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HomeMy WebLinkAboutAzusa Mountain Cove FS Final 2-20-17 CITY OF AZUSA – COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN COVE) SPECIAL TAX BONDS SERIES 2011 FOR THE FISCAL YEAR ENDED JUNE 30, 2015 FINANCIAL STATEMENTS CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN COVE) SPECIAL TAX BONDS SERIES 2011 FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN COVE) SPECIAL TAX BONDS SERIES 2011 JUNE 30, 2015 TABLE OF CONTENTS Page Number INDEPENDENT AUDITORS' REPORT .................................................................................................. 1 BASIC FINANCIAL STATEMENTS Statement of Net Position and Governmental Fund Balance Sheet ................................................ 3 Statement of Activities and Governmental Fund Revenues, Expenditures and Changes in Fund Balance ................................................................................... 4 Notes to Special Purpose Financial Statements .............................................................................. 5 COMBINING FINANCIAL STATEMENTS AND SCHEDULES Combining Balance Sheet - All Debt Service Funds ...................................................................... 10 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - All Debt Service Funds ............................................................... 12 Combining Statement of Receipts, Disbursements and Transfers – All Debt Service Funds ......................................................................................... 14 INDEPENDENT AUDITORS’ REPORT To the Honorable Mayor and Members of City Council of the City of Azusa Community Facilities District No. 2002-1 Azusa, California Report on Financial Statements We have audited the accompanying financial statements of the City of Azusa Community Facilities District No. 2002-1 (Mountain Cove) Special Tax Refunding Bonds, Series 2011, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City of Azusa Community Facilities District No. 2002-1’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, 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 City Council of the City of Azusa Community Facilities District No. 2002-1 Azusa, California Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, on the basis of accounting described in Note 1, 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 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 Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Mountain Cove’s basic financial statements. The combining fund information is presented for purposes of additional analysis and is not a required part of the basic financial statements. The combining fund information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with the auditing standards generally accepted in the United States of America. In our opinion, the combining fund information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.  Brea, California February 7, 2017   2 Debt Service Statement of Fund Adjustments Net Position Assets: Cash and investments with trustee 539,578$ -$ 539,578$ Total Assets 539,578 - 539,578 Liabilities: Accrued liabilities 87,500 - 87,500 Due to City 1,650 - 1,650 Accrued interest payable - 130,285 130,285 Noncurrent liabilities: Due within one year - 195,000 195,000 Due in more than one year - 7,245,000 7,245,000 Total Liabilities 89,150 7,570,285 7,659,435 Fund Balances/Net Position: Fund Balances: Restricted for: Debt service 511,989 Unassigned (61,561) Total Fund Balances 450,428 Total Liabilities and Fund Balances 539,578$ Net Position: Restricted for: Debt service 511,989 511,989 Unrestricted (8,082,274) (7,631,846) Total Net Position (7,570,285)$ (7,119,857)$ JUNE 30, 2015 STATEMENT OF NET POSITION AND GOVERNMENTAL FUND BALANCE SHEET CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 SPECIAL TAX BONDS (MOUNTAIN COVE) SERIES 2011 See Notes to Special Purpose Financial Statements 3 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 SPECIAL TAX BONDS (MOUNTAIN COVE) SERIES 2011 STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUND REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2015 Debt Service Fund Adjustments Statement of Activities Revenues: Interest on investments 41$ -$ 41$ Assessments 739,176 - 739,176 Total Revenues 739,217 - 739,217 Expenditures: General Government: Administrative cost 7,075 - 7,075 Debt service: Principal payment 180,000 (180,000) - Interest expense 397,905 (1,582) 396,323 Total Expenditures 584,980 (181,582) 403,398 Excess (Deficiency) of Revenues Over (Under) Expenditures 154,237 181,582 335,819 Other Financing Sources (Uses): Transfers in 597,905 - 597,905 Transfers out (597,905) - (597,905) Total Other Financing Sources (Uses)- - - Excess (Deficiency) of Revenues and Transfers In Over (Under) Expenditures and Transfers Out 154,237 181,582 335,819 Fund Balances/Net Position: Beginning of Fiscal Year 296,191 (7,751,867) (7,455,676) End of Fiscal Year 450,428$ (7,570,285)$ (7,119,857)$ See Notes to Special Purpose Financial Statements 4 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN COVE) SPECIAL TAX BONDS SERIES 2011 NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2015 I. SIGNIFICANT ACCOUNTING POLICIES Note 1: Organization and Summary of Significant Accounting Policies a. Description of Entity The City of Azusa Community Facilities District No. 2002-1 (Mountain Cove) (the “District”) was established by the City Council of the City of Azusa (the “City”) pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (constituting Section 53311 et seq. of the California Government Code) to finance certain costs of acquisition and construction of certain water, sewer, reservoir, pump station and bike trail improvements generally related to development within the District as well as school and city impact fees associated with the development. Bond indebtedness in the amount of $7,880,000 was issued by the District. The bonds are payable solely from the proceeds of a special tax to be levied annually on the land within the District. The bonds are not in any way a debt, liability or obligation of the City of Azusa. The financial statements presented in this report cover only the City of Azusa Community Facilities District No. 2002-1 (Mountain Cove) Special Tax Bonds, Series 2002 A and the Special Tax Refunding Bonds, Series 2011, which are only a portion of the bonds issued by the City. Therefore, these financial statements do not purport to represent the financial position or results of operations of the City of Azusa. 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 the City of Azusa Community Facility District No. 2002-1 (Mountain Cove) Special Tax Bonds, Series 2011. 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. 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. Government 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 are recorded only when payment is due. 5 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN COVE) SPECIAL TAX BONDS SERIES 2011 NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Organization and Summary of Significant Accounting Policies (Continued) d. Assets, Liabilities, and Net Assets or Equity 1. Investments Investments are reported at fair value. Increases and decreases in the fair value of investments, as well as interest earned on the investments, are reported as investment income. 2. Receivables and Payables All trade receivables are shown net of an allowance for uncollectible. 3. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the government activities 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 costs are reported as deferred charges and amortized over the term of the related debt. Note 2: Cash and Investments As of June 30, 2015, cash and investments were reported in the accompanying financial statements as follows: Cash and investments with fiscal agents 539,578$ Deposits The California Government Code requires California banks and savings and loan associations to secure a government agency’s deposits by pledging government securities with a value of 110% of its deposits. California law also allows financial institutions to secure a government agency’s deposits by pledging first trust deed mortgage notes having a value of 150% of the government’s total deposits. The government agency’s Treasurer may waive the collateral requirement for deposits that are fully insured up to $250,000 by the FDIC. The collateral for deposits in federal and state chartered banks is held in safekeeping by an authorized Agent of Depository recognized by the State of California Department of Banking. The collateral for deposits with savings and loan associations is generally held in safekeeping by the Federal Home Loan Bank in San Francisco, California as an Agent of Depository. These securities are physically held in an undivided pool for all California public agency depositors. Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an “Agent of Depository” has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository are considered to be held for, and in the name of, the local governmental agency. 6 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN COVE) SPECIAL TAX BONDS SERIES 2011 NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 2: Cash and Investments (Continued) Investments Under provision of the City’s investment policy, and in accordance with the California Government Code, the following investments are authorized:  U.S. Treasury Obligations (bills, notes and bonds)  U.S. Government Agency Securities and Instrumentalities of Government Sponsored Corporations  Mutual Funds  Commercial Papers  Repurchase Agreements  Certificates of Deposit  Negotiable Certificates of Deposit  Passbook Savings Accounts  Medium Term Corporate Notes  Bank Money Market Accounts  Local Agency Investment Fund (State Pool) Investments Authorized by Debt Agreements The above investments do not address investment of debt proceeds held by a bond trustee. Investments of debt proceeds held by a bond trustee are governed by provisions of the debt agreements rather than the general provisions of the California Government Code or the government agency’s investment policy. GASB Statement No. 31 The City adopted GASB Statement No. 31, Accounting and Financial Reporting for certain investments and for External Investment Pools, as of July 1, 1997. GASB Statement No. 31 establishes fair value standards for investments in participating interest earning investment contracts, external investment pools, equity securities, option contracts, stock warrants and stock rights that have readily determinable fair values. Accordingly, the City reports its investments at fair value in the balance sheet. All investment income, including changes in the fair value of investments, is recognized as revenue in the operating statement. Credit Risk The City's investment policy limits investments in medium term notes (MTNs) to those rated A or higher by Standard and Poor’s (S&P) or by Moody. As of June 30, 2015, the City did not have any investments in MTN’s. Investments in U.S. government securities are not considered to have credit risk; therefore, their credit quality is not disclosed. As of June 30, 2015, the Agency's investments in external investment pools and money market mutual funds holding 100% of U.S. Treasuries are unrated. 7 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN COVE) SPECIAL TAX BONDS SERIES 2011 NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 2: Cash and Investments (Continued) 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, 2015, none of the City’s deposits or investments was exposed to custodial credit risk. Concentration of Credit Risk The City’s investment policy imposes restrictions on the maximum percentage it can invest in a single type of investment. These limitations are 30%, 20%, and 30% for commercial paper, medium term notes, and repurchase agreements, respectively. As of June 30, 2015, in accordance with GASB 40 requirements, the City is exposed to concentration of credit risk whenever it has invested more than 5% of its total investments in any one issuer. As of June 30, 2015, the City did not have more than 5% of their total investment in any one issuer. Investments guaranteed by the U.S. government, 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 no investment may have a maturity of more than five years without receiving prior City Board approval. The only exception to the maturity limits shall be the investment of the gross proceeds of tax-exempt bonds, and reserve funds associated with bond issues. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk. At June 30, 2015, cash and investments of $539,578 consists of investment in money market mutual funds. Note 3: Long-Term Debt a. The following is a schedule of changes in long-term debt for the fiscal year ended June 30, 2015: Outstanding Outstanding Due Within June 30, 2014 Additions Repayments June 30, 2015 One Year Special Tax Refunding Bonds, Series 2011 7,620,000$ -$ 180,000$ 7,440,000$ 195,000$ 7,620,000$ -$ 180,000$ 7,440,000$ 195,000$ 8 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN COVE) SPECIAL TAX BONDS SERIES 2011 NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 3: Long-Term Debt (Continued) b. Special Tax Refunding Bonds, Series 2011: In July 6, 2011, the District issued $7,880,000 City of Azusa Community Facilities District No. 2002-1 (Mountain Cove) Special Tax Refunding Bond, Series 2011 to refund the outstanding Community Facilities District No. 2002-1 (Mountain Cove) Special Tax Bonds Series 2002 A. The Special Tax Refunding Bonds, Series 2011 consist of $4,310,000 serial bonds maturing September 1, 2026, and bearing interest from 3.000% to 5.500% and $3,570,000 term bonds maturing September 1, 2032, and bearing interest at 5.875%. The bonds are subject to optional call and redemption prior to their maturity. Interest is payable semiannually on September 1 and March 1 of each year. The outstanding balance at June 30, 2015, was $7,440,000. c. The debt service to maturity is as follows: Principal Interest Total 2015 - 2016 195,000$ 390,856$ 585,856$ 2016 - 2017 215,000 382,656 597,656 2017 - 2018 240,000 373,556 613,556 2018 - 2019 260,000 363,556 623,556 2019 - 2020 280,000 358,356 638,356 2021 - 2025 1,780,000 1,575,358 3,355,358 2026 - 2030 2,500,000 1,033,734 3,533,734 2031 - 2035 1,970,000 166,469 2,136,469 Total 7,440,000$ 4,644,541$ 12,084,541$ 9 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 SPECIAL TAX BONDS (MOUNTAIN COVE) SERIES 2011 COMBINING BALANCE SHEET - ALL DEBT SERVICE FUNDS JUNE 30, 2015 Reserve Interest Fund Principal Account Assets: Cash and investments with trustee 370,714$ -$ -$ Total Assets 370,714$ -$ -$ Liabilities and Fund Balances: Liabilities: Accrued liabilities -$ -$ -$ Due to City - - - Total Liabilities - - - Fund Balances: Restricted for: Debt service 370,714 - - Undesignated - - - Total Fund Balance 370,714 - - Total Liabilities and Fund Balances 370,714$ -$ -$ 10 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 SPECIAL TAX BONDS (MOUNTAIN COVE) SERIES 2011 COMBINING BALANCE SHEET - ALL DEBT SERVICE FUNDS JUNE 30, 2015 Assets: Cash and investments with trustee Total Assets Liabilities and Fund Balances: Liabilities: Accrued liabilities Due to City Total Liabilities Fund Balances: Restricted for: Debt service Undesignated Total Fund Balance Total Liabilities and Fund Balances Special Tax Administrative Fund Expense Total 141,275$ 27,589$ 539,578$ 141,275$ 27,589$ 539,578$ -$ 87,500$ 87,500$ - 1,650 1,650 - 89,150 89,150 141,275 - 511,989 - (61,561) (61,561) 141,275 (61,561) 450,428 141,275$ 27,589$ 539,578$ 11 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - ALL DEBT SERVICE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 SPECIAL TAX BONDS (MOUNTAIN COVE) SERIES 2011 Reserve Interest Fund Principal Account Revenues: Interest on investments 34$ -$ -$ Assessments - - - Total Revenues 34 - - Expenditures: Current: Administrative cost - - - Debt service: Principal payment - 180,000 - Interest expense - - 397,905 Total Expenditures - 180,000 397,905 Excess (Deficiency) of Revenues Over (Under) Expenditures 34 (180,000) (397,905) Other Financing Sources (Uses): Transfers in - 180,000 397,905 Transfers out - - - Total Other Financing Sources (Uses)- 180,000 397,905 Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other Uses 34 - - Fund Balances: Beginning of Fiscal Year 370,680 - - End of Fiscal Year 370,714$ -$ -$ 12 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - ALL DEBT SERVICE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 SPECIAL TAX BONDS (MOUNTAIN COVE) SERIES 2011 Revenues: Interest on investments Assessments Total Revenues Expenditures: Current: Administrative cost Debt service: Principal payment Interest expense Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers in Transfers out Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances: Beginning of Fiscal Year End of Fiscal Year Special Tax Administrative Fund Expense Total 4$ 3$ 41$ 739,176 - 739,176 739,180 3 739,217 - 7,075 7,075 - - 180,000 - - 397,905 - 7,075 584,980 739,180 (7,072) 154,237 - 20,000 597,905 (597,905) - (597,905) (597,905) 20,000 - 141,275 12,928 154,237 - (74,489) 296,191 141,275$ (61,561)$ 450,428$ 13 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 SPECIAL TAX BONDS (MOUNTAIN COVE) SERIES 2011 COMBINING STATEMENT OF RECEIPTS, DISBURSEMENTS AND TRANSFERS - ALL DEBT SERVICE FUNDS JUNE 30, 2015 Reserve Interest Fund Principal Account Cash and Investments with Trustee: Balance - June 30, 2014, as adjusted 370,677$ -$ -$ Receipts: Interest on investments 37 - - Assessments - - - Transfers - 180,000 397,905 Total Receipts 37 180,000 397,905 Disbursements: Administrative cost - - - Principal payment - 180,000 - Interest expense - - 397,905 Transfers - - - Total Disbursements - 180,000 397,905 Cash and Investments with Trustee: Balance - June 30, 2015 370,714$ -$ -$ 14 CITY OF AZUSA - COMMUNITY FACILITIES DISTRICT NO. 2002-1 SPECIAL TAX BONDS (MOUNTAIN COVE) SERIES 2011 COMBINING STATEMENT OF RECEIPTS, DISBURSEMENTS AND TRANSFERS - ALL DEBT SERVICE FUNDS JUNE 30, 2015 Cash and Investments with Trustee: Balance - June 30, 2014, as adjusted Receipts: Interest on investments Assessments Transfers Total Receipts Disbursements: Administrative cost Principal payment Interest expense Transfers Total Disbursements Cash and Investments with Trustee: Balance - June 30, 2015 Special Tax Administrative Fund Expense Total -$ 19,177$ 389,854$ 4 3 44 739,176 - 739,176 - 20,000 597,905 739,180 20,003 1,337,125 - 7,075 7,075 - 4,516 184,516 - - 397,905 597,905 - 597,905 597,905 11,591 1,187,401 141,275$ 27,589$ 539,578$ 15