HomeMy WebLinkAboutStaff Report 162-05.,
J
1
1 j
"j
.~
;
! ,.
1 . ."
1 :~
J
-,
I J
1 j
-, I )
1 1
ATTACHMENT A
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
COMPONENT lJNIT FINANCIAL STATEMENTS
FOR THE YEAR ENDED
JUNE 30, 2004
";J
Downtown Parking Improvements Certificates of Participation bond proceeds. Prior year was a
negative $1.2 for a difference of $0.2.
As of june 30, 2004, the Corporation has two funds, Debt Service Fund, which reported a $1.4
million fund balance and the Capital Projects Fund, which reported a $1.0 million fund balance a
decrease from prior year of $0.2 and $1.2 respectively.
OVERVIEW OF THE AGENCY'S BASIC FIN~Au.~CIAL 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 Agency-wide and the Fund financial
statements, along with the Notes to these financial statements.
The Basic Financial Statements
The Basic Financial Statements comprise the Corporation-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 position-lang-term and short-term.
The Corporation-wide Financial Statements provide a longer-term view. of the Corporation's
activities as a whole, and comprise the statements of Net Assets and the Statement of Activities.
The statement of Net Assets provides information 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 all its expenses, also on the full accrual basis, with the emphasis on measuring net
revenues or expenses of the Corporation's program. The Statement of Activities explains in detail
the change in Net Assets for the year.
The Fund Financial Statements report the Corporation's operations in more detail than the
Corporation-wide statements and focus primarily on the short-term activities of the -Debt Service
and Capital Projects Funds. The Fund Financial Statements measure only current revenues and
expenditures, current assets, liabilities and fund balances; they exclude capital assets, long-term
debt and other long-term amounts.
Together, all these statements are now called the Basic Financial Statements.
DEBT ADMINISTRATION
The Corporation issues debt in the form of Certificates of Participation (termed COPs) in 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 secu;ring each
COPs issue. .
The Corporation's COPs issues are discussed in detail in Note 4 to the fmancial statements. The
Corporation issued two COPs issued in fiscal 2002, one of which refunded an earlier issue
4
,', J "
" ~j ..
~.
CITY OF PALO ALTO -PUBLIC IJYf..PROv""EJYf...ENT CORPORATION
STATEMENT OF NET ASSETS
AND STATEMENT OF
ACTIVITIES
The Statement of Net 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
all 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 and Capital
Projects Funds.
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 hands. This differs from the "modified accrual"
basis used in the Fund financial statements, which reflect only current assets, current liabilities,
available revenues and measurab1e expenditures.
The Statement of Activities presents the Corporation's expenses and follows with program
revenues-that is, revenues which are generated directly by these programs-are then deducted from
program expenses to arrive at the net expense of the governmental program. The CorP9ration'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.
7
PALO ALTO PUBLIC IlvIPROVE1v1ENT CORPORATION
. A COIvIPONENT UNIT OF THE CITY OF PALO ALTO
STATEMENT OF NET ASSETS
JUNE 30, 2004
ASSETS
Cash and investments held by trustee (Note 3)
Interest receivable
Construction in progress
Invesunent in leases to City of Palo Alto (Note 2E)
Total Assets
Interest payable
Long-term debt (Note 4):
Due in one year
LIABILITIES
Due in more than one year
Total Liabilities
NET ASSETS
Unrestricted
Total Net Assets
See accompanying notes to financial statements
8
$2,452,200
. 11,363
2,534,498
7,427,521
12,425,582
199,219
720,000
11,495,000
12,414,219
11,363
$11,363
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
BALANCE SHEET
JUNE 30, 2004
Debt Service
ASSETS
Cash and. investments held by trustee (Note 3) $1,412,860
Interest receivable 10,909
Investment in leases to City of Palo Alto (Note 2E) 7,427,.)21
Total Assets $8.851,290
LIABILITIES
Deferred revenue $7,427,521
Total Liabilities 7,427,521
FUND BALANCES
Reserved for:
Debt service 1,423,769
Capital projects
Total Fund Balances 1,423,769
Total Liabilities and Fund Balances $8,851,290
Accrual adjustment to remove deferred revenue from the balance sheet
Deferred revenue
Construction in Progress used in governmental activities is not a financial resource
and therefore not reported ilJ funds
Some liabilities, 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 ACTIVITIES
See accompanying notes to financial statements
12
Capital·
Projects
$1,039,340
454
$1,039,794
$1,039,794
1,039,794
$1,039,794
Totals
$2,452,200
11,363
7,427,521
$9,891,084
$7,427,521
. 7,427,521
1,423,769
1,039,794
2,463,563
7,427,521
2,534,498
(199,219)
(720,000)
01,495,000)
$11,363
PALO ALTO PlJBLIC IIvIPROVEMENT CORPORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
STATEMENT OF REVENUES, EXPENTIITURES
AND CHANGES IN FlJND BALANCES
FOR Th'E FISCAL YEAR ENDED JLJ1~E 30, 2004
REVENUES
Lease receipts from City of Palo Alto:
Principal
Interest
Interest from cash and investments
Total Revenues
EXPENDITURES
Debt service:
Principal repayment
Interest and fiscal' agent charges
Capital projects
Total Expenditures
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES
Fund balances at begiiming of year
Fund balances at end of year
Debt Service Capital Projects
$690,000
334,282
44,439 $7,103
1,068,721 7,103
690,000
603,056
1,135,373
1,293,056 1,135,373
(224,335) (1,128,270)
1,648,104 2,168,064
$1,423,769 $1,039,794
See accompanying notes to financial statements
13
Totals
$690,000
334,282
51,542
1,075,824
690,000
603,056
1,135,373
2,428,429
(1,352,605)
3,816,168
$2,463,563
CITY OF PALO ALTO PUBLIC IMPROVEMENT CORPORATION
A COMPOl\i""ENT UNIT OF THE CITY OF PALO ALTO
Notes to Financial.Statements
I NOTE 1 -DESCRIPTION OF REPORTING ENTITY
General Description
The Palo Alto Public Improvement Corporation (the Corporation) was incorporated in
September i983 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 50l(c)(4) of the Internal Revenue Code. The
Corporation provides· financing of public capital improvements for the City tlrrough the
issuance of Certificates of Participation (COPs), a form of debt which 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 annual financial report for the year ended June 30, 2004.
I NOTE 2 -SIGNIFICAl'fT ACCOUNTING POLICIES
A. Basis of Presentation
The accompanying financial statements are presented on the basis set forth in Government
Accounting Standards Board Statement 34, Basic Financial Statements-and Management's
Discussion and Analysis-for State and Local Governments, which the Corporation
implemented in fiscal 2002. GASB Statement 34 requires that the fmancial statements
described below be presented.
Government-wide Statements: 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 internaJ.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
not 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.
15
CITY OF PALO ALTO PlJBLIC IMPROVEMENT CORPORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
Notes to Financial Statements
I NOTE 3 -CASH AND INV""ESTMENTS HELD BY TRUSTEE
At June 30, 2004 the Corporation's investments were recorded at market value and
comprised the following:
Category I1nvestments
U.S. Agency Obligations
Pooled Investmenis (non Categorized):
California Arbitrage Management Program
Mutual funds
Total cash and investments held by trustee
719,319
20,269
1,712,612
$2,452,200
The Trustee is only permitted to invest in US Corporation securities, US dollar
denominated deposit accounts, federal funds, banker's acceptances, mutual funds, money
market accounts, pre-funded municipal obligations, written repurchase agreement, and
the California Arbitrage Management Program .. Investments are purchased and held in
the name of the Trustee on behalf of the Corporation and are held to maturity to match
vvith payments required under the COP issue ..
The Corporation's investments are carried at fair value, as required by generally accepted
accounting principles. The Corporation adjusts the carrying value of its investments to
reflect their fair value at each fiscal year end, and it includes the effects of these
adjustments in income for that fiscal year.
NOTE 4 -CERTIFICATES OF PARTICIPATION
The Corporation's changes in long term debt are presented below:
Governmental Activity Debt:
Certificates of Participation
1998 Golf Course
4.00-5.00%, due 09/0112018
2002A Civic Center Refinancing
2.00-4.00%, due 03/0112012
2002B Downtown Parking
Improvements
4.55-6.00%, due 03/0112022
17
Balance
June 30, 2003
$6,235,000
3,200,000
3,470,000
$12,905,000
Retirements
$270,000
315,000
105,000
$690,000
Balance
June 30, 2004
$5,965,000
2,885,000
3,365,000
$12,215,000
. Current
Ponion
$285,000
325,000
110,000
$720,000
This Page Left Intentionally Blank