HomeMy WebLinkAboutChico Urban Area Joint Powers Financing Authority Annual Financial Report for FY 2013CHICO URBAN AREA JOINT POWERS
FINANCING AUTHORITY
County of Butte
City of Chico, Successor Agency
to the
Chico Redevelopment Agency
�y.77 ,
\ RES @EN-mL J
i�L.CI
� CORIMERC'AL INOUSTRISI
Annual Financial Report
Year Ended June 30, 2013
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico)
Independent Auditors' Report,
Financial Statements and
Required Supplementary Information
Year Ended June 30, 2013
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico)
Year Ended June 30, 2013
Table of Contents
Page(s)
IndependentAuditors' Report ................................................................................. ............................... 1-2
Financial Statements:
Statement of Net Position and Governmental Funds Balance Sheet ....................... ............................... 3
Statement of Activities and Governmental Fund Revenues, Expenditures, and
Changesin Fund Balance ........................................................................................ ............................... 4
Notes to Financial Statements ................................................................................ ...........................5 -10
urrou.1
Valtrinek, Trine, Day & Co., LLP
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORTS
Board of Directors
Chico Urban Area Joint Powers Financing Authority
Chico, California
We have audited the accompanying financial statements of the governmental activities and each major fund of the
Chico Urban Area Joint Powers Financing Authority (the Authority), a component unit of the City of Chico,
California, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which
collectively comprise the Authority's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
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. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities and each major fund of the Authority, as of June 30, 2013, and
the respective changes in financial position for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
2151 River Plaza Drive, Suite 308 Sacramento, CA 95833 Tel: 916.570.1880 Fax: 916.570.1875 www.vtdcpa.com
FRESNO ^ LAGUNA HILLS • PALO ALTO , PLEASANTON - RANCHO CUCAMONGA • RIVERSIDE • SACRAMENTO
Other Matters
Required Supplementary Information
Management has omitted management's discussion and analysis that accounting principles generally accepted in
the United States of America requires to be presented to supplement the basic financial statements. Such missing
information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operation, economic, or historical context. Our opinion on the basic financial
statements is not affected by this missing information.
U,P
Sacramento, California
March 11, 2014
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico, California)
Assets
Current assets:
Cash and investments
Interest receivable
Total assets
Liabilities
Due to other governments
Noncurrent liabilities:
Loans payable
Total liabilities
Fund Balance /Net Position
Fund balances:
Restricted for sewer projects
Total fund balance
Net Position:
Unrestricted
Total net position
Statement of Net Position and
Governmental Funds Balance Sheet
June 30, 2013
Capital Projects
Fund
Adjustments
(Note II C)
Statement
of Net
Position
$ 9,723,433 $ - $ 9,723,433
5,672 - 5,672
$ 9,729,105 $ - $ 9,729,105
$ 3,266,813 $
$ 3,266,813
- 11,772,010 11,772,010
3,266,813 11,772,010 15,038,823
6,462,292 (6,462,292)
$ 6,462,292 (6,462,292)
(5,309,718) (5,309,718)
$ (5,309,718) $ (5,309,718)
See accompanying notes to financial statements.
3
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico, California)
Statement of Activities and
Governmental Fund Revenues, Expenditures, and
Changes in Fund Balance
Year Ended June 30, 2013
Expenditures:
Administrative expenses
Construction expenses
Total expenditures
Program revenues:
Intergovernmental revenue
Capital grants and contributions
Total program revenue
Net program (expense) revenue
General revenues:
Investment earnings
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Issuance of long -term debt
Total other financing souces
Change in fund balance /net position
Fund balance /net position:
Beginning of the year
End of the year
Capital Projects
Adjustments Statement
Fund
(Note II D) of Activities
$ 15,170
$ $ 15,170
7,291,044
7,291,044
7,306,214
7,306,214
1,900,000
1,900,000
(5,406,214)
29,207
(5,377,007)
(1,900,000) -
1,900,000 1,900,000
- 1,900,000
(5,406,214)
4,947,166 (4,947,166)
4,947,166 (4,947,166)
(429,841) (4,947,166)
29,207
(5,377,007)
(5,377,007)
6,892,133 (6,824,844) 67,289
$ 6,462,292 $(11,772,010) $ (5,309,718)
See accompanying notes to financial statements.
M
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico, California)
Notes to Financial Statements
Year Ended June 30, 2013
L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. THE FINANCIAL REPORTING ENTITY
In August 2005, the governing boards of the Chico Redevelopment Agency, which due to State Assembly
Bill IX 26 is now known as the City of Chico, Successor Agency to the Chico Redevelopment Agency
(Agency) and the County of Butte established a joint powers agency known as the Chico Urban Area
Joint Powers Financing Authority (JPFA) to facilitate the financing, construction and installation of sewer
facilities and improvements in the greater Chico urban area. The JPFA was formed pursuant to the
provisions of the joint powers laws of the State of California, as set forth in Article 1, Chapter 5, Division
7, Title 1 of the California Government Code (commencing with Government Code Section 6500). The
JPFA is authorized to obtain state or federal loans for the purpose of financing the construction and
installation of sewer facilities and improvements. The construction activity of the JPFA is included in the
City of Chico's financial statements as a discretely presented component unit as the infrastructure belongs
to the City's Sewer Enterprise Fund.
B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
The government -wide financial statements (i.e. tl
activities) report information on all of the activities
supported by taxes and intergovernmental revenues.
statement of net position and the statement of
of the JPFA. Governmental activities are normally
The statement of activities demonstrates the degree to which the direct expenses 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 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.
Investment earnings and other items which are excluded from program revenues are reported instead as
general revenues.
Separate financial statements are provided for the JPFA's major governmental fund and are reported as a
separate column in the fund financial statements.
C. BASIS OF PRESENTATION, BASIS OF ACCOUNTING, AND MEASUREMENT FOCUS
The government -wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when
a liability is incurred, regardless of the timing of the related cash flows.
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 collectible within the current
period or soon enough thereafter to pay liabilities of the current period. For this purpose, the JPFA
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico, California)
Notes to Financial Statements
Year Ended June 30, 2013
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. BASIS OF PRESENTATION, BASIS OF ACCOUNTING, AND MEASUREMENT FOCUS
(Continued)
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.
Investment earnings are considered to be susceptible to accrual and have been recognized as revenue of
the current period. Other revenues are considered to be measurable and available only when cash is
received by the JPFA.
The activities of the JPFA are accounted for in a capital projects fund.
When both restricted and unrestricted resources are available for use, it is the JPFA's policy to use
restricted resources first, then unrestricted resources as they are needed.
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY
Capital Assets
Although the JPFA's sole purpose is to construct infrastructure to facilitate the installation of sewer
connections for residents located in the benefited area, the infrastructure is not owned by the JPFA, and as
a result, the construction costs of the sewer infrastructure are shown as construction expenditures (not
capital assets) in these financial statements. As the construction occurs, the infrastructure is conveyed to
the City of Chico's Sewer Enterprise Fund as capital assets.
Due to other Governments
Due to other governments represents the amount the Authority owes the City of Chico's Treasury (pooled
cash) for use of the City's cash. This amount is paid back from the Authority's cash in its own Local
Agency Investment Fund's (LAIF).
Lona -Tenn Liabilities
In the government -wide financial statements, long -term debt and other long -tern obligations are reported
as liabilities and in the fund financial statements; the face amount of debt issued is reported as other
financing sources.
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico, California)
Notes to Financial Statements
Year Ended June 30, 2013
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fund Equity
Restricted fund balances include amounts that can be spent only for the specific purposes stipulated by
constitution, external resource providers, or through enabling legislation.
Net Position
Net position is classified as unrestricted net position which is not restricted for any project or any other
purpose. The Authority's unrestricted net position is <$5,309,718> at June 30, 2013.
II. DETAILED NOTES
A. CASH AND INVESTMENTS
I. Authorized Investments
The JPFA follows the City's investment policy with respect to the management of cash and investments.
The table below identifies the investment types that are authorized by California Government Code
Section 53601. The investment policy limits the amount of funds invested in instruments with maturities
over one year to 15 %, unless adequate liquidity is available, yield appears favorable and the Executive
Director approves the investment in advance.
IL Custodial Credit Risk
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 its investment or collateral securities
that are in the possession of another party. The custodian of the investments is not the counterparty for the
investments held for the Agency and hence these investments are not exposed to custodial credit risk.
Maximum
Maximum
Maximum
Percentage of
Investment
Minimum
Authorized Investment Type
Maturity
Portfolio
in One
Rating
Issuer
U.S. Treasury Securities
5 years
None
None
None
U.S. Agency Securities
5 years
None
None
None
Money Market Mutual Funds
5 years
20%
10%
AAA
Collateralized Bank Deposits
5 years
None
None
None
State of California and California
Local Agency Bonds
5 years
15%
5%
None
Repurchase Agreements
5 years
None
5%
None
Local Agency Investment Fund
N/A
None
None
None
(LAIF)
IL Custodial Credit Risk
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 its investment or collateral securities
that are in the possession of another party. The custodian of the investments is not the counterparty for the
investments held for the Agency and hence these investments are not exposed to custodial credit risk.
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico, California)
Notes to Financial Statements
Year Ended June 30, 2013
H. DETAILED NOTES (Continued)
A. CASH AND INVESTMENTS (Continued)
IL Custodial Credit Risk (Continued)
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 its deposits or will not be able to recover collateral
securities that are in the possession of an outside parry. 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 its investment or collateral securities that are in the possession of another party. The
California Government Code and the investment policy do not contain legal or policy requirements that
would limit the exposure to custodial credit risk for deposits or investments, other than the following
provision for deposits and securities lending transactions: The California Government Code requires that
a financial institution secure deposits made by state or local governmental units by pledging securities in
an undivided collateral pool held by depository regulated under stated law. The market value of the
pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the
public agencies.
As of June 30, 2013, the JPFA had $9,723,433 in LAIF. The JPFA also had a negative cash balance of
$3,266,813 which is shown as a due to other governments as it represents cash borrowed from the City of
Chico's treasury pool.
III. Concentration of Credit Risk
The investment policy contains no limitations on the - amount that can be invested in any one issuer
beyond that stated above.
IV. Interest Rate and Credit Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment, the greater the sensitivity its fair value is
to changes in market interest rates. As a means of limiting its exposure to fair value losses arising from
rising interest rates, the JPFA manages its exposure to interest rate risk by investing in the Local Agency
Investment Fund (LAIF), which provides the necessary cash flow and liquidity needed for operations, as
well as purchasing a combination of shorter term and longer term investments so that a portion of the
portfolio is maturing or coming close to maturing evenly over time. The segmented time distribution
method is used for reporting interest rate risk.
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder
of the investment. This is measured by the assignment of a rating by a nationally recognized statistical
rating organization. It is the City's policy to purchase investments with the minimum ratings required by
the California Government Code.
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico, California)
Notes to Financial Statements
Year Ended June 30, 2013
H. DETAH,ED NOTES (Continued)
A. CASH AND INVESTMENTS (Continued)
IV.. Interest Rate and Credit Risk (Continued)
As of June 30, 2013, the JPFA's investments and credit ratings are as follows:
Credit
rating
(5 &P/ Under 30 31 -365
Moody's) Days Days
1 -5 Over Fair
Years Years Value
Local Agency Investment Fund Not Rated $ 9,723,433 - - - $ 9,723,433
The JPFA is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
California Government Code Section 16429 under the oversight of the State of California Treasurer. The
fair value of the investment in this pool is reported in the accompanying financial statements at amounts
based upon the pro -rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation
to the amortized cost of that portfolio, as calculated monthly). The balance available for withdrawal is
based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.
The cash and investments as of June 30, 2013, are displayed on the JPFA's Statement of Net Position as
follows:
Total Cash and Investments: $ 9,723,433
B. CONSTRUCTION EXPENDITURES
During the current period, the JPFA constructed infrastructure totaling $7,291,044. The infrastructure is
conveyed to the City of Chico's Sewer Fund as capital assets.
C. PROGRAM REVENUES
As part of the joint powers agreement, the Agency has pledged to provide $1,900,000 to the Authority
each year to be used for future debt repayment. The annual payments are reported as program revenue in
the JPFA's Statement of Activities. The Agency's annual pledge has been approved by the California
State Department of Finance as evidenced by an approved recognized obligation payment schedule.
CHICO URBAN AREA JOINT POWERS FINANCING AUTHORITY
(A Component Unit of the City of Chico, California)
Notes to Financial Statements
Year Ended June 30, 2013
Il. DETAILED NOTES (Continued)
D. RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET TO THE
STATEMENT OF NET POSITION
Total governmental fund balance $ 6,462,292
Amounts reported for governmental activities in the statement of net position are
different because:
Loans payable are not due and payable in the current period and, therefore
are not reported in the funds. (11,772,010)
Net position of governmental activities $ (5,309,718)
E. RECONCILIATION OF THE GOVERNEMNETAL FUND STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE GOVERNMENT -WIDE
STATEMENT OF ACTIVITIES
Net change in fund balances - total governmental fiord $ (429,841)
Amounts reported for governmental activities in the statement of activities are
different because:
The issuance of long -term debt (e.g. loans) provides current financial resources
to governmental fiords, however, the transaction does not affect net position (4,947,166)
Change in net position of governmental activities $ (5,377,007)
F. LONG -TERM DEBT
Loan_ s Pavable
A loan of $31,666,540, interest at 0 %, has been approved by the State Revolving Fund Loan Program for
the JPFA's Nitrate Compliance Program. As of June 30, 2013, construction draws on the loan were
$4,947,166. No payments are due on the loan until project completion. The JPFA will use the
$1,900,000 received annually from the Agency to pay the debt when it becomes due.
Changes to the JPFA's long -term debt for the year ended June 30, 2013 were as follows:
Due within
July 1, 2012 Additions June 30, 2013 One Year
Loans Payable:
State Revolving Fund Loan $ 6,824,844 $ 4,947,166 $ 11,772,010 $
Total $ 6,824,844 $ 4,947,166 $ 11,772,010 $
10