2019-CAFRCOMPREHENSIVE ANNUAL FINANCIAL REPORT
F I S C A L Y E A R E N D E D J U N E 3 0 , 2 0 1 9
City of Encinitas
Encinitas, California
Comprehensive Annual Financial Report
and Independent Auditor’s Reports
For the Year Ended June 30, 2019
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
Glenna McShane Finance Analyst
Alexis Angelini Accountant
Katie Schroeder Accountant
Cindy Dabney Finance Technician
Alyce Gonzalez Finance Technician
Annamae Lagdaan Finance Technician
Julie Pickard Finance Technician
Devon Seal Finance Technician
INTRODUCTORY SECTION
This page intentionally left blank.
City of Encinitas
Comprehensive Annual Financial Report
For the Year Ended June 30, 2019
Table of Contents
Page
INTRODUCTORY SECTION (Unaudited)
Table of Contents
Transmittal Letter .......................................................................................................................................... i
List of City Officials ........................................................................................................................................xi
Organization Chart .......................................................................................................................................xii
Certificate of Achievement for Excellence in Financial Reporting – GFOA .................................................xiii
FINANCIAL SECTION
Independent Auditor’s 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, 2019
Table of Contents (Continued)
Page
FINANCIAL SECTION (Continued):
Required Supplementary Information (Unaudited):
Budgetary Information ........................................................................................................................ 113
Budgetary Comparison Schedule:
General Fund ................................................................................................................................ 114
Infrastructure Improvements Special Revenue Fund .................................................................... 116
Schedule of Changes in the Net Pension Liability and Related Ratios ................................................ 117
Schedule of the City’s Proportionate Share of the Net Pension Liability .............................................. 118
Schedule of Contributions - Pension ................................................................................................... 120
Schedule of Changes in the Net OPEB Liability and Related Ratios ................................................... 123
Schedule of Contributions - OPEB ...................................................................................................... 125
Supplementary Information:
Non-Major Governmental Funds:
Combining Balance Sheet ............................................................................................................ 130
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...................... 132
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:
Grants and Housing Special Revenue Fund ........................................................................... 134
Development Impact Special Revenue Fund .......................................................................... 135
Lighting and Landscaping Special Revenue Fund ................................................................... 136
Internal Service Funds:
Combining Statement of Net Position ........................................................................................... 139
Combining Statement of Revenues, Expenses, and Changes in Net Position .............................. 140
Combining Statement of Cash Flows ............................................................................................ 141
Fiduciary Funds:
Statement of Changes in Assets and Liabilities – Agency Funds. ................................................. 145
STATISTICAL SECTION (Unaudited)
Index ........................................................................................................................................................ 149
Financial Trends:
Net Position by Components – Last Ten Fiscal Years ........................................................................ 150
Changes in Net Position – Last Ten Fiscal Years ............................................................................... 152
Fund Balances of Governmental Funds – Last Ten Fiscal Years ........................................................ 156
Changes in Fund Balances of Governmental Fund – Last Ten Fiscal Years ....................................... 158
Revenue Capacity:
Assessed Value of Taxable Property – Last Ten Fiscal Years ............................................................. 160
Principal Property Taxpayers – Current year and nine years ago......................................................... 161
Property Tax Levies and Collections – Last Ten Fiscal Years............................................................. 162
Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ................................................. 164
City of Encinitas
Comprehensive Annual Financial Report
For the Year Ended June 30, 2019
Table of Contents (Continued)
Page
STATISTICAL SECTION (Continued):
Debt Capacity:
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ............................................................. 168
Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ................................................ 170
Schedule of Direct and Overlapping Bonded Debt .............................................................................. 171
Legal Debt Margin Information – Last Ten Fiscal Years ...................................................................... 172
Historical Debt Service Coverage – Last Ten Fiscal Years ................................................................. 174
Demographic and Economic Information:
Demographic and Economic Statistics – Last Ten Fiscal Years .......................................................... 176
General Governmental Tax Revenue by Source................................................................................. 177
Taxable Sales by Business Type – Last Ten Fiscal Years .................................................................. 178
Principal Employers – Current Fiscal Year and Nine Years Ago ......................................................... 179
Operating Information:
Full-Time and Part-Time Employees by Function – Last Ten Fiscal Years ......................................... 180
Operating Indicators by Function – Last Ten Fiscal Years .................................................................. 182
Capital Asset Statistics by Function – Last Ten Fiscal Years .............................................................. 184
Cardiff Sanitary Division:
Rate Schedule for Annual Sewer Charges.......................................................................................... 188
Historical Service Charges Billed ........................................................................................................ 189
Ten Largest Customers ...................................................................................................................... 190
Historical Service Connections ........................................................................................................... 190
San Dieguito Water District:
Schedule of Water Rates .................................................................................................................... 192
Bi-Monthly Meter Service Availability Charges .................................................................................... 192
Historic Potable Water System Revenues – Last Ten Fiscal Years .................................................... 193
Historic Recycled Water System Revenues – Last Ten Fiscal Years .................................................. 193
Summary of Water Production by Source – Last Ten Fiscal Years ..................................................... 194
Summary of Water Deliveries by Source – Last Ten Fiscal Years ...................................................... 194
Sales by Customer Class ................................................................................................................... 195
Total Service Connections by Category – Last Ten Fiscal Years ........................................................ 195
This page intentionally left blank.
TRANSMITTALLETTER•INTRODUCTORYSECTIONHonorableMayor,CityCouncilandCitizensoftheCityofEncinitas,California:ItisapleasuretopresenttheFiscalYear2018-19ComprehensiveAnnttatfinancialReport(CAFR)fortheCityofEncinitasanditsrelatedentities.ThisreportwaspreparedtoassistthoseinterestedinunderstandingthefinancialconditionandresultsofCityoperationsforthefiscalyearendedJune30,2019andincludesfinancialinformationfortheCityofEncinitas,theSanDieguitoWaterDistrict,theEncinitasHousingAuthority,andtheEncinitasPublicFinancingAuthority.Thesefinancialstatementshavebeenpreparedinaccordancewithgenerallyacceptedaccountingprinciples(GAAP)andauditedinaccordancewithgenerallyacceptedauditingstandards.Responsibilityfortheaccuracyofthedata,thecompletenessandreliabilityofthepresentation,includingalldisclosures,restswithCitymanagement.ToprovideareasonablebasisformakingthepresentationsshowninthisreportandtocompilesufficientreliableinformationforthepreparationoftheCity’sfinancialstatements,themanagementoftheCityhasestablishedacomprehensiveinternalcontrolframeworkdesignedtoprotecttheCity’sassetsfromloss,theft,ormisuse.Becausethecostofinternalcontrolsshouldnotexceedtheirbenefits,theCity’sinternalcontrolshavebeendesignedtoprovidereasonableratherthanabsoluteassurancethatthefinancialstatementswillbefreefrommaterialmisstatements.TheCity’sfinancialstatementshavebeenauditedbyDavisFanLLP,certifiedpublicaccountants.Theindependentauditorconcludedbasedontheaudit,thattherewasreasonablebasisforrenderinganunmodifiedopinion(ora“cleanaudit”)ontheCity’sfinancialstatementsforthefiscalyearendedJune30,2019,whichmeansthatintheauditors’opinion,thefinancialstatementsaccuratelypresenttheCity’sfinancialposition.Management’sDiscussion&Analysis(MD&A)immediatelyfollowstheindependentauditor’sreportandprovidesanarrativeintroduction,overview,andanalysisofthebasicfinancialstatements.TheMD&Acomplementsthisletteroftransmittalandshouldbereadinconjunctionwithit.CITYPROFILEANDBACKGROUNDTheCityofEncinitaswasincorporatedinOctober1986asagenerallawcity,bringingtogetherthecommunitiesofNewandOldEncinitas,Cardiff-by-the-Sea,Leucadia,andOlivenhain.EncinitasislocatedinnorthernSanDiegoCountyapproximately25milesnorthofdowntownSanDiegoontheSouthernCaliforniacoast.TheCitywithanestimatedpopulationof63,000coversapproximately21squaremilesandispredominatelyresidentialwithtwomajorcommercialcorridors.December9,20191
TRANSMITTALLETTER•INTRODUCTORYSECTIONGOVERNANCETheCityisgovernedbyaCityCouncilconsistingofaMayorandfourCouncilmembersundertheCouncil-Managerformofgovernment.TheMayoriselectedat-largeforatwo-yeartermofoffice.TheCityofEncinitashastransitionedtoasystemwhereCityCouncilmembersareelectedbydistrictinsteadofserving“atlarge”withthesequenceofelectionsfordistrictelectionsinCouncilDistricts3and4in201$,anddistrictelectionsinCouncilDistricts1and2in2020.Thetransitiontodistrict-basedelectionswillbecompletein2020.InthegeneralmunicipalelectionheldonNovember6,2018,CouncilMemberswereelectedbydistrictforafullfour-yeartermofofficeinDistricts3and4.TheCityCouncilappointstheCityManagerandCityAttorney.AllotherstaffpositionsareappointedbytheCityManagerorherdesignee.TheCityCouncilactsastheBoardofDirectorsfortheSanDieguitoWaterDistrict,theEncinitasHousingAuthority,andtheEncinitasPublicFinancingAuthority.MUNICIPALSERVICESTheCityprovidesafullrangeofmunicipalservicessuchas:FireandparamedicservicesLawenforcement(contract)MarinesafetyParks,beachesandtrailsDevelopmentservicesRecreationservicesStreetmaintenanceandconstructionTrafficcontrolWastewaterservicesWaterservicesCITYFACILITIESCityHallislocatedonVulcanAvenuebetweenDandEStreets,adjacenttotheEncinitasTrainStationanddowntown.TheCitymaintainsanactiveCommunityandSeniorCenterlocatedatEncinitasBoulevardandBalourDrive,the44-acreEncinitasCommunityParklocatedat425SantaFeDrivealongwith20otherparksitesandMoonlightBeachlocatedat400BStreetwhichattractsanestimatedthreemillionvisitorsannually.Therearesixfirestationslocatedthroughoutthecity,afastresponsevehiclepilotprogramwithagoalofreducingfiredepartmentresponsetimesintheNorthLeucadia/SaxonyCanyonPeakarea,aswellasonesheriffsubstationwhichisownedandoperatedbytheCountyofSanDiego.ThecorporateyardforboththeCityofEncinitasandSanDieguitoWaterDistrictislocatednearEncinitasBoulevardandCalleMagdalena.TheWastewaterCollectionsdivisionislocatedattheSanElijoWaterReclamationFacilitylocatedinCardiff.BUDGETINGOVERVIEWTheCitydevelopsandadoptsbothanoperatingandacapitalbudgetonatwo-yearbudgetcycle.Amountsareappropriatedforthefirstyearonly,withtheamountsforthesecondyearsubjecttorevisionbeforeappropriation.AnychangestotheoperatingorcapitalbudgetsmustbeapprovedbytheCityCouncil.TheCityalsopublishesasix-yearcapitalimprovementprogramandfinancialplanwhichisupdatedaspartofthetwo-yearbudgetcycle.ThisdocumentprovidesmanagementandtheCityCouncilwithlong-termfinancialplanninginformationandtools.OnlineaccesstodetailedCityfinancialinformationisavailableontheCity’swebsite.Thisweb-basedtoolallowstheusertosortandfilterCityfinancialinformationtoobtainthespecificfinancialinformation11
TRANSMITTALLETTER•INTRODUCTORYSECTIONdesired.ThistoolmaybefoundontheCity’swebsiteathttps://encinitasca.opengov.com/transparency.FACTORSAFFECTINGFINANCIALCONDITIONOFTHECITYLocalEconomy—Encinitasenjoysastrongandwelldiversifiedtaxbase.Overtheyears,thepropertyvaluesandpersonalincomelevelswithintheCityhavegeneratedtaxrevenuessufficienttosupportthelevelofmunicipalservicesandfacilitiesforthecommunitytoenjoy.Thetaxbasehasperformedwellingoodeconomictimesandithasalsobeenabletoweatherthefinancialimpactsduringslowereconomictimes.ThenettaxableassessedvalueofpropertyintheCityhasgrown44.4percentsinceFiscalYear2008-09(tenyearsago).ThroughouttherecessiontheCitymaintainedslightincreaseseachyearinnettaxableassessedvalue.ForFiscalYears2017-18and2018-19taxablevaluesincreased6.2percentand6.5percent,respectively.AccordingtoinformationprovidedbytheCaliforniaEmploymentDevelopmentDepartment,employmentinEncinitasisstrongwiththeunemploymentratejust2.1percentasofOctober2019.TheunemploymentrateforallofSanDiegoCountywas2.8percentwhilestatewidetheratewas3.9percent.Encinitasalsohasover3,300businessesreportingretailsaleswithintheCity.Thetop100salestaxproducersincludeawidevarietyofbusinessessuchascardealers,homeimprovementstores,bigboxretail,gasstations,grocerystoresandrestaurants.Property,andSalesandUseTaxReventte-Propertytax,andsalesandusetaxrevenuerepresentapproximately77percentoftheCity’stotalGeneralFundrevenue.PropertytaxrevenueinFY2018-19totaled$47.4millionwhichwasanincreaseof$2.7million,or6.1percent,comparedtoFY2017-18.SalesandusetaxrevenueinFY2018-19was$13.7million,anincreaseof$0.4million,or3.3percenthighercomparedtoFY2017-18.Otherrevenuesourcesremainedrelativelystable,althoughrevenuesfromtheStateofCaliforniaarestillconsideredtobevulnerabletoStateactions.FinancialStrengthandSustainability-TheCityofEncinitasiswellpositionedtoweathereconomicfluctuationsandhasbeenevaluatedandratedbyinternationallyrecognizedthirdpartyreviewers.OnJanuary26,2017,Standard&Poor’sRatingServices(S&P)affirmedits‘AAA’issuercreditrating(ICR)fortheCityofEncinitas.TheCityhadapproximately$46.1millionofgeneralfundbondeddebtandcapitalleasesoutstandingatJune30,2019,withscheduledpaymentsofprincipalandinterestof$4.0millioninFY2018-19.ThisdebtserviceasapercentageoftheGeneralFundbudgetis5.8percent,whichiswellbelowtheCity’sdebtservicepolicywhichstatesthatdebtservicepaideachyearshallnotexceed15percentoftheGeneralFundbudget.DevelopmentandMaintenanceofFinancialReserves-TheCityhasanestablishedfinancialpolicyregardingmaintenanceofadequatefinancialreserves.TheCitysetsaside20percentofGeneralFundoperatingexpendituresforcontingencies(unanticipatedeventsthatcouldnegativelyimpacttheCity’sfinancialcondition).TheCityhasneverhadoccasiontodrawonthisreserve,sinceitsinceptionintheearly1990’s.TheCityalsomaintainsaGeneralFundbudgetstabilizationreserve,establishedin2007inanticipationoftheensuingrecession.Thisreserveisfundedataminimumoftwopercentofoperatingrevenues.TheCityhasnothadanyneedtodrawonthisreserve,despitethedeclineinoperatingrevenuesexperiencedduringtherecession.AnyamountsremainingafterthesetworeservesarefullyfundedareconsideredavaiLableforCityCouncildirecteduse,primarilyforfuturefundingofcapitalimprovements.GeneralFundreservesforcontingenciesandbudget111
TRANSMITTALLETTER•INTRODUCTORYSECTIONstabilizationtotal$15.5millionandfundingavailableforcapitalimprovementswas$24.4milLionasofJune30,2019.ACCOMPLISHMENTSBasedondirectionbytheCityCouncil,highlightedbelowaretheCity’saccomplishmentsthisfiscalyear.HousingElement—WithguidancefromtheHousingElementTaskForce,receivingpublicinputthroughover15publicmeetings,andcourtdirectedaction,theCityadoptedthe2019HousingElementinMarch2019.FollowingapprovalfromtheCaLiforniaCoastalCommissioninJuly2019,theStateHousingandCommunityDevelopmentcertifiedthedocumentinOctober2019.“One-Stop-Shop”PermitCenter-EffectiveJuly1,2019,CityHallopenedthenew“One-Stop-Shop”PermitCenter.ThePermitCentercentralizesallpermittingandpaymentneedsatonelocation.Customersseekingapermitwererequiredtogouptothreedifferentlocations.Nowallfunctions,includingregulatorypermits,planning,engineering,buildingandcashierarelocatedwithinthePermitCenter.OntheFridaywhentherestofCityHallisclosed,thePermitCenternowremainsopentooffercounterservice.CounterserviceallowscustomersaccesstoallfunctionswithinthePermitCenter,includingopportunitiestopaySanDieguitoWaterDistrictbills.CityHall’snewcustomerservicehoursareMondaythroughThursday7:30a.m.to5:30p.m.andeveryFridayfrom7:30a.m.to4:30p.m.CityHallwaspreviouslyclosedeveryotherFriday.EnerGov(EG)andCustomerSelfService(CSS)-EGisafullyintegratedenterprisesystemthatincorporatesprocessesanddatafromthevariouscitydepartments.Thistoolreducestheneedforredundantdataprocessingandprovidesstaffaccesstoinformationwithinasingleenvironment.CSSworkswithEGandisanoutwardfacingwebportal.CSSprovidesvariousservicestothepublic,suchastheabilitytosubmitpermitapplications,accessinformation,andpayinvoices.EGandCSSincorporateelectronicapplicationandplansubmittals,whichgreatlyreducepaperusage,theneedtoscandocuments,andcustomertripstoCityHall.ThesystemalsoroutesapplicationsandinformationelectronicallytoCityreviewers.TheCityhasover30,200contactswithinEG,sincetheCityimplementedthissysteminJune2015.Additionally,therearecurrentlyover4,600registeredCSSusersaccessingonlineservicessinceCSSwasrolledoutinJanuary201$.FirePreventionhasfullyimplementedEGandoffersallpermitsthroughtheCSSonlineapplicationprocess.AnotherFY2018-19accomplishmentconcernsPlanning-relatedpermits,whichnowaredoneentirelywithinEG.AnumberofBuildingandEngineeringpermitsarealsoconductedwithinthenewsystem,suchasHaulRoutePermits,HotWaterHeaterPermits,andMechanical/Electrical/PlumbingPermits.CyberSecurityUpdate—TheCityimplementedautomationtoenable24/7cyber-defense,improvingtheabilityforstafftosecuretheCity’sdataandbusinessprocessesfromapotentialbreach.Similarly,servers,workstations,andtheemailsystemwereupgradedinpreparationforMicrosoftproductretirementsplannedforJanuary2020.UnionNegotiations-TheMeyers-Milias-BrownAct(MMBA)governslabor-managementrelationshipswithinCalifornialocalgovernments.UnderMMBAthewages,hoursandotherconditionsofemploymentarecontainedinawrittenmemorandumofunderstanding.ItalsorequirestheCityanditsemployeeassociationstomeetandconferregardingthesewages,hoursandiv
TRANSMITTALLETTER•INTRODUCTORYSECTIONotherconditionsofemployment.ThepreviousMemorandumofUnderstandingbetweentheCityofEncinitasandServiceEmployeesInternationalUnion(SITU)expiredonJune30,2019andrepresentativesfortheCityandSEWreachedagreementonanewfour-yearmemorandumofunderstanding.Thefour-yeartermisJuly1,2019toJune30,2023andincludedtwopercentbasepayincreasesforeachyear,anincreaseintheflexiblebenefitplan,notarycertificationpay,anincreaseinsafetyfootwear,achangetopaidfamilyillness,changingthecustomerservicehoursandopeningeveryFriday,addingaholidayclosure,andprovidingahalfdayofpaidleavetovoteorafulldayofpaidleavetovolunteerfortheCountyRegistrarofVotersforaGeneralElection.Additionally,therewereoperationalandadministrativechangesmadetocomplywithchangesinstateandfederallawsandregulations.CooperativeFireManagementServices-TheCityhasacooperativemanagementservicesagreementwiththeCitiesofDelMarandSolanaBeachsinceOctober2009,whichsharesfiredepartmentmanagementfunctions.Thecooperativeservicesagreementpromotescost-effectivenessandefficiencyacrosstheselocalgovernmentagencies.InJune2018,theCitiesapprovedthethirdamendmenttotheagreementaddinganadministrativefeetocapturecostsidentifiedthatwerenotpreviouslysharedandaddingafull-timeAdministrativeBattalionChiefpositionthatwouldbeinchargeoftrainingforallthreecities.ThenewadministrativefeereducedtheproportionalcosttotheCityofEncinitaswhilehavingafull-timeAdministrativeBattalionChiefdedicatedtoensuringthatallfirefighterswouldhavetrainingopportunities.InMay2019,theCitiesapprovedafourthamendmenttotheagreementwhichreclassifiedanEncinitasDeputyFireMarshaltoaSeniorFireMarshalandaddedthepositiontothecooperativemanagementservicesagreementtosharethepositionwiththethreeCities.HavingthissharedpositionreducedtheCityofEncinitas’costimpact.CommunityChoiceEnergy(CCE)-Since2016,theCityhasbeenactivelyinvestigatingthefeasibilityofcommencingCCEserviceforelectriccustomerswithintheCity,withtheobjectiveofallowingelectricitycustomersthechoiceofselectingagreaterpercentageofrenewableenergy,providinggreaterLocalinvolvementovertheprovisionofelectriccommodityservices,andpromotingcompetitivecommodityrates.TheCitycompletedaTechnicalFeasibilityStudywhichdeterminedthataCCEprogramcouldresultinlocalbenefitsincludingtheuseofrenewableenergy.OnSeptember18,2019CouncilofficiallyformedandjoinedanewCCEagency,theSanDiegoRegionalCommunityChoiceEnergyAuthority,alongwiththeCitiesofSanDiego,ChulaVista,ImperialBeachandLaMesa.ClimateActionPlan(CAP)Awards-InFiscalYear2018-19,theCity’sClimateActionPlanandassociatedimpLementationeffortsreceivedrecognitionfromlocalandstatewideorganizations.InOctober2018,theSanDiegoAssociationofEnvironmentalProfessionalsrecognizedEncinitas’2018ClimateActionPlan(CAP)withthedistinguishedawardof“OutstandingPlanningDocumentoftheYear”whichhonorsdocumentscreatedwithstrongpublicoutreachandaccessibilityeffortsthatareclearlyorganized,easytoread,thorough,andthatadvanceenvironmentaldesigninitiatives.InFebruary2019,theClimateActionCampaign,alocalnon-profitcLimateadvocacyorganization,recognizedtheCityofEncinitaswithatop-rankingscoreof“Silver”initspublishedregionalCAPReportCard.ThisrecognitionwasreceivedforthecompletionofarobustClimateActionPlan,early-stageimplementationeffortsandannualreporting.InMarch2019,theCaliforniaAssociationofEnvironmentalProfessionalsfurtherrecognizedtheCity’sCAPasthemost“OutstandingClimateChangeDocument,”statewide.SuccessfulSandReplenishmentProject-Inwinter/springof2019,theCityofEncinitasprocuredanddeposited40,000cubicyardsofcompatiblebeachsandonthenorthendoftheCityatBatiquitosBeach.Benefitstotheareawereimmediatelyrealized;depositedsandimprovedpublic-V
TRANSMITTALLETTER•INTRODUCTORYSECTIONsafetyandrecreationwithincreasedbeachwidths,andenhancedwildlifehabitatforresidentandmigratingshorebirds.AmericanPublicWorksAssociation(APWA)Accreditation-TheDepartmentofPublicWorksreceivedafour-yearre-accreditationrecognizingthattheDepartmentoperatesinaccordancewithindustrystandardsestablishedbytheAmericanPublicWorksAssociation.TheEncinitasPublicWorksDepartmentisoneofonly19agenciesinCaliforniatoreceivesuchrecognition.HelenPutnamAwardforAccessoryDwellingUnits(ADU)s—OnOctober16,2019,theCityreceivedthe2019HelenPutnamAwardfromtheLeagueofCaliforniaCitiesforitsHousingforGenerationsprogram,underthe“HousingProgramsandInnovations”category.TheHousingforGenerationsprogramwasrecognizedforitsinnovative,multistepapproachtoencouragethepermittingan4constructionofAccessoryDwellingUnits(ADU).ThisprogramincludedtheadoptionoftwonewordinancesforADUandJuniorADUregulations,thesponsoringofstatelegislation(SB1226),andthecreationofthePRADUprogram,whichofferspropertyownersaselectionofpre-approvedADUbuildingplans,freeofcharge.TheCityhasalreadyexperiencedmorethanadoublingofADUapplicationsandpermitsineachofthelasttwoyears.In2019,asofNovember19,theDevelopmentServicesDepartmenthasprocessed201ADUapplications,with116ADUsreceivingbuildingpermits.Thedepartmenthasreceived27PermitReadyADUapplicationswhichmakeup19percentofthetotalsincetheplanswerereleasedinAprilofthisyear.Tenoftheseunitshavealreadyreceivedbuildingpermitsandareunderconstruction.CitywideCustomerServiceInitiative—TheHumanResourcesDepartmentthisyearlaunchedanewefforttoenhancecustomerservice.Multidepartmentalstaffteamsidentifiedexamplesofexemplarycustomerservicethroughover50staffinterviews,andmultipleteammeetings.TheresultswereusedtoimproveinternalCityoperations,andgiveunsurpassedcustomerservicetothecommunity,residents,businessesandvisitors.TransitiontoaZero/LowEmissionsVehicleFleet-ThePublicWorksDepartmentisprogressivelymovingtowardazero/lowemissionsmunicipalfleet.TheFleetDivisionreceivesregulardeliveryofrenewabledieselinsteadofconventionaldiesel.Renewabledieselisanon-petroleum-baseddieselthatworksinunmodifieddieselengines,andburns$0percentcleanerthanconventionaldieselfuel.AllthreeoftheCity’sfueltanks,whicharelocatedatthePublicWorksFacility,aswellasFireStations3and4,supplyrenewablediesel.Therenewabledieselisusedforalldiesel-fueledCityvehicles,includingPublicWorksheavydutytrucksandequipmentandallfireengines.PublicWorksfleetisalsosteadilytransitioningtoelectriclightdutyvehicLesincompliancewiththegoalsoftheCAP.TheCityownsthirty-three(33)heavy-andmedium-dutydieselvehiclesandfifty-six(56)lightdutyvehicles.Thisfleetincludestwenty-seven(27)vehiclescurrentlyfueledwithrenewablediesel,thirteen(13)hybridvehicles,one(1)plug-inhybridvehicle,andtwo(2)all-electricvehicles.WithapprovalfromCouncil,twomoreall-electricvehiclesareanticipatedtobepurchasedinearly2020.LeafBlowerOrdinance—Anordinanceregulatingtheuseofgas-poweredleafblowerswasadoptedbyCouncilonJuly10,2019.Theordinanceprohibitsgas-poweredleafblowersandallowstheuseofbatteryandelectricleafblowersasanalternative.TheordinancetakesfulleffectonJanuary20,2020.vi
TRANSMITTALLETTER•INTRODUCTORYSECTIONThefollowingCWprojectswerecompletedduringFY2018-19:CardiffLivingShorelineProject—AwardwinningprojectcompletedinJune2019toconstructdunes,parking,andpedestrianaccessalongthebeach.CoastalRailTrail-TheCoastalRailTrail(CRT)isa44-milelongsystemofpedestrianandbicycletrailsgenerallyalongthecoastalrailcorridorbetweenthecitiesofOceansideandSanDiego.TheSanDiegoAssociationofGovernments(SANDAG),theagencyresponsibleforthedesignandconstructionoftheCRT,completedconstructionofthesegmentinCardiffinMay2019.ChesterfieldQuietZone-Thisprojectreducesnoiseimpactsfromtheexistingrailsystemandprovidesanincreasingbenefitintothefutureasrailtrafficincreases.QuietzoneconstructionfortheChesterfieldcrossingwascompletedinApril2019.TheCityalsocompletedtheQuietZonefeasibilityStudytoevaluateimplementationofextendingthe“quietzone”alongtheentirecorridor.LumberyardSidewalks—InSeptember2018,anextensionoftheDowntownStreetscapeprojectwascompletedonSouthCoastHighway101thatincludedupgradedsidewalks,pedestrianramps,drivewayreplacements,andlandscaping.MobilityImprovements—Generalmobilityimprovements,suchasbikelanebuffersandbollards,wereinstalledonLeucadiaBoulevard,QuailGardensDrive,SantaFeDrive,VulcanAvenue,andSanElijoAvenue.Pedestriancrossing,includingrapidflashingbeaconswereinstalledonQuailGardenDriveandMontgomeryAvenue,andWillowspringDriveTrafficCalming-SpeedcushionswereinstalledonNolbeyStreet,CornishDrive,AvenidaDeLasAdelsas,WindsorRoad,andatEncinitasCommunityParktocalmtraffic.Othertrafficcalmingmeasures,suchaslanenarrowingwereconstructedalongNeptuneAvenue,Requeza,andMacKinnonAvenue.SafeRoutestoSchool(SRTS)Implementations-ThisprogramimprovespedestrianandbikeaccessintheCity.ProjectsinFY2018-19focusedonimprovementsnearCapriElementarySchool,FloraVistaElementarySchool,AmargosaDrive,BonitaDrive,BalourDrive,andRequezaDrive.MAJORINITIATIVESANDPROJECTSTheCityCouncilhasfourStrategicPriorityFocusareaswhichare—1.AttainalegallycompliantHousingElement2.Betterincorporatetherailcorridorintoourneighborhoods3.Improveconnectivityandmobilityforallusers4.Promotegreeninitiativesandprotectnaturalresources.vii
TRANSMITTALLETTER•INTRODUCTORYSECTIONHighlightedbelowaretheprojectsthattheCityisworkingonasitrelatestotheCityCouncil’sfocusareas:I.AttainalegallycompliantHousingElementHousingElement-DevelopmentoftheHousingElementUpdate2021-2029beganinMay2019withtheissuanceofaRequestforProposal(RFP)toobtainaqualifiedconsultanttohelppreparetheupdateandtheassociatedenvironmentalassessment,consistentwithcurrentStatehousinglaw.TheConsultantwillcompleteareviewofdemographics,populationandhousingtoreflectcurrentconditions,andcompleteanadequatesiteanalysisforthe2021-2019RegionalHousingNeedsAssessment(RHNA).TheCityandConsultantwillalsoholdcommunityworkshopsandpublicmeetingstoincreasecommunityinput.2.BetterincorporatetherailcorridorintoourneighborhoodsRailCorridorCross-ConnectImplementationPlan—BuildsontherecommendationspresentedintheRailCorridorVisionStudyandActiveTransportationPlan.-ApprovedbytheCityCouncilinFebruary2018,theRailCorridorVisionStudyisthecenterpieceoftheCoastalMobilityandLivabilityStudy(CMLS),abroadefforttoexaminemobilityissuesandopportunitiesintheEncinitascoastalrailcorridor.ElPortalPedestrianRailCrossing-Thisprojectisfullydesigned,andconstructionofagrade-separatedpedestrianandbicyclerailcrossingnearElPortalStreetinLeucadiaisplannedinJuly2020.TheCityretainedtheservicesoftheSanDiegoAssociationofGovernmentstomanageconstructionofthiscomplicatedproject.VerdiUndercrossing—ThisprojectconsistsofarailundercrossingatVerdiAvenueinCardiff—theprojectisindesignandgrantfundingisbeingsoughtforconstruction.3.ImproveconnectivityandmobilityforallusersLeucadia101Streetscape-ThisprojectprovidesstreetscapeimprovementsalongNorthCoastHighway101fromAStreettoLaCostaAvenue.Theprojectincludespedestrianandbicycleimprovements,roundabouts,roadlanenarrowingandtreeplantingsthroughouttheentirecorridor.TheCityCouncilapprovedtherequiredentitlementpermitsandcertifiedtheEnvironmentalImpactReportinMarch2018.TheCaliforniaCoastalCommissionapprovedtheprojectandcertifiedtheLocalCoastalPrograminOctober2018.BStreetSidewalkImprovements-Thisprojectconstructsnewsidewalk,pedestrianramps,curbsandguttersandlandscapingonthenorthsideofBStreetfromHighway101toMoonlightBeach.SantaFeDriveSouthSidewalkandSanDieguitoAcademyFrontageImprovements-Thisprojectinvolvesconstructionofcurb,gutter,andsidewalkonthesouthsideofSantaFeDrivefromGardenaRoadtoMackinnonAvenue.Inaddition,accessiblecurbrampswillbeprovidedonbothsidesoftheSantaFeDrive/MackinnonAvenueintersection,andlandscapingimprovementswillbeprovidedonthenorthsideofthestreet,frontingSanDieguitoAcademySchool.AmericanswithDisabilitiesAct(ADA)TransitionPlan-UnderTitleIIoftheADA,publicagenciesarerequiredtoconductaself-evaluationoftheirprogramsandservicesinordertoidentifyanyobstaclesorbarrierstoaccessibility.In2013,theCityandSanDieguitoWaterDistrictconductedaself-evaluationofitsprograms,services,administrativeemploymentpolicies,andfacilitiesonpublicpropertyanddevelopedaSelf-EvaluationandTransitionPlan.TheCity/Districtviii
TRANSMITTALLETTER•INTRODUCTORYSECTIONrecognizesthatADAcomplianceisanongoingresponsibilityandhasupdatedtheSelf-EvaluationandTransitionPlans,GrievanceProcedures,PublicNoticeandAdministrativepoliciesP020,P021,P022,andP023whichwillbepresentedtoCityCouncilinDecember2019foradoption.RanchoSantaFe(Trail$2)andCaminoDelNorte(Trail95)DesignandConstruction-Designis95percentcomplete.ConstructionisexpectedtobegininSpring2020.AdamsRunTrailwillrequireenvironmentalreviewandpermitsfromFederalFishandWildliferegardinghabitatimpactstoCaliforniaGnatcatcher.4.Promotegreeninitiativesandprotectnaturalresources.ClimateActionPlan-TheupdatedClimateActionPlan(CAP)wasadoptedbyCouncilonJanuary17,2018.CitystaffcontinuestoimplementprOjects,programs,andinitiativesthatsupportthegoalsoftheCAPandreducegreenhousegas(GHG)emissions.SomeofthemajorCAPactionsthatwillbeadvancedinthecomingyearinclude:•LaunchaConmiunityChoiceEnergy(CCE)Program—ThenewCCEhascommencedstart-upactivitiesincludingdevelopingabusinessplan,hiringstaff,andacquiringthefinancingneededtopurchaseandserverenewableelectricitytothecommunity.•Developmentofbuildingordinancestorequireandencouragereductionoffossilfuelenergyuse—InNovember2019,Counciladoptedanordinancethatwillrequireadditionalelectricalimprovementsandelectricvehiclechargingstations(EVCS)tobeinstalledatapercentageofparkingspacesatcommercialandmultifamilyproperties,aswellasrequirenewsinglefamilyhomestocomeequippedwithelectricalinfrastructurenecessaryforthehometobe“EVCSready.”TheordinancewillgointoeffectonJanuary1,2020.State-requiredcosteffectivenessstudiesandproposedordinancesarecurrentlybeingdraftedtoaddresssolarphotovoltaicenergyproduction,energyefficientwaterheating,andotherefficiencymeasuresforcommercialandresidentialproperties.•Implementalocalshuttlesystem-StaffwillevaluateoptionstoenhancelocaltransitoptionsandbringtoCouncilforconsiderationaCity-supportedpublictransitoptionthatsupplementsexistingNCTDrailandbusprograms.•Supportinitiativestodivertfoodwasteandrecyclingoutofthelandfill-SupportEDCO,theCity’sfranchisewastehauler,indevelopinganaerobicdigesterfacilityandcoordinatingcurbsidepickupofallorganicwaste,includingfoodwaste.Continuetofundandsupportcommunityeducationandoutreachprogramsthatencouragethediversionoffoodwastethroughcompostingandothermeansandencourageproperrecyclingandwastedisposal.•Plasticsinitiative-DeveloptheCityofEncinitasPlasticsInitiativedefiningmeasurestoregulatethesaleanddistributionofsingle-useplasticproductsinEncinitasincludingplasticstraws,plasticutensils,andplasticbeveragebottles.ThePlasticsInitiativeisamulti-phasedapproach,startinginDecember2019throughtheIntroductionofanOrdinancetorequirethedistributionofplasticstrawsuponrequestonly,includingtakeoutanddrive-thru,andaprohibitiononthedistributionofplasticstraws.Phase2willincludethedevelopmentofpolicytolimitthesaleordistributionofPlasticBeverageContainersatCityFacilitiesandEvents,andPhase3willbefocusedonthedevelopmentofpolicytocontroltheretailsaleofsingleuseplasticandexpandedpolystyreneproducts.ix
TRANSTvUTTALLETTER•INTRODUCTORYSECTIONNetZeroMunicipalElectricity-Inthefallof201$,thePublicWorksDepartmentissuedaRequestforProposalstoengageanenergycompanytodevelopaplantobringtheCitytoanetzeroenergyfootprint.ThiswasinresponsetoamajorgoaloutlinedintheClimateActionPlan.Afterconductingprospectiveconsultantinterviews,Engiewasselectedtoevaluateallcityfacilities,proposeenergysavingsmeasures,andthendesignasolarsystemtooffsettheremainingdemand.Theevaluationofcityfacilitiesiscompleteandadraftproposaltofinanceandinstallenergyefficiencymeasuresandmultiplesolarphotovoltaicsystemshasbeenprepared.TheproposalwillgotoCityCouncilforconsiderationin2020.StandardPacificPark-In2001,aspartoftheMaravuDevelopment,theStandardPacificparcelwasconveyedtotheCityforparklandmitigation.OnOctober26,2016,theParks,Beaches,TrailsandOpenSpaceMasterPlanwasapprovedbyCityCouncil.TheplanidentifiedtheneighborhoodaroundtheStandardPacificparksiteasanareathatofferedlowserviceforrecreationalopportunities.Aparkinthisareawouldaffordtheresidentsmoreopportunitytoparticipateinparkandrecreationactivities.OnJune28,2017,CityCouncilawardedacontracttodesignStandardPacificPark.Thescopeofworkinthecontractincludesdevelopmentofplans,specifications,permits,andenvironmentaldocumentationfortheStandardPacificparksite.Thefinaldesigndocumentsarecompleteandarefullyentitledtobuildthepark.Constructionoftheparkisscheduledtobeginspring2020.EnerGov(EG)andCustomerSelfService(CSS)-theDevelopmentServicesDepartmentanticipatesconfiguringtheremainingBuildingandEngineeringpermitswithinEGandCSSduring2020,whichwillallowtheoldH.T.E.permittingsystemtobefinallyphasedout.Additionalimprovementsareplannedinthedigitalapplicationandsubmittalprocess.AWARDSANDACKNOWLEDGEMENTSTheGovernmentFinanceOfficersAssociation(GFOA)awardeditsCertificateofAchievementforExcellenceinFinancialReportingtotheCityofEncinitasforitsComprehensiveAnnualFinancialReportforthefiscalyearendedJune30,2018.TheCitybelievesthattheFY2018-19ComprehensiveAnnualFinancialReportcontinuestomeettheGFOAcriteriafortheaward.Lastly,wedeeplyappreciatethededicationandleadershipoftheMayorandCouncilMemberswhohaveconsistentlysupportedourgoalofexcellenceinallaspectsoffinancialmanagement.ThecompletionofthisreportcouldnothavebeenaccomplishedwithoutthededicationandhardworkoftheentirestaffintheFinanceDepartment.SpecialrecognitiongoestotheFinanceReportingteam,StellaHuang,MonicaAttili,AlexisAngelini,andKatieSchroederfortheirworkwiththeauditorsandthecoordinationofthepreparationofthisreport.TeresaS.McBroomeDirectorofFinance/CityTreasurerCityManagerx
LIST OF CITY OFFICIALS
As of June 30, 2019
CITY COUNCIL
Mayor Catherine S. Blakespear
Deputy Mayor Jody Hubbard (District 3)
Council Member Kellie Hinze (District 2)
Council Member Tony Kranz (District 1)
Council Member Joe Mosca (District 4)
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
xi
xii
GovernmentFinanceOfficersAssociationCertificateofAchievementforExcellenceinFinancialReportingPresentedtoCityofEncinitasCaliforniaForitsComprehensiveAnnualFinancialReportfortheFiscalYearEndedJune30,2018ExecutiveDirector/CEOxiii
This page intentionally left blank.
FINANCIAL SECTION
This page intentionally left blank.
Independent Auditor’s Report
City Council
City of Encinitas
Encinitas, California
Report on the 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, as of and for the year ended June 30, 2019, and the related
notes to the basic financial statements, which collectively comprise the City’s basic financial
statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States
of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
did not audit the 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:
Those statements were audited by other auditors whose reports have been furnished to us,
and our opinions, 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 from
material misstatement.
As sets Net Position Expenses
Business-type Activities 12.56% 17.71% 4.26%
Each Major Enterprise Fund:
Cardiff Sanitary District 51.79% 64.17% 43.49%
San Dieguito Water District 31.37% 40.85% 14.70%
Encinitas Sanitary Division 17.04% 17.37% 41.83%
Opinion Unit
1
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 of Encinitas, California, as of June 30, 2019, and the
respective changes in financial position and, where applicable, cash flows thereof for the year
then ended in accordance with accounting principles generally accepted in the United States
of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, budgetary comparison schedule for the General Fund
and the Infrastructure Improvements Special Revenue Fund, Schedule of Changes in the Net
Pension Liability and Related Ratios, Schedule of the City’s Proportionate Share of the Net
Pension Liability, Schedules of Contributions – Pensions, Schedule of Changes in the Net OPEB
Liability and Related Ratios, and the Schedule of Contributions – OPEB be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who
considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We 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.
2
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Encinitas’ basic financial statements. The introductory
section, supplementary information and the statistical section are presented for purposes of
additional analysis and are not a required part of the basic financial statements.
The supplementary information is 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 supplementary information is
fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory section and the statistical section 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 9, 2019 on our consideration of the City of Encinitas' internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe
the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on internal control over financial reporting
or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering City of Encinitas’ internal control over financial
reporting and compliance.
Irvine, California
December 9, 2019
3
This page intentionally left blank.
4
City of Encinitas
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
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, 2019. 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 $12.1 million. This is due to a $7.0 million increase
in governmental activities and a $5.1 million increase in business-type activities.
The City’s total net position increased overall by $15.8 million compared to the previous year.
The governmental activities increased $9.6 million and business-type activities increased $6.2
million. Total assets increased $12.1 million, total liabilities decreased $7.2 million, deferred
outflows decreased $4.6 million, and deferred inflows also decreased $1.1 million.
The City’s total revenues increased $9.6 million from 2018.
o Governmental activities revenues increased $7.8 million
o Business-type activities revenues increased $1.8 million
The City’s total expenses increased $6.6 million from 2018.
o Governmental activities expenses increased $2.8 million
o Business-type activities expenses increased $3.8 million
The City’s total net pension liability decreased $2.5 million from 2018.
o Governmental liability decreased $2.4 million
o Business-type liability decreased $0.1 million
The City’s total OPEB liability decreased $0.4 million from 2018.
o Governmental liability decreased $0.4 million
o Business-type liability slightly decreased and stayed the same at $0.3 million
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).
5
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
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 – Property, sales and use taxes, user fees, franchise fees, investment
earnings, and state and federal grants revenues finance the governmental activities. Most of the City’s
basic services are reported in this category, including:
o General Government
o Public Safety
o Public Works
o Planning
o Engineering
o Parks, Recreation and Cultural Arts
In Fiscal Year 2018-19, the City reorganized some departments and functions. The Facilities
Maintenance division and Stormwater Management division transferred to the Public Works
Department. The Facilities Maintenance division previously was in the Park, Recreation and Cultural
Arts Department and the Stormwater Management division was previously in the Development
Services-Engineering Department.
6
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
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.
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 and include the General Fund, Capital Improvements
Capital Projects Fund, Infrastructure Improvements Special Revenue Fund and other non-major
governmental funds. The City reports the General Fund, the Capital Improvements Capital Projects
Fund, and the Infrastructure Improvements Special Revenues Fund as major funds, under the guidance
provided by GASB No. 34. All other governmental funds are considered non-major 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.
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
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
7
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
Revenue Fund, which are all classified as major funds. These statements also report several individual
governmental funds classified as non-major funds, such as Special Revenue and Debt Service Funds,
which are combined into a single, aggregated presentation. Individual fund data for each of the non-
major 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, like government-wide financial statements, are presented on an accrual basis of
accounting. There are two types of proprietary funds – enterprise funds and internal service funds.
Enterprise funds are used to report activities for which external users are charged a fee for goods or
services. Internal service funds are used to report activities that provide supplies and services to other
City 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.
Financial Analysis of the City Overall
Net Position – The City of Encinitas’ combined net position (i.e. inclusive of all City funds) for the fiscal
year ended June 30, 2019 is compared to the results for 2018 in Table 1.
8
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
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 4.9 percent from $323.4 million at June 30, 2018, to $339.2
million at June 30, 2019.
The overall increase in total assets is $12.1 million when compared to the previous year. The
governmental activities total assets increased $7.0 million compared to the previous year with an
increase in cash and investments, receivable and noncurrent assets. The business-type activities
total assets increased $5.1 million compared to the previous year with primary increases also in
cash and investments. In addition, the investment in joint ventures increased slightly compared to
the previous year. The only decrease was in capital assets due to a sale of SDWD property.
The overall decrease in total liabilities is $7.2 million when compared to the previous year. This is
primarily attributable to a $3.7 million decrease in long-term liabilities and a $2.7 million decrease in
net pension liabilities for governmental and business-type activities. Additionally, the liability in the
other postemployment benefits (OPEB) also decreased $0.3 million.
The increase in total assets of $12.1 million, decrease in total liabilities of $7.2 million, deferred
inflows of $1.1 million and deferred outflows of $4.6 million results in an increase in the City’s total
net position by $15.8 million, or approximately 4.9 percent, compared to 2018. See Table 1.
9
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
10
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
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 and do
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 91 percent of
funding for governmental activities. The remaining categories include operating grants and
contributions, investment income and other.
11
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
Business-type Activities
Business-type activities for the City of Encinitas include water and wastewater operations and the City’s
affordable housing program. These activities increased net position by $6.2 million from the last fiscal
year. The program revenues and general revenues totaled $29.9 million, exceeding total expenses of
$23.7 million. 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 a decrease
of $0.9 million in program revenues and an increase of $2.6 million in general revenues from the
previous year. The primary reason for the decrease in operating revenue during Fiscal Year 2018-19
was attributable to lower potable water and recycled water sales from the San Dieguito Water District
(SDWD) by $1.2 million. The operating revenues in Cardiff Sanitary Division (CSD) increased slightly
by one percent and the Encinitas Sanitary Division (ESD) didn’t change compared to the previous year.
Due to a higher total portfolio amount and a slight increase in interest rates, investment income
increased $1.8 million compared to the previous year. Supplies expense for SDWD increased $0.9
million and operations and maintenance expense increased by $0.1 million compared to the previous
year. The sale of water decreased contributing to a $2.3 million decrease in net income for SDWD. The
CSD and ESD operating income remained stable
Overall, program revenues and general revenues exceeded program expenses during Fiscal Year
2018-19 resulting in a total net change of $6.2 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.
12
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
GENERAL FUND BUDGETARY HIGHLIGHTS
General Fund Revenues $2.2 million above projections
General Fund actual revenues of $79.2 million were $4.8 million, or 6.4 percent, higher than the original
budget and $3.3 million, or 4.3 percent, higher than the final budget. Actual revenues were higher by
$5.3 million, or 7.2 percent, when compared to FY 2017-18.
Property taxes are the City’s largest revenue source and makeup 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 $0.7 million, or 1.5 percent, compared to the final budget. Total property tax
revenue collected in FY2018-19 increased by $2.7 million or 6.1 percent more compared with the prior
year. 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 median sale price of a single-family home in Encinitas was $1,144,250 up from $932,500
compared with the same period January through July in FY 2017-18. The City experienced a net
taxable value increase of 6.5 percent for the FY 2018-19 tax roll, which was slightly more than
countywide at 6.0 percent.
Documentary transfer tax exceeded projections by $222,706, which was related to the values of homes
sold and the number of homes sold. The revenue from this category exceeded the budget due to higher
than anticipated transfers of ownership occurring during the fourth quarter, which accounted for 50
percent of the actual amount received.
Sales and use taxes is the City’s second largest revenue source, providing 18 percent of General Fund
revenue. Actual revenue received was over projections by $225,450, which was a 1.7 percent increase
compared to the final budget. The increase was from sales in the building and construction, fuel and
services, restaurants and hotels. The total sales tax revenue received was $442,594 higher, an
increase of 3.3 percent compared with the prior year.
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 $357,957, an increase of 19.2 percent from the final budget. The TOT revenue
increased by $184,426 and is an increase of 9.1 percent compared with prior year.
Overall, franchise taxes were under projections by $101,081, 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 revenue
collected from AT&T was $101,319 lower than anticipated and $14,070 below projection for collections
from SDG&E.
Licenses and permits were over projections by $19,024. This exceeded budget projection by 7.1
percent, mostly due to a one-time payment of $18,581 from Corridor Power Inc. for use of the City Hall
lower parking lot for vehicle charging stations. Revenue collected in this category was $46,425 more
than the previous fiscal year.
13
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
Intergovernmental revenue was higher than projected by $20,735. This was primarily due to revenue
received from agencies participating in the Joint Technical Community Choice Aggregate (CCA)
Feasibility Study cost sharing agreement.
Overall charges for services revenue exceeded projections by $18,689, primarily from engineering fees,
which were $261,739 higher than projected due to conservative budgeting. Revenues collected from
inspection fees were also $163,922 higher than projected. However, building fees were $228,282 lower
than projected due to a higher than anticipated number of Accessory Dwelling Unit (ADU) and energy
efficiency permit fee waiver credits issued during the year, totaling $178,758. The revenue collected
from recreation and art program fees and sponsorships was $163,208 lower than projected, which was
due to fewer registrations than anticipated and postponement of the piano concert series and pottery
classes.
Fines, forfeitures and penalties, which include vehicle code and red-light violations, were over
projections by $47,584. Use of money and property, which include investment earnings, exceeded
projections by $1.7 million, due to a higher portfolio amount and a slight increase in interest rates.
General Fund Expenditures $3.8 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 $3.8 million, or 5.5 percent
compared to the final budget. The savings was primarily from personnel costs resulting from vacancies
through the City departments, and savings in the contracts and services category. In FY 2018-19 the
savings in major functions were from general government, public safety, engineering, and parks and
recreation. Departments also saved in materials and supplies expenditures. Overall, all departments,
except non-departmental, were 2.8 percent to 29.6 percent below budget. Actual General Fund
expenditures were $65.2 million compared to prior year’s actual amount of $61.0 million.
Excess of Revenues over Expenditures $7.1 million above projections
Actual revenues over expenditures were approximately $14.0 million, compared to a budget of $6.9
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 slightly over by $3,234. Transfers in for capital were over budget by
$282,562.
Transfers out of the General Fund category was $34,707 less than projected. The anticipated matching
shares or subsidies from the General Fund for the Community Development Block Grant (CDBG) Fund,
Section 8 Administration Fund and Pacific Pines Administration Fund were also lower than projected.
Transfers out to internal service funds include the General Fund’s contribution to the Self-Insurance
fund. The contribution was budgeted and funded at approximately $1.4 million.
14
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
Appropriations for capital projects from the General Fund totaled $11.0 million in 2019.
Transfers out for debt service totaled $3.7 million which was under budget by $3,157.
Analysis of Fund Balance and Changes in Fund Balance
Fund balance was projected to be $17.0 million as of June 30, 2019, a scheduled decrease of about
$10.3 million. Actual fund balance was $24.4 million, or $7.4 million higher than projected; as
mentioned above, the revenues were $3.3 million above projected and the expenditures were $3.8
million under projected. The total other financing sources was also $0.3 million over projected.
There was an excess of revenues over expenditures of $14.0 million. Factoring in transfers for debt
service payments of $3.7 million, capital expenditures of $11.0 million and other transfer activity of $2.2
million, the net result is a decrease in total fund balance of $2.9 million at year end.
Besides the General Fund, the Capital Improvements Capital Projects Fund and Infrastructure
Improvements Special Revenue Fund are also major funds in the governmental funds. The City
executes capital projects through the Capital Improvements Capital Projects Fund. When a project is
designated and the budget is appropriated, the fund balance of the funding source will be transferred to
the Capital Improvements Capital Projects Fund to complete the capital project. Because of the
transfers, the Infrastructure Improvements Special Revenue Fund at June 30, 2019 had a deficit fund
balance $14.3 million. The Capital Improvements Capital Projects Fund had a total $50.0 million in fund
balances at the end of Fiscal Year 2018-19.
CAPITAL ASSETS AND THE CAPITAL IMPROVEMENT PROGRAM
As of June 30, 2019, the City had approximately $277.1 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, $218.4 million is classified as capital assets under the category of governmental activities,
and $58.7 million is classified as capital assets of business-type activities. For more detailed
information on capital assets activity refers to Note 7. In addition, there are $60.0 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: $218.4 million
The City has three Capital Improvements Capital Projects Funds to monitor capital improvements
projects for governmental activities. These projects include public facilities, acquisition of parkland and
park improvements, infrastructure, and certain City “work projects” such as multi-year consultant
studies that meet the criteria for inclusion as capital projects for budgeting purposes. The City uses a
dollar threshold of $100,000 and a useful life of five years or more in its evaluation for capitalizing a
capital expenditure. Eligible project costs are additions to construction in progress (CIP) at fiscal year-
end. Costs for completed projects are recorded as additions to the appropriate capital asset category at
year end.
15
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
The City spent approximately $11.9 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
emphasis this fiscal year was the Cardiff Beach Living Shoreline Project also known as the Dune
Restoration, the North Coast Highway 101 Streetscape, the South Coast Highway 101 Sidewalk
Improvement, Montgomery Avenue At-Grade Pedestrian Rail Crossing, El Portal Pedestrian/Bike
Underpass Project, Chesterfield Drive Quiet Zone Implementation, General Mobility Improvement,
Technology Infrastructure Replacement, parkland and drainage improvements, and ongoing pavement
overlay projects.
Business-type Activities
Capital Assets: $58.7 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. Capital assets
decreased slightly compared with prior year’s $59.1 million. During the year, SDWD sold their property
at 2315 Cambridge Avenue for $650,000.
The City’s Affordable Housing Fund carries an investment of about $2.5 million in affordable housing
stock under the classification of utility, plant, vehicles and equipment. The City purchased 16 housing
units in 2004. There has not been any capital spending activity in this fund since then.
Investment in Joint Ventures: $60.0 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 only. 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
16
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
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.
The City’s joint ventures in the Cardiff Sanitary Division and Encinitas Sanitary Division increased $1.4
million, which was offset by a decrease of $1.2 million in the City’s joint venture in the San Dieguito
Water District.
DEBT ISSUANCE AND ADMINISTRATION
The City has a total of $71.6 million of long-term obligation for both governmental and business-type
activities as shown in Note 8 of the basic financial statements. The governmental activities debt totaling
$46.1 million include $1.2 million in capital leases, and $44.9 million in bonded debt. Besides $46.1
million in debt, the long-term obligation in governmental activities also includes $4.8 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 long-term obligation totals $20.7 million and
includes $20.5 million in bonded debt and $0.2 million in compensated absences. Of the $66.6 million
total debt that is due, $3.7 million is due within one year.
Governmental Activities $46.1 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. Debt payments for all of these bonds are due semi-annually at fixed amounts, and the debt
matures at various times through 2045. The City’s total annual debt service of approximately $4.0
million represents approximately five percent of annual General Fund operating revenues.
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 the repair of the roof. Annual
payment on that lease is $183,556. Additionally, the City currently leases two fire engine vehicles with
another one paid off in FY 2018-19. The annual lease payments in FY 2018-19 were $276,165.
Business-type Activities $20.5 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’s share of the loan is
$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.
17
City of Encinitas
Management’s Discussion and Analysis (Continued)
For the Year Ended June 30, 2019
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 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 2019-20 were appropriated by the City Council in June
2019.
The FY 2018-19 actual results, when compared to the adopted projections and appropriations, showed
revenues above forecasts and expenditures significantly under budget. FY 2019-20 revenues are
expected to increase slightly above FY 2018-19 actual levels. Expenditures are budged to increase
modestly above FY 2018-19 levels. Next year’s budget includes a two percent adjustment to employee
compensation, which is the largest portion of the General Fund budget.
According to 2019 mid-year crime statistics published by the San Diego Association of Governments
(SANDAG), the City of Encinitas had the lowest amount of crime among other cities in San Diego
County. In October 2019, the City was certified compliant with state housing laws. Under the Housing
Element, the City will address future housing needs. In addition, the City is eligible for more state grants
for large infrastructure improvement and with state approval for adding housing at all income levels.
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, California 92024, telephone (760) 633-2600, or visit our website at www.encinitasca.gov and
review the Finance Department webpage.
18
BASIC FINANCIAL STATEMENTS
19
This page intentionally left blank.
20
GOVERNMENT-WIDE
FINANCIAL STATEMENTS
21
This page intentionally left blank.
22
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments (Note 3)83,292,641$ 46,530,397$ 129,823,038$
Restricted cash and investments with fiscal agent 1,540 20,907 22,447
Receivables (Note 4)7,872,549 2,352,489 10,225,038
Inventory and prepaid items 282,634 336,385 619,019
Total current assets 91,449,364 49,240,178 140,689,542
Noncurrent assets:
Internal balances 69,415 (69,415) -
Investments in joint ventures (Note 5)- 60,017,464 60,017,464
Long-term receivable (Note 6)458,186 - 458,186
Capital assets (Note 7):
Non-depreciable 83,258,710 13,584,669 96,843,379
Depreciable, net 135,116,531 45,069,277 180,185,808
Total capital assets, net 218,375,241 58,653,946 277,029,187
Total noncurrent assets 218,902,842 118,601,995 337,504,837
Total assets 310,352,206 167,842,173 478,194,379
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on bond refunding 325,745 - 325,745
Pension related deferred outflows of resources (Note 13)12,142,818 1,453,178 13,595,996
OPEB related deferred outflows of resources (Note 14)1,269,129 66,983 1,336,112
Total deferred outflows of resources 13,737,692 1,520,161 15,257,853
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 7,477,119 1,731,178 9,208,297
Interest payable 440,593 228,665 669,258
Unearned revenue 1,096,969 - 1,096,969
Deposits and other liabilities 4,560,525 575,574 5,136,099
Long-term liabilities - due within one year (Note 8)5,233,041 1,580,548 6,813,589
Total current liabilities 18,808,247 4,115,965 22,924,212
Noncurrent liabilities:
Long-term liabilities - due in more than one year (Note 8)45,725,662 19,099,796 64,825,458
Net pension liability (Note 13)46,511,899 7,073,051 53,584,950
Net OPEB liability (Note 14)8,748,893 287,106 9,035,999
Total noncurrent liabilities 100,986,454 26,459,953 127,446,407
Total liabilities 119,794,701 30,575,918 150,370,619
DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding - 58,734 58,734
Pension related deferred inflows of resources (Note 13)3,158,826 423,157 3,581,983
OPEB related deferred inflows of resources (Note 14)201,027 9,295 210,322
Total deferred inflows of resources 3,359,853 491,186 3,851,039
NET POSITION
Net investment in capital assets 172,580,765 38,074,788 210,655,553
Restricted:
Community development 1,164,935 - 1,164,935
Debt service 1,540 198 1,738
Housing - 411,697 411,697
Capital projects 19,830,915 - 19,830,915
Unrestricted 7,357,189 99,808,547 107,165,736
Total net position 200,935,344$ 138,295,230$ 339,230,574$
Primary Government
City of Encinitas
Statement of Net Position
June 30, 2019
Se e 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 15,280,238$ 1,239,815$ 421,208$ -$ 1,661,023$
Public safety 33,160,544 2,075,725 148,752 - 2,224,477
Public works 9,166,709 57,786 3,378,969 5,762,983 9,199,738
Planning services 6,878,364 2,936,898 249,078 - 3,185,976
Engineering services 6,762,441 1,782,402 - - 1,782,402
Parks and recreation 9,809,964 1,310,426 223,581 863,300 2,397,307
Interest on long-term debt 1,655,750 - - - -
Total governmental activities 82,714,010 9,403,052 4,421,588 6,626,283 20,450,923
Business-type activities:
Cardiff Sanitary Division 3,548,203 4,937,942 - 73,874 5,011,816
San Dieguito Water District 16,615,687 15,727,590 - 294,259 16,021,849
Encinitas Sanitary Division 2,044,676 2,698,745 - 360,567 3,059,312
Affordable Housing 1,576,162 260,848 1,142,424 - 1,403,272
Total business-type activities 23,784,728 23,625,125 1,142,424 728,700 25,496,249
Total primary government 106,498,738$ 33,028,177$ 5,564,012$ 7,354,983$ 45,947,172$
Program Revenues
City of Encinitas
Statement of Activities and Changes in Net Position
For the Year Ended June 30, 2019
See accompanying Notes to the Basic Financial Statements.
24
Governmental Business-type
Functions/Programs Activities Activities Total
Primary government:
Governmental activities:
General government (13,619,215)$ -$ (13,619,215)$
Public safety (30,936,067) - (30,936,067)
Public works 33,029 - 33,029
Planning services (3,692,388) - (3,692,388)
Engineering services (4,980,039) - (4,980,039)
Parks and recreation (7,412,657) - (7,412,657)
Interest on long-term debt (1,655,750) - (1,655,750)
Total governmental activities (62,263,087) - (62,263,087)
Business-type activities:
Cardiff Sanitary Division - 1,463,613 1,463,613
San Dieguito Water District - (593,838) (593,838)
Encinitas Sanitary Division - 1,014,636 1,014,636
Affordable Housing - (172,890) (172,890)
Total business-type activities - 1,711,521 1,711,521
(62,263,087) 1,711,521 (60,551,566)
General revenues:
Taxes:
Property taxes and documentary transfer taxes 49,237,265 1,110,248 50,347,513
Sales and use taxes 13,694,647 - 13,694,647
Transient occupancy taxes 2,775,771 - 2,775,771
Franchise taxes 2,571,367 - 2,571,367
Total taxes 68,279,050 1,110,248 69,389,298
Intergovernmental - unrestricted 185,380 - 185,380
Investment income 2,613,728 1,393,446 4,007,174
Rental income 636,999 231,600 868,599
Gain on disposal of capital assets 12,739 614,324 627,063
Other 190,491 1,074,947 1,265,438
Transfers (16,644) 16,644 -
Total general revenues and transfers 71,901,743 4,441,209 76,342,952
Changes in net position 9,638,656 6,152,730 15,791,386
Net position:
Beginning of year 191,296,688 132,142,500 323,439,188
End of year 200,935,344$ 138,295,230$ 339,230,574$
City of Encinitas
Statement of Activities and Changes in Net Position (Continued)
For the Year Ended June 30, 2019
Primary Government
and Changes in Net Position
Net (Expense) Revenue
See accompanying Notes to the Basic Financial Statements.
25
This page intentionally left blank.
26
FUND FINANCIAL STATEMENTS
27
This page intentionally left blank.
28
GOVERNMENTAL FUND
FINANCIAL STATEMENTS
29
This page intentionally left blank.
30
Capital Infrastructure
Improvements Improvements Other Total
General Capital Projects Special Revenue Governmental Governmental
Fund Fund Fund Funds Funds
ASSETS
Cash and investments 27,280,962$ 37,644,922$ 1,108,455$ 10,083,409$ 76,117,748$
Receivables 4,737,316 - 2,870,855 264,025 7,872,196
Due from other funds (note 9)2,761,121 13,883,324 - - 16,644,445
Inventory and prepaid items 238,428 - - - 238,428
Long-term receivable 28,400 - - 429,786 458,186
Restricted cash and investments 383 - - 1,157 1,540
Total assets 35,046,610$ 51,528,246$ 3,979,310$ 10,778,377$ 101,332,543$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND
FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities 5,348,917$ 1,538,694$ 3,426$ 307,950$ 7,198,987$
Unearned revenue 736,064 - 360,905 - 1,096,969
Due to other funds (note 9)- - 16,309,027 266,003 16,575,030
Deposits and other liabilities 4,539,298 - - 21,227 4,560,525
Total liabilities 10,624,279 1,538,694 16,673,358 595,180 29,431,511
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 1,639,058 429,786 2,068,844
Total deferred inflows of resources - - 1,639,058 429,786 2,068,844
Fund Balances:
Nonspendable 266,828 - - - 266,828
Restricted 383 25,576,702 1,105,029 9,753,411 36,435,525
Committed 15,545,889 24,412,850 - - 39,958,739
Unassigned 8,609,231 - (15,438,135) - (6,828,904)
Total fund balances 24,422,331 49,989,552 (14,333,106) 9,753,411 69,832,188
Total liabilities, deferred inflows
of resources, and fund balances 35,046,610$ 51,528,246$ 3,979,310$ 10,778,377$ 101,332,543$
City of Encinitas
Balance Sheet
Governmental Funds
June 30, 2019
Major Funds
See accompanying Notes to the Basic Financial Statements.
31
Total Fund Balances - Total Governmental Funds 69,832,188$
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 $3,312,210 reported in internal service
funds).
Land 61,862,474
Land easements 2,381,057
Construction in progress 19,015,179
Public facilities 106,466,354
Vehicles, equipment and machinery 2,206,391
Infrastructure 117,435,353
Less: Accumulated depreciation (94,303,777)
Total capital assets adjustment 215,063,031
Deferred loss on refunding in the governmental activities were not financial resources and,
therefore, were not reported in governmental funds. 325,745
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.(440,593)
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
$544,033 reported in internal service funds):
Amount reported in Government-wide Statement of Net Position:
2008 Civic Center roof replacement lease (676,834)
2013 Community Park Bonds, net of unamortized premium of $78,840 (5,988,840)
2014 Moonlight Beach Tower Series A Bonds, net of unamortized discount of $26,966 (2,803,034)
2014 Pacific View Series B Bonds, net of unamortized discount of $135,374 (9,419,626)
2015 Library Refunding Bonds, net of unamortized premium of $661,897 (14,791,897)
2017 Park Refunding Bonds, net of unamortized premium of $1,165,957 (11,895,957)
Claims payable (2,652,742)
Compensated absences (2,185,740)
Total long-term liabilities (50,414,670)
Net pension liability is not due and payable in the current period and, therefore, is not required
to be reported in the governmental funds. (46,511,899)
Actuarially determined pension deferred outflows of resources are reported in the government-
wide statements but are not reported in the governmental funds. 12,142,818
Actuarially determined pension deferred inflows of resources are reported in the government-
wide statements but are not reported in the governmental funds. (3,158,826)
Net OPEB liability is not due and payable in the current period and,therefore,is not required
to be reported in the governmental funds. (8,748,893)
Actuarially determined OPEB deferred outflows of resources are reported in the government-
wide statements but are not reported in the governmental funds. 1,269,129
Actuarially determined OPEB deferred inflows of resources are reported in the government-
wide statements but are not reported in the governmental funds. (201,027)
and, therefore, are deferred in the governmental funds or not recorded in the governmental
funds. 2,068,844
Internal service funds were used by management to charge the costs of risk management,
personnel support, fleet maintenance and vehicle replacement to individual funds. The
assets and liabilities of the internal service funds were included in governmental activities in
the Government-wide Statement of Net Position.9,709,497
Net position of governmental activities 200,935,344$
City of Encinitas
Reconciliation of the Governmental Funds Balance Sheet
to the Government-wide Statement of Net Position
June 30, 2019
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 66,263,561$ -$ 567,476$ 2,572,379$ 69,403,416$
Licenses and permits 286,224 - - - 286,224
Intergovernmental 663,028 - 5,599,024 899,754 7,161,806
Development impact fees - - - 1,485,129 1,485,129
Charges for services 7,383,043 - - - 7,383,043
Fines, forfeitures and penalties 794,237 - - - 794,237
Use of money and property 2,582,812 - 59,158 796,015 3,437,985
Other 1,214,504 - -103,696 1,318,200
Total revenues 79,187,409 - 6,225,658 5,856,973 91,270,040
EXPENDITURES:
Current:
General government 11,863,735 - 138,907 780,960 12,783,602
Public safety 31,279,823 - -214,582 31,494,405
Public works 5,338,578 - -536,565 5,875,143
Planning services 6,268,884 - -301,956 6,570,840
Engineering services 3,305,943 - -545,373 3,851,316
Parks and recreation 6,985,782 - -968,747 7,954,529
Capital outlay 133,137 11,717,500 - 75,000 11,925,637
Debt service:
Principal - - - 1,949,298 1,949,298
Interest and fiscal charges - - - 1,774,333 1,774,333
Total expenditures 65,175,882 11,717,500 138,907 7,146,814 84,179,103
REVENUES OVER
(UNDER) EXPENDITURES 14,011,527 (11,717,500) 6,086,751 (1,289,841) 7,090,937
OTHER FINANCING SOURCES (USES):
Transfers in (note 9)1,587,071 18,940,165 148,313 4,574,238 25,249,787
Transfers out (note 9)(18,469,725) (328,155) (6,416,377) (2,127,403) (27,341,660)
Total other financing sources (uses)(16,882,654) 18,612,010 (6,268,064) 2,446,835 (2,091,873)
NET CHANGE IN FUND BALANCES (2,871,127) 6,894,510 (181,313) 1,156,994 4,999,064
FUND BALANCES:
Beginning of year 27,293,458 43,095,042 (14,151,793) 8,596,417 64,833,124
End of year 24,422,331$ 49,989,552$ (14,333,106)$ 9,753,411$ 69,832,188$
City of Encinitas
Statement of Revenues, Expenditures, and Changes in Fund Balance
Governmental Funds
For the Year Ended June 30, 2019
Major Funds
See accompanying Notes to the Basic Financial Statements.
33
Net Change in Fund Balances - Total Governmental Funds 4,999,064$
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. 7,044,841
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 $562,723
recorded in internal service funds). (5,996,487)
Loss on the disposal of capital assets (29,999)
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 1,949,298
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 136,453
Deferred amounts on refunding (19,162)
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 (166,470)
Changes in claims payable (139,261)
Changes in the net pension liability 2,458,143
Changes in the net OPEB liability 396,238
The net effect of various miscellaneous transactions involving pension plans (i.e.deferred outflow/inflow
amortization, contributions after the measurement date) increased Net Position. (3,070,638)
The net effect of various miscellaneous transactions involving OPEB plans (i.e.deferred outflow/inflow
amortization, contributions after the measurement date) increased Net Position. 264,763
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.19,062
A portion of deferred grant revenues are not available to pay for current period expenditures and,
therefore, are not recognized in the funds.1,646,213
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. 146,598
Change in net position of governmental activities 9,638,656$
City of Encinitas
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
For the Year Ended June 30, 2019
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 13,202,364$ 19,427,472$ 13,532,059$
Restricted cash and investments with fiscal agent - 198 -
Accounts and taxes receivable 71,798 2,213,247 36,302
Inventory and prepaid items 3,625 236,956 3,081
Total current assets 13,277,787 21,877,873 13,571,442
Noncurrent assets:
Investment in joint ventures 33,525,279 20,635,205 5,856,980
Capital assets:
Land - 3,413,320 -
Public works facility right-of-use - 3,378,700 -
Construction in progress 3,571,843 184,302 3,036,504
Capacity rights, net - 171,829 -
Utility, plant, vehicles, and equipment, net 14,360,049 16,116,650 11,915,682
Total capital assets, net 17,931,892 23,264,801 14,952,186
Total noncurrent assets 51,457,171 43,900,006 20,809,166
Total assets 64,734,958 65,777,879 34,380,608
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension related items - 1,453,178 -
Deferred OPEB related items - 66,983 -
Total deferred outflows of resources - 1,520,161 -
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 14,716 1,048,858 666,234
Due to other funds (note 9)- - -
Accrued interest payable 151,540 77,125 -
Deposits 37,382 519,981 -
Compensated absences - due in one year - 81,046 -
Current portion of long-term debt 275,000 1,135,000 -
Total current liabilities 478,638 2,862,010 666,234
Noncurrent liabilities:
Capital leases payable - - -
Revenue bonds payable - due in more than one year - 3,211,858 -
Notes and mortgages payable - due in more than one year 11,951,937 2,855,000 -
Compensated absences - due in more than one year - 66,491 -
Net pension liability - 7,073,051 -
Net OPEB liability - 287,106 -
Total noncurrent liabilities 11,951,937 13,493,506 -
Total liabilities 12,430,575 16,355,516 666,234
DEFERRED INFLOWS OF RESOURCES
Deferred amount on refunding 58,734 - -
Deferred pension related items - 423,157 -
Deferred OPEB related items - 9,295 -
Total deferred inflows of resources 58,734 432,452 -
NET POSITION
Net investment in capital assets 5,646,221 16,062,943 14,952,186
Restricted:
Debt service - 198 -
Housing - --
Unrestricted 46,599,428 34,446,931 18,762,188
Total net position 52,245,649$ 50,510,072$ 33,714,374$
Major Enterprise Funds
City of Encinitas
Statement of Net Position
Proprietary Funds
June 30, 2019
See accompanying Notes to the Basic Financial Statements.
36
Non-major Governmental
Enterprise Fund Activities
Affordable Internal
Housing Total Service Funds
ASSETS
Current assets:
Cash and investments 368,502$ 46,530,397$ 7,174,893$
Restricted cash and investments with fiscal agent 20,709 20,907 -
Accounts and taxes receivable 31,142 2,352,489 353
Inventory and prepaid items 92,723 336,385 44,206
Total current assets 513,076 49,240,178 7,219,452
Noncurrent assets:
Investment in joint ventures - 60,017,464 -
Capital assets:
Land - 3,413,320 -
Public works facility right-of-use - 3,378,700 -
Construction in progress - 6,792,649 -
Capacity rights, net - 171,829 -
Utility, plant, vehicles, and equipment, net 2,505,067 44,897,448 3,312,210
Total capital assets, net 2,505,067 58,653,946 3,312,210
Total noncurrent assets 2,505,067 118,671,410 3,312,210
Total assets 3,018,143 167,911,588 10,531,662
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension related items - 1,453,178 -
Deferred OPEB related items - 66,983 -
Total deferred outflows - 1,520,161 -
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 1,370 1,731,178 278,132
Due to other funds (note 9)69,415 69,415 -
Accrued interest payable - 228,665 -
Deposits 18,211 575,574 -
Compensated absences - due in one year 6,787 87,833 -
Current portion of long-term debt 82,715 1,492,715 170,768
Total current liabilities 178,498 4,185,380 448,900
Noncurrent liabilities:
Capital leases payable - - 373,265
Revenue bonds payable - due in more than one year - 3,211,858 -
Notes and mortgages payable - due in more than one year 1,008,914 15,815,851 -
Compensated absences - due in more than one year 5,596 72,087 -
Net pension liability - 7,073,051 -
Net OPEB liability - 287,106 -
Total noncurrent liabilities 1,014,510 26,459,953 373,265
Total liabilities 1,193,008 30,645,333 822,165
DEFERRED INFLOWS OF RESOURCES
Deferred amount on refunding - 58,734 -
Deferred pension related items - 423,157 -
Deferred OPEB related items - 9,295 -
Total deferred inflows - 491,186 -
NET POSITION
Net investment in capital assets 1,413,438 38,074,788 2,768,177
Restricted:
Debt service - 198 -
Housing 411,697 411,697 -
Unrestricted - 99,808,547 6,941,320
Total net position 1,825,135$ 138,295,230$ 9,709,497$
City of Encinitas
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2019
See accompanying Notes to the Basic Financial Statements.
37
Cardiff San Dieguito Encinitas
Sanitary Water Sanitary
Division District Division
OPERATING REVENUES:
Charges for services 4,937,942$ 15,662,658$ 2,698,745$
Rental income -112,108 -
Interfund revenues -64,932 -
Intergovernmental ---
Other revenues 1,500 16,002 12,800
Total operating revenues 4,939,442 15,855,700 2,711,545
OPERATING EXPENSES:
Housing assistance payments - - -
Source of supply -5,900,120 -
General operations and maintenance 927,194 5,322,770 592,799
Facility operations and maintenance 1,543,054 2,239,714 685,290
General and administrative 183,040 604,333 103,976
Depreciation 389,390 831,957 369,669
Insurance and claims 33,203 47,620 30,242
Total operating expenses 3,075,881 14,946,514 1,781,976
OPERATING INCOME (LOSS)1,863,561 909,186 929,569
NONOPERATING REVENUES (EXPENSES):
Investment income 397,179 582,926 406,214
Property taxes -1,110,248 -
Operating grants ---
Net change from joint ventures 870,959 (1,376,819) (262,700)
Gain on disposal of capital assets -614,324 -
Amortization of bond premium 98,880 74,373 -
Interest expense (472,322) (292,354)-
Total nonoperating revenues (expenses)894,696 712,698 143,514
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS 2,758,257 1,621,884 1,073,083
Capital contributions 73,874 294,259 360,567
Transfers in (note 9)- - -
Transfers out (note 9)- - -
Total capital contributions and transfers 73,874 294,259 360,567
CHANGES IN NET POSITION 2,832,131 1,916,143 1,433,650
NET POSITION:
Beginning of year 49,413,518 48,593,929 32,280,724
End of year 52,245,649$ 50,510,072$ 33,714,374$
Major Enterprise Funds
City of Encinitas
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
For the Year Ended June 30, 2019
See accompanying Notes to the Basic Financial Statements.
38
Non-major
Enterprise Fund Governmental
Activities
Affordable Internal
Housing Total Service Funds
OPERATING REVENUES:
Charges for services -$ 23,299,345$ -$
Rental income 119,492 231,600 -
Interfund revenues 97,632 162,564 2,528,167
Intergovernmental 163,216 163,216 -
Other revenues 433 30,735 48,787
Total operating revenues 380,773 23,887,460 2,576,954
OPERATING EXPENSES:
Housing assistance payments 1,184,973 1,184,973 -
Source of supply - 5,900,120 -
General operations and maintenance 105,284 6,948,047 1,019,517
Facility operations and maintenance - 4,468,058 -
General and administrative 165,084 1,056,433 1,373,072
Depreciation 100,538 1,691,554 562,723
Insurance and claims 1,833 112,898 1,545,241
Total operating expenses 1,557,712 21,362,083 4,500,553
OPERATING INCOME (LOSS)(1,176,939) 2,525,377 (1,923,599)
NONOPERATING REVENUES (EXPENSES):
Investment income 7,127 1,393,446 -
Property taxes - 1,110,248 -
Operating grants 1,142,424 1,142,424 -
Net change from joint ventures - (768,560) -
Gain on disposal of capital assets - 614,324 12,739
Amortization of bond premium - 173,253 -
Interest expense (18,450) (783,126) (17,771)
Total nonoperating revenues (expenses)1,131,101 2,882,009 (5,032)
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS (45,838) 5,407,386 (1,928,631)
Capital contributions - 728,700 -
Transfers in (note 9)43,538 43,538 2,207,229
Transfers out (note 9)(26,894) (26,894) (132,000)
Total capital contributions and transfers 16,644 745,344 2,075,229
CHANGES IN NET POSITION (29,194) 6,152,730 146,598
NET POSITION:
Beginning of year 1,854,329 132,142,500 9,562,899
End of year 1,825,135$ 138,295,230$ 9,709,497$
City of Encinitas
Statement of Revenues, Expenses, and Changes in Net Position (Continued)
Proprietary Funds
For the Year Ended June 30, 2019
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 4,932,617$ 15,870,117$ 2,688,914$
Cash received from other funds - 64,932 -
Payments to employees (3,075) (1,983,301) -
Payments to suppliers for goods and services (2,856,342) (11,233,551) (1,180,722)
Other operating revenues 1,500 16,002 12,800
Net cash provided by (used in) operating activities 2,074,700 2,734,199 1,520,992
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets (531,834) (220,145) (259,853)
Capital contributions received - connection/capacity fees 73,874 105,600 360,567
Principal payments on long-term debt (663,846) (1,100,000) -
Interest payments on long-term debt (481,174) (301,694) -
Capital related payments to other agencies (76,595) (201,064) (704,171)
Proceeds received from disposal of capital assets - 614,324 -
Net cash (used in) capital and related financing activities (1,679,575) (1,102,979) (603,457)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Operating grants - - -
Proceeds from property taxes - 1,110,248 -
Cash received from other funds - - -
Cash paid to other funds - - -
Net cash provided by (used in) noncapital financing activities - 1,110,248 -
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest income 397,179 582,926 406,214
Net cash provided by investing activities 397,179 582,926 406,214
Net increase (decrease) in cash and cash equivalents 792,304 3,324,394 1,323,749
CASH AND CASH EQUIVALENTS:
Beginning of year 12,410,060 16,103,276 12,208,310
End of year 13,202,364$ 19,427,670$ 13,532,059$
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO
STATEMENT OF NET POSITION:
Cash and investments 13,202,364$ 19,427,472$ 13,532,059$
Restricted cash and investments with fiscal agent - 198 -
Total cash and cash equivalents 13,202,364$ 19,427,670$ 13,532,059$
Major Enterprise Funds
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2019
City of Encinitas
See accompanying Notes to the Basic Financial Statements.
40
Non-major
Enterprise Fund Governmental
Activities
Affordable Internal
Housing Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users 300,907$ 23,792,555$ 2,591,031$
Cash received from other funds 97,632 162,564 -
Payments to employees (155,879) (2,142,255) (1,372,992)
Payments to suppliers for goods and services (1,302,553) (16,573,168) (2,430,999)
Other operating revenues 433 30,735 -
Net cash provided by (used in) operating activities (1,059,460) 5,270,431 (1,212,960)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets - (1,011,832) (246,315)
Capital contributions received - connection/capacity fees - 540,041 -
Principal payments on long-term debt (81,429) (1,845,275) (258,393)
Interest payments on long-term debt (18,450) (801,318) (17,771)
Capital related payments to other agencies - (981,830) -
Proceeds received from disposal of capital assets - 614,324 12,739
Net cash (used in) capital and related financing activities (99,879) (3,485,890) (509,740)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Operating grants 1,142,424 1,142,424 -
Proceeds from property taxes - 1,110,248 -
Cash received from other funds 40,754 40,754 2,207,229
Cash paid to other funds (26,894) (26,894) (132,000)
Net cash provided by (used in) noncapital financing activities 1,156,284 2,266,532 2,075,229
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest income 7,127 1,393,446 -
Net cash provided by investing activities 7,127 1,393,446 -
Net increase (decrease) in cash and cash equivalents 4,072 5,444,519 352,529
CASH AND CASH EQUIVALENTS:
Beginning of year 385,139 41,106,785 6,822,364
End of year 389,211$ 46,551,304$ 7,174,893$
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO
STATEMENT OF NET POSITION:
Cash and investments 368,502$ 46,530,397$ 7,174,893$
Restricted cash and investments with fiscal agent 20,709 20,907 -
Total cash and cash equivalents 389,211$ 46,551,304$ 7,174,893$
City of Encinitas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2019
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)1,863,561$ 909,186$ 929,569$
Adjustments to reconcile operating income to net cash
provided (used) by operating activities:
Depreciation 389,390 831,957 369,669
Changes in operating assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
Accounts and taxes receivable (5,325) 95,351 (9,831)
Inventory and prepaid items 156 835 162
OPEB-related deferred outflows - (13,692) -
Pension-related deferred outflows - 694,928 -
Accounts payable and accrued liabilities (209,214) 197,737 231,423
Deposits 36,132 117,681 -
Compensated absences - 19,494 -
Unearned revenue - --
Net OPEB liability - (28,559) -
Net pension liability - (68,181) -
OPEB-related deferred inflows - 2,221 -
Pension-related deferred inflows - (24,759) -
Total adjustments 211,139 1,825,013 591,423
Net cash provided by (used in) operating activities 2,074,700$ 2,734,199$ 1,520,992$
NON-CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Amortization of original issue premium 98,880$ 74,373$ -$
Donation of capital assets - 188,659 -
Total non-cash capital and related financing activities 98,880$ 263,032$ -$
Proprietary Funds
For the Year Ended June 30, 2019
City of Encinitas
Statement of Cash Flows (Continued)
Major Enterprise Funds
See accompanying Notes to the Basic Financial Statements.
42
Non-major
Enterprise Fund Governmental
Activities
Affordable Internal
Housing Total Service Funds
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss)(1,176,939)$ 2,525,377$ (1,923,599)$
Adjustments to reconcile operating income to net cash
provided (used) by operating activities:
Depreciation 100,538 1,691,554 562,723
Changes in operating assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
Accounts and taxes receivable 18,593 98,788 14,077
Inventory and prepaid items (2,832) (1,679) (3,734)
OPEB-related deferred outflows - (13,692) -
Pension-related deferred outflows - 694,928 -
Accounts payable and accrued liabilities (204) 219,742 137,573
Deposits 2,574 156,387 -
Compensated absences (796) 18,698 -
Unearned revenue (394) (394)-
Net OPEB liability - (28,559) -
Net pension liability - (68,181) -
OPEB-related deferred inflows - 2,221 -
Pension-related deferred inflows - (24,759) -
Total adjustments 117,479 2,745,054 710,639
Net cash provided by (used in) operating activities (1,059,460)$ 5,270,431$ (1,212,960)$
NON-CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Amortization of original issue premium -$ 173,253$ -$
Donation of capital assets - 188,659 -
-$ 361,912$ -$
City of Encinitas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2019
See accompanying Notes to the Basic Financial Statements.
43
This page intentionally left blank.
44
FIDUCIARY FUND
FINANCIAL STATEMENTS
Agency Fund –These funds are used to account for money and property held by the City as trustee or
custodian.It is custodial in nature (assets equal liabilities).These funds include a Community Facilities (Mello-
Roos) District.
45
This page intentionally left blank.
46
Agency
Fund
ASSETS
Cash and investments (Note 3)2,333,543$
Restricted cash and investments with fiscal agent (Note 3)1,993,947
Current assessments receivable 18,889
Total assets 4,346,379$
LIABILITIES
Due to bondholders 4,346,379$
Total liabilities 4,346,379$
City of Encinitas
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2019
See accompanying Notes to the Basic Financial Statements.
47
This page intentionally left blank.
48
NOTES TO THE BASIC
FINANCIAL STATEMENTS
49
This page intentionally left blank.
50
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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.
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.
51
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 1 – Reporting Entity (Continued)
Blended Component Units (Continued)
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. The City reports deferred outflows related to pensions and Other Post-
Employment Benefits (OPEB) in this category.
Deferred Inflows of Resources represent inflows of resources (acquisition of net position)
that apply to future periods and, therefore, are not recognized as revenue until that time. The
City has two types of items that qualify for reporting in this category. The first item is
deferred inflows related to pensions and OPEB. The second item, unavailable revenue, is
reported only in the governmental funds balance sheet. The governmental funds report
unavailable revenues from grants. This amount is deferred and recognized as an inflow of
resources in the period the amount becomes available.
52
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
B.Measurement Focus, Basis of Accounting and Financial Statements Presentation
(Continued)
Government-wide Financial Statements
The City’s Government-wide Financial Statements include a Statement of Net Position, and a
Statement of Activities and Changes in Net Position. These statements present summaries of
governmental and business-type activities for the City accompanied by a total column. Fiduciary
activities of the City are not included in these statements.
These financial statements are presented on an “economic resources” measurement focus and the
accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital
assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying
Statement of Net Position. The Statement of Activities presents changes in Net Position. Under
the accrual basis of accounting, revenues are recognized in the period in which they are earned
while expenses are recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
Certain eliminations have been made in regard 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.
53
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
B. Measurement Focus, Basis of Accounting and Financial Statements Presentation
(Continued)
Government Fund Financial Statements (Continued)
Under the modified accrual basis of accounting, revenues are recognized in the accounting period
in which they become both measurable and available to finance expenditures of the current period.
Revenues are recorded when received in cash, except for that revenues subject to accrual
(generally 60 days after year end) are recognized when earned. 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.
54
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
B. Measurement Focus, Basis of Accounting and Financial Statements Presentation
(Continued)
Proprietary Fund Financial Statements (Continued)
The Statement of Revenues, Expenses, and Changes in Net Position presents increases
(revenues) and decreases (expenses) in total Net Position. Under the accrual basis of accounting,
revenues are recognized in the period in which they are earned while expenses are recognized in
the period in which the liability is incurred. In these funds, receivables have been recorded as
revenue and provisions have been made for uncollectible amounts.
Operating revenues in the proprietary funds are those revenues that are generated from the primary
operations of the fund. All other revenues are reported as non-operating revenues. Operating
expenses are those expenses that are essential to the primary operations of the fund. All other
expenses are reported as non-operating expenses.
The City reports the following major proprietary funds:
The Cardiff Sanitary Division (“CSD”) Enterprise Fund provides wastewater collection and
treatment services to approximately 6,400 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 4,000 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 Community Facilities (Mello-Roos) District for which the City
acts as an agent for debt service activities.
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.
55
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
C. Cash, Cash Equivalents, and Investments (Continued)
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
o Overall
o Custodial credit risk
o 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
Certain assets and liabilities are required to be reported at fair value. The fair value framework
provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3
measurements). The three levels of fair value hierarchy are described as follows:
Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or
liabilities in active markets.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly and fair value is determined through the use of models or other
valuation methodologies including:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in markets that are inactive;
Inputs other than quoted prices that are observable for the asset or liability;
Inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
56
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
E.Fair Value Measurement (Continued)
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value
measurement. These unobservable inputs reflect the City’s own assumptions about the inputs
market participants would use in pricing the asset or liability (including assumptions about risk).
These unobservable inputs are developed based on the best information available in the
circumstances and may include the City’s own data.
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 Joint Ventures
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. Refer to 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 the first-in first-out basis. Prepaid
items are payments made to vendors for services that will benefit periods beyond the fiscal year
ended. The cost of inventory and prepaids are recorded as expenditures/expenses when
consumed rather than purchased.
I.Capital Assets
Capital assets are valued at historical cost or estimated historical cost if the 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.
57
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
I. Capital Assets (Continued)
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.
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, 2019 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.
58
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
L. Long-Term Debt (Continued)
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, 2019.
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 the 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 the 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.
59
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
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:
Valuation date June 30, 2017
Measurement Date June 30, 2018
Measurement Period July 1, 2017 to June 30, 2018
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.
The obligations for net pension liability and OPEB are primarily liquidated from the General Fund.
There is no fixed payment schedule for these liabilities
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, 2018
Measurement Period July 1, 2017 to June 30, 2018
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:
60
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
R. Net Position (Continued)
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.
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 Director of Finance to assign fund balance amounts in the annual financial
statements.
61
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
S. Fund Balances (Continued)
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.
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 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, 2019
GASB Statement No. 83 – “Certain Asset Retirement Obligations,” effective for financial
statements starting with the fiscal year beginning after June 15, 2018.
62
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 2 – Summary of Significant Accounting Policies (Continued)
V. Accounting Changes (Continued)
New Governmental Accounting Standards Implemented for the Year Ended June 30, 2019
(Continued)
GASB Statement No. 88 – “Certain Disclosures Related to Debt, including Direct
Borrowing and Direct Placements,” effective for reporting periods beginning after June 15,
2018.
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. 84 – “Fiduciary Activities,” effective for reporting periods beginning
after December 15, 2018.
GASB Statement No. 85 – “Omnibus 2017,” effective for reporting periods beginning after
December 15, 2018.
GASB Statement No. 86 – “Certain Debt Extinguishments,” effective for reporting periods
beginning after December 15, 2018.
GASB Statement No. 87 – “Leases,” effective for reporting periods beginning after
December 15, 2019.
GASB Statement No. 90 – “Majority Equity Interests-an amendment of GASB Statements
No. 14 and No. 61,” effective for reporting periods beginning after December 15, 2018.
GASB Statement No. 91 – “Conduit Debt Obligations” effective for reporting periods
beginning after December 15, 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 83,292,641$ 46,530,397$ 2,333,543$ 132,156,581$
Restricted cash and investments with fiscal agent 1,540 20,907 1,993,947 2,016,394
Total cash and investments 83,294,181$ 46,551,304$ 4,327,490$ 134,172,975$
Government-wide Statement of Position
63
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 3 – Cash and Investments (Continued)
Cash and investments at June 30, 2019, consisted of the following:
Cash on hand 3,655$
Deposits with financial institutions 353,796
Restricted cash 2,016,394
Investments 131,799,130
Total cash and investments 134,172,975$
At June 30, 2019, 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, 2019:
Percentage
Fair of Measurement
Value Investments Input
Investments:
Local Agency Investment Fund (LAIF)19,529,853$ 14.82%Uncategorized
California Asset Management Program 1,039,321 0.79%Uncategorized
Money Market Mutual Funds 815,258 0.62%Uncategorized
Negotiable Certificates of Deposit 9,288,859 7.05%Uncategorized
U.S. Treasury Securities 48,334,265 36.67%Level 2
U.S. Government Sponsored Enterprise Securities 48,785,101 37.01%Level 2
San Diego County Investment Pool 4,006,473 3.04%Uncategorized
Total Investments 131,799,130$
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 $353,796 at June 30, 2019. Bank
balances were $1,819,982 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.
64
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 3 – Cash and Investments (Continued)
A. Demand Deposits (Continued)
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 has not waived the collateralization requirements.
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
Repurchased Agreements-Overnight "Sweep"Yes 1 year 20%No Limit
Local Agency Investment Fund (LAIF)Yes N/A 30%State Law Maximum
Other Governmental Managed Investment Pools Yes N/A 30%10% per pool
Money Market Mutual Funds Yes N/A 20%10%
Certificates of Deposit Yes 1 year 10%5%
Negotiable Certificates of Deposit Yes 5 years 10%5%
Bankers' Acceptances Yes 180 days 10%5%
U.S. Treasury Bills, Notes and Bonds Yes 5 years 50%No Limit
U.S. Government Sponsored Enterprises Yes 5 years 60%25%
Commercial Paper Yes 270 days 25%5%
Commercial Medium-Term Notes Yes 5 years 15%5%
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.
65
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 3 – Cash and Investments (Continued)
D. Risk Disclosures
Disclosures Related to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity, the greater the sensitivity its fair value is to
changes in market interest rates. One of the ways that the City manages its exposure to interest
rate risk is by purchasing a combination of shorter-term and longer-term investments and by timing
cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity
evenly over time as necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City's investments to interest rate risk is
provided in the table that shows the distribution by maturity is as follows:
Less than 12 to 36 36-60
Total 12 Months Months Months
Investments:
Local Agency Investment Fund (LAIF)19,529,853$ 19,529,853$ -$ -$
California Asset Management Program 1,039,321 1,039,321 - -
Money Market Mutual Funds 815,258 815,258 - -
Negotiable Certificates of Deposit 9,288,859 1,216,380 1,448,590 6,623,889
U.S. Treasury Securities 48,334,265 11,852,839 23,640,769 12,840,657
U.S. Government Sponsored Enterprise Securities 48,785,101 9,881,086 19,899,977 19,004,038
San Diego County Investment Pool 4,006,473 4,006,473 - -
Total Investments 131,799,130$ 48,341,210$ 44,989,336$ 38,468,584$
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 $250,000 or less are fully insured by the Federal Deposit Insurance
Corporation (FDIC), and therefore, do not seek a credit rating.
Presented below is the minimum rating required by (where applicable) the Government Code, the
Investment Policy, or the debt agreements, and the actual rating as of year-end for each investment
type.
66
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 3 – Cash and Investments (Continued)
Minimum
Fair Legal AAA/
Value Rating AA+Not Rated
Investments:
Local Agency Investment Fund (LAIF)19,529,853$ N/A -$ 19,529,853$
California Asset Management Program 1,039,321 N/A 1,039,321 -
Money Market Mutual Funds 815,258 AAA 815,258 -
Negotiable Certificates of Deposit 9,288,859 N/A - 9,288,859
U.S. Treasury Securities*48,334,265 N/A - -
U.S. Government Sponsored Enterprise Securities 48,785,101 N/A 48,785,101 -
San Diego County Investment Pool 4,006,473 N/A 4,006,473 -
T otal Investments 131,799,130$ 54,646,153$ 28,818,712$
*Exempt from rating disclosure
Rating as of Year End
Investment Type
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:
Issuer Investment Type Fair Value
Federal Farm Credit Bank U.S Government Sponsored
Enterprise Securities 18,136,777$
Federal Home Loan Bank U.S Government Sponsored
Enterprise Securities 12,081,770
Federal Home Loan Mortgage U.S Government Sponsored
Enterprise Securities 9,968,980
Federal National Mortgage Association U.S Government Sponsored
Enterprise Securities 9,120,111
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.
67
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 3 – Cash and Investments (Continued)
E. Investment 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 fair value of the City’s investment in this pool is reported in the accompanying
financial statements at amounts based upon the City’s pro-rata share of the fair value provided by
LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance
available for withdrawal is based on the accounting records maintained by LAIF, which are recorded
on an amortized cost basis.
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 AAA by Standard & Poor's national
rating agency.
G. Investment in San Diego County Pooled Investment Fund
The San Diego County Pooled Investment Fund (SDCPIF) is a pooled investment fund program
governed by the County of San Diego Board of Supervisors and administered by the County of San
Diego Treasurer and Tax Collector. Investments in SDCPIF are highly liquid as deposits and
withdrawals can be made at any time without penalty. SDCPIF does not impose a maximum
investment limit.
The County of San Diego’s bank deposits are either Federally insured or collateralized in
accordance with the California Government Code. Pool detail is included in the County of San
Diego Comprehensive Annual Financial Report (CAFR). Copies of the CAFR may be obtained
from the County of San Diego Auditor-Controller’s Office – 1600 Pacific Coast Highway – San
Diego, CA 92101.
Note 4 – Receivables
At June 30, 2019, receivables consist of the following:
Governmental Business-Type
Activities Activities Total
Accounts receivable 3,721,956$ 2,192,232$ 5,914,188$
Taxes and assessments receivable 505,778 135,220 640,998
Accrued revenues 2,919,636 25,037 2,944,673
Interest receivables 725,179 - 725,179
Total 7,872,549$ 2,352,489$ 10,225,038$
68
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
SDWD Santa Fe Facilities
45%55%Filtration Plant
31%69%Filtered Water Reservoir
39%61%Joint Pipeline
42%58%San Dieguito Water Reservoir
Note 5 – Investment in Joint Ventures
Investment in joint ventures consists of the following as of June 30, 2019:
Proprietary Fund Investment in Joint Ventures
Cardiff Sanitary Division San Elijo Joint Facilities 33,525,279$
San Dieguito Water District R.E. Badger Joint Facilities 19,976,172
San Dieguito Water District R.E. Badger Financing Authority 659,033
20,635,205
Encinitas Sanitary Division Encina Joint Facilities 5,856,980
Total Investment in Joint Ventures 60,017,464$
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 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 Joint 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, 2019, CSD's share of those costs was $1,543,054, 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:
69
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 5 – Investment in Joint Ventures (Continued)
B. San Dieguito Water District (Continued)
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, 2019, SDWD's share of those was $2,239,714,
which is shown as "facility operations and maintenance" in the accompanying financial statements.
Investment in R.E. Badger Water Facilities Financing Authority (the "Financing Authority")
In 1999, SDWD and Santa Fe entered into a joint exercise of powers agreement and formed the
Financing Authority to provide financing for the acquisition and construction of capital improvements
related to the Joint Facilities. The Financing Authority subsequently issued revenue bonds for the
purpose of funding those capital improvements. SDWD and Santa Fe are obligated under
Installment Purchase Agreements to repay their proportionate shares of the long-term financing.
The investment in the Financing Authority consists primarily of SDWD's share of the debt reserve
funds held by a fiscal agent and unamortized bond discounts and issuance costs.
C. Encinitas Sanitary Division
Investment in Encina Water Pollution Control Facility (the "Joint Facilities")
ESD is one of six member agencies with an ownership interest in the Joint Facilities. ESD owns
approximately 2.7 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, 2019, ESD's share
of those costs was $685,290, which is shown as "facility operations and maintenance" in the
accompanying financial statements.
Note 6 – Long-Term Receivables
Long-term receivables consist of loans to developers and loans to employees for the purchase of
computer equipment, a program approved by the City Council to promote more efficient use of
technology. At June 30, 2019, loans receivable consisted of the following:
Iris Apartments 429,786$
Employee computer loans 28,400
Total 458,186$
70
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 6 – Long-Term Receivables (Continued)
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
to 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, 2019 was $429,786.
Note 7 – Capital Assets
A. Governmental Activities
The summary of changes in governmental activities capital assets for the year ended June 30, 2019
is as follows:
Balance Balance
July 1, 2018 Additions Deletions Transfers June 30, 2019
Capital assets, not being depreciated:
Land 61,862,474$ -$ -$ -$ 61,862,474$
Land easements 2,300,434 80,623 - - 2,381,057
Construction in progress 14,007,820 6,735,291 - (1,727,932) 19,015,179
Total capital assets, not being depreciated 78,170,728 6,815,914 - (1,727,932) 83,258,710
Capital assets, being depreciated:
Public facilities 106,466,354 - - - 106,466,354
Vehicles, equipment and machinery 10,569,976 486,331 (207,705) 30,000 10,878,602
Infrastructure 115,707,421 - - 1,727,932 117,435,353
Total capital assets, being depreciated 232,743,751 486,331 (207,705) 1,757,932 234,780,309
Less accumulated depreciation
Public facilities (35,315,341) (3,304,781) - - (38,620,122)
Vehicles, equipment and machinery (6,469,461) (706,099) 166,615 (30,000) (7,038,945)
Infrastructure (51,456,380) (2,548,331) - - (54,004,711)
Total accumulated depreciation (93,241,182) (6,559,211) 166,615 (30,000) (99,663,778)
Total capital assets being depreciated, net 139,502,569 (6,072,880) (41,090) 1,727,932 135,116,531
Governmental activities capital assets, net 217,673,297$ 743,034$ (41,090)$ -$ 218,375,241$
Depreciation expense was charged to the functions/programs of the governmental activities as
follows:
General government 1,223,028$
Public safety 515,742
Public works 2,763,089
Parks and recreation 1,494,629
Internal service funds 562,723
Total depreciation expense 6,559,211$
71
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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,
2019 is as follows:
Balance Balance
July 1, 2018 Additions Deletions Transfers June 30, 2019
Capital assets, not being depreciated:
Land easements 3,300,931$ 112,389$ -$ -$ 3,413,320$
Public works facility right of use 3,378,700 - - - 3,378,700
Construction in progress 8,629,993 1,011,830 - (2,849,174) 6,792,649
Total capital assets, not being depreciated 15,309,624 1,124,219 - (2,849,174) 13,584,669
Capital assets, being depreciated:
Structures and improvements 19,147,575 - - 2,022,647 21,170,222
Collection and distribution 63,727,816 76,272 - 681,220 64,485,308
Machinery and equipment 2,548,455 - - 145,307 2,693,762
Capacity rights 323,190 - - - 323,190
Total capital assets, being depreciated 85,747,036 76,272 - 2,849,174 88,672,482
Less accumulated depreciation
Structures and improvements (6,240,735) (421,171) - - (6,661,906)
Collection and distribution (33,632,037) (1,036,896) - - (34,668,933)
Machinery and equipment (1,893,982) (227,023) - - (2,121,005)
Capacity rights (144,897) (6,464) - - (151,361)
Total accumulated depreciation (41,911,651) (1,691,554) - - (43,603,205)
Total capital assets being depreciated, net 43,835,385 (1,615,282) - 2,849,174 45,069,277
Business-type activities capital assets, net 59,145,009$ (491,063)$ -$ -$ 58,653,946$
Depreciation expense was charged to the functions/programs of the business-type activities as
follows:
Cardiff Sanitary Division 389,390$
San Dieguito Water District 831,957
Encinitas Sanitary Division 369,669
Non-major Affordable Housing 100,538
Total 1,691,554$
72
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 8 – Long-Term Obligations
A summary of changes in long-term liabilities for the year ended June 30, 2019 is as follows:
Balance Balance Due Within Due in More
July 1, 2018 Additions Deletions June 30, 2019 One Year Than One Year
Governmental Activities:
Capital Leases:
2008 Civic Center Roof Replacement 831,133$ -$ (154,299)$ 676,834$ 160,045$ 516,789$
2012 Fire Apparatus 91,335 - (91,335) - - -
2013 Fire Apparatus 164,653 - (81,547) 83,106 83,106 -
2017 Fire Apparatus 546,438 - (85,511) 460,927 87,663 373,264
Bonded Debt:
2013 Community Park Bonds 6,255,000 - (345,000) 5,910,000 350,000 5,560,000
add: original issue premium 87,600 - (8,760) 78,840 - 78,840
2014 Moonlight Beach Tower (Series A)2,900,000 - (70,000) 2,830,000 70,000 2,760,000
less: original issue discount (28,003) - 1,037 (26,966) - (26,966)
2014 Pacific View (Series B)9,760,000 - (205,000) 9,555,000 210,000 9,345,000
less: original issue discount (140,580) - 5,206 (135,374) - (135,374)
2015 Library Refunding Bonds 14,660,000 - (530,000) 14,130,000 555,000 13,575,000
add: original issue premium 698,669 - (36,772) 661,897 - 661,897
2017 Park Refunding Bonds 11,375,000 - (645,000) 10,730,000 680,000 10,050,000
add: original issue premium 1,263,121 - (97,164) 1,165,957 - 1,165,957
Claims payable 2,513,481 425,000 (285,739) 2,652,742 1,856,919 795,823
Compensated absences 2,019,270 1,934,103 (1,767,633) 2,185,740 1,180,308 1,005,432
Total governmental activities 52,997,117 2,359,103 (4,397,517) 50,958,703 5,233,041 45,725,662
Business-type Activities:
2011 CSD Note Payable to SEJPA 781,345 - (663,845) 117,500 57,500 60,000
add: original issue premium 103,202 - (34,400) 68,802 - 68,802
2017 CSD Note Payable to SEJPA 11,057,500 - - 11,057,500 217,500 10,840,000
add: original issue premium 1,018,248 - (35,112) 983,136 - 983,136
2007 SDWD Note Payable Badger 3,820,000 - (475,000) 3,345,000 490,000 2,855,000
2004 EHA Housing Note Payable 1,173,058 - (81,429) 1,091,629 82,715 1,008,914
2014 SDWD Water Revenue Bonds 4,110,000 - (625,000) 3,485,000 645,000 2,840,000
add: original issue premium 446,231 - (74,373) 371,858 - 371,858
Compensated absences (SDWD)128,043 142,133 (122,640) 147,536 81,046 66,490
Compensated absences (Affordable
Housing)13,179 9,507 (10,303) 12,383 6,787 5,596
Total business-type activities 22,650,806 151,640 (2,122,102) 20,680,344 1,580,548 19,099,796
Total long-term obligations 75,647,923$ 2,510,743$ (6,519,619)$ 71,639,047$ 6,813,589$ 64,825,458$
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 $3,543,258.
73
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
The annual debt service requirements for the lease outstanding at June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 160,045$ 23,511$ 183,556$
2021 166,004 17,552 183,556
2022 172,186 11,370 183,556
2023 178,599 4,957 183,556
Total 676,834$ 57,390$ 734,224$
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 $84,693. The lease is accounted for
as a capital lease, as the City will be purchasing the unit at the maturity of the lease in Fiscal Year
2019-20.
The annual debt service requirements for the lease outstanding at June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 83,106$ 1,587$ 84,693$
Total 83,106$ 1,587$ 84,693$
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 $98,641. The lease is accounted for
as a capital lease, as the City will be purchasing the unit at the maturity of the lease in Fiscal Year
2023-24.
74
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2017 Fire Apparatus Lease (Continued)
The annual debt service requirements for the lease outstanding at June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 87,663$ 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 460,927$ 32,277$ 493,204$
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$ (1,429,112)$ 2,114,146$
Fire apparatus and equipment 1,189,504 (355,649) 833,855
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 $510,000. Interest is due and payable semi-annually
at rates ranging from 2.00 percent to 3.00 percent. The bonds were issued at a premium, which is
being amortized over the life of the bonds on a straight-line basis in the government-wide financial
statements. The bonds are payable from lease payments to be made by the City of Encinitas for the
right to use certain real property and related improvements pursuant to a lease agreement dated
March 1, 2013 between the City as lessee and the Authority as lessor. The bonds are secured by
pledged revenue consisting of all lease revenue paid by the City of Encinitas in addition to any
assets held in trust for the purpose of paying the lease payments. The Authority has a leasehold on
the property until all the terms of the lease agreement are fulfilled. The refunding bonds are payable
from any source of legally available funds of the City. The bonds are subject to federal arbitrage
requirements.
75
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2013 Lease Revenue Refunding Bonds (Public Park Construction Project) (Continued)
The annual debt service requirements for the 2013 Lease Revenue Refunding Bonds outstanding
at June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 350,000$ 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 390,000 127,950 517,950
2025-2029 2,120,000 455,250 2,575,250
2030-2034 1,950,000 119,250 2,069,250
Total 5,910,000$ 1,311,002$ 7,221,002$
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 $245,000. The term bonds mature through
2045 and are subject to mandatory sinking requirements. Interest is due and payable semi-annually
at rates ranging from 2.00 percent to 3.50 percent. The bonds were issued at a discount, which is
being amortized over the life of the bonds on a straight-line basis in the government-wide financial
statements. The bonds are payable from lease payments to be made by the City of Encinitas for the
right to use certain real property and related improvements pursuant to a lease agreement dated
November 1, 2014 between the City as lessee and the Authority as lessor. The bonds are secured
by pledged revenue consisting of all lease revenue paid by the City of Encinitas in addition to any
assets held in trust for the purpose of paying the lease payments. The Authority has a leasehold on
the property until all the terms of the lease agreement are fulfilled. The refunding bonds are payable
from any source of legally available funds of the City. The bonds are subject to federal arbitrage
requirements.
76
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2014 Lease Revenue Bonds (Pacific View Property and Moonlight Beach Lifeguard Tower)
(Continued)
The annual debt service requirements for the 2014 Lease Revenue Bonds, Series A Moonlight
Beach Lifeguard Tower bonds outstanding at June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 70,000$ 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 80,000 86,731 166,731
2025-2029 445,000 396,994 841,994
2030-2034 510,000 322,484 832,484
2035-2039 610,000 223,447 833,447
2040-2044 730,000 101,541 831,541
2045-2049 165,000 3,094 168,094
Total 2,830,000$ 1,509,465$ 4,339,465$
The annual debt service requirements for the 2014 Lease Revenue Bonds, Series B Pacific View
Property bonds outstanding at June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
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 240,000 405,475 645,475
2025-2029 1,335,000 1,881,838 3,216,838
2030-2034 1,655,000 1,559,694 3,214,694
2035-2039 2,105,000 1,108,150 3,213,150
2040-2044 2,710,000 509,500 3,219,500
2045-2049 630,000 15,750 645,750
Total 9,555,000$ 7,172,334$ 16,727,334$
77
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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 $1,065,000
through 2036. The bonds are subject to federal arbitrage requirements.
The annual debt service requirements for the 2015 Library Refunding Bonds outstanding at June
30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 555,000$ 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 675,000 382,456 1,057,456
2025-2029 3,745,000 1,506,256 5,251,256
2030-2034 4,355,000 886,919 5,241,919
2035-2039 2,970,000 161,578 3,131,578
Total 14,130,000$ 4,780,158$ 18,910,158$
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 $1,140,000 through 2031. The bonds are subject to federal arbitrage requirements.
78
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 8 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2017 Park Refunding Bonds (Continued)
The annual debt service requirements for the 2017 Park Refunding Bonds outstanding at June 30,
2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 680,000$ 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 825,000 315,250 1,140,250
2025-2029 4,785,000 923,800 5,708,800
2030-2034 2,190,000 99,000 2,289,000
Total 10,730,000$ 2,974,050$ 13,704,050$
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. During the year ended June 30, 2019, principal and
interest paid on the 2011 Note Payable was $693,634 and net revenue was $2,822,884, or 407
percent of annual debt service. Management of CSD believes it is in compliance with these
covenants for Fiscal Year 2018-19.
79
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 8 – Long-Term Obligations (Continued)
B. Business-Type Activities
2011 CSD Note Payable to San Elijo Joint Powers Authority (SEJPA) (Continued)
The annual debt service requirements for the 2011 CSD Note Payable to San Elijo Joint Powers
Authority outstanding at June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 57,500$ 3,234$ 60,734$
2021 60,000 1,710 61,710
Total 117,500$ 4,944$ 122,444$
covenants for Fiscal Year 2018-19.
percent of annual debt service. Management of CSD believes it is in compliance with these
interest paid on the 2017 Note Payable was $451,388 and net revenue was $2,822,884, or 625
2017 Note Payable as of June 30, 2019 is $18,722,710. During the year ended June 30, 2019,
least 1.3 times the annual debt service. Total principal and interest remaining to be paid on the
shall produce gross revenues sufficient in each fiscal year to provide system revenues equal to at
to collect its system revenues which after allowances for contingencies and error in the estimates,
collection, treatment, reclamation, recycling, and disposal of wastewater. Encinitas has covenanted
are defined as gross revenues less operations and maintenance costs that are related to the
Encinitas has pledged its system revenues to pay for this outstanding obligation. System revenues
issued at a premium, which is being amortized over the life of the bonds on a straight-line basis.
through 2047. The average rate on the borrowing is approximately 2.5 percent. The bonds were
approximately $451,000 through 2019 with larger repayments of approximately $670,000 from 2020
$11,057,500 of the total borrowing amount of $22,115,000 (50 percent). Annual debt service is
Series 2017 Revenue Bonds. CSD is responsible for the repayment of the loan in the amount of
2017 as a successor to the CSD to assist in the financing of the CSD’s respective share of the
unit, the CSD. The City of Encinitas entered into a Series 2017 Loan Agreement dated June 1,
issuance. The 2017 revenue bonds are not the obligation of the City of Encinitas nor its component
facilities and improvements as part of SEJPA’s capital improvement plan and certain costs of
Solana Beach) issued 2017 Revenue Bonds (Clean Water Projects) for the purpose of funding
On July 6, 2017 SEJPA, on behalf of its members (the Cardiff Sanitary Division and the City of
2017 CSD Note Payable to San Elijo Joint Powers Authority (SEJPA)
80
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 8 – Long-Term Obligations (Continued)
B. Business-Type Activities (Continued)
2017 CSD Note Payable to San Elijo Joint Powers Authority (SEJPA) (Continued)
The annual debt service requirements for the 2017 CSD Note Payable to SEJPA outstanding at
June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 217,500$ 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 245,000 424,088 669,088
2025-2029 1,407,500 1,937,563 3,345,063
2030-2034 1,785,000 1,556,563 3,341,563
2035-2039 2,210,000 1,134,219 3,344,219
2040-2044 2,645,000 696,900 3,341,900
2045-2049 1,855,000 150,300 2,005,300
Total 11,057,500$ 7,665,210$ 18,722,710$
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 $630,000 through 2028.
The annual debt service requirements for the 2007 SDWD Note Payable to R.E. Badger Water
Facilities Financing Authority outstanding at June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 490,000$ 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 595,000 40,915 635,915
2025-2029 620,000 13,950 633,950
Total 3,345,000$ 455,388$ 3,800,388$
81
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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 $2,012,280 less than the old debt.
The annual debt service requirements for the 2014 SDWD Water Refunding Bonds outstanding at
June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 645,000$ 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 3,485,000$ 359,700$ 3,844,700$
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, 2019, is $3,844,700. During the year ended June 30, 2019
principal and interest paid was $1,401,694 and net revenue was $4,228,613, or 302 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 2018-19.
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 are due and payable monthly. Annual
principal installments range from $52,417 in 2014 to $98,938 in 2031. The note bears interest at 90
percent of the ten-year US Treasury note, adjustable every six years. The EHA is solely responsible
for repayment of this note.
82
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 8 – Long-Term Obligations (Continued)
B. Business-Type Activities (Continued)
2004 Encinitas Housing Authority (EHA) Note Payable (Continued)
The annual debt service requirements for the 2004 Encinitas Housing Authority Note Payable
outstanding at June 30, 2019 are as follows:
Year Ending
June 30 Principal Interest Total
2020 82,715$ 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 88,282 11,598 99,880
2025-2029 463,701 35,696 499,397
2030-2034 200,433 3,476 203,909
Total 1,091,629$ 111,075$ 1,202,704$
Note 9 – Interfund Receivables, Payable and Transfers
A. Due To and From Other Funds
Individual interfund receivables and payables at June 30, 2019 were as follows:
Due from Due to
Other Funds Other Funds
Govermental Funds:
General Fund 2,761,121$ -$
Capital Improvements Capital Projects Fund 13,883,324 -
Infrastructure Improvements Special Revenue Fund 16,309,027
- 266,003
- 69,415
Total 16,644,445$ 16,644,445$
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.
Non-major Affordable Housing Enterprise Fund
Enterprise Funds:
Non-major Governmental Funds
83
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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, 2019 were as follows:
Transfers In Transfers Out
General Fund Infrastructure Improvements 1,466,988$
General Fund Non-Major Governmental Funds 120,083
1,587,071
Infrastructure Improvements Capital Projects Fund 148,313
Capital Projects Fund Infrastructure Improvements 4,949,389
Capital Projects Fund Non-Major Governmental Funds 2,007,319
Capital Projects Fund Non-Major Proprietary Fund 26,894
Capital Projects Fund General Fund 11,956,563
18,940,165
Non-Major Governmental Funds General Fund 4,394,395
Non-Major Governmental Funds Capital Projects Fund 179,843
4,574,238
Internal Service Funds General Fund 2,075,229
Non-Major Proprietary Fund General Fund 43,538
Total 27,368,554$
Transfers into the General Fund consist of funds from the State Gasoline Tax, Development
Impact Fees and a reimbursement from a Federal award. The City 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. The City's Development Impact Fee Funds transfer funds to
the General Fund 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 General Fund was reimbursed by the
Infrastructure Improvements Special Revenue Fund for an emergency repair that occurred in FY
2016-17 and awarded a Federal grant in FY 2018-19.
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 non-major governmental funds represent General Fund subsidies for the Senior
Nutrition Program, the Community Development Block Grant (CDBG), the Section 8 Housing
Program, the Home Program, and the Wiro Park Landscape and Lighting District. In 1998, the
Council increased the Transient Occupancy Tax (TOT) from eight percent to ten percent.
84
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 9 – Interfund Receivables, Payable and Transfers (Continued)
B. Transfers In and Out (Continued)
The additional two percent of TOT revenue increase is transferred to the Coastal Zone
Management fund for beach and sand replenishment and stabilization projects. The transfers in to
the non-major 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 non-major 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. In addition, the General
Fund also contributes toward vehicle replacement funds annually.
85
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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, 2019 as follows:
Capital Infrastructure
Improvements Improvements Other
General Capital Projects Special Revenue Governmental
Fund Fund Fund Funds Totals
Nonspendable:
Inventory and prepaid items 238,428$ -$ -$ -$ 238,428$
Long-term receivable 28,400 - - - 28,400
Total nonspendable 266,828 - - - 266,828
Restricted:
Capital projects - 25,576,702 - - 25,576,702
Street maintenance and improvements - - - 1,437,298 1,437,298
Cable Franchise PEG funds - - - 172,886 172,886
Environmental initiatives - - - 1,569,770 1,569,770
Affordable housing - - - 15,082 15,082
Donations - - - 124,939 124,939
Parkland and open space - - - 1,826,204 1,826,204
Traffic mitigation - - - 1,217,759 1,217,759
Flood control - - - 332,311 332,311
Lighting and landscaping
assessments - - - 2,973,748 2,973,748
Law enforcement - - - 82,257 82,257
Sand management - - 1,105,029 - 1,105,029
Debt service 383 - - 1,157 1,540
Total restricted 383 25,576,702 1,105,029 9,753,411 36,435,525
Committed:
Capital projects - 24,412,850 - - 24,412,850
Budget stabilization 1,545,909 - - - 1,545,909
Operating reserve 13,999,980 - - - 13,999,980
Total committed 15,545,889 24,412,850 - - 39,958,739
Unassigned 8,609,231 - (15,438,135) - (6,828,904)
Total Fund Balances 24,422,331$ 49,989,552$ (14,333,106)$ 9,753,411$ 69,832,188$
Major Funds
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:
86
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 10 – Fund Balance and Net Position Classifications (Continued)
Categorization of Reserves under Adopted City Policies (Continued)
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 following 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, 2019 was $13,999,980.
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 following 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, 2019 was $1,545,909.
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, 2019 was $8,609,231.
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.
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.
87
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 11 – Risk Management (Continued)
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 $5,000,000 and statutory limits is
provided through contract reinsurance. City departments contribute premiums to the Self-Insurance
Fund based on annual rates set for each work class.
Changes in the balances of claims payable for liability and workers’ compensation during the past
two years are as follows:
Year Ended Year Ended
June 30, 2019 June 30, 2018
Claims payable, beginning of year 2,513,481$ 2,113,535$
Estimated incurred claims, net 425,000 1,619,837
Claims payments or closures (285,739) (1,219,891)
Claims payable, end of year 2,652,742$ 2,513,481$
A. 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 $91,408 for the year ended June 30, 2019.
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, 2019, 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, 2019 and did not pay any claims during the fiscal year.
88
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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, 2019, the City had remaining contractual commitments totaling approximately $3.4
million for capital projects related to its governmental and business-type activities. The more
significant capital commitments include approximately $2.0 million for street improvement projects,
approximately $0.9 million for park improvements, and $0.2 million for CSD pump station upgrades.
There were also commitments for drainage projects, emergency repairs, and pipeline rehabilitation-
capacity improvement projects for approximately $0.3 million.
Note 13 – California Public Employees’ Retirement System
The information in the following table includes the aggregate total pension related items for the
Miscellaneous and Safety plans of the City and the Miscellaneous plan of SDWD:
Miscellaneous Safety SDWD Total
Net Pension Liabilities 23,386,762$ 23,125,137$ 7,073,051$ 53,584,950$
Deferred Outflow of Resources 6,254,487 5,888,331 1,453,178 13,595,996
Deferred Inflow of Resources 1,690,500 1,468,326 423,157 3,581,983
Pension Expense 3,551,863 2,855,187 717,436 7,124,486
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
3. The Miscellaneous Plan of the San Dieguito Water District (SDWD Plan)
89
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
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, 2017 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.
SDWD Plan
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 District 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, California 95814.
90
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
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 years of age formula. In addition, legislation enacted by the State of California applying to all
local units of government, referred to as the Public Employees' Pension Reform Act (PEPRA) which
became effective on January 1, 2013, created yet another benefit formula for new hires with no
experience or prior service credit with CalPERS. In the case of the City, this will constitute a "Tier 3
miscellaneous plan" which provides a retirement benefit, referred to as the 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 City 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.
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, the Board of Directors imposed new terms and conditions
which created a new benefit formula for employees hired after the effective date of the change (the
"Tier 2 Plan"). Employees hired under the Tier 2 Plan receive a lower benefit formula, referred to as
the 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 2 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.
91
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
Employees Covered by Benefit Terms
As of the measurement date June 30, 2018, the following employees were covered by the benefit
terms for the City’s plans:
Miscellaneous Safety SDWD
Active employees 150 64 22
Inactive employees or beneficiaries currently
receiving benefits 146 76 32
Inactive employees entitled to, but not yet receiving
benefits 158 54 8
Total 454 194 62
Contributions
Miscellaneous Plan
actuarial methods and assumptions adopted by the CalPERS Board of Administration.
employer contribution rates are calculated and established annually by CalPERS, based on the
percent for fire members and from 11.990 percent to 17.875 percent for lifeguard members. The
The employer contribution rates for Fiscal Year 2017-18 ranged from 12.729 percent to 19.520
remaining amounts necessary to fund the benefits for its members (the “employer contributions”).
salary (the “employee contribution”). The City is required to contribute the actuarially determined
Active fire and lifeguard members are required to contribute 10.5 percent of their annual covered
Safety Plan
methods and assumptions as adopted by the CalPERS Board of Administration.
contribution rates are calculated and established annually by CalPERS, based on the actuarial
rate for Fiscal Year 2017-18 was 10.007 percent for miscellaneous members. The employer
the benefits for its members (the "employer contributions"). The employer normal cost contribution
The City is required to contribute the actuarially determined remaining amounts necessary to fund
Employer Contributions
requirements are established by State statute.
and 6.25 percent of their annual covered salary, respectively. The employee contribution
accounts. Members receiving the Tier 2 or Tier 3 benefits are required to contribute seven percent
miscellaneous members contribute the full eight percent, which is credited to their individual
covered salary (the "employee contribution"). Effective October 13, 2012, all City Tier 1
Active City Tier 1 miscellaneous members are required to contribute eight percent of their annual
Employee Contributions
92
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
SDWD Plan
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 rates for the year
ended June 30, 2018 for Tier 1, Tier 2, and PEPRA employees were 11.675 percent, 7.200 percent,
and 6.533 percent, respectively. 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.
Net Pension Liability
Actuarial Methods and Assumptions Used to Determine Total Pension Liability (All Plans)
For the measurement period ended June 30, 2018, the total pension liability was determined by
rolling forward the June 30, 2017 total pension liability. The June 30, 2017 and June 30, 2018 total
pension liabilities were based on the following actuarial methods and assumptions:
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
Actuarial Cost Method
No. 68
Actuarial Assumptions:
Discount Rate 7.15%
Inflation
Salary Increases
Mortality Rate Table
Post Retirement Benefit Increase
Entry Age Normal in accordance with the requirements of GASB
2.50%
Varies by Entry Age and Service
Derived using CalPERS' Membership Data for all funds
Contract cost of living adjustment (COLA)up to 2.50%until
Purchasing Power Protection Allowance Floor on Purchasing Power
applies, 2.50% thereafter.
Discount Rate
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.
93
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
Discount Rate (Continued)
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 cash flows. Using
historical returns of all of the funds’ asset classes, expected compound (geometric) returns were
calculated over the short-term (first ten years) and the long-term (11+ years) using a building-block
approach. Using the expected nominal returns for both short-term and long-term, the present value
of benefits was calculated for each fund. The expected rate of return was set by calculating the
rounded 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 the 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 expense.
New Strategic Real Return Real Return
Asset Class 1 Allocation 1 - 10 2 11 + 3
Global equity 50.0%4.80%5.98%
Fixed income 28.0 1.00 2.62
Inflation assets -0.77 1.81
Private equity 8.0 6.30 7.23
Real assets 13.0 3.75 4.93
Liquidity 1.0 -(0.92)
2 An expected inflation of 2.00 percent was used for this period.
3 An expected inflation of 2.92 percent was used for this period.
1 In the CalPER's CAFR, fixed income is included in global debt securities; liquidity is included in
short-term investments; inflation assets are included in both global equity securities and global
debt securities.
94
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
Changes in the Net Pension Liability
The following tables show the changes in the net pension liability recognized over the measurement
period for the Miscellaneous Plan:
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability/(Asset)
(a)(b)(c) = (a) - (b)
Balance at June 30, 2017 (Valuation Date)103,867,707$ 77,828,630$ 26,039,077$
Changes Recognized for the Measurement Period:
Service Cost 2,258,659 - 2,258,659
Interest on the total pension liability 7,270,761 - 7,270,761
Changes of benefit terms - - -
Difference between expected and actual experience (486,531) - (486,531)
Changes of assumptions (739,046) - (739,046)
Plan to plan resource movement - (196) 196
Contributions from the employer - 3,755,605 (3,755,605)
Contributions from employees - 992,534 (992,534)
Net investment income, net of administrative expense - 6,559,803 (6,559,803)
Benefit payments, including refunds of employee
contributions (4,164,974) (4,164,974) -
Administrative expense - (121,278) 121,278
Other expense - (230,310) 230,310
Net Changes during July 1, 2017 to June 30, 2018 4,138,869$ 6,791,184$ (2,652,315)$
Balance at June 30, 2018 (Measurement Date)108,006,576$ 84,619,814$ 23,386,762$
Increase (Decrease)
As of June 30, 2019, the City reported net pension liabilities for its proportionate shares of the net
pension liability of the Safety Plan as follows:
Plan Total Plan Plan Net
Pension Fiduciary Pension
Liability Net Position Liability/(Asset)
Balance at June 30, 2017 (Valuation date)90,584,327$ 67,653,362$ 22,930,965$
Balance at June 30, 2018 (Measurement date)92,660,835 69,535,698 23,125,137
Net changes during 2017-2018 2,076,508$ 1,882,336$ 194,172$
95
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
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 Plan is measured as of June 30, 2018, 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, 2017 rolled forward to June 30, 2018 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 City’s proportionate share of the net pension liability for the Safety Plan as of measurement
date June 30, 2018 was as follows:
Safety
Plan
Proportionate share at June 30, 2017 0.38377%
Proportionate share at June 30, 2018 0.39412%
Change - Increase/(Decrease)0.01035%
As of June 30, 2019, 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, 2017 23,132,699$ 15,991,467$ 7,141,232$
Balance at June 30, 2018 23,172,973 16,099,922 7,073,051
Net changes during 2017-2018 40,274$ 108,455$ (68,181)$
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, 2018, and the total
pension liability for the Plan used to calculate the net pension liability was determined by an
actuarial valuation as of June 30, 2017 rolled forward to June 30, 2018 using standard update
procedures. The District’s proportion of the net pension liability was based on a projection of the
District’s long-term share of contributions to the pension plan relative to the projected contributions
of all participating employers, actuarially determined.
The City’s proportionate share of the net pension liability for the SDWD Plan as of June 30 was as
follows:
Proportionate share at June 30, 2017 0.18116%
Proportionate share at June 30, 2018 0.18768%
Change - Increase/(Decrease)0.00652%
96
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the Miscellaneous Plan, Safety Plan, and SDWD
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 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%)
City Miscellaneous 38,576,077$ 23,386,762$ 10,872,640$
City Safety 35,899,027 23,125,137 12,659,221
SDWD 10,207,687 7,073,051 4,485,461
84,682,791$ 53,584,950$ 28,017,322$
Plan's Net Pension Liability/(Asset)
Pension Plan Fiduciary Net Position
Detailed information about the Miscellaneous, Safety, and SDWD Plans’ fiduciary net position is
available in a separately issued CalPERS financial report.
Amortization of Deferred Outflows and Inflows of Resources
Under GASB No. 68, 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:
Net difference between projected
and actual earnings on pension plan
investments
5 years
All other amounts Straight-line amortization over the expected
average remaining service lifetime (EARSL)
of all members that are provided with
benefits (active, inactive and retired) as of
the beginning of the measurement period.
97
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension
For the year ended June 30, 2019, the City recognized pension expense of $3,551,863,
$2,855,187, and $717,436 for the Miscellaneous, Safety and SDWD plans, respectively. At June
30, 2019, the City reported deferred outflows resources and deferred inflows of resources related to
pensions from the following sources:
Deferred Deferred Deferred Deferred
Outflows Inflows Outflows Inflows
of Resources of Resources of Resources of Resources
Contribution made after the measurement date 3,637,225$ -$ 2,457,135$ -$
Difference between expected and actual experience - (1,182,406) 494,996 -
Difference between employer's contribution and
proportionate share of contribution - - - (1,229,853)
Changes of assumptions 2,497,798 (508,094) 1,962,853 -
Net difference between projected and actual earning on
pension plan investments 119,464 - 156,568 -
Adjustments due to difference in proportions - - 816,779 (238,473)
Total 6,254,487$ (1,690,500)$ 5,888,331$ (1,468,326)$
Miscellaneous Plan Safety Plan
The $3,637,225 and $2,457,135 reported as deferred outflows of resources related to contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in
the fiscal year ended June 30, 2020. Other amounts reported as deferred outflows of resources and
deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Deferred Outflows/Deferred Outflows/
(Inflows) of (Inflows) of
Resources Resources
Measurement Period Miscellaneous Safety
Ending June 30 Plan Plan
2019 1,686,148$ 1,641,454$
2020 298,568 1,002,546
2021 (854,327) (520,954)
2022 (203,627) (160,176)
2023 - -
Thereafter - -
926,762$ 1,962,870$
98
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 13 – California Public Employees’ Retirement System (Continued)
For the year ended June 30, 2019, the City recognized pension expense of $717,436 for the SDWD
Plan. At June 30, 2019 the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred outflows Deferred inflows
of Resources of Resources
Contribution made after the measurement date 585,749$ -$
Difference between expected and actual experience 179,031 -
Changes of assumptions 608,728 -
Net difference between projected and actual earnings on
pension plan investments 34,967 -
Difference between employer's actual contributions
and proportionate share of contributions - (185,152)
Adjustments due to difference in proportions 44,703 (238,005)
Total 1,453,178$ (423,157)$
The $585,749 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the fiscal year
ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred
inflows of resources related to pensions will be recognized as pension expense as follows:
Measurement Period Pension
Ending June 30 Expense
2019 543,137$
2020 258,339
2021 (293,584)
2022 (63,620)
2023 -
Thereafter -
444,272$
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 was used to determine the June 30, 2018 measurement date amounts.
99
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
A. Summary
The information in the following table includes the aggregate total OPEB related items for the City
and SDWD:
City SDWD Total
Net OPEB Liabilities 8,748,893$ 287,106$ 9,035,999$
Deferred Outflow of Resources 1,269,129 66,983 1,336,112
Deferred Inflow of Resources 201,027 9,295 210,322
OPEB Expense 752,650 32,867 785,517
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 defined benefit agent multiple-employer 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 ($133
per month in 2018, $136 per month in 2019, and in future years, indexed to medical CPI increases)
except for former Encinitas Fire Protection District employees hired on or before March 15, 1995
who receive full retiree health benefits for both the employee and their dependents. The City does
not provide a retiree contribution for dental, vision, or life insurance benefits. The City's OPEB plan
does not issue a separate stand-alone report.
The City has elected to join the California Employers' Retiree Benefit Trust (the "Trust") in
accordance with GASB Statement No. 75, which provides a means to fund the annual OPEB costs,
referred to as the Actuarially Determined Contribution (ADC). The ADC includes the normal cost
(current accrual for benefits being earned) plus an amortization of the unfunded accrued liability or
net OPEB liability over 15 years on level-percentage of pay basis. The City’s funding policy is to
pre-fund the ADC through the Trust.
Eligibility
Employees of the City are eligible for retiree health benefits if they retire from the City and
commence pension benefits under PERS (typically on or after age 50 with at least five years of
PERS eligible service). Membership in the plan consisted of the following at June 30, 2017, the
date of the latest actuarial valuation:
Active plan members 206
Inactive plan members or beneficiaries
currently receiving benefits 88
Total 294
100
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
B. City of Encinitas Retiree Health Plan (Continued)
Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2018. The total OPEB liability used to
calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2018. The
net OPEB liability at June 30, 2019 was:
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability/(Asset)
(a)(b)(c) = (a) - (b)
Balance at June 30, 2017 12,639,192$ 3,494,061$ 9,145,131$
Changes Recognized for the Measurement Period:
Service Cost 190,479 - 190,479
Interest on the total OPEB liability 867,343 - 867,343
Employer contributions - 1,102,937 (1,102,937)
Net investment income - 358,109 (358,109)
Benefit payments, including refunds of member
contributions (878,114) (878,114) -
Administrative expenses - (2,366) 2,366
Other expenses - (4,620) 4,620
Net Changes during July 1, 2017 to June 30, 2018 179,708$ 575,946$ (396,238)$
Balance at June 30, 2018 (Measurement Date)12,818,900$ 4,070,007$ 8,748,893$
Increase (Decrease)
Actuarial Assumptions
The net OPEB liability in the June 30, 2018 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% per annum, in aggregate
Investment Rate of Return
Mortality Rate 1
Pre-retirement Turnover 2
Healthcare Trend Rate
Entry Age Normal
7.00%, assuming actuarially determined contributions funded into CERBT
Investment Strategy 1.
Derived using CalPERS' Membership Data for all funds
Derived using CalPERS' Membership Data for all funds
Based on recent premium experience assumng 1%-2% increase due to
market trends then reduced to a rate reflecting medical price inflation.
101
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
B. City of Encinitas Retiree Health Plan (Continued)
Actuarial Assumptions (Continued)
1 Pre-retirement mortality information was derived from data collected during 1997 to 2011 CalPERS Experience
Study dated January 2014 and post-retirement mortality information was derived from the 2007-2011 CalPERS
Experience Study. The Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov
under Forms and Publications.
2 The pre-retirement turnover information was developed based on CalPERS' specific data. For more details, please
refer to the 2007 to 2011 Experience Study Report. The Experience Study Reports may be accessed on the
CalPERS website www.calpers.ca.gov under Forms and Publications.
The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an
actuarial experience study for the period July 1, 2017 to June 30, 2018.
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 7.00 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.
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:
Asset Class
Target
Allocation
Long-term
Expected Real
Rate of Return*
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%
*Long-term expected rate of return is 7.00 percent
102
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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 (Continued)
Discount Rate - 1%Current Discount Discount Rate + 1%
(6.00%)Rate (7.00%)(8.00%)
10,230,391$ 8,748,893$ 7,515,208$
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/4.0%PPO) or 1-percentage-point higher
(7.0%HMO/7.5%PPO decreasing to 6.0%HMO/6.0%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)
7,357,562$ 8,748,893$ 10,420,444$
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.
OPEB Liabilities, OPEB Expense and Deferred Outflows/Inflows of Resources to OPEB
For the year ended June 30, 2019, the City recognized OPEB expense of $752,650 for the City
Plan. At June 30, 2019 the City reported deferred outflows of resources and deferred inflows of
resources related to OPEB from the following sources:
Deferred outflows Deferred inflows
of Resources of Resources
OPEB contribution made after the
measurement period 1,269,129$ -$
Changes of assumptions - (201,027)
1,269,129$ (201,027)$
103
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
B. City of Encinitas Retiree Health Plan (Continued)
OPEB Liabilities, OPEB Expense and Deferred Outflows/Inflows of Resources to OPEB
(Continued)
The $1,269,129 reported as deferred outflows of resources related to contributions subsequent to
the measurement date will be recognized as a reduction of the net OPEB liability in the fiscal year
ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred
inflows of resources related to OPEB will be recognized as OPEB expense as follows:
Measurement Period OPEB
Ending June 30 Expense
2019 (59,949)$
2020 (59,949)
2021 (59,949)
2022 (21,180)
2023 -
Thereafter -
(201,027)$
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 as of June 30, 2017 was used to
determine the June 30, 2018 measurement date amounts.
Plan Description
SDWD provides postretirement health care benefits through the Public Employees Medical and
Hospital Care Act (PEMHCA), which is a defined benefit agent multiple-employer 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.
104
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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:
Active plan members 22
Inactive plan members or beneficiaries
currently receiving benefits 13
Total 35
Change in the Net OPEB Liability
SDWD’s net OPEB liability was measured as of June 30, 2018. 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, 2019 was:
Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability/(Asset)
(a)(b)(c) = (a) - (b)
Balance at June 30, 2018 493,240$ 177,575$ 315,665$
(Measurement Date: June 30, 2017)
Changes Recognized for the Measurement Period:
Service cost 14,241 - 14,241
Interest on the total OPEB liability 34,637 - 34,637
Changes of benefit terms - - -
Difference between expected and actual experience - - -
Changes of assumptions - - -
Contributions from the employer - 59,205 (59,205)
Contributions from employees - - -
Net investment income, net of administrative expense - 18,590 (18,590)
Benefit payments, including refunds of employee
contributions (25,346) (25,346) -
Administrative expense - (123) 123
Other expenses - (235) 235
Net Changes 23,532 52,091 (28,559)
Balance at June 30, 2019 516,772$ 229,666$ 287,106$
(Measurement Date: June 30, 2018)
Increase (Decrease)
105
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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% per annum, in aggregate
Investment Rate of Return
Mortality Rate 1
Pre-retirement Turnover 2
Healthcare Trend Rate
Derived using CalPERS' Membership Data for all funds
Entry Age Normal
Derived using CalPERS' Membership Data for all funds
7.00%, assuming actuarially determined contributions funded into
CERBT Investment Strategy 1.
Based on recent premium experience assuming 1%-2% increase
due to market trends then reduced to a rate reflecting medical price
1 Pre-retirement mortality information was derived from data collected during 1997 to 2011
CalPERS Experience Study dated January 2014 and post-retirement mortality information was
derived from the 2007-2011 CalPERS Experience Study. The Experience Study Reports may be
accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications.
2 The pre-retirement turnover information was developed based on CalPERS' specific data. For
more details, please refer to the 2007 to 2011 Experience Study Report. The Experience Study
Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms and
Publications.
Discount Rate
The discount rate used to measure the net OPEB liability was 7.00 percent. The projection of cash
flows used to determine the discount rate assumed that District contributions will be made at rates
equal to the actuarily determined contribution rates. Based on those assumptions, the OPEB plan’s
fiduciary net position was projected to be available to make all projected OPEB payments for
current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of
return on OPEB plan investments was applied to all periods of projected benefit payments to
determine the total OPEB liability.
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.
106
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
C. San Dieguito Water District – Retiree Health Plan (Continued)
Discount Rate (Continued)
Target
Asset Class Allocation Real Return*
Global equity 57.00%5.50%
Global debt security 27.00%2.35%
Inflation assets 5.00%1.50%
Commodities 3.00%1.75%
Real estate investment trusts 8.00%3.65%
100%
* Long-term expected rate of return is 7.00 percent
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 (6.00 percent) or 1-
percentage point higher (8.00 percent) than the current discount rate:
Discount Rate - 1%Current Discount Discount Rate + 1%
(6.00%)Rate (7.00%)(8.00%)
Net OPEB Liability 348,716$ 287,106$ 235,672$
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/4.0%PPO) or 1-percentage point higher
(7.0%HMO/7.5%PPO decreasing to 6.0%HMO/6.0%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)
Net OPEB Liability 227,040$ 287,106$ 360,014$
Plan's Net OPEB Liability/(Asset)
107
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 14 – Other Postemployment Benefits (OPEB) (Continued)
C. San Dieguito Water District – Retiree Health Plan (Continued)
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.
OPEB Expense and Deferred Outflows/Inflows of Resources to OPEB
For the year ended June 30, 2019, SDWD recognized OPEB expense of $32,867 for the SDWD
Plan. At June 30, 2019, SDWD reported deferred outflows of resources and deferred inflows of
resources related to OPEB from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB contribution subsequent to the measurement date 66,983$ -$
Net difference between projected and actual earnings on
OPEB plan investments - (9,295)
66,983$ (9,295)$
The $66,983 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net OPEB liability in the fiscal year
ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred
inflows of resources related to OPEB will be recognized as OPEB expense as follows:
Measurement Period OPEB
Ending June 30 Expense
2019 (2,766)$
2020 (2,766)
2021 (2,764)
2022 (999)
2023 -
Thereafter -
(9,295)$
108
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
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.
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, 2019, the outstanding balance on the 2012 Special Tax Refunding Bonds was
$23,905,000. 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
CFD’s bills, as well as other administrative duties. The City has no duty or obligation to pay any
liabilities or potential liabilities of the CFD. 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.
109
City of Encinitas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2019
Note 17 – Other Required Disclosures
Deficit Fund Balances/Net Position
At June 30, 2019, the Infrastructure Improvements Special Revenue fund had a fund deficit of
$14,333,106. The deficit is anticipated to be funded from future grants, other revenues, and operating
or capital transfers.
110
REQUIRED SUPPLEMENTARY
INFORMATION
111
This page intentionally left blank.
112
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
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.
113
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
Note 2 – Budgetary Comparison Schedule
General Fund
Variance with
Original Final Actual Final Budget
REVENUES:
Taxes:
Property 46,061,136$ 46,711,136$ 47,406,620$ 695,484$
Real property transfer 519,777 519,777 742,483 222,706
Sales 13,469,197 13,469,197 13,694,647 225,450
Franchise 2,300,275 2,300,275 2,199,194 (101,081)
Transient occupancy 1,862,660 1,862,660 2,220,617 357,957
Total taxes 64,213,045 64,863,045 66,263,561 1,400,516
Licenses and permits 267,200 267,200 286,224 19,024
Intergovernmental 616,547 642,293 663,028 20,735
Charges for services 7,189,819 7,364,354 7,383,043 18,689
Fines, forfeitures and penalties 746,653 746,653 794,237 47,584
Use of money and property 840,268 841,868 2,582,812 1,740,944
Other 532,560 1,164,530 1,214,504 49,974
Total revenues 74,406,092 75,889,943 79,187,409 3,297,466
EXPENDITURES:
General government:
City Council 477,401 477,401 426,133 51,268
City Attorney 406,500 416,500 416,493 7
City Manager 4,671,491 4,703,150 4,387,673 315,477
City Clerk 487,968 622,596 601,909 20,687
Finance 1,814,427 1,896,522 1,787,583 108,939
Non-departmental 4,124,069 4,624,069 4,243,944 380,125
Total general government 11,981,856 12,740,238 11,863,735 876,503
Public safety:
Law enforcement 15,167,052 15,167,052 15,032,771 134,281
Fire and marine safety 15,870,293 17,014,563 16,247,052 767,511
Total public safety 31,037,345 32,181,615 31,279,823 901,792
Public works:
Administration 310,054 421,616 410,620 10,996
Street maintenance 2,937,908 3,045,321 2,902,514 142,807
Facility maintenance 1,311,883 1,233,259 1,179,858 53,401
Stormwater 843,666 961,120 845,586 115,534
Total public works 5,403,511$ 5,661,316$ 5,338,578$ 322,738$
Budgeted Amounts
114
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
Note 2 – Budgetary Comparison Schedule (Continued)
General Fund (Continued)
Variance with
Original Final Actual Final Budget
Development services - planning:
Planning 3,192,317$ 3,297,747$ 3,117,376$ 180,371$
Code enforcement 2,584,330 2,574,630 2,412,974 161,656
Building services 754,944 754,944 738,534 16,410
Total development services - planning 6,531,591 6,627,321 6,268,884 358,437
Development services - engineering:
City engineering 1,083,809 1,233,088 924,664 308,424
Traffic engineering 701,925 701,925 636,151 65,774
Stormwater 777,581 777,581 618,051 159,530
Coastal zone management 891,245 1,248,492 1,126,496 121,996
Street lighting 17,340 17,340 581 16,759
Total development services - engineering 3,471,900 3,978,426 3,305,943 672,483
Parks and recreation:
Administration 1,122,510 1,122,510 1,106,884 15,626
Park services 2,378,273 2,378,273 2,188,486 189,787
Beach services 581,847 581,847 518,275 63,572
Recreational services 715,328 744,928 704,466 40,462
Community and senior center 2,729,955 2,778,825 2,467,671 311,154
Total parks and recreation 7,527,913 7,606,383 6,985,782 620,601
Capital outlay:
Public safety 19,230 63,930 43,609 20,321
Public works 22,000 22,000 21,951 49
Parks and recreation 23,000 103,200 67,577 35,623
Total capital outlay 64,230 189,130 133,137 55,993
Total expenditures 66,018,346 68,984,429 65,175,882 3,808,547
EXCESS OF REVENUES OVER
EXPENDITURES 8,387,746 6,905,514 14,011,527 7,106,013
OTHER FINANCING SOURCES (USES)
Transfers in - operating 1,214,191 1,214,191 1,217,425 3,234
Transfers in - capital 8,000,000 87,084 369,646 282,562
Transfers out - operating (3,322,307) (3,322,307) (3,290,758) 31,549
Transfers out - capital (9,528,563) (10,956,563) (10,956,563) -
Transfers out - debt service (3,725,561) (3,725,561) (3,722,404) 3,157
Transfers out - other - (500,000) (500,000) -
Total other financing sources (uses)(7,362,240) (17,203,156) (16,882,654) 320,502
NET CHANGE IN FUND BALANCE 1,025,506$ (10,297,642)$ (2,871,127) 7,426,515$
Fund balance - beginning of year 27,293,458
Fund balance - end of year 24,422,331$
Budgeted Amounts
115
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
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 465,756$ 465,756$ 567,476$ 101,720$
Intergovernmental 4,465,053 5,963,485 5,599,024 (364,461)
Use of money and property - - 59,158 59,158
Total revenues 4,930,809 6,429,241 6,225,658 (203,583)
EXPENDITURES:
Current:
General government 244,189 249,189 138,907 110,282
Total expenditures 244,189 249,189 138,907 110,282
REVENUES OVER
(UNDER) EXPENDITURES 4,686,620 6,180,052 6,086,751 (93,301)
OTHER FINANCING SOURCES (USES):
Transfers in - 148,313 148,313 -
Transfers out (4,946,086) (6,161,956) (6,416,377) (254,421)
Total other financing sources (uses)(4,946,086) (6,013,643) (6,268,064) (254,421)
NET CHANGE IN FUND BALANCE (259,466)$ 166,409$ (181,313) (347,722)$
Fund balance - beginning of year (14,151,793)
Fund balance - end of year (14,333,106)$
116
Meaurement period 2017-18 2016-17 2015-16 2014-15 2013-14
Service cost 2,258,659$ 2,427,983$ 2,192,399$ 2,261,277$ 2,448,194$
Interest on total pension liability 7,270,761 6,965,613 6,690,503 6,333,421 5,943,955
Differences between expected and actual experience (486,531) (1,781,097) (801,667) (126,649) -
Changes in assumptions (739,046) 6,066,080 - (1,637,757) -
Changes in benefit terms - - - --
Benefit payments, including refunds of employee contributions (4,164,974) (3,466,120) (3,178,023) (3,003,676) (2,990,732)
Net change in total pension liability 4,138,869 10,212,459 4,903,212 3,826,616 5,401,417
Total pension liability - beginning 103,867,707 93,655,248 88,752,036 84,925,420 79,524,003
Total pension liability - ending (a)108,006,576$ 103,867,707$ 93,655,248$ 88,752,036$ 84,925,420$
Plan fiduciary net position
Contributions - employer 3,755,605$ 2,944,153$ 2,927,539$ 2,077,263$ 2,278,140$
Contributions - employee 992,534 1,015,196 1,004,970 776,061 1,043,925
Investment income (net of administrative expenses)6,559,803 7,826,373 447,217 1,359,388 9,816,151
Benefit payments (4,164,974) (3,466,120) (3,178,023) (3,003,676) (2,990,732)
Other (351,784) (102,777) (41,718) 49,406 -
Net change in plan fiduciary net position 6,791,184 8,216,825 1,159,985 1,258,442 10,147,484
Plan fiduciary net position - beginning 77,828,630 69,611,805 68,451,820 67,193,378 57,045,894
Plan fiduciary net position - ending (b)84,619,814$ 77,828,630$ 69,611,805$ 68,451,820$ 67,193,378$
Net pension liability - ending (a)-(b)23,386,762$ 26,039,077$ 24,043,443$ 20,300,216$ 17,732,042$
Plan fiduciary net position as a percentage of the
total pension liability 78.35% 74.93% 74.33% 77.13% 79.12%
Covered payroll 13,562,192$ 13,167,177$ 12,783,667$ 12,951,932$ 13,022,309$
Net pension liability as a percentage of covered
payroll 172.44% 197.76% 188.08% 156.74% 136.17%
Notes to Schedule:
Changes in Assumptions:
*Fiscal Year 2014-15 was the first year of implementation; therefore, only five years of information are shown.
Benefit changes The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June
20, 2015 valuation date.
In 2018, demographic assumptions and the inflation rate changed in accordance to the CalPERS Experience Study and Review of Actuarial
Assumptions December 2017. In 2017, the accounting discount rate was 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.
Note 3 - Schedule of Changes in the Net Pension Liability and Related Ratios
Last Ten Fiscal Years*
City Miscellaneous Plan
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
117
Meaurement period 2017-18 2016-17 2015-16 2014-15 2013-14
Plan's proportion of the net pension liability 0.39412% 0.38377% 0.38281% 0.35376% 0.22994%
Plan's proportionate share of the net pension liability 23,125,137$ 22,930,965$ 19,826,444$ 14,576,416$ 14,308,774$
Plan's covered payroll 6,197,680$ 6,017,165$ 5,841,908$ 5,671,755$ 5,115,288$
373.13% 381.09% 339.38% 257.00% 279.73%
Plan's fiduciary net position 69,535,698$ 67,653,362$ 63,591,785$ 65,540,377$ 62,697,310$
75.04% 74.69% 76.23% 81.81% 81.42%
Plan's proportionate share of
aggregate employer contributions 2,203,690$ 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 five years of information are shown.
Plan's proportionate share of the net pension liability as
a percentage of covered payroll
In 2018, demographic assumptions and the inflation rate were changed in accordance to the CalPERS Experience Study and Review
of Actuarial Assumptions December 2017.
On December 21, 2016, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using a
three year phase-in beginning with the June 20, 2016 actuarial valuation.
Plan's fiduciary net position as a percentage of the total
pension liability
Changes in assumptions
Benefit changes The figures above do not include any liability impact that may have resulted from plan changes which occurred after
the June 30, 2017 valuation date.
Last Ten Fiscal Years*
Safety Plan
Note 4 - Schedule of the City's Proportionate Share of the Net Pension Liability
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
118
Meaurement period 2017-18 2016-17 2015-16 2014-15 2013-14
Plan's proportion of the net pension liability 0.18768% 0.18116% 0.18103% 0.18296% 0.06074%
Plan's proportionate share of the net pension liability 7,073,051$ 7,141,232$ 6,288,631$ 5,019,493$ 3,779,285$
Plan's covered payroll $1,918,865 $1,862,975 1,808,714$ 1,756,033$ 1,712,639$
368.61% 383.32% 347.69% 285.84% 220.67%
Plan's fiduciary net position 16,099,922$ 15,991,467$ 15,586,708$ 16,358,655$ 18,489,458$
69.48% 69.13% 71.25% 76.52% 83.03%
Plan's proportionate share of
aggregate employer contributions 504,492$ 472,819$ 356,509$ 271,845$ 241,133$
Notes to Schedule:
*Fiscal Year 2014-15 was the first year of implementation; therefore, only five years of information are shown.
In 2018, demographic assumptions and the inflation rate were changed in accordance to the CalPERS Experience Study and Review of
Actuarial Assumptions December 2017.
On December 21, 2016, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using a three
year phase-in beginning with the June 20, 2016 actuarial valuation.
Plan's proportionate share of the net
pension liability as a percentage of
covered payroll
Plan's fiduciary net position as a
percentage of the total pension liability
Changes in assumptions
Benefit changes The figures above do not include any liability impact that may have resulted from plan changes which occurred after
the June 30, 2017 valuation date.
Last Ten Fiscal Years*
San Dieguito Water District Plan
Note 4 - Schedule of the City's Proportionate Share of the Net Pension Liability
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
119
Fiscal Year 2018-19 2017-18 2016-17 2015-16 2014-15
Actuarially determined contribution 3,252,930$ 2,832,401$ 2,723,629$ 2,585,583$ 1,815,263$
Contributions in relation to the actuarially
determined contributions 1 (3,637,225) (3,755,605) (2,944,153) (2,927,539) (2,077,263)
Contribution deficiency (excess)(384,295)$ (923,204)$ (220,524)$ (341,956)$ (262,000)$
Covered payroll 13,653,405$ 13,562,192$ 13,167,177$ 12,783,667$ 12,951,932$
Contributions as a percentage of covered
payroll 26.64% 27.69% 22.36% 22.90% 16.04%
Notes to Schedule
Fiscal Year: June 30, 2019
Valuation Date: June 30, 2016
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period Level percent of payroll
Asset valuation method Market value
Inflation
Salary increases Varies by entry age and service
Payroll growth
Investment rate of return
Retirement age 50 years (2% at 55 and 2% at 60), 52 years (2% at 62)
Mortality CalPERS' membership data for all funds
*Fiscal Year 2014-15 was the first year of implementation; therefore, only five years of information are shown.
2.75%
3.00%
7.375%
Note 5 - Schedule of Contributions - Pension
Last Ten Fiscal Years*
City Miscellaneous Plan
1 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.
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
120
Fiscal Year 2018-19 2017-18 2016-17 2015-16 2014-15
Contractually determined contribution
(actuarially determined)2,457,135$ 2,203,690$ 1,108,343$ 1,609,491$ 1,251,594$
Contributions in relation to the actuarially
determined contributions (2,457,135) (2,203,690) (1,108,343) (1,609,491) (1,251,594)
Contribution deficiency (excess)-$ -$ -$ -$ -$
Covered payroll 6,117,357$ 6,197,680$ 6,017,165$ 5,841,908$ 5,671,755$
Contributions as a percentage of covered
payroll 40.17% 35.56% 18.42% 27.55% 22.07%
Notes to Schedule
Fiscal Year: June 30, 2019
Valuation Date: June 30, 2016
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period Level percent of payroll
Asset valuation method Market Value
Inflation 2.50%
Projected salary increases 3.30% to 14.20% depending on age, service, and type of employment
Payroll growth 3.00%
Discount rate 7.375%
Individual Salary Growth
*Fiscal Year 2014-15 was the first year of implementation; therefore, only five years of information are shown.
Required Supplementary Information
Note 5 - Schedule of Contributions - Pension (Continued)
A merit scale varying by duration of employment
coupled with an assumed annual inflation growth of
2.75% and an annual production growth of 0.25%
Last Ten Fiscal Years*
Safety Plan
City of Encinitas
For the Year Ended June 30, 2019
121
Note 5 - Schedule of Contributions - Pension (Continued)
Fiscal Year 2018-19 2017-18 2016-17 2015-16 2014-15
Contractually determined contribution
(actuarially determined)585,749 504,492$ 472,819$ 356,509$ 271,845$
Contributions in relation to the actuarially
determined contributions (585,749) (504,492) (472,819) (356,509) (271,845)
Contribution deficiency (excess)-$ -$ -$ -$ -$
Covered payroll 1,887,782$ 1,918,865$ 1,862,975$ 1,808,714$ 1,756,033$
Contributions as a percentage of covered
payroll 31.03% 26.29% 25.38% 19.71% 15.48%
Notes to Schedule
Fiscal Year: June 30, 2019
Valuation Date: June 30, 2016
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period Level percent of payroll
Asset valuation method Market
Inflation 2.50%
Projected salary increases 3.30% to 14.20% depending on age, service, and type of employment
Payroll growth 3.00%
Discount rate
Individual Salary Growth
*Fiscal Year 2014-15 was the first year of implementation; therefore, only five years of information are shown.
San Dieguito Water District Plan
A merit scale varying by duration of employment
coupled with an assumed annual inflation growth of
2.75% and an annual production growth of 0.25%
7.375%
City of Encinitas
Required Supplementary Information
Last Ten Fiscal Years*
For the Year Ended June 30, 2019
122
Measurement Period 2017-18 2016-17
Total OPEB liability
Service cost 190,479$ 178,018$
Interest 867,343 856,058
Changes of benefit terms - -
Differences between expected and actual experience - -
Changes of assumptions - -
Benefit payments, including refunds of member contributions (878,114) (892,532)
Net change in total OPEB liability 179,708 141,544
Total OPEB liability - beginning 12,639,192 12,497,648
Total OPEB liability - ending (a)12,818,900$ 12,639,192$
OPEB fiduciary net position
Contributions - employer 1,102,937$ 1,092,690$
Net investment income 358,109 403,267
Benefit payments, including refunds of member contributions (878,114) (892,532)
Administrative expense (2,366) (2,046)
Other expense (4,620) -
Net change in plan fiduciary net position 575,946 601,379
Plan fiduciary net position - beginning 3,494,061 2,892,682
Plan fiduciary net position - ending (b)4,070,007 3,494,061
Plan net OPEB liability - ending (a) - (b)8,748,893$ 9,145,131$
Plan fiduciary net position as a percentage of the total OPEB liability 31.75% 27.64%
Covered-employee payroll 21,767,304$ 17,816,557$
Plan net OPEB liability as a percentage of covered-employee payroll 40.19% 51.33%
* Fiscal Year 2017-18 was the first year of implementation; therefore, only two years of information are shown.
Note 6 - Schedule of Changes in Net OPEB Liability and Related Ratios
Last Ten Fiscal Years*
City Plan
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
123
Measurement Period 2017-18 2016-17
Total OPEB liability
Service cost 14,241$ 13,309$
Interest 34,637 33,225
Benefit payments, including refunds of member contributions (25,346) (29,268)
Net change in total OPEB liability 23,532 17,266
Total OPEB liability - beginning 493,240 475,974
Total OPEB liability - ending (a)516,772$ 493,240$
OPEB fiduciary net position
Contributions - employer 59,205$ 63,332$
Net investment income 18,590 18,770
Benefit payments, including refunds of member contributions (25,346) (29,268)
Administrative expense (358) (95)
Net change in plan fiduciary net position 52,091 52,739
Plan fiduciary net position - beginning 177,575 124,836
Plan fiduciary net position - ending (b)229,666 177,575
Plan net OPEB liability - ending (a) - (b)287,106$ 315,665$
Plan fiduciary net position as a percentage of the total OPEB liability 44.44% 36.00%
Covered-employee payroll 1,978,669$ 1,802,043$
Plan net OPEB liability as a percentage of covered-employee payroll 14.51% 17.52%
* Fiscal Year 2017-18 was the first year of implementation; therefore, only two years of information are shown.
Note 6 - Schedule of Changes in Net OPEB Liability and Related Ratios (Continued)
Last Ten Fiscal Years*
San Dieguito Water District Plan
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
124
Fiscal Year 2018-19 2017-18
Actuarialy determined contribution (ADC)958,415 930,499$
Contributions in relation to the ADC (1,269,129) (1,092,690)
Contribution deficiency (excess)(310,714)$ (162,191)$
Covered employee payroll 22,403,865$ 21,767,304$
Contributions as a percentage of covered
employee payroll 5.66% 5.02%
Notes to Schedule
Actuarial methods and assumptions used to set the actuarially determined contributions for
Fiscal Year 2019 were from the June 30, 2017 actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period Level percentage of payroll over a closed rolling
15-year period
Asset valuation method Market value
Inflation 2.75% per annum
Payroll growth 3% per annum, in aggregate
Investment rate of return 7% per annum. Assumes investing in California Employers' Retirees
Benefit Trust asset allocation Strategy 1.
Retirement age According to the retirement rates under the most recent CalPERS pension plan
experience study.
Mortality Pre-retirement mortality probability based on 2014 CalPERS 1997-2011
Experience Study covering CalPERS participants. Post-retirement
mortality probability based on CalPERS Experience Study 2007-2011
covering participants in CalPERS.
* Fiscal Year 2017-18 was the first year of implementation; therefore, only two years of information are shown.
City of Encinitas
Required Supplementary Information
Note 7 - Schedule of Contributions - OPEB
Last Ten Fiscal Years*
For the Year Ended June 30, 2019
City Plan
125
Fiscal Year 2018-19 2017-18
Actuarialy determined contribution (ADC)53,291$ 52,780$
Contributions in relation to the ADC (66,983) (63,332)
Contribution deficiency (excess)(13,692)$ (10,552)$
Covered employee payroll 1,903,385$ 1,978,669$
Contributions as a percentage of covered
employee payroll 3.52% 3.20%
Notes to Schedule
Actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year
2019 were from the June 30, 2017 actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period Level percentage of payroll over a closed rolling
15-year period
Asset valuation method Market value
Inflation 2.75% per annum
Payroll growth 3% per annum, in aggregate
Investment rate of return 7% per annum. Assumes investing in California Employers' Retirees
Benefit Trust asset allocation Strategy 1.
Retirement age According to the retirement rates under the most recent CalPERS pension plan
experience study.
Mortality Pre-retirement mortality probability based on 2014 CalPERS 1997-2011
Experience Study covering CalPERS participants. Post-retirement
mortality probability based on CalPERS Experience Study 2007-2011
covering participants in CalPERS.
* Fiscal Year 2017-18 was the first year of implementation; therefore, only two years of information are shown.
Last Ten Fiscal Years*
Note 7 - Schedule of Contributions - OPEB (Continued)
San Dieguito Water District Plan
City of Encinitas
Required Supplementary Information
For the Year Ended June 30, 2019
126
SUPPLEMENTARY INFORMATION
127
This page intentionally left blank.
128
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 expenditures for the payment of principal and interest on the 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 expenditures for the payment of principal and interest on the
Encinitas Public Financing Authority long-term debt.
129
Grants and Development Lighting and
Housing Impact Landscaping
ASSETS
Cash and investments 1,359,867$ 4,837,867$ 3,885,675$
Receivables 226,238 - 37,787
Long-term receivable 194,466 235,320 -
Restricted cash and investments - - -
Total assets 1,780,571$ 5,073,187$ 3,923,462$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts payable and accrued liabilities 155,167$ -$ 152,783$
Due to other funds 266,003 - -
Deposits and other liabilities - 21,227 -
Total liabilities 421,170 21,227 152,783
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 194,466 235,320 -
Total deferred inflows of resources 194,466 235,320 -
Fund Balances
Restricted 1,164,935 4,816,640 3,770,679
Total fund balances 1,164,935 4,816,640 3,770,679
Total liabilities, deferred inflows of
resources and fund balances 1,780,571$ 5,073,187$ 3,923,462$
(Continued)
Special Revenue
City of Encinitas
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2019
130
Total
Encinitas Public Other
City Financing Governmental
Debt Service Authority Funds
ASSETS
Cash and investments -$ -$ 10,083,409$
Receivables -- 264,025
Long-term receivable -- 429,786
Restricted cash and investments -1,157 1,157
Total assets -$ 1,157$ 10,778,377$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts payable and accrued liabilities -$ -$ 307,950$
Due to other funds -- 266,003
Deposits and other liabilities -- 21,227
Total liabilities - - 595,180
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 429,786
Total deferred inflows of resources - - 429,786
Fund Balances
Restricted -1,157 9,753,411
Total fund balances -1,157 9,753,411
Total liabilities, deferred inflows of
resources and fund balances -$ 1,157$ 10,778,377$
(Concluded)
City of Encinitas
Combining Balance Sheet (Continued)
Non-Major Governmental Funds
June 30, 2019
Debt Service
131
Grants and Development Lighting and
Housing Impact Landscaping
REVENUES:
Taxes and assessments 372,173$ -$ 2,200,206$
Intergovernmental 899,754 - -
Development impact fees - 1,485,129 -
Use of money and property 198,998 425,430 169,880
Other 96,658 - 7,038
Total revenues 1,567,583 1,910,559 2,377,124
EXPENDITURES:
Current:
General government 780,960 - -
Public safety 214,582 - -
Public works 603 - 535,962
Development services - planning 301,956 - -
Development services - engineering - - 545,373
Parks and recreation 160,011 - 808,736
Capital outlay 75,000 - -
Debt service:
Principal - - -
Interest and fiscal charges - - -
Total expenditures 1,533,112 - 1,890,071
REVENUES OVER
(UNDER) EXPENDITURES 34,471 1,910,559 487,053
OTHER FINANCING SOURCES (USES):
Transfers in 157,991 539,567 154,276
Transfers out (336,828) (1,730,575) (60,000)
Total other financing sources (uses)(178,837) (1,191,008) 94,276
NET CHANGE IN FUND BALANCES (144,366) 719,551 581,329
FUND BALANCES:
Beginning of year 1,309,301 4,097,089 3,189,350
End of year 1,164,935$ 4,816,640$ 3,770,679$
(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, 2019
132
Total
Encinitas Public Other
City Financing Governmental
Debt Service Authority Funds
REVENUES:
Taxes and assessments -$ -$ 2,572,379$
Intergovernmental - - 899,754
Development impact fees - - 1,485,129
Use of money and property - 1,707 796,015
Other - -103,696
Total revenues - 1,707 5,856,973
EXPENDITURES:
Current:
General government - - 780,960
Public safety - - 214,582
Public works - - 536,565
Development services - planning - - 301,956
Development services - engineering - - 545,373
Parks and recreation - - 968,747
Capital outlay - - 75,000
Debt service:
Principal 154,298 1,795,000 1,949,298
Interest and fiscal charges 29,347 1,744,986 1,774,333
Total expenditures 183,645 3,539,986 7,146,814
REVENUES OVER
(UNDER) EXPENDITURES (183,645) (3,538,279) (1,289,841)
OTHER FINANCING SOURCES (USES):
Transfers in 183,645 3,538,759 4,574,238
Transfers out - - (2,127,403)
Total other financing sources (uses)183,645 3,538,759 2,446,835
NET CHANGE IN FUND BALANCES - 480 1,156,994
FUND BALANCES:
Beginning of year - 677 8,596,417
End of year -$ 1,157$ 9,753,411$
City of Encinitas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued)
Non-Major Governmental Funds
For the Year Ended June 30, 2019
Debt Service
133
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Taxes and assessments 372,838$ 372,173$ (665)$
Intergovernmental 1,048,640 899,754 (148,886)
Use of money and property 183,612 198,998 15,386
Other 96,613 96,658 45
Total revenues 1,701,703 1,567,583 (134,120)
EXPENDITURES:
Current:
General government 862,357 780,960 81,397
Public safety 211,712 214,582 (2,870)
Public works - 603 (603)
Development services - planning 437,085 301,956 135,129
Parks and recreation 164,513 160,011 4,502
Capital Outlay 103,000 75,000 28,000
Total expenditures 1,778,667 1,533,112 245,555
REVENUES OVER
(UNDER) EXPENDITURES (76,964) 34,471 111,435
OTHER FINANCING SOURCES (USES)
Transfers in 156,720 157,991 1,271
Transfers out (336,828) (336,828) -
Total other financing sources (uses)(180,108) (178,837) 1,271
NET CHANGE IN FUND BALANCE (257,072)$ (144,366) 112,706$
FUND BALANCE:
Beginning of year 1,309,301
End of year 1,164,935$
City of Encinitas
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
Grants and Housing Special Revenue Fund
For the Year Ended June 30, 2019
134
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Development impact fees 1,098,668$ 1,485,129$ 386,461$
Use of money and property 34,034 425,430 391,396
Other - - -
Total revenues 1,132,702 1,910,559 777,857
Expenditures:
Current:
General government - - -
Total expenditures - - -
REVENUES OVER
(UNDER) EXPENDITURES 1,132,702 1,910,559 777,857
OTHER FINANCING SOURCES (USES)
Transfers in 539,567 539,567 -
Transfers out (1,699,200) (1,730,575) (31,375)
Total other financing sources (uses)(1,159,633) (1,191,008) (31,375)
NET CHANGE IN FUND BALANCE (26,931)$ 719,551 746,482$
FUND BALANCE:
Beginning of year 4,097,089
End of year 4,816,640$
City of Encinitas
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
Development Impact Special Revenue Fund
For the Year Ended June 30, 2019
135
Final Actual Variance with
Budget Amounts Final Budget
REVENUES:
Taxes and assessments 2,025,292$ 2,200,206$ 174,914$
Use of money and property 59,089 169,880 110,791
Other -7,038 7,038
Total revenues 2,084,381 2,377,124 292,743
EXPENDITURES:
Current:
Public works 632,900 535,962 96,938
Development services - engineering 671,662 545,373 126,289
Parks and recreation 946,931 808,736 138,195
Total expenditures 2,251,493 1,890,071 361,422
REVENUES OVER
(UNDER) EXPENDITURES (167,112) 487,053 654,165
OTHER FINANCING SOURCES (USES)
Transfers in 154,276 154,276 -
Transfers out (60,000) (60,000) -
Total other financing sources (uses)94,276 94,276 -
NET CHANGE IN FUND BALANCE (72,836)$ 581,329 654,165$
FUND BALANCE:
Beginning of year 3,189,350
End of year 3,770,679$
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, 2019
136
Internal Service Funds
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.
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.
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.
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.
137
This page intentionally left blank.
138
Risk Wastewater Vehicle Vehicle
Management Support Maintenance Replacement Total
ASSETS
Current assets:
Cash and investments 5,786,650$ 17,403$ 9,878$ 1,360,962$ 7,174,893$
Accounts receivable 353 - - - 353
Inventory and prepaid items 44,206 - - - 44,206
Total current assets 5,831,209 17,403 9,878 1,360,962 7,219,452
Noncurrent assets:
Capital assets:
Utility, plant, vehicles, and equipment, net - - - 3,312,210 3,312,210
Total noncurrent assets - - - 3,312,210 3,312,210
Total assets 5,831,209 17,403 9,878 4,673,172 10,531,662
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 199,644 17,403 9,878 51,207 278,132
Current portion of capital leases payable - - - 170,768 170,768
Total current liabilities 199,644 17,403 9,878 221,975 448,900
Noncurrent liabilities:
Capital lease payable - - - 373,265 373,265
Total noncurrent liabilities - - - 373,265 373,265
Total liabilities 199,644 17,403 9,878 595,240 822,165
NET POSITION
Net investment in capital assets - - - 2,768,177 2,768,177
Unrestricted 5,631,565 - - 1,309,755 6,941,320
Total net position 5,631,565$ -$ -$ 4,077,932$ 9,709,497$
June 30, 2019
All Internal Service Funds
Combining Statement of Net Position
City of Encinitas
139
Risk Wastewater Vehicle Vehicle
Management Support Maintenance Replacement Total
OPERATING REVENUES:
Interfund revenues 1,135,749$ 903,414$ 489,004$ -$ 2,528,167$
Other revenues 48,559 228 - - 48,787
Total operating revenues 1,184,308 903,642 489,004 -2,576,954
OPERATING EXPENSES:
Operational support services 735,215 106,362 177,940 - 1,019,517
Administrative support 396,786 665,222 311,064 - 1,373,072
Insurance and claims 1,545,241 - - - 1,545,241
Depreciation of capital assets - - - 562,723 562,723
Total operating expenses 2,677,242 771,584 489,004 562,723 4,500,553
Operating income (loss)(1,492,934) 132,058 -(562,723)(1,923,599)
NONOPERATING REVENUES:
Gain (loss) on disposal of capital assets - - - 12,739 12,739
Interest expense - - - (17,771) (17,771)
Total nonoperating revenues - - - (5,032) (5,032)
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS (1,492,934) 132,058 -(567,755)(1,928,631)
Transfers in 1,392,229 - - 815,000 2,207,229
Transfers out -(132,000)- - (132,000)
Total capital contributions and transfers 1,392,229 (132,000)-815,000 2,075,229
Net change in net position (100,705) 58 - 247,245 146,598
NET POSITION:
Beginning of year 5,732,270 (58)-3,830,687 9,562,899
End of year 5,631,565$ -$ -$4,077,932$ 9,709,497$
City of Encinitas
Combining Statement of Revenues, Expenses, and Changes in Net Position
All Internal Service Funds
For the Year Ended June 30, 2019
140
Risk W astewater Vehicle Vehicle
Management Support Maintenance Replacement Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from users 1,190,289$ 903,642$ 489,100$ 8,000$ 2,591,031$
Payments to employees (396,786) (665,142) (311,064) - (1,372,992)
Payments to suppliers and vendors (2,187,734) (99,672) (194,453) 50,860 (2,430,999)
Net cash provided by (used in) operating activities (1,394,231) 138,828 (16,417) 58,860 (1,212,960)
CASHFLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets - - - (246,315) (246,315)
Principal payment on long-term debt - - - (258,393) (258,393)
Interest payments on capital leases - - - (17,771) (17,771)
Proceeds from sale of capital assets - - - 12,739 12,739
Net cash (used in) capital and related financing activities - - - (509,740) (509,740)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in 1,392,229 - - 815,000 2,207,229
Transfers (out)- (132,000) - - (132,000)
Net cash provided by (used in) noncapital financing activities 1,392,229 (132,000) - 815,000 2,075,229
Net increase (decrease) in cash and cash equivalents (2,002) 6,828 (16,417) 364,120 352,529
CASH AND CASH EQUIVALENTS:
Beginning of year 5,788,652 10,575 26,295 996,842 6,822,364
End of year 5,786,650$ 17,403$ 9,878$ 1,360,962$ 7,174,893$
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss)(1,492,934)$ 132,058$ -$ (562,723)$ (1,923,599)$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation - - - 562,723 562,723
Changes in operating assets and liabilities:
Accounts receivable 5,981 - 96 8,000 14,077
Inventory and prepaid items (3,734) - -- (3,734)
Accounts payable and accrued liabilities 96,456 6,770 (16,513) 50,860 137,573
Total adjustments 98,703 6,770 (16,417) 621,583 710,639
Net cash provided by (used in) operating activities (1,394,231)$ 138,828$ (16,417)$ 58,860$ (1,212,960)$
There were no non-cash capital and related financing activitites.
City of Encinitas
Combining Statement of Cash Flows
All Internal Service Funds
For the Year Ended June 30, 2019
141
This page intentionally left blank.
142
AGENCY FUND
FIDUCIARY FUNDS
The Agency Fund is used to account for assets held by the City in a trustee capacity for individuals,private
organizations, other governments, and/or other 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.
143
This page intentionally left blank.
144
Balance Balance
July 1, 2018 Additions Deletions June 30, 2019
Community Facilities District #1
Assets:
Cash and investments 2,207,163$ 2,730,634$ (2,604,254)$ 2,333,543$
Restricted cash and investments:
Held by fiscal agents 1,984,266 2,618,276 (2,608,595) 1,993,947
Current assessments receivable 9,554 18,889 (9,554) 18,889
Total assets 4,200,983$ 5,367,799$ (5,222,403)$ 4,346,379$
Liabilities:
Due to bondholders 4,200,983$ 1,685,396$ (1,540,000)$ 4,346,379$
Total liabilities 4,200,983$ 1,685,396$ (1,540,000)$ 4,346,379$
For the Year Ended June 30, 2019
Agency Funds
Statement of Changes in Assets and Liabilities
City of Encinitas
145
This page intentionally left blank.
146
STATISTICAL SECTION
(UNAUDITED)
147
This page intentionally left blank.
148
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 150
2 Changes in Net Position 152
3 Fund Balances of Governmental Funds 156
4 Changes in Fund Balances of Governmental Funds 158
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 160
6 Principal Property Taxpayers 161
7 Property Tax Levies and Collections 162
8 Direct and Overlapping Property Tax Rates 164
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 168
10 Ratios of General Bonded Debt Outstanding 170
11 Schedule of Direct and Overlapping Bonded Debt 171
12 Legal Debt Margin Information 172
13 Historical Debt Service Coverage 174
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 176
15 General Governmental Tax Revenue by Source 177
16 Taxable Sales by Business Type 178
17 Principal Employers 179
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.
18 Full-time and Part-Time Employees by Function 180
19 Operating Indicators by Function 182
20 Capital Asset Statistics by Function 184
21 Cardiff Sanitary Division - Summary of Operational Data 188
22 San Dieguito Water District - Summary of Operational Data 192
Sources: Unless otherwise noted, the information in these schedules was derived from the Comprehensive
Annual Financial Reports for the relevant year.
(Unaudited)
149
2010 2011 2012 2013 2014
Government activities:
Net investment in capital assets 130,912,728$ 139,575,875$ 153,516,469$ 157,395,370$ 161,902,991$
Restricted 4,219,623 - - 9,980,695 17,363,704
Unrestricted 54,755,944 56,799,902 43,857,634 37,646,551 38,446,880160
Total governmental activities net position 189,888,295$ 196,375,777$ 197,374,103$ 205,022,616$ 217,713,575$
Business-type activities:
Net investment in capital assets 25,014,811$ 30,076,172$ 25,155,766$ 32,247,941$ 54,362,661$
Restricted - - - - 1,039,739
Unrestricted 71,916,135 72,608,845 83,232,015 79,816,600 62,426,804 168
Total business-type activities net position 96,930,946$ 102,685,017$ 108,387,781$ 112,064,541$ 117,829,204$
Primary government:
Net investment in capital assets 155,927,539$ 169,652,047$ 178,672,235$ 189,643,311$ 216,265,652$
Restricted 4,219,623 - - 9,980,695 18,403,443
Unrestricted 126,672,079 129,408,747 127,089,649 117,463,151 100,873,684176
Total primary government net position 286,819,241$ 299,060,794$ 305,761,884$ 317,087,157$ 335,542,779$
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
(Accrual Basis of Accounting)
Fiscal Years
City of Encinitas
Net Position by Components
Last Ten Fiscal Years
150
2015 2016 2017 2018 2019
Government activities:
Net investment in capital assets 157,304,041$ 162,923,350$ 165,759,601$ 169,553,838$ 172,580,765
Restricted 18,741,022 30,996,309 19,867,542 19,779,315 20,997,390
Unrestricted 9,229,896 (580,736)9,510,235 1,963,535 7,357,189
Total governmental activities net position 185,274,959$ 193,338,923$ 195,137,378$ 191,296,688$ 200,935,344
Business-type activities:
Net investment in capital assets 39,806,764$ 42,501,264$ 44,977,544$ 36,547,324$ 38,074,788
Restricted - 1,377,006 20,237 421,938 411,895
Unrestricted 75,781,002 75,512,969 79,286,895 95,173,238 99,808,547
Total business-type activities net position 115,587,766$ 119,391,239$ 124,284,676$ 132,142,500$ 138,295,230
Primary government:
Net investment in capital assets 197,110,805$ 205,424,614$ 210,737,145$ 206,101,162$ 210,655,553
Restricted 18,741,022 32,373,315 19,887,779 20,201,253 21,409,285
Unrestricted 85,010,898 74,932,233 88,797,130 97,136,773 107,165,736
Total primary government net position 300,862,725$ 312,730,162$ 319,422,054$ 323,439,188$ 339,230,574
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
Net Position by Components
(Continued)
(Accrual Basis of Accounting)
Last Ten Fiscal Years
City of Encinitas
Fiscal Years
151
2010 2011 2012 2013 2014
Expenses:
Government activities:
General government 12,132,268$ 10,912,556$ 12,064,527$ 10,616,440$ 9,549,338$
Public safety 22,269,616 22,324,624 23,062,746 24,629,613 25,146,843
Public works 9,520,416 10,981,355 8,560,330 10,851,147 10,239,746
Planning 5,599,614 5,539,148 5,008,179 4,353,831 5,853,995
Engineering services 3,873,432 3,646,306 5,817,932 3,813,678 3,988,720
Parks and recreation 6,518,623 6,243,769 5,578,716 5,542,550 4,735,864
Interest and fiscal charges on long-term debt 2,296,422 2,029,477 1,811,714 1,932,904 1,913,349
Total governmental activities expenses 62,210,391 61,677,235 61,904,144 61,740,163 61,427,855
Business-type activities:
Cardiff Sanitary Division 3,569,880 3,715,529 3,385,439 3,373,704 2,922,446
San Dieguito Water District 11,633,694 11,622,126 12,448,911 12,200,431 13,552,862
Encinitas Sanitary Division 1,855,278 1,992,334 1,719,176 1,983,786 2,438,692
Affordable Housing 256,873 244,748 1,492,811 1,499,863 1,405,225
Recreation Programs - - 1,187,788 1,153,840 1,300,555
Total business-type activities expenses 17,315,725 17,574,737 20,234,125 20,211,624 21,619,780
Total primary government expenses 79,526,116 79,251,972 82,138,269 81,951,787 83,047,635
Program revenues:
Government activities:
Charges for services:
General government 1,962,344 2,453,152 1,789,943 1,775,756 1,800,630
Public safety 105,799 98,202 99,047 91,495 202,220
Public works 668 - - - -
Planning and building 1,521,889 1,816,765 2,155,076 1,894,785 2,874,894
Engineering services 660,734 1,063,822 736,786 955,986 1,075,885
Parks and recreation 1,126,285 1,149,350 14,580 39,946 35,791
Operating grants and contributions 5,392,117 6,964,053 5,896,502 3,759,864 4,345,931
Capital grants and contributions 3,437,302 4,854,393 3,626,279 6,462,979 8,756,281
Total governmental activities program revenues 14,207,138 18,399,737 14,318,213 14,980,811 19,091,632
Business-type activities:
Charges for services:
Cardiff Sanitary Division 4,979,238 4,830,204 4,970,662 4,755,573 4,605,867
San Dieguito Water District 11,046,650 12,438,502 12,922,922 13,687,156 15,297,718
Encinitas Sanitary Division 2,816,963 2,895,879 2,897,592 2,933,319 2,879,605
Affordable Housing 202,499 216,723 214,503 214,115 216,728
Recreation Programs - - 1,273,007 1,059,009 1,269,179
Operating grants and contributions - - 1,105,851 1,103,639 994,607
Capital grants and contributions 231,362 712,827 460,688 1,003,057 1,066,769
Total business-type activities program revenues 19,276,712 21,094,135 23,845,225 24,755,868 26,330,473
Total primary government program revenues 33,483,850 39,493,872 38,163,438 39,736,679 45,422,105
Governmental activities (48,003,253) (43,277,498) (47,585,931) (46,759,352) (42,336,223)
Business-type activities 1,960,987 3,519,398 3,611,100 4,544,244 4,710,693
Total net revenue (expense)(46,042,266)$ (39,758,100)$ (43,974,831)$ (42,215,108)$ (37,625,530)$
City of Encinitas
(Accrual Basis of Accounting)
Changes in Net Position
Last Ten Fiscal Years
Fiscal Years
152
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2015 2016 2017 2018 2019
Expenses:
Government activities:
General government 10,810,882$ 11,750,737$ 11,737,634$ 14,403,144$ 15,280,238$
Public safety 25,762,703 27,255,755 29,437,181 30,762,894 33,160,544
Public works 11,565,315 11,743,123 9,205,570 8,325,467 9,166,709
Planning 6,550,992 7,255,460 6,935,754 8,741,589 6,878,364
Engineering services 6,253,352 4,591,315 8,918,281 7,492,540 6,762,441
Parks and recreation 5,205,986 6,778,769 7,046,255 8,429,448 9,809,964
Interest and fiscal charges on long-term debt 2,311,944 2,494,815 2,237,069 1,755,100 1,655,750
Total governmental activities expenses 68,461,174 71,869,974 75,517,744 79,910,182 82,714,010
Business-type activities:
Cardiff Sanitary Division 4,262,565 3,857,531 3,308,454 3,086,434 3,548,203
San Dieguito Water District 15,005,767 13,462,935 13,970,919 13,800,288 16,615,687
Encinitas Sanitary Division 1,731,770 2,306,540 2,037,116 1,652,061 2,044,676
Affordable Housing 1,408,226 1,440,124 1,449,917 1,464,181 1,576,162
Recreation Programs 1,331,565 - - - -
Total business-type activities expenses 23,739,893 21,067,130 20,766,406 20,002,964 23,784,728
Total primary government expenses 92,201,067 92,937,104 96,284,150 99,913,146 106,498,738
Program revenues:
Government activities:
Charges for services:
General government 1,629,857 1,594,277 1,675,799 1,815,086 1,239,815
Public safety 160,178 1,009,713 1,148,567 1,421,393 2,075,725
Public works 759,918 107,279 65,746 394,647 57,786
Planning and building 2,737,225 2,800,413 2,954,523 3,262,604 2,936,898
Engineering services 1,055,311 1,367,902 1,143,830 1,874,562 1,782,402
Parks and recreation 46,846 1,741,619 1,796,918 1,405,704 1,310,426
Operating grants and contributions 3,878,422 3,349,186 3,419,730 3,253,127 4,421,588
Capital grants and contributions 4,126,194 5,409,098 4,407,963 4,851,823 6,626,283
Total governmental activities program revenues 14,393,951 17,379,487 16,613,076 18,278,946 20,450,923
Business-type activities:
Charges for services:
Cardiff Sanitary Division 4,528,551 4,761,486 4,788,884 4,885,227 4,937,942
San Dieguito Water District 14,785,858 14,684,387 14,851,977 16,852,732 15,727,590
Encinitas Sanitary Division 2,841,235 2,855,690 2,819,006 2,711,075 2,698,745
Affordable Housing 247,349 218,148 213,124 225,468 260,848
Recreation Programs 1,321,471 - - - -
Operating grants and contributions 1,061,698 1,068,549 1,099,366 1,093,800 1,142,424
Capital grants and contributions 483,425 681,412 736,370 560,651 728,700
Total business-type activities program revenues 25,269,587 24,269,672 24,508,727 26,328,953 25,496,249
Total primary government program revenues 39,663,538 41,649,159 41,121,803 44,607,899 45,947,172
Governmental activities (54,067,223) (54,490,487) (58,904,668) (61,631,236) (62,263,087)
Business-type activities 1,529,694 3,202,542 3,742,321 6,325,989 1,711,521
Total net revenue (expense)(52,537,529)$ (51,287,945)$ (55,162,347)$ (55,305,247)$ (60,551,566)$
City of Encinitas
(Continued)
Fiscal Years
153
2010 2011 2012 2013 2014
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes
Property and documentary transfer taxes 32,285,155$ 32,292,988$ 32,788,129$ 34,974,578$ 36,414,507$
Sales taxes 8,780,203 10,244,506 10,613,188 11,585,145 12,067,360
Transient occupancy taxes 1,179,789 1,276,980 1,413,926 1,491,998 1,570,459
Franchise taxes 2,031,924 2,108,420 2,144,162 2,323,616 2,614,844
Intergovernmental revenues 794,362 1,488,770 635,097 541,079 479,026
Investment income 1,085,981 657,796 387,066 552,512 705,849
Other general revenues 2,238,041 1,695,520 1,780,543 1,596,026 1,257,002
Gain/(Loss) on sale of assets - - - - (48,320)
Impairment loss on capital assets - - - - -
Transfers - - (668,877) 1,809,656 (33,545)
Total governmental activities 48,395,455 49,764,980 49,093,234 54,874,610 55,027,182
Business-type activities:
Property taxes 718,212 706,175 725,551 749,378 787,242
Intergovernmental-unrestricted - - - 189,676 -
Investment income 395,152 508,089 188,259 3,118 357,357
Other general revenues 228,614 401,013 - - 63,768
Gain/(Loss) on sale of assets - - - - (187,942)
Transfers - - 668,877 (1,809,656) 33,545
Total business-type activities 1,341,978 1,615,277 1,582,687 (867,484) 1,053,970
Total primary government 49,737,433 51,380,257 50,675,921 54,007,126 56,081,152
Changes in Net Position
Government activities 392,202 6,487,482 1,507,303 8,115,258 12,690,959
Business-type activities 3,302,965 5,134,675 5,193,787 3,676,760 5,764,663
Total primary government 3,695,167$ 11,622,157$ 6,701,090$ 11,792,018$ 18,455,622$
The City reports recreation programs as a business-type activity beginning in Fiscal Year 2011-12.
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
Fiscal Years
Changes in Net Position
Last Ten Fiscal Years
City of Encinitas
(Accrual Basis of Accounting)
(Continued)
154
2015 2016 2017 2018 2019
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes
Property and documentary transfer taxes 38,508,558$ 41,210,485$ 43,494,220 46,311,814 49,237,265
Sales taxes 12,569,119 14,166,771 12,549,609 13,252,053 13,694,647
Transient occupancy taxes 1,828,116 2,018,024 2,216,145 2,562,484 2,775,771
Franchise taxes 2,761,335 2,794,144 2,545,854 2,587,443 2,571,367
Intergovernmental revenues 814,337 388,876 251,919 97,163 185,380
Investment income 880,989 611,350 770,634 958,172 2,613,728
Other general revenues 1,567,168 956,824 961,475 452,275 827,490
Gain/(Loss) on sale of assets 107,177 8,865 1,937 61,400 12,739
Impairment loss on capital assets - - (2,088,668) - -
Transfers (36,068) 399,112 - 20,018 (16,644)
Total governmental activities 59,000,731 62,554,451 60,703,125 66,302,822 71,901,743
Business-type activities:
Property taxes 834,994 906,106 959,873 1,030,168 1,110,248
Intergovernmental-unrestricted - - (31,828) - -
Investment income (60,169) (63,690) 6,925 (446,745) 1,393,446
Other general revenues 63,768 153,667 - 1,247,955 1,306,547
Gain/(Loss) on sale of assets 18,085 4,010 216,146 8,285 614,324
Transfers 36,068 (399,112) - (20,018) 16,644
Total business-type activities 892,746 600,981 1,151,116 1,819,645 4,441,209
Total primary government 59,893,477 63,155,432 61,854,241 68,122,467 76,342,952
Changes in Net Position
Government activities 4,933,508 8,063,964 1,798,457 4,671,586 9,638,656
Business-type activities 2,422,440 3,803,523 4,893,437 8,145,634 6,152,730
Total primary government 7,355,948$ 11,867,487$ 6,691,894$ 12,817,220$ 15,791,386$
The City reports recreation programs as a business-type activity beginning in Fiscal Year 2011-12.
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
Fiscal Years
(Accrual Basis of Accounting)
(Continued)
City of Encinitas
Last Ten Fiscal Years
Changes in Net Position
155
2010 2011(1)2012 2013 2014
General fund:
Reserved 4,286,026$ -$ -$ -$ -$
Unreserved, designated 36,913,369 - - - -
Unreserved, undesignated 5,789,899 - - - -
Nonspendable - 2,648,338 2,868,533 1,980,075 2,052,250
Restricted - 633,245 - 7,996,400 4,079
Committed - 42,274,327 19,371,624 9,847,719 8,136,886
Assigned - - - 561,762 561,762
Unassigned - 1,850,582 17,964,935 21,160,822 25,151,131
Total general fund 46,989,294$ 47,406,492$ 40,205,092$ 41,546,778$ 35,906,108$
All other governmental funds:
Reserved 3,408,409$ -$ -$ -$ -$
Unreserved, designated 10,430,543 - - - -
Nonspendable - 145,686 - - 1,565
Restricted - 8,290,163 13,471,421 13,036,985 17,358,060
Committed - 7,570,021 - - -
Assigned - - 2,169,209 2,135,100 -
Unassigned - - - - -
Total all other governmental funds 13,838,952$ 16,005,870$ 15,640,630$ 15,172,085$ 17,359,625$
Total all governmental funds 60,828,246$ 63,412,362$ 55,845,722$ 56,718,863$ 53,265,733$
(1) GASB No.54, which requires changes in reporting categories for fund balances was implemented
in Fiscal Year 2010-11.
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
Fiscal Years
City of Encinitas
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
156
2015 2016 2017 2018 2019
General fund:
Reserved -$ -$ -$ -$ -$
Unreserved, designated - - - - -
Unreserved, undesignated - - - - -
Nonspendable 1,535,601 1,109,424 727,094 267,203 266,828
Restricted 3,009,269 - 1,472,372 251 383
Committed 8,266,796 - 13,937,399 14,691,792 15,545,889
Assigned 561,762 - -- -
Unassigned 28,029,019 31,775,120 9,514,727 12,334,212 8,609,231
Total general fund 41,402,447$ 32,884,544$ 25,651,592$ 27,293,458$ 24,422,331$
All other governmental funds:
Reserved -$ -$ -$ -$ -$
Unreserved, designated - - - - -
Nonspendable - 287,756 296,234 - -
Restricted 18,741,022 4,305,652 30,282,525 34,724,312 36,435,142
Committed - 1,626,219 18,998,215 17,760,602 24,412,850
Assigned - 24,776,682 - - -
Unassigned - -(12,183,589) (14,945,248) (15,438,135)
Total all other governmental funds 18,741,022$ 30,996,309$ 37,393,385$ 37,539,666$ 45,409,857$
Total all governmental funds 60,143,469$ 63,880,853$ 63,044,977$ 64,833,124$ 69,832,188$
(1) GASB No.54, which requires changes in reporting categories for fund balances was implemented
in Fiscal Year 2010-11.
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
City of Encinitas
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
(Continued)
Fiscal Years
157
2010 2011 2012 2013 2014
Revenues:
Taxes and assessments 46,805,219$ 48,100,768$ 49,089,142$ 51,528,542$ 53,830,193$
Intergovernmental 6,917,521 8,369,571 6,537,855 8,520,220 5,025,480
Charges for services 5,164,315 6,376,261 4,406,737 4,450,756 5,479,847
Fines, forfeitures, and penalties 761,202 856,392 657,364 611,029 632,776
Use of money and property 1,085,981 657,798 639,676 572,481 724,310
Other 2,875,491 3,803,927 2,715,266 2,141,439 3,654,621
Total Revenues 63,609,729 68,164,717 64,046,040 67,824,467 69,347,227
Expenditures:
Current:
General government 11,859,415 10,155,732 9,277,443 9,430,487 9,109,412
Public safety 22,049,239 22,107,692 22,853,121 23,655,367 24,164,979
Public works 5,888,161 6,051,253 5,843,228 6,057,646 6,281,800
Planning and building 5,599,614 5,539,148 4,655,501 4,238,882 4,716,315
Engineering services 3,873,432 3,646,306 3,804,813 3,716,994 3,949,352
Parks and recreation 5,482,578 5,293,664 4,333,303 4,377,047 4,672,683
Capital outlay 5,606,327 8,559,193 12,803,379 18,836,006 14,548,894
Debt service:
Principal 2,091,882 2,481,223 2,359,932 2,295,614 2,661,976
Interest and fiscal charges 2,332,574 2,056,501 1,872,773 2,050,068 1,937,144
Bond issuance costs - 395,404 - - -
Total expenditures 64,783,222 66,286,116 67,803,493 74,658,111 72,042,555
Excess (deficiency) of revenues
over (under) expenditures (1,173,493)1,878,601 (3,757,453)(6,833,644)(2,695,328)
Other Financing Sources (Uses):
Operating transfers in 11,066,120 13,133,224 17,661,946 23,363,240 20,570,966
Operating transfers out (11,066,120)(13,133,224)(18,354,656)(24,208,239)(21,328,768)
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 (757,802)
Net change in fund balances (1,173,493)$ 2,584,116$ (3,850,524)$ 873,140$ (3,453,130)$
Debt service as a percentage of
noncapital expenditures 7.4%7.6%7.2%7.3%7.8%
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
Fiscal Years
City of Encinitas
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
158
2015 2016 2017 2018 2019
Revenues:
Taxes and assessments 56,825,628$ 61,325,308$ 61,934,421$ 65,845,166$ 69,403,416$
Intergovernmental 7,022,485 6,689,475 6,436,599 6,966,193 7,161,806
Charges for services 5,315,721 6,585,518 6,688,958 7,280,374 7,383,043
Fines, forfeitures, and penalties 802,936 889,388 850,153 704,216 794,237
Use of money and property 899,807 1,222,730 1,285,049 1,126,652 3,437,985
Other 2,456,996 2,804,043 2,215,452 2,566,551 3,089,553
Total Revenues 73,323,573 79,516,462 79,410,632 84,489,152 91,270,040
Expenditures:
Current:
General government 9,362,214 9,288,227 10,017,430 12,213,808 12,783,602
Public safety 24,902,920 26,976,136 27,724,959 29,478,104 31,494,405
Public works 6,682,424 6,305,340 6,351,537 5,033,316 5,875,143
Planning and building 5,082,589 5,159,777 5,110,298 6,017,914 6,570,840
Engineering services 4,162,630 4,298,563 4,368,601 3,504,336 3,851,316
Parks and recreation 5,091,224 6,366,337 6,610,308 7,879,881 7,954,529
Capital outlay 18,440,036 10,799,083 12,230,552 12,933,995 11,925,637
Debt service:
Principal 2,730,686 2,783,268 2,853,417 2,128,758 1,949,298
Interest and fiscal charges 2,170,164 2,372,231 2,077,770 1,899,328 1,774,333
Bond issuance costs - - - - -
Total expenditures 78,624,887 74,348,962 77,344,872 81,089,440 84,179,103
Excess (deficiency) of revenues
over (under) expenditures (5,301,314)5,167,500 2,065,760 3,399,712 7,090,937
Other Financing Sources (Uses):
Operating transfers in 24,514,293 44,550,246 35,159,839 30,412,724 25,249,787
Operating transfers out (25,509,616)(45,577,444)(36,650,845)(32,024,289)(27,341,660)
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)12,179,050 (1,430,114)(2,901,636)(1,611,565)(2,091,873)
Net change in fund balances 6,877,736$ 3,737,386$ (835,876)$ 1,788,147$ 4,999,064$
Debt service as a percentage of
noncapital expenditures 7.6%7.5%6.9%5.4%4.8%
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
City of Encinitas
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
Fiscal Years
(Modified Accrual Basis of Accounting)
(Continued)
159
(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)
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%
2019 14,191,006 1,546,386 44,994 590,531 16,372,917 0.23769%
(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.
Source: HdL Companies
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
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Taxable Assessed Value
(In thousands)
Residential
Commercial
Industrial
Fiscal Years
160
Taxable % of Total Taxable % of Total
Assessed City Assessed Assessed City Assessed
Secured Value Rank Secure Value Secured Value Rank Secure Value
Scripps Health $166,475,379 1 1.03%16,515,834$ 20 1.46%
TRC Encinitas Village LLC 86,242,451 2 0.53%- - -
Collwood Pines Apartments 80,206,891 3 0.49%70,979,046 1 6.27%
Belmont Village 59,461,933 4 0.37%33,546,200 3 2.96%
Pacifico Encinitas Apartment 52,880,000 5 0.33%- - -
Encinitas Town Center Association 38,870,426 6 0.24%32,123,522 4 2.84%
Encinitas MarketPlace LLC 38,000,000 7 0.23%- - -
NCHC3 LLC 36,703,861 8 0.23%- - -
Weingarten Nostat Inc 36,006,174 9 0.22%- - -
Home Depot USA Inc.31,226,189 10 0.19%28,228,851 8 2.49%
SS L Landlord LLC 25,897,648 11 0.16%- - -
Mission Ridge LLC 25,270,729 12 0.16%- - -
Vons Companies Inc.24,531,128 13 0.15%21,392,678 14 1.89%
Paul H Meardon Trust 24,293,023 14 0.15%- - -
Keith B. and Sara S. Harrison 22,298,230 15 0.14%16,126,379 22 1.42%
Paul Vincent Bernard Hyde 21,638,939 16 0.13%- - -
Quail Pointe Apartment Homes LP 21,000,293 17 0.13%18,566,995 15 1.64%
Sterling Family Trust 19,464,355 18 0.12%17,102,759 18 1.51%
Plenc El Camino LLC 19,182,068 19 0.12%16,802,557 19 1.48%
Los Angeles Fitness Int'l LLC 19,172,328 20 0.12%- - -
Shea Homes LP 16,077,460 21 0.10%- - -
Camino Village LLC 16,005,086 22 0.10%- - -
Essex Heights LLC 15,971,708 23 0.10%- - -
Target Corporation 15,638,930 24 0.10%- - -
Golden Eagle Annuity Invest LP 15,587,522 25 0.10%- - -
PK III Encinitas Marketplace LP - - - 39,717,270 2 3.51%
North Coast Health Center LLC - - - 32,011,781 5 2.83%
WRI El Camino LP - - - 31,813,910 6 2.81%
Lofts at Moonlight Beach LLC - - - 31,155,758 7 2.75%
North Coast Business Park - - - 23,628,937 9 2.09%
Urschel Laboratories Inc.- - - 22,402,164 10 1.98%
ASN Encinitas LLC - - - 22,347,830 11 1.97%
SDCC Properties - - - 21,848,400 12 1.93%
KSL Encinitas Resort Corporation - - - 21,536,280 13 1.90%
Pacific Station Property LLC - - - 18,117,684 16 1.60%
Encinitas Plaza LLC - - - 17,278,863 17 1.53%
Hughes Encinitas Limited - - - 16,348,444 21 1.44%
ARV Assisted Living Inc.- - - 14,565,600 23 1.29%
Encinitas Terraces LLC - - - 14,056,502 24 1.24%
Bellflower Capital LP - - - 13,438,253 25 1.19%
$928,102,751 5.74%611,652,497$ 54.02%
Source: HdL Companies
City of Encinitas
Taxpayer
Principal Property Taxpayers
Current Fiscal Year and Nine Years Ago
2019 2010
161
Fiscal Taxes Levied Collections
Year Ended for the Percent in Subsequent Percentage of
June 30 Fiscal Year Amount of Levy Years Amount Levy
2010 27,421,386 26,490,783 96.61%548,636 27,039,420 98.61%
2011 27,541,487 26,888,921 97.63%238,418 27,127,339 98.50%
2012 28,100,611 27,540,858 98.01%238,418 27,779,276 98.86%
2013 29,207,237 28,712,036 98.30%157,287 28,869,323 98.84%
2014 30,550,301 30,009,574 98.23%133,208 30,142,782 98.67%
2015 32,251,814 31,755,994 98.46%168,077 31,924,071 98.98%
2016 34,443,972 33,961,174 98.60%235,730 34,196,904 99.28%
2017 48,540,436 47,871,961 98.62%330,704 48,202,665 99.30%
2018 50,804,445 50,172,791 98.76%171,827 50,344,617 99.09%
2019 53,427,075 52,652,248 98.55% N/A 52,652,248 98.55%
Source: County of San Diego Auditor and Controller: Property Tax Apportionment
City of Encinitas
Total Collections to Date
Collected within the
Fiscal Year of Levy
Property Tax Levies and Collections
Last Ten Fiscal Years
162
This page intentionally left blank.
163
2010 2011 2012 2013 2014
%%%%%
City of Encinitas Basic Rate 0.23338 0.23472 0.23866 0.23974 0.24002
City of Encinitas Total Direct Rate (1)0.23338 0.23472 0.23866 0.23974 0.24002
Overlapping Rates: (2)
City of Encinitas 0.26648 0.26648 0.24020 0.24020 0.24020
Encinitas Landscape & Lighting District 0.01596 0.01596 0.02100 0.02100 0.02100
Autistic Pupils Minors Elementary 0.00009 0.00009 0.00000 0.00000 0.00000
Autistic Pupils Minors High 0.00009 0.00009 0.00000 0.00000 0.00000
Cardiff, Encinitas Elementary 0.26240 0.26240 0.24870 0.24870 0.24870
Children's Institutions Tuition 0.00146 0.00146 0.00107 0.00107 0.00107
County General 0.07570 0.07570 0.08020 0.08020 0.08020
County Library 0.01995 0.01995 0.01969 0.01969 0.01969
County School Service 0.00687 0.00687 0.00643 0.00643 0.00643
County School Service-Capital Outlay 0.00173 0.00173 0.00161 0.00161 0.00161
County Service Area No. 17 0.00291 0.00291 0.00251 0.00251 0.00251
CWA San Dieguito Water District, OMWD 0.00344 0.00344 0.02510 0.02510 0.02510
Development Centers for Handicapped Elementary 0.00043 0.00043 0.00000 0.00000 0.00000
Development Centers for Handicapped High 0.00044 0.00044 0.00000 0.00000 0.00000
Educable Mentally Retarded Minors 0.00196 0.00196 0.00161 0.00161 0.00161
Educational Revenue Augmentation Fund 0.08570 0.08570 0.08620 0.08620 0.08620
Mira Costa Community College 0.08590 0.08590 0.08150 0.08150 0.08150
Physically Handicapped Minors Elementary 0.00303 0.00303 0.00268 0.00268 0.00268
Physically Handicapped Minors High 0.00304 0.00304 0.00268 0.00268 0.00268
Regional Occupational Centers 0.00438 0.00438 0.00375 0.00375 0.00375
San Dieguito Union High 0.14400 0.14400 0.13610 0.13610 0.13610
San Dieguito Water District 0.00992 0.00992 0.03590 0.03590 0.03590
Trainable Mentally Retarded Minors Elementary 0.00197 0.00197 0.00161 0.00161 0.00161
Trainable Mentally Retarded Minors High 0.00198 0.00198 0.00161 0.00161 0.00161
Oceanside (19/85001),Vista (19/85701) Projects 0.00017 0.00017 0.00000 0.00000 0.00000
Total Prop 13 Rate (3)1.00000 1.00000 1.00000 1.00000 1.00000
(1)Total Direct Rate is the weighted average of all individual direct rates applied by the government preparing the statistical
section information.
(2) General Fund tax rates are representative and based upon the direct and overlapping rates for the largest General Fund
tax rate area (TRA) by net taxable value.
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.
City of Encinitas
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
Notes;
164
2015 2016 2017 2018 2019
%%%%%
City of Encinitas Basic Rate 0.24534 0.23978 0.23644 0.23695 0.23769
City of Encinitas Total Direct Rate (1)0.24534 0.23978 0.23644 0.23695 0.23769
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
(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.
(1) Total Direct Rate is the weighted average of all individual direct rates applied by the government preparing the statistical
section information.
Notes:
(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
(Continued)
Fiscal Years
Last Ten Fiscal Years
165
2010 2011 2012 2013 2014
%%%%%
Gen Bond Cardiff 2000A 0.03518 - - - -
Gen Bond Cardiff 2000 Election,2010 Ref. Bonds - 0.03715 0.03489 0.03458 0.03386
MWD D/S Remainder of SDCWA 1501999 0.00430 0.00370 0.00370 0.00350 0.00350
Total Voter Approved Rate 0.03948 0.04085 0.03859 0.03808 0.03736
Total Tax Rate 1.03948 1.04085 1.03859 1.03808 1.03736
Source: HdL Companies; County of San Diego Office of Property Tax Services
Fiscal Years
Last Ten Fiscal Years
Direct and Overlapping Property Tax Rates
City of Encinitas
(Continued)
166
2015 2016 2017 2018 2019
%%%%%
Gen Bond Cardiff 2000A - - - 0.03028 0.03737
Gen Bond Cardiff 2000 Election,2010 Ref. Bonds 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 0.03904 0.03674 0.03542 0.03378 0.04087
Total Tax Rate 1.03904 1.03674 1.03542 1.03378 1.04087
Source: HdL Companies; County of San Diego Office of Property Tax Services
Fiscal Years
Last Ten Fiscal Years
City of Encinitas
Direct and Overlapping Property Tax Rates
(Continued)
167
Fiscal Year
Ended
June 30 Bonded Debt Capital Leases
Total Governmental
Activities
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
2019 44,899,354 1,220,867 46,120,221
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
(1) Debt per Capita is calculated by dividing the total primary government amount by the City
population shown on the Demographic and Economic statistical page.
Governmental Activities
City of Encinitas
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
168
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)
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
2019 7,201,858 12,226,938 1,091,629 20,520,425 66,640,646 1,051
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
(Continued)
population shown on the Demographic and Economic statistical page.
(1) Debt per Capita is calculated by dividing the total primary government amount by the City
Business-type Activities
City of Encinitas
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
169
Fiscal Certificates of Participation Percentage
Year Ended and Assessed of Assessed Per
June 30 Lease Revenue Bonds Valuation (1)Value Capita
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 11,497,856,000 0.39%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 12,870,004,000 0.38%786
2018 46,830,807 15,366,779,000 0.30%741
2019 49,737,836 16,372,917,000 0.30%785
Source: Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019
(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
170
FY 2018-19 Assessed Valuation:$16,374,697,624 City's Share of
Total Debt Applicable Overlapping Debt
June 30, 2019 % (1)June 30, 2019
OVERLAPPING TAX AND ASSESSMENT DEBT:
Metropolitan Water District 48,050,000$ 56.100%269,561$
Mira Costa Community College District 85,850,000 15.141%12,998,549
Cardiff School District 24,425,198 100.000%24,425,198
Encinitas Union School District 47,547,433 67.956%32,311,334
San Dieguito Union High School 333,920,000 24.795%82,795,464
San Dieguito Union High School District Community Facilities Districts 37,985,000 31.405%11,929,114
City of Encinitas Community Facilities District No. 1 23,905,000 100.000%23,905,000
Olivenhain Municipal Water District, Assessment District No. 96-1 9,765,000 25.924%2,531,479
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 191,165,699$
DIRECT AND OVERLAPPING GENERAL FUND DEBT
San Diego County General Fund Obligations 255,365,000$ 3.113%7,949,512$
San Diego County Pension Obligations 508,765,000 3.113%15,837,854
San Diego County Superintendent of Schools Obligations 10,085,000 3.113%313,946
Mira Costa Community College District Certificates of Participation 150,000 15.141%22,712
San Dieguito Union High School District General Fund Obligations 12,730,000 24.795%3,156,404
City of Encinitas Bonded Debt 43,155,000 100.000%43,155,000
City of Encinitas Bond Premiums and Discounts 1,744,354 100.000%1,744,354
City of Encinitas Capital Leases 1,220,867 100.000%1,220,867
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 73,400,649$
TOTAL DIRECT DEBT 46,120,221$
TOTAL OVERLAPPING DEBT 218,446,127$
COMBINED TOTAL DEBT 264,566,348$ (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 2018-19 Assessed Valuation:
Total Overlapping Tax and Assessment Debt..…………………………….1.17%
Total Direct Debt ($ 46,120,221).……...……..….……………………….…0.28%
Combined Total Debt…...…….………….….….…….………....…………….1.62%
Source: County of San Diego Assessor
City of Encinitas
Schedule of Direct and Overlapping Bonded Debt
June 30, 2019
171
City of Encinitas
Legal Debt Margin Information
Last Ten Fiscal Years
(in thousands)
2010 2011 2012 2013 2014
Assessed valuation 11,337,568$ 11,342,197$ 11,497,856$ 11,723,928$ 12,147,361$
Conversion percentage equal 25%25%25%25%25%
to 25% of assessed valuation
Adjusted assessed valuation 2,834,392 2,835,549 2,874,464 2,930,982 3,036,840
Debt limit percentage 15%15%15%15%15%
Debt limit 425,159 425,332 431,170 439,647 455,526
Total net debt applicable to limit:44,165 42,641 40,646 46,736 44,547
Legal debt margin 380,994$ 382,691$ 390,524$ 392,911$ 410,979$
Total debt applicable to the limit
as a percentage of debt limit 10.39%10.03%9.43%10.63%9.78%
Notes: Details regarding the City's outstanding debt can be found in the Notes to the Financial
Statements section.
Source: HdL Companies
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
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 that the legal debt margin was enacted by
the State of California for local governments located within the state.
172
City of Encinitas
Legal Debt Margin Information
Last Ten Fiscal Years
(in thousands)
2015 2016 2017 2018 2019
Assessed valuation 12,870,004$ 13,702,972$ 14,472,213$ 15,366,779$ 16,374,698$
Conversion percentage equal 25%25%25%25%25%
to 25% of assessed valuation
Adjusted assessed valuation 3,217,501 3,425,743 3,618,053 3,841,695 4,093,675
Debt limit percentage 15%15%15%15%15%
Debt limit 482,625 513,861 542,708 576,254 614,051
Total net debt applicable to limit:55,432 52,934 48,954 46,831 49,738
Legal debt margin 427,193$ 460,927$ 493,754$ 529,423$ 564,313$
Total debt applicable to the limit
as a percentage of debt limit 11.49%10.30%9.02%8.13%8.10%
Notes: Details regarding the City's outstanding debt can be found in the Notes to the Financial
Statements section.
Source: HdL Companies
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 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 that the legal debt margin was enacted by the State of
California for local governments located within the state.
173
2010 2011 2012 2013 2014
Revenues:
Operating revenues - including connection fees 11,267,684$ 12,574,450$ 13,170,422$ 13,789,636$ 15,715,575$
Non-operating revenues 879,477 817,872 813,610 869,568 827,676
Gross Revenues 12,147,161 13,392,322 13,984,032 14,659,204 16,543,251
Total Operating & Non-Operating Expenses 11,634,347 11,614,631 12,448,911 12,198,228 14,066,485
Net Income 512,814 1,777,691 1,535,121 2,460,976 2,476,766
Add:
Interest expense 749,704 725,936 698,908 657,963 622,075
Depreciation and amortization expense 1,213,640 1,196,007 1,294,904 1,476,044 1,490,806
Net Revenues Available for Debt Service 2,476,158 3,699,634 3,528,933 4,594,983 4,589,647
Less: Debt Service Paid
2004 Water Revenue Refunding Bonds - Interest Charges 469,269 452,244 433,950 408,906 380,731
2004 Water Revenue Refunding Bonds - Principal Payments 560,000 575,000 595,000 615,000 640,000
2007 Note Payable to Financing Authority - Interest Charges 265,157 281,494 270,352 256,744 241,344
2007 Note Payable to Financing Authority - Principal Payments 335,000 350,000 365,000 375,000 385,000
2014 Water Revenue Refunding Bonds - Interest Charges - - - - -
2014 Water Revenue Refunding Bonds - Principal Payments - - - - -
Total Debt Service 1,629,426$ 1,658,738$ 1,664,302$ 1,655,650$ 1,647,075$
Coverage by Net Revenues Available for Debt Service 152%223%212%278%279%
2010 2011 2012 2013 2014
Revenues:
Operating revenues - including connection fees (1)5,049,039$ 5,337,717$ 5,087,182$ 4,755,573$ 4,758,606$
Non-operating revenues 162,601 355,974 79,347 39,015 1,216,941
Gross Revenues 5,211,640 5,693,691 5,166,529 4,794,588 5,975,547
Total Operating & Non-Operating Expenses 3,569,880 3,746,748 3,385,439 3,310,986 3,189,268
Net Income 1,641,760 1,946,943 1,781,090 1,483,602 2,786,279
Add:
Interest expense 285,800 267,533 248,400 142,898 266,822
Depreciation and amortization expense 912,026 932,273 404,640 800,000 200,459
Net Revenues Available for Debt Service 2,839,586 3,146,749 2,434,130 2,426,500 3,253,560
Less: Debt Service
2003 Note Payable to SEJPA - Interest Charges 291,800 273,800 255,000 - -
2003 Note Payable to SEJPA - Principal Payments 450,000 470,000 490,000 - -
2011 Note Payable to SEJPA - Interest Charges - - 28,945 142,898 131,967
2011 Note Payable to SEJPA - Principal Payments - - 25,000 546,540 563,037
2017 Note Payable to SEJPA-Interest Charges - - - - -
2017 Note Payable to SEJPA-Principal Payments - - - - -
Total Debt Service 741,800$ 743,800$ 798,945$ 689,438$ 695,004$
Coverage by Net Revenues Available for Debt Service 383%423%305%352%468%
Source: City of Encinitas Finance Department
City of Encinitas
Historical Debt Service Coverage
Last Ten Fiscal Years
Debt service coverage requirement is a minimum 110 percent of net revenue including connection fees.
The above schedules include connection fees in operating revenues.
San Dieguito Water District
Cardiff Sanitary Division
Debt service coverage requirement is a minimum 115 percent of net revenue including connection fees. The above schedules include connection
fees in operating revenues.
174
2015 2016 2017 2018 2019
Revenues:
Operating revenues - including connection fees 15,152,433$ 14,852,061$ 15,142,544$ 17,219,494$ 15,961,300$
Non-operating revenues 927,526 1,013,297 1,048,764 1,092,337 2,307,498
Gross Revenues 16,079,959 15,865,358 16,191,308 18,311,831 18,268,798
Total Operating & Non-Operating Expenses 15,481,543 13,800,671 14,263,288 15,198,929 16,541,314
Net Income 598,416 2,064,687 1,928,020 3,112,902 1,727,484
Add:
Interest expense 475,775 412,108 366,740 328,050 292,354
Depreciation and amortization expense 2,271,907 1,514,716 978,627 1,848,913 2,208,775
Net Revenues Available for Debt Service 3,346,098 3,991,511 3,273,387 5,289,865 4,228,613
Less: Debt Service Paid
2004 Water Revenue Refunding Bonds - Interest Charges 144,720 - - - -
2004 Water Revenue Refunding Bonds - Principal Payments 665,000 - - - -
2007 Note Payable to Financing Authority - Interest Charges 224,994 211,144 191,244 171,619 152,919
2007 Note Payable to Financing Authority - Principal Payments 405,000 415,000 440,000 455,000 475,000
2014 Water Revenue Refunding Bonds - Interest Charges 106,061 202,400 185,075 167,225 148,775
2014 Water Revenue Refunding Bonds - Principal Payments - 570,000 585,000 605,000 625,000
Total Debt Service 1,545,775$ 1,398,544$ 1,401,319$ 1,398,844$ 1,401,694$
Coverage by Net Revenues Available for Debt Service 216%285%234%378%302%
2015 2016 2017 2018 2019
Revenues:
Operating revenues - including connection fees (1)4,615,399$ 4,862,274$ 5,006,574$ 5,081,021$ 5,013,316$
Non-operating revenues 120,668 149,151 140,095 162,951 496,059
Gross Revenues 4,736,067 5,011,425 5,146,669 5,243,972 5,509,375
Total Operating & Non-Operating Expenses 4,371,847 3,949,288 3,380,180 3,578,417 3,548,203
Net Income 364,220 1,062,137 1,766,489 1,665,555 1,961,172
Add:
Interest expense 109,282 91,757 71,727 491,983 472,324
Depreciation and amortization expense 1,555,955 1,303,272 754,400 386,019 389,390
Net Revenues Available for Debt Service 2,029,457 2,457,166 2,592,616 2,543,557 2,822,886
Less: Debt Service
2003 Note Payable to SEJPA - Interest Charges - - - - -
2003 Note Payable to SEJPA - Principal Payments - - - - -
2011 Note Payable to SEJPA - Interest Charges 109,282 91,757 79,889 55,402 29,788
2011 Note Payable to SEJPA - Principal Payments 579,366 593,530 612,192 640,352 663,846
2017 Note Payable to SEJPA-Interest Charges - - - 294,656 451,388
2017 Note Payable to SEJPA-Principal Payments - - - - -
Total Debt Service 688,648$ 685,287$ 692,081$ 990,410$ 1,145,021$
Coverage by Net Revenues Available for Debt Service 295%359%375%257%247%
Source: City of Encinitas Finance Department
(Continued)
San Dieguito Water District
Cardiff Sanitary Division
City of Encinitas
Historical Debt Service Coverage
Last Ten Fiscal Years
Debt service coverage requirement is a minimum 110 percent of net revenue including connection fees.
The above schedules include connection fees in operating revenues.
Debt service coverage requirement is a minimum 115 percent of net revenue including connection fees. The above schedules include connection
fees in operating revenues.
175
Fiscal Year
Ended June 30 City Population
% of San Diego
County
Population
% Change from
Previous Year
Median
Age
Average
Household
Size
Unemployment
Rate
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%
2019 63,390 1.9%0.37%42.9 2.56 2.6%
NOTE: City population figures have been revised to match updated population from the California State
Department of Finance as of January 1, 2019.
Sources: California Department of Finance; US Census Bureau QuickFacts; Employment Development Department
City of Encinitas
Demographic and Economic Statistics
Last Ten Fiscal Years
176
Fiscal Year
Ended
June 30
Property and
Documentary
Transfer Tax Sales and Use Tax
Transient
Occupancy Tax Franchise Tax Total Tax Revenue
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
2019 50,330,691 13,701,719 2,775,771 2,199,194 69,007,375
Property Tax Levies and Collections
Source: City of Encinitas Finance Department
City of Encinitas
General Governmental Tax Revenue by Source
Last Ten Fiscal Years
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total General Governmental Tax Revenues
Property Tax
Sales Tax
Transient Occupancy
Tax
Franchise Tax
Fiscal Years
177
2010 2011 2012 2013 2014
Autos and Transportation 1,189,413$ 1,330,270$ 1,427,132$ 1,446,737$ 1,519,006$
Building and Construction 818,484 774,109 868,790 820,467 887,182
Business and Industry 461,247 537,840 518,699 560,723 573,032
Food and Drugs 931,937 945,542 995,511 1,003,491 1,001,942
Fuel and Service Stations 1,146,372 1,351,288 1,569,265 1,577,783 1,559,342
General Consumer Goods 2,836,989 2,818,809 3,117,547 3,165,746 3,355,540
Restaurants and Hotels 1,388,570 1,442,976 1,624,007 1,699,705 1,825,971
Total 8,773,012$ 9,200,834$ 10,120,951$ 10,274,652$ 10,722,015$
2015 2016 2017 2018 2019
Autos and Transportation 1,638,839$ 1,684,618$ 1,627,531$ 1,744,199$ 1,806,753$
Building and Construction 944,334 980,140 1,021,600 924,933 1,133,022
Business and Industry 556,835 738,490 623,641 567,665 629,112
Food and Drugs 1,028,085 1,005,870 931,650 1,010,551 1,110,862
Fuel and Service Stations 1,500,416 1,382,946 1,191,164 1,025,386 1,630,124
General Consumer Goods 3,476,481 3,535,734 3,492,330 3,400,696 3,812,472
Restaurants and Hotels 1,978,072 2,113,116 2,264,487 2,274,664 2,560,108
Total 11,123,062$ 11,440,914$ 11,152,403$ 10,948,094$ 12,682,453$
Source: HdL Companies
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
178
% of Total City % of Total City
Employer Industry Employees Rank Employment Employees Rank Employment
Scripps Memorial Hospital Health Care & Social Assistance 1,017 1 2.93%650 1 1.69%
Walmart Supercenter Retail 335 2 0.96%- - -
YMCA Recreation Facilities 300 3 0.86%300 2 0.78%
Target Retail 250 4 0.72%250 4 0.65%
San Diego Hebrew Homes Health Care & Social Assistance 220 5 0.63%220 7 0.57%
Paul Ecke Ranch Agriculture 201 6 0.58%250 5 0.65%
Encinitas City Hall Government Office 200 7 0.58%- - -
Magdalena Ecke Family YMCA Recreation Facilities 200 8 0.58%- - -
Marriott International Inc Hotels & Motels 200 9 0.58%- - -
Seacrest Village Retire Community Health Care & Social Assistance 200 10 0.58%- - -
Hom e Depot Retail - - - 250 3 0.65%
Scripps Rehabilitation Services Health Care & Social Assistance - - - 250 6 0.65%
Quality Children's Services Child Care Services - - - 205 8 0.53%
California Bank & Trust Financial Services - - - 200 10 0.52%
Subtotal Employees 3,123 9.00%2,575 6.69%
Total Employees 34,745 38,493
Sources: InfoUSA
2019 2010
City of Encinitas
Principal Employers
Current Fiscal Year and Nine Years Ago
179
Function 2010 2011 2012 2013 2014
General government 43.00 44.25 44.55 44.75 44.75
Public safety 68.00 63.00 63.00 63.00 66.00
Public works 29.55 28.85 28.85 29.25 29.55
Engineering services 27.47 27.47 27.42 26.42 27.17
Parks and recreation 21.18 21.18 21.18 21.18 21.18
Planning and building 26.75 26.75 26.75 26.75 27.25
Subtotal 215.95 211.50 211.75 211.35 215.90
San Dieguito Water District 25.70 25.40 25.40 25.00 23.00
Function 2015 2016 2017 2018 2019
General government 46.75 46.75 46.75 44.60 44.60
Public safety 66.00 69.00 69.00 69.00 69.00
Public works 28.55 28.55 28.55 27.55 27.55
Engineering services*27.17 27.17 27.17 - -
Parks and recreation 20.18 20.18 20.18 22.25 22.25
Planning and building*27.25 27.25 27.25 - -
Development services*- - - 53.00 52.25
Subtotal 215.90 218.90 218.90 216.40 215.65
San Dieguito Water District 24.00 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
Source: City of Encinitas Finance Department
180
This page intentionally left blank.
181
2010 2011 2012 2013 2014
San Diego County Sheriff's Department
Criminal arrests 1,803 1,047 1,231 1,548 1,595
Traffic arrests 482 535 485 383 331
Traffic accidents 385 472 441 372 323
Traffic citations 11,714 12,024 11,349 11,381 10,357
Calls for service 21,216 20,602 20,150 20,559 19,394
Deputy initiated action 25,401 29,224 29,862 31,281 29,849
Fire:
Number of emergency fire calls 106 96 124 102 383
Number of EMS/rescue 3,291 3,498 3,495 3,697 3,806
Other 1,475 1,520 1,737 1,932 1,458
Inspections 2,055 2,263 2,252 2,163 2,143
Engineering:
Number of permits issued 301 397 392 269 351
Parks and recreation:
Number of recreation class registrations 11,435 10,697 11,119 11,175 16,236
Number of facility rentals 459 377 749 421 578
Planning and building:
Number of planning permits issued 181 177 202 207 298
Number of new dwelling units issued 39 51 121 63 161
Environmental review 11 4 7 6 9
Appeals 1 3 3 5 7
Plan checks 805 882 948 990 1,391
Code enforcement complaints 1,667 1,645 1,270 1,199 1,153
Water:
New connections 18 9 79 64 131
Average daily consumption (millions of gallons)5.42 5.21 5.32 5.61 5.71
Sewer:
New connections 26 14 44 50 22
Average daily sewage treatment (millions of gallons)2.46 2.43 2.38 2.40 2.36
The City of Encinitas contracts with the County of San Diego Sheriff's Department to provide
law enforcement services.
Source: City of Encinitas Fire, Parks, Recreation and Cultural Arts, Development Services, and San Dieguito Water District
City of Encinitas
Operating Indicators by Function
Last Ten Fiscal Years
182
2015 2016 2017 2018 2019
San Diego County Sheriff's Department
Criminal arrests 1,743 1,997 1,612 1,130 1,161
Traffic arrests 551 263 201 213 355
Traffic accidents 297 274 289 307 281
Traffic citations 13,650 14,873 4,891 5,501 9,635
Calls for service 21,335 22,518 19,372 20,019 19,190
Deputy initiated action 27,339 27,481 24,625 22,612 25,725
Fire:
Number of emergency fire calls 300 328 283 532 934
Number of EMS/rescue 3,844 4,098 4,717 4,775 6,270
Other 1,265 1,517 1,035 2,382 1,711
Inspections 2,072 2,133 2,122 3,145 2,198
Engineering:
Number of permits issued 383 436 440 424 399
Parks and recreation:
Number of recreation class registrations 16,289 15,500 16,338 15,444 17,812
Number of facility rentals 557 538 492 537 550
Planning and building:
Number of planning permits issued 335 263 276 222 194
Number of new dwelling units issued 135 117 94 160 71
Environmental review 10 4 7 3 6
Appeals 6 11 6 6 5
Plan checks 1,737 2,339 1,807 2,147 2,409
Code enforcement complaints 1,063 1,199 1,282 878 1,090
Water:
New connections 69 77 39 50 114
Average daily consumption (millions of gallons)5.49 4.56 4.85 5.21 4.82
Sewer:
New connections 53 33 65 62 14
Average daily sewage treatment (millions of gallons)2.22 2.20 2.27 2.20 1.21
The City of Encinitas contracts with the County of San Diego Sheriff's Department to provide
law enforcement services.
Source: City of Encinitas Fire, Parks, Recreation and Cultural Arts, Development Services, and San Dieguito Water District
Last Ten Fiscal Years
(Continued)
City of Encinitas
Operating Indicators by Function
183
2010 2011 2012 2013 2014
Law enforcement: *
Number of sub-stations 1 1 1 1 1
Fire department:
Fire stations 5 5 5 6 6
Public works:
Streets (miles) **201 201 201 201 201
Engineering:
Signalized intersections 63 63 63 63 63
Parks and recreation:
Community and senior center 1 1 1 1 1
Developed parks 18 18 18 18 18
Undeveloped parks 4 4 4 4 4
Parkland acres 382 382 382 382 382
Habitat/open space acreage 87 87 87 87 87
Marine life refuge 1 1 1 1 1
Trails/streetscapes (miles)41/10 41/10 41/10 41/10 41/10
Lifeguard towers 7 7 7 7 7
Water:
Water mains (miles)166 168 168 168 168
Maximum daily capacity (millions of gallons)15 15 15 15 15
Source: City of Encinitas Fire, Parks, Recreation and Cultural Arts, Development Services, and San Dieguito Water District
** Prior to FY 2017-18 data included both City and privately maintained streets. In FY 2017-18, data includes
only City maintained streets.
* The City of Encinitas contracts with the County of San Diego Sheriff's Department to provide law enforcement
services.
City of Encinitas
Capital Asset Statistics by Function
Last Ten Fiscal Years
184
2015 2016 2017 2018 2019
Law enforcement: *
Number of sub-stations 1 1 1 1 1
Fire department:
Fire stations 6 6 6 6 7
Public works:
Streets (miles) **201 201 201 168 168
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 382 382 382 382 325
Habitat/open space acreage 87 87 87 87 90
Marine life refuge 1 1 1 1 1
Trails/streetscapes (miles)41/10 41/10 41/10 41/10 41/10
Lifeguard towers 7 7 7 9 9
Water:
Water mains (miles)168 168 170 175 174
Maximum daily capacity (millions of gallons)15 15 15 15 15
Source: City of Encinitas Fire, Parks, Recreation and Cultural Arts, Development Services, and San Dieguito Water District
** Prior to FY 2017-18 data included both City and privately maintained streets. In FY 2017-18, data includes
only City maintained streets.
* The City of Encinitas contracts with the County of San Diego Sheriff's Department to provide law enforcement
services.
City of Encinitas
Capital Asset Statistics by Function
Last Ten Fiscal Years
(Continued)
185
This page intentionally left blank.
186
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.
187
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 W ash 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 $6,505.90
Repair and Service Station RSS 7.31 70 511.70
Shopping Center SC 7.31 1,030 7,529.30
Kennel K 7.31 900 6,579.00
Coffee Shop CS 7.31 --
Amusement Park AP 7.31 --
Nightclub/Bar NC 7.31 320 2,339.20
Commercial Laundry CL 7.31 --
Manufacturing M 7.31 180 1,315.80
Lumber Yard LY 7.31 --
Group IV Commercial
Hotels-Motel (with restaurant)HM 10.98$ 3,130 $34,367.40
Bakery (wholesale)/Food Processor BW 10.98 --
Supermarket SM 10.98 1,030 11,309.40
Mortuary MT 10.98 300 3,294.00
Restaurant R 10.98 600 6,588.00
(1)Sewer rates are based on water consumption (fixed charge based on meter size and consumption component).
The consumption is based on HCF (hundred cubic feet - 748 gallons).
Non-Residential (Commercial) = Water Consumption For Meter Readings Occurring Between July-June of Preceding Year
Cardiff Sanitary Division
Rate Schedule for Annual Sewer Charges
As of June 30, 2019
Table 1
Residential = 2 Lowest Periods of Water Consumption For Meter Readings Occurring Between Dec.-May (most recent available 5-year period)
New Connections (no prior water consumption
history)
New Connections (no prior water consumption
history)
Multi Family/Trailer Park* and Non-Residential Fixed Meter Charge
Water Consumption Periods To Be Used
188
Table 2
Fiscal Year
Residential
(Tax Roll)
Commercial
(Tax Roll)
Commercial
(Manual) Total Billed
Single
Family
Average
2010 4,034,670$ 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
2019 4,048,063 633,674 126,925 4,808,662 662
Cardiff Sanitary Division bills most customers through the San Diego County property tax billing service.
Delinquency rates have been between 1.8 -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
189
Parcel Sewer Service Percentage of
Property Owner Count Charges Sewer Charges
Scripps Health 1 89,980.74$ 1.87%
Collwood Pines Apartments LP 3 77,294.52 1.61%
San Dieguito Union High School District 2 54,160.83 1.13%
State of California Parks & Rec.2 42,964.96 0.89%
Cardiff Town Center LLC 1 33,510.00 0.70%
Georges Restaurant Inc.1 32,147.18 0.67%
Newport Taft, Inc.1 29,627.72 0.62%
944 Regal Road LLC 1 28,858.64 0.60%
Belmont Village LLC 1 25,732.60 0.54%
West Village, Inc.1 23,765.70 0.49%
Subtotal 14 438,042.89$ 9.11%
Total Billed 4,779,492$
Source: Cardiff Sanitary Division
Commercial
Total Connections Residential Industrial Total
Year (Billed Parcels)EDU's EDU's EDU's
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
2019 6,456 7,247 1,205 8,452
Source: Cardiff Sanitary Division
Table 3
Cardiff Sanitary Division
Ten Largest Customers
Fiscal Year 2018-19
Historical Service Connections
Last Ten Fiscal Years
Table 4
Cardiff Sanitary Division
190
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.
191
Customer Class Residential Rate Tier Potable Recycled
Single-family residential 0-12 units 2.99$ -$
13-20 units 4.75 -
21-40 units 5.87 -
41+ units 6.69 -
Multi-family residential (per dwelling) 0-8 units 2.99 -
9-12 units 4.75 -
13-16 units 5.87 -
17+ units 6.69 -
Agriculture Uniform 5.09 4.07
Commercial Uniform 5.09 4.07
Government Uniform 5.57 4.46
Public Uniform 5.57 4.46
Landscaping Uniform 5.87 4.70
Construction Uniform 5.97 4.78
(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, 2019
Water Meter Service Infrastructure Fire Meter Service
Availability Access Availability
Meter Size Charge Charge Charge
5/8" & 3/4"42.41$ 6.02$ 9.02$
1"62.44 9.63 9.02
1-1/2"112.08 18.06 10.17
2"171.89 31.90 17.73
3"311.53 57.79 44.66
4"511.00 98.73 91.63
6"1,009.18 180.60 259.53
8"1,607.26 313.04 549.12
Source: San Dieguito Water District
As of June 30, 2019
Rate (1)
Table 2
San Dieguito Water District
(2)San Dieguito Water District charges a bi-monthly service availability charge,which covers the costs for the
maintenance of meters,water lines,and storage facilities,to ensure that water is available upon demand.
This charge also covers customer service costs for meter reading and billing.The Infrastructure Access
Charge is levied by the San Diego County Water Authority and is collected from the customer by the District.
Table 1
San Dieguito Water District
Schedule of Water Rates
192
Meter
Fiscal Potable Percentage Availability Percent
Year Water Sales Change (3)Charge Change (3)
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%
2019 10,203,984 (9.1%)3,839,847 1.8%
(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 Recycled Percent Availability Percent
Year Water Sales Change Charges (4)Change
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%
2019 587,272 (31.2%)86,801 0.8%
(4) The District first implemented a meter availability charge for recycled customers on September 1, 2013.
Source: San Dieguito Water District
Historic Recycled Water System Revenues
Last Ten Fiscal Years
Table 3
San Dieguito Water District
Historic Potable Water System Revenues
Last Ten Fiscal Years
Table 4
San Dieguito Water District
193
Fiscal Local Imported Total Recycled Total
Year Water Water Potable Water Production
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
2019 2,173 3,407 5,580 550 6,130
(5) Potable water production is defined as water either produced locally or purchased from imported sources.
Fiscal Percent Percent
Year Potable Change Recycled Change
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%
2019 5,397 (7.6%)550 (23.0%)
distribution system and/or water pumped or used through the fire distribution system.
Source: San Dieguito Water District
San Dieguito Water District
Table 5
Summary of Water Deliveries by Source
Last Ten Fiscal Years
(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.The recycled water provided
to ERGA credits towards the District's production and delivery water to ERGA and the District ceased
selling recycled water as ERGA falls within the District's sphere of influence.
Note: The differences between potable water production and deliveries represents water loss in the
San Dieguito Water District
Summary of Water Production by Source
Last Ten Fiscal Years
Potable Production (in acre-feet)(5)
Table 6
194
Acre-Feet Percent of
Customer Description Sold Water Sold
Agriculture 184 3.4%
Commercial 532 9.9%
Construction 31 0.6%
Government 22 0.4%
Landscaping 385 7.1%
Multi-Family Residential 1,122 20.8%
Public 124 2.3%
Single-Family Residential 2,997 55.5%
Total Sales 5,397 100.0%
Source: San Dieguito Water District
Fiscal Percent Percent
Years Potable Increase Recycled Increase
2010 11,388 0.1%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%)
2019 11,861 0.6%93 9.4%
Source: San Dieguito Water District
Total Service Connections by Category
Last Ten Fiscal Years
Table 7
San Dieguito Water District
Sales by Customer Class
As of June 30, 2019
Table 8
San Dieguito Water District
195
CITY OF ENCINITAS
5 0 5 S . V u l c a n A v e n u e
E n c i n i t a s , C A 9 2 0 2 4
P h o n e : ( 7 6 0 ) 6 3 3 - 2 6 0 0
F A X : ( 7 6 0 ) 6 3 3 - 2 8 7 9
W W W . E N C I N I T A S . G O V