City of Daly City Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2014 CITY OF DALY CITY, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2014 Prepared by DEPARTMENT OF FINANCE AND ADMINISTRATIVE SERVICES Lawrence Chiu Director CITY OF DALY CITY COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS I INTRODUCTORY SECTION Page Letter of Transmittal .................................................................................................................................. vii Organization Structure ............................................................................................................................... xiv GFOA Certificate of Achievement for Excellence in Financial Reporting .............................................. xvi II FINANCIAL SECTION Independent Auditor’s Report ................................................................................................................... 1 Management’s Discussion and Analysis .................................................................................................. 3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ......................................................................................................... 12 Statement of Activities .............................................................................................................. 13 Fund Financial Statements: Governmental Funds: Balance Sheet ......................................................................................................................... 14 Reconciliation of the Governmental Funds Balance Sheet with the Statement of Net Position ................................................................................................. 15 Statement of Revenues, Expenditures, and Changes in Fund Balance ................................ 16 iii CITY OF DALY CITY COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Page Reconciliation of the Net Change in Fund Balances - Total Governmental Funds with the Statement of Activities ............................................................................ 17 Statements of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: General Fund ....................................................................................................................... 18 Gas Tax Special Revenue Fund .......................................................................................... 20 Proprietary Funds: Statement of Net Position ................................................................................................. 21 Statement of Revenues, Expenses and Changes in Fund Net Position ............................ 22 Statement of Cash Flows .................................................................................................. 23 Fiduciary Funds: Statement of Fiduciary Net Position ..................................................................................26 Statement of Changes in Fiduciary Net Position ...............................................................27 Notes to Basic Financial Statements .......................................................................................... 29 Supplemental Information: Major Governmental Funds Other than General Fund and Special Revenue Funds: Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: Capital Projects Fund ....................................................................................................... 60 iv CITY OF DALY CITY COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Page Nonmajor Governmental Funds: Combining Balance Sheet ................................................................................................... 62 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ............................................................................................................. 64 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual ........................................................................... 66 Nonmajor Proprietary Funds: Combining Statement of Net Position ....................................................................................... 70 Combining Statement of Revenues, Expenses and Changes in Fund Net Position .............................................................................................. 71 Combining Statement of Cash Flows ........................................................................................ 72 Internal Service Funds: Combining Statement of Net Position ................................................................................. 74 Combining Statement of Revenues, Expenses and Changes in Fund Net Position ............ 76 Combining Statements of Cash Flows ................................................................................ 78 Agency Funds: Combining Statement of Changes in Assets and Liabilities ............................................... 82 v CITY OF DALY CITY COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS III STATISTICAL SECTION Page Net Position by Component - Last Ten Fiscal Years ................................................................................ 87 Changes in Net Position - Last Ten Fiscal Years ..................................................................................... 88 Fund Balances of Governmental Funds - Last Ten Fiscal Years ............................................................ 91 Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years .......................................... 92 Assessed Value of Taxable Real Property - Last Ten Fiscal Years......................................................... 94 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years ..................................................... 95 Principal Property Tax Payers – Current Year and Nine Years Ago ...................................................... 96 Property Tax Levies and Collections – Last Ten Fiscal Years ................................................................ 97 Ratio of Outstanding Debt by Type – Last Ten Fiscal Years .................................................................. 98 Computation of Direct and Overlapping Debt ......................................................................................... 99 Computation of Legal Bonded Debt Margin .......................................................................................... 100 Water Utility District - Number of Connections by User and Revenue Bond Coverage: Water Utility District Certificates of Participation – Last Ten Fiscal Years ........................................................................................................ 101 Demographic and Economic Statistics - Last Ten Fiscal Years ............................................................ 103 Principal Employers – Current Year and Nine Years Ago .................................................................... 104 Full-Time City Government Employees by Function – Last Ten Fiscal Years .................................... 105 Operating Indicators by Function/Program – Last Ten Fiscal Years .................................................... 106 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ................................................ 108 vi City of Daly City 333 – 90TH STREET DALY CITY, CALIFORNIA 94015-1895 November 4, 2014 Honorable Mayor Members of the City Council Citizens of Daly City It is a pleasure to present the Comprehensive Annual Financial Report (CAFR) of the City of Daly City for the fiscal year ended June 30, 2014. The financial statements are presented in conformity with generally accepted accounting principles (GAAP). These financial statements have been audited by Maze and Associates, independent certified public accountants, in accordance with generally accepted auditing standards. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City are free of material misstatements. Maze and Associates, has issued an unmodified (“clean”) opinion on the City of Daly City’s financial statements. The auditor’s report is located at the front of the financial section of this report. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based on a comprehensive framework of internal controls that are established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The CAFR is divided into three sections: (1) The Introductory Section includes the Letter of Transmittal, an organizational overview of the City government and prior awards received. (2) The Financial Section includes the Independent Auditor’s Report, Management’s Discussion and Analysis, Government-wide Financial Statements, Fund Financial Statements, Notes to the Financial Statements, Required Supplementary Information, Combining Financial Statements, and schedules. (3) The Statistical Section includes a number of tables of unaudited data depicting the financial, economic and demographic information of the City. Management’s Discussion and Analysis (MD&A) immediately follows the