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HomeMy WebLinkAboutCAFR - FY 2007-08CITY OF DIAMOND BAR, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2008 Prepared by: FINANCE DEPARTMENT Linda G Magnuson Director of Finance TABLE OF CONTENTS June 30, 2008 INTRODUCTORY SECTION: Letter of Transmittal GFOA Certificate of Achievement for Excellence in Financial Reporting Organization Chart List of Principal Officials FINANCIAL SECTION: Independent Auditors' Report Management's Discussion and Analysis (Required Supplementary Information) Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Governmental Funds: Balance Sheet Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities Proprietary Funds: Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows Notes to Basic Financial Statements Page Number - v vi vii viii 1-2 3-11 13 14 15 16-17 19 20-21 22 23 24 25 27-48 '$ AJU V C91 Al TABLE OF CONTENTS (CONTINUED) June 30, 2008 Page Number FINANCIAL SECTION (CONTINUED): Required Supplementary Information: Budgetary Comparison Schedules: 49 General Fund 50 Park and Facility Development Special Revenue Fund 51 Proposition 1B Bond Special Revenue Fund 52 Note to Required Supplementary Information 53 Supplementary Information: Other Governmental Funds: Combining Balance Sheet 55 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 57 Other Special Revenue Funds: 58-59 Combining Balance Sheet 60-61 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 62-63 Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: State Gas Tax Fund 64 Proposition C Transit Fund 65 Intermodal Surface Transportation Enhancement Act (ISTEA) Special Revenue Fund 66 Integrated Waste Management Fund 67 Traffic Improvement Fund 68 Traffic Congestion Relief Fund 69 Air Quality Improvement Fund 70 Trails & Bikeways Fund 71 California Law Enforcement Equipment Program (CLEEP) Fund 72 Proposition A Transit 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 Capital Projects Fund: 79 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Capital Improvement Fund 80 -T1 211 AINAK9121011"'I 01 0100 TABLE OF CONTENTS (CONTINUED) FINANCIAL SECTION (CONTINUED): Supplementary Information (Continued): Page Number Internal Service Funds: 81 Combining Statement of Net Assets 82 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 83 Combining Statement of Cash Flows 84 STATISTICAL SECTION: Description of Statistical Section Contents 85 Financial Trends: Net Assets by Component - Last Six Fiscal Years 86-87 Changes in Net Assets - Last Six Fiscal Years 88-89 Fund Balances of Governmental Funds - Last Six Fiscal Years 90-91 Changes in Fund Balances of Governmental Funds - Last Six Fiscal Years 92-93 l Revenue Capacity: Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 94 Direct and Overlapping Property Tax Rates - Current Fiscal Year 95 Top 10 Property Taxpayers - Current Fiscal Year and Nine Fiscal Years Ago 96 Secured Property Tax Levies and Collections - Last Ten Fiscal Years 97 f Debt Capacity: l Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 98 Direct and Overlapping Debt 99 ..,, Computation of Legal Debt Margin - Last Ten Fiscal Years 100 Demographic and Economic Information: Demographic and Economic Statistics - Last Ten Calendar Years 101 Principal Employers - Current Fiscal Year and Nine Fiscal Years Ago 102 Operating Information: Full -Time Equivalent City Employees by Function - Last Ten Fiscal Years 103 Operating Indicators by Function - Last Ten Fiscal Years 104 Capital Asset Statistics by Function - Last Five Fiscal Years 105 I Ron Everett Mayor Carol Herrera Mayor Pro Tem Wen P. Chang Council Member Jack Tanaka I Council Member Steve Tye Council Member Recycled paper 21825 Copley Drive ® Diamond Bar, CA 91765-4178 (909) 839-7000 ® Fax (909) 861-3117 -cember 23, 2008 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, 2008. 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 generally accepted accounting principles (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 assurance that the financial statements will be free from 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, 2008, 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, 2008, were fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. -1- 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. 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 60,360, 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. 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 and property tax revenues. To spite this growth, the nation's economy is definitely in turmoil. Retail sales are down and unemployment numbers are reaching new heights. This along with the major budget shortfalls experienced by the State, are of a major concern to the City of Diamond Bar. - 11 - ECONOMIC CONDITION AND OUTLOOK (CONTINUED) Recent headlines have been filled with news about the slowing economy and budget woes at the State level. With the status of State funds as uncertain as ever, it is anticipated that more of the financial burden will fall upon municipal agencies. Although the City has built a strong General Fund reserve, the fiscal year 2008-2009 budget was prepared with the possibility of a reduction in State funds in mind. The erosion of the City's sales tax base continues to be a major concern. As a result there continues to be an emphasis on Economic Development within the City. The City has started reaping the rewards of this emphasis. In fiscal year 06-07 the City welcomed a new Target Store at the intersection of Grand Avenue and Golden Springs Drive. This fiscal year the City welcomed a Chili's Bar and Grill to the same shopping center. In October 2007, Majestic Realty announced its plans to develop a professional football stadium based entertainment, retail and office development in the neighboring city, City of Industry. The NFL stadium is proposed to seat 75,000 people and will be surrounded by retail shops, restaurants, a live theater, movie theater, outpatient medical center, and offices along with necessary parking structures. It is anticipated that Phase 1 which includes the stadium will be open for business in the fall of 2011. This proposed development is of great concern to the City of Diamond Bar. The City will be seriously impacted by major increases in traffic since the primary access to the venue will be at the Orange (SR57) and Pomona (SR -60) interchange located within the City of Diamond Bar. Public Safety in the City will be affected by the increase in population during major events. There are also concerns as to how it will affect the City's air quality, noise levels and aesthetics. The City has responded to the environmental report and will monitor the development's progress. In fiscal year 08-09, 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 continue working on the annexation of the Crestline area. Development opportunities in the City's commercial areas include the Walnut Valley Trailer Park site; site "D"; and the K -Mart Property. 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. 1101.E 1 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, 2007. 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. F., IIAT141 , -a 11acy-43 gw1 1 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 thirteen consecutive years (fiscal years ended 1995 through 2007). 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. I N 01 1 tv 9 RIM WIN I V 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. 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 FY07-08, most of the City funds were invested in the Local Agency Investment Fund (LAIF), which is administered by the State Treasurers 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. Losses from $50,001 to $ 100,000 per claim are pooled based on the member's share of losses under $50,000. Losses between $100,000 and $2,000,000 and employer's liability losses from $5,000,000 to $10,000,000 are pooled based. Costs between $2,000,000 and $300,000,000 are paid by excess insurance purchased by the CJPIA. Costs in excess of $300,000,000 are pooled based on payroll. - iv - REPORTING ENTITY AND ITS SERVICES (CONTINUED) Risk Management (Continued) The City carries Environmental Insurance through the CJPIA. This policy covers sudden and gradual pollution of property, streets, and storm drains owned by the City. There is a $50,000 deductible and is on a claims -made basis. 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 Authorityby the City. 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 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 1998-99. The self-insurance reserve at June 30, 2008 was $1,025,011. 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 full 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, 2006, 2007, and 2008 the employer contribution to PERS was 11.148%, 11.051% and 10.733% respectively, of the annual covered payroll. 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. The City's total contribution to the system including both the employer and employee's contribution was $613,665 for FY2007-08. Acknowledgements The preparation of this Comprehensive Annual Financial Report 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 thep � City's r aration of the Ci 's Comp rehensive 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. i_ Sincerely, James DeStefano City Manager -v- Certificate o Achievement for Excellence in Financial Reportmn 4 Presented to .City of Diamond Bar California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2007 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. -vi- too President Executive Director -vi- _V - rn M u Y u CL u to> E E CL > LU w I o cu E > a0 = u s CL E > c CL a E E ',u- E 0 O CA E w > co _V - CITY OF DUMOND BAR Mayor Jack Tanaka Mayor Pro Tem Ron Everett Councilmember Wen Chang Councilmember Carol Herrera Councilmember Steve Tye City Manager James DeStefano Assistant City Manager David Doyle City Clerk Tommye Cribbins Director of: Community Services Bob Rose Community Development Nancy Fong Finance Linda Magnuson Information Systems Ken Desforges Public Works David Liu - viii - DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS MICHAEL R. LUDIN, CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W. SPRAKER, CPA NITIN P. PATEL, CPA ROBERT J. CALLANAN, CPA 5 CORPORATE PARK, SUITE 100 * MOMSHII M. PERL MP, CPA *THOMAS M. PERLOWSHI, CPA IRVINE, CALIFORNIA 92606-5165 *HARVEY J. SCHROEDER, CPA (949) 399-0600 * FAX (949) 399-0610 KENNETH R. AMES, CPA www.diehlevans.com p *WILLIAM C. PENTZ, CPA December 23, 2008 -A PROFESSIONAL CORPORATION INDEPENDENT AUDITORS' REPORT 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, 2008, 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 j plan and perform the audit to obtain reasonable assurance about whether the financial statements are Ii 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, 2008, and the 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- i OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330 CARLSBAD, CALIFORNIA 92008-2389 ESCONDIDO, CALIFORNIA 92025-2598 (760) 729-2343 * FAX (760) 729-2234 (760) 741-3141 * FAX (760) 741-9890 In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2008 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 laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results 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 statements and, 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. 1 201 �021 I M!' -2- MANAGEMENT'S DISCUSSION AND ANALYSIS THIS PAGE LEFT BLAND INTENTIONALLY CITY OF DIAMOND BAR Management's Discussion and Analysis June 30, 2008 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, 2008. 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 assets of the City of Diamond Bar exceeded its liabilities at the close of the fiscal year by $411,296,785 (net assets). Of this amount, $36,236,504 (unrestricted net assets) may be used to meet the City's ongoing obligations to citizens and creditors. • The total governmental fund revenues from all sources equaled $27,932,439. • The total cost of all City governmental fund programs equaled $24,747,763. • As of the close of the current fiscal year, the City of Diamond. Bar's governmental funds reported combined ending fund balances of $37,991,462, an increase of $2,842,076 in comparison with the prior f year. Approximately $30.3 million of that amount is available for spending at the City's discretion. Although funds haven't been specifically reserved for economic development activities or for future capital projects to benefit the community it is anticipated in the future some of these funds may be used for these purposes. • At the end of the current fiscal year, unreserved fund balance for the general fund was $31,065,127, or over one and three quarters 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 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. 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 cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). See independent auditors' report. -3- CITY OF DIAMOND BAR Management's Discussion and Analysis (Continued) June 30, 2008 Overview of the Financial Statements (Continued) Government -wide financial statements (Continued) 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 fiinctions 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 or enterprise funds. 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 t 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. The City of Diamond Bar adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided 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 t used to allocate costs internally among the various functions of the City. The City of Diamond 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. See independent auditors' report. CITY OF DIAMOND BAR Management's Discussion and Analysis (Continued) June 30, 2008 Overview of the Financial Statements (Continued) Notes to the 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 supplementafy 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 $411,296,785 at the close of 2008. (see Table 1) By far the largest component of the City's net assets (90 percent) is its investment in capital assets (e.g., land, buildings, infrastructure, machinery, equipment, and construction in progress), 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. Table 1 CITY OF DIAMOND BAR Statement of Net Assets Governmental Activities 2008 2007 Current and other assets $46,289,772 $43,549,754 Capital assets 383,974,296 388,377,190 Total Assets 430,264,068 431,926,944 Long-term debt outstanding 12,806,584 13,126,500 Other Liabilities 6,160,699 4,729,046 Total Liabilities 18,967,283 17,855,546 Net assets: (' Invested in capital assets, net of debt 370,949,296 375,216,400 Restricted 4,110,985 4,782,114 Unrestricted 36,236,504 34,072,884 Total Net Assets $411,296,785 $414,071,398 II Although the City's net assets decreased by $2,774,613 this year there was an increase in the unrestricted l portion of the net assets. The total value of capital assets decreased due to the aging and resulting depreciation of the City's capital assets. ISee independent auditors' report. -5- Management's Discussion and Analysis June 30, 2008 Financial Analysis (Continued) At the end of fiscal year 2008 the City is able to report a 6.4 percent or $2,163,620 increase in unrestricted net assets from the prior fiscal year. This is an indication of the City's efforts to continually expend its resources conservatively in anticipation of the future purchase or construction of a city hall and possible revenue Revenues The City's total revenues were $26while the total cost of all programs and services was $29.3 million. Revenues this fiscal year were 15.6% lower than those of the prior year. There were decreases in most of the revenue categories. There were however a few increases in the revenue categories which offset some of the revenue reduction. 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 inLieu ofSales Taxes Franchise Taxes Property transfer tax Othertaxea Motor vehicle in lieu Investment Income Other Total revenues Expenses: General Government Public Safety Highways and Streets Community Development Parks, Recreation and Culture Interest and Fiscal Charges Total expenses Change innet assets Net assets -O7/O1 Net assets - 06/30 See independent oocibzrs` 2008 2007 $ 5.858.619 $ 6.675,619 4`307'074 6.968.824 219.183 1.254.314 8,194,270 7,727,580 800,390 774,757 3.114.563 2.935,703 987,815 1.007.642 1.024.710 1.064.621 283'433 331.006 33,885 33.822 262.084 350.194 1.420.989 1.478.010 4,388 41,362 26,511,172 30,641,544 4,473.666 4,784,314 4.944'729 4.876/435 13/034,6R69 14`019.550 2,251.198 2.292.757 5.188.977 4.779.588 414,071,398 414,680,540 $ 411,296,785 $ 414,071,398 Management's Discussion and Analysis (Continued) June 30, 2008 Government -wide Financial Analysis (Continued) The following are highlights of some of the major differences: Revenues • Charges for services decreased this year primarily due to last year's receipt of traffic mitigation and developer fees related to the construction of the Brookfield homes project. • The dramatic decrease of over $2.7 million in operating grants and contributions is due to several different factors. Last year the City received a one time contribution of $502,600 from the County to assist with the implementation of a traffic management system. During the previous fiscal year there were grants received from both the State and Federal Government which reimbursed the City for various operating expenditures. In addition during the previous fiscal year the City received two years' allocation of traffic congestion relief funds from the State. • Last year the City received Federal Funds for the improvement of Grand Avenue. These funds in the amount of $1,066,605 were reflected in the capital grant and contributions category causing this category to be higher than the current year. • The increase in property tax revenue is primarily due the continuing rise of property values in fiscal year 07-08. Another factor causing the increase is from the addition of new homes from the Brookfield development project. • Sales tax was slightly higher this fiscal year due to the rise in gasoline prices. The City is located at the intersection of several freeways and as a result some of its highest sales tax producers are service stations. Expenses This year expenses for the City totaled $29.3 million which is nearly $2 million or 6.3% less than the previous fiscal year. There were both increases and decreases in the various categories. The following are the highlights of the major differences: • General Government was lower this year due primarily to the decrease in the City's Information Technology Division. This division has been responsible for implementation of several new computer systems. Last fiscal year saw the purchase of hardware and software related to these implementations. • There was a slight increase in Public Safety expenditures (1.4%) this year. Contract rates with the L.A. County Sheriffs Department rose approximately 7% in fiscal year 07-08. This increase was mitigated since the City had vacancies in its contracted law enforcement positions during the year. • Streets and Highways category was lower this year by a little over $2 million. In fiscal year 2006-07 the I City completed a major rehabilitation of a portion of Grand Avenue. The cost of this project was $2.1 million. • There was a slight decrease in Community Development. This decrease is due a decrease in Building (I and Safety expenditures. • Interest rates on the outstanding variable rate lease revenue bonds were lower this year. This along with the lower principal outstanding on the lease revenue bonds is responsible for the decrease in Interest and Fiscal Charges. See independent auditors' report. Management's Discussion and Analysis (Continued) June 30, 2008 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 $37,991,462, an increase of $2,842,076 in comparison with the prior year. Of this amount, there is $6,458,948 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 $31,065,127, while the total fund balance reached $32,929,514. 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 184.4% of total general fund expenditures, while total fund balance represents 195.5% of the same amount. Overall the fund balance of the City of Diamond Bar's general fund increased by $2,467,964 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 a slight 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. • Traffic mitigation fees were received to fund future traffic improvements. ® Rents and concessions continued rise due to the popularity of the City's park facilities including the Diamond Bar Center and cell site leases. ® Conservative expenditure budgets also contribute to the growth of the general fund balance. This includes a contract city business model which aides the City in containing costs. Fund balance in the City's Park and Facility Development Fund has been derived primarily from the receipt of developer related fees which have been collected for the purpose of improving the City's parks and facilities. The fund ended the year with a fund balance of $1,302,445, which is a decrease of $405,830. This change in fund balance is due to the fact these funds were used to assist in funding eight different park and facility improvement projects. The improvements ranged from improving ball fields for the City's use at a local middle school to making improvements to City's Sycamore Canyon Park to making trail improvements in the Sycamore Canyon area. See independent auditors' report. l -8- lei VVE63 a Q A UV Lei 0110 : : Management's Discussion and Analysis (Continued) June 30, 2008 Financial Analysis of the City's Funds (Continued) General Fund Budgetary Highlights Original revenue budget projections were decreased during the year by 4.66% to reflect more conservative revenue projections. The actual revenue came in 2.5% less than anticipated. There were categories which exceed expectations and some that obviously were less than anticipated. The General Fund taxes category include property taxes, sales tax, franchise tax and property transfer tax. These revenues exceeded expectations by $401,381. The variance between the amount budgeted and the amount received is primarily due to the under estimation of property tax revenue. The City anticipated receiving FEMA reimbursement and over estimated the revenue from the State for vehicle license fees causing the budgeted revenue in the Intergovernmental category to exceed actual revenue received. This has been reflected in the fiscal year 08-09 budget. During fiscal year 07-08 the City had a piece of property which was in escrow for most of the year. It was anticipated that this property sale would be completed by the end of the fiscal year. It was anticipated that this property would sell for $1,225,000. Therefore the Other Revenue budget was not realized. It should be noted that if this sale had been completed the City's General Fund revenues would have exceeded expectations overall. The investment income revenue estimate was much higher than anticipated due to higher investment yields and cash balances. Although there was an increase in General Fund appropriations for the year of 6.4% from the original budget to the amended budget, the final expenditures actually came in 20% or $4.2 million less than budgeted. At the end of the year, were General Fund open encumbrances equaling $958,231 which were carried over into fiscal year 08-09. Reasons for the difference between budget and actual include salary savings from staff vacancies, law enforcement contract savings from contracted position vacancies, various studies and projects which were either postponed or cancelled. See independent auditors' report. -9- Management's Discussion and Analysis (Continued) June 30, 2008 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, 2008 amounts to $383,974,296 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, Runiture and fixtures, vehicles and equipment, infrastructure and construction in progress. The total decrease in the City's investment in capital assets was approximate 1.1% from the previous year. Table 3 City of Diamond Bar Capital Assets (net of depreciation) Land Right of Way Buildings and improvements Furniture and fixtures Vehicles and equipment Infrastructure Construction in Progress 2008 2007 $ 6,206,190 $ 6,206,190 256,536,095 256,536,095 15,195,460 16,502,917 7,692 8,815 653,078 632,903 103,882,787 107,168,051 1,492,994 1,322,219 $ 383,974,296 $ 388,377,190 Although there is a net decrease in the value of Building and Improvements there were improvements made to two City parks. Batting cages were constructed and completed at Pantera and Peterson Parks. The decrease is due to depreciation. The decrease in Furniture and Fixtures was due to the depreciation of existing assets. The increase in Vehicles and Equipment is primarily a result of the purchase of several pieces of equipment to either improve efficiency or provide new programs to the citizens of Diamond Bar. The highlights are: • Black out shades for the windows at the Diamond Bar Center to enhance daytime viewing of projected screen images. • New computer servers and network hardware for the new computerized traffic management system which is currently under development. • A portable traffic message board was purchased to increase traffic safety by posting construction, traffic congestion or road closure warnings. See independent auditors' report. -10- Management's Discussion and Analysis (Continued) June 30, 2008 Capital Asset and Debt Administration (Continued) Capital assets (Continued) The overall decrease in the value of the City's capitalized assets is due to the depreciation of the City's infrastructure. Significant additions to capital assets include: • Traffic signal improvements include modifications and improvements to nine intersections including: Intersection of Pathfinder and Peaceful Hills Intersection of Diamond Bar Blvd and Maple Hill Intersection of Diamond Bar Blvd and Sunset Crossing Intersection of Diamond Bar Blvd and North Bound SR 57 Intersection of Diamond Bar Blvd and Cold Spring Intersection of Diamond Bar Blvd and Mountain Laurel Intersection of Brea Canyon Road and Sliver Bullet Intersection of Diamond Bar Blvd and Highland Valley Intersection of Diamond Bar Blvd and Grand Ave • Pavement additions included making Washington Street a cul-de-sac. Construction in progress at the end of the year included twenty three projects in various stages of construction. There were eight park improvement projects in progress totaling $349,382. The rest of the projects 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 $1,145,683 at the end of the year. Additional information on the City's capital assets can be found in note 4. Long-term debt — At the end of the current fiscal year, the City of Diamond Bar's total long-term debt equaled $13,321,584. The following table shows the breakdown of the debt outstanding. City of Diamond Bar Outstanding Long Term Debt at Year-end Variable Rate Lease Revenue Bonds (backed by the Public Financing Authority) $ 13,025,000 Unamoritzed Bond Discount (114,625) Compensated Absences (backed by the City) 411,209 $ 13,321,584 Additional information on the City's long-term debt can be found in note 5. See independent auditors' report. - 11 - Management's Discussion and Analysis (Continued) June 30, 2008 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 2008-2009 budget is a fiscally conservative budget. As a result of the slow down in the economy anticipated revenues in the General Fund show a slight rise with the exception of development related fees. At the same time, the expenditure budget is slightly less than last year's appropriations. The City has made a conscientious decision to use some general fund balance reserves for economic development purposes. As a result, the fiscal year 08 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 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- GOVERNMENT WIDE FINANCIAL STATEMENTS I ull It CITY OF DIAMOND BAR STATEMENT OF NET ASSETS June 30, 2008 ASSETS: Cash and investments (Note 2) Accounts receivable Interest receivable Due from other governments Due from employees Notes receivable 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 Unearned revenue 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. -13- Governmental Activities $ 42,812,278 280,597 292,635 1,821,908 927 230,435 526,459 324,533 264,235,279 119,739,017 430,264,068 2,688,174 106,079 19,320 1,126,633 90,837 931,017 478,650 204,989 515,000 12,806,584 18,967,283 370,949,296 309,533 2,912,276 889,176 36,236,504 $ 411,296,785 CITY OF DIAMOND BAR STATEMENT OF ACTIVITIES For the year ended June 30, 2008 Functions/programs Expenses Governmental activities: Net (Expense) General government $ 4,473,666 Public safety 4,944,729 Highways and streets 12,034,669 Community development 2,251,196 Parks, recreation Program Revenues and culture 5,188,977 Interest on long-term debt 392,548 Total governmental activities $ 29,285,785 (392,548) $ 5,858,619 $ 4,307,074 $ 219,193 (18,900,899) 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 revenues Total general revenues Change in net assets NET ASSETS - BEGINNING OF YEAR NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. -14- 8,194,270 800,390 3,114,562 987,615 1,024,710 283,433 33,865 262,064 1,420,989 4,388 16,126,286 (2,774,613) 414,071,398 $ 411,296,785 Net (Expense) Revenue and Changes in Program Revenues Net Assets Charges Operating Capital for Grants and Grants and Governmental Services Contributions Contributions Activities $ 225,553 $ 34,169 $ - $ (4,213,944) 1,176,931 157,735 - (3,610,063) 2,851,187 1,673,027 45,193 (7,465,262) 23,351 806,480 - (1,421,365) 1,581,597 1,635,663 174,000 (1,797,717) (392,548) $ 5,858,619 $ 4,307,074 $ 219,193 (18,900,899) 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 revenues Total general revenues Change in net assets NET ASSETS - BEGINNING OF YEAR NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. -14- 8,194,270 800,390 3,114,562 987,615 1,024,710 283,433 33,865 262,064 1,420,989 4,388 16,126,286 (2,774,613) 414,071,398 $ 411,296,785 FUND FINANCIAL STATEMENTS THIS PAGE LEFT BLANK INTENTIONALLY GOVERNMENTAL FUNDS GENERAL FUND 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 farad. SPECIAL REVENUE FUNDS The 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. The following Special Revenue Funds have been classified as major funds in the accompanying financial statements: Park and Facility Development Fund - This fund is used to account for the development and enhancement of the City's parks. Proposition 1B Bond Fund - This fund is used to account for the receipt and expenditures of Proposition 1B Bond funds from the State of California. -15- CITY OF DIAMOND BAR BALANCE SKEET GOVERNMENTALFUNDS June 30, 2008 ASSETS ASSETS: Cash and investments Cash and investments with fiscal agents Accounts receivable Interest receivable Due from other funds (Note 3) Due from employees Due from other governments 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: Reserved for: Encumbrances Bond retirement Debt service Unreserved, Reported in: General Fund Special Revenue Funds Capital Projects Funds TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES See independent auditors' report and notes to basic financial statements. -16- Special Revenue Funds Park and Facility Proposition General Development 1B Bond Fund Fund Fund $ 34,204,926 $ 1,320,237 $ 938,839 15,000 - - 219,607 - - 292,635 - - 243,660 - - 927 - - 1,255,024 - _ $ 36,231,779 $ 1,320,237 $ 938,839 $ 1,603,825 $ 17,792 $ - 101,565 - _ 1,126,633 470,242 - 931,017 3,302,265 17,792 931,017 958,231 144,586 - 906,156 - 31,065,127 - - - 1,157,859 7,822 32,929,514 1,302,445 7,822 $ 36,231,779 $ 1,320,237 $ 938,839 Other Total Governmental Governmental Funds Funds $ 4,266,229 $ 40,730,231 309,533 324,533 60,990 280,597 - 292,635 - 243,660 - 927 566,884 1,821,908 230,435 230,435 $ 5,434,071 $ 43,924,926 $ 1,066,557 $ 2,688,174 4,514 106,079 - 1,126,633 243,660 243,660 71,833 1,473,092 90,837 90,837 204,989 204,989 1,682,390 I; 5,933,464 5,356,131 6,458,948 - 906,156 309,533 309,533 - 31,065,127 3,789,871 4,955,552 (5,703,854) (5,703,854) 3,751,681 37,991,462 $ 5,434,071 $ 43,924,926 -17- THIS PAGE LEFT BLANK INTENTIONALLY MW1 • •� RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO TBE STATEMENT OF NET ASSETS June 30, 2008 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, 2008 are: Bonds payable $(13,025,000) Deferred charges for issuance costs 526,459 Bond discount 114,625 Compensated absences (411,209) Accrued interest payable from the current portion of interest due on bonds payable has not been reported in the governmental funds. Certain amounts due from other governments that are not available to pay for current period expenditures and, therefore, are recorded as deferred revenue in the governmental funds. 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. -19- $ 37,991,462 383,910,090 (12,795,125) (19,320) 542,075 1,667,603 $ 411,296,785 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended June 30, 2008 Special Revenue Funds Park and Facility Proposition General Development 1B Bond Fund Fund Fund REVENUES: Taxes $ 10,165,881 $ - $ - Special assessments - Intergovernmental revenue 4,611,368 1,062,895 37,371 Charges for services - _ - Fines and forfeitures 637,484 - - Licenses, permits and fees 2,947,476 174,000 - Investment income 1,343,002 67,477 7,822 Other revenues 826,177 - - TOTAL REVENUES 20,531,388 1,304,372 45,193 EXPENDITURES: Current: General government 3,987,656 - - Public safety 4,927,377 - - Highways and streets 2,511,382 - - Parks, recreation and culture 3,714,762 - - Community development 1,702,734 17,791 - Capital outlay _ _ _ Debt service: Principal Interest and fiscal charges _ - _ TOTAL EXPENDITURES 16,843,911 17,791 - EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 3,687,477 1,286,581 45,193 OTTER FINANCING SOURCES (USES): Transfers in 1,439,832 26,825 - Transfers out (2,659,345) (1,719,236) (37,371) TOTAL OTHER FINANCING SOURCES (USES) (1,219,513) (1,692,411) (37,371) NET CHANGE IN FUND BALANCES 2,467,964 (405,830) 7,822 FUND BALANCES - BEGINNING OF YEAR 30,461,550 1,708,275 - FUND BALANCES - END OF YEAR $ 32,929,514 $ 1,302,445 $ 7,822 See independent auditors' report and notes to basic financial statements. -20- Other Total Governmental Governmental Funds Funds $ - $ 10,165,881 543,561 543,561 4,185,314 9,896,948 1,111,655 1,111,655 - 637,484 - 3,121,476 210,956 1,629,257 - 826,177 6,051,486 27,932,439 - 3,987,656 6,581 4,933,958 2,415,036 4,926,418 - 3,714,762 525,971 2,246,496 4,271,890 4,271,890 255,000 255,000 411,583 411,583 7,886,061 24,747,763 (1,834,575) 3,184,676 5,799,492 7,266,149 (3,192,797) (7,608,749) 2,606,695 (342,600) 772,120 2,842,076 2,979,561 35,149,386 $ 3,751,681 $ 37,991,462 -21- 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, 2008 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 expenses in the current period: Capital expenditures Depreciation expense 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 of governmental funds. Neither transaction, however, has any effects on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar 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 Amortization of bond discount Amortization of issuance costs Compensated absences 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 governmental funds are for funds that become available in the current year. These funds were already reported as revenues in the Statement of Activities in prior years. 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. -22- $ 1,702,372 (6,097,833) $ 255,000 (4,585) (21,058) (80,144) $ 2,842,076 (4,395,461) (5,510) 149,213 23,620 (1,494,262) 105,711 $(2,774,613) CITY OF DIAMOND BAR STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2008 ASSETS CURRENT ASSETS: Cash and investments NONCURRENT ASSETS: Capital assets: Machinery and equipment Less accumulated depreciation TOTAL NONCURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES: Accounts payable NET ASSETS Invested in capital assets Unrestricted TOTAL NET ASSETS See independent auditors' report and notes to basic financial statements. -23- Internal Service Funds $ 2,082,047 211,580 (147,374) 64,206 2,146,253 478,650 64,206 1,603,397 $ 1,667,603 CITY OF DIAMOND BAR STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS For the year ended June 30, 2008 OPERATING EXPENSES: Insurance premiums Maintenance and operations Depreciation TOTAL OPERATING EXPENSES OPERATING LOSS NONOPERATING REVENUES: Investment income LOSS BEFORE TRANSFERS TRANSFERS IN CHANGE IN NET ASSETS TOTAL NET ASSETS - BEGINNING OF YEAR TOTAL NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. -24- Internal Service $ 285,105 4,898 19,881 309,884 (309,884) 72,995 (236,889) 342,600 105,711 1,561,892 $ 1,667,603 CITY OF DIAMOND BAR STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the year ended June 30, 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Insurance payments CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Cash received from other funds CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets CASH FLOWS FROM INVESTING ACTIVITIES: Investment income 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 payable NET CASH USED BY OPERATING ACTIVITIES See independent auditors' report and notes to basic financial statements. -25- Internal Service $ (318,280) 342,600 (17,794) 72,995 79,521 2,002,526 $ 2,082,047 $ (309,884) 19,881 (28,277) $ (318,280) THIS PAGE LEFT BLANK INTENTIONALLY -26- NOTES TO BASIC FINANCIAL STATEMENTS NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2008 1. 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 by an elected five -member city council. As required by accounting principles generally accepted in the United States of America, 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 fall 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 (the Agency) was established 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, 2008. 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. - 27 - CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 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 interfand 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 ® Notes to basic financial statements See independent auditors' report. W -W-2 NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 1. 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. - 29 - low&Q c .� NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 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 l 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 used 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. The Park and Facility Development Special Revenue Fund - This fund is used to account for the development and enhancement of the City's parks. The Proposition 1B Bond Fund - This fund is used to account for the receipt and expenditures of Proposition 1B Bond funds from the State of California. See independent auditors' report. -30- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): d. Fund Classifications (Continued): The City's fund structure also includes the following fund types: GOVERNMENTAL 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. 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). PROPRIETARY 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. 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 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. See independent auditors' report. -31- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): f 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 recorded at cost where historical records are ii 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. In the fiscal year ended June 30, 2008, the City, with the assistance of an outside consultant, valued and recorded its public domain assets acquired prior to July 1, 2002. The City now has all of its infrastructure asset data valued and recorded in its entirety as of June 30, 2008. 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. sm NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 1. REPORTING ENTITY .AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): h. Encumbrances: Encumbrance accounting, under which purchase orders, contracts and other commitments for 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: O 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. j 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, Eas 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: Deferred charges represent capitalized costs incurred in connection with the issuance of long-term debt. These costs are amortized over the life of the debt on a straight-line basis. See independent auditors' report. -33- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 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 I November I - Vt installment February I - 2nd installment December 10 - 1St installment April 10 - 2nd installment December 11 - I st 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. -34- CITY OF • BAA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 2. CASH AND INVESTMENTS: Cash and Investments: Cash and investments at June 30, 2008 consisted of the following: Statement of Net Assets: Cash and investments $ 42,812,278 Cash and investments with fiscal agents 324,533 l $ 43,136,811 Cash and investments held by the City at June 30, 2008 consisted of the following: Ij Imprest cash on hand $ 1,500 Demand deposits (overdraft) (65,765) Escrow deposits 15,000 Investments: U.S. Government Sponsored Enterprise Securities Repurchase agreements Local agency investment fund Held by Bond Trustee: Money Market Mutual Funds See independent auditors' report. -35- 8,000,000 892,584 33,983,959 309,533 $ 43,136,811 NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 2. CASH AND INVESTMENTS (CONTINUED): Investments Authorized by the California Government_ Code and the Citv's Investment Policv: 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. -36- Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity 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. -36- W-ftifflany-Mlly Is) 2 103 NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 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. Maximum Percentage/ Maximum Maximum Amount Investment Authorized Investment Type Maturity Allowed in One Issuer U.S. Treasury Obligations None None None U.S. Government Sponsored Enterprise Securities None 10% None Banker's Acceptances 1 year None None Time Certificate of Deposits None None None Local Agency Investment Fund None None None Money Market Funds None None None Repurchase Obligations Tax Exempt 30 days None None Taxable Government Money Market Portfolios None Equal to six None months of principal and interest on the bonds Disclosures Relating to Interest Rate Risk: 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. I : -37- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 2. CASH AND INVESTMENTS (CONTINUED): Disclosures Relating to Interest Rate Risk (Continued): 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: Investment Type U.S. Government Sponsored Enterprise Securities Repurchase Agreements Local Agency Investment Fund Held by Bond Trustee: Money Market Mutual Funds Disclosures Relating to Credit Risk: Remaining Mat LjtV (in Months) 12 Months 13-24 25-60 or Less Months Months Total $ - $ 1,000,000 $ 7,000,000 $ 8,000,000 892,584 - - 892,584 33,983,959 - - 33,983,959 309,533 - - 309,533 S 35 186:0761.000,000 S 7.000.000 $ 43,186.076 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 assignment 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: N/A - Not Applicable See independent auditors' report. -38- AAA Unrated $ 8,000,000 $ - - 892,584 309,533 $ 8,309.533 33,983,959 34.876,543 Total Minimum as of Legal Investment Type June 30, 2008 Rating_ U.S. Government Sponsored Enterprise Securities $ 8,000,000 N/A Repurchase Agreements 892,584 N/A Local Agency Investment Fund 33,983,959 N/A Held by Bond Trustee: Money Market Mutual Funds 309,533 AAA Total $ 43186.076 N/A - Not Applicable See independent auditors' report. -38- AAA Unrated $ 8,000,000 $ - - 892,584 309,533 $ 8,309.533 33,983,959 34.876,543 CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 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 party. 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 governmental 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, 2008, 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. -39- [$11WA[$ NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 3. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS: The composition of interftmd balances as of June 30, 2008, is as follows: Due To/From Other Funds: Receivable Fund Payable Fund Amount General Fund Other Governmental Funds $ 24�3660 The amounts loaned from the General Fund to the Other Governmental Funds are to provide a short-term loan to fund temporary cash shortfalls. Interfund Transfers: Transfers In General Fund Park and Facility Development Special Revenue Fund Other Governmental Funds Transfers Out Amount Other Governmental Funds $ 1,439,832 Other Governmental Funds 1 26,825 General Fund 2,316,745 Park and Facility Development Special Revenue Fund 1,719,236 Proposition 1B Bond Special Revenue Fund 37,371 Other Governmental Funds 1,726,140 Internal Service Funds General Fund 342,600 $ 7.60&749 Transfers to the General Fund from the Other Governmental Funds were made to reimburse the General Fund for various capital projects. Transfers from the General Fund to the Other Governmental Funds were made to provide for debt service payments and capital projects costs. 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. -40- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 4. CAPITALASSETS: A summary of changes in the Governmental Activities capital assets at June 30, 2008 is as follows: Capital assets, not being depreciated: Land Right of way Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Building and improvements Furniture and fixtures Vehicles and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation for: Balance Balance at July 1, 2007 Additions Deletions June 30, 2008 $ 6,206,190 $ - $ - $ 6,206,190 256,536,095 - - 256,536,095 1,322,219 1,486,532 (1,315,757) 1,492,994 264,064,504 1,486,532 (1,315,757) 264,235,279 23,931,012 177,143 - 24,108,155 68,505 1,829 - 70,334 1,548,567 194,891 (9,195) 1,734,263 179,389,923 1,175,692 (70,155) 180,495,460 204,938,007 1,549,555 (79,350) 206,408,212 Building and improvements (7,428,095) (1,484,600) - (8,912,695) j Furniture and fixtures (59,690) (2,952) - (62,642) Vehicles and equipment (915,664) (172,713) 7,192 (1,081,185) Infrastructure (72,221,872) (4,457,449) 66,648 (76,612,673) Total accumulated depreciation (80,625,321) (6,117,714) 73,840 (86,669,195) Total capital assets being depreciated, net Total Governmental Activities capital assets, net 124,312,686 (4,568,159) (5,510) 119,739,017 $ 388.377,190 $ (3,081,627) $ (1,321,267) $ 383,974,296 Depreciation expense was charged to functions in the Statement of Activities as follows: General government Public safety Highways and streets Community development Parks, recreation and culture Internal Service Funds depreciation charges to program See independent auditors' report. -41- $ 105,432 10,771 4,467,086 12,782 1,501,762 19,881 $ 6,117,714 NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 5. LONG-TERM LIABILITIES: Long-term liability activity for the year ended June 30, 2008, was as follows: 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, 2008, $13,025,000 of the bonds are outstanding. In conjunction with the Bonds, the Authority executed a rate cap agreement on December 2, 2002 (the Agreement) with JPMorgan 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, 2008 the Agreement had a positive fair value of $71,950. 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, JPMorgan Chase, has the following credit ratings of. (i) Standard & Poor's, AA - and (ii) Moody's, Aa2. See independent auditors' report. -42- Beginning Ending Due Within Balance Additions Retirements Balance— One Year Bonds payable: Revenue bonds $ 13,280,000 $ $ (255,000) $ 13,025,000 $ 265,000 Unamortized discount (119,210) 4,585 (114,625) - Compensated absences 331,065 322.377 (242,233) 411,209 250.000 Total 5 13.491.855 $3_2_2 =3 $ (491648) $ 13.321.584 L--5-15000 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, 2008, $13,025,000 of the bonds are outstanding. In conjunction with the Bonds, the Authority executed a rate cap agreement on December 2, 2002 (the Agreement) with JPMorgan 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, 2008 the Agreement had a positive fair value of $71,950. 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, JPMorgan Chase, has the following credit ratings of. (i) Standard & Poor's, AA - and (ii) Moody's, Aa2. See independent auditors' report. -42- CITY OF DIAMOND BAR NOTES. TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 5. LONG-TERM LIABILITIES (CONTINUED): Bonds Payable (Continued): 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. 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, 2008, the Agreement had a positive fair value of $71,950. Payments and Associated Debt: Using a variable rate of 2.730% as of June 30, 2008, 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. See independent auditors' report. -43- Variable Rate Debt Counter- Net Year Ending party Debt June 30, Principal Interest Total Payments Service I' 2009 $ 265,000 $ 355,583 $ 620,583 $ 230,542 $ 851,125 2010 280,000 348,348 628,348 225,852 854,200 2011 290,000 340,704 630,704 220,896 851,600 2012 305,000 332,787 637,787 215,763 853,550 2013 320,000 324,461 644,461 210,364 854,825 2014-2018 1,835,000 1,482,937 3,317,937 961,463 4,279,400 2019-2023 2,310,000 1,207,889 3,517,889 783,136 4,301,025 2024-2028 2,910,000 861,180 3,771,180 558,345 4,329,525 2029-2033 3,670,000 424,379 4,094,379 275,146 4,369,525 2034 840,000 22,932 862,932 14,868 877,800 13,025,000 $ 5,701,200 $ 18,726,200 $ 3,696,375 $ 21422,575 Compensated Absences: The City's policies relating to compensated absences are described in Note 1. This liability, amounting to $407,988 at June 30, 2008, is expected to be paid in future years from future �. resources, typically liquidated from the General Fund. See independent auditors' report. -43- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 ,6'. LIABILITY, PROPERTY AND WORKERS' COMPENSATION PROTECTION: The City is a member of the California Joint Powers Insurance Authority (the Insurance Authority). The Insurance Authority is composed of 119 California public entities and is organized under a joint powers agreement pursuant to California Government Code Section 6500 et seq. The purpose of the Insurance 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 Insurance 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 Liabilitv Each member government pays a primary deposit to cover estimated losses for a fiscal year (claims year). After the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Claims are pooled separately between police and nonpolice. Costs are spread to members as follows: the first $30,000 of each occurrence is charged directly to the member's primary deposit; costs from $30,000 to $750,000 and the loss development reserves associated with losses up to $750,000 are pooled based on the member's share of losses under $30,000. Losses from $750,000 to $5,000,000 and the associated loss development reserves are pooled based on payroll. Costs of covered claims from $5,000,000 to $50,000,000 are currently paid by excess insurance. Costs of covered claims for subsidence losses from $15,000,000 to $25,000,000 are paid by excess insurance. The protection for each member is $50,000,000 per occurrence and $50,000,000 annual aggregate. Administrative expenses are paid from the Insurance Authority's investment earnings. Workers' Compensation The City also participates in the workers compensation pool administered by the Insurance Authority. Each member pays a primary deposit to cover estimated losses for a fiscal year (claims year). After the close of a fiscal year, -outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Claims are pooled separately between public safety and non-public safety. See independent auditors' report. -44- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 6. LIABILITY, PROPERTY AND WORKERS' COMPENSATION PROTECTION (CONTIZJUED): a. Self -Insurance Programs of the Authority (Continued): Workers' Compensation (Continued) Each member has a retention level of $50,000 for each loss and this is charged directly to the member's primary deposit. Losses from $50,000 to $100,000 and the loss development reserve associated with losses up to $100,000 are pooled based on the member's share of losses under $50,000. Losses from $100,000 to $2,000,000 and employer's liability losses from $5,000,000 to $10,000,000 and loss development reserves associated with those losses are pooled based on payroll. Losses from $2,000,000 to $5,000,000 are pooled with California State Association of Counties - Excess Insurance Authority members. Costs from $2,000,000 to $300,000,000 are transferred to reinsurance carriers. Costs in excess of $300,000,000 are pooled among the Members based on payroll. Protection is provided per statutory liability under California Workers' Compensation law. Administrative expenses are paid from the Insurance Authority's investment earnings. b. Purchased Insurance: Environmental Insurance The City participates in the pollution legal liability and remediation legal liability insurance which is available through the Insurance Authority. This policy covers sudden and gradual pollution of scheduled properly, 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 July 1, 2008. Each member of the Insurance Authority has a $10,000,000 limit during the 3 -year term of the policy. Property Insurance The City participates in the all-risk property protection program of the Insurance Authority. j 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 Insurance Authority. The City's property currently has all-risk property insurance protection in the amount of $17,659,518. There is a $5,000 deductible per occurrence except for non -emergency vehicle insurance which has a $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. See independent auditors' report. -45- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 6.. LIABILITY, PROPERTY AND WORKERS' COMPENSATION PROTECTION (CONTINUED): b. Purchased Insurance (Continued): Crime Insurance The City purchases crime insurance coverage in the amount of $1,000,000 with $2,500 deductible. The fidelity coverage is provided through the Insurance Authority. Premiums are paid annually and are not subject to retroactive adjustments. c. Adequacy of Protection: During the past three fiscal (claims) 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. The aforementioned information is not included in the accompanying financial statements. Complete financial statements for the Authority may be obtained at their administrative office located at 8081 Moody Street, La Palma, California 90623. 7. OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES: Deficit Fund Balance The following fund reported a deficit fund balance at June 30, 2008: Other Governmental Fund: Capital Improvement Capital Projects Fund $ 361,238 The Capital Improvement Capital Projects Fund deficit will be funded with various government grants in future years. See independent auditors' report. CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 8. PENSION PLAN: Plan Description: The City of Diamond Bar participates in the Miscellaneous 2% at 55 Risk Pool of the California Public Employee's Retirement System (PERS), a cost-sharing, multiple -employer defined benefit pension plan administered by PERS. PERS provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions and all other requirements are established by State statue and District ordinance. Copies of the PERS' annual financial report may be obtained from the PERS Executive Office - 400 P Street, Sacramento, California 95814. Funding Plic p� The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by PERS. Active City employees are required to contribute 7% of their annual covered salary to PERS. The city makes the contributions,required of City employees on their behalf and for their account. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The current rate is 10.91% of covered payroll. The City's contributions to CalPERS for the years ending June 30, 2008, 2007 and 2006 were $373,818, $344,320 and $304,107, respectively and were equal to the required contribution for each year. The City is presently involved in other 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. -47- NIMI)WRIGIUVISIN -70.1"941 NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2008 10. CONSTRUCTION COMMITMENTS: The following material construction commitments existed at June 30, 2008: Project Name Park Improvements Street Improvements Miscellaneous Capital Improvements Traffic Signals Landscape and Irrigation Improvements 11. OPERATING LEASES: Expenditures as of Remaining June 30, 2008 Commitments 172,189 $ 560,005 959,445 3,207,660 14,725 56,227 656,262 595,871 48,969 103,494 1,851,590 A- $ 4,523.257 The City leases building and office facilities under noncancelable operating leases. The total costs for such leases were $261,727 for the year ended June 30, 2008. The future minimum lease payments for the lease of building and office facilities are as follows: Year Ending June 30, 2009 2010 2011 Total See independent auditors' report. NEM $ 264,151 268,997 179,332 �712480 REQUIRED SUPPLEMENTARY INFORMATION THIS PAGE LEFT BLANK INTENTIONALLY BUDGETARY COMPARISON SCHEDULES GENERAL FUND 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. jPark and Facility Development Fund - This fund is used to account for the development and enhancement of the City's parks. Proposition 1B Bond Fund -This fund is used to account for the receipt and expenditures of Proposition 1B Bond funds from the State of California. CITY OF DIAMOND BAR BUDGETARY COMPARISON SCHEDULE GENERALFUND REVENUES: Taxes Intergovernmental revenue Fines and forfeitures Licenses, permits and fees Investment income Other revenues TOTAL REVENUES EXPENDITURES: Current: General government: City Council City Manager/Clerk City Attorney Finance Human resources Information systems General government Public information Subtotal general government Public safety: Law enforcement Fire protection Animal control Emergency preparedness Subtotal public safety Highways and streets Parks, recreation and culture Community development 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 BALANCE For the year ended June 30, 2008 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 9,745,000 $ 9,764,500 $ 10,165,881 $ 401,381 4,253,525 4,952,000 4,611,368 (340,632) 527,500 508,000 637,484 129,484 4,916,303 3,093,143 2,947,476 (145,667) 750,000 750,000 1,343,002 593,002 1,882,050 1,977,730 826,177 (1,151,553) 22,074,378 21,045,373 20,531,388 (513,985) 175,640 195,640 160,924 34,716 953,690 1,001,325 868,489 132,836 240,000 250,000 197,252 52,748 407,800 448,423 427,354 21,069 243,620 255,270 183,622 71,648 930,910 1,324,837 942,620 382,217 1,684,150 1,585,759 720,124 865,635 513,290 539,290 487,271 52,019 5,149,100 5,600,544 3,987,656 1,612,888 5,342,750 5,379,750 4,809,457 570,293 16,360 16,360 2,888 13,472 105,600 120,600 100,909 19,691 43,290 43,290 14,123 29,167 5,508,000 5,560,000 4,927,377 632,623 2,716,310 3,059,460 2,511,382 548,078 3,938,745 3,979,975 3,714,762 265,213 2,467,360 2,843,363 1,702,734 1,140,629 19,779,515 21,043,342 16,843,911 4,199,431 2,294,863 2,031 3,687,477 3,685,446 1,518,420 1,666,054 1,439,832 (226,222) (3,201,042) (3,181,042) (2,659,345) 521,697 (1,682,622) (1,514,988) (1,219,513) 295,475 612,241 (1,512,957) 2,467,964 3,980,921 FUND BALANCE - BEGINNING OF YEAR 30,461,550 30,461,550 30,461,550 - FUND BALANCE - END OF YEAR $ 31,073,791 $ 28,948,593 $ 32,929,514 $ 3,980,921 See independent auditors' report and note to required supplementary information. -50- CITY OF DIAMOND BAR BUDGETARY COMPARISON SCHEDULE PARK AND FACILITY DEVELOPMENT SPECIAL REVENUE FUND REVENUES: Intergovernmental revenue Licenses, permits and fees Investment income TOTAL REVENUES EXPENDITURES: Current: Community development Capital outlay 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 BALANCE I0i Z I tjM1r0): a`►9 oxels'/m For the year ended June 30, 2008 See independent auditors' report and note to required supplementary information. -51- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 123,938 $ 1,206,433 $ 1,062,895 $ (143,538) 130,500 130,500 174,000 43,500 86,000 86,000 67,477 (18,523) 340,438 1,422,933 1,304,372 (118,561) 90,000 154,500 17,791 136,709 186,650 186,650 - 186,650 276,650 341,150 17,791 323,359 63,788 1,081,783 1,286,581 204,798 26,825 26,825 26,825 - (503,588) (1,742,956) (1,719,236) 23,720 (476,763) (1,716,131) (1,692,411) 23,720 (412,975) (634,348) (405,830) 228,518 1,708,275 1,708,275 1,708,275 - $ 1,295,300 $ 1,073,927 $ 1,302,445 $ 228,518 See independent auditors' report and note to required supplementary information. -51- CITY OF DIAMOND BAR BUDGETARY COMPARISON SCHEDULE PROPOSITION 1B BOND SPECIAL REVENUE FUND For the year ended June 30, 2008 REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ $ 968,389 $ 37,371 $ (931,018) 10,000 7,822 (2,178) 978,389 45,193 (933,196) (978,389) (37,371) 941,018 7,822 7,822 See independent auditors' report and note to required supplementary information. -52- 7,822 $ 7,822 CITY OF DIAMOND BAR June 30, 2008 1. BUDGETS AND BUDGETARY ACCOUNTING: The City adheres to the following general procedures in establishing its annual budget, which is reflected in the accompanying 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 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. Annual budges are not adopted for the Debt Service Funds. 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, 2008, supplemental appropriations in the amount of $5,825,493 were made. i 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 year end lapse, and then are added to the following year's budgeted appropriations. However, encumbrances at year-end are reported as reservations of fund balance. See independent auditors' report. -53- THIS PAGE LEFT BLAND INTENTIONALLY -54- 4 0 w w 9 X N -1"L - r,"Ill - Is Q WORM El 4 0 W � THIS PAGE LEFT BLANK INTENTIONALLY f` CITY OF DIAMOND BAR COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS I June 30, 2008 ( Debt Capital Service Fund Projects Fund Total f Special Public Capital Other Revenue Financing Improvement Governmental Funds Authority Fund Funds ASSETS Cash and investments $ 4,059,689 $ - $ 206,540 $ 4,266,229 Cash and investments with fiscal agents - 309,533 - 309,533 Accounts receivable 60,990 - - 60,990 Due from other governments 496,650 70,234 566,884 Notes receivable 230,435 230,435 TOTAL ASSETS $ 4,847,764 $ 309,533 $ 276,774 $ 5,434,071 LIABILITIES AND FUND BALANCES 'I LIABILITIES: Accounts payable $ 583,703 $ - $ 482,854 $ 1,066,557 Accrued payroll 4,514 - - 4,514 Due to other funds 243,660 - - 243,660 I Deferred revenue 1,599 - 70,234 71,833 Retentions payable 5,913 - 84,924 90,837 Advances from other governments 204,989 - - 204,989 TOTAL LIABILITIES 1,044,378 - 638,012 1,682,390 FUND BALANCES (DEFICIT): Reserved for: Encumbrances 13,515 - 5,342,616 5,356,131 j Debt service - 309,533 - 309,533 Unreserved reported in: Special revenue funds 3,789,871 - - 3,789,871 Capital projects fund - - (5,703,854) (5,703,854) TOTAL FUND BALANCES (DEFICIT) 3,803,386 309,533 (361,238) 3,751,681 l 1 TOTAL LIABILITIES AND FUND BALANCES $ 4,847,764 $ 309,533 $ 276,774 $ 5,434,071 �I See independent auditors' report. -55- THIS PAGE LEFT BLANK INTENTIONALLY SWM CITY OF DIAMOND BAR COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANCES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS For the year ended June 30, 2008 l See independent auditors' report. l -57- Debt Capital Service Fund Project Fund Total ( Special Public Capital Other Revenue Financing Improvement Governmental Funds Authority Fund Funds REVENUES: Special assessments $ 543,561 $ - $ - $ 543,561 Intergovernmental revenue 3,683,434 - 501,880 4,185,314 Charges for services 1,111,655 - - 1,111,655 Investment income 205,964 4,992 - 210,956 TOTAL REVENUES 5,544,614 4,992 501,880 6,051,486 j( EXPENDITURES: Current: Public safety 6,581 - - 6,581 f_ Highways and streets 2,415,036 - - 2,415,036 Community development 525,971 - - 525,971 Capital outlay - - 4,271,890 4,271,890 Debt service: Principal - 255,000 - 255,000 Interest and fiscal charges - 411,583 - 411,583 TOTAL EXPENDITURES 2,947,588 666,583 4,271,890 7,886,061 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 2,597,026 (661,591) (3,770,010) (1,834,575) OTHER FINANCING SOURCES (USES): ( Transfers in - 649,377 5,150,115 5,799,492 Transfers out (3,192,797) (3,192,797) TOTAL OTHER FINANCING SOURCES (USES) (3,192,797) 649,377 5,150,115 2,606,695 NET CHANGE IN FUND BALANCES (595,771) (12,214) 1,380,105 772,120 1 FUND BALANCES (DEFICIT) - BEGINNING OF YEAR 4,399,157 321,747 (1,741,343) 2,979,561 FUND BALANCES (DEFICIT) - END OF YEAR $ 3,803,386 $ 309,533 $ (361,238) $ 3,751,681 l See independent auditors' report. l -57- Icy Il 0 i �'� /'+ ►t l" lU 1 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 (ISTEA) 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 Improvement Fund - This fund is used to account for funds received and designated by the City Council specifically for traffic improvements. 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. Trails & Bikeways Fund - This fund is used to account for the State SB821 revenue received for the specific purpose of the construction of bike and pedestrian paths. California Law 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. -58- OTHER SPECIAL REVENUE FUNDS (CONTINUED) Proposition A Transit Fund - This fund is used to account for the receipt and expenditure of the City's share of the Y2cent sales tax levied'in Los Angeles County for local transit purposes. Communily 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 Development Commission. These funds are used to fund community development programs and projects benefiting low and moderate income citizens. 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 fund is 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. Landscgpe 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. See independent auditors' report. -60- CITY OF DIAMOND BAR COMBINING BALANCE SHEET OTHER SPECIAL REVENUE FUNDS June 30, 2008 Proposition Integrated Traffic State C Waste Traffic Congestion Gas Tax Transit ISTEA Management Improvement Relief ASSETS Cash and investments $ - $ 1,526,646 $ - $ 220,977 $ 370,770 $ - Accounts receivable - - - 46,656 - - Due from other governments 349,037 - 1,599 - - - Notes receivable - - - 25,446 - - TOTAL ASSETS $ 349,037 $ 1,526,646 $ 1,599 $ 293,079 $ 370,770 $ - LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ - $ - $ - $ 18,276 $ - $ - Accrued payroll - - - 1,715 - - Due to other funds 182,152 - - - Deferred revenue - - 1,599 - - - Retentions payable - - - Advances from other governments - _ _ _ TOTAL LIABILITIES 182,152 - 1,599 19,991 - - FUND BALANCES: Reserved for: Encumbrances - - - _ Unreserved 166,885 1,526,646 - 273,088 370,770 - TOTAL FUND BALANCES 166,885 1,526,646 - 273,088 370,770 - TOTAL LIABILITIES AND FUND BALANCES $ 349,037 $ 1,526,646 $ 1,599 $ 293,079 $ 370,770 $ - See independent auditors' report. -60- $ 106,951 $ 9,756 $ 80,106 $1,095,262 $ 321,490 $ 76,296 $ 357,126 $ 259,646 $ 4,847,764 $ 3,398 $ - $ - $ 389,331 $ 48,622 $ 995 $ - $ 123,081 $ 583,703 - - - 2,343 456 - - - 4,514 _ - 61,508 - - - 243,660 - _ _ - 1,599 5,913 - - - 5,913 - _ _ - 204,989 - - - 204,989 3,398 - - 391,674 321,488 995 - 123,081 1,044,378 10,756 - - - - - - 2,759 13,515 ` 92,797 9,756 80,106 703,588 2 75,301 357,126 133,806 3,789,871 l 103,553 9,756 80,106 703,588 2 75,301 357,126 136,565 3,803,386 I $ 106,951 $ 9,756 $ 80,106 $1,095,262 $ 321,490 $ 76,296 $ 357,126 $ 259,646 $ 4,847,764 I' l i �.. _ -61- I Total Air . Proposition Landscape Other Quality Trails & A Asset Maintenance Special Improvement Bikeways CLEEP Transit CDBG COPS Seizure District Revenue Funds $ 88,161 $ 9,756 $ 80,106 $1,080,928 $ - $ 76,296 $ 357,126 $ 248,923 $ 4,059,689 - - - 14,334 - - - - 60,990 18,790 - - - 116,501 - - 10,723 496,650 - - - - 204,989 - - - 230,435 $ 106,951 $ 9,756 $ 80,106 $1,095,262 $ 321,490 $ 76,296 $ 357,126 $ 259,646 $ 4,847,764 $ 3,398 $ - $ - $ 389,331 $ 48,622 $ 995 $ - $ 123,081 $ 583,703 - - - 2,343 456 - - - 4,514 _ - 61,508 - - - 243,660 - _ _ - 1,599 5,913 - - - 5,913 - _ _ - 204,989 - - - 204,989 3,398 - - 391,674 321,488 995 - 123,081 1,044,378 10,756 - - - - - - 2,759 13,515 ` 92,797 9,756 80,106 703,588 2 75,301 357,126 133,806 3,789,871 l 103,553 9,756 80,106 703,588 2 75,301 357,126 136,565 3,803,386 I $ 106,951 $ 9,756 $ 80,106 $1,095,262 $ 321,490 $ 76,296 $ 357,126 $ 259,646 $ 4,847,764 I' l i �.. _ -61- I CITY OF DIAMOND BAR COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER SPECIAL REVENUE FUNDS For the year ended June 30, 2008 EXPENDITURES: Current: Public safety - - Highways and streets - - Community development - - TOTAL EXPENDITURES - - EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 1,062,321 864,416 OTHER FINANCING USES: 251,120 251,120 12,340 44,304 16,336 17,546 Transfers out (1,136,695) Proposition Integrated Traffic State C Waste Traffic Congestion Gas Tax Transit ISTEA Management Improvement Relief REVENUES: (12,560) (442,069) FUND BALANCES (DEFICIT) - Special assessments $ - $ - $ - $ $ Intergovernmental revenue 1,049,504 794,267 12,340 72,776 Charges for services - - - 208,604 166.885 Investment income 12,817 70,149 - 14,044 16,336 17,546 TOTAL REVENUES 1,062,321 864,416 12,340 295,424 16,336 17,546 EXPENDITURES: Current: Public safety - - Highways and streets - - Community development - - TOTAL EXPENDITURES - - EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 1,062,321 864,416 OTHER FINANCING USES: 251,120 251,120 12,340 44,304 16,336 17,546 Transfers out (1,136,695) (869,424) (12,340) (147,866) (28,896) (459,615) NET CHANGE IN FUND BALANCES (74,374) (5,008) - (103,562) (12,560) (442,069) FUND BALANCES (DEFICIT) - BEGINNING OF YEAR 241,259 1,531,654 - 376,650 383,330 442,069 FUND BALANCES - END OF YEAR 166.885 $1.526.646 $ - � 271 ORR 170 770 � - See independent auditors' report. -62- 660 - - 5,921 - - 6,581 - 1,855,286 - - - 559,750 2,415,036 81,251 - - - 193,600 - - - 525,971 81,251 - 660 1,855,286 193,600 5,921 - 559,750 2,947,588 (4,086) 36,581 2,650 41,758 378,668 116,507 Total Air 2,597,026 Proposition (26,825) - Landscape Other Quality Trails & A (3,192,797) Asset Maintenance Special Improvement Bikeways CLEEP Transit CDBG COPS Seizure District Revenue Funds 9,756 2,650 2,528 61,212 $ - $ - $ - $ - $ - $ - $ - $ 543,561 $ 543,561 71,909 36,569 - 953,944 572,268 115,773 4,084 - 3,683,434 - - - 903,051 - - - - 1,111,655 5,256 12 3,310 40,049 - 6,655 14,536 5,254 205,964 $ 357,126 $ 136,565 $ 3,803,386 77,165 36,581 3,310 1,897,044 572,268 122,428 18,620 548,815 5,544,614 660 - - 5,921 - - 6,581 - 1,855,286 - - - 559,750 2,415,036 81,251 - - - 193,600 - - - 525,971 81,251 - 660 1,855,286 193,600 5,921 - 559,750 2,947,588 (4,086) 36,581 2,650 41,758 378,668 116,507 18,620 (10,935) 2,597,026 - (26,825) - (39,230) (317,456) (154,450) - - (3,192,797) (4,086) 9,756 2,650 2,528 61,212 (37,943) 18,620 (10,935) (595,771) 107,639 - 77,456 701,060 (61,210) 113,244 338,506 147,500 4,399,157 $ 103,553 $ 9,756 $ 80,106 $ 703,588 $ 2 $ 75,301 $ 357,126 $ 136,565 $ 3,803,386 -63- 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, 2008 REVENUES: Intergovernmental revenue Investment income TOTALREVENUES TES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. -64- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1,099,050 $ 1,099,050 $ 1,049,504 $ (49,546) 10,000 10,000 12,817 2,817 1,109,050 1,109,050 1,062,321 (46,729) (1,259,970) (1,259,970) (1,136,695) 123,275 (150,920) (150,920) (74,374) 76,546 241,259 241,259 241,259 - $ 90,339 $ 90,339 $ 166,885 $ 76,546 -64- l f_ 1� II I J See independent auditors' report. (. -65- 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, 2008 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 810,000 $ 810,000 $ 794,267 $ (15,733) Investment income 45,000 45,000 70,149 25,149 TOTAL REVENUES 855,000 855,000 864,416 9,416 OTHER FINANCING USES: Transfers out (1,578,400) (1,801,400) (869,424) 931,976 NET CHANGE IN FUND BALANCE (723,400) (946,400) (5,008) 941,392 FUND BALANCE - BEGINNING OF YEAR 1,531,654 1,531,654 1,531,654 - FUND BALANCE - END OF YEAR $ 808,254 $ 585,254 $ 1,526,646 $ 941,392 l f_ 1� II I J See independent auditors' report. (. -65- 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, 2008 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 1,018,000 $ 768,000 $ 12,340 $ (755,660) OTHER FINANCING USES: Transfers out (1,018,000) (768,000) (12,340) 755,660 NET CHANGE IN FUND BALANCE - FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR $ See independent auditors' report. -66- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL INTEGRATED WASTE MANAGEMENT SPECIAL REVENUE FUND For the year ended June 30, 2008 REVENUES: Intergovernmental revenue Charges for services Investment income TOTAL REVENUES EXPENDITURES: Current: Community development EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. Budgeted Amounts Original Final $ 45,000 $ 45,000 $ 230,000 230,000 15,000 15,000 _ 290,000 290,000 341,990 353,117 251,120 101,997 (51,990) Variance with 44,304 Final Budget (185,000) Positive Actual (Negative) 72,776 $ 27,776 208,604 (21,396) 14,044 (956) 295,424 5,424 251,120 101,997 (51,990) (63,117) 44,304 107,421 (185,000) (185,000) (147,866) 37,134 (236,990) (248,117) (103,562) 144,555 376,650 376,650 376,650 - $ 139,660 $ 128,533 $ 273,088 $ 144,555 -67- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TRAFFIC IMPROVEMENT SPECIAL REVENUE FUND For the year ended June 30, 2008 REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. -68- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 100,000 $ 100,000 $ - $ (100,000) 15,000 15,000 16,336 1,336 115,000 115,000 16,336 (98,664) (125,000) (155,000) (28,896) 126,104 (10,000) (40,000) (12,560) 27,440 383,330 383,330 383,330 - $ 373,330 $ 343,330 $ 370,770 $ 27,440_ -68- SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TRAFFIC CONGESTION RELIEF SPECIAL REVENUE FUND REVENUES: Investment income OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2008 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 10,000 $ 10,000 $ 17,546 $ 7,546 (438,000) (438,000) (459,615) (21;615) (428,000) (428,000) (442,069) (14,069) 442,069 442,069 442,069 - $ 14,069 $ 14,069 $ - $ (14,069) -69- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND For the year ended June 30, 2008 REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES EXPENDITURES: Current: Community development EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. 66,940 95,232 81,251 13,981 10,060 (18,232) (4,086) 14,146 107,639 107,639 107,639 - $ 117,699 $ 89,407 $ 103,553 $ 14,146 -70- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 73,000 $ 73,000 $ 71,909 $ (1,091) 4,000 4,000 5,256 1,256 77,000 77,000 77,165 165 66,940 95,232 81,251 13,981 10,060 (18,232) (4,086) 14,146 107,639 107,639 107,639 - $ 117,699 $ 89,407 $ 103,553 $ 14,146 -70- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TRAILS & BIKEWAYS SPECIAL REVENUE FUND For the year ended June 30, 2008 REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. Budgeted Amounts Original Final $ 53,672 $ 53,672 $ 53,672 53,672 Variance with Final Budget Positive Actual (Negative) 36,569 $ (17,103) 12 12 36,581 (17,091) (53,672) (53,672) (26,825) 26,847 9,756 9,756 -71- 9,756 $ 9,756 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, 2008 See independent auditors' report. -72- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment income $ 3,000 $ 3,000 $ 3,310 $ 310 EXPENDITURES: Current: Public safety 78,688 78,688 660 78,028 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (75,688) (75,688) 2,650 78,338 FUND BALANCE - BEGINNING OF YEAR 77,456 77,456 77,456 - FUND BALANCE - END OF YEAR $ 1,768 $ 1,768 $ 80,106 $ 78,338 See independent auditors' report. -72- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PROPOSITION A TRANSIT SPECIAL REVENUE FUND For the year ended June 30, 2008 f (_ l See independent auditors' report. (_ -73- I Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 970,000 $ 970,000 $ 953,944 $ (16,056) Charges for services 750,000 915,000 903,051 (11,949) Investment income 40,000 40,000 40,049 49 TOTAL REVENUES 1,760,000 1,925,000 1,897,044 (27,956) IEXPENDITURES: Current: Highways and streets 1,606,070 1,906,070 1,855,286 50,784 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 153,930 18,930 41,758 22,828 OTHER FINANCING USES: Transfers out (90,000) (90,000) (39,230) 50,770 NET CHANGE IN FUND BALANCE 63,930 (71,070) 2,528 73,598 FUND BALANCE - BEGINNING OF YEAR I 701,060 701,060 701,060 - FUND BALANCE - END OF YEAR $ 764,990 $ 629,990 $ 703,588 $ 73,598 f (_ l See independent auditors' report. (_ -73- I 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, 2008 See independent auditors' report. -74- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 472,775 $ 472,775 $ 572,268 $ 99,493 EXPENDITURES: Current: Community development 230,944 230,944 193,600 37,344 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 241,831 241,831 378,668 136,837 OTHER FINANCING USES: Transfers out (241,831) (241,831) (317,456) (75,625) NET CHANGE IN FUND BALANCE - - 61,212 61,212 FUND BALANCE (DEFICIT) - BEGINNING OF YEAR (61,210) (61,210) (61,210) - FUND BALANCE - END OF YEAR $ (61,210) $ (61,210) $ 2 $ 61,212 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, 2008 See independent auditors' report. -75- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 117,000 $ 117,000 $ 115,773 $ (1,227) Investment income 6,000 6,000 6,655 655 ' TOTAL REVENUES 123,000 123,000 122,428 (572) EXPENDITURES: Current: Public safety 7,900 7,900 5,921 1,979 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 115,100 115,100 116,507 1,407 OTHER FINANCING USES: Transfers out (194,450) (194,450) (154,450) 40,000 NET CHANGE IN FUND BALANCE (79,350) (79,350) (37,943) 41,407 FUND BALANCE - BEGINNING OF YEAR 113,244 113,244 113,244 - FUND BALANCE - END OF YEAR $ 33,894 $ 33,894 $ 75,301 $ 41,407 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, 2008 See independent auditors' report. -76- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ - $ - $ 4,084 $ 4,084 Investment income 20,000 20,000 14,536 (5,464) TOTAL REVENUES 20,000 20,000 18,620 (1,380) EXPENDITURES: Current: Public safety 50,500 50,500 - 50,500 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (30,500) (30,500) 18,620 49,120 FUND BALANCE - BEGINNING OF YEAR 338,506 338,506 338,506 FUND BALANCE - END OF YEAR 308,006 $ 308,006 $ 357,126 $ 49,120 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, 2008 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Special assessments $ 551,562 $ 551,562 $ 543,561 $ (8,001) Investment income 7,000 7,000 5,254 (1,746) TOTAL REVENUES 558,562 558,562 548,815 (9,747) EXPENDITURES: Current: Highways and streets 691,009 701,859 559,750 142,109 i EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (132,447) (143,297) (10,935) 132,362 FUND BALANCE - BEGINNING OF YEAR 147,500 147,500 147,500 - FUND BALANCE - END OF YEAR $ 15,053 $ 4,203 $ 136,565 $ 132,362 ll l See independent auditors' report. f__ -77- THIS PAGE LEFT BLANK INTENTIONALLY OTHER CAPITAL PROJECTS FUND The 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). 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. -79- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CAPITAL IMPROVEMENT CAPITAL PROJECTS FUND For the year ended June 30, 2008 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 1,476,718 $ 1,520,368 $ 501,880 $ (1,018,488) Licenses, permits and fees 250,000 255,000 - (255,000) TOTAL REVENUES 1,726,718 1,775,368 501,880 (1,273,488) EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES: Transfers in NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICIT) - BEGINNING OF YEAR FUND BALANCE (DEFICIT) - END OF YEAR See independent auditors' report. 8,734,651 12,881,548 4,271,890 8,609,658 (7,007,933) (11,106,180) (3,770,010) 7,336,170 7,007,933 9,081,056 5,150,115 (3,930,941) - (2,025,124) 1,380,105 3,405,229 (1,741,343) (1,741,343) (1,741,343) - $ (1,741,343) $ (3,766,467) $ (361,238) $ 3,405,229 -80- 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. CITY OF DIAMOND BAR COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS June 30, 2008 See independent auditors' report. -82- Self- Equipment Computer Insurance Replacement Replacement Totals ASSETS CURRENT ASSETS: Cash and investments $ 1,498,599 $ 222,381 $ 361,067 $ 2,082,047 NONCURRENT ASSETS: Capital assets: Machinery and equipment - 182,206 29,374 211,580 Less accumulated depreciation - (135,958) (11,416) (147,374) TOTAL NONCURRENT ASSETS - 46,248 17,958 64,206 TOTAL ASSETS 1,498,599 268,629 379,025 2,146,253 LIABILITIES CURRENT LIABILITIES: Accounts payable 473,588 - 5,062 478,650 NET ASSETS Invested in capital assets - 46,248 17,958 64,206 Unrestricted 1,025,011 222,381 356,005 1,603,397 TOTAL NET ASSETS $ 1,025,011 $ 268,629 $ 373,963 $ 1,667,603 See independent auditors' report. -82- See independent auditors' report. �._,� -83- CITY OF DIAMOND BAR COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS - INTERNAL SERVICE FUNDS For the year ended June 30, 2008 Self- Equipment Computer Insurance Replacement Replacement Totals OPERATING EXPENSES: L Insurance premiums $ 285,105 $ - $ - $ 285,105 Maintenance and operations - - 4,898 4,898 r- Depreciation - 19,881 - 19,881 TOTAL OPERATING EXPENSES 285,105 19,881 4,898 309,884 OPERATING LOSS (285,105) (19,881) (4,898) (309,884) NONOPERATING REVENUES: i Investment income 56,218 8,396 8,381 72,995 INCOME (LOSS) BEFORE TRANSFERS (228,887) (11,485) 3,483 (236,889) TRANSFERS IN 150,060 18,150 174,450 342,600 CHANGE IN NET ASSETS (78,887) 6,665 177,933 105,711 TOTAL NET ASSETS - BEGINNING OF YEAR 1,103,898 261,964 196,030 1,561,892 TOTAL NET ASSETS - END OF YEAR $ 1,025,011 $ 268,629 $ 373,963 $ 1,667,603 See independent auditors' report. �._,� -83- CITY OF DIAMOND BAR COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the year ended June 30, 2008 Self- Equipment Computer Insurance Replacement Replacement CASH FLOWS FROM OPERATING ACTIVITIES: Insurance payments $ (318,280) $ - $ CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Cash received from other funds 150,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets - CASH FLOWS FROM INVESTING ACTIVITIES: $ (318,280) 18,150 174,450 342,600 (17,794) (17,794) Investment income 56,218 8,396 8,381 72,995 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (112,062) 26,546 165,037 79,521 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 1,610,661 195,835 196,030 2,002,526 CASH AND CASH EQUIVALENTS - END OF YEAR $ 1,498,599 $ 222,381 $ 361,067 $ 2,082,047 RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: Operating loss $ (285,105) $ (19,881) $ (4,898) $ (309,884) Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation 19,881 - 19,881 Changes in operating assets and liabilities: Increase (decrease) in accounts payable (33,175) - 4,898 (28,277) NET CASH USED BY OPERATING ACTIVITIES $ (318,280) $ $ - $ (318,280) See independent auditors' report. -84- DESCRIPTION OF STATISTICAL SECTION CONTENTS June 30, 2008 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. Contents: Pages Financial Trends - These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. 86-93 Revenue Capacity - These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. 94-97 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 I ability to issue additional debt in the future. 98-100 Demographic and Economic Information - These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. 101-102 Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 103-105 City of Diamond Bar Net Assets by Component Last Six Fiscal Years (accrual basis of accounting) Governmental activities: Invested in capital assets, net of related debt (1) Restricted for: Debt service Capital projects Specific programs Unrestricted Total governmental activities net assets 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. (1) As allowed by GASB 34, the value of infrastructure placed in service prior to July 1, 2002 was not included in the net assets until the fiscal year ended June 30, 2007. Source: City Finance Department -86- Fiscal Year Ended June 30, 2007 2008 $ 375,216,400 $ 370,949,296 321,747 309,533 3,446,872 2,912,276 1,013,495 889,176 34,072,884 36,236,504 $ 414,071,398 $ 411,296,785 -87- City of Diamond Bar Changes in Net Assets Last Six 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 -88- Fiscal Year Ended June 30, 2003 2004 2005 2006 Expenses: Governmental activities: General government $ 3,315,082 $ 3,713,530 $ 3,997,319 $ 4,203,123 Public safety 4,988,449 4,875,823 4,969,183 5,418,005 Highways and streets 1,006,768 1,365,737 4,622,014 5,240,568 Community development 3,370,116 5,724,606 1,050,025 2,759,718 Parks, recreation and culture 2,309,150 2,580,454 3,814,887 3,737,071 Interest and fiscal charges 535,752 171,223 270,735 423,320 Total expenses 15,525,317 18,431,373 18,724,163 21,781,805 Program revenues: Governmental activities: Charges for services: General government 74,805 225,656 486,925 707,272 Public safety 813,617 733,902 1,159,264 1,277,170 Highways and streets 517,930 529,330 1,328,637 1,555,993 Community development 908,330 933,985 7,888 16,841 Parks, recreation and culture 558,227 610,772 1,147;088 1,260,849 Operating grants and contributions 4,390,722 4,068,446 4,040,785 5,281,308 Capital grants and contributions 1,779,510 261,994 - 1,150 Total program revenues 9,043,141 7,364,085 8,170,587 10,100,583 General revenues: Taxes: Property taxes 2,692,723 2,682,872 3,155,723 6,769,553 Transient occupancy taxes 578,680 628,564 717,879 718,889 Sales taxes 2,965,292 3,167,901 2,645,096 2,964,877 Property taxes in lieu of sales taxes - - 863,245 984,472 Franchise taxes 828,242 912,531 941,319 996,567 Property transfer tax 367,638 367,464 413,247 416,423 Other taxes 34,989 35,077 35,283 35,522 Unrestricted motor vehicle in lieu 3,370,387 2,716,134 4,386,800 413,230 Investment income 439,455 182,069 532,091 1,051,922 Other revenue 84,795 250,250 676,292 361,622 Total general revenues 11,362,201 10,942,862 14,366,975 14,713,077 Change in net assets $ 4,880,025 $ (124,426) $ 3,813,399 $ 3,031,855 * 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 -88- Fiscal Year Ended June 30, 2007 2008 $ 4,784,314 $ 4,473,666 4,876,435 4,944,729 14,019,550 12,034,669 - 2,292,757 2,251,196 4,779,588 5,188977 498,042 392,548 31,250,686 29,285,785 262,541 225,553 1,512,195 1,176,931 3,493,798 2,851,187 21,297 23,351 1,385,788 1,581,597 6,968,824 4,307,074 1,254,314 219,193 14,898,757 10,384,886 7,727,580 8,194,270 774,757 800,390 2,935,703 3,114,562 1,007,642 987,615 1,064,621 1,024,710 331,096 283,433 33,822 33,865 350,194 262,064 1,476,010 1,420,989 41,362 4,388 15,742,787 16,126,286 $ (609,142) $ (2,774,613) -89- 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 Six 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 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 six years of data for this schedule. Source: City Finance Department -90- Fiscal Year Ended June 30, 2007 2008 $ 1,893,287 $ 1,864,387 28,568,263 31,065,127 30,461,550 32,929,514 3,311,451 5,810,250 6,058,113 4,955,552 (4,681,728) (5,703,854) 4,687,836 5,061,948 $ 35,149,386 $ 37,991,462 -91- City of Diamond Bar Changes in Fund Balances, Governmental Funds Last Six Fiscal Years (modified accrual basis of accounting) Revenues: Taxes Special assessments Intergovernmental Charges for services Fines and forfeitures Licenses and permits Investment income Otherrevenues 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 593J78 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 20,313,653 18,198,854 21,874,774 24,726,977 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 24,826,786 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) $ 2,873,549 $ (584,921) 7.48% 0.82% 1.38% 3.18% The City has elected to show only six years of data for this schedule. Source: City Finance Department -92- Fiscal Year Ended June 30, 2007 2008 $ 9,876,760 $ 10,165,881 541,382 543,561 11,169,052 9,896,948 1,002,210 1,111,655 546,902 637,484 4,247,626 3,121,476 1,716,194 1,629,257 767,457 826,177 29,867,583 27,932,439 4,402,235 3,987,656 4,880,290 4,933,958 5,114,274 4,926,418 3,475,549 3,714,762 2,292,757 2,246,496 5,344,935 4,271,890 240,000 255,000 493,840 411,583 26,243,880 24,747,763 3,623,703 3,184,676 6,030,764 7,266,149 (6,354,106) (7,608,749) (323,342) (342,600) $ 3,300,361 $ 2,842,076 2.91% 2.89% -93- City of Diamond Bar Assessed and Estimated Actual Values of Taxable Property Last Ten Fiscal Years (unaudited) Fiscal Year Total Ended Net Tax Direct June 30, Secured Unsecured Nonunitary * Taxable Values Exemptions Rate 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% 2007 6,331,041,269 90,751,985 134,088 6,421,927,342 28,682,577 0.0519% 2008 6,784,318,579 109,704,881 - 6,894,023,460 39,859,238 0.0519% $8,000,000,000 $7,000,000,000 $6,000,000,000 $5,000,000,000 Cn _o $4,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 Net Assessed Value 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 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. * Prior to 2007, all SBE Nonunitary Railroad Properties were taxed at the tax rate area level. As of 2007, there was legislation passed that requires Counties to track this value for the each county in a specific tax rate area and it's distributed differently. Therefore from this year forward, Cities can no longer keep tracking how much value there is on railroad properties within each City. 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) Mt S Antonio Ccd Ds 2005 Ref Bds 2007/08 Mt S Antonio Ccd Ds 01, 06 Ser C Tax Rate Mt San Antonio Ccd Ds 2001 S-A Table Direct Rates: 0.00503 Direct Rates: 0.05294 Overlapping Rates: 0.04116 Children's Institutional Tuition Fund 0.00271 Consolidated Fire Protection 0.16936 County Lighting Maintenance 0.02016 County Sanitation Dist 21 0.01221 County scholl service - Walnut Valley 0.00894 Development Ctr Handicapped Minor 0.00083 Educational Augmentation Fund 0.21072 LA County Library 0.02237 LA County Capital Outlay 0.00011 LA County Fire 0.00616 LA County Flood Control 0.01094 LA County General 0.24908 Mt San Antonio Children's Center 0.00028 Mt San Antonio Community College 0.02926 Southeast Mosquito Abatement 0.00035 Three Valley Municipal Water 0.00409 Walnut Valley Unified School Dist 0.19057 Walnut Valley Water Dist 0.00892 Total Prop. 13 Rate 1.0000 Mt S Antonio Ccd Ds 2005 Ref Bds 0.00781 Mt S Antonio Ccd Ds 01, 06 Ser C 0.00266 Mt San Antonio Ccd Ds 2001 S-A 0.00200 Mt San Antonio Ccd Ds 2004B 0.00503 Three Valley Municipal Water - 1112 0.00450 Pomona Unif Ds Ref 1997 Ser - A 0.04116 Pomona Usd Refdg Ds 2000 Ser - A 0.01450 Pomona Unif Sch Ds 1998 Ser D 0.00128 Pomona Usd Refdg Ds 2001 Ser A 0.01301 Pomona Unif Sch Ds 2002 Ser - A 0.00593 Pomona Unif Sch Ds 2002 Ser - B 0.00887 Pomona Unif Sch Ds 2002 Ser - C 0.00896 Pomona Unified Sch Ds 2002 Ser - D 0.00867 Pomona Unif Sch Ds 2002 Ser - E 0.00697 Pomona Unif Sch Ds 2007 Ref Bds 0.00444 Walnut Valley Unified Sch Dist 2000 Ser E 0.00033 Walnut Valley Unif Ds 2005 Ref Bonds 0.00778 Walnut Valley Unif Ds Ser 1997 A 0.05642 Walnut Valley Usd Ds 2000 Ser A 0.00281 Walnut Valley Usd Ds 2000 Ser B 0.00251 Walnut Valley Usd Ds 2000 Ser C 0.00691 Walnut Valley Usd Ds 2000 Ser D 0.00875 Walnut Valley Usd Ds 2000 Ser E 0.00035 Walnut Valley Unif Ds 2005 Ref Bds 0.00688 Total Voter Approved Rate 0.2213 Total Tax Rate 1.2213 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 scholl district the property is located in. The City has elected to show only one year of data for this schedule. Sources: Hdl Coren & Cone, LA County Property Tax Statement -95- City of Diamond Bar Top 10 Property Taxpayers Current Fiscal Year and Nine Fiscal Years Ago Current Taxpayers Behringer Harvard Western Portfolio Hampton Apartments at Diamond Bar Target Corporation CRP -2 Holdings CC DB Gateway Corporate, Inc. Muller Rock 2 Gateway Gateway Corporate Center Hidden Manna Corporation Ari Diamond Bar Limited Partnership Millennium Diamond Road Partners, LLC Taxpayers Ten Years Ago Diamond Bar Business Associates M & H Realty Partners II Shea Homes Limited Partnership Arden Realty Limited Partnership Martin Brattrud Properties Lakeview Village Corporation HR Barros Family Limited Partnership Diamond Bar Hotel Fund Limited Mark R. Tounat Company Trust Inter Community Health 2007-08 Percentage of Total Assessed Valuation Net Assessed Valuation $ 39,933,000 0.579% 35,496,990 0.515% 30,593,344 0.444% 28,682,236 0.416% 26,809,313 0.389% 24,022,387 0.348% 19,250,000 0.279% 19,020,602 0.276% 18,783,376 0.272% 17,998,919 0.261% $ 260,590,167 3.780% 1998-99 Percentage of Total Assessed Valuation Net Assessed Valuation $ 24,195,400 20,666,119 11,384,853 10,790,000 10,688,485 9,433,099 8,525,458 8,219,594 8,183,000 7,390,000 $ 119,476,008 0.633% 0.541% 0.298% 0.282% 0.280% 0.247% 0.223% 0.215% 0.214% 0.193% 3.126% Source: Hdl Coren & Cone, Los Angeles County Assessor 2007/08 combined tax rolls and the SBE Non Unitary Tax Roll -96- i City of Diamond Bar $3,500,000 Secured Property Tax Levies and Collections Last Ten Fiscal Years (unaudited) Fiscal Year $3,000,000 Collected within the Delinquent & Ended Total Fiscal Year of Levy Collections in June 30 Current Levy Amount % to Levy Subsequent Years 1999 $ 1,810,266 $ 1,758,764 97.16% $ 51,502 2000 1,904,915 1,813,904 95.22% 91,011 2001 1,954,530 1,847,817 94.54% 106,713 2002 2,129,310 2,017,399 94.74% 111,911 2003 2,301,716 2,211,793 96.09% 89,923 2004 2,504,974 2,390,554 95.43% 114,420 2005 2,698,515 2,568,064 95.17% 130,450 2006 2,921,267 2,615,545 89.53% 305,722 2007 3,204,812 2,948,678 92.01% 256,135 2008 3,446,453 3,128,201 90.77% 318,252 Source: Los Angeles County Auditor/Controller. -97- Total Secured Property Tax Collections $3,500,000 $3,000,000 $2,500,000 N c W $2,000,000 N _ $1,500,000 $1,000,000 $500,000 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Fiscal Year Source: Los Angeles County Auditor/Controller. -97- Fiscal Year Lease Ended Revenue June 30 Bonds (a) 1999 $ 2000 Government 2001 Capita (b) 2002 13,755,00( 2003 13,755,00( 2004 13,755,00( 2005 13,655,00( 2006 13,520,00( 2007 13,280,00( 2008 13,025,00( City of Diamond Bar Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Other Total Total % of Debt Bond and Governmental Primary Per Capita Per Loans Activities Government Income (b) Capita (b) - $ - $ - 0.00% $ - - - - 0.00% - - - - 0.00% - - 13,755,000 13,755,000 0.80% 237 - 13,755,000 13,755,000 0.78% 233 - 13,755,000 13,755,000 0.77% 232 - 13,655,000 13,655,000 0.75% 229 - 13,520,000 13,520,000 0.72% 226 - 13,280,000 13,280,000 0.71% 222 - 13,025,000 13,025,000 0.69% 216 Notes: (a) Details regarding the City's outstanding lease revenue bonds can be found in the notes to the financial statements. (b) Details regarding the City's population and per capita income can be found in the Demographic and Economic Statistics Table. Source: City Finance Department -98- City of Diamond Bar Direct and Overlapping Debt June 30, 2008 (unaudited) Direct Debt as of June 30, 2008: Diamond Bar Lease Revenue Bond Overlapping Debts as of June 30, 2008*: Metropolitan Water District Three Valley Area 1112 Mt San Antonio Community College District 2001 Series A Mt San Antonio Community College District 2004 Series B Mt San Antonio Community College District DS 05 Ref Bd Mt San Antonio Community College District DS 01, 06 Ser C Pomona Unified School District Refund Series 1997A Pomona Unified School District 2002 Series A Pomona Unified School District 1998 Series D Debt Service Pomona Unified SD Refunding 2001 Series A Debt Service Pomona Unified School District 2002 Series A Debt Service Pomona Unified School District 2002 Series B Pomona Unified School District 2002 Series C Pomona Unified School District 2002 Series D Pomona Unified School District 2002 Series E Walnut Valley Unified School District Refund Series 1997 A Walnut Valley Unified School District 2000 Series A Walnut Valley Unified School District 2000 Series B Walnut Valley Unified School District 2000 Series C Walnut Valley Unified School District 2000 Series D Walnut Valley Unified School District 2000 Series E Walnut Valley Unified School District 2005 Ref Bonds Walnut Valley Unified School District 2007 Series A Total Direct and Overlapping Bonded Debt Gross Bonded Debt Balance $ 13,025,000 150,054,336 4,470,000 13,300,000 71,525,843 79,996,203 37,450,000 18,505,000 190,000 19,680,000 8,750,000 13,545,000 14,025,000 14,320,000 21,859,163 31,867,718 640,000 400,000 7,160,000 21,763,114 6,001,837 11,835,000 36,800,887 $ 597,164,101 % Applicable Net Bonded To City Debt 100.000 $ 13,025,000 0.870 10.599 10.599 10.599 10.599 19.764 19.764 19.764 19.764 19.764 19.764 19.764 19.764 19.764 58.923 58.923 58.923 58.923 58.923 58.923 58.923 58.750 Debt to Assessed Valuation Ratios as of June 30, 2008: Ratio 2007/08 Net Assessed Valuation: $6,894,023,460 Debt to Assessed Valuation Ratios: Direct Debt 0.19% Overlapping Debt 1.70% Total Debt 1.89% Report reflects general obligation debt which is being repaid through voter -approved indebtness. It excludes, mortgage revenue, tax allocation bonds, interim financing obligations, non -bonded capital lease obligations and certificates of participation. * The overlapping debt is the portion of a larger agency, and is responsible for debt in areas outside the city. Sources: Hdl Coren & Cone City Finance Department -99- 1,305,063 473,783 1,409,690 7,581,149 8,478,937 7,401,767 3,657,402 37,552 3,889,633 1,729,385 2,677,088 2,771,957 2,830,262 4,320,332 18,777,407 377,107 235,692 4,218,885 12,823,474 3,536,461 6,973,534 21,620,455 $ 130,152,015 Per Capita $ 216 $ 1,940 $ 2,156 Net assessed value Add back: Exemptions Gross assessed value Conversion percentage Adjusted assessed valuation Debt limit percentage Debt limit City Debts: Revenue bonds Legal debt margin Net assessed value Add back: Exemptions Gross assessed value Conversion percentage Adjusted assessed valuation Debt limit percentage Debt limit City Debts: Revenue bonds Legal debt margin City of Diamond Bar Computation of Legal Debt Margin Last Ten Fiscal Years (unaudited) Fiscal Year Ended June 30, loon )Ann Inni )nni $ 3,767,314,142 $ 3,900,751,190 $ 4,125,665,929 $ 4,357,791,664 $ 4,688,804,659 38,373,706 36,494,583 40,088,648 41,869,703 44,188,829 3,805,687,848 3,937,245,773 4,165,754,577 4,399,661,367 4,732,993,488 25% 25% 25% 25% 25% 951,421,962 984,311,443 1,041,438,644 1,099,915,342 1,183,248,372 15% 15% 15% 15% 15% 142,713,294 147,646,716 156,215,797 164,987,301 177,487,256 - - - 13,755,000 13,755,000 $ 142,713,294 $ 147,646,716 $ 156,215,797 $ 151,232,301 $ 163,732,256 Fiscal Year Ended June 30, ')one Innc nnnr nnn7 Irma $ 5,080,985,735 $ 5,446,817,363 $ 5,874,950,276 $ 6,421,927,342 $ 6,894,023,460 47,621,182 39,831,091 51,408,286 28,682,577 39,859,238 5,128,606,917 5,486,648,454 5,926,358,562 6,450,609,919 6,933,882,698 25% 25% 25% 25% 25% 1,282,151,729 1,3 71,662,114 1,481,589,641 1,612,652,480 1,733,470,675 15% 15% 15% 15% 15% 192,322,759 205,749,317 222,238,446 241,897,872 260,020,601 13,755,000 13,755,000 13,520,000 13,280,000 13,025,000 $ 178,567,759 $ 191,994,317 $ 208,718,446 $ 228,617,872 $ 246,995,601 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 -100- City of Diamond Bar Demographic and Economic Statistics Last Ten Calendar Years General Information Date of Incorporation April 18, 1989 Form of Government Council -Manager Area 14.76 Square Miles Miles of Streets 137 Public Safety Police Protection Los Angeles County Sheriff Department Fire Protection Los Angeles County Fire Department Water Services Service Provider Walnut Valley Water District Education School District Pomona Unified School District Schools 1 High School, 1 Middle School, & 4 Elementary Schools School District Walnut Valley Unified School District Schools 1 High School, 2 Middle Schools, & 4 Elementary Schools Demographic and Statistical Information (Last Ten Calendar Years) Calendar Per Capita Year Population 1999 58,300 2000 56,287 2001 57,066 2002 58,115 2003 58,966 2004 59,399 2005 59,595 2006 59,722 2007 60,207 2008 60,360 Total Per Capita Personal Personal Total Income Income Employment 1,485,017,600 $ 25,472 30,700 1,435,318,500 25,500 29,700 1,636,938,210 28,685 30,100 1,852,125,050 31,870 29,700 1,779,358,016 30,176 29,900 1,691,802,318 28,482 29,900 1;722,653,070 28,906 30,700 1,737,074,092 29,086 31,400 1,774,420,704 29,472 31,800 1,903,995,840 31,544 31,200 Sources: (1) State Department of Finance (2) California LaborMarketInfo, Data Library (3) Diamond Bar City, California - Fact Sheet - American FactFinder (4) State of California - Labor Market Info (http://www.labormarketinfo.edd.ca.gov) -101- Unemployment Rate 4.00% 3.70% 3.80% 4.90% 5.10% 4.70% 3.60% 3.20% 3.40% 5.30% City of Diamond Bar Principal Employers (unaudited) Current Fiscal Year and Nine Fiscal Years Ago 2008 1999 "Total Employment" as used above represents the total employment of all employers located within City limits. Source: InfoUSA - Government Division -102- Number of % of Total Number of % of Total Employer Employees Employment Employees Employment South Coast Air Quality Management 786 2.52% 710 2.31% St Paul Travelers 401 1.29% Target Store - Diamond Bar 220 0.71% AAA Auto Club of California 200 0.64% Diamond Bar High School 200 0.64% 160 0.52% Lab Support Inc 200 0.64% First Team Real Estate 150 0.48% J.F. Shea Co. Inc 135 0.43% Baybrook Services 120 0.38% Goodrich Hoist & Winch 120 0.38% Southwest Patrol 120 0.38% Starside Security & Investigation 120 0.38% Century 21 Diamond Realty 120 0.38% Administaff Inc 100 0.32% Biosense Webstar Inc 100 0.32% First Mortgage Corp 100 0.32% 75 0.24% Kelley -Clarke Inc 400 1.30% ADP 300 0.98% K Mart 130 0.42% California Compensation Inc 110 0.36% Dail Egg Ranchers Inc 100 0.33% Lucky Food Center 80 0.26% Chaparral Middle School 80 0.26% Diamond Bar Honda 80 0.26% Diamond Bar Country Club 70 0.23% Total Employment 31,200 30,700 "Total Employment" as used above represents the total employment of all employers located within City limits. Source: InfoUSA - Government Division -102- City of Diamond Bar Full-time and Part-time City Employees by Function Last Ten Fiscal Years Function l General government ( Community development Community services Public works Total Function General government Community development Community services Public works Total Fiscal Year Ended June 30, 1999 2000 2001 2002 2003 22 21 24 24 24 5 6 4 4 4 12 41 38 37 38 4 4 4 4 5 43 72 70 69 71 Fiscal Year Ended June 30, 2004 2005 2006 2007 2008 25 25 22 21 24 5 7 8 8 6 45 74 77 74 69 6 7 7 8 10 81 113 114 111 109 Note: The City is a contract city and as such contracts for many of its services. This includes police services, fire services, building and safety services, engineering, road maintenance and landscape maintenance. Source: City Finance Department -103- City of Diamond Bar Operating Indicators by Function Last Ten Fiscal Years Function .Police: (in calendar year) (1) Arrests Street Sweeping Parking Citation Fire: (in calendar year) (2) Number of emergency calls Inspections Public works: (in fiscal year) (3) Street resurfacing (miles) Parks and recreation: (in fiscal year) (4) Number of recreation classes Number of facility rentals Fiscal Year Ended June 30, 2004 2005 2006 2007 2008 481 520 Fiscal Year Ended June 30, 582 Function 1999 2000 2001 2002 2003 Police: (in calendar year) (1) 2,615 2,592 2,612 2,595 1,206 Arrests 723 817 764 571 552 Street Sweeping Parking Citation (a) (a) 2,996 7,995 6,662 Fire: (in calendar year) (2) 1,569 1,736 4,123 4,305 4,555 Number of emergency calls (a) (a) 2,647 2,666 2,741 Inspections (a) (a) (a) (a) (a) Public works: (in fiscal year) (3) Street resurfacing (miles) 20.6 23.0 24.6 19.7 18.5 Parks and recreation: (in fiscal year) (4) Number of recreation classes 740 1,084 1,062 947 915 Number of facility rentals 785 785 785 785 1,021 Function .Police: (in calendar year) (1) Arrests Street Sweeping Parking Citation Fire: (in calendar year) (2) Number of emergency calls Inspections Public works: (in fiscal year) (3) Street resurfacing (miles) Parks and recreation: (in fiscal year) (4) Number of recreation classes Number of facility rentals Fiscal Year Ended June 30, 2004 2005 2006 2007 2008 481 520 558 582 543 6,710 6,250 5,790 5,684 5,200 2,755 2,615 2,592 2,612 2,595 1,206 1,159 837 1,114 1,085 5.0 18.6 16.8 19.6 18.5 1,022 1,102 1,376 1,558 1,569 1,736 4,123 4,305 4,555 4,103 (a) Unavailable Note: Indicators are not available for the general government function. Sources: (1) Police Walnut/Diamond Bar Station (2) LA County Fire Dept East Regional Operation Bureau (3) City Public Works Department (4) City Community Services Department -104- City of Diamond Bar Capital Asset Statistics by Function Last Five Fiscal Years (a) Unavailable Notes: The City is a contract city and as such contracts for many of its services. This includes police services, fire services, building and safety services, engineering, road maintenance and landscape maintenance. No capital asset indicators are available for the general government function. L Sources: (1) Police Walnut/Diamond Bar Station (2) LA County Fire Dept East Regional Operation Bureau (3) City Public Works Department '. (4) City Community Services Department -105- Fiscal Year Ended June 30, Function 2004 2005 2006 2007 2008 Public safety: Police (1):, Station 1 1 1 1 1 Patrol units (all shifts combined) 20 20 19 19 18 Fire (2): Stations 3 3 3 3 3 Public works: Highways and streets (3): Streets (miles) 137 137 137 137 137 Streetlights (a) (a) (a) 233 233 Traffic signals (a) (a) (a) 75 76 Parks and recreation: Culture and recreation (4): Parks acreage (developed) 62.7 62.7 62.7 62.7 62.7 Parks acreage (undeveloped) 439 439 439 439 439 Parte 11 11 11 11 11 Public tennis courts 8 8 8 8 8 Community centers 3 3 3 3 3 Sewer (3): Sanitary sewers (miles) (a) (a) (a) 157 157 (a) Unavailable Notes: The City is a contract city and as such contracts for many of its services. This includes police services, fire services, building and safety services, engineering, road maintenance and landscape maintenance. No capital asset indicators are available for the general government function. L Sources: (1) Police Walnut/Diamond Bar Station (2) LA County Fire Dept East Regional Operation Bureau (3) City Public Works Department '. (4) City Community Services Department -105-