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MIOPENINSULA REGIONAL OPEN SPACE DISTRICT
Financial Statements for the Year Ended
March 31, 1991 and Independent Auditors'
Report
Member
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Deloitte &
Touche
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INDEPENDENT AUDITORS' REPORT
Suite 800
60 South Market Street
San Jose, California 95113-2303
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, 1991 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, 1991 and the results of its operations for the year then ended
in conformity with generally accepted accounting principles.
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May 9, 1991
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
COMBINED B ALANCE SHEET
MARCH 31 . 1991
Gen eral
Fund
ASSETS AND OTHER DEBIT B ALANCES
Cas h, including inter est bearing
deposits and cash inv estments $ 8,597,503
Restr ic ted cash and ca sh inv estments 4,818,133
Interest and other r eceivables 3,146,243
Prepaid expenses and other assets 41,726
L and
St ruc tur es and impro vements
Equipment
Amount to be pro vided for retirement
of gener al lo ng-ter m debt
TOTAL $16 ,603 ,605.
LIABILITIES A ND FUND EQUITY
Liabilities :
Accounts payable
Accr ued liabilities
$ 302,432
174,255
De pos its 21,820
Deferr ed revenue 339,684
Defe rred co mpe nsatio n
Lo ng-ter m debt
Total liabilities
Fund Equity:
Inves tment in ge ner al fixe d as sets
Fund ba lanc e
Total fund e quity
TOTA L
Se e note s to financial s tatements .
Agency
Fund
205,114
....ACCOUNT
Gen eral
Fix ed
Assets
115,878,814
3,911,998
858,815
205 114 $120,649,627
205,114
838,191 205 ,114
15, 765,414
15, 765,414
$16,603,605, $205, 114
120,649,627
120.649.627
$120,649,627
GROUPS....
G ene ral
L ong -Te rm
Debt
Total
(Mem or andum
Only)
$8,597,503
5,023,247
3,146,243
41,726
115,878 ,814
3,911 ,998
858,815
$50,513,866 50 ,513,866
$50 ,513 ,866. $187,972,212 .
$50.513 ,866
50 ,513,866
$ 302 ,432
174,255
21 ,820
339,684
205 ,114
50,513,866
51 ,557 ,171
120,649,627
15,765,414
136,415 .041
$50.513 ,866 $187 ,972 ,212
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL - OF THE GENERAL FUND
YEAR ENDED MARCH 31, 1991
REVENUES:
General property tax
State grants
Other taxes
Interest
Rental income and other
Proceeds from sale of land
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
DEFICIENCY OF REVENUES OVER
EXPENDITURES
OTHER FINANCING SOURCES (USES):
Net proceeds from issuance
of long-term debt
Defeasance of 1987 notes
Budget
$ 8,470,000
2,178,000
170,000
820,000
1,319,000
3,500,000
16,457,000
Variance
Favorable
Actual (Unfavorable)
$ 8,645,306
1,342,627
170,783
960,663
1,155,456
12,274.835
175,306
(835,373)
783
140,663
(163,544)
(3.500,000)
(4,182,165)
2,109,200 2,140,998 (31,798)
239,950 270,491 (30,541)
109,100 128,545 (19,445)
126,500 125,802 698
205,910 181,075 24,835
58,310 62,485 (4,175)
601,620 564,201 37,419
15,558,000 9,924,430 5,633,570
2,433,750 2,210,243 223,507
121,350 87,318 34,032
5,590,174 5,445,709 144,465
2,937,743 2,796,915 140,828
30,091,607 23,938,212 6,153,395
13,634,607
29,349,100
(12,100,000)
TOTAL OTHER FINANCING SOURCES 17,249,100
EXCESS OF REVENUES AND OTHER SOURCES
OVER EXPENDITURES AND OTHER USES
FUND BALANCE, APRIL 1, 1990
FUND BALANCE, MARCH 31, 1991
See notes to financial statements.
3,614,493
9.806,384
$13,420,877
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11,663,377
26,916,807
(9,294,400)
1,971,230
(2,432,293)
2,805,600
17,622,407 373,307
5,959,030 2,344,537
9,806,384
$15,765,414 $ 2,344,537
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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 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.
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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.
Unsecured taxes are levied 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, 1991, the carrying value of the General Fund's deposits in
cash and cash investments was $13,415,636 and the balance reported by the
respective financial institution and County of Santa Clara was $13,702,098
and consists of:
Commercial bank demand deposits $ 91,620
Cash investments including U.S. Treasury notes,
commercial paper, bankers acceptances and
repurchase agreements 4,782,967
County of Santa Clara pooled investment fund 8,827,511
TOTAL $13,702,098
Cash held in commercial bank demand deposits are insured up to $100,000 by
federal depository insurance. The District's cash investments are
insured, registered or collateralized by securities held by the District
or its agent in the District's name. These investments had a market value
of $4,809,904 at March 31, 1991.
Investments made with District funds are restricted by State law. The
County investment pool is subject to these restrictions and additional
restrictions prescribed by the County.
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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).
Cash investments of $4,818,133 are restricted by the terms of certain
promissory notes; interest earned on such funds is unrestricted.
Cash investments of $205,114 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 changes in the general fixed assets account group for the period ended
March 31, 1991 are as follows;
Balance Balance
March 31, 1990 Additions March 31, 1991
Land $105,954,384 $ 9,924,430 $115,878,814
Structures and
improvements 1,701,755 2,210,243 3,911,998
Equipment 771,497 87,318 858,815
Total $108,427,636 $12,221,991 $120,649,627
All fixed asset additions during fiscal 1991 were acquired through general
fund expenditures.
In October 1990, the District purchased an office building to serve as the
District's headquarters. The total cost of the building was $1,916,660
which included $41,660 of fees and interest. The cost of the building was
financed with a portion of the proceeds from the issuance of thirty-year
certificates of participation (see Note 5).
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, 1991 was
$6,693,000.
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, 1991 are as
follows:
Long-term debt, March 31, 1990
Issues of notes payable
Principal reductions
$ 38,238,778
27,465,000
(15,189,912)
Long-term debt, March 31, 1991 $ 50,513,866
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Long-term debt of $38,013,866 bears interest at fixed rates from 5.5% to
11%, has a weighted average interest rate of 6.9% at March 31, 1991 and is
collateralized with land with a cost of approximately $5,261,266.
Long-term debt of $12,500,000, to be repaid in annual installments
beginning in 1994, bears interest at a floating rate (4.3% at March 31,
1991) 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 Interest Total
1992 $ 1,601,231 $ 3,339,394 $ 4,940,625
1993 1,864,881 3,250,514 5,115,395
1994 2,556,040 3,146,173 5,702,213
1995 2,638,179 2,994,774 5,632,953
1996 3,166,995 2,817,375 5,984,370
Thereafter through 2020 38,686,540 25.346,749 64,033,289
$50.513,866 $40,894,979 $91,408,845
During fiscal 1991, the District purchased land and issued notes payable
for $2,465,000 at rates ranging between 5% to 6%, due at varying dates
through 1997. During fiscal 1991, the District repaid $2,400,000 of these
notes.
In September 1990 the District issued $10,000,000 in certificates of
participation. The certificates bear interest at rates ranging from 6.3%
to 7.6%, and mature through 2020 and are callable in fiscal 2000, The
proceeds were used to purchase an office building to serve as the
permanent headquarters of the District and to acquire approximately 40
parcels of open space land. The net proceeds of the certificates of
participation was $9,758,851 after underwriter's discount and cost of
issuance of $241,149.
The District also issued $15,000,000 in Promissory Notes in September
1990. A portion of the proceeds were used to advance refund $9,744,000 of
the 1987 Notes and $3,357,500 of land contract notes. The 1990 Notes
mature through 2010 and are callable in fiscal 2000. The indenture
agreement places certain restrictions on further borrowing by the
District. The 1990 Notes carry an average interest rate of 7.4% compared
to 5.4% on the 1987 Notes and 6% on the land contract notes.
The total net proceeds of the 1990 Notes were $14,692,955 after payment of
$307,045 in issuance costs, Of the total proceeds, $9,294,400 was used to
purchase U.S. government securities. These securities were deposited in
an irrevocable trust with an escrow agent to provide for all future debt
service payments on the refunded portion of the 1987 notes. The advance
refunding met the requirements of an in -substance debt defeasance and the
notes were removed from the District's General Long -Term Debt Account
Group.
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The advance refunding permitted the District to restructure its debt
maturities and to allow for more short-term funding of land acquisitions.
As a result of the advance refunding, the District increased its total
debt service requirements by $8,215,829, which resulted in an economic
loss (difference between the present value of the debt service payments on
the old and new debt) of $292,914.
The trust account assets and the liability for defeased promissory notes
in fiscal 1991 and prior years are not included in the District's
financial statements. At March 31, 1991, $18,549,000 of promissory notes
are considered defeased.
5. 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 who are (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, 1991, the District made contributions to the
Fund of $159,925. The District's payroll for employees covered by the
Fund for the year ended March 31, 1991 was $1,470,253 out of a total
payroll of $1,586,685. District participation in the Fund is comprised of
45 active employees out of a total of 51 employees. The District's
required employer contribution rate is 6,3%; 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
Current employees:
Accumulated employee contributions and allocated
investment earnings
Employer -financed, vested
Employer -financed, nonvested
$ 47,227
617,458
585,549
74,316
Total pension benefit obligation 1,324,550
Net assets available for benefits, at cost
(total market value, $1,889,122) 1,611,879
Excess pension assets $ 287,329
Actuarially Determined Contributions Required and Contributions Made
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, 1991 was made in
accordance with the actuarially determined requirements computed as of
June 30, 1989. If the District had not had a surplus in the PER's asset
account, the total pension funded contribution for fiscal 1991 would have
consisted of $196,088 normal cost (13.3% 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 liability over a 12 -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.
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.
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Trend information for the District for each of the three 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
Employer contributions as a percentage of
covered payroll
6. DEFERRED COMPENSATION PLAN
1990 1989 1988
$1,325 $1,023 $ 855
1,612 1,425 1,239
$ 287 402 $ 384
122% 139% 145%
$1,416 $1,195 $1,048
20.3% 33.7% 36,6%
10.9% 7.0%
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.
Changes in the assets (restricted cash) of the deferred compensation plan
for the year ended March 31, 1991 are as follows:
Balance, March 31, 1990 $148,395
Additions 57,969
Reductions (1,250)
Balance, March 31, 1991 $205,114
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7. LEASE REVENUES
The District leases certain land and structures to others under operating
leases with terms varying from month -to -month to fifty years. Lease
revenue received was approximately $337,000 during the year ended
March 31, 1991.
8. 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.
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