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INDEPENDENT AUDITORS' REPORT
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,
1989 and the related statement of revenues, expenditures
and changes in fund balance - budget and actual - of the
general fund for the nine -month period then ended. These
financial statements are the responsibility of the
District's 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,
1989 and the results of its operations for the nine -month
period then ended, in conformity with generally accepted
accounting principles.
Eca_eL:t__
May 31, 1989
MIDP ENINSULA REGIONAL OPEN SPACE DISTRICT
COMBINED BAL ANCE SHEET , MARCH 31, 1989
ASSETS AND OTHER DEBIT BALANCES
Ca sh, including interest b earing
de pos its and cash i nvestments
Restr icted ca sh and ca sh i nvestm ent s
Inte rest an d o ther receivabl es
Pre paid expenses a nd other ass ets
Lan d
Stru ctures and improv ements
Equipme nt
Amo unt to be prov ided for retirement
of gene ra l lon g-te rm de bt
TOTAL
LIA BILITIES AND FUND EQUITY
Liabilities:
Acco unts paya ble
Acc rue d lia bilitie s
De po sits
Defe rr ed c ompe ns ation
Lon g-te rm de bt
Total liabilitie s
Fun d Equity:
Investment in gene ral fixed assets
Fund balan ce
Total fun d equ ity
TOTAL
See notes to finan cia l stateme nts.
G eneral
Fu nd
Ag en cy
Fund
$10,318,935
3,677,722 $96,017
2,311,241
90,749
.ACCOUNT
G eneral
Fix ed
A ssets
$101,287,300
737,208
681,492
GROUPS... .
G eneral
Long -Term
D ebt
$45 ,915, 657
Total
(Memorand um
Only)
$ 10,318,935
3,773,739
2,311,241
90,749
101,287,300
737,208
681,492
45,915,657
$16,398,647 $96,017 *102 .706 .000 345 .915.657 3165.116,321
$ 117,883
132,002
10,775
$96,017
260, 660 96 ,017
16,137,987
16,137, 987
$102,706,000
102,706,000
316,398.647 $96,017 3102.706,000
$45,915,657
45,915,657
)45.915.657
$ 117,883
132,002
10,775
96,017
45,915,657
46,272,334
102,706,000
16 ,137,987
118 ,843,987
$165 .116.321
MIDPENINSULA REGIONAL OPEN'SPACE DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL - OF THE GENERAL FUND
FOR THE NINE -MONTH PERIOD ENDED MARCH 31, 1989
REVENUES:
General property tax
State and Federal grants
Other taxes
Interest
Gifts
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
REVENUES OVER EXPENDITURES
OTHER FINANCING SOURCE -
Net proceeds from issuance
of long-term debt
REVENUES AND OTHER FINANCING
SOURCE OVER EXPENDITURES
FUND BALANCE, JULY 1, 1988
FUND BALANCE, MARCH 31, 1989
Budget
(Unaudited)
$ 6,225,000
6,500,000
400,000
375,000
150,000
316,250
13,966,250
Actual
$ 6,440,217
6,562,298
462,471
738,240
101,000
264,151
14,568,377
1,208,363 1,146,503
229,210 240,551
81,800 78,399
92,380 86,315
111,304 70,338
43,625 31,045
275,965 168,875
6,698,800 6,687,722
303,633 42,403
151,280 125,645
690,443 690,443
2,065,561 2,146,298
11,952,364 11,514,537
2,013,886 3,053,840
2,811,000
4,824,886
10,170,510
$14.995.396
See notes to financial statements.
2,913,637
Variance
Favorable
(Unfavorable)
$ 215,217
62,298
62,471
363,240
(49,000)
(52,099)
602,127
61,860
(11,341)
3,401
6,065
40,966
12,580
107,090
11,078
261,230
25,635
(80,737)
437,827
1,039,954
102,637
5,967,477 1,142,591
10,170,510
$16.137.987 $1,142,591
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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 available and measurable, and
expenditures are recognized generally 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. The
District has changed its year end to March 31; therefore,
the current -year budget information has been revised by the
District's Controller to reflect nine months of operations.
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
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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.
The District receives property tax
Clara and San Mateo Counties. The
properties, bill for, collect, and
taxes as follows:
Valuation dates
Lien/levy dates
Due dates
Delinquent as of
,Secured
revenues from Santa
Counties assess
distribute property
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
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, 1989, the book balance of the General Fund's
time and demand deposits was $13,996,657 and the bank
balance was $14,728,085. The bank balance consists of:
Commercial bank demand deposits $ 111,243
Cash investments 4,400,079
County of Santa Clara pooled
investment fund 10,216,763
TOTAL $14.7283085
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Commercial bank demand deposits are covered up to $100,000
by federal depository insurance. Investments of the
commercial bank trust fund and the County of Santa Clara
investment pool are restricted by State law as to the types
of investments which can be made.
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 $4,400,079 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
$4,435,124 at March 31, 1989.
3. FIXED ASSETS
The changes in the general fixed assets account group for
the period ended March 31, 1989 are as follows:
Land
Structures and
improvements
Equipment
Balance
July 1, 1988 Additions
$94,599,578 $6,687,722
694,805 42,403
555,847 125.645
Balance
March 31, 1989
$101,287,300
737,208
681,492
Total $95.850.230 $6.855.770 $102,706,Q0Q
All fixed asset additions during fiscal 1989 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.
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, 1989 are as follows:
- 6 -
Long-term debt, July 1, 1988
Issuance of notes payable
Principal retirements
$43,692,463
2,913,637
(690,443)
Long-term debt, March 31, 1989 $45.915.657
Long-term debt of $33,415,657 bears interest at fixed rates
from 5% to 11% and has a weighted average interest rate of
5.75% at March 31, 1989. Long-term debt of $12,500,000
bears interest at a floating rate (7.24% at March 31, 1989)
which is based upon prevailing market conditions and is
redetermined every seven days. Maturities of long-term debt
are as follows:
Year
Ending March
1990
1991
1992
1993
1994
Thereafter
31:
(through 2009)
Principal Interest
$ 7,676,878
3,382,677
3,127,923
3,583,156
4,270,938
23.874.085
$ 2,675,806
2,204,148
2,048,870
1,844,675
1,612,592
6.515.139
Total
$10,352,684
5,586,825
5,176,793
5,427,831
5,883,530
30.389,224
Total $45.915.657 $,6.901,230 $62.J16.887
Land with a cost of approximately $18,467,000 is pledged as
collateral for the long-term debt.
Cash of $3,677,722 is restricted by the terms of certain
promissory notes; interest earned on such funds is
unrestricted. Cash of $96,017 is restricted for the
District's deferred compensation plan; earnings on this cash
are restricted to the plan.
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, 1989, $12.3 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: 1990, $118,000;
1991, $77,000; 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 period ended March 31, 1989, due to the surplus in
the PERS asset account, the District made no contributions
to the Fund; employee and employer contributions for the
period ended March 31, 1989 have been deducted from the
District's PERS account surplus. The District's payroll for
employees covered by the Fund for the period ended March 31,
1989 was $925,842 out of a total payroll of $943,826.
District participation in the Fund is comprised of 39 active
employees out of a total 44 employees. The District's
required employer contribution rate is 6.564%; 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.
The pension benefit obligation was computed as part of an
actuarial valuation performed as of June 30, 1987. The
significant actuarial assumptions used in the 1987 valuation
to compute the pension benefit obligation were an assumed
rate of return on investment assets of 8.5%, annual payroll
increases of 5.75% attributable to inflation and 1.25%
attributable to merit or seniority, and no post -retirement
benefit increases.
- 8 -
Information applicable to the District's employee group at
June 30, 1987 (the latest date for which the information is
available) follows:
Pension Benefit Obligation:
Retirees and beneficiaries currently
receiving benefitsandterminated
employees not yet receiving benefits $ 7,114
Current employees:
Accumulated employee contributions
and allocated investment earnings 418,206
Employer -financed, vested 370,894
Employer -financed, nonvested 59.005
Total pension benefit obligation 855,219
Net assets available for benefits,
at cost (total market value, $1,550,935) 1,238,766
Excess pension assets S 383.547
Actuarially Determined Contributions Reauired 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 period ended March 31, 1989 was made in accordance
with the actuarially_ determined requirements computed as of
June 30, 1987. The total pension funded contribution for
the nine -month period consisted of $125,581 normal cost
(13.564% 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 1987 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 for the Fund is not available. As of June
30, 1987 available net assets were sufficient to fund 145%
of the pension benefit obligation; there was no unfunded
pension benefit obligation; and the District's actuarially
determined funded contribution to the Fund was 6.564% of
annual covered payroll.
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7. DEFERRED COMPENSATION PLAN
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 period ended March 31, 1989 are as
follows:
Balance, July 1, 1988
Additions
Reductions
Balance, March 31, 1989
8. LEASE REVENUES
$56,746
39,271
$96.017
The District leases certain land and structures to others
under operating leases with terms varying from one to
eighteen years. In addition, in connection with the fiscal
1982 acquisition of the Skyline Ridge Open Space Preserve,
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 $200,000 during the
period ended March 31, 1989. Future minimum lease revenues
are not expected to be significant.
- 10 -
9. GIFTS
During the period ended March 31, 1989 the District received
a donation of land with an approximate value of $1,000 and a
cash contribution of $100,000.
10. 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.