HomeMy WebLinkAboutAPFA-Final-06-30-15
AZUSA
PUBLIC FINANCING AUTHORITY
JUNE 30, 2015 FINANCIAL STATEMENTS
AZUSA
PUBLIC FINANCING AUTHORITY
FINANCIAL STATEMENTS
JUNE 30, 2015
AZUSA PUBLIC FINANCING AUTHORITY
JUNE 30, 2015
TABLE OF CONTENTS
Page
Number
INDEPENDENT AUDITORS’ REPORT .................................................................................................. 1
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Position ................................................................................................................. 3
Statement of Activities ...................................................................................................................... 4
Fund Financial Statements:
Balance Sheet - Governmental Funds ............................................................................................. 5
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position ....................................................................................................... 6
Statement of Revenues, Expenditures and Changes in Fund
Balances - Governmental Funds ...................................................................................................... 7
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities ...................................................................................................................... 8
Notes to Financial Statements ............................................................................................................. 9
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
City of Azusa, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund,
and the aggregate remaining fund information of the Azusa Public Financing Authority,
(the Authority) as of and for the year ended June 30, 2015, and the related notes to the financial
statements, which collectively comprise the City’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 and
the standards applicable to financial audits contained in Government 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 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.
203 N. Brea Blvd., Suite 203 Brea, CA 92821 Phone: 714.672.0022
An Association of Independent Accounting Firms
To the Honorable Mayor and Members of the City Council
City of Azusa, California
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate remaining
fund information of the Authority, each major fund, and the aggregate remaining fund information of the
City of Azusa, California, as of June 30, 2015, 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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management has
omitted the management’s discussion and analysis that accounting principles generally accepted in the
United States of America require 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 operational, economic, or historical context.
Our opinion on the basic financial statements is not affected by this missing information.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
June 8, 2016 on our consideration of the Authority’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the Authority’s internal control over
financial reporting and compliance.
Brea California
June 8, 2016
2
AZUSA PUBLIC FINANCING AUTHORITY
STATEMENT OF NET POSITION
Primary
Government
Governmental
Activities
Assets:
Receivables:
Contracts and notes 54,555,000$
Accrued interest 25
Restricted assets:
Cash with fiscal agent 6,527,409
Total Assets 61,082,434
Liabilities:
Accrued interest 1,322,131
Noncurrent liabilities:
Due within one year 1,355,000
Due in more than one year 55,938,682
Total Liabilities 58,615,813
Net Position:
Restricted for:
Debt service 2,466,621
Total Net Position 2,466,621$
JUNE 30, 2015
See Notes to Financial Statements 3
AZUSA PUBLIC FINANCING AUTHORITY
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2015
Operating Capital
Charges for Contributions Contributions Governmental
Expenses Services and Grants and Grants Activities
Functions/Programs
Primary Government:
Governmental Activities:
General government 4,625$ -$ -$ -$ (4,625)$
Interest on long-term debt 2,614,909 - - - (2,614,909)
Total Primary Government 2,619,534$ -$ -$ -$ (2,619,534)
General Revenues:
Use of money and property 2,421,737
Other 356,749
Total General Revenues 2,778,486
Change in Net Position 158,952
Net Position at Beginning of Year 2,307,669
Net Position at End of Year 2,466,621$
Program Revenues
Net
(Expenses)
Revenues and
Changes in
Net Position
See Notes to Financial Statements 4
AZUSA PUBLIC FINANCING AUTHORITY
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2015
Assets:
Receivables:
Contracts and notes 2,285,000$ 52,270,000$ 54,555,000$
Accrued interest 25 - 25
Restricted assets:
Cash and investments with fiscal agents 482,626 6,044,783 6,527,409
Total Assets 2,767,651$ 58,314,783$ 61,082,434$
Deferred Inflows of Resources and Fund Balances:
Deferred Inflows of Resources:
Unavailable revenues 2,285,000$ 52,270,000$ 54,555,000$
Total Deferred Inflows of Resources 2,285,000 52,270,000 54,555,000
Fund Balances:
Restricted for:
Debt service 482,651 6,044,783 6,527,434
Total Fund Balances 482,651 6,044,783 6,527,434
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 2,767,651$ 58,314,783$ 61,082,434$
Total
Governmental
Funds
Debt Service Funds
COP - 2003
Lease Revenue
Refunding
2006 Water
Revenue Bonds
See Notes to Financial Statements 5
AZUSA PUBLIC FINANCING AUTHORITY
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2015
Fund balances of governmental funds 6,527,434$
Amounts reported for governmental activities in the statement of net position are
different because:
Long-term liabilities as well as related unamortized bond discount/premium
that have not been included in the governmental fund activity.(57,293,682)
Accrued interest payable for the current portion of interest due on bonds has
not been reported in the governmental funds.(1,322,131)
Revenues reported as deferred revenue in the governmental funds and recognized
in the Statement of Activities. These are included in the intergovernmental revenues
in the governmental fund activity.54,555,000
Net position of governmental activities 2,466,621$
See Notes to Financial Statements 6
AZUSA PUBLIC FINANCING AUTHORITY
STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2015
Total
Governmental
Funds
Revenues:
Use of money and property 53,184$ 3,668,553$ 3,721,737$
Miscellaneous 356,749 - 356,749
Total Revenues 409,933 3,668,553 4,078,486
Expenditures:
Current:
General government 4,625 - 4,625
Debt service:
Principal retirement 255,000 1,045,000 1,300,000
Interest and fiscal charges 150,284 2,604,663 2,754,947
Total Expenditures 409,909 3,649,663 4,059,572
Excess (Deficiency) of Revenues
Over (Under) Expenditures 24 18,890 18,914
Net Change in Fund Balances 24 18,890 18,914
Fund Balances, Beginning of Year 482,627 6,025,893 6,508,520
Fund Balances, End of Year 482,651$ 6,044,783$ 6,527,434$
Debt Service Funds
COP - 2003
Lease Revenue
Refunding
2006 Water
Revenue Bonds
See Notes to Financial Statements 7
AZUSA PUBLIC FINANCING AUTHORITY
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2015
Net change in fund balances - total governmental funds 18,914$
Amounts reported for governmental activities in the statement of activities are
different because:
Repayment of bond principal is an expenditure in the governmental funds, but the
repayment reduces long-term liabilities in the statement of net position.1,300,000
Unamortized premium or discount on bonds issued are revenue or expenditures
in governmental funds, but these are spread to future period over the life of the new
bonds on the statement of net position.110,121
Contracts and notes receivable are recorded as expenditure when initiated,
while repayment is recorded as use of money and property on the statement
of revenues, expenditures and changes in fund balance. On the governmental
fund balance sheet, this payment is recorded as an adjustment to deferred
revenue. On the statement of net position, the repayment reduces the contracts
and notes receivable outstanding.(1,300,000)
Accrued interest for long-term liabilities. This is the net change in accrued interest
for the current period.29,917
Change in net position of governmental activities 158,952$
See Notes to Financial Statements 8
AZUSA PUBLIC FINANCING AUTHORITY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2015
I. SIGNIFICANT ACCOUNTING POLICIES
Note 1: Summary of Significant Accounting Policies
a. Description of the Reporting Entity
The Azusa Public Financing Authority (Authority) is a joint powers agency created by a joint
powers agreement between the City of Azusa and the Azusa Redevelopment Agency, dated
January 2, 1990. It was created pursuant to Articles 1 through 4 of Chapter 5, Division 7,
Title 1 of the Government Code of the State of California in accordance with the provisions of
the Marks-Roos Local Bond Pooling Act of 1985. The purpose of the Authority is to provide
loans to refinance certain debt previously issued by the City of Azusa and to finance certain
capital improvement projects for the benefit of the City and the Agency. The Redevelopment
Agency was dissolved as of January 31, 2012, through the Supreme Court decision on
Assembly Bill 1X 26. See Note 6 for more information on the dissolution.
The Authority is an integral part of the reporting entity of the City of Azusa. The funds of the
Authority have been included within the scope of the financial statements of the City because
the City Council of the City of Azusa is the governing board and has responsibility over the
operation of the Authority. Only the funds of the Authority are included herein; therefore,
these financial statements do not purport to represent the financial position or results of
operation of the City of Azusa, California.
b. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) report information on all activities of the Azusa Public Financing
Authority.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is 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.
Major individual governmental 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. 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 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.
9
AZUSA PUBLIC FINANCING AUTHORITY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2015
Note 1: Summary of Significant Accounting Policies (Continued)
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, are recorded only when payment is due.
Amounts reported as program revenues include contributions of the participating agencies.
Internally dedicated resources are reported as general revenues rather than as program
revenues.
The Authority reports the following major governmental funds:
Governmental Funds
Debt Service Funds - Used to account for the payment of interest and principal on
long-term obligations.
Certificates of Participation – 2003 Lease Revenue Refunding
2006 Water Revenue Bonds
When both restricted and unrestricted resources are available for use, it is the government's
policy to use restricted resources first, and then unrestricted resources as they are needed.
d. Budgetary Reporting
Formal budgetary integration is not employed for the Authority because effective control is
alternatively achieved through the various bond indenture provisions.
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 position:
The governmental fund balance sheet includes reconciliation between fund balances of
governmental funds and net position of governmental activities as reported in the
government-wide statement of net position. One element of that reconciliation explains
that “long-term liabilities as well as the related unamortized bond discount and cost of
issuance have not been included in the governmental funds.” The details of the
$(57,293,682) difference are as follows:
Long-term debt:
Certificates of Participation - 2003 Lease
Revenue Refunding (2,285,000)$
2006 Water Revenue Bonds (52,270,000)
Unamortized bond premium (2,750,139)
Unamortized bond discount 11,457
Net adjustment to reduce fund balance of total
governmental funds to arrive at net assets of
governmental activities (57,293,682)$
10
AZUSA PUBLIC FINANCING AUTHORITY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2015
Note 2: Cash and Investments
As of June 30, 2015, the Authority reported cash and investment with fiscal agent of $ 6,527,409.
The Authority’s funds are pooled with the City of Azusa’s cash and investments in order to
generate optimum interest income, except for funds required to be held by fiscal agents under
provisions of bond indentures. The City has implemented GASB Statement No. 40, Deposit and
Investment Risk Disclosures. This pronouncement is an amendment to GASB Statement
No. 3. GASB No. 40 modifies disclosure requirements related to deposit and investment risks.
The information required by GASB Statement No. 40 related to authorized investments, credit
risk, etc., is available in the annual report of the City.
Note 3: Contracts and Notes Receivable
Lease Agreement
The Authority entered into a lease agreement with the City of Azusa to lease certain facilities of
the City. Title to these facilities will remain at all times with the City of Azusa. The Authority has
used the leasehold rights that it acquired as lessee to lease the facilities back to the City.
Amounts paid by the City to the Authority in return for the City's right to use and operate the
property are equal in amount to the debt service requirements of the Authority for the $4,825,000
2003 Lease Revenue Refunding Certificates of Participation. As of June 30, 2015, the
outstanding lease receivable balance was $2,285,000.
Installment Sale Agreement
Pursuant to an installment agreement dated December 13, 2006, the Authority agrees to provide
for the acquisition of a Water Project in a manner approved by the City and to sell the project to
the City. Under the terms of this agreement, the City is obligated to pay the purchase price from
net revenue derived from the operation of the Water System in amounts equal to the Authority's
annual debt service obligations on its $54,570,000 2006 Water Revenue Bonds. As of
June 30, 2015, the outstanding installment receivable from the City was $52,270,000.
11
AZUSA PUBLIC FINANCING AUTHORITY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2015
Note 4: Long-Term Debt
A summary of changes in governmental activities long-term debt for the year ended
June 30, 2015, was as follows:
Balance Balance Due Within
July 1, 2014 Additions Deletions June 30, 2015 One Year
2003 Lease Revenue
Refunding 2,540,000$ -$ 255,000$ 2,285,000$ 265,000$
2006 Water Revenue
Bonds 53,315,000 - 1,045,000 52,270,000 1,090,000
55,855,000$ -$ 1,300,000$ 54,555,000 1,355,000$
Unamortized bond premium 2,750,139
Unamortized bond discount (11,457)
57,293,682$
Certificates of Participation – 2003 Lease Revenue Refunding
In August 2003, the City of Azusa issued $4,825,000 of 2003 Lease Revenue Refunding
Certificates of Participation to currently refund $4,565,000 of outstanding 1994 Certificates of
Participation, to provide for a reserve fund, and to pay for the costs of issuance of the Certificates.
The Certificates represent the interest in the lease payments to be made by the City to the
Authority for the use and occupancy of the real property and improvement of the Azusa City Hall
and construction of the Azusa Senior Center. The Certificates maturing from 2004 to 2020 are
serial certificates payable in annual installments ranging from $265,000 to $845,000. Interest is
payable semi-annually on each August 1 and February 1, commencing August 1, 2004, at rates
ranging from 2.0% to 4.56% per annum. The outstanding principal balance as of June 30, 2015,
was $2,285,000. The annual requirements to amortize the outstanding Certificates of Participation
as of June 30, 2015, are as follows:
Principal Interest
2015-2016 265,000$ 91,768$
2016-2017 275,000 80,968
2017-2018 285,000 69,590
2018-2019 300,000 57,337
2019-2020 315,000 44,071
2020-2024 845,000 18,590
Total 2,285,000$ 362,324$
2003 Certificates of
Participation
2006 Water Revenue Bonds
On December 13, 2006, the Azusa Public Financing Authority, a component unit of the City of
Azusa, issued $54,850,000 of Parity Revenue Bonds, Series 2006 (2006 Water Revenue Bonds).
The proceeds were used to finance certain improvements to the municipal water system of the
City of Azusa. The Bonds are payable from pledged revenues comprised primarily of installment
payments received by the Authority from the City. Serial bonds mature in annual installments
beginning on July 1, 2009 through July 1, 2039, in amounts ranging from $280,000 to $3,560,000.
Interest ranges from 4.000% to 5.000% and is payable semi-annually on July 1 and January 1.
12
AZUSA PUBLIC FINANCING AUTHORITY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2015
Note 4: Long-Term Debt (Continued)
Term bonds mature in various years beginning on July 1, 2019 through July 1, 2039, with
amounts ranging from $1,090,000 to $16,145,000 and interest from 3.920% to 4.380%. The
outstanding principal balance as of June 30, 2015, was $52,270,000. The annual requirements to
amortize the outstanding bonds as of June 30, 2015, including interest are as follows:
Principal Interest
2016 1,090,000$ 2,555,738$
2017 1,145,000 2,504,313
2018 1,200,000 2,445,688
2019 1,265,000 2,384,063
2020 1,330,000 2,319,188
2021-2025 7,735,000 10,507,438
2026-2030 9,795,000 8,443,719
2031-2035 12,565,000 5,669,375
2036-2040 16,145,000 2,098,625
Totals 52,270,000$ 38,928,147$
2006 Water Revenue Bonds
13