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Acceptance of Audit Report for Fiscal Year 2012-2013 ��1 AGE9�IDA iTEM � '� TOWX OF TI�JC�E MEETING DATE: December 10, 2013 TO: Honorable Mayor and Council Members FROM: Chrissy Eamhardt, Administrative Services Manager C E/KS SUBJECT: Acceptance of Audit Report. c Fi cal year2012/2013 APPROVED BY o shbrook, Town Manager RECOMMENDATION: That the Council accept the Town of Truckee Annual Financial Statements and Audit Report forthe year ended June 30, 2013. DISCUSSION: The independent auditing firm of Mann, Urrutia, Nelson, Certified Public Accountants "auditors," has provided an opinion on the attached Town of T�uckee annual financial statements and the results thereof for the fiscal year ended June 30, 2013. The Town received an "unqualified" opinion which is the highest level of assurance an auditor can provide relative to the faimess and accuracy of the financial statemenfs being presented. Included in the annual.financial report, "Other Reports" is a �eport on compliance in accordance with OMB Circular A-133 and a schedule of expenditures of Federal Awards as required by the "Single Audit Act." These reports are required when an entity receives a certain level of federal funds. The auditor did not identify any deficiencies in internal controf over compliance that were considered material weaknesses (see page 103). Auditors issue a Management Letter to give recommendations for improvement in internal controls or financial processes. The auditors issued a letter with one comment related to inventory tracking. This year, staff elected to record public works inventory held at the new corporation yard as we felt it is a material amount. The auditors agreed with this decision and provided additional suggestions for future trecking. Staff is already working on implementing the auditor comments in this.area as this will bring enhanced accountability to the Town's inventory on hand. The auditors also performed procedures as they relate to our appropria4ions limit calculation (GANN limit); no exceptions were noted. Representatives f�om Mann, Urtutia, Nelson, Kim Szczurek and I will be available at the Council meeting to provide furtHer information on these reports. Town Council Staff Report Page 1 of 2 AGEPdDA ITEM meeting to provide further information on these reports. FISCAL7MPACT: None. ATTACHMENTS: • The Town of Truckee Financial Statements, including the Single Audit Act Report, Communication to Council regarding the audit, as required by SAS 114, Management Letter, and the Town of Truckee Appropriations Limit Calculation for the Year Ended June 30, 2013. Town Council Staff Report Page 2 of 2 TOWN OF TRUCKEE, CALIFORNIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013 Photo: Steam train arriving in Truckee (courtesy of Laura Sexton) This page intentionally left blank. Table of Contents INTRODUCTORY SECTION List of Officials ..............................................................................................................................i FINANCIAL SECTION Independent Auditor’s Report .....................................................................................................1 Management’s Discussion and Anaylsis (Required Supplementary Information) ................5 Basic Financial Statements .......................................................................................................13 Government-Wide Financial Statements Statement of Net Position ..............................................................................................15 Statement of Activities....................................................................................................16 Fund Financial Statements Governmental Funds .....................................................................................................20 Balance Sheet ........................................................................................................20 Reconciliation of Total Governmental Fund Balances to the Government-Wide Statement of Net Position - Governmental Activities ..............................................22 Statement of Revenues, Expenditures, and Changes in Fund Balances ...............24 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities - Governmental Activities ..........................................................................................26 Proprietary Funds ..........................................................................................................28 Statement of Net Position .......................................................................................28 Statement of Revenues, Expenses, and Changes in Net Position .........................30 Statement of Cash Flows........................................................................................32 Fiduciary Funds .............................................................................................................34 Statement of Net Position .......................................................................................34 Statement of Revenues, Expenses, and Changes in Net Position .........................35 Notes to the Basic Financial Statements 1 Financial Reporting Entity and Summary of Significant Accounting Policies ............39 2 Stewardship, Compliance, and Accountability ..........................................................48 3 Detailed Notes ..........................................................................................................48 4 Employees’ Retirement Plan .....................................................................................54 5 Risk Management .....................................................................................................57 6 Other Information ......................................................................................................58 ANNUAL FINANCIAL REPORT TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 7 Prior Period Adjustments ..........................................................................................59 8 Extraordinary Items ..................................................................................................60 9 Fiduciary Funds ........................................................................................................60 Required Supplementary Information (Other than MD&A) .....................................................65 Budgetary Comparison Schedule - General Fund .........................................................67 Budgetary Comparison Schedule - Measure A - Major Special Revenue Fund ............68 Budgetary Comparison Schedule - Impact Fees - Major Special Revenue Fund .........69 Budgetary Comparison Schedule - Home Grant - Major Special Revenue Fund ..........70 Budgetary Comparison Schedule - Town Special Service Areas- Major Special Revenue Fund ...............................................................................................................................71 Notes to Required Supplementary Information ..............................................................72 Combining Fund Statements and Schedules ..........................................................................75 Nonmajor Governmental Funds Combining Balance Sheet .............................................................................................79 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ....80 Special Revenue Funds..........................................................................................81 Combining Balance Sheet ...............................................................................82 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ..........................................................................................................88 Capital Projects Funds............................................................................................93 Combining Balance Sheet ...............................................................................94 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ..........................................................................................................95 Debt Service Funds ................................................................................................97 Combining Balance Sheet ...............................................................................98 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ..........................................................................................................99 Other Reports ...........................................................................................................................101 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.......................................................103 Independent Auditor’s Report on Compliance for each Major Program and on Internal Control over Compliance required by OMB Circular A-133 .........................................105 Schedule of Expenditures of Federal Awards ..............................................................107 Notes to the Schedule of Expenditures of Federal Awards ..........................................108 Schedule of Findings and Questioned Costs ...............................................................109 Schedule of Prior Year Findings....................................................................................11 0 (Table of Contents, continued) INTRODUCTORY SECTION List of Officials• This page intentionally left blank. - i - TOWN COUNCIL TOWN OF TRUCKEE, CALIFORNIA Name Office Carolyn Wallace Dee Mayor Patrick Flora Vice Mayor Dr. Mark Brown Councilmember Joan deRyk Jones Councilmember Alicia Barr Councilmember FOR THE YEAR ENDED JUNE 30, 2013 - ii - This page intentionally left blank. FINANCIAL SECTION Independent Auditor’s Report• Management’s Discussion and Analysis• Basic Financial Statements• Required Supplementary Information• Combining Fund Statements and Schedules• This page intentionally left blank. - 1 - - 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS - 4 - This page intentionally left blank. - 5 - MANAGEMENT’S DISCUSSION AND ANALYSIS TOWN OF TRUCKEE, CALIFORNIA This discussion and analysis of the Town of Truckee's (Town) financial performance provides an overview of the Town's financial activities for the fiscal year ended June 30, 2013. Please read it in conjunction with the accompanying basic financial statements, and the notes to the financial statements. FINANCIAL HIGHLIGHTS The Town's government-wide total assets exceeded liabilities (net position) at the close of the fiscal year by $172.3 million. Of this amount, $36.4 million is in unrestricted net position, which is available to meet the Town's ongoing commitments to citizens and creditors. The Town's governmental activities ended the year with total net position of $171.3 million. Of this balance, $35.9 million is unrestricted and available for spending at the Town's discretion. The Town's General Fund ended the year with a fund balance of $19 million. The non-spendable balance of $.5 million is for the Town’s public works inventory on hand. The restricted balance is $.1 million. The assigned balance of $10.6 million is designated for various contingencies and future capital needs and $7.8 million is unassigned and available for spending at the Town’s discretion. Completed capital projects include the public service facility, the Town’s largest project since inception, which is the new home of the Town’s road maintenance and snow removal operations along with fleet maintenance operations. The Frates Lane reconstruction, the Depot streetscape and Bridge/West River Street streetscape projects were also completed during the year.Projects in-process at year end include: the Animal Shelter, 2012 paving project, Glenshire Road reconstruction, the SR89/UPRR underpass (Mousehole), the Truckee River Trail, and the Trout Creek Trail. During fiscal 2012 construction of a Town Animal Shelter was begun. The Shelter is a joint project with the Humane Society of Truckee-Tahoe.Construction was completed in September of 2013, animals and staff moved in,and the grand opening of the building held on September 27, 2013. On December 29, 2011 the California Supreme Court upheld Assembly Bill 1x26 that provides for the dissolution of all redevelopment agencies in the State effective February 1, 2012.Assets of the former redevelopment agency were transferred to a fiduciary fund as of that date and reported as an extraordinary gain. As of fiscal 2011-12, the Town no longer reported the activities of the Agency as a component unit in its financial statements. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of a series of financial statements. These statements include all activities of the Town of Truckee using the integrated approach as prescribed by GASB Statement No. 34. The Statement of Net Position and Statement of Activities provide information about the activities of the Town as a whole and present a longer- term view of the Town's finances. Fund financial statements tell how these services are financed in the short term as well as what remains for future spending. Fund financial statements also report the Town's operations in more detail than the government-wide statements by providing information about the Town's most significant funds. GOVERNMENT-WIDE STATEMENTS The government-wide financial statements are designed to provide readers with a broad overview of the Town's finances. These statements include all assets and liabilities of the Town using the accrual basis of accounting, which is similar to the accounting method used by most private sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received. The Statement of Net Position presents information on all the Town's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as one indicator of whether the Town's financial position is improving or deteriorating. JUNE 30, 2013 - 6 - MANAGEMENT’S DISCUSSION AND ANALYSIS TOWN OF TRUCKEE, CALIFORNIA The Statement of Activities presents information showing how the Town's net position changed in the most recent fiscal year. All changes of net position are reported as soon as the underlying event giving rise to the change occurs. Thus, revenues and expenses are reported on this statement for some items that will result in cash flows in future fiscal periods (e.g. earned but unused vacation leave). The government-wide financial statements of the Town are divided as follows: Governmental Activities: Most of the Town's basic services are included here such as public safety, public works (snow removal, streets and roads), community development, facilities and general government. These services are primarily financed by property and sales taxes, federal and state grants, and development fees. Business-type Activities: The Town charges fees to customers to cover the costs of services provided. The Town's solid waste removal service, parking, building & safety and transit services are included in business-type activities. The government-wide financial statements can be found on pages 15, 16 and 17 of this report. Fiduciary funds are used to account for resources held for the benefit of parties outside the Town. Since the resources of these funds are not available to support the Town’s own programs, they are not reflected in the government-wide financial statements. The Statement of Fiduciary Net Position is on page 34 and includes the assets and liabilities of the Truckee Redevelopment Successor Agency formed in accordance with State law requiring the dissolution of redevelopment agencies. FUND FINANCIAL STATEMENTS The fund financial statements provide more detailed information about the Town's most significant funds, not the Town as a whole. 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. Some funds are required to be established by State Law or by bond covenants. Management establishes other funds to control and manage money for particular purposes or to show the Town is meeting legal responsibilities for using certain taxes, grants, and other money. All the funds of the Town can be classified 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 government-wide financial statements, governmental fund financial statements focus on the near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. Such information is useful in evaluating a government’s near-term financing requirements. Because the focus of the governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for the 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 government's near-term financing decisions. The Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances provide reconciliations between governmental funds and governmental activities. These reconciliations explain the relationship (or differences) between the fund statements and the government-wide statements. The basic governmental fund financial statements can be found on pages 20-26 of this report. Proprietary Funds.The Town utilizes enterprise funds (one type of proprietary fund) to account for those activities that are supported primarily by user charges to external users,specifically solid waste removal service, parking, building & safety, and transit services. Proprietary funds provide the same type of information as the government- wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Parking,Solid Waste,Transit and Building & Safety divisions. The basic proprietary fund financial statements can be found on pages 28-33 of this report. JUNE 30, 2013 - 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS TOWN OF TRUCKEE, CALIFORNIA Fiduciary Funds.The Town utilizes fiduciary funds to account for resources held for the benefit of parties outside the Town. The Statement of Fiduciary Net Position is on page 34 and includes the assets and liabilities of the Truckee Redevelopment Successor Agency formed in accordance with State law requiring the dissolution of redevelopment agencies. Notes to the Financial Statements.The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund statements. The notes to the financial statements can be found on pages 37-64 of this report. FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE Below is a table showing the Town's net position for the fiscal year ended June 30, 2013. Governmental Business-type Total Total Activities Activities Activities Percentage 2012 2013 2012 2013 2012 2013 Change Current and other assets 62,559$66,085$561$877$63,120$66,963$6% Capital assets 114,123 118,493 457 443 114,580 118,935 4% Total assets 176,682 184,578 1,018 1,320 177,700 185,898 5% Current Liabilities 2,650 2,947 304 305 2,954 3,253 10% Long-term debt outstanding 10,583 10,283 77 63 10,660 10,345 -3% Total liabilities 13,233 13,229 381 368 13,615 13,597 Net position Invested in capital assets net of related debt 104,258 108,914 457 443 104,715 109,357 4% Restricted 24,987 26,460 --24,987 26,460 6% Unrestricted 34,204 35,975 180 509 34,384 36,485 6% Total net position 163,449$171,349$637$952$164,086$172,301$ Town of Truckee Net Position (in thousands of dollars) As of June 30, 2013, the Town's government-wide total assets exceeded liabilities (net position) by $172.3 million. Governmental activities finished the year with a positive net position balance, $171.3 million. Business type activities finished the year with a positive balance of $.95 million. Net position as noted earlier may serve over time as a useful indicator of the Town's financial position. Of the total net position, $109.4 million is the Town's investment in capital assets (e.g. land, buildings and improvements, machinery and equipment and the road network) less any related debt used to acquire those assets that is still outstanding. In fiscal 2013, the Town completed construction of the public service facility, the Town’s largest project since inception, which is the new home of the Town’s road maintenance and snow removal operations along with fleet maintenance operations. The Frates Lane reconstruction, the Depot streetscape and Bridge/West River Street streetscape projects were also completed during the year. The Town's long-term liabilities include debt incurred to acquire the Town's administrative facility,debt issued in 2009 for $5 million to pay for the land purchased for the Public Service Facility and compensated absences payable. The proceeds of the debt issued for the administrative facility and land for the public service facility are utilized to provide services to citizens and are not available for future spending. The repayment of the debt on the general fund assets must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. See Note 3 D for debt schedules. Restricted net position amounts to $26.4 million or 15.4%of total net position. Restricted net position represents those resources that are subject to external restrictions on how they may be used. These restrictions are established by bond covenants or restrictions on the use of funds by state or federal regulations. JUNE 30, 2013 - 8 - MANAGEMENT’S DISCUSSION AND ANALYSIS TOWN OF TRUCKEE, CALIFORNIA Unrestricted net position represents those resources which may be used to meet the Town’s ongoing commitments to citizens and creditors. Government-wide unrestricted net position is $36.4 million or 21.1%of the total net position. Governmental activities account for $35.9 million or 98.6% of the total unrestricted net position. Business-type activities account for $.51 million or 1.4% of the total. The Town can use unrestricted net position of the solid waste, parking, building & safety and transit funds to finance their continuing operations. GOVERNMENTAL ACTIVITIES The following lists key components of net position and highlights the changes between fiscal 2012 and fiscal 2013 for both Governmental Activities and Business-type Activities: Governmental Business-type Total Total Activities Activities Activities Percentage 2012 2013 2012 2013 2012 2013 Change Revenues Program Revenues Charges for services 2,403$2,389$4,053$4,643$6,456$7,034$9% Operating grants and contributions 2,481 2,165 685 564 3,166 2,729 -14% Capital grants and contributions 3,718 4,888 --3,718 4,888 31% General Revenues - Property taxes 8,996 9,516 --8,996 9,516 6% Sales taxes 3,964 4,101 --3,964 4,101 3% Transient occupancy tax 1,351 1,718 --1,351 1,718 27% Other taxes 1,177 1,148 --1,177 1,148 -3% Interest and contributed capital 3,529 1,956 3 2 3,532 1,958 -45% Other revenue 2,373 1,694 111 72 2,485 1,766 -29% Total revenues 29,993$29,576$4,851$5,281$34,844$34,857$ Town of Truckee Changes in Net Position (in thousands of dollars) Total governmental revenues for the year were $29.6 million, a decrease of $.4 million or 1.4%when compared to 2012. The more significant decreases in revenues are due to decreases in contributed capital as the Town accepted multiple roads in fiscal 2012 and only accepted 2 roads in fiscal 2013. Other revenue also decreased due to one-time revenue adjustments that were recorded in fiscal 2012 and not in fiscal 2013. In 2013 the Town received $7.1 million in operating and capital grants and contributions compared with $6.2 million in 2012. Property tax revenue, the Town’s largest revenue source,had an increase of 6%compared with 2012. Sales taxes had a JUNE 30, 2013 - 9 - MANAGEMENT’S DISCUSSION AND ANALYSIS TOWN OF TRUCKEE, CALIFORNIA slight increase compared with 2012,indicating continued recovery in all types of sales.Transient occupancy tax revenues significantly increased, with the highest collection year in the Town’s history.Taxes, which include property, sales, and other taxes account for $16.5 million or 55.7% of the Town's governmental activities revenue. W ithout capital grants,taxes would be 66.8%of the Town’s governmental activities revenue. Governmental Business-type Total Total Activities Activities Activities Percentage 2012 2013 2012 2013 2012 2013 Change Expenses General government 4,736$3,465$-$-$4,736$3,465$-27% Public safety 6,134 5,915 --6,134 5,915 -4% Public works 9,767 10,426 --9,767 10,426 7% Community development 1,009 730 --1,009 730 -28% Transit --761 802 761 802 5% Solid Waste --2,581 2,923 2,581 2,923 13% Building & Safety --793 792 793 792 0% Parking --529 431 529 431 -18% Interest on long-term debt 1,292 537 --1,292 537 -58% Other 914 917 --914 917 0% Total expenses 23,851 21,991 4,663 4,948 28,515 26,939 Excess (deficiency) before transfers 6,140 7,584 189 334 6,329 7,918 Transfers (60)19 60 (19)-- Extraordinary Items 860 (245)--860 (245) Increase (decrease) in net position 6,940$7,358$249$315$7,189$7,673$ Total governmental expenses for the year were $22 million as compared to $23.9 million,an 7.8%decrease.The most significant decrease in expenses is due to a decrease in interest on long-term debt since the long-term debt of the former Redevelopment Agency was transferred to the Redevelopment Successor Agency (fiduciary fund). There was also a decrease in general government expenses as the Town spent nearly $1.1M on the Trout Creek reconstruction project in 2012 –expenses that did not happen in 2013. BUSINESS-TYPE ACTIVITIES Business-type activities account for a total increase in net position of $0.32 million or 1.4%of the total Government- wide net position. The increase in net position is the result of a 15% increase in charges for services revenue in parking,solid waste,and building and safety funds. Due to cost controls and an increase in permit revenues, building and safety’s revenues exceeded expenses by $.24 million and the fund has once again reached a positive net position. Solid waste revenue increased 13.4% compared to 2012 due to budgeted rate increases for enhancements in service. JUNE 30, 2013 - 10 - MANAGEMENT’S DISCUSSION AND ANALYSIS TOWN OF TRUCKEE, CALIFORNIA FINANCIAL ANALYSIS OF THE TOWN’S FUNDS As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. All of the Town's governmental funds ended the year with positive fund. The ending fund balance for all funds is $45.5 million. Of the total fund balance, $7.8 million or 17% is unassigned, which is available for spending at the Town's discretion. See the notes to the financial report, note 1.N on page 45.for more in-depth discussion of the fund balance designations. The general fund is the chief operating fund of the Town. As of June 30, 2013 the total fund balance of the general fund was $19 million with $.56 million in non-spendable inventory, $90,000 restricted for self-insurance,and $18.4 million in assigned/unassigned funds for contingencies, equipment replacement, facilities construction and capital projects. Total governmental revenues, excluding other financing sources/uses,exceeded expenditures by $1.8 million primarily as a result of a combination of higher than expected sales tax and transient occupancy tax revenues and savings in the public works department as a result of a low snow year and staffing shortages in the police department. Proprietary Funds.The Town's parking, solid waste,building and safety and transit funds ended the year with positive unrestricted net position. The building & safety fund ended the year with positive unrestricted net position for the first time since fiscal 2006. Fiduciary Funds. The Town of Truckee Redevelopment Successor Agency fiduciary fund incurred an extraordinary loss and has a negative net position due to the transfer of assets and liabilities from the former Redevelopment Agency in fiscal 2012. GENERAL FUND BUDGETARY HIGHLIGHTS The General Fund Budgetary Comparison Schedule is shown on page 67. There were no significant changes to the original budget. Total actual revenues of $17.6 million were $1.4 million higher than budgeted revenues. While fines and forfeitures, use of money and property, and other revenues were lower than budgeted, taxes and assessments, licenses and permits, intergovernmental revenues, and charges for services all exceeded budgeted revenues. Property tax, sales tax, and transient occupancy tax revenues were over budget by a total of $1.3 million and charges for services was over budget by $.1 million primarily due to higher than expected collections of plan processing fees. Actual expenditures were lower than budgeted expenditures as a result of budgetary savings,primarily due to lower than budgeted snow activity during the winter season, unfilled police positions, and deferral of capital project costs into later years. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. The Town's investment in capital assets for its governmental and business-type activities as of June 30, 2013, amounts to $118.9 million (net of depreciation). This investment in capital assets includes land, buildings and improvements, machinery and equipment, and the road network. JUNE 30, 2013 - 11 - MANAGEMENT’S DISCUSSION AND ANALYSIS TOWN OF TRUCKEE, CALIFORNIA Governmental Business-type Total Activities Activities Total Percentage 2012 2013 2012 2013 2012 2013 Change Right of way 44,046$44,993$-$-$44,046$ 44,993$ 2.1% Land 6,960 6,960 --6,960 6,960 0.0% Construction in progress 22,084 11,425 0 0 22,084 11,425 -48.3% Buildings and improvements 7,688 21,435 251 285 7,940 21,719 173.6% Equipment 3,765 5,629 206 158 3,971 5,787 45.7% Infrastructure 29,578 28,049 --29,578 28,049 -5.2% TOTALS 114,122$118,492$457$ 443$ 114,579$118,933$ Major capital asset additions this year were due to additions in infrastructure projects still in construction at year end in fiscal 2013, including the new animal shelter and the 2012 paving project. Additional information on the Town's capital assets can be found in note 3 C on pages 51and 52. Long-term Debt. The Town's long-term debt as of June 30, 2013 was $10.7 million. The majority of the Town’s debt is lease revenue bonds used to acquire the Town’s current administrative office facility and land for the Public Service Facility. Additional information on the Town’s long-term debt, including business-type activities debt,can be found in note 3 D on pages 52-53. General obligation debts are direct obligations of the Town and are backed by the full faith and credit of the Town requiring voter approval, and may have a tax rate set to cover repayment. State statues limit the amount of general obligation debt to 15% of the Town's total assessed valuation which was $4,999.3 million in fiscal 2013. The Town of Truckee's debt limit is $749.9 million. The Town currently has no general obligation debt outstanding. ECONOMIC FACTORS AND NEXT YEARS BUDGETS AND RATES The Town continues to experience slow residential growth, although there has been a small uptick in 2013. During the budget process for fiscal 2014 it was estimated that 55 new single-family units would be constructed within the Town, compared with 36 budgeted units and 44 actual units in fiscal 2013. Non -residential growth is estimated to be similar in 2014 when compared to 2013. These factors as well as the changing economy statewide were utilized in developing the Town's revenue estimates. General Fund expenditures,excluding debt service,overlay reserve and capital expenditures,were projected to increase approximately 3.72%compared with 2013 budgeted expenditures. Personnel costs were budgeted to increase 4.07%and included an increase in the employee’s partial contribution to CalPERS retirement as well as the restoration of funding of the Town’s pay for performance program.Overall service and supply costs are expected to increase 4.57%above the 2013 budget due to decreased operating costs in nearly every operating department. The Town's general fund is currently contributing approximately $.8 million to the Town’s capital programs, excluding funding of the new Animal Shelter,as well as $750,000 for street overlay maintenance reserve annually. It has almost $11.5 million in assigned fund balance which includes $4.8 million (25% of revenues)of general fund balance to be assigned for contingencies and $4.8 million for asphalt overlay,and $1.25 for economic development infrastructure. CONTACTING THE TOWN’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Town of Truckee's finances and to demonstrate the Town's accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the Administrative Services Director, Town of Truckee, 10183 Truckee Airport Road, Truckee, CA, 96161-3306. JUNE 30, 2013 - 12 - This page intentionally left blank. BASIC FINANCIAL STATEMENTS Government Wide Financial Statements - 14 - This page intentionally left blank. - 15 - STATEMENT OF NET POSITION The notes to the financial statements are an integral part of this statement. TOWN OF TRUCKEE, CALIFORNIA ASSETS Governmental Activities Business-type Activities Total Cash and investments 44,687,816$672,297$45,360,113$ Cash with fiscal agent 323,372 -323,372 Accounts receivable 1,154,320 235,296 1,389,616 Interest receivable 145,892 736 146,628 Taxes receivable 1,574,657 -1,574,657 Internal balances 40,952 (40,952)- Due from other governments 189,770 -189,770 Inventories 557,309 -557,309 Prepaid costs and deposits 1,310,680 10,099 1,320,779 Deferred charges 156,991 -156,991 Loans receivable (net of allowance of $33,278)15,890,842 -15,890,842 Net other post-employment benefits asset 52,515 52,515 Capital assets: Non-depreciable assets 63,377,891 -63,377,891 Depreciable assets, net of depreciation 55,114,772 442,605 55,557,377 Total capital assets 118,492,663 442,605 118,935,268 To t al As s et s 184,577,779 1,320,081 185,897,860 LIABILITIES Accounts payable 1,808,424 260,150 2,068,574 Salaries and benefits payable 317,542 13,161 330,703 Deposits payable 410,461 9,582 420,043 Unearned revenue 22,131 15,932 38,063 Long-term liabilities Due within one year 387,702 6,480 394,182 Due in more than one year 10,282,580 62,730 10,345,310 Total Liabilities 13,228,840 368,035 13,596,875 NET POSITION Invested in capital assets, net of related debt 108,913,968 442,605 109,356,573 Restricted for: Capital Projects 4,515,667 -4,515,667 Grants, taxes, and fees 21,944,157 -21,944,157 Unrestricted 35,975,147 509,441 36,484,588 Total Net Position 171,348,939$952,046$172,300,985$ JUNE 30, 2013 - 16 - STATEMENT OF ACTIVITIES The notes to the financial statements are an integral part of this statement. TOWN OF TRUCKEE, CALIFORNIA FUNCTIONS/PROGRAMS Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental activities: General government 3,465,117$117,460$95,966$949,126$ Public safety 5,915,265 388,207 97,544 - Public works 10,426,072 1,686,627 1,764,364 3,301,102 Community development 730,220 197,055 206,923 638,046 Facilities 917,015 --- Interest on long-term debt 536,830 --- Total Governmental Activities 21,990,519 2,389,349 2,164,797 4,888,274 Business-type activities: Parking 431,257 579,965 -- Solid waste 2,923,046 2,920,219 3,935 - Building and safety 791,592 1,049,658 -- Transit 802,295 93,328 560,115 - Total Business-type Activities 4,948,190 4,643,170 564,050 - Total 26,938,709$7,032,519$2,728,847$4,888,274$ Program Revenues Page 1 of 2 FOR THE YEAR ENDED JUNE 30, 2013 - 17 - The notes to the financial statements are an integral part of this statement. TOWN OF TRUCKEE, CALIFORNIA STATEMENT OF ACTIVITIES FUNCTIONS/PROGRAMS Governmental Activities Business-type Activities Total Governmental activities: General government (2,302,565)$-$(2,302,565)$ Public safety (5,429,514)-(5,429,514) Public works (3,673,979)-(3,673,979) Community development 311,804 -311,804 Facilities (917,015)-(917,015) Interest on long-term debt (536,830)-(536,830) Total Governmental Activities (12,548,099)-(12,548,099) Business-type activities: Parking -148,708 148,708 Solid waste -1,108 1,108 Building and safety -258,066 258,066 Transit -(148,852)(148,852) Total Business-type Activities -259,030 259,030 Total (12,548,099)259,030 (12,289,069) General revenues: Taxes: Property taxes 9,516,056 -9,516,056 Sales and use taxes 4,100,852 -4,100,852 Transient occupancy taxes 1,718,415 -1,718,415 Property transfer taxes 191,036 -191,036 Franchise taxes 956,487 -956,487 Grants and contributions - unrestricted 1,308,923 -1,308,923 Interest and investment earnings 1,955,999 2,195 1,958,194 Miscellaneous 385,572 72,529 458,101 Transfers 18,690 (18,690)- Total General Revenues and Transfers 20,152,030 56,034 20,208,064 Extraordinary Items (244,699)-(244,699) Change in Net Position 7,359,232 315,064 7,674,296 Net Assets - Beginning, as previously reported 163,449,440 636,982 164,086,422 Prior period restatement (Note 7)540,267 -540,267 Net Position - Beginning 163,989,707 636,982 164,626,689 Net Position - Ending 171,348,939$952,046$172,300,985$ Net (Expense) Revenue and Changes in Net Position Continued (Page 2 of 2) FOR THE YEAR ENDED JUNE 30, 2013 - 18 - This page intentionally left blank. BASIC FINANCIAL STATEMENTS Fund Financial Statements - 20 - GOVERNMENTAL FUNDS BALANCE SHEET The notes to the financial statements are an integral part of this statement. TOWN OF TRUCKEE, CALIFORNIA ASSETS General Measure A / Measure V Impact Fees HOME Grant Cash and investments 17,711,681$ 5,524,677$ 7,132,228$ -$ Cash with fiscal agent ---- Accounts receivable 303,378 --- Interest receivable 110,414 11,207 10,219 - Taxes receivable 1,082,041 254,500 -- Due from other funds 41,802 --- Due from other governments 101,836 -4,768 - Inventories 557,309 --- Prepaid costs and deposits 94,805 --- Loans receivable 1,763,785 --10,537,988 To tal A s s et s 21,767,051 5,790,384 7,147,215 10,537,988 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable 428,300 --- Salaries and benefits payable 312,087 --- Deposits payable 90,213 --- Due to other funds ---- Unearned revenue 1,898,244 --10,537,988 Total Liabilities 2,728,844 --10,537,988 FUND BALANCES Nonspendable 557,309 --- Restricted 90,000 5,790,384 7,147,215 - Assigned 10,557,616 --- Unassigned 7,833,282 --- Total Fund Balances 19,038,207 5,790,384 7,147,215 - Total Liabilities and Fund Balances 21,767,051$ 5,790,384$ 7,147,215$ 10,537,988$ Page 1 of 2 JUNE 30, 2013 - 21 - The notes to the financial statements are an integral part of this statement. GOVERNMENTAL FUNDS BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA ASSETS Cash and investments Cash with fiscal agent Accounts receivable Interest receivable Taxes receivable Due from other funds Due from other governments Inventories Prepaid costs and deposits Loans receivable To t al A ss ets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Salaries and benefits payable Deposits payable Due to other funds Unearned revenue Total Liabilities FUND BALANCES Nonspendable Restricted Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances Capital Projects Town Special Service Areas (TSSA) Other Governmental Funds Total Governmental Funds 1,238,497$ 6,529,266$ 6,551,467$ 44,687,816$ --323,372 323,372 800,271 -22,920 1,126,569 -10,324 3,728 145,892 -38,555 39,757 1,414,853 ---41,802 48,183 -34,983 189,770 ---557,309 ---94,805 --3,622,347 15,924,120 2,086,951 6,578,145 10,598,574 64,506,308 1,328,167 -51,957 1,808,424 5,455 --317,542 320,248 --410,461 --850 850 379,205 -3,655,563 16,471,000 2,033,075 -3,708,370 19,008,277 ---557,309 -6,578,145 2,313,435 21,919,179 53,876 -4,576,769 15,188,261 ---7,833,282 53,876 6,578,145 6,890,204 45,498,031 2,086,951$ 6,578,145$ 10,598,574$ 64,506,308$ Continued (Page 2 of 2) JUNE 30, 2013 - 22 - TOWN OF TRUCKEE, CALIFORNIA GOVERNMENTAL ACTIVITIES TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION - RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES The notes to the financial statements are an integral part of this statement. Total Governmental Fund Balances 45,498,031$ Amounts reported for governmental activities in the Statement of Net Position are different because: Deferred charges represent costs associated with the issuance of long-term debt which are deferred and amortized over the period which the debt is outstanding.The costs are reported as expenditures of the current period in the governmental funds. 156,991 Capital assets,net of accumulated depreciation,used in governmental activities are not financial resources and therefore are not reported in the governmental funds. 118,492,663 Prepaid costs for animal shelter deposits 16,584 Long-term liabilities,including bonds payable,compensated absences and other post-employment benefits,are not due and payable in the current period and therefore are not reported in the governmental funds. (10,617,767) A prior year expenditure for the CalPers side fund payoff is reported as an asset in the Statement of Net Position, net of amortization. 1,199,291 Adjustment to unearned revenue for grant receivables,long-term loan payments,accrued interest,new loans, and prior period adjustments. 16,448,869 Under the modified accrual basis of accounting used in governmental funds,revenues are not recognized for transactions that do not represent available financial resources.In the Statement of Activities,however,revenues and assets are reported regardless of when financial resources are available. Accounts receivable 187,555 Allowance for doubtful accounts (33,278) Net Position of Governmental Activities 171,348,939$ JUNE 30, 2013 - 23 - This page intentionally left blank. - 24 - TOWN OF TRUCKEE, CALIFORNIA GOVERNMENTAL FUNDS AND CHANGES IN FUND BALANCES STATEMENT OF REVENUES, EXPENDITURES, The notes to the financial statements are an integral part of this statement. REVENUES General Measure A / Measure V Impact Fees HOME Grant Taxes and assessments 14,572,532$ 1,733,409$ -$ -$ Licenses and permits 33,574 --- Fines and forfeitures 250,523 --- Use of money and property 9,309 21,986 19,867 - Intergovernmental revenues 1,582,502 --- Charges for services 873,333 -465,382 - Other revenues 285,098 --- To t al Revenues 17,606,871 1,755,395 485,249 - EXPENDITURES Current: General government 3,094,236 172 4,752 - Public safety 5,582,781 --- Public works 5,027,815 --- Community development 684,282 --- Facilities 919,996 --- Capital outlay 72,777 --- Debt service Principal ---- Interest and other charges ---- Total Expenditures 15,381,886 172 4,752 - Excess of Revenues Over (Under) Expenditures 2,224,985 1,755,223 480,497 - OTHER FINANCING SOURCES (USES) Transfers in 2,216,670 --- Transfers out (3,535,735)(2,511,194)(78,442)(26) Total Other Financing Sources (Uses)(1,319,065)(2,511,194)(78,442)(26) Net Change in Fund Balances 905,920 (755,971)402,055 (26) Beginning Fund Balances, as previously reported 17,592,020 6,546,355 6,745,160 26 Prior Period Restatement (Note 7)540,267 --- Beginning Fund Balances (Deficits)18,132,287 6,546,355 6,745,160 26 Fund Balances - Ending 19,038,207$ 5,790,384$ 7,147,215$ -$ Page 1 of 2 FOR THE YEAR ENDED JUNE 30, 2013 - 25 - TOWN OF TRUCKEE, CALIFORNIA GOVERNMENTAL FUNDS AND CHANGES IN FUND BALANCES STATEMENT OF REVENUES, EXPENDITURES, The notes to the financial statements are an integral part of this statement. REVENUES Taxes and assessments Licenses and permits Fines and forfeitures Use of money and property Intergovernmental revenues Charges for services Other revenues To t al Rev en u es EXPENDITURES Current: General government Public safety Public works Community development Facilities Capital outlay Debt service Principal Interest and other charges Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Beginning Fund Balances, as previously reported Prior Period Restatement (Note 7) Beginning Fund Balances (Deficits) Fund Balances - Ending Capital Projects Town Special Service Areas (TSSA) Other Governmental Funds Total Governmental Funds -$ -$ 1,628,618$ 17,934,559$ ---33,574 ---250,523 -19,551 27,877 98,590 1,617,173 1,676,934 4,876,609 -767,766 166,174 2,272,655 2,164,978 311,114 2,761,190 3,782,151 787,317 3,810,717 28,227,700 245,243 -1,224 3,345,627 --140,377 5,723,158 1,245,699 4,353 3,169 6,281,036 --41,500 725,782 ---919,996 8,285,108 -238,303 8,596,188 --300,000 300,000 --523,101 523,101 9,776,050 4,353 1,247,674 26,414,887 (5,993,899)782,964 2,563,043 1,812,813 6,536,300 -1,553,770 10,306,740 -(772,956)(3,389,697)(10,288,050) 6,536,300 (772,956)(1,835,927)18,690 542,401 10,008 727,116 1,831,503 (488,525)6,568,137 6,163,088 43,126,261 ---540,267 (488,525)6,568,137 6,163,088 43,666,528 53,876$ 6,578,145$ 6,890,204$ 45,498,031$ Continued (Page 2 of 2) FOR THE YEAR ENDED JUNE 30, 2013 - 26 - The notes to the financial statements are an integral part of this statement. TOWN OF TRUCKEE, CALIFORNIA GOVERNMENT-WIDE STATEMENT OF ACTIVITIES - GOVERNMENTAL ACTIVITIES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, Net Change in Fund Balances - Total Governmental Funds 1,831,503$ Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures.However,in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.This is the amount by which capital outlays ($8,596,188)exceeded depreciation expense ($4,442,967) in the current period. 4,153,221 Governmental funds do not report infrastructure additions for contributed capital.This is the amount of contributed capital reported as an asset and revenue in the government-wide financial statements. 1,265,059 Governmental funds only report the disposal of assets to the extent proceeds are received from the sale.The additional net effect of various transactions involving capital assets (i.e.sales)is a decrease to net position. (39,055) Some revenues reported in the Statement of Activities will not be collected for several months after the Town's year end and do not provide current financial resources and therefore are not reported as revenues in the governmental funds ($990,944).Some revenues reported in prior year Statement of Activities were recognized in the governmental funds in current year ($1,004,233). (13,289) Prepaid costs for animal shelter deposits (130,105) Repayment of principal is an expenditure in the governmental funds,but the repayment reduces long- term liabilities in the Statement of Net Position. This is the net amount of principal repayments. 300,000 Repayment of long-term receivables is treated as revenues in governmental funds,but the repayment reduces long-term receivables in the Statement of Net Position.Issuance of long-term receivables is treated as expenditures in the governmental funds,but the issuance increases long-term receivables in the Statement of Net Position.Also,interest accrued on long-term loans increases unearned revenue in the governmental funds, but increases revenue in the Statement of Activities. Loan program receipts (16,094) Loans made during the year 25,091.78 Long-term loan interest accrual 424,843 Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. Change in allowance (33,278) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. Change in compensated absences (49,342) Amortization of bond discount, cost of issuance and refunding difference (13,729) Other post-employment benefits 74,347 Side fund amortization (175,242) An extraordinary loss is reported in governmental activities related to the dissolution of the former redevelopment agency and direction from the State to transfer three down-payment assistance loans from the Town Successory Housing agency to the Redevelopment Successor Agency (fiduciary fund). No expenditure was recorded in governmental funds since there was no fund balance for the loans. (244,699) Change in Net Position of Governmental Activities 7,359,232$ The schedule below reconciles the net changes in fund balances reported on the governmental funds Statement of Revenues,Expenditures,and Changes in Fund Balances,which measure only changes in current assets and current liabilities on the modified accrual basis,with the changes in net position of governmental activities reported in the Statement of Activities, which is prepared on the full accrual basis. FOR THE YEAR ENDED JUNE 30, 2013 - 27 - This page intentionally left blank. - 28 - PROPRIETARY FUNDS STATEMENT OF NET POSITION TOWN OF TRUCKEE, CALIFORNIA The notes to the financial statements are an integral part of this statement. Parking Solid Waste Building and Safety ASSETS Current Assets Cash and investments 288,085$289,578$94,634$ Accounts receivable, net of allowance 20,230 151,010 - Interest receivable 391 303 42 Prepaid costs 6,119 -- Total Current Assets 314,825 440,891 94,676 Noncurrent Assets Capital Assets Depreciable capital assets 25,022 36,305 333,064 Less: accumulated depreciation (18,677)(24,137)(311,299) To t al No n c u r r en t As s et s 6,345 12,168 21,765 To t al As set s 321,170 453,059 116,441 LIABILITIES Current Liabilities Accounts payable 7,508 249,145 2,556 Salaries & benefits payable 3,305 2,328 6,115 Deposits payable --9,582 Due to other funds --- Unearned revenue 3,576 -- Compensated absences 2,192 574 1,895 Total Current Liabilities 16,581 252,047 20,148 Noncurrent Liabilities Compensated absences 8,418 11,918 31,839 Total Noncurrent Liabilities 8,418 11,918 31,839 Total Liabilities 24,999 263,965 51,987 NET POSITION Invested in capital assets 6,345 12,168 21,765 Unrestricted 289,826 176,926 42,689 Total Net Position 296,171$189,094$64,454$ Business-type Activities - Enterprise Funds Page 1 of 2 JUNE 30, 2013 - 29 - PROPRIETARY FUNDS STATEMENT OF NET POSITION TOWN OF TRUCKEE, CALIFORNIA The notes to the financial statements are an integral part of this statement. ASSETS Current Assets Cash and investments Accounts receivable, net of allowance Interest receivable Prepaid costs Total Current Assets Noncurrent Assets Capital Assets Depreciable capital assets Less: accumulated depreciation To t al No n c u r r en t As s et s To t al As s et s LIABILITIES Current Liabilities Accounts payable Salaries & benefits payable Deposits payable Due to other funds Unearned revenue Compensated absences Total Current Liabilities Noncurrent Liabilities Compensated absences Total Noncurrent Liabilities Total Liabilities NET POSITION Invested in capital assets Unrestricted Total Net Position Transit Totals -$672,297$ 64,056 235,296 -736 3,980 10,099 68,036 918,428 770,935 1,165,326 (368,608)(722,721) 402,327 442,605 470,363 1,361,033 941 260,150 1,413 13,161 -9,582 40,952 40,952 12,356 15,932 1,819 6,480 57,481 346,257 10,555 62,730 10,555 62,730 68,036 408,987 402,327 442,605 -509,441 402,327$952,046$ Continued (Page 2 of 2) JUNE 30, 2013 - 30 - TOWN OF TRUCKEE, CALIFORNIA PROPRIETARY FUNDS AND CHANGES IN NET POSITION STATEMENT OF REVENUES, EXPENSES, The notes to the financial statements are an integral part of this statement. Parking Solid Waste Building and Safety OPERATING REVENUES Charges for services 512,172$2,920,219$1,049,658$ Fines and foreitures 67,793 -- Other revenues 518 -2,346 Total Operating Revenues 580,483 2,920,219 1,052,004 OPERATING EXPENSES Salaries and benefits 151,778 141,916 512,150 Services and supplies 276,648 2,777,797 274,952 Depreciation 2,831 3,333 4,490 Total Operating Expenses 431,257 2,923,046 791,592 Operating Income (Loss)149,226 (2,827)260,412 NON-OPERATING REVENUES (EXPENSES) Intergovernmental revenues -3,935 - Interest income 1,591 463 43 Total Non-Operating Revenues (Expenses)1,591 4,398 43 Income (Loss) before Transfers 150,817 1,571 260,455 Transfers out --(18,690) Change in Net Position 150,817 1,571 241,765 Total Net Position - Beginning 145,354 187,523 (177,311) Total Net Position - Ending 296,171$189,094$64,454$ Business-type Activities - Enterprise Funds Page 1 of 2 FOR THE YEAR ENDED JUNE 30, 2013 - 31 - TOWN OF TRUCKEE, CALIFORNIA PROPRIETARY FUNDS AND CHANGES IN NET POSITION STATEMENT OF REVENUES, EXPENSES, The notes to the financial statements are an integral part of this statement. OPERATING REVENUES Charges for services Fines and foreitures Other revenues Total Operating Revenues OPERATING EXPENSES Salaries and benefits Services and supplies Depreciation Total Operating Expenses Operating Income (Loss) NON-OPERATING REVENUES (EXPENSES) Intergovernmental revenues Interest income Total Non-Operating Revenues (Expenses) Income (Loss) before Transfers Transfers out Change in Net Position Total Net Position - Beginning Total Net Position - Ending Transit Totals 93,328$4,575,377$ -67,793 69,665 72,529 162,993 4,715,699 128,942 934,786 599,279 3,928,676 74,074 84,728 802,295 4,948,190 (639,302)(232,491) 560,115 564,050 98 2,195 560,213 566,245 (79,089)333,754 -(18,690) (79,089)315,064 481,416 636,982 402,327$952,046$ Continued (Page 2 of 2) FOR THE YEAR ENDED JUNE 30, 2013 - 32 - PROPRIETARY FUNDS STATEMENT OF CASH FLOWS TOWN OF TRUCKEE, CALIFORNIA The notes to the financial statements are an integral part of this statement. Parking Solid Waste Building and Safety Transit CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 604,917$ 2,930,190$ 1,054,034$ 192,479$ Payments to suppliers (293,180)$ (2,770,854) (266,605) (606,943) Payments to employees (155,604)$ (137,460) (531,181) (123,881) Net Cash Provided (Used) by Operating Activities 156,133 21,876 256,248 (538,345) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Intergovernmental revenues received - - - 572,471 Transfers from other funds - 3,935 (18,690) - Transfers to other funds - - - 15,924 Interfund loans received - - (122,871) - Net Cash Provided (Used) by Noncapital Financing Activities - 3,935 (141,561) 588,395 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets - - - (50,147) Proceeds from the sale of capital assets - - (20,197) - Net Cash Provided (Used) by Capital and Related Financing Activities - - (20,197) (50,147) CASH FLOWS FROM INVESTING ACTIVITIES Interest received on investments 1,409 421 44 97 Net Cash Provided (Used) by Investing Activities 1,409 421 44 97 Net Increase (Decrease) in Cash and Cash Equivalents 157,542 26,232 94,534 - Cash and Cash Equivalents - Beginning of the Year 130,543 263,346 100 - Cash and Cash Equivalents - End of the Year 288,085$ 289,578$ 94,634$ -$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss)149,226$ (2,827)$ 260,412$ (639,302)$ Adjustments to reconcile operating income to net cash provided by (used for) operating activities:- - - - Depreciation 2,831 3,333 4,490 74,074 Decrease (increase) in: Accounts receivable 20,858 9,971 74 29,486 Prepaid expenses (6,119) 18,554 (3,980) Increase (decrease) in: Accounts payable (10,413) 6,943 (10,207) (3,684) Salaries and benefits payable 192 129 (2,401) (479) Unearned revenue 3,576 Deposits payable 1,956 Compensated absenses (4,018) 4,327 (16,630) 5,540 Net Cash Provided by (Used for) Operating Activities 156,133$ 21,876$ 256,248$ (538,345)$ Business-type Activities - Enterprise Funds Page 1 of 2 FOR THE YEAR ENDED JUNE 30, 2013 - 33 - PROPRIETARY FUNDS STATEMENT OF CASH FLOWS TOWN OF TRUCKEE, CALIFORNIA The notes to the financial statements are an integral part of this statement. CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers Payments to employees Net Cash Provided (Used) by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Intergovernmental revenues received Transfers from other funds Transfers to other funds Interfund loans received Net Cash Provided (Used) by Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets Proceeds from the sale of capital assets Net Cash Provided (Used) by Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received on investments Net Cash Provided (Used) by Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents - Beginning of the Year Cash and Cash Equivalents - End of the Year RECONCILIATION OF OPERATING INCOME (LOSS) TO NET Operating income (loss) Adjustments to reconcile operating income to net cash provided by (used for) operating activities: Depreciation Decrease (increase) in: Accounts receivable Prepaid expenses Increase (decrease) in: Accounts payable Salaries and benefits payable Unearned revenue Deposits payable Compensated absenses Net Cash Provided by (Used for) Operating Activities Totals 4,781,620 (3,937,582) (948,126) (104,088) 572,471 (14,755) 15,924 (122,871) 450,769 (50,147) (20,197) (70,344) 1,971 1,971 278,308 393,989 672,297$ CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (232,491)$ 84,728 60,389 8,455 (17,361) (2,559) 3,576 1,956 (10,781) (104,088)$ Continued (Page 2 of 2) FOR THE YEAR ENDED JUNE 30, 2013 - 34 - ASSETS Redevelopment Successor Agency Cash and cash equivalents 755,900$ Investments: Held with trustees 7,700,420 Interest receivable 24,707 Deferred charges 446,286 Notes receivable 666,601 Prepaid assets 3,373 Land held for redevelopment 200,000 Capital Assets Nondepreciable capital assets 5,090 Depreciable capital assets 217,816 Less: accumulated depreciation (32,769) Total Assets 9,987,424 LIABILITIES Accounts payable 1,365 Salaries and benefits payable 4,490 Interest payable 206,777 Long-term liabilities: Due within one year 39,925 Due in more than one year 12,675,448 Total Liabilities 12,928,005 NET POSITION Held in trust for other purposes (2,940,581)$ FIDUCIARY FUNDS STATEMENT OF NET POSITION TOWN OF TRUCKEE, CALIFORNIA JUNE 30, 2013 - 35 - ADDITIONS Redevelopment Successor Agency Property taxes 1,036,046$ Use of money and property 65,467 Other revenue 510,674 To t al Ad d i t i o n s 1,612,187 DEDUCTIONS Program expenses of former redevelopment agency 102,908 Administrative expenses 250,003 Interest and fiscal agency expenses of former redevelopment agency 744,025 Noncash expenses: depreciation, amortization and loan forgiveness 65,599 Total Deductions 1,162,535 Extraordinary loss (2,221,867) Change in net position (1,772,215) Net Position - Beginning (1,168,366) Net Position - Ending (2,940,581)$ FIDUCIARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 - 36 - This page intentionally left blank. BASIC FINANCIAL STATEMENTS Notes to the Basic Financial Statements - 38 - This page intentionally left blank. - 39 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 1: FINANCIAL REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A.Reporting Entity The Town of Truckee (Town)was incorporated on March 23, 1993, became a charter city on September 15, 1995 and is governed under the charter and applicable state statutes. The Town operates under a Council form of government and provides the following services: public safety, highways and streets, public improvements, planning and zoning, general administrative services, solid waste, building and safety, parking, and transit. The governmental reporting entity consists of the Town (Primary Government) and its component units. Component units are legally separate organizations for which the Council is financially accountable or other organizations whose component unit nature and significant relationship with the Town are such that exclusion would cause the Town’s financial statements to be misleading or incomplete. Financial accountability is defined as the appointment of a voting majority of the component unit’s board, and either (i) the Town’s ability to impose its will on the organization or (ii) there is potential for the organization to provide a financial benefit to or impose a financial burden on the Town. Reporting for component units on the Town’s financial statements can be blended or discretely presented. Blended component units are, although legally separate entities, in substance part of the Town’s operations and,therefore, data from these units are combined with data of the primary government. Discretely presented component units would be reported in a separate column in the government-wide financial statements to emphasize it is legally separate from the government. For financial reporting purposes, the Town’s basic financial statements include all financial activities that are controlled by or are dependent upon actions taken by the Town Council. Blended Component Units Component units that are blended into the reporting activity types of the Town’s report are presented below: Truckee Redevelopment Agency The Town of Truckee Redevelopment Agency was organized under the State of California Community Redevelopment Law. The governing body was substantially the same as the primary government and the Town and the component units were financially interdependent, hence, the unit had been presented by blending with the primary government.The Agency was dissolved as of January 31, 2012 and therefore is no longer reported as a component unit and the Town no longer issues separate financial statements for the Agency or its successor. The Redevelopment Successor Agency is reported as a Fiduciary Fund in the 2012- 13 financial statements. Truckee Public Financing Authority The Truckee Public Financing Authority is a public agency created under a joint exercise of powers agreement between the Town and the agency. The governing body is substantially the same as the primary government and the Town and the component units are financially interdependent, hence, the unit is presented by blending with the primary government. Separate audited financial statements for the Truckee Public Financing Authority are not issued. Debt of the Truckee Public Financing Authority related to Town operations is shown as long-term debt of the Town.Debt related to the Successor Agency is shown as debt of the fiduciary fund. Discretely Presented Component Units There are no component units of the Town which meet the criteria for discrete presentation. FOR THE YEAR ENDED JUNE 30, 2013 - 40 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 1: FINANCIAL REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B.Basis of Presentation Government-Wide Financial Statements The statement of net position and statement of activities display information about the primary government, the Town, and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the Town. Governmental activities, which are normally supported by taxes and inter-governmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for each different identifiable activity of the Town’s business-type activities and for each function of the Town’s governmental activities. Direct expenses are those that are specifically associated with a program or function and; therefore, are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods and services offered by the program and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues. Fund Financial Statements Fund financial statements of the reporting entity are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, liabilities, fund equity, revenues, and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered to be major if it is the primary operating fund of the Town or meets both of the following criteria: x Total assets, liabilities, revenues or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type; and x Total assets, liabilities, revenues or expenditures/expenses of the individual governmental or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. The Town reports the following major governmental funds: x The General Fund is used to account for all revenues and expenditures necessary to carry out basic governmental activities of the Town that are not accounted for through other funds. For the Town, the General Fund includes such activities as public safety, road maintenance, community development, general government, and public improvements. x The Town Special Service Area (TSSA)Funds are collected in certain Town neighborhoods and are available for enhanced road and transportation related maintenance. x Measure A and V, its successor measure,are special revenue funds used to account for Measure A and V revenues and expenditures. Measures A and V are a ½ percent sales tax which are used to maintain roads and related infrastructure within the Town of Truckee. x Impact Fees Fund is a special revenue fund used to account for traffic impact fee revenues and expenditures. x HOME Grant Fund is a special revenue fund used to account for the activity of various HOME Grant programs used to fund long term loans for low/very low housing units. FOR THE YEAR ENDED JUNE 30, 2013 - 41 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 1: FINANCIAL REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) x The Capital Projects Fund is used to account for the expenditures of most capital projects undertaken by the Town. This fund receives transfers of resources from various Town funds. The Town reports the following proprietary funds: x The Parking Fund is an enterprise fund used to account for the operation of the Town’s downtown parking facilities. x The Solid Waste Fund is an enterprise fund used to account for regular garbage collection services, collection of yard waste, and a recycling collection program. Services are provided on a user charge basis to residences and businesses. x The Building and Safety Fund is an enterprise fund used to account for the operations of the department, enforcing State and Town laws and regulations concerning the safety of structures. x The Transit Fund is an enterprise fund used to account for the operations of public transportation. The Town reports the following fiduciary fund: x The Redevelopment Successor Agency Fund is used to account for the activities of the former Truckee Redevelopment Agency formed in accordance with State law. C.Basis of Accounting and Measurement Focus The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non- exchange transactions, in which the Town gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales tax, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Property and sales taxes, interest, certain state and federal grants, and charges for services are accrued when their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures as well as expenditures related to claims and judgments are recorded only when payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and capital leases are reported as other financing sources. 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 are charges to customers for sales and services. Operating expenses for enterprise 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. Fiduciary funds are used to account for assets held by the Town in a trustee capacity or as an agent for individuals, private organizations, or other governments, or other funds. These funds share characteristics with both the governmental and proprietary funds and therefore use the measurements focus and basis of accounting most appropriate to their specific operations. FOR THE YEAR ENDED JUNE 30, 2013 - 42 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 1: FINANCIAL REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D.Cash and Cash Equivalents For purposes of the accompanying statement of cash flows, the enterprise and fiduciary funds consider all highly liquid investments with a maturity of three months or less when purchased, and their equity in the Town’s investment pool, to be cash equivalents. E.Investments The Town pools cash and investments of all funds except for amounts held by fiscal agent. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments. State statutes authorize the Town to invest its cash surplus in obligations of the U.S. treasury, agencies and instrumentalities, corporate bonds, medium term notes, bankers’ acceptances, certificates of deposit, commercial paper, repurchase agreements, and the State of California Local Agency Investment Fund. Investment income from pooled investments is allocated to all funds in the pool. Interest is allocated on the basis of average month end cash balance amounts for each fund as a percentage of the total balance. Income from non-pooled investments is recorded based on the specific investments held by the fund. Interest income is recorded in the fund that earned the interest. Investments are reported in the accompanying balance sheet at fair value which is determined using selected bases annually. Short term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Cash deposits are reported at a carrying amount which reasonably estimates fair value. Managed funds not listed on an established market are reported at the estimated fair value as determined by the respective fund managers based on quoted sales prices of the underlying securities. F.Receivables In the government-wide statements, receivables consist of all revenues earned at year-end and not yet received. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging of accounts receivable. Major receivable balances for the governmental activities include taxes, grants, loans,and interest. Business-type activities report user fees and interest earnings as their major receivables. In the fund financial statements, material receivables in governmental funds include revenue accruals such as taxes, grants, interest, and other similar intergovernmental revenues since they are usually both measurable and available. Non-exchange transactions that are collectible but not available are deferred in the fund financial statements in accordance with modified accrual, but not deferred in the government-wide financial statements in accordance with the accrual basis. Interest and investment earnings are recorded when earned only if paid within 60 days since they would be considered both measurable and available. Proprietary fund material receivables consist of all revenues earned at year-end and not yet received. User fee receivable and interest earnings compose the majority of proprietary fund receivables. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging of accounts receivable. G.Interfund Transactions Interfund transactions are reflected as loans, services provided or used, reimbursements or transfers. Loans reported as receivables and payables are referred to as either "due to/from other funds" (i.e. the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans) as appropriate and are subject to elimination upon consolidation. 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 non-spendable fund balance account in applicable governmental funds to indicate that they are not available for appropriation and are not available financial resources. FOR THE YEAR ENDED JUNE 30, 2013 - 43 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 1: FINANCIAL REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Services provided or used, deemed to be at market or near market rates, are treated as revenues and expenditures or expenses. Reimbursements occur when the funds responsible for particular expenditures or expenses repay the funds that initially paid for them. Such reimbursements are treated as an adjustment to expenditures or expenses; that is, a corresponding increase in expenditures or expenses in the reimbursing fund and a corresponding decrease in expenditures or expenses in the reimbursed fund. All other interfund transactions are treated as transfers. Transfers between governmental and proprietary funds are netted as part of the reconciliation to the government-wide presentation. See Note 3 for details of interfund transactions, including receivables and payables at year end. H.Inventory and Prepaid Costs Governmental fund inventories are recorded as expenditures at the time the inventory is purchased. The Town’s inventory balance includes supplies used in the road maintenance, snow removal, and fleet divisions of the public works department. Change in the inventory balance is reported as a direct adjustment to public works expenditures. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid costs. I.Loans Receivable For the purpose of the fund financial statements, capital fund and special revenue fund expenditures relating to loans receivable arising from mortgage subsidy programs and other loan programs are charged to operations at the time of funding and the loans receivable are recorded. Loans receivable includes loans for which repayment is deferred or for which repayment may be forgiven if certain terms and conditions of the loans are met. As of June 30, 2013, the Town has an outstanding loan receivable from the Humane Society of Truckee-Tahoe (“HSTT”). The Town and HSTT are jointly constructing a new animal shelter and sharing the costs of the construction. The Town has advanced funds to the HSTT for a portion of their share of the construction costs. J.Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (roads, bridges, sidewalks and similar items),are defined by the Town as an asset with a expected life greater than a year and a cost greater than $5,000. Property, plant and equipment have been stated at actual cost. Infrastructure assets, including roads, have been stated at historical cost, beginning with the 1996-97 fiscal year. Contributed 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 the life of the asset are not capitalized. The accounting treatment over capital assets depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. FOR THE YEAR ENDED JUNE 30, 2013 - 44 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 1: FINANCIAL REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide Financial Statements In the government-wide financial statements, property, plant,and equipment are accounted for as capital assets. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Depreciable Asset.Estimated Lives Equipment 4-25 years Structures and improvements 25-60 years Infrastructure 15 -25 years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund at the time of acquisition. Capital assets used in proprietary fund operations are accounted for the same as in the government-wide financial statements. K.Unearned Revenue Unearned revenue is recorded for assets recognized in connection with a transaction before the earnings process is complete.Those assets are offset by a corresponding liability for unearned revenue. Accounts receivable and amounts due from other governments includes grant and other revenue for which the earning process is complete, but the revenues are not available; in addition, loans receivable, including accrued interest, for which repayment is deferred or for which the balance may be forgiven if certain terms and conditions of the loans are met,have also been offset by unearned revenue. L.Long-Term Debt The accounting treatment of long-term debt depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. All long-term debt to be repaid from governmental and business-type resources is reported as a liability in the government-wide financial statements. The long-term debt consists primarily of bonds payable and accrued compensated absences. Long-term debt for governmental funds is not reported as a liability in the fund financial statements. The debt proceeds are reported as other financing sources and payment of principal and interest reported as expenditures. The accounting for proprietary funds is the same in the fund statements as it is in the government-wide financial statements. M.Compensated Absences The Town's policy regarding compensated absences is to permit employees to accumulate a limited amount of earned but unused vacation leave, compensatory time, and sick time. The liability for these compensated absences is recorded as long-term debt in the government-wide financial statements. The current portion of this debt is estimated based on historical trends. In the governmental fund financial statements the expenditures and liabilities related to those obligations are recognized only when they mature.The Town includes its share of medicare taxes payable on behalf of the employees in the accrual for compensated absences. FOR THE YEAR ENDED JUNE 30, 2013 - 45 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 1: FINANCIAL REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N.Net Position/Fund Balances The government-wide and business-type activities fund financial statements utilize a net position presentation. Net position is categorized as invested in capital assets (net of related debt), restricted and unrestricted. x Invested in capital assets, net of related debt -Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets. x Restricted resources -Consists of resources with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. Resources restricted for other purposes included $5,790,384 restricted by enabling legislation (Measures A and V). x Unrestricted resources -All other resources that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." When both restricted and unrestricted resources are available, unrestricted resources are depleted first before the restricted resources are used. At June 30, 2013, the Town had recorded restricted resources in governmental activities as follows: Restricted for: Capital Projects 4,515,667$ Grants, taxes, and fees 21,944,157 Total Restricted 26,459,824$ Beginning with fiscal year 2011, the Town implemented GASB Statement No. 54, “Fund Balance Reporting and Governmental Fund Type Definitions.” This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balances more transparent. The following Classifications describe the relative strength of the spending constraints: x Nonspendable –amounts that cannot be spent either because they are in nonspendable form or because they are legally or contractually required to be maintained intact. x Restricted –amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulation of another governments. x Committed –amounts that can be used only for specific purposes determined by a formal action of Town Council. Town Council is the highest level of decision-making authority for the Town. Commitments may be established, modified, or rescinded only through ordinances or resolutions approved by Town Council. The Town did not have any committed resources as of June 30, 2013. x Assigned –amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. This intent can be expressed by the Town Council or by an official or body to which the Town Council delegates the authority. x Unassigned –amounts not included in other spendable classifications. Positive amounts are reported only in the General Fund. FOR THE YEAR ENDED JUNE 30, 2013 - 46 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 1: FINANCIAL REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Town Council establishes (and modifies or rescinds) fund balance commitments by passage of an ordinance or resolution. This is typically done through adoption and amendm ent of the budget. Assigned fund balance is established by Town Council through adoption or amendment of the budget as intended for specific purpose (such as the purchase of fleet equipment, construction, litigation, overlay program, etc.) When an expenditure is incurred for purposes for which amounts in any of the unrestricted classifications of fund balance could be used, the Town considers committed amounts to be reduced first, followed by assigned amounts, and unassigned amounts. As of June 30, 2013, restricted fund balance included: x Self Insurance Retention -to reflect funds held to cover the deductible on self-insurance programs. As of June 30, 2013,assigned fund balance in the following governmental fund: x General Fund -to reflect the Town Council’s intention to set aside funds for general fund contingencies, litigation,future economic development programs or projects, capital facilities needs, and designations related to road maintenance overlay. O.Property Tax Levy, Collection and Maximum Rates The State of California's (State) Constitution Article XIIIA provides that the combined maximum property tax rate on any given property may not exceed 1% of its assessed value unless an additional amount for general obligation debt has been approved by voters. Assessed value is calculated at 100% of market value, as defined by Article XIIIA, and may be adjusted by no more than 2% per year unless the property is sold or transferred. The State Legislature has determined the method of distribution of receipts from a 1% tax levy among the County, cities, school districts, and other districts. The County of Nevada assesses properties and bills for and collects property taxes as follows: Secured Unsecured Valuation/lien dates January 1 January 1 Levy dates January 1 January 1 Due Dates November 1 (1st installment)July 1 February 1 (2nd installment) Delinquent dates December 10 (1st installment)August 31 April 10 (2nd installment) The term "unsecured" refers to taxes on personal property other than land and buildings. These taxes are secured by liens on the property being taxed. Property tax revenues are recognized in the fiscal year for which they are levied, provided they are due and collected within sixty days after fiscal year-end. The County of Nevada apportions secured property tax revenue in accordance with the alternate methods of distribution, the "Teeter Plan", as prescribed by Section 4717 of the California Revenue and Taxation code. Therefore, the Town receives 100 percent of the secured property tax levies to which it is entitled, whether or not collected. Unsecured delinquent taxes are considered fully collectible. P.Grant Revenues Certain grant revenues are recognized when specific related expenditures have been incurred. In other grant programs, monies are virtually unrestricted as to purpose of expenditure and are only revocable for failure to comply with prescribed compliance requirements. These revenues are recognized at the time of receipt,or earlier if accrual criteria are met. Cash received prior to incurrence of the related expenditure is recorded as unearned revenue. FOR THE YEAR ENDED JUNE 30, 2013 - 47 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 1: FINANCIAL REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q.Expenditures/Expenses In the government-wide financial statements, expenses are classified by function for both governmental and business-type activities. In the fund financial statements, expenditures are classified as follows: Government Funds -By Character Current (further classified by function) Debt Service Capital Outlay Proprietary Fund -By Operating and Non-operating R.Estimates The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. S.Future Government Accounting Standards Board Statements These statements are not effective until July 1, 2013 or later. The Town has not determined the effects on the financial statements. Government Accounting Standards Board Statement No. 66 In March 2012, GASB issued Statement No. 66, Technical Corrections—2012—an amendment of GASB Statements No. 10 and No. 62. The objective of this Statement is to improve accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. Application of this statement is effective for the Town's fiscal year ending June 30, 2014. Government Accounting Standards Board Statement No. 68 In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions by requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense. This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. The Town has not determined what impact, if any, this pronouncement will have on the financial statements. Application of this statement is effective for the Town's fiscal year ending June 30, 2015. FOR THE YEAR ENDED JUNE 30, 2013 - 48 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A.GANN Spending Limit Under Article XIIIB of the California Constitution (the Gann Spending Limitation), the Town is restricted as to the amount of annual appropriations from proceeds of taxes, and of proceeds of taxes allowed appropriations, the excess must either be refunded to the State Controller or returned to the taxpayers through revised tax rates, revised fee schedules or other refund arrangements. For the year ended June 30, 2013, the Gann Limit Calculation was calculated based upon the advice of legal counsel to exclude police and animal control services from the appropriations subject to the limit. NOTE 3: DETAILED NOTES A.Cash and Investments Total cash and investments are presented on the Town’s financial statements as follows: Governmental Activities: Unrestricted Cash and investments 44,687,816$ Restricted Cash and investments 323,372 Total Governmental Cash and investments 45,011,188 Business Type Activities 672,297 Total Cash and Investments 45,683,485$ Total cash and investments of the Town at fair value are comprised of the following: Cash and Deposits: Cash on hand 850$ Deposits in Town's depository institution (less outstanding checks)5,084,896 Deposits with fiscal agents 323,372 Total Cash and Deposits 5,409,118 Investments: In Town's pool 40,274,366 Total Cash and Investments 45,683,485$ Deposits The California Government Code requires California banks and savings and loan associations to collateralize a Town's deposits by pledging government securities. The market value of pledged securities must equal at least 110 percent of a Town's deposits. California law also allows financial institutions to collateralize Town deposits by pledging first trust deed mortgage notes having a value of 150 percent of a Town's total deposits. The Town may waive collateral requirements for deposits which are fully insured up to $250,000 by Federal Deposit insurance. FOR THE YEAR ENDED JUNE 30, 2013 - 49 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 3:DETAILED NOTES (CONTINUED) At year end, the carrying amount of the Town's cash deposits (including amount in checking accounts and money market accounts) was $5,084,896 and the bank balance was $5,440,675.The difference between the bank balance and the carrying amount represents outstanding checks and deposits in transit. Of the bank balance, $1,172,065 was covered by federal depository insurance and $4,268,610 was uninsured and collateralized (i.e. collateralized with securities held by the pledging financial institution at 110 percent of the deposits, in accordance with the State of California Government Code, deemed to be held in the Town's name). Investments The Town adopts an investment policy annually. Authorized investments include: Investment Category Standard Treasury Bills and Notes No limitations Federal Agencies No limitations Banker's Acceptances A1/P1 rated; 40% maximum; 30% per issuer; 180 days; 5% per issuer Commercial Paper A-1/F1/F-1 rated; and >A-rated long term ratings; 25% maximum; <270 days; 5% Negotiable CDs 30% maximum; >A-rated issuer; 5% per issuer Medium Term Notes 30% maximum; >A-rated issuer; 5% per issuer Money Market Funds AAA/Aaa rated; assets greater than $500MM; 20% maximum Repurchase Agreements Not currently used LAIF No limitations As of June 30, 2013, the Town had the following investments: 0 - 1 year 1 - 5 years Over 5 years Fair Value Weighted Average Maturity (Years) Investments U.S. Government Agency Securities 4,157,649$11,060,013$-$15,217,662$0.72 Corporate Notes 2,221,651 4,220,023 -6,441,674 0.26 Local Agency Investment Fund (LAIF)18,615,031 --18,615,031 - Total Investments 24,994,331$15,280,036$-$40,274,366$0.31 Maturities Interest Rate Risk Interest rate risk is the risk of loss due to the fair value of an investment falling due to interest rates rising. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. All investments of the Town are invested in accordance with the investment policies of the Town. Of the Town's $40,274,366 investment portfolio, over 60%of the investments have a maturity of one year or less. Of the remainder, none have a maturity of more than 5 years.The Town had no investments that were highly sensitive to interest rate fluctuations as of June 30, 2013. Credit Risk Credit risk is generally the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. State law and Town investment pool policy limit investments in commercial paper to the rating of A1 by Standards & Poor's or P-1 by Moody's Investors Service. State law also limits investments in corporate bonds to the rating of A by both Standards & Poor's and Moody's Investors Service. The Town does not have credit limits on U.S. government securities or U.S. government agency securities. FOR THE YEAR ENDED JUNE 30, 2013 - 50 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 3:DETAILED NOTES (CONTINUED) Investments at June 30, 2013 Standard & Poor's % of Portfolio Federal Home Loan Mortgage Corporation AA+7.7% Federal Home Loan Bank AA+6.9% Federal National Mortgage Association AA+7.7% Federal Farm Credit Bank AA+7.9% US Treasury TSY 8.0% Commercial Paper A-1+2.2% Corporate Obligations A 4.9% Corporate Obligations A-0.7% Corporate Obligations A+3.8% Corporate Obligations AA 1.7% Corporate Obligations AA-2.2% Corporate Obligations AA+0.7% LAIF Unrated 45.6% Total 100.0% Custodial Credit Risk At year end, the Town did not participate in any repurchase agreements or securities lending that would result in any possible risk in this area. Concentration of Credit Risk Over 38%of the Town's investments at year-end are in U.S. Government or Agencies issues. There is no limitation on amounts invested in these types of issues. Of the 16.2%of the portfolio invested in corporate notes and money market funds, no investment in a single issuer exceeds 1.1%. Investment in Local Agency Investment Fund The Town 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 Town's investment in this pool is reported in the accompanying financial statements at amounts based upon the Town's share of the fair value provided by LAIF for the entire 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. At June 30, 2013, the Town's investment position in the State of California Local Agency Investment Fund (LAIF) was $18,615,031.The total amount invested by all public agencies in LAIF on that day was $58,803,312,428. Of that amount, 98.04%is invested in non-derivative financial products and 1.96%in structured notes and asset- backed securities. B.Loans Receivable Loans receivable include notes for down payment assistance and for the purchase of land and the construction of the Frishman Hollow,Henness Flats and Sierra Pines low/very low housing complexes.Loans were funded by various grants and developer contributions. Loans receivable also includes a note from the Humane Society of Truckee-Tahoe related to the construction of the Town’s new animal shelter. Loans in governmental funds are treated as expenditures in the year advanced and as revenue in the year repayment is measurable and available. Loans receivable are recorded in the fund statements but are deferred to indicate they do not represent current financial resources. In the government-wide statements, loans receivable are recorded at their net realizable value. FOR THE YEAR ENDED JUNE 30, 2013 - 51 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 3:DETAILED NOTES (CONTINUED) C.Capital Assets Capital assets activity for the year ended June 30, 2013, was as follows: Beginning Balance Additions/Retirements/Balance July 1, 2012 Adjustments Adjustments June 30, 2013 Governmental Activities Capital Assets, Not Being Depreciated: Land 6,960,070$-$6,960,070$ Right of Way 44,046,305 946,281 -44,992,586 Construction in Progress 22,084,434 8,222,812 (18,882,011)11,425,235 Total Capital Assets, Not Being Depreciated 73,090,809 9,169,093 (18,882,011)63,377,891 Capital Assets, Being Depreciated: Buildings and improvements 10,147,902 14,379,946 -24,527,848 Equipment 12,593,165 2,705,077 (167,543)15,130,699 Infrastructure 48,200,575 1,479,143 -49,679,718 Total Capital Assets, Being Depreciated 70,941,642 18,564,166 (167,543)89,338,265 Less Accumulated Depreciation For: Buildings and improvements (2,527,040)(565,693)-(3,092,733) Equipment (8,759,540)(869,409)128,488 (9,500,461) Infrastructure (18,622,434)(3,007,865)-(21,630,299) Total Accumulated Depreciation (29,909,014)(4,442,967)128,488 (34,223,493) Total Capital Assets, Being Depreciated, Net 41,032,628 14,121,199 (39,055)55,114,772 Governmental Activities Capital Assets, Net 114,123,437$23,290,292$(18,921,066)118,492,663$ Balance Additions/Retirements/Balance June 30, 2012 Adjustments Adjustments June 30, 2013 Business-Type Activities Capital Assets, Being Depreciated: Structures and improvements 321,269$50,147$-$371,416$ Equipment 786,145 20,198 (12,433)793,910 Total Capital Assets, Being Depreciated 1,107,414 70,345 (12,433)1,165,326 Less Accumulated Depreciation For: Structures and improvements (69,929)(16,705)-(86,634) Equipment (580,498)(68,022)12,433 (636,087) Total Accumulated Depreciation (650,427)(84,728)12,433 (722,721) Total Capital Assets, Being Depreciated, Net 456,987 (14,382)-442,605 Business-Type Activities Capital Assets, Net 456,987$(14,382)$-$442,605$ FOR THE YEAR ENDED JUNE 30, 2013 - 52 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 3:DETAILED NOTES (CONTINUED) Depreciation Depreciation expense was charged to governmental functions as follows: General government 313,332$ Public safety 161,914 Public works 3,967,721 Total Depreciation Expense - Governmental Functions 4,442,967$ Depreciation expense was charged to the business-type functions as follows: Parking 2,831$ Solid Waste 3,333 Building and Safety 4,490 Transit 74,074 Total Depreciation Expense - Business-Type Functions 84,728$ Construction in Progress Construction in progress for governmental activities relates primarily to work performed on the Animal Shelter, the Truckee River Legacy,Brockway Road and Trout Creek Trails,Glenshire Drive Reconstruction, the Mousehole project, and Streetscape and Roundabout projects.The majority of the deletion from construction in progress for fiscal 2013 is due to the substantial completion of the Town’s new public service facility. D.Lonq-Term Liabilities Deferred charges (cost of issuance) for the 2009 bond issue are included as an asset in the Government Wide Statement of Net Position ($156,991).Deferred charges are made up of current year cost of issuance additions, net of amortization for the lease revenue bonds. Long-term liabilities due within one year are net of unamortized discount.See Note 8, Fiduciary Funds, for detail on the 2010 tax increment bond issuance, which was previously reflected in governmental activities. The outstanding bonds were transferred to the Successor Agency upon the dissolution of the Town of Truckee Redevelopment Agency. The following is a summary of all long-term liabilities activity for the year ended June 30, 2013: Balance Additions/Balance Amounts Due July 1, 2012 Adjustments Retirements June 30, 2013 Within One Year Governmental Activities Lease Revenue Bonds 10,095,000$-$(300,000)$9,795,000$305,000$ Less: Unamortized Discount (62,827)-3,512 (59,315)(3,512) Less: Cost of Issuance (167,208)-10,217 (156,991)(10,217) Lease Revenue Bonds, Net 9,864,965 -(286,271)9,578,694 291,271 Compensated Absences (Note 1M)885,255 755,778 (706,436)934,597 86,214 Total Governmental Activities - Long- term Liabilities 10,750,220$755,778$(992,707)$10,513,291$377,485$ Business-Type Activities Compensated Absences (Note 1M)79,991 46,254 (57,035)69,210 6,480 Total Business-Type Activities - Long-term Liabilities 79,991$46,254$(57,035)$69,210$6,480$ FOR THE YEAR ENDED JUNE 30, 2013 - 53 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 3:DETAILED NOTES (CONTINUED) As of June 30, 2013 lease revenue bonds consisted of the following: Governmental Activities Lease Revenue Refunding Bonds Series 2005,dated September 21,2005,in the amount of $5,670,000,payable in annual installments of $55,000 to $390,000, with an interest rate of 3.000% to 4.375% and maturity on November 1, 2030.5,090,000$ Lease Revenue Bonds Series 2009,dated September 8,2009,in the amount of $1,645,000 (Series 2009A)and $3,355,000 (Series 2009B)for a total issue of $5,000,000,payable in annual installments of $95,000 to $290,000.Series 2009A interest rate of 2.000%to 4.650%and maturity on December 1,2039 and Series 2009B Build America Bonds (Taxable)interest rate of 7.700%to 7.900% prior to 35%United States Treasury subsidy (net rates of 5.01%to 5.145%), maturing December 1, 2039. 4,705,000 Total Lease Revenue Bonds 9,795,000$ The annual aggregate maturities for years subsequent to June 30, 2013 are as follows: Lease Revenue Bonds Year Ended June 30 Principal Gross Interest Revenue Bonds Less US Treasury Subsidy Net Interest Revenue Bonds Total Principal & Net Interest 2014 305,000$514,519$(92,087)$422,432$727,432$ 2015 315,000 505,254 (92,087)413,167 728,167 2016 320,000 495,165 (92,087)403,078 723,078 2017 335,000 484,190 (92,087)392,103 727,103 2018 345,000 472,226 (92,087)380,139 725,139 2019-2023 1,925,000 2,147,187 (460,434)1,686,753 3,611,753 2024-2028 2,380,000 1,658,444 (430,317)1,228,127 3,608,127 2029-2033 2,100,000 974,106 (314,676)659,430 2,759,430 2034-2038 1,205,000 469,853 (164,448)305,404 1,510,404 2039-2040 565,000 45,228 (15,830)29,398 594,398 Total 9,795,000$7,766,170$(1,846,139)$5,920,032$15,715,032$ Governmental Activities E.Leases Operating Leases Rental expenses incurred under operating leases are not considered material. F.Interfund Transactions Due To/From Other Funds Operating receivables and payables between funds are classified as due from or due to the General Fund. Amounts due from other funds include amounts due from other funds for loans to fund negative cash balances. Negative cash balances are expected to be funded in subsequent fiscal years by collection of revenues. The following are due to and due from balances as of June 30, 2013: FOR THE YEAR ENDED JUNE 30, 2013 - 54 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 3:DETAILED NOTES (CONTINUED) Due from Other funds Due to Other funds General Fund 41,802$-$ Nonmajor Governmental Funds -850 Transit -40,952 Total 41,802$41,802$ Transfers Transfers are indicative of funding for or purchase of capital projects, lease payments or debt service, and re- allocations of special revenues. The following are the interfund transfers for the year ended June 30, 2013: Transfers In Transfers Out General Fund 2,216,670$3,535,735$ Measure A/Measure V -2,511,194 Impact Fees -78,442 HOME Grant -26 Capital Projects 6,536,300 - Assessment Districts -772,956 Nonmajor Governmental Funds 1,553,770 3,389,697 Building and Safety -18,690 Total 10,306,740$10,306,740$ NOTE 4: EMPLOYEES’ RETIREMENT PLAN A.Defined Benefit Pension Plan Plan Description The Town contributes to the miscellaneous plan of the Town of Truckee and the safety plan of the Town of Truckee (plans) which are part of the California Public Employees Retirement System (PERS), a cost sharing multiple-employer public employee defined benefit plan. PERS provides retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members and beneficiaries. The Town participates in three plans for its employees. Town Tier Date of Hire Miscellaneous Plan Safety Plan 1 Prior to July 1, 2011 2.7% at 55 3.0% at 50 2 July 1,2011 -Dec. 31, 2011 2.5% at 55 3.0% at 55 3 Jan 1, 2012 and after 2.0% at 62 2.7% at 57 The second and third tier plans also have certain other benefit reductions. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by statute. Copies of PERS' annual financial report may be obtained from their executive office -400 P Street, Sacramento, CA 95814. Funding Policy Each plan requires employee contributions equal to some percentage of the employees’ annual covered salary. The Town has a variety of agreements regarding these employee contributions to the PERS retirement program. FOR THE YEAR ENDED JUNE 30, 2013 - 55 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA NOTE 4:EMPLOYEES’ RETIREMENT PLAN (CONTINUED) During fiscal 2013 the Town paid a portion of the employee’s contribution on their behalf for employees hired prior to July 1, 2011. The Town 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 PERS Board of Administration. The contribution requirements of the plan are established by State statute and the employer contribution rate is established and may be amended by PERS.See the following table for both employee and employer required contributions for fiscal 2013. Town Tier Date of Hire Miscellaneous Plan FY12/13 Employer Contribution FY12/13 Employee Contribution Actual Employee Contribution 1 Prior to July 1, 2011 2.7% at 55 17.875%8%3.21% 2 July 1,2011 -Dec. 31, 2012 2.5% at 55 13.65%8%8% 3 Jan 1, 2012 and after 2.0% at 62 6.50%6.5%6.5% Town Tier Date of Hire Safety Plan FY12/13 Employer Contribution FY12/13 Employee Contribution Actual Employee Contribution 1 Prior to July 1, 2011 3.0% at 50 29.235%9%4.5% 2 July 1,2011 -Dec. 31, 2012 3.0% at 55 22.062%9%9% 3 Jan 1, 2012 and after 2.7% at 57 12.250%12.25%9% Annual Pension Cost For fiscal 2013, the Town's annual pension cost of $824,782 for the miscellaneous plan and $506,042 for the safety plan was equal to the Town's actual contributions. The required contributions for fiscal 2013 were determined as part of the June 30,2010 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 7.5 percent investment rate of return (net of administrative expenses), (b) projected annual salary increases of 3.3 percent to 14.2 percent,depending on age, service, and type of employment, and (c) 2.75 percent per year cost of living adjustment. Both (a) and (b) included an inflation component of 2.75 percent. The actuarial value of PERS assets were determined using techniques that smooth the effect of short term volatility in the market value of investments over a fifteen year period (smoothed market value). PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. Initial unfunded liabilities are amortized over a closed period that depends on the plan's date of entry into PERS. Subsequent plan amendments are amortized as a level percent of pay over a closed-20-year period. Fiscal Year Ending Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation June 30, 2011 1,326,851$100%- June 30, 2012 1,399,014 100%- June 30, 2013 1,330,824 100%- In fiscal year 2010/2011 the Town paid off the side fund liability to PERS in the amount of $1,549,775. This side fund was created by the establishment of the Safety plan and the enhancement of benefits for the Miscellaneous plan. The side fund liability was financed by PERS at their assumed rate of return. This pay off reduces future pension costs and is being amortized in the Government Wide statements over ten years for the Miscellaneous plan and seven years for the Safety plan beginning in fiscal 2012. FOR THE YEAR ENDED JUNE 30, 2013 - 56 - NOTE 4:EMPLOYEES’ RETIREMENT PLAN (CONTINUED) Funded Status and Funding Progress Since the Town has less than 100 active members in at least one valuation since June 30, 2003, it is required to participate in a risk pool and does not present individual plan funded status. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets for the risk pool is increasing or decreasing over time relative to the actuarial accrued liability for benefits. B.457 Plan The Town maintains deferred compensation plans (the Plan) for its employees. The plan was created in accordance with the Internal Revenue Code Section 457. The Plan is available to all regular Town employees and permits them to defer a portion of their salary until future years. The deferred compensation is not available to the employees for withdrawal until termination, retirement, death or unforeseeable emergency. The Town has no liability for losses under the Plan but does have the duty of due care that would be required of an ordinary prudent investor. The Town has not reflected the Plan's assets and corresponding liabilities (if any) on the accompanying financial statements. C.Other Post Retirement Benefits (OPEB) Plan Description The Town administers a single-employer defined benefit health care plan for its employees. The plan provides medical, dental and vision coverage. As of January 1, 2012, medical coverage is provided through CalPERS under the Medical and Hospital Care Act (PEMHCA), also referred to as PERS Health. The PEMHCA plan requires that medical benefits be made available to qualified retirees. Dependent children are covered until age 26. The Town currently has 36 retirees eligible to participate in the plan and 83 active employees who participate in the health plan. Funding Policy Employees become eligible to retire under PEMHCA and receive healthcare benefits upon attainment of age 50 and 5 years of covered PERS service, or by attaining qualifying disability retirement status. The Town has selected the unequal contribution method, where it contributes a percent of the amount paid for actives to its eligible retirees. For calendar 2013 this amount is $1 per month per retiree. Concurrent with implementing the PERS Health Plan the Town Council passed a resolution to participate in the California Employers Retirees Benefit Trust (CERBT), an irrevocable trust fund established to fund OPEB. CEBRT is administered by CalPERS, and is managed by an appointed Board not under the control of the Town Council. The Trust is not considered a component unit by the Town and has been excluded from these financial statements. Separately issued financial statements for CERBT may be obtained for CalPERS at P.O. Box 942709, Sacramento, Ca.94229-2709. For the year ended June 30, 2013, the Town’s annual cost for the healthcare plan was $66,858. The Town’s annual OPEB cost contributed to the plan and the net OPEB obligation for the year ended June 30, 2013 were as follows: NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 - 57 - NOTE 4:EMPLOYEES’ RETIREMENT PLAN (CONTINUED) Annual Required Contribution Service Cost at year end 42,301$ 30-year amortization of funded liability 24,557 Total fiscal year required contribution 66,858 Employer contribution during fiscal year 141,205 Net OPEB obligation July 1, 2012 21,832 Net OPEB asset, June 30, 2013 (52,515)$ The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to the health plan, and the net OPEB asset for the fiscal year ended June 30, 2013 are as follows: Actual Employer Percentage Net Ended OPEB Year Ended Annual OPEB Cost Contribution Contributed Liability(Asset) June 30, 2012 $ 66,858 $ 45,026 67% $ 21,832 June 30, 2013 66,858 141,205 211%(52,515) Actuarial valuations for an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Actuarially determined amounts are subject to continuous revision as actual results are based on the values which the Town’s actuarial consultant believes are reasonable assumptions, the valuation results reflect a long-term perspective and, as such, are merely an estimate of what future costs may actually be. Deviations in any of several factors, such as future interest rates, medical cost inflation, Medicare coverage, and changes in marital status, could result in actual costs being less or greater than estimated. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present multi-year trend information that shows whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions Calculations of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the projected cost sharing between the Town and the employees based on the PERS Health requirements. The actuarial methods and assumptions used 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. In the 2011 actuarial valuation, the Projected Unit Credit Cost Method was used. Demographic assumptions regarding retirement, disability, and turnover are based on statistics taken from pension valuations for California PERS under a 3.0% @ 50 formula for Police employees and a 2.7% @ 55 formula for all other employees. The actuarial assumptions included a 6.39% interest rate if funded, and a 4.25% annual increase to the minimum Town contribution. NOTE 5: RISK MANAGEMENT The Town 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 natural disasters. The Town has joined together with other municipalities to participate in the Public Agency Risk Sharing Authority of California (PARSAC) for general liability, vehicle liability, errors and omissions, and workers' compensation and employers’liability purposes. PARSAC is a public entity risk pool which serves as a .common risk management and insurance program .PARSAC is under the control and NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 - 58 - NOTE 5:RISK MANAGEMENT (CONTINUED) direction of a 9 member executive committee consisting of representatives of the 35 member cities.The Town pays an annual premium to PARSAC for its insurance coverage.The agreements with PARSAC provide that they will be self sustaining through member premiums and will reinsure through commercial companies for excess coverage. Complete audited financial statements of PARSAC can be obtained at 1525 Response Road, Suite One, Sacramento, California 95815-4805. The Town continues to carry commercial insurance for all other risks of loss. Settled claims resulting from these risks have not exceeded commercial insurance in any of the past three fiscal years. There is no claim s liability to be reported based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. NOTE 6: OTHER INFORMATION A.Construction Commitments The Town has signed agreements for $9,776,863 in various construction projects that were not complete as of June 30, 2013.Construction completed and paid subsequent to June 30, 2013 on these projects was $3,961,243. The Town has also signed agreements for construction projects subsequent to June 30, 2013 in the amount of $3,144,677 of which $458,279 was constructed and paid by the date of financial statement preparation. B.Contingent Liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 - 59 - NOTE 7: PRIOR PERIOD ADJUSTMENTS The Town determined that public works inventory has reached a material level. As of July 1, 2012, the inventory balance on hand was $540,267.Both the fund financial statements and government-wide financial statements reflect an adjustment to fund balance and net position, respectively, for the beginning balance of inventory. On an ongoing basis, the inventory balance will be adjusted at the end of each fiscal year with an adjustment to public works expenditures in the fund financial statements. Fund Description of Restatement Amount Governmental Funds General Fund Increase fund balance for inventory balance on hand 7/1/2012 $ 540,267 Total Governmental Fund Balance Restatement $ 540,267 Government Wide Description of Restatement Amount Increase fund balance for inventory balance on hand 7/1/2012 $ 540,267 Total Government Wide Restatement $ 540,267 NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 - 60 - NOTE 8: EXTRAORINDARY ITEMS During fiscal 2013, the Town continued the wind-down of former Redevelopment Agency, including completion of a review by the State of California Department of Finance (DOF). Per the DOF review, the Town transferred cash of the former Agency in the amount of $2,466,566 to Nevada County for distribution to the pass-through agencies. This transfer created an extraordinary loss in the Redevelopment Successor Agency fiduciary fund. Additionally, the DOF required the transfer of three down-payment assistance loans from the Housing Successor Agency to the Redevelopment Successor Agency. The transfer of the loans created an extraordinary loss in the Government Wide Statement of Activities (Governmental Activities)and an extraordinary gain in the Fiduciary Fund Statement of Activities. Fiduciary Funds Description of Extraordinary Items Amount Redevelopment Successor Agency Extraordinary Gain for loans transferred from Town Housing Successor Agency $ 244,699 Extraordinary Loss for payment of funds to Nevada County per DOF Review (2,466,566) Total Fiduciary Fund Extraordinary Gain(Loss) $ (2,221,867) Government Wide Extraordinary Loss for loans transferred from Town Housing Successor Agency $ (244,699) Total Government Wide Extraordinary Gain(Loss) $ (244,699) NOTE 9:FIDUCIARY FUNDS A.Cash and Investments Total cash and investments are presented on the Agency’s financial statements as follows: Fiduciary Activities: Cash and cash equivalents 755,900$ Investments 7,700,420 Total Cash and Investments 8,456,320$ NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 - 61 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 NOTE 9: FIDUCIARY FUNDS (CONTINUED) Total cash and investments of the Agency at fair value are comprised of the following: Cash and Deposits: Deposits in Town's depository institution (less outstanding checks)130,401$ Deposits with fiscal agents 1,218,297 Total Cash and Deposits 1,348,698 Investments: In Town's pool 7,107,622 Total Cash and Investments 8,456,320$ Deposits The California Government Code requires California banks and savings and loan associations to collateralize an Agency's deposits by pledging government securities. The market value of pledged securities must equal at least 110 percent of an Agency's deposits. California law also allows financial institutions to collateralize Agency deposits by pledging first trust deed mortgage notes having a value of 150 percent of an Agency's total deposits. The Agency may waive collateral requirements for deposits which are fully insured up to $250,000 by Federal Deposit insurance. At year end, the carrying amount of the Agency's cash deposits (including amount in checking accounts and money market accounts) was $1,348,698 and the bank balance was $1,348,698.Of the bank balance, $631,310 was covered by federal depository insurance and $717,388 was uninsured and collateralized (i.e. collateralized with securities held by the pledging financial institution at 110 percent of the deposits, in accordance with the State of California Government Code, deemed to be held in the Agency's name). Investments The Agency bond proceeds investment policy authorized investments include: Investment Category Standard Treasury Issues No limitations Government sponsored Agency Issues No limitations Banker's Acceptances A-1 and P-1 rated or better Commercial Paper A-1 and P-1 rated or better Money Market Mutual Funds Aaa or AAA rated Investment Agreements Not currently used Repurchase Agreements Not currently used LAIF No limitations As of June 30, 2013, the Agency had the following investments: 0 - 1 year 1 - 5 years Over 5 years Fair Value Weighted Average Maturity (Years) Investments in Investment Pool U.S. Government Agency Securities 6,293,909$154,352$-$6,448,261$0.41 Local Agency Investment Fund (LAIF)659,361 --659,361 - Total Investments in Investment Pool 6,953,270$154,352$-$7,107,622$0.37 Maturities - 62 - NOTE 9: FIDUCIARY FUNDS (CONTINUED) Interest Rate Risk Interest rate risk is the risk of loss due to the fair value of an investment falling due to interest rates rising. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. All investments of the Agency are invested in accordance with the investment policies of the Agency. Of the Agency's $7,107,622 investment portfolio, over 97%of the investments have a maturity of one year or less. Of the remainder, none have a maturity of more than 5 years.The Town had no investments that were highly sensitive to interest rate fluctuations as of June 30, 2013. Credit Risk Credit risk is generally the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. State law and Town investment pool policy limit investments in commercial paper to the rating of A1 by Standards & Poor's or P-1 by Moody's Investors Service. State law also limits investments in corporate bonds to the rating of A by both Standards & Poor's and Moody's Investors Service. The Town does not have credit limits on U.S. government securities or U.S. government agency securities. Investments at June 30, 2013 Standard & Poor's % of Portfolio Federal Home Loan Mortgage Corporation AA+17.1% Federal Home Loan Bank AA+18.8% Federal National Mortgage Association AA+29.2% Federal Farm Credit Bank AA+3.4% US Treasury TSY 22.1% Corporate Obligations AA+0.0% LAIF Unrated 9.4% Total 100.0% Custodial Credit Risk At year end, the Agency did not participate in any repurchase agreements or securities lending that would result in any possible risk in this area. Concentration of Credit Risk Over 92%of the Agency's investments at year-end are in U.S. Government or Agencies issues. There is no limitation on amounts invested in these types of issues. Of the .5%of the portfolio invested in corporate notes and money market funds, no investment in a single issuer exceeds .5%. Investment in Local Agency Investment Fund The Agency 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 Agency's investment in this pool is reported in the accompanying financial statements at amounts based upon the Agency's share of the fair value provided by LAIF for the entire 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. At June 30, 2013, the Agency's investment position in the State of California Local Agency Investment Fund (LAIF) was $659,361.The total amount invested by all public agencies in LAIF on that day was $58,803,312,428. Of that amount,98.04%is invested in non-derivative financial products and 1.96%in structured notes and asset- backed securities. TOWN OF TRUCKEE, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2013 - 63 - NOTE 9: FIDUCIARY FUNDS (CONTINUED) B.Land Held for Resale The Agency purchased land on West River Street from Nevada County during fiscal years 2004 and 2005. The land required environmental hazard remediation prior to sale or use. Further clean-up is required before the land will be sold or redeveloped. The total value of land held for resale at June 30, 2013 was $200,000. C.Loans Receivable Loans receivable include notes for economic development, improvements to the former Redevelopment Project Area, historical preservation, and down payment assistance. Loans receivable are recorded at their net realizable value. D.Capital Assets Capital assets activity for the year ended June 30, 2013, was as follows: Balance Additions/Retirements/Balance June 30, 2012 Adjustments Adjustments June 30, 2013 Fiduciary Activities Capital Assets, Not Being Depreciated: Land 5,090$-$-$5,090$ Total Capital Assets, Not Being Depreciated 5,090 --5,090 Capital Assets, Being Depreciated: Buildings and improvements 67,440 --67,440 Equipment 150,376 --150,376 Total Capital Assets, Being Depreciated 217,816 --217,816 Less Accumulated Depreciation For: Buildings and improvements (2,984)(7,162)-(10,146) Equipment (6,654)(15,969)-(22,623) Total Accumulated Depreciation (9,638)(23,131)-(32,769) Total Capital Assets, Being Depreciated, Net 208,178 (23,131)-185,047 Fiduciary Activities Capital Assets, Net 213,268$(23,131)$-$190,137$ Depreciation Depreciation expense was charged to governmental functions as follows: Community Development 23,131$ Total Depreciation Expense - Fiduciary Functions 23,131$ E.Lonq-Term Liabilities Deferred charges (cost of issuance) for the 2010 bond issue are included as an asset in the Statement of Net Position ($446,286).Deferred charges are made up of current year cost of issuance additions, net of amortization for the lease revenue bonds. Long-term liabilities due within one year are net of unamortized discount. NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 - 64 - NOTES TO THE BASIC FINANCIAL STATEMENTS TOWN OF TRUCKEE, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2013 NOTE 9: FIDUCIARY FUNDS (CONTINUED) The following is a summary of all long-term liabilities activity for the year ended June 30, 2013: Balance Additions/Balance Amounts Due June 30, 2012 Adjustments Retirements June 30, 2013 Within One Year Tax Increment Revenue Bonds 12,740,000$-$-$12,740,000$40,000$ Less: Unamortized Discount (51,480)-1,860 (49,620)(1,860) Less: Cost of Issuance (463,022)-16,736 (446,286)(16,736) Tax Increment Revenue Bonds, Net 12,225,498 -18,596 12,244,094 21,404 Compensated Absences (Note 1M)26,000 730 (1,737)24,993 1,785 Total Fiduciary Activities - Long-term Liabilities 12,251,498$730$16,859$12,269,087$23,189$ As of June 30, 2013 tax increment bonds consisted of the following: Fiduciary Activities Tax Increment Bonds Tax increment Bonds Series 2010,dated February 9,2010,in the amount of $9,385,000 (Series 2010A)and $3,355,000 (Series 2010B)for a total issue of $12,740,000,payable in annual installments of $40,000 to $1,085,000.Series 2010A interest rate of 3.000%to 4.500%and maturity on September 1,2034 and Series 2010B Recovery Zone Economic Development Bonds (Taxable)with an interest rate of 8.193%prior to the 45%United States Treasury subsidy (net interest rate of 4.51%). 12,740,000$ Total Bonds 12,740,000$ The annual aggregate maturities for years subsequent to June 30, 2013 are as follows: Tax Increment Bonds Year Ended June 30 Principal Total Gross Interest Less US Treasury Subsidy Net Interest Total Principal & Net Interest 2014 40,000$743,425$(123,694)$619,731$659,731$ 2015 55,000 742,000 (123,694)618,306 673,306 2016 75,000 740,050 (123,694)616,356 691,356 2017 95,000 737,263 (123,694)613,569 708,569 2018 115,000 733,588 (123,694)609,894 724,894 2019-2023 930,000 3,577,620 (618,469)2,959,150 3,889,150 2024-2028 1,685,000 3,290,657 (618,469)2,672,188 4,357,188 2029-2033 2,725,000 2,741,960 (618,469)2,123,491 4,848,491 2034-2038 3,945,000 1,855,659 (613,308)1,242,351 5,187,351 2039-2041 3,075,000 387,734 (174,480)213,254 3,288,254 12,740,000$15,549,955$(3,261,664)$12,288,291$25,028,291$ Community Development Activities REQUIRED SUPPLEMENTARY INFORMATION - 66 - This page intentionally left blank. - 67 - GENERAL FUND BUDGETARY COMPARISON SCHEDULE TOWN OF TRUCKEE, CALIFORNIA See accompanying note to the required supplementary information. REVENUES Original Budget Final Budget Actual Variance with Final Budget Positive (Negative) Taxes and assessments 13,207,098$13,207,098$ 14,572,532$1,365,434$ Licenses and permits 25,000 25,000 33,574 8,574 Fines and forfeitures 285,000 285,000 250,523 (34,477) Use of money and property 102,000 102,000 9,309 (92,691) Intergovernmental revenues 1,516,659 1,516,659 1,582,502 65,843 Charges for services 775,925 775,925 873,333 97,408 Other revenues 312,737 312,737 285,098 (27,639) To t al Rev en u es 16,224,419 16,224,419 17,606,871 1,382,452 EXPENDITURES Current: General government 3,254,647 3,273,647 3,094,236 179,411 Public safety 5,719,589 5,719,589 5,582,781 136,808 Public works 5,069,579 5,069,579 5,027,815 41,764 Community development 692,190 692,190 684,282 7,908 Facilities 1,039,969 1,039,969 919,996 119,973 Capital outlay 1,059,126 1,059,126 72,777 986,349 Total Expenditures 16,835,100 16,854,100 15,381,886 1,472,214 Excess of Revenues Over (Under) Expenditures (610,681) (629,681) 2,224,985 2,854,666 OTHER FINANCING SOURCES (USES) Transfers in 1,620,783 1,620,783 2,216,670 595,887 Transfers out (3,913,893) (3,913,893) (3,535,735) 378,158 Total Other Financing Sources (Uses)(2,293,110) (2,293,110) (1,319,065) 974,045 Net Change in Fund Balances (2,903,791) (2,922,791) 905,920 3,828,711 Beginning Fund Balances 15,771,322 15,771,322 18,132,287 2,360,965 Fund Balances - Ending 12,867,531$12,848,531$19,038,207$6,189,676$ Required Supplementary Information FOR THE YEAR ENDED JUNE 30, 2013 - 68 - MEASURE A & MEASURE V - MAJOR SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE TOWN OF TRUCKEE, CALIFORNIA See accompanying note to the required supplementary information. REVENUES Original Budget Final Budget Actual Variance with Final Budget Positive (Negative) Taxes and assessments 1,505,328$ 1,505,328$ 1,733,409$ 228,081$ Use of money and property 30,000 30,000 21,986 (8,014) To t al Rev en u es 1,535,328 1,535,328 1,755,395 220,067 EXPENDITURES Current: General government - - 172 (172) Total Expenditures - - 172 (172) Excess of Revenues Over (Under) Expenditures 1,535,328 1,535,328 1,755,223 219,895 OTHER FINANCING SOURCES (USES) Transfers in - - - - Transfers out (7,167,948) (7,167,948) (2,511,194) 4,656,754 Total Other Financing Sources (Uses)(7,167,948) (7,167,948) (2,511,194) 4,656,754 Net Change in Fund Balances (5,632,620) (5,632,620) (755,971) 4,876,649 Fund Balances - Beginning 5,989,273 5,989,273 6,546,355 557,082 Fund Balances - Ending 356,653$ 356,653$ 5,790,384$ 5,433,731$ Required Supplementary Information FOR THE YEAR ENDED JUNE 30, 2013 - 69 - IMPACT FEES - MAJOR SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE TOWN OF TRUCKEE, CALIFORNIA See accompanying note to the required supplementary information. REVENUES Original Budget Final Budget Actual Variance with Final Budget Positive (Negative) Use of money and property 21,000$ 21,000$ 19,867$ (1,133)$ Charges for services 220,000 220,000 465,382 245,382 To t al Rev en u es 241,000 241,000 485,249 244,249 EXPENDITURES Current: General government 4,000 4,000 4,752 (752) Total Expenditures 4,000 4,000 4,752 (752) Excess of Revenues Over (Under) Expenditures 237,000 237,000 480,497 243,497 OTHER FINANCING SOURCES (USES) Transfers out (2,294,182) (2,294,182) (78,442) 2,215,740 Total Other Financing Sources (Uses)(2,294,182) (2,294,182) (78,442) 2,215,740 Net Change in Fund Balances (2,057,182) (2,057,182) 402,055 2,459,237 Fund Balances - Beginning 6,686,893 6,686,893 6,745,160 58,267 Fund Balances - Ending 4,629,711$ 4,629,711$ 7,147,215$ 2,517,504$ Required Supplementary Information FOR THE YEAR ENDED JUNE 30, 2013 - 70 - BUDGETARY COMPARISON SCHEDULE TOWN OF TRUCKEE, CALIFORNIA See accompanying note to the required supplementary information. HOME GRANT - MAJOR SPECIAL REVENUE FUND Required Supplementary Information FOR THE YEAR ENDED JUNE 30, 2013 REVENUES Original Budget* Final Budget* Actual Variance with Final Budget Positive (Negative) Use of money and property -$ -$ -$ -$ Intergovernmental revenues - - - - To t al Rev en u es - - - - EXPENDITURES Current: Community development - - - - Total Expenditures - - - - Excess of Revenues Over (Under) Expenditures - - - - OTHER FINANCING SOURCES (USES) Transfers out - - (26) (26) Total Other Financing Sources (Uses)- - (26) (26) Net Change in Fund Balances - - (26) (26) Fund Balances - Beginning - - 26 26 Fund Balances - Ending -$ -$ -$ -$ *The Town did not adopt a budget for the Home Grant Fund for the year ending June, 30 2013 - 71 - BUDGETARY COMPARISON SCHEDULE TOWN OF TRUCKEE, CALIFORNIA TOWN SPECIAL SERVICE AREAS - MAJOR SPECIAL REVENUE FUND Required Supplementary Information FOR THE YEAR ENDED JUNE 30, 2013 REVENUES Original Budget Final Budget Actual Variance with Final Budget Positive (Negative) Charges for services 766,000$ 766,000$ 767,766$ 1,766$ Use of money and property 30,000 30,000 19,551 (10,449) To t al Rev en u es 796,000 796,000 787,317 (8,683) EXPENDITURES Current: Public works 4,400 4,400 4,353 47 Total Expenditures 4,400 4,400 4,353 47 Excess of Revenues Over (Under) Expenditures 791,600 791,600 782,964 (8,636) OTHER FINANCING SOURCES (USES) Transfers out (1,775,000) (1,775,000) (772,956) 1,002,044 Net Change in Fund Balances (983,400) (983,400) 10,008 993,408 Fund Balances - Beginning 6,574,368 6,574,368 6,568,137 (6,231) Fund Balances - Ending 5,590,968$ 5,590,968$ 6,578,145$ 987,177$ See accompanying note to the required supplementary information. - 72 - NOTES TO REQUIRED SUPPLEMENTARY INFORMATION TOWN OF TRUCKEE, CALIFORNIA A. BUDGETARY BASIS OF ACCOUNTING The approved Town procedures for establishing the budgetary data reflected in the financial statements are as follows: 1.Each year, the Administrative Services Department submits to the Town Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and estimated revenues. Public hearings are to be conducted at Town Hall to obtain taxpayer comments. Generally by the first of July, after adjustment as appropriate by the Town Council, the budget is to be legally enacted through council motion. 2.Council approval is required for transfers between funds, or for an increase in total appropriations. Therefore, the level of budgetary responsibility is by total appropriations; however, for report purposes, this level has been expanded to a functional basis (General Government, Public Safety, etc.). 3.Formal budgetary integration is employed as a management control device during the year for the General fund and Special Revenue funds. Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP). Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant adjustments. 4.All unused appropriations for budgeted amounts lapse at the end of the year. 5 Individual fund budgetary comparisons are not presented at the detail budget unit level due to their excessive length. A separate document presenting this information is available. The Town does not use encumbrance accounting under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation. B. EXCESS EXPENDITURES OVER APPROPRIATIONS The Town’s general fund and major special revenue funds did not have any material excess expenditures over appropriations for fiscal 2013. FOR THE YEAR ENDED JUNE 30, 2013 - 73 - NOTES TO REQUIRED SUPPLEMENTARY INFORMATION TOWN OF TRUCKEE, CALIFORNIA C. PERS SCHEDULE OF FUNDING PROGRESS As of June 30, 2003, retirement plans with less than 100 active members were required to participate in a risk pool. Therefore, the schedule of funding progress for the Town for the June 30, 2003 valuation date and thereafter is for the entire pool not just the Town employees. Tier 1 Miscellaneous Plan: Valuation Date Entry Age Normal Accrued Liability (AL) Actuarial Value of Assets (AVA) Unfunded Liability (Excess Assets) (UL) Funded Status (AVA/AL) Annual Covered Payroll UL as a % of Payroll June 30, 2009 2,140,438,884$1,674,260,302$466,178,582$78.2%440,071,499$105.9% June 30, 2010 2,297,871,345 1,815,671,616 482,199,729 79.0%434,023,381 111.1% June 30, 2011 2,486,708,579 1,981,073,089 505,635,490 79.7%427,300,410 118.3% Safety Plan: Valuation Date Entry Age Normal Accrued Liability (AL) Actuarial Value of Assets (AVA) Unfunded Liability (Excess Assets) (UL) Funded Status (AVA/AL) Annual Covered Payroll UL as a % of Payroll June 30, 2009 9,721,675,347$8,027,158,724$1,694,516,623$82.6%973,814,168$174.0% June 30, 2010 10,165,475,166 8,470,235,152 1,695,240,014 83.3%955,980,815 177.3% June 30, 2011 10,951,745,049 9,135,654,246 1,816,090,803 83.4%949,833,090 191.2% Tier 2 Miscellaneous Plan: Valuation Date Entry Age Normal Accrued Liability (AL) Actuarial Value of Assets (AVA) Unfunded Liability (Excess Assets) (UL) Funded Status (AVA/AL) Annual Covered Payroll UL as a % of Payroll June 30, 2011 2,135,350,204$1,724,200,585$411,149,619$80.8%350,121,750$117.4% Safety Plan: Valuation Date Entry Age Normal Accrued Liability (AL) Actuarial Value of Assets (AVA) Unfunded Liability (Excess Assets) (UL) Funded Status (AVA/AL) Annual Covered Payroll UL as a % of Payroll June 30, 2011 2,061,923,933$1,759,286,797$302,637,136$85.3%225,026,216$134.5% Tier 3 No funding progress information is available for Tier 3 plans as of the date of these financial statements. D. OTHER POST EMPLOYMENT BENEFITS Schedule of Funding Progress for Other Post-Employment Benefits (OPEB) Annual UAAL as a % Actuarial Actuarial Value Actuarial Accrued Unfunded Funded Covered of Covered Valuation Date of Assets Liabilities Liability Ratio Payroll Payroll June 30, 2011 -$ 324,371$ 324,371$ 0%7,491,719$ 4% The Town’s health plan did not include post-retirement benefits until January 1, 2012. See note 4 to the financial statements for further discussion. FOR THE YEAR ENDED JUNE 30, 2013 - 74 - This page intentionally left blank. COMBINING FUND STATEMENTS AND SCHEDULES - 76 - This page intentionally left blank. NONMAJOR GOVERNMENTAL FUNDS - 78 - This page intentionally left blank. - 79 - NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA ASSETS Special Revenue Funds Capital Projects Debt Service Totals Cash and investments 2,080,227$4,471,240$-$6,551,467$ Cash with fiscal agent 323,372 --323,372 Accounts receivable 22,920 --22,920 Interest receivable 3,728 --3,728 Taxes receivable 39,757 --39,757 Due from other governments 34,983 --34,983 Loans receivable 3,622,347 --3,622,347 Tot al As s et s 6,127,334 4,471,240 -10,598,574 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable 42,508 9,449 -51,957 Due to other funds 850 --850 Unearned revenue 3,655,563 --3,655,563 Total Liabilities 3,698,921 9,449 -3,708,370 FUND BALANCES Restricted 2,313,435 --2,313,435 Assigned 114,978 4,461,791 -4,576,769 Total Fund Balances 2,428,413 4,461,791 -6,890,204 Total Liabilities and Fund Balances 6,127,334$4,471,240$-$10,598,574$ JUNE 30, 2013 - 80 - NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, TOWN OF TRUCKEE, CALIFORNIA AND CHANGES IN FUND BALANCES REVENUES Special Revenue Funds Capital Projects Debt Service Totals Taxes and assessments 1,628,618$-$-$1,628,618$ Use of money and property 27,877 --27,877 Intergovernmental revenues 727,809 949,125 -1,676,934 Charges for services 166,174 --166,174 Other revenue 223,033 -88,081 311,114 To t al Rev en u es 2,773,511 949,125 88,081 3,810,717 EXPENDITURES Current: General government 255 969 -1,224 Public safety 140,377 --140,377 Public works 3,169 --3,169 Community development 41,500 --41,500 Capital outlay 13,411 224,892 -238,303 Debt service Principal --300,000 300,000 Interest and other charges --523,101 523,101 Total Expenditures 198,712 225,861 823,101 1,247,674 Excess of Revenues Over (Under) Expenditures 2,574,799 723,264 (735,020)2,563,043 OTHER FINANCING SOURCES (USES) Transfers in 730,666 -823,104 1,553,770 Transfers out (3,048,178)-(341,519)(3,389,697) Total Other Financing Sources (Uses)(2,317,512)-481,585 (1,835,927) Net Change in Fund Balances 257,287 723,264 (253,435)727,116 Beginning Fund Balances 2,171,126 3,738,527 253,435 6,163,088 Fund Balances - Ending 2,428,413$4,461,791$-$6,890,204$ FOR THE YEAR ENDED JUNE 30, 2013 NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds - 82 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA ASSETS Asset Forfeiture Abandoned Vehicle Housing Assistance Air Quality Mitigation Cash and investments 58,310$ 24,510$ 595,736$ 273,167$ Cash with fiscal agent ---- Accounts receivable ---- Interest receivable 84 35 853 260 Taxes receivable ---- Due from other governments ---- Loans receivable --891,047 - To t al A s s et s 58,394 24,545 1,487,636 273,427 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable ---- Due to other funds ---- Unearned revenue --891,046 - Total Liabilities --891,046 - FUND BALANCES Restricted 58,394 24,545 596,590 273,427 Assigned ---- Total Fund Balances 58,394 24,545 596,590 273,427 Total Liabilities and Fund Balances 58,394$ 24,545$ 1,487,636$ 273,427$ Page 1 of 5 JUNE 30, 2013 - 83 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA ASSETS Cash and investments Cash with fiscal agent Accounts receivable Interest receivable Taxes receivable Due from other governments Loans receivable To t al A s s et s LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Due to other funds Unearned revenue Total Liabilities FUND BALANCES Restricted Assigned Total Fund Balances Total Liabilities and Fund Balances Downtown in Lieu Parking Downtown Frontage Improvement COPS Program Housing Reimbursement 73,578$ 34,384$ 81,414$ -$ ---- 22,920 --- 105 49 187 - ---- --34,983 - ---421,287 96,603 34,433 116,584 421,287 --2,751 - ---- 22,920 -10,297 421,287 22,920 -13,048 421,287 73,683 34,433 103,536 - ---- 73,683 34,433 103,536 - 96,603$ 34,433$ 116,584$ 421,287$ Continued (Page 2 of 5) JUNE 30, 2013 - 84 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA ASSETS Cash and investments Cash with fiscal agent Accounts receivable Interest receivable Taxes receivable Due from other governments Loans receivable Tot al A s s et s LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Due to other funds Unearned revenue Total Liabilities FUND BALANCES Restricted Assigned Total Fund Balances Total Liabilities and Fund Balances Gas Tax CDBG 10-STBG- 6741 Bond Proceeds Fund Town Housing Fund -$ -$ -$ 4,542$ --323,372 - --- 24 799 -4 39,757 --- ---- -753,765 -711,706 39,781 754,564 323,372 716,252 39,757 --- 24 799 -- -753,765 -711,705 39,781 754,564 -711,705 --323,372 4,547 ---- --323,372 4,547 39,781$ 754,564$ 323,372$ 716,252$ Continued (Page 3 of 5) JUNE 30, 2013 - 85 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA ASSETS Cash and investments Cash with fiscal agent Accounts receivable Interest receivable Taxes receivable Due from other governments Loans receivable To t al As s et s LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Due to other funds Unearned revenue Total Liabilities FUND BALANCES Restricted Assigned Total Fund Balances Total Liabilities and Fund Balances CDBG Miscellaneous Income Program Income CDBG Housing Rehab CalHome Grant 114,852$ 147,327$ -$ -$ ---- ---- 126 203 8 15 ---- ---- 25,342 101,196 54,811 657,843 140,320 248,726 54,819 657,858 ---- --8 13 25,342 101,195 54,811 657,845 25,342 101,195 54,819 657,858 -147,531 -- 114,978 --- 114,978 147,531 -- 140,320$ 248,726$ 54,819$ 657,858$ Continued (Page 4 of 5) JUNE 30, 2013 - 86 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA ASSETS Cash and investments Cash with fiscal agent Accounts receivable Interest receivable Taxes receivable Due from other governments Loans receivable Tot al As s et s LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Due to other funds Unearned revenue Total Liabilities FUND BALANCES Restricted Assigned Total Fund Balances Total Liabilities and Fund Balances CDBG 04-EDBG- 1022 Impact Fees Miscellaneous Totals -$ 672,407$ 2,080,227$ --323,372 --22,920 6 970 3,728 --39,757 --34,983 5,350 -3,622,347 5,356 673,377 6,127,334 --42,508 6 -850 5,350 -3,655,563 5,356 -3,698,921 -673,377 2,313,435 --114,978 -673,377 2,428,413 5,356$ 673,377$ 6,127,334$ Continued (Page 5 of 5) JUNE 30, 2013 - 87 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA JUNE 30, 2013 This page intentionally left blank. - 88 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, TOWN OF TRUCKEE, CALIFORNIA AND CHANGES IN FUND BALANCES REVENUES Asset Forfeiture Abandoned Vehicle Housing Assistance Air Quality Mitigation Taxes and assessments -$ -$ -$ -$ Use of money and property 406 168 4,143 1,261 Intergovernmental revenues ---- Charges for services -1,069 -411 Other revenue --208,364 - Tot al Rev en ues 406 1,237 212,507 1,672 EXPENDITURES Current: General government -255 -- Public safety ---- Public works ---- Community development ---- Capital outlay ---- Total Expenditures -255 -- Excess of Revenues Over (Under) Expenditures 406 982 212,507 1,672 OTHER FINANCING SOURCES (USES) Transfers in --580,537 92,080 Transfers out --(580,537)- Total Other Financing Sources (Uses)---92,080 Net Change in Fund Balances 406 982 212,507 93,752 Beginning Fund Balances 57,988 23,563 384,083 179,675 Fund Balances - Ending 58,394$ 24,545$ 596,590$ 273,427$ Page 1 of 5 FOR THE YEAR ENDED JUNE 30, 2013 - 89 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, TOWN OF TRUCKEE, CALIFORNIA AND CHANGES IN FUND BALANCES REVENUES Taxes and assessments Use of money and property Intergovernmental revenues Charges for services Other revenue To t al Rev en u es EXPENDITURES Current: General government Public safety Public works Community development Capital outlay Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Beginning Fund Balances Fund Balances - Ending Downtown in Lieu Parking Downtown Frontage Improvement COPS Program Gas Tax 1,500$ -$ -$ 1,627,118$ 506 240 1,449 117 --89,703 - ---- ---- 2,006 240 91,152 1,627,235 ---- --140,377 - ---- ---- --13,411 - --153,788 - 2,006 240 (62,636)1,627,235 ---- --(119,791)(1,665,243) --(119,791)(1,665,243) 2,006 240 (182,427)(38,008) 71,677 34,193 285,963 38,008 73,683$ 34,433$ 103,536$ -$ Continued (Page 2 of 5) FOR THE YEAR ENDED JUNE 30, 2013 - 90 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, TOWN OF TRUCKEE, CALIFORNIA AND CHANGES IN FUND BALANCES REVENUES Taxes and assessments Use of money and property Intergovernmental revenues Charges for services Other revenue To t al Rev enu es EXPENDITURES Current: General government Public safety Public works Community development Capital outlay Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Beginning Fund Balances Fund Balances - Ending CDBG 09-EDEF- 6535 CDBG 10-STBG- 6741 Bond Proceeds Fund Town Housing Fund -$ -$ -$ -$ -9,860 493 2,496 60 638,046 -- ---- -6,235 -2,051 60 654,141 493 4,547 ---- ---- ---- 59 15,567 -- ---- 59 15,567 -- 1 638,574 493 4,547 ---- (9)(595,472)(437)- (9)(595,472)(437)- (8)43,102 56 4,547 8 (43,102)323,316 - -$ -$ 323,372$ 4,547$ Continued (Page 3 of 5) FOR THE YEAR ENDED JUNE 30, 2013 - 91 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, TOWN OF TRUCKEE, CALIFORNIA AND CHANGES IN FUND BALANCES REVENUES Taxes and assessments Use of money and property Intergovernmental revenues Charges for services Other revenue To t al Rev en u es EXPENDITURES Current: General government Public safety Public works Community development Capital outlay Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Beginning Fund Balances Fund Balances - Ending CDBG Miscellaneous Income Program Income CDBG Housing Rehab CalHome Grant -$ -$ -$ -$ 712 998 35 327 ---- ---- --1,841 - 712 998 1,876 327 ---- ---- ---- 25,092 --782 ---- 25,092 --782 (24,380)998 1,876 (455) 26,968 31,081 -- -(26,968)(5,925)(9,354) 26,968 4,113 (5,925)(9,354) 2,588 5,111 (4,049)(9,809) 112,390 142,420 4,049 9,809 114,978$ 147,531$ -$ -$ Continued (Page 4 of 5) FOR THE YEAR ENDED JUNE 30, 2013 - 92 - NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, TOWN OF TRUCKEE, CALIFORNIA AND CHANGES IN FUND BALANCES Continued (Page 5 of 5) FOR THE YEAR ENDED JUNE 30, 2013 REVENUES Taxes and assessments Use of money and property Intergovernmental revenues Charges for services Other revenue To t al Rev enu es EXPENDITURES Current: General government Public safety Public works Community development Capital outlay Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Beginning Fund Balances Fund Balances - Ending CDBG 04-EDBG- 1022 Impact Fees Miscellaneous Totals -$ -$ 1,628,618$ 308 4,358 27,877 --727,809 -164,694 166,174 4,542 -223,033 4,850 169,052 2,773,511 --255 --140,377 -3,169 3,169 --41,500 --13,411 -3,169 198,712 4,850 165,883 2,574,799 --730,666 (4,947)(39,495)(3,048,178) (4,947)(39,495)(2,317,512) (97)126,388 257,287 97 546,989 2,171,126 -$ 673,377$ 2,428,413$ NONMAJOR GOVERNMENTAL FUNDS Capital Projects Funds - 94 - NONMAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA ASSETS Fleet Replacement Cash and investments 4,471,240$ To t al As s et s 4,471,240 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable 9,449 Total Liabilities 9,449 FUND BALANCES Assigned 4,461,791 Total Fund Balances 4,461,791 Total Liabilities and Fund Balances 4,471,240$ JUNE 30, 2013 - 95 - NONMAJOR CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, TOWN OF TRUCKEE, CALIFORNIA AND CHANGES IN FUND BALANCES REVENUES Fleet Replacement Intergovernmental revenues 949,125$ To t al Reven u es 949,125 EXPENDITURES Current: General government 969 Capital outlay 224,892 Total Expenditures 225,861 Excess of Revenues Over (Under) Expenditures 723,264 Net Change in Fund Balances 723,264 Fund Balances - Beginning 3,738,527 Fund Balances - Ending 4,461,791$ FOR THE YEAR ENDED JUNE 30, 2013 - 96 - This page intentionally left blank. NONMAJOR GOVERNMENTAL FUNDS Debt Service Funds - 98 - NONMAJOR DEBT SERVICE FUNDS COMBINING BALANCE SHEET TOWN OF TRUCKEE, CALIFORNIA ASSETS General Fund Debt Service Cash and investments -$ To t al As s et s - LIABILITIES AND FUND BALANCES FUND BALANCES Restricted - Total Fund Balances - Total Liabilities and Fund Balances -$ JUNE 30, 2013 - 99 - NONMAJOR DEBT SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, TOWN OF TRUCKEE, CALIFORNIA AND CHANGES IN FUND BALANCES REVENUES General Fund Debt Service Other revenue 88,081$ To t al Rev en u es 88,081 EXPENDITURES Debt service Principal 300,000 Interest and other charges 523,101 Total Expenditures 823,101 Excess of Revenues Over (Under) Expenditures (735,020) OTHER FINANCING SOURCES (USES) Transfers in 823,104 Transfers out (341,519) Total Other Financing Sources (Uses)481,585 Net Change in Fund Balances (253,435) Fund Balances - Beginning 253,435 Fund Balances - Ending -$ FOR THE YEAR ENDED JUNE 30, 2013 - 100 - This page intentionally left blank. - 101 - OTHER REPORTS - 102 - This page intentionally left blank. - 103 - - 104 - This page intentionally left blank. - 105 - - 106 - - 107 - TOWN OF TRUCKEE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2013 Federal Grantor/Pass-Through Grantor Program Federal CFDA Number Pass-Through Entity Identifying Number/Grant Number Federal Expenditures U.S Department of Housing and Urban Development Pass-Through State of California Department of Housing and Community Development: Community Development Block Grants/State's Program and Non Entitlement Grants in Hawaii14.22809-EDEF-6535$59 Community Development Block Grants/State's Program and Non Entitlement Grants in Hawaii14.22810-STBG-6741 594,944 Total U.S. Department of Housing and Urban Development 595,003 U.S. Department of Justice Direct Programs: ARRA: Justice Assistance Grant Program 16.8042009-SB-B9-2975 2,457 Total U.S. Department of Justice 2,457 U.S Department of Transportation Pass-Through State of California Department of Transportation Highway Planning and Construction 20.205HPLU-5473(007)313,768 Formula Grants for Other than Urbanized Areas 20.509 649968 50,148 Formula Grants for Other than Urbanized Areas 20.509 641175 61,857 Total Formula Grants for Other than Urbanized Areas 112,005 Total U.S. Department of Transportation 425,773 Total Expenditures of Federal Awards $1,023,233 - 108 - TOWN OF TRUCKEE NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2013 NOTE 1: REPORTING ENTITY The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal financial assistance programs of the Town of Truckee. The Town of Truckee reporting entity is defined in Note 1 of the Town's Annual Financial Report. All federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included on the schedule. When federal awards were received from a pass- through entity, the Schedule of Expenditures of Federal Awards shows, if available, the identifying number assigned by the pass-through entity. NOTE 2: BASIS OF ACCOUNTING The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Town and is presented on accounting principles generally accepted in the United States of America. The information in this schedule is presented on the accrual basis of accounting and in accordance with requirements of OMB Circular A- 133,Audits of States, Local Governments, and Non-Profit Organizations. NOTE 3: RELATIONSHIP TO FINANCIAL STATEMENTS The amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree, in all material respects, to amounts reported within the Town's basic financial statements. Federal award revenues are reported principally in the Town's financial statements as intergovernmental revenues in the governmental funds. NOTE 4: CLAIMS The Town of Truckee has received federal grants for specific purposes that are subject to review and audit by the Federal Government pass-through entity. Although such audits could result in expenditure disallowance under grant terms, any required reimbursements are not expected to be material which have not already been recorded. NOTE 5: LOANS OUTSTANDING The programs listed below had the following aggregate federally funded loans outstanding at June 30, 2013: Federal CFDA Number Program Title Amount Outstanding 14.228Community Development Block Grants/State's Program and Non-entitlement Grants in Hawaii $813,926 14.239Home Investment Partnerships Program 10,537,988 Total Loans Outstanding $11,351,914 - 109 - TOWN OF TRUCKEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2013 SECTION I - SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issued:Unqualified Internal control over financial reporting: Material weakness(es) identified?No Significant deficiency(ies) identified None reported Noncompliance material to financial statements noted?No Federal Awards Internal control over major programs: Material weakness(es) identified?No Significant deficiency(ies) identified?None reported Type of auditor's report issued on compliance for major programs:Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133?No Identification of Major Programs: Community Development Block Grants/State's Program and Non Entitlement Grants in Hawaii, 14.228 Dollar threshold used to distinguish between type A and type B programs:$300,000 Auditee qualified as low-risk auditee?Yes SECTION II - FINANCIAL STATEMENT FINDINGS Findings relating to the financial statements which are required to be reported in accordance with Generally Accepted Government Auditing Standards No SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Findings and questioned costs for Federal Awards, which includes audit findings and defined in section 510(a)No - 110 - TOWN OF TRUCKEE SCHEDULE OF PRIOR YEAR FINDINGS JUNE 30, 2013 There were no findings to report for the year ended June 30, 2012. MANN • URRUTIA • NELSON CPAs & ASSOC I ATES, L LP GL EN DAL E • RO SEVIL LE • S AC RA MENTO • SOUTH LA KE TA H O E • KA U A I , HAWA I I November 27, 2013 To the Town Council Town of Tru ckee We have audited the financial statements of the governmental activities, the business-type activities, each major fund , and the aggregate remaining fund information of the Town of Truckee for the year ended Ju ne 30, 2013. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards (and, if applicable, Government Auditing Standards and OMB Circular A-133), as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated June 10, 2013 . Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting pol icies used by the Town are described in Note 1 to the financial statements. As described in the Note, the Town adopted Government Accounting Standards Board (GASB) Statement No . 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position . Althoug h the Town does not ha ve any deferred outflows of resources or deferred inflows of resources in the current ye ar, the Statement standardized the presentation of the former Statement of Net Assets to the Statement of Net Position. We noted no transactions entered into by the governmental unit during the yea r for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in th e financial statements in the proper period . Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are part icularly sensitive because of their signifi cance to the financial statem ents and be cause of the possibility that future events affecting them may differ significantly from those expected . The most sensitive estimates affecting the Town of Truckee 's financial statements were depreciation and the allowance for un collectible accounts . Management's estimate of depreciation is based on the Town 's capitalization poli cy. Management's estimate of the allowance for uncollectible accounts is based on an analysis of individual accounts by specific identification and historical loss levels. We evaluated the key factors and assumptions used to develop the estimates in determining that they are reasonable in relation to the financia l statements taken as a whole. The financia l statement disclosures are neutral , consistent, and clear . The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing th e Audit We encoun tered no sig nifican t difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumu late all known and likely misstatements identified during the aud it, oth er than those that are clearly trivial, and communicate them to th e appropriate level of management. Management has corrected all such misstatements. In additi on , none of the misstatements detected as a result of audit procedures and corrected by management were material, either in dividually or in the aggregate , to each opinion unit's financial statements taken as a whole . Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting , reporting , or auditing matter, whether or not re solved to our satisfacti on , that cou ld be significant to the finan cial statements or the auditor's report. We are ple ased to report that no such disagreements arose during the course of our audit. SACRAI~ENTO O FF ICE • 2515 V ENTURE O,;,Ks WAY, Sum 135 • SACRA/lENTO, CA 95833 • o. 916.929.0540 • F. 916.929.0541 WWW .MUNCPAS.COM Management Representations We have requested certain representations from management that are included in the management representation letter dated November 27, 2013. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. This information is intended solely for the use of the Town Council and management of the Town of Truckee and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, Vl)uu iJr1da; ~~ Mann, Urrutia, Nelson CPAs & Associates LLP MA NN • URR UTIA • NELS ON CPAs & ASSOC IAT E S , L LP GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAU A I, HAWAII November 27, 2013 To the Town Council of the Town of Truckee Truckee, California MANAGEMENT LETTER In planning and performing our audit of the financial statements of the Town of Truckee as of and for the year ended June 30, 2013, in accordance with auditing standards generally accepted in the United States of America, we considered the Town of Truckee's internal control over financial reporting (internal control} as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements , but not for the pu rpose of expressing an opinion on the effectiveness of the Town's internal control. According ly , we do not express an opinion on the effectiveness of the Town's internal control. However, during our audit we became aware of matters that are opportunities for streng.thening intern al controls and operating efficiency. The memorandum that accompanies this letter sum marizes our comments and s uggestions regarding those matters. This letter does not affect our report dated November 2 7 , 2013, on the financial statements of the Town of Truckee. We will review the status of these comments during our next audit engagement. We have already d iscussed many of these comments and suggestions with various Town personnel , and we will be pleased to d iscuss them in further detail at your convenience, to perform any additional study of these matters, o r to assist you in implementing the recommendations . Sincerely, V/)cuutJ /YJJcv U¥{}~ Mann, Urrutia, Nelson CPAs and Associates , LLP SACRAI\ENTO OF FICE . 2515 VENTURE OAKS W AY, SUITE 13 5. SACR iv'.IENTO, CA 95833 .0.9 16.929.0540 . F. 916 .929.0541 WWW.MUNCPAS.COM TOWN OF TRUCKEE MANAGEMENT LETTER COMMENTS AND RECOMMENDATIONS FOR THE YEAR ENDED JUNE 30, 2013 Inventory During the current year, the Town elected to record inventory for the first time as balances are material to the financial statements compared to prior years. As this is the first year of implementation, we have the following recommendations to improve controls over the inventory process: Inventory Count The Town performed an inventory count at year-end to determine the amount of inventory on-hand. In order to gain greater accuracy and efficiency in the taking of physical inventory, we recommend the following:  Prepare written inventory count instructions which may include the items noted below.  Use of a count sheet listing all inventories on-hand that includes proper identification and description of stock  Arrange inventory for easier counting and segregate items that are not to be included in the count (unusable or obsolete items)  Perform inventory counts on a periodic basis, quarterly or semi-annually Inventory Valuation As this was the first year of implementation, we noted that inventory costs were estimated based on the results of the inventory count. Our recommendations for proper inventory valuation are as follows:  Inventory should be recorded based on cost noted on the invoice (lower of cost or market)  Each inventory item should be listed with a unit price and multiplied by the results of the count to determine the total cost of inventory on-hand TOWN OF TRUCKEE STATUS OF PRIOR YEAR COMMENTS AND RECOMMENDATIONS There were no prior year management comments and recommendations. TOWN OF TRUCKEE APPROPRIATIONS LIMIT CALCULATION AS OF JUNE 30, 2013 MANN, URRUTIA, NELSON, CPAS & ASSOCIATES, LLP 2515 VENTURE OAKS WAY, SUITE 135 SACRAMENTO, CA 95833 MANN • URRUTIA • NELSON CPAs & ASSOCIATES, LLP G LE NDALE • ROSEV IL LE • SACRAMEN TO • SO UTH LAKE TA HOE • K AU A I, HAV/A I I INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES To the Town Council of the To wn of Truckee Truckee, California We have performed the procedures enumerated below to the accompanying Appropriations Limit Calculation of the Town of Truckee, CA. (the Town) for the year ended June 30, 2013 . These procedures , which were agreed to by the Town and the League of California Cities (as presented in the publication entitled Agreed-upon Procedures Applied to Appropriations Lim itation Prescribed by Article XIII-B of the California Constitution), and were performed solely to assist the Town in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. Town of Truckee 's management is responsible for the Appropriations Limit Calculation. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Publ ic Accountants. The sufficiency of these procedures is solely the respons ibility of those parties specified in the report. Cons eq uently, we make no representation regarding the sufficiency of the procedures described below, either for the purpose for which thi s report has been requested or for any other purpose. Our procedures and findings are as follows: 1 . We obtai ned the completed internal calcu lations and compared the lim it and annual adjustment factors included in those calculations to the limit and annual adjustment factors that were adopted by a resolution of the Town Council. We compared the population and inflation options included in the aforementioned calculations to those that were selected by a recorded vote of the Town Council. Findi ng: No exceptions were noted as a result of our procedures. 2. For the Appropriations Limit Calculation , we added June 30, 2012's appropriations limit to the ann ual permitted adjustments and ag reed th e resulting amount to the June 30, 2013 appropriations limit. Finding: No exceptions were noted as a result of our procedures . 3. We compared current year information presented in th e appropriations limit calculatio n to supporting worksheets. Finding: No exceptions were noted as a resu lt of our procedures . 4 . We compared the June 30, 2012 appropriations limit presented in the appropriations limit calculation to the prior year appropriations limit adopted by the Town Council during the prior year. Finding: No exceptions were noted as a result of our procedu res. S A-C RAMENT O OFFICE • 25 15 VENTURE OAKS W AY, SuiTE 135 • SAC RAMEN TO , CA 95833 • o . 916 .929.0540 • F. 916.929.0541 WWW .MUNCPAS.COM We were not engaged to, and did not, conduct an audit, the objective of which would be the expression of an opinion, on the specified elements, accounts, or items. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been perfonmed with respect to the determination of the appropriations limit for the base year, as defined by Article XI liB of the California Constitution. This report is intended solely for the information and use of the specified users listed above and is not intended to be and should not be used by anyone other than those specified parties. However, this report is a matter of public record and its distribution is not limited. ~~ c};yu?f~ V9Lff, November27, 2013 TOWN OF TRUCKEE APPROPRIATIONS LIMIT CALCULATION JUNE 30, 2013 Amount Source A. Prior year's appropriations limit (at June 30, 2012)$14,556,796 B. Adjustment factors for the current fiscal year: 1. Population change0.9936* State Finance 2. Inflation (per capita personal income change)1.0377 * State Finance Total adjustment1.0311 * [(B1xB2)-1.0] C. Annual adjustment452,115AxB D. Other Adjustments Lost responsibility (-)- Transfer to fees (-)- Assumed responsibility (+)- - E. Total adjustments452,115 C+D F. Current year's appropriations limit (at June 30, 2013)$15,008,911 A+E * Rounded to the nearest ten thousandth