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HomeMy WebLinkAboutCAFR - FY 2006-07CITY OF DIAMOND BAR, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2007 Prepared by: FINANCE DEPARTMENT Linda G Magnuson Director of Finance CITY OF DIAMOND BAR TABLE OF CONTENTS June 30, 2007 Page Number INTRODUCTORY SECTION: Letter of Transmittal i - vi GFOA Certificate of Achievement for Excellence in Financial Reporting vii Organization Chart viii List of Principal Officials ix FINANCIAL SECTION: Independent Auditors' Report 1-2 Management's Discussion and Analysis (Required Supplementary Information) 3-11 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 13 Statement of Activities 14 Fund Financial Statements: Governmental Funds: 15 Balance Sheet 16-17 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 19 Statement of Revenues, Expenditures and Changes in Fund Balances 20-21 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 22 Proprietary Funds: Statement of Net Assets 23 Statement of Revenues, Expenses and Changes in Fund Net Assets 24 Statement of Cash Flows 25 Notes to Basic Financial Statements 27-49 -111 'WYSJ� TABLE OF CONTENTS (CONTINUED) June 30, 2007 FINANCIAL SECTION (CONTINUED): Required Supplementary Information: Page Number Budgetary Comparison Schedules: 51 General Fund 52 Park and Facility Development Special Revenue Fund 53 Note to Required Supplementary Information 54 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 California Law Enforcement Equipment Program (CLEEP) Fund 71 Proposition A Transit Fund 72 Community Development Block Grant (CDBG) Fund 73 Citizens Option for Public Safety (COPS) Fund 74 Asset Seizure Fund 75 Landscape Maintenance District Fund 76 Major Capital Projects Fund: 77 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Capital Improvement Fund 78 [$JjWALQWQrAjU TABLE OF CONTENTS (CONTINUED) June 30,2007 FINANCIAL SECTION (CONTINUED): Supplementary Information (Continued): Page Number Internal Service Funds: 79 Combining Statement of Net Assets 80 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 81 Combining Statement of Cash Flows 82 STATISTICAL SECTION: Description of Statistical Section Contents 83 Financial Trends: Net Assets by Component - Last Five Fiscal Years 84-85 Changes in Net Assets - Last Five Fiscal Years 86-87 Fund Balances of Governmental Funds - Last Five Fiscal Years 88-89 Changes in Fund Balances of Governmental Funds - Last Five Fiscal Years 90-91 Revenue Capacity: Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 92 Direct and Overlapping Property Tax Rates - Current Fiscal Year 93 Top 10 Property Taxpayers 94 Property Tax Levies and Collections - Last Ten Fiscal Years 95 Debt Capacity: Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 96 Direct and Overlapping Debt 97 Legal Debt Margin Information - Last Ten Fiscal Years 98 Demographic and Economic Information: Demographic and Economic Statistics - Last Ten Calendar Years 99 Principal Employers 100 Operating Information: Full -Time Equivalent City Employees by Function - Last Ten Fiscal Years 101 Operating Indicators by Function - Last Ten Fiscal Years 102 PULL THIS PAGE AND INSERT TAB FOR PULL THIS PAGE BLANK FOR BACK OF TAB January 28, 2008 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, 2007. 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, 2007, 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, 2007, 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. The independent audit of the financial statements of the City of Diamond Bar was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited City's internal controls and legal requirements involving the administration of federal awards. These reports are available in the City's separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE CITY OF DIAMOND BAR The City, incorporated in 1989, is located at the junction of the 57 and 60 freeways. As a result, the City of Diamond Bar is at the hub of the Los Angeles basin transportation network. A twenty-five mile radius encompasses Pasadena, downtown Los Angeles, Long Beach, Irvine and Riverside. Diamond Bar is a relatively young residential community of about 60,200, situated among the meandering hills and valleys of Brea Canyon. Many desired services can be found in Diamond Bar's shopping and business centers. Recreational opportunities within the City include more than 70 acres of developed park facilities, hiking trails, a new community center, an 18 -hole public golf course and 370 acres of undeveloped publicly owned open space. The City has operated under the council-manager form of government since incorporation. Policy making and legislative authority are vested in a five member City Council. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees and task forces, and hiring both the City Manager and City Attorney. The City Manager is responsible for overseeing the day -to day operations of the City, and for appointing the heads of the various departments. The Council is elected on a non-partisan basis. Council members serve four-year staggered terms, with elections held every other year. Each December, the City Council selects a mayor and mayor pro tem from its membership. The City of Diamond Bar is a contract city and as such contracts for many of its services. This includes police services, building and safety services, engineering, road maintenance and landscape maintenance. The Los Angeles County Fire District provides fire protection, which is independent of the City. Funds are collected through property tax bills and are disbursed directly to the Los Angeles County Fire District by the Los Angeles County Tax Collector's Office. Water services for the City are provided by the Walnut Valley Water District. Refuse collection is provided by private waste collection companies. Additionally, schools are provided by both the Walnut Valley Unified School District and the Pomona Unified School District. Accordingly, none of these activities are included in this report. 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 property tax revenues. To spite this growth, the erosion of the City's sales tax base is a major concern to the City. The City has, however, built General Fund reserves to fill in any gaps created by the economy or changes in State funding. Last fiscal year, the City saw the welcome addition of a brand new Target store at the intersection of Grand Avenue and Golden Springs Drive. The Target -anchored shopping center located at what is considered one of the City's prime retail locations is set to receive yet another boost this coming fiscal year when Chili's restaurant fills one of its two vacant pad sites. The City also saw the unfolding of a highly anticipated plan to revitalize the 221,000 square foot Country Hills Towne Center located at the southern end of town. Upon completion, the center will feature an upscale Korean -American grocery retailer, a Quiznos, a drive-thru. Starbucks and several other new businesses. The City's population also expanded in fiscal year 06-07. The city welcomed new families who moved into newly constructed homes as part of the Brookfield project located on a hillside behind the new Target store. The project will see even more homes constructed in the coming fiscal year for atotal of 180 condominiums. And even more condominiums and single family homes are on the drawing board for the near -future. In fiscal year 07-08, the City will continue to explore opportunities to expand its sales tax and property tax base with new development opportunities in its commercial areas and the possible annexation of land located within the City's sphere of influence. Development opportunities in the City's commercial areas include the Walnut Valley Trailer Park site; 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. EXZ,�N� 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, 2006. 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. JjRr"Is 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 twelve consecutive years (fiscal years ended 1995 through 2006). 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. REPORTING ENTITY AND ITS SERVICES This Comprehensive Annual Financial Report includes all funds of the City. The City directly provides a limited range of services and contracts for several other services. The City's significant reliance on contracted services has the benefit of reducing expenses to the citizens of the City of Diamond Bar while simultaneously providing the City with a high degree of flexibility in responding to changing economic conditions. Contracted services include police protection, building and safety, street maintenance, park maintenance, capital improvement projects, animal control, attorney services and engineering. Staff provided services include: community development (which includes planning, economic development, building and safety management, and neighborhood improvement), public works (which includes engineering, capital projects administration, street maintenance contract management, traffic and transportation matters, engineering contract management, and solid waste contract management), community services (which includes senior services, park maintenance, recreation services, community center operation, and landscape maintenance), community relations, subsidized transit ticket sales, grant administration, financial management, and administrative management. All of these activities are included in this report. 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 fiscal year 06-07, most of the City funds were invested in the Local Agency Investment Fund (LAIF), which is administered by the State Treasurer's Office. In addition to LAIF, the City diversified its investment portfolio by also investing in U.S. Government Sponsored Enterprise Securities and Money Market Mutual Fund accounts that are in accordance with the City's investment policy. The City manages all of its cash and investments on a pooled basis. Interest earnings are allocated to the various funds based on their share of cash and investment balances. Risk Management The City of Diamond Bar is a member of the California Joint Powers Insurance Authority (CJPIA) for the purpose of pooling its general liability losses and claims with the other member agencies. The City is charged for the first $30,000 of each claim. Claims above $30,000 are shared by all the member agencies up to a maximum of $50,000,000 per occurrence. Mkim REPORTING ENTITY AND ITS SERVICES (CONTINUED) Risk Management (Continued) The City belongs to the CJPIA's Workers' Compensation Insurance Program. The administration of the workers' compensation program is similar to that of the authority's liability program. The City is charged for the first $50,000 of each claim. Costs from $50,001 to $100,000 per claim are pooled based on the member's losses under its retention level. Costs between $100,001 and $2,000,000 are pooled based on payroll. Costs between $2,000,000 and $5,000,000 are paid by excess insurance purchased by the CJP1A. Costs in excess of $5,000,000 are pooled based on payroll. Additionally, the City has all risk property insurance through the Authority. The City's property is currently insured according to a schedule of covered property submitted to the Authority by the City. 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, 2007 was $1,103,898. 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, 2005, 2006, and 2007 the employer contribution to PERS was 15.06%, 11.148% and 11.051% 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 $562,411 for fiscal year 2006-07. -v- 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 the preparation of the City's Comprehensive Annual Financial Report. In closing, without the leadership and support of the City Council of the City of Diamond Bar, the preparation of this Report would not have been possible. Sincerely, City -vi- - �14 10 1=410 Presented to California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2006 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 fmancial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. ,%r,E 0 077E UMMSTAM AU xa�yCORPORAMM President BcHL roti Executive Director - vii - L- —6, WS"; E u> E > Ou J." cu OJ OD Im u >, bA tti a c c. U Q u r_ U o a E o as CL E U U U > E 0 u E cCL E u > m CL 0 W cu a = E —w > (U V Mayor Mayor Pro Tern Councilmember Councilmember Councilmember City Manager Assistant City Manager City Clerk Director of: Community Services Community Development Finance Information Systems Public Works Steve Tye Jack Tanaka Wen Chang Ron Everett Carol Herrera James DeStefano David Doyle Tommye Cribbins Bob Rose Nancy Fong Linda Magnuson Ken Desforges David Liu * -X- PULL THIS PAGE AND INSERT TAB FOR FINANCIAL SECTION PULL THIS PAGE BLANK FOR BACK OF TAB DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS MICHAEL R. LUDIN, CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W. A CPA NTTIN P. PATELEL, CPA ROBERT J.CALLANAN,CPA *PHILIP H. HOLTKAMP, CPA 2121 ALTON PARKWAY, SUITE 100 *THOMAS M. PERLOWSKI, CPA IRVINE, CALIFORNIA 92606-4956 *HARVEY J. SCHROEDER, CPA (949) 399-0600 • FAX (949) 399-0610 KENNETH NT , CPA *WILLIAM C.. PENTZ, CPA www.dielilevans.com p January 28, 2000 *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, 2007, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Diamond Bar's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Diamond Bar, California, as of June 30, 2007, 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- 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 January 28, 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. f ' � �0 •1 i i r, r PULL THIS PAGE AND INSERT TAB FOR MD&A PULL THIS PAGE Management's Discussion and Analysis June 30, 2007 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, 2007. 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 m The total revenues from all sources equaled $29,867,583. • The total cost of all City programs equaled $26,243,880. ® The assets of the City of Diamond Bar exceeded its liabilities at the close of the fiscal year by $414,071,398 (net assets). Of this amount, $34,072,884 (unrestricted net assets) may be used to meet the City's ongoing obligations to citizens and creditors. ® According to GASB34 requirements, the City's infrastructure has been fully capitalized this fiscal year. As a result the net capital assets beginning balance has been restated. ® As of the close of the current fiscal year, the City of Diamond Bar's governmental funds reported combined ending fund balances of $35,149,386, an increase of $3,300,361 in comparison with the prior year. Approximately $29.9 million of that amount is available for spending at the City's discretion. Although funds haven't been specifically reserved for purchase or construction of a permanent City Hall, it is anticipated in the future some of these funds will be used for that purpose. ® At the end of the current fiscal year, unreserved fund balance for the general fund was $28,568,263, or over one and two thirds 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 Belated 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- Nwid s 1. ENTA 10301111 Management's Discussion and Analysis (Continued) June 30, 2007 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 functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Diamond Bar include general government, public safety, highways and streets, community development, and parks and recreation. The City of Diamond Bar currently has no business -type activities. The government -wide financial statements include not only the City of Diamond Bar itself, but also a legally separate financing authority. Although legally separate, the Diamond Bar Financing Authority is included because the City is financially accountable for it. Fund financial statements — A farad is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Diamond Bar, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into two categories: governmental funds, and proprietary funds. Governmental Funds — Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, available at the end of the fiscal year. This information helps to determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impacts of the City's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. 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. Proprietwy Funds — The type of proprietary funds that the City maintains are internal service funds that are used to allocate costs internally among the various functions of the City. The City of Diamond 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. -4- Management's Discussion and Analysis (Continued) June 30, 2007 Overview of the Financial Statements (Continued) Government -wide 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 Laformation — In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's budgetary control and accounting and expenditures in excess of appropriations. Government -wide Financial Analysis As mentioned earlier, net assets may serve over time as a useful indicator of the City's financial position. The City of Diamond Bar's assets exceeded liabilities by $414,071,398 at the close of 2007. (see Table 1). By far the largest component of the City's net assets (91 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 DAR'S Statement of Net Assets Governmental Activities 2007 2006 Current and other assets $43,549,754 $39,755,482 Capital assets 388,377,190 393,183,015 Total Assets Long-term debt outstanding Other Liabilities Total Liabilities Net assets: Invested in capital assets, net of debt Restricted Unrestricted Total Net Assets 431,926,944 432,938,497 13,126,500 13,350,051 4,729,046 4,907,906 17, 855,546 18,257,957 375,216,400 380,355,385 4,782,114 4,863,977 34,072,884 29,461,178 $414,071,398 $414,680,540 Although the City's Net Assets decreased by $609,142 this year there was a significant increase the unrestricted portion of the fixed assets. The total value of capital assets decreased due to the aging and resulting depreciation of the City's capital assets. See independent auditors' report. -5- Management's Discussion and Analysis (C June 30, 2007 Financial Analysis (Continued) At the end offiscal year 2007 the City is able to report a 15.6 percent or $4,61increase tuunrestricted 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 $30.6 million, while the total cost of all programs and services was $31.3 million. Revenues this fiscal year were 23.5% higher than those of the prior year. There were increases in most of the revenue categories. The following are highlights of some of the major differences: 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 Cthortanee 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 Increase innet assets Net assets -07O1/OG Net assets - 06/30/07 See independent auditors' -6- 2007 2006 $6675,619 $4,818'125 6.968.824 5.281.308 1.254.314 1.150 7,727,580 6,769,553 774,757 718,889 2.935703 2.964.877 1.007.642 984.472 1.064.621 906.567 331,096 418'423 33.822 35.522 350,194 413,230 1.476.010 1.051'922 41,362 361,622 30,641,544 24,813,660 4.784,314 4,203.123 4.876/435 5/418.005 14.019,550 5.240.568 2.292.757 2,759.718 4.770.688 3.737.071 498,042 423,320 31,250,686 21,781,805 (609,142) 3,031,855 414,680,540 411,648,685 $414,071,398 $414,680,540 Management's Discussion and Analysis (Continued) June 30, 2007 Government -wide Financial Analysis (Continued) • Charges for services increased this year primarily due to the receipt of traffic mitigation and developer fees ($1.97 million) related to the construction of the Brookfield homes project which is a project comprised of both single family homes and townhouses. In addition rising fuel prices contributed to the increased participation in the City's discounted transit pass program which was also a factor. • Operating grants and contributions increased as a result of the City obtaining and using various grants to augment City resources in the financing of various City programs and capital improvements. The City received a contribution of $502,600 from the County to assist with the implementation of a traffic management system. In addition to the various grants received for capital projects, the City received two year's allocation of Traffic Congestion Relief funds from the State. This was to make up for funds taken away several years ago as a result of the State's budget crisis. • This year the City received Federal Funds for the improvement of Grand Avenue. These funds in the amount of $1,066,605 are reflected in the capital grant and contributions category. In addition the City received for the first time in several years received park improvement developer fees. • The increase in property tax revenue is due the continuing rise of property values in fiscal year 06-07. • Sales tax was down slightly this year, however the increase in property tax in lieu of sales tax's increase basically evened out the overall sales tax numbers. The City is mindful of the loss of major sales tax producers and is working diligently to improve its sales tax base. • Investment Income has increased significantly due to rising interest rates and the diversification of the City's investment portfolio. The City continued to invest its funds in longer term securities resulting in a higher investment yield. (see note 2) • Miscellaneous revenue is lower this year due to the fact that in the previous year the City received a settlement resulting from an audit of the City's cable TV franchise. This fiscal year the City fully capitalized its infrastructure. In the financial statements the beginning balances have been restated to reflect this. The prior year expenditures however, have not been restated. Instead the net assets amounts have been adjusted. As a result the expenditure numbers for fiscal year 06 do not include depreciation for all of the infrastructure assets. • General Government was higher this year due primarily to increases in the City's Information Technology Division. This division has been responsible for implementation of several new computer systems resulting in increases in computer maintenance contracts and project management costs. Another factor in the increase in General Government is due to the increased cost of the lease paid to the Public Financing Authority for the Diamond Bar Center. This lease amount is based on the debt service due on the variable rate lease revenue bonds that were issued to build the Center. Since interest rates have been rising, so has this expenditure. • There was a decrease in Public Safety expenditures primarily due to the reclassification of the Building and Safety expenditures to the Community Development category. • As mentioned earlier the numbers for the previous fiscal year does not include depreciation for all infrastructure assets. This has created huge differences in the Highways and Streets and Parks, Recreation and Culture categories. This year the City completed two significant street rehabilitation projects also causing arise in Streets and Highway category. See independent auditors' report. -7- W) 1 1 •�',' Management's Discussion and Analysis (Continued) June 30, 2007 Government -wide Financial Analysis (Continued) ® The decrease in Community Development is primarily due to the fact that last fiscal year the City purchased land for future Economic Development purposes. With the exception of Building and Safety, expenditures were slightly higher overall. Last year saw a spike in Building and Safety revenues due to the issuance of permits for a large housing tract. ® As mentioned earlier rising interest rates on the outstanding variable rate lease revenue bonds caused an increase in Interest and Fiscal Charges. Financial Analysis of the City's Funds As noted earlier the City of Diamond Bar uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds. The focus of the City of Diamond Bar's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a City's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of Diamond Bar's governmental funds reported combined ending fund balances of $35,149,386, an increase of $3,300,361 in comparison with the prior year. Of this amount, there is $4,095,466 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 $28,568,263, while the total fund balance reached $30,461,550. 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 169.2% of total general fund expenditures, while total fund balance represents 180.4% of the same amount. Overall the fund balance of the City of Diamond Bar's general fund increased by $4,047,934 during the current year. Since the City's incorporation, the City has been fiscally conservative contributing to healthy fund balance reserves. Other factors contributing to this growth are as follows: ® Property tax revenue increased due the unprecedented rise in property values within the Southern California region and a favorable real estate market. ® Some of the revenues received from the State for Motor Vehicle in Lieu fees are now based on an allocation of property taxes based on property values. Previously it had been allocated based on population. As a result since the City's property values have increased so has this revenue source. ® Traffic mitigation and development fees were received to fund future traffic improvements and economic development activities. ® Rents and Concessions continued rise due to the popularity of the City's park facilities including the Diamond Bar Center. ® Investment revenue from higher interest rates and higher cash balances in the General Fund contributed to the growth of the General Fund as well. See independent auditors' report. -8- Management's Discussion and Analysis (Continued) June 30, 2007 Financial Analysis of the City's Funds (Continued) Governmental funds (Continued). 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 $1,708,275, which is a decrease of $117,440. This change in fund balance is due to the fact that $527,397 was used to assist in funding four 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 the city owned Sycamore Canyon Park. The Capital Projects Fund ended the year with a negative fund balance of $1,741,343 as opposed to $1,086,021 last year. Ideally this fund should carry a zero fund balance. Capital project expenditures are accounted for in this fund along with their offsetting revenues and transfers. Due to revenue and expenditure accruals, it is not unusual for the fund to carry a negative balance since many of the capital improvement projects are funded with reimbursable grants. General Fund Budgetary Highlights Although original revenue budget projections were increased during the year by 5.75% actual revenues exceeded expectations by another 14.4%. In all but one category actual revenues exceeded expectations. The General Fund taxes category include property taxes, sales tax, franchise tax and property transfer tax. These revenues exceeded expectations by $481,780. The variance between the amount budgeted and the amount receive is due to the fact that the City has traditionally budgeted revenues conservatively without building a lot of growth into the budget. This along with the economic growth caused the difference between the budget and actual numbers. The FY07-08 budget has been created to reflect more realistic revenue projections. The City received a contribution from the County which had not been budgeted. This contribution was for the development of a transportation management system. It was questionable as to when and if the City would receive the funding so therefore it was not budgeted prior to its receipt. The development fees received from the Brookfield housing tract came in sooner than anticipated. As a result actual revenues were much higher than anticipated. The investment income revenue estimate was much higher than anticipated due to higher investment yields and cash balances. General Fund expenditures for FY06-07 were anticipated to be $19,343,007 according to the amended budget numbers. The actual expenditures equaled $16,884,828 or $2,458,179 less than anticipated. Most of the expenditure categories came in under budget. The City also experienced a turnover in a few staff positions resulting in salary savings in several departments. As a result of this turn over in staff some of the projects budgeted had to be postponed until a later date. In many cases the projects were encumbered at the end of the fiscal year or simply re -budgeted in fiscal year 07-08. Contract commitments in the form of encumbrances equaled $1.1 million at the end of the fiscal year. See independent auditors' report. -9- Management's Discussion and Analysis (Continued) June 30, 2007 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, 2007 amounts to $388,377,190 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, furniture and fixtures, vehicles and equipment, infrastructure and construction in progress. The total decrease in the City's investment in capital assets was approximate 1.3% 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 & Equipment Infrastructure Construction in Progress 2007 2006 $6,206,190 $6,206,190 256,536,095 256,536,095 16,502,917 15,662,267 8,815 11,875 632,903 539,624 107,168,051 111,279,212 1,322,219 2,947,753 $388,377,190 $393,183,016 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: ® Outdoor screen and projection equipment to provide free summer movies in the park. ® New computers for the computer resource room at the Diamond Bar Center. ® Equipment purchased to improve operations and efficiency included a color copier, folding machine, postage machine, high speed scanner and the replacement of several computer servers. 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: o Traffic signal improvements to the intersection of Grand and Diamond Bar Blvd. ® Sycamore Canyon Park benefited from a major facelift which includes new ADA compliant access ramps, playground equipment, security lights, picnic tables, drinking fountains, barbecues and benches. Construction in progress at the end of the year included twenty two projects in various stages of construction. There were five park improvement projects in progress totaling $123,904. 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 $1,198,315 at the end of the year. Additional information on the City's capital assets can be found in note 4. See independent auditors' report. -10- Management's Discussion and Analysis (Continued) June 30, 2007 Capital Asset and Debt Administration (Continued) Long-term debt — At the end of the current fiscal year, the City of Diamond Bar's total long-term debt equaled $13,491,855. The following table shows the breakdown of the debt outstanding. Table 4 City of Diamond Bar Outstanding Long Term Debt at Year-end Variable Rate Lease Revenue Bonds (backed by the Public Financing Authority) 13,280,000 Unamoritzed Bond Discount (119,210) Compensated Absences (backed by the City) 331,065 $13,491,855 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 2007-2008 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 FY08 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. -11- TRIS PAGE LEFT BLANK INTENTIONALLY -12- PULL THIS PAGE AND INSERT TAB FOR GOVERNMENT WIDE FINANCIAL STATEMENTS PULL THIS PAGE STATEMENT OF NET ASSETS June 30, 2007 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 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 Governmental Activities $ 38,611,382 248,237 397,093 3,084,997 4,414 186,854 547,517 469,260 264,064,504 124,312,686 431,926,944 1,998,968 93,816 42,940 1,140,635 393,715 506,763 186,854 365,355 13,126,500 17,855,546 375,216,400 321,747 3,446,872 1,013,495 34,072,884 $ 414,071,398 See independent auditors' report and notes to basic financial statements. -13- CITY OF DIAMOND BAR STATEMENT OF ACTIVITIES For the year ended June 30, 2007 Functions/programs Expenses Governmental activities: Net (Expense) General government $ 4,784,314 Public safety 4,876,435 Highways and streets 14,019,550 Community development 2,292,757 Parks, recreation Program Revenues and culture 4,779,588 Interest on long-term debt 498,042 Total governmental activities $ 31,250,686 1,385,788 311,376 197,925 (2,884,499) - - (498,042) $ 6,675,619 $ 6,968,824 $ 1,254,314 (16,351,929) 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 Otherrevenues Total general revenues Change in net assets NET ASSETS - BEGINNING OF YEAR, AS RESTATED (NOTE 12) NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. -14- 7,727,580 774,757 2,935,703 1,007,642 1,064,621 331,096 33,822 350,194 1,476,010 41,362 15,742,787 (609,142) 414,680,540 $ 414,071,398 Net (Expense) Revenue and Changes in Program Revenues Net Assets Charges Operating Capital for Grants and Grants and Governmental Services Contributions Contributions Activities $ 262,541 $ 4,390 $ - $ (4,517,383) 1,512,195 233,558 - (3,130,682) 3,493,798 5,687,380 1,056,389 (3,781,983) 21,297 732,120 - (1,539,340) 1,385,788 311,376 197,925 (2,884,499) - - (498,042) $ 6,675,619 $ 6,968,824 $ 1,254,314 (16,351,929) 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 Otherrevenues Total general revenues Change in net assets NET ASSETS - BEGINNING OF YEAR, AS RESTATED (NOTE 12) NET ASSETS - END OF YEAR See independent auditors' report and notes to basic financial statements. -14- 7,727,580 774,757 2,935,703 1,007,642 1,064,621 331,096 33,822 350,194 1,476,010 41,362 15,742,787 (609,142) 414,680,540 $ 414,071,398 PULL THIS PAGE AND INSERT TAB FOR FUND FINANCIAL SECTION PULL THIS PAGE BLANK FOR BACK OF TAB 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 fund. SPECIAL REVENUE FUND The Special Revenue Fund is used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for a specified purpose. The following Special Revenue Fund has been classified as a major fund in the accompanying financial statements: Park and Facility Development Fund - This fund is used to account for the development and enhancement of the City's parks. CAPITAL PROJECTS FUND The Capital Projects Fund is used to account for the acquisition and construction of major capital facilities. The following Capital Projects Fund has been classified as a major fund in the accompanying financial statements: Capital Improvement Fund - This fund is used to account for the costs of constructing street improvements, park improvements and other public improvements not normally included within the other Capital Projects funds. Financing is provided by developer fees and interfund transfers from the Special Revenue Funds and the General Fund. -15- CITY OF DIAMOND BAR BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2007 See independent auditors' report and notes to basic financial statements. -16- Special Capital Revenue Fund Projects Fund Park and Facility Capital General Development Improvement Fund Fund Fund ASSETS ASSETS: Cash and investments $ 30,187,327 $ 1,705,422 $ - Cash and investments with fiscal agent 15,000 - 132,513 Accounts receivable 204,758 - - interest receivable 397,093 - - Due from other funds (Note 3) 1,342,295 - - Due from employees 4,414 - - Due from other governments 1,448,488 920,130 511,706 Notes receivable - " TOTAL ASSETS $ 33,599,375 $ 2,625,552 $ 644,219 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ 1,354,190 $ - $ 181,387 Accrued payroll 88,956 - - Deposits payable 1,140,635 - - Due to other funds (Note 3) - - 1,320,594 Deferred revenue 532,204 917,277 511,706 Retentions payable 21,840 - 371,875 Advances from other governments - - " TOTAL LIABILITIES 3,137,825 917,277 2,385,562 FUND BALANCES (DEFICIT): Reserved for: Encumbrances 1,105,762 - 2,940,385 Improvements 2,207 - Bond retirement 771,959 - - Debt service 13,359 - - Unreserved, Reported in: General Fund 28,568,263 - - Special Revenue Funds - 1,708,275 - Capital Projects Funds - - (4,681,728) TOTAL FUND BALANCES (DEFICIT) 30,461,550 1,708,275 (1,741,343) TOTAL LIABILITIES AND FUND BALANCES $ 33,599,375 $ 2,625,552 $ 644,219 See independent auditors' report and notes to basic financial statements. -16- Other Total Governmental Governmental Funds Funds $ 4,716,107 $ 36,608,856 321,747 469,260 43,479 248,237 - 397,093 - 1,342,295 - 4,414 204,673 3,084,997 186,854 186,854 $ 5,472,860 $ 42,342,006 $ 463,391 $ 1,998,968 4,860 93,816 - 1,140,635 21,701 1,342,295 75,150 2,036,337 - 393,715 186,854 186,854 751,956 7,192,620 49,319 4,095,466 - 2,207 - 771,959 321,747 335,106 - 28,568,263 4,349,838 6,058,113 - (4,681,728) 4,720,904 35,149,386 $ 5,472,860 $ 42,342,006 -17- THIS PAGE LEFT BLANK INTENTIONALLY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS June 30, 2007 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, 2007 are: Bonds payable Deferred charges for issuance costs Bond discount Compensated absences Accrued interest payable from the current portion of interest due on bonds payable has not been reported in the governmental funds. 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- $(13,280,000) 547,517 119,210 (331,065) $ 35,149,386 388,311,061 (12,944,338) (42,940) 2,036,337 1,561,892 $ 414,071,398 CITY OF DIAMOND BAR STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended June 30, 2007 EXPENDITURES: Current: General government Public safety Highways and streets Parks, recreation and culture Community development Capital outlay Debt service: Principal Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICIT) - BEGINNING OF YEAR 4,402,235 - - 4,865,335 - - 2,400,023 - - 3,475,549 - - 1,741,686 - - - - 5,344,935 16,884,828 - 5,344,935 4,954,510 409,957 (4,765,760) 1,311,707 - 3,679,739 (2,218,283) (527,397) - (906,576) (527,397) 3,679,739 4,047,934 (117,440) (1,086,021) 26,413,616 1,825,715 (655,322) FUND BALANCES (DEFICIT) - END OF YEAR $ 30,461,550 $ 1,708,275 $ (1,741,343) See independent auditors' report and notes to basic financial statements. -20- Special Capital Revenue Fund Projects Fund Park and Facility Capital General Development Improvement Fund Fund Fund REVENUES: Taxes $ 9,876,760 $ - $ - Special assessments - - Intergovernmental revenue 5,204,901 122,672 579,175 Charges for services - - - Fines and forfeitures 546,902 - - Licenses, permits and fees 4,049,701 197,925 - Investment income 1,393,617 89,360 Other revenues 767,457 - - TOTAL REVENUES 21,839,338 409,957 579,175 EXPENDITURES: Current: General government Public safety Highways and streets Parks, recreation and culture Community development Capital outlay Debt service: Principal Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICIT) - BEGINNING OF YEAR 4,402,235 - - 4,865,335 - - 2,400,023 - - 3,475,549 - - 1,741,686 - - - - 5,344,935 16,884,828 - 5,344,935 4,954,510 409,957 (4,765,760) 1,311,707 - 3,679,739 (2,218,283) (527,397) - (906,576) (527,397) 3,679,739 4,047,934 (117,440) (1,086,021) 26,413,616 1,825,715 (655,322) FUND BALANCES (DEFICIT) - END OF YEAR $ 30,461,550 $ 1,708,275 $ (1,741,343) See independent auditors' report and notes to basic financial statements. -20- Other Total Governmental Governmental Funds Funds $ - $ 9,876,760 541,382 541,382 5,262,304 11,169,052 1,002,210 1,002,210 - 546,902 - 4,247,626 233,217 1,716,194 - 767,457 7,039,113 29,867,583 14,955 2,714,251 551,071 4,402,235 4,880,290 5,114,274 3,475,549 2,292,757 5,344,935 240,000 240,000 493,840 493,840 4,014,117 26,243,880 3,024,996 3,623,703 1,039,318 6,030,764 (3,608,426) (6,354,106) (2,569,108) (323,342) 455,888 3,300,361 4,265,016 31,849,025 $ 4,720,904 $ 35,149,386 -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, 2007 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ 3,300,361 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 $ 1,058,750 (5,844,089) (4,785,339) Depreciation expense The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins and donations) is to decrease net assets. (249) 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 $ 240,000 Amortization of bond discount (4,585) Amortization of issuance costs (21,058) Compensated absences (40,296) 174,061 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: 383 Interest expense Some revenues reported in the Statement of Activities are not considered to be available to finance current expenditures and therefore are not reported as revenues in the governmental funds 698,OS7 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. 3,584 Change in net assets of governmental activities $ (609,142) See independent auditors' report and notes to basic financial statements. -22- CITY OF DIAMOND BAR STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2007 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 Internal Service Funds $ 2,002,526 193,623 (127,494) 66,129 2,068,655 506,763 66,129 1,495,763 See independent auditors' report and notes to basic financial statements. -23- STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS For the year ended June 30, 2007 OPERATING EXPENSES: Insurance premiums Depreciation TOTAL OPERATING EXPENSES OPERATING LOSS NONOPERATING REVENUES (EXPENSES): Investment income TOTAL NONOPERATING REVENUES (EXPENSES) LOSS BEFORE TRANSFERS I._: _ 0:' 1 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 $ 370,415 25,247 395,662 (395,662) 75,904 .I. (319,758) 323,342 3,584 1,558,308 $ 1,561,892 CITY OF DIAMOND BAR STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the year ended June 30, 2007 CASH FLOWS FROM OPERATING ACTIVITIES: Insurance payments NET CASH USED BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers from other funds NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Investment income NET CASH PROVIDED BY INVESTING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: Operating loss Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation Changes in operating assets and liabilities: Increase (decrease) in due to other governments TOTAL ADJUSTMENTS NET CASH USED BY OPERATING ACTIVITIES See independent auditors' report and notes to basic financial statements. -25- Internal Service Funds $ (225,008) (225,008) 323,342 323,342 (5,010) (5,010) 75,904 75,904 169,228 1,833,298 $ 2,002,526 $ (395,662) 25,247 145,407 170,654_ $ (225,008) THIS PAGE LEFT BLANK INTENTIONALLY -26- PULL THIS PAGE AND INSERT TAB FOR NOTES TO THE FINANCIAL STATEMENTS PULL TRIS PAGE BLANK FOR BACK OF TAB CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2007 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 full or partial accountability for fiscal matters of the other entities. The financial reporting entity consists of: (1) the City (2) organizations for which the City is financially accountable; and, (3) organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes or set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, a component unit's balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit's governing body is substantially the same as the City's or the component unit provides services almost entirely to the City. Blended Component Units: The Diamond Bar Community Redevelopment Agency (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, 2007. 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, 2007 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): b. Government -Wide and Fund Financial Statements: The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The City has no business -type activities. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds are reported as separate columns in the fund financial statements. c. Measurement Focus, Basis of Accounting, and Financial Statement Presentation: The basic financial statements of the City are composed of the following: ® Government -wide financial statements ® Fund financial statements ® Notes to basic financial statements See independent auditors' report. -28- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 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- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): c. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): Property taxes, taxpayer -assessed taxes, such as sales taxes, gas taxes, and transient occupancy taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The accounts of the City are organized and operated on the basis of funds, each of which is considered a separate accounting entity with a self -balancing set of accounts, established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources. d. Fund Classifications: The City reports the following major governmental funds: The General Fund is the primary operating fund of the City and is 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 Capital Improvement Capital Projects Fund is used to account for the costs of constructing street improvements, park improvements and other public improvements not normally included within the other Capital Projects funds. Financing is provided by developer fees and interfimd transfers from the Special Revenue Funds and the General Fund. See independent auditors' report. -30- [a I • W 03 FAM L630 11KA, NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 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). 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, 2007 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 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, 2007, 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, 2007. Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method in the Government -wide and Proprietary Fund Financial Statements. Depreciation is charged as an expense against operations and accumulated depreciation is reported on the respective balance sheet. The lives used for depreciation purposes of each capital asset class are: Buildings and improvements Furniture and fixtures Vehicles and equipment Infrastructure See independent auditors' report. -32- 10 - 20 years 3 - 5 years 5 years 10 - 50 years CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 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: Vacation and sick leave time begin to accumulate as of the first day of employment to a maximum of 160 hours. Employees who accumulate sick leave in excess of 160 hours are paid for the excess annually at one half the employee's current wage rate. A liability is recorded for unused vacation and similar compensatory leave balances since the employees' entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement. A liability is recorded for unused sick leave balances only to the extent that it's probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receive termination payments, as well as those who are expected to become eligible to receive termination benefits as a result of continuing their employment with the City. If an employee terminates with a minimum of one year of service, the employee is entitled to receive 10% of the value of his unused sick leave. The percentage increases to 50% for two to three years of service and 100% of the value of his unused sick leave upon the completion of more than three years of continuous employment. j. Deferred Charges: 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- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): k. Property Taxes: Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City accrues only those taxes which are received from the County within 60 days after year end. Property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien date Levy date Due dates Collection dates Delinquent dates 1. Use of Estimates: January 1 July 1 November 1 - l St installment February 1 - 2nd installment December 10 - 1St installment April 10 - 2nd installment December 11 - 1St installment April 11 - 2nd installment The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. See independent auditors' report. -34- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS: Cash and Investments: Cash and investments at June 30, 2007 consisted of the following: Statement of Net Assets: Cash and investments $ 38,611,382 Cash and investments with fiscal agents 469,260 $ 39,080,642 Cash and investments held by the City at June 30, 2007 consisted of the following: Imprest cash on hand $ 1,500 Demand deposits (overdraft) (96,089) Escrow deposits 147,513 Investments: U.S. Government Sponsored Enterprise Securities 9,000,000 Repurchase agreements 1,324,036 Local agency investment fund 28,381,935 Held by Bond Trustee: Money Market Mutual Funds 321,747 $ 39,080,642 See independent auditors' report. -35- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS (CONTINUED): Investments Authorized by the California Government Code and the City's Investment Policy: The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy. (1) Notes must be rated "A" or better. N/A - Not Applicable See independent auditors' report. -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- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS (CONTINUED): Investments Authorized by Debt Agreements: Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk. Disclosures Relating to Interest Rate Risk: Maximum Percentage/ Amount Allowed 12 10% None None None None None Equal to six months of principal and interest on the bonds Maximum Investment in One Issuer None None None None None None None None 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. -37- Maximum Authorized Investment Type Maturity U.S. Treasury Obligations None U.S. Government Sponsored Enterprise Securities None Banker's Acceptances 1 year Time Certificate of Deposits None Local Agency Investment Fund None Money Market Funds None Repurchase Obligations Tax Exempt 30 days Taxable Government Money Market Portfolios None Disclosures Relating to Interest Rate Risk: Maximum Percentage/ Amount Allowed 12 10% None None None None None Equal to six months of principal and interest on the bonds Maximum Investment in One Issuer None None None None None None None None 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. -37- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 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 Marker Mutual Funds Disclosures Relating. to Credit Risk: Remaining Maturity in Months) 12 Months 13-24 25-60 or Less Months Months Total $ 2,000,000 1,324,036 28,381,935 $ 5,000,000 $ 2,000,000 $ 9,000,000 1,324,036 28,381,935 321,747 - - 321,747 $ 32,027,7-1 $ 5,000,0 $ 2X00,000 $ 39 027 718 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 $ 9,000,000 $ 321,747 $ 9,321,747 1,324,036 28,381,935 $ 29,705,971 Total Minimum as of Legal Investment Type June 30, 2007 Rating__ U.S. Government Sponsored Enterprise Securities $ 9,000,000 AAA Repurchase Agreements 1,324,036 N/A Local Agency Investment Fund 28,381,935 N/A Held by Bond Trustee: Money Market Mutual Funds 321,747 A Total $ 39,027118 N/A - Not Applicable See independent auditors' report. -38- AAA Unrated $ 9,000,000 $ 321,747 $ 9,321,747 1,324,036 28,381,935 $ 29,705,971 NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 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, 2007, 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- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 3. 1NTERFUND RECEIVABLES, PAYABLES AND TRANSFERS: The composition of interfund balances as of June 30, 2007, is as follows: Due To/From Other Funds: Receivable Fund Payable Fund Amount General Fund Capital Improvement Capital Projects Fund $ 1,320,594 Other Governmental Funds 21,701 $ 1,342,295 The amounts loaned from the General Fund to the Capital Improvement Capital Projects Fund and Other Governmental Funds are to provide a short-term loan to fund temporary cash shortfalls. Interfund Transfers: Transfers In Transfers Out Amount General Fund Other Governmental Funds $ 1,311,707 Capital Improvement General Fund 855,623 Capital Projects Fund Park and Facility Development Special Revenue Fund 527,397 Other Governmental Funds 2,296,719 Other Governmental Funds General Fund 1,039,318 Internal Service Funds General Fund 323,342 $ 6,354,106 Transfers to the General Fund from the Other Governmental Funds were made to reimburse the General Fund for various capital projects. Transfers to the Capital Improvement Capital Projects Fund from the General Fund, the Park and Facility Development Special Revenue Fund and Other Governmental Funds were made to provide the funding necessary to accomplish those projects approved by the City Council. Transfers from the General Fund to the Other Governmental Funds were made to provide for debt service payments. Transfers from the General Fund to the Internal Service Funds were made to provide for purchases of a vehicle and equipment and uninsured insurance losses. See independent auditors' report. -40- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 4. CAPITALASSETS: A summary of changes in the Governmental Activities capital assets at June 30, 2007 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 Balance July 1, 2006 Balance at As Restated Additions Deletions June 30, 2007 $ 6,206,190 $ - $ - $ 6,206,190 256,536,095 - - 256,536,095 2,947,753 559,512 (2185,046) 1,322,219 265,690,038 559,512 (2,185,046) 264,064,504 21,788,509 2,142,503 - 23,931,012 68,505 - - 68,505 1,386,550 254,167 (92,150) 1,548,567 179,097,299 292,624 - 179,389,923 202,340,863 2,689,294 (92,150) 204,938,007 Less accumulated depreciation for: Building and improvements (6,126,242) (1,301,853) - (7,428,095) Furniture and fixtures (56,630) (3,060) - (59,690) Vehicles and equipment (846,926) (160,639) 91,901 (915,664) Infrastructure (67,818,087) (4,403,785) - (72,221,872) Total accumulated depreciation (74,847,885) (5,869,337) 91,901 (80,625,321) Total capital assets being depreciated, net Total Governmental Activities capital assets, net 127,492,978 (3,180,043) (249) 124,312,686 $ 393,1.83.016 $ (2,620,531) $(2,185 295) $ 388,377,19-0 Depreciation expense was charged to functions in the Statement of Activities as follows: General government $ 102,009 Public safety 17,114 Highways and streets 4,408,431 Parks, recreation and culture 1,316,536 Internal Service Funds depreciation charges to program 25,247 $ 5,869,337 See independent auditors' report. -41- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 5. LONG-TERM LIABILITIES: Long-term liability activity for the year ended June 30, 2007, was as follows: Bonds payable: Revenue bonds Unamortized discount Compensated absences Total Bonds Payable: Beginning Balance Additions Retirements $13,520,000 (123,795) 290,769 $13,696,974 282,385 $ 282.385 $ (240,000) 4,585 (242,089) (477,504) Ending Due Within Balance One Year $13,280,000 $ 255,000 (119,210) - 331,065 110,355 13,491.855 $ 365 355 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, 2007, $13,280,000 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, 2007 the Agreement had a positive fair value of $64,644. 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. Basis Risk: The Agreement does not expose the Authority to basis risk, which refers to a mismatch between the interest rate cap of 4.5% and the variable rate payments to be made on the debt. See independent auditors' report. -42- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 5. LONG-TERM LIABILITIES (CONTINUED): Bonds Payable (Continued): Termination Risk: If the rate cap is terminated, the rate on the Bonds that the Authority would prospectively have to pay will not be subject to the cap rate of 4.5%. The termination of the Agreement could therefore increase the Authority's total debt service in the event that the variable rate is higher than the cap rate of 4.5%. At June 30, 2007, the Agreement had a positive fair value of $64,644. Payments and Associated Debt: Using a variable rate of 4.83% as of June 30, 2007, debt service requirements of the Bonds and the Counterparty's payments, assuming current interest rates remain the same for remainder of the term of the Agreement, are as follows. As rates vary, the variable rate interest payments and net rate cap payments will vary. Compensated Absences: The City's policies relating to compensated absences are described in Note 1. This liability, amounting to $331,065 at June 30, 2007, is expected to be paid in future years from future resources, typically liquidated from the General Fund. See independent auditors' report. -43- Variable Rate Debt Counter- Net Year Ending party Debt June 30, Principal Interest Total Payments Service 2008 $ 255,000 $ 641,424 $ 896,424 $ (43,824) $ 852,600 2009 265,000 629,108 894,108 (42,983) 851,125 2010 280,000 616,308 896,308 (42,108) 854,200 2011 290,000 602,784 892,784 (41,184) 851,600 2012 305,000 588,777 893,777 (40,227) 853,550 2013-2017 1,755,000 2,708,424 4,463,424 (185,049) 4,278,375 2018-2022 2,205,000 2,243,535 4,448,535 (153,285) 4,295,250 2023-2027 2,780,000 1,657,899 4,437,899 (113,274) 4,324,625 2028-2032 3,500,000 919,874 4,419,874 (62,849) 4,357,025 2033-2034 1,645,000 120,026 1,765,026 (8,201) 1,756,825 $ 13,280,000 $ 10,728J59 $ 24 008,159 $ (732,984) $ 23,275,175 Compensated Absences: The City's policies relating to compensated absences are described in Note 1. This liability, amounting to $331,065 at June 30, 2007, 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, 2007 6. LIABILITY, PROPERTY AND WORKERS' COMPENSATION PROTECTION: The City is a member of the California Joint Powers Insurance Authority (the Authority). The Authority is composed of 114 California public entities and is organized under a joint powers agreement pursuant to California Government Code Section 6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group -purchased insurance for property and other coverages. The Authority's pool began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a 9 -member Executive Committee. a. Self -Insurance Programs of the Authority: General Liability Each member government pays a primary deposit to cover estimated losses for a fiscal year (claims year). Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. 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 $10,000,000, $18,000,000 to $23,000,000, and $45,000,000 to $50,000,000 and the associated loss development reserves are pooled based on payroll. Costs of covered claims from $10,000,000 to $18,000,000 and $23,000,000 to $45,000,000 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 Authority's investment earnings. Workers' Compensation The City also participates in the workers' compensation pool administered by the Authority. Each member pays a primary deposit to cover estimated losses for a fiscal year (claims year). Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Claims are pooled separately between public safety and nonpublic safety. See independent auditors' report. -44- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 6. LIABILITY, PROPERTY AND WORKERS' COMPENSATION PROTECTION (CONTINUED): 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 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 $200,000,000 are transferred to reinsurance carriers. Costs in excess of $200,000,000 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 Authority's investment earnings. b. Purchased Insurance: Environmental Liability The City participates in the pollution legal liability and remediation legal liability insurance which is available through the Authority. This policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City. Coverage is on a claims -made basis. There is a $50,000 deductible. The Authority has a limit of $50,000,000 for the 3 -year period from July 1, 2005 through June 30, 2008. Each member of the 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 Authority. This insurance protection is underwritten by several insurance companies. The City's property is currently insured according to a schedule of covered property submitted by the City to the Authority. Total all-risk property insurance coverage is $16,435,575. There is a $5,000 deductible per occurrence except for nonemergency vehicle insurance with has a $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. See independent auditors' report. -45- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 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 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 Balances The following funds reported deficit fund balances at June 30, 2007: Major Fund: Capital Improvement Capital Projects Fund $ (1,741,343) Other Governmental Funds: Community Development Block Grant Special Revenue Fund (61,210) The Capital Improvement Capital Projects Fund deficit will be funded with various government grants in future years. The Community Development Block Grant Special Revenue Fund deficit will be funded by future year revenue allocations from Los Angeles County. See independent auditors' report. -46- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 7. OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES (CONTINUED): Expenditures Exceeded Appropriations Expenditures for the year ended June 30, 2007 exceeded appropriations of the following funds/departments as follows: Budget Actual Variance Major Fund: General Fund: General Government - City Attorney $ 215,000 $ 246,430 $ (31,430) General Government - General Government 938,062 947,475 (9,413) Other Governmental Funds: Proposition A Transit Special Revenue Fund - Highways and streets 1,868,405 2,036,136 (167,731) 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 Policy: 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 11.20% of covered payroll. The City's contributions to CalPERS for the years ending June 30, 2007, 2006 and 2005 were $344,320, $304,107 and $195,270, respectively and were equal to the required contribution for each year. See independent auditors' report. -47- CITY OF DIAMOND BAR NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 9. CONTINGENCIES: 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. 10. CONSTRUCTION COMMITMENTS: The following material construction commitments existed at June 30, 2007: Expenditures as of Remaining Project Name June 30, 2007 Commitments Park Improvements $ 34,493 $ 175,569 Street Improvements 1,592,327 1,499,807 Miscellaneous Capital Improvements 61,044 628,630 Traffic Signals 167,522 551,636 Left Turn 277,139 37,016 Landscape and Irrigation Improvements 21,486 47,727 2,154,01.1 2,940-385 See independent auditors' report. -48- NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 11. OPERATING LEASES: 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, 2007. The future minimum lease payments for the lease of building and office facilities are as follows: Year Ending June 30, 2008 $ 261,727 2009 264,151 2010 268,997 2011 179,332 Total $ 974,207 12. RESTATEMENT OF NET ASSETS: The balances of net assets at July 1, 2006 of the governmental activities were increased by $365,761,450 to $414,680,540 to record the net book value of infrastructure assets acquired or constructed prior to July 1, 2002. This adjustment was made in accordance with the implementation guidelines of Governmental Accounting Standards Board Statement No. 34 on Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments. See independent auditors' report. -49- THIS PAGE LEFT BLANK INTENTIONALLY 50 PULL THIS PAGE AND INSERT TAB FOR RSI PULL TRIS PAGE BLANK FOR BACK OF TAB 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. Park and Facility Development Fund - This fund is used to account for the development and enhancement of the City's parks. -51- CITY OF DIAMOND BAR BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the year ended June 30, 2007 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 Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR 26,136,376 26,136,376 26,413,616 277,240 FUND BALANCE - END OF YEAR $ 23,314,376 $ 23,304,941 $ 30,461,550 $ 7,156,609 See independent auditors' report and note to required supplementary information. -52- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 9,400,000 $ 9,395,000 $ 9,876,760 $ 481,760 3,941,525 4,403,945 5,204,901 800,956 617,500 595,500 546,902 (48,598) 2,803,785 3,406,785 4,049,701 642,916 625,000 625,000 1,393,617 768,617 657,900 657,900 767,457 109,557 18,045,710 19,084,130 21,839,338 2,755,208 191,600 191,600 167,973 23,627 936,140 948,640 915,838 32,802 165,000 215,000 246,430 (31,430) 420,300 420,300 379,160 41,140 241,415 241,415 125,937 115,478 1,268,590 1,550,090 1,159,135 390,955 885,562 938,062 947,475 (9,413) 577,790 577,790 460,287 117,503 4,686,397 5,082,897 4,402,235 680,662 4,996,250 5,066,250 4,719,030 347,220 40,900 40,900 24,975 15,925 112,500 112,500 107,519 4,981 43,290 43,290 13,811 29,479 5,192,940 5,262,940 4,865,335 397,605 2,441,610 2,574,175 2,400,023 174,152 3,589,055 3,836,465 3,475,549 360,916 2,741,580 2,586,530 1,741,686 844,844 18,651,582 19,343,007 16,884,828 2,458,179 (605,872) (258,877) 4,954,510 5,213,387 1,483,050 1,548,050 1,311,707 (236,343) (3,699,178) (4,120,608) (2,218,283) 1,902,325 (2,216,128) (2,572,558) (906,576) 1,665,982 (2,822,000) (2,831,435) 4,047,934 6,879,369 FUND BALANCE - BEGINNING OF YEAR 26,136,376 26,136,376 26,413,616 277,240 FUND BALANCE - END OF YEAR $ 23,314,376 $ 23,304,941 $ 30,461,550 $ 7,156,609 See independent auditors' report and note to required supplementary information. -52- BUDGETARY COMPARISON SCHEDULE PARK AND FACILITY DEVELOPMENT SPECIAL REVENUE FUND For the year ended June 30, 2007 REVENUES: Intergovernmental revenue Licenses, permits and fees Investment income TOTAL REVENUES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 932,755 $ 932,755 $ 122,672 $ (810,083) 65,250 65,250 197,925 132,675 53,000 53,000 89,360 36,360 1,051,005 1,051,005 409,957 (641,048) (1,949,205) (2,412,085) (527,397) 1,884,688 (1,949,205) (2,412,085) (527,397) 1,884,688 (898,200) (1,361,080) (117,440) 1,243,640 938,230 938,230 1,825,715 887,485 $ 40,030 $ (422,850) $ 1,708,275 $ 2,131,125 See independent auditors' report and note to required supplementary information. -53- wffim• • : as NOTE TO REQUIRED SUPPLEMENTARY INFORMATION June 30, 2007 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, 2007, supplemental appropriations in the amount of $2,322,107 were made. e. Formal budgetary integration is employed as a management control device. Commitments for materials and services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist in controlling expenditures. Appropriations which are encumbered at 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. -54- mrtpm��. SUPPLEMENTARY SCHEDULES PULL THIS PAGE BLANK FOR BACK OF TAB MVMM• • • : 111 COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS ASSETS Cash and investments Cash and investments with fiscal agents Accounts receivable Due from other governments Notes receivable TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable Accrued payroll Due to other funds Deferred revenue Advances from other governments TOTAL LIABILITIES FUND BALANCES: Reserved for: Encumbrances Debt service Unreserved reported in: Special revenue funds TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES See independent auditors' report. June 30, 2007 I&SIN Debt $ 463,391 $ Service Fund Total Special Public Other Revenue Financing Governmental Funds Authority Funds $ 4,716,107 $ - $ 4,716,107 - 321,747 321,747 43,479 - 43,479 204,673 - 204,673 186,854 - 186,854 $ 5,151,113 $ 321,747 $ 5,472,860 $ 463,391 $ - $ 463,391 4,860 - 4,860 21,701 - 21,701 75,150 - 75,150 186,854 - 186,854 751,956 - 751,956 49,319 - 49,319 - 321,747 321,747 4,349,838 - 4,349,838 4,399,157 321,747 4,720,904 $ 5,151,113 $ 321,747 $ 5,472,860 THIS PAGE LEFT BLAND INTENTIONALLY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANCES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS For the year ended June 30, 2007 REVENUES: Special assessments Intergovernmental revenue Charges for services Investment income TOTAL REVENUES EXPENDITURES: Current: Public safety Highways and streets Community development Debt service: Principal Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES - BEGINNING OF YEAR FUND BALANCES - END OF YEAR See independent auditors' report. -57- Debt 14,955 14,955 2,714,251 2,714,251 551,071 551,071 240,000 240,000 493,840 493,840. 3,280,277 733,840 4,014,117 3,752,347 (727,351) 3,024,996 _ 277,240 762,078 1,039,318 (3,608,426) - (3,608,426) (3,331,186) 762,078 (2,569,108) 421,161 34,727 455,888 3,977,996 287,020 4,265,016 $ 4,399,157 $ 321,747 $ 4,720,904 Service Fund Total Special Public Other Revenue Financing Governmental Funds Authority Funds — $ 541,382 $ $ 541,382 5,262,304 5,262,304 1,002,210 1,002,210 226,728 6,489 233,217 7,032,624 6,489 7,039,113 14,955 14,955 2,714,251 2,714,251 551,071 551,071 240,000 240,000 493,840 493,840. 3,280,277 733,840 4,014,117 3,752,347 (727,351) 3,024,996 _ 277,240 762,078 1,039,318 (3,608,426) - (3,608,426) (3,331,186) 762,078 (2,569,108) 421,161 34,727 455,888 3,977,996 287,020 4,265,016 $ 4,399,157 $ 321,747 $ 4,720,904 OTHER SPECIAL REVENUE FUNDS The following Special Revenue Funds have been classified as other governmental funds in the accompanying financial statements: State Gas Tax F - 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. 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. Proposition A Transit Fund - This fund is used to account for the receipt and expenditure of the City's share of the 1/2cent sales tax levied in Los Angeles County for local transit purposes. 9". Community 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. Landscape Maintenance District Fund - This fund is used to account of revenues and expenditures related to the special property tax assessments which were set up in accordance with the Landscape and Lighting Act of 1972. The purpose of these districts is to improve the landscaping of City owned medians and hillsides. -59- ASSETS Cash and investments Accounts receivable Due from other governments Notes receivable TOTAL ASSETS CITY OF DIAMOND BAR COMBINING BALANCE SHEET OTHER SPECIAL REVENUE FUNDS June 30, 2007 Proposition Integrated Traffic State C Waste Traffic Congestion Gas Tax Transit ISTEA Management Improvement Relief $ 139,457 $ 1,531,654 $ - $ 348,274 $ 383,330 $ 442,069 - - - 43,479 - 101,802 - 13,939 - - $ 241,259 $ 1,531,654 $13,939 $ 391,753 $ 383,330 $ 442,069 LIABILITIES: Accounts payable $ - $ - $ - $ 12,823 $ - $ Accrued payroll - - - 2'280 Due to other funds - ' Deferred revenue - - 13,939 - - Advances from other governments - - - TOTAL LIABILITIES - - 13,939 15,103 - FUND BALANCES (DEFICIT): Reserved for: Encumbrances - - - 11,127 - Unreserved 241,259 1,531,654 - 365,523 383,330 442,069 TOTALFUND BALANCES (DEFICIT) 241,259 1,531,654 - 376,650 383,330 442,069 TOTAL LIABILITIES AND FUND BALANCES $ 241,259 $ 1,531,654 $13,939 $ 391,753 $ 383,330 $ 442,069 See independent auditors' report. Total Air Proposition Landscape Other Quality A Asset Maintenance Special Improvement CLEEP Transit CDBG COPS Seizure District Revenue Funds $ 89,762 $ 77,456 $ 982,497 $ - $ 113,605 $ 338,506 $ 269,497 $ 4,716,107 _ _ - 43,479 19,133 - - 61,211 - - 8,588 204,673 - - 186,854 - - - 186,854 $ 108,895 $ 77,456 $ 982,497 $ 248,065 $ 113,605 $ 338,506 $ 278,085 $ 5,151,113 $ 694 $ - $ 279,419 $ 39,509 $ 361 $ - $ 130,585 $ 463,391 562 - 2,018 - - - - 4,860 - 21,701 - - - 21,701 61,211 - - - 75,150 - 186,854 - - - 186,854 1,256 - 281,437 309,275 361 - 130,585 751,956 28,292 - - - _ - 9,900 49,319 79,347 77,456 701,060 (61,210) 113,244 338,506 137,600 4,349,838 107,639 77,456 701,060 (61,210) 113,244 338,506 147,500 4,399,157 $ 108,895 $ 77,456 $ 982,497 $ 248,065 $ 113,605 $ 338,506 $ 278,085 $ 5,151,113 -61- wr"• • �:ma COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER SPECIAL REVENUE FUNDS For the year ended June 30, 2007 Proposition Integrated Traffic State C Waste Traffic Congestion Gas Tax Transit ISTEA Management Improvement Relief REVENUES: Special assessments $ - $ $ - $ - $ - $ Intergovernmental revenue 1,075,092 797,919 1,066,605 36,967 382,500 438,520 Charges for services - - - 215,911 - - Investment income 18,819 73,023 - 20,421 830 17,088 TOTAL REVENUES 1,093,911 870,942 1,066,605 273,299 383,330 455,608 EXPENDITURES: Current: Public safety - - - - Highways and streets - - - Community development - - - 238,522 - - TOTAL EXPENDITURES - - - 238,522 - - EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 1,093,911 870,942 1,066,605 34,777 383,330 455,608 OTHER FINANCING SOURCES ((JSES): Transfers in - - 277,240 - - Transfers out (1,243,465) (695,605) (1,066,605) (145,657) - (255,000) TOTAL OTHER FINANCING SOURCES (USES) (1,243,465) (695,605) (789,365) (145,657) - (255,000) NET CHANGE IN FUND BALANCES (149,554) 175,337 277,240 (110,880) 383,330 200,608 FUND BALANCES (DEFICITS) - BEGINNING OF YEAR 390,813 1,356,317 (277,240) 487,530 - 241,461 FUND BALANCES (DEFICIT) - END OF YEAR $ 241,259 $1,531,654 $ - $ 376,650 $ 383,330 $442,069 See independent auditors' report. -63- Total Air Proposition Landscape Other Quality A Asset Maintenance Special Improvement CLEEP Transit CDBG COPS Seizure District Revenue Funds $ _ $ _ $ - $ _ $ - $ - $ 541,382 $ 541,382 71,835 - 959,676 316,948 116,242 - - 5,262,304 - . - 786,299 - - - - 1,002,210 6,367 3,500 52,991 - 8,524 15,308 9,857 226,728 78,202 3,500 1,798,966 316,948 124,766 15,308 551,239 7,032,624 - 1,132 - - 5,833 7,990 - 14,955 - - 2,036,136 - - - 678,115 2,714,251 77,530 - - 235,019 - - - 551,071 77,530 1,132 2,036,136 235,019 5,833 7,990 678,115 3,280,277 672 2,368 (237,170) 81,929 118,933 7,318 (126,876) 3,752,347 - _ _ - - 277,240 (21,794) (180,300) - - (3,608,426) - - - (21,794) (180,300) - - (3,331,186) 672 2,368 (237,170) 60,135 (61,367) 7,318 (126,876) 421,161 106,967 75,088 938,230 (121,345) 174,611 331,188 274,376 3,977,996 $ 107,639 $ 77,456 $ 701,060 $ (61,210) $ 113,244 $ 338,506 $ 147,500 $ 4,399,157 -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, 2007 REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. -64- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1,087,500 $ 1,087,500 $ 1,075,092 $ (12,408) 15,000 15,000 18,819 3,819 1,102,500 1,102,500 1,093,911 (8,589) (1,755,350) (1,493,350) (1,243,465) 249,885 (1,755,350) (1,493,350) (1,243,465) 249,885 (652,850) (390,850) (149,554) 241,296 390,813 390,813 390,813 - $ (262,037) $ (37) $ 241,259 $ 241,296 -64- SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PROPOSITION C TRANSIT SPECIAL REVENUE FUND For the year ended June 30, 2007 REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR •MM See independent auditors' report. -65- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 770,500 $ 770,500 $ 797,919 $ 27,419 20,000 20,000 73,023 53,023 790,500 790,500 870,942 80,442 (914,000) (1,160,840) (695,605) 465,235 (914,000) (1,160,840) (695,605) 465,235 (123,500) (370,340) 175,337 545,677 1,356,317 1,356,317 1,356,317 - $ 1,232,817 $ 985,977 $ 1,531,654 $ 545,677 -65- SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ISTEA SPECIAL REVENUE FUND REVENUES: Intergovernmental revenue TOTAL REVENUES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICIT) - BEGINNING OF YEAR • . . See independent auditors' report. For the year ended June 30, 2007 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1,703,845 $ 1,703,845 $ 1,066,605 $ (637,240) 1,703,845 1,703,845 1,066,605 (637,240) 277,240 277,240 (1,703,845) (1,703,845) (1,066,605) 637,240 (1,703,845) (1,703,845) (789,365) 914,480 277,240 277,240 (277,240) (277,240) (277,240) - $ (277,240) $ (277,240) $ - $ 277,240 -66- SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL INTEGRATED WASTE MANAGEMENT SPECIAL REVENUE FUND For the year ended June 30, 2007 EXPENDITURES: Current: Community development 372,050 372,050 238,522 133,528 TOTAL EXPENDITURES 372,050 372,050 238,522 133,528 EXCESS OF REVENUES OVER Variance with (UNDER) EXPENDITURES (95,050) Final Budget 34,777 Budgeted Amounts Positive OTHER FINANCING USES: Original Final Actual (Negative) REVENUES: Intergovernmental revenue $ 62,000 $ 62,000 $ 36,967 $ (25,033) Charges for services 200,000 200,000 215,911 15,911 Investment income 15,000 15,000 20,421 5,421 TOTALREVENUES 277,000 277,000 273,299 (3,701) EXPENDITURES: Current: Community development 372,050 372,050 238,522 133,528 TOTAL EXPENDITURES 372,050 372,050 238,522 133,528 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (95,050) (95,050) 34,777 129,827 OTHER FINANCING USES: Transfers out (185,000) (185,000) (145,657) 39,343 TOTAL OTHER FINANCING USES (185,000) (185,000) (145,657) 39,343 NET CHANGE IN FUND BALANCE (280,050) (280,050) (110,880) 169,170 FUND BALANCE - BEGINNING OF YEAR 487,530 487,530 487,530 - FUND BALANCE - END OF YEAR $ 207,480 $ 207,480 $ 376,650 $ 169,170 See independent auditors' report. -67- CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TRAFFIC IMPROVEMENT SPECIAL REVENUE FUND REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ - $ 382,500 $ 382,500 $ - - 830 830 382,500 383,330 830 $ - $ 382,500 $ 383,330 $ 830 !i'f 0 CITY OF DIAMOND BAR SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TRAFFIC CONGESTION RELIEF SPECIAL REVENUE FUND 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. For the year ended June 30, 2007 Budgeted Amounts Original Final $ - $ 438,520 2,000 8,000 2,000 446,520 (255,000) (693,000) (255,000) 438,000 (253,000) (246,480) 200,608 447,088 241,461 241,461 241,461 - $ (11,539) $ (5,019) $ 442,069 $ 447,088 -69- Variance with Final Budget Positive Actual (Negative) $ 438,520 $ - 17,088 9,088 455,608 9,088 (255,000) (693,000) (255,000) 438,000 (253,000) (246,480) 200,608 447,088 241,461 241,461 241,461 - $ (11,539) $ (5,019) $ 442,069 $ 447,088 -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, 2007 REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES EXPENDITURES: Current: Community development TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 70,000 $ 70,000 $ 71,835 $ 1,835 3,000 3,000 6,367 3,367 73,000 nor nnn 78,202 5,202 81,700 81,700 77,530 4,170 81,700 81,700 77,530 4,170 (8,700) (8,700) 672 9,372 (70,000) (70,000) - 70,000 (70,000) (70,000) - 70,000 (78,700) (78,700) 672 79,372 106,967 106,967 106,967 - $ 28,267 $ 28,267 $ 107,639 $ 79,372 -70- 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, 2007 REVENUES: Investment income TOTAL REVENUES EXPENDITURES: Current: Public safety TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 2,000 $ 2,000 $ 3,500 $ 1,500 2,000 2,000 3,500 1,500 15,000 15,000 1,132 13,868 15,000 15,000 1,132 13,868 (13,000) (13,000) 2,368 15,368 75,088 75,088 75,088 - $ 62,088 $ 62,088 $ 77,456 $ 15,368 -71- 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, 2007 REVENUES: Intergovernmental revenue Charges for services Investment income TOTAL REVENUES EXPENDITURES: Current: Highways and streets TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. 1,368,405 1,868,405 2,036,136 Variance with 1,368,405 Final Budget Budgeted Amounts Positive Original Final Actual (Negative) (237,170) 31,735 $ 927,500 $ 927,500 $ 959,676 $ 32,176 650,000 650,000 786,299 136,299 22,000 22,000 52,991 30,991 1,599,500 1,599,500 1,798,966 199,466 1,368,405 1,868,405 2,036,136 (167,731) 1,368,405 1,868,405 2,036,136 (167,731) 231,095 (268,905) (237,170) 31,735 75,088 75,088 938,230 863,142 $ 306,183 $ (193,817) $ 701,060 $ 894,877 -72- 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, 2007 REVENUES: Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: Community development TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICIT) - BEGINNING OF YEAR FUND BALANCE (DEFICIT) - END OF YEAR See independent auditors' report. Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 522,128 $ 672,128 $ 316,948 $ (355,180) 522,128 672,128 316,948 (355,180) 219,039 369,039 235,019 134,020 219,039 369,039 235,019 134,020 303,089 303,089 81,929 (221,160) (303,089) (303,089) (21,794) 281,295 (303,089) (303,089) (21,794) 281,295 60,135 60,135 (121,345) (121,345) (121,345) - $ (121,345) $ (121,345) $ (61,210) $ 60,135 -73- 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, 2007 REVENUES: Intergovernmental revenue Investment income TOTAL REVENUES EXPENDITURES: Current: Public safety TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out TOTAL OTHER FINANCING USES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. -74- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 100,000 $ 100,000 $ 116,242 $ 16,242 4,000 4,000 8,524 4,524 104,000 104,000 124,766 20,766 7,700 7,700 5,833 1,867 7,700 7,700 5,833 1,867 96,300 96,300 118,933 22,633 (180,300) (180,300) (180,300) - (180,300) (180,300) (180,300) - (84,000) (84,000) (61,367) 22,633 174,611 174,611 174,611 - $ 90,611 $ 90,611 $ 113,244 $ 22,633 -74- 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, 2007 REVENUES: Investment income TOTAL REVENUES EXPENDITURES: Current: Public safety TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 28,000 $ 28,000 $ 15,308 $ (12,692) 28,000 28,000 15,308 (12,692) 25,000 25,000 7,990 17,010 25,000 25,000 7,990 17,010 3,000 3,000 7,318 4,318 331,188 331,188 331,188 - $ 334,188 $ 334,188 $ 338,506 $ 4,318 -75- 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, 2007 See independent auditors' report. -76- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Special assessments $ 551,562 $ 551,562 $ 541,382 $ (10,180) Investment income 13,000 13,000 9,857 (3,143) TOTAL REVENUES 564,562 564,562 551,239 (13,323) EXPENDITURES: Current: Highways and streets 792,120 704,730 678,115 26,615 TOTAL EXPENDITURES 792,120 704,730 678,115 26,615 EXCESS OF REVENUES OVER - (UNDER) EXPENDITURES (227,558) (140,168) (126,876) 13,292 FUND BALANCE - BEGINNING OF YEAR 274,376 274,376 274,376 - FUND BALANCE - END OF YEAR $ 46,818 $ 134,208 $ 147,500 $ 13,292 See independent auditors' report. -76- Capital Projects Funds are established to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Special Revenue Funds). MAJOR FUND: 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. -77- 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, 2007 REVENUES: Intergovernmental revenue Licenses, permits and fees TOTAL REVENUES EXPENDITURES: Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES: Transfers in TOTAL OTHER FINANCING SOURCES NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICIT) - BEGINNING OF YEAR FUND BALANCE (DEFICIT) - END OF YEAR See independent auditors' report. Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1,516,700 $ 1,887,700 $ 579,175 $ (1,308,525) 275,000 275,000 - (275,000) 1,791,700 2,162,700 579,175 (1,583,525) 10,238,189 11,873,339 5,344,935 6,528,404 10,238,189 11,873,339 5,344,935 6,528,404 (8,446,489) (9,710,639) (4,765,760) 4,944,879 8,446,489 9,708,639 3,679,739 (6,028,900) 8,446,489 9,708,639 3,679,739 (6,028,900) (2,000) (1,086,021) (1,084,021) (655,322) (655,322) (655,322) - $ (6551322) $ (657,322) $ (1,741,343) $ (1,084,021) -78- 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 Re -placement Fund - This fund is used to account for the replacement and/or enhancement of the City's computer-related equipment. -79- rsgw• • �xl COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS ASSETS CURRENT ASSETS: Cash and investments NONCURRENT ASSETS: Capital assets: Machinery and equipment Less accumulated depreciation TOTAL NONCURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES: Accounts payable NET ASSETS Invested in capital assets Unrestricted TOTAL NET ASSETS See independent auditors' report. June 30, 2007 Self- Equipment Computer Insurance Replacement Replacement Totals $ 1,610,661 $ 195,835 $ 196,030 $ 2,002,526 182,206 11,417 193,623 (116,077) (11,417) (127,494) 66,129 - 66,129 1,610,661 261,964 196,030 2,068,655 506,763 - - 506,763 - 66,129 - 66,129 1,103,898 195,835 196,030 1,495,763 $ 1,103,898 $ 261,964 $ 196,030 $ 1,561,892 9:11 COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS - INTERNAL SERVICE FUNDS For the year ended June 30, 2007 See independent auditors' report. -81- Self- Equipment Computer Insurance Replacement Replacement Totals OPERATING EXPENSES: Insurance premiums $ 370,415 $ - $ - $ 370,415 Depreciation - 24,260 987 25,247 TOTAL OPERATING EXPENSES 370,415 24,260 987 395,662 OPERATING LOSS (370,415) (24,260) (987) (395,662) NONOPERATING REVENUES (EXPENSES): Investment income 63,838 7,760 4,306 75,904 TOTAL NONOPERATING REVENUES (EXPENSES) 63,838 7,760 4,306 75,904 INCOME (LOSS) BEFORE TRANSFERS (306,577) (16,500) 3,319 (319,758) TRANSFERS IN 200,000 23,342 100,000 323,342 CHANGE IN NET ASSETS (106,577) 6,842 103,319 3,584 TOTAL NET ASSETS - BEGINNING OF YEAR 1,210,475 255,122 92,711 1,558,308 TOTAL NET ASSETS - END OF YEAR $ 1,103,898 $ 261,964 $ 196,030 $ 1,561,892 See independent auditors' report. -81- COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the year ended June 30, 2007 CASH FLOWS FROM OPERATING ACTIVITIES: Insurance payments NET CASH USED BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers from other funds NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Investment income NET CASH PROVIDED BY INVESTING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: Operating loss Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation Changes in operating assets and liabilities: Increase (decrease) in due to other governments TOTAL ADJUSTMENTS NET CASH USED BY OPERATING ACTIVITIES See independent auditors' report. Self- Equipment Computer Insurance Replacement Replacement Totals $ (225,008) $ - $ - $ (225,008) (225,008) - - (225,008) 200,000 23,342 100,000 323,342 200,000 23,342 100,000 323,342 (5,010) - (5,010) (5,010) - (5,010) 63,838 7,760 4,306 75,904 63,838 7,760 4,306, 75,904 38,830 26,092 104,306 169,228 1,571,831 169,743 91,724 1,833,298 $ 1,610,661 $ 195,835 $ 196,030 $ 2,002,526 $ (370,415) $ (24,260) $ (987) $ (395,662) 24,260 987 25,247 145,407 - - 145,407 145,407 24,260 987 170,654 $ (275,008) $ - $- $ (225,008) -82- PULL THIS PAGE AND INSERT TAB FOR STATISTICAL SECTION PULL THIS PAGE DESCRIPTION OF STATISTICAL SECTION CONTENTS June 30, 2007 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. 84-91 Revenue Capacity - These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. 92-95 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 ability to issue additional debt in the future. 96-98 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. 99-100 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. 101-102 City of Diamond Bar Net Assets by Component Last Five 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. (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 -84- Fiscal Year Ended June 30, 2003 2004 2005 2006 Governmental activities: Invested in capital assets, net of related debt (1) $ 8,237,553 $ 10,844;807 $ 10,692,694 $ 14,593,935 Restricted for: Debt service - - 245,763 243,697 Capital projects 5,988,178 241,767 3,775,552 3,323,474 Specific programs - - 1,398,057 1,296,806 Unrestricted 26,205,849 31,231,827 29,775,169 29,461,178 Total governmental activities net assets $ 40,431,580 $ 422318,401 $ 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 -84- Fiscal Year Ended June 30, 2007 $375,216,400 321,747 3,446,872 1,013,495 34,072,884 $414,071,398 -85- City of Diamond Bar Changes in Net Assets Last Five 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 -86- Fiscal Year Ended June 30, 2003 2004 2005 2006 Expenses: Governmental activities: $ 3,315,082 $ 3,713,530 $ 3,997,319 $ 4,203,123 General government 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: 74,805 225,656 486,925 707,272 General government 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 -86- Fiscal Year Ended June 30, 2007 $ 4,784,314 4,876,435 14,019,550 2,292,757 4,779,588 498,042 31,250,686 262,541 1,512,195 3,493,798 21,297 1,385,788 6,968,824 1,254,314 14,898,757 7,727,580 774,757 2,935,703 1,007,642 1,064,621 331,096 33,822 350,194 1,476,010 41,362 15,742,787 $ (609,142) -87- City of Diamond Bar Fund Balances of Governmental Funds Last Five Fiscal Years (modified accrual basis of accounting) The City has elected to show only five years of data for this schedule. Source: City Finance Department -88- Fiscal Year Ended June 30, 2003 2004 2005 2006 General fund: Reserved $ 440,407 $ 866,843 $ 1,125,918 $ 1,310,172 Unreserved 21,913,219 21,796,659 24,809,721 25,103,444 Total general fund 22,353,626 22,663,502 25,935,639 26,413,616 All other governmental funds: 5,719,861 105,861 5,555,988 2,274,829 Reserved Unreserved, reported in: Special revenue funds 8,030,278 6,043,352 6,111,202 5,772,953 Debt Service Fund - 505,915 274,426 Capital projects funds 268,317 241,767 (5,443,309) (2,612,373) Total all other governmental funds 14,018,456 6,896,895 6,498,307 5,435,409 Total fund balances $ 36,372,082 $ 29,560,397 $ 32,433,946 $ 31,849,025 The City has elected to show only five years of data for this schedule. Source: City Finance Department -88- Fiscal Year Ended June 30, 2007 $ 1,893,287 28,568,263 30,461,550 3,311,451 6,058,113 (4,681,728) 4,687,836 $ 35,149,386 -89- City of Diamond Bar Changes in Fund Balances, Governmental Funds Last Five Fiscal Years (modified accrual basis of accounting) 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 3,163,516 3,663,055 Fiscal Year Ended June 30, 4,857,179 1,006,768 2003 2004 2005 2006 Revenues: 8,057,482 9,261,289 Taxes $ 7,432,575 $ 7,759,331 $ 8,632,837 $ 9,508,757 Special assessments 557,601 555,232 593,778 504,908 Intergovernmental 8,602,856 6,353,152 8,306,557 8,821,141 Charges for services 706,137 709,011 761,040 870,314 Fines and forfeitures 813,617 733,903 713,201 589,922 Licenses and permits 1,467,127 1,457,345 1,732,555 2,389,149 Investment income 658,922 395,929 654,066 1,250,570 Other revenues 74,818 234,951 480,740 792,216 Total revenues 20,313,653 18,198,854 21,874,774 24,726,977 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 3,163,516 3,663,055 4,973,248 4,857,179 1,006,768 1,365,737 1,946,025 2,114,090 2,808,613 3,419,856 8,057,482 9,261,289 3,787,005 3,551,659 4,954,630 5,404,259 4,301,146 4,769,497 2,750,815 2,613,834 1,050,025 2,748,539 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) 3.61% 0.43% 1.15% 2.06% The City has elected to show only five years of data for this schedule. Source: City Finance Department .M Fiscal Year Ended June 30, 2007 $ 9,876,760 541,382 11,169,052 1,002,210 546,902 4,247,626 1,716,194 767,457 29,867,583 4,402,235 4,880,290 5,114,274 3,475,549 2,292,757 5,344,935 240,000 493,840 26,243,880 3,623,703 6,030,764 (6,354,106) (323,342) $ 3,300,361 2.27% -91- 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 Nommitary Taxable Values Exemptions Rate 1998 $ 3,608,349,286 $ 67,777,550 $ 884,347 $ 3,677,011,183 $ 37,731,129 0.0529°/a 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% Net Assessed Value $7,000,000,000 $6,000,000,000 $5,000,000,000 ORR $4,000,000,000 x $3,000,000,000 $2,000,000,000 $1,000,000,000 O 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Fiscal Year Exempt values are not included in Total Net Taxable Values. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: Los Angeles County Auditor/Controller, Hdl Coren & Cone -92- �"t^� r � i �.;CSL u- f , = �� red, � rw "ySC it Exempt values are not included in Total Net Taxable Values. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: Los Angeles County Auditor/Controller, Hdl Coren & Cone -92- City of Diamond Bar Direct and Overlapping Property Tax Rates (Rate per $100 of Assessed Value) In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds for the Pomona Unified School District or Walnut Valley Unified School Districts in Diamond Bar depending on which school district the property is located in. The City has elected to show only one year of data for this schedule. Sources: Hdl Coren & Cone LA County Property Tax Statement -93- Fiscal Year Ended June 30, 2007 Direct Rates: 0.05294 City of Diamond Bar basic rate Overlapping Rates: 0.00271 Children's Institutional Tuition Fund Consolidated Fire Protection 0.16936 County Lighting Maintenance 0.02016 County Sanitation Dist 21 0.01221 County school 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 0.00 11 LA County Fire 0.006616 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 1.00000 Detention Facilities 1987 Debt S 0.00066 LA County Flood Control Storm Dist #4 0.00005 Mt San Antonio Ccd Ds 2005 Ref Bond 0.01536 Mt San Antonio Ccd Ds 2001 & 2006 Series C 0.00503 Mt San Antonio Ccd Ds 2001 S-A 0.00346 Mt San Antonio Ccd Ds 2004-B 0.00146 Three Valley Municipal Water - 1112 0.00470 Walnut Valley Unified School Dist 2000 Series E 0.00033 Walnut Valley Unif Ds 2005 Ref Bonds 0.00778 Walnut Valley Unif Ds Series 1997 A 0.05834 Walnut Valley Unified School Dist Ds 2000 Series A 0.00283 Walnut Valley Unified School Dist Ds 2000 Series B 0.00248 Walnut Valley Unified School Dist Ds 2000 Series D 0.00828 Walnut Valley Unified School Dist Ds 2000 Series C 0.00744 Total Voter Approved Rate 0.11820 Total Tax Rate 1.11820 In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds for the Pomona Unified School District or Walnut Valley Unified School Districts in Diamond Bar depending on which school district the property is located in. The City has elected to show only one year of data for this schedule. Sources: Hdl Coren & Cone LA County Property Tax Statement -93- Current Taxpayers Behringer Harvard Western Portfolio Hampton Apartments at Diamond Bar CRP -2 Holdings CC GEM Gateway Limited Inc. Hidden Manna Corporation Muller Rock 2 Gateway Danari Diamond Bar LLC Millennium Diamond Road Partners LLC J.F. Shea Company Inc. Margaret M. Tam Trust, Et. Al. Taxpayers Ten Years Ago Diamond Bar Business Associates M & H Realty Partners II Hidden Manna Corporation J.F. Shea Company Inc. PGP Inland Communities Nikko Capital Corporation Martin Brattrud Properties Lincoln Emerald Pointe TCEP H Properties Joint Venture Nugit Trust City of Diamond Bar Top 10 Property Taxpayers Current Year and Ten Years Ago 2006-07 Assessed Valuation Percentage of Total Net Assessed Valuation $ 39,150,000 0.61% 34,855,141 0.54% 28,119,840 0.44% 26,283,641 0.41% 24,231,313 0.38% 23,551,362 0.37% 19,518,942 0.30% 17,646,000 0.27% 16,398,921 0.26% 16,241,200 0.25% $ 245,996,360 3.83% 1996-97 Assessed Valuation Percentage of Total Net Assessed Valuation $ 29,535,399 0.79% 20,666,119 0.55% 19,000,721 0.51% 12,168,275 0.33% 11,946,050 0.32% 11,585,739 0.31% 10,686,250 0.29% 10,562,250 0.28% 10,196,519 0.27% 9,604,613 0.26% $ 145,951,935 3.91% Source: Hdl Coren & Cone, Los Angeles County Assessor 2006/07 combined tax rolls. -94- City of Diamond Bar Secured Property Tax Levies and Collections Last Ten Fiscal Years (unaudited) Fiscal Year Ended Total June 30 Current Levy 1998 $ 1,781,264 1999 1,810,266 2000 1,904,915 2001 1,954,530 2002 2,129,310 2003 2,301,716 2004 2,504,974 2005 2,698,515 2006 2,921,267 2007 3,204,812 $3,500,000 $3,000,000 $2,500,000 U7 m $2,000,000 N D L $1,500,000 H $1,000,000 $500,000 Collected within the Delinquent & Fiscal Year of Levy ^'aeiyMf ' 7N 5MON., Ri 44 Collections in Amount % to Levy Subsequent Years $ 1,680,816 94.36% $ 100,448 1,758,764 97.16% 51,502 1,813,904 95.22% 91,011 1,847,817 94.54% 106,713 2,017,399 94.74% 111,911 2,211,793 96.09% 89,923 2,390,554 95.43% 114,420 2,568,064 95.17% 130,450 2,615,545 89.53% 305,722 2,948,678 92.01% 256,135 Total Secured Property Tax Collections 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Fiscal Year Source: Los Angeles County Auditor/Controller. -95- Sol ^'aeiyMf ' 7N 5MON., Ri 44 y C ro 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Fiscal Year Source: Los Angeles County Auditor/Controller. -95- City of Diamond Bar Ratios of Outstanding Debt by Type Last Ten Fiscal Years 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 IM Governmental Activities Fiscal Year Lease Other Total Total % of Debt Ended Revenue Bond and Governmental Primary Per Capita Per June 30 Bonds (a) Loans Activities Government Income (b) Capita (b) 1998 $ - $ - $ - $ - 0.00% $ - 1999 - - - - 0.00% - 2000 - - - - 0.00% - 2001 - - - - 0.00% - 2002 13,755,000 - 13,755,000 13,755,000 0.74% 237 2003 13,755,000 - 13,755,000 13,755,000 0.77% 233 2004 13,755,000 - 13,755,000 13,755,000 0.81% 232 2005 13,655,000 - 13,655,000 13,655,000 0.79% 229 2006 13,520,000 - 13,520,000 13,520,000 0.78% 226 2007 13,280,000 - 13,280,000 13,280,000 0.75% 221 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 IM City of Diamond Bar Direct and Overlapping Debt June 30, 2007 (unaudited) 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 -97- Gross Bonded % Applicable Net Bonded Debt Balance To City Debt Direct Debt Diamond Bar Lease Revenue Bond $ 13,280,000 100.000 $ 13,280,000 Overlapping Debts* LA Co Flood Control Storm Dr. D.S. #4 370,000 0.825 3,052 Metropolitan Water District Three Valley Area 1112 165,681,509 0.877 1,452,287 Mt San Antonio Community College District 2001 Series A 5,585,000 10.629 593,640 Mt San Antonio Community College District 2004 Series B 16,040,000 10.604 1,700,938 Mt San Antonio Community College District DS 05 Ref Bd 75,295,843 10.604 7,984,634 Mt San Antonio Community College District DS 01, 06 Ser C 79,996,203 10.619 8,494,538 Pomona Unified School District Refund Series 1997A 39,655,000 20.161 7,994,776 Pomona Unified School District 2002 Series A 18,920,000 20.161 3,814,429 Pomona Unified School District 1998 Series D Debt Service 370,000 20.161 74,595 Pomona Unified SD Refunding 2001 Series A Debt Service 20,280,000 20.161 4,088,616 Pomona Unified School District 2002 Series A Debt Service 9,025,000 20.161 1,819,515 Pomona Unified School District 2002 Series B 13,965,000 20.161 2,815,460 Pomona Unified School District 2002 Series C 14,405,000 20.161 2,904,167 Pomona Unified School District 2002 Series D 14,710,000 20.161 2,965,658 Pomona Unified School District 2002 Series E 22,302,278 20.161 4,496,324 Walnut Valley Unified School District Refund Series 1997 A 34,122,718 58.372 19,918,107 Walnut Valley Unified School District 2000 Series A 825,000 58.372 481,569 Walnut Valley Unified School District 2000 Series B 590,000 58.372 344,395 Walnut Valley Unified School District 2000 Series C 7,370,000 58.372 4,302,015 Walnut Valley Unified School District 2000 Series D 21,918,114 58.372 12,794,038 Walnut Valley Unified School District 2000 Series E 6,001,837 58.372 3,503,391 Walnut Valley Unified School District 2005 Ref Bonds 11,895,000 58.372 6,943,347 Total Direct and Overlapping Bonded Debt $ 592,603,502 $ 112,769,491 2006/07 Net Assessed Valuation: $ 6,421,927,342 Ratio Per Capita Debt to Assessed Valuation Ratios: Direct Debt 0.21% $ 221 Overlapping Debt 1.55% $ 1,652 Total Debt 1.76% $ 1,873 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 -97- 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, 1998 1999 2000 2001 2002 $ 3,677,011,183 $ 3,767,314,142 $ 3,900,751,190 $ 4,125,665,929 $ 4,357,791,664 37,731,129 38,373,706 36,494,583 40,088,648 41,869,703 3,714,742,312 3,805,687,848 3,937,245,773 4,165,754,577 4,399,661,367 25% 25% 25% 25% 25% 928,685,578 951,421,962 984,311,443 1,041,438,644 1,099,915,342 15% 15% 15% 15% 15% 139,302,837 142,713,294 147,646,716 156,215,797 164,987,301 - 13,755,000 $ 139,302,837 $ 142,713,294 $ 147,646,716 $ 156,215,797 $ 151,232,301 Fiscal Year Ended June 30, 2003 2004 2005 2006 2007 $ 4,688,804,659 $ 5,080,985,735 $ 5,446,817,363 $ 5,874,950,276 $ 6,421,927,342 44,188,829 47,621,182 39,831,091 51,408,286 28,682,577 4,732,993,488 5,128,606,917 5,486,648,454 5,926,358,562 6,450,609,919 25% 25% 25% 25% 25% 1,183,248,372 1,282,151,729 1,371,662,114 1,481,589,641 1,612,652,480 15% 15% 15% 15% 15% 177,487,256 192,322,759 205,749,317 222,238,446 241,897,872 13,755,000 13,755,000 13,755,000 13,520,000 13,280,000 $ 163,732,256 $ 178,567,759 $ 191,994,317 $ 208,7187446 $ 228,617,872 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 -98- City of Diamond Bar Demographic and Economic Statistics Last Ten Calendar Years Per Personal Capita Total Calendar Population Employment Year (1) (2) 1998 57,271 30,200 1999 58,300 30,700 2000 56,287 29,700 2001 57,066 30,100 2002 58,115 29,700 2003 58,966 29,900 2004 59,399 29,900 2005 59,595 30,700 2006 59,722 31,400 2007 60,207 31,800 Per Personal Capita Unemployment Income Personal Rate (3) Income (3) (4) Unavailable Unavailable 4.20% $ 68,957 $ 25,472 4.00% 71,911 25,500 3.70% Unavailable Unavailable 3.80% 86,741 31,870 4.90% Unavailable 30,176 5.10% 73,359 28,482 4.70% 74,941 28,906 3.60% 84,297 29,086 3.20% 99,987 29,472 3.40% Sources: (1) State Department of Finance (2) California LaborMarketlnfo, Data Library (3) Diamond Sar City, California - Fact Sheet - American FactGFinder (http://factfinder.census.gov) (4) State of California - Labor Market Info -99- City of Diamond Bar Principal Employers* (unaudited) Last Two Fiscal Years "Total Employment" as used above represents the total employment of all employers located within City limits. * The City implemented GASB 44 for the fiscal year ended June 30, 2006. Information prior to the implementation of GASB 44 is not available. Source: InfoUSA - Government Division 2006 2007 Number of Number of % of Total Employer Employees Employees Employment South Coast Air Quality Management 750 762 2.40% Acosta Sales & Marketing 450 450 1.42% St Paul Travelers 401 402 1.26% Target Store - Diamond Bar 0 220 0.69% Diamond Bar High School 200 200 0.63% Lab Support Inc 200 200 0.63% J.F. Shea Co., Inc. 135 135 0.42% Baybrook Services 120 120 0.38% Goodrich Hoist & Winch 120 120 0.38% Southwest Patrol 120 120 0.38% Starside Security & Investigation 120 120 0.38% Administaff 120 120 0.38% Biosense Webstar Inc 100 100 0.31% Century 21 Diamond Realty 100 100 0.31% DACOR 100 100 0.31% FIN -West Group 100 100 0.31% First Mortgage Corp. 100 100 0.31% "Total Employment" as used above represents the total employment of all employers located within City limits. * The City implemented GASB 44 for the fiscal year ended June 30, 2006. Information prior to the implementation of GASB 44 is not available. Source: InfoUSA - Government Division Function General government Community development Community services Public works Total Function General government Community development Community services Public works Total City of Diamond Bar Full-time and Part-time City Employees Last Ten Fiscal Years Fiscal Year Ended June 30, 1998 1999 2000 2001 2002 23 22 21 24 24 3 5 6 4 4 13 12 41 38 37 3 4 4 4 4 42 43 72 70 69 Fiscal Year Ended June 30, 2003 2004 2005 2006 2007 24 25 25 22 21 4 5 7 8 8 38 45 74 77 74 5 6 7 7 8 71 81 113 114 ill Police services were contracted with the Los Angeles County Sheriffs Departments. Building and safety services were contracted with D & J Municipal Services Inc. Fire services were provided by the County Fire District. Source: City Finance Department -101- City of Diamond Bar Operating Indicators Last Ten Fiscal Years 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 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 (a) Unavailable 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 Fiscal Year Ended June 30, 1998 1999 2000 2001 2002 747 723 817 764 571 (a) (a) (a) 2,996 7,995 (a) (a) (a) 2,647 2,666 (a) (a) (a) (a) (a) (a) 20.6 23.0 24.6 19.7 700 740 1,084 1,062 947 785 785 785 785 785 Fiscal Year Ended June 30, 2003 2004 2005 2006 2007 552 481 520 558 582 6,662 6,710 6,250 5,790 5,684 2,741 2,755 2,615 2,592 2,612 (a) 1,206 1,159 837 1,114 18.5 5.0 18.6 16.8 19.6 -102- 915 1,022 1,102 1,376 1,558 1,021 1,736 4,123 4,305 4,555