HomeMy WebLinkAboutStaff Report 248-10TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER
DATE: MAY 17, 2010
PIC-l
DEP ARTMENT: ADMINISTRATIVE
SERVICES
CMR: 248:10
SUBJECT: Approval of2008-09 Public Improvement Corporation Financial Statements
RECOMMENDATION
Staff recommends that the Board of Directors of the Public Improvement Corporation (PIC) approve
the 2008-09 financial statements for the Public Improvement Corporation.
BACKGROUND
The Public Improvement Corporation (PIC) is a nonprofit corporation formed by the City in 1983,
allowing the City to issue Certificates of Participation (COPs) to fund capital improvements. The
PIC, through a lease structure, finances the acquisition, improvement, and construction of City
facilities. The PIC uses the lease payments by the City's General Fund to pay the debt service on the
COPs.
On July 13, 1998, Council adopted a resolution establishing itself as the Board of Directors of the
PIC. In 1983 and 1998, the City of Palo Alto issued Certificates of Participation (COPs) to fund
improvements to the Civic Center and the Golf Course, respectively. In 2002, the Civic Center bonds
were refinanced due to a lower interest rate environment and COPs were issued to finance the
construction of commercial space adjacent to the new parking structure on Bryant/Florence Street.
The bylaws of the PIC require the Board of Directors of the Corporation to meet atlcast annually and
approve the financial statements for the Corporation. Therefore, the City Council is required to meet
annually as the Board of the PIC.
'The Golf Course bond proceeds were used to finance various improvements at the Palo Alto Public
Golf Course, including upgrading five failways and various traps, trees and greens, constructing new
storm drain facilities, replacing the existing irrigation system, upgrading the driving range, and
installing new cart paths. The Civic Center bonds were issued to undertake various improvet1'lents to
the City's existing Civic Center, These improvements included a third elevator assembly and its
installation in a pre-existing elevator shaft and strengthening of certain structural and decorative
elements ofthe building for seismic purposes, In addition, funds were used for stlUctural remodeling
of the police headquarters and retrofitting of a portion of the Civic Center for a fire sprinklel'system.
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lbe Downtown Parking Improvement bonds were used to build a two story above-ground structure
of approximately 7,638 square feet which was leased to a commercial tenant.
DISCUSSION
The attached financial statements show the financial condition of the PIC. All debt service payments
have been made on time and all financial requirements, such as the maintenance of reserves, have
been met. At year-end, June 30, 2009, total outstanding debt principal on the COPs equaled $7.6
million as follows:
Principal Year Debt will be
I
COP Description Outstanding Retired
(millions)
1998 Golf Course $4.4 2018
!
! 2002A Civic Center Refinancing
!
$1.2 2012
I
!
2002B Downtown Parking Improvements . $2.0 2~23
I
Total COPs $7.6
II
Staff recommends that the Board of Directors of the Public Improvement Corporation (PI C) approve
the 2008-09 financial statements for the Public Improvement Corporation.
RESOURCE IMP ACT
Approval of the Public Improvement Corporation's financial statements will have no resource
impact.
POLICY IMPLICATIONS
Approval of the Public Improvement Corporation's financial statements is consistent with prior
Council policy direction and resolutions.
ENVIRONMENTALREVIEW
This is not a project, as defined in Section 21065 of the California Environmental Quality Act
(CEQA).
ATTACHMENTS
Attachment A: City of Palo Alto Public Improvement Corporation Financial Statements for the
Year Ended June 30, 2009.
CMR:248:10 Page 2 00
PREPARED BY: !~
TARUN NARAYAN
DEPARTMENT APPROVAL:
LA
Director, Administrative Services
CITY MANAGER APPROVAL:
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ATTACHMENT A
CITY QF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
BASIC COMPONENT UNIT FINANCIAL STATEMENTS
FOR THE YEAR ENDED
JUNE 30, 2009
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CITY OF PALO ALTO PUBLIC IMPROVEMENT CORPORATION
BASIC COMPONENT UNIT FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2009 .
Table of Contents
Indepenlknt Auditor's Report ................................................................................................................ 1
Managemellt's Discussion and Analysis ............................................................................................... .3
Basic Component Unit Financial Statenu!1ItS1
Corporate-wide FinanciaJ Statements
Statement of Net Assets .............................................................................................................. 6
Statement of Activities ............................................................................................................... 7
Fund Financial Statements
. Balance Sheet ........................................................................................ ; .................................. 1 0
Statement of Revenues, Expenditures and Changes in Fund Balances ..................................... J 1
Statement of Revenues, Expenditures and Changes in Fund Balances-
Governmental Funds to the Statement of Activities ............................................................... 12
Notes to Basic Component Unit Financial Statements ........................................................................ 13
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MAZE &
ASSOCIATES
INDEPENDENT AUDITOR'S REPORT .
The Honorable Mayor and
Members of the City Council of the
City of Palo Alto, California
ACCOUNTANCY CORPORATION
3478 BuskIrk Ave •• SuIte 215
Pleasant Hili, california 94523
(925) 930-0902 • FAX (925) 930-0135
mszoe@mazoeassoclates.com
www.m8l.eassocfatss.com
We have audited the accompanying baSic component unit financial statements of the
governmental activities and the major fund of the Palo Alto Public Improvement Corporation, a
component unit of the City of Palo Alto, as of and for the year ended June 30, 2009 as listed in
the Table ofCentents. 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 of America, Those standards require that we plan and perform the audit to obtain
reasonable assurance as to whether the financial statements are free of material misstatement. An
audit includes examining on a test basis evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all material respects the
financial position of the governmental activities and the major fund of tbe Palo Alto Public
Improvement Corporation as of June 30, 2009, and the results of its operations for the year then
ended, in conformity with generally accepted accounting principles in tbe United States of
America.
Management's Discussion and Analysis is not a required part of the basic component unit financial
statements but is supplementary information required by the Governmental Accounting Standards
Board. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of required supplementary
information. However we did not audit the information and we express no opinion on it.
Octo~r 23,2009
A Professlonsl Corporation
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MANAGEMENT'S DISCUSSION AND ANALYSIS
The Palo Alto Public Improvement Corporation, a component unit of the City of Palo Alto, follows the
provisions of Government Accounting Standards Board Statement 34 (GASB 34), "Basic Financial
Statements and Management's Discussion and Analysis for State and Local Governments."
The Corporation is controlled by the City of Palo Alto and was organized to aasist the City in financing
public improvements. The Corporation issues debt and turns the proceeds of the debt over to the City
under lease agreements that provide a revenue source for the repayment of this debt. The Corporation
has three debt issues and has turned the proceeds of these issues over to the City, which pledged certain
lease payments as collateral for this debt as discussed in Note 4 to the financial statements.
FISCAL 2009 FINANCIAL IDGHLIGHTS: CORPORATE-WIDE BASIS AND FUND BASIS
GASB 34 requires the issuance of corporate-wide financial statements as well as fund financial
statements. The corporate-wide financial statements report the balance of the Corporation's long-term
debt issues while the individual fund statements do not.
In fiscal year 2002, the Corporation issued its 2002A Civic Center Refinancing COPs in the amount of
$3.5 million to refund its 1992 Civic Center Project COPs, reducing debt service requirements by $372
thousand and producing an account gain of $137 thousand. The Corporation also issued its 2002B
Downtown Parking Improvements COPs in the amount of$3.6 million. In fiscal year 2005, a partial
redemption was completed by placing excess construction arid debt service reserve funds into an escrow
account to defease $900 thousand of2002B Downtown Parking Improvements COPs. These issues,
including the 1998 Golf Course Capital Improvements COPs, comprise all the Corporation's
outstanding debt.
Interest expense on these COP issues was $437 thousand for fiscal year 2009, an increase of $36
thousand over the prior year. The interest forleases on the assets securing these COP issues was $437
thousand, a decrease of $44 thousand from the prior year. Although program expenses exceeded lease
revenues by $1 thousand, this amount was more than offset by the $23 thousand in general revenues
represented by interest income, thereby resulting in an increase in net assets of $22 thousand over the
prior year.
The Corporation ended fiscal year 2009 with total assets of $7.9 million, a decrease of $0.7 million from
the prior year. Total assets consist of $1.4 million in cash and $6.5 million of leases receivable·
(recorded at net present value) from the City of Palo Alto. Total liabilities were $7.7 million, a decrease
of $0.8 million from the prior year, and included $840 thousand of current debt as well as $6.8 million
oflong-term debt.
At the fund level, the Corporation reported $22 thousand in revenues over expenditures. This \.VaS an
increase of $8 thousand over the prior year.
As of June 30, 2009, the Corporation had one fund, the Debt Service Fund, which reported a $1.4
million fund balance. reflecting a $0.03 million increase over the prior year.
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OVERVIEW OF THE CORPORATION'S BASIC FINANCIAL STATEMENTS
The Basic Financial Statements are in two parts:
(1) Management's Discussion and Analysis (this part);
(2) The Basic Financial Statements, which include the corporate-wide and the fund financial
statements, along with the notes to these financial statements.
The Basic Financial Statements
The Basic Financial Statements comprise the corporate-wide Financial Statements and the Fund
Financial Statements. These two sets of financial statements provide two different views of the
Corporation's financial activities and financial positions, both short-term and long-term.
,The corporate-wide Financial Statements provide a long-term view of the Corporation's activities as a
whole and comprise the Statement of Net Assets and the Statement of Activities. The Statement of Net
Assets provides inforination about the financial position of the Corporation as a whole, including all its
long-term liabilities on the full accrual basis, similar to that used by corporations. The Statement of
Activities provides information about all the Corporation's revenues and expenses on the full-accrual
basis with an emphasis on measuring tha net revenues or expenses of the Corporation's programs. The
Statement of Activities explains in detail the change in net assets for the fiscal year.
The Fund Financial Statements report the Corporation's operations in more detail than the corporate
wide statements and focus primarily on the short-term activities of the Debt Service Fund. Fund
Financial Statements measure only current revenues and expenditures; current assets, liabilities. and
fund balances; and they exclude capital assets and long-term debt.
Together, these statements are called the Basic Financial Statements.
DEBT ADMINISTRATION
The Corporation issues debt in the form of Certificates of Participation (termed COPs) for future lease
receipts from the City of Palo Alto. Legally. these COPs issues are the Corporation's debt only; the City
is liable only for the payment of the amounts set forth in the lease securing each COPs issue.
The Corporation issued two COPs for the fiscal year ending June 30, 2002, one of which was refunded
by an earlier issue.
ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The economy of the City of Palo Alto and its major initiatives for the coming year are discussed in detail
in the City's Comprehensive Annual Financial Report.
CONTACTING THE AGENCY'S FINANCIAL MANAGEMENT
The Basic Financial Statements are intended to provide citizens, taxpayers, investors, and creditors with
a general overview of the Agency's finances. Questions about these statements should be directed to the
Finance Department ofthe City of Palo Alto, 250 Hamilton Avenue, Palo Alto, CA 94301.
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CITY OF PAW ALTO -PUBLIC IMPROVEMENT CORPORATION
STATEMENT OF NET ASSETS
AND STATEMENT OF
ACTIVITIES
The Statement ofNe! Assets and the Statement of Activities summarize the entire Corporation's
financial activities and fmancial position. They are prepared on the same basis as is used by most
businesses, which means they include all the Corporation's assets and all its liabilities, as well as
aU its revenues and expenses. This is known as the full accrual basis; the effect of all the
Corporation's transactions is taken into account, regardless of whether or when cash changes
hands; but all material internal transactions between Corporation funds have been eliminated.
The Statement of Net Assets reports the difference between the Corporation's total assets and the
Corporation's total liabilities, including all the Corporation's capital assets and all its long-term
debt. The Statement of Net Assets presents similar information to the old balance sheet format
but presents it in a way that focuses the reader on the composition of the Corporation's net assets,
by subtracting total liabilities from total assets.
The Statement of Net Assets summarizes the financial position of all the Corporation's
Governmental Activities in a single column that presents the financial position of the entire
Corporation.
The Corporation's Governmental Activities include the activities of its Debt Service Fund.
The Statement of Activities reports increases and decreases in the Corporation's net assets. It is
also prepared on the full accrual basis, which means it includes all the Corporation's revenues and
all its expenses, regardless of when cash changes bands. This differs from the "modified accrual"
basis used in the Fund financial statements, which reflect only current assets, current liabilities,
available revenues and measurable expenditures.
The Statement' of Activities presents the Corporation's expenses and follows with program
revenues. Revenues which are generated directly by these programs are deducted from program
expenses to m:rive at the nel expense of the governmental program. The Corporation's general
revenues are then listed in the Governmental Activities column, and the Change in Net Assets is
computed and reconciled with the Statement of Net Assets.
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PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
STATEMENT OF NET ASSETS
JUNE 30, 2009
ASSETS
Cash and investments held by trustee (Note 3)
Interest receivable
Investment in leases to City of Palo Alto (Note 2C)
Total Assets
lnterost payable
Long-term debt (Note 4):
Due in one year
LIABILITIES
Due In more than one year
Total Liabilities
NET ASSETS
Restricted (Note 5 A)
Total Net Assets
See accompanying nota, to fmancial statements
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$1,364,430
12,164
6,495,405
7,871,999
129,000
840,000
6,765,000
7,734,000
137,999
$137,999
PALO ALTO PUBLIC IMPROVEMENT CORPORA nON
A COMPONENT UNIT OF THE CITY OF PALO ALTO
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2009
EXPENSES
Interest and fiscal agent charges
Total Program Expenses
REVENUES .
Interest on leases from Cit)' ofPato Alto
Net Program Expenses
GENERAL REVENUES
Interest from cash and investments
Change in Net Assets
Net assets at the beginning of year .
Net .ssets at the end of year
Se. accompanying notes to fmancla! statements
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$437,321
437,321
436,641
(680)
23,009
22,329
115,670
$137,999
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FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The Corporation has one fund in fiscal 2009.
Debt Service Fund· This fund accounts for debt service payments on the Corporatipn's
long·tenn debt issues.
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PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPONENT uNrr OF THE CITY OF PALO ALTO
DEBT SERVICE FUND BALANCE SHEET
JUNE 3D, 2009
ASSETS
Cash and investments held by trustee (Note 3)
Interest receivable
Investment in leases to City of Palo Alto (Note 2C)
Total Assets
LIABD.JTlES
Deferred revenue
Total Liabilities
FUND BALANCE (Note 5B)
Reserved for:
Debt service
Total Fund Balance
RECONCILIATION OF FUND BALANCE TO NET ASSETS:
Accrual adjustment to remove deferred revenue from the balance sbeet
Deferred revenue
Some !labilities, including bonds payable, are not due and payable in the
current period and therefore are not reported in the funds
Long·term debt:
Interest payable
Due within one year
Due in more than one year
NET ASSETS OF GOVERNMENTAL ACTMTlES
See accompanying notes to fmancial statements
]0
$1,364,430
12,164
6,495,405
$7,87i,999
$6,495,405
6,495,405
1,376,594
1,376,594
6,495,405
(l29,OOO)
(840,OOO)
(6,765,000)
$137,999
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPONENT UNlT OF THE CITY OF PALO ALTO
DEBT SERVICE FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES rnFUNDBALANCE
FOR THE YEAR ENDED JUNE 30, 2009
REVENUES
Lease receipts from City of Palo Alto,
Principal
interest ,
interest from cash and investments
Total Revenues
EXPENDITURES
Debt selVice:
Principal repayment
Interest and fiscal agent charges
Total Expenditures
l','BT CHANGE IN FUND BALANCE
Fund balance at beginning of year
Fund balance at end of year
See accompanying notes to fmancial statements
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$778,040
436,641
23,009
1,237,690
800,000
415,714
1,215,714
21,976
1,354,618
$1,376,594
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS TO THE
STATEMENT OF ACTIVITIES -FOR THE YEAR ENDED JUNE 30, 2009
Net change in ftmd balances-total governmental funds
Amounts reported for govenunental activities in the Statement of Activities
are different becaus.:
Repayment of bond principal is an expenditure in the governmental ftmds, but
in tile Statement of Net Assets the repayment reduces loug-tenn liabilities.
Fund balance is increased by the amount of debt repayment
Some amounts reported in tbe Statement of Revenues, Expenditures and Changes in Fund Balances
reflect the collection of an asset which are not includable as revenues on the Statement of Activities
Change in deferred revenue
Change in interest payable
Change in net assets of governmental activities
See accompanying notes to financial statements
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$21,976
800,000
(778,040)
(21,607)
$22,329
CITY OF PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2009
I NOTE 1 • DESCRIPTION OF REPORTING ENTITY
The Palo Alto Public improvement Corporation (the Corporation) was incorporated in September
1983 under the General Nonprofit Corporation Law of the State of California to acquire, construct
and lease capital improvement projects. The Corporation is exempt from federal income taxes
under Section 501(c)(4) of the Internal Revenue Code. The Corporation provides financing of
public capital improvements for the City through the issuance of Certificates of Participation
(COPs), a form of debt whi\lh allows investors to participate in a stream of future lease payments.
Proceeds from the COPs are used to construct projects which are leased to the City for lease
payments which are sufficient in timing and amount to meet the debt service requirements of the
COPs.
The Corporation is an integral part of the City of Palo Alto. It primarily services the City and its
governing body is composed of the City Council. Therefore, the financial data of the Corporation
has also been included as a blended component unit within the City's comprehensive an!wal
financial report for the year ended June 30,2009.
I NOTE 2· SIGNIFICANT ACCOUNTING POLICmS
A. Basis af Presentatian
Carparate-wide Stlitements: The Statement of Net Assets and the Statement of Activities include
the financial activities of the Corporation. Eliminations have been made to minimize the double
counting of internal activities.
The Statement of Activities presents a comparison between direct expenses and program revenues
for each function of the Corporation's activities. Direct expenses are those that are specifically
associated with a program or function and; therefore, are clearly identifiable to a particular
function. Program revenues include (a> charges paid by the recipients of goods or services offered
by the programs and (b) grants and contributions that are restricted to meeting the operational or
capital requirements of a particular program. Revenues that are no! classified as program revenues,
including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the
Corporation's funds. Separate statements for each governmental fund are presented. The emphasis
of fund financial statements is on major individual funds, each of which is displayed in a separate
. column.
B. Majar Funds
Major funds are defined as funds that have either assets, liabilities, revenues or expenditures equal
to ten percent of their fund-type total and five pereent of the grand total. The Corporation has One
fund which is reported as a major governmental fund in the accompanying fmancial statements:
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CITY OF PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30,2009
I NOTE 2 -SIGNIFICANT ACCOUNTING POLICIES (Continued)
;
Debt Service Fund -This fund accounts for debt service payments on the Corporation's long-tenn
debt issues,
C Investment In Leases
Improvements financed by the Corporation are leased to the City for their entire estimated useful life
and will bewme the City property at the conclusion of the lease, The Corporation therefore records
the present value of the lease and considm the leased improvements to have been sold for this
amount when leased.
iNOTE 3 • CASH AND INVESTMENTS HELD BY TRUSTEE
A Trustee under the provisions of the Corporation's COP issues, bolds, and invests all the
Corporation's casb,
A, Inl£resl Rale Risk
Interest rate risk is tbe risk tbat changes in market interest rates will adversely affect the fair value
of an investment. Normally, the longer tbe maturity of an investment, the greater the sensitivity of
its fair value to cbanges in market interest rates, Information about the sensitivity of the fair values
of the Corporation's investments to market interest rate fluctuations is provided by· the following
table that shows the distribution of the Corporation's investments by maturity:
Investment TYpe
CAMP
U.S. Agency Obligations:
FNMA
Money Market Mutual Funds
Total Investments held by Trustee
California Asset M anagemt!llt Program
Amounl
$20,165
756,113
588,152
$1,364,43Q
Maturity Date
NIA
February 15, 2011
NlA
The City is a voluntary participant in the California Asset Management Program (CAMP). CAMP
is an investment pool offered by the California Asset Management Trust (the Trust). The Trust is a
joint powers authority and pUblic agency created by the Declaration of Trust and established under
the provisions of the California Joint Exercise of Powers Act (California Government Code
Sections 6500 et seq., Or the "Act") for the purpose of exercising the common power of its
Participants to invest certain proceeds of debt issues and surplus funds, The Pool's investments are
limited to investments permitted by subdivisions (a) to (n), inclusive, of Section 53601 of the
California Government Code. The City reports its investments in CAMP at the fair value amounts
provided by CAMP, which Is the same as the value of the pool share. At June 30, 2009, fair value
approximated cost. At June 30,2009, tbese investments have an average maturity of 56 days.
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CITY OF PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPONENT .UNIT OF THE CITY OF PALO ALTO
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 200'
I NOTE 3 -CASH AND INVESTMENTS HELD BY TRUSTEE (Continued)
Money Market Mutual Funds are available for withdrawal on demand at June 30, 2009, and have an
average maturity of 55 days.
B. Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of tbe investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. The actnal ratings as of June 30, 2009 for all U.s. Agency
Obligations and Mutual Funds are Aaa as provided by Moody's Investment Rating system. As an
external investment pool, the California Asset Management Program was not rated as of June 30,
2009 ..
C. Investment Policy
The Corporation must maintain required amounts of cash and investments with trustees under the
tenns of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves
to be used if the Corporation fails to meet its obligations under these debt issues. The California
Government Code requires these funds to be invested in accordance with bond indentnres or State
statnte. All these funds have been invested as pennitted under the Code. The Investment Policy is
. described in detail in the City of Palo Alto Comprehensive Annual Financial Report.
The table below identifies the investment types that are authorized by the City's Illvestment Policy.
The table also identifies certain provisions of the City's Investment Policy that address interest fate
risk, credit risk and cOncentration of credit risk. The table addresses investments of debt proceeds
held by bond trustee that are governed by the provisions of debt agreements of the City rather than
by the general provisions ofthe City'5 investment policy.
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CITY OF PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2009
I NOTE 3 -CASH AND INVESTMENTS HELD BY TRUSTEE (Contillued)
Mlnimum Maximum
Maximum Credit Percentage of
Authorized Investment Type Maturity Quality Portfolio
U,S. Government Securities 10 year. N/A No Limit
U.s. Govemment Agencles 10 years N/A Nu Llmil (A)
Certificates of Deposit 10 years N/A 20""
Bankers Accop""'''' 180 days N/A 30%
Commercial Paper 270 days AM 15%
Local Agency Investment Fund NIA NlA No Limit
Short-Tenn Repurtbase Agreements 1 year N/A No Limit
City of Palo Alto Bond. NlA NlA NuLimit
Money Market Deposit Accounts N/A N/A No Limit
Mutu.1 Pund. (C) N/A N/A 20%
Negotiable Certificate. ofOeposit 10 year. NlA 10%
Medium Tenn Corporate Notes S years AA 10%
Maximum
Investment In One
Issuer
NuLlmit
No Limit
10% oflh. par value
of portfolio
$S million
$3 million (B)
$40 million per
account
NoLimh
No Limit
10""
10%
$5 million
$5 million
CA) Callable and multi-step setunties are limited to no more than twenty pereent of the par value of the portfolio,
provided that:
1) the potential call date, are known at !he time of purchase.
2) the interesl rates at whieh they "step~Up!l are known at the time of purchase.
3) the entire face value of !he security i, redeemed at the .all date.
(B) The lesser of$3 million or 10% of outstanding commercial paper of anyone institution.
Debt Ag .... m.n .. '
(C) Golf PIC COP 1998, University Avenue Parking Bond 2001 8l\d University
Avenue Parking Bond 2002 are aUowed 10 invest in the California Asset MIlfi.gemcnl Program.
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CITY OF PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2009
I NOTE 4 -CERTIFICATES OF P ARTICIP ATION
The Corporation's changes in long-term debt are presented below:
Balance Balance
Jun. 30, 2008 Retirements June 30, 2009
Governmental Activity Debt:
Cerllficates o/PartJclpatlon
1998 Golr Course
. 4.00·5.00%, due 09/01/2018 $4,150,000 $335,000 $4,415,000
2002A Civic Center Refinancing
2.00-4.0OVo, due 03/0112012 1,540,000 365,000 1,115,000
20018 Downtown Parking
Improvements
4.55·6.00%, due 03/01/2022 2,115,000 100,000 2,015,000
$8,405,000 $800,000 $1,605,000
Current
Portion
$355,000
380.000
105,000
$840,000
In August 1998, the Corporation issued the Golf Course Capital Improvements and
Refinancing Project Certificates of Participation, Series 1998, in the amount of $7.8 million to
refund and subsequently retire the 1978 Golf Course Lease Revenue Bonds issued by the City
through the Palo Alto Golf Course Corporation and to finance various improvements at the Palo
Alto' Public Golf Course, including upgrading five fairways and various traps, trees and greens,
constructing new storm drain facilities, replacing the existing irrigation system, upgrading the
driving range, and installing new cart paths. Under the terms of the 1998 COPs, the Corporation
transferred $473 thousand to an agent for the Golf Course Corporation which used the funds to
retire the 1978 Bonds.
On January 16, 2002, the Corporation issued the 2002A Civic Center Refinancing Certificates
of Participation in the amount of $3.5 million to refund the City's 1992 Civic Center Project
Certificates of Participation. Principal payments for the 2002A COPs are due annually on March
I and interest payments semi-annually on March I and September I and are payable from lease
revenues from the City from available funds. During the year ended June 30, 2002, the 1992
Civic Center COPs were retired.
On January 16, 2002, the Corporation issued the 2002B Downtown Parking Improvements
. Certificates of Participation in the amount of $3.6 million to finance the construction of certain
. improvements to the non-parking area contained in the City's BryantIFlorence Garage complex.
Principal payments are due annually on March I and interest payments semi-annually on March I
and September I and are payable from lease revenue received from the City from available funds.
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CITY OF P ALO ALTO PUBLIC IMPROVEMENT CORPORA nON
A COMPONENT UNIT OF THE CITY OF PALO ALTO
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2009 .
I NOTE 4 -CERTIFICATES OF P ARTICIP ATION (Continued)
On January 25, 2005, the City defeased $900 thousand of the 2002B Downtown Parking
Improvements Certificates of Participation. The City placed $1.0 million in surplus cash from the
Civic Center Refinancing and Downtown Parking Improvement Project Construction account in
an irrevocable trust to provide for future debt payments. Accordingly, the trust account assets
and the liability fot the defeased Bonds are not included on the financial statements. The
outstanding amount of the defeased debt at June 30, 2009 is $740 thousand. • .
The COPs are payable and secured by lease revenues received by the Public Improvement
Corpomtion from any City General Fund revenue source. Principal and interest are payable semi
annually on March I and September I.
Future annual debt service on the COPs is expected to be provided by the lease receipts discussed
above, and is shown below:
Govenunental Activities
For the Year
Ending June 30 Principal Interest Total
2010 $840,000 $380,564 $1,220,564
2011 870,000 344,109 1,214,109
2012 905,000 305,559 1,210,559
2013 530,000 263,512 793,512
2014 555,000 235,509 790,509
2015·2019 3,285,000 687,829 3,972,829
2020·2022 620,000 82,226 702,226
Total $7,605,000 $2,299,308 $9,904,308
I NOTE 5· NET ASSETS AND FUND BALANCES
A. Net Assets
Net Assets are described below:
Restricted describes .the portion of Net Assets which is restricted as to use by the tenus and
conditions of agreements with outside parties, governmental regulations, laws, or other restrictions
which the Corporation cannot unilaterally alter. These principally include debt proceeds received
for debt service requirements.
B. Fund Balances
Fund balances consist of reserved fund balance representing that portion of fund balance which is
legally segregated for debt service.
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