Attachment - Town of Los Gatos 2010-11 CAFRCALIFORNIA T OWN OF L OS G ATOS & R EDEVELOPMENT A GENCY C OMPREHENSIVE A NNUAL F INANCIAL R EPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011
TOWN OF LOS GATOS CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 PREPARED BY THE OFFI CE 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, a nd rapid growth ensued when the railroad reached Los Gatos in 1878. The residential subdivisi ons of Broadway, Bayview, Fairview, and Almond Grove were built in the 1880's. 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 produci ng residential and commercial development. Highway 17 was constructed through the center of Town. Growth levelled off in the early 1970's, leaving Los Gatos with its small-town atmosphere and pedestrian-oriented downtown. Because of its distance from other centers of population, Los Ga tos 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 commun ity. From the first 100-acre to wn 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 Lo s Gatos covers between 14 and 15 square miles and has a population of 29,651. 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 cr eate 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 Town's 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, establis hed residential areas and a do wntown with many historic buildings representing the various eras in the Town's history. Protection of these historic resources is an important community goal. The Town's two museums, known as the Tait Avenue and Forbes Mill museums, also help to preserve the Town's valued history.
Introductory Section
TOWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 TABLE OF CONTENTS TI TL E PAGE INTRODU CTORY SECTION:Table of Contents ................................................................................................................................i Letter of Transmittal ............................................................................................................................iii Principal Officers ................................................................................................................................ix Organization Chart ..............................................................................................................................x GFOA Award ......................................................................................................................................xi FINANCIAL SECTION:Independent Auditor’s Report ............................................................................................................1 Management’s Discussion and Analysis ...........................................................................................3 Basic Financial Statements:Governm ent -Wide Financial Statements:....................................................................................13 Statement of Net Assets ........................................................................................................14 Statement of Activities ..........................................................................................................15 Fund Financial Statements:Governmental Funds:............................................................................................................16 Balance Sheet ....................................................................................................................17 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Asset s .................................................................................................18 Statement of Revenues, Expenditures and Changes in Fund Balances .............................19 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities .......................................20 Statement of Revenue, Expenditures an d Changes in Fund Balances –Budget and Actual (GAAP) General Fund ....................................................................21 Proprietary Funds – Internal Service Funds:........................................................................22 Statement of Net Assets .....................................................................................................23 Statement of Revenue, Expenses and Changes in Net Assets ...........................................24 Statement of Cash Flows ...................................................................................................25 Fiducia ry Funds:..................................................................................................................26 Statement of Fiduciary Net Assets ....................................................................................27 Statement of Changes in Fiduciary Net Assets ..................................................................28 Notes to the Basic Financial Statements ......................................................................................29 SUPPLEMENTARY INFORMATION:Major Governmental Fund Schedules (other than the General Fund):..........................................58 Sched ule of Revenue, Expenditu res and Changes in Fund Balance –Budget and Actual (GAAP ) Appropriated Reserves Fund ....................................................59 i
TOWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 TABLE OF CONTENTS Schedule of Revenue, Expenditu res and Changes in Fund Balance –Budget and Actual (GAAP) Certificates of Participation Fund ............................................60 Schedul e of Revenue, Expenditures and Changes in Fund Balance –Budget and Actual (GAAP) Redevelopment A gency Affordable Housing Fund .................61 Nonmajor Governmental Funds:.......................................................................................................62 Com bining Balance Sheets ...........................................................................................................63 Com bining Schedule of Revenues, Expenditures and Changes i n Fund Balances .......................................................................................................................65 Budgeted Nonmajor Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balance s – Budget and Actual (GAAP)....................................................67 Internal Service Funds .......................................................................................................................71 Com bi ning Statement of Net Assets ............................................................................................72 Com bining Statement of Revenue, Exp ens es and Changes in Net Assets ...................................73 Com bi ning Statement of Cash Flows ...........................................................................................74 Agency Funds:....................................................................................................................................75 Statement of Changes in Assets and Liabilities - Park ing Improvement District #88 ..................76 STATISTICAL SECTION:Net As sets by Component ...................................................................................................................77 Changes in Net As sets .........................................................................................................................78 Fund Balances , Governmental Funds ..................................................................................................79 Changes in Fund Balances, Governmental Funds ...............................................................................80 Assessed Value and Estimated Actu al Value of Taxable Property .....................................................81 Direct and Ov erlapping Property Tax Rates ........................................................................................82 P rincipal Property Tax Payers .............................................................................................................83 Propert y Tax Levies a nd Collections ..................................................................................................84 Ratios of Outstanding Debt by T ype ...................................................................................................85 Direct and Overlapping Governmental Activities Debt ......................................................................86 Legal D ebt Margin ..............................................................................................................................87 Dem ographic and Economic S tatistics ................................................................................................88 Principal Employers ............................................................................................................................89 Full -time Equivalent Tow n Government Employees by Functi on/Program .......................................90 Operating In dicators by Function/Program .........................................................................................91 Capital Assets Statistics by Function/P rogram ....................................................................................92 OTHER INDEPENDENT AUDITOR’S REPORTS:Independent Auditor’s Report on Internal Control o v er Financial Reporting and on Compliance and Other Matt ers Based on an Audit of Financial Statements Performed in Accordance with G overnment Auditing Standar ds ..................................................................................................93 ii
T OWN OF L OS G ATOS O FFICE OF THE TOWN MA NAGER (408)354 -6832 F AX : (408)399 -5786 January 3 1 , 20 1 2 Honorable May or and Town Council,I am pleased to submit the Town’s Comprehensive Annua l Financial Report (CAFR) for the fiscal ye ar ending June 30, 20 1 1 . T his report was prepared by m anagement and the Finance staff in the Town Manager’s Department, which assumes responsibility f or the accuracy o f the data and the completeness and fairness of the presentation and all disclosures. T he information in this report is intended to present the reader with a comprehensive view of the Town’s financial position and the results of its operations for the fiscal year ending June 30, 20 1 1 , along with add itional disclosures and financial information designed to enable the reader to gain a n understanding of the Town’s financial activities. This report was prepared as prescribed in Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements -and Management’s Discussion and Analysis -for State and Local Governments (GASB 34). T his new GASB Statement requires management t o p rovide a narrative introduction, overview, and analy sis to accompan y the basic financial statements in t he form of a Management’s Discussion and Analy sis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. T he MD&A can be found immediately f ollowing the I ndependent Auditor’s Report.This Compre hensive Annual Financial Report is organized into three sections:I.The Introductory S ection includes the table of contents, letter of transmittal, listing of elected officials and Town administrative personnel, and organization chart delineating organizati onal structure. II.The Financial Section includes the independent auditors’ opinion, management’s discussion and analy sis, the basic financial statements, notes to the financial statements, combining statements of non -major funds, and required supplemental information.III.The Statistical Section includes both financial and non -financial data about the Town. The Comprehensive Annual Financial Report is prepared in accordance with Generally Accepted Accounting Principles (GAAP) promulgated by t he Governmental A ccounting Standards Board (GASB) and includes the report of C.G. Uhlenberg LLP, the Town’s independent certified public accountants.
Page iv May or and Town Council January 31, 2012 This Comprehensive Annual Financial Report will be submitted to the Government Finance Officers Association f or conside ration to be awarded its Achievement of Excellence in financial reporting c ertification . T h is award is granted only t o entities whose reports meet the highest standards of municipal financial reporting. THE REPORTING ENTITY AND ITS SERVICES Los Gato s i s a general law Town, incorporated under the laws of California in 1887. The Town is l ocated in the foothills and level terrain of the Santa Clara Valley , in an area referred to inter nationally a s “Silicon Valley .” F rom the first 100 -acre town site an d an 1890 population of 1,652, L os Gatos grew slowly so that by 1963 the area was 6.3 square miles, with a population o f 1 1,750. T oday L os Gatos covers approximately 1 4 square miles with a p opulation of 29,651 . T his relatively s low growth over the first 80 years resulted in a human scale community with narrow streets and small buildings. Preserving Los Gatos as a complete and well -balanced community h as been and remains a prominent goal for the community .Five council members are elected at large for st aggered four -ye ar terms to govern the Town. T he May or and Vice -May or are appointed b y the Council from its o wn ranks and serve for one -ye ar terms. T he Town Manager and Town Attorney a re appointed and supervised directl y by t he Council. T he Town Manager o versees traditional municipal services such as Public Safety , Parks & Public Works, Community D evelopment, Community Services and a Public L ibrary . This report includes all funds of the Town of Los Gatos. I t also includes the financial activities of th e Lo s Gatos Redevelopment Agency which is governed by t he Lo s Gatos Town Council who sit as the board members for the Agency . F inancial information for the Lo s Gatos Redevelopment Agency is aggregated and merged with that of the Town in the financial stat ements in accordance with generally accepted accounting principles.ECONOMIC CONDITIONS AND OUTLOOK C onsistent with other Silicon Valley c ommunities, the Town of Lo s Gatos has been impacted by t he effects of the national e conomic downturn . As a result of the recession, the Town has experienced significant reductions i n two o f its economically s ensitive revenue s : sales tax and rev enues related to private development activity . In recent ye ars ,the Town has implemented a number of strategies to keep ope rating revenues in balance with ongoing operating expenditures. T hese steps included selected hiring freezes, t he elimination of vacant positions, s trategic expenditure slowdowns, and departm ental cost saving efficiencies among other strategies that have allowed the Town to remain fiscall y balanced during these challenging economic times .
Page v May or and Town Council January 31, 2012 General Fund revenues (including operating transfer -ins) increased by 4 .5%from the prior ye ar. The Town relies heavil y on sales tax revenues to support General F und op erations, comprising approximately 30 % of G eneral F und revenues in FY 2010/11 . The FY 2010/11 $10 m illion sales t ax receipts were $1.7 million higher than t he prior ye ar’s collection.This increase i n sales tax due to the continued success of one internet retail business, coupled with an increase in sales tax revenue from another general retail provider and auto dealer.Property t ax revenue (accounting for 30 % of Town general fund r evenues )decreased by 1.8%. Lo s Gatos property v alues remain largel y stabl e, although the volume of housing sales has decreased in the past y ear. The t urnover rate of Prop 13 housing units, which are often revalued at current market rates,is not o ffsetting the loss of propert y t ax growth due to the slow housing market.Despite the slow e conomic recovery , the Town continues to strategicall y use its Economic V itality program to ensure the fiscal health of the Town. The Town continues to experience challenges due to the State of California’s budget deficit. S ince 1991, the Stat e has diverted or taken portions of Town revenues such as propert y taxes to balance its fiscal equation. I n FY 2008/09, the State took $480,000 million in property t ax from the Town Redevelopment Agency . W hile that action was found unconstitutional by th e State Supreme Court, the State was successful in taking an additional $2.7 m illion in redevelopment funds in FY 2009/10 and FY 2010/11. M ore recentl y, ABx1 26, which calls for the dissolution of California Redevelopment Agencies, was signed into law on June 29, 2011, by t he Governor of the State of California, and was subsequently u pheld by t he California State Supreme Court on December 29, 2011. Effective February 1 , 2012, redevelopment agencies are dissolved and must suspend all activities, with the e xception of the implementation of existing contracts and pay ment of enforceable oblig ations entered into prior to February 1, 2012. This dissolution will significantly i mpact the Town due to reductions in administrative and program reimbursements previou sly paid by the Redevelopment Agency .The Town has managed to limit the effects of State revenue reductions with pro -active s trategic budgetary c hanges and expenditure reductions made on an organizational basis . De spite t he reductions to various state so urces of local government revenue , the Town has mainta i ned h ig h service levels due to t he General Fund ’s s trong fiscal health through FY 2010/11 .The T own continue s t o diligently outreach to the community , the League of California Cities, and local legisla tors to prevent any future revenue losses.MAJOR INITIATIVES Despite the ongoing revenue challenges , FY 2010/11 w as a ye ar of high activity centering on the new Los Gatos Library c apital project . The construction of the new 30,000 square foot library b egan , which will be an environmentall y “green” building as well as offering adequate space for a wide range of library s ervices. The conceptual
Page vi May or and Town Council January 31, 2012 design for the library w as completed in 2009, the Environmental Im pact report was approved b y the Tow n Council in January 2010; the construction contract was awarded in May 2 010, followed by t he groundbreaking in June. Construction of the new library i s expected to be complete earl y 2012. Other initiatives included addressing the critical capital asset and infr astructure needs of the Town w ere a priority f or the fiscal ye ar. Approximately $15.8 million in Town infrastructure and other capital asset improvements were made in FY 2010/11 , including $9.4 million for the new library b uilding, $1.6 million i n bridge improvements , $546,000 for c urb, gutter and sidewalk improvements, $156,000 for r etaining wall repairs, $153,000 for traffic si gnal improvements, and $352,000 in parking lot improvements. In addition , a pproximately $2 million was invested in the Town’s str eets a nd roads , including improvements to major arterials and neighborhood c ollector streets to enhance pedestrian and traffic safety . Additional infrastructure improvements were scheduled in accordance with the Town’s approved C apital Im provement Plan, and will continue into future ye ars. A ll of these improvements are funde d either through debt issuance, grant s , or via revenues accumulated from prior ye ar b udget savings and /or e xcess revenues per T own Council policy .ACCOUNTING SYSTEM AND BUDGETARY CONTROL The effectiveness of internal control is considered in the development and evaluation of the Town’s accounting sy stem. I nternal accounting controls are designed to provide reasonable but not absolute assurance regarding:1) safeguarding of as sets against loss from unauthorized loss or disposition,2) accuracy and reliability of accounting data,3) adherence to managerial policy .The concept of reasonable assurance recognizes that the cost of internal control should not outweigh its bene fits, and that management must make estimates and judgments in evaluating these costs and benefits. All governmental fund ty pes use the modified accrual basis of accounting. T his means that revenues are recorded when measurable and available rather t hen when received. Measurable means the amount can be determined a nd available means the cash is received within forty -five day s after the end of the fiscal ye ar. E xpenditures are recorded when the liability i s incurred, rather than when paid. A n except ion to this rule is principal and interest on general long -term debt, which is not recognized by d ebt service funds until it is due.
Page vii May or and Town Council January 31, 2012 Proprietary (internal service) funds are accounted for using the accrual basis of accounting, similar to that used by c orporations. P roprietary fund revenues are recognized when they a re earned rather than when the cash is received, even if the cash is not available and proprietary fund expenses are recognized when they are incurred.With the implementation of GASB 34, t he Town now prepares its Basic Financial Statements on the accrual basis.Internal accounting procedures have been developed to provide reasonable assurance regarding the safeguarding of assets and the reliability o f financial records for preparing financ ial statements and maintaining asset accountability .An annual operating budget and five -ye ar capital improvement plan is adopted by t he Town Council on a basis consistent with generally a ccepted accounting principles. A ll budget adjustments and transfer s between funds must be approved by t he Town Council by r esolution during the fiscal year. T he Town Manager is authorized to transfer unencumbered appropriations within a budget category , within a fund. A ppropriations are valid for each fiscal year and l apse at ye ar -end. AWARDS The Town’s Comprehensive Annual Financial Report for the fiscal year ended June 30, 20 10 w as awarded a Certificate of Achievement for Excellence in Financial Reporting by the national Government Finance Officers Association. T his prestigious award recognizes the report’s conformance with strict accounting and reporting standards established by the Government Accounting Standards Board and government finance organizations. This award is annual in nature and valid for one ye ar o nl y. T his ye ar’s report will be submitted for award consideration by this organization, as we believe it continues to meet these standards. INDEPENDENT AUDIT State law requires an annual audit of the Town’s accounts by independent certified public acc ountants. T he accounting firm of C.G. Uhlenberg LLP performs this function for the Town of Los Gatos, and their report is included in the financial section of the CAFR.
Page viii May or and Town Council January 31, 2012 ACKNOWLEDGEMENTS The preparation of this Comprehensive Annual Financial Repo rt, as presented herein, is the result of the combined efforts and dedicated services of the excellent staff of the Department of Finance. S pecial thanks to Jenny Haru yam a, Assistant Finance Director, Bob Edris , Accountant ; L inda Isherwood , Accountant /Fin ance Analy st and Gitta Ungvari Administrative Analy st , for their efforts in preparing this report.Respectfully submitted,_____________________________ ___________________________________Greg Larson Stephen D. Conway Town Manager Director of Finance & Administrative Services PSJ :SDC:pd N:\FINANCE \CA FR \CA FR 20 1 1 Transmittal Letter .doc
TOWN OF LOS GATOS PRINCIPAL OFFICERS JUNE 30, 201 1 TOWN COUNCIL Mayor Joe Pirzynski Vice Mayor Steve Rice Council Member Steve Leonardis Counci l Mem ber Diane McNutt Council Member Barbara Spector COUNCIL APPOINTEES Town Manager Greg Larson Town Attorney Judith Propp APPOINTED OFFICIALS Assistant Town Manager Pam ela Jacobs Chief of Police Scott Seam an Community Development Director We ndie Rooney Community Services Director Regina Falkner Finance and Administrative Services Director Stephen Conway Hum an Resources Director Rum i Portillo Library Director Linda Dydo Parks and Public Works Director Todd Capurso ix
Town of Los Gatos Organizational Structure COMMUNITY DEVELOPMENT CDD Administration Development Review Code Compliance Building Inspection Services Advanced Planning RDA Housing Program POLICE Police Administration Records/Communications Patrol Investigations Traffic Personnel & Community Services Parking Management PARKS &PUBLIC WORKS PPW Administration Park Services Engineering Development Services Engineering Program Services Streets & Signals Facilities Maintenance Services Vehicle Maintenance Landscape & Lighting COMMUNITY SERVICES CS Administration Neighborhood Center Senior & Volunteer Prgrms Community Grants Arts & Culture Housing Conservation Programs Conservation, Recycling &Sustainability CDBG/ADA Programs LIBRARY Library Administration Reference Services Children's program Reading/Literacy Program Collection Maintenance Circulation & System Administration Los Gatos History Program HUMAN RESOURCES Recruitment Benefits Management Training Employee Relations Org Development FINANCE & ADMINISTRATIVE SERVICES General Ledger Accounts Payable Accounts Receivable Payroll Business License Tax Purchasing Budget Administration Financial Reporting Treasurer CLERK ADMINISTRATIONS Records Management Boards & Commissions Election Coordintaion Claims & Insurance Customer Service Center Legislative Coordination Public Information Cable/Broadcasting Mgmt MANAGEMENT INFORMATION SYTEMS Technolgy Support IT Systems Management Technology Planning & Implementation Website Management ASSISTANT TOWN MANAGER TOWN MANAGER ELECTED TOWN COUNCIL BOARDS &COMMISSIONS TOWN ATTORNEY RESIDENTS of LOS GATOS x
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Financial Section
C. G. UHLENBERG LLP CERTIFIED PUBLIC ACC OUNTANTS JEFFREY J. IRA, C.P.A. KATHERINE CHAO, C.P .A.1 INDEPENDENT AUDITOR’S REPORT The Honorable Mayor and Members of Town Council Town of Los Gatos, California We have audited the accompanying fin ancial statements of the governmental activities, each maj or fund and the aggregate remaining fund information of the Town of Los Gatos (the “Town”), as of and for the year ended June 30, 2011 , which collectively com prise the Town’s basic financial statements as listed in the table of contents. T hese financial statements are the responsibility of the Town’s management. O ur 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 Am erica 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. A n audit includes examining, on a test basis, evidence supporting the amounts and disclo sures in the financial statements. A n 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 reas onable basis for our opinion.In o ur opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, each maj or fund and the aggregate remaining fund information of the T own as of June 30, 2011 , and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparisons listed as a part of the basic financial statements 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 January 20, 2012 on our consideration of the T own ’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 f inancial reporting and compliance and the results of that 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 Auditin g Standards a nd should be read in conj unction with this report in considering the results of our audit.As discussed in Note 1 to the financial statements, the Agency adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions; effective July 1, 2010 As explained further in Note 12 t o the basic financial statements, the California State Legislature has enacted legislation that is intended to provide for the dissolution of redevelopment agencies in the Sta te of California e ffective February 1, 2012 . The effects of the dissolution are uncertain pending the results of audits to be performed on inter -agency receivables and other transactions by oversight boards of the successor agency established under this l egislation.Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3 through 11 be presented to supplement the basic financial statements.
C. G. UHLENBERG LLP CERTIFIED PUBLIC ACC OUNTANTS JEFFREY J. IRA, C.P.A. KATHERINE CHAO, C.P .A.2 Such information, although not a p art of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or hist orical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of p reparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. W e do not express an o pinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.Our audit was conducted for the purpose of forming opinions on the financial state ments that collectively comprise the Town’s financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, budgetary schedules included in the supplementary information, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements.The combining and individual nonmajor fund financial statements a nd budgetary schedules are the responsibility of management and were derived from and re late directly to the underlying accounting and other records used to prepare the financial statements. T he information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, includ ing comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards g enerally accepted in the United States of America. I n our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. T he introductory and statistical sections have not been subjected to the au diting procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. January 20, 2012 Redwood City , California
Management’s Discussion and Analysi s
3 M ANAGEMENT ’S D ISCUSSION AND A NALYSIS Our discussion and analysis of the Town of Los Gatos f inancial performance provides an overview of the Town’s f inancial activities for fiscal year ending June 30, 20 1 1 . T his information is presented in conjunction wit h the audited financial statements that follow this section. F INANCIAL H IGHLIGHTS T own a ssets e xceeded its liabilities at the close of FY 2010/11 b y $116,237 ,698 (net assets). Of this amount, $28,906,009 (unrestricted net assets) may be used to meet th e Town ’s ongoing obligations to citizens and creditors.The Town ’s Net Assets decreased by 7,807,073 million due primarily to liabilities established in conjunction with a Public Improvements Cooperation Agreement for infrastructure an d housing improvement s within the redevelopment project area established between the Town and the Redevelopment Agency in March 2011.Total fund balances for governmental funds at year end were $45,267,329 , a decrease o f $19,978,216 (31 %) from the prior year. T he aforementi oned decrease is mainly the result of the combined effects of liabilities established in conjunction with a Public Improvements Cooperation Agreement and the capital project expenditures of the new library project.At the end of FY 2010/11 , unreserved d es ignated f und balance for the General Fund was $24,240,337 , approximately 67 % of Gener al Fund expenditures for the current fiscal year . The Town and Redevelopment Agency continued its efforts in addressing the critical capital asset and infrastructure n eeds of the Town. Approximately $15.8 million in Town infrastructure and other capital asset improvements were made in FY 2010/11 , including $9.4 million for the new library b uilding, $1.6 million i n bridge improvements , $546,000 for c urb, gutter and side walk improvements, $156,000 for r etaining wall repairs, $153,000 for traffic si gnal improvements, and $352,000 in parking lot improvements. In a ddition ,approximately $2 million was invested in the Town’s streets a nd roads , including improvements to major arterials and neighborhood c ollector streets to enhance pedestrian and traffic safety . O VERVIEW OF THE F INANCIAL S TATEMENTS The financial statements presented herein include all of the activities of the Town a nd its component units using the integrated approach as prescribed by GASB Statement No. 34. Governm ent -wide financial statements The government -wide financial statements present the financial picture of the Town f rom the economic resources measurement focus using the accrual basis of accounting.The statement of net assets – presents information on all of the Town ’s assets and liabilities, with the difference between the two reported as net assets. O ver time, increases or decreases in net assets may serve as a useful indicator of whether the fi nancial position of the Town i s improving or deteriorating.The statement of activities –presents information showing how the Town ’s net assets changed during the most recent fiscal year. A ll 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.
4 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 ear ned but unused vacation leave).Both of the government -wide financial statements distingui sh f unctions of the Town t hat are principally supported by taxes and intergovernmental revenues (governmental activities) f rom other functions that are intended to r ecover all or a significant portion of their costs through user fees and charges (b usiness –type activity ). The governmental activities of the Town include public safety, parks and public works, community development, library, community services, debt serv ice, redevelopment, and general government . The Town has no busi ness -type activit ies .The government -wide financial statements include not only the Town i tself (known as the primary government), but also a legally separate Town of Los Gatos Redevelopment A gency (the Agency ) for which the Town i s financially accountable. F inancial 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 . Additiona l information on this legally s eparate 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 hav e been segrega ted for specific activities or objectives. T he Town , like other local governments , uses fund accounting to ensure and demonstrate compliance with finance -relat ed legal requirements. T he funds of the Town are segregated i nto three categories: governmental f unds, proprietary funds, and fiduciary funds.Governmental funds – T he Town ’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at ye ar -end that are available for spending . T hese funds are reported using the modified accrual b asis of a ccounting, which measures cash and other financial assets that can readily be converted to cash. T he governmental fund statements provide a detailed short -term view of the Town ’s general gov ernment operations and the basic services it provides. G overnmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the Town ’s operations . B oth the governmental fund bal ance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds a nd governmental activities.Proprietary funds –The Town m aintains on e t ype of proprietary fund: internal service funds. Proprietary funds are reported using the accrual basis of accounting. I nternal service funds are an accounting device used to accumulate and allocate costs internally among the Town ’s various functions. The Town u ses 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 with in governmental activities in the government -wide financial state ments.Fiduciary funds –Fiduciary funds are used to account for resources held for the benefit of parties outside the Town . F iduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not availa ble to support the Town ’s own programs.
5 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. T he notes to basic f inan cial statements can be found on pages 2 9 -5 7 of this report.Government -wide Financial Analysis Net assets may serve over time as a useful indicator of a government’s financial position. I n the case of the Town , assets exceeded liabilities by $1 1 6 millio n at the end of the current fiscal year. Capital assets represent approximately 49 % o f the Town ’s total assets c onsist ing o f investments made by the Town in permanent or long -lived ass e ts (e.g., land, buildings, infrastru ctu re, machinery and equipment), l ess any related debt used to acquire those assets still outstanding. The Town u ses these capital assets to provide services to citizens and c ustomers ; consequently, these assets are not a vailable for future spending. A lthou gh the Town ’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must b e provided from other sources s ince the capital assets themselves cannot be used to liquidate these liabil ities.For the current year, I nvestment in C apital A ssets, N et of R elated D ebt increased b y approximately $22.4 m illion . The increase is the net result of approximately $15.8 m illion in infrastructure and other capital improvement made in the year.An a dditional portion of the Town ’s net assets (12.6 %) represents resources that are subject to external restrictions on how they ma y be used. The R estricted N et A sset b alance is composed largely of t he Town’s Redevelopment Agency Capital Projects and capit al projects which serve the Town and its redevelopment project area .2011 2010 Current and other assets 91,938,063 $ 96,424,622 $ Capital assets 88,432,043 76,147,645 Total a ssets 180,370,106 172,572,267 Current liabilities 33,611,143 18,190,600 Long -term liabilities outstanding 30,521,265 30,336,897 Total liabilities 64,132,408 48,527,497 Net assets:In vestment in capital assets,net of related debt 72,567,355 50,129,550 Restricted 14,764,334 26,723,994 Unrestricted 28,906,009 47,191,225 Total net assets 116,237,698 $ 124,044,771 $ Tow n of Los Gatos Net Assets Governmental Activities
6 The b alance of U nrestricted N et A ssets m ay be used to meet the Town ’s ongoing obligations to citizens, customers, and creditors. The Town ’s Unrestricted Net Assets represent 25 %of the Town’s net assets at year end. Governmental activities Go ve rnm en ta l Ac ti vit ies 2011 2010 Re venues :Pr og ra m revenues :Charg es for s er vices 7,491,282 $ 8,016,656 $ Op er at ing g ra nt s a nd c ont ribut ions 1,055,005 850,393 Ca pi ta l gr ant s a nd c ont ribut ions 2,375,759 3,074,453 Ge ne ra l re venues :Pr op er ty t ax es 18,226,001 18,856,081 Sa les t ax es 9,971,409 8,317,217 Ot he r t ax es 2,906,264 2,623,622 Mo to r V ehicle In Lieu 139,814 92,595 Inve st ment e ar ni ng s 760,905 1,155,929 Ga in of S ale of P rop er ty (870,127) - Ot her 41,943 52,459 To ta l re ve nue s 42,098,255 43,039,404 Ex pe ns es :Po lice De pa rt ment 13,495,885 13,266,849 Pa rks and P ubli c Works 7,155,905 7,458,085 Ge ne ra l go vernment 5,180,153 4,647,801 Communit y De ve lop ment 3,099,269 3,522,477 Lib ra ry S er vi ces 1,892,805 2,038,009 Re de velo pm en t 16,794,022 6,636,270 Int eres t an d fe es 1,278,381 612,700 Communit y Ser vices 666,015 966,055 Sa nit at ion 342,893 655,713 To ta l ex pe nse s 49,905,328 39,803,960 Inc reas e in net a sse ts (7,807,073) 3,235,448 Ne t as se ts , be gi nning 124,044,771 119,948,577 Pr io r p er io d a dj ust men ts - 860,746 Ne t as se ts , e nding 116,237,698 $ 124,044,771 $ Tow n of L os G atos St ate me nt of A cti vi ti es For th e Ye ar E nd ed Ju ne 30, 2011
7 As sh own in the schedule above, g overnmental activities for the year decreased t he Town ’s N et A ssets by $7,807,073 . Key elements of th e increase in net assets are as follows:Pr operty T ax r ev enue s collected for the Town and t he Redevelopment Agency accounted for 39.4 % o f total Town r evenu e s. In the midst of a national recession, p roperty t ax revenue slightly decreased from the prior year. Los Gatos property values remain largely stable, alth ough the volume of housing sales has decreased in the past year. The t urnover rate of Prop 13 h ousing units, which are often revalued at current market rates, is not offsetting the loss of property tax growth due to the slow housing market.Sales T ax reven ue of $9.9 m illion accounted for 21.6 % o f Town total r evenues for the year . Th e 20 % increase o f approximately $1,654,192 f rom the prior year collections is due to the continued success of one internet retail business, coupled with an increase in sales tax revenue from another general retail provider and auto dealer.Other T axes , Other Revenues, and M otor V ehicle in L ieu T axes of $3,088,021 accounted for 6.7 % of total r evenues, increasing by 11.45%from the prior year’s amount of $2 ,768676 because of t he of the increased Motor & Vehicle in Lieu and Franchise tax collected . In vestment Earnings of $760,905 a ccounted for 1.7 % of total r evenues d ecreased by 34.2 %from the prior y ear . This decrease due to a d eclining interest rate environment and reduced cash ba lances from prior years as a result of significant capital expenditures spending in the current fiscal year.Total expenditures increased approximately $9,872,3 3 8 o r 17.4 % from the prior year . Th is increase was due to the c ombined effect o f capital proje ct expenditure s,the increased obligation of Certificat es o f Participation (COP) p ayment s for the new library , a nd the increased expenditures related to the l iabilities established in conjunction with a Public Improvements Cooperation Agreement e stablishe d between the Town and the Redevelopment Agency in March 2011. T he agreement provided for infrastructure and housing improvements within the redevelopment project area .F INANCI AL A NALYSIS OF THE T OWN ’S F UNDS The Town u ses fund accounting to ensure and d emonstrate compliance with finance -related legal requirements.Governmental funds The focus of the Town ’s governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. As of the end of FY 2010/11 , t he Town ’s g overnmental f unds reported combined ending fund balances of $45,267,329 ,a decrease o f $19,978,216 in c omparison with the prior year. This decrease primarily due to increased debt service on the new Library COP and increased expenditures in conj unction with a Public Improvements Cooperation Agreement for redevelopment infrastr ucture and housing improvements.Approximately 64.1 % or $29,002,995 of the total amount of governmental fund balances of $45,267,329 constitutes unreserved d esignated f und balance, which is available for spending at the Town’s discretion. T he remainder of fund balance is reserved and i s not available for new spending because it has already been committed t o:(1) pay debt service ($453 ,637 ); (2 ) provide
8 for l oans/advances du e to the Town ($1 ,500 ,000 ); (3 ) provide for appropriated capital projects ($12 ,956,138 ); (4 ) to provide for prior obligation for Redevelopment Projects ($1,243,048)and (5 ) to provide for dedicated repair and maintenance in ligh ting and landscape districts ($111,511 ). General Fund -The G eneral F und is the chief operating fund of the Town . It a ccounts for all financial resources except those required to be accounted for in another fund. At the end of the current fiscal year, unreserved d esignated fun d balance o f the General F und was $24,240,337 .The General Fund overall net fund balance increased by 11.5% to $25,740,337 from prior year balances . The largest increase o ccurred in sales t ax revenues of approximately $1,654,192,due to the continue d succe ss of one internet retail business, coupled with an increase in sales tax revenue from another general retail provider and auto dealer. General Fund expenditures (exc luding transfers -out )decreased by 10% from the prior fiscal year . The biggest factor co ntributing to the overall increase in expenditures t he prior fiscal year was the one -time expenditure of approximately $3.1 million for the purchase of land for new sports park facility. E xcluding that expenditure item, General Fund expenditures are in lin e with the prior year ’s figures.Other Major Funds General Fund Appropriated Reserve (GFAR) Capital Projects Fund . The GFAR fund is used as the primary capital projects fund for the Town and is used for the acquisition and construction of maj or capital p roj ects in the Town. F und balances d ecreased to $13,416,625 due to capital spending made on the new library building during the fiscal year . Certificates of Participation (COP) R DA Debt Service Fund . The COP RDA Debt Service Fund balance totals $1,4 54,311 , all of which is reserved or designated for the payment of debt service for Town and Redevelopment Agency activities. The net fund balance decreased in the debt service fund by $5,964,911 due to t he increased Certificated of Participation payment an d the increased expenditures related to the liabilities established in conjunction with a Public Improvements Cooperation Agreement for infrastructure and housing improvements in redevelopment project area .Redevelopment Agency Low & Moderate Housing Cap ital Projects Fund . T his fund is used as the primary capital projects fund for the Town’s Redevelopment Agency’s low and moderate income housing capital program. Fund balances decreased from the prior year by $5,140,056 due to funding requirements with Town to carry out low and moderate housing projects under the Pubic Improvement Cooperation Agreement between the Agency and the Town of Los Gatos. Other Non -Major Other Governmental Funds . These funds consist primarily of special revenue funds used to account for specific revenue sources for which expenditures are restricted by law or regulation to finance particular functions or activities of the Town and other non -maj or capital projects funds. T otal fund balances for other non -ma jor other governmenta l funds decreased by $489,291 .
9 Proprietary funds The Town ’s proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail.Internal Service Funds -T he Town h as seven internal service f unds :Worker’s Compensation ,Self Insurance ; S tores , V ehicle Maintenance , B uilding Maintenance , M anagement Information Systems, a nd Equipment Replacement funds. R evenues to the se f unds are generated from fees charged to the Town ’s operating programs for services provided. The Equipment Replacement Fund charges replacement c osts and the Vehicle Maintenance Fund charges vehicle maintenance costs to all user departments b ased on equipment assignment and usage of equipment . Net operating income before tra nsfers at year end for both funds was $356,669 and $10,287 respectively versus $370,318 and $160,198 in the prior year. The decrease in operating income in the Vehicle Maintenance F und from the prior year is attributable to the contracting out maintenance services to reduce General Fund operating expenses.The Bui lding Maintenance, Stores , a nd Management Information Systems funds charge premiums based on use and labor charges to provide Town -wide building maintenance, mail a nd office inventory and duplic ation charges, and management information services. N et operating income (loss) before transfers at year end was $133,275 , ($10,712 ) a nd $78,049 r espectively. Revenues e xceeded expenditures in the Building Maintenance Fund due t o decreased heating, venti lation and air conditioning maintenance and repair costs experienced in the prior year . Management information systems also experienced savings on anticipated repairs and replacements. The Worker’s Compensation and Self I nsurance Fund charge premiu ms based on exposure levels by department for liability, property,W orker’s C ompensa tion and Self In surance costs. Net operating income b efore transfers at year end was $84,509 a nd ($12,567 ) r espectively , v ersus 142,095 and ($13,064) in the prior year. T he decrease of Operating income for the year in the Worker’s Compensation reflect the experience of loss claims in the current year f rom the prior year in the Worker’s C ompensation . G OVERNMENT F UNDS B UDGETARY H IGHLIGHTS :Budget Adjustments Comparing th e FY 2010/11 o riginal budget (or adopted) General Fund amount of $32,931,855 (including budgeted transfers -out), th e final budget amount of $33,142,695 s h ows a net increase of $210,840 . Additions to the original budget i ncluded a pproved additions of $56,9 92 in net miscellaneous adjustments approved by Town Council throughout the fiscal year . Original Budget +Approved Carryforwards +Prior Year Encumbrances +Misc. Adjustments &Mid -Year Adjustments =Final Budget $32,931,855 $153,848 $-0 -$56,992 $33 ,142,695 The inc rease in General Fund appropriation s occurred from the following budget adjustments:$30,000 increase in the Town Attor n ey’s expenditure budget to address one -time contractual and transition issues
10 $6,000 i ncre a se in P ark & Public service appropriation for tree trimming services $22,000 Project Read, a (VTA) grant for staff time for grant application preparation .Comparing the FY 2010/11 f inal amended budget to the actual result shows $1.4 m illion in operational saving s d ue to various cost s aving methods. These steps included selected hiring freezes, strategic expenditure slowdowns, and departmental cost saving efficiencies among other strategies.Capital Assets As of Ju ne 30, 2011, t he Town ’s investment in capital assets for its governme ntal activity is recorded at $88,432,043 (net of accumulated depreciation). T he investment in capital a ssets includes land, buildings a nd improvements , infrastructure , construction in progress and machinery and equipment. During FY 2010/11 t he Town ’s $15.8 million investment in capital ass ets for the current year represented approximately 18 %of total assets for governmental activities. Major capital asset events during the current fiscal year include the following:$9.4 million for the new library build ing ;$2 million for street improvements;$1.6 million for bridge improvements;$0.8 million for curb, gutter and sidewalk improvements and retaining wall $0.6 million Pageant Park Enhancements;$0.4 million for various park improvements; and $0.2 mil lion for traffic signal improvements.Go ve rn me ntal Ac ti vi ti es La nd 25,650,991 $ Co ns tr ucti on in Pro gr es s 4,276,988 Bu ild in gs 20,503,881 Eq ui pm en t 2,713,963 In fra st ru ctur e 35,286,220 88,432,043 $ Ju ne 3 0, 2 011 Tow n of L os G atos Cap it al As se ts (ne t of ac cu mu la te d de pr ecia ti on)Additional information on the Town ’s capital assets is found in N ote 5 of this financial report.
11 Debt Administration At the end of the current fiscal year, the Town h ad total bonded debt outstanding of $25,495,440 . The entire liability i s comprised of debt backed by the Town’s obligation to pay lease payments to the Town’s Redevelopment Agency. Th e Town ’s long -term obligations outstanding as of June 30, 20 1 1 consist of the following:Go ver nm en tal Acti vi ti es Ce rt ific ates o f Pa rt ic ip ati on 25,495,440 $ Total Ou ts tandi ng De bt 25,495,440 Tow n of L os G atos Outs tand in g De bt J une 3 0, 2 011 Additional informat ion on the Town ’s long -term debt can be found in N ote 6 of this report.Economic Factors and Next Year’s Budgets and Rates A product of an ongoing examination of how the Town provides c ost -effective services , the Town’s b udget emphasizes outcomes or res ults for the community and allows for longer -term financial planning decisions.During the development and adoption of the Town ’s FY 2011/12 b udget , t he Town Council and management considered the following factors :T he Town anticipates a modest increase in s ales t ax growth for FY 2011/12 . In e arly 20 10 , t he Town experienced declines i n retail sales tax due to the n ational recession coupled with t he loss of a Honda dealership in Fall 2 009 . Sales t ax estimates for FY 2011/12 w ere budgeted reflecting a 13 %increase (approximately $1 million ) from the prior year ’s adopted sales tax of a pproximate ly $9.4 m illion dolla rs d ue to the continued success o f one internet retail business. With s ales t ax representing approximately 2 8 % of the Town’s General Fund reven ue s , any fluctuation i n l ocal sales tax collections will significantly impact the Town. General property tax collections r epresent approximately 21 % (not including the State’s property t ax “backfill” shifts) of t he Town’s General Fund revenues a nd antici pated to experience minimal growth rate based on data from the Santa Clara County Tax Assessor’s Office. Los Gatos is one of the few cities in Santa Clara County that is expected to experience positive assessed valuation growth for FY 2011/12. The growth i n property tax is largely attributable to the increase d a ssessed valuation that occurs upon the turnover of housing stock in the Town. The Town’s investment portfolio experienced a decline in i t s o verall weighted average annual yield, lowering from 1.92 % a t Ju ne 30, 20 10 to 1.72 % a t June 30, 20 1 1 . As a result o f declin ing interest rate s f or FY 20 10/11 , a nd reduced cash balances due to significant capital expenditures ,investment ea rnings are expected to be lower than the prior year .B udgeted estimates h a ve been reduced by $630,000 from the adjusted budget estimate to $1 million from the prior year .Transient Occupancy Tax (TOT) revenues are expected to be lower in FY 2011/12 due to declines in travel and tourism. Given the reduction in travel activity, t he FY 201 1 /1 2
12 TO T revenues were budgeted at $933,020 . Reflecting a 5.7 % decrease from the FY 2010/11 adopted budget.Requests for Information This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors, with a general overview of the Town ’s finances and to demonstrate the Town ’s accountability for the money it receives. I f you have any questions about this report or need a ny additional information, cont act the Stephen Conway, Director of Finance ,at 110 East Ma in Street, Los Gatos, California, 95030, or phone (408) 354 -6828 .
Basic Financial Statements
TOWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 GOVERNMENT -WIDE FINANCI AL STATEMENTS STATEMENT OF NET ASSETS AND STATEMENT OF ACTIVITIES 13 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. T hey a re prepared on the same basis of accounting (accrual) use d by m ost businesses, which means they i nclude all the Town’s assets and liabilities, as well as its revenues and expenses. T he effect of the entire Town’s transactions is a ccounted for, regardless of when cash changes hands, and all material internal tra nsactions between funds have been eliminated.The Statement of Net Assets report the Town’s total assets and liabilities, including capital assets and long -term debt, and presents similar information to the old balance sheet format while focusing the read er on the composition of the Town’s net assets (assets minus liabilities). T he Statement of Net Assets summarizes the financial position of the Town’s governmental activities in a single column.The Town’s governmental activities include the activities o f the General Fund, Special Revenue Funds, Capital Projects Funds and Debt Service Funds. T hese funds are serviced by t he Town’s 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 Town’s net assets and is prepared on the full accrual basis of accounting, which means it includes all the Town’s revenues and expenses regardless of when cash changed hands. T his differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only c urrent assets, current liabilities, available revenues and measurable expenditures.The format of the Stateme nt of Activities presents the Town’s expenses before revenues and by program. P rogram revenues (revenues generated directly b y specific programs) are deducted from program expenses to arrive at the net expense of each governmental program, which is offset by g eneral revenues as listed before the change in net assets. F rom 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 Redev elopment 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 f inancial statements and the notes to financial statements comprise the Basic Financial Statements of the Town. T he term “Basic Financial S tatements” replaces the term “General Purpose Financial Statements” which is no longer used.
TOWN OF LOS GATOS, CALIFORNIA STATEMENT OF NET ASSETS JUNE 30, 2011 The notes to the financial statements are an integral part o f this statement 14 Go ve rn ment al Act iv it ies ASS ETS C as h an d in ve stm en ts (No te 2)77 ,04 0,5 17 $ R es tr ic te d ca sh a nd i nv es tm en ts (Not e 2)10 ,86 1,6 27 R ec ei va bl es : Ac co unt s 73 9,4 48 In te re st 14 3,9 91 In te rg ov er nm en tal 1,39 0,5 72 Ma te ri al s, su pp li es a nd d epo si ts 42 ,5 07 Lo ng t erm n ote s re ce iv ab le s (N ot e 3)1,62 7,2 80 C ap it al A ss et s (N ot e 5): No nd ep re ci ab le 25 ,65 0,9 91 De pr ec ia bl e, n et of a cc umu la te d de pr ec ia ti on 62 ,78 1,0 52 Tot al A ss et s 18 0,27 7,98 5 $ LI ABI LI TI ES Ac co un ts p aya bl e 4,16 4,6 99 $ Ac cr ue d pa yr ol l an d be ne fi ts 3,80 3,4 02 Ac cr ue d in te re st p ay abl e 45 1,1 20 P as st hr ou gh o bl ig at io ns 3,82 9,7 51 Du e to o th er go ve rn men ts 6,7 42 Un ea rn ed Re ve nu e 16 ,84 9,1 90 De po si ts 3,87 1,0 02 C la im s pa yabl e (N ot e 11 )54 3,1 16 Lo ng -t er m l ia bil iti es: Du e wi th in o ne y ear Co mp en sa te d ab se nc es (No te 1 )1,64 4,6 39 Cer tif ic ate s of p ar ti ci pa tio n (N ot e 6)79 5,0 00 Du e in mo re th an o ne y ea r Po st r et ir em en t be ne fi ts (No te 1 0)2,55 1,8 63 Co mp en sa te d ab se nc es (No te 1 )82 9,3 23 Cer tif ic ate s of p ar ti ci pa tio n (N ot e 6)24 ,70 0,4 40 Tot al L ia bi lit ies 64 ,04 0,2 87 $ NET ASS ET S (N ot e 1) I nve st ed i n ca pi ta l a ss et s, n et o f re lat ed d eb t 72 ,56 7,3 55 $ R es tr ic te d fo r: Ca pi ta l pr oj ec ts 12 ,95 6,1 38 Li ght in g an d la nd sc ap e re pa irs a nd ma in te na nc e 11 1,5 11 De bt s er vi ce 45 3,6 37 Re de ve lo pm ent p ro je ct s 1,24 3,0 48 Tot al R es tr ict ed N et As se ts 14 ,76 4,3 34 Un re st ric te d 28 ,90 6,0 09 T ot al N et As se ts 11 6,23 7,69 8 $
TOWN OF LOS GATOS, CALIFORNIA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2011 The notes to the financial statements are an integral part o f this statement 15 Net (Ex pen se )Re ve nu es a nd Cha ng es i n Ne t A ss et s Ope ra ti ng Ca pit al Ch arg es f or Gra nt s an d Gr an ts a nd Go ve rn me nt al Fun ct io ns /Pro gr ams Ex pe ns es Se rv ic es Co nt ri bu ti on s Co nt ri bu ti on s Ac ti vi tie s Go ve rn me nt al Ac ti vit ies :Pu bl ic s af et y 13 ,49 5,8 85 $ 2,15 3,843 $ 27 ,7 48 $ -$ (1 1,31 4,29 4)$ Pa rk s an d p ub li c wo rk s 7,15 5,9 05 81 0,022 80 9,27 2 2,37 5,75 9 (3 ,1 60 ,85 2) Ge ne ra l gov er nm ent 5,18 0,1 53 1,15 6,931 15 ,6 38 - (4 ,0 07 ,58 4) Co mmu ni ty de ve lo pm en t 3,09 9,2 69 3,09 7,192 - - (2 ,07 7) Re de ve lo pm ent 16 ,79 4,0 22 - - - (1 6,79 4,02 2) Li br ar y s er vi ce s 1,89 2,8 05 39 ,4 91 10 ,6 62 - (1 ,8 42 ,65 2) Co mmu ni ty se rv ic es 66 6,0 15 98 ,8 03 18 2,68 3 - (3 84 ,52 9) Sa ni ta tio n 34 2,8 93 13 5,000 9,00 2 - (1 98 ,89 1) In te re st a nd f ee s 1,27 8,3 81 - - - (1 ,2 78 ,38 1) Tot al G ov er nme nt al A ct iv iti es 49 ,90 5,3 28 $ 7,49 1,282 $ 1,05 5,00 5 $ 2,37 5,75 9 $ (3 8,98 3,28 2) Gen er al r eve nu es :Ta xe s:Pr op er ty tax es 18 ,2 26 ,00 1 Sa le s ta xe s 9,97 1,40 9 Ot he r ta xe s 2,90 6,26 4 Mo to r ve hi cl e in l ie u 13 9,81 4 In ve st me nt e ar ni ng s 76 0,90 5 Mi sc ell an eo us 41 ,94 3 Sp ec ia l it em s:Ga in (lo ss) o n th e s al e of p ro pe rt y (8 70 ,12 7) To ta l ge ner al r ev en ue s an d s pe ci al i te ms 31 ,1 76 ,20 9 Ch ang e i n Net A ss et s (7 ,8 07 ,07 3) Net A ss et s - Beg in ni ng 124 ,0 44 ,77 1 Net A ss et s - End in g 116 ,2 37 ,69 8 $ Pr og ra m Re ve nu es
TOWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCA L YEAR ENDED JUNE 30, 2011 FUND FINANCIAL STATEMENTS &MAJOR GOVERNMENTAL FUNDS 16 F und Financial Statements :The Fund Financial Statements only p resent major funds individually w hile nonmajor funds are combined in a single column. M ajor funds are generall y defined as having significant activities or balances in the current year. N o di stinction is made between fund ty pes 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.Major Governmenta l Funds :The Town determined that the following funds were major funds for the ye ar ended June 30, 2011 . I ndividual non -major funds can be found in the supplemental section.General Fund i s the general operating f und 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 i s 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 Certificates of Participation issued to finance s everal capital improvement projects throughout the Town.Redevelopment Agency Affordable Housing Fund i s used for the implementation of the Agen cy ’s required Affordable Housing Set -Aside Program obligations
TOWN OF LOS GATOS, CALIFORNIA GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2011 The notes to the financial statements are an integral part of this statement 17 Ot her Re de ve lo pm en t Non maj or Tot al Ap pr op ri at ed Cer ti fic at es of Low & Mo de ra te Go ve rn me nt al Go ve rn men ta l Gen er al Res er ve s Par tic ip at ion Hou si ng Fu nd s Fu nd s ASS ETS Cas h & I nv es tmen ts 32 ,09 4,96 2 $ 21 ,2 23 ,82 1 $ 6,39 6,3 78 $ 76 2,60 5 $ 3,966 ,29 0 $ 64 ,44 4,05 6 $ Res tr ict ed C as h & I nv es tm en ts - 9,63 0,75 2 45 3,6 37 - 730 ,95 3 10 ,81 5,34 2 Rec ei va bl es : Acc ou nt s 58 8,56 3 14 ,17 3 - - 135 ,00 0 73 7,73 6 In te re st 14 3,99 1 - - - - 14 3,99 1 In te rg ov er nme nt al 14 ,94 7 1,10 3,57 3 18 ,5 03 4,62 6 248 ,92 3 1,39 0,57 2 Due f ro m Ot he r Fu nds 71 4,09 1 92 ,97 6 - - - 80 7,06 7 Adv an ce s t o O th er F un ds 1,50 0,00 0 - - - - 1,50 0,00 0 Tot al A ss et s 35 ,05 6,55 4 $ 32 ,0 65 ,29 5 $ 6,86 8,5 18 $ 76 7,23 1 $ 5,081 ,16 6 $ 79 ,83 8,76 4 $ LI ABI LI TI ES Acc ou nt s Pa yab le 1,36 0,71 5 $ 2,28 9,85 4 $ 84 ,4 56 $ 14 0,03 4 $ 21 ,43 7 $ 3,89 6,49 6 $ Acc ru ed Pa yro ll a nd Be ne fi ts 3,75 2,34 8 4,81 8 - 5,22 7 8,46 1 3,77 0,85 4 Pa ss th ro ug h Ob lig at io ns - - 3,82 9,7 51 - - 3,82 9,75 1 Due t o oth er go ve rn me nt s 6,66 8 - - - - 6,66 8 Def er re d re ve nu e 28 5,07 7 16 ,3 53 ,99 8 - - 210 ,11 5 16 ,84 9,19 0 Dep os it s 3,87 1,00 2 - - - - 3,87 1,00 2 Due t o Ot he r Fu nd s - - - 62 1,97 0 185 ,09 7 80 7,06 7 Adv an ce fr om Oth er F un ds - - 1,50 0,0 00 - - 1,50 0,00 0 Com pe ns at ed Ab se nc es 40 ,40 7 - - - - 40 ,4 07 To ta l Liab il itie s 9,31 6,21 7 18 ,6 48 ,67 0 5,41 4,2 07 76 7,23 1 425 ,11 0 34 ,57 1,43 5 FUND BALA NCE Non sp en da bl e: Ad va nc es t o O th er Fu nd s 1,50 0,00 0 - - - - 1,50 0,00 0 Res tr ict ed f or : De bt S er vi ce - - 45 3,6 37 - - 45 3,63 7 Ca pi ta l Ou tl ay - 9,63 0,75 2 - - 3,325 ,38 6 12 ,95 6,13 8 Re de ve lo pm en t Pr oj ec ts - - - - 1,243 ,04 8 1,24 3,04 8 Re pa ir s an d Ma in ten an ce - - - - 111 ,51 1 11 1,51 1 As sig ne d to : Va so na Lan d Sa le 2,83 4,77 9 - - - - 2,83 4,77 9 Op en S pa ce 56 2,00 0 - - - - 56 2,00 0 P os t Ret ir em en t Med ic al 40 0,00 0 - - - - 40 0,00 0 P ar ki ng - 1,46 0,21 0 - - - 1,46 0,21 0 Ma rk et Fl uc tu at ion s 24 7,70 5 - - - - 24 7,70 5 S us ta in ab il ity 14 0,55 3 - - - - 14 0,55 3 P ro du ct iv it y Enh an ce men ts 10 0,00 0 - - - - 10 0,00 0 Ec on omi c Un cer ta in ty 3,67 8,00 1 - - - - 3,67 8,00 1 Ca pi ta l Pr oje ct s 5,71 8,99 7 2,30 3,66 3 - - - 8,02 2,66 0 Ca rr yov er 5,81 5 - - - - 5,81 5 Co mc as t PEG - 22 ,00 0 - - - 22 ,0 00 Re ve nu e S ta bi liz ati on F un d 7,86 3,93 1 - - - - 7,86 3,93 1 S pec ia l St ud ie s 25 5,00 0 - - - - 25 5,00 0 De bt S er vi ce - - 1,00 0,6 74 - - 1,00 0,67 4 Una ss ig ne d 2,43 3,55 6 - - - (2 3,88 9) 2,40 9,66 7 Tot al F un d Bal an ce s 25 ,74 0,33 7 13 ,4 16 ,62 5 1,45 4,3 11 - 4,656 ,05 6 45 ,26 7,32 9 Tot al L ia bi li tie s an d Fu nd Bal an ce 35 ,05 6,55 4 $ 32 ,0 65 ,29 5 $ 6,86 8,5 18 $ 76 7,23 1 $ 5,081 ,16 6 $ 79 ,83 8,76 4 $
TOWN OF LOS GATOS, CALIFORNIA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT -WIDE STATEMENT OF NET ASSETS – GOVERNMENTAL ACTIVITIES JU NE 30, 2011 The notes to the financial statements are an integral part of this statement 18 Fun d B al an ce -T ot al Go ve rn men ta l Fun ds 45 ,26 7,32 9 $ Am ou nt s re po rt ed f or Go ve rn men ta l Ac ti vi tie s in t he S ta te me nt o f Ne t As se ts ar e di ff er en t fro m t ho se r ep or te d in th e Go ve rn me nt al F un ds be ca us e o f th e fo ll ow in g: C API TAL A SS ETS C api ta l as se ts us ed in t he Gov er nm ent al A ct iv itie s ar e not f in an ci al re so ur ce s an d, t he re fo re , a re no t r ep or ted i n th e Gov er nm ent al F un ds .88 ,43 2,04 3 ALLO CAT ION O F I NT ER NAL S ERV ICE FUN D NE T AS SE TS In te rn al s er vi ce f un ds a re u se d b y ma na gem en t to ch ar ge th e co st o f man ag eme nt o f c er tai n ac ti vit ies s uc h as i ns ur an ce , c en tr al s er vi ce s an d ma in ten an ce to in di vi du al go ve rn men ta l fu nd s. T he ne t cu rr en t as se ts o f th e in te rn al s er vi ce f un ds a re t he re fo re i nc lu de d a s Gov er nm ent al A ct iv itie s in th e St ate me nt o f Ne t As se ts . 11 ,84 3,02 4 ALLO CAT ION O F I NT ER EST ON LONG TER M DEB T In te re st p ay ab le on lon g-te rm de bt d oe s no t re qu ir e th e use o f cur re nt f in an ci al re so ur ce s an d, th er ef or e, a re n ot r ep or te d in t he G ov er nme nt al F un ds . (4 51 ,1 20 ) LON G-T ERM LI ABI LITI ES Lo ng-te rm l ia bi liti es , in cl ud in g bo nd s pa yab le , a re no t du e and p aya bl e in th e cu rr en t pe ri od a nd , t he re fo re , ar e n ot r ep or te d in t he Go ve rn me nt al F und s. C er ti fic at es o f Pa rt ic ipa ti on (25 ,4 95 ,44 0)$ P os t Re ti re me nt B ene fi ts (2 ,5 51 ,86 3) C omp en sa te d ab se nc es (2 ,4 33 ,55 5) (3 0,48 0,85 8) LON G-T ERM NOT ES REC EIVA BLES In go ve rn me nt al f un ds , n ot es r ec ei va bl es a re n ot a vai la ble to pa y fo r cu rr en t pe ri od e xp en di tu re s an d, the re fo re , a re of fs et b y d ef er re d re ve nu e. 1,62 7,28 0 Net As se ts -G ov er nmen ta l Ac ti vi tie s 11 6,23 7,69 8 $
TOWN OF LOS GATOS, CALIFORNIA GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BA LANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2011 The notes to the financial statements are an integral part of this statement 19 Ot her Re de ve lo pm en t Non ma jor To ta l App ro pr ia te d Ce rt if ica te s of Low & Mod er at e Go ve rn me nt al Gov er nme nt al Ge ne ra l Rese rv es Pa rt ic ipa ti on Ho us in g Fun d Fu nd s Fu nd s REVE NUES P ro pe rt y Ta xe s 9,59 7,37 8 $ -$ -$ -$ 37 ,7 60 $ 9,63 5,1 38 $ P ro pe rt y Ta x Inc re ments - - 9,31 6,79 5 - - 9,31 6,7 95 Le ss : Electi on A mou nt - - (73 9,73 2) - - (7 39 ,7 32 ) S al es Ta xe s 9,97 1,40 9 - - - - 9,97 1,4 09 Ot he r Ta xe s 2,91 3,04 7 26 3,04 9 - - 18 9,64 5 3,36 5,7 41 Lice ns es & P er mits 2,96 7,81 9 - - - - 2,96 7,8 19 In te rg ov er nm ent al 83 4,71 3 1,54 7,77 8 - - 86 5,81 2 3,24 8,3 03 Ch ar ge s fo r S er vi ce s 3,57 0,11 0 40 2,27 6 - - 13 5,00 0 4,10 7,3 86 Fi ne s an d F or fe it ur es 73 7,90 3 - - - - 73 7,9 03 In te re st 62 5,65 4 - 5,99 0 (3 ,03 3) 62 ,4 11 69 1,0 22 Us e of Pr op er ty 38 ,50 2 - - - - 38 ,5 02 Ot he r 1,53 9,29 5 - 1,35 4,88 1 22 10 ,6 64 2,90 4,8 62 To ta l Rev en ue s 32 ,7 95 ,83 0 2,21 3,10 3 9,93 7,93 4 (3 ,01 1) 1,3 01 ,2 92 46 ,2 45 ,1 48 EXPE NDI TURE S Cu rr en t: Gen er al Go ve rn men t 6,31 8,70 6 - - - - 6,31 8,7 06 Pub li c Sa fe ty 13 ,0 04 ,04 1 - - - - 13 ,0 04 ,0 41 Par ks and Pub lic W or ks 5,19 4,14 6 - - - 28 ,3 58 5,22 2,5 04 Com mun it y D ev el op men t 2,97 3,58 7 - - - - 2,97 3,5 87 Com mun it y S er vi ce s 43 8,32 7 - - - 22 5,31 8 66 3,6 45 Li br ar y Ser vi ce s 1,80 6,61 1 - - - - 1,80 6,6 11 San it ati on a nd Oth er 17 7,33 8 20 ,50 0 - - 11 7,06 1 31 4,8 99 Re de ve lop ment - - 12 ,0 82,55 1 6,2 00 ,92 1 67 4,65 4 18 ,9 58 ,1 26 Ca pi ta l Ou tl ay 69 ,47 9 14 ,0 83 ,49 0 - 65 1,53 7 1,0 34 ,7 97 15 ,8 39 ,3 03 De bt s er vi ce : Pr in ci pa l - - 48 5,00 0 - - 48 5,0 00 Int er es t & F ee s - - 1,01 9,88 1 - - 1,01 9,8 81 To ta l Ex pe nd it ur es 29 ,9 82 ,23 5 14 ,1 03 ,99 0 13 ,5 87,43 2 6,8 52 ,45 8 2,0 80 ,1 88 66 ,6 06 ,3 03 EXCE SS (DE FI CI ENCY ) OF RE VENUE S OVER EXPE NDI TUR ES 2,81 3,59 5 (1 1,89 0,88 7) (3 ,6 49,49 8) (6 ,8 55 ,46 9) (7 78 ,8 96 ) (2 0,36 1,1 55 ) OTHE R FI NAN CIN G SOU RCES (USE S) T ra ns fe rs in 62 6,69 4 98 6,00 0 - 1,7 15 ,41 3 60 0,00 0 3,92 8,1 07 T ra ns fe rs (o ut )(7 86 ,52 5) (1 32 ,83 5) (2 ,3 15,41 3) - (3 10 ,3 95 ) (3 ,5 45 ,1 68 ) To ta l Ot he r Fi na nc in g S ou rc es (Uses )(1 59 ,83 1) 85 3,16 5 (2 ,3 15,41 3) 1,7 15 ,41 3 28 9,60 5 38 2,9 39 NET CHAN GES IN FUND BAL ANCE S 2,65 3,76 4 (1 1,03 7,72 2) (5 ,9 64,91 1) (5 ,1 40 ,05 6) (4 89 ,2 91 ) (1 9,97 8,2 16 ) BEGI NNI NG F UND B ALA NCES 23 ,0 86 ,57 3 24 ,4 54 ,34 7 7,41 9,22 2 5,1 40 ,05 6 5,1 45 ,3 47 65 ,2 45 ,5 45 ENDI NG F UND B ALA NCES 25 ,7 40 ,33 7 $ 13 ,4 16 ,62 5 $ 1,45 4,31 1 $ -$ 4,6 56 ,0 56 $ 45 ,2 67 ,3 29 $
TOWN OF LOS GATOS, CALIFORNIA RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE GOVERNMENT -WIDE STATE MENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2011 The notes to the financial statements are an integral part of this statement 20 Net ch an ge i n Fun d B al an ce s - Tot al Go ve rn me nt al F un ds (1 9,97 8,216 )$ Am ou nt s re po rt ed f or Go ve rn me nta l Ac ti vi tie s in t he S ta te me nt o f A ct iv itie s a re di ff er en t be ca us e of th e fo llo wi ng :CAP ITAL ASS ET TRA NSAC TIO NS Go ve rn me nt al fu nd s re po rt c ap ita l o utl ay s as e xpe nd it ur es. Ho we ver , in th e St at em en t of Ac ti vi tie s th e co st o f th os e as se ts i s ca pi ta lize d an d a ll oc at ed o ve r th ei r es tim at ed u se fu l li ve s an d re po rt ed a s de pr ec ia ti on e xp en se .Ex pe ndi tu re s fo r ca pi tal a ss et s 15 ,8 39 ,3 03 $ Cur re nt Y ea r D ep re ci at io n (2 ,6 84 ,7 81 ) 13 ,1 54 ,5 22 Ga in s a nd l os se s fro m t he d is po sa l of c ap it al as se ts a re n ot c on si de re d cur re nt f in an cia l re so ur ce s a nd ar e no t re co rd ed in t he go ve rn me nt al f un d s ta te me nt o f re ve nu es a nd ex pe nd it ur es b ut a re re co rd ed i n th e go ve rn me nt -w id e st at em en t o f ac tiv iti es b ec au se t he y a re e co no mi c re so ur ce s.(8 70 ,1 27 ) LONG-TER M DE BT P ROC EED S A ND P AYMEN TS Re pa yme nt o f de bt pr in ci pa l is a n ex pe nd it ur e in t he g ov er nme nt al f un ds , bu t th e rep aym en t re du ce s lo ng -t er m li ab il itie s in th e Sta te me nt o f Ne t A sse ts .Cer tif ic ate s of p ar ti ci pa tio n 48 5,000 Pr em iu ms f ro m t he i ss ua nc e o f lo ng -t er m de bt a re am or ti ze d as i nt er es t inc om e in th e st at em en t of ac ti vit ie s ov er t he life o f th e d eb t, b ut re co rd ed a s rev en ue a t th e t im e of issu anc e in th e go ve rn me nta l fu nd s st at em en t of re ve nu es , ex pe nd it ur es a nd c ha nge s in f un d b al an ce s.37 ,6 55 ACCR UAL O F NO N-CU RR ENT ITE MS Th e a mo un t be lo w i nc lu de d in t he S ta te me nt o f Act iv iti es d oe s no t r eq uir e th e us e of c ur re nt fin an ci al r es ou rc es a nd th er efo re i s no t r ep or ted in t he g ov er nm en ta l fu nd s: Int er es t pa ya bl e (2 58 ,5 00 ) Com pe ns at ed a bse nc es (1 85 ,6 22 ) Po st r et ir em en t b en ef its (5 27 ,0 00 ) ALLOCA TION ON I NTER NAL S ER VI CE FU ND AC TIV ITY In te rn al s er vic e fu nd s ar e us ed b y ma na ge me nt t o ch ar ge t he co st s of c er ta in a ct iv itie s to in di vid ua l fu nd s. T he ne t re ve nu e of t he i nt ern al s er vi ce f un d is r ep or te d wi th go ve rn me nt al a ct iv iti es .28 7,672 LONG T ERM NOTE S REC EI VA BLES AND ASS OCI ATED DEF ERR ED REVE NUE In te re st in co me f rom l on g t er m n ot es r ec ei va bl es i s re co rd ed o n th e Sta te me nt o f Ac tiv itie s b ut is co ns id er ed a re so ur ce n ot a va il ab le f or g ov er nme nt al f un ds 47 ,5 43 Cha ng e i n Ne t A ss et s - Go ve rn men ta l Act iv iti es (7 ,8 07 ,0 73 )$
TOWN OF LOS GATOS, CALIFORNIA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL (GAAP)FOR THE FI CSAL YEAR ENDED JUNE 30 , 2011 The notes to the financial statements are an integral part of this statement 21 Var ia nc e Wi th Fi na l Bu dg et Or ig in al Fi na l Po si tiv e Bu dg et Bu dge t Ac tu al (N eg at iv e)REVE NUES P ro pe rt y Ta xe s 9,6 67 ,77 0 $ 9,66 7,77 0 $ 9,59 7,37 8 $ (7 0,3 92 )$ S al es Ta xe s 8,3 50 ,00 0 9,10 0,00 0 9,97 1,40 9 87 1,4 09 Ot he r Ta xe s 2,9 25 ,75 0 3,00 0,75 0 2,91 3,04 7 (8 7,7 03 ) Li ce ns es & P er mi ts 2,8 82 ,20 0 3,05 7,20 0 2,96 7,81 9 (8 9,3 81 ) In te rg ov er nm ent al 67 6,61 0 69 8,61 0 83 4,71 3 13 6,1 03 Ch ar ge s fo r Se rv ice s 3,7 80 ,93 6 3,78 6,93 6 3,57 0,11 0 (2 16 ,8 26 ) Fi ne s an d F or fe it ur es 64 5,00 0 60 0,00 0 73 7,90 3 13 7,9 03 In te re st 1,2 05 ,41 0 1,10 5,41 0 62 5,65 4 (4 79 ,7 56 ) Us e of Pr op er ty 36 ,67 5 36 ,6 75 38,50 2 1,8 27 Ot he r 2,5 87 ,42 0 2,60 0,67 4 1,53 9,29 5 (1 ,06 1,3 79 ) Tot al R ev en ue s 32 ,7 57 ,77 1 33 ,65 4,02 5 32 ,7 95,83 0 (8 58 ,1 95 ) EXPE NDI TURE S Cu rr en t: Gen er al Go ve rn men t: To wn Co unc il 18 0,54 2 18 0,54 2 16 3,44 7 17 ,0 95 To wn Att or ne y 22 0,22 5 25 0,22 5 19 7,71 6 52 ,5 09 Ad minis tra tiv e Se rv ic es 2,3 71 ,07 7 2,34 0,31 6 2,29 4,65 5 45 ,6 61 No n-Dep ar tme nta l 4,8 82 ,77 0 4,93 7,32 5 3,66 2,88 8 1,27 4,4 37 Tot al G en er al Go ve rn men t 7,6 54 ,61 4 7,70 8,40 8 6,31 8,70 6 1,38 9,7 02 Pub li c Sa fe ty 13 ,0 87 ,26 1 13 ,17 1,58 7 13 ,0 04,04 1 16 7,5 46 Com mun it y D ev el op men t 3,3 49 ,28 8 3,34 9,28 8 2,97 3,58 7 37 5,7 01 Par ks & Pu bl ic Wo rk s 5,3 19 ,96 2 5,36 4,72 2 5,07 2,78 9 29 1,9 33 Com mun it y S er vi ce s 56 5,66 4 56 5,66 4 43 8,32 7 12 7,3 37 Li br ar y Ser vi ce s 1,8 32 ,36 2 1,86 0,32 2 1,80 6,61 1 53 ,7 11 San it ati on & Ot he r 22 2,70 4 22 2,70 4 17 7,33 8 45 ,3 66 Cap it al O ut la y - - 19 0,83 6 (1 90 ,8 36 ) To ta l Ex pe nd it ur es 32 ,0 31 ,85 5 32 ,24 2,69 5 29 ,9 82,23 5 2,26 0,4 60 EXCE SS (DE FI CI T) OF R EVEN UES OVER EXPE NDI TUR ES 72 5,91 6 1,41 1,33 0 2,81 3,59 5 1,40 2,2 65 OTHE R FI NAN CI NG SOU RCES (USE S) Op er at in g Tr an sf er s In 43 8,92 0 43 8,92 0 62 6,69 4 18 7,7 74 Op er at in g Tr an sf er s Ou t (9 00 ,00 0) (9 00 ,0 00 ) (78 6,52 5) 11 3,4 75 To ta l Othe r Fi na nc in g S ou rc es (Us es )(4 61 ,08 0) (4 61 ,0 80 ) (15 9,83 1) 30 1,2 49 NET CHAN GES IN F UND BAL ANCE S 26 4,83 6 $ 95 0,25 0 $ 2,65 3,76 4 1,70 3,5 14 $ BEGI NNI NG F UND B ALA NCE 23 ,0 86,57 3 ENDI NG F UND B ALA NCE 25 ,7 40,33 7 $
TOWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 PROPRIETARY FUNDS -INTERNAL SERVICE FUNDS 22 Internal service funds account for Town operations financed and operated in a manner similar to a private business enterprise. T he intent of the Town is that th e cost of providing goods and services to other Town funds be financed through user charges to those funds.
TOWN OF LOS GATOS, CALIFORNIA PROPRIETARY FUNDS -STATEMENT OF NET ASSETS JUNE 30, 2011 The notes to the financial statements are an integral part of this statement 23 Go ve rn me nt al Act iv itie s In te rn al Se rv ic e Fu nds ASS ETS Cu rr en t As se ts : Cas h & i nv es tm en ts (Not e 2)12 ,59 6,46 1 $ Res tr ic ted c as h & i nv es tm en ts (Not e 2)46 ,2 85 Ac co un ts R ec ei va bl e 1,71 2 Mat er ia ls , su pp li es , an d dep os it s 42 ,5 07 To ta l cu rr en t as se ts 12 ,68 6,96 5 No nc ur re nt As se ts : Cap it al a ss ets , ne t of ac cu mul at ed d ep re ci at ion (No te 5)30 ,2 26 To ta l no nc ur re nt a ss et s 30 ,2 26 T ot al As se ts 12 ,71 7,19 1 $ LI ABI LI TI ES Cu rr en t Li ab il iti es : Ac co un ts p ay abl e 26 8,20 3 $ Ac cr ue d pa yro ll a nd b en ef it s 32 ,5 48 Due t o o th er g ov er nme nt s 74 To ta l cu rr en t li ab ili tie s 30 0,82 5 No nc ur re nt l ia bi liti es : Cl ai ms p ayab le (No te 1 1)54 3,11 6 To ta l no nc ur re nt l ia bil itie s 54 3,11 6 T ot al Li ab il itie s 84 3,94 1 $ NET ASS ET S (No te 1 ) I nv es te d in c ap ita l as se ts , ne t of r el at ed d eb t 30 ,2 26 $ Re st ric te d fo r wor ke rs c om pen sa ti on c la im s 46 ,2 85 Un re st ri cte d 11 ,79 6,73 9 Tot al N et As se ts 11 ,87 3,25 0 $
TOWN OF LOS GATOS, CALIFORNIA PROPRIETARY FUNDS -STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR THE FICSAL YEAR ENDED JUNE 30, 2011 The notes to the financial statements are an integral part of this statement 24 Go ve rn me nt al Ac ti vi tie s In ter na l Se rv ic e Fu nd s OPERA TI NG RE VENU ES Ch ar ge s fo r se rvi ce s 3,92 7,83 9 $ Ot he r 16 5,90 2 Tot al O pe ra ti ng R eve nu es 4,09 3,74 1 OPERA TI NG EX PENS ES S al ar ie s an d re lat ed e xp en se s 95 7,82 6 I ns ur an ce e xp en se s 45 0,90 1 De pr ec ia ti on 11 ,69 8 S er vi ce s and S up pl ie s 2,03 3,80 6 Tot al O pe ra ti ng Ex pe ns es 3,45 4,23 1 Ope ra ti ng In co me 63 9,51 0 Tr an sf er s in (No te 4 )- Tr an sf er s ou t (N ot e 4)(3 82 ,93 9) Ne t tr an sfe rs (3 82 ,93 9) Cha ng e in N et A ss et s 25 6,57 1 BEGI NNI NG N ET ASS ETS 11 ,6 16 ,67 9 ENDI NG N ET ASS ETS 11 ,8 73 ,25 0 $
TOWN OF LOS GATOS, CALIFORNIA PROPRIETARY FUNDS -S TATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 The notes to the financial statements are an integral part of this statement 25 Go ve rn me nt al Ac ti vi tie s In te rn al Se rv ic e Fu nd s CASH FLO WS FR OM OPE RAT IN G ACTI VI TI ES Re ce ip ts f ro m cu st om er s 4,11 2,41 1 $ P ayme nt s to s up pl ie rs (1 ,5 91 ,1 38 ) P ayme nt s to e mpl oye es (9 57 ,4 30 ) Cl ai ms p ai d (8 05 ,6 68 ) Net c as h p ro vi de d (u se d) b y op er at in g ac ti vi tie s 75 8,17 5 CASH FLO WS FR OM NON CAPI TAL FI NANC IN G ACTI VI TI ES Tr an sf er s In - Tr an sf er s Ou t (3 82 ,9 39 ) Net c as h p ro vi de d (u se d) b y no nc ap it al f in an ci ng a ct iv itie s (3 82 ,9 39 ) CASH FLO WS FR OM CAP IT AL R ELAT ED FI NANCI NG A CTI VI TI ES Ac qu is it io n o f Cap it al As se ts (2 ,5 74 ) Net c as h p ro vi de d (u se d) b y ca pi ta l re la ted f in an ci ng a ct iv iti es (2 ,5 74 ) Net In cr ea se (D ec re as e) i n Ca sh a nd In ve st me nt s 37 2,66 2 Cas h an d inv es tme nt s - b eg in ni ng o f ye ar 12,27 0,08 4 Cas h an d inv es tme nt s - e nd of ye ar 12,64 2,74 6 $ Rec on ci li ati on o f Op er at in g Inc ome t o Cas h Fl ows f ro m Op er at in g Act iv itie s: Ope ra ti ng In co me 63 9,51 0 Adj us tme nt s t o re co nc il e op er at in g in co me to c as h fl ow s f ro m o per at in g ac ti vit ies : De pr ec ia tio n 11 ,6 98 C han ge i n a ss et s an d li ab ili tie s: Re ce iv ab le s, n et (7 34 ) Othe r as se ts 4,54 7 Ac cou nt s pa yab le a nd ot he r ac cr ue d e xp en se s 52 ,0 83 Othe r ac cr ued e xp en se s 51 ,0 71 Cas h Fl ows F ro m Op er at in g Act iv itie s 75 8,17 5 $
TOWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 F IDUCIARY FUNDS 26 Trust funds are used to account for assets held by t he 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 F und financial statements.Library Private Purpose Trust Fund was established to provide for the serv icing 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. T he financial activities of these funds are excluded fro m the government -wide financial statements, but are presented in separate Fiduciary F und financial statements. Agency funds have no measurement focus. Parking Im provement District Agency Fund w as established to account for non -obligation bond debt serv ice pay ments and assessments.
The notes to the financial statements are an integral part of this statement 27 PR IV ATE PUR POS E AGE NCY TR US T FU ND Pa rk in g Im pr ov em en t Li br ar y Di st ric t #8 8 ASS ETS Cas h an d i nv es tm en ts (No te 2 )1,01 0,06 8 $ 41 ,9 43 $ Res tr ict ed c as h an d in ve stm en ts (No te 2 )- 28 2,91 4 Int er go ve rn me nt al r ec ei va bl e - 22 5,34 3 To ta l As se ts 1,01 0,06 8 55 0,20 0 $ LI ABI LI TI ES Ac co un ts p ay abl e 3,29 5 -$ Due t o oth er g ov er nme nt s 28 .0 0 55 0,20 0 To ta l Li ab il iti es 3,32 3 55 0,20 0 $ NET ASS ET S Res er ve d fo r li br ar y t ru st 1,00 6,74 5 To ta l Ne t As se ts 1,00 6,74 5 $ TO WN O F LO S GA TOS , CAL IF ORNI A FI DUC IA RY FUN DS ST ATE ME NT OF F ID UC IA RY NE T AS SE TS JUN E 3 0, 2 01 1
The notes to the financial statements are an integral part of this statement 28 Tr us t Fu nd ADDI TI ONS I nt ere st 4,3 56 $ Gi ft s, b eq ue st s an d end ow men ts 66 6,2 52 Ot he r 18 ,9 02 Tot al A dd it io ns 68 9,5 10 DEDU CTI ONS Li br ar y s er vi ce s 22 ,0 26 Tot al D ed uc ti on s 22 ,0 26 CHANGE I N NE T AS SE TS 66 7,4 84 NET ASS ET S - BE GI NN IN G OF YEAR 33 9,2 61 NET ASS ET S - EN D OF YEAR 1,00 6,7 45 $ TO WN O F LO S GA TOS , CAL IF ORNI A PR IVA TE PURPOS E LI BRARY TRU ST FUND S ST AT EMEN T OF CHAN GES IN FI DUCI ARY NET ASS ET S FOR THE FI SCAL YE AR E NDED JUN E 3 0, 20 11
Notes to Basic Financial Statements
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 29 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A.Description of the Financial Reporting Entity The Town of Lo s 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 s ervices, library , sanitation, public improvements, p lanning and zoning, general administration services, and redevelopment. Redevelopment services are provided primary through the Redevelopment Agency of the Town. The Town is largely a r esidential community l ocated in the foothills of the Santa Cruz Mo untains and was incorporated as a municipal corporation in 1887. T he Town’s population as of January 1 , 2011 was 29,651 .As required by g enerally a ccepted accounting principles, these financial statements present the Town as the Primary Government, with its component unit for which the Town is considered financially accountable. T he component unit discussed below is included in the Town's reporting entity b ecause of the significance of their operational and financial relationships with the Town.B.Descrip tion of Blended Component Units The following component unit, although a legally s eparate entity , is reported as if it was part of the primary g overnment because the Town Council is that component unit's governing body or it provides services entirely t o the Town. U nder 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 Lo s Gatos Redevelopment Agency (the “Agency”) was establis hed as a result of the Loma Prieta Earthquake in 1989 and the need to rebuild existing infrastructure. The Redevelopment Agenc y area encompasses approximately 440 acres in and around Downtown Lo s Gatos, which includes retail and residential areas, lodging , schools, and main traffic thoroughfares. Projects such as street and utility r econstruction, parking, streetscape and civic improvements were called out in the Plan. The Agency is governed by t he Town Council in a separate capa city f rom the Town as memb ers of the Redevelopment Agency Board.The financial statements of the Agency’s can be obtained from the Town of Lo s Gatos at 110 East Main St., Los Gatos, California, 95031. C.Description of Joint Ventures and Public Entity Risk Pool As described in N ote 1 2 , the Town participates in two joint venture s a nd public entity r isk pool activities through formally organized separate legal entities. T he financial activities of the ABAG PL AN Corporation (“ABAG”) and the Lo cal Agency W orkers’ Compensation Ex cess J oint Powers Authority (“L AWCX”) are not included in the accompany ing basic financial statements as boards separate from and independent of the Town administer them.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 30 D.Basis of Presentation The Town’s Basic Financial Statements are prepared in conformi ty w ith accounting principles generally accepted in the United States of America. T he Government Accounting Standards Board (“GASB”) is the acknowledged standard setting body f or establishing accounting and financial reporting standards followed by govern mental entities in the U.S.A.The accompany ing financial statements are presented on the basis set forth in Government Accounting Standards Board Statements No. 34, Basic Financial Statements —and Management’s Discussion and Analysis —for State and Local Go vernments , No. 36, Recipient Reporting for Certain Non -exchange Revenues, an Amendment of GASB Statement No. 33, No. 37, Basic Financial Statements —and Management’s Discussion and Analysis —for State and Local Governments; Omnibus , and No. 38, Certain Finan cial Statement Note Disclosures .These Statements require that the financial statements described below be presented. Government -wide Statements: The Statement of Net Assets and the Statement of Activities display information about the primary g overnmen t (the Town) and its component units. These statements include the financial activities of the overall Town government, except for fiduciary a ctivities. Eliminations have been made to minimize the double counting of internal activities. These statements pr esent governmental activities o f the Town. Governmental activities generall y are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement of Activities presents a comparison between direct expenses and program r evenues for each function of the Town’s governmental activities. Direct expenses are those that are specificall y associated with a program or function and, therefore, are clearl y identifiable to a particular function. Program revenues include (a) charges p aid by t he recipients of goods or services offered by t he programs, (b) grants and contributions that are restricted to meet the operational needs of a particular program and (c) fees, grants and contributions that are restricted to financing the acquisi tion or construction of capital assets. R evenues that are not classified as program revenues, including all taxes, are presented as general revenues.Fund Financial Statements: T he fund financial statements provide information about the Town's funds, inc luding fiduciary f unds and blended component units. S eparate statements for each fund category —governmental , proprietary a nd fiduciary —are presented. T he emphasis of fund financial statements is on major individual governmental funds, each of which is di splay ed in a separate column. All remaining governmental are aggregated and reported as nonmajor funds.Internal service funds of the Town (which provide services primaril y to other funds of the Town ) are presented, in summary f orm, as part of the propr ietary f und financial statements. S ince the principal users of the internal services are the Town ’s governmental activities, financial activities of the internal service funds are presented in the governmental activities column when presented at the gover nment -wide level. T he costs of these services are allocated to the appropriate function/program i n the S tatement of A ctivities.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 31 Proprietary f und operating revenues, such as charges for services, result from exchange transactions associated with the princi pal activity o f the fund. E xchange transactions are those in which each part y receives and gives up essentially e qual values. N on -operating revenues, such as subsidies and investment earnings, result from non -exchange transactions or ancillary activities .E.Major Funds GASB defines major funds and requires that the Town’s major governmental funds be identified and presented separatel y in the fund financial statements. A ll other funds, called nonmajor funds, are combined and reported in a single column, r egardless of their fund -ty pe. Major funds are defined as funds that have assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund -ty pe total and five percent of the grand total. T he General Fund is alway s a major fund. The Town may a lso select other funds it believes should be presented as major funds.The Town reported the following major governmental funds in the accompan yi ng financial statements: General Fund is the general operating fund of the Town and is used t o 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 F und is used to account for the Certificates of Participation issued to finance several capital improvement projects throughout the Town.Redevelopment Agency Affordable Housing Fund i s used for the implementation of the Agency ’s required Affordable Hou sing Set -Aside Program obligations.The Town also reports the following fund ty pes: Internal Service Funds are used to account for services, which are provided to other departments on a cost -reimbursement basis. T hose services include workers compensa tion, self -insurance, stores, vehicle maintenance, building maintenance, management information, and equipment replacement. Fiduciary Funds include Private -Purpose Trust Funds and agency f unds are used to account for assets held by t he 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 F und financial statement. T he Town reported the follow ing Fiduciary Funds in the accompany ing financial statements:
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 32 Library Private Purpose Trust Fund was established to provide for the servicing of donations and bequests to the Town's L ibrary Program.History Project Fund w as established to provide for the s ervicing of donations, bequests, grant monies and expenditures to the history p roject partnership of Los Gatos Public Library and the Museum of L os Gatos.Clelles Ness Trust Fu nd w as established by A nsten R. Ness, M.D. and the Board of Library T rustees for the Town of Los Gatos, as a memorial to his wife, Clelles Ness.to use the income and principal of the trust estate to provide materials and services not ordinarily available from public funds. Susan E. (Betty) McClendon Trust Fund i s a bequest to th e Lo s Gatos Public Li brary from the estate of Susan McClendon was established to be used solely f or children's services.Parking Improvement District Agency Fund w as established to account for non -obligation bond debt service pay ments and assessments.Ba rberra J. Cassin T rust Fund is a b equest to the Town from the estate of Barberra J. Cassin was established to be distributed to the Los Gatos Public Li brary f or the purpose of establishing an endowment fund, which is to be used for the support of science, the arts and humanities projects.F.Basis of Accounting T he government -wide and fiduciary f und (except for agency f unds) f inancial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are r ecorded when earned a nd expenses are recorded at the time liabilities are incurred,regardless of when the related cash flows take place. Agency funds have no measurement focus. Governmental funds are reported using the current financial resources m ea surement focus and the modified accrual b asis of accounting. Under this method, revenues are recognized when measurable and available . The Town considers propert y tax revenues reported in the governmental funds to be available if the revenues are collected or are reasonably e xpected to be collected within sixty d ay s after ye ar -end. For revenues other than propert y tax es , the Town generally a pplies the sixty -day period rule but would make exceptions considering the measurable and available criteria. Expend itures are recorded when the related fund liability i s incurred, except for principal and interest on general long -term debt, which is recognized upon becoming due and pay able; and except for claims, judgments and compensated absences, which are recognized when estimable and probable. G overnmental capital asset acquisitions are reported as expenditures i n governmental funds. P roceeds of governmental long -term debt and acquisitions under capital leases are reported as other financing sources .
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 33 Those revenu es susceptible to accrual are property a nd 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 receiv ed 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 t he fiscal ye ar 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 f und programs with a combination of cost -reimbursement grants, categorical block grants and general revenues. T hus, both restricted and unrestricted net assets may b e available to finance program expenditures. T he Town’s policy i s to first appl y restricted grant resources to such programs foll owed by general revenues as necessary .Certain indirect costs are included in program expenses reported for individual functions and activities.The Town a pplies all Governmental Accounting Standa rds Board (GASB) pronouncements applicable to accounting a nd reporting for proprietary o per ations, including the following pronouncements issued on or before November 30, 1989 that do not conflict with or contradict GASB pronouncements: Financial Accounting Standa rds Board (FASB) Statements and Interpretations, A ccounting Principles Board (APB) Op inions, and Accounting Research Bulletins (ARB's) of the Committee on Accounting Procedure.Cash Equivalents -The Town’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short -term inves tments with original maturities of three months or less from the date of acquisition.State of California statutes and the Town’s investment policy a uthorize the Town to invest in obligations of the U.S. Treasury , its agencies and instrumentalities, colla teralized, non -negotiable certificates of deposits, commercial paper rated A -1/P -1, medium -term corporate notes rated A or its equivalent or better by M oody ’s or Standard & Poor’s, asset backed corporate notes, bankers’ acceptances, mutual funds, and the S tate Treasurer’s investment pool (Local Agency I nvestment 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 b ased upon market closing prices. The fair value of mutual funds is stated at share value. Materials, Supplies and Deposits a re held for consumption and are stated at cost using the first -in, first -out method. The costs are recorded as expenditures at th e time the item is consumed.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 34 Interfund Receivables and Payables -Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal ye ar 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 nonspendable fund balance in applicable Town funds to indicate the extent to which they a re not avai lable 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. C ontributed capital assets are valued at their estimated f air market value on the date contributed. C apital assets, including infrastructure, are recorded if acquisition or construction costs exceeds $10,000.As required by G A SB , the Town depreciates capital assets with limited useful lives over their estimated u seful lives. The purpose of depreciation is to spread the cost of capital assets equitabl y among all users over the life of these assets. The amount charged to depreciation expense each y ear represents that ye ar’s pro rata share of the cost of capital a ssets. The Town depreciates using the straight line method which means the cost of the asset is divided by its expected useful life in ye ars and the result is charged to expense each ye ar until the asset is fully depreciated. The Town has assigned the u seful lives listed below to capital assets:Buildings 25 -40 y ears Improvements 25 -40 y ears Machinery and equipment 2 -20 y ears Furniture and fixtures 5 -12 y ears Software 5 -7 y ears Infrastructure 20 -40 y ears Major capital outlay for capital assets and improvements are capitalized as projects are constructed.Capital assets may b e acquired using federal and state grants, contributions from developers, and contributions or grants from other governments. GASB 34 requires that these contributed asset s be accounted for as revenue at the time they are contributed. Deferred Compensation Plan -The Town established a deferred compensation plan created in accordance with California Government Code Section 53212 and In ternal Revenue Code Section 457. T he p lan, available to all Town employ ees, permits them to defer a portion of their salary until future ye ars. T he deferred compensation is not available to employ ees until termination, retirement, death, or unforeseeable emergency . D eferred compensation pl ans are not reported as part of the Town’s assets or liabilities, as the deferred compensation plan trustees hold those funds in trust on behalf of employ ees until the employ ees are eligible to receive the benefits.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 35 Compensated Absences - A ccumulated Vaca tion, Sick Pay a nd Other Employ ee Benefits are accrued as earned. Upon termination, employ ees are paid for all unused vacation at their current hourly r ates. Sick leave earned is cashed out based on the following schedule for employ ees with at least 150 ho urs accrued and up to a maximum amount as specified under labor contract provisions:For employe es under contract 1 -59 months 25.0% For employees under co ntract 60 -119 months 37.5%For employees under contract 120 mon ths or more 50.0%The Town’s liab ility f or compensated absences is determined annually . F or 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:Be gi nn in g B al an ce 2,293 ,939 $ Ad di tio ns 1,445 ,327 Paym ent s (1,265 ,304) End in g Ba la nce 2,473 ,962 $ Cu rren t Port io n 1,644 ,639 $ Compensated absences are liquidated by t he fund that has recorded the liability . T he long -term portion of governmental activities compensated absences is liquidated primarily b y the General fun d. O nly c ompensated absences related to terminate d e mploy ees are reported in the fund financial statements.Unearned Revenue and Deferred Revenue -In t he government -wide financial statements, unearned revenue is recognized for transactions for which rev enue has not y et been earned. Ty pical transactions for which unearned revenue is recorded are unearned grant revenues and prepay ments from customers.In the fund financial statements, deferred revenue is recorded when transactions have not ye t met the rev enue recognition criteria based on the modified acc rual basis of accounting. The Town records deferred revenue for transactions for which revenues have not been earned, or for which funds are not available to meet current financial obligations. Ty pical tra nsactions for which deferred revenue is recorded are grants received but not ye t earned or available, interest accrued on interfund advances, long -term assessments and long -term loans receivables.Long -Term Liabilities - I n the government -wide financial s tatements 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 pay able are reported net of the applicable bond premium or discount.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 36 In the fund financial statements, governmental fund ty pes recognize bond premi ums and discounts, as well as bond issuance costs, during t he 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.Net Assets - N et Assets are t he excess of all the Town’s assets over all its liabilities, regardless of each fund. N et Assets are divided into thre e captions under GASB Statement 34. These captions apply o nl y to Net Assets, which is determined only a t the Government -wide level, and are described below:Invested in Capital Assets, net of related debt d escribes th e portion of Net Assets which is repr esented by the current net book value of the Town’s capital assets, less the outstanding balance of an y debt issued to finance these assets.Restricted describes th e portion of Net Assets which are r estricted as to use by t he terms and conditions of agree ments with outside parties, governmental regulations, laws, or other restrictions which the Town cannot unilaterall y alter. T hese principall y include debt service requirements and redevelopment funds restricted to low and moderate income purposes. Unres tricted describes th e portion of Net Assets which are not restricted to use.Fund Balances -The Town does not have a policy i dentify ing a minimum unassigned fund balance. B ecause amounts in the nonspendable, restricted, committed, and assigned categorie s are subject to vary ing constraints on their use, the remaining fund balances are otherwise unassigned.In accordance with Government Accounting Standards Board 54 , Fund Balance Reporting and Governmental Fund Type Definitions , the Town classifies govern mental fund balances as follows:Non -spendable i ncludes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual constraints.Restricted includes fund balance amounts that are constrained for s pecific purposes which are externally i mposed by p roviders, such as creditors or amounts constrained due to constitutional provisions or enabling legislation.Committed includes fund balance amounts that are constrained for specific purposes that are in ternally i mposed by t he government through formal action of the highest level of decision making authority a nd does not lapse at ye ar -end. C ommitted fund balances are imposed by t he Town Council .Assigned includes fund balance amounts that are intended t o be used for specific purposes that are neither considered restricted or committed. Fund balance may b e assig ned by t he Town Manager or the Finance Director .
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 37 Unassigned i ncludes fund b alances within the funds which have n ot been classified within the abo ve mentioned catego ries.The Town uses restricted /committed amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as a grant agreement requiring dollar for dollar spending. Additionall y, the Town w ould first use committed, then assigned, and lastly u nassigned amounts of unrestricted fund balance when expenditures are made.Use of Estimates - T he preparation of financial statements in conformity w i th generall y 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 r eported amounts of revenues and expenditures/expenses during the reporting periods. Actual results could differ from those estimates.Property Tax Levy, Collection and Maximum Rates - S tate of California Constitution Article XIII A provides that the co mbined maximum property t ax rate on any g iven property m ay n ot 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 A rticle X III A and may be adjusted by n o more than 2% per year unless the property i s sold, transferred, or substantially improved. The State Le gislature has determined the method of distribution of receipts from a 1% tax levy among the counties, cities, school dis tricts and other districts. The County o f 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 (delinquen t 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 o ther than land and buildings. T hese taxes are secured by l iens on the property b eing taxed. P roperty t a xes levied are recorded as revenue and receivables when they are collected during the fiscal y ear of levy or within 60 day s of y ear -end.Budgets and Budgetary Accounting - T he Town follows the procedures below when establishing the budgetary data reflecte d in the financial statements:1.The Town Manager submits to the Town Council a proposed operating and capital improvement budget for the fiscal ye ar commencing the following Ju ly 1 . T he budgets include the proposed expenditures and the means of financing them.2.Public hearings are conducted to obtain taxpay er comments.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 38 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 f und, 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.Budg ets are adopted on a basis consistent with generally accepted accounting principles except for proprietary f unds which budget for capital outlay s but not depreciation. Budgets were adopted for the General Fund, Special Revenue Funds, I nternal Service Fund s and Capital Projects Funds.6.Budgeted amounts are as originally a dopted or as amended by T own Council. I ndividual amendments were not material in relation to original appropriations.Excess of Expenditures over Appropriations - N o general fund or speci al revenue funds have expenditures in excess of budget for the ye ar ended June 30, 2011 . Encumbrances - U nder encumbrance accounting, purchase orders, contract and other commitments f or expenditures are recorded in order to reserve that portion of the applicable appropriation. Encumbrance accounting is employ ed as an ex tension of formal budgetary integration in all funds. Encumbrances outstanding at year -end are reported as reservati ons of fund balances since they d o not constitute ex penditures or liabilities; unexpended and unencumbered appropriations lapse at ye ar end in all funds. Encumbered appropriations are carried forward to the following year.Reclassifications - C ertain acc ounts in t he prior -year financial statements have been reclassified for the presentation in the current -ye ar financial statements. G.Newly Implemented Accounting Pronouncements The Government Accounting Standards Board has issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Statement establishes fund balance classifications that comprise a hierarchy b ased primarily o n the extent to which a government is bound to observe constraints imposed upon the use of the reso urces reported in governmental funds. G overnments also are required to classify a nd report amounts in the appropriate fund balance classifications by appl yi ng their accounting policies that determine whether restricted, committed, assigned, and unassigned a mounts are considered to have been spent. Disclosure of the policies in the notes to the financial statements is required. The definitions of the general fund, special revenue fund ty pe, capital projects fund ty pe, debt service fund ty pe, and permanent f und ty pe are clarified by t he provisions in this Statement. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2010 (fiscal ye ar ending June 30, 2011).
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 39 H.Upcoming Accounting and Reporting Changes Summary of GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements (Issued 11/10). T he objective of this Statement is to improve financial reporting by addressing issues related to service concession arrangements (SCAs ), which are a t ype of public -private or public -public partnership. As used in this Statement, an SCA is an arrangement between a transferor (a government) and an operator (governmental or nongovernmental entity ) in which (1) the transferor convey s to an o perator the right and related obligation to provide services through the use of infrastructure or another public asset (a “facilit y”) in exchange for significant consideration and (2) the operator collects and is compensated by f ees from third parties. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2011. The provisions of this Statement generall y are required to be applied retroactively f or all periods presented. The implementation of this standard will not have a significant impact on the Town ’s financial statements. Summary of Statement No. 61, The Financial Reporting Entity: Om nibus an amendment of GASB Statements No. 14 and No. 34 (Issued 11/10). T he objective of this Statement is to i mprove financial reporting for a governmental financial reporting entity . The requirements of Statement No. 14, The Financial Reporting Entity , and the related financial reporting requirements of Statement No. 34, B asic Financial Statements -and Management’s Discussion and Analysis —for State and Local Governments, were amended to better meet user needs and to address reporting entity i ssues that have arisen since the issuance of those Statements. This Statement modifies certain requirements for inclusion of component units in the financial reporting entity . This Statement also clarifies the reporting of equit y interests in legall y s eparate organizations. I t requires a primary g overnment to report its equity i nterest in a component unit as an asset. The provis ions of this Statement are effective for financial statements for periods beginning after June 15, 2012. Earlier application is encouraged. The implementation of this standard will not have a significant impact on the Town ’s financial statements. Summary o f Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre -November 30, 1989 FASB and AICPA Pronouncements (Issued 12/10). T he objective of this Statement is to incorporate into the GASB’s authoritative literature ce rtain accounting and financial reporting guidance that is included in the following pronouncements issued on or before November 30, 1989, which does not conflict with or contradict GASB pronouncements: 1.Financial Accounting Standards Board (FASB) Statemen ts and Interpretations 2.Accounting Principles Board Opinions 3.Accounting Research Bulletins of the American In stitute of Certified Public Accountants’ (AICPA) Committee on Accounting Procedure.This Statement also supersedes Statement No. 20, Accounting and F inancial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, thereb y eliminating the election provided in paragraph 7 of that Statement for enterprise funds and business -ty pe activities to apply p ost -Nove mber 30, 1989 FASB Statements and Interpretations
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 40 that do not conflict with or contradict GASB pronouncements. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2011.The implementation of th is standard will not h ave a significant impact on the Town ’s financial statements.Summary of Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position (Issued 06/11). T his Statement provides f inancial reporting guidance for deferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4, Elements of Financial Statements, i ntroduced and defined those elements as a consumption of net assets by t he government that is app licable to a future reporting period, and an acquisition of net assets by t he government that is applicable to a future reporting period, respectivel y. Previous financial reporting standards do not include guidance for reporting those financial statement e lements, which are distinct from assets and liabilities. Concepts Statement 4 also identifies net position as the residual of all other elements presented in a statement of financial position. This Statement amends the net asset reporting requirements in S tatement No. 34, Basic Financial Statements -and Management’s Discussion and Analysis -for State and Local Governments, a nd other pronouncements by i ncorporating deferred outflows of resources and deferred inflows of resources into the definitions of the req uired components of the residual measure and by renaming that measure as net position, rather than net assets. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. Management is evaluating the impact of this statement on the Town’s financial statements.Summary of Statement No. 64, Derivative Instruments: Application of Hedge Accounting Termination Provisions an amendment of GASB Statement No. 5 (Issued 06/11). T he objective of this Statem ent is to clarify w hether an effective hedging relationship continues after the replacement of a swap counterpart y or a swap counterpart y’s credit support provider. This Statement sets forth criteria that establish when the effective hedging relationship c ontinues and hedge accounting should continue to be applied. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2011. Earlier application is encouraged.The implementation of this standard will not have a significant impact on the Town ’s financial statements.NOTE 2 -CASH AND INVESTMENTS The Town pools cash from all sources and all funds except Restricted Cash and In vestments so that it can be invested at the maximum yi eld, 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. I nvestments in LAIF and government securities mutual funds are net in the order of liquidity , since they m ay b e withdrawn without penalty. U .S. Treasuries, U.S. Agencies and Certificates of Deposit are the Town’s least liquid investments, since they must be held to maturity .Cash Deposits with Banks and Custodial Credit Risk - California Law requ ires banks and savings and loan institutions to pledge government securities with a market value of 110% of the Town’s cash on
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 41 deposit or first trust deed mortgage notes with a value of 150% of the deposit as collateral for these deposits. U nder Californi a Law this collateral is held in the Town’s name and places the Town ahead of general creditors of the institution. T he Town has waived collateral requirements for the portion of deposits covered by Federal Depository I nsurance Corporation (FDI C).The ba nk balance o f the Town’s cash deposits was $17,677,744 a s of June 30, 2011 .The bank balance and the carry ing amount differed due to deposits in transit and outstanding checks. The FDI C insured the bank balances up to $250,000 for each bank, except for non -interest bearing transaction accounts at institutions participating in FDI C’s Temporary L iquidity G uarantee Program, which are provided with unlimited deposit insurance coverage. As o f June 30, 2011 , $17,410,425 o f the Town’s cash balance was not insured by FDI C and was collateralized as discussed above. Investments - T he Town and its fiscal agent invest in indivi dual investments and in investment pools. Individual investments are evidenced by s pecific identifiable pieces of paper called “securities instruments,” or by a n electronic entry registering the owner in the records of the institution issuing the security , c alled the book entry s ys tem. I n order to maximize security , the Town employ s the Trust department of a bank as the custodian of all its investments, regardless of their form. The Town i nvests in the California State Treasurer’s Lo cal Agency I nvestment F und (LAIF). L AI F, established in 1977, is regulated by C alifornia Government Code Section 16429 and under the day t o day administration of the State Treasurer. A s of June 30, 2011 , L AI F had approximately $68 b illion in investments.LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily a vailable, and on amortized cost of best estimate for those secur ities where market value is not readily available. T he Town’s i nvestments with LA IF at Ju ne 30, 2011 included a portion of the pooled funds invested in structured notes and asset -backed s ecurities. T hese inves tments are described as follows:1.Structured Notes a re debt securities (other than asset -backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and / or that have embedded forwards or options.2.Asset -Backed Securities , the bulk of which are mortgage -backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repay ments from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables.As of June 30, 2011 the Town h ad $14,073,413 i nvested in LA IF, which had invested 5.01 % of the po ol investments funds in Structured Notes and Asset -Backed Securities. T he Town v alued its investments with LA IF by m ultiply ing its account balance with a fair value factor determined by L AI F. T his f actor was 1.001576 and was the result of dividing all LA IF participants’ total aggregate fair value by t otal aggregate amortized cost. Risk Disclosures -Interest Rate Risk i s the risk that changes in market interest rates will adversely affect the fair value of an investment. Generall y, t he longer the maturi ty o f an investment, the greater
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 42 the sensitivity o f its fair value to the changes in market interest rates. One of the way s that the Town manages its exposure to interest rate risk is by p urchasing a combination of shorter term and longer term investments and by t iming cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity e venl y over time as necessary t o provide the cash flow and liquidity n eeded for operations. Information about the sensitivity o f the fair va lues of the Town 's investments to market interest rate fluctuations is provided in the summary of cash a nd investments table on page 4 3 that shows the distribution of the Town 's investments b y maturity .Credit Risk i s the risk of loss due to the failure o f the securit y issuer. This is measured by t he assignment of a rating by a n ationall y recognized statistical rating organization. The summary o f cash and investments table on page 4 3 sh ows the minimum rating under the actual rating of the Town ’s investment s at y ear end.Custodial C redit R isk is the risk that in the event of the failure of the counterparty (e.g., broker -dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the pos session of another party . The Town ’s investment in money m arket fund and LA IF is not categorized as to custodial credit risk. I ts U.S. Government Agency Securities investment is held by a third party f inancial institution under the third party’s trust dep artment’s name and thus not ex posed to custodial credit risk .Concentration of Credit Risk is the risk that the Town’s investments are exposed because the ty pes of investments have been too limited. The Town’s Policy s tates that, with the exception of US T reasury securities and LA IF, no more then 50% of the Town’s total investment portfolio will be invested in one single security ty pe or with a single financial institution. The Town was in compliance with this policy a s of June 30, 2011 . The following table summarizes the Towns policy related to maturities and concentration of investments:Maximum Maximum Portfolio Investment Ty pe Maturity Percentage US Treasury Obligations 5 y ears None US Agency Obligations 5 y ears None Bankers Acceptances 180 day s 15%Commercial Paper 180 day s 15%Medium Term Notes 3/5 y ears 15%Collateralized CD's 5 y ears 15%CA L AI F NA 65%Money M arket Funds NA 15%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
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 43 cost. U nder GASB 31, the Town must ad just the carr yi ng value of its investments to reflect their fair value at each fiscal ye ar end, and it must include the effects of these adjustments in income for that fiscal year .The following is a summary of the Town’s Cash and I nvestments (stated at f air value) as of June 30, 2011 . Av ai lable Co ncent rat io n Ti me to We ig hte d fo r Inv est men t of C re di t Ma tu re Av er ag e Op er at io ns Re str icted To tal Ra ti ng Ri sk (Yea rs)Ma tu rit y U.S. G ove rn ment A ge ncy se cur it ie s:Un ion Ban k (1 )43,77 3,160 $ -$ 43 ,773,160 $ Aaa/A AA 61 %1.2 5 0.77 Go vernment Se cur it ie s Mo ney Ma rket Mut ual F und s 2,60 7,476 10,81 5,342 13 ,422,818 No t Ra te d 19 %LA IF 14,07 3,413 - 14 ,073,413 No t Ra te d 20 %0.6 5 0.13 To ta l Inv est me nt s 60,45 4,049 10,81 5,342 71 ,269,391 100 %Ca sh D ep osi ts w it h B ank s 17,63 4,379 46 ,285 17 ,680,664 Ce rti ficat es o f De po si t - 28 2,914 282,914 Ca sh o n han d at T ow n 4,100 - 4,100 To ta l Ca sh and I nvestments 78,09 2,528 $ 11,14 4,541 $ 89 ,237,069 $ (1 )Li mi te d to U S Ag ency Ob li gati on s w it h l iq ui d ma rket s and readil y determi na bl e fa ir market values, including F HL B, FN MA, Fr edd ie Mac, FFC B, the Fed er al L and B ank, and t he T VA .Investment T yp e/Ca sh D epo si t 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 Agenc y agreements.Fi du ci ar y Tot al T ow n Fund s Tot als Ca sh a nd i nvest me nts avai la bl e fo r op er at ion 77,0 40,51 7 $ 1,05 2,011 $ 78 ,092,528 $ Re stri cted cash a nd i nvest me nts 10,8 61,62 7 28 2,914 11 ,144,541 To tal cash and i nvest men ts 87,9 02,14 4 $ 1,33 4,925 $ 89 ,237,069 $ .
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 44 NOTE 3 -LONG -TERM NOTES RECEIVABLE The Town had the following long -term notes receivable as of June 30, 2011 :In te rest R at e Ma tu rit y B al an ce Gen eral Fu nd:Op en D oor s Associat es, L td .7%2024 66 8,77 0 $ Ac ti ve H om e Loa ns Va ri oi us Va ri ous 88,14 6 Op en D oor s Associat es, L td .7%2024 98,66 0 Ho usi ng C ons ervat ion L oans 0-5%Va ri ous 19 4,92 6 To ta l C DB G 38 1,73 2 Proj ect Ma tc h Va rio us Va ri ous 48 2,11 3 Di tt os Lane Fam il y Ho using, L .P. 3%Va ri ous 94,66 5 To ta l R DA H ou si ng 57 6,77 8 Tot al L ong -T er m No te s Re cei va bl e 1,6 27,28 0 $ Co mmu ni ty D evelopmen t Blo ck G ran t Fun d (CDB G):De scri pt io n Re de vel opm en t Ag ency A ff or dabl e H ou si ng Fun d (R DA H ou si ng )Open Doors Associates Ltd. And Mid -Peninsula Housing Coalition - T he 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. T o assist in financing this project, the To wn advanced funds to these developers under notes, which are secured by deeds of trust subordinated by c onstruction 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 agre ed to loan a maximum amount of $339,250 to Open Doors Associates, Ltd. to cover the cost of traffic impact fees, planning fees and building permit taxes. As of June 30, 2011 , $668,770 o f such costs, including accrued interest, had been incurred by O pen Doors Associates, Ltd. in connection with the project and advances by the Town under this note.Active Home Loans a nd Housing Conservation Loans - T he Town uses CDBG Fund (funded through federal grants) to assist low and moderate income homeowners to improve their homes and to fund low income housing rental properties acquisition and rehabilitation. The se l oan s are secured by d eed s of t rust.Project Match - T he Agency e ntered into a loan a greement with Project Match, a nonprofit benefit corporation to acquire and rehabilitate four or five bedroom single family home s . The propert y is to provide affordable housing rental to very l ow income senior households. The loan receivable is evidenced by a promissory note and secured by a d eed of trust. Since incept ion of the loan till June 30, 2011 , no interest or principal pay ment has been made.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 45 Dittos R edevelopment Loan -During the ye ar ended June 30, 2010 , t he Town entered into a loan agreement with Dittos Lane Famil y Housing, L.P., a California limited partnership , in the principal amount of $94,665 . The loan is used to r edevelop the affordable housing rental propert y, a maximum of 32 townhouse sty le apartm ents , and secured by t he propert y. In addition, the loan repay ments including principal, interest, late charges, prepayment fees, reasonable costs, and etc. are guaranteed by ROEM Development Corporation, a compan y affiliated with the borrower.NOTE 4 -I NTERFUND TRANSACTIONS Inter -fund Receivables and Payables -Amounts due to or due from other funds reflect inter -fund balances for services rendered or short -term loans expected to be repaid in the n ext fiscal y ear. Advances to or from other funds are lo ng -term loans between funds that are t o be repaid in their entiret y over several ye ars.As of Ju ne 30, 2011 , inter -fund receivables and pay ables consisted of the following:Ad vanc es Ad van ces Due to Du e Fr om From O th er to O th er Ot her Ot her F unds Fu nds Fun ds Fun ds Ge ne ra l Fu nd -$ 1,500,00 0 $-$ 71 4,091 $ Ap pr opr ia te d R eserves F und - - - 92 ,976 Ce rti ficat es o f Pa rt ici pa ti on F und 1,5 00,00 0 - - - Re de velopment L ow & Moderate Housi ng F und - - 621 ,970 - Com mu ni ty D evelopm en t Fu nd - - 111 ,382 - No n-Poi nt So ur ce Mai nt en ance Fu nd - - 73 ,715 - Tot als 1,5 00,00 0 $ 1,500,00 0 $807 ,067 $ 80 7,067 $ The Gener al Fund has an advance of 1,500,000 to the Certificates of Participation Debt Service Fund to finance Agency operations.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 a lso be made to pay f or capital projects or capital outlay s, lease or debt service pay ments, operating expenses and low and moderate -income housing projects. Transfers between funds during the fiscal year ended June 30, 2011 were as follows:Re devel opm en t Low and Ge neral Ap pr opr ia te d Mod er at e No nm aj or Tot al Fu nds Mak in g Tr an sf er s Fu nd Re serve Ho us in g Go ve rn mental Tr an sf ers O ut Ge neral Fu nd -$ 786 ,525 $ -$ -$ 786 ,525 $ Ce rt ifi cates of P ar tici pation - - 1,715,4 13 60 0,00 0 2,315 ,413 Ap pr op ri at ed R es er ve 13 2,83 5 - - - 132 ,835 In te rn al Serv ic e 38 2,93 9 - - - 382 ,939 No nma jo r Go ve rn me nt al 11 0,92 0 199 ,475 - - 310 ,395 Tot al T ransfer s In 62 6,69 4 $ 986 ,000 $ 1,715,4 13 $ 60 0,00 0 $ 3,928 ,107 $ Fu nd R eceiving T ra ns fers
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 46 NOTE 5 -CAPITAL ASSETS Changes in capital assets during the fiscal y ear are shown as follows : B al ance at Ju ne 30, 2010 A dj ustm ent s an d A ddit ions R et ir em ent s B alance a t Ju ne 30, 2 011 Ca pi ta l Asse ts not being d epr eci ated:La nd 24 ,999,455 $ 651 ,536 $ -$ 25 ,650,9 91 $ Co ns tru ct ion in P rogress 2,058,926 2,218 ,062 - 4,276,9 88 Tot al capit al asset s n ot b ei ng dep re ci at ed 27 ,058,381 2,869 ,598 - 29 ,927,9 79 Ca pi ta l Asse ts bei ng de pr ec ia te d:Bu il di ng s and Im pr ov em ents 17 ,434,047 9,204 ,253 1,088,6 96 25 ,549,6 04 Eq ui pm ent & V ehi cl e 8,870,157 373 ,032 89,5 60 9,153,6 29 In fr ast ru ct ur e - A ll O th er 8,938,883 1,469 ,490 - 10 ,408,3 73 In fr ast ru ct ur e - S tr eets 45 ,055,161 1,922 ,930 - 46 ,978,0 91 Tot al capit al asset s b ei ng depreciated 80 ,298,248 12 ,969 ,705 1,178,2 56 92 ,089,6 97 Le ss accum ul ated d epr eci at ion for:Bu il di ng s and Im pr ov em ents 4,917,886 365 ,809 237,9 72 5,045,7 23 Eq ui pm ent and Improv em ent s 5,866,381 643 ,443 70,1 58 6,439,6 66 In fr ast ru ct ur e - A ll O th er 1,065,735 246 ,135 - 1,311,8 70 In fr ast ru ct ur e - S tr eets 19 ,358,980 1,429 ,394 - 20 ,788,3 74 Tot al acccum ul ated dep re ci at io n 31 ,208,982 2,684 ,781 308,1 30 33 ,585,6 33 Ne t capi tal asset s bei ng d epreci ated 49 ,089,266 10 ,284 ,924 870,1 26 58 ,504,0 64 Go vernmental act ivity capi tal asset s, net 76 ,147,647 $ 13 ,154 ,522 $ 870,1 26 $ 88 ,432,0 43 $ Depreciation e xpense is cha rged to functions and programs based on their usage of the related assets. The amount allocated to each function or program is as follows: D ep re ci at io n Exp ense Ge ne ra l Go ve rn me nt 217,144 $ Publ ic Safety 286,293 Parks & P ubl ic W orks 1,883,544 Co mm uni ty D evel opm en t 96,089 Li brar y 67,728 Sani ta tio n 32,291 Re de vel opm ent 101,692 To ta l Go ve rn mental A cti vi ti es 2,684,781 $ Go vernm ent al A ct iv it ies
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 47 NOTE 6 -LONG -TERM OBLIGATIONS The Town generall y incurs long -term debt to finance projects or purchase asse ts, which will have useful lives equal to or greater than the related debt. T he Town’s bonded debt issues and transactions are summarized below in the schedule of changes in long -term debt and discussed in detail thereafter.Du e Due i n Int er es t Ma tu ri ty Ori gi na l Be gi nn in g En di ng Wit hi n On e Mo re Th an Lo ng -T er m De bt Ra te Dat e Is su e Ba lan ce Ad di ti on s De le ti on s Ba la nc e Ye ar On e Ye ar 19 92 C OP 5-9%20 12 2,96 0,0 00 $ 47 0,00 0 $ -$ 230 ,0 00 $ 24 0,00 0 $ -$ 240 ,0 00 $ 20 02 C OP 2.5-5 %20 31 10 ,72 5,0 00 9,1 20 ,00 0 - 255 ,0 00 8,86 5,00 0 26 5,0 00 8,600 ,0 00 20 10 C OP 2.5-4 .2 5%20 28 15 ,67 5,0 00 15 ,6 75 ,00 0 - - 15 ,6 75,00 0 53 0,0 00 15 ,1 45 ,0 00 Su bt ot al CO P's 29 ,36 0,0 00 25 ,2 65 ,00 0 - 485 ,0 00 24 ,7 80,00 0 79 5,0 00 23 ,9 85 ,0 00 Pr em iu ms 75 3,0 95 75 3,09 5 - 37 ,6 55 71 5,44 0 - 715 ,4 40 To ta l Lo ng -T er m De bt 30 ,11 3,0 95 $ 26 ,0 18 ,09 5 $ -$ 522 ,6 55 $ 25 ,4 95,44 0 $ 79 5,0 00 $ 24 ,7 00 ,4 40 $ 1992 Certificates of Partic ipation (1992 COPs)- T he Town issued 1992 COPs in the original principal amount of $2,960,000 dated August 1, 1992 to finance certain construction costs of the Town’s Parking Lot 4 Project, which was constructed on land located in the Lo s Gatos Central Re development Project Area. T he COPs are similar to bond debt as they a llow investors to participate in a share of guaranteed pay ments. Because they a re similar to debt, the present value of the total of the pay ments to be made is recorded as long -term debt . Principal pay ments are due annually on August 1 st , which interest pay ments pay able semi -annually on February 1 st a nd August 1 st . The Town has pledged motor vehicle license fee revenues as collateral for the repay ment of the Certificates.2002 Certifica tes of Pa rticipation (2002 COPs)- O n July 1 8, 2002, the Town and the Los Gatos Redevelopment Agency issued $10,725,000 in 2002 COPs, Series A, to finance the acquisition, construction, rehabilitation, equipping and improvement of several capital improveme nt projects. The Town has pledged lease pay ments of real property a nd 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 repay ment of the Certificates. Princip al pay ments are due annuall y on August 1st, with interest pay ments due semi -annually on February 1st and August 1st.20 10 C ertificates of Pa rticipation (20 10 C OPs)-On Ju ne 1 , 20 10 , the Town issued $1 5,675,000 in 2010 COPs to finance the acquisition, con struction, and improvement of a library o n the Town’s Ci v ic Center campus to be owned and operated by t he Town Principal pay ments are due annually o n August 1, with interest pay ments due semi -annuall y on February 1 and August 1. To assist the Town in pay ing the cost of acquisition and construction of various projects, the Town and its Redevelopment Agency e ntered into lease and reimbursement agreements in 1992 , 2 002 , and 2010 . Under the agreements, the Agency w ill use available net tax increment revenues resulting from the projects’ effect on land values to repay t he Town for all lease pay ments made by t he Town to the Agency u nder the lease agreements for the projects. Net tax increment revenues are all taxes allocated to and paid into the Redevelopment Ag ency Capital Projects Fund for the Project Area.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 48 Future debt service requirements of the 1992 , 2002 , and 2010 Certificates of Participation (collectively the “COPs”) as of June 30, 201 1 , were as follows:For t he Y ear End in g June 30 Pr inci pal In teres t Tot al 2012 79 5,000 $ 837 ,437 $ 1,632,4 37 $ 2013 1,16 5,000 1,043 ,596 2,208,5 96 2014 95 5,000 1,006 ,977 1,961,9 77 2015 99 0,000 968 ,830 1,958,8 30 2016 1,02 5,000 925 ,498 1,950,4 98 2017-2021 5,76 5,000 3,957 ,158 9,722,1 58 2022-2026 7,10 5,000 2,588 ,064 9,693,0 64 2027-2031 6,33 0,000 919 ,826 7,249,8 26 2032 65 0,000 16 ,250 666,2 50 Tot al C OP D eb t Se rv ic e 24,78 0,000 $ 12,263 ,636 $ 37 ,043,6 36 $ The Town m ust 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 to taled $94 0,387 at June 30, 2011 . The California Government Code requires these funds to be invested in accordance with Town ordinance, bond indentures or State statues. All these funds h ave been invested as permitted under the Code. NOTE 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. P r operties are assessed for the cost of the improvements. T hese assessments are pay able 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 is acting only a s an age nt and has no legal liability w ith respect to the pay ment of any indebtedness of the Downtown Parking Assessment District. T he principal amount of the non -obligated debt outstanding was $38 0,000 as of June 30, 2011 a nd was excluded from the Town’s financial statements.NOTE 8 -FUND BALANCES Fund balance for governmental funds is reported in classificat ions (nonspendable, restricted, committed, assigned, and unassigned) that comprise a hierarchy based p rimarily on the extent to which the government is bound to honor constraints on the specific purposes for whic h amounts in those funds can be spent.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 49 As of June 30, 2 011 , fund balance s were classified as follows:Nonspendable Advances to Other Funds reflect long -term loans to other funds that are not available for expenditure.Restricted Debt Service reflect s t he cash balances in the debt service funds that are re stricted for debt service pay ments.Capital Outlay funded from storm drain fees, constructi on taxes and debt proceeds are legally restricted for major capital projects.Redevelopment Projects funded from debt proceeds and other resources in the Redevelop ment Agency Capital Projects Funds are legall y restricted for major capital projects.Repairs and Maintenance reflect s l egally r estricted balances for repairs and maintenance of lighting and landscape property a nd open space propert y that are financed wit h special tax assessments on the benefiting propert y.Assigned Vasona Land Sale assigned fund balance w ill be used for acquisition and development of a new Town sports park.Open Space assigned fund balance will be used to make selective open space acqu isitions.Post Retirement Medical assigned fund balance w ill be used to aid in funding actua rially d etermined requirements for retiree medical costs .Parking assigned fund balance will be used to mitigate parking issues within the Town.Market Fluctuati ons assigned fund balance w ill be used to manage changes in fair values of investments . Sustainability assigned fund balance w ill be used to fund ongoing sustainability i nitiatives and programs . Productivity Enhancement assigned fund balance w ill be us ed to fund requests that result in streamlining or improving existing service levels.Economic Uncertainty assigned fund balance w ill be used to fund future fluctuations in the economy that are not currentl y foreseen. This designation is calculated at 25 % of the operating budget.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 50 Capital Projects assigned fund balance w ill be used for the acquisition and construction of capital facilities.Carryover assigned fund balance w ill be used for encumbered items re -appropriated in the following ye ar.Comcast PE G assigned fund balance w ill be used to fund capital improvements linked to the televising of council and planning commission meetings.Revenue Stabilization assigned fund balance w ill be used to mitigate the cy clical changes in locally generated revenues f rom temporary d ownturns in the local econom y, or "one -time" revenue losses where recovery of the revenue base is deemed likely in the near future.Special Revenue Fun d a ssigned fund balance w ill be used for the activities of the respective revenue fund .Debt Service assigned fund balance w ill be used to fund the future pay ments of principal and interest on long -term debt.NOTE 9 -EMPLOYEES' RETIREMENT PLAN Plan Description - T he Town of Lo s Gatos contributes to the California Public Employ ees R etirement Sy stem (PERS), a cost -sharing multiple -employer public employ ee defined benefit pension plan. PERS provides retirement and disability b enefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. P ERS acts a s a common investment and administrative agent for participating public entities within the State of California. B enefit provisions and all other requirements are established by s tate statute and Town ordinance. C opies of PERS' annual financial report ma y be obtained from their Executive Office, 400 P Street, Sacramento, CA 95814. Funding Policy - P articipants are required to contribute 7% (9% for safety e mploy ees) of their annual covered salary . T he Town is required to contribute at an actuariall y det ermined rate. T he rates for the fiscal ye ar ended June 30, 2011 was 14.431 % of annual covered pay roll for non -safet y (miscellaneous) and 33.575 % f or safety e mploy ees. T he contribution requirements of plan members and the Town are established and may be amended by PERS.Annual Pension Cost - F or fiscal ye ar ended June 30, 2011 , the Town's $2,934,287 a nnual pension cos t for PERS was equal to the Town's required and actual contributions. The required contribution was determined as part of the June 30, 2008 a ctuarial v aluation using the entry a ge normal actuarial cost method. T he actuarial assumptions included: (a) 7.75% i nvestment rate of return (net of administrative expenses); (b) projected annual salary i ncreases from 3.55% and 14.45% that vary by age, duration of service, and ty pe of employ ment; (c) 3.0% inflation; (d) 3.25% pay roll growth; and (e) individual salary growth based on a merit scale vary ing by d uration of employ ment coupled with an assumed annual inflation of 3.0% and an annual production growth of 0.25%. The actuarial value of PERS assets was determined using techniques that smooth the effects of short -t erm volatility i n the market value of investments over a three -year period (smoothed market value) depending on the size
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 51 of investment gains and/or losses. Initial unfunded liabilities are amortized over a closed period that depends on the plan’s date of e ntry i nto PERS. Subsequent plan amendments are amortized as a level percentage of pay roll over a closed 20 -ye ar 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 ye ar. If the plan’s accrued liability e xceeds the actuarial value of plan assets, then the amortization pay ment on the total unfunded liability m ay n ot be lower than the pay ment calculated over a 30 ye ar amortization peri od.Three Year Trend Information PERS Safety Plan: Fi scal Y ear An nu al P ensi on Percent age of Ne t Pen si on En ded C ost (APC ) A PC C ont ri bu te d O bli ga ti on 6/30 /2 009 1,6 33,42 6 100% - 6/30 /2 010 1,6 38,53 9 100% - 6/30 /2 011 1,7 30,79 6 100% - Miscellaneous Plan: Fi scal Y ear An nu al P ensi on Per cent age of Net P en si on E nd ed C ost (AP C) A PC C ont ri bu te d O bl ig at io n 6/30 /2 009 1,2 00,19 2 100% - 6/30 /2 010 1,4 02,93 3 100% - 6/30 /2 011 1,2 03,49 1 100% - Plan Actuarial Value and Funding Progress (Required Supplementary Information)The information presented below relates to the cost -sharing plans as a whole, of which the To wn of Los Gatos is one participating emplo ye r. Safety Plan: Un fu nd ed Ent ry A ge Act uairal Un fu nd ed An nual (Ov erfund ed)Va lu atio n Accrued Va lu e of (Ov erfund ed)Fund ed Co vered Li abil ity as %Dat e Li abil it y As sets Li abili ty Rat io Pa yr ol l of Pa yr ol l 2008 8,700,4 67,733 $ 7,46 4,927 ,716 $ 1,235 ,540,0 17 $ 85.8%91 4,840,596 $ 135 .1%2009 9,721,6 75,347 $ 8,02 7,158 ,724 $ 1,694 ,516,6 23 $ 82.6%97 3,814,168 $ 174 .0%2010 10,165,4 75,166 $ 8,47 0,235 ,152 $ 1,695 ,240,0 14 $ 83.3%95 5,980,815 $ 177 .3%Miscellaneous Plan: Unfund ed En try A ge Ac tuairal Un fu nd ed An nual (Overfund ed)Val uat io n Accrued Va lu e of (Ov erfund ed)Fund ed Co ver ed Li abil ity as %Dat e Li abi li ty As sets Li abili ty Ra ti o Pa yr ol l of Pa yrol l 2008 59,3 77,787 $ 53 ,904 ,084 $ 5,473,7 03 $ 90.8%9,643,094 $ 56 .8%2009 66,1 23,224 $ 56 ,676 ,749 $ 9,446,4 75 $ 85.7%9,101,528 $ 103 .8%2010 70,4 68,550 $ 59 ,225 ,131 $ 11 ,243,4 19 $ 84.0%8,888,743 $ 126 .5%
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 52 NOTE 10 -OTHER POSTEMPLOYMENT BENEFITS The Town recognize s t he cost of postemploy ment healthcare in the year when employ ee services are received, reports the acc umulated liability f rom prior ye ars, and provides information useful in assessing potential demands on the Town ’s future cash flows b ased on GASB Statement No. 45 , Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensi ons (GASB 45). Because the Town adopted the requirements of GASB 45 prospectivel y, recognition of the liability a ccumulated from prior ye ars will be phased in over ten ye ars, commencing with the 2009 liability .Plan Description -The Town provides the co ntribution to California Employ er’s Retiree Benefit Trust (CERBT), an agent multiple -employ er defined benefit healthcare plan administered by the PERS. The purpose of the CERBT Fund is to provide California government employ ers with a trust through which they m ay p refund retiree medical costs and Other Post Employ ment Benefits (OPEB). The Town uses CERBT as its investment vehicle and requests disbursements on an as needed basis to reimburse the Town for the cost of retiree health insurance benefits. Benef it provisions and all other requirements are established by s tate 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 -The contribution requi rements of plan members and the Town are established and may b e amended by t he Town. The required contribution is based on projected pay -as -yo u -go financing requirements, with an additional amount to prefund benefits as determined by t he Town. For the year e nded June 30, 2011 , the Town contributed $1,401,000 t o the plan, including $581,000 f or current premiums and an additional $820 ,000 to prefund benefits. Annual OPEB Cost and Net OPEB O bligation -As of June 30, 2011 and for the year t hen e nded, the Town’s Net OPEB Obligation (NOO) and Annual OPEB Cost were as follow s : NO O as of June 30, 20 10 2,024,86 3 $ An nual O PE B Cost An nu al R equ ir ed C ont ri bu ti on 1,990,00 0 In te rest o n N OO 117,00 0 NOO adj us tm en t (179,00 0) Net a nnual O PE B co ost 1,928,00 0 Co nt ri but io ns m ade (i ncl udes ben ef it paym ent s)(1,401,00 0) NO O as of June 30, 20 11 2,551,86 3 $ Trend Information Ac tu al An nual O PE B Em pl oy er Pe rc en ta ge Ne t OP EB Ye ar Co st Co nt ri bu ti on Co ntri bu te d Ob li gation 200 9 1,800 ,000 $ 74 6,29 2 $ 41 %1,0 53,70 8 $ 201 0 1,921 ,000 94 9,84 5 49 %2,0 24,86 3 201 1 1,928 ,000 1,4 01,00 0 73 %2,5 51,86 3
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 53 Funded Status and Funding Progr ess -As of June 30 , 20 11 , the most recent actuarial valuation date, the plan was 8 .8 % funded. The actuarial accrued liability (AAL) for benefits was $22,121 ,000 a nd the actuarial value of plan assets was approximately $1,947 ,000 , resulting in an unfunded actuarial accrued liability (UAAL) of $20,174 ,000 . The covered pay roll (annual pay roll of active employ ees covered by the plan) was $13,477 ,000 and the ratio of UAAL to the covered pay roll was 150 %.Actuarial Methods and Assumptions -Projections of benef its for financial reporting purposes are based on the substantive plan (the plan as understood by t he employ er and the plan members) and include the ty pes of benefits provided at the time of each valuation and the historical pattern of sharing of benefit c osts between the employ er and plan members to that point. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The actuarial methods and assumpti ons used include techniques that are designed to reduce the effects of short -term volatility i n actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term perspective of the calculations. In the June 30 , 20 11 a ctuarial v aluation, the entry a ge normal actuarial cost method was used. The actuarial assumptions used in the valuation are as follows: 1.Ultimate investment return of 7.25% (upward trend 0.25%-0.30% per y ear to 7.25 % in FY 17/18 )2.Projected salary increases of 3 .25%. 3.The annual healthcare cost trend ultimate rate is 5 %. The select rates were 9%-9.4 % depending on plans but were redu ced to the ultimate rate in 2021 . 4.Total infl ation is assumed to increase 3 % annually . 5.Amortization method: L evel percentage of pay r oll. 6.Amortization period: a.30 -ye ar closed period for initial unfunded actuarial accrued liability (UAAL) (27 y ears remaining as of June, 30 , 2011 ) b.20 -ye ar closed period for method, assumption, and plan changes c.15 -ye ar closed period for gains and losses; and d.Maximum 30 y ear combined period 7.Actuarial method for valuing assets: Investment gains and losses spread over a 5 -ye ar rolling period, not less than 80% nor more than 120% of market value. Plan Actuarial Value and Funding Progress (Required Supplement ary Information)Un fund ed Ent ry A ge Ac tu ai ra l Un fu nd ed An nua l (Ov erfun ded )Va lu ati on Ac cr ue d Va lu e of (O ve rf un ded)Fu nded Co ve re d Li abi li ty as %Dat e Li ab il it y As set s Li abili ty Ra ti o Payroll of Pay rol l 20 08 14,26 5,000 $ -$ 14 ,265,000 $ 0.0%13 ,372,0 00 $ 106.7%20 10 17,71 2,000 425 ,000 17 ,287,000 2.4%13 ,477,0 00 128.3%20 11 22,12 1,000 1,947 ,000 20 ,174,000 8.8%13 ,477,0 00 149.7%
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 54 NOTE 11 -RISK MANAGEMENT The Town participates in the following public entity r isk pools through formally o rganized and separate legal entities. The Town does not have an equit y interest in the joint ventures. These entities exer cise full powers and authorities within the scope of the related agreements including the preparation of annual budgets, accountability f or all funds, the power to make and execute contracts and the right to sue and be sued. O bligations and liabilities of t he 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)- T he Town participates in ABAG, which covers gen eral liability c laims in the amount up to $5,000,000 plus $15,000,000 in excess liability f or total coverage of $20,000,000 per occurrence. The Town has a deductible or uninsured liability o f up to $50,000 per claim. A BAG also provides all risk property c overage of $100,000,000, excluding flood and earthquake coverage. T he Town has a $5,000 deductible for propert y damage and a $10,000 deductible for vehicle damage. O nce the Town’s deductible is met, ABAG becomes responsible for pay ment of all claims up t o the limit. Condensed full accrual basis audited financial information of ABAG as of and for the ye ar ended June 30, 2010 , as provided by ABAG, P.O. Box 2050, Oakland, CA 94604, is a s follows:Tot al A ss et s 50 ,4 36 ,6 28 $ Tot al L ia bi li tie s 18 ,6 40 ,5 21 Ne t As se ts 31 ,7 96 ,1 07 $ Tot al O pe ra ti ng R eve nu e 9,41 2,34 1 $ Tot al O pe ra ti ng E xp en se 10 ,8 44 ,5 77 Ne t Op er at in g Inc om e (1 ,43 2,23 6) Ge ne ra l Re ve nu e 1,87 3,37 0 Cha ng e i n Ne t As se ts 44 1,13 4 Begi nn in g Ne t As se ts 31 ,3 54 ,9 73 End in g Net As se ts 31 ,7 96 ,1 07 $ Local Agency Workers’ Compensation Joint Powers Authority (LAWCX)- T he Town is a member of LAWCX for workers compensation claims coverage. T he Town has a $250,000 self -insured retention level or uninsured liability f or all employ ees. O nce the Town’s deductible is met, LAWCX becomes responsible for claims up to $1,000,000. F or claims greater than $1,000,000, LAWCX has a commercial policy p roviding coverage. F inancial statements may b e obtained from LAWCX at 6371 Auburn Blvd., Suite B, Citr us Heights, California, 94604 -2050.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 55 Condensed full accrual basis audited financial information of LAWCX as of and for the ye ar ended June 30, 2010 , is as follows: Tot al A ss et s 42 ,2 35 ,3 14 $ Tot al L ia bi li tie s 29 ,8 95 ,8 91 Ne t As se ts 12 ,3 39 ,4 23 $ Tot al O pe ra ti ng R eve nu e 10 ,6 77 ,7 74 $ Tot al O pe ra ti ng E xp en se 8,31 5,83 1 Ne t Op er at in g Inc om e 2,36 1,94 3 Ge ne ra l Re ve nu e 2,48 1,80 1 Cha ng e i n Ne t As se ts 4,84 3,74 4 Begi nn in g Ne t As se ts 7,49 5,67 9 End in g Net As se ts 12 ,3 39 ,4 23 $ The Town has not significantly r educe d i ts insurance coverage from the prior ye ar and settlements have not exceeded insurance coverage for the past three ye ars.Liability for Uninsured Claims - The Town is required to record its liability for uninsured claims and to r eflect the current portion of this liability a s 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.The change in W orkers’ Compensation and Self Insurance Service Funds’ claims liabilities, is based on historical trend information provided by i ts third part y administrator and was computed as follows as of June 30, 2011 :Wo rk ers' Se lf Co mp en sat io n Insurance In te rn al Inter na l Ser vi ce Fun d Ser vi ce F und To tal Cl ai ms payab le b al ance - June 30 , 2009 517,8 66 $ 122 ,540 $ 64 0,406 $ Cl ai ms i nc ur red 1,880,4 61 229 ,875 2,11 0,336 In c./(D ec.) in esti ma te d l iabil it y for p ri or cl ai ms - (2 ,219) (2 ,219 ) Cl ai ms paid (1 ,966,4 48) (290 ,036) (2,25 6,484 )Cl ai ms payab le b al ance - June 30 , 2010 431,8 79 60 ,160 49 2,039 Cl ai ms i nc ur red 481,8 29 374 ,916 85 6,745 In c./(D ec.) in esti ma te d l iabil it y for p ri or cl ai ms - - - Cl ai ms paid (3 99,5 85) (406 ,083) (80 5,668 ) Cl ai ms payab le b al ance - June 30 , 2011 514,1 23 $ 28 ,993 $ 54 3,116 $
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 56 NOTE 12 -REDEVELOPMENT AGENCY DISSOLUTION ABx1 26, which calls for the dissolution of California Redevelopment Agencies, was signed into law on June 29, 2011, by t he Governor of the State of California, and was subsequently u phel d by t he California State Supreme Court on December 29, 2011. Effective February 1 , 2012, redevelopment agencies are dissolved and must suspend all activities, with the exception of the implementation of existing contracts and pay ment of enforc eable oblig ations entered into prior to February 1, 2012.Under ABx1 26, redevelopment assets and liabilities except existing housing fund balance must be transferred to a “successor agency ” of the former redevelopment agency . T he Town of Los Gatos has elected to b e the successor agency for the Los Gatos Redevelopment Agency and Housing Agency . ABx1 26 also directs the State Controller of the State of California to review transfers of assets from former redevelopment agencies to other public agencies occurring aft er January 1 , 2011.Except for enforceable obligations of the Redevelopment Agency , all other available assets must be transferred to the successor agency of the former redevelopment agency . It is possible that the County o r State, based on their interpr etat ions of ABx1 26 may a ttempt to invalidate certain prior Town/Agency a ctions, including the transfer of interagency a ssets or advances of funds and/or repay ment of loans to the Town that may r esult in a loss of funds. The Town will also be fiscally i m pacted by s ig nificant reductions in administrative and program reimbursements previously paid by the Redevelopment Agency .NOTE 13 - SUPPLEMENTAL EDUCATIONAL AUGMENTATION FUNDS (SERAF)On July 2 4, 2009, the State Legislature passed Assembl y Bill (AB) 26 4x, which requires redevelopment agencies statewide to deposit a total of $2.05 billion of propert y tax increment in county “Supplemental” Educational Revenue Augmentation Funds (SERAF) to be distributed to meet the State’s Proposition 98 obligations to sc hools. The SERAF revenue shift of $2.05 billion will be made over two years, $1.7 billion in fiscal ye ar 2009 -2010 and $350 million in fiscal ye ar 2010 -2011. The SERAF would then be paid to school districts and the count y offices of education which have st udents residing in redevelopment project areas, or residing in affordable housing projects financially assisted by a r edevelopment agency , thereby r elieving the State of payments to those schools. T he Agency paid approximately $2.2 million to SERAF due in M ay 2 010 from the Certificates of Participation Fund. T he Agency ’s share of this revenue shift for the ye ar ended June 30, 2011 w as $457,334 .NOTE 14 -COMMITMENTS AND CONTINGENCIES The Town participates in several federal and state grant programs. These are subject to examination by g rantors and the amount, if any , of disallowed expenditures cannot be determined at this time. T he Town expects such amounts, if any , to be immaterial.The Town is subject to litigation arising from the normal course o f business. T he Town Attorney believes there is no pending litigation which is likely t o have a material adverse effect on the financial position of the Town.
TOWN OF LOS GATOS, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2011 57 As of June 30, 2011, the Town has open constructi on contracts. The remaining commitment on the construction contracts was approximately $4,551,369 NOTE 15 - TOWN GRANTS AND COOPERATIVE AGREEMENTS Public Improvement Grants and Cooperative Agreements In January of 2011, the Agency entered into a public improvement grant and cooperative agreement with the Town for the purpose of funding the acquisiti on of public land and designing and constructing various public improvements to be owned by the Town provided that the projects are in accordance with the Agency’s five year implementation plan and redevelopment plan. The improvement plan, as indentified in the agreement, calle d for approximately $24 million to be granted to th e Town for the following projects: a. Expansion and improvement of cu rrent and new downtown parking b. Highway 9 improvements from Highway 17 to Monte Sereno c. Almond Grove Area street, side walk and other improvements d. Downtown Los Gatos gateways, signage, banners and art e. Storm drain, retaining wall, street and other improvements f. New Los Gatos library building During the fiscal year ended June 30, 2011, $6,356,550 was granted to the Town fr om the Certificates of Participation Fund. Affordable Housing Cooperative Agreement In March of 2011, the Agency entere d into an affordable housing coope rative agreement with the Town for the purpose of funding affordable housing projects and programs to be developed and/or administered by the Town in accordance with the Agency’s five y ear implementation plan and redevelopment plan. The improvement plan, as indentified in the agreement, called for approximately $16 million to be granted to the Town for the following projects: a. Development of affordable housing at 224 Main St. b. Development of affordable housing at Dittos Lane c. Acquisition of property and development of affordable housing on Knowles Ave d. Partnership with Senior Housing Solutions fo r the creation of senior housing in Los Gatos e. Partnerships for the conversion of existing residen tial developments dedicated to affordable housing f. Grants to the Santa Clara County Housing Trus t for the development of affordable housing. During the fiscal year ended June 30, 2011, $5,721,969 was granted to the Town from the Housing Set-Aside Fund. $621,969 remained as a payable to the Town as of June 30, 2011.
Supplementary I nformation
TOWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 MAJOR GOVERNMENTAL FUND SCHEDULES (OTHER THAN THE GENERAL FUND)58 Schedule of Revenue, Expenditures and Changes in Fund Balances – B udget and Actual (GAAP):Appropriated Reserves Fund i s used to account for resources provided for capital projects not fully funded from other sources.Certificates of Particip ation Fund is used to account for the 1992 and 2002 Certificates of Participation issued to finance the Parking Lo t #4 project ad several capital improvement projects throughout the Town.Redevelopment Agency Affordable Housing Fund i s used for the implem entation of the Agency ’s required Affordable Housing Set -Aside Program obligations
Variance OriginalFinal Positive BudgetBudgetActual(Negative)REVENUES Other taxes80,000 $ 80,000 $ 263,049 $ 183,049 $ Intergovernmental1,233,941 2,056,426 1,547,778 (508,648) Charges for services566,000 415,495 402,276 (13,219) Other- - - - Total Revenues1,879,941 2,551,921 2,213,103 (338,818) EXPENDITURES Sanitation and other- - 20,500 (20,500) Capital outlay25,417,045 14,698,949 14,083,490 615,459 Total Expenditures25,417,045 14,698,949 14,103,990 594,959 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (23,537,104) (12,147,028) (11,890,887) 256,141 OTHER FINANCING SOURCES (USES) Operating transfers in992,976 1,056,145 986,000 (70,145) Operating transfers (out)(10,000) (10,000) (132,835) (122,835) Total Other Financing Sources (Uses)982,976 1,046,145 853,165 (192,980) CHANGE IN FUND BALANCE (22,554,128)$ (11,100,883)$ (11,037,722) 63,161 $ BEGINNING FUND BALANCE 24,454,347 ENDING FUND BALANCE 13,416,625 $ BUDGET AND ACTUAL (GAAP)FOR THE FISCAL YEAR ENDED JUNE 30, 2011 TOWN OF LOS GATOS, CALIFORNIA APPROPRIATED RESERVES FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE 59
Variance OriginalFinal Positive BudgetBudgetActual(Negative)REVENUES Property taxes8,029,440 $ 8,029,440 $ 9,316,795 $ 1,287,355 $ Less ERAF payment(456,910) (456,910) (739,732) (282,822) Interest186,700 186,700 5,990 (180,710) Other2,213,470 2,213,470 1,354,881 (858,589) Total Revenues9,972,700 9,972,700 9,937,934 (34,766) EXPENDITURES Redevelopment5,988,495 12,345,045 12,082,551 262,494 Debt Service: Principal1,120,000 1,120,000 485,000 635,000 Interest & fees1,247,475 1,247,475 1,019,881 227,594 Total Expenditures8,355,970 14,712,520 13,587,432 1,125,088 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,616,730 (4,739,820) (3,649,498) 1,090,322 OTHER FINANCING SOURCES (USES) Operating transfers in- - - - Operating transfers (out)(2,205,890) (2,205,890) (2,315,413) (109,523) Total Other Financing Sources (Uses)(2,205,890) (2,205,890) (2,315,413) (109,523) CHANGE IN FUND BALANCE (589,160)$ (6,945,710)$ (5,964,911) 980,799 $ BEGINNING FUND BALANCE 7,419,222 ENDING FUND BALANCE 1,454,311 $ BUDGET AND ACTUAL (GAAP)FOR THE FISCAL YEAR ENDED JUNE 30, 2011 TOWN OF LOS GATOS, CALIFORNIA CERTIFICATES OF PARTICIPATION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE 60
Variance OriginalFinal Positive BudgetBudgetActual(Negative)REVENUES Interest125,000 $ 186,700 $ (3,033)$ (189,733)$ Other- - 22 22 Total Revenues125,000 186,700 (3,011) (189,711) EXPENDITURES Redevelopment527,548 6,727,548 6,200,921 526,627 Capital outlay3,000,000 3,000,000 651,537 2,348,463 Total Expenditures3,527,548 9,727,548 6,852,458 2,875,090 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (3,402,548) (9,540,848) (6,855,469) 2,685,379 OTHER FINANCING SOURCES (USES) Operating transfers in1,605,890 1,605,890 1,715,413 109,523 Operating transfers (out)- - - - Total Other Financing Sources (Uses)1,605,890 1,605,890 1,715,413 109,523 CHANGE IN FUND BALANCE (1,796,658)$ (7,934,958)$ (5,140,056) 2,794,902 $ BEGINNING FUND BALANCE 5,140,056 ENDING FUND BALANCE -$ BUDGET AND ACTUAL (GAAP)FOR THE FISCAL YEAR ENDED JUNE 30, 2011 TOWN OF LOS GATOS, CALIFORNIA REDEVELOPMENT AGENCY HOUSING SET ASIDE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE 61
T OWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 NONMAJOR GOVERNMENTAL FUNDS 62 Capital Projects Funds :Storm Drain Basin Funds were established to account for fees paid in conjunction with the development in specified drainage areas.Construction Tax Funds w ere 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 S treets and Highway s Code Sections 2106, 2107 and 2107.5. T he revenues must be used for the maintenance and construction of streets.Redevelopment Agency Capital Projects Fund is used to account for redevelopment projects and related propert y tax revenue.Special Revenue Funds :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 w as established to compl y with obligations und er the National Pollutant Discharge Elimination sy stem permit issued by the California Regional Water Quality Control Board.Lighting a nd Landscape F und was established to account for maintenance of trees, landscaping, irrigation s ystems and lighting with in the boundaries of Tract No. 8439.
Storm Construction GasRedevelopmentTotal DrainsTax TaxAgency CapitalCapital Projects FundsFundFundProjects Funds ASSETS Cash & Investments866,456 $ 2,385,666 $ 73,264 $ 531,805 $ 3,857,191 $ Restricted cash & investments- - - 730,953 730,953 Receivables: Accounts- - - - - Intergovernmental Receivable- - - - - Total Assets866,456 $ 2,385,666 $ 73,264 $ 1,262,758 $ 4,588,144 $ LIABILITIES Accounts Payable-$ -$ -$ 13,913 $ 13,913 $ Accrued payroll and benefits- - - 5,797 5,797 Due to other funds- - - - - Deferred revenue- - - - - Total Liabilities- - - 19,710 19,710 FUND BALANCE Restricted for: Redevelopment Projects- - - 1,243,048 1,243,048 Capital Projects 866,456 2,385,666 73,264 - 3,325,386 Repairs and Maintenance- - - - - Unassigned- - - - - Total Fund Balances866,456 2,385,666 73,264 1,243,048 4,568,434 Total Liabilities and Fund Balance866,456 $ 2,385,666 $ 73,264 $ 1,262,758 $ 4,588,144 $ (Continued)CAPITAL PROJECTS FUNDS TOWN OF LOS GATOS, CALIFORNIA JUNE 30, 2011 COMBINING BALANCE SHEETS NONMAJOR GOVERNMENTAL FUNDS 63
ASSETS Cash & Investments Restricted cash & investments Receivables: Accounts Intergovernmental Receivable Total Assets LIABILITIES Accounts Payable Accrued payroll and benefits Due to other funds Deferred revenue Total Liabilities FUND BALANCE Restricted for: Redevelopment Projects Capital Projects Repairs and Maintenance Unassigned Total Fund Balances Total Liabilities and Fund Balance Community Non-PointTotalTotal Non Major DevelopmentSourceLighting andSpecial RevenueGovernmental FundMaintenanceLandscapingFunds Funds -$ -$ 109,099 $ 109,099 $ 3,966,290 $ - - - - 730,953 - 135,000 - 135,000 135,000 246,128 - 2,795 248,923 248,923 246,128 $ 135,000 $ 111,894 $ 493,022 $ 5,081,166 $ 6,663 $ 478 $ 383 $ 7,524 $ 21,437 $ - 2,664 - 2,664 8,461 111,382 73,715 - 185,097 185,097 210,115 - - 210,115 210,115 328,160 76,857 383 405,400 425,110 - - - - 1,243,048 - - - - 3,325,386 - - 111,511 111,511 111,511 (82,032) 58,143 - (23,889) (23,889) (82,032) 58,143 111,511 87,622 4,656,056 246,128 $ 135,000 $ 111,894 $ 493,022 $ 5,081,166 $ (Concluded) SPECIAL REVENUE FUNDS TOWN OF LOS GATOS, CALIFORNIA NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2011 COMBINING BALANCE SHEETS 64
Storm Construction GasRedevelopmentTotal DrainTax TaxAgency CapitalCapital Projects FundsFundFundProjects Funds REVENUES Property Taxes-$ -$ -$ -$ -$ Other Taxes157,656 31,989 - - 189,645 Intergovernmental- - 728,852 - 728,852 Charges for Services- - - - - Interest10,781 30,662 5,489 4,250 51,182 Other - - - - - Total Revenues168,437 62,651 734,341 4,250 969,679 EXPENDITURES Current: Parks and Public Works- - - - - Community Services- - - - - Sanitation and Other- - - - - Redevelopment 674,654 674,654 Capital Outlay:24,690 - 914,546 95,561 1,034,797 Total Expenditures24,690 - 914,546 770,215 1,709,451 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 143,747 62,651 (180,205) (765,965) (739,772) OTHER FINANCING SOURCES (USES) Transfers in- - - 600,000 600,000 Transfers (out)- - (106,000) - (106,000) Total Other Financing Sources (Uses)- - (106,000) 600,000 494,000 Changes in Fund Balances143,747 62,651 (286,205) (165,965) (245,772) Fund Balances - Beginning of year722,709 2,323,015 359,469 1,409,013 4,814,206 Fund Balances - End of year866,456 $ 2,385,666 $ 73,264 $ 1,243,048 $ 4,568,434 $ (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2011 CAPITAL PROJECTS FUNDS TOWN OF LOS GATOS, CALIFORNIA NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 65
REVENUES Property Taxes Other Taxes Intergovernmental Charges for Services Interest Other Total Revenues EXPENDITURES Current: Parks and Public Works Community Services Sanitation and Other Redevelopment Capital Outlay: Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers (out) Total Other Financing Sources (Uses)Changes in Fund Balances Fund Balances - Beginning of year Fund Balances - End of year Community Non-PointTotal DevelopmentSourceLighting andSpecial Revenue FundMaintenanceLandscapingFundsTotal -$ -$ 37,760 $ 37,760 $ 37,760 $ - - - - 189,645 136,960 - - 136,960 865,812 - 135,000 - 135,000 135,000 9,896 - 1,333 11,229 62,411 10,600 - 64 10,664 10,664 157,456 135,000 39,157 331,613 1,301,292 - - 28,358 28,358 28,358 225,318 - - 225,318 225,318 - 117,061 - 117,061 117,061 674,654 - - - - 1,034,797 225,318 117,061 28,358 370,737 2,080,188 (67,862) 17,939 10,799 (39,124) (778,896) - - - - 600,000 (199,475) - (4,920) (204,395) (310,395) (199,475) - (4,920) (204,395) 289,605 (267,337) 17,939 5,879 (243,519) (489,291) 185,305 40,204 105,632 331,141 5,145,347 (82,032)$ 58,143 $ 111,511 $ 87,622 $ 4,656,056 $ (Concluded) SPECIAL REVENUE FUNDS AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2011 TOWN OF LOS GATOS, CALIFORNIA COMBINING SCHEDULE OF REVENUES, EXPENDITURES NONMAJOR GOVERNMENTAL FUNDS 66
TOWN OF LOS GATOS, CALIFORNIA BUDGETED NONMAJOR FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL (GAAP)FOR THE FISCAL YEAR ENDED JUNE 30, 2011 VarianceVariance PositivePositive BudgetActual(Negative)BudgetActual(Negative)REVENUES Property taxes-$ -$ -$ -$ -$ -$ Other taxes- - - - - - Intergovernmental232,045 136,960 (95,085) - - - Charges for services- - - 135,000 135,000 - Interest12,500 9,896 (2,604) - - - Other - 10,600 10,600 - - - Total Revenues244,545 157,456 (87,089) 135,000 135,000 - EXPENDITURES Parks and public works- - - - - - Community services281,241 225,318 55,923 - - - Sanitation and other- - - 137,434 117,061 20,373 Redevelopment- - - - - - Capital outlay- - - - - - Total Expenditures281,241 225,318 55,923 137,434 117,061 20,373 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (36,696) (67,862) (31,166) (2,434) 17,939 20,373 OTHER FINANCING SOURCES (USES) Operating transfers in- - - - - - Operating transfers (out)(200,620) (199,475) 1,145 - - - Total Other Financing Sources (Uses)(200,620) (199,475) 1,145 - - - CHANGE IN FUND BALANCE (237,316)$ (267,337) (30,021)$ (2,434)$ 17,939 20,373 $ BEGINNING FUND BALANCE 185,305 40,204 ENDING FUND BALANCE (82,032)$ 58,143 $ (Continued)COMMUNITY DEVELOPMENT BLOCK GRANT NON-POINT SOURCE MAINTENANCE 67
REVENUES Property taxes Other taxes Intergovernmental Charges for services Interest Other Total Revenues EXPENDITURES Parks and public works Community services Sanitation and other Redevelopment Capital outlay Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Operating transfers in Operating transfers (out) Total Other Financing Sources (Uses)CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE TOWN OF LOS GATOS, CALIFORNIA BUDGETED NONMAJOR FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL (GAAP)FOR THE FISCAL YEAR ENDED JUNE 30, 2011 VarianceVariance PositivePositive BudgetActual(Negative)BudgetActual(Negative)37,760 $ 37,760 $ -$ -$ -$ -$ - - - 96,000 157,656 61,656 - - - - - - - - - - - - 2,440 1,333 (1,107) 10,540 10,781 241 - 64 64 - - - 40,200 39,157 (1,043) 106,540 168,437 61,897 35,780 28,358 7,422 - - - - - - - - - - - - - - - - - - - - - - - - 25,000 24,690 310 35,780 28,358 7,422 25,000 24,690 310 4,420 10,799 6,379 81,540 143,747 62,207 - - - - - - (4,920) (4,920) - - - - (4,920) (4,920) - - - - (500)$ 5,879 6,379 $ 81,540 $ 143,747 62,207 $ 105,632 722,709 111,511 $ 866,456 $ (Continued)LIGHTING AND LANDSCAPINGSTORM DRAIN FUNDS 68
REVENUES Property taxes Other taxes Intergovernmental Charges for services Interest Other Total Revenues EXPENDITURES Parks and public works Community services Sanitation and other Redevelopment Capital outlay Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Operating transfers in Operating transfers (out) Total Other Financing Sources (Uses)CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE TOWN OF LOS GATOS, CALIFORNIA BUDGETED NONMAJOR FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL (GAAP)FOR THE FISCAL YEAR ENDED JUNE 30, 2011 VarianceVariance PositivePositive BudgetActual(Negative)BudgetActual(Negative)-$ -$ -$ -$ -$ -$ 15,000 31,989 16,989 - - - - - - 791,118 728,852 (62,266) - - - - - - 32,240 30,662 (1,578) 4,930 5,489 559 - - - - - - 47,240 62,651 15,411 796,048 734,341 (61,707) - - - - - - - - - - - - - - - - - - - - - - - - - - - 914,546 914,546 - - - - 914,546 914,546 - 47,240 62,651 15,411 (118,498) (180,205) (61,707) - - - - - - - - - (106,000) (106,000) - - - - (106,000) (106,000) - 47,240 $ 62,651 15,411 $ (224,498)$ (286,205) (61,707)$ 2,323,015 359,469 2,385,666 $ 73,264 $ (Continued)CONSTRUCTION TAXGAS TAX 69
REVENUES Property taxes Other taxes Intergovernmental Charges for services Interest Other Total Revenues EXPENDITURES Parks and public works Community services Sanitation and other Redevelopment Capital outlay Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Operating transfers in Operating transfers (out) Total Other Financing Sources (Uses)CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE TOWN OF LOS GATOS, CALIFORNIA BUDGETED NONMAJOR FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL (GAAP)FOR THE FISCAL YEAR ENDED JUNE 30, 2011 VarianceVariance PositivePositive BudgetActual(Negative)BudgetActual(Negative)-$ -$ -$ 37,760 $ 37,760 $ -$ - - - 111,000 189,645 78,645 - - - 1,023,163 865,812 (157,351) - - - 135,000 135,000 - 25,000 4,250 (20,750) 87,650 62,411 (25,239) - - - - 10,664 10,664 25,000 4,250 (20,750) 1,394,573 1,301,292 (93,281) - - - 35,780 28,358 7,422 - - - 281,241 225,318 55,923 - - - 137,434 117,061 20,373 704,125 674,654 29,471 704,125 674,654 29,471 95,837 95,561 276 1,035,383 1,034,797 586 799,962 770,215 29,747 2,193,963 2,080,188 113,775 (774,962) (765,965) 8,997 (799,390) (778,896) 20,494 600,000 600,000 - 600,000 600,000 - - - - (311,540) (310,395) 1,145 600,000 600,000 - 288,460 289,605 1,145 (174,962)$ (165,965) 8,997 $ (510,930)$ (489,291) 21,639 $ 1,409,013 5,145,347 1,243,048 $ 4,656,056 $ (Concluded)TOTALS REDEVELOPMENT AGENCY CAPITAL PROJECT 70
TOWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPOR T FOR THE FISCAL YEAR ENDED JUNE 30, 2011 PROPRIETARY FUNDS INTERNAL SERVICE FUNDS 71 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 fun ds does not extend to internal service funds because they a re used for internal activities only . I n 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 r eplacement of major Town equipment and all vehicle replacement.Workers’ Compensation Fund w as established to account for future claims that may o ccur related to workers compensation injuries.Self Insurance Fund was established to account for future g eneral liability c laims against the Town.Stores Fund w as established to account for the purchase of photocopy e quipment, postage and bulk meter expenses.Management Information Fund was established to account for the replacement of management informatio n computer s ystems 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 a nd repair for all Town buildings.
EquipmentWorker'sSelfManagementVehicleBuilding ReplacementCompInsuranceStoresInformationMaintenanceMaintenanceTotal ASSETS Cash & Investments 3,114,473 $ 3,282,989 $ 2,127,883 $ 237,594 $ 2,393,689 $ 425,716 $ 1,014,117 $ 12,596,461 $ Restricted Cash & Investments - 46,285 - - - - - 46,285 Receivables: Accounts - 472 - 180 387 465 208 1,712 Materials, Supplies and Deposits - - - 9,054 - 33,453 - 42,507 Equipment (Net)- - - - - 19,496 10,730 30,226 Total Assets 3,114,473 $ 3,329,746 $ 2,127,883 $ 246,828 $ 2,394,076 $ 479,130 $ 1,025,055 $ 12,717,191 $ LIABILITIES Accounts Payable 20,265 2,648 28,437 1,183 115,348 34,510 65,812 268,203 Accrued Payroll and Benefits 318 3,091 4,385 - 13,226 5,801 5,727 32,548 Due to Other Governments - - - - - 3 71 74 Claims Payable - 514,123 28,993 - - - - 543,116 Total Liabilities 20,583 $ 519,862 $ 61,815 $ 1,183 $ 128,574 $ 40,314 $ 71,610 $ 843,941 $ NET ASSETS Invested in capital assets, net of related debt -$ -$ -$ -$ -$ 19,496 $ 10,730 $ 30,226 $ Restricted for: workers compensation claims - 46,285 - - - - - 46,285 Unrestricted 3,093,890 2,763,599 2,066,068 245,645 2,265,502 419,320 942,715 11,796,739 Total Net Assets 3,093,890 $ 2,809,884 $ 2,066,068 $ 245,645 $ 2,265,502 $ 438,816 $ 953,445 $ 11,873,250 $ TOWN OF LOS GATOS, CALIFORNIA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET ASSETS JUNE 30, 2011 72
EquipmentWorker'sSelfManagementVehicleBuilding ReplacementCompInsuranceStoresInformationMaintenanceMaintenanceTotal OPERATING REVENUES Charges for services 341,280 $ 655,244 $ 500,056 $ 111,063 $ 983,596 $ 487,600 $ 849,000 $ 3,927,839 $ Other 28,245 490 - 2,478 830 1,089 132,770 165,902 - Total Operating Revenues 369,525 655,734 500,056 113,541 984,426 488,689 981,770 4,093,741 OPERATING EXPENSES Salaries and benefits 9,289 89,585 111,295 - 409,111 175,576 162,970 957,826 Insurance expenses - 225,240 225,661 - - - - 450,901 Depreciation expenses - - - - - 6,772 4,926 11,698 Services and supplies 3,567 256,400 175,667 124,253 497,266 296,054 680,599 2,033,806 Total Operating Expenses 12,856 571,225 512,623 124,253 906,377 478,402 848,495 3,454,231 Operating Income (loss)356,669 84,509 (12,567) (10,712) 78,049 10,287 133,275 639,510 Transfers (in)- - - - - - - - Transfers (out)(359,739) - - - (23,200) - - (382,939) Net Transfers (359,739) - - - (23,200) - - (382,939) Change in Net Assets (3,070) 84,509 (12,567) (10,712) 54,849 10,287 133,275 256,571 BEGINNING NET ASSETS 3,096,960 2,725,375 2,078,635 256,357 2,210,653 428,529 820,170 11,616,679 ENDING NET ASSETS 3,093,890 $ 2,809,884 $ 2,066,068 $ 245,645 $ 2,265,502 $ 438,816 $ 953,445 $ 11,873,250 $ TOWN OF LOS GATOS, CALIFORNIA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 73
EquipmentWorker'sSelfManagementVehicleBuilding ReplacementCompInsuranceStoresInformationMaintenanceMaintenanceTotal CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 369,525 $ 655,262 $ 500,056 $ 113,361 $ 984,697 $ 488,544 $ 1,000,966 $ 4,112,411 $ Payments to suppliers (748) - - (124,479) (499,315) (296,258) (670,338) (1,591,138) Payments to employees (9,289) (89,466) (111,323) - (408,811) (175,719) (162,822) (957,430) Claims paid - (399,585) (406,083) - - - - (805,668) Net Cash Provided (Used) by Operating Activities 359,488 166,211 (17,350) (11,118) 76,571 16,567 167,806 758,175 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers In - - - - - - - - Transfers Out (359,739) - - - (23,200) - - (382,939) Net Cash Provided (Used) by Noncapital Financing Activities (359,739) - - - (23,200) - - (382,939) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of Capital Assets - - - (2,574) - - - (2,574) Net Cash Used by Capital and Related Financing Activities - - - (2,574) - - - (2,574) Net Increase(Decrease) in Cash and Investments (251) 166,211 (17,350) (13,692) 53,371 16,567 167,806 372,662 Cash and investments - beginning of year 3,114,724 3,163,063 2,145,233 251,286 2,340,318 409,149 846,311 12,270,084 Cash and investments - end of year 3,114,473 $ 3,329,274 $ 2,127,883 $ 237,594 $ 2,393,689 $ 425,716 $ 1,014,117 $ 12,642,746 $ Reconciliation of Operating Income to Cash Flows from Operating Activities: Operating Income 356,669 $ 84,509 $ (12,567)$ (10,712)$ 78,049 $ 10,287 $ 133,275 $ 639,510 $ Adjustments to reconcile operating income to cash flows from operating activities: Depreciation - - - - - 6,772 4,926 11,698 Change in assets and liabilities: Receivables, net - (472) - (180) 271 (145) (208) (734) Other assets - - - - - (14,857) 19,404 4,547 Accounts payable 2,819 (68) 26,382 (226) (1,749) 14,543 10,382 52,083 Accrued payroll and benefits - 82,242 (31,165) - - (33) 27 51,071 Cash Flows From Operating Activities 359,488 $ 166,211 $ (17,350)$ (11,118)$ 76,571 $ 16,567 $ 167,806 $ 758,175 $ TOWN OF LOS GATOS, CALIFORNIA INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 74
TOWN OF LOS GATOS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 AGENCY FUND PARKNG IMPROVEMENT DISTRICT #88 75 Agency funds are used to account for assets held by the Town as an agent for individuals, private organizations and other governments. T he financial activities of these funds are excluded from the government -wide fina ncial statements, but are presented in separate Fiduciary F und financial statements.
Balance Balance June 30, 2010AdditionsDeletionsJune 30, 2011 ASSETS Cash and investments (Note 3)46,752 $ 142,731 $ 147,540 $ 41,943 $ Restricted cash and investments (Note 3)279,606 3,308 - 282,914 Intergovernmental receivable358,913 - 133,570 225,343 Total Assets788,485 $ 146,039 $ 281,110 $ 550,200 $ LIABILITIES Due to other governments685,271 $ 146,039 $ 281,110 $ 550,200 $ Total Liabilities788,485 $ 146,039 $ 281,110 $ 550,200 $ FOR THE FISCAL YEAR ENDED JUNE 30, 2011 TOWN OF LOS GATOS, CALIFORNIA AGENCY FUND PARKING IMPROVEMENT DISTRICT #88 STATEMENT OF CHANGES IN ASSETS AND LIABILITIES 76
Statistical Section
STATISTICAL (UNAUDITED) This part of the Town of Los Gatos Comprehe nsive Annual Financial Re port (“CAFR”) presents the detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supp lementary information says about the Town’s overall financial health. Financial Trends These schedules contain trend information to help the reader unde rstand how Town’s financial performance and well-being have ch anged over time. (Schedule 1, Schedule 2, Schedule 3, and Schedule 4). Revenue Capacity These schedules contain information to help the reader assess one of the Town’s most significant local revenue source, the propert y tax (Schedule 5, Schedule 6, Schedule 7, and Schedule 8). Debt Capacity These schedules present information to help the reader assess the affordability of the Town’s current levels of outstanding debt a nd its ability to issue additional debt in the future (Schedule 9, Schedule 10, and Schedule 11) Demographic and Economic Information These schedules offer demographic and ec onomic indicators to help the reader understand the environment within which the Town’s financial acti vities take place (Schedule 12, Schedule 13, and schedule 14). Operating Information These schedules contain service and infrastructu re data to help the reader understand how the information in the Town’s CAFR relate s to the services the Town provides and activities it performs (S chedule 15 and Schedule 16).
Town of Los Gatos Schedule 1 Net Assets by Component Last Nine Fiscal Years (Accrual Basis of Accounting)Investment Fiscalin Capital AssetsTotal YearNet of Related Debt Restricted UnrestrictedNet Assets 2003 33,799,130 24,016,830 20,984,676 78,800,636 2004 38,417,211 11,463,187 29,308,135 79,188,533 2005 38,234,229 13,295,871 31,410,468 82,940,568 2006 41,019,121 12,665,493 38,609,085 92,293,699 2007 43,281,315 20,423,828 37,893,056 101,598,199 2008 48,581,378 18,459,776 42,884,826 109,925,980 2009 52,665,506 15,663,436 51,619,635 119,948,577 2010 50,129,550 26,723,994 47,191,225 124,044,769 2011 72,567,355 14,764,334 28,906,009 116,237,698 * 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 FY2003.0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 50,000,000 55,000,000 60,000,000 65,000,000 2 003 2 004 2 005 2 006 2 007 2 008 2 009 2 010 2 011 Invesment in Capital Assets Net of Related Debt Restricted Unrestricted 77
Town of Los Gatos Schedule 2 Changes in Net Assets Last Eight Fiscal Years (Accrual Basis of Accounting)Expenses2003/042004/052005/062006/072007/082008/092009/102010/11 Governmental Activities:General government4,246,133 $ 4,341,526 $ 4,383,584 $ 4,570,391 $ 5,233,730 $ 5,323,467 $ 4,647,801 $ 5,180,153 $ Police department9,980,927 10,524,840 11,133,362 11,556,350 12,313,637 13,467,503 13,266,849 13,495,885 Parks and public works6,179,328 5,953,319 6,523,888 7,222,052 6,958,449 8,671,678 7,458,085 7,155,905 Community development2,229,686 2,494,689 2,887,818 2,735,223 3,064,865 3,389,151 3,522,477 3,099,269 Community services1,046,351 920,562 948,650 2,388,250 1,060,922 1,162,284 1,270,240 666,015 Library services1,807,662 1,786,696 1,880,465 1,892,448 1,956,767 2,067,476 2,038,009 1,892,805 Sanitation832,538 834,525 574,344 414,610 502,196 407,048 655,713 342,893 Redevelopment1,828,924 2,133,008 2,093,546 2,434,935 3,360,585 2,939,550 6,992,935 16,794,022 Interest and fees662,867 696,266 708,585 704,794 670,415 631,159 612,700 1,278,381 Total Governmental Activitie s 28,814,415 $ 29,685,430 $ 31,134,241 $ 33,919,053 $ 35,121,567 $ 38,059,316 $ 40,464,809 $ 49,905,328 $ Program Revenues 2003/042004/052005/062006/072007/082008/092009/102010/11 Charges for Services:General government 1,959,401 $ 1,640,632 $ 1,981,557 $ 2,127,670 $ 1,149,911 $ 1,155,409 $ 1,337,772 $ 1,156,931 $ Police department 1,446,067 1,386,479 1,343,028 1,250,636 895,569 1,358,361 2,110,357 2,153,843 Parks and public works 472,366 757,790 591,079 676,095 576,107 637,933 779,300 810,022 Community development 2,025,305 2,569,923 3,070,115 2,997,419 2,954,123 2,700,614 3,404,087 3,097,192 Community services 347,970 182,075 147,895 134,366 98,803 Library services 72,013 61,671 62,444 61,091 60,123 56,932 57,633 39,491 Sanitation 903,097 889,948 690,314 437,794 166,660 135,000 135,000 135,000 Operating Grants and Contributions:General government - - - - 54,242 8,834 10,237 15,638 Police department 546,508 566,180 745,797 645,034 744,347 538,629 81,997 27,748 Parks and public works 706,621 556,121 549,873 545,432 565,857 633,923 594,775 809,272 Community services 124,920 262,554 180,897 68,912 146,236 190,447 124,287 182,683 Library services 12,981 14,987 11,379 16,735 11,409 10,462 13,996 10,662 Sanitation 8,155 8,023 7,857 41,044 39,891 25,103 9,002 Redevelopment Capital Grants and Contributions:Parks and public works 1,166,929 867,951 931,616 1,381,631 2,020,121 1,330,638 3,074,453 2,375,759 Total Program Revenues 9,792,333 $ 9,764,334 $ 10,165,957 $ 10,208,449 $ 9,385,751 $ 8,944,968 $ 11,883,363 $ 10,922,046 $ General Revenues 2003/042004/052005/062006/072007/082008/092009/102010/11 Property taxes 9,645,339 $ 11,931,215 $ 13,810,457 $ 16,082,348 $ 17,311,052 $ 18,343,063 $ 18,856,081 $ 18,226,001 $ Sales taxes 6,914,526 7,904,130 8,655,566 9,253,891 9,345,432 8,487,000 8,317,217 9,971,409 Other taxes 1,823,019 1,864,997 2,247,997 2,327,516 2,904,908 2,664,698 2,623,622 2,906,264 Motor vehicle in lieu 1,298,455 314,041 666,494 194,104 137,330 101,265 92,595 139,814 Interest Investment earnings (92,621) 1,286,433 1,922,819 3,607,966 4,190,951 2,949,119 1,155,929 760,905 a Proceeds from sale of property - Proceeds from sale of property - (6,378) Loss on disposal of capital assets (3,592) Sale of property 6,525,000 (870,127) Miscellaneous 25,415 378,693 2,850,836 334,818 9,842 66,802 52,459 41,943 Total General Revenues 19,614,133 $ 23,673,131 $ 30,150,578 $ 31,800,643 $ 33,899,515 $ 39,136,947 $ 31,097,903 $ 31,176,209 $ Chan g e in Net Assets 592,051 $ 3,752,035 $ 9,182,294 $ 8,090,039 $ 8,163,698 $ 10,022,597 $ 2,516,457 $ (7,807,073)$ a. Investment Earnings revenue was down due to the economy downturn.* These line items have only been available since implementation of GASB34 in 78
Town of Los Gatos Schedule 3 Fund Balance, Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting)2001/022002/032003/042004/052005/06 General Fund Reserved2,894,473 $ 2,894,473 $ 1,852,516 $ 2,097,545 $ 2,128,873 $ Unreserved7,751,411 9,701,339 10,544,144 12,144,819 18,000,209 Total general fund10,645,884 $ 12,595,812 $ 12,396,660 $ 14,242,364 $ 20,129,082 $ All Other Governmental Funds Reserved6,841,638 $ 14,605,959 $ 11,189,030 $ 12,844,667 $ 12,088,367 $ Unreserved, reported in: Special revenue funds1,055,587 1,067,615 845,014 962,032 1,123,335 Capital project funds8,871,368 5,294,418 4,078,709 3,853,747 3,842,580 Debt service funds1,454,569 2,575,400 3,704,844 4,032,770 4,960,030 Total all other governmental funds18,223,162 $ 23,543,392 $ 19,817,597 $ 21,693,216 $ 22,014,312 $ 2006/072007/082008/092009/102010/11 General Fund Reserved4,732,394 $ 2,048,261 $ 8,165,607 $ 4,491,589 $ -$ Unreserved16,406,211 17,236,569 16,861,752 18,594,984 - Nonspendable- - - - 1,500,000 Restricted- - - - - Assigned- - - - 21,806,781 Unassigned- - - - 2,433,556 Total general fund21,138,605 $ 19,284,830 $ 25,027,359 $ 23,086,573 $ 25,740,337 $ All Other Governmental Funds Reserved15,820,345 $ 14,917,629 $ 15,265,127 $ 10,525,384 $ -$ Unreserved, reported in: Special revenue funds 836,191 1,030,161 522,105 225,509 - Capital project funds 8,169,857 11,719,905 11,203,521 24,454,347 - Debt service funds 3,849,382 5,747,185 7,526,557 6,953,732 - Restricted - - - - 14,764,334 Assigned - - - - 4,786,547 Unassigned - - - - (23,889) Total all other governmental funds28,675,775 $ 33,414,880 $ 34,517,310 $ 42,158,972 $ 19,526,992 $ Fiscal Year Fiscal Year 79
Town of Los Gatos Schedule 4 Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting)2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 Revenues: Taxes 17,855,424 $ 17,788,711 $ 18,541,280 $ 22,099,118 $ 25,112,221 $ 27,888,072 $ 29,773,634 $ 29,643,262 $ 29,967,385 $ 31,549,351 $ Intergovernmental 4,323,605 4,515,854 4,719,901 4,242,451 3,993,032 4,085,983 3,128,239 2,134,352 4,082,725 3,248,303 Charges for Service 2,684,386 3,383,422 3,236,450 3,062,960 3,529,178 4,269,571 2,996,660 3,421,131 4,418,074 4,107,386 Licenses & Permits 1,686,610 1,937,094 2,031,387 2,417,204 2,637,977 2,705,028 3,337,822 2,692,187 2,977,199 2,967,819 Investment income 3,002,383 2,547,576 465,432 1,828,216 4,975,513 4,179,736 4,190,955 2,949,120 1,174,203 691,022 Fines and Forfeitures 532,680 187,117 751,532 580,937 1,005,773 561,665 369,292 618,771 662,699 737,903 Use of Property 60,749 51,948 38,502 Other 409,403 282,660 267,052 1,597 232,694 110,486 1,180,063 1,581,078 2,105,333 2,904,862 Total revenues 30,494,491 30,642,434 30,013,034 34,232,483 41,486,388 43,800,541 44,976,665 43,100,649 45,439,565 46,245,148 Expenditures: Current Public safety 9,775,147 10,211,315 9,986,069 10,506,167 11,706,091 11,576,850 12,214,891 12,971,105 12,821,499 13,004,041 Public Works 4,435,711 4,903,638 4,625,525 4,399,171 4,742,401 4,956,451 5,261,706 5,785,584 5,152,745 5,222,504 Community Development 2,287,237 2,269,870 2,249,641 2,527,730 2,936,730 2,776,231 3,035,240 3,280,856 3,452,914 2,973,587 Community Services 912,997 1,004,142 1,265,296 933,759 950,333 2,395,429 1,056,835 1,149,290 1,261,981 663,645 Library Services 1,685,099 1,811,866 1,798,331 1,770,991 1,876,022 1,904,900 1,946,595 2,007,518 1,999,430 1,806,611 Sanitation & Other 647,829 819,658 846,809 848,547 551,164 387,674 470,660 375,483 642,512 314,899 General Government 3,557,111 4,048,876 4,234,148 4,372,991 4,358,853 4,586,513 5,120,970 5,145,355 5,483,753 6,318,706 Redevelopment 646,470 1,459,013 1,773,889 2,084,767 2,573,514 2,966,132 3,284,847 3,861,525 8,692,216 18,958,126 1 Capital outlay 10,955,593 9,077,120 6,911,405 2,142,212 4,682,848 4,689,187 8,697,478 7,759,577 16,141,561 15,839,303 2 Debt service Principal repayment 144,560 150,000 370,000 385,000 400,000 414,167 429,167 445,000 465,000 485,000 Interest and fiscal charges 557,010 904,565 668,721 698,906 714,079 711,346 676,913 638,221 620,356 1,019,881 Total expenditures 35,604,764 36,660,063 34,729,834 30,670,241 35,492,035 37,364,880 42,195,302 43,419,514 56,733,966 66,606,303 Excess (deficiency) of revenues over (under) expenditures (5,110,273) (6,017,629) (4,716,800) 3,562,242 5,994,353 6,435,661 2,781,363 (318,865) (11,294,401) (20,361,155) Other financing sources(uses): Debt Issuance - - - - - - - - 16,428,095 - Transfers in 3,740,134 3,256,337 2,352,051 2,130,315 2,854,245 10,611,169 8,810,379 5,370,708 4,028,905 3,928,107 Transfers out (3,724,134) (2,456,337) (1,702,052) (2,130,315) (2,640,785) (9,375,847) (8,706,409) (4,731,885) (3,461,724) (3,545,168) Proceeds from issuance of debt 010,725,000 - - - - - - - - Total other financing sources(uses)16,000 11,525,000 649,999 - 213,460 1,235,322 103,970 638,823 16,995,276 382,939 Special item: Sale of property - - - - - - - 6,525,000 - - Net change in fund balances (5,094,273)$ 5,507,371 $ (4,066,801)$ 3,562,242 $ 6,207,813 $ 7,670,983 $ 2,885,333 $ 6,844,958 $ 5,700,875 $ (19,978,216)$ Debt service as a percentage of non capital expenditures 2.01%2.96%3.77%3.86%3.72%3.49%3.26%3.05%2.22%2.58%1Increase due to SERAF payment to State in the amount of $2.2M and increased Pass Through Payments.2The amount shown as capital outlay does not reconcile to the reconciling item on the Statement of Activity due to capital outlay expenditures which fall below the capitalization threshold.The increase in capital outlay is due to purchases of land for low-moderate housing projects in the amount of $4.3M and purchase of land for a sports park in the amount of $3.1M.Fiscal Year 80
Town of Los Gatos Schedule 5 Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Utility and Total FiscalUnsecured PercentSecuredPercentTotal EstimatedDirect YearPropertyChangePropertyChangeAssessedFull MarketTax Rate 2002 185,521,158 4.53%4,685,070,118 14.70%4,870,591,27618,740,280,472 1.0426 2003 201,539,300 8.63%4,913,724,163 4.88%5,115,263,46319,654,896,652 1.0460 2004 175,689,995 -12.83%5,258,601,739 7.02%5,434,291,73421,034,406,956 1.0475 2005 179,611,684 2.23%5,654,906,203 7.54%5,834,517,88722,619,624,812 1.0480 2006 186,694,066 3.94%6,259,830,939 10.70%6,446,525,00525,039,323,756 1.0466 2007 194,195,209 4.02%6,840,335,733 9.27%7,034,530,94227,361,342,932 1.0460 2008 201,629,315 3.83%7,392,958,751 8.08%7,594,588,06629,571,835,004 1.0459 2009 216,402,089 7.33%7,949,991,620 7.53%8,166,393,70931,799,966,480 1.0449 2010 241,286,055 11.50%8,076,101,607 1.59%8,317,387,66232,304,406,428 1.0462 2011 217,353,236 -9.92%8,044,692,600 -0.39%8,262,045,83632,178,770,400 1.0460 Source: Santa Clara County Assessed Value Report 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 Millions Unsecured Secured 81
Town of Los Gatos Schedule 6 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years CountySanta ClaraCounty School FiscalBasic CountyRetirementValley WaterDirect Rate District Bonds YearWide LevyLevyDistrictSubtotal and LoansTotal 2002 1.0000 0.0364 0.00621.0426 0.0734 1.1160 2003 1.0000 0.0388 0.00721.0460 0.0635 1.1095 2004 1.0000 0.0388 0.00871.0475 0.0749 1.1224 2005 1.0000 0.0388 0.00921.0480 0.0726 1.1206 2006 1.0000 0.0388 0.00781.0466 0.0996 1.1462 2007 1.0000 0.0388 0.00721.0460 0.0941 1.1401 2008 1.0000 0.0388 0.00711.0459 0.1032 1.1491 2009 1.0000 0.0388 0.00611.0449 0.0970 1.1419 2010 1.0000 0.0388 0.00741.0462 0.1147 1.1609 2011 1.0000 0.0388 0.00721.0460 0.1252 1.1712 Source: Santa Clara County Book of Tax Rates B asic Co u n t y W ide Levy 0.00 0.25 0.50 0.75 1.00 1.25 Per Hundred $Santa Clara Valley Water District County Retirement Levy School District Bonds and Loans Basic County Wide Levy 82
Town of Los Gatos Principle Property Tax Payers Last Five Fiscal Years *Percentage Percentage Percentage Percentage of Total Cityof Total Cityof Total Cityof Total City Taxable TaxableTaxable TaxableTaxable TaxableTaxable Taxable AssessedAssessedAssessedAssessedAssessedAssessedAssessedAssessed ASSESSEE NAMEValueValueValueValueValueValueValueValue Sobrato Interests IV/Sobrato Land Holdings $65,972,4840.96%$93,581,2151.27%$147,774,9331.86%$156,934,5611.94%Boccardo Corporation $19,614,7940.29%$20,044,5300.27%$20,519,2740.26%$37,747,0200.47%Knowles Los Gatos LLC $19,500,0000.29%$22,000,0000.30%$35,000,0000.44%$32,000,0000.40%SRI Old Town LLC $27,917,5940.41%$28,475,9450.39%$29,045,4630.37%$29,626,3710.37%CH Realty IV Downing LP $00.00%$00.00%$28,815,0000.36%$29,391,3000.37%Hercules Holding II LLC $00.00%$00.00%$18,417,1110.23%$25,886,8050.33%Health Care REIT Inc,$00.00%$00.00%$24,480,0000.31%$24,969,6000.31%750 University LLC $15,500,0000.23%$19,000,0000.26%$22,000,0000.28%$21,000,0000.26%Grosvenor USA Ltd.$00.00%$20,145,0000.27%$20,547,9000.26%$20,958,8580.26%Alberto Way Holdings LLC $00.00%$20,114,4000.27%$20,516,6870.26%$20,927,0180.26%D&K Los Gatos LLC $00.00%$00.00%$14,041,5730.18%$20,400,0000.26%CHL Ventures LP $00.00%$19,380,0000.26%$19,767,5990.25%$20,162,9500.25%San Jose Water Works $17,303,3410.25%$17,828,9020.24%$19,934,4910.25%$20,162,8480.25%Toll House Hotel LLC $13,943,3900.20%$17,991,9460.24%$16,127,9370.20%$18,986,1450.24%Grade Way Apartments VI $00.00%$00.00%$14,151,2370.18%$14,434,2610.18%Lyon Baytree Apartments LLC $15,799,0760.23%$16,232,9770.22%$16,722,7480.21%$14,161,5250.18%KSL Capital Partners $00.00%$00.00%$27,838,9030.35%$14,030,0960.18%Los Gatos Hotel Corp.$15,574,8900.23%$15,919,8360.22%$00.00%$13,906,2730.17%David A. and Shari Flick $00.00%$00.00%$00.00%$00.00%Pter R. Hofman $0 $00.00%$00.00%$00.00%Paul H. Roskoph $11,964,6000.17%$00.00%$00.00%$12,696,9240.16%Elizabeth K. Dodson $00.00%$00.00%$00.00%$12,617,1400.16%Health Care Property Partners $26,762,9980.39%$27,298,2540.37%$27,844,2160.35%$00.00%BR3 Partners $12,890,0000.19%$15,718,5940.21%$21,182,5950.27%$00.00%Community Hospital of Los Gatos Inc.$25,415,1050.37%$00.00%$17,081,9710.21%$00.00%Ohana University Ave. LLC $12,029,8100.18%$00.00%$00.00%$00.00%Robert M. Granum II $00.00%$00.00%$00.00%$00.00%GS Baytree LP $00.00%$00.00%$00.00%$00.00%Robson Homes LLC 11,500,001 0.17%$00.00%$00.00%$00.00%GHC Shannon Valley Ranch LLC $13,355,2000.20%$20,087,5400.27%$00.00%$00.00%Sports Resorts Inc.$29,845,5530.44%$17,142,6780.23%$00.00%$00.00%Good Samaritan Hospital LP $15,213,3170.22%$15,866,5480.21%$00.00%$00.00%Windrose Los Gatos Properties LLC $00.00%$14,626,6410.20%$00.00%$00.00%Grade Way Associates VI $13,577,2200.20%$13,873,7630.19%$00.00%$00.00%Park Row East Apartments Ltd.$13,496,3230.20%$13,766,2490.19%$00.00%$00.00%Total - Principal taxpayers 397,175,696 $ 5.81%449,095,018 $ 6.07%561,809,638 $ 7.07%560,999,695 $ 6.95%Total - All real properties assessed by the Town (1)$6,840,335,733 $7,392,958,751 $7,949,991,620 $8,075,202,207 *Data pertaining to principal tax payers prior to 2005/06 is not available.(1) Assessed value includes only net secured real properties.Source Data: California Municipal Statistics, Inc.2009/10 2006/07 2007/08 2008/09 83
Town of Los Gatos Schedule 8 Property Tax Levies and Collections Last Ten Fiscal Years 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 20024,425,0474,079,598 8,504,645 4,918,304,676667,237,082 5,585,541,758 20034,736,5604,037,443 8,774,003 5,162,418,2631,941,931,823 7,104,350,086 20044,834,4644,376,896 9,211,361 5,480,295,734753,210,332 6,233,506,066 20055,348,4835,013,350 10,361,833 5,834,517,887804,306,862 6,638,824,749 20065,739,8465,976,062 11,715,909 6,446,525,005897,448,660 7,343,973,665 20076,386,5627,425,925 13,812,488 7,034,530,942996,479,040 8,031,009,982 20086,901,9358,072,176 14,974,111 7,594,588,0661,081,483,541 8,676,071,607 20097,465,4038,574,251 16,039,654 8,166,393,7091,096,883,582 9,263,277,291 20107,608,1379,022,863 16,630,999 8,317,387,6621,134,135,499 9,451,523,161 20117,567,8806,861,650 14,429,530 8,262,045,8361,117,973,351 9,380,019,187 Sources: Santa Clara County Auditor-Controller Office and the Town of Los Gatos Value of Property $4.0 $4.5 $5.0 $5.5 $6.0 $6.5 $7.0 $7.5 $8.0 $8.5 $9.0 $9.5 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 Billions Tax Levied $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 $11.0 $12.0 $13.0 $14.0 $15.0 $16.0 $17.0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 Millions 84
Town of Los Gatos Schedule 9 Ratios of Outstanding Debt by Type Last Ten Fiscal Years 199220022010 CertificateCertificateCertificateTotalTotal Percentage of FiscalofofofGovernmentalPrimaryPersonal Per YearParticipationParticipationParticipationActivitiesGovernmentIncomeCapita 20021,925,000 1,925,000 1,925,000 *66.69 20031,775,000 10,725,000 12,500,000 12,500,000 *432.98 20041,615,000 10,515,000 12,130,000 12,130,000 *419.56 20051,445,000 10,300,000 11,745,000 11,745,000 *405.49 20061,270,000 10,075,000 11,345,000 11,345,000 *389.65 20071,085,000 9,845,000 10,930,000 10,930,000 *372.25 2008890,000 9,610,000 10,500,000 10,500,000 *348.03 2009685,000 9,370,000 10,055,000 10,055,000 *329.70 2010470,000 9,120,000 15,675,000 25,265,000 25,265,000 *820.24 2011240,000 8,865,000 15,675,000 24,780,000 24,780,000 *804.49 * Data is being compiled by departments but unavailable at printing Notes: Details regarding the Town's outstanding debt can be found in the notes to the financial statements (1) See Schedule 12 for personal income and population data Governmental Activities 85
Town of Los Gatos Schedule 10 Direct and Overlapping Governmental Activities Debt As of June 30, 2011 2010/11 Assessed Valuation:$8,262,045,836 Redevelopment Incremental Valuation$875,370,629 Adjusted Assessed Valuation:$7,386,675,207 Estimated Share of Direct and Debt atOverlapping Debt DIRECT AND OVERLAPPING BONDED DEBT:% ApplicableJune 30, 2011at June 30, 2011 Overlapping Tax & Assesment Debt Santa Clara County 2.784%334,900,000 $ 9,323,616 $ Santa Clara Valley Water District, Zone W-13.122%405,000 $ 12,644 $ West Valley-Mission Community College District10.449%213,049,346 $ 22,261,526 $ Campbell Union High School District8.261%167,315,000 $ 13,821,892 $ Los Gatos-Saratoga Joint Union High School District29.770%55,215,000 $ 16,437,506 $ Cambrian School District0.274%18,759,944 $ 51,402 $ Campbell Union High School District8.871%119,646,120 $ 10,613,807 $ Los Gatos Union School District66.361%98,340,000 $ 65,259,407 $ Saratoga Union School District0.015%47,550,032 $ 7,133 $ Union School District 20.425%72,645,524 $ 14,837,848 $ Town of Los Gatos 1915 Act Bonds100.000%380,000 $ 380,000 $ Santa Clara Valley Water District Benefit Assessment District2.784%143,160,000 $ 3,985,574 $ Total Overlapping Tax and Assesmet Debt 156,992,356 $ O ver l app i ng G enera l F un d D e b t Santa Clara County General Fund Obligations2.784%786,980,000 $ 21,909,523 $ Santa Clara County Pension Obligations2.784%386,024,822 $ 10,746,931 $ Santa Clara County Board of Education Certificates of Participation2.784%12,580,000 $ 350,227 $ West Valley-Mission Community College District General Fund Obligations10.449%56,120,000 $ 5,863,979 $ Los Gatos-Saratoga Joint Union High School District Certificates of Participation29.770%9,650,000 $ 2,872,805 $ Saratoga Union School District Certificates of Participation0.015%6,110,000 $ 917 $ Santa Clara County Vector Control District Certificates of Participation2.784%3,800,000 $ 105,792 $ Midpeninsula Regional Open Space Park District General Fund Obligations4.623%131,003,031 $ 6,056,270 $ Total Overlapping General Fund Debt 47,906,444 $ Direct Debt Town of Los Gatos Certificates of Participation100.000%25,010,000 $ 25,010,000 $ Total Direct Debt 25,010,000 $ Total Direct and Overlapping Bonded Debt 229,908,800 $ Ratios to 2010/11 Assessed Valuation: Total Overlapping Tax and Assessment Debt: 1.90%Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($25,010,000 ): 0.34% Combined Total Debt: 3.11%State School Building Aid Repayable as of 6/30/10: $0.00 Source Data: California Municipal Statistics, Inc.(1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.86
Town of Los Gatos Schedule 11 Legal Debt Margin Information,Last Ten Fiscal Years (In Thousands of Dollars)Legal Debt Margin Calculation for Fiscal Year 2011/12 Assessed Value7,966,902,652 $ Debt limit1,195,035,398 Debt applicable to limit:- Legal Debt Margin1,195,035,398 2002/032003/042004/052005/062006/072007/082008/092009/102010/112011/12 Debt limit 612,703$ 702,761 $ 788,790$ 842,159$ 932,872 $ 1,019,970 $ 1,102,766 $ 1,185,727 $ 1,204,551 $ 1,195,035 $ Debt applicable to limit - - - - - - - - - - Legal debt margin 612,703$ 702,761 $ 788,790$ 842,159$ 932,872 $ 1,019,970 $ 1,102,766 $ 1,185,727 $ 1,204,551 $ 1,195,035 $ Total net debt applicable to the limit 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%as a percentage of debt limit Note: The Town of Los Gatos is a general law city and has a debt limit of 15%. Fiscal Year 87
Town of Los Gatos Schedule 12 Demographic and Economic Statistics,Last Nine Fiscal Years Personal IncomePer CapitaPublic County Fiscal (thousands PersonalMedian School Unemployment YearPopulation of dollars)IncomeAgeEnrollmentRate Ended(1)(2)(3)(4)(5)(6)200228,864 1,564,284 $ 54,195$ 41.895,518 8.5%200328,870 1,432,385 49,615 41.895,525 9.1%200428,911 1,338,724 46,305 42.525,529 6.7%200528,965 1,342,904 46,363 44.045,610 5.5%200629,116 1,430,527 49,132 44.195,718 4.7%200729,362 1,500,751 51,112 44.645,742 4.8%200830,170 1,681,525 55,735 44.865,870 6.0%200930,497 1,833,083 60,107 45.356,006 11.9%201030,802 1,303,695 42,325 45.096,100 11.1%201129,651 1,254,979 42,325 44.226,184 8.7%Note: Data pertaining to principal employers prior to 2001/02 is not available.Source: (1) California State Dept. of Finance - Population Research Unit (January 2010) (2) California State Dept. of Finance - Estimate equals county per capita average times population (3) California State Dept of Finance - county per capita at: labormarketinfo.edd.ca.gov (4) Claritas demographic snapshot report (5) Los Gatos Saratoga Joint Union and Los Gatos Union Elementary School Districts (6) State of California, Employment Development Dept., Labor Market Info. Div. 88
Town of Los Gatos Schedule 13 Principal Employers Last Five Fiscal Years PercentagePercentagePercentagePercentagePercentage of Total Townof Total Townof Total Townof Total Townof Total Town Major Employers EmployeesEmploymentEmployeesEmploymentEmployeesEmploymentEmployeesEmploymentEmployeesEmployment Columbia Health Care Assoc/Mission Oaks Hospital2,000 13.09%2,000 12.89%2,000 12.31%2,000 12.17%2,000 12.60%800 4.92%700 4.26%700 4.41%Community Hospital of Los Gatos 730 4.78%730 4.70%0.00%Los Gatos Union School District 300 1.96%300 1.93%300 1.85%300 1.83%300 1.89%Los Gatos-Saratoga High School District 300 1.96%300 1.93%300 1.85%300 1.83%300 1.89%Netflix 280 1.83%280 1.80%280 1.70%800 5.04%Safeway 250 1.64%250 1.61%200 1.23%250 1.52%250 1.57%Alain Pinel Realtors 220 1.44%220 1.42%220 1.34%220 1.39%Verizon 200 1.31%200 1.29%200 1.23%Courtside Tennis Club 200 1.31%200 1.29%200 1.23%200 1.22%200 1.26%Town of Los Gatos 152 0.99%135 0.87%189 1.16%152 0.92%150 0.94%Los Gatos Meadows 130 0.85%130 0.84%150 0.92%Monolithic Power Systems Semi-Conductor 136 0.89%136 0.83%136 0.86%Note: Data pertaining to principal employers prior to 2005/06 is not available.Source: Town of Los Gatos, Finance Department and Claritas Demographic Report El Camino Hospital, Los Gatos 2010/11 2006/07 2007/08 2008/09 2009/10 89
Town of Los Gatos Schedule 14 Full-time-Equivalent Employees by Function/Program Last Nine Fiscal Years 2002/032003/042004/052005/062006/072007/082008/092009/102010/11 Function/Program General Government 23.25 23.10 21.35 19.95 20.75 20.50 19.95 18.35 18.90 Police 73.00 69.00 65.30 62.00 62.00 61.00 61.00 60.00 59.50 Culture and Recreation 4.25 4.25 4.25 4.25 4.25 5.25 5.25 5.25 3.25 Economic Development 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Library 11.25 10.75 11.10 10.35 10.35 10.35 10.35 10.35 8.60 Planning 19.00 18.60 19.60 18.80 18.80 18.80 18.80 17.80 15.00 Public Works 44.00 41.00 37.00 37.00 34.00 34.00 37.00 35.00 32.50 Total 175.75 167.70 159.60 153.35 151.15 150.90 153.35 147.75 138.75 Note: Data pertaining to principal employers prior to 2001/02 is not available. Full-time equivalent employment is calculated as one or more employee positio n of service or approximately 2,080 hours a year. Full-time-Equivalent Employees as of June 30 90
Town of Los Gatos Operating Indicators Last Five Fiscal Years Schedule 15 FUNCTION/PROGRAM General government 2005/062006/072007/082008/092009/102010/11 Building Permits Issued Residential Permits Issued868 878 762 676 733 711 Residential Permits Value126,348,388 80,030,698 69,104,606 48,162,274 51,090,808 42,974,043 Commercial Permits Issued101 136 127 24 117 128 Commercial Permits Value24,203,521 31,916,848 27,232,018 4,356,307 7,908,146 31,289,431 Publically Owned Permits Issued 2 11 11 Publically Owned Permits Value 2,308,160 5,732,014 40,000 Residential Parking Permits Number of Daily Permits Issued52 67 72 76 87 96 Number of Annual Permits Issued486 492 621 752 686 713 City Clerk Number of Council Resolutions Passed127 117 130 143 167 76 Number of Ordinances Passed7 4 6 13 16 6 Number of Contracts Passed151 156 221 197 206 218 General Services Number of Purchase Orders Issued610 588 557 396 365 336 Police Physical Arrests1,062 1,062 1,165 925 831 872 Parking Violations10,207 10,136 4,041 11,148 11,512 14,377 Traffic Violations 1,674 1,674 1,714 2,588 3,008 2,718 DUI Arrests 148 148 100 88 110 98 Library Circulated e-audiobooks 1,564 1,506 965 1,516 2,546 2,597 Other Public Works Street Resurfacing/Overlay/Reconstruction (miles)12 1.7 2.1 3.5 4.7 4.7 ADA Compliance: Curb Ramps 0 9 9 9 13 17 Traffic Circles 1 1 1 1 1 1 Street Poles 1,575 1,575 1,575 1,575 1,605 1,708 Planning and Development Department Building & Safety Inspections Performed *13,376 11,110 10,367 9,055 10,977 Redevelopment: Number of active projects 2 2 4 3 3 1 Note : Data prior to 2005/06 is not available.Source: Town of Los Gatos, Finance Department * Data is being compiled by departments but unavailable at printing Fiscal Year 91
Town of Los Gatos Schedule 16 Capital Asset Statistics by Function/Program Last Five Fiscal Years 2005/062006/072007/082008/092009/102010/11 Function/Program Police Number of Stations1 1 1 1 2 2 Number of Patrol Units 15 15 15 15 14 14 Parking Enforcement Vehicles 3 3 3 3 2 2 Other Public Works Streets (miles)112 112 112 112 112 112 Streetlights 2,064 2,190 2,190 2,190 2,112 2,115 Traffic Signals 28 28 28 28 28 28 Parks and Recreation Number of Parks 12 12 12 12 12 12 Number of Community Centers 1 1 1 1 1 1 Parking Number of Parking Garages 1 1 1 1 1 1 Number of Parking Lots 22 22 22 22 22 22 Number of Off Street Parking Garage Spaces 1,126 1,126 1,126 1,126 1,126 1,126 Source: Town of Los Gatos, Finance Department Note: Certain data required by GASB 44 was not available prior to 2005/06.Fiscal Year 92
Other Independent Auditor’s Reports
C. G. UHLENBERG LLP CERTIFIED PUBLIC ACCOUNTANTS JEFFREY J. IRA, C.P.A. KATHERINE CHAO, C.P .A.93 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENT S PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Mayor and Members of the Town Council Town of Los Gatos We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Town of Lo s Gatos (the “Town”) as of and for the ye ar ended June 30, 2011 , which collectively c omprise the Town’s basic financial statements and have issued our report thereon dated January 2 0, 2012 . 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 Sta tes.Internal Control Over Financial Reporting In planning and performing our audit, we considered Town’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financi al statements, but not for the purpose of expressing an opinion on the effectiveness of Town’s internal control over financial reporting. Accordingly , we do not express an opinion on the effectiveness of the Town’s internal control over financial reporting .A deficiency in internal control e xists when the design or operation of a control does not allow management or employ ees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A m aterial weakness i s a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity ’s financial statements will not be prevented, or detected and corrected on a time ly basis.Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal contro l over financial reporting that might b e deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.Compliance and Other Matters As part of ob taining reasonable assurance about whether Town of Los Gatos’ 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 whi ch 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 accordingl y, we do not express such an opinion. The res ults of our tests disclosed no
C. G. UHLENBERG LLP CERTIFIED PUBLIC ACCOUNTANTS JEFFREY J. IRA, C.P.A. KATHERINE CHAO, C.P .A.94 instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.This report is intended solely f or the information and use of management, Town C ouncil, others within the en tity , and federal awarding agencies and pass -through entities and is not intended to be and should not be used by anyone other than these specified parties.Redwood City, California January 20, 2012