2016-CAFRFiscal Year Ended June 30, 2016
City of Encinitas
C a l i f o r n i a
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2016
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2016
The front cover of this Financial Report highlights City Council priority projects worked on during
FY 2015-2016 starting upper left and moving clockwise: 1) Marine Safety Center at Moonlight
Beach (artists rendering), 2) Paul Ecke Central Elementary Safe Route to School Improve-
ments, 3) Annual Street Overlay project, and 4) Leo Mullen Turf project. The picture in the cen-
ter highlights the adoption of an urban agriculture ordinance by City Council that encourages
sustainable practices, improves local food security and access to healthy food while protecting
the environment, public health and animal welfare.
City of Encinitas
California
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2016
Issued by the Finance Department
505 South Vulcan Avenue • Encinitas, CA 92024 • 760-633-2600 •
www.encinitasca.gov
ABOUT THE CITY OF ENCINITAS
The City of Encinitas was incorporated as a general law city in 1986, merging the existing
communities of New and Old Encinitas, Cardiff-by-the-Sea, Leucadia, and Olivenhain. The
City of Encinitas has a population of approximately 62,000 and is located along six miles of
Pacific coastline in the northern half of San Diego County. Approximately 21 square miles
in area, Encinitas is characterized by coastal beaches, cliffs, flat-topped coastal areas,
steep mesa bluffs, and rolling hills. Encinitas is the center of a significant flower growing
industry and is often referred to as the Flower Capital of the World.
Issued by the Finance Department
505 South Vulcan Avenue • Encinitas, CA 92024 • 760-633-2600 •
www.encinitasca.gov
ABOUT THE CITY OF ENCINITAS
The City of Encinitas was incorporated as a general law city in 1986, merging the existing
communities of New and Old Encinitas, Cardiff-by-the-Sea, Leucadia, and Olivenhain. The
City of Encinitas has a population of approximately 61,000 and is located along six miles of
Pacific coastline in the northern half of San Diego County. Approximately 21 square miles
in area, Encinitas is characterized by coastal beaches, cliffs, flat-topped coastal areas,
steep mesa bluffs, and rolling hills. Encinitas is the center of a significant flower growing
industry and is often referred to as the Flower Capital of the World.
CITY COUNCIL KEY STRATEGIC PLAN DOCUMENT ELEMENTS:
VISION STATEMENT
“Encinitas is five unique communities thriving as ONE great city.”
MISSION STATEMENT
“Preserve, protect and provide innovative services that enhance the quality of
life for residents, visitors, businesses and our communities.”
ABOUT THE COVERS
On the front cover is a collage highlighting City Council priority projects worked on during
FY 2015-2016 starting upper left and moving clockwise: 1) Marine Safety Center at
Moonlight Beach (artists rendering), 2) Paul Ecke Central Elementary Safe Route 2 School
Improvements, 3) Annual Street Overlay project, and 4) Leo Mullen Turf project. The
picture in the center highlights the adoption of an urban agriculture ordinance by City
Council that encourages sustainable practices, improves local food security and access to
healthy food while protecting the environment, public health and animal welfare. On the
back cover is a photo taken courtesy of Morgan Mallory.
Copies of this report are available at the City of Encinitas, 505 South Vulcan Avenue,
Encinitas, California 92024.
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City of Encinitas
Comprehensive Annual Financial Report
For the Year Ended June 30, 2016
Table of Contents
Page
INTRODUCTORY SECTION (Unaudited)
Table of Contents
Transmittal Letter ........................................................................................................................................... i
List of City Officials ...................................................................................................................................... vii
Organization Chart ...................................................................................................................................... viii
Certificate of Achievement for Excellence in Financial Reporting – GFOA .................................................. ix
FINANCIAL SECTION
Independent Auditors’ Report on Financial Statements ......................................................................... 1
Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed
in Accordance with Government Auditing Standards ....................................................................... 5
Management’s Discussion and Analysis (Required Supplementary Information – Unaudited) .......... 7
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position ................................................................................................................. 25
Statement of Activities and Changes in Net Position ....................................................................... 26
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet ............................................................................................................................ 33
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ................................................................ 34
Statement of Revenues, Expenditures, and Changes in Fund Balances ................................... 35
Reconciliation of the Governmental Statement of Revenues,
Expenditures, and Changes in Fund Balances to the Government-Wide
Statement of Activities and Changes in Net Position ............................................................... 36
Proprietary Fund Financial Statements:
Statement of Net Position ........................................................................................................... 38
Statement of Revenues, Expenses, and Changes in Net Position ............................................. 40
Statement of Cash Flows ............................................................................................................ 42
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Position ........................................................................................... 49
Notes to the Basic Financial Statements ........................................................................................... 51
City of Encinitas
Comprehensive Annual Financial Report
For the Year Ended June 30, 2016
Table of Contents (Continued)
Page
FINANCIAL SECTION (Continued):
Required Supplementary Information (Unaudited):
Budgetary Information ....................................................................................................................... 119
Budgetary Comparison Schedule:
General Fund ............................................................................................................................... 120
Schedule of Changes in the Net Pension Liability and Related Ratios ............................................. 122
Schedules of the City’s Proportionate Share of the Net Pension Liability ......................................... 123
Schedules of Contributions ................................................................................................................ 125
Schedule of Funding Progress – Other Post Employment Benefits .................................................. 128
Supplementary Information:
Non-Major Governmental Funds:
Combining Balance Sheet ........................................................................................................... 132
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................... 134
Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:
Infrastructure Improvements Special Revenue Fund ............................................................ 136
Grants and Housing Special Revenue Fund ......................................................................... 137
Development Impact Special Revenue Fund ........................................................................ 138
Lighting and Landscaping Special Revenue Fund ................................................................ 139
Internal Service Funds:
Combining Statement of Net Position .......................................................................................... 142
Combining Statement of Revenues, Expenses, and Changes in Net Position ............................ 143
Combining Statement of Cash Flows .......................................................................................... 144
Fiduciary Funds:
Combining Statement of Changes in Assets and Liabilities – Agency Funds ............................. 146
STATISTICAL SECTION (Unaudited)
Index ........................................................................................................................................................ 147
Financial Trends:
Net Position by Component – Last Ten Fiscal Years ........................................................................ 148
Changes in Net Position – Last Ten Fiscal Years ............................................................................. 150
Fund Balances of Governmental Funds – Last Ten Fiscal Years ..................................................... 154
Changes in Fund Balance of Governmental Fund – Last Ten Fiscal Years ...................................... 156
Revenue Capacity:
Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ............ 158
Principal Secured Property Tax Payers – Last Ten Fiscal Years ...................................................... 159
General Property Tax Levies and Collections – Last Ten Fiscal Years ............................................ 160
Direct and Overlapping Property Tax Ratios – Last Ten Fiscal Years .............................................. 162
City of Encinitas
Comprehensive Annual Financial Report
For the Year Ended June 30, 2016
Table of Contents (Continued)
Page
STATISTICAL SECTION (Continued):
Debt Capacity:
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ........................................................... 166
Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ............................................. 168
Schedule of Direct and Overlapping Bonded Debt ............................................................................ 169
Legal Debt Margin Information – Last Ten Fiscal Years ................................................................... 170
Historical Debt Service Coverage – Last Ten Fiscal Years ............................................................... 172
Demographic and Economic Information:
Demographic and Economic Statistics – Last Ten Calendar Years .................................................. 173
General Governmental Tax Revenue by Source ............................................................................... 174
Taxable Sales by Category – Last Ten Fiscal Years ......................................................................... 175
Operating Information:
Full-Time and Part-Time City Employees by Function – Last Seven Fiscal Years ........................... 176
Operating Indicators by Function – Last Seven Fiscal Years ............................................................ 177
Capital Assets Statistics by Function – Last Nine Fiscal Years ......................................................... 178
Cardiff Sanitary Division:
Rate Schedule for Annual Sewer Charges ........................................................................................ 179
Historical Service Charges Billed ...................................................................................................... 180
Ten Largest Customers ..................................................................................................................... 182
Historical Service Connections .......................................................................................................... 182
San Dieguito Water District:
Schedule of Water Rates ................................................................................................................... 184
Bi-Monthly Meter Service Availability Charges .................................................................................. 184
Historic Potable Water System Revenues – Last Ten Fiscal Years .................................................. 185
Historic Recycled Water System Revenues – Last Ten Fiscal Years ............................................... 185
Summary of Water Production by Source – Last Ten Fiscal Years .................................................. 186
Summary of Water Deliveries by Source – Last Ten Fiscal Years .................................................... 186
Ten Largest Water Customers .......................................................................................................... 187
Total Service Connections by Category – Last Ten Fiscal Years ..................................................... 187
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LIST OF CITY OFFICIALS
As of June 30, 2016
Mayor Kristen Gaspar
Deputy Mayor Lisa Shaffer
Councilmember Catherine Blakespear
Councilmember Tony Kranz
Councilmember Mark Muir
City Manager Karen P. Brust
City Clerk/Legislative Services Director Kathy Hollywood
Public Works Director Glenn Pruim
Finance Director Tim Nash
Fire Chief Michael Stein
Human Resources Department Manager Jodene Dunphy
Chief Information Officer Lynn Tufts
Law Enforcement Services Director Captain John Maryon
Parks & Recreation Department Director Jennifer Campbell
Planning & Building Director (Interim)Manjeet Ranu
Risk Management Manager Jace Schwarm
CITY COUNCIL
EXECUTIVE TEAM MEMBERS
November 2016
viii
ix
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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
of the City of Encinitas
Encinitas, California
Report on Financial Statements
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 Encinitas, California
(the “City”), as of and for the year ended June 30, 2016, 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 did not audit
the Investments in Joint Ventures which represent 9.6 percent, 14.3 percent and 3.8 percent of the assets,
net position, and expenses, respectively, of the City. The financial statements of these agencies, as listed
in Note 5 to the basic financial statements, were audited by other auditors whose report has been furnished
to us, and our opinion, insofar as it relates to the amounts included for the Investments in Other Agencies,
is based solely on the report of the other auditors. 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 of 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 City’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 City’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.
6265 Greenwich Drive, Suite 220, San Diego, California 92122
Tel: 858-242-5100 • Fax: 858-242-5150
www.pungroup.com
3939352 Pun & McGeady_L_final.pdf 2 1/14/14 3:48 PM
To the Honorable Mayor and Members of the City Council
of the City of Encinitas
Encinitas, California
Page 2
2
Opinions
In our opinion, based on our audit and the report of other auditors, 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 as of
June 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof
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 the Management’s
Discussion and Analysis, Budgetary Comparison Schedules, Schedules of Changes in Net Pension Liability
and Related Ratios, Schedules of the Proportionate Share of the Net Pension Liability, Schedules of
Contributions, and Schedules of Funding Progress on pages 7 through 19 and 119 through 128 be
presented to supplement the basic financial statements. Such 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. We and other auditors have applied certain limited procedures
to the Required Supplementary Information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management’s responses to our inquiries,
the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The Introductory Section, Combining and Individual
Nonmajor Fund Financial Statements and Budgetary Comparison Schedules, and Statistical Section, are
presented for purposes of additional analysis and are not a required part of the basic financial statements.
The Combining and Individual Nonmajor Fund Financial Statements and Budgetary Comparison Schedules
are the responsibility of management and were derived from and relate 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 auditing standards generally accepted in
the United States of America. In our opinion, the Combining and Individual Nonmajor Fund Financial
Statements and Budgetary Comparison Schedules are fairly stated in all material respects in relation to the
basic financial statements as a whole.
The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in the
audit of the basic financial statements, and accordingly, we do not express an opinion or provide any
assurance on them.
To the Honorable Mayor and Members of the City Council
of the City of Encinitas
Encinitas, California
Page 3
3
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 7, 2016, on our consideration of the City’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 the
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 City’s internal control over
financial reporting and compliance.
San Diego, California
December 7, 2016
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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the City Council
of the City of Encinitas
Encinitas, California
We have audited, in accordance with the 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, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of the
City of Encinitas, California (the “City”), as of and for the year ended June 30, 2016, and the related notes to
the financial statements, which collectively comprise the City’s basic financial statements, and have issued
our report thereon dated December 7, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (“internal control”) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not
express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness,
yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts
and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
6265 Greenwich Drive, Suite 220, San Diego, California 92122
Tel: 858-242-5100 • Fax: 858-242-5150
www.pungroup.com
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To the Honorable Mayor and Members of the City Council
of the City of Encinitas
Encinitas, California
Page 2
6
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this
communication is not suitable for any other purpose.
San Diego, California
December 7, 2016
City of Encinitas
Management’s Discussion and Analysis
For the Year Ended June 30, 2016
7
This discussion and analysis of the City of Encinitas’ financial performance provides an
overview of the fiscal year ended June 30, 2016. The City’s financial statements include the
accounts of the City, the Encinitas Public Financing Authority (EPFA), the Encinitas Housing
Authority (EHA), and the San Dieguito Water District (SDWD). Please read it in conjunction with
the accompanying transmittal letter, the basic financial statements and the accompanying notes
to those financial statements.
FINANCIAL HIGHLIGHTS
The City’s total assets increased overall by $7.5 million. This is composed of a $4.5
million increase in Governmental activities and $3.0 million increase in Business-Type
activities.
The City’s total net position increased overall by $11.8 million. Total assets increased
$7.5 million and total liabilities increased $1.9 million (due to an increase in the
aggregate net pension liabilities).
The City’s total revenues increased $5.1 million from 2015.
o Governmental activities revenues increased $6.0 million
o Business-type activities revenues decreased $.9 million
The City’s total expenses increased $0.8 million from 2015.
o Governmental activities expenses increased $3.4 million
o Business-type activities expenses decreased $2.6 million
THE FINANCIAL STATEMENTS
The financial statements presented herein include all the activities of the City of Encinitas (City)
and the component unit of San Dieguito Water District (SDWD) using the integrated approach
as prescribed by GASB Statement No. 34. The City includes accounts for the Encinitas Public
Financing Authority (EPFA) and the Encinitas Housing Authority (EHA).
The Government-Wide Financial Statements present the financial picture of the City from the
economic resources measurement focus using the accrual basis of accounting. They present
Governmental activities and Business-type activities separately. These statements include all
assets of the City (including infrastructure) as well as all liabilities (including long-term debt).
Certain eliminations have occurred as prescribed by the statement in regards to interfund
activity, payables and receivables.
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
8
The Fund Financial Statements include statements for each of the three categories of activities:
Governmental, Business-Type (proprietary) and Fiduciary. The Governmental activities (other
than internal service activities) are prepared using the current financial resources measurement
focus and modified accrual basis of accounting. The Business-Type activities are prepared
using the economic resources management focus and the accrual basis of accounting. The
Fiduciary activities include agency funds that only report a balance sheet and do not have a
measurement focus. Reconciliations of the Fund Financial Statements to the Government-Wide
Financial Statements are included in order to explain the differences created by the integrated
approach (please see pages 34 and 36).
Reporting the City as a Whole
The Statement of Net Position and the Statement of Activities
The Government-Wide Financial Statements consist of two financial statements. The
Statement of Net Position and the Statement of Activities and Changes in Net Position,
report information about the City as a whole and 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. Revenues and expenses for the current
fiscal year are accounted for, regardless of when cash is received or paid. One of the most
important questions asked about the City’s finances is “Are the City’s finances better or
worse off as a result of this year’s activities?” These statements can help answer this
question and provides an analysis of the City’s financial position.
The Statement of Net Position presents information on all of the City’s assets, deferred
outflows-inflows and liabilities, with the difference between the four reported as Net Position,
which is one way to measure the City’s financial health. Over time, increases or decreases
in the City’s Net Position is one indicator of whether its financial health is improving or
deteriorating.
The Statement of Activities presents information showing how the City’s Net Position
changed during the most recent fiscal year. All changes in Net Position are reported as soon
as the underlying event giving rise to the change occurs, regardless of the timing of related
cash flows. Thus, revenues and expenses are reported in this statement for some items that
will only result in cash flows in future fiscal periods (i.e. uncollected taxes and earned but
unused vacation leave).
In both the Statement of Net Position and the Statement of Activities and Changes in Net
Position, the City activities are separated as follows:
Governmental activities - Most of the City’s basic services are reported in this category,
including General Government, Public Safety, Public Works, Building and Planning,
Engineering Services, and Parks and Recreation. Property and sales taxes, user fees,
franchise fees, investment earnings and state and federal grants finance these activities.
Business-Type activities – The City charges a fee to customers to cover all or most of the
cost of certain services it provides. These activities include the water and wastewater
operations and a portion of the City’s affordable housing program.
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
9
Reporting the City’s Most Significant Funds
Fund Financial Statements – The City’s Fund Financial Statements provide a greater level
of detail regarding the City’s Governmental Activities, which include the General fund, Capital
Improvements, and other Nonmajor Governmental funds. The City reports the General fund
and the Capital Improvements fund as major funds, under the guidance provided by GASB
No. 34. All other governmental funds are considered Nonmajor funds, and are reported as
one group. The General Fund is the largest and most discretionary source of funding for
operations, debt service and capital improvements, via both direct expenditures and transfers
to other City funds. The Capital Improvements Capital Projects Fund accounts for all
governmentally funded capital improvements, as well as a number of work projects such as
long-term consultant studies. All of these expenses appear as capital outlay expenditures.
Capital spending totaled $10.8 million this fiscal year, a decrease of approximately $7.6
million from the prior year. Further discussion of the City’s capital program is included in the
section below entitled CAPITAL ASSETS AND CAPITAL IMPROVEMENT PROGRAM. The
other Nonmajor Governmental Funds are primarily Special Revenue funds, where monies
are collected and held, but are restricted to the specific purpose for which they are collected.
The City’s Debt Service funds are included in this group. Discussion of the City’s debt service
program is included in the section below entitled DEBT ISSUANCE AND ADMINISTRATION.
The City’s Major Funds include: Type of Activity
• General Fund Governmental Activities
• Capital Improvements Capital Projects Fund Governmental Activities
• City’s Water and Wastewater Enterprises Business-Type Activities
o San Dieguito Water District
o Cardiff Sanitary Division
o Encinitas Sanitary Division
Governmental funds – Most of the City’s basic services are reported in Governmental
Funds, which focus on how money flows into and out of those funds and the balances left at
year-end that are available for spending. These funds are reported by 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 governmental operations and the basic services
it provides. Governmental fund information helps determine whether there are more or fewer
financial resources that can be used in the near future to finance the City’s programs.
Proprietary funds - When the City charges customers for the services it provides (whether
to outside customers or to other units of the City), these services are generally reported in
proprietary funds. Proprietary funds are reported in the same manner as the governmental
activities are reported in Statement of Net Position and the Statement of Activities and
Changes in Net Position. The City’s enterprise funds (one component of the proprietary
funds) are the same as the business-type activities reported in the government-wide financial
statements, but provide more detail and additional information such as cash flows for
proprietary funds. Internal service funds (the other component of the proprietary funds) report
activities that provide supplies and services to other City’s programs and activities. The
Internal Service funds are reported with Governmental activities in the Government-Wide
financial statements.
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
10
Fiduciary funds – The City is the trustee, or fiduciary, for certain funds held on behalf of the
Community Facilities District No. 1 (the Encinitas Ranch Development) and Requeza Street
Assessment District No. 93-1. The City’s fiduciary activities are reported in a separate
Statement of Fiduciary Net Position and Liabilities. We exclude these activities 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.
Net Position – The City of Encinitas’ combined Net Position (i.e. inclusive of all City funds)
for the fiscal year ended June 30, 2016 are compared to results for 2015 in Table 1.
2016 2015 2016 2015 2016 2015
Current assets 74.8$ 66.2$ 42.7$ 42.5$ 117.5$ 108.7$
Capital assets (net)217.9 218.8 55.6 55.7 273.5 274.5
Other non-current assets 4.3 7.5 43.6 40.7 47.9 48.2
Total Assets 297.0 292.5 141.9 138.9 438.9 431.4
Current liabilities 16.5 14.8 4.1 4.5 20.6 19.3
Long-term liabilities 86.7 86.9 18.8 18.0 105.5 104.9
Total Liabilities 103.2 101.7 22.9 22.5 126.1 124.2
Deferred inflows
(outflows)0.5 5.5 (0.4) 0.8 0.1 6.3
Net Position:
Net investment in
capital assets 162.9 157.3 42.5 39.8 205.4 197.1
Restricted 31.0 18.8 1.4 - 32.4 18.8
Unrestricted (0.6) 9.2 75.5 75.8 74.9 85.0
Total Net Position 193.3$ 185.3$ 119.4$ 115.6$ 312.7$ 300.9$
Table 1
Statement of Net Position
(in millions of dollars)
Governmental
Activities
Business-type
Activities
Total Primary
Government
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
11
Net Position represents the most simple test of financial health for the City, indicating the
excess (or deficit) of assets and deferred outflows of resources over liabilities. Net Position
for the City as a whole increased 3.9% from $300.9 million at June 30, 2015, to $312.7
million at June 30, 2016.
• The overall increase in total assets is $7.5 million. The Governmental activities total
assets increased $4.5 million with a slight decrease in cash/investments, an increase in
receivables and inventory as well as a decrease in capital assets. The Business-Type
activities total assets increased $3.0 million with increases in both investment in joint
ventures and capital assets. In summary, the Governmental increase of $4.5 million
plus the Business-Type increase of $3.0 million results in an overall increase to the
City’s total assets of $7.5 million.
• The overall increase in total liabilities is $1.9 million. This is the net change attributable
to $4.2 million increase in the long-term liabilities and $2.3 million decrease in other
liabilities in the Governmental and Business activities (accounts payable, deposits, and
unearned revenue). $4.0 million of the overall increase in long-term liabilities is the
result of an increase in net pension liabilities (governmental activities total $ 2.8 million
and business-type activities total $1.2 million).
• The increase of total assets of $7.5 million along with an increase of Total Liabilities of
$1.9 million and a decrease in Deferred Inflows of $6.2 million has increased the City’s
Total Net Position by $11.8 million or approximately 3.9% increase from 2015.
(Remainder of page left intentionally blank)
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
12
2016 2015 2016 2015 2016 2015
Program Revenues:
Charges for services 8.6$ 6.4$ 22.5$ 23.7$ 31.1$ 30.1$
Operating grants 3.3 3.9 1.1 1.0 4.4 4.9
Capital grants 5.4 4.1 0.7 0.5 6.1 4.6
General Revenues:
Property taxes 41.2 38.5 0.9 0.8 42.1 39.3
Sales and use taxes 14.2 12.6 - - 14.2 12.6
Other taxes 4.8 4.6 - - 4.8 4.6
Intergovernmental 0.4 0.8 - - 0.4 0.8
Other general revenue 1.6 2.6 0.1 0.2 1.7 2.8
Total Revenues 79.5 73.5 25.3 26.2 104.8 99.7
Program Expenses:
General government 11.7 10.8 - - 11.7 10.8
Public safety 27.3 25.8 - - 27.3 25.8
Public works 11.7 11.6 - - 11.7 11.6
Planning and building 7.3 6.6 - - 7.3 6.6
Engineering services 4.6 6.2 - - 4.6 6.2
Parks and recreation 6.8 5.2 - - 6.8 5.2
Interest on long-term debt 2.5 2.3 - - 2.5 2.3
Cardiff Sanitary Division - - 3.9 4.3 3.9 4.3
San Dieguito Water District - - 13.5 15.0 13.5 15.0
Encinitas Sanitary Division - - 2.3 1.7 2.3 1.7
Affordable Housing - - 1.4 1.4 1.4 1.4
Recreation - - - 1.3 - 1.3
Total Expenses 71.9 68.5 21.1 23.7 93.0 92.2
Change in Net Position 7.6 5.0 4.2 2.5 11.8 7.5
Transfers in (out)0.4 - (0.4) - - -
Increase in Net Position 8.0 5.0 3.8 2.5 11.8 7.5
Net Position - beginning 185.3 180.3 115.6 113.1 300.9 293.4
Net Position - ending 193.3$ 185.3$ 119.4$ 115.6$ 312.7$ 300.9$
Activities Activities Government
Table 2
Statement of Activities and Changes in Net Position
(in millions of dollars)
Governmental Business-type Total Primary
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
13
Chart 1 shows the financial impact of the various City programs, or the extent to which these
programs generate revenue from fees and grants. The City’s programs include General
Government, Public Safety (Fire and Law Enforcement), Public Works, Planning and Building,
Engineering Services, and Parks and Recreation. Each program’s net cost (total cost less
revenues generated by the activities) is presented in the Statement of Activities and Changes in
Net Position.
Chart 2 shows that Property Tax, Sales Tax, Charges for Services, Capital Grants and
Contributions, and Operating Grants and Contributions, which are the top five categories of
revenue and comprise 94% of funding for Governmental activities. The Other category includes
proceeds from the disposition of City real property, intergovernmental, cost recovery, and
miscellaneous revenues.
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
General
Government
Pubic Safety Public Works Planning &
Building
Engineering
Services
Parks &
Recreation
Interest on
Long-term
Debt
Chart 1
Expenses vs. Program Revenue
(Governmental Activities)
Program Revenue Expenses
Charges for
Services
11%
Operating Grants &
Contributions
4%
Capital Grants &
Contributions
7%
Property Taxes
52%
Sales Taxes
18%
Other Taxes
6%
Intergovernmental
0%
Use of Money &
Property
1%
Other Taxes
1%
Chart 2
Governmental Revenues
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
14
Business-Type Activities for the City of Encinitas include water and wastewater operations
and a portion of the City’s affordable housing program. These activities increased Net
Position (including transfers) by $3.8 million from the last fiscal year as noted in in Table 2.
Overall revenues decreased $0.9 million while overall expenses decreased $2.6 million from
2015. Net transfers (an increase to Net Position) increase $0.4 million from the prior year.
The Statement of Revenues, Expenses, and Changes in Net Position for proprietary funds
indicate a decrease of $1.3 million in operating revenues from the previous year. The Water
operating revenue decreased $0.1 million while Wastewater and Affordable Housing
revenues increased $1.4 million. Operating expenses decreased $2.7 million. The primary
reason for the decrease in operating revenue and expenses in 2016 is attributable to the
recreation program funds being transferred back to the General Fund and are now reported
in the Governmental activities starting 2016.
Overall, operating revenue exceeded operating expenses (before transfers) in 2016 resulting
in a total net operating income of $1.3 million.
Chart 3 below compares program revenue from Business-Type activities to program
expenses. Water and wastewater operations operated at a surplus, as referenced in the
Statement of Activities and Changes in Net Position (with transfers-out for $462,721
appearing “below the line” of program expenses).
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
Cardiff Sanitary
Division
San Dieguito Water
District
Encinitas Sanitary
Division
Affordable Housing
Chart 3
Expenses vs. Program Revenue
(Business-type Activities)
Program Revenue Expenses
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
15
General Fund
General Fund Budgetary Highlights
General Fund Revenues $2.0 million above projections
Property taxes made up 60% of the general fund revenue budget. The City of Encinitas receives
approximately 24 cents of each dollar of property tax revenue generated in the City. Current
secured property taxes, along with other property tax categories, exceeded projections by
$530,243, a 7.1% increase over 2015. Documentary transfer tax exceeded projections by
$137,189. Sales tax is the City’s second largest revenue source and actual revenue received
exceeded projections by $381,583, a 12.6% increase over 2015. 80% of the City’s Transient
Occupancy Tax (TOT) is deposited to the General Fund and 20% is deposited to the Coastal
Zone Management Fund for sand replenishment. TOT revenue exceeded projections by
$114,172, an increase of 10.4% from 2015. Overall, franchise taxes exceeded projections by
$161,567. Licenses and permits were lower than projections by $17,773 mainly due to a
decrease in business registration renewals and short-term vacation permits. Intergovernmental
revenue was lower than projected by $185,068, primarily due to revenue not yet received from
agencies participating in the Carlsbad Watershed Management Area Cost Sharing Agreement.
Planning and building fees were lower than projections, while Engineering, Fire and Recreation
fees exceeded projections so overall Charges for Services revenue exceeded projections by
$201,892. Fines and Penalties, which include vehicle code and red light violations, exceeded
projections by $154,638. Use of money and property include investment earnings which
exceeded projections by $211,577 and income from City property rentals that exceeded
projections by $169,539, an increase of 59.7%. This was primarily due to an additional lease
agreement for a cell tower at Fire Station 3. Other general fund revenues overall exceeded
projections by $183,593, primarily due to an increase in cost recovery revenue received.
General Fund Expenditures $2.4 million under budget
All general fund functional areas, including general government/administration, experienced
savings in the current fiscal year, with total savings (budget vs. actual) of over $2.4 million. This
represents savings of approximately 4.2%. Actual general fund expenditures were $54.9 million
compared to prior year actuals of $52.1 million.
Excess of Revenues over Expenditures $4.4 million above projections
Actual revenues over expenditures were approximately $13.8 million, compared to a budget of
$9.4 million. NOTE: This does not take into account the Other Financing Sources (Uses)
discussed below. This result is a combination of revenues being above projections and
expenditures being under budget, as discussed above.
Other Financing Sources and Uses – General Fund
Other Financing Sources and Uses consisted of Transfers-in and Transfers-(out) this fiscal year.
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
16
Scheduled transfers-in included: (a) monies from the Gasoline Taxes special revenue fund,
which fund a portion of the City’s street maintenance program, and (b) monies for impact fees
collected for community facilities and fire mitigation. The impact fees are transferred at year-
end to reimburse the General Fund for amounts expended in prior years for the Public Library
and Fire Station Rehabilitation projects. Transfers in for operating were lower than budgeted by
$35,591 primarily due to the Gasoline Taxes received were lower than budgeted.
Transfers out to internal service funds includes the General Fund’s contribution to the Self-
Insurance fund. The contribution was set and funded at approximately $900,000.
Appropriations for capital projects from the general fund totaled $16.0 million in 2016.
Transfers-(out) for debt service totaled $5.0 million, which was the same as the $5.0 million
budgeted
Analysis of Fund Balance and Changes in Fund Balance
Fund balance projected to be $28.5 million as of June 30, 2016, a scheduled decrease of about
$12.9 million. Actual fund balance was $32.9 million, or $4.4 million higher than projected.
There was an excess of revenues over expenditures of 13.8 million. Factoring in transfers for
debt service payments of $5.0, capital expenditures of $16.1 and other transfer activity of $1.2
million, the net result is a decrease in total fund balance of $8.5 million at year-end.
CAPITAL ASSETS AND THE CAPITAL IMPROVEMENT PROGRAM
As of June 30, 2016, the City had approximately $393.4 million invested in a broad range of
capital assets including road and drainage systems, parks and beach facilities, public buildings,
water and wastewater treatment facilities, collection and distribution systems and affordable
housing stock. Of that amount, $298.9 million is classified as capital assets under the category
of Governmental Activities, and $94.5 million is classified as capital assets of Business-Type
Activities. In addition, there are $42.2 million of assets under Business-Type Activities classified
as Investment in Joint Ventures. This investment consists mainly of capital assets belonging to
related governmental agencies where the City holds an equity interest in the joint venture. The
assets are principally water and wastewater treatment facilities.
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
17
Governmental Activities $298.9 million
The City has two Capital Projects Improvement Funds for the capital improvements for
governmental activities. These include public facilities, acquisition of parkland and park
improvements, infrastructure, and certain City “work projects” such as multi-year consultant
studies that meet the criteria for inclusion as capital projects for budgeting purposes. The City
uses a dollar threshold of $100,000 and a useful life of five years or more in its evaluation for
capitalizing a capital expenditure. Eligible project costs are additions to construction in progress
(CIP) at fiscal year-end. Costs for completed projects are recorded as additions to the
appropriate capital asset category at year-end. .
The City spent approximately $10.8 million this fiscal year on capital improvement projects.
These capital expenditures consisted of a variety of different projects that were either in
development or construction phase. The primary emphasis this fiscal year was on the North
Coast Highway 101 Streetscape, Santa Fe Drive Improvements, Devonshire Drive Traffic
Calming, Civic Center Improvements, El Camino Real Channel Storm Drain Repair, Highway
101 Emergency Repair, and on-going pavement overlay project.
Business-Type Activities
Capital Assets: $94.5 million
The City accounts for the acquisition and construction of capital assets for its Water and
Wastewater operations under its Proprietary-Type funds and as enterprise activities. Capital
spending is recorded as expenses in the appropriate capital fund under each separate activity
during the fiscal year. At the end of the fiscal year, the expenses are analyzed to determine if
they meet the criteria to be capitalized as long-term fixed assets. The criteria are the same as
the City criteria ($100,000 threshold and a minimum five-year life.) Eligible capital expenses are
then capitalized to the construction-in-progress account(s), while non-eligible expenses are
reclassified as operating expenses. Total amounts expended on completed projects are then
transferred to the appropriate capital asset class.
The City’s affordable housing fund carries its investment of about $4 million in affordable
housing stock under the classification of utility, plant, vehicles and equipment. There has not
been any capital spending activity in this fund since its original purchase of 16 housing units in
2004.
Investment in Joint Ventures: $42.2 million
The City’s water and wastewater enterprises each hold equity interests in joint ventures with
other local agencies.
SDWD holds an equity interest, along with Santa Fe Irrigation District, in the R.E. Badger Joint
Facilities. SDWD makes capital contributions each year for the replacement and improvement
of the Joint Facilities, which then gets added to the Investment account at the end of the fiscal
year. SDWD also makes monthly payments to cover its ratable share of annual operating costs.
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
18
SDWD also holds an equity interest in the R.E. Badger Water Facilities Financing Authority.
The primary content of this investment consists of a ratable share of certain debt service
reserve fund assets and capitalized financing costs. Therefore, these resources are not
available to SDWD for the funding of its operations.
Cardiff Sanitary Division (CSD) holds an equity interest, along with the City of Solana Beach, in
the San Elijo Joint Powers Authority Joint Facilities. CSD makes capital contributions each year
for the replacement and improvement of the Joint Facilities, which gets added to its Investment
account at the end of the fiscal year. CSD also makes quarterly payments to cover its ratable
share of annual operating costs. The treatment facilities, also serving other local agencies, bill
quarterly for their ratable share of operations costs and capital improvements.
Encinitas Sanitary Division (ESD) holds an equity interest, along with five other local agencies,
in the Encina Wastewater Authority Joint Facilities. ESD makes capital contributions each year
for the replacement and improvement of the Joint Facilities. These capital contributions are
additions to the Investment account at the end of the fiscal year. The Division also makes
quarterly payments to cover its ratable share of annual operating costs.
DEBT ISSUANCE AND ADMINISTRATION
The City has a total of $73.0 million of long-term debt for both Governmental and Business-type
activities as shown in Note 9 – Long-Term Obligations schedule on page 75 of this report. The
Governmental Activities debt totaling $58.7 million include $2.0 million in capital leases, $53.0
million in bonded debt and $3.7 million in claims payable and compensated absences. The
capital leases consist of the Civic Center Roof Replacement and fire apparatus vehicles. The
Business-type Activities debt totals $14.3 million and includes $14.1 million in bonded debt and
$0.2 million in compensated absences. $8.7 million of the total $73.0 million is due within one
year.
Governmental Activities $58.7 million
The majority of the City’s long-term debt is bonded debt issued in order to acquire and/or
construct public facilities including City Hall, the Public Library, the Encinitas Community Park
and the Pacific View land acquisition. On September 23, 2015, the Encinitas Public Financing
Authority (on behalf of the City) refunded its 2006 Public Library bonds with the principal
balance of $16,975,000 with the 2015 Lease Revenue Refunding Bonds for $15,645,000. The
issuance of the new debt and refunding of the old debt resulted in an economic gain of
approximately $3.2 million and the final maturity is the same. Debt payments for all of these
bonds are due semi-annually at fixed amounts, and the debt matures at various times through
2036. Annual debt service averages approximately $1.1 million.
The City has a policy of utilizing lease/purchase financing for the acquisition of equipment
costing more than $100,000. The City is obligated under a lease/purchase agreement (a private
placement with a financial institution) for improvements made to City Hall in 2008. Annual
payments on that lease are $180,000. The City’s total annual debt service of approximately
$4.8 million represents approximately 7.0% of annual general fund operating revenues. The
City currently leases three Fire Engines and the average annual leases are $325,000.
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2016
19
Business-Type Activities $14.3 million
SDWD and CSD carry long-term debt issued to construct capital improvements to both their distribution and
collection systems and their Joint Facilities. The Encinitas Housing Authority has a mortgage loan with a
financial institution that partially funded the acquisition of the City’s affordable housing units (Pacific Pines).
The City is not obligated in any way for repayment of these debt issues.
General Information on City debt
The City of Encinitas obtained and affirmed in 2015 an upgrade to its issuer credit rating to AAA by
Standard & Poor’s (S & P). The City’s credit rating affirmed recently by S & P issued a credit rating of AA+
on the City’s 2015 Lease Revenue bonds. Ratings for lease revenue bond issues are typically one notch
lower than the issuers’ rating, due to the structure of the bond issue.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS
The City’s elected and appointed officials consider many economic factors when setting budgets, including
national, state and local economic conditions, trends in residential housing, and the unique needs of the
community. The Finance Department coordinates the development of the operating and capital budgets
presented by the City Manager to the City Council for consideration. The City adopts its operating budget in
a two-year cycle, with legal appropriations set for the first year only. The operating and capital budgets for
Fiscal Year 2015-16 were appropriated by the City Council in June 2015.
The fiscal year 2015-16 actual results, when compared to the adopted projections and appropriations,
showed revenues well above forecasts and expenditures significantly under budget. Fiscal year 2016-17
revenues expect to increase modestly above 2015-16 actual levels. Expenditures expect to rise modestly
above 2015-16 levels. Next year’s budget does anticipate a 1% adjustment to employee compensation,
which is the largest portion of the general fund budget. Debt service costs will remain consistent with 2015-
16.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
The financial report’s intention is to provide our citizens, taxpayers, customers, and investors and creditors
with a general overview of the City’s finances and to demonstrate the City’s accountability for the monies it
receives and manages.
If you have questions about this report or need additional information, please contact the Finance
Department of the City of Encinitas, 505 South Vulcan Ave, Encinitas, CA 92024, telephone (760) 633-
2600, or visit our website at www.encinitasCA.gov and review the Finance Department webpage.
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BASIC FINANCIAL STATEMENTS
21
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GOVERNMENT-WIDE
FINANCIAL STATEMENTS
23
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Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments 64,366,979$ 39,850,247$ 104,217,226$
Restricted cash and investments with fiscal agent 2,559,011 19,510 2,578,521
Receivables 6,721,481 2,625,060 9,346,541
Inventory and prepaid items 1,145,388 261,878 1,407,266
Total current assets 74,792,859 42,756,695 117,549,554
Noncurrent assets:
Restricted cash and investments with fiscal agent 3,007,966 1,377,006 4,384,972
Internal balances 65,610 (65,610) -
Long-term receivable 948,633 - 948,633
Investments in joint ventures - 42,164,196 42,164,196
Other assets 332,518 98,155 430,673
Capital assets:
Non-depreciable 78,212,996 11,292,597 89,505,593
Depreciable, net 139,695,076 44,278,260 183,973,336
Total capital assets, net 217,908,072 55,570,857 273,478,929
Total noncurrent assets 222,262,799 99,144,604 321,407,403
Total assets 297,055,658 141,901,299 438,956,957
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on bond refunding, net 383,229 - 383,229
Pension related deferred outflows of resources (Note 14)4,537,030 840,631 5,377,661
Total deferred outflows of resources 4,920,259 840,631 5,760,890
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 4,968,415 1,693,398 6,661,813
Interest payable 525,851 133,468 659,319
Unearned revenue 714,534 892 715,426
Deposits and other liabilities 3,425,669 372,888 3,798,557
Long-term liabilities - due within one year 6,882,319 1,865,249 8,747,568
Total current liabilities 16,516,788 4,065,895 20,582,683
Noncurrent liabilities:
Long-term liabilities - due in more than one year 51,799,312 12,454,024 64,253,336
Due to R.E. Badger - 1,377,006 1,377,006
Aggregate net pension liability (Note 14)34,876,632 5,019,493 39,896,125
Total noncurrent liabilities 86,675,944 18,850,523 105,526,467
Total liabilities 103,192,732 22,916,418 126,109,150
DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding, net - 146,836 146,836
Pension related deferred inflows of resources (Note 14)5,444,262 287,437 5,731,699
Total deferred inflows of resources 5,444,262 434,273 5,878,535
NET POSITION
Net investment in capital assets 162,923,350 42,501,264 205,424,614
Restricted:
Community development 1,372,165 - 1,372,165
Debt service 2,574,192 1,377,006 3,951,198
Capital projects 27,049,952 - 27,049,952
Total restricted 30,996,309 1,377,006 32,373,315
Unrestricted (580,736) 75,512,969 74,932,233
Total Net Position 193,338,923$ 119,391,239$ 312,730,162$
Primary Government
City of Encinitas
June 30, 2016
Statement of Net Position
See accompanying Notes to the Basic Financial Statements.
25
Operating Capital Total
Charges for Grants and Grants and Program
Functions/Programs Expenses Services Contributions Contributions Revenues
Primary government:
Governmental activities:
General government 11,750,738$ 1,594,277$ -$ -$ 1,594,277$
Public safety 27,255,755 1,009,713 133,648 - 1,143,361
Public works 11,743,123 107,279 2,782,836 4,296,593 7,186,708
Planning and building 7,255,460 2,800,413 310,559 225 3,111,197
Engineering services 4,591,315 1,367,902 - - 1,367,902
Parks and recreation 6,778,769 1,741,619 122,143 1,112,280 2,976,042
Interest on long-term debt 2,494,815 - - - -
Total governmental activities 71,869,975 8,621,203 3,349,186 5,409,098 17,379,487
Business-type activities:
Cardiff Sanitary Division 3,857,531 4,761,486 - 93,623 4,855,109
San Dieguito Water District 13,462,935 14,684,337 - 470,003 15,154,340
Encinitas Sanitary Division 2,306,540 2,855,690 - 117,786 2,973,476
Affordable Housing 1,440,124 218,148 1,068,549 - 1,286,697
Total business-type activities 21,067,130 22,519,661 1,068,549 681,412 24,269,622
Total primary government 92,937,105$ 31,140,864$ 4,417,735$ 6,090,510$ 41,649,109$
Program Revenues
Statement of Activities and Changes in Net Position
City of Encinitas
For the Year Ended June 30, 2016
See accompanying Notes to the Basic Financial Statements.
26
Governmental Business-type
Functions/Programs Activities Activities Total
Primary government:
Governmental activities:
General government (10,156,461)$ -$ (10,156,461)$
Public safety (26,112,394) - (26,112,394)
Public works (4,556,415) - (4,556,415)
Planning and building (4,144,263) - (4,144,263)
Engineering services (3,223,413) - (3,223,413)
Parks and recreation (3,802,727) - (3,802,727)
Interest on long-term debt (2,494,815) - (2,494,815)
Total governmental activities (54,490,488) - (54,490,488)
Business-type activities:
Cardiff Sanitary Division - 997,578 997,578
San Dieguito Water District - 1,691,405 1,691,405
Encinitas Sanitary Division - 666,936 666,936
Affordable Housing - (153,427) (153,427)
Total business-type activities - 3,202,492 3,202,492
(54,490,488) 3,202,492 (51,287,996)
General revenues:
Taxes:
Property taxes and transfer fees 41,210,485 906,106 42,116,591
Sales tax 14,166,771 - 14,166,771
Transient occupancy taxes 2,018,024 - 2,018,024
Franchise taxes 2,794,144 - 2,794,144
Total taxes 60,189,424 906,106 61,095,530
Intergovernmental - unrestricted 388,876 - 388,876
Use of money and property 611,350 (63,690) 547,660
Gain on disposal of capital assets 8,750 4,010 12,760
Other 956,940 153,667 1,110,607
Transfers 399,112 (399,112) -
Total general revenues and transfers 62,554,452 600,981 63,155,433
Changes in net position 8,063,964 3,803,473 11,867,437
Net Position:
Beginning of year 185,274,959 115,587,766 300,862,725
End of year 193,338,923$ 119,391,239$ 312,730,162$
Statement of Activities and Changes in Net Position (Continued)
City of Encinitas
For the Year Ended June 30, 2016
Primary Government
and Changes in Net Position
Net (Expense) Revenue
See accompanying Notes to the Basic Financial Statements.
27
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FUND FINANCIAL STATEMENTS
29
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GOVERNMENTAL FUND
FINANCIAL STATEMENTS
31
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Capital
Improvements Other Total
General Capital Projects Governmental Governmental
Fund Fund Funds Funds
ASSETS
Cash and investments 27,578,888$ 19,221,877$ 11,695,248$ 58,496,013$
Receivables 5,866,695 - 820,067 6,686,762
Due from other funds 2,516,638 8,200,603 - 10,717,241
Inventory and prepaid items 227,781 - 287,756 515,537
Other assets 332,518 - - 332,518
Long-term receivable 520,000 - 428,633 948,633
Restricted cash and investments 3,007,966 - 2,559,011 5,566,977
Total assets 40,050,486$ 27,422,480$ 15,790,715$ 83,263,681$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND
FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities 3,159,413$ 1,019,579$ 613,220$ 4,792,212$
Interest payable - - - -
Unearned revenue 596,323 - 118,211 714,534
Due to other funds - - 10,021,780 10,021,780
Deposits and other liabilities 3,410,206 - 15,463 3,425,669
Total liabilities 7,165,942 1,019,579 10,768,674 18,954,195
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 428,633 428,633
Total deferred inflows of resources - - 428,633 428,633
Fund Balances:
Nonspendable 1,109,424 - 287,756 1,397,180
Restricted - - 12,521,387 12,521,387
Committed - 1,626,219 - 1,626,219
Assigned - 24,776,682 - 24,776,682
Unassigned 31,775,120 - (8,215,735) 23,559,385
Total fund balances 32,884,544 26,402,901 4,593,408 63,880,853
Total liabilities, deferred inflows
of resources, and fund balances 40,050,486$ 27,422,480$ 15,790,715$ 83,263,681$
Balance Sheet
Governmental Funds
June 30, 2016
Major Funds
City of Encinitas
See accompanying Notes to the Basic Financial Statements.
33
Total Fund Balances - Total Governmental Funds 63,880,853$
Amounts reported for governmental activities in the Statement of Net Position were different because:
Capital assets used in governmental activities were not financial resources and therefore were not reported in
governmental funds (net of $3,195,015 reported in internal service funds).
Land 61,862,474
Land easements 2,114,042
Construction in progress 14,236,480
Public facilities 100,389,962
Vehicles, equipment and machinery 1,935,410
Infrastructure 111,024,528
Less: Accumulated depreciation (76,849,839)
Total capital assets 214,713,057
Deferred loss on refunding in the governmental activities were not financial resources and therefore were not
reported in governmental funds. 383,229
Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was
not reported as a liability in Governmental Funds Balance Sheet.(525,851)
Long-term liabilities applicable to the City's governmental activities were not due and payable in the current
period and therefore were not reported in the governmental funds (net of $927,533 reported in internal service
funds):
Amount reported in Government-Wide Statement of Net Position:
2008 Civic Center roof replacement (1,123,307)
1997 Civic Center COPs (590,000)
2002 ABAG financing (565,000)
2010 Community Park Lease Revenue Bonds, net of unamortized premium of $152,656 (15,417,656)
2013 Community Park Bonds, net of unamortized premium of $105,120 (7,025,120)
2014 Moonlight Beach Tower Series A Bonds, net of unamortized discount of $53,303 (2,976,697)
2014 Pacific View Series B Bonds, net of unamortized discount of $222,803 (9,942,197)
2015 Library Refunding Bonds, net of unamortized premium of $772,212 (16,417,212)
Claims payable (1,589,220)
Compensated absences (2,107,689)
Total long-term liabilities (57,754,098)
Aggregate net pension liability is not due and payable in the current period and therefore is not required to be
reported in the governmental funds. (34,876,632)
Pension contributions made during the year after the measurement date are reported as expenditures in
governmental funds and as deferred outflow of resources in the government-wide financial statements. 4,537,030
Actuarially determined pension deferred inflows of resources are reported in the government-wide statements:
Difference between expected and actual experience (254,827)
Difference between projected and actual earnings on pension plan investments are reported in the
government-wide statements (743,525)
Changes in actuarial assumptions (1,925,790)
Difference between employer contributions and proportionate share of contributions (720,785)
Deferred change in pension plan proportion (1,799,335)
(5,444,262)
Unavailable revenue deferred inflows of resources are not available for the current period and, therefore, are
deferred in the governmental funds or not recorded in the governmental funds. 428,633
Internal service funds were used by management to charge the costs of risk management, personnel support,
fleet maintenance and vehicle replacement to individual funds. The assets and liabilities of the internal service
funds were included in governmental activities in the Government-Wide Statement of Net Position.7,996,964
Net Position of Governmental Activities 193,338,923$
City of Encinitas
June 30, 2016
to the Government-Wide Statement of Net Position
Reconciliation of the Governmental Funds Balance Sheet
See accompanying Notes to the Basic Financial Statements.
34
Capital
Improvements Other Total
General Capital Projects Governmental Governmental
Fund Fund Funds Funds
REVENUES:
Taxes and assessments 58,479,429$ -$ 2,845,879$ 61,325,308$
Licenses and permits 232,227 - - 232,227
Intergovernmental 801,966 - 5,887,509 6,689,475
Development impact fees - - 1,695,565 1,695,565
Charges for services 6,585,518 - - 6,585,518
Fines, forfeitures and penalties 889,388 - - 889,388
Use of money and property 972,663 - 250,067 1,222,730
Other 779,892 - 96,474 876,366
Total revenues 68,741,083 - 10,775,494 79,516,577
EXPENDITURES:
Current:
General government 9,096,174 - 192,053 9,288,227
Public safety 26,775,120 - 201,016 26,976,136
Public works 3,970,924 - 2,334,416 6,305,340
Planning and building 4,896,957 - 262,820 5,159,777
Engineering services 4,078,841 - 219,722 4,298,563
Parks and recreation 6,112,079 - 254,258 6,366,337
Capital outlay - 10,799,083 - 10,799,083
Debt service:
Principal - - 2,783,268 2,783,268
Interest and fiscal charges - - 2,372,231 2,372,231
Total expenditures 54,930,095 10,799,083 8,619,784 74,348,962
REVENUES OVER
(UNDER) EXPENDITURES 13,810,988 (10,799,083) 2,155,710 5,167,615
OTHER FINANCING SOURCES (USES):
Proceeds from bond issuance - - 15,645,000 15,645,000
Premium on bond issuance - - 772,212 772,212
Deposit to escrow for bond refunding - - (16,820,243) (16,820,243)
Proceeds from sale of property - - - -
Transfers in 1,519,174 37,647,543 5,383,529 44,550,246
Transfers out (23,848,063) (445,559) (21,283,822) (45,577,444)
Total other financing sources (uses)(22,328,889) 37,201,984 (16,303,324) (1,430,229)
NET CHANGE IN FUND BALANCES (8,517,901) 26,402,901 (14,147,614) 3,737,386
FUND BALANCES:
Beginning of year 41,402,445 - 18,741,022 60,143,467
End of year 32,884,544$ 26,402,901$ 4,593,408$ 63,880,853$
Statement of Revenues, Expenditures, and Changes in Fund Balance
Governmental Funds
For the Year Ended June 30, 2016
Major Funds
City of Encinitas
See accompanying Notes to the Basic Financial Statements.
35
Net Change in Fund Balances - Total Governmental Funds 3,737,386$
Amounts reported for governmental activities in the Statement of Activities were different because:
Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of
Activities and Changes in Net Position, the cost of those assets was allocated over their estimated useful lives
as depreciation expense. This was the amount of capital assets recorded in the current period. 5,651,323
Contributions of capital assets were reported in the Government-Wide Statement of Activities and Changes in
Net Position, but they did not provide current financial resources. Therefore, contribution revenue was not
reported as revenue in the Governmental Funds.9,500
Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities and
Changes in Net Position, but it did not require the use of current financial resources. Therefore, depreciation
expense was not reported as expenditures in the Governmental Funds (net of $310,496 recorded in internal
service funds). (6,197,207)
The issuance of long-term liabilities provided current financial resources to governmental funds, but issuing debt
increased long-term liabilities in the Government-Wide Statement of Net Position. Repayment of long-term
liabilities was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the
Government-Wide Statement of Net Position.
Issuance of long-term debt (15,645,000)
Premium on issuance of long-term debt (772,212)
Refunding of long-term debt 16,820,243
Principal payment of long-term debt 2,783,268
Interest payment of long-term debt (177,014)
Amortization expenses were reported in the Government-Wide Statement of Activities and Changes in Net
Position, but they did not require the use of current financial resources. Therefore, amortization expenses were
not reported as expenditures in the Governmental Funds.
Bond premium and discount 10,016
Certain long-term liabilities were reported in the Government-Wide Statement of Activities and Changes in Net
Position, but they did not require the use of current financial resources. Therefore, long-term liabilities were not
reported as expenditures in governmental funds. These amounts represented the changes in long-term
liabilities from prior year.
Changes in compensated absences (5,761)
Changes in claims payable (395,931)
Changes in the net pension liability reported in the Statement of Activities did not require the use of current
financial resources and, therefore, were not reported as an expenditure in the governmental funds. (2,814,251)
Pension contribution made after the measurement date is reported as deferred outflow of resources in the
Government-Wide Statement of Net Position but is reported as pension expense in governmental funds. 4,537,030
Interest expense on long-term debt was reported in the Government-Wide Statement of Activities and Changes
in Net Position, but it did not require the use of current financial resources. This amount represented the
change in accrued interest from prior year.70,662
Issuances of loans receivable were recorded as expenditures in the governmental funds but not on the
Government-Wide Statement of Activities and Changes in Net Position. 428,633
Internal service funds were used by management to charge the costs of certain activities to individual funds.
The net revenue of internal service funds was reported with governmental activities (net of $1,252,139 transfer
of capital leases from governmental activities). 23,279
Change in Net Position of Governmental Activities 8,063,964$
City of Encinitas
For the Year Ended June 30, 2016
Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position
Reconciliation of the Governmental Statement of Revenues, Expenditures, and Changes in
See accompanying Notes to the Basic Financial Statements.
36
PROPRIETARY FUND
FINANCIAL STATEMENTS
37
Cardiff San Dieguito Encinitas Nonmajor
Sanitary Water Sanitary Affordable
Division District Division Housing
ASSETS
Current assets:
Cash and investments 13,449,441$ 15,490,693$ 10,435,073$ 475,040$
Restricted cash and investments with fiscal agent - - - 19,510
Accounts and taxes receivable 88,244 2,481,987 43,443 11,386
Inventory and prepaid items - 181,393 - 80,485
Total current assets 13,537,685 18,154,073 10,478,516 586,421
Noncurrent assets:
Restricted cash and investments with fiscal agent - 1,377,006 - -
Other assets - 98,155 - -
Investment in joint ventures 18,446,627 19,780,139 3,937,430 -
Capital assets:
Land easements - 3,219,301 - -
Public works facility right-of-use - 3,378,700 - -
Construction in progress 1,495,624 937,749 2,261,223 -
Capacity rights, net - 191,221 - -
Utility, plant, vehicles, and equipment, net 13,499,000 14,756,670 13,024,689 2,806,680
Total capital assets, net 14,994,624 22,483,641 15,285,912 2,806,680
Total noncurrent assets 33,441,251 43,738,941 19,223,342 2,806,680
Total assets 46,978,936 61,893,014 29,701,858 3,393,101
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension related items - 840,631 - -
Total deferred outflows of resources - 840,631 - -
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 24,806 1,316,714 351,729 149
Due to other funds - - - 65,610
Accrued interest payable 26,630 106,838 - -
Unearned revenue - - - 892
Deposits 1,250 354,628 - 17,010
Current portion of long-term debt 612,192 1,186,310 - 66,747
Total current liabilities 664,878 2,964,490 351,729 150,408
Noncurrent liabilities:
Capital leases payable - - - -
Revenue bonds payable, due in more than one year - 5,300,000 - -
Notes and mortgages payable, due in more than one year 1,593,700 4,284,973 - 1,275,351
Due to R.E. Badger - 1,377,006 - -
Aggregate net pension liability (Note 14)- 5,019,493 - -
Total noncurrent liabilities 1,593,700 15,981,472 - 1,275,351
Total liabilities 2,258,578 18,945,962 351,729 1,425,759
DEFERRED INFLOWS OF RESOURCES
Deferred amount on refunding 146,836 - - -
Deferred pension related items (Note 14)- 287,437 - -
Total deferred inflows of resources 146,836 287,437 - -
NET POSITION
Net investment in capital assets 12,641,896 13,089,364 15,285,912 1,484,092
Restricted - 1,377,006 - -
Unrestricted 31,931,626 29,033,876 14,064,217 483,250
Total net position 44,573,522$ 43,500,246$ 29,350,129$ 1,967,342$
City of Encinitas
Statement of Net Position
Proprietary Funds
June 30, 2016
Major Enterprise Funds
See accompanying Notes to the Basic Financial Statements.
38
Governmental
Nonmajor Activities
Recreation Internal
Fund Total Service Funds
ASSETS
Current assets:
Cash and investments -$ 39,850,247$ 5,870,966$
Restricted cash and investments with fiscal agent - 19,510 -
Accounts and taxes receivable - 2,625,060 34,719
Inventory and prepaid items - 261,878 629,851
Total current assets - 42,756,695 6,535,536
Noncurrent assets:
Restricted cash and investments with fiscal agent - 1,377,006 -
Other assets - 98,155 -
Investment in joint ventures - 42,164,196 -
Capital assets:
Land easements - 3,219,301 -
Public works facility right-of-use - 3,378,700 -
Construction in progress - 4,694,596 -
Capacity rights, net - 191,221 -
Utility, plant, vehicles, and equipment, net - 44,087,039 3,195,015
Total capital assets, net - 55,570,857 3,195,015
Total noncurrent assets - 99,210,214 3,195,015
Total assets - 141,966,909 9,730,551
DEFERRED OUTFLOWS OF RESOURCES
-
Deferred pension related items - 840,631 -
Total deferred outflows - 840,631 -
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities - 1,693,398 176,203
Due to other funds - 65,610 629,851
Accrued interest payable - 133,468 -
Unearned revenue - 892 -
Deposits - 372,888 -
Current portion of long-term debt - 1,865,249 331,993
Total current liabilities - 4,131,505 1,138,047
Noncurrent liabilities:
Capital leases payable - - 595,540
Revenue bonds payable, due in more than one year - 5,300,000 -
Notes and mortgages payable, due in more than one year - 7,154,024 -
Due to R.E. Badger - 1,377,006 -
Aggregate net pension liability (Note 14)- 5,019,493 -
Total noncurrent liabilities - 18,850,523 595,540
Total liabilities - 22,982,028 1,733,587
DEFERRED INFLOWS OF RESOURCES
Deferred amount on refunding - 146,836 -
Deferred pension related items (Note 14)- 287,437 -
Total deferred inflows - 434,273 -
NET POSITION
Net investment in capital assets - 42,501,264 2,267,482
Restricted - 1,377,006 -
Unrestricted - 75,512,969 5,729,482
Total net position -$ 119,391,239$ 7,996,964$
City of Encinitas
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2016
See accompanying Notes to the Basic Financial Statements.
39
Cardiff San Dieguito Encinitas Nonmajor
Sanitary Water Sanitary Affordable
Division District Division Housing
OPERATING REVENUES:
Charges for services 4,761,486$ 14,628,656$ 2,855,690$ -$
Rental income - 103,181 - 119,682
Contribution from users - - - -
Interfund revenues - 55,681 - 97,800
Intergovernmental - - - 120,348
Other revenues 7,165 4,734 2,341 1,287
Total operating revenues 4,768,651 14,792,252 2,858,031 339,117
OPERATING EXPENSES:
Housing assistance payments - - - 1,069,882
Source of supply - 5,352,508 - -
General operations and maintenance 1,013,875 4,729,923 652,711 96,339
Facility operations and maintenance 1,250,059 1,788,841 594,288 -
General and administrative 228,039 76,947 110,964 166,358
Depreciation of capital assets 387,320 675,549 369,141 100,538
Amortization of other assets - 98,152 - -
Amortization of investment in joint ventures 915,952 741,015 556,036 -
Administrative support - - - -
Operational support services - - - -
Insurance and claims 62,286 - 23,400 7,007
Total operating expenses 3,857,531 13,462,935 2,306,540 1,440,124
OPERATING INCOME (LOSS)911,120 1,329,317 551,491 (1,101,007)
NONOPERATING REVENUES (EXPENSES):
Use of money and property 85,383 103,590 64,865 3,273
Property taxes - 906,106 - -
Operating grants - - - 1,068,549
Gain (loss) on disposal of capital assets - 4,010 - -
Accretion of bond premium 63,768 74,372 - -
Interest expense (91,757) (412,108) - (39,799)
Total nonoperating revenues (expenses)57,394 675,970 64,865 1,032,023
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS 968,514 2,005,287 616,356 (68,984)
Capital contributions 93,623 470,003 117,786 -
Transfers in - - - 63,609
Transfers out - - - -
Total capital contributions and transfers 93,623 470,003 117,786 63,609
CHANGES IN NET POSITION 1,062,137 2,475,290 734,142 (5,375)
NET POSITION:
Beginning of year 43,511,385 41,024,956 28,615,987 1,972,717
End of year 44,573,522$ 43,500,246$ 29,350,129$ 1,967,342$
Major Enterprise Funds
City of Encinitas
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
For the Year Ended June 30, 2016
See accompanying Notes to the Basic Financial Statements.
40
Governmental
Nonmajor Activities
Recreation Internal
Fund Total Service Funds
OPERATING REVENUES:
Charges for services -$ 22,245,832$ -$
Rental income - 222,863 -
Contribution from users - - -
Interfund revenues - 153,481 2,629,196
Intergovernmental - 120,348 -
Other revenues - 15,527 356,423
Total operating revenues - 22,758,051 2,985,619
OPERATING EXPENSES:
Housing assistance payments - 1,069,882 -
Source of supply - 5,352,508 -
General operations and maintenance - 6,492,848 -
Facility operations and maintenance - 3,633,188 -
General and administrative - 582,308 -
Depreciation of capital assets - 1,532,548 310,496
Amortization of other assets - 98,152 -
Amortization of investment in joint ventures - 2,213,003 -
Administrative support - - 1,507,347
Operational support services - - 1,026,079
Insurance and claims - 92,693 1,527,229
Total operating expenses - 21,067,130 4,371,151
OPERATING INCOME (LOSS)- 1,690,921 (1,385,532)
NONOPERATING REVENUES (EXPENSES):
Use of money and property - 257,111 -
Property taxes - 906,106 -
Operating grants - 1,068,549 -
Gain (loss) on disposal of capital assets - 4,010 8,750
Accretion of bond premium - 138,140 -
Interest expense - (543,664) (26,249)
Total nonoperating revenues (expenses)- 1,830,252 (17,499)
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS - 3,521,173 (1,403,031)
Capital contributions - 681,412 (1,252,139)
Transfers in - 63,609 1,539,310
Transfers out (462,721) (462,721) (113,000)
Total capital contributions and transfers (462,721) 282,300 174,171
CHANGES IN NET POSITION (462,721) 3,803,473 (1,228,860)
NET POSITION:
Beginning of year 462,721 115,587,766 9,225,824
End of year -$ 119,391,239$ 7,996,964$
Statement of Revenues, Expenses, and Changes in Net Position (Continued)
Proprietary Funds
For the Year Ended June 30, 2016
City of Encinitas
See accompanying Notes to the Basic Financial Statements.
41
Cardiff San Dieguito Encinitas Nonmajor
Sanitary Water Sanitary Affordable
Division District Division Housing
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users 4,758,164$ 14,291,536$ 2,871,294$ 228,919$
Cash received from other funds - 55,681 - 99,216
Cash payments to suppliers and employees for goods and services (2,546,340) (11,892,150) (1,351,214) (1,338,421)
Other operating revenues 7,165 4,734 2,341 1,287
Net cash provided by (used in) operating activities 2,218,989 2,459,801 1,522,421 (1,008,999)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets (349,588) (650,467) (401,703) -
Capital contributions received - connection/capacity fees 93,623 470,003 117,786 -
Principal payments on long-term debt (627,931) (1,046,126) - (59,520)
Interest payments on long-term debt (63,291) (339,173) - (39,799)
Capital related payments to other agencies (504,762) (1,491,918) (400,913) -
Proceeds received from disposal of capital assets - 4,010 - -
Net cash (used in) capital and related financing activities (1,451,949) (3,053,671) (684,830) (99,319)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Operating grants - - - 1,068,549
Proceeds from property taxes - 906,106 - -
Transfers in - - - 63,609
Transfers (out)- - - -
Net cash provided by (used in) noncapital financing activities - 906,106 - 1,132,158
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest income 85,383 103,590 64,865 3,273
Net cash provided by investing activities 85,383 103,590 64,865 3,273
Net increase (decrease) in cash and cash equivalents 852,423 415,826 902,456 27,113
CASH AND CASH EQUIVALENTS:
Beginning of year 12,597,018 16,451,873 9,532,617 467,437
End of year 13,449,441$ 16,867,699$ 10,435,073$ 494,550$
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO
STATEMENT OF NET POSITION:
Cash and investments 13,449,441$ 15,490,693$ 10,435,073$ 475,040$
Restricted cash and investments with fiscal agent - current - - - 19,510
Restricted cash and investments with fiscal agent - non-current - 1,377,006 - -
Total cash and cash equivalents 13,449,441$ 16,867,699$ 10,435,073$ 494,550$
Major Enterprise Funds
City of Encinitas
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2016
See accompanying Notes to the Basic Financial Statements.
42
Governmental
Nonmajor Activities
Recreation Internal
Fund Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users 50,054$ 22,199,967$ 2,951,487$
Cash received from other funds - 154,897 -
Cash payments to suppliers and employees for goods and services (598,589) (17,726,714) (4,100,149)
Other operating revenues - 15,527 -
Net cash provided by (used in) operating activities (548,535) 4,643,677 (1,148,662)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets - (1,401,758) -
Capital contributions received - connection/capacity fees - 681,412 -
Principal payments on long-term debt - (1,733,577) (324,606)
Interest payments on long-term debt - (442,263) (26,249)
Capital related payments to other agencies - (2,397,593) -
Proceeds received from disposal of capital assets - 4,010 8,750
Net cash (used in) capital and related financing activities - (5,289,769) (342,105)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Operating grants - 1,068,549 -
Proceeds from property taxes - 906,106 -
Transfers in - 63,609 1,539,310
Transfers (out)(462,721) (462,721) (113,000)
Net cash provided by (used in) noncapital financing activities (462,721) 1,575,543 1,426,310
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest income 257,111 -
Net cash provided by investing activities - 257,111 -
Net increase (decrease) in cash and cash equivalents (1,011,256) 1,186,562 (64,457)
CASH AND CASH EQUIVALENTS:
Beginning of year 1,011,256 40,060,201 5,935,423
End of year -$ 41,246,763$ 5,870,966$
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO
STATEMENT OF NET POSITION:
Cash and investments -$ 39,850,247$ 5,870,966$
Restricted cash and investments with fiscal agent - current - 19,510 -
Restricted cash and investments with fiscal agent - non-current - 1,377,006 -
Total cash and cash equivalents -$ 41,246,763$ 5,870,966$
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2016
City of Encinitas
See accompanying Notes to the Basic Financial Statements.
43
Cardiff San Dieguito Encinitas Nonmajor
Sanitary Water Sanitary Affordable
Division District Division Housing
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) 911,120$ 1,329,317$ 551,491$ (1,101,007)$
Adjustments to reconcile operating income to net cash
provided (used) by operating activities:
Depreciation 387,320 675,549 369,141 100,538
Amortization of other assets - 98,152 - -
Amortization of investment in joint ventures 915,952 741,015 556,036 -
Changes in operating assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
Accounts and taxes receivable (3,322) (440,301) 15,604 (11,111)
Inventory and prepaid items - (33,750) - 1,719
Pension-related deferred outflows - (203,086) - -
Accounts payable and accrued liabilities 7,669 (1,647) 30,149 149
Due to other funds - - - 1,416
Unearned revenue - - - (1,355)
Deposits 250 42,473 - 652
Aggregate net pension liability - 1,240,208 - -
Pension-related deferred inflows - (988,129) - -
Total adjustments 1,307,869 1,130,484 970,930 92,008
Net cash provided by (used in) operating activities 2,218,989$ 2,459,801$ 1,522,421$ (1,008,999)$
NON-CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Amortization of original issue premium 34,401$ 74,372$ -$ -$
Amortization of deferred amount on refunding 29,367 - - -
Contributions of capital assets from governmental activities - 410,603 - -
63,768$ 484,975$ -$ -$
Major Enterprise Funds
City of Encinitas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2016
See accompanying Notes to the Basic Financial Statements.
44
Governmental
Nonmajor Activities
Recreation Internal
Fund Total Service Funds
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss)-$ 1,690,921$ (1,385,532)$
Adjustments to reconcile operating income to net cash
provided (used) by operating activities:
Depreciation - 1,532,548 310,496
Amortization of other assets - 98,152 -
Amortization of investment in joint ventures - 2,213,003 -
Changes in operating assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
Accounts and taxes receivable 50,054 (389,076) (34,132)
Inventory and prepaid items - (32,031) (629,851)
Pension-related deferred outflows - (203,086) -
Accounts payable and accrued liabilities (81,271) (44,951) (39,494)
Due to other funds - 1,416 629,851
Unearned revenue (513,168) (514,523) -
Deposits (4,150) 39,225 -
Aggregate net pension liability - 1,240,208 -
Pension-related deferred inflows - (988,129) -
Total adjustments (548,535) 2,952,756 236,870
Net cash provided by (used in) operating activities (548,535)$ 4,643,677$ (1,148,662)$
NON-CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Amortization of original issue premium -$ 108,773$ -$
Amortization of deferred amount on refunding - 29,367 -
Contributions of capital assets from governmental activities - 410,603 (1,252,139)
-$ 548,743$ (1,252,139)$
For the Year Ended June 30, 2016
City of Encinitas
Statement of Cash Flows (Continued)
Proprietary Funds
See accompanying Notes to the Basic Financial Statements.
45
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FIDUCIARY FUND
FINANCIAL STATEMENTS
Agency Funds – These funds are used to account for money and property held by the City as trustee or
custodian. They are custodial in nature (assets equal liabilities). These funds include one Assessment District
and one Community Facilities (Mello-Roos) District.
47
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Agency
Funds
ASSETS
Cash and investments 2,092,758$
Restricted cash and investments with fiscal agent 1,976,121
Special assessments receivable 28,350,000
Total assets 32,437,410$
LIABILITIES
Due to bondholders 32,437,410$
Total liabilities 32,437,410$
City of Encinitas
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2016
See accompanying Notes to the Basic Financial Statements.
49
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City of Encinitas
Notes to the Basic Financial Statements
For the Year Ended June 30, 2016
51
Note 1 – Reporting Entity
The City of Encinitas (the “City”) was incorporated on October 1, 1986, pursuant to an election approving
the San Dieguito Reorganization Plan, which consisted primarily of the detachment of territory from the
Cardiff area and the annexation of the same territory to the City of Solana Beach.
The reporting entity of the City includes the accounts of the City, as the primary government, and the
following blended component units: the Encinitas Housing Authority (the “EHA”), the Encinitas Public
Financing Authority (the “EPFA”), and the San Dieguito Water District (“SDWD”).
The EHA was formed on January 26, 1994, under the laws of the State of California to provide
housing assistance to citizens of the City.
The EPFA was formed on November 6, 1991, by the City and SDWD as a Joint Powers Authority
under the laws of the State of California to purchase, finance, and lease certain real property to the
members. The member agencies are the City and the SDWD.
SDWD was formed in 1922 under the laws of the State of California to supply water services to the
central western portion of San Diego County. Certain management, maintenance, and operating
functions are the responsibility of the City, which bills periodically for these services.
The criteria used in determining the scope of the reporting entity are based on the provisions of
Governmental Accounting Standards Board (GASB) Statement No 14, The Financial Reporting Entity, as
amended by GASB Statement No. 61, The Financial Reporting Entity - Omnibus –An Amendment of GASB
Statements No. 14 and No. 34. The City is the primary governmental unit. Component units are financially
accountable to the City. Financial accountability exists if the primary government appoints a voting majority
of the entity's governing body and (1) it is able to impose its will on that organization or (2) there is potential
for the organization to provide financial benefit, or impose financial burdens on the primary government. The
component units have been accounted for as "blended" component units of the City. Despite being legally
separate, these entities are so intertwined with the City that they are, in substance, part of the City's
operations. Accordingly, the balances and transactions of these component units are reported within the
funds of the City. SDWD is reported as an enterprise fund of the City.
The following specific criteria were used in determining the status of these component units:
Members of the City Council also act as the governing body of the EHA, the EPFA, and SDWD.
The City, the EHA, the EPFA, and SDWD are financially interdependent.
The EHA, the EPFA, and SDWD are managed, at least in part, by employees of the City, who
provide various support functions including financial reporting and investment decisions.
Separate financial statements for SDWD are available at the City's administrative office. Separate financial
statements are not required or prepared for the EHA and the EPFA.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
52
Note 2 – Summary of Significant Accounting Policies
A. Basis of Presentation
Financial statement presentation follows the recommendations promulgated by the Governmental
Accounting Standards Board (“GASB”) commonly referred to as accounting principles generally
accepted in the United States of America (“U.S. GAAP”). GASB is the accepted standard-setting body
for establishing governmental accounting and financial reporting standards.
B. Measurement Focus, Basis of Accounting and Financial Statements Presentation
The accounts of the City are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for by providing a separate set of self-
balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or
expenses, as appropriate. Fund accounting segregates funds according to their intended purpose and
is used to aid management in demonstrating compliance with finance-related legal and contractual
provisions. The minimum number of funds is maintained in accordance with legal and managerial
requirements.
In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position, the Statement of Net Position reports separate
sections for Deferred Outflows of Resources, and Deferred Inflows of Resources, when applicable.
Deferred Outflows of Resources represent outflows of resources (consumption of net position)
that apply to future periods and that, therefore, will not be recognized as an expense until that
time.
Deferred Inflows of Resources represent inflows of resources (acquisition of net position) that
apply to future periods and that, therefore, are not recognized as a revenue until that time.
Government-Wide Financial Statements
The City’s Government-Wide Financial Statements include a Statement of Net Position and a Statement
of Activities and Changes in Net Position. These statements present summaries of governmental and
business-type activities for the City accompanied by a total column. Fiduciary activities of the City are
not included in these statements.
These financial statements are presented on an “economic resources” measurement focus and the
accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets,
as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of
Net Position. The Statement of Activities presents changes in Net Position. Under the accrual basis of
accounting, revenues are recognized in the period in which they are earned while expenses are
recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
53
Note 2 – Summary of Significant Accounting Policies (Continued)
B. Measurement Focus, Basis of Accounting and Financial Statements Presentation (Continued)
Government-Wide Financial Statements (Continued)
Certain eliminations have been made in regards to interfund activities, payables and receivables. All
internal balances in the Statement of Net Position have been eliminated except those representing
balances between the governmental activities and the business-type activities, which are presented as
internal balances and eliminated in the total primary government column. In the Statement of Activities
and Changes in Net Position, internal service fund transactions have been eliminated; however, those
transactions between governmental and business-type activities have not been eliminated. The
following interfund activities have been eliminated:
Due to/from other funds
Transfers in/out
Government Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds
aggregated. An accompanying schedule is presented to reconcile and explain the differences in Net
Position as presented in these statements to the Net Position presented in the Government-Wide
Financial Statements. The City has presented all major funds that met the applicable criteria.
All governmental funds are accounted for on a spending or "current financial resources" measurement
focus and the modified accrual basis of accounting. Accordingly, only current assets and current
liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in
Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures
and other financing uses) in fund balances. Under the modified accrual basis of accounting, revenues
are recognized in the accounting period in which they become both measurable and available to finance
expenditures of the current period.
Revenues are recorded when received in cash, except for that revenues subject to accrual (generally 60
days after year-end) are recognized when due. The primary revenue sources, which have been treated
as susceptible to accrual by the City, are property taxes, transient occupancy taxes, franchise taxes,
sales tax, licenses, intergovernmental revenues and other taxes. Expenditures are recorded in the
accounting period in which the related fund liability is incurred.
The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is
provided to explain the differences created by the integrated approach of GASB Statement No. 34.
The City reports the following major Governmental Funds:
The General Fund is used to account for resources which are not required to be accounted for in
another fund. The fund includes the general activities of the City and other administrative functions.
The Capital Improvements Capital Projects Fund is used to account for financial resources to be
used for the acquisition or construction of major property, equipment, or facilities which are generally
financed by governmental funds.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
54
Note 2 – Summary of Significant Accounting Policies (Continued)
B. Measurement Focus, Basis of Accounting and Financial Statements Presentation (Continued)
Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues,
Expenses and Changes in Net Position, and a Statement of Cash Flows for each major Proprietary
Fund. A separate column representing internal service funds is also presented in these statements.
However, internal service balances and activities have been combined with the governmental activities
in the Government-Wide Financial Statements. The City’s internal service funds include four individual
funds which provide services directly to other City funds. These areas of service include Risk
Management, Wastewater Support, Vehicle Maintenance, and Vehicle Replacement.
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual
basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included
on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position
presents increases (revenues) and decreases (expenses) in total Net Position. Under the accrual basis
of accounting, revenues are recognized in the period in which they are earned while expenses are
recognized in the period in which the liability is incurred. In these funds, receivables have been recorded
as revenue and provisions have been made for uncollectible amounts.
Operating revenues in the proprietary funds are those revenues that are generated from the primary
operations of the fund. All other revenues are reported as non-operating revenues. Operating
expenses are those expenses that are essential to the primary operations of the fund. All other
expenses are reported as non-operating expenses.
The City reports the following major proprietary funds:
The Cardiff Sanitary Division (“CSD”) Enterprise Fund provides wastewater collection and
treatment services to approximately 6,000 customers in the southern portion of the City.
The San Dieguito Water District (“SDWD”) Enterprise Fund provides potable and reclaimed
water services to approximately 11,000 customers in Encinitas.
The Encinitas Sanitary Division (“ESD”) Enterprise Fund provides wastewater collection and
treatment services to approximately 5,000 customers in the northern portion of the City.
Fiduciary Fund Financial Statements
Fiduciary fund financial statements are accounted for according to the nature of the fund. The City has
only Agency funds, which are purely custodial in nature (assets equal liabilities) and thus, do not involve
the measurement of the results of operations. These funds are accounted for on the accrual basis of
accounting.
The Agency Fund accounts for one Assessment District and one Community Facilities (Mello-Roos)
District for which the City acts as an agent for debt service activities.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
55
Note 2 – Summary of Significant Accounting Policies (Continued)
C. Cash, Cash Equivalents, and Investments
The City pools its available cash for investment purposes. The City considers pooled cash and
investment amounts, with original maturities of three months or less, to be cash equivalents.
Highly liquid market investments with maturities of one year or less at time of purchase are stated at
amortized cost. All other investments are stated at fair value. Market value is used as fair value for
those securities for which market quotations are readily available.
The statement of cash flows requires presentation of “cash and cash equivalents”. For the purposes of
the statement of cash flows, the City considers all proprietary fund pooled cash and investments as
“cash and cash equivalents”, as such funds are available to the various funds as needed.
Certain disclosure requirements, if applicable, for Deposits and Investment Risks in the following areas:
Interest Rate Risk
Credit Risk
- Overall
- Custodial Credit Risk
- Concentration of Credit Risk
Foreign Currency Risk
In addition, other disclosures are specified including use of certain methods to present deposits and
investments, highly sensitive investments, credit quality at year-end and other disclosures.
D. Restricted Cash and Investments with Fiscal Agents
Cash and investments with fiscal agents are restricted due to limitations on their use by bond covenants.
Fiscal agents acting on behalf of the City hold investment funds arising from the proceeds of long-term
debt issuances. The funds may be used for specific capital outlays or for the payment of certain bonds,
and have been invested only as permitted by specific State statutes or applicable City ordinance,
resolution or bond indenture.
E. Fair Value Measurement
In accordance with GASB Statement No. 72, Fair Value Measurement and Application, defines fair
value, establishes a framework for measuring fair value and establishes disclosures about fair value
measurement. Investments, unless otherwise specified, recorded at fair value in the Statements
of Net Position, are categorized based upon the level of judgment associated with the inputs used to
measure their fair value. Levels of inputs are as follows:
Level 1 – Inputs are unadjusted, quoted prices for identical assets and liabilities in active markets at the
measurement date.
Level 2 – Inputs, other than quoted prices included in Level 1, which are observable for the asset or
liability through corroboration with market data at the measurement date.
Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants
would use in pricing the asset or liability at the measurement date.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
56
Note 2 – Summary of Significant Accounting Policies (Continued)
F. Receivables
Receivables include such items as taxes, intergovernmental revenues, charges for services,
miscellaneous accounts receivable, and interest receivable. No allowance for doubtful accounts has
been established, as the City believes all amounts are considered to be collectible in the normal course
of business.
G. Investments in Other Agencies
The City’s Cardiff Sanitary Division, San Dieguito Water District, and Encinitas Sanitary Division (the
“City agencies”) participate in joint ventures with other local agencies, generally to more efficiently
provide water and wastewater treatment. Each entity has an ownership interest in the respective joint
facilities, which are accounted for under the equity method of accounting. The City agencies pay for the
fair share of operating costs, and make capital contributions for major maintenance and the upgrade or
construction of facilities. The City agencies also record their share of the results of operations for these
joint ventures. See Note 5, Investment in Joint Ventures.
H. Inventory and Prepaid Items
Inventory applies only to SDWD and consists of water meters and other material used in the repair of
capital facilities. Inventory is valued at average-cost using first-in first-out basis. Prepaid items are
payments made to vendors for services that will benefit periods beyond the fiscal year ended, such as
prepaid pension costs for the City and SDWD.
I. Other Assets
Other assets include prepaid pension costs for the City and SDWD.
J. Capital Assets
Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not
available. Donated capital assets are valued at their estimated fair market value on the date donated.
City policy has set the capitalization threshold for reporting capital assets at $5,000 for non-
infrastructure assets and $100,000 for infrastructure assets. Depreciation is recorded on a straight-line
basis over estimated useful lives of the assets as follows:
Structures and improvements 20 - 45 years
Equipment, machinery and vehicles 5 - 20 years
Infrastructure 20 - 50 years
Collection and distribution systems 50 years
The City defines infrastructure as the basic physical assets that allow the City to function.
Governmental fund capital assets include land, land easements, construction in progress, public
facilities (buildings and building improvements), vehicles, equipment and machinery, and infrastructure
assets (e.g., roads, streets and sidewalks, bridges, curbs and gutters, drainage systems, lighting
systems and similar assets).
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
57
Note 2 – Summary of Significant Accounting Policies (Continued)
J. Capital Assets (Continued)
Proprietary fund capital assets include, land easements, public works facility right of use, construction in
progress, structures and improvements, collection and distribution systems, machinery and equipment,
and capacity rights, which are stated at cost. Contributed assets, which are principally collection and
distribution lines, are stated at cost or estimated fair value on the date of donation.
K. Deposit Liabilities
The City collects deposits from homeowners and commercial enterprises as surety for the payment of
fees and other costs related to planning and engineering services provided by the City. The City collects
two types of deposits: (1) Application Deposits and (2) Security Deposits. Application deposits are
collected on certain projects for which a fee for services has not been established. As costs for these
projects are incurred by the City, the applicant's deposit balance is adjusted and revenue (including
applicable overhead charges) is recognized. Expenses incurred in excess of the deposit amounts are
billed to the applicant. Any surplus at project completion is returned to the applicant. Security deposits
are collected from the applicant to guarantee required performance. These may either be in cash or in
the form of non-cash, such as performance bonds or letters of credit. The amount of cash deposits on
hand as of June 30, 2016, is reported as a current liability in the Statement of Net Position and Balance
Sheets. Noncash security deposits are not reported as liabilities, as the corresponding surety is not an
asset of the City.
L. Unearned Revenue
Unearned revenue recorded in the government-wide statement of net position for governmental
activities and the governmental fund financial statements consist of federal and state capital grants,
representing voluntary nonexchange transactions, for which advance payments have been received
from the provider for which eligibility requirements, other than timing requirements, have not been
satisfied.
Unearned revenue recorded in the government-wide statement of net position for business-type
activities and the proprietary fund financial statements generally consist of program fees collected from
customers prior to the statement of net position date for recreation programs that begin in the next fiscal
year or donations for capital or work projects, for which the related expenses have not yet been
incurred.
M. Long-Term Debt
For the government-wide financial statements and proprietary fund financial statements, long-term debt
and other financial obligations are reported as liabilities, net of bond premiums or discounts. Bond
premiums and discounts are amortized over the life of the bonds using the straight-line method.
Issuance costs are reported as expense when incurred.
Governmental fund financial statements do not present long-term debt but are shown in the
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net
Position.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
58
Note 2 – Summary of Significant Accounting Policies (Continued)
N. Arbitrage Rebate Requirement
The City is subject to the Internal Revenue Code (“IRC”) Section 148(f), related to its tax exempt
revenue bonds. The IRC requires that investment earnings on gross proceeds of any revenue bonds
that are in excess of the amount prescribed will be surrendered to the Internal Revenue Service. The
City had no rebate liability for arbitrage as of June 30, 2016.
O. Claims Liabilities
The City accounts for material claims and judgments outstanding at year-end. When it is probable that a
claim liability has been incurred at year-end, and the amount of the loss can be reasonably estimated,
the City records the estimated loss.
P. Compensated Absences
The City’s policy permits its non-fire employees to accumulate not more than two times their current
annual vacation allotment. Fire employees can accrue up to a maximum of 720 hours of vacation,
depending on length of employment with the City. Non-fire employees are compensated five days of
sick leave per year with no balances accruing upon separation of employment. Fire employees may
accrue up to 240 hours of sick leave. The combined unused vacation and sick pay will be paid to the
employee or his/her beneficiary upon leaving the City’s employment. The amount due will be determined
using salary/wage rate in effect at the time of separation.
Government-Wide Financial Statements – For governmental and business-type activities,
compensated absences are recorded as expenses and liabilities as incurred.
Fund Financial Statements – In governmental funds, compensated absences are recorded as
expenditures in the years paid, as it is the City’s policy to liquidate any unpaid compensated
absences at June 30 from future resources, rather than currently available financial resources. The
General Fund is typically used to liquidate compensated absences. In proprietary funds,
compensated absences are expensed to the various funds in the period they are earned, and such
fund’s share of the unpaid liability is recorded as a long-term liability of the fund.
Q. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows
of resources related to pensions, and pension expense, information about the fiduciary net position of
the plans and additions to/deductions from the plans’ fiduciary net position have been determined on the
same basis as they are reported by the plans (Note 14). For this purpose, benefit payments (including
refunds of employee contributions) are recognized when due and payable in accordance with benefit
terms. Investments are reported at fair value.
The following timeframes are used for pension reporting:
CalPERS
Valuation date June 30, 2014
Measurement Date June 30, 2015
Measurement Period July 1, 2014 to June 30, 2015
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
59
Note 2 – Summary of Significant Accounting Policies (Continued)
Q. Pensions (Continued)
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in
pension expense systematically over time. The first amortized amounts are recognized in pension
expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred
outflows and deferred inflows of resources related to pensions and are to be recognized in future
pension expense. The amortization period differs depending on the source of the gain or loss. The
difference between projected and actual earnings is amortized straight-line over 5 years. All other
amounts are amortized straight-line over the average expected remaining service lives of all members
that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement
period.
R. Net Position
For government-wide and proprietary fund financial statements, net position represents the difference
between all other elements in the statement of net position and should be displayed in the following
three components:
Net Investment in Capital Assets – This component of net position consists of capital assets,
net of accumulated depreciation, reduced by the outstanding balances of debt that are
attributable to the acquisition, construction, or improvement of those assets.
Restricted – This component of net position consists of restricted assets reduced by liabilities
and deferred inflows of resources related to those assets.
Unrestricted – This component of net position is the amount of the assets, deferred outflows of
resources, liabilities, and deferred inflows of resources that are not included in the determination
of net investment in capital assets or the restricted component of net position.
When an expense is incurred for purposes for which both restricted and unrestricted Net Position are
available, the City’s policy is to apply restricted Net Position first.
S. Fund Balances
In governmental fund financial statements, fund balances are categorized as follows:
Non-spendable – Items that cannot be spent because they are not in spendable form, such as
prepaid items and inventories, items that are legally or contractually required to be maintained
intact, such as principal of an endowment or revolving loan funds.
Restricted – Restricted fund balances encompass the portion of net fund resources subject to
externally enforceable legal restrictions. This includes externally imposed restrictions by
creditors, such as through debt covenants, grantors, contributors, laws or regulations of other
governments, as well as restrictions imposed by law through constitutional provisions or enabling
legislation.
Committed – Committed fund balances encompass the portion of net fund resources, the use of
which is constrained by limitations that the government imposes upon itself at its highest level of
decision making, normally the governing body, and that remain binding unless removed in the
same manner. Adoption of a resolution by the City Council is required to commit resources or
rescind the commitment.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
60
Note 2 – Summary of Significant Accounting Policies (Continued)
S. Fund Balances (Continued)
Assigned – Assigned fund balances encompass the portion of net fund resources reflecting the
government’s intended use of resources. Assignment of resources can be done by the highest
level of decision making or by a committee or official designated for that purpose. The City
Council adopts a resolution contained within the annual budget that delegates the authority to
the Finance Director to assign fund balance amounts in the annual financial statements.
Unassigned – This amount is for any portion of the fund balances that do not fall into one of the
above categories. The General Fund is the only fund that reports a positive unassigned fund
balance amount. In other governmental funds, it is not appropriate to report a positive
unassigned fund balance amount. However, in governmental funds other than the General Fund,
if expenditures incurred for specific purposes exceed the amounts that are restricted, committed
or assigned to those purposes, it may be necessary to report a negative unassigned fund
balance in that particular fund.
When expenditures are incurred for purposes where only unrestricted fund balances are available,
the City uses the unrestricted resources in the following order: committed, assigned, and
unassigned.
T. Property Taxes
Property taxes are levied on July 1 and are payable in two installments: November 1 and February 1 of
each year. Property taxes become delinquent on December 10 and April 10, for the first and second
installments, respectively. The lien date is January 1. The County of San Diego, California (County)
bills and collects property taxes and remits them to the City according to a payment schedule
established by the County.
The County is permitted by State law to levy taxes at 1% of full market value (at time of purchase) and
can increase the property tax rate no more than 2% per year or the current CPI, whichever is less. The
City receives a share of this basic tax levy proportionate to what it received during the years 1980-1981.
Property tax revenue is recognized in the fiscal year for which the taxes have been levied, provided the
taxes are received within 60 days after the end of the fiscal year. Property taxes received after this date
are not considered available as a resource that can be used to finance the current year operations of the
City and, therefore, are not recorded as revenue until collected.
No allowance for doubtful accounts was considered necessary.
U. Use of Estimates
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 the
reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
61
Note 2 – Summary of Significant Accounting Policies (Continued)
V. Accounting Changes
New Governmental Accounting Standards Implementation for the Year Ended June 30, 2016
GASB No. 72
In February 2015, The Governmental Accounting Standards Board issued Statement No. 72, Fair
Value Measurement and Application. This pronouncement provides guidance for determining fair
value measurement for financial reporting purposes and provides guidance for applying fair value to
certain investments and disclosures related to all fair value measurements. Governments are
required to use valuation techniques that are appropriate under the circumstances and for which
sufficient data is available to measure fair value. Required disclosures include the level of fair value
hierarchy and valuation techniques and should be organized by type of asset or liability. This
pronouncement is effective for financial statements for periods beginning after June 15, 2015. Earlier
application is encouraged. This pronouncement did not have any new measurement impact on the
City’s investment portfolio, except for additional disclosure on measurement input as discussed in
Note 3 to the Basic Financial Statements.
GASB No. 73
In June 2015, GASB issued Statement No. 73, Accounting and Financial Reporting for Pension and
Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain
Provisions of GASB Statements 67 and 68. This statement establishes requirements for those
pensions and pension plans that are not administered through a trust meeting specified criteria
(those not covered by GASB Statements 67 and 68). Application of this statement is effective for the
City’s fiscal year ending June 30, 2016, except those provisions that address employers and
governmental nonemployer contributing entities that are not within the scope of GASB Statement 68,
which are effective for financial statements for fiscal year ending June 30, 2017. This
pronouncement did not have a material effect on the financial statements of the City.
GASB Statement No. 76
In June 2015, GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting
Principles for State and Local Governments. This statement reduces the generally accepted
accounting principles (GAAP) hierarchy to two categories of authoritative GAAP from the four
categories under GASB Statement No. 55, The Hierarchy of Generally Accepted Accounting
Principles for State and Local Governments. The first category of authoritative GAAP consists of
GASB Statements of Governmental Accounting Standards. The second category comprises GASB
Technical Bulletins and Implementation Guides, as well as guidance from the American Institute of
Certified Public Accountants that is cleared by the GASB. Application of this statement is effective
for the City’s fiscal year ending June 30, 2016. This pronouncement did not have a material effect on
the financial statements of the City.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
62
Note 2 – Summary of Significant Accounting Policies (Continued)
V. Accounting Changes (Continued)
New Governmental Accounting Standards Implementation for the Year Ended June 30, 2016
(Continued)
GASB Statement No. 79
In December 2015, GASB issued Statement No. 79, Certain External Investment Pools and Pool
Participants. This Statement establishes additional note disclosure requirements for qualifying
external investment pools that measure all of their investments at amortized cost for financial
reporting purposes and for governments that participate in those pools. Those disclosures for both
the qualifying external investment pools and their participants include information about any
limitations or restrictions on participant withdrawals. This pronouncement did not have a material
effect on the financial statements of the City.
Upcoming Governmental Accounting Standards Implementation
The City is currently analyzing its accounting practices to determine the potential impact on the
financial statements for the following GASB statements:
GASB Statement No. 74
In June 2015, GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit
Plans Other Than Pension Plans, which addresses reporting by postemployment benefits other than
pensions (OPEB) plans that administer benefits on behalf of governments. This statement basically
parallels GASB Statement 67 and replaces GASB Statement 43. Application of this statement is
effective for the City’s fiscal year ending June 30, 2017.
GASB Statement No. 75
In June 2015, GASB issued Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions. This statement applies to government employers
who provide OPEB to their employees and for governments that finance OPEB for employees of
other governments. This statement basically parallels GASB Statement 68 and replaces GASB
Statement 45. Application of this statement is effective for the City’s fiscal year ending June 30,
2018.
GASB Statement No. 77
In August 2015, the GASB issued Statement No. 77, Tax Abatement Disclosures. This statement
establishes financial reporting standards for tax abatement agreements entered into by state and
local governments. Application of this statement is effective for the City’s fiscal year ending June 30,
2017.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
63
Note 2 – Summary of Significant Accounting Policies (Continued)
V. Accounting Changes (Continued)
Upcoming Governmental Accounting Standards Implementation (Continued)
GASB Statement No. 78
In December 2015, GASB issued Statement No. 78, Pensions Provided Through Certain Multiple-
Employer Defined Benefit Pension Plans. This Statement amends the scope and applicability of
Statement 68 to exclude pensions provided to employees of state or local governmental employers
through a cost-sharing multiple-employer defined benefit pension plan that (1) is not a state or local
governmental pension plan, (2) is used to provide defined benefit pensions both to employees of
state or local governmental employers and to employees of employers that are not state or local
governmental employers, and (3) has no predominant state or local governmental employer (either
individually or collectively with other state or local governmental employers that provide pensions
through the pension plan). This Statement establishes requirements for recognition and
measurement of pension expense, expenditures, and liabilities; note disclosures; and required
supplementary information for pensions that have the characteristics described above. Application of
this statement is effective for the City’s fiscal year ending June 30, 2017.
GASB Statement No. 80
In December 2015, GASB issued Statement No. 80, Blending Requirements for Certain Component
Units – An Amendment of GASB Statement No. 14. This Statement amends the blending
requirements for the financial statement presentation of component units of all state and local
governments. The additional criterion requires blending of a component unit incorporated as a not-
for-profit corporation in which the primary government is the sole corporate member. The additional
criterion does not apply to component units included in the financial reporting entity pursuant to the
provisions of Statement No. 39, Determining Whether Certain Organizations Are Component Units.
Application of this statement is effective for the City’s fiscal year ending June 30, 2017.
GASB Statement No. 81
In December 2015, GASB issued Statement No. 81, Irrevocable Split-Interest Agreements. This
Statement requires that a government that receives resources pursuant to an irrevocable split-
interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of
the agreement. Furthermore, this Statement requires that a government recognize assets
representing its beneficial interests in irrevocable split-interest agreements that are administered by
a third party, if the government controls the present service capacity of the beneficial interests. This
Statement requires that a government recognize revenue when the resources become applicable to
the reporting period. Application of this statement is effective for the City’s fiscal year ending June
30, 2018.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
64
Note 2 – Summary of Significant Accounting Policies (Continued)
V. Accounting Changes (Continued)
Upcoming Governmental Accounting Standards Implementation (Continued)
GASB Statement No. 82
In December 2015, GASB issued Statement No. 82, Pension Issues – An Amendment of GASB
Statements No. 67, No. 68, and No. 73. This Statement clarifies that payments that are made by an
employer to satisfy contribution requirements that are identified by the pension plan terms as plan
member contribution requirements should be classified as plan member contributions for purposes
of Statement 67 and as employee contributions for purposes of Statement 68. It also requires that
an employer’s expense and expenditures for those amounts be recognized in the period for which
the contribution is assessed and classified in the same manner as the employer classifies similar
compensation other than pensions (for example, as salaries and wages or as fringe benefits).
Application of this statement is effective for the City’s fiscal year ending June 30, 2018.
Note 3 – Cash and Investments
Cash and investments are classified in the accompanying financial statements as follows:
Fiduciary Funds
Governmental Business-type Statement of
Activities Activities Net Position Total
Current assets:
Cash and investments 64,366,979$ 39,850,247$ 2,092,758$ 106,309,984$
Restricted cash and investments with fiscal agent 2,559,011 19,510 1,976,121 4,554,642
Noncurrent assets:
Restricted cash and investments with fiscal agent 3,007,966 1,377,006 - 4,384,972
Total cash and investments 69,933,956$ 41,246,763$ 4,068,879$ 115,249,598$
Government-Wide Statement of Position
Cash and investments at June 30, 2016, consisted of the following:
Fair
Value
Cash on hand 3,500$
Deposits with financial institutions 3,551,617
Investments 111,694,481
Total cash and investments 115,249,598$
At June 30, 2016, cash and investments, excluding restricted cash and investments held by fiscal agent, are
reported at fair value based on quoted market prices. The following table represents the fair value
measurements of investments recognized in the accompanying Statement of Net Position measured at fair
value on a recurring basis and the level within GASB 72 fair value hierarchy in which the fair value
measurements fall at June 30, 2016:
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
65
Note 3 – Cash and Investments (Continued)
Percentage
Fair of Measurement
Value Investments Input
Investments:
Local Agency Investement Fund (LAIF) 23,890,024$ 22.40% Level 2
California Asset Management Program 1,003,469 0.94%Level 2
Money Market Mutual Funds 470 0.00%N/A
Certificates of Deposit 4,004,129 3.76%N/A
US Treasury Securities 28,266,327 26.51%Level 2
U.S. Government Sponsored Enterprise Securities 49,467,284 46.39%Level 2
Total Investments 106,631,703$
Investment Type
A. Demand Deposits
The carrying amounts of the City’s demand deposits were $3,551,617 at June 30, 2016. Bank balances
were $3,346,015 at that date, the total amount of which was collateralized or insured with securities held
by the pledging financial institutions in the City’s name as discussed below.
The California Government Code requires California banks and savings and loan associations to secure
the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in
this manner shall have the effect of perfecting a security interest in such collateral superior to those of a
general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.
The market value of pledged securities must equal at least 110% of the City's cash deposits. California
law also allows institutions to secure City’s deposits by pledging first trust deed mortgage notes having a
value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash
deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”).
The City, however, has not waived the collateralization requirements.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
66
Note 3 – Cash and Investments (Continued)
B. Investments Authorized by the California Government Code and the City’s Adopted Investment
Policy
The table below identifies the investment types that are authorized for the City by the California
Government Code (or the City’s investment policy, where more restrictive). The table also identifies
certain provisions of the California Government Code (or the City’s investment policy, where more
restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not
address investments of debt proceeds held by bond trustees that are governed by the provisions of debt
agreements of the City, rather than the general provisions of the California Government Code or the
City’s investment policy.
Authorized Maximum Maximum
Authorized by Investment Maximum Percentage of Investment in
Investment Type Policy Maturity Portfolio* One Issuer
Repurchase Agreements-Overnight "Sweep"Yes 1 year 20%No Limit
Local Agency Investement Fund (LAIF) **Yes N/A 30%No Limit
Local Agency Bonds No 5 years N/A N/A
Other Governmental Managed Investment Pools Yes N/A 30%No Limit
Money Market Mutual Funds Yes N/A 20%10%
Certificates of Deposit Yes 5 years 10%$1M
Negotiable Certificates of Deposit Yes 5 years 10%$1M
Banker's Acceptances Yes 180 days 10%$1M
U.S. Treasury Bills, Notes and Bonds Yes 5 years 50%15%
U.S. Gov't Sponsored Enterprises Yes 5 years 60%15%
Commercial Paper Yes 270 days 25%$5M
Commercial Medium-Term Notes Yes 5 years 15%$1M
* Excluding amounts held by bond trustee that are not subject to California Government Code restriction.
** Maximum is $50 million per account.
C. Investments Authorized by Debt Agreements
The investment of the proceeds from debt issuances, held by a third-party trustee, is governed by the
provisions of the specific debt agreement rather than by the Gov't Code or the Investment Policy. The
investment types that are authorized and currently utilized by the City are Guaranteed Investment
Contracts and Money Market Mutual Funds.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
67
Note 3 – Cash and Investments (Continued)
D. Risk Disclosures
Disclosures Related to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity, the greater the sensitivity its fair value is to changes in
market interest rates. One of the ways that the City manages its exposure to interest rate risk is by
purchasing a combination of shorter-term and longer-term investments and by timing cash flows from
maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as
necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City's investments to interest rate risk is
provided in the table that shows the distribution by maturity is as follows:
Less than 12 to 60
Total 12 Months Months
Investments:
Local Agency Investement Fund (LAIF) 23,890,024$ 23,890,024$ -$
California Asset Management Program 1,003,469 1,003,469 -
Money Market Mutual Funds 470 470 -
Certificates of Deposit 4,004,129 2,237,669 1,766,460
Corporate Medium Term Notes - - -
US Treasury Securities 28,266,327 8,006,780 20,259,547
U.S. Government Sponsored Enterprise Securities 49,467,284 12,940,924 36,526,360
Total Investments 106,631,703 48,079,336 58,552,367
Investment with Fiscal Agents:
Guaranteed Investment Contracts 619,500 - 619,500
Money Market Mutual Funds 4,443,278 4,443,278 -
Total Investment with Fiscal Agents 5,062,778 4,443,278 619,500
Total 111,694,481$ 52,522,614$ 59,171,867$
Investment Type
Remaining Maturity (in Months)
Disclosures Related to Credit Risk
Credit risk is defined as the risk that an issuer of an investment will not fulfill its obligation to repay the
holder at the maturity date. This is generally measured by the assignment of a rating by a nationally
recognized statistical organization. However, some issuers do not seek a credit rating. For instance, the
California Local Agency Investment Fund (LAIF) has not sought or received a credit rating. In these
cases, the purchaser is solely responsible for performing their own due diligence before purchasing an
investment or participating in an external investment pool. Certificates of deposit of $250,000 or less are
fully insured by the Federal Deposit Insurance Corporation (FDIC), and therefore, do not seek a credit
rating.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
68
Note 3 – Cash and Investments (Continued)
D. Risk Disclosures (Continued)
Disclosures Related to Credit Risk (Continued)
Presented on the following is the minimum rating required by (where applicable) the Government Code,
the Investment Policy, or the debt agreements, and the actual rating as of year-end for each investment
type as well as the fair value measurements of investments recognized in the accompanying statement
of net position measured at fair value on a recurring basis and the level within GASB 72’s fair value
hierarchy in which the fair value measurements fall at June 30, 2016.
Minimum
Fair Legal AAA/
Value Rating AA+ Not Rated
Investments:
Local Agency Investment Fund (LAIF) 23,890,024$ N/A -$ 23,890,024$
California Asset Management Program 1,003,469 N/A 1,003,469 -
Money Market Mutual Funds 470 AAA 470 -
Certificates of Deposit 4,004,129 N/A - 4,004,129
Corporate Medium Term Notes - A - -
US Treasury Securities 28,266,327 N/A 28,266,327 -
U.S. Government Sponsored Enterprise Securities 49,467,284 N/A 49,467,284 -
Total Investments 106,631,703 78,737,550 27,894,153
Investments with Fiscal Agents:
Guaranteed Investment Contracts 619,500 N/A - 619,500
Money Market Mutual Funds 4,443,278 AAA - 4,443,278
Total Investments with Fiscal Agents 5,062,778 - 5,062,778
Total 111,694,481$ 78,737,550$ 32,956,931$
Rating as of Year End
Investment Type
Disclosures Relating to Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one
issuer beyond that stipulated in the Gov't Code. GASB Statement No. 40 requires disclosure by amount
and issuer, of investments in any one issuer that represent 5% or more of total investments.
Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external
investment pools) that represents 5% or more of the City's total investments are as follows:
Fair Value
Federal National Mortgage Association 20,315,280$
Federal Home Loan Mortgage Corporation 10,056,680$
Federal Home Loan Bank 15,077,864$
Local Agency Investment Fund (LAIF) 23,890,024$ California Pooled
Investment Fund
Enterprise Securities
Enterprise Securities
Enterprise Securities
Issuer Investment Type
U.S. Government Sponsored
U.S. Government Sponsored
U.S. Government Sponsored
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
69
Note 3 – Cash and Investments (Continued)
D. Risk Disclosures (Continued)
Disclosures Relating to Custodial Credit Risk
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty
(e.g. broker-dealer) 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 Government Code and the City's
investment policy do not contain legal or policy requirements that would limit the exposure to custodial
credit risk for investments.
E. Investments in State Investment Pool – Local Agency Investment Fund
The City’s investments with the Local Agency Investment Fund (LAIF) include a portion of the pool funds
invested in Structured Notes and Asset-Backed Securities. These investments include the following:
Structured Notes - debt securities (other than asset-backed securities) whose cash flow
characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more
indices and/or that have embedded forwards or options.
Asset-Backed Securities - the bulk of which are mortgage-backed securities, entitle their
purchasers to receive a share of the cash flows from a pool of assets such as principal and
interest repayments from a pool of mortgages (such as CMO’s) or credit card receivables.
LAIF is overseen by the Local Investment Advisory Board, which consists of five members, in
accordance with State statute. The fair value of our position in the pool is the same as the value of the
pool shares.
As of June 30, 2016, the City had $23,890,024 invested in LAIF, which had invested 2.81% of the pool
investment funds in Structured Notes and Asset-Backed Securities. The LAIF fair value factor of
1.000621222 was used to calculate the fair value of the investment in LAIF.
F. Investment in California Asset Management Program (CAMP)
The City is a voluntary participant in CAMP, a California Joint Powers Authority that falls under
California Government Code Section 53601(p), which is directed by a Board of Trustees that is made up
of experienced local government finance directors and treasurers. The Pool is required to maintain an
average maturity of less than 60 days, and is rated AAAm by Standard & Poor's national rating agency.
As of June 30, 2016, the City had $1,003,469 invested in CAMP.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
70
Note 4 – Receivables
At June 30, 2016, receivables consisted of the following:
Governmental Business-Type
Activities Activities Total
Accounts receivable 640,520$ 2,450,117$ 3,090,637$
Taxes and assessments receivable 330,159 165,758 495,917
Accrued revenues 4,802,169 9,185 4,811,354
Loans receivable 948,633 - 948,633
Total 6,721,481$ 2,625,060$ 9,346,541$
Loans receivable consist of loans to developers and loans to employees for the purchase of computer
equipment, a program approved by the City Council to promote more efficient use of technology.
Note 5 – Investment in Joint Ventures
Investment in joint ventures (See Note 2G) is reported as other noncurrent assets in the Statement of Net
Position, consists of the following as of June 30, 2016:
Cardiff Sanitary Division San Elijo Joint Facilities 18,446,627$
San Dieguito Water District R.E. Badger Joint Facilities 19,015,947
San Dieguito Water District R.E. Badger Financing Authority 764,192
19,780,139
Encinitas Sanitary Division Encina Joint Facilities 3,937,430
Total Investment in Joint Ventures 42,164,196$
A. Cardiff Sanitary Division
Investment in San Elijo Joint Powers Authority (CITY)
In 1964, Cardiff Sanitary Division (“CSD”) entered into an agreement with Solana Beach Sanitation
District (“Solana Beach”) for the joint ownership, maintenance, operation, and use of a Wastewater
Treatment Plant and Ocean Outfall (collectively, the "Joint Facilities"). In 1987, CSD and Solana Beach
agreed to establish the San Elijo Joint Powers Authority (“SEJPA”), a separate legal entity whose
function it is to manage and operate the Joint Facilities and to determine the joint and separate
obligations of the members concerning the transmission, treatment, disposal, and reclamation of
wastewater within the respective service territories. On June 30, 1988, CSD and Solana Beach each
transferred all of their assets related to the Facilities in exchange for a 50% interest in SEJPA. The
Ocean Outfall is jointly owned by SEJPA (21% interest) and the City of Escondido (79% interest).
SEJPA is responsible for the operations and maintenance of the Joint Facilities as well as the related
administration. The operations and maintenance costs are allocated monthly and billed quarterly, based
on the relative volume of flows after taking into account charges to other agencies that lease certain
capacity rights and share in the costs of operations and maintenance. For the year ended June 30,
2016, CSD's share of those costs was $1,250,059, which is reported as a component of "facility
operations and maintenance" in the accompanying financial statements.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
71
Note 5 – Investments in Joint Ventures (Continued)
B. San Dieguito Water District
Investment in R.E. Badger Filtration Plant and related Facilities (the "Joint Facilities")
In 1967, SDWD entered into an agreement with Santa Fe Irrigation District (“Santa Fe”) for the joint
ownership, maintenance, operation, and use of a water treatment plant and various facilities for the
storage and delivery of potable water. During the ensuing years, the SDWD and Santa Fe have added
various facilities and improvements, which are owned in different percentages depending on the type of
facility and the agreements in place. The ownership percentages of these Joint Facilities are described
below:
San Dieguito
Water District Santa Fe Facilities
45% 55% Filtration Plant
31% 69% Filtered Water Reservoir
39% 61% Joint Pipeline
42% 58% San Dieguito Water Reservoir
Santa Fe is responsible for the operations and maintenance of the Joint Facilities as well as the related
administration. The operations and maintenance costs are allocated monthly on the basis of the water
used by each district, and administrative costs are allocated based on an agreed-upon cost allocation
plan. For the year ended June 30, 2016, SDWD's share of those was $1,788,841, which is shown as
"facility operations and maintenance" in the accompanying financial statements.
Investment in R.E. Badger Water Facilities Financing Authority (the "Financing Authority")
In 1999, SDWD and Santa Fe entered into a joint exercise of powers agreement and formed the
Financing Authority to provide financing for the acquisition and construction of capital improvements
related to the Joint Facilities. The Financing Authority subsequently issued revenue bonds for the
purpose of funding those capital improvements. SDWD and Santa Fe are obligated under Installment
Purchase Agreements to repay their proportionate shares of the long-term financing. The investment in
the Financing Authority consists primarily of SDWD's share of the debt reserve funds held by a fiscal
agent and unamortized bond discounts and issuance costs.
C. Encinitas Sanitary Division
Investment in Encina Water Pollution Control Facility (the "Joint Facilities")
ESD is one of six member agencies with an ownership interest in the Joint Facilities. ESD owns
approximately 2.7% of the Joint Facilities, after adjusting for the construction and upgrades to the Joint
Facilities, referred to a "Phase V improvements." This ownership percentage affords ESD treatment
capacity rights of approximately 2.0 million gallons/day, which is in excess of current needs and
sufficient to meet all projected future needs. The Encina Wastewater Authority (Encina) is responsible
for the operations and maintenance of the Joint Facilities, as well as the related administration. The
operations, maintenance, and administrative costs are allocated monthly on the basis of the relative
flows of each member agency. For the year ended June 30, 2016, ESD's share of those costs was
$594,288, which is shown as "facility operations and maintenance" in the accompanying financial
statements.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
72
Note 6 – Long-Term Receivables
At June 30, 2016 the City’s long-term receivables consisted of the following:
Encinitas Ranch Town Center 520,000$
Iris Apartments 428,633
Total 948,633$
A. Encinitas Ranch Town Center
At June 30, 2016, the outstanding balance of the long-term receivable was $520,000. This receivable is one
of the results of the Encinitas Ranch Development Agreement that was executed between the City and the
developer of the Encinitas Ranch planned community in 1994. Part of that agreement allowed the developer
to apply up to 50% of the sales tax proceeds generated by the Encinitas Ranch Town Center towards the
payment of CFD assessments during its first five years of operation. The funds were applied to CFD
payments pursuant to this loan agreement for approximately two years, and then discontinued. The original
loan amount was about $1.3 million. The developer has been making interest and certain principal
repayments, consistent with the contract terms, in the ensuing years. In 2011, the City Council approved an
extension to the final maturity of the note by five years, to June 15, 2018. The balance at that time was
approximately $650,000. Simple interest is payable annually, with principal payments commencing in June
2016 and continuing through until June 2018 when the remaining balance is due and payable. The note is
secured by the developer’s share of the future net revenues of the Encinitas Ranch Golf Course, which
substantially exceed the face value of the note.
B. Iris Apartments
On April 20, 2012, the City entered into a promissory note agreement with Iris Apartments in the amount of
$350,000, secured by a Deed of Trust on the project. The outstanding principal balance due the City bears
simple interest at a rate of 6% per annum, commencing on the date of fund disbursement which was May
2012. Under the terms of the agreement, Iris Apartments is obligated to make annual payments of principal
and interest in the amount equal to 50% of residual receipts, as defined in the promissory note agreement.
All principal and unpaid interest will be due and payable on April 20, 2067. The outstanding principal and
interest receivable at June 30, 2016 was $428,633.
Note 7 – Other Assets
At June 30, 2016, the City has recorded other assets consisting of the following:
Governmental Business-type
Activities Activities Total
Other Assets:
Prepaid pension side funds 3,325,189$ 981,523$ 4,306,712$
Less: accumulated amortization (2,992,671) (883,368) (3,876,039)
Total other assets 332,518$ 98,155$ 430,673$
These amounts represent the related unamortized prepayment of its pension side fund obligations in 2007.
The City elected to amortize over a 10-year period. For the year ended June 30, 2016, the amortization
expense was $332,519 for the governmental activities and $98,152 for the business-type activities.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
73
Note 8 – Capital Assets
A. Governmental Activities
The summary of changes in governmental activities capital assets for the year ended June 30, 2016 is
as follows:
Balance Transfers/ Balance
July 1, 2015 Additions Deletions Reclassification June 30, 2016
Capital assets, not being depreciated:
Land 61,862,474$ -$ -$ -$ 61,862,474$
Land easements 2,104,542 9,500 - - 2,114,042
Construction in progress 9,959,944 5,226,128 - (949,592) 14,236,480
Total capital assets, not being depreciated 73,926,960 5,235,628 - (949,592) 78,212,996
Capital assets, being depreciated:
Public facilities 100,192,351 - - 197,611 100,389,962
Vehicles, equipment and machinery 9,245,293 425,195 (390,537) - 9,279,951
Infrastructure 110,272,547 - - 751,981 111,024,528
Total capital assets, being depreciated 219,710,191 425,195 (390,537) 949,592 220,694,441
Less accumulated depreciation
Public facilities (25,662,524) (3,262,689) - - (28,925,213)
Vehicles, equipment and machinery (5,432,312) (637,137) 390,537 - (5,678,912)
Infrastructure (43,787,363) (2,607,877) - - (46,395,240)
Total accumulated depreciation (74,882,199) (6,507,703) 390,537 - (80,999,365)
Total capital assets being depreciated, net 144,827,992 (6,082,508) - 949,592 139,695,076
Governmental activities capital assets, net 218,754,952$ (846,880)$ -$ -$ 217,908,072$
Depreciation expense was charged to the functions/programs of the governmental activities as follows:
General government 1,452,692$
Public safety 350,158
Public works 2,826,056
Parks and recreation 1,568,301
Internal service funds 310,496
Total depreciation expense 6,507,703$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
74
Note 8 – Capital Assets (Continued)
B. Business-type Activities
The summary of changes in business-type activities capital assets for the year ended June 30, 2016 is
as follows:
Balance Transfers/ Balance
July 1, 2015 Additions Deletions Reclassification June 30, 2016
Capital assets, not being depreciated:
Land easements 3,047,151$ 172,150$ -$ -$ 3,219,301$
Public works facility right of use 3,378,700 - - - 3,378,700
Construction in progress 4,375,674 906,235 - (587,313) 4,694,596
Total capital assets, not being depreciated 10,801,525 1,078,385 - (587,313) 11,292,597
Capital assets, being depreciated:
Structures and improvements 19,118,795 - - 28,780 19,147,575
Collection and distribution 60,497,024 269,629 - 558,533 61,325,186
Machinery and equipment 2,381,068 53,744 (6,600) - 2,428,212
Capacity Rights 323,190 - - - 323,190
Total capital assets, being depreciated 82,320,077 323,373 (6,600) 587,313 83,224,163
Less accumulated depreciation
Structures and improvements (4,986,387) (418,575) - - (5,404,962)
Collection and distribution (29,834,608) (868,874) - (609,295) (31,312,777)
Machinery and equipment (2,473,455) (238,635) 6,600 609,295 (2,096,195)
Capacity rights (125,505) (6,464) - - (131,969)
Total accumulated depreciation (37,419,955) (1,532,548) 6,600 - (38,945,903)
Total capital assets being depreciated, net 44,900,122 (1,209,175) - 587,313 44,278,260
Business-type activities capital assets, net 55,701,647$ (130,790)$ -$ -$ 55,570,857$
Depreciation expense was charged to the functions/programs of the business-type activities as follows:
Cardiff Sanitary Division 387,320$
San Dieguito Water District 675,549
Encinitas Sanitary Division 369,141
Non-major Affordable Housing 100,538
Total 1,532,548$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
75
Note 9 – Long-Term Obligations
A summary of changes in long-term liabilities for the year ended June 30, 2016 is as follows:
Balance Balance Due Within Due in More
July 1, 2015 Additions Deletion June 30, 2016 One Year Than One Year
Governmental Activities:
Capital Leases:
2008 Civic Center Roof Replacement 1,261,575$ -$ (138,268)$ 1,123,307$ 143,417$ 979,890$
2011 Fire Apparatus 498,147 - (161,975) 336,172 166,015 170,157
2012 Fire Apparatus 353,750 - (85,582) 268,168 87,458 180,710
2013 Fire Apparatus 400,242 - (77,049) 323,193 78,520 244,673
Bonded Debt:
1997 Civic Center COP's 1,150,000 - (560,000) 590,000 590,000 -
2002 ABAG Financing 830,000 - (265,000) 565,000 275,000 290,000
2006 Public Library Bonds 16,975,000 - (16,975,000) - - -
less: original issue discount (220,000) - 220,000 - - -
2010 Community Park Bonds 16,000,000 - (735,000) 15,265,000 770,000 14,495,000
add: original issue premium 163,433 - (10,777) 152,656 - 152,656
2013 Community Park Bonds 7,245,000 - (325,000) 6,920,000 330,000 6,590,000
add: original issue premium 113,880 - (8,760) 105,120 - 105,120
2014 Moonlight Beach Tower (Series A) 3,095,000 - (65,000) 3,030,000 65,000 2,965,000
less: original issue discount (55,141) - 1,838 (53,303) - (53,303)
2014 Pacific View (Series B)10,365,000 - (200,000) 10,165,000 200,000 9,965,000
less: original issue discount (230,486) - 7,683 (222,803) - (222,803)
2015 Library Refunding Bonds - 15,645,000 - 15,645,000 480,000 15,165,000
add: original issue premium - 772,212 - 772,212 - 772,212
Subtotal of governmental
capital leases and bonded debt 57,945,400 16,417,212 (19,377,890) 54,984,722 3,185,410 51,799,312
Claims payable 1,193,289 1,430,314 (1,034,383) 1,589,220 1,589,220 -
Compensated absences 2,101,928 4,442,733 (4,436,972) 2,107,689 2,107,689 -
Total governmental activities 61,240,617 22,290,259 (24,849,245) 58,681,631 6,882,319 51,799,312
Business-type Activities:
2011 CSD Note Payable to SEJPA 2,627,419 - (593,530) 2,033,889 612,192 1,421,697
add: original issue premium 206,405 - (34,401) 172,004 - 172,004
2007 SDWD Note Payable Badger 5,130,000 - (415,000) 4,715,000 440,000 4,275,000
2004 EHA Housing Note Payable 1,391,715 - (60,306) 1,331,409 56,059 1,275,350
2014 SDWD Water Revenue Bonds 5,870,000 - (570,000) 5,300,000 585,000 4,715,000
add: original issue premium 669,345 - (74,372) 594,973 - 594,973
Subtotal of business-type
bonded debt 15,894,884 - (1,747,609) 14,147,275 1,693,251 12,454,024
Compensated absences (SDWD)148,064 293,833 (280,587) 161,310 161,310 -
Compensated absences (Affordable
Housing)9,902 60,379 (59,593) 10,688 10,688 -
Total business-type activities 16,052,850 354,212 (2,087,789) 14,319,273 1,865,249 12,454,024
Total long-term obligations 77,293,467$ 22,644,471$ (26,937,034)$ 73,000,904$ 8,747,568$ 64,253,336$
Classification
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
76
Note 9 – Long-Term Obligations (Continued)
A. Governmental Activities
2008 Civic Center Roof Replacement and Energy Optimization Project
On February 27, 2008, the City entered into a long-term lease arrangement with a financial institution to
finance $2,100,000 of the 2008 improvements to the Encinitas Civic Center. The lease has a term of
fifteen (15) years, an interest rate of 3.69%, and semi-annual payments of $91,778. The project was
completed during fiscal year 2008-2009, and the final payment is due in fiscal year 2023. The total cost
of the project was $3,543,258.
The annual debt service requirements for the lease outstanding at June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 143,417$ 40,139$ 183,556$
2018 148,758 34,798 183,556
2019 154,298 29,258 183,556
2020 160,045 23,511 183,556
2021 166,005 17,552 183,557
2022-2023 350,784 16,327 367,111
Total 1,123,307$ 161,585$ 1,284,892$
2011 Fire Apparatus Lease
The City entered into a long-term lease arrangement in fiscal year 2010-11 to finance the purchase of a
2011 Pierce Arrow XT Aerial Tiller Truck for $1,214,003. The lease has a term of seven years, an
interest rate of 2.48%, and semi-annual payments of $86,665. The lease is accounted for as a capital
lease, as the City will be purchasing the unit for $1.00 at the maturity of the lease in fiscal year 2018.
The annual debt service requirements for the lease outstanding at June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 166,015$ 7,314$ 173,329$
2018 170,157 3,171 173,328
Total 336,172$ 10,485$ 346,657$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
77
Note 9 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2012 Fire Apparatus Lease
The City entered into a long-term lease arrangement in fiscal year 2011-12 to finance the purchase of a
2012 Pierce Arrow XT Pumper Truck for $603,397. The lease has a term of seven (7) years with an
interest rate of 2.18% and semi-annual payments of $46,415. The lease is accounted for as a capital
lease, as the City has the option to purchase the unit for $1 at the maturity of the lease term in fiscal
year 2019.
The annual debt service requirements for the lease outstanding at June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 87,458$ 5,372$ 92,830$
2018 89,375 3,455 92,830
2019 91,335 1,496 92,831
Total 268,168$ 10,323$ 278,491$
2013 Fire Apparatus Lease
The City entered into a long-term lease arrangement in fiscal year 2012-13 to finance the purchase of a
2012 Pierce Arrow XT Pumper Truck for $559,653. The lease has a term of seven years, an interest
rate of 1.91%, and annual payments of $84,693. The lease is accounted for as a capital lease, as the
City will be purchasing the unit for $1.00 at the maturity of the lease in fiscal year 2020.
The annual debt service requirements for the lease outstanding at June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 78,520$ 6,173$ 84,693$
2018 80,020 4,673 84,693
2019 81,548 3,145 84,693
2020 83,105 83,105
Total 323,193$ 13,991$ 337,184$
Capital assets and accumulated depreciation for assets held under capital leases are as follows:
Accumulated Net Capital
Cost Depreciation Assets
Public facilities 3,543,258$ (1,003,922)$ 2,539,336$
Fire apparatus and equipment 2,377,053 (704,469) 1,672,584
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
78
Note 9 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
1997 Refunding Certificates of Participation (COPs)-Series A (Encinitas Civic Center)
In December 1991, the Encinitas Public Financing Authority (on behalf of the City of Encinitas) issued its
1991 Certificates of Participation-Series A totaling $7,635,000, to purchase the site and existing
improvements for the Encinitas Civic Center. In December 1997, the EPFA issued the 1997 Refunding
Certificates of Participation-Series A totaling $7,550,000, to refund all of the 1991 Certificates. The
refunding qualified as an in-substance defeasance. Principal is due and payable annually in amounts
ranging from $505,000 to $590,000. Interest is due and payable semi-annually with rates ranging from
3.70% to 5.05%. The final maturity of the issue is due and payable in fiscal year 2017. These certificates
are subject to federal arbitrage requirements. The certificates are not subject to optional redemption
prior to maturity.
The annual debt service requirements for the 1997 Certificates of Participation outstanding at
June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 590,000$ 14,750$ 604,750$
Total 590,000$ 14,750$ 604,750$
2002 Association of Bay Area Governments (ABAG) Lease Revenue Bonds
In July 2002, the City issued $6,590,000 of Lease Revenue Bonds, Series 2002-1 through ABAG, a
California Joint Powers Authority. The proceeds were utilized to retire the 1992 Certificates of
Participation-Series B (Encinitas Civic Center) and four existing debt obligations (including one of the
Encinitas Sanitary Division) and to provide funding for improvements to the Civic Center and the SDWD
Water Utility meter exchange and automation program. The Bonds mature annually in amounts ranging
from $240,000 to $290,000. Interest is due and payable semiannually at rates ranging from 3.00% to
4.65%. The final maturity of the issue is due and payable in fiscal year 2018. The bonds are subject to
federal arbitrage requirements.
The Encinitas Sanitary Division and the San Dieguito Water District have repaid all of their obligations to
the City under the agreement to advance funds. The remaining amounts payable are all attributable to
the Civic Center funding.
The annual debt service requirements for the 2002 ABAG Lease Revenue Bonds outstanding at
June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 275,000$ 19,810$ 294,810$
2018 290,000 6,743 296,743
Total 565,000$ 26,553$ 591,553$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
79
Note 9 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2002 Association of Bay Area Governments (ABAG) Lease Revenue Bonds (Continued)
The bonds are subject to optional redemption beginning in 2013 at the following respective redemption
prices (expressed as percentages of the principal amount of the Bonds to be redeemed).
Redemption
Redemption Period Price
July 1, 2014 and thereafter 100%
2006 Lease Revenue Bonds (Public Library)
On October 1, 2006 the Encinitas Public Financing Authority (on behalf of the City of Encinitas) issued
its 2006 Lease Revenue Bonds - Series A (Library Construction Project) in the amount of $20,000,000
to provide funds for the construction of a new 26,000 square foot public library. The bonds consist of
$10,405,000 of serial bonds and $9,595,000 in term bonds. The serial bonds mature through 2026 in
annual installments ranging from $465,000 to $755,000. The term bonds mature through 2037 and are
subject to mandatory sinking fund requirements. Annual principal installments range from $785,000 to
$1,155,000. Interest is due and payable semi-annually at rates ranging from 3.6% to 4.4%. The bonds
were issued at a discount, which is being amortized over the life of the bonds on a straight-line basis in
the government-wide financial statements. The bonds are subject to federal arbitrage requirements.
The 2006 Lease Revenue Bonds were refunded in fiscal year 2016 via the issuance of the 2015 Library
Refunding Bonds. The outstanding balance at June 30, 2016 is $0.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
80
Note 9 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2010 Lease Revenue Refunding Bonds (Park Project)
On September 1, 2010, the Encinitas Public Financing Authority (on behalf of the City of Encinitas)
issued its 2010 Lease Revenue Refunding Bonds, Series A (Park Project) in the amount of $19,530,000
to provide funds for the refinancing of its 2001 Lease Revenue Bonds, Series A. The bonds consist of
$15,675,000 of serial bonds and $3,855,000 of term bonds. The serial bonds mature from 2011 to 2028
in annual installments ranging from $625,000 to $1,175,000. The term bond matures on April 1, 2031
and is subject to mandatory sinking fund requirements. Interest is due and payable semi-annually at
rates ranging from 2.00% to 4.85%. The bonds were issued at a premium, which is being amortized
over the life of the bonds on a straight-line basis in the government-wide financial statements. The
bonds are subject to federal arbitrage requirements.
The bonds maturing on or after April 1, 2018 are subject to optional redemption on any date after
April 1, 2017, without premium.
The annual debt service requirements for the 2010 Lease Revenue Refunding Bonds outstanding at
June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 770,000$ 640,081$ 1,410,081$
2018 810,000 601,581 1,411,581
2019 830,000 577,281 1,407,281
2020 855,000 552,381 1,407,381
2021 885,000 523,525 1,408,525
2022-2026 4,965,000 2,071,156 7,036,156
2027-2031 6,150,000 892,900 7,042,900
Total 15,265,000$ 5,858,905$ 21,123,905$
2013 Lease Revenue Refunding Bonds (Public Park Construction Project)
On March 20, 2013, the Encinitas Public Financing Authority (on behalf of the City of Encinitas) issued
its 2013 Lease Revenue Bonds, Series A (Public Park Construction Project) in the amount of
$7,865,000 to provide funds for the construction of capital improvements to the Encinitas Community
Park. The bonds consist of $7,865,000 of serial bonds, which mature annually through 2033 in
installments ranging from $305,000 to $510,000. Interest is due and payable semi-annually at rates
ranging from 2.00% to 3.00%. The bonds were issued at a premium, which is being amortized over the
life of the bonds on a straight-line basis in the government-wide financial statements. The bonds are
subject to federal arbitrage requirements.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
81
Note 9 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2013 Lease Revenue Refunding Bonds (Public Park Construction Project) (Continued)
The annual debt service requirements for the 2013 Lease Revenue Refunding Bonds outstanding at
June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 330,000$ 185,644$ 515,644$
2018 335,000 178,994 513,994
2019 345,000 172,194 517,194
2020 350,000 164,806 514,806
2021 360,000 156,818 516,818
2022-2026 1,940,000 634,928 2,574,928
2027-2031 2,255,000 324,075 2,579,075
2032-2034 1,005,000 30,375 1,035,375
Total 6,920,000$ 1,847,834$ 8,767,834$
The bonds maturing on or after October 1, 2023 are subject to optional redemption on any date on or
after October 1, 2022, without premium.
2014 Lease Revenue Bonds (Pacific View Property and Moonlight Beach Lifeguard Tower)
On November 26, 2014, the Encinitas Public Financing Authority (on behalf of the City of Encinitas)
issued its 2014 Lease Revenue Bonds, Series A tax-exempt (Pacific View Property) and Series B
taxable (Moonlight Beach Lifeguard Tower) in the amounts of $3,095,000 and $10,365,000,
respectively, to provide funds for the purpose of financing the acquisition of a property known as the
Pacific View Property and for improving the Moonlight Beach Lifeguard Tower. The bonds consist of
$3,350,000 of serial bonds and $10,110,000 of term bonds. The serial bonds mature annually through
2030 in installments ranging from $65,000 to $245,000. The term bonds mature through 2045 and are
subject to mandatory sinking requirements. Interest is due and payable semi-annually at rates ranging
from 2.00% to 3.50%. The bonds were issued at a discount, which is being amortized over the life of the
bonds on a straight-line basis in the government-wide financial statements. The bonds are subject to
federal arbitrage requirements.
The annual debt service requirements for the 2014 Lease Revenue Bonds, Series A Moonlight Beach
Tower bonds outstanding at June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 65,000$ 101,181$ 166,181$
2018 65,000 99,881 164,881
2019 70,000 98,531 168,531
2020 70,000 97,131 167,131
2021 70,000 97,131 167,131
2022-2026 400,000 435,406 835,406
2027-2031 470,000 370,491 840,491
2032-2036 550,000 285,488 835,488
2037-2041 650,000 177,756 827,756
2042-2045 620,000 47,813 667,813
Total 3,030,000$ 1,810,809$ 4,840,809$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
82
Note 9 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2014 Lease Revenue Bonds (Pacific View Property and Moonlight Beach Lifeguard Tower)
(Continued)
The annual debt service requirements for the 2014 Lease Revenue Bonds, Series B Pacific View
Property bonds outstanding at June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 200,000$ 442,628$ 642,628$
2018 205,000 440,190 645,190
2019 205,000 436,603 641,603
2020 210,000 432,033 642,033
2021 215,000 426,556 641,556
2022-2026 1,195,000 2,023,841 3,218,841
2027-2031 1,450,000 1,766,841 3,216,841
2032-2036 1,820,000 1,395,188 3,215,188
2037-2041 2,330,000 887,000 3,217,000
2042-2045 2,335,000 240,875 2,575,875
Total 10,165,000$ 8,491,755$ 18,656,755$
2015 Library Refunding Bonds
On September 1, 2015, the Encinitas Public Financing Authority issued $15,645,000 of 2015 Lease
Revenue Refunding Bonds to defease and refund on a current basis, all of the outstanding 2006 Library
Bonds. The Bonds consist of serial bonds maturing from 2016 through 2036 in annual installments of
$480,000 to $1,025,000. Interest is due and payable semi-annually at rates ranging from 2.5% to 5.0%.
Annual debt service is approximately $1,065,000 through 2036. The bonds are subject to federal
arbitrage requirements. The aggregate debt service payments of the new debt are $3,252,589 less than
the old debt. The issuance of the new debt and refunding of the old debt resulted in an economic gain
(the difference between the net present value of the old debt and new debt service payments) of
approximately $1,547,162.
The annual debt service requirements for the 2015 Library Refunding Bonds outstanding at June 30,
2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 480,000$ 579,931$ 1,059,931$
2018 505,000 557,706 1,062,706
2019 530,000 531,831 1,061,831
2020 555,000 504,706 1,059,706
2021 580,000 476,331 1,056,331
2022-2026 3,355,000 1,918,931 5,273,931
2027-2031 3,980,000 1,267,481 5,247,481
2032-2036 4,635,000 594,131 5,229,131
2037 1,025,000 18,578 1,043,578
Total 15,645,000$ 6,449,626$ 22,094,626$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
83
Note 9 – Long-Term Obligations (Continued)
B. Business-Type Activities
2011 CSD Note Payable to San Elijo Joint Powers Authority (SEJPA)
On December 1, 2011, the City, on behalf of its members (the Cardiff Sanitary Division and the City of
Solana Beach) refinanced all of its outstanding debt, including its 2003 refunding revenue bonds and a
loan from the State of California. Information on the bond issuance itself is available through the SEJPA
administrative offices. CSD is responsible, via a Third Amended and Restated Loan Agreement, for the
repayment of $4,341,362 of the total borrowing amount of $9,235,000 (or approximately 47%.) Annual
debt service is approximately $690,000 through fiscal year 2019, with smaller repayments due in 2020
and 2021. The average rate on the borrowing is approximately 2.0%. The bonds were issued at a
premium, which is being amortized over the life of the bonds on a straight-line basis. The issue also
resulted in deferred refunding costs, which are also being amortized over the life of the bonds on a
straight-line basis.
CSD has pledged its net revenues to pay for this outstanding obligation. Net revenues are defined as
gross revenues less operations and maintenance costs, excluding depreciation, amortization and other
non-cash type charges. CSD has covenanted to budget for net revenues each fiscal year of at least
110% of annual debt service. Total principal and interest remaining to be paid on the 2011 Note Payable
as of June 30, 2016 is $2,203,912. During the year ended June 30, 2016, principal and interest paid on
the 2011 Note Payable was $691,225 and net revenue was $2,457,166, or 355% of annual debt service.
Management of CSD believes it is in compliance with these covenants for fiscal year 2016.
The annual debt service requirements for the 2011 CSD Note Payable to San Elijo Joint Powers
Authority outstanding at June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 612,192$ 79,889$ 692,081$
2018 640,352 55,402 695,754
2019 663,845 29,788 693,633
2020 57,500 3,234 60,734
2021 60,000 1,710 61,710
Total 2,033,889$ 170,023$ 2,203,912$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
84
Note 9 – Long-Term Obligations (Continued)
B. Business-Type Activities (Continued)
2007 SDWD Note Payable to R.E. Badger Water Facilities Financing Authority (WFFA)
On November 20, 2007, the WFFA, on behalf of its members (the Santa Fe Irrigation District and the
San Dieguito Water District) issued $20,685,000 of 2007 Water Revenue Refunding Bonds while
concurrently redeeming all of its outstanding 1999 Water Revenue Bonds. Information on the bond
issuance itself is available through the WFFA administrative offices. SDWD is responsible, via an
Amended and Restated Loan Agreement, for the repayment of $7,705,000 of the total borrowing.
Principal is due and payable annually in amounts ranging from $335,000 to $620,000. Interest is due
and payable semi-annually at rates ranging from 3.5% to 4.5%. Annual debt service is approximately
$630,000 through fiscal year 2028.
The annual debt service requirements for the 2007 SDWD Note Payable to R.E. Badger Water Facilities
Financing Authority outstanding at June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 440,000$ 191,244$ 631,244$
2018 455,000 171,619 626,619
2019 475,000 152,919 627,919
2020 490,000 133,619 623,619
2021 525,000 111,465 636,465
2022-2025 2,330,000 210,304 2,540,304
Total 4,715,000$ 971,170$ 5,686,170$
Pledged Revenues
SDWD has pledged its net revenues to pay the debt service on these two obligations. Net revenues are
defined as gross revenues less operations and maintenance costs, excluding depreciation, amortization
and other non-cash type charges. Total principal and interest outstanding of the above mentioned debts
as of June 30, 2016, is $7,890,082. During the year ended June 30, 2016 principal and interest paid was
$1,317,369 and net revenue was $4,331,948, or 309% of annual debt service. SDWD has covenanted
to budget for net revenues each fiscal year of at least 115% of combined annual debt service. SDWD’s
management believes it is in compliance with these covenants for fiscal year 2016.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
85
Note 9 – Long-Term Obligations (Continued)
B. Business-Type Activities (Continued)
2004 Encinitas Housing Authority (EHA) Note Payable
In 2004, the EHA secured a note payable with a financial institution of $1,905,338 to partially fund the
acquisition of 16 affordable housing units. The note is secured only by the rental income generated by
the housing units. Principal and interest is due and payable monthly. Annual principal installments range
from $52,417 in 2014 to $74,562 in 2034. The note bears interest at 90% of the ten-year US Treasury
note, adjustable every six years. The EHA is solely responsible for repayment on this note.
The annual debt service requirements for the 2004 Encinitas Housing Authority Note Payable
outstanding at June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 56,059$ 44,206$ 100,265$
2018 57,976 42,289 100,265
2019 59,958 40,307 100,265
2020 61,904 38,361 100,265
2021 64,125 36,140 100,265
2022-2026 354,972 146,352 501,324
2027-2031 419,989 81,336 501,325
2032-2034 256,427 12,796 269,223
Total 1,331,410$ 441,787$ 1,773,197$
2014 SDWD Water Revenue Refunding Bonds
On September 18, 2014, SDWD issued $5,870,000 of Water Revenue Refunding Bonds, Series 2014,
to defease and refund on a current basis, all of the outstanding 2004 Water Revenue Refunding Bonds.
The Bonds consist of serial bonds maturing from 2016 through 2024 in annual installments of $570,000
to $755,000. Interest is due and payable semi-annually at rates ranging from 3.0% to 4.0%. Annual debt
service is approximately $780,000 through 2024. The bonds are subject to federal arbitrage
requirements. The aggregate debt service payments of the new debt are $2,012,280 less than the old
debt. The issuance of the new debt and refunding of the old debt resulted in an economic gain (the
difference between the net present value of the old debt and new debt service payments) of
approximately $780,873.
The annual debt service requirements for the 2014 SDWD Water Refunding Bonds outstanding at
June 30, 2016 are as follows:
Year Ending
June 30 Principal Interest Total
2017 585,000$ 185,075$ 770,075$
2018 605,000 167,225 772,225
2019 625,000 148,775 773,775
2020 645,000 126,500 771,500
2021 665,000 100,300 765,300
2022-2025 2,175,000 132,900 2,307,900
Total 5,300,000$ 860,775$ 6,160,775$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
86
Note 10 – Interfund Receivables, Payable and Transfers
A. Due To and From Other Funds
Individual interfund receivables and payables at June 30, 2016, were as follows:
Due from Due to
Other Funds Other Funds
Govermental Funds:
General Fund 2,516,638$ -$
Capital Improvements Capital Projects Fund 8,200,603 -
Nonmajor Governmental Funds - 10,021,780
Internal Service Funds - 629,851
Enterprise Funds:
Nonmajor Affordable Housing Enterprise Fund - 65,610
Total 10,717,241$ 10,717,241$
The amounts due to the General Fund are all short-term borrowings in anticipation of grant revenue not
yet received or for debt service payments.
The amounts due to the Capital Improvements Capital Projects fund represent grant revenues due from
other funds.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
87
Note 10 – Interfund Receivables, Payable and Transfers (Continued)
B. Transfers In and Out
Transfers in and out between funds for the year ended June 30, 2016, were as follows:
Capital Nonmajor
General Improvement Governmental Nonmajor Internal Total
Fund Capital Projects Funds Recreation Service Funds All Funds
Transfers In
Major Governmental Funds:
General Fund -$ -$ 1,056,453$ 462,721$ -$ 1,519,174$
Capital Improvement Capital Project Fund 17,003,668 445,559 20,198,316 - - 37,647,543
Nonmajor Governmental Funds 5,383,529 - - - - 5,383,529
Nonmajor Affordable Housing Enterprise Fund 63,609 - - - - 63,609
Internal Service Funds 1,397,257 - 29,053 - 113,000 1,539,310
Total 23,848,063$ 445,559$ 21,283,822$ 462,721$ 113,000$ 46,153,165$
Transfers Out
Transfers in to the General Fund consist of funds from two of the City's development impact fee funds
for qualified costs incurred, or to be incurred in the future years, by the General Fund for the
construction of public facilities. In addition, the City now accounts for all street maintenance
expenditures in the Streets Division budget unit within the General Fund, and transfers all State
Gasoline Tax operating revenues from the Infrastructure Improvements special revenue fund to the
General Fund.
Transfers in to the Capital Improvement Capital Projects Fund represent funds from other governmental
funds for capital expenditures.
Transfers in to the Special Revenue funds represent the General Fund subsidy for the Senior Nutrition
Program and the General Fund contribution to the Coastal Zone Management fund, which is included in
the Grants and Housing special revenue fund.
Transfers in to the Debt Service funds represent the amounts being transferred to the City's general
debt service fund and the Encinitas Public Financing Authority debt service fund to pay for the City's
various debt service obligations.
Transfers in to the Internal Service Funds represent the City's annual contribution from the General
Fund to the Risk Management fund. The contribution is not mandated and is established by the City
Council during the annual budget process.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
88
Note 11 – Fund Balance and Net Position Classifications
The City classifies fund balances, as shown on the Balance Sheet - Governmental Funds as of
June 30, 2016 as follows:
Capital
Improvements Other
General Capital Projects Governmental
Fund Fund Funds Totals
Nonspendable:
Inventory and prepaid items 227,781$ -$ 287,756$ 515,537$
Other assets 332,518 - - 332,518
Computer loans 29,125 - - 29,125
Long-term receivable 520,000 - - 520,000
Total nonspendable 1,109,424 - 287,756 1,397,180
Restricted:
Street maintenance and improvements - - 85,252 85,252
Cable Franchise PEG funds - - 175,020 175,020
Environmental initiatives - - 1,869,253 1,869,253
Affordable housing - - 1,309,543 1,309,543
Donations - - 128,690 128,690
Parkland and open space - - 2,080,419 2,080,419
Traffic mitigation - - 1,361,916 1,361,916
Flood control - - 332,131 332,131
Lighting and landscaping
assessments - - 1,967,800 1,967,800
Law enforcement - - 124,406 124,406
Sand management - - 689,190 689,190
Debt service - - 2,286,436 2,286,436
Other - - 111,331 111,331
Total restricted - - 12,521,387 12,521,387
Committed:
Capital projects - 1,626,219 - 1,626,219
Total committed - 1,626,219 - 1,626,219
Assigned:
Capital projects - 24,776,682 - 24,776,682
Total assigned - 24,776,682 - 24,776,682
Unassigned 31,775,120 - (8,215,735) 23,559,385
Total Fund Balances 32,884,544$ 26,402,901$ 4,593,408$ 63,880,853$
Major Funds
City of Encinitas
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
89
Note 11 – Fund Balance and Net Position Classifications (Continued)
Categorization of Reserves under Adopted City Policies
All unassigned amounts in the City's General Fund are considered reserves under internal City policies. The
City maintains three separate and distinct reserves:
1) Contingency Reserve – represents funds that are set-aside for use only in exceptional
circumstances such as catastrophic events that could negatively impact the financial condition of the
City. Funding represents 20% of the next year’s operating expenditures, and no drawdowns have
ever been executed on this reserve. City Policy requires a 4/5 vote of the City Council to authorize
draws on this reserve. The amount of the contingency reserve as of June 30, 2016 was
$11,822,489.
2) Budget Stabilization Reserve – was established in 2007 to help mitigate potential fluctuations in
operating revenues, or to fund unanticipated operating expenditures. Funding levels are mandated
at 2% to 5% of the next year’s budgeted operating revenues. Any changes to the level of funding for
this reserve also require a 4/5 vote of the City Council. In practice, this reserve has been funded
within the established range since 2007, and changes are made during the annual budget process.
The amount of the budget stabilization reserve as of June 30, 2016 was $1,357,873.
3) General Undesignated Reserve – this reserve represents any remaining unassigned fund balance
after funding levels have been established for (1) and (2) above. These funds may be allocated in
any manner the City Council designates. The amount of the general undesignated reserve as of
June 30, 2016 was $18,594,758.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
90
Note 12 – Risk Management
A. City of Encinitas - Risk Management and Insurance Programs
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The City has a proactive in-
house risk management program, which combines risk mitigation initiatives with a self-insurance
program and excess coverage policies with outside providers.
The City maintains a self-insurance fund to finance and account for its self-insured risks of loss. The
Risk Management fund is accounted for as an Internal Service fund. It is supported by interfund charges
for workers compensation coverage, unemployment insurance, and contributions from CSD, ESD and
the City. The Risk Management fund strives to maintain an adequate net position, over time, to cover all
known and reported claims, as well as an adequate reserve for incurred but not reported (IBNR) claims.
The City is self-insured for liability claims and losses up to $500,000 per occurrence, and for worker's
compensation claims and losses up to $350,000 per occurrence.
The City is a member of the San Diego Pooled Insurance Program Authority (SANDPIPA) which covers
any liability claims or losses above the $500,000 self-insured level. SANDPIPA is a separate legal entity
formed by the participating municipalities to provide pooled excess liability insurance coverage to its
members. The members do not hold any ownership stake in SANDPIPA and have no claims to revenue
or assets upon withdrawal, at which time the purchase of tail coverage is required. SANDPIPA is
governed by a Board of Directors, who determines policy and necessary funding levels, including
retroactive adjustments for over-or under-funding, which is reflected as adjustments to current year
premiums. The City is covered for losses between $500,000 and $2,500,000 by the SANDPIPA reserve
pool. The members share the risk of claims in excess of reserves. For claims incurred after July 1, 1992,
member expenses are included in the self-insurance reserve for purposes of calculating pooled
coverage. Excess liability insurance coverage is provided for losses between $2,500,000 and
$47,000,000 via excess insurers.
The City is a member of the Local Agency Workers Compensation Excess (LAWCX), a California Joint
Powers Insurance Authority. LAWCX provides coverage for claims between $350,000 and $5,000,000.
Excess worker's compensation coverage between $5,000,000 and statutory limits is provided through
contract reinsurance. City departments contribute premiums to the self-insurance fund based on annual
rates set for each work class.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
91
Note 12 – Risk Management (Continued)
A. City of Encinitas - Risk Management and Insurance Programs (Continued)
Changes in the balances of claims payable for liability and workers compensation during the past two
years are as follows:
Year Ended Year Ended
June 30, 2016 June 30, 2015
Claims payable, beginning of year 1,193,289$ 607,546$
Estimated incurred claims, net 1,430,314 972,064
Claims payments or closures (1,034,383) (386,321)
Claim payable, end of year 1,589,220$ 1,193,289$
B. San Dieguito Water District (SDWD) - Risk Management and Insurance Programs
Risk management programs and support for SDWD are provided by the City of Encinitas Risk
Management Department, for which SDWD pays the City an annual fee (charge for those services.)
SDWD is a member of the Association of California Water Agencies - Joint Powers Insurance Authority
(JPIA), which provides coverage for general liability, property and casualty, and workers' compensation.
As of June 30, 2016, in the opinion of the District's management and general counsel, there were no
material claims which would require accrual in the accompanying financial statements. Management has
determined, based on modest self-insurance retention levels and favorable claims experience, that no
self-insurance liabilities were necessary. SDWD has no outstanding claims as of June 30, 2016, and did
not pay any claims during the fiscal year.
Note 13 – Commitments and Contingencies
A. Lawsuits
Numerous claims and suits have been filed against the City in the normal course of conducting City
business. Based upon information received from the City Attorney and the self-insurance administrator,
the estimated liability under such claims would be adequately covered by the deposits paid to
SANDPIPA or LAWCX for self-insurance and insurance coverage (See Note 12).
B. Grants
Amounts received or receivable from federal and state granting agencies are subject to audit and
adjustment by grantor agencies. While no matters of noncompliance were disclosed by the audit of the
financial statements or Single Audit of the Federal grant programs, grantor agencies may subject grant
programs to additional compliance tests, which may result in disallowed costs. In the opinion of
management, future disallowances of current or prior grant expenditures, if any, would not have a
material adverse effect on the financial position of the City.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
92
Note 13 – Commitments and Contingencies (Continued)
C. Construction Commitments
As of June 30, 2016, the City had remaining contractual commitments totaling nearly $2.9 million for
capital projects related to its governmental and business-type activities. The more significant capital
commitments include approximately $409,000 related to monitoring and assessment of the Carlsbad
Municipal Water Authority, $536,000 related to the Olivenhain Trunk Sewer Design project, $303,000
related to the Montgomery Avenue At-Grade Pedestrian Design project, $586,000 related to the North
Coast Highway 101 Streetscape Design project, $262,000 related to the Annual Street Overlay project,
and $200,000 related to the City-wide Sewer Rehab Design project.
Note 14 – California Public Employees’ Retirement System
A. Summary
Aggregate Net Pension Liability
Aggregate net pension liability is reported in the accompanying Statement of Net Position as follows:
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - City 20,300,216$ -$
CalPERS Miscellaneous Plan - SDWD - 5,019,493
CalPERS Safety Plan 14,576,416 -
Total 34,876,632$ 5,019,493$
Deferred Outflows of Resources
Deferred outflows of resources are reported in the accompanying Statement of Net Position as follows:
Deferred Pension Contributions Made after the Measurement Date
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - City 2,927,539$ -$
CalPERS Miscellaneous Plan - SDWD - 598,690
CalPERS Safety Plan 1,609,491 -
Total 4,537,030$ 598,690$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
93
Note 14 – California Public Employees’ Retirement System (Continued)
A. Summary (Continued)
Deferred Outflows of Resources (Continued)
Difference between Expected and Actual Experience
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - City -$ -$
CalPERS Miscellaneous Plan - SDWD - 17,389
CalPERS Safety Plan - -
Total -$ 17,389$
Deferred Change in Plan Proportion
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - City -$ -$
CalPERS Miscellaneous Plan - SDWD - 224,552
CalPERS Safety Plan - -
Total -$ 224,552$
Deferred Inflows of Resources
Deferred inflows of resources are reported in the accompanying Statement of Net Position as follows:
Difference Between Projected and Actual Earnings on Pension Plan Investments
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - City 360,398$ -$
CalPERS Miscellaneous Plan - SDWD - 82,471
CalPERS Safety Plan 383,127 -
Total 743,525$ 82,471$
Difference between Expected and Actual Experience
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - City 90,464$ -$
CalPERS Miscellaneous Plan - SDWD - -
CalPERS Safety Plan 164,363 -
Total 254,827$ -$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
94
Note 14 – California Public Employees’ Retirement System (Continued)
A. Summary (Continued)
Deferred Inflows of Resources (Continued)
Changes in Assumptions
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - City 1,169,826$ -$
CalPERS Miscellaneous Plan - SDWD - 164,511
CalPERS Safety Plan 755,964 -
Total 1,925,790$ 164,511$
Change in Plan Proportions
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - SDWD -$ -$
CalPERS Safety Plan 1,799,335 -
Total 1,799,335$ -$
Difference between Employer Contributions and the Proportionate Share of Contributions
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - SDWD -$ 40,455$
CalPERS Safety Plan 720,785 -
Total 720,785$ 40,455$
Pension Expense
Pension expenses are included in the accompanying Statement of Revenues, Expenses, and Changes
in Net Position as follows:
Governmental Business-Type
Activities Activities
CalPERS Miscellaneous Plan - City 1,807,304$ -$
CalPERS Miscellaneous Plan - SDWD - 647,683
CalPERS Safety Plan 1,266,490 -
Total 3,073,794$ 647,683$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
95
Note 14 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District)
The City has the following California Public Employees’ Retirement Plans:
1. The Miscellaneous Plan of the City of Encinitas (Miscellaneous Plan)
2. The Safety Plan of the City of Encinitas (Safety Plan)
a. Fire Plan of the City of Encinitas
b. Lifeguard Plan of the City of Encinitas
Plan Descriptions
Miscellaneous Plan
The City of Encinitas has entered into separate defined benefit pension plans covering miscellaneous
and safety employees with the California Public Employees' Retirement System (CalPERS). CalPERS is
an agent multiple-employer public employee defined benefit pension plan. The plans provide retirement
and disability benefits, annual cost-of-living adjustments, and death benefits to Plan members and
beneficiaries. The Plans are administered by CalPERS, which acts as a common investment and
administrative agent for participating public employers within the State of California. A menu of benefit
provisions as well as other requirements is established by State statutes within the Public Employees'
Retirement Law. The City selects optional benefit provisions from the benefit menu by contract and
adopts those benefits through local ordinances. A full description of the pension plans regarding number
of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and
membership information are listed in the June 30, 2015 Annual Actuarial Valuation Report. This report
and CalPERS’ audited financial statements are publicly available reports that can be obtained at
CalPERS’ website under “Forms and Publications.”
Safety Plan
The Safety Plan is a cost-sharing multiple employer defined benefit plan in which the City participates
with other public agencies that each have fewer than 100 active members and share the same benefit
formula and includes both fire and lifeguard employees and retirees. The Safety Plan is administered by
the California Public Employees’ Retirement System (CalPERS), which acts as a common investment
and administrative agent for its participating member employers. Benefit provisions under the Safety
Plan are established by State statutes within the Public Employee’s Retirement Law. CalPERS issues
publicly available reports that include a full description of the pension plans regarding benefit provisions,
assumptions and membership information that can be found on the CalPERS website. Copies of the
CalPERS annual financial report may be obtained from the CalPERS Executive Office – 400 P Street,
Sacramento, CA 95814.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
96
Note 14 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Benefits Provided
The City's Miscellaneous Plan is an agent multiple-employer Plan that is part of the Public Agency's
portion of CalPERS. The Miscellaneous Plan provides employees hired before October 13, 2012 with a
Tier 1 benefit equal to 2.7% at 55 years of age, calculated based on the single highest year of qualifying
compensation. As of October 13, 2012, the City Council imposed new terms and conditions on the
miscellaneous employees which created a new benefit formula for employees hired after the effective
date of the change (the "Tier 2 miscellaneous plan".) Employees hired under the Tier 2 miscellaneous
plan receive a lower benefit formula, referred to as the 2% at 60 year of age formula. In addition,
legislation enacted by the State of California applying to all local units of government, referred to as the
Public Employees' Pension Reform Act (PEPRA) which became effective on January 1, 2013, created
yet another benefit formula for new hires with no experience or prior service credit with CalPERS. In the
case of the City, this will constitute a "Tier 3 miscellaneous plan" which provides a retirement benefit,
referred to as the 2% at 62 years of age formula. The actual retirement benefit for Tier 2 and Tier 3
miscellaneous employees will be calculated using the average of the highest 36 consecutive months of
qualifying compensation.
The City’s Safety Plan provides Fire Department employees hired before June 23, 2012 with a Tier 1
benefit equal to 3.0% at 55 years of age, calculated based on the single highest year of qualifying
compensation. Effective June 23, 2012, the Encinitas Firefighters Association executed a new four year
Memorandum of Understanding (MOU) with the City that provides for modifications to the pension
benefit formula for employees hired on or after the effective date (the "Tier 2 fire safety plan".) The 3.0%
at 55 year of age formula is maintained, but the actual retirement benefit will be calculated using the
average of the highest 36 consecutive months of qualifying compensation. In addition, the PEPRA
legislation, created yet another benefit formula for new hires with no experience or prior service credit
with CalPERS. In the case of the City, this will constitute a "Tier 3 fire safety plan" which provides a
retirement benefit, referred to as the 2.7% at 57 years of age formula. This plan also utilizes the
mandated method of calculation based on the average of the highest 36 consecutive months of
qualifying compensation.
The City’s Safety Plan also provides lifeguard employees hired before October 13, 2012 with a Tier 1
benefit equal to 3.0% at 55 years of age, calculated based on the single highest year of qualifying
compensation. The lifeguards have Tier 2 and Tier 3 (PEPRA) plans which are identical to the Fire Plan
described above. For the measurement period July1, 2014 through June 30, 2054, Tier 2 employees
were grouped with Tier 1 employees because there was no separate Tier 2 actuarial study performed at
the June 30, 2014 valuation date.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
97
Note 14 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Employees Covered by Benefit Terms
At June 30, 2016, the following employees were covered by the benefit terms for the City’s plans:
City City
Miscellaneous Safety
Active employees 159 58
Inactive employees or beneficiaries currently
receiving benefits 132 72
Inactive employees entitled to, but not yet receiving
benefits 82 42
Total 373 172
Contributions
City Miscellaneous Plan
Employee Contributions
Active City Tier 1 miscellaneous members are required to contribute 8% of their annual covered salary
(the "employee contribution"). Effective October 13, 2012, all City Tier 1 miscellaneous members
contribute the full 8%, which is credited to their individual accounts. Members receiving the Tier 2 or Tier
3 benefits are required to contribute 7% of their annual covered salary. The employee contribution
requirements are established by State statute.
Employer Contributions
The City is required to contribute the actuarially determined remaining amounts necessary to fund the
benefits for its members (the "employer contributions"). The employer contribution rate for fiscal year
2015-2016 was 20.676% for miscellaneous members. The employer contribution rates are calculated
and established annually by CalPERS, based on the actuarial methods and assumptions as adopted by
the CalPERS Board of Administration.
For the measurement year ended June 30, 2015, contributions were:
Contributions - employees 776,061$
Contributions - employer 2,077,263
City Safety Plan
Active fire and lifeguard members are required to contribute 9% of their annual covered salary (the
“employee contribution”). The City is required to contribute the actuarially determined remaining
amounts necessary to fund the benefits for its members (the “employer contributions”). The employer
contribution rates for fiscal year 2015-2016 ranged from 11.777% to 31.056% for fire members and from
10.845% to 19.954% for lifeguard members. The employer contribution rates are calculated and
established annually by CalPERS, based on the actuarial methods and assumptions adopted by the
CalPERS Board of Administration.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
98
Note 14 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Contributions (Continued)
City Safety Plan (Continued)
For the year ended June 30, 2015, the plan’s proportionate share of aggregate employer contributions
made for the Safety Plan was as follows:
Safety
Plan
Contributions - employer 1,251,594$
Net Pension Liability
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
For the measurement period ended June 30, 2015, the total pension liability was determined by rolling
forward the June 30, 2014 total pension liability. The June 30, 2014 and June 30, 2015 total pension
liabilities were based on the following actuarial methods and assumptions:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Mortality Rate Table
Post Retirement Benefit Increase
Entry Age Normal in accordance with the requirement of GASB
Statement No. 68
7.65%
2.75%
Varies by Entry Age and Service
7.65% Net of Pension Plan Investment and Administrative
Expenses; includes inflation.
Derived using CalPERS’ Membership Data for all Funds. The
mortality table used was developed based on CalPERS’ specific
data. The table includes 20 years of mortality improvements
using Society of Actuaries Scale BB.
Contract COLA up to 2.75% until Purchasing Power Protection
Allowance Floor on Purchasing Power applies, 2.75%
thereafter.
All other actuarial assumptions used in the June 30, 2014 valuation were based on the results of an
actuarial experience study for the period from 1997 to 2011, including updates to salary increase,
mortality and retirement rates. The Experience Study report can be obtained at CalPERS’ website under
“Forms and Publications.”
Change of Assumption
In accordance with GASB 68, the long-term expected rate of return should be determined net of pension
plan investment expense but without reduction for pension plan administrative expense. The discount
rate was changed from 7.5% (net of administrative expense in 2014) to 7.65% as of the June 30, 2015
measurement date to correct the adjustment which previously reduced the discount rate for
administrative expenses.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
99
Note 14 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Discount Rate
The discount rate used to measure the total pension liability was 7.65 percent, which is net of
administrative expenses. To determine whether the municipal bond rate should be used in the
calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in
a discount rate that would be different from the actuarially assumed discount rate. Based on the testing,
none of the tested plans run out of assets. Therefore, the current 7.65 percent discount rate is adequate
and the use of the municipal bond rate calculation is not necessary. The long term expected discount
rate of 7.65 percent is applied to all plans in the Public Employees Retirement Fund. The stress test
results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained
at CalPERS’ website under the GASB 68 section.
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without
reduction for pension plan administrative expense. The 7.65 percent investment return assumption used
in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to
be 15 basis points. An investment return excluding administrative expenses would have been 7.50
percent. Using this lower discount rate has resulted in a slightly higher total pension liability and net
pension liability.
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability
Management review cycle that is scheduled to be completed in February 2018. Any changes to the
discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS
expects to continue using a discount rate net of administrative expenses for GASB 67 and 68
calculations through at least the 2017-18 fiscal year. CalPERS will continue to check the materiality of
the difference in calculation until such time as we have changed our methodology.
The long-term expected rate of return on pension plan investments was determined using a building-
block method in which best-estimate ranges of expected future real rates of return (expected returns,
net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, staff took into account both short-term and long-
term market return expectations as well as the expected pension fund cash flows. Such cash flows were
developed assuming that both members and employers will make their required contributions on time
and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected
compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term
(11-60 years) using a building-block approach. Using the expected nominal returns for both short-term
and long-term, the present value of benefits was calculated for each fund. The expected rate of return
was set by calculating the single equivalent expected return that arrived at the same present value of
benefits for cash flows as the one calculated using both short-term and long-term returns. The expected
rate of return was then set equivalent to the single equivalent rate calculated above and rounded down
to the nearest one quarter of one percent.
The table below reflects long-term expected real rate of return by asset class. The rate of return was
calculated using the capital market assumptions applied to determine the discount rate and asset
allocation. These geometric rates of return are net of administrative expenses.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
100
Note 14 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Discount Rate (Continued)
Asset Class
New Strategic
Allocation
Real Return
Years 1 - 10 1
Real Return Years
11 + 2
Global equity 50.00%5.25%5.71%
Global fixed income 17.00%0.99%2.43%
Inflation sensitive 4.00%0.45%3.36%
Private equity 14.00%6.83%6.95%
Real estate 11.00%4.50%5.13%
Infrastructure and forestland 0.00%4.50%5.09%
Liquidity 4.00%-0.55%-1.05%
1 An expected inflation of 2.5% was used for this period.
2 An expected inflation of 3.0% was used for this period.
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the Miscellaneous Plan as of the measurement date,
calculated using the discount rate of 7.65%, as well as what the net pension liability would be if it were
calculated using a discount rate that is 1 percentage point lower (6.65%) or 1 percentage point higher
(8.65%) than the current rate:
Discount Rate - 1% Current Discount Discount Rate + 1%
(6.65%) Rate (7.65%) (8.65%)
City Miscellaneous 32,997,803$ 20,300,216$ 9,856,995$
City Safety 23,371,000 14,576,416 7,365,018
Plan's Net Pension Liability/(Asset)
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
101
Note 14 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Changes in the Net Pension Liability
The following tables show the changes in the net pension liability recognized over the measurement
period for the City Miscellaneous Plan:
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2014 (Valuation Date) 84,925,420$ 67,193,378$ 17,732,042$
Changes Recognized for the Measurement Period:
Service Cost 2,261,277 - 2,261,277
Interest on the total pension liability 6,333,421 - 6,333,421
Changes of benefit terms - - -
Difference between expected and actual experience (126,649) - (126,649)
Changes of assumptions (1,637,757) - (1,637,757)
Plan to plan resource movement - 126,193 (126,193)
Contributions from the employer - 2,077,263 (2,077,263)
Contributions from employees - 776,061 (776,061)
Net investment income, net of administrative expense - 1,359,388 (1,359,388)
Benefit payments, including refunds of employee
contributions (3,003,676) (3,003,676) -
Administrative expense - (76,787) 76,787
Net Changes during July 1, 2014 to June 30, 2015 3,826,616$ 1,258,442$ 2,568,174$
Balance at June 30, 2015 (Measurement Date)88,752,036$ 68,451,820$ 20,300,216$
Increase (Decrease)
Miscellaneous Plan
As of June 30, 2016, the City reported net pension liabilities for its proportionate shares of the net
pension liability of the Safety Plan is as follows:
Plan Total Plan Plan Net
Pension Fiduciary Pension
Liability Net Position Liability/(Asset)
Balance at: 6/30/14 (Valuation date) 77,006,084$ 62,697,310$ 14,308,774$
Balance at: 6/30/15 (Measurement date)80,116,793 65,540,377 14,576,416
Net changes during 2014-2015 3,110,709 2,843,067 267,642
The City’s net pension liability for the Safety Plan is measured as the proportionate share of the net
pension liability. The net pension liability of the Plans is measured as of June 30, 2015, and the total
pension liability for each Plan used to calculate the net pension liability was determined by an actuarial
valuation as of June 30, 2014 rolled forward to June 30, 2015 using standard update procedures. The
City’s proportion of the net pension liability was based on a projection of the City’s long-term share of
contributions to the pension plans relative to the projected contributions of all participating employers,
actuarially determined.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
102
Note 14 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Changes in the Net Pension Liability (Continued)
The following is the approach established by the plan actuary to allocate the net pension liability and
pension expense to the individual employers within the risk pool.
(1) In determining a cost-sharing plan’s proportionate share, total amounts of liabilities and assets are
first calculated for the risk pool as a whole on the valuation date (June 30, 2014). The risk pool’s
fiduciary net position (“FNP”) subtracted from its total pension liability (“TPL”) determines the net
pension liability (“NPL”) at the valuation date.
(2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the
measurement date (June 30, 2015). Risk pool FNP at the measurement date is then subtracted from
this number to compute the NPL for the risk pool at the measurement date. For purposes of FNP in
this step and any later reference thereto, the risk pool’s FNP at the measurement date denotes the
aggregate risk pool’s FNP at June 30, 2015 less the sum of all additional side fund (or unfunded
liability) contributions made by all employers during the measurement period (2014-15).
(3) The individual plan’s TPL, FNP and NPL are also calculated at the valuation date.
(4) Two ratios are created by dividing the plan’s individual TPL and FNP as of the valuation date from
(3) by the amounts in step (1), the risk pool’s total TPL and FNP, respectively.
(5) The plan’s TPL as of the Measurement Date is equal to the risk pool TPL generated in (2) multiplied
by the TPL ratio generated in (4). The plan’s FNP as of the Measurement Date is equal to the FNP
generated in (2) multiplied by the FNP ratio generated in (4) plus any additional side fund (or
unfunded liability) contributions made by the employer on behalf of the plan during the measurement
period.
(6) The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in
(5).
The City’s proportionate share of the net pension liability for the Safety Plan as of June 30, 2015 was as
follows:
Safety
Plan
Proportion June 30, 2015 0.35376%
Pension Plan Fiduciary Net Position
Detailed information about the Miscellaneous and Safety Plans’ fiduciary net position is available in the
separately issued CalPERS financial report.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
103
Note 14 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension
For the year ended June 30, 2016, the City recognized pension expense of $1,807,304 for the
Miscellaneous Plan and $1,266,490 for the Safety Plan.
At June 30, 2016, the City reported deferred outflows resources and deferred inflows of resources
related to pensions from the following sources:
Deferred outflows Deferred inflows Deferred outflows Deferred inflows Deferred outflows Deferred inflows
of Resources of Resources of Resources of Resources of Resources of Resources
Difference between expected and actual experience -$ (90,464)$ -$ (164,363)$ -$ (254,827)$
Changes of assumptions - (1,169,826) - (755,964) - (1,925,790)
Net difference between projected and actual earning on
pension plan investments - (360,398) - (383,127) - (743,525)
Difference between employer's actual contributions
and proportionate share of contributions - - - (720,785) - (720,785)
Adjustments due to difference in proportions - - - (1,799,335) - (1,799,335)
Total -$ (1,620,688)$ -$ (3,823,574)$ -$ (5,444,262)$
TotalMiscellaneous Plan Safety Plan
The $4,537,030 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended June
30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized as pension expense as follows:
Deferred Outflows/ Deferred Outflows/
(Inflows) of (Inflows) of Deferred Outflows/
Resources Resources (Inflows) of
Measurement Period Miscellaneous Safety Resources
Ended June 30 Plan Plan Total
2016 (872,892)$ (1,482,091)$ (2,354,983)$
2017 (872,892) (1,499,519) (2,372,411)
2018 (620,835) (1,312,277) (1,933,112)
2019 745,931 470,313 1,216,244
2020 - - -
Thereafter - - -
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
104
Note 14 – California Public Employees’ Retirement System (Continued)
C. San Dieguito Water District Miscellaneous Plan (SDWD Plan)
Plan Description
The SDWD Plan is a cost-sharing multiple employer defined benefit plan that provides retirement and
disability benefits, annual cost-of-living adjustments, and death benefits to members and beneficiaries,
in which the City participates with other public agencies that each have fewer than 100 active members
and share the same benefit formula. The Plan is administered by the California Public Employees’
Retirement System (CalPERS), which acts as a common investment and administrative agent for its
participating member employers. Benefit provisions under the Plan are established by State statutes
within the Public Employee’s Retirement Law. CalPERS issues publicly available reports that include a
full description of the pension plans regarding benefit provisions, assumptions and membership
information that can be found on the CalPERS website. Copies of the CalPERS annual financial report
may be obtained from the CalPERS Executive Office – 400 P Street, Sacramento, CA 95814.
Benefits Provided
The SDWD Plan provides employees hired before October 13, 2012 with a Tier 1 benefit equal to 2.7%
at 55 years of age, calculated based on the single highest year of qualifying compensation. As of
October 13, 2012, the Board of Directors imposed new terms and conditions which created a new
benefit formula for employees hired after the effective date of the change (the "Tier 2 Plan"). Employees
hired under the Tier 2 Plan receive a lower benefit formula, referred to as the 2% at 60 years of age
formula. In addition, PEPRA created yet another benefit formula for new hires with no experience or
prior service credit with CalPERS. In the case of the District, this will constitute a "Tier 3 Plan" which
provides a retirement benefit, referred to as the 2% at 62 years of age formula. The actual retirement
benefit for Tier 2 and Tier 3 employees will be calculated using the average of the highest 36
consecutive months of qualifying compensation.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
105
Note 14 – California Public Employees’ Retirement System (Continued)
C. San Dieguito Water District Miscellaneous Plan (SDWD Plan) (Continued)
Employees Covered by Benefit Terms
At June 30, 2016, the following employees were covered by the benefit terms for the SDWD plan:
SDWD
Plan
Active employees 23
Inactive employees or beneficiaries currently
receiving benefits 32
Inactive employees entitled to, but not yet receiving
benefits 5
Total 60
Contributions
Active members in the Tier 1 Plan are required to contribute 8% of their annual covered salary (the
"employee contribution"). Effective October 13, 2012, all Tier 1 members contribute the full 8%, which is
credited to their individual accounts. Members receiving the Tier 2 or Tier 3 benefits are required to
contribute 7% and 6.25% of their annual covered salary, respectively. The employee contribution
requirements are established by State statute.
SDWD is required to contribute the actuarially determined remaining amounts necessary to fund the
benefits for its members (the "employer contributions"). The employer contribution rate for fiscal year
2015-2016 ranged from 6.223% to 25.636%. The employer contribution rates are calculated and
established annually by CalPERS, based on the actuarial methods and assumptions as adopted by the
CalPERS Board of Administration.
For the year ended June 30, 2016, the SDWD Plan’s proportionate share of aggregate employer
contributions made for each plan was as follows:
SDWD
Plan
Contributions - employer 356,509$
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions
As of June 30, 2016, the City reported net pension liabilities for its proportionate shares of the net
pension liability of the SDWD Plan as follows:
Plan Total Plan Plan Net
Pension Fiduciary Pension
Liability Net Position Liability/(Asset)
Balance at: 6/30/14 (Valuation date)22,268,743$ 18,489,458$ 3,779,285$
Balance at: 6/30/15 (Measurement date)21,378,148 16,358,655 5,019,493
Net changes during 2014-2015 (890,595) (2,130,803) 1,240,208
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
106
Note 14 – California Public Employees’ Retirement System (Continued)
C. San Dieguito Water District Miscellaneous Plan (SDWD Plan) (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions (Continued)
The City’s net pension liability for the SDWD Plan is measured as the proportionate share of the net
pension liability. The net pension liability of the Plans is measured as of June 30, 2015, and the total
pension liability for each Plan used to calculate the net pension liability was determined by an actuarial
valuation as of June 30, 2014 rolled forward to June 30, 2015 using standard update procedures. The
City’s proportion of the net pension liability was based on a projection of the City’s long-term share of
contributions to the pension plans relative to the projected contributions of all participating employers,
actuarially determined.
The following is the approach established by the plan actuary to allocate the net pension liability and
pension expense to the individual employers within the risk pool.
(1) In determining a cost-sharing plan’s proportionate share, total amounts of liabilities and assets are
first calculated for the risk pool as a whole on the valuation date (June 30, 2014). The risk pool’s
fiduciary net position (“FNP”) subtracted from its total pension liability (“TPL”) determines the net
pension liability (“NPL”) at the valuation date.
(2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the
measurement date (June 30, 2015). Risk pool FNP at the measurement date is then subtracted from
this number to compute the NPL for the risk pool at the measurement date. For purposes of FNP in
this step and any later reference thereto, the risk pool’s FNP at the measurement date denotes the
aggregate risk pool’s FNP at June 30, 2014 less the sum of all additional side fund (or unfunded
liability) contributions made by all employers during the measurement period (2014-15).
(3) The individual plan’s TPL, FNP and NPL are also calculated at the valuation date.
(4) Two ratios are created by dividing the plan’s individual TPL and FNP as of the valuation date from
(3) by the amounts in step (1), the risk pool’s total TPL and FNP, respectively.
(5) The plan’s TPL as of the Measurement Date is equal to the risk pool TPL generated in (2) multiplied
by the TPL ratio generated in (4). The plan’s FNP as of the Measurement Date is equal to the FNP
generated in (2) multiplied by the FNP ratio generated in (4) plus any additional side fund (or
unfunded liability) contributions made by the employer on behalf of the plan during the measurement
period.
(6) The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in
(5).
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
107
Note 14 – California Public Employees’ Retirement System (Continued)
C. San Dieguito Water District Miscellaneous Plan (SDWD Plan) (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources to Pensions
(Continued)
The City’s proportionate share of the net pension liability for the SDWD Plan as of June 30, 2015 was as
follows:
SDWD
Plan
Proportion June 30, 2015 0.0018296%
For the year ended June 30, 2016, the City recognized pension expense of $647,683 for the SDWD
Plan. At June 30, 2016 the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred outflows Deferred inflows
of Resources of Resources
Contribution made after the measurement date 598,690$ -$
Difference between expected and actual experience 17,389 -
Changes of assumptions - (164,511)
Net difference between projected and actual earnings on
pension plan investments - (82,471)
Difference between employer's actual contributions
and proportionate share of contributions - (40,455)
Adjustments due to difference in proportions 224,552 -
Total 840,631$ (287,437)$
The $598,690 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended June
30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized as pension expense as follows:
Measurement Period
Ended June 30
2016 564,703$
2017 (42,631)
2018 (74,297)
2019 105,419
2020 -
Thereafter -
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
108
Note 14 – California Public Employees’ Retirement System (Continued)
C. San Dieguito Water District Miscellaneous Plan (SDWD Plan) (Continued)
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
For the measurement period ended June 30, 2015, the total pension liability was determined by rolling
forward the June 30, 2014 total pension liability. The June 30, 2014 and June 30, 2015 total pension
liabilities were based on the following actuarial methods and assumptions:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Mortality Rate Table
Post Retirement Benefit Increase Contract COLA up to 2.75% until Purchasing Power Protection
Allowance Floor on Purchasing Power applies, 2.75% thereafter.
Entry Age Normal in accordance with the requirement of GASB
Statement No. 68
7.65%
2.75%
Varies by Entry Age and Service
7.65% Net of Pension Plan Investment and Administrative
Expenses; includes inflation
Derived using CalPERS’ Membership Data for all Funds. The
mortality table used was developed based on CalPERS’ specific
data. The table includes 20 years of mortality improvements
using Society of Actuaries Scale BB.
All other actuarial assumptions used in the June 30, 2014 valuation were based on the results of an
actuarial experience study for the period from 1997 to 2011, including updates to salary increase,
mortality and retirement rates. The Experience Study report can be obtained at CalPERS’ website under
“Forms and Publications.”
Change of Assumption
In accordance with GASB 68, the long-term expected rate of return should be determined net of pension
plan investment expense but without reduction for pension plan administrative expense. The discount
rate was changed from 7.5% (net of administrative expense in 2014) to 7.65% as of the June 30, 2015
measurement date to correct the adjustment which previously reduced the discount rate for
administrative expenses.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
109
Note 14 – California Public Employees’ Retirement System (Continued)
C. San Dieguito Water District Miscellaneous Plan (SDWD Plan) (Continued)
Discount Rate
The discount rate used to measure the total pension liability was 7.65 percent, which is net of
administrative expenses. To determine whether the municipal bond rate should be used in the
calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in
a discount rate that would be different from the actuarially assumed discount rate. Based on the testing,
none of the tested plans run out of assets. Therefore, the current 7.65 percent discount rate is adequate
and the use of the municipal bond rate calculation is not necessary. The long term expected discount
rate of 7.65 percent is applied to all plans in the Public Employees Retirement Fund. The stress test
results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained
at CalPERS’ website under the GASB 68 section.
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without
reduction for pension plan administrative expense. The 7.65 percent investment return assumption used
in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to
be 15 basis points. An investment return excluding administrative expenses would have been 7.65
percent. Using this lower discount rate has resulted in a slightly higher total pension liability and net
pension liability.
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability
Management review cycle that is scheduled to be completed in February 2018. Any changes to the
discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS
expects to continue using a discount rate net of administrative expenses for GASB 67 and 68
calculations through at least the 2017-18 fiscal year. CalPERS will continue to check the materiality of
the difference in calculation until such time as we have changed our methodology.
The long-term expected rate of return on pension plan investments was determined using a building-
block method in which best-estimate ranges of expected future real rates of return (expected returns,
net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, staff took into account both short-term and long-
term market return expectations as well as the expected pension fund cash flows. Such cash flows were
developed assuming that both members and employers will make their required contributions on time
and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected
compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term
(11-60 years) using a building-block approach. Using the expected nominal returns for both short-term
and long-term, the present value of benefits was calculated for each fund. The expected rate of return
was set by calculating the single equivalent expected return that arrived at the same present value of
benefits for cash flows as the one calculated using both short-term and long-term returns. The expected
rate of return was then set equivalent to the single equivalent rate calculated above and rounded down
to the nearest one quarter of one percent.
The table below reflects long-term expected real rate of return by asset class. The rate of return was
calculated using the capital market assumptions applied to determine the discount rate and asset
allocation. These geometric rates of return are net of administrative expenses.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
110
Note 14 – California Public Employees’ Retirement System (Continued)
C. San Dieguito Water District Miscellaneous Plan (SDWD Plan) (Continued)
Discount Rate (Continued)
Asset Class
New Strategic
Allocation
Real Return
Years 1 - 10 1
Real Return Years
11 + 2
Global equity 50.00%5.25%5.71%
Global fixed income 17.00%0.99%2.43%
Inflation sensitive 4.00%0.45%3.36%
Private equity 14.00%6.83%6.95%
Real estate 11.00%4.50%5.13%
Infrastructure and forestland 0.00%4.50%5.09%
Liquidity 4.00%-0.55%-1.05%
1 An expected inflation of 2.5% was used for this period.
2 An expected inflation of 3.0% was used for this period.
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount
Rate
The following presents the City’s proportionate share of the net pension liability for each SDWD Plan,
calculated using the discount rate for each SDWD Plan, as well as what the City’s proportionate share of
the net pension liability would be if it were calculated using a discount rate that is one percentage point
lower (6.65%) or one percentage point higher (8.65%) than the current rate:
Discount Rate - 1% Current Discount Discount Rate + 1%
(6.65%)Rate (7.65%)(8.65%)
SDWD Plan 8,418,040$ 5,019,493$ 2,213,598$
Plan's Net Pension Liability/(Asset)
Pension Plan Fiduciary Net Position
Detailed information about the plan’s fiduciary net position is available in the separately issued CalPERS
financial report.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
111
Note 15 – Other Postemployment Benefits (OPEB)
The City of Encinitas and the San Dieguito Water District maintain separate plans to provide for post-
retirement health care benefits. An actuarial report is prepared every two years to update plan information
and assumptions (when required). The latest actuarial valuation was prepared for June 30, 2015, and
applies to fiscal years 2015-16 and 2016-17.
A. City of Encinitas Retiree Health Plan
Plan Description
The City provides postretirement health care benefits through the Public Employees Medical and
Hospital Care Act (PEMHCA), which is a health benefit plan administered by CalPERS, to eligible
employees who retire directly from the City. The City pays the cost for lifetime retiree and dependent
medical benefits (average premium for CalPERS health plans available in San Diego County) for fire
department employees hired before March 16, 1995. Other City retirees receive the PEMHCA minimum
benefit, as determined by CalPERS. The City does not provide a retiree contribution for dental, vision, or
life insurance benefits. The City's OPEB plan does not issue a separate stand-alone report.
The City has elected to join the California Employers' Retiree Benefit Trust (the "Trust") in accordance
with GASB Statement No. 45, which provides a means to fund the annual OPEB costs, referred to as
the Annual Required Contribution (ARC). The City makes an annual contribution to the Trust, pays
benefits either directly to retirees or through PEMHCA during the year, and then seeks reimbursement
for these "pay-as-you-go expenses" from the Trust.
Funding Policy and Actuarial Methods and Assumptions
It is the City's policy to fully fund the ARC each fiscal year. The actual contributions of the City to the
Trust are established by action of the City Council. The contribution requirements were established via
an actuarial valuation of the City's Retiree Healthcare Plan as of June 30, 2015, performed in conformity
with the requirements of GASB Statement No. 45.
The following key assumptions were utilized in developing the June 30, 2015 actuarial valuation:
1. The actuarial cost method used to determine the benefit obligations is the Entry Age Normal cost
method.
2. The ARC is comprised of the present value of benefits in the current fiscal year (normal cost with
interest) plus a 26-year amortization (on a level-percentage of basis) of the unfunded actuarial
accrued liability.
3. The valuation reflects updated census and premium information, as well as changes to the
demographic tables, reflecting the recent experience study published by CalPERS.
4. The investment rate of return assumption is 7.28%.
5. The expected future medical price inflation trend ranges from 5.0 to 7.5%.
6. Core inflation rate of 3.0%.
7. Payroll increases of 3.0% per annum, in aggregate.
8. Projected salary increases are based on merit increase data from the most recent CalPERS
Pension Plan Study using the average pay increase based on the employee's date of hire.
9. Participation levels for safety personnel eligible for lifetime medical benefits is assumed to be
100%, while participation levels for miscellaneous employees who receive the CalPERS
minimum required contribution is 50%, based on experience.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
112
Note 15 – Other Postemployment Benefits (OPEB) (Continued)
A. City of Encinitas Retiree Health Plan (Continued)
Annual Required Contribution (ARC) and OPEB Cost Summary
The ARC for fiscal year 2016 of approximately $560,000 represents a level of funding that, if paid on an
on-going basis, is projected to cover normal costs each year and to amortize any unfunded actuarial
liability over a maximum of 30 years. The City contributed the ARC to the Trust and received
reimbursement for actual pay-as-you-expenses incurred during the year.
The City's annual OPEB costs, the percentage of annual OPEB cost contributed, and the resulting net
OPEB obligation for the preceding three years were as follows:
Percentage of Net
Annual Annual OPEB OPEB
Fiscal Year OPEB Cost Cost Contributed Obligation
June 30, 2014 785,000$ 100% -$
June 30, 2015 544,000 100% -
June 30, 2016 560,000 100% -
Funded Status and Funding Progress
The following table summarizes the funding status of the City's Retiree Health Plan from most recent
actuarial valuations:
Unfunded
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Estimated Percentage of
Valuation Assets Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
June 30, 2015 2,915,458$ 12,060,155$ 9,144,697$ 24.17% 18,533,738$ 49.34%
B. San Dieguito Water District – Retiree Health Plan
The San Dieguito Water District maintains a separate plan to provide for post-retirement health care
benefits. An actuarial report is prepared every two years to update plan information and assumptions
(when required). The latest actuarial valuation was prepared for June 30, 2015, and applies to fiscal
years 2015-16 and 2016-17.
Plan Description
SDWD provides postretirement health care benefits through the Public Employees Medical and Hospital
Care Act (PEMHCA), which is a health benefit plan administered by CalPERS, to eligible employees
who retire directly from SDWD. Retirees receive the PEMHCA minimum benefit, as determined by
CalPERS. SDWD does not provide a retiree contribution for dental, vision, or life insurance benefits.
SDWD's OPEB plan does not issue a separate stand-alone report.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
113
Note 15 – Other Postemployment Benefits (OPEB) (Continued)
B. San Dieguito Water District – Retiree Health Plan (Continued)
Plan Description (Continued)
SDWD has elected to join the California Employers' Retiree Benefit Trust (the "Trust") in accordance
with GASB Statement No. 45, which provides a means to fund the annual OPEB costs, referred to as
the Annual Required Contribution (ARC). SDWD makes its annual contribution to the Trust, pays
benefits either directly to retirees or through PEMHCA during the year, and then seeks reimbursement
for these "pay-as-you-go expenses" from the Trust.
Funding Policy and Actuarial Methods and Assumption
It is SDWD's policy to fully fund the ARC each fiscal year. The actual contributions of SDWD to the Trust
are established by action of the Board of Directors. The contribution requirements were established via
an actuarial valuation of the SDWD's Retiree Healthcare Plan as of June 30, 2015, performed in
conformity with the requirements of GASB Statement No. 45.
The following key assumptions were utilized in developing the June 30, 2013 actuarial valuation:
1. The actuarial cost method used to determine the benefit obligations is the Entry Age Normal cost
method.
2. The ARC is comprised of the present value of benefits in the current fiscal year (normal cost with
interest) plus a 26-year amortization (on a level-percentage of basis) of the unfunded actuarial
accrued liability.
3. The valuation reflects updated census and premium information, as well as changes to the
demographic tables, reflecting the recent experience study published by CalPERS.
4. The investment return assumption by the Trust is 7.28%.
5. The expected future medical price inflation trend ranges from 5.0 to 7.5%.
6. Core inflation rate of 3.0%.
7. Payroll increases of 3.0% per annum, in aggregate.
8. Projected salary increases are based on merit increase data from the most recent CalPERS
Pension Plan Study using the average pay increase based on the employee's date of hire.
9. Participation levels for safety personnel eligible for lifetime medical benefits is assumed to be
100%, while participation levels for miscellaneous employees who receive the CalPERS
minimum required contribution is 50%, based on experience.
Annual Required Contribution (ARC) and OPEB Cost Summary
The ARC for fiscal year 2016 of $28,794 represents a level of funding that, if paid on an ongoing basis,
is projected to cover normal costs each year and to amortize any unfunded actuarial liability over a
maximum of 30 years. SDWD contributed the ARC to the Trust and received reimbursement for actual
pay-as-you-expenses incurred during the year.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
114
Note 15 – Other Postemployment Benefits (OPEB) (Continued)
B. San Dieguito Water District – Retiree Health Plan (Continued)
Annual Required Contribution (ARC) and OPEB Cost Summary (Continued)
SDWD's annual OPEB costs, the percentage of annual OPEB cost contributed, and the resulting net
OPEB obligation for the preceding three years were as follows:
Percentage of Net
Annual Annual OPEB OPEB
Fiscal Year OPEB Cost Cost Contributed Obligation
June 30, 2014 31,000$ 100% -$
June 30, 2015 29,000 100% -
June 30, 2016 28,794 100% -
Funded Status and Funding Progress
The following table summarizes the funding status of SDWD's Retiree Health Plan from most recent
actuarial valuations. The latest information available on the funding status comes from the actuarial
valuation dated June 30, 2015, projected to June 30, 2016.
Unfunded
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Estimated Percentage of
Valuation Assets Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
June 30, 2015 111,363$ 484,247$ 372,884$ 23.00% 1,767,898$ 21.09%
General Information regarding Actuarial Valuations Methods and Assumptions
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are
subject to continual revision as actual results are compared with past expectations and new estimates
are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood between the employer and the plan members) and include the types of benefits provided at
the time of each valuation and the historical pattern of sharing benefit costs between the employer and
the plan members at that point. The actuarial methods and assumptions used include techniques
designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial
value of plan assets, consistent with the long-term perspective of the calculations.
The Schedule of Funding Progress for the City and SDWD retiree health care plans are presented as
Required Supplementary Information following the Notes to the Basic Financial Statements. These
schedules show multi-year trend information about whether the actuarial value of the plan assets is
increasing or decreasing over time relative to the actuarial accrued liability for benefits.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
115
Note 16 – Encinitas Ranch Golf Authority
The Encinitas Ranch Golf Authority (the “Golf Authority”) is a joint powers authority, formed by the City and
SDWD in 1995 to finance, own, and operate an 18-hole golf course (the “Golf Course”) within the City. The
Golf Course was constructed in connection with the development of the Encinitas Ranch master-planned
community (the “Ranch”). The Ranch is a mixed-use community of residential, commercial and agricultural
development within the City. As a condition to the development of the Ranch, the Carltas Company (the
“Developer”), agreed to dedicate land for and construct the Golf Course improvements. The Golf Course
opened to the public on March 1, 1998, and is managed and operated under a contract arrangement with a
private company.
The Golf Authority is governed by a five-member Board of Directors, the membership of which is specified
in the 1994 Encinitas Ranch Development Agreement. It is a self-sustaining golf course operation and
receives no financial support from the City or SDWD. In future years, depending on the net revenues from
golf operations, the City may benefit financially from the operations.
However, this is unlikely until at least 2030, when the Golf Course bonded debt is expected to be paid off.
The debts and obligations of the Golf Authority are not the debts and obligations of the City or SDWD.
Separate audited financial statements of the Golf Authority are available at the City's administrative office.
Note 17 – Special Assessment Debt
A. City of Encinitas - Community Facilities District (CFD) #1: Encinitas Ranch Community
During fiscal year 2013-2014, the City, on behalf of the residents and businesses of the CFD #1,
refunded all of the outstanding bonds of the 2004 Special Tax Bonds, Series A, via a current refunding
transaction. The CFD #1 issued $32,265,000 par value of 2012 Special Tax Refunding Bonds (Encinitas
Ranch Public Improvements), at lower interest rates, while maintaining the same general terms and
conditions, including the final maturity date of September 1, 2030. The transaction will save the
taxpayers an average of $170,000 in annual debt service, or about 6% of the average annual debt
service of the prior bonds.
As of June 30, 2016, the outstanding balance on the 2012 Special Tax Refunding Bonds was
$28,350,000. The City acts solely as an agent for CFD #1. The City has no duty or obligation to pay any
liabilities or potential liabilities of the district. Neither the full faith and credit, nor the taxing power of the
City or any other City related agency, is pledged to the repayment of these 2012 Special Tax Refunding
Bonds. Therefore, such bonds are not considered to be a liability of the City and are not included in the
accompanying basic financial statements.
B. City of Encinitas – Assessment District 93-1: Requeza Street/Bracero Road
During fiscal year 1997-1998, the City, acting as the agent for the Requeza Assessment District
(“District”), issued $1,356,400 of limited obligation bonds to finance and pay for infrastructure
improvements to the District. The bonds were issued in two series.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
116
Note 17 – Special Assessment Debt (Continued)
B. City of Encinitas – Assessment District 93-1: Requeza Street/Bracero Road (Continued)
Series A:
The Series A bonds were issued as tax-exempt obligations totaling $945,000 principal which were sold
to the public. The bonds mature serially through 2017 and are being repaid by special assessments paid
by the landowners. The remaining bonds have an average interest rate of 6.9%. At June 30, 2016, the
outstanding balance was paid in full.
Series B:
The Series B bonds were issued as taxable obligations totaling $411,000 principal and were sold
directly to the City of Encinitas. The Series B bonds have since been fully repaid.
City of Encinitas – Duties and Responsibilities
The City acts as the agent for both of these Assessment Districts, collecting the assessments and
paying the Districts’ bills, as well as other administrative duties. The City has no duty or obligation to pay
any liabilities or potential liabilities of the Districts. Neither the full faith and credit, nor the taxing power of
the City or any other City related agency, is pledged in connection with these bond issues. Therefore,
such bonds are not considered to be a liability of the City and are not included in the accompanying
basic financial statements.
117
REQUIRED SUPPLEMENTARY
INFORMATION
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City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2016
119
Note 1 – Budgetary Information
Budget and Budgetary Accounting:
The City follows these procedures in establishing the budgetary data reflected in the required
supplementary information and other supplementary information budgetary comparison schedules:
The City Council adopts a two year operating budget, with appropriations for the first year only. The annual
budget provides for the general operations of the City. In includes all proposed expenditures and inter-fund
transfers, and the means of financing them. The Council also approves any amendments to appropriations
throughout the year, generally at the mid-year budget review in February. This “appropriated budget” covers
substantially all City expenditures, with the exception of capital improvement projects, which expenditures
constitute a legally authorized “non-appropriated budget.” The legal level of budgetary control is the fund
level. The budget figures used in the required supplementary information are both original and final
budgeted amounts. The final budget amount includes any amendments adopted during the year.
Formal budgetary integration is employed as a management control device. Commitments for materials and
services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist
in controlling expenditures. Appropriations which are unencumbered lapse at year end. City Council
approval is required to include any unencumbered appropriations at year end in the following fiscal year’s
budget as continuing appropriations.
Budget for the General and special revenue funds are adopted on a basis substantially consistent with
accounting principles generally accepted in the United States of America. Accordingly, actual revenue and
expenditures can be compared with related budgeted amounts without any significant reconciling items. No
budgetary comparisons are presented for the debt service, capital projects, or proprietary funds, as the City
is not legally required to adopt an annual budget for those types of funds.
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), the City is
restricted as to the amount of annual appropriations from the proceeds of taxes, and if proceeds of taxes
exceed allowed appropriations, the excess must either be refunded to the State Controller, returned to the
taxpayers through revised tax rates or revised fee schedules, or an excess in one year may be offset
against a deficit in the following year. Further, Section 5 of Article XIIIB allows the City to designate a
portion of fund balance for general contingencies to be used in future years without limitation.
City of Encinitas
Required Supplementary Information (Continued)
For the Year Ended June 30, 2016
120
Note 2 – Budgetary Comparison Schedule
General Fund
Variance with
Original Final Actual Final Budget
REVENUES:
Taxes:
Property 38,078,376$ 39,170,487$ 39,700,730$ 530,243$
Real property transfer 500,000 500,000 637,189 137,189
Sales 13,685,188 13,785,188 14,166,771 381,583
Franchise 2,197,000 2,197,000 2,358,567 161,567
Transient occupancy 1,502,000 1,502,000 1,616,172 114,172
Total taxes 55,962,564 57,154,675 58,479,429 1,324,754
Licenses and permits 250,000 250,000 232,227 (17,773)
Intergovernmental 500,679 987,034 801,966 (185,068)
Charges for services 6,627,762 6,383,627 6,585,518 201,891
Fines, forfeitures and penalties 674,750 734,750 889,388 154,638
Use of money and property 426,547 591,547 972,663 381,116
Other 590,000 596,300 779,892 183,592
Total revenues 65,032,302 66,697,933 68,741,083 2,043,150
EXPENDITURES:
General government:
City Council 447,633 471,133 399,509 71,624
Community enhancement 179,238 223,704 194,021 29,683
City Attorney 375,500 375,500 375,391 109
City Manager 4,455,369 4,164,732 3,787,886 376,846
City Clerk 564,535 564,535 514,669 49,866
Finance 1,809,212 1,809,212 1,639,391 169,821
Non-departmental 1,571,656 2,021,803 2,185,307 (163,504)
Total general government 9,403,143 9,630,619 9,096,174 534,445
Public safety:
Law enforcement 13,048,100 13,098,100 12,761,949 336,151
Fire and marine safety 14,222,456 14,276,169 14,013,171 262,998
Total public safety 27,270,556 27,374,269 26,775,120 599,149
Public works:
Administration 223,739 223,739 158,319 65,420
Environmental programs 3,600 3,600 3,428 172
Street maintenance 1,866,578 1,912,914 1,849,973 62,941
Facility maintenance 1,225,331 1,272,106 1,227,411 44,695
Stormwater 860,577 865,479 731,793 133,686
Total public works 4,179,825$ 4,277,838$ 3,970,924$ 306,914$
Budgeted Amounts
City of Encinitas
Required Supplementary Information (Continued)
For the Year Ended June 30, 2016
121
Note 2 – Budgetary Comparison Schedule (Continued)
General Fund (Continued)
Variance with
Original Final Actual Final Budget
Planning and building:
Planning 2,684,559 2,693,132 2,571,549 121,583
Code enforcement 682,818 717,568 607,306 110,262
Building services 1,803,290 1,803,290 1,718,102 85,188
Total planning and building 5,170,667 5,213,990 4,896,957 317,033
Engineering services:
City engineering 2,734,927 2,893,225 2,632,541 260,684
Traffic engineering 699,875 705,357 681,387 23,970
Stormwater 826,943 807,860 764,913 42,947
Total engineering services 4,261,745 4,406,442 4,078,841 327,601
Parks and recreation:
Administration 983,017 1,030,779 984,194 46,585
Park services 1,795,302 1,797,327 1,738,782 58,545
Beach services 506,932 530,038 495,356 34,682
Recreational trails 128,969 129,254 117,300 11,954
Recreational services 658,021 658,021 576,629 81,392
Community and senior center 2,257,639 2,282,639 2,199,818 82,821
Total parks and recreation 6,329,880 6,428,058 6,112,079 315,979
Capital outlay - - - -
Debt service:
Interest and fiscal charges - - - -
Total expenditures 56,615,816 57,331,216 54,930,095 2,401,121
EXCESS OF REVENUES OVER
EXPENDITURES 8,416,486 9,366,717 13,810,988 4,444,271
OTHER FINANCING SOURCES (USES)
Proceeds from sale of property - - - -
Transfers in - operating 1,184,360 1,174,360 1,056,452 (117,908)
Transfers in - capital - 462,722 462,722 -
Transfers out - operating (2,646,724) (2,870,990) (2,849,747) 21,243
Transfers out - capital (4,969,090) (16,065,203) (16,003,668) 61,535
Transfers out - debt service (4,994,187) (4,994,187) (4,994,648) (461)
Total other financing sources (uses)(11,425,641) (22,293,298) (22,328,889) (35,591)
NET CHANGE IN FUND BALANCE (3,009,155) (12,926,581) (8,517,901) 4,408,680
Fund balance - beginning of year 41,402,445 41,402,445 41,402,445 -
Fund balance - end of year 38,393,290$ 28,475,864$ 32,884,544$ 4,408,680$
Budgeted Amounts
City of Encinitas
Required Supplementary Information (Continued)
For the Year Ended June 30, 2016
122
Note 3 – Schedule of Changes in the Net Pension Liability and Related Ratios
Last Ten Fiscal Years*
City Miscellaneous Plan
Total Pension Liability 2014-15 2013-14
Service cost 2,261,277$ 2,448,194$
Interest on total pension liability 6,333,421 5,943,955
Differences between expected and actual experience (126,649) -
Changes in assumptions (1,637,757) -
Changes in benefit terms - -
Benefit payments, including refunds of employee contributions (3,003,676) (2,990,732)
Net change in total pension liability 3,826,616 5,401,417
Total pension liability - beginning 84,925,420 79,524,003
Total pension liability - ending (a)88,752,036$ 84,925,420$
Plan fiduciary net position
Contributions - employer 2,077,263$ 2,278,140$
Contributions - employee 776,061 1,043,925
Investment income (net of administrative expenses)1,359,388 9,816,151
Benefit payments (3,003,676) (2,990,732)
Other 49,406 -
Net change in plan fiduciary net position 1,258,442 10,147,484
Plan fiduciary net position - beginning 67,193,378 57,045,894
Plan fiduciary net position - ending (b)68,451,820$ 67,193,378$
Net pension liability - ending (a)-(b)20,300,216$ 17,732,042$
Plan fiduciary net position as a percentage of the
total pension liability 77.13%79.12%
Covered-employee payroll 12,951,932$ 13,022,309$
Net pension liability as a percentage of covered-
employee payroll 156.74%136.17%
Notes to Schedule:
* - Fiscal year 2015 was the first year of implementation, therefore only two years are shown.
Changes in assumptions. The discount rate was changed from 7.5% (net of administrative expenses) to 7.65%.
City of Encinitas
Required Supplementary Information (Continued)
For the Year Ended June 30, 2016
123
Note 4 – Schedule of the City's Proportionate Share of the Net Pension Liability
Last Ten Fiscal Years*
Safety Plan
2014-2015 1 2013-2014 1
Plan's proportion of the net pension liabliity 0.00354% 0.00230%
Plan's proportionate share of the net pension liability 14,576,416$ 14,308,774$
Plan's covered-employee payroll 2 5,671,755$ 5,115,288$
Plan's proportionate share of the net pension liability as a
percentage of covered-employee payroll 257.00% 279.73%
Plan's fiduciary net position 65,540,377$ 62,697,310$
Plan's fiduciary net position as a percentage of the total
pension liability 81.81% 81.42%
Plan's proportionate share of aggregate employer contributions 3, 4 5,671,755$ 1,775,034$
Notes to Schedule:
* - Fiscal year 2016 was the first year of implementation, therefore only two years are shown.
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
Changes in assumptions. In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to
expected retirement ages of miscellaneous employees.
Benefit changes. In 2015, benefit terms were modified to base miscellaneous employee pensions on a final three-year
average salary instead of a final five-year average salary.
4 This data is not required to be displayed by GASB 68 for employers participating in cost-sharing plans, but it is being
shown here because it is used in the calculation of the Plan’s pension expense.
3 The plan’s proportionate share of aggregate contributions may not match the actual contributions made by the employer
during the measurement period. The plan’s proportionate share of aggregate contributions is based on the plan’s
proportion of fiduciary net position shown on line 5 of the table above as well as any additional side fund (or unfunded
liability) contributions made by the employer during the measurement period.
2 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However,
GASB 68 defines covered-employee payroll as the total payroll of employees that are provided pensions through the
pension plan. Accordingly, if pensionable earnings are different than total earnings for covered-employees, the employer
should display in the disclosure footnotes the payroll based on total earnings for the covered group and recalculate the
required payroll-related ratios.
City of Encinitas
Required Supplementary Information (Continued)
For the Year Ended June 30, 2016
124
Note 4 – Schedule of the City's Proportionate Share of the Net Pension Liability (Continued)
Last Ten Fiscal Years*
San Dieguito Water District Plan
2014-2015 1 2013-2014 1
Plan's proportion of the net pension liabliity 0.0018296% 0.0006074%
Plan's proportionate share of the net pension liability 5,019,493$ 3,779,285$
Plan's covered-employee payroll 2 1,756,033$ 1,712,639$
Plan's proportionate share of the net pension liability as a
percentage of covered-employee payroll 285.84% 220.67%
Plan's fiduciary net position 16,358,655$ 18,489,458$
Plan's fiduciary net position as a percentage of the total
pension liability 76.52% 83.03%
Plan's proportionate share of aggregate employer contributions 3, 4 565,860$ 499,985$
Notes to Schedule:
* - Fiscal year 2016 was the first year of implementation, therefore only two years are shown.
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
Changes in assumptions. In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to
expected retirement ages of miscellaneous employees.
Benefit changes. In 2015, benefit terms were modified to base miscellaneous employee pensions on a final three-year
average salary instead of a final five-year average salary.
4 This data is not required to be displayed by GASB 68 for employers participating in cost-sharing plans, but it is being
shown here because it is used in the calculation of the Plan’s pension expense.
3 The plan’s proportionate share of aggregate contributions may not match the actual contributions made by the employer
during the measurement period. The plan’s proportionate share of aggregate contributions is based on the plan’s
proportion of fiduciary net position shown on line 5 of the table above as well as any additional side fund (or unfunded
liability) contributions made by the employer during the measurement period.
2 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However,
GASB 68 defines covered-employee payroll as the total payroll of employees that are provided pensions through the
pension plan. Accordingly, if pensionable earnings are different than total earnings for covered-employees, the employer
should display in the disclosure footnotes the payroll based on total earnings for the covered group and recalculate the
required payroll-related ratios.
City of Encinitas
Required Supplementary Information (Continued)
For the Year Ended June 30, 2016
125
Note 5 – Schedule of Contributions
Last Ten Fiscal Years*
City Miscellaneous Plan
2015-16 1 2014-15 1 2013-14 1
Actuarially determined contribution 2,927,539$ 1,815,263$ 2,278,140$
Contributions in relation to the actuarially determined contributions 2 (2,927,539) (2,077,263) (2,278,140)
Contribution deficiency (excess)-$ (262,000)$ -$
Covered-employee payroll 3, 4 13,340,490$ 12,951,932$ 13,022,309$
Contributions as a percentage of covered-
employee payroll 3 16.04%17.49%
Notes to Schedule
Valuation date:6/30/2014 6/30/2013
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll growth 3.00%
Investment rate of return
Retirement age
Mortality
* - Fiscal year 2015 was the first year of implementation, therefore only two years are shown.
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some
employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such
plans exceed the actuarially determined contributions.
3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However,
GASB 68 defines covered-employee payroll as the total payroll of employees that are provided pensions through the
pension plan. Accordingly, if pensionable earnings are different than total earnings for covered-employees, the employer
should display in the disclosure footnotes the payroll based on total earnings for the covered group and recalculate the
required payroll-related ratios.
4 Payroll from prior year ($12,951,932) was assumed to increase by the 3.00% payroll growth assumption.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2013-14 were from the June
30, 2011 public agency valuations.
The probabilities of retirement are based on the 2010
CalPERS Experience study for the period from 1997 to
2007.
7.50%, net of pension plan investment and
administrative expenses, including inflation
The probabilities of mortality are based on the 2010
CalPERS Experience Study for the period from 1997 to
2007. Pre-retirement and Post-retirement mortality rates
include 5 years of projected mortality improvement using
Scale AA published by the Society of Actuaries.
For details, see June 30, 2012 Funding Valuation Report
Actuarial Value of Assets. For details, see June 30,
2012 Funding Valuation Report.
City of Encinitas
Required Supplementary Information (Continued)
For the Year Ended June 30, 2016
126
Note 5 – Schedule of Contributions (Continued)
Last Ten Fiscal Years*
Safety Plan
2015-16 1 2014-15 1 2013-14 1
Contractually determined contribution (actuarially determined)1,609,491$ 1,251,594$ 1,209,864$
Contributions in relation to the actuarially determined contributions 2 (1,609,491) (1,251,594) (1,209,864)
Contribution deficiency (excess)-$ -$ -$
Covered-employee payroll 3, 4 5,841,908$ 5,671,755$ 5,154,534$
Contributions as a percentage of covered-
employee payroll 3 27.55%22.07%23.47%
Notes to Schedule
Valuation date:6/30/2014 6/30/2013
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll growth 3.00%
Investment rate of return
Retirement age
Mortality
* - Fiscal year 2015 was the first year of implementation, therefore only two years are shown.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2014-15 were from the June 30,
2012 public agency valuations.
For details, see June 30, 2011 Funding Valuation Report
Actuarial Value of Assets. For details, see June 30, 2011
Funding Valuation Report.
7.50%, net of pension plan investment and
administrative expenses, including inflation
The probabilities of retirement are based on the 2010
CalPERS Experience study for the period from 1997 to
2007.
The probabilities of mortality are based on the 2010
CalPERS Experience Study for the period from 1997 to
2007. Pre-retirement and Post-retirement mortality rates
include 5 years of projected mortality improvement using
Scale AA published by the Society of Actuaries.
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to
make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined
contributions.
3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB 68 defines
covered-employee payroll as the total payroll of employees that are provided pensions through the pension plan. Accordingly, if pensionable
earnings are different than total earnings for covered-employees, the employer should display in the disclosure footnotes the payroll based on
total earnings for the covered group and recalculate the required payroll-related ratios.
4 Payroll from prior year ($5,671,755) was assumed to increase by the 3.00% payroll growth assumption.
City of Encinitas
Required Supplementary Information (Continued)
For the Year Ended June 30, 2016
127
Note 5 – Schedule of Contributions (Continued)
Last Ten Fiscal Years*
San Dieguito Water District Plan
2015-16 1 2014-15 1 2013-14 1
Contractually determined contribution (actuarially determined)356,509$ 271,845$ 241,133$
Contributions in relation to the actuarially determined contributions 2 (356,509) (271,845) (241,133)
Contribution deficiency (excess)-$ -$ -$
Covered-employee payroll 3, 4 1,808,714$ 1,756,033$ 1,712,639$
Contributions as a percentage of covered-
employee payroll 3 19.71%15.48%14.08%
Notes to Schedule
Valuation date:6/30/2014 6/30/2013
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll growth 3.00%
Investment rate of return
Retirement age
Mortality
* - Fiscal year 2015 was the first year of implementation, therefore only two years are shown.
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to
make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined
contributions.
3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB 68 defines
covered-employee payroll as the total payroll of employees that are provided pensions through the pension plan. Accordingly, if pensionable
earnings are different than total earnings for covered-employees, the employer should display in the disclosure footnotes the payroll based on
total earnings for the covered group and recalculate the required payroll-related ratios.
4 Payroll from prior year ($1,756,033) was assumed to increase by the 3.00% payroll growth assumption.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2014-15 were from the June 30,
2012 public agency valuations.
For details, see June 30, 2011 Funding Valuation Report
Actuarial Value of Assets. For details, see June 30,
2011 Funding Valuation Report.
7.50%, net of pension plan investment and
administrative expenses, including inflation
The probabilities of retirement are based on the 2010
CalPERS Experience study for the period from 1997 to
2007.
The probabilities of mortality are based on the 2010
CalPERS Experience Study for the period from 1997 to
2007. Pre-retirement and Post-retirement mortality rates
include 5 years of projected mortality improvement using
Scale AA published by the Society of Actuaries.
City of Encinitas
Required Supplementary Information (Continued)
For the Year Ended June 30, 2016
128
Note 6 – Schedules of Funding Progress – Other Postemployment Benefits
A. Other Postemployment Benefits (OPEB) – City’s Plan
Unfunded
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Percentage of
Valuation Assets Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
June 30, 2011 1,960,000$ 10,506,000$ 8,546,000$ 18.66% 18,252,000$ 46.82%
June 30, 2013 2,178,800 8,686,482 6,507,682 25.08%18,135,000 35.88%
June 30, 2015 2,915,458 12,060,155 9,144,697 24.17%18,533,738 49.34%
B. Other Postemployment Benefits (OPEB) – San Dieguito Water District’s Plan
Unfunded
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Percentage of
Valuation Assets Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
June 30, 2011 65,000$ 343,000$ 278,000$ 18.95% 1,230,000$ 22.60%
June 30, 2013 68,176 484,247 416,071 14.08%1,886,000 22.06%
June 30, 2015 111,363 484,247 372,884 23.00%1,767,898 21.09%
SUPPLEMENTARY INFORMATION
129
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NON-MAJOR
GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS:
Infrastructure Improvements -This fund is used to account for financial resources from state and federal
grants which are primarily to fund operations and capital improvements.
Grants and Housing -This fund is used to account for financial resources from state and federal grants that
are utilized to fund various City programs such as affordable housing and law enforcement.
Development Impact -This fund is used to account for development impact/mitigation fees that are
collected in connection with land use and construction applications. These monies are utilized to fund
specified city capital improvement projects.
Lighting and Landscaping -This fund is used to account for special assessments and certain restricted
property tax revenues collected from homeowners and businesses. These monies are utilized to fund
specified operational and maintenance costs related to common area landscaping, street lighting, and park
maintenance.
DEBT SERVICE FUNDS:
City Debt Service -This fund is used to account for and report financial resources that are restricted,
committed, or assigned to expenditure for the payment of principal and interest on City long-term debt.
Encinitas Public Financing Authority -This fund is used to account for and report financial resources that
are restricted, committed, or assigned to expenditure for the payment of principal and interest on Encinitas
Public Financing Authority long-term debt.
131
Infrastructure Grants and Development Lighting and
Improvements Housing Impact Landscaping
ASSETS
Cash and investments 1,208,651$ 1,399,116$ 6,156,854$ 2,915,446$
Receivables 557,764 225,282 - 37,021
Due from other funds - - - -
Other assets - - - -
Inventory and prepaids - - - -
Long-term receivable - 194,466 234,167 -
Restricted cash and investments - - - -
Total assets 1,766,415$ 1,818,864$ 6,391,021$ 2,952,467$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts payable and accrued liabilities 8,887$ 85,505$ -$ 231,072$
Interest payable - - - -
Unearned revenue 118,211 - - -
Due to other funds 9,855,052 166,728 - -
Deposits and other liabilities - - 15,463 -
Total liabilities 9,982,150 252,233 15,463 231,072
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 194,466 234,167 -
Total deferred inflows of resources - 194,466 234,167 -
Fund Balances:
Nonspendable - - - -
Restricted - 1,372,165 6,141,391 2,721,395
Committed - - - -
Assigned - - - -
Unassigned (deficit) (8,215,735) - - -
Total fund balances (8,215,735) 1,372,165 6,141,391 2,721,395
Total liabilities, deferred inflows of
resources and fund balances 1,766,415$ 1,818,864$ 6,391,021$ 2,952,467$
Special Revenue
City of Encinitas
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2016
132
Total
Encinitas Public Other
City Financing Governmental
Debt Service Authority Funds
ASSETS
Cash and investments -$ 15,181$ 11,695,248$
Receivables - - 820,067
Due from other funds - - -
Other assets - - -
Inventory and prepaids 287,756 - 287,756
Long-term receivable - - 428,633
Restricted cash and investments 504,199 2,054,812 2,559,011
Total assets 791,955$ 2,069,993$ 15,790,715$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts payable and accrued liabilities 287,756$ -$ 613,220$
Interest payable - - -
Unearned revenue - - 118,211
Due to other funds - - 10,021,780
Deposits and other liabilities - - 15,463
Total liabilities 287,756 - 10,768,674
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 428,633
Total deferred inflows of resources - - 428,633
Fund Balances:
Nonspendable 287,756 - 287,756
Restricted 216,443 2,069,993 12,521,387
Committed - - -
Assigned - - -
Unassigned (deficit)- - (8,215,735)
Total fund balances 504,199 2,069,993 4,593,408
Total liabilities, deferred inflows of
resources and fund balances 791,955$ 2,069,993$ 15,790,715$
(Concluded)
June 30, 2016
Non-Major Governmental Funds (Continued)
Combining Balance Sheet
City of Encinitas
Debt Service
133
Infrastructure Grants and Development Lighting and
Improvements Housing Impact Landscaping
REVENUES:
Taxes and assessments 401,852$ 435,577$ -$ 2,008,450$
Intergovernmental 4,954,647 932,862 - -
Development impact fees - - 1,695,565 -
Use of money and property 4,442 65,042 73,905 67,420
Other - 77,682 - 18,792
Total revenues 5,360,941 1,511,163 1,769,470 2,094,662
EXPENDITURES:
Current:
General government - 192,053 - -
Public safety - 201,016 - -
Public works - 407,894 - 1,926,522
Planning and building - 262,820 - -
Engineering services 219,722 - - -
Parks and recreation - 141,534 - 112,724
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 219,722 1,205,317 - 2,039,246
REVENUES OVER
(UNDER) EXPENDITURES 5,141,219 305,846 1,769,470 55,416
OTHER FINANCING SOURCES (USES):
Proceeds from bond issuance - - - -
Premium on bond issuance - - - -
Deposit to escrow for bond refunding - - - -
Transfers in - 380,481 - 8,400
Transfers out (14,599,417) (1,763,798) (4,736,731) (183,876)
Total other financing sources (uses)(14,599,417) (1,383,317) (4,736,731) (175,476)
NET CHANGE IN FUND BALANCES (9,458,198) (1,077,471) (2,967,261) (120,060)
FUND BALANCES:
Beginning of year 1,242,463 2,449,636 9,108,652 2,841,455
End of year (8,215,735)$ 1,372,165$ 6,141,391$ 2,721,395$
Special Revenue
City of Encinitas
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Non-Major Governmental Funds
For the Year Ended June 30, 2016
134
Total
Encinitas Public Other
City Financing Governmental
Debt Service Authority Funds
REVENUES:
Taxes and assessments -$ -$ 2,845,879$
Intergovernmental - - 5,887,509
Development impact fees - - 1,695,565
Use of money and property 580 38,678 250,067
Other - - 96,474
Total revenues 580 38,678 10,775,494
EXPENDITURES:
Current:
General government - - 192,053
Public safety - - 201,016
Public works - - 2,334,416
Planning and building - - 262,820
Engineering services - - 219,722
Parks and recreation - 254,258
Debt service:
Principal 403,268 2,380,000 2,783,268
Interest and fiscal charges 79,631 2,292,600 2,372,231
Total expenditures 482,899 4,672,600 8,619,784
REVENUES OVER
(UNDER) EXPENDITURES (482,319) (4,633,922) 2,155,710
OTHER FINANCING SOURCES (USES):
Proceeds from bond issuance - 15,645,000 15,645,000
Premium on bond issuance - 772,212 772,212
Deposit to escrow for bond refunding - (16,820,243) (16,820,243)
Transfers in 486,360 4,508,288 5,383,529
Transfers out - - (21,283,822)
Total other financing sources (uses)486,360 4,105,257 (16,303,324)
NET CHANGE IN FUND BALANCES 4,041 (528,665) (14,147,614)
FUND BALANCES:
Beginning of year 500,158 2,598,658 18,741,022
End of year 504,199$ 2,069,993$ 4,593,408$
(Concluded)
City of Encinitas
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Non-Major Governmental Funds (Continued)
For the Year Ended June 30, 2016
Debt Service
135
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Taxes and assessments 300,000$ 401,852$ 101,852$
Intergovernmental 10,216,486 4,954,647 (5,261,839)
Use of money and property - 4,442 4,442
Other - - -
Total revenues 10,516,486 5,360,941 (5,155,545)
EXPENDITURES:
Current:
Engineering services 238,599 219,722 18,877
Total expenditures 238,599 219,722 18,877
REVENUES OVER
(UNDER) EXPENDITURES 10,277,887 5,141,219 (5,136,668)
OTHER FINANCING SOURCES (USES):
Transfers out (14,748,650) (14,599,417) 149,233
Total other financing sources (uses)(14,748,650) (14,599,417) 149,233
NET CHANGE IN FUND BALANCE (4,470,763)$ (9,458,198) (4,987,435)$
FUND BALANCE:
Beginning of year 1,242,463
End of year (8,215,735)$
For the Year Ended June 30, 2016
Infrastructure Improvements Special Revenue Fund
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual
City of Encinitas
136
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Taxes and assessments 425,895$ 435,577$ 9,682$
Intergovernmental 1,260,923 932,862 (328,061)
Use of money and property 118,071 65,042 (53,029)
Total revenues 1,804,889 1,511,163 (293,726)
EXPENDITURES:
Current:
General government 337,345 192,053 145,292
Public safety 262,348 201,016 61,332
Public works 462,262 407,894 54,368
Planning and building 439,286 262,820 176,466
Parks and recreation 218,033 141,534 76,499
Total expenditures 1,719,274 1,205,317 513,957
REVENUES OVER
(UNDER) EXPENDITURES 85,615 305,846 220,231
OTHER FINANCING SOURCES (USES)
Transfers in 384,963 380,481 4,482
Transfers (out)(1,763,798) (1,763,798) -
Total other financing sources (uses)(1,378,835) (1,383,317) 4,482
NET CHANGE IN FUND BALANCE (1,293,220)$ (1,077,471) 215,749$
FUND BALANCE:
Beginning of year 2,449,636
End of year 1,372,165$
City of Encinitas
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual
Grants and Housing Special Revenue Fund
For the Year Ended June 30, 2016
137
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Intergovernmental 165,553$ -$ (165,553)$
Development impact fees 877,636 1,695,565 817,929
Use of money and property 38,679 73,905 35,226
Total revenues 1,081,868 1,769,470 687,602
REVENUES OVER
(UNDER) EXPENDITURES 1,081,868 1,769,470 687,602
OTHER FINANCING SOURCES (USES)
Transfers (out)(4,705,403) (4,736,731) (31,328)
Total other financing sources (uses)(4,705,403) (4,736,731) (31,328)
NET CHANGE IN FUND BALANCE (3,623,535)$ (2,967,261) 656,274$
FUND BALANCE:
Beginning of year 9,108,652
End of year 6,141,391$
City of Encinitas
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual
Development Impact Special Revenue Fund
For the Year Ended June 30, 2016
138
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Taxes and assessments 1,900,050$ 2,008,450$ 108,400$
Use of money and property 50,600 67,420 16,820
Other 30,500 18,792 (11,708)
Total revenues 1,981,150 2,094,662 113,512
EXPENDITURES:
Current:
Public works 2,017,903 1,926,522 91,381
Parks and recreation 138,754 112,724 26,030
Total expenditures 2,156,657 2,039,246 117,411
REVENUES OVER
(UNDER) EXPENDITURES (175,507) 55,416 230,923
OTHER FINANCING SOURCES (USES)
Transfers in 8,400 8,400 16,800
Transfers (out)- (183,876) (183,876)
Total other financing sources (uses)8,400 (175,476) (167,076)
NET CHANGE IN FUND BALANCE (167,107)$ (120,060) 47,047$
FUND BALANCE:
Beginning of year 2,841,455
End of year 2,721,395$
City of Encinitas
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Lighting and Landscaping Special Revenue Fund
For the Year Ended June 30, 2016
139
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Internal Service Funds are used to finance and account for special activities and services performed by a
designated City department for other departments on a cost reimbursement basis.
Risk Management -This fund is used to account for the financing of goods or services provided by one
department or agency to other departments or agencies of the City, or to other governments, on a cost
reimbursement basis for risk management expenditures.
Vehicle Maintenance -This fund is used to account for the financing of goods or services provided by
one department or agency to other departments or agencies of the City, or to other governments, on a
cost reimbursement basis for vehicle maintenance expenditures.
Wastewater Support -This fund is used to account for the financing of goods or services provided by
one department or agency to other departments or agencies of the City, or to other governments, on a
cost reimbursement basis for wastewater support expenditures.
Internal Service Funds
Vehicle Replacement -This fund is used to account for the financing of goods or services provided by
one department or agency to other departments or agencies of the City, or to other governments, on a
cost reimbursement basis for vehicle replacement expenditures.
141
Risk Wastewater Vehicle Vehicle
Management Support Maintenance Replacement Total
ASSETS
Current assets:
Cash and investments 4,462,732$ 11,097$ 8,986$ 1,388,151$ 5,870,966$
Accounts receivable 31,259 - 3,460 - 34,719
Inventory and prepaid items - - - 629,851 629,851
Total current assets 4,493,991 11,097 12,446 2,018,002 6,535,536
Noncurrent assets:
Capital assets:
Utility, plant, vehicles, and equipment, net - - - 3,195,015 3,195,015
Total noncurrent assets - - - 3,195,015 3,195,015
Total assets 4,493,991 11,097 12,446 5,213,017 9,730,551
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 119,008 11,097 12,446 33,652 176,203
Due to other funds - - - 629,851 629,851
Current portion of capital leases payable - - - 331,993 331,993
Total current liabilities 119,008 11,097 12,446 995,496 1,138,047
Noncurrent liabilities:
Capital lease payable - - - 595,540 595,540
Total noncurrent liabilities - - - 595,540 595,540
Total liabilities 119,008 11,097 12,446 1,591,036 1,733,587
NET POSITION
Net investment in capital assets - - - 2,267,482 2,267,482
Unrestricted 4,374,983 - - 1,354,499 5,729,482
Total net position 4,374,983$ -$ -$ 3,621,981$ 7,996,964$
June 30, 2016
All Internal Service Funds
Combining Statement of Net Position
City of Encinitas
142
Risk Wastewater Vehicle Vehicle
Management Support Maintenance Replacement Total
OPERATING REVENUES:
Charges for services -$ -$ -$ -$ -$
Contribution from users - - - - -
Interfund revenues 1,082,031 984,255 562,910 - 2,629,196
Other revenues 350,784 - 200 5,439 356,423
Total operating revenues 1,432,815 984,255 563,110 5,439 2,985,619
OPERATING EXPENSES:
Operational support services 482,896 98,915 210,534 233,734 1,026,079
Administrative support 382,431 772,340 352,576 - 1,507,347
Insurance and claims 1,527,229 - - - 1,527,229
Depreciation of capital assets - - - 310,496 310,496
Total operating expenses 2,392,556 871,255 563,110 544,230 4,371,151
Operating income (loss)(959,741) 113,000 - (538,791) (1,385,532)
NONOPERATING REVENUES:
Gain (loss) on disposal of capital assets - - - 8,750 8,750
Interest expense - - - (26,249) (26,249)
Total nonoperating revenues - - - (17,499) (17,499)
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS (959,741) 113,000 - (556,290) (1,403,031)
Transfer of capital leases from governmental
activities - - - (1,252,139) (1,252,139)
Transfers in 894,257 - - 645,053 1,539,310
Transfers out - (113,000) - - (113,000)
Total capital contributions and transfers 894,257 (113,000) - (607,086) 174,171
Net increase (decrease) in net position (65,484) - - (1,163,376) (1,228,860)
NET POSITION:
Beginning of year 4,440,467 - - 4,785,357 9,225,824
End of year 4,374,983$ -$ -$ 3,621,981$ 7,996,964$
For the Year Ended June 30, 2016
All Internal Service Funds
Combining Statement of Revenues, Expenses, and Changes in Net Position
City of Encinitas
143
Risk Wastewater Vehicle Vehicle
Management Support Maintenance Replacement Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from users 1,401,556$ 984,255$ 560,237$ 5,439$ 2,951,487$
Payments to employees (865,327) (871,255) (563,110) (233,734) (2,533,426)
Payments to suppliers and vendors (1,462,682) 3,944 (5,011) (102,974) (1,566,723)
Net cash provided by (used in) operating activities (926,453) 116,944 (7,884) (331,269) (1,148,662)
CASHFLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Acquisition of capital assets - - - - -
Principal payment on long-term debt - - - (324,606) (324,606)
Interest payments on capital leases - - - (26,249) (26,249)
Proceeds from sale of capital assets - - - 8,750 8,750
Net cash used in capital and related financing activities - - - (342,105) (342,105)
CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:
Transfers in 894,257 - - 645,053 1,539,310
Transfers (out) - (113,000) - - (113,000)
Net cash provided by noncapital financing activities 894,257 (113,000) - 645,053 1,426,310
Net increase (decrease) in cash and cash equivalents (32,196) 3,944 (7,884) (28,321) (64,457)
CASH AND CASH EQUIVALENTS:
Beginning of year 4,494,928 7,153 16,870 1,416,472 5,935,423
End of year 4,462,732$ 11,097$ 8,986$ 1,388,151$ 5,870,966$
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) (959,741)$ 113,000$ -$ (538,791)$ (1,385,532)$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation - - - 310,496 310,496
Changes in operating assets and liabilities:
Accounts receivable (31,259) - (2,873) - (34,132)
Inventory and prepaid items - - - (629,851) (629,851)
Accounts payable and accrued liabilities 64,547 3,944 (5,011) (102,974) (39,494)
Due to other funds - - - 629,851 629,851
Total adjustments 33,288 3,944 (7,884) (102,974) (73,626)
Net cash provided by (used in) operating activities (926,453)$ 116,944$ (7,884)$ (331,269)$ (1,148,662)$
NON-CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Transfer of capital leases from governmental activities -$ -$ -$ (1,252,139)$ (1,252,139)$
For the Year Ended June 30, 2016
All Internal Service Funds
Combining Statement of Cash Flows
City of Encinitas
144
AGENCY FUND
Community Facilities District #1 - This fund accounts for all money collected to pay for debt service of
the Community Facilities District #1 for which the City acts as paying agent but has no legal commitment
or obligation.
Requeza Street Assessment District #93-1 - This fund accounts for all money collected to pay for debt
service of the Requeza Assessment District for which the City acts as paying agent but has no legal
commitment or obligation.
FIDUCIARY FUNDS
The Agency Funds are used to account for assets held by the City in a trustee capacity for individuals, private
organizations, other governments, and/or other funds.
145
Balance Balance
July 1, 2015 Additions Deletions June 30, 2016
Community Facilities District #1
Assets:
Cash and investments 2,100,677$ 2,626,789$ (2,638,202)$ 2,089,264$
Restricted cash and investments:
Held by fiscal agents 1,975,737 2,612,891 (2,612,507) 1,976,121
Interest receivable - - - -
Special assessments receivable 29,755,000 - (1,405,000) 28,350,000
Current assessments receivable - 18,531 - 18,531
Total assets 33,831,414$ 5,258,211$ (6,655,709)$ 32,433,916$
Liabilities:
Due to bondholders 33,831,414$ 5,258,212$ (6,655,710)$ 32,433,916$
Total liabilities 33,831,414$ 5,258,212$ (6,655,710)$ 32,433,916$
Requeza Street Assessment District No. 93-1
Assets:
Cash and investments 175,180$ 210$ (171,896)$ 3,494$
Special assessments receivable 165,000 - (165,000) -
Total assets 340,180$ 210$ (336,896)$ 3,494$
Liabilities:
Due to bondholders 340,180$ 210$ (336,896)$ 3,494$
Total liabilities 340,180$ 210$ (336,896)$ 3,494$
Total - All Agency Funds
Assets:
Cash and investments 2,275,857$ 2,626,999$ (2,810,098)$ 2,092,758$
Restricted cash and investments:
Held by fiscal agents 1,975,737 2,612,891 (2,612,507) 1,976,121
Interest receivable - - - -
Special assessments receivable 29,920,000 - (1,570,000) 28,350,000
Current assessments receivable - 18,531 - 18,531
Total assets 34,171,594$ 5,258,421$ (6,992,605)$ 32,437,410$
Liabilities:
Due to bondholders 34,171,594$ -$ -$ 32,437,410$
Total liabilities 34,171,594$ -$ -$ 32,437,410$
For the Year Ended June 30, 2016
Agency Funds
Statement of Changes in Assets and Liabilities
City of Encinitas
146
147
City of Encinitas Statistical Section
This section of the City of Encinitas' Comprehensive Annual Financial Report presents detailed information as a context
for understanding what the information in the financial statements, note disclosures, required supplementary and
supplementary information says about the City's overall financial health.
Contents Page
Financial Trends - These schedules contain trend information to help the reader understand how the
City's financial performance and well-being have changed over time.
1 Net Position by Component 148-149
2 Changes in Net Position 150-153
3 Fund Balances of Governmental Funds 154-155
4 Changes in Fund Balances of Governmental Funds 156-157
Revenue Capacity - These schedules contain information to help the reader assess the City's most
significant local revenue source which is property tax.
5 Assessed Value of Taxable Property, General Property Tax 158
6 Principal Secured Property Tax Payers, General Property Tax 159
7 General Property Tax Levies and Collections 161
8 Direct and Overlapping Property Tax Ratios, General Property Tax 162-165
Debt Capacity - These schedules present information to help the reader assess the affordability of the
City's current levels of outstanding debt and the City's ability to issue additional debt in the future.
9 Ratios of Outstanding Debt by Type 166-167
10 Ratios of General Bonded Debt Outstanding 168
11 Schedule of Direct and Overlapping Debt 169
12 Legal Debt Margin Information 170-171
13 Historical Debt Service Coverage 172
Demographics and Economic Information - These schedules offer demographics and economic indicators
to help the reader understand the environment within which the City's financial activities take place.
14 Demographic and Economic Statistics 173
15 General Governmental Tax Revenue 174
16 Taxable Sales by Business Type 175
Operating Information - These schedules contain service and infrastructure data to help the reader
understand how the information in the City's financial report relates to the services the City provides and
the activities it performs.
17 Full-time and Part-Time City Employees by Function 176
18 Operating Indicators by Function 177
19 Capital Asset Statistics by Function 178
20 Cardiff Sanitary Division - Summary of Operational Data 179-182
21 San Dieguito Water District - Summary of Operational Data 183-187
Sources: Unless otherwise noted, the information in these schedules was derived from the Comprehensive
Annual Financial Reports for the relevant year.
Source: City of Encinitas Finance Department 148
2007 2008 2009 2010 2011
Government activities:
Net investment in capital assets 120,651,504$ 125,786,039$ 131,703,037$ 130,912,728$ 139,575,875$
Restricted 6,264,431 5,207,761 4,340,090 4,219,623 -
Unrestricted 52,721,705 56,901,871 53,452,967 54,755,944 56,799,902
Total governmental activities net assets 179,637,640$ 187,895,671$ 189,496,094$ 189,888,295$ 196,375,777$
Business-type activities:
Net investment in capital assets 1,806,768 19,204,679 19,422,684 25,014,811 30,076,172
Restricted 18,865,708$ 1,814,716$ 1,048,426$ -$ -$
Unrestricted 60,256,625 65,301,729 68,683,799 71,916,135 72,608,845
Total business-type activities net assets 80,929,101$ 86,321,124$ 89,154,909$ 96,930,946$ 102,685,017$
Primary government:
Net investment in capital assets 122,458,272$ 144,990,718$ 151,125,721$ 155,927,539$ 169,652,047$
Restricted 25,130,139 7,022,477 5,388,516 4,219,623 -
Unrestricted 112,978,330 122,203,600 122,136,766 126,672,079 129,408,747
Total primary government net position 260,566,741$ 274,216,795$ 278,651,003$ 286,819,241$ 299,060,794$
Fiscal Year
City of Encinitas
Net Position by Components
Last Ten Fiscal Years
(Accrual Basis of Accounting)
Source: City of Encinitas Finance Department 149
2012 2013 2014 2015 2016
Government activities:
Net investment in capital assets 153,516,469$ 157,395,370$ 161,902,991$ 157,304,041$ 162,923,350$
Restricted - 9,980,695 17,363,704 18,741,022 30,996,309
Unrestricted 43,857,634 37,646,551 38,446,880 9,229,896 (580,736)
Total governmental activities net assets 197,374,103$ 205,022,616$ 217,713,575$ 185,274,959$ 193,338,923$
Business-type activities:
Net investment in capital assets 25,155,766 32,247,941 54,362,661 39,806,764 42,501,264
Restricted -$ -$ 1,039,739$ -$ 1,377,006$
Unrestricted 83,232,015 79,816,600 62,426,804 75,781,002 75,512,969
Total business-type activities net assets 108,387,781$ 112,064,541$ 117,829,204$ 115,587,766$ 119,391,239$
Primary government:
Net investment in capital assets 178,672,235$ 189,643,311$ 216,265,652$ 197,110,805$ 205,424,614$
Restricted - 9,980,695 18,403,443 18,741,022 32,373,315
Unrestricted 127,089,649 117,463,151 100,873,684 85,010,898 74,932,233
Total primary government net position 305,761,884$ 317,087,157$ 335,542,779$ 300,862,725$ 312,730,162$
City of Encinitas
Fiscal Year
Net Position by Components
(Continued)
(Accrual Basis of Accounting)
Last Ten Fiscal Years
2007 2008 2009 2010 2011
Expenses:
Government activities:
General government 11,858,189$ 12,783,573$ 14,249,545$ 12,132,268$ 10,912,556$
Public safety 20,783,243 21,015,336 22,039,493 22,269,616 22,324,624
Public works 6,728,553 11,595,020 9,360,563 9,520,416 10,981,355
Planning and building 4,892,201 5,287,058 4,833,543 5,599,614 5,539,148
Engineering services 3,078,645 3,972,242 4,010,485 3,873,432 3,646,306
Parks and recreation 5,318,816 6,594,001 6,902,715 6,518,623 6,243,769
Interest and fiscal charges on long-term debt 1,978,163 2,261,104 2,266,817 2,296,422 2,029,477
Total governmental activities expenses 54,637,810 63,508,334 63,663,161 62,210,391 61,677,235
Business-type activities:
Cardiff Sanitary Division 2,948,112 2,985,912 2,854,368 3,569,880 3,715,529
San Dieguito Water District 11,712,887 11,894,734 12,955,085 11,633,694 11,622,126
Encinitas Sanitary Division 1,357,343 1,823,088 1,805,624 1,855,278 1,992,334
Affordable Housing 1,405,094 242,553 260,130 256,873 244,748
Recreation Programs - - - - -
Total business-type activities expenses 17,423,436 16,946,287 17,875,207 17,315,725 17,574,737
Total primary government expenses 72,061,246 80,454,621 81,538,368 79,526,116 79,251,972
Program revenues:
Government activities:
Charges for services:
General government 2,248,666 2,895,795 1,608,273 1,962,344 2,453,152
Public safety 1,127,923 1,006,293 103,641 105,799 98,202
Public works - - 19,276 668 -
Planning and building 2,341,988 2,284,066 1,539,851 1,521,889 1,816,765
Engineering services 1,430,282 1,655,539 759,885 660,734 1,063,822
Parks and recreation 928,810 1,224,923 810,667 1,126,285 1,149,350
Operating grants and contributions 5,086,623 5,736,957 4,838,455 5,392,117 6,964,053
Capital grants and contributions 4,372,149 2,699,027 3,613,636 3,437,302 4,854,393
Total governmental activities program revenues 17,536,441 17,502,600 13,293,684 14,207,138 18,399,737
Business-type activities:
Charges for services:
Cardiff Sanitary Division 4,826,970 4,926,104 5,009,340 4,979,238 4,830,204
San Dieguito Water District 10,961,760 11,283,219 11,379,337 11,046,650 12,438,502
Encinitas Sanitary Division 2,556,281 2,685,490 2,811,359 2,816,963 2,895,879
Affordable Housing - - 222,507 202,499 216,723
Recreation Programs - - - - -
Operating grants and contributions - - - - -
Capital grants and contributions 277,210 746,586 299,326 231,362 712,827
Total business-type activities program revenues 18,622,221 19,641,399 19,721,869 19,276,712 21,094,135
Total primary government program revenues 36,158,662 37,143,999 33,015,553 33,483,850 39,493,872
Governmental activities (37,101,369) (46,005,734) (50,369,477) (48,003,253) (43,277,498)
Business-type activities 1,198,785 2,695,112 1,846,662 1,960,987 3,519,398
Total net revenue (expense) (35,902,584)$ (43,310,622)$ (48,522,815)$ (46,042,266)$ (39,758,100)$
(Accrual Basis of Accounting)
Changes in Net Position
Last Ten Fiscal Years
Fiscal Year
City of Encinitas
Source: City of Encinitas Finance Department 150
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2012 2013 2014 2015 2016
Expenses:
Government activities:
General government 12,064,527$ 10,616,440$ 9,549,338$ 10,810,882$ 11,750,737$
Public safety 23,062,746 24,629,613 25,146,843 25,762,703 27,255,755
Public works 8,560,330 10,851,147 10,239,746 11,565,315 11,743,123
Planning and building 5,008,179 4,353,831 5,853,995 6,550,992 7,255,460
Engineering services 5,817,932 3,813,678 3,988,720 6,253,352 4,591,315
Parks and recreation 5,578,716 5,542,550 4,735,864 5,205,986 6,778,769
Interest and fiscal charges on long-term debt 1,811,714 1,932,904 1,913,349 2,311,944 2,494,815
Total governmental activities expenses 61,904,144 61,740,163 61,427,855 68,461,174 71,869,974
Business-type activities:
Cardiff Sanitary Division 3,385,439 3,373,704 2,922,446 4,262,565 3,857,531
San Dieguito Water District 12,448,911 12,200,431 13,552,862 15,005,767 13,462,935
Encinitas Sanitary Division 1,719,176 1,983,786 2,438,692 1,731,770 2,306,540
Affordable Housing 1,492,811 1,499,863 1,405,225 1,408,226 1,440,124
Recreation Programs 1,187,788 1,153,840 1,300,555 1,331,565 -
Total business-type activities expenses 20,234,125 20,211,624 21,619,780 23,739,893 21,067,130
Total primary government expenses 82,138,269 81,951,787 83,047,635 92,201,067 92,937,104
Program revenues:
Government activities:
Charges for services:
General government 1,789,943 1,775,756 1,800,630 1,629,857 1,594,277
Public safety 99,047 91,495 202,220 160,178 1,009,713
Public works - - - 759,918 107,279
Planning and building 2,155,076 1,894,785 2,874,894 2,737,225 2,800,413
Engineering services 736,786 955,986 1,075,885 1,055,311 1,367,902
Parks and recreation 14,580 39,946 35,791 46,846 1,741,619
Operating grants and contributions 5,896,502 3,759,864 4,345,931 3,878,422 3,349,186
Capital grants and contributions 3,626,279 6,462,979 8,756,281 4,126,194 5,409,098
Total governmental activities program revenues 14,318,213 14,980,811 19,091,632 14,393,951 17,379,487
Business-type activities:
Charges for services:
Cardiff Sanitary Division 4,970,662 4,755,573 4,605,867 4,528,551 4,761,486
San Dieguito Water District 12,922,922 13,687,156 15,297,718 14,785,858 14,684,387
Encinitas Sanitary Division 2,897,592 2,933,319 2,879,605 2,841,235 2,855,690
Affordable Housing 214,503 214,115 216,728 247,349 218,148
Recreation Programs 1,273,007 1,059,009 1,269,179 1,321,471 -
Operating grants and contributions 1,105,851 1,103,639 994,607 1,061,698 1,068,549
Capital grants and contributions 460,688 1,003,057 1,066,769 483,425 681,412
Total business-type activities program revenues 23,845,225 24,755,868 26,330,473 25,269,587 24,269,672
Total primary government program revenues 38,163,438 39,736,679 45,422,105 39,663,538 41,649,159
Governmental activities (47,585,931) (46,759,352) (42,336,223) (54,067,223) (54,490,487)
Business-type activities 3,611,100 4,544,244 4,710,693 1,529,694 3,202,542
Total net revenue (expense) (43,974,831)$ (42,215,108)$ (37,625,530)$ (52,537,529)$ (51,287,945)$
City of Encinitas
(Continued)
Fiscal Year
Source: City of Encinitas Finance Department 151
2007 2008 2009 2010 2011
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes
Property taxes and transfer fees 32,593,979$ 33,858,150$ 35,064,401$ 32,285,155$ 32,292,988$
Sales taxes 9,043,912 8,130,837 7,340,410 8,780,203 10,244,506
Transient occupancy taxes 1,089,065 1,182,816 1,099,817 1,179,789 1,276,980
Franchise taxes 2,011,947 2,212,915 2,162,729 2,031,924 2,108,420
Intergovernmental revenues 753,722 1,335,594 1,866,726 794,362 1,488,770
Use of money and property 3,957,869 3,842,268 2,884,233 1,085,981 657,796
Other general revenues 502,115 568,884 1,551,584 2,238,041 1,695,520
Gain/(Loss) on sale of assets (5,682) - - - -
Transfers (1,227,186) - - - -
Total governmental activities 48,719,741 51,131,464 51,969,900 48,395,455 49,764,980
Business-type activities:
Property taxes 651,195 690,407 721,628 718,212 706,175
Intergovernmental-unrestricted 893,500 - - - -
Use of money and property 1,374,862 1,756,153 974,702 395,152 508,089
Other general revenues 238,270 250,351 45,193 228,614 401,013
Gain/(Loss) on sale of assets - - - - -
Transfers 1,227,186 - - - -
Total business-type activities 4,385,013 2,696,911 1,741,523 1,341,978 1,615,277
Total primary government 53,104,754 53,828,375 53,711,423 49,737,433 51,380,257
Changes in Net Position
Government activities 11,618,372 5,125,730 1,600,423 392,202 6,487,482
Business-type activities 5,583,798 5,392,023 3,588,185 3,302,965 5,134,675
Total primary government 17,202,170$ 10,517,753$ 5,188,608$ 3,695,167$ 11,622,157$
The City reports Recreation Programs as a business-type activity starting in Fiscal Year 2012.
(Accrual Basis of Accounting)
(Continued)
Fiscal Year
Changes in Net Position
Last Ten Fiscal Years
City of Encinitas
Source: City of Encinitas Finance Department 152
2012 2013 2014 2015 2016
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes
Property taxes and transfer fees 32,788,129$ 34,974,578$ 36,414,507$ 38,508,558$ 41,210,485$
Sales taxes 10,613,188 11,585,145 12,067,360 12,569,119 14,166,771
Transient occupancy taxes 1,413,926 1,491,998 1,570,459 1,828,116 2,018,024
Franchise taxes 2,144,162 2,323,616 2,614,844 2,761,335 2,794,144
Intergovernmental revenues 635,097 541,079 479,026 814,337 388,876
Use of money and property 387,066 552,512 705,849 880,989 611,350
Other general revenues 1,780,543 1,596,026 1,257,002 1,567,168 956,824
Gain/(Loss) on sale of assets - - (48,320) 107,177 8,865
Transfers (668,877) 1,809,656 (33,545) (36,068) 399,112
Total governmental activities 49,093,234 54,874,610 55,027,182 59,000,731 62,554,451
Business-type activities:
Property taxes 725,551 749,378 787,242 834,994 906,106
Intergovernmental-unrestricted - 189,676 - - -
Use of money and property 188,259 3,118 357,357 (60,169) (63,690)
Other general revenues - - 63,768 63,768 153,667
Gain/(Loss) on sale of assets - - (187,942) 18,085 4,010
Transfers 668,877 (1,809,656) 33,545 36,068 (399,112)
Total business-type activities 1,582,687 (867,484) 1,053,970 892,746 600,981
Total primary government 50,675,921 54,007,126 56,081,152 59,893,477 63,155,432
Changes in Net Position
Government activities 1,507,303 8,115,258 12,690,959 4,933,508 8,063,964
Business-type activities 5,193,787 3,676,760 5,764,663 2,422,440 3,803,523
Total primary government 6,701,090$ 11,792,018$ 18,455,622$ 7,355,948$ 11,867,487$
The City reports Recreation Programs as a business-type activity starting in Fiscal Year 2012.
(Continued)
City of Encinitas
Last Ten Fiscal Years
Changes in Net Position
(Accrual Basis of Accounting)
Fiscal Year
Source: City of Encinitas Finance Department 153
2007 2008 2009 2010 2011
General fund:
Reserved 15,196,796$ 6,210,167$ 5,255,137$ 4,286,026$ -
Unreserved, designated - 35,790,162 38,413,388 36,913,369 -
Unreserved, undesignated 36,488,893 9,126,804 3,866,759 5,789,899 -
Nonspendable - - - - 2,648,338
Restricted - - - - 633,245
Committed - - - - 42,274,327
Assigned - - - - -
Unassigned - - - - 1,850,582
Total general fund 51,685,689$ 51,127,133$ 47,535,284$ 46,989,294$ 47,406,492$
All other governmental funds:
Reserved 4,176,025$ 3,908,007$ 3,771,850$ 3,408,409$ -$
Unreserved, designated 16,909,261 10,968,342 10,694,605 10,430,543 -
Unreserved, undesignated - - - - -
Nonspendable - - - - 145,686
Restricted - - - - 8,290,163
Committed - - - - 7,570,021
Assigned - - - - -
Unassigned - - - - -
Total all other governmental funds 21,085,286$ 14,876,349$ 14,466,455$ 13,838,952$ 16,005,870$
Total all governmental funds 72,770,975$ 66,003,482$ 62,001,739$ 60,828,246$ 63,412,362$
(1)
(1) GASB 54, which requires changes in reporting categories for fund balances was implemented
in Fiscal Year 2010-2011.
Fiscal Year
City of Encinitas
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
Source: City of Encinitas Finance Department 154
2012 2013 2014 2015 2016
General fund:
Reserved -$ -$ -$ -$ -$
Unreserved, designated - - - - -
Unreserved, undesignated - - - - -
Nonspendable 2,868,533 1,980,075 2,052,250 1,535,601 1,109,424
Restricted - 7,996,400 4,079 3,009,269 -
Committed 19,371,624 9,847,719 8,136,886 8,266,796 -
Assigned - 561,762 561,762 561,762 -
Unassigned 17,964,935 21,160,822 25,151,131 28,029,019 31,775,120
Total general fund 40,205,092$ 41,546,778$ 35,906,108$ 41,402,447$ 32,884,544$
All other governmental funds:
Reserved -$ -$ -$ -$ -$
Unreserved, designated - - - - -
Unreserved, undesignated - - - - -
Nonspendable - - 1,565 - 287,756
Restricted 13,471,421 13,036,985 17,358,060 18,741,022 4,305,652
Committed - - - - 1,626,219
Assigned 2,169,209 2,135,100 - - 24,776,682
Unassigned - - - - -
Total all other governmental funds 15,640,630$ 15,172,085$ 17,359,625$ 18,741,022$ 30,996,309$
Total all governmental funds 55,845,722$ 56,718,863$ 53,265,733$ 60,143,469$ 63,880,853$
(1) GASB 54, which requires changes in reporting categories for fund balances was implemented
in Fiscal Year 2010-2011.
Fiscal Year
City of Encinitas
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
(Continued)
Source: City of Encinitas Finance Department 155
2007 2008 2009 2010 2011
Revenues:
Taxes and assessments 46,922,540$ 47,483,312$ 47,800,573$ 46,805,219$ 48,100,768$
Intergovernmental 5,596,224 5,999,680 5,950,205 6,917,521 8,369,571
Charges for services 8,022,053 9,293,303 6,621,931 5,164,315 6,376,261
Fines, forfeitures, and penalties 949,606 884,446 746,023 761,202 856,392
Use of money and property 3,943,512 3,851,877 2,008,557 1,085,981 657,798
Other 4,679,351 1,227,055 1,110,325 2,875,491 3,803,927
Total Revenues 70,113,286 68,739,673 64,237,614 63,609,729 68,164,717
Expenditures:
Current:
General government 9,601,089 11,903,557 13,036,815 11,859,415 10,155,732
Public safety 20,674,992 20,896,882 21,636,969 22,049,239 22,107,692
Public works 4,679,795 5,432,032 6,033,513 5,888,161 6,051,253
Planning and building 4,892,201 5,287,058 4,811,020 5,599,614 5,539,148
Engineering services 3,078,645 3,972,242 3,986,859 3,873,432 3,646,306
Parks and recreation 5,318,816 5,585,446 5,811,778 5,482,578 5,293,664
Capital outlay 23,383,302 20,704,628 8,473,396 5,606,327 8,559,193
Debt service:
Principal 1,499,032 1,581,033 2,197,891 2,091,882 2,481,223
Interest and fiscal charges 1,780,651 2,244,288 2,251,116 2,332,574 2,056,501
Bond issuance costs - - - - 395,404
Total expenditures 74,908,523 77,607,166 68,239,357 64,783,222 66,286,116
Excess (deficiency) of revenues
over (under) expenditures (4,795,237) (8,867,493) (4,001,743) (1,173,493) 1,878,601
Other Financing Sources (Uses):
Transfer in from CFD debt service - - - - -
Operating transfers in 23,774,352 25,007,578 12,631,197 11,066,120 13,133,224
Operating transfers out (24,998,428) (25,007,578) (12,631,197) (11,066,120) (13,133,224)
Proceeds from capital lease - - - - -
Proceeds from sale of property - - - - 19,530,000
Issuance of debt 20,000,000 2,100,000 - - -
Premium on debt - - - - 215,515
Deposit to escrow for bond refunding - - - - -
Bond discounts (300,000) 0 - - (19,040,000)
Total other financing sources (uses) 18,475,924 2,100,000 0 - 705,515
Net change in fund balances 13,680,687$ (6,767,493)$ (4,001,743)$ (1,173,493)$ 2,584,116$
Debt service as a percentage of
noncapital expenditures 6.8% 7.2% 8.0% 8.1% 8.6%
Fiscal Year
City of Encinitas
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
Source: City of Encinitas Finance Department 156
2012 2013 2014 2015 2016
Revenues:
Taxes and assessments 49,089,142$ 51,528,542$ 53,830,193$ 56,825,628$ 61,325,308$
Intergovernmental 6,537,855 8,520,220 5,025,480 7,022,485 6,689,475
Charges for services 4,406,737 4,450,756 5,479,847 5,315,721 6,585,518
Fines, forfeitures, and penalties 657,364 611,029 632,776 802,936 889,388
Use of money and property 639,676 572,481 724,310 899,807 1,222,730
Other 2,715,266 2,141,439 3,654,621 2,456,996 2,804,043
Total Revenues 64,046,040 67,824,467 69,347,227 73,323,573 79,516,462
Expenditures:
Current:
General government 9,277,443 9,430,487 9,109,412 9,362,214 9,288,227
Public safety 22,853,121 23,655,367 24,164,979 24,902,920 26,976,136
Public works 5,843,228 6,057,646 6,281,800 6,682,424 6,305,340
Planning and building 4,655,501 4,238,882 4,716,315 5,082,589 5,159,777
Engineering services 3,804,813 3,716,994 3,949,352 4,162,630 4,298,563
Parks and recreation 4,333,303 4,377,047 4,672,683 5,091,224 6,366,337
Capital outlay 12,803,379 18,836,006 14,548,894 18,440,036 10,799,083
Debt service:
Principal 2,359,932 2,295,614 2,661,976 2,730,686 2,783,268
Interest and fiscal charges 1,872,773 2,050,068 1,937,144 2,170,164 2,372,231
Bond issuance costs 0 - - - -
Total expenditures 67,803,493 74,658,111 72,042,555 78,624,887 74,348,962
Excess (deficiency) of revenues
over (under) expenditures (3,757,453) (6,833,644) (2,695,328) (5,301,314) 5,167,500
Other Financing Sources (Uses):
Transfer in from CFD debt service - - - - -
Operating transfers in 17,661,946 23,363,240 20,570,966 24,514,293 44,550,246
Operating transfers out (18,354,656) (24,208,239) (21,328,768) (25,509,616) (45,577,444)
Proceeds from capital lease 599,639 555,384 - - -
Issuance of debt - 7,865,000 - 13,174,373 15,645,000
Issuance of debt - - - - 115
Premium on debt - 131,400 - - 772,212
Premium on debt - - - - (16,820,243)
Bond discounts - - - - -
Total other financing sources (uses) (93,071) 7,706,784 (757,802) 12,179,050 (1,430,114)
Net change in fund balances (3,850,524)$ 873,140$ (3,453,130)$ 6,877,736$ 3,737,386$
Debt service as a percentage of
noncapital expenditures 8.3% 8.4% 8.7% 8.9% 8.8%
(Continued)
City of Encinitas
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
Fiscal Year
(Modified Accrual Basis of Accounting)
Source: City of Encinitas Finance Department 157
Fiscal Year
Ended June 30
Residential
Property
Commercial
Property
Industrial
Property
All Other
Property (1)
Total Net
Taxable
Assessed
Value (2)
Total Direct
Tax Rate % (3)
2007 8,729,334$ 831,148$ 32,714$ 425,261$ 10,018,457$ 0.23182%
2008 9,342,260 875,958 33,263 435,672 10,687,153 0.23229%
2009 9,800,179 969,642 35,427 451,831 11,257,079 0.23278%
2010 9,774,056 1,063,161 36,255 464,096 11,337,568 0.23338%
2011 9,767,731 1,110,811 36,036 427,619 11,342,197 0.23472%
2012 9,886,681 1,154,923 34,944 421,308 11,497,856 0.23866%
2013 10,030,357 1,247,785 37,766 408,020 11,723,928 0.23974%
2014 10,393,910 1,300,287 39,501 413,663 12,147,361 0.24570%
2015 11,073,358 1,323,412 39,665 433,569 12,870,004 0.24534%
2016 11,864,809 1,359,004 41,187 437,972 13,702,972 0.23978%
(1) All Other Property includes the following categories: dry farm, institutional, irrigated, recreational, vacant land,
SBC nonunitary, possessory interest, unsecured, and unknown.
(2) The "total net taxable assessed value" is net of tax-exempt property. Homeowners exemptions are not included
in the totals shown..
(3) The total direct tax rate is the city's proportionate share of Proposition 13 property taxes collected within the tax area
City of Encinitas
Assessed Value and Estimated
Actual Value of Taxable Property
Last Ten Fiscal Years
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Taxable Assessed Value
Residential
Commercial
Industrial
Fiscal Year
Source: San Diego County Assessor 2015/16 Combined Tax Rolls
The Hdl Companies 158
Taxable % of Total Taxable % of Total
Assessed City Assessed Assessed City Assessed
Secured Value Rank Secure Value Secured Value Rank Secure Value
TRC Encinitas Village 81,648,417$ 1 0.60%
Collwood Pines Apartments LP 75,997,680 2 0.56%
Belmont Village Tenant LLC 56,294,467 3 0.42%
Camino Village LLC 38,260,829 4 0.28%
Encinitas Town Center Associates LLC 36,575,336 5 0.27% 83,102,227$ 1 0.84%
PK III Encinitas Marketplace LP 35,100,000 6 0.26%
NCHC 3 LLC 34,748,693 7 0.26% 19,772,253 9 0.20%
Weingarten Nostat Inc 34,088,170 8 0.25%
Home Depot USA Inc. 29,772,846 9 0.220%
ASN Encinitas LLC 28,217,778 10 0.21%
SSL Landlord LLC
Scripps Health
Vons Companies Inc. 33,297,337 2 0.34%
Secrest Holdings Corporation 27,586,319 3 0.28%
Enrique Apartment Company 26,815,255 4 0.27%
WRI El Camino LP 25,559,506 5 0.26%
Encinitas Plaza LLC 25,045,004 6 0.25%
North Coast Business Park 24,135,158 7 0.24%
Urschel Holdings LP 21,040,588 8 0.21%
Keith B and Sara S Harrison 18,072,453 10 0.18%
450,704,216$ 3.33% 304,426,100$ 3.08%
City of Encinitas
Taxpayer
Principal Property Taxpayers
Current Fiscal Year and Nine Years Ago
2016 2007
Source: HdL Coren Cone 159
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160
(1)
Fiscal Taxes Levied
Year Ended for the Percent
June 30 Fiscal Year Amount of Levy
2007 25,857,065$ 24,741,077$ 95.68%
2008 26,950,803 25,584,630 94.93%
2009 27,441,558 26,326,996 95.94%
2010 27,421,386 26,490,783 96.61%
2011 27,541,487 26,888,921 97.63%
2012 28,100,611 27,540,858 98.01%
2013 29,207,237 28,712,036 98.30%
2014 30,550,301 30,009,574 98.23%
2015 32,251,814 31,755,994 98.46%
2016 34,443,972 33,941,624 98.54%
(1) City of Encinitas General Fund
City of Encinitas
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the
Fiscal Year of Levy
Source: San Diego County Assessor Combined Tax Rolls 161
2007 2008 2009 2010 2011
%%%%%
City of Encinitas Basic Rate 0.23182 0.23229 0.23278 0.23338 0.23472
City of Encinitas Direct Rate (1) 0.23182 0.23229 0.23278 0.23338 0.23472
Overlapping Rates: (2)
City of Encinitas 0.26641 0.26641 0.26648 0.26648 0.26648
Encinitas Landscape & Lighting District 0.01596 0.01596 0.01596 0.01596 0.01596
Autistic Pupils Monors Elem 0.00009 0.00009 0.00009 0.00009 0.00009
Autistic Pupils Monors High 0.00009 0.00009 0.00009 0.00009 0.00009
Cardiff Elementary 0.26237 0.26237 0.26240 0.26240 0.26240
Children's Institutions Tuition 0.00146 0.00146 0.00146 0.00146 0.00146
County General 0.08264 0.08264 0.07570 0.07570 0.07570
County Library 0.01298 0.01298 0.01995 0.01995 0.01995
County School Service 0.00687 0.00687 0.00687 0.00687 0.00687
County School Service-Capital Outlay 0.00173 0.00173 0.00173 0.00173 0.00173
County Service Area No. 17 0.00291 0.00291 0.00291 0.00291 0.00291
CWA San Dieguito Water District 0.00344 0.00344 0.00344 0.00344 0.00344
Development Centers for Handicapped Elem 0.00043 0.00043 0.00043 0.00043 0.00043
Development Centers for Handicapped High 0.00044 0.00044 0.00044 0.00044 0.00044
Educable Mentally Retarded Minors 0.00196 0.00196 0.00196 0.00196 0.00196
Educational Revenue Augmentation Fund 0.08574 0.08574 0.08570 0.08570 0.08570
Mira Costa Community College 0.08594 0.08594 0.08590 0.08590 0.08590
Physically Handicapped Minors Elem 0.00303 0.00303 0.00303 0.00303 0.00303
Physically Handicapped Minors High 0.00304 0.00304 0.00304 0.00304 0.00304
Regional Occupational Centers 0.00438 0.00438 0.00438 0.00438 0.00438
San Dieguito Union High 0.14405 0.14405 0.14400 0.14400 0.14400
San Dieguito Water District 0.00992 0.00992 0.00992 0.00992 0.00992
Trainable Mentally Retarded Minors Elem 0.00197 0.00197 0.00197 0.00197 0.00197
Trainable Mentally Retarded Minors High 0.00198 0.00198 0.00198 0.00198 0.00198
Vista Project (19/85701) 0.00017 0.00017 0.00017 0.00017 0.00017
Total Prop 13 Rate (3) 1.00000 1.00000 1.00000 1.00000 1.00000
Notes:
(1) Total Direct Rate is the weighted average of all individual direct rates applied by the government preparing the
statistical section information.
(2) General fund tax rates are representative and based upon the direct and overlapping rates for the largest
General Fund tax rate area (TRA) by net taxable value.
City of Encinitas
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
Fiscal Year
(3) In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total
maximum rate of 1% based upon the assessed value of the property being taxed. Each year the assessed value of
property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions,
property is only reassessed at the time that it was sold to a new owner. At that point, the new assessed value is
reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the
only data currently available with respect to the actual market value.
Source: San Diego County Assessor
2006/2007 through 2015/2016 Tax Increment Table
The Hdl Companies 162
2012 2013 2014 2015 2016
%%%%%
City of Encinitas Basic Rate 0.23866 0.23974 0.24002 0.24534 0.23978
City of Encinitas Direct Rate (1) 0.23866 0.23974 0.24002 0.24534 0.23978
Overlapping Rates: (2)
City of Encinitas 0.24020 0.24020 0.24020 0.24020 0.24020
Encinitas Landscape & Lighting District 0.02100 0.02100 0.02100 0.02100 0.02100
Autistic Pupils Monors Elem 0.00000 0.00000 0.00000 0.00000 0.00000
Autistic Pupils Monors High 0.00000 0.00000 0.00000 0.00000 0.00000
Cardiff Elementary 0.24870 0.24870 0.24870 0.24870 0.24870
Children's Institutions Tuition 0.00107 0.00107 0.00107 0.00107 0.00107
County General 0.08020 0.08020 0.08020 0.08020 0.08020
County Library 0.01969 0.01969 0.01969 0.01969 0.01969
County School Service 0.00643 0.00643 0.00643 0.00643 0.00643
County School Service-Capital Outlay 0.00161 0.00161 0.00161 0.00161 0.00161
County Service Area No. 17 0.00251 0.00251 0.00251 0.00251 0.00251
CWA San Dieguito Water District 0.02510 0.02510 0.02510 0.02510 0.02510
Development Centers for Handicapped Elem 0.00000 0.00000 0.00000 0.00000 0.00000
Development Centers for Handicapped High 0.00000 0.00000 0.00000 0.00000 0.00000
Educable Mentally Retarded Minors 0.00161 0.00161 0.00161 0.00161 0.00161
Educational Revenue Augmentation Fund 0.08620 0.08620 0.08620 0.08620 0.08620
Mira Costa Community College 0.08150 0.08150 0.08150 0.08150 0.08150
Physically Handicapped Minors Elem 0.00268 0.00268 0.00268 0.00268 0.00268
Physically Handicapped Minors High 0.00268 0.00268 0.00268 0.00268 0.00268
Regional Occupational Centers 0.00375 0.00375 0.00375 0.00375 0.00375
San Dieguito Union High 0.13610 0.13610 0.13610 0.13610 0.13610
San Dieguito Water District 0.03590 0.03590 0.03590 0.03590 0.03590
Trainable Mentally Retarded Minors Elem 0.00161 0.00161 0.00161 0.00161 0.00161
Trainable Mentally Retarded Minors High 0.00161 0.00161 0.00161 0.00161 0.00161
Vista Project (19/85701) 0.00000 0.00000 0.00000 0.00000 0.00000
Total Prop 13 Rate (3) 1.00000 1.00000 1.00000 1.00000 1.00000
Notes:
(Continued)
(2) General fund tax rates are representative and based upon the direct and overlapping rates for the largest
General Fund tax rate area (TRA) by net taxable value.
Fiscal Year
City of Encinitas
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
(1) Total Direct Rate is the weighted average of all individual direct rates applied by the government preparing the
statistical section information.
(3) In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total
maximum rate of 1% based upon the assessed value of the property being taxed. Each year the assessed value of
property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions,
property is only reassessed at the time that it was sold to a new owner. At that point, the new assessed value is
reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the
only data currently available with respect to the actual market value.
Source: San Diego County Assessor
2006/2007 through 2015/2016 Tax Increment Table
The Hdl Companies 163
2007 2008 2009 2010 2011
%%%%%
Gen Bond Cardiff 2000A 0.03508 0.03306 0.03212 0.03518 -
Gen Bond Cardiff 2000 Election,2010 Ref.Bonds - - - - 0.03715
MWD D/S Remainder of SDCWA 1501999 0.00470 0.00450 0.00430 0.00430 0.00370
Total Voter Approved Rate 0.03978 0.03756 0.03642 0.03948 0.04085
Total Tax Rate 1.03978 1.03756 1.03642 1.03948 1.04085
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
City of Encinitas
Fiscal Year
(Continued)
Source: San Diego County Assessor
2006/2007 through 2015/2016 Tax Increment Table
The Hdl Companies 164
2012 2013 2014 2015 2016
%%%%%
Gen Bond Cardiff 2000A - - - - -
Gen Bond Cardiff 2000 Election,2010 Ref.Bonds 0.03489 0.03458 0.03386 - -
MWD D/S Remainder of SDCWA 1501999 0.00370 0.00350 0.00350 0.00350 0.00350
Total Voter Approved Rate 0.03859 0.03808 0.03736 0.00350 0.00350
Total Tax Rate 1.03859 1.03808 1.03736 1.00350 1.00350
City of Encinitas
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
(Continued)
Source: San Diego County Assessor
2006/2007 through 2015/2016 Tax Increment Table
The Hdl Companies 165
Fiscal Year
Ended
June 30 Bonded Debt Capital Leases
Total Governmental
Activities
2007 49,410,000 696,373 50,106,373
2008 47,960,000 2,670,340 (3) 50,630,340
2009 46,005,000 2,432,449 48,437,449
2010 44,165,000 2,185,567 46,350,567
2011 42,641,535 3,036,899 45,678,434
2012 40,645,759 3,281,606 43,927,365
2013 46,736,383 3,446,376 50,182,759
2014 44,546,848 2,964,400 47,511,248
2015 55,431,687 2,513,713 57,945,400
2016 52,933,882 2,050,840 54,984,722
(1) Percentage of Personal Income ratios are calculated using personal income and population
for the prior calendar year.
(2) Debt per Capita is calculated by dividing the total primary government amount by City
population shown on the Demographic and Economic statistics page.
(3) During 2008, the City borrowed $2.1 million to partially fund major improvements to the
Encinitas Civic Center under a capital lease arrangement with a financial institution.
City of Encinitas
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
Source: City of Encinitas Finance Department 166
Fiscal Year
Ended
June 30
Water Bonds
and Notes
CSD Note
Payable
EHA Note
Payable
Total Business-
type Activities
Total Primary
Government
Debt Per
Capita (2)
2007 20,030,000 7,085,000 1,786,769 28,901,769 79,298,142 1242
2008 19,340,000 6,660,000 1,723,832 27,723,832 78,354,172 1318
2009 18,440,000 6,220,000 1,681,534 26,341,534 74,778,983 1254
2010 17,545,000 5,770,000 1,638,817 24,953,817 71,304,384 1190
2011 16,620,000 5,300,000 1,591,681 23,511,681 69,190,115 1147
2012 15,660,000 4,625,969 1,544,434 21,830,403 65,757,768 1090
2013 14,670,000 4,045,028 1,495,415 20,210,443 70,393,202 1162
2014 13,645,000 3,447,591 1,444,731 18,537,322 66,048,570 1079
2015 11,669,345 2,833,824 1,391,715 15,894,884 73,840,284 1200
2016 10,609,973 2,205,893 1,331,410 14,147,276 69,131,998 1116
(1) Percentage of Personal Income ratios are calculated using personal income and population
for the prior calendar year.
(2) Debt per Capita is calculated by dividing the total primary government amount by City
population shown on the Demographic and Economic statistics page.
(3) During 2008, the City borrowed $2.1 million to partially fund major improvements to the
Encinitas Civic Center under a capital lease arrangement with a financial institution.
Business-type Activities
City of Encinitas
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
(Continued)
Source: City of Encinitas Finance Department 167
Fiscal Certificates of Participation Percentage
Year Ended and Assessed of Assessed Per
June 30 Lease Revenue Bonds Valuation (1) Value Capita
2007 49,410,000$ 10,018,457,000$ 0.49% 781
2008 47,960,000 10,687,153,000 0.45% 751
2009 46,005,000 11,257,079,000 0.41% 774
2010 44,165,000 11,337,568,000 0.39% 741
2011 42,641,535 11,342,197,000 0.38% 712
2012 40,645,759 11,497,857,000 0.35% 674
2013 46,736,383 11,725,285,000 0.40% 772
2014 44,546,848 12,147,361,000 0.37% 728
2015 55,431,687 12,870,003,660 0.43% 901
2016 54,984,722 13,702,972,188 0.40% 888
(1) Assessed valuation has been used because the actual market value of taxable property is not
readily available in the State of California. The assessed valuation information can be found in the
Assessed Value and Estimated Actual Value of Taxable Property schedule in the Statistical Section.
Ratios of General Bonded Debt Outstanding
City of Encinitas
Last Ten Fiscal Years
Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
General bonded debt is debt payable with governmental fund resources and general obligation bonds
recorded in enterprise funds of which, the City has none.
Outstanding General Bonded Debt
Source: City of Encinitas Finance Department
San Diego County Assessor Combined Tax Rolls 168
$13,704,596,790 City's Share of
Total Debt Applicable Overlapping Debt
6/30/16 % (1) 6/30/16
OVERLAPPING TAX AND ASSESSMENT DEBT:
Metropolitan Water District 92,865,000$ 0.559% 519,115$
Cardiff School District 4,415,198 100% 4,415,198
Encinitas Union School District 44,024,619 67.099% 29,540,079
San Dieguito Union High School 261,260,000 24.568% 64,186,357
San Dieguito Union High School District Community Facilities Districts 34,393,533 1.840-100.00% 10,856,280
City of Encinitas Community Facilities District No. 1 28,350,000 100% 28,350,000
Olivenhain Municipal Water District, Assessment District No. 96-1 12,485,000 25.913% 3,235,238
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 141,102,267$
DIRECT AND OVERLAPPING GENERAL FUND DEBT
San Diego County General Fund Obligations 307,830,000$ 3.097% 9,533,495$
San Diego County Pension Obligations 649,860,000 3.097% 20,126,164
San Diego County Superintendent of Schools Obligations 13,295,000 3.097% 411,746
Mira Costa Community College District Certificates of Participation 1,335,000 15.206% 203,000
San Dieguito Union High School District General Fund Obligations 12,730,000 24.568% 3,127,506
City of Encinitas Governmental Bonded Debt 52,180,000 100% 52,180,000
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 85,581,911$
TOTAL DIRECT DEBT 52,180,000$
TOTAL OVERLAPPING DEBT 174,504,178
COMBINED TOTAL DEBT 226,684,178$ (2)
(1) The percentage of overlapping applicable to the city is estimated using taxable assessed property value. Applicable
percentages were estimated by determining the portion of the overlapping district's assessed value that is within the
city divided by the district's total taxable assessed value.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Ratios to 2015-16 Assessed Valuation:
Total Overlapping Tax and Assessment Debt..………………………….….1.03%
Total Direct Debt ($55,660,000).……...……..………………………….…..0.38%
Combined Total Debt…...…….………….….….…….………....…………..…1.65%
City of Encinitas
Schedule of Direct and Overlapping Bonded Debt
June 30, 2016
Source: California Municipal Statistics 169
City of Encinitas
Legal Debt Margin Information
Last Ten Fiscal Years
(in thousands)
2007 2008 2009 2010 2011
Assessed valuation 10,018,457$ 10,687,153$ 11,257,079$ 11,337,568$ 11,342,197$
Conversion percentage equal 25% 25% 25% 25% 25%
to 25% of Assessed valuation
Adjusted assessed valuation 2,504,614 2,671,788 2,814,270 2,834,392 2,835,549
Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 375,692 400,768 422,141 425,159 425,332
Total net debt applicable to limit: 49,410 47,960 46,005 44,165 42,641
Legal debt margin 326,282$ 352,808$ 376,136$ 380,994$ 382,691$
Total debt applicable to the limit
as a percentage of debt limit 13.15% 11.97% 10.90% 10.39% 10.03%
Notes: Details regarding the city's outstanding debt can be found in the notes to the
financial statements.
Fiscal Years
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed
valuation. However, this provision was enacted when assessed valuation was based upon 25% of
market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market
value (as of the most recent change in ownership for that parcel). The computations shown above
reflect a conversion of assessed valuation data for each fiscal year from the current full valuation
perspective to the 25% level that was in effect at the time the that the legal debt margin was enacted by
the State of California for local governments located within the state.
Source: City of Encinitas Finance Department
San Diego County Assessor Combined Tax Rolls 170
City of Encinitas
Legal Debt Margin Information
Last Ten Fiscal Years
(in thousands)
2012 2013 2014 2015 2016
Assessed valuation 11,497,857$ 11,723,929$ 12,147,361$ 12,870,004$ 13,702,972$
Conversion percentage equal 25% 25% 25% 25% 25%
to 25% of Assessed valuation
Adjusted assessed valuation 2,874,464 2,930,982 3,036,840 3,217,501 3,425,743
Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 431,170 439,647 455,526 482,625 513,861
Total net debt applicable to limit: 40,646 46,736 44,547 55,432 53,032
Legal debt margin 390,524$ 392,911$ 410,979$ 427,193$ 460,829$
Total debt applicable to the limit
as a percentage of debt limit 9.43% 10.63% 9.78% 11.49% 10.32%
Notes: Details regarding the city's outstanding debt can be found in the notes to the
financial statements.
Fiscal Years
(Continued)
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed
valuation. However, this provision was enacted when assessed valuation was based upon 25% of
market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market
value (as of the most recent change in ownership for that parcel). The computations shown above reflect
a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to
the 25% level that was in effect at the time the that the legal debt margin was enacted by the State of
California for local governments located within the state.
Source: City of Encinitas Finance Department
San Diego County Assessor Combined Tax Rolls 171
2012 2013 2014 2015 2016
Revenues:
Operating revenues - including connection fees 13,170,422$ 13,789,636$ 15,715,575$ 15,152,433$ 14,851,652$
Non-operating revenues 813,610 869,568 827,676 927,526 1,013,706
Gross Revenues 13,984,032 14,659,204 16,543,251 16,079,959 15,865,358
Total Operating & Non-Operating Expenses 12,448,911 12,198,228 14,066,485 15,481,543 13,800,671
Net Income 1,535,121 2,460,976 2,476,766 598,416 2,064,687
Add back……..
Interest expense 698,908 657,963 622,075 475,775 337,736
Depreciation and amortization expense 1,294,904 1,476,044 1,490,806 2,271,907 1,514,716
Net Revenues Available for Debt Service 3,528,933 4,594,983 4,589,647 3,346,098 3,917,139
Less: Debt Service Paid
2004 Water Revenue Refunding Bonds - Interest Charges 433,950 408,906 380,731 144,720 -
2004 Water Revenue Refunding Bonds - Principal Payments 595,000 615,000 640,000 665,000 -
2007 Note Payble to Financing Authority - Interest Charges 270,352 256,744 241,344 224,994 211,144
2007 Note Payble to Financing Authority - Principal Payments 365,000 375,000 385,000 405,000 415,000
2014 Water Revenue Refunding Bonds - Interest Charges - - - 106,061 202,400
2014 Water Revenue Refunding Bonds - Principal Payments - - - - 570,000
Total Debt Service 1,664,302$ 1,655,650$ 1,647,075$ 1,545,775$ 1,398,544$
Coverage by Net Revenues Available for Debt Service 212% 278% 279% 216% 280%
Debt service coverage requirement is minimum 115% including connection fees. The above schedules include connection fees in operating revenues.
2012 2013 2014 2015 2016
Revenues:
Operating revenues - including connection fees $ 5,039,818$ 4,755,573$ 4,758,606$ 4,615,399$ 4,768,651$
Non-operating revenues 126,914 39,015 1,216,941 120,668 149,151
Gross Revenues 5,166,732 4,794,588 5,975,547 4,736,067 4,917,802
Total Operating & Non-Operating Expenses 3,310,986 3,310,986 3,189,268 4,371,847 3,949,288
Net Income 1,855,746 1,206,029 2,786,279 364,220 968,514
Add back……..
Interest expense 248,400 142,898 266,822 109,282 91,757
Depreciation and amortization expense 404,641 800,000 200,459 1,555,955 1,303,272
Net Revenues Available for Debt Service 2,508,787 2,148,927 3,253,560 2,029,457 2,363,543
Less: Debt Service
2003 Note Payable to SEJPA - Interest Charges 255,000 - - - -
2003 Note Payable to SEJPA - Principal Payments 490,000 - - - -
2011 Note Payable to SEJPA - Interest Charges 29,946 142,898 131,967 109,282 91,757
2011 Note Payable to SEJPA - Principal Payments 25,000 546,540 563,037 579,366 593,530
Total Debt Service 799,946$ 689,438$ 695,004$ 688,648$ 685,287$
Coverage by Net Revenues Available for Debt Service 314% 312% 467% 294% 345%
Debt service coverage requirement is minimum 110% including connection fees. The above schedules include connection fees in operating revenue
City of Encinitas
Historical Debt Service Coverage
Last Five Fiscal Years
San Dieguito Water District
Cardiff Sanitary Division
Source: City of Encinitas Finance Department 172
Fiscal Year
Ended June 30
City
Population
% of San
Diego County
Population
% Change
from
Previous
Year
Median
Age
Avg.
Household
Size
Unemployment
Rate
2007 63,259 2.0% 2.10% 41.0 2.65 3.2%
2008 63,864 2.0% 0.95% 41.5 2.65 4.2%
2009 59,453 2.0% -7.42% 41.7 2.69 6.9%
2010 59,628 2.0% 0.29% 41.6 2.45 NA
2011 59,910 2.0% 0.47% 42.0 2.50 7.3%
2012 60,346 2.0% 0.72% 42.2 2.45 9.2%
2013 60,568 2.0% 0.37% 41.5 2.50 5.5%
2014 61,204 2.1% 1.04% 41.5 2.49 5.2%
2015 61,518 2.0% 0.51% 41.5 2.50 4.2%
2016 61,928 1.9% 0.67% 41.5 2.50 4.5%
NOTE: City population figures have been revised to match updated population from the California State
Department of Finance starting in 2009 from 2010 census data available.
City of Encinitas
Demographic and Economic Statistics
Last Ten Fiscal Years
Source: California State Department of Finance
Unemployment rate estimates are from California Employment
Development.173
Fiscal Year
Ended June
30
Property Taxes
and Transfer Fees Sales Tax
Transient
Occupancy Tax Franchise Tax Total Tax Revenue
2007 32,593,979$ 9,043,912$ 1,089,065$ 2,011,947$ 44,738,903
2008 33,858,150 8,130,837 1,182,816 2,212,915 45,384,718
2009 35,064,401 7,340,410 1,099,817 2,162,729 45,667,357
2010 32,285,155 8,780,202 1,179,789 2,031,924 44,277,070
2011 32,292,988 10,244,506 1,276,980 2,108,420 45,922,894
2012 32,788,129 10,613,188 1,413,926 2,144,162 46,959,405
2013 34,974,578 11,585,145 1,491,998 2,323,616 50,375,337
2014 36,414,507 12,067,360 1,570,459 2,614,844 52,667,170
2015 38,508,558 12,569,119 1,828,116 2,761,335 55,667,128
2016 41,210,486 14,166,771 1,616,171 2,358,567 59,351,995
City of Encinitas
General Governmental Tax Revenue by Source
Last Ten Fiscal Years
(In thousands of dollars)
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total General Governmental Tax Revenues
(In thousands)
Property Tax
Sales Tax
Transient Occupancy Tax
Franchise TaxFiscal Year
Source: City of Encinitas 174
2010 2011 2012 2013 2014 2015 2016
Autos and Transportation 1,189,413$ 1,330,270$ 1,427,132$ 1,446,737$ 1,519,006$ 1,638,839$ 1,684,618$
Building and Construction 818,484 774,109 868,790 820,467 887,182 944,334 980,140
Business and Industry 461,247 537,840 518,699 560,723 573,032 556,835 738,490
Food and Drugs 931,937 945,542 995,511 1,003,491 1,001,942 1,028,085 1,005,870
Fuel and Service Stations 1,146,372 1,351,288 1,569,265 1,577,783 1,559,342 1,500,416 1,382,946
General Consumer Goods 2,836,989 2,818,809 3,117,547 3,165,746 3,355,540 3,476,481 3,535,734
Restaurants and Hotels 1,388,570 1,442,976 1,624,007 1,699,705 1,825,971 1,978,072 2,113,116
Total 8,773,012$ 9,200,834$ 10,120,951$ 10,274,652$ 10,722,015$ 11,123,062$ 11,440,914$
Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories
presented are intended to provide alternative information regarding the sources of the City's revenue.
CITY OF ENCINITAS
Taxable Sales by Business Type
Last Seven Fiscal Years
Source: State of California Board of Equalization and the
HdL Companies 175
Function 2012 2013 2014 2015 2016
General government 44.55 44.75 44.75 46.75 46.75
Fire department 63.00 63.00 66.00 66.00 69.00
Public works 28.85 29.25 29.55 28.55 28.55
Engineering services 27.42 26.42 27.17 27.17 27.17
Parks and recreation 21.18 21.18 21.18 20.18 20.18
Planning and building 26.75 26.75 27.25 27.25 27.25
Subtotal 211.75 211.35 215.90 215.90 218.90
San Dieguito Water District 25.40 25.00 23.00 24.00 24.00
Fiscal Years
Full-Time and Part-Time Employees by Function
Last Five Fiscal Years
City of Encinitas
176
2012 2013 2014 2015 2016
San Diego County Sheriff's Dept
Criminal arrests 1,231 1,548 1,595 1,743 1,997
Traffic arrests 485 383 331 551 263
Traffic accidents 441 372 323 297 274
Traffic citations 11,349 11,381 10,357 13,650 14,873
Calls for service 20,150 20,559 19,394 21,335 22,518
Deputy initiated action 29,862 31,281 29,849 27,339 27,481
Fire:
Number of emergency fire calls 124 102 383 300 328
Number of EMS/rescue 3,495 3,697 3,806 3,844 4,098
Other 1,737 1,932 1,458 1,265 1,517
Inspections 2,252 2,163 2,143 2,072 2,133
Engineering:
Number of permits issued 392 269 351 383 436
Parks and recreation:
Number of recreation class registrations 11,119 11,175 16,236 16,289 15,500
Number of facility rentals 749 421 578 557 538
Planning and building:
Number of planning permits issued 202 207 298 335 263
Number of new dwelling units issued 121 63 161 135 117
Environmental review 7 6 9 10 4
Appeals 357611
Plan checks 948 990 1,391 1,737 2,339
Code enforcement complaints 1,270 1,199 1,153 1,063 1,199
Water:
New connections 79 64 131 69 77
Average daily consumption (millions of gallons) 5.32 5.61 5.71 5.49 4.56
Sewer:
New connections 44 50 22 53 33
Average daily sewage treatment (millions of gallons 2.38 2.40 2.36 2.22 2.20
The City of Encinitas contracts with the County of San Diego Sheriff's Department to provide
law enforcement services.
City of Encinitas
Operating Indicators by Function
Last Five Fiscal Years
Source: City of Encinitas 177
2012 2013 2014 2015 2016
Law enforcement: *
Number of sub-stations 1 1 1 1 1
Fire department:
Fire stations 5 6 6 6 6
Public works:
Streets (miles) 201 201 201 201 201
Engineering:
Signalized intersections 63 63 63 63 63
Parks and recreation:
Community and senior center 1 1 1 1 1
Developed parks 18 18 18 18 18
Undeveloped parks 4 4 4 4 4
Parkland acres 382 382 382 382 382
Habitat/open space acreage 87 87 87 87 87
Marine life refuge 1 1 1 1 1
Trails/streetscapes (miles) 41/10 41/10 41/10 41/10 41/10
Lifeguard towers 7 7 7 7 7
Water:
Water mains (miles) 168 168 168 168 168
Maximum daily capacity (millions of gallons)15 15 15 15 15
* The City of Encinitas contracts with the County of San Diego Sheriff's department to provide
law enforcement services.
City of Encinitas
Capital Asset Statistics by Function
Last Five Fiscal Years
Source: City of Encinitas 178
Cardiff Sanitary Division
Summary of Operational Data
The following tables are being presented as supplementary information based on
requirements for bonds issued to CSD for continuing bond disclosure certificate.
179
Table 1
Users/Class Category Charge HCF Rate HCF Median Charge
Group I Residential
Single Family SF $42.72 4.99$ 95.90 521.26$
Multi Family MF See below 4.99 $359.70/unit
Trailer Park TP See below 4.99 $359.70/unit
Non-Residential
Commercial Group II See below See below 5.24$ See below See below
Commercial Group III See below See below 6.83 See below See below
Commercial Group IV See below See below 10.25 See below See below
Meter Size Annual Charge Meter Size Annual Charge
5/8" 42.72$ 1-1/2" 213.60$
3/4" 64.07$ 2" 341.74$
1" 106.80$ 3" 640.78$
* Multi Family = Fixed Meter Charge x 2
Users/Class
Sub
Category
Unit Cost
(perHCF)
Median Annual
HCF (New
Connections)
Median Usage Charge
(New Connections)
Group II Commercial
Softwater Service SW 5.24$ -------
Car Wash CW 5.24 1,520 $7,964.80
Office Building OF 5.24 200 1,048.00
Fire Station FS 5.24 110 576.40
Professional Building (Doctor) PB 5.24 160 838.40
Veterinary Clinic VC 5.24 -------
Athletic Gymnasium G 5.24 1,340 7,021.60
Laundromat L 5.24 990 5,187.60
Department and Retail Store DRS 5.24 120 628.80
Warehouse W 5.24 1,050 5,502.00
Hospital, Convalescent Home HCH 5.24 3,240 16,977.60
Parks PB 5.24 510 2,672.40
Church-Membership Organization C 5.24 440 2,305.60
Membership Organization (Non-Church) MO 5.24 240 1,257.60
Social Services SS 5.24 160 838.40
Group III Commercial
Hotels-Motels (without restaurant) HM 6.83$ 890 $6,078.70
Repair and Service Station RSS 6.83 70 478.10
Shopping Center SC 6.83 1,030 7,034.90
Kennel K 6.83 900 6,147.00
Coffee Shop CS 6.83 -------
Amusement Park AP 6.83 -------
Nightclub/Bar NC 6.83 320 2,185.60
Commercial Laundry CL 6.83 -------
Manufacturing M 6.83 180 1,229.40
Lumber Yard LY 6.83 -------
Group IV Commercial
Hotels-Motel (with restaurant) HM 10.25$ 3,130 $32,082.50
Bakery (wholesale)/Food Processor BW 10.25 -------
Supermarket SM 10.25 1,030 10,557.50
Mortuary MT 10.25 300 3,075.00
Restaurant R 10.25 600 6,150.00
(1) Sewer rates are based on water consumption (fixed charge based on meter size and consumption component).
The consumption is based on HCF (hundred cubic feet - 748 gallons).
Cardiff Sanitary Division
Rate Schedule for Annual Sewer Charges
As of June 30, 2016
New Connections (no prior water consumption
history)
New Connections (no prior water consumption
history)
Multi Family* and Non-Residential Fixed Meter Charge
Water Consumption Periods To Be Used
Residential = 2 Lowest Periods of Water Consumption For Meter Readings Occurring Between Dec.-May (most recent available 5-year period)
Non-Residential (Commercial) = Water Consumption For Meter Readings Occurring Between July-June of Preceding Year
180
Table 2
Fiscal
Year
Residential
(Tax Roll)
Commercial
(Tax Roll)
Commercial
(Manual) Total Billed
Single Family
Average
2007 3,904,470$ 777,218$ 131,872$ 4,813,560$ 655$
2008 3,983,597 739,676 130,386 4,853,659 668
2009 4,092,138 753,503 127,030 4,972,671 682
2010 4,034,670 703,126 128,223 4,866,019 674
2011 3,984,339 628,165 127,210 4,739,715 664
2012 4,058,990 645,560 123,822 4,828,372 676
2013 3,935,414 666,099 126,677 4,728,190 652
2014 3,812,338 599,324 134,910 4,546,572 622
20154,033,393 623,032 135,587 4,792,012 610
2016 3,873,157 610,169 135,107 4,618,432 634
Cardiff Sanitary Division bills most customers through the San Diego County property tax billing service.
Delinquincy rates have been between 1.8%-3.0% during the period presented.
Delinquencies do not apply to direct billings.
Cardiff Sanitary Division
Historical Service Charges Billed
Last Ten Fiscal Years
181
Parcel Sewer Service Percentage of
Property Owner Count Charges Sewer Charges
Scripps Health 1 92,755$ 2.01%
Collwood Pines Apartments LP 4 74,877 1.62%
State of California Parks & Recreation 2 55,352 1.20%
San Deiguito Union High School District 2 44,485 0.96%
Newport Taft Inc 1 30,682 0.66%
944 Regal Road LLC 1 29,344 0.64%
Cardiff Town Center LLC 1 26,365 0.57%
George's Restaurant Inc 1 22,844 0.49%
West Village Inc 1 22,373 0.48%
Deluca Trust 1 19,741 0.43%
Subtotal 15 418,817$ 9.07%
Total Billed 4,618,432$
Source: Cardiff Sanitary Division
Commercial
Total Connections Residential Industrial Total
Year (Billed Parcels) EDU's EDU's EDU's
2007 6,241 6,840 1,112 7,952
2008 6,283 6,976 1,122 8,097
2009 6,312 6,990 1,124 8,114
2010 6,317 7,011 1,124 8,136
2011 6,329 7,033 1,124 8,187
2012 6,334 7,067 1,154 8,221
2013 6,365 7,083 1,174 8,257
2014 6,375 7,126 1,176 8,302
2015 6,394 7,132 1,187 8,319
2016 6,416 7,157 1,187 8,344
Source: Cardiff Sanitary Division
Historical Service Connections
Last Ten Fiscal Years
Table 3
Cardiff Sanitary Division
Ten Largest Customers
FY 2015-2016
Table 4
Cardiff Sanitary Division
182
Summary of Operational Data
The following tables are being presented as supplementary information based on
requirements for bonds issued by SDWD for continuing bond disclosure certificate.
183
Customer Class Residential Rate Tier Potable Recycled
Single-family residential 0-12 units 2.92$
13-20 units 4.62
21-40 units 5.72
41+ units 6.50
Multi-family residential (per dwelling) 0-8 units 2.92
9-12 units 4.62
13-16 units 5.72
17+ units 6.50
Agriculture Uniform 4.95 3.80$
Commercial Uniform 4.95 3.80
Government Uniform 5.42 4.17
Public Uniform 5.42 4.17
Landscaping Uniform 5.70 4.39
Construction Uniform 5.81 4.47
Note: Drought rates associated with a 10% reduction in water use in effect on June 30, 2016, per Board action.
(1) Per Unit (one hundred cubic feet or 748 gallons)
Source: San Dieguito Water District
Bi-Monthly Meter Service Availability Charges (2)
As of June 30, 2016
Water Meter Service Infrastructure Fire Meter Service
Availability Access Availability
Meter Size Charge Charge Charge
5/8" & 3/4" 37.39$ 5.52$ 7.95$
1" 55.05 8.83 7.95
1-1/2" 98.82 16.56 8.97
2" 151.55 28.70 15.63
3" 274.67 52.99 39.55
4" 450.52 90.52 80.79
6" 889.76 165.60 228.82
8" 1,417.05 287.04 484.14
Source: San Dieguito Water District
(2) San Dieguito Water District charges a bi-monthly service availability charge, which covers the costs for the
maintenance of meters, water lines, and storage facilities, to ensure that water is available upon demand. This
charge also covers customer service costs for meter reading and billing. The Intrastructure Access Charge is
levied by the San Diego County Water Authority and is collected from the customer by the District.
Table 1
Rate (1)
Table 2
San Dieguito Water District
San Dieguito Water District
Schedule of Water Rates
As of June 30, 2016
184
Meter
Fiscal Potable Percentage Availability Percent
Year Water Sales Change (3)Charge Change (3)
2007 7,579,205$ 17.2% 2,251,011$ 9.2%
2008 7,717,818 1.8% 2,404,547 6.8%
2009 7,525,927 -2.5% 2,453,075 2.0%
2010 7,146,854 -5.0% 2,501,264 2.0%
2011 8,205,876 14.8% 3,007,127 20.2%
2012 8,528,418 3.9% 3,196,605 6.3%
2013 9,236,462 8.3% 3,087,794 -3.4%
2014 10,649,157 15.3% 3,227,823 4.5%
2015 9,728,434 -8.6% 3,415,227 5.8%
2016 9,503,108 -2.3% 3,503,933 2.6%
(3) Due to the varying number of billing cycles in a fiscal year, changes year-over-year may not be exactly
comparable.
Source: San Dieguito Water District
Meter
Fiscal Recycle Percent Availability Percent
Year Water Sales Change Charges (4)Change
2007 596,299$ 31.3% -$ N/A
2008 600,401 0.7% - N/A
2009 663,036 10.4% - N/A
2010 537,654 -18.9% - N/A
2011 523,397 -2.7% - N/A
2012 422,925 -19.2% - N/A
2013 400,244 -5.4% - N/A
2014 460,383 15.0% 60,048 N/A
2015 648,398 40.8% 80,585 34.2%
2016 702,301 8.3% 85,149 5.7%
(4) The District first implemented a meter availability charge for recycled customers on September 1, 2013.
Source: San Dieguito Water District
Table 3
Last Ten Fiscal Years
Table 4
San Dieguito Water District
Last Ten Fiscal Years
San Dieguito Water District
Historic Potable Water System Revenues
Historic Recycled Water System Revenues
185
Fiscal Local Imported Total Recycled Total
Year Water Water Potable Water Production
2007 2,706 5,692 8,398 708 9,106
2008 3,539 3,753 7,292 676 7,968
2009 3,869 3,369 7,237 694 7,931
2010 4,399 2,156 6,555 498 7,053
2011 4,434 1,901 6,335 511 6,846
2012 3,719 2,663 6,382 578 (6)6,960
2013 4,200 2,395 6,595 678 (6)7,273
2014 1,136 5,598 6,734 692 7,426
2015 603 5,726 6,329 736 7,065
2016 1,400 3,839 5,239 628 5,867
(5) Potable water production is defined as water either produced locally or purchsed from imported
sources (expressed in acre-feet).
Fiscal Percent Percent
Year Potable Increase Recycled Increase
2007 7,592 4.3% 708 18.0%
2008 6,753 -11.1% 676 -4.5%
2009 6,463 -4.3% 694 2.7%
2010 5,649 -12.6% 498 -28.2%
2011 5,425 -4.0% 511 2.6%
2012 5,957 9.8% 578
(6)13.1%
2013 6,284 5.5% 678
(6)17.3%
2014 6,449 2.6% 692 2.1%
2015 6,134 -4.9% 736 6.4%
2016 5,112 -16.7% 628 -14.7%
Note: The differences between potable water production and deliveries represents water loss in the
distribution system and/or water pumped or used through the fire distribution system.
Source: San Dieguito Water District
San Dieguito Water District
(6) Since 2012, Recycled Water Production and Delivery figures are revised to include water provided
to the Encinitas Ranch Golf Authority (ERGA). Beginning in 2012, the San Elijo Joint Powers Authority
(SEJPA) began directly providing recycled water to ERGA and the District ceased selling recycled water
to ERGA. The recycled water provided to ERGA credits towards the Districts production and delivery
figures as ERGA falls within the District's sphere of influence.
Table 5
Last Ten Fiscal Years
Potable Production (6)
Table 6
Last Ten Fiscal Years
San Dieguito Water District
Summary of Water Production by Source
Summary of Water Deliveries by Source
186
Acre-Feet Percent of
Customer Description Sold Water Sold
Agriculture 98 1.9%
Commercial 475 9.3%
Construction 9 0.2%
Government 21 0.4%
Landscaping 263 5.2%
Multi-Family Residential 1,038 20.3%
Pooled Meters 354 6.9%
Public 69 1.3%
Single-Family Residential 2,787 54.5%
Subtotal - Top 10 Customers 5,114 100.0%
Source: San Dieguito Water District
Fiscal Percent Percent
Year Potable Increase Recycled Increase
2007 11,338 -3.3% 56 -31.7%
2008 11,364 0.2% 59 5.4%
2009 11,370 0.1% 68 15.3%
2010 11,388 0.2% 73 7.4%
2011 11,397 0.1% 72 -1.4%
2012 11,476 0.7% 74 2.8%
2013 11,502 0.2% 77 4.1%
2014 11,610 0.9% 77 0.0%
2015 11,644 0.3% 81 5.2%
2016 11,721 0.7% 82 1.2%
Source: San Dieguito Water District
(8) The decline of one connection in 2011 reflects the change in the contract arrangement with the
Encinitas Ranch Golf Course.
Table 7
As of June 30, 2016
Table 8
Last Ten Fiscal Years
San Dieguito Water District
Sales by Customer Class
San Dieguito Water District
Total Service Connections by Category
187
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188