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2003-2004 CAFRCity Of Chino Hills California CITYOF CHINO HILLS I N C U R P U R A T E D 1 4 `/ 1 COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2004 INTRODUCTORY SECTION CITY OF CHINO HILLS I N C O R P O R A T E D 1 9 9 1 CITY OF CHINO HILLS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 TABLE OF CONTENTS Page Number INTRODUCTORY SECTION Table of Contents i Letter of Transmittal v Organizational Chart ix City Officials x Certificate of Achievement for Excellence in Financial Reporting xi FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 1 MANAGEMENT'S DISCUSSION AND ANALYSIS 3 Government -Wide Financial Statements Exhibit A Statement of Net Assets 11 Exhibit B - Statement of Activities 12 Fund Financial Statements Exhibit C Balance Sheet - Governmental Funds 14 Exhibit D Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 17 Exhibit E - Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 18 Exhibit F - Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 20 Exhibit G - Budgetary Comparison Statement - General Fund 21 Exhibit H - Budgetary Comparison Statement - Lighting and Landscape District 22 Exhibit I - Budgetary Comparison Statement - Existing Infrastructure Fee 23 Exhibit J - Statement of Net Assets - Proprietary Funds 24 Exhibit K - Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds 27 Exhibit L - Statement of Cash Flows - Proprietary Funds 28 Exhibit M - Statement of Fiduciary Net Assets - Fiduciary Funds 30 Notes to Financial Statements 31 CITY OF CHINO HILLS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 TABLE OF CONTENTS Page Number COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Schedule 1 - Combining Balance Sheet - Nonmajor Governmental Funds 60 Schedule 2 - Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 64 Schedule 3 - Budgetary Comparison Schedules A. Sleepy Hollow Road Improvement 68 B. City Facilities Fees 69 C. Traffic Facilities Fees 70 D. Storm Drain Facilities Fees 71 E. Parkland Fees 72 F. Traffic Signal Fees 73 G. Gas Tax 74 H. Air Quality 75 I. Federal Grants 76 J. Measure 1 77 K. Solid Waste 78 L. Street Sweeping 79 M. Frontline Policing 80 N. Miscellaneous Grants 81 O. Capital Improvement 82 P. CFD #9 Rincon Village 83 Q. CRD #10 Fairfield Ranch 84 Schedule 4 - Combining Statement of Net Assets - Internal Service Funds 85 Schedule 5 - Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Internal Service Funds 86 Schedule 6 - Combining Statement of Cash Flows - Internal Service Funds 87 Schedule 7 - Combining Balance Sheet - All Agency Funds 88 Schedule 8 - Combining Statement of Changes in Assets and Liabilities - AII Agency Funds 91 CITY OF CHINO HILLS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 TABLE OF CONTENTS Page STATISTICAL SECTION Number Last Ten Fiscal Years General Governmental Revenues by Source 96 General Governmental Expenditures by Function 97 Secured Property Tax Levies and Collections 98 Assessed and Estimated Actual Values of Taxable Property 98 Property Value, Construction and Bank Deposits 99 Computation of Direct and Overlapping Bonded Debt - General Obligation Bonds 100 Principal Taxpayers 101 Property Tax Rates - All Direct and Overlapping Governments 101 Miscellaneous Statistics 102 CITY OF CHINO HILLS INC ORP ORATED 1 9 9 1 THIS PAGE INTENTIONALLY LEFT BLANK IV City of CITY' OF CHINO HILLS Chino Hills November 8, 2004 The Honorable Mayor and City Council City of Chino Hills, California The Comprehensive Annual Financial Report (CAFR) for the City of Chino Hills for the fiscal year ended June 30, 2004, is hereby submitted. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosure, rests with City management. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and the changes in financial position and cash flows, where applicable, of the governmental activities, the business -type activities, and the various other funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City of Chino Hills' financial activities have been included. The CAFR is organized into three main sections: • The Introductory Section includes this transmittal letter and other information to familiarize the reader with the City: the City organization chart, a listing of elected and appointed officials, and the city's mission and values statement. The Financial Section is prepared in accordance with the GASB 34 requirements by including a narrative introduction in the form of a Management's Discussion and Analysis (MD&A), the basic financial statements including notes and the required supplementary information. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The basic financial statements include the government -wide financial statements that present an overview of the City's entire financial operations and the fund financial statements that present the financial information of each of the City's major funds, as well as nonmajor governmental, proprietary, and fiduciary funds. Also included in this section is the independent auditor's report on the financial statements and schedules. This section also presents supplemental combining statements and schedules for the City's nonmajor funds. • The Statistical Section includes selected financial and demographic information, generally presented on a multi-year basis. CITY OF CHINO HILLS PROFILE The City of Chino Hills was incorporated in December 1991 as a general law City and operates under the Council -Manager form of government. The City, located in southwestern San Bernardino County, has a population of 76,401 and has a land area of 46 square miles. Since its incorporation, the City continues to grow and is one of the few areas in Southern California in which significant numbers of single family residential units are still being constructed. The City is one of the largest master -planned communities in Southern California and, at build -out, is expected to have about 85,000 residents. City Council: Ed M. Graham W.C. "Bill" Kruger Gary G. Larson Rossana Mitchell Gwenn E. Norton -Perry 2001 Grand Avenue, Chino Hills, CA 91709 9 (909) 364-2600 • FAX (909) 364-2695 • www.chinohills.org The City of Chino Hills provides a full range of services including: police protections (via contract with the County of San Bernardino Sheriff's Department); solid waste disposal services (via contract with Chino Hills Disposal); the construction and maintenance of streets and infrastructure; economic development; recreational activities and cultural events. Fire protection services are provided by the Chino Valley Independent Fire District, an entity governed by its own independently elected board of directors and financed by its own share of property taxes, contractual charges, and other fees. A comprehensive financial plan was developed to fund all necessary infrastructure required for new residential and commercial development. Through the use of special assessment districts as well as benefit assessment districts and development fees, funds were made available for the installation of parks, infrastructure, and government facilities, and the maintenance of the City's open space, parks, and landscaped areas. A non-partisan five -member council elected to serve staggered four-year terms governs the City. The City elections are consolidated with the statewide general election held in November of even numbered years. The City Council appoints the City Manager, City Clerk, and City Attorney as well as members of various commissions and citizen advisory groups ensuring a broad base of citizen input into the City's decision making process. The City has developed a reputation for being a family oriented community with significant amounts of recreation opportunities for its youths and adults. The City has historically been recognized as one of the safest communities in Southern California, and continues to be recognized as a healthy city. ECONOMIC CONDITION AND OUTLOOK The economic condition of the area in which the City is located (in southwestern San Bernardino County) points to future growth for the City of Chino Hills. However, in November, 1999, the residents of Chino Hills voted in Proposition "U" that essentially states that voter approval is needed for any new development proposed for a higher density that is allowed per the General Plan. This does not affect projects with densities equal to or lower than allowed per the General Plan or projects that already have approved tract maps. The City of Chino Hills shows a promising future for approved projects while new, higher density development may be difficult to implement due to the voter approved initiative. Chino Hills is one of the most desirable cities in the County of San Bernardino with median income nearly double the County average. The strong, positive reputation due to good schools and low crime is anticipated to keep fueling the demand for residential construction. In the 2003-04 fiscal year, 508 residential units were built. Residential construction was dominated by single-family tract homes though the development includes custom home lots and multi -family housing projects. It is estimated that at least 229 residential units will be completed in the 2004-05 fiscal year. Additionally, the City is aggressively seeking commercial economic development within the City. A number of retail commercial sites are available for development and the City is actively marketing these sites. In recent years several major retail outlets have located in the City as anchors for a retail power center. At this time, however, the City is primarily a "bedroom community' with very little commercial and industrial businesses. MAJOR INITIATIVES AND ACCOMPLISHMENTS The major initiatives and accomplishments for the 2003-04 fiscal year include: Completion of the second phase of the Monte Vista Water District Interconnection pipeline (total pipeline is 7 miles); completion of Fairfield Ranch neighborhood park; the construction of the Soquel Canyon Reservoir #20 reservoir and pump station; completion of Sleepy Hollow Community Center. Future major initiatives include: Work towards approval of the The Shoppes/Government Center Project(s) and complete the Environmental Impact Report(s); Los Serranos Infrastructure Improvement Phase I; Extension of Fairfield Ranch Road north of Central Avenue; Other major initiatives include the vi revision of water, sewer, and reclaimed water master plans and the completion and implementation of the comprehensive fee study and cost allocation study. For the fiscal year 2004-05 a balanced budget was presented to the City Council that included deferral of capital projects to bring the General Fund expenditures in line with revenue. Several factors will have an effect on the City's budget for the fiscal year 2004-05 and beyond. These factors include the State and the local area economies, and the State's management of its budget deficit. Future budget adjustments will be heavily influenced by the impact future State budgets will have on local governmental revenue. FINANCIAL INFORMATION Management of the City is responsible for establishing and maintaining internal controls designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America. Internal controls are 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 requires estimates and judgements by management of the City. Budgeting Controls: The City maintains a budget control system to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the general fund, special revenue funds, and capital projects funds are included in the annual appropriated budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the department level within the General Fund and at the function level for all other funds. Budget appropriations lapse at the end of the fiscal year, with the exception of contract commitments and capital improvement projects, which are re -budgeted as of July 1 in the next fiscal year. Cash Management: Cash temporarily idle during the year was invested in demand deposits and pooled investment accounts operated by the State of California's Local Agency Investment Fund, the San Bernardino County Investment Pool, and the Los Angeles County Investment Pool. The average yield on maturing investment during the fiscal year was about 1.59 percent, and the amount of interest earnings on all invested funds amounted to $1,870,463. This was $774,077 less than was earned in the past fiscal year. The City's investment policy is to mitigate market and credit risk while maintaining market yield on its portfolio. Monthly reports to the City Council include the fair value of the portfolio and a certification that the City has adequate funds to meet expenditures for the following six-month period. Risk Management: The City has an active risk management program, which is coordinated and administered by the City Manager's Office. This program includes: exposure identification (identifying the City's potential loss exposure); risk evaluation (analyzing financial risks, based on past losses and projected future losses), and risk control (reducing risk or losses through safety practices and planning). The City is member of the California Joint Powers Insurance Authority (CJPIA), through which the City receives coverage for liability and workers' compensation claims, as well as property damage and certain other coverage. The CJPIA is a consortium of local government agencies that was formed for the purpose of providing insurance coverage for its member agencies. The liability insurance coverage is funded through contribution paid to the CJPIA for the first $20,000 of loss, and through sharing losses with the other agencies for the $20,000 through $5,000,000 increment. Costs of covered claims above $5,000,000 are paid through reinsurance. The protection for each member is $50,000,000 per occurrence and $50,000,000 annual aggregate. vii The workers' compensation program includes pooling of retained losses plus excess insurance. The City's self-insured retention is $50,000 and is covered via deposits with the CJPIA. The pool covers claims from $50,000 to $500,000, and claims in excess of $500,000 are covered by insurance policies through the CJPIA. The excess insurance provides coverage to statutory limits. The City purchases its own insurance policies for property damage, earthquake and flood, and employee fidelity bonds. The deductible portion for each of these categories is $5,000, $100,000, and $5,000, respectively. OTHER INFORMATION Independent Audit: An annual audit of the financial records and transactions of the City is required to be performed by a certified public accountant selected by the City Council. This requirement has been complied with and the independent auditor's report of Lance, Soll & Lunghard, LLP has been included in this report. Awards: The Government Finance Officers Association of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2003. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such report must satisfy both U.S. generally accepted accounting principles (GAAP) and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments: The preparation of the Comprehensive Annual Financial Report on a timely basis was made possible by the dedicated efforts of the Finance Department staff. Each individual has our sincere appreciation for the contribution made in the preparation of this report. ully submitted, N. La elle CTy Manager u R. ancaster irecto of Finance viii THE CITY OF CHINO HILLS ORGANIZATION OF CITY GOVERNMENT OPERATING SUMMARY City of Chino Hills Voters } City Council Various Commissions City Clerk City Manager City Attorney Community Community Engineering Finance Public Facilities Development Services Department Department and Department Department Operations Department CITY OF CHINO HILLS LIST OF ELECTED AND APPOINTED OFFICIALS ELECTED OFFICIALS - CITY COUNCIL Gary G. Larson W.C. "Bill" Kruger Ed M. Graham Gwenn Norton -Perry Rossana Mitchell Mayor Mayor Pro Tem Council Member Council Member Council Member APPOINTED OFFICIALS Douglas N. La Belle Kathleen Gotch Mary M. McDuffee Mark D. Hensley Garry Cohoe Jeff Collier Michael Fleager Pat Hagler Judy R. Lancaster x City Manager Assistant City Manager City Clerk City Attorney City Engineer Community Development Director Community Services Director Public Facilities and Operations Director Finance Director/City Treasurer Certificate of Achievement for Excellence in Financial Reporting Presented to City of Chino Hills, California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2003 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. AGE OFFjO Q� OF 1N UNI7FO�STATES `�"°" 6 CORPURAA President n SEAL Os CHIC 64 *10r 44eo' •/ Executive Director Xi CITY OF CHINO HILLS INC OR P OR ATE D 19 9 1 THIS PAGE INTENTIONALLY LEFT BLANK xii FINANCIAL SECTION CITY OF CHINO HILLS INCORPORATED 1 9 9 1 L[SLance $011 & Lunghard LLP Certified Public Accountants INDEPENDENT AUDITORS' REPORT To the Honorable Mayor and Members of the City Council City of Chino Hills, California Brandon W. Burrows Donald L. Parker Michael K. Chu David E. Hale A Pwfe"1 n 1 C-PMVen Donald G. Slater Richard K. Kikuchi Retired Robert C. Lance 1914-1994 Richard C. Soil Fred J. Lunghard, Jr. 192&1999 We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Chino Hills, California (the City), as of and for the year ended June 30, 2004, 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 of Chino Hills' management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Governmental 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Chino Hills as of June 30, 2004, and the respective changes in financial position and cash flows where applicable, thereof and the respective budgetary comparison for the General Fund, Lighting and Landscape District Fund and the Existing Infrastructure Fee Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Governmental Auditing Standards, we have also issued our report dated September 23, 2004 on our consideration of the City of Chino Hills' internal control over financial reporting and our tests of its compliance with certain laws, regulations, contracts and grants. The management's discussion and analysis on pages 3 to 12 is not a required part of the basic 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 the required supplementary information. However, we did not audit the information and express no opinion on it. 75 Years 1929 2004 of Excellence 203 N. Brea Blvd. • Suite 203 • Brea, CA 92821-4056 • (714) 672-0022 • Fax (714) 672-0331 • WWW.Islcpas.com LLS LLnce lghard LLP CERTIFIED PUBLIC ACCOUNTANTS To the Honorable Mayor and Members of the City Council City of Chino Hills, California Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying introductory section, the combining and individual fund statements, schedules and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying combining and individual nonmajor fund financial statements have been subjected to the auditing procedures applied in the audit of the basic financial statements taken and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The accompanying 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. September 23, 2004 MANAGEMENT'S DISCUSSION & ANALYSIS CITY OF CHINO HILLS INCORPORATED 1991 MANAGEMENT'S DISCUSSION AND ANALYSIS The following is a narrative overview and analysis of the City of Chino Hills' financial statements for the fiscal year ended June 30, 2004. Information presented here should be taken into consideration with additional information furnished in the letter of transmittal and the City's financial statements. FINANCIAL HIGHLIGHTS • The net assets of the City of Chino Hills increased $20.2 million from $345.8 million to $366 million in the fiscal year 2003-04. This is primarily attributed from the addition of the Big League Dream Sports Park in capital assets of $16.5 million. • The City's overall revenues exceeded expenses by $3.3 million in fiscal year 2003-04. • The City's governmental funds reported combined ending fund balances of $47.8 million, as compared to $46.3 million in FY 2002-03. Of this $47.8 million, $8.4 million was reserved and $39.4 million was designated for special projects. • General Fund fund balance decreased slightly by $0.1 million with total revenues of $21.5 million and total expenses of $21.6 million. • Water Utility Fund recorded an increase in net assets by $5.2 million at June 30, 2004 as compared to an increase of $5.7 million in prior year. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Assets and Statement of Activities (on pages 13, 14 and 15) provide information about the activities of the City as a whole and present a long-term view of the City's finances. Fund financial statements start on page 16. For governmental activities, these fund statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City's operation in more detail than the government -wide statements by providing information about the City's most significant funds and other funds. The remaining fiduciary (Agency) fund statement provides financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government. REPORTING THE CITY AS A WHOLE The Statement of Net Assets and the Statement of Activities: The analysis of the City as a whole begins on page 13. The Statement of Net Assets and the Statement of Activities 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. 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 an indication of whether its financial health is improving or deteriorating. However, other non- financial factors such as changes in the economy due to external factors that will cause a decrease in consumer spending also needs to be taken into consideration. In the Statement of Net Assets and the Statement of Activities, the City's activities are separated as follows: Governmental activities — Most of the City's basic services are reported in this category, including the general government (city manager, city clerk, finance, etc.), public safety (police protection), public works, community development, cultural and leisure, and interest on long-term debt. Property taxes, sales tax, motor vehicle in -lieu fees, interest income, franchise fees, state and federal grants, contributions from other agencies, and other revenues finance these activities. 3 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 and sewer utilities are reported in this category. REPORTING THE CITY'S MOST SIGNIFICANT FUNDS Fund Financial Statements: The fund financial statements provide detailed information about the most significant funds and other funds - not the City as a whole. Some funds are required to be established by State law and by bond covenants. However, management established 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 resources. The City's two types of funds are governmental and proprietary. Governmental funds - Most of the City's basic services are reported in governmental funds, which focus on how money flows in 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 following each Governmental Fund financial statement. Proprietary funds - When the City charges customers for the services it provides, 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 Activities. In fact, the City's enterprise funds are the same as the business -type activities that are reported in the government -wide statements but provide more detail and additional information such as a statement of cash flows. THE CITY AS TRUSTEE Reporting the City's Fiduciary Responsibilities: The City is the trustee, or fiduciary, for certain funds held on behalf of those entities outside of the government. The City's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets. These activities are excluded 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. THE CITY AS A WHOLE The following is an analysis that summarizes the City's net assets (Exhibit A) at fiscal year ended June 30, 2003 and 2004, respectively: Exhibit A Net Assets (Summarized) As of June 30, 2004 (in thousands) 2004 2003 2004 2003 2004 2003 Governmental Business -Type Activities Activities Total Total Chance Current and other assets 55,769 62,984 46,401 45,319 102,170 108,304 (6,313) Capital assets 210,2934 193,301 128,944 127,344 339,238 320,645 18,592 Total Assets 266,063 256,285 175,345 172,663 441,408 428,949 12,279 Long -Term Liabilities Outstanding 40,101 39,071 28,479 29,275 68,580 68,346 234 Other Liabilities 4,193 11,782 2,579 2,988 6,772 14,771 (7,999) Total Liabilities 44,294 50,853 31,058 32,263 75,352 83,117 (7,765) 4 Exhibit A (continued) Net Assets (Summarized) As of June 30, 2004 (in thousands) 2004 2003 2004 2003 2004 2003 Governmental Business -Type Activities Activities Total Total Change Net Assets: Invested in capital assets, net of related debt 170,214 158,522 87,952 80,052 258,166 238,574 19,593 Restricted 24,794 24,454 1,180 5,539 25,974 29,993 (4,019) Unrestricted 26,761 22,456 55,155 54,809 81,916 77,265 4,650 Total Net Assets 221,769 205,432 144,287 140,400 366,056 345,832 20,224 The City's capital assets that included water and sewer capacity rights, had increased by $18.6 million, or 5.8% from $320.6 million to $339.2 million in FY 2003-04. The primary reason for this increase was attributed to the addition of the Big League Dream Sports Park of $16.5 million to the capital assets. On the other hand, reduction in current assets by $6.3 million and reduction in other liabilities by $8 million, was primarily due to a combined result of reclassification and elimination of interfund loans of $6.5 million that was erroneously listed as debts owed to developers in previous year. Unrestricted net assets increased $4.6 million from $77.3 million to $81.9 million as compared to prior year. This is the portion of net assets that can be used to finance day-to-day operations for the City. The overall result was an increase of a total of $20.2 million in the net assets from $345.8 million to $366 million in fiscal year 2003-04. The following is a summary of Statements of Activities that records the Changes in Net Assets (Exhibit B): Exhibit B Changes in Net Assets As of June 30, 2004 (in thousands) 5 2004 2003 2004 2003 2004 2003 Governmental Business -Type Activities Activities Total Total Change Revenues: Program Revenues: Charges for services $11,644 $11,432 $18,923 $17,176 30,568 28,608 $1,960 Operating grants and contributions 2,121 2,418 0 0 2,121 2,418 (297) Capital grants and contributions 11,419 18,210 0 213 11,418 18,423 (7,005) General Revenues: Property taxes 2,391 2,139 0 0 2,391 2,139 252 Sales taxes 3,890 3,301 0 0 3,890 3,301 589 Franchise taxes 1,684 1,494 0 0 1,684 1,494 190 Business license taxes 133 117 0 0 133 117 16 Othertaxes 497 396 0 0 497 396 101 Motor vehicle in -lieu 3,336 4,057 0 0 3,336 4,057 (721) Use of money and 1,088 1,696 407 920 1,495 2,616 (1,121) property Other Revenues 225 1,136 5,851 6,690 6,075 7,826 (1,751) Total Revenues 38,428 46,396 25,181 24,999 63,608 71,395 (7,787) Expenses: General govemment 5,791 4,792 0 0 5,791 4,792 999 Public safety 5,267 4,685 0 0 5,268 4,685 582 Public works 24,644 35,340 0 0 24,644 35,340 (10,696) Community development 2,677 2,390 0 0 2,677 2,390 287 Culture and leisure 3,019 2,518 0 0 3,018 2,517 501 Interest on long-term 381 607 0 0 381 607 (226) debt Water Utility 0 0 14,540 13,989 14,540 13,989 551 Sewer Utility 0 0 4,014 3,985 4,014 3,985 29 5 Exhibit B (continued) Changes in Net Assets As of June 30, 2004 (in thousands) 2004 2003 2004 2003 2004 2003 Governmental Business -Type $4,792 $999 Activities Activities Total Total Change Total Expenses 41,779 50,332 18,554 17,974 60,333 68,305 (7,973) Increase (Decrease) in $(3,351) $(3,936) $6,627 $7,025 3,275 $3,090 $186 Net Assets 3,018 2,517 501 There was no significant net change to the City's net assets based on the operating activities in FY 2003-04. Overall expenses exceeded revenues by $0.1 million. However, for the operations related to the Governmental Activities, revenues declined by $8.0 million and expenses decreased by $8.6 million compared to previous year. One of the revenue sources reduced was the development fees collected through issuing permits. There was a significant decline in the development fees by $ 6.2 million as compared to last year due to lower than expected development activities. Also, the Motor Vehicle In -Lieu Fees was reduced by a net of $0.7 million as a result of a 'loan' of $0.9 million to the State of California, with the promise to pay back in FY 2005-06. For the decline in investment interest earnings of $0.6 million, it was primarily due to the continuous low interest rate. As major construction projects completed in the fiscal year 2003-04, capital project expenditures also declined significantly by $10 million as compared to last fiscal year. On the other hand, increases in General Government expenses of $1.0 million and Public Safety of $0.5 million, were mainly caused by increased level of activities in major litigations, and additional law enforcement protection for an expanding population. For the operations related to the Business -Type Activities, charges for services increased in the Water Utility Fund by $1.7 million from $13 million to $14.7 million. This was a result of water rate increase of 3.5% in FY 2003-04, and an expanded number of service households. Cost of purchased water also increased by $0.8 million from $4.9 million to $5.7 million, as demand went up. Furthermore, cost reimbursements related to the capital projects declined by $1 million from $2.8 million to $1.8 million, as major construction for the Monte Vista Interconnect and Reservoir No. 20 projects completed in the fiscal year. Governmental Activities The following presents the cost of each of the City's six largest programs — general government, public safety, community development, culture and leisure, public works and interest on long-term debt — as well as each program's net cost (total cost less revenues generated by the activities). The net cost shows the financial burden that was placed on the City's taxpayers by each of these functions. Exhibit C Governmental Activities As of June 30, 2004 (in thousands) 2004 2003 Total Cost of Services Total Total Change General government $5,791 $4,792 $999 Public safety 5,268 4,686 582 Public works 24,644 35,340 (10,696) Community development 2,677 2,390 287 Culture and leisure 3,018 2,517 501 Interest on long-term debt 381 607 (226) Total $41,779 $50,332 ($8,553) Net Cost of Services 2004 2003 Change General government ($680) $211 ($891) Public safety (4,485) (3,895) (5) Public works (14,900) (19,306) 4,405 R Community development Culture and leisure Interest on long-term debt Total THE CITY'S FUNDS Exhibit C (continued) Governmental Activities As of June 30, 2004 (in thousands) 2004 2003 5,834 6,831 (1,983) (1,506) (381) (607) ($16,595) ($18,272) Chance (997) (477) 226 $1,676 The governmental funds balance sheet is shown on page 16 and 17. The combined fund balance included the general fund balance of $14.2 million, of which $1.0 million was reserved for encumbrances and interfund loans, and $13.2 million was unreserved but designated for special purposes. The Existing Infrastructure Fee Fund fund balance was in deficit of $(0.3) million as compared to $(1.4) million in FY 2002-03. The narrowing of the deficit gap was a result of the timing difference when the actual development fee revenues collected, exceeded the development fee credits given during the year for developers who have development agreements with the City. General Fund Budgetary Highlights During the year, the City Council reviewed and revised the City budget as recommended by the staff. Adjustments were made on a quarterly basis as the City's staff requested additional appropriations to cover the cost of projects that either had change orders for additional work, or the estimated cost at the beginning of the project was underestimated. Adjustments were also made as department heads requested increases or decreases to their budgets to maintain their current level of services. All amendments that either increase or decrease appropriations are approved by the City Council. For the General Fund, actual revenues of $21.4 million were in line with budget of $22.1 million with a variance of $0.64 million, or 2.9 percent under the overall budget. Both property taxes and sales tax had experienced growth by $0.25 million and $0.59 million, respectively, due to accelerated housing market value and additions of major retail stores within the City. Actual expenses were $21.6 million, about $6.1 million less than total amount appropriated at $27.7 million in fiscal year 2003-04. The City had made a conscientious effort to control program costs, also by deleting approximately $0.93 million in capital projects and delaying in hiring three new positions. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City of Chino Hills had $326.6 million invested in the capital assets, as compared to $307.6 million in FY 2002-03: Land and easements Construction -in -progress Structures and improvements Utility plant in service Meters Pipeline in service Equipment Vehicle Infrastructure Exhibit D Capital Assets at Year -End (Net of Depreciation) For the Year Ended June 30, 2004 (in thousands) 2004 2003 Governmental Activities 18,277 17,583 0 0 29,594 13,264 0 0 0 0 207 211 513 560 837 686 160,866 160,997 Total 210,294 193,301 2004 2003 2004 2003 Business -Type Activities Total Total Chance 3,607 3,607 21,884 21,189 695 15,308 12,473 15,308 12,473 2,835 1,053 1,098 30,647 14,362 16,285 16,984 16,413 16,984 16,414 570 774 685 774 685 89 78,428 79,923 78,635 80,134 (1,499) 142 125 655 685 (30) 0 0 837 686 151 0 0 160,866 160,997 (131) 116,296 114,324 326,590 307,625 18,965 7 The City had budgeted for a total of $47.7 million capital improvement projects in the fiscal year 2003-04. During the year, several major capital projects funded by the Water Utility funds were completed, that included the Monte Vista Interconnect Project ($11.1 million), and the Reclaimed Water Reservoir No. 20 ($1.2 million). The capital projects that were deleted in the General Fund in the total amount of $0.93 million, included the Los Serranos-Other Infrastructure ($0.3 million), the Bird Farm Park ($0.1 million), and the City Skate Park ($0.1 million). Please refer to Note 5 on P. 45-46 for further details on capital assets. Debt At year-end, the City's governmental activities had $40.1 million in long-term debts including development fee related obligations, capital lease obligations, and compensated absences, as compared to $39.1 million in prior year, a net decrease of $1.0 million during the fiscal year. Please refer to Note 6 on P. 47-53 for further details on the City's long-term liabilities. Exhibit E Outstanding Debt at Year -End For Fiscal Year Ended June 30, 2004 (in thousands) Of these total obligations, 98.6 percent were development related and owed to developers who had previously installed major infrastructure throughout the City. Reduction in these commitments was given in the form of development fee credits when the developers pulled construction permits with the City during the year. Other obligation included $0.4 million of compensated absences liabilities owned to the City's employees. In addition, the City's business -type activities had $28.5 million in long-term debts and they were recorded primarily in the Water Utility and Sewer Utility funds. During fiscal year 2003-04, the City had refinanced the outstanding 1996 Certificates of Participation (C.O.P.) of $17.3 million, by issuing the 2003 Water C.O.P of $18.2 million for a fifteen -year term. The net saving to the City was approximately $2.1 million in interest cost. The principal debt outstanding at June 30, 2004 was $9.5 million and $17.3 million for the 2002 and 2003 C.O.P., respectively. The 2002 Water C.O.P. was issued to acquire as well as construct major improvements to the water system, whereas the 2003 Water C.O.P was issued to refund the 1996 Water C.O.P. (Note 1): McCoy Equestrian Center has a lease amount outstanding at June 30, 2004 for $18, which was reduced by the annual payment of $1 paid in FY 2003-04. (Note 2): Business -type activities has a capital lease amount of $960 outstanding at June 30, 2004, a reduction of $635 from $1,595 in FY 2002-03. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET In preparing the budget for 2004-05, the following economic factors have been taken into account: • Possibility of loosing additional revenue sources besides Motor Vehicle In -Lieu Fees due to the State of California's budget crisis A 2004 2003 2004 2003 2004 2003 Governmental Business -Type Activities Activities Total Total Change Compensated absences 435 452 117 122 553 574 (21) Advances from developers 891 891 0 0 891 891 0 Advances for construction 0 0 26 37 26 37 (11) Development fee program 38,655 37,414 3,238 3,238 41,892 40,651 1,241 obligations Claims payable 0 123 0 0 0 123 (123) Capital lease obligations 120 191 (Note 2) (Note 2) 121 193 (72) Equestrian center lease (Note 1) (Note 1) (Note 1) (Note1) (Note 1) (Note 1) (Note1) Certificates of Participation 0 0 26,740 26,835 26,740 26,835 (95) Less: Deferred amount on 0 0 (1,527) (758) (1,527) (758) (769) Refunding Unamortized bond 0 0 (116) (200) (116) (200) 84 discount Total 40,101 39,071 28,479 29,275 68,580 68,346 234 Of these total obligations, 98.6 percent were development related and owed to developers who had previously installed major infrastructure throughout the City. Reduction in these commitments was given in the form of development fee credits when the developers pulled construction permits with the City during the year. Other obligation included $0.4 million of compensated absences liabilities owned to the City's employees. In addition, the City's business -type activities had $28.5 million in long-term debts and they were recorded primarily in the Water Utility and Sewer Utility funds. During fiscal year 2003-04, the City had refinanced the outstanding 1996 Certificates of Participation (C.O.P.) of $17.3 million, by issuing the 2003 Water C.O.P of $18.2 million for a fifteen -year term. The net saving to the City was approximately $2.1 million in interest cost. The principal debt outstanding at June 30, 2004 was $9.5 million and $17.3 million for the 2002 and 2003 C.O.P., respectively. The 2002 Water C.O.P. was issued to acquire as well as construct major improvements to the water system, whereas the 2003 Water C.O.P was issued to refund the 1996 Water C.O.P. (Note 1): McCoy Equestrian Center has a lease amount outstanding at June 30, 2004 for $18, which was reduced by the annual payment of $1 paid in FY 2003-04. (Note 2): Business -type activities has a capital lease amount of $960 outstanding at June 30, 2004, a reduction of $635 from $1,595 in FY 2002-03. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET In preparing the budget for 2004-05, the following economic factors have been taken into account: • Possibility of loosing additional revenue sources besides Motor Vehicle In -Lieu Fees due to the State of California's budget crisis A • An estimate of $440,000 of the Motor Vehicle In -Lieu Fees would be taken away by the State Government to help out the budget deficit • Uncertainty in the direction of the investment earnings rate which is contingent on the market conditions Key budget assumptions for forecasting General Fund revenues in FY 2004-05 include the following: • The State's fiscal problems will affect the City's Motor Vehicle License Fees (VLF) revenue • The 'Triple Flip' and the 'VLF and Property Tax Swap' will not materially impact the City's revenue amounts except for the delay in timing of payments • Sales Tax revenue will continue to increase as major retail stores and restaurant opened during the fiscal year • Property Tax revenues will increase by $0.45 million due to continued accelerating property values in the San Bernardino County area • Development activities within the City are projected to be at 229 in residential units in FY 2004-05 and the permit fee will continue to fund the related operations • Investment earning was projected at about $0.46 million or at a rate of 1.75 percent The Operating Budget for fiscal year 2004-05 is a well-balanced budget that reflects the City's commitment to foster steady, controlled growth and provide the highest level of service to the community within the City's financial constraint and is consistent with the City Council's goals and objectives. Questions or requests for information regarding the City of Chino Hills' 2004-05 budget should be sent to the Finance Department at the address below. CONTACTING THE CITY'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City of Chino Hills' finances and to show the City's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City's Finance Department, at the City of Chino Hills, 2001 Grand Avenue, Chino Hills, CA 91709. M CITY OF CHINO HILLS INC OR P OR ATE D 1 9 9 1 THIS PAGE INTENTIONALLY LEFT BLANK 10 BASIC FINANCIAL STATEMENTS CITY OF CHINO HILLS INCORPORATED 1991 CITY OF CHINO HILLS STATEMENT OF NET ASSETS JUNE 30, 2004 Exhibit A See Notes to Financial Statements 11 Primary Government Governmental Business -Type Activities Activities Total Assets: Cash and investments $ 57,456,387 $ 28,169,606 $ 85,625,993 Receivables: Accounts 594,032 2,666,501 3,260,533 Accrued interest 197,658 86,151 283,809 Taxes 733,856 - 733,856 Special assessments 87,369 901,584 988,953 Internal balances (8,011,655) 8,011,655 - Due from other agencies 338,249 8,464 346,713 Due from other governments 858,306 73,603 931,909 Due to developers 3,070,404 157,727 3,228,131 Inventories - 67,788 67,788 Deferred charges - 619,439 619,439 Investment in joint venture - 4,457,822 4,457,822 Restricted assets: Cash and investments 43,840 - 43,840 Cash with fiscal agent 401,032 1,180,447 1,581,479 Capital assets not being depreciated 18,277,515 18,914,882 37,192,397 Capital assets, net of depreciation 192,016,016 97,381,119 289,397,135 Water rights, net of amortization - 12,467,927 12,467,927 Capacity rights, net of amortization - 179,972 179,972 Total Assets 266,063,009 175,344,687 441,407,696 Liabilities: Accounts payable 3,200,756 1,295,846 4,496,602 Accrued liabilities 508,176 69,092 577,268 Accrued interest - 86,636 86,636 Deposits - 1,107,509 1,107,509 Fund held for others - 11,400 11,400 Retentions payable 119,637 - 119,637 Due to developers 53,128 8,160 61,288 Unearned revenues 311,454 - 311,454 Noncurrent liabilities: Due within one year 93,877 1,083,207 1,177,084 Due in more than one year 40,006,851 27,395,962 67,402,813 Total Liabilities 44,293,879 31,057,812 75,351,691 Net Assets: Invested in capital assets, net of related debt 170,214,503 87,951,967 258,166,470 Restricted for: Community development projects 18,603,971 - 18,603,971 Public safety 12,430 - 12,430 Capital projects 5,558,322 - 5,558,322 Debt service 618,843 1,180,447 1,799,290 Unrestricted 26,761,061 55,154,461 81,915,522 Total Net Assets $ 221,769,130 $ 144,286,875 $ 366,056,005 See Notes to Financial Statements 11 CITY OF CHINO HILLS STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2004 Total General Revenues and Transfers Change in Net Assets Net Assets at Beginning of Year Restatement of Net Assets Net Assets at End of Year See Notes to Financial Statements 12 Program Revenues Operating Capital Charges for Contributions Contributions Expenses Services and Grants and Grants Functions/Programs Primary Government: Governmental Activities: General government $ 5,791,059 $ 5,111,368 $ - $ - Public safety 5,267,519 603,561 178,647 - Public works 24,644,445 3,396,199 285,872 6,062,276 Community development 2,676,842 1,498,104 1,656,857 5,356,117 Culture and leisure 3,018,462 1,035,082 - - Interest on long-term debt 380,809 - - - Total Governmental Activities 41,779,136 11,644,314 2,121,376 11,418,393 Business -Type Activities: Water utility 14,540,120 14,672,595 - - Sewer utility 4,013,704 4,250,684 - - Total Business -Type Activities 18,553,824 18,923,279 - - Total Primary Government $ 60,332,960 $ 30,567,593 $ 2,121,376 $ 11,418,393 General Revenues: Taxes: Property taxes, levied for general purpose Sales taxes Franchise taxes Business licenses taxes Other taxes Motor vehicle in lieu Use of money and property Other Transfers Total General Revenues and Transfers Change in Net Assets Net Assets at Beginning of Year Restatement of Net Assets Net Assets at End of Year See Notes to Financial Statements 12 Exhibit B Net (Expenses) Revenues and Changes in Net Assets Primary Government Governmental Business -Type Activities Activities $ (679,691) (4,485,311) (14,900,098) 5,834,236 (1,983,380) (380,809) (16,595,053) Total $ (679,691) (4,485,311) (14,900,098) 5,834,236 (1,983,380) (380,809) (16,595,053) - 132,475 132,475 - 236,980 236,980 - 369,455 369,455 (16,595,053) 369,455 (16,225,598) 2,391,352 - 2,391,352 3,890,159 - 3,890,159 1,683,595 - 1,683,595 132,450 - 132,450 497,029 - 497,029 3,335,980 - 3,335,980 1,088,166 406,944 1,495,110 585,030 5,490,306 6,075,336 (359,900) 359,900 - 13,243,861 6,257,150 19,501,011 (3,351,192) 6,626,605 3,275,413 205,431,995 140,399,708 345,831,703 19,688,327 (2,739,438) 16,948,889 $ 221,769,130 $ 144,286,875 $ 366,056,005 13 CITY OF CHINO HILLS BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2004 Assets: Cash and investments Receivables (net of allowances): Accounts Interest Taxes Special assessments Due from other agencies Due from other governments Due from developers Due from other funds Advances to other funds Restricted assets: Cash and investments Cash and investments with fiscal agents Total Assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued liabilities Retentions payable Due to other funds Due to developers Deferred revenues Unearned revenues Compensated absences payable Advances from other funds Total Liabilities Fund Balances: Reserved for: Encumbrances Acquisition of facilities Advances to other funds Unreserved: Unreserved, reported in nonmajor: Special revenue funds Capital projects funds Designated for: Structural replacement Cash flow Emergencies and contingencies Special projects Undesignated Total Fund Balances Total Liabilities and Fund Balances 9,296 Special Revenue Funds 3,225,244 Lighting and Existing - - Landscape Infrastructure General District Fee $ 20,692,149 $ 8,051,220 $ 3,805,693 200,060 304 - 92,469 25,420 11,705 669,381 - - - 82,702 - 338,249 - - 456,017 - - 618,843 - 2,316,576 356,653 301,800 - 774,200 3,926,200 - $ 24,198,021 $ 12,387,646 $ 6,133,974 $ 704,593 $ 390,299 $ - 468,519 29,435 - 317,148 106,588 - - - 53,128 618,843 - - 21,700 - - 7,828,215 - 6,400,991 9,959,018 526,322 6,454,119 207,499 7,000 - - - 794,732 774,200 3,926,200 - 9,296 4,719,463 - 3,225,244 2,898,175 - 9,474,082 - - 548,682 - - - 310,486 (1,114,877) 14,239,003 11,861,324 (320,145) $ 24,198,021 $ 12,387,646 $ 6,133,974 See Notes to Financial Statements 14 i Capital Project Fund Capital Improvement Exhibit C Other Total Governmental Governmental Funds Funds $ 1,105,635 $ 20,500,801 $ 54,155,498 - 380,689 581,053 - 58,326 187,920 - 64,475 733,856 - 4,667 87,369 - - 338,249 - 402,289 858,306 - 106,656 3,042,075 29,584 175,900 863,937 - 3,107,301 7,807,701 43,840 - 43,840 - 401,032 401,032 $ 1,179,059 $ 25,202,136 $ 69,100,836 $ 1,092,008 $ 925,984 $ 3,112,884 - 5,920 503,874 87,051 32,586 119,637 - 570,328 994,064 - - 53,128 - - 618,843 - 311,454 311,454 - - 21,700 - 1,301,900 15,531,106 1,179,059 3,148,172 21,266,690 2,664,511 - 2,879,010 - - 794,732 4,700,400 19,139,469 19,139,469 2,914,495 2,914,495 - 4,728,759 - 6,123,419 - 9,474,082 - 548,682 (2,664,511) - (3,468,902) - 22,053,964 47,834,146 $ 1,179,059 $ 25,202,136 $ 69,100,836 15 CITY OF CHINO HILLS INC ORP ORATED 1 9 9 1 THIS PAGE INTENTIONALLY LEFT BLANK iI: CITY OF CHINO HILLS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2004 Exhibit D Fund balances of governmental funds $ 47,834,146 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets net of depreciation have not been included as financial resources in governmental fund activity. 209,398,048 Long-term debt and compensated absences have not been included in the governmental fund activity: Long-term debt payable (39,665,412) Compensated absences (407,257) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 618,843 Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net assets. 3,990,762 Net assets of governmental activities $ 221,769,130 See Notes to Financial Statements 17 CITY OF CHINO HILLS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2004 Expenditures: Current: General government 5,158,614 Special Revenue Funds Public safety Lighting and Existing - Public works Landscape Infrastructure 2,315,814 General District Fee Revenues: Culture and leisure 2,039,967 - Taxes $ 11,657,289 $ - $ Special assessments - 5,147,487 - Licenses and permits 1,733,174 - - Intergovernmental - - - Charges for services 5,512,916 1,130,100 - Development fees - - 1,246,584 Contribution from property owners 274,376 - - Fines and forfeitures 354,012 - - Use of money and property 672,637 150,057 32,238 Miscellaneous 599,284 2,018 - Total Revenues 20,803,688 6,429,662 1,278,822 Expenditures: Current: General government 5,158,614 Public safety 5,048,067 - - Public works 4,369,335 6,344,742 2,315,814 Community development 2,672,650 - - Culture and leisure 2,039,967 - - Capital outlay 28,958 - - Debt service: Principal retirement 172,089 - 632,445 Interest and fiscal charges 134,864 - 216,971 Total Expenditures 19,624,544 6,344,742 3,165,230 Excess (Deficiency) of Revenues Over (Under) Expenditures 1,179,144 84,920 (1,886,408) Other Financing Sources (Uses): Transfers in 682,785 190,900 - Transfers out (1,996,300) (928,766) - Other debts issued - - 3,001,247 Total Other Financing Sources (Uses) (1,313,515) (737,866) 3,001,247 Net Change in Fund Balances (134,371) (652,946) 1,114,839 Fund Balances: Beginning of Year 14,373,374 12,514,270 (1,434,984) End of Year $ 14,239,003 $ 11,861,324 $ (320,145) See Notes to Financial Statements 18 Exhibit E Capital Project Fund Other Total Capital Governmental Governmental Improvement Funds Funds $ $ - $ 11,657,289 - 208,630 5,356,117 - - 1,733,174 - 3,180,817 3,180,817 - 3,220,533 9,863,549 - 2,517,326 3,763,910 433,937 481,195 1,189,508 - - 354,012 - 202,275 1,057,207 - - 601,302 433,937 9,810,776 38,756,885 - 25,971 5,184,585 - 215,403 5,263,470 - 4,168,944 17,198,835 - - 2,672,650 - 119,985 2,159,952 6,343,105 338,534 6,710,597 - 654,589 1,459,123 - 28,974 380,809 6,343,105 5,552,400 41,030,021 (5,909,168) 4,258,376 (2,273,136) 5,909,168 - 6,782,853 - (3,042,687) (5,967,753) 3,001,247 5,909,168 (3,042,687) 3,816,347 - 1,215,689 1,543,211 20,838,275 46,290,935 $ - $ 22,053,964 $ 47,834,146 19 CITY OF CHINO HILLS Exhibit F RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2004 Net change in fund balances - total governmental funds $ 1,543,211 Amounts reported for governmental activities in the statement of activities differs from the amounts reported in the statement of activities because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. (2,830,598) Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. (1,046,686) Compensated absences expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 17,968 Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. The net revenues (expenses) of the internal service funds is reported with governmental activities. (1,035,087) Change in net assets of governmental activities $ (3,351,192) See Notes to Financial Statements 100] CITY OF CHINO HILLS BUDGETARY COMPARISON STATEMENT GENERALFUND YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Taxes Licenses and permits Charges for services Contribution from property owners Fines and forfeitures Use of money and property Other Transfers from other funds Amounts Available for Appropriation Charges to Appropriation (Outflow): General government: City council City manager City clerk City attorney Finance Personnel Risk management Non -departmental Public safety: Emergency preparedness Code enforcement Law enforcement Animal control Household hazardous waste Public works: General maintenance General park and landscape maintenance Storm drain facilities Street maintenance Engineering Community development: Community development Building and safety Planning Economic development Neighborhood services Commercial economic development Culture and leisure: Recreation Recreation fee program Community services administration Capital outlay Debt service: Principal Interest and fiscal charges Transfers to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final $ 14,373,374 $ 14,373,374 11,788,500 1,704,800 5,877,200 80,000 320,500 1,648,100 351,800 975,200 37,119,474 11,178,000 1,714,800 5,877,200 129,100 320,500 1,551,600 354,000 1,002,000 36,500,574 Actual Amounts $ 14,373,374 11,657,289 1,733,174 5,512,916 274,376 354,012 672,637 599,284 682,785 35,859,847 Exhibit G Variance with Final Budget Positive (Negative) 479,289 18,374 (364,284) 145,276 33,512 (878,963) 245,284 (319,215) (640,727) 168,800 168,800 156,484 12,316 917,000 1,017,300 924,376 92,924 710,300 686,400 562,111 124,289 450,000 1,251,700 1,251,667 33 1,288,700 1,331,700 1,256,399 75,301 245,400 265,400 245,947 19,453 767,200 781,600 709,089 72,511 813,700 813,700 52,541 761,159 25,800 25,800 5,323 20,477 106,200 116,200 113,370 2,830 4,710,400 4,741,400 4,732,328 9,072 102,000 102,000 93,138 8,862 171,900 181,800 103,908 77,892 1,336,200 1,323,100 1,207,834 115,266 546,800 600,700 511,818 88,882 21,800 112,800 54,323 58,477 856,600 877,900 824,529 53,371 2,414,200 2,612,700 1,770,831 841,869 653,900 687,800 509,475 178,325 990,200 1,115,200 779,162 336,038 865,900 865,900 758,081 107,819 121,500 121,500 102,336 19,164 336,600 338,000 292,513 45,487 300,000 300,000 231,083 68,917 571,900 572,700 413,578 159,122 1,359,800 1,359,800 1,130,636 229,164 513,500 521,500 495,753 25,747 32,000 63,500 28,958 34,542 107,900 107,900 172,089 (64,189) 223,200 223,200 134,864 88,336 4,598,500 4,455,700 1,996,300 2,459,400 26,327,900 27,743,700 21,620,844 6,122,856 $ 10,791,574 $ 8,756,874 $ 14,239,003 $ 5,482,129 See Notes to Financial Statements 21 CITY OF CHINO HILLS BUDGETARY COMPARISON STATEMENT LIGHTING AND LANDSCAPE DISTRICT YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Special assessments Charges for services Use of money and property Miscellaneous Transfers from other funds Amounts Available for Appropriation Charges to Appropriation (Outflow): Public works Transfers to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Actual Original Final Amounts $ 12,514,270 $ 12,514,270 $ 12,514,270 Exhibit H Variance with Final Budget Positive (Negative) 5,067,900 5,067,900 5,147,487 79,587 1,334,800 1,334,800 1,130,100 (204,700) 275,900 240,700 150,057 (90,643) - - 2,018 2,018 1,767,500 1,767,500 190,900 (1,576,600) 20,960,370 20,925,170 19,134,832 (1,790,338) 6,401,700 6,458,300 6,344,742 113,558 2,964,700 3,421,400 928,766 2,492,634 9,366,400 9,879,700 7,273,508 2,606,192 $ 11,593,970 $ 11,0454470 $ 11,861,324 $ 815,854 See Notes to Financial Statements 22 CITY OF CHINO HILLS BUDGETARY COMPARISON STATEMENT EXISTING INFRASTRUCTURE FEE YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Developer fees Use of money and property Other debts issued Amounts Available for Appropriation Charges to Appropriation (Outflow): Public works Debt service: Principal Interest and fiscal charges Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final $ (1,434,984) $ (1,434,984) Actual $ (1,434,984) Exhibit I Variance with Final Budget Positive (Negative) 7,759,400 7,759,400 1,246,584 (6,512,816) 72,200 62,800 32,238 (30,562) 2,500,000 2,500,000 3,001,247 501,247 8,896,616 8,887,216 2,845,085 (6,042,131) 6,138,900 6,138,900 2,315,814 3,823,086 2,747,400 2,747,400 632,445 2,114,955 695,700 695,700 216,971 478,729 9,582,000 9,582,000 3,165,230 6,416,770 $ (681,384) $ (694,784) $ (320,145) $ 374,639 See Notes to Financial Statements 23 Assets: Current: Cash and investments Receivables: Accounts Interest Due from other funds Due from other agencies Due from other governments Due from other developers Inventories Restricted assets: Cash with fiscal agent Total Current Assets Noncurrent: Advances to other funds Due from other developers Deferred charges Investment in joint venture Capital assets - net of accumulated depreciation Water rights - net of amortization Capacity rights - net of amortization Total Noncurrent Assets Total Assets CITY OF CHINO HILLS STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2004 Business -Type Activities - Enterprise Funds Water Sewer Utility Utility Totals Exhibit J Pagel of 2 Governmental Activities - Internal Service Funds $ 15,618,500 $ 12,551,106 $ 28,169,606 $ 3,300,889 2,175,715 490,786 2,666,501 41,308 49,600 36,551 86,151 9,739 128,166 2,048 130,214 - - 8,464 8,464 - 73,603 - 73,603 - 57,116 4,598 61,714 - 67,165 623 67,788 - 1,180,447 - 1,180,447 - 19,350,312 13,094,176 32,444,488 3,351,936 4,520,561 7,525,628 12, 046,189 - 96,013 - 96,013 - 619,439 - 619,439 - 4,457,822 - 4,457,822 - 90,196,510 26,099,491 116,296,001 895,483 12,467,927 - 12,467,927 - - 179,972 179,972 - 112,358,272 33,805,091 146,163,363 895,483 $ 131,708,584 $ 46,899,267 $ 178,607,851 $ 4,247,419 See Notes to Financial Statements 24 CITY OF CHINO HILLS STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2004 Business -Type Activities - Enterprise Funds Water Sewer Utility Utility Totals Exhibit J Page 2 of 2 Governmental Activities - Internal Service Funds Liabilities and Net Assets: Liabilities: Current: Accounts payable $ 917,932 $ 377,914 $ 1,295,846 $ 87,873 Accrued payroll payable 53,467 15,625 69,092 4,302 Accrued interest payable 86,636 - 86,636 - Deposits 617,916 489,593 1,107,509 - Fund held for others - 11,400 11,400 - Due to other funds - 87 87 - Due to other developers 8,160 - 8,160 - Compensated absences 1,000 1,500 2,500 500 Capital lease obligations 707 - 707 - Certificates of participation 1,080,000 - 1,080,000 - Total Current Liabilities 2,765,818 896,119 3,661,937 92,675 Noncurrent: Advances from other funds 3,421,200 - 3,421,200 - Advances for constructions 26,058 - 26,058 - Due to other developers 3,237,533 - 3,237,533 - Compensated absences 86,060 28,677 114,737 5,859 Capital lease obligations 253 - 253 - Certificates of participation 24,017,381 - 24,017,381 - Total Noncurrent Liabilities 30,788,485 28,677 30,817,162 5,859 Total Liabilities 33,554,303 924,796 34,479,099 98,534 Net Assets: Invested in capital assets, net of related debt 61,852,476 26,099,491 87,951,967 895,483 Restricted for debt service 1,180,447 - 1,180,447 - Unrestricted 35,121,358 19,874,980 54,996,338 3,253,402 Total Net Assets 98,154,281 45,974,471 144,128,752 4,148,885 Total Liabilities and Net Assets $ 131,708,584 $ 46,899,267 $ 178,607,851 $ 4,247,419 Reconciliation of Net Assets to the Statement of Net Assets: Net assets per Statement of Net Assets - Proprietary Funds $ 144,128,752 Prior years' accumulated adjustment to reflect the consolidation of internal service funds activities related to enterprise funds 103,117 Current year internal service funds activity adjustment 55,006 Net Assets: Business -Type Activities $ 144,286,875 25 CITY OF CHINO HILLS INC ORP ORATED 1 9 9 1 THIS PAGE INTENTIONALLY LEFT BLANK 26 CITY OF CHINO HILLS Exhibit K STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2004 Changes in net assets per the Statement of Revenues, $ 6,571,599 Expenses and Changes in Fund Net Assets - Proprietary Funds Adjustment to reflect the consolidation of the current fiscal year internal service funds activities related to enterprise funds 55,006 Changes in Net Assets of Business -Type Activities $ 6,626,605 See Notes to the Financial Statements 27 Business -Type Activities - Governmental Enterprise Funds Activities - Water Sewer Internal Utility Utility Totals Service Funds Operating Revenues: Charges for services $ 14,672,595 $ 4,250,684 $ 18,923,279 $ 1,089,798 Meter and installation fees 112,098 - 112,098 - Other 2,741 - 2,741 - Total Operating Revenues 14,787,434 4,250,684 19,038,118 1,089,798 Operating Expenses: Salaries and benefits 1,177,206 332,373 1,509,579 97,136 Professional and contractual services 571,003 2,263,016 2,834,019 187,804 Purchased water 5,683,269 - 5,683,269 - Repairs and maintenance 403,158 117,004 520,162 201,598 Services and supplies 178,682 29,780 208,462 170,366 Other general and administrative 1,505,401 314,500 1,819,901 30,863 Utilities 483,721 14,728 498,449 - Depreciation 2,373,611 951,685 3,325,296 228,900 Amortization 398,000 4,864 402,864 - Total Operating Expenses 12,774,051 4,027,950 16,802,001 916,667 Operating Income (Loss) 2,013,383 222,734 2,236,117 173,131 Nonoperating Revenues (Expenses): Interest earnings 180,643 226,301 406,944 30,959 Contribution from developers 2,333,952 253,231 2,587,183 - Contribution from property owners 412,871 594,050 1,006,921 - Reimbursement cost 1,764,533 16,830 1,781,363 - Interest expense (1,376,431) - (1,376,431) - Loss on disposition of assets - - - (9,171) Loss on investment in Joint Ventures (430,398) - (430,398) - Total Nonoperating Revenues (Expenses) 2,885,170 1,090,412 3,975,582 21,788 Income (Loss) Before Transfers 4,898,553 1,313,146 6,211,699 194,919 Transfers in 268,300 141,600 409,900 - Transfers out - (50,000) (50,000) (1,175,000) Changes in Net Assets 5,166,853 1,404,746 6,571,599 (980,081) Net Assets: Beginning of Fiscal Year, as originally stated 95,726,866 44,569,725 140,296,591 5,128,966 Restatements (2,739,438) - (2,739,438) - Beginning of Fiscal Year, as restated 92,987,428 44,569,725 137,557,153 5,128,966 End of Fiscal Year $ 98,154,281 $ 45,974,471 $144,128,752 $ 4,148,885 Changes in net assets per the Statement of Revenues, $ 6,571,599 Expenses and Changes in Fund Net Assets - Proprietary Funds Adjustment to reflect the consolidation of the current fiscal year internal service funds activities related to enterprise funds 55,006 Changes in Net Assets of Business -Type Activities $ 6,626,605 See Notes to the Financial Statements 27 Cash Flows from Operating Activities: Cash received from customers and users Cash paid to supplies for good and services Cash paid to employees for services Net Cash Provided (Used) by Operating Activities Cash Flows from Non -Capital Financing Activities: Cash transfer to other funds Cash transfer from other funds Due to other funds Due from other funds Advances from other funds Advances to other funds Net Cash Provided (Used) by Non -Capital Financing Activities Cash Flows from Capital and Related Financing Activities: Contribution from developers Contribution from property owners Reimbursement cost Advances for construction Acquisition and construction of capital assets Investment in joint venture Purchase in water rights Long-term debt issued Debt issuance cost Payment to refunding escrow Principal paid on capital lease obligation Principal paid on certificate of participation Interest paid on capital debt Net Cash Provided (Used) by Capital and Related Financing Activities Cash Flows from Investing Activities: Interest received Net Cash Provided (Used) by Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year CITY OF CHINO HILLS Exhibit L Page 1 of 2 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2004 Business -Type Activities - Governmental Enterprise Funds Activities - Water Sewer Internal Utility Utility Total Service Funds $17,891,530 $ 4,225,455 $22,116,985 $ 1,078,737 (9,312,928) (2,708,942) (12,021,870) (571,467) (1,078,809) (331,439) (1,410,248) (95,613) 7,499,793 1,185,074 8,684,867 411,657 - (50,000) (50,000) (1,175,000) 268,300 141,600 409,900 (3,525,200) - (3,525,200) - 572,293 1,770,025 2,342,318 1,500,000 (2,400,000) - (2,400,000) - (1,190,419) (641,069) (1,831,488) - (6,275,026) 1,220,556 (5,054,470) 325,000 3,288,225 545,473 3,833,698 - 412,871 594,050 1,006,921 - 1,764,533 16,830 1,781,363 - (10,711) - (10,711) - (4,652,835) (644,050) (5,296,885) (372,794) (421,732) - (421,732) - (31,296) - (31,296) 18,163,038 - 18,163,038 - (369,738) - (369,738) - (17,793,300) - (17,793,300) - (635) - (635) - (975,000) - (975,000) - (1,410,275) - (1,410,275) - (2,036,855) 512,303 (1,524,552) (372,794) 188,962 223,058 412,020 32,053 188,962 223,058 412,020 32,053 (623,126) 3,140,991 2,517,865 395,916 17,422,073 9,410,115 26,832,188 2,904,973 $16,798,947 $12,551,106 $29,350,053 $ 3,300,889 See Notes to Financial Statements P�:3 CITY OF CHINO HILLS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2004 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Amortization Changes in assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in due from other agencies (Increase) decrease in due from other governments (Increase) decrease in inventories Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities Increase (decrease) in deposits payable Increase (decrease) in due to other governments Increase (decrease) in compensated absences Total Adjustments Net Cash Provided (Used) by Operating Activities Exhibit L Page 2 of 2 Business -Type Activities - Governmental Enterprise Funds Activities - Water Sewer Internal Utility Utility Total Service Funds $ 2,013,383 $ 222,734 $ 2,236,117 $ 173,131 2,373,611 951,685 3,325,296 228,900 398,000 4,864 402,864 - 2,701,249 (19,412) 2,681,837 (11,061) - (5,817) (5,817) - 402,847 - 402,847 - 22,518 - 22,518 - (426,076) (580) (426,656) 19,164 8,187 934 9,121 831 21,510 30,666 52,176 - (12,473) - (12,473) - (2,963) - (2,963) 692 5,486,410 962,340 6,448,750 238,526 $ 7,499,793 $ 1,185,074 $ 8,684,867 $ 411,657 Non -Cash Investing, Capital, and Financing Activities: The Water Fund received capital contributions from developers in the form of capital improvements totaling $2,603,495 29 CITY OF CHINO HILLS Exhibit M STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2004 Assets: Cash and investments $ 44,626,160 Receivables: Accounts 39,180 Interest 103,200 Special assessments 175,194 Restricted assets: Cash with fiscal agent 8,203,126 Total Assets $ 53,146,860 Liabilities: Accounts payable $ 94,383 Deposits 4,441,948 Due to Inland Empire Utilities Agency 5,774,412 Advances from other funds 901,584 Funds held for others 41,934,533 Total Liabilities $ 53,146,860 See Notes to Financial Statements 30 NOTES TO THE FINANCIAL STATEMENTS CITY OF CHINO HILLS I N C O R P O R A T E D 1 9 9 1 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 Note 1: Summary of Significant Accounting Policies a. Description of the Reporting Entity The City of Chino Hills (the "City") was incorporated December 1, 1991 under the General Laws of the State of California. The City operates under a Council -Manager form of government and provides the following services: contracted police, lighting and landscaping, public improvements, water, sanitation, planning and zoning, general administrative services, contracted animal control, building and safety, community services, and street and highway maintenance. As required by accounting principles generally accepted in the United States of America, these financial statements present the City of Chino Hills and its component units, entities for which the City is considered financially accountable. The inclusion of an organization within the scope of the reporting entity of the City of Chino Hills is based on the provision of GASB Statement No. 14 and 39. The blended component units discussed below, although legally separate entities, are in substance part of the government operation and so data from these component units has been combined herein. The City of Chino Hills Redevelopment Agency The Chino Hills Redevelopment Agency (the Agency) was activated November 12, 2003, pursuant to the State of California Health and Safety Code Section 33000 entitled "Community Development Law". The primary purpose of the Agency is to serve as the second "public agency" in the formation of JPA. It is not intended that the Agency conduct any activities other than to participate in the JPA formation process. The JPA will be formed to facilitate the purpose of executing Marks -Roos bond offerings. There was no financial activity during the fiscal year 2003-2004. The City of Chino Hills Public Financing Authority The City of Chino Hills Public Financing Authority (the Authority) was created by a joint exercise of joint powers agreement between the City of Chino Hills and the Chino Hills Redevelopment Agency on November 12, 2003 by virtue of the laws of the State of California pursuant to Section 2.02 hereof. The purpose of the Authority is to provide, through the issuance of debt, financing necessary for various capital improvements. The authority is administered by the Board who are the members of the City Council and the Mayor. The Authority's primary source of income will be installment sale, loan and lease payments received from the City which will be used to meet the debt service requirements on debt issues. The authority does not have taxing power. Separate financial statements for the Authority are not prepared. 31 City of Chino Hills Notes to Financial Statements (Continued) Note 1: Summary of Significant Accounting Policies (Continued) b. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. c. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. 32 City of Chino Hills Notes to Financial Statements (Continued) Note 1: Summary of Significant Accounting Policies (Continued) The City reports the following major governmental funds: The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Lighting and Landscape District Special Revenue Fund accounts for receipts and expenditures of money in the benefit assessment district zones for operating expenditures, maintenance, and capital outlay for street lighting, landscaping and parks located within the district. The Existing Infrastructure Fee Special Revenue Fund accounts for receipts and expenditures of money in the facilities development program which provides for the reimbursement of expenditures to property owners who constructed the facilities in the program. The Capital Improvement Fund accounts for receipts and expenditures of money for construction of various projects. The City reports the following major proprietary funds: The Water Utility Fund accounts for the revenues and expenses for the operation, maintenance, and facilities improvements of the City's water production, transmission and distribution system. The Sewer Utility Fund accounts for the revenues and expenses for the collection and treatment (via contract) of the liquid waste generated within the City. Additionally, the City reports the following fund types: Special Revenue Funds used to account for taxes and other revenues, which are set aside for a specific purpose in accordance with law or administrative regulation. Capital Projects Funds used to account for resources used for the acquisition and construction of major capital facilities. Internal Service Funds used to account for the financing of goods and services provided by one department to other departments of the City. Agency Funds used to account for money and property held by the City as trustee or custodian. They are also used to account for various assessment districts and community facilities districts for which the City acts as an agent for debt service activity. Private -sector standards of accounting and financial reporting issued prior to December 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private -sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private -sector guidance. 33 City of Chino Hills Notes to Financial Statements (Continued) Note 1: Summary of Significant Accounting Policies (Continued) As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the government's proprietary funds function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Enterprise Funds and of the Internal Service Funds are charges to customers for sales and services. Operating expenses for Enterprises Funds and Internal Service Funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. d. Assets, Liabilities and Net Assets or Equity Cash and Investments All cash and investments, except those which are held by fiscal agents, are held in a City pool. These pooled funds are available upon demand and, therefore, are considered cash and cash equivalents for purposes of the statement of cash flows. Investments held by fiscal agents with an original maturity of three months or less are also considered cash equivalents. Investments for the City are reported at fair value. The City's policy is generally to hold investments until maturity, or until market values equal or exceed cost. The State Treasurer's Investment Pool and Counties Treasurer's Investment Pool operate in accordance with appropriate state laws and regulations. The reported value of the pool is the fair value of the pool shares. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds". Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances". 34 City of Chino Hills Notes to Financial Statements (Continued) Note 1: Summary of Significant Accounting Policies (Continued) Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. All trade and property tax receivables are shown net of an allowance for uncollectibles. Property tax revenue is recognized on the modified accrual basis, that is, in the fiscal year for which the taxes have been levied providing they become available. Available means then due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. The County of San Bernardino collects property taxes for the City. Tax liens attach annually as of 12:01 A.M. on the first day in March preceding the fiscal year for which the taxes are levied. Taxes are levied on both real and personal property as it exists on that date. The tax levy covers the fiscal period July 1 to June 30. All secured personal property taxes and one-half of the taxes on real property are due November 1; the second installment is due February 1. All taxes are delinquent, if unpaid, on December 10 and April 10, respectively. Unsecured personal property taxes become due on the first of March each year and are delinquent, if unpaid, on August 31. Functional Classifications Expenditures of the Governmental Funds are classified by function. Functional classifications are defined as follows: General Government includes legislative activities which have a primary objective of providing legal and policy guidelines for the City. Also included in this classification are those activities which provide management or support services across more than one functional area. Public Safety includes those activities which involve the protection of people and property. Public Works includes those activities which involve the maintenance and improvement of City streets, roads and park development and maintenance. Community Development includes those activities, which involve the enhancing of the general quality of life. Culture and Leisure includes those activities which involve recreation. Capital Outlay includes those activities which involve the acquisition of capital assets. Debt Service includes those activities that account for the payment of long-term debt principal, interest and fiscal charges. 35 City of Chino Hills Notes to Financial Statements (Continued) Note 1: Summary of Significant Accounting Policies (Continued) Inventories and Prepaid Items Materials and supplies consist of water pipe, meters, valves, tools and miscellaneous items used in installing, monitoring and repairing these items. The water pipe, meters, valves and long-term items are removed from inventory and capitalized as fixed assets and depreciated upon installation. The remaining items are recorded as expenses when used in accordance with the consumption method. Inventories are recorded at the lower of cost or market on a first -in, first -out (FIFO) basis. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. The fund balances in the governmental fund types have been reserved for amounts equal to the prepaid items in the fund -level statements, since these amounts are not available for appropriation. Restricted Assets Certain proceeds of debt issues, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. In addition, funds have been restricted for future capital improvements by City resolution. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. In accordance with GASB Statement No. 34, the City has reported its general infrastructure assets, which includes streets, sidewalks, curbs and gutters, handicap ramps, trails and equestrian fencings. The City has assigned no value to its rights of way. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. Property, plant and equipment of the primary government, as well as the component units, is depreciated using the straight-line method over the following estimated useful lives: 36 City of Chino Hills Notes to Financial Statements (Continued) Note 1: Summary of Significant Accounting Policies (Continued) Asset Years Equipment 3-12 Vehicles 4-10 Utility Plant in Service 5-100 Meters 15 Pipeline in Service 30-50 Infrastructure 20-60 Intangible Assets Intangible assets are capitalized at cost, while contributed assets are recorded at fair market value at the time received. Amortization has been provided on a straight-line basis over their estimated useful lives as follows: Asset Water Rights Capacity Rights Deferred Charges Years 40 40 Deferred charges consist of issuance costs representing capitalized costs incurred in connection with the issuance of long-term debt in proprietary funds. These costs are amortized on a straight-line basis. Balance at July 1, 2003 $ 559,975 2003-2004 amortization expense 59,464 Balance at June 30, 2004 $ 619,439 Compensated Absences In accordance with GASB Code Section C60, the City of Chino Hills records a liability for vacation and compensatory leave that is earned and unused at year-end; sick leave liability recorded has been estimated using the "vesting method" which is calculated "... based on the sick leave accumulated at the balance sheet date by those employees who currently are eligible to receive termination payments as well as other employees who are expected to become eligible in the future to receive such payments." Vacation, sick and compensatory leave liabilities relating to governmental funds have been recorded in the General Long -Term Debt Account Group, as these amounts are expected to be paid from future resources; liabilities relating to proprietary funds are recorded within those respective funds. 37 City of Chino Hills Notes to Financial Statements (Continued) Note 1: Summary of Significant Accounting Policies (Continued) Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance cost are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. e. Reconciliation of Government -Wide and Fund Financial Statements Explanation of certain differences between the governmental fund balance sheet and the government -wide statement of net assets: The governmental fund balance sheet includes reconciliation between fund balance - governmental funds and net assets of governmental activities as reported in the government -wide statement of net assets. One element of that reconciliation explains that "long-term debts and compensated absences have not been included in the governmental fund activity". The details of the $39,655,412 long-term debt difference are as follows.- Long-term ollows: Long-term debt: Advances from developers Development fee program obligations Capital lease obligations Equestrian center lease Net adjustment to reduce fund balance of total governmental funds to arrive at net assets of governmental activities 38 $ 890,550 38,654,852 119,992 18 $ 39,665,412 City of Chino Hills Notes to Financial Statements (Continued) Note 1: Summary of Significant Accounting Policies (Continued) Explanation of certain differences between the governmental fund statement of revenues, expenditures and changes in fund balances and the government -wide statement of activities: The governmental fund statement of revenues, expenditures and changes in fund balances includes a reconciliation between net changes in fund balances - of total governmental funds and changes in net assets of governmental activities as reported in the government -wide statement of activities. One element of that reconciliation explains that "Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this $2,830,598 difference are as follows: Capital outlay $ (5,544,034) Depreciation expense 8,374,632 Net adjustment to increase net changes in fund balances of total governmental funds to arrive at changes in net assets of governmental activities $ 2,830,598 II. STEWARDSHIP Note 2: Stewardship, Compliance and Accountability a. Budget Procedures All financial activities of the General Fund, Special Revenue Funds and Capital Projects Funds are part of the appropriated budget. Appropriated amounts are as originally adopted or as amended by the City Council throughout the year. The following general procedures are followed in establishing the annual budget: 1. The annual budget adopted by the City Council provides for the general operation of the City. It includes proposed expenditures and estimated revenues. 2. The City Manager is authorized to transfer appropriations between programs and funds up to $10,000 without approval by the City Council. In addition, the City Manager has unlimited authority to transfer appropriations between items and accounts within the same department funded by the General Fund and within the same function funded by a special revenue, debt service or capital projects fund. 3. The budget is formally integrated into the accounting system and employed as a management control device during the year for all funds. 4. The budget is adopted on an annual basis. 5. The budget is adopted on a basis which differs from accounting principles generally accepted in the United States of America in that encumbrances are included as expenditures. The modified accrual basis of accounting is employed in the preparation of the budget. 39 City of Chino Hills Notes to Financial Statements (Continued) Note 2: Stewardship, Compliance and Accountability (Continued) 6. At fiscal year-end, operating budget appropriations lapse; however, incomplete capital improvement project appropriations within Capital Projects Funds, and authorized non -capital appropriations are rebudgeted in the following fiscal year. 7. The legally adopted budget requires that expenditures not exceed appropriations at the department level for the General Fund and the fund level for Special Revenue and Capital Projects Funds. Encumbrances Encumbrance accounting is employed as an extension of formal budgetary integration in governmental funds. Encumbrances, such as purchase orders, contracts and other commitments for the expenditure of monies, are reported as reservations of fund balances. Outstanding encumbrances at year-end are reappropriated in the following year. b. Deficit Fund Equity The Existing Infrastructure Fee Fund has a fund balance deficit of $320,145. This deficit will be eliminated in future years by future development fees. Note 3: Cash and Investments As of June 30, 2004, cash and investments were reported in the accompanying financial statements as follows: Governmental activities Business -type activities Fiduciary funds Total Cash and Investments $ 57,901,259 29,350,053 52,829,286 $ 140,080,598 The City of Chino Hills maintains a cash and investment pool that is available for use for all funds. Each fund type's position in the pool is reported on the combined balance sheet as cash and investments. The City has adopted an investment policy, which authorizes it to invest in various investments. The City early implemented the provisions of GASB Statement No. 40, Deposit and Investment Risk Disclosures, for the year ended June 30, 2004. This statement establishes and modifies disclosure requirements related to investment and deposit risks; accordingly, the note disclosure on cash and investments has been revised to conform to the provisions of GASB Statement No. 40. Deposits At June 30, 2004, the carrying amount of the City's deposits was $452,339, and the bank balance was $1,107,702. The $655,363 difference represents outstanding checks and other reconciling items. 40 City of Chino Hills Notes to Financial Statements (Continued) Note 3: Cash and Investments (Continued) Credit Risk The City's investment policy limits investments in medium-term notes (MTN's) to those rated "A" or higher by Standard and Poor's (S&P) or by Moody's. As of June 30, 2004, the City did not have investment in medium-term notes. Investments in U.S. government securities are not considered to have credit risk and, therefore, their credit quality is not disclosed. As of June 30, 2004, the City's investments in external investment pools and money market mutual funds are unrated. Custodial Credit Risk The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. As of June 30, 2004, none of the City's deposits or investments were exposed to custodial credit risk. Concentration of Credit Risk The City's investment policy imposes restrictions for certain types of investments with any one issuer. With respect to concentration risk, as of June 30, 2004, the City has not invested more than 10% of its total investments in any one issuer. Investments guaranteed by the U.S. government and investments in mutual funds and external investment pools are excluded from this requirement. Interest Rate Risk The City's investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The City's investment policy states that purchases of investments will be restricted to securities with a final state maturity not to exceed three years. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk. As of June 30, 2004, the City had the following investments and original maturities: Money Market Mutual Funds - held by fiscal agent Investment Agreements California Local Agency Investment Fund L.os Angeles County Investment Pool San Bernardino County Investment Pool W Investment Maturities (in Years) Less Fair Than 1 1 -5 Value $ 7,882,078 $ - $ 7,882,078 - 2,036,757 2,036,757 35,980,754 - 35,980,754 54,435,436 - 54,435,436 39,293,234 - 39,293,234 $137,591,502 $ 2,036,757 $139,628,259 City of Chino Hills Notes to Financial Statements (Continued) Note 4: Interfund Receivable, Payable and Transfers The composition of interfund balances as of June 30, 2004 is as follows: Due To/From Other Funds Funds Due From Other Funds: General Lighting and Landscape Capital Improvement Water Utility Sewer Utility Nonmajor Governmental Funds Total Due to Other Funds Lighting and Nonmajor General Landscape Sewer Governmental Fund District Utility Funds Total $ - $ $ $ 356,653 $ 356,653 301,800 - 301,800 29,584 29,584 15,348 106,588 87 6,143 128,166 - - - 2,048 2,048 - - 175,900 175,900 $ 317,148 $ 106,588 $ 87 $ 570,328 $ 994,151 The due to General Fund includes $264,000 from the City Facilities Fee Fund which was for the repayment of a loan for a City Yard project. The due to the Lighting and Landscape District Fund for $301,800 from the General Fund is for the Sport Park Project. The other interfund balances were the results of routine interfund transactions not cleared prior to year-end. Advances to/from Other Funds Funds Advances from Other Funds: General Fund Lighting and Landscape District Water Utility Nonmajor Governmental Fund Fiduciary Fund Total During the prior years, the Lighting and Landscape District Fund and the Sewer Utility Fund advanced $3,910,400 and $3,462,200, respectively, to the General Fund for the Big League Dream Sports Park Project. Also the Sewer Utility Fund advanced $3,421,200 to the Water Utility Fund for construction of various projects. 42 Advances to Other Funds Lighting and Nonmajor General Landscape Water Sewer Governmental Fund District Utility Utlity Funds Total $ $ 1,275,720 $ 3,618,977 $ 353,917 $ 2,579,601 $ 7,828,215 2,650,480 - 3,750,511 - 6,400,991 - 3,421,200 - 3,421,200 774,200 - 527,700 1,301,900 - - 901,584 - 901,584 $ 774,200 $ 3,926,200 $ 4,520,561 $ 7,525,628 $ 3,107,301 $ 19,853,890 During the prior years, the Lighting and Landscape District Fund and the Sewer Utility Fund advanced $3,910,400 and $3,462,200, respectively, to the General Fund for the Big League Dream Sports Park Project. Also the Sewer Utility Fund advanced $3,421,200 to the Water Utility Fund for construction of various projects. 42 City of Chino Hills Notes to Financial Statements (Continued) Note 4: Interfund Receivable, Payable and Transfers (Continued) Interfund Transfers Transfers In General Fund Lighting and Landscape District Capital Improvement Water Utility Sewer Utility Total The transfers into the General Fund in the amount of $58,585 was for the reimbursement of engineering administration costs and grant expenditures. The transfers in to the Capital Improvement Fund from the other funds was to cover construction costs of various projects. Note 5: Capital Assets Capital asset activity for the year ended June 30, 2004 was as follows: Governmental Activities: Capital assets, not being depreciated: Land Total Capital Assets, Not Being Depreciated Capital assets, being depreciated: Buildings Structures other than buildings Equipment Vehicles Pipeline in service Infrastructure Total Capital Assets, Being Depreciated Less accumulated depreciation: Buildings Structures other than buildings Equipment Vehicles Pipeline in service Infrastructure Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Governmental Activities Capital Assets, Net Beginning Ending Balance Increases Decreases Balance $ 17,582,563 Transfers Out $ 18,277,515 2,761,319 651,750 17,582,563 Lighting and 18,277,515 - 2,544,199 761,600 8,654,560 General Landscape Sewer Nonmajor Internal 1,321,981 Fund District Utility Governmental Service Funds Total $ $ $ $ 58,585 $ 624,200 $ 682,785 - 190,900 190,900 1,996,300 928,766 2,984,102 5,909,168 50,000 - 218,300 268,300 - - - 141,600 141,600 $ 1,996,300 $ 928,766 $ 50,000 $ 3,042,687 $ 1,175,000 $ 7,192,753 The transfers into the General Fund in the amount of $58,585 was for the reimbursement of engineering administration costs and grant expenditures. The transfers in to the Capital Improvement Fund from the other funds was to cover construction costs of various projects. Note 5: Capital Assets Capital asset activity for the year ended June 30, 2004 was as follows: Governmental Activities: Capital assets, not being depreciated: Land Total Capital Assets, Not Being Depreciated Capital assets, being depreciated: Buildings Structures other than buildings Equipment Vehicles Pipeline in service Infrastructure Total Capital Assets, Being Depreciated Less accumulated depreciation: Buildings Structures other than buildings Equipment Vehicles Pipeline in service Infrastructure Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Governmental Activities Capital Assets, Net Beginning Ending Balance Increases Decreases Balance $ 17,582,563 $ 694,952 $ $ 18,277,515 2,761,319 651,750 17,582,563 694,952 18,277,515 - 2,544,199 761,600 8,654,560 17,567,614 26,222,174 9,328,964 - 9,328,964 1,321,981 88,907 17,720 1,393,168 2,567,880 361,885 282,776 2,646,989 217,375 - - 217,375 213,578,148 6,891,798 - 220,469,946 235,668,908 24,910,204 300,496 260,278,616 2,761,319 651,750 - 3,413,069 1,957,732 586,467 - 2,544,199 761,600 136,232 17,720 880,112 1,881,896 202,204 273,605 1,810,495 6,522 4,348 - 10,870 52,581,323 7,022,532 59,603,855 59,950,392 8,603,533 291,325 68,262,600 175,718,516 16,306,671 9,171 192,016,016 $ 193,301,079 $ 17,001,623 $ 9,171 $ 210,293,531 43 City of Chino Hills Notes to Financial Statements (Continued) Note 5: Capital Assets (Continued) Business -Type Activities: Capital assets, not being depreciated: Land Easements Con struction-i n -p rogress Total Capital Assets, Not Being Depreciated Capital assets, being depreciated: Buildings and improvements Structure other than building Utility plant in service Pipeline in service Meters Equipment Total Capital Assets, Being Depreciated Less accumulated depreciation: Buildings and improvements Structure other than building Utility plant in service Pipeline in service Meters Equipment Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Business -Type Activities Capital Assets, Net Beginning Ending Balance Increases Decreases Balance $ 3,068,883 $ - $ $ 3,068,883 537,940 - - 537,940 12,472,967 4,007,298 1,172,206 15,308,059 16,079,790 4,007,298 1,172,206 18,914,882 1,007,023 - 1,007,023 290,234 - - 290,234 23,021,386 1,171,981 - 24,193,367 106,345,756 1,056,921 - 107,402,677 1,553,004 187,320 - 1,740,324 389,927 45,574 - 435,501 132,607,330 2,461,796 135,069,126 $ 782,052 183,238 34,560 217,798 16,275 10,065 26,340 6,607,726 601,406 7,209,132 26,423,133 2,551,409 28,974,542 867,983 98,532 966,515 264,356 29,324 293,680 34,362,711 3,325,296 37,688,007 98,244,619 (863,500) 97,381,119 $ 114,324,409 $ 3,143,798 $ 1,172,206 $ 116,296,001 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General Government $ 782,052 Culture and Leisure 770,085 Community Development 12,396 Public Safety 11,972 Public Works 7,027,028 Business -Type Activities: Water Utility 2,373,611 Sewer Utility 951,685 44 City of Chino Hills Notes to Financial Statements (Continued) Note 6: Long -Term Debt a. Governmental Activities The following is a summary of changes in the General Long -Term Debt for the year ended June 30, 2004: Balance at Balance at Due Within July 1, 2003 Adjustments' Additions Deletions June 30, 2004 One Year Compensated Absences $ 452,292 $ $ 992 $ 17,968 $ 435,316 $ 22,200 Advances from Developers 890,550 - 890,550 - Development Fee Program Obligations 37,414,062 3,001,247 1,760,457 38,654,852 Claim Payable 122,809 - 122,809 - - Capital Lease Obligations 191,286 (7,064) 64,230 119,992 71,676 Equestrian Center Lease 19 - 1 18 1 Totals $ 39,071,018 $ (7,064) $ 3,002,239 $ 1,965,465 $ 40,100,728 $ 93,877 *The total adjustment of $7,064 consists of changes in amounts owed on capital leases due to adjustments in lease terms. Long-term debt repayments per governmental funds financial statements. $ 1,459,123 Long-term debt payments made by Assessment District Agency Funds. Repayment is made by giving a building permit fee credit against assessments previously paid to the Assessment District Funds. 488,374 Compensated absences payouts. 17,968 Total Deletions per Changes in Long -Term Debt Schedule 1.965.465 Compensated Absences The City's policies relating to compensated absences are described in Note 1 of the Notes to Financial Statements. This liability will be paid in future years from the General Fund. $ 435.316 Advances From Developers Advances from developers represent monies owed to developers for development fees collected in advance. The City will repay these developers by allowing them to use the $2,700 credit per unit against their development fees as they obtain their building permit releases. There is no fixed repayment schedule. $ 890.552__ 45 City of Chino Hills Notes to Financial Statements (Continued) Note 6: Long -Term Debt (Continued) Development Fee Program Obligations The City has executed many agreements with outside developers requiring developers to provide funding up front for the costs of backbone infrastructure (major thoroughfares, water and sewer mains, etc.) concurrent with the development of their residential and commercial projects. This up -front funding is generally in the form of the developer constructing the backbone infrastructure. Future development fees will be used to reimburse the developers (either as credits against fees owed or cash reimbursements if not fully credited) for their costs. A liability has been recorded for the project costs incurred to date, including estimated construction- in - progress and estimated interest payable related to one of the projects. There is no fixed repayment schedule. Claims Payable This liability represented a settlement agreement with the Industry Urban Development Agency related to the acquisition of land and rights of way used for what is now Chino Hills Parkway. This liability was repaid in ten equal installments of $122,809 payable on January 15 of each year, commencing January 15, 1995, plus interest at the rate in effect pursuant to Section 1268.350 of the Code of Civil Procedure. The final payment was made in fiscal year 2003-2004. Capital Lease Obligations The City entered into lease purchase agreements throughout fiscal year 2000-2001 for ten copiers. $ 119,992 _ The debt service payments to maturity were as follows: Year Ending June 30 Principal Interest Total 2005 $ 71,676 $ 10,073 $ 81,749 2006 34,755 3,100 37,855 2007 10,674 1,136 11,810 2008 2,887 62 2,949 Subtotal $ 119,992 $ 14,371 $ 134,363 46 City of Chino Hills Notes to Financial Statements (Continued) Note 6: Long -Term Debt (Continued) Equestrian Center Lease I On December 30, 1996, the City entered into a lease with the McCoy Equestrian Center trust to provide property for the equestrian center. The lease is for a period of 25 years for $1 per year with options to renew on an annual basis. $ 18 b. Business -Type Activities The following is a summary of changes in Proprietary Funds debt for the year ended June 30, 2004: Balance at Balance at Due Within I July 1, 2003 Additions Deletions Defeasance June 30, 2004 One Year Advances for construction $ 36,769 $ $ 10,711 $ $ 26,058 $ Capital lease obligations 1,595 635 960 707 Development program obligations 3,237,533 - 3,237,533 - Certificates of participation 26,835,000 18,210,000 975,000 17,330,000 26,740,000 1,080,000 Compensated absences 122,056 - 4,819 - 117,237 2,500 Totals 30,232,953 $ 18,210,000 $ 991,165 $ 17,330,000 30,121,788 $ 1,083,207 Deferred amount on refunding (757,678) $ (1,586,212) $ 59,255 $ 757,678 (1,526,957) Unamoritzed bond discount (200,348) (46,962) 4,277 127,371 (115,662) Total Long -Term Debt $ 29,274,927 $ 28,479,169 Capital Lease Obligations The City entered into a lease purchase agreement for a copier. The debt service payments to maturity are as follows: June 30 Principal Interest Total 2005 $ 707 $ 68 $ 775 2006 253 5 258 Total $ 960 $ 73 $ 1,033 Certificates of Participation On May 1, 1996, the City issued $21,645,000 in Certificates of Participation. The certificates consist of serial certificates maturing in principal amounts of $420,000 to $1,440,000 beginning June 1997 through June 2015 with interest rates ranging from 4.65% to 7.00% and term certificates of $4,440,000 maturing on June 1, 2018 with an interest rate of 5.60%. The certificates were issued in order to advance refund $22.4 million of outstanding installments obligation due to the Inland Empire Public Facilities Corporation and Water Facilities Authority. There is no principal amount outstanding on the original debt at June 30, 2004. The entire amount of the bonds was defeased in the current year by the issuance of the 2003 Water COPS. 47 City of Chino Hills Notes to Financial Statements (Continued) Note 6: Long -Term Debt (Continued) On December 2, 2003, the City issued $18,210,000 in Certificates of Participation. The certificates consist of serial certificates maturing in principal amounts of $940,000 to $1,460,000 beginning June 2004 through June 2018 with interest rates ranging from 2.00% to 4.20%. The certificates were issued in order to refund $17,330,000 million of outstanding installments obligation due on the 1996 Water Certificates of Participation. The refunding of the 1996 Certificates of Participation resulted in a reduction of the City's total debt service payments over the next 14 years by $2.1 million and an economic gain (difference between the present values of the debt service payments on the old and new debt) of $1.5 million. $ 17,270,000 The annual requirements to amortize the Certificates of Participation outstanding as of June 30, 2004 were as follows: Year Ending June 30 Principal Interest Total 2005 $ 1,050,000 $ 559,295 $ 1,609,295 2006 1,060,000 538,295 1,598,295 2007 1,090,000 517,095 1,607,095 2008 1,110,000 495,295 1,605,295 2009 1,145,000 470,320 1,615,320 2010-2014 6,260,000 1,812,550 8,072,550 2015-2018 5,555,000 566,160 6,121,160 Total $ 17,270,000 $ 4,959,010 $ 22,229,010 On June 1, 2002, the City issued $9,545,000 in Certificates of Participation. The Certificates consist of serial certificates maturing in principal amounts of $20,000 to $685,000 beginning June 1, 2003 through June 2028 with interest rates ranging from 1.900% to 5.125% and term certificates of $3,140,000 maturing on June 1, 2032 with an interest rate of 5.300%. The Certificates were issued for the acquisition, construction and installation of certain improvements to the City's water system. 48 City of Chino Hills Notes to Financial Statements (Continued) Note 6: Long -Term Debt (Continued) The annual requirements to amortize the certificates of participation outstanding, as of June 30, 2004, were as follows: Year Ending June 30 2005 2006 2007 2008 2009 2010-2014 2015-2019 2020-2024 2025-2029 2030-2032 Total Advances for Construction Principal Interest Total $ 30,000 40,000 35,000 35,000 30,000 155,000 935,000 2,525,000 3,270,000 2,415,000 $ 9,470,000 $ 480,341 479,561 478,361 477,259 476,104 2,362,459 2,302,962 1,876,072 1,158,400 257,775 $ 10,349,294 In the agreement for the acquisition of the Pomona Valley Water Company (Pomona Valley), the City agreed to assume responsibility for repayment of certain cash advances made to Pomona Valley by various developers and individuals under individual contracts for the construction of main extension pipeline and special facilities. The advances are to be repaid, without interest, based on a percentage of water revenues received from the main extension pipeline payable annually and within 20 years of the origination of each individual advance. Development Program Obligations The City has executed many agreements with outside developers requiring developers to provide funding up -front for the costs of backbone infrastructure (major thoroughfares, water and sewer mains, etc.) concurrent with the development of their residential and commercial projects. This up -front funding is generally in the form of the developer constructing the backbone infrastructure. Future development fees will be used to reimburse the developers for their up -front funding. A liability has been recorded for the project costs incurred to date, including estimated construction -in - progress. Compensated Absences $ 510,341 519,561 513,361 512,259 506,104 2,517,459 3,237,962 4,401,072 4,428,400 2,672,775 $ 19,819,294 3.237.533 The City's policies relating to compensated absences are described in Note 1 of the Notes to Financial Statements. This liability will be paid in future years by the Water Utility Fund and the Sewer Utility Fund. $ 117,237 City of Chino Hills Notes to Financial Statements (Continued) Note 6: Long -Term Debt (Continued) c. Assessment District and Community Facilities District Bond Issues Excluded from the liabilities are special assessment and special tax bonds related to various special assessment districts and community facilities districts included within the City. The City acts as an agent for the property owners benefited by the projects financed from the bond proceeds in collecting the assessments and taxes, forwarding the collections to bond holders, and initiating foreclosure proceedings, if appropriate. Neither the faith and credit, nor the taxing power of the City, is pledged to the payment of the bonds, and the City is not legally obligated for payment of the bonds. Included in the Agency fund is $41,934,533 of funds due to bondholders relating to these obligations. The debt outstanding at June 30, 2004 consists of the following individual issues: 2000 $13,040,000 Community Facilities District No. 10, Special Tax Bonds, serial bonds due in annual installments of $35,000 to $405,000 through September 1, 2016, $2,040,000 term bonds due September 1, 2020 and $8,495,000 term bonds due September 1, 2030; interest ranging from 5.40% to 6.95%. $ 13,040,000 1998 $14,860,000 Community Facilities District No. 9, Special Tax Bonds, due in annual installments of $55,000 to $270,000 through September 1, 2010 plus term bonds due September 1, 2022 and September 1, 2023; interest rates varying from 4.40% to 6.45%. 7,595,000 1994 $7,265,000 Reassessment District of 1994, Limited Obligation Bonds due in annual installments of $380,000 to $420,000 through September 2, 2008; interest ranging from 5.50% to 7.50%. 1,390,000 1995 $26,440,000 Reassessment District of 1995, Limited Obligation Bonds due in annual installments of $120,000 to $975,000 through September 2, 2021; interest ranging from 4.90% to 7.20%. 13,185,000 2004 $14,560,000 Community Facilities District Special Tax Refunding Bonds due in annual installments of $1,530,000 to $2,075,000 through September 1, 2011; interest ranging from 2.00% to 3.00°/x. The bonds were issued to defease $3,725,000 of 1991 Community Facilities - District No. 2, Special Tax Bonds, Series "A", $5,815,000 of 1993 Community Facilities - District No. 1, Special Tax Refunding Bonds, $1,805,000 of 1993 Community Facilities - District No. 4, Special Tax Refunding Bonds, $1,340,000 of 1993 Community Facilities — District No. 5, Special Tax Refunding Bonds and $1,875,000 of 1993 Community Facilities - District No. 8, Special Tax Refunding Bonds. 14,560,000 Assessment District No. 80-1 The County of San Bernardino, prior to the City's incorporation in 1991, formed Assessment District No. 80-1. The County informed the City of the existence of this District and pursuant to the directive of the Local Agency Formation Commission, the City should have assumed the responsibility of the district upon its incorporation. 50 City of Chino Hills Notes to Financial Statements (Continued) Note 6: Long - Term Debt (Continued) Bonds issued for the district are $430,285 1980 Assessment District No. 80-1 serial bonds due in annual installments of $9,000 to $24,000 through July 2, 2021 with interest rate of 5%. The balance outstanding as of June 30, 2004 was $167,000. Note 7: Pension Plan Plan Description The City of Chino Hills contributes to the San Bernardino County Employees' Retirement Association (SBCERA), a cost-sharing multiple -employer public employee defined benefit pension plan. Although legally established as a single employer plan, the City of Chino Hills, the City of Big Bear Lake, the County Supervisors Association of California and the South Coast Air Quality Management District were later included along with the County of San Bernardino (the County) and are collectively referred to as the "Participating Members". Substantially all employees of the Participating Members are covered by the plan. SBCERA provides retirement and disability benefits, annual cost -of -living adjustments and death benefits to plan members and beneficiaries. SBCERA acts as a common investment and administrative agent for the Participating Members. Benefit provisions and all other requirements are established by the California County Employees' Retirement Act of 1937. Copies of SBCERA's annual financial report may be obtained from their executive office: 348 West Hospitality Lane, Third Floor, San Bernardino, CA 92415-0014. Funding Policy The contribution requirements of plan members and the City are established and may be amended by SBCERA. Employees are required to contribute a percentage of their annual compensation to the Plan based on the member's age at entry into the Plan. The City pays the employee's contribution up to 7% of their salary. The City also contributes an amount, based on actuarial assumptions that, together with employee contributions, is intended to provide sufficient reserves for payment of all prospective benefits to members. Employer rates are as follows: Category General Members Required Contributions Member Rates as a Percentage of Covered Payroll 12.66% For fiscal year 2003-2004, the City's annual pension cost of $1,453,912 for SBCERA was equal to the City's required and actual contributions. The required contribution was determined as part of the June 30, 2003 actuarial valuation using the Entry Age Normal Actuarial Cost Method, which is an accrued benefit method. The actuarial assumptions included 8.16% investment rate of return compounded annually, and projected salary increases of 4.25% a year compounded annually and attributable to inflation, across the board pay increases, and promotional and merit increases. 51 City of Chino Hills Notes to Financial Statements (Continued) Note 7: Pension Plan (Continued) a. Description of Self -Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the California Joint Powers Insurance Authority (the Authority). The Authority is composed of 106 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group - purchased insurance for property and other coverage. The Authority's pool began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The board operates through a nine - member Executive Committee. b. Self -Insurance Programs of the Authority General Liability - Each member government pays a primary deposit to cover estimated losses for fiscal year 2003-2004. Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Costs are spread to members as follows: the first $30,000 of each occurrence is charged directly to the member; costs from $30,001 to $750,000 are pooled based on a member's share of costs under $30,000; costs from $750,001 to $15,000,000 are pooled based on payroll. Costs of covered claims above $15,000,000 are currently paid by reinsurance. The protection for each member is $50,000,000 per occurrence and $50,000,000 annual aggregate. Workers' Compensation - The City also participates in the workers' compensation pool administered by the Authority. Pool deposits and retrospective adjustments are valued in a manner similar to the general liability pool. The City of Chino Hills is charged for the first $50,000 of each claim. Costs are pooled above that level to $50,000. Costs from $50,001 to $100,000 per claim are pooled based on the member's losses under its retention level. Costs between $100,001 and $2,000,000 per claim are pooled based on payroll. Cost between $2,000,000 and $50,000,000 are paid by excess insurance purchased by the Authority. Costs in excess of $50,000,000 are pooled by members based on payroll. c. Purchased Insurance Environmental Insurance - The City of Chino Hills participates in the pollution legal liability and remediation legal liability insurance, which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets and storm drains owned by the City of Chino Hills. Coverage is on a claims -made basis. There is a $50,000 deductible. The Authority has a limit of $120,000,000 for the three-year period from July 1, 2002 through June 30, 2005. Each member of the Authority has a $10,000,000 limit during the three-year term of the policy. 52 (Amount in Thousands) Percentage of Required Required Contributions Fiscal Year Contributions Contributed 6/30/2002 $1,043 100% 6/30/2003 $1,205 100% 6/30/2004 $1,454 100% Note 8: Liability, Property and Workers' Compensation Protection a. Description of Self -Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the California Joint Powers Insurance Authority (the Authority). The Authority is composed of 106 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group - purchased insurance for property and other coverage. The Authority's pool began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The board operates through a nine - member Executive Committee. b. Self -Insurance Programs of the Authority General Liability - Each member government pays a primary deposit to cover estimated losses for fiscal year 2003-2004. Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Costs are spread to members as follows: the first $30,000 of each occurrence is charged directly to the member; costs from $30,001 to $750,000 are pooled based on a member's share of costs under $30,000; costs from $750,001 to $15,000,000 are pooled based on payroll. Costs of covered claims above $15,000,000 are currently paid by reinsurance. The protection for each member is $50,000,000 per occurrence and $50,000,000 annual aggregate. Workers' Compensation - The City also participates in the workers' compensation pool administered by the Authority. Pool deposits and retrospective adjustments are valued in a manner similar to the general liability pool. The City of Chino Hills is charged for the first $50,000 of each claim. Costs are pooled above that level to $50,000. Costs from $50,001 to $100,000 per claim are pooled based on the member's losses under its retention level. Costs between $100,001 and $2,000,000 per claim are pooled based on payroll. Cost between $2,000,000 and $50,000,000 are paid by excess insurance purchased by the Authority. Costs in excess of $50,000,000 are pooled by members based on payroll. c. Purchased Insurance Environmental Insurance - The City of Chino Hills participates in the pollution legal liability and remediation legal liability insurance, which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets and storm drains owned by the City of Chino Hills. Coverage is on a claims -made basis. There is a $50,000 deductible. The Authority has a limit of $120,000,000 for the three-year period from July 1, 2002 through June 30, 2005. Each member of the Authority has a $10,000,000 limit during the three-year term of the policy. 52 City of Chino Hills Notes to Financial Statements (Continued) Note 8: Liability, Property and Workers' Compensation Protection (Continued) Property Insurance - The City of Chino Hills participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. The City of Chino Hills property is currently insured according to a schedule of covered property submitted by the City of Chino Hills to the Authority. Total all-risk property insurance coverage is $15,260,133. There is a $5,000 per loss deductible. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. Earthquake and Flood Insurance - The City of Chino Hills purchases earthquake and flood insurance on a portion of its property. The earthquake insurance is part of the property protection insurance program of the Authority. The City of Chino Hills property currently has earthquake protection in the amount of $12,588,873. There is a deductible of 5% of value with a minimum deductible of $100,000. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. Fidelity Bonds - The City of Chino Hills purchases blanket fidelity bond coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid annually and are not subject to retroactive adjustments. d. Adequacy of Protection During the past three fiscal years, none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year. The following is a summary of the changes in the claims liability over the past two fiscal years: Claims payable, June 30, 2002 $ 245,617 Payments (122,808) Claims payable, June 30, 2003 122,809 Payments (122,809) Claims payable, June 30, 2004 $ - Note 9: Contingencies a. Litigation The City is involved in several pending lawsuits of a nature common to many similar jurisdictions. City management estimates that potential claims against the City, not covered by insurance, will not have a material adverse effect on the financial statements of the City. b. Voter Initiatives The California Supreme Court issued an opinion in December 1995 relating to the validity of Proposition 62, which was passed by the voters in 1986 (the Guardino case). This case could potentially affect the City with respect to the monies the City received, and will receive, from the County of San Bernardino pursuant to the Measure I voter -approved initiative, and the monies the City has received, and will receive, from its business license fees and from its property transfer tax. The City cannot further assess its potential liabilities at this time until additional opinions are issued by the State of California courts. 53 City of Chino Hills Notes to Financial Statements (Continued) Note 9: Contingencies (Continued) Proposition 218, which was approved by the voters in November 1996, will regulate the City's ability to impose, increase and extend taxes, assessments and fees. Any new, increased, or extended taxes, assessments and fees subject to the provisions of Proposition 218, require voter approval before they can be implemented. Additionally, Proposition 218 provides that these taxes, assessments and fees are subject to the voter initiative process and may be rescinded in the future by the voters. Therefore, the City's ability to finance the services for which the taxes, assessments and fees were imposed may be significantly impaired. The taxes, fees and assessments that are subject to the provisions of Proposition 218 that the City currently imposes for its own benefit or as an agent for a special district, or receives from other governmental agencies potentially include the Measure I taxes, business license fees, community facilities districts, special taxes, landscape and lighting district assessments, street sweeping assessments, water utility fees, sewer utility fees and refuse disposal fees. Certain language in the initiative is unclear as to the scope and impact of the proposition. Future court rulings or state legislation may clarify these issues. At this time, it is uncertain how Proposition 218 will affect the City's ability to maintain or increase the revenue it receives from taxes, assessments and fees. 3. A general plan initiative was passed by City residents in November 1999, which removed the City Council's ability to increase residential density zoning. An increase in residential zoning density would require a majority voter approval. Current zoning on a significant amount of developable residential parcels in the City is of a lower density of units per acre than the density desired by residential developers. This change could significantly slow down development in the City due to the voter approval requirement. Overhead revenue from development is currently the General Fund's largest revenue source, therefore, a decrease in the amount of development could have a significant fiscal impact on the General Fund. Note 10: Joint Venture a. Water Facility Authority On February 19, 1980, the Water Facilities Authority (the Authority) was created under a joint exercise of powers agreement between the CSA 70 Zone CH (now part of the City of Chino Hills) and other local entities. It was formed for the acquisition and construction of facilities directly benefiting the participants by supplying water to the inhabitants within the boundaries of its members. Thus, each participant has an ongoing financial interest in the Authority. The governing Board of Directors consists of one member appointed from each participating agency and has approval of all budget and finance activities. The City's investment in the Authority has been recorded under the equity method of accounting and is shown as an investment in joint venture in the Water Enterprise Fund. On September 30, 1997, the Authority issued $24,455,000 in 1997 Refunding Certificates of Participation (COPS) for the purpose of refunding $25,820,000 of the outstanding 1986 COPS. The 1997 Refunding COPS carry interest rates from 4.00% to 5.30% and will be repaid in various principal increments with the final payment due on October 1, 2015. 6'il City of Chino Hills Notes to Financial Statements (Continued) Note 10: Joint Venture (Continued) Each participant in the joint venture has pledged gross revenues from its respective Enterprise Fund and has agreed to restrictive covenants that establish rates and charges for each respective water enterprise fund at levels sufficient to maintain net revenues equal to at least 1.25 times the aggregate amount of each respective party's installment payments to the Authority as well as any parity debt which shall become due and payable within the succeeding 12 months. On March 21, 1996, the Board of Directors of the Authority approved the prepayment by the City of Chino Hills of its installment payment obligation pursuant to the 1986 Installment Purchase Agreement between the Authority and its participants. As a result of such prepayment and redemption of such 1986 Certificates, the City of Chino Hills has no further obligation for the payment of installment payments to the Authority. The City's investment in the Authority at June 30, 2004 was $3,837,386. Audited financial information of the Authority for the fiscal year ended June 30, 2004 was summarized as follows: Water Facilities Authority Net Assets: Total assets Total liabilities Total Net Assets Water Facilities Authority Changes in Net Assets: Operating revenues Operating expenses Operating loss before depreciation and amortization Depreciation and amortization Operating revenue (loss) Nonoperating revenues (expenses) Contributions Change in net assets Beginning Net Assets Ending Net Assets 55 $ 39,859,612 21,585,037 $ 18,274,575 $ 16,292,891 (16,652,376) (359,485) (1,025,861) (1,385,346) 282,832 1,064,880 (37,634) 18,312,209 $ 18,274,575 City of Chino Hills Notes to Financial Statements (Continued) Note 10: Joint Venture (Continued) The participants and their audited financial contributions through June 30, 2004 were as follows: City of Chino Hills Monte Vista Water District City of Chino City of Ontario City of Upland Non -Participants Total Amount Percent $ 5,171,430 21.0% 3,840,740 15.6% 3,521,111 14.3% 7,497,529 30.4% 4,489,413 18.2% 107,399 0.4% $ 24,627,622 100.0% Financial statements of the Authority can be obtained from the office of Charles Z. Fedak & Co., 6801 Orange Avenue, Cypress, California 90630. b. Chino Basin Desalter Authority On January 15, 2002, the Chino Basin Desalter Authority (the Authority) was created under a joint exercise of powers agreement between the City of Chino Hills and other neighboring government agencies. This agreement was formed to successfully manage the groundwater resources in the Chino Basin. The governing Board of Director consists of one representative appointed from each participating agency and has the power and responsibility to adopt budgets, operating plans and finance activities to further the purpose of the Authority. The City's investment in the Authority has been recorded under the equity method of accounting and is shown as an investment in joint venture in the Chino Basin Desalter Authority. At June 30, 2004, the City's investment in the Authority was $620,436. On February 28, 2002, the Chino Basin Desalter Authority issued the 2002A Variable Rate Demand Desalter Revenue Bonds in the total amount of $100,000,000. The 2002A Bonds provided funding for the acquisition of the Chino Desalter No. 1 and to provide partial funding for the expansion of the Chino Desalter No. 1, (ii) the design and construction of Chino Desalter No. 2, and (iii) to fund capitalized interest and a debt service reserve fund. The variable rate bonds are due in annual installments of varying amounts through November 1, 2035. Unaudited financial information of the Authority for the fiscal year ended June 30, 2004 is summarized as follows: Chino Basin Desalter Authority Net Assets: Total assets Total liabilities Total Net Assets 56 $ 128,556,331 118,646,944 $ 9,909,387 City of Chino Hills Notes to Financial Statements (Continued) Note 10: Joint Venture (Continued) Chino Basin Desalter Authority Changes in Net Assets: Operating revenues Operating expenses Operating gain before depreciation and amortization Depreciation and amortization Operating revenue (loss) Nonoperating revenues (expenses) Contributions Change in net assets Beginning Net Assets Ending Net Assets $ 3,982,378 (3,406,447) 575,931 (1,671,478) (1,095,547) (18,123) 8,067,423 6,953,753 2,955,634 $ 9,909,387 The participants' unaudited contributions through June 30, 2004 were as follows: JCSD City of Chino Hills City of Chino City of Norco Total Note 11: Fund Equity Amount Percent $ 2,060,000 34.78% 1,287,500 21.74% 1,931,250 32.61% 643,750 10.87% $ 5,922,500 100.0% a. Reserves and Designations Fund balance reserves and designations are as follows: 57 Lighting and Existing Other General Landscape Infrastructure Capital Governmental Fund District Fee Improvement Funds Reserved: Encumbrances $ 207,499 $ 7,000 $ - $ 2,664,511 $ Acquisition of facilities - - 794,732 - Advances to other funds 774,200 3,926,200 Total Reserved $ 981,699 $ 3,933,200 $ 794,732 $ 2,664,511 $ 57 City of Chino Hills Notes to Financial Statements (Continued) Note 12: Fund Equity (Continued) Net assets have been restated as follows: Governmental Activities: Construction in progress expensed in prior year $ 19,688,327 Business -Type Activities: Receivable for the Monte Vista Interconnect Project was over accrued in prior year $ (2,739,438) Note 12: Commitments The City has no significant operating leases outstanding. It has ongoing agreements with developers in which the City will be required to reimburse the developers for the costs of infrastructure built. Lighting and Existing Other General Landscape Infrastructure Capital Governmental Fund District Fee Improvement Funds Designated: Special revenue funds $ $ $ $ $ 19,139,469 Capital project funds 2,914,495 Structural replacement 9,296 4,719,463 - Cash flow 3,225,244 2,898,175 - Emergencies and contingencies 9,474,082 - Special projects 548,682 - - - Total Designated $ 13,257,304 $ 7,617,638 $ $ - $ 22,053,964 b. Restatement of Fund Equity Beginning fund equity has been restated as follows: Proprietary Funds: Water Utility Fund: Receivable for the Monte Vista Interconnect Project was over accrued in prior year $ (2,739,438) Net assets have been restated as follows: Governmental Activities: Construction in progress expensed in prior year $ 19,688,327 Business -Type Activities: Receivable for the Monte Vista Interconnect Project was over accrued in prior year $ (2,739,438) Note 12: Commitments The City has no significant operating leases outstanding. It has ongoing agreements with developers in which the City will be required to reimburse the developers for the costs of infrastructure built. SUPPLEMENTARY INFORMATION CITY OF CHINO HILLS I N C O R P O R A T E D 1 9 9 1 CITY OF CHINO HILLS INC ORP ORATED 1 9 9 1 THIS PAGE INTENTIONALLY LEFT BLANK 59 CITY OF CHINO HILLS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2004 Assets: Cash and investments Receivables (net of allowances): Accounts Interest Taxes Special assessments Due from other governments Due from developers Due from other funds Advances to other funds Restricted assets: Cash and investments with fiscal agents Total Assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued liabilities Retentions payable Due to other funds Unearned revenue Advances from other funds Total Liabilities Fund Balances: Reserved for: Encumbrances Acquisition of facilities Advances to other funds Unreserved: Designated for: St t1 I t Special Revenue Funds Sleepy City Traffic Storm Drain Hollow Road Facilities Facilities Facilities Improvement Fees Fees Fees $ 60,804 $ 3,346,402 $ 3,996,431 $ 3,058,459 179 9,958 11,881 9,253 612 - - - 14,328 1,768 90,560 - 761,482 140,597 713,772 $ 61,595 $ 4,132,170 $ 4,150,677 $ 3,872,044 $ 19,931 $ 6,433 $ - $ 58,984 1,049 - - - - 264,000 - - 774,200 - - 20,980 1,044,633 - 58,984 - 23,150 - 196,349 1,708,296 - - 761,482 140,597 713,772 ruc ura rep acemen - - - - Undesignated 40,615 594,609 4,010,080 2,902,939 Total Fund Balances 40,615 3,087,537 4,150,677 3,813,060 Total Liabilities and Fund Balances $ 61,595 $ 4,132,170 $ 4,150,677 $ 3,872,044 Schedule 1 Page 2 of 4 Special Revenue Funds Parkland Traffic 2,608,154 Air Federal 1,534,430 Fee Signal Fee Gas Tax Quality Grant Measure 1 $ 2,203,605 $ 75,303 $ 2,468,252 $ 363,690 $ 472 $ 1,465,884 7,030 224 6,980 1,164 1 4,071 - - - - - 64,475 - - 132,922 22,997 65,673 - 963,750 - - - - - $ 3,174,385 $ 75,527 $ 2,608,154 $ 387,851 $ 66,146 $ 1,534,430 12,346 $ - 5,920 - 175,900 - - - 47,746 - 527,700 - - - - - 703,600 - - - 66,012 - - - 7,500 - - 963,750 - - - - - 1,507,035 75,527 2,608,154 380,351 134 1,534,430 2,470,785 75,527 2,608,154 387,851 134 1,534,430 $ 3,174,385 $ 75,527 $ 2,608,154 $ 387,851 $ 66,146 $ 1,534,430 61 CITY OF CHINO HILLS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2004 Assets: Cash and investments Receivables (net of allowances): Accounts Interest Taxes Special assessments Due from other governments Due from developers Due from other funds Advances to other funds Restricted assets: Cash and investments with fiscal agents Total Assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued liabilities Retentions payable Due to other funds Unearned revenue Advances from other funds Total Liabilities Special Revenue Funds Solid Street Frontline Miscellaneous Waste Sweeping Policing Grant $ 398,108 $ 281,821 $ 12,345 $ 160,341 834 85 4,055 - - - - 180,697 175,900 - 527,700 - - $ 778,797 $ 990,310 $ 12,430 $ 341,038 $ 725,699 $ 32,041 53,098 - - 29,584 - - - 311,454 778,797 32,041 341,038 Fund Balances: Reserved for: Encumbrances - - - - Acquisition of facilities - - - - Advances to other funds - 527,700 - - Unreserved: Designated for: Structural replacement - 98,506 - Undesignated - 332,063 12,430 - Total Fund Balances - 958,269 12,430 - Total Liabilities and Fund Balances $ 778,797 $ 990,310 $ 12,430 $ 341,038 RVA Capital Project Funds CFD # 9 CFD # 10 Rincon Fairfield Village Ranch $ 2,608,708 $ 176 Schedule 1 Page 4 of 4 Total Governmental Funds $ 20,500,801 - - 380,689 6,666 - 58,326 - - 64,475 - - 4,667 - - 402,289 - - 106,656 - - 175,900 - - 3,107,301 - 401,032 401,032 $ 2,615,374 $ 401,208 $ 25,202,136 $ 59,301 $ 11,249 31,537 - 90,838 11,249 1,574,424 - 950,112 389,959 2,524,536 389,959 $ 2,615,374 $ 401,208 63 $ 925,984 5,920 32,586 570,328 311,454 1,301,900 3,148,172 1,801,423 1,708,296 3,107,301 98,506 15,338,438 22,053,964 $ 25,202,136 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2004 Revenues: Special assessments Intergovernmental Charges for services Development fees Contribution from property owners Use of money and property Total Revenues Expenditures: Current: General government Public safety Public works Culture and leisure Capital outlay Debt service: Principal retirement Interest and fiscal charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances: Beginning of Year End of Year Special Revenue Funds Sleepy City Traffic Storm Drain Hollow Road Facilities Facilities Facilities Improvement Fees Fees Fees $ 10,930 $ $ - $ - - 700,281 86,411 783,292 524 28,798 41,546 27,381 11,454 729,079 127,957 810,673 25,971 - - 58,230 281,100 146,881 - - 100,311 - 17,270 - - 25,971 75,500 281,100 247,192 (14,517) 653,579 (153,143) 563,481 (87,423) (126,151) (246,600) (87,423) (126,151) (246,600) (14,517) 566,156 (279,294) 316,881 55,132 2,521,381 4,429,971 3,496,179 $ 40,615 $ 3,087,537 $ 4,150,677 $ 3,813,060 64 Schedule 2 Page 2 of 4 SDecial Revenue Funds Parkland Traffic Air Federal Fee Signal Fee Gas Tax Quality Grant Measure 1 - - 1,355,407 85,494 199,119 942,528 947,002 340 - - - - 24,102 730 20,582 5,199 223 12,493 971,104 1,070 1,375,989 90,693 199,342 955,021 80,300 100 554,278 - 11,704 - 646,282 100 - 65,403 - 102,645 13,820 - 119,985 - 102,645 199,208 - 324,822 970 1,375,989 (11,952) (470,763) - (856,160) (125,600) (470,763) - (856,160) (125,600) _ (145,941) 970 519,829 (137,552) 2,616,726 74,557 2,088,325 525,403 $ 2,470,785 $ 75,527 $ 2,608,154 $ 387,851 $ 65 134 955,021 (640,883) (640,883) 134 314,138 1,220,292 134 $ 1,534,430 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2004 Revenues: Special assessments Intergovernmental Charges for services Development fees Contribution from property owners Use of money and property Total Revenues Expenditures: Current: General government Public safety Public works Culture and leisure Capital outlay Debt service: Principal retirement Interest and fiscal charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances: Beginning of Year End of Year Special Revenue Funds Solid Street Frontline Miscellaneous Waste Sweeping Policing Grant $ $ 197,700 $ - $ - _ _ 109,162 489,107 3,220,533 - - - - 13,903 200 - 3,220,533 211,603 109,362 489,107 - - 150,000 - 3,220,533 263,850 - 3,220,533 263,850 150,000 - (52,247) (40,638) 489,107 (52,247) (40,638) (489,107) (489,107) 1,010,516 53,068 - $ - $ 958,269 $ 12,430 $ - Capital Project Funds CFD # 9 CFD # 10 Rincon Fairfield Village Ranch Schedule 2 Page 4 of 4 Total Governmental Funds $ - $ - $ 208,630 - 3,180,817 - 3,220,533 - 2,517,326 481,195 - 481,195 24,238 2,356 202,275 505,433 2,356 9,810,776 25,971 - 215,403 - 1,485 4,168,944 - - 119,985 327,286 11,248 338,534 654,589 - - 28,974 327,286 12,733 5,552,400 178,147 (10,377) 4,258,376 (3,042,687) (3,042,687) 178,147 (10,377) 1,215,689 2,346,389 400,336 20,838,275 $ 2,524,536 $ 389,959 $ 22,053,964 67 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE SLEEPY HOLLOW ROAD IMPROVEMENT YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Special assessments Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): General government Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Actual Original Final Amounts $ 55,132 $ 55,132 $ 55,132 Schedule 3A Variance with Final Budget Positive (Negative) 10,300 10,300 10,930 630 1,000 900 524 (376) 66,432 66,332 66,586 254 400 42,800 25,971 16,829 400 42,800 25,971 16,829 $ 66,032 $ 23,532 $ 40,615 $ 17,083 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE CITY FACILITIES FEES YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Developer fees Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Public works Debt service: Principal Interest and fiscal charges Transfers to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final $ 2,521,381 $ 2,521,381 Actual Amounts 2,521,381 Schedule 3B Variance with Final Budget Positive (Negative) 863,300 863,300 700,281 (163,019) 56,100 48,800 28,798 (20,002) 3,440,781 3,433,481 3,250,460 (183,021) 38,000 81,500 58,230 23,270 264,000 264,000 - 264,000 28,600 25,100 17,270 7,830 357,800 434,900 87,423 347,477 688,400 805,500 162,923 642,577 $ 2,752,381 $ 2,627,981 $ 3,087,537 $ 459,556 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE TRAFFIC FACILITIES FEES YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Developer fees Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Public works Transfers to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final $ 4,429,971 $ 4,429,971 Actual Amounts $ 4,429,971 Schedule 3C Variance with Final Budget Positive (Negative) 106,500 106,500 86,411 (20,089) 76,900 66,900 41,546 (25,354) 4,613,371 4,603,371 4,557,928 (45,443) 281,100 281,100 281,100 - 5,323,400 2,175,000 126,151 2,048,849 5,604,500 2,456,100 407,251 2,048,849 $ (991,129) $ 2,147,271 $ 4,150,677 $ 2,003,406 70 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE STORM DRAIN FACILITIES FEES YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Developer fees Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Public works Debt service: Principal Transfers to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Schedule 3D $ 3,742,479 $ 2,777,779 $ 3,813,060 $ 1,035,281 71 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) $ 3,496,179 $ 3,496,179 $ 3,496,179 $ - 1,266,100 1,407,100 783,292 (623,808) 36,200 31,500 27,381 (4,119) 4,798,479 4,934,779 4,306,852 (627,927) 191,900 376,400 146,881 229,519 - 141,000 100,311 40,689 864,100 1,639,600 246,600 1,393,000 1,056,000 2,157,000 493,792 1,663,208 $ 3,742,479 $ 2,777,779 $ 3,813,060 $ 1,035,281 71 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE PARKLAND FEES YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Developer fees Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Public works Debt service: Principal Interest and fiscal charges Transfers to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final $ 2,616,726 $ 2,616,726 Actua I Amounts $ 2,616, 726 Schedule 3E Variance with Final Budget Positive (Negative) 1,167,400 1,755,900 947,002 (808,898) 38,300 33,300 24,102 (9,198) 3,822,426 4,405,926 3,587,830 (818,096) 80,300 80,300 80,300 - 175,900 764,400 554,278 210,122 19,300 19,300 11,704 7,596 473,300 795,700 470,763 324,937 748,800 1,659,700 1,117,045 542,655 $ 3,073,626 $ 2,746,226 $ 2,470,785 $ (275,441) 72 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE TRAFFIC SIGNAL FEES YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Developer fees Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Public works Total Charges to Appropriations Budgetary Fund Balance, June 30 Schedule 3F 73 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) $ 74,557 $ 74,557 $ 74,557 $ - - - 340 340 1,400 1,200 730 (470) 75,957 75,757 75,627 (130) 100 100 100 - 100 100 100 - $ 75,857 $ 75,657 $ 75,527 $ (130) 73 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE GAS TAX YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Intergovernmental Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Transfers to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Actual Original Final Amounts $ 2,088,325 $ 2,088,325 $ 2,088,325 Schedule 3G Variance with Final Budget Positive (Negative) 1,284,400 1,284,400 1,355,407 71,007 38,800 33,800 20,582 (13,218) 3,411,525 3,406,525 3,464,314 57,789 2,193,700 1,823,900 856,160 967,740 2,193,700 1,823,900 856,160 967,740 $ 1,217,825 $ 1,582,625 $ 2,608,154 $ 1,025,529 74 CITY OF CHINO HILLS BUDGET COMPARISON SCHEDULE AIR QUALITY YEAR ENDED JUNE 30, 2004 Schedule 3H 75 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 525,403 $ 525,403 $ 525,403 $ - Resources (Inflows): Intergovernmental 70,400 70,400 85,494 15,094 Use of money and property 8,600 7,500 5,199 (2,301) Amounts Available for Appropriation 604,403 603,303 616,096 12,793 Charges to Appropriation (Outflow): Public works - 174,300 102,645 71,655 Transfers to other funds 151,200 252,000 125,600 126,400 Total Charges to Appropriations 151,200 426,300 228,245 198,055 Budgetary Fund Balance, June 30 $ 453,203 $ 177,003 $ 387,851 $ 210,848 75 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE FEDERAL GRANTS YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Intergovernmental Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Public safety Culture and leisure Public works Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final Schedule 31 Variance with Final Budget Actual Positive Amounts (Negative) 1,033,000 1,044,000 199,119 (844,881) 300 300 223 (77) 1,033,300 1,044,300 199,342 (844,958) 16,000 27,000 65,403 (38,403) 225,200 225,200 119,985 105,215 791,800 929,600 13,820 915,780 1,033,000 1,181,800 199,208 982,592 $ 300 $ (137,500) $ 134 $ 137,634 ILy CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE MEASUREI YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Intergovernmental Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Transfers to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final $ 1,220,292 $ 1,220,292 Actual Amounts $ 1,220,292 Schedule 3J Variance with Final Budget Positive (Negative) 800,500 710,500 942,528 232,028 23,200 20,200 12,493 (7,707) 2,043,992 1,950,992 2,175,313 224,321 1,623,100 1,507,800 640,883 866,917 1,623,100 1,507,800 640,883 866,917 $ 420,892 $ 443,192 $ 1,534,430 $ 1,091,238 77 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE SOLID WASTE YEAR ENDED JUNE 30, 2004 Schedule 3K 78 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ - $ - $ - $ - Resources (Inflows): Charges for services 3,269,100 3,339,200 3,220,533 (118,667) Amounts Available for Appropriation 3,269,100 3,339,200 3,220,533 (118,667) Charges to Appropriation (Outflow): Public works 3,150,500 3,220,600 3,220,533 67 Total Charges to Appropriations 3,150,500 3,220,600 3,220,533 67 Budgetary Fund Balance, June 30 $ 118,600 $ 118,600 $ - $ (118,600) 78 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE STREET SWEEPING YEAR ENDED JUNE 30, 2004 Schedule 3L 79 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 1,010,516 $ 1,010,516 $ 1,010,516 $ - Resources (Inflows): Special assessments 201,400 201,400 197,700 (3,700) Use of money and property 21,500 18,700 13,903 (4,797) Transfers from other funds 175,900 175,900 - (175,900) Amounts Available for Appropriation 1,409,316 1,406,516 1,222,119 (184,397) Charges to Appropriation (Outflow): Public works 267,300 267,300 263,850 3,450 Total Charges to Appropriations 267,300 267,300 263,850 3,450 Budgetary Fund Balance, June 30 $ 1,142,016 $ 1,139,216 $ 958,269 $ (180,947) 79 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE FRONTLINE POLICING YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Intergovernmental Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Public safety Total Charges to Appropriations Budgetary Fund Balance, June 30 Schedule 3M :N Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) $ 53,068 $ 53,068 $ 53,068 $ - 150,000 150,000 109,162 (40,838) 2,100 1,800 200 (1,600) 205,168 204,868 162,430 (42,438) 150,000 150,000 150,000 - 150,000 150,000 150,000 - $ 55,168 $ 54,868 $ 12,430 $ (42,438) :N CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE MISCELLANEOUS GRANTS YEAR ENDED JUNE 30, 2004 Schedule 3N 81 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ - $ - $ - $ - Resources (Inflows): Intergovernmental 1,558,900 1,860,200 489,107 (1,371,093) Amounts Available for Appropriation 1,558,900 1,860,200 489,107 (1,371,093) Charges to Appropriation (Outflow): Transfers to other funds 1,558,900 1,710,700 489,107 1,221,593 Total Charges to Appropriations 1,558,900 1,710,700 489,107 1,221,593 Budgetary Fund Balance, June 30 $ - $ 149,500 $ - $ (149,500) 81 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE CAPITAL IMPROVEMENT YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Contribution from property owners Transfers from other funds Amounts Available for Appropriation Charges to Appropriation (Outflow): Capital outlay Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final Schedule 30 Variance with Final Budget Actual Positive Amounts (Negative) 10,116,500 15,257,900 433,937 (14,823,963) 35,293,400 36,633,100 5,909,168 (30,723,932) 45,409,900 51,891,000 6,343,105 (45,547,895) 45,409,900 51,891,000 6,343,105 45,547,895 45,409,900 51,891,000 6,343,105 45,547,895 82 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE CFD #9 RINCON VILLAGE YEAR ENDED JUNE 30, 2004 Schedule 3P Variance with 83 Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 2,346,389 $ 2,346,389 $ 2,346,389 $ - Resources (Inflows): Contribution from property owners 449,900 449,900 481,195 31,295 Use of money and property 29,100 25,300 24,238 (1,062) Amounts Available for Appropriation 2,825,389 2,821,589 2,851,822 30,233 Charges to Appropriation (Outflow): Capital outlay 1,106,500 1,904,600 327,286 1,577,314 Total Charges to Appropriations 1,106,500 1,904,600 327,286 1,577,314 Budgetary Fund Balance, June 30 $ 1,718,889 $ 916,989 $ 2,524,536 $ 1,607,547 83 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE CFD #10 FAIRFIELD RANCH YEAR ENDED JUNE 30, 2004 Budgetary Fund Balance, July 1 Resources (Inflows): Use of money and property Amounts Available for Appropriation Charges to Appropriation (Outflow): Public works Capital outlay Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final $ 400,336 $ 400,336 Actual Amounts $ 400,336 Schedule 3Q Variance with Final Budget Positive (Negative) 2,900 2,500 2,356 (144) 403,236 402,836 402,692 (1 4D - - 1,485 (1,485) 350,000 342,500 11,248 331,252 350,000 342,500 12,733 329,767 $ 53,236 $ 60,336 $ 389,959 $ 329,623 CITY OF CHINO HILLS COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS JUNE 30, 2004 Assets: Current: Cash and investments Receivables (net of allowances): Accounts Interest Total Current Assets Noncurrent: Capital assets - net of accumulated depreciation Total Noncurrent Assets Total Assets Liabilities and Net Assets: Liabilities: Current: Accounts payable Accrued liabilities Compensated absences Total Current Liabilities Long -Term: Compensated absences Total Long -Term Liabilities Total Liabilities Net Assets: Invested in capital assets, net of related debts Unrestricted Total Net Assets Total Liabilities and Net Assets 85 Schedule 4 Equipment Data Maintenance Processing Total $ 2,669,237 $ 631,652 $ 3,300,889 12,979 28,329 41,308 7,891 1,848 9,739 2,690,107 661,829 3,351,936 847,209 48,274 895,483 847,209 48,274 895,483 $ 3,537,316 $ 710,103 $ 4,247,419 $ 48,636 $ 39,237 $ 87,873 4,302 - 4,302 500 - 500 53,438 39,237 92,675 5,859 - 5,859 5,859 - 5,859 59,297 39,237 98,534 847,209 48,274 895,483 2,630,810 622,592 3,253,402 3,478,019 670,866 4,148,885 $ 3,537,316 $ 710,103 $ 4,247,419 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2004 Operating Revenues: Charges for services Total Operating Revenues Operating Expenses: Salaries and benefits Professional and contractual services Repairs and maintenance Services and supplies Other general and administrative Depreciation Total Operating Expenses Operating Income (Loss) Non -Operating Revenues (Expenses): Interest income Loss on disposal of assets Total Non -Operating Revenues (Expenses) Net Income (Loss) Before Transfers Transfers Out Change in Net Assets Net Assets: Beginning of fiscal year End of fiscal year E:Z: Schedule 5 Equipment Data Maintenance Processing Totals $ 729,498 $ 360,300 $ 1,089,798 729,498 360,300 1,089,798 97,136 - 97,136 1,121 186,683 187,804 176,778 24,820 201,598 111,560 58,806 170,366 26,063 4,800 30,863 202,998 25,902 228,900 615,656 301,011 916,667 113,842 59,289 173,131 25,035 5,924 30,959 (9,171) - (9,171) 15,864 5,924 21,788 129,706 65,213 194,919 (800,000) (375,000) (1,175,000) (670,294) (309,787) (980,081) 4,148,313 980,653 5,128,966 $ 3,478,019 $ 670,866 $ 4,148,885 CITY OF CHINO HILLS STATEMENT OF CASH FLOWS COMBINING INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2004 Cash Flows from Operating Activities: Cash received from customers and users Cash payments to supplies for good and services Cash payments to employees for services Net Cash Provided (Used) by Operating Activities Cash Flows from Non -Capital Financing Activities: Cash transfer to other funds Due from other funds Net Cash Provided (Used) by Non -Capital Financing Activities Cash Flows from Capital and Related Financing Activities: Purchases of capital assets Net Cash Provided (Used) by Capital and Related Financing Activities Cash Flows from Investing Activities: Interest received Net Cash Provided (Used) by Investing Activities Net Increase (Decrease) in Cash and Cash equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Changes in assets and liabilities: (Increase) decrease in accounts receivable Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities Increase (decrease) in compensated absences Total Adjustments Net Cash Provided (Used) by Operating Activities Non -Cash Investing, Capital, and Financing Activities: There were no non-cash transactions during the fiscal year. 87 Schedule 6 Equipment Data $ 173,131 Maintenance Processing Total $ 716,519 $ 362,218 $ 1,078,737 (314,344) (257,123) (571,467) (95,613) - (95,613) 692 - 692 306,562 105,095 411,657 $ 306,562 $ 105,095 $ 411,657 (800,000) (375,000) (1,175,000) 1,500,000 - 1,500,000 700,000 (375,000) 325,000 (361,885) (10,909) (372,794) (361,885) (10,909) (372,794) 24,588 7,465 32,053 24,588 7,465 32,053 669,265 (273,349) 395,916 1,999,972 905,001 2,904,973 $ 2,669,237 $ 631,652 $ 3,300,889 $ 113,842 $ 59,289 $ 173,131 202,998 25,902 228,900 (12,979) 1,918 (11,061) 1,178 17,986 19,164 831 - 831 692 - 692 192,720 45,806 238,526 $ 306,562 $ 105,095 $ 411,657 Assets: Cash and investments Receivables: Accounts Interest Special assessments Restricted assets: Cash and investments with fiscal agent Total Assets Liabilities: Accounts payable Deposits Due to Inland Empire Utilities Agency Advances from other funds Funds held for others Total Liabilities CITY OF CHINO HILLS COMBINING BALANCE SHEET ALL AGENCY FUNDS JUNE 30, 2004 AD # 1980 AD # 1994 $ 65,144 $ 1,112,541 AD # 1995 $ 913,975 CFD # 1 Rolling Ridge $ 2,060,818 7 826 186 3,103 4,112 5,719 3,633 1,298 13,953 18,583 - 933,366 3,109,099 582,273 $ 68,963 $ 2,050,308 $ 4,041,139 $ 2,675,219 $ - $ 739 $ 3,687 $ 1,002 68,963 2,049,569 4,037,452 2,674,217 $ 68,963 $ 2,050,308 $ 4,041,139 $ 2,675,219 %R Schedule 7 Page 2 of 3 CFD # 2 CFD # 4 CFD # 5 CFD # 6 CFD # 8 CFD # 9 Los Ranchos The Oaks Rincon Village Carbon Canyon Butterfield Rincon Village $ 9,624,499 $ 9,735,043 $ 4,055,607 $ 1,171,466 $ 2,640,338 $ 2,338,618 7,876 7,826 7,826 - 7,826 - 28,474 28,727 12,782 3,441 8,123 6,973 33,929 12,475 33,998 2,451 20,533 12,980 372,995 180,740 134,178 - 187,749 1,482,625 $ 10,067,773 $ 9,964,811 $ 4,244,391 $ 1,177,358 $ 2,864,569 $ 3,841,196 $ 1,002 $ 1,002 $ 7,402 $ - $ 5,269 $ 752 - - 901,584 - - - 10,066,771 9,963,809 3,335,405 1,177,358 2,859,300 3,840,444 $ 10,067,773 $ 9,964,811 $ 4,244,391 $ 1,177,358 $ 2,864,569 $ 3,841,196 CITY OF CHINO HILLS COMBINING BALANCE SHEET ALL AGENCY FUNDS JUNE 30, 2004 Assets: Cash and investments Receivables: Accounts Interest Special assessments Restricted assets: Cash and investments with fiscal agent Total Assets Liabilities: Accounts payable Deposits Due to Inland Empire Utilities Agency Advances from other funds Funds held for others Total Liabilities Schedule 7 Page 3 of 3 CFD # 10 General Fairfield Ranch Agency Fund Totals $ 618,223 $ 10,289,888 $ 44,626,160 - - 39,180 1,560 - 103,200 21,361 - 175,194 1,220,101 - 8,203,126 $ 1,861,245 $ 10,289,888 $ 53,146,860 $ - $ 73,528 $ 94,383 4,441,948 4,441,948 5,774,412 5,774,412 - 901,584 1,861,245 - 41,934,533 $ 1,861,245 $ 10,289,888 $ 53,146,860 .f CITY OF CHINO HILLS Schedule 8 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30, 2004 91 Balance Balance July 1, 2003 Additions Deletions June 30, 2004 Special Assessment - District #1980 Assets: Cash and investments $ 39,926 $ 38,141 $ 12,923 $ 65,144 Receivables: Interest 442 186 442 186 Special assessments 115 3,633 115 3,633 Restricted assets: Cash and investments with fiscal agent 82,075 - 82,075 - Total Assets $ 122,558 $ 41,960 $ 95,555 $ 68,963 Liabilities: Funds held for others $ 122,558 $ 41,960 $ 95,555 $ 68,963 Total Liabilities $ 122,558 $ 41,960 $ 95,555 $ 68,963 Special Assessment - District #1994 Assets: Cash and investments $ 1,046,919 $ 430,233 $ 364,611 $ 1,112,541 Receivables: Interest 4,131 3,103 4,131 3,103 Special assessments 5,242 1,298 5,242 1,298 Restricted assets: Cash and investments with fiscal agent 950,496 361,142 378,272 933,366 Total Assets $ 2,006,788 $ 795,776 $ 752,256 $ 2,050,308 Liabilities: Accounts payable $ 187 $ 739 $ 187 $ 739 Funds held for others 2,006,601 795,037 752,069 2,049,569 Total Liabilities $ 2,006,788 $ 795,776 $ 752,256 $ 2,050,308 Special Assessment - District #1995 Assets: Cash and investments $ 1,194,972 $ 1,489,374 $ 1,770,371 $ 913,975 Receivables: Interest 4,913 4,112 4,913 4,112 Special assessments 20,631 13,953 20,631 13,953 Restricted assets: Cash and investments with fiscal agent 2,881,240 1,782,817 1,554,958 3,109,099 Total Assets $ 4,101,756 $ 3,290,256 $ 3,350,873 $ 4,041,139 Liabilities: Accounts payable $ 15,141 $ 3,687 $ 15,141 $ 3,687 Funds held for others 4,086,615 3,286,569 3,335,732 4,037,452 Total Liabilities $ 4,101,756 $ 3,290,256 $ 3,350,873 $ 4,041,139 91 CITY OF CHINO HILLS Schedule 8 (Continued) COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30, 2004 92 Balance Balance July 1, 2003 Additions Deletions June 30, 2004 Community Facilities District #1 Rolling Ridge Assets: Cash and investments $ 1,626,960 $ 1,398,048 $ 964,190 $ 2,060,818 Receivables: Accounts - 7,826 - 7,826 Interest 5,410 5,719 5,410 5,719 Special assessments 21,012 18,583 21,012 18,583 Restricted assets: Cash and investments with fiscal agent 946,000 2,046,176 2,409,903 582,273 Total Assets $ 2,599,382 $ 3,476,352 $ 3,400,515 $ 2,675,219 Liabilities: Accounts payable $ 1,525 $ 1,002 $ 1,525 $ 1,002 Funds held for others 2,597,857 3,475,350 3,398,990 2,674,217 Total Liabilities $ 2,599,382 $ 3,476,352 $ 3,400,515 $ 2,675,219 Community Facilities District #2 Los Ranchos Assets: Cash and investments $ 8,545,242 $ 3,172,391 $ 2,093,134 $ 9,624,499 Receivables: Accounts - 7,876 - 7,876 Interest 30,716 28,474 30,716 28,474 Special assessments 34,646 33,929 34,646 33,929 Restricted assets: Cash and investments with fiscal agent - 372,995 - 372,995 Total Assets $ 8,610,604 $ 3,615,665 $ 2,158,496 $10,067,773 Liabilities: Accounts payable $ 56 $ 1,002 $ 56 $ 1,002 Funds held for others 8,610,548 3,614,663 2,158,440 10,066,771 Total Liabilities $ 8,610,604 $ 3,615,665 $ 2,158,496 $10,067,773 92 CITY OF CHINO HILLS Schedule 8 (Continued) COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30, 2004 Community Facilities District #4 The Oaks Assets: Cash and investments Receivables: Accounts Interest Special assessments Restricted assets: Cash and investments with fiscal agent Total Assets Liabilities: Accounts payable Funds held for others Total Liabilities Community Facilities District #5 Rincon Village Assets: Cash and investments Receivables: Accounts Interest Special assessments Restricted assets: Cash and investments with fiscal agent Total Assets Liabilities: Accounts payable Advances from other funds Funds held for others Total Liabilities $ Balance $ 1,780,401 $ 891,266 Balance July 1, 2003 Additions - Deletions June 30, 2004 - 7,826 $ 9,042,312 $ 1,007,649 $ 314,918 $ 9,735,043 - 7,826 33,998 - 32,514 7,826 33,998 32,959 28,726 32,958 28,727 13,465 12,475 3,420,390 13,465 2,297,974 12,475 1,473,973 288,000 625,690 $ 732,950 $ 180,740 $ 9,376,736 $ 1,682,366 $ 1,094,291 $ 9,964,811 - - 901,584 2,516,324 $ 1,525 $ 1,002 $ 1,525 $ 1,002 3,420,390 9,375,211 1,681,364 $ 1,092,766 $ 9,963,809 $ 9,376,736 $ 1,682,366 $ 1,094,291 $ 9,964,811 $ 3,166,472 $ 1,780,401 $ 891,266 $ 4,055,607 - 7,826 - 7,826 12,404 12,782 12,404 12,782 32,514 33,998 32,514 33,998 209,000 462,967 537,789 134,178 $ 3,420,390 $ 2,297,974 $ 1,473,973 $ 4,244,391 $ 2,482 $ 7,402 $ 2,482 $ 7,402 901,584 - - 901,584 2,516,324 2,290,572 1,471,491 3,335,405 $ 3,420,390 $ 2,297,974 $ 1,473,973 $ 4,244,391 93 CITY OF CHINO HILLS Schedule 8 (Continued) COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30, 2004 94 Balance Balance July 1, 2003 Additions Deletions June 30, 2004 Community Facilities District #6 Carbon Canyon Assets: Cash and investments $ 979,787 $ 205,407 $ 13,728 $ 1,171,466 Receivables: Interest 3,747 3,441 3,747 3,441 Special assessments 5,080 2,451 5,080 2,451 Total Assets $ 988,614 $ 211,299 $ 22,555 $ 1,177,358 Liabilities: Funds held for others $ 988,614 $ 211,299 $ 22,555 $ 1,177,358 Total Liabilities $ 988,614 $ 211,299 $ 22,555 $ 1,177,358 Community Facilities District #8 Butterfield Assets: Cash and investments $ 2,440,483 $ 674,440 $ 474,585 $ 2,640,338 Receivables: Accounts - 7,826 - 7,826 Interest 9,225 8,123 9,225 8,123 Special assessments 19,385 20,533 19,385 20,533 Restricted assets: Cash and investments with fiscal agent 298,000 647,159 757,410 187,749 Total Assets $ 2,767,093 $ 1,358,081 $ 1,260,605 $ 2,864,569 Liabilities: Accounts payable $ 2,163 $ 5,269 $ 2,163 $ 5,269 Funds held for others 2,764,930 1,352,812 1,258,442 2,859,300 Total Liabilities $ 2,767,093 $ 1,358,081 $ 1,260,605 $ 2,864,569 Community Facilities District #9 Rincon Village Assets: Cash and investments $ 1,168,184 $ 2,168,412 $ 997,978 $ 2,338,618 Receivables: Interest 3,974 6,973 3,974 6,973 Special assessments 14,384 12,980 14,384 12,980 Restricted assets: Cash and investments with fiscal agent 1,828,417 1,724,083 2,069,875 1,482,625 Total Assets $ 3,014,959 $ 3,912,448 $ 3,086,211 $ 3,841,196 Liabilities: Accounts payable $ 1,320 $ 752 $ 1,320 $ 752 Funds held for others 3,013,639 3,911,696 3,084,891 3,840,444 Total Liabilities $ 3,014,959 $ 3,912,448 $ 3,086,211 $ 3,841,196 94 CITY OF CHINO HILLS Schedule 8 (Continued) COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30, 2004 95 Balance Balance July 1, 2003 Additions Deletions June 30, 2004 Community Facilities District #10 Fairfield Ranch Assets: Cash and investments $ 545,681 $ 981,124 $ 908,582 $ 618,223 Receivables: Interest 1,626 1,560 1,626 1,560 Special assessments 37,346 21,361 37,346 21,361 Restricted assets: Cash and investments with fiscal agent 1,221,846 891,593 893,338 1,220,101 Total Assets $ 1,806,499 $ 1,895,638 $ 1,840,892 $ 1,861,245 Liabilities: Funds held for others $ 1,806,499 $ 1,895,638 $ 1,840,892 $ 1,861,245 Total Liabilities $ 1,806,499 $ 1,895,638 $ 1,840,892 $ 1,861,245 General Agency Fund Assets: Cash and investments $ 7,595,495 $ 5,126,144 $ 2,431,751 $10,289,888 Total Assets $ 7,595,495 $ 5,126,144 $ 2,431,751 $10,289,888 Liabilities: Accounts payable $ 102,714 $ 73,528 $ 102,714 $ 73,528 Deposits 4,036,019 2,688,602 2,282,673 4,441,948 Due to Inland Empire Utilities Agency 3,456,762 2,364,014 46,364 5,774,412 Total Liabilities $ 7,595,495 $ 5,126,144 $ 2,431,751 $10,289,888 Total - All Agency Funds Assets: Cash and investments $ 37,392,433 $ 18,471,764 $ 11,238,037 $ 44,626,160 Receivables: Accounts - 39,180 - 39,180 Interest 109,547 103,199 109,546 103,200 Special assessments 203,820 175,194 203,820 175,194 Restricted assets: Cash and investments with fiscal agent 8,705,074 8,914,622 9,416,570 8,203,126 Total Assets $ 46,410,874 $ 27,703,959 $ 20,967,973 $ 53,146,860 Liabilities: Accounts payable $ 127,113 $ 94,383 $ 127,113 $ 94,383 Deposits 4,036,019 2,688,602 2,282,673 4,441,948 Due to Inland Empire Utilities Agency 3,456,762 2,364,014 46,364 5,774,412 Advances from other funds 901,584 - - 901,584 Funds held for others 37,889,396 22,556,960 18,511,823 41,934,533 Total Liabilities $ 46,410,874 $ 27,703,959 $ 20,967,973 $ 53,146,860 95 CITY OF CHINO HILLS INC ORP ORATED 1 9 9 1 THIS PAGE INTENTIONALLY LEFT BLANK STATISTICAL SECTION CITY OF CHINO HILLS I N C O R P O R A T E D 1 9 9 1 City of Chino Hills General Governmental Revenues by Source (1) Last Ten Fiscal Years (2) (In Thousand Dollars) (1) Includes General, Special Revenue, Debt Service, and Capital Projects Funds. (2) The City was incorporated on December 1, 1991. (3) Includes Contributions from Assessment Districts and Other Revenue. U. Special Licenses Use of Inter- Develop - Fiscal Assess- and Money and Govern- ment Year Taxes ments Permits Propertv mental Fees 1994-95 4,913 5,454 1,349 3,097 2,145 9,018 1995-96 5,031 5,151 1,492 2,796 1,992 7,594 1996-97 5,227 5,437 1,952 2,973 1,993 11,781 1997-98 5,982 5,216 2,981 3,269 1,709 14,150 1998-99 7,293 5,217 2,795 2,762 1,857 9,159 1999-00 8,549 5,256 2,668 3,426 1,906 8,371 2000-01 9,680 5,314 2,772 4,880 2,474 8,413 2001-02 10,634 5,321 1,855 2,984 2,894 9,149 2002-03 11,264 5,332 2,036 1,592 3,673 9,959 2003-04 11,657 5,356 1,733 1,057 3,181 3,764 Contri- butions Fiscal from Charges Fines Property for and Other Year Owners Services Forfeitures Revenue (3) Total 1994-95 647 3,525 178 5,045 35,371 1995-96 669 4,233 154 734 29,846 1996-97 718 6,985 150 1,982 39,198 1997-98 1,037 7,474 145 2,162 44,125 1998-99 5,622 8,226 257 2,133 45,321 1999-00 12,963 8,288 256 7,303 58,986 2000-01 350 8,152 267 2,973 45,275 2001-02 558 8,070 292 2,178 43,935 2002-03 996 9,370 302 1,150 45,674 2003-04 1,190 9,864 354 601 38,757 (1) Includes General, Special Revenue, Debt Service, and Capital Projects Funds. (2) The City was incorporated on December 1, 1991. (3) Includes Contributions from Assessment Districts and Other Revenue. U. City of Chino Hills General Governmental Expenditures by Function (1) Last Ten Fiscal Years (2) (In Thousand Dollars) (1) Includes General, Special Revenue, Debt Service, and Capital Projects Funds. (2) The City was incorporated on December 1, 1991. (3) Includes Contributions to Assessment Districts. (4) Contributions to Assessment Districts are included in the Public Works Program under the Existing Infrastructure Fee Fund. 97 General Community Culture Fiscal Govern- Public Public Develop- and Year ment Safety Works ment Leisure Other 1994-95 2,020 3,006 10,005 3,463 1,326 1,725 (3) 1995-96 3,514 3,131 10,476 1,769 868 2,102 (3) 1996-97 3,388 3,404 10,680 2,466 848 8,308 (3) 1997-98 3,410 3,402 12,341 3,946 1,065 5,949 (3) 1998-99 4,026 3,622 12,298 3,784 1,404 5,224 (3) 1999-00 4,610 3,631 19,493 4,605 4,576 2 (3) 2000-01 4,733 3,906 13,798 3,944 2,167 2,872 (3) 2001-02 4,579 4,347 13,230 3,615 2,266 1,761 (3) 2002-03 4,169 4,674 21,235 2,360 1,952 0 (4) 2003-04 5,185 5,263 17,199 2,673 2,160 0 (4) Fiscal Capital Debt Year Outlay Service Total 1994-95 8,233 10,344 40,436 1995-96 6,427 5,489 33,776 1996-97 4,238 6,066 39,398 1997-98 4,919 8,573 43,605 1998-99 13,108 8,465 51,931 1999-00 18,060 6,699 61,676 2000-01 3,887 4,919 40,226 2001-02 14,364 3,211 47,373 2002-03 11,380 3,360 49,130 2003-04 6,710 1,840 41,030 (1) Includes General, Special Revenue, Debt Service, and Capital Projects Funds. (2) The City was incorporated on December 1, 1991. (3) Includes Contributions to Assessment Districts. (4) Contributions to Assessment Districts are included in the Public Works Program under the Existing Infrastructure Fee Fund. 97 City of Chino Hills Secured Property Tax Levies And Collections (1) Last Ten Fiscal Years (2) Total Total Percent of Fiscal Current Current Levy Year Levy Collections Collected 1994-95 1,240,010 1,114,018 89.8% 1995-96 1,250,014 1,154,794 92.4% 1996-97 1,299,249 1,187,694 91.4% 1997-98 1,379,405 1,267,811 91.9% 1998-99 1,473,928 1,360,530 92.3% 1999-00 1,600,751 1,455,148 90.9% 2000-01 1,695,233 1,605,518 94.7% 2001-02 1,866,919 1,783,954 95.6% 2002-03 2,033,010 1,963,816 96.6% 2003-04 2,250,501 2,217,021 98.5% (1) Source : San Bernardino County Auditor/Controller-Recorder. (2) The City was incorporated on December 1, 1991. Assessed And Estimated Actual Values Of Taxable Property (1) Last Ten Fiscal Years (2) (In Thousand Dollars) Total Assessed Fiscal Real Personal & Estimated Full Year Property Property Exemptions Market Valuation 1994-95 2,922,716 30,394 67,986 3,021,096 1995-96 3,039,526 33,121 70,618 3,143,265 1996-97 3,172,581 35,792 71,667 3,280,040 1997-98 3,394,998 33,522 75,256 3,503,776 1998-99 3,681,005 36,219 77,763 3,717,224 1999-00 3,913,460 43,466 80,014 4,036,940 2000-01 4,143,434 45,091 .78,061 4,266,586 2001-02 4,591,137 45,347 83,251 4,719,735 2002-03 5,004,386 59,608 84,759 5,148,753 2003-04 5,515,100 61,579 89,910 5,666,589 (1) Source : San Bernardino County Auditor/Controller-Property Tax Division (2) The City was incorporated on December 1, 1991. m City of Chino Hills Property Value, Construction and Bank Deposits Last Ten Fiscal Years (1) (In Thousand Dollars) Property Value (2) Fiscal Year Commercial Residential Other Exemptions Total 1994-95 118,278 2,834,832 N/A 67,986 3,021,096 1995-96 204,341 2,868,306 N/A 70,618 3,143,265 1996-97 204,009 3,004,364 N/A 71,667 3,280,040 1997-98 227,893 3,200,627 N/A 75,256 3,503,776 1998-99 243,857 3,395,604 N/A 77,763 3,717,224 1999-00 (5) (5) N/A 80,014 4,036,940 2000-01 (5) (5) N/A 78,061 4,266,586 2001-02 (5) (5) N/A 83,251 4,719,735 2002-03 (5) (5) N/A 84,759 5,148,753 2003-04 192,198 5,221,647 162,834 89,910 5,666,589 Commercial Residential Construction (3) Construction (3) Fiscal Number Number Bank Year of Permits Value of Permits Value Deposits (4) 1994-95 0 0 1,696 96,949 92,816 1995-96 0 0 1,953 114,439 108,745 1996-97 N/A N/A 2,295 142,663 127,959 1997-98 N/A N/A 2,298 183,502 236,511 1998-99 N/A N/A 1,872 146,441 217,543 1999-00 N/A N/A 1,767 144,821 240,728 2000-01 N/A N/A 1,827 131,170 278,165 2001-02 N/A N/A 1,584 121,498 327,579 2002-03 N/A N/A 1,832 158,342 389,915 2003-04 N/A N/A 1,787 113,927 457,762 (1) The City was incorporated on December 1, 1991. (2) Source : San Bernardino County Auditor/Controller-Property Tax Division and HDL Coren & Cone. (3) Source: City of Chino Hills community development department. (4) Source : The Findley Reports. (5) Information was not available at time when this report was prepared. City of Chino Hills Computation of Direct and Overlapping Bonded Debt General Obligation Bonds (1) Fiscal Year 2003-04 Assessed Valuation: $5,666,589,281 Overlapping Tax and Assessment Debt: Metropolitan Water District Chaffey Community College District Certificates of Participation Chino Valley Unified School District City of Chino Hills 1915 Act Bonds City of Chino Hills - Community Facilities District #1 City of Chino Hills - Community Facilities District #2 City of Chino Hills - Community Facilities District #4 City of Chino Hills - Community Facilities District #5 City of Chino Hills - Community Facilities District #8 City of Chino Hills - Community Facilities District #9 City of Chino Hills - Community Facilities District #10 Total Overlapping Tax and Assessment Debt Direct and Overlapping General Fund Obligation Debt: San Bernardino County General Fund Obligations San Bernardino County Pension Obligations Chino Valley Unified School District Certificates of Participation City of Chino Hills West Valley Vector Control District Certificates of Participation Total Direct and Overlapping General Fund Obligation Debt COMBINED TOTAL DEBT Applicable 0.4640% 16.0060% 53.9670% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 7.31900% 7.31900% 53.9670% 100.0000% 43.7890% Debt 6/30/04 $ 2,076,284 7,405,176 39,584,795 14,742,000 5,815,000 3,725,000 1,805,000 1,340,000 1,875,000 7,595,000 13,040,000 $ 99,003,255 $ 70,693,123 58,352,235 32,415,279 0 241,438 $ 161,702,075 $ 260,705,330 (2) (1) Source : California Municipal Statistics, Inc. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded capital lease obligations. Ratios to Assessed Valuation Combined Direct Debt 0.00% Total Overlapping Tax and Assessment Debt 1.75% Combined Total Debt 4.60% Computation of Limitation to Debt Margin June 30, 2004 (In Thousand Dollars) Total Assessed Valuation Debt Margin Equal to 15 Percent of Assessed Valuation Limitation of Debt Margin Bonded Indebtedness as of June 30, 2004 100 $ 5,666,589 15% $ 849,988 Taxpayer Steadfast Crossroads 1 LLC Village Oaks Inc. Chino Hills LLC ERP Operating LP Chino Hills Mortgage LLC Pan Pacific Retail Properties Inc. Sears Roebuck & Co. LBK LP LDC Cougar LLC BRE Properties Inc. City of Chino Hills Principal Taxpayers (1) June 30, 2004 (In Thousand Dollars) Type of Business Commercial Residential Commercial Residential Vacant Land Commercial Commercial Residential Residential Residential, Vacant Land 2003-04 Percent Assessed of Total Valuation Valuation $ 31,747 0.56% 31,212 0.55% 29,600 0.52% 19,363 0.34% 19,219 0.34% 18,618 0.33% 13,892 0.25% 15,406 0.27% 14,659 0.26% 13,879 0.25% $ 207,595 3.68% Total Local Secured Assessed Valuation for FY 2003-04 : $5,604,985,688. (1) Source: HDL Coren & Cone. Property Tax Rates - All Direct and Overlapping Governments (1) & (2) Last Ten Fiscal Years Chino (1) Source : San Bernardino County Auditor/Controller-Recorder and Assessor. (2) Tax rates are per $100 of Assessed Valuation. (3) Property Tax Rates For FY 00-01. The FY 2001-02 information was not provided to the City by the San Bernardino County Auditor/Controller-Recorder Office at the time this report was prepared. 101 General Unified Metropolitan Fiscal Basic School Water Year Tax Levy District District Total 1994-95 1.0000 0.0288 0.0089 1.0377 1995-96 1.0000 0.0336 0.0089 1.0425 1996-97 1.0000 0.0490 0.0089 1.0579 1997-98 1.0000 0.0000 0.0089 1.0089 1998-99 1.0000 0.0000 0.0089 1.0089 1999-00 1.0000 0.0000 0.0089 1.0089 2000-01 1.0000 0.0000 0.0088 1.0088 2001-02 1.0000 0.0000 0.0088 1.0088 (3) 2002-03 1.0000 0.0490 0.0067 1.0557 2003-04 1.0000 0.0527 0.0061 1.0588 (1) Source : San Bernardino County Auditor/Controller-Recorder and Assessor. (2) Tax rates are per $100 of Assessed Valuation. (3) Property Tax Rates For FY 00-01. The FY 2001-02 information was not provided to the City by the San Bernardino County Auditor/Controller-Recorder Office at the time this report was prepared. 101 City of Chino Hills Miscellaneous Statistics (1) June 30, 2004 Date of Incorporation December 1, 1991 Form of Government Council -Manager Number of authorized full time positions 127 Area in square miles 46 Population: January 1, 1995 47,791 January 1, 1996 49,763 January 1, 1997 51,418 January 1, 1998 54,667 January 1, 1999 58,086 January 1, 2000 60,236 January 1, 2001 69,183 January 1, 2002 70,952 January 1, 2003 72,994 January 1, 2004 76,400 Facilities and services Miles of streets 186 Culture and Recreation: Parks 37 Park acreage 218 Sewage System: Miles of sanitary sewers 200 Miles of storm sewers 80 Number of service connections 19,395 Average daily treatment in gallons 6.5 Million Water System: Miles of water mains 245 Number of service connections 20,635 Average daily consumption in gallons 15.46 Million Total Storage 37.91 Million Facilities and services not included in the primary government Cable Television System: Miles of service 250 Number of satellite receiving stations 5 Education : Number of elementary schools 10 Number of secondary schools 5 (1) Source : City of Chino Hills, Chino Valley Unified School District, Adelphia Cablevision, and State of California. 102 CITY OF CHINO HILLS INC ORP ORATED 1 9 9 1 THIS PAGE INTENTIONALLY LEFT BLANK