City
of
Menlo Park
Menlo Park, California
Comprehensive Annual Financial Report
For the year ended June 30, 2003
City of Menlo Park
For the year ended June 30, 2003
Table of Contents
INTRODUCTORY SECTION
Exhibits
Letter of Transmittal ............................................................................................................................... ............ 1
Organization Chart.......................................................................................................................... .................... 2
Principal Officials of the City of Menlo Park, California ................................................................................ 3
FINANCIAL SECTION
Page
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.......................................................................................... 24
Reconciliation of the Governmental Funds Balance Sheet to the
Government- Wide Statement of Net Assets......................................................................... 27
Statement of Revenues, Expenditures and Changes Fund Balances....................................... 28
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........................................................... 30
Proprietary Fund Financial Statements:
Statement of Net Assets ................................................................................................................. 32
Statement of Revenues, Expenses and Changes in Fund Net Assets...................................... 33
Statement of Cash Flows................................................................................................................ 34
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Assets – Agency Funds.................................................................. 36
Notes to Basic Financial Statements .......................................................................................................... 37
City of Menlo Park
For the year ended June 30, 2003
Table of Contents, Continued
FINANCIAL SECTION, Continued
Page
Required Supplementary Information:
Budgetary Principles..................................................................................................................... ........ 74
Budgetary Comparison Schedule – General Fund...................................................................... 75
Budgetary Comparison Schedule – CDBG Special Revenue Fund .......................................... 76
Budgetary Comparison Schedule – CDA Special Revenue Fund............................................. 77
Budgetary Comparison Schedule – Measure T 2002 GO Bond
Capital Projects Fund................................................................................................................ 78
Schedule of Funding Progress – Public Employees Retirement System ........................................ 79
Supplementary Information:
Non- Major Governmental Funds:
Combining Fund Statements and Schedules:
Combining Balance Sheet...................................................................................................................... 86
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances.............................................................................................................. 91
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual:
Highway Users Tax Special Revenue Fund........................................................................... 97
Federal Revenue Sharing Special Revenue Fund ................................................................. 98
Landscape Tree Assessment Special Revenue Fund............................................................ 99
Sidewalk Assessment Special Revenue Fund ..................................................................... 100
Bayfront Park Landfill Special Revenue Fund .................................................................... 101
Below Market Rate Housing Special Revenue Fund.......................................................... 102
County Transportation Tax Special Revenue Fund ........................................................... 103
Public Library Special Revenue Fund .................................................................................. 104
Literacy Grant Special Revenue Fund .................................................................................. 105
Narcotic Seizure Special Revenue Fund .............................................................................. 106
Traffic Impact Fees Special Revenue Fund.......................................................................... 107
Downtown Parking Permits Special Revenue Fund .......................................................... 108
Storm Drainage Fees Special Revenue Fund....................................................................... 109
Solid Waste Service Special Revenue Fund......................................................................... 110
Bay Area Air Quality Management Special Revenue Fund.............................................. 111
Storm Water Management ( NPDES) Special Revenue Fund............................................ 112
Peninsula Partnership Special Revenue Fund..................................................................... 113
Supplemental Law Enforcement Special Revenue Fund................................................... 114
Local Law Enforcement Block Grant Special Revenue Fund............................................ 115
City of Menlo Park
For the year ended June 30, 2003
Table of Contents, Continued
FINANCIAL SECTION, Continued
Page
California Law Enforcement Equipment Program Special Revenue Fund .................... 116
Bayfront Park Maintenance Special Revenue Fund ........................................................... 117
Recreation In- Lieu Special Revenue Fund........................................................................... 118
Sharon Hills Park Special Revenue Fund ............................................................................ 119
Vintage Oaks Landscape Special Revenue Fund................................................................ 120
Miscellaneous Trust Special Revenue Fund ........................................................................ 121
PERS Dividend Special Revenue Fund ................................................................................ 122
Library Bond Debt Service Fund........................................................................................... 123
Recreation GO Bond 2002 Debt Service Fund ..................................................................... 124
Library Addition Capital Projects Fund............................................................................... 125
Capital Improvement General Capital Projects Fund........................................................ 126
Agency Fund:
Statement of Changes in Net Assets .................................................................................................. 127
Capital Assets Used in Operations of Governmental Funds:
Schedules by Source......................................................................................................................... ... 130
Schedule by Function and Activity.................................................................................................... 131
Schedule of Changes by Function and Activity ............................................................................... 132
STATISTICAL SECTION ( UNAUDITED)
General Government Expenditures by Function - Last Ten Fiscal Years.................................................. 134
General Government Revenues by Source - Last Ten Fiscal Years ............................................................ 136
General Government Taxes Detail - Last Ten Fiscal Years.......................................................................... 138
Property Tax Levies and Collections - Last Ten Fiscal Years...................................................................... 139
Assessed Valuation, Tax Rate and Tax Levies - Last Ten Fiscal Years ...................................................... 140
Ratio of Net General Bonded Debt to Total Assessed Value and Net Bonded
Debt Per Capita - Last Ten Fiscal Years ................................................................................................... 143
Computation of Legal Debt Margin ............................................................................................................... 144
Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total
General Expenditures - Last Ten Fiscal Years......................................................................................... 145
Special Assessment Collections - Last Ten Fiscal Years............................................................................... 146
Property Tax Rates - All Direct and Overlapping Governments - Last Ten Fiscal Years ....................... 147
Direct and Overlapping Bonded Debt............................................................................................................ 148
Demographic Statistics - Last Ten Fiscal Years ............................................................................................. 149
Property Value, Construction, Bank and Savings and Loan Deposits –
Last Ten Fiscal Years ............................................................................................................................... .. 150
Principal Taxpayers...................................................................................................................... .................... 153
Miscellaneous Statistical Data ......................................................................................................................... 154
This page intentionally left blank.
INTRODUCTORY SECTION
Exhibit 1
701 LAUREL STREET, MENLO PARK, CA 94025- 3483
www. menlopark. org
December 10, 2003
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, 2003. 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- 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
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the City. The notes are treated as an integral part of the financial statements and should
be read in conjunction with them.
Major Changes in Reporting
These financial statements represent a substantial change from the prior year’s format
and accounting methodology. In June of 1999, the Governmental Accounting Standards
Board ( GASB), which sets the Generally Accepted Accounting Principles ( GAAP) for all
state and local governments, established a new framework for financial reports.
This is the first year the City prepared the CAFR using 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 ( GASB 34).
This new 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.
The major differences from the prior year’s financial statements are listed below:
• The detailed financial analysis previously found in the Transmittal Letter has
been moved to the Management’s Discussion & Analysis section.
• Management’s Discussion & Analysis is a newly required section that provides a
detailed analytical overview of the City’s Financial Statements.
• The “ General Purpose Financial Statements” have been replaced with the “ Basic
Financial Statements” which include Government- wide Statements and Fund
Statements.
• The Government- wide Financial Statements reflect the entire City’s financial
information on the full accrual basis of accounting in a manner consistent with
private sector reporting.
• The Government- wide Statement of Net Assets now includes the recording of
land, buildings, equipment and infrastructure as Capital Assets. These assets are
now expensed through depreciation on the Government- wide Statement of
Activities; unless they are inexhaustible, such as land.
• The General Fixed Assets and General Long- Term Debt Account Groups will no
longer be shown; they are now included in the Government- wide Statement of
Net Assets as assets and liabilities.
• The Government- wide Statement of Activities and Changes in Net Assets
provides information on the net cost of each governmental function.
• Fund Statements are reported in a manner consistent with previous years, using
a modified accrual basis of accounting. However, they are divided into Major
and Non- major funds based on a detailed analysis of fund assets, liabilities,
expenditures, and revenues.
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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).
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.
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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, 2003. 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
As with most California communities, the City’s major revenue source is sales tax with
property taxes and fees and charges for services also being important resources. Until
two 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.
Major Initiatives
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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 2002- 03 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 continued on bringing the City into compliance with the
new GASB 34 reporting requirements.
The Building division experienced reduced levels of 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, M2,
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
renovation of Kelly Park and Ravenswood School District play fields, and
neighborhood- wide infrastructure improvements. In Housing, key work elements
included the Park and Housing project on Hamilton Avenue, administering the sale of
three Below Market Rate units in the Menlo Square development 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 figures continue to
increase.
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The Police Department addressed issues of staffing shortages, training new officers,
increased crime as a byproduct of the economic downturn, and efforts to make forward
progress in the area of code enforcement. The department’s website continues to
receive acclaim, while officers maintain their individual commitment to community
policing through such diverse initiatives as bike rodeos, child safety seat installations, a
model car program, gun lock programs and liaisons with the schools.
The Engineering and Maintenance divisions within Public Works stayed on course in
keeping capital projects within budget and on schedule and further progress on
maintaining and improving operations.
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
identified in the Parks and Recreation Master Plan. Many projects that were started will
continue well into the fiscal year ahead. Similarly, with land assembly completed and a
developer chosen, park and housing development will be proceeding while the
reconstruction of Hamilton Avenue progresses. 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 the transition to the
new program- based budget structure. This requires the ability to accurately track
expenditures and benchmark 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
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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.
General Government Functions
Net assets for governmental activities were decreased by $ 1,589,488 for the fiscal year to
$ 366,554,095. This accounts for 95% of the City’s total net assets of $ 387,148,277. 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 $ 46,300,677 in fiscal year 2002- 03. The
largest expenses were incurred for Public Safety and Public Works. These expenses do
not include capital outlays, which are now reflected in the City’s capital assets.
Total program revenues from governmental activities were $ 15,249,089 for the 2002- 03
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 29%.
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 $ 29,462,100 in the 2002- 03 fiscal year. The largest
percentage of general revenues received during the 2002- 03 fiscal year for governmental
activities were Taxes, $ 27,889,418, which includes property taxes, sales, tax, motor
vehicle license, and other taxes.
Business Type Activities
Net assets for business- type activities were $ 20,594,182. Total program revenues for
business- type activities were $ 3,421,677. The largest program revenues were in Water-
Charges for Services of $ 3,421,677. Total expenses for business- type activities were
$ 2,831,383 during the 2002- 03 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
vii i
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 $ 87.5 million, which earned approximately $ 2.5
million with an effective yield of 2.81percent.
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, 2003, 51 percent of investments held by the City are classified in the
category of lowest credit risk as defined by the Government Accounting Standards
Board; 49 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.
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, 2002.
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.
ix
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, 2002. We will submit our 2003 report to the
California Society of Municipal Finance Officers as well.
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
CITY OF MENLO PARK, CALIFORNIA
ORGANIZATIONAL CHART
JUNE 30, 2003
City Attorney
Boards
Commissions
Committees
Community
Development
Public Works Community
Services
Administrative
Services
Police Library
City Manager
City Council
Citizens
CITY OF MENLO PARK, CALIFORNIA
LIST OF CITY OFFICIALS
JUNE 30, 2003
CITY COUNCIL
Nicholas P. Jellins, Mayor
Lee B. Duboc, Mayor Pro Tem
Paul J. Collacchi, Councilmember
Charles M. Kinney, Councilmember
Micki Winkler, Councilmember
ADMINISTRATION AND DEPARTMENT HEADS
City Attorney.................................................................................................... William McClure
City Manager........................................................................................................... David Boesch
Assistant City Manager .................................................................................. Audrey Seymour
Administrative Services:
Personnel and Information Services Director .............................................. Glen Kramer
Finance Director................................................................................... Uma Chokkalingam
City Clerk............................................................................................................ Sylvia Ponte
Community Services Director............................................................................... Curtis Brown
Police Chief...................................................................................................... Christopher Boyd
Library Director ..................................................................................................... Susan Holmer
Developmental Services:
Director of Community Development .................................................. Arlinda Heineck
Director of Housing and Redevelopment................................................. Don de la Pena
Director of Public Works................................................................................. Kent Steffens
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
of the City of Menlo Park
Menlo Park, California
We have audited the accompanying financial statements of the governmental activities, the business- type
activities, the discrete component unit, each major fund, and the aggregate remaining fund information of
the City of Menlo Park, California ( City), as of and for the year ended June 30, 2003, which collectively
comprise the City’s basic financial statements as listed in the table of contents. These financial statements
are the responsibility of the City’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in the United States and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall basic financial statement presentation. We believe that
our audit provides a reasonable basis for our opinions.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the
financial position of the governmental activities, the business- type activities, each major fund, and the
aggregate remaining fund information of the City as of June 30, 2003, and the respective changes in
financial position and cash flows, where applicable, thereof for the year then ended in conformity with
generally accepted accounting principles in the United States.
As described in Note 1 to the basic financial statements, the City adopted statements of the Governmental
Accounting Standards Board No. 34, Basic Financial Statements- and Management’s Discussion and Analysis- for
State and Local Governments; No. 37, Basic Financial Statements- and Management’s Discussion and Analysis- for
State and Local Governments: Omnibus; and No. 38, Certain Financial Statement Note Disclosures.
In accordance with Government Auditing Standards, we have also issued our report dated September 18, 2003,
on our consideration of the City’s internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in conjunction with this
report in considering the results of our audit.
The accompanying Required Supplementary Information, such as management’s discussion and analysis,
budgetary comparison information and other information as listed in the table of contents are not a
required part of the basic financial statements but is supplementary information required by the
Governmental Accounting Standards Board.
2
To the Honorable Mayor and Members of the City Council
of the City of Menlo Park
Menlo Park, California
We have applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the Required Supplementary Information.
However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively
comprise the City’s basic financial statements. The accompanying supplementary information is presented
for purpose of additional analysis and is not a required part of the basic financial statements. The
supplementary information has been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole. The introductory section and statistical tables have not been
subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly,
we express no opinion on them.
Oakland, California
September 18, 2003
3
701 LAUREL STREET, MENLO PARK, CA 94025- 3483
www. menlopark. org
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Year Ended June 30, 2003
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, 2003. 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, 2003 by $ 387,148,277.
Of this amount, $ 71,577,126 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 $ 761,283 in fiscal year 2002- 03. Net assets of
governmental activities decreased by $ 1,589,488, while net assets of the business type activities increased by
$ 828,205.
Fund Highlights:
Governmental Funds – Fund Balances- As of the close of fiscal year 2002- 03, the City’s governmental funds
reported a combined ending fund balance of $ 105,038,664, a decrease of $ 7,097,088 from the prior year. Of
this amount, $ 35,684,286 represents “ unreserved, undesignated fund balances” available for appropriation.
General Fund - The undesignated fund balance of the general fund on June 30, 2003 was $ 22,102,635. The
fund balance increased by $ 2,732,228 from the prior year.
Long- Term Debt:
The City’s total bonded debt obligations decreased by $ 905,000 ( 1%) during fiscal year 2002- 03. It is due to
the annual payment of the principal balance.
City Highlights:
The City administered the sale of three Below Market Rate units in the Menlo Square development.
Numerous renovation projects for the City’s parks have been completed and the improvement plans for
Burgess Park have been approved.
Attendance 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 through diverse programs, such as bike
rodeos, child safety seat installations, model car program, gun lock programs, and liaisons with the schools.
To improve community safety progress is made in the area of drug abatement, code enforcement and the
popular Neighborhood Watch Program.
4
The Community Development Agency continues to deliver high quality projects that have been planned
based on neighborhood needs and goals. In addition to the renovation of Kelly Park and the refurbishment
of the Belle Haven School fields and playgrounds, construction was completed on a variety of streetscape
improvements. The reconstruction and under grounding of utilities along Hamilton Avenue was started,
and progress continued on the construction of the Police/ City Service Center and the Ivy Drive Plaza.
Program funding for code and drug enforcement and housing improvements continued to have a positive
effect on the overall quality of life of the area. The Park and Housing Project on Hamilton Avenue has been
approved and is underway.
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
Activities Activities Total
2003 2003 2003
Current Assets $ 7 1,970,436 $ 1 5,893,691 $ 8 7,864,127
Non- Current Assets 4 1,021,597 4 1,021,597
Capital Assets 3 53,266,246 5 ,031,535 3 58,297,781
Total Assets 4 66,258,279 2 0,925,226 4 87,183,505
Current Liabilities 1 0,266,208 3 31,044 1 0,597,252
Long- term Liabilities 8 9,437,976 - 8 9,437,976
Total Liabilities 9 9,704,184 3 31,044 1 00,035,228
Investments in Capital
Net of Related Debt 2 64,641,246 - 2 64,641,246
Restricted 5 0,898,018 3 1,887 5 0,929,905
Unrestricted 5 1,014,831 2 0,562,295 7 1,577,126
Total Net Assets $ 3 66,554,095 $ 2 0,594,182 $ 3 87,148,277
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 $ 12,589,155 $ 3,421,677 $ 16,010,832
Operating Grants and Contributions 1,318,007 - 1,318,007
Capital Grants and Contributions 1,341,927 - 1,341,927
General Revenues: -
Property Taxes 15,876,102 - 15,876,102
Sales Taxes 8,005,666 - 8,005,666
Motor Vehicle License 1,850,187 - 1,850,187
Other Taxes 2,157,463 - 2,157,463
Loss on Sale of Asset ( 1,698,248) - ( 1,698,248)
Investment Earnings 2,775,669 454,611 3,230,280
Miscellaneous 278,561 - 278,561
Total Revenues 44,494,489 3,876,288 48,370,777
Expenses:
General Government 6,020,459 - 6,020,459
Public Safety 8,499,959 - 8,499,959
Public Works 8,675,679 - 8,675,679
Culture and Recreation 7,384,073 - 7,384,073
Community Development 7,063,943 - 7,063,943
Depreciation Expense 3,834,636 - 3,834,636
Interest on Long- term Debt 4,821,928 - 4,821,928
Water Operations - 2,831,383 2,831,383
Total Expenses 46,300,677 2,831,383 49,132,060
Increase ( Decrease) in Net Assets before Transfers ( 1,806,188) 1,044,905 ( 761,283)
Transfers 216,700 ( 216,700) -
Change in Net Assets ( 1,589,488) 828,205 ( 761,283)
Net Assets - Beginning of the Year ( as restated) 368,143,583 19,765,977 387,909,560
Net Assets - End of the Year $ 366,554,095 $ 20,594,182 $ 387,148,277
City of Menlo Park's Changes in Net Assets
Fiscal Year Ending June 30, 2003
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 74 through 79 of this report.
7
GOVERNMENT- WIDE FINANCIAL ANALYSIS
As noted earlier, the City as a whole has net assets of $ 387,148,277 at June 30, 2003. 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 $ 20,594,182. Total program revenues for business- type activities
were $ 3,421,677. The main program revenue was Charges for Services of $ 3,421,627, related to the water
usage fee. Total expenses for the business- type activities were $ 2,831,383 during fiscal year 2003, 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
13%
Public Safety
18%
Public Works
Culture & 20%
Recreation
16%
Community
Development
15%
Depreciation
Expense
8%
Interest on
Long- term
Debt
10%
Net Cost of Governmental Activities
( Net of Program Revenues)
General
Government
$ 1.6 million Public Safety
$ 7.1 million
Public Works
Culture & $ 5.4 million
Recreation
$ 3.3 million
Community
Development
$ 4.9 million
Depreciation
Expense
$ 3.8 million
Interest on
Long- term
Debt
$ 4.8 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 $ 22,102,635, while
total fund balance reached $ 31,739,735. 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 86% of total General Fund expenditures including transfers out, while total fund
balance represents 123% of that same amount.
During the current year, the fund balance of the General Fund increased by $ 2,732,228. This represents 11%
of the General Fund operating budget. Of the total fund balance of $ 31,739,735 $ 2,449,808 is reserved for
certain commitments and $ 7,187,292 is designated for various items such as insurance claims, equipment
and infrastructure replacement and fiscal uncertainties leaving $ 22,102,635 as the undesignated fund
balance.
The available fund balance of the City’s General Fund increased by $ 2,732,228 during the current fiscal year.
Key factors in the growth are as follows:
• Operating revenues were $ 715,791 over operating expenditures.
• Decreased operating transfers to other funds by over $ 990,000 from last fiscal year.
• One- time revenue source of $ 1,071,091 from the sale of capital assets.
Several departments realized significant savings as a result of a variety of factors. The management
direction not to fill in the vacant positions to reduce expenditures to match with the revenue reduction due
to weakened economy resulted in cost savings in most departments.
Special Revenue Fund Balance:
At the end of the current fiscal year, the total fund balance of all the Special Revenue Funds is $ 50,102,101.
During the year, the total fund balance decreased by $ 8,714,906. The key factors in the growth are as
follows:
• Community Development Agency started construction of redevelopment projects
Increase
June 30 June 30, ( Decrease)
Fund Balances for Major Funds 2003 2002 From 2001- 02
General Fund $ 31,739,735 $ 29,007,507 $ 2,732,228
Community Development Block Grant Fund 566 - 566
Community Development Agency Fund 34,721,245 42,763,255 ( 8,042,010)
Measure T 2002 GO Bond Fund 13,014,389 13,397,527 ( 383,138)
Other Governmental Funds 25,562,729 26,967,463 ( 1,404,734)
Water Fund 20,594,182 19,765,977 828,205
TOTAL $ 125,632,846 $ 131,901,729 $ ( 6,268,883)
9
Capital Projects Fund Balance:
At June 30, 2003, the total fund balance for the Capital Projects Funds is $ 22,188,677. This is the result of a
$ 1,533,278 decrease in fund balance during the fiscal year. The key factors in the change of the total fund
balance are as follows:
• Urban development and housing projects were started
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, 2003 were $ 20,594,182, an increase of $ 828,205. 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 $ 2,412,051 in the
Safety Plan and $ 9,714,031 in the Miscellaneous Plan. Deviations from the assumptions made by the
Retirement System and enhancements made to the safety employees benefit drive the FY 2004- 05
contribution rates as follows:
Miscellaneous employees group 6.243%
Safety employees group 21.595%
DEBT ADMINISTRATION
As of June 30, 2003, the City has various debt obligations outstanding. These debt obligations are
comprised of:
Type Principal Outstanding
General Obligation Bonds $ 17,275,000
Tax Allocation Bonds 71,350,000
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, 2003 was $ 4,030,000. The bonds are to be paid from special assessments to
property owners within the City.
10
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, 2003
was $ 27,350,000.
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, 2003 was $ 44,000,000.
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,
2003 was $ 13,245,000.
CAPITAL ASSETS
The City’s investment in capital assets for its governmental and business type activities as of June 30, 2003,
amounts to $ 358,297,781, net of accumulated depreciation of $ 53,669,062. 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
additions to the City’s investment in capital assets for the current fiscal year was $ 7,550,631, net of
accumulated depreciation.
Major capital asset additions during the current fiscal included the following:
• City- wide street resurfacing - $ 1,626,764
• El Camino Real tree planting - $ 489,859
• Belle Haven streets improvements - $ 2,015,453
• Purchase of land for Belle Haven Community Park - $ 5,119,032
Additional information on the City’s capital assets can be found in note 4 on pages 60 through 61 of this
report.
GENERAL FUND BUDGETARY HIGHLIGHTS
Comparing the FY 2002- 03 General Fund original expenditure budget ( or adopted) including the transfers
out amount of $ 28,338,374 to the final budget amount of $ 28,580,113 shows a net increase of $ 241,739.
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 $ 28,583,369.
11
ECONOMIC CONDITION AND OUTLOOK
During fiscal year 2002- 03, the City still experienced the 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
13
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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, 2003
Governmental Business- Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments $ 6 3,006,451 $ 1 5,435,660 $ 7 8,442,111
Receivables:
Accounts 2 ,565,073 3 58,386 2 ,923,459
Interest 4 31,802 9 9,645 5 31,447
Notes 5 ,932,297 - 5 ,932,297
Deposits and prepaid items 3 4,813 - 3 4,813
Total current assets 7 1,970,436 1 5,893,691 8 7,864,127
Noncurrent assets:
Restricted cash and investments 4 1,021,597 - 4 1,021,597
Capital assets
Non- depreciable 2 55,957,741 1 ,066,454 2 57,024,195
Depreciable, net 9 7,308,505 3 ,965,081 1 01,273,586
Total capital asset 3 53,266,246 5 ,031,535 3 58,297,781
Total noncurrent assets 3 94,287,843 5 ,031,535 3 99,319,378
Total assets 4 66,258,279 2 0,925,226 4 87,183,505
LIABILITIES
Current liabilities:
Accounts payable 2 ,290,787 2 53,639 2 ,544,426
Accrued payroll 8 61,113 1 5,902 8 77,015
Interest payable 6 87,839 - 6 87,839
Deposits 1 77,382 4 2,186 2 19,568
Compensated absences 7 62,801 1 9,317 7 82,118
Deferred revenue 3 ,861,286 - 3 ,861,286
Long- term debt due within one year 1 ,625,000 - 1 ,625,000
Total current liabilities 1 0,266,208 3 31,044 1 0,597,252
Noncurrent liabilities:
Claims payable 1 ,467,798 - 1 ,467,798
Compensated absences 9 70,178 - 9 70,178
1996 General Obligation Refunding Bonds 3 ,815,000 - 3 ,815,000
1996 Las Pulgas Project Refunding Bonds 2 6,450,000 - 2 6,450,000
2000 Las Pulgas Project Tax Allocation Bonds 4 3,620,000 - 4 3,620,000
2002 General Obligation Bonds 1 3,115,000 - 1 3,115,000
Total noncurrent liabilities 8 9,437,976 - 8 9,437,976
Total liabilities 9 9,704,184 3 31,044 1 00,035,228
NET ASSETS
Invested in capital assets, net of related debt 2 64,641,246 - 2 64,641,246
Restricted for:
Capital projects 4 5,576,230 3 1,887 4 5,608,117
Debt service 1 ,008,151 - 1 ,008,151
Special projects 4 ,313,637 - 4 ,313,637
Unrestricted 5 1,014,831 2 0,562,295 7 1,577,126
$ 3 66,554,095 $ 2 0,594,182 $ 3 87,148,277
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, 2003
Operating Capital
Charges for Grants and Grants and
Functions/ Programs Expenses Services Contributions Contributions Total
Primary government:
Governmental activities:
General Government $ 6 ,020,459 $ 4 ,398,884 $ - $ - $ 4 ,398,884
Public Safety 8,499,959 1,225,796 - 158,262 - - 1,384,058
Public Works 8,675,673 1,908,545 - - - 1,341,927 3,250,472
Culture and recreation 7,384,079 3,041,867 - 1 ,016,423 - - 4,058,290
Community development 7,063,943 2,014,063 - 143,322 - - 2,157,385
Depreciation expense 3,834,636 - - - -
Interest on long- term debt 4,821,928 - - - -
Total governmental activities 4 6,300,677 1 2,589,155 1,318,007 1,341,927 1 5,249,089
Business- type activities:
Water 2,831,383 3,421,677 - - 3,421,677
Total business- type activities 2,831,383 3,421,677 - - 3,421,677
Total primary government $ 4 9,132,060 $ 1 6,010,832 $ 1 ,318,007 $ 1 ,341,927 $ 1 8,670,766
General Revenues:
Taxes:
Property taxes
Sales taxes
Motor vehicle license
Other taxes
Total taxes
Transfers
Loss on sale of asset
Investment earnings
Miscellaneous
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
$ ( 1,621,575) $ - $ ( 1,621,575)
( 7,115,901) - ( 7,115,901)
( 5,425,201) - ( 5,425,201)
( 3,325,789) - ( 3,325,789)
( 4,906,558) - ( 4,906,558)
( 3,834,636) - ( 3,834,636)
( 4,821,928) - ( 4,821,928)
( 31,051,588) - ( 31,051,588)
- 590,294 590,294
- 590,294 590,294
( 31,051,588) 590,294 ( 30,461,294)
15,876,102 - 15,876,102
8,005,666 - 8,005,666
1,850,187 - 1,850,187
2,157,463 - 2,157,463
27,889,418 - 27,889,418
216,700 ( 216,700) -
( 1,698,248) - ( 1,698,248)
2,775,669 454,611 3,230,280
278,561 - 278,561
29,462,100 237,911 29,700,011
( 1,589,488) 828,205 ( 761,283)
368,143,583 19,765,977 387,909,560
$ 366,554,095 $ 20,594,182 $ 387,148,277
Net ( Expense) Revenue
and Changes in Net Assets
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20
FUND FINANCIAL STATEMENTS
21
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22
Measure T 2002 General Obligation Bonds - Established to account for general obligation bonds issued in 2002 to
finance certain parks and recreation improvements.
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.
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
City of Menlo Park
Balance Sheet
Governmental Funds
June 30, 2003
Community Community Measure T
Development Development 2002
General Block Grant Agency GO Bond
Fund Special Revenue Special Revenue Capital Projects
ASSETS
Cash and investments $ 3 0,999,328 $ - $ 7 ,608,001 $ -
Restricted cash and investments - - 2 7,989,481 1 3,032,052
Receivables:
Accounts 1 ,047,833 1 85,018 - -
Interest 2 38,724 - 4 9,313 -
Notes 2 ,259,698 2 ,461,136 4 ,529,040 -
Deposits and prepaid items 3 4,813 - - -
Due from other funds - - 1 11,792 -
Advances to other funds - 5 00,000 - -
Total assets $ 3 4,580,396 $ 3 ,146,154 $ 4 0,287,627 $ 1 3,032,052
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 7 35,155 $ 6 7,353 $ 9 64,971 $ 1 2,807
Accrued payroll 7 66,192 3 ,420 2 2,597 4 ,856
Compensated absences 6 82,114 1 ,887 3 4,842 -
Due to other funds - 1 11,792 - -
Deposits 1 77,382 - - -
Deferred revenue 4 79,818 2 ,961,136 4 ,043,972 -
Advances from other funds - - 5 00,000 -
Total liabilities 2 ,840,661 3 ,145,588 5 ,566,382 1 7,663
Fund Balances
Reserved:
Encumbrances 2 44,995 - 3 ,206,899 1 ,281,063
Deposits and prepaid items 3 4,813 - - -
Advances to other funds - 5 00,000 1 11,792 -
Housing loans - - 1 ,598,696 -
Debt service - - - -
Notes receivable 2 ,170,000 - - -
Total reserved 2 ,449,808 5 00,000 4 ,917,387 1 ,281,063
Unreserved:
Designated:
Unrealized investment gain 2 28,569 - 1 36,547 3 7,010
Insurance 2 ,252,933 - - -
Equipment replacement 1 05,790 - - -
Operational reserve 5 00,000 - - -
Vacation and sick leave 1 00,000 - - -
Infrastructure replacement 2 ,000,000 - - -
Fiscal uncertainties 1 ,000,000 - - -
PERS safety investment 1 ,000,000 - - -
Special programs and services - - - -
Capital improvements - - 1 9,128,278 1 1,696,316
Undesignated 2 2,102,635 ( 499,434) 1 0,539,033 -
Total fund balances 3 1,739,735 5 66 3 4,721,245 1 3,014,389
Total liabilities and fund balances $ 3 4,580,396 $ 3 ,146,154 $ 4 0,287,627 $ 1 3,032,052
See accompanying Notes to Basic Financial Statements.
Major Funds
24
Other Total
Governmental Governmental
Funds Funds
$ 24,399,122 $ 63,006,451
64 41,021,597
1,332,222 2,565,073
143,765 431,802
704,580 9,954,454
- 34,813
- 111,792
- 500,000
$ 26,579,753 $ 117,625,982
$ 510,501 $ 2,290,787
64,048 861,113
43,958 762,801
- 111,792
- 177,382
398,517 7,883,443
- 500,000
1,017,024 12,587,318
1,837,530 6,570,487
- 34,813
- 611,792
982,000 2,580,696
1,004,965 1,004,965
- 2,170,000
3,824,495 12,972,753
65,826 467,952
- 2,252,933
- 105,790
- 500,000
- 100,000
- 2,000,000
- 1,000,000
- 1,000,000
9,122,910 9,122,910
9,007,446 39,832,040
3,542,052 35,684,286
25,562,729 105,038,664
$ 26,579,753 $ 117,625,982
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26
City of Menlo Park
Reconciliation of the Governmental Funds Balance Sheet
to the Government- Wide Statement of Net Assets
June 30, 2003
Total Fund Balances - Total Governmental Funds $ 105,038,664
Amounts reported for Governmental Activities in the Statement of Net Assets were different because:
Capital assets used in governmental activities were not current financial resources. Therefore, they were not
reported in the Governmental Funds Balance Sheet.
Non- depreciable 255,957,741
Depreciable, net 97,308,505
Total capital assets 353,266,246
Interest payable on long- term debt did not require current financial resources. Therefore, interest payable was
not reported as a liability in Governmental Funds Balance Sheet. ( 687,839)
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 ( 1,625,000)
Long- term liabilities - due in more than one year:
Claims and judgments payable ( 1,467,798)
Compensated absences payable ( 970,178)
1996 General Obligation Refunding Bonds ( 3,815,000)
1996 Las Pulgas Project Refunding Bonds ( 26,450,000)
2000 Las Pulgas Project Tax Allocation Bonds ( 43,620,000)
2002 General Obligation Bonds ( 13,115,000)
Total long- term liabilities ( 91,062,976)
Net Assets of Governmental Activities $ 366,554,095
366,554,095
See accompanying Not es to Basic Financial Statements.
City of Menlo Park
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2003
Community Community Measure T
Development Development 2002
General Block Grant Agency GO Bond
Fund Special Revenue Special Revenue Capital Projects
REVENUES:
Taxes:
Secured property taxes $ 4 ,700,691 $ - $ 8 ,994,818 $ -
Unsecured property taxes 5 34,593 - 9 66,988 -
Other property taxes 6 79,012 - - -
Sales taxes 6 ,857,224 - - -
Franchise and occupancy taxes 2 ,157,462 - - -
Special assessments - - - -
Licenses and permits 2 ,671,512 - - -
Fines and forfeitures 8 02,636 - - -
Use of money and property 1 ,391,918 - 1 ,082,875 2 81,774
Intergovernmental 2 ,862,975 5 33 - -
Charges for services 3 ,580,793 4 34,153 5 0,116 -
Other 1 9,315 - - -
Total revenues 2 6,258,131 4 34,686 1 1,094,797 2 81,774
EXPENDITURES:
Current:
General government 4 ,681,397 - - -
Public safety 7 ,991,790 - - -
Public works 3 ,668,436 - - -
Culture and recreation 6 ,997,615 - - -
Rehabilitation loans - 4 34,120 - -
Community development 2 ,054,727 - 2 40,981 -
Urban development and housing - - 3 ,924,306 -
Capital outlay 1 48,375 - 9 ,785,804 6 64,912
Debt service:
Principal - - 6 95,000 -
Interest - - 3 ,843,476 -
Total expenditures 2 5,542,340 4 34,120 1 8,489,567 6 64,912
REVENUES OVER ( UNDER) EXPENDITURES 7 15,791 5 66 ( 7,394,770) ( 383,138)
OTHER FINANCING SOURCES ( USES):
Transfers in 1 ,143,460 - - -
Transfers out ( 198,114) - ( 647,240) -
Sale of fixed assets 1 ,071,091 - - -
Total other financing sources ( uses) 2 ,016,437 - ( 647,240) -
Net change in fund balances 2 ,732,228 5 66 ( 8,042,010) ( 383,138)
FUND BALANCES:
Beginning of year 2 9,007,507 - 4 2,763,255 1 3,397,527
End of year $ 3 1,739,735 $ 5 66 $ 3 4,721,245 $ 1 3,014,389
See accompanying Notes to Basic Financial Statements.
Major Funds
28
Other Total
Governmental Governmental
Funds Funds
$ - $ 13,695,509
- 1,501,581
- 679,012
1,148,442 8,005,666
- 2,157,462
3,240,160 3,240,160
281,250 2,952,762
- 802,636
501,077 3,257,644
2,267,331 5,130,839
531,881 4,596,943
153,208 172,523
8,123,349 46,192,737
1,329,578 6,010,975
470,747 8,462,537
2,467,650 6,136,086
359,723 7,357,338
- 434,120
387,080 2,682,788
20,848 3,945,154
3,506,056 14,105,147
210,000 905,000
694,995 4,538,471
9,446,677 54,577,616
( 1,323,328) ( 8,384,879)
231,114 1,374,574
( 312,520) ( 1,157,874)
- 1,071,091
( 81,406) 1,287,791
( 1,404,734) ( 7,097,088)
26,967,463 112,135,752
$ 25,562,729 $ 105,038,664
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, 2003
Net Change in Fund Balances - Total Governmental Funds $ -
Governmental Funds reported capital outlay as expenditures. 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. 11,490,032
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 ( 3,834,636)
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. ( 2,769,339)
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 reduceds long- term liabilities in the Government- Wide
Statement of Net Assets.
Long- term debt repayments:
1996 General Obligation Refunding Bonds 210,000
1996 Las Pulgas Project Refunding Bonds 695,000
Total long- term debt repayments 905,000
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. ( 283,457)
Change in Net Assets of Governmental Activities $ 5,507,600
$ ( 1,589,488)
$ 7,097,088
See accompanying Notes to Basic Financial Statements.
Amounts reported for governmental activities in the Statement of Activities were different because:
30
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.
31
City of Menlo Park
Statement of Net Assets
Proprietary Funds
June 30, 2003
Major Fund
Water Total
ASSETS
Current assets:
Cash and investments $ 1 5,435,660 $ 1 5,435,660
Receivables:
Accounts 3 58,386 3 58,386
Interest 9 9,645 9 9,645
Total current assets 1 5,893,691 1 5,893,691
Noncurrent assets:
Non- depreciable 1 ,066,454 1 ,066,454
Depreciable, net 3 ,965,081 3 ,965,081
Total noncurrent assets 5 ,031,535 5 ,031,535
Total assets 2 0,925,226 2 0,925,226
LIABILITIES
Current liabilities:
Accounts payable 2 53,639 2 53,639
Accrued payroll 1 5,902 1 5,902
Compensated absences 1 9,317 1 9,317
Deposits 4 2,186 4 2,186
Total liabilities 3 31,044 3 31,044
NET ASSETS
Restricted for capital projects 3 1,887 3 1,887
Unrestricted 2 0,562,295 2 0,562,295
Total net assets $ 2 0,594,182 $ 2 0,594,182
$ 2 0,594,182 $ 2 0,594,182
$ -
See accompanying Notes to Basic Financial Statements.
32
City of Menlo Park
Statement of Revenues, Expenses and Changes in Fund Net Assets
Proprietary Funds
For the year ended June 30, 2003
Major Fund
Water Total
OPERATING REVENUES:
Water sales $ 3,318,496 $ 3,318,496
Connection fees 23,249 23,249
Other 79,932 79,932
Total operating revenues 3,421,677 3,421,677
OPERATING EXPENSES:
Cost of sales and services 2,291,067 2,291,067
General and administrative 415,663 415,663
Depreciation 124,653 124,653
Total operating expenses 2,831,383 2,831,383
OPERATING INCOME ( LOSS) 590,294 590,294
NONOPERATING REVENUES ( EXPENSES):
Interest income 454,611 454,611
Total nonoperating revenues 454,611 454,611
INCOME ( LOSS) BEFORE OPERATING TRANSFERS 1,044,905 1,044,905
OPERATING TRANSFERS:
Transfers out ( 216,700) ( 216,700)
Total operating transfers ( 216,700) ( 216,700)
Net income ( loss) 828,205 828,205
NET ASSETS:
Beginning of year, as restated 19,765,977 19,765,977
End of year $ 20,594,182 $ 20,594,182
$ 20,594,182
$ -
See accompanying Notes to Basic Financial Statements.
33
City of Menlo Park
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2003
Major Fund
Water Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers/ other funds $ 3 ,420,016 $ 3 ,420,016
Cash payment to suppliers ( 2,468,378) ( 2,468,378)
Cash payments for general and administrative ( 403,625) ( 403,625)
Cash received from ( payment to) other ( 6,161) ( 6,161)
Net cash provided ( used) by operating activities 5 41,852 5 41,852
-
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers out ( 216,700) ( 216,700)
Net cash provided ( used) by noncapital financing activities ( 216,700) ( 216,700)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition and construction of capital assets ( 19,888) ( 19,888)
Net cash provided ( used) by capital and related financing activities ( 19,888) ( 19,888)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment income 4 54,611 4 54,611
Net cash provided ( used) by investing activities 4 54,611 4 54,611
Net increase ( decrease) in cash and cash equivalents 7 59,875 7 59,875
CASH AND CASH EQUIVALENTS:
Beginning of year 1 4,675,785 1 4,675,785
End of year $ 1 5,435,660 $ 1 5,435,660
$ 1 5,435,660
RECONCILIATION OF OPERATING INCOME ( LOSS) TO NET $ -
CASH PROVIDED ( USED) BY OPERATING ACTIVITIES:
Operating income ( loss) $ 5 90,294 $ 5 90,294
Adjustments to reconcile operating income ( loss) to net
cash provided ( used) by operating activities:
Depreciation 1 24,653 1 24,653
Changes in current assets and liabilities:
Accounts receivable ( 18,177) ( 18,177)
Interest receivable 1 6,516 1 6,516
Accounts payable ( 177,311) ( 177,311)
Accrued payroll 3 ,280 3 ,280
Compensated absences 8 ,758 8 ,758
Deposits ( 6,161) ( 6,161)
Total adjustments ( 48,442) ( 48,442)
Net cash provided ( used) by operating activities $ 5 41,852 $ 5 41,852
See accompanying Notes to Basic Financial Statements.
34
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.
35
City of Menlo Park
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2003
Agency
Funds
ASSETS
Cash and cash equivalents $ 125,661
Total assets $ 125,661
LIABILITIES
Accounts payable $ 6 9,890
Deposits 5 5,771
Total liabilities $ 125,661
$ -
See accompanying Notes to Basic Financial Statements.
36
NOTES TO BASIC
FINANCIAL STATEMENTS
37
38
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City of Menlo Park
Notes to Basic Financial Statements
For the year ended June 30, 2003
39
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 General Purpose
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
fund.
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.
􀂾 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.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
40
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
A. Reporting Entity, Continued
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 basic 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. ( In the Statement of Activities, internal service fund transactions have been
eliminated.) However, those transactions between governmental and business- type activities have not
been eliminated. The following interfund activities have been eliminated:
􀂾 Due to/ from other funds
􀂾 Advances to/ from other funds
􀂾 Operating transfers in/ out
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
41
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
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.
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.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
42
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
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. Encumbrances
Under encumbrance accounting, purchase orders, contracts and other commitments for expenditures
are recorded to reserve that portion of the applicable appropriation. Encumbrance accounting is
employed as an extension of formal budgetary accounting. Since encumbrances do not yet constitute
expenditures or liabilities, encumbrances outstanding at year- end are reported as reservations of fund
balances.
E. 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, 2003
43
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
E. 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 pool 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.
F. 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 2002- 03
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, 2003
44
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
F. 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.
G. 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.
H. 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, 2003
45
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
I. 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.
J. 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 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
K. Property Taxes
Under California law, property taxes are assessed and collected by the counties up to 1% of assessed
value, plus other increases approved by the voters. The property taxes go into a pool, and are then
allocated to the cities based on complex formulas. Accordingly, the City accrues only those taxes which
are 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
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.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
46
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
L. 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 expendable 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.”
M. Implementation of New GASB Pronouncements
In 2003, the City adopted new accounting standards in order to conform to the following
Governmental Accounting Standards Board Statements:
􀂾 Statement No. 34, Basic Financial Statements and Management’s Discussion and Analysis for State and
Local Governments.
􀂾 Statement No. 37, Basic Financial Statements and Management’s Discussion and Analysis for State and
Local Governments: Omnibus
􀂾 Statement No. 38, Certain Financial Statement Note Disclosures
GASB Statement No. 34 is a new financial reporting requirement for local governments in the United
States. The City has implemented this pronouncement and has restructured much of the information that it
has presented in the past. The main goal is to make the reports more comprehensive and easier to
understand and use.
GASB Statement No. 37 addresses selected issues and amends GASB Statement No. 21, Accounting for
Escheat Property, and No. 34, Basic Financial Statements and Management’s Discussion and Analysis for State and
Local Governments. These Statements make selective changes including accounting for Escheat Property,
Management’s Discussion and Analysis, Capitalization of Construction – Period Interest, Modified
Approach for Reporting Infrastructure, Program Revenues and Major Fund Criteria.
GASB Statement No. 38 establishes and modifies disclosure requirements related to Summary of
Significant Accounting Policies, actions taken to address violations of significant finance – related legal
and contractual provisions, debt and lease obligations, short- term debt, disaggregation of receivable
and payable balances, and interfund balances and transfers.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
47
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 February 1, 2002, and adopted February 6, 2002
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
The City’s investments with LAIF at June 30, 2003, included a small portion of the pool 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.
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, 2003, the City had $ 73,803,144 invested in LAIF, which had invested 2.327% of the pool
investment funds in Structured Notes and Asset- Backed Securities.
A. Cash Deposits
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).
At June 30, 2003, the carrying amount of the City’s deposits was $( 138,198) and the bank balances were
$ 407,671. 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, 2003
48
2. CASH AND INVESTMENTS, Continued
A. Cash Deposits, Continued
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.
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.”
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
49
2. CASH AND INVESTMENTS, Continued
C. Summary of Cash and Investments
The following is a summary of cash and investments at June 30, 2003:
Fund Financials
Fiduciary Funds
Governmental Business- Type Statement of
Activities Activities Total Net Assets Total
Cash and investments $ 6 3,006,451 $ 1 5,435,660 $ 7 8,442,111 $ 1 25,661 $ 7 8,567,772
Restricted cash and investments $ 4 1,021,597 $ - $ 4 1,021,597 $ - $ 4 1,021,597
Government- Wide Statement of Net Assets
Cash ( deposits) and investments were categorized as follows at June 30, 2003:
Not Required to Fair
Category 1 be Categorized Value
Cash and Investments:
Cash and Cash Deposits:
Checking $ ( 138,198) $ - $ ( 138,198)
Petty cash - 3 ,860 3 ,860
Total cash and cash deposits ( 138,198) 3,860 ( 134,338)
Investments:
US Treasury Notes 7,074,700 - 7,074,700
Federal Home Loan Bank 9,160,650 - 9,160,650
Federal National Mortgage Association 11,409,633 - 11,409,633
Federal Home Loan Mortgage Corporation 12,133,770 - 12,133,770
Local Agency Investment Fund - 38,923,357 38,923,357
Total investments 39,778,753 38,923,357 78,702,110
Total cash and investments $ 39,640,555 $ 38,927,217 $ 78,567,772
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
50
2. CASH AND INVESTMENTS, Continued
C. Summary of Cash and Investments, Continued
At June 30, 2003, 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 $ 6 ,141,746 $ 6,141,746
Local Agency Investment Fund 3 4,879,787 34,879,787
Total Bank of New York 4 1,021,533 41,021,533
US Bank:
US Treasury Money Market 6 4 64
Total restricted cash and investments $ 4 1,021,597 $ 41,021,597
At June 30, 2003, the City had no Category 3 type pooled cash or investments.
External Investment Pool
The City invests in LAIF, a State of California external investment pool. 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, 2003, 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, 2003, the City’s investments in LAIF at fair value amounted to $ 73,803,144
using a LAIF fair value factor of 1.002846280.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
51
3. RECEIVABLES
A. Government- Wide Financial Statements
The following is a summary of receivables net of allowances for uncollectible amounts at June 30, 2003:
Governmental Business- Type
Activities Activities Total
Accounts $ 2 ,565,073 $ 3 58,386 $ 2 ,923,459
Interest 4 31,802 9 9,645 5 31,447
Notes 5 ,932,297 - 5 ,932,297
Total $ 8 ,929,172 $ 4 58,031 $ 9 ,387,203
Statement of Net Assets
Government- Wide
B. Fund Financial Statements
At June 30, 2003, the Fund Financial Statements show the following receivables:
Accounts Receivable
Accounts receivable consisted of amounts accrued in separate funds in the ordinary course of
operations. The total amount of accounts receivable for each major fund and non- major fund in the
aggregate as of June 30, 2003, was as follows:
Governmental Funds:
General Fund $ 1,047,833
Community Development Block Grant Special Revenue Fund 185,018
Non- Major Funds 1,332,222
Total governmental funds 2,565,073
Proprietary Funds:
Water Fund 358,386
Total proprietary funds 358,386
Total accounts receivable $ 2,923,459
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
52
3. RECEIVABLES, Continued
B. Fund Financial Statements, Continued
Interest Receivable
Interest receivable consists of interest from investments pooled by the City and is distributed among
the funds according to their ending cash balances. The interest receivable as of June 30, 2003, was as
follows:
Governmental Funds:
General Fund $ 238,724
Community Development Agency Special Revenue Fund 49,313
Non- Major Funds 143,765
Total governmental funds 431,802
Proprietary Funds:
Water Fund 99,645
Total proprietary funds 99,645
Total interest receivable $ 531,447
Notes Receivables
As of June 30, 2003, notes receivable consisted of the following:
Notes
Receivable
Major Funds:
General Fund:
City Manager housing $ 2,259,698
Community Development Block Grant 2,461,136
Community Development Agency 4,529,040
Total general fund 9,249,874
Other Governmental Funds:
Below market rate housing 673,283
Emergency repair loan ( ERL) 31,297
Total special revenue funds 704,580
Total notes receivable $ 9,954,454
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, 2003, was $ 2,259,698.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
53
3. RECEIVABLES, Continued
B. Fund Financial Statements, Continued
Community Development Block Grant
The City uses Housing and Community Development Block Grant funds to provide housing
rehabilitation loans to eligible applicants. Outstanding loans at June 30, 2003, were $ 2,461,136. The
rehabilitation loans are reflected in the Community Development Block Grant Fund. Since the funds
have not been legally vested with the City as of June 30, 2003, these funds are reported as deferred
revenue.
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, 2003 was $ 44,996 and is reflected
in the Community Development Agency Fund.
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, 2003, was $ 53,625
and is reflected in the Community Development Agency Fund.
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, 2003, was $ 245,622
and is reflected in the Community Development Agency Fund.
The Agency made housing rehabilitation loans to two eligible participants. The outstanding balance at
June 30, 2003, was $ 79,756 and is reflected in the Community Development Agency Fund.
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, 2003, was $ 82,884, and is reflected in the Community Development Agency Fund.
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 due on February 15, 2043. The outstanding balance as of June
30, 2003, was $ 4,022,157.
Total Agency loans at June 30, 2003, amounted to $ 4,529,040.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
54
3. RECEIVABLES, Continued
B. Fund Financial Statements, 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, 2003, were $ 673,283, and are
reflected in the Below Market Rate Housing Reserve Fund.
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, 2003, were $ 31,297, and are reflected in the Revenue Sharing Fund.
4. CAPITAL ASSETS
A. Government- Wide Financial Statements
At June 30, 2003, 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 1 ,717,984 - 1 ,717,984
Total non- depreciable assets, net 2 55,957,741 1 ,066,454 2 57,024,195
Depreciable Assets:
Buildings 3 9,689,374 - 3 9,689,374
Equipment 5 ,798,154 5 85,643 6 ,383,797
Other improvements 3 ,328,493 8 ,423,306 1 1,751,799
Infrastructure 9 7,117,678 - 9 7,117,678
1 45,933,699 9 ,008,949 1 54,942,648
Less accumulated depreciation ( 48,625,194) ( 5,043,868) ( 53,669,062)
Total depreciable assets, net 9 7,308,505 3 ,965,081 1 01,273,586
Total capital assets $ 3 53,266,246 $ 5 ,031,535 $ 3 58,297,781
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
55
4. CAPITAL ASSETS, Continued
A. Government- Wide Financial Statements, Continued
The following is a summary of capital assets for governmental activities:
Balance Reclassification/ Balance
July 1, 2002 Additions Retirements Adjustments June 30, 2003
Governmental Activities:
Capital assets, not being depreciated:
Land $ 8,490,309 $ 22,735,914 $ ( 662,500) $ 190,970,544 $ 221,534,267
Land improvements - 658,026 - 32,047,464 32,705,490
Construction in progress 25,626,382 ( 23,908,398) - - 1,717,984
Total capital assets,
not being depreciated 34,116,691 ( 514,458) ( 662,500) 223,018,008 255,957,741
Capital assets, being depreciated:
Buildings 29,185,487 144,064 - 10,359,823 39,689,374
Equipment 7,803,067 156,494 ( 161,448) ( 1,999,959) 5,798,154
Other improvements 13,767,101 8,204,881 - ( 18,643,489) 3,328,493
Infrastructure - 3,499,051 ( 3,292,836) 96,911,463 97,117,678
Total capital assets,
being depreciated 50,755,655 12,004,490 ( 3,454,284) 86,627,838 145,933,699
Less accumulated depreciation - ( 3,834,636) 1,347,445 ( 46,138,003) ( 48,625,194)
Total capital assets,
being depreciated, net 50,755,655 8,169,854 ( 2,106,839) 40,489,835 97,308,505
Governmental activities
capital assets, net $ 84,872,346 $ 7,655,396 $ ( 2,769,339) $ 263,507,843 $ 353,266,246
The following is a summary of capital assets for business- type activities:
Balance Balance
July 1, 2002 Additions Retirements Adjustments June 30, 2003
Land $ 403,675 $ - $ - $ 662,779 $ 1,066,454
Machinery and equipment 605,104 - - ( 19,461) 585,643
Other improvements 9,459,197 19,888 - ( 1,055,779) 8,423,306
10,467,976 19,888 - ( 412,461) 10,075,403
Less accumulated depreciation ( 3,047,256) ( 124,653) - ( 1,871,959) ( 5,043,868)
Total $ 7,420,720 $ ( 104,765) $ - $ ( 2,284,420) $ 5,031,535
Depreciation expense for all proprietary funds was $ 124,653 for the year ended June 30, 2003.
City of Menlo Park
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2003
56
5. LONG- TERM DEBT
A. Long- Term Obligations
Summary of changes in long- term debt transactions for the year ended June 30, 2003 was as follows:
Balance Balance Due within Due in more
July 1, 2002 Additions Deletions June 30, 2003 one year than one year
Governmental Activities:
Claims payable $ 1,618,754 $ - $ ( 150,956) $ 1,467,798 $ - $ 1,467,798
Compensated absences 811,058 921,921 - 1,732,979 762,801 970,178
1996 General Obligation
Refunding Bonds 4,240,000 - ( 210,000) 4,030,000 215,000 3,815,000
1996 Las Pulgas Project
Refunding Bonds 28,045,000 - ( 695,000) 27,350,000 900,000 26,450,000
2000 Las Pulgas Project
Tax Allocation Bonds 44,000,000 - - 44,000,000 380,000 43,620,000
2002 General Obligation
Bonds 13,245,000 - - 13,245,000 130,000 13,115,000
Total governmental
activities $ 91,959,812 $ 921,921 $ ( 1,055,956) $ 91,825,777 $ 2,387,801 $ 89,437,976
Business- Type Activities:
Compensated absences - current $ 10,559 $ 8,758 $ - $ 19,317 $ 19,317 $ -
Total enterprise $ 10,559 $ 8,758 $ - $ 19,317 $ 19,317 $ -
Claims Payable
With the implementation of Governmental Accounting Standards Board Statement No. 10, Accounting
and Financial Reporting for Risk Financing and Related Insurance Issues, in the Governmental- Wide
Financial Statements the City has reflected the financial effect of risk financing activities of $ 1,467,798
( see Note 7 for further discussion).
Compensated Absences
Compensated absences at June 30, 2003 amounted to $ 1,732,979. There is no fixed payment schedule
for compensated absences. The current portion of this