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HomeMy WebLinkAboutCAFR - FY 2005-06port Financ -�: i.1,,� mjhs"', CITY OF DIAMOND BAR, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2006 Prepared by: FINANCE DEPARTMENT Linda G Magnuson Director of Finance CITY OF DIAMOND BAR TABLE OF CONTENTS June 30, 2006 FINANCIAL SECTION: Independent Auditors' Report Page Management's Discussion and Analysis (Required Supplementary Information) Number INTRODUCTORY SECTION: Letter of Transmittal i - vi CSMFO Certificate of Award for Outstanding Financial Reporting vii GFOA Certificate of Achievementfor Excellence in Financial Reporting viii Organization Chart ix List of Principal Officials x FINANCIAL SECTION: Independent Auditors' Report 172 Management's Discussion and Analysis (Required Supplementary Information) .3-11 Basic Financial Statements: Government -wide Financial Statements: 21 Statement of Net Assets 15 Statement of Activities 16 Fund Financial Statements: Governmental Funds: 17 Balance Sheet 18-19 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 21 Statement of Revenues, Expenditures and Changes in Fund Balances 22-23 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 24 Proprietary Funds: Statement of Net Assets 25 Statement of Revenues, Expenses and Changes in Fund Net Assets 26 Statement of Cash Flows 27 Notes to Basic Financial Statements 28 - 50 CITY OF DIAMOND BAR TABLE OF CONTENTS (CONTINUED) June 30, 2006 FINANCIAL SECTION (CONTINUED): Required Supplementary Information: Page Number Budgetary Comparison Schedules: 53 General Fund 54 Proposition A Transit. Special Revenue Fund 55 Note to Required Supplementary Information 56 Supplementary Information: Other Governmental Funds: Combining Balance Sheet 58 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 59 Other Special Revenue Funds: 60-61 Combining Balance Sheet 62-63 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 64-65 Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: State Gas Tax Fund 66 Proposition C Transit Fund 67 Intermodal Surface Transportation Enhancement Act (ISTEA) Special Revenue Fund 68 Integrated Waste Management Fund 69 Traffic Congestion Relief 70 Air Quality Improvement Fund 71 California Law Enforcement Equipment Program (CLEEP) Fund 72 Park and Facility Development Fund 73 Community Development Block Grant (CDBG) Fund 74 Citizens Option for Public Safety (COPS) Fund 75 Asset Seizure Fund 76 Landscape Maintenance District Fund 77 Other Debt Service Fund: 79 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Public Financing Authority Fund 80 0 crry OF DIAMOND BAR TABLE OF CONTENTS (CONTINUED) June 30, 2006 FINANCIAL SECTION (CONTINUED): Page Number Supplementary Information (Continued): Other and Major Capital Projects Funds: 81 Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: 82 Public Financing Authority Fund 83 Capital Improvement Fund Internal Service Funds: 85 Combining Statement of Net Assets 86 Combining Statement of Revenues, Expenses and 87 Changes in Fund Net Assets C 88 Combining Statement of Cash Flows STATISTICAL SECTION: Description of Statistical Section Contents 89 Financial Trends: 90 Net Assets by Component - Last Four Fiscal Years 91 Changes in Net Assets - Last Four Fiscal Years Fund Balances of Governmental Funds - Last Four Fiscal Years 92 Changes in Fund Balances of Governmental Funds - Last Four Fiscal Years 93 Revenue Capacity: e of Taxable Property -Last Ten Fiscal Years 94 Assessed and Estimated Actual Valu 95 Direct and Overlapping Property Tax Rates - Current Fiscal Year 96 Top 10 Property TaxpayersI Ye . ars 97 Property Tax Levies and Collections - Last Ten Fiscal Debt Capacity: 98 Direct and Overlapping Debt 99 Legal Debt Margin Information - Last Ten Fiscal Years Demographic and Economic Information: 100 Demographic and Economic Statistics - Last Ten Calendar Years 101 Principal Employers CITY OF DIAMOND BAR TABLE OF CONTENTS (CONTINUED) June 30, 2006 Page Number STATISTICAL SECTION (CONTINUED): Operating Information: Full -Time Equivalent City Employees by Function - Last Ten Fiscal Years 102 Operating Indicators by Function - Last Ten Fiscal Years 103 Steve Tye Mayor Jack Tanaka Mayor Pro Tem Wen P. Chang Council Member Carol Herrera Council Member Bob Zirbes Council Member Recycled paper January 15, 2007 111i ij111!1111111111M 21825 Copley Drive - Diamond Bar, CA 91765-4178 (909) 839-7000 - Fax (909) 861-3117 www.CityofDiamondBar.com Honorable Mayor and Members of the City Council City of Diamond Bar Diamond Bar, California It is a pleasure to submit the Comprehensive Annual Financial Report of the City of Diamond Bar for the fiscal year ended June 30, 2006. This report consists of management's representations concerning the finances of the City. Consequently, responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City's management. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the City's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformance with GAAP. Because the cost of internal controls should not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects. The City's financial statements have been audited by Diehl, Evans and Company L.L.P., a firm of certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for fiscal year ended June 30, 2006, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded based upon the audit that there was a reasonable basis for rendering an unqualified opinion that the City's financial statements for the fiscal year ended June 30, 2006, were fairly presented in -I- conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City of Diamond Bar was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited City's internal controls and legal requirements involving the administration of federal awards. These reports are available in the City's separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE CITY OF DIAMOND BAR. The City, incorporated in 1989, is located at the junction of the 57 and 60 freeways. As a result, the City of Diamond Bar is at the hub of the Los Angeles basin transportation network. A twenty-five mile radius encompasses Pasadena, downtown Los Angeles, Long Beach, Irvine and Riverside. Diamond Bar is a relatively young residential community of about 59,200, situated among the meandering hills and valleys of Brea Canyon. Many desired services can be found in Diamond Bar's shopping and business centers. Recreational opportunities within the City include more than 70 acres of developed park facilities, hiking trails, a new community center, an 18 -hole public golf course and 370 acres of undeveloped publicly owned open space. The City has operated under the council-manager form of government since incorporation. Policy making and legislative authority are vested in a five member City Council. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees and task forces, and hiring both the City Manager and City Attorney. The City Manager is responsible for overseeing the day -to day operations of the City, and for appointing the heads of the various departments. The Council is elected on a non-partisan basis. Council members serve four-year staggered terms, with elections held every other year. Each December, the City Council selects a mayor and mayor pro tem from its membership. The City of Diamond Bar is a contract city and as such contracts for many of its services. This includes police services, building and safety services, engineering, road maintenance and landscape maintenance. The Los Angeles County Fire District provides fire protection, which is independent of the City. Funds are collected through property tax bills and are disbursed directly to the Los Angeles County Fire District by the Los Angeles County Tax Collector's Office. Water services for the City are provided by the Walnut Valley Water District. Refuse collection is provided by private waste collection companies. Additionally, schools are provided by both the Walnut Valley Unified School District and the Pomona Unified School District. Accordingly, none of these activities are included in this report. ECONOMIC CONDITION AND OUTLOOK During the last few years, the City of Diamond Bar's economy has seen a slight improvement. This fiscal year was no exception as illustrated by higher sales tax revenues and property tax revenues. To spite this growth, the erosion of the City's sales tax base is a major concern to the City. The City has, however, built General Fund reserves to fill in any gaps created by the economy or changes in State funding. A careful analysis of the FY 06-07 budget will be done mid -year to adjust anticipated revenues as well as appropriations. The City continues to market opportunities for business expansion and business attraction. As a result of these efforts, the City is starting to realize some of the fruit of its labor. In October 2006 the City will have the first opening of a major retail store since incorporation. This Target store is the anchor store for a small shopping center which will eventually include restaurants and other services. This project located at the intersection of Grand Avenue and Golden Springs Drive also includes a residential component consisting of town homes and single family homes, This location is considered one of the prime retail locations in the City. In addition, the Country Hills Town Center is being redesigned and rebuilt to include a new grocery store. In FY06-07, the City will continue to explore opportunities to expand its sales tax and property tax base with new development opportunities in its commercial areas and the possible annexation of land located within the City's sphere of influence. Development opportunities in the City's commercial areas include the Walnut Valley Trailer Park site; L.A. County Golf Course site; site "D"; and the K -Mart Property. The annexation plans will provide an alternative site for a golf course thus malting it possible to commercially develop the current golf course site. The City's future economic health is being secured by building healthy reserves through fiscally conservative budgets and policies in addition to aggressively pursuing economic development opportunities. AWARDS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Diamond Bar for its comprehensive annual financial report.for the fiscal year ended June 30, 2005. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local financial reports. . In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, with contents that conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City of Diamond Bar has received the Certificate of Achievement for the last eleven consecutive years (fiscal years ended 1995 through 2005 ). We believe our current report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to GFOA to determine its eligibility for another certificate. The City of Diamond Bar has also been awarded the Certificate of Award for Outstanding Financial Reporting by the California Society of Municipal Finance Officers for its comprehensive annual financial report for the last eleven consecutive years. REPORTING ENTITY AND ITS SERVICES This Comprehensive Annual Financial Report includes all funds of the City. The City directly provides a limited range of services and contracts for several other services. The City's significant reliance on contracted services has the benefit of reducing expenses to the citizens of the City of Diamond Bar while simultaneously providing the City with a high degree of flexibility in responding to changing economic conditions. Contracted services include police protection, building and safety, street maintenance, park maintenance, capital improvement projects, animal control, attorney services and engineering. Staff provided services include: community development. (which includes planning, economic development, building and safety management, and neighborhood improvement), public works (which includes engineering, capital projects administration, street maintenance contract management, traffic and transportation matters, engineering contract management, and solid waste contract management), community services (which includes senior services, park maintenance, recreation services, community center operation, and landscape maintenance), community relations, subsidized transit ticket sales, grant administration, financial management, and administrative management. All of these activities are included in this report. -1v- Cash Management The City invests temporarily idle funds in accordance with the Government Code and the investment policy approved annually by the City Council. During FY05-06, most of the City funds were invested in the Local Agency Investment Fund (LAIF), which is administered by the State Treasurer's Office. In addition to LAIF, the City diversified its investment portfolio by also investing in U.S. Government Sponsored Enterprise Securities and Money Market Mutual Fund accounts that are in accordance with the City's investment policy. The City manages all of its cash and investments on a pooled basis. Interest earnings are allocated to the various funds based on their share of cash and investment balances. Risk Management The City of Diamond Bar is a member of the California Joint Powers Insurance Authority (CJPIA.) for the purpose of pooling its general liability losses and claims with the other member agencies. The City is charged for the first $30,000 of each claim. Claims above $30,000 are shared by all the member agencies up to a maximum of $50,000,000 per occurrence. The City belongs to the CJPIA's Workers' Compensation Insurance Program. The administration of the workers' compensation program is similar to that of the authority's liability program. The City is charged for the first $50,000 of each claim. Costs from $50,001 to $100,000 per claim are pooled based on the member's losses under its retention level. Costs between $100,001 and $2,000,000 are pooled based on payroll. Costs between $2,000,000 and $5,000,000 are paid by excess insurance purchased by the CJPIA.. Costs in excess of $5,000,000 are pooled based on payroll. Additionally, the City has all risk property insurance through the Authority. The City's property is currently insured according to a schedule of covered property submitted to the Authority by the City. Total all-risk property insurance coverage is $100,000,000 per occurrence. There is a $5,000 per loss deductible. Premiums for the coverage are paid annually. -' The City has also established a self-insurance internal service fund to cover the City's share of any potential losses not covered by the CJPIA. The City Council established a l policy of annually transferring $100,000 to the fund to create a self-insurance reserve. Policy states that when the reserve reaches $1,000,000, the reserves are deemed to be sufficient. No transfer was necessary this fiscal year, since the reserves reached that milestone in fiscal year 1.998-99. The self-insurance reserve at June 30, 2006 was $1,210,475. MIC Defined Benefit Pension Plan The City has contracted with the California Public Employees Retirement System (PERS) to provide retirement, disability, death and survivor benefits for all eligible fall and part-time City employees. The pension benefit obligation varies from year to year and is computed as part of an actuarial valuation. For the three years ended June 30, 2004, 2005, and 2006 the total contribution to PERS was 12.70%, 15.06% and 11.148% respectively, of the annual covered payroll. The City's total contribution to the system was $496,247 for FY2005-06. The total contribution paid by the City included employer contributions as well as member contributions for which the City is contractually obligated to pay on behalf of its employees. Acknowledgements The preparation of this Comprehensive Annual Financial Report on a timely basis was made possible by the dedicated service of the City's Finance Department staff, and through the cooperation of the entire City staff. Each staff member has my sincere appreciation for the contributions made in the preparation of this Report. I would also like to thank our independent auditor, Diehl, Evans and Company L.L.P., for its expertise and advice in the preparation of the City's Comprehensive Annual Financial Report. In closing, without the leadership and support of the City Council of the City of Diamond Bar, the preparation of this Report would not have been possible. Sincerely, ,,,iL,.y iv.Lauar:,�j. _v1_ — VIZ — Certificate of Achievement for Excellence in Financial Reporting Presented to City of Diamond Bar California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2005 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. Of THE UMM STASES Ml CAl Z President Coll, N NCO Executive Director 2 1= r CL E T- o E w w 0 M r IL C 6 LA E > Z5 > 2 42 LL.0 IDv IIIc cc Cd CL U I a, r 15 § —2s 1 –, '.i o E o U CL O E EE 8 E E I iEn w . E tb 0 U U OC C a ac E E¢ E CL E m mm TL 6W W C, • S. CpAr I • w E > Z5 > 2 42 LL.0 IDv IIIc cc Cd CL U I a, r 15 § —2s 1 –, '.i o E o U CL O E EE 8 E E I iEn w . E tb 0 U U OC C a ac E E¢ E CL E m mm TL 6W W C, • S. CpAr I • cc Cd CL U I a, r 15 § —2s 1 –, '.i o E o U CL O E EE 8 E E I iEn w . E tb 0 U U n .t E > r 00 c > t to c (U .3 u0 g, MIm M E !y E a o > E > OC C a ac E E¢ E CL E m mm TL n .t E > r 00 c > t to c (U .3 u0 g, MIm M E !y E a o > E > OC E m mm TL 6W W C, • S. CpAr I • n .t E > r 00 c > t to c (U .3 u0 g, MIm M E !y E a o > E > OC E m mm TL 6W W C, - IIS I 111, �IijIII '01,11 "1 11 ff,011"'111 III ELECTED AND ADMINISTRATIVE OFFICIALS Mayor Carol Herrera Mayor Pro Tem Robert Zirbes Councilmember Jack Tanaka Councilmember Wen Chang Councilmember Steve Tye City Manager Linda C. Lowry Assistant City Manager David Doyle City Clerk Tommye Cribbins Doyle Director of: Community Services Bob Rose Community Development Nancy Fong. Finance Linda G. Magnuson Public Works David G. Liu Information Systems Ken Desforges DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS Int CONSULTANTS MICHAEL R. LUDIN. CPA CRMO A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 1 NITIN P.. SPEAKER. CPA I'ATEL. CPA ROBERT J. CALLANAN. CPA 'PHILIP H. HOLTKAMP. CPA 2121 ALTON PARKWAY, SUITE 100 *THOMAS M. PERLOWSKI. CPA IRVINE, CALIFORNIA 92606-4956 *HARVEY J. SCHROEDER. CPA (949) 399-0600 • FAX (949) 399-0610 KENNETH R. AMES. CPA www.diehlevans.com -A PROPMMIONAL CORPORATION October 19, 2006 I INDEPENDENT AUDITORS' REPORT LI The Honorable Mayor and City Council of the City of Diamond Bar Diamond Bar, California (!We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Diamond Bar, California, as of and for the year ended June 30, 2006, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Diamond Bar's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Diamond Bar, California, as of June 30, 2006, and the 1 respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. -1- OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY. SUITE 330 CARLSBAD. CALIFORNIA 92008-2389 ESCONDIDO. CALIFORNIA 92025-2595 Il (760) 729-2343 • FAX (760) 729.2231 (760) 741-3141 • FAX (760) 741-9890 In accordance with Government Auditing Standards, we have also issued our report dated November 9, 2006 on our consideration of the City of Diamond Bar's internal control over financial reporting and our tests of its compliance with certain provisions of la w's, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management's discussion and analysis and the other required supplementary information identified in the accompanying table of contents are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited* procedures to the management's discussion and analysis, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this required supplementary information. However, we did not audit the management's discussion and analysis and express no opinion on it. The budgetary comparison schedules and related note have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Diamond Bar's basic financial statements.. The introductory. section, other supplementary information and statistical section as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The other supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statementsand, in our opinion is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. CITY OF DIAMOND BAR Management's Discussion and Analysis June 30, 2006 As management of the City of Diamond Bar, we offer readers of the City of Diamond Bar's financial statements this narrative overview and analysis of the financial activities of the City of Diamond Bar for the fiscal year ended June 30, 2006. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. Financial Highlights • The total revenues from all sources equaled $24,8131660. • The total cost of all City .programs equaled $21,781,805. • The assets of the City of Diamond Bar exceeded its liabilities at the close of the fiscal year by $48,919,090 (net assets). Of this amount, $29,461,178 (unrestricted net assets) may be used to meet the City's ongoing obligations to citizens and creditors. • As of the close of the current fiscal year, the City of Diamond Bar's governmental funds reported combined ending fund balances of $31,849,025, a decrease of $584,921 in comparison with the prior year. .$28,264,024 of that amount is available for spending at the City's discretion. (unreserved, undesignated fund balance) (i • At the end of the current fiscal year, unreserved fund balance for the general fund was $25,103,444, or over one and a half the amount of general fund expenditures. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Diamond Bar's basic financial statements. The City of Diamond Bar's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements — The government —wide, financial statements are designed to provide readers with a broad overview of the City of Diamond Bar's finances, in a manner similar to a private -sector business. The statement of net assets presents information on all of the City of Diamond Bar's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in new assets may serve as a useful indicator of whether the financial position of the City of Diamond Bar is improving or deteriorating. See independent auditors' report. -3- 14 WZovy: 1/ ♦�►t1 Management's Discussion and Analysis . (Continued) June 30, 2006 Overview of the Financial Statements (Continued) Government -wide financial statements (Continued) The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cashflows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City of Diamond Bar that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Diamond Bar include general government, public safety, highways and streets, community development, and parks and recreation. The City of Diamond Bar currently has no business -type activities. The government -wide financial statements include not only the City. of Diamond Bar itself, but also a legally separate financing authority. Although legally separate, the Diamond Bar Financing Authority is included because the City is financially accountable for it. Fund financial statements — A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City. of Diamond Bar, like other state and local governments, uses fund accounting to. ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into two categories: governmental funds, and proprietary funds. Governmental Funds — Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, available at the end of the fiscal year. This information helps to determine whether there are more or fewer financial resources. that can be spent in the near future to finance the City's programs. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impacts of the City's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. See independent auditors' report. M CITY OF DIAMOND BAR Management's Discussion and Analysis (Continued) June 30, 2006 Overview of the Financial Statements (Continued) Fund financial statements (Continued) Governmental Funds (Continued) — The City of Diamond Bar adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been p . rovided for the general fund to demonstrate compliance with this budget. Proprietary Funds — The type of proprietary funds that the City maintains are internal service funds that are used to allocate costs internally among the various functions of the City. The City of Diamond C) Bar uses these funds to account for its liability insurance costs and vehicle and computer replacement costs. Because these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities within the government -wide financial statements. Notes to the Basic Financial Statements — The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Other Information — In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's budgetary control and accounting and expenditures in excess of appropriations. Government -wide Financial Analysis As mentioned earlier, net assets may serve over time as a useful. indicator of the City's financial position. The City of Diamond Bar's assets exceeded liabilities by $48,919,090 at the close of 2006 (see Table 1). Included in the net assets of the City of Diamond Bar is its investment in capital assets (e.g., land, buildings, machinery, construction in progress . and equipment), less the related outstanding debt used to acquire those assets. The City of Diamond Bar uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this .debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. See independent auditors' report. -5- Management's Discussion and Analysis (Continued) June 30, 2006 Government -wide Financial Analysis (Continued) Table 1 CITY OF DIAMOND BAR'S Statement, of Net Assets Current and other assets Capital assets Total Assets Long-term debt outstanding Other Liabilities Total Liabilities Net assets: Invested in capital assets, net of debt Restricted Unrestricted Total Net Assets Governmental Activities 2006 2005 $39,755,482 $39,547,890 27,421,565 23,729,680 67,177,047 - 63,277,570 13,350,051 13,558,447 4,907,906 3,587,323 18,257,957 17,145,770 14,593,935 10,692,694 4,863,977 5,419,372 29,461,178 - 30,019,734 $48,919,090 $46,131,800 The City's Net Assets increased this year by $3,031,855 or 6.61%. The primary reason for this growth is due a higher investment in capital assets including the purchase of land for economic development purposes and significant infrastructure .improvements. The City's total revenues were $24.8 million, while the total cost of all programs and services was $21.8 million. Revenues this fiscal year were 10.10% higher than those of the prior year. There were increases in most of the revenue categories. The following are highlights of some of the major differences: • Charges for services increased this year due to several factors. The building development fees were higher as a result of the construction of a major housing development and a new Target Department store. Another factor was the increased participation in the City's discounted transit pass program. • Operating grants and contributions increased as a result of the City obtaining and using various grants to augment City resources in the financing of various capital improvements. • The significant increase in property tax revenue and offsetting decrease in Motor Vehicle in Lieu revenue is due to the change in the allocation of funds to the City by. the State. Some of the revenue that had previously been received from the State in the form of Motor Vehicle in Lieu revenue has been replaced with Property Tax Revenues. In addition property values have increased resulting in an increase in the property tax base. ® Sales tax and franchise taxes were all higher this year due to a growing economy. • Investment Income has increased significantly due to rising interest rates and the diversification of the City's investment portfolio. This year the City started investing some of its funds in longer term securities resulting in a higher investment yield (see note. 2). See independent auditors' report. -6- CITY OF DIAMOND BAR Management's Discussion and Analysis (Continued) June 30, 2006 Government -wide Financial Analysis (Continued) Table 2 City of Diamond Bar's Changes in Net Assets Revenues: Program revenues: ,Charges for services Operating grants and contributions Capital grants and contributions General Revenues Property taxes Transient occupancy taxes Sales Taxes Property Taxes in Lieu of Sales Taxes Franchise Taxes Motor vehicle in lieu Property transfer tax Othertaxes Investment Income Other Total revenues Expenses: General Government Public Safety Highways and Streets Community Development Parks, Recreation and Culture Interest on long-term debt Total expenses Change in net assets Net assets - Beginning of year Net assets - End of year 2006 2005 $4,818,125 $4,129,802 5,281,308 4,040,785 1,150 6,769,553 3,155,723 718,889 717,879 2,964,877 2,645,096 984,472 863,245 996,567 941,319 413,230 4,386,800 416,423 413,247 35,522 35,283 1,051,922 532,091 361,622 676,292 24,813,660 22,537,562 4,203,123 3,997,319 5,418,005 4,969,183 5,240,568 4,622,014 2,759,718 1,050,025 3,737,071 3,814,887 423,320 270,735 21,781, 805 18,724,163 3,031,855 3,813,399 45,887,235 42,073,836 $48,919,090 $45,887,235 Expenditures were higher (16.33%) this fiscal year as well. The increase is primarily due to increased services to the community. ® General Government was higher this year due primarily to changes made in the City's Information Technology Division. This division has been responsible for the implementation of several new computer systems this year. Another factor in the increase in General Government is due to the increased cost of the lease paid to the Public Financing Authority for the Diamond Bar Center. This lease amount is based on the debt service due on the variable rate lease revenue bonds that were issued to build the Center. Since interest rates have been rising, so has this cost. See independent auditors' report. 7 101 WA D) 2 R K 13 111 Z10111 F., I Management's Discussion and Analysis (Continued) June 30, 2006 Government -wide Financial Analysis (Continued) Changes in Net Assets (Continued) Public Safety increased due to the rising cost of the sheriffs contract with the County. There were overall contract rate increases. Another factor in this increase was due to the fact that in the previous fiscal year, the City had one contracted position which remained vacant for most of the year. The Highways and Streets category increased due to rising street maintenance costs. In addition during the year the lighted street name signs at most of the major intersections were replaced. Community Development increased significantly due to the emphasis the City has placed on Economic Development. This year the City purchased land that will be used in the future for Economic Development purposes. As mentioned earlier rising interest rates on the outstanding variable rate lease revenue bonds caused an increase in interest and fiscal charges. Financial Analysis of the City's Funds As noted earlier the City of Diamond Bar uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds. The focus of the City of Diamond Bar's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a City's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of Diamond Bar's governmental funds reported combined ending fund balances of $31,849,025, a decrease of $584,291 in comparison with the prior year. Of this amount, there is $2,082,577 reserved to liquidate contracts and purchase orders outstanding at the end of the year. The general fund is the chief operating fund of the City of Diamond Bar. At the end of the current fiscal year, the unreserved fund balance of the general fund was $25,103,444, while the total fund balance reached $26,413,616. As a measure of the general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 154.4% of total general fund expenditures, while total fund balance represents 162.4% of the same amount. See independent auditors' report. -8- CITY OF DIAMOND BAR Management's Discussion and Analysis (Continued) June 30, 2006 Financial Analysis of the City's Funds (Continued) Governmental funds (Continued). Overall the fund balance of the City of Diamond Bar's general fund increased by $477,977 during the current year. Since the City's incorporation, the City has been fiscally conservative contributing to healthy fund balance reserves. Other factors contributing to this growth are as follows: • Property tax revenue increased due the unprecedented rise in property values within the Southern California region and a favorable real estate market. • Some of the revenues received from the State for Motor Vehicle in Lieu fees are now based on an allocation of property taxes based on property values. Previously it had been allocated based on population. As a result since the City's property values have increased so has this revenue source. • Sales tax increased as a result of a growing economy and the dramatic increase in fuel prices C) since some of the City's largest sales tax producers are gas stations. • There was dramatic increase in building related fees. This is due to some of the City's economic development activities. This year saw the development of a new shopping area which includes a new Target store, a major housing development, Brookstone Homes and the C) rebuildino, of the Country Hills Town Center shopping center. • Rents and Concessions continued to rise due to the popularity of the City's park facilities including the Diamond Bar Center. • Investment income from higher interest rates and higher cash balances in the General Fund contributed to the growth of the General Fund as well. General Fund Budgetary Highlights Although original revenue budget projections were increased during the year by 10.1% actual revenues exceeded expectations by another 9.57%. In all but one category actual revenues exceeded expectations. The. General Fund taxes category include property taxes, sales tax, franchise tax and property transfer tax. These revenues exceeded expectations by $947,058. The variance between the amount budgeted [ j and the amount received is due to the fact that the City has traditionally budgeted revenues conservatively without building a lot of growth into the budget. This along with the economic growth caused the dramatic difference between the budget and actual numbers. The fiscal year 2006-07 budget has been created to reflect more realistic revenue projections. See independent auditors' report. -9- Management's Discussion and Analysis (Continued) June 30, 2006 General Fund Budgetary Highlights (Continued) The City received a federal grant which had not been budgeted. This grant was reimbursement for some of the expenditures related to the construction of the Diamond Bar Center. It was questionable as to when and if the City would receive the funding so therefore it was not budgeted prior to its receipt. The investment income revenue estimate was much higher than anticipated due to higher investment yields and a slight change in investment strategy. Other revenues exceeded expectations partially due to the unanticipated receipt of a settlement from an audit of the Cable TV franchisee. General Fund expenditures for fiscal year 2005-06 were anticipated to be $18,383,662 according to the amended budget numbers. The actual expenditures equaled $16,263,047 or $2,120,615 less than anticipated. Most of the expenditure categories came in under budget. Some of this is due to the creation of a conservative budget which in some areas incorporated worst case scenarios. The City also experienced a turnover in several staff positions resulting in salary savings in. several departments. As a result of this turn over in staff many of the projects budgeted had to be postponed until a later date. In some cases the projects were encumbered at the end of the fiscal year or simply re -budgeted in fiscal year 2006-07. Contract commitments in the form of encumbrances equaled $491,061 at the end of the fiscal year. Capital Asset and Debt Administration Capital assets - The City of Diamond Bar's investment in capital assets for its governmental activities as of June 30, 2006 amounts to $27,421,565 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, furniture and fixtures, vehicles and equipment, some infrastructure and construction in progress. The total increase in the City's investment in capital assets was 15.56% from the previous year (see Table 3). At this time, the City has not valued its infrastructure and therefore only the infrastructure improvements constructed since fiscal year 2002-2003 have been included at this time. As mentioned in the discussion of the Economic Development expenditures, the City purchased land this fiscal year and as a result the City's investment in land increased by $953,725. The decrease in Furniture and Fixtures was due to the deletion of excess office furniture which was surplused. See independent auditors' report. _10- CITY OF DIAMOND BAR Management's Discussion and Analysis (Continued) June 30, 2006 Capital Asset and Debt Administration (Continued) Capital assets (Continued) - The increase in Vehicles and Equipment is primarily a result of the purchase of three new trucks and the activities of the Information Technology Division. The trucks were purchased to replace two of the aging fleet and to provide a vehicle for a new road maintenance staff member. The Information Technology equipment increased as well due to the replacement or purchases of new computer servers. Table 3. City of Diamond Bar Capital Assets (net of depreciation) Land Buildings and Improvements Furniture and Fixtures Vehicles & Equipment Infrastructure Construction in Progress 2006 2005 $6,206,190 $5,252;465 15,233,102 15,440,854 11,875 12,275 539,624 438,420 2,483,021 1,686,888 2,947,753 898,778 $27,421,565 $23,729,680 Capitalized infrastructure increased due to the completion of five street related projects. These included: ® A traffic signal located at Golden Springs Drive and Adel/Highknob. ® A new ADA accessible sidewalk on Diamond Bar Boulevard between the 60 freeway and Solitaire Drive. ® Parkway and median improvements on Pathfinder Road near Evergreen Springs Road. • Parkway and median improvements on Brea Canyon Road near Gemdal Street and Golden Springs Drive and Adel Avenue. ® Parkway and median improvements on Diamond Bar Blvd south of Mountain Laurel. Construction in progress at the end of the year included twenty projects in various stages of I y C) construction. There were four park improvement projects in progress totaling $113,633. There was one major road construction project (Grand Ave — Beautification and Betterment Phase I) amounting to $2,137,502. There were a variety of traffic signal improvements' and parkway improvements either in the design phase or under construction at the end of the year. These projects totaled $696,618 at the end of the year. Additional information on the City's capital assets can be found in note 4. See independent auditors' report. I - � 16111WA010111,300101 ' ' Management's Discussion and Analysis (Continued) June 30, 2006 Capital Asset and Debt Administration (Continued) Long-term debt — At the end of the current fiscal year, the City of Diamond Bar's total long-term debt equaled $13,686,974. The following table shows the breakdown of the debt outstanding. Table 4 City of Diamond Bar Outstanding Long Term Debt at Year-end Variable Rate Lease Revenue Bonds (backed by the Public Financing Authority) $ 13,520,000 Unamoritzed Bond Discount (123,795) Compensated Absences (backed by the City) 290,769 $ 13,686,974 Additional information on the City's long-term debt can be found in Note 5. Economic Factors and Next Year's Budgets and Rates While the City maintains a diverse and upscale housing stock, the City's economy is equally dependent on commercial and retail revenues. The City's concentration on maintaining and attracting new business clientele is of utmost importance. The City's 2006-2007 budget is a fiscally conservative budget. Anticipated revenues in the General Fund have increased by approximately 6% which is a reflection of continued growth in the economy. At the same time General Fund appropriations have only increased by 4% to cover the cost of living increases in the region. The City has made a conscientious decision to use some general fund balance reserves for economic development purposes. As a result, the FY07 budget includes an appropriation for economic development. It is anticipated that these efforts will continue to be rewarded in the near future with the development of several new retail spaces. Contacting the City's Financial Management This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general overview of the City of Diamond Bar's finances and to show the City's accountability for the C� money it receives. If you have questions about this report or need additional financial information, contact the City's Finance Department, at the City of Diamond Bar, 21825 Copley Drive, Diamond Bar, California 91765. See independent auditors' report. -12- BASIC FINANCIAL STATEMENTS -13- THIS PAGE LEFT BLANK INTENTIONALLY -14- CITY OF DIAMOND BAR STATEMENT OF NET ASSETS June 30, 2006 ASSETS: Cash and investments (Note 2) Accounts receivable Interest receivable Due from other governments Due from employees Notes receivable Deposits Deferred charges Restricted assets: Cash and investments with fiscal agents (Note 2) Capital assets, not depreciated (Note 4) Capital assets, depreciated, net (Note 4) TOTAL ASSETS LIABILITIES: Accounts payable Accrued payroll Interest payable Deposits payable Retentions payable Due to other governments Advance from other governments Noncurrent liabilities (Note 5): Due within one year Due in more than one year TOTAL LIABILITIES NET ASSETS: Invested in capital assets, net of related debt Restricted for: Debt service Capital projects Specific programs Unrestricted TOTAL NET ASSETS See independent auditors' report and notes to basic financial statements. -15- Governmental Activities $ 35,178,211 342,107 362,641 2,579,345 3,538 137,595 64,000 568,575 519,470 9,153,943 18,267,622 67,177,047 2,603,475 81,437 43,323 1,092,108 251,689 361,356 137,595 336,923 13,350,051 18,257,957 14,593,935 243,697 3,323,474 1,296,806 29,461,178 $ 48,919,090 CITY OF DIAMOND BAR STATEMENT OF ACTIVITIES For the year ended June 30, 2006 Functions/programs Expenses Governmental activities: Net (Expense) General government $ 4,203,123 Public safety 5,418,005 Highways and streets 5,240,568 Community development 2,759,718 Parks, recreation Program Revenues and culture 3,737,071 Interest on long-term debt 423,320 Total governmental activities $ 21,781,805 (423,320) $ 4,818,125 $ 5,281,308 $ 1,150 (11,681,222) General revenues: Taxes: Property taxes Transient occupancy taxes Sales taxes Property taxes in lieu of sales taxes Franchise taxes Property transfer tax Other taxes Unrestricted motor vehicle in lieu Investment income Other revenue Total general revenues Change in net assets NET ASSETS - BEGINNING OF YEAR, AS RESTATED (NOTE 12) NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. - 16- 6,769,553 718,889 2,964,877 984,472 996,567 416,423 35,522 413,230 1,051,922 361,622 14,713,077 3,031,855 45,887,235 $ 48,919,090 Net (Expense) Revenue and Changes in Program Revenues Net Assets Charges Operating Capital for Grants and Grants and Governmental Services Contributions Contributions Activities $ 707,272 $ 5,662 $ - $ (3,490,189) 1,277,170 165,341 - (3,975,494) 1,555,993 3,892,883 - 208,308 16,841 775,091 1,150 (1,966,636) 1,260,849 442,331 - (2,033,891) (423,320) $ 4,818,125 $ 5,281,308 $ 1,150 (11,681,222) General revenues: Taxes: Property taxes Transient occupancy taxes Sales taxes Property taxes in lieu of sales taxes Franchise taxes Property transfer tax Other taxes Unrestricted motor vehicle in lieu Investment income Other revenue Total general revenues Change in net assets NET ASSETS - BEGINNING OF YEAR, AS RESTATED (NOTE 12) NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. - 16- 6,769,553 718,889 2,964,877 984,472 996,567 416,423 35,522 413,230 1,051,922 361,622 14,713,077 3,031,855 45,887,235 $ 48,919,090 GOVERNMENTAL FUNDS The General Fund has been classified as a major fund and is used to account for resources traditionally associated with government, which are not legally or by sound financial.management to be accounted for in another fund. SPECIAL REVENUE FUND The Special Revenue Fund is used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for a specified purpose. The following Special Revenue Fund has been classified as a major fund in the accompanying financial statements: Proposition A Transit Fund - This fund is used to account for the receipt and expenditure of the City's share of the 1/z cent sales tax levied in Los Angeles County for local transit purposes. CAPITAL PROJECTS FUND The Capital Projects Fund is used to account for the acquisition and construction of major capital facilities. The following Capital Projects Fund has been classified as a major fund in the accompanying financial statements: Capital Improvement Fund - This fund is used to account for the costs of constructing street improvements, park improvements and other public improvements not normally included within the 'other Capital Projects funds. Financing is provided by developer fees and interfund transfers from the Special Revenue Funds and the General Fund. -17- CITY OF DIAMOND BAR BALANCESHEET GOVERNMENTAL FUNDS June 30, 2006 ASSETS ASSETS: Cash and investments Cash and investments with fiscal agent Accounts receivable Interest receivable Due from other funds (Note 3) Due from employees Due from other governments Deposits Notes receivable TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable Accrued payroll Deposits payable Due to other funds (Note 3) Deferred revenue Retentions payable Advances from other governments TOTAL LIABILITIES FUND BALANCES (DEFICIT): Reserved for: Encumbrances Deposits Improvements Bond retirement Debt service Unreserved, Reported in: General Fund Special Revenue Funds Capital Projects Funds TOTAL FUND BALANCES (DEFICIT) TOTAL LIABILITIES AND FUND BALANCES $ 1,839,155 $ 116,385 $ 512,676 75,884 1,824 - 1,092,108 - - - - 517,760 320,925 - 496,416 - - 251,689 See independent auditors' report and notes to basic financial statements. -18- 3,328,072 118,209 1,778,541 491,061 - 1,560,758 64,000 - - 2,207 - 396,293 752,904 - - 25,103,444 - - - 938,230 - - - (2,612,373) 26,413,616 938,230 (655,322) $ 29,741,688 $ 1,056,439 $ 1,123,219 Special Capital Revenue Fund Projects Fund General Prop A Transit Capital Fund Fund Improvement $ 27,191,624 $ 1;056,423 $ - 40,619 - 191,831 292,102 16 - 362,641 - - 549,832 - 323,299 3,538 - - 1,237,332 - 608,089 64,000 - - $ 29,741,688 $ 1,056,439 $ 1,123,219 $ 1,839,155 $ 116,385 $ 512,676 75,884 1,824 - 1,092,108 - - - - 517,760 320,925 - 496,416 - - 251,689 See independent auditors' report and notes to basic financial statements. -18- 3,328,072 118,209 1,778,541 491,061 - 1,560,758 64,000 - - 2,207 - 396,293 752,904 - - 25,103,444 - - - 938,230 - - - (2,612,373) 26,413,616 938,230 (655,322) $ 29,741,688 $ 1,056,439 $ 1,123,219 Other Total Governmental Governmental Funds Funds $ 5,096,866 $ 33,344,913 287;020 519,470 49,989 342,107 - 362,641 355,371 - 873,131 l - 3,538 733,924 2,579,345 - 64,000 137,595 137,595 $ 6,305,394 $ 38,226,740 $ 135,259 $ 2,603,475 3,729 81,437 - 1,092,108 355,371 873,131 520,939 1,338,280 - 251,689- 137,595 137,595 1,152,893 6,377,715 30,758 2,082,577 - 64,000 398,500 - 752,904 287,020 287,020 25,103,444 4,834,723 5,772,953 - (2,612,373) 5,152,501 31,849,025 $ 6,305,394 $ 38,226,740 91 THIS PAGE LEFT BLANK. INTENTIONALLY CITY OF DIAMOND BAR RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS June 30, 2006 Fund balances for governmental funds Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets, net of depreciation, have not been included as financial resources in governmental fund activity. Long-term liabilities applicable to the City governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Also; bond issuance costs do not provide current financial resources and are not reported in the governmental funds. All liabilities, both current and long-term, are reported in the Statement of Net Assets. Balances at June 30, 2006 are: Bonds payable Deferred charges for issuance costs Bond discount Compensated absences Accrued interest payable from the current portion of interest due on bonds payable has not been reported in the governmental funds. Long-term assets that are not available for current use. Amounts are recorded as deferred revenue under the modified accrual basis of accounting. Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The assets and liabilities of the internal service funds must be added to the Statement of Net Assets. Net assets of governmental activities See independent auditors' report and notes to basic financial statements. -21- $ 31,849,025 27,335,199 $ (13,520,000) 568,575 123,795 (290,769) (13,118,399) (43,323) 1,338,280 1 55R 11M $ 48,919,090 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended June 30, 2006 REVENUES: Taxes Special assessments Intergovernmental revenue Charges for services Fines and forfeitures Licenses, permits and fees Investment income Other revenues TOTAL REVENUES EXPENDITURES: Current: General government Public safety Highways and streets Parks, recreation and culture Community development Capital outlay Debt service: Principal Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICIT) - BEGINNING OF YEAR FUND BALANCES (DEFICIT) - END OF YEAR See independent auditors' report and notes to basic financial statements. -22- 3,551,659 - - 5,395,998 . - - 2,439,740 1,634,577 - 2,613,834 - - 2,261,816 - - - - 5,320,597 16,263,047 1,634,577 5,320,597 2,431,984 19,294 (5,077,569) 1,224,783 - 4,598,518 (3,178,790) - - (1,954,007) - 4,598,518 477,977 19,294 (479,051) 25,935,639 918,936 (176,271) $ 26,413,616 $ 938,230 $ (655,322) Special Capital Revenue Fund Projects Fund General Prop A Transit Capital Fund Fund Improvement $ 9,508,757 $ - $ - 4,449,031 959,518 241,878 - 659,218 - 589,922 - - 2,389,149 - - 985,531 35,135 1,150 772,641 - - 18,695,031 1,653,871 243,028 See independent auditors' report and notes to basic financial statements. -22- 3,551,659 - - 5,395,998 . - - 2,439,740 1,634,577 - 2,613,834 - - 2,261,816 - - - - 5,320,597 16,263,047 1,634,577 5,320,597 2,431,984 19,294 (5,077,569) 1,224,783 - 4,598,518 (3,178,790) - - (1,954,007) - 4,598,518 477,977 19,294 (479,051) 25,935,639 918,936 (176,271) $ 26,413,616 $ 938,230 $ (655,322) Other ITotal Governmental Governmental Funds Funds $ - $ 9,508,757 504,908 504,908 3,170,714 8,821,141 211,096 870,314 - 589,922 - 2,389,149 228,754 1,250,570 19,575 792,216 4,135,047 24,726,977 - 3,551,659 8,261 5,404,259 695,180 4,769,497 - 1 2,613,834 486,723 2,748,539 - 5,320,597 235,000 235,000 404,075 404,075 1,829,239 25,047,460 2,305,808 (320,483) 646,222 6,469,523 (3,555,171) (6,733,961) (2,908,949) (264,438) (603,141) (584,921) 5,755,642 1 32,433,946 $ 5,152,501 $ 31,849,025 -23- CITY OF DIAMOND BAR RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES For the year ended June 30, 2006 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. This is the amount by which depreciation exceeded capital expense in the current period: Capital expenditures $ 4,941,840 Depreciation expense (1,307,113) The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins and donations) is to decrease net assets. The issuance of long term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when the debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities, These amounts are the net effect of these differences in the treatment of long-term debt and related items: Principal payment 235,000 Amortization of bond discount (4,585) Amortization of issuance costs (21,059) Compensated absences (40,528) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds: Interest expense Some revenues reported in the Statement of Activities are not considered to be available to finance current expenditures and therefore are not reported as revenues in the governmental funds Internal service funds are used by management to charge the costs of certain activities, such as self-insurance, equipment management, and computer management, to individual funds. The net revenues (expenses) of the internal service funds is reported with governmental activities. Change in net assets of governmental activities See independent auditors' report and notes to basic financial statements. -24- (584,921) 3,634,727 (14,819) 168,828 (14,660) 28,800 (186,100) $ 3,031,855 CITY OF DIAMOND BAR STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2006 Internal Service Funds ASSETS CURRENT ASSETS: Cash and investments $ 1,833,298 I. NONCURRENT ASSETS: Capital assets: Machinery and equipment 188,613 Less accumulated depreciation (102,247) TOTAL NONCURRENT ASSETS 86,366 TOTAL ASSETS 1,919,664 CURRENT LIABILITIES: Due to other governments 361,356 NET ASSETS Invested in capital assets 86,366 Unrestricted 1,471,942 TOTAL NET ASSETS $ 1,558,308 L1 1 .1 See independent auditors' report and notes to basic financial statements. -25- CITY OF DIAMOND BAR STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS For the year ended June 30, 2006 OPERATING EXPENSES: Insurance premiums Depreciation TOTAL OPERATING EXPENSES OPERATING LOSS NONOPERATING REVENUES (EXPENSES): Loss on disposal of capital asset Investment income TOTAL NONOPERATING REVENUES (EXPENSES) LOSS BEFORE TRANSFERS TRANSFERS IN CHANGE IN NET ASSETS TOTAL NET ASSETS - BEGINNING OF YEAR, AS RESTATED TOTAL NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. -26- Internal Service $ 488,019 20,141 508,160, (508,160) (261) 57,883 57,622 (450,538) 264,438 (186,100) 1,744,408 $ 1,558,308 CITY OF DIAMOND BAR STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the year ended June 30, 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Insurance deposits Insurance payments NET CASH USED BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers from other funds NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Investment income NET CASH PROVIDED BY INVESTING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: Operating loss Adjustments to reconcile operating loss to net cash used by operating activities:' Depreciation Changes in operating assets and liabilities: (Increase) decrease in accounts receivables Increase (decrease) in due to other governments TOTAL ADJUSTMENTS NET CASH USED BY OPERATING ACTIVITIES See independent auditors' re and notes to basic financial statements. -27- Internal Service Funds $ 48,148 (211,752) (163,604 264,438 264,438 (92,379) (92,379) 57,883_ 57,883 66,338 1,766,960 $ 1,833,298 $ (508,160) 20,141 49,148 276,267 344,556 $ (163,604) THIS PAGE LEFT BLANK INTENTIONALLY NOTES TO BASIC FINANCIAL STATEMENTS NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2006 REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES: a. Description of Reporting Entity: The City of Diamond Bar (the City) was incorporated April 18, 1989 as a "General Law" City governed b * y an elected five -member city council. As required by accounting principles generally accepted in the United States ofAmerica, these financial statements present the City of Diamond Bar (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from each other. However, the City of Diamond Bar's elected officials have a continuing full or partial accountability for fiscal matters of the other entities. The financial reporting entity consists of. (1) the City (2) organizations for which the City is financially accountable; and, (3) organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes or set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, a component unit's balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit's governing body is substantially the same as the City's or the component unit provides services almost entirely to the City. Blended Component Units: The Diamond Bar Community Redevelopment Agency Agency) ency) was established Ag February 6, 1996, pursuant to the State of California Health and Safety Code, Section 33000, entitled "Community Redevelopment Law". Although it is a legally separate entity from the City, the Agency is reported as if it were part of the City because of its purpose to prepare and execute plans for improvement, rehabilitation and redevelopment of blighted areas within the territorial limits of the City. According to the California Supreme Court's decision on August 9, 2000, the Agency's Redevelopment Plan was deemed invalid. No activities occurred during the year ended June 30, 2006. Accordingly, no financial statements of the Agency were issued. The Diamond Bar Public- Financing Authority (the Authority) was formed on November 19, 2002. The purpose of the Authority is to issue debt to finance public improvements and other capital purchases for the City and Agency. The activity of the Authority is reported in debt service and capital projects funds. See independent auditors' report. NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 1. - REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): b. Government -Wide and Fund Financial Statements: The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The City has no business -type activities. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues.. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds are reported as separate columns in the fund financial statements. c. Measurement Focus, Basis of Accounting, and Financial Statement Presentation: The basic financial statements of the City are composed of the following: •Government -wide financial statements • 'Fund financial statements 0 Notes to basic financial statements Financial reporting for the government -wide financial statements is based upon all GASB pronouncements, as well as the FASB Statements and Interpretations, APB Opinions, and Accounting Research Bulletins that were issued on or before November 30, 1989 that do not conflict with or contradict GASB pronouncements. FASB pronouncements issued after November 30, 1989 are not followed in preparation of the accompanying financial statements. See independent auditors' report. -29- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): c. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): The government -wide financial statements and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all assets and liabilities (current and long-term) are reported. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the fiscal year, which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all the eligibility requirements imposed by the provider have been met. Proprietary, funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's internal service funds are charges to customers for services. Operating expenses for the proprietary funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under the current financial resources measurement focus, generally only current assets and liabilities are reported in the governmental funds. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, except for principal and interest on general long-term liabilities, claims and judgments, and compensated absences which are recognized as expenditures only when payment is due. See independent auditors' report. B-112 wo-swel a@ V.30 [93121101 O.Y.11 10 NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): c. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): Property taxes, taxpayer -assessed taxes, such as sales taxes, gas taxes, and transient occupancy taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. . The accounts of the City are organized and operated on the basis of funds, each of which is considered a separate accounting entity with a self -balancing set of accounts, established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources. d. Fund Classifications: The City reports the following major governmental funds: The General Fund is the primary operating fund of the City and is use ' d to account for all revenues and expenditures of the City not legally restricted as to use. A broad range of municipal activities are provided through this fund including City Manager, City Attorney, Finance, City Clerk, Public Works, Building and Safety, and Parks and Recreation. Proposition A Transit Special Revenue Fund - This fund is used to account for the receipt and expenditure of the City's share of the 1/z cent sales tax levied. in Los Angeles County for local transit purposes. The Capital Improvement Capital Projects Fund is used to account for the costs of constructing street improvements, park improvements and other public improvements not normally included within the other Capital Projects funds. Financing is provided by developer fees and interfund transfers from the Special Revenue Funds and the General Fund. See independent auditors' report. -31- El M41MM10011 • 10111 0 June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING: POLICIES (CONTINUED): d. Fund Classifications (Continued): The City's fund structure also includes the following fund types: •I 1 9 "201 Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for a specified purpose. Debt Service Fund is used primarily to account for the accumulation of resources for the payment of principal and interest on long-term liabilities of the City. Capital Projects Fund is used to account for financial resources to be used for the acquisition .or construction of major capital facilities (other than those financed by Special Revenue Funds). .. • .. 1 W• IMA28101 Internal Service Funds have been established to finance and account for goods and services C, provided by one City department to other City departments or agencies. These activities include self-insurance, equipment and computer maintenance. e. Investments: For financial reporting purposes, investments are stated at fair value. Changes in fair value that occur during a fiscal year are recognized as investment income Z111 reported for that fiscal year. . Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund's share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled investments is allocated to the various funds based on each fund's average cash and investment balances, IM See independent auditors' report. -32- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): L Cash and Cash Equivalents: For purposes of the statement of cash flows, cash and cash equivalents are defined as short-term, highly liquid ' investments that are both readily convertible to known amounts of cash or so near their maturity (an original maturity date of three months or less from the date of purchase) that they present insignificant risk of changes in value because of changes in interest rates. Cash and cash equivalents also represent the proprietary funds' share in the cash and investment pool of the City. All cash and investments of the proprietary (internal service) funds are pooled with the City's pooled cash and investments and are therefore considered cash equivalents for purposes of the statement of cash flows. g. Capital Assets: Capital assets (including infrastructure) are record ' ed at cost where historical records are available and at an estimated original cost where no historical records exist. Contributed capital assets are valued at their estimated fair market value at the date of contribution. Capital asset purchases (other than infrastructure) in excess of $1,500 are capitalized if they have an expected useful life of three years or more. Capital assets include additions to public domain (infrastructure), certain improvements including roads, streets, sidewalks, medians and storm drains within the City. Public domain assets acquired prior to July 1, 2002 have not been included in the accompanying financial statements. The City expects to value and record all infrastructure asset data in its entirety by the fiscal year ending June 30, 2007. Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method in the Government -wide and Proprietary Fund Financial Statements. Depreciation is charged as an. expense against operations and accumulated depreciation is reported on the respective balance sheet. The lives used for depreciation purposes of each capital asset class are: Buildings and improvements 10 - 20 years Furniture and fixtures 3 - 5 years Vehicles and equipment 5 years Infrastructure 10 - 50 years See independent auditors' report. -33- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): h. Encumbrances: Encumbrance accounting, under which purchase orders, contracts and other commitments for C, the expenditure of monies are .recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary control in the governmental funds. Encumbrances outstanding at year-end do not constitute expenditures .or liabilities, but are reported as reservations of fund balance. i. Compensated Absences: Vacation and sick leave time begin to accumulate as of the first day of employment to a maximum of 160 hours. Employees who accumulate sick leave in excess of 160 hours are paid for the excess annually at one half the employee's current wage rate. A liability is recorded for unused vacation and similar compensatory leave balances since the employees' entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement. A liability is recorded for unused sick leave balances only to the extent that it's probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receive termination payments, as well as those who are expected to become eligible to receive termination benefits as a result of continuing their employment with the City. If an employee terminates with a minimum of one year of service, the employee is entitled to receive 10% of the value of his unused sick leave. The percentage increases to 50% for two to three years of service and 100% of the value of his unused. sick leave upon the completion of more than three years of continuous employment. j. Deferred Charges: C Deferredcharges represent capitalized costs incurred in connection with the issuance of Z:) long-term debt. These costs are amortized over the life of the debt on a straight-line basis. C) See independent auditors' report. -34- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED); k. Property Taxes: Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City accrues only those taxes which are received from the County within 60 days after year end. Property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien date Levy date Due dates Collection dates Delinquent dates 1. Use of Estimates: January 1 July 1 November 1 - 1St installment February 1 - 2nd installment December 10 - 1St installment April 10 - 2nd installment December 11 - 1St installment April 11 - 2nd installment The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. See independent auditors' report. -35- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 2. CASH AND, INVESTMENTS: Cash and Investments: Cash and investments at June 30, 2006 consisted of the following. - Statement of Net Assets: Cash and investments $ 35,178,211 Cash and investments with fiscal agents 519,470 $ 35,69701 Cash and investments held by the City at June 30, 2006 consisted of the following: Irnprest cash on hand $ 1,500 Demand deposits (overdraft) (401,279) Escrow deposits 232,450 Investments: U.S. Government Sponsored Enterprise Securities 5,946,100 Repurchase agreements 486,718 Local agency investment fund 29,145,172 Held by Bond Trustee: Cash 285,163 Money Market Mutual Funds 1,857 $ 35,697,681 See independent auditors' report. -36- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 2. CASH AND INVESTMENTS (CONTINUED): Investments Authorized by the California Government Code and the City's Investment Policy: The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy. Maximum Maximum Maximum Percentage Investment . Authorized Investment Type Maturi!y of Portfolio* in One Issuer United States (U.S.) Treasury Obligations 5 years None None U.S. Government Sponsored Enterprise Securities 5 years 20% None Banker's Acceptances 180 days 40% 30% Time Certificate of Deposits 5 years None None Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30%. None Money Market Mutual Funds N/A 15% None Repurchase Agreements, 1 year None None Medium. -Term Corporate Notes (1) 5 years 30% None Local Agency Investment Fund (LAIF) N/A None $ 40.,000,000 Excluding amounts held by bond trustee that are not subject to California Government Code restrictions. (1) Notes must be rated "A" or better. N/A - Not Applicable See independent auditors' report. -37- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 2. CASH AND INVESTMENTS (CONTINUED): Investments Authorized by Debt Agreements: Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk. Disclosures Relating to Interest Rate Risk: Maximum Percentage/ Amount Allowed I_MW 10% None None None None None Equal to six months of principal and interest on the bonds Maximum Investment in One Issuer None None None None None None •l Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. See independent auditors' report. -38- 1 Maximum Authorized Investment Type Maturity U.S. Treasury Obligations None U.S. Government Sponsored Enterprise Securities None Banker's Acceptances 1 year Time Certificate of Deposits None Local Agency Investment Fund None Money Market Funds None Repurchase Obligations Tax Exempt 30 days Taxable Government Money Market Portfolios None Disclosures Relating to Interest Rate Risk: Maximum Percentage/ Amount Allowed I_MW 10% None None None None None Equal to six months of principal and interest on the bonds Maximum Investment in One Issuer None None None None None None •l Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. See independent auditors' report. -38- 1 CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 2. CASH AND INVESTMENTS (CONTINUED): Disclosures Relating to Interest Rate Risk (Continue Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: Remaining Maturity (in Months) 12 Months 13-24 25-60 Investment Type or Less Months Months Total U.S. Government Sponsored Enterprise Securities $ 2,978,500 $ 2,967,600 $ - $ 5,946,100 Repurchase Agreements 486,718 - - 486,718 Local Agency Investment Fund 29,1 45,172 - 29,145,172 Held by Bond Trustee: Money Marker Mutual Funds 1,857 - 1.857 $ 32,612,24-7 $ 2,967&Q0 $ $ 35,579,842 Disclosures Relating to Credit Risk: Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assigrument, of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the actual rating, as reported by Standard and Poor's, as of year end for each investment type: Total Minimum as of Legal Not Investment Type June 30, 2006 Rating—. AAA Rated U.S. Government Sponsored Enterprise Securities $ 5,946,100 AAA 5,946,100 $ Repurchase Agreements 486,718 N/A - 486,718 Local Agency Investment Fund 29,145,172 N/A 29,145,172 Held by Bond Trustee: Money Market Mutual Funds 1.857 A 1,857 Total 35.5.7-9847 $ 5,947,957 $ 29,631-890 N/A - Not Applicable See independent auditors' report. -39- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 2. CASH AND INVESTMENTS (CONTINUED): Disclosures Relating to Custodial Credit Risk: Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside pony. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local go vernmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. The City does not accept 150% of the secured 'public totals. At June 30, 2006, the City deposits (bank balances) were insured by the Federal Depository Insurance Corporation up to $100,000 and the remaining balances were collateralized under California Law. The cash and investments held by Bond Trustee are uninsured and uncollateralized. Investment in State Investment Pool: The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro -rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. See independent auditors' report. CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 3. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS: The composition of interfund balances as of June 30, 2006, is as follows: Due To/From Other Funds: Receivable Fund General Fund Capital Improvement Capital Projects Fund Payable Fund Capital Improvement Capital Projects Fund Other Governmental Funds Other Governmental Funds Amount $ 517,760 32,072 323,299 $ 873,131 The amounts loaned from'the General Fund to the Capital Improvement Capital Projects Fund and Other Governmental Funds are to provide a short-term loan to fund temporary cash shortfalls. The amounts loaned from the Capital Improvement Capital Projects Fund to Other Governmental Funds are to provide a short-term loan to fund construction project expenditures. Interfund Transfers: Transfers In Transfers Out Amount General Fund Other Governmental Funds $ 1,224,783 Capital Improvement General Fund 2,423,221 Capital Projects Fund Other Governmental Funds 2,175,297 Other Governmental Funds General Fund 491,131 Other Governmental Funds 155,091 Internal Service Funds General Fund 264,438 6,733,,961 Transfers to the General Fund from the Other Governmental -Funds were made to reimburse the General Fund for various capital projects. Transfers to the Capital Improvement Capital Projects Fund from the General Fund and Other Governmental Funds were made to provide the funding necessary to accomplish those projects approved by the City Council. Transfers from the General Fund to the Other Governmental Funds were made to provide for debt service payments. Transfers from the General Fund to the Internal Service Funds were made to provide for purchases of a vehicle and equipment and uninsured insurance losses. See independent auditors' report. -41- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 4. CAPITALASSETS: A summary of changes in the Governmental Activities capital assets at June 30, 2006 is as follows: Capital assets, being depreciated: Building and improvements Furniture and fixtures Vehicles and equipment Infrastructure Total capital assets beingdepreciated Less accumulated depreciation for: Building and improvements Furniture and fixtures Vehicles and equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Total Governmental Activities capital assets, net 19,245,306 903,927 20,149,233 71,239 2,347 (5,081) 68,505 1,220,702 242,103 (76,255) 1,386,550 1,779,698 883,147 2.662.845 22,316,945 2,031,524 (81,336) 24,267,133 (3,804,452) Balance - (4,916,131) Balance at (2,747) July 1, 2005 Additions Deletions June 30, 2006 Capital assets, not being depreciated: (92,81 (87,014) - (179,824 Land $ 5,252,465 $ 953,72 * 5 $ - $ 6,206,190 Construction in progress 898,778 3,8 5,049 (1,796,074) 2,947,753 Total capital assets, not being depreciated 6,151,243 4,798,774 (1,796,074) 9,153,943 Capital assets, being depreciated: Building and improvements Furniture and fixtures Vehicles and equipment Infrastructure Total capital assets beingdepreciated Less accumulated depreciation for: Building and improvements Furniture and fixtures Vehicles and equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Total Governmental Activities capital assets, net 19,245,306 903,927 20,149,233 71,239 2,347 (5,081) 68,505 1,220,702 242,103 (76,255) 1,386,550 1,779,698 883,147 2.662.845 22,316,945 2,031,524 (81,336) 24,267,133 (3,804,452) (1,111,679) - (4,916,131) (58,964) (2,747) 5,081 (56,630) (782,282) (125,814) 61,170 (846,926) (92,81 (87,014) - (179,824 (4,738,508) (1,327,254) 66,251 (5,999,511) 17,578,437 704,270 (15,085) 18.267,622 $ 23,722-6BO $ 5,503,044 $ (1,811,152) $ 27,421,565 Depreciation expense was charged to functions in the Statement of Activities as follows: General government $ 66,632 Public safety 13,746 Highways and streets 92,319 Parks, recreation and culture 1,123,237 Community development 11,179 Internal Service Funds depreciation charges to program 20,141 $ 1.327.254 See independent auditors' -report. NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 5. LONG-TERM LIABILITIES: Long-term liability activity for the year ended June 30, 2006, was as follows: Beginning Ending Due Within Balance Additions Retirements Balance One Year Bonds payable: Revenue bonds $13,755,000 $ $ (235,000) $13,520,000 $ 240,000 Unamortized discount (128,380) 49585 (123,795) - Compensated absences 250,241 248,658 (208,130) 290,769 96,923 Total $13,876,K_1 $ 248.658 $ (438,545) $13,686,974 $ 336,923 Bonds Payable: In December 2002, the Diamond Bar Public Financing Authority issued $13,755,000 of 2002 Series A Variable Rate Lease Revenue Bonds to finance the construction of' a community/senior center project and other public improvements within the City. The bonds are special limited obligations of the Authority payable solely from revenues, consisting primarily of base rental payments paid by the City. The variable interest rate on the bonds is reset on a bi-weekly basis. As of June 30, 2006, $13,520,000 of the bonds are outstanding. In conjunction with the Bonds, the Authority executed a rate cap agreement on December 2, 2002 (the Agreement) with JPM[organ Chase (Counterparty) to minimize debt service cost on the 2002 Lease Revenue Bonds (the Bonds) by setting a cap on the interest rate on the Bonds. Under the Agreement, the Counterparty will pay the Authority an amount equal to the product of. (i) the amount by which the floating rate exceeds 4.5%, (ii) the notional principal amount and (iii) the actual number of days in the calculation period divided by 365 days. The Agreement is for a notional amount equal to the outstanding principal amount of the Bonds and will decline as the principal amount declines. The Agreement terminates on January 1, 2013. Fair Value: At June 30, 2006 the Agreement had a positive fair value of $152,798. This is the amount that the Authority would receive in the event that the Agreement is terminated. The fair value was estimated by the City's financial advisor. Credit Risk: The Counterparty, JPM[organ Chase, has the following credit ratings of: (i) Standard & Poor's, AA - and (ii) Moody's, Aa2. Basis Risk: The Agreement does not expose the Authority to basis risk, which refers to a mismatch between the interest rate cap of 4.5% and the variable rate payments to be made on the debt. See independent auditors' report. _43- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 5. LONG-TERM LIABILITIES (CONTINUED): Bonds Payable (Continued): Termination Risk: If the rate cap is terminated, the rate on the Bonds that the Authority would prospectively have to pay will not be subject to the cap rate of 4.5%. The termination of the Agreement could therefore increase the Authority's total debt service in the event that the variable rate is higher than the cap rate of 4.5%. At June 30, 2006, the Agreement had a positive fair value of $152,798. Payments and Associated Debt: Using a variable rate of 5.08% as of June 30, 2006, debt service requirements of the Bonds and the Counterparty's payments, assuming current interest rates remain the same for remainder of the term of the Agreement, are as follows. As rates vary, the variable rate interest payments and net rate cap payments will vary. Compensated Absences: The City's policies relating to compensated absences are described in Note 1. This liability, amounting to $290,769 at June 30, 2006 is expected to be paid in future years from future resources, typically liquidated from the General Fund. See independent auditors' report. -44- Variable Rate Debt Counter- Net Year Ending party Debt June 30, Principal Interest Total Payments Service 2007 $ 240,000 $ 686,816 $ 926,816 $ (78,416) $ 848,400 2008 255,000 674,624 929,624 (77,024) 852,600 2009 265,000 661,670 926,670 (75,545) 851,125 2010 280,000 648,208 928,208 (74,008) 854,200 2011 290,000 633,984 923,984 (72,384) 851,600 2012-2016 1,675,000 2,933,700 4,608,700 (105,168) 4,503,532 2017-2021 2,105,000 2,466,594 4,571,594 - 4,571,594 2022-2026 2,655,000 1,878;584 4,533,584 - 4,533,584 2027-2031 3,345,000 1,137,412 4,482,412 - 4,482,412 2032-2034 2,410,000 248,666 2,658,666 - 2,658,666 $ 13,520,000 $ 11,970,258 $ 25,490;258 $ (482,545) $ 25.007,713 Compensated Absences: The City's policies relating to compensated absences are described in Note 1. This liability, amounting to $290,769 at June 30, 2006 is expected to be paid in future years from future resources, typically liquidated from the General Fund. See independent auditors' report. -44- NOTES TO BASIC FINANCIAL STATEMENTS . (CONTINUED) June 30, 2006 6. LIABILITY, PROPERTY AND WORKERS' COMPENSATION PROTECTION: The City is a member. of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 109 California public entities and is organized under a joint powers agreement pursuant to California Government Code Section 6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group -purchased insurance for property and other coverages.* The Authority's pool began covering claims of its members in 1978. Each member government has an elected official as.its representative on the Board of Directors. The Board operates through a 9 -member Executive Committee. a. Self -Insurance Programs of the Authority: General Liabilit The City pays a primary deposit to cover estimated losses for a fiscal year (claims year). Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Each member has a retention level of $30,000 for each loss and this is charged directly to the member's primary deposit. Losses from $30,000 to $750,000 are pooled based on each member's share of the total losses in the first layer of all of the members. Losses from $750,000 to $15,000,000 are pooled based on the member's share of the total payroll of all the members. Losses from $15,000,000 to $50,000,000 are transferred to the California JPIA's excess insurer. Loss Development Reserves are separated by layer and allocated in the same manner as the losses with which they are associated. The protection for each member is $50,000,000 per occurrence and $50,000,000 annual aggregate. Z:1 Workers' Compensation The City participates in the workers' compensation pool administered by the Authority. Pool deposits and retrospective adjustments are valued in a manner similar to the General Liability pool. The City is charged for the first $50,000 of each claim. Costs are pooled above that level to $50,000. Costs from $50,001 to $100,000 per claim are pooled based on the .member's losses under its retention level. Costs between $100,001 and $2,000,000 per claim are pooled based on payroll. Costs between $2,000,000 and $5,000,000 are paid by excess insurance purchased by the Authority. Costs in excess of $5,000,000 are pooled by the members based on payroll. See independent auditors' report. - 45 - M • e a ut6 _�1 0 Y.3 NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 6. LIABILITY, PROPERTY AND. WORKERS' COMPENSATION PROTECTION (CONTINUED): a. Self -Insurance Programs of the Authority (Continued): Property Insurance The City participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. The City's property is currently insured according to a schedule of covered property submitted by the. City to the Authority. Total all-risk property insurance coverage is $100,000,000 per occurrence. There is a $5,000 per loss deductible. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. Environmental Liability The City participates in the pollution legal liability and remediation legal liability insurance which is available through the Authority. This policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City. Coverage is on a claims -made basis. There is a $50,000 deductible. The Insurance Authority has a limit of $50,000,000 for the 3 -year period from July 1, 2005 through June 30, 2008. Fidelity Bonds The City participates in the Blanket Fidelity Bond issued by the Authority to protect the City from employee dishonesty, faithful performance, depositor's forgery, computer fraud, crime -money and securities. This bond covers all employees, the Treasurer, City Clerk and/or Tax Collector and any employee required by law to be individually bonded. The bond's limit is $1,000,000 and the deductible is $2,500 per occurrence. b. Adequacy of Protection: During the past three fiscal years none of the above programs of protection have had settlements or judgments that exceed pooled or- insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year, with the exception of the environmental insurance coverage which has been decreased from $120,000,000 to $50,000,000. See independent auditors' report. -46- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 Deficit Fund Balances The following funds reported deficit fund balances at June 30, 2006: Capital Improvement Capital Projects Fund $ (655,322) ISTEA Special Revenue Fund (277,240) Community Development Block Grant Special Revenue Fund (121,345) The Capital Improvement Capital Projects Fund deficit will be funded with various- government grants in future years. The ISTEA Special Revenue Fund deficit will be reimbursed through revenues received from the California Department of Transportation. The Community Development Block Grant Special Revenue Fund deficit will be funded by future year revenue allocations from Los Angeles County. Expenditures Exceeded Appropriations Expenditures for the year ended June 30, 2006 'exceeded appropriations of the following funds/departments as follows: Budget Actual Variance General Fund: General Government - City Attorney $ 90,000 $ 152,090 $ (62,090) Public Safety - Building and Safety 718,950 746,845 (27,895) Capital Projects Fund - Public Financing Authority 3 (3) 8. PENSION PLAN: Plan Description: The City contributes to the California Public Employees Retirement System (PERS); * an and multiple -.employer public employee defined benefit pension plan. PERS provides 'retirement d disability benefits, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. As of July 1, 2005, the City was mandated by the State to participate in the risk pool. The risk pool combines the assets and liabilities across employers of the same risk pool to provide a method to spread the risk of uncertain gains and losses over a larger base .of members. The June 30, 2003 valuations were the first pooled valuations. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their executive office: 400 P Street, Sacramento, CA 95814. See independent auditors' report. -47- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 8. PENSION PLAN (CONTINUED): Funding Policy: Participants are required to contribute 7% of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. Benefit provisions and. all other requirements are established by state statute and city contract with employee bargaining groups. Annual Pension Cost: Under GASB 27, the City reports an annual pension cost (APC) equal to the annual required contribution (ARC) plus an adjustment for the cumulative difference between the APC and the employer's actual plan contributions for the year. The cumulative difference is called the "net pension obligation (NPO)". The ARC for the period July.1, 2005 to June 30, 2006 has been determined by an actuarial valuation of the plans as of June 30, 2003. The contribution rate indicated for the period is 11.148% of payroll for the Retirement Program. In order to.calculate the dollar value of the ARC for inclusion in financial statements prepared as of June 30, 2006, this contribution rate, as modified by any amendments for the year, would be multiplied by the payroll of covered employees that were actually paid during the period July 1, 2005 to June 30, 2006. The employer is responsible for determining the NPO and the APC. A summary of principle assumptions and methods used to determine the ARC is shown below. Valuation Date: Actuarial Cost Method: Amortization Method: Average Remaining Pool: Asset Valuation Method: Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Inflation Payroll Growth Individual Salary Growth See independent auditors' report. Retirement Program June 30, 2003 Entry Age Actuarial Cost Method Level Percent of Payroll 15 years as of the Valuation Date 3 year Smoothed Market 7.75% (net of administrative expenses) 3.25% to 14.45% depending on Age, Service and Type of Employment 3.00% 3.25% A merit scale varying by duration of employment coupled with an assumed annual inflation compone . n.t of 3.0% and an annual production growth of 0.25%. NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 8. PENSION PLAN (CONTINUED): Annual Pension Cost (Continued The Schedule of Funding Progress below shows the recent history of the actuarial value of assets, actuarial accrued liability, their relationship, and the relationship of the unfunded actuarial liability to payroll. Three -Year Trend Information For PERS Fiscal Annual Pension Percentage of Net Pension Year Cost (APC)- APC Contributed Obligation 6/30/2004 $ 134,451 100% $ 6/30/2005 195,270 100% 6/30/2006 304,107 100% Schedule of Funding Progress for PERS for the Risk Pool 9. CONTINGENCIES: � The City is presently involved in other I matters of litigation that have arisen in the normal course of the City's business. City management believes, based upon consultation with. the City Attorney, that these cases, in the aggregate, are not expected to have a material adverse financial impact on the City. See independent auditors' . report. - 49 - Entry Age Normal UAAL as a Actuarial Accrued Actuarial Unfunded % of Valuation Liability Value of AAL Funded Covered Covered Date (AAL) Assets— (UAAL) Ratio Payroll Payroll (A) (B) (A -B) (B/A) (C) [(A-B/Cl 6/30/03 $2,596,966,545 $2,372,879,034 $ 224,087,511 91.4 % $725,020,458 30,9 % 6/30/04 2,746,095,668 2,460,944,656 285,151,012 89.6% 743,691,970 .38.3 % 6/30/05 2,891,460,651 2,588,713,000 302,747,651 89.5 % 755,046,679 40.1 % 9. CONTINGENCIES: � The City is presently involved in other I matters of litigation that have arisen in the normal course of the City's business. City management believes, based upon consultation with. the City Attorney, that these cases, in the aggregate, are not expected to have a material adverse financial impact on the City. See independent auditors' . report. - 49 - NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2006 10. CONSTRUCTION COMMITMENTS: The following material construction commitments existed at June 30, 2006: Project Name Grand Avenue Betterment/Beautification - WCL to ECL Traffic Signals: Pathfinder @ Peaceful Hills Grand @ Cahill Grand @ Cleghorn Left Turn: Diamond Bar Boulevard @ Cold Spring Diamond Bar Boulevard @ Highland Valley TS Mod: Diamond Bar Boulevard/Mountain Laurel Diamond Bar Boulevard/Grand Neighborhood Traffic Mgt Mitigations 11. OPERATING LEASES: Expenditures as of Remaining June 30, 2006 Commitments, 1,963,030 $ 87,055 249,059 .34,841 - 172,714 187,030 97,244 45,740 5,934 275,850 2,025 73,132 6,500 187,145 - 146,144 $ 2,323,792 $ 1,209,651 The City leases building and office facilities under noncancelable operating leases. The total costs for such leases were $254,457 for the year ended June 30, 2006. The future minimum lease payments for the lease of building and office facilities are as follows: Year Ending June 30, 2007 256,880 2008 261,727 2009 264,151 2010 268,997 2011 179,332 Total $ 1,231,087 12. RESTATEMENT OF NET ASSETS: The balances of net assets at July 1, 2005 of the governmental activities and the Self -Insurance Internal Service Fund were decreased by $244,565 to $45,887,235 and $1,468,053, respectively, to adjust the balance of the due to other governments liability. See independent auditors' report. -50- REQUIRED SUPPLEMENTARY INFORMATION -51- THIS PAGE LEFT BLANK INTENTIONALLY -52- BUDGETARY COMPARISON SCHEDULES M►1 . a M The General Fund is used to account for resources traditionally associated with government, which are not legally or by sound financial management to be accounted for in another fund. SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for a specified purpose. Proposition A Transit Fund - This fund is used to account for the receipt and expenditure of the City's share of the 1/z cent sales tax levied in Los Angeles County for local transit purposes. - -53- BUDGETARY COMPARISON SCHEDULE GENERALFUND For the year ended June 30, 2006 See independent auditors' report and note to required supplementary information. Variance with - - Final Budget- Budgeted Amounts 9nedivo Original Final Actual REVENUES: Taxes $ 8,606,700 $ 8,561J00 $ 9,508757 $ 947,057 Intergovernmental revenue 3,209'905 4,221,645 4,440,031 227,386 Fines and forfeitures 746'000 706.000 589.922 (116'078) Licenses, permits and fees 2'174,000 2'375'260 2,389'149 13,889 Investment income 350.000 550'000 985'531 435,531 Other revenues 408200 647,200 772,641 125,441 TOTALIOBVENDE8 15,499,705 17,061,805 19,695,031 1,633,226 --------`--' Current: General government: City Council 188,500 188,500 164,024 24,476 CityMonoguc/C%cdc 934,850 063,350 83 *1J17 131,633 City Attorney 0O'OOO qO'0OO 3 l�,0PO (62'090) Finance 391'050 400.550 310/458 81'092 Human resources 224'058 226,950 160'189 57'770 Information systems 620,015 713,304 698.061 15,253 General government .863,360 955`126 860,888 04,238 Public information 487000 486,450 356,242 130208 Subtotal general government 3808735 4,024,239 3551659 472,580 Public safety: Law enforcement 4J82,300 4,822,300 4,538,014 283,386 Fire protection 7,500 7,500 7,350 141 Animal control 94`000 94.000 80.307 4'603 Emergency preparedness 68.550 73'800 13,573 60'227 Building and safety 556,280 719,950746,845(27,895) Subtotal public safety 5508630 5,716,5505395998 320,552 Highways and streets 2,139,715 2,949,957 2 410 ,117 Parks, recreation and culture 2,592,640 2804767 2,613,834 190933 Community development 1,955,25020892,261,816 726,433 TOTAL EXPENDITURES 16804960 18,383,662 16,263,047 2,120,615_ EXCESS OFREVENUES OVER (DNJBI8 EXPENDITURES 3,753,841 OTHER FINANCING SOURCES (J383): Transfers in 1,376J00 1,391,700 I'224J83 (166'017) Transfers out 648,093 TOTAL OTHER FINANCING SOURCES (USES) 954 481176 NET CHANGE INFUND BALANCE (1,349,255) 8,757,048 477,979 4L235,0I7 FUND BALANCE ' BEGINNING UFYEAR 25,935,639 25,935,639 25,935,639 - FUND BALANCE - END OFYEAR See independent auditors' report and note to required supplementary information. CITY OF DIAMOND BAR BUDGETARY COMPARISON SCHEDULE PROPOSITION A TRANSIT SPECIAL REVENUE FUND For the year ended June 30, 2006 See independent auditors' report and note to required supplementary information. -55- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 866,300 $ 966,300 $ 959,518 $ (6,782) Charges for services 550,000 550,000 659,218 109,218 Investment income 22,000 22,000 35,135 13,135 TOTAL REVENUES 1,438,300 1,538,300 1,653,871 115,571 EXPENDITURES: Current: Highway and streets 1,202,130 1,650,918 1,634,577 16,341 TOTAL EXPENDITURES 1,202,130 1,650,918 1,634,577 16,341 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 236,170 (112,618) 19,294. 131,912 FUND BALANCE - BEGINNING OF YEAR' 918,936 918,936 918,936 - FUND BALANCE - END OF YEAR $ 11155,106 $ 806,318 $ 938,230 $ 131,912 See independent auditors' report and note to required supplementary information. -55- I"MKe) 41 "D - "T -kyj We "D M.MI 1 1111111 ;cii iiiii �i � iil� ii i i� � lr� �l'�: p� ij� 1111� �� June 30, 2006 1. BUDGETS AND BUDGETARY ACCOUNTING: The City adheres to the following general procedures in establishing its annual budget, which is reflected in the accompanyingt:- basic financial statements: a. The annual budget adopted by the City Council provides for the general operation of the City. It includes proposed expenditures and the means of financing them. Budgeted appropriations lapse at the end of the year. b. The City Council approves total budgeted appropriations and amendments to appropriations throughout the year. The City Council must approve budget appropriation transfers between departments within a fund. The departments of the General Fund are considered to be departments for purposes of this requirement. Actual expenditures may not legally exceed budgeted appropriations at the fund level. c. Annual budgets are adopted for the General and certain Special Revenue Funds on a basis substantially consistent with accounting principles generally accepted in the United States of America. Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. d. The budgetary information shown for revenues and expenditures represents the original adopted budget adjusted for any changes made by the City Council. For the year ended June 30, 2006, supplemental appropriations in the amount of $4,969,353 were made. e. Formal budgetary integration is employed as a management control device. Commitments for materials and services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist in controlling expenditures. Appropriations which are encumbered at C) year end lapse, and then are added to the following year's budgeted appropriations. However, t) C� encumbrances at year-end are reported as reservations of fund balance. See independent auditors' report. -56- SUPPLEMENTARY INFORMATION -57- CITY OF DIAMOND BAR COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS June 30, 2006 ASSETS Cash and investments Cash and investments with fiscal agents Accounts receivable Due from other governments Notes receivable TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable Accrued payroll Due to other funds Deferred revenue Advances from other governments TOTAL LIABILITIES FUND BALANCES: Reserved for: Encumbrances Debt service Unreserved reported in: Special revenue funds Capital projects funds TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES $ 135,259 $ - $ - $ 135,259 3,729 - - 3,729 355,371 - - 355,371 520,939 - - 520,939 137,595 - - 137,595 1,152,893 - - 1,152,893 30,758 - - 30,758 - 287,020 - 287,020 4,834,723 - - 4,834,723 4,865,481 287,020 - 5,152,501 $ 6,018,374 $ 287,020 $ - $ 6,305,394 See independent auditors' report. -58- Debt Capital Service Fund Projects Fund Total Special Public Public Other Revenue Financing Financing Governmental Funds Authority Authority Funds $ 5,096,866 $ - $ - $ 5,096,866 - 287,020 - 287,020 49,989 - - 49,989 733,924 - - 733,924 137,595 - - 137,595 $ 6,018,374 $ 287,020 $ - $ 6,305,394 $ 135,259 $ - $ - $ 135,259 3,729 - - 3,729 355,371 - - 355,371 520,939 - - 520,939 137,595 - - 137,595 1,152,893 - - 1,152,893 30,758 - - 30,758 - 287,020 - 287,020 4,834,723 - - 4,834,723 4,865,481 287,020 - 5,152,501 $ 6,018,374 $ 287,020 $ - $ 6,305,394 See independent auditors' report. -58- COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANCES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS For the year ended June 30, 2006 See independent auditors' report. 'Moon Debt Capital Service Fund Projects Fund Total Special Public Public Other Revenue Financing Financing Governmental Funds Authority Authority Funds REVENUES: Special assessments $ 504,908 $ - $ - $ 504,908 Intergovernmental revenue 3,170,714 - - 3,170,714 Charges for services 211,096 Investment income 220,245 5,444 3,065 228,754 Other revenues 19,575 - - 19,575 TOTAL REVENUES 4,126,538 5,444 3,065 4,135,047 EXPENDITURES: Current: Public safety 8,261 - - 8,261 Highways and streets 695,180 - - 695,180 Community development 486,723 - - 486,723 Debt service: Principal - 235,000 235,000 Interest and fiscal charges - 404,072 3 404,075 TOTAL EXPENDITURES 1,190,164 639,072 3 1,829,239 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 2,936,374 (633,628) 3,062 2,305,808 OTHER FINANCING SOURCES (USES): Transfers in - 646,222 - 646,222 Transfers out (3,400,079) - (155,092) (3,555,171) TOTAL OTHER FINANCING SOURCES (USES) (3,400,079) 646,222 (155,092) (2,908,949) NET CHANGE IN FUND BALANCES (463,705) 12,594 (152,030) (603,141) FUND BALANCES - BEGINNING OF YEAR 5,329,186 274,426 152,030 5,755,642 FUND BALANCES - END OF YEAR $ 4,865,481 $ 287,020 $ - $ 5,152,501 See independent auditors' report. 'Moon OTHER SPECIAL REVENUE FUNDS The following Special Revenue Funds have been classified as other governmental funds in the accompanying financial statements: State Gas Tax Fund - This fund is used to account for state gasoline taxes received under Sections 2105, 2106, 2107 and 2107.5 of the Streets and Highways Code. State law requires that these revenues be utilized solely for street related purposes. Proposition C Transit Fund - This fund is used to account for the receipt and expenditure of Proposition C funds from the Los Angeles County Metropolitan Transportation Authority for the City's transit and transit -related improvement projects. The Intermodal Surface Transportation Enhancement Act (TQrM A )Fund - This fund is used to account for transport related receipts and expenditures. Integrated Waste Management Fund - This fund is used to account for revenues and expenditures related to the City's waste reduction efforts as related to AB939. Traffic Congestion Relief Fund - This fund * is used to account for the Governor's transportation congestion policy program revenue received for the repair and construction of streets. Air Quality Improvement Fund - This fund is used to account for motor vehicle registration fees received from the South Coast Air Quality Management District to reduce air pollution from motor vehicles pursuant to the California Clean Air Act of 1988. California T,,qw Enforcement Equipment Program (CLEEP) Fund - This fund is used to account for revenues received from the California CLEEP fund and expenditures made for the purchase of high-technology equipment. Park and Facility Development Fund This fund is used to account for the development and enhancement of the City's parks. Communis Development Block Grant (CDBG) Fund - This fund is used to account for the City's allotment of CDBG funds from the federal government via the County of Los Angeles Community 0 Im Development Commission. These funds are used to fund community development programs and projects benefiting, low and moderate income citizens. C) OTHER SPECIAL REVENUE FUNDS (CONTINUED) Citizens Option for Public Safety (COPS) Fund - This fund is used to account for COPS grants received from both the state and federal government. The purpose of these funds is to enhance the City's public safety budget and to fund special public safety related projects. Asset Seizure Fund - This fundis used to account for Narcotics Asset Forfeiture funds received from the federal government. It is required that these funds be used to enhance drug, and law enforcement activities. Landscape Maintenance District Fund - This fund is used to account of revenues and expenditures related to the special property tax assessments which were set up in accordance with the Landscape and Lighting Act of 1972. The purpose of these districts is to improve the landscaping of City owned medians and hillsides. CITY OF DIAMOND BAR COMBENIING BALANCE SHEET OTHER SPECIAL REVENUE FUNDS June 30, 2006 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ - $ - $ - Proposition Integrated Traffic 1,922 - State C Waste Congestion - - 277,240 Gas Tax Transit ISTEA Management Relief ASSETS - - 554,480 10,140 - FUND BALANCES (DEFICITS): Cash and investments $ 289,038 $ 1,356,317 $ - $ 447,681 $ 166,393 Accounts receivable - - - 49,989 - Due from other governments 101,775 - 277,240 - 75,068 Notes receivable - - - - - TOTAL ASSETS $ 390,813 $ 1,356,317 $ 277,240 $ 497,670 $ 241,461 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ - $ - $ - $ 8,218 $ - Accrued payroll - - - 1,922 - Due to other funds - - 277,240 - - Deferred revenue - - 277,240 - - Advances from other governments - - - - - TOTAL LIABILITIES - - 554,480 10,140 - FUND BALANCES (DEFICITS): Reserved for: Encumbrances - - - - - Unreserved 390,813 1,356,317 (277,240) 487,530 241,461 TOTAL FUND BALANCES (DEFICITS) 390,813 1,356,317 (277,240) 487,530 241,461 TOTAL LIABILITIES AND FUND BALANCES $ 390,813 $ 1,356,317 $ 277,240 $ 497,670 $ 241,461 See independent auditors' report. -62- $ 114,265 $ 75,088 $ 1,947,992 $ 259,017 $ 174,611 $ 331,644 $ 352,256 $ 6,018,374 $ 6,760 $ - $ - $ 43,214 $ - Total Air Park and Landscape Other Quality Facility Asset Maintenance Special Improvement CLEEP Development CDBG COPS Seizure District Revenue Funds - $ 95,516 $ 75,088 $ 1,825,715 $ - $ 174,611 $ 331,644 $ 334,863 $ 5,096,866 - - - _ - - - 49,989 18,749 - 122,277 121,422 - - 17,393 733,924 - - - 137,595 - - - 137,595 $ 114,265 $ 75,088 $ 1,947,992 $ 259,017 $ 174,611 $ 331,644 $ 352,256 $ 6,018,374 $ 6,760 $ - $ - $ 43,214 $ - $ 456 $ 76,611 $ 135,259 538 - - - - - 1,269 3,729 78,131 - - - 355,371 - - 122,277 121,422 - - - 520,939 - - - 137,595 - - - 137,595 7,298 - 122,277 380,362 - 456 77,880 1,152,893 24,209 - - 419 - - 6,130 30,758 82,758 75,088 1,825,715 (121,764) 174,611 331,188 268,246 4,834,723 106,967 75,088 1,825,715 (121,345) 174,611 331,188 274,376 4,865,481 $ 114,265 $ 75,088 $ 1,947,992 $ 259,017 $ 174,611 $ 331,644 $ 352,256 $ 6,018,374 -63- CITY OF DIAMOND BAR COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER SPECIAL REVENUE FUNDS For the year ended June 30, 2006 REVENUES: Special assessments Intergovernmental revenue Charges for services Investment income Other revenues TOTAL REVENUES EXPENDITURES: Current: Public safety Highways and streets Community development TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICITS) - BEGINNING OF YEAR FUND BALANCES (DEFICITS) - END OF YEAR See independent auditors' report. 196,804 196,804 1,101,342 872,835 .282,630 76,440 270,986 (1,2951827) (690,826) - (152,686) (29,525) (1,295,827) (690,826) - (152,686) (29,525) (194,485) 182,009 282,630 (76,246) 241,461 585,298 1,174,308 (559,870) 563,776 $ 390,813 $1,356,317 $ (277,240) $ 487,530 $ 241,461 -64- Proposition Integrated Traffic State C Waste Congestion Gas Tax —Transit ISTEA -Management Relief 1,078,352 825,189 282,630 42,875 267,292 - - .211,096 - 22,990 47,646 19,273 3,694 1,101,342 872,835 282,630 273,244 270,986 196,804 196,804 1,101,342 872,835 .282,630 76,440 270,986 (1,2951827) (690,826) - (152,686) (29,525) (1,295,827) (690,826) - (152,686) (29,525) (194,485) 182,009 282,630 (76,246) 241,461 585,298 1,174,308 (559,870) 563,776 $ 390,813 $1,356,317 $ (277,240) $ 487,530 $ 241,461 -64- Total Air Park and Landscape Other Quality Facility Asset Maintenance Special Improvement CLEEP Development CDBG COPS Seizure District Revenue Funds $ $ _ $ _ $ _ $ - $ - $ 504,908 $ 504,908 71,314 - 29,067 460,560 113,435 - - 3,170,714 - - _ _ - 211,096 5,397 2,701 70,894 9,020 11,933 26,697 220,245 19,575 = 19,575 L76,711 2,701 119,536 460,560 122,455 11,933 531,605 4,126,538 7,671 590 - 8,261 - _ _ - _ - 695,180 695,180 89,664 - - 200,255 - - - 486,723 89,664 - - 200,255 7,671 590 695,180 1;190,164 (12,953) 2,701 119,536 260,305 114,784 11,343 (163,575) 2,936,374 .., - - (194,121) (248,728) (129,307) - (659,059) (3,400,079) - - (194,121) (248,728) (129,307) - (659,059) (3,400,079) (12,953) 2,701 (74,585) 11,577 (14,523) 11,343 (822,634) (463,705) 119,920 72,387 1,900,300 (132,922) 189,134 319,845 1,097,010 5,329,186 $ 106,967 $ 75,088 $ 1,825,715 $ (121,345) $ 174,611 $ 331,188 $ 274,376 $ 4,865,481 t� a -65- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL STATE GAS TAX SPECIAL REVENUE FUND For the year ended June 30, 2006 REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. -66- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1,040,670 $ 1,040,670. $ 1,078,352 $ 37,682 7,000 7,000 22,990 15,990 1,047,670 1,047,670 1,101,342 53,672 (1,202,400) (1,202,400) (1,295,827) (93,427) (1,202,400) (1,202,400) (1,295,827) (93,427) (154,730) (154,730) (194,485) (39,755) 585,298 585,298 585,298 - $ 430,568 $ 430,568 $ 390,813 $ (39,755) See independent auditors' report. -66- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PROPOSITION c TRANSIT SPECIAL REVENUE FUND For the year ended June 30, 2006 See independent auditors' report. -67- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 718,540 $ 718,540 $ 825,189 $ 106,649 Investment income 18,000 18,000 47,646 29,646 TOTAL REVENUES 736,540 736,540 872,835 136,295 OTHER FINANCING USES: Transfers out (719,000) (1,019,000) (690,826) 328,174 TOTAL OTHER FINANCING USES (719,000) (1,019,000) (690,826) 328,174 NET CHANGE IN FUND BALANCE 17,540 (282,460) 182,009 464,469 FUND BALANCE - BEGINNING OF YEAR 1,174,308 1,174,308 1,174,308 - FUND BALANCE - END OF YEAR $ 1,191,848 $ 891,848 $ 1,356,317 $ 464,469 See independent auditors' report. -67- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ISTEA SPECIAL REVENUE FUND For the year ended June 30, 2006 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 2,535,845 $ 2,535,845 282,630 $ (2,253,215) TOTAL REVENUES 2,535,845 2,535,845 282,630 (2,253,215) OTHER FINANCING USES: Transfers out (2,535,845) (2,535,845) 2,535,845 TOTAL OTHER FINANCING USES (2,535,845) (2,535,845) - 2,535,845 NET CHANGE IN FUND BALANCE 282,630 282,630 FUND BALANCE (DEFICIT) - BEGINNING OF YEAR (559,870) (559,870) (559,870) FUND BALANCE (DEFICIT) - END OF YEAR $ (559,870) $ (559,870) $ (277,240) $ 282,630 See independent auditors' report. -68- SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL INTEGRATED WASTE MANAGEMENT SPECIAL REVENUE FUND REVENUES: Intergovernmental revenue Charges for services Investment income TOTAL REVENUES EXPENDITURES: Current: Community development TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR For the year ended June 30, 2006 (40,850) (59,026) 76,440 135,466 (185,000) (185,000) (152,686) Variance with (185,000) (185,000) (152,686) Final Budget Budgeted Amounts (76,246) Positive Original Final Actual (Negative) $ 170,000 $ 170,000 $ 42,875 $ (127,125) 200,000 200,000 211,096 11,096 12,000 12,000 19,273 7,273 382,000 382,000 273,244 (108,756) 422,850 441,026 196,804 244,222 422,850 441,026 196,804 244,222 (40,850) (59,026) 76,440 135,466 (185,000) (185,000) (152,686) 32,314 (185,000) (185,000) (152,686) 32,314 (225,850) (244,026) (76,246) 167,780 563,776 563,776 563,776 $ 337,926 $ - 319,750 $ 487,530 $ 167,780 See independent auditors' report. -69- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TRAFFIC CONGESTION RELIEF SPECIAL REVENUE FUND For the year ended June 30, 2006 See independent auditors' report. -70- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ $ 250,000 $ 267,292 $ 17,292 Investment income - 3,694 3,694 TOTAL REVENUES 250,000 270,986 20,986 OTHER FINANCING USES: Transfers out (250,000) (29,525) 220,475 NET CHANGE IN FUND BALANCE 241,461 241,461 FUND BALANCE - BEGINNING OF YEAR - - FUND BALANCE - END OF YEAR $ 241,461 $ 241,461_ See independent auditors' report. -70- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES EXPENDITURES: Current: Community development TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCE I : • 117L 1900. . FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2006 -71- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 65,000 $ 65,000 $ 71,314 $ 6,314 4,000 4,000 5,397 1,397 69,000 69,000 76,711 7,711 168,690 172,347 89,664 82,683 168,690 172,347 89,664 82,683 (99,690) (103,347) (12,953) 90,394 (7,800) (7,800) - 7,800 (7,800) (7,800) - 7,800 (107,490) (111,147) (12,953) 98,194 119,920 119,920 119,920 - $ 12,430 $ 8,773 $ 106,967 $ 98,194 -71- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CLEEP SPECIAL REVENUE FUND For the year ended June 30, 2006 See independent auditors' report. -72- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment income $ $ $ 2,701 $ 2,701 TOTAL REVENUES 2,701 2,701_ EXPENDITURES: Current: Public safety 25,000 25,000 25,000 TOTAL EXPENDITURES 25,000 25,000 25,000 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (25,000) (25,000) 2,701 27,701 FUND BALANCE - BEGINNING OF YEAR 72,387 72,387 72,387 - FUND BALANCE - END OF YEAR $ 47,387 $ 47,387 $ 75,088 27,701 See independent auditors' report. -72- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PARK AND FACILITY DEVELOPMENT SPECIAL REVENUE FUND For the year ended June 30, 2006 See independent auditors' report. -73- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 863,483 $ 863,483 $ 29,067 $ (834,416) Investment income, 37,000 37,000 70,894 33,894 Other revenues - 19,575 19,575 TOTAL REVENUES 900,483 900,483 119,536 (780,947) OTHER FINANCING USES: Transfers out (1,883,774) (1,883,774) (194,121) 1,689,653 TOTAL OTHER FINANCING USES (1,883,774) (1,883,774) (194,121) 1,689,653 NET CHANGE IN FUND BALANCE (983,291) (983,291) (74,585) 908,706 FUND BALANCE - BEGINNING OF YEAR 1,900,300 1,900,300. 1,900,300 - FUND BALANCE - END OF YEAR $ 917,009 $ 917,009 $ 1,825,715 $ 908,706 See independent auditors' report. -73- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CDBG SPECIAL REVENUE FUND For the year ended June 30, 2006 See independent auditors' report. -74- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 753,041 $ 922,034 460,560 $ (461,474) TOTAL REVENUES 753,041 922,034 460,560 (461,474) EXPENDITURES: Current: Community development 232,205 386,201 200,255 185,946 TOTALEXPENDITURES 232,205 386,201 200,255 185,946 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 520,836 535,833 260,305 (275,528) OTHER FINANCING USES: Transfers out (380,915) (395,915) (248,728) 147,187 TOTAL OTHERFINANCING USES (380,915) (395,915) (248,728) 147,187_ NET CHANGE IN FUND BALANCE 139,921 139,918 11,577 (128,341) FUND BALANCE (DEFICIT) - BEGINNING OF YEAR (132,922) (132,922) (132,922) FUND BALANCE (DEFICIT) - END OF YEAR 6,999 6,996 $ (121,345) (128,341) See independent auditors' report. -74- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL COPS SPECIAL REVENUE FUND For the year ended June 30, 2006 See independent auditors' report. -75- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: . Intergovernmental revenue $ 113,000 $ 113,000 $ 113,435 $ 435 Investment income 4,000 4,000 9,020 5,020 TOTAL REVENUES 117,000 117,000 122,455 5,455 EXPENDITURES: Current: Public safety 36,900 36,900 7,671 29,229 TOTAL EXPENDITURES 36,900 36,900 7,671 29,229 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 80,100 80,100 114,784 34,684 OTHER FINANCING USES: Transfers out (182,700) (192,700) (129,307) 53,393 TOTAL OTHER FINANCING USES (182,700) (182,700) (129,307) 53,393 NET CHANGE IN FUND BALANCE (102,600) (102,600) (14,523) 88,077 FUND BALANCE - BEGINNING OF I YEAR 189,134 189,134 189,134. - FUND BALANCE - END OF YEAR $ 86,534 $ 86,534 $ 174,611 $ 88,077 See independent auditors' report. -75- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ASSET SEIZURE SPECIAL REVENUE FUND For the year ended June 30, 2006 See independent auditors' report. -76- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: — Investment income $ 7,000 $ 7,000 $ 11,933 $ 4,933 TOTAL REVENUES 7,000 7,000 11,933 4,933 EXPENDITURES: Current: Public safety 25,000 25,000 590 24,410 TOTAL EXPENDITURES 25,000 25,000 590 24,410 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (18,000) (18,000) 11,343 29,343 FUND BALANCE - BEGINNING OF YEAR 319,845 319,845 319,845 - FUND BALANCE - END OF YEAR $ 301,845 $ 301,845 $ 331,188 $ 29,343 See independent auditors' report. -76- CITY OF DIAMOND BAR . SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LANDSCAPE MAINTENANCE DISTRICT SPECIAL REVENUE FUND For the year ended June 30, 2006 EXPENDITURES: Current: 103,404 Highways and streets 783,502 798,584 695,180 TOTAL EXPENDITURES 783,502 798,584 695,180 103,404 EXCESS OF REVENUES OVER Variance with (UNDER) EXPENDITURES (215,775) Final Budget (163,575) Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Special assessments $ 551,727 $ 551,727 $ 504,908 $ (46,819) Investment income 16,000 16,000 26,697 10,697 TOTAL REVENUES 567,727 567,727 531,605 (36,122) EXPENDITURES: Current: 103,404 Highways and streets 783,502 798,584 695,180 TOTAL EXPENDITURES 783,502 798,584 695,180 103,404 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (215,775) (230,957) (163,575) 67,292 OTHER FINANCING USES: Transfers out (80,400) (80,400) (659,059) (578,659) TOTAL OTHER FINANCING USES (80,400) (80,400) (659,059) (578,659) NET CHANGE IN FUND BALANCE (296,175) (311,257) (822,634) (511,377) FUND BALANCE - BEGINNING OF YEAR 1,097,010 1,097,010 1,097,010 FUND BALANCE - END OF YEAR $ 800,835 $ 785,753 274,376 $ (511,377) See independent auditors' report. -77- THIS PAGE LEFT BLANK INTENTIONALLY -78- OTHER DEBT SERVICE FUND The Debt Service Fund is used primarily to account for the accumulation of resources for the payment of principal and interest on long-term liabilities of the City. The following has been classified as an other governmental fund in the accompanying financial statements. Public Financing AuthorityFund- This fund is used to account for the: payment of principal and interest on the Lease Revenue Bonds. -79- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PUBLIC FINANCING AUTHORITY DEBT SERVICE FUND For the year ended June 30, 2006 See independent auditors' report. -80- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment income $ 5,000 $ 5,000 $ 5,444 $ 444 EXPENDITURES: Debt service: Principal 235,000 235,000 235,000 - Interest and fiscal charges 474,500 474,500 404,072 70,428_ TOTAL EXPENDITURES 709,500 709,500 639,072 70,428 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (704,500) (704,500) (633,628) 70,872 OTHER FINANCING SOURCES (USES): Transfers in 708,200 708,200 646,222 (61,978) Transfers out (278,126) - - TOTAL OTHER FINANCING SOURCES (USES) 430,074 708,200 646,222 (61,978) NET CHANGE IN FUND BALANCE (274,426) 3,700 12,594 8,894 FUND BALANCE - BEGINNING OF YEAR 274,426 274,426 274,426 - FUND BALANCE - END OF YEAR . - : $ 278,126 $ 287,020 $ 8,894 See independent auditors' report. -80- OTHER AND MAJOR CAPITAL PROJECTS FUNDS Capital Projects Funds are established to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Special Revenue Funds). Public Financing Authority Fund - This fund is used to account for the financing of public improvements and other capital purchases for the City. Capitprovement Fund - This fund is used to account for the costs of constructina, street improvements, park improvements and other public improvements not normally included within the other Capital Projects funds. Financing is provided by developer fees and interfund transfers from the Special Revenue Funds and the General Fund. -81- CITY OF DIAMOND BAR SCHEDULE oFaEvENuEs, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PUBLIC FINANCING AUTHORITY CAPITAL PROJECTS FUND For the year ended June 30, 2006 See independent auditors' report. - 82 - Variance with Final Budget Budgeted Amounts Positive Original — Final Actual (Negative) REVENUES: Investment income $ 6,000 $ 5,000 3,065 (1,935) TOTAL REVENUES 6,000 5,000 3,065 (1,935) EXPENDITURES: Debt service: Interest and fiscal charges 3 (3) TOTAL EXPENDITURES - - 3 (3) EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 6,000 5,000 3,062 (1,938) OTHER FINANCING USES: Transfers out (158,030) (155,092) (155,092) TOTAL OTHER FINANCING USES (158,030) (155,092) (155,092) NET CHANGE IN FUND BALANCE (152,030) 5,000 (152,030) (157,030) FUND BALANCE - BEGINNING OF YEAR 152,030 152,030 152,030 FUND BALANCE - END OF YEAR $ - $ 157,030 $ - $ (157,030) See independent auditors' report. - 82 - SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CAPITAL IMPROVEMENT CAPITAL PROJECTS FUND For the year ended June 30, 2006 REVENUES: { Intergovernmental revenue Licenses, permits and fees Investment income TOTAL REVENUES EXPENDITURES: Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES: Transfers in TOTAL OTHER FINANCING SOURCES NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICIT) - BEGINNING OF YEAR FUND BALANCE (DEFICIT) - END OF YEAR See independent auditors` report. (176,271) (176,271) (176,271) - $ (176,271) $ (318,884) $ (655,322) $ (336,438) -83- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1,322,439 $ 730,106 $ 241,878 $ (488,228) 250,000 250,000 - (250,000) 140,000 140,000 1,150 (138,850) 1,712,439 1,120,106 243,028 (877,078) 8,614,476 10,563,098 5,320,597 5,242,501 8,614,476 10,563,098 5,320,597 5,242,501 (6,902,037) (9,442,992) (5,077,569) 4,365,423 6,902,037 9,300,379 4,598,518 (4,701,861) 6,902,037 9,300,379 4,598,518 (4,701,861) - (142,613) (479,051) (336,438) (176,271) (176,271) (176,271) - $ (176,271) $ (318,884) $ (655,322) $ (336,438) -83- THIS PAGE LEFT (BLANK. INTENTIONALLY -84- INTERNAL SERVICE FUNDS Internal Service Funds have been established to finance and account for goods and services provided by one City department to other City departments or agencies. Funds included are: Self -Insurance Fund - This fund is used to account for the payments made for the City's general liability insurance premiums Equipment Replacement Fund - This fund is used to account for the replacement of the City's rolling equipment stock or vehicles. _Computer Replacement Fund - This fund is used to account for the replacement and/or enhancement of the City's computer-related equipment. -85- CITY OF DIAMOND BAR COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS June 30_2006 See independent auditors' report. -86- Self- Equipment Computer Insurance Replacement Replacement Totals ASSETS CURRENT ASSETS: Cash and investments $ 1,571,831 $ 169,743 $ 91,724 $ 1,833,298 NONCURRENT ASSETS: Capital assets: Machinery and equipment - 177,196 11,417 188,613 Less accumulated depreciation - (91,817) (10,430) (102,247) TOTAL NONCURRENT ASSETS - 85,379 987 86,366 TOTAL ASSETS 1,571,831 255,122 92,711 1,919,664 LIABILITIES CURRENT LIABILITIES: Due to other governments 361,356 - - 361,356 NET ASSETS Invested in capital assets, net of related debt - 85,379 987 86,366 Unrestricted 1,210,475 169,743 91,724 1,471,942 TOTAL NET ASSETS $ 1,210,475 $ 255,122 $ 92,711 $ 1,558,308 See independent auditors' report. -86- CITY OF DIAMOND BAR COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS - INTERNAL SERVICE FUNDS For the year ended June 30, 2006 See independent auditors' report. -87- Self- Equipment Computer Insurance Replacement Replacement Totals OPERATING EXPENSES: insurance premiums $ 488,019 $ - $ $ 498,019 Depreciation - - 17,928 2,213 20,141 TOTAL OPERATING EXPENSES 488,019 17,928 2,213 508,160_ OPERATING LOSS (488,019) (17,928) (2,213) (508,160) NoNOPERATING REVENUES (EXPENSES): Loss on disposal of capital asset - - (261) (261) Investment income 50,441 6,256 1,186 57,883 TOTAL NONOPERATING REVENUES (EXPENSES) 50,441 6,256 925 57,622 LOSS BEFORE TRANSFERS (437,578) (11,672) (1,288) (450,538) TRANSFERS IN 180,000 25,338 59,100 264,438 CHANGE IN NET ASSETS (257,578). 13,666 57,812 (186,100) TOTAL NET ASSETS - BEGINNING OF YEAR, AS RESTATED 1,468,053 241,456 34,899 1,744,408 TOTAL NET ASSETS - END OF YEAR $ 1,210,475 $ 255,122 92,711 $ 1,558,308 See independent auditors' report. -87- CITY OF DIAMOND BAR COMBINING STATEMENT OF CASH FLOWS , INTERNAL SERVICE FUNDS For the year ended June 30, 2006 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 66,837 (60,785) 60,286 66,338 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 1,504,994 230,528 31,438 1,766,960 CASH AND CASH EQUIVALENTS - END OF YEAR $ 1,571,831 $ 169,743 $ 91,724 $ 1,833,298 RECONCILIATION OF OPERATING LOSS TO Self- Equipment Computer. Insurance Replacement Replacement Totals CASH FLOWS FROM OPERATING ACTIVITIES: used by operating activities: Insurance deposits $ 48,148 $ - $ _ $ 48,148 Insurance payments (211,752) - - (211,752) NET CASH USED - 276,267 TOTAL ADJUSTMENTS 324,415 17,928 2,213 344,556 BY OPERATING ACTIVITIES (163,604) - - (163,604) CASH FLOWS FROM NONCAPITAL See independent auditors' report. FINANCING ACTIVITIES: Transfers from other funds 180,000 25,338 59,100 264,438 NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 180,000 25,338 59,100 264,438 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets - (92,379) - (92,379) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES - (92,379) _ (92,379) CASH FLOWS FROM INVESTING ACTIVITIES: Investment income 50,441 6,256 1,186 57,883 NET CASH PROVIDED BY INVESTING ACTIVITIES 50,441 6,256 1,186 57,883 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 66,837 (60,785) 60,286 66,338 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 1,504,994 230,528 31,438 1,766,960 CASH AND CASH EQUIVALENTS - END OF YEAR $ 1,571,831 $ 169,743 $ 91,724 $ 1,833,298 RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: Operating loss $ (488,019) $ (17,928) $ (2,213) $ (508,160) Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation - 17,928 2,213 20,141 Changes in operating assets and liabilities: (Increase) decrease in accounts receivables 48,148 - - 48.148 Increase (decrease) in due to other governments 276,267 - - 276,267 TOTAL ADJUSTMENTS 324,415 17,928 2,213 344,556 NET CASH USED BY OPERATING ACTIVITIES $ (163,604) $ - $ - $ (163.604) See independent auditors' report. -88- i DESCRIPTION OF STATISTICAL SECTION CONTENTS June 30, 2006 This part of the City of Diamond Bar's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the government's overall financial health. Pages Contents: Financial Trends - These schedules contain trend information to help the reader understand how the City's financial performance and well-being have 90-93 changed over time. Revenue Capacity - These schedules contain information to help the reader 94 -97 assess the City's most significant local revenue source, the property tax. Debt Capacity - These schedules present information to help the reader assess the affordability of the City's current.levels of outstanding debt and the City's 98-99 ability to issue additional debt in the future. Demographic and Economic Information - These schedules offer demographic and economic indicators to help the reader understand the environment within 100-101 which the City's financial activities take place. OReratigg Information - These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial 102-103 report relates to the services the City provides and the activities it performs. -89- Governmental activities: Invested in capital assets, net of related debt Restricted for: Debt service Capital projects Specific programs Unrestricted Total governmental activities net assets City of Diamond Bar Net Assets by Component Last Four Fiscal Years (accrual basis of accounting) * The City implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Source: City Finance Department -90- Fiscal Year Ended June 30, 2003 2004 2005 2006 $ 8,237,553 $ 10,844,807 $ 10,692,694 $ 14,593,935 - - 245,763 243,697 5,988,178 241,767 3,775,552 3,323,474 - - 1,398,057 1,296,806 26,205,849 31,231,827 29,775,169 29,461,178 $ '40,431,580 $ 42,318,401 $ 45,887,235 $ 48,919,090 * The City implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Source: City Finance Department -90- City of Diamond Bar Changes in Net Assets Last Four Fiscal Years (accrual basis ofaccounting) � Fiscal Year Ended June 30, 2003 2004 2005 2006 E^e~~~~~' Governmental activities: $3,315,082 $ 3,713,530 $ 3,997,319 $ 4,203,123Guoeral g»vom«neui 4,988/440 4,975,823 4/969.183 5,418,005 Public safety l�O6�7 6Q -- l�65JI7 4�21)l4 p�� 524�68 - Blgbvvoyyuod»�eu� 337O1l6 `4 5,724,606` lO�O025 . 27547l8 ' ' Community development � 2,309,150 2,5QO'4� 3Dl4Q87 ^ ` 3�737�?l Puzba o:uroudoou�dcoluo�3 ` �35752 l7l223 z/o 423320 Interest and fiscal charges 15525317 18431373 zoz �/ '" l8O5 Total expenses Program revenues: Governmental activities: Charges for services: 74,805 225,656 496,925 707,272 General Government 813,617 733`902 I,150,264 1.277'170 Public safety 5l7g30 �20,33O 1,328,637 1.555^093 EGghvvuyaand a�n�» ' O8 y330 D93'08i 7,888 16.841 Community development ' �5 Q�27 6lO.772 ll�700D . , l26O84g . . Podc.o�roadouund«nlmn: 4'�9O'722 �'068/W6 4,040`785 5.281`308 ~pero6uQ8zuu�and couuih»b»oa 1''g5l0 26/94 ' 1,150 Capital grants and contributions O43 l41 /�o�o __ Dl7O5D7 ^~ -- O 83 T��pm�amomcouoo General revenues: Taxes: 26V2J23 �682'87% 3,l5�J23 6�60�553 Property taxes ' 578.G80 62Q�64 . 7l7879 ' 718,8O0 Tzun�untoccupancy u�en %965,%g2 3,167.901 2.645.006 2.964'877 taxes ' . 863,245 084,472 Property taxes bzlieu »fsales taxes _ 829.242 012,531 941,310 996`567 Franchise taxes S37O3Q7 �7l6,1�4 ' 4,386'OOO 413.230 Uune�uted��otorv��o)uio�«» � ` ' 367,638 367,464 �l3247 . 4l6423 Property transfer tax 34.989 95.077 35,283 35.522 0dh«ctaxen 43g.455 182.069 532.001 1,051.022 Iupoauuout income 5 0�0 676,292 361,622 Other revenue ll3622Ol Q62 l��uov/r ________� 14/1307' 7otulgeoer�omeouao � 4880025 6 3309 1855 Cbuo�o�oo��uauu� The GASB 34 yosended June 3\2O03. `~~'-�--- ofG�SB�4�o��uva�ub�� information prior to the umpmm�mo� Source: City Finance Department '9l General fund: Reserved Unreserved Total general fund All other governmental funds: Reserved Unreserved, reported in: Special revenue funds Debt Service Fund Capital projects funds Total all other governmental funds Total fund balances City of Diamond Bar Fund Balances of Governmental Funds Last Four Fiscal Years (modified accrual basis of accounting) Fiscal Year Ended June 30, 2003 2004 2005 2006 $ 440,407 $ 866,843 $ 1,125,918 $ 1,310,172 21,913,219 21,796,659 24,809,721 25,103,444 268,317 22,353,626 22,663,502 25,935,639 26,413,616 5,719,861 105,861 5,555,988 2,274,829 8,030,278 6,043,352 6,111,202 5,772,953 - 505,915 274,426 - 268,317 241,767 (5,443,309) (2,612,373) 14,018,456 6,896,895 6,498,307 5,435,409 $ 36,372,082 $ 29,560,397 $ 32,433,946 $ 31,849,025 The City has elected to show only four years of data for this schedule. Source: City Finance Department -92- 1 City of Diamond Bar Changes in Fund Balances, Governmental Funds Last Four Fiscal Years (modified accrual basis of accounting) Revenues: Taxes Special assessments Intergovernmental Charges for services Fines and forfeitures Licenses and permits Investment income Other ' Total revenues Expenditures: Current: General government Public safety Highway and streets Parks, recreation and culture Community development Capital outlay Debt service: Principal Interest charges Fiscal charges Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses): Bond issued Bonds discount and issuance costs Transfers in Transfers out Total other financing sources (uses) Net changes in fund balances Debt service as a percentage of noncapital expenditures Fiscal Year Ended June 30, 2003 2004 2005 2006 $ 7,432,575. $ 7,759,331 $ 8,632,837 $ 9,508,757 557,601 555,232 593,778 504,908 8,602,856 6,353,152 8,306,557 8,821,141 706,137 709,011 761,040 870,314 813,617 733,903 713,201 .589,922 1,467,127 1,457,345 1,732,555 2,389,149 658,922 395,929 654,066 1,250,570 74,818 234,951 480,740 792,216 .18,1981854 21,874,774 24,726,977 .20,3131653 3,163,516 3,663,055 3,787,005 3,551,659 4,973,248 4,857,179 4,954,630 5,404;259 1,006,768 1,365,737 4,301,146 4,769,497 1,946,025 2,114,090 2,750,815 2,613,834 2,808,613 3,419,856 1,050,025 2,748,539 8,057,482 9,261,289 1,682,830 5,320,597 - - 235,000 86,562 145,580 237,487 404,075 1,080,940 23,123,154 247826,786 18,763,938 25,047,460 (2,809,501) (6,627,932) 3,110,836 (320,483) 13,755,000 - - - (769,300) - - 10,259,848 9,906,970 2,363,367 6,469,523 (10,453,243) (10,090,723) (2,600,654) (6,733,961.) 12,792,305 (183,753) (237,287) (264,438) _ $ 9,982,804 $ (6,811,685) $ 2,8731549 $ (584,921) 3.61.% 0.43% 1.15% 2.06%n The City has elected to show only four years of data for this schedule. Source: City Finance Department -93- City of Diamond Bar Assessed and Estimated Actual Values of Taxable Property Last Ten Fiscal Years (unaudited) Fiscal Year �St' f i kri 't '�j �' -� ✓F 017 lat atar�tLr YAW, ` 'R j'}i�11Y 9 2ukF� '}21t �„'n'�� - Total Ended r� MH �� Net Tax Direct June 30, Secured Unsecured Nonunitary Taxable Values Exemptions Rate 1997 $3,613,273,657 $ 64,175,586 $ 828,963 $ 3,678,278,206 $ 27,479,616 0.0529% 1998 3,608,349,286 67,777,550 884,347 3,677,011,183 37,731,129 0.0529% 1999 3,692,120,496 74,316,958 876,688 3,767,314,142 38,373,706 0.1529% 2000 3,836,874,815 63,750,454 125,921 3,900,751,190 36,494,583 0.1585% 2001 4,058,203,577 67,345,947 116,405 4,125,665,929 40,088,648 0.1704% 2002 4,286,132,334 71,531,889 127,441 4,357,791,664 41,869,703 0.0502% 2003 4,618,700,097 69,981,865 122,697 4,688,804,659 44,188,829 0.0514% 2004 5,003,437,689 77,407,924 140,122 5,080,985,735 47,621,182 0.0513% 2005 5,370,469,396 76,173,121 174,846 5,446,817,363 39,831,091 0.0513% 2006 5,791,564,163 83,223,023 163,090 5,874,950,276 51,408,286 0.0519% $7,000,000,000 $6,000,000,000 $5,000,000,000 c $4,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 Net Assessed Value 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fiscal Year Exempt values are not included in Total Net Taxable Values. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: Los Angeles County Auditor/Controller, Hdl Coren & Cone -94- �St' f i kri 't '�j �' -� ✓F 017 lat atar�tLr YAW, ` 'R j'}i�11Y 9 2ukF� '}21t �„'n'�� - r� MH �� r�t`N'i. 4 dlG' 7 5'Yk "NIN `r W 'N k JS, r tie r„ vi'yC4:31{tyM1�"L ac'at'' 1 4�` r X4r�i� <, M t MIR 4bd4' c.'2 -i X+`.,a. y?,Z_�i ye a (f."r�t N'S Y(� S_'}Y"' `£( 1)�, TAM .x.47141 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fiscal Year Exempt values are not included in Total Net Taxable Values. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: Los Angeles County Auditor/Controller, Hdl Coren & Cone -94- City of Diamond Bar Direct and Overlapping Property Tax Rates (Rate per $100 of Assessed Value) Direct Rates: City of Diamond Bar basic rate Overlapping Rates: Children's Institutional Tuition Fund Consolidated Fire Protection County Lighting Maintenance County Sanitation Dist 21 County school service - Walnut Valley Development Ctr Handicapped Minor Educational Augmentation Fund LA County Library LA County Capital Outlay LA County Fire LA County Flood Control LA County General Mt San Antonio Children's Center Mt San Antonio Community College Southeast Mosquito Abatement Three Valley Municipal Water Walnut Valley Unified School Dist Walnut Valley Water Dist Total Prop. 13 Rate Detention Facilities 1987 Debt Flood Control Ref Bonds 1993 LA County Flood Control Storm Dist #4 Mt San Antonio Ccd Debts of 2001 & 2004 Three Valley Municipal Water - 1112 Walnut Valley Unified School Dist Bonds Total Voter Approved Rate Tax Rate for Walnut Valley Unified School District Property Owners County Metropolitan Water Dist Flood Control Community College Pomona Unified School Dist Bonds Fiscal Year Ended June 30, 2006 0.05294 0.00271 0.16936 0.02016 0.01221 0:00894 0.00083 0.21072 0.02237 0.00011 0.00616 0.01094 0.24908 . 0.00028 0.02926 0.00035 0.00409 0.19057 0.00892 1.00000 0.00080 0.00003 0.00002 0.021.22 0.00520 0.09141 0.11868 1.11868 0.00092 0.00580 0.00025 0.14731 0.12910 0.28338 1.28338 Tax Rate for Pomona Unified School District Property Owners In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds for the Pomona Unified School District or Walnut Valley Unified School Districts in Diamond Bar depending on which school district the property is located in. �I The City has elected to show only one year of data for.this schedule. Sources: Hdl Coren & Cone LA County Property Tax Statement -95- Current Taxpayers Hampton Apartments at Diamond Bar Behringer Harvard Western Portfolio Pacifica Trenton Center GEM Gateway Limited Inc. Muller Rock 2 Gateway LLC Margaret M. Tam Trust, Et. Al. Ari Diamond Bar J.F. Shea Company Inc. Emerald Pointe Apartments LLC H. R. Barros Family Limited Partnership City of Diamond Bar Top 10 Property Taxpayers Current Year and Nine Years Ago 2005-06 Assessed Valuation Percentage of Total Net Assessed Valuation $ 34,100,000 0.58% 29,441,806 0.50010 27,300,000 0.46%n 25,768,277 0.44% 19,482,061 0.33% 15,923,105 0.27% 15,886,720 0.27% 15,745,649 0.27% 15,474,148 0.26% 15,070,875 0.26% PGP Inland Communities $ 214,192,641 3.65% Source: Hdl Coren & Cone, Los Angeles County Assessor 2005/06 combined tax rolls. -96- 1996-97 Percentage of Total Taxpayers Nine Years Ago Assessed Valuation Net Assessed Valuation Diamond Bar Business Associates $ 29,535,399 0.79% M & H Realty Partners II 20,666,119 0.55% Hidden Manna Corporation 19,000,721 0.51% J.F. Shea Company Inc. 12,168,2.75 0.33% PGP Inland Communities 11,946,050 0.32% Nikko Capital Corporation 11,585,739 0.31% Martin Brattrud Properties 10,686,250 0.29% Lincoln Emerald Pointe 10,562,250 0.28% TCEP II Properties Joint Venture 10,196,519 0.27% Nugit Trust 9,604,613 0.26%n $ 145,951,935 3.91% Source: Hdl Coren & Cone, Los Angeles County Assessor 2005/06 combined tax rolls. -96- Source: Los Angeles County Auditor/Controller. -97- $3,000,000 City of Diamond Bar Total Secured Property Tax Collections �, • Secured Property Tax Levies and Collections $2,500,000 ( Last Ten Fiscal Years (unaudited) �?,p Collected within the Delinquent & Fiscal Year Ended Total Fiscal Year of Levy Collections in Y'. June 30 Current Levy Amount % to Levy Subsequent Years _ 1997 $ 1,,809,197 $ 1,625,252 89.83% $ 183,945 1,781,264 1,680,816 94.36% 100,448 (1998 l 1999 1,810,266 1,758,764 97.16% 51,502 91,011 2000 1,904,915 1,813,904 95.22% 94.54% 106,713 2001 L 1,954,530 2,129,310 1,847,817 2,017,399 94.74% 111,911 2002 2003 2,301,716 2,211,793 96.09% 2004 2,504,974 2,390,554 95.43% 14,423 114,420 34,SF3 2005 2,698,515 2,568,064 95.17% 130,450 x'4'4 j 2006 2,921,267 2,615,545 89.53% 305,722 Source: Los Angeles County Auditor/Controller. -97- $3,000,000 Total Secured Property Tax Collections $2,500,000 �?,p tgti Y'. $2,000,000 yeaY $1,500,000 # ����4 rz� _r �yyl�, i r4s?y-. 34,SF3 F"d ;edM ry4^x'.. ~ $1,000,000�7t: x'4'4 ii ! qA � x � �' f�flj. �' $500,000 t 26 pSz xry ry, ztSF)i atr yM,- xa eiL 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fiscal Year Source: Los Angeles County Auditor/Controller. -97- City of Diamond Bar Direct and Overlapping Debt June 30, 2006 (unaudited) Direct Debt Diamond Bar Lease Revenue Bond Overlapping Debts Los Angeles County Detention Facilities 1987 Debt Svc LA Co Flood Control Storm Dr. D.S. #4 *Metropolitan Water District Three Valley Area 1112 Mt San Antonio Com Col Dis 2001 Ser S-A Mt San Antonio Com Col Dis 2004 Ser B Pomona Unified School District Refund Ser 1997A DS Pomona Unified School District 2002 Ser C DS Pomona Unified SD Refund 2000 Series A Debt Service Pomona Unified SD 1998 Series D Debt Service Pomona Unified SD Refunding 2001 Ser A Debt Service Pomona Unified SD 2002 Ser A Debt Service Pomona Unified School District 2002 Ser B Pomona Unified School District 2002 Ser D Walnut Valley Unified SD Refund Series 1997 A Walnut Valley Unified SD 2000 Series A Walnut Valley Unified SD 2000 Series B Walnut Valley Unified SD 2000 Series C Walnut Valley Unified SD 2000 Series D Walnut Valley Unified SD 2000 Series E Walnut Valley Unified SD 2005 Ref Bonds Total Direct and Overlapping Bonded Debt 2005/06 Net Assessed Valuation: $ 5,874,950,276 Debt to Assessed Valuation Ratios: Gross Bonded % Applicable Net Bonded Debt Balance To City Debt $ 13,520,000 100.000 $ 13,520,000 8,395,000 0.800 67,170 1,080,000 0.812 8,773 182,369,156 0.863 1,574,494 6,710,000 10.667 715,762 22,360,000 10.667 2,385,163 41,610,000 20.688 8,608,272 14,780,000 20.688 3,057,685 19,305,000 20.688 3,993,816 9,435,000 20.688 1,951,912 20,845,000 20.688 4,312,411 9,285,000 20.688 1,920,880 14,365,000 20.688 2,971,829 15,000,000 20.688 3,103,198 36,097,718 57.863 20,887,099 995,000 57.863 575,733 770,000 57.863 445,542 7,570,000 57.863 4,380,203 21,998,114 57.863 12,728,693 6,001,837 57.863 3,472,822 11,955,000 57.863 6,917,481 $ 464,446,825 $ 97,598,938 Direct Debt 0.23% Overlapping Debt 1.43% Total Debt 1.66% Report reflects general obligation debt which is being repaid through voter -approved indebmess. It excludes, mortgage revenue, tax allocation bonds, interim financing obligations, non -bonded capital lease obligations and certificates of participation. a' This fund is a portion of a larger agency, and is responsible for debt in areas outside the city. Sources: Hdl Coren & Cone City Finance Department -98- City of Diamond Bar Computation of Legal Debt Margin Last Ten Fiscal Years (unaudited) The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local government located within the state. Sources: Section 43605 of the California Government Code Hdl Coren & Cone City Finance Department -99- Fiscal Year Ended June 30, 1997 1998 1999 2000 2001 Net value $ 3,678,278,208 $ 3,677,011,183 $ 3,767,314,142 $ 3,900,751,190 $ 4,125,665,929 assessed Add back: Exemptions 27,479,616 37,731,129 38,373,706 36,494,583 3,937,245,773 40,088,648 4,165,754,577 Gross assessed value _ 3,705,757,824 3,714,742,312 3,805,687,848 25% 25% Conversion percentage 25% 25% 25% Adjusted assessed 926,439,456 928,685,578 951,421,962 984,311,443 1,041,438,644 valuation 15% 15% 15% 15% 15% Debt limit percentage 138,965,918 139,302,837 142,713,294 14?,646,716 156,215,797 Debt limit City Debts: - - Revenue bonds - - $ 138,965,918 $ 139,302,837 $ 142,713,294 $ 147,646,716 $ 156,215,797 Legal debt margin Fiscal Year Ended June 30, 2002 2003 2004 2005 2006 Net assessed value $ 4,357,791,664 $ 4,688,804,659 $ 5,080,985,735 $ 5,446,817,363 $ 5,874,950,276 51,408,286 Add back: Exemptions 41,869,703 44,188,829 47,621,182 39.831,091 5,486,648,454 5.926,358,562 5,128,606,917 Gross assessed value 4,399,661,367 4,732,993,488 25% 25% Conversion percentage 25% 25% 25% Adjusted assessed 1,099,915,342 1,183,248,372 1,282,151,729 1,371,662,114 1,481,589,641 valuation 150/0 15% 15% 15% 1S% Debt limit percentage 164,987,301 177,487,256 192,322,759 205,749,317 222,238,446 Debt limit City Debts: Revenue bonds 13,7551000 13,755,000 13,755,000 13,755,000 13,520.000 $ 151,232,301 $ 163,732.256 $ 178,567,759 $ 191,994,317 $ 208,718,446 Legal debt margin The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local government located within the state. Sources: Section 43605 of the California Government Code Hdl Coren & Cone City Finance Department -99- Calendar Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Population (1) 56,003 57,271 58,300 56,287 57,066 58,115 58,966 59,399 59.595 59,722 City of Diamond Bar Demographic and Economic Statistics Last Ten Calendar Years Total Employment (2) 29,500 30,200 30,700 29,700 30,100 29,700 29,900 29,900 30,700 31,400 Per Personal Capita Unemployment Income Personal Rate (3) Income (3) (4) Unavailable Unavailable 4.70% Unavailable Unavailable 4.20% $ 68,957 $ 25,472 4.00% 71,911 25,500 3.70% Unavailable Unavailable 3.80% 86,741 31,870 4.90% Unavailable Unavailable 5.10% 73,359 28,482 4.70% 74,941 28,906 3.60% 84,297 29,086 3.20% Sources: (1) State Department of Finance (2) California LaborMarketInfo, Data Library (3j Information provided by the U.S. Census Bureau and Claritas (4) State of California - Labor Market Info - 100 - City of Diamond Bar Principal Employers (unaudited) Current Year and Nine Years Ago 2006 "Total Employment" as used above represents the total employment of all employers located within City limits I) Source: InfoUSA - Government Division - 101 - Number of % of Total Employer Employees Employment South Coast Air Quality Management 750 2.%n 600 1.9911 % Avnet Acosta Sales & Marketing 450 1.43% St Paul Travelers 401 200 1.28% 0.64% Diamond Bar High School 200 0.64% Lab Support Inc 120 0.39% Baybrook Services 120 0.38%n Goodrich Hoist & Winch 120 0.39% Southwest Patrol 120 0.39% Starside Security & Investigation 100 0.32% Biosense Webstar Inc 1.00 0.32% Century 21 Diamond Realty 100 0.32% DACOR 100 0.32% Daily Egg Ranches Inc 100 0.32% FIN -West Group 100 0.32% First Mortgage Corp "Total Employment" as used above represents the total employment of all employers located within City limits I) Source: InfoUSA - Government Division - 101 - City of Diamond Bar Full-time and Part-time City Employees Last Ten Fiscal Years Police services were contracted with the Los Angeles County Sheriffs Departments. Building and safety services were contracted with D & J Municipal Services Inc. Fire services were provided by the County Fire District. Source: City Finance Department - 102- Fiscal Year Ended June 30, Function 1997 1998 1999 2000 2001 General government - 22 23 22 21 24 Community development 4 3 5 6 4 Community services 13 13 12 41 38 Public works 3 3 4 4 4 Total 42 42 43 72 70 Fiscal Year Ended June 30, Function 2002 2003 2004 2005 2006 General government 24 24 25 25 22 Community development 4 4 5 7 8 Community services 37 38 45 74 77 Public works 4 5 6 7 7 Total 69 71 81 113 114 Police services were contracted with the Los Angeles County Sheriffs Departments. Building and safety services were contracted with D & J Municipal Services Inc. Fire services were provided by the County Fire District. Source: City Finance Department - 102- i City of Diamond Bar r. Operating Indicators I Last Ten Fiscal Years Fiscal Year Ended June 30, 1997 1998 1999 2000 2001 Police: (in calendar year) (1) (a) 747 723 817 764 � Arrests Street Sweeping Parking Citation (a) (a) (a) (a) 2,996 f Fire: (in calendar year) (2) (a) (a) (a) (a) 2,64 Number of emergency calls (a) (a) (a) (a) (a) Inspections Public works: (in fiscal year) (3) (a) (a) 20.6 23.0 24.6 Street resurfacing (miles) Parks and recreation: (in fiscal year) (4) j 700 700 740 1,084 1,062 Number of recreation classes 785 785 785 785 785 Number of facility rentals Fiscal Year Ended June 30, f 2002 -- 2003 2004 2005 2006 Police: (in calendar year) (1) 571 552 481 558 (a) Arrests Street Sweeping Parking Citation 7,995 6,662 6,710 5,790 (a) Fire: (in calendar year) (2) 2,666 2,741 2,755 2,615 (a) Number of emergency calls (a) (a) 1,206 1,159 (a) ( Inspections Public works: (in fiscal year) (3) 19.7 18.5 5.0 18.6 16.8 Street resurfacing (miles) Parks and recreation: (in fiscal year) (4) 947 915 1,022 1,102 1,376 � Number of recreation classes 785 1,021 1,736 4,123 4,305 Number of facility rentals (a) Unavailable 'I �i i Sources: (1) Police Walnut/Diamond Bar Station (2) LA County Fire Dept East Regional Operation Bureau l (3) City Public Works Department (4) City Community Services Department