FINAL REPORT - San Bernardino Superior Court

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Section 1: Financial Condition • Transfers that are not to be repaid. These are otherwise known as subsidies if they are used to support operations, as opposed to payment for the exchange of services (i.e. utility services). Table 1.3 Four-Year Comparison of General Fund Short-Term Loans, Inter-fund Loans, and Transfers to Other Funds Fund Year Short- Term Inter-fund Loan Transfer/ Subsidy Amount FY 2007-08 $1,133,238 $6,878,884 City Golf FY 2008-09 $5,745,646 1,253,552 1,253,552 FY 2009-10 5,073,220 5,073,220 FY 2010-11 1,400,322 1,400,322 Total City Golf 14,605,978 FY 2007-08 1,353,898 1,353,898 SCLAA FY 2008-09 1,755,396 1,755,396 FY 2010-11 2,314,851 2,314,851 Total SCLAA 5,424,145 Municipal Utility FY 2007-08 9,990,448 9,990,448 FY 2008-09 818,427 818,427 Total Municipal Utility 10,808,875 Fire Protection FY 2007-08 131,198 5,465,894 5,597,092 CDBG Grants FY 2007-08 718,895 718,895 Other Federal Grants FY 2007-08 4,624,051 4,624,051 Park and Recreation FY 2007-08 1,115,412 1,115,412 Source: City of Victorville Financial Statements Short-term loans to meet negative cash balances at the end of the year are typical of most jurisdictions. Because the short-term loans are intended to be repaid within a year, it is assumed that the loans listed in Table 1.3 above were repaid. However, inter-fund loans where repayment is expected beyond one year, without a clear repayment plan, are a sign of financial distress. Inter-fund loans are further discussed in Section 2 of this report. 1-5 Harvey M. Rose Associates, LLC
Section 1: Financial Condition Cash Balance As of June 30, 2011, the City’s cash and investments were $88,306. While there is no specific standard for how much a City should have in cash and investments, the amount is very low when compared to the City’s rate of expenditures of approximately $4,000,000 per month, resulting in a cash flow risk for the City. There are three ways in which cities typically address cash flow issues. The first is to resolve low cash balances through inter-fund loans. However, as previously discussed, the City’s ability for the General Fund to engage in inter-fund borrowing has diminished because of long-term lending and the poor financial condition of other funds. Secondly, cities can borrow from Internal Service Funds on a temporary basis, yet the City of Victorville does not have any Internal Service Funds. Finally, through the California Statewide Communities Development Authority (CCDA or California Communities), 3 cities can finance short-term cash flow deficits through Tax and Revenue Anticipation Notes (TRANs). However, the maximum maturity of TRANs issued by CCDA is 13 months and State law requires that funds be set aside for the repayment of TRANs from current fiscal year revenues, or the fiscal year in which the TRANs was actually issued. Based on the City’s track record of setting aside cash, applying for TRANs may not be a viable option for the City either. The City should develop a plan to replenish the General Fund reserves to the recommended level of two months annual revenue or expenditures. By doing so, the City would be eligible for TRANs should the City have major cash flow risks in the future. Such a plan should include further reducing expenditures and identifying additional sources of revenue while the economy improves and major sources of revenue—sales tax, property tax, and franchise tax—increase. Additionally, the City should avoid inter-fund loans and transfers from the General Fund to other City funds. Other Entities are in Poor Financial Condition Three entities for which the City has fiduciary responsibility have been operating at a deficit over the past four fiscal years (operating expenditures exceeded operating revenues). These entities are the Southern California Logistics Airport Authority (SCLAA), Victorville Municipal Utility Services (VMUS), and the City Golf Course. Additional factors, such as significant debt for SCLAA and VMUS, contribute to these entities’ poor financial condition. As previously noted, the General Fund has had to transfer funds to support some of these operations. 3 The California Statewide Communities Development Authority is a joint powers authority sponsored by the California State Association of Counties and the League of California Cities. Its mission is to provide local governments and private entities access to low-cost, tax-exempt financing for projects. 1-6 Harvey M. Rose Associates, LLC
Page 1 and 2: FINAL REPORT COUNTY OF SAN BERNARDI
Page 3 and 4: EDITORIAL COMMITTEE From left to ri
Page 5 and 6: Honorable Ronald M. Christianson, P
Page 7 and 8: 2011-2012 GRAND JURY SAN BERNARDINO
Page 9 and 10: TABLE OF CONTENTS 2011-2012 GRAND J
Page 11 and 12: CITIES/SPECIAL DISTRICTS COMMITTEE
Page 13 and 14: 2011‐2012 San Bernardino County G
Page 23 and 24: May 15, 2012 Ted Burgnon, Foreman a
Page 25 and 26: Executive Summary Harvey M. Rose As
Page 27 and 28: Executive Summary year to prevent b
Page 29 and 30: Executive Summary never completed a
Page 31 and 32: Executive Summary purposes that dir
Page 33 and 34: Introduction Harvey M. Rose Associa
Page 35 and 36: Introduction Victorville was establ
Page 37 and 38: Introduction Exhibit 1 City of Vict
Page 39 and 40: Introduction boundaries of the Vict
Page 41 and 42: Introduction The SCLAA operated und
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Section 4: SCLA Hangar Development
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FINAL REPORT - San Bernardino Superior Court

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