2018-CAFRF I N A N C I A L R E P O R T
F i s c a l Y e a r E n d e d J u n e 3 0 , 2 0 1 8
t h e c i t y o f
E N C I N I T A S
C a l i f o r n i a
C o m p r e h e n s i v e A n n u a l
City of Encinitas
Encinitas, California
Comprehensive Annual Financial Report
and Independent Auditors’ Reports
For the Year Ended June 30, 2018
Supported by the Finance Department
Teresa S. McBroome Director of Finance/City Treasurer
Tom Gallup Finance Manager - Budget
Stella Huang Finance Manager - Reporting
Marta Lundgren Finance Manager - Operating
Tanya Allsup Finance Analyst
Monica Attili Finance Analyst
Nancy Rau Finance Analyst
Kelly Sanderson Finance Analyst
Alexis Angelini Accountant
Cindy Dabney Finance Technician
Alyce Gonzalez Finance Technician
Katie Schroeder Finance Technician
Devon Seal Finance Technician
Joanna Bradford Contractor
Liz Gyokery Contractor
INTRODUCTORY SECTION
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City of Encinitas
Comprehensive Annual Financial Report
For the Year Ended June 30, 2018
Table of Contents
Page
INTRODUCTORY SECTION (Unaudited)
Table of Contents
Transmittal Letter ............................................................................................................................................ i
List of City Officials ......................................................................................................................................... x
Organization Chart ......................................................................................................................................... xi
Certificate of Achievement for Excellence in Financial Reporting – GFOA ................................................... xii
FINANCIAL SECTION
Independent Auditors’ Report on Financial Statements .......................................................................... 1
Management’s Discussion and Analysis (Required Supplementary Information – Unaudited) ........... 5
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position ................................................................................................................. 23
Statement of Activities and Changes in Net Position ....................................................................... 24
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet ............................................................................................................................ 31
Reconciliation of the Governmental Funds Balance Sheet
to the Government-wide Statement of Net Position ................................................................. 32
Statement of Revenues, Expenditures, and Changes in Fund Balances ................................... 33
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 ............................................................... 34
Proprietary Fund Financial Statements:
Statement of Net Position ........................................................................................................... 36
Statement of Revenues, Expenses, and Changes in Net Position ............................................. 38
Statement of Cash Flows ............................................................................................................ 40
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Position ........................................................................................... 47
Notes to the Basic Financial Statements ........................................................................................... 51
City of Encinitas
Comprehensive Annual Financial Report
For the Year Ended June 30, 2018
Table of Contents (Continued)
Page
FINANCIAL SECTION (Continued):
Required Supplementary Information (Unaudited):
Budgetary Information .......................................................................................................................... 125
Budgetary Comparison Schedule:
General Fund .................................................................................................................................. 126
Infrastructure Improvements Special Revenue Fund ..................................................................... 128
Schedule of Changes in the Net Pension Liability and Related Ratios ................................................ 129
Schedule of the City’s Proportionate Share of the Net Pension Liability .............................................. 130
Schedule of Contributions - Pension .................................................................................................... 132
Schedule of Changes in the Net OPEB Liability and Related Ratios ................................................... 135
Schedule of Contributions - OPEB ....................................................................................................... 137
Supplementary Information:
Non-Major Governmental Funds:
Combining Balance Sheet .............................................................................................................. 142
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...................... 144
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:
Grants and Housing Special Revenue Fund ............................................................................ 146
Development Impact Special Revenue Fund ........................................................................... 147
Lighting and Landscaping Special Revenue Fund ................................................................... 148
Internal Service Funds:
Combining Statement of Net Position ............................................................................................. 151
Combining Statement of Revenues, Expenses, and Changes in Net Position ............................... 152
Combining Statement of Cash Flows ............................................................................................. 153
Fiduciary Funds:
Statement of Changes in Assets and Liabilities – Agency Funds................................................... 157
STATISTICAL SECTION (Unaudited)
Index ........................................................................................................................................................... 161
Financial Trends:
Net Position by Components – Last Ten Fiscal Years ......................................................................... 162
Changes in Net Position – Last Ten Fiscal Years ................................................................................ 164
Fund Balances of Governmental Funds – Last Ten Fiscal Years ........................................................ 168
Changes in Fund Balances of Governmental Fund – Last Ten Fiscal Years ....................................... 170
Revenue Capacity:
Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ............... 172
Principal Property Taxpayers – Last Ten Fiscal Years ......................................................................... 173
Property Tax Levies and Collections – Last Ten Fiscal Years ............................................................. 175
Direct and Overlapping Property Tax Ratios – Last Ten Fiscal Years ................................................. 176
City of Encinitas
Comprehensive Annual Financial Report
For the Year Ended June 30, 2018
Table of Contents (Continued)
Page
STATISTICAL SECTION (Continued):
Debt Capacity:
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years .............................................................. 180
Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ................................................ 182
Schedule of Direct and Overlapping Bonded Debt ............................................................................... 183
Legal Debt Margin Information – Last Ten Fiscal Years ...................................................................... 184
Historical Debt Service Coverage – Last Ten Fiscal Years .................................................................. 186
Demographic and Economic Information:
Demographic and Economic Statistics – Last Ten Fiscal Years .......................................................... 188
General Governmental Tax Revenue by Source .................................................................................. 189
Taxable Sales by Business Type – Last Ten Fiscal Years ................................................................... 190
Operating Information:
Full-Time and Part-Time Employees by Function – Last Ten Fiscal Years .......................................... 191
Operating Indicators by Function – Last Ten Fiscal Years ................................................................... 192
Capital Asset Statistics by Function – Last Ten Fiscal Years ............................................................... 194
Cardiff Sanitary Division:
Rate Schedule for Annual Sewer Charges ........................................................................................... 198
Historical Service Charges Billed ......................................................................................................... 199
Ten Largest Customers ........................................................................................................................ 200
Historical Service Connections ............................................................................................................. 200
San Dieguito Water District:
Schedule of Water Rates ...................................................................................................................... 202
Bi-Monthly Meter Service Availability Charges ..................................................................................... 202
Historic Potable Water System Revenues – Last Ten Fiscal Years ..................................................... 203
Historic Recycled Water System Revenues – Last Ten Fiscal Years .................................................. 203
Summary of Water Production by Source – Last Ten Fiscal Years ..................................................... 204
Summary of Water Deliveries by Source – Last Ten Fiscal Years ....................................................... 204
Sales by Customer Class ..................................................................................................................... 205
Total Service Connections by Category – Last Ten Fiscal Years ........................................................ 205
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 .................................................................... 207
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TRANSMITTAL LETTER • INTRODUCTORY SECTION
i
December 27, 2018
Honorable Mayor, City Council and Citizens of the City of Encinitas, California,
It is a pleasure to present the Fiscal Year 2017-18 Comprehensive Annual Financial Report
(CAFR) for the City of Encinitas and its related entities. This report was prepared to assist those
interested in understanding the financial condition and results of City operations for the fiscal
year ended June 30, 2018 and includes financial information for the City of Encinitas, the San
Dieguito Water District, the Encinitas Housing Authority, and the Encinitas Public Financing
Authority. These financial statements have been prepared in accordance with generally accepted
accounting principles (GAAP) and audited in accordance with generally accepted auditing
standards. Responsibility for the accuracy of the data, the completeness and reliability of the
presentation, including all disclosures, rests with City management.
To provide a reasonable basis for making the presentations shown in this report and to compile
sufficient reliable information for the preparation of the City’s financial statements, the
management of the City has established a comprehensive internal control framework designed to
protect the City’s assets from loss, theft, or misuse. Because the cost of internal controls should
not exceed their benefits, the City’s internal controls have been designed to provide reasonable
rather than absolute assurance that the financial statements will be free from material
misstatements.
The City’s financial statements have been audited by the Pun Group, certified public accountants.
The independent auditor concluded based on the audit, that there was reasonable basis for
rendering an unmodified opinion (or a “clean audit”) on the City’s financial statements for the
fiscal year ended June 30, 2018, which means that in the auditors’ opinion, the financial
statements accurately present the City’s financial position.
Management’s Discussion & Analysis (MD&A) immediately follows the independent auditors’
report and provides a narrative introduction, overview, and analysis of the basic financial
statements. The MD&A complements this letter of transmittal and should be read in conjunction
with it.
CITY PROFILE AND BACKGROUND
The City of Encinitas was incorporated in October 1986 as a general law city, bringing together
the communities of New and Old Encinitas, Cardiff-by-the-Sea, Leucadia, and Olivenhain.
Encinitas is located in northern San Diego County approximately 25 miles north of downtown
San Diego on the Southern California coast. The City with an estimated population of 63,000
covers approximately 21 square miles and is predominately residential with two major
commercial corridors.
TRANSMITTAL LETTER • INTRODUCTORY SECTION
ii
GOVERNANCE
The City is governed by a City Council consisting of a Mayor and four Council members under
the Council-Manager form of government. The Mayor is elected at-large for a two-year term of
office. The City of Encinitas has transitioned to a system where City Council members are elected
by-district instead of serving "at large" with the sequence of elections for district elections in
Council Districts 3 and 4 in 2018, and district elections in Council Districts 1 and 2 in 2020. The
transition to district-based elections will be complete in 2020. In the general municipal election
held on November 6, 2018, Council Members were elected by district for a full four-year term of
office in Districts 3 and 4.
The City Council appoints the City Manager and City Attorney. All other staff positions are
appointed by the City Manager or her designee. The City Council acts as the Board of Directors
for the San Dieguito Water District, the Encinitas Housing Authority, and the Encinitas Public
Financing Authority.
MUNICIPAL SERVICES
The City provides a full range of municipal services such as:
Fire and paramedic services Law enforcement (contract)
Marine safety Parks and trails
Development services Recreation services
Street maintenance and construction Traffic control
Wastewater services Water services
CITY FACILITIES
City Hall is located on Vulcan Avenue between D and E Streets, adjacent to the Encinitas Train
Station and downtown. The City maintains an active Community and Senior Center located at
Encinitas Boulevard and Balour Drive, the 44-acre Encinitas Community Park located at 425
Santa Fe Drive along with 20 other park sites and Moonlight Beach located at 400 B Street which
attracts an estimated three million visitors annually. There are six fire stations located throughout
the city, as well as one sheriff substation which is owned and operated by the County of San
Diego. The corporate yard for both the City of Encinitas and San Dieguito Water District is
located near Encinitas Boulevard and Calle Magdalena.
BUDGETING OVERVIEW
The City develops and adopts both an operating and a capital budget on a two-year budget cycle.
Amounts are appropriated for the first year only, with the amounts for the second year subject to
revision before appropriation. Any changes to the operating or capital budgets must be approved
by the City Council. The City also publishes a six-year capital improvement program and
financial plan which is updated as part of the two-year budget cycle. This document provides
management and the City Council with long-term financial planning information and tools.
Online access to detailed City financial information is available on the City’s website. This web-
based tool allows the user to sort and filter City financial information to obtain the specific
TRANSMITTAL LETTER • INTRODUCTORY SECTION
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financial information desired. This tool may be found on the City’s website at
https://encinitasca.opengov.com/transparency.
FACTORS AFFECTING FINANCIAL CONDITION OF THE CITY
Local Economy – Encinitas enjoys a strong and well diversified tax base. Over the years, the
property values and personal income levels within the City have generated tax revenues sufficient
to support the level of municipal services and facilities for the community to enjoy. The tax base
has performed well in good economic times and it has also been able to weather the financial
impacts during slower economic times. The net taxable assessed value of property in the City has
grown 36.5 percent since Fiscal Year 2007-08 (ten years ago). Throughout the recession the City
maintained slight increases each year in net taxable assessed value. For Fiscal Years 2016-17 and
2017-18 taxable values increased 5.9 percent and 6.2 percent, respectively.
According to information provided by the Bureau of Labor Statistics, employment in Encinitas is
strong with the unemployment rate just 2.3 percent as of May 2018. The unemployment rate for
all of San Diego County was 2.9 percent while statewide the rate was 4.2 percent. Encinitas also
has over 3,300 businesses reporting retail sales within the City. The top 100 sales tax producers
include a wide variety of businesses such as car dealers, home improvement stores, big box retail,
gas stations, grocery stores and restaurants.
Property, and Sales and Use Tax Revenue - Property tax, and sales and use tax revenue represent
approximately 78 percent of the City’s total General Fund revenue. Property tax revenue in FY
2017-18 totaled $44.7 million which was an increase of $2.6 million, or 6.2 percent, compared to
FY 2016-17. Sales and use tax revenue in FY 2017-18 was $13.3 million, an increase of $0.7
million, or 5.6 percent higher compared to FY 2016-17. Other revenue sources remained
relatively stable, although revenues from the State of California are still considered to be
vulnerable to State actions.
Financial Strength and Sustainability - The City of Encinitas is well positioned to weather
economic fluctuations and has been evaluated and rated by internationally recognized third party
reviewers. On January 26, 2017, Standard & Poor’s Rating Services (S&P) affirmed its ‘AAA’
issuer credit rating (ICR) for the City of Encinitas.
The City had approximately $48.5 million of general fund bonded debt and capital leases
outstanding at June 30, 2018, with scheduled payments of principal and interest of $4.5 million in
FY 2017-18. This debt service as a percentage of general fund revenue is 6.1 percent, which is
well below the City’s goal to maintain a debt service to general fund revenue ratio of less than 10
percent.
Development and Maintenance of Financial Reserves - The City has an established financial
policy regarding maintenance of adequate financial reserves. The City sets aside 20 percent of
General Fund operating expenditures for contingencies (unanticipated events that could
negatively impact the City’s financial condition). The City has never had occasion to draw on this
reserve, since its inception in the early 1990’s. The City also maintains a General Fund budget
stabilization reserve, established in 2007 in anticipation of the ensuing recession. This reserve is
funded at a minimum of two percent of operating revenues. The City has not had any need to
draw on this reserve, despite the decline in operating revenues experienced during the recession.
Any amounts remaining after these two reserves are fully funded are considered available for City
TRANSMITTAL LETTER • INTRODUCTORY SECTION
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Council directed use, primarily for future funding of capital improvements. General Fund
reserves for contingencies and budget stabilization total $14.7 million and funding available for
capital improvements was $17.0 million as of June 30, 2018.
ACCOMPLISHMENTS
Based on direction by the City Council, highlighted below are the City’s accomplishments this
fiscal year.
EnerGov and Customer Self Service (CSS) - EnerGov is a fully integrated enterprise system that
will manage permits and inspections, as well as a host of additional standalone manual processes,
giving the City the tools to adopt best business practices, and reduce the need for redundant data
processes. Furthermore, the related Customer Self Service (CSS) portal will increase customer
access to information and online services. In Fiscal Year 2017-18, the Information Technology
(IT) and Development Services departments partnered together to implement the following
external CSS online services: a variety of Permits; Plans & Permits Search; Map Viewer; Fee
Estimator; Report Generator; and Tutorials.
Climate Action Plan Update - The Encinitas Climate Action Plan (CAP) was updated and adopted
by Council on January 17, 2018. The update included a re-assessment of the City’s baseline
greenhouse gas (GHG) emissions, the development of new and revised strategies, goals and
actions to reduce GHG emissions, and quantitative analysis of GHG reduction measures. The
update also included development of a CAP Implementation Plan and completion of a California
Environmental Quality Act (CEQA) Negative Declaration for the CAP update. The updated CAP
earned the distinction of being a “gold-standard” CAP in Climate Action Campaign’s 2017
Climate Action Plan Report Card, dated February 2018.
Community Choice Energy - The City is leading a four-city partnership (Encinitas, Del Mar,
Carlsbad and Oceanside) to study the feasibility of Community Choice Energy. A study was
initiated in February 2018 and will determine if it would be financially feasible for the four cities
to form a community choice energy program and offer an additional electricity choice to residents
and business that includes a greater proportion of renewable energy at a cost competitive with the
San Diego Gas and Electric Company (SDG&E).
Transition to a Zero Emission Vehicle Fleet - The Public Works Department entered into an
agreement to receive regular delivery of renewable diesel instead of conventional diesel.
Renewable diesel is a non-petroleum-based diesel that works in unmodified diesel engines but
burns 80 percent cleaner than conventional diesel fuel. To facilitate this supply, a new diesel fuel
tank was installed at the Department of Public Works facility. The renewable diesel will be used
to fuel all diesel run City vehicles, including Public Works heavy duty trucks and equipment and
all fire engines. Public Works fleet has begun the transition to electric light duty vehicles in
compliance with the goals of the CAP. A sedan was replaced with a fully electric charging
vehicle, and the first hybrid pickup truck and two hybrid sport utility vehicles (SUVs) were
purchased this year. In December 2018, with a grant from SDG&E, 10 electric vehicle charging
stations were installed at the Public Works yard for fleet vehicle use.
North Leucadia/Saxony Canyon Fast Response Emergency Vehicle Pilot-Program - In November
2017, the City Council authorized the Fire Department to implement a part-time, peak-hour fast
response emergency vehicle program for the North Leucadia/Saxony Canyon portion of the City.
TRANSMITTAL LETTER • INTRODUCTORY SECTION
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The goal of this program is to reduce the emergency response times for this part of the City and is
scheduled to commence in January 2019.
Infrastructure Updates - New playgrounds were installed at Encinitas Viewpoint and Mildred
MacPherson Parks. At the Community Center, new carpet and new sunshades were installed, and
the interior was painted. IT upgraded three conference rooms at the Community Center with
state-of-the-art audio/visual equipment. The Public Works Facilities division converted the
outdoor lighting at the Library to LED lighting. Public art pieces were installed at Moonlight
State Beach and Swami’s Beach Park.
Utility Billing - IT partnered with the San Dieguito Water District (SDWD) to implement a new
utility billing system for the district. The old legacy system was replaced with Tyler Utility
Billing to provide enhanced customer service and information access. It now provides SDWD
with the tools they need to adopt best business practices, reduce redundant data processes, and
increase customer access to information and online services.
The following CIP projects were completed during FY 2017-18:
Moonlight Beach Marine Safety Center - Construction of the $3.7 million Moonlight Beach
Marine Safety Center was completed in April 2018. The new Moonlight Beach Marine Safety
Center replaced the former Lifeguard Tower which was deemed functionally obsolete. This new
building serves as the headquarters of the Marine Safety Division which is responsible for the
safety of our residents and visitors on the City of Encinitas beaches. In 2018, the project won the
American Public Works Association “Project of the Year” award.
Lone Jack Storm Drain Replacement and Recreational Trail Improvements - Completed in
January 2018, the $1.8 million project included reconstruction of storm drain and trail
improvements from Rancho Santa Fe Road to Stratford Knoll.
Santa Fe Drive Undergrounding - In April 2018, the City completed the undergrounding of
overhead utilities from Gardena to Evergreen on Santa Fe Drive. The project costs totaled $1.5
million.
Safe Routes to School (SRTS) Implementations - This program improves pedestrian and bike
access in the City. Projects in FY 2017-18 focused on Mackinnon Road, Balour Drive, Requeza
Street, and Villa Cardiff Drive.
MAJOR INITIATIVES AND PROJECTS
The City Council has four Strategic Priority Focus areas which are –
1. Attain a legally compliant Housing Element
2. Make the rail corridor a better neighbor
3. Improve connectivity and mobility for all users
4. Promote green initiatives and protect natural resources.
TRANSMITTAL LETTER • INTRODUCTORY SECTION
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Highlighted below are the projects that the City is working on as it relates to the City Council’s
focus areas:
1. Attain a legally compliant Housing Element
Housing Element - With guidance from the Housing Element Task Force which completed over
15 public meetings, the City completed the draft Housing Plan 2018, which was later adopted in
August 2018.
2. Make the rail corridor a better neighbor
Coastal Rail Trail - The Coastal Rail Trail (CRT) is a 44-mile long system of pedestrian and
bicycle trails generally along the coastal rail corridor between the cities of Oceanside and San
Diego. The San Diego Association of Governments (SANDAG), the agency responsible for the
design and construction of the CRT, started construction of the segment in Cardiff in January
2018.
Chesterfield Quiet Zone - This project is underway to reduce noise impacts from the existing rail
system and provide an increasing benefit into the future as rail traffic increases. Project
construction for the Chesterfield crossing began in January 2018. The City also completed the
Quiet Zone Feasibility Study to evaluate implementation of extending the “quiet zone” along the
entire corridor.
Rail Corridor Vision Study - Approved by the City Council in February 2018, the Rail Corridor
Vision Study is the centerpiece of the Coastal Mobility and Livability Study (CMLS), a broad
effort to examine mobility issues and opportunities in the Encinitas coastal rail corridor.
El Portal Pedestrian Rail Crossing - This project will complete the design and construction of a
grade separated pedestrian and bicycle rail crossing near El Portal Street in Leucadia.
Verdi Undercrossing – This project consists of a rail undercrossing at Verdi Avenue in Cardiff –
the project is in design and funding is being sought for construction.
3. Improve connectivity and mobility for all users
Coastal Mobility and Livability Working Group - On May 18, 2016, the City Council authorized
the City Manager to refine the scope of work to achieve the project goals and provide for
coordinated public engagement between three mobility studies: the Rail Corridor Vision Study,
Active Transportation Plan (ATP) and the Coastal Business Districts Parking Study. With
adoption of Resolution No. 2016-54 on July 13, 2016, the Council approved the formation of a
Coastal Mobility and Livability Work Group (CMLWG). The Working Group supports all three
mobility studies. The primary function of the group is for members to help shape the direction of
a number of upcoming projects located in the rail corridor and build community consensus for the
final corridor vision; members of the Working Group also are directly responsible to inform their
respective stakeholders, to allow for consistent, regular communication between all interested
parties. The next step is to work on the ATP implementation plan that will prioritize the projects
proposed in the ATP. The completion and implementation of the ATP is an action in the CAP.
Leucadia 101 Streetscape - This project provides streetscape improvements along North Coast
Highway 101 from A Street to La Costa Avenue. The project includes pedestrian and bicycle
TRANSMITTAL LETTER • INTRODUCTORY SECTION
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improvements, roundabouts, road diet and tree plantings throughout the entire corridor. The City
Council approved the required entitlement permits and certified the Environmental Impact Report
in March 2018.
B Street Sidewalk Improvements - This project constructs new sidewalk, pedestrian ramps, curb
and gutter and landscaping on the north side of B Street from Highway 101 to Moonlight Beach.
Santa Fe Drive South Sidewalk and San Dieguito Academy Frontage Improvements - This
project involves construction of curb, gutter, and sidewalk on the south side of Santa Fe Drive
from Gardena Road to Mackinnon Avenue. In addition, accessible curb ramps will be provided
on both sides of the Santa Fe Drive/Mackinnon Avenue intersection, and landscaping
improvements will be provided on the north side of the street, fronting San Dieguito Academy
School.
Community Bikeshare - On March 14, 2018, Council authorized the City to enter into a
Memorandum of Understanding with the cities of Del Mar, Solana Beach, Carlsbad, and
Oceanside, as well as Camp Pendleton and the North County Transit District (NCTD) to develop
and implement a one-year pilot regional bikeshare program. Staff from the partner cities prepared
a Request for Information and selected a recommended vendor to launch bikeshare in North
County. In FY 2018-19, staff will bring to Council a Mobility Ordinance giving the City authority
to regulate and enable mobility services. Shortly thereafter, Council will have to option to enter
into a license agreement with the preferred vendor and launch an organized bikeshare program.
Americans with Disabilities Act (ADA) Transition Plan - Under Title II of the ADA, public
agencies are required to conduct a self-evaluation of their programs and services in order to
identify any obstacles or barriers to accessibility. In 2013, the City and San Dieguito Water
District conducted a self-evaluation of its programs, services, administrative employment
policies, and facilities on public property and developed a Self-Evaluation and Transition Plan.
The City/District recognizes that ADA compliance is an ongoing responsibility and will be
updating the Self Evaluation and Transition Plans in 2019.
4. Promote green initiatives and protect natural resources.
Climate Action Plan - The updated Climate Action Plan (CAP) was adopted by Council on
January 17, 2018. City staff will continue to implement projects, programs, and initiatives that
support the goals of the CAP and reduce greenhouse gas (GHG) emissions. Some of the major
CAP actions that will be advance in the coming year include:
• Develop and launch a Community Choice Energy (CCE) Program - this effort
will involve completion of the four-city CCE Feasibility Study, consideration of
the formation of a Joint Powers Authority, preparation of an Implementation
Plan, and CCE start-up.
• Development of building ordinances to require and encourage reduction of fossil
fuel energy use - The selected consultant is currently preparing the State-required
cost effectiveness studies for the building ordinances proposed. Once completed,
ordinances will be drafted and brought to Council for consideration. The
ordinances will address solar photovoltaic energy production, installation of
electric vehicle charging stations, energy efficient water heating energy and other
efficiency measures for commercial and residential properties.
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• Implement a local shuttle system - Staff will evaluate options to enhance local
transit options and bring to Council for consideration a City-supported public
transit option that supplements existing NCTD rail and bus programs.
• Support initiatives to divert food waste and recycling out of the landfill - Support
EDCO, the City’s franchise waste hauler, in developing an aerobic digester
facility and coordinating curbside pickup of all organic waste, including food
waste. Continue to fund and support community education and outreach
programs that encourage the diversion of food waste through composting and
other means and encourage proper recycling and waste disposal.
• Develop a Leaf Blower Ordinance - Bring to Council for consideration an
ordinance regulating the use of two-stroke leaf blowers and initiating the phase
out of leaf blower greenhouse gas emissions.
Net Zero Energy Footprint - In the fall of 2018 the Public Works Department issued a Request for
Proposals to engage an energy company to develop a plan to bring the City to a net zero energy
footprint. This was in response to a major goal outlined in the Climate Action Plan. After
conducting interviews with several energy firms, a plan was developed to engage a company to
survey all city facilities and propose energy savings measures and then design a solar system to
offset the remaining demand. The recommendation goes to Council in January 2019.
Beacon’s Beach Access - This project involves improvements to the parking lot and beach access
from Neptune Avenue to Beacon’s Beach to mitigate the impacts of the area landslide.
Standard Pacific Park - In 2001 as part of the Maravu Development, the Standard Pacific parcel
was conveyed to the City for parkland mitigation. On October 26, 2016, the Parks, Beaches,
Trails and Open Space Master Plan was approved by City Council. The plan identified the
neighborhood around the Standard Pacific park site as an area that offered low service for
recreational opportunities. A park in this area would afford the residents more opportunity to
participate in park and recreation activities. On June 28, 2017 City Council awarded a contract to
design Standard Pacific Park. The scope of work in the contract includes development of plans,
specifications, permits, and environmental documentation for the Standard Pacific park site. The
final design concept was approved by City Council on March 21, 2018. The final design
documents are being completed and will be submitted to obtain the permit to build the park.
Construction of the park is scheduled to begin late spring 2019.
Pacific View - The City purchased the Pacific View Elementary School site in December 2014.
Proposals were solicited for an operating partner for use of the site and the City Council selected
the Encinitas Arts, Culture and Ecology Alliance in September 2015. The Alliance proposes to
use the site for a self-sustaining non-profit arts, culture, and ecology center utilizing the buildings
and grounds, and incorporating the historic schoolhouse into the broader site to increase its
visibility and significance. The Alliance has submitted the entitlements for the property and is
working towards a lease with the City for the site.
Electronic Plan Submittal & Review - This project, which is a major phase of the EnerGov
project, is underway for the Development Services Department. The transition to paperless
submissions will greatly reduce paper costs, scanning of documents and trips to City Hall. The
public will be able to conduct business online, submit plan sets from home or office, check on
project status in real time, correspond with staff on plan check results through a common portal,
and other customer service-oriented activities.
TRANSMITTALLETTER•INTRODUCTORYSECTIONAWARDSANDACKNOWLEDGEMENTSTheGovernmentFinanceOfficersAssociation(GfOA)awardeditsCertificateofAchievementforExcellenceinfinancialReportingtotheCityofEncinitasforitsComprehensiveAnnualFinancialReportforthefiscalyearendedJune30,2018.TheCitybelievesthattheFY2017-18ComprehensiveAnnualfinancialReportcontinuestomeettheGFOAcriteriafortheaward.Lastly,wedeeplyappreciatethededicationandleadershipoftheMayorandCouncilMemberswhohaveconsistentlysupportedourgoalofexcellenceinallaspectsoffinancialmanagement.ThecompletionofthisreportcouldnothavebeenaccomplishedwithoutthededicationandhardworkoftheentirestaffinthefinanceDepartment.SpecialrecognitiongoestofinanceReportingteam,StellaHuang,MonicaAttili,AlexisAngelini,JoannaBradfordandLizGyokeryfortheirworkwiththeauditorsandthecoordinationofthepreparationofthisreport.Rspectfullsubmitted,KarenP.BrustTeresaS.McBroomeCityManagerDirectoroffinance/CityTreasurerix
CITY COUNCIL
Mayor Catherine S. Blakespear
Deputy Mayor Joe Mosca
Council Member Tasha Boerner Horvath
Council Member Tony Kranz
Council Member Mark Muir
EXECUTIVE TEAM MEMBERS
City Manager Karen P. Brust
Assistant City Manager Mark Delin
City Clerk/Legislative Services Director Kathy Hollywood
Public Works Director Carl Quiram
Director of Finance/City Treasurer Teresa S. McBroome
Fire Chief Michael Stein
Human Resources Director Tom Bokosky
IT Manager Wendy Flynn
Development Services Director Brenda Wisneski
Risk Manager Jace Schwarm
Parks, Recreation & Cultural Arts Director Jennifer Campbell
LIST OF CITY OFFICIALS
As of June 30, 2018
x
xi
Government FinanceOfficersAssociationCertificateofAchievementforExcellenceinFinancialReportingPresentedtoCityofEncinftasCaliforniaForitsComprehensive AnnualFinancial ReportfortheFiscalYearEndedJune30,2017CL%PExecutive Director/CEOxii
FINANCIAL SECTION
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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, 2018, 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.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not audit
the Investment in Joint Ventures of the R.E. Badger Joint Powers Authority, R.E. Badger Financing
Authority, and Encina Wastewater Authority, which collectively represent the following percentages of
assets, net position, and expenses of the following opinion units:
Opinion Unit Assets Net Position Expenses
Business-type Activities 12.83% 18.49% 4.42%
Each Major Enterprise Fund:
San Dieguito Water District 34.00% 44.88% 16.04%
Encinitas Sanitary Division 16.55% 16.78% 33.55%
Those statements were audited by other auditors whose reports have been furnished to us, and our
opinions, insofar as they relate to the amounts included for investment in joint ventures, are based solely on
the reports 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.
4365 Executive Drive, Suite 710, San Diego, California 92121
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
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.
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, 2018, 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.
Emphasis of a Matter
Implementation of GASB Statement No. 75
As discussed in Note 14 to the financial statements, the City implemented Governmental Accounting
Standards Board (“GASB”) Statement No. 75, Accounting and Financial Reporting for Postemployment
Benefits Other Than Pensions. The adoption of this standard required retrospective application of
previously reported net position and reclassification of certain accounts as of July 1, 2017 as described in
Note 18 to the financial statements. In addition, the net other postemployment benefit (OPEB) liability is
reported in the Statement of Net Position in the amount of $9,460,796 as of the measurement date. Net
OPEB liability is calculated by actuaries using estimates and actuarial techniques from an actuarial
valuation as of June 30, 2017, the measurement date. Our opinion is not modified with respect to this
matter.
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 - Pension, Schedules of Changes in the Net OPEB Liability and Related Ratios, and
Schedules of Contributions – OPEB on pages 5 through 18 and 125 through 138 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.
To the Honorable Mayor and Members of the City Council
of the City of Encinitas
Encinitas, California
Page 3
3
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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 27, 2018, 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 solely 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
effectiveness of the City’s 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 27, 2018
4
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City of Encinitas
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2018
5
The Management’s Discussion and Analysis (“MD&A) provides an overview of the City of Encinitas’
(“City”) activities and financial performance for the fiscal year ended June 30, 2018. 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 the
MD&A in conjunction with the transmittal letter, the basic financial statements and the accompanying
notes to those financial statements.
FINANCIAL HIGHLIGHTS
The City’s total assets increased overall by $24.0 million. This is composed of a $5.3 million
increase in governmental activities and an $18.7 million increase in business-type activities.
The City’s total net position increased overall by $4.0 million. Total assets increased $24.0
million, total liabilities increased $26.5 million, deferred outflows increased $7.0 million and
deferred inflows increased $0.5 million.
The City’s total revenues increased $9.8 million from 2017.
o Governmental activities revenues increased $7.3 million
o Business-type activities revenues increased $2.5 million
The City’s total expenses increased $3.6 million from 2017.
o Governmental activities expenses increased $4.4 million
o Business-type activities expenses decreased $0.8 million
The City implemented the provisions of GASB Statement No. 75, Accounting and Financing
Reporting for Postemployment Benefit Plans Other Than Pension, during the current year. The
impact of this pronouncement on the City’s financial statements can be found in Note 14 to the
basic financial statements and Note 6 to the required supplementary information (RSI).
The City’s net pension liability for June 30, 2018 was $56.1 million, an increase of $6.0 million
from June 30, 2017, or 12.0 percent. The funding ratio for the City’s Miscellaneous pension plan
with CalPERS was 74.93 percent, 74.69 percent for the Safety pension plan, and 69.13 percent
for the SDWD pension plan.
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis is intended to serve as an introduction to the City’s basic financial
statements. The basic financial statements are comprised of the government-wide financial statements,
the fund financial statements, and the notes to the basic financial statements. The two sets of financial
statements provide two different views of the City’s financial activities and positions.
The financial statements presented herein include all the activities of the 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).
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
6
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.
Reporting the City as a Whole
The Statement of Net Position and the Statement of Activities
The government-wide financial statements provide a long-term view of the City’s activities as a whole,
and are composed of the statement of net position and the statement of activities and changes in net
position. These statements are prepared on 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 recorded, regardless of when cash is received or paid.
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 net position is one
indicator of whether the financial condition of the City is improving or declining.
The statement of activities and changes in net position 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. Examples include revenues pertaining to uncollected taxes and expenses
pertaining to earned but unused vacation and sick 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, Planning, Engineering and Parks and Recreation. In
Fiscal Year 2017-18, the City reorganized some departments and functions. The Building and Planning
divisions, and Engineering division, are now Development Services-Planning, and Development
Services-Engineering. Property and sales and use 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 (Unaudited) (Continued)
For the Year Ended June 30, 2018
7
Reporting the City’s Most Significant Funds
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.
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,
Infrastructure Improvements and other nonmajor governmental funds. The City reports the General
Fund, the Capital Improvements Fund, and the Infrastructure Improvement 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 governmental fund capital improvements, as well
as work projects such as long-term consultant studies. The Infrastructure Improvements Special
Revenue Fund accounts for financial resources from local, state and federal grants which are used
primarily to fund capital improvements. All of these expenditures are categorized as capital outlay.
Capital spending totaled $12.9 million this fiscal year, an increase of approximately $0.7 million from
the prior year. Further discussion of the City’s capital program is included in the section below entitled
Capital Assets and the 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 Fund is 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
Infrastructure Improvements Special Revenue 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. Unlike
the government-wide financial statements, governmental funds financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available
at the end of the fiscal year. Such information may be useful in evaluating the City’s capacity to finance
its programs in the near future. 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 funds balance sheet and the governmental funds statement of
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
8
revenues, expenditures, and changes in fund balance present information separately for the General
Fund, the Capital Improvements Capital Projects Fund, and the Infrastructure Improvements Special
Revenue Fund, which are all classified as major funds. These statements also report several individual
governmental funds classified as nonmajor funds, such as Special Revenue and Debt Service funds,
which are combined into a single, aggregated presentation. Individual fund data for each of the
nonmajor governmental funds is provided in the supplementary information section.
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 the
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.
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. The City’s fiduciary activities are
reported in a separate statement of fiduciary net position. These activities are excluded 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 30,2018 is compared to the results for 2017 in Table 1.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
9
Net position represents the simplest test of financial health for the City, indicating the excess or deficit
of assets, and deferred outflows of resources, over liabilities and deferred inflows of resources. Net
position for the City as a whole increased 1.3 percent from $319.4 million at June 30, 2017, to $323.4
million at June 30, 2018.
The overall increase in total assets is $24.0 million when compared to the previous year. The
governmental activities total assets increased $5.3 million compared to the previous year with an
increase in cash and investments offset by a decrease in restricted cash and investment, and
inventory and prepaid items. The business-type activities total assets increased $18.7 million
compared to the previous year with increases in both investment in joint ventures and capital
assets. The increase is primarily due to an increase in investments to the San Elijo Joint Powers
Authority for $14.0 million and an increase of $1.4 million to the Encina Joint Facilities. The overall
business-type capital assets also increased $1.5 million compared to the previous year.
The overall increase in total liabilities is $26.5 million when compared to the previous year. This is
primarily attributable to a $7.8 million increase in long-term liabilities and a $6.0 million increase in
net pension liabilities for governmental and business-type activities. Additionally, the
implementation of GASB No. 75 this year, which requires the City to report its other
postemployment benefits (OPEB), adds $9.4 million of liabilities.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
10
The increase in total assets of $24.0 million, total liabilities of $26.5 million, deferred inflows of $0.5
million and deferred outflows of $7.0 million results in an increase in the City’s total net position by $4.0
million, or approximately 1.3 percent, compared to 2017.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
11
Governmental Activities – Chart 1 reflects 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, Development Services
(Planning and Engineering) and Parks, Recreation and Cultural Arts. 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.
Note: Program revenues only include charges for services, operating grants and contributions, capital grants and contributions; not
include general revenues.
Chart 2 reflects that Property Taxes, Sales and Use Taxes, Charges for Services, Capital Grants and
Contributions, and Other Taxes are the top five categories of total revenue and comprise 95 percent of
funding for governmental activities. The remaining categories include Operating Grants and
Contributions, and Use of Money and Property.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
12
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 by $7.8 million
from the last fiscal year. Overall revenues increased $2.5 million while overall expenses decreased
$0.8 million from Fiscal Year 2016-17. Refer to Table 2, Statement of Activities and Changes in Net
Position.
The Statement of Activities and Changes in Net Position for business-type activities reflects an increase
of $1.8 million in program revenues and an increase of $0.7 million in general revenues from the
previous year. The primary reason for the increase in operating revenue during Fiscal Year 2017-18
was attributable to charges for services from the San Dieguito Water District of $2.0 million. The City’s
joint venture in the Cardiff Sanitary Division and Encinitas Sanitary Division increased $3.0 million offset
by a decrease of $0.9 million from the San Dieguito Water District in net income compared to the
previous year. The San Dieguito Water District expenses decreased $0.9 million in supply expenses
offset by an increase of $0.7 million in facility operation and maintenance cost, along with $0.2 million
from the CSD.
Overall, program revenues and general revenues exceeded program expenses during Fiscal Year
2017-18 resulting in a total net change of $3.3 million.
Chart 3 below compares program revenue from business-type activities to program expenses. Water
and wastewater operations operated at a surplus, as shown in the Statement of Activities and Changes
in Net Position.
Note: Program revenues only include charges for services, operating grants and contributions, capital grants and contributions; not
include general revenues.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
13
GENERAL FUND BUDGETARY HIGHLIGHTS
General Fund Revenues $2.2 million above projections
General Fund actual revenues of $73.8 million were $3.0 million, or 4.2 percent, above the original
budget and $2.2 million, or 3.1 percent, above the final budget. Actual revenues were higher by $2.2
million, or 6.4 percent, when compared to FY 2016-17.
Property taxes made up 61 percent of the General Fund revenue budget. The City of Encinitas receives
approximately 24 cents of each dollar of property taxes revenue generated in the City. Current secured
property taxes, along with other property tax categories, exceeded projections by $1.5 million, or 3.4
percent, compared to the final budget. The continued growth in assessed values from transfers of
ownership and the full two percent inflation adjustment applied under Proposition 13 contributed to the
increase in property taxes revenue. The City experienced a net taxable value increase of 6.2 percent
for the FY 2017-18 tax roll, which was slightly more than countywide at 6.0 percent.
Documentary transfer tax exceeded projections by $105,091, which was related to the values of homes
sold and the number of homes sold. Sales and use taxes is the City’s second largest revenue source
and actual revenue received was under projections by $11,371, which is less than a one percent
decrease compared to the final budget. Despite the budget shortfall, total sales and use taxes revenue
received in FY 2017-18 was $702,444 more, or 5.6 percent higher, than the amount received in FY
2016-17.
Transient occupancy tax (TOT) is apportioned 80 percent to the General Fund and 20 percent to the
Coastal Zone Management Fund for sand replenishment and shore stabilization. TOT revenue
exceeded projections by $348,191, an increase of 20.6 percent from the final budget. The City
conducted an audit in 2017 of rentals marketed through various marketplace and hospitality service
websites that resulted in additional units enrolled in the program and increased TOT collections for
these rentals.
Overall, franchise taxes were under projections by $76,112, which was a result of a reduction in taxes
collected due to a declining number of paid services not meeting projections and a decrease in total
electric consumption. The franchise fee revenue is generated from public utility sources, trash collection
franchises, and telecommunication franchises conducting business within the city limits. The total
revenue collected was $50,217 more than last year.
Licenses and permits were under projections by $6,201. This is due, in part, to fewer taxi companies
renewing operating permits and current registrants reporting reduced cab counts. In addition, the
number of alarm permits issued was lower than anticipated. Intergovernmental revenue was higher
than projected by $176,438. Additional revenue was received from agencies participating in the
Carlsbad Watershed Water Quality Improvement Program cost sharing agreement.
Overall charges for services revenue exceeded projections by $179,605, primarily from engineering
fees, which was $400,985 higher than projected due to conservative budgeting. However, revenue
collected from recreation and art program fees and sponsorships was $202,550 lower than projected,
which was due to fewer registrations than anticipated.
Fines and penalties, which include vehicle code and red light violations, were under projections by
$42,437. Use of money and property, which include investment earnings, exceeded projections by
$69,678, due to a higher portfolio amount and a slight increase in interest rates.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
14
General Fund Expenditures $3.7 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 $3.7 million, or 5.7 percent
compared to the final budget. The savings was primarily from personnel costs resulting from vacancies
and reorganizations across City departments, and savings in the contracts and services category. In FY
2017-18 the Planning and Building Department, and Engineering divisions were merged into a single
department, Development Services. Departments also saved in materials and supplies expenditures.
Overall, all departments, except non-departmental, were one percent to 20 percent below budget.
Actual General Fund expenditures were $61.0 million compared to prior year’s actual of $56.8 million.
Excess of Revenues over Expenditures $5.9 million above projections
Actual revenues over expenditures were approximately $12.9 million, compared to a budget of $7.0
million. This does not take into account other financing sources and uses which are 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. 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 $33,591 primarily due to gasoline taxes receipts
being 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 $1.1 million.
Appropriations for capital projects from the General Fund totaled $5.8 million in 2018.
Transfers out for debt service totaled $3.7 million which was less than the $4.0 million budgeted.
Analysis of Fund Balance and Changes in Fund Balance
Fund balance was projected to be $22.9 million as of June 30, 2018, a scheduled decrease of about
$2.7 million. Actual fund balance was $27.3 million, or $4.4 million higher than projected.
There was an excess of revenues over expenditures of $12.9 million. Factoring in transfers for debt
service payments of $3.7 million, capital expenditures of $5.8 million and other transfer activity of $1.8
million, the net result is an increase in total fund balance of $1.6 million at year end.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
15
CAPITAL ASSETS AND THE CAPITAL IMPROVEMENT PROGRAM
As of June 30, 2018, the City had approximately $336.6 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, $217.7 million is classified as capital assets under the category of governmental activities,
and $59.1 million is classified as capital assets of business-type activities. In addition, there are $59.8
million of assets under business-type activities classified as investments in joint ventures. These
investments consist mainly of capital assets belonging to related governmental agencies where the City
holds an equity interest in the joint venture. The assets are primarily water and wastewater treatment
facilities.
Governmental Activities
Capital Assets: $217.7 million
The City has three Capital Improvements Capital Projects Funds to monitor capital improvements
projects 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 recorded as additions to the appropriate capital asset category at year
end.
The City spent approximately $12.9 million this fiscal year on capital improvement projects consisting of
a variety of different projects that were either in development or under construction. The primary
emphases this fiscal year were the Moonlight Beach Marine Safety Tower, El Camino drainage
augmentation, Leucadia Boulevard and El Camino Real traffic signals upgrade, Encinitas Boulevard
improvements, parkland and drainage improvements, the North Coast Highway 101 Streetscape, and
ongoing pavement overlay projects.
Business-type Activities
Capital Assets: $59.1 million
The City accounts for the acquisition and construction of capital assets for its water and wastewater
operations under its proprietary-type funds 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 capital assets. The criteria is the same as the City’s criteria ($100,000 threshold and a
minimum five-year life). Eligible capital expenses are then capitalized to the construction-in-progress
account, while non-eligible expenses are reclassified as operating expenses. Total amounts expensed
on completed projects are then transferred to the appropriate capital asset class.
The City’s Affordable Housing Fund carries its investment of about $2.6 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.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
16
Investment in Joint Ventures: $59.8 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 is added to the investment account at the end of the fiscal year. SDWD also
makes monthly payments to cover its proportional share of annual operating costs.
SDWD also holds an equity interest in the R.E. Badger Water Facilities Financing Authority. The
primary reason for this investment is to provide financing for the acquisition and construction of capital
improvements related to the R.E. Badger Joint Facilities. SDWD has a proportional share of assets in
the debt service reserve. 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 (SEJPA) Joint Facilities. CSD makes capital contributions each year for the
replacement and improvement of the SEJPA Joint Facilities, which is added to its investment account
at the end of the fiscal year. CSD also makes quarterly payments to cover its proportional share of
annual operating costs. The treatment facilities, also serving other local agencies, bill quarterly for their
proportional 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 (EWA) Joint Facilities. ESD makes capital contributions each year for the
replacement and improvement of the EWA Joint Facilities. These capital contributions are additions to
the investment account at the end of the fiscal year. ESD also makes quarterly payments to cover its
proportional share of annual operating costs
DEBT ISSUANCE AND ADMINISTRATION
The City has a total of $75.6 million of long-term debt for both governmental and business-type
activities as shown in Note 8 of the basic financial statements. The governmental activities debt totaling
$53.0 million include $1.6 million in capital leases, $46.9 million in bonded debt and $4.5 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 $22.6 million and
includes $22.5 million in bonded debt and $0.1 million in compensated absences. Of the $75.6 million
total debt that is due, $7.1 million is due within one year.
Governmental Activities $53.0 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. Debt payments for all of these bonds are due semi-annually at fixed amounts,
and the debt matures at various times through 2031. The City’s total annual debt service of
approximately $3.8 million represents approximately 5.3 percent of annual General Fund operating
revenues.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
17
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 for roof repair. Annual payments on
that lease are $183,556. Additionally, the City currently leases four fire engine vehicles and the annual
lease payments in FY 2017-18 were $449,494.
Business-type Activities $22.5 million
SDWD and CSD carry long-term debt issued to construct capital improvements to both their distribution
and collection systems and their Joint Facilities. On July 6, 2017, SEJPA on behalf of its members (the
CSD division and the City of Solana Beach) issued 2017 Revenue Bonds for the purpose of funding
facilities and improvements as part of SEJPA’s capital improvements. CSD is responsible for the
repayment of the loan for $11,057,500. 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 2017 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 2017 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 over a two-year cycle, with legal appropriations set for the first year only. The
operating and capital budgets for Fiscal Year 2018-19 were appropriated by the City Council in June
2018.
With the City Council’s approval in March 2017, the Engineering Division and Storm Water functions
were moved out of the City’s Public Works Department and into the Planning and Building Department,
and was renamed as the Development Services Department during FY 2017-18.
The FY 2017-18 actual results, when compared to the adopted projections and appropriations, showed
revenues above forecasts and expenditures significantly under budget. FY 2018-19 revenues are
expected to increase slightly above FY 2017-18 actual levels. Expenditures are budged to increase
modestly above FY 2017-18 levels. Next year’s budget includes a two percent adjustment to employee
compensation, which is the largest portion of the General Fund budget. Debt service costs will remain
consistent with FY 2017-18.
City of Encinitas
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2018
18
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is intended to provide our residents, 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.
BASIC FINANCIAL STATEMENTS
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20
GOVERNMENT-WIDE
FINANCIAL STATEMENTS
21
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22
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments (Note 3)80,023,944$ 41,088,492$ 121,112,436$
Restricted cash and investments with fiscal agent 928 18,293 19,221
Receivables (Note 4)4,813,000 2,451,277 7,264,277
Inventory and prepaid items 278,979 334,706 613,685
Total current assets 85,116,851 43,892,768 129,009,619
Noncurrent assets:
Restricted cash and investments with fiscal agent - - -
Internal balances 72,199 (72,199) -
Investments in joint ventures (Note 5)- 59,804,194 59,804,194
Long-term receivable (Note 6)451,328 - 451,328
Other assets (Note 7)- - -
Capital assets (Note 7):
Non-depreciable 78,170,728 15,309,624 93,480,352
Depreciable, net 139,502,569 43,835,385 183,337,954
Total capital assets, net 217,673,297 59,145,009 276,818,306
Total noncurrent assets 218,196,824 118,877,004 337,073,828
Total assets 303,313,675 162,769,772 466,083,447
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on bond refunding 344,907 - 344,907
Pension related deferred outflows of resources (Note 13)16,263,968 2,148,106 18,412,074
OPEB related deferred outflows of resources (Note 14)958,415 53,291 1,011,706
Total deferred outflows of resources 17,567,290 2,201,397 19,768,687
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 7,811,306 1,511,436 9,322,742
Interest payable 459,655 246,858 706,513
Unearned revenue 1,075,665 394 1,076,059
Deposits and other liabilities 4,760,947 419,187 5,180,134
Long-term liabilities - due within one year (Note 8)5,173,305 1,927,577 7,100,882
Total current liabilities 19,280,878 4,105,452 23,386,330
Noncurrent liabilities:
Long-term liabilities - due in more than one year (Note 8)47,823,812 20,723,229 68,547,041
Aggregate net pension liability (Note 13)48,970,042 7,141,232 56,111,274
Net OPEB liability (Note 14)9,145,131 315,665 9,460,796
Total noncurrent liabilities 105,938,985 28,180,126 134,119,111
Total liabilities 125,219,863 32,285,578 157,505,441
DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding - 88,101 88,101
Pension related deferred inflows of resources (Note 13)4,209,338 447,916 4,657,254
OPEB related deferred inflows of resources (Note 14)155,076 7,074 162,150
Total deferred inflows of resources 4,364,414 543,091 4,907,505
NET POSITION
Net investment in capital assets 169,553,838 36,547,324 206,101,162
Restricted:
Community development 1,309,301 - 1,309,301
Debt service 928 156 1,084
Housing - 421,782 421,782
Capital projects 18,469,086 - 18,469,086
Total restricted 19,779,315 421,938 20,201,253
Unrestricted 1,963,535 95,173,238 97,136,773
Total net position 191,296,688$ 132,142,500$ 323,439,188$
Primary Government
City of Encinitas
June 30, 2018
Statement of Net Position
See accompanying Notes to the Basic Financial Statements.23
Operating Capital Total
Charges for Grants and Grants and Program
Functions/Programs Expenses Services Contributions Contributions Revenues
Primary government:
Governmental activities:
General government 14,403,144$ 1,815,086$ 428,556$ -$ 2,243,642$
Public safety 30,762,894 1,421,393 254,582 - 1,675,975
Public works 8,325,467 394,647 2,254,981 4,363,833 7,013,461
Planning services 8,741,589 3,262,604 281,178 131,350 3,675,132
Engineering services 7,492,540 1,874,562 - - 1,874,562
Parks and recreation 8,429,448 1,405,704 33,830 356,640 1,796,174
Interest on long-term debt 1,755,100 - - - -
Total governmental activities 79,910,182 10,173,996 3,253,127 4,851,823 18,278,946
Business-type activities:
Cardiff Sanitary Division 3,086,434 4,885,227 - 195,794 5,081,021
San Dieguito Water District 13,800,288 16,852,732 - 232,293 17,085,025
Encinitas Sanitary Division 1,652,061 2,711,075 - 132,564 2,843,639
Affordable Housing 1,464,181 225,468 1,093,800 - 1,319,268
Total business-type activities 20,002,964 24,674,502 1,093,800 560,651 26,328,953
Total primary government 99,913,146$ 34,848,498$ 4,346,927$ 5,412,474$ 44,607,899$
Program Revenues
Statement of Activities and Changes in Net Position
City of Encinitas
For the Year Ended June 30, 2018
See accompanying Notes to the Basic Financial Statements.
24
Governmental Business-type
Functions/Programs Activities Activities Total
Primary government:
Governmental activities:
General government (12,159,502)$ -$ (12,159,502)$
Public safety (29,086,919) - (29,086,919)
Public works (1,312,006) - (1,312,006)
Planning services (5,066,457) - (5,066,457)
Engineering services (5,617,978) - (5,617,978)
Parks and recreation (6,633,274) - (6,633,274)
Interest on long-term debt (1,755,100) - (1,755,100)
Total governmental activities (61,631,236) - (61,631,236)
Business-type activities:
Cardiff Sanitary Division - 1,994,587 1,994,587
San Dieguito Water District - 3,284,737 3,284,737
Encinitas Sanitary Division - 1,191,578 1,191,578
Affordable Housing - (144,913) (144,913)
Total business-type activities - 6,325,989 6,325,989
(61,631,236) 6,325,989 (55,305,247)
General revenues:
Taxes:
Property taxes and documentary transfer taxes 46,311,814 1,030,168 47,341,982
Sales and use taxes 13,252,053 - 13,252,053
Transient occupancy taxes 2,562,484 - 2,562,484
Franchise taxes 2,587,443 - 2,587,443
Total taxes 64,713,794 1,030,168 65,743,962
Intergovernmental - unrestricted 97,163 - 97,163
Use of money and property 958,172 (446,745) 511,427
Gain on disposal of capital assets 61,400 8,285 69,685
Other 452,275 1,247,955 1,700,230
Transfers 20,018 (20,018) -
Total general revenues and transfers 66,302,822 1,819,645 68,122,467
Changes in net position 4,671,586 8,145,634 12,817,220
Net position:
Beginning of year, as restated (Note 18)186,625,102 123,996,866 310,621,968
End of year 191,296,688$ 132,142,500$ 323,439,188$
Statement of Activities and Changes in Net Position (Continued)
City of Encinitas
For the Year Ended June 30, 2018
Primary Government
and Changes in Net Position
Net (Expense) Revenue
See accompanying Notes to the Basic Financial Statements.
25
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26
FUND FINANCIAL STATEMENTS
27
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28
GOVERNMENTAL FUND
FINANCIAL STATEMENTS
29
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30
Capital Infrastructure
Improvements Improvements Other Total
General Capital Projects Special Revenue Governmental Governmental
Fund Fund Fund Funds Funds
ASSETS
Cash and investments 33,687,791$ 29,918,560$ 796,934$ 8,798,295$ 73,201,580$
Receivables 4,174,221 99,050 152,246 373,053 4,798,570
Due from other funds 618,216 14,405,810 - - 15,024,026
Inventory and prepaid items 238,507 - - - 238,507
Long-term receivable 28,696 - - 422,632 451,328
Restricted cash and investments 251 - - 677 928
Total assets 38,747,682$ 44,423,420$ 949,180$ 9,594,657$ 93,714,939$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND
FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities 6,021,430$ 1,328,378$ 3,479$ 317,457$ 7,670,744$
Unearned revenue 691,733 - 383,932 - 1,075,665
Due to other funds - - 14,713,562 238,265 14,951,827
Deposits and other liabilities 4,741,061 - - 19,886 4,760,947
Total liabilities 11,454,224 1,328,378 15,100,973 575,608 28,459,183
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - 422,632 422,632
Total deferred inflows of resources - - - 422,632 422,632
Fund Balances:
Nonspendable 267,203 - - - 267,203
Restricted 251 25,334,440 793,455 8,596,417 34,724,563
Committed 14,691,792 17,760,602 - - 32,452,394
Unassigned 12,334,212 - (14,945,248) - (2,611,036)
Total fund balances 27,293,458 43,095,042 (14,151,793) 8,596,417 64,833,124
Total liabilities, deferred inflows
of resources, and fund balances 38,747,682$ 44,423,420$ 949,180$ 9,594,657$ 93,714,939$
Balance Sheet
Governmental Funds
June 30, 2018
City of Encinitas
Major Funds
See accompanying Notes to the Basic Financial Statements.
31
Total Fund Balances - Total Governmental Funds 64,833,124$
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 $3,628,621 reported in internal service funds).
Land 61,862,474
Land easements 2,300,434
Construction in progress 14,007,820
Public facilities 106,466,354
Vehicles, equipment and machinery 2,018,113
Infrastructure 115,707,421
Less: Accumulated depreciation (88,317,940)
Total capital assets adjustment 214,044,676
Deferred loss on refunding in the governmental activities were not financial resources and therefore were not
reported in governmental funds. 344,907
Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not
reported as a liability in the Governmental Funds Balance Sheet.(459,655)
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 $802,426 reported in internal service funds):
Amount reported in Government-wide Statement of Net Position:
2008 Civic Center roof replacement lease (831,133)
2013 Community Park Bonds, net of unamortized premium of $87,500 (6,342,600)
2014 Moonlight Beach Tower Series A Bonds, net of unamortized discount of $28,003 (2,871,997)
2014 Pacific View Series B Bonds, net of unamortized discount of $140,580 (9,619,420)
2015 Library Refunding Bonds, net of unamortized premium of $698,669 (15,358,669)
2017 Park Refunding Bonds, net of unamortized premium of $1,263,120 (12,638,121)
Claims payable (2,513,481)
Compensated absences (2,019,270)
Total long-term liabilities (52,194,691)
Aggregate net pension liability is not due and payable in the current period and therefore is not required to be
reported in the governmental funds. (48,970,042)
Actuarially determined pension deferred outflows of resources are reported in the government-wide statements
but are not reported in the governmental funds. 16,263,968
Actuarially determined pension deferred inflows of resources are reported in the government-wide statements but
are not reported in the governmental funds. (4,209,338)
Aggregate net OPEB liability is not due and payable in the current period and therefore is not required to be
reported in the governmental funds. (9,145,131)
Actuarially determined OPEB deferred outflows of resources are reported in the government-wide statements but
are not reported in the governmental funds. 958,415
Actuarially determined OPEB deferred inflows of resources are reported in the government-wide statements but
are not reported in the governmental funds. (155,076)
Unavailable revenue deferred inflows of resources are not available for the current period and, therefore, are
deferred in the governmental funds or not recorded in the governmental funds. 422,632
Internal service funds were used by management to charge the costs of risk management, personnel support,
fleet maintenance and vehicle replacement to individual funds. The assets and liabilities of the internal service
funds were included in governmental activities in the Government-wide Statement of Net Position.9,562,899
Net position of governmental activities 191,296,688$
City of Encinitas
June 30, 2018
to the Government-wide Statement of Net Position
Reconciliation of the Governmental Funds Balance Sheet
See accompanying Notes to the Basic Financial Statements.
32
Capital Infrastructure
Improvements Improvements Other Total
General Capital Projects Special Revenue Governmental Governmental
Fund Fund Fund Funds Funds
REVENUES:
Taxes and assessments 62,827,496$ -$ 518,116$ 2,499,554$ 65,845,166$
Licenses and permits 239,799 - - - 239,799
Intergovernmental 795,578 131,350 4,799,952 1,239,313 6,966,193
Development impact fees - - - 1,003,123 1,003,123
Charges for services 7,280,374 - - - 7,280,374
Fines, forfeitures and penalties 704,216 - - - 704,216
Use of money and property 807,881 - 23,933 294,838 1,126,652
Other 1,192,914 51,134 - 79,581 1,323,629
Total revenues 73,848,258 182,484 5,342,001 5,116,409 84,489,152
EXPENDITURES:
Current:
General government 11,267,904 - 215,020 730,883 12,213,807
Public safety 29,284,523 - - 193,581 29,478,104
Public works 4,516,723 - - 516,593 5,033,316
Planning services 5,839,578 - - 178,336 6,017,914
Engineering services 3,069,458 - - 434,878 3,504,336
Parks and recreation 6,773,696 - - 1,106,185 7,879,881
Capital outlay 237,264 12,654,274 - 42,458 12,933,996
Debt service:
Principal - - - 2,128,758 2,128,758
Interest and fiscal charges - - - 1,899,328 1,899,328
Total expenditures 60,989,146 12,654,274 215,020 7,231,000 81,089,440
REVENUES OVER
(UNDER) EXPENDITURES 12,859,112 (12,471,790) 5,126,981 (2,114,591) 3,399,712
OTHER FINANCING SOURCES (USES):
Transfers in 1,588,997 19,867,991 4,691,000 4,779,335 30,927,323
Transfers out (12,806,243) (5,288,159) (11,786,185) (2,658,301) (32,538,888)
Total other financing sources (uses)(11,217,246) 14,579,832 (7,095,185) 2,121,034 (1,611,565)
NET CHANGE IN FUND BALANCES 1,641,866 2,108,042 (1,968,204) 6,443 1,788,147
FUND BALANCES:
Beginning of year 25,651,592 40,987,000 (12,183,589) 8,589,974 63,044,977
End of year 27,293,458$ 43,095,042$ (14,151,793)$ 8,596,417$ 64,833,124$
Statement of Revenues, Expenditures, and Changes in Fund Balance
Governmental Funds
For the Year Ended June 30, 2018
City of Encinitas
Major Funds
See accompanying Notes to the Basic Financial Statements.
33
Net Change in Fund Balances - Total Governmental Funds 1,788,147$
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. 6,644,325
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 $525,646 recorded in internal
service funds). (5,827,460)
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.
Principal payment of long-term debt 2,128,758
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 143,006
Deferred amounts on refunding (19,161)
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 (82,521)
Changes in claims payable (399,946)
Changes in the net pension liability (5,100,155)
Changes in the net OPEB liability 459,835
The net effect of various miscellaneous transactions involving pension plans (i.e. deferred outflow/inflow
amortization, contributions after the measurement date) increased Net Position. 5,239,902
The net effect of various miscellaneous transactions involving OPEB plans (i.e. deferred outflow/inflow
amortization, contributions after the measurement date) increased Net Position. (289,351)
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.46,910
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. 11,199
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. (71,902)
Change in net position of governmental activities 4,671,586$
City of Encinitas
For the Year Ended June 30, 2018
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.
34
PROPRIETARY FUND
FINANCIAL STATEMENTS
35
Cardiff San Dieguito Encinitas
Sanitary Water Sanitary
Division District Division
ASSETS
Current assets:
Cash and investments 12,410,060$ 16,103,120$ 12,208,310$
Restricted cash and investments with fiscal agent - 156 -
Accounts and taxes receivable 66,473 2,308,598 26,471
Inventory and prepaid items 3,781 237,791 3,243
Total current assets 12,480,314 18,649,665 12,238,024
Noncurrent assets:
Investment in joint ventures (Note 5) 32,577,725 21,810,960 5,415,509
Capital assets:
Land easements - 3,300,931 -
Public works facility right-of-use - 3,378,700 -
Construction in progress 5,062,657 790,685 2,776,651
Capacity rights, net - 178,293 -
Utility, plant, vehicles, and equipment, net 12,726,791 16,039,345 12,285,351
Total capital assets, net 17,789,448 23,687,954 15,062,002
Total noncurrent assets 50,367,173 45,498,914 20,477,511
Total assets 62,847,487 64,148,579 32,715,535
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension related items (Note 13) - 2,148,106 -
Deferred OPEB related items (Note 14) - 53,291 -
Total deferred outflows of resources - 2,201,397 -
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 223,930 851,121 434,811
Due to other funds - - -
Accrued interest payable 160,393 86,465 -
Unearned revenue - - -
Deposits 1,250 402,300 -
Compensated absences - due in one year - 73,807 -
Current portion of long-term debt 663,845 1,100,000 -
Total current liabilities 1,049,418 2,513,693 434,811
Noncurrent liabilities:
Capital leases payable - - -
Revenue bonds payable, due in more than one year - 3,931,231 -
Notes and mortgages payable, due in more than one year 12,296,450 3,345,000 -
Compensated absences - due in more than one year - 54,236 -
Aggregate net pension liability (Note 13)- 7,141,232 -
Net OPEB liability (Note 14) - 315,665 -
Total noncurrent liabilities 12,296,450 14,787,364 -
Total liabilities 13,345,868 17,301,057 434,811
DEFERRED INFLOWS OF RESOURCES
Deferred amount on refunding 88,101 - -
Deferred pension related items (Note 13) - 447,916 -
Deferred OPEB related items (Note 14) - 7,074 -
Total deferred inflows of resources 88,101 454,990 -
NET POSITION
Net investment in capital assets 4,741,052 15,311,723 15,062,002
Restricted:
Debt service - 156 -
Housing - - -
Unrestricted 44,672,466 33,282,050 17,218,722
Total net position 49,413,518$ 48,593,929$ 32,280,724$
Major Enterprise Funds
City of Encinitas
Statement of Net Position
Proprietary Funds
June 30, 2018
See accompanying Notes to the Basic Financial Statements.
36
Nonmajor Governmental
Enterprise Fund Activities
Affordable Internal
Housing Total Service Funds
ASSETS
Current assets:
Cash and investments 367,002$ 41,088,492$ 6,822,364$
Restricted cash and investments with fiscal agent 18,137 18,293 -
Accounts and taxes receivable 49,735 2,451,277 14,430
Inventory and prepaid items 89,891 334,706 40,472
Total current assets 524,765 43,892,768 6,877,266
Noncurrent assets:
Investment in joint ventures (Note 5) - 59,804,194 -
Capital assets:
Land easements - 3,300,931 -
Public works facility right-of-use - 3,378,700 -
Construction in progress - 8,629,993 -
Capacity rights, net - 178,293 -
Utility, plant, vehicles, and equipment, net 2,605,605 43,657,092 3,628,621
Total capital assets, net 2,605,605 59,145,009 3,628,621
Total noncurrent assets 2,605,605 118,949,203 3,628,621
Total assets 3,130,370 162,841,971 10,505,887
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension related items (Note 13) - 2,148,106 -
Deferred OPEB related items (Note 14) - 53,291 -
Total deferred outflows - 2,201,397 -
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 1,574 1,511,436 140,562
Due to other funds 72,199 72,199 -
Accrued interest payable - 246,858 -
Unearned revenue 394 394 -
Deposits 15,637 419,187 -
Compensated absences - due in one year 8,496 82,303 -
Current portion of long-term debt 81,429 1,845,274 258,394
Total current liabilities 179,729 4,177,651 398,956
Noncurrent liabilities:
Capital leases payable - - 544,032
Revenue bonds payable, due in more than one year - 3,931,231 -
Notes and mortgages payable, due in more than one year 1,091,629 16,733,079 -
Compensated absences - due in more than one year 4,683 58,919 -
Aggregate net pension liability (Note 13)- 7,141,232 -
Net OPEB liability (Note 14) - 315,665 -
Total noncurrent liabilities 1,096,312 28,180,126 544,032
Total liabilities 1,276,041 32,357,777 942,988
DEFERRED INFLOWS OF RESOURCES
Deferred amount on refunding - 88,101 -
Deferred pension related items (Note 13) - 447,916 -
Deferred OPEB related items (Note 14) - 7,074 -
Total deferred inflows - 543,091 -
NET POSITION
Net investment in capital assets 1,432,547 36,547,324 2,826,195
Restricted:
Debt service - 156 -
Housing 421,782 421,782 -
Unrestricted - 95,173,238 6,736,704
Total net position 1,854,329$ 132,142,500$ 9,562,899$
City of Encinitas
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2018
See accompanying Notes to the Basic Financial Statements.
37
Cardiff San Dieguito Encinitas
Sanitary Water Sanitary
Division District Division
OPERATING REVENUES:
Charges for services 4,885,227$ 16,791,403$ 2,711,075$
Rental income - 109,229 -
Interfund revenues - 61,329 -
Intergovernmental - - -
Other revenues - 63,493 -
Total operating revenues 4,885,227 17,025,454 2,711,075
OPERATING EXPENSES:
Housing assistance payments - - -
Source of supply - 5,029,043 -
General operations and maintenance 895,682 5,208,840 596,426
Facility operations and maintenance 1,592,107 2,266,216 554,218
General and administrative 182,102 527,197 103,977
Depreciation of capital assets 386,019 703,955 369,668
Administrative support - - -
Operational support services - - -
Insurance and claims 30,524 65,037 27,772
Total operating expenses 3,086,434 13,800,288 1,652,061
OPERATING INCOME (LOSS)1,798,793 3,225,166 1,059,014
NONOPERATING REVENUES (EXPENSES):
Use of money and property 64,071 53,880 51,767
Property taxes - 1,030,168 -
Operating grants - - -
Capital grants - - -
Net change from joint ventures 1,448,188 (1,144,958) 707,980
Gain on disposal of capital assets - 8,285 -
Accretion of bond premium 98,880 74,372 -
Interest expense (491,983) (328,051) -
Total nonoperating revenues (expenses)1,119,156 (306,304) 759,747
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS 2,917,949 2,918,862 1,818,761
Capital contributions 195,794 232,293 132,564
Transfers in - 57,419 40,237
Transfers out (40,237) (57,419) -
Total capital contributions and transfers 155,557 232,293 172,801
CHANGES IN NET POSITION 3,073,506 3,151,155 1,991,562
NET POSITION:
Beginning of year, as restated (Note 18) 46,340,012 45,442,774 30,289,162
End of year 49,413,518$ 48,593,929$ 32,280,724$
Major Enterprise Funds
City of Encinitas
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
For the Year Ended June 30, 2018
See accompanying Notes to the Basic Financial Statements.
38
Nonmajor
Enterprise Fund Governmental
Activities
Affordable Internal
Housing Total Service Funds
OPERATING REVENUES:
Charges for services -$ 24,387,705$ -$
Rental income 108,904 218,133 -
Interfund revenues 100,524 161,853 2,470,899
Intergovernmental 124,944 124,944 -
Other revenues - 63,493 120,309
Total operating revenues 334,372 24,956,128 2,591,208
OPERATING EXPENSES:
Housing assistance payments 1,108,724 1,108,724 -
Source of supply - 5,029,043 -
General operations and maintenance 100,606 6,801,554 -
Facility operations and maintenance - 4,412,541 -
General and administrative 151,886 965,162 -
Depreciation of capital assets 100,538 1,560,180 525,646
Administrative support - - 1,339,928
Operational support services - - 1,221,874
Insurance and claims 2,427 125,760 1,242,118
Total operating expenses 1,464,181 20,002,964 4,329,566
OPERATING INCOME (LOSS)(1,129,809) 4,953,164 (1,738,358)
NONOPERATING REVENUES (EXPENSES):
Use of money and property 5,199 174,917 -
Property taxes - 1,030,168 -
Operating grants 1,093,800 1,093,800 -
Capital grants - - -
Net change from joint ventures - 1,011,210 -
Gain (loss) on disposal of capital assets - 8,285 61,400
Accretion of bond premium - 173,252 -
Interest expense (19,761) (839,795) (26,527)
Total nonoperating revenues (expenses)1,079,238 2,651,837 34,873
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS (50,571) 7,605,001 (1,703,485)
Capital contributions - 560,651 -
Transfers in 1,721 99,377 1,744,583
Transfers out (21,739) (119,395) (113,000)
Total capital contributions and transfers (20,018) 540,633 1,631,583
CHANGES IN NET POSITION (70,589) 8,145,634 (71,902)
NET POSITION:
Beginning of year, as restated (Note 18) 1,924,918 123,996,866 9,634,801
End of year 1,854,329$ 132,142,500$ 9,562,899$
Proprietary Funds
For the Year Ended June 30, 2018
City of Encinitas
Statement of Revenues, Expenses, and Changes in Net Position (Continued)
See accompanying Notes to the Basic Financial Statements.
39
Cardiff San Dieguito Encinitas
Sanitary Water Sanitary
Division District Division
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users 4,832,516$ 16,835,193$ 2,722,217$
Cash received from other funds - 61,329 -
Cash payments to suppliers and employees for goods and services (2,562,718) (12,876,209) (1,254,139)
Other operating revenues 40,237 63,493 -
Net cash provided by (used in) operating activities 2,310,035 4,083,806 1,468,078
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets (1,610,072) (1,169,352) (410,414)
Capital contributions received - connection/capacity fees 195,794 232,293 132,564
Principal payments on long-term debt (640,352) (1,060,000) -
Proceeds from issuance of note payable 12,110,860 - -
Interest payments on long-term debt (350,058) (338,843) -
Capital related payments to other agencies (12,599,303) (408,672) (685,389)
Proceeds received from disposal of capital assets - 8,285 -
Net cash (used in) capital and related financing activities (2,893,131) (2,736,289) (963,239)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Operating grants - - -
Proceeds from property taxes - 1,030,168 -
Transfers in - 57,419 40,237
Transfers out (40,237) (57,419) -
Net cash provided by (used in) noncapital financing activities (40,237) 1,030,168 40,237
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest income 64,071 53,880 51,767
Net cash provided by investing activities 64,071 53,880 51,767
Net increase (decrease) in cash and cash equivalents (559,262) 2,431,565 596,843
CASH AND CASH EQUIVALENTS:
Beginning of year 12,969,322 13,671,711 11,611,467
End of year 12,410,060$ 16,103,276$ 12,208,310$
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO
STATEMENT OF NET POSITION:
Cash and investments 12,410,060$ 16,103,120$ 12,208,310$
Restricted cash and investments with fiscal agent - 156 -
Total cash and cash equivalents 12,410,060$ 16,103,276$ 12,208,310$
Major Enterprise Funds
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2018
City of Encinitas
See accompanying Notes to the Basic Financial Statements.
40
Governmental
Nonmajor Activities
Affordable Internal
Housing Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users 192,916$ 24,582,842$ 2,576,778$
Cash received from (paid to) other funds 101,280 162,609 -
Cash payments to suppliers and employees for goods and services (1,374,607) (18,067,673) (3,811,147)
Other operating revenues - 103,730 -
Net cash provided by (used in) operating activities (1,080,411) 6,781,508 (1,234,369)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets - (3,189,838) (827,450)
Capital contributions received - connection/capacity fees - 560,651 -
Principal payments on long-term debt (80,119) (1,780,471) (422,965)
Proceeds from issuance of note payable - 12,110,860 -
Interest payments on long-term debt (19,762) (708,663) (26,527)
Capital related payments to other agencies - (13,693,364) -
Proceeds received from disposal of capital assets - 8,285 61,400
Net cash (used in) capital and related financing activities (99,881) (6,692,540) (1,215,542)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Operating grants 1,093,800 1,093,800 -
Proceeds from property taxes - 1,030,168 -
Transfers in 1,721 99,377 1,744,583
Transfers out (21,739) (119,395) (113,000)
Net cash provided by (used in) noncapital financing activities 1,073,782 2,103,950 1,631,583
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest income 5,199 174,917 -
Net cash provided by investing activities 5,199 174,917 -
Net increase (decrease) in cash and cash equivalents (101,311) 2,367,835 (818,328)
CASH AND CASH EQUIVALENTS:
Beginning of year 486,450 38,738,950 7,640,692
End of year 385,139$ 41,106,785$ 6,822,364$
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO
STATEMENT OF NET POSITION:
Cash and investments 367,002$ 41,088,492$ 6,822,364$
Restricted cash and investments with fiscal agent 18,137 18,293 -
Total cash and cash equivalents 385,139$ 41,106,785$ 6,822,364$
City of Encinitas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2018
See accompanying Notes to the Basic Financial Statements.
41
Cardiff San Dieguito Encinitas
Sanitary Water Sanitary
Division District Division
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) 1,798,793$ 3,225,166$ 1,059,014$
Adjustments to reconcile operating income to net cash
provided (used) by operating activities:
Depreciation 386,019 703,955 369,668
Changes in operating assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
Accounts and taxes receivable (12,474) (65,439) 11,142
Inventory and prepaid items (1,562) (16,403) (1,501)
OPEB-related deferred outflows - 10,037 -
Pension-related deferred outflows - (608,060) -
Accounts payable and accrued liabilities 139,259 (338,499) 29,755
Due to other funds - - -
Unearned revenue - - -
Deposits - 104,105 -
Compensated absences - (34,802) -
Aggregate net OPEB liability - (35,473) -
Aggregate net pension liability - 852,601 -
OPEB-related deferred inflows - 7,074 -
Pension-related deferred inflows - 279,544 -
Total adjustments 511,242 858,640 409,064
Net cash provided by (used in) operating activities 2,310,035$ 4,083,806$ 1,468,078$
NON-CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Amortization of original issue premium 34,401$ 74,371$ -$
Contributions of capital assets - 38,253 -
34,401$ 112,624$ -$
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2018
City of Encinitas
Major Enterprise Funds
See accompanying Notes to the Basic Financial Statements.
42
Governmental
Nonmajor Activities
Affordable Internal
Housing Total Service Funds
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) (1,129,809)$ 4,953,164$ (1,738,358)$
Adjustments to reconcile operating income to net cash
provided (used) by operating activities:
Depreciation 100,538 1,560,180 525,646
Changes in operating assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
Accounts and taxes receivable (39,660) (106,431) (14,430)
Inventory and prepaid items (7,291) (26,757) 408,451
OPEB-related deferred outflows - 10,037 -
Pension-related deferred outflows - (608,060) -
Accounts payable and accrued liabilities (5,750) (175,235) (415,678)
Due to other funds 756 756 -
Unearned revenue 161 161 -
Deposits (1,433) 102,672 -
Compensated absences 2,077 (32,725) -
Aggregate net OPEB liability - (35,473) -
Aggregate net pension liability - 852,601 -
OPEB-related deferred inflows - 7,074 -
Pension-related deferred inflows - 279,544 -
Total adjustments 49,398 1,828,344 503,989
Net cash provided by (used in) operating activities (1,080,411)$ 6,781,508$ (1,234,369)$
NON-CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Amortization of original issue premium -$ 108,772$ -$
Contributions of capital assets - 38,253 -
-$ 147,025$ -$
City of Encinitas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2018
See accompanying Notes to the Basic Financial Statements.
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44
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.
45
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46
Agency
Funds
ASSETS
Cash and investments 2,207,164$
Restricted cash and investments with fiscal agent 1,984,266
Special assessments receivable 25,445,000
Current assessments receivable 9,554
Total assets 29,645,984$
LIABILITIES
Due to bondholders 29,645,984$
Total liabilities 29,645,984$
City of Encinitas
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2018
See accompanying Notes to the Basic Financial Statements.
47
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48
NOTES TO THE BASIC
FINANCIAL STATEMENTS
49
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50
City of Encinitas
Notes to the Basic Financial Statements
For the Year Ended June 30, 2018
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 City is governed by a City Council consisting of a mayor and four council members under the Council-
Manager form of government.
In evaluating how to define the City for financial reporting purposes, management has considered all
potential component units. The primary criteria for including a potential component unit within the reporting
entity are the governing body’s financial accountability and a financial benefit or burden relationship and
whether it is misleading to exclude. A primary government is financially accountable and shares a financial
benefit or burden relationship if it appoints a voting majority of an organization’s governing body and it is
able to impose its will on the organization, or if there is a potential for the organization to provide specific
financial benefits to, or impose specific financial burdens on the primary government. A primary government
may also be financially accountable if an organization is fiscally dependent on the primary government
regardless of whether the organization has a separately elected governing board, a governing board
appointed by a higher level of government, or a jointly appointed board, and there is a potential for the
organization to provide specific financial benefits to, or impose specific financial burdens on the primary
government.
Blended Component Units
Although the following are legally separate from the City, they have been “blended” as though they are part
of the City because the component unit’s governing body is substantially the same as the City’s and there is
a financial benefit or burden relationship between the City and the component unit; management of the City
has operational responsibilities for the component units; and/or the component units provide services
entirely, or almost entirely, to the City or otherwise exclusively, or almost exclusively, benefits the City, even
though it does not provide services directly to it.
The San Dieguito Water District (“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 Encinitas Housing Authority (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 Encinitas Public Financing Authority (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.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
52
Note 1 – Reporting Entity (Continued)
Blended Component Units (Continued)
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.
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.
The Statement of Net Position/Balance Sheet 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, 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, 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.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
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)
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
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.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
54
Note 2 – Summary of Significant Accounting Policies (Continued)
B. Measurement Focus, Basis of Accounting and Financial Statements Presentation (Continued)
Government Fund Financial Statements (Continued)
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.
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.
The Infrastructure Improvements Special Revenue Fund is used to account for financial
resources from state and federal grants which are primarily to fund operations and capital
improvements.
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.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
55
Note 2 – Summary of Significant Accounting Policies (Continued)
B. Measurement Focus, Basis of Accounting and Financial Statements Presentation (Continued)
Proprietary Fund Financial Statements (Continued)
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, 2018
56
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
U.S. GAAP 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, 2018
57
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. 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 acquisition 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).
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 acquisition value on the date of donation.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
58
Note 2 – Summary of Significant Accounting Policies (Continued)
J. 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, 2018 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.
K. 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 non-exchange 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.
L. 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.
M. 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 be surrendered to the Internal Revenue Service. The City
had no rebate liability for arbitrage as of June 30, 2018.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
59
Note 2 – Summary of Significant Accounting Policies (Continued)
N. 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.
O. 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.
P. 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 13). 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, 2016
Measurement Date June 30, 2017
Measurement Period July 1, 2016 to June 30, 2017
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
60
Note 2 – Summary of Significant Accounting Policies (Continued)
P. 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.
Q. Other Post-Employment Benefits
For purposes of measuring the Net OPEB liability, deferred outflows of resources and deferred inflows
of resources related to OPEB, and OPEB 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).
The following timeframes are used for OPEB reporting:
Valuation date June 30, 2017
Measurement Date June 30, 2017
Measurement Period July 1, 2016 to June 30, 2017
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, plus deferred outflows of resources attributed to their
acquisition, reduced by the outstanding balances of debt that are attributable to the acquisition,
construction, or improvement of those assets and deferred inflows of resources attributable to
their acquisition.
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.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
61
Note 2 – Summary of Significant Accounting Policies (Continued)
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, and 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.
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 one percent of full market value (at time of
purchase). The City receives a share of this basic tax levy.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
62
Note 2 – Summary of Significant Accounting Policies (Continued)
T. Property Taxes (Continued)
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 on property taxes receivable 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.
V. Accounting Changes
New Governmental Accounting Standards Implemented for the Year Ended June 30, 2018
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 had a significant effect on the City’s financial statements
(see Note 14).
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 did not have a significant effect on the City’s
financial statements.
GASB Statement No. 85
In March 2017, GASB issued Statement No. 85, Omnibus 2017. This Statement addresses practice
issues that have been identified during implementation and application of certain GASB Statements.
This Statement also addresses a variety of topics including issues related to blending component
units, goodwill, fair value measurement and application, and postemployment benefits (pensions and
other postemployment benefits [OPEB]). Application of this statement did not have a significant
effect on the City’s financial statements.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
63
Note 2 – Summary of Significant Accounting Policies (Continued)
V. Accounting Changes (Continued)
New Governmental Accounting Standards Implemented for the Year Ended June 30, 2018
(Continued)
GASB Statement No. 86
In April 2017, GASB issued Statement No. 86, Certain Debt Extinguishment Issues. This Statement
improves consistency in accounting and financial reporting for in-substance defeasance of debt by
providing guidance for transactions in which cash and other monetary assets acquired with only
existing resources—resources other than the proceeds of refunding debt—are placed in an
irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves
accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to
financial statements for debt that is defeased in substance. Application of this statement did not
have a significant effect on the City’s financial statements.
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. 83
In November 2016, GASB issued Statement No. 83, Certain Asset Retirement Obligations. This
Statement establishes criteria for determining the timing and pattern of recognition of a liability and a
corresponding deferred outflow of resources for asset retirement obligations (ARO). This Statement
requires that recognition occur when the liability is both incurred and reasonably estimable. The
determination of when the liability is incurred should be based on the occurrence of external laws,
regulations, contracts, or court judgments, together with the occurrence of an internal event that
obligates a government to perform asset retirement activities. Laws and regulations may require
governments to take specific actions to retire certain tangible capital assets at the end of the useful
lives of those capital assets, such as decommissioning nuclear reactors and dismantling and
removing sewage treatment plants. Other obligations to retire tangible capital assets may arise from
contracts or court judgments. Internal obligating events include the occurrence of contamination,
placing into operation a tangible capital asset that is required to be retired, abandoning a tangible
capital asset before it is placed into operation, or acquiring a tangible capital asset that has an
existing ARO. Application of this statement is effective for the City’s fiscal year ending June 30,
2019.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
64
Note 2 – Summary of Significant Accounting Policies (Continued)
V. Accounting Changes (Continued)
Upcoming Governmental Accounting Standards Implementation (Continued)
GASB Statement No. 84
In January 2017, GASB issued Statement No. 84, Fiduciary Activities. This Statement establishes
criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria
generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the
beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify
fiduciary component units and postemployment benefit arrangements that are fiduciary activities.
Application of this statement is effective for the City’s fiscal year ending June 30, 2020.
GASB Statement No. 87
In June 2017, GASB issued Statement No. 87, Leases. This Statement increases the usefulness of
governments’ financial statements by requiring recognition of certain lease assets and liabilities for
leases that previously were classified as operating leases and recognized as inflows of resources or
outflows of resources based on the payment provisions of the contract. It establishes a single model
for lease accounting based on the foundational principle that leases are financings of the right to use
an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an
intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a
deferred inflow of resources, thereby enhancing the relevance and consistency of information about
governments’ leasing activities. Application of this statement is effective for the City’s fiscal year
ending June 30, 2020.
GASB Statement No. 88
In April 2018, GASB issued Statement No. 88, Certain Disclosures Related to Debt, including Direct
Borrowings and Direct Placements. This Statement is to improve the information that is disclosed in
notes to government financial statements related to debt, including direct borrowings and direct
placements. It also clarifies which liabilities governments should include when disclosing information
related to debt. The statement also defines debt for purposes of disclosure in notes to financial
statements as a liability that arises from a contractual obligation to pay cash (or other assets that
may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date
the contractual obligation is established. In addition the statement requires that additional essential
information related to debt be disclosed in notes to financial statements, including unused lines of
credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to
significant events of default with finance-related consequences, significant termination events with
finance-related consequences, and significant subjective acceleration clauses. Application of this
statement is effective for the City’s fiscal year ending June 30, 2020.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
65
Note 2 – Summary of Significant Accounting Policies (Continued)
V. Accounting Changes (Continued)
Upcoming Governmental Accounting Standards Implementation (Continued)
GASB Statement No. 89
In June 2018, GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End
of a Construction Period. This Statement establishes accounting requirements for interest cost
incurred before the end of a construction period. Such interest cost includes all interest that
previously was accounted for in accordance with the requirements of paragraphs 5–22 of Statement
No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November
30, 1989 FASB and AICPA Pronouncements, which are superseded by this Statement. This
Statement requires that interest cost incurred before the end of a construction period be recognized
as an expense in the period in which the cost is incurred for financial statements prepared using the
economic resources measurement focus. As a result, interest cost incurred before the end of a
construction period will not be included in the historical cost of a capital asset reported in a business-
type activity or enterprise fund. Application of this statement is effective for the City’s fiscal year
ending June 30, 2021.
GASB Statement No. 90
In August 2018, GASB issued Statement No. 90, Majority Equity Interests– An Amendment of GASB
Statements No. 14 and No. 61. This Statement improves the consistency and comparability of
reporting a government’s majority equity interest in a legally separate organization and to improve
the relevance of financial statement information for certain component units. It defines a majority
equity interest and specifies that a majority equity interest in a legally separate organization should
be reported as an investment if a government’s holding of the equity interest meets the definition of
an investment. A majority equity interest that meets the definition of an investment should be
measured using the equity method, unless it is held by a special-purpose government engaged only
in fiduciary activities, a fiduciary fund, or an endowment (including permanent and term
endowments) or permanent fund. Those governments and funds should measure the majority equity
interest at fair value. Application of this statement is effective for the City’s fiscal year ending June
30, 2020.
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 80,023,944$ 41,088,492$ 2,207,164$ 123,319,600$
Restricted cash and investments with fiscal agent 928 18,293 1,984,266 2,003,487
Total cash and investments 80,024,872$ 41,106,785$ 4,191,430$ 125,323,087$
Government-wide Statement of Position
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
66
Note 3 – Cash and Investments (Continued)
Cash and investments at June 30, 2018, consisted of the following:
Fair
Value
Cash on hand 3,659$
Deposits with financial institutions 11,947
Restricted cash 2,003,487
Investments 123,303,994
Total cash and investments 125,323,087$
At June 30, 2018, 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 the fair value hierarchy in which the fair value measurements
fall at June 30, 2018:
Percentage
Fair of Measurement
Value Investments Input
Investments:
LAIF 19,098,731$ 15.49% Uncategorized
San Diego County Investment Pool 3,957,207 3.21% Uncategorized
California Asset Management Program 1,014,892 0.82% Uncategorized
Money Market Mutual Funds 3,907 0.01% Uncategorized
Certificates of Deposit 7,423,306 6.02% Uncategorized
Corporate Medium Term Notes 237,528 0.19% Level 2
U.S. Treasury Securities 46,607,222 37.80% Level 2
U.S. Government Sponsored Enterprise Securities 44,961,201 36.46% Level 2
Total Investments 123,303,994$
Investment Type
The City’s level two investments are valued based on either quoted prices for identical securities in markets
that are not active or quoted prices for similar securities in active markets.
A. Demand Deposits
The carrying amounts of the City’s demand deposits were $11,947 at June 30, 2018. Bank balances
were $1,733,381 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 percent 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 percent 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, 2018
67
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 day 20% No Limit
Local Agency Investement Fund (LAIF) ** Yes N/A 30% No Limit
Other Governmental Managed Investment Pools Yes N/A 30% 10%
Money Market Mutual Funds Yes N/A 20% 10%
Certificates of Deposit Yes 1 year 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% No Limit
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 $65 million per account.
C. Investments Authorized by Debt Agreements
The investment of the proceeds from debt issuances, held by a third-party trustee, is governed by the
provisions of the specific debt agreement rather than by the Government Code or the Investment Policy.
The investment types that are authorized and currently utilized by the City are Guaranteed Investment
Contracts and Money Market Mutual Funds.
D. Risk Disclosures
Disclosures Related to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity, the greater the sensitivity its fair value is to changes in
market interest rates. One of the ways that the City manages its exposure to interest rate risk is by
purchasing a combination of shorter-term and longer-term investments and by timing cash flows from
maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as
necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City's investments to interest rate risk is
provided in the table that shows the distribution by maturity is as follows:
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
68
Note 3 – Cash and Investments (Continued)
D. Risk Disclosures (Continued)
Disclosures Related to Interest Rate Risk (Continued)
Less than 12 to 60
Total 12 Months Months
Investments:
Local Agency Investement Fund (LAIF) 19,098,731$ 19,098,731$ -$
San Diego County Investment Pool 3,957,207 3,957,207 -
California Asset Management Program 1,014,892 1,014,892 -
Money Market Mutual Funds 3,907 3,907 -
Certificates of Deposit 7,423,306 743,529 6,679,777
Negotiable Certificates of Deposit 237,528 - 237,528
U.S. Treasury Securities 46,607,222 1,999,340 44,607,882
U.S. Government Sponsored Enterprise Securities 44,961,201 15,957,520 29,003,681
Total Investments 123,303,994$ 42,775,126$ 80,528,868$
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 $250,000 or less are
fully insured by the Federal Deposit Insurance Corporation (FDIC), and therefore, do not seek a credit
rating.
Presented below is the minimum rating required by (where applicable) the Government Code, the
Investment Policy, or the debt agreements, and the actual rating as of year end for each investment
type.
Minimum
Fair Legal AAA/
Value Rating AA+A Not Rated
Investments:
Local Agency Investment Fund (LAIF) 19,098,731$ N/A -$ -$ 19,098,731$
California Asset Management Program 1,014,892 N/A 1,014,892 - -
Money Market Mutual Funds 3,907 AAA 3,907 - -
Certificates of Deposit 7,423,306 N/A - - 7,423,306
Negotiable Certificates of Deposit 237,528 N/A - - 237,528
U.S. Treasury Securities 46,607,222 N/A - - 46,607,222
U.S. Government Sponsored Enterprise Securities 44,961,201 N/A 44,961,201 - -
San Diego County Investment Pool 3,957,207 N/A 2,910,922 1,046,285 -
Total Investments 123,303,994$ 48,890,922$ 1,046,285$ 73,366,787$
Rating as of Year End
Investment Type
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
69
Note 3 – Cash and Investments (Continued)
D. Risk Disclosures (Continued)
Disclosures Relating to Concentration of Credit Risk
GASB Statement No. 40 requires disclosure by amount and issuer of investments in any one issuer that
represent five percent or more of total investments. Investments in any one issuer (other than U.S.
Treasury securities, mutual funds, and external investment pools) that represents five percent or more of
the City's total investments are as follows:
Fair Value
Federal National Mortgage Association 11,954,540$
Federal Home Loan Mortgage Corporation 9,753,547
Federal Home Loan Bank 17,791,754 U.S. Government Sponsored
Enterprise Securities
Enterprise Securities
Enterprise Securities
Issuer Investment Type
U.S. Government Sponsored
U.S. Government Sponsored
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 is a participant in the Local Agency Investment Fund (LAIF) which is regulated by California
Government Code Section 16429 under the oversight of the Treasurer of the State of California. The
City’s investments in 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 collateralized mortgage obligations) 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 the City’s position in the pool is the same as the value of
the pool shares.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
70
Note 3 – Cash and Investments (Continued)
E. Investments in State Investment Pool – Local Agency Investment Fund (Continued)
As of June 30, 2018, the City had $19,098,731 invested in LAIF, which had invested 2.67 percent of the
pool investment funds in Structured Notes and Asset-Backed Securities. LAIF determines fair value on
its investment portfolio based on market quotations for those securities where market quotations are
readily available and based on amortized cost or best estimate for those securities where market value
is not readily available. The credit quality rating of LAIF is unrated as of June 30, 2018.
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, 2018, the City had $1,014,892 invested in CAMP.
Note 4 – Receivables
At June 30, 2018, receivables consisted of the following:
Governmental Business-Type
Activities Activities Total
Accounts receivable 1,140,786$ 2,284,576$ 3,425,362$
Taxes and assessments receivable 419,107 120,779 539,886
Accrued revenues 3,253,107 45,922 3,299,029
Total 4,813,000$ 2,451,277$ 7,264,277$
Note 5 – Investment in Joint Ventures
Investment in joint ventures (see Note 2G) consists of the following as of June 30, 2018:
Cardiff Sanitary Division San Elijo Joint Facilities 32,577,725$
San Dieguito Water District R.E. Badger Joint Facilities 21,045,875
San Dieguito Water District R.E. Badger Financing Authority 765,085
21,810,960
Encinitas Sanitary Division Encina Joint Facilities 5,415,509
Total Investment in Joint Ventures 59,804,194$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
71
Note 5 – Investment in Joint Ventures (Continued)
A. Cardiff Sanitary Division
Investment in San Elijo Joint Powers Authority (SEJPA)
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 percent interest in SEJPA.
The Ocean Outfall is jointly owned by SEJPA (21 percent interest) and the City of Escondido (79
percent 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,
2018, CSD's share of those costs was $1,592,107, which is reported as a component of "facility
operations and maintenance" in the accompanying financial statements.
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, 2018, SDWD's share of those was $2,266,216, 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, 2018
72
Note 5 – Investments in Joint Ventures (Continued)
B. San Dieguito Water District (Continued)
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 percent of the Joint Facilities, after adjusting for the construction and upgrades to the
Joint Facilities, referred to as "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, 2018, ESD's share of
those costs was $554,218, which is shown as "facility operations and maintenance" in the
accompanying financial statements.
Note 6 – Long-Term Receivables
Long-term receivables consist of loans to developers and loans to employees for the purchase of computer
equipment, a program approved by the City Council to promote more efficient use of technology. At June
30, 2018, loans receivable consisted of the following:
Iris Apartments 422,632$
Employee computer loans 28,696
Total 451,328$
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 six percent 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 percent 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, 2018 was $422,632.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
73
Note 7 – Capital Assets
A. Governmental Activities
The summary of changes in governmental activities capital assets for the year ended June 30, 2018 is
as follows:
Balance Transfers/ Balance
July 1, 2017 Additions Deletions Reclassification June 30, 2018
Capital assets, not being depreciated:
Land 61,862,474$ -$ -$ -$ 61,862,474$
Land easements 2,286,158 14,276 - - 2,300,434
Construction in progress 15,710,940 6,350,327 - (8,053,447) 14,007,820
Total capital assets, not being depreciated 79,859,572 6,364,603 - (8,053,447) 78,170,728
Capital assets, being depreciated:
Public facilities 102,560,379 9,755 - 3,896,220 106,466,354
Vehicles, equipment and machinery 9,998,072 1,097,417 (525,513) - 10,569,976
Infrastructure 111,550,194 - - 4,157,227 115,707,421
Total capital assets, being depreciated 224,108,645 1,107,172 (525,513) 8,053,447 232,743,751
Less accumulated depreciation
Public facilities (32,129,611) (3,185,730) - - (35,315,341)
Vehicles, equipment and machinery (6,341,621) (653,353) 525,513 - (6,469,461)
Infrastructure (48,942,357) (2,514,023) - - (51,456,380)
Total accumulated depreciation (87,413,589) (6,353,106) 525,513 - (93,241,182)
Total capital assets being depreciated, net 136,695,056 (5,245,934) - 8,053,447 139,502,569
Governmental activities capital assets, net 216,554,628$ 1,118,669$ -$ -$ 217,673,297$
Depreciation expense was charged to the functions/programs of the governmental activities as follows:
General government 1,223,201$
Public safety 383,388
Public works 2,730,041
Parks and recreation 1,490,830
Internal service funds 525,646
Total depreciation expense 6,353,106$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
74
Note 7 – Capital Assets (Continued)
B. Business-type Activities
The summary of changes in business-type activities capital assets for the year ended June 30, 2018 is
as follows:
Balance Transfers/ Balance
July 1, 2017 Additions Deletions Reclassification June 30, 2018
Capital assets, not being depreciated:
Land easements 3,262,678$ 38,253$ -$ -$ 3,300,931$
Public works facility right of use 3,378,700 - - - 3,378,700
Construction in progress 7,733,231 2,729,046 (57,420) (1,774,864) 8,629,993
Total capital assets, not being depreciated 14,374,609 2,767,299 (57,420) (1,774,864) 15,309,624
Capital assets, being depreciated:
Structures and improvements 19,147,575 - - - 19,147,575
Collection and distribution 61,664,315 419,960 - 1,643,541 63,727,816
Machinery and equipment 2,384,521 60,000 (27,389) 131,323 2,548,455
Capacity Rights 323,190 - - - 323,190
Total capital assets, being depreciated 83,519,601 479,960 (27,389) 1,774,864 85,747,036
Less accumulated depreciation
Structures and improvements (5,822,935) (417,800) - - (6,240,735)
Collection and distribution (32,665,964) (966,073) - - (33,632,037)
Machinery and equipment (1,751,528) (169,843) 27,389 - (1,893,982)
Capacity rights (138,433) (6,464) - - (144,897)
Total accumulated depreciation (40,378,860) (1,560,180) 27,389 - (41,911,651)
Total capital assets being depreciated, net 43,140,741 (1,080,220) - 1,774,864 43,835,385
Business-type activities capital assets, net 57,515,350$ 1,687,079$ (57,420)$ -$ 59,145,009$
Depreciation expense was charged to the functions/programs of the business-type activities as follows:
Cardiff Sanitary Division 386,019$
San Dieguito Water District 703,955
Encinitas Sanitary Division 369,668
Non-major Affordable Housing 100,538
Total 1,560,180$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
75
Note 8 – Long-Term Obligations
A summary of changes in long-term liabilities for the year ended June 30, 2018 is as follows:
Balance Balance Due Within Due in More
July 1, 2017 Additions Deletions June 30, 2018 One Year Than One Year
Governmental Activities:
Capital Leases:
2008 Civic Center Roof Replacement 979,891$ -$ (148,758)$ 831,133$ 154,298$ 676,835$
2011 Fire Apparatus 170,157 - (170,157) - - -
2012 Fire Apparatus 180,710 - (89,375) 91,335 91,335 -
2013 Fire Apparatus 244,673 - (80,020) 164,653 81,548 83,105
2017 Fire Apparatus 629,851 - (83,413) 546,438 85,511 460,927
Bonded Debt:
2002 ABAG Financing 290,000 - (290,000) - - -
2013 Community Park Bonds 6,590,000 - (335,000) 6,255,000 345,000 5,910,000
add: original issue premium 96,360 - (8,760) 87,600 - 87,600
2014 Moonlight Beach Tower (Series A) 2,965,000 - (65,000) 2,900,000 70,000 2,830,000
less: original issue discount (27,438) - (565) (28,003) - (28,003)
2014 Pacific View (Series B) 9,965,000 - (205,000) 9,760,000 205,000 9,555,000
less: original issue discount (140,834) - 254 (140,580) - (140,580)
2015 Library Refunding Bonds 15,165,000 - (505,000) 14,660,000 530,000 14,130,000
add: original issue premium 735,441 - (36,772) 698,669 - 698,669
2017 Park Refunding Bonds 11,955,000 - (580,000) 11,375,000 645,000 10,730,000
add: original issue premium 1,360,284 - (97,163) 1,263,121 - 1,263,121
Subtotal of governmental
capital leases and bonded debt 51,159,095 - (2,694,729) 48,464,366 2,207,692 46,256,674
Claims payable 2,113,535 1,619,837 (1,219,891) 2,513,481 1,759,437 754,044
Compensated absences 1,936,749 1,825,249 (1,742,728) 2,019,270 1,206,176 813,094
Total governmental activities 55,209,379 3,445,086 (5,657,348) 52,997,117 5,173,305 47,823,812
Business-type Activities:
2011 CSD Note Payable to SEJPA 1,421,697 - (640,352) 781,345 663,845 117,500
add: original issue premium 137,603 - (34,401) 103,202 - 103,202
2017 CSD Note Payable to SEJPA - 11,057,500 - 11,057,500 - 11,057,500
add: original issue premium - 1,053,360 (35,112) 1,018,248 - 1,018,248
2007 SDWD Note Payable Badger 4,275,000 - (455,000) 3,820,000 475,000 3,345,000
2004 EHA Housing Note Payable 1,253,177 - (80,119) 1,173,058 81,429 1,091,629
2014 SDWD Water Revenue Bonds 4,715,000 - (605,000) 4,110,000 625,000 3,485,000
add: original issue premium 520,602 - (74,371) 446,231 - 446,231
Subtotal of business-type
bonded debt 12,323,079 12,110,860 (1,924,355) 22,509,584 1,845,274 20,664,310
Compensated absences (SDWD) 162,845 134,859 (169,661) 128,043 73,807 54,236
Compensated absences (Affordable
Housing) 11,102 9,282 (7,205) 13,179 8,496 4,683
Total business-type activities 12,497,026 12,255,001 (2,101,221) 22,650,806 1,927,577 20,723,229
Total long-term obligations 67,706,405$ 15,700,087$ (7,758,569)$ 75,647,923$ 7,100,882$ 68,547,041$
Classification
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
76
Note 8 – 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 years, an interest rate of 3.69 percent, and semi-annual payments of $91,778. The project was
completed during Fiscal Year 2008-09, and the final payment is due in Fiscal Year 2022-23. The total
cost of the project was $3,543,258.
The annual debt service requirements for the lease outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 154,298$ 29,258$ 183,556$
2020 160,045 23,511 183,556
2021 166,005 17,552 183,557
2022 172,186 11,370 183,556
2023 178,599 4,957 183,556
Total 831,133$ 86,648$ 917,781$
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 $1,124,003. The lease has a term of seven years, an
interest rate of 2.48 percent, and semi-annual payments of $86,665. The lease is accounted for as a
capital lease, as the City purchased the unit at the maturity of the lease in Fiscal Year 2017-18. The
lease was paid in full during Fiscal Year 2017-18.
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 years with an interest
rate of 2.18 percent 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 $1 at the maturity of the lease term in Fiscal
Year 2018-19.
The annual debt service requirements for the lease outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 91,335$ 1,495$ 92,830$
Total 91,335$ 1,495$ 92,830$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
77
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
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 percent, and annual payments of $84,693. The lease is accounted for as a capital lease, as
the City will be purchasing the unit at the maturity of the lease in Fiscal Year 2019-20.
The annual debt service requirements for the lease outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 81,548$ 3,145$ 84,693$
2020 83,105 1,587 84,692
Total 164,653$ 4,732$ 169,385$
2017 Fire Apparatus Lease
The City entered into a long-term lease arrangement in Fiscal Year 2016-17 to finance the purchase of a
2017 Pierce Arrow XT Pumper Truck for $629,851. The lease has a term of seven years, an interest
rate of 2.50 percent, and annual payments of $98,641. The lease is accounted for as a capital lease, as
the City will be purchasing the unit at the maturity of the lease in Fiscal Year 2023-24.
The annual debt service requirements for the lease outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 85,511$ 13,130$ 98,641$
2020 87,663 10,978 98,641
2021 89,868 8,773 98,641
2022 92,129 6,512 98,641
2023 94,446 4,195 98,641
2024 96,821 1,819 98,640
Total 546,438$ 45,407$ 591,845$
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$ (1,287,382)$ 2,255,876$
Fire apparatus and equipment 2,916,904 (1,061,895) 1,855,009
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
78
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
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 percent
to 4.65 percent. The final maturity of the issue was due and paid in Fiscal Year 2017-18. 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 debt has been paid in full at June 30,
2018.
2013 Lease Revenue Refunding Bonds (Public Park Construction Project)
On March 20, 2013, the Encinitas Public Financing Authority, a blended component unit of the City,
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 $510,000. Interest is due and payable semi-annually at rates
ranging from 2.00 percent to 3.00 percent. The bonds were issued at a premium, which is being
amortized over the life of the bonds on a straight-line basis in the government-wide financial statements.
The bonds are payable from lease payments to be made by the City of Encinitas for the right to use
certain real property and related improvements pursuant to a lease agreement dated March 1, 2013
between the City as lessee and the Authority as lessor. The bonds are secured by pledged revenue
consisting of all lease revenue paid by the City of Encinitas in addition to any assets held in trust for the
purpose of paying the lease payments. The Authority has a leasehold on the property until all the terms
of the lease agreement are fulfilled. The refunding bonds are payable from any source of legally
available funds of the City. The bonds are subject to federal arbitrage requirements.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
79
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2013 Lease Revenue Refunding Bonds (Public Park Construction Project) (Continued)
The annual debt service requirements for the 2013 Lease Revenue Refunding Bonds outstanding at
June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 345,000$ 172,194$ 517,194$
2020 350,000 164,806 514,806
2021 360,000 156,818 516,818
2022 365,000 148,206 513,206
2023 375,000 138,722 513,722
2024-2028 2,060,000 517,950 2,577,950
2029-2033 2,400,000 184,500 2,584,500
Total 6,255,000$ 1,483,196$ 7,738,196$
The bonds maturing on or after October 1, 2023 are subject to optional redemption on any date on or
after October 1, 2022, without a 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 (Moonlight Beach Lifeguard Tower) and
Series B taxable (Pacific View Property) in the amounts of $3,095,000 and $10,365,000,
respectively, to provide funds for the purpose of improving the Moonlight Beach Lifeguard Tower and
financing the acquisition of a property known as the Pacific View Property. 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 $245,000. The term bonds mature through 2045 and are
subject to mandatory sinking requirements. Interest is due and payable semi-annually at rates ranging
from 2.00 percent to 3.50 percent. The bonds were issued at a discount, which is being amortized over
the life of the bonds on a straight-line basis in the government-wide financial statements. The bonds are
payable from lease payments to be made by the City of Encinitas for the right to use certain real
property and related improvements pursuant to a lease agreement dated November 1, 2014 between
the City as lessee and the Authority as lessor. The bonds are secured by pledged revenue consisting of
all lease revenue paid by the City of Encinitas in addition to any assets held in trust for the purpose of
paying the lease payments. The Authority has a leasehold on the property until all the terms of the lease
agreement are fulfilled. The refunding bonds are payable from any source of legally available funds of
the City. The bonds are subject to federal arbitrage requirements.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
80
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2014 Lease Revenue Bonds (Pacific View Property and Moonlight Beach Lifeguard Tower)
(Continued)
The annual debt service requirements for the 2014 Lease Revenue Bonds, Series A Moonlight Beach
Lifeguard Tower bonds outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 70,000$ 98,531$ 168,531$
2020 70,000 97,131 167,131
2021 70,000 95,381 165,381
2022 75,000 92,831 167,831
2023 75,000 89,831 164,831
2024-2028 430,000 409,444 839,444
2029-2033 495,000 339,478 834,478
2034-2038 590,000 244,984 834,984
2039-2043 700,000 128,103 828,103
2044-2045 325,000 12,281 337,281
Total 2,900,000$ 1,607,995$ 4,507,995$
The annual debt service requirements for the 2014 Lease Revenue Bonds, Series B Pacific View
Property bonds outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 205,000$ 436,603$ 641,603$
2020 210,000 432,033 642,033
2021 215,000 426,556 641,556
2022 225,000 420,225 645,225
2023 230,000 413,113 643,113
2024-2028 1,285,000 1,933,294 3,218,294
2029-2033 1,580,000 1,633,744 3,213,744
2034-2038 2,005,000 1,209,494 3,214,494
2039-2043 2,580,000 641,750 3,221,750
2044-2045 1,225,000 62,125 1,287,125
Total 9,760,000$ 7,608,937$ 17,368,937$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
81
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
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 which were originally used to finance capital projects that included the construction of the
Encinitas Library and the Encinitas Community Park, in addition to rehabilitating three fire stations and
the public works facility. 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 percent to 5.0 percent. 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 $1,547,162.
The annual debt service requirements for the 2015 Library Refunding Bonds outstanding at
June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 530,000$ 531,831$ 1,061,831$
2020 555,000 504,706 1,059,706
2021 580,000 476,331 1,056,331
2022 610,000 446,581 1,056,581
2023 640,000 415,331 1,055,331
2024-2028 3,625,000 1,634,106 5,259,106
2029-2033 4,225,000 1,020,684 5,245,684
2034-2037 3,895,000 282,419 4,177,419
Total 14,660,000$ 5,311,989$ 19,971,989$
2017 Park Refunding Bonds
On February 7, 2017, the Encinitas Public Financing Authority issued $11,955,000 of 2017 Lease
Revenue Refunding Bonds to defease and refund on a current basis, all of the outstanding 2010 Park
Bonds which were issued for the purpose of refinancing its 2001 Lease Revenue Bonds, Series A. The
refunded 2001 Lease Revenue Bonds, Series A were used to finance the acquisition of real property
(Hall Property) now known as the Encinitas Community Park. The bonds consist of serial bonds
maturing from 2018 through 2031 in annual installments of $580,000 to $1,110,000 and term bonds
maturing April 1, 2030 in the amount of $2,125,000. Interest is due and payable semi-annually at rates
ranging from 3.0 percent to 5.0 percent. Annual debt service is approximately $1,140,000 through
2031. The bonds are subject to federal arbitrage requirements. The aggregate debt service payments of
the new debt are $3,725,644 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 $1,691,810.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
82
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2017 Park Refunding Bonds (Continued)
The annual debt service requirements for the 2017 Park Refunding Bonds outstanding at June 30, 2018
are as follows:
Year Ending
June 30 Principal Interest Total
2019 645,000$ 494,000$ 1,139,000$
2020 680,000 461,750 1,141,750
2021 715,000 427,750 1,142,750
2022 750,000 392,000 1,142,000
2023 785,000 354,500 1,139,500
2024-2028 4,565,000 1,142,000 5,707,000
2029-2031 3,235,000 196,050 3,431,050
Total 11,375,000$ 3,468,050$ 14,843,050$
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 percent.)
Annual debt service is approximately $690,000 through 2019, with smaller repayments due in 2020 and
2021. The average rate on the borrowing is approximately 2.0 percent. 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 percent of annual debt service. Total principal and interest remaining to be paid on the 2011 Note
Payable as of June 30, 2018 is $816,077. During the year ended June 30, 2018, principal and interest
paid on the 2011 Note Payable was $695,754 and net revenue was $2,543,557, or 366 percent of
annual debt service. Management of CSD believes it is in compliance with these covenants for Fiscal
Year 2017-18.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
83
Note 8 – Long-Term Obligations (Continued)
B. Business-Type Activities (Continued)
2011 CSD Note Payable to San Elijo Joint Powers Authority (SEJPA) (Continued)
The annual debt service requirements for the 2011 CSD Note Payable to San Elijo Joint Powers
Authority outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 663,845$ 29,788$ 693,633$
2020 57,500 3,234 60,734
2021 60,000 1,710 61,710
Total 781,345$ 34,732$ 816,077$
2017 CSD Note Payable to San Elijo Joint Powers Authority (SEJPA)
On July 6, 2017 SEJPA, on behalf of its members (the Cardiff Sanitary Division and the City of Solana
Beach) issued 2017 Revenue Bonds (Clean Water Projects) for the purpose of funding facilities and
improvements as part of SEJPA’s capital improvement plan and certain costs of issuance. The 2017
revenue bonds are not the obligation of the City of Encinitas nor its component unit, the CSD. The City
of Encinitas entered into a Series 2017 Loan Agreement dated June 1, 2017 as a successor to the CSD
to assist in the financing of the CSD’s respective share of the Series 2017 Revenue Bonds. CSD is
responsible for the repayment of the loan in the amount of $11,057,500 of the total borrowing amount of
$22,115,000 (50 percent). Annual debt service is approximately $451,000 through 2019 with larger
repayments of approximately $670,000 from 2020 through 2047. The average rate on the borrowing is
approximately 2.5 percent. The bonds were issued at a premium, which is being amortized over the life
of the bonds on a straight-line basis.
Encinitas has pledged its system revenues to pay for this outstanding obligation. System revenues are
defined as gross revenues less operations and maintenance costs that are related to the collection,
treatment, reclamation, recycling, and disposal of wastewater. Encinitas has covenanted to collect its
system revenues which after allowances for contingencies and error in the estimates, shall produce
Gross Revenues sufficient in each Fiscal Year to provide System revenues equal to at least 1.3 times
the annual debt service. Total principal and interest remaining to be paid on the 2017 Note Payable as
of June 30, 2018 is $19,174,094. During the year ended June 30, 2018, interest paid on the 2017 Note
Payable was $294,656 and net revenue was $2,543,557, or 645 percent of annual debt service.
Management of CSD believes it is in compliance with these covenants for Fiscal Year 2017-18.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
84
Note 8 – Long-Term Obligations (Continued)
B. Business-Type Activities (Continued)
2017 CSD Note Payable to San Elijo Joint Powers Authority (SEJPA) (Continued)
The annual debt service requirements for the 2017 CSD Note Payable to SEJPA outstanding at
June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 -$ 451,388$ 451,388$
2020 217,500 451,388 668,888
2021 225,000 444,863 669,863
2022 230,000 438,113 668,113
2023 237,500 431,213 668,713
2024-2028 1,342,500 2,002,240 3,344,740
2029-2033 1,707,500 1,634,440 3,341,940
2034-2038 2,125,000 1,220,402 3,345,402
2039-2043 2,545,000 795,156 3,340,156
2044-2047 2,427,500 247,400 2,674,900
Total 11,057,500$ 8,116,603$ 19,174,103$
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 percent to 4.5 percent. Annual debt service is
approximately $630,000 through 2028.
The annual debt service requirements for the 2007 SDWD Note Payable to R.E. Badger Water Facilities
Financing Authority outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 475,000$ 152,919$ 627,919$
2020 490,000 133,619 623,619
2021 525,000 111,465 636,465
2022 545,000 89,396 634,396
2023 570,000 66,043 636,043
2024-2025 1,215,000 54,865 1,269,865
Total 3,820,000$ 608,307$ 4,428,307$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
85
Note 8 – Long-Term Obligations (Continued)
B. Business-Type Activities (Continued)
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 percent to 4.0 percent.
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 $780,873.
The annual debt service requirements for the 2014 SDWD Water Refunding Bonds outstanding at
June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 625,000$ 148,775$ 773,775$
2020 645,000 126,500 771,500
2021 665,000 100,300 765,300
2022 695,000 73,100 768,100
2023 725,000 44,700 769,700
2024 755,000 15,100 770,100
Total 4,110,000$ 508,475$ 4,618,475$
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 debt
as of June 30, 2018, is $9,046,782. During the year ended June 30, 2018 principal and interest paid was
$1,398,844 and net revenue was $5,215,489, or 373 percent of annual debt service. SDWD has
covenanted to budget for net revenues each Fiscal Year of at least 115 percent of combined annual
debt service. SDWD’s management believes it is in compliance with these covenants for Fiscal Year
2017-18.
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 $98,938 in 2031. The note bears interest at 90 percent of the ten-year US
Treasury note, adjustable every six years. The EHA is solely responsible for repayment on this note.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
86
Note 8 – Long-Term Obligations (Continued)
B. Business-Type Activities (Continued)
2004 Encinitas Housing Authority (EHA) Note Payable (Continued)
The annual debt service requirements for the 2004 Encinitas Housing Authority Note Payable
outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 81,429$ 18,450$ 99,879$
2020 82,715 17,164 99,879
2021 84,115 15,764 99,879
2022 85,492 14,388 99,880
2023 86,891 12,989 99,880
2024-2028 456,205 43,192 499,397
2029-2032 296,211 7,577 303,788
Total 1,173,058$ 129,524$ 1,302,582$
Note 9 – Interfund Receivables, Payable and Transfers
A. Due To and From Other Funds
Individual interfund receivables and payables at June 30, 2018 were as follows:
Due from Due to
Other Funds Other Funds
Govermental Funds:
General Fund 618,216$ -$
Capital Improvements Capital Projects Fund 14,405,810 -
Infrastructure Improvements Special Revenue Fund 14,713,562
Nonmajor Governmental Funds - 238,265
Internal Service Funds - -
Enterprise Funds:
Nonmajor Affordable Housing Enterprise Fund - 72,199
Total 15,024,026$ 15,024,026$
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 for capital projects.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
87
Note 9 – Interfund Receivables, Payable and Transfers (Continued)
B. Transfers In and Out
Transfers in and out between funds for the year ended June 30, 2018 were as follows:
Capital Infrastructure Nonmajor Cardiff Nonmajor
General Improvement Improvements Governmental Sanitary Affordable Internal Total
Fund Capital Projects Special Revenue Funds Division Housing Service Funds All Funds
Transfers In
Major Governmental Funds:
General Fund -$ 195,558$ 1,087,709$ 305,730$ -$ -$ -$ 1,588,997$
Capital Improvements Capital Project Fund 6,795,205 - 10,698,476 2,352,571 - 21,739 - 19,867,991
Infrastructure Improvements Special Revenue Fund - 4,691,000 - - - - - 4,691,000
Nonmajor Governmental Funds 4,377,734 401,601 - - - - - 4,779,335
Encinitas Sanitary Division - - - - 40,237 - - 40,237
Nonmajor Affordable Housing Enterprise Fund 1,721 - - - - - - 1,721
Internal Service Funds 1,631,583 - - - - - 113,000 1,744,583
Total 12,806,243$ 5,288,159$ 11,786,185$ 2,658,301$ 40,237$ 21,739$ 113,000$ 32,713,864$
Transfers Out
Transfers into 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 into the Capital Improvements Capital Projects Fund represent funds from other governmental
funds for capital expenditures. All capital projects are executed and expended through the Capital
Improvements Capital Projects Fund.
Transfers into the nonmajor governmental funds represent General Fund subsidies for the Senior
Nutrition Program, the Community Development Block Grant (CDBG), Section 8 Housing Program,
Home Program entitlement, the Mizel Donation General Fund match, and the Wiro Park M.I.D. In 1998,
the Council increased the transient occupancy tax from eight percent to ten percent. The additional two
percent increase is transferred to the Coastal Zone Management fund for beach and sand
replenishment and stabilization projects. The transfers in to the Nonmajor Governmental funds also
include transfers to the City’s Debt Service Fund and the Encinitas Public Financing Authority Debt
Service Fund to pay for the City’s various debt service obligations. The transfers into the Nonmajor
Governmental funds also include a transfer for future open space acquisition.
Transfers into the Internal Service Funds represent the City’s annual contribution from the General Fund
to the Self Insurance (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, 2018
88
Note 10 – Fund Balance and Net Position Classifications
The City classifies fund balances, as shown on the Balance Sheet - Governmental Funds as of
June 30, 2018 as follows:
Capital Infrastructure
Improvements Improvements Other
General Capital Projects Special Revenue Governmental
Fund Fund Fund Funds Totals
Nonspendable:
Inventory and prepaid items 238,507$ -$ -$ -$ 238,507$
Long-term receivable 28,696 - - - 28,696
Total nonspendable 267,203 - - - 267,203
Restricted:
Capital projects - 25,334,440 - - 25,334,440
Street maintenance and improvements - - - 1,360,022 1,360,022
Cable Franchise PEG funds - - - 166,895 166,895
Environmental initiatives - - - 1,384,514 1,384,514
Donations - - - 172,310 172,310
Parkland and open space - - - 1,409,204 1,409,204
Traffic mitigation - - - 1,419,172 1,419,172
Flood control - - - 212,345 212,345
Lighting and landscaping
assessments - - - 2,437,296 2,437,296
Sand management - - 793,455 - 793,455
Debt service 251 - - 677 928
Other - - - 33,982 33,982
Total restricted 251 25,334,440 793,455 8,596,417 34,724,563
Committed:
Capital projects - 17,760,602 - - 17,760,602
Budget stabilization 1,488,122 - - - 1,488,122
Operating reserve 13,203,670 - - - 13,203,670
Total committed 14,691,792 17,760,602 - - 32,452,394
Unassigned 12,334,212 - (14,945,248) - (2,611,036)
Total Fund Balances 27,293,458$ 43,095,042$ (14,151,793)$ 8,596,417$ 64,833,124$
Major Funds
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
89
Note 10 – 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 committed for use only in exceptional
circumstances such as catastrophic events that could negatively impact the financial condition of the
City. Funding represents 20 percent of the next year’s operating expenditures, and no drawdowns
have ever been executed from 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, 2018 was
$13,203,670.
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 two to five percent 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 committed as of June 30, 2018 was
$1,488,122.
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, 2018 was $12,334,212.
Note 11 – 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 $250,000 per occurrence, and for workers’
compensation claims and losses up to $350,000 per occurrence.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
90
Note 11 – Risk Management (Continued)
A. City of Encinitas - Risk Management and Insurance Programs (Continued)
The City is a member of the California State Association of Counties, Excess Insurance Authority
(CSAC EIA), a joint risk sharing pool which covers liability claims or losses above the City’s $250,000
self-insured level. CSAC EIA is a separate legal entity formed by the participating municipalities and
counties to provide pooled excess liability insurance coverage to its members. The members do not hold
any ownership stake in CSAC EIA and have no claims to revenue or assets upon withdrawal. CSAC EIA
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 above $250,000 with excess coverage through CSAC EIA and
excess carriers up to $50 million dollars. All members jointly share risk liability exposures in excess of
each member’s self-insured retention.
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 workers’ compensation coverage between $5,000,000 and statutory limits is provided through
contract reinsurance. City departments contribute premiums to the self-insurance fund based on annual
rates set for each work class.
Changes in the balances of claims payable for liability and workers compensation during the past two
years are as follows:
Year Ended Year Ended
June 30, 2018 June 30, 2017
Claims payable, beginning of year 2,113,535$ 1,589,220$
Estimated incurred claims, net 1,619,837 1,131,053
Claims payments or closures (1,219,891) (606,738)
Claim payable, end of year 2,513,481$ 2,113,535$
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 paid the City $90,054 for the year ended June 30, 2018.
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, 2018, 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, 2018, and did
not pay any claims during the Fiscal Year.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
91
Note 12 – 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 CSAC EIA
or LAWCX for self-insurance and insurance coverage (See Note 11).
B. Grants
Amounts received or owed 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.
C. Construction Commitments
As of June 30, 2018, the City had remaining contractual commitments totaling approximately $5 million
for capital projects related to its governmental and business-type activities. The more significant capital
commitments include approximately $3.3 million for street and pedestrian projects, approximately $0.5
million for CSD upgrades, and another $0.5 million for park improvements. There were also
commitments for drainage projects, parking lot upgrades, emergency repairs, and studies for
approximately $0.7 million.
Note 13 – California Public Employees’ Retirement System
A. Summary
Aggregate Net Pension Liability
Aggregate net pension liability is reported in the accompanying Statement of Net Position as follows:
Governmental Business-type
Activities Activities
CalPERS Miscellaneous Plan - City 26,039,077$ -$
CalPERS Miscellaneous Plan - SDWD - 7,141,232
CalPERS Safety Plan 22,930,965 -
Total 48,970,042$ 7,141,232$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
92
Note 13 – California Public Employees’ Retirement System (Continued)
A. Summary (Continued)
Deferred Outflows of Resources
Deferred outflows of resources are reported in the accompanying Statement of Net Position as follows:
Governmental Business-type
Activities Activities Total
Deferred outflows of resources:
Pension contribution made after measurement date:
CalPERS Miscellaneous Plan - City 3,755,605$ -$ 3,755,605$
CalPERS Miscellaneous Plan - SDWD - 504,492 504,492
CalPERS Safety Plan 2,203,690 - 2,203,690
Difference between expected and actual experience:
CalPERS Miscellaneous Plan - City - - -
CalPERS Miscellaneous Plan - SDWD - - -
CalPERS Safety Plan 195,569 - 195,569
Changes of assumptions
CalPERS Miscellaneous Plan - City 4,281,939 - 4,281,939
CalPERS Miscellaneous Plan - SDWD - 891,674 891,674
CalPERS Safety Plan 3,542,178 - 3,542,178
Difference between projected and actual earnings on
pension plan investments
CalPERS Miscellaneous Plan - City 946,270 - 946,270
CalPERS Miscellaneous Plan - SDWD - 218,306 218,306
CalPERS Safety Plan 836,513 - 836,513
Adjustments due to differences in proportions:
CalPERS Miscellaneous Plan - City - - -
CalPERS Miscellaneous Plan - SDWD - 533,634 533,634
CalPERS Safety Plan 502,204 - 502,204
Total deferred outflows of resources 16,263,968$ 2,148,106$ 18,412,074$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
93
Note 13 – California Public Employees’ Retirement System (Continued)
A. Summary (Continued)
Deferred Inflows of Resources
Deferred inflows of resources are reported in the accompanying Statement of Net Position as follows:
Governmental Business-type
Activities Activities Total
Deferred inflows of resources:
Difference between projected and actual experience
CalPERS Miscellaneous Plan - City 1,618,910$ -$ 1,618,910$
CalPERS Miscellaneous Plan - SDWD - 103,679 103,679
CalPERS Safety Plan - - -
Change in plan proportion
CalPERS Miscellaneous Plan - City - - -
CalPERS Miscellaneous Plan - SDWD - 24,783 24,783
CalPERS Safety Plan 976,815 - 976,815
Difference between employer contribution and
proportionate share of contributions
CalPERS Miscellaneous Plan - City - - -
CalPERS Miscellaneous Plan - SDWD - 319,454 319,454
CalPERS Safety Plan 1,379,649 - 1,379,649
Change in assumptions
CalPERS Miscellaneous Plan - City 233,964 - 233,964
CalPERS Miscellaneous Plan - SDWD - - -
CalPERS Safety Plan - - -
Total deferred inflows of resources 4,209,338$ 447,916$ 4,657,254$
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 4,064,738$ -$
CalPERS Miscellaneous Plan - SDWD - 591,501
CalPERS Safety Plan 1,958,286 -
Total 6,023,024$ 591,501$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
94
Note 13 – 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, 2016 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 Employees’ 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, California 95814.
Benefits Provided
The City's Miscellaneous Plan is an agent multiple-employer plan that is part of the City’s portion of
CalPERS. The Miscellaneous Plan provides employees hired before October 13, 2012 with a Tier 1
benefit equal to 2.7 percent 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 two percent at 60 year of age formula.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
95
Note 13 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
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 two percent 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 three percent 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 three percent 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 percent 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 three percent 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.
Employees Covered by Benefit Terms
At June 30, 2018, the following employees were covered by the benefit terms for the City’s plans:
City City
Miscellaneous Safety
Active employees 160 62
Inactive employees or beneficiaries currently
receiving benefits 139 75
Inactive employees entitled to, but not yet receiving
benefits 134 54
Total 433 191
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
96
Note 13 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Contributions
City Miscellaneous Plan
Employee Contributions
Active City Tier 1 miscellaneous members are required to contribute eight percent of their annual
covered salary (the "employee contribution"). Effective October 13, 2012, all City Tier 1 miscellaneous
members contribute the full eight percent, which is credited to their individual accounts. Members
receiving the Tier 2 or Tier 3 benefits are required to contribute seven percent 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 normal cost contribution rate for
Fiscal Year 2018 was 10.355 percent 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, 2017, contributions were:
Contributions - employees 1,015,196$
Contributions - employer 2,944,153
City Safety Plan
Active fire and lifeguard members are required to contribute 10.5 percent 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 2018 ranged from 12.729 percent to 19.520 percent for fire members
and from 11.990 percent to 17.875 percent 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.
For the year ended June 30, 2017, the plan’s proportionate share of aggregate employer contributions
made for the Safety Plan was as follows:
Safety
Plan
Contributions - employer 1,108,343$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
97
Note 13 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
Net Pension Liability
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
For the measurement period ended June 30, 2017, the total pension liability was determined by rolling
forward the June 30, 2016 total pension liability. The June 30, 2016 and June 30, 2017 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
7.15%
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, 2016 valuation were based on the results of an
actuarial experience study for the period from 1997 to 2014, 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 No. 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 percent (net of administrative expense in 2014) to 7.65 percent as
of the June 30, 2016 measurement date to correct the adjustment which previously reduced the
discount rate for administrative expenses. In 2017, the accounting discount rate reduced from 7.65
percent to 7.15 percent.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
98
Note 13 – 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 7.15 percent. To determine whether
the municipal bond rate should be used in the calculation of the 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. The tests revealed the assets would not run out. Therefore, the
current 7.15 percent discount rate is appropriate and the use of the municipal bond rate calculation is
not deemed necessary. The long-term expected discount rate of 7.15 percent is applied to all plans in
the Public Employees’ Retirement Fund (PERF). The cash flows used in the testing were developed
assuming that both members and employers will make their required contributions on time and as
scheduled in all future years. The stress test results are presented in a detailed report titled “GASB
Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB No. 68 section.
The long-term expected rate of return on pension plan investments was determined using a building-
block method in which 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, CalPERS took into account both short-term and
long-term market return expectations as well as the expected pension fund (PERF) cash flows. Taking
into account historical returns of all the Public Employees Retirement Funds’ asset classes (which
includes the agent plan and two cost-sharing plans or PERF A, B, and C funds), 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 PERF 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 equal to the single equivalent rate calculated above and rounded down to the
nearest 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.
Asset Class
New Strategic
Allocation
Real Return
Years 1 - 10 1
Real Return Years
11 + 2
Global equity 47.00%4.90% 5.38%
Global fixed income 19.00%0.80% 2.27%
Inflation sensitive 6.00%0.60% 1.39%
Private equity 12.00%6.60% 6.63%
Real estate 11.00%
2.80% 5.21%
Infrastructure and forestland 3.00%3.90% 5.36%
Liquidity 2.00%-0.40% -0.90%
1 An expected inflation of 2.5 percent was used for this period.
2 An expected inflation of three percent was used for this period.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
99
Note 13 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
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 7.15 percent, as well as what the net pension liability would be if it
were calculated using a discount rate that is 1 percentage point lower (6.15 percent) or 1 percentage
point higher (8.15 percent) than the current rate:
Discount Rate - 1%Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
City Miscellaneous 40,972,188$ 26,039,077$ 13,760,316$
City Safety 35,605,258 22,930,965 12,570,362
Plan's Net Pension Liability/(Asset)
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, 2016 (Valuation Date) 93,655,248$ 69,611,805$ 24,043,443$
Changes Recognized for the Measurement Period:
Service Cost 2,427,983 - 2,427,983
Interest on the total pension liability 6,965,613 - 6,965,613
Changes of benefit terms - - -
Difference between expected and actual experience (1,781,097) - (1,781,097)
Changes of assumptions 6,066,080 - 6,066,080
Plan to plan resource movement - - -
Contributions from the employer - 2,944,153 (2,944,153)
Contributions from employees - 1,015,196 (1,015,196)
Net investment income, net of administrative expense - 7,826,373 (7,826,373)
Benefit payments, including refunds of employee
contributions (3,466,120) (3,466,120) -
Administrative expense - (102,777) 102,777
Net Changes during July 1, 2016 to June 30, 2017 10,212,459$ 8,216,825$ 1,995,634$
Balance at June 30, 2017 (Measurement Date) 103,867,707$ 77,828,630$ 26,039,077$
Increase (Decrease)
Miscellaneous Plan
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
100
Note 13 – 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)
As of June 30, 2018, 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 June 30, 2016 (Valuation date) 83,418,229$ 63,591,785$ 19,826,444$
Balance at June 30, 2017 (Measurement date) 90,584,327 67,653,362 22,930,965
Net changes during 2016-2017 7,166,098$ 4,061,577$ 3,104,521$
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, 2017, 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, 2016 rolled forward to June 30, 2017 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, 2016). 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, 2017). 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, 2017 less the sum of all additional side fund (or unfunded
liability) contributions made by all employers during the measurement period (2016-17).
(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.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
101
Note 13 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
(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, 2017 was as
follows:
Safety
Plan
Proportionate share at June 30, 2016 0.38281%
Proportionate share at June 30, 2017 0.38377%
Change - Increase/(Decrease) 0.00096%
Pension Plan Fiduciary Net Position
Detailed information about the Miscellaneous and Safety Plans’ fiduciary net position is available in a
separately issued CalPERS financial report.
Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension
For the year ended June 30, 2018, the City recognized pension expense of $4,064,738 for the
Miscellaneous Plan and $1,958,286 for the Safety Plan.
At June 30, 2018, the City reported deferred outflows resources and deferred inflows of resources
related to pensions from the following sources:
Deferred outflows Deferred inflows Deferred outflows Deferred inflows Deferred outflows Deferred inflows
of Resources of Resources of Resources of Resources of Resources of Resources
Difference between expected and actual experience -$ (1,618,910)$ 195,569$ -$ 195,569$ (1,618,910)$
Changes of assumptions 4,281,939 (233,964) 3,542,178 - 7,824,117 (233,964)
Net difference between projected and actual earning on
pension plan investments 946,270 - 836,513 - 1,782,783 -
Difference between employer's actual contributions
and proportionate share of contributions - - - (1,379,649) - (1,379,649)
Adjustments due to difference in proportions - - 502,204 (976,815) 502,204 (976,815)
Total 5,228,209$ (1,852,874)$ 5,076,464$ (2,356,464)$ 10,304,673$ (4,209,338)$
TotalMiscellaneous Plan Safety Plan
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
102
Note 13 – California Public Employees’ Retirement System (Continued)
B. City of Encinitas (not including the San Dieguito Water District) (Continued)
The $5,959,295 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended June
30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized as pension expense as follows:
Deferred Outflows/ Deferred Outflows/
(Inflows) of (Inflows) of Deferred Outflows/
Resources Resources (Inflows) of
Measurement Period Miscellaneous Safety Resources
Ending June 30 Plan Plan Total
2018 791,478$ (75,288)$ 716,190$
2019 2,272,769 2,111,571 4,384,340
2020 885,189 1,173,191 2,058,380
2021 (574,101) (489,474) (1,063,575)
3,375,335$ 2,720,000$ 6,095,335$
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
percent at 55 years of age, calculated based on the single highest year of qualifying compensation. As
of October 13, 2012, SDWD 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 two percent 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 two percent 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, 2018
103
Note 13 – California Public Employees’ Retirement System (Continued)
C. San Dieguito Water District Miscellaneous Plan (SDWD Plan) (Continued)
Employees Covered by Benefit Terms
At June 30, 2018, 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 33
Inactive employees entitled to, but not yet receiving
benefits 6
Total 62
Contributions
Active members in the Tier 1 Plan are required to contribute eight percent of their annual covered salary
(the "employee contribution"). Effective October 13, 2012, all Tier 1 members contribute the full eight
percent, which is credited to their individual accounts. Members receiving the Tier 2 or Tier 3 benefits
are required to contribute seven percent and 6.25 percent 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
2017-18 ranged from 6.533 percent to 11.675 percent. 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, 2017, the SDWD Plan’s proportionate share of aggregate employer
contributions made for each plan was as follows:
SDWD
Plan
Contributions - employer 472,819$
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions
As of June 30, 2018, 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 June 30, 2016 (valuation date) 21,875,339$ 15,586,708$ 6,288,631$
Balance at June 30, 2017 (measurement date) 23,132,699 15,991,467 7,141,232
Net changes during Fiscal Year 2016-2017 1,257,360$ 404,759$ 852,601$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
104
Note 13 – 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 Plan is measured as of June 30, 2017, 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, 2016 rolled forward to June 30, 2017 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 plan 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, 2016). 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, 2017). 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, 2016 less the sum of all additional side fund (or unfunded
liability) contributions made by all employers during the measurement period (FY 2016-17).
(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, 2018
105
Note 13 – 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, 2017 was as
follows:
SDWD
Plan
Proportionate share at June 30, 2016 0.1810300%
Proportionate share at June 30, 2017 0.1811600%
Change - Increase/(Decrease) 0.0001300%
For the year ended June 30, 2018, the City recognized pension expense of $591,501 for the SDWD
Plan. At June 30, 2018 the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred outflows Deferred inflows
of Resources of Resources
Difference between expected and actual experience -$ (103,679)$
Changes of assumptions 891,674 -
Net difference between projected and actual earnings on
pension plan investments 218,306 -
Difference between employer's actual contributions
and proportionate share of contributions - (319,454)
Adjustments due to difference in proportions 533,634 (24,783)
Total 1,643,614$ (447,916)$
The $504,492 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended June
30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized as pension expense as follows:
Measurement Period Pension
Ending June 30 Expense
2019 231,031$
2020 687,707
2021 406,573
2022 (129,613)
2023 -
Thereafter -
1,195,698$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
106
Note 13 – 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, 2017, the total pension liability was determined by rolling
forward the June 30, 2016 total pension liability. The June 30, 2016 and June 30, 2017 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
7.15%
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, 2016 valuation were based on the results of an
actuarial experience study for the period from 1997 to 2014, 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 No. 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 percent (net of administrative expense in 2014) to 7.65 percent as
of the June 30, 2016 measurement date to correct the adjustment which previously reduced the
discount rate for administrative expenses. In 2017, the accounting discount rate reduced from 7.65
percent to 7.15 percent. The CalPERS Board of Directors has approved reducing the discount rate to
seven percent by 2020.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
107
Note 13 – 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 7.15 percent. To determine whether
the municipal bond rate should be used in the calculation of the 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. The tests revealed the assets would not run out. Therefore, the
current 7.15 percent discount rate is appropriate and the use of the municipal bond rate calculation is
not deemed necessary. The long-term expected discount rate of 7.15 percent is applied to all plans in
the Public Employees’ Retirement Fund (PERF). The cash flows used in the testing were developed
assuming that both members and employers will make their required contributions on time and as
scheduled in all future years. The stress test results are presented in a detailed report called “GASB
Crossover Testing Report” that can be obtained on CalPERS’ website under the GASB No. 68 section.
The long-term expected rate of return on pension plan investments was determined using a building-
block method in which 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, CalPERS took into account both short-term and
long-term market return expectations as well as the expected pension fund (PERF) cash flows. Taking
into account historical returns of all the Public Employees Retirement Funds’ asset classes (which
includes the agent plan and two cost-sharing plans or PERF A, B, and C funds), 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 PERF 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 equal to the single equivalent rate calculated above and rounded down to the
nearest 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.
Asset Class
New Strategic
Allocation
Real Return
Years 1 - 10 1
Real Return Years
11 + 2
Global equity 47.00%4.90% 5.38%
Global fixed income 19.00%0.80% 2.27%
Inflation sensitive 6.00%0.60% 1.39%
Private equity 12.00%6.60% 6.63%
Real estate 11.00%
2.80% 5.21%
Infrastructure and forestland 3.00%3.90% 5.36%
Liquidity 2.00%-0.40% -0.90%
1 An expected inflation of 2.5 percent was used for this period.
2 An expected inflation of three percent was used for this period.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
108
Note 13 – California Public Employees’ Retirement System (Continued)
C. San Dieguito Water District Miscellaneous Plan (SDWD Plan) (Continued)
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 (6.15 percent) or one percentage point higher (8.15 percent) than the current rate:
Discount Rate - 1%Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
SDWD Plans 10,323,063$ 7,141,232$ 4,505,982$
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.
Note 14 – 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, 2017, and
applies to Fiscal Years 2017 and 2018.
A. Summary
Aggregate Net OPEB Liability
Aggregate net OPEB liability is reported in the accompanying Statement of Net Position as follows:
Governmental Business-Type
Activities Activities
City Plan 9,145,131$ -$
SDWD Plan - 315,665
Total 9,145,131$ 315,665$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
109
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
A. Summary (Continued)
Deferred Outflows of Resources
Deferred outflows of resources related to OPEB are reported in the accompanying Statement of Net
Position as follows:
Governmental Business-Type
Activities Activities Total
Deferred outflows of resources:
Pension contribution made after measurement date:
City Plan 958,415$ -$ 958,415$
SDWD Plan - 53,291 53,291
Total deferred outflows of resources 958,415$ 53,291$ 1,011,706$
Deferred Inflows of Resources
Deferred inflows of resources related to OPEB are reported in the accompanying Statement of Net
Position as follows:
Governmental Business-Type
Activities Activities Total
Deferred inflows of resources:
Difference between projected and actual earnings on
pension plan investments:
City Plan 155,076$ -$ 155,076$
SDWD Plan - 7,074 7,074
Total deferred inflows of resources 155,076$ 7,074$ 162,150$
OPEB Expense
OPEB expenses are included in the accompanying Statement of Revenues, Expenses, and Changes
in Net Position as follows:
Governmental Business-Type
Activities Activities
City Plan 787,931$ -$
SDWD Plan - 34,933
Total 787,931$ 34,933$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
110
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
B. 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’s financial obligation is to provide the CalPERS minimum
required employee contribution ($128 per month in 2017, $133 per month in 2018, and in future years,
indexed to medical CPI increases) except for former Encinitas Fire Protection District employees hired
on or before March 15, 1995 who receive full retiree health benefits for both the employee and their
dependents. The City does not provide a retiree contribution for dental, vision, or life insurance benefits.
The City's OPEB plan does not issue a separate stand-alone report.
The City has elected to join the California Employers' Retiree Benefit Trust (the "Trust") in accordance
with GASB Statement No. 75, which provides a means to fund the annual OPEB costs, referred to as
the Actuarially Determined Contribution (ADC). The ADC includes the normal cost (current accrual for
benefits being earned) plus an amortization of the unfunded accrued liability or net OPEB liability over
15 years on level-percentage of pay basis. The City’s funding policy is to pre-fund the ADC through the
Trust.
Eligibility
Employees of the City are eligible for retiree health benefits if they retire from the City and commence
pension benefits under PERS (typically on or after age 50 with at least five years of PERS eligible
service). Membership in the plan consisted of the following at June 30, 2017, the date of the latest
actuarial valuation:
City
Plan
Active plan members 206
Inactive plan members entitled to, but not yet
receiving benefits 88
Total 294
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
111
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
B. City of Encinitas Retiree Health Plan (Continued)
Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to
calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2017. The net
OPEB liability at June 30, 2018 was:
City
Plan
Total OPEB Liability 12,639,192$
Plan Fiduciary Net Position (3,494,061)
Net OPEB Liability 9,145,131$
Actuarial Assumptions
The net OPEB liability in the June 30, 2017 actuarial valuation was determined using the following
actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate 7.00%
Inflation 2.75%
Wage Inflation 3.00%
Expected Rate of Return
Merit Increases:
Pre-retirement Turnover
Pre-retirement Mortality
Post-retirement Mortality
Healthcare Trend Rate
Entry Age Normal
7.00% per annum. This discount rate assumes the City continues to fully
fund for its retiree benefits throught the California Employers' Retiree Benefit
Trust (CERBT) under its investment strategy 1 of 7.28% with an additional
margin for adverse deviation.
Merit increases from the most recent CalPERS pension plan experience
study. The benefits are not payroll related, but each individual's projected
cost is allocated over their lifetime as a level-percentage of pay.
According to the termination rates under the CalPERS pension plan.
According to the pre-retirement mortality rates under the CalPERS pension
plan updated to reflect the most recent experience study.
According to the post-retirement mortality rates under the CalPERS pension
plan updated to reflect the most recent experience study.
An annual healthcare cost trend rate of 6.5 percent initially reduced by
decrements to an ultimate of five percent thereafter.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period July 1, 2016 to June 30, 2017.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
112
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
B. City of Encinitas Retiree Health Plan (Continued)
Discount Rate
The discount rate used to measure the net OPEB liability was seven percent. This discount rate
assumes the City continues to fully fund for its retiree health benefits through the California Employers’
Retiree Benefit Trust (CERBT) under its investment allocation strategy 1. The rate reflects the CERBT
published median interest rate for strategy 1 of 7.28 percent with an additional margin for adverse
deviation.
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.
Asset Class Target Allocation
Long-term Expected
Real Rate of Return1
Global equity 57.00%5.50%
Fixed income 27.00%2.35%
Inflation sensitive 5.00%1.50%
Commodities 3.00%1.75%
Real estate 8.00%
3.65%
1 Long-term expected rate of return is seven percent
Change in the Net OPEB Liability
Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2016 (as restated) 12,497,648$ 2,892,682$ 9,604,966$
Changes Recognized for the Measurement Period:
Service Cost 178,018 - 178,018
Interest on the total OPEB liability 856,058 - 856,058
Employer contributions - 1,092,690 (1,092,690)
Net investment income - 403,267 (403,267)
Benefit payments, including refunds of member
contributions (892,532) (892,532) -
Administrative expenses - (2,046) 2,046
Net Changes during July 1, 2016 to June 30, 2017 141,544$ 601,379$ (459,835)$
Balance at June 30, 2017 (Measurement Date) 12,639,192$ 3,494,061$ 9,145,131$
City Plan
Increase (Decrease)
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
113
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
B. City of Encinitas Retiree Health Plan (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability
would be if it were calculated using a discount rate 1-percentage-point lower (six percent) or 1-
percentage-point higher (eight percent) than the current discount rate:
Discount Rate - 1%Current Discount Discount Rate + 1%
(6.00%) Rate (7.00%) (8.00%)
City Plan 10,615,175$ 9,145,131$ 7,922,608$
Plan's Net OPEB Liability/(Asset)
Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates
The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability
would be if it were calculated using healthcare cost trend rates 1-percentage-point lower
(5.0%HMO/5.5%PPO decreasing to 4.0%HMO/4.5%PPO) or 1-percentage-point higher
(7.0%HMO/6.5%PPO decreasing to 6.0%HMO/6.5%PPO) than the current healthcare cost trend rates:
(5.00% HMO/5.50%PPO (6.00% HMO/6.50%PPO (7.00% HMO/7.50%PPO
decreasing to decreasing to decreasing to
4.00% HMO/4.50% PPO) 5.00% HMO/5.50% PPO) 6.00% HMO/6.50% PPO)
City Plan 7,871,604$ 9,145,131$ 10,673,018$
Plan's Net OPEB Liability/(Asset)
Contributions
The City’s policy is to fund the ADC, which includes the normal cost (current accrual for benefits being
earned) plus an amortization of the net (unfunded accrued) OPEB liability. Contributions during the
measurement period were the following:
City
Plan
Contributions - employer 1,092,690$
OPEB Liabilities, OPEB Expense and Deferred Outflows/Inflows of Resources to OPEB
For the year ended June 30, 2018, the City recognized OPEB expense of $787,931 for the City Plan. At
June 30, 2018 the City reported deferred outflows of resources and deferred inflows of resources related
to OPEB from the following sources:
Deferred outflows Deferred inflows
of Resources of Resources
Changes of assumptions -$ (155,076)$
-$ (155,076)$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
114
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
B. City of Encinitas Retiree Health Plan (Continued)
The $958,415 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net OPEB liability in the year ended June 30,
2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to OPEB will be recognized as OPEB expense as follows:
Measurement Period OPEB
Ending June 30 Expense
2018 (38,769)$
2019 (38,796)
2020 (38,796)
2021 (38,715)
2022 -
Thereafter -
(155,076)$
C. 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, 2017, and applies to Fiscal
Years 2016-17 and 2017-18.
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.
SDWD has elected to join the California Employers' Retiree Benefit Trust (the "Trust") in accordance
with GASB Statement No. 75, which provides a means to fund the annual OPEB costs, referred to as
the Actuarially Determined Contribution (ADC). The ADC includes the normal cost (current accrual for
benefits being earned) plus an amortization of the unfunded accrued liability or net OPEB liability over
15 years on a level-percentage of pay basis. SDWD’s funding policy is to pre-fund the ADC through the
trust.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
115
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
C. San Dieguito Water District – Retiree Health Plan (Continued)
Eligibility
Employees of SDWD are eligible for retiree health benefits if they retire from SDWD and commence
pension benefits under CalPERS (typically on or after age 50 with at least five years of CalPERS eligible
service). Membership in the plan consisted of the following at June 30, 2017, the date of the latest
actuarial valuation:
SDWD
Plan
Active plan members 22
Inactive plan members entitled to, but not yet
receiving benefits 13
Total 35
Net OPEB Liability
SDWD’s net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to
calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2017. The net
OPEB liability at June 30, 2018 was:
SDWD
Plan
Total OPEB Liability 493,240$
Plan Fiduciary Net Position (177,575)
Net OPEB Liability 315,665$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
116
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
C. San Dieguito Water District – Retiree Health Plan (Continued)
Actuarial Assumptions
The net OPEB liability in the June 30, 2017 actuarial valuation was determined using the following
actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate 7.00%
Inflation 2.75%
Wage Inflation 3.00%
Expected Rate of Return
Merit Increases:
Pre-retirement Turnover
Pre-retirement Mortality
Post-retirement Mortality
Healthcare Trend Rate
According to the post-retirement mortality rates under the CalPERS pension
plan updated to reflect the most recent experience study.
An annual healthcare cost trend rate of 6.5 percent initially reduced by
decrements to an ultimate of five percent thereafter.
Entry Age Normal
7.00% per annum. This discount rate assumes the SDWD continues to fully
fund for its retiree benefits throught the California Employers' Retiree Benefit
Trust (CERBT) under its investment strategy 1 of 7.28% with an additional
margin for adverse deviation.
Merit increases from the most recent CalPERS pension plan experience
study. The benefits are not payroll related, but each individual's projected
cost is allocated over their lifetime as a level-percentage of pay.
According to the termination rates under the CalPERS pension plan.
According to the pre-retirement mortality rates under the CalPERS pension
plan updated to reflect the most recent experience study.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period July 1, 2016 to June 30, 2017.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
117
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
C. San Dieguito Water District – Retiree Health Plan (Continued)
Discount Rate
The discount rate used to measure the net OPEB liability was seven percent. This discount rate
assumes the City continues to fully fund for its retiree health benefits through the California Employers’
Retiree Benefit Trust (CERBT) under its investment allocation strategy 1. The rate reflects the CERBT
published median interest rate for strategy 1 of 7.28 percent with an additional margin for adverse
deviation.
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.
Asset Class Target Allocation
Long-term Expected
Real Rate of Return1
Global equity 57.00%
5.50%
Global fixed income 27.00%2.35%
Inflation sensitive 5.00%1.50%
Private equity 3.00%
1.75%
Real estate 8.00%3.65%
1 Long-term expected rate of return is seven percent
Change in the Net OPEB Liability
Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2016 (as restated) 475,974$ 124,836$ 351,138$
Changes Recognized for the Measurement Period:
Service Cost 13,309 - 13,309
Interest on the total OPEB liability 33,225 - 33,225
Employer contributions - 63,332 (63,332)
Net investment income - 18,770 (18,770)
Benefit payments, including refunds of member -
contributions (29,268) (29,268) -
Administrative expenses - (95) 95
Net Changes during July 1, 2016 to June 30, 2017 17,266$ 52,739$ (35,473)$
Balance at June 30, 2017 (Measurement Date) 493,240$ 177,575$ 315,665$
SDWD Plan
Increase (Decrease)
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
118
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
C. San Dieguito Water District – Retiree Health Plan (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of SDWD, as well as what SDWD’s net OPEB liability
would be if it were calculated using a discount rate 1-percentage point lower (six percent) or 1-
percentage point higher (eight percent) than the current discount rate:
Discount Rate - 1%Current Discount Discount Rate + 1%
(6.00%) Rate (7.00%) (8.00%)
SDWD Plan 375,313$ 315,665$ 265,912$
Plan's Net OPEB Liability/(Asset)
Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates
The following presents the net OPEB liability of SDWD, as well as what SDWD’s net OPEB liability
would be if it were calculated using healthcare cost trend rates 1-percentage point lower
(5.0%HMO/5.5%PPO decreasing to 4.0%HMO/4.5%PPO) or 1-percentage point higher
(7.0%HMO/6.5%PPO decreasing to 6.0%HMO/6.5%PPO) than the current healthcare cost trend rates:
(5.00% HMO/5.50%PPO (6.00% HMO/6.50%PPO (7.00% HMO/7.50%PPO
decreasing to decreasing to decreasing to
4.00% HMO/4.00% PPO) 5.00% HMO/5.00% PPO) 6.00% HMO/6.00% PPO)
SDWD Plan 261,886$ 315,665$ 380,731$
Plan's Net OPEB Liability/(Asset)
Contributions
SDWD’s policy is to fund the ADC, which includes the normal cost (current accrual for benefits being
earned) plus an amortization of the net (unfunded accrued) OPEB liability. Contributions during the
measurement period were the following:
SDWD
Plan
Contributions - employer 53,291$
OPEB Liabilities, OPEB Expense and Deferred Outflows/Inflows of Resources to OPEB
For the year ended June 30, 2018, SDWD recognized OPEB expense of $34,933 for the SDWD Plan.
At June 30, 2018 SDWD reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Deferred outflows Deferred inflows
of Resources of Resources
Net difference between projected and actual earnings on
OPEB plan investments -$ (7,074)$
-$ (7,074)$
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
119
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
C. San Dieguito Water District – Retiree Health Plan (Continued)
The $52,391 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net OPEB liability in the year ended June 30,
2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to OPEB will be recognized as OPEB expense as follows:
Measurement Period OPEB
Ending June 30 Expense
2018 (1,769)$
2019 (1,769)
2020 (1,769)
2021 (1,767)
2022 -
Thereafter -
(7,074)$
Note 15 – 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.
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
120
Note 16 – Special Assessment Debt
City of Encinitas - Community Facilities District (CFD) #1: Encinitas Ranch Community
During Fiscal Year 2012-13, the City, on behalf of the residents and businesses of the Community Facilities
District (“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 six percent of the average annual debt
service of the prior bonds.
As of June 30, 2018, the outstanding balance on the 2012 Special Tax Refunding Bonds was $25,445,000.
The City acts solely as an agent for CFD #1. The City has no duty or obligation to pay any liabilities or
potential liabilities of the district. Neither the full faith and credit, nor the taxing power of the City or any other
City related agency, is pledged to the repayment of these 2012 Special Tax Refunding Bonds. Therefore,
such bonds are not considered to be a liability of the City and are not included in the accompanying basic
financial statements.
City of Encinitas – Duties and Responsibilities
The City acts as the agent for this Assessment District, collecting the assessments and paying the District’s
bills, as well as other administrative duties. The City has no duty or obligation to pay any liabilities or
potential liabilities of the District. Neither the full faith and credit, nor the taxing power of the City or any
other City related agency, is pledged in connection with this bond issue. Therefore, such bonds are not
considered to be a liability of the City and are not included in the accompanying basic financial statements.
Note 17 – Other Required Disclosures
Deficit Fund Balances/Net Position
At June 30, 2018, the following governmental and proprietary funds have deficits that are anticipated to be
funded from future grants, other revenues, and operating or capital transfers:
Fund Type Funds Deficit
Special Revenue Infrastructure Improvements (14,151,793)$
Internal Service Wastewater Support (58)
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
121
Note 18 – Prior Period Adjustment
The City recorded the following prior period adjustments to the beginning net position of the Governmental
Activities, Business-Type Activities, and the San Dieguito Water District (“SDWD”) major enterprise fund in
order to record beginning balances of OPEB-related items as part of the implementation of GASB
Statement No. 75.
Governmental Business-Type Major Enterprise
Activities Activities Fund
Net position at July 1, 2017, as previously reported 195,137,378$ 124,284,676$ 45,730,584$
To implement GASB No. 75 for net OPEB liability (8,512,276) (287,810) (287,810)
Net position at July 1, 2017, as restated 186,625,102$ 123,996,866$ 45,442,774$
122
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123
REQUIRED SUPPLEMENTARY
INFORMATION (UNAUDITED)
124
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City of Encinitas
Required Supplementary Information (Unaudited)
For the Year Ended June 30, 2018
125
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. It 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.
Budgets for the General Fund 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 (Unaudited) (Continued)
For the Year Ended June 30, 2018
126
Note 2 – Budgetary Comparison Schedule
General Fund
Variance with
Original Final Actual Final Budget
REVENUES:
Taxes:
Property 43,192,718$ 43,192,718$ 44,682,773$ 1,490,055$
Real property transfer 550,000 550,000 655,091 105,091
Sales 13,263,424 13,263,424 13,252,053 (11,371)
Franchise 2,277,500 2,277,500 2,201,388 (76,112)
Transient occupancy 1,688,000 1,688,000 2,036,191 348,191
Total taxes 60,971,642 60,971,642 62,827,496 1,855,854
Licenses and permits 246,000 246,000 239,799 (6,201)
Intergovernmental 530,346 619,140 795,578 176,438
Charges for services 7,006,469 7,100,769 7,280,374 179,605
Fines, forfeitures and penalties 746,653 746,653 704,216 (42,437)
Use of money and property 751,003 738,203 807,881 69,678
Other 600,200 1,217,403 1,192,914 (24,489)
Total revenues 70,852,313 71,639,810 73,848,258 2,208,448
EXPENDITURES:
General government:
City Council 438,990 438,990 374,023 64,967
City Attorney 375,500 558,450 558,040 410
City Manager 4,545,657 4,641,586 4,250,081 391,505
City Clerk 421,804 421,804 407,338 14,466
Finance 1,766,309 1,799,259 1,698,715 100,544
Non-departmental 3,639,843 4,132,893 3,979,708 153,185
Total general government 11,188,103 11,992,982 11,267,905 725,077
Public safety:
Law enforcement 14,322,777 14,322,777 14,243,939 78,838
Fire and marine safety 14,755,021 15,191,414 15,040,584 150,830
Total public safety 29,077,798 29,514,191 29,284,523 229,668
Public works:
Administration 321,278 309,803 239,617 70,186
Environmental programs 2,050 - 2,050
Street maintenance 2,636,542 2,629,450 2,359,089 270,361
Facility maintenance 1,289,777 1,278,437 1,244,905 33,532
Stormwater 899,273 899,273 673,112 226,161
Total public works 5,146,870$ 5,119,013$ 4,516,723$ 602,290$
Budgeted Amounts
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
127
Note 2 – Budgetary Comparison Schedule (Continued)
General Fund (Continued)
Variance with
Original Final Actual Final Budget
Development services - planning:
Planning 3,128,904$ 3,117,429$ 2,823,177$ 294,252$
Code enforcement 2,548,630 2,606,230 2,317,174 289,056
Building services 751,620 740,145 699,227 40,918
Total development services - planning 6,429,154 6,463,804 5,839,578 624,226
Development services - engineering:
City engineering 1,030,509 1,079,034 919,323 159,711
Traffic engineering 671,163 671,163 596,202 74,961
Stormwater 853,789 863,789 645,295 218,494
Coastal zone management 841,403 1,241,001 907,145 333,856
Street lighting 17,320 17,320 1,493 15,827
Total development services - engineering 3,414,184 3,872,307 3,069,458 802,849
Parks and recreation:
Administration 1,058,749 1,082,656 1,080,338 2,318
Park services 2,257,435 2,290,620 2,233,535 57,085
Beach services 576,965 590,765 464,094 126,671
Recreational services 707,934 706,884 599,231 107,653
Community and senior center 2,618,726 2,725,846 2,396,498 329,348
Total parks and recreation 7,219,809 7,396,771 6,773,696 623,075
Capital outlay:
Public safety 28,845 152,255 151,487 768
Public works 34,000 85,239 77,942 7,297
Parks and recreation 63,000 79,850 7,835 72,015
Total capital outlay 125,845 317,344 237,264 80,080
Total expenditures 62,601,763 64,676,412 60,989,147 3,687,265
EXPENDITURES 8,250,550 6,963,398 12,859,111 5,895,713
OTHER FINANCING SOURCES (USES)
Transfers in - operating 1,214,192 1,214,192 1,180,601 (33,591)
Transfers in - capital - 2,282,001 192,001 (2,090,000)
Transfers in - debt service - - 216,396 216,396
Transfers out - operating (2,875,244) (2,871,886) (2,789,701) 82,185
Transfers out - capital (3,758,931) (5,795,205) (5,795,205) -
Transfers out - debt service (4,020,527) (4,020,527) (3,721,337) 299,190
Transfers out - other - (500,000) (500,000) -
Total other financing sources (uses)(9,440,510) (9,691,425) (11,217,245) (1,525,820)
NET CHANGE IN FUND BALANCE (1,189,960)$ (2,728,027)$ 1,641,866 4,369,893$
Fund balance - beginning of year 25,651,592
Fund balance - end of year 27,293,458$
Budgeted Amounts
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
128
Note 2 – Budgetary Comparison Schedule (Continued)
Infrastructure Improvements Special Revenue Fund
Original Final Actual Variance with
Budget Budget Amounts Final Budget
REVENUES:
Taxes and assessments 422,000$ 422,000$ 518,116$ 96,116$
Intergovernmental 3,624,551 6,627,026 4,799,952 (1,827,074)
Use of money and property - - 23,933 23,933
Total revenues 4,046,551 7,049,026 5,342,001 (1,707,025)
EXPENDITURES:
Current:
General government 225,066 227,981 215,020 12,961
Total expenditures 225,066 227,981 215,020 12,961
REVENUES OVER
(UNDER) EXPENDITURES 3,821,485 6,821,045 5,126,981 (1,694,064)
OTHER FINANCING SOURCES (USES):
Transfers in - - 4,691,000 (4,691,000)
Transfers out (4,130,484) (7,125,853) (11,786,185) (4,660,332)
Total other financing sources (uses)(4,130,484) (7,125,853) (7,095,185) (9,351,332)
NET CHANGE IN FUND BALANCE (308,999)$ (304,808)$ (1,968,204) (1,663,396)$
Fund balance - beginning of year (12,183,589)
Fund balance - end of year (14,151,793)$
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
129
Note 3 – Schedule of Changes in the Net Pension Liability and Related Ratios
Last Ten Fiscal Years*
City Miscellaneous Plan
Total Pension Liability 2016-17 2015-16 2014-15 2013-14
Service cost 2,427,983$ 2,192,399$ 2,261,277$ 2,448,194$
Interest on total pension liability 6,965,613 6,690,503 6,333,421 5,943,955
Differences between expected and actual experience (1,781,097) (801,667) (126,649) -
Changes in assumptions 6,066,080 - (1,637,757) -
Changes in benefit terms - - - -
Benefit payments, including refunds of employee contributions (3,466,120) (3,178,023) (3,003,676) (2,990,732)
Net change in total pension liability 10,212,459 4,903,212 3,826,616 5,401,417
Total pension liability - beginning 93,655,248 88,752,036 84,925,420 79,524,003
Total pension liability - ending (a)103,867,707$ 93,655,248$ 88,752,036$ 84,925,420$
Plan fiduciary net position
Contributions - employer 2,944,153$ 2,927,539$ 2,077,263$ 2,278,140$
Contributions - employee 1,015,196 1,004,970 776,061 1,043,925
Investment income (net of administrative expenses) 7,826,373 447,217 1,359,388 9,816,151
Benefit payments (3,466,120) (3,178,023) (3,003,676) (2,990,732)
Other (102,777) (41,718) 49,406 -
Net change in plan fiduciary net position 8,216,825 1,159,985 1,258,442 10,147,484
Plan fiduciary net position - beginning 69,611,805 68,451,820 67,193,378 57,045,894
Plan fiduciary net position - ending (b)77,828,630$ 69,611,805$ 68,451,820$ 67,193,378$
Net pension liability - ending (a)-(b)26,039,077$ 24,043,443$ 20,300,216$ 17,732,042$
Plan fiduciary net position as a percentage of the
total pension liability 74.93% 74.33% 77.13% 79.12%
Covered-employee payroll 12,843,071$ 12,783,667$ 12,951,932$ 13,022,309$
Net pension liability as a percentage of covered-
employee payroll 202.75% 188.08% 156.74% 136.17%
Notes to Schedule:
* Fiscal Year 2014-15 was the first year of implementation, therefore, only four years are shown.
Changes in assumptions. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In
2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a
reduction for pension plan administrative expense.) In 2014, amounts reported were based on the 7.5 percent discount rate.
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
130
Note 4 – Schedules of the City's Proportionate Share of the Net Pension Liability
Last Ten Fiscal Years*
Safety Plan
2016-2017 1 2015-2016 1 2014-2015 1 2013-2014 1
Plan's proportion of the net pension liabliity 0.38377% 0.38281% 0.35376% 0.22994%
Plan's proportionate share of the net pension liability 22,930,965$ 19,826,444$ 14,576,416$ 14,308,774$
Plan's covered-employee payroll 2 6,017,165$ 5,841,908$ 5,671,755$ 5,115,288$
Plan's proportionate share of the net pension liability as a
percentage of covered-employee payroll 381.09% 339.38% 257.00% 279.73%
Plan's fiduciary net position 67,653,362$ 63,591,785$ 65,540,377$ 62,697,310$
Plan's fiduciary net position as a percentage of the total
pension liability 74.69% 76.23% 81.81% 75.16%
Plan's proportionate share of aggregate employer contributions 3, 4 1,108,343$ 1,609,491$ 1,250,672$ 1,775,034$
Notes to Schedule:
* Fiscal Year 2014-15 was the first year of implementation, therefore, only four years are shown.
1 Historical information is required only for measurement periods for which GASB No. 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 No. 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 No. 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 em ployer 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 (Unaudited) (Continued)
For the Year Ended June 30, 2018
131
Note 4 – Schedules of the City's Proportionate Share of the Net Pension Liability (Continued)
Last Ten Fiscal Years*
San Dieguito Water District Plan
2016-2017 1 2015-2016 1 2014-2015 1 2013-2014 1
Plan's proportion of the net pension liabliity 0.18116% 0.18103% 0.18296% 0.06074%
Plan's proportionate share of the net pension liability 7,141,232$ 6,288,631$ 5,019,493$ 3,779,285$
Plan's covered-employee payroll 2 1,862,975$ 1,808,714$ 1,756,033$ 1,712,639$
Plan's proportionate share of the net pension liability as a
percentage of covered-employee payroll 383.32% 347.69% 285.84% 220.67%
Plan's fiduciary net position 15,991,467$ 15,586,708$ 16,358,655$ 18,489,458$
Plan's fiduciary net position as a percentage of the total
pension liability 69.13% 71.25% 76.52% 83.03%
Plan's proportionate share of aggregate employer contributions 3, 4 472,819$ 356,509$ 565,860$ 499,985$
Notes to Schedule:
* Fiscal Year 2014-15 was the first year of implementation, therefore, only four years are shown.
1 Historical information is required only for measurement periods for which GASB No. 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 No. 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 No. 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 (Unaudited) (Continued)
For the Year Ended June 30, 2018
132
Note 5 – Schedules of Contributions - Pension
Last Ten Fiscal Years*
City Miscellaneous Plan
2017-18 1 2016-17 1 2015-16 1 2014-15 1 2013-14 1
Actuarially determined contribution 2,999,666$ 2,723,629$ 2,585,583$ 1,815,263$ 2,278,140$
Contributions in relation to the actuarially determined contributions 2 (3,755,605) (2,944,153) (2,927,539) (2,077,263) (2,278,140)
Contribution deficiency (excess)(755,939)$ (220,524)$ (341,956)$ (262,000)$ -$
Covered-employee payroll 3, 4 13,562,192$ 13,167,177$ 12,783,667$ 12,951,932$ 13,022,309$
Contributions as a percentage of covered-
employee payroll 3 27.69% 22.36% 22.90% 16.04% 17.49%
Notes to Schedule
Valuation date:6/30/2016 6/30/2015 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 2014-15 was the first year of implementation, therefore, only five years are shown.
1 Historical information is presented only for measurement periods for which GASB No. 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 No. 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 ($13,167,177) was assumed to increase by the three percent payroll growth assumption.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2013-14 were from the June 30, 2011 public agency valuations.
The probabilities of retirement are based on the 2010
CalPERS Experience study for the period from 1997 to
2011.
7.50%, net of pension plan investment and
administrative expenses, including inflation
The probabilities of mortality are based on the 2014
CalPERS Experience Study for the period from 1997 to
2011. Pre-retirement and Post-retirement mortality rates
include 20 years of projected mortality improvement
using Scale BB published by the Society of Actuaries.
For details, see the June 30, 2014 Funding Valuation
Report
Market Value of Assets. For details, see the June 30,
2014 Funding Valuation Report.
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
133
Note 5 – Schedules of Contributions - Pension (Continued)
Last Ten Fiscal Years*
Safety Plan
2017-18 1 2016-17 1 2015-16 1 2014-15 1 2013-14 1
Contractually determined contribution (actuarially determined) 2,203,690$ 1,108,343$ 1,609,491$ 1,251,594$ 1,209,864$
Contributions in relation to the actuarially determined contributions 2 (2,203,690) (1,108,343) (1,609,491) (1,251,594) (1,209,864)
Contribution deficiency (excess)-$ -$ -$ -$ -$
Covered-employee payroll 3, 4 6,197,680$ 6,017,165$ 5,841,908$ 5,671,755$ 5,154,534$
Contributions as a percentage of covered-
employee payroll 3 35.56% 18.42% 27.55% 22.07% 23.47%
Notes to Schedule
Valuation date:6/30/2016 6/30/2015 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 2014-15 was the first year of implementation, therefore, only five years are shown.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2016-17 were from the June 30, 2015 public agency
valuations.
For details, see the June 30, 2012 Funding Valuation
Report
Actuarial Value of Assets. For details, see the June 30,
2012 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
2011.
Derived using CalPERS' membership data for all funds.
The mortality table includes 20 years of mortality
improvements using Society of Actuaries Scale BB. For
more details on this table, please refer to the 2014
experience study report.
1 Historical information is presented only for measurement periods for which GASB No. 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 No. 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 ($6,017,165) was assumed to increase by the three percent payroll growth assumption.
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
134
Note 5 – Schedules of Contributions - Pension (Continued)
Last Ten Fiscal Years*
San Dieguito Water District Plan
2017-18 1 2016-17 1 2015-16 1 2014-15 1 2013-14 1
Contractually determined contribution (actuarially determined) 504,492$ 472,819$ 356,509$ 271,845$ 241,133$
Contributions in relation to the actuarially determined contributions 2 (504,492) (472,819) (356,509) (271,845) (241,133)
Contribution deficiency (excess)-$ -$ -$ -$ -$
Covered-employee payroll 3, 4 1,918,865$ 1,862,975$ 1,808,714$ 1,756,033$ 1,712,639$
Contributions as a percentage of covered-
employee payroll 3 26.29% 25.38% 19.71% 15.48% 14.08%
Notes to Schedule
Valuation date:6/30/2016 6/30/2015 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 2014-15 was the first year of implementation, therefore, only five years are shown.
1 Historical information is presented only for measurement periods for which GASB No. 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 No. 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 ($1,862,975) was assumed to increase by the three percent payroll growth assumption.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2016-17 were from the June 30, 2015 public agency
valuations.
For details, see the June 30, 2012 Funding Valuation
Report
Actuarial Value of Assets. For details, see the June 30,
2012 Funding Valuation Report.
7.50%, net of pension plan investment and
administrative expenses, including inflation
The probabilities of retirement are based on the 2010
CalPERS Experience study for the period from 1997 to
2011.
Derived using CalPERS' membership data for all funds.
The mortality table includes 20 years of mortality
improvements using Society of Actuaries Scale BB. For
more details on this table, please refer to the 2014
experience study report.
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
135
Note 6 – Schedules of Changes in the Net OPEB Liability and Related Ratios
A. Other Postemployment Benefits (OPEB) – City’s Plan
Last Ten Fiscal Years 1
Measurement period, year ended: 2016-17 1
Total OPEB liability
Service cost 178,018$
Interest 856,058
Changes of benefit terms -
Differences between expected and actual experience -
Changes of assumptions -
Benefit payments, including refunds of member contributions (892,532)
Net change in total OPEB liability 141,544
Total OPEB liability - beginning 12,497,648
Total OPEB liability - ending (a)12,639,192$
OPEB fiduciary net position
Contributions - employer 1,092,690$
Net investment income 403,267
Benefit payments, including refunds of member contributions (892,532)
Administrative expense (2,046)
Net change in plan fiduciary net position 601,379
Plan fiduciary net position - beginning 2,892,682
Plan fiduciary net position - ending (b)3,494,061
Plan net OPEB liability - ending (a) - (b)9,145,131$
Plan fiduciary net position as a percentage of the total OPEB liability 27.64%
Covered-employee payroll 17,816,557$
Plan net OPEB liability as a percentage of covered-employee payroll 51.33%
1 Ten year historical information is not available.
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
136
Note 6 – Schedules of Changes in the Net OPEB Liability and Related Ratios (Continued)
B. Other Postemployment Benefits (OPEB) – San Dieguito Water District’s Plan
Last Ten Fiscal Years 1
Measurement period, year ended: 2016-17 1
Total OPEB liability
Service cost 13,309$
Interest 33,225
Changes of benefit terms -
Differences between expected and actual experience -
Changes of assumptions -
Benefit payments, including refunds of member contributions (29,268)
Net change in total OPEB liability 17,266
Total OPEB liability - beginning 475,974
Total OPEB liability - ending (a)493,240$
OPEB fiduciary net position
Contributions - employer 63,332$
Net investment income 18,770
Benefit payments, including refunds of member contributions (29,268)
Administrative expense (95)
Net change in plan fiduciary net position 52,739
Plan fiduciary net position - beginning 124,836
Plan fiduciary net position - ending (b)177,575
Plan net OPEB liability - ending (a) - (b)315,665$
Plan fiduciary net position as a percentage of the total OPEB liability 36.00%
Covered-employee payroll 1,802,043$
Plan net OPEB liability as a percentage of covered-employee payroll 17.52%
1 Ten year historical information is not available.
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
137
Note 7 – Schedules of Contributions - OPEB
A. Other Postemployment Benefits (OPEB) – City’s Plan
2016-17 1
Contractually determined contribution (actuarially determined) 930,499$
Contributions in relation to the actuarially determined contributions 2 (1,092,690)
Contribution deficiency (excess)(162,191)$
Covered payroll 3, 4 17,816,557$
Contributions as a percentage of covered
payroll 3 6.13%
Notes to Schedule
Valuation date:6/30/2017
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period Level percentage of pay
Asset valuation method
Inflation 2.75%
Salary increases 3.00%
Payroll growth 3.00%
Investment rate of return 7.00%
Retirement age
Mortality According to the mortality rates under
the CalPERS pension plan updated to
reflect the most recent experience study.
According to the retirement rates under
the most recent CalPERS pension plan
experience study.
The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2016-17 were from the
June 30, 2015 public agency valuations.
4 Payroll from prior year was assumed to increase by the three percent payroll growth assumption.
3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB No.
75 defines covered 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.
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.
1 Historical information is presented only for measurement periods for which GASB No. 75 is applicable.
City of Encinitas
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2018
138
Note 7 – Schedules of Contributions – OPEB (Continued)
B. Other Postemployment Benefits (OPEB) – San Dieguito Water District’s Plan
2016-17 1
Contractually determined contribution (actuarially determined) 52,780$
Contributions in relation to the actuarially determined contributions 2 (63,332)
Contribution deficiency (excess)(10,552)$
Covered payroll 3, 4 1,802,043$
Contributions as a percentage of covered
payroll 3 3.51%
Notes to Schedule
Valuation date:6/30/2017
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period Level percentage of pay
Asset valuation method
Inflation 2.75%
Salary increases 3.00%
Payroll growth 3.00%
Investment rate of return 7.00%
Retirement age
Mortality According to the mortality rates under
the CalPERS pension plan updated to
reflect the most recent experience
study.
According to the retirement rates under
the most recent CalPERS pension plan
experience study.
The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2016-17 were from the
June 30, 2015 public agency valuations.
4 Payroll from prior year was assumed to increase by the three percent payroll growth assumption.
3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB No.
75 defines covered 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.
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.
1 Historical information is presented only for measurement periods for which GASB No. 75 is applicable.
SUPPLEMENTARY INFORMATION
139
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140
NON-MAJOR
GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS:
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.
141
Grants and Development Lighting and
Housing Impact Landscaping
ASSETS
Cash and investments 1,338,562$ 4,116,975$ 3,342,758$
Receivables 325,284 - 47,769
Long-term receivable 194,466 228,166 -
Restricted cash and investments - - -
Total assets 1,858,312$ 4,345,141$ 3,390,527$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts payable and accrued liabilities 116,280$ -$ 201,177$
Due to other funds 238,265 - -
Deposits and other liabilities - 19,886 -
Total liabilities 354,545 19,886 201,177
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 194,466 228,166 -
Total deferred inflows of resources 194,466 228,166 -
Fund Balances:
Restricted 1,309,301 4,097,089 3,189,350
Total fund balances 1,309,301 4,097,089 3,189,350
Total liabilities, deferred inflows of
resources and fund balances 1,858,312$ 4,345,141$ 3,390,527$
(Continued)
Special Revenue
City of Encinitas
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2018
142
Total
Encinitas Public Other
City Financing Governmental
Debt Service Authority Funds
ASSETS
Cash and investments -$ -$ 8,798,295$
Receivables - - 373,053
Long-term receivable - - 422,632
Restricted cash and investments - 677 677
Total assets -$ 677$ 9,594,657$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts payable and accrued liabilities -$ -$ 317,457$
Due to other funds - - 238,265
Deposits and other liabilities - - 19,886
Total liabilities - - 575,608
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 422,632
Total deferred inflows of resources - - 422,632
Fund Balances:
Restricted - 677 8,596,417
Total fund balances - 677 8,596,417
Total liabilities, deferred inflows of
resources and fund balances -$ 677$ 9,594,657$
(Concluded)
City of Encinitas
Combining Balance Sheet (Continued)
Non-Major Governmental Funds
June 30, 2018
Debt Service
143
Grants and Development Lighting and
Housing Impact Landscaping
REVENUES:
Taxes and assessments 386,056$ -$ 2,113,498$
Intergovernmental 908,185 331,128 -
Development impact fees - 1,003,123 -
Use of money and property 169,983 61,081 62,394
Other 79,581 - -
Total revenues 1,543,805 1,395,332 2,175,892
EXPENDITURES:
Current:
General government 730,883 - -
Public safety 193,581 - -
Public works 6,947 - 509,646
Development services - planning 178,336 - -
Development services - engineering - - 434,878
Parks and recreation 131,786 - 974,399
Capital outlay 42,458 - -
Debt service:
Principal - - -
Interest and fiscal charges - - -
Total expenditures 1,283,991 - 1,918,923
REVENUES OVER
(UNDER) EXPENDITURES 259,814 1,395,332 256,969
OTHER FINANCING SOURCES (USES):
Transfers in 142,397 871,296 44,305
Transfers out (422,450) (1,959,456) (60,000)
Total other financing sources (uses)(280,053) (1,088,160) (15,695)
NET CHANGE IN FUND BALANCES (20,239) 307,172 241,274
FUND BALANCES:
Beginning of year 1,329,540 3,789,917 2,948,076
End of year 1,309,301$ 4,097,089$ 3,189,350$
(Continued)
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, 2018
144
Total
Encinitas Public Other
City Financing Governmental
Debt Service Authority Funds
REVENUES:
Taxes and assessments -$ -$ 2,499,554$
Intergovernmental - - 1,239,313
Development impact fees - - 1,003,123
Use of money and property 272 1,108 294,838
Other - - 79,581
Total revenues 272 1,108 5,116,409
EXPENDITURES:
Current:
General government - - 730,883
Public safety - - 193,581
Public works - - 516,593
Development services - planning - - 178,336
Development services - engineering - - 434,878
Parks and recreation - - 1,106,185
Capital outlay - - 42,458
Debt service:
Principal 438,758 1,690,000 2,128,758
Interest and fiscal charges 43,965 1,855,363 1,899,328
Total expenditures 482,723 3,545,363 7,231,000
REVENUES OVER
(UNDER) EXPENDITURES (482,451) (3,544,255) (2,114,591)
OTHER FINANCING SOURCES (USES):
Transfers in 185,981 3,535,356 4,779,335
Transfers out (216,395) - (2,658,301)
Total other financing sources (uses)(30,414) 3,535,356 2,121,034
NET CHANGE IN FUND BALANCES (512,865) (8,899) 6,443
FUND BALANCES:
Beginning of year 512,865 9,576 8,589,974
End of year -$ 677$ 8,596,417$
(Concluded)
City of Encinitas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued)
Non-Major Governmental Funds
For the Year Ended June 30, 2018
Debt Service
145
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Taxes and assessments 372,838$ 386,056$ 13,218$
Intergovernmental 946,697 908,185 (38,512)
Use of money and property 217,557 169,983 (47,574)
Other 79,581 79,581 -
Total revenues 1,616,673 1,543,805 (72,868)
EXPENDITURES:
Current:
General government 806,151 730,883 75,268
Public safety 183,432 193,581 (10,149)
Public works - 6,947 (6,947)
Development services - planning 259,797 178,336 81,461
Parks and recreation 244,208 131,786 112,422
Capital outlay 120,471 42,458 78,013
Total expenditures 1,614,059 1,283,991 330,068
REVENUES OVER
(UNDER) EXPENDITURES 2,614 259,814 257,200
OTHER FINANCING SOURCES (USES)
Transfers in 153,667 142,397 (11,270)
Transfers out (422,450) (422,450) -
Total other financing sources (uses)(268,783) (280,053) (11,270)
NET CHANGE IN FUND BALANCE (266,169)$ (20,239) 245,930$
FUND BALANCE:
Beginning of year 1,329,540
End of year 1,309,301$
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, 2018
146
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Intergovernmental 1,260,000$ 331,128$ (928,872)$
Development impact fees 1,328,668 1,003,123 (325,545)
Use of money and property 34,734 61,081 26,347
Total revenues 2,623,402 1,395,332 (1,228,070)
REVENUES OVER
(UNDER) EXPENDITURES 2,623,402 1,395,332 (1,228,070)
OTHER FINANCING SOURCES (USES)
Transfers in 871,296 871,296 -
Transfers out (1,965,935) (1,959,456) 6,479
Total other financing sources (uses)(1,094,639) (1,088,160) 6,479
NET CHANGE IN FUND BALANCE 1,528,763$ 307,172 (1,221,591)$
FUND BALANCE:
Beginning of year 3,789,917
End of year 4,097,089$
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, 2018
147
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Taxes and assessments 2,025,292$ 2,113,498$ 88,206$
Use of money and property 59,089 62,394 3,305
Total revenues 2,084,381 2,175,892 91,511
EXPENDITURES:
Current:
Public works 602,824 509,646 93,178
Development services - engineering 572,676 434,878 137,798
Parks and recreation 1,110,666 974,399 136,267
Total expenditures 2,286,166 1,918,923 367,243
REVENUES OVER
(UNDER) EXPENDITURES (201,785) 256,969 458,754
OTHER FINANCING SOURCES (USES)
Transfers in 44,305 44,305 -
Transfers out (60,000) (60,000) -
Total other financing sources (uses)(15,695) (15,695) -
NET CHANGE IN FUND BALANCE (217,480)$ 241,274 458,754$
FUND BALANCE:
Beginning of year 2,948,076
End of year 3,189,350$
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, 2018
148
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.
149
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150
Risk Wastewater Vehicle Vehicle
Management Support Maintenance Replacement Total
ASSETS
Current assets:
Cash and investments 5,788,652$ 10,575$ 26,295$ 996,842$ 6,822,364$
Accounts receivable 6,334 - 96 8,000 14,430
Inventory and prepaid items 40,472 - - - 40,472
Total current assets 5,835,458 10,575 26,391 1,004,842 6,877,266
Noncurrent assets:
Capital assets:
Utility, plant, vehicles, and equipment, net - - - 3,628,621 3,628,621
Total noncurrent assets - - - 3,628,621 3,628,621
Total assets 5,835,458 10,575 26,391 4,633,463 10,505,887
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 103,188 10,633 26,391 350 140,562
Current portion of capital leases payable - - - 258,394 258,394
Total current liabilities 103,188 10,633 26,391 258,744 398,956
Noncurrent liabilities:
Capital lease payable - - - 544,032 544,032
Total noncurrent liabilities - - - 544,032 544,032
Total liabilities 103,188 10,633 26,391 802,776 942,988
NET POSITION
Net investment in capital assets - - - 2,826,195 2,826,195
Unrestricted 5,732,270 (58) - 1,004,492 6,736,704
Total net position 5,732,270$ (58)$ -$ 3,830,687$ 9,562,899$
June 30, 2018
All Internal Service Funds
Combining Statement of Net Position
City of Encinitas
151
Risk Wastewater Vehicle Vehicle
Management Support Maintenance Replacement Total
OPERATING REVENUES:
Interfund revenues 1,072,213$ 835,846$ 562,840$ -$ 2,470,899$
Other revenues 84,405 205 10,096 25,603 120,309
Total operating revenues 1,156,618 836,051 572,936 25,603 2,591,208
OPERATING EXPENSES:
Operational support services 900,291 93,355 228,228 - 1,221,874
Administrative support 365,466 629,754 344,708 - 1,339,928
Insurance and claims 1,242,118 - - - 1,242,118
Depreciation of capital assets - - - 525,646 525,646
Total operating expenses 2,507,875 723,109 572,936 525,646 4,329,566
Operating income (loss)(1,351,257) 112,942 - (500,043) (1,738,358)
NONOPERATING REVENUES:
Gain (loss) on disposal of capital assets - - - 61,400 61,400
Interest expense - - - (26,527) (26,527)
Total nonoperating revenues - - - 34,873 34,873
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS (1,351,257) 112,942 - (465,170) (1,703,485)
Transfers in 1,128,583 - - 616,000 1,744,583
Transfers out - (113,000) - - (113,000)
Total capital contributions and transfers 1,128,583 (113,000) - 616,000 1,631,583
Net change in net position (222,674) (58) - 150,830 (71,902)
NET POSITION:
Beginning of year 5,954,944 - - 3,679,857 9,634,801
End of year 5,732,270$ (58)$ -$ 3,830,687$ 9,562,899$
For the Year Ended June 30, 2018
All Internal Service Funds
Combining Statement of Revenues, Expenses, and Changes in Net Position
City of Encinitas
152
Risk Wastewater Vehicle Vehicle
Management Support Maintenance Replacement Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from users 1,150,284$ 836,051$ 572,840$ 17,603$ 2,576,778$
Payments to employees (1,265,757) (723,109) (572,936) - (2,561,802)
Payments to suppliers and vendors (1,240,739) 5,407 20,063 (34,076) (1,249,345)
Net cash provided by (used in) operating activities (1,356,212) 118,349 19,967 (16,473) (1,234,369)
CASHFLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES:
Acquisition of capital assets - - - (827,450) (827,450)
Principal payment on long-term debt - - - (422,965) (422,965)
Interest payments on capital leases - - - (26,527) (26,527)
Proceeds from sale of capital assets - - - 61,400 61,400
Net cash (used in) capital and related financing activities - - - (1,215,542) (1,215,542)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in 1,128,583 - - 616,000 1,744,583
Transfers (out) - (113,000) - - (113,000)
Net cash provided by (used in) noncapital financing activities 1,128,583 (113,000) - 616,000 1,631,583
Net increase (decrease) in cash and cash equivalents (227,629) 5,349 19,967 (616,015) (818,328)
CASH AND CASH EQUIVALENTS:
Beginning of year 6,016,281 5,226 6,328 1,612,857 7,640,692
End of year 5,788,652$ 10,575$ 26,295$ 996,842$ 6,822,364$
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) (1,351,257)$ 112,942$ -$ (500,043)$ (1,738,358)$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation - - - 525,646 525,646
Changes in operating assets and liabilities:
Accounts receivable (6,334) - (96) (8,000) (14,430)
Inventory and prepaid items 7,290 - - 401,161 408,451
Accounts payable and accrued liabilities (5,911) 5,407 20,063 (435,237) (415,678)
Total adjustments (4,955) 5,407 19,967 483,570 503,989
Net cash provided by (used in) operating activities (1,356,212)$ 118,349$ 19,967$ (16,473)$ (1,234,369)$
For the Year Ended June 30, 2018
All Internal Service Funds
Combining Statement of Cash Flows
City of Encinitas
153
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154
AGENCY FUNDS
Community Facilities District #1 - This fund accounts for all money collected to pay for the 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 the
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.
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156
Balance Balance
July 1, 2017 Additions Deletions June 30, 2018
Community Facilities District #1
Assets:
Cash and investments 2,135,679$ 2,713,155$ (2,641,670)$ 2,207,164$
Restricted cash and investments:
Held by fiscal agents 1,979,042 2,599,046 (2,593,822) 1,984,266
Special assessments receivable 26,925,000 - (1,480,000) 25,445,000
Current assessments receivable 11,833 9,554 (11,833) 9,554
Total assets 31,051,554$ 5,321,755$ (6,727,325)$ 29,645,984$
Liabilities:
Due to bondholders 31,051,554$ 5,228,896$ (6,634,466)$ 29,645,984$
Total liabilities 31,051,554$ 5,228,896$ (6,634,466)$ 29,645,984$
Requeza Street Assessment District No. 93-1
Assets:
Cash and investments 3,515$ -$ (3,515)$ -$
Total assets 3,515$ -$ (3,515)$ -$
Liabilities:
Due to bondholders 3,515$ -$ (3,515)$ -$
Total liabilities 3,515$ -$ (3,515)$ -$
Total - All Agency Funds
Assets:
Cash and investments 2,139,194$ 2,713,155$ (2,645,185)$ 2,207,164$
Restricted cash and investments:
Held by fiscal agents 1,979,042 2,599,046 (2,593,822) 1,984,266
Special assessments receivable 26,925,000 - (1,480,000) 25,445,000
Current assessments receivable 11,833 9,554 (11,833) 9,554
Total assets 31,055,069$ 5,321,755$ (6,730,840)$ 29,645,984$
Liabilities:
Due to bondholders 31,055,069$ 5,228,896$ (6,637,981)$ 29,645,984$
Total liabilities 31,055,069$ 5,228,896$ (6,637,981)$ 29,645,984$
For the Year Ended June 30, 2018
Agency Funds
Statement of Changes in Assets and Liabilities
City of Encinitas
157
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158
STATISTICAL SECTION
(UNAUDITED)
159
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160
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 Components 162
2 Changes in Net Position 164
3 Fund Balances of Governmental Funds 168
4 Changes in Fund Balances of Governmental Funds 170
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 172
6 Principal Property Taxpayers 173
7 Property Tax Levies and Collections 175
8 Direct and Overlapping Property Tax Rates 176
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 180
10 Ratios of General Bonded Debt Outstanding 182
11 Schedule of Direct and Overlapping Bonded Debt 183
12 Legal Debt Margin Information 184
13 Historical Debt Service Coverage 186
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 188
15 General Governmental Tax Revenue by Source 189
16 Taxable Sales by Business Type 190
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 Employees by Function 191
18 Operating Indicators by Function 192
19 Capital Asset Statistics by Function 194
20 Cardiff Sanitary Division - Summary of Operational Data 198
21 San Dieguito Water District - Summary of Operational Data 202
Sources: Unless otherwise noted, the information in these schedules was derived from the Comprehensive
Annual Financial Reports for the relevant year.
(Unaudited)
161
2009 2010 2011 2012 2013
Government activities:
Net investment in capital assets 131,703,037$ 130,912,728$ 139,575,875$ 153,516,469$ 157,395,370$
Restricted 4,340,090 4,219,623 - - 9,980,695
Unrestricted 53,452,967 54,755,944 56,799,902 43,857,634 37,646,551
Total governmental activities net position 189,496,094$ 189,888,295$ 196,375,777$ 197,374,103$ 205,022,616$
Business-type activities:
Net investment in capital assets 19,422,684$ 25,014,811$ 30,076,172$ 25,155,766$ 32,247,941$
Restricted 1,048,426 - - - -
Unrestricted 68,683,799 71,916,135 72,608,845 83,232,015 79,816,600
Total business-type activities net position 89,154,909$ 96,930,946$ 102,685,185$ 108,387,781$ 112,064,541$
Primary government:
Net investment in capital assets 151,125,721$ 155,927,539$ 169,652,047$ 178,672,235$ 189,643,311$
Restricted 5,388,516 4,219,623 - - 9,980,695
Unrestricted 122,136,766 126,672,079 129,408,747 127,089,649 117,463,151
Total primary government net position 278,651,003$ 286,819,241$ 299,060,970$ 305,761,884$ 317,087,157$
(Accrual Basis of Accounting)
Fiscal Year
City of Encinitas
Net Position by Components
Last Ten Fiscal Years
162
2014 2015 2016 2017 2018
Government activities:
Net investment in capital assets 161,902,991$ 157,304,041$ 162,923,350$ 165,759,601$ 169,553,838$
Restricted 17,363,704 18,741,022 30,996,309 19,867,542 19,779,315
Unrestricted 38,446,880 9,229,896 (580,736) 9,510,235 1,963,535
Total governmental activities net position 217,713,575$ 185,274,959$ 193,338,923$ 195,137,378$ 191,296,688$
Business-type activities:
Net investment in capital assets 54,362,661$ 39,806,764$ 42,501,264$ 44,977,544$ 36,547,324$
Restricted 1,039,739 - 1,377,006 20,237 421,938
Unrestricted 62,426,804 75,781,002 75,512,969 79,286,895 95,173,238
Total business-type activities net position 117,829,204$ 115,587,766$ 119,391,239$ 124,284,676$ 132,142,500$
Primary government:
Net investment in capital assets 216,265,652$ 197,110,805$ 205,424,614$ 210,737,145$ 206,101,162$
Restricted 18,403,443 18,741,022 32,373,315 19,887,779 20,201,253
Unrestricted 100,873,684 85,010,898 74,932,233 88,797,130 97,136,773
Total primary government net position 335,542,779$ 300,862,725$ 312,730,162$ 319,422,054$ 323,439,188$
Net Position by Components
(Continued)
(Accrual Basis of Accounting)
Last Ten Fiscal Years
City of Encinitas
Fiscal Year
163
2009 2010 2011 2012 2013
Expenses:
Government activities:
General government 14,249,545$ 12,132,268$ 10,912,556$ 12,064,527$ 10,616,440$
Public safety 22,039,493 22,269,616 22,324,624 23,062,746 24,629,613
Public works 9,360,563 9,520,416 10,981,355 8,560,330 10,851,147
Planning and building 4,833,543 5,599,614 5,539,148 5,008,179 4,353,831
Engineering services 4,010,485 3,873,432 3,646,306 5,817,932 3,813,678
Parks and recreation 6,902,715 6,518,623 6,243,769 5,578,716 5,542,550
Interest and fiscal charges on long-term debt 2,266,817 2,296,422 2,029,477 1,811,714 1,932,904
Total governmental activities expenses 63,663,161 62,210,391 61,677,235 61,904,144 61,740,163
Business-type activities:
Cardiff Sanitary Division 2,854,368 3,569,880 3,715,529 3,385,439 3,373,704
San Dieguito Water District 12,955,085 11,633,694 11,622,126 12,448,911 12,200,431
Encinitas Sanitary Division 1,805,624 1,855,278 1,992,334 1,719,176 1,983,786
Affordable Housing 260,130 256,873 244,748 1,492,811 1,499,863
Recreation Programs - - - 1,187,788 1,153,840
Total business-type activities expenses 17,875,207 17,315,725 17,574,737 20,234,125 20,211,624
Total primary government expenses 81,538,368 79,526,116 79,251,972 82,138,269 81,951,787
Program revenues:
Government activities:
Charges for services:
General government 1,608,273 1,962,344 2,453,152 1,789,943 1,775,756
Public safety 103,641 105,799 98,202 99,047 91,495
Public works 19,276 668 - - -
Planning and building 1,539,851 1,521,889 1,816,765 2,155,076 1,894,785
Engineering services 759,885 660,734 1,063,822 736,786 955,986
Parks and recreation 810,667 1,126,285 1,149,350 14,580 39,946
Operating grants and contributions 4,838,455 5,392,117 6,964,053 5,896,502 3,759,864
Capital grants and contributions 3,613,636 3,437,302 4,854,393 3,626,279 6,462,979
Total governmental activities program revenues 13,293,684 14,207,138 18,399,737 14,318,213 14,980,811
Business-type activities:
Charges for services:
Cardiff Sanitary Division 5,009,340 4,979,238 4,830,204 4,970,662 4,755,573
San Dieguito Water District 11,379,337 11,046,650 12,438,502 12,922,922 13,687,156
Encinitas Sanitary Division 2,811,359 2,816,963 2,895,879 2,897,592 2,933,319
Affordable Housing 222,507 202,499 216,723 214,503 214,115
Recreation Programs - - - 1,273,007 1,059,009
Operating grants and contributions - - - 1,105,851 1,103,639
Capital grants and contributions 299,326 231,362 712,827 460,688 1,003,057
Total business-type activities program revenues 19,721,869 19,276,712 21,094,135 23,845,225 24,755,868
Total primary government program revenues 33,015,553 33,483,850 39,493,872 38,163,438 39,736,679
Governmental activities (50,369,477) (48,003,253) (43,277,498) (47,585,931) (46,759,352)
Business-type activities 1,846,662 1,960,987 3,519,398 3,611,100 4,544,244
Total net revenue (expense) (48,522,815)$ (46,042,266)$ (39,758,100)$ (43,974,831)$ (42,215,108)$
(Accrual Basis of Accounting)
Changes in Net Position
Last Ten Fiscal Years
Fiscal Year
City of Encinitas
164
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2014 2015 2016 2017 2018
Expenses:
Government activities:
General government 9,549,338$ 10,810,882$ 11,750,737$ 11,737,634$ 14,403,144$
Public safety 25,146,843 25,762,703 27,255,755 29,437,181 30,762,894
Public works 10,239,746 11,565,315 11,743,123 9,205,570 8,325,467
Planning and building 5,853,995 6,550,992 7,255,460 6,935,754 8,741,589
Engineering services 3,988,720 6,253,352 4,591,315 8,918,281 7,492,540
Parks and recreation 4,735,864 5,205,986 6,778,769 7,046,255 8,429,448
Interest and fiscal charges on long-term debt 1,913,349 2,311,944 2,494,815 2,237,069 1,755,100
Total governmental activities expenses 61,427,855 68,461,174 71,869,974 75,517,744 79,910,182
Business-type activities:
Cardiff Sanitary Division 2,922,446 4,262,565 3,857,531 3,308,454 3,086,434
San Dieguito Water District 13,552,862 15,005,767 13,462,935 13,970,919 13,800,288
Encinitas Sanitary Division 2,438,692 1,731,770 2,306,540 2,037,116 1,652,061
Affordable Housing 1,405,225 1,408,226 1,440,124 1,449,917 1,464,181
Recreation Programs 1,300,555 1,331,565 - - -
Total business-type activities expenses 21,619,780 23,739,893 21,067,130 20,766,406 20,002,964
Total primary government expenses 83,047,635 92,201,067 92,937,104 96,284,150 99,913,146
Program revenues:
Government activities:
Charges for services:
General government 1,800,630 1,629,857 1,594,277 1,675,799 1,815,086
Public safety 202,220 160,178 1,009,713 1,148,567 1,421,393
Public works - 759,918 107,279 65,746 394,647
Planning and building 2,874,894 2,737,225 2,800,413 2,954,523 3,262,604
Engineering services 1,075,885 1,055,311 1,367,902 1,143,830 1,874,562
Parks and recreation 35,791 46,846 1,741,619 1,796,918 1,405,704
Operating grants and contributions 4,345,931 3,878,422 3,349,186 3,419,730 3,253,127
Capital grants and contributions 8,756,281 4,126,194 5,409,098 4,407,963 4,851,823
Total governmental activities program revenues 19,091,632 14,393,951 17,379,487 16,613,076 18,278,946
Business-type activities:
Charges for services:
Cardiff Sanitary Division 4,605,867 4,528,551 4,761,486 4,788,884 4,885,227
San Dieguito Water District 15,297,718 14,785,858 14,684,387 14,851,977 16,852,732
Encinitas Sanitary Division 2,879,605 2,841,235 2,855,690 2,819,006 2,711,075
Affordable Housing 216,728 247,349 218,148 213,124 225,468
Recreation Programs 1,269,179 1,321,471 - - -
Operating grants and contributions 994,607 1,061,698 1,068,549 1,099,366 1,093,800
Capital grants and contributions 1,066,769 483,425 681,412 736,370 560,651
Total business-type activities program revenues 26,330,473 25,269,587 24,269,672 24,508,727 26,328,953
Total primary government program revenues 45,422,105 39,663,538 41,649,159 41,121,803 44,607,899
Governmental activities (42,336,223) (54,067,223) (54,490,487) (58,904,668) (61,631,236)
Business-type activities 4,710,693 1,529,694 3,202,542 3,742,321 6,325,989
Total net revenue (expense) (37,625,530)$ (52,537,529)$ (51,287,945)$ (55,162,347)$ (55,305,247)$
City of Encinitas
(Continued)
Fiscal Year
165
2009 2010 2011 2012 2013
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes
Property and documentary transfer taxes 35,064,401$ 32,285,155$ 32,292,988$ 32,788,129$ 34,974,578$
Sales taxes 7,340,410 8,780,203 10,244,506 10,613,188 11,585,145
Transient occupancy taxes 1,099,817 1,179,789 1,276,980 1,413,926 1,491,998
Franchise taxes 2,162,729 2,031,924 2,108,420 2,144,162 2,323,616
Intergovernmental revenues 1,866,726 794,362 1,488,770 635,097 541,079
Use of money and property 2,884,233 1,085,981 657,796 387,066 552,512
Other general revenues 1,551,584 2,238,041 1,695,520 1,780,543 1,596,026
Gain/(Loss) on sale of assets - - - - -
Impairment loss on capital assets - - - - -
Transfers - - - (668,877) 1,809,656
Total governmental activities 51,969,900 48,395,455 49,764,980 49,093,234 54,874,610
Business-type activities:
Property taxes 721,628 718,212 706,175 725,551 749,378
Intergovernmental-unrestricted - - - - 189,676
Use of money and property 974,702 395,152 508,089 188,259 3,118
Other general revenues 45,193 228,614 401,013 - -
Gain/(Loss) on sale of assets - - - - -
Transfers - - - 668,877 (1,809,656)
Total business-type activities 1,741,523 1,341,978 1,615,277 1,582,687 (867,484)
Total primary government 53,711,423 49,737,433 51,380,257 50,675,921 54,007,126
Changes in Net Position
Government activities 1,600,423 392,202 6,487,482 1,507,303 8,115,258
Business-type activities 3,588,185 3,302,965 5,134,675 5,193,787 3,676,760
Total primary government 5,188,608$ 3,695,167$ 11,622,157$ 6,701,090$ 11,792,018$
The City reports recreation programs as a business-type activity starting in Fiscal Year 2011-12.
(Accrual Basis of Accounting)
(Continued)
Fiscal Year
Changes in Net Position
Last Ten Fiscal Years
City of Encinitas
166
2014 2015 2016 2017 2018
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes
Property and documentary transfer taxes 36,414,507$ 38,508,558$ 41,210,485$ 43,494,220 46,311,814
Sales taxes 12,067,360 12,569,119 14,166,771 12,549,609 13,252,053
Transient occupancy taxes 1,570,459 1,828,116 2,018,024 2,216,145 2,562,484
Franchise taxes 2,614,844 2,761,335 2,794,144 2,545,854 2,587,443
Intergovernmental revenues 479,026 814,337 388,876 251,919 97,163
Use of money and property 705,849 880,989 611,350 770,634 958,172
Other general revenues 1,257,002 1,567,168 956,824 961,475 452,275
Gain/(Loss) on sale of assets (48,320) 107,177 8,865 1,937 61,400
Impairment loss on capital assets - - - (2,088,668) -
Transfers (33,545) (36,068) 399,112 - 20,018
Total governmental activities 55,027,182 59,000,731 62,554,451 60,703,125 66,302,822
Business-type activities:
Property taxes 787,242 834,994 906,106 959,873 1,030,168
Intergovernmental-unrestricted - - - (31,828) -
Use of money and property 357,357 (60,169) (63,690) 6,925 (446,745)
Other general revenues 63,768 63,768 153,667 - 1,247,955
Gain/(Loss) on sale of assets (187,942) 18,085 4,010 216,146 8,285
Transfers 33,545 36,068 (399,112) - (20,018)
Total business-type activities 1,053,970 892,746 600,981 1,151,116 1,819,645
Total primary government 56,081,152 59,893,477 63,155,432 61,854,241 68,122,467
Changes in Net Position
Government activities 12,690,959 4,933,508 8,063,964 1,798,457 4,671,586
Business-type activities 5,764,663 2,422,440 3,803,523 4,893,437 8,145,634
Total primary government 18,455,622$ 7,355,948$ 11,867,487$ 6,691,894$ 12,817,220$
The City reports recreation programs as a business-type activity starting in Fiscal Year 2011-12.
(Continued)
City of Encinitas
Last Ten Fiscal Years
Changes in Net Position
(Accrual Basis of Accounting)
Fiscal Year
167
2009 2010 2011(1) 2012 2013
General fund:
Reserved 5,255,137$ 4,286,026$ -$ -$ -$
Unreserved, designated 38,413,388 36,913,369 - - -
Unreserved, undesignated 3,866,759 5,789,899 - - -
Nonspendable - - 2,648,338 2,868,533 1,980,075
Restricted - - 633,245 - 7,996,400
Committed - - 42,274,327 19,371,624 9,847,719
Assigned - - - - 561,762
Unassigned - - 1,850,582 17,964,935 21,160,822
Total general fund 47,535,284$ 46,989,294$ 47,406,492$ 40,205,092$ 41,546,778$
All other governmental funds:
Reserved 3,771,850$ 3,408,409$ -$ -$ -$
Unreserved, designated 10,694,605 10,430,543 - - -
Unreserved, undesignated - - - - -
Nonspendable - - 145,686 - -
Restricted - - 8,290,163 13,471,421 13,036,985
Committed - - 7,570,021 - -
Assigned - - - 2,169,209 2,135,100
Unassigned - - - - -
Total all other governmental funds 14,466,455$ 13,838,952$ 16,005,870$ 15,640,630$ 15,172,085$
Total all governmental funds 62,001,739$ 60,828,246$ 63,412,362$ 55,845,722$ 56,718,863$
(1) GASB No.54, which requires changes in reporting categories for fund balances was implemented
in Fiscal Year 2010-11.
Fiscal Year
City of Encinitas
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
168
2014 2015 2016 2017 2018
General fund:
Reserved -$ -$ -$ -$ -$
Unreserved, designated - - - - -
Unreserved, undesignated - - - - -
Nonspendable 2,052,250 1,535,601 1,109,424 727,094 267,203
Restricted 4,079 3,009,269 - 1,472,372 251
Committed 8,136,886 8,266,796 - 13,937,399 14,691,792
Assigned 561,762 561,762 - - -
Unassigned 25,151,131 28,029,019 31,775,120 9,514,727 12,334,212
Total general fund 35,906,108$ 41,402,447$ 32,884,544$ 25,651,592$ 27,293,458$
All other governmental funds:
Reserved -$ -$ -$ -$ -$
Unreserved, designated - - - - -
Unreserved, undesignated - - - - -
Nonspendable 1,565 - 287,756 296,234 -
Restricted 17,358,060 18,741,022 4,305,652 30,282,525 34,724,312
Committed - - 1,626,219 18,998,215 17,760,602
Assigned - - 24,776,682 - -
Unassigned - - - (12,183,589) (14,945,248)
Total all other governmental funds 17,359,625$ 18,741,022$ 30,996,309$ 37,393,385$ 37,539,666$
Total all governmental funds 53,265,733$ 60,143,469$ 63,880,853$ 63,044,977$ 64,833,124$
(1) GASB No.54, which requires changes in reporting categories for fund balances was implemented
in Fiscal Year 2010-11.
City of Encinitas
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
(Continued)
Fiscal Year
169
2009 2010 2011 2012 2013
Revenues:
Taxes and assessments 47,800,573$ 46,805,219$ 48,100,768$ 49,089,142$ 51,528,542$
Intergovernmental 5,950,205 6,917,521 8,369,571 6,537,855 8,520,220
Charges for services 6,621,931 5,164,315 6,376,261 4,406,737 4,450,756
Fines, forfeitures, and penalties 746,023 761,202 856,392 657,364 611,029
Use of money and property 2,008,557 1,085,981 657,798 639,676 572,481
Other 1,110,325 2,875,491 3,803,927 2,715,266 2,141,439
Total Revenues 64,237,614 63,609,729 68,164,717 64,046,040 67,824,467
Expenditures:
Current:
General government 13,036,815 11,859,415 10,155,732 9,277,443 9,430,487
Public safety 21,636,969 22,049,239 22,107,692 22,853,121 23,655,367
Public works 6,033,513 5,888,161 6,051,253 5,843,228 6,057,646
Planning and building 4,811,020 5,599,614 5,539,148 4,655,501 4,238,882
Engineering services 3,986,859 3,873,432 3,646,306 3,804,813 3,716,994
Parks and recreation 5,811,778 5,482,578 5,293,664 4,333,303 4,377,047
Capital outlay 8,473,396 5,606,327 8,559,193 12,803,379 18,836,006
Debt service:
Principal 2,197,891 2,091,882 2,481,223 2,359,932 2,295,614
Interest and fiscal charges 2,251,116 2,332,574 2,056,501 1,872,773 2,050,068
Bond issuance costs - - 395,404 - -
Total expenditures 68,239,357 64,783,222 66,286,116 67,803,493 74,658,111
Excess (deficiency) of revenues
over (under) expenditures (4,001,743) (1,173,493) 1,878,601 (3,757,453) (6,833,644)
Other Financing Sources (Uses):
Transfer in from CFD debt service - - - - -
Operating transfers in 12,631,197 11,066,120 13,133,224 17,661,946 23,363,240
Operating transfers out (12,631,197) (11,066,120) (13,133,224) (18,354,656) (24,208,239)
Proceeds from capital lease - - - 599,639 555,384
Proceeds from sale of property - - 19,530,000 - 7,865,000
Issuance of debt - - - - -
Premium on debt - - 215,515 - 131,400
Deposit to escrow for bond refunding - - - - -
Bond discounts - - (19,040,000) - -
Total other financing sources (uses) - - 705,515 (93,071) 7,706,784
Net change in fund balances (4,001,743)$ (1,173,493)$ 2,584,116$ (3,850,524)$ 873,140$
Debt service as a percentage of
noncapital expenditures 7.3% 7.4% 7.6% 7.2% 7.3%
Fiscal Year
City of Encinitas
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
170
2014 2015 2016 2017 2018
Revenues:
Taxes and assessments 53,830,193$ 56,825,628$ 61,325,308$ 61,934,421$ 65,845,166$
Intergovernmental 5,025,480 7,022,485 6,689,475 6,436,599 6,966,193
Charges for services 5,479,847 5,315,721 6,585,518 6,688,958 7,280,374
Fines, forfeitures, and penalties 632,776 802,936 889,388 850,153 704,216
Use of money and property 724,310 899,807 1,222,730 1,285,049 1,126,652
Other 3,654,621 2,456,996 2,804,043 2,215,452 2,566,551
Total Revenues 69,347,227 73,323,573 79,516,462 79,410,632 84,489,152
Expenditures:
Current:
General government 9,109,412 9,362,214 9,288,227 10,017,430 12,213,808
Public safety 24,164,979 24,902,920 26,976,136 27,724,959 29,478,104
Public works 6,281,800 6,682,424 6,305,340 6,351,537 5,033,316
Planning and building 4,716,315 5,082,589 5,159,777 5,110,298 6,017,914
Engineering services 3,949,352 4,162,630 4,298,563 4,368,601 3,504,336
Parks and recreation 4,672,683 5,091,224 6,366,337 6,610,308 7,879,881
Capital outlay 14,548,894 18,440,036 10,799,083 12,230,552 12,933,995
Debt service:
Principal 2,661,976 2,730,686 2,783,268 2,853,417 2,128,758
Interest and fiscal charges 1,937,144 2,170,164 2,372,231 2,077,770 1,899,328
Bond issuance costs - - - - -
Total expenditures 72,042,555 78,624,887 74,348,962 77,344,872 81,089,440
Excess (deficiency) of revenues
over (under) expenditures (2,695,328) (5,301,314) 5,167,500 2,065,760 3,399,712
Other Financing Sources (Uses):
Transfer in from CFD debt service - - - - -
Operating transfers in 20,570,966 24,514,293 44,550,246 35,159,839 30,412,724
Operating transfers out (21,328,768) (25,509,616) (45,577,444) (36,650,845) (32,024,289)
Proceeds from capital lease - - - - -
Proceeds from sale of property - 13,174,373 15,645,000 - -
Issuance of debt - - 115 11,955,000 -
Premium on debt - - 772,212 1,360,284 -
Deposit to escrow for bond refunding - - (16,820,243) (14,725,914) -
Bond discounts - - - - -
Total other financing sources (uses) (757,802) 12,179,050 (1,430,114) (2,901,636) (1,611,565)
Net change in fund balances (3,453,130)$ 6,877,736$ 3,737,386$ (835,876)$ 1,788,147$
Debt service as a percentage of
noncapital expenditures 7.8% 7.6% 7.5% 6.9% 5.4%
City of Encinitas
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
Fiscal Year
(Modified Accrual Basis of Accounting)
(Continued)
171
(In thousands of dollars)
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)
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%
2017 12,622,536 1,390,398 41,805 417,474 14,472,213 0.24019%
2018 13,453,667 1,436,502 42,618 433,992 15,366,779 0.23749%
(1) All Other Property includes the following categories: dry farm, institutional, irrigated, recreational, vacant land,
exempt and unsecured properties.
(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 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
$16,000,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Taxable Assessed Value
(In thousands)
Residential
Commercial
Industrial
Fiscal Years
172
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 $84,551,424 1 0.56%-$ - -
Collwood Pines Apartments LP 78,634,210 2 0.52% 73,422,521 1 0.65%
Belmont Village Tenant LLC 58,296,014 3 0.38%- - -
Encinitas Town Center Associates LLC 38,108,278 4 0.25% 31,493,663 4 0.28%
NCHC 3 LLC 35,984,179 5 0.24% 31,384,100 5 0.28%
Weingarten Nostat Inc 35,300,172 6 0.23%- - -
PK III Encinitas Marketplace LP 35,155,000 7 0.23% 38,938,500 2 0.35%
Home Depot USA Inc. 30,613,913 8 0.20% 27,675,347 6 0.25%
Pacifico Encinitas Apartment 29,221,059 9 0.19%- - -
SSL Landlord LLC 25,389,852 10 0.17%- - -
Mission Ridge 24,775,227 11 0.16%- - -
Keith B. and Sara S. Harrison 24,313,814 12 0.16% 16,984,065 14 0.15%
Vons Companies Inc. 24,050,127 13 0.16% 20,973,214 13 0.19%
RPG Pacifica Station LLC 21,214,649 14 0.14%- - -
Quail Pointe Apartments LP 20,588,524 15 0.14% 23,621,958 8 0.21%
Regents Of University and CA 19,480,703 16 0.13%- - -
Sterling Family Trust 19,056,126 17 0.13% 16,748,983 16 0.15%
Plenc El Camino LLC 18,805,951 18 0.12% 16,473,098 17 0.15%
LA Fitness International LLC 18,796,401 19 0.12%- - -
Cardiff Town Center LLC 15,666,915 20 0.10%- - -
ASN Encinitas - - -35,200,700 3 0.31%
WRI El Camino LP - - -26,842,109 7 0.24%
Urschel Laboratories Inc.- - -21,916,170 9 0.20%
North Coast Business Park - - -21,907,586 10 0.20%
SDCC Properties - - -21,420,000 11 0.19%
KSL Encinitas Resort Corporation - - -21,114,000 12 0.19%
Encinitas Plaza LLC - - -16,940,062 15 0.15%
Hughes Encinitas Limited - - -16,027,887 18 0.14%
Scripps Health - - -14,862,104 19 0.13%
ARV Assisted Living Inc.- - -14,280,000 20 0.13%
$658,002,538 4.33% $508,226,067 4.54%
Sources: San Diego County Assessor 2017/18 Combined Tax Roll and the State Board of Equalization
Nonunitary Tax Roll
HdL Coren & Cone
City of Encinitas
Taxpayer
Principal Property Taxpayers
Current Fiscal Year and Nine Years Ago
2018 2009
173
This page intentionally left blank.
174
(1)
Fiscal Taxes Levied
Year Ended for the Percent
June 30 Fiscal Year Amount of Levy
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 33,961,174 98.60%
2017 48,540,436 47,871,961 98.62%
2018 50,804,445 50,172,791 98.76%
(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
175
2009 2010 2011 2012 2013
%%%%%
City of Encinitas Basic Rate 0.23278 0.23338 0.23472 0.23866 0.23974
City of Encinitas Total Direct Rate (1)(4) 0.23278 0.23338 0.23472 0.23866 0.23974
Overlapping Rates: (2)
City of Encinitas 0.26648 0.26648 0.26648 0.24020 0.24020
Encinitas Landscape & Lighting District 0.01596 0.01596 0.01596 0.02100 0.02100
Autistic Pupils Minors Elementary 0.00009 0.00009 0.00009 0.00000 0.00000
Autistic Pupils Minors High 0.00009 0.00009 0.00009 0.00000 0.00000
Cardiff, Encinitas Elementary 0.26240 0.26240 0.26240 0.24870 0.24870
Children's Institutions Tuition 0.00146 0.00146 0.00146 0.00107 0.00107
County General 0.07570 0.07570 0.07570 0.08020 0.08020
County Library 0.01995 0.01995 0.01995 0.01969 0.01969
County School Service 0.00687 0.00687 0.00687 0.00643 0.00643
County School Service-Capital Outlay 0.00173 0.00173 0.00173 0.00161 0.00161
County Service Area No. 17 0.00291 0.00291 0.00291 0.00251 0.00251
CWA San Dieguito Water District, OMWD 0.00344 0.00344 0.00344 0.02510 0.02510
Development Centers for Handicapped Elementary 0.00043 0.00043 0.00043 0.00000 0.00000
Development Centers for Handicapped High 0.00044 0.00044 0.00044 0.00000 0.00000
Educable Mentally Retarded Minors 0.00196 0.00196 0.00196 0.00161 0.00161
Educational Revenue Augmentation Fund 0.08570 0.08570 0.08570 0.08620 0.08620
Mira Costa Community College 0.08590 0.08590 0.08590 0.08150 0.08150
Physically Handicapped Minors Elementary 0.00303 0.00303 0.00303 0.00268 0.00268
Physically Handicapped Minors High 0.00304 0.00304 0.00304 0.00268 0.00268
Regional Occupational Centers 0.00438 0.00438 0.00438 0.00375 0.00375
San Dieguito Union High 0.14400 0.14400 0.14400 0.13610 0.13610
San Dieguito Water District 0.00992 0.00992 0.00992 0.03590 0.03590
Trainable Mentally Retarded Minors Elementary 0.00197 0.00197 0.00197 0.00161 0.00161
Trainable Mentally Retarded Minors High 0.00198 0.00198 0.00198 0.00161 0.00161
Oceanside (19/85001),Vista (19/85701) Projects 0.00017 0.00017 0.00017 0.00000 0.00000
Total Prop 13 Rate (3) 1.00000 1.00000 1.00000 1.00000 1.00000
Notes:
(4) Total Direct Rate is the weighted average of all individual direct rates applied by the government preparing the statistical
section information.
(1) Total Direct Rate is the weighted average of all individual direct rates applied by the City.
Fiscal Year
(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
(3) In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of
one percent 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 two percent). 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.
176
2014 2015 2016 2017 2018
%%%%%
City of Encinitas Basic Rate 0.24002 0.24534 0.23978 0.23644 0.23695
City of Encinitas Total Direct Rate (1)(4) 0.24002 0.24534 0.23978 0.23644 0.23695
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 Minors Elementary 0.00000 0.00000 0.00000 0.00000 0.00000
Autistic Pupils Minors High 0.00000 0.00000 0.00000 0.00000 0.00000
Cardiff, Encinitas 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, OMWD 0.02510 0.02510 0.02510 0.02510 0.02510
Development Centers for Handicapped Elementary 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 Elementary 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 Elementary 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
Oceanside (19/85001),Vista (19/85701) Projects 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)
(4) Total Direct Rate is the weighted average of all individual direct rates applied by the government preparing the statistical
section information.
Fiscal Year
City of Encinitas
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
(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.
(1) Total Direct Rate is the weighted average of all individual direct rates applied by the City.
(3) In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of
one percent 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 two percent). 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.
177
2009 2010 2011 2012 2013
%%%%%
Gen Bond Cardiff 2000A 0.03212 0.03518 - - -
Gen Bond Cardiff 2000 Election,2010 Ref.Bonds - - 0.03715 0.03489 0.03458
MWD D/S Remainder of SDCWA 1501999 0.00430 0.00430 0.00370 0.00370 0.00350
Total Voter Approved Rate 0.03642 0.03948 0.04085 0.03859 0.03808
Total Tax Rate 1.03642 1.03948 1.04085 1.03859 1.03808
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
City of Encinitas
Fiscal Year
(Continued)
178
2014 2015 2016 2017 2018
%%%%%
Gen Bond Cardiff 2000A - - - - 0.03028
Gen Bond Cardiff 2000 Election,2010 Ref.Bonds 0.03386 0.03554 0.03324 0.03192 -
MWD D/S Remainder of SDCWA 1501999 0.00350 0.00350 0.00350 0.00350 0.00350
Total Voter Approved Rate 0.03736 0.03904 0.03674 0.03542 0.03378
Total Tax Rate 1.03736 1.03904 1.03674 1.03542 1.03378
City of Encinitas
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
Fiscal Year
(Continued)
179
Fiscal Year
Ended June
30 Bonded Debt Capital Leases
Total Governmental
Activities
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
2017 48,953,813 2,205,282 51,159,095
2018 46,830,807 1,633,559 48,464,366
population shown on the Demographic and Economic statistics page.
City of Encinitas
(1) Debt per Capita is calculated by dividing the total primary government amount by the City
Governmental Activities
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
180
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 (1)
2009 18,440,000$ 6,220,000$ 1,681,534$ 26,341,534$ 74,778,983$ 1,254$
2010 17,545,000 5,770,000 1,638,817 24,953,817 71,304,384 1,190
2011 16,620,000 5,300,000 1,591,681 23,511,681 69,190,115 1,147
2012 15,660,000 4,625,969 1,544,434 21,830,403 65,757,768 1,090
2013 14,670,000 4,045,028 1,495,415 20,210,443 70,393,202 1,162
2014 13,645,000 3,447,591 1,444,731 18,537,322 66,048,570 1,079
2015 11,669,345 2,833,824 1,391,715 15,894,884 73,840,284 1,200
2016 10,609,973 2,205,893 1,331,410 14,147,276 69,131,998 1,117
2017 9,510,602 1,559,300 1,253,177 12,323,079 63,482,174 1,019
2018 8,376,231 12,960,295 1,173,058 22,509,584 70,973,950 1,124
(Continued)
(1) Debt per Capita is calculated by dividing the total primary government amount by the City
population shown on the Demographic and Economic statistics page.
City of Encinitas
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Business-type Activities
181
Fiscal Certificates of Participation Percentage
Year Ended and Assessed of Assessed Per
June 30 Lease Revenue Bonds Valuation (1) Value Capita
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 11,723,928,000 0.40% 772
2014 44,546,848 12,147,361,000 0.37% 728
2015 55,431,687 12,870,004,000 0.43% 901
2016 52,933,882 13,702,972,000 0.39% 855
2017 48,953,813 14,472,213,000 0.34% 786
2018 46,830,807 15,366,779,000 0.30% 741
(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 of 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 Basic 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
182
FY 2017-18 Assessed Valuation: $15,368,661,510 City's Share of
Total Debt Applicable Overlapping Debt
6/30/18 % (1) 6/30/18
OVERLAPPING TAX AND ASSESSMENT DEBT:
Metropolitan Water District 60,600,000$ 0.561% 339,966$
Mira Costa Community College District 100,000,000 15.133% 15,133,000
Cardiff School District 16,889,035 100% 16,889,035
Encinitas Union School District 48,735,453 67.525% 32,908,615
San Dieguito Union High School 336,955,000 24.696% 83,214,407
San Dieguito Union High School District Community Facilities Districts 37,894,518 1.840-100% 10,200,793
City of Encinitas Community Facilities District No. 1 25,445,000 100% 25,445,000
Olivenhain Municipal Water District, Assessment District No. 96-1 10,625,000 26.016% 2,764,200
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 186,895,016$
DIRECT AND OVERLAPPING GENERAL FUND DEBT
San Diego County General Fund Obligations 273,220,000$ 3.099% 8,467,088$
San Diego County Pension Obligations 558,525,000 3.099% 17,308,690
San Diego County Superintendent of Schools Obligations 10,785,000 3.099% 334,227
Mira Costa Community College District Certificates of Participation 555,000 15.133% 83,988
San Dieguito Union High School District General Fund Obligations 12,730,000 24.696% 3,143,801
City of Encinitas Bonded Debt 44,950,000 100% 44,950,000
City of Encinitas Bond Premiums and Discounts 1,880,807 100% 1,880,807
City of Encinitas Capital Leases 1,633,559 100% 1,633,559
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 77,802,160$
TOTAL DIRECT DEBT 48,464,366$
TOTAL OVERLAPPING DEBT 216,232,810$
COMBINED TOTAL DEBT 264,697,176$ (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 districts' assessed value that is within the
City divided by the districts' total taxable assessed value.
(2) Excludes tax and revenue anticipation notes, enterprise revenue and mortgage revenue.
Ratios to FY 2017-18 Assessed Valuation:
Total Overlapping Tax and Assessment Debt..…………………………….1.22%
Total Direct Debt ($ 48,464,366).……...……..….……………………….…0.32%
Combined Total Debt…...…….………….….….…….………....……………1.72%
City of Encinitas
Schedule of Direct and Overlapping Bonded Debt
June 30, 2018
183
City of Encinitas
Legal Debt Margin Information
Last Ten Fiscal Years
(in thousands)
2009 2010 2011 2012 2013
Assessed valuation 11,257,079$ 11,337,568$ 11,342,197$ 11,497,856$ 11,723,928$
Conversion percentage equal 25% 25% 25% 25% 25%
to 25% of assessed valuation
Adjusted assessed valuation 2,814,270 2,834,392 2,835,549 2,874,464 2,930,982
Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 422,141 425,159 425,332 431,170 439,647
Total net debt applicable to limit: 46,005 44,165 42,641 40,646 46,736
Legal debt margin 376,136$ 380,994$ 382,691$ 390,524$ 392,911$
Total debt applicable to the limit
as a percentage of debt limit 10.90% 10.39% 10.03% 9.43% 10.63%
Notes: Details regarding the City's outstanding debt can be found in the Notes to the Financial
Statements section.
Fiscal Years
The Government Code of the State of California provides for a legal debt limit of 15 percent of gross
assessed valuation. However, this provision was enacted when assessed valuation was based upon 25
percent of market value. Effective with the Fiscal Year 1981-82, each parcel is now assessed at 100
percent 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 percent 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.
184
City of Encinitas
Legal Debt Margin Information
Last Ten Fiscal Years
(in thousands)
2014 2015 2016 2017 2018
Assessed valuation 12,147,361$ 12,870,004$ 13,702,972$ 14,472,213$ 15,366,779$
Conversion percentage equal 25% 25% 25% 25% 25%
to 25% of assessed valuation
Adjusted assessed valuation 3,036,840 3,217,501 3,425,743 3,618,053 3,841,695
Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 455,526 482,625 513,861 542,708 576,254
Total net debt applicable to limit: 44,547 55,432 52,934 48,954 46,831
Legal debt margin 410,979$ 427,193$ 460,927$ 493,754$ 529,423$
Total debt applicable to the limit
as a percentage of debt limit 9.78% 11.49% 10.30% 9.02% 8.13%
Notes: Details regarding the City's outstanding debt can be found in the Notes to the Financial
Statements section.
Fiscal Years
(Continued)
The Government Code of the State of California provides for a legal debt limit of 15 percent of gross
assessed valuation. However, this provision was enacted when assessed valuation was based upon 25
percent of market value. Effective with the Fiscal Year 1981-82, each parcel is now assessed at 100 percent
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 percent 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.
185
2009 2010 2011 2012 2013
Revenues:
Operating revenues - including connection fees 11,521,897$ 11,267,684$ 12,574,450$ 13,170,422$ 13,789,636$
Non-operating revenues 1,129,594 879,477 817,872 813,610 869,568
Gross Revenues 12,651,491 12,147,161 13,392,322 13,984,032 14,659,204
Total Operating & Non-Operating Expenses 12,955,085 11,634,347 11,614,631 12,448,911 12,198,228
Net Income (303,594) 512,814 1,777,691 1,535,121 2,460,976
Add:
Interest expense 803,748 749,704 725,936 698,908 657,963
Depreciation and amortization expense 2,217,274 1,213,640 1,196,007 1,294,904 1,476,044
Net Revenues Available for Debt Service 2,717,428 2,476,158 3,699,634 3,528,933 4,594,983
Less: Debt Service Paid
1999 Badger Bonds-Interest Charges - - - - -
1999 Badger Bonds-Principal Payments - - - - -
2004 Water Revenue Refunding Bonds - Interest Charges 485,769 469,269 452,244 433,950 408,906
2004 Water Revenue Refunding Bonds - Principal Payments 540,000 560,000 575,000 595,000 615,000
2007 Note Payable to Financing Authority - Interest Charges 290,748 265,157 281,494 270,352 256,744
2007 Note Payable to Financing Authority - Principal Payments 360,000 335,000 350,000 365,000 375,000
2014 Water Revenue Refunding Bonds - Interest Charges - - - - -
2014 Water Revenue Refunding Bonds - Principal Payments - - - - -
Total Debt Service 1,676,517$ 1,629,426$ 1,658,738$ 1,664,302$ 1,655,650$
Coverage by Net Revenues Available for Debt Service 162% 152% 223%212% 278%
Debt service coverage requirement is minimum 115 percent including connection fees. The above schedules include connection fees in operating revenues.
2009 2010 2011 2012 2013
Revenues:
Operating revenues - including connection fees (1) 5,062,773$ 5,049,039$ 5,337,717$ 5,087,182$ 4,755,573$
Non-operating revenues 392,505 162,601 355,974 79,347 39,015
Gross Revenues 5,455,278 5,211,640 5,693,691 5,166,529 4,794,588
Total Operating & Non-Operating Expenses 2,854,368 3,569,880 3,746,748 3,385,439 3,310,986
Net Income 2,600,910 1,641,760 1,946,943 1,781,090 1,483,602
Add:
Interest expense 302,067 285,800 267,533 248,400 142,898
Depreciation and amortization expense 303,930 912,026 932,273 404,640 800,000
Net Revenues Available for Debt Service 3,206,907 2,839,586 3,146,749 2,434,130 2,426,500
Less: Debt Service
2003 Note Payable to SEJPA - Interest Charges 307,200 291,800 273,800 255,000 -
2003 Note Payable to SEJPA - Principal Payments 440,000 450,000 470,000 490,000 -
2011 Note Payable to SEJPA - Interest Charges - - - 28,945 142,898
2011 Note Payable to SEJPA - Principal Payments - - - 25,000 546,540
2017 Note Payable to SEJPA-Interest Charges
2017 Note Payable to SEJPA-Principal Payments
Total Debt Service 747,200$ 741,800$ 743,800$ 798,945$ 689,438$
Coverage by Net Revenues Available for Debt Service 429% 383% 423%305% 352%
Debt service coverage requirement is minimum 110 percent including connection fees. The above schedules include connection fees in operating revenues.
San Dieguito Water District
Cardiff Sanitary Division
City of Encinitas
Historical Debt Service Coverage
Last Ten Fiscal Years
186
2014 2015 2016 2017 2018
Revenues:
Operating revenues - including connection fees 15,715,575$ 15,152,433$ 14,852,061$ 15,142,544$ 17,219,494$
Non-operating revenues 827,676 927,526 1,013,297 1,048,764 1,092,337
Gross Revenues 16,543,251 16,079,959 15,865,358 16,191,308 18,311,831
Total Operating & Non-Operating Expenses 14,066,485 15,481,543 13,800,671 14,263,288 15,198,929
Net Income 2,476,766 598,416 2,064,687 1,928,020 3,112,902
Add:
Interest expense 622,075 475,775 412,108 366,740 328,050
Depreciation and amortization expense 1,490,806 2,271,907 1,514,716 978,627 1,848,913
Net Revenues Available for Debt Service 4,589,647 3,346,098 3,991,511 3,273,387 5,289,865
Less: Debt Service Paid
1999 Badger Bonds-Interest Charges - - - - -
1999 Badger Bonds-Principal Payments - - - - -
2004 Water Revenue Refunding Bonds - Interest Charges 380,731 144,720 - - -
2004 Water Revenue Refunding Bonds - Principal Payments 640,000 665,000 - - -
2007 Note Payable to Financing Authority - Interest Charges 241,344 224,994 211,144 191,244 171,619
2007 Note Payable to Financing Authority - Principal Payments 385,000 405,000 415,000 440,000 455,000
2014 Water Revenue Refunding Bonds - Interest Charges - 106,061 202,400 185,075 167,225
2014 Water Revenue Refunding Bonds - Principal Payments - - 570,000 585,000 605,000
Total Debt Service 1,647,075$ 1,545,775$ 1,398,544$ 1,401,319$ 1,398,844$
Coverage by Net Revenues Available for Debt Service 279% 216% 285%234% 378%
Debt service coverage requirement is minimum 115 percent including connection fees. The above schedules include connection fees in operating revenues.
2014 2015 2016 2017 2018
Revenues:
Operating revenues - including connection fees (1) 4,758,606$ 4,615,399$ 4,862,274$ 5,006,574$ 5,081,021$
Non-operating revenues 1,216,941 120,668 149,151 140,095 162,951
Gross Revenues 5,975,547 4,736,067 5,011,425 5,146,669 5,243,972
Total Operating & Non-Operating Expenses 3,189,268 4,371,847 3,949,288 3,380,180 3,578,417
Net Income 2,786,279 364,220 1,062,137 1,766,489 1,665,555
Add:
Interest expense 266,822 109,282 91,757 71,727 491,983
Depreciation and amortization expense 200,459 1,555,955 1,303,272 754,400 386,019
Net Revenues Available for Debt Service 3,253,560 2,029,457 2,457,166 2,592,616 2,543,557
Less: Debt Service
2003 Note Payable to SEJPA - Interest Charges - - - - -
2003 Note Payable to SEJPA - Principal Payments - - - - -
2011 Note Payable to SEJPA - Interest Charges 131,967 109,282 91,757 79,889 55,402
2011 Note Payable to SEJPA - Principal Payments 563,037 579,366 593,530 612,192 640,352
2017 Note Payable to SEJPA-Interest Charges 294,656
2017 Note Payable to SEJPA-Principal Payments
Total Debt Service 695,004$ 688,648$ 685,287$ 692,081$ 990,410$
Coverage by Net Revenues Available for Debt Service 468% 295% 359%375% 257%
Debt service coverage requirement is minimum 110 percent including connection fees. The above schedules include connection fees in operating revenues
(Continued)
San Dieguito Water District
Cardiff Sanitary Division
City of Encinitas
Historical Debt Service Coverage
Last Ten Fiscal Years
187
Fiscal Year
Ended June 30
City
Population
% of San
Diego County
Population
% Change
from
Previous
Year
Median
Age
Average
Household
Size
Unemployment
Rate
2009 59,453 2.0% (7.42%) 41.7 2.69 6.9%
2010 59,628 2.0% 0.29% 41.6 2.45 8.8%
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 61,893 1.9% 0.67% 41.5 2.50 4.5%
2017 62,288 1.9% 0.63% 41.5 2.50 3.8%
2018 63,158 1.9% 1.38% 41.5 2.45 2.8%
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
188
Fiscal Year
Ended
June 30
Property and
Documentary
Transfer Tax Sales Tax
Transient
Occupancy Tax Franchise Tax Total Tax Revenue
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
2017 43,494,220 12,549,609 2,216,145 2,545,854 60,805,828
2018 46,311,814 13,252,053 2,562,484 2,587,443 64,713,794
Property Tax Levies and Collections
City of Encinitas
General Governmental Tax Revenue by Source
Last Ten Fiscal Years
$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
$50,000,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total General Governmental Tax Revenues
Property Tax
Sales Tax
Transient Occupancy Tax
Franchise Tax
Fiscal Year
189
2009 2010 2011 2012 2013
Autos and Transportation 1,138,428$ 1,189,413$ 1,330,270$ 1,427,132$ 1,446,737$
Building and Construction 1,057,851 818,484 774,109 868,790 820,467
Business and Industry 520,656 461,247 537,840 518,699 560,723
Food and Drugs 979,585 931,937 945,542 995,511 1,003,491
Fuel and Service Stations 1,085,758 1,146,372 1,351,288 1,569,265 1,577,783
General Consumer Goods 2,949,625 2,836,989 2,818,809 3,117,547 3,165,746
Restaurants and Hotels 1,448,867 1,388,570 1,442,976 1,624,007 1,699,705
Total 9,180,770$ 8,773,012$ 9,200,834$ 10,120,951$ 10,274,652$
2014 2015 2016 2017 2018
Autos and Transportation 1,519,006$ 1,638,839$ 1,684,618$ 1,627,531$ 1,744,199$
Building and Construction 887,182 944,334 980,140 1,021,600 924,933
Business and Industry 573,032 556,835 738,490 623,641 567,665
Food and Drugs 1,001,942 1,028,085 1,005,870 931,650 1,010,551
Fuel and Service Stations 1,559,342 1,500,416 1,382,946 1,191,164 1,025,386
General Consumer Goods 3,355,540 3,476,481 3,535,734 3,492,330 3,400,696
Restaurants and Hotels 1,825,971 1,978,072 2,113,116 2,264,487 2,274,664
Total 10,722,015$ 11,123,062$ 11,440,914$ 11,152,403$ 10,948,094$
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 Ten Fiscal Years
190
Function 2009 2010 2011 2012 2013
General government 45.45 43.00 44.25 44.55 44.75
Public safety 67.00 68.00 63.00 63.00 63.00
Public works 30.4 29.55 28.85 28.85 29.25
Engineering services 27.12 27.47 27.47 27.42 26.42
Parks and recreation 21.18 21.18 21.18 21.18 21.18
Planning and building 26.75 26.75 26.75 26.75 26.75
Subtotal 217.9 215.95 211.5 211.75 211.35
San Dieguito Water District 22.7 25.7 25.4 25.40 25.00
Function 2014 2015 2016 2017 2018
General government 44.75 46.75 46.75 46.75 44.60
Public safety 66.00 66.00 69.00 69.00 69.00
Public works 29.55 28.55 28.55 28.55 27.55
Engineering services* 27.17 27.17 27.17 27.17 -
Parks and recreation 21.18 20.18 20.18 20.18 22.25
Planning and building*27.25 27.25 27.25 27.25 -
Development services*- - - - 53.00
Subtotal 215.90 215.90 218.90 218.90 216.40
San Dieguito Water District 23.00 24.00 24.00 24.00 24.00
*Engineering and Planning/Building merged into Development Services during FY 2017-18.
Fiscal Years
Fiscal Years
City of Encinitas
Full-Time and Part-Time Employees by Function
Last Ten Fiscal Years
191
2009 2010 2011 2012 2013
San Diego County Sheriff's Department
Criminal arrests 1,715 1,803 1,047 1,231 1,548
Traffic arrests 424 482 535 485 383
Traffic accidents 438 385 472 441 372
Traffic citations 11,974 11,714 12,024 11,349 11,381
Calls for service 19,764 21,216 20,602 20,150 20,559
Deputy initiated action 29,098 25,401 29,224 29,862 31,281
Fire:
Number of emergency fire calls 113 106 96 124 102
Number of EMS/rescue 3,179 3,291 3,498 3,495 3,697
Other 1,645 1,475 1,520 1,737 1,932
Inspections 4,099 2,055 2,263 2,252 2,163
Engineering:
Number of permits issued 325 301 397 392 269
Parks and recreation:
Number of recreation class registrations 11,368 11,435 10,697 11,119 11,175
Number of facility rentals 491 459 377 749 421
Planning and building:
Number of planning permits issued 97 181 177 202 207
Number of new dwelling units issued 86 39 51 121 63
Environmental review 8 11 4 7 6
Appeals 12 1 3 3 5
Plan checks 906 805 882 948 990
Code enforcement complaints 1,973 1,667 1,645 1,270 1,199
Water:
New connections 6 18 9 79 64
Average daily consumption (millions of gallons) 6.24 5.42 5.21 5.32 5.61
Sewer:
New connections 14 26 14 44 50
Average daily sewage treatment (millions of gallons) 2.55 2.46 2.43 2.38 2.40
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 Ten Fiscal Years
192
2014 2015 2016 2017 2018
San Diego County Sheriff's Department
Criminal arrests 1,595 1,743 1,997 1,612 1,130
Traffic arrests 331 551 263 201 213
Traffic accidents 323 297 274 289 307
Traffic citations 10,357 13,650 14,873 4,891 5,501
Calls for service 19,394 21,335 22,518 19,372 20,019
Deputy initiated action 29,849 27,339 27,481 24,625 22,612
Fire:
Number of emergency fire calls 383 300 328 283 532
Number of EMS/rescue 3,806 3,844 4,098 4,717 4,775
Other 1,458 1,265 1,517 1,035 2,382
Inspections 2,143 2,072 2,133 2,122 3,145
Engineering:
Number of permits issued 351 383 436 440 424
Parks and recreation:
Number of recreation class registrations 16,236 16,289 15,500 16,338 15,444
Number of facility rentals 578 557 538 492 537
Planning and building:
Number of planning permits issued 298 335 263 276 222
Number of new dwelling units issued 161 135 117 94 160
Environmental review 910473
Appeals 7 6 11 6 6
Plan checks 1,391 1,737 2,339 1,807 2,147
Code enforcement complaints 1,153 1,063 1,199 1,282 878
Water:
New connections 131 69 77 39 50
Average daily consumption (millions of gallons) 5.71 5.49 4.56 4.85 5.21
Sewer:
New connections 22 53 33 65 62
Average daily sewage treatment (millions of gallons) 2.36 2.22 2.202.272.20
The City of Encinitas contracts with the County of San Diego Sheriff's Department to provide
law enforcement services.
Last Ten Fiscal Years
(Continued)
City of Encinitas
Operating Indicators by Function
193
2009 2010 2011 2012 2013
Law enforcement: *
Number of sub-stations 1 1 1 1 1
Fire department:
Fire stations 5 5 5 5 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) 35 41 41/10 41/10 41/10
Lifeguard towers 7 7 7 7 7
Water:
Water mains (miles) 166 166 168 168 168
Maximum daily capacity (millions of gallons)15 15 15 15 15
City of Encinitas
** Prior to FY 2017-18 data included both City and privately maintained streets. In FY 2017-
18, data includes only City maintained streets.
Capital Asset Statistics by Function
Last Ten Fiscal Years
* The City of Encinitas contracts with the County of San Diego Sheriff's department to provide
law enforcement services.
194
2014 2015 2016 2017 2018
Law enforcement: *
Number of sub-stations 11111
Fire department:
Fire stations 66666
Public works:
Streets (miles) ** 201 201 201 201 168
Engineering:
Signalized intersections 63 63 63 63 63
Parks and recreation:
Community and senior center 11111
Developed parks 18 18 18 18 18
Undeveloped parks 44444
Parkland acres 382 382 382 382 382
Habitat/open space acreage 87 87 87 87 87
Marine life refuge 11111
Trails/streetscapes (miles) 41/10 41/10 41/10 41/10 41/10
Lifeguard towers 77779
Water:
Water mains (miles) 168 168 168 170 175
Maximum daily capacity (millions of gallons)15 15 15 15 15
City of Encinitas
Capital Asset Statistics by Function
Last Ten Fiscal Years
(Continued)
* The City of Encinitas contracts with the County of San Diego Sheriff's department to provide
law enforcement services.
** Prior to FY 2017-18 data included both City and privately maintained streets. In FY 2017-
18, data includes only City maintained streets.
195
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196
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.
197
Users/Class
Sub
Category
Fixed Meter
Charge HCF Rate
Median Annual
HCF Median Charge
Group I Residential
Single Family SF $45.76 5.35$ 93.30 544.92$
Multi Family MF See below 5.35 $373.12/unit
Trailer Park TP See below 5.35 $373.12/unit
Non-Residential
Commercial Group II See below See below 5.62$ See below See below
Commercial Group III See below See below 7.31 See below See below
Commercial Group IV See below See below 10.98 See below See below
Meter Size Annual Charge Meter Size Annual Charge
5/8" 45.76$ 1-1/2" 228.80$
3/4" 68.64$ 2"366.08$
1" 114.40$ 3"686.40$
* Multi Family/Trailer Park = 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 5.62$ --
Car Wash CW 5.62 1,520 $8,542.40
Office Building OF 5.62 200 1,124.00
Fire Station FS 5.62 110 618.20
Professional Building (Doctor) PB 5.62 160 899.20
Veterinary Clinic VC 5.62 --
Athletic Gymnasium G 5.62 1,340 7,530.80
Laundromat L 5.62 990 5,563.80
Department and Retail Store DRS 5.62 120 674.40
Warehouse W 5.62 1,050 5,901.00
Hospital, Convalescent Home HCH 5.62 3,240 18,208.80
Parks PB 5.62 510 2,866.20
Church-Membership Organization C 5.62 440 2,472.80
Membership Organization (Non-Church) MO 5.62 240 1,348.80
Social Services SS 5.62 160 899.20
Group III Commercial
Hotels-Motels (without restaurant) HM 7.31$ 890 $6,505.90
Repair and Service Station RSS 7.31 70 511.70
Shopping Center SC 7.31 1,030 7,529.30
Kennel K 7.31 900 6,579.00
Coffee Shop CS 7.31 --
Amusement Park AP7.31 --
Nightclub/Bar NC 7.31 320 2,339.20
Commercial Laundry CL 7.31 --
Manufacturing M 7.31 180 1,315.80
Lumber Yard LY 7.31 --
Group IV Commercial
Hotels-Motel (with restaurant) HM 10.98$ 3,130 $34,367.40
Bakery (wholesale)/Food Processor BW 10.98 --
Supermarket SM 10.98 1,030 11,309.40
Mortuary MT 10.98 300 3,294.00
Restaurant R 10.98 600 6,588.00
(1) Sewer rates are based on water consumption (fixed charge based on meter size and consumption component).
The consumption is based on HCF (hundred cubic feet - 748 gallons).
Multi Family/Trailer Park* and Non-Residential Fixed Meter Charge
Water Consumption Periods To Be Used
Non-Residential (Commercial) = Water Consumption For Meter Readings Occurring Between July-June of Preceding Year
Cardiff Sanitary Division
Rate Schedule for Annual Sewer Charges
As of June 30, 2018
Table 1
Residential = 2 Lowest Periods of Water Consumption For Meter Readings Occurring Between Dec.-May (most recent available 5-year period)
New Connections (no prior water consumption
history)
New Connections (no prior water consumption
history)
198
Table 2
Fiscal
Year
Residential
(Tax Roll)
Commercial
(Tax Roll)
Commercial
(Manual) Total Billed
Single
Family
Average
2009 4,092,138$ 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
2015 4,033,393 623,032 135,587 4,792,012 610
2016 3,873,157 610,169 135,107 4,618,432 634
2017 3,958,853 597,392 135,581 4,691,826 648
2018 4,065,382 595,450 118,660 4,779,492 665
Cardiff Sanitary Division bills most customers through the San Diego County property tax billing service
Delinquency rates have been between 1.8 percent-3.0 percent during the period presented.
Delinquencies do not apply to direct billings.
Cardiff Sanitary Division
Historical Service Charges Billed
Last Ten Fiscal Years
199
Parcel Sewer Service Percentage of
Property Owner Count Charges Sewer Charges
Scripps Health 1 95,977.60$ 2.01%
Collwood Pines Apartments LP 3 77,354.96 1.62%
San Dieguito Union High School District 2 48,723.57 1.02%
State of California Parks & Rec. 2 36,540.83 0.76%
Georges Restaurant Inc. 1 31,730.76 0.66%
Newport Taft, Inc. 1 28,380.18 0.59%
Cardiff Town Center LLC 1 27,947.64 0.58%
Deluca Trust 1 25,191.48 0.53%
944 Regal Road LLC 1 24,994.88 0.52%
West Village, Inc. 1 22,370.00 0.47%
Subtotal 14 419,212$ 8.77%
Total Billed 4,779,492$
Source: Cardiff Sanitary Division
Commercial
Total Connections Residential Industrial Total
Year (Billed Parcels) EDU's EDU's EDU's
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
2017 6,435 7,186 1,187 8,373
2018 6,442 7,223 1,202 8,425
Source: Cardiff Sanitary Division
Table 3
Cardiff Sanitary Division
Ten Largest Customers
Fiscal Year 2017-18
Historical Service Connections
Last Ten Fiscal Years
Table 4
Cardiff Sanitary Division
200
Net Position by Components
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.
201
Customer Class Residential Rate Tier Potable Recycled
Single-family residential 0-12 units 2.81$ -$
13-20 units 4.46 -
21-40 units 5.51 -
41+ units 6.28 -
Multi-family residential (per dwelling) 0-8 units 2.81 -
9-12 units 4.46 -
13-16 units 5.51 -
17+ units 6.28 -
Agriculture Uniform 4.78 4.06
Commercial Uniform 4.78 4.06
Government Uniform 5.23 4.44
Public Uniform 5.23 4.44
Landscaping Uniform 5.51 4.68
Construction Uniform 5.61 4.76
(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, 2018
Water Meter Service Infrastructure Fire Meter Service
Availability Access Availability
Meter Size Charge Charge Charge
5/8" & 3/4" 39.82$ 6.02$ 8.47$
1" 58.63 9.66 8.47
1-1/2" 105.24 18.06 9.55
2" 161.40 31.32 16.65
3" 292.52 57.82 42.12
4" 479.81 98.74 86.04
6" 947.59 180.60 243.69
8" 1,509.16 313.04 515.61
(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 deman
This charge also covers customer service costs for meter reading and billing. The Infrastructure Access
Charge is levied by the San Diego County Water Authority and is collected from the customer by the
District.
Source: San Dieguito Water District
Table 1
Rate (1)
Table 2
San Dieguito Water District
San Dieguito Water District
Schedule of Water Rates
As of June 30, 2018
202
Meter
Fiscal Potable Percentage Availability Percent
Year Water Sales Change (3)Charge Change (3)
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%
2017 9,467,085 (0.4%) 3,544,758 1.2%
2018 11,222,736 18.5% 3,772,759 6.4%
(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
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%
2017 716,826 2.1% 78,732 (7.5%)
2018 853,052 19.0% 86,098 9.4%
(4) The District first implemented a meter availability charge for Recycled Water System 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
203
Fiscal Local Imported Total Recycled Total
Year Water Water Potable Water Production
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
2017 1,446 3,984 5,430 654 6,084
2018 3,450 2,660 6,110 714 6,824
(5) Potable water production is defined as water either produced locally or purchased from imported
sources.
Fiscal Percent Percent
Year Potable Change Recycled Change
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%)
2017 5,287 3.4% 654 4.1%
2018 5,838 10.4% 714 9.2%
(6) Since FY 2011-12, Recycled Water Production and Delivery figures are revised to include water
provided to the Encinitas Ranch Golf Authority (ERGA). Beginning in FY 2011-12, 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 District's production and delivery figures as ERGA falls within the District's sphere of influence.
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
Table 5
Last Ten Fiscal Years
Potable Production (in acre-feet) (5)
Table 6
Last Ten Fiscal Years
San Dieguito Water District
Summary of Water Production by Source
Summary of Water Deliveries by Source
San Dieguito Water District
204
Acre-Feet Percent of
Customer Description Sold Water Sold
Agriculture 204 3.5%
Commercial 544 9.3%
Construction 26 0.4%
Government 39 0.7%
Landscaping 441 7.5%
Multi-Family Residential 1,177 20.2%
Public 135 2.3%
Single-Family Residential 3,272 56.1%
Total Sales 5,838 100.0%
Source: San Dieguito Water District
Fiscal Percent Percent
Year Potable Increase Recycled Change
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%
2017 11,740 0.2% 87 6.1%
2018 11,790 0.4% 85 (2.3%)
Source: San Dieguito Water District
(8) The decline of one connection during FY 2010-11 reflects the change in the contract arrangement w
Encinitas Ranch Golf Course.
Table 7
As of June 30, 2018
Table 8
Last Ten Fiscal Years
San Dieguito Water District
Sales by Customer Class
San Dieguito Water District
Total Service Connections by Category
205
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206
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
Independent Auditors’ Report
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, 2018, 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 27, 2018.
Our report includes a reference to other auditors who audited the financial statements of the following: R.E.
Badger Joint Powers Authority, R.E. Badger Financing Authority, and the Encina Wastewater Authority,
which are reported as investments in joint ventures in the business-type activities, the San Dieguito Water
District major enterprise fund, and the Encinitas Sanitary Division, as described in our report on the City’s
financial statements. This report does not include the results of the other auditors’ testing of internal control
over financial reporting or compliance and other matters that are reported on separately by those auditors.
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.
4365 Executive Drive, Suite 710, San Diego, California 92121
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
208
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.
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 27, 2018
C I T Y O F E N C I N I T A S
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5 0 5 S . V u l c a n A v e n u e
P h o n e : 7 6 0 . 6 3 3 . 2 6 0 0
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F A X : 7 6 0 . 6 3 3 . 2 8 7 9