City of Menlo Park
For the year ended June 30, 2004
Table of Contents
INTRODUCTORY SECTION
Page
Letter of Transmittal ............................................................................................................................... .............. i
Organization Chart.......................................................................................................................... .................... ix
Principal Officials of the City of Menlo Park, California ................................................................................. x
Certificate of Achievement for Excellence in Financial Reporting -
Government Finance Officers Association................................................................................................. xi
Certificate of Award for Outstanding Financial Reporting -
California Society of Municipal Finance Officers..................................................................................... xii
FINANCIAL SECTION
Independent Auditors’ Report......................................................................................................................... . 1
Management Discussion and Analysis ............................................................................................................ 3
Basic Financial Statements:
Government- Wide Financial Statements:
Statement of Net Assets......................................................................................................................... 17
Statement of Activities and Changes in Net Assets........................................................................... 18
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet – Governmental Funds........................................................................................... 25
Reconciliation of the Governmental Funds Balance Sheet to the
Government- Wide Statement of Net Assets.......................................................................... 26
Statement of Revenues, Expenditures and Changes Fund Balances........................................ 27
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Government- Wide
Statement of Activities and Changes in Nets Assets............................................................ 28
Proprietary Fund Financial Statements:
Statement of Net Assets .................................................................................................................. 30
Statement of Revenues, Expenses and Changes in Fund Net Assets....................................... 31
Statement of Cash Flows................................................................................................................. 32
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Assets ................................................................................................ 34
Notes to Basic Financial Statements ........................................................................................................... 37
City of Menlo Park
For the year ended June 30, 2004
Table of Contents, Continued
FINANCIAL SECTION, Continued
Page
Required Supplementary Information:
Budgetary Principles..................................................................................................................... ........ 72
Budgetary Comparison Schedule – General Fund...................................................................... 73
Budgetary Comparison Schedule – CDBG Special Revenue Fund .......................................... 74
Budgetary Comparison Schedule – CDA Special Revenue Fund............................................. 75
Schedule of Funding Progress – Public Employees Retirement System ........................................ 76
Supplementary Information:
Non- Major Governmental Funds:
Combining Fund Statements and Schedules:
Combining Balance Sheet...................................................................................................................... 82
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances.............................................................................................................. 88
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual:
Highway Users Tax Special Revenue Fund........................................................................... 93
Federal Revenue Sharing Special Revenue Fund ................................................................. 94
Landscape Tree Assessment Special Revenue Fund............................................................ 95
Sidewalk Assessment Special Revenue Fund ....................................................................... 96
Bayfront Park Landfill Special Revenue Fund ...................................................................... 97
Below Market Rate Housing Special Revenue Fund............................................................ 98
County Transportation Tax Special Revenue Fund ............................................................. 99
Public Library Special Revenue Fund .................................................................................. 100
Literacy Grant Special Revenue Fund .................................................................................. 101
Narcotic Seizure Special Revenue Fund .............................................................................. 102
Traffic Impact Fees Special Revenue Fund.......................................................................... 103
Downtown Parking Permits Special Revenue Fund .......................................................... 104
Storm Drainage Fees Special Revenue Fund....................................................................... 105
Solid Waste Service Special Revenue Fund......................................................................... 106
Bay Area Air Quality Management Special Revenue Fund.............................................. 107
Storm Water Management ( NPDES) Special Revenue Fund............................................ 108
Peninsula Partnership Special Revenue Fund..................................................................... 109
Supplemental Law Enforcement Special Revenue Fund................................................... 110
Local Law Enforcement Block Grant Special Revenue Fund............................................ 111
City of Menlo Park
For the year ended June 30, 2004
Table of Contents, Continued
FINANCIAL SECTION, Continued
Page
Bayfront Park Maintenance Special Revenue Fund ........................................................... 112
Recreation In- Lieu Special Revenue Fund........................................................................... 113
Sharon Hills Park Special Revenue Fund ............................................................................ 114
Vintage Oaks Landscape Special Revenue Fund................................................................ 115
Miscellaneous Trust Special Revenue Fund ........................................................................ 116
Library Bond Debt Service Fund........................................................................................... 117
Recreation GO Bond 2002 Debt Service Fund ..................................................................... 118
Library Addition Capital Projects Fund............................................................................... 119
Measure T 2002 GO Bond Capital Projects Fund................................................................ 120
Capital Improvement General Capital Projects Fund........................................................ 121
Agency Fund:
Combining Statement of Net Assets.................................................................................................. 122
Combining Statement of Changes in Net Assets ............................................................................. 123
STATISTICAL SECTION ( UNAUDITED)
General Government Expenditures by Function - Last Ten Fiscal Years.................................................. 126
General Government Revenues by Source - Last Ten Fiscal Years ............................................................ 128
General Government Taxes Detail - Last Ten Fiscal Years.......................................................................... 130
Property Tax Levies and Collections - Last Ten Fiscal Years...................................................................... 131
Assessed Valuation, Tax Rate and Tax Levies - Last Ten Fiscal Years ...................................................... 132
Ratio of Net General Bonded Debt to Total Assessed Value and Net Bonded
Debt Per Capita - Last Ten Fiscal Years ................................................................................................... 135
Computation of Legal Debt Margin ............................................................................................................... 136
Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total
General Expenditures - Last Ten Fiscal Years......................................................................................... 137
Special Assessment Collections - Last Ten Fiscal Years............................................................................... 138
Property Tax Rates - All Direct and Overlapping Governments - Last Ten Fiscal Years ....................... 139
Direct and Overlapping Bonded Debt............................................................................................................ 140
Demographic Statistics - Last Ten Fiscal Years ............................................................................................. 141
Property Value, Construction, Bank and Savings and Loan Deposits –
Last Ten Fiscal Years ............................................................................................................................... .. 142
Principal Taxpayers...................................................................................................................... .................... 145
Miscellaneous Statistics ............................................................................................................................... .... 146
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i
701 LAUREL STREET, MENLO PARK, CA 94025- 3483
www. menlopark. org
December 02, 2004
Honorable Mayor
Members of the City Council
and Citizens of Menlo Park
Comprehensive Annual Financial Report
We are pleased to submit the comprehensive annual financial report for the City of Menlo Park,
California ( the City), for the fiscal year ended June 30, 2004. Responsibility for the accuracy of the
data and the completeness and fairness of the presentation, including all disclosures, rests with the
City. To the best of our knowledge and belief, the data is accurate in all material respects and is
reported in such a way as to present fairly and honestly the financial position and results of
operations of the funds and account groups of the City. All disclosures necessary to enable the
reader to gain an understanding of the City's financial activities have been included.
The comprehensive annual financial report is presented in four sections: introductory, financial,
supplementary, and statistical. The introductory section includes this transmittal letter, the City's
organizational chart and a list of principal officials.
The financial section includes the basic financial statements consisting of government- wide
financial statements and fund financial statements, notes to basic financial statements, required
supplementary information on budgetary principles and schedule of funding progress for the
Public Employee Retirement System, supplementary information on non- major funds, and the
independent auditor’s report. The statistical section includes selected financial and demographic
information, generally presented on a multi- year basis.
The notes to the financial statements are provided in the financial section and are considered
essential to fair presentation and adequate disclosure for this financial report. The notes include
the summary of significant accounting polices for the City and other necessary disclosures of
important matters relating to the financial position of the City. The notes are treated as an integral
part of the financial statements and should be read in conjunction with them.
ii
Major Changes in Reporting
The financial statements for the year ended June 30, 2003, the City implemented the new financial
reporting requirements as prescribed by the GASB Statement No. 34, Basic Financial Statements –
and Management’s Discussion and Analysis – for State and Local Governments. This GASB Statement
requires that management provide a narrative introduction, overview, and analysis to accompany
the basic financial statements in the form of a Management’s Discussion & Analysis ( MD& A). This
letter of transmittal is designed to complement the MD& A and should be read in conjunction with
it. The MD& A can be found immediately following the report of the independent auditors.
Background
The City of Menlo Park is located in San Mateo County, midway between the cities of San
Francisco and San Jose. It is an area that has comparatively high property values and is a vital part
of the region commonly referred to as the Silicon Valley. One of its noteworthy neighbors is
Stanford University. Because of the number of venture capital firms and the amount of venture
capital that is invested through companies located in Menlo Park, it is internationally known as the
“ Venture Capital of the World”.
The City contains a healthy balance of residential, commercial, and industrial uses. Residential
home prices are among the highest in the area reflecting the desirability of living in the
community. Major companies that have facilities in Menlo Park include Sun Microsystems, Tyco/
Raychem Corporation, E* Trade, SRI International, Informix and Boise Cascade. Menlo Park is also
home to the Western Region Headquarters of the United States Geological Survey, a major
Veterans Administration medical facility, and the U. S. Department of Energy funded and
University owned and operated Stanford Linear Accelerator Center.
Reporting Entity
The financial reporting entity ( the government) includes all the funds and account groups of the
primary government ( i. e. the City of Menlo Park as legally defined), as well as all of its component
units. Component units are legally separate entities for which the primary government is
financially accountable.
Blended component units, although legally separate entities, are, in substance, part of the primary
government’s operations and are included as part of the primary government. Accordingly, the
Community Development Agency ( the Agency) is reported as a blended component unit of the
primary government.
Menlo Park consists of a balanced mix of residential, commercial, industrial and educational uses.
The City provides a varied range of services, including, police protection, engineering, street, park,
building and vehicle maintenance, water distribution and maintenance, transportation services,
community services ( recreation, child care and senior services), planning, zoning and building
inspection, code and parking enforcement, library services, housing and general administration
( finance, personnel, management information systems, legal and record keeping).
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Community Development Agency
The City Council, acting as the Agency Board, exercises authority over redevelopment activities for
which the City also provides administrative and financial services; therefore, its financial activities
are included in this report.
The Agency was established in 1981, with the first and only project area in turn established that
same year on November 24. During the first ten years, implementation of Agency projects caused
most of the original revenue cap of $ 30 million to be either expended or committed to bond issues
and City loan debt service. As a result, a plan amendment was necessary to pursue any new
projects.
In order to realize new projects, a new plan with a new life and revenue cap was necessary. The
planning process culminated in the adoption of Agency Ordinance No. 826 on September 10, 1991.
The ordinance became effective on October 10, 1991. The new revenue cap is $ 430,000,000. The
Amended and Restated Las Pulgas Community Development Project Area Plan also established
new bonded indebtedness limits and extended the time limit for the power of eminent domain for
an additional twelve years. On March 3, 1992 the Agency Board approved a bond issue of up to
$ 25 million, both to fund projects identified in the Amended Plan and to refund tax allocation
bonds issued in 1985. During the 1995- 1996 fiscal year the Agency issued $ 32,305,000 of tax
allocation refunding bonds to refund and defease the tax allocation bonds issued in 1988 and 1992.
During the 2000- 2001 fiscal year the Agency issued $ 44,000,000 of tax allocation bonds to provide
funds for various redevelopment projects of the Agency.
On October 11, 1994, in accordance with State of California Health and Safety Code Section
33333.6, the Agency amended its deadline to incur debt to January 1, 2004 and its deadline for
Activities and Plan expiration was amended to November 24, 2021. These changes did not affect
the Agency’s existing debt. They shortened the period for incurring debt and implementing the
Redevelopment Plan, as required by the cited State Code. ( Note: This CAFR reflects the status of
the City and Agency’s finances as of June 30, 2004. However, at the time of its actual preparation,
the Agency had acted to remove the debt limit incurrence deadline in accordance and compliance
with state law.)
Economic Condition and Outlook
The City’s major revenue source is property taxes with sales tax and fees and charges for services
also being important resources. Until three years ago, the Silicon Valley was experiencing a strong
economy. The City was a recipient of the financial benefits of being a part of a vibrant regional
economy and experienced significant increases in sales tax revenue and property values. The
national economic downturn in 2001 has resulted in decreases in both realized and forecasted
revenues. The City has and will continue to have an overall low rate of population growth, which
minimizes the need to expand City services. This, coupled with modest commercial and light
industrial development that typically generate more in revenues than they cost the City in services,
helps ensure continued stability in the City’s finances.
iv
Major Initiatives
FOR THE YEAR: The City Council initiated a number of new projects and emphasized
maintaining quality city services with the goal of ensuring that Menlo Park remains a desirable
community. The focus in developing the 2003- 04 fiscal year budget was to reduce costs to match
revenues while striving to sustain service levels. Fortunately, the passage of the $ 38 million
Measure T general obligation bond combined with the $ 44 million redevelopment agency bond
issue a year earlier, provided the City with the financial resources to improve community facilities
that enhance the quality of life for residents.
The City Manager’s Office continued its emphasis on organizational development and improving
the Council support function. The conversion to a program- driven organization has evolved to
where the Council establishes service levels and tracks performance results. Work continues on
keeping the City in compliance with the GASB 34 reporting requirements.
The Building division experienced reduced levels of non- residential construction permitting
activity with a corresponding reduction in revenues and construction. Planning has experienced a
commensurate decrease in new applications for commercial projects. Planning is also involved in
various policy studies, including, but not limited to, Residential Review, Housing Element Update,
and Redevelopment project input.
The Transportation division continued its work on neighborhood traffic calming with less reliance
on outside consultant assistance.
Community Services accomplishments included completing a number of park renovation projects,
approval of plans for Burgess Park and establishing improved coordination and outreach with
respect to field use, scheduling and maintenance practices.
Much of the work undertaken in Housing and Redevelopment was continued from last year’s goal
setting. Considerable progress was made in terms of implementing the high priority
redevelopment area projects funded through the 2000 bond issue, with many projects advancing
through the design phase and into construction: Included are the Ivy Plaza and Hamilton Avenue
streetscape projects and neighborhood- wide infrastructure improvements. In Housing, key work
elements included the Park and Housing project on Hamilton Avenue, Below Market Rate
ordinance refinements and further progress with Habitat for Humanity.
Our Libraries continued to provide quality services in terms of providing more convenient access
to information and databases, enabling many more customers to self- help themselves through the
creative use of technology. Attendance and material circulation figures continue to increase.
The Police Department addressed issues of training new officers, increased crime as a byproduct of
the economic downturn, and efforts to improve the Pierce Road area through code enforcement.
The department’s officers maintain their individual commitment to community policing through
innovative outreach efforts. Continued emphasis was placed on technology deployment and
juvenile offender diversion programs.
v
The Engineering and Maintenance divisions within Public Works stayed on course in keeping
capital projects within budget and on schedule and furthering progress on improving internal
operations. Following a series of study sessions on the state of the City’s capital facilities and
capital improvements program, the Council approved two investment plans in March and a Five-
Year Infrastructure Maintenance Program and a Five- Year Street Resurfacing Program.
FOR THE FUTURE: A major focus will be continuing to implement the funded and top- ranked
priority capital improvement projects in both the redevelopment area and as identified in the
Parks and Recreation Master Plan. Many projects that were started will continue into the fiscal
year ahead. Similarly, with land assembly completed and a developer chosen, park and housing
development will be proceeding on Hamilton Avenue and the long- awaited Police/ City Service
Center on Willow Road will break ground in early 2005. Other projects and studies will be
identified and programmed as the City Council establishes its goals and annual priorities.
In terms of internal organizational initiatives, staff will continue evolving the program- based
budget structure, with improved ability to measure and track service- level results. And the
persistent downturn in the economy will continue to challenge the staff’s creativity in terms of
maintaining quality city services in the face of diminished revenues.
Accounting System & Control
The City administration is responsible for establishing and maintaining an internal control
structure designated to ensure that the assets of the City are protected from loss, theft or misuse
and to ensure that adequate accounting data are compiled to allow for the preparation of financial
statements in conformity with generally accepted accounting principles. The internal control
structure is designed to provide reasonable, but not absolute, assurance that these objectives are
met. The concept of reasonable assurance recognizes that, ( 1) the cost of a control should not
exceed the benefits likely to be derived, and ( 2) the valuation of costs and benefits require
estimates and judgments by management.
Budgeting Controls
In addition, the City maintains budgetary controls. The objective of these budgetary controls is to
ensure compliance with legal provisions embodied in the annual appropriated budget approved
by the City's governing body. Activities of the general fund, special revenue funds and capital
projects funds are included in the annual appropriated budget. The level of budgetary control
( that is, the level at which expenditures cannot legally exceed the appropriated amount) is
established at the fund level. The City also maintains an encumbrance accounting system as a
technique of accomplishing budgetary control.
As demonstrated by the statements and schedules included in the financial section of this report,
the City continues to meet its responsibility for sound financial management.
vi
General Government Functions
Net assets for governmental activities were decreased by $ 925,292 for the fiscal year to
$ 372,528,475. This accounts for 95% of the City’s total net assets of $ 393,235,550. A comparison of
the cost of services by function for the City’s governmental activities is shown below, along with
the revenues used to cover the net expenses of the governmental activities.
Total government activity type expenses were $ 46,559,605 in fiscal year 2003- 04. The largest
expenses were incurred for Public Works and General Government. These expenses do not
include capital outlays, which are now reflected in the City’s capital assets.
Total program revenues from governmental activities were $ 17,426,702 for the 2003- 04 fiscal year.
Per GASB 34, program revenues are derived directly from the program itself or from parties
outside the reporting government’s taxpayers or citizenry. They reduce the net cost of the function
to be financed from the government’s general revenues. The largest category of program revenues
came from Charges for Services for General Government, at 33%.
General revenues are all other revenues not categorized as program revenues, such as property
taxes, sales taxes, and investment earnings. Total general revenues from governmental activities
were $ 27,990,911 in the 2003- 04 fiscal year. The largest percentage of general revenues received
during the 2003- 04 fiscal year for governmental activities were Taxes, $ 26,419,030, which includes
property taxes, sales tax, motor vehicle license, and other taxes.
Business Type Activities
Net assets for business- type activities were $ 20,707,075. Total program revenues for business- type
activities were $ 3,754,693. The largest program revenues were in Water- Charges for Services of
$ 3,754,693. Total expenses for business- type activities were $ 3,555,582 during the 2003- 04 fiscal
year.
Cash Management
Cash temporarily idle during the year was invested in the Local Agency Investment Fund
administered by the Treasurer of the State of California, obligations of the United States Treasury,
Federal Agency Coupons and Discount Notes, Medium Term Notes, and Certificates of Deposit.
The average daily balance of the investments for the City and the Agency for the fiscal year was
$ 91.2 million, which earned approximately $ 1.8 million with an effective yield of 1.83 percent.
The City's investment policy is to obtain the highest yield obtainable as long as investments meet
the criteria established for safety and liquidity. Accordingly, deposits were classified as either risk
category 1 or 2.
At June 30, 2004, 62 percent of investments held by the City are classified in the category of lowest
credit risk as defined by the Government Accounting Standards Board; 38 percent was invested in
California Local Agency Investment Fund; and remaining investments were held in the
government's name either by the counter party financial institution's trust department or by a
Securities and Exchange Commission brokerage firm.
vii
Risk Management
The General Fund designates $ 2.3 million in cash reserves for possible future catastrophic claims.
In addition, various risk control techniques, including employee safety training, an employee
safety committee to analyze accidents, and a safety and loss control consultant have been utilized
to minimize employee accident and liability claim losses.
Other Information
Independent Audit. State statutes require an annual audit by independent certified public
accountants. The accounting firm of Caporicci & Larson, Certified Public Accountants, was
selected by the City Council for this purpose. The auditor's report on the general purpose financial
statements and combining and individual fund statements is included in the financial section of
this report.
Awards. The Government Finance Officers Association of the United States has awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive
annual financial report for the fiscal year ended June 30, 2003.
In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting awarded
by the Government Finance Officers Association, a governmental unit must publish an easily
readable and efficiently organized comprehensive annual financial report. This report must satisfy
both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year. We believe our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program’s
requirements and we will be submitting it to the GFOA.
The City has also been awarded the Certificate of Award for Outstanding Financial Reporting by
the California Society of Municipal Finance Officers for its Comprehensive Annual Report for the
year ended June 30, 2003. We will submit our 2004 report to the California Society of Municipal
Finance Officers as well.
viii
Acknowledgments. The preparation of this report in a timely manner is the result of the
exemplary dedicated service of the members of the Finance Department to whom I express my
appreciation, and to whom the organization owes it thanks and success.
The leadership and fiscal acumen of the City Council is essential and sincerely appreciated. The
financial stability of our City is a direct result of their vigilant stewardship, dedication, interest and
support.
Respectfully,
David Boesch
City Manager
Uma Chokkalingam
Finance Director
3
701 LAUREL STREET, MENLO PARK, CA 94025- 3483
www. menlopark. org
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Year Ended June 30, 2004
This discussion and analysis of the City of Menlo Park’s financial performance provides an overview of the
City’s financial activities for the fiscal year ended June 30, 2004. Please read it in conjunction with the
accompanying transmittal letter, the basic financial statements and the accompanying notes to those
financial statements.
FINANCIAL HIGHLIGHTS
Government- Wide Highlights:
Net Assets - The assets of the City exceeded its liabilities at fiscal year ending June 30, 2004 by $ 393,235,550.
Of this amount, $ 76,271,114 was reported as “ unrestricted net assets” and may be used to meet the
government’s ongoing obligations to citizens and creditors.
Changes in Net Assets – The City’s total net assets decreased by $ 812,399 in fiscal year 2003- 04. Net assets of
governmental activities decreased by $ 925,292, while net assets of the business type activities increased by
$ 112,893.
Fund Highlights:
Governmental Funds – Fund Balances- As of the close of fiscal year 2003- 04, the City’s governmental funds
reported a combined ending fund balance of $ 97,199,694, a decrease of $ 7,390,893 from the prior year. Of
this amount, $ 41,504,617 represents “ unreserved, undesignated fund balances” available for appropriation.
General Fund - The undesignated fund balance of the general fund on June 30, 2004 was $ 22,173,564. The
total fund balance decreased by $ 42,402 from the prior year.
Long- Term Debt:
The City’s total bonded debt obligations decreased by $ 1,625,000 ( 2%) during fiscal year 2003- 04. It is due
to the annual payment of the principal balance.
City Highlights:
Numerous renovation projects for the City’s parks have been completed and the improvement project for
Burgess Park is continuing.
Attendance and material circulation figures for the City’s Library continue to increase due to the quality of
services provided. Our Library offers more convenient access to information and databases, enabling more
customers to help themselves.
The Police Department maintains its commitment to the community, focuses on training new officers and
efforts to improve the Pierce Road area through code enforcement. To improve community safety
emphasis is placed on technology development, juvenile offender diversion programs and innovative
outreach efforts.
4
The Community Development Agency continues to deliver high quality projects that have been planned
based on neighborhood needs and goals.
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements.
The City’s basic financial statements are comprised of three components: 1) government- wide financial
statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains
other supplementary information in addition to the basic financial statements themselves.
Government- Wide Financial Statements
The Statement of Net Assets and the Statement of Activities and Changes in Net Assets
The Statement of Net Assets and the Statement of Activities and Changes in Net Assets report information
about the City as a whole and about its activities. These statements include all assets and liabilities of the
City using the accrual basis of accounting, which is similar to the accounting used by most private- sector
companies. All of the current year’s revenues and expenses are taken into account regardless of when cash
is received or paid.
These two statements report the City’s net assets and changes in them. Net assets are the difference between
assets and liabilities, which is one way to measure the City’s financial health, or financial position. Over
time, increases or decreases in the City’s net assets are one indicator of whether its financial health is improving
or deteriorating. Other factors to consider are changes in the City’s property tax base and the condition of
the City’s roads.
Governmental Business- Type Total
Activities Activities
2004 2004 2004
Current Assets $ 76,654,996 $ 16,002,196 $ 92,657,192
Non- Current Assets 33,994,719 - 33,994,719
Capital Assets 3 58,531,891 5,149,972 363,681,863
Total Assets 469,181,606 21,152,168 490,333,774
Current Liabilities 9,664,295 418,793 10,083,088
Long- term Liabilities 86,988,836 26,300 87,015,136
Total Liabilities 96,653,131 445,093 97,098,224
Investments in Capital
Net of Related Debt 271,543,602 5,149,972 276,693,574
Restricted 40,196,802 74,060 40,270,862
Unrestricted 60,788,071 15,483,043 76,271,114
Total Net Assets $ 372,528,475 $ 20,707,075 $ 393,235,550
City of Menlo Park's Net Assets
5
In the Statement of Net Assets and the Statement of Activities and Changes in Net Assets, we separate the
City activities as follows:
Governmental activities:
Most of the City’s basic services are reported in this category, including the General Government, Public
Safety, Public Works, Culture and Recreation that includes the library services, Community Development,
and Urban Development and Housing. Property and sales taxes, user fees, interest income, franchise fees,
and state and federal grants finance these activities.
Business- type activities:
The City charges a fee to customers to cover all or most of the cost of certain services it provides. The City’s
Water system activities are reported in this category.
Governmental Business- Type
Activities Activities Total
Revenues:
Program Revenues:
Charges for Services $ 14,927,549 $ 3,754,693 $ 18,682,242
Operating Grants and Contributions 2,418,574 - 2,418,574
Capital Grants and Contributions 80,579 - 80,579
General Revenue:
Property Taxes 16,878,085 - 16,878,085
Sales Taxes 6,580,473 - 6,580,473
Motor Vehicle License 1,394,880 - 1,394,880
Other Taxes 1,565,592 - 1,565,592
Investment Earnings 1,464,350 130,482 1,594,832
Miscellaneous 107,531 - 107,531
Total Revenues 45,417,613 3,885,175 49,302,788
Expenses:
General Government 8,375,348 - 8,375,348
Public Safety 8,010,385 - 8,010,385
Public Works 9,742,184 - 9,742,184
Culture and Recreation 7,971,110 - 7,971,110
Community Development 7,780,767 - 7,780,767
Interest on Long- term Debt 4,679,811 - 4,679,811
Water Operations - 3,555,582 3,555,582
Total Expenses 46,559,605 3,555,582 50,115,187
Increase ( Decrease) in Net Assets before Transfers ( 1,141,992) 329,593 ( 812,399)
Transfers 216,700 ( 216,700) -
Changes in Net Assets ( 925,292) 112,893 ( 812,399)
Net Assets - Beginning of the Year ( as restated) 373,453,767 20,594,182 394,047,949
Net Assets - End of the Year $ 372,528,475 $ 20,707,075 $ 393,235,550
City of Menlo Park's Changes in Net Assets
Fiscal Year Ending June 30, 2004
6
FUND FINANCIAL STATEMENTS
The fund financial statements provide detailed information about the most significant funds— not the City
as a whole. Some funds are required to be established by State law and by bond covenants. However,
management establishes many other funds to help it control and manage money for particular purposes or
to show that it is meeting legal responsibilities for using certain taxes, grants, and other money.
Governmental funds:
Most of the City’s basic services are reported in governmental funds, which focus on how money flows into
and out of those funds and the balances left at year- end that are available for spending. These funds are
reported using an accounting method called modified accrual accounting, which measures cash and all
other financial assets that can readily be converted to cash. The governmental fund statements provide a
detailed short- term view of the City’s general government operations and the basic services it provides.
Governmental fund information helps determine whether there are more or fewer financial resources that
can be spent in the near future to finance the City’s programs. The differences of results in the
Governmental fund financial statements to those in the Government- Wide financial statements are
explained in a reconciliation schedule following each Governmental Fund financial statement.
Proprietary funds:
When the City charges customers for the services it provides— whether to outside customers or to other
units of the City— these services are generally reported in proprietary funds. Proprietary funds are
reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of
Revenues, Expenses and Changes in Fund Net Assets. In fact, the City’s enterprise funds are the same as
the business- type activities reported in the government- wide statements but provide more detail and
additional information, such as cash flows, for proprietary funds.
Fiduciary Funds:
The City is the trustee, or fiduciary, for certain funds held on behalf of individuals, private organizations,
other governments and/ or other funds. The City’s fiduciary activities are reported in separate Statements
of Fiduciary Net Assets. We exclude these activities from the City’s other financial statements because the
City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets
reported in these funds are used for their intended purposes.
Notes to the Financial Statements:
The notes provide additional information that is essential to a full understanding of the data provided in
the Government- Wide and Fund financial statements.
Required Supplementary Information:
In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information providing a budgetary comparison statement for the general fund and
all major funds. It also includes Employees Pension Plan Schedule of Funding. Required supplementary
information can be found on pages 71 through 76 of this report.
7
GOVERNMENT- WIDE FINANCIAL ANALYSIS
As noted earlier, the City as a whole has net assets of $ 393,235,550 at June 30, 2004. Program expenses by
function, general revenues by major source, excess and/ or deficiency of revenues over expenses before
contributions to fund principal, special, and extraordinary items, and total assets are presented in the
Statement of Activities and Changes in Net Assets.
The City’s programs for governmental activities include General Government, Public Safety, Public Works,
Culture and Recreation, Community Development, and Urban Development and Housing. The programs
for the business type activities include the water services.
BUSINESS TYPE ACTIVITIES
Net assets for business- type activities were $ 20,707,075. Total program revenues for business- type activities
were $ 3,754,693. The main program revenue was Charges for Services of $ 3,754,693, related to the water
usage fee. Total expenses for the business- type activities were $ 3,555,582 during fiscal year 2004, which is
related to water operations.
FINANCIAL ANALYSIS OF INDIVIDUAL FUNDS
Major Fund Balances:
A key function of fund accounting is to segregate resources. In order to reduce frustration when different
individual funds are combined for financial reporting purposes and because it is common for governments
to have too many funds to include information on each individual fund within the basic financial
statements, Major fund reporting has been implemented with GASB 34. Each major individual fund is
required to be presented separately and all non- major governmental funds to be aggregated into a single
other governmental fund category. The General Fund is always considered a major fund. The criteria to
determine what other funds must be reported as a major fund are:
• Ten percent criterion. An individual fund reports at least 10 percent of any of the following: a) total
governmental fund assets, b) total governmental fund liabilities, c) total governmental fund
revenues, or d) total governmental fund expenditures.
• Five percent criterion. An individual governmental fund reports at least 5 percent of the total for
both governmental and enterprise funds of any one of the items for which it met the 10 percent
criterion.
Governmental Expenses by Activity
General
Government
18%
Public Safety
17%
Public Works
21%
Culture &
Recreation
17%
Community
Development
17%
Interest on
Long- term Debt
10%
Net Cost of Governmental Activities
( Net of Program Revenues)
General
Government
$ 2.6 million
Public Safety
$ 7.2 million
Public Works
$ 6.0 million
Culture &
Recreation
$ 4.1 million
Community
Development
$ 4.6 million
Interest on
Long- term
Debt
$ 4.7 million
8
The City’s major fund balances and aggregate other governmental funds balances are:
General Fund Balance:
Included as part of the general fund for financial reporting purposes is the General Fund, which is the
primary operating fund of the city.
At the end of the current fiscal year, undesignated fund balance of the General Fund was $ 22,173,564, while
total fund balance reached $ 31,697,333. As a measure of the General Fund’s liquidity, it may be useful to
compare both undesignated fund balance and total fund balance to total fund expenditures. Unreserved
fund balance represents 76% of total General Fund expenditures including transfers out, while total fund
balance represents 109% of that same amount.
During the current year, the fund balance of the General Fund decreased by $ 42,402. This represents 0.1%
of the General Fund operating budget. Of the total fund balance of $ 31,697,333 $ 1,543,774 is reserved for
certain commitments and $ 7,979,994 is designated for various items such as insurance claims, equipment
and infrastructure replacement and fiscal uncertainties leaving $ 22,173,564 as the undesignated fund
balance.
The available fund balance of the City’s General Fund decreased by $ 42,402 during the current fiscal year.
Key factors in the decline are as follows:
• Operating expenditures were $ 362,980 over operating revenues.
• Operating transfers- in exceeded operating transfers- out by $ 315,037.
Special Revenue Fund Balance:
At the end of the current fiscal year, the total fund balance of all the Special Revenue Funds is $ 45,238,722.
During the year, the total fund balance decreased by $ 4,415,302. The key factors in the change are as
follows:
• Community Development Agency is continuing construction of redevelopment projects.
Capital Projects Fund Balance:
At June 30, 2004, the total fund balance for the Capital Projects Funds is $ 19,121,584. This is the result of a
$ 3,067,093 decrease in fund balance during the fiscal year. The key factors in the change of the total fund
balance are as follows:
• Parks and Recreation projects and urban development projects were started or being continued.
Increase
June 30, June 30, ( Decrease)
Fund Balances for Major Funds 2004 2003 From 2002- 03
General Fund $ 31,697,333 $ 31,739,735 ($ 42,402)
Community Development Block Grant Fund 731 566 165
Community Development Agency Fund 29,837,542 34,721,245 ( 4,883,703)
Other Governmental Funds 35,664,088 38,129,041 ( 2,464,953)
Water Fund 20,707,075 20,594,182 112,893
TOTAL $ 117,906,769 $ 125,184,769 ($ 7,278,000)
9
Enterprise Funds:
The City has one enterprise operation: the Water Fund. An enterprise fund accounts for activities that are
financed and operated in a manner similar to private business enterprises. The City Council has
determined that the cost of providing these services to the public be recovered primarily through user
charges.
The Water Fund accounts for water supplied to approximately 4,000 customers. The retained earnings at
June 30, 2004 were $ 20,707,075, an increase of $ 112,893. The City adopted consumption block rates ranging
from $ 0.80/ ccf to $ 1.60/ ccf, along with a $. 35/ ccf capital surcharge, as recommended in the rate study done
by Bartle Wells and Associates. The rates are structured to encourage water conservation; to increase
operating fund balance; to support capital improvement projects; and to find new sources of water.
Fiduciary Operations:
The City Council contracts with the State of California Public Employees Retirement System ( PERS) for
retirement coverage for City employees. As of June 30, 2003, the City had excess assets of $ 5,091,147 in the
Safety Plan and $ 2,595,667 in the Miscellaneous Plan. Deviations from the assumptions made by the
Retirement System and enhancements made to the safety employees benefit drive the FY 2005- 06
contribution rates as follows:
Miscellaneous employees group 11.508%
Safety employees group 26.360%
DEBT ADMINISTRATION
As of June 30, 2004, the City has various debt obligations outstanding. These debt obligations are
comprised of:
Type Principal Outstanding
General Obligation Bonds $ 16,930,000
Tax Allocation Bonds 70,070,000
During fiscal year 1995- 1996, the City issued $ 4,630,000 of General Obligation Refunding Bonds, Series 1996
to refund and defease $ 4,080,000 of the $ 4,665,000 aggregate principal amount of the outstanding City of
Menlo Park Library Improvement Project General Obligation Bonds, Series 1990. The proceeds of the 1990
Bonds were used to finance certain improvements to the City’s library, including the renovation of existing
structures and the construction of additional facilities. The balance of the 1996 General Obligation
Refunding Bonds at June 30, 2004 was $ 3,815,000. The bonds are to be paid from special assessments to
property owners within the City.
During fiscal year 1995- 1996, the City issued $ 32,305,000 of Community Development Agency of the City of
Menlo Park Las Pulgas Community Development Project Tax Allocation Refunding Bonds, Series 1996 to
refund and defease the Agency’s outstanding Series 1988 Bonds issued in the original principal amount of
$ 4,720,000, to refund and defease the outstanding Series 1992 Bonds issued in the original principal amount
of $ 25,000,000, to fund a reserve account, and to pay costs of issuance incurred in connection with the
issuance, sale and delivery of the 1996 Bonds. The balance of the 1996 Tax Allocation Bonds at June 30, 2004
was $ 26,450,000.
10
During fiscal year 2000- 2001, the City issued $ 44,000,000 of Community Development Agency of the City of
Menlo Park Las Pulgas Community Development Project Tax Allocation Bonds, Series 2000 to finance
certain capital projects of benefit to the Las Pulgas Community Development Project. The balance of the
2000 Tax Allocation Bonds at June 30, 2004 was $ 43,620,000.
During fiscal year 2001- 2002 the City issued $ 13,245,000 of General Obligation Bonds, Series 2002 to finance
certain parks and recreation improvements. The balance of the 2002 General Obligation Bonds at June 30,
2004 was $ 13,115,000.
CAPITAL ASSETS
The City’s investment in capital assets for its governmental and business type activities as of June 30, 2004,
amounts to $ 363,681,863, net of accumulated depreciation of $ 57,207,547. This investment in capital assets
includes land, buildings, improvements, machinery and equipment, infrastructure and construction in
progress. Infrastructure assets are items that are normally immovable and of value only to the City such as
roads, bridges, streets and sidewalks, drainage systems, lighting systems and similar items. The total
changes to the City’s investment in capital assets for the current fiscal year was $ 5,384,082, net of
accumulated depreciation.
Major capital asset additions during the current fiscal year included the following:
• City- wide street resurfacing - $ 916,578
• Hamilton Avenue Streetscape - $ 3,972,918
• Belle Haven Community Park - $ 715,673
• Burgess Park Improvements - $ 988,271
• Nealon Park Improvements - $ 562,084
Additional information on the City’s capital assets can be found in note 5 on pages 53 through 55 of this
report.
GENERAL FUND BUDGETARY HIGHLIGHTS
Comparing the FY 2003- 04 General Fund original expenditure budget ( or adopted) including the transfers
out amount of $ 28,359,851 to the final budget amount of $ 31,548,944 shows a net increase of $ 3,189,093.
Major increases in the budget include:
• $ 1,400,000 increase in transfers- out for General Fund.
• $ 1,400,000 increase in General Government for settlement payment.
Included in this figure is $ 244,995 in committed purchase orders from the prior June 30 balance. The
resulting beginning budget balance was equal to $ 28,604,846.
11
ECONOMIC CONDITION AND OUTLOOK
During fiscal year 2003- 04, the City still experienced a decline of sales tax revenue associated with the
national recession. In addition, the lower interest rates have meant a lower earning potential for the City’s
investments. The economic downturn has severely impacted the State of California and, in turn, any
solution will include moderate cuts to local governments.
The City of Menlo Park contains a healthy balance of residential, commercial, and industrial uses. The
residential home prices are among the highest in the area and therefore the City will have a healthy
property tax base. The City has an overall low rate of population growth, which minimizes the need for
increased City services. In addition, the modest commercial and light industrial areas typically generate
more revenues than they incur in costs for the City. These two factors will help continue the City’s financial
stability.
REQUESTS FOR INFORMATION
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors
with a general overview of the City’s finances and to show the City’s accountability for the money it
receives. If you have questions about this report or need additional financial information, contact the City of
Menlo Park Finance Department, 701 Laurel Street, California 94025.
12
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BASIC FINANCIAL STATEMENTS
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14
GOVERNMENT- WIDE
FINANCIAL STATEMENTS
15
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16
City of Menlo Park
Statement of Net Assets
June 30, 2004
Governmental Business- Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments $ 64,195,433 $ 15,612,546 $ 7 9,807,979
Receivables:
Accounts 2,689,292 3 03,852 2,993,144
Interest 3 53,437 8 5,798 439,235
Notes 9,373,402 - 9 ,373,402
Deposits and prepaid items 43,432 - 43,432
Total current assets 76,654,996 16,002,196 92,657,192
Noncurrent assets:
Restricted cash and investments 33,994,719 - 3 3,994,719
Capital assets
Non- depreciable 2 63,300,307 1,328,747 2 64,629,054
Depreciable, net 9 5,231,584 3,821,225 9 9,052,809
Total capital asset 358,531,891 5,149,972 3 63,681,863
Total noncurrent assets 392,526,610 5,149,972 3 97,676,582
Total assets 4 69,181,606 2 1,152,168 4 90,333,774
LIABILITIES
Current liabilities:
Accounts payable 3,326,274 3 28,468 3,654,742
Accrued payroll 1,176,707 2 3,932 1,200,639
Interest payable 6 76,128 - 676,128
Deposits 2 50,314 4 7,348 297,662
Compensated absences due within one year 753,341 1 9,045 772,386
Unearned revenue 8 13,805 - 813,805
Claims payable due within one year 8 97,726 - 897,726
Long- term debt due within one year 1 ,770,000 - 1 ,770,000
Total current liabilities 9 ,664,295 418,793 1 0,083,088
Noncurrent liabilities:
Claims payable 7 16,128 - 716,128
Compensated absences due in more than one year 1,042,708 2 6,300 1,069,008
Long- term debt due in more than one year 8 5,230,000 - 8 5,230,000
Total noncurrent liabilities 8 6,988,836 2 6,300 8 7,015,136
Total liabilities 96,653,131 4 45,093 9 7,098,224
NET ASSETS
Invested in capital assets, net of related debt 271,543,602 5,149,972 2 76,693,574
Restricted for:
Capital projects 36,959,941 5 0,413 3 7,010,354
Debt service 1,142,055 - 1,142,055
Special projects 2,094,806 2 3,647 2,118,453
Unrestricted 60,788,071 15,483,043 7 6,271,114
$ 3 72,528,475 $ 2 0,707,075 $ 393,235,550
Primary Government
See accompanying Notes to Basic Financial Statements.
Total net assets
17
City of Menlo Park
Statement of Activities and Changes in Net Assets
For the year ended June 30, 2004
Operating Capital
Charges for Grants and Grants and
Functions/ Programs Expenses Services Contributions Contributions Total
Primary government:
Governmental activities:
General Government $ 8 ,375,348 $ 5 ,707,675 $ 5 5,799 $ - $ 5 ,763,474
Public Safety 8 ,010,385 5 26,542 2 79,545 - 8 06,087
Public Works 9 ,742,184 2 ,914,762 7 84,659 8 0,579 3 ,780,000
Culture and recreation 7 ,971,110 2 ,909,707 1 ,003,537 - 3 ,913,244
Community development 7 ,780,767 2 ,868,863 2 95,034 - 3 ,163,897
Interest on long- term debt 4 ,679,811 - - - -
Total governmental activities 4 6,559,605 1 4,927,549 2 ,418,574 8 0,579 1 7,426,702
Business- type activities:
Water 3 ,555,582 3 ,754,693 - - 3 ,754,693
Total business- type activities 3 ,555,582 3 ,754,693 - - 3 ,754,693
Total primary government $ 5 0,115,187 $ 1 8,682,242 $ 2 ,418,574 $ 8 0,579 $ 2 1,181,395
General Revenues:
Taxes:
Property taxes
Sales taxes
Motor vehicle license
Other taxes
Total taxes
Investment earnings
Miscellaneous
Transfers
Total general revenues and transfers
Change in net assets
Net assets - beginning of year, as restated ( Note 18)
Net assets - end of year
See accompanying Notes to Basic Financial Statements.
Program Revenues
18
Governmental Business- Type
Activities Activities Total
$ ( 2,611,874) $ - $ ( 2,611,874)
( 7,204,298) - ( 7,204,298)
( 5,962,184) - ( 5,962,184)
( 4,057,866) - ( 4,057,866)
( 4,616,870) - ( 4,616,870)
( 4,679,811) - ( 4,679,811)
( 29,132,903) - ( 29,132,903)
- 1 99,111 1 99,111
- 1 99,111 1 99,111
( 29,132,903) 1 99,111 ( 28,933,792)
1 6,878,085 - 1 6,878,085
6 ,580,473 - 6 ,580,473
1 ,394,880 - 1 ,394,880
1 ,565,592 - 1 ,565,592
2 6,419,030 - 2 6,419,030
1 ,464,350 1 30,482 1 ,594,832
1 07,531 - 1 07,531
2 16,700 ( 216,700) -
2 8,207,611 ( 86,218) 2 8,121,393
( 925,292) 1 12,893 ( 812,399)
3 73,453,767 2 0,594,182 3 94,047,949
$ 3 72,528,475 $ 2 0,707,075 $ 3 93,235,550
$ 3 72,528,475 $ 2 0,707,075
and Changes in Net Assets
Net ( Expense) Revenue
19
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20
FUND FINANCIAL STATEMENTS
21
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22
GOVERNMENTAL FUND
FINANCIAL STATEMENTS
General Fund - Account for all revenues and expenditures necessary to carry out basic governmental
activities of the City that are not accounted for through other funds. For the City, the General Fund includes
such activities as police, planning, engineering, public works operations and maintenance, and legal and
administrative services.
Community Development Block Grant Fund - Established to account for Federal Housing and Community
Development Block Grant funds utilized for single family housing rehabilitation and related administration.
Community Development Agency Fund - Established to account for tax increment property taxes received
under State of California Health and Safety Code Division 24, Part 1. Funds are utilized to reduce and
eliminate visual, economic, physical and social blight existing within the Agency's project area( s).
23
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24
City of Menlo Park
Balance Sheet
Governmental Funds
June 30, 2004
Community Community
Development Development Non- Major Total
General Block Grant Agency Governmental Governmental
Fund Special Revenue Special Revenue Funds Funds
ASSETS
Cash and investments $ 31,937,710 $ - $ 7,858,367 $ 24,399,356 $ 64,195,433
Restricted cash and investments - - 23,212,203 10,782,516 33,994,719
Receivables:
Accounts 1,283,409 416,090 - 989,793 2,689,292
Interest 234,755 - 43,207 75,475 353,437
Notes 1,370,542 2,318,844 4,766,260 917,756 9,373,402
Deposits and prepaid items 43,432 - - - 43,432
Due from other funds - - 402,959 16,615 419,574
Advances to other funds - 500,000 - - 500,000
Total assets $ 34,869,848 $ 3,234,934 $ 36,282,996 $ 37,181,511 $ 111,569,289
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 723,813 $ 2,858 $ 1,649,125 $ 950,478 $ 3,326,274
Accrued payroll 1,037,662 4,795 57,379 76,871 1,176,707
Compensated absences 677,257 4,747 27,255 44,082 753,341
Due to other funds - 402,959 - 16,615 419,574
Deposits 250,314 - - - 250,314
Deferred revenue 483,469 2,818,844 4,211,695 429,377 7,943,385
Advances from other funds - - 500,000 - 500,000
Total liabilities 3,172,515 3,234,203 6,445,454 1,517,423 14,369,595
Fund Balances
Reserved 1,543,775 3,263 6,375,938 6,977,610 14,900,586
Unreserved:
Designated, reported in:
Major funds 7,979,994 - 12,770,877 - 20,750,871
Non- major funds:
Special revenue funds - - - 4,974,456 4,974,456
Capital project funds - - - 15,069,164 15,069,164
Undesignated, reported in:
Major funds 22,173,564 ( 2,532) 10,690,727 - 32,861,759
Non- major funds:
Special revenue funds - - - 8,642,858 8,642,858
Total Unreserved 30,153,558 ( 2,532) 23,461,604 28,686,478 82,299,108
Total fund balances 31,697,333 731 29,837,542 35,664,088 97,199,694
Total liabilities and fund balances $ 34,869,848 $ 3,234,934 $ 36,282,996 $ 37,181,511 $ 111,569,289
$ 31,697,333 $ 731 $ 29,837,542 $ 35,664,088 $ -
See accompanying Notes to Basic Financial Statements.
Major Funds
25
City of Menlo Park
Reconciliation of the Governmental Funds Balance Sheet
to the Government- Wide Statement of Net Assets
June 30, 2004
Total Fund Balances - Total Governmental Funds $ 97,199,694
Capital assets used in governmental activities were not current financial resources. Therefore, they were
not reported in the Governmental Funds Balance Sheet.
Non- depreciable 263,300,307
Depreciable, net 95,231,584
Interest payable on long- term debt did not require current financial resources. Therefore, interest
payable was not reported as a liability in the Governmental Funds Balance Sheet. ( 676,128)
Deferred revenues recorded in governmental fund financial statements resulting from activities in which
revenues were earned but funds were not available are reclassified as revenues in the Government- Wide
Financial Statements. 7,129,580
Long- term liabilities were not due and payable in the current period. Therefore, they were not reported
in the Governmental Funds Balance Sheet.
Long- term liabilities - due within one year:
Claims and judgments payable ( 897,726)
Long- term debt ( 1,770,000)
Long- term liabilities - due in more than one year:
Claims and judgments payable ( 716,128)
Compensated absences payable ( 1,042,708)
Long- term debt ( 85,230,000)
Net Assets of Governmental Activities $ 372,528,475
372,528,475
-
See accompanying Notes to Basic Financial Statements.
Amounts reported for Governmental Activities in the Statement of Net Assets were different because:
26
City of Menlo Park
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2004
Community Community
Development Development Non- Major Total
General Block Grant Agency Governmental Governmental
Fund Special Revenue Special Revenue Funds Funds
REVENUES:
Taxes:
Secured property taxes $ 5,741,883 $ - $ 9,016,592 $ - $ 14,758,475
Unsecured property taxes 510,438 - 1,069,412 - 1,579,850
Other property taxes 539,761 - - 494 540,255
Sales taxes 6,048,940 - - 1,138,329 7,187,269
Franchise and occupancy taxes 2,202,364 - - - 2,202,364
Special assessments - - - 3,501,335 3,501,335
Licenses and permits 2,553,997 - - 337,026 2,891,023
Fines and forfeitures 756,678 - - - 756,678
Use of money and property 688,429 - 426,424 343,583 1,458,436
Intergovernmental 2,322,221 127,311 - 1,233,405 3,682,937
Charges for services 4,367,440 582,472 - 1,590,451 6,540,363
Other 14,700 - 350 92,480 107,530
Total revenues 25,746,851 709,783 10,512,778 8,237,103 45,206,515
EXPENDITURES:
Current:
General government 5,912,521 - - 1,467,979 7,380,500
Public safety 7,634,558 - - 192,037 7,826,595
Public works 3,642,424 - - 3,570,988 7,213,412
Culture and recreation 6,904,366 - - 693,604 7,597,970
Rehabilitation loans - 582,200 - - 582,200
Community development 1,817,044 - 806,645 236,111 2,859,800
Urban development and housing - 127,418 4,162,030 14,871 4,304,319
Capital outlay 198,918 - 5,182,647 3,547,356 8,928,921
Debt service:
Principal - - 1,280,000 345,000 1,625,000
Interest - - 3,811,159 880,363 4,691,522
Total expenditures 26,109,831 709,618 15,242,481 10,948,309 53,010,239
REVENUES OVER ( UNDER) EXPENDITURES ( 362,980) 165 ( 4,729,703) ( 2,711,206) ( 7,803,724)
OTHER FINANCING SOURCES ( USES):
Transfers in 3,213,220 - - 230,483 3,443,703
Transfers out ( 2,897,483) - ( 154,000) ( 175,520) ( 3,227,003)
Proceeds from sale of fixed assets 4,841 - - 191,290 196,131
Total other financing sources ( uses) 320,578 - ( 154,000) 246,253 412,831
Net change in fund balances ( 42,402) 165 ( 4,883,703) ( 2,464,953) ( 7,390,893)
FUND BALANCES:
Beginning of year 31,739,735 566 34,721,245 38,577,118 105,038,664
Prior period adjustment ( Note 17) - - - ( 448,077) ( 448,077)
Beginning of year, as restated 31,739,735 566 34,721,245 38,129,041 104,590,587
End of year $ 31,697,333 $ 731 $ 29,837,542 $ 35,664,088 $ 97,199,694
See accompanying Notes to Basic Financial Statements.
Major Funds
27
City of Menlo Park
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in
Fund Balances to the Government- Wide Statement of Activities and Changes in Net Assets
For the year ended June 30, 2004
Net Change in Fund Balances - Total Governmental Funds $ ( 7,390,893)
Governmental Funds reported aquisition of capital assets as expenditures in various functions and in
capital outlay. However, in the Government- Wide Statement of Activities and Changes in Net Assets,
the cost of those assets was allocated over their estimated useful lives as depreciation expense. This was
the amount of capital assets recorded in the current period. 9,229,926
Depreciation expense on capital assets was reported in the Government- Wide Statement of Activities
and Changes in Net Assets, but they did not require the use of current financial resources. Therefore,
depreciation expense was not reported as expenditures in Governmental Funds. ( 3,793,536)
Loss on the disposal of capital assets was reported in the Government- Wide Statement of Activities and
Changes in Net Assets, but they did not require the use of current financial resources. Therefore, it was
not reported as expenditures in Governmental Funds. ( 403,881)
Proceeds from sale of fixed assets were reported in Governmental Funds as revenue. However, in the
Government- Wide Statement of Activities and Changes in Net Assets, the amount is included in the
calculation of gain/ loss on disposal of capital assets. ( 196,131)
Revenues that have not met the revenue recognition criteria in the Fund Financial statements are
recognized as revenue in the Government- Wide Financial Statements. 211,098
Expenses to accrue for long- term compensated absences and claims liability is reported in the
Government- Wide Statement of Activities and Changes in Net Assets, but they do not require the use of
current financial resources. Therefore, these expenses are not reported in Governmental Funds. ( 218,586)
Bond proceeds provided current financial resources to Governmental Funds, but issuing debt increased
long- term liabilities in the Government- Wide Statement of Net Assets. Repayment of bond principal was
an expenditure in Governmental Funds, but the repayment reduced long- term liabilities in the
Government- Wide Statement of Net Assets.
Long- term debt repayments: 1 ,625,000
Interest expense on long- term debt was reported in the Government- Wide Statement of Activities and
Changes in Net Assets, but they did not require the use of current financial resources. Therefore, interest
expense was not reported as expenditures in Governmental Funds. The following amount represented
the change in accrued interest from prior year. 11,711
Change in Net Assets of Governmental Activities $ ( 925,292)
$ ( 925,292)
See accompanying Notes to Basic Financial Statements.
Amounts reported for governmental activities in the Statement of Activities were different because:
28
Water Fund - Established to account for the water distribution operations.
PROPRIETARY FUND
FINANCIAL STATEMENTS
Enterprise funds are used to account for activities that are financed and operated in a manner similar to
private business enterprises. The City Council has determined that the cost of providing the following
services to the public be recovered primarily through user charges.
29
City of Menlo Park
Statement of Net Assets
Proprietary Funds
June 30, 2004
Major Fund
Water
ASSETS
Current assets:
Cash and investments $ 15,612,546
Receivables:
Accounts 303,852
Interest 85,798
Total current assets 16,002,196
Noncurrent assets:
Non- depreciable 1,328,747
Depreciable, net 3,821,225
Total noncurrent assets 5,149,972
Total assets 21,152,168
LIABILITIES
Current liabilities:
Accounts payable 328,468
Accrued payroll 23,932
Deposits 47,348
Compensated absences 19,045
Total current liabilities 418,793
Noncurrent liabilities:
Compensated absences due in more than one year 26,300
Total noncurrent liabilities 26,300
Total liabilities 445,093
NET ASSETS
Invested in capital assets, net of related debt 5,149,972
Restricted for:
Capital projects 50,413
Special projects 23,647
Unrestricted 15,483,043
Total net assets $ 20,707,075
See accompanying Notes to Basic Financial Statements.
30
City of Menlo Park
Statement of Revenues, Expenses and Changes in Fund Net Assets
Proprietary Funds
For the year ended June 30, 2004
Major Fund
Water
OPERATING REVENUES:
Water sales $ 3,753,080
Connection fees 1,613
Total operating revenues 3,754,693
OPERATING EXPENSES:
Cost of sales and services 2,998,272
General and administrative 433,343
Depreciation 123,967
Total operating expenses 3,555,582
OPERATING INCOME ( LOSS) 199,111
NONOPERATING REVENUES ( EXPENSES):
Interest income 130,482
Total nonoperating revenues 130,482
INCOME ( LOSS) BEFORE OPERATING TRANSFERS 329,593
OPERATING TRANSFERS:
Transfers out ( 216,700)
Total operating transfers ( 216,700)
Net income ( loss) 112,893
NET ASSETS:
Beginning of year 20,594,182
End of year $ 20,707,075
$ 20,707,075
$ -
See accompanying Notes to Basic Financial Statements.
31
City of Menlo Park
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2004
Major Fund
Water
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers/ other funds $ 3 ,814,388
Cash payment to suppliers ( 2,923,443)
Cash payments for general and administrative ( 399,284)
Net cash provided ( used) by operating activities 4 91,661
-
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers out ( 216,700)
Net cash provided ( used) by noncapital financing activities ( 216,700)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition and construction of capital assets ( 242,405)
Net cash provided ( used) by capital and related financing activities ( 242,405)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment income 1 44,330
Net cash provided ( used) by investing activities 1 44,330
Net increase ( decrease) in cash and cash equivalents 1 76,886
CASH AND CASH EQUIVALENTS:
Beginning of year 1 5,435,660
End of year $ 1 5,612,546
$ 1 5,612,546
RECONCILIATION OF OPERATING INCOME ( LOSS) TO NET $ -
CASH PROVIDED ( USED) BY OPERATING ACTIVITIES:
Operating income ( loss) $ 1 99,111
Adjustments to reconcile operating income ( loss) to net
cash provided ( used) by operating activities:
Depreciation 1 23,967
Changes in current assets and liabilities:
Accounts receivable 5 4,534
Accounts payable 7 4,829
Accrued payroll 8 ,030
Compensated absences 2 6,028
Deposits 5 ,162
Total adjustments 2 92,550
Net cash provided ( used) by operating activities $ 4 91,661
See accompanying Notes to Basic Financial Statements.
32
FIDUCIARY FUND
FINANCIAL STATEMENTS
Agency Funds are custodial in nature ( assets equal liabilities) and do not involve measurements of results of
operations. They are used to account for assets held in an agency capacity for others and therefore cannot be
used to support the City's programs.
33
City of Menlo Park
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2004
Agency
Funds
ASSETS
Cash and cash equivalents $ 155,070
Total assets $ 155,070
LIABILITIES
Accounts payable $ 94,229
Deposits 60,841
Total liabilities $ 155,070
$ -
See accompanying Notes to Basic Financial Statements.
34
NOTES TO BASIC
FINANCIAL STATEMENTS
35
36
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City of Menlo Park
Notes to Basic Financial Statements
For the year ended June 30, 2004
37
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of Menlo Park ( City) was incorporated under the General Laws of the State of California and
enjoys all the rights and privileges pertaining to such “ General Law” cities. The City uses the City
Council/ Manager form of government. The financial reporting entity consists of ( a) the primary
government, the City; ( b) organizations for which the primary government is financially accountable;
and ( c) other organizations for which the primary government is not accountable, but for which the
nature and significance of their relationship with the primary government are such that exclusion
would cause the reporting entity’s financial statements to be misleading or incomplete.
Component units are legally separate organizations for which the elected officials of the primary
government are financially accountable. In addition, component units can be other organizations for
which the primary government’s exclusion would cause the reporting entity’s financial statements to be
misleading or incomplete.
The following is a brief review of the component unit included in the accompanying Basic Financial
Statements of the City.
Community Development Agency of the City of Menlo Park - The Community Development Agency
( Agency) was established in November 1981 pursuant to the State of California Health and Safety
Codes, Section 33000, entitled “ Community Redevelopment Law.” Its purpose is to prepare and
carry out plans for the improvement, rehabilitation, and redevelopment of blighted areas within the
territorial limits of the City.
The criteria used in determining the scope of the reporting entity are based on the provisions of GASB
Statement No. 14, The Financial Reporting Entity. The City is the primary government unit. Component
units are those entities which are financially accountable to the primary government, either because the
City appoints a voting majority of the component unit’s board, or because the component unit will
provide a financial benefit or impose a financial burden on the City. The Agency has been accounted
for as a “ blended” component unit of the City. Despite being legally separate, this entity is so
intertwined with the City that it is, in substance, part of the City’s operations. Accordingly, the
balances and transactions of these component units are reported within the funds of the City. Balances
for the Agency consisting of special revenue, debt service and capital projects are reported as separate
funds.
The following specific criteria were used in determining that the Agency was a blended component
unit:
􀂾 The members of the City Council also act as the governing bodies of the Agency.
􀂾 The Agency is managed by employees of the City. A portion of the City’s salary and overhead
expenses are billed to the Agency each year.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
38
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
A. Reporting Entity, Continued
􀂾 The City and the Agency are financially interdependent. The City makes loans to the Agency to
use for redevelopment purposes. Property tax revenues of the Agency are used to repay the
loans to the City.
Detailed financial statements are available for the above component unit from the City’s Finance
Department.
B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for with a separate set of self- balancing
accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses as
appropriate. Government resources are allocated to and accounted for in individual funds based upon
the purpose for which they are to be spent and the means by which spending activities are controlled.
Government– Wide Financial Statements
The City government– wide financial statements include a Statement of Net Assets and a Statement of
Activities and Changes in Net Assets. These statements present summaries of governmental and
business- type activities for the City, the primary government, accompanied by a total column.
Fiduciary activities of the City are not included in these statements.
These government- wide financial statements are presented on an “ economic resources” measurement
focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including
capital assets and related infrastructure assets and long- term liabilities, are included in the
accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets.
Under the accrual basis of accounting, revenues are recognized in the period in which they are earned
while expenses are recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
􀂾 Charges for services
􀂾 Operating grants and contributions
􀂾 Capital grants and contributions
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables and receivables. All internal balances in the Statement of Net Assets have been
eliminated except those representing balances between the governmental activities and the business-type
activities, which are presented as internal balances and eliminated in the total primary
government column. However, those transactions between governmental and business- type activities
have not been eliminated. The following interfund activities have been eliminated:
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
39
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
􀂾 Due to/ from other funds
􀂾 Advances to/ from other funds
􀂾 Transfers in/ out
The City applies all applicable GASB pronouncements ( including all NCGA Statements and
Interpretations currently in effect) as well as the following pronouncements issued on or before
November 30, 1989, to the business- type activities, unless those pronouncements conflict with or
contradict GASB pronouncements: Financial Accounting Standards Board ( FASB) Statements and
Interpretations, Accounting Principles Board ( APB) Opinions, and Accounting Research Bulletins
( ARB) of the committee on Accounting Procedure. The City applies all applicable FASB Statements and
Interpretations issued after November 30, 1989, except those that conflict with or contradict GASB
pronouncements.
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances for all major governmental funds and non- major funds
aggregated. An accompanying schedule is presented to reconcile and explain the differences in net
assets as presented in these statements to the net assets presented in the government- wide financial
statements. The City has presented all major funds that met the applicable criteria.
All governmental funds are accounted for on a spending or “ current financial resources” measurement
focus and the modified accrual basis of accounting. Accordingly, only current assets and current
liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in
Fund Balances present increases ( revenue and other financing sources) and decreases ( expenditures
and other financing uses) in net current assets. Under the modified accrual basis of accounting,
revenues are recognized in the accounting period in which they become both measurable and available
to finance expenditures of the current period.
Revenues are recorded when received in cash, except those revenues subject to accrual ( generally 60
days after year- end) are recognized when due. The primary revenue sources, which have been treated
as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other
taxes. Expenditures are recorded in the accounting period in which the related fund liability is
incurred.
Deferred revenues arise when potential revenues do not meet both the “ measurable” and “ available”
criteria for recognition in the current period. Deferred revenues also arise when the government
receives resources before it has a legal claim to them, as when grant monies are received prior to
incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are
met or when the government has a legal claim to the resources, the deferred revenue is removed from
the balance sheet and revenue is recognized.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
40
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
The Reconciliation of the Fund Financial Statements to the Government- Wide Financial Statements is
provided to explain the differences created by the integrated approach of GASB Statement No. 34.
Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Assets, a Statement of Revenues,
Expenses and Change in Net Assets, and a Statement of Cash Flows for all proprietary funds.
Proprietary funds are accounted for using the “ economic resources” measurement focus and the accrual
basis of accounting. Accordingly, all assets and liabilities ( whether current or noncurrent) are included
on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets
presents increases ( revenues) and decreases ( expenses) in total net assets. Under the accrual basis of
accounting, revenues are recognized in the period in which they are earned while expenses are
recognized in the period in which liability is incurred.
Operating revenues in the proprietary funds are those revenues that are generated from the primary
operations of the fund. All other revenues are reported as nonoperating revenues. Operating expenses
are those expenses that are essential to the primary operations of the fund. All other expenses are
reported as nonoperating expenses.
Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a Statement of Net Assets. The City’s fiduciary funds
represent agency funds, which are custodial in nature ( assets equal liabilities) and do not involve
measurement of results of operations. The agency funds are accounted for on a spending or “ current
financial resources” measurement focus and the modified accrual basis of accounting as are the
governmental funds explained above. Fiduciary fund types are accounted for according to the nature
of the fund.
C. Use of Restricted and Unrestricted Net Assets
When an expense is incurred for purposes for which both restricted and unrestricted net assets are
available, the City’s policy is to apply restricted net assets first.
D. Cash and Investments
The City pools cash resources from all funds in order to facilitate the management of cash. The balance
in the pooled cash account is available to meet current operating requirements. Cash in excess of
current requirements is invested in various interest- bearing accounts and other investments for varying
terms.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
41
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
D. Cash and Investments, Continued
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments
and for External Investment Pools, highly liquid market investments with maturities of one year or less at
time of purchase are stated at amortized cost. All other investments are stated at fair value. Market
value is used as fair value for those securities for which market quotations are readily available.
The City participates in an investment pool managed by the State of California titled Local Agency
Investment Fund ( LAIF) which has invested a portion of the pooled funds in Structured Notes and
Asset- Backed Securities. LAIF’s investments are subject to credit risk with the full faith and credit of
the State of California collateralizing these investments. In addition, these Structured Notes and Asset-
Backed Securities are subject to market risk as to change in interest rates.
Cash equivalents are considered amounts in demand deposits and short- term investments with a
maturity date within three months of the date acquired by the City and are presented as “ Cash and
Investments” in the accompanying General Purpose Financial Statements.
E. Capital Assets
Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not
available. Donated fixed assets are valued at their estimated fair market value on the date donated.
City policy has set the capitalization threshold for reporting capital assets at $ 2,000. Depreciation is
recorded on a straight- line basis over estimated useful lives of the assets as follows:
Buildings 40 years
Other improvements 40 years
Equipment 3- 15 years
Infrastructure 15- 50 years
In June 1999, the Governmental Accounting Standards Board ( GASB) issued Statement No. 34 which
requires the inclusion of infrastructure capital assets in local governments’ basic financial statements.
In accordance with GASB Statement No. 34, the City has included all infrastructures into the current
Basic Financial Statements.
The City defines infrastructure as the basic physical assets that allow the City to function. The assets
include streets, sewer, and park lands. Each major infrastructure system can be divided into
subsystems. For example the street system can be subdivided into pavement, curb and gutters,
sidewalks, medians, streetlights, landscaping and land. These subsystems were not delineated in the
basic financial statements. The appropriate operating department maintains information regarding the
subsystems.
Interest accrued during capital assets construction, if any, is capitalized for the business- type and
proprietary funds as part of the asset cost.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
42
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
E. Capital Assets, Continued
For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement
No. 34 for infrastructure reporting. The City commissioned an appraisal of City owned infrastructure
and property as of June 30, 2002. This appraisal determined the original cost, which is defined as the
actual cost to acquire new property in accordance with market prices at the time of first
construction/ acquisition. Original costs were developed in one of three ways: ( 1) historical records; ( 2)
standard unit costs appropriate for the construction/ acquisition date; or ( 3) present cost indexed by a
reciprocal factor of the price increase from the construction/ acquisition date to the current date. The
accumulated depreciation, defined as the total depreciation from the date of construction/ acquisition to
the current date on a straight line, unrecovered cost method was computed using industry accepted life
expectancies for each infrastructure subsystem. The book value was then computed by deducting the
accumulated depreciation from the original cost.
F. Long- Term Obligations
In the Government- Wide Financial Statements the long- term obligations are reported as liabilities in the
appropriate funds.
The Fund Financial Statements do not present long- term debt but are shown in the Reconciliation of the
Governmental Funds Balance Sheet to the Government- Wide Statement of Net Assets.
G. Net Assets and Fund Equity
In the Government- Wide Financial Statements, net assets are classified in the following categories:
Invested in Capital Assets, Net of Related Debt – This amount consists of capital assets net of
accumulated depreciation and reduced by outstanding debt that attributed to the acquisition,
construction, or improvement of the assets.
Restricted Net Assets – This amount is restricted by external creditors, grantors, contributors, or laws
or regulations of other governments.
Unrestricted Net Assets – This amount is all net assets that do not meet the definition of “ invested in
capital assets, net of related debt” or “ restricted net assets.”
In the Fund Financial Statements, fund equity are reservations of fund balances of governmental funds
and retained earnings of proprietary funds are created to either satisfy legal covenants, including State
laws, that require a portion of the fund equity be segregated or identify the portion of the fund equity
not available for future expenditures.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
43
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
H. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
I. Compensated Absences
City employees have vested interests in varying levels of vacation, sick leave, and compensatory time.
If sick leave and vacation is not used by the employee during the term of employment, compensation is
payable to the employee at the time of retirement. Such compensation is calculated at the employees’
then prevalent rate at the time of retirement or termination. Whereas vacation is compensated at 100%
of accumulated hours, sick leave is accrued and compensated only at retirement at 15% of accumulated
hours. On termination, only accrued vacation is compensated and not sick leave. The liabilities for
current compensated absences of the governmental fund types are recorded in individual funds and the
noncurrent compensated absences appear in the Governmental- Wide financial statements. The
liabilities for compensated absences of proprietary funds are recorded as current liabilities in the
appropriate proprietary fund.
A recap of the maximum accruals by bargaining unit is as follows:
Bargaining Unit Vacation Sick Leave
SEIU 336 hours 1,160 hours
AFSCME 336 hours 1,240 hours
POA 424 hours 1,200 hours
PMA
Administration
1,348 hours combined
900 hours combined
J. Property Taxes
Under California law, property taxes are assessed and collected by the counties up to 1% of assessed
value, plus other increases approved by the voters. The property taxes go into a pool, and are then
allocated to the cities based on complex formulas. Accordingly, the City accrues only those taxes which
are receivable from the County of San Mateo ( County) within sixty days after year- end.
Lien Date March 1
Levy Date July 1
Due Date November 1 and February 1
Collection Date December 10 and April 10
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
44
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
J. Property Taxes, Continued
Property taxes levied are recorded as revenue when received, in the fiscal year of levy, because of the
adoption of the “ alternate method of property tax distribution,” known as the Teeter Plan, by the City
and the County. The Teeter Plan authorizes the Auditor/ Controller of the County to allocate 100% of
the secured property taxes billed, but not yet paid.
K. Interfund Balances/ Internal Balances
Advances to and advances from other funds represent interfund loans in the fund financial statements.
Advances between funds are offset by a fund balance reservation or by deferred revenue in the
applicable governmental funds to indicate that they are not available financial resources. Any unpaid
interest due to lack of funds in the borrowing fund increases the principal owed and is reported in the
lending fund as deferred revenue.
All other outstanding balances between funds are reported as due to and due from other funds. These
are generally repaid within the following fiscal year.
Any residual balances outstanding between the governmental activities and business- type activities are
reported in the Government- Wide Financial Statements as “ internal balances.”
2. CASH AND INVESTMENTS
The City maintains a cash and investment pool for all funds. Certain restricted funds which are held and
invested by independent outside custodians through contractual agreements are not pooled. These
restricted funds include cash with fiscal agents.
The investments made by the City Treasurer are limited to those allowable under State statutes as
incorporated into the City’s Investment Policy, dated July 1, 2003, and adopted June 24th, 2003 which is
more conservative than that allowed by State statute.
Under provisions of this policy, the City is authorized to invest in the following types of investments:
Certificates of Deposit Government Agency Securities
Bankers Acceptances Treasury Bills and Notes
Commercial Papers Passbook Savings Accounts
Repurchase Agreements State of California Local Agency Investment Fund
A. Cash Deposits
At June 30, 2004, the carrying amount of the City’s deposits was $ 78,104 and the bank balances were
$ 973,869. The total bank balance was covered by federal depository insurance or by collateral held by
the City’s agent in the City’s name.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
45
2. CASH AND INVESTMENTS, Continued
A. Cash Deposits, Continued
All pooled certificates of deposit and bank balances are entirely insured or collateralized. The
California Government Code requires California banks and savings and loan associations to secure an
agency’s deposits by pledging government securities as collateral. The market value of the pledged
securities must equal at least 110% of an agency’s deposits. California law also allows financial
institutions to secure local agency deposits by pledging first trust deed mortgage notes having a value
of 150% of a local agency’s deposits. The City may waive collateral requirements for deposits which are
fully insured up to $ 100,000 by the Federal Deposit Insurance Corporation ( FDIC).
The City’s cash deposits at year- end are categorized below to give an indication of the level of credit
risk assumed by the City.
Category 1 - Deposits which are insured by the FDIC.
Category 2 - Deposits which are collateralized. The California Government Code requires California
banks and savings and loan associations to secure a City’s deposits by pledging government
securities with a value of 110% of a City’s deposits, or by pledging first trust deed mortgage notes
having a value of 150% of a City’s total deposits.
Category 3 - Deposits which are uninsured or uncollateralized.
B. Investments
The City’s investments at year- end are categorized below to give an indication of the level of credit risk
assumed by the City.
Category 1 - Investments which are insured by the Securities Investors Protection Corporation
( SIPC), or investments which are held in definitive form by the City or the City’s agent in the City’s
name, or investments acquired through the federal reserve book- entry system where the financial
institution or broker/ dealer associated with the purchase is adequately segregated from the
custodial safekeeping agent on the same investments, and where the investments are recorded on
the books and records of the financial institution or broker/ dealer in the name of the City.
Category 2 - Investments which are uninsured, where the investments are acquired through a
financial institution’s investment or trading department, but are held in the same financial
institution’s trust department and are recorded in the City’s name in the trust department’s systems
and records.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
46
2. CASH AND INVESTMENTS, Continued
B. Investments, Continued
Category 3 - Investments which are uninsured, 1) where the investments are acquired through a
financial institution’s investment department but are held for custodial purposes in the same
financial institution’s safekeeping department, or 2) where the investments are acquired through a
financial institution’s trust department and held for custodial safekeeping by the same trust
department, or 3) where the investments are acquired through, and held for safekeeping by, the
same broker/ dealer, or 4) where investments are not held in the City’s name in the systems and
records of the financial institution or broker/ dealer.
Uncategorized - Certain cash deposits and investments are not subject to categorization under GASB
Statement No. 3, Deposits with Financial Institutions, Investments ( including Repurchase Agreements),
and Reverse Repurchase Agreements, and are identified as “ Not Required to be Categorized.”
C. Summary of Cash and Investments
The following is a summary of cash and investments at June 30, 2004:
Fund Financials
Fiduciary Funds
Governmental Business- Type Statement of
Activities Activities Total Net Assets Total
Cash and investments $ 6 4,195,433 $ 1 5,612,546 $ 7 9,807,979 $ 1 55,070 $ 7 9,963,049
Restricted cash and investments $ 3 3,994,719 $ - $ 3 3,994,719 $ - $ 3 3,994,719
Government- Wide Statement of Net Assets
Cash ( deposits) and investments were categorized as follows at June 30, 2004:
Not Required to Fair
Category 1 be Categorized Value
Cash and Investments:
Cash and Cash Deposits:
Checking $ 7 8,104 $ - $ 7 8,104
Petty cash 3 ,829 - 3 ,829
Total cash and cash deposits 81,933 - 81,933
Investments:
U. S. Treasury 9,849,730 - 9,849,730
Federal Home Loan Bank 24,783,564 24,783,564
Federal National Mortgage Association 10,897,500 10,897,500
Federal Home Loan Mortgage Corporation 1,972,300 - 1,972,300
Corporate Bonds 1,992,200 - 1,992,200
Local Agency Investment Fund - 30,385,822 30,385,822
Total investments 49,495,294 30,385,822 79,881,116
Total cash and investments $ 49,577,227 $ 30,385,822 $ 79,963,049
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
47
2. CASH AND INVESTMENTS, Continued
C. Summary of Cash and Investments, Continued
Investments to Maturity
Investments held by the City grouped by maturity date at June 30, 2004, are shown below:
Maturity
Current to One Year $ 32,377,382
One - Two Years 30,679,110
Two - Three Years 16,824,624
Total $ 79,881,116
At June 30, 2004, the City’s restricted cash and investments classified by risk category consisted of the
following:
Fair
Category 2 Value
Restricted Cash and Investments:
Other cash with fiscal agents:
Bank of New York:
Federal Securities $ 5,541,176 $ 5,541,176
Local Agency Investment Fund 28,453,479 28,453,479
Total Bank of New York 33,994,655 33,994,655
US Bank:
US Treasury Money Market 64 64
Total restricted cash and investments $ 33,994,719 $ 33,994,719
At June 30, 2004, the City had no Category 3 type pooled cash or investments.
External Investment Pool
The City’s investments with LAIF at June 30, 2004, included a small portion of the pooled funds
invested in Structured Notes and Asset- Backed Securities. These investments may include the
following:
Structured Notes - debt securities ( other than asset- backed securities) whose cash flow characteristics
( coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/ or
that have embedded forwards or options.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
48
2. CASH AND INVESTMENTS, Continued
C. Summary of Cash and Investments, Continued
Asset- Backed Securities - generally mortgage- backed securities which entitle their purchasers to
receive a share of the cash flows from a pool of assets such as principal and interest repayments
from a pool of mortgages ( such as CMO’s) or credit card receivables.
As of June 30, 2004, the City had $ 58,839,301 invested in LAIF, which had invested 1.603% of the pool
investment funds in Structured Notes and Asset- Backed Securities.
LAIF determines fair value on its investment portfolio based on market quotations for those securities
where market quotations are readily available and based on amortized cost or best estimate for those
securities where market value is not readily available. The City valued its investments in LAIF as of
June 30, 2004, by multiplying its account balance with LAIF times a fair value factor determined by
LAIF. This fair value factor was determined by dividing all LAIF participants’ total aggregate
amortized cost by total aggregate fair value.
Accordingly, as of June 30, 2004, the City’s investments in LAIF at fair value amounted to $ 58,839,301
using a LAIF fair value factor of 0.9983841770.
3. RECEIVABLES
A. Accounts Receivables
As of June 30, 2004, accounts receivable consisted of the following:
Governmental Business- Type
Taxes: Activities Activities Total
Property taxes $ 79,835 $ - $ 79,835
Sales taxes 652,333 - 652,333
Occupancy taxes 267,760 - 267,760
Special assessments 15,796 - 15,796
Total taxes 1,015,724 - $ 1,015,724
Franchise fees 120,843 - 120,843
Parking permits 268 - 268
Traffic fines 18,740 - 18,740
Rental income 8,186 - 8,186
Grants 1,126,893 - 1,126,893
Contributions 141,455 - 141,455
Water service fees - 3 03,852 303,852
Miscellaneous 257,183 - 257,183
Total accounts receivable $ 2,689,292 $ 3 03,852 $ 2,993,144
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
49
3. RECEIVABLES, Continued
B. Notes Receivables
As of June 30, 2004, notes receivable consisted of the following:
Notes
Receivable
Major Funds:
General Fund:
City Manager housing $ 1,370,542
Community Development Block Grant 2,318,844
Community Development Agency 4,766,260
Total general fund 8,455,646
Other Governmental Funds:
Below market rate housing 889,257
Emergency repair loan ( ERL) 28,499
Total special revenue funds 917,756
Total notes receivable $ 9,373,402
City Manager Housing
A note was entered into on June 13, 2001, between the City Manager and the City to assist in the
purchase of residential real estate property. This note is secured by a First Deed of Trust on the
property. Another note was entered into on March 18, 2003, between the City Manager and the City to
assist in the purchase of another residential real estate property. The note is secured by a Third Deed of
Trust. The outstanding balance of the loans at June 30, 2004, was $ 1,370,542.
Community Development Block Grant
The City uses Housing and Community Development Block Grant funds to provide housing
rehabilitation loans to eligible applicants. Loans bear no or very low interest and are not due until the
property changes ownership. Outstanding loans at June 30, 2004, were $ 2,318,844. Since the funds
have not been legally vested with the City as of June 30, 2004, these funds are reported as deferred
revenue.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
50
3. RECEIVABLES, Continued
B. Notes receivable, Continued
Community Development Agency
The City of Menlo Park Community Development Agency ( Agency) assumed a portfolio of loans which
had been made by Neighborhood Housing Services ( NHS) to low income residents of Menlo Park for
housing rehabilitation. The Agency had granted funds to the local NHS for that purpose and assumed
the loans when the NHS closed. The outstanding balance at June 30, 2004 was $ 38,935.
The Agency made a loan to Peninsula Habitat for Humanity for purchase of two mini- park lots as sites
to develop two single- family houses for very low- income homeowners. Loan repayment is structured
as a zero interest note with a twenty- year term. The outstanding balance at June 30, 2004, was $ 48,750.
The Agency made a loan to Mid- Peninsula Housing Coalition for purchase of a five- unit apartment
building for very low- income households. The loan carries a 3% simple interest rate, with payments
made from residual receipts of the property. The outstanding balance at June 30, 2004, was $ 252,522.
The Agency made housing rehabilitation loans to two eligible participants. Loans bear no or very low
interest and are not due until the property changes ownership. The outstanding balance at June 30,
2004, was $ 164,756.
On March 21, 2002, the Agency made a loan for Peace Officer Homebuyer Assistance Program ( POMA)
to one eligible participant in the amount of $ 84,000. The loan bears an interest rate of 5.48%. The loan
amount ( principal and interest) is forgiven at an increasing graduated rate with every bi- weekly pay
period until the loan is entirely forgiven at the end of the 10 years. The outstanding balance as of
June 30, 2004, was $ 78,317.
On October 28, 2002, the Agency made a loan to Menlo Gateway, Inc. to refinance Menlo Gateway’s
debt in the amount of $ 4,022,157. The loan bears a compounded interest of 3%. The payment is secured
by the Deed of Trust. The final payment is due on February 15, 2043. The outstanding balance as of
June 30, 2004, was $ 4,182,980.
Total Agency loans at June 30, 2004, amounted to $ 4,766,260.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
51
3. RECEIVABLES, Continued
B. Notes receivable, Continued
Below Market Rate Housing
The City uses Below Market Rate Housing Reserve funds to provide residents and employees who
work in Menlo Park with second mortgage loans to purchase their first home in Menlo Park. These
“ PAL” loans are amortized over 30 years, and are currently restricted to purchasers of Below Market
Rate Housing units, which are income and price restricted housing units produced through the City’s
Below Market Rate Housing program. Outstanding loans at June 30, 2004, were $ 889,257.
Emergency Repair Loan ( ERL)
The Emergency Repair Loan ( ERL) Program is designed to assist lower income households with minor
emergency repairs to their home. The revolving loan program was originally funded by a Federal
Revenue Sharing Grant. The maximum loan amount is ten thousand dollars at 3% interest, with a loan
term of either 5, 10, or 15 years. Outstanding loans at June 30, 2004, were $ 28,499.
4. UNEARNED/ DEFERRED REVENUE
A. Government- Wide Financial Statements
Unearned revenues in Government- Wide Financial Statements represent amounts for which revenues
have not been earned. At June 30, 2004, deferred revenues in the Government- Wide Financial
Statements were as follows:
Governmental
Activities
Rental income $ 1 ,930
Recreation summer programs 3 36,991
Donation for computer lab 4 00
Police donations 2 2,723
Planning deferred 6 62
Art deferred 8 ,647
MCC deferred 1 ,093
Friends of library deferred 4 0,481
Garbage service fees 4 00,878
Total $ 8 13,805
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
52
4. UNEARNED/ DEFERRED REVENUE, Continued
B. Fund Financial Statements
At June 30, 2004, the following deferred revenues were recorded in the Fund Financial Statements
because either the revenues had not been earned or the funds were not available to finance expenditures
of the current period:
Governmental Funds:
Community
Development Community
General Block Development Non- Major
Fund Grant Agency Funds Total
Rental income $ 1 ,930 $ - $ - $ - $ 1,930
Recreation Summer Programs 3 36,991 - - - 336,991
Donation for Computer Lab 4 00 - - - 400
Planning Deferred 6 62 - - - 662
City Manager Home Loan Interest 7 0,542 - - - 70,542
Percent for Art Deferred 8 ,647 - - - 8,647
MCC Deferred 1 ,093 - - - 1,093
Police Donations 2 2,723 - - - 22,723
Friends of Library Deferred 4 0,481 - - - 40,481
Garbage Service Fees - - - 4 00,878 400,878
Menlo Gateway Loan - - 4,182,980 - 4,182,980
CDBG loans - 2,318,844 - - 2,318,844
Advance to CDA fund - 500,000 - - 500,000
Emergency Repair Loans - - - 2 8,499 28,499
Mid Peninsula loans - - 28,715 - 2 8 , 7 1 5
Total $ 4 83,469 $ 2,818,844 $ 4,211,695 $ 4 29,377 7,943,385
Special Revenue Funds
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
53
5. CAPITAL ASSETS
A. Government- Wide Financial Statements
At June 30, 2004, the City’s capital assets consisted of the following:
Government Business- Type
Activities Activities Total
Non- Depreciable Assets:
Land $ 2 21,534,267 $ 1 ,066,454 $ 2 22,600,721
Land improvements 3 2,705,490 - 3 2,705,490
Construction in progress 9 ,060,550 2 62,293 9 ,322,843
Total non- depreciable assets, net 2 63,300,307 1 ,328,747 2 64,629,054
Depreciable Assets:
Buildings 3 9,706,068 3 ,945,489 4 3,651,557
Equipment 5 ,919,103 5 85,643 6 ,504,746
Other improvements 3 ,797,004 - 3 ,797,004
Infrastructure 9 7,849,119 4 ,457,930 1 02,307,049
1 47,271,294 8 ,989,062 1 56,260,356
Less accumulated depreciation ( 52,039,710) ( 5,167,837) ( 57,207,547)
Total depreciable assets, net 9 5,231,584 3 ,821,225 9 9,052,809
Total capital assets $ 3 58,531,891 $ 5 ,149,972 $ 3 63,681,863
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
54
5. CAPITAL ASSETS, Continued
A. Government- Wide Financial Statements, Continued
The following is a summary of capital assets for governmental activities:
Balance Reclassification/ Balance
June 30, 2003 Additions Retirements Adjustments June 30, 2004
Governmental Activities:
Capital assets, not being depreciated:
Land $ 221,534,267 $ - $ - $ - $ 221,534,267
Land improvements 32,705,490 - - - 32,705,490
Construction in progress 1,717,984 7,328,813 ( 415,514) 429,267 9,060,550
Total capital assets,
not being depreciated 255,957,741 7,328,813 ( 415,514) 429,267 263,300,307
Capital assets, being depreciated:
Buildings 39,689,374 16,694 - - 39,706,068
Equipment 5,798,154 185,086 ( 64,137) - 5,919,103
Other improvements 3,328,493 474,631 ( 6,120) - 3,797,004
Infrastructure 97,117,678 1,640,216 ( 908,775) - 97,849,119
Total capital assets,
being depreciated 145,933,699 2,316,627 ( 979,032) - 147,271,294
Less accumulated depreciation for:
Buildings ( 8,474,130) ( 790,905) - - ( 9,265,035)
Equipment ( 4,241,955) ( 554,748) 62,049 - ( 4,734,654)
Other improvements ( 1,353,180) ( 102,219) 6,120 - ( 1,449,279)
Infrastructure ( 34,555,929) ( 2,345,664) 310,851 - ( 36,590,742)
Total accumulated depreciation ( 48,625,194) ( 3,793,536) 379,020 - ( 52,039,710)
Total capital assets,
being depreciated, net 97,308,505 ( 1,476,909) ( 600,012) - 95,231,584
Governmental activities
capital assets, net $ 353,266,246 $ 5,851,904 $ ( 1,015,526) $ 429,267 $ 358,531,891
Depreciation expense was charged to the various governmental activities as follows:
General government $ 673,386
Public safety 183,790
Public works 2,528,772
Culture and recreation 373,140
Community development 34,448
Total depreciation expense - governmental departments $ 3,793,536
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
55
5. CAPITAL ASSETS, Continued
A. Government- Wide Financial Statements, Continued
The following is a summary of capital assets for business- type activities:
Balance Balance
June 30, 2003 Additions Retirements June 30, 2004
Business- Type Activities
Capital assets, not being depreciated:
Land $ 1 ,066,454 $ - $ - $ 1 ,066,454
Constructin in progress 1 9,887 2 42,405 - 2 62,292
Total capital assets,
not being depreciated 1 ,086,341 2 42,405 - 1 ,328,746
Capital assets, being depreciated:
Buildings 3 ,945,489 - - 3 ,945,489
Equipment 5 85,643 - - 5 85,643
Infrastructure 4 ,457,930 - - 4 ,457,930
Total capital assets,
being depreciated 8 ,989,062 - - 8 ,989,062
Less accumulated depreciation for:
Buildings ( 810,858) ( 78,910) - ( 889,768)
Equipment ( 555,638) ( 11,034) - ( 566,672)
Infrastructure ( 3,677,373) ( 34,023) - ( 3,711,396)
Total accumulated depreciation ( 5,043,869) ( 123,967) - ( 5,167,836)
Total capital assets,
being depreciated, net 3 ,945,193 ( 123,967) - 3 ,821,226
Business- Type activities
capital assets, net $ 5 ,031,534 $ 1 18,438 $ - $ 5 ,149,972
Depreciation expense for all proprietary funds was $ 123,967 for the year ended June 30, 2004, which
was recorded in the City’s water business- type activity.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
56
6. LONG- TERM DEBT
A. Long- Term Obligations
Summary of changes in long- term debt transactions for the year ended June 30, 2004 was as follows:
Balance Balance Due within Due in more
July 1, 2003 Additions Deletions June 30, 2004 one year than one year
Governmental Activities:
1996 General Obligation
Refunding Bonds $ 4,030,000 $ - $ ( 215,000) $ 3,815,000 $ 230,000 $ 3,585,000
1996 Las Pulgas Project
Refunding Bonds 27,350,000 - ( 900,000) 26,450,000 935,000 25,515,000
2000 Las Pulgas Project
Tax Allocation Bonds 44,000,000 - ( 380,000) 43,620,000 405,000 43,215,000
2002 General Obligation -
Bonds 13,245,000 - ( 130,000) 13,115,000 200,000 12,915,000
Total governmental
activities $ 88,625,000 $ - $ ( 1,625,000) $ 87,000,000 $ 1,770,000 $ 85,230,000
1996 General Obligation Refunding Bonds
During fiscal year 1995- 1996, the City issued $ 4,630,000 of 1996 General Obligation Refunding Bonds.
The bonds bear interest rates between 3.75% and 5.0% annually between June 30, 2000 and August 1,
2015. The bonds mature on August 1 of each year from 1996 to 2015 in amounts ranging from $ 40,000
to $ 430,000. Interest is payable semi- annually on February 1 and August 1 of each year. The bonds are
to be paid from special assessments to property owners within the City.
The bonds maturing on or before August 1, 2006 are not subject to optional redemption prior to
maturity. The bonds maturing on or after August 1, 2007, are subject to optional redemption prior to
maturity at the option of the City, in whole or in part, at any time on or after August 1, 2006, from any
available source of funds thereof at the following redemption prices expressed as percentages of the
principal amount to be redeemed, plus accrued interest to the date fixed for redemption. Redemption
prices expressed as percentages of the principal amount to be redeemed are as follows:
Redemption Period Redemption Price
August 1, 2006 through July 31, 2007 102%
August 1, 2007 through July 31, 2008 101%
August 1, 2008 and thereafter 100%
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
57
6. LONG- TERM DEBT, Continued
A. Long- term Obligations, Continued
1996 General Obligation Refunding Bonds, Continued
The annual debt service requirements to maturity for the 1996 General Obligation Refunding Bonds
Outstanding at June 30, 2004, were as follows:
Year Ending June 30, Principal Interest Total
2005 $ 230,000 $ 179,238 $ 409,238
2006 240,000 169,013 409,013
2007 255,000 157,995 412,995
2008 270,000 146,048 416,048
2009 285,000 133,087 418,087
2010- 2014 1,700,000 431,025 2,131,025
2015- 2016 835,000 42,375 877,375
Total $ 3,815,000 $ 1,258,781 $ 5,073,781
1996 Las Pulgas Project Refunding Bonds
Las Pulgas Project Refunding Bonds outstanding at June 30, 2004, amounted to $ 26,450,000. The bonds
bear interest at rates between 3.75% and 5.375%, with interest payments made semi- annually on June 1
and December 1. The bonds mature annually from 1996 to 2022 on June 1 in amounts ranging from
$ 60,000 to $ 2,235,000.
The bonds maturing on or before June 1, 2006, are not subject to optional redemption prior to maturity.
The bonds maturing on and after June 1, 2007, shall be subject to redemption prior to their respective
maturities at the option of the City on or after June 1, 2006, as a whole on any date, or in part ( in such
maturities as are designated to the Trustee by the City no later than 45 days prior to the redemption
date or, if the City fails to designate such maturities, on a proportional basis among maturities) on any
Interest Payment Date, from funds derived by the City from any source at the following redemption
prices expressed as percentages of the principal amount to be redeemed, plus accrued interest to the
date fixed for redemption.
Redemption Period Redemption Price
June 1, 2006 through May 30, 2007 102%
June 1, 2007 through May 30, 2008 101%
June 1, 2008 and thereafter 100%
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
58
6. LONG- TERM DEBT, Continued
A. Long- term Obligations, Continued
1996 Las Pulgas Project Refunding Bonds, Continued
The annual debt service requirements to maturity for the 1996 Las Pulgas Project Refunding Bonds
outstanding at June 30, 2004, were as follows:
Year Ending June 30, Principal Interest Total
2005 $ 935,000 $ 1,404,946 $ 2,339,946
2006 605,000 1,359,599 1,964,599
2007 1,025,000 1,329,651 2,354,651
2008 1,085,000 1,277,889 2,362,889
2009 1,140,000 1,222,011 2,362,011
2010- 2014 6,650,000 5,142,113 11,792,113
2015- 2019 8,635,000 3,154,588 11,789,588
2020- 2022 6,375,000 697,138 7,072,138
Total $ 26,450,000 $ 15,587,935 $ 42,037,935
2000 Las Pulgas Project Tax Allocation Bonds
Las Pulgas Community Development Project Tax Allocation Bonds, Series 2000 outstanding at June 30,
2004, amounted to $ 43,620,000. The bonds bear interest at rates between 4.10% and 5.55%, with interest
payments made semi- annually on June 1 and December 1. The bonds mature annually from 2004 to
2030 on June 1 in amounts ranging from $ 380,000 to $ 4,820,000.
The bonds maturing on or before June 1, 2010 are not subject to optional redemption prior to their
maturities. The bonds maturing on or after June 1, 2011 are subject to redemption prior to their
respective maturities at the option of the City on or after June 1, 2010, as a whole on any date, or in part
( in such maturities as are designated to the Trustee by the City no later than 45 days prior to the
redemption date or, if the City fails to designate such maturities, on a proportional basis among
maturities) on any Interest Payment Date, from funds derived by the City from any source at the
following redemption prices ( expressed as percentages of the principal amount of Bonds called for
redemption), together with interest accrued thereon to the date fixed for redemption:
Redemption Period Redemption Price
June 1, 2010 through May 31, 2011 102%
June 1, 2011 through May 31, 2012 101%
June 1, 2012 and thereafter 100%
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
59
6. LONG- TERM DEBT, Continued
A. Long- term Obligations, Continued
2000 Las Pulgas Project Tax Allocation Bonds, Continued
The annual debt service requirements to maturity for the 2000 Las Pulgas Project Tax Allocation Bonds
outstanding at June 30, 2004, were as follows:
Year Ending June 30, Principal Interest Total
2005 $ 405,000 $ 2,347,883 $ 2,752,883
2006 800,000 2,331,075 3,131,075
2007 440,000 2,297,075 2,737,075
2008 455,000 2,278,155 2,733,155
2009 475,000 2,258,363 2,733,363
2010- 2014 2,735,000 10,943,922 13,678,922
2015- 2019 3,505,000 10,198,638 13,703,638
2020- 2024 9,415,000 9,014,670 18,429,670
2025- 2029 20,570,000 4,883,545 25,453,545
2030 4,820,000 267,510 5,087,510
Total $ 43,620,000 $ 46,820,836 $ 90,440,836
2002 General Obligation Bonds
On April 17, 2002, the City issued $ 13,245,000 of the 2002 General Obligation Bonds. The bonds bear
interest at rates between 4.50% and 5.75%, with interest payments made semi- annually on February 1
and August 1. The bonds mature annually from 2003 to 2032 on August 1 in amounts ranging from
$ 130,000 to $ 840,000.
The bonds maturing on or before August 1, 2013 are not subject to optional redemption prior to their
maturities. The bonds maturing on or after August 1, 2014 are subject to redemption prior to their
respective maturities at the option of the City, from any source of available funds, as a whole or in part
on any date, on or after August 1, 2012. If less than all of the bonds are called for redemption, bonds
shall be redeemed in inverse order of maturities, and if less than all of the bonds of any given maturity
are called for redemption, the portions of bonds given maturities to be redeemed shall be determined
by lot. Bonds shall be redeemed at the following redemption prices ( expressed as a percentage of the
principal amount of the bonds called for redemption), together with interest accrued thereon to the date
of redemption:
Redemption Period Redemption Price
August 1, 2012 through July 31, 2013 101.0%
August 1, 2013 through July 31, 2014 100.5%
August 1, 2014 and thereafter 100.0%
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
60
6. LONG- TERM DEBT, Continued
A. Long- term Obligations, Continued
2002 General Obligation Bonds, Continued
The annual debt service requirements to maturity for the 2002 General Obligation Bonds outstanding at
June 30, 2004, were as follows:
Year Ending June 30, Principal Interest Total
2005 2 00,000 6 87,960 8 87,960
2006 2 10,000 6 76,560 8 86,560
2007 2 20,000 6 64,485 8 84,485
2008 2 35,000 6 51,835 8 86,835
2009 2 50,000 6 31,135 8 81,135
2010- 2014 1,475,000 2,917,481 4,392,481
2015- 2019 1,900,000 2,485,540 4,385,540
2020- 2024 2,405,000 1,965,051 4,370,051
2025- 2039 3,100,000 1,251,754 4,351,754
2030- 2033 3,120,000 3 41,320 3,461,320
Total $ 13,115,000 $ 12,273,121 $ 25,388,121
B. Prior Years’ Defeased Obligations
1988 and 1992 Tax Allocation Bonds
During fiscal year 1995- 1996, the City’s Community Development Agency issued $ 32,305,000 of 1996
Tax Allocation Refunding Bonds to refund and defease the Agency’s outstanding principal of
$ 3,565,000 of the 1988 Tax Allocation Bonds and the outstanding principal of $ 25,000,000 of the 1992
Tax Allocation Bonds. Both the 1988 and 1992 series bonds have been 100% defeased and the liability
has been removed from the Long- Term Debt.
The refundings were undertaken to reduce total debt service payments over the next 25 years and to
obtain an economic gain.
The balance of the defeased bonds outstanding as of June 30, 2004, was $ 24,015,000.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
61
7. COMPENSATED ABSENCES
Compensated absences at June 30, 2004 were as follows:
Balance Balance Due within Due in more
July 1, 2003 Additions Deletions June 30, 2004 one year than one year
Governmental Activities: $ 1,732,979 $ 63,070 $ - $ 1,796,049 $ 753,341 $ 1,042,708
Business- Type Activities: 19,317 26,028 - 45,345 19,045 26,300
Total compensated absences $ 1,752,296 $ 89,098 $ - $ 1,841,394 $ 772,386 $ 1,069,008
8. RISK MANAGEMENT
General Liability Insurance
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. The City participates in pooled
insurance programs offered by a Joint Powers Insurance Authority for losses in excess of specific program
deductibles. The Liability program has a per claim deductible of $ 100,000 and a policy limit of $ 15,000,000.
The Employment Practices program has a per claim deductible of $ 75,000 and policy limit of $ 6,000,000.
The Property and Fire program has a per claim deductible of $ 10,000 and a policy limit of replacement
value.
Workers’ Compensation
The City participated in a Joint Powers Authority pooled workers’ compensation insurance program. This
program has a per claim deductible of $ 250,000 and a policy limit of $ 25,000,000.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
62
8. RISK MANAGEMENT, Continued
Claims for long- term disability are covered by insurance. Estimated reserves for claims are recorded in the
General Fund. No claim settlement exceeded either this self- insured amount or the insurance coverage for
any of the years shown.
Beginning Current Year Claim Payments End
of Year Claims and Changes for Current and of Year
Liability in Estimates Prior Years Liability
1994- 1995 $ 387,556 $ 7 7,248 $ ( 190,498) $ 274,306
1995- 1996 274,306 6 20,603 ( 325,355) 569,554
1996- 1997 569,554 5 88,907 ( 411,191) 747,270
1997- 1998 747,270 7 55,001 ( 477,414) 1,024,857
1998- 1999 1,024,857 8 11,041 ( 577,723) 1,258,175
1999- 2000 1,258,175 8 13,829 ( 870,628) 1,201,376
2000- 2001 1,201,376 1,129,222 ( 822,279) 1,508,319
2001- 2002 1,508,319 1,017,717 ( 907,282) 1,618,754
2002- 2003 1,618,754 4 61,060 ( 612,016) 1,467,798
2003- 2004 1,467,798 9 69,496 ( 823,440) 1,613,854
9. INTERFUND TRANSACTIONS
Interfund receivables and payables at June 30, 2004, were as follows:
Due To / F