10 Staff Report - Amending Certain Fees, Rates, and Charges FY 2007/08~pW N 0
SOS GO
DATE
TO
FROM
COUNCIL AGENDA REPORT
MARCH 14, 2007
MEETING DATE: MARCH 19, 2007
ITEM NO:
I U"
MAYOR AND TOWN COUNCIL
DEBRA J. FIGONE, TOWN MANAGER
SUBJECT: ADOPTION OF A RESOLUTION CONTINUING CERTAIN DEPARTMENT FEES,
RATES AND CHARGES, AND AMENDING CERTAIN FEES, RATES, AND
CHARGES FOR FY2007/08.
RECOMMENDATION:
1. Open and hold the public hearing.
2. Close the public hearing.
3. Adopt the resolution continuing certain department fees, rates and charges, and amending certain
fees, rates and charges.
BACKGROUND:
The Town of Los Gatos' Financial Policies require that certain fees, rates and charges for services be
maintained to provide for cost recovery based on the cost to the Town. In order to comply with this
mandate staff periodically reviews the cost of providing such services and recommends appropriate
increases in fees supported by cost data.
For development-related fees, the California Government Code requires a 60-day waiting period
between the approval of a Resolution and the implementation of such fees. As the Town's proposed FY
2007/08 Fee Schedule contains a number of development-related fee changes, which will be reflected in
the FY 2007/08 proposed budget, staff recommends an effective date of July 1, 2007 (76 days) for
implementing all fees contained in the proposed Fee Schedule.
Staff based the proposed FY 2007/08 Fee Schedule on the comprehensive fee study that was prepared
by Public Resource Management, Inc, (PRM) as part of the FY 2005/06 fee update. Staff first reviewed
all fees charged by the Town for various departmental services and for private development activity, and
then used current costs to update the Town's cost of service "baseline" data that was established by
PR-M.
PREPARED BY: STEPHEN D. CONWAY
Finance & Administrative Services Director
SDC:li
N:AF[NANCE\Fee ScheduleA2007-08\2007 Council Report.doc
Reviewed by: '=-'J Assistant Town Manager Town Attorney
Clerk Administrator ~ Finance Community Development
I
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPTION OF A RESOLUTION CONTINUING CERTAIN DEPARTMENT FEES,
RATES AND CHARGES, AND AMENDING CERTAIN FEES, RATES, AND
CHARGES FOR FY 2007/08.
MARCH 14, 2007
DISCUSSION:
The attached proposed FY 2007/08 Comprehensive Fee Schedule (Attachment 2) is the Town's master
schedule and it includes detailed listings of all fees charged by the Town.
For purposes of tracking changes in Town fees from year to year, all proposed changes to fees for FY
2007/08 are summarized in the attached Recommended Fee Changes and Additions for FY 2007/08
(Attachment 3). In addition to this document, highlights of certain fee changes or newly proposed fees
for FY2007/08 that staff believes are relevant for further discussion/explanation are presented by service
category below.
The fee resolution adopted for FY 2006/07 provided for a 2% increase in most development fees, based
on the December 2005 change in the Consumer Price Index (CPI). The FY 2007/08 Fee Schedule has
been increased by 3.4% based on the December 2006 CPI. It is anticipated that this increase will better
reflect the increased cost of service delivery in FY 2007/08. All other changes to the Fee Schedule other
than CPI and newly proposed fees are described below:
Development Services
General Development Services Fees
Annexation Fees: The fee schedule for Annexation Fees has been moved from Engineering
Services to General Development Services. There are no fee adjustments.
Planning Division Fees
The Environmental Assessment Deposit for Initial Study: Staff recommends an increase from
$3,000 to $3,500 per each initial study. This increase is equal to the negotiated increase in
contracted costs next year. The current required deposit of $3,000 has been in place since FY
2003/04. The Town's Environmental Consultant has continually provided an efficient service to
the Town at a considerably lower cost than comparable consultants. Besides the cost of the
initial study, the cost of any required special studies are also paid by the applicant. Unexpended
portions of the deposit are typically refunded to the applicant.
Engineering Division Fees
The Underground Utility Locating Surcharge (for an outside contractor): Staff recommends that
this fee be revised from $50 to read "actual cost" to recover the current cost charged to the Town
for this service. This fee fluctuates based on the actual cost of services provided by the outside
contractor and using "actual cost" allows the flexibility to change the fee as needed based on the
outside contractor's costs.
All Other Required Inspections: An additional inspection fee is added under the National
Pollutant Discharge Elimination System (NPDES) to include future inspections that are required
by the permit's best management practices (BMP) sections C-3 e and C-3 n. Future inspections
of specific development projects are required and will be tracked. This fee will recover the cost
for the Town to conduct such inspections, and will be billed to the property owner at the time of
the inspection.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPTION OF A RESOLUTION CONTINUING CERTAIN DEPARTMENT FEES,
RATES AND CHARGES, AND AMENDING CERTAIN FEES, RATES, AND
CHARGES FOR FY 2007/08.
MARCH 14, 2007
Engineering Division Fees (cont'd)
The C-3 Permit Hydrologic Calculation fee has been added to NPDES fees. This is not a new
fee but was previously collected under the Geotechnical Peer Review Fees and is now required
to be tracked separately as a new requirement of the C-3 storm water permit.
Under Road Impact fees the fee for Alterations/Remodels/Re-roof/Repairs/Decks, etc.: Staff
recommends that this fee be reduced from $0.10 per square foot to $0.02 per square foot to
reflect the impact of these types of projects on the Town's roads. These impacts are less
intensive and shorter duration than new construction projects.
Community Services
No adjustments to the Community Services Department fees are proposed for FY 2007/08. The
wording for the Building Attendant section has been revised with no changes in fees. Staff
believes the current fees are competitive with market rates as determined by a recent comparison
of fees by the department.
Library Fees and Fines
History Project Digital Images Fee: Staff is formalizing the fees charged by the Library for Fair
or Commercial Use of digital images. Library and museum-owned collections of digital images
can be printed or burned to a CD. There two category of fees as follows: Fair Use Fees which
are charged for digital images to be used for personal use only; and Commercial Use Fees are for
anyone using the photographs for commercial purposes. The Commercial Use Fee is in addition
to the cost of the photographic reproduction of each image. Details are on Attachment 3.
Parks and Public Works
Parks Division Fees
Plaza Use fee - Town Plaza is used by organizations for certain public events. Currently, the
permit fee for Plaza use is $75 plus a $15 per day of additional use. For example, this fee
applies to the use of the park for Carriage Rides.
Staff is proposing a new major impact fee for Plaza use. The major impact fee of $55 per
hour will be charged when the Plaza is closed since the public cannot use it during the event.
This per hour rate is based on the fee for use of the bandstand. Additional fees or deposits
may be charged for lawn repair, street closures, parking lot use, and/or additional
maintenance. Staff believes that this fee will better reflect the cost of the Plaza use when it is
not available for other purposes.
Jazz in the Plazz will experience an increase in fees as a result of the proposed change. Fees
for Jazz in the Plazz will go from $210 to $3,300 for each season. Staff has had preliminary
discussions with Teri Hope representing Jazz in the Plazz. She has indicated that the group
will budget for the increased fee.
F,
PAGE 4
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPTION OF A RESOLUTION CONTINUING CERTAIN DEPARTMENT FEES,
RATES AND CHARGES, AND AMENDING CERTAIN FEES, RATES, AND
CHARGES FOR FY 2007/08.
MARCH 14, 2007
Turf Impact fee - Staff is formalizing a turf impact fee to restore any damage caused during
special events. Damage to turf areas is caused by a combination of extended use and the
construction of structures such as stages, platforms, and kiosks. Such usage often results in
severe damage that requires costly repair. The amount of the turf impact fee will be based on
actual repair costs and may be collected after an event, as determined by the Director of Parks
and Public Works. Applicants will be advised of this fee during the application process. Staff
believes that the typical fee amount would range between $700 and $1,000 and would normally
be applicable to groups such as Shakespeare in the Park and Montalvo.
Police Fees and Fines
Solicitor's/Peddler's Permit - In the past, applicants for a solicitor's or peddler's permit were typically
granted a permit and charged a fee of $36. Applicants were not subject to finger printing or background
checks. In the interest of public safety, applicants are now required to make an appointment with the
Police Department to be fingerprinted and have their backgrounds checked through a criminal history
query of the Department of Justice (DOJ) databases. The outcome of this check will determine if the
applicant is granted a permit. The added validation has resulted in a charge for finger printing services
by the DOJ. Additionally, the Town incurs a cost for printing the permit. Staff recommends that these
added costs be passed on to the applicant. The revised fee to the applicant will be $93.00 and consists of:
S32 fee for DOJ prints (this portion of the fee is collected and then paid directly to the DOJ and is a
requirement of the DOJ) plus $25 fee to the Town of Los Gatos for printing services, plus the original
$36 fee for issuing the permit.
Clearance Letters Notary Fee - This fee has been discontinued. The applicants are now required to
present their own notary at the time of obtaining a clearance letter.
CONCLUSION:
Staff recommends that the Town Council approve the attached adjustments to the Town Fee Schedule to
be effective July 1, 2007.
ENVIRONMENTAL ASSESSMENT:
The Town's fee resolution is not a project subject to CEQA.
FISCAL IMPACT:
The Town's financial policies require that fees be maintained to provide for cost recovery for fee related
services. The proposed new fees will help defray the current cost of services and decrease the Town-
wide subsidy of private activity, in adherence with the Town's financial policies.
Staff will incorporate the estimated revenue increases into the Town's FY 2007/08 Operating and
Capital Budget using conservative volume of activity projections.
9
PAGE 5
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPTION OF A RESOLUTION CONTINUING CERTAIN DEPARTMENT FEES,
RATES AND CHARGES, AND AMENDING CERTAIN FEES, RATES, AND
CHARGES FOR FY 2007/08.
MARCH 14, 2007
Attachments:
1. Resolution
Comprehensive Fee Schedule FY 2007/08 Incorporating Fee Change Recommendations
Recommended Fee Changes and Additions for FY 2007/08
Distribution: Regular
Y
RESOLUTION NO. 2007-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ADOPTING CONTINUING DEPARTMENT FEES, RATES, AND CHARGES, AND
AMENDING CERTAIN FEES, RATES, AND CHARGES
WHEREAS, that the Town of Los Gatos Financial Policies require an annual evaluation
of the Schedule of Fees and Charges to ensure that recovery of the cost of providing services is
recovered where appropriate, and the last update of fees, rates and charges was on March 19, 2007,
WHEREAS, that certain fees for General Administration, Community Development,
Community Services, Parks and Public Works, Library, and Police be adopted.
WHEREAS, that those fees that are currently in effect will continue and remain in
effect without interruption, but shall be increased to reflect increased costs of providing service,
RESOLVED, that Resolution 2006-054 adopting departmental fees, rates, and charges
is hereby rescinded,
RESOLVED, that the Town Fee Schedule, attached here to as Exhibit A shall become
effective July, 1, 2007.
PASSED AND ADOPTED at a regular meeting of the Town Council held on 19th day
of March, 2007 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
ATTEST:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
Attachment 1
N:AFINANCE\Fee ScheduleA2007-0812007 Fee Schedule Resolution.doc
Town of Los Gatos
Comprehensive Fee Schedule
FY 200708
CPI Increases are shaded
New or Changes are Bolded
Attachment 2
1111,
TABLE OF CONTENTS
Page No.
Administrative Fees ........................................................................................................................1
Development Services
General Development Fees ......................................................................................................2
Building Division Fees
..5
Building Permit Fees
..5
Electrical Permit Fees
..7
Mechanical Permit Fees
..8
Plumbing Permit Fees
..9
Other Fees
10
Planning Division Fees
12
Zoning Approvals
12
Subdivisions
15
Miscellaneous Application Fees
15
Environmental Assessment Fees
16
Other Fees
16
Engineering Division Fees
19
Community Service Fees
Los Gatos Downtown Neighborhood Center Fee Schedule .................................................24
Program Space for Non-Profit Agencies ..............................................................................27
Library Fees and Fines .................................................................................................................28
Parks and Public Works
Parks Division Fees ...............................................................................................................29
Plaza Use Permit ..............................................................................................................29
Park Use Permit ................................................................................................................29
Specific Park Use Fee .......................................................................................................29
Turf Impact Fee .................................................................................................................30
Tree Related Fees ..............................................................................................................30
Equipment Hourly Rates ...................................................................................................30
Street Division Fees ..............................................................................................................31
Police Fees and Fines
Parking Permit Fees
ii
....................................................32
....................................................3 5
DEVELOPMENT SERVICES
General Development Fees
A. Photo Copying Charge - plus actual mailing costs, as applicable
Maps, plans, etc. (larger than 11" x 17") Actual Cost- sent to San Jose Blueprint
B. Printing Charge - plus actual mailing costs, as applicable
Maps, plans, etc. (larger than 11" x 17") $5.00 per page
C. Data Duplication Services and Fees
For partial or full copies of each digital standard
Town data file on one-time request basis:
8"x11" copy, standard printer $25.00 per digital file
Larger format, using plotter $75.00 per digital file
Electronic copy on CD $100.00 per digital file
D. Document Storage Fee-Microfiche Actual cost
E. Duplicate Plans Set $104.00/hr
(%2 hr min)
F. Address Processing fee 5207.00
G. Computer Surcharge on Building/Plumbing/Mechanical/
Electrical/Grading/Encroachment/Planning Permits/
Applications and any other Permits/Applications
except Park Permit/Applications 4% of Permit with $1 minimum
H. Engineering Development Review Service Fee 7.25% of Building and Development
Permit Fees and Building Plan Check
Fees that require engineering services
1. Seismic Hazards Mapping Program Fees - (SMIP)
For residential construction of three stories and less (Category 1), the permit fee is $10.00
per $100,000. For all other construction (Category 2), the permit fee is $21.00 per
$100,000. This fee is required by the State of California to identify and map zones of
particular seismic hazards. Five percent of the fee is retained by the Town to be used
solely for earthquake preparedness.
J. Capital Improvement Tax (Construction) - Based on $0.18 for each square foot of
building addition or alteration, which increases floor area of an existing building.
K. Underground Utility Tax (Utilities) - Based on $0.18 for each square foot of building
addition or alteration, which increases floor area of an existing building.
L. Park Fund Tax (Parks) - Based on $0.04 for each square foot of building addition or
alteration, which increases floor area of an existing building.
2
h
DEVELOPMENT SERVICES
General Development Fees - cont'd
0. Annexation Fees
1. 1 lot
2.2 lots
3.3 lots
4.4 lots
5.5 lots or more
* Annexation Advertising Deposit
(any remaining deposit will be refunded to the
applicant and amounts exceeding the deposit
amount will be paid by applicant)
4
$2,400.00*
$1,200.00*
$ 800.00*
$ 600.00*
$ 400.00*
$1,000 - $2,200
(varies as to size of map)
it
DEVELOPMENT SERVICES
Building Division - cont'd
Building Permit Fees - cont'd
D. Building Valuation Fee
A building valuation multiplier of 2.32 shall be used in conjunction with the Building
Valuation Data provided in the publication, Building Standards, published by the
International Conference of Building Officials for November-December, 2002, except for
Hillside Homes and Commercial Office Tenant Improvements. Their multipliers will be
3.246 and 1. 16, respectively. Annually, the building permit fees will be increased by the
February Annual Building Cost Index.
E. Building Permit Fees for Remodels, Alterations, and Repairs
The Building Official shall establish the valuation of said improvements, and fees will be
assessed as per Schedule 2.C above.
F. Si)ecial Services & Inspections
1.
Inspection outside normal business hours (4 hr min)
$92.00/1-Ir
2.
Re-inspection fees
$92.00/hr
3.
Inspections for which no fee is specifically indicated
$92.00/1-ir
(2/hr min)
4.
Additional plan review required by changes, additions
S l 20.00/lu•
or revisions to plans (1 hour min)
5.
For use of outside consultants for plan checking
Actual costs
and/or inspections
6.
Services for which no fee is specifically indicated ('/z hr min)
;103.00/hr
7.
Permit/Plan check time extension (per permit)
558.00
(applies to pen-nits that have not expired)
8.
Express plan review or initial review (1 hr. minimum)
$120.00/hr
9.
Application for the Appeals Building Board Review
S132.00
G. Plan Review Fee
A plan review fee shall be charged at the time of filing application. This fee is separate
from and shall be in addition to building permit fee. This fee is calculated at sixty-five
percent (65%) of the building permit fee as per Schedule 2.C above.
H. Other Miscellaneous Factors to Determine Construction Valuation
1. Convert garage to habitable space S 88.00/sq. ft
2. Convert unfinished basement or attic to habitable S95.00'sq.ft
3. Pools/Spas (gunite) $56.00 sct.ft
4. Siding - aluminum/vinyl/wood $7.00/sq.ft
5. Antennas & Towers Const. Value As Applied
Under 2.C Above
6. Commercial Awning or Canopy:
Aluminum 523.00/sq.ft
Canvas $17.00/sq.ft
6
11
DEVELOPMENT SERVICES
Building Division - cont'd
Electrical Permit Fees - cont'd
3.
Nonresidential appliances/new circuits:
$7.00
(medical & dental devices, food, beverage,
drinking fountains, laundry machines, or
other similar equipment)
Note: for other types of air conditioners and
other motor-driven appliances having larger
electrical ratings, see Generators/Motors
4.
Photovoltaic system (residential)
$55.00
5.
Solar systems (including controls)
555.00
6.
Power apparatus (generators, transformers, A/C, heat pumps, baking equipment):
Up to 10 KV, each
$14.00
Over 10 KV not over 50 KV, each
$23.00
Over 50 KV and not over 100 KV, each
$47.00
Over 100 KV, each
$63.00
7.
Motors:
Up to 10 hp
$14.00
Up to 25 hp
$23.00
Up to 55 hp
$47.00
Over 55 hp
$69.00
8. Transformers:
Up to 5 KVA
$14.00
Up to 10 KVA
$23.00
Up to 50 KVA
$40.00
Over 50 KVA
;55.00
9. Busways/conduits (per 100 ft)
$7.00
10. Service equipment:
200 amps or less
$58.00
201 to 999 amps
$81.00
Sub-panels
S29.00
11. Installation of spas or saunas
$29.00
F. Other Electrical Fees
1. Duplicate job card
529,00
2. Permit extension (applies to permits that have not expired)
$_5S.00
3. Mechanical Permit Fees
A. Permit Issuance
1. Fee for issuing a Mechanical Permit $34.00
2. Additional Mechanical Permit fee $10.00
8
DEVELOPMENT SERVICES
Building Division - cont'd
Plumbing Permit Fees - cont'd
D. Svstem Fee Schedule
1.
Private swimming pools
$69.00
(including heater, water piping, gas piping)
2.
Public swimming pools
$103.00
(including heater, water piping, gas piping)
3.
Lawn sprinkler system on one meter
$29.00
4.
Each new or repair of gas piping system
$52.00
5.
Each drainage, sewer system
$29.00
6.
Radiant floor heating system
$86.00
E. Unit Fee Schedule
1. Each plumbing fixture or trap or set of
fixtures on one trap
$10.00
2. Each sewer cleanout, backflow device
$10.00
3. Each septic system abatement
$86.00
4. Rainwater systems - per drain (inside building)
810.00
5. Each water heater, water softener
$23.00
6. Each grease interceptor (750 gallon capacity)
$58.00
7. Each grease trap (1-4 fixtures)
$34.00
8. Residential water re-piping
$86.00
9. Each ejector/sump pump
$29.00
10. Each vacuum breaker/hose bib
S10.00
11. Each water piping system repair or replacement
$17.00
12. Each additional gas outlet
S17.00
F. Other Plumbing Fees
1. Duplicate job card $29,00
2. Permit extension (applies to permits that have not expired) 558.00
5. Other Fees
A. State of California Title 24 Part 2 Energy and _Accessibility Code and Regulation Plan
Review and Inspection Fees
A surcharge shall be added to the building permit fee for the cost to plan review and inspect
for compliance with State of California Title 24 Regulations. This fee is calculated at fifteen
percent (15%) of the building permit fee. This fee is applied whenever a plan review is
assessed.
B. Duplicate Inspection Card
10
$29.00
0
DEVELOPMENT SERVICES
Planning Division
The fees listed below constitute all fees imposed by the Planning Division. Certain types of
applications must be reviewed/processed by other departments/agencies, which may impose
separate fees. Applicants are advised that the fees for those services are not included in the Planning
Department's fees. Where the term "actual cost" is used here, it shall mean: materials, supplies
(including any costs of noticing or publication), outside consultants, employee cost will be billed at
the top step, plus benefits, plus overhead. The following fee schedule is established for applications
filed pursuant to the Town Code. The fees are collected by the Community Development Department
at the time the application is filed unless otherwise noted.
Fees for Additional Processing
in the event additional processing services by the Town are required due to changes,
modifications, additions, errors, omissions, or discrepancies caused by the applicant or
his/her agents or representatives, the applicant shall pay an additional fee as determined by
the Director of Community Development to cover the actual cost.
Fees for Lack of Progress
If additional information is required by the Town for an application and the requested
information is not submitted within 180 days, the applicant will be required to pay a fee of 10
percent of the current application fee at the time the requested information is submitted.
Any re-submittal after one year will be processed as a new application, subject to new fees.
Fees for Maior Proiects
If it is anticipated that the application processing costs of selected major projects will
significantly exceed the following fees, the Director of Community Development may
collect a deposit and charge actual time spent to process the applications based upon
current hourly rates.
Surcharges: All of the following applications are subject to the surcharge fees as set forth in General
Development Services and in Section 5.1-1 of Planning Division.
1. Zoning Approvals
A. Architecture and Site Applications *
(1) Development Review Committee (DRC) Approval
a. New single family detached (HR & RC zone) 54,927.00
b. New single family detached (HR & RC zones) per unit,
as part of a Planned Development 53,697.00
C. New single family or two family units 53,493.00
d. New single family or two family (any other zone) per unit,
as part of a Planned Development $2,620.00
e. Minor projects (a development proposal that does not
significantly change the size, mass, appearance or
neighborhood impact of a structure, property or parking lot) S1,329.00
12
DEVELOPMENT SERVICES
Planning Division - cont'd
Zoning Approvals - cont'd
E. Planned Development
1.
Without General Plan or Specific Plan Amendment
$17.057.00
2.
Without General Plan or Specific Plan Amendment
(HR or RC Underlying Zone)
$22,452.00
3.
With General Plan or Specific Plan Amendment
$20,179.00
4.
With General Plan or Specific Plan Amendment
(HR or RC Underlying Zone)
525,569.00
5.
Town Council Modification to a Planned Development
75% of current fee
6.
DRC Modification to a Planned Development
56,757.00
7.
Publication costs for the planned development ordinance shall be paid by the
applicant.
8.
Transcription fee of Planning Commission
Actual cost
minutes Minimum $500.00 deposit
F. Minor Residential Development (See Section I.A. (2) a)
$1,329.00
G. Agri
cultural Preserve Withdrawal
$2,512.00
H. Planninv, Division Certificates of Use and Occunanc
1. Change of use 5204.00
2. Change of occupancy (excluding change of proprietor
of a continuing business enterprise) $100.00
3. Use/occupancy clearance if Conditional Use Permit is required
or occupancy of a new secondary dwelling unit No fee
1. Hazardous Materials Storage Facility Application $1,106.00
J. Home Occupation Permit S126.00
K. Sim Application
1. New permanent sign 5276.00
2. Temporary nonresidential sign $58.00
3. Change of face only $114.00
4. Sign program S1,311.00
L. Secondary Dwelling Units
1. New or existing unit $ 844.00
2. Two existing units S 1,170.00
14
1
DEVELOPMENT SERVICES
Planning Division - cont'd
Miscellaneous Application Fees - cont'd
E. Auto Dealer Events
1. Small promotional events 555.00
2. Large promotional events 5274.00
4. Environmental Assessment Fees
A. Categorical Exemption
B. Initial Study Deposit
C. Negative Declaration
No fee
$3,500.00*
51.650.00
D. Environmental Impact Report Consultants fee
E. Draft EIR Review Fee $9,135.00
Plus 10% of EIR cost
F. Impact Monitoring Program (AB3180) Actual cost
(hourly basis plus cost of consultant, if necessary)
* The $3,500 fee is a deposit only. The specific cost of the Initial Study and any required special
studies shall be borne by the applicant. The deposit shall be increased before the Town will
authorize work exceeding the amount on deposit. Any deposit balance will be refunded.
5. Other
A. Fence Height Exceptions
164.00
B. Peer/Technical Review - (any remaining deposit will be Actual cost
refunded to the applicant and amounts exceeding the ($1,500.00 deposit
deposit amount will be paid by applicant) plus 10% of actual cost
for administrative charge)
C. Fees For Additional Tech Review and/or DRC Review
DRC beyond three meetings, Planning Commission hearing
beyond two meetings, Town Council hearing beyond
one meeting Actual cost
D. Surcharges
1. General Plan update surcharge
16
.5% of building valuation
for new construction and additions/
10% of zone change and subdivision fee
DEVELOPMENT SERVICES
Planning Division - cont'd
6. Payment of Application Fees
All application fees are to be paid at the time the applications are submitted to the Community
Development Department. If the applicant withdraws an application, which requires a hearing
by the Planning Commission, prior to processing the application for the hearing, 40% of the
paid application fee shall be refunded to the applicant at the discretion of the Director of
Community Development. All other fees are non-refundable.
18
F,
3 f
DEVELOPMENT SERVICES
Engineering Division - cont'd
F. NPDES
1. Inspection fee
(Charged on all Encroachment & Grading Permits and some Storage Permits)
a. No change in impervious area $ 50.00
b. Change in grading or impervious area $ 0.10 sq ft with a
$50.00 minimum
c. All other required inspections Actual cost
2. C-3 Permit Hydrologic Calculation Consultant Cost + 10%
G. Encineerinc Subdivision Man Checkin
1. 1 - 4 lots $2,600.00
2. 5 or more lots $4,750.00 + 500.00 lot over 4
3. Map Check done by Town's Consultant Consultant Cost plus 25%
surcharge for reports,
reviews, and processes.
H. En2ineerin2 Reversion to Acreage
1.
Map Check
$ 935.00
2.
Map Check done by Town's Consultant
Consultant Cost plus 25%
surcharge for reports,
reviews, and processes.
1. En
gineering Lot Merger
1.
Certificate
$ 700.00
2.
Map checking
$1,200.00
3.
Review done by Town's Consultant
Consultant Cost plus 25%
surcharge for reports,
reviews, and processes.
J. Engineering Lot Line Adjustments
1.
Certificate
$ 700.00
2.
Map checking
$1,200.00
3.
Review done by Town's Consultant
Consultant Cost plus 25%
surcharge for reports,
reviews, and processes.
K. Certificate of Compliance
1.
Certificate review and preparation
$ 750.00
2.
Review done by Town's Consultant
Consultant Cost plus 25%
surcharge for reports,
reviews, and processes.
20
DEVELOPMENT SERVICES
Engineering Division - cont'd
S. Storm Drainage Fees
1. Development Projects
a. Single family lots - hillside area $3,000.00/ac.
Section 24.60.035(b) (3): For
subdivision whose lots exceed
one acre, the fee shall not exceed
that of one acre per lot
b. Single family lots - not hillside area $3,600.00/ac.
C. Multiple family dwelling units - initial unit $3,600.00/ac.
Each unit after initial $135.00
(not to exceed $4,500.00/ac.)
d. Commercial, industrial, hospitals,
churches, schools, and others $4,500.00/ac.
T
U.
2. Building/Grading Permits (Building, Structures & impervious areas)
a. New Impervious surface area, per sq. ft. $.75/sq. ft.
Street Improvement In-Lieu Fee
1. Sidewalks S 16.00 per linear foot
2. Curb and Gutter $57.00 per linear foot
Trail Improvements In-Lieu Fee
V. Hauling Permits
1. House Moving Fee
a. Per House, plus
b. Deposit for Facilities Damage
2. Hauling (Overweight Vehicle) Permit
$ 517.00
$2,050.00
$ 18.00*
*The current State mandated fee is $18.00 for Hauling Permits. If the State fee
changes, the Hauling Permits fee will change to reflect the same.
W. Road Impact Fee (Ordinance 1984)
1. New Buildings, Additions & Demolitions:
a. Commercial
b. Residential
C. Pools/spas/water features
2. Alterations/Remodels/Re-roof/
Repairs/Decks, etc.
22
S 16.00/per sq ft. or
deterrnined by Director
$0.20/sq. ft
$0.15/sq. ft
$0.25/sq. ft
$0.02/sq. ft
t~
COMMUNITY SERVICE FEES
A. Los Gatos Downtown Neighborhood Center Fee Schedule
Rental fees may be paid at the time of the application or any time no less than two weeks before
the scheduled date.
a. If rental fees are not paid at least two weeks prior to the event, then the application may be
terminated.
b. If a reservation is cancelled at least two weeks before the scheduled event, 100 percent of the
security deposit and room rental fees which may have been paid to the Town will be returned.
C. If notice is given to cancel an event less than two weeks before the scheduled event, half of
the room rental fees and none of the security deposit paid to the Town will be returned.
d. Any required security deposit must be paid at the time the reservation form is submitted to
secure the reservation.
Conference
Hall Kitchen Lounge Room
Category: Govermnent Agencies, No No No No
Community Service Organizations Charge Charge Charge Charge
Serving Los Gatos' Senior Citizens,
And Neighborhood Center Tenants
Category II: Community Service Groups
1. Activities (non-profits)
There is a 2-hour minimum for all rental usage.
a. Resident
$30.00/hr
No Charge
$15.00/hr
$10.00/hr
b. Non-Resident
$100.00/hr
No Charge
$40.00/hr
$30.00/hr
c. Security Deposit
$300.00
No Charge
$100.00
$100.00
d. Security Deposit
(Alcohol is served)
$500.00
No Charge
$500.00
$500.00
2. Fees Charged for Fundraising Activities
There is a 2-hour minimum for all rental usage.
a. Resident
$100.00/hr
No Charge
$40.00/hr
$30.00/hr
b. Non-resident
$200.00/hr
No Charge
$80.00/hr
$60.00/hr
c. Security Deposit
$300.00
No Charge
$100.00
$100.00
d. Security Deposit
(Alcohol is served)
$500.00
No Charge
$500.00
$500.00
24
F
COMMUNITY SERVICE FEES
Los Gatos Downtown Neighborhood Center Fee Schedule - cont'd
Category I - cont'd
• Neighborhood Center Tenants which provide a community service that does
not involve fundraising.
Category IL Community Service Groups
Groups qualifying as community service groups include the following:
• Nonprofit organizations, which have obtained 501(c) 3 ruling from the State
(must be documented by ruling letter from State).
• Los Gatos Service and Community organizations - groups that provide
recreational, cultural, leisure or other community service activities to Los
Gatos residents, including the Los Gatos-Saratoga Department of Community
Education and Recreation.
Los Gatos Elementary School District and the Los Gatos Joint Union High
School District.
Category III: Private parties
• Resident
For private parties or wedding receptions to qualify for the resident fee,
($60/hr) the Neighborhood Center may be reserved either by a Los Gatos
resident or by a non-resident's immediate family member who is a Los
Gatos resident. An immediate family member is defined as: mother,
father, sibling, and children of applicant, grandparents, stepchildren and
parents.
Non-Resident
Applicants who do not meet above criteria.
Priori
Category I applicants have priority over Category II and III applicants for use of the Center.
General Regulations:
1. Use is limited to ten hours.
2. If use exceeds hours on application form, then fee is charged at 1.5 times the rate.
3. All checks made payable to the Town of Los Gatos
4. Refundable deposits are returned within forty-five days by the Town of Los Gatos.
Definitions:
1. Resident
a. To qualify as a "resident" group, at least 51 percent of the Board of Directors or
membership attending the function must be Los Gatos residents.
26
0
LIBRARY FEES AND FINES
A. Fees
1. Inter-Library Loan
B. Overdue Fines
$2.00
1. Adult materials $.25/day $10.00 max/per item
2. Children's/Teen materials $.25/day $5.00 max/per item
3. Periodicals - Adult/Children's standard fine to cost of item
C. Lost or Damaged Items
1. Replacement of Adult book/AV item Cost of item plus $10.00 processing fee
2. Replacement of Teen/Children's book/AV item Cost of item plus $5.00 processing fee
3. Replacement of Adult paperback Cost of item plus $5.00 processing fee
4. Replacement of magazine Cost of item plus $5.00 processing fee
5. Patron procures replacement copy Half of normal processing fee for item type
D. Replacement of single cassette from audio book
E. Internet printing, initial ten free, thereafter each page
F. History Proiect Digital Image Fee
Fair Use Fees (for personal use only)
1. 8 by 10 single weight glossy
2. Digital image scanned to CD/ROM
Commercial Use Fees
1. Educational Media
2. Brochures and flyers
3. Trade publications, including electronic Magazine/Websites
4. Commercial Media
5. Commercial decor
6. Advertising and product design
$7.00
$0.10
$20.00
$25.00
$25.00
$50.00
$75.00
$125.00
$125.00
$125.00
Anyone using the photographs for commercial purposes must pay one-time
commercial fees in addition to the cost of the photographic reproduction for each
image.
28
I ? I1
PARKS AND PUBLIC WORKS
Parks Division - cont'd
Resident Non-Resident
Vehicle Escort Fee $75.00 $100.00
Parking Fee No charge $5.00 per vehicle
year-round
Turf Impact Fee
Additional fee added to any Park Use or Special Event Permit, when a permit's scheduled
activity or event will negatively impact the park turf, (locations including but not limited to
Oak Meadow, Plaza, and Civic Center lawn areas). Amount of fee to be based upon best
estimate of turf repair cost, as determined by the Director of Parks and Public Works
Tree Related Fees
A. Tree Removal Permit Application to remove one tree $ 120.00
Additional tree removal fee $ 60.00/each
If application is denied 50% refund
B. Illegal Tree Removal Administrative Fee $224.00
C. Replacement Trees - Town Forestry Fund Tree cost for each 24",36", and/or 45" box
Per Tree Ordinance Section 29.10.0985 size will be the Market Price plus the
Installation Cost, determined by the Director
30
POLICE FEES AND FINES
Fingerprinting - per each Livescan application $ 25.00
(Plus additional DOJ or FBI fees which are based on the level of service for the application)
Report Copies up to 20 pages
($0.50 for each page over 20)
$ 20.00
Subpoena Duces Tecum
Photo rg a, phs
1. For the first 3
2. Each additional
Bingo Permits (each)
Concealed Weapons
(California Penal Code, Section 12050.2)
1. Initial Permit plus DOJ fingerprinting fee
2. Renewal Permit
Solicitor/Peddler's Permit
(includes permit fee ($36), DOJ print fee ($32),
and LGPD print fee ($25)
Bicycle Licenses (each)
Tow Trucks
1. Driver's Permit (initial) - includes DOJ
Fingerprinting Fee
2. Driver's Permit (renewal)
3. Service Permit (initial)
4. Service Permit (renewal)
Clearance Letters
1. Each letter
Fortune-Telling Registration (each)
Administrative Fee for:
Special Events
1. For-Profit Groups (each)
2. Not-For-Profit Groups (each)
3. All Other Costs as specified in Special Events
Ordinance, Section 14.100.045
Other Special Police Services
32
Per California Evidence Code Section 1563
S 48.00
$ 5.00
$148.00
$136.00
$ 59.00
$ 93.00
$ 3.00
$130.00
$130.00
$444.00
$444.00
$ 48.00
$320.00
5517.00
S129.00
Pursuant to Agreement
between Police Chief
and Requestor
POLICE FEES AND FINES
Town Code Parking Violation Fees
1. 15.40.015 (Overtime Parking)
2. 15.40.065 (Vehicle Storage on Street)
3. 15.40.070 (Commercial Vehicles in Residential Zones)
4. 15.40.075 (For Sale/Non Emergency Repair)
5. 15.40.080 (Preferential Parking)
6. 15.40.080(b) (Permit Required Area)
7. 15.40.080(c) (Fraudulent use of Permit)
8. 15.40.085 (Posted no Parking Special Events)
9. 15.40.090 (Parking on Parkway)
10. 15.40.095 (Marked Parking Space)
11. 15.40.100 (Parking on Grade)
12. 15.40.105 (Designated Parking VC22507.8)
13. 15.40.110 (Marked Curb)
California Vehicle Code Parking Violation Fees
1. 21113(a) VC (Public Lot Parking in Permit Area)
2. 22500(b) VC (On Crosswalk)
3. 22500(e) VC (Blocking Driveway)
4. 22500(f) VC (On Sidewalk)
5. 22500(h) VC (Double Parking)
6. 22500(1) VC (In Bus Zone)
7. 22500(1) VC (Blocking Curb Access Ramp)
8. 22500.1 VC (Blocking Fire Lane)
9. 22502(a) VC (Parallel 18in.Right Curb)
10. 22502(e) VC (One Way within 18in. Left Curb)
11. 22507.8(a) VC (Designated Disabled Parking)
12. 22507.8(b) VC(Disabled Space Inaccessible)
13. 22507.8(c)(1-2) VC (On Stall or Cross Hatch Lines
14. 22514 VC (Within 15ft of Fire Hydrant)
15. 22521 VC (Within 7ft of Railroad Track)
16. 22522 VC (Within 3ft Sidewalk Access Ramp)
17. 23333 VC (Vehicular Crossing)
18. 4000(a) VC (Expired Registration)
Fine if corrected within 21 days of issue date
19. 5204(a) VC (No Registration Tabs)
Fine if corrected within 21 days of issue date
20. 5200 VC (Missing License Plate)
Fine if corrected within 21 days of issue date
34
$ 35.00
$ 60.00
$ 60.00
$ 35.00
$ 45.00
$ 45.00
$100.00
$ 35.00
$ 35.00
$ 35.00
$ 30.00
$280.00
$ 35.00
$ 15.00
$ 35.00
$ 35.00
$ 35.00
$ 35.00
$255.00
$255.00
$ 35.00
$ 35.00
$ 35.00
$280.00
$280.00
$280.00
$ 35.00
$ 35.00
$280.00
$ 72.00
$135.00
$ 10.00
$ 76.00
$ 10.00
$ 76.00
$ 10.00
[t
Town of Los Gatos Comprehensive Fee Schedule
Recommended Fee Changes and Additions for FY 2007/08
Adopted Proposed
Fee Categorv FY 06107 Fee FY 07108 Fee
Development Services
General Development Fees
G. Computer Surcharge
0. Annexation Fees
Planning Division
4. Environmental Assessment Fees
B. Initial Study Deposit
Engineering Division
F. NPDES
I.e. All Other Required Inspections
2. C-3 Permit Hydrologic Calculation
Q. Traffic Impact Analysis or Parking Study
1. Pre-Development Review (Stafftraffic impact analysis or parking
study)
2. Traffic Impact Analysis or Parking Study
X. Road Impact Fee (Ordinance 1984)
2. Alterations/Remodels/Re-roof/Repairs/Decks, etc
Communitv Service Fees
Building Attendant
Librarv Fees and Fines
F. History Project Digital Image Fees
Fair Use Fees
1. 8 by 10 single weight glossy
2. Digital image scanned to CD/ROM
Commericial Use Fees
1. For Educational Media
2. For Brochures and flyers
3. Trade publications, including electronic Magazines/Websites
4. Commercial Media
5. Commercial decor
6. Advertising and product design
Parks and Public Works
Parks Division
Plaza Use Permit Fees when closed to public
Turf Impact Fees
Police Fees and Fines
Fingerprinting
Solicitor/Peddler's Permit (addition of DOI $32 and LGPD $25)
Clearance Letters
2. If not notarized add
Addition of the word "Applications"
Moved from Engineering Fees to General Development Fees
$3,000.00 $3,500.00
New Fee for FY 2007/08 Actual cost
Previously charged thru Geotech Consultant Cost + 10%
Pass thru
Adding "Parking Study"
Adding "Parking Study"
Adding "Parking Study"
10/sq.ft. .02/sq.ft.
Wording changes Only
New
Fee for FY 2007/08
$20.00
New
Fee for FY 2007/08
$25.00
New
Fee for FY 2007/08
$25.00
New
Fee for FY 2007/08
$50.00
New
Fee for FY 2007/08
$75.00
New
Fee for FY 2007/08
$125.00
New
Fee for FY 2007/08
$125.00
New
Fee for FY 2007/08
$125.00
New Fee for FY 2007/08 $55 per hour
New Fee for FY 2007/08 As determined by PPW Director
Additional wording only
$36.00 $93.00
$10.00 Fee Deleted
N:\FINANCE\Fee Schedule\2007-08\Fee Changes and Additions.xis
1
Attachment 3
Town of Los Gatos Comprehensive Fee Schedule
Recommended Fee Changes and Additions for FY 2007/08
Adoptedll Proposed
Fee Catelorv l
l FY 06/07 Feel
l FY 07/08 Feel
Fees Chanced by Consumer Price Index (3.4% increase)
8. Transformers
Up to 10 KVA
$22.00
$23.00
Up to 50 KVA
$39.00
$40.00
Over 50 KVA
$56.00
$58.00
10. Service Equipment
200 amps or less
$56.00
$58.00
201 to 999 amps
$78.00
$81.00
Sub-panels
$28.00
$29.00
11. Installation of spas or saunas
$28.00
$29.00
F. Other Electrical Fees
1. Duplicate job card
$28.00
$29.00
2. Permit extension
$56.00
$58.00
3. Mechanical Permits
A. Permit Issuance
$33.00
$34.00
B. Plan Review & Re-inspection Fees
$116.00
$120.00
2. Additional plan review
$89.00
$92.00
3. Re-inspection fee
D. Unit Fee Schedule
1. Installation of each heating, A/C, boiler, etc.
$28.00
$29.00
3. Each fireplace appliance
$22.00
$23.00
6. Installation of each hood with mechanical exhaust
Residential
$22.00
$23.00
Commercial
$83.00
$86.00
7. Each new or repair of gas piping system
$50.00
$52.00
8. Each additional gas outlet
$16.00
$17.00
9. Installation of evaporative cooler
$22.00
$23.00
E. Other Mechanical Fees
1. Duplicate job card
$28.00
$29.00
2. Permit extension
$56.00
$58.00
4. Plumbing Permit Fees
A. Permit Issuance
$33.00
$34.00
B. Plan Review & Re-inspection Fees
2. Additional Plan Review
$116.00
$120.00
3. Re-inspection
$89.00
$92.00
D. System Fee Schedule
1. Private Swimming Pools
$67.00
$69.00
2. Public Swimming Pools
$100.00
$103.00
3. Lawn Sprinkler system
$28.00
$29.00
4. Each new or repair of gas piping system
$50.00
$52.00
5. Each drainage, sewer system
$28.00
$29.00
6. Radiant floor heating system
$83.00
$86.00
E. Unit Fee Schedule
3. Each septic system abatement
$83.00
$86.00
5. Each water heater, water so8ner
$22.00
$23.00
6. Each grease trap interceptor
$56.00
$58.00
7. Each grease trap
$33.00
$34.00
8. Residential water re-piping
$83.00
$86.00
9. Each ejector/sump pump
$28.00
$29.00
11. Each water piping system repair or replacement
$16.00
$17.00
12. Each additional gas outlet
$16.00
$17.00
N:\FINANCE\Fee Schedule\2007-08\Fee Changes and Additions.xls 3
Attachment 3
Town of Los Gatos Comprehensive Fee Schedule
Recommended Fee Changes and Additions for FY 2007/08
Adopted P=posed
Fee Category FY 06/07 Fee FY 0Fees Changed by Consumer Price Index f3.4% increase?
I. Secondary Dwelling Units
1. New or existing unit
2. Two existing units
0. Administrative Iand Use Permits
1. Minor telecommunications
2. Major telecommunications
2. Subdivisions
A. Lot line adjustment (DRC approval)
B. 4 lots or less (DRC approval)
C. 5 lots or more
E. Lot merger and reversion to acreage (DRC approval)
E Condominium
G. Certificate of Compliance (DRC approval)
Fl. DRC Applications tha trequire Planning Commission Approval
1 Miscellaneous Application Fees
C. Conceptual Development Advisory Committee Review
D. Push Cart Permit
E. Auto Dealer Events
1. Small promotional events
2. Large promotional events
4. Environmental Assessment Fees
C. Negative Declaration
E. Draft EIR Review
5. Other Fees
A. Fence Height Exception
F. Appeals
1. Fee to appeal PC decision to TC residential
Fee to appeal PC decision to TC commercial
3. Fee to appeal Direct of CDD or DRC to PC residential
Fee to appeal Direct of CDD or DRC to PC commercial
4. Tree appeals
H. Zoning Research
1. Basic zoning letter
2. Legal non-conforming verification
3. Reconstruction oflegal non-conforming structures
Engineering Division
U. Street Improvement In-Lieu Fee
1. Sidewalks
2. Curb and Gutter
V. Trail Improvements In-Lieu Fee
$816.00 $844.00
$1.132.00 $1.170.00
$107.00
$111.00
$1,291.00
$1,335.00
$1,220.00
$1,261.00
$5,096.00
$5,269.00
$8,081.00
$8,356.00
5603.0D
$624.00
$4,268.00
$4,413.00
$2,445.00
$2,528.00
$1,862.00
$1,925.00
$1,445.00
$1,494.00
$282.00
$292.00
$53.00
$55.00
$265.00
$274.00
$1,596.00
$1,650.00
$8,835.00
$9,135.00
$159.00
$164.00
$277.00
$286.00
$1,111.00
$1.149.00
$139.00
$144.00
$556.00
$575.00
$56.00
$58.00
$159.00
$164.00
$371.00
$384.00
$159.00
$164.00
$15.00 per linear foot $16.00 per linear foot
$55.00 per linear foot $57.00 per linear foot
$15.00 per linear foot or $16.00 per linear foot or determined
determined by Director by Director
N:\FINANCE\Fee Schedule\2007-08\Fee Changes and Additions.xls 5
Attachment 3
Town of Los Gatos Comprehensive Fee Schedule
Recommended Fee Changes and Additions for FY 2007108
Adopted ii Proposed
Fee Catecorv
FY 06/07 Fee
FY 07/08 Feed
Fees Chanced by Consumer Price Index (3.4% increase)
Horse Drawn Vehicle
1. Application Fee
$98.00
$101.00
2. Driver's Permit (annual)
$50.00
$52.00
3. Vehicle Permit & Inspection Fee
$50.00
$52.00
4. Annual Renewal & Inspection Fee
$50.00
$52.00
Firearms Dealer's Permit
$576.00
$596.00
Vehicle Release
$150.00
5155.00
False Alarm
1. Third False Alarm
$100.00
$103.00
2. Fourth False Alarm
$200.00
$207.00
1 Fifth False Alarm
$300.00
$310.00
Bail Amount
1. Handicap
$30.00
$31.00
Photographs on CD
$46.00
548.00
Copy of Video Tape
$46.00
$48.00
Copy of Audio Tape
$46.00
$48.00
Parking Permit Fees
1. Residential Parking Permits
Annual residential parking permit/per vehicle
$35.00
$36.00
Lost permit replacement
$25.00
$26.00
1. Business Parking Permits
Standard employee monthly
$25.00
$26.00
Standard employee annual
$200.00
$207.00
Premium employee monthly
$35.00
$36.00
Premium employee annual
$300.00
$310.00
Lost permit replacement
$30.00
$31.00
Damaged permit replacement (with return ofpernit)
$15.00
$16.00
1. Construction Parking Permits
One day parking permit per construction vehicle
$25.00
$26.00
N:\FINANCE\Fee Schedule\2007-08\Fee Changes and Additions.xis 7
Attachment 3
TOWN OF LOS GATOS
CALIFORNIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2006
PREPARED BY THE
OFFICE OF THE TOWN MANAGER
TOWN HISTORY
The name Los Gatos comes from El Rancho de Los Gatos. A ranch established in 1839
by a Mexican land grant and so named because of the large number of mountain lions in
the area. In 1854, James Alexander Forbes purchased some of this land and built a flour
mill. In 1860, the first hotel was opened to provide a stage stop on the toll road which had
been built between San Jose and Santa Cruz.
Wheat production gave way to orchards, and rapid growth ensued when the railroad
reached Los Gatos in 1878. The residential subdivisions of Broadway, Bayview,
Fairview, and Almond Grove were built in the 1880s. By 1887, the population had
grown to 1,500 and Los Gatans voted to incorporate.
Fruit industries faded slowly during the Depression and World War II, but the postwar
period brought an influx of people producing residential and commercial development.
Highway 17 was constructed through the center of Town. Growth levelled off in the early
1970s, leaving Los Gatos with its small-town atmosphere and pedestrian-oriented
downtown.
Because of its distance from other centers of population, Los Gatos developed as a
complete community including residential, business and industrial elements. Preserving
Los Gatos as a complete and well-balanced community has been and remains a
prominent goal of the community. From the first 100-acre town site in 1890 with a
population of 1,652, Los Gatos grew slowly so that by 1963 the area was 6.3 square
miles, with a population of 11,750. Today Los Gatos covers between 14 and 15 square
miles and has a population of 28,910. This relatively slow growth over the first 80 years
resulted in a human scale community with narrow streets and small buildings.
As it exists now, Los Gatos boundaries encompass a wide variety of terrain, ranging
from level land to steep and densely wooded hillsides. The sharp visual contrasts among
these features and charming architecture create the picturesque setting of the Town. In
the midst of an increasingly uniform urban complex, this setting has attracted people with
a preference for the Towns distinctive, high quality natural and urban environment.
The slow growth of the Town over an extended number of years has left the Town with a
heritage of older, established residential areas and a downtown with many historic
buildings representing the various eras in the Towns history. Protection of these historic
resources is an important community goal. The Towns two museums, known as the Tait
Avenue and Forbes Mill museums, also help to preserve the Towns valued history.
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
TABLE OF CONTENTS
TITLEPAGE
INTRODUCTORY SECTION:
Table of Contents................................................................................................................................ i
Letter of Transmittal........................................................................................................................... iii
Principal Officers................................................................................................................................ ix
Organization Chart............................................................................................................................. x
GFOA Award..................................................................................................................................... xi
FINANCIAL SECTION:
[[298,1173,852,1220][10][B,I,][Times New Roman]]Independent Auditors Report [[819,1173,2123,1221][10][,,][Times New Roman]]...........................................................................
................................ 1
[[298,1269,1021,1316][10][B,I,][Times New Roman]]Managements Discussion and Analysis [[987,1269,2123,1317][10][,,][Times New Roman]]..................................................................
......................... 3
[[298,1365,822,1412][10][B,I,][Times New Roman]]Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Assets....................................................................................................... 12
Statement of Activities......................................................................................................... 13
Fund Financial Statements:
Governmental Funds:
Balance Sheet................................................................................................................... 14
Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Assets................................................................................................ 15
Statement of Revenues, Expenditures, and Changes
in Fund Balances........................................................................................................... 16
Reconciliation of Governmental Funds Statement of Revenues, Expenditures,
and Changes in Fund Balances to the Statement of Activities...................................... 17
Statement of Revenue, Expenditures and Changes in Fund Balances
Budget and Actual (GAAP) General Fund.................................................................... 18
Proprietary Funds Internal Service Funds:
Statement of Net Assets.................................................................................................... 19
Statement of Revenue, Expenses and Changes in Net Assets........................................... 20
Statement of Cash Flows.................................................................................................. 21
Fiduciary Funds:
Statement of Fiduciary Net Assets.................................................................................... 22
Statement of Changes in Fiduciary Net Assets................................................................. 23
Notes to the Basic Financial Statements...................................................................................... 24
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
TABLE OF CONTENTS
SUPPLEMENTARY INFORMATION:
[[298,637,1002,684][10][B,I,][Times New Roman]]Major Governmental Fund Schedules [[962,637,1538,684][10][B,I,][Times New Roman]](other than the General Fund):
Schedule of Revenue, Expenditures and Changes in Fund Balance
Budget and Actual (GAAP) Appropriated Reserves Fund................................................... 47
Schedule of Revenue, Expenditures and Changes in Fund Balance
Budget and Actual (GAAP) Certificates of Participation Fund........................................... 48
Schedule of Revenue, Expenditures and Changes in Fund Balance
Budget and Actual (GAAP) Redevelopment Agency Capital Projects Fund....................... 49
[[299,1020,903,1067][10][B,I,][Times New Roman]]Nonmajor Governmental Funds:
Combining Balance Sheets.......................................................................................................... 50
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balances...................................................................................................................... 52
Budgeted Nonmajor Funds Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances Budget and Actual (GAAP)................................................... 54
[[298,1355,748,1402][10][B,I,][Times New Roman]]Internal Service Funds:
Combining Statement of Net Assets............................................................................................ 60
Combining Statement of Revenue, Expenses and Changes in Net Assets.................................. 61
Combining Statement of Cash Flows.......................................................................................... 62
[[297,1595,613,1642][10][B,I,][Times New Roman]]Agency Funds:
Statement of Changes in Assets and Liabilities - Parking Improvement District #88................. 63
STATISTICAL SECTION:
Net Assets by Component.................................................................................................................. 64
Changes in Net Assets........................................................................................................................ 65
Fund Balances.................................................................................................................................... 66
Changes in Fund Balances, Governmental Funds.............................................................................. 67
Assessed Value and Estimated Actual Value of Taxable Property..................................................... 68
Direct and Overlapping Property Tax Rates....................................................................................... 69
Principal Property Tax Payers............................................................................................................ 70
Property Tax Levies and Collections.................................................................................................. 71
Ratios of Outstanding Debt by Type.................................................................................................. 72
Direct and Overlapping Governmental Activities Debt...................................................................... 73
Legal Debt Margin.............................................................................................................................. 74
Demographic and Economic Statistics............................................................................................... 75
Principal Employers........................................................................................................................... 76
Full-time Equivalent City Government Employees by Function/Program......................................... 77
Operating Indicators by Function/Program........................................................................................ 78
Capital Assets Statistics by Function/Program................................................................................... 79
OTHER INDEPENDENT AUDITORS REPORTS:
Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of
Financial Statements Performed in Accordance with Government Auditing Standards............. 80
TOWN OF LOS GATOS
PRINCIPAL OFFICERS
JUNE 30, 2006
TOWN COUNCIL
Mayor Diane McNutt
Vice Mayor Joe Pirzynski
Councilmember Steve Glickman
Councilmember Mike Wasserman
Councilmember Barbara Spector
COUNCIL APPOINTEES
Town Manager Debra Figone
Town Attorney Orry Korb
ELECTED OFFICIALS
Town Clerk Marian V. Cosgrove
Town Treasurer Linda Lubeck
APPOINTED OFFICIALS
Assistant Town Manager Pamela Jacobs
Chief of Police Scott Seaman
Community Services Director Regina Falkner
Finance & Administrative Services Director Stephen D. Conway
Library Director Peggy Conaway
Parks and Public Works Director John Curtis
Community Development Director Warren Bud Lortz
Human Resources Director Rumi Portillo
ix
èÔÓÉ ÌÛÕ× Ð×ÖÈ ÓÎÈ×ÎÈÓÍÎÛÐÐà ÚÐÛÎÑ
[[964,227,1651,292][14][B,I,][Times New Roman]]Town Organization Chart
Residents of Los Gatos
Town ClerkTown CouncilTown Treasurer
Boards &
Town AttorneyTown Manager
Commissions
Assistant Town
Manager
Community
Finance &
Parks & Public
Human ResourcesDevelopment &
Administrative
Works
Redevelopment Agency
Services
Community
LibraryPolice
Services
x
¨·
[[655,1202,1914,1286][18][B,I,][Times New Roman]]Managements Discussion and Analysis
MDA
ANAGEMENTSISCUSSION AND NALYSIS
Our discussion and analysis of the Town of Los Gatos financial performance provides an overview of the
Towns financial activities for fiscal year ended June 30, 2006. This information is presented in
conjunction with the audited financial statements that follow this section.
FH
INANCIAL IGHLIGHTS
Town assets exceeded its liabilities at the close of FY 2005/06 by $92,293,699 (net assets). Of this
amount, $38,609,085 (unrestricted net assets) may be used to meet the Towns ongoing obligations to
citizens and creditors.
The Towns net assets increased by $9,353,131 during the fiscal year. The increase is mostly due to
growth in net assets in: the Towns General Fund (approximately $5.9 million); the Redevelopment
Agencys Debt Service Fund (of $.9 million); and the Low and Moderate Housing funds (of $.8
million). The General Fund net asset increases are explained largely by the one-time sale of the
Towns sewer assets to the West Valley Sanitation District for approximately $2.4 million,
expenditure savings experienced by many departments in FY 2005/06, sales tax growth exceeding
estimates due to receipt of one-time revenues resulting from appeals at the State level and growth
of one internet commerce retailer beyond assumptions forecast in the FY 2005/06 budget.
Redevelopment debt service and housing funds experienced growth in net assets resulting from tax
increment revenues exceeding expenditures for the current year.
At the end of FY 2005/06, unreserved fund balance for the General Fund was $18,000,209,
approximating 68.89% of General Fund expenditures for FY 2005/06.
The Town and Redevelopment Agency continued its efforts in addressing the critical infrastructure
needs of the Town. Approximately $4.4 million in Town infrastructure and other capital asset
improvements were made in the year, including a $407,386 capital investment made to the Towns
storm drain systems, $369,894 in alley improvements, $268,415 in parking lot improvements,
$248,595 in retaining wall repairs, and approximately $1.7 million invested in the Towns streets,
parking lots, and downtown streetscapes, providing improvements to the Towns traffic flows and
adding enhancements to the downtown. With these investments, overall pavement condition ratings
on the Towns streets continue to improve.
OFS
VERVIEW OF THE INANCIALTATEMENTS
The financial statements presented herein include all of the activities of the Town and its component units
using the integrated approach as prescribed by GASB Statement No. 34.
Government-wide financial statements
The government-wide financial statements present the financial picture of the Town from the economic
resources measurement focus using the accrual basis of accounting.
presents information on all of the Towns assets and liabilities, with the
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difference between the two reported as net assets. Over time, increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the Town is improving or deteriorating.
presents information showing how the Towns net assets changed during the
èÔ× ÉÈÛÈ×Ï×ÎÈ ÍÖ ÛÙÈÓÆÓÈÓ×É
most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,
uncollected taxes and earned but unused vacation leave).
3
Both of the government-wide financial statements distinguish functions of the Town that are principally
supported by taxes and intergovernmental revenues from other functions that are
ÕÍÆ×ÊÎÏ×ÎÈÛÐ ÛÙÈÓÆÓÈÓ×É
intended to recover all or a significant portion of their costs through user fees and charges (
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. The governmental activities of the Town include public safety, parks and public works,
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community development, library, community services, debt service, redevelopment, and general
government. The Town has no business-type activities.
The government-wide financial statements include not only the Town itself (known as the primary
government), but also a legally separate Town of Los Gatos Redevelopment Agency (the Agency) for
which the Town is financially accountable. Financial information for this blended component unit is
reported as if it were part of the primary government because its sole purpose is to provide redevelopment
in the Town. Additional information on this legally separate entity can be found in Note 1(A) in the notes
to basic financial statements.
Fund financial statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The Town, like other local governments, uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements. The funds of
the Town are segregated into three categories: governmental funds, proprietary funds, and fiduciary
funds.
The Towns basic services are reported in governmental funds, which focus on
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how money flows into and out of those funds and the balances left at year-end that are available for
spending. These funds are reported using the modified accrual basis of accounting, which measures cash
and other financial assets that can readily be converted to cash. The governmental fund statements
provide a detailed short-term viewof the Towns general government operations and the basic services it
provides. Governmental fund information helps determine whether there are more or fewer financial
resources that can be spent in the near future to finance the Towns operations. Both the governmental
fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund
balances provide a reconciliation to facilitate this comparison between and
ÕÍÆ×ÊÎÏ×ÎÈÛÐ ÖÇÎØÉ
ÕÍÆ×ÊÎÏ×ÎÈÛÐ ÛÙÈÓÆÓÈÓ×É
The Town maintains one type of proprietary fund: internal service funds. Proprietary
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funds are reported using the accrual basis of accounting. Internal service funds are an accounting device
used to accumulate and allocate costs internally among the Towns various functions. The Town uses
internal service funds to account for its fleet of vehicles and computer equipment, and for its risk
management activities. The Internal Service funds have been included within governmental activities in
the government-wide financial statements.
Fiduciary funds are used to account for resources held for the benefit of parties outside
öÓØÇÙÓÛÊÃ ÖÇÎØÉ ¦
the Town. Fiduciary funds are not reflected in the government-wide financial statements because the
resources of those funds are not available to support the Towns own programs.
Notes to basic financial statements
The notes provide additional information essential to a full understanding of the data provided in the
government-wide and fund financial statements. The notes to basic financial statements can be found on
pages 41-68 of this report.
4
Government-wide Financial Analysis
Net assets may serve over time as a useful indicator of a governments financial position. In the case of
the Town, assets exceeded liabilities by $92.29 million at the end of the current fiscal year.
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î×È ÛÉÉ×ÈÉ
õÍÆ×ÊÎÏ×ÎÈÛÐ
ûÙÈÓÆÓÈÓ×É
20062005
Current and other assets$ 71,294,498$62,750,920
Capital assets 52,364,121 49,979,229
Total assets 123,658,619 112,730,149
Current liabilities 19,621,627 16,001,576
Long-term liabilities outstanding 11,743,297 13,788,005
Total liabilities 31,364,924 29,789,581
Net assets:
Investment in capital assets,
net of related debt 41,019,121 38,234,231
Restricted 12,665,493 13,295,871
Unrestricted 38,609,085 31,410,466
Total net assets$ 92,293,699$82,940,568
Capital assets represent approximately 42.35% of the Towns net assets consisting of investments made
by the Town in permanent or long-lived assets (e.g., land, buildings, infrastructure, machinery and
equipment), less any related debt used to acquire those assets still outstanding. The Town uses these
capital assets to provide services to citizens and customers; consequently, these assets are available
ÎÍÈ
for future spending. Although the Towns investment in its capital assets is reported net of related debt, it
should be noted that the resources needed to repay this debt must be provided from other sources since the
capital assets themselves cannot be used to liquidate these liabilities.
For the current year, increased by $2,784,892.The
óÎÆ×ÉÈÏ×ÎÈ ÓÎ ùÛÌÓÈÛÐ ûÉÉ×ÈÉ î×È ÍÖ ê×ÐÛÈ×Ø ø×ÚÈ
increase is the net result of approximately $4.4 million of capital asset additions made in FY 2005/06 less
current year depreciation expense reducing total asset values by approximately $2.01 million and asset
retirements of approximately $3,600.
An additional portion of the Towns net assets (3.68 percent) represents resources that are subject to
external restrictions on how they may be used. The balance decrease for the year is
ê×ÉÈÊÓÙÈ×Ø î×È ûÉÉ×È
explained largely by the expenditure of the remaining cash balances from the 2002 Certificate of
Participation issuance of $10.7 million, the proceeds of which are restricted for use in eligible
redevelopment related capital improvements.
The balance of may be used to meet the Towns ongoing obligations to citizens,
çÎÊ×ÉÈÊÓÙÈ×Ø î×È ûÉÉ×ÈÉ
customers, and creditors. The Towns represent 41.83 percent of the Towns net
çÎÊ×ÉÈÊÓÙÈ×Ø î×È ûÉÉ×ÈÉ
assets at year end.
5
Town of Los Gatos
Statement of Activities
For the Year Ended June 30, 2006
Governmental
Activities
20062005
Revenues:
Program revenues:
Charges for services
Operating grants
and contributions
Capital grants
and contributions
General revenues:
Property taxes
Sales taxes
Other taxes
Motor Vehicle In Lieu
Investment earnings
Proceeds from sale of property
Other
Total revenues
Expenses:
Police Department
Parks and Public Works
General government
Community Development
Library Services
Redevelopment
Interest and fees
Community Services
Sanitation
Total expenses
Increase in net assets
Net assets, beginning
Prior period adjustments
Net assets, ending
Governmental activities
As shown in the schedule above, governmental activities for the year increased the Towns Net Assets by
$9,353,131. Key elements of the increase in net assets are as follows:
Property Tax Revenues collected for the Town and Redevelopment Agency accounted for 34.11% of
total Town revenues. Property Tax increased 15.75% from the prior year. The increase from the
prior year amount is mainly the result of two factors. The first factor is the gain resulting from
turnover of pre-Proposition 13 parcels to new owners. In most cases the property is reassessed at
the current market value, leading to higher taxes collected for that parcel. The second factor is that
property in the Town remains very desirable, home prices in general remained strong, reflective of the
continued desirability of the Town.
Sales Tax revenue accounted for 21.38% of Town General Revenues at $8.7 million for the year,
exceeding the prior year collections by $751,436 or an increase of 9.51%. This recovery from the
6
prior year is due in large part to one-time payments relating to prior sales tax appeals and to the
performance of one internet commerce retailer that experienced large sales growth in the past fiscal
quarter.
Other Taxes and Motor Vehicle in Lieu Taxes of $2,914,491 accounted for 7.20% of General
Revenues, decreasing 33.75% from the prior years amount of $2,179,083. The increase is largely
attributable to a one-time event in which the State repaid $493,169 of Motor Vehicle License fee
backfills due to the Town from FY 2003/04, but was instead borrowed by the State to balance its
budget in FY 2003/04 with a promise by the State to repay it in future years.
Investment Earnings of $1,922,819 were a substantial improvement from the prior year, reflecting a
growth in size of the invested portfolio and the portfolios more favorable interest rate position
relative to the market in prior years.
Total expenditures increased approximately $1,448,812 or 4.88% from the prior year, due mostly to
increases in three service areas, police, parks and public works, community development, and
redevelopment activities. In the case of the police services, the increases in operating expenses were due
to two primary factors, a continued increase in overtime and cost increases in accordance with previously
bargained labor contracts, most notably in employers pension contributions. The increase to parks and
public works expenditures was attributable to increased use of temporary services to provide services due
to winter storm damage. The increase to community development expenditures were due mainly to a
spike in service demands delivered for private development, which were funded by pass through fees
and charges for services rendered. The growth in library services expenditures was partly attributable to
the increase in its materials budget which had been reduced in prior years. Adding to the overall increase
was the normal inflationary cost escalation, and continued growth in the demand for essential Town
services.
FATF
INANCIAL NALYSIS OF THE OWNSUNDS
The Town uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental funds
The focus of the Towns governmental funds is to provide information on near-term inflows, outflows,
and balances of spendable resources. As of the end of FY 2005/06, the Towns Governmental Funds
reported combined ending fund balances of $42,143,394, an increase of $6,207,813 in comparison with
the prior year. The majority of this increase is from the Towns General Fund, which accounts for
approximately $5.8 million of the increase, the Redevelopment Agencys Debt Service which contributed
$.9 million, and the Low and Moderate Housing funds with a $.8 million. These increases were offset by
a decline in the RDA Capital Projects fund of $.9 million and other funds of $0.4 million.
The General Fund net asset increases are attributed to a number of factors. The largest factor is receipt of
approximately $2.4 in one-time revenues related to the sale of the Towns sewer assets to the West
Valley Sanitation District. Other factors included expenditure savings Town-wide in FY 2004/05, Sales
Tax growth exceeding estimates due to receipt of one-time revenues resulting from appeals at the State
level and growth of one internet commerce retailer beyond assumptions forecast in the FY 2005/06
budget. Redevelopment funds experienced growth in net assets resulting from tax increment revenues
exceeding expenditures for the current year.
$27,925,853 or approximately 66.26% of the total amount of governmental fund balances of $42,143,39
constitutes unreserved fund balance, which is available for spending at the Towns discretion. The
remainder of fund balance is reserved to indicate that it is not available for new spending because it has
7
already been committed to: 1) liquidate contracts and purchase orders of the prior period ($1,137,370); 2)
pay debt service ($455,193); 3) provide for loans/advances due to the Town ($1,500,000) and solid waste
program ($150,000); 4) provide for appropriated capital projects ($4,782,393); 5) provide for low and
moderate housing ($5,111,259); 6) provide for long term notes receivable ($975,968); and 7) to provide
for dedicated repair and maintenance in lighting and landscape districts ($105,358).
The General Fund is the chief operating fund of the Town. It accounts for all financial
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resources except those required to be accounted for in another fund. At the end of the current fiscal year,
unreserved fund balance of the General Fund was $18,000,209, while total fund balances were
$20,129,082. General fund revenues (including operating transfers-in) increased by $5,781,111 from the
prior year. The largest increase occurred in the growth of sales tax, primarily due to one-time receipts
from the sale of the Towns sewer asset infrastructure of approximately $2.4 million. Other gains were
experienced in Sales and Other taxes ($1,106,668) and interest income ($3,147,297). General Fund
expenditures (including transfers-out) increased $1,458,983 from the prior fiscal year. The biggest factor
contributing to the overall increase in expenditures was the rising cost of pension benefits for public
safety employees, increases in public safety overtime, an increase in emergency related temporary costs
for parks and public works due to winter storm activity, library materials expenditure restoration from
prior year reductions, and an increase in community development services, (which are largely recovered
through matching fees charged by the Town for private development activities).
- The Special Revenue funds are used to account for specific revenue sources for
éÌ×ÙÓÛÐ ê×Æ×ÎÇ× öÇÎØÉ
which expenditures are restricted by law or regulation to finance particular functions or activities of the
Town. During the current year, Special Revenue fund revenues declined from prior years, experiencing a
decrease of 23.67% ($302,155) from levels received in the prior year. This was due to the reduction in
charges for services due to the mid-year sale of the Towns sewer assets to the West Valley Sanitation
District and the cessation of sewer maintenance services upon the sale. Because of the aforementioned
sale, operating expenditures decreased 30.39% from the prior year ($303,790).
The Debt Service Fund balance totals $5,514,922, all of which is reserved or
ø×ÚÈ é×ÊÆÓÙ× öÇÎØÉ
designated for the payment of debt service for Town and Redevelopment Agency activities. The net fund
balance increased in the debt service fund by $933,077 primarily due to redevelopment tax increments
exceeding agency debt service expenditures during the year.
The Capital Projects fund is used to account for resources used for the acquisition
ùÛÌÓÈÛÐ ìÊÍÒ×ÙÈ öÇÎØÉ
or construction of major capital projects within the governmental fund types. Total Town Capital Project
Fund balances at year end were $14,873,603, a decrease of $677,211 from the prior year. The decrease is
attributable mostly to approximately $1.2 million in current year capital project expenditures in the
Towns capital improvement fund (GFAR), and expenditure of approximately $1.5 million of
expenditures of the remaining 2002 COP proceeds in the RDA Capital projects fund for downtown
project area street improvements, and the approximate $800K expenditure of Gas Tax capital projects
funds for street improvements, offset by GFAR revenues of approximately $675,000, Town loan proceeds
of $500K to the Redevelopment Agency Capital Projects Fund, Gas Tax current year revenues of
approximately $560K, and increases in fund balances in the Redevelopment Agencys Low and Moderate
Income Housing Fund of approximately $800,000.
Proprietary funds
The Towns proprietary funds provide the same type of information found in the government-wide
financial statements, but in more detail.
The Town has seven internal service funds: Workers Compensation; Self
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Insurance; Stores; Vehicle Maintenance; Building Maintenance; Management Information Systems; and
8
Equipment Replacement funds. Revenues to these funds are generated from fees charged to the Towns
operating programs for services provided.
The Equipment Replacement Fund charges replacement costs and the Vehicle Maintenance Fund charges
vehicle maintenance costs to all user departments based on equipment assignment and usage of
equipment. Net operating income before transfers at year end for both funds was $72,184 and ($18,475)
respectively versus $222,582 and $(13,539) in the prior year. The decrease in operating income in the
Equipment Replacement from the prior year is attributable to significant vehicle purchases (patrol units,
motorcycles, and street sweepers) not made in FY 2004/05. The decline in the Vehicle Maintenance Fund
net operating income reflects a reduction in charges for services to more closely align with estimated
operating expenditures expected for FY 2005/06.
The Building Maintenance, Stores and Management Information Systems funds charge premiums based
on use and labor charges to provide Town-wide building maintenance, mail and office inventory and
duplication charges, and management information services. Net operating income (loss) before transfers
at year end was ($311,732), $11,891, and $179,137 respectively. Expenditures exceeded revenues in the
Building Maintenance Fund due to the scheduled expenditure of retained earnings for Civic Center
building improvements as set for the in the Towns FY 2005/06 Capital Improvement Plan.
The Workers Compensation and Self Insurance Fund charge premiums based on exposure levels by
department for liability, property, workers compensation and self-insurance costs. Net operating income
before transfers at year end was $373,504 and $107,240 respectively, versus $97,965 and $117,924 in the
prior year. Operating income increases for the year in both Workers Compensation and the Self
Insurance funds reflect the decreased experience of loss claims in the current year from the prior year in
the workers compensation and the similar claims experience in the current year as the prior year in the
general liability arena.
GFBH:
OVERNMENT UNDSUDGETARYIGHLIGHTS
Budget Adjustments
Comparing the FY 2005/06 original budget (or adopted) General Fund amount of $27,397,527, the final
budget amount of $27,799,092 shows a net increase of $401,565. Additions to the original budget
included approved additions of $401,565 in net miscellaneous adjustments approved by Town Council
throughout the fiscal year.
+++=
OriginalApprovedPrior Year Misc. Adjustments & Final
BudgetCarryforwards Encumbrances Mid-Year Budget
Adjustments
$27,397,527$-0-$-0-$401,565$27,799,092
Of note were the following budget adjustments that were a significant part of the total increase in the
authorized budget for FY 2005/06:
The General Fund appropriated budget was increased $325,000 to provide funding augmentations for
approved FY 2005/06 capital improvement projects as approved in the Towns capital improvement
plan.
Other General Fund adjustments included $40,000 in operating transfers to backfill projected revenue
shortfalls for FY 2005/06 in the Towns Parking Management program.
9
Miscellaneous net adjustments totaling $36,565 of supplemental appropriations also occurred in this
period. Included in these increases were additions to legal claims, a reduction in estimated demand for
fingerprinting services provided by the Police Department, and increased appropriations to meet
winter storm related emergency responses by the Parks and Public Works Department.
Capital Assets
The Towns investment in capital assets for its governmental activity as of June 30, 2006, is recorded at
$52,364,121 (net of accumulated depreciation). The investment in capital assets includes land, buildings
and improvements, infrastructure, construction in progress and machinery and equipment. During FY
2005/06 the Towns investment in capital assets for the current year totaled 12.39% for governmental
activities. Major capital asset events during the current fiscal year include the following:
$1.7 million in street improvements in the current year, including North Santa Cruz Avenue and
Los Gatos Almaden Road.
The Town made substantial improvements to alleyways, expending approximately $370,00 on
alleyway improvements in alleys near the downtown shopping area.
The Town also completed approximately $407,000 in storm drain improvements near North
Santa Cruz Avenue, improving traffic circulation and reductions in winter time ponding
occurrences in the affected area.
õÍÆ×ÊÎÏ×ÎÈÛÐ
ûÙÈÓÆÓÈÓ×É
ðÛÎØ
ùÍÎÉÈÊÇÙÈÓÍÎ ÓÎ ìÊÍÕÊ×ÉÉ
úÇÓÐØÓÎÕÉ
÷ËÇÓÌÏ×ÎÈ
óÎÖÊÛÉÈÊÇÙÈÇÊ×
Additional information on the Towns capital assets is found in note 5 of this financial report.
Debt Administration
At the end of the current fiscal year, the Town had total bonded debt outstanding of $11,345,000. The
entire liability is comprised of debt backed by the Towns obligation to pay lease payments to the Towns
Redevelopment Agency. The Towns long-term obligations outstanding as of June 30, 2006 consist of
the following:
Town of Los Gatos
Outstanding Debt June 30, 2006
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ûÙÈÓÆÓÈÓ×É
ù×ÊÈÓÖÓÙÛÈ×É ÍÖ ìÛÊÈÓÙÓÌÛÈÓÍÎ
èÍÈÛÐ íÇÈÉÈÛÎØÓÎÕ ø×ÚÈ
The Towns debt obligations decreased by $400,000 during the fiscal year. The decrease resulted from
the scheduled principal payments made in the fiscal year for the 2002 Certificates of Participation and the
1992 Certificates of Participation. The rating of the Towns certificates of participation series from
Moodys ranges from Aaa to Aa2 and from Standard & Poors from AAA to AA-. Additional
information on the Towns long-term debt can be found in note 6 of this report.
10
Economic Factors and Next Years Budgets and Rates
A product of an ongoing examination of how the Town provides cost-effective services, our budget
emphasizes outcomes or results for the community and allows for longer-term financial planning
decisions.
During the development and adoption of the Towns FY 2006/07 budget, the Town Council and
management considered the following factors:
The Town anticipated modest increases in Sales Tax growth for FY 2006/07. Though some
retailers continued to experience sluggish growth in sales in FY 2006/07, there were positive
signs in certain sectors such as general retail and auto sales. Sales Tax estimates were forecast
and budgeted by staff to increase $500,000 from the prior year to total approximately $7.8 million
dollars for FY 2006/07. With Sales Tax representing approximately 30% of the Towns General
Fund revenues, any impairment to this moderate recovery in local sales tax collections will
continue to impact the Town.
General property tax collections representing approximately 23% of the Towns General Fund
revenues reflect positive growth of approximately 16.7% (not including the States Property Tax
backfill shifts). The growth in property tax is largely due to the reassessment of properties due
to change in ownership. However, the continuing growth trend does point to the Towns
continued desirability as a place to live in the greater Santa Clara Valley.
The Towns investment portfolio experienced a small improvement in its overall weighted
average annual yield, rising from slightly from the 2.85% levels early in the fiscal year. Due to a
forecasted higher interest rate climate for FY 2006/07, investment earnings were expected to
continue to rise from the returns experienced in FY 2005/06. This trend was built into the
adopted budget estimates reflecting an approximate 3.1% increase for the upcoming year.
Transient Occupancy Tax revenues improved moderately from the prior year, possibly due to
higher occupancy rates and local economic recovery. The small increase occurred despite the
loss in total rooms due to the conversion of one local hotel to a commercial office use in late
2005. A small increase from $870,000 to $930,000 was budgeted for FY 2006/07, reflecting the
loss in overall room capacity, offset by a moderate recovery in tourism and business travel
experienced locally since the low levels seen in recent years.
Requests for Information
This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors, with a
general overview of the Towns finances and to demonstrate the Towns accountability for the money it
receives. If you have any questions about this report or need any additional information, contact the
Stephen Conway, Director of Finance, at 110 East Main Street, Los Gatos, California, 95030, or phone
(408) 354-6828.
11
[[848,1202,1721,1286][18][B,I,][Times New Roman]]Basic Financial Statements
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS AND STATEMENT OF ACTIVITIES
The purpose of the Statement of Net Assets and the Statement of Activities is to summarize the
entire financial activities and financial position of the Town. They are prepared on the same
basis of accounting (accrual) used by most businesses, which means they include all the Towns
assets and liabilities, as well as its revenues and expenses. The effect of the entire Towns
transactions are accounted for, regardless of when cash changes hands, and all material internal
transactions between funds have been eliminated.
The Statement of Net Assets report the Towns total assets and liabilities, including capital assets
and long-term debt, and presents similar information to the old balance sheet format while
focusing the reader on the composition of the Towns net assets (assets minus liabilities). The
Statement of Net Assets summarizes the financial position of the Towns governmental activities
in a single column.
The Towns governmental activities include the activities of the General Fund, Special Revenue
Funds, Capital Projects Funds and Debt Service Funds. These funds are serviced by the Towns
Internal Service Funds; therefore internal service activities are consolidated with governmental
activities after eliminating inter-fund transactions and balances.
The Statement of Activities reports increases and decreases in the Towns net assets and is
prepared on the full accrual basis of accounting, which means it includes all the Towns revenues
and expenses regardless of when cash changed hands. This differs from the modified accrual
basis of accounting used in the fund financial statements, which reflect only current assets,
current liabilities, available revenues and measurable expenditures.
The format of the Statement of Activities presents the Towns expenses before revenues and by
program. Program revenues (revenues generated directly by specific programs) are deducted
from program expenses to arrive at the net expense of each governmental program, which is
offset by general revenues as listed before the change in net assets. From these components, the
change in net assets is computed and reconciled to the Statement of Net Assets.
Both of these statements include the financial activities of the Town and the Redevelopment
Agency of the Town of Los Gatos, which is a legally separate, but a component unit of the Town
because it is controlled by the Town, which is financially accountable for its activities.
The Statement of Net Assets, Statement of Activities, fund financial statements and the notes to
financial statements comprise the Basic Financial Statements of the Town. The term Basic
Financial Statements replaces the term General Purpose Financial Statements which is no
longer used.
TOWN OF LOS GATOS
STATEMENT OF NET ASSETS
JUNE 30, 2006
Governmental
Activities
ASSETS
Cash and investments (Note 2)$ 64,460,460
Restricted cash and investments (Note 2) 3,630,643
Receivables:
Accounts 1,221,089
Interest 268,700
Intergovernmental 709,266
Materials, supplies and deposits 28,376
Long term notes receivables (Note 3) 975,968
Capital Assets (Note 5):
Nondepreciable 14,165,194
Depreciable, net of accumulated depreciation 38,198,927
Total Assets$ 123,658,623
LIABILITIES
Accounts payable$ 977,977
Accrued payroll and benefits 4,096,350
Accrued interest payable 220,389
Pass through obligations 2,573,514
Unearned Revenue 5,772,127
Deposits 3,618,484
Claims payable (Note 11) 614,560
Long-term liabilities (Note 6):
Due within one year
Compensated absences (Note 1) 1,748,226
Certificates of participation 415,000
Due in more than one year
Compensated absences (Note 1) 398,297
Certificates of participation 10,930,000
Total Liabilities$ 31,364,924
NET ASSETS
(Note 8)
Invested in capital assets, net of related debt$ 41,019,121
Restricted for:
Capital projects 3,486,853
Housing 5,111,260
Special revenue projects 1,179,275
Debt service 455,193
Redevelopment projects 2,432,912
Total Restricted Net Assets 12,665,493
(1)
Unrestricted
38,609,085
Total Net Assets$ 92,293,699
èÔ× ÛÏÍÇÎÈ ÌÊ×É×ÎÈ×Ø ÛÉ ÓÎ ÇÎÊ×ÉÈÊÓÙÈ×Ø Î×È ÛÉÉ×ÈÉ ÓÉ ÛÙÙÇÊÛÈ× ÚÇÈ ÏÓÉÐ×ÛØÓÎÕ ûÐÈÔÍÇÕÔ ÙÇÊÊ×ÎÈ ÛÙÙÍÇÎÈÓÎÕ ÌÊÛÙÈÓÙ×É Ê×ËÇÓÊ× ÈÔ× ÇÉ× ÍÖ ÈÔ× È×ÊÏ
(1)
çÎÊ×ÉÈÊÓÙÈ×Ø î×È ûÉÉ×ÈÉ ÈÔ×É× ÖÇÎØÉ ÛÊ× ÓÎ ÖÛÙÈ Ø×ÉÓÕÎÛÈ×Ø ÖÍÊ ÉÌ×ÙÓÖÓÙ ÌÇÊÌÍÉ×É èÔ×à ÛÊ× ÛÎ ÍÆ×ÊÛÐÐ ÖÓÎÛÎÙÓÛÐ ÌÍÉÓÈÓÍÎ ÓÎØÓÙÛÈÍÊ ÛÎØ ÎÍÈ ÈÔ× ÛÏÍÇÎÈ
ÍÖ ÙÇÊÊ×ÎÈ Ê×ÉÍÇÊÙ×É ÛÆÛÓÐÛÚÐ× ÖÍÊ ÚÇØÕ×ÈÛÊà ÌÇÊÌÍÉ×É
The notes to the financial statements are an integral part of this statement
12
TOWN OF LOS GATOS
STATEMENT OF ACTIVITIES
JUNE 30, 2006
Net (Expense)
Revenues and
Changes in
Program RevenuesNet Assets
OperatingCapital
Charges forGrants andGrants andGovernmental
Functions/ProgramsExpensesServicesContributionsContributionsActivities
Governmental Activities:
Police department$ 11,133,362$ 1,343,028$ 745,797$ - $ (9,044,537)
Parks and public works 6,523,888 591,079 549,873 931,616 (4,451,320)
General government 4,383,584 1,981,557 - - (2,402,027)
Community development 2,887,818 3,070,115 - - 182,297
Redevelopment 2,093,546 - - - (2,093,546)
Library services 1,880,465 62,444 11,379 - (1,806,642)
Community services 948,650 170,836 180,897 - (596,917)
Sanitation 574,344 690,314 7,857 - 123,827
Interest and fees 708,585 - - - (708,585)
Total Governmental Activities31,134,242$ $ 7,909,373$ 1,495,803$ 931,616 (20,797,450)
General revenues:
Taxes:
Property taxes 13,810,457
Sales taxes 8,655,566
Other taxes 2,247,997
Motor vehicle in lieu 666,494
Investment earnings 1,922,819
Miscellaneous 2,847,248
Total general revenues 30,150,581
Change in Net Assets 9,353,131
Net Assets - Beginning 82,940,568
Net Assets - Ending$ 92,293,699
The notes to the financial statements are an integral part of this statement
13
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
FUND FINANCIAL STATEMENTS &
MAJOR GOVERNMENTAL FUNDS
[[300,616,898,673][12][B,I,][Times New Roman]]Fund Financial Statements
:
The Fund Financial Statements only present major funds individually while nonmajor funds are
combined in a single column. Major funds are generally defined as having significant activities
or balances in the current year. No distinction is made between fund types and the practice of
combining like funds and presenting their totals in separate columns has been discontinued along
with the use of the General Fixed Assets and General Long-Term Debt Account Groups.
[[298,1076,911,1133][12][B,I,][Times New Roman]]Major Governmental Funds
:
The Town determined that the following funds were major funds for the year ended June 30,
2006. Individual non-major funds can be found in the supplemental section.
General Fund
is the general operating fund of the Town and is used to account for all financial
resources except those required to be accounted for in another fund.
Appropriated Reserves Fund
is used to account for resources provided for capital projects not
fully funded from other sources.
Certificates of Participation Fund
is used to account for the 1992 and 2002 Certificates of
Participation issued to finance the Parking Lot #4 project ad several capital improvement
projects throughout the Town.
Redevelopment Agency Capital Projects Fund
is used to account for redevelopment projects
and related property tax revenue.
TOWN OF LOS GATOS
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2006
RedevelopmentOther Total
AppropriatedCertificates of Agency CapitalGovernmentalGovernmental
GeneralReservesParticipationProjectsFundsFunds
ASSETS
Cash and investments (Note 2)$ 26,391,862$ 8,062,085$ 9,026,911$ 98,918$ 8,912,409$ 52,492,185
699,160
Restricted cash and investments (Note 2) - - 454,892 2,421,265 3,575,317
Receivables:
Accounts 526,643 90,761 - - 601,372 1,218,776
Interest 268,700 - - - - 268,700
Intergovernmental Receivable 552,785 - 61,499 - 94,982 709,266
Interfund Receivable - - - - - -
Long Term Notes Receivable (Note 3) 478,873 - - - 497,095 975,968
Advances to Other Funds (Note 4) 1,650,000 - - - - 1,650,000
Total Assets$ 29,868,863$8,152,846$9,543,302$2,520,183$ 10,805,018$60,890,212
LIABILITIES
Accounts Payable$ 703,283$ 41,636$ 54,866$ 75,804$ 45,210$ 920,799
Accrued payroll and benefits 4,046,135 181 - 11,468 10,897 4,068,681
Pass Through Obligations - - 2,573,514 - - 2,573,514
Deferred revenue 1,228,665 4,268,449 - - 275,012 5,772,126
- - 3,614,281
Deposits 3,614,281 --
Advance from Other Funds (Note 4) - - 1,500,000 - 150,000 1,650,000
Compensated Absences (Note 1) 147,415 - - - - 147,415
Total Liabilities 9,739,779 4,310,266 4,128,380 87,272 481,119 18,746,816
FUND BALANCE (Note 8)
Reserved for:
Encumbrances - - - 1,137,370 - 1,137,370
Capital Outlay - - - 1,295,541 3,486,852 4,782,393
Debt Service - - 454,892 - - 454,892
Advances 1,650,000 - - - - 1,650,000
Repair and Maintenance - - - - 105,358 105,358
Long Term Notes Receivable 478,873 - - - 497,095 975,968
Low & Moderate Housing - - - 5,111,259- 5,111,259
Unreserved, designated for:
Civic Center Improvement 663,086 - - - - 663,086
Solid waste management - - - - 329,914 329,914
Open Space 562,000 - - - - 562,000
Parking 186,930 1,972,000 - -- 2,158,930
Manager's Contingency 100,000 - - - - 100,000
Productivity Enhancements 100,000 - - - - 100,000
Economic Uncertainty 3,678,001 - - - - 3,678,001
Capital Projects 4,143,889 1,870,580 - - - 6,014,469
Carryover 66,900 - - - - 66,900
Grants 12,750 - - - - 12,750
Revenue stabilization 4,048,887 - - - - 4,048,887
Sewer asset proceeds 2,438,660 - - - - 2,438,660
Debt Service - - 4,960,030 - - 4,960,030
Unreserved, undesignated in:
General Fund 1,999,108 - - - - 1,999,108
Special Revenue - - - - 793,421 793,421
Total Fund Balances 20,129,084 3,842,580 5,414,922 2,432,911 10,323,899 42,143,396
Total Liabilities and Fund Balance$ 29,868,863$8,152,846$9,543,302$2,520,183$ 10,805,018$60,890,212
The notes to the financial statements are an integral part of this statement
14
TOWN OF LOS GATOS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO
THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS - GOVERNMENTAL ACTIVITIES
JUNE 30, 2006
Fund Balance - Total Governmental Funds
$ 42,143,396
Amounts reported for Governmental Activities in the Statement of Net Assets are
different from those reported in the Governmental Funds because of the following:
CAPITAL ASSETS
Capital assets used in Governmental Activities are not financial resources and,
therefore, are not reported in the Governmental Funds. 52,364,121
ALLOCATION OF INTERNAL SERVICE FUND NET ASSETS
Internal service funds are used by management to charge the cost of management of
certain activities, such as insurance, central services and maintenance to individual governmental funds. The
net current assets of the internal service funds are therefore included as Governmental Activities in the
Statement of Net Assets.
11,350,678
ACCRUAL OF INTEREST ON LONG TERM DEBT
Interest payable on long-term debt does not require the use of current financial
resources and, therefore, are not reported in the Governmental Funds. (220,386)
LONG-TERM LIABILITIES
Long-term liabilities, including bonds payable, are not due and payable in the current
period and, therefore, are not reported in the Governmental Funds.
Certificates of participation$ (11,345,000)
Compensated absences (1,999,110) (13,344,110)
Net Assets - Governmental Activities
$ 92,293,699
The notes to the financial statements are an integral part of this statement
15
TOWN OF LOS GATOS
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2006
RedevelopmentOther Total
AppropriatedCertificates of Agency CapitalGovernmentalGovernmental
GeneralReservesParticipationProjectsFundsFunds
REVENUES
Property Taxes$7,755,200$ - $-$-$37,162$7,792,362
Property Tax Increments - - 6,323,502- 6,323,502-
Less: Educational Revenue Augmentation Fund - - (347,440)- (347,440)-
Sales Taxes 8,655,566 - -- 8,655,566-
Other Taxes2,178,664160,579--348,9882,688,231
Licenses & Permits2,584,239 - --26,8692,611,108
Intergovernmental2,782,191266,584--944,2573,993,032
Charges for Services3,035,61016,352-6,676470,5403,529,178
Fines and forfeitures210,888 - --397,442608,330
Interest4,416,586 - 189,93885,449261,9424,953,915
Other -229,231-3,463-232,694
Total Revenues31,618,944672,7466,166,00095,5882,487,20041,040,478
EXPENDITURES
Current:
General Government4,358,853 - -- 4,358,853-
Public Safety10,680,250 - --512,92011,193,170
Parks and Public Works 4,742,401 - --31,2384,773,639
Community Development2,905,492 - -- 2,905,492-
Community Services865,029 - --85,304950,333
Library Services1,876,022 - -- 1,876,022-
Sanitation and Other - - --551,164551,164
Capital Outlay192,3431,194,242-1,482,9501,813,3134,682,848
Redevelopment - - 2,573,514- 2,573,514-
Debt service:
Principal - - 400,000--400,000
Interest & Fees - - 686,094-27,985714,079
Total Expenditures25,620,3901,194,2423,659,6081,482,9503,021,92434,979,114
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES5,998,554(521,496)2,506,392(1,387,362)(534,724)6,061,364
OTHER FINANCING SOURCES (USES)
Transfers in (Note 4)430,839715,409-500,0001,140,9882,787,236
Transfers (out) (Note 4)(542,673)(205,081)(1,573,315)-(319,716)(2,640,785)
Total Other Financing Sources (Uses)(111,834)510,328(1,573,315)500,000821,272146,451
NET CHANGES IN FUND BALANCES5,886,720(11,168)933,077(887,362)286,5486,207,815
BEGINNING FUND BALANCES14,242,3643,853,7484,481,8453,320,27310,037,35135,935,581
ENDING FUND BALANCES$20,129,084$3,842,580$5,414,922$2,432,911$10,323,899$42,143,396
The notes to the financial statements are an integral part of this statement
16
TOWN OF LOS GATOS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES TO
THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES - GOVERNMENTAL ACTIVITIES
JUNE 30, 2006
Net change in Fund Balances - Total Governmental Funds
$ 6,207,815
Amounts reported for Governmental Activities in the Statement of Activities are
different because of the following:
CAPITAL ASSET TRANSACTIONS
Governmental funds report capital outlays as expenditures. However, in the Statement of
Activities the cost of those assets is capitalized and allocated over their estimated useful lives and
reported as depreciation expense.
Expenditures for capital assets4,398,712$
Current year depreciation(2,010,226) 2,388,486
Governmental funds do not report loss on disposal of capital assets. However, in the
government-wide statement of activities and changes in net assets, the cost to dispose
of capital assets, net any proceeds, is accounted for as a special item.
(3,592)
LONG-TERM DEBT PROCEEDS AND PAYMENTS
Debt proceeds provide current financial resources to governmental funds, but issuing debt
increases long-term liabilities in the Statement of Net Assets.
Repayment of debt principal is an expenditure in the governmental funds, but the repayment
reduces long-term liabilities in the Statement of Net Assets.
Certificates of participation 400,000
ACCRUAL OF NON-CURRENT ITEMS
The amount below included in the Statement of Activities does not require the use
of current financial resources and therefore is not reported as revenue or expenditures in governmental
funds (net change):
Deferred revenue
Interest payable 5,913
Compensated absences (45,136)
ALLOCATION ON INTERNAL SERVICE FUND ACTIVITY
Internal service funds are used by management to charge the costs of certain activities to
individual funds. The net revenue of the internal service fund is reported with governmental activities. 399,645
Change in Net Assets - Governmental Activities
$ 9,353,131
The notes to the financial statements are an integral part of this statement
17
TOWN OF LOS GATOS
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
VARIANCE WITH
FINAL BUDGET
ORIGINAL FINALPOSITIVE
BUDGETBUDGETACTUAL(NEGATIVE)
REVENUES
Property Taxes7,091,890$ 7,591,890$ 7,755,200$ 163,310$
Sales Taxes 7,313,000 7,800,000 8,655,566 855,566
Other Taxes1,864,450 1,944,450 2,178,664 234,214
Licenses & Permits2,553,180 2,553,180 2,584,239 31,059
Intergovernmental2,135,750 2,731,702 2,782,191 50,489
Charges for Services2,965,070 2,810,870 3,035,610 224,740
Fines and forfeitures166,700 166,700 210,888 44,188
Interest1,523,150 4,139,860 4,416,586 276,726
Total Revenues25,613,190 29,738,652 31,618,944 1,880,292
EXPENDITURES
Current:
General Government:
Town Council151,390 151,390 145,952 5,438
Town Treasurer97,250 97,250 75,069 22,181
Town Clerk2,100 2,100 2,336 (236)
Town Attorney233,700 233,700 228,301 5,399
Town Manager2,290,310 2,293,021 2,209,782 83,239
Non-Departmental2,233,712 2,236,976 1,697,413 539,563
Total General Government5,008,462 5,014,437 4,358,853 655,584
Public Safety10,836,350 10,705,390 10,680,250 25,140
Parks & Public Works4,666,190 4,806,890 4,742,401 64,489
Community Development3,016,850 3,016,850 2,905,492 111,358
Community Services905,065 907,565 865,029 42,536
Library Services 1,903,860 1,903,860 1,876,022 27,838
Capital Outlay 176,000 194,350 192,343 2,007
Total Expenditures26,512,77726,549,34225,620,390928,952
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (899,587) 3,189,310 5,998,554 2,809,244
OTHER FINANCING SOURCES (USES)
Transfers in 673,060 603,780 430,839 (172,941)
Transfers (out) (307,500) (672,500) (542,673) 129,827
Total Other Financing Sources (Uses) 365,560 (68,720) (111,834) (43,114)
NET CHANGES IN FUND BALANCES$ (534,027)$ 3,120,590 5,886,720$ 2,766,130
FUND BALANCE, BEGINNING 14,242,364
FUND BALANCE, ENDING$ 20,129,084
The notes to the financial statements are an integral part of this statement
18
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
PROPRIETARY FUNDS -
INTERNAL SERVICE FUNDS
Internal service funds account for Town operations financed and operated in a manner similar to
a private business enterprise.The intent of the Town is that the cost of providing goods and
services to other Town funds be financed through user charges to those funds.
TOWN OF LOS GATOS
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2006
Governmental
Activities
Internal Service
Funds
ASSETS
Current Assets:
Cash and investments available for operations (Note 2)$ 11,968,273
Restricted cash and cash equivalents 55,328
Accounts Receivable 28,681
Materials, supplies, and deposits 28,377
Total current assets 12,080,659
Noncurrent Assets:
Capital assets, net of accumulated depreciation (Note 5) 96,614
Total noncurrent assets 96,614
Total Assets$12,177,273
LIABILITIES
Current Liabilities:
Accounts Payable$ 83,548
Accrued payroll and benefits 27,669
Deposits 4,203
Total current liabilities 115,420
Noncurrent liabilities:
Claims payable (Note 10) 614,560
Total noncurrent liabilities 614,560
Total Liabilities$729,980
NET ASSETS (Note 8)
Invested in capital assets, net of related debt$ 96,614
Unrestricted 11,350,679
Total Net Assets$11,447,293
The notes to the financial statements are an integral part of this statement
19
TOWN OF LOS GATOS
PROPRIETARY FUNDS
STATEMENT OF REVENUE, EXPENSES
AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2006
Governmental
Activities
Internal Service
Funds
OPERATING REVENUES
Charges for services$ 3,807,337
Refunds 8,981
Other 143,310
Total Operating Revenues 3,959,628
OPERATING EXPENSES
Salaries and related expenses 885,847
Insurance expenses 466,220
Depreciation 10,167
Services and Supplies 2,037,192
Total Operating Expenses 3,399,426
Operating Income 560,202
Transfers (out) (Note 4) (146,451)
Change in Net Assets 413,751
BEGINNING NET ASSETS 11,033,542
ENDING NET ASSETS$11,447,293
The notes to the financial statements are an integral part of this statement
20
TOWN OF LOS GATOS
PROPRIETARY FUNDS
STATEMENT OFCASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2006
Governmental
Activities
Internal Service
Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers$ 3,963,148
Payments to suppliers (2,108,299)
Payments to employees (882,375)
Claims paid (691,147)
NET CASH PROVIDED BY OPERATING ACTIVITIES 281,327
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets (148,074)
NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (148,074)
NET INCREASE IN CASH AND INVESTMENTS 133,253
CASH AND INVESTMENTS - BEGINNING 11,890,348
CASH AND INVESTMENTS - ENDING$12,023,601
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Operating Income 560,202
Adjustments to reconcile operating income to cash flows
provided by operating activities:
Depreciation 3,970
Change in assets and liabilities:
Receivables, net 3,515
Supplies and prepaids (10,297)
Accounts payable and other accrued expenses (46,162)
Other accrued expenses (213,450)
NET CASH PROVIDED BY OPERATING ACTIVITIES$297,778
The notes to the financial statements are an integral part of this statement
21
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
FIDUCIARY FUNDS
Trust funds are used to account for assets held by the Town as a trustee agent for individuals,
private organizations and other governments. The financial activities of these funds are excluded
from the government-wide financial statements, but are presented in separate Fiduciary Fund
financial statements.
Library Private Purpose Trust Fund
was established to provide for the servicing of donations
and bequests to the Town's Library Program.
Agency funds are used to account for assets held by the Town as an agent for individuals, private
organizations and other governments. The financial activities of these funds are excluded from
the government-wide financial statements, but are presented in separate Fiduciary Fund financial
statements.
Parking Improvement District Agency Fund
was established to account for non-obligation
bond debt service payments and assessments.
TOWN OF LOS GATOS
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2006
PRIVATE
PURPOSEAGENCY
TRUSTFUND
Parking
Improvement
LibraryDistrict #88
ASSETS
Cash and investments (Note 2)$ 305,692$ 74,222
Restricted cash and investments (Note 2) - 246,127
Intergovernmental receivable - 721,877
Total Assets 305,692$1,042,226
LIABILITIES
Accounts payable 475$ -
Due to other governments - 1,042,226
Total Liabilities 475$1,042,226
NET ASSETS
Reserved for library trust$ 305,217
Total Net Assets$ 305,217
The notes to the financial statements are an integral part of this statement
22
TOWN OF LOS GATOS
PRIVATE PURPOSE LIBRARY TRUST FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2006
Trust
Fund
ADDITIONS
Interest $ 7,890
Other 56,561
Total Additions 64,451
DEDUCTIONS
Library services 52,136
Total Deductions 52,136
CHANGE IN NET ASSETS 12,315
NET ASSETS, BEGINNING OF YEAR 292,902
NET ASSETS, END OF YEAR$305,217
See accompanying notes to financial statements
23
[[711,1202,1855,1286][18][B,I,][Times New Roman]]Notes to Basic Financial Statements
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description of the Financial Reporting Entity
The Town of Los Gatos (the Town ) operates under a Council-Manager form of government and
provides the following services; public safety (including police, emergency management and fire
services), parks and public works, community development, community services, library, sanitation,
public improvements, planning and zoning, general administration services, and redevelopment.
Redevelopment services are provided primary through the Redevelopment Agency of the Town.
The Town is largely a residential community located in the foothills of the Santa Cruz Mountains and
was incorporated as a municipal corporation in 1887. The Towns population as of January 1, 2005
was 28,989.
As required by generally accepted accounting principles, these financial statements present the Town
as the Primary Government, with its component unit for which the Town is considered financially
accountable. The component unit discussed below is included in the Town's reporting entity because
of the significance of their operational and financial relationships with the Town.
B. Description of Blended Component Units
The following component unit, although a legally separate entity, is reported as if it was part of the
primary government because the Town Council is that component unit's governing body or it provides
services entirely to the Town. Under the blended method of inclusion, the component units' balances
and transactions are reported in a manner similar to the balances and transactions of the Town itself.
The Town of Los Gatos Redevelopment Agency (the Agency ) was established as a result of the
Loma Prieta Earthquake in 1989 and the need to rebuild existing infrastructure. The
Redevelopment Agency area encompasses approximately 440 acres in and around Downtown Los
Gatos, which includes retail and residential areas, lodging, schools, and main traffic thoroughfares.
Projects such as street and utility reconstruction, parking, streetscape and civic improvements were
called out in the Plan. The Agency is governed by the Town Council in a separate capacity from the
Town as members of the Redevelopment Agency Board.
The financial statements of the Agencys can be obtained from the Town of Los Gatos at 110 East
Main St., Los Gatos, California, 95031.
C. Description of Joint Ventures and Public Entity Risk Pool
As described in Note 10, the Town participates in two joint venture and public entity risk pool
activities through formally organized separate legal entities. The financial activities of the ABAG
PLAN Corporation ( ABAG ) and the Local Agency Workers Compensation Excess Joint Powers
Authority ( LAWCX ) are not included in the accompanying basic financial statements as boards
separate from and independent of the Town administer them.
24
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
D. Basis of Presentation
The Towns Basic Financial Statements are prepared in conformity with accounting principles
generally accepted in the United States of America. The Government Accounting Standards Board
( GASB ) is the acknowledged standard setting body for establishing accounting and financial
reporting standards followed by governmental entities in the U.S.A.
The accompanying financial statements are presented on the basis set forth in Government
Accounting Standards Board Statements No. 34, úÛÉÓÙ öÓÎÛÎÙÓÛÐ éÈÛÈ×Ï×ÎÈÉ¥ÛÎØ ïÛÎÛÕ×Ï×ÎȪÉ
øÓÉÙÇÉÉÓÍÎ ÛÎØ ûÎÛÐÃÉÓÉ¥ÖÍÊ éÈÛÈ× ÛÎØ ðÍÙÛÐ õÍÆ×ÊÎÏ×ÎÈÉ, No. 36, ê×ÙÓÌÓ×ÎÈ ê×ÌÍÊÈÓÎÕ ÖÍÊ
ù×ÊÈÛÓÎ îÍÎ×ÄÙÔÛÎÕ× ê×Æ×ÎÇ×É ÛÎ ûÏ×ÎØÏ×ÎÈ ÍÖ õûéú éÈÛÈ×Ï×ÎÈ No. 33, No. 37, úÛÉÓÙ
öÓÎÛÎÙÓÛÐ éÈÛÈ×Ï×ÎÈÉ¥ÛÎØ ïÛÎÛÕ×Ï×Î黃 øÓÉÙÇÉÉÓÍÎ ÛÎØ ûÎÛÐÃÉÓÉ¥ÖÍÊ éÈÛÈ× ÛÎØ ðÍÙÛÐ
õÍÆ×ÊÎÏ×ÎÈÉ íÏÎÓÚÇÉ, and No. 38, ù×ÊÈÛÓÎ öÓÎÛÎÙÓÛÐ éÈÛÈ×Ï×ÎÈ îÍÈ× øÓÉÙÐÍÉÇÊ×É.
These Statements require that the financial statements described below be presented.
[[315,1310,970,1367][12][B,I,][Times New Roman]]Government-wide Statements:
The Statement of Net Assets and the Statement of Activities display
information about the primary government (the Town) and its component units. These statements
include the financial activities of the overall Town government, except for fiduciary activities.
Eliminations have been made to minimize the double counting of internal activities. These
statements present ÕÍÆ×ÊÎÏ×ÎÈÛÐÛÙÈÓÆÓÈÓ×É of the Town. Governmental activities generally are
financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues
for each function of the Towns governmental activities. Direct expenses are those that are
specifically associated with a program or function and, therefore, are clearly identifiable to a
particular function. Program revenues include (a) charges paid by the recipients of goods or
services offered by the programs, (b) grants and contributions that are restricted to meeting the
operational needs of a particular program and (c) fees, grants and contributions that are restricted to
financing the acquisition or construction of capital assets. Revenues that are not classified as
program revenues, including all taxes, are presented as general revenues.
[[315,2230,939,2287][12][B,I,][Times New Roman]]Fund Financial Statements:
The fund financial statements provide information about the Town's
funds, including fiduciary funds and blended component units. Separate statements for each fund
categoryÕÍÆ×ÊÎÏ×ÎÈÛÐ and ÖÓØÇÙÓÛÊÃare presented. The emphasis of fund financial statements
is on major individual governmental funds, each of which is displayed in a separate column. All
remaining governmental are aggregated and reported as nonmajor funds.
E. Major Funds
GASB Statement 34 defines major funds and requires that the Towns major governmental funds
be identified and presented separately in the fund financial statements. All other funds, called
nonmajor funds, are combined and reported in a single column, regardless of their fund-type.
Major funds are defined as funds that have assets, liabilities, revenues or expenditures/expenses
equal to ten percent of their fund-type total and five percent of the grand total. The General Fund
25
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
is always a major fund. The Town may also select other funds it believes should be presented as
major funds.
The Town reported the following major governmental funds in the accompanying financial
statements:
General Fund
is the general operating fund of the Town and is used to account for all financial
resources except those required to be accounted for in another fund.
Appropriated Reserves Fund
is used to account for resources provided for capital projects not
fully funded from other sources.
Certificates of Participation Fund
is used to account for the 1992 and 2002 Certificates of
Participation issued to finance the Parking Lot #4 project ad several capital improvement
projects throughout the Town.
Redevelopment Agency Capital Projects Fund
is used to account for redevelopment projects
and related property tax revenue.
The Town also reports the following fund types:
Internal Service Funds
are used to account for services, which are provided to other
departments on a cost-reimbursement basis. Those services include workers compensation,
self-insurance, stores, vehicle maintenance, building maintenance, management information,
and equipment replacement.
Fiduciary Funds
includePrivate-Purpose Trust Funds and agency funds are used to account
for assets held by the Town as an agent for individuals, private organizations, and other
governments. The financial activities of this fund are excluded from the government-wide
financial statement but are presented in a separate Fiduciary Fund financial statement. The
Town reported the following Fiduciary Funds in the accompanying financial statements:
Library Private Purpose Trust Fund
was established to provide for the servicing of
donations and bequests to the Town's Library Program.
Parking Improvement District Agency Fund
was established to account for non-
obligation bond debt service payments and assessments.
26
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
F. Basis of Accounting
The government-wide and fiduciary fund financial statements are reported using the ×ÙÍÎÍÏÓÙ
Ê×ÉÍÇÊÙ×É Ï×ÛÉÇÊ×Ï×ÎÈ ÖÍÙÇÉ and the full ÛÙÙÊÇÛÐ ÚÛÉÓÉ of accounting. Revenues are recorded
when×ÛÊÎ×Ø and expenses are recorded at the time liabilities are ÓÎÙÇÊÊ×Ø regardless of when the
related cash flows take place.
Governmental funds are reported using the ÙÇÊÊ×ÎÈ ÖÓÎÛÎÙÓÛÐ Ê×ÉÍÇÊÙ×É measurement focus and the
ÏÍØÓÖÓ×Ø ÛÙÙÊÇÛÐ basis of accounting. Under this method, revenues are recognized when
Ï×ÛÉÇÊÛÚÐ× and ÛÆÛÓÐÛÚÐ×. The Town considers all revenues reported in the governmental funds to
be available if the revenues are collected within sixty days after year-end. Expenditures are
recorded when the related fund liability is incurred, except for principal and interest on general
long-term debt, which is recognized upon becoming due and payable; and except for claims,
judgments and compensated absences, which are recognized when estimable and probable.
Governmental capital asset acquisitions are reported as ×ÄÌ×ÎØÓÈÇÊ×É in governmental funds.
Proceeds of governmental long-term debt and acquisitions under capital leases are reported as
ÍÈÔ×Ê ÖÓÎÛÎÙÓÎÕ ÉÍÇÊÙ×É.
Those revenues susceptible to accrual are property and sales taxes, certain intergovernmental
revenues, and interest revenue. Fines, forfeitures, licenses and permits, and charges for services are
not susceptible to accrual because they are not measurable until received in cash.
Non-exchange transactions, in which the Town gives or receives value without directly, receiving
or giving equal value in exchange, include taxes, grants, entitlements, and donations. On the
accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or
assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in
which all eligibility requirements have been satisfied.
The Town may fund programs with a combination of cost-reimbursement grants, categorical block
grants and general revenues. Thus, both restricted and unrestricted net assets may be available to
finance program expenditures. The Towns policy is to first apply restricted grant resources to
such programs followed by general revenues as necessary.
Certain indirect costs are included in program expenses reported for individual functions and
activities.
The Town follows statements and interpretations of the Financial Accounting Standards Board and
its predecessors issued on or before November 30, 1989, in accounting for its business-type
activities, unless those pronouncements conflict with GASB pronouncements.
Cash Equivalents -
The Towns cash and cash equivalents are considered to be cash on hand,
demand deposits, and short-term investments with original maturities of three months or less from
the date of acquisition.
State of California statutes and the Towns investment policy authorize the Town to invest in
obligations of the U.S. Treasury, its agencies and instrumentalities, collateralized, non-negotiable
certificates of deposits, commercial paper rated A-1/P-1, medium-term corporate notes rated A or
27
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
its equivalent or better by Moodys or Standard & Poors, asset backed corporate notes, bankers
acceptances, mutual funds, and the State Treasurers investment pool (Local Agency Investment
Fund).
The Town does not enter into repurchase or reverse repurchase agreements.
Investments
for the Town, as well as for its component units, are reported at fair value. The value
is determined based upon market closing prices. The fair value of mutual funds is stated at share
value.
Materials, Supplies and Deposits
are held for consumption and are stated at cost using the first-in,
first-out method. The costs are recorded as expenditures at the time the item is consumed.
Interfund Receivables and Payables -
Transactions between funds that are representative of
lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as
advances to/advances from other funds . All other outstanding balances between funds are
reported as due to/from other funds .
Advances between funds and due from/to other funds are offset by a fund balance reserve account
in applicable Town funds to indicate the extent to which they are not available for appropriation
and are not expendable available financial resources.
Capital Assets
are valued at historical cost or estimated historical cost if actual historical cost is
not available. Contributed capital assets are valued at their estimated fair market value on the date
contributed. Capital assets, including infrastructure, are recorded if acquisition or construction costs
exceeds $5,000.
GASB Statement 34 allows the Town up to four years to record all its infrastructure assets. As of
June 30, 2006, the Town has recorded all infrastructure assets as classified below.
As required by GASB Statement 34, the Town depreciates capital assets with limited useful lives
over their estimated useful lives. The purpose of depreciation is to spread the cost of capital assets
equitably among all users over the life of these assets. The amount charged to depreciation expense
each year represents that years pro rata share of the cost of capital assets. The Town depreciates
using the straight line method which means the cost of the asset is divided by its expected useful life
in years and the result is charged to expense each year until the asset is fully depreciated. The Town
has assigned the useful lives listed below to capital assets:
Buildings 25-40 years
Improvements 25-40 years
Machinery and equipment 2-20 years
Furniture and fixtures 5-12 years
Infrastructure 20-40 years
Major capital outlay for capital assets and improvements are capitalized as projects are constructed.
Capital assets may be acquired using federal and state grants, contributions from developers, and
contributions or grants from other governments. GASB 34 requires that these contributed assets be
accounted for as revenue at the time they are contributed.
28
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
Deferred Compensation Plan -
The Town established a deferred compensation plan created in
accordance with California Government Code Section 53212 and Internal Revenue Code Section
457. The plan, available to all Town employees, permits them to defer a portion of their salary
until future years. The deferred compensation is not available to employees until termination,
retirement, death, or unforeseeable emergency. Deferred compensation plans are not reported as
part of the Towns assets or liabilities, as the deferred compensation plan trustees hold those funds
in trust on behalf of employees until the employees are eligible to receive the benefits.
Compensated Absences
- Accumulated Vacation, Sick Pay and Other Employee Benefits are accrued
as earned. Upon termination, employees are paid for all unused vacation at their current hourly rates.
Sick leave earned is cashed out based on the following schedule for employees with at least 150 hours
accrued and up to a maximum amount as specified under labor contract provisions:
For employees under contract 1-59 months 25%
For employees under contract 60-119 months 37.5%
For employees under contract 120 months or more 50%
The Towns liability for compensated absences is determined annually. For all governmental
funds, amounts expected to be paid out of current financial resources are recorded as liabilities of
each fund; the long-term portion is recorded in the Statement of Net Assets.
The changes of the compensated absences were as follows:
Governmental
Activities
Beginning Balance$ 2,043,005
Additions 850,608
Payments (747,090)
Total Ending Balance$ 2,146,523
Current Portion of Ending Balance$ 1,748,226
Compensated absences are liquidated by the fund that has recorded the liability. The long-term
portion of governmental activities compensated absences is liquidated primarily by the General
fund. Only compensated absences related to terminated employees are reported in the fund
financial statements.
Long-Term Liabilities
- In the government-wide financial statements long-term debt and other
long-term obligations are reported as liabilities in the applicable governmental activities statement
of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized
over the life of the bonds using the effective interest method. Bonds payable are reported net of the
applicable bond premium or discount.
In the fund financial statements, governmental fund types recognize bond premiums and discounts,
as well as bond issuance costs, during the current period. The face amount of debt issued is
reported as other financing sources. Premiums received on debt issuances are reported as other
financing sources while discounts on debt issuances are reported as other financing uses. Issuance
costs, whether or not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
29
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
Use of Estimates
- The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent asset and liabilities at the
dates of the financial statements and the reported amounts of revenues and expenditures/expenses
during the reporting periods. Actual results could differ from those estimates.
Property Tax Levy, Collection and Maximum Rates
- State of California Constitution Article XIII
A provides that the combined maximum property tax rate on any given property may not exceed 1%
of its assessed value unless an additional amount for general obligation debt has been approved by
voters. Assessed value is calculated at 100% of market value as defined by Article XIII A and may be
adjusted by no more than 2% per year unless the property is sold, transferred, or substantially
improved. The State Legislature has determined the method of distribution of receipts from a 1% tax
levy among the counties, cities, school districts and other districts.
The County of Santa Clara assesses properties, bills for and collects property taxes on the following
schedule:
Secured Unsecured
Valuation/lien dates January 1 January 1
Levy dates January 1 January 1
Due dates (delinquent as of) 50% on November 1 (December 10) March 1 (August 31)
50% on February 1 (April 10)
The term "unsecured" refers to taxes on personal property other than land and buildings. These taxes
are secured by liens on the property being taxed. Property taxes levied are recorded as revenue and
receivables when they are collected during the fiscal year of levy or within 60 days of year-end.
Postemployment Health Care Benefits
- Substantially all Town employees and their surviving
spouses are eligible for post-employment health care benefits which are funded on a pay-as-you-go
basis. During the fiscal year ended June 30, 2006, 63 employees received benefits at a cost to the
Town of $157,856, net employee reimbursements.
Social Security -
The Omnibus Budget Reconciliation Act of 1990 (OBRA) mandates that public
sector employees who are not members of their employers existing retirement system as of January 1,
1992 be covered by either social security or an alternative plan.
The Towns part-time, seasonal and temporary employees are covered under social security, which
required these employees and the Town to contribute 6.2% of the employees pay. Total contributions
to Social Security for the year ended June 30, 2006 amounted to $57,631, of which the Town paid
one-half.
Budgets and Budgetary Accounting
- The Town follows the procedures below when establishing
the budgetary data reflected in the financial statements:
30
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
1.The Town Manager submits to the Town Council a proposed operating and capital
improvement budget for the fiscal year commencing the following July 1. The budgets
include the proposed expenditures and the means of financing them.
2.Public hearings are conducted to obtain taxpayer comments.
3.The budget is legally enacted through adoption of Town resolution by Council.
4.The Town Manager is authorized to implement the programs as approved in the adopted
budget. Within a specific fund, the Town Manager may transfer appropriations between
categories, departments, projects and programs as needed to implement the adopted budget,
whereas the Town Council must authorize budget increases and decreases, and transfers
between funds.
5.Budgets are adopted on a basis consistent with generally accepted accounting principles
except for proprietary funds which budget for capital outlays but not depreciation. Budgets
were adopted for the General Fund, Special Revenue Funds, Internal Service Funds and
Capital Projects Funds.
6.Budgeted amounts are as originally adopted or as amended by Town Council. Individual
amendments were not material in relation to original appropriations.
Encumbrances
- Under encumbrance accounting, purchase orders, contract and other commitments
for expenditures are recorded in order to reserve that portion of the applicable appropriation.
Encumbrance accounting is employed as an extension of formal budgetary integration in all funds.
Encumbrances outstanding at year-end are reported as reservations of fund balances since they do not
constitute expenditures or liabilities; unexpended and unencumbered appropriations lapse at year end
in all funds. Encumbered appropriations are carried forward to the following year.
G. New Accounting Pronouncements
The Town has adopted the provisions of GASB Statement No. 44, ÷ÙÍÎÍÏÓÙ ùÍÎØÓÈÓÍÎ ê×ÌÍÊÈÓÎÕ
[[1561,2230,1612,2287][12][B,I,][Times New Roman]].
èÔ× éÈÛÈÓÉÈÓÙÛÐ é×ÙÈÓÍÎ ¦ ÛÎ ÛÏ×ÎØÏ×ÎÈ ÈÍ îùõû éÈÛÈ×Ï×ÎÈ This Statement amends the portions
of NCGA Statement 1, Governmental Accounting and Financial Reporting Principals that guide
the preparation of the Statistical Section. The statistical section presents detailed information,
typically in ten-year trends, that assists users in utilizing the basic financial statements, notes to the
basic financial statements, and required supplementary information to assess the economic
condition of a government.
The Town adopted the provisions of GASB Statement No. 46, î×È ûÉÉ×ÈÉ ê×ÉÈÊÓÙÈ×Ø Úà ð×ÕÓÉÐÛÈÓÍÎ
¦ ÛÎ ÛÏ×ÎØÏ×ÎÈ ÈÍ õûéú éÈÛÈ×Ï×ÎÈ îÍ , which clarifies that legally enforceable enabling
legislation restriction is one that a party external to a government, such as citizens, public interest
groups, of the judiciary, can compel a government to honor. This statement also specifies the
accounting and financial reporting requirements if new enabling legislation replaces existing
legislation or if legal enforceability s reevaluated. Finally, this statement requires governments to
disclose the portion of total net assets that is restricted by enabling legislation.
31
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
2.CASH AND INVESTMENTS
The Town pools cash from all sources and all funds except Restricted Cash and Investments so that it
can be invested at the maximum yield, consistent with safety and liquidity, while existing funds have
cash available for expenditures.
Cash and Investments Defined -
The Town includes only cash deposits in banks as cash.
Investments in LAIF and government securities mutual funds are net in the order of liquidity, since
they may be withdrawn without penalty. U.S. Treasuries, U.S. Agencies and Certificates of Deposit
are the Towns least liquid investments, since they must be held to maturity.
Cash Deposits with Banks and Certificates of Deposit
- California Law requires banks and savings
and loan institutions to pledge government securities with a market value of 110% of the Towns cash
on deposit or first trust deed mortgage notes with a value of 150% of the deposit as collateral for these
deposits. Under California Law this collateral is held in the Towns name and places the Town ahead
of general creditors of the institution. The Town has waived collateral requirements for the portion of
deposits covered by Federal Depository Insurance.
The Carrying amount of the Towns cash deposits was $2,795,369 as of June 30, 2006. The bank
balance was $3,006,799 as of June 30, 2006 of which $100,000 was covered by Federal Depository
Insurance and $2,906,799 was collateralized as discussed above. The bank balance and the carrying
amount differed due to deposits in transit and outstanding checks.
Investments
- The Town and its fiscal agent invest in individual investments and in investment pools.
Individual investments are evidenced by specific identifiable pieces of paper called securities
instruments, or by an electronic entry registering the owner in the records of the institution issuing
the security, called the book entry system. In order to maximize security, the Town employs the Trust
department of a bank as the custodian of all its investments, regardless of their form.
The Town voluntarily participates in LAIF, regulated under Section 16429 of the State Government
Code. LAIF allows local agencies such as the Town to participate in a Pooled Money Investment
Account managed by the State Treasurer Office and overseen by the Pooled Money Investment Board
and State Treasurer investment committee. A Local Agency Investment Advisory Board oversees
LAIF. The fair value of the Towns position in the pool is the same as the value of its pool shares.
The total amount invested by all public agencies in LAIF, as of June 30, 2006, was approximately
$63.6 billion. Of that amount, 95% is invested in non-derivative financial products and 5% in
structured notes and asset-backed securities. The average maturity for the investment in LAIF is
152 days
ùÍÎÙ×ÎÈÊÛÈÓÍÎ ÍÖ ùÊ×ØÓÈ êÓÉÑ ÛÎØ óÎÈ×Ê×ÉÈ êÛÈ× êÓÉÑ ìÍÐÓÙÓ×É - The Towns Policy states that, with the
exception of US Treasury securities and LAIF, no more then 50% of the Towns total investment
portfolio will be invested in one single security type or with a single financial institution. The Town
was in compliance with this policy as of June 30, 2006.
32
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
The following table summarizes the Towns policy related to maturities and concentration of
investments:
Maximum
MaximumPortfolio
Investment TypeMaturityPercentage
US Treasury Obligations5 yearsNone
US Agency Obligations5 yearsNone
Bankers Acceptances180 days15%
Commercial Paper180 days15%
Medium Term Notes3/5 years15%
Collateralized CD's5 years15%
CA LAIFNA65%
Money Market FundsNA15%
The following is a summary of the Towns Cash and Investments (stated at fair value) as of June 30,
2006.
AvailableInvestmentConcentrationTime toWeighted
forRatingof CreditMatureAverage
Investment Type/Cash DepositOperationsRestrictedTotalMoody's/S&PRisk(Years)Maturity
U.S. Government Agency securities:
(1)
Union Bank $ -37,650,179$ 37,650,179$57%0.840.49
Aaa/AAA
U.S. Treasury Securities - 6 45,023 645,023Aaa/AAA1%1.040.01
Government Securities Money Market Mutual Funds354,208 1,297,248943,040 2%NANA
Aaa/AAA
Local Agency Investment Fund 24,792,3551,288,09326,080,449Not Rated40%0.420.17
Total Investments 62,796,7422,876,157 65,672,899100% 0.67
Cash Deposits with Banks 2,040,882 2,795,369754,487 NANANANA
Certificates of Deposit - 2 46,127 246,127NANANANA
Cash on hand at Town 2,750 - 2,750NANANANA
Total Cash and Investments$ 3,876,77064,840,374$$ 100%68,717,144 0.67
Limited to US Agency Obligations with liquid markets and readily determinable fair market values, including FHLB, FNMA, Freddie Mac, FFCB
(1)
the Federal Land Bank and the TVA.
Cash and investments are classified in the financial statements as shown below, based on whether or
not their use is restricted by Town debt or Agency agreements.
Fiduciary
Total CityFundsTotals
Cash and investments available for operation$64,460,460$379,914$64,840,374
Restricted cash and investments3,630,644246,1273,876,770
Total cash and investments$68,091,103$626,041$68,717,144
Marking Investments to Fair Value
- The Town adopted Governmental Accounting Standards
Board (GASB) Statement 31, which requires that the Town's investments be carried at fair value
instead of cost. Under GASB 31, the Town must adjust the carrying value of its investments to reflect
33
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
their fair value at each fiscal year end, and it must include the effects of these adjustments in income
for that fiscal year.
3. LONG-TERM NOTES RECEIVABLE
The Town had the following long-term notes receivable as of June 30, 2006:
DescriptionInterest RateMaturityBalance
General Fund:
Open Doors Associates, Ltd.7%2024478,873$
Community Development Block Grant Fund(CDBG):
Housing Conservation Loans0-5%Various433,979
Open Doors Associates, Ltd.7%202463,117
Total CDBG497,095
Total Long-Term Notes Receivable$975,968
Open Doors Associates Ltd. And Mid-Penninsula Housing Coalition
- The Town has
cooperation agreements with these two developers and several other governmental agencies (the
Developers ). Under these agreements, the Developers constructed a 64-unit low and moderate-
income housing project. To assist in financing this project, the Town advanced funds to these
developers under notes, which are secured by deeds of trust subordinated by construction loans,
permanent financing and other loans on the project up to a maximum of $6.5 million.
Under a note dated April 21, 1992, the Town agreed to loan a maximum amount of $339,250 to
Open Doors Associates, Ltd. to cover the cost of traffic impact fees, planing fees and building
permit taxes. As of June 30, 2006, $478,873 of such costs, including accrued interest, had been
incurred by Open Doors Associates, Ltd. in connection with the project and advances by the Town
under this note.
Housing Conservation Loans
- The Town administers a housing conservation and rehabilitation
loan program using Housing and Community Development Act funds (funded through federal
grants). Under this program, individuals with income below certain levels are eligible to receive
low interest loans, secured by deeds of trust, for construction work on their homes. Upon approval
of loans, the Town disburses cash and arranges for and collects repayments. As of June 30, 2006,
restricted cash and investments included a balance of $699,159 available for this program and
recorded in the CDBG fund.
34
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
4. INTERFUND TRANSACTIONS
Inter-fund Receivables and Payables
- Amounts due to or due from other funds reflect inter-fund
balances for services rendered or short-term loans expected to be repaid in the next fiscal year.
Advances due to or due from other funds are long-term loans between funds that are to be repaid in
their entirety over several years.
As of June 30, 2006, inter-fund receivables and payables consisted of the following:
ûØÆÛÎÙ×ÉûØÆÛÎÙ×É
öÍÏèÍ
öÇÎØíÈÔ×Ê öÇÎØÉíÈÔ×Ê öÇÎØÉ
$-
õ×Î×ÊÛÐ öÇÎØ
-
ù×ÊÈÓÖÓÙÛÈ×É ÍÖ ìÛÊÈÓÙÓÌÛÈÓÍÎ
-
îÍÎÏÛÒÍÊ õÍÆ×ÊÎÏ×ÎÈÛÐ öÇÎØÉ
èÍÈÛÐ
The General Fund has an advance of 1,500,000 to the Certificates of Participation Debt Service Fund
to finance Agency operations. The advance bears interest at 10% per year and is payable on demand.
For the fiscal year ended June 30, 2006, the Certificates of Participation Fund paid $150,000 in
interest to the General Fund.
The General Fund has $150,000 non-interest bearing advance to the Non-Point Source Maintenance
Special Revenue Fund. Expenditures are paid and subsequently reimbursed in this fund and the
advance was used to cover cash shortfalls until reimbursements are received. The advance is due
when the program is eliminated and is repayable from Non-Point Source Maintenance revenues.
35
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
Transfers
With Council approval resources may be transferred from one fund to another. Transfers
routinely reimburse funds that have made an expenditure on behalf of another fund. Transfers may
also be made to pay for capital projects or capital outlays, lease or debt service payments, operating
expenses and low and moderate-income housing projects.
Transfers between funds during the fiscal year ended June 30, 2006 were as follows:
Fund Receiving TransfersFund Making TransfersAmount
General FundSolid Waste Management$ 58,335A
Non-Point Source Maintenance 32,330A
Sewer Maintenance 19,350
A
Land & Lighting 9,742A
Appropriated Reserves 205,081A
Gas Tax 106,000
B
Community Development Block GrantGeneral Fund 664C
Housing Set-AsideCertificates of Participation 1,073,315F
Appropriated ReservesGeneral Fund 475,000
D
Community Development Block Grant 93,959E
Building Maintenance 16,450D
Equipment Replacement 130,000
D
RDA Capital Projects FundCertificates of Participation 500,000D
Parking ManagementGeneral Fund 67,009G
$ 2,787,236
The reasons for these transfers are set forth below:
To reimburse fund administrative expenditures.
A
BRecurring transfers.
CTo subsidize various programs run by CDBG.
To allocate balance of advance to fund capital projects.
D
ETo fund capital project expenditures using grant funds.
FState-required set-aside of Low/Moderate Income Housing portion of property tax increment.
To desinated as a funding resource.
G
36
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
5. CAPITAL ASSETS
Changes in capital assets during the fiscal year consist of:
BalanceAdjustments &Balance
July 1, 2005AdditionsRetirementsJune 30, 2006
Capital assets not being depreciated:
Land$ 14,165,194$ -$ 14,165,194-$
Construction in Progress 381,958 5,897 (362,399) 25,456
Total capital assets not being depreciated14,547,152 5,897 (362,399) 14,190,650
Capital assets being depreciated:
Buildings and Improvements 9,074,909 132,657 9,207,566-
Equipment & Vehicle 6,269,806 545,126 (294,336) 6,520,596
Infrastructure - All Other 3,696,595 495,298 4,191,893-
Infrastructure - Streets 37,674,886 3,582,129 41,257,015-
Total capital assets being depreciated 56,716,196 4,755,210 (294,336) 61,177,070
Less accumulated depreciation for:
Buildings and Improvements 3,984,085 - 3,984,085-
Equipment & Vehicle 4,193,345 703,823 (290,744) 4,606,424
Infrastructure - All Other 148,329 - - 148,329
Infrastructure - Streets 12,958,358 1,306,403 14,264,761-
Total accumulated depreciation 21,284,117 2,010,226 (290,744) 23,003,599
Net capital assets being depreciated35,432,0792,744,984(3,592)38,173,471
Governmental activity capital assets, net$ 49,979,231$ 2,750,881$ (365,991)$ 52,364,121
Depreciation Allocation -
Depreciation expense is charged to functions and programs based on
their usage of the related assets. The amounts allocated to each function or program are as follows:
Depreciation
[[714,2368,1160,2415][10][B,I,][Times New Roman]]Governmental Activities
Expense
General government$83,533
Public safety 221,251
Parks and public works 1,520,224
Community development 17,961
Community services 9,449
Library 26,828
Sanitation 29,287
Redevelopment 101,693
Total Governmental Activities
$2,010,226
37
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
6. LONG-TERM OBLIGATIONS
The Town generally incurs long-term debt to finance projects or purchase assets, which will have
useful lives equal to or greater than the related debt. The Towns bonded debt issues and
transactions are summarized below in the schedule of changes in long-term debt and discussed in
detail thereafter.
OriginalBalanceBalanceDue
IssueJune, 30June, 30Within One
Amount2005AdditionsRetirements2006Year
1992 Certificates of Participation,
5-9%, due 8/1/2012$ 2,960,000$ 1,445,000$ -$ 175,000$ 1,270,000$ 1 85,000
2002 Certificates of Participation,
Series A, 2.5-5%, due 8/1/203110,725,000 10,300,000 - 225,00010,075,000230,000
Total Long-Term Debt$ 13,685,000$ 11,745,000$ -$ 400,000$11,345,000$ 4 15,000
1992 Certificates of Participation (COPs)
- The Town issued Certificates of Participationin the
original principal amount of $2,960,000 dated August 1, 1992 to finance certain construction costs
of the Towns Parking Lot 4 Project, which was constructed on land located in the Los Gatos
Central Redevelopment Project Area. The COPs are similar to bond debt as they allow investors to
participate in a share of guaranteed payments. Because they are similar to debt, the present value of
the total of the payments to be made is recorded as long-term debt. Principal payments are due
stst
annually on August 1, which interest payments payable semi-annually on February 1 and August
st
1. The Town has pledged motor vehicle license fee revenues as collateral for the repayment of the
Certificates.
To assist the Town in paying the cost of acquisition and construction of the Parking Lot 4 Project,
the Town and its Redevelopment Agency entered into a Reimbursement Agreement. Under this
agreement, the Agency will use available net tax increment revenues resulting from the Projects
effect on land values to repay the Town for all lease payments made by the Town to the Agency
under the lease agreement for the Project. Net tax increment revenues are all taxes allocated to and
paid into the Redevelopment Agency Capital Projects Fund for the Project Area. Reimbursements
under this agreement commenced in fiscal 1995-1996.
For the fiscal year ended June 30, 2006, lease income and reimbursements in the amount of
$932,122 (offsetting) was recorded as other financing sources and uses in the Certificates of
Participation Fund. These transactions are eliminated from the Government-Wide Statement of
Activities.
2002 Certificates of Participation (COPs)
- On July 18, 2002, the Town and the Los Gatos
Redevelopment Agency issued $10,725,000 in 2002 Certificates of Participation, Series A, to
finance the acquisition, construction, rehabilitation, equipping and improvement of several capital
improvement projects. The Town has pledged lease payments of real property and facilities
comprised of the Parks and Public Works Service Center and Baseball Field, as well as Parking Lot
No. 1, 2, and 3, as collateral for the repayment of the Certificates. Principal payments are due
annually on August 1st, with interest payments due semi-annually on February 1st and August 1st.
38
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
Future debt service requirements as of June 30, 2006, were as follows:
Governmental Activities
For the Year
PrincipalInterest
Ending June 30
2007415,000 511,458
2008430,000 495,910
2009445,000 479,137
2010465,000 460,975
2011485,000 441,325
2012-20161,670,000 1,967,827
2017-20211,755,000 1,622,458
2022-20262,210,000 1,152,039
2027-20312,820,000 528,750
2032650,000 16,250
Total Debt Service$11,345,000$ 7,676,129
The Agency must maintain required amount of cash and investments with the trustee under the
terms of the COPs issues. These funds are pledged as reserves to be used if the Town fails to meet
its obligations under the COPs issue and totaled $994,489 at June 30, 2006.
The California Government Code requires these funds to be invested in accordance with Town
ordinance, bond indentures or State statues. All these funds have been invested as permitted under
the Code.
7. SPECIAL ASSESSMENT DISTRICT DEBT WITHOUT COMMITMENT
Special assessment districts are established in various parts of the Town to provide improvements
to properties located in those districts. Properties are assessed for the cost of the improvements.
These assessments are payable over the term of the debt issued to finance the improvements and
are used to pay debt service on debt issued to fund the improvements.
The Town has no legal liability with respect to the payment of any indebtedness of the Downtown
Parking Assessment District. The principal amount of the non-obligated debt outstanding was
$850,000 as of June 30, 2006 and was excluded from the Towns financial statements.
39
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
8. NET ASSETS AND FUND BALANCES
GASB Statement 34 adds the concept of Net Assets, which is measured on the full accrual basis, to the
concept of Fund Balance, which is measured on the modified accrual basis.
Net Assets
- Net Assets is the excess of all the Towns assets over all its liabilities, regardless of each
fund. Net Assets are divided into three captions under GASB Statement 34. These captions apply only
to Net Assets, which is determined only at the Government-wide level, and are described below:
óÎÆ×ÉÈ×Ø ÓÎ ùÛÌÓÈÛÐ ûÉÉ×ÈÉ Î×È ÍÖ Ê×ÐÛÈ×Ø Ø×ÚÈ describes the portion of Net Assets which is represented by
the current net book value of the Towns capital assets, less the outstanding balance of any debt issued to
finance these assets.
ê×ÉÈÊÓÙÈ×Ø describes the portion of Net Assets which is restricted as to use by the terms and conditions of
agreements with outside parties, governmental regulations, laws, or other restrictions which the Town
cannot unilaterally alter. These principally include debt service requirements and redevelopment funds
restricted to low and moderate income purposes.
çÎÊ×ÉÈÊÓÙÈ×Ø describes the portion of Net Assets which is not restricted to use.
Reservations of Fund Balances -
Fund balance consists of reserved and unreserved amounts.
Reserved fund balance represents that portion of fund balance or retained earnings that has been
appropriated for expenditure or is legally segregated for a specific future use. As of June 30, 2006,
portions of fund balance had been reserved because of the following:
÷ÎÙÇÏÚÊÛÎÙ×É are reserved to encumber fund balance for purchase order commitments made before
fiscal year end.
ùÛÌÓÈÛÐ íÇÈÐÛà reserves are funded from storm drain fees, construction taxes and debt proceeds that are
legally restricted for major capital projects.
ø×ÚÈ é×ÊÆÓÙ× reserves reflect the cash balances in the debt service funds that are restricted for debt
service payments.
ûØÆÛÎÙ×É are reserved to reflect long-term loans to other funds that are not available for expenditure.
ê×ÌÛÓÊÉ ÛÎØ ïÛÓÎÈ×ÎÛÎÙ× reserves reflect legally restricted balances for repairs and maintenance of
lighting and landscape property and open space property that are financed with special tax assessments
on the benefiting property.
ðÍÎÕè×ÊÏ îÍÈ×É ê×Ù×ÓÆÛÚÐ× reserves reflect the balance of long-term loans not offset by deferred
revenue and that are not available for expenditure.
ôÍÇÉÓÎÕ reserves reflect the amounts to be expended for low and moderate-income housing or rental
rehabilitation.
Designations of Fund Balances
- A portion of unreserved fund balance may be designated to indicate
plans for financial resource usage in a future period, such as for general contingencies or capital
40
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
projects. As of June 30, 2006, portions of unreserved fund balance had been designated for the
following purposes and the remaining balance is unreserved.
ùÓÆÓÙ ù×ÎÈ×Ê óÏÌÊÍÆ×Ï×ÎÈÉ designations will be used for general improvements to the Civic Center
including major upgrades to the electrical system.
éÍÐÓØ åÛÉÈ× ïÛÎÛÕ×Ï×ÎÈ designations will be used to implement a yard waste collection program.
íÌ×Î éÌÛÙ× designations will be used to make selective open space acquisitions.
ìÛÊÑÓÎÕ designations will be used to mitigate parking issues within the Town.
ïÛÎÛÕ×滃 ùÍÎÈÓÎÕ×ÎÙà designations will be used at the discretion of the Town Manager to provide
budgets for unforeseen situations that may arise during the fiscal year.
ìÊÍØÇÙÈÓÆÓÈà ÷ÎÔÛÎÙ×Ï×ÎÈ designations will be used to fund requests that result in streamlining or
improving existing service levels.
÷ÙÍÎÍÏÓÙ çÎÙ×ÊÈÛÓÎÈà designations will be used to fund future fluctuations in the economy that are not
currently foreseen. This designation is calculated at 25% of the 2003-04 operating budget.
ùÛÌÓÈÛÐ ìÊÍÒ×ÙÈÉ designations will be used for the acquisition and construction of capital facilities.
ùÛÊÊÃÍÆ×Ê designations will be used for encumbered items re-appropriated in the following year.
õÊÛÎÈÉ designations will be used for grant funded capital projects.
ê×Æ×ÎÇ× éÈÛÚÓÐÓÂÛÈÓÍÎ designations will be used to mitigate the cyclical changes in locally generated
revenues from temporary downturns in the local economy, or "one-time" revenue losses where
recovery of the revenue base is deemed likely in the near future.
é×Å×Ê ûÉÉ×È ìÊÍÙ××ØÉ designations will be used for future special projects
ø×ÚÈ é×ÊÆÓÙ× designations will be used to fund the future payments of principal and interest on long-
term debt.
Excess of Expenditures over Appropriations
- There were no funds with expenditures in excess of
budget for the year ended June 30, 2006.
9. EMPLOYEES' RETIREMENT PLAN
Plan Description
- The Town of Los Gatos contributes to the California Public Employees
Retirement System (PERS), an agent multiple-employer public employee defined benefit pension
plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and
death benefits to plan members and beneficiaries. PERS acts as a common investment and
administrative agent for participating public entities within the State of California. Benefit
41
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
provisions and all other requirements are established by state statute and Town ordinance. Copies
of PERS' annual financial report may be obtained from their Executive Office, 400 P Street,
Sacramento, CA 95814.
Funding Policy
- Participants are required to contribute 7% (9% for safety employees) of their
annual covered salary. The Town is required to contribute at an actuarially determined rate. The
rates for the fiscal year ended June 30, 2006 was 13.813% of annual covered payroll for non-safety
(miscellaneous) and 32.557% for safety employees. The contribution requirements of plan
members and the Town are established and may be amended by PERS.
Annual Pension Cost
- For fiscal year ended June 30, 2006, the Town's $2,602,604 annual
pension cost for PERS was equal to the Town's required and actual contributions. The required
contribution was determined as part of the June 30, 2002 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 age,
duration of service, and type of employment; (c) 3.5% inflation; (d) 3.75% payroll growth; and (e)
individual salary growth based on a merit scale varying by duration of employment coupled with
an assumed annual inflation of 3.50% and an annual production growth of 0.25%. 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 three-year period (smoothed market value)
depending on the size of investment gains and/or losses. Initial unfunded liabilities are amortized
over a closed period that depends on the plans date of entry into PERS. Subsequent plan
amendments are amortized as a level percentage of payroll 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 plans accrued liability
exceeds the actuarial value of plan assets, then the amortization payment on the total unfunded
liability may not be lower than the payment calculated over a 30 year amortization period.
Three Year Trend Information PERS
In recent years the Town has experienced actuarial surplus excesses in the both the safety and
miscellaneous retirement plans. As a result, the required employer contributions were reduced
each year for both plans at differing amounts. Town management believed the spike in market
valuations of actuarial assets was only temporary and decided to accrue expenses for those years in
order to match expenditures more appropriately over time. The Town accrued at a historical
normal employer contribution rate of 7.0 and 11.0 percent of covered payroll for the
miscellaneous and safety plans, respectively.
éÛÖ×Èà ìÐÛÎ
Fiscal Annual Pension Cost Percentage of Net Pension
Year Ended (APC) APC Contributed Obligation
6/30/04$ 626,290100 0
6/30/051,168,631100 0
6/30/061,404,921100 0
42
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
ïÓÉÙ×ÐÐÛÎ×ÍÇÉ ìÐÛÎ
Fiscal Annual Pension Cost Percentage of Net Pension
Year Ended (APC) APC Contributed Obligation
6/30/04$ 661,735 100 0
6/30/05688,064100 0
6/30/061,197,683100 0
Plan Actuarial Value and Funding Progress
éÛÖ×Èà ìÐÛÎ
Actuarial
Unfunded
Entry AgeUnfundedAnnual(Overfunded)
ValuationAccruedValue of(Overfunded)FundedCoveredLiability as %
DateLiabilityAssetsLiabilityRatioPayrollof Payroll
200126,845,081$ $27,471,189$ 102.3%3,339,766(626,108)$-18.7%
200229,477,33725,858,9883,618,34987.7%3,631,14199.6%
200332,651,10226,834,6055,816,49782.2%4,090,829142.2%
ïÓÉÙ×ÐÐÛÎ×ÍÇÉ ìÐÛÎ
Actuarial
Unfunded
Entry AgeUnfundedAnnual(Overfunded)
ValuationAccruedValue of(Overfunded)FundedCoveredLiability as %
DateLiabilityAssetsLiabilityRatioPayrollof Payroll
200340,384,16337,408,8982,975,26592.6%9,049,14232.9%
200443,430,31139,413,5064,016,80590.8%8,823,79145.5%
200547,348,95142,466,6894,882,26289.7%8,782,19755.6%
43
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
10. JOINT POWERS AUTHORITY
The Town participates in the following public entity risk pools through formally organized and
separate legal entities. The Town does not have an equity interest in the joint ventures. These
entities exercise full powers and authorities within the scope of the related agreements including
the preparation of annual budgets, accountability for all funds, the power to make and execute
contracts and the right to sue and be sued. Obligations and liabilities of the separate entities are not
those of the Town, although the Town retains an ongoing financial interest or an ongoing financial
responsibility.
Association of Bay Area Governments PLAN Corporation
(ABAG) is a public entity risk pool
that is a not-for-profit organization established in 1986 to provide certain levels of liability
insurance coverage, claims and risk management services, and legal defense to San Francisco Bay
Area cities (currently 29 participants). ABAG is governed by a Board of Directors comprised of
officials appointed by each participating member and is administered by ABAG. The Town paid
premiums of $281,632 to ABAG during 2005-06. Members may receive rebates when declared by
ABAG or, in the event excess liability claims against ABAG exceed available resources, may be
required to make additional contributions. ABAG is considered a risk-sharing pool whereby all its
members share in the cost of losses for other members.
Condensed full accrual basis audited financial information of ABAG as of and for the year ended
June 30, 2005, as provided by ABAG, P.O. Box 2050, Oakland, CA 94604, is as follows:
Total Assets$41,866,497
Total Liabilities18,790,003
Net Assets23,076,494
Total Operating Revenue$ 7,962,906
Total Operating Expense15,482,622
Net Operating Income (7,519,716)
General Revenue 1,570,683
Change in Net Assets (5,949,033)
Beginning Net Assets29,025,527
Ending Net Assets$23,076,494
44
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
11. RISK MANAGEMENT
ABAG PLAN
Corporation (ABAG) covers general liability claims in the amount up to
$5,000,000. The Town has a deductible or uninsured liability of up to $50,000 per claim. ABAG
also provides all risk property coverage of $100,000,000, excluding flood and earthquake coverage.
The Town has a $5,000 deductible for property damage and a $10,000 deductible for vehicle
damage. Once the Towns deductible is met, ABAG becomes responsible for payment of all
claims up to the limit.
Local Agency Workers Compensation Joint Powers Authority (LAWCX)
- The Town is a
member of LAWCX for workers compensation claims coverage. The Town has a $250,000 self-
insured retention level or uninsured liability for all employees. Once the Towns deductible is met,
LAWCX becomes responsible for claims up to $1,000,000. For claims greater than $1,000,000,
LAWCX has a commercial policy providing coverage. Financial statements may be obtained from
LAWCX at 6371 Auburn Blvd., Suite B, Citrus Heights, California, 94604-2050. Condensed full
accrual basis audited financial information of LAWCX as of and for the year ended June 30, 2004,
is as follows:
Total Assets$25,255,308
Total Liabilities21,176,740
Net Assets$ 4,078,568
Total Operating Revenue$11,301,307
Total Operating Expense 9,760,295
Net Operating Income 1,541,012
General Revenue 599,718
Equity Distribution (84,706)
Change in Net Assets 2,056,024
Beginning Net Assets 2,022,544
Ending Net Assets$ 3,993,862
The Town has not significantly reduces its insurance coverage from the prior year and settlements
have not exceeded insurance coverage for the past three years.
Liability for Uninsured Claims
- The Town is required to record its liability for uninsured claims
and to reflect the current portion of this liability as an expenditure in its financial statements. As
discussed above, the Town has coverage for such claims, but it has retained the risk for the
deductibles, or uninsured portion of these claims.
45
TOWN OF LOS GATOS, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2006
The change in Workers Compensation and Self Insurance Service Funds claims liabilities,
including claims incurred but not reported as estimated by the Town, is based on historical trend
information provided by its third party administrator and was computed as follows as of June 30,
2006:
Workers'Self
CompensationInsurance
InternalInternal
Service FundService FundTotal
Claims payable balance - July 1, 2004$614,515$ 335,594$ 950,109
Claimes incurred154,534 148,417302,951
Inc./(Dec.) in estimated liability for prior claims101,460 ( 27,729)73,731
Claims paid(279,049) ( 216,441)(495,490)
Claims payable balance - July 1, 2005$591,460$239,841$831,301
Claims payable balance - July 1, 2005$591,460$ 239,841$ 831,301
Claimes incurred88,502 65,822154,324
Inc./(Dec.) in estimated liability for prior claims(76,265) 111,81635,551
Claims paid(198,246) ( 208,370)(406,616)
Claims payable balance - June 30, 2006$405,451$209,109$614,560
12. COMMITMENTS AND CONTINGENCIES
The Town participates in several federal and state grant programs. These are subject to
examination by grantors and the amount, if any, of disallowed expenditures cannot be determined
at this time. The Town expects such amounts, if any, to be immaterial.
The Town is subject to litigation arising from the normal course of business. The Town Attorney
believes there is no pending litigation, which is likely to have a material adverse effect on the
financial position of the Town.
46
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
MAJOR GOVERNMENTAL FUND SCHEDULES
(OTHER THAN THE GENERAL FUND)
[[299,617,1325,674][12][B,I,][Times New Roman]]Schedule of Revenue, Expenditures and Change [[1297,617,2185,674][12][B,I,][Times New Roman]]s in Fund Balances Budget and Actual
[[300,674,500,731][12][B,I,][Times New Roman]](GAAP)
:
Appropriated Reserves Fund
is used to account for resources provided for capital projects not
fully funded from other sources.
Certificates of Participation Fund
is used to account for the 1992 and 2002 Certificates of
Participation issued to finance the Parking Lot #4 project ad several capital improvement
projects throughout the Town.
Redevelopment Agency Capital Projects Fund
is used to account for redevelopment projects
and related property tax revenue.
TOWN OF LOS GATOS
APPROPRIATED RESERVES FUND
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
Variance
OriginalFinalPositive
BudgetBudgetActual (Negative)
REVENUES
Other taxes$95,000$95,000$160,579$65,579
Intergovernmental680,004640,912266,584(374,328)
Charges for services-23,60716,352(7,255)
Other180,000191,123229,23138,108
Total Revenues955,004950,642672,746(277,896)
EXPENDITURES
Capital Outlay1,027,3141,774,6571,194,242580,415
Total Expenditures1,027,3141,774,6571,194,242580,415
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES(72,310)(824,015)(521,496)302,519
OTHER FINANCING SOURCES (USES)
Operating transfers in339,810715,409715,409 -
Operating transfers (out)(70,000)(70,000)(205,081)(135,081)
Total Other Financing Sources (Uses)269,810645,409510,328(135,081)
CHANGE IN FUND BALANCE$197,500$(178,606)(11,168)$167,438
BEGINNING FUND BALANCE3,853,748
ENDING FUND BALANCE$3,842,580
47
TOWN OF LOS GATOS
CERTIFICATES OF PARTICIPATION FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
Variance
OriginalFinalPositive
BudgetBudgetActual (Negative)
REVENUES
Property Taxes$ 4,673,100$ 5,358,700$ 6,323,502$ 964,802
Less: Educational Revenue Augmentation Fund (303,000) (347,440) (347,440) -
Interest 78,000 78,000 189,938 111,938
Total Revenues 4,448,100 5,089,260 6,166,000 1,076,740
EXPENDITURES
Redevelopment 1,817,540 2,127,540 2,573,514 (445,974)
Debt Service:
Principal 400,000 400,000 400,000 -
Interest and fees 635,900 635,900 686,094 (50,194)
Total Expenditures 2,853,440 3,163,440 3,659,608 (496,168)
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 1,594,660 1,925,820 2,506,392 580,572
OTHER FINANCING SOURCES (USES)
Operating transfers in - - - -
Operating transfers (out) (1,043,460) (1,043,460) (1,573,315) (529,855)
Total Other Financing Sources (Uses) (1,043,460) (1,043,460) (1,573,315) (529,855)
CHANGE IN FUND BALANCE$551,200$882,360 933,077$50,717
BEGINNING FUND BALANCE 4,481,845
ENDING FUND BALANCE$ 5,414,922
48
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
Variance
OriginalFinalPositive
BudgetBudgetActual (Negative)
REVENUES
Charges for Services$ - $ -$ 6,676$ 6,676
Interest 50,000 50,000 85,449 35,449
Other - - 3,463 3,463
Total Revenues 50,000 50,000 95,588 10,139
EXPENDITURES
Capital outlay 623,200 1,567,737 1,482,950 84,787
Total Expenditures 623,200 1,567,737 1,482,950 84,787
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (573,200) (1,517,737) (1,387,362) 94,926
OTHER FINANCING SOURCES (USES)
Operating transfers in - - 500,000 500,000
Operating transfers (out) - - - -
Total Other Financing Sources (Uses) - - 500,000 500,000
CHANGE IN FUND BALANCE$(573,200)$(1,517,737) (887,362)$594,926
BEGINNING FUND BALANCE 3,320,273
ENDING FUND BALANCE$ 2,432,911
49
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
NONMAJOR GOVERNMENTAL FUNDS
[[299,559,817,616][12][B,I,][Times New Roman]]Special Revenue Funds
:
Parking Management Fund
was established to account for the Towns parking program
activities.
Solid Waste Fund
was established to account for the Towns solid waste program activities.
Community Development Block Grant Fund
was established to account for grant funds
received and expended under the Community Development Act of 1974.
Non-Point Source Maintenance Fund
was established to comply with obligations under the
National Pollutant Discharge Elimination system permit issued by the California Regional Water
Quality Control Board.
Sewer Maintenance Fund
was established to account for the collection and disbursement of
sanitary sewer fees.
Land and Lighting Fund
was established to account for maintenance of trees, landscaping,
irrigation systems and lighting within the boundaries of Tract No. 8439.
[[300,1708,806,1765][12][B,I,][Times New Roman]]Capital Projects Funds
:
Housing Set-Aside Fund
was established to account for the mandatory 20% property tax
allocation for low-income housing and related capital projects.
Storm Drain Basin Funds
were established to account for fees paid in conjunction with the
development in specified drainage areas.
Construction Tax Funds
were established to account for tax levies on building additions or
alterations including capital improvements, underground utilities and parks.
Gas Tax Fund
was established to account for revenue and expenditures under the State of
California Streets and Highways Code Sections 2106, 2107 and 2107.5. The revenues must be
used for the maintenance and construction of streets.
TOWN OF LOS GATOS
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2006
SPECIAL REVENUE FUNDS
Community Non-Point
Solid WasteDevelopmentSourceSewerLighting and
FundFundMaintenanceMaintenanceLandscaping
ASSETS
Cash & Investments$ 307,187$ -$ 176,616$ -$ 105,383
Restricted cash & investments - 699,160 - - -
Receivables:
Accounts 29,474 95,596 87,501 - -
Intergovernmental Receivable - 79,018 - - 590
Long Term Notes Receivable - 497,095 - - -
Total Assets$ 336,661$ 1,370,869$ 264,117$ -$ 105,973
LIABILITIES
Accounts Payable$ 1,572$ 42,984$ 39$ -$ 615
Accrued payroll and benefits 5,175 398 2,838 - -
Deferred revenue - 148,211 - - -
Advance from Other Funds - - 150,000 - -
Total Liabilities 6,747 191,593 152,877 - 615
FUND BALANCES
Reserved for:
Low & Moderate Housing - - - - -
Repair and Maintenance - - - - 105,358
Long Term Notes Receivable - 497,095 - - -
Capital Projects - - - - -
Unreserved, designated for:
Solid waste management 329,914 - - - -
Unreserved, Undesignated - 682,181 111,240 - -
Total Fund Balances 329,914 1,179,276 111,240 - 105,358
Total Liabilities and Fund Balances$ 336,661$ 1,370,869$ 264,117$ -$ 105,973
(Continued)
50
TOWN OF LOS GATOS
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2006
CAPITAL PROJECTS FUNDS
Storm Storm Storm
Housing DrainsDrainsDrainsConstructionGas
Set-AsideBasin 1Basin 2Basin 3TaxTaxTotal
ASSETS
Cash & Investments$ 4,836,371$ 270,491$ 3 07,194$ 225,755$ 2,115,596$ 5 67,816$ 8,912,409
Restricted cash & investments - - - - - - 699,160
Receivables:
Accounts 3 88,801 - - - - - 601,372
Intergovernmental Receivable
1 5,374 - - - - - 94,982
Long Term Notes Receivable
- - - - - - 497,095
Total Assets
$5,240,546$ 2 70,491$ 3 07,194$ 225,755$ 2,115,596$ 5 67,816$10,805,018
LIABILITIES
Accounts Payable
$ - $ - $ - $ - $ - $ -$ 45,210
Accrued payroll and benefits
2 ,486 - - - - - 10,897
Deferred revenue
1 26,801 - - - - - 275,012
Advance from Other Funds
- - - - - - 150,000
Total Liabilities
1 29,287 - - - 481,119
FUND BALANCES
Reserved for:
Low & Moderate Housing - - 5,111,259
5 ,111,259 - - -
Repair and Maintenance - - - - - - 105,358
Long Term Notes Receivable - - - - - - 497,095
Capital Projects - 2 70,491 3 07,194 2 25,755 2,115,596 5 67,816 3,486,852
Unreserved, designated for:
Solid waste management - - - - - - 329,914
Unreserved, Undesignated - - - - - - 793,421
Total Fund Balances 5,111,259 2 70,491 3 07,194 2 25,755 2,115,596 5 67,816 10,323,899
Total Liabilities and Fund Balances$5,240,546$ 270,491$ 3 07,194$ 2 25,755$ 2,115,596$ 5 67,816$10,805,018
(Concluded)
51
TOWN OF LOS GATOS
NONMAJOR GOVERNMENTAL FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2006
SPECIAL REVENUE FUNDS
ParkingCommunity Non-Point
ManagementSolid WasteDevelopmentSourceSewerLighting and
FundFundFundMaintenanceMaintenanceLandscaping
REVENUES
Property Taxes$ - $ - $ - $ -$ -$ 37,162
Other Taxes - - - - - -
Licenses & Permits 26,869 - - - - -
Intergovernmental - 51,123 178,600 176,333 - -
Charges for Services - 337,199 - - 133,341 -
Fines and Forfeitures 397,442 - - - - -
Interest 21,600 175 57,530 - - 2,510
Total Revenues 445,911 388,497 236,130 176,333 133,341 39,672
EXPENDITURES
Current:
Public Safety 512,920 - - - - -
Parks and Public Works - - - - - 31,238
Community Services - - 85,304 - - -
Sanitation and Other - 250,284 - 186,889 113,991 -
Capital Outlay - - - - - -
Debt Service:
Interest & Fees - - 27,985 - - -
Total Expenditures 512,920 250,284 113,289 186,889 113,991 31,238
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (67,009) 138,213 122,841 (10,556) 19,350 8,434
OTHER FINANCING SOURCES (USES)
Transfers in 67,009 - 664 - - -
Transfers (out) - (58,335) (93,959) (32,330) (19,350) (9,742)
Total Other Financing Sources (Uses) 67,009 (58,335) (93,295) (32,330) (19,350) (9,742)
Changes in Fund Balances - 79,878 29,546 (42,886) - (1,308)
Fund Balances at Beginning of year - 250,036 1,149,730 154,126 - 106,666
Fund Balances at End of year$ -$329,914$1,179,276$111,240$ -$105,358
(Continued)
52
TOWN OF LOS GATOS
NONMAJOR GOVERNMENTAL FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2006
CAPITAL PROJECTS FUNDS
Storm Storm Storm
Housing DrainsDrainsDrainsConstructionGas
Set-AsideBasin 1Basin 2Basin 3TaxTaxTotal
REVENUES
Property Taxes$ - $ -$ -$ -$ -$ -$ 37,162
Other Taxes - 3 8,663 1 94,466 2 6,716 89,143 - 348,988
Licenses & Permits - - - - - - 26,869
Intergovernmental - - - - - 538,201 944,257
Charges for Services - - - - - - 470,540
Fines and Forfeitures - - - - - - 397,442
Interest 83,377 6 ,640 1 4,720 5 ,750 53,270 16,370 261,942
Total Revenues 83,377 4 5,303 2 09,186 3 2,466 142,413 554,571 2,487,200
EXPENDITURES
Current:
Public Safety - - - - - - 512,920
Parks and Public Works - - - - - - 31,238
Community Services - - - - - - 85,304
- - - - - 551,164
Sanitation and Other -
Capital Outlay 380,626 2 15,000 4 00,000 7 ,386 - 810,301 1,813,313
Debt Service:
Interest & Fees - - - - - - 27,985
Total Expenditures 380,626 2 15,000 4 00,000 7 ,386 - 810,301 3,021,924
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (169,697)(297,249) (190,814) 25,080 142,413 (255,730) (534,724)
OTHER FINANCING SOURCES (USES)
Transfers in 1,073,315 - - - - - 1,140,988
Transfers (out) - - - - - (106,000) (319,716)
Total Other Financing Sources (Uses) 1,073,315 - - - - (106,000) 821,272
(169,697)776,066 (190,814) 25,080 142,413 (361,730) 286,548
Changes in Fund Balances
Fund Balances at Beginning of year 4,335,193 4 40,188 4 98,008 2 00,675 1,973,183 929,546 10,037,351
$ 5,111,259$ 270,491$ 307,194$ 2,115,596225,755$ $ 567,816$10,323,899
Fund Balances at End of year
(Concluded)
53
TOWN OF LOS GATOS
BUDGETED NONMAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
COMMUNITY DEVELOPMENT
SOLID WASTE MANAGEMENTBLOCK GRANT
PARKING MANAGEMENT
VarianceVarianceVariance
PositivePositivePositive
Budget Actual (Negative)Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Property taxes
$ --$ -$ -$ -$ -$ -$ -$ -$
Other taxes
-- - - - - - - -
Licenses & Permits
26,86924,000 2,869 - - - - - -
Intergovernmental
-- - 51,420 51,123 (297) 182,220 178,600 (3,620)
Charges for services
-- - 330,000 337,199 7,199 - - -
Fines and Forfeitures
397,442360,000 37,442 - - - - - -
Interest
21,60021,600 - - 175 175 10,000 57,530 47,530
Other
-- - - - - - - -
Total Revenues
445,911405,600 40,311 381,420 388,497 7,077 192,220 236,130 43,910
EXPENDITURES
Public Safety
512,920577,250 64,330 - - - - - -
Parks and public works
-- - - - - - - -
Community services
-- - - - - 314,111 85,304 228,807
Sanitation and other
-- - 325,300 250,284 75,016 - - -
Capital Outlay
-- - - - - - - -
Debt Service:
Interest and fees
-- - - - - 10,000 27,985 (17,985)
Total Expenditures
512,920577,250 64,330 325,300 250,284 75,016 324,111 113,289 210,822
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
(67,009)(171,650) 104,641 56,120 138,213 82,093 (131,891) 122,841 254,732
OTHER FINANCING SOURCES (USES)
Transfers in
67,009171,650 - - - - 25,850 664 (25,186)
Transfers (out)
-- - (64,000) (58,335) 5,665 (93,959) (93,959) -
Total Other Financing Sources (Uses)
67,009171,650 - (64,000) (58,335) 5,665 (68,109) (93,295) (25,186)
CHANGES IN FUND BALANCES
$ -- 104,641$ (7,880)$ 79,878 87,758$ (200,000)$ 29,546 229,546$
BEGINNING FUND BALANCES
250,036- 1,149,730
ENDING FUND BALANCES
$ 329,914-$ 1,179,276$
(Continued)
54
TOWN OF LOS GATOS
BUDGETED NONMAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
NON-POINT
SOURCE MAINTENANCESEWER MAINTENANCE
VarianceVariance
PositivePositive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Property taxes$ --$ -$ -$ -$ -$
Other taxes -- - - - -
Licenses & Permits
-- - - - -
Intergovernmental 176,333176,330 3 - - -
Charges for services -- - 133,720 133,341 (379)
Fines and Forfeitures -- - - - -
Interest -- - - - -
Other -- - - - -
Total Revenues 176,333176,330 3 133,720 133,341 (379)
EXPENDITURES
Public Safety -- - - - -
Parks and public works -- - - - -
Community services -- - - - -
Sanitation and other 186,889150,320 (36,569) 114,370 113,991 379
Capital Outlay -- - - - -
Debt Service:
-- - - - -
Interest and fees
Total Expenditures 186,889150,320 (36,569) 114,370 113,991 379
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (10,556)26,010 (36,566) 19,350 19,350 -
OTHER FINANCING SOURCES (USES)
-- - - - -
Transfers in
Transfers (out) (32,330)(26,010) (6,320) (19,350) (19,350) -
Total Other Financing Sources (Uses) (32,330)(26,010) (6,320) (19,350) (19,350) -
$ (42,886)- (42,886)$ -$ - -$
CHANGES IN FUND BALANCES
BEGINNING FUND BALANCES -154,126
ENDING FUND BALANCES$ -111,240$
(Continued)
55
TOWN OF LOS GATOS
BUDGETED NONMAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
LIGHTING AND LANDSCAPINGHOUSING SET-ASIDE
VarianceVariance
PositivePositive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Property taxes$ 37,16237,110$ 52$ -$ -$ -$
Other taxes -- - - - -
Licenses & Permits
-- - - - -
Intergovernmental -- - - - -
Charges for services -- - - - -
Fines and Forfeitures -- - - - -
Interest 2,5101,910 600 60,000 83,377 23,377
Other -- - - - -
Total Revenues 39,67239,020 652 60,000 83,377 23,377
EXPENDITURES
Public Safety -- - - - -
Parks and public works 31,23834,280 3,042 - - -
Community services -- - - - -
Sanitation and other -- - - - -
Capital Outlay -- - 408,420 380,626 27,794
Debt Service:
-- - - - -
Interest and fees
Total Expenditures 31,23834,280 3,042 408,420 380,626 27,794
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 8,4344,740 3,694 (348,420) (297,249) 51,171
OTHER FINANCING SOURCES (USES)
-- - 1,043,460 1,073,315 29,855
Transfers in
Transfers (out) (9,742)(6,420) (3,322) - - -
Total Other Financing Sources (Uses) (9,742)(6,420) (3,322) 1,043,460 1,073,315 29,855
$ (1,308)(1,680) 372$ 695,040$ 776,066 81,026$
CHANGES IN FUND BALANCES
BEGINNING FUND BALANCES 4,335,193106,666
ENDING FUND BALANCES$ 5,111,259105,358$
(Continued)
56
TOWN OF LOS GATOS
BUDGETED NONMAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
STORM DRAINS BASIN 1STORM DRAINS BASIN 2
VarianceVariance
PositivePositive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Property taxes$ --$ -$ -$ -$ -$
Other taxes 38,66370,000 (31,337) 185,000 194,466 9,466
Licenses & Permits
-- - - - -
Intergovernmental -- - - - -
Charges for services -- - - - -
Fines and Forfeitures -- - - - -
Interest 6,6406,000 640 6,000 14,720 8,720
Other -- - - - -
Total Revenues 45,30376,000 (30,697) 191,000 209,186 18,186
EXPENDITURES
Public Safety -- - - - -
Parks and public works -- - - - -
Community services -- - - - -
Sanitation and other -- - - - -
Capital Outlay 215,000215,000 - 400,000 400,000 -
Debt Service:
-- - - - -
Interest and fees
Total Expenditures 215,000215,000 - 400,000 400,000 -
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (169,697)(139,000) (30,697) (209,000) (190,814) 18,186
OTHER FINANCING SOURCES (USES)
-- - - - -
Transfers in
Transfers (out) -- - - - -
Total Other Financing Sources (Uses) -- - - - -
$ (169,697)(139,000) (30,697)$ (209,000)$ (190,814) 18,186$
CHANGES IN FUND BALANCES
BEGINNING FUND BALANCES 498,008440,188
ENDING FUND BALANCES$ 307,194270,491$
(Continued)
57
TOWN OF LOS GATOS
BUDGETED NONMAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
STORM DRAINS BASIN 3CONSTRUCTION TAX
VarianceVariance
PositivePositive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Property taxes$ --$ -$ -$ -$ -$
Other taxes 26,71618,000 8,716 50,000 89,143 39,143
Licenses & Permits
-- - - - -
Intergovernmental -- - - - -
Charges for services -- - - - -
Fines and Forfeitures -- - - - -
Interest 5,7504,000 1,750 45,000 53,270 8,270
Other -- - - - -
Total Revenues 32,46622,000 10,466 95,000 142,413 47,413
EXPENDITURES
Public Safety -- - - - -
Parks and public works -- - - - -
Community services -- - - - -
Sanitation and other -- - - - -
Capital Outlay 7,3867,386 - - - -
Debt Service:
-- - - - -
Interest and fees
Total Expenditures 7,3867,386 - - - -
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 25,08014,614 10,466 95,000 142,413 47,413
OTHER FINANCING SOURCES (USES)
-- - - - -
Transfers in
Transfers (out) -- - - - -
Total Other Financing Sources (Uses) -- - - - -
$ 25,08014,614 10,466$ 95,000$ 142,413 47,413$
CHANGES IN FUND BALANCES
BEGINNING FUND BALANCES 1,973,183200,675
ENDING FUND BALANCES$ 2,115,596225,755$
(Continued)
58
TOWN OF LOS GATOS
BUDGETED NONMAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL (GAAP)
FOR THE YEAR ENDED JUNE 30, 2006
GAS TAXTOTALS
VarianceVariance
PositivePositive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES -
Property taxes$ --$ -$ 37,110$ 37,162$ 52$
Other taxes -- - 323,000 348,988 25,988
Licenses & Permits
-- - 24,000 26,869 2,869
Intergovernmental 538,201431,000 107,201 840,970 944,257 103,287
Charges for services -- - 463,720 470,540 6,820
Fines and Forfeitures -- - 360,000 397,442 37,442
Interest 16,37013,000 3,370 167,510 261,942 94,432
Other -- - - - -
Total Revenues 554,571444,000 110,571 2,216,310 2,487,200 270,890
EXPENDITURES
Public Safety -- - 577,250 512,920 64,330
Parks and public works -- - 34,280 31,238 3,042
Community services -- - 314,111 85,304 228,807
Sanitation and other -- - 589,990 551,164 38,826
Capital Outlay 810,301810,231 (70) 1,841,037 1,813,313 27,724
Debt Service:
-- - 10,000 27,985 (17,985)
Interest and fees
Total Expenditures 810,301810,231 (70) 3,366,668 3,021,924 344,744
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (255,730)(366,231) 110,501 (1,150,358) (534,724) 615,634
OTHER FINANCING SOURCES (USES)
-- - 1,240,960 1,140,988 4,669
Transfers in
Transfers (out) (106,000)(106,000) - (315,739) (319,716) (3,977)
Total Other Financing Sources (Uses) (106,000)(106,000) - 925,221 821,272 692
$ (361,730)(472,231) 110,501$ (225,137)$ 286,548 616,326$
CHANGES IN FUND BALANCES
BEGINNING FUND BALANCES 10,037,351929,546
ENDING FUND BALANCES$ 10,323,899567,816$
(Concluded)
59
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
PROPRIETARY FUNDS
INTERNAL SERVICE FUNDS
Internal service funds are used to finance and account for special activities and service performed
by a designed department for other departments in the Town on a cost reimbursement basis.
The concept of major funds does not extend to internal service funds because they are used for
internal activities only. In the Government-Wide Statement of Activities, the net revenues and
expenses of the internal service funds are allocated to the Town departments or programs that
generated them, thus eliminating internal service funds.
However, internal service funds are still presented separately in the fund financial statements and
include the following funds:
Equipment Replacement Fund
was established to account for the replacement of major Town
equipment and all vehicle replacement.
Workers Compensation Fund
was established to account for future claims that may occur
related to workers compensation injuries.
Self Insurance Fund
was established to account for future general liability claims against the
Town.
Stores Fund
was established to account for the purchase of photocopy equipment, postage and
bulk meter expenses.
Management Information Fund
was established to account for the replacement of management
information computer systems and components.
Vehicle Maintenance Fund
was established to account for preventative maintenance and repair
provided for all Town vehicles and equipment.
Building Maintenance Fund
was established to account for preventative maintenance and
repair for all Town buildings.
TOWN OF LOS GATOS
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
JUNE 30, 2006
EquipmentWorker'sSelfManagementVehicleBuilding
ASSETSReplacementCompInsuranceStoresInformationMaintenanceMaintenanceTotal
Cash & Investments$ 3,561,954$ 2,542,426$ 2,231,262$ 2 37,829$ 2,608,903$ 80,488$ 705,411$ 11,968,273
Restricted cash & investments - 55,328 - - - - - 55,328
Receivables: -
Accounts 1,540 - 26,924 - - 217 - 28,681
Interest - - - - - - - -
Intergovernmental Receivable - - - - - - - -
Interfund Receivable - - - - - - - -
Supplies and Prepaids - - - 6 ,630 - 21,747 - 28,377
Equipment (Net) - - - - - 53,885 42,729 96,614
Total Assets$ 3,563,494$ 2,597,754$ 2,258,186$ 2 44,459$ 2,608,903$ 156,337$ 748,140$ 12,177,273
LIABILITIES
Accounts Payable$ -$ -$ -$ 2 ,349$ 17,055$ 13,920$ 50,224$ 83,548
Accrued payroll and benefits - 1,745 1,880 - 10,978 8,617 4,44927,669
Claims Payable - 405,451 209,109 - - - - 614,560
Deferred revenue - - - - - - - -
Deposits - - - - - - 4,203 4,203
Advance from Other Funds - - - - - - - -
Total Liabilities$ -$ 407,196$ 210,989$ 2 ,349$ 28,033$ 22,537$ 58,876$ 729,980
NET ASSETS
Invested in capital assets, net of related debt$ -$ -$ -$ -$ - $ 53,885$ 42,729$ 96,614
Unrestricted 3,563,494 2,190,558 2,047,197 2 42,110 2,580,870 79,915 646,535 11,350,679
Total Net Assets$ 3,563,494$ 2,190,558$ 2,047,197$ 2 42,110$ 2,580,870$ 133,800$ 689,264$ 11,447,293
61
TOWN OF LOS GATOS
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2006
EquipmentWorker'sSelfManagementVehicleBuilding
ReplacementCompInsuranceStoresInformationMaintenanceMaintenanceTotal
OPERATING REVENUES
Charges for services$ 396,900$ 587,024$ 497,246$84,593$ 732,355$ 501,765$1,007,454$ 3,807,337
Refunds - - 8,981 - - - - 8,981
Interest - 47 - - - - - 47
Other 6,470 47,107 - - 89,686 - - 143,263
Total Operating Revenues 403,370 634,178 506,227 84,593 822,041 501,765 1,007,454 3,959,628
OPERATING EXPENSES
Salaries and benefits - 51,847 80,322 - 365,340 258,671 129,667 885,847
Insurance expenses - 207,783 258,437 - - - - 466,220
Depreciation expenses - - - - - 6,197 3,970 10,167
Services and supplies 201,186 1,045 60,228 72,702 277,563 255,370 1,169,098 2,037,192
Total Operating Expenses 201,186 260,675 398,987 72,702 642,903 520,238 1,302,735 3,399,426
Operating Income (loss) 202,184 373,503 107,240 11,891 179,138 (18,473) (295,281) 560,202
Transfers (out) (130,000) - - - - - (16,451) (146,451)
Change in Net Assets 72,184 373,503 107,240 11,891 179,138 (18,473) (311,732) 413,751
BEGINNING NET ASSETS 3,491,310 1,817,055 1,939,957 230,219 2,401,732 152,273 1,000,996 11,033,542
ENDING NET ASSETS$ 3,563,494$2,190,558$2,047,197$242,110$2,580,870$ 133,800$ 689,264$11,447,293
62
TOWN OF LOS GATOS
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2006
EquipmentWorker'sSelfManagementVehicleBuilding
ReplacementCompInsuranceStoresInformationMaintenanceMaintenanceTotal
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers$ 401,830$ 634,178$ 511,329$ 84,593$ 822,042$ 501,552$ 1,007,624$ 3,963,148
Payments to suppliers (201,186) (89,841)- ( 72,991) (282,882) (283,913) (1,177,486) (2,108,299)
Payments to employees (51,847)- (81,179) - (364,151) (257,139) (128,059) (882,375)
Claims paid (401,978)- (289,169) - - - (691,147)-
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 200,644 180,353 51,140 11,602 175,009 (39,500) (297,921) 281,327
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets (130,000) - - - (18,074)- (148,074)-
NET CASH USED BY CAPITAL AND RELATED
FINANCING ACTIVITIES (130,000) - - - (18,074)- (148,074)-
NET INCREASE IN CASH AND INVESTMENTS 70,644 180,353 51,140 11,602 175,009 (57,574) (297,921) 133,253
CASH AND INVESTMENTS - BEGINNING 3,491,310 2,417,401 2,180,122 226,227 2,433,894 138,062 1,003,332 11,890,348
CASH AND INVESTMENTS - ENDING$ 3,561,954$ 2,597,754$ 2,231,262$ 237,829$ 2,608,903$ 80,488$ 705,411$ 12,023,601
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Operating Income 202,184 373,503 107,240 11,891 179,138 (18,473) (295,281) 560,202
Adjustments to reconcile operating income to cash flows
provided by operating activities:
Depreciation - - - - - 3,970- 3,970
Change in assets and liabilities:
Receivables, net (1,540) 5,102- - - (217) 170 3,515
Supplied and prepaids - - - 743 (11,040)- (10,297)-
Accounts payable and other accrued expenses (7,141)- (30,469) ( 1,032) (5,318) (11,304) 9,102
(46,162)
Other accrued expenses (186,009)- (30,733) - 1,189 1,534 (213,450)569
NET CASH PROVIDED BY OPERATING ACTIVITIES$ 200,644$ 180,353$ 51,140$ 11,602$ 175,009$ (39,500)$ (281,470)$ 297,778
63
TOWN OF LOS GATOS, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
AGENCY FUND
PARKNG IMPROVEMENT DISTRICT #88
Agency funds are used to account for assets held by the Town as an agent for individuals, private
organizations and other governments. The financial activities of these funds are excluded from
the government-wide financial statements, but are presented in separate Fiduciary Fund financial
statements.
TOWN OF LOS GATOS
AGENCY FUND
PARKING IMPROVEMENT DISTRICT #88
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FOR THE YEAR ENDED JUNE 30, 2006
BalanceBalance
July 1, 2004AdditionsDeletionsJune 30, 2005
ASSETS
Cash and investments (Note 2)$ 8 2,423$ 1 38,207$ 146,408$74,222
Restricted cash and investments (Note 2) 2 39,803 6 ,324 -246,127
Intergovernmental receivable 7 97,765 - 75,888721,877
Total Assets$ 1 ,119,991$ 1 44,531$ 222,296$1,042,226
LIABILITIES
Due to other governments$ 1 ,119,991$ 1 44,531$ 222,296$1,042,226
Total Liabilities$ 1 ,119,991$ 1 44,531$ 222,296$1,042,226
64
[[998,1202,1559,1286][18][B,I,][Times New Roman]]Statistical Section
Town of Los GatosSchedule 1
Net Assets by Component
Last Four Fiscal Years
(Accrual Basis of Accounting)
50000000
45000000
40000000
35000000
30000000
25000000
20000000
15000000
10000000
5000000
0
Invesment in Capital Assets Net of Related DebtRestrictedUnrestricted
Investment
Fiscalin Capital AssetsTotal
Restricted
YearNet of Related DebtUnrestrictedNet Assets
19970000
19980000
19990000
20000000
20010000
20020000
200333,799,13024,016,83020,984,67678,800,636
200438,417,21111,463,18729,308,13579,188,533
(1)
200538,234,22913,295,87131,410,46882,940,568
200641,224,2024,067,37947,207,19792,498,779
* This data has only been available since implementation of GASB34 in FY2003.
(1) The decrease in Restricted Net Assets from FY2003 to FY2004 was primarily due to the issuance of the $10.7 million
Certificates of Participation in FY2003.
Town of Los GatosSchedule 2
Changes in Net Assets
Last Four Fiscal Years
(Accrual Basis of Accounting)
Expenses2002/032003/042004/052005/06
Governmental Activities:
General government4,140,359$ 4,246,133$ 4,341,526$ 4,383,584$
Police department10,337,213 9,980,927 10,524,840 11,133,362
Parks and public works6,410,103 6,179,328 5,953,319 6,523,888
Community development2,277,109 2,229,686 2,494,689 2,887,818
Community services973,554 1,046,351 920,562 948,650
Library services1,779,697 1,807,662 1,786,696 1,880,465
Sanitation833,096 832,538 834,525 574,344
Redevelopment1,563,166 1,828,924 2,133,008 2,093,546
Interest and fees1,139,358 662,867 696,266 708,585
s$ 28,814,41529,453,655$ 29,685,430$ 31,134,241$
Total Governmental Activitie
Program Revenues
Charges for Services:
General government2,159,167$ 1,959,401$ 1,640,632$ 1,981,557$
Police department1,403,332 1,446,067 1,386,479 1,343,028
Parks and public works351,605 472,366 757,790 591,079
Community development1,815,495 2,025,305 2,569,923 3,070,115 a
Community services152,697 347,970 182,075 170,836
Library services57,913 72,013 61,671 62,444
Sanitation871,698 903,097 889,948 690,314
Operating Grants and Contributions:
Police department590,489 546,508 566,180 745,797
Parks and public works616,962 706,621 556,121 549,873
Community services285,812 124,920 262,554 180,897
Library services26,070 12,981 14,987 11,379
Sanitation8,155 8,023 7,857
Redevelopment143,043
Capital Grants and Contributions:
Parks and public works881,758 1,166,929 867,951 931,616
s$ 9,792,3339,356,041$ 9,764,334$ 10,336,793$
Total Program Revenue
General Revenues2003200420052006
Property taxes9,051,608$ 9,645,339$ 11,931,215$ 13,810,457$ b
Sales taxes6,928,817 6,914,526 7,904,130 8,655,566 c
Other taxes1,835,328 1,823,019 1,864,997 2,247,997
Motor vehicle in lieu1,722,801 1,298,455 314,041 666,494 d
Interest1,642,527
Investment earnings(92,621) 1,286,433 1,922,819 e
Proceeds from sale of property262,568 -
Proceeds from sale of property- - (6,378)
Loss on disposal of capital assets(3,592)
Miscellaneous22,356 25,415 378,693 2,850,836 f
Total General Revenues$ 19,614,13321,466,005$ 23,673,131$ 30,150,578$
Change in Net Assets
$ 592,0511,368,391$ 3,752,035$ 9,353,130$
* These line items have only been available since implementation of GASB34 in 2002/03.
a. The increase in Community Development charges for services revenue was due to major one-time developments
and increases in user fees.
b. Property Tax growth.
c. Sales Tax revenue was up in 2006 largely due to one internet commerce retailer.
d. Increase is due to one time repayment of 2003/04 GAP loan.
e. Investment Earnings were a substantial improvement from the prior year.
f. The increase is mainly due to the one time proceeds from the sale of the Town's Sanitary Sewer System to West
Valley Sanitation District.
Town of Los GatosSchedule 5
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
7000
6000
5000
4000
3000
2000
1000
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
UnsecuredSecured
FiscalSecuredPercentUnsecured PercentTotal Estimated
YearPropertyChangePropertyChangeAssessedFull Market
19972,823,741,4156.34%138,354,91613.66%2,962,096,33111,294,965,660
19983,046,505,0317.89%136,521,793-1.32%3,183,026,82412,186,020,124
19993,368,833,89810.58%138,728,8681.62%3,507,562,76613,475,335,592
20003,690,413,7439.55%143,327,9093.32%3,833,741,65214,761,654,972
20014,084,688,12610.68%177,486,95423.83%4,262,175,08016,338,752,504
20024,685,070,11814.70%185,521,1584.53%4,870,591,27618,740,280,472
20034,913,724,1634.88%201,539,3008.63%5,115,263,46319,654,896,652
20045,258,601,7397.02%175,689,995-12.83%5,434,291,73421,034,406,956
20055,614,391,1036.77%174,856,384-0.47%5,789,247,48722,457,564,412
20066,219,145,89610.77%181,943,5094.05%6,401,089,40524,876,583,584
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Town of Los GatosSchedule 6
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
1.25
1.00
0.75
0.50
0.25
0.00
Santa Clara Valley Water DistrictCounty Retirement Levy
School District Bonds and LoansBasic County Wide Levy
SchoolCountySanta Clara
FiscalBasic CountyDistrict BondsRetirementValley Water
YearWide Levy and LoansLevyDistrictTotal
19971.00000.12920.03410.00261.1659
19981.00000.00450.03880.00981.0531
19991.00000.03560.03880.00821.0826
20001.00000.02390.03430.00851.0667
20011.00000.03200.03560.00751.0751
20021.00000.07340.03640.00621.1160
20031.00000.06350.03880.00721.1095
20041.00000.07490.03880.00871.1224
20051.00000.07260.03880.00921.1206
20061.00000.09960.03880.00781.1462
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Town of Los GatosSchedule 7
Principle Property Tax Payers
Current Year and Nine Years Ago *
2005/06
Percentage
of Total City
Taxable Taxable
AssessedAssessed
ASSESSEE NAMEValueValue
Sobrato Interests IV/Sobrato Land Holdings$38,914,3710.62%
Sports Resorts Inc.$28,128,7740.45%
SRI Old Town LLC$27,370,1910.44%
Health Care Property Partners$26,238,2350.42%
Community Hospital of Los Gatos Inc.$24,916,7740.40%
Boccardo Corporation$18,463,3980.29%
Knowles Los Gatos LLC$18,000,0000.29%
San Jose Water Works$16,778,5270.27%
Good Samaritan Hospital LP$15,561,6320.25%
Los Gatos Hotel Corp.$15,240,2300.24%
BR3 Partners$14,492,1440.23%
Grade Way Associates VI$13,311,0000.21%
Park Row East Apartments Ltd.$13,231,6910.21%
Toll House Hotel LLC$13,063,0370.21%
Ohana University Ave. LLC$11,793,9340.19%
Paul H. Roskoph$11,730,0000.19%
750 University LLC$11,550,0000.18%
Elizabeth K. Dodson$11,523,0060.18%
Robert M. Granum II$10,975,1550.18%
GS Baytree LP$10,785,2610.17%
Total - Principal taxpayers352,067,360$ 3.67%
Total - All real properties assessed by the Town (1)$6,259,830,939
*Data pertaining to principal tax payers for nine years ago is not available.
(1) Assessed value includes only net secured real properties.
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Town of Los Gatos Schedule 8
Property Tax Levies and Collections
Last Ten Fiscal Years
$13.0
$7.0
$12.0
$6.5
$11.0
$6.0
$10.0
$5.5
$9.0
$5.0
$8.0
$4.5
$7.0
$4.0
$6.0
$3.5
$5.0
$4.0
$3.0
$3.0
$2.5
$2.0
$2.0
Value of Property
Tax Levied
Value of
Redevelopment
AgencyValue of
TownRedevelopmentTotal PropertyValue of TownPropertyProperty
Property TaxProperty TaxTax LeviedProperty subjectSubject to Subject to
FiscalLevied andLevied andandto Local TaxLocal Local
YearCollectedCollectedCollectedRateTax RateTax Rate
19972,652,072790,0153,442,0872,962,096,331327,410,4603,289,506,791
19982,916,3051,132,8064,049,1113,503,932,314334,394,5573,838,326,871
19993,260,6151,314,5564,575,1713,507,562,766341,082,4483,848,645,214
20003,578,1752,123,0415,701,2163,882,006,452347,904,0974,229,910,549
20013,917,9323,232,0427,149,9744,310,115,280585,708,1964,895,823,476
20024,425,0474,079,5988,504,6454,918,304,676667,237,0825,585,541,758
20034,736,5604,037,4438,774,0035,162,418,263693,559,2745,855,977,537
20044,834,4644,376,8969,211,3615,480,295,734753,210,3326,233,506,066
20055,348,4835,013,35010,361,8335,834,517,887804,306,8626,638,824,749
20065,739,8465,976,06211,715,9096,446,525,005897,448,6607,343,973,665
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Town of Los Gatos Schedule 9
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
19922002Percentage
CertificateCertificateTotalTotalof
FiscalofofGovernmentalPrimary PersonalPer
YearParticipationParticipationActivitiesGovernmentIncomeCapita
19972,645,000$ 2,645,000$ 2,645,000$ *88.35$
19982,550,000 2,550,000 2,550,000 *85.17
19992,435,000 2,435,000 2,435,000 *81.33
20002,320,000 2,320,000 2,320,000 *77.49
20012,185,000 2,185,000 2,185,000 *72.98
20021,925,000 1,925,000 1,925,000 *66.49
20031,775,000 10,725,000 12,500,000 12,500,000 *432.53
20041,615,000 10,515,000 12,130,000 12,130,000 *418.85
20051,445,000 10,300,000 11,745,000 11,745,000 *405.34
20061,270,000 10,075,000 11,345,000 11,345,000 *391.36
* Data is being compiled by departments but unavailable at printing.
Town of Los GatosSchedule 10
Direct and Overlapping Governmental Activities Debt
As of June 30, 2006
2005/06 Assessed Valuation:$6,446,525,005
Estimated Share
of Direct and
Debt atOverlapping Debt
DIRECT AND OVERLAPPING BONDED DEBT:% ApplicableJune 30, 2006at June 30, 2006
Santa Clara Valley Water District, Zone W-12.706%4,974,981$ 134,623$
West Valley-Mission Community College District10.160%10,160,000$ 1,032,256$
Campbell Union High School District8.331%7,684,514$ 640,197$
Los Gatos-Saratoga Joint Union High School District28.750%20,227,063$ 5,815,281$
Cambrian School District0.231%47,182$ 109$
Campbell Union High School District8.704%8,019,428$ 698,011$
Los Gatos Union School District65.740%49,469,350$ 32,521,151$
Saratoga Union School District0.017%9,341$ 2$
Union School District20.855%17,458,603$ 3,640,992$
Town of Los Gatos 1915 Act Bonds100.000%850,000$ 850,000$
Santa Clara County General Fund Obligations2.706%24,911,301$ 674,100$
Santa Clara County Board of Education Certificates of Participation2.706%464,620$ 12,573$
West Valley Community College District Certificates of Participation10.160%3,648,456$ 370,683$
Los Gatos-Saratoga Joint Union High School District Certificates of Participation28.750%1,198,875$ 344,677$
Saratoga Union School District Certificates of Participation0.017%1,251$ 0$
Town of Los Gatos Certificates of Participation100.000%11,560,000$ 11,560,000$
Midpeninsula Regional Open Space Park District General Fund Obligations4.747%5,301,933$ 251,683$
TOTAL DIRECT AND OVERLAPPING BONDED DEBT$165,986,898(1$58,546,335
(1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital
lease obligations.
Ratios to 2005/06 Assessed Valuation:
Total Overlapping Tax and Assessment Debt: 1.84%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($12,310,000 ): 0.20%
Combined Total Debt: 2.84%
State School Building Aid Repayable as of 6/30/06: $0.00
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Town of Los GatosSchedule 12
Demographic and Economic Statistics,
Last Five Fiscal Years
Personal
IncomePer CapitaPublic County
FiscalÈÔÍÇÉÛÎØÉ PersonalMedian School Unemployment
YearPopulation ÍÖ ØÍÐÐÛÊÉIncomeAgeEnrollmentRate
Ended(1)(2)(3)(4)(5)6
200228,928 1,567,753 54,195 41.895,518 9.4%
200328,910 1,434,370 49,615 41.895,525 7.8%
200428,910 1,338,678 46,305 42.525,529 7.3%
200528,976 1,343,414 46,363 44.045,610 6.1%
200628,989 1,424,288 49,132 44.195,718 5.0%
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Town of Los Gatos Schedule 13
Principal Employers
Current Year and Nine Years Ago
2005/06*
Percentage
of Total Town
Major EmployersEmployeesEmployment
Good Samaritan Hospital2,000 13.36%
Community Hospital of Los Gatos800 5.34%
Los Gatos Union School District300 2.00%
Los Gatos-Saratoga High School District300 2.00%
Safeway 1.34%200
Verizon 1.34%200
Courtside Tennis Club200 1.34%
Town of Los Gatos189 1.26%
Los Gatos Meadows150 1.00%
Lunardi's 0.67%100
Los Gatos Acura100 0.67%
Swanson Ford 0.60%90
Note: Major employers information presented as of June 30, 2006.
Data pertaining to principal employers for nine years ago is not available.
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Town of Los Gatos Schedule 14
Full-time-Equivalent Employees by Function/Program
Last Five Fiscal Years
Full-time-Equivalent Employees as of June 30
2001/022002/032003/042004/052005/06
Function/Program
General Government24.20 24.10 22.35 20.15 20.95
Police73.00 69.00 65.30 62.00 62.00
Culture and recreation4.25 4.25 4.25 4.20 4.20
Community development/housing0.25 0.20 0.30 0.50 0.50
Economic Development0.80 0.80 0.80 0.95 0.95
Library11.25 10.75 11.10 10.35 10.35
Planning18.00 17.60 18.50 18.20 18.20
Public Works47.33 45.35 40.70 40.70 34.00
Total179.08 172.05 163.30 157.05 151.15
Full-time equivalent employment is calculated as one or more employee positions totaling one full year
of service or approximately 2,080 hours a year.
Town of Los Gatos
Operating Indicators
Fiscal Year Ending June 30, 2006
Fiscal Year
2005/06
FUNCTION/PROGRAM
General government
Building Permits Issued
Residential Permits Issued868
Residential Permits Value126,348,388
Commercial Permits Issued101
Commercial Permits Value24,203,521
Residential Parking Permits
Number of Daily Permits Issued*
Number of 14 Day Permits Issued*
Number of Annual Permits Issued*
City Clerk
Number of Council Resolutions Passed*
Number of Ordinances Passed*
Number of Contracts Passed*
General Services
Number of Purchase Orders Issued301
Police
Physical Arrests*
Parking Violations*
Traffic Violations*
DUI Arrests*
Library
Electronic resources subscriptions*
Electronic research subscriptions searches*
Circulated e-audiobooks*
Other Public Works
Street Resurfacing/Overlay/Reconstruction (miles)*
ADA Compliance: Curb Ramps*
Traffic Circles*
Street Poles with Lights*
Planning and Development Department
Customers Served*
Building & Safety Inspections Performed*
Toxics: CUPA Inspections*
Redevelopment: Number of active projects2
Note: As certain data required by GASB 44 was not available prior to 2006 the Town of Los Gatos has
elected to show one year of data in this schedule.
* Information required by GASB 44 was unavailable for presentation
éÍÇÊÙ× èÍÅÎ ÍÖ ðÍÉ õÛÈÍÉ öÓÎÛÎÙ× ø×ÌÛÊÈÏ×ÎÈ
Town of Los Gatos Schedule 16
Capital Asset Statistics by Function/Program
Fiscal Year Ending June 30, 2006
Fiscal Year
2005/06
Function/Program
Police
Number of Stations1
Number of Patrol Units*
Parking Enforcement Vehicles4
Other Public Works
Streets (miles)105
Streetlights*
Traffic Signals 29
Sidewalks (miles)*
Parks and Recreation
Number of Parks12
Number of Community Centers1
Parking
Number of Parking Garages*
Number of Parking Lots*
Number of Off Street Parking Garage Spaces*
Note: As certain data required by GASB 44 was not available prior to 2006 the Town of Los Gatos
has elected to show one year of data in this schedule.
* Information required by GASB 44 was unavailable for presentation
éÍÇÊÙ× èÍÅÎ ÍÖ ðÍÉ õÛÈÍÉ öÓÎÛÎÙ× ø×ÌÛÊÈÏ×ÎÈ
[[699,1202,1872,1286][18][B,I,][Times New Roman]]Other Independent Auditors Reports
TOWN OF LOS GATOS
REDEVELOPMENT AGENCY
BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2006
WITH INDEPENDENT AUDITORS' REPORTS
THEREON
* * *
TOWN OF LOS GATOS
REDEVELOPMENT AGENCY
TABLE OF CONTENTS
FOR THE YEAR ENDED JUNE 30, 2006
PAGE
Independent Auditors Report
...................................................................................... 1 - 2
Managements Discussion and Analysis
...................................................................... 3 - 9
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets....................................................................................... 10
Statement of Activities......................................................................................... 11
Fund Financial Statements:
Governmental Funds:
Balance Sheet................................................................................................. 12
Reconciliation of the Balance Sheet Statement of Net Assets.................... 13
Statement of Revenues, Expenditures and Changes in Fund Balances......... 14
Reconciliation of Statement of Revenues, Expenditures and Changes
in Fund Balances Statement of Activities............................................. 15
Notes to the Financial Statements.............................................................................. 16 - 24
Supplementary Information:
Budgetary Comparison Schedules:
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget to Actual - Redevelopment Fund............................. 25
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget to Actual - Housing Fund......................................... 26
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget to Actual - Certificates of Participation Fund.......... 27
Independent Auditors Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with
[[375,2513,1075,2570][12][B,I,][Times New Roman]]Government Auditing Standards
.............................................................................. 28
Summary of Compliance Findings
............................................................................... 29
Summary of Prior Year Compliance Findings
........................................................... 30
C. G. UHLENBERG LLP
CERTIFIED PUBLIC ACCOUNTANTS
ROBERT E. BARSANTI (RETIRED) PEGGY H. CHEN, C.P.A. JEFFREY J. IRA, C.P.A. KATHERINE CHAO, C.P.A . JULIE LIN, C.P.A. SHELDON D. CHAVAN, C.P.A.
INDEPENDENT AUDITORS REPORT
Members of the Board of the
Town of Los Gatos Redevelopment Agency
Los Gatos, California
We have audited the accompanying financial statements of the governmental activities, each
major fund and the aggregate remaining fund information of the Los Gatos Redevelopment
Agency (the "Agency"), a component unit of the Town of Los Gatos, California, as of and for the
year ended June 30, 2006, which collectively comprise the Agency's basic financial statements,
as listed in the table of contents. These financial statements are the responsibility of the
Agency's management. 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 the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free 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 financial position of the governmental activities, each major fund and the aggregate
remaining fund information of the Los Gatos Redevelopment Agency as of June 30, 2006, and
the respective changes in financial position for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report dated
September 23, 2006 on our consideration of the Agency's internal control over financial reporting
and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results pf the testing, and not to
provide an opinion on the internal control over financial reporting or on compliance. That report
is an integral part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our audit.
1
C. G. UHLENBERG LLP
CERTIFIED PUBLIC ACCOUNTANTS
ROBERT E. BARSANTI (RETIRED) PEGGY H. CHEN, C.P.A. JEFFREY J. IRA, C.P.A. KATHERINE CHAO, C.P.A . JULIE LIN, C.P.A. SHELDON D. CHAVAN, C.P.A.
The Managements Discussion and Analysis 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 the financial statements that
collectively comprise the Agency's basic financial statements. The budgetary 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 of the Agency. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and, in our opinion, is
fairly stated, in all material respects, in relation to the basic financial statements taken as a
whole.
September 22, 2006
Redwood City, California
2
Managements Discussion and Analysis
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENTS DISCUSSION AND ANALYSIS
As a component unit of the Town of Los Gatos, the Redevelopment Agency ( Agency ) was
established in response to the need to rebuild existing infrastructure damaged in the 1989 Loma
Prieta Earthquake. The Redevelopment Agency area encompasses approximately 440 acres in
and around Downtown Los Gatos, which includes retail and residential areas, lodging, schools,
and main traffic thoroughfares. Projects such as street and utility reconstruction, parking,
streetscape and civic improvements were called out in the Redevelopment Plan. The Agency has
the power to condemn properties for this purpose and to issue debt payable out of the
incremental property taxes expected to be realized because of its redevelopment activities. The
Agency may enter into development agreements with developers and others to further its
purposes.
FISCAL 2006 FINANCIAL HIGHLIGHTS
Agency revenues experienced continued growth in the project area as compared to the prior year.
Property tax increments, the Agencys primary revenue source, increased $962,711 from the
amounts received the prior year.
The assets of the Agency exceeded its liabilities at June 30, 2006 by $6,942,890 (net assets).
Included in the determination of net assets is a negative (deficit) balance of ($5,335,662) in
unrestricted net assets. The deficit in unrestricted net assets is normal in California
redevelopment agencies. All redevelopment agencies leverage current tax increment
revenues by issuing long-term debt to raise capital to eliminate blight and promote economic
growth within the Agencys project area.
The Agencys total net assets increased by $1,984,426 from the prior year.The increase is
largely due to an increase in property tax increment growth and a $776,067 growth in net
assets in the Agencys Low and Moderate Income Housing Fund.
As of June 30, 2006 the Agencys governmental funds reported combined ending fund
balances of $12,959,093, an increase of $821,782 in comparison from the prior years
combined fund balance of $12,137,311. The increase is due primarily to an increase in fund
balances in the Towns Low and Moderate Housing Fund.
At June 30, 2006 total unreserved fund balance in the Towns governmental funds of
$4,959,728 increased $926,958 in comparison with the prior years balances of $4,032,770.
The Agencys total outstanding debt increased by $165,499 during the current fiscal year.
The increase is due chiefly to an increase in the amounts of property tax increments due to
tax agencies at year end related to increased tax increments amounts received by the Agency
compared to the amounts received the prior year.
3
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENTS DISCUSSION AND ANALYSIS
OVERVIEW OF THE BASIC FINANCIAL STATEMENTS
This Report is in three parts:
1)Managements Discussion and Analysis (this part),
2)The Basic Financial Statements, which include the Agency-wide and the Fund financial
statements, along with the Notes to these financial statements,
3)Budget/Actual Statements for budgeted Capital Projects Funds.
The Basic Financial Statements
The Basic Financial Statements comprise the Agency-wide Financial Statements and the Fund
Financial Statements. These two sets of financial statements provide two different views of the
Agencys financial activities and financial position long-term and short-term.
The Agency-wide Financial Statements provide a longer-term view of the Agencys activities as
a whole, and comprise the Statement of Net Assets and the Statement of Activities. The
Statement of Net Assets provides information about the financial position of the Agency as a
whole, including all its capital assets and long-term liabilities on the full accrual basis, similar to
that used by corporations. The Statement of Activities provides information about all the
Agencys revenues and all its expenses, also on the full accrual basis, with the emphasis on
measuring net revenues or expenses of each of the Agencys programs. The Statement of
Activities explains in detail the change in Net Assets for the year.
The Fund Financial Statements report the Agencys operations in more detail than the Agency-
wide statements and focus primarily on the short-term activities of the Agencys Major Funds.
The Fund Financial Statements measure only current revenues and expenditures, current assets,
liabilities and fund balances; they exclude capital assets, long-term debt, and other long-term
amounts.
Major Funds account for the major financial activities of the Agency and are presented
individually, while the activities of any Non-major Funds would be presented in summary, with
subordinate schedules presenting the detail for each of these other funds. The Agency does not
have any Non-major Funds. Major Funds are explained below.
Together, all these statements are now called the Basic Financial Statements; formerly they were
called the general-purpose financial statements.
[[300,2203,1132,2260][12][,I,][Times New Roman]]The Agency-wide Financial Statements
All of the Agencys basic services are considered to be Governmental activities, including;
economic development, pass through agreements, and debt service. General Agency revenues
such as incremental property taxes and investment earnings support these services.
Agency-wide financial statements are prepared on the accrual basis, which means they measure
the flow of all economic resources of the Agency as a whole.
[[298,2616,892,2673][12][,I,][Times New Roman]]Fund Financial Statements
Governmental Fund financial statements are prepared on the modified accrual basis, which
means they measure only current financial resources and uses. Capital assets and other long-
lived assets, along with long-term liabilities, are presented only in the Agency-wide financial
statements.
4
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENTS DISCUSSION AND ANALYSIS
The Fund financial statements provide detailed information about each of the Agencys most
significant funds, called Major Funds. The concept of Major Funds, and the determination of
which are Major Funds, was established by GASB Statement 34 and replaces the concept of
combining like funds and presenting them in total. Instead, each Major Fund is presented
individually, with all Non-major Funds summarized and presented only in a single column.
Subordinate schedules present the detail of these Non-major funds. Major Funds present the
major activities of the Agency for the year. The Agencys Major Funds may change from year to
year as a result of changes in the pattern of Agencys activities.
The Agency has three Major Governmental Funds in 2006. These are the Redevelopment Fund,
the Housing Set-Aside Fund, and the Certificate of Participation Fund, each of which is
discussed in detail below.
FINANCIAL ACTIVITIES OF THE AGENCY AS A WHOLE
This analysis focuses on the net assets and changes in net assets of the Agency as a whole.
Tables 1, 2 and 3 focus on the Agencys Governmental Statement of Net Assets and Statement of
Activities.
[[300,1364,816,1421][12][,I,][Times New Roman]]Governmental Activities
Governmental Net Assets presents total program assets and liabilities and the resulting allocation
of the Agencys net assets.
Table 1
Governmental Net Assets at June 30, 2006
(In Millions)
June 30, 2006June 30, 2005
Cash and Investments$ 16.57$ 15.45
Other Assets 6.01 5.25
Total Assets $ 22.58$ 20.70
Long Term Debt Outstanding11.35$ 11.75
Other Liabilities 4.56 3.99
Total Liabilities $ 15.91$ 15.74
Net Assets:
Invested in Net Assets $ 4.28$ 3.35
Restricted 8 8.10
Unrestricted-5.34 (6.49)
Total Net Assets:$ 6.94$ 4.96
5
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENTS DISCUSSION AND ANALYSIS
The Agencys governmental net assets amounted to $6.94 million at June 30, 2006. The
Agencys net assets at June 30, 2006 are comprised of the following:
Unrestricted cash and investments comprised $13.96 million of pooled cash and investments
available for operations. Substantially all of these amounts were held in the Towns cash and
investment pool as described in Note 3 to the financial statements. Restricted cash and
investments of $2.88 million are funds held by trustees as prescribed under the Certificate of
Participation issuances.
Other Assets of $6.01 million largely represents the value of the Parking Lot #4 parking
structure, which is considered an infrastructure capital asset under the provisions of GASB
34.
Short term payables and pass-through obligations comprise $3.07 million of Agency
liabilities. As part of the Redevelopment Plan, the Agency entered into agreements with
other taxing agencies to pass-through portions of incremental property taxes and amounts due
are reflected at June 30, 2006.
As of June 30, 2006 the Town of Los Gatos had advanced the Agency a total of $1.5 million
to partially fund ongoing Agency operations. This advance is repayable on demand.
Long-term debt of $11.35 million, of which $10.93 million is due in future years and $.42
million, is due currently.
The $4.28 million of Investments in Capital Assets, Net of Related Debt describes the
portion of Net Assets that represents the current net book value of the Agencys capital
assets, less the outstanding balance of any debt issued to finance these assets.
Restricted net assets total $8.00 million, of which $2.43 million may be used only for capital
projects, $5.11 million is restricted for low and moderate income housing purposes, and $.45
million may be used only for debt service. The restrictions on these funds were placed there
by outsiders and cannot be changed by the Agency.
Unrestricted net assets are the part of net assets that can be used to finance day-to-day
operations without constraints established by debt covenants or other legal requirements or
restrictions. The Agency had $(5.34) million of unrestricted net assets at June 30, 2006. This
deficit is a result of the $11.75 million in long-term debt proceeds, which are deducted from
fund balance.
6
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENTS DISCUSSION AND ANALYSIS
[[300,355,1095,412][12][,I,][Times New Roman]]Changes in Governmental Net Assets
The Statement of Activities presents program revenues and expenses and general revenues in
detail. All these are elements in the Changes in Governmental Net Assets summarized below.
Table 2
Changes in Governmental Net Assets
(In Millions)
Revenues 20062005
[[534,917,946,969][11][B,I,][Times New Roman]]Program Revenues
Redevelopment Projects $ 0.01$ -
[[537,1039,931,1091][11][B,I,][Times New Roman]]General Revenues:
Property Tax Increments5.97$ 5.01
Interest0.36 0.26
Total Revenues $ 6.34$ 5.27
Activities:
[[537,1405,1001,1457][11][B,I,][Times New Roman]]Functions / Programs
Redevelopment Projects $ 1.11$ 0.88
Pass-through payments2.57 2.08
Interest and Fees0.68 0.68
Total Government Activities $ 4.36$ 3.64
Change in Net Assets $ 1.98$ 1.63
As Table 2 above shows, $0.01 million (0%) of the Agencys 2006 Governmental revenue is
program revenue and $6.33 million (100%) came from general revenues such as taxes and
interest. Program revenues were comprised of charges for services, which include
reimbursements for expenses incurred in providing services. General revenues are not allocable
to programs. General revenues are used to pay for the net cost of governmental programs.
7
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENTS DISCUSSION AND ANALYSIS
[[298,361,1375,418][12][,I,][Times New Roman]]Net Revenue (Expense) of Governmental Activities
Table 3 presents the net (expense) or revenue of each of the Agencys governmental activities,
including interest on long-term debt. Net expense is defined as total program cost less the
revenues generated by those specific activities.
Table 3
Net Revenue (Expense) of Governmental Activities
(In Millions)
20062005
Redevelopment Projects $ (1.11)$ (0.88)
Property Tax Increments$ (2.57)$ (2.08)
Interest$ (0.68)$ (0.68)
Totals (4.36)$ $ (3.64)
THE AGENCYS FUND FINANCIAL STATEMENTS
Table 4 below summarizes Governmental Activity and balances at the fund level:
Table 4
Financial Highlights at Fund Level
(In Millions)
Governmental Funds20062005
Total Assets $ 17.30$ 15.91
Total Liabilities $ 4.34$ 3.77
Total Fund Balances $ 12.96$ 12.14
Total Revenues $ 6.34$ 5.27
Total Expenditures $ 5.52$ 4.13
Total Other Financing Sources (Uses) $ -$ -
Analyses of Major Governmental Funds
[[298,2309,786,2366][12][,I,][Times New Roman]]Redevelopment Fund
Accounts for activities of the Redevelopment Agency of the Town and the related program tax
revenues. This fund encompasses three core functions: Redevelopment Agency administration,
Capital Project development and implementation, and the implementation of the Economic
Vitality Program.
[[298,2654,835,2711][12][,I,][Times New Roman]]Housing Set Aside Fund
Accounts for administering the housing component of the Redevelopment plan. The revenue
source for this program comes from the 20% State-mandated housing set-aside deducted from
incremental property taxes.
8
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENTS DISCUSSION AND ANALYSIS
[[300,361,1007,418][12][,I,][Times New Roman]]Certificates of Participation Fund
This Fund accounts for financial resources to be used for the payment of principal and interest in
long-term obligations. Each of the Agencys debt issues is discussed in detail in Note 6 to the
financial statements. Certificates of Participation are used to fund the key infrastructure projects
in the Downtown redevelopment area. At June 30, 2006, the Agencys debt comprised:
June 30, 2006June 30, 2005
Balance Balance
(In Millions)(In Millions)
[[511,830,1036,882][11][B,I,][Times New Roman]]Government Activity Debt
1992 Certificates of Participation$ 1.27$ 1.45
2002 Certificates of Participation10.0810.30
Total Long Term Debt$ 11.35$ 11.75
ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The economy of the Agency and its major initiatives are discussed in detail in the Letter of Transmittal in
the Town of Los Gatos Comprehensive Annual Financial Report for the Fiscal Year Ended June 30,
2006.
CONTACTING THE AGENCYS FINANCIAL MANAGEMENT
These Financial Statements are intended to provide citizens, taxpayers, investors, and creditors with a
general overview of the Agencys finances. Questions about this Report should be directed to the Finance
Department, at 110 East Main Street, Los Gatos, CA 95030.
9
Basic Financial Statements
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
STATEMENT OF NET ASSETS
JUNE 30, 2006
Governmental
Activities
ASSETS
Cash and investments$13,960,041
Restricted cash and investments 2,878,315
Accounts receivable 388,801
Intergovernmental receivable 76,874
Capital assets - net 5,549,187
Total Assets$22,853,218
LIABILITIES
Accounts payable$ 130,670
Accrued payroll and benefits 13,953
Interest payable 220,390
Advances from Town of Los Gatos 1,500,000
Deferred Revenue 126,801
Pass through obligations 2,573,514
Long-term liabilities:
Due within one year 415,000
Due more than one year10,930,000
Total Liabilities$15,910,328
NET ASSETS
Invested in capital assets, net of related debt$ 4,279,187
Restricted for:
Redevelopment projects 2,432,911
Low income housing 5,111,260
Debt service 455,194
Unrestricted (5,335,662)
Total Net Assets$ 6,942,890
10
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Governmental
Activities
Program Expenses:
Redevelopment$ 1,106,842
Pass-through payment 2,573,514
Interest and fees 680,183
Total Program Expenses 4,360,539
Program Revenues:
Charges for services 10,140
Total Program Revenues 10,140
Net Program Income (Expense) (4,350,399)
General Revenues:
Tax allocation increment 5,976,062
Interest 358,763
Total General Revenues 6,334,825
Change in Net Assets 1,984,426
Net Assets - Beginning 4,958,464
Net Assets - Ending$ 6,942,890
11
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
GOVERNMENTAL FUNDS
BALANCE SHEET
June 30, 2006
DEBT
SERVICE
CAPITAL PROJECT FUNDSFUND
CertificatesTotal
Housing ofGovernmental
RedevelopmentSet-AsideParticipationFunds
ASSETS:
Cash and investments available for operations$97,061$4,836,371$ 9,026,609$13,960,041
Restricted cash and investments2,423,121 455,194- 2,878,315
Accounts receivable 388,801- -388,801
Intergovernmental receivable-15,375 61,49976,874
TOTAL ASSETS2,520,1825,240,547 9,543,30217,304,031
LIABILITIES AND FUND EQUITY:
Accounts payable75,804 - 54,866130,670
Accrued payroll and benefits11,467 2,486 -13,953
Advances from Town of Los Gatos- 1,500,000- 1,500,000
Deferred revenue 126,801- -126,801
Pass through obligations (Note )- 2,573,514- 2,573,514
Total Liabilities87,271129,287 4,128,3804,344,938
FUND EQUITY
Reserved for:
Encumbrances1,137,370 - 1,137,370-
Debt service- 455,194- 455,194
Redevelopment projects1,295,541 - 1,295,541-
Low and moderate income housing 5,111,260- 5,111,260-
Unreserved, designated for:
Debt service- 4,959,728- 4,959,728
Total Fund Balance2,432,9115,111,260 5,414,92212,959,093
TOTAL LIABILITIES AND
FUND BALANCE$2,520,182$5,240,547$ 9,543,302$17,304,031
12
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
RECONCILIATION OF THE BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
JUNE 30, 2006
Fund Balance of Governmental Fund Statements$ 12,959,093
Amounts reported for governmental activities in the statement of net assets
different because:
Capital assets used in governmental activities are not financial resources and,
therefore, are not reported in the funds.
Capital assets$ 7,423,015
Accumulated depreciation (1,873,828) 5,549,187
Interest payable on long-term debt does not require the use of current financial
resources and, therefore, are not reported in the Governmental Funds. (220,390)
Long-term liabilities, including bonds payable, are not due and payable in the
current period and, therefore, are not reported in the funds.
Certificates of participation (11,345,000)
Government Wide Net Assets$ 6,942,890
13
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2006
DEBT
SERVICE
CAPITAL PROJECT FUNDSFUND
CertificatesTotal
HousingofGovernmental
RedevelopmentSet-AsideParticipationFunds
Revenues:
Tax allocation increment$ -$ 6,323,502-$ $ 6,323,502
(1)
Allocations
Less: ERAF
- - (347,440) (347,440)
Interest income 85,448 83,377 189,938 358,763
Other 10,140 - - 10,140
Total Revenues 95,588 83,377 6,166,000 6,344,965
Expenditures:
Community Development 547,283 380,625 - 927,908
Capital outlay 935,667 - - 935,667
Pass through payment - 2,573,514- 2,573,514
Debt service:
Principal retirement - - 400,000 400,000
Interest and fees - - 686,094 686,094
Total Expenditures 1,482,950 380,625 3,659,608 5,523,183
Excess (Deficiency) of Revenues
over Expenditures (1,387,362) (297,248) 2,506,392 821,782
Other Financing Sources (Uses)
Transfers in 500,000 1,073,315 - 1,573,315
Transfers out - (1,573,315)- (1,573,315)
Total Other Financing Sources (Uses) 500,000 1,073,315 (1,573,315) -
Net Change in Fund Balances (887,362) 776,067 933,077 821,782
Fund Balances - Beginning 3,320,273 4,335,193 4,481,845 12,137,311
Fund Balances - Ending$ 2,432,911$ 5,111,260$ 5,414,922$ 12,959,093
(1)
Educational Revenue Augmentation Fund
14
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
RECONCILIATION OF THE STATEMENT OF REVENUE, EXPENDITURES
AND CHANGES IN FUND BALANCES
TO THE STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds
Statement of Revenue, Expenditures and Change in Fund Balance, which measures only changes in
current assets and current liabilities on the modified accrual basis, with the Change in Net Assets of
Governmental Activities reported in the Statement of Activities, which is reported on the full accrual basis.
Net Changes in Fund Balances - Total Governmental Funds$ 821,782
Amounts reported for governmental activities in the statement of net assets
different because:
Governmental funds report capital outlays as expenditures. However, in
the statement of activities the cost of those assets is allocated over
their estimated useful lives and reported as depreciation expense. This
is the amount by which capital outlays exceeded depreciation in the
current period.
Expenditure for capital assets$ 935,667
Depreciation expense is deducted from the fund balance (178,934) 756,733
The issuance of long-term debt provides current financial resources to
governmental funds, while the repayment of the principal of long-term
debt consumes the current financial resources of governmental funds.
Neither transaction, however, has any effect on net assets. This
amount is the net effect of these differences in the treatment of long-
term debt.
Repayment of debt principle is added back to fund balance 400,000
The amounts below included in the Statement of Activities do not provide
or (require) the use of current financial resources and therefore are not
reported as revenue or expenditures in governmental funds (net change):
Interest payable 5,911
Government Wide Changes in Net Assets$ 1,984,426
15
Notes to Financial Statements
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE AGENCY AND REDEVELOPMENT PROJECTS
The Town of Los Gatos Redevelopment Agency (the Agency ) is a public body
established and authorized to transact business under the provisions of the Community
Redevelopment Law of the State of California, including the power to issue bonds for any
of its corporate purposes. Its purposes are to stimulate and attract private investment and
eliminate physical, social and/or economic blight.
The Redevelopment plan was established as a result of the Loma Prieta Earthquake in 1989
and the need to rebuild existing infrastructure. The Redevelopment Agency area
encompasses approximately 440 acres in and around Downtown Los Gatos, which includes
retail and residential areas, lodging, schools, and main traffic thoroughfares. Projects such
as street and utility reconstruction, parking, streetscape and civic improvements were called
out in the Plan.
As part of the Redevelopment Plan, the Agency entered into agreements with various
taxing authorities, which required the Agency to pass through portions of incremental
property taxes to each taxing authorities. Expenditures for these pass-through agreements
amounted to $2,573,514 for the year ended June 30, 2006. In addition, as of June 30, 2006
the Agency owed $2,573,514 in pass-through amounts to other agencies.
As the Town is financially accountable for the Agency, the Agency is considered a
component unit of the Town. As such, the Agency is reported as part of the Town in the
basic financial statements of the Town.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Agencys Basic Component Unit Financial Statements are prepared in conformity with
accounting principles generally accepted in the United States of America. The Government
Accounting Standard Board (GASB) is the acknowledged standard setting body for
establishing accounting and financial reporting standards followed by governmental entities
in the U.S.A.
GASB requires that the financial statements described below be presented.
[[412,2488,1031,2545][12][,I,][Times New Roman]]Government-wide Statements [[1000,2488,2300,2545][12][,,][Times New Roman]] - The Statement of Net Assets and the Statement of Activities
include the financial activities of the overall Agency. Eliminations have been made to
minimize the effect of interfund of activities. Governmental activities are generally
financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program
revenues for each function of the Agencys activities. Direct expenses are those that are
specifically associated with a program or function and, therefore, are clearly identifiable to
16
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
a particular function. Program revenues include (a) charges paid by the recipients of goods
or services offered by the programs, (b) grants and contributions that are restricted to
meeting the operational needs of a particular program and (c) fees, grants and contributions
that are restricted to financing the acquisition or construction of capital assets. Revenues
that are not classified as program revenues, including all taxes, are presented as general
revenues.
[[410,763,993,820][12][,I,][Times New Roman]]Fund Financial Statements [[963,763,2300,820][12][,,][Times New Roman]] - The fund financial statements provide information about the
Agency's funds. The emphasis of fund financial statements is on major individual
governmental funds, each of which is displayed in a separate column. All remaining
governmental funds are aggregated and reported as nonmajor funds.
Major Funds
GASB Statement 34 defines major funds and requires the Agencys major governmental
funds to be identified and presented separately in the fund financial statements. All other
funds, called nonmajor funds, are combined and reported in a single column, regardless of
their fund-type.
Major funds are defined as funds that have assets, liabilities, revenues or
expenditures/expenses equal to ten percent of their fund-type total and five percent of the
grand total. The General Fund is always a major fund. The Agency may also select other
funds it believes should be presented as major funds.
The Agency reported the following major governmental funds in the accompanying
financial statements:
[[410,1913,867,1970][12][,I,][Times New Roman]]Redevelopment Fund [[843,1913,1588,1970][12][,,][Times New Roman]] This fund is used to account fo [[1563,1913,2300,1970][12][,,][Times
New Roman]]r financial resources used for the
acquisition or construction of major capital facilities.
[[410,2086,923,2143][12][,I,][Times New Roman]]Housing Set Aside Fund [[899,2086,1594,2143][12][,,][Times New Roman]] This fund is used to account fo [[1568,2086,2300,2143][12][,,][Times
New Roman]]r twenty percent housing set aside
from the tax increment proceeds.
[[412,2258,1133,2315][12][,I,][Times New Roman]]Certificates of Participation Fund [[1108,2258,2300,2315][12][,,][Times New Roman]] This fund is used to account for the accumulation
of
financial resources and the payment of general long-term obligation principal, interest and
related costs.
Basis of Accounting
The government-wide financial statements are reported using the [[1838,2603,2300,2660][12][,I,][Times New Roman]]economic resources
[[413,2661,832,2718][12][,I,][Times New Roman]]measurement focus [[801,2661,1102,2718][12][,,][Times New Roman]] and the full [[1069,2661,1372,2718][12][,I,][Times New Roman]]accrual
basis [[1341,2661,2300,2718][12][,,][Times New Roman]] of accounting. Revenues are recorded when
[[412,2718,576,2775][12][,I,][Times New Roman]]earned [[551,2718,1638,2775][12][,,][Times New Roman]] and expenses are recorded at the time liabilities are [[1601,2718,1823,2775][12][,I,][Times
New Roman]]incurred, [[1785,2718,2300,2775][12][,,][Times New Roman]] regardless of when the
related cash flows take place.
17
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Governmental funds are reported using the [[1296,361,1876,418][12][,I,][Times New Roman]]current financial resources [[1845,361,2300,418][12][,,][Times New Roman]] measurement focus
and the [[577,418,956,475][12][,I,][Times New Roman]]modified accrual [[920,418,1618,475][12][,,][Times New Roman]] basis of accounting. Under this [[1583,418,2300,475][12][,,][Times
New Roman]]method, revenues are recognized
when[[549,476,810,533][12][,I,][Times New Roman]]measurable [[782,476,932,533][12][,,][Times New Roman]] and [[910,476,1124,533][12][,I,][Times New Roman]]available [[1097,476,2300,533][12][,,][Time
s New Roman]]. The Agency considers all revenues reported in the
governmental funds to be available if the revenues are collected within sixty days after
year-end. Expenditures are recorded when the related fund liability is incurred, except for
principal and interest on general long-term debt, which is recognized upon becoming due
and payable; and except for claims, judgments and compensated absences, which are
recognized when estimable and probable. Governmental capital asset acquisitions are
reported as [[649,821,935,878][12][,I,][Times New Roman]]expenditures [[904,821,1643,878][12][,,][Times New Roman]] in governmental funds. Proceeds [[1608,821,2300,878][12][,,][Times
New Roman]]of governmental long-term debt
and acquisitions under capital leases are reported as [[1459,878,1962,935][12][,I,][Times New Roman]]other financing sources [[1931,878,1981,935][12][,,][Times New Roman]].
Non-exchange transactions, in which the Agency gives or receives value without directly,
receiving or giving equal value in exchange, include taxes, grants, entitlements, and
donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for
which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is
recognized in the fiscal year in which all eligibility requirements have been satisfied. Other
revenues susceptible to accrual include other taxes, intergovernmental revenue, interest,
and charges for services.
The Agency may fund programs with a combination of cost-reimbursement grants,
categorical block grants and general revenues. Thus, both restricted and unrestricted net
assets may be available to finance program expenditures. The Agencys policy is to first
apply restricted grant resources to such programs followed by general revenues as
necessary.
Cash and Investments
The Agencys cash and cash equivalents are considered to be cash on hand, demand
deposits, and short-term investments if they are liquid.
The Towns investment policy and California Government Code permit investments in
obligations of U.S. Treasury and its agencies, commercial paper, bankers acceptances,
repurchase agreements, certificates of deposit, medium term notes, passbook savings
account demand deposits, mutual funds and the State of California Local Agency
Investment Fund.
Investments for the Agency are reported at fair value. The value is determined based upon
market closing prices.
Interfund Receivables and Payables
Balances representing lending/borrowing transactions between funds outstanding at the end
of the fiscal year are reported as either due to/due from other funds (amounts due within
one year), advances to/from other funds (non-current portions of interfund
lending/borrowing transactions), or loans to/from other funds (long-term
18
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
lending/borrowing transactions as evidenced by loan agreements). Advances and loans to
other funds are offset by a fund balance reserve in applicable Governmental Funds to
indicate they are not available for appropriation, and are not expendable available financial
resources.
Long-Term Obligations
In the government-wide financial statements long-term debt and other long-term
obligations are reported as liabilities in the Statement of Net Assets.
Tax Increment
The Agency has no direct taxing power and does not have the power to pledge the general
credit or taxing power of the Town, the State of California or any political subdivision
thereof. However, Californias Health and Safety Code allows redevelopment agencies
with appropriate approvals of the local legislative bodies to recover costs of financing
public improvements from increased tax revenues (tax increment) associated with increased
property values of individual project areas. Property tax increment is recorded as revenue
when it becomes both measurable and available to finance expenditures.
Property Held for Resale
Property held for resale is acquired as part of the Agencys redevelopment program. All of
these properties are residential. Costs of developing and administering Agency projects are
charged to capital outlay expenditures as incurred.
The Agency does not maintain cost records by parcel, as there is no relationship between
costs incurred and the final disposition value, which is significantly affected by various use
restrictions. For financial statement presentation, this property is stated at the lower of
estimated cost or net realizable value.
Budgets and Budgetary Accounting
Prior to June 1, the Town Manager submits to the Town Council a proposed operating
budget for the upcoming fiscal year. The proposed budget includes a summary of proposed
expenditures and forecasted revenues of the Agencys governmental funds.
The Town Council adopts the budget by June 30 through passage of an adopting ordinance.
All appropriated amounts, as originally adopted or as amended by the City Council, lapse
at year-end or are subject to reappropriation in the following fiscal year. The budget is
adopted on a cash basis, which is not consistent with generally accepted accounting
principles.
19
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
The actual results of operations are presented in the combined statement of revenues and
expenditures budget and actual in accordance with the budget basis to provide a
meaningful comparison of actual results to the budget.
Use of Estimates
The Agencys management has made certain estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent assets and liabilities to
prepare these financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
3. CASH AND INVESTMENTS
Cash
The Agency holds its cash in the Town of Los Gatos (the Town ). The Town maintains a
cash and investment pool and allocates interest to the various funds based upon the average
quarterly cash balances. Information regarding credit risk and collateral requirements, as
applicable, can be found in the Towns financial statements.
Investments
The Agency voluntarily participates in LAIF, regulated under Section 16429 of the State
Government Code. LAIF allows local governments such as the Agency to participate in a
Pooled Money Investment Account managed by the State Treasurer Office and overseen by
the Pooled Money Investment Board and State Treasurer investment committee. A Local
Agency Investment Advisory Board oversees LAIF. As of June 30, 2006, the Agencys
investment in LAIF was $1,288,093.
Information regarding investment risks related to credit risk, concentration of credit risk
and interest rate risk can be found in the Towns financial statements.
Under GASB 31, the Agency must adjust the carrying value of its investments to reflect
their fair value at each fiscal year end, and it must include the effects of these adjustments
in income for that fiscal year.
20
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
4. CAPITAL ASSETS
The following is a summary of the Agency's capital assets:
Depreciation expense was $178,934 for the fiscal year ended June 30, 2006.
5. ADVANCES FROM THE TOWN
The Town advanced $1,500,000 to the Agency to partially fund operations. The advance
bears interest at 10% and is repayable on demand, provided that sufficient tax increment
revenue funds are available. For the fiscal year ended June 30, 2006 the Agency paid the
Town $150,000 in interest on this advance.
6. LONG-TERM OBLIGATIONS
1992 Certificates of Participation (COPs)
Certificates of Participation (COPs)
The Town issued in the original principal amount of
$2,960,000 dated August 1, 1992. The Towns Motor Vehicle License Fee Revenues were
pledged as security for the COPs, and the guarantee was registered with the State
Controllers Office. The COPs were issued to finance certain construction costs of the
Towns Parking Lot 4 Project, which was constructed on land located in the Los Gatos
Central Redevelopment Project Area. The COPs are similar to bond debt, and they allow
investors to participate in a share of guaranteed payments. Because they are similar to debt,
21
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
the present value of the total of the payments to be made is recorded as long-term debt.
st
Principal payments are due annually on August 1, which interest payments payable semi-
stst
annually on February 1 and August 1.
To assist the Town in paying the cost of acquisition and construction of the Parking Lot 4
Project, the Town and its Redevelopment Agency entered into a Reimbursement
Agreement. Under this agreement, the Agency will use available net tax increment
revenues resulting from the Projects effect on land values to repay the Town for all lease
payments made by the Town to the Agency under the lease agreement for the Project. Net
tax increment revenues are all taxes allocated to and paid into the Redevelopment Agency
Capital Projects Fund for the Project Area. Reimbursements under this agreement
commenced in fiscal 1995-1996. Accordingly the COPs have been recorded in the
Agencys General Long-Term Debt Account Group. In addition, the Parking Lot 4 Project,
which was constructed with proceeds of the COPs, has been included in the Agencys
financial statements.
For the fiscal year ended June 30, 2006, lease income and reimbursements in the amount of
$932,122 offsets in the Certificates of Participation Fund and is eliminated from the
Government-Wide Statement of Activities.
2002 Certificates of Participation (COPs)
The 2002 Certificates of Participation financing parallels the 1992 issue. On August 1,
2002, the Town and the Los Gatos Redevelopment Agency issued $10,725,000 in 2002
Certificates of Participation to finance infrastructure improvements in the downtown
redevelopment area. The Town has pledged lease payments of real property and facilities
comprised of the Parks and Public Works Service Center and Baseball Field, as well as
Parking Lot No. 1, 2, and 3, as collateral for the repayment of the Certificates.
The COP principal payments are due annually on August 1st, with interest payments
payable semi-annually on February 1st and August 1st.
A summary of general long-term obligations account group transactions for the year ended
June 30, 2006 follows:
22
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Future debt service requirements for general long-term debt with stated maturities are as
follows at June 30, 2006:
The Agency must maintain required amount of cash and investments with the trustee under
the terms of the COPs issue. These funds are pledged as reserves to be used if the Town
fails to meet its obligations under the COPs issue. These reserves totaled $994,489 at June
30, 2006.
The California Government Code requires these funds to be invested in accordance with
Town ordinance, bond indentures or State statues. All these funds have been invested as
permitted under the Code.
7. NET ASSETS AND FUND BALANCES
Net Assets are the excess of all the Agencys assets over all its liabilities, regardless of
fund. Net Assets are divided into three captions under GASB Statement 34. These captions
apply only to Net Assets, which is determined at the Government-wide level, and are
described below:
[[410,2253,1388,2310][12][,I,][Times New Roman]]Invested in Capital Assets, net of related debt [[1353,2253,1881,2310][12][,,][Times New Roman]]describes the portion of [[1846,2253,2300,2310][12][,
,][Times New Roman]]Net Assets which is
represented by the current net book value of the Agencys capital assets, less the
outstanding balance of any debt issued to finance these assets.
[[410,2483,665,2540][12][,I,][Times New Roman]]Restricted [[633,2483,2301,2540][12][,,][Times New Roman]]describes the portion of Net Assets which are restricted as to use by the terms
and conditions of agreements with outside parties, governmental regulations, laws, or other
restrictions which the Agency cannot unilaterally alter. These principally include debt
service requirements, and redevelopment funds restricted to low and moderate income
purposes.
[[412,2828,715,2885][12][,I,][Times New Roman]]Unrestricted [[678,2828,1475,2885][12][,,][Times New Roman]]describes the portion of Net Assets wh [[1450,2828,2013,2885][12][,,][Times
New Roman]]ich is not restricted to use.
23
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Reservations of Fund Balances -
Fund balance consists of reserved and unreserved
amounts. Reserved fund balance represents that portion of fund balance that has been
appropriated for expenditure or is legally segregated for a specific future use. As of June
30, 2006, portions of fund balance had been reserved because of the following:
[[411,653,741,710][12][,I,][Times New Roman]]Encumbrances [[710,653,2301,710][12][,,][Times New Roman]] are reserved to encumber fund balance for purchase order commitments
made before fiscal year end.
[[413,825,1362,882][12][,I,][Times New Roman]]Capital Outlay and Redevelopment Projects [[1331,825,2300,882][12][,,][Times New Roman]] reserves are funded from storm drain fees,
construction taxes and debt proceeds that are legally restricted for major capital projects.
[[410,998,700,1055][12][,I,][Times New Roman]]Debt Service [[672,998,1498,1055][12][,,][Times New Roman]] reserves reflect the cash balances in th [[1473,998,1931,1055][12][,,][Times
New Roman]]e debt service funds [[1897,998,2300,1055][12][,,][Times New Roman]]that are restricted
for debt service payments.
8. TAX INCREMENT SHIFT TO EDUCATIONAL REVENUE AUGMENTATION
FUND (ERAF)
In fiscal year 2003, the State of California directed that a portion of the incremental
property taxes, which had been received in prior years by redevelopment agencies be paid
instead to local educational agencies. During the fiscal year ended June 30, 2006, the
Agency paid $347,440 as a result of the State directive.
24
Supplementary Information
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL (GAAP)
REDEVELOPMENT FUND CAPITAL PROJECTS FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Variance
Favorable
BudgetActual(Unfavorable)
Revenues:
Interest 50,000$85,448$35,448
Other -10,14010,140
Total Revenues50,00095,58845,588
Expenditures:
Community Development618,410547,283(71,127)
Capital outlay949,327935,66713,660
Total Expenditures1,567,7371,482,950(57,467)
Excess (Deficiency) of Revenues
over Expenditures(1,517,737)(1,387,362)130,375
OTHER FINANCING SOURCES (USES)
Operating transfers in-500,000500,000
Operating transfers (out)- - -
Total Other Financing Sources (Uses)-500,000500,000
Net Change in Fund Balance$ (887,362)(1,517,737)$130,375
Fund Balance - Beginning3,320,273
Fund Balance - Ending$2,432,911
25
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL (GAAP)
HOUSING SET-ASIDE FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Variance
Favorable
BudgetActual(Unfavorable)
Revenues:
Interest60,000$83,377$23,377
Total Revenues60,00083,37723,377
Expenditures:
Community Development408,420380,62527,795
Total Expenditures408,420380,62527,795
Excess (Deficiency) of Revenues
over Expenditures(348,420)(297,248)51,172
Other Financing Sources (Uses)
Transfers in1,043,4601,073,31529,855
Total Other Financing Sources (Uses)1,043,4601,073,31529,855
Net Change in Fund Balance$695,040776,067$81,027
Fund Balance - Beginning4,335,193
Fund Balance - Ending$5,111,260
26
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL (GAAP)
CERTIFICATES OF PARTICPATION FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Variance
Favorable
BudgetActual(Unfavorable)
Revenues:
Property Tax$5,358,700$6,323,502$ 964,802
(1)
Less: ERAF Allocations
(347,440) (347,440) -
Interest 78,000 189,938 111,938
Total Revenues 5,089,260 6,166,000 1,076,740
Expenditures:
Pass through payment 2,127,540 2,573,514 (445,974)
Debt Service:
Principal 400,000 400,000 -
Interest and fees 635,900 686,094 (50,194)
Total Expenditures 3,163,440 3,659,608 (496,168)
Excess (Deficiency) of Revenues
over Expenditures 1,925,820 2,506,392 580,572
Other Financing Sources (Uses)
Transfers out (1,043,460)(1,573,315) (529,855)
Total Other Financing Sources (Uses) (1,043,460)(1,573,315) (529,855)
Net Change in Fund Balance$ 882,360 933,077$ 50,717
Fund Balance - Beginning 4,481,845
Fund Balance - Ending$5,414,922
(1)
Educational Revenue Augmentation Fund
27
Other Independent Auditors Reports
C. G. UHLENBERG LLP
CERTIFIED PUBLIC ACCOUNTANTS
ROBERT E. BARSANTI (RETIRED) PEGGY H. CHEN, C.P.A. JEFFREY J. IRA, C.P.A. KATHERINE CHAO, C.P.A . JULIE LIN, C.P.A. SHELDON D. CHAVAN, C.P.A.
INDEPENDENT AUDITORS REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH [[1280,698,2147,750][11][B,I,][Times New Roman]]GOVERNMENT AUDITING STANDARDS
Members of the Board of the
Town of Los Gatos Redevelopment Agency
Los Gatos, California
We have audited the basic financial statements of the Town of Los Gatos Redevelopment Agency ( the Agency ) as
of and for the year end June 30, 2006, and have issued our report thereon dated September 22, 2006. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and [[2045,1091,2300,1139][10][,I,][Times New Roman]]Government
[[296,1139,657,1187][10][,I,][Times New Roman]]Auditing Standards [[623,1139,1618,1187][10][,,][Times New Roman]], issued by the Comptroller General of the United States.
[[298,1235,1059,1283][10][,I,][Times New Roman]]Internal Control over Financial Reporting
In planning and performing our audit, we considered the Agencys internal control over financial reporting in order
to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to
provide an opinion on the internal control over financial reporting. Our consideration of the internal control over
financial reporting would not necessarily disclose all matters in the internal control that might be material
weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that misstatements caused by error or
fraud in amounts that would be material in relation to the financial statements being audited may occur and not be
detected within a timely period by employees in the normal course of performing their assigned functions. We noted
no matters involving the internal control over financial reporting and its operation that we consider to be material
weaknesses.
[[300,1858,872,1906][10][,I,][Times New Roman]]Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Agencys financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements, noncompliance with which could have a direct and material effect on the determination of financial
statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our
audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under [[1470,2194,2043,2242][10][,I,][Times New Roman]]Government Auditing Standards [[2009,2194,2059,2242][10][,,][Times
New Roman]].
We noted certain matters that we reported to management of the Agency in a separate letter dated December 20,
2006.
This report is intended for the information of the Mayor, members of the Agency board members, and the
State Controllers office, and is not intended to be and should not be used by anyone other than these
specified parties.
September 22, 2006
Redwood City, California
FINDINGS AND RECOMMENDATIONS
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SUMMARY OF COMPLIANCE FINDINGS
YEAR ENDED JUNE 30, 2006
No current year findings.
29
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SUMMARY OF PRIOR YEAR COMPLIANCE FINDINGS
YEAR ENDED JUNE 30, 2006
No prior year findings.
30