CITY OF MARTINEZ, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2004
Prepared by
ADMINISTRATIVE SERVICES DEPARTMENT
CITY OF MARTINEZ
Comprehensive Annual Financial Report
For the Year Ended June 30, 2004
Page
INTRODUCTORY SECTION:
Table of Contents ............................................................................................................................... ........................ i
Letter of Transmittal.................................................................................................................... .............................. v
Key Personnel ............................................................................................................................... ......................... xiv
Organization Chart ............................................................................................................................... ................... xv
Location Map ............................................................................................................................... .......................... xvi
CSMFO Award ............................................................................................................................... ...................... xvii
GFOA Award.......................................................................................................................... ............................. xviii
FINANCIAL SECTION:
Independent Auditor’s Report on Basic Financial Statements.............................................................................. 1
Management’s Discussion and Analysis ................................................................................................................. 3
Basic Financial Statements:
Government- wide Financial Statements:
Statement of Net Assets......................................................................................................................... 18
Statement of Activities ........................................................................................................................... 19
Fund Financial Statements:
Governmental Funds:
Balance Sheet.......................................................................................................................... ........... 22
Reconciliation of the Governmental Funds – Balance Sheet With the
Statement of Net Assets .................................................................................................................. 23
Statement of Revenues, Expenditures, and Changes in Fund Balances ............................................ 24
Reconciliation of the Net Change in Fund Balances Total Governmental
Funds with the Change in Governmental Net Assets.................................................................... 25
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual:
General Fund........................................................................................................................... ..... 26
CITY OF MARTINEZ
Comprehensive Annual Financial Report
For the Year Ended June 30, 2004
Page
FINANCIAL SECTION ( Continued):
Basic Financial Statements ( Continued)
Proprietary Funds:
Statement of Net Assets ........................................................................................................................... 28
Statement of Revenue, Expenses and Changes in Net Assets Net Assets .............................................. 29
Statement of Cash Flows.......................................................................................................................... 30
Fiduciary Funds:
Statement of Fiduciary Net Assets .......................................................................................................... 32
Statement of Changes in Fiduciary Net Assets....................................................................................... 33
Notes to Financial Statements ........................................................................................................................ 35
Supplemental Information:
Non- major Governmental Funds:
Combining Balance Sheets...................................................................................................................... 60
Combining Statements of Revenues, Expenditures, and Changes
in Fund Balances....................................................................................................................... ......... 62
Combining Schedule of Revenues, Expenditures, and Changes
in Fund Balances- Budget and Actual................................................................................................ 64
Internal Service Funds:
Combining Statement of Net Assets ....................................................................................................... 68
Combining Statements of Revenues, Expenses and Changes in Net Assets.......................................... 69
Combining Statements of Cash Flows .................................................................................................... 70
Fiduciary Funds:
Statement of Changes in Assets and Liabilities – All Agency Funds .................................................... 72
CITY OF MARTINEZ
Comprehensive Annual Financial Report
For the Year Ended June 30, 2004
Page
STATISTICAL SECTION:
General Governmental Revenues by Source – All Governmental Fund Types ...................................... 73
General Governmental Expenditures by Function - All Governmental Fund Types .............................. 74
Property Tax Levies and Collections ........................................................................................................ 75
Assessed and Estimated Actual Value of Taxable Property .................................................................... 76
Property Tax Rates – Direct and Overlapping Governments .................................................................. 77
Computation of Legal Debt Margin.......................................................................................................... 78
Computation of Direct and Overlapping Debt.......................................................................................... 79
Population for Last Ten Years .................................................................................................................. 80
Property Values and Construction ........................................................................................................... 81
1999 System Improvement Certificates of Participation.......................................................................... 82
Top 20 Sales Tax Generators .................................................................................................................. 83
Top 20 Property Tax Generators ............................................................................................................. 84
Miscellaneous Statistics..................................................................................................................... ....... 85
City of Martinez Key Personnel
June 30, 2004
City Council
Rob Schroder, Mayor
Mark Ross, Vice Mayor
Lara DeLaney, Councilmember
Janet Kennedy, Councilmember
Bill Wainwright, Councilmember
Council Appointees
June Catalano, City Manager
Elected Officials
Gary Hernandez, City Clerk
Carolyn Robinson, City Treasurer
City Staff
Lianne Marshall, Administrative Services Director
Richard Pearson, Community Development Director
David Scola, Building Director
Dave Cutaia, Chief of Police
City of Martinez
Organization Chart
City Clerk
City Attorney
Administration
Finance
Personnel
Information Systems
Admin Services Dept
Building Permits/ Inspections
Code Enforcement
Construction Management
Solid Waste
Building Dept
Admin, Transportation, & Special Projects
Planning and Economic Development
Engineering
Recreation and Community Services
Community Development Dept
Administrative Services
Field Services
Investigative Services
Support Services
Traffic Enforcement
Emergency Services
Police Dept
City Manager City Commissions/ Committees
City Council City Treasurer
Citizens of Martinez
LOCATION MAP
N
S
City of Martinez
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal 2004 marks the second year the City has issued its financial statements in the format
prescribed by the provisions of Government Accounting Standards Board Statement 34 ( GASB
34), which requires the City to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with the accompanying Transmittal Letter and Basic
Financial Statements.
FISCAL 2004 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
City- wide Activities:
• The City’s total net assets were $ 77,697,892 at June 30, 2004, down $ 2,690,170 from the
prior year. Of this total, $ 38,874,569 were Governmental assets and $ 38,823,323 were
Business- type assets.
• Total City revenues were $ 27,292,744 in Fiscal 2004. General Revenues and Transfers,
which result from both Governmental and Business- type Activities, totaled $ 13,257,431.
Program Revenues from the Governmental Activities were $ 5,342,791, and Program
Revenues from the Business- type Activities were $ 8,692,522.
• Total City expenses were $ 29,982,914 in Fiscal 2004. Program Expenses from the
Governmental Activities were $ 18,876,919, and Program Expenses from the Business- Type
Activities were $ 11,105,995.
General Fund Activities:
• General Fund revenues of $ 14,750,300 in Fiscal 2004 represented a decrease of $ 139,039
from the prior year. General Fund expenditures of $ 14,443,890 in Fiscal 2004 represented an
increase of $ 45,270 over the prior year expenditures.
• General Fund balance of $ 9,233,059 at June 30, 2004 was $ 879,777 lower than Fiscal 2003’ s
fund balance of $ 10,112,836.
OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
This Comprehensive Annual Financial Report is in six parts:
1) Introductory section, which includes the Transmittal Letter and general information,
2) Management’s Discussion and Analysis ( this part),
3) The Basic Financial Statements, which include the City- wide and the Fund financial
statements, along with the Notes to these financial statements,
4) Required Supplemental Information,
5) Combining statements for Non- major Governmental Funds and Fiduciary Funds,
6) Statistical information.
The Basic Financial Statements
The Basic Financial Statements comprise the City- wide Financial Statements and the Fund
Financial Statements; these two sets of financial statements provide two different views of the
City’s financial activities and financial position both long term and short term. The Fiduciary
Funds are excluded from the Basic Financial Statements because the City cannot use these assets
to finance its own operations.
The City- wide Financial Statements provide a longer- term view of the City’s activities as a
whole, and comprise the Statement of Net Assets and the Statement of Activities. The Statement
of Net Assets provides information about the financial position of the City in its entirety,
including all its capital assets and long- term liabilities on the full accrual basis, similar to that
used by corporations. The Statement of Activities provides information about all the City’s
revenues and all its expenses, also on the full accrual basis, with the emphasis on measuring net
revenues or expenses of each of the City’s programs. The Statement of Activities explains in
detail the Change in Net Assets for the year.
The City- wide Financial Statements group all the City’s activities into Governmental Activities
and Business- type Activities, as explained below. All the amounts in the Statement of Net
Assets and the Statement of Activities are separated into Governmental Activities and Business-type
Activities in order to provide a summary of these two activities of the City as a whole.
The Fund Financial Statements report the City’s operations in more detail than the City- wide
statements and focus primarily on the short- term activities of the City’s General Fund and other
Major Funds. The Fund Financial Statements measure only current revenues and expenditures,
current assets, liabilities and fund balances; they exclude capital assets, long- term debt and other
long- term debt amounts.
Major Funds account for the major financial activities of the City and are presented individually,
while the activities of Non- major Funds are presented in summary, with subordinate schedules
presenting the detail for each of these other funds. Major Funds are explained below.
The City acts solely as a depository agent for various community groups and functions, as well
as an Assessment District. The fiduciary statements provide information about the cash balances
and activities of these functions. These statements are separate from, and their balances are
excluded from, the City’s financial statements.
The City- wide Financial Statements
The Statement of Net Assets and the Statement of Activities present information about the
following:
• Governmental Activities— All of the City’s basic services are considered to be governmental
activities, including general government; community development; public safety; public
works; recreation, parks, and community services; public improvements; planning and
zoning; and general administration services. These services are supported by general City
revenues such as taxes, and by specific program revenues such as mitigation/ impact fees.
Business- type Activities— The City’s three enterprise activities, Parking Services, Water
System, and Marina Services are reported here. Unlike governmental services, these services
are supported through charges paid by users based on the amount of the service they use.
Citywide Financial Statements are prepared on the accrual basis, which means they measure the
flow of all economic resources of the City as a whole.
Fund Financial Statements
The Fund Financial Statements provide detailed information about each of the City’s most
significant funds, called Major Funds. The concept of Major Funds, and the determination of
which are Major Funds, was established by GASB Statement 34 and replaces the concept of
combining like funds and presenting them in total. Instead, each Major Fund is presented
individually, with all Non- major Funds summarized and presented only in a single column.
Subordinate schedules present the detail of these Non- major Funds. Major Funds present the
major activities of the City for the year, and may change from year to year as a result of changes
in the pattern of the City’s activities.
Fund Financial Statements include governmental, enterprise and internal service funds as
discussed in the following:
Governmental Fund Financial Statements are prepared on the modified accrual basis, which
means they measure only current financial resources and uses. Capital assets and other long-lived
assets, along with long- term liabilities, are not presented in the Governmental Fund
Financial Statements.
Enterprise and Internal Service Fund financial statements are prepared on the full accrual basis,
as in the past, and include all their assets and liabilities, current and long- term.
Since the City’s Internal Service Funds are proprietary funds used by the City to account for the
financing of goods and services provided by one department or agency to other departments or
agencies of the City on a cost- reimbursement basis, their activities are reported only in total at
the Fund level. Internal Service Funds may not be Major Funds because their revenues are
derived from other City funds. These revenues are eliminated in the City- wide Financial
Statements and any related profits or losses are returned to the activities that created them, along
with any residual net assets of the Internal Service Funds.
Comparisons of Budget and Actual financial information are presented only for the General
Fund and other Major Funds that are Special Revenue Funds.
Fiduciary Statements
The City is the agent for one assessment district, the Alhambra Creek Special Assessment
District, and is responsible for holding amounts collected from property owners that await
transfer to these Districts’ bond trustees. The City is also an agent for certain community
organizations, for which it collects and disburses cash and maintains separate cash accounts. The
City’s fiduciary activities are reported in the separate Statements of Fiduciary Net Assets and the
Agency Funds Statement of Changes in Assets and Liabilities. As previously mentioned, these
activities are excluded from the City’s other financial statements because the City cannot use
these assets to finance its own operations.
FINANCIAL ACTIVITIES OF THE CITY AS A WHOLE
This analysis focuses on the net assets and changes in net assets of the City’s Governmental
Activities ( Tables 1, 2 and 3) and Business- type Activities ( Tables 4 and 5) presented in the
City- wide Statement of Net Assets and Statement of Activities that follow.
Governmental Activities
Table 1
Governmental Net Assets at June 30, 2004
The City’s net assets from governmental activities decreased $ 374,937 in 2004 from
$ 39,249,506 in 2003. This decrease is the Change in Net Assets reflected in the Statement of
Activities, as shown in Table 2, and is explained below:
• Cash and investments decreased slightly from fiscal year 2003 by $ 48,003.
• Other non- capital assets increased $ 255,361 due primarily to the timing of short- term
receivables and payables.
• Capital assets decreased $ 536,392 due to several street projects classified as CIPs in the
prior year that were actually maintenance.
• Long- term debt did not significantly decrease or increase.
• Net assets invested in capital assets net of related debt equaled to $ 23,434,010.
Governmental Activities
2004 2003
Cash and investments $ 17,081,638 $ 17,129,641
Other assets 2,931,925 2,676,564
Capital assets 25,634,010 26,170,402
Total Assets 45,647,573 45,976,607
Long- term debt outstanding 2,200,000 2,208,014
Other Liabilities 4,573,004 4,519,087
Total Liabilities 6,773,004 6,727,101
Net assets:
Invested in capital assets, net of debt 23,434,010 23,962,388
Restricted 1,860,177 2,758,880
Unrestricted 13,580,382 12,528,238
Total Net Assets $ 38,874,569 $ 39,249,506
• Restricted net assets are composed of $ 638,295 in Capital Projects, $ 432,286 in Special
Revenue Projects and $ 789,596 in Debt Service.
• Unrestricted net assets are normally the part of net assets that can be used to finance day-to-
day operations without constraints established by debt covenants or other legal
requirements. Unrestricted net assets were $ 13,580,382 at June 30, 2004 an increase of
$ 1,052,144 largely due to the release of funds previously restricted.
Fiscal Year 2004 Government Activities
( see Table 2)
Capital Grants
and
Contributions
7%
Rents and
Leases
0%
Investment
Earnings
1%
Property Taxes
27%
Operating
Grants &
Contributions
13%
Other Taxes
12%
Sales Taxes
20%
Charges for
Services
9%
Transfers
1%
Miscellaneous
0%
Intergovernmental
10%
Community
Development
Dept
41%
General
Government
7%
Building
4%
Nondepartmental
Services
3%
Interest on Long
Term Debt
0%
Administrative
Services
3%
Police
42%
As the Sources of Revenue Chart shows, $ 5,072,317 or 27% of the City’s Fiscal 2004
Governmental Activities revenue came from property taxes and $ 3,683,973 or 20% came from
sales tax. The remaining $ 9,745,692 or 53% came primarily from other taxes, operating
contributions and grants, and charges for services.
The Functional Expenses Chart includes only current year expenses, which are detailed in Table
2. It does not include capital outlays, which are now added to the City’s capital assets. In Fiscal
2004, the City’s capital assets decreased $ 536,392 as shown in detail in Table 7.
Functional Expenses Sources of Revenues
The Statement of Activities presents program revenues and expenses and general revenues in
detail. All of these are elements in the Changes in Governmental Net Assets are summarized
below.
Table 2
Changes in Governmental Net Assets
Table 2 shows that the governmental expenses were $ 18,876,919 in Fiscal 2004, up $ 947,307
from the prior year, as increases in general government, administrative services, building,
community development and police expenses were partially offset by declines in
nondepartmental services and interest expense.
Total government activities revenues of $ 18,501,982 were down by $ 111,547 in 2004, as an
decrease in general revenues of $ 535,445 partially offset a increase of $ 423,898 in program
revenues.
Governmental Activities
2004 2003
Expenses
General government $ 1,361,712 $ 904,411
Nondepartmental services 583,170 1,162,661
Administrative services 597,450 412,644
Building 742,330 633,565
Community development 7,673,229 6,656,236
Police 7,852,448 7,882,901
Interest on LTD 66,580 277,194
Total expenses 18,876,919 17,929,612
Revenues
Program revenues:
Charges for services 1,703,266 1,872,350
Operating contributions & grants 2,365,301 1,249,683
Capital grants 1,274,224 1,796,860
Total program revenues 5,342,791 4,918,893
General revenues:
Property tax 5,072,317 4,591,561
Sales tax 3,683,973 2,981,530
Other taxes 2,167,772 2,392,013
Intergovernmental 1,762,251 2,296,323
Investment earnings 199,788 474,473
Rents and leases 63,389 600
Miscellaneous 19,701 958,136
Transfers 190,000
Total general revenues 13,159,192 12,641,212
Total revenues 18,501,983 18,613,529
Change in Net Assets $ 374,936 ($ 683,917)
Governmental Activities
Table 3 presents the net cost of each of the City’s largest programs. Net expense is defined as
total program cost less the revenues generated by those specific activities. In the City’s case, the
net expenses of community development and building varied significantly from the total
expenses in Table 2. Overall, program revenues reduced program expenses by an average of
28% of total expenses. The City’s program revenues include developer fees, plan check fees,
building inspection, traffic fines, recreation fees, police fees, grants, assessment revenues, and
other charges for services.
Table 3
Governmental Activities
Net ( Expense) Revenue
From Services
2004 2003
Governmental Activities:
Police ( 6,836,460) ( 6,937,029)
Community development ( 3,887,160) ( 3,361,458)
General government ( 1,248,906) ( 687,355)
Administrative services ( 597,450) ( 412,644)
Nondepartmental services ( 583,170) ( 1,162,661)
Building ( 314,402) ( 172,378)
Interest on long term debt ( 66,580) ( 277,194)
Total Governmental Activities ( 13,534,128) ( 13,010,719)
Business- type Activities
Table 4
Business- type Net Assets at June 30, 2004
Enterprise Fund net assets totaled $ 38,823,323 at June 30, 2004, a decrease of $ 2,315,233 from
the prior year. Most of the decrease in net assets was due to increased expenditures in the Water
System over the prior year as a result of raw water, administrative charges and maintenance of
parallel lines.
Table 5
Changes in Business- type Net Assets
Business- type Activities
2004 2003
Cash and investments $ 8,799,029 $ 10,466,104
Other assets $ 2,633,760 $ 1,528,750
Capital assets 44,034,365 44,840,868
Total Assets 55,467,154 56,835,722
Long- term debt outstanding 15,286,586 14,411,757
Other Liabilities 1,357,245 1,285,409
Total Liabilities 16,643,831 15,697,166
Net assets:
Invested in capital assets, net of debt 31,622,821 30,429,111
Restricted 478,686 465,144
Unrestricted 6,721,816 10,244,301
Total Net Assets $ 38,823,323 $ 41,138,556
Business- type Activities
2004 2003
Expenses
Water System $ 10,088,366 $ 8,994,202
Marina Services 470,175 404,774
Parking Services 547,454 330,031
Total expenses 11,105,995 9,729,007
Revenues
Program revenues:
Charges for services 8,692,522 8,373,828
Operating contributions & grants 0 0
Capital grants 0 0
Total program revenues 8,692,522 8,373,828
General revenues:
Taxes 62,306 0
Investment earnings 139,026 214,941
Rents and leases 25,231 22,176
Miscellaneous 61,677 65,920
Transfers ( 190,000) 0
Total general revenues 98,240 303,037
Total revenues 8,790,762 8,676,865
Change in Net Assets $ 2,315,233 $ 1,052,142
Table 5 shows that the Business- type expenses were $ 11,105,995 in Fiscal 2004, up $ 1,376,988
from the prior year, primarily due to an increase in the Water System of $ 1,094,164. This
increase was a result of a $ 329,059 in raw water, $ 449,040 in maintenance on parallel lines, and
costs recovered in the current year for prior year administrative charges in engineering and other
departments.
Total Business- type revenues of $ 8,790,762 were up by $ 113,897 in 2004, as an increase in
program revenues of $ 318,694 offset a decrease of $ 204,797 in general revenues. Most of the
program revenue increase was due to a rate increase in the Water System Fund. Most of the
decrease in general revenues was a $ 150,000 transfer from Parking Services to the General Fund
for payment of a prior year loan.
Table 6
Business- type Activities
THE CITY’S FUND FINANCIAL STATEMENTS
Governmental Funds
At June 30, 2004, the City’s governmental funds reported a combined fund balance of
$ 14,188,662, which is an increase of $ 837,107, or 6.3%, compared with the prior year. This was
comprised of an increase in Non- major Funds of $ 1,716,884 and a decrease in the General Fund
of $ 879,777.
Governmental fund revenues decreased $ 16,370 to a total of $ 18,359,491. Non- major Fund
revenues increased $ 122,669, while General Fund revenues decreased $ 139,039. Governmental
fund expenses decreased $ 2,273,797 to a total of $ 17,712,384. General Fund expenses increased
$ 45,270, while Non- major Fund expenditures decreased $ 2,319,067 largely due to a decrease in
capital projects. Other financing sources increased $ 179,982 to $ 190,000 in Fiscal 2004.
ANALYSES OF MAJOR GOVERNMENTAL FUNDS
General Fund
General Fund revenues, including transfers in, increased $ 203,409 this fiscal year due primarily
to increases in property and sales taxes, which was offset by a decline in VLF. Property taxes
increased $ 480,748 as assessed valuations rose. Sales tax increased $ 702,443, property transfer
tax increased $ 36,602, and transient occupancy tax decreased $ 18,153. Permits for home
construction declined $ 50,515, and franchise fees grew by $ 36,602. Return on investments
Net ( Expense) Revenue
From Services
2004 2003
Business- type Activities:
Water System ($ 1,692,597) ($ 1,148,088)
Marina Services ( 342,567) ( 213,381)
Parking Services ( 378,309) 6,290
Total Business- type Activities ($ 2,413,473) ($ 1,355,179)
decreased $ 74,493 due to a decline in short- term rates. Actual revenues compared favorably to
the final budget with an increase of 5.8%.
General Fund expenditures increased overall but were less than what was originally budgeted.
Expenditures, including transfers out, increased $ 1,055,377 in Fiscal 2004 to a total of
$ 16,185,843.
Transfers out of the General Fund increased $ 1,010,107 in Fiscal 2004 to $ 1,741,953. The
transfers were mostly the result of the City Council’s decisions to transfer $ 400,000 for paving
projects, $ 368,560 for the amphitheater project and $ 190,000 for the police evidence building.
The amphitheater and police evidence building were prior year projects.
Although the final expenditures for the General Fund at year- end were $ 585,574, or 3.9% below
budget, the fiscal year ended with encumbrances of $ 234,497. Budget amendments and
supplemental appropriations of $ 452,549 were made during the year to increase appropriations
for unanticipated expenditures after adoption of the original budget.
At June 30, 2004, the General Fund balance was comprised of $ 659,139 in reserved balances and
$ 8,573,920 in unreserved balances, of which $ 3,401,133 was designated by Council for certain
purposes as referred to in Note 10C of the financial statements. Only the unreserved portion
represents available liquid resources, since the reserved portion is represented by non- cash assets
or by open purchase orders.
Other Governmental Funds
These funds are not presented separately in the Basic Financial Statements, but are individually
presented as Supplemental Information.
Internal Service Funds
Internal Service Funds are proprietary funds used by the City to account for the financing of
goods or services provided by one department or agency to other departments or agencies of the
City on a cost- reimbursement basis. The City’s Internal Service Funds are the Equipment
Replacement Fund and the Management Information System ( MIS) Fund.
• Equipment Replacement Fund— Costs for the Equipment Replacement Fund are considered
to be “ direct costs” that are readily identifiable with a specific service. The Equipment
Replacement Fund equipment and vehicle rates will remain constant with FY 2002- 03 rates
until FY 2005- 06.
• Management Information System ( MIS) Fund— Costs for the MIS Fund are considered to be
“ indirect costs” that are not easily associated with a specific service. These costs are
distributed by both number of workstations and overall use of technology.
Enterprise Funds
Enterprise Funds are used to account for operations ( a) that are financed and operated in a
manner similar to private business enterprises, where the intent of the City is that the costs and
expenses, including depreciation, of providing goods or services to the general public on a
continuing basis be financed or recovered primarily through user charges; or ( b) which the City
has decided that periodic determination of revenue earned, expenses incurred, and/ or net income
is appropriate for capital maintenance, public policy, management control, accountability, or
other purposes. The City’s Enterprise Funds include Parking Services, Water System, and
Marina Services and are described below:
• Parking Services— Parking Services Fund revenue is generated from parking meters.
Operating revenues decreased $ 169,078 this year to a total of $ 169,145 due to broken meters.
Operating expenses increased by $ 228,876 to $ 544,709; this increase was attributable to a
parking study and administrative charges from other funds supporting the Parking Services
Fund. Non- operating revenues increased $ 26,382. Net assets of $ 1,847,105 decreased by
$ 473,745. $ 905,746 of the Parking Services Fund’s fiscal year end Net Assets was
unrestricted. Future revenue is expected to grow due to the installation of new parking
meters.
• Water System— The Water System Fund is financed and operated in a manner similar to that
of a private business. Net assets of the Water System Fund decreased $ 1,516,882 in the
current year to a total of $ 41,073,758, as a result of a $ 1,064,674 increase in operating
expenses for the current year. The increased expenses were due to an increase in the cost of
raw water, the maintenance of parallel lines, and administrative charges mentioned earlier
under Changes in Net Assets. There was a $ 70,206 increase in non- operating expenses,
offset by an increase of $ 493,170 in operating revenues. Only $ 9,439,865 of the $ 41,073,758
in this Fund’s Net Assets was unrestricted at the fiscal year end. Due to the age of the Water
System, significant investments will be required in future years in the Water System to
enhance security and update water lines and equipment. Some of the resources that will be
required have been or will be obtained from developers, but the remainder will need to be
provided by the Water System.
• Marina Services— The Marina Fund revenues include lease payments, sales and property
taxes, and a State loan for capital improvement projects. The Marina Fund incurred an
operating loss of $ 228,276 in the current year, which was more than the operating loss of
$ 111,593 from the prior year. Operating revenues decreased $ 60,197 due to a loss in rental
income and charges for services, while operating expenses increased $ 56,486, largely due to
the removal of an underground tank. The net assets of this Fund decreased a total of
$ 256,137.
CAPITAL ASSETS
GASB 34 requires the City to record all of its capital assets including infrastructure, which was
not recorded in prior years. Infrastructure includes roads, bridges, signals and similar assets used
by the entire population.
In accordance with GASB 34, in Fiscal 2003, the City recorded the cost of all its infrastructure
assets and computed the amount of accumulated depreciation for these assets based on their
original acquisition dates.
At the end of Fiscal 2004 the City had $ 25,634,010, net of depreciation, invested in a broad
range of capital assets used in governmental activities, as shown in Table 7 below:
Table 7
Capital Assets at Year- end
The City depreciates all its capital assets over their estimated useful lives, as required by GASB
34. The purpose of depreciation is to spread the cost of a capital asset over the years of its life so
that an allocable portion of the cost of the asset is borne by all users. Additional information on
capital assets and depreciable lives may be found in Note 6.
DEBT ADMINISTRATION
Each of the City’s debt issues is discussed in detail in Note 7 to the financial statements.
Debt Service Funds are used to account for the accumulation of resources for and the payment of
general long- term debt principal, interest and related costs ( other than those paid for by the
Enterprise Funds). In March 2003, the City issued Certificates of Participation ( COPs) in the
amount of $ 2,200,000 to refund and retire the outstanding 1992 proceeds that were used to
finance the rehabilitation and expansion of the Martinez City Hall.
The Water Fund has two outstanding debt issues. In 1999 and 2003, the City issued Certificates
of Participation ( COPs) in the amount of $ 6,040,000 and $ 5,595,000. COP proceeds were used
to finance improvements to the Water Plant. The following table represents the City’s debt as of
June 30, 2004:
June 30, 2004 June 30, 2003
Governmental Activities
Land $ 4,978,951 $ 4,978,951
Construction in progress 285,872 3,161,522
Building and improvements 4,706,879 3,602,519
Equipment 3,939,280 2,627,995
Infrastructure 35,638,966 34,412,144
Less accumulated depreciation ( 23,915,938) ( 22,612,729)
Totals $ 25,634,010 $ 26,170,402
Business- type Activities
Land $ 1,665,154 $ 1,665,154
Construction in progress 336,798 338,703
Building and improvements 16,621,758 16,161,059
Equipment 1,590,643 1,590,643
Infrastructure 87,170,105 87,120,000
Less accumulated depreciation ( 63,350,093) ( 62,034,691)
Totals $ 44,034,365 $ 44,840,868
Table 8
Outstanding Debt
SPECIAL ASSESSMENT DISTRICT DEBT
A special assessment district in the City has also issued debt to finance infrastructure and
facilities construction in their respective districts. No special assessment debt was issued in
fiscal year 2004.
At June 30, 2004, a total of $ 1,095,000 in special assessment district debt was outstanding,
issued by one special assessment district. This debt is secured only by special assessments on
the real property in the district issuing the debt, and is not the City’s responsibility, although the
City does act as these Districts’ agent in the collection and remittance of assessments.
June 30, 2004 June 30, 2003
Governmental Activity Debt
General Long- term Debt
2003 Certificates of Participation $ 2,200,000 $ 2,200,000
Notes Payable, California Energy Commission 0 8,014
Total governmental activity debt $ 2,200,000 $ 2,208,014
Business- type Activity Debt
Water Fund Long- term Debt
1999 Water System Improvements $ 5,775,000 $ 5,910,000
2003 Refinancing Project 5,305,000 5,595,000
Total principal $ 11,080,000 $ 11,505,000
Less unamortized discount ( 42,845) ( 44,970)
Less deferred amount on refunding ( 1,077,752) ( 1,149,602)
Total Water Fund debt $ 9,959,403 $ 10,310,428
Marina Long- term Debt, including accrued interest
1960 State of California $ 2,458,026 $ 2,352,857
1973 State of California 311,523 298,108
1978 State of California 157,623 150,835
1982 State of California 370,071 354,135
1985 State of California 987,937 945,394
Total Marina Fund debt $ 4,285,180 $ 4,101,329
Total business- type activity debt $ 14,244,583 $ 14,411,757
ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The economy of the City and its major initiatives for the coming year are discussed in detail in
the accompanying Transmittal Letter.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Comprehensive Annual Financial Report is intended to provide citizens, taxpayers,
investors, and creditors with a general overview of the City’s finances. Questions about this
Report should be directed to the Administrative Services Department, at 525 Henrietta Street,
Martinez, CA 94553.
CITY OF MARTINEZ
STATEMENT OF NET ASSETS
AND STATEMENT OF ACTIVITIES
The Statement of Net Assets and the Statement of Activities are statements required by Government
Accounting Standards Board Statement 34. Their purpose is to summarize the entire City’s financial activities
and financial position. They are prepared on the same basis as is used by most businesses, which means they
include all the City’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the
full accrual basis— the effect of all the City’s transactions is taken into account, regardless of whether or when
cash changes hands, but all material internal transactions between City funds have been eliminated.
The Statement of Net Assets reports the difference between the City’s total assets and the City’s total
liabilities, including all the City’s capital assets and all its long- term debt. The Statement of Net Assets
presents similar information to the old balance sheet format, but presents it in a way that focuses the reader on
the composition of the City’s net assets, by subtracting total liabilities from total assets.
The Statement of Net Assets summarizes the financial position of all the City’s Governmental Activities in a
single column, and the financial position of all the City’s Business- Type Activities in a single column; these
columns are followed by a Total column that presents the financial position of the entire City.
The City’s Governmental Activities include the activities of its General Fund, along with all its Special
Revenue, Capital Projects and Debt Service Funds. Since the City’s Internal Service Funds service these
Funds, their activities are consolidated with Governmental Activities, after eliminating inter- fund transactions
and balances. The City’s Business- type Activities include all its Enterprise Fund activities.
The Statement of Activities reports increases and decreases in the City’s net assets. It is also prepared on the
full accrual basis, which means it includes all the City’s revenues and all its expenses, regardless of when cash
changes hands. This differs from the “ modified accrual” basis used in the Fund financial statements, which
reflect only current assets, current liabilities, available revenues and measurable expenditures.
The format of the Statement of Activities presents the City’s expenses first, listed by program, and follows
these with the expenses of its business- type activities. Program revenues— that is, revenues which are
generated directly by these programs— are then deducted from program expenses to arrive at the net expense
of each governmental and business- type program. The City’s general revenues are then listed in the
Governmental Activities or Business- type Activities column, as appropriate, and the Change in Net Assets is
computed and reconciled with the Statement of Net Assets.
Both these Statements include the financial activities of the City and the Martinez Public Improvement
Corporation, which is legally separate but is a component unit of the City because it is controlled by the City,
which is financially accountable for the activities of this entity.
These new financial statements along with the fund financial statements and footnotes are called Basic
Financial Statements.
CITY OF MARTINEZ
STATEMENT OF NET ASSETS
JUNE 30, 2004
Governmental Business- Type
Activities Activities Total
ASSETS
Cash and investments ( Note 3):
Available for operations $ 16,712,995 $ 8,320,343 $ 25,033,338
With fiscal agents 368,643 478,686 847,329
Receivables ( net of allowance for uncollectible)
Intergovernmental 1,819,741 1,544,677 3,364,418
Other 316,219 316,219
Interest 105,199 30,092 135,291
Loans receivable ( Note 5) 262,010 22,920 284,930
Internal balances ( Note 4) 347,771 ( 347,771)
Prepaids and inventory ( Note 1 H) 80,985 80,985
Bond issuance costs, net of amortization 1,383,842 1,383,842
Capital assets ( Note 6):
Land and construction in progress 5,264,823 2,001,952 7,266,775
Depreciable assets, net 20,369,187 42,032,413 62,401,600
Total Assets 45,647,573 55,467,154 101,114,727
LIABILITIES
Accounts payable 978,567 552,191 1,530,758
Accrued wages and benefits 540,419 39,692 580,111
Accrued vacation and other fringe benefits ( Note 1 G) 1,427,744 150,301 1,578,045
Claims payable ( Note 14) 80,000 80,000
Deposits 1,291,465 71,110 1,362,575
Deferred revenue 254,809 414,377 669,186
Accrued interest 129,574 129,574
Long- term debt ( Notes 7 and 8):
Due within one year 195,000 440,000 635,000
Due in more than one year 2,005,000 14,846,586 16,851,586
Total Liabilities 6,773,004 16,643,831 23,416,835
NET ASSETS ( Note 10)
Invested in capital assets, net of related debt 23,434,010 31,622,821 55,056,831
Restricted for:
Capital projects 638,295 638,295
Debt service 789,596 478,686 1,268,282
Special revenue projects 432,286 432,286
Total Restricted Net Assets 1,860,177 478,686 2,338,863
Unrestricted 13,580,382 6,721,816 20,302,198
Total Net Assets $ 38,874,569 $ 38,823,323 $ 77,697,892
See accompanying notes to financial statements
CITY OF MARTINEZ
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2004
Net ( Expense) Revenue and
Program Revenues Changes in Net Assets
Operating Capital
Charges for Grants and Grants and Governmental Business- type
Functions/ Programs Expenses Services Contributions Contributions Activities Activities Total
Governmental Activities:
General government $ 1,361,712 $ 112,806 ($ 1,248,906) ($ 1,248,906)
Nondepartmental services 583,170 ( 583,170) ( 583,170)
Administrative services 597,450 ( 597,450) ( 597,450)
Building 742,330 417,578 $ 10,350 ( 314,402) ( 314,402)
Community development 7,673,229 819,377 1,692,468 $ 1,274,224 ( 3,887,160) ( 3,887,160)
Police 7,852,448 353,505 662,483 ( 6,836,460) ( 6,836,460)
Interest on long term debt 66,580 ( 66,580) ( 66,580)
Total Governmental Activities 18,876,919 1,703,266 2,365,301 1,274,224 ( 13,534,128) ( 13,534,128)
Business- type Activities:
Water System 10,088,366 8,395,769 ($ 1,692,597) ( 1,692,597)
Marina Services 470,175 127,608 ( 342,567) ( 342,567)
Parking Services 547,454 169,145 ( 378,309) ( 378,309)
Total Business- type Activities 11,105,995 8,692,522 ( 2,413,473) ( 2,413,473)
Total $ 29,982,914 $ 10,395,788 $ 2,365,301 $ 1,274,224 ( 13,534,128) ( 2,413,473) ( 15,947,601)
General revenues:
Property taxes 5,072,317 5,072,317
Sales taxes 3,683,973 3,683,973
Other taxes 2,167,772 62,306 2,230,078
Intergovernmental 1,762,251 1,762,251
Investment earnings 199,788 139,026 338,814
Rents and leases 63,389 25,231 88,620
Miscellaneous 19,701 61,677 81,378
Transfers ( Note 4) 190,000 ( 190,000)
Total general revenues and transfers 13,159,191 98,240 13,257,431
Change in Net Assets ( 374,937) ( 2,315,233) ( 2,690,170)
Net Assets- Beginning 39,249,506 41,138,556 80,388,062
Net Assets- Ending $ 38,874,569 $ 38,823,323 $ 77,697,892
See accompanying notes to financial statements
FUND FINANCIAL STATEMENTS
GASB 34 revises the format of the Fund Financial Statements so that only individual major funds are
presented, while non- major funds are combined in a single column. Major funds are defined generally as
having significant activities or balances in the current year.
MAJOR GOVERNMENTAL FUNDS
The funds described below are determined to be Major Funds by the City in fiscal 2004. Individual non- major
funds may be found in the Supplemental section.
GENERAL FUND
The General Fund is used for all the general revenues of the City not specifically levied or collected for other
City funds and the related expenditures. The General Fund accounts for all financial resources of a
governmental unit which are not accounted for in another fund.
CITY OF MARTINEZ
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2004
Other Total
Governmental Governmental
General Funds Funds
ASSETS
Cash and investments ( Note 3):
Available for operations $ 10,087,730 $ 4,458,934 $ 14,546,664
With fiscal agents 368,643 368,643
Receivables
Intergovernmental 889,002 930,739 1,819,741
Other 304,581 3,843 308,424
Interest 99,385 5,814 105,199
Loans receivable ( Note 5) 262,010 262,010
Prepaids and inventory 80,219 105 80,324
Due from other funds ( Note 4) 535,885 535,885
Advances to other funds ( Note 4) 219,880 219,880
Total Assets $ 12,216,682 $ 6,030,088 $ 18,246,770
LIABILITIES
Accounts payable $ 748,496 $ 187,418 $ 935,914
Accrued wages and benefits 530,616 530,616
Compensated absences 78,237 78,237
Claims payable ( Note 14) 80,000 80,000
Deposits 1,291,465 1,291,465
Due to other funds ( Note 4) 535,885 535,885
Deferred revenue 254,809 351,182 605,991
Total Liabilities 2,983,623 1,074,485 4,058,108
FUND BALANCES
Fund balance ( Note 10)
Reserved for:
Debt service 789,596 789,596
Prepaids and Inventory 80,219 80,219
Special events 76,594 76,594
Police Grants 22,225 149,311 171,536
Petty Cash 800 800
Advances to other funds 219,880 219,880
Grants 24,924 24,924
Encumbrances 234,497 38,777 273,274
Unreserved, Reported in:
General Fund 8,573,920 8,573,920
Special Revenue Funds 670,733 670,733
Capital Projects Funds 3,307,186 3,307,186
Total Fund Balances 9,233,059 4,955,603 14,188,662
Total Liabilities and Fund Balances $ 12,216,682 $ 6,030,088 $ 18,246,770
See accompanying notes to financial statements
CITY OF MARTINEZ
Reconciliation of the
GOVERNMENTAL FUNDS -- BALANCE SHEET
with the
STATEMENT OF NET ASSETS
JUNE 30, 2004
Total fund balances reported on the governmental funds balance sheet $ 14,188,662
Amounts reported for Governmental Activities in the Statement of Net Assets
are different from those reported in the Governmental Funds above because of the following:
CAPITAL ASSETS
Capital assets used in Governmental Activities are not current assets or financial resources and
therefore are not reported in the Governmental Funds. 24,620,858
ALLOCATION OF INTERNAL SERVICE FUND NET ASSETS
Internal Service Funds are not governmental funds. However, they are used by management to
charge the costs of certain activities, such as insurance and central services and maintenance
to individual governmental funds. The net current assets of the Internal Service Funds are therefore
included in Governmental Activities in the following line items in the Statement of Net Assets.
Cash and investments 2,166,331
Interest and other 8,456
Internal balances 127,891
Capital assets 1,013,152
Accounts payable ( 42,653)
Accrued liabilities ( 9,803)
Accrued compensated absences ( 10,895)
ACCRUAL OF NON- CURRENT REVENUES AND EXPENSES
Revenues which are deferred on the Fund Balance Sheets because they are not available currently
are taken into revenue in the Statement of Activities. 351,182
LONG TERM ASSETS AND LIABILITIES
The assets and liabilities below are not due and payable in the current period and therefore are not
reported in the Funds:
Long- term debt ( 2,200,000)
Non- current portion of compensated absences ( 1,338,612)
NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 38,874,569
See accompanying notes to financial statements
CITY OF MARTINEZ
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2004
Other Total
Governmental Governmental
General Funds Funds
REVENUES
Taxes $ 11,295,326 $ 11,295,326
Special assessments $ 604,659 604,659
Licenses, permits, and fees 355,725 133,551 489,276
Intergovernmental 1,855,593 2,758,094 4,613,687
Charges for services 722,266 722,266
Fines and forfeits 231,412 231,412
Use of money and property 164,775 35,534 200,309
Miscellaneous 125,203 77,353 202,556
Total Revenues 14,750,300 3,609,191 18,359,491
EXPENDITURES
Current:
General government 850,845 850,845
Nondepartmental services 583,170 583,170
Administrative services 578,412 578,412
Building 618,243 618,243
Community development 4,458,024 2,193,941 6,651,965
Police 7,355,196 385,340 7,740,536
Debt service
Principal 8,014 8,014
Interest and fiscal charges 66,580 66,580
Capital outlay 614,619 614,619
Total Expenditures 14,443,890 3,268,494 17,712,384
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES 306,410 340,697 647,107
OTHER FINANCING SOURCES ( USES)
Transfers in ( Note 4) 555,766 4,519,064 5,074,830
Transfers ( out) ( Note 4) ( 1,741,953) ( 3,142,877) ( 4,884,830)
Total Other Financing Sources ( Uses) ( 1,186,187) 1,376,187 190,000
NET CHANGE IN FUND BALANCES ( 879,777) 1,716,884 837,107
BEGINNING FUND BALANCES 10,112,836 3,238,719 13,351,555
ENDING FUND BALANCES $ 9,233,059 $ 4,955,603 $ 14,188,662
See accompanying notes to financial statements
CITY OF MARTINEZ
Reconciliation of the
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the Change in
GOVERNMENTAL NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2004
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current
liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the
Statement of Activities, which is prepared on the full accrual basis.
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ 837,107
Amounts reported for governmental activities in the Statement of Activities
are different because of the following:
CAPITAL ASSETS TRANSACTIONS
Governmental Funds report capital outlays as expenditures. However,
in the Statement of Activities the cost of those assets is capitalized and allocated over
their estimated useful lives and reported as depreciation expense.
The capital outlay expenditures are therefore added back to fund balance 614,619
Depreciation expense is deducted from the fund balance
( Depreciation expense is net of internal service fund depreciation
of $ 302,946 which has already been allocated to serviced funds) ( 1,027,226)
LONG TERM DEBT PROCEEDS AND PAYMENTS
Bond proceeds provide current financial resources to governmental funds, but
issuing debt increases long- term liabilities in the Statement of Net Assets.
Repayment of bond principal is an expenditure in the governmental funds, but
in the Statement of Net Assets the repayment reduces long- term liabilities.
Repayment of debt principal is added back to fund balance 8,014
ACCRUAL OF NON- CURRENT ITEMS
The amounts below included in the Statement of Activities do not provide or ( require) the use of
current financial resources and therefore are not reported as revenue or expenditures in
governmental funds ( net change):
Deferred revenue ( 100,139)
Compensated absences ( 177,638)
ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal Service Funds are used by management to charge the costs of certain activities,
such as equipment acquisition, maintenance, and insurance to individual funds.
The portion of the net revenue ( expense) of these Internal Service Funds arising out
of their transactions with governmental funds is reported with governmental activities,
because they service those activities.
Change in Net Assets - All Internal Service Funds ( 529,674)
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES ($ 374,937)
See accompanying notes to financial statements
CITY OF MARTINEZ
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2004
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts ( Negative)
REVENUES:
Taxes 10,288,433 $ 10,705,308 $ 11,295,326 $ 590,018
Licenses, permits, and fees 339,060 303,186 355,725 52,539
Intergovernmental 2,156,000 1,507,731 1,855,593 347,862
Charges for services 915,724 612,604 722,266 109,662
Fines and forfeits 381,000 389,107 231,412 ( 157,695)
Use of money and property 300,840 300,840 164,775 ( 136,065)
Miscellaneous 85,568 117,000 125,203 8,203
Total Revenues 14,466,625 13,935,776 14,750,300 814,524
EXPENDITURES:
Current:
General government 778,526 863,886 850,845 13,041
Nondepartmental services 830,042 677,991 583,170 94,821
Administrative services 624,844 617,074 578,412 38,662
Building 673,335 672,719 618,243 54,476
Community development 4,409,669 4,764,490 4,458,024 306,466
Police 7,260,499 7,433,304 7,355,196 78,108
Total Expenditures 14,576,915 15,029,464 14,443,890 585,574
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES ( 110,290) ( 1,093,688) 306,410 1,400,098
OTHER FINANCING SOURCES ( USES)
Transfers in 555,765 555,766 1
Transfers ( out) ( 1,082,270) ( 1,741,954) ( 1,741,953) 1
Total other financing sources ( uses) ( 1,082,270) ( 1,186,189) ( 1,186,187) 2
EXCESS ( DEFICIENCY) OF REVENUES AND OTHER
SOURCES OVER EXPENDITURES AND OTHER USES ( 1,192,560) ( 2,279,877) ( 879,777) 1,400,100
BEGINNING FUND BALANCES 10,112,836 10,112,836 10,112,836
ENDING FUND BALANCES $ 8,920,276 $ 7,832,959 $ 9,233,059 $ 1,400,100
See accompanying notes to financial statements
MAJOR PROPRIETARY FUNDS
Proprietary funds account for City operations financed and operated in a manner similar to a private business
enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through
user charges.
The concept of major funds established by GASB Statement 34 extends to Proprietary Funds. The City has
identified the funds below as major proprietary funds in fiscal 2004. Individual non- major funds may be found
in the Supplemental section.
GASB 34 does not provide for the disclosure of budget vs. actual comparisons regarding proprietary funds
that are major funds.
WATER SYSTEM FUND
To account for the funds received from customers receiving water service provided by the City and the related
expenditures for administration; system improvements, maintenance and repairs; and debt service for issues
related to the provision of water to the customers.
MARINA SERVICES FUND
To account for the operations at the municipal marina.
PARKING SERVICES FUND
To account for the activities related to the various parking lots in the downtown area, including parking meters
and shuttle services.
CITY OF MARTINEZ
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2004
Business- type Activities- Enterprise Funds Governmental
Activities-
Parking Internal Service
Water System Marina Services Services Totals Funds
ASSETS
Current Assets:
Cash and investments ( Note 3):
Available for operations $ 7,285,753 $ 116,233 $ 918,357 $ 8,320,343 $ 2,166,331
With fiscal agent 478,686 478,686
Receivables:
Other 1,535,999 8,678 1,544,677
Interest 26,039 256 3,797 30,092 7,795
Prepaid Insurance 661
Total Current Assets 9,326,477 125,167 922,154 10,373,798 2,174,787
Capital Assets ( Note 6):
Land 630,912 800,165 234,077 1,665,154
Buildings 15,335,900 252,929 15,588,829
Improvements 787,807 245,122 1,032,929
Equipment 1,268,954 321,689 1,590,643 2,768,589
Infrastructure 87,170,105 87,170,105
Less: Accumulated depreciation ( 62,399,944) ( 616,815) ( 333,334) ( 63,350,093) ( 1,755,437)
42,005,927 1,224,086 467,554 43,697,567 1,013,152
Construction in progress ( Note 6) 229,280 107,458 60 336,798
Net Capital Assets 42,235,207 1,331,544 467,614 44,034,365 1,013,152
Other Non Current Assets:
Notes receivable ( Note 5) 22,920 22,920
Bond issuance costs 1,383,842 1,383,842
Total Assets 52,968,446 1,456,711 1,389,768 55,814,925 3,187,939
LIABILITIES
Current liabilities
Accounts payable 531,107 4,676 16,408 552,191 42,653
Accrued liabilities 39,692 39,692 9,803
Deferred revenue 12,922 401,455 414,377
Deposits 29,686 41,424 71,110
Accrued interest 50,980 78,594 129,574
Current portion of long term debt ( Note 7) 440,000 440,000
Total Current Liabilities 1,104,387 526,149 16,408 1,646,944 52,456
Noncurrent Liabilities:
Accrued vacation and other fringe benefits ( Note 1G) 150,301 150,301 10,895
Advance from other funds ( Note 4) 219,880 219,880
Long term debt ( Note 7) 10,640,000 10,640,000
Loans payable ( Note 8) 4,206,586 4,206,586
Total Liabilities 11,894,688 4,952,615 16,408 16,863,711 63,351
Invested in capital assets,
net of related debt 31,155,207 467,614 31,622,821 1,013,152
Restricted for bond principal 478,686 478,686
Unrestricted 9,439,865 ( 3,495,904) 905,746 6,849,707 2,111,436
Total Net Assets ( Deficit) $ 41,073,758 ($ 3,495,904) $ 1,373,360 38,951,214 $ 3,124,588
Some amounts reported for business- type activities in the Statement of Net Assets are different
because certain internal service fund assets and liabilities are included with business- type activities. ( 127,891)
Net assets business- type activities $ 38,823,323
See accompanying notes to financial statements
NET ASSETS
CITY OF MARTINEZ
PROPRIETARY FUNDS
STATEMENT OF REVENUE, EXPENSES
AND CHANGES IN FUND NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2004
Business- type Activities- Enterprise Funds Governmental
Activities-
Parking Internal Service
Water System Marina Services Services Totals Funds
OPERATING REVENUES
Water sales $ 8,058,204 $ 8,058,204
Rents and leases $ 127,608 127,608
Charges for services 284,661 $ 169,145 453,806 $ 907,607
Other fees 52,904 52,904
Refunds and rebates 6,538 4,583 11,121
Total Operating Revenues 8,402,307 132,191 169,145 8,703,643 907,607
OPERATING EXPENSES
Filtration plant 4,296,222 4,296,222
Maintenance, repair, and distribution 1,871,369 95,350 6,901 1,973,620 1,242,255
Administration 1,627,941 105,228 492,562 2,225,731
Depreciation and amortization 1,745,521 159,889 45,246 1,950,656 316,126
Total Operating Expenses 9,541,053 360,467 544,709 10,446,229 1,558,381
Operating Income ( Loss) ( 1,138,746) ( 228,276) ( 375,564) ( 1,742,586) ( 650,774)
NONOPERATING REVENUES ( EXPENSES)
Interest income 118,222 4,699 16,105 139,026 31,252
Interest ( expense) ( 481,589) ( 109,708) ( 591,297)
Rents and leases 25,231 25,231
Gain from sale of equipment 21,378
Taxes 26,592 35,714 62,306
Intergovernmental 50,556 50,556
Total Nonoperating Revenues ( Expenses) ( 338,136) ( 27,861) 51,819 ( 314,178) 52,630
Income ( Loss) Before Transfers ( 1,476,882) ( 256,137) ( 323,745) ( 2,056,764) ( 598,144)
Transfers in ( Note 4) 25,000 25,000
Transfers ( out) ( Note 4) ( 65,000) ( 150,000) ( 215,000)
Net transfers ( 40,000) ( 150,000) ( 190,000)
Change in net assets ( 1,516,882) ( 256,137) ( 473,745) ( 2,246,764) ( 598,144)
BEGINNING NET ASSETS ( DEFICIT) 42,590,640 ( 3,239,767) 1,847,105 3,722,732
ENDING NET ASSETS ( DEFICIT) $ 41,073,758 ($ 3,495,904) $ 1,373,360 $ 3,124,588
Some amounts reported for business- type activities in the Statement of Activities are different because the
portion of the net income of certain internal service funds is reported with the business- type activities ( 68,469)
which those funds service
Change in net assets of business- type activities ($ 2,315,233)
See accompanying notes to financial statements
CITY OF MARTINEZ
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2004
Business- type Activities- Enterprise Funds
Governmental
Activities-
Parking Internal Service
Water System Marina Services Services Totals Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 8,045,916 $ 130,688 $ 169,145 $ 8,345,749 $ 911,904
Payments to suppliers ( 6,649,185) ( 167,868) ( 485,962) ( 7,303,015) ( 978,805)
Payments to employees ( 1,134,719) ( 1,134,719) ( 275,213)
Cash Flows from Operating Activities 262,012 ( 37,180) ( 316,817) ( 91,985) ( 342,114)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Rent and lease payments received 25,231 25,231
Taxes received 26,592 35,714 62,306
Received from other governments 50,556 50,556
Transfers in 25,000 25,000
Transfers out ( 65,000) ( 150,000) ( 215,000)
Cash Flows from Noncapital Financing Activities ( 14,769) 77,148 ( 114,286) ( 51,907)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Advances from other funds 219,880 219,880
Acquisition of capital assets ( 623,999) ( 520,093) ( 60) ( 1,144,152) ( 192,341)
Proceeds from sale of equipment 21,378
Principal payments on capital debt ( 425,000) ( 425,000)
Interest paid ( 380,835) ( 5,527) ( 386,362)
Cash Flows from Capital and Related Financing Activities ( 1,429,834) ( 305,740) ( 60) ( 1,735,634) ( 170,963)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest 128,907 6,082 18,040 153,029 31,252
Cash Flows from Investing Activities 128,907 6,082 18,040 153,029 31,252
Net Cash Flows ( 1,053,684) ( 259,690) ( 413,123) ( 1,726,497) ( 481,825)
Cash and investments at beginning of period 8,818,123 375,923 1,331,480 10,525,526 2,648,156
Cash and investments at end of period $ 7,764,439 $ 116,233 $ 918,357 $ 8,799,029 $ 2,166,331
Reconciliation of Operating Income ( Loss) to Cash Flows
from Operating Activities:
Operating income ( loss) ($ 1,138,746) ($ 228,276) ($ 375,564) ($ 1,742,586) ($ 650,774)
Adjustments to reconcile operating income to cash flows
from operating activities:
Depreciation and amortization 1,745,521 159,889 45,245 1,950,655 316,126
Change in assets and liabilities:
Accounts receivable ( 368,256) 6,860 ( 361,396) 4,297
Notes receivable
Accounts payable and other liabilities 4,615 710 13,502 18,827 ( 4,734)
Deposits ( 15,488) 32,000 16,512
Accrued vacation and other fringe benefits 22,501 22,501 ( 1,756)
Accrued wages and benefits ( 5,273)
Deferred revenue 11,865 ( 8,363) 3,502
Cash Flows from Operating Activities $ 262,012 ($ 37,180) ($ 316,817) ($ 91,985) ($ 342,114)
See accompanying notes to financial statements
FIDUCIARY FUNDS
FIDUCIARY FUNDS
Fiduciary funds are used to account for assets held by the City as an agent or in trust for individuals, private
organizations, and other governments. The financial activities of these funds are excluded from the Entity-wide
financial statements, but are presented in separate Fiduciary Fund financial statements.
CITY OF MARTINEZ
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2004
Agency Trust
Funds Fund Totals
ASSETS
Restricted cash and investments ( Note 3) $ 331,006 $ 119,776 $ 119,776
Receivables 650 367 367
Total Assets $ 331,656 $ 120,143 $ 120,143
LIABILITIES
Accounts payable $ 1,473 $ 9 $ 9
Due to Bondholders 185,891
Due to Members 144,292
Total Liabilities $ 331,656 9 9
FUND BALANCE
Reserved for private purpose activities 120,134 120,134
Total Net Assets $ 120,134 $ 120,134
See accompanying notes to financial statements
CITY OF MARTINEZ
FIDUCIARY FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FOR THE FISCAL YEAR ENDED JUNE 30, 2004
Trust
Funds
ADDITIONS
Donations $ 2,367
Interest 1,563
Miscellaneous 17,104
Total Additions 21,034
DEDUCTIONS
Supplies 1,980
Total Deductions 1,980
CHANGE IN NET ASSETS 19,054
NET ASSETS BEGINNING OF YEAR AS RECATEGORIZED ( NOTE 1J) 101,080
NET ASSETS END OF YEAR $ 120,134
See accompanying notes to financial statements
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Martinez was incorporated in 1876 and operates under an elected Mayor/ Council form of
government. The City’s major operations include public safety, water system, marina, parking,
recreation and parks, and general administrative services.
The financial statements and accounting policies of the City conform with generally accepted
accounting principles applicable to governments. The Governmental Accounting Standards Board
( GASB) is the accepted standard- setting body for establishing governmental accounting and financial
reporting principles. Significant accounting policies are summarized below:
A. Reporting Entity
The financial statements of the City of Martinez include the financial activities of the City as well as
the Martinez Public Improvement Corporation which is controlled by and dependent on the City.
While the Corporation is a separate legal entity, City Council serves in a separate session as its
governing body and financial activities of the Corporation are integral to those of the City.
Corporation financial activities have been aggregated and merged ( termed “ blended”) with those of
the City in the accompanying financial statements.
The Martinez Public Improvement Corporation is a nonprofit public benefit corporation organized
and existing under the Nonprofit Public Benefit Corporation Law of the State of California. The
purposes for which the Corporation was formed include, among others, ( i) rendering financial
assistance to the City by financing, refinancing, acquiring, constructing, improving, leasing and
selling of buildings, building improvements, equipment, electrical, water, sewer, road and other public
improvements, lands and any other real or personal property for the benefits of the City and
surrounding areas; ( ii) acquiring by lease, purchase or otherwise, real or personal property or any
interest therein; and ( iii) constructing, reconstructing, modifying, adding to, improving or otherwise
acquiring or equipping buildings, structures or improvements and ( by sale, lease, sublease, leaseback,
gift or otherwise) making any part or all of any such real or personal property available to or for the
benefit of the residents of the City. The Corporation is reported as part of the City’s operations
because of its purpose to provide financing for the City.
The Pleasant Hill/ Martinez Joint Facilities Agency is established for the purpose of providing cost-effective
services for employees participating in the Miscellaneous CALPERS retirement plan. The
Agency is controlled by the City and has the same governing body as the City, which also performs
all accounting and administrative functions for the Agency.
Separate financial statements for the Martinez Public Improvement Corporation or the Pleasant
Hill/ Martinez Joint Facilities Agency are not issued.
B. Basis of Presentation
The City’s Basic Financial Statements are prepared in conformity with accounting principles
generally accepted in the United States of America. The Government Accounting Standards Board is
the acknowledged standard setting body for establishing accounting and financial reporting standards
followed by governmental entities in the U. S. A.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
These Statements require that the financial statements described below be presented.
Government- wide Statements: The Statement of Net Assets and the Statement of Activities display
information about the primary government ( the City) and its component units. These statements
include the financial activities of the overall City government, except for fiduciary activities.
Eliminations have been made to minimize the double counting of internal activities. These statements
distinguish between the governmental and business- type activities of the City. Governmental activities
generally are financed through taxes, intergovernmental revenues, and other nonexchange
transactions. Business- type activities are financed in whole or in part by fees charged to external
parties.
The Statement of Activities presents a comparison between direct expenses and program revenues for
each segment of the business- type activities of the City and for each function of the City’s
governmental activities. Direct expenses are those that are specifically associated with a program or
function and, therefore, are clearly identifiable to a particular function. Program revenues include ( a)
charges paid by the recipients of goods or services offered by the programs, ( b) grants and
contributions that are restricted to meeting the operational needs of a particular program and ( c) fees,
grants and contributions that are restricted to financing the acquisition or construction of capital
assets. Revenues that are not classified as program revenues, including all taxes, are presented as
general revenues.
Fund Financial Statements: The fund financial statements provide information about the City's
funds, including fiduciary funds and blended component units. Separate statements for each fund
category— governmental, proprietary, and fiduciary— are presented. The emphasis of fund financial
statements is on major individual governmental and enterprise funds, each of which is displayed in a
separate column. All remaining governmental and enterprise funds are aggregated and reported as
nonmajor funds.
Proprietary fund operating revenues, such as charges for services, result from exchange transactions
associated with the principal activity of the fund. Exchange transactions are those in which each party
receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and
investment earnings, result from nonexchange transactions or ancillary activities.
C. Major Funds
GASB Statement 34 defines major funds and requires that the City’s major governmental and
business- type funds be identified and presented separately in the fund financial statements. All other
funds, called non- major funds, are combined and reported in a single column, regardless of their fund-type.
Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/ expenses
equal to ten percent of their fund- type total and five percent of the grand total. The General Fund is
always a major fund. The City may also select other funds it believes should be presented as major
funds.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
The City reported the following major governmental funds in the accompanying financial statements:
General Fund - The General Fund is used for all the general revenues of the City not specifically
levied or collected for other City funds and the related expenditures. The general fund accounts for all
financial resources of a governmental unit which are not accounted for in another fund.
The City reported all its enterprise funds as major funds in the accompanying financial statements:
Water System Fund- To account for the funds received from customers receiving water service
provided by the City and the related expenditures for administration; system improvements,
maintenance and repairs; and debt service for issues related to the provision of water to the customers.
Marina Services Fund- To account for the operations at the municipal marina.
Parking Services Fund- To account for the activities related to the various parking lots in the
downtown area, including parking meters and shuttle services.
The City also reports the following fund types:
Internal Service Funds. The funds account for equipment replacement and management information
systems; all of which are provided to other departments on a cost- reimbursement basis.
Fiduciary Funds. Agency Funds are used to account for assets held by the City as an agent for
individuals, private organizations, and other governments. The financial activities of these funds are
excluded from the Government- wide financial statement, but are presented in separate Fiduciary Fund
financial statements.
D. Basis of Accounting
The government- wide, proprietary, and fiduciary fund financial statements are reported using the
economic resources measurement focus and the full accrual basis of accounting. Revenues are
recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of
when the related cash flows take place.
Governmental funds are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Under this method, revenues are recognized when measurable
and available. The City considers all revenues reported in the governmental funds to be available if
the revenues are collected within sixty days after year- end. Expenditures are recorded when the
related fund liability is incurred, except for principal and interest on general long- term debt, claims
and judgments, and compensated absences, which are recognized as expenditures to the extent they
have matured. Governmental capital asset acquisitions are reported as expenditures in governmental
funds. Proceeds of governmental long- term debt and acquisitions under capital leases are reported as
other financing sources.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
Those revenues susceptible to accrual are property, sales and franchise taxes, certain other
intergovernmental revenues, special assessments and interest revenue. Fines, permits, licenses and
charges for services are not susceptible to accrual because they are not measurable until received in
cash.
Non- exchange transactions, in which the City gives or receives value without directly receiving or
giving equal value in exchange, include taxes, grants, entitlements, and donations. On the accrual
basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed.
Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all
eligibility requirements have been satisfied.
The City may fund programs with a combination of cost- reimbursement grants, categorical block
grants, and general revenues. Thus, both restricted and unrestricted net assets may be available to
finance program expenditures. The City’s policy is to first apply restricted grant resources to such
programs, followed by general revenues if necessary.
Certain indirect costs are included in program expenses reported for individual functions and
activities.
The City follows those Financial Accounting Standards Board Statements issued before November
30, 1989 unless they conflict with Governmental Accounting Standards Board Statements.
E. Revenue Recognition for Water System Enterprise Fund
Revenues are recognized based on cycle billings rendered to customers. Revenues for services
provided but not billed at the end of the year are accrued.
F. Property Taxes and Special Assessment Revenue
Revenue is recognized in the fiscal year for which the tax and assessment is levied. The County of
Contra Costa levies, bills and collects property taxes for the City; the County remits the entire amount
levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property
taxes are levied on January 1 of the preceding fiscal year.
Secured property tax is due in two installments, on November 1 and February 1, and becomes a lien
on those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property
tax is due on July 1 and becomes delinquent on August 31.
The term “ unsecured” refers to taxes on personal property other than real estate, land and buildings.
These taxes are secured by liens on the personal property being taxed. Property tax revenues are
recognized by the City in the fiscal year they are assessed provided they become available as defined
above.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
G. Compensated Absences
Compensated absences comprise unused vacation leave, vested sick pay and other employee benefits
which are accrued as earned. The City’s liability for compensated absences is recorded in various
Governmental funds or Proprietary funds as appropriate. The liability for compensated absences is
determined annually. For all governmental funds, amounts expected to be permanently liquidated are
recorded as fund liabilities; the long- term portion is recorded in the Statement of Net Assets.
The changes of the compensated absences were as follows:
Governmental
Activities
Business- Type
Activities Total
Beginning Balance $ 1,173,624 $ 127,800 $ 1,301,424
Additions 1,487,249 118,501 1,605,750
Payments ( 1,233,129) ( 96,000) ( 1,329,129)
Ending Balance $ 1,427,744 $ 150,301 $ 1,578,045
Current Portion $ 78,237 $ 78,237
Compensated absences are liquidated by the fund that has recorded the liability. The long- term
portion of governmental activities compensated absences is liquidated primarily by the General Fund.
H. Inventories
Inventories are valued at cost ( on the first- in, first- out basis). Inventories of the General Fund consist
of expendable supplies held for consumption. The cost is recorded as an expenditure in the General
Fund at the time individual inventory items are consumed. Reported General Fund inventories are
equally offset by a fund balance reserve which indicates that they do not constitute available
spendable resources even though they are a component of net current assets.
I. Postemployment Health Care Benefits
The City provides health care benefits for retired employees and spouses based on negotiated
employee bargaining unit contracts. Substantially all of the City’s employees may become eligible
for those benefits if they reach the normal retirement age and have a minimum ten years of service
while working for the City. The premium reimbursement benefits are as follows: 0- 10 years of
service = 0%; 11- 15 years of service = 25%; 16- 20 years of service = 50%; 21- 25 years of service =
75%; 26 years or more of service = 100%. Currently, 33 retirees meet the eligibility requirements and
receive reimbursement.
Additionally, the City provides the option of postretirement health benefits to sworn Police Personnel
through the Public Employees’ Retirement System in lieu of the reimbursement plan, in accordance
with the MOU for that represented group. The City covers 100% of the cost. Currently, 27 retirees
meet the eligibility requirements and are either receiving a reimbursement or health benefits paid
directly by the City to PERS.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
The cost of retiree health care benefits is recognized as an expenditure as health care premiums are
paid. For the year ending June 30, 2004, those costs totaled $ 316,969.
J. Fund Changes and Reclassifications
During Fiscal year 2004, the City implemented new accounting software and reviewed their fund
structure. As a result, the Transportation Fund was renamed as Measure C Fund. The Senior Center
Club Agency Fund was created to account for assets held for Senior Center Club usage. The Private
Purpose Trust Fund was also created to account for the resources that are required to be held in trust
for certain projects in the Alhambra Historic Cemetery. Cash and investments amounting to $ 101,050
and $ 137,561 were recategorized from the General Fund to the Senior Center Club Agency Fund and
the Private Purpose Trust Fund, respectively, as a result of these recategorizations effected July 1,
2003.
NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING
A. Budgeting Procedures
Budgets are adopted for the General Fund and all Special Revenue Funds. These budgets are adopted
on a basis consistent with generally accepted accounting principles ( GAAP). All annual
appropriations lapse at fiscal year- end. Capital Projects Funds are budgeted on a project length basis.
On or before the last day in March of each year, all departments of the City submit requests for
appropriations to the City’s Manager so that a budget may be prepared on or by May 1, the proposed
budget is presented to the City’s Council for review. The Council holds public hearings and a final
budget must be prepared and adopted no later than June 30.
The appropriated budget is prepared by fund, function and department. The City’s department heads
may make transfers of appropriations within a department. Transfers of appropriations between
departments require the approval of the City Council. The legal level of budgetary control is the
department level.
The budget is revised in February to take into consideration information available during the fiscal
year. Budget amounts presented in the accompanying financial statements reflect original
appropriations modified by supplemental amendments discussed above which were not material.
NOTE 3 – CASH AND INVESTMENTS
The City pools cash from all sources and all funds except cash with fiscal agents so that it can be
invested at the maximum yield, consistent with safety and liquidity, while individual funds can make
expenditures at any time.
Interest income earned on pooled cash and investments is allocated monthly to the various funds
based on the month- end cash balances. The interest income from cash and cash equivalents with
fiscal agent is credited directly to the related funds.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 3 – CASH AND INVESTMENTS ( Continued)
A. Categorization of Credit Risk of Securities Instruments
The City and its fiscal agents invest in individual investments and in investment pools. Individual
investments are evidenced by specific identifiable pieces of paper called securities instruments, or by
an electronic entry registering the owner in the records of the institution issuing the security, called the
book entry system. Individual investments are generally made by the City’s fiscal agents as required
under its debt issues; the City normally invests only in the California Local Agency Investment Fund
pool administered by the State.
The City categorizes its individual securities instruments in ascending order to reflect the relative risk
of loss of these instruments. This risk is called Credit Risk, the lower the number, the lower the risk.
The three levels of risk prescribed by generally accepted accounting principles are described below:
Category 1 - Securities instruments in this category are in the City’s name and are in the possession of
the Trust Department of the bank employed by the City solely for this purpose. The City is the
registered owner of securities held in book entry form by the bank’s Trust Department.
Category 2 - Securities instruments and book entry form securities in this category are in the bank’s
name but are held by its Trust Department in a separate account in the City’s name.
Category 3 - None of the City’s investments are in this category, which would include only City-owned
securities instruments or book entry form securities which were not in the City’s name or
which were not held by the bank’s Trust Department.
Pooled Investments - Pooled investments are not categorized because of their pooled, rather than
individual, nature.
Investments are carried at fair value and are categorized as follows at June 30
Available for
Operations
With Fiscal
Agents
Fiduciary Funds
Restricted Total Fair Value
Category 1:
U. S. Treasury and Agency Obligations $ 7,937,102 $ 7,937,102
Category 2:
U. S. Treasury and Agency Obligations $ 685,000 $ 685,000
Non- categorized:
Pooled investments:
Money Market Funds ( U. S. 162,329 $ 108,591 270,920
State of California Local Agency
Investment Fund 16,369,294 16,369,294
Total Investments 24,306,396 847,329 108,591 25,262,316
Cash Deposits with Banks 726,042 342,191 1,068,233
Cash on Hand 900 900
Total Cash and Investments $ 25,033,338 $ 847,329 $ 450,782 $ 26,331,449
City Funds
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 3 – CASH AND INVESTMENTS ( Continued)
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term
investments with original maturities of three months or less from the date of acquisition.
The City must maintain required amounts of cash and investments with trustees or fiscal agents under
the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as
reserves to be used if the City fails to meet its obligations under these debt issues. The California
Government Code requires these funds to be invested in accordance with City ordinance, bond
indentures or State statute. All these funds have been invested as permitted under the Code.
B. Cash Deposits
California Law requires banks and savings and loan institutions to pledge government securities with
a market value of 110% of the City’s cash on deposit or first trust deed mortgage notes with a value of
150% of the deposit as collateral for these deposits. Under California Law this collateral is held in the
City’s name and places the City ahead of general creditors of the institution. The City has waived
collateral requirements for the portion of deposits covered by federal deposit insurance.
Cash in banks is entirely insured ( Category 1) or collateralized by the institution holding the deposit
( Category 2), as discussed above.
The carrying amount of the City’s cash deposits was $ 1,068,233 at June 30, 2004. Bank balances
before reconciling items were $ 1,554,614 of which $ 100,000 was insured ( Category 1), and
$ 1,454,614 was collateralized as discussed above ( Category 2) at June 30, 2004.
C. Authorized Investments
The City’s investment policy and the California Government Code allow the City to invest in the
following:
California Local Agency Investment Fund
U. S. Treasury and Agency Obligations
Money Market
Federal Agency Obligations
The City does not enter into repurchase or reverse repurchase agreements. Trustees under bond
indentures may also invest in U. S. Government Agency Issues, U. S. Treasury Notes, Money Market
and Mutual Funds, and Investment Agreements.
The City’s investments are carried at fair value, as required by generally accepted accounting
principles. The City adjusts the carrying value of its investments to reflect their fair value at each
fiscal year end, and it includes the effects of these adjustments in income for that fiscal year.
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 City reports its investment in LAIF at the fair value amount provided by LAIF. The
balance available for withdrawal is based on the accounting records maintained by LAIF, which are
recorded on an amortized cost basis. Included in LAIF’s investment portfolio are collateralized
mortgage obligation, mortgage- backed securities, other asset- backed securities, loans to certain state
funds, and floating rate securities issued by federal agencies, government- sponsored enterprises, and
corporations.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 4 – INTERFUND TRANSACTIONS
A. Transfers Between Funds
With Council approval, resources may be transferred from one City fund to another. The purpose of
the majority of transfers, is to reimburse a fund which has made an expenditure on behalf of another
fund. Less often, a transfer may be made to open or close a fund.
Fund Receiving Transfers Fund Making Transfers
Amount
Transferred
General Fund Parking Services $ 150,000 C
Non- Major Funds 405,766 A
Water System General Fund 18,000 A
Non- Major Funds 7,000 A
Non- Major Funds General Fund 1,723,953 A & B
Water System 65,000 B
Non- Major Funds 2,730,111 B
Total Interfund Transfers $ 5,099,830
A: To fund operations
B: To fund capital projects
C: To repay interfund loan
B. Current Interfund Balances
Current interfund balances arise in the normal course of business and are expected to be repaid shortly
after the end of the fiscal year. At June 30, 2004, Measure C Special Revenue Fund and Alhambra
Creek Improvement Capital Projects Fund owed the General Fund $ 446,713 and $ 89,172
respectively.
C. Long- Term Interfund Advances
In 2004 the General Fund made an advance to the Marina Systems Fund in the amount of $ 225,000,
to be repaid monthly over the next 14 years. As of June 30, 2004 the balance was $ 219,880.
D. Internal Balances
Internal balances are presented in the Entity- wide financial statements only. They represent the net
interfund receivables and payables remaining after the elimination of all such balances within
governmental and business- type activities.
NOTE 5 – LOAN RECEIVABLE AND DEFERRED REVENUE
The City made a loan to Riverhouse Associates, which was used to rehabilitate the Riverhouse Hotel,
an affordable housing project. The loan is secured by a deed of trust, bears no interest, and is due
August 14, 2021. At June 30, 2004 the loan balance was $ 284,930.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 6 - CAPITAL ASSETS
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not
available. Contributed capital assets are valued at their estimated fair market value on the date
contributed.
With the implementation of GASB Statement 34, the City has recorded all its public domain
( infrastructure) capital assets, which include roads, bridges, curbs and gutters, streets and sidewalks,
drainage systems and lighting systems.
GASB Statement 34 requires that all capital assets with limited useful lives be depreciated over their
estimated useful lives. Alternatively, the “ modified approach” may be used for certain capital assets.
Depreciation is not provided under this approach, but all expenditures on these assets are expensed,
unless they are additions or improvements.
The purpose of depreciation is to spread the cost of capital assets equitably among all users over the
life of these assets. The amount charged to depreciation expense each year represents that year’s pro
rata share of the cost of capital assets.
Depreciation is provided using the straight line method which means the cost of the asset is divided by
its expected useful life in years and the result is charged to expense each year until the asset is fully
depreciated. The City has assigned the useful lives listed below to capital assets:
Buildings 30 years
Improvements 18- 67 years
Equipment 7 years
Infrastructure 40 years
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest
incurred during the construction phase is reflected in the capitalized value of the asset constructed, net
of interest earned on the invested proceeds over the same period.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 6 - CAPITAL ASSETS ( Continued)
A. Capital Asset Additions and Retirements
Capital assets at June 30 comprise:
June 30, 2003 Additions Retirements Transfers June 30, 2004
Governmental activities
Capital assets not being depreciated:
Land $ 4,978,951 $ 4,978,951
Construction in progress 3,161,522 $ 282,231 ($ 3,157,881) 285,872
Total capital assets not being depreciated 8,140,473 282,231 ( 3,157,881) 5,264,823
Capital assets being depreciated:
Buildings 3,602,519 23,688 1,080,672 4,706,879
Equipment 2,627,995 430,986 ($ 57,627) 937,926 3,939,280
Infrastructure 34,412,144 87,539 1,139,283 35,638,966
Total capital assets being depreciated 40,642,658 542,213 ( 57,627) 3,157,881 44,285,125
Less accumulated depreciation
Buildings ( 2,239,914) ( 74,562) ( 2,314,476)
Equipment ( 1,490,804) ( 413,707) 40,144 ( 1,864,367)
Infrastructure ( 18,882,011) ( 855,084) ( 19,737,095)
Total accumulated depreciation ( 22,612,729) ( 1,343,353) 40,144 ( 23,915,938)
Net capital assets being depreciated 18,029,929 ( 801,140) ( 17,483) 3,157,881 20,369,187
Governmental activity capital assets, net $ 26,170,402 ($ 518,909) ($ 17,483) $ 25,634,010
Business- type activities
Capital assets, not being depreciated:
Land $ 1,665,154 $ 1,665,154
Construction in progress 338,703 $ 242,349 ($ 244,254) 336,798
Total capital assets not being depreciated 2,003,857 242,349 ( 244,254) 2,001,952
Capital assets being depreciated:
Buildings 15,588,829 15,588,829
Improvements 572,230 460,699 1,032,929
Equipment 1,590,643 1,590,643
Infrastructure 87,120,000 441,105 ($ 635,254) 244,254 87,170,105
Net capital assets being depreciated 104,871,702 901,804 ( 635,254) 244,254 105,382,506
Less accumulated depreciation for:
Buildings ( 5,212,893) ( 398,329) ( 5,611,222)
Improvements ( 456,022) ( 159,018) ( 615,040)
Equipment ( 1,037,875) ( 63,925) ( 1,101,800)
Infrastructure ( 55,327,901) ( 1,329,384) 635,254 ( 56,022,031)
Total accumulated depreciation ( 62,034,691) ( 1,950,656) 635,254 ( 63,350,093)
Net capital assets being depreciated 42,837,011 ( 1,048,852) 244,254 42,032,413
Business- type activity capital assets, net $ 44,840,868 ($ 806,503) $ 44,034,365
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 6 - CAPITAL ASSETS ( Continued)
B. Capital Asset Contributions
Some capital assets may be acquired using federal and State grant funds, or they may be contributed
by developers or other governments. GASB Statement 34 requires that these contributions be
accounted for as revenues at the time the capital assets are contributed.
C. Depreciation Allocation
Depreciation expense is charged to functions and programs based on their usage of the related assets.
The amounts allocated to each function or program are as follows:
Governmental Activities
General government $ 23,710
Community development 955,517
Police 47,999
Capital assets held by the City's internal service funds 316,127
Total Governmental Activities $ 1,343,353
Water System $ 1,745,521
Marina System 159,889
Parking Services 45,246
Total Business- Type Activities $ 1,950,656
Business- Type Activities
NOTE 7 – LONG TERM DEBT
The City generally incurs long- term debt to finance projects or purchase assets which will have useful
lives equal to or greater than the related debt.
Proprietary Fund ( Enterprise and Internal Service) long- term debt is accounted for in the proprietary
funds which will repay the debt because these funds are accounted for on the full- accrual basis in a
similar manner to commercial operations.
For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized
during the period of issuance. For proprietary fund types, bond premiums and discounts, as well as
issuance costs, are deferred and amortized over the life of the bonds using the straight- line method.
Bonds payable are reported net of the applicable bond premium or discount.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 7 – LONG TERM DEBT ( Continued)
The City’s debt issues and transactions are summarized below and discussed in detail thereafter.
A. Current Year Transactions and Balances
Original Issue Balance at Balance at Current
Amount June 30, 2003 Retirements June 30, 2004 Portion
Governmental Activity Debt
General Long Term Debt
2003 Certificates of Participation
Refinancing Project, 2- 4%, due 12/ 01/ 13 $ 2,200,000 $ 2,200,000 $ 2,200,000 $ 195,000
Note Payable, California Energy Commission,
4.68%, due 6/ 22/ 04 59,925 8,014 $ 8,014
Total governmental activity debt $ 2,259,925 $ 2,208,014 $ 8,014 $ 2,200,000 $ 195,000
Business- Type Activity Debt
Enterprise Long Term Debt
Certificates of Participation:
1999 Water System Improvements, 4.2-
5.375%, due 12/ 1/ 26 $ 6,040,000 $ 5,910,000 $ 135,000 $ 5,775,000 $ 145,000
2003 Refinancing Project, 2- 4%, due 12/ 01/ 18 5,595,000 5,595,000 290,000 5,305,000 295,000
Total Principal 11,635,000 11,505,000 425,000 11,080,000 440,000
Less unamortized discount ( 44,970) ( 2,125) ( 42,845)
Less deferred amount on refunding ( 1,149,602) ( 71,850) ( 1,077,752)
Total Business - type Activity Debt $ 11,635,000 $ 10,310,428 $ 351,025 $ 9,959,403 $ 440,000
B. Note Payable
In 1993, the State Energy Resources Conservation and Development Commission loaned $ 59,925 to
the City to provide financial assistance for the City to implement energy projects which could reduce
energy costs. The loan is secured by a deed of trust, accrues interest at a rate of 4.68% per year and is
paid in semi- annual installments of $ 4,149. The loan was paid off during this fiscal year.
C. 1999 Certificates of Participation
On August 1, 1999, the City issued Certificates of Participation ( COPs) in the amount of $ 6,040,000
to fund and retired the construction of various improvements to the City’s existing municipal water
system. Semi- annual interest payments are due on June 1 and December 1 of each year, and annual
principal payments are due on December 1 commencing in 2002. Interest and principal payments are
payable from net revenues derived from the operation of the water system.
D. 2003 Certificates of Participation
On March 11, 2003, the City issued Certificates of Participation ( COPs) in the amount of $ 7,795,000
to refund and retire the outstanding 1992 City Hall Refurbishment Certificates of Participation and the
1993 Water System Improvements Certificates of Participation. Interest payments on the 2003 COPs
are due semi annually on June 1 and December 1, and annual principal payments are due on
December 1 commencing 2003. Interest and principal payments are payable from lease revenues on
City Hall and net revenues derived from the operation of the water system.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 7 – LONG TERM DEBT ( Continued)
E. Debt Service Requirements
Annual debt service requirements are shown below:
Governmental Activities Business- type Activities
For the Year
Ending June 30 Principal Interest Principal Interest
2005 $ 195,000 $ 59,256 $ 440,000 $ 461,238
2006 200,000 55,306 450,000 449,143
2007 200,000 51,306 455,000 436,661
2008 205,000 47,256 470,000 423,808
2009 215,000 42,519 485,000 410,263
2010- 2014 1,185,000 106,254 2,695,000 1,774,863
2015- 2019 3,295,000 1,163,640
2020- 2024 1,605,000 542,278
2025- 2029 1,185,000 97,710
Total $ 2,200,000 $ 361,897 $ 11,080,000 $ 5,759,604
F. Authorized but Unissued Debt
The City has previously issued Water Revenue Bonds authorized by the electorate at a bond election
held on June 7, 1966. Series A, B, and C Bonds in the amount of $ 3,250,000 were previously issued
and have been fully retired. $ 1,400,000 remains authorized but unissued.
NOTE 8 – LOANS PAYABLE TO STATE OF CALIFORNIA
In January of 1960, the City entered into an agreement with the State of California, whereby a loan of
$ 1,300,000 was granted to the City for the construction of a Marina. At June 30, 2004, the amount
payable to the State including interest amounted to $ 2,458,026.
The agreement was modified in 1964 with the following conditions:
Net income from the operations of the Marina is distributable as follows:
• Pro rata reimbursement to contributors of initial development costs as described in the
agreement.
• 80% of the annual net income to the State, until the sum of $ 1,300,000 is paid; the remaining
20% to be paid to the City.
• After the principal portion of the loan is repaid to the State, 80% of the annual net income
shall be paid to the City; the remaining 20% shall be paid to the State until the State has been
paid 3% interest per annum on the unpaid principal of the loan for each year starting with
January 1, 1961. The agreement will terminate upon completion of the foregoing payments.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 8 – LOANS PAYABLE TO STATE OF CALIFORNIA ( Continued)
On December 20, 1973, the City entered into another agreement with the State of California, whereby
a loan of $ 450,000 was granted to the City to complete the Martinez Small Craft Harbor ( MSCH). At
June 30, 2004, the amount payable to the State was $ 311,523 including accrued interest. The terms
are as follows:
• The loan is payable from the gross revenues from operations of the facilities located or
erected within the MSCH Project, prior to any other expenditures from such revenues.
• Payments of principal and interest at 4.5% shall be payable in equal annual installments on
August 1 of each year with a final payment due on August 1, 2004.
• Any retained earnings arising from the operation of the MSCH Project after deductions for
repayments of the State loan, operating and maintenance expenses and reserve funds
provided for by the State, shall be invested in reasonably liquid assets. No transfer of such
funds, other than for advance repayment of the State loan, shall be made so long as any
principal or interest remains unpaid.
• Whenever the retained earnings exceeds two years of MSCH Project operating and loan
repayment expenses, such excess may be required by the State for advance repayment of the
loan.
On January 30, 1978, the City entered into another agreement with the State of California, whereby a
loan of $ 175,000 was granted to the City for construction of Marina Improvements. At June 30, 2004
the amount payable to the State was $ 157,623 including accrued interest. The terms are as follows:
• The loan is payable from the gross revenues from operation of the facilities located or
erected within the Project Area.
• Payments of principal and interest at 4.5% in equal annual installments shall be payable on
August 1 of each year with a final payment due August 1, 2008.
On November 1, 1982, the City entered into another agreement with the State of California, whereby
a loan of $ 300,000 was granted to the City for the construction of new berthings and improvements to
the Marina. The loan was to be based on stages of completion. At June 30, 2004, the amount payable
to the State was $ 370,071 including accrued interest. The terms are as follows:
• The loan is payable from the gross revenues originating from the operations of the Marina.
These gross revenues constitute sole security for the loan.
• The loan shall bear compound interest at 4.5% per annum on the unpaid balance.
• Repayment of the loan shall be in equal annual installments on August 1 of each year with
final payment due August 1, 2014.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 8 – LOANS PAYABLE TO STATE OF CALIFORNIA ( Continued)
On January 14, 1985 the City entered into another agreement with the State of California, whereby a
loan of $ 770,425 was granted to the City for twelve capital improvement projects at the Marina. At
June 30, 2004, the amount payable to the State was $ 987,937 including accrued interest. The loan
terms are as follows:
• The loan is payable from the gross revenues from the operation of the facilities located
within the project area.
• The loan shall bear compound interest at 4.5% per annum on the unpaid balance.
• Repayment of the loan shall be in equal annual installments on August 1 of each year with a
final payment due on August 1, 2017.
• Berthing rates may not average less than $ 3.75 per foot of boat or berth length and are
subject to annual adjustments based on the consumer price index.
• A survey of berthing charges in the same market as the Marina shall be conducted on an
annual basis.
The above loan agreements, except for the 1960 loan which has no specified repayment terms, require
the Marina to remit approximately $ 170,000 per year for each of the subsequent five years for debt
service, and additional amounts thereafter. However, the Marina did not make any principal or
interest payments on the above loans between fiscal 1996 and fiscal 2004. During the fiscal year
ended June 30, 2004, accrued interest was added to the outstanding principal for all the state loans
with the exception of the 1960 loan. The City and State are currently in negotiations to amend these
loan agreements. Subsequent to fiscal year end 2004, the City resumed scheduled interest payments.
The first payment was made on August 1, 2004.
NOTE 9 – DEBT WITHOUT CITY COMMITMENT
A. Special Assessment Bonds
The Alhambra Creek Assessment District issued Assessment Bonds of 1999, but the City has no legal
or moral liability with respect to the payment of this debt, which is secured only by assessments on
the properties in this District. Therefore, this debt is not included as debt of the City. At June 30,
2004, the District’s outstanding debt amounted to $ 1,095,000.
B. Home Mortgage Revenue Bonds
Home mortgage revenue bonds have been issued to finance secured mortgage loans for low- income
housing projects. The bonds do not constitute indebtedness to which the good faith and credit of the
City is pledged. The City is not obligated to pay the principal, interest or other payments associated
with the bonds. The payments on the bonds are payable solely from monies received from mortgage
loans, security agreements or insurance. Accordingly, the bonds have not been recorded in the basic
financial statements of the City. The total amount of mortgage revenue bonds outstanding as June 30,
2004 was $ 3,005,000.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 10 – NET ASSETS AND FUND BALANCES
GASB Statement 34 adds the concept of Net Assets, which is measured on the full accrual basis, to
the concept of Fund Balance, which is measured on the modified accrual basis.
A. Net Assets
Net Assets is the excess of all the City’s assets over all its liabilities, regardless of fund. Net Assets
are divided into three captions under GASB Statement 34. These captions apply only to Net Assets,
which is determined only at the Government- wide level, and are described below:
Invested in Capital Assets, net of related debt describes the portion of Net Assets which is represented
by the current net book value of the City’s capital assets, less the outstanding balance of any debt
issued to finance these assets.
Restricted describes the portion of Net Assets which is restricted as to use by the terms and conditions
of agreements with outside parties, governmental regulations, laws, or other restrictions which the
City cannot unilaterally alter. These principally include debt service requirements, and special
revenue programs restricted to special revenue purposes such as transportation grants and revenues,
stormwater and COPs grants.
Unrestricted describes the portion of Net Assets which is not restricted to use.
B. Fund Equity
Fund equity consists of reserved and unreserved amounts. Reserved fund equity represents that
portion of a fund balance or net assets which has been appropriated for expenditure or is legally
segregated for a specific future use. The remaining portion is unreserved.
A portion of unreserved fund balance may be designated to indicate plans for financial resource
utilization in a future period, such as for general contingencies or capital projects. Such plans are
subject to change and may never be legally authorized or result in expenditures.
C. Designation
The City has designated portions of Fund Balance for certain purposes. These designations may be
changed by the City. Details are as follows:
Other
Governmental
General Funds
Designated for:
General Liability $ 2,650,047
Improvements $ 2,320,162
Pollution Elimination 104,880
Police 56,806
Catastrophe 300,000
Contingencies 100,000
Drainage 182,425
City Hall 111,855
Total 3,401,133 2,425,042
Undesignated 5,172,787 1,552,877
Total Unreserved $ 8,573,920 $ 3,977,919
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 10 – NET ASSETS AND FUND BALANCES ( Continued)
D. Fund Balance and Net Assets Deficits
At June 30, 2004 the Alhambra Creek Improvements Capital Projects Funds had a deficit fund
balance of $ 89,172. Future revenues are expected to offset this fund deficit.
The Marina System Enterprise Fund has an accumulated retained earnings deficit of $ 3,495,904 as of
June 30, 2004. The fund is used to account for the operation of the City’s Marina. The deficit is the
result of significant previous years’ operating losses. Management has taken steps to eliminate this
deficit by reorganizing the Marina’s operations, cutting costs and increasing the Marina’s occupancy
rates. However these measures, although reasonably successful, have not generated sufficient cash
flow to meet the debt service requirements. Management has entered into an operating agreement
with an independent company to manage the Marina. As of June 30, 2004 the Marina had not paid
debt service on the State loans discussed in Note 8. The City and the State are in the process of
negotiating amendments to these agreements which may allow for the Marina to repay the amounts
due. Contained in the loan agreements with the State is a provision which allows the State to take
over the Marina within 90 days notice. As of June 30, 2004 the State had not sent such notice.
NOTE 11 – EMPLOYEES’ RETIREMENT SYSTEM
Substantially all City employees are eligible to participate in pension plans offered by California
Public Employees Retirement System ( CALPERS), an agent multiple employer defined benefit
pension plan which acts as a common investment and administrative agent for its participating
member employers. CALPERS provides retirement and disability benefits, annual cost of living
adjustments and death benefits to plan members, who must be public employees and beneficiaries.
The City’s employees participate in the separate Safety ( police), Miscellaneous ( all other), and
Miscellaneous Joint Facilities Agency Employee Plans. Benefit provisions under the Plans are
established by State statute and City ordinance. Benefits are based on years of credited service, equal
to one year of full time employment. Funding contributions for the Plans are determined annually on
an actuarial basis as of June 30 by CALPERS; the City must contribute these amounts.
The Plans’ provisions and benefits in effect at June 30, 2004, are summarized as follows:
Safety
Miscellaneous
Miscellaneous
Joint
Facilities Agency
Benefit vesting schedule 5 years service 5 years service 5 years service
Benefit payments Monthly for life Monthly for life Monthly for life
Retirement age 50 50 50
Monthly benefits, as a % of
annual salary
1.783- 2.5%
1.426- 2.418% 1.426- 2.418%
Required employee
contribution rates
9% 7% 7%
Required employer
contribution rates
6.476% 0% 3.638%
Actuarially required
contributions
$ 190,844
$ 0
$ 187,561
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 11 – EMPLOYEES’ RETIREMENT SYSTEM ( Continued)
The City’s labor contracts require it to pay employee contributions as well as its own.
CALPERS determines contribution requirements using a modification of the Entry Age Actuarial
Cost Method. Under this method, the City’s total normal benefit cost for each employee from date of
hire to date of retirement is expressed as a level percentage of the related total payroll cost. Normal
benefit cost under this method is the level amount the City must pay annually to fund an employee’s
projected retirement benefit. This level percentage of payroll method is used to amortize any
unfunded actuarial liabilities. The actuarial assumptions used to compute contribution requirements
are also used to compute the actuarial liability. The City does not have a net pension obligation since
it pays these actuarially required contributions monthly.
CALPERS use the market related value method of valuing the Plan’s assets. An investment rate of
return of 8.25% is assumed, including inflation at 3.5%. Annual salary increases are assumed to vary
by duration of service. Changes in liability due to plan amendments, changes in actuarial
assumptions, or changes in actuarial methods are amortized as a level percentage of payroll on a
closed basis over twenty years. Investment gains and losses are accumulated as they are realized and
ten percent of the net balance is amortized annually.
The Plans’ actuarial value ( which differs from market value) and funding progress over the past three
years are set forth below at their actuarial valuation date of June 30:
Safety Plan:
Actuarial
Unfunded
Entry Age Unfunded Annual ( Overfunded)
Valuation Accrued Value of ( Overfunded) Funded Covered Liability as %
Date Liability Assets Liability Ratio Payroll of Payroll
2000 $ 22,707,824 $ 25,781,701 ($ 3,073,877) 113.5% $ 2,365,440 - 129.9%
2001 24,110,721 26,352,812 ( 2,242,091) 109.3% 2,638,679 - 85.0%
2002 26,048,748 24,652,432 1,396,316 94.6% 2,793,930 50.0%
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 11 – EMPLOYEES’ RETIREMENT SYSTEM ( Continued)
Miscellaneous Plan:
Actuarial
Unfunded
Entry Age Unfunded Annual ( Overfunded)
Valuation Accrued Value of ( Overfunded) Funded Covered Liability as %
Date Liability Assets Liability Ratio Payroll of Payroll
2000 $ 11,271,578 $ 13,307,197 ($ 2,035,619) 118.1% $ 94,668 - 2150.271%
2001 11,863,777 13,242,916 ( 1,379,139) 111.6% 74,786 - 1844.114%
2002 12,210,747 11,706,844 503,903 95.9% 80,616 625.066%
Miscellaneous Joint Facilities Agency Plan:
Actuarial
Unfunded
Entry Age Unfunded Annual ( Overfunded)
Valuation Accrued Value of ( Overfunded) Funded Covered Liability as %
Date Liability Assets Liability Ratio Payroll of Payroll
2000 $ 12,300,807 $ 17,231,881 ($ 4,931,074) 140.1% $ 4,035,303 - 122.198%
2001 14,054,207 18,160,014 ( 4,105,807) 129.2% 4,617,007 - 88.928%
2002 15,682,698 17,693,950 ( 2,011,252) 112.8% 5,460,658 - 36.832%
Audited annual financial statements and ten- year statistical information are available from CALPERS
at P. O. Box 942709, Sacramento, CA 94229- 2709.
The market value of the net assets in the Plans changed as follows during the year ended June 30,
2002 ( the most recent available):
Miscellaneous
Joint
Safety Miscellaneous Facilities Agency
Beginning Balance 6/ 30/ 01 $ 26,352,812 $ 13,242,916 $ 18,160,014
Contributions received 302,850 10,027 405,897
Benefits and Refunds Paid ( 1,307,833) ( 785,342) ( 394,358)
Expected Investment Earnings Credited 2,133,473 1,061,193 1 ,498,668
Expected Actuarial Value of Assets 6/ 30/ 02 $ 27,481,302 $ 13,528,794 $ 19,670,221
Market Value of Assets 6/ 30/ 02 $ 22,411,302 $ 10,642,585 $ 16,085,409
Actuarial Value of Assets 6/ 30/ 02 $ 24,652,432 $ 11,706,844 $ 17,693,950
Actuarially required employer contributions for fiscal years 2003, 2002, and 2001 were $ 378,405,
$ 54,650, and $ 93,999, respectively.
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 12 – SOCIAL SECURITY
The Omnibus Budget Reconciliation Act of 1990 ( OBRA) mandates that public sector employees
who are not members of their employers existing system as of January 1, 1992 be covered by either
Social Security or an alternative plan.
The City’s part time seasonal and temporary employees are covered under Social Security, which
requires these employees and the City to each contribute 6.2% of the employees’ pay. Total
contributions to Social Security during the year ended June 30, 2004 amounted to $ 74,481 of which
the City paid half.
NOTE 13 – DEFERRED COMPENSATION PLAN
City employees may defer a portion of their compensation under a City sponsored Deferred
Compensation Plan created in accordance with Internal Revenue Code Section 457. Under this Plan,
participants are not taxed on the deferred portion of their compensation until distributed to them;
distributions may be made only at termination, retirement, death or in an emergency defined by the
Plan.
The laws governing deferred compensation plan assets require plan assets to be held by a Trust for the
exclusive benefit of plan participants and their beneficiaries. Since the assets held under these plans
are not the City’s property and are not subject to City control, they have been excluded from these
financial statements.
NOTE 14 – RISK MANAGEMENT
A. Contra Costa County Municipal Risk Management Insurance Authority
The City is a member of the Contra Costa County Municipal Risk Management Insurance Authority.
The Authority provides coverage against the following types of loss risks under the terms of a
joint- powers agreement with the City and several other cities and governmental agencies as follows:
Type of Coverage ( Deductible)
Coverage
Limits
Liability ($ 5,000)
$ 15,000,000
Vehicle - Physical Damage ($ 3,000 for police vehicles,
$ 2,000 for all others)
250,000
Worker’s Compensation ( no deductible)
50,000,000
All Fire, Property, Earthquake & Flood ($ 5,000)
1,000,000,000
Boiler & Machinery ($ 5,000)
100,000,000
CITY OF MARTINEZ
Notes to Financial Statements
NOTE 14 – RISK MANAGEMENT ( Continued)
The Authority is governed by a Board consisting of representatives from member municipalities. The
Board controls the operations of the Authority, including selection of management and approval of
operating budgets, independent of any influence by member municipalities beyond their
representation on the Board.
The City’s deposits with the Authority are in accordance with formulas established by the Authority.
Actual surpluses or losses are shared according to a formula developed from overall loss costs and
spread to member entities on a percentage basis after a retrospective rating.
Audited financial statements for the Authority are available from CCCMRMIA, 1911 San Miguel
Drive, Suite 200, Walnut Creek, CA 94596.
B. Liability for Uninsured Claims
The City provides for the uninsured portion of claims and judgments, including a provision for claims
incurred but not reported, when a loss is deemed probable of assertion and the amount of the loss is
reasonably determinable.
The City’s liability for uninsured claims at June 30 was estimated by management based on claims
experience reported by CCCMRMIA and was computed as follows:
2004 2003
Beginning balance $ 80,000 $ 80,000
Liability for current fiscal year claims 29,395 24,502
Increase ( decrease) in liability for
fiscal year claims and claims
but not reported ( IBNR) 15,257 18,611
Claims paid ( 44,652) ( 43,113)
Ending balance $ 80,000 $ 80,000
NOTE 15 - COMMITMENTS AND CONTINGENCIES
The City is subject to litigation arising in the normal course of business. In the opinion of the City
Attorney there is no presently filed litigation which is likely to have a material adverse effect on the
financial position of the City.
The City participates in several federal and State grant programs. These programs have been audited
by the City’s independent accountants in accordance with the provisions of the federal Single Audit
Act amendments of 1996 and applicable State requirements. No cost disallowances were proposed as
a result of these audits; however, these programs are still subject to further examination by the
grantors and the amount, if any, of expenditures which may be disallowed by the granting agencies
cannot be determined at this time. The City expects such amounts, if any, to be immaterial.
NON- MAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Gas Tax Funds
To account for the funds received from the State of California under code 2105, 2106, and 2107 to use for
street and highway related projects.
NPDES Stormwater Fund
To account for the revenues and expenditures from assessments levied on all real property in the City in
compliance with the provisions of the National Pollutant Discharge Elimination System for prevention of
stormwater and flood related damage.
Disaster Recovery Fund
To account for the funds received from the federal government as reimbursement of local funds spent on
repair of disaster related damage to property within the city.
Measure C Fund
To account for the local funds as well as funds received from the State of California, Contra Costa County,
Amtrak and other outside agencies for construction of the Intermodal facility and similar projects related to
transportation and traffic.
COPS Grant Fund
To account for the funds received from the federal government and State of California to be used specifically
for public safety equipment and personnel.
Traffic Congestion Relief
To account for the revenues received from the State of California under AB2928. The allocations must be
spent on local streets and roads maintenance, rehabilitation and reconstruction projects according to the
State’s Traffic Congestion Relief Plan.
DEBT SERVICE FUND
To account for the accumulation of resources for, and the payment of long- term debt principal, interest and
related costs ( other than those paid for by Proprietary Funds).
CAPITAL PROJECTS FUNDS
Capital Improvements
To account for the funds spent and revenue received for various capital projects within the City.
Alhambra Creek Improvements
To account for the funds spent on the Alhambra Creek channel improvements in an effort to curb flooding
and related damage to property within the special assessment district.
Lighting and Landscaping Funds
To account for the installation, maintenance and improvement of subdivision landscape and lighting within
the special districts. Monies are collected through an annual levy on the property owners within in each
district.
CITY OF MARTINEZ
NON- MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2004
SPECIAL REVENUE FUNDS
NPDES Disaster COPS
Gas Tax Stormwater Recovery Measure C Grant
Funds Fund Fund Fund Fund
ASSETS
Cash and investments
Available for operations $ 377,040 $ 143,697 $ 138,188
With fiscal agents
Receivables
Intergovernmental 67,310 $ 570,158 30,910
Other 3,843
Interest 1,249 57 529
Loans receivable
Prepaids and Inventory 105
Total Assets $ 445,599 $ 143,754 $ 574,106 $ 169,627
LIABILITIES
Accounts payable $ 6,954 $ 97 $ 185 $ 20,316
Due to other funds 446,713
Deferred revenue
Total Liabilities 6,954 97 446,898 20,316
FUND EQUITY
Fund balances
Reserved for:
Debt service
Grants 149,311
Encumbrances 38,777
Unreserved:
Special Revenue Funds 438,645 104,880 127,208
Capital Projects Funds
Total Fund Balances 438,645 143,657 127,208 149,311
Total Liabilities and Fund Balances $ 445,599 $ 143,754 $ 574,106 $ 169,627
CAPITAL PROJECTS FUNDS
Total
Traffic DEBT Alhambra Lighting and Nonmajor
Congestion SERVICE Capital Creek Landscaping Governmental
Relief FUND Improvements Improvements Fund Funds
$ 421,793 $ 3,160,613 $ 217,603 $ 4,458,934
368,643 368,643
173,189 $ 89,172 930,739
3,843
3,117 862 5,814
262,010 262,010
105
$ 790,436 $ 3,598,929 $ 89,172 $ 218,465 $ 6,030,088
$ 840 $ 152,321 $ 6,705 $ 187,418
$ 89,172 535,885
262,010 89,172 351,182
840 414,331 178,344 6,705 1,074,485
789,596 789,596
149,311
38,777
670,733
3,184,598 ( 89,172) 211,760 3,307,186
789,596 3,184,598 ( 89,172) 211,760 4,955,603
$ 790,436 $ 3,598,929 $ 89,172 $ 218,465 $ 6,030,088
CITY OF MARTINEZ
NON- MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2004
NPDES Disaster COPS
Gas Tax Stormwater Recovery Measure C Grant
Funds Fund Fund Fund Fund
REVENUES
Special assessments $ 475,753
Licenses, permits, and fees
Intergovernmental $ 765,065 $ 638,812 $ 271,632
Use of money and property 7,111 57 2,517
Miscellaneous
Total Revenues 772,176 475,810 638,812 274,149
EXPENDITURES
Current
Community development 392,718 537,070 102,530
Police 385,340
Debt Service
Principal
Interest and fiscal charges
Capital outlay
Total Expenditures 392,718 537,070 102,530 385,340
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES 379,458 ( 61,260) 536,282 ( 111,191)
OTHER FINANCING SOURCES ( USES)
Transfers in 79,971 73,714 572,869 34,312
Transfers ( out) ( 864,045) ( 200,000) ($ 146,303) ( 1,059,985) ( 17,093)
Total Other Financing Sources ( Uses) ( 784,074) ( 126,286) ( 146,303) ( 487,116) 17,219
EXCESS ( DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES ( 404,616) ( 187,546) ( 146,303) 49,166 ( 93,972)
BEGINNING FUND BALANCES 843,261 331,203 146,303 78,042 243,283
ENDING FUND BALANCES $ 438,645 $ 143,657 $ 127,208 $ 149,311
SPECIAL REVENUE FUNDS
CAPITAL PROJECTS FUNDS
Total
Traffic DEBT Alhambra Lighting and Nonmajor
Congestion SERVICE Capital Creek Landscaping Governmental
Relief FUND Improvement