HomeMy Public PortalAboutAudit Report - District- FY90Deloitte �
Touche
MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
Financial Statements for the Year Ended
March 31, 1990 and Independent Auditors'
Report
Deloitte &
Touche
/\
INDEPENDENT AUDITORS' REPORT
Suite 1200
One Almaden Boulevard
San Jose, California 95113-2269
Telephone: (408) 998-4000
Facsimile: (408) 298-5782
Board of Directors,
Midpeninsula Regional Open Space District:
We have audited the accompanying balance sheet of
Midpeninsula Regional Open Space District as of March 31,
1990 and the related statement of revenues, expenditures
and changes in fund balance - budget and actual - of the
general fund for the year then ended. These financial
statements are the responsibility of District management.
Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, such financial statements present fairly,
in all material respects, the financial position of
Midpeninsula Regional Open Space District as of March 31,
1990 and the results of its operations for the year then
ended in conformity with generally accepted accounting
principles.
47;:ei;ert& 74"
May 11, 1990
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
COMBINED B ALANCE SHEET, MARCH 31, 1990
..ACCOUNT GROUPS.. ..
Gener al General T ot al
G ener al Agency Fixed Long -Term (Memo ra ndum
F und Fund A ssets Debt Onl y)
ASSETS AND OTHE R DEBIT B ALANCES
Ca sh, including i nterest bearing
deposits and cash inve stme nt s $ 4,919,331 $ 4,919,331
Restric ted cash a nd cash in vest ments 2,738,366 $148,395 2,886,761
In te re st and other re cei vables 2,551,218 2,551,218
Prepa id e xpenses a nd oth er assets 48,022 48,022
Land $105,954,384 105,954 ,384
Structures a nd impr ov ement s 1,701,755 1,701,755
Equipment 771,497 771,497
Amo unt to be prov ided f or retirement
of gene ral long-term debt $38,238 ,778 38,238,778
TOTAL $10,256,937 $148,395 $108,427,636 $38,238,778 $157 ,071,746
LIA BILIT IES AND FUND EQUITY
Lia bilities :
Accoun ts pa yable $ 129,250
A ccrued liabilities 176,456
Deposits 10,490
Deferred reve nue 134,357
De fe rre d co mpensation $148,395
L ong-term debt
To ta l liabilitie s 450,553 148 ,395
$38,238,778
38 ,238,778 38 ,837 ,726
$ 129,250
176,456
10,490
134,357
148 ,395
38,238,778
Fu nd Equity:
Inv estmen t in gene ra l fixed assets $108,427,636 108,427,636
Fund ba lance 9,806,384 9 ,806 ,384
Total fun d e quity 9,806,384 108,427,636 118,234,020
TOTAL $10,256,937 $148,395 $108,427.636 )38.238.778 $157,071,746
See notes to finan cial statemen ts.
MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL - OF THE GENERAL FUND
FOR THE YEAR ENDED MARCH 31, 1990
REVENUES:
General property tax
State grants
Other taxes
Interest
Rental income and other
Total
EXPENDITURES:
Salaries and benefits
Professional services
Vehicle expenses
Rent
Site supplies and services
Utilities and communications
Other
Acquisitions:
Land
Structures and improvements
Equipment
Debt service:
Principal retirement
Interest
Total
EXPENDITURES OVER REVENUES
OTHER FINANCING SOURCE -
Net proceeds from issuance
of long-term debt
EXPENDITURES OVER REVENUES
AND OTHER FINANCING SOURCES
FUND BALANCE, APRIL 1, 1989
FUND BALANCE, MARCH 31, 1990
Budget
$ 7,215,000
4,047,000
450,000
765,000
523,000
13,000,000
1,867,600
212,950
93,300
121,850
194,900
50,175
364,150
6,150,000
1,003,250
107,250
7,676,878
2,675,806
20,518,109
(7,518,109)
500.000
(7,018,109)
16,137.987
$ 9.112A21
See notes to financial statements.
Actual
$ 7,690,428
3,122,875
524,737
771,892
352,684
12,462,616
1,648,027
282,085
115,272
120,861
155,370
50,604
275,571
4,667,084
964,547
139,841
7,676,879
2,698,078
18,794,219
(6,331,603)
(6,331,603)
16,137,987
$_9.806.384
Variance
Favorable
(Unfavorable)
$ 475,428
(924,125)
74,737
6,892
(170.316)
(537,384)
219,573
(69,135)
(21,972)
989
39,530
(429)
88,579
1,482,916
38,703
(32,591)
(1)
(22,272)
1,723,890
1,186,506
(500,000)
686,506
$ 686.506
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - The Midpeninsula Regional Open Space
District (the "District") was formed in 1972 to acquire and
preserve land and open space in the northern and western
portions of Santa Clara County. In June 1976, the southern
portion of San Mateo County was annexed to the District.
Basis of accounting - The records of the District are
maintained on the modified accrual basis of accounting.
Under this method, revenues are generally recognized in the
period they become measurable and available, and
expenditures are generally recognized when the obligation
is incurred except for interest on long-term debt which is
recognized as an expenditure when due. Substantially all
revenues are susceptible to accrual.
Budgets and budgetary accounting - The Board of Directors
of the District adopts an annual operating budget on or
before March 31 for the ensuing fiscal year. The Board of
Directors may amend the budget by resolution during the
fiscal year. All appropriations lapse at the end of the
fiscal year. The budget is presented on a basis consistent
with generally accepted accounting principles.
Agency fund - The Agency Fund accounts for the assets of
the District's deferred compensation plan which are held by
the District as an agent for its employees.
General fixed assets - Land, equipment, structures and
improvements purchased by the District are stated at cost
in the general fixed asset group of accounts. Assets
donated to the District are stated at their estimated fair
market value as of the date received. Depreciation is not
recorded for fixed assets.
Long-term debt - The principal portion of long-term debt is
recorded as a liability in the general long-term debt
account group.
Property tax levy, collection and maximum rates - The State
of California (State) Constitution Article XIII A provides
that the combined maximum property tax rate on any given
property may not exceed one percent of its assessed value
unless an additional amount for general obligation debt has
been approved by voters. Assessed value is calculated at
100 percent of market value as defined by Article XIII A
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and may be increased by no more than two percent per year
unless the property is sold or transferred. The State
Legislature has determined the method of distribution of
receipts from the one percent tax levy among the counties,
cities, school districts and other districts.
The District receives property tax revenues from Santa
Clara and San Mateo Counties. The Counties assess
properties, bill for and collect property taxes as follows:
Valuation dates
Lien/levy dates
Due dates
Delinquent as of
Secured
March 1
July 1
50% on November 1
50% on February 1
December 10 (for
November)
April 10 (for
February)
Unsecured
March 1
March 1
July 1
August 31
Property taxes are distributed by the counties to the
District following their collection.
The term "unsecured" refers to taxes on personal property
other than real estate, land and buildings. These taxes
are secured by liens on the property being taxed.
Totals (Memorandum Only) - The column in the financial
statements captioned "Totals (Memorandum Only)" is
presented for purposes of additional analysis and is not a
required part of the basic financial statements. This data
is not comparable to a consolidation and does not present
financial position or results of operations in conformity
with generally accepted accounting principles.
2. CASH AND CASH INVESTMENTS
At March 31, 1990, the book balance of the General Fund's
time and demand deposits was $7,657,697 and the bank
balance was $7,997,350. The bank balance consists of:
Commercial bank demand deposits
Cash investments
County of Santa Clara pooled
investment fund
TOTAL
Commercial bank demand deposits are guaranteed
$100,000 by federal depository insurance. The
investments made with District funds deposited
commercial banks and the County of Santa Clara
pool are restricted by State law.
$ 135,769
2,460,617
5,400,964
$1197.350
up to
types of
in
investment
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State statutes authorize investments in obligations of the
U.S Treasury, its agencies and instrumentalities,
commercial paper rated A-1 by Standard & Poor's Corporation
or P-1 by Moody's Commercial Paper Record, bankers'
acceptances, repurchase agreements, and the State
treasurer's investment pool (Local Agency Investment Fund).
The District's cash investments consist of $2,460,617 of
investments that are insured or registered or for which the
securities are held by the District or its agent in the
District's name. These investments had a market value of
$2,459,922 at March 31, 1990.
Cash investments of $2,738,366 are restricted by the terms
of certain promissory notes; interest earned on such funds
is unrestricted.
Cash investments of $148,395 are restricted for the
District's deferred compensation plan; earnings on this
cash are restricted to the plan. Cash investments of the
plan are held by the District's agent in the District's
name and are subject to State statutes as described above.
3. FIXED ASSETS
The
the
changes in the general fixed assets account
period ended March 31, 1990 are as follows:
Land
Structures and
improvements
Equipment
Balance
April 1, 1989
$101,287,300
737,208
681,492
group for
Net Balance
Additions March 31, 1990
$4,667,084
964,547
90,005
Total $102.706.000 $&,721,636
$105,954,384
1,701,755
771,497
$108 , 63i
Equipment additions are net of retirements of $49,836. All
fixed asset additions during fiscal 1990 were acquired
through general fund expenditures.
In conjunction with the purchase of a certain parcel of land
during 1986, the District holds an option through August 15,
1995 to acquire an additional 889 acres for $6.1 million
plus $1,000 per day for each day after August 15, 1989. The
purchase price as of March 31, 1990 was $6,328,000.
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4. LONG-TERM DEBT
Long-term debt issued to acquire land, structures and
improvements, and equipment is recorded in the general
long-term debt account group. The changes in the account
group for the period ended March 31, 1990 are as follows:
Long-term debt, April 1, 1989
Principal retirements
$45,915,657
(7,676,879)
Long-term debt, March 31, 1990 538.238.778
Long-term debt of $25,738,778 bears interest at fixed rates
from 5.45% to 11%, has a weighted average interest rate of
5.89% at March 31, 1990 and is collateralized with land with
a cost of approximately $11,471,000. Long-term debt of
$12,500,000, to be repaid in annual installments beginning
in 1994, bears interest at a floating rate (6.05% at
March 31, 1990) which is based upon prevailing market
conditions and is redetermined every seven days. Maturities
of long-term debt are as follows:
Year Ending March 31: Principal
1991 $ 3,382,623
1992 3,127,866
1993 3,583,097
1994 4,270,872
1995 4,248,505
Thereafter (through 2009) 19,625,815
Total 538.238.778
Interest
$ 2,203,185
2,047,906
1,843,712
1,611,631
1,338,604
5,176,302
$19.221,394
Total
$ 5,585,808
5,175,772
5,426,809
5,882,503
5,587,109
24,802,117
$52.460.118
In fiscal 1987, the District defeased certain promissory
notes by placing the proceeds from new promissory notes in
an irrevocable trust to provide for all future debt service
payments on the old promissory notes. Accordingly, the
trust account assets and the liability for the defeased
promissory notes are not included in the District's
financial statements. At March 31, 1990, approximately
$10.8 million of promissory notes are considered defeased.
5. LEASE OBLIGATIONS
Office facilities and a telephone system are leased under
five-year operating leases expiring through 1992. Minimum
annual lease payments are as follows: 1991, $102,000; 1992,
$1,000.
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6. EMPLOYEES' RETIREMENT PLAN
All regular employees are eligible to participate in the
Public Employees' Retirement Fund (the Fund) of the State of
California's Public Employees Retirement System (PERS). The
Fund, an agent multiple -employer defined benefit retirement
plan that acts as a common investment and administrative
agent for various local and state governmental agencies
within California, is administered by a Board of
Administration composed of individuals (1) elected by PERS
members, (2) appointed by elected State of California
officials, and (3) specific elected State of California
officials. The Fund provides retirement, disability, and
death benefits. Such benefits are based on the employee's
years of service, age, and final compensation. Employees
vest after five years of service and are eligible to receive
retirement benefits at age 50. These benefits provisions
and all other requirements are established by State statute
and District resolution.
For the year ended March 31, 1990, due to a surplus in the
District's PERS asset account, the District made no
contributions to the Fund because employee and employer
contributions for the year ended March 31, 1990 have been
deducted from the District's PERS account surplus. The
District's payroll for employees covered by the Fund for the
year ended March 31, 1990 was $1,264,732 out of a total
payroll of $1,334,757. District participation in the Fund
is comprised of 43 active employees out of a total 45
employees. The District's required employer contribution
rate is 6.489%; the employees' required contribution rate is
7%, which is currently funded by the District.
Funding Status and Progress
The "pension benefit obligation" is determined for each
participating employer by the Fund's actuary and is a
standardized disclosure measure that results from applying
actuarial assumptions to estimate the present value of
pension benefits, adjusted for the effects of projected
salary increases and step rate benefits, to be payable in
the future as a result of employee service to date. The
measure is intended to help users assess the funding status
of the District's portion of the Fund to which contributions
are made on a going -concern basis, assess progress made in
accumulating sufficient assets to pay benefits when due, and
make comparisons among employers. The measure is the
actuarial present value of credited projected benefits and
is independent of the funding method used.
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The pension benefit obligation was computed as part of an
actuarial valuation performed as of June 30, 1989. The
significant actuarial assumptions used in the 1989 valuation
to compute the pension benefit obligation were an assumed
rate of return on investment assets of 8.5%, annual payroll
increases of 5.0% attributable to inflation and 2.0%
attributable to merit or seniority, and no post -retirement
benefit increases.
Information applicable to the District's employee group at
June 30, 1989 (the latest date for which the information is
available) follows:
Pension Benefit Obligation:
Retirees and beneficiaries currently
receiving benefits and terminated
employees not yet receiving benefits $ 8,828
Current employees:
Accumulated employee contributions
and allocated investment earnings 504,826
Employer -financed, vested 433,465
Employer -financed, nonvested 75,458
Total pension benefit obligation 1,022,577
Net assets available for benefits,
at cost (total market value, $1,611,945) 1,425,239
Excess pension assets
Actuarially Determined Contributions Required and
Contributions Made
S 402,662
The funding policy of the Fund provides for actuarially
determined periodic contributions by the District at rates
such that sufficient assets will be available to pay Fund
benefits when due. The District's contribution calculation
for the year ended March 31, 1990 was made in accordance
with the actuarially determined requirements computed as of
June 30, 1989. The total pension funded contribution for
the year consisted of $170,600 normal cost (13.489% of
current covered payroll).
The contribution rate for normal cost is determined using
the credited projected benefits actuarial funding method.
The Fund uses the level percentage of payroll method to
amortize the unfunded liability, if any, over a twelve-year
period.
Significant actuarial assumptions used in the 1989 valuation
to compute the actuarially determined contribution
requirements are the same as those used to compute the
pension benefit obligation as described above.
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Trend information gives an indication of the progress made
in accumulating sufficient assets to pay for benefits when
due. System wide ten-year trend information may be found in
the California Public Employees' Retirement System annual
reports.
Trend information for the District for each of the two years
in the period ended June 30, 1989 (the period for which
information is available) is as follows (dollars in
thousands):
Pension benefit obligation
Net assets available for benefits
Excess of nets assets over the pension
benefit obligation
Percentage funded
Annual covered payroll
Excess of net assets over the
pension obligation as a percentage
of covered payroll
7. DEFERRED COMPENSATION PLAN
1989 1988
$1,023 $ 855
1,425 1,239
$ 422 $ 384
139% 145%
$1,195 $1,048
33.7% 36.6%
During 1988, the District established a deferred
compensation plan for its employees in accordance with
California Government Code Section 53212 and Internal
Revenue Code Section 457. The plan, available to all
District employees, permits them to defer a portion of their
salary until future years. The deferred compensation is not
available to employees until termination, retirement, death
or unforseeable emergency.
All amounts of compensation deferred under the plan, all
property and rights purchased with those amounts, and all
income attributable to those amounts, property or rights are
(until paid or made available to the employee or other
beneficiary) solely the property and rights of the District
(without being restricted to the provisions of benefits
under the Plan), subject only to the claims of the
District's general creditors. Participants' rights under
the plan are equal to those of general creditors of the
District in an amount equal to the fair market value of the
deferred account for each participant.
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Changes in the assets (restricted cash) of the deferred
compensation plan for the year ended March 31, 1990 are as
follows:
Balance, April 1, 1989
Additions
Balance, March 31, 1990
8. LEASE REVENUES
$ 96,017
52,378
$148.395
The District leases certain land and structures to others
under operating leases with terms varying from one to
eighteen years. In connection with an acquisition of the
Skyline Ridge Open Space Preserve in fiscal 1982, the
District leased back to the sellers for their lifetimes
(maximum term of 50 years) the structures comprising a ranch
compound:
Lease revenue received was approximately $267,000 during the
year ended March 31, 1990. Future minimum lease revenues
are not expected to be significant.
9. LITIGATION
The District is named in certain claims and litigation. It
is the opinion of management, after consultation with
counsel, that the liability, if any, resulting therefrom
will not have a material effect on the District's financial
position.
10. PURCHASE COMMITMENT
The District has entered into a commitment to purchase an
office building to serve as the District's headquarters.
The purchase price of approximately $1.9 million is expected
to be financed through the sale of 30 year certificates of
participation.
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