Comprehensive Annual Financial Report - City of Santa Monica

City of Santa Monica 

Comprehensive Annual Financial Report 

Year Ended June 30,2008 

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California 


Year ended June 30, 2008 

Prepared by the Finance Department 

Carol Swindell Director of Finance/City Treasurer 

Candace Tysdal Financial Operations Manager 

Randy Chow Financial Reporting Supervisor 

Scott Lowe Financial Reporting Supervisor 

Imelda De Leon Senior Accountant 

Stephanie Manglaras Senior Accountant 

Steven Hull Accountant 

Sandra Walker Accountant 

Martha Romero Junior Accountant 

Michael Towler Junior Accountant 

Caline Evans Executive Administrative Assistant

City of Santa Monica, California 

Year Ended June 30, 2008 

INTRODUCTORY SECTION

CITY OF SANTA MONICA, CALIFORNIA 


For the fiscal year ended June 30, 2008 

Table of Contents 

Page 

INTRODUCTORY SECTION 

Letter of Transmittal .......................................................................................................................... v 

Officials of the City of Santa Monica ................................................................................................ xii 

Organization Chart – City of Santa Monica ...................................................................................... xiii 

GFOA Certificate of Achievement for Excellence in Financial Reporting ....................................... xiv 

FINANCIAL SECTION 

Independent Auditors' Report ............................................................................................................ 1 

Management’s Discussion and Analysis (Required Supplementary Information) ............................ 3 

Basic Financial Statements: 

Government-wide Financial Statements: 

Statement of Net Assets .............................................................................................................. 15 

Statement of Activities ................................................................................................................ 16 

Fund Financial Statements: 

Balance Sheet – Governmental Funds ........................................................................................ 18 

Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficits) – 

Governmental Funds ................................................................................................................ 19 

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of 

Governmental Funds to the Statement of Activities ................................................................ 20 

Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual 

(Non-GAAP Basis) – General Fund ........................................................................................ 21 

Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual 

(Non-GAAP Basis) – Special Revenue Source Fund .............................................................. 25 

Statement of Net Assets – Proprietary Funds .............................................................................. 28 

Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds ........ 30 

Statement of Cash Flows – Proprietary Funds ............................................................................ 31 

Statement of Fiduciary Assets and Liabilities – Fiduciary Funds ............................................... 34 

Notes to Basic Financial Statements: 

Note 1 – Summary of Significant Accounting Policies ............................................................ 35 

Note 2 – Budgetary and Legal Compliance .............................................................................. 43 

Note 3 – Reconciliation of Fund Financial Statements to Government-Wide Financial 

Statements ................................................................................................................... 44 

Note 4 – Prior Period Adjustments ........................................................................................... 47 

Note 5 – Cash and Investments ................................................................................................. 48 

Note 6 – Notes Receivable ........................................................................................................ 54 

Note 7 – Capital Assets ............................................................................................................. 59 

Note 8 – Unearned Revenue ..................................................................................................... 60 

Note 9 – Long-Term Liabilities ................................................................................................ 62 

Note 10 – Fund Deficits .............................................................................................................. 65 

Note 11 – Interfund Transactions ................................................................................................ 65 

Note 12 – Restricted Net Assets .................................................................................................. 67 

Note 13 – Reserved and Designated Fund Balances ................................................................... 68 

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Table of Contents, Continued 

Page 

Note 14 – Litigation and Contingencies ...................................................................................... 73 

Note 15 – Self-Insurance ............................................................................................................. 75 

Note 16 – Employee Benefit Programs ....................................................................................... 77 

Note 17 – Short-Term Loans Payable ......................................................................................... 81 

REQUIRED SUPPLEMENTARY INFORMATION 

Pension Funding Information ............................................................................................................ 83 

OPEB Funding Information……………………………………………………………………… ... 84 

SUPPLEMENTARY INFORMATION 

NON-MAJOR FUNDS / OTHER FINANCIAL INFORMATION 

Combining and Individual Fund Statements and Schedules: 

Combining Balance Sheet – Nonmajor Governmental Funds by Fund Type ................................ 88 

Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor 

Governmental Funds by Fund Type ............................................................................................ 89 

Combining Balance Sheet – Nonmajor Governmental Funds – Special Revenue Funds .............. 90 

Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) – 

Nonmajor Governmental Funds – Special Revenue Funds ............................................................ 92 

Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) – Budget and 

Actual (Non-GAAP Basis) – Nonmajor Governmental Funds – Special Revenue Funds: 

Clean Beaches and Ocean Parcel Tax ...................................................................................... 94 

Beach Recreation ..................................................................................................................... 95 

Housing Authority ................................................................................................................... 96 

Disaster Relief Fund ................................................................................................................ 97 

Tenant Ownership Rights Charter Amendment (TORCA) ...................................................... 98 

Community Development Block Grant (CDBG) ..................................................................... 99 

Miscellaneous Grants ............................................................................................................... 100 

Citizens Option for Public Safety ............................................................................................ 101 

Rent Control ............................................................................................................................. 102 

Air Quality Management District (AQMD) ............................................................................. 103 

Parks and Recreation .............................................................................................................. 104 

Gas Tax .................................................................................................................................... 105 

Combining Balance Sheet – Nonmajor Governmental Funds – Capital Projects .......................... 106 

Combining Statement of Revenues, Expenditures and Changes in Fund Balances – 

Nonmajor Governmental Funds – Capital Projects ..................................................................... 107 

Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual 

(Non-GAAP Basis) – Major and Nonmajor Governmental Funds – Capital Projects Funds: 

Downtown Redevelopment Project ......................................................................................... 108 

Earthquake Recovery Redevelopment Project ......................................................................... 109 

Capital Projects ........................................................................................................................ 110 

Low/Mod Housing Projects ..................................................................................................... 111 

Ocean Park Redevelopment Project ......................................................................................... 112 

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Page 

Combining Balance Sheet – Nonmajor Governmental Funds – Debt Service ............................... 114 

Combining Statement of Revenues, Expenditures and Changes in Fund Balances – 

Nonmajor Governmental Funds – Debt Service ......................................................................... 115 

Combining Balance Sheet – Nonmajor Governmental Funds – Permanent Funds ........................ 116 

Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 

Nonmajor Governmental Funds – Permanent Funds .................................................................. 117 

Statement of Net Assets – Nonmajor Enterprise Funds ................................................................. 120 

Statement of Revenues, Expenses and Changes in Fund Net Assets – 

Nonmajor Enterprise Funds ........................................................................................................ 122 

Statement of Cash Flows – Nonmajor Enterprise Funds ................................................................ 123 

Statement of Net Assets – Internal Service Funds ......................................................................... 126 

Statement of Revenues, Expenses and Changes in Net Assets – Internal Service Funds .............. 127 

Statement of Cash Flows – Internal Service Funds ........................................................................ 128 

Combining Statement of Fiduciary Assets and Liabilities – Fiduciary Funds ............................... 130 

Combining Statement of Changes in Fiduciary Assets and Liabilities – Fiduciary Funds ............ 131 

STATISTICAL SECTION 

Table Page 

Financial Trends Information 

Net Assets by Component – Last Five Fiscal Years ............................................................. 1 135 

Changes in Net Assets – Last Five Fiscal Years ................................................................... 2 136 

Fund Balance of Governmental Funds – Last Ten Fiscal Years .......................................... 3 138 

Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years ........................ 4 139 

General Fund Tax Revenues by Source – Last Five Fiscal Years ........................................ 5 141 

Revenue Capacity Information 

Assessed Value and Actual Value of Taxable Property – Last Ten Fiscal Years................. 6 142 

Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years .................................. 7 143 

Principal Property Tax Payers – Current Fiscal Year and Nine Years Ago ......................... 8 144 

Property Tax Levies and Collections – Last Ten Fiscal Years ............................................. 9 145 

Taxable Transactions by Type of Business – Last Five Calendar Years .............................. 10 146 

Debt Capacity Information 

Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ............................................. 11 147 

Ratios of General Bonded Debt – Last Ten Fiscal Years ..................................................... 12 148 

Direct and Overlapping Governmental Activities Debt as of June 30, 2008 ........................ 13 149 

Computation of Legal Debt Margin – Last Ten Fiscal Years ............................................... 14 150 

Wastewater Enterprise Revenue Bonds Coverage ................................................................ 15 151 

Redevelopment Agency Downtown Project Lease Revenue Bonds Coverage .................... 16 152 

Redevelopment Agency Earthquake Recovery Project Tax Allocation Bonds Coverage .... 17 153 

Redevelopment Agency Ocean Park Project Tax Allocation Refunding Bonds Coverage .. 18 154 

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Table Page 

Demographic and Economic Information 

Demographic and Economic Statistics – Last Ten Calendar Years ...................................... 19 155 

Principal Employers – Current Year and Nine Years Ago ................................................... 20 156 

Operating Information 

Full-time Equivalent City Government Employees by Function/Program – 

Last Five Fiscal Years ....................................................................................................... 21 157 

Operating Indicators by Function/Program – Last Three Fiscal Years ................................ 22 158 

Capital Asset Statistics by Function/Program – Last Three Fiscal Years ............................. 23 159 

iv

The City provides a full range of services, including, among others, police and fire protection, water and 

wastewater utilities, street maintenance, public transportation, parking, parks and recreation, planning, and 

building and safety. In FY 2007-08 the City also began offering simple annual dark fiber leasing 

arrangements to Santa Monica businesses and non-profit organizations. 

Elementary and secondary education is provided by the Santa Monica Malibu Unified School District, and 

community college education is provided by the Santa Monica College District. Courts, health and social 

services are provided by the County of Los Angeles. Gas, electric and telephone services are provided by 

private utility companies. 

Financial data for all funds through which services are provided by the City have been included in this report 

based on the criteria adopted by GASB. 

FINANCIAL CONDITION AND OUTLOOK 

With $1.9 billion in reportable assets and $0.4 billion in liabilities, the City’s net assets (assets less liabilities) 

of $1.5 billion are essentially unchanged from the prior year. During the fiscal year, the General Fund, the 

City’s major operating fund, realized revenues in excess of budgeted revenues and expended less than 

appropriations, leaving the General Fund after transfers and changes to reservations and designations with an 

ending unreserved and undesignated fund balance of $5.2 million. 

The national, state and local economies all continue to be in an incredibly fragile state. On the national level, 

the economy has been in a recession since December 2007 and is clearly suffering through recessionary 

conditions. The housing market’s severe downturn and resulting “credit crunch” have resulted in 

unprecedented foreclosure activity and is severely hampering economic growth. Unemployment is at the 

highest level in five years and expected to increase. 

The California economy is plagued by many of the same issues confronting the national economy. 

Unemployment increased at the highest rate in fourteen years. The housing crisis continues to be the biggest 

drain on the economy. Growth in state personal income and retail sales over the next 12 to 24 months are 

expected to be less than in recent years. In addition to housing, the biggest threat to the California economy is 

the State budget. The State recently adopted a budget after a record delay (85 days), but still faces financial 

challenges with an estimated $42 billion budget deficit by the end of FY 2009-10. 

Historically, Santa Monica has tended to be more resilient than its neighbors in tough economic times. This is 

due, in large part, to a relatively strong, diversified economy. Unlike many cities, no single source of revenue 

accounts for more than 15% of total General Fund revenues. However, since many of these tax sources are 

economy driven, the local economy will be impacted by many of the same challenges as the State and the 

nation, and revenue growth in the near term is expected to be less than in recent years. Also, the possibility of 

State borrowing of local tax revenues is present. 

During the fiscal year just ended, the City completed a comprehensive review of the financial condition and 

operations of the Big Blue Bus and established rate structures and multi-year rate increases for the delivery of 

water and wastewater. In addition, a review of the costs of delivering fee-based services was recently 

undertaken and fees were adjusted where necessary to cover both operating and capital needs. 

The City Council reconfirmed three areas requiring special focus for FY 2008-09 and updated community 

priorities to guide the work of the City. The three special focus areas are Homelessness, Land Use and 

Circulation Element Update and Youth. The community priorities are (1) implementation of a Cultural 

vi

Master Plan; (2) an ongoing commitment to sustainability; (3) continuing support of the Santa Monica Malibu 

Unified School District through a Master Facilities Use Agreement; (4) a continuing commitment to 

responsive service from all department, (5) a plan to address capital investment and maintenance; and, (6) 

continued support of the City’s Active Living program 

The residents of Santa Monica recently affirmed the City’s Utility Users Tax ordinance and eliminated the 

need for an $8.2 million set aside of the General Fund balance. The City Manager has strongly urged the 

City Council to use this set-aside to fund an economic uncertainty reserve to allow the city to respond to the 

impacts of the current economic turmoil. 

The Annenberg Community Beach House is scheduled to open in April 2009 after a decade of community 

input and planning. Possibly the first of its kind, the Beach House is a public beach club, offering everyone 

the quintessential Southern California experience – a great day at the beach. 

The facility features restoration of an historic pool and guest house that were part of the original estate 

William Randolph Hearst built for Marion Davies at 415 Pacific Coast Highway. New construction includes a 

playground, splash pad, event space and a pool house with a second floor view deck. Back on the Beach Café 

has also been refurbished as part of the project. The Beach House will be open for community use during the 

summer and available to rent for private events during the rest of the year. 

The Annenberg Community Beach House is made possible by a generous gift from the Annenberg 

Foundation, at the recommendation of Wallis Annenberg, and in partnership with the City of Santa Monica 

and California State Parks. Additional funding comes from the U.S. Department of Housing & Urban 

Development and the Federal Preserve America grant program. 

For more information on the facility, please visit http://beachhouse.smgov.net. 

Long Term Financial Planning. The City is dedicated to financial planning in all areas of the organization. 

Financial planning takes the form of continuous review and refinement of fiscal policies, development of fiveyear 

forecasts, and an understanding of the initiatives being undertaken by the entire organization. In June 

2008, the City Council adopted the following fiscal policies to help provide critical analysis and sound review 

for budget development decisions. 

General Policies 

● 

● 

The City will maintain sound financial practices in accordance with state law and direct its financial 

resources towards meeting the City’s long-term goals. 

The City will maintain and further develop programs to assure its long-term ability to pay the costs 

necessary to provide the level and quality of service required by its citizens. 

Operating Budget Policies 

● The City will adopt a balanced budget annually by June 30. 

● Current revenues will be sufficient to support current operating expenditures. 

● The City will estimate revenues using an objective and analytical process; in the case of assumption 

uncertainty, conservative projections will be used. 

● The City will forecast its General Fund and other major fund expenditures and revenues for a fiveyear 

period and will update the forecast annually. The forecast will be taken into consideration when 

preparing budget recommendations. 

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Revenue Policies 

● 

● 

● 

● 

● 

● 

The City will endeavor to maintain a diversified and stable revenue system to minimize the shortterm 

fluctuations in any one revenue source. 

The City will avoid targeting revenues for specific purposes, whenever possible, allowing maximum 

flexibility in funding decisions on an annual basis. 

One-time revenues will be used for one-time expenditures only. 

User fees will be adjusted annually by CPI and reviewed at least once every five years to ensure that 

fees recover the costs of providing services. 

The City will investigate potential new revenue sources, particularly those which will not add to the 

tax burden of residents and local businesses. 

The City will work proactively with the League of California Cities and local communities to monitor 

legislation that may impact the City financially. 

Expenditure Policies 

● 

● 

The City will maintain a level of expenditures that support the essential services and promote qualityof-life 

to its citizens. 

Each enterprise fund should reflect the true costs of operation, including direct and indirect charges 

for services. 

Debt Policy 

● 

● 

● 

Capital projects may be funded on a pay-as-you-go basis or using debt proceeds. Capital budgeting is 

limited by the availability of revenues and bond proceeds. The ability to meet debt service 

requirements will act as a ceiling on capital programming. Because capital expenditures produce 

long-term benefits, they can appropriately be funded by debt, which can lead to a more equitable tax 

burden across generations of citizens and taxpayers. However, pay-as-you-go financing provides 

flexibility when the economy or revenue growth slows. Therefore, the City’s goal is to maintain a 

balance between pay-as-you-go financing and debt financing for capital projects. 

When the City finances capital projects by issuing bonds, it will pay back the bonds within a period 

not to exceed the expected useful life of the project. 

When possible, the City will identify a source of repayment for General Fund supported bonds and 

monitor the source of repayment in the future to ensure it is sufficient to meet debt repayment 

requirements. 

Reserve/Internal Service Fund Policies 

● 

● 

● 

● 

The City will maintain a General Fund operating contingency designation at a level that is equal to at 

least 10% of the General Fund’s annual operating expenditure budget. Council approval will be 

required before expending funds from this operating contingency designation. 

In addition to the General Fund operating contingency designation, the City’s goal is to maintain an 

economic uncertainty designation with the level to be established as needed, but not less than 3% of 

the General Fund’s annual operating expenditure budget. 

The City will maintain a designation in the General Fund for earned, but unused, vacation benefits of 

General Fund employees. The assessment of this designation is made annually, on June 30. All 

other compensated absences are recorded in the respective governmental or proprietary funds. 

The City will maintain a capital/maintenance designation to be determined as part of the annual 

budget adoption. The capital/maintenance designation is to be made available by Council 

appropriation to meet unanticipated, unscheduled, and/or unprogrammed capital and maintenance 

viii

needs of City infrastructure and facilities. This designation is intended to be used for major capital 

repair where facility failure, unexpected hazards, or destruction of City property has occurred and 

where repair or replacement is not planned within the established capital, operations, or other 

replacement funds. 

Capital Improvement Policies 

● 

● 

● 

The City will coordinate preparation of the capital budget with preparation of the operating budget. 

Future operating costs associated with new capital improvements will be projected and included in 

the operating budget forecasts. 

The City will identify estimated costs and potential funding sources for each proposed capital project 

before it is submitted to Council for approval. 

The City administration will identify, for Council consideration, the least costly financing method for 

all new projects. 

Accounting, Auditing & Financial Reporting Policies 

● 

● 

The City’s accounting and financial reporting systems will be maintained in conformance with 

generally accepted accounting principles and standards of the Government Accounting Standards 

Board. 

A Comprehensive Annual Financial Report will be prepared and audited by a qualified independent 

public accounting firm. 

Investment Policies 

● 

● 

An investment policy will be submitted annually to the City Council for review and adoption. 

The City will invest public funds in a manner that will provide a market rate of return after ensuring 

optimum safety and meeting the daily cash flow demands of the City. 

Cash Management Policies and Practices. The City’s Investment Policy (Policy) sets broad legal 

guidelines which govern the investment of cash balances. The Policy, established in accordance with State 

law, has been certified by the Association of Public Treasurers, United States and Canada. The Policy is 

reviewed annually and approved by the City Council. The primary objectives of all City investments, in 

priority order, are safety and preservation of principal, liquidity to meet cash flow needs, and a market rate of 

return after the first two objectives have been met. Within this framework, the City has developed an 

Investment Plan (Plan) which guides strategy and structure of the portfolio. The Plan sets targets for the 

portfolio by investment type as well as benchmarks to measure return. 

Debt Administration. At June 30, 2008, the City's general obligation bond rating was the highest possible 

with an Aaa from Moody’s; AAA from Fitch; and AAA from Standard and Poor’s. All other City 

indebtedness is considered to be at least investment grade. In November 2008, Standard and Poor’s upgraded 

the credit rating on the City’s Wastewater Enterprise Refunding Revenue Bonds from AA to AAA. The 

City’s bonded debt applicable to its debt limit consisted of: $20.1 million of Main Library Improvements 

Project General Obligation Bonds; $24.4 million in Public Safety Facility Lease Revenue Bonds; $38.1 

million in Civic Center Parking Structure Bonds; $76.7 million in Downtown Redevelopment Project Lease 

Revenue Bonds, Earthquake Recovery Redevelopment Project Tax Allocation Bonds and Ocean Park 

Redevelopment Projects Tax Allocation Refunding Bonds; and $8.3 million in Parking Authority Lease 

Revenue Bonds. A calculation of the City's debt limit is detailed in Table 14 of the Statistical Section of this 

CAFR. 

ix

The City has other long-term payment obligations, which are not bonded debt, e.g., claims payable. These are 

detailed in Note 9 in the notes to the basic financial statements. 

Risk Management. The City established a Risk Management program in 1986 to minimize the exposure of 

the City’s assets and resources (both human and financial) to accidental loss. The program is staffed by a 

full-time Risk Manager and includes risk identification and evaluation, risk control, risk transfer, and risk 

financing. Services include administration of claims filed by the public and employees and safety training 

and loss prevention. 

Additional information about the City’s risk management practices can be found in Note 15 of the notes to the 

basic financial statements. 

Pension and Other Postemployment Benefits (OPEB). The City contributes to the California Public 

Employees’ Retirement System (CalPERS), an agent multiple-employer public employee defined benefit 

pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments and 

death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative 

agent for participating public entities within the state of California. Benefit provision and all other 

requirements are established by the State statute. The amount of the City’s required annual contribution is 

determined actuarially. It is the policy of the City to fully fund the annual required contribution to ensure that 

the plan will be able to fully meet its obligation to retired employees. 

In addition, in accordance with agreements with various bargaining units, the City provides other 

postemployment benefits to retirees. Funded on a pay-as-you-go-basis, a net OPEB obligation of $1.2 million 

is reflected in the Statement of Net Assets as of June 30, 2008. 

In addition to the CalPERS pension benefits and other postemployment benefits to retirees described above, 

the City contributes to postemployment medical premium reimbursement plans for employees. These plans 

were established by employees to mitigate the impacts of postemployment medical costs and are managed by 

trustees from the various employee groups. 

Additional information regarding the City's pension benefits and other postemployment benefits can be found 

in Note 16 of the notes to the basic financial statements. 

AWARDS 

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a 

Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the fiscal year 

ended June 30, 2007. The Certificate of Achievement is a prestigious national award, recognizing 

conformance with the highest standards for preparation of State and local government financial reports. 

In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and 

efficiently organized CAFR whose contents conform to program standards. This report must satisfy both 

generally accepted accounting principles and applicable legal requirements. 

A Certificate of Achievement is valid for a period of one year only. The City of Santa Monica has received a 

Certificate of Achievement for each of the last twenty-four years. We believe our current CAFR also 

conforms to the Certificate of Achievement program requirements. 

In keeping with past practice, a copy of this CAFR will be placed on file in the City libraries and sent to City 

management personnel, bond rating agencies, and other agencies which have expressed an interest in the 

x

OFFICIALS OF THE CITY OF SANTA MONICA 

As of December 15, 2008 

City Council 

Ken Genser, Mayor 

Pam O’Connor, Mayor Pro Tempore 

Richard Bloom 

Robert Holbrook 

Herb Katz 

Kevin McKeown 

Bobby Shriver 

Administration and Department Heads 

City Manager 

Assistant City Manager 

Deputy City Manager 

City Attorney 

City Clerk (Director of Records and Election Services) 

Director of Community Maintenance 

Director of Finance/City Treasurer 

Director of Human Resources 

Director of Information Systems 

Chief of Police 

Fire Chief 

Director of Planning and Community Development 

City Librarian 

Director of Community and Cultural Services 

Director of Transit Services 

Director of Housing and Economic Development 

Director of Public Works 

P. Lamont Ewell 

Gordon Anderson 

Elaine Polachek 

Marsha Jones Moutrie 

Maria M. Stewart 

Joan Akins (acting) 

Carol Swindell 

Donna Peter 

Jory Wolf 

Timothy Jackman 

James A. Hone 

Eileen Fogarty 

Gregory T. Mullen 

Barbara Stinchfield 

Stephanie Negriff 

Andy Agle 

Lee E. Swain 

xii

ORGANIZATION OF THE 

CITY OF SANTA MONICA 

As of December 15, 2008 

CITIZENS 

CITY COUNCIL 

Records & Election Services 

Maria M. Stewart 

City Manager 

P. Lamont Ewell 

City Attorney 

Marsha Jones Moutrie 

Deputy City Manager 

Elaine Polachek 

Assistant City Manager 

Gordon Anderson 

Community Maintenance 

Joan Akins (acting) 

Police 

Timothy Jackman 

Fire 

James A. Hone 

Community & Cultural 

Services 

Barbara Stinchfield 

Finance 

Carol Swindell 

Library 

Gregory T. Mullen 

Human Resources 

Donna Peter 

Big Blue Bus 

Stephanie Negriff 

Information Systems 

Jory Wolf 

Housing & Economic 

Development 

Andy Agle 

Planning & Community 

Development 

Eileen Fogarty 

Public Works 

Lee E. Swain 

xiii

Certificate of 

Achievement 

for Excellence 

in Financial 

Reporting 

Presented to 


California 

For its Coinprehensive Annual 

Financial Report 

for the Fiscal Year Ended 

June 30,2007 

A Certificate of Achievement for Excellence in Financial 

Reporting is presented by the Government Finance Officers 

Association of the United States and Canada to 

government units and public employee retirement 

systenls whose comprehensive annual financial 

reports (CAFRs) achieve the highest 

standards in government accounting 

and financial reporting. 

President 

Executive Director 

xiv



FINANCIAL SECTION

The Honorable Mayor and City Council 


INDEPENDENT AUDITORS’ REPORT 

We have audited the accompanying basic financial statements of the governmental activities, the 

business-type activities, each major fund, and the aggregate remaining fund information of the 

City of Santa Monica, California (“City”) as of and for the year ended June 30, 2008, which 

collectively comprise the City’s basic financial statements, as listed in the table of contents. 

These financial statements are the responsibility of the management of the City. Our 

responsibility is to express opinions on these financial statements based on our audit. 

We conducted our audit in accordance with auditing standards generally accepted in the United 

States of America and 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 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 opinions. 

In our opinion, 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 as of June 30, 2008, the 

respective changes in financial position and cash flows, where applicable, and the respective 

budgetary comparison information for the general fund and major special revenue funds of the 

City for the year then ended in conformity with accounting principles generally accepted in the 

United States of America. 

As described further in note 16 to the financial statements, the City changed its method of 

accounting for postemployment benefits other than pensions for fiscal year ended June 30, 2008. 

The information identified in the accompanying table of contents as management’s discussion 

and analysis and required supplementary information are not a required part of the basic 

financial statements, but are supplementary information required by the Governmental 

Accounting Standards Board. We have applied certain limited procedures, which consisted 

principally of inquiries of management regarding the methods of measurement and presentation 

of the required supplementary information. However, we did not audit the information and 

express no opinion on it. 

1

The Honorable Mayor and City Council 


Page Two 

Our audit was conducted for the purpose of forming an opinion on the financial statements that 

collectively comprise the City's basic financial statements. The introductory section, 

supplementary information, and statistical tables, as listed in the accompanying table of contents, 

are presented for purposes of additional analysis and are not a required part of the basic financial 

statements. The supplementary information as listed in the table of contents have been subjected 

to the auditing procedures applied in the audit of the basic financial statements and, in our 

opinion, are fairly stated in all material respects in relation to the basic financial statements taken 

as a whole. The introductory section and statistical tables have not been subjected to the auditing 

procedures applied in the audit of the basic financial statements and, accordingly, we express no 

opinion on them. 

In accordance with Government Auditing Standards, we have also issued a report dated 

December 15, 2008 on our consideration of the City's internal control over financial reporting 

and our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That 

report is an integral part of an audit performed in accordance with Government Auditing 

Standards and should be considered in assessing the results of our audit. 

Irvine, California 

December 15,2008


Management’s Discussion and Analysis 


As management of the City of Santa Monica, California (City), we offer readers of the City’s 

Comprehensive Annual Financial Report (CAFR) this narrative overview and analysis of the financial 

activities of the City for the fiscal year ended June 30, 2008. We encourage readers to consider the 

information presented here in conjunction with additional information that we have furnished in the City’s 

basic financial statements, which immediately follow this section, and the CAFR transmittal letter in the 

preceding Introductory Section. 

FINANCIAL HIGHLIGHTS 

• The total assets of the City for its governmental and business-type activities exceeded its liabilities 

as of June 30, 2008 by $1.5 billion. Of this amount, $963.4 million are capital assets, net of related 

debt, $233.9 million is for restricted uses as specified by entities outside of the City government, 

and $314.4 million is for unrestricted uses in accordance with finance-related legal requirements 

reflected in the City’s fund structure. 

• The City’s total net assets increased $6.0 million during the current fiscal year, after an $8.4 million 

restatement described in note 4. 

• At the end of the current fiscal year, the City’s governmental funds reported total ending fund 

balances of $426.1 million, a decrease of $47.6 million compared with the prior fiscal year, after a 

$4.0 million restatement described in note 4. Of this amount, $298.9 million was reserved for uses 

set by various legal requirements and $127.2 million was unreserved. Of the unreserved amount, 

$72.1 million was designated for various specific uses by the City Council, and $55.1 million was 

unreserved and undesignated. 

• At the end of the current fiscal year, the General Fund fund balance was $148.8 million, a decrease 

of $6.9 million from the previous fiscal year, which consisted of a decrease of $10.8 million of 

reserved fund balance and an increase of $3.9 million of unreserved fund balance. Of the $67.8 

million unreserved fund balance, $62.6 is designated and $5.2 million is undesignated. 

• The City’s investment in capital assets increased by $82.5 million or 9.4%. Please see further detail 

of capital assets in note 7. 

• The City’s long-term debt decreased by $10.2 million or 4.9% during the current fiscal year. Please 

see further detail of long-term debt in note 9. 

OVERVIEW OF THE BASIC FINANCIAL STATEMENTS 

Management’s Discussion and Analysis is intended to serve as an introduction to the City’s basic 

financial statements. The City’s basic financial statements include three components: government-wide 

financial statements, fund financial statements, and notes to the basic financial statements. The major 

features of these financial statements, including the portion of the city government they cover and the 

types of information they contain, are summarized on the following page. The remainder of this overview 

section of management’s discussion and analysis explains the structure and contents of each of the 

statements. 

3


Management’s Discussion and Analysis, Continued 


Major Features of City of Santa Monica's Government-wide and Fund Financial Statements 

Fund Statements 

Government-wide 

Statements Governmental Funds Proprietary Funds Fiduciary Funds 

Sc ope 

Entire City gov ernment 

(except fiduciary funds) 

The activies of the City that 

are not proprietary or fiduciary, 

such as police, fire, and library 

Activities the City operates 

similar to private businesses 

such as the water and sewer 

system , parking facilities and 

bus line 

Instances in whic h the City is the 

trustee or agent for someone 

else's resources 

Required financial 

statements 

- Statement of net assets - Balance sheet - Statement of net assets 

- Statement of activities - Statement of revenues, 

expenditures, and changes 

- Statement of revenues, 

expenses, and changes in 

in fund balances 

net assets 

- Statement of cash flows 

- Statement of fiduciary net 

assets 

- Statement of changes in 

fiduciary net assets 

Accounting basis 

and measurement 

focus 

Accrual accounting and 

economic resources 

focus 

Modified accrual accounting 

and current financial 

resources focus 

Accrual accounting and 

economic resources focus 

Because the City only has 

Agency funds, there is no 

measurement focus. 

Type of 

asset/liability 

information 

All assets and liabilities, 

both financial and 

capital, short term and 

long-term 

Only assets expected to be 

used up and liabilities that 

come due during t he year or 

soon t hereafter; no c apit al 

assets or long-term debt 

included 

All assets and liabilities, both 

financial and capital, and shortterm 

and long-t erm 

All assets and liabilities, both 

short-term and long-term; the 

City's fiduc iary funds do not 

currently contain capital as sets, 

although they can 

Type of 

inflow/outflow 

information 

All revenues and 

expenses during year, 

regardless of when cash 

is received or paid 

Revenues for which cash is 

received during or soon within 

90 days of year end; 

expenditures when goods or 

services have been received 

and payment is due 

All revenues and expenses 

during year, regardless of 

when cash is received or paid 

All revenues and expenses 

during year, regardless of when 

cash is received or paid 

Government-wide financial statements. The government-wide financial statements are designed to 

provide readers with a broad overview of the City’s finances, in a manner similar to statements of a 

private-sector business. 

The statement of net assets presents information on all the City’s assets and liabilities, with the difference 

between the two reported as net assets. Over time, increases or decreases in net assets may serve as a 

useful indicator of whether the financial position of the City is improving or deteriorating. 

The statement of activities presents information showing how the City’s net assets changed during the 

most recent fiscal year. All changes in net assets 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 result in cash flows in future fiscal periods. 

The government-wide financial statements distinguish functions of the City that are principally supported 

by taxes and intergovernmental revenues (governmental activities) from other functions that are intended 

to recover all or a significant portion of their costs through user fees and charges (business-type 

activities). The governmental activities of the City include public safety (police and fire), streets, library, 

cultural and recreation, parks, planning and zoning, housing and community development, and general 

administrative support. The business-type activities of the City include water, wastewater, stormwater, 

solid waste management, pier, civic auditorium, airport, special aviation services, cemetery, bus lines and 

parking structures and lots. 

4




Component units are included in the basic financial statements and consist of legally separate entities for 

which the City is financially accountable and that have either the same governing board as the City or a 

governing board appointed by the City of Santa Monica City Council. The blended component units 

include the Redevelopment Agency of the City of Santa Monica, the Parking Authority of the City of 

Santa Monica, and the Housing Authority of the City of Santa Monica. 

Three related organizations, the Pier Restoration Corporation, the Bayside District Corporation, and the 

Santa Monica Arts Foundation, are not included in the basic financial statements. While the City is 

financially accountable and each have a governing board appointed by the City of Santa Monica City 

Council, the economic resources held by these related organizations are not significant to the City. The 

fund financial statements provide detailed information about the City’s most significant funds—not the 

City as a whole. 

The government-wide financial statements can be found on pages 15 and 16 of this report. 

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over 

resources that have been segregated for specific activities or objectives. The City, like other state and 

local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal 

requirements. All the funds of the City can be divided into three categories: governmental funds, 

proprietary funds, and fiduciary funds. 

Governmental funds. Governmental funds are used to account for essentially the same functions reported 

as governmental activities in the government-wide financial statements. However, unlike the 

governmental-wide financial statements, governmental fund 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 near-term financing 

requirements. 

Because the focus of governmental funds is narrower than that of the government-wide financial 

statements, it is useful to compare the information presented for governmental funds with similar 

information presented for governmental activities in the government-wide financial statements. By doing 

so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both 

the governmental funds balance sheet and the governmental funds statements of revenues, expenditures, 

and changes in fund balance provide reconciliation to the government-wide financial statements in order 

to facilitate this comparison between governmental funds and governmental activities. 

The City maintains 24 individual governmental funds for financial reporting purposes. Information is 

presented separately in the governmental funds balance sheet and in the governmental funds statement of 

revenues, expenditures, and changes in fund balances for the General, Special Revenue Source, 

Downtown Redevelopment Project, and Earthquake Recovery Redevelopment Project funds, which are 

considered to be major funds. Data for the other 20 governmental funds are combined into a single, 

aggregated presentation. Individual fund data for each of these non-major governmental funds is 

provided in the non-major funds supplementary section of this report. 

The City adopts an annual appropriated budget for its General Fund, 13 of 14 special revenue funds (no 

budget is adopted for Asset Seizure Fund), and 5 capital project funds. A budgetary comparison 

statement has been provided for the General Fund, Special Revenue Source Fund, and Downtown 

Redevelopment Project Fund in the basic financial statements. 

The governmental funds financial statements can be found on pages 18 through 25 of this report. 

5




Proprietary funds. Proprietary funds provide the same type of information as the government-wide 

financial statements, but in more detail. The proprietary fund financial statements provide separate 

information for the wastewater and bus operations, which are considered to be major funds of the City. 

The City maintains two different types of proprietary funds. Enterprise funds are used to report the same 

functions presented as business-type activities in the government-wide financial statements. Internal 

service funds are an accounting device used to accumulate and allocate costs internally among the City’s 

various functions. The City uses internal service funds to account for its vehicle operations, risk 

management program and information technology and communications operations. The vehicle 

operations and insurance services for bus operations primarily benefit business-type activities and are 

included within business-type activities in the government-wide financial statements. All other risk 

management functions, information technology and communication services primarily benefit 

governmental funds and are included within governmental activities in the government-wide financial 

statements. Individual fund data for the internal service funds is provided in the supplementary 

information section of this report. 

The proprietary funds financial statements can be found at pages 28 through 32 of this report. 

Fiduciary funds. Fiduciary funds, which consist solely of trust and agency funds, are used to account for 

resources held for the benefit of parties outside the City. Fiduciary funds are not included in the 

government-wide financial statements because the resources are not available to support the City’s 

operations. The accounting used for fiduciary funds is much like that used for proprietary funds. 

The fiduciary funds financial statements can be found on page 34 of this report. 

Notes to the basic financial statements. The notes to the basic financial statements provide additional 

information that is essential to a full understanding of the data provided in the government-wide and fund 

financial statements. The notes to the basic financial statements begin on page 35 of this report. 

GOVERNMENT-WIDE FINANCIAL ANALYSIS 

As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. 

In the case of the City, assets exceeded liabilities by $1.5 billion at the close of the current fiscal year. 

As shown below, the largest portion of the City’s net assets, $963.4 million or 63.7%, reflects the City’s 

investment in capital assets less any related outstanding debt used to acquire those assets. The City uses 

these capital assets to provide services to citizens; consequently, these assets are not available for future 

spending. Although the City’s investment in its capital assets is reported net of related debt, it should be 

noted that resources needed to repay this debt must be provided from other sources, since the capital 

assets themselves cannot be used to liquidate liabilities. 

An additional portion of the City of Santa Monica’s net assets, $233.9 million or 15.5% represent 

resources that are subject to external restrictions on how they may be used. The remaining balance of 

unrestricted net assets, $314.4 million or 20.8%, may be used to meet the government’s ongoing 

obligations to citizens and creditors. 

At the end of the current fiscal year, the City of Santa Monica is able to report positive balances in all 

three categories of net assets, both for the government as a whole, as well as for its separate governmental 

and business-type activities. The same situation held true for the prior fiscal year. 

6




A summary of the government-wide statement of net assets follows: 


Net Assets 

(in millions) 

Governmental activities Business-type activities Total 

2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 

Current and other assets $ 623.7 677.3 137.0 141.1 760.7 818.4 

Capital assets 724.9 686.1 417.0 403.6 1,141.9 1,089.7 

Total assets 1,348.6 1,363.4 554.0 544.7 1,902.6 1,908.1 

Current and other liabilities 134.3 138.9 25.5 18.6 159.8 157.5 

Long-term liabilities 198.6 206.4 32.5 34.4 231.1 240.8 

Total liabilities 332.9 345.3 58.0 53.0 390.9 398.3 

Net assets: 

Invested in capital assets, 

net of related debt 574.0 506.3 389.4 374.6 963.4 880.9 

Restricted 232.3 273.1 1.6 2.5 233.9 275.6 

Unrestricted 209.4 243.0 105.0 114.6 314.4 357.6 

Total net assets $ 1,015.7 1,022.4 496.0 491.7 1,511.7 1,514.1 

7




A summary of the government-wide statement of changes in net assets follows: 


Changes in Net Assets 

(in millions) 


2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 

Revenues 

Program revenues: 

Charges for services $ 78.4 76.6 74.7 71.8 153.1 148.4 

Operating grants and contributions 34.8 27.8 32.2 31.7 67.0 59.5 

Capital grants and contributions 4.9 5.4 20.0 12.2 24.9 17.6 

General revenues: 

Sales tax 32.4 33.3 - - 32.4 33.3 

Property tax 101.3 89.8 - - 101.3 89.8 

Other taxes 108.4 101.3 - - 108.4 101.3 

Settlement income 1.0 69.1 - - 1.0 69.1 

Investment earnings 22.0 25.5 4.5 7.4 26.5 32.9 

Other general revenues 8.0 6.2 3.4 4.1 11.4 10.3 

Total revenues 391.2 435.0 134.8 127.2 526.0 562.2 

Expenses 

General government 38.8 45.8 - - 38.8 45.8 

Public safety 91.9 87.8 - - 91.9 87.8 

General services 111.2 41.4 - - 111.2 41.4 

Cultural and recreation 33.8 43.6 - - 33.8 43.6 

Library 11.4 10.7 - - 11.4 10.7 

Housing and community 

development 92.0 75.0 - - 92.0 75.0 

Interest on long term debt 7.6 7.9 - - 7.6 7.9 

Water - - 15.5 14.8 15.5 14.8 

Solid waste management - - 16.3 18.6 16.3 18.6 

Pier - - 4.9 9.5 4.9 9.5 

Wastewater - - 20.1 19.6 20.1 19.6 

Civic auditorium - - 3.7 3.5 3.7 3.5 

Airport - - 5.2 5.3 5.2 5.3 

Storm water management - - 0.4 0.5 0.4 0.5 

Cemetery - - 1.7 1.5 1.7 1.5 

Big Blue Bus - - 65.2 59.6 65.2 59.6 

Special aviation - - - 0.1 - 0.1 

Parking authority - - 0.3 0.7 0.3 0.7 

Total expenses 386.7 312.2 133.3 133.7 520.0 445.9 

Excess (deficiency) of revenues 

over expenses before transfers 4.5 122.8 1.5 (6.5) 6.0 116.3 

Transfers (2.8) (9.0) 2.8 9.0 - - 

Increase in net assets 1.7 113.8 4.3 2.5 6.0 116.3 

Beginning net assets as restated 1,014.0 908.6 491.7 489.2 1,505.7 1,397.8 

Ending net assets $ 1,015.7 1,022.4 496.0 491.7 1,511.7 1,514.1 

8




Governmental Activities. Governmental activities increased the City’s governmental activities net 

assets by $1.7 million for the current fiscal year, accounting for 28.2% of the $6.0 million growth in the 

net assets of the City. It should be noted that although the current fiscal year resulted in a net asset 

increase, ending net assets showed a $6.7 million decline in governmental activities due to prior year 

adjustments of $8.4 million. The decrease was primarily due to the settlement of a legal dispute. The City 

had been involved in a dispute with a law firm who represented the City in connection with a settlement 

reached with various oil companies over the contamination of the City’s aquifers. The dispute was 

resolved with the City paying the law firm $55 million. 

Business-type Activities. Business-type activities increased the City’s net assets by $4.3 million for the 

current fiscal year, thereby accounting for 71.8% of the growth in the net assets of the City. A key 

element of this increase was transfers in of $2.8 million for current year’s operations. 

FINANCIAL ANALYSIS OF THE CITY'S MAJOR FUNDS 

As noted earlier, the City uses fund accounting to demonstrate compliance with finance-related legal 

requirements. 

Governmental funds. The focus of the City’s governmental funds is to provide information on nearterm 

inflows, outflows, and balances of spendable resources. Such information is useful in assessing the 

City’s financial requirements. In particular unreserved fund balance may serve as a useful measure of a 

government’s net resources available for spending at the end of the fiscal year. 

At the end of the current fiscal year, the City’s governmental funds reported total fund balances of $426.1 

million, $51.6 million or 10.8% decrease in comparison with the prior year. Approximately $127.2 

million or 29.8% total fund balances constitutes unreserved (designated and undesignated) fund balance, 

which is available to meet the City’s current and future needs. The remainder of fund balance is reserved 

to indicate that it is not available for new spending because it has been committed to a variety of restricted 

purposes. Restrictions, commitments, or other limitations do not significantly affect the availability of 

fund resources for future use. 

General Fund 

The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the 

unreserved (designated and undesignated) fund balance of the General Fund was $67.7 million, while 

total fund balance was $148.8 million, which was $6.9 million or 4.4% less than the prior year’s General 

Fund total fund balance. As a measure of the General Fund’s liquidity, it may be useful to compare both 

unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance 

represents 28.2% of total General Fund expenditures, while total fund balance represents 62.0% of total 

General Fund expenditures. 

The City’s management also designates unreserved fund balance to a particular function, project or 

activity. Fund balance may also be designated for purposes beyond the current year. However, 

designated fund balance is available for appropriation at any time. Of the $67.7 million General Fund 

unreserved fund balance, 92.4% is designated. The most significant designations are $25.3 million for 

operating contingency, $8.2 million for UUT revenue loss, $1.6 million for environmental mitigation, 

$3.3 million for City Hall renovation, $2.4 million for fire vehicle replacement, $2.6 million for PERS 

contributions and $9.2 million for compensated absences. Unreserved and undesignated fund balance at 

year-end was $5.2 million. This amount constitutes funds available for spending at the government’s 

discretion. 

9




The General Fund fund balance decreased $6.9 million during the fiscal year ended June 30, 2008. A 

variety of variances from the prior year--both positive and negative--contribute to the increase as follows: 

1. Revenues reflect a net increase of $6.3 million over the prior fiscal year primarily from: 

a. A 10.7% increase in property taxes ($3.5 million) resulting from increased property 

values in the City. 

b. A 4.0% increase in other taxes ($4.0 million) due to increases in transient occupancy tax, 

utilities users’ tax and business license tax. 

c. A 27.3% decrease in investment income ($2.2 million) due to decreases in portfolio 

earnings. 

2. Expenditures were $2.8 million higher than the prior fiscal year primarily due to increased public 

safety, general services and other expenditures. These increases were partially offset by a 

reduction in cultural and recreation services expenditures due to a departmental reorganization. 

Transfers out increased by $14.6 million due to funding of a new Capital Projects Fund. 

Special Revenue Source Special Revenue Fund 

The Special Revenue Source Fund fund balance decreased by $49.0 million from the prior year. The 

decrease was primarily due to legal fees resulting from the MTBE settlement. 

Downtown Redevelopment Project Fund 

The Downtown Redevelopment Project Fund fund deficit decreased by $0.8 million from the prior year. 

This decrease was primarily due to decreased capital improvement project expenditures in the current 

year and increased incremental property tax revenues received in the current year. 

Earthquake Recovery Redevelopment Project Fund 

The Earthquake Recovery Redevelopment Project Fund fund balance decreased by $20.1 million from the 

prior year. This decrease was primarily due to increased capital improvement project expenditures 

in the current year and prior period adjustments of $4.0 million (Note 4). 

Nonmajor Governmental Funds 

All other governmental funds’ fund balances increased $27.6 million or 24.9% from the previous fiscal 

year. This increase was primarily due to an increase of $19.5 million in transfers in from the General 

Fund for the new Capital Projects Fund and an increase of $4.7 million in intergovernmental revenue. 

Proprietary funds. The City’s proprietary funds provide the same type of information found in the 

government-wide financial statements, but in more detail. 

10




The total net assets of the enterprise funds increased by $1.0 million. This was due primarily to increases 

in operating revenues of $2.9 million, an increase in depreciation expense of $1.5 million, a decrease in 

investment income of $2.5 million, a decrease in transfers in of $5.0 million, and a $7.8 million increase 

in capital contributions received. 

Total net assets of internal service funds at June 30, 2008 increased $11.3 million. This was primarily due 

to an increase in operating revenue of $5.6 million (primarily increases of $2.0 million in Vehicle 

Management Fund and $4.4 million in the Self-Insurance Comprehensive Fund), and a decrease in 

insurance and bonds expense of $7.1 million. 

Wastewater Enterprise Fund 

The total net assets of the Wastewater Fund decreased by $2.3 million primarily due to increases in 

personnel services expense of $0.2 million, increases in materials and supplies expense of $0.2 million, a 

decrease in investment income of $0.5 million and an increase in loss on disposal of capital assets of $0.4 

million. 

Big Blue Bus Enterprise Fund 

The total net assets of the Big Blue Bus increased $3.1 million. There were increases in personnel 

services expenses of $2.4 million, increased materials and supplies expense of $1.3 million, increased 

depreciation expense of $2.1 million and an increase in capital contributions – cash of $7.4 million. 

General Fund Budgetary Highlights 

Differences between the original budget versus the final amended budget and the final amended budget 

versus the actual are briefly summarized as follows: 

The final revenue budget is greater than the original budget by $0.4 million. Actual results for total 

revenues exceeded the final adopted budget by $4.0 million primarily due to property taxes and other 

income exceeding budget by $2.2 million and $1.4 million, respectively. 

The final expenditure budget is greater than the original budget by $55.7 million. The increase is 

comprised primarily of a $48.6 million re-appropriation of continuing capital improvement project 

budgets from FY 2006-07 to FY 2007-08. Final budgeted expenditures exceeded actual expenditures by 

$46.3 million mostly due to unspent continuing capital improvement project budgets. 

CAPITAL ASSET AND DEBT ADMINISTRATION 

Capital Assets. The City’s investment in capital assets as of June 30, 2008, amounted to $1.1 billion (net 

of accumulated depreciation) an increase of $52.3 million from the prior year balance. This investment in 

a broad range of capital assets, including land, infrastructure, structures and improvements, equipment, 

and construction in progress, is detailed as follows: 

11





Capital Assets (net of depreciation) 

(in millions) 

2007-08 2006-07* 2007-08 2006-07 2007-08 2006-07* 

Land $ 145.3 112.1 72.6 69.6 217.9 181.7 

Land held under easement 72.2 72.1 - - 72.2 72.1 

Buildings 210.6 204.8 39.5 39.4 250.1 244.2 

Improvements other than buildings 39.4 50.7 6.6 8.6 46.0 59.3 

Machinery and equipment 11.5 13.1 46.8 50.0 58.3 63.1 

Infrastructure 197.6 206.6 208.6 205.6 406.2 412.2 

Utility systems 5.0 3.5 - - 5.0 3.5 

Construction in progress 43.3 23.2 42.9 30.4 86.2 53.6 

Capital assets, net $ 724.9 686.1 417.0 403.6 1,141.9 1,089.7 

* as restated 


Some of the City’s major capital asset events in the current fiscal year were: 

• Additions to the General Fund construction in progress in FY 2007-08 include $1.0 million in 

revitalization of the property at 415 Pacific Coast Highway. 

• Additions to the Downtown Redevelopment Project Fund in FY 2007-08 include $33.1 million 

for the purchase of land on 5 th Street and construction in progress of $2.1 million for the retrofit 

of parking structures and $3.1 million in revitalization of the property at 415 Pacific Coast 

Highway. 

• Additions to the Parking Authority Fund in FY 2007-08 include $3.0 million for the purchase of 

land on 5 th Street. 

• Additions to the Disaster Relief Fund construction in progress in FY 2007-08 include $4.9 

million in expenditures for the Colorado Ocean relief sewer. 

• Additions to the Big Blue Bus Fund construction in progress in FY 2007-08 include $17.1 million 

in expenditures for Phases 2 and 3 of the Campus Expansion construction and for the Ocean Park 

Community Center (OPCC) Access Center relocation. 

• Additions to the Miscellaneous Grants Fund construction in progress in FY 2007-08 include $9.3 

million in revitalization of the property at 415 Pacific Coast Highway. 

• Additions to the Wastewater Fund in FY 2007-08 include $2.4 million paid to the City of Los 

Angeles for Santa Monica’s share of the Hyperion Plant capital expenditures and $2.6 to 

construction in progress for the Colorado Ocean relief sewer. 

12




Additional information on the City’s capital assets can be found in note 7 to the basic financial 

statements. 

Long-term Debt. At the end of the current fiscal year, the City’s total long-term debt outstanding was 

$198.2 million, a decrease from the prior year of $10.2 million or 4.9%. This amount was comprised of 

$99.1 million of revenue bonds which are secured by both governmental and business-type revenue 

sources, $75.6 million of tax allocation bonds which are secured by future tax revenues, $20.1 million of 

general obligation bonds which are backed by the assets of the City and $3.4 million of various loans 

payable. This is shown in the following table: 


Outstanding Debt 

(in millions) 


2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 

General obligation bonds 

(backed by the City) $ 20.1 21.8 - - 20.1 21.8 

Revenue bonds and notes 

(backed by specific tax and fee 147.5 153.9 27.2 28.7 174.7 182.6 

revenues) 

Certificates of participation - - - 0.4 - 0.4 

Other loans - - 3.4 3.6 3.4 3.6 

Total $ 167.6 175.7 30.6 32.7 198.2 208.4 

Additional information on the City’s long-term debt can be found in note 9 to the basic financial 

statements. 

OTHER POTENTIALLY SIGNIFICANT MATTERS 

The City had been involved with various legal disputes involving the July 13, 2003 accident at the 

Farmers Market. The disputes were settled for $21 million which was paid by the City’s insurers through 

insurance policies. 

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET 

The City’s adopted General Fund budget for FY 2007-08 supports the basic responsibilities of local 

government, the policy interests of City Council Members and diverse concerns of the residents. 

Management feels that there are adequate resources available to fund the proposed expenditures. 

In preparing the budget for the next fiscal year, many factors were taken into consideration. 

• The impact on Santa Monica’s economy from the declining housing market and resultant 

reduction in consumer confidence. 

13




• Revenues from sales tax derived from auto sales and leases have declined in recent quarters and 

are expected to decline in the future. 

• The temporary closure of Santa Monica Place for renovations during parts of FY 2008-09 and FY 

2009-10 will also reduce City tax revenues in the near term. 

• Anticipated reductions in state subsidies reducing revenue to the capital projects and Big Blue 

Bus funds. 

CONTACTING THE CITY'S FINANCE DEPARTMENT 

This management’s discussion and analysis is designed to provide citizens, taxpayers, customers, 

investors and creditors with a general overview of the City's finances and to demonstrate the City's 

accountability for the money it receives. If you have questions or need additional financial information, 

please contact the City of Santa Monica’s Finance Department at www.smgov.net/finance or at (310) 

458-8281. 

14



Basic Financial Statements


Statement of Net Assets 

June 30, 2008 

Governmental Business-type 

activities activities Total 

Assets 

Cash and investments (note 5) $ 482,942,759 103,117,394 586,060,153 

Receivables (net, where applicable, of allowances for uncollectibles): 

Accounts 7,574,792 21,647,951 29,222,743 

Interest 3,673,202 1,180,014 4,853,216 

Property taxes 5,272,603 — 5,272,603 

Notes (note 6) 62,702,984 — 62,702,984 

Other governments 14,513,046 — 14,513,046 

Internal balances 12,366,918 (12,366,918) — 

Inventory 938,999 1,328,148 2,267,147 

Prepaids 892,195 102,450 994,645 

Restricted cash and investments (note 5) — 20,941,196 20,941,196 

Restricted cash with fiscal agent (note 5) 30,055,545 535,909 30,591,454 

Due from other governments, restricted — 9,654 9,654 

Bond issuance costs, net 2,740,432 469,222 3,209,654 

Capital assets not being depreciated (note 7): 

Land 145,240,508 72,634,413 217,874,921 

Land held under easement 72,237,823 — 72,237,823 

Construction in progress 43,306,737 42,884,961 86,191,698 

Capital assets being depreciated (note 7): 

Buildings 253,854,273 67,940,845 321,795,118 

Improvements other than buildings 77,194,062 23,221,260 100,415,322 

Utility systems 5,198,568 — 5,198,568 

Machinery and equipment 33,041,280 126,431,755 159,473,035 

Infrastructure 324,776,828 264,599,015 589,375,843 

Less accumulated depreciation (229,905,467) (180,697,424) (410,602,891) 

Total capital assets, net 724,944,612 417,014,825 1,141,959,437 

Total assets 1,348,618,087 553,979,845 1,902,597,932 

Liabilities 

Accounts payable 11,932,568 9,593,513 21,526,081 

Accrued liabilities 8,082,310 3,025,928 11,108,238 

Accrued interest payable 3,823,218 564,476 4,387,694 

Short-term loans payable (note 17) 400,000 — 400,000 

Contracts payable (retained percentage) 1,864,610 91,041 1,955,651 

Unearned revenue (note 8) 103,579,844 4,332,035 107,911,879 

Due to other governments 3,859,917 — 3,859,917 

Liabilities payable from restricted assets 800,682 7,853,854 8,654,536 

Long-term liabilities: 

Compensated absences due within one year (note 9) 5,174,471 1,521,158 6,695,629 

Compensated absences due in more than one year (note 9) 4,420,073 992,676 5,412,749 

Claims payable due within one year (note 9 and 15) 5,837,864 455,605 6,293,469 

Claims payable due in more than one year (note 9 and 15) 19,278,549 1,485,033 20,763,582 

Loans and bonds payable due within one year (note 9) 8,375,000 1,759,830 10,134,830 

Loans and bonds payable due in more than one year (note 9) 155,497,382 26,314,702 181,812,084 

Total liabilities 332,926,488 57,989,851 390,916,339 

Net Assets 

Invested in capital assets, net of related debt 573,971,975 389,409,515 963,381,490 

Restricted for (note 12): 

Housing and community development 73,976,356 — 73,976,356 

Clean beaches and ocean parcel tax 2,536,009 — 2,536,009 

Miscellaneous grants 18,512,612 — 18,512,612 

Debt service 18,953,165 — 18,953,165 

Development projects 38,400,473 — 38,400,473 

Perpetual care - nonexpendable 7,726,238 — 7,726,238 

Rail system — 1,625,057 1,625,057 

MTBE Settlement 72,176,249 — 72,176,249 

Unrestricted 209,438,522 104,955,422 314,393,944 

Total net assets $ 1,015,691,599 495,989,994 1,511,681,593 

See accompanying notes to basic financial statements. 

15


Statement of Activities 


16 

Program revenues 

Net (expense) revenue and changes in net assets 

Operating Capital 

Charges for grants and grants and Governmental Business–type 

Functions/programs Expenses services contributions contributions activities activities Total 

Governmental activities: 

General government $ 38,849,626 17,188,876 56,343 58,902 (21,545,505) — (21,545,505) 

Public safety 91,862,403 17,298,741 1,327,128 2,112 (73,234,422) — (73,234,422) 

General services 111,168,586 19,650,237 12,309,867 41,667 (79,166,815) — (79,166,815) 

Cultural and recreation services 33,776,210 9,492,174 2,278,222 4,759,706 (17,246,108) — (17,246,108) 

Library 11,458,259 363,987 160,623 — (10,933,649) — (10,933,649) 

Housing and community development 91,966,369 14,430,326 18,671,472 — (58,864,571) — (58,864,571) 

Interest on long-term debt 7,628,437 — — — (7,628,437) — (7,628,437) 

Total governmental activities $ 386,709,890 78,424,341 34,803,655 4,862,387 (268,619,507) — (268,619,507) 

Business–type activities: 

Water $ 15,489,230 16,130,044 — — — 640,814 640,814 

Solid waste management 16,277,710 18,842,702 — — — 2,564,992 2,564,992 

Pier 4,867,415 3,107,349 — — — (1,760,066) (1,760,066) 

Wastewater 20,063,420 12,797,786 1,723 — — (7,263,911) (7,263,911) 

Civic auditorium 3,718,652 3,117,033 — — — (601,619) (601,619) 

Airport 5,199,701 4,279,268 — — — (920,433) (920,433) 

Storm water management 474,683 1,301,350 — — — 826,667 826,667 

Cemetery 1,715,605 1,080,532 — — — (635,073) (635,073) 

Big Blue Bus 65,185,007 13,898,980 32,186,846 20,030,403 — 931,222 931,222 

Special aviation 18,333 — — — — (18,333) (18,333) 

Parking authority 349,576 145,600 — — — (203,976) (203,976) 

Total business–type activities $ 133,359,332 74,700,644 32,188,569 20,030,403 — (6,439,716) (6,439,716) 

General revenues: 

Taxes: 

Business $ 26,211,226 

— 26,211,226 

Property 101,323,706 — 101,323,706 

Sales 32,356,941 — 32,356,941 

Transient occupancy 34,969,063 — 34,969,063 

Utility users 31,621,621 — 31,621,621 

Real property transfer 4,739,502 — 4,739,502 

Parking facility tax 7,826,257 — 7,826,257 

Other 2,605,760 — 2,605,760 

Settlement income 1,012,863 — 1,012,863 

Motor vehicle in lieu 390,244 — 390,244 

Other income 8,038,022 3,421,837 11,459,859 

Investment earnings 22,021,977 4,489,611 26,511,588 

Transfers (2,815,040) 2,815,040 — 

Total general revenues and transfers 270,302,142 10,726,488 281,028,630 

Change in net assets 1,682,635 4,286,772 5,969,407 

Net assets, beginning, as restated (note 4) 1,014,008,964 491,703,222 1,505,712,186 

Net assets, ending $ 1,015,691,599 495,989,994 1,511,681,593 

See accompanying notes to basic financial statements.


Major Governmental Fund Financial Statements 

General Fund – To account for all financial resources necessary to carry out basic governmental activities of 

the City that are not accounted for in another fund. The General Fund supports essential City services such as 

police and fire protection, street maintenance, libraries, parks and open space management. 

Special Revenue Source Fund (Special Revenue Fund Type) – To account for receipt and expenditure of 

monies collected for specific uses. 

Downtown Redevelopment Project Fund (Capital Projects Fund Type) – To account for the revenues and 

expenditures of the downtown redevelopment project area of the Redevelopment Agency of the City of Santa 

Monica. The redevelopment plan for this 9.9-acre project was approved in January 1976 and work was 

completed in 1980. The project area is located at the southern end of the City’s Third Street Promenade in the 

downtown core of Santa Monica. It consists of Santa Monica Place and two adjoining parking structures with 

2,020 parking spaces. 

Earthquake Recovery Redevelopment Project Fund (Capital Projects Fund Type) – To account for the 

revenues and expenditures of the earthquake redevelopment project area of the Redevelopment Agency of the 

City of Santa Monica. The redevelopment plan for this 2,307-acre project was approved in June 1994. The 

project area includes approximately 90 percent of all red-tagged and 80 percent of all yellow-tagged buildings 

damaged by the January 17, 1994 Northridge Earthquake. Recovery project work is ongoing. 

17


Balance Sheet 

Governmental Funds 

June 30, 2008 

18 

Capital p projectsp j 

funds 

Earthquake 

Special Revenue Downtown Recovery Nonmajor Total 

General Source Redevelopment Redevelopment governmental governmental 

Assets Fund Fund Project Fund Project Fund funds funds 

Cash and investments $ 124,459,829459 194,407,246407 2,370,121 45,849,132 77,072,704 704 444,159,032 

Receivables (net, where h applicable, of f allowances for uncollectibles): 

) 

Accounts 7,301,931 — 15,073 — 252,367 7,569,371 

Notes 2,916,229 10,124,763 1,923,000 716,669 47,022,323 62,702,984 

Property taxes 1,038,841 841 — 49,580 3,121,932 1,062,250 250 5,272,603 

Interest e t 1,456,881 539,263 29,874 646,866 609,127 3,282,011 

Other governments — — — — 14,513,046 14,513,046 

Due from other funds 3,402,840 , — — — — 3,402,840 

, 

Inventory 938,999999 — — — — 938,999999 

Prepaids 855,343 — — — 10,556 865,899899 

Cash with fiscal agent 2,725,992 — — — 27,329,553 30,055,545055 545 

Capitalized lease receivable — — 1,120,000 , — — 1,120,000 

, 

Advances to other funds (note 11) 35,105,966 — — 6,500,000 9,836,527 51,442,493 

Total assets $ 180,202,851 

851 

205,071,272071 272 5,507,648507 56,834,599 599 177,708,453708 625,324,823 

Liabilities i and Fund Balances 

Liabilities: 

Accounts payable $ 5,829,213 

213 

320,793 22,985 1,272,100 100 4,297,907 907 11,742,998 

Accrued liabilities 6,464,321 — — — 162,247247 6,626,568626 Short-term t loan payable (note 17) — — — — 400,000000 400,000000 

Contracts py payable (retained percentage) g) 

473,755 66,517 — 571,651 752,687 1,864,610 

Due to other funds — — — — 3,402,840 3,402,840 

Due to other governments 438,629 — 6,558 3,414,730 — 3,859,917 

917 

Df Deferred revenue 17,440,343 98,621,383 1,120,000120 000 — 13,702,326 326 130,884,052 

052 

Deposits 754,711 — — — 45,971 800,682 

Advances from other funds (note 11) — — 19,409,014 , 3,465,452 , 16,728,370 , 39,602,836 

, 

Total liabilities 31,400,972 99,008,693 20,558,557 557 8,723,933 39,492,348 348 199,184,503184 Fund balances (deficit): 

Reserved (note 13) 81,056,800 800 43,056,384 384 3,548,399 399 36,839,442 134,444,498444 498 298,945,523945 523 

Unreserved - designated g reported in: 

General Fund 62,572,543 — — — — 62,572,543 

Special revenue funds — 7,806,131 — — 1,764,093 9,570,224 

Unreserved - undesignated tdreported tdin: 

General Fund 5,172,536 — — — — 5,172,536 

Special revenue funds — 55,200,064 — — 2,596,767 57,796,831 

Capital projects funds — — (18,599,308) 11,271,224 224 (589,253) (7,917,337) 

Total fund balances (deficit) it) 148,801,879801 879 106,062,579062 (15,050,909) 48,110,666 138,216,105 105 426,140,320 

Total l liabilities i and d fund d balancesl $ 180,202,851 205,071,272 5,507,648 56,834,599 177,708,453 625,324,823 

Fund balances - total governmental funds $ 

426,140,320 

Amounts reported for governmental activities in the statement of net assets are different because (Note 3): 

(1) Capital assets used in governmental activities are not current financial resources and therefore are not reported in the balance sheet 724,319,157 

, 

(2) The interfund capitalized lease receivable is recorded on the balance sheet but eliminated on the statement of net assets (1,120,000) 120 000) 

(3) Bond issue costs to be amortized over the life of the debt 2,740,432 

432 

(4) Long-term liabilities i are not due and d payable in the h current period i d and d therefore h f are not reported d in the h balance l sheet h (178,532,144) 8 144) 

(5) Other long-term assets are not available to pay for current period expenditures and, , therefore, , are deferred in the 

funds and recognized as revenue in the statement of activities 27,304,208 

208 

(6) Internal service funds are used by management to charge the costs of vehicle management, information technology and 

risk i k management t to individual id l funds. d The assets t and d liabilities of f the information f technology h l and d riski k 

management g (excluding g bus) ) internal service funds are included in the governmental activities in the statement of net assets 

The assets and liabilities of internal service funds are included in the statement of net assets 14,839,626 

Net t assets t of f governmental t l activities iti $ 1,015,691,599 

599


Statement t t of f Revenues, Expenditures and d Changes in Fund Balances (Deficits) 

it ) 


For the fiscal l year ended d d June 30, 2008 

19 

Capital projects 

funds 

Earthquake 

Special lRevenue Downtown Recovery Nonmajor Total 

General Source Redevelopment Redevelopment governmental governmental 

Fund Fund Project Fund Project Fund funds funds 

Revenues: 

Property p y taxes $ 36,067,632 , , — — — — 36,067,632 , , 

Incremental property taxes — — 1,168,638168 638 48,810,455810 455 16,168,953168 66,148,046 

Sales taxes 32,356,941 , , — — — — 32,356,941 , , 

Other taxes 104,250,391 — — — 5,305,919 109,556,310 

Licenses and permits 20,109,435 — — — 93,650 20,203,085 

Intergovernmental 446,800 — — — 32,560,261 261 33,007,061 

061 

Charges for services 25,778,223 297,328 — — 10,151,092 36,226,643 

Fines and d forfeituresf 14,567,262 — — — — 14,567,262 

Investment income 5,799,315 11,359,869 63,584 2,043,715 2,183,588 21,450,071 

Rental lincome 5,696,255 — 1,220,200 200 — 90,517 7,006,972 

Settlement income — 1,012,863 — — — 1,012,863 

Other 5,117,139 139 2,136,900 1,450,143 143 133,039 7,854,276 16,691,497691 Total revenues 250,189,393 14,806,960 3,902,565 50,987,209 74,408,256408 394,294,383 

383 

Expenditures: 

Current: 

General government 40,722,122 , 333,335 335 — — 288,769 41,344,226 

, 

Public safety 88,308,262 — — — 1,244,431 431 89,552,693 

General lservicesi 

36,943,004 , , 63,498,519 , , — — 15,708,986 , , 116,150,509 , , 

Cultural and recreation services 32,316,853316 53,632 — — 13,665,140 140 46,035,625 

625 

Libraryy 10,219,930 , , — — — 25,180 , 10,245,110 , , 

Housing and community development 31,538,299 144,418418 756,101 61,704,273 24,309,636 118,452,727 

Debt service expenditures: p 

Principal — — — — 8,075,000 000 8,075,000 

000 

Interest — — 861,972 — 8,079,860 8,941,832 

Total expenditures 240,048,470048 470 64,029,904 904 1,618,073 61,704,273 71,397,002 438,797,722 

722 


over (under) expenditures 10,140,923140 (49,222,944) 944) 2,284,492284 492 (10,717,064) 064) 3,011,254 (44,503,339) 

339) 

Other financing sources (uses): 

Transfers in (note 11) 11,408,818 818 665,165 — — 34,421,428421 428 46,495,411495 411 

Transfers out (note 11) (28,417,466) 466) (429,968) 968) (1,465,353) (9,381,849) 849) (9,880,221) (49,574,857) 

Ttl Total other financing i sources (uses) (17,008,648) 235,197 (1,465,353) (9,381,849) 849) 24,541,207 207 (3,079,446) 

Net change h in fund dbalances (6,867,725) 725) (48,987,747) 747) 819,139139 (20,098,913) 098 913) 27,552,461 (47,582,785) 

785) 

Fund balances b l (deficits) i ) at beginning i g of f 

year, 

as restated (note 4) 155,669,604 604 155,050,326 (15,870,048) 048) 68,209,579 110,663,644 644 473,723,105723 Fund balances b l (deficits) i ) at end d of f year $ 148,801,879801 879 

106,062,579062 (15,050,909) 48,110,666 138,216,105 105 426,140,320 

See accompanying p y g notes to basic financial statements.


Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances 



Net change in fund balances – total governmental funds $ (47,582,785) 

Amounts reported for governmental activities in the statement of activities are different because: 

Capital assets 

1) The acquisition of capital assets requires the use of current financial resources 

but has no effect on net assets 62,393,967 

2) The cost of capital assets is allocated over their estimated useful lives and reported 

as depreciation expense in the statement of activities (21,888,104) 

3) The disposal of capital assets is recorded as an expense in the statement of activities 

but is not recorded in the fund statements (1,550,899) 

Measurement focus: 

4) Change in accrued interest payable 143,996 

5) Principal payments on long-term bonded debt use current financial resources 

but have no effect on net assets 8,075,000 

6) Bond premiums are recorded as other financing source in the fund statements but are 

amortized in the statement of activities 20,366 

7) Bond discounts are recorded as other financing uses in the fund statements but are 

amortized in the statement of activities (12,485) 

8) Costs of issuance are recorded as an expenditure in the fund statements but are 


9) Deferred loss on refunding recorded as an expenditure in the fund statements but is 


10) The increase in compensated absences liability does not require the use of current 

financial resources but is recorded as an expense in the statement of activities (948,604) 

11) Elimination of interest related to interfund loans that are recorded as an expenditure 

on the fund statements but eliminated on the government-wide statements 1,079,518 

12) Revenue recognized for fund statements had been previously recognized in the statement of activities (4,464,561) 

13) Revenue not recognized for fund statements recognized in the statement of activities 144,898 

14) The increase in OPEB liability does not require the use of current 

financial resources but is recorded as an expense in the statement of activities (1,242,000) 

Internal service funds: 

15) Certain internal service funds are used by management to charge the costs of vehicle 

management, information technology, and risk management to individual funds. 

The net revenue of certain internal service funds is reported with 

governmental activities 7,948,852 

Change in net assets (statement of activities, governmental activities) $ 1,682,635 


20


Statement of Revenues, Expenditures and Changes in 

Fund balance - Budget and Actual (Non-GAAP Basis) 

General Fund 


21 

Less 

Variance with 

2006-2007 Plus Actual, final budget - 

Original Final encumbered 2007-2008 budgetary positive 

budget budget Actual expenditures encumbrances basis (negative) 

Revenues: 

Property taxes $ 33,357,781 33,830,681 36,067,632 — — 36,067,632 2,236,951 

Sales tax 33,667,000 32,366,400 32,356,941 — — 32,356,941 (9,459) 

Other taxes 101,406,000 103,849,000 104,250,391 — — 104,250,391 401,391 

Licenses and permits 19,391,903 19,491,903 20,109,435 — — 20,109,435 617,532 

Intergovernmental 472,535 536,185 446,800 — — 446,800 (89,385) 

Charges for services 28,583,855 26,808,155 25,778,223 — — 25,778,223 (1,029,932) 

Fines and forfeitures 13,869,400 13,869,400 14,567,262 — — 14,567,262 697,862 

Investment income 6,025,000 6,125,000 5,799,315 — — 5,799,315 (325,685) 

Rental income 5,371,655 5,671,655 5,696,255 — — 5,696,255 24,600 

Other 3,677,268 3,677,268 5,117,139 — — 5,117,139 1,439,871 

Ttl Total revenues 245,822,397 246,225,647225 647 250,189,393 — — 250,189,393 3,963,746 

Expenditures: 

General government: 

City council 

Salaries 375,858 518,524 518,524 — — 518,524 — 

Supplies 197,309 136,916 136,916 — — 136,916 — 

Total city council 573,167 655,440 655,440 — — 655,440 — 

City manager 

Salaries 2,489,677 2,618,454 2,618,454 — — 2,618,454 — 

Supplies 1,829,539 1,718,278 1,334,392 98,222 482,108 1,718,278 — 

Capital outlay — 2,540 2,540 — — 2,540 — 

Total city manager 4,319,216 4,339,272 3,955,386 98,222 482,108 4,339,272 — 

Record and election services 

Salaries 1,233,421 1,254,503 1,254,502 — — 1,254,502 1 

Supplies 743,390 684,388 617,679 — 66,709 684,388 — 

Capital outlay 12,755 — — — — — — 

Total record and election services 1,989,566 1,938,891 1,872,181 — 66,709 1,938,890 1 

Finance 

Salaries 5,734,704 5,614,197 5,614,197 — — 5,614,197 — 

Supplies 2,737,912 3,045,237 2,917,964 34,540 161,813 3,045,237 — 

Capital outlay 13,980 12,938 52,789 39,851 — 12,938 — 

Total finance 8,486,596 8,672,372 8,584,950 74,391 161,813 8,672,372 — 


(Continued)




General Fund 


22 

Less 

Variance with 




City attorney 

Salaries $ 7,905,555 7,793,438 7,793,438 — — 7,793,438 — 

Supplies 304,044 397,056 397,056 — — 397,056 — 

Capital outlay 7,326 7,648 5,889 1,307 3,066 7,648 — 

Total city attorney 8,216,925 8,198,142 8,196,383 1,307 3,066 8,198,142 — 

Human resources 

Salaries 2,405,759 2,406,342 2,406,342 — — 2,406,342 — 

Supplies 610,129 885,948 863,725 15,087 37,310 885,948 — 

Capital outlay 6,400 3,093 3,093 — — 3,093 — 

Total human resources 3,022,288 3,295,383 3,273,160 15,087 37,310 3,295,383 — 

Information systems 

Salaries 4,643,178 4,389,029 4,352,529 — 36,500 4,389,029 — 

Supplies 807,982 767,960 721,188 8,566 55,338 767,960 — 


Total information systems 5,453,160 5,162,547 5,079,275 8,566 91,838 5,162,547 — 

Other 2,237,139 5,219,180 2,749,086 — — 2,749,086 2,470,094 

Capital improvement 4,381,048 15,026,369 6,356,261 — 2,153,968 8,510,229 6,516,140 

Total general government 38,679,105 52,507,596 40,722,122 197,573 2,996,812 43,521,361 8,986,235 

Public safety: 

Police 

Salaries 56,787,603 59,411,334 59,411,334 — — 59,411,334 — 

Supplies 4,507,534 5,174,398 5,139,538 22,719 57,579 5,174,398 — 


Total police 61,301,904 64,588,399 64,553,539 22,719 57,579 64,588,399 — 

Fire 

Salaries 21,025,773 21,888,600 21,888,600 — — 21,888,600 — 

Supplies 1,719,040 1,433,733 1,426,130 — 7,603 1,433,733 — 


Total fire 22,863,013 23,436,143 23,465,597 37,057 7,603 23,436,143 — 

Capital improvement 1,453,100 5,109,925 289,126 — 151,018 440,144 4,669,781 

Total public safety 85,618,017 93,134,467 88,308,262 59,776 216,200 88,464,686 4,669,781 

(Continued)




General Fund 


23 

Less 

Variance with 




General services: 

Environmental and public works management 

Salaries $ 6,794,215 6,596,107 6,596,107 — — 6,596,107 — 

Supplies 1,797,708 1,993,938 1,904,456 23,312 112,794 1,993,938 — 


Total environmental and public works 8,605,123 8,598,019 8,518,124 34,465 114,360 8,598,019 — 

Community maintenance: 

Salaries 15,298,346 14,452,105 14,452,105 — — 14,452,105 — 

Supplies 9,612,323 10,337,313 10,300,668 37,129 73,774 10,337,313 — 


Total community maintenance 24,964,469 24,879,051 24,842,406 37,129 73,774 24,879,051 — 

Capital limprovement 588,000 22,178,974 3,582,474 — 11,154,465154 465 14,736,939 7,442,035 

Total general services 34,157,592 55,656,044 36,943,004 71,594 11,342,599 48,214,009 7,442,035 

Cultural and recreation services: 

Community and cultural services 

Salaries 11,076,412 11,755,380 11,755,380 — — 11,755,380 — 

Supplies 19,089,209 19,096,854 17,954,058 444,062 1,586,858 19,096,854 — 


Total community and cultural services 30,185,621 30,861,676 29,719,379 453,955 1,596,252 30,861,676 — 

Capital improvement 192,000 10,692,712 2,597,474 — 1,598,080 4,195,554 6,497,158 

Total cultural and recreation services 30,377,621 41,554,388 32,316,853 453,955 3,194,332 35,057,230 6,497,158 

Library: 

Salaries 7,636,207 7,656,352 7,656,352 — — 7,656,352 — 

Supplies 2,556,750 2,512,984 2,519,033 308,188 302,139 2,512,984 — 

10,192,957 10,169,336 10,175,385 308,188 302,139 10,169,336 — 

Capital improvement — 44,545 44,545 — — 44,545 — 

Total library 10,192,957 10,213,881 10,219,930 308,188 302,139 10,213,881 — 

(Continued)




General Fund 


Less 

Variance with 




Housing and community development: 

Planning and community development 

Salaries $ 11,433,750 11,417,284 11,446,982 29,698 — 11,417,284 — 

Supplies 7,356,362 7,181,099 7,534,091 602,884 236,075 7,167,282 13,817 


Total planning and community development 18,816,562 18,602,808 19,003,018 650,102 236,075 18,588,991 13,817 

Housing and economic development 

Salaries 4,307,041 3,946,855 3,946,855 — — 3,946,855 — 

Supplies 8,275,699 8,234,407 8,041,901 159,401 351,907 8,234,407 — 


Total housing and economic development 12,594,440 12,192,939 12,000,433 159,401 351,907 12,192,939 — 

Capital improvement 250,000 2,485,079 534,848 — 1,311,957 1,846,805 638,274 

Total housing and community development 31,661,002 33,280,826 31,538,299 809,503 1,899,939 32,628,735 652,091 

24 

Total expenditures 230,686,294 286,347,202 240,048,470 1,900,589 19,952,021 258,099,902 28,247,300 

Excess (deficiency) of revenues over 

(under) expenditures 15,136,103 (40,121,555) 10,140,923 (1,900,589) (19,952,021) (7,910,509) 32,211,046 


Transfers in 12,990,515 11,408,818 11,408,818 — — 11,408,818 — 

Transfers out (28,384,743) (28,582,477) (28,417,466) — — (28,417,466) 165,011 

Total other financing sources (15,394,228) (17,173,659) (17,008,648) — — (17,008,648) 165,011 

Net change in fund balances (258,125) (57,295,214) (6,867,725) (1,900,589) (19,952,021) (24,919,157) 32,376,057 

Fund balance at the beginning of year 155,669,604 155,669,604 155,669,604 — — 155,669,604 — 

Fund balance at end of year $ 155,411,479 98,374,390 148,801,879 (1,900,589) (19,952,021) 130,750,447 32,376,057 




Fund Balance – Budget and Actual (Non-GAAP Basis) 

Special Revenue Source Fund 


Less 

2006-2007 Plus Actual, Variance – 


budget budget Actual expenditures* encumbrances basis (negative) 

Revenues: 

Charges for services $ 240,000 

240,000 297,328 — — 297,328 57,328 

Investment income 6,450,000 6,450,000 11,359,869 — — 11,359,869 4,909,869 

Settlement income 8,500,000 8,500,000 1,012,863 — — 1,012,863 (7,487,137) 

Other 1,168,333 1,168,333 2,136,900 — — 2,136,900 968,567 

Total revenues 16,358,333 16,358,333 14,806,960 — — 14,806,960 (1,551,373) 

Expenditures: 


Capital improvement — 816,295 333,335 — 21,923 355,258 461,037 

Total general government — 816,295 333,335 — 21,923 355,258 461,037 

25 


Supplies 4,413,335 61,084,279 61,065,333 — 18,946 61,084,279 — 

Capital improvement 900,000 18,966,146 2,433,186 — 12,095,862 14,529,048 4,437,098 

Ttl Total general services 5,313,335 335 80,050,425050 63,498,519 — 12,114,808114 75,613,327 327 4,437,098437 Cultural and recreation services: 

Capital improvement — 53,632 53,632 — — 53,632 — 

Total cultural and recreation services — 53,632 53,632 — — 53,632 — 

Library: 

Capital improvement — 514,000 — — — — 514,000 

Total library — 514,000 — — — — 514,000 


Capital improvement 575,000 2,341,993 144,418 — 132,582 277,000 2,064,993 

Total housing and community development 575,000 2,341,993 144,418 — 132,582 277,000 2,064,993 

Total expenditures 5,888,335 83,776,345 64,029,904 — 12,269,313 76,299,217 7,477,128 


over (under) expenditures 10,469,998 (67,418,012) (49,222,944) — (12,269,313) (61,492,257) 5,925,755 


Transfers in — 665,165 665,165 — — 665,165 — 

Transfers out (690,478) (690,478) (429,968) — — (429,968) 260,510 

Total other financing sources (690,478) (25,313) 235,197 — — 235,197 260,510 

Net change in fund balance 9,779,520 (67,443,325) (48,987,747) — (12,269,313) (61,257,060) 6,186,265 

Fund balance at beginning of year 155,050,326 155,050,326 155,050,326 — — 155,050,326 — 

Fund balance at end of year $ 164,829,846 87,607,001 106,062,579 — (12,269,313) 93,793,266 6,186,265 

* No encumbrances were outstanding at June 30, 2007 


THIS PAGE INTENTIONALLY LEFT BLANK 

26


Proprietary Fund Financial Statements 

Enterprise Funds are used to account for operations that are financed and operated in a manner similar to 

private business enterprises (a) where the intent is that the costs (expenses, including depreciation) of 

providing goods or services to the general public on a continuing basis be financed or recovered primarily 

through user charges, or (b) where the City has decided that periodic determination of revenues earned, 

expenses incurred and/or net income is appropriate for capital maintenance, public policy, management 

control, accountability or other purposes. 

Wastewater Enterprise Fund – To account for revenues and expenses associated with maintaining 

the sanitary sewer and storm drain systems within the City. 

Big Blue Bus Enterprise Fund – To account for revenues and expenses related to operation of the 

City's Municipal Bus Lines. 

Internal Service Funds – 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. 

27



Proprietary Funds 

June 30, 2008 

28 

Total 

Nonmajor Total internal 

Big Blue enterprise enterprise service 

Assets Wastewater Bus funds funds funds 

Current assets: 

Cash and investments $ 26,373,738 8,208,243 40,237,652 74,819,633 67,081,488 

Restricted cash and investments — — 10,023,097 10,023,097 — 

Receivables (net, where applicable, of 

allowances for uncollectibles): 

Accounts 2,117,960 13,638,906 5,813,877 21,570,743 82,629 

Interest 217,483 110,007 602,718 930,208 640,997 

Inventory — 839,628 421,049 1,260,677 67,471 

Prepaids 14,859 80,081 7,510 102,450 26,296 

Total current assets 28,724,040 22,876,865 865 57,105,903 108,706,808 808 67,898,881 

881 

Noncurrent assets: 

Restricted cash and investments 1,168,395 8,436,279 1,313,425 10,918,099 — 

Restricted cash with fiscal agent 535,909 — — 535,909 — 

Due from other governments, restricted 9,654 — — 9,654 — 

Capital assets (note 7): 

Land 3,189,132 132 61,085,563 563 8,359,718 72,634,413 413 

— 

Buildings 230,677 46,590,661 21,119,507 67,940,845 — 

Improvements other than buildings 421,868 2,863,002 19,936,390 23,221,260 — 

Machinery and equipment 1,124,254 88,949,838 5,724,079 95,798,171 32,171,322 

Infrastructure 209,544,765 — 55,054,250 264,599,015 — 

Construction in progress 3,054,573 37,915,864 1,914,524 42,884,961 — 

217,565,269 , 237,404,928 , 112,108,468 , 567,078,665 , 32,171,322 

, 

Less: accumulated depreciation (33,898,839) (75,785,690) (53,496,455) (163,180,984) (18,428,723) 

Net capital assets 183,666,430 161,619,238 58,612,013 403,897,681 13,742,599 

Advances to other funds (note 11) 6,603,197 — — 6,603,197 — 

Bond issuance costs, net 469,222 — — 469,222 — 

Total noncurrent assets 192,452,807 170,055,517 59,925,438 422,433,762 13,742,599 

Total assets $ 221,176,847 192,932,382 117,031,341 531,140,570 81,641,480 

(Continued)


Statement of Net Assets, Continued 


June 30, 2008 

29 

Total 



Liabilities Wastewater Bus funds funds funds 

Current liabilities: 

Accounts payable $ 2,204,920 4,289,787 2,817,335 9,312,042 471,042 

Accrued liabilities 207,458 3,168,235 1,042,099 4,417,792 258,933 

Contracts payable (retained percentage) — — 91,041 91,041 — 

Claims payable (note 15) — — — — 6,293,469 

Interest payable 535,906 — 28,570 564,476 — 

Current portion of long-term obligations (note 9) 1,500,000 — 259,830 1,759,830 — 

Liabilities payable from restricted assets – 

deposits — 6,924 7,846,930 7,853,854 854 

— 

Total current liabilities 4,448,284 7,464,946 12,085,805 23,999,035 7,023,444 

Noncurrent liabilities: 

Accrued liabilities 35,543 401,377 511,393 948,313 128,466 

Advances from other funds (note 11) 6,500,000 — 11,942,854 18,442,854 — 

Claims payable (note 15) — — — — 20,763,582 

Unearned revenue (note 8) — 4,332,035 — 4,332,035 — 

Long-term obligations, net of current portion (note 9) 23,211,294 — 3,103,408 26,314,702 — 

Total noncurrent liabilities 29,746,837 4,733,412 15,557,655 50,037,904 20,892,048 

Total liabilities 34,195,121 12,198,358 27,643,460 74,036,939 27,915,492 

Net assets 

Invested in capital assets, net of related debt 159,424,358 161,619,238 55,248,775 376,292,371 13,742,599 

Restricted for rail system (note 12) — 1,625,057 — 1,625,057 — 

Unrestricted 27,557,368 17,489,729 34,139,106 79,186,203 39,983,389 

Total net assets $ 186,981,726 180,734,024 89,387,881 457,103,631 53,725,988 

39,413,624 Net assets, business-type activitiesinternal 

service funds 

See accompanying notes to basic financial statements. (527,261) Net adjustment to reflect the allocation 

of the internal service funds net loss 

495,989,994 Net assets of business-type activities


Statement of Revenues, Expenses and 

Changes in Fund Net Assets 



30 

Total 



Wastewater Bus funds funds funds 

Operating revenues - charges for services $ 12,797,786 13,898,980 48,003,878 74,700,644 31,440,872 

Operating expenses: 

Personnel services 3,602,989 33,914,845 17,593,734 55,111,568 3,740,717 

Administrative indirect 781,762 2,557,075 3,297,830 6,636,667 492,718 

Contractual services 4,501,609 3,465,022 5,715,821 13,682,452 32,135 

Repairs and maintenance 699,189 1,470,980 3,528,895 5,699,064 1,827,392 

Materials and supplies 1,350,216 6,392,685 8,060,092 15,802,993 1,503,757 

Utilities 35,672 418,922 1,007,446 1,462,040 69,736 

Water purchases — — 3,950,104 3,950,104 — 

Casualty, property and liability costs 243,000 1,491,265 800,366 2,534,631 48,600 

Claims expense, net of claims reserve 

adjustments — — — — 7,583,641 

Insurance and bonds — — — — 3,309,769 

Miscellaneous fees and costs — — — — 1,247,687 

Administrative fees and costs — — — — 160,691 

Depreciation 6,011,310 14,232,445 2,718,758 22,962,513 2,427,615 

Other 1,496,622 466,353 3,243,688 5,206,663 — 

Total operating expenses 18,722,369 64,409,592 49,916,734 133,048,695 22,444,458 

Operating income (loss) (5,924,583) (50,510,612) (1,912,856) (58,348,051) 8,996,414 

Nonoperating revenues (expenses): 

Operating grants 1,723 — — 1,723 — 

Sales tax proceeds — 32,186,846 — 32,186,846 — 

Investment income 799,940 606,091 2,190,178 3,596,209 2,218,445 

Interest expense (1,074,360) — (338,334) (1,412,694) — 

Gain (loss) on disposal of capital assets (410,811) (967,704) (154,119) (1,532,634) 22,900 

Other 371,116 1,747,871 1,276,974 3,395,961 656 

Total nonoperating revenues (expenses) (312,392) 33,573,104 2,974,699 36,235,411 2,242,001 

Gain (loss) before capital 

contributions and transfers (6,236,975) (16,937,508) 1,061,843 (22,112,640) 11,238,415 

Capital contributions - cash — 19,590,403 440,000 20,030,403 — 

Transfers in (note 11) 3,888,064 786,520 5,204,774 9,879,358 677,752 

Transfers out (note 11) — (377,300) (6,442,364) (6,819,664) (658,000) 

Change in net assets (2,348,911) 3,062,115 264,253 977,457 11,258,167 

Net assets at beginning of year, 189,330,637 177,671,909 89,123,628 456,126,174 42,467,821 

Net assets at end of year $ 186,981,726 180,734,024 89,387,881 457,103,631 53,725,988 

$ 977,457 Change in net assets 

3,309,315 Net adjustment to reflect the consolidation 

of internal service fund activities related to 

See accompanying notes to basic financial statements. enterprise funds 

$ 4,286,772 Change in net assets of business-type activities


Statement of Cash Flows 



31 

Total 




Cash flows from operating activities: 

Cash received from customers $ 12,691,662 13,898,980 48,358,178 74,948,820 32,725,591 

Cash payments for materials and services (7,217,539) (15,016,747) (29,404,586) (51,638,872) (15,808,509) 

Cash paid for claims and related services — — — — (8,103,948) 

Cash payments to employees for services (3,700,011) (34,067,681) (17,881,058) (55,648,750) (3,721,367) 

Other revenue received 371,116 1,747,873 1,276,973 3,395,962 656 

Net cash provided by operating activities 2,145,228 (33,437,575) 2,349,507 (28,942,840) 5,092,423 

Cash flows from noncapital financing activities: 

Sales tax proceeds — 28,264,657 — 28,264,657 — 

Other grants 1,723 — — 1,723 — 

Repayment of advances made to other funds — — (48,000) (48,000) — 

Transfers in 3,888,064 786,520 5,204,774 9,879,358 677,752 

Transfers out — (377,300) (6,442,364) (6,819,664) (658,000) 

Net cash provided by noncapital 

financing activities 3,889,787 28,673,877 (1,285,590) 31,278,074 19,752 

Cash flows from capital and related financing activities 

Capital contributions received — 22,704,235 440,000 23,144,235 — 

Acquisition and construction of capital assets (5,476,270) (25,025,838) (5,215,570) (35,717,678) (4,609,826) 

Proceeds from sale of capital assets 114,836 (20,949) — 93,887 17,992 

Reduction in long-term obligations (1,194,486) — (673,808) (1,868,294) — 

Advances from other funds 6,500,000 — 112,266 6,612,266 — 

Interest paid on long-term obligations (1,096,185) — (352,102) (1,448,287) — 

Net cash used in capital 

and related financing activities (1,152,105) (2,342,552) (5,689,214) (9,183,871) (4,591,834) 

Cash flows from investing activities – interest received 

on investments 776,655 667,747 2,000,559 3,444,961 2,111,463 

Net cash provided by investing activities 776,655 667,747 2,000,559 3,444,961 2,111,463 

Net increase (decrease) in cash and cash equivalents 5,659,565 (6,438,503) (2,624,738) (3,403,676) 2,631,804 

Cash and cash equivalents at beginning of year 22,418,477 23,083,025 54,198,912 99,700,414 64,449,684 

Cash and cash equivalents at end of year $ 28,078,042 16,644,522 51,574,174 96,296,738 67,081,488 

Cash and investments $ 26,373,738 

8,208,243 40,237,652 74,819,633 67,081,488 

Restricted cash and investments 1,704,304 8,436,279 11,336,522 21,477,105 — 

Total cash and cash equivalents $ 28,078,042 16,644,522 51,574,174 96,296,738 67,081,488 

(Continued)


Statement of Cash Flows, Continued 



32 

Total 




Reconciliation of operating income (loss) to net 

cash provided by (used in) operating activities: 

Operating income (loss) $ (5,924,583) (50,510,612) (1,912,856) (58,348,051) 8,996,414 

Adjustments to reconcile operating income 

(loss) to net cash provided by (used in) 

operating activities: 

Add depreciation 6,011,310 14,232,445 2,718,758 22,962,513 2,427,615 

Change in assets and liabilities: 

(Increase) in accounts receivable (106,124) — 127,880 21,756 1,284,719 

(Increase) in prepaids (2,382) (4,244) (945) (7,571) (16,650) 

Decrease in inventory — (153,797) (45,083) (198,880) (19,843) 

Increase (decrease) in accounts payable 1,893,458 1,432,502 574,809 3,900,769 (7,133,453) 

Increase (decrease) in accrued liabilities (64,551) 302,290 (232,626) 5,113 57,080 

Increase in deposits — (2,841) 589,812 586,971 — 

Increase (decrease) in contracts payable (545) (26,065) (692,517) (719,127) — 

(Decrease) in claims payable — — — — (504,115) 

Decrease in accrued 

noncurrent liabilities (32,471) (455,124) (54,699) (542,294) — 

Other nonoperating revenue received 371,116 1,747,871 1,276,974 3,395,961 656 

Total adjustments 8,069,811 17,073,037 4,262,363 29,405,211 (3,903,991) 

Net cash provided by (used in) 

operating activities $ 2,145,228 (33,437,575) 2,349,507 (28,942,840) 5,092,423 

There were no significant noncash capital financing or investing activities for the year ended June 30, 2008. 



Fiduciary Fund Financial Statements 

Agency Funds are custodial in nature and used to receive and disburse funds for an entity/individual, which 

is not part of the City. 

33


Statement of Fiduciary Assets and Liabilities 

Fiduciary Funds 

June 30, 2008 

Assets 

Total 

Agency Funds 

Restricted cash and investments (note 5) $ 3,761,030 

Accounts receivable 26,485 


Liabilities 

Accounts payable and accrued liabilities $ 3,787,515 

Total liabilities i $ 

3,787,515 


34


Notes to Basic Financial Statements 


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. THE REPORTING ENTITY 

The City of Santa Monica, California (City) was incorporated November 30, 1886. The City 

operates under a Council-Manager form of government and provides traditional municipal services 

as authorized by its charter as well as various enterprise services. As required by accounting 

principles generally accepted in the United States of America (GAAP), the accompanying basic 

financial statements present the activities of the City and its component units. The component units 

discussed below are included in the City’s reporting entity because of the significance of their 

operations or financial relationships with the City. None are considered major component units for 

reporting purposes. 

As required by GAAP, these basic financial statements present the City and its component units, 

entities for which the City is considered to be financially accountable. The following entities are 

reported as blended component units because they have substantively the same governing board as 

the primary government. 

Blended component units, although legally separate entities are, in substance, part of the City’s 

operations and data from these units are combined with data of the City. Additional detailed 

information and/or separately issued financial statements for these component units can be obtained 

from the City’s Director of Finance. 

The Redevelopment Agency of the City of Santa Monica (Agency) was established by the City of 

Santa Monica City Council in 1957 pursuant to the Community Redevelopment Law of California 

to eliminate blight and to promote economic revitalization within designated project areas of the 

City. 

The Parking Authority of the City of Santa Monica (Authority) was established by the City in 1950 

and maintains and operates parking lots and parking structures. 

The Housing Authority of the City of Santa Monica (Housing Authority) was established by the City 

in 1975 to address unsanitary and unsafe inhabited dwelling accommodations and the shortage of 

affordable safe and sanitary dwelling accommodations for persons with low incomes. Since 

January 1, 1989, the Housing Authority has administered the Section 8 Housing Assistance 

Payments Program funded by the United States Department of Housing and Urban Development on 

behalf of the City. 

Following are brief descriptions of organizations created in 1984 as nonprofit public benefit 

corporations. These basic financial statements do not present these entities for which the City may 

meet criteria for discrete presentation because the economic resources received or held by an 

individual organization are not significant to the primary government. Each of the governing bodies 

acts on behalf of the City through members appointed by the City of Santa Monica City Council for 

the benefit of the citizens of Santa Monica. Separate financial statements for each can be obtained 

from the City’s Director of Finance. 

The Pier Restoration Corporation maintains and operates the public educational and recreational 

facility in the City commonly known as the Santa Monica Pier. 

35


Notes to Basic Financial Statements, Continued 


The Bayside District Corporation, formerly the Third Street Development Corporation, combats 

community deterioration by developing and improving the aging areas in and around the City’s 

central business district and coordinating public and private sector activities. 

The Santa Monica Arts Foundation promotes the arts by raising funds to finance art programs. On 

June 8, 1990, the City Council merged the City’s Arts Commission with the Santa Monica Arts 

Foundation. 

B. BASIC FINANCIAL STATEMENTS 

Basic financial statements consist of the following: 

• Government-wide financial statements, 

• Fund financial statements, and 

• Notes to the basic financial statements. 

The government-wide financial statements consist of the statement of net assets and the statement of 

activities and report information on all of the non-fiduciary activities of the primary government and 

its component units. As a general rule, the effect of interfund activity has been eliminated from the 

government-wide financial statements. All internal balances in the statement of net assets have 

been eliminated, with the exception of those representing balances between the governmental 

activities and the business-type activities, which are presented as internal balances and eliminated in 

the total government column. In the statement of activities, internal service fund transactions have 

been eliminated; however, those transactions between governmental and business-type activities 

have not been eliminated. Exceptions to this general rule are charges between the City’s Water 

Fund and various other functions of the government. Elimination of these charges would distort the 

direct costs and program revenues reported for the various functions concerned. Governmental 

activities, which normally are supported by taxes and intergovernmental revenues, are reported 

separately from business-type activities, which rely to a significant extent on fees and charges for 

support. 

Both of the government-wide financial statements distinguish functions of the City that are 

principally supported by taxes and intergovernmental revenues (governmental activities) from other 

functions that are intended to recover all or a significant portion of their costs through user fees and 

charges (business-type activities). The governmental activities of the City include public safety 

(police and fire), streets, public improvements, library, cultural, recreation and parks, planning and 

zoning, housing and community development and general administrative support services. The 

business-type activities of the City include water, wastewater, storm water, solid waste 

management, pier, civic auditorium, airport, special aviation services, cemetery, bus lines, and 

parking structures and lots. 

The statement of activities demonstrates the degree to which the direct and indirect expenses of a 

given function are offset by program revenues. Direct expenses are those that are clearly 

identifiable with a specific function or segment. Indirect expenses are allocated based on the annual 

cost allocation plan. Program revenues include: 1) charges to customers or applicants who 

purchase, use, or directly benefit from goods, services, or privileges provided by a given function or 

segment, and 2) grants and contributions, including special assessments that are restricted to 

meeting the operational or capital requirements of a particular function. Taxes and other items not 

properly included among program revenues are reported instead as general revenues. 

36




Separate fund financial statements are provided for governmental funds, proprietary funds and 

fiduciary funds, even though the latter are excluded from the government-wide financial statements. 

Major individual governmental funds and major individual enterprise funds are reported as separate 

columns in the fund financial statements. 

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT 

PRESENTATION 

The government-wide financial statements are reported using the economic resources measurement 

focus and the accrual basis of accounting, as are the proprietary funds financial statements. 

Revenues are recorded when earned and expenses are recorded when a liability is incurred, 

regardless of the timing of related cash flows. Fiduciary (Agency) funds report only assets and 

liabilities and therefore have no measurement focus. 

Governmental funds financial statements are reported using the current financial resources 

measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon 

as they are both measurable and available. Revenues are considered to be available when they are 

collectible within the current period or soon enough thereafter to pay liabilities of the current period. 

The City in general considers revenues available if they are collected within 60 days. Additionally, 

grants and similar items are recognized as revenue as soon as all eligibility requirements have been 

met. Expenditures are recorded when the related fund liability is incurred, except for unmatured 

interest on general long-term debt which is recognized when due, and certain compensated absences 

and claims and judgments which are recognized when payment is due. 

Sales taxes, franchise taxes, licenses, interest, special assessments, charges for services and other 

miscellaneous revenue are all considered to be susceptible to accrual and have been recognized as 

revenue in the current fiscal period. Entitlements and shared revenues are recorded at the time of 

receipt or earlier if susceptible to accrual criteria. Expenditure-driven grants are recognized as 

revenue when the qualifying expenditures have been incurred, all other eligibility requirements have 

been met and are recorded at the time of receipt or earlier, and the susceptible to accrual criteria are 

met. All other revenue items are considered to be measured and available only when cash is 

received by the government. 

The accounts of the City are organized on the basis of funds. A fund is an independent fiscal and 

accounting entity with a self-balancing set of accounts. 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 

consistent with legal and managerial requirements. 

The City reports the following major governmental funds: 

The General Fund is the City’s primary operating fund. It accounts for all the financial resources 

and the legally authorized activities of the City, except those required to be accounted for in other 

specialized funds. 

The Special Revenue Source Fund (Special Revenue Fund type) accounts for receipt and 

expenditure of monies collected for specific uses. 

37




The Downtown Redevelopment Project Fund (Capital Projects Fund type) accounts for 

activities of the downtown redevelopment project area of the Redevelopment Agency of the City of 

Santa Monica. 

The Earthquake Redevelopment Project Fund (Capital Projects Fund type) accounts for 

activities of the earthquake redevelopment project area of the Redevelopment Agency of the City of 

Santa Monica. 

The City reports the following major proprietary funds: 

The Wastewater Enterprise Fund accounts for the activities of maintaining sanitary sewer and 

storm drain systems within the City. 

The Big Blue Bus Enterprise Fund accounts for the activities of the City’s municipal bus lines. 

Additionally, the City reports the following fund types: 

Permanent Funds account for resources that are legally restricted to the extent that only earnings, 

not principal, may be used for purposes that support specific programs. 

Internal Service Funds account for vehicle operations, risk management, and information 

technology and communications operations that provide services to other departments of the City on 

a cost reimbursement basis. 

Fiduciary Funds, which consist solely of Agency funds, account for assets held by the City as a 

trustee or as an agent for individuals or other government units. The only fiduciary fund type used 

by the City is the Agency Fund type. Agency funds are custodial in nature and do not involve 

measurement of results of operations. Such funds are unlike all other types of funds, reporting only 

assets and liabilities. These funds account for assets held by the City in an agency capacity for 

individuals or other governmental units, including development fees collected on behalf of the 

school district, various employee payroll deductions that will be remitted to various agencies and 

other assets held by the City in an agency capacity. 

Enterprise funds have elected not to apply Financial Accounting Standards Board (FASB) 

Statements and interpretations issued after November 30, 1989. The enterprise funds apply all 

applicable GASB pronouncements as well as statements and interpretations of FASB, the 

Accounting Principles Board Opinions and Accounting Research Bulletins of the Committee on 

Accounting Procedure issued on or before November 30, 1989, unless those pronouncements 

conflict with or contradict GASB pronouncements. 

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating 

revenues and expenses generally result from providing services and producing and delivering goods 

in connection with a proprietary fund's principal ongoing operations. The principal operating 

revenues of the enterprise funds and of the City’s internal service funds are charges to customers for 

sales and services. Operating expenses for enterprise funds and internal service funds include the 

cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues 

and expenses not meeting this definition are reported as non-operating revenues and expenses. 

38




When both restricted and unrestricted resources are available for use, it is the City's policy to use 

restricted resources first, and then unrestricted resources as they are needed. 

D. ASSETS, LIABILITIES, NET ASSETS OR EQUITY 

Cash and Investments 

In order to maximize the flexibility of its investment program and to aid in cash budgeting, the City 

pools the cash of all funds, except for monies deposited with fiscal agents in accordance with related 

bond indentures. The cash and investments balance in each fund represents that fund's equity share 

of the City's cash and investment pool. As the City places no restrictions on the deposit or 

withdrawal of its equity from the pool by a particular fund, the pool operates like a demand deposit 

account for the participating funds. 

Interest income earned on pooled cash and investments is allocated quarterly to the various funds 

based on quarter-end balances and is adjusted at year-end. Interest income on restricted cash and 

investments with fiscal agents is credited directly to the related fund. 

The City's investments are carried at fair value, except for guaranteed investment contracts, which 

are carried at cost because they are not transferable and they have terms that are not affected by 

changes in market interest rates. The fair value of equity and debt securities is determined based on 

sales prices or bid-and-asked quotations from SEC-registered securities exchanges or NASDAQ 

dealers. The fair value of the City's share of LAIF is reported to the City on a quarterly basis. LAIF 

operates in accordance with laws and regulations of the State of California. The reported value of 

the pool is the same as the fair value of pool shares. Changes in fair value are allocated to each 

participating fund on an annual basis. 

For purposes of the statement of cash flows, the City has defined cash and cash equivalents to be 

change and petty cash funds, equity in the City's cash and investment pool, and restricted, nonpooled 

investments with initial maturities of three months or less. 

Receivables and Payables 

Activity between funds that are representative of lending/borrowing arrangements outstanding at the 

end of the fiscal year are referred to as interfund receivables/interfund payables, i.e., the current 

portion of interfund loans, or advances to/from other funds, the non-current portion of interfund 

loans. All other outstanding balances between funds are reported as interfund receivables/interfund 

payables. Any residual balances outstanding between the governmental activities and the 

business-type activities are reported in the government-wide financial statements as internal 

balances. 

Advances between funds, as reported in the fund financial statements, are offset by a reservation of 

fund balance in the applicable governmental funds to indicate that they are not available for 

appropriation and are not expendable available financial resources. 

All trade receivables are shown net of an allowance for uncollectible accounts and estimated 

refunds due. As of June 30, 2008 the allowance for uncollectible accounts for governmental and 

business-type activities is $139,883 and $203,486 respectively. 

39




Unbilled service receivables are accrued for at year-end. 

Property Taxes 

Assessed property values are determined on an annual basis for the period July 1 to June 30 by the 

Los Angeles County Assessor as of January 1. Article XIIIA of the State Constitution (Proposition 

13, approved by voters in June 1978) limits the real property tax rate to 1% of the full market cash 

value plus rates imposed to fund indebtedness approved by the voters. Locally assessed property is 

appraised at the 1975-76 full cash value, the base year value, and is adjusted each year after 1975 by 

the change in the consumer price index, not to exceed an increase of 2%. Property is reappraised to 

current full value upon either a change in ownership or new construction. If property values decline 

below the base year value, the value is adjusted to reflect the lower value. Taxes are levied annually 

on July 1 and become a lien on real property at January 1. Taxes are due November 1 and February 

1 and are delinquent if not paid by December 10 and April 10, respectively, at which time 

applicable penalties and interest are assessed. 

Inventories and Prepaid Items 

All materials and supplies inventories are valued at cost using the average cost method. Inventory 

in the General Fund is recorded as expenditures when consumed rather than when purchased. 

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded 

as prepaid items in both government-wide and fund financial statements. 

Restricted Assets 

Certain proceeds of the City's bonds, as well as certain resources set aside for their repayment, are 

classified as restricted assets on the balance sheet because they are maintained in separate bank 

accounts and their use is limited by applicable bond covenants. 

In the absence of specific statutory provisions governing the issuance of bonds, certificates or 

leases, these bond monies may be invested in accordance with the ordinance, resolutions or 

indentures specifying the types of investments its trustees or fiscal agents may make. These 

ordinances, resolutions and indentures are generally more restrictive than the City's general 

investment policy. In no instance have additional types of investments been authorized that are not 

permitted by the City's general investment policy. 

Capital Assets 

Capital assets, which include land, buildings and improvements, equipment, and infrastructure 

assets (e.g., roads, sidewalks, curbs and gutters and similar items), are reported in the applicable 

governmental or business-type activities columns in the government-wide financial statements. 

Capital assets are defined by the City as assets with an initial individual cost of $15,000 or more and 

an estimated useful life in excess of two years. The City defines buildings, improvements other 

than buildings, and infrastructure as assets with an individual cost of $100,000 or more and an 

estimated useful life of two years or longer. Such assets are recorded at historical cost. Donated 

capital assets are recorded at estimated fair market value at the date of donation. The cost of normal 

maintenance and repairs that do not add to the value of the asset or materially extend assets lives are 

not capitalized. 

40




Major outlays for capital assets and improvements are capitalized as projects are constructed. 

Interest incurred during the construction phase of capital assets of business-type activities is 

included as part of the capitalized value of the assets constructed. No interest was capitalized 

during the year ended June 30, 2008. 

Capital assets of the City are depreciated using a straight-line method over the following estimated 

useful lives: 

Assets 

Years 

Buildings 5 to 85 

Improvements other than buildings 2 to 50 

Infrastructure 15 to 75 

Utility systems 20 to 100 

Machinery and equipment 2 to 30 

The City has elected not to capitalize its collection of artwork. GASB 34 waives the requirement 

for artwork capitalization if the collection meets all the following conditions: 

• The collection is held for reasons other than financial gain. 

• The collection is protected, kept unencumbered, cared for, and preserved. 

• The collection is subject to an organizational policy requiring that the proceeds from sales of 

collection items be used to acquire other items for collections. 

The City’s artwork collection meets the above criteria and therefore qualifies for the exemption 

from the capitalization requirement. The collection includes both permanent and portable artworks, 

artworks integrated into overall projects, murals, and stand-alone permanently installed paintings 

and sculptures, art integrated into the design of public works projects (not stand-alone), and a 

contemporary collection of almost 100 portable artworks which are on display in public areas of 

City facilities. 

Lease Obligations 

The City leases various assets under both operating and capital lease agreements. In the 

government-wide and proprietary funds financial statements, capital leases and the related lease 

obligations are reported as liabilities in the applicable governmental activities or proprietary funds 

statement of net assets. 

Compensated Absences 

It is the City's policy to permit employees to accumulate earned but unused vacation and sick leave 

benefits up to a maximum determined by bargaining unit agreements. Employees are paid 100% of 

their accumulated vacation when they terminate employment for any reason. All vacation is 

accrued when incurred in the government-wide and proprietary fund financial statements. A 

liability is reported in the governmental funds only if they have matured, for example, as a result of 

employee resignations or retirements. Additionally, employees of the United Transportation Union 

are able to exchange unused sick days balances for equal dollars of medical insurance premiums. In 

order to qualify the employee must have 10 years of service at retirement and at least 50 days of 

unused sick leave. 

41




Long-Term Liabilities 

In the government-wide financial statements and proprietary funds financial statements, long-term 

debt and other long-term obligations are reported as liabilities in the applicable governmental 

activities, business-type activities, or proprietary fund type statement of net assets. Initial-issue 

bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of 

the bonds using the straight-line method. The difference between the reacquisition price of 

refunding bonds and the net carrying amount of refunded debt (deferred amount on refunding) is 

amortized over the shorter of the lives of the refunding debt or remaining life of the refunded debt. 

Bonds payable are reported net of the unamortized portion of applicable premium, discount or 

deferred amount on refunding. Bond issuance costs, including underwriters' discount, are reported 

as deferred bond issuance costs. Amortization of bond premiums or discounts, issuance costs and 

deferred amounts on refunding are included in interest expense when due. 

In the governmental funds financial statements, bond premiums, discounts and issuance costs are 

recognized during the period issued. The face amount of debt issued is reported as other financing 

sources. Premiums received are reported as other financing sources, while discounts are reported as 

other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds 

received, are reported as debt service expenditures. Interest and principal payments are reported as 

debt service expenditures. 

Net Assets and Fund Equity 

In the government-wide financial statements and proprietary funds financial statements, net assets 

are reported in three categories: net assets invested in capital assets, net of related debt, restricted 

net assets and unrestricted net assets. Net assets invested in capital assets, net of related debt 

represents capital assets less accumulated depreciation less outstanding principal of related debt. 

Net assets invested in capital assets, net of related debt does not include the unspent proceeds of 

capital debt. Restricted net assets represent net assets restricted by parties outside of the City (such 

as creditors, grantors, contributors, laws and regulations of other governments) and include unspent 

proceeds of bonds issued to acquire or construct capital assets. The nonexpendable portion of 

permanent funds is reported as a component of restricted net assets. The City's other restricted net 

assets are temporarily restricted (ultimately expendable) assets. All other net assets are considered 

unrestricted. 

In the fund financial statements, governmental funds report reservations of fund balance for 

amounts that are not available for appropriation or are legally restricted by outside parties for use 

for a specific purpose. Designations of fund balance represent tentative management plans that are 

subject to change. 

Self-Insurance Program 

The City has self-insurance programs to provide for general liability, bus and automobile liability, 

and workers' compensation claims. These activities are accounted for in self-insurance internal 

service funds. 

Premiums are charged to individual funds and are designed to cover future expenses. The City's 

Risk Manager oversees the self-insurance programs. It is his or her duty to ensure that programs are 

42




operated in accordance with City policies. The City’s Risk Manager also provides budget guidance 

and case reserves and claims analysis. It is the City's intent to maintain cash reserves in the 

self-insurance funds equal to or greater than estimated losses. 

Use of Estimates 

The preparation of basic financial statements in conformance with GAAP requires management to 

make estimates and assumptions that affect the amounts reported in the basic financial statements 

and accompanying notes. Actual results may differ from those estimates. 

(2) BUDGETARY AND LEGAL COMPLIANCE 

The City Council is required to adopt an annual budget resolution by June 30 each fiscal year for the 

General Fund and each special revenue fund (except the Rent Control and Asset Seizure Funds). The 

City Council also approves any revisions that alter the total expenditures of any major object or program 

category (salaries, supplies including capital outlay or capital improvements) by department within the 

same fund (the legal level of budgetary control). 

The City Council also approves annual operating budgets for the City’s proprietary, capital projects and 

internal service funds to facilitate management evaluation and control. 

The budget is prepared on a non-GAAP budgetary basis, which considers encumbrances outstanding at 

year end as an expenditure of that year. Encumbrances outstanding at the beginning of a fiscal year, 

which were recognized as budgetary expenditures in the prior year, are recognized as GAAP-basis 

expenditures but not as budgetary expenditures unless re-appropriated. It is the City’s policy to only reappropriate 

capital encumbrances and unencumbered balances of specific capital appropriations. In 

addition, capital leases are budgeted on a cash basis, whereas GAAP requires the full amount of the 

leased asset purchased to be shown as an expenditure of the current year. Appropriations in 

governmental funds outstanding at year end lapse, except for encumbered amounts, for which fund 

balances are reserved at year-end for governmental funds. 

A Comprehensive Annual Financial Report Budget Supplement is prepared to reconcile 

expenditures/expenses at the legal level of control to the summarized amounts presented in the 

Comprehensive Annual Financial Report and can be obtained from the Finance Department. 

43




(3) RECONCILIATION OF FUND FINANCIAL STATEMENTS TO GOVERNMENT-WIDE 

FINANCIAL STATEMENTS 

Amounts reported for governmental activities in the government-wide statement of net assets are 

different from those reported for governmental funds in the fund balance sheet. The following provides 

a reconciliation of those differences: 

Total 

Assets 

Total 

governmental 

funds 

Long-term 

assets and 

liabilities (1) 

governmental 

activities 

internal service 

funds (2) 

Other 

adjustments 

and 

eliminations (3) 

Statement of net 

assets totals 


— 38,783,727 — 482,942,759 

Receivables (net, where applicable, 

of allowances for uncollectibles): 

Accounts 7,569,371 — 5,421 — 7,574,792 

Notes 62,702,984 — — — 62,702,984 

Property taxes 5,272,603 — — — 5,272,603 

Interest 3,282,011 — 391,191 — 3,673,202 

Other governments 14,513,046 — — — 14,513,046 

Internal balances — — 527,261 11,839,657 12,366,918 

Due from other funds 3,402,840 — — (3,402,840) — 

Inventory 938,999 — — — 938,999 

Prepaids 865,899 — 26,296 — 892,195 

Cash with fiscal agent 30,055,545 — — — 30,055,545 

Capitalized lease receivable 1,120,000 — — (1,120,000) — 

Advances to other funds 51,442,493 — — (51,442,493) — 

Bond issuance costs, net — 2,740,432 — — 2,740,432 

Capital assets — 724,319,157 625,455 — 724,944,612 

Total assets $ 625,324,823 727,059,589 40,359,351 (44,125,676) 1,348,618,087 

Liabilities and Fund Balances/Net Assets 

Liabilities: 


— 189,570 — 11,932,568 

Accrued liabilities 6,626,568 1,242,000 213,742 — 8,082,310 

Accrued interest payable — 3,823,218 — — 3,823,218 

Short-term loan payable 400,000 — — — 400,000 

Contracts payable (retained percentage) 1,864,610 — — — 1,864,610 

Due to other funds 3,402,840 — — (3,402,840) — 

Due to other governments 3,859,917 — — — 3,859,917 

Deferred revenue 130,884,052 — — (27,304,208) 103,579,844 

Deposits payable from restricted assets 800,682 — — — 800,682 

Compensated absences due within one year — 4,420,073 — — 4,420,073 

Compensated absences due in more than 

one year — 5,174,471 — — 5,174,471 

Claims payable due within one year — — 5,837,864 — 5,837,864 

Claims payable due in more than one year — — 19,278,549 — 19,278,549 

Long-term debt due within one year — 8,375,000 — — 8,375,000 

Long-term debt due in more than one year — 155,497,382 — — 155,497,382 

Advances from other funds 39,602,836 — — (39,602,836) — 

Total liabilities 199,184,503 178,532,144 25,519,725 (70,309,884) 332,926,488 

Total fund balances/net assets 426,140,320 548,527,445 14,839,626 26,184,208 1,015,691,599 

Total liabilities and fund balance/net assets $ 625,324,823 727,059,589 40,359,351 (44,125,676) 1,348,618,087 

44




1) 

Capital assets used in governmental activities are not current financial resources 

and, therefore, are not reported in the balance sheet. Capital assets of internal 

service funds of $625,455, net of accumulated depreciation, are not included in 

this amount. 

$ 953,312,341 

Less accumulated depreciation (228,993,184) 

724,319,157 

Bond issue costs to be amortized over the life of the debt 2,740,432 

OPEB costs are not due and payable in the current period and, therefore, (1,242,000) 

are not reported in the balance sheet 

Long-term liabilities are not due and payable in the current period and, 

therefore, are not reported in the balance sheet. 

Tax allocation bonds $ (75,570,000) 

General obligation bonds (20,140,000) 

Revenue bonds (71,900,000) 

Deferred loss on refunding 3,791,611 

Accrued interest on long-term debt (3,823,218) 

Unamortized premium on long-term debt (268,476) 

Unamortized issue discount on long-term debt 214,483 

Employee compensated absences (9,594,544) 

Total long-term liabilities (177,290,144) 

$ 548,527,445 

2) 

Internal service funds are used by management to charge the costs of 

information technology and communications operations, self-insurance 

comprehensive, auto and workers' compensation to individual funds. The assets 

and liabilities of these internal service funds are included in the governmental 

activities on the statement of net assets. 

$ 

14,312,365 

Adjustments for Internal Service Funds are necessary to "close" those funds by 

recording charges to and payments from business-type activities to completely 

cover the Internal Service Funds' costs for the year. 

$ 

527,261 

14,839,626 

3) Other adjustments and eliminations: 

The interfund capitalized lease receivable recorded on the balance sheet but 

eliminated on the statement of net assets. 

Other long-term assets are not available to pay for current period expenditures 

and, therefore, are deferred in the funds and recognized as revenue in the 

statement of activities. 

$ 

$ 

(1,120,000) 

27,304,208 

26,184,208 

45




Amounts reported for business-type activities in the government-wide statement of net assets are 

different from those reported for enterprise funds in the fund statement of net assets. The following 

provides a reconciliation of those differences: 

Assets 

Total business- Other 

Total type internal adjustments Statement of 

enterprise service and net assets 

funds funds (1) eliminations totals 

Cash and investments $ 74,819,633 28,297,761 — 103,117,394 

Receivables (net, where applicable, 

of allowances for uncollectibles): 

Accounts 21,570,743 77,208 — 21,647,951 

Interest 930,208 249,806 — 1,180,014 

Internal balances — (527,261) (11,839,657) (12,366,918) 

Inventory 1,260,677 67,471 — 1,328,148 

Prepaids 102,450 — — 102,450 

Restricted cash and investments 20,941,196 — — 20,941,196 

Restricted cash with fiscal agent 535,909 — — 535,909 

Due from other governments, restricted 9,654 — — 9,654 

Advances to other funds 6,603,197 — (6,603,197) — 

Bond issuance costs, net 469,222 — — 469,222 

Capital assets 403,897,681 13,117,144 — 417,014,825 

Total assets 531,140,570 41,282,129 (18,442,854) 553,979,845 

Liabilities 

Accounts payable $ 9,312,042 281,471 — 9,593,513 

Accrued liabilities 5,366,105 173,657 (2,513,834) 3,025,928 

Accrued interest payable 564,476 — — 564,476 

Contracts payable (retained percentage) 91,041 — — 91,041 

Deferred revenue 4,332,035 — — 4,332,035 

Liabilities payable from restricted assets 7,853,854 — — 7,853,854 

Advances from other funds 18,442,854 — (18,442,854) — 

Compensated absences due within one year — — 1,521,158 1,521,158 

Compensated absences due in more than one year — — 992,676 992,676 

Claims payable due within one year — 455,605 — 455,605 

Claims payable due in more than one year — 1,485,033 — 1,485,033 

Long-term debt due within one year 1,759,830 — — 1,759,830 

Long-term debt due in more than one year 26,314,702 — — 26,314,702 

Total liabilities 74,036,939 2,395,766 (18,442,854) 57,989,851 

Net Assets 

$ 457,103,631 38,886,363 — 495,989,994 

1) 

Internal service funds are used by management to charge the costs of vehicle 

management, information technology and risk management to individual funds. 

The assets and liabilities of the vehicle management and self-insurance bus internal 

service funds are included in business-type activities in the statement of net assets. 

$ 39,413,624 

Adjustment for Internal Service Funds are necessary to "close" those funds for 

charges to and payments from participating governmental-type activities to 

completely cover the Internal Service Funds' costs for the year. 

$ 

(527,261) 

46




(4) PRIOR PERIOD ADJUSTMENTS 

During the year ended June 30, 2008, the City discovered (a) a capital asset that had been sold in a 

previous period and (b) discovered a receivable that should have been recorded as an expenditure in a 

previous period. 

The following schedules summarize the effects of the prior period adjustments to the 

government-wide financial statements and fund financial statements: 

Government-wide financial statements: 

Governmental 

Activities 

Net assets at beginning of year 

as previously reported $ 1,022,448,717 

(a) 

(b) 

Adjustment to record capital asset disposal 

in a previous fiscal year (4,400,000) 

Adjustment to eliminate receivable from 

other governments and record expenditures 

made in a previous fiscal year (4,039,753) 

Net assets at beginning of year as restated $ 1,014,008,964 

Fund financial statements: 

Governmental funds: 

Earthquake 

Recovery 

Redevelopment 

Project Fund 

Fund balance at beginning of year 

as previously reported $ 72,249,332 

(b) 

Adjustment to eliminate receivable from 

other governments and record expenditures 

made in a previous fiscal year (4,039,753) 

Fund balance at beginning of year as restated $ 68,209,579 

47




(5) CASH AND INVESTMENTS 

Cash and investments as of June 30, 2008 are classified in the accompanying financial statements as 

follows: 

Statement of net assets: 


Restricted cash and investments 20,941,196 

Restricted cash with fiscal agent 30,591,454 

Fiduciary funds: 

Restricted cash and investments 3,761,030 

Total cash and investments $ 641,353,833 

Cash and investments as of June 30, 2008 consist of the following: 

Cash on hand $ 56,182 

Deposits with financial institutions (3,584,337) 

Investments 644,881,988 

Total cash and investments $ 641,353,833 

Investments Authorized by the California Government Code and the City’s Investment Policy 

The table below identifies the investment types that are authorized for the City by the California 

Government Code and the City’s investment policy. The table also identifies certain provisions of the 

California Government Code (or the City’s investment policy, if 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 

Investment types by investment *Maximum percentage Investment 

authorized by state law policy maturity of portfolio in one issuer 

Local agency bonds Yes 5 years None None 

U.S. Treasury obligations Yes 5 years None None 

U.S. agency securities Yes 5 years None 50% 

State of California obligations Yes 5 years None None 

CA Local Agency obligations Yes 5 Years None None 

Banker's acceptances Yes 180 days 10% 10% 

Commercial paper Yes 270 days 15% 10% 

Negotiable certificates of deposit Yes 5 years 30% 10% 

Repurchase agreements Yes 1 year None None 

Reverse repurchase agreements Yes 92 days 

20% of 

base value 

None 

48




Authorized *Maximum *Maximum 

Investment types by investment *Maximum percentage Investment 

authorized by state law policy maturity of portfolio in one issuer 

Corporate medium-term notes Yes 5 years 30% None 

Mutual funds Yes N/A 20% 10% 

Money market mutual funds Yes N/A 20% 10% 

Mortgage pass-through securities Yes 5 years 20% None 

Time deposits Yes 5 years None None 

Collateralized certificates of deposit Yes 5 years None None 

County pooled investment funds Yes N/A None None 

Local Agency Investment Fund (LAIF) Yes N/A None None 

JPA pools (other investment pools) Yes N/A None None 

* Based on state law requirements or investment policy requirements, whichever is more restrictive. 

Investments Authorized by Debt Agreements 

Investments of debt proceeds held by bond trustees are governed by provisions of the debt agreements, 

rather than the general provisions of the California Government Code or the City’s investment policy. 

The table below identifies the investment types that are generally authorized for investments held by 

bond trustees. The table also identifies certain provisions of these debt agreements that address interest 

rate risk, credit risk, and concentration of credit risk. 

Maximum Maximum 

Authorized Maximum percentage Investment 

investment type maturity allowed in one issuer 

U.S. Treasury obligations None None None 

Federal Housing Administration debentures None None None 

U.S. agency securities None None None 

Time deposits None None None 

Unsecured certificates of deposit 180 days None None 

Banker's acceptances 180 days None None 

State obligations None None None 

Repurchase agreements 1 year None None 

Pre-refunded municipal obligations None None None 

Commercial paper 270 days None None 

Money market mutual funds None None None 

Investment contracts 30 years None None 

49




Investments Authorized by Actions of the City Council 

Cemetery and Mausoleum Perpetual Care funds are received from cemetery users for the perpetual care 

of cemetery grounds and of the mausoleum. The funds are legally restricted to the extent that only 

earnings, and not principal, can be used for restricted perpetual care purposes. These funds represent 

the accumulation of unspent monies from non-government sources and are not considered by the City to 

constitute “surplus funds” of a local government. Accordingly, these funds are not considered by the 

City to be subject to the provisions of the California Government Code Section 53601 or the City’s 

investment policy. These funds have been invested per instructions of the City Council. The table 

below identifies the investment types generally authorized for these investments. Current City Council 

instructions limit amount invested in equities (common stock) to 60% of the total portfolio with the 

balance to be invested in fixed income securities. The table also identifies certain provisions of these 

debt agreements that address interest rate risk, credit risk, and concentration of credit risk. 

Maximum Maximum 

Authorized Maximum percentage Investment 

investment type maturity allowed in one issuer 

U.S. Treasury obligations None None None 

U.S. agency securities None None None 

Common stock None 60% None 

Corporate bonds None None None 

Disclosures Relating 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 of an investment, the greater the sensitivity of its fair 

value to changes in market interest rates. The fair value of callable securities is also sensitive to market 

changes in that if interest rates decrease between the time of purchase and the call date, the likelihood 

that a bond will be called and reinvested at a lower interest rate increases. 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 (including investments held 

by bond trustee and Charnock funds held jointly with another party in an escrow account) to market 

interest rate fluctuations is provided by the following table that shows the distribution of the City’s 

investments by maturity. For purposes of the schedule shown below, any callable securities are assumed 

to be held to maturity. 

50




Investment type 

Amount 

12 Months 

or Less 

Remaining maturity (in months) 

13 to 24 25 to 60 

Months Months 

More than 

60 Months 

Held by City: 

Federal agency securities $ 432,777,487 74,665,476 128,050,965 230,061,046 — 

Corporate medium term notes 96,531,504 22,108,825 14,069,349 60,353,330 — 

State investment pool 39,912,581 39,912,581 — — — 

Money market funds 45,602,942 45,602,942 — — — 

Held by others: 

Treasury notes/ bonds 1,193,880 — 342,214 — 851,666 

Federal agency securities 5,815,833 5,665,325 150,508 

Corporate medium term notes 1,345,192 83,978 — 1,026,028 235,186 

Municipal Bonds 147,681 — — — 147,681 

Common stock 4,110,026 4,110,026 — — — 

Money market funds 17,444,862 17,444,862 — — — 

Total $ 644,881,988 209,594,015 142,462,528 291,590,912 1,234,533 

Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations 

The City’s investments as of June 30, 2008 (including investments held by bond trustees) do not include 

any investments that are highly sensitive to interest rate fluctuations to a greater degree than already 

indicated in the information provided above. 

Disclosures Relating to Credit Risk 

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder 

of the investment. This is measured by the assignment of a rating by a nationally recognized statistical 

rating organization. Presented below is the minimum rating required by (where applicable) the 

California Government Code, the City’s investment policy, or debt agreements, and the actual rating as 

of year end for each investment type. 

51





Amount 

Minimum 

legal 

rating AAA AA+ AA AA- A+ A BBB+ Not rated 

52 

Federal agency securities $ 432,777,487 N / A 432,777,487 — — — — — — — 

Corporate medium term notes 96,531,504 A 12,279,419 2,027,580 — 52,169,199 10,800,850 19,254,456 — — 

State investment pool 39,912,581 N / A — — — — — — — 39,912,581 

Money market funds 45,602,942 AAA 45,602,942 — — — — — — — 

614,824,514 

Held by others: 

Treasury bonds 1,193,880 N / A 1,193,880 — — — — — — — 

Federal agency securities 5,815,833 N / A 5,815,833 — — — — — — — 

Corporate medium term notes 1,345,192 N / A 237,233 150,503 83,978 492,694 148,676 — 232,108 — 

Municipal Bonds 147,681 N / A — — — 147,681 — — — — 

Common stock 4,110,026 N / A — — — — — — — 4,110,026 

Money market funds 17,444,862 AAA 17,444,862 — — — — — — — 

$ 644,881,988 

515,351,656 2,178,083 83,978 52,809,574 10,949,526 19,254,456 232,108 44,022,607




The Cemetery and Mausoleum perpetual care funds are funds held in trust by the City to pay for 

perpetual care costs at the City-owned cemetery. Investment of these funds is not covered by the State 

Government Code. The guidelines for investment of these funds are set by the City Council, and the 

funds are managed by an outside investment firm using the guidelines. 

Concentration of Credit Risk 

In regards to limitations on the amount that can be invested in any one issuer, the City’s investment 

policy generally follows stipulations by the California Government Code. However, the City’s policy 

adds an additional stipulation that no more than 50% of the portfolio may be invested in a single issuer. 

Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external 

investment pools) that represent 5% or more of total City investments (excluding investments held by 

others) are as follows: 

% of 

Issuer Investment type Reported amount Investment 

FNMA Federal agency securities $ 79,116,382 12.9 % 

Federal Home Loan Mortgage Corporation Federal agency securities 118,495,659 19.3 

Federal Home Loan Bank Federal agency securities 205,987,013 33.5 

Custodial Credit Risk 

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial 

institution, a government will not be able to recover its deposits or will not be able to recover collateral 

securities that are in the possession of an outside party. 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 California 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 deposits or 

investments, other than the following provision for deposits: The California Government Code requires 

that a financial institution secure deposits made by state or local governmental units by pledging 

securities in an undivided collateral pool held by a depository regulated under state law (unless so 

waived by the governmental unit). The market value of the pledged securities in the collateral pool must 

equal at least 110% of the total amount deposited by the public agencies. California law also allows 

financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value 

of 150% of the secured public deposits. As of June 30, 2008, City investments in the following 

investment types were held by the same broker-dealer (counterparty) that was used by the City to buy 

the securities: 


Reported amount 

Federal agencies $ 5,332,850 

For investments identified herein as held by bond trustee, the bond trustee, under direction of the 

City/Redevelopment Agency/Parking Authority selects the investment under the terms of the applicable 

trust agreement, acquires the investment, and holds the investment on behalf of the applicable agency. 

53




Investment in State Investment Pool 

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the 

California Government Code 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. 

(6) NOTES RECEIVABLE 

Notes receivable related to governmental activities total $62,702,984 as follows: 

Balance at 

June 30, 2007 Increases Decreases 

Balance at 

June 30, 2008 

General Fund 

American Youth Hostel (a) $ 200,000 — 40,000 160,000 

Mountain View Mobile Inn Residents Assoc. (b) 124,977 — — 124,977 

Step Up on Second (c) 1,331,252 — — 1,331,252 

Employee housing (d) 1,300,000 — — 1,300,000 

Total General Fund 2,956,229 — 40,000 2,916,229 

Special Revenue Source Fund 

Community Corporation of Santa Monica (e) 6,774,763 — — 6,774,763 

Community Corporation of Santa Monica (f) 3,350,000 — — 3,350,000 

Total Special Revenue Source Fund 10,124,763 — — 10,124,763 

Downtown Redevelopment Fund 

Community Corporation of Santa Monica (g) 1,055,953 188,047 — 1,244,000 

Community Corporation of Santa Monica (h) 679,000 — — 679,000 

Total Downtown Redevelopment Fund 1,734,953 188,047 — 1,923,000 

Earthquake Recovery Redevelopment Fund 

Community Corporation of Santa Monica (i) 318,307 — — 318,307 

Community Corporation of Santa Monica (j) 398,362 — — 398,362 

Total Earthquake Recovery Redevelopment 716,669 — — 716,669 

Non-major Governmental Funds 

Community Corporation of Santa Monica (k) 681,952 — — 681,952 

Community Corporation of Santa Monica (l) 2,900,000 — — 2,900,000 

Habitat for Humanity - Los Angeles (m) 523,685 51,315 — 575,000 

Community Corporation of Santa Monica (n) 4,837,693 700,000 — 5,537,693 

Low- and moderate-income housing (DRPLP) (o) 200,000 — — 200,000 

Low- and moderate-income housing (DRPLP) (o) 200,000 — — 200,000 

Low- and moderate-income housing (p) 1,441,945 — 140,260 1,301,685 

Low- and moderate-income housing (q) 1,152,003 47,997 — 1,200,000 

Low- and moderate-income housing (r) 6,745,807 — — 6,745,807 

Low- and moderate-income housing (s) 924,478 — — 924,478 

Low- and moderate-income housing (t) 5,811,096 1,358,904 — 7,170,000 

Community Corporation of Santa Monica (u) 3,157,144 — — 3,157,144 

Low- and moderate-income housing (v) 841,600 — — 841,600 

Low- and moderate-income housing (w) 2,733,631 — — 2,733,631 

MERL Program (x) 14,254,030 — 1,446,947 12,807,083 

Low income senior housing (y) 46,250 — — 46,250 

Total non-major governmental funds 46,451,314 2,158,216 1,587,207 47,022,323 

Total notes receivable $ 61,983,928 2,346,263 1,627,207 62,702,984 

54




General Fund 

a. On April 12, 1990, the City loaned $500,000 from the General Fund, interest free, to American 

Youth Hostel, Inc. to assist in financing construction of a 200-bed international youth hostel facility. 

The thirteenth of seventeen installment loan payments was received in 2008; the remaining principal 

balance at June 30, 2008 is $160,000. 

b. A promissory note in the amount of $290,000, interest free, has been executed with Mountain View 

Mobile Inn Residents Association for pre-development loan funds to assist in the acquisition and 

subsequent conversion of the mobile home park located at 1930 Stewart Street to tenant ownership. 

As of June 30, 2008, $124,977 had been disbursed to the borrower. 

c. A promissory note in the amount of $1,331,252 was executed with Step Up on Second, L.P., a 

California limited partnership, for the construction of a thirty-six bed permanent housing project for 

mentally disabled low-income persons. The project is located at 1328 Second Street in Santa 

Monica. The original promissory note dated September 16, 1993 was amended, superseded and 

replaced in full by a promissory note dated September 9, 1996, the unpaid balance is due not later 

than September 16, 2043, and may be extended for a period of up to 25 years. Interest has been 

forgiven and the principal balance as of June 30, 2008 is $1,331,252. 

d. On April 12, 2006, the City made a housing loan to P. Lamont Ewell, City Manager, in the amount 

of $1,300,000 for the purchase of a home within the City limits. The loan is secured by a deed of 

trust and has a term of 30 years with an interest rate of 4.7%, subject to annual adjustments as set 

forth in the note, not to exceed 4.855%. The outstanding principal, together with any outstanding 

interest, is due and payable in full on or before the 30-year anniversary date of the loan. Monthly 

interest payments are due on the first calendar day of each month. The City Manager must repay 

any outstanding balance of the loan within two years of ending employment with the City. As of 

June 30, 2008, the total outstanding balance of the loan was $1,300,000. 

Special Revenue Source Special Revenue Fund 

e. A revised promissory note in the amount of $6,774,763 was executed with Pacific Court Limited 

Partnership, c/o Community Corporation of Santa Monica, for an affordable housing project located 

at 2209 Main Street. Forty-three low- and moderate-income housing units are to be constructed on 

the site. This is a 55-year loan with 1% interest rate per annum. Payments are to be made from 

residual receipts. At June 30, 2008, $6,774,763 had been disbursed to the borrower. 

f. A revised promissory note in the amount of $3,350,000 was executed with 1424 Broadway 

Apartments Limited Partnership, c/o Community Corporation of Santa Monica, for an affordable 

housing project located at 1424 Broadway/1512 15th Street. This is a 55-year loan with 3% interest 

rate per annum. Payments are to be made from residual receipts. At June 30, 2008, $3,350,000 had 

been disbursed to the borrower. 

Downtown Redevelopment Fund 

g. Promissory notes in the amount of $4,458,033, $1,691,967 and $950,000 for a total of $7,100,000 

were executed with 26 th and Santa Monica Family Housing Limited Partnership, c/o Community 

Corporation of Santa Monica, for an affordable housing project located at 1349 26 th Street. Fortyfour 

low- and moderate-incoming housing units are to be constructed on the site. They are 55-year 

55




loans with 3% interest rate per annum. Payments are to be made from residual receipts. At June 30, 

2008, $1,244,000 had been disbursed to the borrower. 

h. A promissory note in the amount of $4,234,507 was executed with The Tahiti, L.P. c/o Community 

Corporation of Santa Monica for an affordable housing project located at 2411-2423 Centinela 

Avenue. The loan is for the construction of 36 affordable rental housing units. This is a 55-year 

loan with a simple interest rate of 3% per annum. Payments are to be made from residual receipts. 


Earthquake Recovery Redevelopment Fund 

i. Promissory notes in the amount of $4,458,033, $1,691,967 and $950,000 for a total of $7,100,000 


Corporation of Santa Monica, for an affordable housing project located at 1349 26 th Street. Fortyfour 

low- and moderate-income housing units are to be constructed on the site. They are 55-year 


2008, $318,307 had been disbursed to the borrower. 

j. A promissory note in the amount of $4,234,507 was executed with The Tahiti, L.P. c/o Community 





Non-major Governmental Funds 

k. On April 17, 2000, the City executed a promissory note with Community Corporation of Santa 

Monica for the construction of a twenty unit, large family, affordable housing complex located at 

708 Pico Blvd. $579,000 is funded from the City’s Pico Neighborhood Trust Fund, while $221,000 

is funded from the City-wide CDBG Fund. This note is a 0% loan to be repaid from residual 

receipts of the project and is due on October 22, 2053. At June 30, 2008, the outstanding balance is 

$681,952. 

l. A revised promissory note in the amount of $2,900,000 was executed with 1424 Broadway 

Apartments Limited Partnership, c/o Community Corporation of Santa Monica, for an affordable 

housing project located at 1424 Broadway/1512 15th Street. This is a 55-year loan with 3% interest 

rate per annum. Payments are to be made from residual receipts. At June 30, 2008, $2,900,000 had 

been disbursed to the borrower. 

m. A promissory note in the amount of $575,000 was executed with Habitat for Humanity – Los 

Angeles for an affordable housing project located at 2018 Nineteenth Street. This loan is for the 

acquisition of a vacant parcel of land where Habitat will build up to six new ownership units that 

will be sold to very low income buyers. This is a 0% loan with the principal amount due and 

payable after a two-year deferral period. At June 30, 2008, $575,000 had been disbursed to the 

borrower. 

n. Promissory notes in the amount of $4,458,033, $1,691,967 and $950,000 for a total of $7,100,000 


Corporation of Santa Monica, for an affordable housing project located at 1349 26 th Street. Forty- 

56




four low- and moderate-income housing units are to be constructed on the site. They are 55-year 


2008, $3,845,726 and $1,691,967 respectively, had been disbursed to the borrower. 

o. Two promissory notes, for $200,000 each, were executed with the owners of certain rental 

properties. The notes were for five years at 3% interest per year, and could be renewed for five 

additional five-year terms as long as the rental properties are maintained for low-and moderateincome 

households. The first note was due December 22, 1993, and has been extended for the third 

time to December 22, 2008 under the same terms and conditions; the second note was due 

December 29, 1994, and has been extended to December 29, 2019 under the same terms and 

conditions. The promissory notes are payable in full upon sale or transfer of the property (whichever 

occurs first) or upon expiration of the term of the promissory notes. Upon payment to the City, 

proceeds must be paid to the State of California as repayment for two $200,000 State Department of 

Housing and Urban Development Deferred Payment Rehabilitation Loan Program (DPRLP) loans. 

As these DPRLP loans are currently due, they have been reported as short-term loans payable on the 

statement of net assets. There were no changes in the loan balances during the year ended June 30, 

2008. 

p. These represent non-interest bearing, limited appreciation and shared appreciation loans made 

pursuant to TORCA Program guidelines to assist low- and moderate-income households purchase 

their rental units. As of June 30, 2008, the outstanding balances of such loans total $1,301,685. 

q. A promissory note in the amount of $1,200,000 was executed with Ocean Park Community Center 

for congregate housing and emergency shelter for very low-income use, located at 1751 Cloverfield 

Blvd. This loan is for the acquisition and rehabilitation of the site. This is a 55-year loan with 

5.98% interest rate per annum with a two-year deferral period. Payments are to be made from 

residual receipts. At June 30, 2008, $1,200,000 had been disbursed to the borrower. 

r. A revised promissory note in the amount of $6,745,807 was executed with Community Corporation 

of Santa Monica for an affordable housing project located at 3021-3031 Santa Monica Blvd. This 

loan is for the acquisition, predevelopment expenses and construction of future low- and moderateincome 

housing. This is a 0% loan with the principal amount due and payable after a two-year 

deferral period. At June 30, 2008, $6,745,807 had been disbursed to the borrower. 

s. A promissory note in the amount of $1,161,185 was executed with Community Corporation of 

Santa Monica for an affordable housing project located at 1342 Berkeley Street. This loan is for the 

acquisition and predevelopment expenses for future low- and moderate-income housing. This is a 

0% loan with the principal amount due and payable after a two-year deferral period. At June 30, 

2008, $924,478 had been disbursed to the borrower. 

t. Two promissory notes, one in the amount of $5,870,000 and one for $1,300,000 were executed with 

Step up on Fifth, L.P. for an affordable housing project located at 1548 Fifth Street. These loans are 

for the acquisition and construction of the site. This is a 55-year loan with a simple interest rate of 

4% per annum. Payments are to be made from residual receipts. At June 30, 2008, $5,870,000 and 

$1,300,000 respectively, had been disbursed to the borrower. 

u. A promissory note in the amount of $4,234,507 was executed with The Tahiti, L.P. c/o Community 



57





As of June 30, 2008, $3,157,144 had been disbursed to the borrower. 

v. A promissory note in the amount of $841,600 was executed with Community Corporation of Santa 

Monica for low- and moderate-income housing at 2020-2030 Cloverfield Blvd. This is a 35-year 

loan with 10.44% interest rate per annum. At June 30, 2008, $841,600 had been disbursed to the 

borrower. 

w. A promissory note in the amount of $2,742,500 was executed with the Santa Monica Housing 

Partners, L.P for the development of twenty units of affordable senior housing at 1458 14 th Street. 

The loan represents land acquisition financing that achieves site control. The interest rate is 0%. 

Repayment is deferred during the two year term of the agreement with an option to extend the 

agreement for eighteen months. At June 30, 2008, the outstanding balance is $2,733,631. 

x. The January 17, 1994 Northridge Earthquake resulted in damaged multifamily residences in the 

City of Santa Monica. To facilitate repair of damaged multifamily residences, the U.S Department 

of Housing and Urban Development awarded the City of Santa Monica a total of $33,388,000 in 

emergency funds to finance the City's Multifamily Earthquake Repair Loan (MERL) Program. 

The funds were allocated as follows: $2,027,000 – HOME Program Emergency Supplemental Fund, 

$6,361,000 – HOME Program Presidential Contingency Fund, and $25,000,000 – CDBG Program 

Emergency Supplemental Fund. 

As of June 30, 2008, the following summarizes the total loan amount authorized, amount disbursed 

since inception of the loan program, the amounts repaid by the borrowers, and the loan balances: 

Loan amount Loan amount Amounts Loan balance at 

Fund authorized disbursed repaid/forgiven June 30, 2008 

Miscellaneous Grants $ 7,790,695 7,790,695 2,570,323 5,220,372 

CDBG 21,739,088 21,727,929 14,141,218 7,586,711 

Total $ 29,529,783 29,518,624 16,711,541 12,807,083 

y. The Redevelopment Housing Trust Fund, formerly known as “CHARP” provides funds to eligible 

borrowers in the form of deferred payment loans to make up the financial gap between available 

non-program resources, including the borrower’s equity and private financing, and the limited 

equity cooperatives. At June 30, 2008, loans totaling $46,250 are outstanding. 

58




(7) CAPITAL ASSETS 

Capital assets activity for the primary government for year ended June 30, 2008 is as follows: 

Balance at 

July 1, 2007 

as restated 

Increases 

Decreases 

(1) 

Transfers 

(1) 

Balance at 

June 30, 2008 


Capital assets, not being depreciated: 

Land $ 112,070,378 33,170,130 — — 145,240,508 

Land held under easement 72,066,823 171,000 — — 72,237,823 

Construction in progress 23,236,388 25,005,482 (395,836) (4,539,297) 43,306,737 

Total capital assets, not being depreciated 207,373,589 58,346,612 (395,836) (4,539,297) 260,785,068 

Capital assets, being depreciated: 

Buildings 237,269,287 1,406,215 (1,138,561) 16,317,332 253,854,273 

Improvements other than buildings 91,707,172 1,022,537 (1,431,384) (14,104,263) 77,194,062 

Utility Systems 3,575,000 173,272 — 1,450,296 5,198,568 

Machinery and equipment 33,886,085 902,973 (2,071,710) 323,932 33,041,280 

Infrastructure 323,765,332 740,984 (281,488) 552,000 324,776,828 

Total capital assets being depreciated 690,202,876 4,245,981 (4,923,143) 4,539,297 694,065,011 

Less accumulated depreciation for: 

Buildings (32,467,630) (6,333,244) 737,123 (5,167,548) (43,231,299) 

Improvements other than buildings (41,025,352) (2,855,140) 927,544 5,236,514 (37,716,434) 

Utility Systems (128,104) (75,212) — — (203,316) 

Machinery and equipment (20,785,144) (2,653,517) 1,987,996 (106,796) (21,557,461) 

Infrastructure (117,121,989) (10,225,240) 112,442 37,830 (127,196,957) 

Total accumulated depreciation (211,528,219) (22,142,353) 3,765,105 — (229,905,467) 

Total capital assets, being depreciated, net 478,674,657 (17,896,372) (1,158,038) 4,539,297 464,159,544 

Subtotal governmental activities 686,048,246 40,450,240 (1,553,874) — 724,944,612 

Business-type activities: 

Capital assets, not being depreciated: 

Land 69,634,413 3,000,000 — — 72,634,413 

Construction in progress 30,426,373 23,500,964 (248,616) (10,793,760) 42,884,961 

Total capital assets, not being depreciated 100,060,786 26,500,964 (248,616) (10,793,760) 115,519,374 

Capital assets, being depreciated: 

Buildings 59,279,645 554,779 (2,550,181) 10,656,602 67,940,845 

Improvements other than buildings 35,934,110 857,487 (2,445,906) (11,124,431) 23,221,260 

Machinery and equipment 114,251,058 9,995,639 (753,603) 2,938,661 126,431,755 

Infrastructure 254,442,114 2,423,254 (589,281) 8,322,928 264,599,015 

Total capital assets being depreciated 463,906,927 13,831,159 (6,338,971) 10,793,760 482,192,875 

Less accumulated depreciation for: 

Buildings (19,929,030) (2,703,645) 1,616,326 (7,406,751) (28,423,100) 

Improvements other than buildings (27,293,493) (599,403) 2,351,384 8,896,819 (16,644,693) 

Machinery and equipment (64,255,270) (14,515,779) 585,598 (1,490,068) (79,675,519) 

Infrastructure (48,849,467) (7,317,052) 212,407 — (55,954,112) 

Total accumulated depreciation (160,327,260) (25,135,879) 4,765,715 — (180,697,424) 

Total capital assets, being depreciated, net 303,579,667 (11,304,720) (1,573,256) 10,793,760 301,495,451 

Subtotal business-type activities 403,640,453 15,196,244 (1,821,872) — 417,014,825 

Total $ 1,089,688,699 55,646,484 (3,375,746) — 1,141,959,437 

(1) In FY07-08, as a result of a review of assets categorized as improvements, certain assets were reclassified 

between category types and assets that did not meet the capitalization thresholds were disposed. 

59




Depreciation expense was charged to functions/programs of the primary government as follows: 

General government $ 1,189,636 

Public safety 2,794,967 

General services 12,253,923 

Cultural and recreation services 2,743,448 

Library 1,341,119 

Housing and community development 1,565,011 

Capital assets held by the government's internal service funds are 

charged to the various functions based on their assets usage 254,249 

Total depreciation expense - governmental activities $ 22,142,353 


Water $ 1,095,289 

Solid waste management 9,463 

Pier 329,220 

Wastewater 6,011,310 

Civic auditorium 284,427 

Airport 565,300 

Stormwater management 284,130 

Cemetery 100,525 

Big Blue Bus 14,232,445 

Special aviation 18,333 

Parking authority 32,071 

Capital assets held by the government's internal service funds are 

charged to the various programs based on their assets usage 2,173,366 

Total depreciation expense - business-type activities $ 25,135,879 

Note that depreciation expense does not equal amounts shown on enterprise fund statements 

because internal service fund amounts relating to business-type activities are included in 

functions/programs. 

The City’s infrastructure assets are recorded at historical cost in the government-wide statements 

as required by GASB 34. 

(8) UNEARNED REVENUE 

Governmental funds report unearned revenue in connection with receivables for revenues that are not 

considered to be available to liquidate liabilities of the current period. Governmental and enterprise 

funds also defer revenue recognition in connection with resources that have been received as of yearend, 

but not yet earned. 

60




At June 30, 2008, $1,120,000 related to lease payments made by the City to the Downtown 

Redevelopment Project Fund is not available and is eliminated as interfund activity. The interest on 

advances reported in the General Fund and the nonmajor governmental funds also represent interfund 

activity eliminated in the government-wide financial statements. This interest is earned and included in 

promissory note balances at year-end. Revenues related to receivables of $6,798,929 in the Disaster 

Relief Fund and $144,898 in the Community Development Block Grant (CDBG) Fund are deferred in 

the fund financial statements because they were not available to liquidate liabilities of the current 

period. However, these amounts are recognized for government-wide financial statement purposes 

because all requirements for revenue recognition have been met. 

The components of unearned revenue are as follows: 

Fund financial 

statements 

Eliminate 

interfund 

activity 

Recognized in 

governmentwide 

financials 

Governmentwide 

financial 

statements 

Governmental funds: 

General Fund: 

Interest on advances $ 14,393,410 (14,393,410) — — 

Unearned user fees 519,277 — — 519,277 

Unearned business license tax 2,527,656 — — 2,527,656 

Total General Fund 17,440,343 (14,393,410) — 3,046,933 

Special Revenue Source Fund: 

Settlement proceeds 98,621,383 — — 98,621,383 

Downtown Redevelopment Project Fund: 

Lease payments (1) 1,120,000 (1,120,000) — — 

Nonmajor governmental funds: 

Other receivables (2) 8,855,355 — (6,943,827) 1,911,528 

Interest on advances 4,846,971 (4,846,971) — — 

Total nonmajor governmental funds: 13,702,326 (4,846,971) (6,943,827) 1,911,528 

Total governmental funds 130,884,052 (20,360,381) (6,943,827) 103,579,844 

Enterprise funds: 

Big Blue Bus Fund: 

Bus tokens/Metrocard 64,623 — — 64,623 

LACMTA funds received prior to 

meeting all eligibility requirements 4,267,412 — — 4,267,412 

Total Big Blue Bus Fund 4,332,035 — — 4,332,035 

Total enterprise funds 4,332,035 — — 4,332,035 

Total uneared revenue $ 135,216,087 (20,360,381) (6,943,827) 107,911,879 

(1) Represents parking lease receivable unavailable therefore deferred in the fund financial statements. 

(2) Represents grants receivable for which all of the eligibility requirements have not been met. 

61




(9) LONG-TERM LIABILITIES 

Changes in long-term liabilities: 

Long-term liability activity for the year ended June 30, 2008, was as follows: 

Balance at 

July 1, 2007 Additions Reductions 

Balance at 

June 30, 2008 

Due within 

one year 

Due beyond 

one year 

Governmental Activities: 

Revenue bonds $ 75,770,000 

— 3,870,000 71,900,000 4,020,000 67,880,000 

Tax allocation bonds 78,115,000 — 2,545,000 75,570,000 2,670,000 72,900,000 

General obligation bonds 21,800,000 — 1,660,000 20,140,000 1,685,000 18,455,000 

Less deferred amounts: 

For issuance discounts (226,968) — (12,485) (214,483) — (214,483) 

For issuance premiums 288,842 — 20,366 268,476 — 268,476 

Deferred loss on refunding (4,015,883) — (224,272) (3,791,611) — (3,791,611) 

Total bonds payable 

171,730,991 — 7,858,609 163,872,382 8,375,000 155,497,382 

Compensated absences 8,645,940 6,110,636 5,162,032 9,594,544 5,174,471 4,420,073 

Claims payable 26,032,048 6,504,480 7,420,115 25,116,413 5,837,864 19,278,549 

Subtotal governmental 

activities 206,408,979 12,615,116 20,440,756 198,583,339 19,387,335 179,196,004 


Certificates of participation 420,000 — 420,000 — — — 

Loans payable 3,617,046 — 253,808 3,363,238 259,830 3,103,408 

Revenue bonds 28,715,000 — 1,455,000 27,260,000 1,500,000 25,760,000 

Less deferred amounts: 

For issuance discounts (116,839) — (8,013) (108,826) — (108,826) 

For issuance premiums 229,731 — 19,278 210,453 — 210,453 

Loss on refunding (2,882,006) — (231,673) (2,650,333) — (2,650,333) 

Total loans and bonds 

payable 

29,982,932 — 1,908,400 28,074,532 1,759,830 26,314,702 

Compensated absences 2,926,046 1,712,165 2,124,377 2,513,834 1,521,158 992,676 

Claims payable 1,529,118 833,433 421,913 1,940,638 455,605 1,485,033 

Subtotal business-type 

activities 34,438,096 2,545,598 4,454,690 32,529,004 3,736,593 28,792,411 

Total $ 240,847,075 15,160,714 24,895,446 231,112,343 23,123,928 207,988,415 

Compensated absences are predominantly liquidated by General Fund resources. 

62




A summary of long-term debt outstanding at year end is as follows: 

Date of issue Original issue 


Revenue bonds: 

Downtown Redevelopment 2002 May 1, 2002 5,640,000 

Final 

maturity 

date 

Interest 

rate 

Balance at 

June 30, 2008 

$ July 1, 2008 2.00-3.60% $ 1,120,000 

Parking Authority 2002 May 1, 2002 10,480,000 July 1, 2016 3.50-4.50% 8,300,000 

Public Finance Authority 1999 Sept 15, 1999 13,200,000 July 1, 2021 4.25-5.50% 10,470,000 

Public Finance Authority 2002 Jan 1, 2002 17,310,000 July 1, 2021 2.00-4.75% 13,880,000 

Public Finance Authority 2004 Dec 1, 2004 38,930,000 July 1, 2025 3.35-5.00% 38,130,000 

Subtotal revenue bonds - 


Tax allocation bonds: 

Ocean Park Redevelopment 2002 May 1, 2002 19,315,000 July 1, 2018 3.75-5.00% 14,605,000 

Earthquake Recovery Project 2006 April 1, 2006 64,720,000 July 1, 2030 4.00-5.50% 60,965,000 

Subtotal tax allocation bonds - 


General obligation bonds: 

Main Library Improvements 1998 June 25, 1998 3,060,000 July 1, 2010 4.00-4.30% 1,390,000 

Main Library Improvements 2002 Aug 27, 2002 25,000,000 July 1, 2022 2.00-4.60% 18,750,000 

Subtotal general obligation 

bonds - governmental 

activities 20,140,000 

Subtotal governmental activities 167,610,000 


Hyperion Project Revenue 1993 Dec 22, 1993 38,620,000 Jan 1, 2022 4.50-4.25% 9,670,000 

Hyperion Project Revenue 2005 Oct 1, 2005 20,305,000 Jan 1, 2018 3.00-5.00% 17,590,000 

Certificates of participation 1995 Aug 15, 1995 4,025,000 July 1, 2007 8.875-9.10% — 

Loans: 

State Dept. of Transportation loans various 1,305,444 July 1, 2010 6.50-7.40% 66,653 

State Water Resources Control 

Board loan Jan 29, 1999 $ 5,000,000 July 1, 2019 2.60% 3,296,585 

Subtotal loans payable 3,363,238 

Subtotal business-type activities 30,623,238 

Total $ 198,233,238 

Management believes it is in compliance with all debt covenants. 

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Annual debt service requirements to maturity are as follows: 

Governmental activities 

Fiscal year 

ended 

Revenue bonds 

Tax allocation bonds General obligation bonds 

Total 

June 30, Principal Interest Principal Interest Principal Interest Principal Interest 

64 

2009 $ 4,020,000 3,171,355 2,670,000 3,459,979 1,685,000 805,201 8,375,000 7,436,535 

2010 3,020,000 3,024,217 2,800,000 3,324,310 1,710,000 737,194 7,530,000 7,085,721 

2011 3,160,000 2,890,476 2,940,000 3,179,601 1,745,000 664,548 7,845,000 6,734,625 

2012 3,295,000 2,756,030 3,095,000 3,025,314 1,250,000 610,937 7,640,000 6,392,281 

2013 3,430,000 2,620,317 3,255,000 2,861,066 1,250,000 564,062 7,935,000 6,045,445 

2014-2018 18,325,000 10,762,208 18,800,000 11,752,404 6,250,000 2,071,405 43,375,000 24,586,017 

2019-2023 15,360,000 6,795,575 15,955,000 7,683,094 6,250,000 712,500 37,565,000 15,191,169 

2024-2028 8,330,000 4,226,855 17,755,000 4,080,590 — — 26,085,000 8,307,445 

2029-2033 10,530,000 1,972,113 8,300,000 396,094 — — 18,830,000 2,368,207 

2034 2,430,000 60,750 — — — — 2,430,000 60,750 

$ 71,900,000 38,279,896 75,570,000 39,762,452 20,140,000 6,165,847 167,610,000 84,208,195 

Business-type activities 

Fiscal year 

ended 

Revenue bonds 

Certificates of Participation 

Loans payable 

Total 

June 30, Principal Interest Principal Interest Principal Interest Principal Interest 

2009 $ 1,500,000 1,071,813 — — 259,830 90,186 1,759,830 1,161,999 

2010 1,545,000 1,026,813 — — 266,008 82,517 1,811,008 1,109,330 

2011 1,600,000 972,738 — — 272,347 74,686 1,872,347 1,047,424 

2012 1,650,000 924,738 — — 256,632 66,691 1,906,632 991,429 

2013 1,700,000 873,175 — — 263,305 60,019 1,963,305 933,194 

2014-2018 9,595,000 3,264,850 — — 1,422,842 193,776 11,017,842 3,458,626 

2019-2023 9,670,000 1,067,852 — — 622,274 24,373 10,292,274 1,092,225 

$ 27,260,000 9,201,979 — — 3,363,238 592,248 30,623,238 9,794,227




(10) FUND DEFICITS 

Special Revenue Fund. A deficit fund balance in the amount of $5,821,981 exists in the Disaster 

Relief Fund. 10% retention held by FEMA until project end is expected to alleviate this deficit fund 

balance. 

Capital Projects Fund. A deficit fund balance in the amount of $15,050,909 exists in the Downtown 

Redevelopment Project Fund. This fund balance deficit is primarily due to interest expense on advances 

from the General fund. Management plans to use future tax increment revenues to pay off the advances 

and eliminate this fund deficit. 

Enterprise Fund. A net deficit in the amount of $1,771,573 exists in the Cemetery Fund due to 

increased expenses compared to previous years. The deficit is expected to be funded by increased 

operating revenues and improved operating efficiency. 

(11) INTERFUND TRANSACTIONS 

The following tables summarize inter-fund advances to/from and transfers in/out at June 30, 2008. 

Advances to/from 

Advances to/from other funds at June 30, 2008 are as follows: 

Advances to 

Advances from 

(receivable fund) (payable fund) Amount 

General Fund Downtown Redevelopment Project Fund $ 19,409,014 

Non-major governmental funds 3,842,973 

Non-major enterprise funds 11,853,979 

Total General Fund 35,105,966 

Non-major governmental funds Earthquake Redevelopment Fund 3,465,452 

Non-major governmental funds Non-major governmental funds 6,371,075 

Earthquake Redevelopment Fund Wastewater Fund 6,500,000 

Wastewater Fund Non-major governmental funds 6,514,322 

Wastewater Fund Non-major enterprise funds 88,875 

Total advances to/from $ 58,045,690 

Advances represent loans made to provide financing resources for capital projects. These amounts are 

expected to be repaid in future years, subject to the various loan terms. None of the above balances are 

expected to be repaid within one year. 

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Transfers 

Transfers to/from other funds at June 30, 2008 are as follows: 

Transfer in 

(receivable fund) 

Transfer out 

(payable fund) 

Amount 

General Fund Special Revenue Source Fund $ 206,490 (1) 

Downtown Redevelopment Fund 307,476 (2) 

Earthquake Redevelopment Fund 2,158,368 (3) 

Non-major governmental funds 5,550,694 (4) 

Big Blue Bus Fund 377,300 (5) 

Non-major enterprise funds 2,808,490 (6) 

Total General Fund 11,408,818 

Special Revenue Source Fund Non-major governmental funds 665,165 (7) 

Total Special Revenue Source Fund 665,165 

Non-major governmental funds General Fund 26,931,190 (8) 

Downtown Redevelopment Fund 1,157,877 (8) 


Non-major governmental funds 2,779,030 (9) 

Total non-major governmental funds 34,421,428 

Wastewater Fund General Fund 256,785 (10) 

Non-major enterprise funds 3,631,279 (11) 

Total Wastewater Fund 3,888,064 

Big Blue Bus Fund General Fund 230,864 

Non-major governmental funds 555,656 (12) 

Total Big Blue Bus Fund 786,520 

Non-major enterprise funds General Fund 978,875 (13) 


Special Revenue Source Fund 223,478 (15) 

Non-major enterprise funds 2,595 (16) 

Non-major governmental funds 329,676 (17) 

Total non-major enterprise funds 5,204,774 

Internal service funds General Fund 19,752 

Internal service funds 658,000 

Total internal service funds 677,752 

Total transfers $ 57,052,521 

(1) Transfer to subsidize housing, homeless programs and transportation management project expenditures. 

(2) Transfer to subsidize downtown redevelopment project expenditures. 

(3) Transfer to subsidize earthquake recovery redevelopment expenditures. 

(4) Transfer to subsidize housing, streets and roads, senior nutrition, library, transportation management and 

various operating expenditures. 

(5) Transfer to subsidize transit officers' salaries and transit mall maintenance. 

(6) Transfer to subsidize parking, traffic and airport expenditures. 

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(7) Transfer to fund transportation related projects. 

(8) Transfer for the payment of debt service. 

(9) Transfer for the payment of debt service and to subsidize housing program expenditures. 

(10) Transfer to subsidize wastewater expenses. 

(11) Transfer to subsidize environmental programs, stormwater and treatment facility expenses. 

(12) Transfer to subsidize transportation related expenses. 

(13) Transfer to subsidize pier, airport and medical trust expenses. 

(14) Transfer to subsidize economic development expenditures and debt service payments. 

(15) Transfer to subsidize water and environmental remediation expenses. 

(16) Transfer to subsidize stormwater management expenses. 

(17) Transfer to subsidize cemetery management expenses. 

(12) RESTRICTED NET ASSETS 

Restricted net assets are net assets whose use is subject to constraints externally imposed. The 

following categories of net assets are restricted as to use by agreements with creditors, developers, 

grantors, or laws or regulations of other governments: debt service, Clean Beaches and Ocean Parcel 

Tax, Housing Authority, Community Development Block Grant, Citizens Option for Public Safety, Air 

Quality Management District, development projects, Asset Seizure, streets projects, low- and moderateincome 

housing, MTBE settlement, perpetual care, miscellaneous medical coverage and construction of 

rail system. The remaining categories of funds, Tenant Ownership Rights Charter Amendment and Rent 

Control, are restricted as to use by law. 

Net assets for governmental activities at June 30, 2008, are restricted as follows: 

Housing Authority $ 2,985,478 

Tenant Ownership Rights Charter Amendment 17,554,518 

Community Development Block Grant 13,719,302 

Citizens Option for Public Safety 244,015 

Rent Control 1,704,023 

Air Quality Management District 183,758 

Asset Seizure 376,017 

Streets projects 1,512,032 

Low- and moderate-income housing 35,697,213 

Total housing and community development 73,976,356 

Clean Beaches and Ocean Parcel Tax 2,536,009 

Miscellaneous grants 18,512,612 

Debt service 18,953,165 

Development projects 38,400,473 

Perpetual care - nonexpendable 7,726,238 

MTBE Settlement 72,176,249 

Total restricted net assets $ 232,281,102 

Of the net assets for business-type activities at June 30, 2008, totaling $495,989,994, $1,625,057 is 

restricted for construction of a rail system. 

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(13) RESERVED AND DESIGNATED FUND BALANCES 

In the fund financial statements, reserves and designations segregate portions of fund balances that are 

either not available or have been earmarked for specific purposes. The various reserves and 

designations are established by actions of the City Council and Management and can be increased, 

reduced or eliminated by similar actions. 

In governmental funds, fund reservations are presented as a component of fund balances as follows: 

Special revenue 

fund 

Special Revenue 

Source Fund 

Capital projects funds 

Downtown 

Redevelopment 

Project Fund 

Earthquake 

Recovery 

Redevelopment 

Fund 

Other 

governmental 

funds 

Total 

governmental 

funds 

General Fund 

Reserved fund balances 

Prepaids and inventory $ 1,794,342 — — — 10,556 1,804,898 

Advances to other funds 20,712,556 — — 6,500,000 4,989,556 32,202,112 

Encumbrances 3,560,777 18,946 — — 227,801 3,807,524 

Cash liquidity 3,546,996 — — — — 3,546,996 

Civic center bonds 2,725,992 — — — — 2,725,992 

Notes receivable 2,916,229 10,124,763 1,923,000 716,669 47,022,324 62,702,985 

Specific continuing capital projects 41,242,835 19,727,496 1,625,399 29,622,773 47,855,645 140,074,148 

Mall assessment district 42,931 — — — — 42,931 

Traffic mitigation 4,514,142 — — — — 4,514,142 

Long-term receivable from state — — — — 1,125 1,125 

Long-term receivable from FEMA — — — — 4,133,189 4,133,189 

Rail construction — — — — 3,524,899 3,524,899 

Low- and moderate-income housing — 1,886,182 — — — 1,886,182 

Childcare center — 614,300 — — — 614,300 

Parks — 424,801 — — — 424,801 

Traffic — 2,263,740 — — — 2,263,740 

Arts — 60,000 — — — 60,000 

Third Street mall/downtown parking — 5,763,191 — — — 5,763,191 

Animal shelter — 21,456 — — — 21,456 

Homeless contributions — 71,118 — — — 71,118 

Roads — 2,052,406 — — — 2,052,406 

Santa Monica Place redevelopment — 27,985 — — — 27,985 

Debt service — — — — 18,953,165 18,953,165 

Perpetual care — — — — 7,726,238 7,726,238 

Total reserved fund balances $ 81,056,800 43,056,384 3,548,399 36,839,442 134,444,498 298,945,523 

Prepaids and Inventory 

Reflects the carrying value of these assets. Since these assets are goods or services already purchased, 

they do not represent available expendable resources. 

Advances to Other Funds 

Reflects the balances due, net of deferred interest revenues, from other funds that are long-term in 

nature and do not represent available expendable resources of the City. 

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Encumbrances 

Encumbrances outstanding at year-end are reported as reservations of fund balances since they do not 

constitute expenditures or liabilities. 

Cash Liquidity 

The City’s Charter provides for a cash liquidity reserve to assure the payment of the operating expenses 

of the City on a cash basis. 

Civic Center Bonds 

Reflects the balance of bond proceeds plus accumulated interest at June 30, 2008 which is legally 

restricted for parking improvements within the Civic Center area. 

Notes Receivable 

Reflects the balances due on loans that are long-term in nature and do not represent available 

expendable resources of the City. 

Specific Continuing Capital Projects 

Reflects the amount needed to fund the full cost of uncompleted capital projects at June 30, 2008. 

Mall Assessment District 

Reflects the balance of assessment revenues accumulated for future debt service for bonds related to the 

Third Street mall and Downtown Assessment District. 

Traffic Mitigation 

Represents the unspent balance of developer fees restricted for traffic mitigation projects. 

Long-Term Receivable from State and FEMA 

Reflects the balances due from the State of California and FEMA for costs incurred after the January 17, 

1994 Northridge Earthquake that is long-term in nature and does not represent available expendable 

resources of the City. 

Rail Construction 

Represents the balance of Proposition A local return funds in the City’s Miscellaneous Grants Fund to 

be used exclusively for rail transportation improvements along the Santa Monica corridor. 

Low- and Moderate-Income Housing 

Represents unspent balance of funds from various sources restricted for use for low- and moderateincome 

housing. 

Childcare Center 

Represents unspent balance of developer fees restricted for future childcare center. 

Parks 

Represents unspent balance of developers fees restricted for parks projects. 

Traffic 

Represents balance of developer fees restricted for traffic mitigation projects. 

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Arts 

Represents balance of funds received from various sources to be used for arts projects. 

Third Street Mall/Downtown Parking 

Represents balance of funds received from various sources to be used for Third Street mall/downtown 

parking. 

Animal Shelter 

Represents unspent balance of contributions from citizens that are restricted for use for the City’s 

Animal Shelter. 

Homeless Contributions 

Represents balance of funds received from various sources to be used for homeless services. 

Roads 

Represents balance of funds received from various sources for road projects. 

Santa Monica Place Redevelopment 

Represents reimbursement funds for professional services restricted for the redevelopment of Santa 

Monica Place. 

Debt Service 

Represents balance of funds held by trustees for future debt service and associated payments in the Debt 

Service and Capital Projects Funds. 

Perpetual Care 

Represents balance of funds held by the City restricted for use for expenses associated with perpetual 

care of the City's Cemetery and Mausoleum. 

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In governmental funds, fund designations are presented as a component of fund balances as follows: 

Designated fund balances 

General Fund 

Special revenue 

fund 

Special 

Revenue 

Source Fund 

Other 

governmental 

funds 

Total 

governmental 

funds 

Civic area development $ 758,708 — — 758,708 

Other purposes 6,346,558 — — 6,346,558 

Compensated absences 9,153,748 — 316,183 9,469,931 

Lifeguard headquarters — — 10,000 10,000 

Santa Monica Place 161,221 — — 161,221 

Affordable overnight accommodations 340,000 — — 340,000 

Parks enhancement 370,845 — — 370,845 

City Hall Renovation 3,320,718 — — 3,320,718 

Education foundation 420,000 — — 420,000 

Low-and moderate-income housing 132,223 — 1,378,935 1,511,158 

Rent control — — 58,975 58,975 

Consumer protection funds 56,983 — — 56,983 

Franchise settlement — 2,000,000 — 2,000,000 

MTBE settlement interest — 5,748,208 — 5,748,208 

Cable Franchise fee — 57,923 — 57,923 

Environmental mitigation 1,569,131 — — 1,569,131 

Capital improvements project start-up 260,000 — — 260,000 

Employee training 150,000 — — 150,000 

Comprehensive land use plan 101,845 — — 101,845 

Homelessness capital projects 2,283 — — 2,283 

Navy/Ozone/Longfellow improvements 83,000 — — 83,000 

UUT revenue loss 8,200,000 — — 8,200,000 

Fire vehicle replacement 2,367,600 — — 2,367,600 

Green Energy 1,000,000 — — 1,000,000 

PERS 2,527,680 — — 2,527,680 

Operating contingency 25,250,000 — — 25,250,000 

Total designated fund balances $ 62,572,543 7,806,131 1,764,093 72,142,767 

Civic Area Development 

Represents the balance of Transient Occupancy Tax receipts designated by City Council to be used for 

future development of the City's Civic Center area. 

Other Purposes 

Represents funds designated for other purposes. 

71




Compensated Absences 

Represents the estimated liability for compensated absences. 

Lifeguard Headquarters 

Represents funds designated for upgrade of lifeguard headquarters. 

Santa Monica Place 

Represents monies designated for future lease payments to the City Redevelopment Agency, Downtown 

Project, for Santa Monica Place parking structures through June 30, 2009. 

Affordable Overnight Accommodations 

Represents balance of funds designated for the development, redevelopment, expansion, replacement, 

repair, operation or use of affordable overnight accommodations within the City of Santa Monica. 

Parks Enhancement 

Represents funds designated by Council for use for enhancement of the City's parks. 

City Hall Renovation 

Represents funds designated by Council for use for City Hall renovation. 

Education Foundation 

Represents funds designated by Council to help finance a Santa Monica Malibu Unified School District 

Education Foundation. 

Low- and Moderate-Income Housing 

Represents funds designated by Council for low- and moderate-income housing. 

Rent Control 

Represents funds designated by the Rent Control Board to provide for operations uncertainties and the 

future replacement of certain equipment. 

Consumer Protection Funds 

Represents funds designated for use by the City Attorney’s Office for consumer protection. 

Franchise Settlement 

Represents funds received in satisfaction of dispute related to City cable television franchise. 

MTBE Settlement Interest 

Represents interest earned on funds received from lawsuit related to MTBE contamination of City’s 

water. 

Cable Franchise Fee 

Represents funds received for cable franchise fees designated for PEG access facilities. 

Environmental Mitigation 

Represents funds designated for environmental mitigation. 

72




Capital Improvements Program Project Start-up 

Represents funds designated for capital improvements projects related to the library, Virginia Avenue 

Park and Civic Center Courthouse mitigation and murals. 

Employee Training 

Represents funds designated for employee training. 

Comprehensive Land Use Plan 

Represents funds for a comprehensive land use plan. 

Homelessness Capital Projects 

Represents balance of funds previously appropriated for various services to homeless persons 

designated by City Council to be used for homeless service programs. 

Navy/Ozone/Longfellow Improvements 

Represents funds designated by Council for future improvements to borderline neighborhoods. 

UUT Revenue Loss 

Represents funds designated for anticipated utility user tax revenue loss. 

Green Energy 

Represents funds for green energy projects. 

PERS 

Represents funds designated for future payments to PERS. 

Fire Vehicle Replacement 

Represents funds designated by Council for a fire vehicle replacement program. 

Operating Contingency 

Represents funds designated for operating contingency. 

(14) LITIGATION AND CONTINGENCIES 

Litigation 

The City is regularly subject to certain legal proceedings and claims that arise in the normal course of 

City operations. Many of these have not yet been fully adjudicated. In the opinion of the City Attorney, 

there are adequate legal defenses to these actions and it is not anticipated that there will be any adverse 

material effect on the financial position of the City. 

Grants 

The City recognizes as revenue grant monies received as reimbursement for costs incurred in certain 

Federal and State programs it administers. Although the City’s Federal grant programs have been 

audited through June 30, 2008 in accordance with the requirements of the Federal Single Audit Act of 

1997 and the related U.S. Office of Management and Budget Circular A-133, these programs may be 

subject to financial and compliance audits by the reimbursing agencies. The amount, if any, of 

73




expenditures which may be disallowed by the granting agencies cannot be determined at this time, 

although the City expects such amounts, if any, to be immaterial. 

Construction Commitments 

The City has a number of construction projects currently underway. Purchase orders, contracts and 

other commitments for these projects are recorded in order to reserve the portion of the applicable 

appropriation and are recorded at year-end as reservations of fund balances. Approximately $143 

million will be payable upon future performance under these contracts. 

Operating Lease Revenue/Expenses 

The City has entered into operating lease arrangements as lessor for property. The following schedule is 

an analysis of the City’s investment in property under operating leases by major classes as of June 30, 

2008: 

Land $ 133,785,085 

Buildings 18,226,752 

Improvements other than buildings 10,302,396 

Infrastructure 8,213,438 

170,527,671 

Less: Accumulated depreciation (19,906,282) 

Total $ 150,621,389 

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The following is a schedule of both future minimum lease rental revenue to be received by the City as 

lessor and lease payments to be made by the City as lessee under operating leases that have initial or 

remaining noncancelable lease terms in excess of one year as of June 30, 2008: 

Fiscal year ended June 30 Rental revenue Lease payments 

2009 $ 6,525,755 

2,351,597 

2010 5,744,563 2,151,651 

2011 5,037,687 1,831,025 

2012 4,555,152 1,250,627 

2013 4,261,034 754,529 

2014 - 2018 16,866,881 3,676,499 

2019 - 2023 11,750,037 59,220 

2024 - 2028 10,450,676 − 

2029 - 2033 6,454,147 − 

2034 - 2038 4,835,779 − 

2039 - 2043 2,803,099 − 

2044 - 2048 2,803,099 − 

2049 - 2053 2,803,099 − 

2054 - 2058 2,803,099 − 

2059 - 2063 2,803,099 − 

2064 - 2068 1,261,395 − 

The total long-term lease rental revenues and expenditures/expenses for the year ended June 30, 2008, 

were $6,063,766 and $1,919,476, respectively. 

Line of Credit 

On May 1, 2008, the Redevelopment Agency of the City entered into a line of credit agreement with 

Bank of America. The agreement calls for an initial line of credit up to $50 million which may be 

increased at the Agency’s request and the bank’s option to $75 million. The line is available through 

June 2013 and is subject to quarterly interest payments at LIBOR plus 1.25%. 

As of June 30, 2008 the City has not drawn on the line. 

(15) SELF INSURANCE 

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 others; and natural disasters. The City has 

chosen to establish risk financing internal service funds where assets are set aside for claim settlements 

associated with such risks of loss up to certain limits and has obtained excess liability coverage through 

the Authority for California Cities Excess Liability (ACCEL), a joint powers authority of twelve 

medium-size California municipalities. ACCEL is a member of the California State Association of 

Counties Excess Insurance Authority for the purpose of providing access to excess workers’ 

75




compensation coverage for major employee injury risks through a program of pooled self insurance/reinsurance 

and insurance on a risk sharing basis. 

The City retains self-insurance up to $1,000,000 for general liability, automobile liability, bus 

operations liability and workers’ compensation. ACCEL covers up to an additional $4,000,000 for all 

liabilities and arranges placement of excess of liability insurance over $5,000,000 up to $80,000,000. 

California State Association of Counties Excess Insurance Authority covers up to $4,000,000 for 

workers’ compensation and arranges for excess of workers compensation over $4,000,000 up to 

$300,000,000. No claim settlements have exceeded insurance coverage in any of the past three years. 

In order to provide funds to pay claims, ACCEL collects premiums from each member. The premiums 

paid are credited with investment income at the rate earning on the Authority’s investments. Based on 

ACCEL’s June 30, 2008 audited financial statements, the City had deposits of $2,674,842 (15.8% of 

ACCEL’s total deposits) net of unpaid claims with ACCEL. Total assets of ACCEL at June 30, 2008 

were $29,960,045. ACCEL has no capital contributions. 

The City’s unpaid claims liabilities are based on the results of actuarial studies. The unpaid claims 

liabilities are compiled by the Risk Manager of the City and include amounts for claims incurred but not 

reported as of year end. Claims liabilities are calculated considering the effects of inflation, recent 

claim settlement trends including frequency and amount of payouts and other economic and social 

factors. Net present values of the unpaid claims liabilities are estimated for the year ended June 30, 

2008, based on interest rates ranging from 4.40% to 4.45%. Revenues of the risk management funds, 

together with funds to be provided in the future, are expected to provide adequate resources to meet 

liabilities as they come due. Nonincremental claims expenses have not been included as part of the 

liability for claims. 

Changes in the liability for claims during the past two fiscal years for the self-insurance funds follow: 

Fund (by fiscal year) 

Beginning of 

year 

Current-year 

claims and 

changes in 

estimates 

Claims 

payments 

End of year 

Due within 

one year 

June 30, 2007: 

Comprehensive $ 5,387,973 817,248 (1,128,569) 5,076,652 999,234 

Bus 2,012,795 2,022,013 (2,505,690) 1,529,118 702,369 

Automobile 599,311 382,796 (727,649) 254,458 95,350 

Workers' Compensation 21,189,344 4,188,819 (4,677,225) 20,700,938 3,239,345 

$ 29,189,423 7,410,876 (9,039,133) 27,561,166 5,036,298 

June 30, 2008: 

Comprehensive $ 5,076,652 1,021,194 (1,851,875) 4,245,971 1,523,291 

Bus 1,529,118 833,433 (421,913) 1,940,638 455,605 

Automobile 254,458 233,103 (252,306) 235,255 89,994 

Workers' Compensation 20,700,938 5,250,183 (5,315,934) 20,635,187 4,224,579 

$ 27,561,166 7,337,913 (7,842,028) 27,057,051 6,293,469 

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(16) EMPLOYEE BENEFIT PROGRAMS 

Santa Monica Public Employees’ Retirement Plan 

The City’s defined benefit pension plan, Santa Monica Public Employees’ Retirement Plan (Plan) 

provides retirement and disability benefits, annual cost-of living adjustments, and death benefits to plan 

members and beneficiaries. The Plan is part of the Public Agency portion of the California Public 

Employees Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, 

which acts as a common investment and administrative agent for participating public employers within 

the State of California. State statutes within the Public Employees’ Retirement Law establish a menu of 

benefit provisions as well as other requirements. The City selects optional benefit provisions from the 

benefit menu by contract with CalPERS and adopts those benefits through City ordinance. CalPERS 

issues a separate comprehensive annual financial report available from the CalPERS Executive Office, 

400 Q Street, Sacramento, California 95811. 

Plan Description 

All full-time employees of the City and part-time employees who have worked over 1,000 hours during 

a fiscal year are eligible to participate in the Plan. The City is authorized by statute to establish and 

amend all plan provisions. Related benefits vest after five years of service. Upon five years of service, 

employees who retire at or after age 50 are entitled to receive an annual retirement benefit. 

The defined pension benefit is payable monthly for life, in an amount that varies, from 2.4% at age 50 to 

a maximum of 3% at age 55 for fire safety employees, 3% at age 50 for police safety employees and 2% 

at age 50 to a maximum of 2.7% at age 55 for miscellaneous employees, of the employee’s single 

highest year’s salary for each year of credited service. The Plan also provides death and disability 

benefits. 

Funding Policy 

Active full-time members in the Plan are required to contribute 8% for miscellaneous employees and 

9% for safety employees of their annual covered salary. The City makes such employee contributions 

on their behalf and for their account. The City is required to contribute the actuarially determined 

remaining amounts necessary to fund the benefits for its members. The actuarial methods and 

assumptions used are those adopted by the CalPERS Board of Administration. CalPERS prepares 

separate actuarial valuations for miscellaneous, fire safety and police safety members. The required 

employer contribution rate for the fiscal year ended June 30, 2008 was 15.765% for miscellaneous 

members; 32.822% for police safety members and 21.557% for fire safety members. The contribution 

requirements of the plan members are established by State statute and the employer contribution rate is 

established and may be amended by CalPERS. The miscellaneous members do reimburse the City for 

the cost of an enhanced benefit at a rate of 6.7%. 

Annual Pension Cost 

For the fiscal year ended June 30, 2008, the City’s annual pension cost and actual contributions were 

$24,767,790. The City also contributed $12,689,485 on behalf of employees. Employees directly 

contributed $276,893. Total contributions were $37,734,168. The required contribution for the fiscal 

year ended June 30, 2008 was determined as part of the June 30, 2005 actuarial valuation using the entry 

age normal actuarial cost method with the contributions determined as a percentage of payroll. The 

77




actuarial assumptions included (a) 7.75% investment rate of return (net of administrative expenses); (b) 

projected salary increases that vary by duration of service ranging from 3.25% to 14.45% for 

miscellaneous members, from 3.25% to 11.15% for safety members, and (c) 3.25% cost-of-living 

adjustment. Both (a) and (b) include an inflation component of 3.00%. The actuarial value of the 

Plan’s assets was determined using a technique that smoothes the effect of short-term volatility in the 

market value of investments by computing an expected value of assets along with the actual market 

value of assets. The Plan’s unfunded accrued liability (or excess assets) is being amortized as a level 

percentage of projected payrolls on a closed basis over a period not to exceed twenty years. 

Three-Year Trend Information for the Annual Pension Cost Funding for the Plan (Unaudited) 

Fiscal year ended 

June 30 

Annual pension cost 

(APC) 

Percentage of APC 

contributed 

Net pension 

obligation 

2008 $ 24,767,790 100 % — 

2007 20,719,971 100 — 

2006 20,236,173 100 — 

Pension Funding Information 

As of June 30, 2007, the date of the latest actuarial valuation, the City’s under funded liability was 

$133,291,543. This under funded liability was primarily the result of a decline in the value of the plan 

assets, less than anticipated investment returns by CalPERS and an increase in benefits for Public Safety 

employees. The City has addressed the under funded liability through additional contributions, as 

determined by CalPERS, in excess of the amount required to fund the current normal cost liability. 

Maintaining this funding schedule CalPERS has estimated that the under funded balance will be 

amortized over 15 years. Prior to the fiscal year ended June 30, 2002, the City’s pension plan had been 

over funded for ten years. 

For miscellaneous members, the plan was 84.4% funded. The actuarial accrued liability for benefits was 

$465,717,963 and the actuarial value of assets was $393,225,061, resulting in an unfunded actuarial 

accrued liability (UAAL) of $72,492,902. The covered payroll (annual payroll of active employees 

covered by the plan) was $101,760,156, and the ratio of the UAAL to the covered payroll was 71%. 

For fire safety members, the plan was 87.8% funded. The actuarial accrued liability for benefits was 




For police safety members, the plan was 81.1% funded. The actuarial accrued liability for benefits was 




The schedule of funding progress, presented as RSI following the notes to the financial statements, 

presents multiyear trend information about whether the actuarial value of plan assets is increasing or 

decreasing over time relative to the actuarial accrued liability for benefits. 

78




Deferred Compensation Plans 

The City offers to its employees an optional deferred compensation plan created in accordance with 

Section 457 of the Internal Revenue Code. This plan is available to substantially all employees and 

allows participants to defer a portion of their current income until future years to shelter such funds and 

earnings from state and federal taxation until withdrawal. The deferred compensation is not available to 

participants until termination, retirement, death or unforeseeable emergency. 

The City offers an employer discretionary, defined contribution plan established and governed under 

Internal Revenue Code Section 401(a). Employer-only contributions are calculated based upon a 

percentage of employee compensation under agreements with employee bargaining groups and unions. 

The City offers to its as-needed employees a separate Section 457 deferred compensation plan under the 

Omnibus Budget Reconciliation Act (OBRA). This plan is available to all as-needed employees who 

are not eligible to participate in CalPERS. This plan requires equal employer and employee 

contributions based on a percentage of earnings. 

These plans are administered through third-party administrators. The City does not perform the 

investing function and has no fiduciary accountability for the plans. Thus, plan assets and any related 

liabilities to plan participants have been excluded from the City’s basic financial statements. 

Other Postemployment Benefits 

In addition to providing pension benefits through CalPERS, the City, in accordance with agreements 

with various bargaining units and groups, provides medical insurance benefits that are considered other 

postemployment benefits (OPEB) to certain retired employees. Employees of the Supervisory Team 

Associates bargaining unit become eligible for a medical insurance benefit if they fulfill length of 

service requirements and have more than 75 unused sick leave days upon retirement. Employees of the 

Executive Pay Plan group and management employees of the Rent Control Board are eligible for a city 

paid medical insurance benefit if their combined retirement age and years of City service equals or 

exceeds 70. Although not delineated in any written agreement, all retirees are allowed to continue 

participating in one of the City’s health plans at the same rate as active employees. The City also 

maintains minimum benefits for public safety employees provided by the City’s contract with its 

healthcare provider. 

The City pays for OPEB on a pay-as-you-go basis. 

Annual OPEB Cost and Net OPEB Obligation 

The City’s OPEB cost is calculated based on the annual required contribution (ARC) of the employer, 

an amount actuarially determined in accordance within the parameters of GASB 45, “Accounting and 

Financial Reporting for Employers for Postemployment Benefits Other than Pensions.” The ARC 

represents a level of funding that if paid on an ongoing basis is projected to cover the normal cost each 

year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following 

table shows the components of the City’s annual OPEB cost for the year, the amount actually 

contributed to the plan, and changes in the City’s OPEB obligation to the plan. 

79




Development of Net OPEB Obligation and Annual OPEB Cost (in thousands) 

Annual required contribution $ 1,638 

Interest on OPEB obligation — 

Adjustment to annual required contribution — 

Annual OPEB expense 1,638 

Contributions made (396) 

Increase in net OPEB obligation 1,242 

Net OPEB obligation - beginning of the year — 

Net OPEB obligation - end of the year $ 1,242 

Schedule of Employer Contributions (in thousands) 

Annual 

OPEB Costs 

Annual 

Contribution 

Percentage 

Contribution 

Net OPEB 

Obligation 

Actuarial methods and assumptions 

$1,638 $396 24.2% $1,242 

Projections of benefits for financial reporting purposes are based on the plan as understood by the City 

and its employees and include the types of benefits provided at the time of each valuation. The actuarial 

methods and assumptions used techniques that are designed to reduce short-term volatility in actuarial 

accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the 

calculations. Actuarial valuations involve estimates of the value of reported amounts and assumptions 

about the probability of events far into the future, and that actuarially determined amounts are subject to 

continual revision as results are compared to past expectations and new estimates are made about the 

future. 

In the July 1, 2007 actuarial valuation, the entry age normal actuarial cost method was used. The 

actuarial assumptions included a 5.0% rate of return, which is a blended rate of expected long-term 

return on plan assets on the City’s own investments calculated based on the funded level of the plan at 

the valuation date, and an annual health care cost trend of 11.0% initially, reduced by decrements to an 

ultimate rate of 5.0% after 8 years. Both rates include a 3.25% inflation assumption. The remaining 

amortization period at July 1, 2007 was thirty years. 

Medical Trusts 

The City contributes, consistent with bargaining unit agreements, monies to medical trusts that provide 

postemployment medical benefits to employees. The amount of benefits provided to employees under 

these plans is limited solely to the amount contributed, related investment earnings, and forfeitures. 

During FY 2007-08 the City contributed $5,763,636 towards the retiree medical trusts. These are 

administered through third-party administrators and the City does not perform the investing function or 

have other significant responsibility relating to the management of plan assets. Thus, plan assets and 

any related liabilities have been excluded from the City’s basic financial statements. 

80




(17) SHORT-TERM LOANS PAYABLE 

The State Department of Housing and Urban Development Deferred Payment Rehabilitation Loan 

Program (DPRLP) granted two $200,000 non-interest bearing loans to the City. The proceeds of these 

loans were used to fund two promissory notes receivable from the owners of certain rental properties. 

Upon payment to the City, proceeds must be paid to the State of California as repayment for the DPRLP 

loans. 

Short-term loans payable activity for the year ended June 30, 2008 was as follows: 

Date of issue 

Balance at 

July 1, 2007 Additions Reductions 

Balance at 

June 30, 2008 

DPRLP loan Dec. 22, 1988 $ 200,000 

— — 200,000 

DPRLP loan Dec. 29, 1989 200,000 — — 200,000 

Total $ 400,000 

— — 400,000 

81


82



Required Supplementary Information


Required Supplementary Information - Pension Funding Information 


PENSION FUNDING INFORMATION 

The City’s Pension Plan includes separate valuations for Miscellaneous Members, Fire Safety Members and Police Safety Members. The funded status of 

the Plan for each of these member groups for the actuarial valuations performed as of June 30, 2005 through 2007 are as follows (valuations for 2008 are not 

yet available): 

Miscellaneous Members 

(dollars in thousands) 

83 

Valuation date 

(June 30) 

Entry age normal 

accrued liability 

Actuarial value 

of assets 

Underfunded 

liability (UAAL) Funded ratio 

Annual covered 

payroll 

UAAL as a percentage 

of payroll 

2007 $ 465,718 $ 393,225 $ 72,493 84.4 % $ 101,760 71.2 % 

2006 427,544 351,378 76,166 82.2 96,384 79.0 

2005 354,403 318,864 35,539 90.0 88,933 40.0 

Fire Safety Members 



(June 30) 





Underfunded 



payroll 



2007 $ 133,026 $ 116,798 $ 16,228 87.8 % $ 11,951 135.8 % 

2006 124,716 107,932 16,784 86.5 11,512 145.8 

2005 116,225 99,993 16,232 86.0 10,840 149.7 

Police Safety Members 



(June 30) 





Underfunded 



payroll 



2007 $ 235,336 $ 190,765 $ 44,571 81.1 % $ 22,730 196.1 % 

2006 219,124 174,553 44,571 79.7 21,212 210.1 

2005 199,310 161,418 37,892 81.0 18,721 202.4


Required Supplementary Information - OPEB Funding Information 



Type of Valuation 


(July 1) 



Actuarial 

accrued 

liability 

Undfunded actuarial 


(UAAL) Funded ratio 


payroll 

UAAL as a 

percentage of payroll Interest rate Salary Scale 

Actual 2007 $ - $ 16,518 $ 16,518 - % $ 124,253 13.29% 5.00% 3.25% 

84


Nonmajor Governmental Fund Financial Statements 

Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures 

for specified purposes. The nonmajor special revenue funds used by the City in this report are listed below: 

Clean Beaches and Ocean Parcel Tax Fund – To account for activity related to implementation of 

Watershed Management Plan and the passage of Measure V in November 2006. 

Beach Recreation Fund – To account for beach parking and concession revenues and expenditures 

related to beach maintenance and recreation activities. 

Housing Authority Fund – To account for the receipt and expenditure of Federal and State funds 

related to housing programs. 

Disaster Relief Special Revenue Fund (Special Revenue Fund Type) – To account for Federal and 

State disaster relief revenues and expenditures associated with recovery from the January 17, 1994 

Northridge Earthquake. 

Tenant Ownership Rights Charter Amendment (TORCA) Fund – To account for filing fee and 

conversion tax revenues and expenditures related to various housing programs authorized by Chapter 

XX of the City Charter. 

Community Development Block Grant (CDBG) Fund – To account for Federal entitlements under 

the Housing and Community Development Act of 1974, as amended. The City Council annually 

allocates CDBG funds to various programs. 

Miscellaneous Grants Fund – To account for the receipt and expenditure of Federal, State and 

County awarded grants and special allocations provided to the City. 

Citizens Option for Public Safety Fund – To account for the receipt and expenditure of the Citizens 

Option for Public Safety program established by AB3229 of 1996. 

Rent Control Fund – To account for revenues and expenditures of the Rent Control Board. 

Air Quality Management District (AQMD) Fund – To account for the receipt and expenditure of 

Air Quality Management District funds. 

Parks & Recreation Fund – To account for funds collected under the City's Unit Dwelling Tax. 

These funds are to be used for the acquisition, improvement and expansion of public parks, 

playgrounds and recreational facilities. 

Asset Seizure Fund – To account for the receipt and expenditure of equitable sharing program funds. 

Gas Tax Fund – To account for State and County gasoline tax allocations and any Federal funds 

provided to the City for street-related purposes. 

85


Capital Projects Funds are used to account for the accumulation of resources to be used for the acquisition 

or construction of major capital facilities of the City and Redevelopment Agency. The nonmajor capital 

projects funds used in this report are listed below: 

Capital Projects Fund – Primarily financed through transfers from the General Fund for acquisition, 

construction and major renovation of City infrastructure and facilities. 

Low-and Moderate-Income Housing (Downtown, Earthquake Recovery and Ocean Park 

Projects) – Under requirements of the State of California Health and Safety Code, the 

Redevelopment Agency of the City of Santa Monica is required to set aside 20% of tax increment 

revenues for housing projects benefiting low-and moderate-income households. 

Ocean Park Redevelopment Project Fund – To account for the revenues and expenditures of the 

Ocean Park Project area of the Redevelopment Agency of the City of Santa Monica. This thirty-three 

acre project consists of two areas: 1A and 1B. The redevelopment plan for the twenty-five acres of 

Area 1A was approved in June 1960 and work was completed in May 1987. The project contains 

two 17-story high-rise apartment buildings of 500 units and a park. The redevelopment plan for the 

eight acres of Area 1B was approved in January 1961 and work was completed in 1983. The project 

contains two senior citizen residential apartment complexes and a former utility building now used 

for other purposes. 

Debt Service Funds are used to accumulate resources for, and the payment of, general long-term debt 

principal, interest and related costs. The debt service funds used by the City in this report are listed below: 

City Fund – To account for accumulation of resources for, and the payment of, general long-term 

debt principal, interest and related costs for library, public safety facility and parking authority bonds. 

Redevelopment Agency Fund – To account for accumulation of resources for, and the payment of, 

general long-term debt principal, interest and related costs for the Ocean Park, downtown and 

earthquake recovery bonds. 

Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, and 

not principal, may be used for restricted purposes. The specific permanent funds used by the City in this 

report are listed below: 

Cemetery Perpetual Care Fund – To account for all funds received by the City from cemetery 

users for the perpetual care of the cemetery grounds. 

Mausoleum Perpetual Care Fund – To account for all funds designated for perpetual care of the 

mausoleum located at the City cemetery. 

86


87


Combining Balance Sheet 

Nonmajor Governmental Funds By Fund Type 

June 30, 2008 

Total Total Total 

special capital Total Total nonmajor 

revenue projects debt service permanent governmental 

Assets funds funds funds funds funds 

Cash and investments $ 36,453,209 40,606,192 — 13,303 77,072,704 



Accounts 250,658 — — 1,709 252,367 

Notes 27,894,571 19,127,752 — — 47,022,323 

Property tax — 1,062,250 — — 1,062,250 

Interest 404,332 204,795 — — 609,127 

Other governments 14,513,046 — — — 14,513,046 

Prepaids 10,556 — — — 10,556 

Cash with fiscal agent — 665,162 18,953,165 7,711,226 27,329,553 

Advances to other funds 9,836,527 — — — 9,836,527 

Total assets $ 89,362,899 61,666,151 18,953,165 7,726,238 177,708,453 

Liabilities and Fund Balances 

Liabilities: 


126,740 — — 4,297,907 

Accrued liabilities 162,247 — — — 162,247 

Short-term loan payable 400,000 — — — 400,000 

Contracts payable (retained percentage) 752,687 — — — 752,687 

Due to other funds 3,402,840 — — — 3,402,840 

Deferred revenue 13,702,326 — — — 13,702,326 

Deposits 45,971 — — — 45,971 

Advances from other funds 10,357,295 6,371,075 — — 16,728,370 

Total liabilities 32,994,533 6,497,815 — — 39,492,348 

Fund balances: 

Reserved 52,007,506 55,757,589 18,953,165 7,726,238 134,444,498 

Unreserved - designated 1,764,093 — — — 1,764,093 

Unreserved - undesignated 2,596,767 (589,253) — — 2,007,514 

Total fund balances 56,368,366 55,168,336 18,953,165 7,726,238 138,216,105 

Total liabilities and 

fund balances $ 89,362,899 61,666,151 18,953,165 7,726,238 177,708,453 

88


Combining Statement of Revenues, Expenditures and 

Changes in Fund Balances 

Nonmajor Governmental Funds By Fund Type 


Total Total Total 

special capital Total Total nonmajor 

revenue projects debt service permanent governmental 

funds funds funds funds funds 

Revenues: 

Incremental property taxes $ — 16,168,953 — — 16,168,953 

Other taxes 5,305,919 — — — 5,305,919 

Licenses and permits 93,650 — — — 93,650 

Intergovernmental 32,560,261 — — — 32,560,261 

Charges for services 10,063,416 — — 87,676 10,151,092 

Investment income 1,731,469 693,670 325,641 (567,192) 2,183,588 

Rental income 90,517 — — — 90,517 

Other 7,731,778 122,498 — — 7,854,276 

Total revenues 57,577,010 16,985,121 325,641 (479,516) 74,408,256 

Expenditures: 

Current: 

General government 288,769 — — — 288,769 

Public safety 766,601 477,830 — — 1,244,431 

General services 15,708,986 — — — 15,708,986 

Cultural and recreation services 13,665,140 — — — 13,665,140 

Library 25,180 — — — 25,180 

Housing and community development 19,689,758 4,619,878 — — 24,309,636 

Debt service expenditures: 

Principal — — 8,075,000 — 8,075,000 

Interest — 307,427 7,772,433 — 8,079,860 

Total expenditures 50,144,434 434 5,405,135 15,847,433 433 — 71,397,002 


over (under) expenditures 7,432,576 11,579,986 (15,521,792) (479,516) 3,011,254 


Transfers in 203,671 18,490,200 15,727,557 — 34,421,428 

Transfers out (6,443,406) (3,107,139) — (329,676) (9,880,221) 

Total other financing sources (uses) (6,239,735) 15,383,061 15,727,557 (329,676) 24,541,207 

Net change in fund balances 1,192,841 26,963,047 205,765 (809,192) 27,552,461 

Fund balances at beginning of year 55,175,525 28,205,289 18,747,400 8,535,430 110,663,644 

Fund balances at end of year $ 56,368,366 55,168,336 18,953,165 7,726,238 138,216,105 

89



Nonmajor Special Revenue Funds 

June 30, 2008 

Clean Beaches 

Community 

and Ocean Beach Housing Disaster Development 

Assets Parcel Tax Recreation Authority Relief TORCA Block Grant 

Cash and investments $ 2,458,548 6,468,425 2,972,686 — 8,160,198 1,209,848 



Accounts 67,195 174,049 6,157 — — 3,257 

Notes — — — — 9,371,971 10,802,229 

Interest 10,349 76,624 24,261 141 82,701 3,108 

Other governments — — 169,025 10,933,243 — 144,899 

Prepaids — — — 560 — — 

Advances to other funds — — — — — 6,717,627 

Total assets $ 2,536,092 6,719,098 3,172,129 10,933,944 17,614,870 18,880,968 

Liabilities and Fund Balances 

Liabilities: 

Accounts payable $ 83 176,003 186,651 37,523 60,352 129,523 

Accrued liabilities — 49,100 — 2,311 — — 

Short-term loan payable — — — — — — 

Contracts payable (retained percentage) — — — — — 40,274 

Due to other funds — — — 3,402,840 — — 

Deferred revenue — — — 6,798,929 — 4,991,869 

Deposits — 45,971 — — — — 

Advances from other funds — 3,842,973 — 6,514,322 — — 

Total liabilities 83 4,114,047 186,651 16,755,925 60,352 5,161,666 


Reserved 883,000 1,856,482 — 4,134,874 16,517,467 12,672,885 

Unreserved - designated — 82,660 — — — 1,046,417 

Unreserved - undesignated 1,653,009 665,909 2,985,478 (9,956,855) 956 1,037,051 051 

— 

Total fund balances (deficits) 2,536,009 2,605,051 2,985,478 (5,821,981) 17,554,518 13,719,302 

Total liabilities and fund 

balances $ 2,536,092 6,719,098 3,172,129 10,933,944 17,614,870 18,880,968 

90

Total 

nonmajor 

Citizens 

special 

Miscellaneous Option for Rent Parks and Asset revenue 

Grants Public Safety Control AQMD Recreation Seizure Gas Tax funds 

10,390,873 244,949 1,830,705 152,989 255,243 449,214 1,859,531 36,453,209 

— — — — — — — 250,658 

7,720,371 — — — — — — 27,894,571 

135,761 3,149 28,623 2,669 2,289 6,194 28,463 404,332 

3,237,779 — — 28,100 — — — 14,513,046 

4,600 — 5,396 — — — — 10,556 

3,118,900 — — — — — — 9,836,527 

24,608,284 248,098 1,864,724 183,758 257,532 455,408 1,887,994 89,362,899 

3,125,298 4,083 54,003 — — 79,391 318,257 4,171,167 

4,138 — 106,698 — — — — 162,247 

400,000 — — — — — — 400,000 

654,708 — — — — — 57,705 752,687 

— — — — — — — 3,402,840 

1,911,528 — — — — — — 13,702,326 

— — — — — — — 45,971 

— — — — — — — 10,357,295 

6,095,672 4,083 160,701 — — 79,391 375,962 32,994,533 

14,507,637 231,067 16,648 112,250 170,753 76,995 827,448 52,007,506 

332,518 — 302,498 — — — — 1,764,093 

3,672,457 12,948 1,384,877 877 71,508 86,779 299,022 684,584 2,596,767 

18,512,612 244,015 1,704,023 183,758 257,532 376,017 1,512,032 56,368,366 

24,608,284 248,098 1,864,724 183,758 257,532 455,408 1,887,994 89,362,899 

91



Changes in Fund Balances (Deficits) 

Nonmajor Special Revenue Funds 


Clean 

Beaches 

Community 

and Ocean Beach Housing Disaster Development 

Parcel Tax Recreation Authority Relief TORCA Block Grant 

Revenues: 

Other taxes $ 2,505,448 

— — — 381,320 — 

Licenses and permits — 93,650 — — — — 

Intergovernmental — — 16,277,007 5,973,724 — 1,731,516 

Charges for services — 5,941,208 — — — — 

Investment income 30,561 296,028 96,729 10,703 373,448 50,322 

Rental income — 71,294 — — — — 

Other — 592,590 40,629 25,773 100,000 — 

Total revenues 2,536,009 6,994,770 16,414,365 6,010,200 854,768 1,781,838 

Expenditures: 

Current: 

General government — 237,222 — 51,547 — — 

Public safety — — — — — — 

General services — 2,775,801 — 5,973,724 — 670,225 

Cultural and recreation services — 3,575,851 — — — 34,833 

Library — — — — — — 

Housing and community development — — 14,009,342 — 196,414 955,555 

Total expenditures — 6,588,874 14,009,342 6,025,271 196,414 1,660,613 


over (under) expenditures 2,536,009 405,896 2,405,023 (15,071) 658,354 121,225 

Other financing (uses): 

Transfers in — 6,790 196,881 — — — 

Transfers out — — (1,242,028) — (28,506) (1,144,775) 

Total other financing (uses) — 6,790 (1,045,147) 147) — (28,506) (1,144,775) 144 Net change in fund balances 2,536,009 412,686 1,359,876 (15,071) 629,848 (1,023,550) 

Fund balances (deficits) at beginning of year — 2,192,365 1,625,602 (5,806,910) 16,924,670 14,742,852 

Fund balances (deficits) at end of year $ 2,536,009 2,605,051 2,985,478 (5,821,981) 17,554,518 13,719,302 

92

Total 

nonmajor 

Citizens 

special 

Miscellaneous Option for Parks and Asset revenue 

Grants Public Safety Rent Control AQMD Recreation Seizure Gas Tax funds 

2,368,839 — — — 50,312 — — 5,305,919 

— — — — — — — 93,650 

6,591,277 175,223 — 560,418 — 37,677 1,213,419 32,560,261 

— — 4,122,208 — — — — 10,063,416 

592,491 12,826 152,313 12,259 9,350 23,248 71,191 1,731,469 

— — — — — — 19,223 90,517 

6,970,410 — 2,376 — — — — 7,731,778 

16,523,017 188,049 4,276,897 572,677 59,662 60,925 1,303,833 57,577,010 

— — — — — — — 288,769 

240,922 178,852 — — — 346,827 — 766,601 

4,869,326 — — 643,291 — — 776,619 15,708,986 

10,054,209 — — — 247 — — 13,665,140 

25,180 — — — — — — 25,180 

367,383 — 4,161,064 — — — — 19,689,758 

15,557,020 178,852 4,161,064 643,291 247 346,827 776,619 50,144,434 

965,997 9,197 115,833 (70,614) 59,415 (285,902) 527,214 7,432,576 

— — — — — — — 203,671 

(2,130,290) — — — — — (1,897,807) (6,443,406) 

(2,130,290) 290) — — — — — (1,897,807) 807) (6,239,735) 

(1,164,293) 9,197 115,833 (70,614) 59,415 (285,902) (1,370,593) 1,192,841 

19,676,905 234,818 1,588,190 254,372 198,117 661,919 2,882,625 55,175,525 

18,512,612 244,015 1,704,023 183,758 257,532 376,017 1,512,032 56,368,366 

93


Schedule of Revenues, Expenditures and Changes in 


Clean Beaches and Ocean Parcel Tax Special Revenue Fund 


94 

Less 


encumbered 2007-2008 budgetary positive 

Budget Actual expenditures* encumbrances basis (negative) 

Revenues: 

Other taxes $ 2,300,000 2,505,448 — — 2,505,448 205,448 

Investment income 40,000 30,561 — — 30,561 (9,439) 

Total revenues 2,340,000 2,536,009 — — 2,536,009 196,009 

Expenditures: 


Capital improvement 883,000 — — 600,000 600,000 283,000 

Total general services 883,000 — — 600,000 600,000 283,000 

Net change in fund balance 1,457,000 2,536,009 — (600,000) 1,936,009 479,009 

Fund balance at beginning of year — — — — — — 

Fund balance at end of year $ 1,457,000 2,536,009 — (600,000) 1,936,009 479,009 

* No encumbrances were outstanding at June 30, 2007.



Fund Balance (Deficit) – Budget and Actual (Non-GAAP Basis) 

Beach Recreation Special Revenue Fund 


Less 



Budget Actual expenditures encumbrances basis (negative) 

Revenues: 

Licenses and permits $ 97,433 

93,650 — — 93,650 (3,783) 

Charges for services 5,123,054 5,941,208 — — 5,941,208 818,154 

Investment income 246,000 296,028 — — 296,028 50,028 

Rental income 72,274 71,294 — — 71,294 (980) 

Other 511,924 592,590 — — 592,590 80,666 


Expenditures: 


Capital improvement 390,911 237,222 — — 237,222 153,689 

Ttl Total general government 390,911911 237,222222 — — 237,222222 153,689 

95 


Community maintenance 

Salaries 1,518,271 1,518,271 — — 1,518,271 — 

Supplies 1,246,310 1,255,182 8,872 — 1,246,310 — 

Capital outlay 2,348 2,348 — — 2,348 — 

Total environmental and public works 2,766,929 2,775,801 8,872 — 2,766,929 — 

Capital improvement 250,000 — — — — 250,000 

Total general services 3,016,929 2,775,801 8,872 — 2,766,929 250,000 


Salaries 478 477 — — 477 1 

Supplies 3,572,768 3,524,893 — 47,875 3,572,768 — 

Capital improvement 1,455,397 50,481 — 64,497 114,978 1,340,419 

Total cultural and recreation services 5,028,643 3,575,851 — 112,372 3,688,223 1,340,420 

Total expenditures 8,436,483 6,588,874 8,872 112,372 6,692,374 1,744,109 


(under) expenditures (2,385,798) 405,896 (8,872) (112,372) 302,396 (800,024) 

Other financing sources – transfers in 6,790 6,790 — — 6,790 — 

Net change in fund balance (2,379,008) 412,686 (8,872) (112,372) 309,186 (800,024) 

Fund balance at beginning of year 2,192,365 2,192,365 — — 2,192,365 — 

Fund balance (deficit) at end of year $ ( 186,643) 2,605,051 (8,872) (112,372) 2,501,551 (800,024)




Housing Authority Special Revenue Fund 


96 

Less 



Budget Actual expenditures* encumbrances* basis (negative) 

Revenues: 

Intergovernmental $ 15,146,900 16,277,007 — — 16,277,007 1,130,107 


Other — 40,629 — — 40,629 40,629 

Total revenues 15,155,500 16,414,365 — — 16,414,365 1,258,865 

Expenditures: 


Supplies 15,275,200 14,003,242 — — 14,003,242 1,271,958 

Capital improvement 6,100 6,100 — — 6,100 — 

Total housing and community development 15,281,300 14,009,342 — — 14,009,342 1,271,958 


(under) expenditures (125,800) 2,405,023 — — 2,405,023 2,530,823 


Transfers in 196,881 196,881 — — 196,881 — 

Transfers out (333,081) (1,242,028) — — (1,242,028) (908,947) 

Net change in fund balance (262,000) 1,359,876 — — 1,359,876 1,621,876 


Fund balance at end of year $ 1,363,602 2,985,478 — — 2,985,478 1,621,876 

* No encumbrances were outstanding at June 30, 2007 and 2008.




Disaster Relief Special Revenue Fund 


Less 




Revenues 

Intergovernmental $ 7,200,000 5,973,724 — — 5,973,724 (1,226,276) 


Other — 25,773 — — 25,773 25,773 

Total revenues 7,224,000 6,010,200 — — 6,010,200 (1,213,800) 

97 

Expenditures: 


Salaries 119,126126 30,798 — — 30,798 88,328 

Supplies 21,400 20,749 — — 20,749 651 

Total general government 140,526 51,547 — — 51,547 88,979 

General Services: 

Capital improvement 10,469,387 5,973,724 — 743,605 6,717,329 3,752,058 

Total general services 10,469,387 5,973,724 — 743,605 6,717,329 3,752,058 

Total expenditures 10,609,913 6,025,271 — 743,605 6,768,876 3,841,037 

Net change in fund balance (3,385,913) (15,071) — (743,605) (758,676) 2,627,237 

Fund deficit at beginning of year (5,806,910) (5,806,910) — — (5,806,910) — 

Fund balance (deficit) at end of year $ ( 9,192,823) (5,821,981) — (743,605) (6,565,586) 2,627,237 





Tenant Ownership Rights Charter Amendment 

(TORCA) Special Revenue Fund 


98 

Less 




Revenues: 

Other taxes $ 100,000 381,320 — — 381,320 281,320 


Other — 100,000 — — 100,000 100,000 

Total revenues 340,000 854,768 — — 854,768 514,768 

Expenditures: 


Supplies 8,729 8,729 — — 8,729 — 

Capital improvement 7,381,177 187,685 — 2,906,022 3,093,707 4,287,470 

Total housing and community development 7,389,906 196,414 — 2,906,022 3,102,436 4,287,470 


over (under) expenditures (7,049,906) 658,354 — (2,906,022) (2,247,668) 4,802,238 

Other financing (uses) – transfers out (70,530) (28,506) — — (28,506) 42,024 

Net change in fund balance (7,120,436) 629,848 — (2,906,022) (2,276,174) 4,844,262 


Fund balance at end of year $ 9,804,234 17,554,518 — (2,906,022) 14,648,496 4,844,262 





Community Development Block Grant 

(CDBG) Special Revenue Fund 


Less 




Revenues 

Intergovernmental $ 2,694,970 1,731,516 — — 1,731,516 (963,454) 


Total revenues 2,739,970 1,781,838 — — 1,781,838 (958,132) 

Expenditures: 

General Services: 

Capital improvement 2,307,485 670,225 — 1,360,208 2,030,433 277,052 

Total general services 2,307,485 670,225 — 1,360,208 2,030,433 277,052 

99 


Capital improvement 34,833 34,833 — — 34,833 — 

Total cultural and recreation services 34,833 34,833 — — 34,833 — 


Supplies 3,433 3,433 — — 3,433 — 

Capital improvement 1,295,185 952,122 — 291,990 1,244,112 51,073 

Total housing and community development 1,298,618 955,555 — 291,990 1,247,545 51,073 

Total expenditures 3,640,936 1,660,613 — 1,652,198 3,312,811 328,125 


over (under) expenditures (900,966) 121,225 — (1,652,198) (1,530,973) (630,007) 

Other financing (uses) – transfers out (1,437,979) (1,144,775) — — (1,144,775) 293,204 

Net change in fund balance (2,338,945) (1,023,550) — (1,652,198) (2,675,748) (336,803) 


Fund balance at end of year $ 12,403,907 13,719,302 — (1,652,198) 12,067,104 (336,803) 





Miscellaneous Grants Special Revenue Fund 


Less 




Revenues: 

Other taxes $ 2,358,434 2,368,839 — — 2,368,839 10,405 

Intergovernmental 6,504,301 6,591,277 — — 6,591,277 86,976 


Other 14,402,500 6,970,410 — — 6,970,410 (7,432,090) 

Total revenues 23,665,235 16,523,017 — — 16,523,017 (7,142,218) 

Expenditures: 


Capital improvement 5,629,029 — — — — 5,629,029 

Total general government 5,629,029 — — — — 5,629,029 


Salaries 129,033 90,740 — — 90,740 38,293 

Supplies 534,064 102,991 — 9,965 112,956 421,108 

Capital outlay 236,418 33,902 13,831 — 20,071 216,347 

Capital improvement 1,349,473 13,289 — — 13,289 1,336,184 

Total public safety 2,248,988 240,922 13,831 9,965 237,056 2,011,932 

100 


Environmental and public works management 

Supplies 520,424 239,279 — — 239,279 281,145 

Capital improvement 16,201,449 4,630,047 — 4,501,056 9,131,103 7,070,346 

Total general services 16,721,873 4,869,326 — 4,501,056 9,370,382 7,351,491 


Communiy and cultural services 

Supplies 231,708 204,841 — — 204,841 26,867 

Capital improvement 25,594,044 9,849,368 — 15,012,150 24,861,518 732,526 

Total cultural and recreation services 25,825,752 10,054,209 — 15,012,150 25,066,359 759,393 

Library: 

Supplies 25,448 25,180 — 256 25,436 12 

Total library 25,448 25,180 — 256 25,436 12 


Supplies 180,577 51,932 — 128,645 180,577 — 

Capital improvement 2,560,225 315,451 — 68,646 384,097 2,176,128 

Total housing and community development 2,740,802 367,383 — 197,291 564,674 2,176,128 

Total expenditures 53,191,892 15,557,020 13,831 19,720,718 35,263,907 17,927,985 


over (under) expenditures (29,526,657) 965,997 (13,831) (19,720,718) (18,740,890) 10,785,767 

Other financing (uses) – transfers out (3,338,406) (2,130,290) — — (2,130,290) 1,208,116 

Net change in fund balance (32,865,063) (1,164,293) (13,831) (19,720,718) (20,871,180) 11,993,883 


Fund balance (deficit) at end of year $ (13,188,158) 18,512,612 (13,831) (19,720,718) (1,194,275) 11,993,883




Citizens Option for Public Safety Special Revenue Fund 


101 

Less 




Revenues: 

Intergovernmental $ 176,000 175,223 — — 175,223 (777) 



Expenditures: 


Capital improvement 409,919 178,852 — 36,868 215,720 194,199 

Total expenditures 409,919 178,852 — 36,868 215,720 194,199 

Net change in fund balance (227,919) 9,197 — (36,868) (27,671) 200,248 

Fund balance at beginning of year 234,818 234,818 — — 234,818 — 

Fund balance at end of year $ 6,899 244,015 — (36,868) 207,147 200,248 





Rent Control Special Revenue Fund 


102 

Less 




Revenues: 

Charges for services $ 4,106,280 4,122,208 — — 4,122,208 15,928 


Other 4,000 2,376 — — 2,376 (1,624) 


Expenditures: 


Rent control 

Salaries 3,646,275 3,488,617 — — 3,488,617 157,658 

Supplies 754,350 650,081 10,500 11,252 650,833 103,517 

Capital outlay 58,600 22,366 — — 22,366 36,234 

Total housing and community development 4,459,225 4,161,064 10,500 11,252 4,161,816 297,409 

Net change in fund balance (211,945) 115,833 (10,500) (11,252) 115,081 327,026 


Fund balance at end of year $ 1,376,245 1,704,023 (10,500) (11,252) 1,703,271 327,026




Air Quality Management District (AQMD) Special Revenue Fund 


Less 




103 

Revenues: 

Intergovernmental $ 252,000 560,418 — — 560,418 308,418 



Expenditures: 


Supplies 2,300 2,385 — — 2,385 (85) 

Capital improvement 753,156 640,906 — — 640,906 112,250 

Total general services 755,456 643,291 — — 643,291 112,165 

Total expenditures 755,456 643,291 — — 643,291 112,165 

Net change in fund balance (493,456) (70,614) — — (70,614) 422,842 


Fund balance (deficit) at end of year $ (239,084) 183,758 — — 183,758 422,842 





Parks and Recreation Special Revenue Fund 


Less 




104 

Revenues: 

Other taxes $ 32,000 

50,312 — — 50,312 18,312 



Expenditures: 

Cultural and recreation: 

Capital improvement 171,000 247 — — 247 170,753 

Total cultural and recreation 171,000 247 — — 247 170,753 

Net change in fund balance (132,700) 59,415 — — 59,415 192,115 


Fund balance at end of year $ 65,417 257,532 — — 257,532 192,115 





Gas Tax Special Revenue Fund 


105 

Less 




Revenues: 

Intergovernmental $ 1,670,000 1,213,419 — — 1,213,419 (456,581) 


Rental income 15,400 19,223 — — 19,223 3,823 

Total revenues 1,780,400 1,303,833 — — 1,303,833 (476,567) 

Expenditures: 


Supplies 4,300 4,067 — — 4,067 233 

Capital improvements 1,600,000 772,552 — 814,943 1,587,495 12,505 

Total general services 1,604,300 776,619 — 814,943 1,591,562 12,738 


over (under) expenditures 176,100 527,214 — (814,943) (287,729) (463,829) 

Other financing (uses) – transfers out (2,350,565) (1,897,807) — — (1,897,807) 452,758 

Net change in fund balance (2,174,465) (1,370,593) — (814,943) (2,185,536) (11,071) 


Fund balance at end of year $ 708,160 1,512,032 — (814,943) 697,089 (11,071) 




Nonmajor Capital Projects Funds 

June 30, 2008 

Assets 

Total 

nonmajor 

Low/mod Ocean Park capital 

Capital Housing Redevelopment projects 

Projects Projects Project funds 

Cash and investments $ 18,058,256 17,761,569 4,786,367 40,606,192 



Notes — 16,732,026 2,395,726 19,127,752 

Property tax — 1,023,842 38,408 1,062,250 

Interest — 147,159 57,636 204,795 

Cash with fiscal agent — 113,471 551,691 665,162 

Total assets $ 18,058,256 35,778,067 7,829,828 61,666,151 

Liabilities and 

Fund Balances 

Liabilities: 

Accounts payable $ 45,886 

80,854 — 126,740 

Advances from other funds — — 6,371,075 6,371,075 

Total liabilities 45,886 80,854 6,371,075 6,497,815 


Reserved 17,992,370 31,497,564 6,267,655 55,757,589 

Undesignated 20,000 4,199,649 (4,808,902) (589,253) 

Total fund balances 18,012,370 35,697,213 1,458,753 55,168,336 


balances $ 18,058,256 35,778,067 7,829,828 61,666,151 

106




Nonmajor Capital Projects Funds 


Total 

nonmajor 

Low/mod Ocean Park capital 

Capital Housing Redevelopment projects 

Projects Projects Project funds 

Revenues: 

Incremental property taxes $ — 13,110,428 3,058,525 16,168,953 

Investment income — 471,381 222,289 693,670 

Other — 109,869 12,629 122,498 

Total revenues — 13,691,678 3,293,443 16,985,121 

Expenditures: 

Current: 

General Services 477,830 — — 477,830 

Housing and community development — 2,999,524 1,620,354 4,619,878 

Debt service expenditures: 

Interest — — 307,427 307,427 

Total expenditures 477,830 2,999,524 1,927,781 5,405,135 


over (under) expenditures (477,830) 10,692,154 1,365,662 11,579,986 


Transfers in 18,490,200 — — 18,490,200 

Transfers out — (1,607,531) (1,499,608) (3,107,139) 

Total other financing (uses) 18,490,200 (1,607,531) (1,499,608) 15,383,061 

Net change in fund balances 18,012,370 9,084,623 (133,946) 26,963,047 

Fund balances at beginning of year — 26,612,590 1,592,699 28,205,289 

Fund balances at end of year $ 18,012,370 35,697,213 1,458,753 55,168,336 

107




Downtown Redevelopment Project Capital Projects Fund (Major Fund) 


108 

Less 




Revenues: 

Incremental property taxes $ 1,034,663 1,034,663 1,168,638 — — 1,168,638 133,975 

Investment income 58,000 58,000 63,584 — — 63,584 5,584 

Rental income 1,340,320 1,340,320 1,220,200 — — 1,220,200 (120,120) 

Other income — — 1,450,143 — — 1,450,143 1,450,143 

Total project revenues 2,432,983 2,432,983 3,902,565 — — 3,902,565 1,469,582 

Expenditures: 


Supplies 632,477 632,477 618,553 — — 618,553 13,924 

Capital improvements 1,400,000 1,950,994 137,548 — 249,771 387,319 1,563,675 

Total housing and community development 2,032,477 2,583,471 756,101 — 249,771 1,005,872 1,577,599 

Debt service expenditures – interest 354,867 354,867 861,972 — — 861,972 (507,105) 

Total project expenditures 2,387,344 2,938,338 1,618,073 — 249,771 1,867,844 1,070,494 


over (under) expenditures 45,639 (505,355) 2,284,492 — (249,771) 2,034,721 2,540,076 


Transfers out (1,465,353) (1,465,353) (1,465,353) — — (1,465,353) — 

Net change in fund balance (1,419,714) (1,970,708) 819,139 — (249,771) 569,368 2,540,076 

Fund deficit at beginning of year (15,870,048) (15,870,048) (15,870,048) — — (15,870,048) — 

Fund deficit at end of year $ (17,289,762) (17,840,756) (15,050,909) — (249,771) (15,300,680) 2,540,076 





Earthquake Recovery Redevelopment Project Capital Projects Fund 


109 

Less 




Revenues: 

Incremental property taxes $ 41,852,000 44,139,200 48,810,455 — — 48,810,455 4,671,255 

Investment income 1,505,000 1,505,000 2,043,715 — — 2,043,715 538,715 

Other 100,000 100,000 133,039 — — 133,039 33,039 

Total project revenues 43,457,000 45,744,200 50,987,209 — — 50,987,209 5,243,009 

Expenditures: 


Payment of property tax increment 11,724,000 14,244,852 14,244,852 — — 14,244,852 — 

Supplies 1,244,919 1,244,919 1,237,050 — — 1,237,050 7869 7,869 

Capital improvements 19,789,300 75,845,144 46,222,371 — 11,395,426 57,617,797 18,227,347 

Total project expenditures 32,758,219 91,334,915 61,704,273 — 11,395,426 73,099,699 18,235,216 


over (under) expenditures 10,698,781 (45,590,715) (10,717,064) — (11,395,426) (22,112,490) 23,478,225 


Transfers out (9,303,823) (9,553,823) (9,381,849) — — (9,381,849) 171,974 

Net change in fund balance 1,394,958 (55,144,538) (20,098,913) — (11,395,426) (31,494,339) 23,650,199 

Fund balance at beginning of year, as restated (note 4) 68,209,579 68,209,579 68,209,579 — — 68,209,579 — 

Fund balance at end of year $ 69,604,537 13,065,041 48,110,666 — (11,395,426) 36,715,240 23,650,199 





Capital Projects Special Revenue Fund 


Revenues: 

Less 




Total revenues $ — 

— — — — — 

Expenditures: 



Total general government 6,000,000 — — — — 6,000,000 

110 



Total public safety 1,554,400 — — — — 1,554,400 


Capital improvement 9,724,000 477,830 — 3,294,164 3,771,994 5,952,006 

Total general services 9,724,000 477,830 — 3,294,164 3,771,994 5,952,006 



Total cultural and recreation services 1,191,800 — — — — 1,191,800 

Total expenditures 18,470,200 477,830 — 3,294,164 3,771,994 14,698,206 


(under) expenditures (18,470,200) (477,830) — (3,294,164) (3,771,994) (14,698,206) 

Other financing (uses) – transfers in 18,490,200 18,490,200 — — 18,490,200 — 

Net change in fund balance 20,000 18,012,370 — (3,294,164) 14,718,206 (14,698,206) 

Fund balance at beginning of year — — — — — — 

Fund balance at end of year $ 20,000 18,012,370 — (3,294,164) 14,718,206 (14,698,206) 





Low/Moderate Housing Capital Projects Fund 


111 

Less 




Revenues: 

Incremental property taxes $ 12,034,466 13,110,428 — — 13,110,428 1,075,962 


Other income — 109,869 — — 109,869 109,869 

Total project revenues 12,349,466 13,691,678 — — 13,691,678 1,342,212 

Expenditures: 


Capital improvements 69,875,282 2999524 2,999,524 — 7,109,456 10,108,980108 59,766,302 

Total project expenditures 69,875,282 2,999,524 — 7,109,456 10,108,980 59,766,302 


over (under) expenditures (57,525,816) 10,692,154 — (7,109,456) 3,582,698 61,108,514 


Transfers out (2,725,529) (1,607,531) — — (1,607,531) 1,117,998 

Net change in fund balance (60,251,345) 9,084,623 — (7,109,456) 1,975,167 62,226,512 


Fund balance (deficit) at end of year $ (33,638,755) 35,697,213 — (7,109,456) 28,587,757 62,226,512 





Ocean Park Redevelopment Project Capital Projects Fund 


112 

Less 




Revenues: 

Incremental property taxes $ 2,964,000 3,058,525 — — 3,058,525 94,525 


Other — 12,629 — — 12,629 12,629 

Total project revenues 3,039,000 3,293,443 — — 3,293,443 254,443 

Expenditures: 


Supplies 135,737 125,295295 — — 125,295295 10,442 

Capital improvements 5,366,990 1,495,059 — 759,403 2,254,462 3,112,528 

Total housing and community development 5,502,727 1,620,354 — 759,403 2,379,757 3,122,970 

Debt service expenditures – interest 99,370 307,427 — — 307,427 (208,057) 

Total project expenditures 5,602,097 1,927,781 — 759,403 2,687,184 2,914,913 


over (under) expenditures (2,563,097) 1,365,662 — (759,403) 606,259 3,169,356 


Transfers out (1,499,608) (1,499,608) — — (1,499,608) — 

Net change in fund balance (4,062,705) (133,946) — (759,403) (893,349) 3,169,356 


Fund balance (deficit) at end of year $ (2,470,006) 1,458,753 — (759,403) 699,350 3,169,356 



113



Nonmajor Debt Service Funds 

June 30, 2008 

Total 

nonmajor 

Redevelopment debt service 

Assets City Agency funds 

Cash with fiscal agent $ 11,631,847 7,321,318 18,953,165 

Total assets $ 11,631,847 7,321,318 18,953,165 

Liabilities and 

Fund Balances 

Fund balances : 

Reserved - debt service $ 11,631,847 7,321,318 18,953,165 

Total fund balances 11,631,847 7,321,318 18,953,165 


balances $ 11,631,847 7,321,318 18,953,165 

114




Nonmajor Debt Service Funds 


Total 

nonmajor 

City 

Redevelopment 

Agency 

debt service 

funds 

Revenues - investment income $ 215,420 

110,221 325,641 

Expenditures: 

Principal 4,450,000 3,625,000 8,075,000 

Interest 4,127,155 3,645,278 7,772,433 

Total expenditures 8,577,155 7,270,278 15,847,433 

Deficiency of revenues 

under expenditures (8,361,735) (7,160,057) (15,521,792) 

Other financing sources - transfers in 8,434,200 7,293,357 15,727,557 

Net change in fund balance 72,465 133,300 205,765 

Fund balances at beginning of year 11,559,382 7,188,018 18,747,400 

Fund balances at end of year $ 11,631,847 7,321,318 18,953,165 

115



Nonmajor Permanent Funds 

June 30, 2008 

Total 

Cemetery Mausoleum nonmajor 

Perpetual Perpetual permanent 

Assets Care Care funds 

Cash and investments $ 5,676 

7,627 13,303 



Accounts 244 1,465 1,709 

Cash with fiscal agent 6,995,086 716,140 7,711,226 

Total assets $ 7,001,006 725,232 7,726,238 

Fund Balances 


Reserved for perpetual care 7,001,006 725,232 7,726,238 

Total fund balances $ 7,001,006 725,232 7,726,238 

116




Nonmajor Permanent Funds 


Total 

Cemetery Mausoleum nonmajor 

Perpetual 

Care 

Perpetual 

Care 

permanent 

funds 

Revenues: 

Charges for services $ 57,453 

30,223 87,676 

Investment income (513,937) (53,255) (567,192) 

Total revenues (456,484) (23,032) (479,516) 

Other financing (uses) - transfers out (300,256) (29,420) (329,676) 

Net change in fund balance (756,740) (52,452) (809,192) 

Fund balances at beginning of year 7,757,746 777,684 8,535,430 

Fund balances at end of year $ 7,001,006 $ 725,232 $ 7,726,238 

117


118


Nonmajor Enterprise Fund Financial Statements 

Enterprise Funds are used to account for operations that are financed and operated in a manner similar to 

private business enterprises (a) where the intent is that the costs (expenses, including depreciation) of 

providing goods or services to the general public on a continuing basis be financed or recovered primarily 

through user charges, or (b) where the City has decided that periodic determination of revenues earned, 

expenses incurred and/or net income is appropriate for capital maintenance, public policy, management 

control, accountability or other purposes. 

Water Fund – To account for revenues and expenses of providing water service to the citizens of the 

City. 

Solid Waste Management – To account for revenues and expenses of operating the City's refuse 

collection, street sweeping and cleaning, and recycling programs. 

Pier Fund – To account for revenues and expenses connected with management and development of 

the Santa Monica Pier. 

Civic Auditorium Fund – To account for revenues and expenses connected with management of the 

Santa Monica Civic Auditorium. 

Airport Fund – To account for revenues and expenses connected with management of the Santa 

Monica Municipal Airport. 

Stormwater Management Fund – To account for revenues and expenses associated with storm 

water management. 

Cemetery Fund – To account for revenues and expenses associated with operation of Woodlawn 

Cemetery. 

Special Aviation Fund – To account for revenues and expenses associated with aviation-related 

State funds provided to the City. 

Parking Authority Fund – To account for revenues and expenses associated with operating the 

various parking structures and parking lots owned by the City Parking Authority. 

119



Nonmajor Enterprise Funds 

June 30, 2008 

120 

Total 

nonmajor 

Solid Civic Special Parking enterprise 

Assets Water Waste Pier Auditorium Airport Stormwater Cemetery Aviation Authority funds 


Cash and investments $ 16,719,809 1,580,198 7,054,171 2,414,294 419,678 239,951 230,596 237,302 11,341,653 40,237,652 

Restricted cash and investments 278,008 6,665,999 293,759 151,853 2,633,478 — — — — 10,023,097 



Accounts 2,510,917 2,939,437 21,143 8,949 198,031 32,158 103,242 — — 5,813,877 

Interest 188,051 101,165 89,258 34,720 33,442 16,234 3,118 2,455 134,275 602,718 

Inventory 421,049 — — — — — — — — 421,049 

Prepaids 7,510 — — — — — — — — 7,510 

Total current assets 20,125,344 11,286,799 7,458,331 2,609,816 3,284,629 288,343 336,956 239,757 11,475,928 57,105,903 


Restricted cash and investments 931,501 — — — — 81,924 — — 300,000 1,313,425 

Capital assets: 

Land 21,006 — — — 8 — 4 — 8,338,700 , 8,359,718 

, 

Buildings 1,728,130 298,198 2,242,457 5,657,651 8,018,907 — 1,499,450 — 1,674,714 21,119,507 

Improvements other than buildings 992,137 173,736 4,750,699 430,780 12,558,166 146,690 204,936 509,940 169,306 19,936,390 

Machinery and equipment 2,025,330 554,160 289,427 1,892,403 478,617 35,750 166,155 275,000 7,237 5,724,079 

Infrastructure 36,436,832 — 8,213,438 — — 10,403,980 — — 55,054,250 

Construction in progress 243,026 658,545 396,890 329,530 — 68,929 190,747 — 26,857 1,914,524 

41,446,461 1,684,639 15,892,911 8,310,364 21,055,698 10,655,349 2,061,292 784,940 10,216,814 112,108,468 

Less accumulated depreciation (20,718,624) (853,954) (9,159,478) (4,908,844) (13,311,594) (1,744,046) (1,078,291) (756,036) (965,588) (53,496,455) 

Net capital assets 20,727,837 830,685 6,733,433 3,401,520 7,744,104 8,911,303 983,001 28,904 9,251,226 58,612,013 

Total noncurrent assets 21,659,338 830,685 6,733,433 3,401,520 7,744,104 8,993,227 983,001 28,904 9,551,226 59,925,438 

Total assets $ 41,784,682 12,117,484 14,191,764 6,011,336 11,028,733 9,281,570 1,319,957 268,661 21,027,154 117,031,341 

(Continued)


Statement of Net Assets, Continued 


June 30, 2008 

Total 

nonmajor 


Liabilities Water Waste Pier Auditorium Airport Stormwater Cemetery Aviation Authority funds 

s 



418,804 187,886 79,385 360,180 19,851 85,990 — 40,711 2,817,335 

Accrued liabilities 311,198 380,916 54,354 164,501 89,182 — 41,948 — — 1,042,099 

Contracts payable (retained percentage) 48,338 — 16,083 26,620 — — — — — 91,041 

Interest payable — — — — — 28,570 — — — 28,570 

Current portion of long-term obligations — — — — 22,218 237,612 — — — 259,830 

Liabilities payable from restricted assets - 

deposits 278,008 6,665,999 293,759 226,420 382,744 — — — — 7,846,930 

Total current liabilities 2,262,072 7,465,719 552,082 496,926 854,324 286,033 127,938 — 40,711 12,085,805 


Accrued liabilities 210,231 178,942 50,913 20,804 30,277 — 20,226 — — 511,393 

Advances from other funds — — — — 8,999,488 — 2,943,366 — — 11,942,854 

Long-term obligations, net of current portion — — — — 44,435 3,058,973 — — — 3,103,408 

121 

Total noncurrent liabilities 210,231 178,942 50,913 20,804 9,074,200 3,058,973 2,963,592 — — 15,557,655 

Total liabilities 2,472,303 7,644,661 602,995 517,730 9,928,524 3,345,006 3,091,530 — 40,711 27,643,460 

Net Assets 

Invested in capital assets, net of related debt 20,727,837 830,685 6,733,433 3,401,520 7,677,451 5,614,718 983,001 28,904 9,251,226 55,248,775 

Unrestricted 18,584,542 3,642,138 6,855,336 2,092,086 (6,577,242) 321,846 (2,754,574) 239,757 11,735,217 34,139,106 

Total net assets $ 39,312,379 4,472,823 13,588,769 5,493,606 1,100,209 5,936,564 (1,771,573) 268,661 20,986,443 89,387,881






122 

Total 

nonmajor 


Water Waste Pier Auditorium Airport Stormwater Cemetery Aviation Authority funds 

Operating revenues: 

Charges for services $ 16,130,044 18,842,702 3,107,349 3,117,033 4,279,268 1,301,350 1,080,532 — 145,600 48,003,878 


Personnel services 4,863,440 7,160,198 1,356,673 2,432,764 1,175,175 — 604,634 — 850 17,593,734 

Administrative indirect 1,181,721 738,677 379,790 170,063 647,113 3,352 177,114 — — 3,297,830 

Contractual services 399,310 3,468,113 1,071,015 58,979 379,291 — 339,113 — — 5,715,821 

Repairs and maintenance 224,612 2,518,673 271,050 94,250 349,146 — 71,164 — — 3,528,895 

Materials and supplies 2,911,323 2,649,088 641,357 425,370 754,553 37,632 324,845 — 315,924 8,060,092 

Utilities 440,549 51,161 142,442 163,318 138,325 — 71,651 — — 1,007,446 

Water purchases 3,950,104 — — — — — — — — 3,950,104 

Casualty, property and liability costs 137,200 311,866 127,000 105,500 82,000 — 36,800 — — 800,366 

Depreciation 1,095,289 9,463 329,220 284,427 565,300 284,130 100,525 18,333 32,071 2,718,758 

Other 438,237 1,293,233 566,685 11,612 866,889 59,844 6,457 — 731 3,243,688 

Total operating expenses 15,641,785 18,200,472 4,885,232 3,746,283 4,957,792 384,958 1,732,303 18,333 349,576 49,916,734 

Operating income (loss) 488,259 642,230 (1,777,883) (629,250) (678,524) 916,392 (651,771) (18,333) (203,976) (1,912,856) 

Nonoperating revenues (expenses): 

Investment income 720,789 371,672 318,341 129,570 121,659 41,322 8,398 9,358 469,069 2,190,178 

Interest expense (2,547) — — — (246,062) (89,725) — — — (338,334) 

Loss on disposal of capital assets (49,473) (5,995) (55,867) — (42,784) — — — — (154,119) 

Other 316,699 457,334 44,710 — 210,921 247,310 — — — 1,276,974 

Total nonoperating revenues 985,468 823,011 307,184 129,570 43,734 198,907 8,398 9,358 469,069 2,974,699 

Income (loss) before capital 

contributions and transfers 1,473,727 1,465,241 (1,470,699) (499,680) (634,790) 1,115,299 (643,373) (8,975) 265,093 1,061,843 

Capital Contributions - cash 440,000 — — — — — — — — 440,000 

Transfers in 249,404 39,506 840,134 16,667 53,556 2,595 332,762 — 3,670,150 5,204,774 

Transfers out (1,208,845) (699,300) (12,500) — (16,200) (1,725,729) — — (2,779,790) (6,442,364) 

Change in net assets 954,286 805,447 (643,065) (483,013) (597,434) (607,835) (310,611) (8,975) 1,155,453 264,253 

Total net assets (deficit) 

at beginning of year 38,358,093 3,667,376 14,231,834 5,976,619 1,697,643 6,544,399 (1,460,962) 277,636 19,830,990 89,123,628 

Total net assets (deficit) 

at end of year $ 39,312,379 4,472,823 13,588,769 5,493,606 1,100,209 5,936,564 (1,771,573) 268,661 20,986,443 89,387,881





123 

Total 

nonmajor 




Cash received from customers $ 16,073,483 18,842,308 3,103,769 3,340,119 4,273,150 1,409,224 1,170,525 — 145,600 48,358,178 

Cash payments for materials and services (9,639,997) (10,594,501) (3,415,784) (1,292,428) (3,079,042) (152,985) (948,722) — (281,127) (29,404,586) 

Cash payments to employees for services (4,938,672) (7,284,705) (1,481,051) (2,399,474) (1,155,845) — (620,462) — (849) (17,881,058) 

Other revenue received 316,699 457,333 44,708 — 210,922 247,311 — — — 1,276,973 


operating activities 1,811,513 1,420,435 (1,748,358) (351,783) 249,185 1,503,550 (398,659) — (136,376) 2,349,507 


Repayment of advances made to other funds — — — — (48,000) — — — — (48,000) 

Transfers in 249,404 39,506 840,134 16,667 53,556 2,595 332,762 — 3,670,150 5,204,774 

Transfers out (1,208,845) (699,300) (12,500) — (16,200) (1,725,729) — — (2,779,790) (6,442,364) 


noncapital financing activities (959,441) (659,794) 827,634 16,667 (10,644) (1,723,134) 332,762 — 890,360 (1,285,590) 

Cash flows from capital and related financing 

activities: 

Capital contributions received 440,000 — — — — — — — — 440,000 

Acquisition and construction of capital assets (422,639) (95,939) (207,352) (451,392) (20,426) (863,828) (153,994) — (3,000,000) (5,215,570) 

Reduction in long-term obligations — — — — (442,218) (231,590) — — — (673,808) 

Advances from other funds — — — — — — 112,266 — — 112,266 

Interest paid on long-term obligations (2,547) — — — (257,822) (91,733) — — — (352,102) 

Net cash (used in) 

capital and related financing 

14,814 (95,939) (207,352) (451,392) (720,466) (1,187,151) (41,728) — (3,000,000) (5,689,214) 

Cash flows from investing activities: 

Interest on investments 622,357 330,581 303,037 126,583 117,952 41,321 10,296 8,782 439,650 2,000,559 

Net cash provided by investing 

activities 622,357 330,581 303,037 126,583 117,952 41,321 10,296 8,782 439,650 2,000,559 

Net increase (decrease) in cash and 

cash equivalents 1,489,243 995,283 (825,039) (659,925) (363,973) (1,365,414) (97,329) 8,782 (1,806,366) (2,624,738) 

Cash and cash equivalents at beginning of year 16,440,075 7,250,914 8,172,969 3,226,072 3,417,129 1,687,289 327,925 228,520 13,448,019 54,198,912 

Cash and cash equivalents at end of year $ 17,929,318 8,246,197 7,347,930 2,566,147 3,053,156 321,875 230,596 237,302 11,641,653 51,574,174 

Cash and investments $ 16,719,809 1,580,198 7,054,171 2,414,294 419,678 239,951 230,596 237,302 11,341,653 40,237,652 

Restricted cash and investments 1,209,509 6,665,999 293,759 151,853 2,633,478 81,924 — — 300,000 11,336,522 

Total cash and cash equivalents $ 17,929,318 8,246,197 7,347,930 2,566,147 3,053,156 321,875 230,596 237,302 11,641,653 51,574,174 

(Continued)



Nonmajor Enterprise Funds, Continued 


124 

Total 

nonmajor 



Reconciliation of operating income (loss) to net 


Operating income (loss) $ 488,259 642,230 (1,777,883) (629,250) (678,524) 916,392 (651,771) (18,333) (203,976) (1,912,856) 

Adjustments to reconcile operating income 

(loss) to net cash provided by (used in) 

operating activities: 

Add depreciation 1,095,289 9,463 329,220 284,427 565,300 284,130 100,525 18,333 32,071 2,718,758 


(Increase) decrease in accounts 

receivable (56,561) (394) (3,580) (3,334) (6,118) 107,874 89,993 — — 127,880 

(Increase) in prepaids (945) — — — — — — — — (945) 

(Increase) in inventory (45,083) — — — — — — — — (45,083) 

Increase (decrease) in accounts 

payable 323,270 3,454 (3,403) 61,627 128,066 (52,156) 78,422 — 35,529 574,809 

(Decrease) in accrued 

current liabilities (61,657) (98,426) (98,743) 24,592 12,912 — (11,304) — — (232,626) 

Increase (decrease) in deposits 148,386 432,856 19,078 (20,717) 10,209 — — — — 589,812 

Increase (decrease) in contracts 

payable (382,569) — (232,121) (77,827) — — — — — (692,517) 

Increase in accrued 

noncurrent liabilities (13,575) (26,082) (25,636) 8,699 6,419 — (4,524) — — (54,699) 

Other nonoperating revenue received 316,699 457,334 44,710 — 210,921 247,310 — — — 1,276,974 

Total adjustments 1,323,254 778,205 29,525 277,467 927,709 587,158 253,112 18,333 67,600 4,262,363 


operating activities $ 1,811,513 1,420,435 (1,748,358) (351,783) 249,185 1,503,550 (398,659) — (136,376) 2,349,507 

There were no significant noncash capital financing or investing activities for the year ended June 30, 2008.


Internal Service Fund Financial Statements 

Internal Service Funds are 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 costreimbursement 

basis. 

Vehicle Management Fund – To account for user charges from other funds and expenses related to 

the replacement, maintenance and the fueling of various City vehicles, including specialized 

mechanical equipment. 

Information Technology Replacement and Services – To account for user charges from other 

funds and expenses related to replacement of computer equipment. 

Self-Insurance, Comprehensive Fund – To account for user charges from other funds and expenses 

related to the administration and payment of general liability claims. 

Self-Insurance, Bus Fund – To account for user charges from the Big Blue Bus Fund and expenses 

related to the administration and payment of municipal bus lines liability claims. 

Self-Insurance, Auto Fund – To account for user charges from other funds and expenses related to 

the administration and payment of automobile liability claims. 

Self-Insurance, Workers' Compensation Fund – To account for user charges from other funds and 

expenses related to the administration and payment of workers' compensation claims. 

125



All Internal Service Funds 

June 30, 2008 

Information 

Total 

Technology Self-Insurance Self-Insurance internal 

Vehicle Replacement Compre- Self-Insurance Self-Insurance Workers’ service 

Assets Management and Services hensive Bus Auto Compensation funds 


Cash and investments $ 26,117,277 4,587,608 7,383,425 2,180,484 1,682,238 25,130,456 67,081,488 

Receivables: 

Accounts 77,208 1,931 3,473 — — 17 82,629 

Interest 224,472 44,352 68,254 25,334 17,130 261,455 640,997 

Inventory 67,471 — — — — — 67,471 

Prepaids — — 16,192 — — 10,104 26,296 

Total current assets 26,486,428 4,633,891 7,471,344 2,205,818 1,699,368 25,402,032 67,898,881 

126 


Capital assets: 

Machinery and equipment 30,626,198 1,523,905 2,849 7,386 919 10,065065 32,171,322 

322 

Less accumulated depreciation (17,509,054) (898,450) (2,849) (7,386) (919) (10,065) (18,428,723) 

Net capital assets 13,117,144 625,455 — — — — 13,742,599 

Total assets 39,603,572 5,259,346 7,471,344 2,205,818 1,699,368 25,402,032 81,641,480 

Liabilities 


Accounts payable 258,261 124,485 7,862 23,211 17,812 39,411 471,042 

Accrued liabilities 129,294 — — — — 129,639 258,933 

Claims payable — — 1,523,291 455,605 89,994 4,224,579 6,293,469 

Total current liabilities 387,555 124,485 1,531,153 478,816 107,806 4,393,629 7,023,444 


Accrued liabilities 44,363 — — — — 84,103 128,466 

Claims payable — — 2,722,680 1,485,033 145,261 16,410,608 20,763,582 

Total noncurrent liabilities 44,363 — 2,722,680 1,485,033 145,261 16,494,711 20,892,048 

Total liabilities 431,918 124,485 4,253,833 1,963,849 253,067 20,888,340 27,915,492 

Net assets 

Net assets 

Invested in capital assets 13,117,144 625,455 — — — — 13,742,599 

Unrestricted 26,054,510 4,509,406 3,217,511 241,969 1,446,301 4,513,692 39,983,389 

Total net assets $ 39,171,654 5,134,861 3,217,511 241,969 1,446,301 4,513,692 53,725,988






127 

Information 

Total 



Management and Services hensive Bus Auto Compensation funds 

Operating revenues – charges for services $ 10,873,750 1,827,994 10,133,569 1,592,500 758,766 6,254,293 31,440,872 


Personnel services 2,349,849 — — — — 1,390,868 3,740,717 

Administrative indirect 492,718 — — — — — 492,718 

Contractual services 32,135 — — — — — 32,135 

Repairs and maintenance 1,827,392 — — — — — 1,827,392 

Materials and supplies 398,994 1,084,015 — — — 20,748 1,503,757 

Utilities 67,908 — — — — 1,828 69,736 

Casualty and liabilities 48,600 — — — — — 48,600 

Claims expense, net of claims reserve 

adjustments — — 1,066,404 833,433 433,613 5,250,191 7,583,641 

Insurance and bonds — — 2,707,502 258,201 4,615 339,451 3,309,769 

Miscellaneous fees and costs 454,679 — 438,471 75,552 56,270 222,715 1,247,687 

Administrative fees — — 2,025 — — 158,666 160,691 

Depreciation 2,173,366 254,249 — — — — 2,427,615 

Total operating expenses 7,845,641 1,338,264 4,214,402 1,167,186 494,498 7,384,467 22,444,458 

Operating income (loss) 3,028,109 489,730 5,919,167 425,314 264,268 (1,130,174) 8,996,414 

Nonoperating revenues: 

Investment income 826,120 169,804 92,780 67,282 64,004 998,455 2,218,445 

Gain or (loss) on disposal of capital assets 25,876 (1) — — — (2,975) 22,900 

Other revenue — — — — — 656 656 

Total nonoperating revenues 851,996 169,803 92,780 67,282 64,004 996,136 2,242,001 

Income (loss) before operating 

transfers 3,880,105 659,533 6,011,947 492,596 328,272 (134,038) 11,238,415 

Transfers in 12,346 — — — — 665,406 677,752 

Transfers out — — (305,000) (257,000) (96,000) — (658,000) 

Change in net assets 3,892,451 659,533 5,706,947 235,596 232,272 531,368 11,258,167 

Net assets at beginning of year, 35,279,203 4,475,328 (2,489,436) 6,373 1,214,029 3,982,324 42,467,821 

Total net assets at 

end of year $ 39,171,654 5,134,861 3,217,511 241,969 1,446,301 4,513,692 53,725,988





128 

Information 

Total 



Management and Services hensive Bus Auto Compensation funds 


Cash received from customers $ 11,829,255 1,826,063 10,133,569 1,923,662 758,766 6,254,276 32,725,591 

Cash payments for materials and services (3,196,937) (1,054,149) (10,448,748) (312,480) (79,148) (717,047) (15,808,509) 

Cash payments for claims and related expenses — — (1,913,277) (421,913) (452,816) (5,315,942) (8,103,948) 

Cash payments to employees for services (2,349,849) — — — — (1,371,518) (3,721,367) 

Other nonoperating revenue received — — — — — 656 656 

Net cash provided by (used in) operating activities 6,282,469 771,914 (2,228,456) 1,189,269 226,802 (1,149,575) 5,092,423 


Transfers in 12,346 — — — — 665,406 677,752 

Transfers out — — (305,000) (257,000) (96,000) — (658,000) 

Net cash provided by (used in) noncapital financing activities 12,346 — (305,000) (257,000) (96,000) 665,406 19,752 

Cash flows from capital and related financing activities: 

Acquisition and construction of capital assets (4,609,826) — — — — — (4,609,826) 

Proceeds from sale of capital assets 216,619 (198,627) — — — — 17,992 

Net cash used in capital and related financing activities (4,393,207) (198,627) — — — — (4,591,834) 

Cash flows from investing activities – interest on investments 781,619 157,030 97,920 67,282 61,238 946,374 2,111,463 

Net increase (decrease) in cash and cash equivalents 2,683,227 730,317 (2,435,536) 999,551 192,040 462,205 2,631,804 

Cash and cash equivalents at beginning of year 23,434,050 3,857,291 9,818,961 1,180,933 1,490,198 24,668,251 64,449,684 

Cash and cash equivalents at end of year $ 26,117,277 4,587,608 7,383,425 2,180,484 1,682,238 25,130,456 67,081,488 

Cash and investments 26,117,277 4,587,608 7,383,425 2,180,484 1,682,238 25,130,456 67,081,488 

Total cash and cash equivalents 26,117,277 4,587,608 7,383,425 2,180,484 1,682,238 25,130,456 67,081,488 

Reconciliation of operating income (loss) to net cash 

provided by (used in) operating activities: 

Operating income (loss) $ 3,028,109 

489,730 5,919,167 425,314 264,268 (1,130,174) 8,996,414 

Adjustments to reconcile operating income (loss) to net 


Add depreciation 2,173,366 254,249 — — — — 2,427,615 


(Increase) in accounts receivable 955,505 (1,931) — 331,162 — (17) 1,284,719 

(Increase) in prepaids — — (16,192) — — (458) (16,650) 

Decrease in inventories (19,843) — — — — — (19,843) 

Increase (decrease) in accounts payable 107,602 29,866 (7,300,750) 21,273 (18,263) 26,819 (7,133,453) 

Increase in accrued liabilities 37,730 — — — — 19,350 57,080 

(Decrease) in claims payable — — (830,681) 411,520 (19,203) (65,751) (504,115) 

Other nonoperating revenue received — — — — — 656 656 

Total adjustments 3,254,360 282,184 (8,147,623) 763,955 (37,466) (19,401) (3,903,991) 

Net cash provided by (used in) operating activities $ 6,282,469 

771,914 (2,228,456) 1,189,269 226,802 (1,149,575) 5,092,423 

There were no significant noncash capital financing or investing activities for the year ended June 30, 2008.


Fiduciary Fund Financial Statements 

Agency Funds are custodial in nature and used to receive and disburse funds for an entity/individual, which 

is not part of the City. 

General Trust Fund - To account for funds given to the City for restricted purposes whereby the 

City is only acting as a pass-through agent. 

Street Light Fund - To account for all receipts and disbursements associated with 1911 Act Street 

Light Assessment Bonds. 

129


Combining Statement of Fiduciary Assets and Liabilities 


June 30, 2008 

Agency Funds 

General Street 

Trust Light Totals 

Restricted cash and investments $ 3,756,215 

4,815 3,761,030 

Accounts receivable 26,485 — 26,485 


4,815 3,787,515 

Accounts payable and accrued liabilities $ 3,782,700 

4,815 3,787,515 

Total liabilities $ 3,782,700 

4,815 3,787,515 

130


Combining Statement of Changes in Fiduciary Assets and Liabilities 



Year ended 

Year ended 

June 30, 2007 Additions Reductions June 30, 2008 

Agency Funds: 

General Trust 

Assets: 

Restricted cash and investments $ 2,415,053 59,789,707 58,448,545 3,756,215 

Accounts receivable 8,414 239,897 221,826 26,485 

Total assets $ 2,423,467 60,029,604 58,670,371 3,782,700 

Liabilities: 

Accounts payable $ 2,423,467 66,790,692 65,431,459 3,782,700 

Total liabilities $ 2,423,467 66,790,692 65,431,459 3,782,700 

Street Light 

Assets: 

Restricted cash and investments $ 4,395 129,972 129,552 4,815 

Total assets $ 4,395 129,972 129,552 4,815 

Liabilities: 

Accounts payable $ 4,395 259,868 259,448 4,815 

Total liabilities $ 4,395 259,868 259,448 4,815 

Total Fiduciary Funds 

Assets: 

Restricted cash and investments $ 2,419,448 59,919,679 58,578,097 3,761,030 

Accounts Receivable 8,414 239,897 221,826 26,485 

Total assets $ 2,427,862 60,159,576 58,799,923 3,787,515 

Liabilities: 

Accounts payable $ 2,427,862 67,050,560 65,690,907 3,787,515 

Total liabilities $ 2,427,862 67,050,560 65,690,907 3,787,515 

131


132



STATISTICAL SECTION



STATISTICAL SECTION (unaudited) 

Table 

Financial Trends Information 

These schedules contain trend information to help the reader understand how the government's 

financial performance and well-being have changed over time. 

Page 

1 Net Assets by Component - Last Five Fiscal Years 135 

2 Changes in Net Assets - Last Five Fiscal Years 136 

3 Fund Balance of Governmental Funds - Last Ten Fiscal Years 138 

4 Changes in Fund Balance of Governmental Funds - Last Ten Fiscal Years 139 

5 General Fund Tax Revenues by Source - Last Five Fiscal Years 141 

Revenue Capacity Information 

These schedules contain information to help the reader assess the government's most 

significant local revenue source, the property tax. 

6 Assessed Value and Actual Value of Taxable Property - Last Ten Fiscal Years 142 

7 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 143 

8 Principal Property Taxpayers - Current Fiscal Year and Nine Years Ago 144 

9 Property Tax Levies and Collections - Last Ten Fiscal Years 145 

10 Taxable Transactions by Type of Business - Last Five Calendar Years 146 

Debt Capacity Information 

These schedules present information to help the reader assess the affordability of the 

government's current levels of outstanding debt and government's ability to issue additional 

debt in the future. 

11 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 147 

12 Ratios of General Bonded Debt - Last Ten Fiscal Years 148 

13 Direct and Overlapping Governmental Activities Debt as of June 30, 2008 149 

14 Computation of Legal Debt Margin - Last Ten Fiscal Years 150 

15 Wastewater Enterprise Revenue Bonds Coverage 151 

16 Redevelopment Agency Downtown Project Lease Revenue Bonds Coverage 152 

17 Redevelopment Agency Earthquake Recovery Project Tax Allocation Bonds Coverage 153 

18 Redevelopment Agency Ocean Park Project Tax Allocation Refunding Bonds Coverage 154 

133



STATISTICAL SECTION (unaudited), continued 

Table 

Demographic and Economic Information 

These schedules offer demographic and economic indicators to help the reader understand the 

environment within which the government's financial activities take place. 

Page 

19 Demographic and Economic Statistics - Last Ten Calendar Years 155 

20 Principal Employers - Current Year and Nine Years Ago 156 

Operating Information 

These schedules contain service and infrastructure data to help the reader understand how the 

information in the government's financial report relates to the services the government 

provides and activities it performs. 

21 Full Time Equivalent City Government Employees by Function/Program - 

Last Five Fiscal Year 

22 Operating Indicators by Function/Program - Last Three Fiscal Years 158 

23 Capital Assets Statistics by Function/Program - Last Three Fiscal Years 159 

157 

134


Net Assets by Component 

Last Five Fiscal Years 

(Accrual Basis of Accounting) 

TABLE 1 

2007-08 2006-07 * 2005-06 * 2004-05 * 2003-04 * 


Invested in capital assets, net of related debt $ 573,971,975 506,307,676 481,678,996 165,893,160 162,528,406 

Restricted 232,281,102 273,104,503 196,818,353 200,744,882 185,632,392 

Unrestricted 209,438,522 243,036,538 230,154,215 223,451,608 203,446,595 

Total governmental activities net assets $ 1,015,691,599 1,022,448,717 908,651,564 590,089,650 551,607,393 

135 



Restricted 1,625,057 2,503,448 37,365,926 34,846,062 34,145,541 

Unrestricted 104,955,422 114,601,165 129,288,372 100,528,572 109,303,814 

Total business-type activities net assets $ 495,989,994 491,703,222 490,762,944 401,587,264 399,057,347 

Primary government 


Restricted 233,906,159 275,607,951 234,184,279 235,590,944 219,777,933 

Unrestricted 314,393,944 357,637,703 359,442,587 323,980,180 312,750,409 

Total primary government net assets $ 1,511,681,593 1,514,151,939 1,399,414,508 991,676,914 950,664,740 

* Before restatement




TABLE 2 

2007-08 2006-07 2005-06 2004-05 2003-04 

Expenses 


General government $ 38,849,626 45,323,227 31,288,910 33,648,946 12,218,726 

Public safety 91,862,403 87,830,433 82,886,707 80,300,625 74,489,887 

General services 111,168,586 41,404,237 64,777,602 32,961,058 30,659,648 

Cultural and recreation services 33,776,210 43,646,843 40,022,151 35,163,220 36,958,290 

Library 11,458,259 10,681,518 7,974,534 7,849,658 20,241,923 

Housing and community development 91,966,369 74,988,387 56,708,298 52,223,052 64,079,218 

Other (1) — 469,285 2,212,186 1,273,607 244,438 

Interest on long term debt 7,628,437 7,934,428 7,514,924 9,507,522 8,430,126 

Total governmental activities 386,709,890 312,278,358 293,385,312 252,927,688 247,322,256 


Water 15,489,230 14,830,595 13,855,863 17,564,916 16,382,688 

Solid waste management 16,277,710 18,630,141 17,459,310 16,550,895 15,933,665 

Pier 4,867,415 9,485,709 7,544,001 6,922,305 8,079,003 

Wastewater 20,063,420 19,579,035 19,008,944 14,755,836 14,013,170 

Civic auditorium 3,718,652 3,535,624 2,898,853 3,129,521 2,741,857 

Airport 5,199,701 5,325,190 3,882,639 3,845,108 3,845,116 

Storm water management 474,683 502,183 648,374 966,897 403,294 

Cemetery 1,715,605 1,481,238 989,274 1,243,343 1,137,698 

Big Blue Bus 65,185,007 59,627,736 59,180,481 52,021,645 47,265,202 

Cable communications (2) — — — 1,340,120 932,823 

Special aviation 18,333 69,374 52,329 52,329 52,329 

Parking authority 349,576 709,982 16,189 202,794 337,552 

Total business-type activities 133,359,332 133,776,807 125,536,257 118,595,709 111,124,397 

Total primary governmental activities expenses 520,069,222 446,055,165 418,921,569 371,523,397 358,446,653 

Program revenues 


Charges for services: 

General government 17,188,876 17,326,675 12,567,222 10,854,382 7,005,002 

Public safety 17,298,741 17,202,256 15,754,085 15,840,756 15,671,730 

General services 19,650,237 18,841,288 17,880,336 15,776,086 15,105,283 

Cultural and recreation services 9,492,174 9,002,084 8,556,557 8,147,054 (3) 7,842,184 

Library 363,987 349,139 232,025 173,864 178,555 

Housing and community development 14,430,326 13,925,980 12,553,269 12,193,457 13,478,114 

Operating grants and contributions 34,803,655 28,362,525 25,133,124 26,063,799 31,705,184 

Capital grants and contributions 4,862,387 4,839,925 5,838,885 612,985 1,500,466 

Total governmental activities program revenues 118,090,383 109,849,872 98,515,503 89,662,383 92,486,518 


Charges for services: 

Water 16,130,044 15,323,653 13,868,390 13,113,058 13,110,498 

Solid waste management 18,842,702 18,766,107 17,097,813 15,704,667 14,598,362 

Pier 3,107,349 3,081,338 2,693,200 2,717,162 2,563,783 

Wastewater 12,797,786 12,472,073 11,175,051 11,376,456 11,004,692 

Civic auditorium 3,117,033 2,789,196 2,608,759 2,474,609 2,279,508 

Airport 4,279,268 3,992,190 3,862,455 3,706,719 3,527,460 

Storm water management 1,301,350 1,376,672 1,610,715 1,439,149 1,355,903 

Cemetery 1,080,532 735,718 665,398 650,484 445,327 

Big Blue Bus 13,898,980 13,078,630 13,333,584 11,298,250 12,190,925 

Cable communications (2) — — — 798,984 747,063 

Parking authority 145,600 141,600 138,100 1,612,705 1,457,952 

(continues next page) 

136




TABLE 2 

2007-08 2006-07 2005-06 2004-05 2003-04 

(continues from previous page) 

Operating grants and contributions 32,188,569 31,723,528 32,297,732 29,638,114 24,671,943 

Capital grants and contributions 20,030,403 12,185,518 19,061,484 17,318,761 7,943,966 

Business-type activities program revenues 126,919,616 115,666,223 118,412,681 111,849,118 95,897,382 

Total primary government program revenues 245,009,999 225,516,095 216,928,184 201,511,501 188,383,900 

Net (expense): 

Governmental activities (268,619,507) (202,428,486) (194,869,809) (163,265,305) (154,835,738) 

Business-type activities (6,439,716) (18,110,584) (7,123,576) (6,746,591) (15,227,015) 

Total primary government net expense (275,059,223) (220,539,070) (201,993,385) (170,011,896) (170,062,753) 

General Revenues and Other changes 

in Net Assets 


Taxes: 

Business 26,211,226 24,232,707 21,775,442 20,384,372 19,249,942 

Property 101,323,706 89,845,591 79,951,933 64,667,456 58,267,374 

Sales 32,356,941 33,267,253 31,871,593 27,579,776 27,825,098 

Other 81,762,203 77,036,651 71,788,854 67,203,194 65,196,019 

Settlement income 1,012,863 69,153,512 6,453,804 4,545,498 73,978,421 

Other income 8,428,266 6,213,329 9,638,813 4,838,074 4,713,695 

Investment earnings 22,021,977 25,505,798 11,995,355 10,289,600 3,645,712 

Transfers (2,815,040) (9,029,202) (8,394,702) (4,773,908) (9,257,834) 

Total governmental activities 270,302,142 316,225,639 225,081,092 194,734,062 243,618,427 


Other income 3,421,837 4,111,407 6,028,516 3,352,205 4,239,895 

Investment earnings 4,489,611 7,439,759 2,673,080 4,007,045 2,090,273 

Transfers 2,815,040 9,029,202 8,394,702 4,773,908 9,257,834 

Total business-type activities 10,726,488 20,580,368 17,096,298 12,133,158 15,588,002 

Total primary government 5,969,407 116,266,937 40,184,005 36,855,324 89,143,676 

Changes in net assets 

Governmental activities 1,682,635 113,797,153 30,211,283 31,468,757 88,782,689 

Business-type activities 4,286,772 2,469,784 9,972,722 5,386,567 360,987 

Total primary government $ 5,969,407 116,266,937 40,184,005 36,855,324 89,143,676 

(1) Other expenses allocated to programs in FY 07-08. 

(2) Cable communications became a division of the City Managers Office in FY 05-06. 

(3) $3,562 previously presented as Other. 

137


Fund Balance of Governmental Funds 

Last Ten Fiscal Years 

(Modified Accrual Basis of Accounting) 

TABLE 3 

2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 

General Fund 

Reserved $ 81,056,800 91,843,183 97,044,588 116,386,390 112,721,556 138,058,223 118,287,162 144,233,412 136,030,173 94,655,083 

Unreserved 67,745,079 63,826,421 55,923,644 52,350,429 62,244,592 44,338,729 49,166,752 35,977,083 42,995,083 66,959,397 

Total General Fund $ 148,801,879 155,669,604 152,968,232 168,736,819 174,966,148 182,396,952 167,453,914 180,210,495 179,025,256 161,614,480 

All other governmental funds 

Reserved $ 217,888,723 314,507,732 229,263,232 224,211,709 202,305,246 128,107,698 127,715,809 111,068,051 64,453,523 84,996,145 

Unreserved, reported in: 

Special revenue funds 67,387,055 11,027,475 5,569,484 7,883,995 5,119,597 19,763,099 15,983,739 12,966,034 7,798,699 (22,925,195) 

Capital project funds (7,937,337) (5,053,769) (10,434,018) (20,392,300) (21,413,949) (24,171,070) (28,013,662) (34,129,673) (14,625,444) (18,585,267) 

Total all other government funds $ 277,338,441 320,481,438 224,398,698 211,703,404 186,010,894 123,699,727 115,685,886 89,904,412 57,626,778 43,485,683 

138


Changes in Fund Balance of Governmental Funds 



TABLE 4 

2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 

Revenues 

Property taxes $ 36,067,632 32,586,134 28,031,618 25,650,975 24,389,651 20,205,578 17,511,845 16,791,606 15,316,818 14,774,952 

Incremental property taxes 66,148,046 58,163,695 52,818,794 39,866,836 34,653,601 37,650,778 29,935,033 21,429,798 18,964,445 10,077,519 

Sales taxes 32,356,941 33,267,253 31,871,593 27,579,776 27,825,098 25,235,982 24,586,014 26,186,186 24,360,293 21,423,677 

Other taxes 109,556,310 102,870,450 97,203,255 71,083,492 68,077,435 63,369,941 61,092,973 74,934,122 58,853,994 54,397,482 

License and permits 20,203,085 19,232,085 18,378,705 39,361,156 35,662,507 33,315,009 32,574,841 31,351,322 29,344,356 28,038,957 

Intergovernmental 33,007,061 28,948,391 20,020,970 25,481,694 28,562,694 30,893,991 28,466,987 31,557,576 41,350,277 35,540,335 

Charges for services 36,226,643 35,855,124 29,083,568 20,918,458 18,401,113 16,904,889 17,871,631 16,627,486 15,811,394 15,796,635 

Fines and forfeitures 14,567,262 14,191,722 13,101,713 13,332,411 13,344,573 10,742,425 9,858,930 8,539,835 9,000,597 8,739,641 

Investment earnings 21,450,071 24,225,164 11,649,849 10,699,979 4,471,698 6,181,428 25,215,755 20,286,388 17,379,702 13,924,740 

Rental income 7,006,972 7,279,995 6,562,654 8,638,543 7,854,141 7,976,304 — (4) 1,147,886 1,146,076 1,146,001 

Settlement income 1,012,863 69,153,512 6,453,804 4,545,498 73,929,382 — — — — — 

Other 16,691,497 8,446,372 9,794,587 4,497,162 5,817,295 7,150,655 10,089,427 37,112,400 13,042,200 6,591,310 

Total revenue 394,294,383 434,219,897 324,971,110 291,655,980 342,989,188 259,626,980 257,203,436 285,964,605 244,570,152 210,451,249 

139 

Expenditures 

General government 38,595,140 37,006,125 33,564,080 29,629,861 23,558,535 21,872,722 21,625,401 17,887,258 18,318,874 16,864,659 

Public safety 89,074,863 87,509,154 82,576,196 80,424,716 64,584,136 77,674,621 77,502,781 60,031,295 50,282,717 46,320,609 

General services 116,628,339 46,537,282 51,793,265 31,005,774 42,228,092 46,117,908 42,328,024 38,688,651 50,461,320 22,475,490 

Cultural and recreation services 46,035,625 49,549,413 44,991,537 59,290,534 38,287,458 35,179,915 37,565,421 27,735,008 29,883,237 25,771,300 

Library 10,245,110 9,454,034 20,759,269 31,443,914 17,844,322 13,002,733 7,385,216 5,948,042 5,940,473 5,228,164 

Retirement (1) — — — — 13,258,631 7,068,355 4,367,576 7,621,026 8,619,950 9,204,945 

Housing and community development 118,452,727 77,871,025 61,094,984 58,081,802 63,175,791 36,280,489 36,446,926 31,912,393 25,969,624 28,317,222 

Statutory pass throughs (2) — — — — — 6,577,635 5,142,773 3,393,724 3,250,427 1,519,682 

Other 2,749,086 609,225 2,189,224 1,087,085 241,524 329,561 349,609 21,257,628 15,996,699 14,023,627 

Capital outlay (3) — — — — — 13,045,843 6,049,281 26,286,778 68,184,452 3,974,650 

Debt service 

Principal 8,075,000 7,805,000 6,515,000 5,625,000 4,880,000 1,625,000 2,590,000 2,445,000 1,465,000 1,355,000 

Interest 8,941,832 8,206,309 9,947,949 9,572,189 9,401,520 7,644,173 7,982,932 8,409,242 3,376,762 3,516,152 

Bond issuance costs — — 1,324,281 — — — — — — — 

Total expenditures 438,797,722 324,547,567 314,755,785 306,160,875 277,460,009 266,418,955 249,335,940 251,616,045 281,749,535 178,571,500 

(continues next page)


Changes in Fund Balance of Governmental Funds 



TABLE 4 

(continues from previous page) 

2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 


over (under) expenditures (44,503,339) 109,672,330 10,215,325 (14,504,895) 65,529,179 (6,791,975) 7,867,496 34,348,560 (37,179,383) 31,879,749 

140 

Other financing sources (uses) 

Transfers in 46,495,411 24,721,684 24,782,699 30,368,084 23,047,929 22,831,619 23,170,931 16,055,582 13,218,417 9,275,348 

Transfers out (49,574,857) (33,998,086) (33,501,106) (35,493,072) (32,456,665) (25,790,988) (50,768,690) (18,775,559) (16,643,144) (11,956,570) 

Refunding bonds issued — — 64,720,000 — — — 25,350,000 — — — 

Bonds issued — — — 38,930,000 — 25,000,000 27,395,000 — 76,438,433 — 

Premium on bonds issued — — 55,653 163,064 — 80,000 45,805 — 1,184,815 — 

Discount on bonds issued — — (187,264) — — — (405,760) — — — 

Payments to refunded bond escrow agent — — (63,213,909) — — — (27,883,554) — — — 

Capital leases — — — — — — — 2,231,362 — 589,143 

Total other financing sources (uses) (3,079,446) (9,276,402) (7,343,927) 33,968,076 (9,408,736) 22,120,631 (3,096,268) (488,615) 74,198,521 (2,092,079) 

Adjustment to reclassify LT advances from the city — — — — — — — — — (20,878,524) 

Residual equity transfer in — — — — — — — 6,622,229 255,393 7,386,798 

Residual equity transfer out — — — — — — — (7,022,229) (5,722,660) (3,299,943) 

Net change in fund balance $ (47,582,785) 100,395,928 2,871,398 19,463,181 56,120,443 15,328,656 4,771,228 33,459,945 31,551,871 12,996,001 

Debt service as a percentage of noncapital 

expenditures 4.52% 5.51% 6.59% 6.50% 6.27% 4.37% 5.16% 4.31% 1.72% 2.73% 

(1) Retirement costs allocated to program areas beginning in FY 2004-05. 

(2) Statutory pass throughs included in housing and community development beginning FY 2003-04. 

(3) Capital outlay included in expenditures beginning in FY 2004-05. 

(4) Rental income included in investment income for FY 2001-02.


General Fund Tax Revenues by Source (1) 


(In Thousands) 

TABLE 5 

Source 

2007-08 2006-07 2005-06 2004-05 2003-04 

Sales taxes (2) $ 32,357 

33,267 31,872 27,580 27,825 

Utility user's tax 31,622 31,243 30,044 29,315 28,967 

Transient occupancy tax 34,969 31,892 29,209 23,419 19,850 

Property taxes (3) 36,068 32,586 28,032 25,651 23,098 

Business license taxes 24,654 22,637 20,274 18,970 17,894 

Parking facility tax 7,826 7,400 6,832 6,241 6,098 

Real property transfer tax 4,739 6,409 5,573 7,180 5,350 

Vehicle license fees 390 608 2,062 975 4,034 

Franchise fees (4) — — — 909 863 

Condominium taxes 50 39 24 24 46 

Total $ 172,675 166,081 153,922 140,264 134,025 

(1) 

(2) 

(3) 

(4) 

Does not include Highway Users Taxes, which are recorded in the Gas Tax Fund, Unit Dwelling Taxes, which are recorded in 

the Parks and Recreation Facilities Fund, or TORCA Conversion Taxes, which are recorded in the TORCA Fund. 

Does not include a one-time prior period adjustment, made as of June 30, 2002, to reflect correction of the accrual of sales tax 

revenues. 

Includes ad valorem property taxes for purposes of paying debt service on general obligation bonds. Does not include tax 

increment received by redevelopment area. 

Beginning in FY 2005-06, franchise fees are classified as "Licenses and Permits". 

Source: City of Santa Monica Finance Department 

141


Assessed Value and Actual Value of Taxable Property 


TABLE 6 

Fiscal 

year Land Improvements Personal property 

Public 

utilities Secured gross Exemptions (1) Secured net Net unsecured 

Net assessed 

valuations 

2007-08 $ 12,279,875,463 $ 8,581,600,449 $ 230,361,744 $ 742,365 $ 21,092,580,021 $ 847,012,250 $ 20,245,567,771 $ 877,156,158 $ 21,122,723,929 

2006-07 11,307,028,243 8,100,538,705 231,255,829 742,865 19,639,565,642 810,600,441 18,828,965,201 876,645,078 19,705,610,279 

2005-06 10,226,948,142 7,591,414,476 37,240,768 742,865 17,856,346,251 535,704,727 17,320,641,524 777,908,774 18,098,550,298 

2004-05 9,187,366,819 7,004,200,099 25,810,792 3,266,758 16,220,644,468 445,214,530 15,775,429,938 771,454,105 16,546,884,043 

142 

2003-04 8,398,483,440 6,720,989,375 110,879,795 3,076,425 15,233,429,035 458,910,480 14,774,518,555 936,652,394 15,711,170,949 

2002-03 7,743,067,190 6,378,861,320 77,861,370 577,895 14,200,367,775 432,908,920 13,767,458,855 830,892,607 14,598,351,462 

2001-02 6,959,592,062 5,827,878,240 67,180,358 577,895 12,855,228,555 304,310,896 12,550,917,659 940,935,105 13,491,852,764 

2000-01 6,387,678,650 5,382,788,280 26,836,372 577,895 11,797,881,197 335,631,820 11,462,249,377 820,704,082 12,282,953,459 

1999-00 5,827,045,970 4,951,093,680 48,350,204 577,895 10,827,067,749 264,038,252 10,563,029,497 771,996,560 11,335,026,057 

1998-99 5,222,114,071 4,496,230,347 48,065,652 577,895 9,766,987,965 327,617,031 9,439,370,934 763,269,831 10,202,640,765 

(1) Includes Homeowner Exemption. City is reimbursed by State for taxes lost because of these exemptions. 

Source: Los Angeles County Auditor-Controller


Direct and Overlapping Property Tax Rates* 


TABLE 7 

Fiscal City County School Miscellaneous 

year General Fund General Fund districts special districts Total 

2007-08 $ 0.01 $ 1.00 $ 0.10 $ 0.01 $ 1.12 

2006-07 0.01 1.00 0.08 0.01 1.10 

2005-06 0.01 1.00 0.07 0.01 1.09 

2004-05 0.01 1.00 0.06 0.01 1.08 

2003-04 0.02 1.00 0.05 0.01 1.08 

2002-03 0.02 1.00 0.06 0.01 1.09 

2001-02 ** 1.00 0.04 0.01 1.05 

2000-01 ** 1.00 0.04 0.01 1.05 

1999-00 0.01 1.00 0.03 0.01 1.05 

1998-99 ** 1.00 0.06 0.01 1.07 

* Property tax rate is per $100 of assessed value. Prior to 1981-82, assessed value was 25% of market value. Since 

1981-82, assessed value equals full market value as defined by law. Since 1978-79, the maximum allowable rate is 

levied by the County, property taxes are collected by the County, and the County allocates the City's share in 

accordance with distribution formulas established in law. Effective 1981-82, Proposition 13 allowed jurisdictions to 

impose rates over the $1.00 base rate only for bonded debt approved by the voters prior to 1978. However, in 1986, 

the State Constitution was amended to allow rates over the $1.00 base rate for voter approved general obligation 

bonds. 

City General Fund is allocated approximately $.15 of each $1.00 of the County General Fund amount. 

Redevelopment areas receive approximately $.85 of each $1.00 of the County General Fund portion. 

** City of Santa Monica property tax override for Library General Obligation Bonds was less than $.01, but was 

levied. 

Source: Los Angeles County Auditor-Controller 

143


Principal Property Taxpayers 

Current Fiscal Year and Nine Years Ago 

TABLE 8 

144 

Taxable 

2007-08 

Percentage 

of total City 

taxable 

Taxable 

assessed 

assessed 

assessed 

Taxpayer value Rank value 

value Rank 

California Colorado Center LLC $ 452,157,840 1 2.14 % $ — 

— % 

Water Garden Realty Holding LLC 438,216,533 2 2.07 — — 

Sisters of Charity/St. John's Hospital 345,742,592 3 1.64 142,922,533 3 1.40 

Douglas Emmett Realty Fund 261,224,120 4 1.24 86,855,305 6 0.85 

SC Enterprises SMBP LLC 226,701,857 5 1.07 88,745,204 5 0.87 

Barrington Pacific LLC 134,791,748 6 0.64 — — 

New Santa Monica Beach Hotel 132,795,598 7 0.63 — — 

Rand Corporation 129,700,673 8 0.61 — — 

Macerich Santa Monica LLC 124,986,550 9 0.59 — — 

CLPF-Arboretum 100,814,760 10 0.48 — — 

Colorado Place Partners — — 188,000,000 1 1.84 

Water Garden Company — — 150,610,902 2 1.48 

Santa Monica Place Associates — — 98,036,225 4 0.96 

SHCI Santa Monica Beach Hotel — — 72,179,758 7 0.71 

Commerce Way Assoc. Ltd. Partnership — — 53,556,227 8 0.52 

Metro Goldwyn Mayer Studios Inc — — 23,750,115 9 0.23 

Santa Monica Shores — — 17,174,236 10 0.17 

Total principal property taxpayers 

assessed value 2,347,132,271 11.11 921,830,505 9.03 

Total City assessed value $ 21,122,723,929 

100.00 % $ 10,202,640,765 

100.00 % 

1998-99 

Percentage 

of total City 

taxable 

assessed 

value 

Source: City of Santa Monica Finance Department (data from Los Angeles County Assessor)


Property Tax Levies and Collections 


TABLE 9 

Total secured tax 

Outstanding 

Fiscal year 

Total secured tax 

levy 

Current secured 

tax collections 

Percent of 

levy collected 

Delinquent 

secured tax 

collections (1) 

Total tax 

collections 

collections as 

percent of total tax 

levy 

Outstanding 

delinquent taxes 

(2) 

delinquent taxes 

as percent of total 

secured tax levy 

2007-08 $ 20,654,045 $ 19,309,774 93.5 % $ 528,207 $ 19,837,981 96.0 % $ 442,105 2.1 % 

2006-07 19,352,421 18,418,938 95.2 376,559 18,795,497 97.1 271,740 1.4 

2005-06 18,053,398 17,445,098 96.6 407,334 17,852,432 98.9 248,199 1.4 

145 

2004-05 16,834,761 16,407,407 97.5 416,502 16,823,909 99.9 292,723 1.7 

2003-04 16,674,558 16,235,740 97.4 486,656 16,722,396 100.3 438,818 2.6 

2002-03 15,315,149 14,891,114 97.2 422,693 15,313,807 100.0 420,562 2.7 

2001-02 14,713,556 14,282,425 97.1 412,287 14,694,712 99.9 446,478 3.0 

2000-01 14,040,882 13,614,254 97.0 406,267 14,020,521 99.9 452,974 3.2 

1999-00 13,287,593 12,891,562 97.0 426,560 13,318,122 100.2 442,199 3.3 

1998-99 12,858,253 12,484,729 97.1 451,186 12,935,915 100.6 470,071 3.7 

(1) Exclusive of penalties and collections related to tax overrides for debt service on general obligation bonds.. 

(2) 

Reflects City of Santa Monica proportionate share of county-wide outstanding delinquencies. City specific statistics are not available from the 

County of Los Angeles. 

Source: County of Los Angeles


Taxable Transactions by Type of Business 

Last Five Calendar Years 

(In Thousands) 

TABLE 10 

Calendar Year 

Business 2007 2006 2005 2004 2003 

Apparel stores $ 333,651 336,010 329,556 302,756 264,676 

General merchandise 62,818 68,565 75,618 84,334 83,827 

Food stores 85,452 81,477 75,971 67,825 67,699 

Eating & drinking places 452,246 435,807 409,645 374,767 344,949 

Building materials & farm implements 125,718 119,648 103,851 101,540 93,048 

Auto dealers & auto suppliers 715,633 716,162 710,000 691,828 653,772 

Service stations 137,283 132,437 101,214 89,261 78,537 

. . . . 

Other retail stores 689,179 649,123 634,605 613,781 533,452 

Retail stores total 2,601,980 2,539,229 2,440,460 2,326,092 2,119,960 

All other outlets 658,730 724,944 676,497 598,595 560,589 

Total all outlets $ 3,260,710 3,264,173 3,116,957 2,924,687 2,680,549 

Source: Hinderleiter, de Llamas and Associates 

146


Ratio of Outstanding Debt by Type 


TABLE 11 

Fiscal 

year 

General 

obligation 

bonds 


Tax allocation 

bonds 

Lease revenue 

bonds 

Wastewater 

bonds 


Certificates of 

participation 

Term loans 

payable 

Capital leases 

Total primary 

government 

Per capita 

2007-08 $ 20,140,000 $ 75,570,000 $ 71,900,000 $ 27,260,000 $ — $ 3,363,238 

— $ 198,233,238 2,168 

2006-07 21,800,000 78,115,000 75,770,000 28,715,000 420,000 3,617,046 — 208,437,046 2,287 

2005-06 23,430,000 81,320,000 78,740,000 29,975,000 820,000 3,864,987 — 218,149,987 2,404 

147 

2004-05 25,035,000 78,025,000 81,610,000 31,205,000 1,205,000 4,107,207 — 221,187,207 2,439 

2003-04 26,615,000 79,975,000 44,775,000 32,335,000 1,570,000 4,343,865 — 189,613,865 2,097 

2002-03 28,170,000 81,840,000 46,235,000 33,340,000 1,920,000 4,625,079 — 196,130,079 2,195 

2001-02 3,440,000 82,800,000 46,630,000 34,230,000 2,255,000 4,900,995 30,718 174,286,713 1,981 

2000-01 3,690,000 73,975,000 31,650,000 35,025,000 2,565,000 5,171,749 2,052,909 154,129,658 1,801 

1999-00 3,915,000 75,120,000 20,975,000 35,725,000 2,865,000 5,555,507 — 144,155,507 1,714 

1998-99 4,110,000 10,085,000 20,545,000 36,350,000 3,165,000 738,836 98,965 75,092,801 894 

Note: See Schedule of Demographic and Economic Statistics on Table 19 for population data.


Ratios of General Bonded Debt 


TABLE 12 

2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 

General bonded debt outstanding 

General obligation bonds $ 20,140,000 21,800,000 23,430,000 25,035,000 26,615,000 28,170,000 3,440,000 3,690,000 3,915,000 4,110,000 

Tax allocation bonds 75,570,000 78,115,000 81,320,000 78,025,000 79,975,000 81,840,000 82,800,000 81,080,000 82,895,000 18,495,000 

Total $ 95,710,000 99,915,000 104,750,000 103,060,000 106,590,000 110,010,000 86,240,000 84,770,000 86,810,000 22,605,000 

Assessed value (in thousands) $ 21,122,724 19,705,610 18,098,550 16,546,884 15,711,170 14,598,351 13,491,852 12,282,953 11,335,026 10,202,640 

Percentage of assessed 

property value 0.45% 0.51% 0.58% 0.62% 0.68% 0.75% 0.64% 0.69% 0.77% 0.22% 

Population 91,439 91,124 90,750 90,678 90,300 89,333 87,954 86,188 96,528 94,220 

148 

Per capita $ 1,047 

1,096 1,154 1,137 1,180 1,231 981 984 899 240


Direct and Overlapping Governmental Activities Debt 

As of June 30, 2008 

TABLE 13 

149 

Estimated Estimated share 

Debt Percentage of Overlapping 

Outstanding Applicable Debt 

Overlapping debt: 

Los Angeles County General Fund Obligations $ 1,019,552,788 

1.730% $ 17,638,263 

Los Angeles County Pension Obligations 352,255,398 1.730% 6,094,018 

Los Angeles County Superintendent of Schools Certificates of Participation 17,861,064 1.730% 308,996 

Los Angeles County Flood Control District 99,210,000 1.770% 1,756,017 

Metropolitan Water District 327,215,000 0.862% 2,820,593 

Santa Monica Community College District 197,452,931 58.570% 115,648,182 

Los Angeles Unified School District 7,325,045,000 0.0002% 14,650 

Santa Monica-Malibu Unified School District 139,295,034 58.643% 81,686,787 

Los Angeles County Regional Park and Open Space Assessment District 269,995,000 1.730% 4,670,914 

Santa Monica Community College District Certificates of Participation 27,840,000 58.570% 16,305,888 

Los Angeles Unified School District Certificates of Participation 498,121,710 0.0002% 996 

Los Angeles Community College District 1,370,820,000 0.009% 123,374 

Santa Monica-Malibu Unified School District Certificates of Participation 17,306,501 58.643% 10,149,051 

Subtotal, overlapping debt 257,217,729 

City direct governmental debt 167,610,000 

Total direct and overlapping governmental debt $ 424,827,729 

Source: California Municipal Statistics, Inc.


Computation of Legal Debt Margin 


TABLE 14 

2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 

Total net debt applicable to limit $ 148,656,800 

156,937,600 165,988,287 165,375,304 138,094,965 143,524,025 125,316,282 99,427,444 101,717,884 28,601,838 

Debt limit 2,214,502,370 2,068,018,972 1,877,324,663 1,713,217,857 1,627,881,798 1,513,649,468 1,389,360,631 1,271,486,828 1,160,525,666 1,062,232,804 

Legal debt margin 2,065,845,570 1,911,081,372 1,711,336,376 1,547,842,553 1,489,786,833 1,370,125,443 1,264,044,349 1,172,059,384 1,058,807,782 1,033,630,966 

Total net debt applicable to the limit 

as a percentage of debt limit 6.71% 7.59% 8.84% 9.65% 8.48% 9.48% 9.02% 7.82% 8.76% 2.69% 

Net assessed value $ 21,122,723,929 

Add: exempt property 1,022,299,770 

Total gross assessed value $ 22,145,023,699 

150 

Debt limit - 10% of total assessed value (1) 2,214,502,370 

Amount of debt applicable to debt limit: 

Total bonded debt 167,610,000 

Less: 

Assets in debt service funds 

available for payment of bonds 18,953,200 

Total amount of debt applicable to debt limit 148,656,800 

Legal debt margin $ 2,065,845,570 

(1) Per Section 607 of the City Charter, bonded indebtedness of the City may not exceed 10% of total assessed valuation 

of property within the City, exclusive of any indebtedness incurred for the purpose of water supply or sewers or storm drains. 

Source: City of Santa Monica Finance Department


Wastewater Enterprise Revenue Bonds Coverage 

TABLE 15 

Direct Net revenue 

Fiscal Gross operating available for 

Debt service requirement 

year revenues (1) expense (2) debt service Principal Interest Total Coverage 

2007-08 $ 17,359,852 $ 12,711,059 $ 4,648,793 $ 1,455,000 $ 1,115,463 $ 2,570,463 1.81 

2006-07 16,401,212 12,613,626 3,787,586 1,260,000 1,311,589 2,571,589 1.47 

2005-06 14,437,130 10,463,034 3,974,096 1,190,000 1,419,825 2,609,825 1.52 

2004-05 14,233,699 9,818,457 4,415,242 1,130,000 1,470,675 2,600,675 1.70 

2003-04 14,191,264 9,349,681 4,841,583 1,005,000 1,591,275 2,596,275 1.86 

2002-03 14,593,471 10,818,410 3,775,061 890,000 1,698,075 2,588,075 1.46 

2001-02 15,196,031 8,104,968 7,091,063 795,000 1,793,475 2,588,475 2.74 

2000-01 19,211,915 10,772,786 8,439,129 700,000 1,877,475 2,577,475 3.27 

1999-00 16,118,683 6,124,121 9,994,562 625,000 1,952,475 2,577,475 3.88 

1998-99 12,816,715 4,688,426 8,128,289 565,000 2,008,975 2,573,975 3.16 

(1) Operating plus non operating revenues and net interfund transfers. 

(2) Excludes depreciation expense and write-off of disposed assets. 

Note: 

The Hyperion Project, Wastewater Enterprise Revenue Bonds were issued November 26, 1991 at an interest rate of 

6.25% with ratings of A1 from Moody's Investors Service, Inc. and A+ from Standard and Poor's Corporation. Debt 

service began in FY 1992-93. These bonds were refunded by the issuance of insured Wastewater Enterprise Revenue 

Bonds, 1993 Refunding Series on December 22, 1993 with an interest rate of 5.3084% with ratings of Aaa and AAA by 

Moody's Investors Services, Inc. and Standard and Poor's Corporation, respectively. The Refunding Bonds are insured 

by AMBAC Indemnity. 

On October 13, 2005 the City issued $20,305,000 of Wastewater Enterprise Refunding Revenue Bonds bearing interest 

from 3.00% to 5.00% to defease $21,535,000 of the outstanding 1993 Wastewater Enterprise Revenue Bonds, 1993 

Refunding Series with ratings from Moody's Investor Services, Inc. of A1, Standard and Poor's Corporation of AA and 

Fitch Ratings of AAA. The Refunding Bonds are insured by Financial Guaranty Insurance Company. 

On November 17, 2008 Standard and Poor's Corporation upgraded the underlying rating to AAA. 


151


Redevelopment Agency Downtown Project Lease 

Revenue Bonds Coverage 

TABLE 16 




year revenues expense debt service Principal Interest Total Coverage 

2007-08 $ 4,205,369 $ 395,930 $ 3,809,439 $ 1,080,000 $ 58,680 $ 1,138,680 3.35 

2006-07 2,002,555 345,087 1,657,468 1,050,000 93,840 1,143,840 1.45 

2005-06 2,964,663 429,708 2,534,955 1,015,000 125,358 1,140,358 2.22 

2004-05 2,913,781 368,031 2,545,750 985,000 152,388 1,137,388 2.24 

2003-04 2,972,240 221,683 2,750,557 390,000 168,600 558,600 4.92 

2002-03 3,698,589 308,456 3,390,133 — 115,000 115,000 29.48 

2001-02 2,823,105 313,397 2,509,708 710,000 417,296 1,127,296 2.23 

2000-01 2,751,331 316,317 2,435,014 670,000 456,981 1,126,981 2.16 

1999-00 2,776,080 286,809 2,489,271 635,000 493,539 1,128,539 2.21 

1998-99 2,687,824 285,855 2,401,969 605,000 526,883 1,131,883 2.12 

Note: 

Redevelopment Agency of the City of Santa Monica Parking Lease Revenue Bonds were originally issued December 1, 

1978 in the principal amount of $14,470,000 at an interest rate of 6.25 - 7.75%. 

These bonds were refunded on October 1, 1992 as Lease Revenue Bonds, Series 1992 (Downtown Redevelopment 

Refunding Project of 1992) issued in the principal amount of $11,635,000 at an interest rate of 5.98%. 

On May 2, 2002, the Agency issued $5,640,000 of Downtown Project refunding bonds bearing interest at 4.6% to 

defease the outstanding 1992 Downtown Project Bonds. Debt service payments on the 2002 bonds began in fiscal year 

2002-03. Coverage ratios before FY 2002-03 above reflect the 1992 bonds. 


152


Redevelopment Agency Earthquake Recovery Project 

Tax Allocation Bonds Coverage 

TABLE 17 




year revenues expenses debt service Principal Interest Total Coverage 

2007-08 $ 63,582,749 $ 3,395,418 $ 60,187,331 $ 1,530,000 $ 2,875,469 $ 4,405,469 13.66 

2006-07 58,267,909 2,670,168 55,597,741 2,225,000 1,998,213 4,223,213 13.16 

2005-06 49,668,747 1,833,675 47,835,072 1,095,000 3,579,048 4,674,048 10.23 

2004-05 36,763,429 1,109,270 35,654,159 1,045,000 3,627,198 4,672,198 7.63 

2003-04 31,918,204 1,033,362 30,884,842 1,000,000 3,673,210 4,673,210 6.61 

2002-03 33,522,316 756,744 32,765,572 960,000 3,717,310 4,677,310 7.01 

2001-02 26,688,631 843,901 25,844,730 920,000 3,759,610 4,679,610 5.52 

2000-01 17,910,624 731,954 17,178,670 880,000 4,118,436 4,998,436 3.44 

Note: 

On December 1, 1999, the Redevelopment Agency of the City of Santa Monica issued Earthquake Recovery 

Redevelopment Project Area Tax Allocation Bonds at various interest rates of 4.58% to 7.50% which were initially 

given underlying ratings of A by Fitch, Baa1 by Moody's, and A- by Standard and Poor's, but all rated the issue AAA 

with insurance. 

On April 27, 2006, the Redevelopment Agency of the City of Santa Monica issued $64,720,000 of Earthquake 

Redevelopment Project refunding bonds bearing interest from 4.00% to 5.5% to defease the 1999 Earthquake 

Redevelopment Project Bonds which were initially given underlying ratings of A+ by Fitch, A3 by Moody's and A by 

Standard and Poors, but all rated AAA with insurance. 


153


Redevelopment Agency Ocean Park Project 

Tax Allocation Refunding Bonds Coverage 

TABLE 18 




year revenues expense debt service Principal Interest Total Coverage 

2007-08 $ 4,086,779 $ 269,907 $ 3,816,872 $ 1,015,000 $ 711,129 $ 1,726,129 2.21 

2006-07 3,958,631 229,017 3,729,614 980,000 748,535 1,728,535 2.16 

2005-06 3,332,493 256,927 3,075,566 945,000 784,628 1,729,628 1.78 

2004-05 3,034,112 218,253 2,815,859 905,000 820,448 1,725,448 1.63 

2003-04 2,896,936 182,117 2,714,819 865,000 859,091 1,724,091 1.57 

2002-03 2,737,356 178,996 2,558,360 — 586,423 586,423 4.36 

2001-02 2,944,183 206,004 2,738,179 280,000 651,925 931,925 2.94 

2000-01 3,240,610 181,426 3,059,184 265,000 668,555 933,555 3.28 

1999-00 1,848,217 186,823 1,661,394 250,000 683,755 933,755 1.78 

1998-99 1,638,906 163,521 1,475,385 235,000 697,585 932,585 1.58 

Note: 

In October of 1984, the Redevelopment Agency issued Tax Allocation Bonds in the principal sum of $5,700,000 at an 

interest rate of 10.89%. Such obligations were serial in nature and matured annually with the final payment of $686,650 

due in 2007. The bond proceeds were used to acquire land, construction of a public park, and for low and moderateincome 

housing. 

In April of 1988, the Redevelopment Agency issued Refunding and Refinancing Bonds in the principal sum of 

$8,775,000 at an interest rate of 5.2 - 8.25%. Such obligations were serial in nature and matured annually with the final 

payment of $754,906 due in 2019. The bond proceeds were used to defease the 1984 Ocean Park Bonds and to pay a 

portion of various Promissory Notes due to the City of Santa Monica. 

In November of 1992, the Redevelopment Agency issued Ocean Park Redevelopment Project Tax Allocation Refunding 

Bonds, Series 1992, in the principal sum of $11,325,000 at an interest rate of 6.89%. Such obligations are serial in 

nature and mature annually with the final payment of $931,500 due in 2019. The bond proceeds were issued to defease 

the 1988 Refunding and Refinancing Bonds and to pay a portion of various Promissory Notes due to the City of Santa 

Monica. Debt service payments began in fiscal year 1992-93. 

On May 2, 2002, the Agency issued $19,315,000 of Ocean Park refunding and new money bonds bearing interest at 

5.03% to defease the outstanding 1992 Ocean Park Project Bonds and to provide funds for new low-moderate-income 

projects. Debt service payments on the 2002 bonds began in fiscal year 2002-03. Coverage ratios before FY 2002-03 

above reflect the 1992 bonds. 


154


Demographic and Economic Statistics 

Last Ten Calendar Years 

TABLE 19 

Calendar 

Personal income (2) 

Per capita 

Unemployment 

year Population (1) (millions) personal income (3) 

rate (4) 

2008 91,439 * * 5.5 

2007 91,124 $ 539,163 $ 41,875 4.0 

2006 90,750 505,197 39,011 4.2 

2005 90,678 477,101 36,917 4.8 

2004 90,410 453,902 35,188 5.9 

2003 89,339 427,041 33,318 4.6 

2002 87,994 412,753 32,522 4.4 

2001 85,576 403,519 32,152 3.7 

2000 84,084 385,053 31,045 3.5 

1999 84,000 360,275 29,402 3.8 

* No data is available for 2008 as of publication date of CAFR. 

Note: 

Source: 

Data shown is the Metropolitan Statistical Area of Los Angeles-Long Beach-Santa Ana, CA. 

Data by City is not available. 

(1) California Department of Finance 

(2) and (3) Bureau of Economic Analysis 

(4) State of California, Employment Development Department, Labor Market Information Division 

155


Principal Employers 

Current Year and Nine Years Ago 

TABLE 20 

Employers 

Number of 

employees 

2007-08 

Rank 

Percentage of 

total City 

employment 

Number of 

employees 

1998-99 

Rank 

Percentage of 

total City 

employment 

Santa Monica College 2,525 1 3.20 % 1,595 2 2.39 % 

City of Santa Monica 2,118 2 2.69 1,650 1 2.47 

Santa Monica-UCLA Hospital 1,652 3 2.10 1,000 5 1.50 

Santa Monica-Malibu Unified School District 1,650 4 2.09 1,300 4 1.95 

Saint John's Hospital Medical Center 1,612 5 2.05 1,542 3 2.31 

MTV Networks 1,200 6 1.52 

RAND Corporation 862 7 1.09 964 7 1.44 

Activision 800 8 1.01 

ET Whitehall (Shutters and Casa del Mar) 715 9 0.91 

Universal Music Group 603 10 0.77 

Metro Goldwyn Meyer, Inc. 989 6 1.48 

Lear Astronics 686 8 1.03 

The Gillette Company Stationery 682 9 1.02 

Specialty Laboratories, Inc. 619 10 0.93 

Total Jobs Provided by Principal Employers 13,737 17.43% 11,027 16.52% 

Average total jobs in Santa Monica 78,822 66,763 

Source: City of Santa Monica Economic Development Division, Housing and Economic Development Department 

156


Full-Time Equivalent City Government Employees by Function/Program 


TABLE 21 

Function/Program 

2007-08 2006-07 2005-06 2004-05 2003-04 

157 

General government 191.6 186.1 179.7 164.9 159.4 

Public safety 

Police 

Sworn 216.0 216.0 216.0 214.0 214.0 

Non-sworn 246.9 243.0 242.0 283.6 239.7 

Fire 

Sworn 107.0 106.0 106.0 104.0 105.0 

Non-sworn 27.3 29.6 26.9 27.3 26.3 

General services 268.9 131.7 124.7 117.6 117.8 

Cultural and recreation services 145.4 228.3 218.8 204.9 206.7 

Library 107.1 107.1 105.4 83.9 84.5 

Housing and community development 139.9 145.2 144.1 137.7 134.0 

Beach recreation 24.8 24.3 23.3 23.3 23.3 

Cable communications (1) — — — 10.8 10.5 

Water 52.2 52.2 52.2 52.2 51.2 

Solid waste management 83.1 106.8 106.8 104.0 102.0 

Pier 16.5 25.8 26.8 26.4 27.2 

Wastewater 39.6 39.6 39.7 36.4 36.4 

Civic Auditorium 35.0 35.0 35.0 34.9 34.9 

Airport 12.4 12.3 11.3 11.3 11.3 

Cemetery 10.2 9.5 9.5 9.5 9.5 

Big Blue Bus 441.9 441.9 441.9 437.9 439.0 

Vehicle management 28.8 24.8 24.8 24.8 24.8 

Self insurance - workers' compensation 12.1 12.1 12.1 12.1 11.7 

Total all funds 2,206.7 2,177.3 2,147.0 2,121.5 2,069.2 

Note: Includes permanent and temporary employees (2,080 hours = 1 full-time position). 

(1) Cable communications was merged into the General Fund in fiscal year 2005-2006. 

Source: City of Santa Monica Budget


Operating Indicators by Function/Program 

Last Three Fiscal Years 

TABLE 22 

Function / program 

2007-08 2006-07 2005-06 


Electronic requests for government information 24,631,223 20,999,363 14,211,319 

Hours of live public meeting coverage 444 332 310 


Number of emergency response incidents 11,553 12,551 11,435 

Number of inspections 7,053 6,562 7,125 

Calls to Police Department for service 106,497 109,328 105,308 

Police reports issued 14,346 15,334 14,618 

Number of crimes recorded 9,604 9,902 9,761 


Number of square feet of sidewalks repaired 140,000 127,170 97,522 

Number of graffiti removals performed 25,251 22,865 11,780 

Feet of sewer mains cleaned 783,932 1,179,759 647,841 


Number of cars parked in beach lots 1,640,733 1,635,707 1,572,374 

Senior services meals served 30,917 30,721 28,609 

Number of low income persons receiving primary health care 3,650 3,231 3,345 

Number of youth regularly attending homework assistance programs 547 511 534 

Library: 

Library visitors 1,328,614 1,273,672 938,067 

Materials used 1,795,844 1,607,534 1,202,754 

Public access computer sessions 286,077 274,239 145,824 


Building and Safety plan checks completed 1,786 1,601 1,975 

Building inspections performed 17,671 17,120 17,765 

Transportation Managements plan checks completed 531 573 572 

Resident parking passes sold 45,657 42,645 37,028 

Number of traffic signs installed, replaced, repaired, or removed 5,633 5,447 10,647 

Number of parking meters installed, replaced, repaired, or removed 45,532 42,645 27,182 

Water: 

Number of direct customer accounts 17,272 17,175 17,171 

Water sold to direct customers in whole acre feet 12,975 13,378 12,775 

Airport: 

Number of tenant aircraft 420 420 420 

Noise ordinance violations issued 244 223 242 

Big Blue Bus: 

Revenue Miles 5,114,167 5,016,822 5,053,891 

Farebox revenue (in millions) 10.91 9.72 9.8 

Total passenger trips (in millions) 21.0 21.8 22.0 

Number of customer relations phone calls 74,131 60,096 60,153 

Total number of charters 554 1,121 1,918 

Sources: Various City departments. 

Note: Statistical Table implemented in FY05-06 per GASB Statement 44. Data from previous fiscal years not shown. 

158


Capital Asset Statistics by Function/Program 

Last Three Fiscal Years 

TABLE 23 

Function / program 

Fiscal Year 

2007-08 2006-07 2005-06 


Number of police vehicles 232 213 174 

Number of fire vehicles 58 60 55 

Number of fire stations 5 5 5 

Number of police substations including Public Safety Facility 4 4 4 


Square footage of asphalt paved streets 30,421,841 30,443,441 30,443,441 

Square footage of concrete paved streets 1,088,778 1,067,178 1,067,178 

Square footage of sidewalks 8,386,183 8,386,183 8,386,183 

Square footage of curbs and gutters 1,702,071 1,663,271 1,663,271 


Number of beach parking lots 16 16 16 

Number of parks 26 24 23 

Number of swim centers 1 1 1 

Library: 

Number of facilities: main and branches 4 4 4 


Downtown structure visitors 3,768,746 3,817,550 3,791,646 

Water: 

Number of feet of water main installed 22,660 22,660 22,660 

Water main system (in miles) 205 205 205 

Reclaimed water main system (in miles) 4 4 4 

Wastewater: 

City sewage flow in million gallons/day 10.4 12.3 12.8 

Sewer main system (in miles) 152 152 152 

Stormwater: 

Daily gallons treated for recycling by SMURRF 330,000 330,000 330,000 

Storm drain system (in miles) 58 58 58 

Airport: 

Aircraft operations (departures and arrivals) 136,485 136,270 135,765 

Big Blue Bus: 

Number of buses 202 202 211 

Sources: Various City departments. 

Note: Statistical Table implemented in FY05-06 per GASB Statement 44. Data from previous fiscal 

years not shown. 

159


160

Comprehensive Annual Financial Report - City of Santa Monica

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