HomeMy WebLinkAbout2004-03-01 City Council (7)TO:
FROM:
City of Palo Alto
City Manager’s Report
HONORABLE CITY COL~CIL
CITY MANAGER
PIC-I
DEPARTMENT:ADMINISTRATIVE
SERVICES
DATE:MARCH 1, 2004 CMR: 172:04
SUBJECT:APPROVAL OF PUBLIC IMPROVEMENT CORPORATION
FINANCIAL STATEMENTS
RECOMMENDATION
Staffrecolr~nends that the Board of Directors of the Public Improvement Corporation (PIC)
approve the 200_-0~ financial statements for the Public Improvement Corporation.
BACKGROUND
The Public Improvement Corporation (PIC) is a nonprofit corporation formed by the City in
1983 that allows 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 certain City properties (described below). 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. Prior to that, the existing PIC Board of Directors elected new" directors with the City
Council having a veto authority.
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 enviromnent and COPs were issued
to finance the construction of office 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 at least 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 Board has no substantive oversight responsibilities, as it assigns all rights to
receive lease payments to the Trustee (U.S. Bank Trust) for the benefit of the investors.
CMR:172:04 Page 1 of 2
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, 2003, total outstanding debt (principal) on the
COPs equaled $!2.9 million as follows:
COP Description
1998 Golf Course
2002A Civic Center Refinancing
2002B Downtown Parking Improvements
Total COPs
Principal
Outstanding
(millions)
$6.2
$3.2
$3.5
$12.9
Year Debt will be
Retired
2018
2012
2022
RESOURCE IMPACT
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 under the California Environmental Quality Act (CEQA).
ATTACHMENTS
Attachment A:
PREPARED BY:
City of Palo Alto Public Improvement Corporation Financial
Statements for the Year Ended June 30, 2003.
TARUN NARAYA_a~-~---~
Senior Financial Analyst
DEPARTMENT APPROVAL:
CARL
Director.Sei-vices
CITY MANAGER APPROVAL:
EMI HARRISON
Assistant City Manager
CMR: 172:04 Page 2 of 2
C!TY OF PALO ALTO
PUBLIC I3{PROXrEMENT CORPORATION
COMPONENT UNIT F_~ANCLa.L STATEMENTS
FOR THE YEAR ENDED
JUNE 30, 2003
CiTY OF PALO A_LTO PUBLIC I.M_PROVEMENT CORPOI~T!ON
COMPONENT UNIT FIN.A_NCIAL STATEMENTS
FOR THE. YEAR ENDED orUNE 30, 2003
Table of Contents
independent Auditor’s Report .............................................................................................................
Management’s Discussion and A~alysis ...............................................................................................3
Financial Statements:
Government-wide Financial Statements
Statement of Net Assets ..............................................................................................................8
Statement of Activities ...............................................................................................................9
Fund Financial Statements
Balance Sheet ...........................................................................................................................12
Statements of Revenues, Expenditures and Changes in Fund Ealances ....................................13
Notes to Financial Statements .............................................................................................................i 5
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MANAGEMENT’S DISCUSSION AND ANALYSIS
The Palo Alto Public Improvement Corporation, a component unit of the CiD~ of Palo Alto, has
implemented the provisions of Government Accounting Standards Board Statement 34, "Basic
Financial Statements - and Management’s Discussion & Analysis - for State and Local
accounting and reporting for municipaikies; it is an effort to make these statements clearer and more
understandable to readers.
_The Corporation is controlled by the City of Palo Alto and was organized to assist the Ci7 in
financing punic improvements. The Corporation issues debt and turns the proceeds of the debt
over to the CiU under Iease a~eements 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
Ciu, which pledged certain lease payments as collateral for this debt, as discussed in Note 4 to the
financial statements.
FISCAl_, 2003 F_rNA_.’NCI~,_L HIGI-ILIGHTS-CORPORATON-WIDE BASIS AN-D FU..~-D
BASIS
GASB 34 requires the issuance of Corporation-wide financial statements as well as fund financial
statements. The Corporation-v,4de financial statements report the balance of the Corporation’s long-
term debt issue, while the individual fund statement does not.
tn fiscal year 2002, the Corporation issued its 2002A Civic Center Refinancing COPs in the amount
of $3.5 million to refund its ! 992 Civic Center Project COPs, reducing debt sen, ice requirements by
$372 thousand and producing an accounting gain of $!37 thousand. It atso issued its 2002B
Dov.mtown Partdng Lm_provements COPs in the amount of $3.55 ro!!lion. _7]~ese issues plus the
1998 Golf course Capital Lmprovements COPs issue comprise all its outstanding debt.
Interest expense on these COPs issues was $487 thousand in fiscal year ~00_~. _,he interest on
leases on the assets securing these COPs issues was $437 thousand; this revenue and $83 thousand
in interest income resulted in an income of $33 thousand in fiscal year 2003.
The Corporation ended fiscal ?,ear 2003 with total assets of $13.9 million, h~cluding $3.8 million in
cash and $8.Tmillion .in present value of leases receivable from the Cib~ of Palo Alto. It had
liabilities of $13. I million, including $ !2.9 rai!!ion in long-term debt.
At the Fund level., the Corporation r~OoiLeu a ~c~u~,~ ,,:.= ~,,u,~
expendirares, which was principally due to the construction expenditures financed by the 2002B
Downtovm Parkin~ Improvements ~ ~" e OI Participation bond proceeds.
As of June _~0, ~,00_,, the Corporation has m,o funds, Debt Service Fund. which repo_~ed a $I.6
million fund bN~ce and the Capital Projects Fund, which reported a $2.2 million fund balance.
O~’~nERVIEW OF THE AGENCY’S BASIC FLNANCL4L STATEMEh~FS
The Basic Financial statements are in two parts:
1)Managemenz’s Discussion and Analysis (this part),
2)The Basic Financial Statements.. which include the Agency-wide and the Fund financial
statements, along vdfl-~ the Notes to these financial statements.
The Basic Financial Statements
The Basic Financial Statements comprise the Corporation-wide Financial Statements and the Fund
Yinancial Statemems. These ~,o sets of financial statements provide wvo different views of the
Corporation’s financial activities and financial position-long-term and short-term.
The Corporation-wide Finandal Statements provide a longer-term view of the Corporation’s
activities as a whole: and comprise the smtemems of Net Assets and the Statement of Activities.
The statemen~ of Net Assets provides im%m~afion about the financial position of the Corporation as
a whole: including al! its long-term liabilities on the ful! accrual basis, similar to that used by
corporations. The Statement of Activities provides information about all the Corporation’s
r~v,~nn~ m~ri ~ll it~ ~’r~en~ ~1~ on the ~ll ~r.e.mm] h~i~ xx,qth the emphasis o~ measufino_ net
revenues o~ expenses of the Corporation:s pro=o-ram. The Statement of Activities explains in detail
the change in Net Assets for the year.
The Fund Financial Statemems repor~ the Corporation’s operations in more detail than the
CorporaJon-wide statements and focus primarily on t~e short-term activities of the Debt Service
and Capital Projects Funds. The Fund Financia! Statements measure only cun’ent revenues and
expenditures, current assets, liabilities and ~nd balances; they exclude capital assets, long-tern
debt and other long-term amounts.
Together, all these statements are now called the Basic Financial Statements.
The Corporation issues debt in the form of Certificates of Participation .(termed COPs) in furore
lease receipts from the Cib~ of Palo Alto. Lega!ly, 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 Corn_ oration’s COPs issues are discussed in detai! in Note 4 to the financi!l statements. The
Corporation issued two COPs issued in fiscal 2002, one of which refunded an earlier issue
ECONOMIC OUTLOOK }~ND ~{AJOR tNITxATES
The economy of the CiB~ O_T, alo. J~o and its maior kmnam, es for the coming ?,ear are mscussea in
detail in the CiB~’s Comprehensive Annual Financial Report.
CONTACT~<NG TZ~ AGENCY’S FLN~_NCLa_L M_~_NAGEM~E. NT
These Basic Financial Statements are intended to provide citizens, taxpayers, im~estors, and
creditors with a general overview of the Agency’s finances. Questions about these Statements
should be directed to the Finance Department of the Ciu; of Palo Alto, 250 Hamilton Avenue, CA
94301.
5
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CITY OF PALO ALTO - PUBLIC IIVL~ROVEMENT COP,~wOP~TION I
STATEMENT OF N~T ASSETS
.4_ND STATEM_ENT OF
~TACTF~ ~ _ IES
The Statement of Net Assets and the Statement of Activities purpose is to summarize the entire
Corporation’s financial activities and financial position. They are prepared on the same basis as
is used by most businesses, which means they include all the Corporation’s assets and all its
liabilities, as well as all its revenues and expenses. This is lmown 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 ~om total assets.
The Statement of Net Assets summarizes the financial position of all the Corporation’s
Governmental Activities in a single column, and the financial position of all the Corporation’s
Business-Type Activities in a single column; these columns are followed by a Total column that
presents the financial position of the entire Corporation.
The Corporation’s Governmental Activities include the activities of its Capital Projects and Debt
Service Funds.
The Statement of Activities reports increases and decreases in the Corporation’s net assets. It is
a!so 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 vo
available revenues and measurable expenditures.
The format of the Statement of Activities differs considerably from those used in the past. It
presents the Corporation’s expenses first, listed by progam, and follows these with the
expenses of its business-rype activities. Progam revenues-tha~ is, revenues which are generated
directly by these pro~ams-are then deducted from pro~am expenses to arrive at the net expense
of each govermnental and business-DCpe progam. The Corporation’s general revenues are then
listed in the Govemmemal Activities or Business-~,pe Activities column, as appropriate, and the
S~at,~ment o~ Ne~ Assets.Change in Net Assets is computed and reconciled with the *=~ ’ ~
P_ad~O .4_LTO PUBLIC LMPROVEMENT CORPORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
STATEMENW OF NET ASSETS
JU.-NE 30, 2003
ASSETS
Cash and inveswnenrs held by trustee (Note 3)
Interest receivable
Construction in pro~ess
Investment in l~as~~ =~ to Ciw. of Palo Alto (Note 2E)
Total Assets
In~eres~ payable
Long-term debt ~ote 4):
Due in one year
Due in more than one year
To’ca! LiabiIities
NET ASSETS
Unreskricted
Total Net Assets
See accompanying notes to financial statements
$3..802,685
la,48a
1,329,2!7
7,945,888
,09 !.273
202,819
690,000
12,215,000
13,107,819
(16,546)
($16,546)
P,~LO .-~TO PL~LIC LMPRO\~-EM]E_NW CORPORATION
A COM~PONENT UNIT OF THE CITY OF PALO ALTO
STATEMENT OF ACTIVITIES
FOR THE FISCAL ~rE.AR ENDED J-U_,-N-E 30, 2003
EXPENSES
Interest and fiscal agent charges
Total Program Expenses
REVENUES
Interest on leases from Cib, of Palo Alto
_Net Program Expenses
GENERAi.. REVENUES
Interest _from cash and investments.
Change in Net Assets
Net assets at the beginning of year
Net assets at the end ofyea~
See accompanying notes to financial statements
$487,089
487,089
437,409
(49,680)
82.598
;2,918
(49,464)
($ ! 6,546)
This Page L~ff Intentionally Blank
CITY OF P~_LO ALTO PUBLIC !MPRO¥ .~MENT CORPOR_4TION
A COMPONENT D-N!T OF THE CITY OF P~_LO ALTO
Notes to Financial Statements
FL.~ND F~ANCIAL STATEMENTS
M~or funds are defined generally as having si~ificant activities or balances in the current year.
No distinction is made between Fund D, pes and the practice of combining like funds and
presenting their totals in separate columns (Combined Financial Statements) has been
discontinued, along with the use of the General Fixed Assets and General Long-term Debt
Groups of Accounts.
All of the Corporation’s Funds were determined to be Major Funds fiscal 2003.
Capitol Projects Fund - This fund accounts for the Corporations project capital outlays.
Debt Service Fund - This fund accounts for debt sen, ice payments on the Corporation’s
long-term debt issues.
11
PALO ALTO PUBLIC IIVIPROVEMENT CORPOIKATION
A COMPONENT LLNIT OF THE CITY OF PA_LO ¢~LTO
BALANCE SHEET
IUNE 30, 2003
ASSETS
Cash and investmen~ held by trustee (Note 3)
Interest receivable
Investment in leases to Cir?.’ of Pale Alto (Note 2E)
Total Assets
Deferred revenue
Total Liabilities
Reserved for:
Debt sea, ice
Capital, . pro_]ects
LL&B ILITIES
BALANCES
Total Fund Balances
Total Liabilities and Fund Balances
Debt Sen;ice
Capita!
Projects Totals
1,635,825 $;2,166,860 5;3,802,685
!~ ~VO 1.204 l~.4fi~
7,945,888 7,945.888
$7,945,888
7,945,888
1,648,104
$2,168,064
$2.!68.064
2,168,064
$2,168,064
1,648,!04
St ~o3 o9~
$I1,762,056
~. ~.$:.%..888
7,945.888
1,648,104
2,!68,064
3.816,!68
Accrua! adjustment to remove deferred revenue from the balance sheet
Construction in Progress used in governmental activities is not a financial resource
and therefore not reported in funds
Some liabilities, including bonds payable, are not due and payable in the
current period and therefore e#e not reported in the funds
Long-term debt
Interest payable
Due within one year
Due in more than one ),ear
NET ASSETS OF GOVEP=NMENTAL ACTIVITIES
See accompanying notes to financia! statements
1,329,217
(202,8!9)
(690,000)
( ! 2,215,000)
($16,546~
!2
PALO .-~TO PUBLIC LMPROVEME_NrI" CORPORATION
COMPON-ENT UNIT OF i-I~. CITY OF PALO A.LTO
STATEMSENTS OF RE\~N-U~S, EXPE.-N-DITURES
A_ND C!-L~NGES L-N FU_-N~D BAd~NCES
FOR THE FISCA& YEAR ENDED JU_-NE 30, 2003
Debt Sera, ice Capital Projects
KEVENUES
Lease receipts from Ciu’ of Palo Alto:
Principal
Interest
Interest from cash and investments
$790,000
464,246
55,76!$26,837
26,837Total Revenues
EXPENDITURES
Debt service:
Principa! repayment
Interest and fiscal agent charges
Capital projects
!.310,007
790,000
655,695
1,049,598
1.049,598
(1,022,761)
(336,886)
(336,886)
Total Expenditures
EXCESS OF R_EVEN-UES OVER (U.-N-DER)
EXPENDITL~,.ES
!,445,695
(I;5,688)
236,886
336.886
OTHER FINANCING SOURCn~ (USES)
Transfers out
EXCESS OF REVEKUES AND OTHER
FINANCING SOURCES OVER (U_~-DER)
EXPENDITURES AND OTHER USES 20t,198 (!,359,647)
Fund balances m beginning of year !,446,906
$1,648,!04
3,527.711
$2.!68,064Fund balances at end of year
See accompanying notes to financial statements
Totals
$790,000
464,246
82,598
1,336,844
790,000
655,695
1,049.598
2,495,293
(!,158.449)
336,886
(336,886)
1,158,449)
4,974,6!7
$3,816,!68
!3
P.&LO ALTO PUBLIC Lk/DRO\~.!vEENT COP,_POP,_ATION
STATEMENT OF REVE_NUES, EZ_~ENDITUR_ES .&NO
C!-L&NGES 12q FU2N-D BA_LA_NCES
GOVE1L\~{ENTA_L FUNTDS TO THE.
STATEM~ENT OF ACT1TqTIES - FOR THE ~’-EA2R ENrDED 3-U.-N-E 30:2003
Net change in fund balances-total governments! funds
Amounts reported for governmental activities in the statement of activities
are different because:
Bond proceeds provide current financial resources to governmental funds, but
issuing debt increases long-term liabilities in the Statement of Net Assets.
Repa?~ent of bond principal is an expenditure in the governmental funds., but
in the Statement of Net Assets the repayment reduces long-term liabilities,
Fund balance is increased by the amount of debt repayment
Capital outlay and capitalized interest costs are ~reated as an expenditures in governmental funds,
but recorded as Consn’uction in Progress on the Statement of Net Asse~s
Some amounts reported in the Statement of Revenues,. Expenditures and Changes in Fund Balances
ref~e:~ the collection of an asset which are not includable as revenues on the Statement of Activities
Change in Invesrmenv in ieages
Change in Interest payable
Change in net assets of governmental acJvkies
See accompanying notes to {inancial statements
($!,158,449)
790,000
!,163,163
(790:000)
28,204
$32,918
!4
C!TY OF PA.LO .~_LTO PUBLIC EVIPRO
A COMPON~ .T D~T OF T~ C! ~ OF
Notes to ~ mane~a, Statements
NOTE 1 - DESCRIPTION OF P,_EPORT!NG ENTITY
General Description
The Palo Alto Public Improvement Corporation (the Corporation) was incorporated in
September 198.; 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 pubIic capital improvements for the Cit3.’ through 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 suf~Scient in
timing and amount to meet the debt service requirements of the COPs.
The Corporation is an integal part of the Ci~, of Palo Alto. It primarily ser~,ices the CiD,
and its governing body is composed of the Ci~, Counci!. Therefore, the fmancial 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, 2003.
NOTE 2- SIGNIFICANT ACCOUNTING POLICIES
A.Basis of Presentation
The accompanying financial statements are presented on the basis se, forth in Government
Accounting Standards Board Statement 34, Basic Financial Statements-and Managemenr’s
Discussion and Analysis-for Store and Local Gove;’nmen’,s, which the Corporation
implemented in fiscal 2002. GASB Statement 34 requires that the financial statements
described below be presented.
The accompanying financia! statements are presented on the basis set forth in Government
Accounting Standards Board Statements No. 34, Basic Financial Staremenrs-and
Managemenr’s Discussion and Analysis-for State and Local Governments, No.36,
Recipient Reporting for Ce:’min Non-exchange Revenues, an Amendment of GASB
&aremem ]~b. 53, No. 37, Basic Financial Statements-and Managemen~ ’s Discz:ssion and
Ana6.’sis-for Srme and Local Governments; Omnibus, and No. 38, Certain Financial
Statement Note DiscIosu:’es.
Gove~’nmen~-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 internal activities.
i5
C!TY OF PA_LO ~TO PUBLIC IMPRO-’,rEMENT CORPORATION
A COMPONENT UNIT OF Thee CITY OF P.~-~LO .ALTO
Notes to FinaneiaI Statements
N0,rE 2- SIq_NIFIC.~NT AccOUNTING POLICIES (Continued)
The Statement of Activities presents a comparison between direct expenses and progam
revenues for each function of the Corporation’s activities. Direct expenses are those that are
specifically associated with a pro~am or function and, therefore, are clearly identifiable to
a particular function. Progam revenues include (a) charges paid by the recipients of goods
or services offered by the progams and (b) pants and contributions that are restricted to
meeting the operational or capital requirements of a particular pro~am. Revenues that are
not classified as progam 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.
Major Funds
GASB Statement 34 defines major funds and requires that the Corporation’s major
governmental n~,pe funds be identified and presented separately in the Fund financial
statements. Major funds are defined as funds that have either assets, liabilities, revenues or
expenditures equal to ten percent of their fund-D, pe total and five percent of the gand tota!.
The Corporation has determined that al! its funds are major funds.
The Corporation reported the following m. ajor governmental funds in the accompanying
financial statements:
Capital _Projects Fund - This fund accounts for the Corporations prqiect capital outlays.
Debt Setn.,ice Fund - This fund accounts for debt sen:ice payments on the Corporation’s
long-term debt issues.
C Non-exchange Transactions
In connection with its adoption of GASB Statement 34, the Corporation has adopted GASB
Statement 33, A ccouming and Pinancia/ Reporting ybr Nonexchange Transaczions.
Cons~’uction in Progress .Net Financing Costs
Interest incurred on debt used to finance projects are netted with interest earned on unspen~
proceeds of the debt. These ’~et Financing Costs" are capitalized and added to construction
in profess during the construction period to reflect the tree project costs, including financing
costs. During fiscal 2002-2003, net financing costs amounting $1!3,565 were added to
construction in progess.
CITYOF p,a._bO ALTO PL~L/C zMPRO ,. ~M=_N ~ COPY OR~,
A C~DM~ oN~NT D~-N-IT OF T~ ~r,mv O~ DaV~ ALTO
Notes to Financial Statements
NOTE 2- SIGNIFICANT ACCOU.~TING POLICIES (Continued)
investment in Leases
Improvements financed by’ the Corporation are leased to the Cib’ for their entire estimated
useful life and wil! become the Cib’ property at the conclusion of the lease. The Corporation
theret%re records the present value of the lease and considers the leased improvements to
have been sold for this amount when leased.
__.NOTE 3 - CASH ,~ND LNW-ESTM_ENTS I-rELD BY TRUSTEE
A Trustee under the provisions of the Corporation’s COP issues holds and invests all the
Corporation:s cash. The Corporation’s investments are categorized below to give an
indication of the level of credit risk assumed by the Corporation at June 30, 2003.
Category. ! includes investments that are insured or registered or for which the securities
are held by the Corporation or its agent in the Corporation’s name. Categou 2 includes
uninsured and unregistered investments for which the securities are held by ~he
counterparry’s trust department or agent in the Corporation’s name. Category 3 includes
uninsured and unregistered investments for which the securities are held by the
counterpart3,;, or are held by the counterpar-c,,.;’s trust departmen* or agent but not in the
Corporation’s name. Pooled investments are not categorized because of their pooled, rather
than individual, nature.
At June 30, 2003 the Corporation’s inves~’anents were recorded at market value and
comprised the following:
Categor), ] Investments:
U.S. Agency Obligations
Pooled inveszments (non Categorized.):
California Arbitrage Management Progam
Mutual funds
$740,6 ! 9
28,642
3,033,424
Total cash and investments held by trustee $3,802,685
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 a~eement, and
the California Arbitra_~e Mana_~m~nt Progam. Investments are purchased and held in
the name of the Trustee on behalf of the Corporation and are held to maturib, to march
with payments required under the COP issue.
i
CITY OF PALO ALTO PUBLIC IMPROVE_V~_NT CO_R_PORATION
A COMPONENT UNIT OF THE CITY OF PALO ALTO
Notes to Financial Statements
3 - CASH .~ND INVESTM_ENTS HELD BY TRUSTEE (continued) [NOTE
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 yeas- end, and it includes the effects of these
adjustments in income for that fiscal year.
NOTE4-CERTIFICATES OF PAaRTICIPAT, ON [
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 09/01/2018
2002A Civic Center Refinancing
2.00-4.00%~ due 03/0]/2012
2002B Downtown Parking
Improvements
4.55-6.00%, due 03/01!2022
Balance Balance Curreni
June 30= 2002 Retirements June 30, 2003 Portion
$6,640,000 5405,000 $6,235,000 5270,000
3,500,000 300,000 3,200,000 3i5,000
3,555,000 85,000 3.470,000 105,000
$z~.6~_.000 $790.000 $12.905.000 $690,000
On JanuaB; 16, 2002 the Co.rporation issued the 2002A Civic Center Refinancing
Certificates of Participation in the amount of ~2.~ million to refund the City’s 1992
Civic Cemer Project Certificates of Participation. Principal payments for .h~. 2002A
~wr. are due annually on March 1 and interest payments semi-annually on March ! and
September 1 and are payable from lease revenues from the City from available fi.mds.
F)nrin~ rh.~ x, anr 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 $3.555 million to finance
the construction of certain improvements to the non-par’king area contained in the
Bryant/Florence Garage complex. Principal payments are due annuaIly on March 1 and
interest payments semi-almual!y on March 1 and September ! and are payable from lease
revenue received from the City from available funds.
!8
. NOTE 4 -CERTIFICATES OF PARTICIPATION (Continued)
in August !998, the Corporation issued the Golf Course Capital improvements and
Refinancing Project Certificates of Participation, Series 1998 in the amount of $7.750
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 Paio Alto Public Golf Course, including upgading five fairways and
various n-aps, trees and g-teens, constructing new storm drain facilities, replacing the
existing irrigation system, up~ading 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 1978 Bonds.
The COPs are payable and secured by lease revenues received by the Public
Improvement Corporation from any Cib.. General Fund revenue source. Principal and
interest are payable semi-annually each March ! and Septcrnber 1 beginning in 1999.
Future annual debt sen;ice on the COPs is expected to be provided by the lease receipts
discussed above, and equaled the following:
For the Year
Ending June 30
2004
2005
2006
2007
2008
2009-20!3
20!4-2018
2019-2023
Total
Governmental Activities
Principal
$690,000
720.000
740.000
770.000
805.000
4,!50.000
3,390.000
1,640.000
$!2,905,000
Interest
$603.056
580.564
52L327
497.3]0
!,933.159
!,008.834
196.925
$5,903,862
The Bond documents require a Trustee to hold a portion of proceeds in a reserve fund for
debt service purposes only. At June 30, 2003, the Trustee held $!.414 million reserved, as
discussed in Note 3.
19
C!TY OF PA_LO .Ad..TO PUBLIC IMPRO¥~MENT CORPOR_ATION
A CO_~PONENT UNIT OF Tile CITY OF PALO _ALTO
Notes to Financial Statements
NOTE 5- NET ASSETS A_NrD FUND BALA_NCES ]
GASB Stazement 34 added the concept of Net .Assets, which is measured on the full accrual
basis, to the concept of Fund Balance, which is measured on the modified accrual basis.
A. Net Assets
Net Assets are divided into three captions under GASB Statement 34. These captions apply
only to Nez Assets as determined at the Government-wide level, and are described below:
Reszv-icted describes the portion of Net Assets wl~ch is restricted as to use by the terms and
conditions of a~eements with outside parties, governmental regulations, laws, or other
restrictions which the Corporation cannot unilaterally alter. These principally include debt
proceeds received for use debt service requirements:
describes the portion of Net Assets which is not restricted as to use.
B.Fund Balances
Fund balances consist of reserved and unreserved amounts. Reserved fund balances
represen~ that portion of fund balance which is legally segegated for debt sen, ice and
capita! proj eczs.
2O