of government entity).
• Experience, resources, and qualifications of the firm and individuals assigned to this account.
• Experience of the firm in managing state/local government operating funds. In evaluating the
firm's experience, past performance data will be evaluated in the context of portfolio
objectives and constraints, as well as risks.
• Recommended approach to management of the (name of government entity) portfolio.
• Additional investment or financial services offered or available through affiliation.
• Fees, relative to services.
II. Format for Proposals
Please format your responseto this request in the following order to facilitate comparisons
between respondents:
A. Organization
• Describe the organization, date founded, and ownership of your firm and any subsidiaries and
affiliates relevant to the governmental entity.
• Describe any other business affiliations (e.g., subsidiaries, joint ventures, "soft dollar"
arrangements with brokers) that would affect investment performance of the government
entity's account. Would you pay a finder's fee to any third party for business related to this
account?
10
Sample Request for Proposal
for Investment Advisory Firms
The government of (name ofgovernment entity) is soliciting proposals from investment advisory firms
for portfolio management services for the government operating and capital funds (non -pension
funds).
Investment practices and procedures must comply with (name of state) law and the (name of
government entity) written investment policies. Firms responding to this request for proposal are
invited to suggest changes that might be appropriate in the investment policies that would govern the
segment of the portfolio to be managed externally.
I. Criteria for Selection
• Understanding of the (name of government entity) overall investment program and the
investment objectives and constraints unique to (name of government entity).
• Experience, resources, and qualifications of the firm and individuals assigned to this account.
• Experience of the firm in managing state/local government operating funds. In evaluating the
firm's experience, past performance data will be evaluated in the context of portfolio
objectives and constraints, as well as risks.
• Recommended approach to management of the (name of government entity) portfolio
• Additional investment or financial services offered or available through affiliation.
• Fees, relative to services.
II. Format for Proposals
Please format your responseto this request in the following order to facilitate comparisons
between respondents:
A. Organization
• Describe the organization, date founded, and ownership of your firm and any subsidiaries and
affiliates relevant to the governmental entity.
• Describe any other business affiliations (e.g., subsidiaries, joint ventures, "soft dollar"
arrangements with brokers) that would affect investment performance of the government
entity's account. Would you pay a finder's fee to any third party for business related to this
account?
10
The firm's client contact is aggressive and
persistent. Don't misconstrue marketing
savvy for investment expertise. Hire the
latter, not the former.
The firm chosen made the best presentation.
Don't allow the selection process to become a
beauty pageant. Don't get sidetracked by
unnecessary details and lose focus.
The firm came highly recommended.
Although it is important to network with
others, make sure it is an "apples -to -apples"
comparison and that the person making the
recommendation has a similar portfolio and
management style.
The firm already has a relationship with the
entity. Although the firm may be providing
other services to the entity (i.e., banking
services or acting as a custodian), it does not
mean that the firm will be able to provide the
government with the investment advisory
services needed. Follow the same step-by-
step approach and treat the firm as a fresh
prospect. It is important to make sure the firm
has sufficient expertise to deliver the results
needed.
The adviser will manage all of the assets.
Don't just hand over all of the government's
assets and fall for the "trust me" routine. Even
if the adviser is managing the total portfolio,
government officials must stay involved in the
process and monitor the investment adviser's
performance and compliance to the
investment policy.
The governing body doesn't consider the
benefit of hiring more than one manager.
There is a pro and a con to hiring more than
one manager. Pro: The hiring of a second
manager can be considered a safety valve and
provides the government with the option of
diversifying by management style or sectors
of expertise. Con: By cutting the portfolio
pie, potentially attractive advisers may be
eliminated because of the minimum account
sizes required by some firms. Cutting the
portfolio into smaller portions could result in
higher fees and more difficult record keeping.
The firm has the lowest fees. As mentioned
earlier, the fee should not be the primary
factor in the selection process, because there
may be a good reason why the firm has lower
fees. For example, if the investment adviser is
investing in a commingled fund, the fee will
be lower. Or the lower fee could be because
the firm is new and has an "introductory" rate.
Often, firms with poor performance will have
lower fees.
Summary
Government officers moving in the direction
of hiring investment advisers should make
sure to have a complete understanding of what
it is they wish to accomplish. Be sure and do
the homework during the selection process. It
will pay off in the long run. And remember,
once an investment adviser has been hired, a
new partnership has been formed and the
relationship should be approached as such.
9
• Describe the firm's primary sources of revenue, categorized if possible between retail and
institutional accounts.
• Describe any SEC or regulatory censure or litigation within the past three years involving
institutional business your firm conducts with governmental investors or regulatory censure
or litigation involving any individuals added to the firm in the past three years.
• Identify and provide background information on the key person or personnel who take the
most active role(s) in the administration and management of the firm.
• Identify the types of accounts primarily sought by your firm.
• Describe your firm's research capabilities and resources. Does your firm assign credit
research to specialists?
• Describe your credit review process. Who reviews portfolio lists for credit approved?
B. Personnel
• Identify the number of investment professionals (portfolio managers, analysts, and
researchers) employed by your firm, by classification and specify the average number of
accounts handled by portfolio managers. Are there any established limits on accounts or assets
under management?
• Identify the size and key personnel of your staff commitment to the public sector, along with
their credentials.
• Provide biographical information on investment professionals that will be directly involved
in the decision -making process for the portfolio.
• What efforts does your. firm make to keep portfolio managers informed of developments
relevant to government investment managers?
• Has there been any turnover of professional staff in the firm in the last 12 months? Have there
been any additions?
11
C. Assets Under Management
• Summarize your institutional investment management asset totals by category for your latest
reporting period in the following table:
Operating Pension
Funds Funds
Governmental $ $
Other Institutional $ $
• Summarize your assets under management (institutional only) over the past five years.
Categorize as appropriate (expand) to include cash component.
• Provide relevant performance statistics on operating funds, and compare with industry
averages or benchmarks, if appropriate.
• List your five largest clients or most representative governmental clients. Identify those that
are exclusively retirement fund relationships and/or those that are operating fund relationships
along with contact names for each.
• How many accounts have you gained in the last 12 months? How many accounts have been
lost in the last 12 months and why?
III. Investment Management Approach and Discipline
• In your investment decision -making process, are there one or more people who predominate?
• Describe how your firm organizes its investment management process. What oversight is
provided to portfolio managers?
• What are the primary strategies for adding value to portfolios (e.g., market timing, credit
research, trading)?
• Describe the process you would recommend for establishing the investment objectives and
constraints for this account.
• How will you handle fluctuating cash flows and the cash forecasting process?
• What is your firm's experience in developing investment policies and portfolio management
guidelines for governmental operating funds?
12
C. Assets Under Management
• Summarize your institutional investment management asset totals by category for your latest
reporting period in the following table:
Operating Pension
_Funds Funds
Governmental $ $_
Other Institutional $ $
• Summarize your assets under management (institutional only) over the past five years.
Categorize as appropriate (expand) to include cash component.
• Provide relevant performance statistics on operating funds, and compare with industry
averages or benchmarks, if appropriate.
• List your five largest clients or most representative governmental clients. Identify those that
are exclusively retirement fund relationships and/or those that are operating fund relationships
along with contact names for each.
• How many accounts have you gained in the last 12 months? How many accounts have been
lost in the last 12 months and why?
III. Investment Management Approach and Discipline
In your investment decision -making process, are there one or more people who predominate?
• Describe how your firm organizes its investment management process. What oversight is
provided to portfolio managers?
• What are the primary strategies for adding value to portfolios (e.g., market timing, credit
research, trading)?
• Describe the process you would recommend for establishing the investment objectives and
constraints for this account.
• How will you handle fluctuating cash flows and the cash forecasting process?
• What is your firm's experience in developing investment policies and portfolio management
guidelines for governmental operating funds?
12
• How frequently would you suggest your staff meet with the government entity's staff? Who
will attend briefings?
• How are differences in account policies and objectives managed and reconciled in-house?
• What percentage of your research is conducted in-house? Describe your research capability.
• What role does interest -rate forecasting take in your bond management strategy?
! What technical analysis (if any) do you use?
• How frequently do you formulate and review fixed income strategy? How is that carried out
and who is involved?
• How are portfolios managed (e.g., by team, individual manager)? What is the back-up when
the manager is away?
IV. Reporting
• Describe the frequency and format of reports that you would provide to the government
entity's staff. Attach examples.
• What performance benchmarks would you suggest for this portfolio?
V. Fees
• Provide the fee schedule that would apply to this account.
• If alternative fee schedules could be developed, such as performance fees, describe how you
would propose to develop such fee structures.
• What expenses would be covered through the fee structure?
• What additional costs could be required in order to implement your program (e.g., bank
custodial fees, travel expenses, etc.)?
VI. References
• Provide three references (identify as short-, intermediate- and/or long-term funds), including
length of time you have managed their assets, client name, contact personnel, address and
phone number.
• Provide references, if appropriate, from non -client organizations that can attest to the
professional reputation of your firm and its personnel.
13
VII. Submission Deadline
Please send copies of your proposal accompanied by annual audited financial reports to:
Government contact name
Government entity name
Address
The deadline for proposals is
(Note: 15-30 days to respond is reasonable.)
14
VII. Submission Deadline
• Please send copies of your proposal accompanied by annual audited financial reports to:
Government contact name'
Government entity name
Address
The deadline for proposals is
(Note: 15-30 days to respond is reasonable.)
14
Section 3
Important Elements of an Investment Advisory Agreement
There are some precautions that must be taken
when using investment advisers. Government
officials must have a written investment policy
outlining the parameters of the investment
program and must have a signed investment
advisory agreement. A tightly controlled
investment agreement with specific instructions
concerning risk parameters, allowable
investment instruments and strategies, and
required reporting is essential.
This chapter presents key provisions frequently
found in investment advisory agreements. These
points are explained in detail and are intended to
assist the government official in the review of
new or existing agreements. As with any legally
binding contract, legal counsel should review the
final agreement.
What to Look For
Although the investment advisory agreement
may include any number of provisions, it should
be specific to the service that is being provided.
Furthermore, the agreement should be worded in
such a way that it can accommodate situations,
such as staff changes, without having to be
amended.
Appointment of Adviser. The adviser must
officially accept appointment for the
responsibilities of liaison between the
government entity and account set forth in the
agreement. This section defines the scope of the
agreement and limits placed on the adviser; for
example, the adviser shall not act as custodian
for the account. In addition, a description of
services to be performed by the investment
advisory firm will be included in this section
along with language assuring compliance with
applicable laws and the entity's investment
15
policy. This section also defines the start and
end dates of the contract.
Definition of the Account(s) and Custody of
Account Assets. This section details what the
account shall consist of in terms of assets and
who shall act as custodian of the account. The
definition of account should conform to the
investment policy of the entity. This section
also should outline the expectations and
responsibilities of the custodian. Furthermore,
this section will specify that all transactions
should be done on a delivery -versus -payment
(DVP) basis and may define settlement
procedures in detail.'
Standard of Care. This section should state
that the investment adviser is a professional and
as such should be held to the "prudent expert"
standard which is a higher standard than the
prudent person rule. The prudent expert
standard requires the adviser:
... to act with the care, skill, prudence, and
diligence under the circumstances then
prevailing that a prudent investment expert
acting in a like capacity and familiar with such
matters would use in the conduct of an
enterprise of a like character and with like
aims...
If the prudent person rule is cited, a provision
may be included stating that this standard of care
shall in no case be or be interpreted to be less
stringent or restrictive than any investment
standards in effect or subsequently placed into
effect for the government entity.
'Reference An Introduction to Collateralizing Public
Deposits (Government Finance Officers Association,
1996) for a sample custodial trust agreement.
At a minimum, a good faith standard of care
should be imposed on advisers with
discretionary authority with respect to
overseeing the completion and performance of
broker/dealers. Agreements may provide
liability limitations for the adviser in this section
by holding them harmless from losses incurred
through any acts or omissions of any broker,
dealer, or custodian of the account. However,
the adviser should be held to a high standard of
care with regard to the selection process and
engagement of the broker/dealers they use.
Investment Objectives and Restrictions. The
government entity may wish to list investment
objectives and restrictions directly in the body of
the agreement or as an attachment. The
attachment should include: the overall objective
of the fund, initial characteristics of the
portfolio, permissible securities, credit quality
restrictions, maximum maturities, portfolio
duration restrictions, use or disposition of cash
flows, and citation of applicable federal, state,
and local laws, ordinances, and resolutions.
Also, a performance benchmark should be a part
of the agreement as well.
The restrictions portion of this section should
explain how notification of changes to the
objectives should be communicated. It also
should specify how investment techniques,
strategies, and instruments not explicitly covered
in agreement will be handled. Prudence would
suggest that all changes to the entity's
investment policy and guidelines should be
communicated to the investment adviser in
writing. Investment instruments not specifically
permitted in the entity's investment guidelines
should be precluded as new investment
instruments are created every day and should not
be permitted until the entity has had the
opportunity to fully understand the risks and
rewards the investment presents.
Transaction Procedures. While operational
16
procedures may be listed directly in the
agreement, they may be more clearly presented
as an attachment. In a discretionary relationship,
these procedures should address the following:
Specification of delivery vs payment
transactions, definition of the adviser's
relationship with the custodian and the adviser's
ability to issue defined types of instructions to
the custodian and brokerage firms, and how such
instructions may be made. For example, the
agreement usually requires written instructions
for all transactions but may specify that verbal
instructions will be followed by written
instructions.
This section also specifies how confirmations
and monthly statements should be handled.
Services to Other Clients. Typically, the
adviser will perform investment advisory
services for clients whose investment objectives
may be the same or similar to those of the
government entity. This section is included by
the adviser to acknowledge that the adviser may
give advice or take actions that vary from client
to client, despite similar investment objectives.
Allocation of Brokerage. This section allows
the investment adviser (with discretionary
authority) to allocate transactions to brokers and
dealers in the best interest of the account and
prohibits "soft dollar" benefits for any
transaction placed on behalf of the government.
In a non -discretionary relationship, the client
selects the broker/dealers and decides who will
handle the transactions, generally through a
competitive bid process.
Fees. The basis of compensation should be
clearly stated in this section. A schedule of fees
should be included and should define fee levels
and if pay -for -performance is used, what levels
of fees will be paid for different performance
levels, and any provisions for fee increases
during the contract term. Methods of
At a minimum, a good faith standard of cafe
should be imposed on advisers with
discretionary authority with respect to
overseeing the completion and performance of
broker/dealers. Agreements may provide
liability limitations for the adviser in this section
by holding them harmless from losses incurred
through any acts or omissions of any broker,
dealer, or custodian of the account. However,
the adviser should be held to a high standard of
care with regard to the selection process and
engagement of the broker/dealers they use.
Investment Objectives and Restrictions. The
government entity may wish to list investment
objectives and restrictions directly in the body of
the agreement or as an attachment. The
attachment should include: the overall objective
of the fund, initial characteristics of the
portfolio, permissible securities, credit quality
restrictions, maximum maturities, portfolio
duration restrictions, use or disposition of cash
flows, and citation of applicable federal, state,
and local laws, ordinances, and resolutions.
Also, a performance benchmark should be a part
of the agreement as well.
The restrictions portion of this section should
explain how notification, of changes to the
objectives should be communicated. It also
should specify how investment techniques,
strategies, and instruments not explicitly covered
in agreement will be handled. Prudence would
suggest that all changes to the entity's
investment' policy and guidelines should be
communicated to the investment adviser in
writing. Investment instruments not specifically
permitted in the entity's investment guidelines
should be precluded as new investment
instruments are created every day and should not
be permitted until the entity has had the
opportunity to fully understand the risks and
rewards the investment presents.
Transaction Procedures. While operational
procedures may be listed directly in the
agreement, they may be more clearly presented
as an attachment. In a discretionary relationship,
these procedures should address the following:
Specification of delivery vs payment
transactions, definition of the adviser's
relationship with the custodian and the adviser's
ability to issue defined types of instructions to
the custodian and brokerage firms, and how such
instructions may be made. For example, the
agreement usually requires written instructions
for all transactions but may specify that verbal
instructions will be followed by written
instructions.
This section also specifies how confirmations
and monthly statements should be handled.
Services to Other Clients. Typically, the
adviser will perform investment advisory
services for clients whose investment objectives
may be the same or similar to those of the
government entity. This section is included by
the adviser to acknowledge that the adviser may
give advice or take actions that vary from client
to client, despite similar investment objectives.
16
Allocation of Brokerage. This section allows
the investment adviser (with discretionary
authority) to allocate transactions to brokers and
dealers in the best interest of the account and
prohibits "soft dollar" benefits for any
transaction placed on behalf of the government.
In a non -discretionary relationship, the client
selects the broker/dealers and decides who will
handle the transactions, generally through a
competitive bid process.
Fees. The basis of compensation should be
clearly stated in this section. A schedule of fees
should be included and should define fee levels
and if pay -for -performance is used, what levels
of fees will be paid for different performance
levels, and any provisions for fee increases
during the contract term. Methods of
notification and implementation of changes to
these fees should be included. Any other
allowable costs that have been agreed to should
be specified in this section as well.
Termination: Assignment. The provisions for
termination of the agreement must be detailed.
This section usually specifies that written notice
is required and that the agreement may be
terminated by either party. Such written notice
may take effect immediately or within some
specified time frame (e.g., 30 days.)
Provisions for the government entity to be able
to terminate the agreement immediately without
cause are not uncommon. However (at a
minimum), immediate termination should be
permitted under adverse conditions such as the
adviser's breach of the agreement, departures in
key personnel, material changes in financial
condition, censure by regulatory agencies or
indictment, conviction or criminal investigation
involving breach of trust, fiduciary duty, fraud,
etc. The investment adviser's termination
provision is, however, more commonly 30 to
180 days dependent upon the entity's ability to
assume responsibility for the portfolio or time
frame for seeking and engaging a replacement
investment adviser. The treatment and
disposition of fees paid in advance should be
presented in this section as well.
Also, this section should state that "No
assignment, as that term is defined in the
Investment Advisers Act of 1940, of this
Agreement shall be made by adviser without the
written consent of client (government entity)."
Notices. This section requires that all notices
and instructions regarding security transactions
or other matters in the agreement must be
acknowledged when received in writing by
either party. This section also may include a
sentence stating the adviser may rely on any
notice (written or oral) from any authorized
17
person representing the government entity. In
addition, this section may require written notice
of any changes in investment strategy by either
party.
Representations by Clients. The client must
represent and confirm that it is authorized to
employ the adviser and that such employment
does not violate any laws or obligations. The
client also will be required to provide evidence
of authority that the adviser may reasonably
require.
Representation by Adviser. The adviser must
confirm that it is registered as an investment
adviser under the Investment Advisers Act of
1940. If the account is a qualified employee
benefit plan, the adviser must represent that it is
a "fiduciary" as defined under the Employment
Retirement Income Security Act of 1974.
The agreement also may require that adviser and
any personnel of the adviser's be free of any
convictions of any crime involving breach of
trust or fiduciary duty or securities law
violations within a specified time frame (e.g.,
three years).
Construction and Severability. A section
should be included in the agreement that states
the provisions of the agreement are severable. If
any part of the agreement is held to be invalid or
unenforceable, the validity of enforceability of
other parts of the agreement will not be affected
as long as the remainder of the agreement can be
reasonably completed.
Applicable Law. A section must be included
that cites the laws of the government entity's
state and the laws, rules, and regulations of the
government entity that govern the agreement.
Record Retention and Inspection. This
section specifies what records the adviser must
maintain and the time period that those records
must be maintained after the termination of the
contract. This section also gives the government
entity the right to inspect those records.
Prior Agreements. This section specifies that
the agreement supersedes all prior agreements
and typically states that full payment for services
rendered by the adviser prior to this agreement
shall be due and owing by the government
entity.
Reports. The reporting relationship should be
formalized and the types and timing of reports to
be provided to the government should be
specified.
Confidential Relationship. All information
must be treated as confidential which will be
required by this provision.
Errors and Omission Insurance. The
agreement will require the adviser to provide
and maintain errors and omission insurance
during the term of the contract and will specify
a minimum amount of coverage.
Waiver. This section states that a waiver of a
breach of contract of any provision of the
agreement shall not constitute a waiver of any
18
other breach of the agreement. Any waiver must
be in writing and signed by the party granting
the waiver.
Changes and Amendments. Any changes to
the agreement must be in writing.
Changes to Key Personnel and Successor to
Adviser. This section requires immediate
notification, in writing, of any changes in key
personnel within the investment advisory firm.
Assurance of Compliance with Civil Rights
Laws. The investment advisory firm must agree
and represent that it is an equal opportunity
employer and will comply with the applicable
sections of the Civil Rights Act of 1964.
Rescission. This section outlines the terms and
conditions of rescinding the agreement without
penalty and specifies the amount of notice that
must be given.
A properly executed investment advisory
agreement will help governments safeguard their
cash. GFOA's Sample Investment Advisory
Agreement can be found in the appendix of this
publication.
must be maintained after the termination of the
contract. This section also gives the government
entity the right to inspect those records.
Prior Agreements. This section specifies that
the agreement supersedes all prior agreements
and typically states that full payment for services
rendered by the adviser prior to this agreement
shall be due and owing by the government
entity.
Reports. The reporting relationship should be
formalized and the types and timing of reports to
be provided to the government should be
specified.
Confidential Relationship. All information
must be treated as confidential which will be
required by this provision.
Errors and Omission Insurance. The
agreement will require the adviser to provide
and maintain errors and omission insurance
during the term of the contract and will specify
a minimum amount of coverage.
Waiver. This section states that a waiver of a
breach of contract of any provision of the
agreement shall not constitute a waiver of any
18
other breach of the agreement. Any waiver must
be in writing and signed by the party granting
the waiver.
Changes and Amendments. Any changes to
the agreement must be in writing.
Changes to Key Personnel and Successor to
Adviser. This section requires immediate
notification, in writing, of any changes in key
personnel within the investment advisory firm.
Assurance of Compliance with Civil Rights
Laws. The investment advisory firm must agree
and represent that it is an equal opportunity
employer and will comply with the applicable
sections of the Civil Rights Act of 1964.
Rescission. This section outlines the terms and
conditions of rescinding the agreement without
penalty and specifies the amount of notice that
must be given.
A properly executed investment advisory
agreement will help governments safeguard their
cash. GFOA's Sample Investment Advisory
Agreement can be found in the appendix of this
publication.
Section 4
Evaluating the Investment Adviser's Performance
After the decision has been made to hire an
investment adviser and the government entity
has entered into a signed agreement, the next
step is to monitor and evaluate the services
provided by the investment adviser: In
evaluating the investment advisory services,
many factors should be taken into consideration.
Government officials should determine if the
investment adviser acted within the constraints
of the entity's investment policy, if the
investment adviser has added value to the
portfolio both in terms of performance and credit
quality, and if the benefits of the service
outweigh the costs.
Performance Benchmarks
One way to gauge how well an investment
advisory firm has performed is to compare its
performance against a benchmark. When
selecting a performance benchmark, the
government entity must choose an appropriate
benchmark.
Standard benchmarks for short- to intermediate -
term investment portfolios include yields of 90-
day Treasury bills, local government investment
pools, money market fund indexes or composite
indexes that are similar in composition to the
government entity's portfolio and investment
strategy. It is important to compare short-term
money to a short-term index and longer -term
funds to a longer -term index. Investment
advisers with superior performance should be
able to explain how they were able to beat the
index. It is important to understand the
investment adviser's results to make sure that
unnecessary risk was not taken or that maturity
restrictions were not violated.
M
Performance should be reviewed over a three- to
five-year cycle in both good markets and in bad
markets to get an idea of how the portfolio
manager has done in each type of market.
Reviewing performance over a longer cycle will
enable the government official to determine if
the adviser's performance was attributable to
active management or general market
fluctuations. For example, a manager with high
returns in a rising interest -rate environment may
not perform as well if the market changes and
requires a shift in investment strategy.
Reporting Requirements
Governments can monitor the investment
adviser's performance by requiring the
following reports:
Summary of portfolio holdings. Governments
should require a listing of all securities held at
the end of the month. This information can be
categorized by type of security or by maturity
date. These reports help to insure that the
investment adviser has conformed to portfolio
diversification requirements and other
investment policy constraints.
Investment performance report. At a minimum,
the performance report should show total returns
for the period. The total return calculation
should include income received and accrued and
changes in market value during the period.
Maturity/duration indicators. Portfolio duration
and average maturity statistics help in
monitoring interest -rate risk. A portfolio with a
longer duration is at greater risk and may suffer
more price erosion than a portfolio with a shorter
duration in changing interest -rate environments.
For example, a portfolio with a duration of three
would be expected to suffer a three percent
market price loss if interest rates rise one
percentage point.
Transaction summary. Investment advisers
must provide investors or the trustee with
transaction confirmations. At a minimum,
investors should receive a monthly summary of
completed transactions. This information will
allow the government entity to reconcile
portfolio balances with accounting records and
verify that the investment adviser acted within
the guidelines of the investment policy.
Mark -to -market report. This report should show
the cost and market value for the securities in the
portfolio.
AIMR Reporting. When reporting on
investment performance, there are many
calculations that can be used to measure return.
It is important that the firm calculating
performance numbers uses a consistent formula
and that the government entity understands how
the numbers were calculated and if those
numbers are presented net of fees.
The Association for Investment Management
and Research (AIMR) has developed
performance presentation standards.' Any
investment adviser who makes the claim of
presenting performance in compliance with
AIMR standards is pledging that certain steps
have been followed.
Intangible Rewards
Besides looking at hard numbers, government
officials should factor intangible rewards into
'For more information the AIMR Performance
Presentation Standards, contact AIMR, 5 Boar's Head
Lane, P.O. Box 3668, Charlottesville, Virginia, 22903;
phone 804/980-3604 or fax 804/980-9789.
20
their cost/benefit analysis. This analysis can be
difficult as it cannot be quantified. Improved
performance or enhanced controls may offset
costs. Officials should factor in staff reductions,
other uses of staff time, and elimination of direct
costs of investing.
Look for Red Flags
As part of the analysis, government officials can
look for certain red flags that may signal trouble.
The Primary Manager has Left. If the
primary manager has left the firm, who will take
over? Will the new manager employ the same
or similar investment strategy? It will be
important to find out the answers to these
questions. The government may wish to consider
terminating the existing contract and finding a
new investment advisory firm.
The Investment Strategy has Changed. If the
investment strategy has changed, the
government will need to find out why and
determine if the new strategy is appropriate for
its investment objectives and constraints.
They are Not Doing what was Promised. This
red flag can be particularly important if the
investment advisory firm is not following the
guidelines set forth in the agreement. Insist on
an independent custodian and on delivery -
versus -payment transactions. Also, the lack of
regular and timely reporting should be a signal
to end the agreement. It is crucial that the
government know what securities are in its
portfolio, the market value of those securities,
and who has custody of the securities.
The Firm is Outperforming the Market.
Again, find out how the firm is able to
outperform the market and make sure that the
investment policy is being followed. Don't
sacrifice safety for yield.
would be expected to suffer a three percent
market price loss if interest rates rise one
percentage point.
Transaction summary. Investment advisers
must pfovide investors or the trustee with
transaction confirmations. At a minimum,
investors should receive a monthly summary of
completed transactions. This information will
allow the government entity to reconcile
portfolio balances with accounting records and
verify that the investment adviser acted within
the guidelines of the investment policy.
Mark -to -market report. This report should show
the cost and market value for the securities in the
portfolio.
AIMR Reporting. When reporting on
investment performance, there are many
calculations that can be used to measure return.
It is important that the firm calculating
performance numbers uses a consistent formula
and that the government entity understands how
the numbers were calculated and if those
numbers are presented net of fees.
The Association for Investment Management
and Research (AIMR) has developed
performance presentation standards.' Any
investment adviser who makes the claim of
presenting performance in compliance with
AIMR standards is pledging that certain steps
have been followed.
Intangible Rewards
Besides looking at hard numbers, government
officials should factor intangible rewards into
4For more information the AIMR Performance
Presentation Standards, contact AIMR, 5 Boar's Head
Lane, P.O. Box 3668, Charlottesville, Virginia, 22903;
phone 804/980-3604 or fax 804/980-9789.
20
their cowbenefit analysis. This analysis can be
difficult as it cannot be quantified. Improved
performance or enhanced controls may offset
costs. Officials should factor in staff reductions,
other uses of staff time, and elimination of direct
costs of investing.
Look for Red Flags
As part of the analysis, government officials can
look for certain red flags that may signal trouble.
The Primary Manager has Left. If the
primary manager has left the firm, who will take
over? Will the new manager employ the same
or similar investment strategy? It will be
important to find out the answers to these
questions. The government may wish to consider
terminating the existing contract and finding a
new investment advisory firm.
The Investment Strategy has Changed. If the
investment strategy has changed, the
government will need to find out " why and
determine if the new strategy is appropriate for
its investment objectives and constraints.
They are Not Doing what was Promised. This
red flag can be particularly important if the
investment advisory firm is not following the
guidelines set forth in the agreement. Insist on
an independent custodian and on delivery -
versus -payment transactions. Also, the lack of
regular and timely reporting should be a signal
to end the agreement. It is crucial that the
government know what securities are in its
portfolio, the market value of those securities,
and who has custody of the securities.
The Firm is Outperforming the Market.
Again, find out how the firm is able to
outperform the market and make sure that the
investment policy is being followed. Don't
sacrifice safety for yield.
Appendix
Sample Investment Advisory Agreement
The GFOA Committee on Cash Management developed the following agreement to serve as a sample
for government entities engaging the services of an investment advisory firm. This agreement covers
the essential components of a sound investment advisory contract and is geared toward advisers with
discretionary authority. This agreement is presented as a sample only and will need to be tailored to
fit an individual government's needs. As with any legally binding contract, government entities
should seek legal counsel before entering into a written agreement.
21
INVESTMENT ADVISORY AGREEMENT
RE:
The undersigned ("Client") hereby employs ("Adviser") as investment Adviser for the
Account referred to above (the "Account") on the following terms and conditions:
1. Appointment of Adviser. By execution of this Agreement and effective as of the
effective date set forth in this Agreement, the Adviser accepts appointment as investment Adviser for
the Account and will supervise and direct investments of the Account subject to such limitations as
the Client may communicate in writing to the Adviser from time to time. The Adviser, as agent and
attorney in fact with respect to the Account, unless otherwise instructed in writing by the Client and
consistent with the investment objectives of the Client as specified in Schedule A, when it deems
appropriate, without prior consultation with the Client, may, (i) buy, sell, exchange, convert, and
otherwise trade in any stocks, bonds, and other securities of every kind and description, and (ii) place
orders for the execution of such securities transactions with or through such brokers, dealers, or issuers
as the Adviser may select.
2. Definition ofAccount and Custody of Account Assets. The Account shall consist of
all cash, securities, and other commingled assets of the Account which are held in a separately
designated management account by or its successors (the "Custodian") at the effective
date of this Agreement, plus any proceeds therefrom or additions thereto, and less any losses thereon
or withdrawals therefrom. The Adviser shall not act as Custodian for the Account or any portion
thereof. All transactions will be consummated by payment to, or delivery by, the Custodian of all
cash, securities, and other assets due to or from the Account. The Custodian, and not the Adviser,
shall be responsible for investing any daily cash balances in the account. The Adviser shall notify the
Custodian in writing as to those persons authorized to act on behalf of the Adviser and may issue such
instructions to the Custodian as may be appropriate in connection with the settlement of the
transactions initiated by the Adviser pursuant to Paragraph 1 hereby and the Custody Agreement,
dated , a copy of said agreement to be attached hereto as Schedule B.
3. Standard of Care. It is agreed that the sole standard of care imposed upon Adviser by
this Agreement is to act with the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent investment expert acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like aims, provided, however,
that this standard of care shall in no case be, or be interpreted to be, less stringent or less restrictive
than any investment standard or standards, now in effect or included by amendment effective in the
future, prescribed for investments by (State) law. While the Adviser will make a good faith effort to
require brokers and dealers selected to effect Account transactions to perform their obligations, the
22
INVESTMENT ADVISORY AGREEMENT
The undersigned ("Client") hereby employs ("Adviser") as investment Adviser for the
Account referred to above (the "Account") on the following terms and conditions:
1. Appointment of Adviser. By execution of this Agreement and effective as of the
effective date set forth in this Agreement, the Adviser accepts appointment as investment Adviser for
the Account and will supervise and direct investments of the Account subject to such limitations as
the Client may communicate in writing to the Adviser from time to time. The Adviser, as agent and
attorney in fact with respect to the Account, unless otherwise instructed in writing by the Client and
consistent with the investment objectives of the Client as specified in Schedule A, when it deems
appropriate, without prior consultation with the Client, may, (i) buy, sell, exchange, convert, and
otherwise trade in any stocks, bonds, and other securities of every kind and description, and (ii) place
orders for the execution of such securities transactions with or through such brokers, dealers, or issuers
as the Adviser may select.
2. Definition of Account and Custody of Account Assets. The Account shall consist of
all cash, securities, and other commingled assets of the Account which are held in a separately
designated management account by or its successors (the "Custodian") at the effective
date of this Agreement, plus any proceeds therefrom or additions thereto, and less any losses thereon
or withdrawals therefrom. The Adviser shall not act as. Custodian for the Account or any portion
thereof. All transactions will be consummated by payment to, or delivery by, the Custodian of all
cash, securities, and other assets due to or from the Account. The Custodian, and not the Adviser,
shall be responsible for investing any daily cash balances in the account. The Adviser shall notify the
Custodian in writing as to those persons authorized to act on behalf of the Adviser and may issue such
instructions to the Custodian as may be appropriate in connection with the settlement of the
transactions initiated by the Adviser pursuant to Paragraph 1 hereby and the Custody Agreement,
dated ; a copy of said agreement to be attached hereto as Schedule B.
3. 'Standard of Care. It is agreed that the sole standard of care imposed upon Adviser by
this Agreement is to act with the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent investment expert acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like aims, provided, however,
that this standard of care shall in no case be, or be interpreted to be, less stringent or less restrictive
than any investment standard or standards, now in effect or included by amendment effective in the
future, prescribed for investments by (State) law. While the Adviser will make a good faith effort to
require brokers and dealers selected to effect Account transactions to perform their obligations, the
22
Adviser shall not be responsible for any loss incurred by reason of any act or omission of any broker,
dealer, or custodian for the Account.' The Adviser shall not act as a principal in sales and/or
purchases of assets, unless the Adviser shall have received prior written approval from an Authorized
Person for each such transaction. In maintaining its records, the Adviser does not assume
responsibility for the accuracy of information furnished to Client by any other party. However, the
Adviser shall cooperate with (entity) and the Custodian to reconcile the Account each month.
4. Investment Objectives and Restrictions. Client has specified in Schedule A the
investment objectives and any specific investment restrictions and limitations which govern the
Account. It will be the Client's responsibility to inform the Adviser in writing of any changes or
modifications in the investment objectives of the Account as well as any additional investment
restrictions and limitations applicable thereto and to give the Adviser prompt written notice if Client
deems any investment made for the Account to be in violation of such objectives or restrictions and
limitations. The Adviser agrees to communicate its investment strategy for the Account and any
changes thereto, in writing, to the Client, and, if necessary, to meet with the Client to review the
Account's investment activity or to advise of changes in the Adviser's investment strategy.
5. Transaction Procedures. Instructions of the Adviser to the Custodian shall be made
in writing or, at the option of the Adviser, shall be -made orally and confirmed in writing as soon as
practical thereafter; provided that all such instructions, written or oral, shall be issued only by persons
designated from time to time by the Adviser in a written instrument delivered to the Custodian
pursuant to the Custody Agreement. Alternatively, the Custodian is authorized to act in accordance
with, and shall be entitled to rely on those deliver and/or receive instructions from the Eligible Trade
Report through the DTC ID system that contain the client bank account number in the defined
"custodian/client account number" field, to the same extent, as if the information contained in such
instructions was given in written form, signed by the Adviser. The Adviser shall instruct all brokers
and dealers executing orders on behalf of the Account to forward to the Custodian and the Client
copies of all confirmations promptly after execution of transactions, and that all transactions must be
completed using delivery vs. payment (DVP). The Client will provide, or instruct the Custodian to
provide the Adviser with such periodic reports concerning the status of the Account as the Adviser
may reasonably request.
'This sentence may be substituted with the following language: The Adviser shall have complete authority and discretion
to establish accounts with one or more duly registered broker/dealers. Consistent with ensuring the safety of assets, the
Adviser shall engage in a prudent and diligent broker/dealer selection process. The Adviser shall ensure that all orders
are placed with only reputable, qualified, and financially sound broker/dealers. The Adviser's primary objective shall
be to select broker/dealers who will provide the most favorable net price and execution for the account, but this
requirement shall not obligate the Adviser to recommend any broker/dealer solely on the basis of obtaining the lowest
commission rate if the other standards set forth herein are satisfied.
23
6. Services to Other Clients. It is understood that the Adviser performs investment
management services for other clients. The Client agrees that the Adviser may direct and take action
with respect to any activity of its other clients which may differ from the direction or the timing or
nature of action taken with respect to the Account so long as it is the Adviser's policy, to the extent
practical, to allocate investment opportunities to the Account over a reasonable period of time on a
fair and equitable basis relative to other clients. It is understood that the Adviser shall not have any
obligations to purchase or sell for the Account any security which the Adviser, its principals, affiliates,
or employees may purchase or sell for its or their own account or for the account of any other client,
if in the Adviser's good faith opinion such transaction or investment appears unsuitable, impractical,
or undesirable for the Account.
7. Allocation of Brokerage. Where the Adviser places orders for the execution of
portfolio transactions for the Account, the Adviser may allocate such transactions to such brokers and
dealers for execution on such markets, at such prices and at such commission rates as in the good faith
judgment of the Adviser will be in the best interest of the Account. The Adviser shall receive no soft
dollar benefit for any transaction placed on behalf of the client.
8. Fees. The compensation of the Adviser shall be calculated and paid in accordance with
the Schedule of Fees, attached hereto as Schedule C. For the purposes of determining the Adviser's
fees, the Account's assets shall be valued as computed by the Custodian bank in accordance with
normal and customary industry standards. Certain securities or assets may need to be valued in a
manner determined in good faith by the Custodian, the Adviser, or other appropriate pricing sources
to reflect its market value or as may be prescribed by applicable law.
9. Termination: Assignment. Client reserves the right to terminate this Agreement
without cause at any time by giving Adviser written notice, by registered mail, at least thirty (30)
calendar days prior to the date on which termination is to become effective.
Adviser reserves the right to terminate this Agreement without cause at any time by giving Client
written notice, by registered mail, at least one hundred twenty (120) calendar days prior to the date
on which termination is to become effective.
If there is just cause, the client can terminate the agreement immediately.
Client shall honor any trades agreed to, but not settled before the date on which termination is to
become effective.
The Adviser's fees will be pro -rated to the date of termination as specified in the notice of termination.
24
6. Services to Other Clients. It is understood that the Adviser performs investment
management services for other clients. The Client agrees that the Adviser may direct and take action
with respect to any activity of its other clients which may differ from the direction or the timing or
nature of action taken with respect to the Account so long as it is the Adviser's policy, to the extent
practical, to allocate investment opportunities to the Account over a reasonable period of time on a
fair and equitable basis relative to other clients. It is understood that the Adviser shall not have any
obligations to purchase or sell for the Account any security which the Adviser, its principals, affiliates,
or employees may purchase or sell for its or their own account or for the account of any other client,
if in the Adviser's good faith opinion such transaction or investment appears unsuitable, impractical,
or undesirable for the Account.
7. Allocation of Brokerage. Where the Adviser places orders for the execution of
portfolio transactions for the Account, the Adviser may allocate such transactions to such brokers and
dealers for execution on such markets, at such prices and at such commission rates as in the good faith
judgment of the Adviser will be in the best interest of the Account. The Adviser shall receive no soft
dollar benefit for any transaction placed on behalf of the client.
8. Fees. The compensation of the Adviser shall be calculated and paid in accordance with
the Schedule of Fees, attached hereto as Schedule C. For the purposes of determining the Adviser's
fees, the Account's assets shall be valued as computed by the Custodian bank in accordance with
normal and customary industry standards. Certain securities or assets may need to be valued in a
manner determined in good faith by the Custodian, the Adviser, or other appropriate pricing sources
to reflect its market value or as may be prescribed by applicable law.
9. Termination: Assignment. Client reserves the right to terminate this Agreement
without cause at any time by giving Adviser written notice, by registered mail, at least thirty (30)
calendar days prior to the date on which termination is to become effective.
Adviser reserves the right to terminate this Agreement without cause at any time by giving Client
written notice, by registered mail, at least one hundred twenty (120) calendar days prior to the date
on which termination is to become effective.
If there is just cause, the client can terminate the agreement immediately.
Client shall honor any trades agreed to, but not settled before the date on which termination is to
become effective.
The Adviser's fees will be pro -rated to the date of termination as specified in the notice of termination.
24
No Assignment, as that term is defined in the Investment Advisers Act of 1940, of the Agreement
shall be made by Adviser without the written consent of Client. This Agreement shall automatically
terminate in the event the Adviser's registration as an investment adviser under the Investment
Adviser's Act of 1940 is suspended or revoked, said termination to be effective with the date of such
suspension or revocation.
10. Notices. Unless otherwise specified herein, all notices and instructions with respect
to security transactions or any other matters contemplated by this Agreement shall be deemed duly
given when received in writing by either party at the address set forth opposite its name on the
signature page hereof or to such other addresses as such parties shall notify the other in writing and
to the Custodian at such address as it may specify to the Adviser in writing, or at such other address
or addresses as shall be specified. The Adviser may rely upon any notice (written or faxed) that is
signed by an authorized representative of the client.
11. Representations by Clients. The Client represents and confirms that the employment
of the Adviser is authorized by the governing documents relating to the Account and that the terms
hereof do not violate any obligation by which Client is bound, whether arising by contract, operation
of law or otherwise, and, if the Client is a trust, that (a) this Agreement has been duly authorized by
appropriate action and when executed and delivered will be binding upon Client in accordance with
its terms, and (b) the Client will deliver to Adviser such evidence of such authority as Adviser may
reasonably require, whether by way of a certified resolution or otherwise.
12. Representation by Adviser. By execution of this Agreement, Adviser represents and
confirms that it is registered as an investment adviser in the State of under the Investment
Advisers Act of 1940 and that with respect to the performance of its duties hereunder with respect to
the Account (if it is a qualified employee benefit plan) Adviser is a "fiduciary" as that term is defined
under the Employee Retirement Income Security Act of 1974 (ERISA).
The personnel of the Adviser who will be responsible for carrying out this Agreement are
individuals experienced in the performance of the various functions contemplated by the Agreement
and have not, within the last two years, been convicted of any crime or pleaded nolo contendere or
agreed to any consent decree with respect to any matter involving breach of trust or fiduciary duty or
securities law violations.
13. Construction and Severability. The provisions of this Agreement are severable. If any
part of this Agreement is held to be invalid or unenforceable, such holding will not affect the validity
or enforceability of any other part of this Agreement so long as the remainder of the Agreement is
reasonably capable of completion.
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14. Applicable Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of , and the laws, rules, and regulations of the
(municipality).
15. Record Retention and Inspection. The Adviser is required to maintain all records and
documents relating to the purchase, sale or exchange of the assets in the Account, or any payment
made or received thereto for twenty-four months after the termination of the agreement. The Client/or
its designated representative has the right to inspect the records of the Adviser during normal business
hours.
16. Prior Agreements. This Agreement supersedes all prior understandings and agreements
between the Client and the Adviser relating to the subject matter of this Agreement. Such prior
understandings and agreements are canceled, and full payment by the Client to the adviser for services
rendered by the Adviser to the date of this Agreement shall be due and owing to the Adviser.
17. Reports from Adviser. Adviser will provide reports to the client as outlined in Schedule
E. The Adviser shall also provide a written reconciliation to the custodian's records on a monthly
basis.
18. Confidential Relationship. All information and advice furnished by either party to the
other hereunder, including their respective agents and employees, shall be treated as confidential and
shall not be disclosed to third parties except as required by law.
19. Errors and Omissions Insurance. The Adviser shall provide and maintain at its own
expense during the term of this agreement Errors and Omissions Insurance covering the negligent acts,
errors, or omissions in the performance of professional services, in an amount of not less than
$ per claim.
Failure on the part of the Adviser to produce or maintain the required insurance shall constitute a
material breach of contract upon which (municipality) may immediately terminate this Agreement.
20. Waiver. No waiver of a breach of any provision of this Agreement by either party shall
constitute a waiver of any other breach of said provision or any other provision of this Agreement.
Failure of either party to enforce at any time, or from time to time, any provision of this Agreement
shall not be construed as a waiver thereof. The remedies herein reserved shall be cumulative and
additional to any other remedies in law or equity. No waiver shall be enforceable unless set forth in
writing and signed by the party granting the waiver.
21. Changes and Amendments. No provision of this Agreement may be changed, altered,
amended, or waivered except by written instrument executed by the parties.
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14. Applicable Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of , and the laws, rules, and regulations of the
(municipality).
15. Record Retention and Inspection. The Adviser is required to maintain all records and
documents relating to the purchase, sale or exchange of the assets in the Account, or any payment
made or received thereto for twenty-four months after the termination of the agreement. The Client/or
its designated representative has the right to inspect the records of the Adviser during normal business
hours.
16. Prior Agreements. This Agreement supersedes all prior understandings and agreements
between the Client and the Adviser relating to the subject matter of this Agreement. Such prior
understandings and agreements are canceled, and full payment by the Client to the adviser for services
rendered by the Adviser to the date of this Agreement shall be due and owing to the Adviser.
17. Reports from Adviser. Adviser will provide reports to the client as outlined in Schedule
E. The Adviser shall also provide a written reconciliation to the custodian's records on a monthly
basis.
18. Confidential Relationship. All information and advice furnished by either party to the
other hereunder, including their respective agents and employees, shall be treated as confidential and
shall not be disclosed to third parties except as required by law.
19. Errors and Omissions Insurance. The Adviser shall provide and maintain at its own
expense during the term of this agreement Errors and Omissions Insurance covering the negligent acts,
errors, or omissions in the performance of professional services, in an amount of not less than
$ per claim.
Failure on the part of the Adviser to produce or maintain the required insurance shall constitute a
material breach of contract upon which (municipality) may immediately terminate this Agreement.
20. Waiver. No waiver of a breach of any provision of this Agreement by either party shall
constitute a waiver of any other breach of said provision or any other provision of this Agreement.
Failure of either party to enforce at any time, or from time to time, any provision of this Agreement
shall not be construed as a waiver thereof. The remedies herein reserved shall be cumulative and
additional to any other remedies in law or equity. No waiver shall be enforceable unless set forth in
writing and signed by the party granting the waiver.
21. Changes and Amendments. No provision of this Agreement may be changed, altered,
amended, or waivered except by written instrument executed by the parties.
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22. Changes to Adviser Key Personnel and Successor to Adviser. The Adviser shall
immediately notify Client, in writing, of any changes in key personnel within its organization. If
Adviser is a partnership, Adviser shall promptly notify Client of changes in Adviser's partners. If
Adviser is a corporation, Adviser shall promptly notify Client of all material changes in ownership.
23. Assurance of Compliance with Civil Rights Laws. Adviser hereby agrees and
represents that it is an equal opportunity employer and will comply with sub -chapter VI of the Civil
Rights Act of 1964, 42 USC Section 2000(e) et. seq.
24. Rescission. The Client acknowledges receipt of Form ADV Part II which accompanies
this Agreement. The Adviser acknowledges that, notwithstanding the foregoing Paragraphs hereof,
the Client shall have a unilateral right to rescind this Agreement without penalty by giving written
notice of rescission to the Adviser in accordance with this Agreement in such a manner that the notice
shall have been received by the Adviser within five (5) business days next following the execution of
this Agreement. For purposes of this Paragraph, the term "business days" shall mean Monday through
Friday, excluding holidays. In the event the Client rescinds this Agreement in accordance with this
Paragraph neither party shall have any obligation or liability to the other.
25. Effective Date. The effective date of this Agreement is
(Client)
By:
(Signature)
(Printed Name)
(Title)
(Client's Address)
(City, State, & Zip)
Date
27
Agreed and Accepted this
day of , 19
(Adviser):
(Address):
(City, State):
LO
(Signature)
(Printed Name)
(Title)