CITY OF SANTA MONICA, CALIFORNIA

City of Santa Monica, California Comprehensive Annual Financial Report Year ended June 30, 2003

Prepared by the Department of Finance Steve Stark, Director of Finance/City Controller Candace Tysdal, Financial Operations Manager Scott Lowe, Financial Reporting Supervisor Randy Chow, Senior Accountant Bill Jias, Senior Accountant Eva U’Ren, Senior Accountant Denise Waterbury, Senior Accountant Mary Cole, Accountant Marvin Halsey, Accountant

CITY OF SANTA MONICA, CALIFORNIA Comprehensive Annual Financial Report Year Ended June 30, 2003 Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal........................................................................................................................ Officials of the City of Santa Monica ............................................................................................. Organization Chart – City of Santa Monica .................................................................................... GFOA Certificate of Achievement for Excellence in Financial Reporting.....................................

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FINANCIAL SECTION Independent Auditors' Report.......................................................................................................... Management’s Discussion and Analysis (Required Supplementary Information).......................... Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets ............................................................................................................. Statement of Activities............................................................................................................... Fund Financial Statements: Balance Sheet – Governmental Funds ....................................................................................... Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficits) – Governmental Funds ............................................................................................................... Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficits) of Governmental Funds to the Statement of Activities ........................................... Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) – General Fund ........................................................................................ Statement of Revenues, Expenditures, and Changes in Fund Balance (Deficit) – Budget and Actual (Non-GAAP Basis) – Disaster Relief Fund ................................................................. Statement of Net Assets – Proprietary Funds............................................................................. Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds ....... Statement of Cash Flows – Proprietary Funds ........................................................................... Statement of Fiduciary Assets and Liabilities – Fiduciary Funds.............................................. Notes to Basic Financial Statements: Note 1 – Summary of Significant Accounting Policies ........................................................... Note 2 – Budgetary and Legal Compliance ............................................................................. Note 3 – Reconciliation of Fund Financial Statements to Government-Wide Financial Statements.................................................................................................................. Note 4 – Prior Period Adjustments .......................................................................................... Note 5 – Cash and Investments ................................................................................................ Note 6 – Trustee-Held Cash and Investments .......................................................................... Note 7 – Notes Receivable....................................................................................................... Note 8 – Capital Assets ............................................................................................................ Note 9 – Deferred Revenue...................................................................................................... Note 10 – Long-Term Liabilities ............................................................................................... Note 11 – Fund Deficits ............................................................................................................. Note 12 – Interfund Transactions............................................................................................... Note 13 – Restricted Net Assets................................................................................................. Note 14 – Reserved and Designated Fund Balances.................................................................. Note 15 – Litigation and Contingencies..................................................................................... Note 16 – Self-Insurance............................................................................................................ Note 17 – Employee Benefit Programs......................................................................................

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19 20 23 24 25 26 28 30 34 36 40 41 49 50 54 54 57 59 62 67 68 72 72 74 75 81 82 83

CITY OF SANTA MONICA, CALIFORNIA Comprehensive Annual Financial Report Year ended June 30, 2003 Table of Contents, Continued Page Required Supplementary Information – Pension Funding Information .......................................... Supplementary Information: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet – Nonmajor Governmental Funds By Fund Type ........................... Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds By Fund Type ....................................................................................... Combining Balance Sheet – Nonmajor Governmental Funds – Special Revenue Funds .......... Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) – Nonmajor Governmental Funds – Special Revenue Funds ..................................................... Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) – Budget and Actual (Non-GAAP Basis) – Nonmajor Governmental Funds – Special Revenue Funds: Beach Recreation .................................................................................................................. Housing Authority ................................................................................................................ Tenant Ownership Rights Charter Amendment (TORCA)................................................... Community Development Block Grant (CDBG).................................................................. Miscellaneous Grants............................................................................................................ Citizens Option for Public Safety ......................................................................................... Rent Control.......................................................................................................................... Air Quality Management District (AQMD).......................................................................... Parks and Recreation ........................................................................................................... Special Revenue Source........................................................................................................ Gas Tax ................................................................................................................................. Combining Balance Sheet – Nonmajor Governmental Funds – Capital Projects ...................... Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) – Nonmajor Governmental Funds – Capital Projects ................................................................. Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) – Major and Nonmajor Governmental Funds – Capital Projects Funds: Downtown Redevelopment Project Low/Mod Housing ....................................................... Earthquake Recovery Project Low/Mod Housing ................................................................ Ocean Park Redevelopment Project Low/Mod Housing ...................................................... Downtown Redevelopment Project ...................................................................................... Earthquake Recovery Redevelopment Project...................................................................... Ocean Park Redevelopment Project...................................................................................... Combining Balance Sheet – Nonmajor Governmental Funds – Debt Service........................... Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds – Debt Service...................................................................... Combining Balance Sheet – Nonmajor Governmental Funds – Permanent Funds.................... Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds – Permanent Funds............................................................... Statement of Net Assets – Nonmajor Enterprise Funds ............................................................. Statement of Revenues, Expenses and Changes in Fund Net Assets – Nonmajor Enterprise Funds..................................................................................................... Statement of Cash Flows – Nonmajor Enterprise Funds ........................................................... Statement of Net Assets – Internal Service Funds ..................................................................... Statement of Revenues, Expenses and Changes in Net Assets – Internal Service Funds .......... Statement of Cash Flows – Internal Service Funds....................................................................

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90 91 92 94

96 97 98 99 100 101 102 103 104 105 106 108 109

110 111 112 113 114 115 116 117 118 119 122 126 128 133 134 135

CITY OF SANTA MONICA, CALIFORNIA Comprehensive Annual Financial Report Year ended June 30, 2003 Table of Contents, Continued Page Combining Statement of Fiduciary Assets and Liabilities – Fiduciary Funds........................... Combining Statement of Changes in Fiduciary Assets and Liabilities – Fiduciary Funds ........

137 138

Capital Assets Used in the Operation of Governmental Funds: Schedules by Source ..................................................................................................................... Schedule by Function and Activity............................................................................................... Schedule of Changes by Function and Activity ...........................................................................

139 140 141

Table

STATISTICAL SECTION General Fund Expenditures by Function – Last Ten Fiscal Years .................................... General Governmental Expenditures by Function – Last Ten Fiscal Years ...................... General Fund Revenues by Source – Last Ten Fiscal Years.............................................. General Governmental Revenues by Source – Last Ten Fiscal Years ............................... Property Tax Levies and Collections – Last Ten Fiscal Years........................................... Assessed Value – Last Ten Fiscal Years ............................................................................ Property Tax Rates – All Direct and Overlapping Governments – Last Ten Fiscal Years Ratio of Net Bonded Debt to Assessed Value and Bonded Debt per Capita – Last Ten Fiscal Years ...................................................................................................... Computation of Legal Debt Margin ................................................................................... Computation of Direct and Overlapping Debt ................................................................... Ratio of Annual Debt Service Expenditures for Bonded Debt to Total General Fund Expenditures – Last Ten Fiscal Years ............................................................................. Redevelopment Agency Downtown Project Lease Revenue Bonds Coverage.................. Redevelopment Agency Ocean Park Project Tax Allocation Refunding Bonds Coverage Wastewater Enterprise Revenue Bonds Coverage ............................................................. 2000 Census Summary....................................................................................................... Principal Property Taxpayers ............................................................................................. Schedule of Insurance ........................................................................................................ Miscellaneous Statistical Data............................................................................................ Property Value, Construction and Bank Deposits – Last Ten Fiscal Years ....................... Principal Employers ........................................................................................................... City of Santa Monica Unemployment Rates – Last Ten Fiscal Years ............................... Number of Budgeted Employees by Fund – Last Five Fiscal Years.................................. Taxable Transactions by Type of Business – Last Five Calendar Years ........................... General Fund Tax Revenues by Source – Last Five Fiscal Years...................................... Redevelopment Agency Earthquake Recovery Project Tax Allocation Bonds Coverage .

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11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

157 158 159 160 161 162 163 165 166 167 168 169 170 171 172

City of Santa Monica, California Year Ended June 30, 2003 INTRODUCTORY SECTION

Finance Department 1717 Fourth Street, Suite 250 Santa Monica, California 90401

October 16, 2003

Honorable Mayor, City Council, and Citizens of Santa Monica Subject: Comprehensive Annual Financial Report of the City of Santa Monica for the Fiscal Year ended June 30, 2003. Dear Honorable Mayor, City Council and Citizens of Santa Monica: It is a pleasure to submit for your information the Comprehensive Annual Financial Report of the City of Santa Monica for the fiscal year ended June 30, 2003. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City’s management. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included. Section 1516 of the City Charter of the City of Santa Monica, California (“City”) requires an annual audit by a qualified accountant of the books of account, financial records, and inventories and reports of all City officers and employees involved in the handling of financial matters. In compliance with this requirement, this Comprehensive Annual Financial Report (“CAFR”) for the year ended June 30, 2003, is hereby submitted. This CAFR consists of three sections: 1) an Introduction Section, which contains the letter of the transmittal and other information to familiarize the reader with the City, 2) a Financial Section explained below, and 3) a Statistical Section to provide additional historical financial information and other information about the City. The Financial Section consists of six parts: 1) independent auditor’s report, 2) management’s discussion and analysis, 3) the basic financial statements, 4) required supplementary information, 5) an optional section that presents combining statements for non-major governmental funds and internal service funds, and 6) an optional section that presents various supplementary financial information about this City’s financial operations that may be useful and informative to CAFR users but which is not necessary for a fair presentation in conformity with generally accepted accounting principles (“GAAP”). This report presents management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh the benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As the City’s Director of Finance, I assert that, to the best of my knowledge and belief, this financial report is complete and reliable in all material respects. tel: 310 458-8281 • fax: 310 393-6142

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Conrad and Associates, LLP, a public accounting firm fully licensed and qualified to perform audits of the State and local governments within the State of California, has audited the City’s basic financial statements. The goal of the independent audit was to provide reasonable assurance that the basic financial statements of the City for the fiscal year ended June 30, 2003, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City’s basic financial statements for the fiscal year ended June 30, 2003, are fairly presented in conformity with accounting principles generally accepted in the United States. The independent auditors’ report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City of Santa Monica was part of a federally mandated Single Audit designed to meet the special needs of Federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of Federal awards. These reports are available in the City’s separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (“MD&A”). This letter of transmittal is designed to compliment MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors in the financial section of the CAFR. Profile of the City of Santa Monica The City of Santa Monica is situated on the western side of Los Angeles County bordered by the City of Los Angeles on three sides and by the Pacific Ocean on the west. Santa Monica encompasses an area slightly greater than eight square miles and has an estimated population of 89,333 as of January 1, 2002, which makes it the 20th largest of 89 cities in Los Angeles County. The name "Santa Monica" is derived from Franciscan Father Junipero Serra of the Portola Expedition of May 4, 1770, the feast day of St. Monica. It is said that the group had camped near a spring in the general area of the current City that reminded the padre of the tears that Saint Monica shed over her son, Saint Augustine. The City of Santa Monica was incorporated November 30, 1886 and subsequently adopted a City Charter in 1945. In 1947, a Council-Manager form of government was established following a vote of the City's residents and approval by the California legislature. The City provides a wide range of traditional municipal and public enterprise services as authorized by its charter.

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SERVICES PROVIDED BY THE CITY OF SANTA MONICA Traditional Municipal Services Police and fire protection Highways and streets Library Culture and recreation Parks Planning and zoning Housing and community development General administrative support

Public Enterprise Services Water and wastewater (sewage) Storm water management Solid waste (refuse collection, street sweeping and recycling) Pier Civic auditorium Airport Cemetery Big Blue Bus Parking structures and lots Cable communications

The City Council consists of seven members elected by the community at large. Council terms are for four years. Elections are held every two years at which time either three or four Council members are elected. The Council selects from its members the Mayor, and appoints a City Manager to administer the affairs of the City, as well as a City Attorney and a City Clerk. A listing of the names of officials of the City of Santa Monica and a City organization chart are included in the Introductory Section of this CAFR. The official responsible for City financial administration is the Director of Finance/City Controller. The Director of Finance/City Controller is appointed by the City Manager and is responsible for establishing and maintaining the general accounting system for the City, and auditing and approving for payment all demands or charges upon the City. The annual budget preparation process begins in November when staff prepares five-year forecasts of the General and other funds’ revenues and expenditures/expenses and presents this information to the City Manager. In January, the City Council holds a public hearing to receive input on budget priorities for the following fiscal year. From February through May, City staff prepares the proposed budget, and provides it to the City Council and the public during May. Early in June, the City Council holds study sessions with staff on the proposed budget. The budget includes proposed expenditures and expenses, the means of financing them, departmental objectives and performance measures. Before the end of June, the Council holds a public hearing and adopts the budget for the following fiscal year beginning on July 1. In accordance with the City Charter, formal budgetary adoption is employed as a management control device during the year for the general and special revenue fund budgets. In addition, yearly operating budgets are adopted for the City’s proprietary, capital projects and internal service funds to facilitate management evaluation. Additional information on the budget can be found in Note 2 in the notes to the basic financial statements. Economic Condition of the City and Financial Condition of the General Fund A. Economic Condition The City of Santa Monica has a diverse and strong economy. The City’s business community is comprised of a diverse collection of businesses ranging from traditional retailers to companies specializing in film post-production and various internet firms. Tourism, health industries, and retail augment the large business service sector. Mainstay firms such as Saint John’s and UCLA-Santa Monica Hospitals, Sanford Papermate along with hotels and new car dealerships occupy a more traditional niche as large institutional property owners, sales tax producers, and employers. Major entertainment and multimedia-software industry firms like Sony Music, Apple, Symantec-Peter Norton, and MTV are vii

among over 200 hi-tech, multimedia, and related entertainment firms of all sizes. These companies relocate to Santa Monica and West Los Angeles because they appreciate the quality of life here. In addition, the cluster of hi-tech and entertainment firms provide a critical mass of support businesses to other similar businesses in the area. While the City’s economy has been adversely impacted by the recent national recession and the events of September 11, 2001, long-term trends are positive. Details concerning the City’s economy for a ten-year period are set forth in Management’s Discussion and Analysis which is in the Financial Section of this CAFR. B. Condition of the General Fund Since September 11, 2001, the City of Santa Monica has experienced declining revenues at a time when the costs of providing services are significantly increasing. Not only are the ongoing costs of providing services to the community increasing, but also costs associated with employee benefits are skyrocketing. For example, workers’ compensation, health insurance and retirement costs have all risen during this same time period. The City’s management began immediately addressing the budget challenges facing Santa Monica. A budget balancing approach utilizing almost entirely ongoing measures was implemented for FY 2003-04. Even with these balancing measures, it appears that Santa Monica will have several difficult years to recover from this economic downturn. In spite of these budgetary constraints, the City continues to provide extraordinary financial flexibility. Santa Monica continues to maintain adequate reserves for continuing capital projects as well as equipment replacement reserves and a 10% undesignated fund balance for unanticipated events. We believe that projected budget gaps are manageable through FY 2005-06 when the budget again stabilizes. Through continuing conservative financial management practices, Santa Monica looks to the future with great optimism. C. Debt Administration As of June 30, 2003, the City's general obligation bond rating was Aaa (Moody’s), AAA (Fitch) and AAA (Standard and Poor’s). The City’s bonded debt applicable to its debt limit consisted of: $28.4 million of Main Library Improvements Project General Obligation Bonds; $30.6 in Public Safety Lease Revenue Bonds; $88.4 million in Downtown Redevelopment Project Lease Revenue Bonds, Earthquake Recovery Redevelopment Project Tax Allocation Bonds and Ocean Park Redevelopment Projects Tax Allocation Refunding Bonds, and $10.4 million in Parking Authority Lease Revenue Bonds. The City is $1.37 billion below its debt limit. The calculation of the City's debt limit is detailed in Table 9 of the Statistical Section of this CAFR. The City has other long-term payment obligations, which are not bonded debt (e.g., lease-purchase agreements and Certificates of Participation obligations). These are detailed in Note 10 of the basic financial statements. D. Cash Management In order to maximize interest earnings, the City commingles the cash of all funds except permanent funds, and those funds held in trust for the City by various financial institutions in accordance with applicable trust agreements. This cash is invested in accordance with the City’s investment policy, which is annually reviewed and approved by the City Council. Interest revenue derived from commingled cash and investments is allocated to the participating funds on a quarterly basis based on the cash balance of each fund. E. Risk Management The City utilizes internal service funds for its self-insurance programs. Four separate funds are viii

maintained, providing for different types of risks. These are as follows: •

Comprehensive – provides for general liability, property and performance bond coverage required by the City.

•

Bus – provides liability coverage for the bus lines operated by the City's Big Blue Bus Department and bus physical damage coverage.

•

Automobile – provides for liability, collision and comprehensive coverage for City vehicles.

•

Workers’ Compensation – provides statutory coverage for all City employees involved in on-the-job injuries/illnesses.

Additional information about the City’s Risk Management practices can be found in Note 16 of the notes to the basic financial statements. F. Pension and Post Employment Benefits The City provides its full-time and part-time employees who have worked over 1,000 hours during a fiscal year, and their beneficiaries, retirement and disability benefits through three defined benefit pension plans, one for its fire safety employees, one for its police safety employees and one for its miscellaneous employees. These plans are part of the California Public Employees’ Retirement System (“CalPERS”). The City makes contributions to the plans based on amounts determined by CalPERS actuaries. The City also contributes the employees’ required contributions on their behalf and for their account. Part-time non-benefited hourly employees participate in a separate defined contribution plan. In addition to providing pension benefits through CalPERS, the City, in accordance with various Memorandums of Understanding, also provides medical coverage to certain retired employees. The retirees may participate in one of the City’s health plans for retirees. The City pays the entire amount on a pay-as-you-go basis through monthly premiums to the various health insurance providers. Additional information regarding the City's pension and post employment benefits can be found in Note 17 to the basic financial statements.

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Awards and Acknowledgments I am pleased to report that for the nineteenth straight year (fiscal years ended 1984-2002), the Government Finance Officers Association of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended June 30, 2002. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of State and local government financial reports. In keeping with past practice, a copy of this CAFR will be placed on file in the City libraries and sent to City management personnel, bond rating agencies, and other agencies (such as financial institutions and governments), which have expressed an interest in the financial affairs of the City. It is also available at www.santa-monica.org/finance. To all City staff, especially those in the Finance Department, who have assisted and contributed to the preparation of this Comprehensive Annual Financial Report, I want to take this opportunity to express my appreciation. Respectfully submitted,

Stephen C. Stark Director of Finance/City Controller

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OFFICIALS OF THE CITY OF SANTA MONICA

City Council Richard Bloom, Mayor Kevin McKeown, Mayor Pro Tempore Michael Feinstein Ken Genser Robert Holbrook Herb Katz Pam O’Connor

Administration and Department Heads City Manager Assistant City Manager City Attorney Director of Records and Election Services Director of Finance Director of Human Resources Chief of Police Fire Chief Director of Planning and Community Development Building Officer City Librarian Director of Community and Cultural Services Director of Transit Services Director of Resource Management Director of Environmental and Public Works Mgmt.

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Susan E. McCarthy Gordon Anderson Marsha Jones Moutrie Maria M. Stewart Stephen C. Stark Karen Bancroft James T. Butts, Jr. Ettore A. Berardinelli Suzanne Frick Tim McCormick Winona Allard Barbara Stinchfield Stephanie Negriff Jeff Mathieu Craig Perkins

ORGANIZATION CHART - CITY OF SANTA MONICA

CITY COUNCIL

Records & Election Services Maria M. Stewart

City Manager Susan E. McCarthy

City Attorney Marsha Jones Moutrie

Assistant City Manager Gordon R. Anderson

Finance Stephen C. Stark

Community & Cultural Services Barbara Stinchfield

Human Resources Karen Bancroft

Library Winona Allard

Police James T. Butts, Jr.

Big Blue Bus Stephanie Negriff

Fire Ettore A. Berardinelli

Resource Management Jeff Mathieu

Planning & Community Development Suzanne Frick

Environmental & Public Works Management Craig Perkins

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City of Santa Monica, California Year Ended June 30, 2003 FINANCIAL SECTION

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)

As management of the City of Santa Monica, California (the “City”), we offer readers of the City’s Comprehensive Annual Financial Report (“CAFR”) this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2003. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in the City’s basic financial statements, which immediately follow this section, and the CAFR transmittal letter in the preceding Introductory Section. FINANCIAL HIGHLIGHTS •

The total assets of the City for its governmental and business-type activities exceeded its liabilities as of June 30, 2003 (“current fiscal year”) by $822.0 million. Of this amount, $410.4 million are capital assets, net of related debt, $157.7 million is for restricted uses as specified by entities outside of the City government, and $253.9 million is for unrestricted uses in accordance with finance-related legal requirements reflected in the City’s fund structure.

•

The City’s total net assets increased $59.0 million during the current fiscal year.

•

At the end of the current fiscal year, the City’s governmental funds reported total ending fund balances of $306.1 million, an increase of $15.3 million compared with the prior fiscal year. Of this amount, $266.1 million was reserved for uses set by various legal requirements, and $40.0 million was unreserved. Of the unreserved amount, $30.6 million was designated for various specific uses by the City Council, and $9.4 million was unreserved and undesignated.

•

At the end of the current fiscal year, the General Fund fund balance was $182.4 million, an increase of $7.3 million from the previous fiscal year (as restated), which consisted of an increase of $16.1 million of reserved fund balance and a decrease of $8.8 million of unreserved fund balance. Of the $44.3 million unreserved fund balance, $27.6 is designated and $16.7 million is undesignated.

•

The City’s investment in capital assets increased by $63.7 million or 13%. Please see further detail of capital assets on page 13.

•

The City’s long-term debt increased by $21.3 million or 12% during the current fiscal year. Please see further detail of long-term debt on page 15.

OVERVIEW OF THE BASIC FINANCIAL STATEMENTS Management’s Discussion and Analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements include three components: government-wide financial statements; fund financial statements; and notes to the basic financial statements. The major features of these financial statements, including the portion of the city government they cover and the types of information they contain, are summarized on the following page. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements.

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

Governmental Funds

Proprietary Funds

Fiduciary Funds

Scope

Entire City government (except f iduciary f unds)

The activies of the City that are not proprietary or f iduciary, such as police, f ire, and library

A ctivities the City operates similar to private businesses such as the w ater and sew er system and parking f acilities

Instances in w hich the City is the trustee or agent f or someone else's resources

Required financial statements

- Statement of net assets - Statement of activities

- Balance sheet - Statement of revenues, expenditures, and changes in f und balances

- Statement of net assets - Statement of revenues, expenses, and changes in net assets - Statement of cash f low s

- Statement of f iduciary net assets - Statement of changes in f iduciary net assets

A ccounting basis and measurement f ocus

A ccrual accounting and economic resources f ocus

Modified accrual accounting and current f inancial resources focus

A ccrual accounting and economic resources f ocus

Accrual accounting and economic resources f ocus

Type of asset/liability information

A ll assets and liabilities, both f inancial and capital, short term and long-term

Only assets expected to be used up and liabilities that come due during the year or soon thereaf ter; no capital assets or long-term debt included

A ll assets and liabilities, both f inancial and capital, and short-term and long-term

All assets and liabilities, both short-term and long-term; the City's f iduciary f unds do not currently contain capital assets, although they can

Type of inflow /outf low information

A ll revenues and expenses during year, regardless of w hen cash is received or paid

Revenues f or w hich cash is received during or soon w ithin 90 days of year end; expenditures w hen goods or services have been received and payment is due

A ll revenues and expenses during year, regardless of w hen cash is received or paid

All revenues and expenses during year, regardless or w hen cash is received or paid

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to statements of a private-sector business. The statement of net assets presents information on all the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods. The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include public safety (police and fire), streets, library, cultural and recreation, parks, planning and zoning, housing and community development, and general administrative support. The business-type activities of the City include water, wastewater, storm water, solid waste management, pier, civic auditorium, airport, special aviation services, cemetery, bus lines, parking structures and lots, and cable communications. Component units are included in the basic financial statements and consist of legally separate entities for which the City is financially accountable and that have either the same governing board as the City or a

governing board appointed by the City of Santa Monica City Council. The blended component units include the Redevelopment Agency of the City of Santa Monica, the Parking Authority of the City of Santa Monica, and the Housing Authority of the City of Santa Monica. Three related organizations, the Pier Restoration Corporation, the Bayside District Corporation, and the Santa Monica Arts Foundation, are not included in the basic financial statements while the City is financially accountable and each have a governing board appointed by the City of Santa Monica City Council, yet the economic resources held by these related organizations are not significant to the City. The fund financial statements provide detailed information about the City’s most significant funds—not the City as a whole. The government-wide financial statements can be found on pages 19 and 20 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the governmental-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statements of revenues, expenditures, and changes in fund balance provide reconciliation to the government-wide financial statements in order to facilitate this comparison between governmental funds and governmental activities. The City maintains 24 individual governmental funds for financial reporting purposes. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General, Disaster Relief, Downtown Redevelopment Project, and Earthquake Recovery Redevelopment Project funds, which are considered to be major funds. Data for the other 20 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the nonmajor funds supplementary section of this report. The City adopts an annual appropriated budget for its General Fund, 12 of 13 special revenue funds, and 6 capital project funds. A budgetary comparison statement has been provided for the General Fund and Disaster Relief Special Revenue Fund in the basic financial statements and for the nonmajor special revenue and capital project funds in the supplementary information. The governmental funds financial statements can be found on pages 22 through 28 of this report. Proprietary funds. Proprietary funds provide the same type of information as the government-wide financial statements, but in more detail. The proprietary fund financial statements provide separate information for the water, wastewater, airport and bus operations, which are considered to be major funds of the City. The City maintains two different types of proprietary funds. Enterprise funds are used to

report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its vehicle operations, risk management and information technology and communications operations. The vehicle operations and bus line insurance services primarily benefit business-type activities and are included within business-type activities in the government-wide financial statements. All other risk management functions, information technology and communication services primarily benefit governmental funds and are included within governmental activities in the government-wide financial statements. Individual fund data for the internal service funds is provided in the supplementary information section of this report. The proprietary funds financial statements can be found at pages 29 through 39 of this report. Fiduciary funds. Fiduciary funds, which consist solely of trust and agency funds, are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not included in the government-wide financial statements because the resources are not available to support the City’s operations. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary funds financial statements can be found on page 40 of this report. Notes to the basic financial statements. The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on page 41 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $822.0 million at the close of the current fiscal year. As shown below, the largest portion of the City’s net assets, $410.4 million, reflects its investment in capital assets less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate liabilities. A summary of the government-wide statement of net assets follows: CITY OF SANTA MONICA Net Assets at June 30, 2003 (in millions) Governmental activities Current and other assets Capital assets

$

Total assets Current and other liabilities Long-term liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets

$

Business-type activities

Total

2003 391.5 300.6

2002 362.7 254.4

2003 174.3 251.6

2002 173.5 234.1

2003 565.8 552.2

2002 536.2 488.5

692.1

617.1

425.9

407.6

1,118.0

1,024.7

42.8 185.2

46.1 155.0

27.9 40.1

26.8 37.7

70.7 225.3

72.9 192.7

228.0

201.1

68.0

64.5

296.0

265.6

193.3 124.0 146.8

171.8 125.2 119.0

217.1 33.7 107.1

198.8 33.0 111.3

410.4 157.7 253.9

370.6 158.2 230.3

464.1

416.0

357.9

343.1

822.0

759.1

A summary of the government-wide statement follows: CITY OF SANTA MONICA Changes in Net Assets Year Ended June 30, 2003 (in millions) Governmental

Business-type

Total

activities

activities

government

2003 Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales tax Property tax Other taxes Investment earnings Other general revenues

$

Total revenues Expenses General government Public safety General services Cultural and recreation Library Housing and community development Other Interest on long term debt Water Solid waste management Pier Wastewater Civic auditorium Airport Storm water management Cemetery Big Blue Bus Cable communications Special aviation Parking authority

2002

2003

2002

2003

2002

45.9 28.7 17.4

27.7 13.9 14.5

62.7 22.5 26.5

58.1 20.8 22.6

108.6 51.2 43.9

85.8 34.7 37.1

25.2 50.6 74.5 5.7 11.4

24.6 47.4 93.7 26.1 9.6

2.2 2.6

7.7 3.7

25.2 50.6 74.5 7.9 14.0

24.6 47.4 93.7 33.8 13.3

259.4

257.5

116.5

112.9

375.9

370.4

22.3 63.5 37.8 33.9 6.3

21.3 59.2 36.0 31.6 6.4

-

-

22.3 63.5 37.8 33.9 6.3

21.3 59.2 36.0 31.6 6.4

40.5 0.4 7.7 -

45.4 0.6 6.2 -

13.6 15.0 6.1 15.7 2.8 3.8 0.4 1.1 44.5 0.9 0.1 0.5

13.8 14.7 6.1 13.1 2.9 3.9 0.4 1.1 40.0 0.9 0.1 0.5

40.5 0.4 7.7 13.6 15.0 6.1 15.7 2.8 3.8 0.4 1.1 44.5 0.9 0.1 0.5

45.4 0.6 6.2 13.8 14.7 6.1 13.1 2.9 3.9 0.4 1.1 40.0 0.9 0.1 0.5

212.4

206.7

104.5

97.5

316.9

304.2

Excess (deficiency) of revenues over expenses before transfers Transfers

47.0 (2.8)

50.8 (27.5)

12.0 2.8

15.4 27.5

59.0 -

66.2 -

Increase in net assets Beginning net assets as restated

44.2 419.9

23.3 392.7

14.8 343.1

42.9 300.2

59.0 763.0

66.2 692.9

464.1

416.0

357.9

343.1

822.0

759.1

Total expenses

Ending net assets

$

Governmental Activities. Governmental activities increased the City’s net assets by $44.2 million for the current fiscal year, thereby accounting for 75% of the growth in the net assets of the City. This increase was primarily due to an increase of $8.5 million in property tax increment revenues due to increased assessed property tax valuation and developments, a decrease in expenses of $10.9 million due to the time lag required to complete capital improvement projects and the issuance of $25.1 million Main Library Improvement bonds. Beginning net assets were increased due to a $3.9 million prior period sales taxes revenue adjustment. Business-type Activities. Business-type activities increased the City’s net assets by $14.8 million for the current fiscal year, thereby accounting for 25% of the growth in the net assets of the City. Key elements of this increase were increases of $4.0 million for charges for services, transfers in of $2.5 million from the General Fund to the Pier Fund for current year’s operations and an increase in operating grants and capital contributions received by the Big Blue Bus of $6.5 million. FINANCIAL ANALYSIS OF THE CITY'S MAJOR FUNDS As noted earlier, the City uses fund accounting to demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financial requirements. In particular unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City’s governmental funds reported total fund balances of $306.1 million, $15.3 million or 5% increase in comparison with the prior year (as restated). Approximately $40.9 million or 13% total fund balances constitutes unreserved fund balance, which is available to meet the City’s current and future needs. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has been committed to a variety of restricted purposes. General Fund The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the unreserved (designated and undesignated) fund balance of the General Fund was $44.3 million, while total fund balance was $182.4 million, which was $7.3 million or 4% more than the prior year’s General Fund total fund balance (as restated). As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 24% of total General Fund expenditures, while total fund balance represents 98% of total General Fund expenditures. The City’s management also designates unreserved fund balance to a particular function, project or activity. Fund balance may also be designated for purposes beyond the current year. However, designated fund balance is available for appropriation at any time. Of the $44.3 million General Fund unreserved fund balance, 62% is designated. The most significant designations are $5.0 million earmarked for future lease payments to the Redevelopment Agency for parking structures at Santa Monica Place, $1.8 million earmarked for civic area development, and $6.1 million earmarked for compensated absences. Unreserved and undesignated fund balance at year-end was $16.7 million. This amount constitutes funds available for a catastrophic emergency or other major economic set back to the City.

Disaster Relief Fund The Disaster Relief Fund fund balance decreased by $7.2 million from the prior year. This decrease was primarily due to an increase in deferred revenue related to FEMA receivables not available to finance expenditures of the current fiscal year. Downtown Redevelopment Project Fund The Downtown Redevelopment Project Fund fund balance increased by $1.0 million from the prior year. This increase was primarily due to decreased capital improvement project expenditures in the current year. Earthquake Recovery Redevelopment Project Fund The Earthquake Recovery Redevelopment Project Fund fund balance increased by $6.5 million from the prior year due primarily to increased property tax increment revenues as a result of increased assessed property valuations. All other governmental funds’ fund balances increased $7.7 million or 4% from the previous fiscal year. Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The total net assets of the enterprise funds increased by $14.1 million. This was due primarily to increases in charges for services of $4.0 million, transfers to the Pier Fund from the General Fund of $2.5 million to cover current operating expenses and $6.5 million increase in operating grants and capital contributions received by the Big Blue Bus. Unrestricted net assets of internal service funds at June 30, 2003 amounted to $27.8 million representing an increase of $0.3 million over the previous year. Water Fund The total net assets of the Water Fund decreased by $1.1 million primarily due to transfers to the Wastewater Fund to cover prior and current year’s capital expenditures. Wastewater Fund The total net assets of the Wastewater Fund decreased by $1.0 million primarily due to increases in operating losses specifically personnel services and contractual services. Airport Fund The total net assets of the Airport Fund decreased $0.7 million primarily due to the Airport continuing to operate at a deficit. Big Blue Bus The total net assets of the Big Blue Bus increased $17.5 million primarily due to an increase in the LACMTA and sales tax derived operating and capital grants compared to the previous year.

Budgetary Highlights General Fund: The following is a summary analysis of the General Fund budget and actuals for the current fiscal year:

CITY OF SANTA MONICA Summary Analysis of General Fund Budget, Fiscal Year 2002-03 (in millions)

Budget Amounts (1) Adopted Final

Category Revenue Sales tax Transient occupancy tax

$

(2)

All other taxes All other revenues Total revenues Expenditures General government Public safety General services Cultural and recreation services Library Retirement Housing and community development Other Total expenditures Total excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Bond-related items Total other financing sources (uses) Net change in fund balance

$

Actual (budget basis)

Variance with final budget positive (negative)

25.7 18.4 78.4

25.6 18.4 80.4

25.2 17.1 81.4

(0.4) (1.3) 1.0

45.7 168.2

46.4 170.8

46.9 170.6

0.5 (0.2)

23.7 60.3 22.8 29.1 44.8 6.3 16.3 3.2 206.5

25.7 85.7 62.7 41.0 60.6 7.1 23.5 0.9 307.2

22.0 81.0 28.5 31.7 45.6 7.1 20.1 0.2 236.2

3.7 4.7 34.2 9.3 15.0 — 3.4 0.7 71.0

(38.3)

(136.4)

(65.6)

70.8

10.1 (6.1) — 4.0 (34.3)

11.2 (10.7) — 0.5 (135.9)

9.4 (10.7) 25.1 23.8 (41.8)

(1.8) — 25.1 23.3 94.1

(1) Reconciliation to adopted budget document for FY 2002-03: Total budgeted expenditures – $206.5 (see above) - $10.1 transfer in + $6.1 transfer out = $202.5 - $.3 for duplicating reimbursement, which is considered a revenue for purposes of financial reporting = $202.2 per adopted budget document. (2) Includes business license charges as a tax.

The $2.6 million increase in the revenue budget reflects a $2.0 million increase in property taxes, as a result of the issuance of General Obligation Bonds, Series 2002, for the library improvement project. The remaining $.6 million represents increases in various permits. The negative $.2 between the final revenue budget and actual revenues is the result of fewer receipts of one-time revenues, while a $1.3 loss on investments is offset by $1.3 collected from municipal ordinance violations. The $100.7 million increase in the expenditure budget reflects a $101.9 re-appropriation of unspent continuing capital improvement project budgets from FY 2001-02 to FY 2002-03. The remaining decrease of $1.2 million primarily reflects budget decreases of $.7 million in salaries and $.5 in supplies. The $70.1 million variance between the final year-end expenditure budget and actual expenditures on the budgetary basis (where current year-end encumbrances are considered current year expenditures) reflects under spending during FY 2002-03, $64.4 million of the total continuing multi-year capital improvement project budget and $5.7 million of expenditure savings. The $25.1 million in the “bond-related items” portion of other financing sources (uses) budget reflects planned additional library bond proceeds, which were subsequently issued in August 2003. Changes between the adopted budget plan, the final budget plan and actual use of funds from balance sheet reserves and/or designations primarily reflects changes in the use of funds previously set aside for various capital improvement projects on the General Fund balance sheet. In the City’s General Fund, on a budgetary basis FY 2002-03 revenues and other financing sources of $205.1 million exceeded expenditures and other financing uses of $246.9 million by $41.8 million. The table on the following page summarizes (in millions) the composition of the $41.8 million change in the total General Fund balance, which includes all reserves, designations and the unreserved/undesignated portion of the fund balance. Disaster Relief Fund: Revenues are not budgeted within the Disaster Relief Fund. The $8.9 million represents reimbursements from federal and state related to the January 17, 1994 Northridge earthquake. The $41.2 increase in expenditure budget is the reappropriation of unspent continuing capital improvement project budgets from FY 2000-01 to FY 2002-03.

Amount $167.5 3.9 3.7 175.1 (13.5) (1.7) 7.6 25.1 (.4) (.8) .6 (2.5) (.9) (1.7) (1.3) (3.6) (1.9) 2.3 .3 (.3) 7.3 182.4

Reason June 30, 2002 total General Fund fund balance Sales taxes received in August 2001 related to prior fiscal year Interest earned on promissory notes for payments made prior to July 1, 2002 June 30, 2002 total General Fund fund balance, as restated Expenditure of funds held by trustee for public safety facility project Reduction of funds reserved for encumbrances carried over to FY 2003-04 Increase of funds reserved for continuing capital improvement projects Funds from sale of library general obligation bonds Net expenditure of mall assessment district funds Expenditure of traffic mitigation funds Net increase in compensated absences designation Expenditure of funds designated for public safety facility-equipment Expenditure of funds designated for Santa Monica Place Net decrease in funds designated for Council policy Net decrease in designation of retirement system contribution savings for miscellaneous employees medical trust contributions Net decrease in designation for civic area development Decrease in non-cash designation of unrealized investment income Funds designated for the Santa Monica/Malibu Unified School District Funds designated for public safety facility maintenance Decrease in unreserved/undesignated portion of fund balance to maintain funds for emergencies. Increase in fund balance June 30, 2003 total General Fund fund balance.

Changes in the unreserved/undesignated portion of the General Fund fund balance from FY 1993-94 to FY 2002-03 are shown by the following graph. The graph indicates that during seven of the last ten fiscal years the unreserved/undesignated portion of the General Fund fund balance has increased. Maintenance of a prudent unreserved/undesignated fund balance is necessary to protect against major unanticipated financial impacts on the City such as a natural disaster.

Status of City of Santa Monica's General Fund Unreserved/Undesignated Fund Balance, FY 1993-94 through FY 2002-03

MILLION

PERCENTAGE

$18.0 $16.0

14.0% 12.7%

12.7% 12.4%

$14.9

$14.7

$14.0 $12.0

12.0%

$16.0 $14.6 10.5%

$16.7

10.4%

$17.0 $16.4

$16.7

12.0% 10.0%

$14.3 $13.4

9.3%

9.3%

9.1%

$10.0

8.0% 7.7%

$8.0

6.0%

$6.0

4.0%

$4.0 2.0%

$2.0 $0.0

0.0% 1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00*

2000-01*

2001-02*

2002-03*

Actual FISCAL YEARS * Unreserved/undesignated fund balance as a percentage of expenditures (on budgetary basis) reduced in FY 1999-00, FY 2001-02 by budgetary basis expenditures financed by Public Safety Facility lease revenue bonds issued September 1999 and January 2002.

CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. The City’s investment in capital assets as of June 30, 2003, amounted to $552.2 million (net of accumulated depreciation) and increased from the prior year balance of $63.7 million. This investment, detailed below, in a broad range of capital assets includes land, infrastructure, structures and improvements, equipment, and construction in progress. CITY OF SANTA MONICA Capital Assets (net of depreciation) (in millions) Governmental activities Land Buildings Improvements other than buildings Machinery and equipment Infrastructure Utility systems Construction in progress Capital assets, net

2003 $ 86.8 33.1 47.5 16.2 2.1 114.9 $

300.6

Business-type activities

Total

2002 87.6 29.1 46.9 17.7 0.9 72.2

2003 34.2 13.0 79.6 47.3 50.6 26.9

2002 32.0 15.5 76.7 51.3 47.5 11.1

2003 121.0 46.1 127.1 63.5 2.1 50.6 141.8

2002 119.6 44.6 123.6 69.0 0.9 47.5 83.3

254.4

251.6

234.1

552.2

488.5

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

The Downtown Redevelopment Project Fund purchased six downtown parking structures from the Parking Authority Fund. At the time of the sale, these parking structures with related land had a book value net of accumulated depreciation of $3 million.

•

Additions to the General Fund construction in progress in FY 2002-03 included $17.4 million in expenditures for the public safety facility and $7.4 million for library expansion.

•

Additions to the Big Blue Bus Fund construction in progress in FY 2002-03 included $12.1 million in expenditures for the Campus Expansion design and construction project.

The City had construction commitments of $110 million at June 30, 2003. Some of the City’s major commitments were as follows: •

The General Fund had commitments of $4.7 million for the Civic Center Parking Structure project. These funds are for construction of approximately 900 parking spaces with one-half level below grade and five levels above grade. The structure will be located in the civic center on 4th Street.

•

The General Fund also had commitments of $35.4 million for the Library Expansion and Renovation project and $12.5 million for the development of supplemental parking for the Main Library. This project includes the expansion and renovation of the main library and improvements to each of the branch libraries.

•

The General Fund also had construction commitments of $3.5 million for construction of the public safety facility. The public safety building will house the Police Department headquarters, jail facilities, Fire Department administration offices, emergency operations center, coordinated dispatch center and 100 subterranean parking spaces.

•

The Earthquake Recovery Redevelopment Fund had construction commitments of $4 million for the seismic retrofit of downtown parking structures. This project includes improvements to the foundation, column and other structural components of Parking Structure #7 and #8.

•

The Big Blue Bus Fund had construction commitments of $6.8 million for the Campus Expansion project. The project includes the design and construction of an alternative fueling facility, improvements to the Big Blue Bus operations/administration building, additional space and future expansion of the maintenance facility.

•

The Big Blue Bus Fund also had construction commitments of $7.1 million for their Advanced Fleet Management System project. This project includes the expansion of radio system replacements, which includes vehicle locating and passenger counting.

•

The Wastewater Fund had construction commitments of $6.2 million for Sewer Project #12. This project includes the repair and replacement of earthquake damaged sewer mains in the area bounded by Pico Boulevard, 34th Street, south City limits and 4th Street.

As a result of the implementation of GASB 34, the City is accounting for infrastructure assets on its financial statements. The accompanying government-wide financial statements include those infrastructure assets that were either completed during the current or prior fiscal year or considered construction in progress at current fiscal year-end. However, the accompanying government-wide financial statements do not reflect those infrastructure assets completed prior to July 1, 2001. The

retroactive historical value of the City’s infrastructure assets will be added prior to June 30, 2006, in accordance with GASB 34. Additional information on the City’s capital assets can be found in the notes to the basic financial statements. Long-term Debt. At the end of the current fiscal year, the City’s total long-term debt outstanding is $196.1 million, an increase from the prior year of $21.9 million. This amount was compromised of $79.6 million of revenue bonds which are secured by both governmental and business-type revenue sources, $81.8 million of tax allocation bonds which are secured by future tax revenues, $1.9 million of certificates of participation which are secured by future revenue sources from business-type activities, $28.2 million of general obligation bonds which are backed by the assets of the City and $4.6 million of various loans payable. This is shown below: CITY OF SANTA MONICA Outstanding Debt (in millions) Governmental activities Business-type activities 2003 General obligation bonds (backed by the City) $ Revenue bonds and notes (backed by specific tax and fee revenues) Certificates of participation Other loans Total

$

2002

28.2

3.4

128.1 156.3

2003

2002

Total 2003

2002

-

-

28.2

3.4

129.4 -

33.3 1.9 4.6

34.2 2.3 4.9

161.4 1.9 4.6

163.6 2.3 4.9

132.8

39.8

41.4

196.1

174.2

The City’s total long-term debt increased by $21.9 million or 13% during the current fiscal year. This increase is due to the issuance of $25 million general obligation bonds to build a new main library less ongoing debt service. Bond Ratings. The City’s debt ratings range from A to AAA by Standard & Poor’s, Baa1 to Aaa by Moody’s and BBB+ to AAA by Fitch. Insurance has been purchased to guarantee repayment of certain of the City’s indentures. Additional information on the City’s long-term debt can be found in the notes to the basic financial statements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The City’s economic condition, which declined in FY2000-01 and FY2001-02, began a slow recovery during FY2002-03. This recovery is reflected in the data displayed below:

CHARACTERISTICS OF THE SANTA MONICA ECONOMY FY

FY

FY

FY

FY

FY

FY

FY

FY

FY

93-94

94-95

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

Business gross receipts earned in the City (in billions)

$5.60

$5.70

$5.70

$6.10

$6.40

$6.90

$7.30

$8.50

$8.90

$9.00

Number of licensed businesses

18,937

19,305

19,260

19,058

19,232

19,422

19,817

19,931

19,915

20,054

Economic Factor

T op ten employers as a percent of total jobs in the City 12.40% 12.70% 12.70%19.0%***

17.20% 16.50% 16.20% 15.40% 16.00% 12.10%

Office vacancy rate*

12.00% 8.30% 8.80% 10.20% 10.60% 10.00% 2.30% 13.30% 20.10% 17.20% (CY 93) (CY 94) (CY 95) (CY 96) (CY 97) (CY 98) (CY 99) (CY 00) (CY 01) (CY 02)

Hotel occupancy rate**

73.60% 70.70% 76.80% 82.10% 82.80% 80.90% 82.80% 82.20% 69.50% 74.60% (CY 93) (CY 94) (CY 95) (CY 96) (CY 97) (CY 98) (CY 99) (CY 00) (CY 01) (CY 02)

City unemployment rate

6.40% 6.20% 5.20% 5.40% 4.50% 4.30% 3.80% 3.50% 3.70% 4.40% (CY 93) (CY 94) (CY 95) (CY 96) (CY 97) (CY 98) (CY 99) (CY 00) (CY 01) (CY 02)

T axable sales transactions (in billions)

$1.379 $1.440 $1.578 $1.677 $1.816 $1.896 $2.076 $2.319 $2.240 $2.240 (CY 93) (CY 94) (CY 95) (CY 96) (CY 97) (CY 98) (CY 99) (CY 00) (CY 01) (CY 02)

Assessed valuation (in billions)

$9.50

$9.60

$9.30

$9.40

$9.50

$10.20

$11.30

$12.30

$13.50

$14.60

CY=Calendar Year; FY=Fiscal Year *

**

***

As of fourth quarter of each calendar year. Source: Grubb & Ellis. CY average occupancy rates of inventoried rooms. Source: PKF Consulting. CY 94 was year of January 17, 1994 Northridge Earthquake. Percentage increase reflects recent revision by the State of estimated number of jobs in the City.

The data shows local business rebounding slightly with a 1% increase in gross receipts and a similar increase in the number of business licenses issued. Office vacancy rates improved in calendar year 2002, reducing from 20.1% in calendar year 2001 to 17.2% in calendar year 2002. During calendar year 2003, rates have continued their decline to around 15%. Hotel occupancy rates increased 5.1% in calendar year 2001 to 74.6%. However, it should be noted that room rates decreased by 5.2% to $190.98 from calendar year 2001. While taxable sales for calendar year 2002 remained flat at $2.2 billion, real property assessed valuation for fiscal year 2002-03 increased by 8.2% The net impact of these citywide economic trends was to decrease 2002-03 General Fund on-going tax revenues by about $0.7M from budgeted levels, a variance of less than 1%.

The City’s adopted General Fund budget for FY2003-04 stresses a budget balancing approach utilizing reductions in on-going expenditures and increases in on-going revenues. A total of $7.0M was cut from the General Fund budget in FY2003-04, including 31.4 full-time equivalent (FTE) positions. Fee and fine increases, adopted with the budget included new revenues of $3.8M. The City also presented in the budget document, for the first time, a financial plan for FY2004-05. The plan calls for an additional $3.6M in General Fund cuts and a reduction of 19 FTE positions. During the FY2004-05 budget process, the City will review the proposed financial plan and make any necessary adjustments to maintain a balanced budget with maximum financial flexibility CONTACTING THE CITY'S FINANCE DEPARTMENT This management’s discussion and analysis is designed to provide citizens, taxpayers, customers, and investors and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have questions or need additional financial information, please contact the City of Santa Monica’s Finance Department at www.santa-monica.org/finance or at (310) 458-8281.

City of Santa Monica, California Year Ended June 30, 2003 Basic Financial Statements

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets June 30, 2003

Governmental activities

Business-type activities

Total

$ 252,482,146

116,985,939

369,468,085

9,147,551 1,385,430 1,813,163 38,615,394 8,661,227 1,307,054 932,593 987,095 16,750 — 74,659,428 — 1,428,550

10,486,397 545,983 — — — (1,307,054) 1,556,131 101,637 — 9,195,148 2,320,734 33,703,216 742,722

19,633,948 1,931,413 1,813,163 38,615,394 8,661,227 — 2,488,724 1,088,732 16,750 9,195,148 76,980,162 33,703,216 2,171,272

86,758,590 52,161,601 86,513,086 — 31,757,780 2,323,759 114,889,096 (73,767,358) 300,636,554 692,072,935

34,221,021 24,688,117 151,928,591 55,120,596 102,398,568 — 26,919,738 (143,708,795) 251,567,836 425,898,689

120,979,611 76,849,718 238,441,677 55,120,596 134,156,348 2,323,759 141,808,834 (217,476,153) 552,204,390 1,117,971,624

16,525,343 6,319,196 3,792,986 400,000 10,781,761 460,678 3,911,945 599,052

15,282,489 1,990,953 884,376 — 3,018,713 6,000,481 — 710,196

31,807,832 8,310,149 4,677,362 400,000 13,800,474 6,461,159 3,911,945 1,309,248

5,068,827 1,336,909 6,729,716 16,414,410 4,880,000 150,787,328 228,008,151

1,677,268 543,879 536,553 784,183 1,636,213 34,882,408 67,947,712

6,746,095 1,880,788 7,266,269 17,198,593 6,516,213 185,669,736 295,955,863

193,302,132

217,142,128

410,444,260

7,090,145 116,893,174 146,779,333 $ 464,064,784

— 33,703,216 107,105,633 357,950,977

7,090,145 150,596,390 253,884,966 822,015,761

Assets Cash and investments (note 5) Receivables (net, where applicable, of allowances for uncollectibles): Accounts Interest Property taxes Notes (note 7) Other governments Internal balances Inventory Prepaids Deposits Restricted cash and investments (note 5) Restricted cash with fiscal agent (notes 5 and 6) Due from other governments, restricted Bond issuance costs, net Capital assets (note 8): Land Buildings Improvements other than buildings Utility systems Machinery and equipment Infrastructure Construction in progress Less accumulated depreciation Total capital assets, net Total assets Liabilities Accounts payable Accrued liabilities Accrued interest payable Short-term loan payable Contracts payable (retained percentage) Deferred revenue (note 9) Due to other governments Liabilities payable from restricted assets Non-current liabilities: Compensated absences due within one year (note 10) Compensated absences due in more than one year (note 10) Claims payable due within one year (note 10 and 16) Claims payable due in more than one year (note 10 and 16) Long-term debt due within one year (note 10) Long-term debt due in more than one year (note 10) Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for (note 13): Perpetual care - nonexpendable All other purposes Unrestricted Total net assets

See accompanying notes to basic financial statements.

CITY OF SANTA MONICA, CALIFORNIA Statement of Activities Year ended June 30, 2003

Functions/programs Governmental activities: General government Public safety General services Cultural and recreation services Library Housing and community development Other Interest on long-term debt Total governmental activities Business–type activities: Water Solid waste management Pier Wastewater Civic auditorium Airport Storm water management Cemetery Big Blue Bus Cable communications Special aviation Parking authority Total business–type activities General revenues: Taxes: Business Property Sales Other Motor vehicle in lieu Rental income Other income Investment earnings Transfers Total general revenues and transfers Change in net assets Net assets, beginning, as restated (note 4) Net assets, ending See accompanying notes to basic financial statements.

Charges for services

Program revenues Operating grants and contributions

Capital grants and contributions

Governmental activities

$ 22,203,518 63,496,266 37,843,832 33,896,585 6,331,445 40,512,087 422,786 7,719,369

6,576,292 12,463,506 11,130,386 6,763,867 276,812 8,647,389 — —

1,405,009 2,205,557 5,723,281 857,549 544,364 17,985,189 — —

— 158,252 17,106,597 100,637 — — — —

(14,222,217) (48,668,951) (3,883,568) (26,174,532) (5,510,269) (13,879,509) (422,786) (7,719,369)

— — — — — — — —

(14,222,217) (48,668,951) (3,883,568) (26,174,532) (5,510,269) (13,879,509) (422,786) (7,719,369)

$ 212,425,888

45,858,252

28,720,949

17,365,486

(120,481,201)

—

(120,481,201)

$ 13,636,722 15,022,708 6,108,337 15,652,716 2,839,311 3,675,501 374,866 1,066,434 44,543,108 883,657 52,329 558,058

13,636,278 14,622,424 2,275,873 10,768,475 2,229,724 2,962,153 1,825,026 396,638 11,903,989 664,318 — 1,370,445

$ 104,413,747

62,655,343

Expenses

— — — — — — — — 22,455,902 — — — 22,455,902

Net (expense) revenue and changes in net assets Business–type activities

Total

— — — — — — — — 26,497,439 — — —

— — — — — — — — — — — —

(444) (400,284) (3,832,464) (4,884,241) (609,587) (713,348) 1,450,160 (669,796) 16,314,222 (219,339) (52,329) 812,387

(444) (400,284) (3,832,464) (4,884,241) (609,587) (713,348) 1,450,160 (669,796) 16,314,222 (219,339) (52,329) 812,387

26,497,439

—

7,194,937

7,194,937

$ 18,963,761 50,562,134 25,235,982 55,578,739 5,082,875 4,312,868 1,971,899 5,737,648 (2,812,169)

— — — — — 1,068,547 1,523,760 2,224,559 2,812,169

18,963,761 50,562,134 25,235,982 55,578,739 5,082,875 5,381,415 3,495,659 7,962,207 —

164,633,737

7,629,035

172,262,772

44,152,536

14,823,972

58,976,508

419,912,248

343,127,005

763,039,253

$ 464,064,784

357,950,977

822,015,761

Major Governmental Fund Financial Statements General Fund – To account for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in another fund. The General Fund supports essential City services such as police and fire protection, street maintenance, libraries, parks and open space management. Disaster Relief Fund – To account for Federal and State disaster relief revenues and expenditures associated with recovery from the January 17, 1994 Northridge Earthquake. Downtown Redevelopment Project Fund – To account for the revenues and expenditures of the downtown redevelopment project area of the Santa Monica Redevelopment Agency. The redevelopment plan for this 9.9-acre project was approved in January 1976 and work was completed in 1980. The project area is located at the southern end of the City’s Third Street Promenade in the downtown core of Santa Monica. It consists of Santa Monica Place and two adjoining parking structures with 2,020 parking spaces. Earthquake Recovery Redevelopment Project Fund – To account for the revenues and expenditures of the downtown redevelopment project area of the Santa Monica Redevelopment Agency. The redevelopment plan for this 2,307-acre project was approved in June 1994. The project area includes approximately 90 percent of all red-tagged and 80 percent of all yellow-tagged buildings damaged by the January 17, 1994 Northridge Earthquake. Recovery project work is ongoing.

CITY OF SANTA MONICA, CALIFORNIA Balance Sheet Governmental Funds June 29, 1999 Special revenue fund

General Fund

Assets Cash and investments (note 5) Receivables (net, where applicable, of allowances for uncollectibles) Accounts Notes (note 7) Property taxes Interest Other governments Due from other funds (note 12) Inventory Deposits Prepaids Cash with fiscal agent (notes 5 and 6)

Capitalized lease receivable Advances to other funds (note 12) Total assets Liabilities and Fund Balances Liabilities: Accounts payable Accrued liabilities Short-term loan payable Contracts payable (retained percentage) Due to other funds (note 12) Due to other governments Deferred revenue (note 9) Deposits – payable from restricted assets Advances from other funds (note 12) Total liabilities Fund balances (note 14): Reserved Unreserved - designated reported in: General Fund Special revenue funds Unreserved - undesignated reported in: General Fund Special revenue funds Capital projects funds Total fund balances (deficit) Total liabilities and fund balances

Disaster Relief Fund

Capital projects funds Earthquake Downtown Recovery Redevelopment Redevelopment Project Fund Project Fund

Total governmental funds

$ 136,532,116

4,480,837

2,433,149

27,786,070

60,795,999

232,028,171

7,105,354 1,816,824 719,360 548,781 — 311,657 932,593 16,750 102,656 39,882,244 — 33,389,441 $ 221,357,776

— — — 41,635 6,385,708 — — — 9,039 — — — 10,917,219

78,250 — 3,567 9,845 — — — — — 16,638 5,640,000 — 8,181,449

— 318,307 832,160 77,676 — — — — — 5,803,325 — 5,242,188 40,059,726

1,963,947 36,480,263 258,077 294,167 2,275,519 — — — 7,380 28,957,221 — 9,222,870 140,255,443

9,147,551 38,615,394 1,813,164 972,104 8,661,227 311,657 932,593 16,750 119,075 74,659,428 5,640,000 47,854,499 420,771,613

$

11,990,490 6,089,586 — 3,605,853 — 41,668 11,393,739 597,300 5,242,188 38,960,824

2,194,651 35,236 — 891,535 — 867 6,332,161 — 5,586,467 15,040,917

— — — — — — 5,640,000 — 16,228,546 21,868,546

786,478 — — 5,657,991 2,958,016 3,522,734 — — 3,465,452 16,390,671

1,379,909 194,374 400,000 626,382 311,657 346,676 4,310,647 1,752 14,842,579 22,413,976

16,351,528 6,319,196 400,000 10,781,761 3,269,673 3,911,945 27,676,547 599,052 45,365,232 114,674,934

138,058,223

85,467

1,392,534

27,904,559

98,725,138

266,165,921

27,638,729 —

— —

— —

— —

— 2,971,830

27,638,729 2,971,830

16,700,000 — — 182,396,952 $ 221,357,776

— (4,209,165) — (4,123,698) 10,917,219

— — (15,079,631) (13,687,097) 8,181,449

— — (4,235,504) 23,669,055 40,059,726

— 21,000,434 (4,855,935) 117,841,467 140,255,443

16,700,000 16,791,269 (24,171,070) 306,096,679 420,771,613

Fund balances - total governmental funds Amounts reported for governmental activities in the statement of net assets are different because (Note 3) (1) Capital assets used in governmental activities are not current financial resources and therefore are not reporting in the balance sheet (2) The interfund capitalized lease receivable is recorded on the balance sheet but eliminated on the statement of net assets (3) Bond issue costs to be amortized over the life of the debt (4) Long-term liabilities are not due and payable in the current period and therefore are not reported in the balance sheet (5) Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds and recognized as revenue in the statement of activities (6) Internal service funds are used by management to charge the costs of vehicle management, information technology and risk management to individual funds. The assets and liabilities of the information technology and risk management (excluding bus) internal service funds are included in the governmental activities in the statement of net assets The assets and liabilities of internal service funds are included in the statement of net assets Net assets of governmental activities See accompanying notes to basic financial statements

Other governmental funds

$

306,096,679

300,319,800 (5,640,000) 1,428,550 (165,866,050) 27,215,869

$

509,936 464,064,784

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) Governmental Funds Year Ended June 30, 2003 Special revenue fund General Fund Revenues: Property taxes Sales taxes Other taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment income Rent Other

$

Disaster Relief Fund

Capital projects funds Earthquake Downtown Recovery Redevelopment Redevelopment Project Fund Project Fund

Other governmental funds

Total governmental funds

20,205,578 25,235,982 60,509,631 33,119,265 285,522 8,253,037 10,742,425 3,276,059 7,258,343 1,691,714

— — — — 8,567,675 — — (72,336) — 385,647

2,217,771 — — — — — — 233,250 591,250 89,475

25,665,755 — — — — — — 927,654 — 158,475

9,767,252 — 2,860,310 195,744 22,040,794 8,651,852 — 1,816,801 126,711 4,825,344

57,856,356 25,235,982 63,369,941 33,315,009 30,893,991 16,904,889 10,742,425 6,181,428 7,976,304 7,150,655

170,577,556

8,880,986

3,131,746

26,751,884

50,284,808

259,626,980

21,147,178 77,107,871 22,055,521 30,252,427 13,002,733 7,068,355 16,110,646 329,561

— — 16,074,718 — — — — —

— — — — — — — —

— — — — — — — —

725,544 566,750 7,987,669 4,927,488 — — 20,169,843 —

21,872,722 77,674,621 46,117,908 35,179,915 13,002,733 7,068,355 36,280,489 329,561

— —

— —

— 550,153

6,577,635 9,364,328

— 3,131,362

6,577,635 13,045,843

— —

— —

— 702,375

— —

1,625,000 6,941,798

1,625,000 7,644,173

Total expenditures

187,074,292

16,074,718

1,252,528

15,941,963

46,075,454

266,418,955

Excess (deficiency) of revenues over (under) expenditures

(16,496,736)

(7,193,732)

1,879,218

10,809,921

4,209,354

(6,791,975)

25,080,000 9,439,740 (10,708,189)

— — —

— — (846,066)

— — (4,358,529)

— 13,391,879 (9,878,204)

25,080,000 22,831,619 (25,790,988)

23,811,551

—

(846,066)

(4,358,529)

3,513,675

22,120,631

7,314,815

(7,193,732)

1,033,152

6,451,392

7,723,029

15,328,656

175,082,137

3,070,034

(14,720,249)

17,217,663

110,118,438

290,768,023

182,396,952

(4,123,698)

(13,687,097)

23,669,055

117,841,467

306,096,679

Total revenues Expenditures: Current: General government Public safety General services Cultural and recreation services Library Retirement – salaries Housing and community development Other Payment of property tax increment in accordance with pass-through agreements Capital projects Debt service: Principal Interest

Other financing sources (uses): Proceeds from bond issuance Transfers in (note 12) Transfers out (note 12) Total other financing sources (uses) Net change in fund balances Fund balances (deficits) at beginning of year, as restated (note 4 ) Fund balances (deficits) at end of year See accompanying notes to basic financial statements.

$

CITY OF SANTA MONICA, CALIFORNIA Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2003

Net change in fund balance – total governmental funds

$

15,328,656

Amounts reported for governmental activities in the statement of activities are different because: Capital assets The acquisition of capital assets requires the use of current financial resources 1) but has no effect on net assets 2) The cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense in the statement of activities 3) The write-off of capital assets is recorded as an expense in the statement of activities but is not recorded in the fund statements

54,533,420 (8,042,858) (26,375)

Measurement focus: 4) Change in accrued interest payable 5) The issuance of long-term debt provides current financial resources to the funds but has no effect on net assets 6) Principal payments on long-term bonded debt use current financial resources but have no effect on net assets 7) Principal payments on leases use current financial resources but have no effect on net assets 8) Bond premiums are recorded as other financing source in the fund statements but are amortized in the statement of activities 9) Bond discounts are recorded as other financing uses in the fund statements but are amortized in the statement of activities 10) Costs of issuance are recorded as an expenditure in the fund statements but are amortized in the statement of activities 11) Deferred loss on refunding recorded as an expenditure in the fund statements but is amortized in the statement of activities 12) The increase in compensated absences liability does not require the use of current financial resources but is recorded as an expense in the statement of activities 13) Elimination of interest related to interfund loans that are recorded as an expenditure on the fund statements but eliminated on the government-wide statements 14) Revenue deferred for fund statements are recognized in the statement of activities

(902,704) (25,000,000) 1,625,000 899,804 (73,804) (4,399) 73,536 (62,569) (757,592) 633,831 6,308,516

Internal service funds: 15) Internal service funds are used by management to charge the costs of vehicle management, information technology, and risk management to individual funds. The net revenue (expense) of the internal service funds is reported with governmental activities Change in net assets (statement of activities, governmental activities) See accompanying notes to basic financial statements.

(379,926) $

44,152,536

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) General Fund Year ended June 30, 2003

Original budget Revenues: Property taxes Sales tax Other taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment income Rent Other Total revenues Expenditures: General government: Salaries Supplies Capital outlay Capital improvement Public safety: Salaries Supplies Capital outlay Capital improvement General services: Salaries Supplies Capital outlay Capital improvement Cultural and recreation services: Salaries Supplies Capital outlay Capital improvement

Less 2001-2002 encumbered expenditures

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance with final budget positive (negative)

Final budget

Actual

$ 18,603,213 25,750,000 60,899,709 32,426,110 443,433 8,109,626 9,415,000 4,567,460 6,717,907 1,298,440

20,671,416 25,586,000 60,899,709 32,980,486 468,433 8,173,555 9,415,000 4,567,460 6,717,907 1,298,440

20,205,578 25,235,982 60,509,631 33,119,265 285,522 8,253,037 10,742,425 3,276,059 7,258,343 1,691,714

— — — — — — — — — —

— — — — — — — — — —

20,205,578 25,235,982 60,509,631 33,119,265 285,522 8,253,037 10,742,425 3,276,059 7,258,343 1,691,714

(465,838) (350,018) (390,078) 138,779 (182,911) 79,482 1,327,425 (1,291,401) 540,436 393,274

168,230,898

170,778,406

170,577,556

—

—

170,577,556

(200,850)

15,063,587 4,734,959 5,000 3,932,876

15,312,823 4,615,949 30,306 5,743,287

14,568,191 4,413,309 73,486 2,092,192

45,590 36,122 57,270 —

— 211,409 14,090 825,623

14,522,601 4,588,596 30,306 2,917,815

790,222 27,353 — 2,825,472

23,736,422

25,702,365

21,147,178

138,982

1,051,122

22,059,318

3,643,047

53,634,171 5,783,884 488,600 355,829

52,847,916 5,681,731 513,100 26,619,358

51,728,991 5,147,095 162,686 20,069,099

162,618 16,862 26,991 —

— 38,711 24,264 3,876,357

51,566,373 5,168,944 159,959 23,945,456

1,281,543 512,787 353,141 2,673,902

60,262,484

85,662,105

77,107,871

206,471

3,939,332

80,840,732

4,821,373

9,995,366 6,839,793 56,700 5,946,145

10,163,302 6,934,093 58,215 45,498,418

9,555,191 7,026,504 85,229 5,388,597

59,673 136,565 51,365 —

— 44,154 15,976 6,642,913

9,495,518 6,934,093 49,840 12,031,510

667,784 — 8,375 33,466,908

22,838,004

62,654,028

22,055,521

247,603

6,703,043

28,510,961

34,143,067

10,988,814 16,952,281 142,500 1,054,147

11,103,208 17,077,650 151,559 12,628,044

10,679,295 17,377,352 64,518 2,131,262

36,820 1,218,112 19,229 —

— 875,479 21,002 1,872,308

10,642,475 17,034,719 66,291 4,003,570

460,733 42,931 85,268 8,624,474

29,137,742

40,960,461

30,252,427

1,274,161

2,768,789

31,747,055

9,213,406 (Continued)

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) General Fund, Continued Year ended June 30, 2003

Less 2001-2002 encumbered expenditures

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance with final budget positive (negative)

Original budget

Final budget

Actual

4,715,062 1,488,268 — 38,582,250

4,782,537 1,479,996 — 54,371,006

4,518,711 1,457,435 16,578 7,010,009

15,118 130,714 16,578 —

— 153,275 — 32,573,749

4,503,593 1,479,996 — 39,583,758

278,944 — — 14,787,248

44,785,580

60,633,539

13,002,733

162,410

32,727,024

45,567,347

15,066,192

Retirement – salaries

6,326,164

7,142,745

7,068,355

—

—

7,068,355

74,390

Housing and community development: Salaries Supplies Capital outlay Capital improvement

7,497,015 8,007,942 61,200 700,000

7,672,297 8,248,442 61,200 7,562,756

6,964,403 7,992,982 18,891 1,134,370

145,872 938,000 7,439 —

108,647 590,532 7,229 4,414,439

6,927,178 7,645,514 18,681 5,548,809

745,119 602,928 42,519 2,013,947

16,266,157

23,544,695

16,110,646

1,091,311

5,120,847

20,140,182

3,404,513

2,017,255 1,221,372

482,728 412,972

— 329,561

— 88,607

—

— 240,954

482,728 172,018

Library: Salaries Supplies Capital outlay Capital improvement

Other: Salaries Supplies

$

3,238,627

895,700

329,561

88,607

—

240,954

654,746

Total expenditures

206,591,180

307,195,638

187,074,292

3,209,545

52,310,157

236,174,904

71,020,734

Excess (deficiency) of revenues over expenditures

(38,360,282)

(136,417,232)

(16,496,736)

(3,209,545)

(52,310,157)

(65,597,348)

70,819,884

— — 10,138,674 (6,109,279)

— — 11,263,212 (10,708,189)

25,080,000 — 9,439,740 (10,708,189)

— — — —

— — — —

25,080,000 — 9,439,740 (10,708,189)

25,080,000 — (1,823,472) —

Other financing sources (uses): Proceeds from issuance of long-term debt Proceeds from capital lease Transfers in (note 12) Transfers out (note 12) Total other financing sources Net change in fund balances Fund balance at beginning of year, as restated (note 4) Fund balance at end of year

See accompanying notes to basic financial statements.

4,029,395

555,023

23,811,551

—

—

23,811,551

23,256,528

(34,330,887)

(135,862,209)

7,314,815

(3,209,545)

(52,310,157)

(41,785,797)

94,076,412

175,082,137

175,082,137

175,082,137

—

—

175,082,137

—

$140,751,250

39,219,928

182,396,952

(3,209,545)

(52,310,157)

133,296,340

94,076,412

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund Balance (Deficit) – Budget and Actual (Non-GAAP Basis) Disaster Relief Special Revenue Fund Year ended June 30, 2003

Original budget Revenues: Intergovernmental Investment income Other Total revenues Expenditures: General services: Salaries Supplies Capital outlay Capital improvement Total expenditures Net change in fund balances Fund balance at beginning of year Fund balance (deficit) at end of year See accompanying notes to basic financial statements.

$

Final budget

Actual

Less 2001-2002 encumbered expenditures

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance with final budget positive (negative)

— — — —

— — — —

8,567,675 (72,336) 385,647 8,880,986

— — — —

— — — —

8,567,675 (72,336) 385,647 8,880,986

8,567,675 (72,336) 385,647 8,880,986

305,800 169,600 6,500 41,322,045 41,803,945

394,597 91,203 6,500 41,220,230 41,712,530

394,597 8,929 973 15,670,219 16,074,718

— — — — —

— 100 — 9,527,698 9,527,798

394,597 9,029 973 25,197,917 25,602,516

— 82,174 5,527 16,022,313 16,110,014

(41,803,945)

(41,712,530)

(7,193,732)

—

(9,527,798)

(16,721,530)

24,991,000

3,070,034

3,070,034

3,070,034

—

—

3,070,034

—

$ (38,733,911)

(38,642,496)

(4,123,698)

—

(9,527,798)

(13,651,496)

24,991,000

Proprietary Fund Financial Statements Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises (a) where the intent is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or (b) where the City has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Water Fund – To account for revenues and expenses of providing water service to the citizens of the City. Wastewater Fund – To account for revenues and expenses associated with maintaining the sanitary sewer and storm drain systems within the City. Airport Fund – To account for revenues and expenses connected with management of the Santa Monica Municipal Airport. Big Blue Bus Fund – To account for revenues and expenses related to operation of the City's Municipal Bus Lines.

Internal Service Funds – To account for the financing of good or services provided by one department or agency to other departments or agencies of the City or to other governments, on a cost-reimbursement basis.

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets Proprietary Funds June 30, 2003

Assets Current assets: Cash and investments (note 5) Receivables (net, where applicable, of allowances for uncollectibles): Accounts Interest Inventory Due from other funds (note 12) Prepaids

Water

Wastewater

$ 23,496,157

23,878,763

2,151,898 85,253 398,756 — 5,990

1,845,923 170,291 — — 5,990

26,138,054

25,900,967

1,609,628 229,798 —

3,540,569 817,807 —

Capital assets (note 8): Land Buildings Improvements other than buildings Utility systems Machinery and equipment Construction in progress

21,000 701,447 43,614,557 — 1,950,842 468,657

3,225,764 574,990 33,020,426 55,120,596 1,191,737 3,096,359

Less accumulated depreciation

46,756,503 (25,916,910)

96,229,872 (16,989,951)

20,839,593

79,239,921

— — —

5,675,342 — 690,758

48,817,073

115,865,364

Total current assets Noncurrent assets: Restricted cash and investments (note 5) Restricted cash with fiscal agent (notes 5 and 6) Due from other governments, restricted

Net capital assets Advances to other funds (note 12) Due from other funds (note 12) Bond issuance costs, net Total assets See accompanying notes to basic financial statements.

Airport

Big Blue Bus

Nonmajor enterprise funds

Total enterprise funds

Total internal service funds

536,393

40,731,550

9,315,663

97,958,526

39,378,617

131,936 7,361 — — —

3,673,745 143,796 1,082,656 — 89,657

2,682,895 58,880 — 2,000,000 —

10,486,397 465,581 1,481,412 2,000,000 101,637

— 493,728 910,670 — 32,070

675,690

45,721,404

14,057,438

112,493,553

40,815,085

420,054 832,385 —

— — 33,703,216

3,589,232 440,744 —

9,159,483 2,320,734 33,703,216

138,436 — —

— 7,673,577 10,702,044 — 137,126 4,933,518

25,635,557 8,230,541 28,992,266 — 73,097,686 15,749,498

5,338,700 7,507,562 35,599,298 — 2,174,173 2,389,963

34,221,021 24,688,117 151,928,591 55,120,596 78,551,564 26,637,995

— — — — 24,766,971 281,743

23,446,265 (10,105,550)

151,705,548 (53,940,349)

53,009,696 (24,529,470)

371,147,884 (131,482,230)

25,048,714 (12,829,780)

13,340,715

97,765,199

28,480,226

239,665,654

12,218,934

— — 51,964

— — —

— 958,016 —

5,675,342 958,016 742,722

— — —

15,320,808

177,189,819

47,525,656

404,718,720

53,172,455

(Continued)

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets, Continued Proprietary Funds June 30, 2003

Liabilities

Water

Wastewater

Current liabilities: Accounts payable Accrued liabilities Contracts payable (retained percentage) Claims payable Interest payable Current portion of long-term obligations (note 10)

8,339,687 236,587 104,922 — — —

1,491,747 153,801 215,110 — 795,638 1,005,000

Total current liabilities

8,681,196

3,661,296

131,310

—

— — — —

— — — 29,117,045

Total liabilities

8,812,506

32,778,341

Net assets Invested in capital assets, net of related debt Restricted (note 13) Unrestricted (deficit)

20,839,593 — 19,164,974

50,626,441 — 32,460,582

40,004,567

83,087,023

Current liabilities payable from restricted assets – deposits Noncurrent liabilities: Advances from other funds (note 12) Claims payable Deferred revenue (note 9) Long-term obligations, net of current portion (note 10)

Total net assets

See accompanying notes to basic financial statements.

$

Big Blue Bus

Nonmajor enterprise funds

Total enterprise funds

Total internal service funds

315,319 30,599 — — 50,628 422,218

3,375,942 3,256,743 69,167 — — —

1,063,226 534,370 37,602 — 38,110 208,995

14,585,921 4,212,100 426,801 — 884,376 1,636,213

870,383 — — 7,266,269 — —

818,764

6,701,852

1,882,303

21,745,411

8,136,652

328,501

—

2,842,297

3,302,108

—

6,434,913 — — 1,577,020

— — 6,000,481 —

1,729,696 — — 4,188,343

8,164,609 — 6,000,481 34,882,408

— 17,198,593 — —

9,159,198

12,702,333

10,642,639

74,095,017

25,335,245

12,225,826 — (6,064,216)

97,765,199 33,703,216 33,019,071

24,082,888 — 12,800,129

205,539,947 33,703,216 91,380,540

12,218,934 — 15,618,276

6,161,610

164,487,486

36,883,017

330,623,703

27,837,210

Airport

29,103,077 (1,775,803) 357,950,977

Net assets, business-type activitiesinternal service funds Net adjustment to reflect the allocation of the internal service funds net loss Net assets of business-type activities

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds Year ended June 30, 2003

Water Operating revenues - charges for services

Wastewater

Airport

$ 13,636,278

10,768,475

2,962,153

3,760,859 781,300 341,080 211,763 2,541,895 383,952 2,738,964 65,700

2,650,357 558,800 3,821,131 691,532 1,327,959 37,671 — 219,700

649,073 894,000 111,640 316,497 282,416 246,946 — 68,300

— — — — 1,298,559 1,491,954

— — — — 2,335,225 2,321,260

— — — — 816,595 178,841

13,616,026

13,963,635

3,564,308

20,252

(3,195,160)

(602,155)

— 336,026 (4,690) 404,165

— 889,224 (1,644,675) 244,622

— (15,821) (101,255) 265,590

Total nonoperating revenues

735,501

(510,829)

148,514

Income (loss) before capital contributions and transfers

755,753

(3,705,989)

(453,641)

— — (1,820,236)

— 2,816,451 (125,300)

— 48,000 (376,700)

(1,064,483)

(1,014,838)

(782,341)

41,069,050 $ 40,004,567

84,101,861 83,087,023

6,943,951 6,161,610

Operating expenses: Personnel services Administrative indirect Contractual services Repairs and maintenance Materials and supplies Utilities Water purchases Casualty, property and liability costs Claims expense, net of claims reserve adjustments Insurance and bonds Miscellaneous fees and costs Administrative fees and costs Depreciation Other Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Sales tax proceeds Investment income Interest expense Other

Capital contributions Transfers in Transfers out Change in net assets Total net assets at beginning of year Total net assets at end of year

See accompanying notes to basic financial statements.

Big Blue Bus

Nonmajor enterprise funds

Total enterprise funds

Total internal service funds

11,903,989

23,384,448

62,655,343

19,229,548

25,426,502 427,200 2,962,281 1,063 4,789,583 272,230 — 1,271,730

11,046,004 1,435,500 3,321,502 2,780,511 3,639,729 422,943 439,800

43,532,795 4,096,800 10,557,634 4,001,366 12,581,582 1,363,742 2,738,964 2,065,230

2,484,121 525,500 135,872 1,217,222 2,006,231 38,200 — 24,800

— — — — 9,556,912 227,567

— — — — 2,146,553 1,625,185

— — — — 16,153,844 5,844,807

9,598,021 1,285,086 683,136 189,997 2,385,366 —

44,935,068

26,857,727

102,936,764

20,573,552

(33,031,079)

(3,473,279)

(40,281,421)

(1,344,004)

22,455,902 328,739 — 1,151,477

— 269,256 (119,744) 477,556

22,455,902 1,807,424 (1,870,364) 2,543,410

— 974,010 — 702,282

23,936,118

627,068

24,936,372

1,676,292

(9,094,961)

(2,846,211)

(15,345,049)

332,288

26,497,439 683,602 (582,852)

— 5,935,232 (3,618,828)

26,497,439 9,483,285 (6,523,916)

— 416,900 (416,900)

17,503,228

(529,807)

14,111,759

332,288

146,984,258 164,487,486

37,412,824 36,883,017

316,511,944 330,623,703

27,504,922 27,837,210

$

14,111,759

$

712,214 14,823,973

Change in net assets Net adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net assets of business-type activities

CITY OF SANTA MONICA, CALIFORNIA Statement of Cash Flows Proprietary Funds Year ended June 30, 2003

Water Cash flows from operating activities: Cash received from customers Cash payments for materials and services Cash paid for claims and related services Cash payments to employees for services Other nonoperating revenue received

Wastewater

$ 13,649,954 (3,263,013) — (3,760,859) 404,165

10,388,724 (14,245,751) — (2,650,357) 244,621

7,030,247

(6,262,763)

Cash flows from noncapital financing activities: Sales tax proceeds Water conservation program Transfers in Transfers out

— — — (1,820,236)

— — 2,816,451 (125,300)

Net cash provided by (used in) noncapital financing activities

(1,820,236)

2,691,151

Cash flows from capital and related financing activities Capital contributions received Acquisition and construction of capital assets Proceeds from sale of capital assets Reduction in long-term obligations Interest paid on long-term obligations Repayment of advances made to other funds Advances made to other funds

— (361,874) — — (4,690) 600,000 —

— (11,410,250) — (890,000) (1,698,075) — (5,586,467)

Net cash provided by (used in) capital and related financing activities

233,436

(19,584,792)

Cash flows from investing activities – interest received on investments

489,929

1,201,525

489,929

1,201,525

5,933,376

(21,954,879)

19,402,207

50,192,018

Cash and cash equivalents at end of year

$ 25,335,583

28,237,139

Cash and investments Restricted cash and investments

$ 23,496,157 1,839,426

23,878,763 4,358,376

$ 25,335,583

28,237,139

Net cash provided by (used in) operating activities

Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year

Total cash and cash equivalents

There were no noncash financing or investing activities for the year ended June 30, 2003. See accompanying notes to basic financial statements.

Airport

Big Blue Bus

Nonmajor enterprise funds

Total enterprise funds

Total internal service funds

3,035,015 (1,926,509) — (649,073) 265,589

11,903,989 (11,331,567) — (25,288,676) 1,131,116

23,659,090 (13,084,363) — (11,046,004) 518,644

62,636,772 (43,851,203) — (43,394,969) 2,564,135

19,229,548 (6,022,985) (9,514,404) (2,484,121) 670,869

725,022

(23,585,138)

47,367

(22,045,265)

1,878,907

— 366,154 48,000 (376,700)

23,371,278 — 683,602 (582,852)

— — 5,935,232 (3,618,828)

23,371,278 366,154 9,483,285 (6,523,916)

— — 416,900 (416,900)

37,454

23,472,028

2,316,404

26,696,801

—

— (778,798) — (407,218) (109,462) — —

26,259,435 (16,746,015) 20,360 — — — —

— (1,504,537) — (234,414) (121,510) (600,000) —

26,259,435 (30,801,474) 20,360 (1,531,632) (1,933,737) — (5,586,467)

— (2,258,072) 61,111 — — — —

(1,295,478)

9,533,780

(2,460,461)

(13,573,515)

(2,196,961)

6,834

592,085

329,799

2,620,172

960,346

6,834

592,085

329,799

2,620,172

960,346

(526,168)

10,012,755

233,109

(6,301,807)

642,292

2,315,000

30,718,795

13,112,530

115,740,550

38,874,761

1,788,832

40,731,550

13,345,639

109,438,743

39,517,053

536,393 1,252,439

40,731,550 —

9,315,663 4,029,976

97,958,526 11,480,217

39,378,617 138,436

1,788,832

40,731,550

13,345,639

109,438,743

39,517,053

(Continued)

CITY OF SANTA MONICA, CALIFORNIA Statement of Cash Flows, Continued Proprietary Funds Year ended June 30, 2003

Water Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss)

$

Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Add depreciation Add amortization Change in assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in prepaids (Increase) decrease in inventory Increase (decrease) in accounts payable Increase in accrued liabilities Increase (decrease) in deposits Increase (decrease) in contracts payable Increase in claims payable Other nonoperating revenue received Total adjustments Net cash provided by (used in) operating activities

See accompanying notes to basic financial statements.

$

Wastewater

Airport

20,252

(3,195,160)

(602,155)

1,298,559 —

2,335,225 179,705

816,595 50,123

13,676 (160) (153,202)

(379,751) (160) —

72,862 — —

5,865,947

(5,396,116)

88,762

18,475 (336,821)

47,063 —

4,989 28,257

(100,644) — 404,165

(98,190) — 244,621

— — 265,589

7,009,995

(3,067,603)

1,327,177

7,030,247

(6,262,763)

725,022

Big Blue Bus

Nonmajor enterprise funds

Total enterprise funds

Total internal service funds

(33,031,079)

(3,473,279)

(40,281,421)

(1,344,004)

9,556,912 —

2,146,553 —

16,153,844 229,828

2,385,366 —

— (63,721) 60,918

285,383 400 —

(7,830) (63,641) (92,284)

— (769,504) (4,235)

(1,434,767)

(530,159)

(1,406,333)

(6,685)

137,826 —

23,828 1,117,518

232,181 808,954

— —

57,657 — 1,131,116

(433) — 477,556

(141,610) — 2,523,047

— 947,100 670,869

9,445,941

3,520,646

18,236,156

3,222,911

(23,585,138)

47,367

(22,045,265)

1,878,907

CITY OF SANTA MONICA, CALIFORNIA Statement of Fiduciary Assets and Liabilities Fiduciary Funds June 30, 2003

Assets Restricted cash and investments (note 5) Accounts receivable Total assets

Total agency funds $

754,109 13,582

$

767,691

$ $

767,691 767,691

Liabilities Accounts payable Total liabilities

See accompanying notes to basic financial statements.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements Year Ended June 30, 2003

(1)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. THE REPORTING ENTITY The City of Santa Monica, California (“City”) was incorporated November 30, 1886. The City operates under a Council-Manager form of government and provides traditional municipal services as authorized by its charter as well as various enterprise services. As required by accounting principles generally accepted in the United States of America (“GAAP”), the accompanying basic financial statements present the activities of the City and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operations or financial relationships with the City. None are considered major component units for reporting purposes. As required by GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with data of the City. Additional detailed information and/or separately issued financial statements for these component units can be obtained from the City’s Director of Finance. The following entities are reported as blended component units: The Redevelopment Agency of the City of Santa Monica (“Agency”) was established by the City of Santa Monica City Council in 1957 pursuant to the Community Redevelopment Law of California to eliminate blight and to promote economic revitalization within designated project areas of the City. The Parking Authority of the City of Santa Monica (“Authority”) was established by the City in 1950 and maintains and operates parking lots and parking structures. The Housing Authority of the City of Santa Monica (“Housing Authority”) was established by the City in 1975 to address unsanitary and unsafe inhabited dwelling accommodations and the shortage or affordable safe and sanitary dwelling accommodations for persons with low incomes. Since January 1, 1989, the Housing Authority has administered the Section 8 Housing Assistance Payments Program funded by the United States Department of Housing and Urban Development on behalf of the City. As further required by Governmental Accounting Standards Board Statement No. 39, Determining Whether Certain Organizations are Component Units, these basic financial statements do not present entities for which the City may meet criteria for discrete presentation but the economic resources received or held by an individual organization are not significant to the primary government. Following are brief descriptions of organizations created in 1984 as nonprofit public benefit corporations. Each of the governing bodies acts on behalf of the City through members appointed by the City of Santa Monica City Council for the benefit of the citizens of Santa Monica. Separate financial statements for each can be obtained from the City’s Director of Finance. The Pier Restoration Corporation (“PRC”) maintains and operates the public educational and recreational facility in the City commonly known as the Santa Monica Pier.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

The Bayside District Corporation (”BDC”), formerly the Third Street Development Corporation, combats community deterioration by developing and improving the aging areas in and around the City’s central business district and coordinating public and private sector activities. The Santa Monica Arts Foundation promotes the arts by raising funds to finance art programs. On June 8, 1990, the City Council merged the City’s Arts Commission with the Santa Monica Arts Foundation. B. IMPLEMENTATION OF NEW ACCOUNTING STANDARDS Governmental Accounting Standards Board Statement No. 39 For the fiscal year ended June 30, 2003, the City implemented GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. For the fiscal year ended June 30, 2003, the City is reporting three blended component units and no discretely presented components units. C. BASIC FINANCIAL STATEMENTS Basic financial statements consist of the following: • • •

Government-wide financial statements, Fund financial statements, and Notes to the basic financial statements.

The government-wide financial statements consist of the statement of net assets and the statement of activities and report information on all of the non-fiduciary activities of the primary government and its component units. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. All internal balances in the statement of net assets have been eliminated, with the exception of those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total government column. In the statement of activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. Exceptions to this general rule are charges between the City’s Water Fund and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include public safety (police and fire), streets, public improvements, library, cultural, recreation and parks, planning and zoning, housing and community development and general administrative support services. The business-type activities of the City include water, wastewater, storm water, solid waste management, pier, civic auditorium, airport, special aviation services, cemetery, bus lines, parking structures and lots, and cable communications.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Indirect expenses are allocated based on the annual cost allocation plan. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions, including special assessments, that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. D. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds and fiduciary funds financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental funds financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City in general considers revenues available if they are collected within 90 days after year-end, except for property taxes, which the City considers available if they are collected within 60 days after year-end. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when payment is due. For the governmental funds financial statements, the City considers all revenues susceptible to accrual and recognizes revenue if the accrual criteria are met. Specifically, sales taxes, franchise taxes, licenses, interest, special assessments, charges for services and other miscellaneous revenue are all considered to be susceptible to accrual and have been recognized as revenue in the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met and are recorded at the time of receipt or earlier, if the susceptible to accrual criteria are met. The accounts of the City are organized on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. The City reports the following major governmental funds:

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

The General Fund is the City’s primary operating fund. It accounts for all the financial resources and the legally authorized activities of the City except those required to be accounted for in other specialized funds. The Downtown Redevelopment Project Capital Projects Fund and the Earthquake Recovery Redevelopment Project Capital Projects Fund are capital projects funds. They account for activities of the respective project areas of the Santa Monica Redevelopment Agency. The Disaster Relief Special Revenue Fund accounts for the Federal and State disaster relief revenues and expenditures associated with the recovery from the January 17, 1994 Northridge Earthquake. The City reports the following major proprietary funds: The Water Fund accounts for the activities of providing water service to the citizens of the City. The Wastewater Fund accounts for the activities of maintaining sanitary sewer and storm drain systems within the City. The Airport Fund accounts for the activities of the Santa Monica Airport. The Big Blue Bus Fund accounts for the activities of the City’s municipal bus lines. Additionally, the City reports the following fund types: Permanent Funds account for resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support specific programs. Internal Service Funds account for vehicle operations, risk management, and information technology and communications operations that provide services to other departments of the City on a cost reimbursement basis. Fiduciary Funds, which consist solely of Agency funds, account for assets held by the City as a trustee or as an agent for individuals or other government units. The only fiduciary fund type used by the City is the Agency Fund type. Agency funds are custodial in nature and do not involve measurement of results of operations. Such funds are unlike all other types of funds, reporting only assets and liabilities. These funds account for assets held by the City in an agency capacity for individuals or other governmental units. Proprietary funds have elected not to apply Financial Accounting Standards Board (FASB) Statements and interpretations issued after November 30, 1989. The proprietary funds apply all applicable GASB pronouncements as well as statements and interpretations of FASB, the Accounting Principles Board Opinions and Accounting Research Bulletins of the Committee on Accounting Procedure issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

revenues of the enterprise funds and of the City’s internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then unrestricted resources as they are needed. E. ASSETS, LIABILITIES, NET ASSETS OR EQUITY Cash and Investments In order to maximize the flexibility of its investment program and to aid in cash budgeting, the City pools the cash of all funds, except for monies deposited with fiscal agents in accordance with related bond indentures. The cash and investments balance in each fund represents that fund's equity share of the City's cash and investment pool. As the City places no restrictions on the deposit or withdrawal of its equity from the pool by a particular fund, the pool operates like a demand deposit account for the participating funds. Interest income earned on pooled cash and investments is allocated quarterly to the various funds based on quarter-end balances and is adjusted at year-end. Interest income on restricted cash and investments with fiscal agents is credited directly to the related fund. In accordance with the State of California Government Code, the City Council adopts an investment policy annually that, among other things, authorizes types and concentrations of investments and maximum investment terms. Authorized investments include: • • • • • • • •

Securities of the U.S. government or its agencies (maximum 33 1/3 % for each agency) Certificates of deposit (or time deposits) placed with commercial banks and/or savings and loan associations (10% maximum per issuer, 30% maximum overall) Negotiable certificates of deposit (30% maximum) Bankers' acceptances (10% maximum per issuer, 40% maximum overall and 180 days) Commercial paper (15% maximum and 270 days) State Treasurer's Local Agency Investment Fund (LAIF) ($40 million maximum) Corporate medium-term notes (30% maximum) Shares of money market funds (20% maximum)

The City's investments are carried at fair value, except for certain short-term money market investments, which approximate fair value. The fair value of equity and debt securities is determined based on sales prices or bid-and-asked quotations from SEC-registered securities exchanges or NASDAQ dealers. The fair value of the City's share of LAIF is reported to the City on a quarterly basis. LAIF operates in accordance with laws and regulations of the State of California. The reported value of the pool is the same as the fair value of pool shares. Changes in fair value are allocated to each participating fund on an annual basis. For purposes of the statement of cash flows, the City has defined cash and cash equivalents to be change and petty cash funds, equity in the City's cash and investment pool, and restricted, nonpooled investments with initial maturities of three months or less.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as interfund receivables/interfund payables, i.e., the current portion of interfund loans, or advances to/from other funds, the non-current portion of interfund loans. All other outstanding balances between funds are reported as interfund receivables/interfund payables. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as internal balances. Advances between funds, as reported in the fund financial statements, are offset by a reservation of fund balance in the applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Short term notes payable reflect two $200,000 non-interest bearing notes payable to the State of California under an agreement dated March 28, 1986 which are related to two $200,000 3% notes receivable discussed in Note 7. The notes payable are to be repaid upon receipt of monies due under the related notes receivable. All trade receivables are shown net of an allowance for uncollectible accounts and estimated refunds due. As of June 30, 2003 allowance for uncollectible accounts for governmental and business-type activities is $38,900 and $214,559, respectively. Unbilled service receivables are accrued for at year-end. Property Taxes Assessed property values are determined on an annual basis for the period July 1 to June 30 by the Los Angeles County Assessor as of March 1. Article XIIIA of the State Constitution (Proposition 13, approved by voted in June 1978) limits the real property tax rate to 1% of the full market cash value plus rates imposed to fund indebtedness approved by the voters. Locally assessed property is appraised at the 1975-76 full cash value, the base year value, and is adjusted each year after 1975 by the change in the consumer price index, not to exceed an increase of 2%. Property is reappraised to current full value upon either a change in ownership or new construction. If property values decline below the base year value, the value is adjusted to reflect the lower value. Taxes are levied annually on July 1 and become a lien on real property at March 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively, at which time applicable penalties and interest are assessed. Inventories and Prepaid Items All materials and supplies inventories are valued at cost using the average cost method. Inventory in the General Fund is recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Restricted Assets

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Certain proceeds of the City's bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. In the absence of specific statutory provisions governing the issuance of bonds, certificates or leases, these bond monies may be invested in accordance with the ordinance, resolutions or indentures specifying the types of investments its trustees or fiscal agents may make. These ordinances, resolutions and indentures are generally more restrictive than the City's general investment policy. In no instance have additional types of investments been authorized that are not permitted by the City's general investment policy. Capital Assets Capital assets, which include land, buildings and improvements, equipment, and infrastructure assets (e.g., roads, sidewalks, traffic lights and signals, street lights and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial individual cost of $5,000 or more and an estimated useful life in excess of one year. Such assets are recorded at historical cost. Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. No interest was capitalized during the year ended June 30, 2003. Capital assets of the City are depreciated using a straight-line method over the following estimated useful lives: Assets Buildings Improvements other than buildings Infrastructure Utility systems Machinery and equipment

Years 5 to 50 5 to 50 15 to 75 40 5 to 30

As a result of the implementation of GASB 34, the City is accounting for infrastructure assets on its financial statements. The government-wide financial statements include those infrastructure assets that were either completed during the current fiscal year or considered construction in progress at current fiscal year end. However, the government-wide financial statements do not reflect those infrastructure assets completed prior to July 1, 2001. From this point forward, new infrastructure will be added to the records while the retroactive historical value of the City’s infrastructure assets will be added prior to June 30, 2006, in accordance with GASB 34. Lease Obligations The City leases various assets under both operating and capital lease agreements. In the government-wide and proprietary funds financial statements, capital leases and the related lease obligations are reported as liabilities in the applicable governmental activities or proprietary funds

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

statement of net assets. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick leave benefits up to a maximum determined by bargaining unit agreements. Employees are paid 100% of their accumulated vacation or when they terminate employment for any reason. All vacation is accrued when incurred in the government-wide and proprietary fund financial statements. A liability is reported in the governmental funds only if they have matured, for example, as a result of employee resignations or retirements. Long-Term Liabilities In the government-wide financial statements and proprietary funds financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Initial-issue bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. The difference between the reacquisition price of refunding bonds and the net carrying amount of refunded debt (deferred amount on refunding) is amortized over the shorter of the lives of the refunding debt or remaining life of the refunded debt. Bonds payable are reported net of the unamortized portion of applicable premium, discount or deferred amount on refunding. Bond issuance costs, including underwriters' discount, are reported as deferred bond issuance costs. Amortization of bond premiums or discounts, issuance costs and deferred amounts on refunding are included in interest expense when due. In the governmental funds financial statements, bond premiums, discounts and issuance costs are recognized during the period issued. The face amount of debt issued is reported as other financing sources. Premiums received are reported as other financing sources, while discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Interest and principal payments are reported as debt service expenditures. Net Assets and Fund Equity In the government-wide financial statements and proprietary funds financial statements, net assets are reported in three categories: net assets invested in capital assets, net of related debt; restricted net assets and unrestricted net assets. Net assets invested in capital assets, net of related debt represents capital assets less accumulated depreciation less outstanding principal of related debt. Net assets invested in capital assets, net of related debt does not include the unspent proceeds of capital debt. Restricted net assets represent net assets restricted by parties outside of the City (such as creditors, grantors, contributors, laws and regulations of other governments) and include unspent proceeds of bonds issued to acquire or construct capital assets. The nonexpendable portion of permanent funds is reported as a component of restricted net assets. The City's other restricted net assets are temporarily restricted (ultimately expendable) assets. All other net assets are considered unrestricted. In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Self-Insurance Program The City has self-insurance programs to provide for general liability, bus and automobile liability, and workers' compensation claims. These activities are accounted for in self-insurance internal service funds. Premiums are charged to individual funds and are designed to cover future expenses. The City's Risk Manager oversees the self-insurance programs. It is his duty to ensure that programs are operated in accordance with City policies. The City’s Risk Manager also provides budget guidance and case reserves and claims analysis. It is the City's intent to maintain cash reserves in the self-insurance funds equal to or greater than estimated losses. Use of Estimates The preparation of basic financial statements in conformance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the basic financial statements and accompanying notes. Actual results may differ from those estimates.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 (2)

BUDGETARY AND LEGAL COMPLIANCE The City Council is required to adopt an annual budget resolution by July 1 each fiscal year for the General Fund and each special revenue fund (except the Asset Seizure Fund). The City Council also approves any revisions that alter the total expenditures of any major object or program category (salaries, supplies, capital outlay or capital improvements) within a department or fund (the legal level of budgetary control). The City Council also approves annual operating budgets for the City’s proprietary, capital projects, internal service and permanent funds to facilitate management evaluation and control. The budget is prepared on a non-GAAP budgetary basis, which considers encumbrances outstanding at year end as an expenditure of that year. Encumbrances outstanding at the beginning of a fiscal year, which were recognized as budgetary expenditures in the prior year, are recognized as GAAP-basis expenditures but not as budgetary expenditures unless re-appropriated. It is the City’s policy to only re-appropriate capital encumbrances and unencumbered balances of specific capital appropriations. In addition, capital leases are budgeted on a capital basis, whereas GAAP requires the full amount of the leased asset purchased to be shown as an expenditure of the current year. Appropriations outstanding at year end lapse, except for encumbered amounts, for which fund balances are reserved at year-end for governmental funds. A Comprehensive Annual Financial Report – Budget Supplement (“Supplement”) is published which reconciles revenues and expenditures/expenses at the legal level of control to the summarized amounts presented in the Comprehensive Annual Financial Report. This Supplement can be obtained from the City’s Director of Finance.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(3) RECONCILIATION OF FUND FINANCIAL STATEMENTS TO GOVERNMENT-WIDE FINANCIAL STATEMENTS Amounts reported for governmental activities in the government-wide statement of net assets are different from those reported for governmental funds in the fund balance sheet. The following provides a reconciliation of those differences:

Assets Cash and investments Receivables (net, where applicable, of allowances for uncollectibles): Accounts Interest Property taxes Notes Other governments Internal balances Inventory Prepaids Deposits Restricted cash with fiscal agent Capitalized lease receivable Advances to other funds Bond issuance costs, net Capital assets Total assets Liabilities and Fund Balances/Net Assets Liabilities: Accounts payable Accrued liabilities Accrued interest payable Short-term loan payable Contracts payable (retained percentage) Deferred revenue Due to other funds Due to other governments Liabilities payable from restricted assets Compensated absences due within one year Compensated absences due in more than one year Claims payable due within one year Claims payable due in more than one year Long-term debt due within one year Long-term debt due in more than one year Advances from other funds Total liabilities Total fund balances/net assets Total liabilities and fund balance/net assets

Total governmental activities internal service funds (2) 20,453,975

Other adjustments and eliminations (3) —

Statement of net assets totals 252,482,146

Total governmental funds $ 232,028,171

Long-term assets and liabilities (1) —

9,147,551 972,104 1,813,164 38,615,394 8,661,227 311,657 932,593 119,075 16,750 74,659,428 5,640,000 47,854,499 — — $ 420,771,613

— — — — — — — — — — — — 1,428,550 300,319,800 301,748,350

— 413,326 — — — 1,775,803 — 868,020 — — — — — 316,753 23,827,877

— — — — — (780,406) — — — — (5,640,000) (47,854,499) — — (54,274,905)

9,147,551 1,385,430 1,813,164 38,615,394 8,661,227 1,307,054 932,593 987,095 16,750 74,659,428 — — 1,428,550 300,636,553 692,072,935

$ 16,351,528 6,319,196 — 400,000 10,781,761 27,676,547 3,269,673 3,911,945 599,052 —

— — 3,792,986 — — — — — — 5,068,827

173,815 — — — — — — — — —

— — — — — (27,215,869) (3,269,673) — — —

16,525,343 6,319,196 3,792,986 400,000 10,781,761 460,678 — 3,911,945 599,052 5,068,827

— — — — — 45,365,232 114,674,934 306,096,679 $ 420,771,613

1,336,909 — — 4,880,000 150,787,328 — 165,866,050 135,882,300 301,748,350

— 6,729,716 16,414,410 — — — 23,317,941 509,936 23,827,877

— — — — — (45,365,232) (75,850,774) 21,575,869 (54,274,905)

1,336,909 6,729,716 16,414,410 4,880,000 150,787,328 — 228,008,151 464,064,784 692,072,935

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

1)

Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the balance sheet. Capital assets of internal service funds of $316,753, net of accumulated depreciation, are not included in this amount. Less accumulated depreciation

$ 373,483,944 (73,164,144) 300,319,800 1,428,550

Bond issue costs to be amortized over the life of the debt. Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the balance sheet. Tax allocation bonds General obligation bonds Revenue bonds Deferred loss on refunding Accrued interest on long-term debt Unamortized premium on long-term debt Unamortized issue discount on long-term debt Employee compensated absences Total long-term liabilities

$

(81,840,000) (28,170,000) (46,235,000) 630,073 (3,792,986) (119,130) 66,729 (6,405,736) (165,866,050) $ 135,882,300

2) Internal service funds are used by management to charge the costs of information technology and communications operations, self-insurance comprehensive, auto and workers' compensation to individual funds. The assets and liabilities of these internal service funds are included in the governmental activities on the statement of net assets.

$

(1,265,867)

$

1,775,803 509,936

$

(5,640,000)

$

27,215,869 21,575,869

Adjustments for Internal Service Funds are necessary to "close" those funds by recording charges to and payments from business-type activities to completely cover the Internal Service Funds' costs for the year and eliminate interfund activities

3)

Other adjustments and eliminations: The interfund capitalized lease receivable recorded on the balance sheet but eliminated on the statement of net assets. Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds and recognized as revenue in the statement of activities.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Amounts reported for business-type activities in the government-wide statement of net assets are different from those reported for enterprise funds in the fund statement of net assets. The following provides a reconciliation of those differences:

Total enterprise funds

Assets Cash and investments Receivables (net, where applicable, of allowances for uncollectibles): Accounts Interest Notes Internal balances Inventory Prepaids Restricted cash and investments Restricted cash with fiscal agent Due from other governments, restricted Advances to other funds Due from other fund Bond issuance costs, net Capital assets Total assets

$

Total business-type internal service funds (1)

Other adjustments and eliminations (2)

Statement of net assets totals

97,958,526

19,027,413

—

116,985,939

10,486,397 465,581 — — 1,481,412 101,637 9,159,483 2,320,734 33,703,216 5,675,342 2,958,016 742,722 239,665,654 404,718,720

— 80,402 — — 74,719 — 35,665 — — — — — 11,902,182 31,120,381

— — — (1,307,054) — — — — — (5,675,342) (2,958,016) — — (9,940,412)

10,486,397 545,983 — (1,307,054) 1,556,131 101,637 9,195,148 2,320,734 33,703,216 — — 742,722 251,567,836 425,898,689

14,585,921 1,990,953 884,376 3,018,713 6,000,481 710,196 8,164,609 1,677,268

696,568 — — — — — —

— — — — — — (8,164,609) —

15,282,489 1,990,953 884,376 3,018,713 6,000,481 710,196 — 1,677,268

543,879 — — 1,636,213 34,882,408 74,095,017

— 536,553 784,183 — — 2,017,304

— — — — — (8,164,609)

543,879 536,553 784,183 1,636,213 34,882,408 67,947,712

$ 330,623,703

29,103,077

(1,775,803)

357,950,977

Liabilities Liabilities: Accounts payable Accrued liabilities Accrued interest payable Contracts payable (retained percentage) Deferred revenue Liabilities payable from restricted assets Advances from other funds Compensated absences due within one year Compensated absences due in more than one year Claims payable due within one year Claims payable due in more than one year Long-term debt due within one year Long-term debt due in more than one year Total liabilities Net Assets

$

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

1)

2)

Internal service funds are used by management to charge the costs of vehicle management, information technology and risk management to individual funds. The assets and liabilities of the vehicle management and self-insurance bus internal service funds are included in business-type activities in the statement of net assets.

$

29,103,077

$

(1,775,803)

Other adjustments and eliminations: Adjustment for internal service funds are necessary to "close" those funds for charges to and payments from, participating governmental-type activities, to completely cover the internal service funds' costs for the year.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(4)

PRIOR PERIOD ADJUSTMENTS The accompanying financial statements reflect adjustments resulting from a restatement of beginning fund balance/net assets of the General Fund/governmental activities as of June 30, 2003 as follows: 1. Increase in fund balance/net assets of $3,914,200 to record sales tax revenue not recorded in the year ended June 30, 2002. 2. Increase in fund balance of $3,714,023 to record interest earned on promissory notes to the redevelopment agency not recorded in the year ended June 30, 2002 and prior. The following schedule summarizes the effect of the prior period adjustments to the beginning fund balance at July 1, 2002:

Fund balance at beginning of year, as previously reported

General Fund $ 167,453,914

Additions to fund balance for: 1. Sales taxes 2. Interest earned on promissory notes Fund balance at beginning of year, as restated

3,914,200 3,714,023 $

175,082,137

The following schedule summarizes the effect of the prior period adjustments to the beginning net assets on the government-wide financial statements at July 1, 2002:

Net assets at beginning of year, as previously reported

Governmental activities $ 415,998,048

Additions to net assets for: 1. Sales taxes Net assets at beginning of year, as restated

3,914,200 $

419,912,248

CITY OF SANTA MONICA, CALIFORNIA Notes to the Basic Financial Statements, Continued Year Ended June 30, 2003

(5)

CASH AND INVESTMENTS Cash and investments include the cash balances of substantially all funds, which are pooled and invested by the City Treasurer/Revenue Manager for the purpose of increasing interest earnings through investment activities. Interest earned on pooled investments is apportioned quarterly to certain participating funds based upon each funds’ cash balance with all remaining interest deposited in the General Fund. Deposits At June 30, 2003, the carrying amount of the City’s deposits was $8,800,647 and the corresponding bank balance was $12,531,388. The difference of $3,370,740 was principally due to outstanding checks and a timing difference in transferring funds. Of the total bank balance, $100,000 was insured by National Credit Union Insurance Fund, $200,000 was insured by Federal Depository Insurance and $12,109,423 was collateralized with collateral held by the pledging financial institution’s trust department or agent in the City’s name in accordance with the provisions of the California Government Code. Investments The City manages its pooled idle cash investments under the guidelines of the State of California Government Code Section 53601 which specifically authorizes investments in the following instruments: treasury bills, treasury notes, federal agency securities, bankers’ acceptances, nonnegotiable certificates of deposit, commercial paper, negotiable certificates of deposit, and repurchase agreements. All investment activities are conducted with financial institutions specifically approved by resolution of the City Council. In accordance with GAAP, the City’s investments are categorized to give an indication of the level of custodial risk assumed by the City. The City’s investments are categorized in the following manner: Category 1 – Includes investments that are insured or registered or for which the securities are held by the City or its agent (other than the counterparty) in the City’s name. Category 2 – Includes uninsured and unregistered investments for which the securities are held by the counterparty’s trust department or agent in the City’s name. Not Required to be Categorized – Includes investments made directly with another party, real estate, direct investments in mortgages and other loans, open-end mutual funds, pools managed by other governments, annuity contracts and guaranteed investment contracts.

CITY OF SANTA MONICA, CALIFORNIA Notes to the Basic Financial Statements, Continued Year Ended June 30, 2003 The City’s investments by category as of June 30, 2003, are as follows:

Category 1 City-held investments: Federal agencies Treasury notes State Treasurer's Local Agency Investment Fund (LAIF) Investments held by others: Trustee-held securities: Federal agencies

Category 2

Not required to be categorized

Fair value at June 30, 2002

$ 283,766,873

—

—

$ 283,766,873

50,304,688

—

—

50,304,688

—

—

—

34,020,024

Treasury notes/bonds Money market funds Corporate bonds (Cemetery and

— —

496,278 —

Mausoleum Perpetual Care Funds) Common and preferred stock (Cemetery and Mausoleum Perpetual Care Funds) Total Investments

—

1,435,705

— $ 334,071,561

4,018,928 39,970,935

36,525,510

36,525,510

—

34,020,024

— 37,009,231

496,278 37,009,231

— — 73,534,741

1,435,705 4,018,928 $ 447,577,237

Total deposits at carrying amount

$

Other cash funds (imprest, revolving) Total cash and investments

19,620 $ 456,397,504

Total cash and investments Total restricted cash and investments (note 6) Total cash and investments

$ 379,417,342 76,980,162 $ 456,397,504

Total cash and investment summary by fund type: Total governmental activities Total business-type activities Total fiduciary funds Total cash and investments

8,800,647

$ 327,141,574 128,501,821 754,109 $ 456,397,504

The unrealized loss on investments held in the City Treasurer’s pool at June 30, 2003 was $262,255. The unrealized loss has been included as a component of designated fund balances at June 30, 2003. Because the City holds investments to maturity there is no realized gain or loss on investments sold or matured during the year. The net increase in fair value of investments was $5,337,053. This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 (6)

TRUSTEE-HELD CASH AND INVESTMENTS Cash and investments at June 30, 2003 that are held in trust by banks and savings and loan associations on behalf of the City of Santa Monica are comprised of the following:

Major Funds: General Fund: Main Library Improvement Project Bonds (1990 Series) Main Library Improvement Project Bonds (2002 Series) Public Safety Facility Bonds (1999 Series) Public Safety Facility Bonds (2002 Series) Subtotal Downtown Redevelopment Project Fund: Downtown Redevelopment Project (2002 Series) Earthquake Recovery Redevelopment Project Fund: Earthquake Recovery Redevelopment Bonds (1999 Series)

$

179,440 25,138,047 14,539,633 25,124 39,882,244

16,638

5,803,325

Water Fund: Public Safety Facility Bonds (2002 Series)

229,798

Wastewater Enterprise Fund: Wastewater Enterprise Revenue Bonds

817,807

Airport Enterprise Fund: Airport Certificates of Participation (1995 Series)

832,385

Nonmajor Governmental Funds: Special Revenue Funds: Housing Authority Fund Citizens Option for Public Safety Fund Asset Seizure Fund Public Safety Facility Bonds (2002 Series) Subtotal Capital Projects Funds: Earthquake Recovery Low/Mod Housing Fund Earthquake Recovery Redevelopment Bonds (1999 Series) Ocean Park Redevelopment Project Low/Mod Housing Fund Ocean Park Redevelopment Bonds (2002 Series) Ocean Park Redevelopment Project Fund Ocean Park Redevelopment Bonds (2002 Series) Subtotal

265,937 312,974 594,028 1,172,939

17,687 5,835,857 1,950,001 7,803,545

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(continued) Debt Service Funds: City Fund: Main Library Improvement Project Bonds (1990 Series) Main Library Improvement Project Bonds (1998Series) Main Library Improvement Project Bonds (2002 Series) Parking Authority Lease Revenue Bonds (2002 Refunding) Public Safety Facility (1999 Series) Public Safety Facility (2002 Series) Subtotal

268,775 105,247 1,688,130 209,273 2,831,306 1,363,768 6,466,499

Redevelopment Agency Fund: Downtown Redevelopment Project (2002 Series) Earthquake Redevelopment Bonds (1999 Series) Ocean Park Redevelopment Projects Bonds (2002 Series) Subtotal

462,490 2,847,855 3,153,404 6,463,749

Nonmajor Enterprise Funds: Pier Fund Cemetery Fund Subtotal Permanent Funds: Cemetery Perpetual Care Fund Mausoleum Perpetual Care Fund Subtotal Total trustee-held cash and investment

233,658 207,086 440,744

$

6,433,520 616,969 7,050,489 76,980,162

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(7)

NOTES RECEIVABLE Governmental Activities Balance at June 30, 2002 General Fund American Youth Hostel (a) Mountain View Mobile Inn Residents Assoc. (b) Step up on Second (c) Total General Fund Other Governmental Funds Community Corporation of Santa Monica (d) Community Corporation of Santa Monica (e) Community Corporation of Santa Monica (f) Community Corporation of Santa Monica (g) Community Corporation of Santa Monica (h) Habitat for Humanity - Los Angeles (i) Community Corporation of Santa Monica (j) Low- and moderate-income housing (DRPLP) (k) Low- and moderate-income housing (DRPLP) (k) Low- and moderate-income housing (l) MERL Program (m) Low income senior housing (n) Total Non-Major Governmental Funds Non-Major Enterprise Fund Pier Seafood (o) Total Notes Receivable

$

$

Increases

Decreases

Balance at June 30, 2003

40,000 — 91,810 131,810

360,000 124,977 1,331,847 1,816,824

400,000 124,977 1,423,657 1,948,634

— — — —

701,418 1,240,080 3,289,381 — — — — 200,000 200,000 2,182,965 22,913,061 46,250 30,773,155

— — 77,848 2,585,300 1,069,260 470,432 3,263,000 — — 255,209 — — 7,721,049

— — — — — — — — — 63,170 1,632,464 — 1,695,634

701,418 1,240,080 3,367,229 2,585,300 1,069,260 470,432 3,263,000 200,000 200,000 2,375,004 21,280,597 46,250 36,798,570

7,016 32,728,805

— 7,721,049

7,016 1,834,460

— 38,615,394

General Fund a. On April 12, 1990, the City loaned $500,000 from the general fund, interest free, to American Youth Hostel, Inc. to assist in financing construction of a 200-bed international youth hostel facility. The eighth of 22 installment loan payments was received in 2003; the remaining principal balance at June 30, 2003 is $360,000. b. A promissory note in the amount of $290,000, interest free, has been executed with Mountain View Mobile Inn Residents Association for pre-development loan funds to assist in the acquisition and subsequent conversion of the mobile home park located at 1930 Stewart Street to tenant ownership. As of June 30, 2003, $124,977 had been disbursed to the borrower. c. A promissory note in the amount of $1,331,252 was executed with Step Up on Second, L.P., a California limited partnership, for the construction of a 36-bed permanent housing project for mentally disabled low-income persons. The project is located at 1328 Second Street in Santa Monica. The original promissory note dated September 16, 1993 was amended, superseded and replaced in full by a promissory note dated September 9, 1996, the unpaid balance is due not later than September 16, 2043, and may be extended for a period of up to 25 years. Interest has been forgiven and the principal balance as of June 30, 2003 is $1,331,847.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 Other Government Funds d. On April 17, 2000, the City executed a promissory note with Community Corporation of Santa Monica for the construction of a 20-unit, large family, affordable housing complex located at 708 Pico Blvd. $579,000 is funded from the City’s Pico Neighborhood Trust Fund, while $221,000 is funded from the City-wide CDBG Fund. This note is a 0% loan to be repaid from residual receipts of the project and is due on October 22, 2053. At June 30, 2003, the outstanding balance is $701,418. e. A promissory note in the amount of $5,253,864 was executed with Community Corporation of Santa Monica for an Affordable Housing Replacement Project located at 502 Colorado Blvd. Fortyfour single room occupancy units have been constructed on the site. This is a 0% loan with the principal amount of $2,459,864 due and payable after a two-year deferral period. The remaining $2,794,000 shall convert into a permanent fifty-year loan with payments being made from residual receipts. At June 30, 2003, $1,240,080 had been disbursed to the borrower. f.

A promissory note in the amount of $4,089,520 was executed with Community Corporation of Santa Monica for an Affordable Housing Project located at 2209 Main Street. Forty-three low- and moderate-income housing units are to be constructed on the site. This is a 0% loan with the principal amount due and payable after a two-year deferral period. At June 30, 2003, $3,367,229 had been disbursed to the borrower.

g. A promissory note in the amount of $3,350,000 was executed with Community Corporation of Santa Monica for an Affordable Housing Project located at 1424 Broadway Street. This loan is for the acquisition of land and predevelopment expenses for future low/moderate income housing. This is a 0% loan with the principal amount due and payable after a two-year deferral period. At June 30, 2003, $2,585,300 had been disbursed to the borrower. h. A promissory note in the amount of $1,382,619 was executed with Community Corporation of Santa Monica for an Affordable Housing Project located at 1512 Fifteenth Street. This loan is for the acquisition of land and predevelopment expenses for future low/moderate income housing. This is a 0% loan with the principal amount due and payable after a two-year deferral period. At June 30, 2003, $1,069,260 had been disbursed to the borrower. i.

A promissory note in the amount of $575,000 was executed with Habitat for Humanity – Los Angeles for an Affordable Housing Project located at 2018 Nineteenth Street. This loan is for the acquisition of a vacant parcel of land where Habitat will build up to six new ownership units that will be sold to very low income buyers. This is a 0% loan with the principal amount due and payable after a two-year deferral period. At June 30, 2003, $470,432 had been disbursed to the borrower.

j.

Two promissory notes, one in the amount of $2,714,033 and one for $1,691,967 were executed with Community Corporation of Santa Monica for an Affordable Housing Project located at 2601 – 2615 Santa Monica Blvd. This loan is for the acquisition of land and predevelopment expenses for a 40unit income housing development. Both are 0% loans with the principal amount due and payable after a two-year deferral period. At June 30, 2003, $1,571,033 and $1,691,967 respectively, had been disbursed to the borrower.

k. Two promissory notes, for $200,000 each, were executed with the owners of certain rental properties. The notes were for five years at 3% interest per year, and could be renewed for five

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 additional five-year terms as long as the rental properties are maintained for low-and moderateincome households. The first note was due December 22, 1993, and has been extended for the second time to December 22, 2003 under the same terms and conditions; the second note was due December 29, 1994, and has been extended for the second time to December 19, 2004 under the same terms and conditions. The promissory notes are payable in full upon sale or transfer of the property (whichever occurs first) or upon expiration of the term of the promissory notes. Upon payment to the City, proceeds must be paid to the Sate of California as repayment for two $200,000 State Department of Housing and Urban Development Deferred Payment Rehabilitation Loan Program (DPRLP) loans. l.

These represent non-interest bearing, limited appreciation and shared appreciation loans made pursuant to TORCA Program guidelines to assist low- and moderate-income households purchase their rental units. As of June 30, 2003, the outstanding balances of such loans total $2,375,004.

m. The January 17, 1994 Northridge Earthquake resulted in damaged multifamily residences in the City of Santa Monica. To facilitate repair of damaged multifamily residences, the Federal Department of Housing and Urban Development awarded the City of Santa Monica a total of $33,388,000 in emergency funds to finance the City's Multifamily Earthquake Repair Loan (MERL) Program. The funds were allocated as follows: $2,027,000 – HOME Program Emergency Supplemental Fund, $6,361,000 – HOME Program Presidential Contingency Fund, and $25,000,000 – CDBG Program Emergency Supplemental Fund. As of June 30, 2003, the following summarizes the total loan amount authorized, amount disbursed since inception of the loan program, the amounts repaid by the borrowers, and the loan balances:

Loan amount Fund Miscellaneous Grants CDBG Total

authorized $ 7,790,695 21,739,088 $ 29,529,783

Loan amount disbursed Amounts repaid 7,790,695 1,192,172 20,633,204 5,951,130 28,423,899 7,143,302

Loan balance at June 30, 2003 6,598,523 14,682,074 21,280,597

n. The Redevelopment Housing Trust Fund, formerly known as “CHARP” provides funds to eligible borrowers in the form of deferred payment loans to make up the financial gap between available non-program resources, including the borrower’s equity and private financing, and the limited equity cooperatives. At June 30, 2003, loans totaling $46,250 are outstanding. Non-major Enterprise Fund o. On September 1, 1992, a promissory note in the amount of $270,272 was executed with Pier Seafood. As of June 30, 2003, the loan is considered paid in full.

CITY OF SANTA MONICA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(8)

CAPITAL ASSETS Capital assets activity for the primary government for year ended June 30, 2003 is as follows: Balance at Balance at

July 1, 2002 as restated Governmental activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated

Increases

Decreases

June 30, 2003

$ 85,791,090 72,247,235 158,038,325

967,500 48,272,307 49,239,807

— (5,630,446) (5,630,446)

86,758,590 114,889,096 201,647,686

Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total capital assets being depreciated

50,171,085 80,077,418 30,760,436 977,274 161,986,213

1,990,516 6,655,865 1,187,412 1,346,485 11,180,278

— (220,197) (190,068) — (410,265)

52,161,601 86,513,086 31,757,780 2,323,759 172,756,226

Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets, being depreciated, net Subtotal governmental activities

(17,981,391) (34,536,001) (13,098,008) (93,353) (65,708,753) 96,277,460 254,315,785

(1,067,868) (4,655,495) (2,624,783) (124,093) (8,472,239) 2,708,039 51,947,846

— 249,942 163,692 — 413,634 3,369 (5,627,077)

(19,049,259) (38,941,554) (15,559,099) (217,446) (73,767,358) 98,988,868 300,636,554

31,993,521 16,783,836 48,777,357

3,195,000 18,503,172 21,698,172

(967,500) (8,367,270) (9,334,770)

34,221,021 26,919,738 61,140,759

32,678,384 142,843,955 50,672,834 100,104,048 326,299,221

406,923 9,336,637 4,447,762 5,515,530 19,706,852

(8,397,190) (252,001) — (3,221,010) (11,870,201)

24,688,117 151,928,591 55,120,596 102,398,568 334,135,872

(17,138,129) (66,119,872) (3,167,052) (48,759,733) (135,184,786) 191,114,435 239,891,792 $ 494,207,577

(1,058,569) (6,566,720) (1,331,684) (9,554,384) (18,511,357) 1,195,495 22,893,667 74,841,513

6,558,266 237,773 — 3,191,309 9,987,348 (1,882,853) (11,217,623) (16,844,700)

(11,638,432) (72,448,819) (4,498,736) (55,122,808) (143,708,795) 190,427,077 251,567,836 552,204,390

Business-type activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Utility systems Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Utility systems Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Subtotal business-type activities Total

CITY OF SANTA MONICA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

The internal service funds serve both governmental and proprietary funds. Accordingly, a portion of their capital assets are included within both governmental and business-type activities in the above table. Capital assets activity for internal service funds for the year ended June 30, 2003, is as follows: Internal service funds included in governmental activities: Balance at July 1, 2002 Capital assets, being depreciated: Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Total

$

$

Balance at Increases

Decreases

883,946 883,946

36,021 36,021

— —

919,967 919,967

(423,774) (423,774) 460,172 460,172

(179,440) (179,440) (143,419) (143,419)

— — — —

(603,214) (603,214) 316,753 316,753

Internal service funds included in business-type activities: Balance at July 1, 2002 Capital assets, not being depreciated: Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Total

$

June 30, 2003

281,743 281,743

23,219,523 23,219,523

(11,585,513) (11,585,513) 11,634,010 $ 11,915,753

Balance at Increases

Decreases

June 30, 2003

— —

— —

281,743 281,743

2,222,050 2,222,050

(1,594,569) (1,594,569)

23,847,004 23,847,004

(2,205,924) (2,205,924) 16,126 16,126

1,564,871 1,564,871 (29,698) (29,698)

(12,226,566) (12,226,566) 11,620,438 11,902,181

CITY OF SANTA MONICA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Capital assets activity by major enterprise fund for the year ended June 30, 2003 is as follows: Water Fund: Balance at

Balance at July 1, 2002 Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated

$

Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Total

Increases

Decreases

21,000 1,231,749 1,252,749

— 324,767 324,767

701,447 42,518,227 1,922,206 45,141,880

— 1,096,330 28,636 1,124,966

— — — —

701,447 43,614,557 1,950,842 46,266,846

(19,311) (1,180,167) (99,082) (1,298,560) (173,594) 151,173

— — — — — (1,087,859)

(301,858) (24,254,417) (1,360,635) (25,916,910) 20,349,936 20,839,593

(282,547) (23,074,250) (1,261,553) (24,618,350) 20,523,530 $ 21,776,279

— (1,087,859) (1,087,859)

June 30, 2003 21,000 468,657 489,657

Wastewater Fund: Balance at July 1, 2002 Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Utility systems Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Utility systems Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Total

$

Balance at Increases

Decreases

June 30, 2003

30,764 5,846,229 5,876,993

3,195,000 3,865,453 7,060,453

— (6,615,323) (6,615,323)

3,225,764 3,096,359 6,322,123

168,067 26,909,991 50,672,834 1,191,737 78,942,629

406,923 6,124,661 4,447,762 — 10,979,346

— (14,226) — — (14,226)

574,990 33,020,426 55,120,596 1,191,737 89,907,749

(67,837) (11,115,836) (3,167,052) (304,001) (14,654,726) 64,287,903 $ 70,164,896

(8,249) (914,813) (1,331,684) (80,479) (2,335,225) 8,644,121 15,704,574

— — — — — (14,226) (6,629,549)

(76,086) (12,030,649) (4,498,736) (384,480) (16,989,951) 72,917,798 79,239,921

Due to an accounting error, construction in progress and due to other governments in the Wastewater Enterprise Fund were both understated by $5,688,889 in the prior year. The current year’s beginning capital assets balance for the Wastewater Enterprise Fund has been adjusted to correct the error.

CITY OF SANTA MONICA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Airport Fund: Balance at

Balance at July 1, 2002 Capital assets, not being depreciated: Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Total

$

Increases

Decreases

June 30, 2003

4,202,681 4,202,681

730,837 730,837

— —

4,933,518 4,933,518

7,673,577 10,702,044 89,165 18,464,786

— — 47,961 47,961

— — — —

7,673,577 10,702,044 137,126 18,512,747

(152,058) (658,345) (6,191) (816,594) (768,633) (37,796)

— — — — — —

(2,882,484) (7,148,491) (74,575) (10,105,550) 8,407,197 13,340,715

(2,730,426) (6,490,146) (68,384) (9,288,956) 9,175,830 $ 13,378,511

Big Blue Bus Fund: Balance at

Balance at July 1, 2002 Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Total

Increases

Decreases

June 30, 2003

$ 25,635,557 3,608,666 29,244,223

— 12,140,832 12,140,832

— — —

25,635,557 15,749,498 41,385,055

8,230,541 27,646,717 71,702,264 107,579,522

— 1,583,324 3,021,861 4,605,185

— (237,775) (1,626,439) (1,864,214)

8,230,541 28,992,266 73,097,686 110,320,493

(3,314,451) (8,478,973) (34,454,226) (46,247,650) 61,331,872 $ 90,576,095

(160,379) (2,395,737) (7,000,797) (9,556,913) (4,951,728) 7,189,104

— 237,775 1,626,439 1,864,214 — —

(3,474,830) (10,636,935) (39,828,584) (53,940,349) 56,380,144 97,765,199

CITY OF SANTA MONICA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government Public safety General services Cultural and recreation services Library Housing and community development Capital assets held by the government's internal service funds are charged to the various functions based on their assets usage Total depreciation expense - governmental activities Business-type activities: Water Solid waste management Pier Wastewater Civic auditorium Airport Stormwater management Cemetery Big blue bus Cable communications Special aviation Parking authority Capital assets held by the government's internal service funds are charged to the various programs based on their assets usage Total depreciation expense - business-type activities

$

$

$

708,144 1,403,702 1,815,722 1,857,114 244,167 2,014,009 179,440 8,222,298

1,298,559 73,725 1,033,972 2,335,225 415,036 816,595 204,585 47,871 9,556,912 47,612 52,329 271,423

2,205,924 $ 18,359,768

Note that depreciation expense does not equal amounts shown on enterprise fund statements because internal service fund amounts are included in functions/programs.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(9)

DEFERRED REVENUE Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental and enterprise funds also defer revenue recognition in connection with resources that have been received as of year-end, but not yet earned. At June 30, 2003, $5,640,000 related to lease payments made by the City to the Downtown Redevelopment Project Fund is not available and is eliminated as interfund activity. The interest on advances reported in the General Fund and the nonmajor governmental funds also represent interfund activity eliminated in the government-wide financial statements. This interest is earned and included in promissory note balances at year end. Revenue related to a receivable of $6,308,516 in the Disaster Relief Fund is deferred in the fund financial statements because they were not available to liquidate liabilities of the current period. However, this amount is recognized for government-wide financial statement purposes because all requirements for revenue recognition have been met. The components of deferred revenue are as follows:

Fund financial statements Governmental funds: General Fund: Interest on advances Other receivables Total General Fund Downtown Redevelopment Project Fund: Lease payments (1) Disaster Relief Fund: Receivable from FEMA Receivable/advances from OES Total Disaster Relief Fund Nonmajor governmental funds: Interest on advances Total governmental funds Enterprise funds: Big Blue Bus Fund: Bus tokens/Metrocard LACMTA funds received prior to meeting all eligibility requirements Total Big Blue Bus Fund Total deferred revenue

$

Recognized in government-wide financials

Government-wide financial statements

11,212,943 180,796 11,393,739

(10,956,706) — (10,956,706)

— — —

256,237 180,796 437,033

5,640,000

(5,640,000)

—

—

5,651,333 680,828 6,332,161

— — —

(5,651,333) (657,183) (6,308,516)

— 23,645 23,645

— (6,308,516)

— 460,678

—

232,653

4,310,647 27,676,547

232,653

$

Eliminate interfund activity

5,767,828 6,000,481 33,677,028

(4,310,647) (20,907,353)

—

— — (20,907,353)

— — (6,308,516)

(1) Represents parking lease receivable unavailable therefore deferred in the fund financial statements.

5,767,828 6,000,481 6,461,159

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(10) LONG-TERM LIABILITIES Changes in long term liabilities: Long-term liability activity for the year ended June 30, 2003, was as follows: Balance at July 1, 2002 Governmental Activities: Revenue bonds Tax allocation bonds General obligation bonds Less deferred amounts: For issuance discounts For issuance premiums Deferred loss on refunding Total bonds payable Capital lease obligations Compensated absences Claims payable Subtotal governmental activities Business-type activities: Certificates of participation Loans payable Revenue bonds Less deferred amounts: For issuance discounts Loss on refunding Total loans and bonds payable Capital leases Compensated absences Claims payable Subtotal business-type activities Total

$ 46,630,000 82,800,000 3,440,000 (71,128) 45,327 (692,642) 132,151,557 899,804 5,648,144 21,926,301 160,625,806

Additions — — 25,000,000 — 80,000 — 25,080,000 — 4,814,768 8,953,867 38,848,635

Reductions

Balance at June 30, 2003

395,000 960,000 270,000

46,235,000 81,840,000 28,170,000

1,460,000 1,865,000 1,555,000

(66,729) 119,130 (630,073) 155,667,328 — 6,405,736 23,144,126 185,217,190

— — — 4,880,000 — 5,068,827 6,729,716 16,678,543

(4,399) 6,197 (62,569) 1,564,229 899,804 4,057,176 7,736,042 14,257,251

Due within one year

2,255,000 4,900,995 34,230,000

— — —

335,000 275,916 890,000

1,920,000 4,625,079 33,340,000

350,000 281,213 1,005,000

(460,707) (3,085,246) 37,840,042 30,718 1,914,317 1,591,461 41,376,538

(6,331) — (6,331) — 1,832,264 439,611 2,265,544

— (185,826) 1,315,090 30,718 1,525,434 710,336 3,581,578

(467,038) (2,899,420) 36,518,621 — 2,221,147 1,320,736 40,060,504

— — 1,636,213 — 1,677,268 536,553 3,850,034

$ 202,002,344

41,114,179

17,838,829

225,277,694

20,528,577

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

A summary of long-term bonds outstanding at year end is as follows:

Date of issue Governmental activities: Revenue bonds: Downtown Redevelopment 2002 Parking Authority 2002 Public Finance Authority 1999 Public Finance Authority 2002 Subtotal revenue bonds governmental activities Tax allocation bonds: Ocean Park Redevelopment 2002 Earthquake Recovery Project 1999 Subtotal tax allocation bonds governmental activities General obligation bonds: Main Library Improvements 1998 Main Library Improvements 1990 Main Library Improvements 2002 Subtotal general obligation bonds governmental activities Subtotal governmental activities Business-type activities: Hyperion Project Revenue 1993 Certificates of participation 1995 Loans: State Dept. of Transportation loans State Water Resources Control Board loan Subtotal loans payable Subtotal business-type activities Total

May 1, 2002 May 1, 2002 Sept 15, 1999 Jan 1, 2002

Final Original issue maturity date

$ 5,640,000 10,480,000 13,200,000 17,310,000

July 1, 2008 July 1, 2016 July 1, 2021 July 1, 2021

Interest rate

2.00-3.60% 3.50-4.50% 4.25-5.50% 2.00-4.75%

Balance at June 30, 2003

$

5,640,000 10,480,000 12,805,000 17,310,000 46,235,000

May 1, 2002 Dec 1, 1999

19,315,000 65,285,000

July 1, 2018 July 1, 2029

3.75-5.00% 4.50-7.50%

19,315,000 62,525,000 81,840,000

June 25, 1998 April 10, 1990 Aug 27, 2002

3,060,000 4,500,000 25,000,000

July 1, 2010 July 1, 2004 July 1, 2022

4.00-4.30% 6.00-6.75% 2.00-4.60%

2,910,000 260,000 25,000,000 28,170,000 156,245,000

Dec 22, 1993 Aug 15, 1995 various Jan 29, 1999

38,620,000 4,025,000

Jan 1, 2022 July 1, 2007

4.25-12.00% 8.875-9.10%

33,340,000 1,920,000

1,305,444

July 1, 2010

6.50-7.40%

227,742

$ 5,000,000

July 1, 2019

2.60%

4,397,337 4,625,079 39,885,079 $ 196,130,079

Management believes it is in compliance with all debt covenants. General obligation bonds On August 27, 2002, the City issued $25,000,000 of Library Improvement Project bonds bearing interest at 4.06% to finance the acquisition, construction and installation of certain capital improvements to the City's main library and related improvements, facilities and equipment.

CITY OF SANTA MONICA CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Annual debt service requirements to maturity are as follows: Governmental activities Fiscal year ended June 30, 2004 2005 2006 2007 2008 2009-2013 2014-2018 2019-2023 2024-2028 2029-2033

Revenue bonds Principal Interest $

$

1,460,000 2,095,000 2,870,000 2,970,000 3,070,000 12,340,000 12,790,000 8,640,000 — — 46,235,000

1,936,620 1,879,604 1,797,571 1,699,560 1,593,044 6,397,274 3,646,472 903,021 — — 19,853,166

Tax allocation bonds Principal Interest

General obligation bonds Principal Interest

1,865,000 1,950,000 2,040,000 2,125,000 2,210,000 13,190,000 17,315,000 14,925,000 17,610,000 8,610,000 81,840,000

1,555,000 1,580,000 1,605,000 1,630,000 1,660,000 7,640,000 6,250,000 6,250,000 — — 28,170,000

4,532,301 4,447,644 4,363,676 4,276,610 4,168,056 18,653,002 14,445,822 9,891,177 5,347,500 524,100 70,649,888

965,973 1,000,844 961,966 921,899 878,203 3,499,288 2,199,687 853,750 — — 11,281,610

Loans payable Principal Interest — — — — — — — — — — —

— — — — — — — — — — —

Total Principal

Interest

4,880,000 5,625,000 6,515,000 6,725,000 6,940,000 33,170,000 36,355,000 29,815,000 17,610,000 8,610,000 156,245,000

7,434,894 7,328,092 7,123,213 6,898,069 6,639,303 28,549,564 20,291,981 11,647,948 5,347,500 524,100 101,784,664

Business-type activities Fiscal year ended June 30, 2004 2005 2006 2007 2008 2009-2013 2014-2018 2019-2023

Revenue bonds Principal Interest $

$

1,005,000 1,130,000 1,190,000 1,255,000 1,330,000 7,855,000 9,905,000 9,670,000 33,340,000

1,591,275 1,470,675 1,419,825 1,366,275 1,303,525 5,478,089 3,488,950 1,067,850 17,186,464

Certificates of Participation Principal Interest 350,000 365,000 385,000 400,000 420,000 — — — 1,920,000

92,505 74,447 55,130 34,320 11,760 — — — 268,162

General obligation bonds Principal Interest — — — — — — — — —

— — — — — — — — —

Loans payable Principal Interest 281,211 236,646 242,221 247,941 253,810 1,318,126 1,422,847 622,277 4,625,079

132,996 120,501 112,272 105,060 97,700 374,101 193,777 24,373 1,160,780

Total Principal 1,636,211 1,731,646 1,817,221 1,902,941 2,003,810 9,173,126 11,327,847 10,292,277 39,885,079

Interest 1,816,776 1,665,623 1,587,227 1,505,655 1,412,985 5,852,190 3,682,727 1,092,223 18,615,406

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

The following is a summary of changes in long-term obligations for each major enterprise fund for the year ended June 30, 2003 Balance at July 1, 2002 Airport Fund Certificates of participation Loans payable Less deferred amounts: Loss on refunding Total Wastewater Fund Revenue bonds Less deferred amounts: For issuance discounts Loss on refunding Total

$

$

Additions

Reductions

Balance at June 30, 2003

Due within one year

2,255,000 299,960

— —

335,000 72,218

1,920,000 227,742

350,000 72,218

(185,630) 2,369,330

— —

(37,126) 370,092

(148,504) 1,999,238

— 422,218

—

890,000

33,340,000

1,005,000

(148,698) 741,302

(467,038) (2,750,917) 30,122,045

— — 1,005,000

$ 34,230,000 (460,707) (2,899,615) $ 30,869,678

(6,331) — (6,331)

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 (11) FUND DEFICITS Special Revenue Funds. A deficit fund balance in the amount of $1,202,642 exists in the Beach Recreation Fund. Anticipated increases in future Beach Recreation Fund revenues, specifically beach parking revenues, are expected to alleviate this deficit fund balance. A deficit fund balance in the amount of $4,123,698 exists in the Disaster Relief Fund. Recognition of deferred revenue related to FEMA receivables is expected to alleviate this deficit fund balance Capital Projects Funds. A deficit fund balance in the amount of $13,687,097 exists in the Downtown Redevelopment Project Fund; and a deficit fund balance in the amount of $255,139 exists in the Ocean Park Redevelopment Project Fund. These fund balance deficits are primarily due to the issuance of long-term debt for redevelopment purposes. Management plans to use future tax increment revenues to pay off the long-term debt and eliminate these fund deficits. Enterprise Fund. A deficit of net assets in the amount of $240,228 exists in the Cemetery Fund due to reduction of transfer from the General Fund. The deficit net assets is expected to be funded by transfers from the General Fund. Internal Service Fund. A deficit fund balance in the amount of $8,210,756 exists in the Self-Insurance Workers’ Compensation Fund due to adverse development on new and existing claims related to prior years. Management expects to alleviate this deficit fund balance by increasing future user charges, instituting cost containment measures, and continuing evaluation of reserve balances.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(12)

INTERFUND TRANSACTIONS The following tables summarize the due to/from other funds, interfund advances to/from, and transfers in/out at June 30, 2003: Due to/from Due to/from other funds at June 30, 2003 are as follows: Due from (receivable fund) General Fund Nonmajor enterprise fund

Due to (payable fund) Nonmajor governmental funds Earthquake Redevelopment Project Fund Total due to/from

$ $

Amount 311,657 2,958,016 3,269,673

During the year, the Redevelopment Agency and the Parking Authority entered into a purchase/sales agreement for the purchase/sale of six downtown parking structures with related land for $60 million. The related promissory note, secured by a deed of trust, calls for annual principal payments of $2 million for 30 years with interest. These parking structures with related land, built generally in the late 60’s, were carried on the books of the Parking Authority at historical cost less related depreciation. At the time of sale, the book value of the six structures and land was $2,958,016. The sale/purchase transaction has been recorded as a transfer of the structures and land from the Parking Authority to the Redevelopment Agency and a corresponding receivable/liability for the book value of the assets transferred. The excess of the purchase price over the book value is not recorded as a gain on the transfer because the transaction is between two blended component units of the City of Santa Monica. As related parties, no gain on the sale is recorded. Once the Redevelopment Agency’s payments exceed the book value of the assets transferred, all future promissory note payments will be considered recorded as inter fund transfers on the financial statements of the two component units. Advances to/from Advances to/from other funds at June 30, 2003 are as follows: Advances to (receivable fund) General Fund

Nonmajor governmental funds Nonmajor governmental funds Earthquake Recovery Project Fund Wastewater Fund Wastewater Fund

Advances from (payable fund) Downtown Redevelopment Project Fund Nonmajor governmental funds Airport Fund Nonmajor enterprise fund Total General Fund Earthquake Recovery Project Funds Nonmajor governmental funds General Fund Disaster Relief Fund Nonmajor enterprise fund Total advances to/from

$

$

Amount 16,228,546 9,085,161 6,434,913 1,640,821 33,389,441 3,465,452 5,757,418 5,242,188 5,586,467 88,875 53,529,841

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 Advances represent loans made to provide financing resources for capital projects. These amounts are expected to be repaid in future years, subject to the various loan terms. None of the above balances are expected to be repaid within one year. Transfers Transfers to/from other funds at June 30, 2003 are as follows: Transfer in (receivable fund) General Fund

Nonmajor governmental funds

Wastewater Fund

Airport Fund Big Blue Bus Fund

Nonmajor enterprise funds

Internal service funds

Transfer out (payable fund) Downtown Redevelopment Project Fund Earthquake Redevelopment Project Fund Nonmajor governmental funds Water Fund Wastewater Fund Airport Fund Big Blue Bus Fund Nonmajor enterprise funds Total General Fund General Fund Downtown Redevelopment Project Fund Earthquake Redevelopment Project Fund Nonmajor governmental funds Total nonmajor governmental funds Nonmajor governmental funds Water Fund Nonmajor enterprise funds Total Wastewater Fund General Fund General Fund Nonmajor governmental funds Total Big Blue Bus Fund General Fund Water Fund Airport Fund Earthquake Redevelopment Project Fund Nonmajor governmental funds Nonmajor enterprise funds Internal service funds Total nonmajor enterprise funds Total transfers

$

$

Amount 270,756 583,399 6,397,555 254,400 125,300 307,600 524,852 975,878 9,439,740 6,376,575 575,310 3,754,530 2,685,464 13,391,879 39,068 965,836 1,811,547 2,816,451 48,000 200,191 483,411 683,602 4,083,423 600,000 69,100 20,600 272,706 889,403 416,900 5,935,232 32,731,804

Transfers are used to: (1) move revenues from the fund required by statute or budget to collect them to the fund required by statute or budget to expend them, (2) move receipts identified for debt service from the funds collecting the receipts to the Debt Service Fund to make debt service payments when they become due.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(13) RESTRICTED NET ASSETS Restricted net assets are net assets whose use are subject to constraints externally imposed. The following categories of net assets are restricted as to use by agreements with creditors, developers, grantors, or laws or regulations of other governments: debt service, Housing Authority, Community Development Block Grant, Citizens Option for Public Safety, Air Quality Management District, development projects, Asset Seizure, streets projects, low-and moderate-income housing, perpetual care, and construction of rail system. The remaining categories of funds, Tenant Ownership Rights Charter Amendment and Rent Control, are restricted as to use by law. Net assets for governmental activities at June 30, 2003, are restricted as follows: Debt service Housing Authority Tenant Ownership Rights Charter Amendment Community Development Block Grant Miscellaneous grants Citizens Option for Public Safety Rent Control Air Quality Management District Development projects Asset Seizure Streets projects Low- and moderate-income housing Net assets restricted for all other purposes

$

$

13,714,487 904,172 13,851,161 18,473,204 17,926,415 178,823 2,300,397 129,899 37,882,341 977,294 2,625,063 7,929,918 116,893,174

Perpetual care - nonexpendable

$

7,090,145

Net assets for business-type activities at June 30, 2003, totaling $33,703,216 are restricted for construction of a rail system.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(14) RESERVED AND DESIGNATED FUND BALANCES In the fund financial statements, reserves and designations segregate portions of fund balance that are either not available or have been earmarked for specific purposes. The various reserves and designations are established by actions of the City Council and Management and can be increased, reduced or eliminated by similar actions. In governmental funds, fund reservations are presented as a component of fund balances as follows: Spe cial re ve nue fund

Ge ne ral Fund Re se rve d fund balance s Prepaids and inventory $ 1,035,249 Advances to other funds 16,934,311 Encumbrances 3,523,514 Cash liquidity 3,546,996 Library general obligation bonds 25,317,487 Notes receivable 1,816,824 Public safety facility construction 14,564,758 Specific continuing capital projects 66,086,838 Mall assessment district 784,238 T raffic mitigation 4,448,008 Long-term receivable from state — Rail construction — Low- and moderate-income housing — Childcare center — Parks — T raffic — Arts — T hird street mall/downtown parking — Animal shelter — Homeless contributions — Roads — T ax increment 20% set aside — Debt service — Perpetual care — T otal reserved fund balances $138,058,223

Disaste r Re lie f Fund 9,039 — 100 — — — — — — — 76,328 — — — — — — — — — — — — — 85,467

Capital proje cts funds Earthquake Downtown Re cove ry O the r Re de ve lopme nt Re de ve lopme nt gove rnme ntal Proje ct Fund Proje ct Fund funds — — — — — — — 1,392,534 — — — — — — — — — — — — — — — 1,392,534

— 5,242,188 — — — 318,307 — 22,344,064 — — — — — — — — — — — — — — — — 27,904,559

7,380 4,912,223 66,400 — — 36,480,263 — 10,005,688 — — — 3,559,155 14,380,275 526,338 260,530 3,310,716 81,912 2,988,365 21,456 245,945 171,135 1,686,964 12,930,248 7,090,145 98,725,138

Total gove rnme ntal funds 1,051,668 27,088,722 3,590,014 3,546,996 25,317,487 38,615,394 14,564,758 99,829,124 784,238 4,448,008 76,328 3,559,155 14,380,275 526,338 260,530 3,310,716 81,912 2,988,365 21,456 245,945 171,135 1,686,964 12,930,248 7,090,145 266,165,921

Prepaids and Inventory Reflects the carrying value of these assets. Since these assets are goods or services already purchased, they do not represent available expendable resources. Advances to Other Funds Reflects the balances due, net of deferred interest revenues, from other funds that are long-term in nature and do not represent available expendable resources of the City. Encumbrances Encumbrances outstanding at year-end are reported as reservations of fund balances since they do not constitute expenditures or liabilities.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Cash Liquidity The City’s Charter provides for a cash liquidity reserve to assure the payment of the operating expenses of the City on a cash basis. Library General Obligation Bonds Reflects the balance of bond proceeds plus accumulated interest at June 30, 2003, which is legally restricted for the construction, improvement and remodeling of the Santa Monica Public Library. Notes Receivable Reflects the balances due on loans that are long-term in nature and do not represent available expendable resources of the City. Public Safety Facility Project Construction Fund Reflects the balance of bond proceeds plus accumulated interest at June 30, 2003, which is legally restricted for the acquisition, construction and installation of certain capital improvements constituting a public safety facility and related improvements, facilities and equipment. Specific Continuing Capital Projects Reflects the amount needed to fund the full cost of uncompleted capital projects at June 30, 2003. Mall Assessment District Reflects the balance of assessment revenues accumulated for future debt service for bonds related to the Third Street Mall and Downtown Assessment District. Traffic Mitigation Represents the unspent balance of developer fees restricted for traffic mitigation projects. Long-Term Receivable from State Reflects the balance due from the State of California for costs incurred after the January 17, 1994, Northridge Earthquake that is long-term in nature and does not represent available expendable resources of the City. Rail Construction Represents the balance of Proposition A local return funds in the City’s Miscellaneous Grants Fund to be used exclusively for rail transportation improvements along the Santa Monica corridor. Low- and Moderate-Income Housing Represents unspent balance of funds from various sources restricted for use for low- and moderate-income housing. Childcare Center Represents unspent balance of developer fees restricted for future childcare center. Parks Represents unspent balance of developers fees restricted for parks projects. Traffic Represents balance of developer fees restricted for traffic mitigation projects. Arts Represents balance of funds received from various sources to be used for arts projects.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Third Street Mall/Downtown Parking Represents balance of funds received from various sources to be used for Third Street mall/downtown parking. Animal Shelter Represents unspent balance of contributions from citizens that are restricted for use for the City’s Animal Shelter. Homeless Contributions Represents balance of funds received from various sources to be used for homeless services. Roads Represents balance of developer fees restricted for road projects. Tax Increment 20% Set Aside Represents the portion of the Redevelopment Agency’s property tax increment revenues, which are required by State law to be spent on housing for low- and moderate-income households. Debt Service Represents balance of funds held by trustees for future debt service and associated payments in the Debt Service and Capital Projects Funds. Perpetual Care Represents balance of funds held by the City restricted for use for expenses associated with perpetual care of the City's Cemetery and Mausoleum.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

General Fund Designated fund balances Civic area development Homeless programs Compensated absences Santa Monica Place Affordable overnight accommodations Council policy Parks enhancement City Hall Renovation Trades intern Education foundation City contribution to medical trust Low- and moderate-income housing Unrealized gain on investments PERS credits Rent control Affordable housing School district Consumer protection funds Santa Monica Symphony Mounted patrol 18th street arts complex Public safety facility & swim center maintenance Total designated fund balances

$

1,824,960 30,272 6,084,559 4,968,399 140,000 5,666,418 370,845 3,320,718 209,068 500,000 1,261,812 44,746 460,327 — — — 2,250,000 46,413 11,500 12,500 20,000 416,192 $ 27,638,729

Other governmental funds

Total governmental funds

— — 217,161 — — — — — — — 44,912 828,648 — 803,775 98,902 978,432 — — — — — — 2,971,830

1,824,960 30,272 6,301,720 4,968,399 140,000 5,666,418 370,845 3,320,718 209,068 500,000 1,306,724 873,394 460,327 803,775 98,902 978,432 2,250,000 46,413 11,500 12,500 20,000 416,192 30,610,559

Civic Area Development Represents the balance of Transient Occupancy Tax receipts designated by City Council to be used for future development of the City's Civic Center area. Homeless Programs Represents the balance of unexpended and unencumbered funds previously appropriated for various services to homeless persons designated by City Council to be used for homeless service programs. Compensated Absences Represents the estimated liability for compensated absences. Santa Monica Place Represents monies designated for future lease payments to the City Redevelopment Agency, Downtown Project, for Santa Monica Place parking structures through June 30, 2009.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Affordable Overnight Accommodations Represents balance of funds designated for the development, redevelopment, expansion, replacement, repair, operation or use of affordable overnight accommodations within the City of Santa Monica. Council Policy Represents one-time monies accumulated from prior year’s operating results, which is available for projects designated by Council. Parks Enhancement Represents funds designated by Council for use for enhancement of the City's parks. City Hall Renovation Represents funds designated by Council for use for City Hall renovation. Trades Intern Represents funds designated to fund trades interns. Education Foundation Represents funds designated by Council to help finance a Santa Monica Malibu Unified School District Education Foundation. City Contribution to Medical Trust Represents balance of funds designated by Council to fund an employee post-retirement medical trust. Low- and Moderate-Income Housing Represents funds designated by Council for low- and moderate-income housing. Unrealized Gain on Investments Represents management’s intent not to liquidate investments to realize the reported gains in the following year. PERS Credits These designations were established in the various funds for Public Employee Retirement System credits. Rent Control Represents funds designated by the Rent Control Board to provide for operations uncertainties and the future replacement of certain equipment. Affordable Housing Represents balance of funds plus accumulated interest realized from repayment of loans made to assist low and moderate income households or repair of damage to multifamily residences caused by the January 17, 1994 Northridge Earthquake. The funds have been designated for use for affordable housing programs. School District Represents funds designated by the City Council for use by the Santa Monica Malibu Unified School District. Consumer Protection Funds Represents funds designated for use by the City Attorney’s Office for consumer protection.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

Santa Monica Symphony Represents funds designated by Council for use by the Santa Monica Symphony. Mounted Patrol Represents funds designated for use by the Police Department’s mounted patrol. 18th Street Arts Complex Represents funds designated by Council for the 18th Street Arts Complex Planning Study. Public Facility Maintenance Represents funds designated for maintenance of the new swim center and public safety facility.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 (15) LITIGATION AND CONTINGENCIES Litigation Several lawsuit and claims, arising in the normal course of City operations, were pending at June 30, 2003. In the opinion of the City Attorney, there are adequate legal defenses to these actions and it is not anticipated that there will be any adverse material effect on the financial position of the City. Grants The City recognizes as revenue grant monies received as reimbursement for costs incurred in certain Federal and State programs it administers. Although the City’s Federal grant programs have been audited through June 30, 2003 in accordance with the requirements of the Federal Single Audit Act of 1997 and the related U.S. Office of Management and Budget Circular A-133, these programs may be subject to financial and compliance audits by the reimbursing agencies. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. Construction Commitments The City has a number of construction projects currently underway. Purchase orders, contracts and other commitments for these projects are recorded in order to reserve the portion of the applicable appropriation and are recorded at year-end as reservations of fund balances. Approximately $110 million will be payable upon future performance under these contracts. Operating Lease Revenue/Expenses The City has entered into operating lease arrangements as lessor and lessee for property and equipment. The following is a schedule of future minimum lease rental revenue to be received and lease payments to be made under operating leases entered into by the City that have initial or remaining noncancelable lease terms in excess of one year as of June 30, 2003: Fiscal year ended June 30 2004 2005 2006 2007 2008 2009 – 2013 2014 – 2018 2019 – 2023 2024 – 2028 2029 – 2033 2034 – 2038 2039 – 2043 2044 – 2048 2049 – 2053 2054 – 2058

$

Rental revenue

Lease payments

2,746,841 2,584,493 2,083,613 1,863,712 1,649,568 6,327,822 4,513,577 3,408,257 3,036,260 2,414,504 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000

1,061,252 821,167 547,469 347,669 347,669 460,040 -⎯ -⎯ -⎯ -⎯ -⎯ -⎯ -⎯ -⎯ -⎯

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 2059 – 2063 2064 – 2068

2,000,000 900,000

-⎯ -⎯

The total long-term lease rental revenues and expenditures/expenses for the year ended June 30, 2003, were $3,170,354 and $1,219,070, respectively.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(16) SELF INSURANCE The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and others; natural disasters. The City has chosen to establish risk financing internal service funds where assets are set aside for claim settlements associated with such risks of loss up to certain limits and has obtained excess liability coverage through the Authority for California Cities Excess Liability (“ACCEL”), a joint powers authority of twelve medium-size California municipalities. The City retains self-insurance up to $1,000,000 for general liability and automobile liability and $500,000 for bus operations liability and workers’ compensation. ACCEL covers up to $20,000,000 for all but workers’ compensation, which is set by state statute. No claim settlements have exceeded insurance coverage in any of the past three years. In order to provide funds to pay claims, ACCEL collect premiums for each member. The premiums paid are credited with investment income at the rate earning on the Authority’s investments. Based on information received from ACCEL at June 30, 2003, the City had $3,575,044 (15.41% of total) on deposit with ACCEL’s total assets at June 30, 2003, were $23,205,481. ACCEL has no capital contributions. The City’s unpaid claims liabilities are based on the results of actuarial studies. The unpaid claims liabilities are compiled by the Risk Manager of the City and include amounts for claims incurred but not reported as of year end. Claims liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. Net present values of the unpaid claims liabilities are estimated for the year ended June 30, 2003, based on a 3.75% interest rate for general and automobile, 4.0% for bus liability and 5.2% for workers’ compensation liability. Revenues of the risk management funds, together with funds to be provided in the future, are expected to provide adequate resources to meet liabilities as they come due. Changes in the liability for claims during the past two fiscal years for the self-insurance funds follow:

Current-year claims and Fund

Beginning of

changes in

Claims

year

estimates

payments

Due within End of year

one year

June 30, 2002: Comprehensive $ Bus Automobile Workers' Compensation

4,787,159 1,036,790 411,055 17,312,974

2,168,140 780,456 503,810 4,584,487

(2,214,745) (225,785) (662,995) (4,963,584)

4,740,554 1,591,461 251,870 16,933,877

1,199,406 493,873 70,553 5,291,497

$

23,547,978

8,036,893

(8,067,109)

23,517,762

7,055,329

June 30, 2003: Comprehensive $ Bus Automobile Workers' Compensation

4,740,554 1,591,461 251,870 16,933,877

1,921,137 439,611 179,252 6,853,478

(2,012,066) (710,336) (127,214) (5,596,762)

4,649,625 1,320,736 303,908 18,190,593

1,205,757 536,553 92,145 5,431,814

$

23,517,762

9,393,478

(8,446,378)

24,464,862

7,266,269

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003

(17) EMPLOYEE BENEFIT PROGRAMS Santa Monica Public Employees’ Retirement Plan The City’s defined benefit pension plan, Santa Monica Public Employees’ Retirement Plan (“Plan”) provides retirement and disability benefits, annual cost-of living adjustments, and death benefits to plan members and beneficiaries. The Plan is part of the Public Agency portion of the California Public Employees Retirement System (“CalPERS”), an agent multiple-employer plan administered by Cal PERS, which acts as a common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions as well as other requirements are established by State statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through City ordinance. CalPERS issues a separate comprehensive annual financial report available from the CalPERS Executive Office, 400 P Street, Sacramento, California 95814. Plan Description All full-time employees of the City and part-time employees who have worked over 1,000 hours during a fiscal year are eligible to participate in the Plan. Related benefits vest after five years of service. Upon five years of service, employees who retire at or after age 50 are entitled to receive an annual retirement benefit. The benefit is payable monthly for life, in an amount that varies, from 2.5% at age 50 to a maximum of 3% at age 55 for safety employees and 1.426% at age 50 to a maximum of 2.418% at age 63 for nonsafety employees, of the employee’s single highest year’s salary for each year of credited service. The Plan also provides death and disability benefits. Funding Policy Active full-time members in the Plan are required to contribute 7% for miscellaneous employees and 9% for safety employees of their annual covered salary. The City makes such employee contributions on their behalf and for their account. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. Separate actuarial valuations are prepared by CalPERS for miscellaneous members, fire safety members and police safety members. The required employer contribution rate for the year ended June 30, 2003 was 1.332% for fire safety members. The required employer contribution rate was 5.128% for the period July 1, 2002 through January 11, 2003 and 11.523% for the period January 12, 2003 through June 30, 2003 for police safety members. No employer contribution was required for miscellaneous employees. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS. Annual Pension Cost For the year ended June 30, 2003, the City’s annual pension cost and actual contributions were $1,566,347. The City also contributed $8,178,058 on behalf of employees. Employees directly contributed $77,250. Total contributions were $9,821,656. The required contribution for the year ended June 30, 2003 was determined as part of the June 30, 2001 actuarial valuation using the entry age normal actuarial cost method with the contributions determined as a percentage of payroll. The actuarial assumptions included (1) 8.25% investment rate of return (net of administrative expenses); (b)

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 projected salary increases that vary by duration of service ranging from 3.75% to 14.20% for miscellaneous members (from 4.272% to 11.587% for safety members), and (c) 3.75% cost-of-living adjustment. Both (a) and (b) include an inflation component of 3.5%. The actuarial value of the Plan’s assets was determined using a technique that smoothes the effect of short-term volatility in the market value of investments by computing an expected value of assets along with the actual market value of assets. The Plan’s unfunded accrued liability (or excess assets) is being amortized as a level percentage of projected payroll on a closed basis over a period not to exceed twenty years. Three-Year Trend Information for the Plan (Unaudited) Fiscal year ended June 30 2003 2002 2001

$

Annual pension cost (APC) 1,566,347 2,231,438 2,383,850

Percentage of APC contributed 100% 100% 100%

Net pension obligation — — —

As-Needed Employees Retirement Plan The City has established a non-qualified single-employer defined benefit retirement plan for all employees who are classified “as-needed” and who are not covered by CalPERS or currently receiving benefits from CalPERS. This plan is governed by the rules of Section 457 of the Internal Revenue Code. Vesting is full and immediate. The funding method is pay-as-you-go with employer contributions. There are no employee contributions. Lump sum benefits are payable to eligible employees upon termination of employment from the City. Lump sum payment calculations are based on earnings since January 1, 1992 and employee’s age at time of separation from the City. Lump sum benefits are also payable on an annual basis to active employees who have attained age 70 1/2. No death benefits are payable at any time. Deferred Compensation Plans The City offers to its employees an optional deferred compensation plan created in accordance with Section 457 of the Internal Revenue. This plan is available to substantially all employees and allows participants to defer a portion of their current income until future years to shelter such funds and earnings from state and federal taxation until withdrawal. The deferred compensation is not available to participants until termination, retirement, death or unforeseeable emergency. The City offers an employer discretionary, defined contribution plan established and governed under Internal Revenue Code Section 401(a). Employer only contributions are calculated based upon a percentage of employee compensation under agreements with employee bargaining groups and unions. These plans are administered through third-party administrators. The City does not perform the investing function and has no fiduciary accountability for the plans. Thus, plan assets and any related liabilities to plan participants have been excluded from the City’s basic financial statements. Post-Retirement Benefits In addition to providing pension benefits through CalPERS, the City, in accordance with agreements with various bargaining units provides medical coverage for certain retired employees. Employees of the Supervisory Team Associates (STA) and United Transportation Union (UTU) bargaining units

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2003 become eligible for this benefit if they fulfill length of service requirements and have more than 50 or 75 unused sick leave days upon retirement. Employees of the Executive Pay Plan bargaining unit and management employees of the Rent Control Board are also eligible for this benefit if their combined retirement age and years of City service equals or exceeds 70. The retirees may participate in one of the City’s health plans for retirees. The City pays for medical coverage for eligible retirees on a pay-as-yougo basis. The estimated maximum future liability to the City of $3,870,533 is based upon current employee data and costs of medical coverage used for fiscal year 2003-04 budget projections. Currently, there are 85 employees who would be eligible for this benefit upon retirement. The City contributes, consistent with bargaining unit agreements, monies to medical trusts that provide post-retirement medical benefits to employees. During fiscal year 2002-03 the City contributed $2,642,194 towards the retiree medical trust. These are administered through third-party administrators and the City does not perform the investing function or have any fiduciary accountability for the plans. Thus, plan assets and any related liabilities have been excluded from the City’s basic financial statements.

CITY OF SANTA MONICA, CALIFORNIA Required Supplementary Information - Pension Funding Information Year Ended June 30, 2003

PENSION FUNDING INFORMATION The City’s Pension Plan includes separate valuations for Miscellaneous Members, Fire Safety Members and Police Safety Members. The funded status of the Plan for each of these member groups for the actuarial valuations performed as of June 30, 1994 through 2003 are as follows (valuations prior to 1994 and 2001 are not available): Miscellaneous Members (dollars in thousands) Valuation date (June 30) 2002 2001 2000 1999 1998 1997 1996 1995 1994

$

254,118 232,707 211,252 173,208 162,224 151,124 149,483 137,909 128,215

Actuarial value of assets $ 267,687 287,459 277,380 254,391 218,511 183,491 159,357 141,001 130,953

$

(13,569) (54,751) (66,128) (81,183) (56,287) (32,367) (9,874) (3,092) (2,738)

Funded ratio 105.34 % 123.53 131.30 146.87 134.70 121.42 106.61 102.24 102.14

Annual covered payroll $ 75,491 71,357 62,584 56,070 54,234 49,152 46,766 49,759 47,148

(17.97) % (76.73) (105.66) (144.79) (103.79) (65.85) (21.12) (6.21) (5.81)

Annual covered payroll $ 9,795 9,845 7,909 8,024 8,166 7,180 6,644 5,844 5,777

136.85 % 27.78 (116.93) (83.59) 5.49 (34.23) 11.50 (19.53) (18.70)

Annual covered payroll $ 17,066 16,691 15,449 16,232 15,344 14,392 13,395 12,747 12,267

154.48 % 55.27 (91.11) (31.96) (31.38) (15.97) 4.65 (3.07) 1.08

Fire Safety Members (dollars in thousands) Valuation date (June 30) 2002 2001 2000 1999 1998 1997 1996 1995 1994

$

100,256 95,752 80,968 71,423 68,118 54,922 50,693 43,221 40,431

Actuarial value of assets $ 86,852 93,017 90,217 78,130 67,670 57,380 49,928 44,362 41,511

$

13,404 2,735 (9,248) (6,707) 448 (2,458) 765 (1,141) (1,080)

Funded ratio 86.63 % 97.14 111.42 109.39 99.34 104.48 98.49 102.64 102.67

Police Safety Members (dollars in thousands) Valuation date (June 30) 2002 2001 2000 1999 1998 1997 1996 1995 1994

$

168,756 161,011 133,315 128,904 109,101 94,110 83,880 72,746 67,654

Actuarial value of assets $ 142,392 151,785 147,391 134,092 113,916 96,408 83,257 73,137 67,522

$

26,363 9,226 (14,075) (5,188) (4,815) (2,298) 623 (391) 132

Funded ratio 84.38 % 94.27 110.56 104.02 104.41 102.44 99.26 100.54 99.80

City of Santa Monica, California Year Ended June 30, 2003 Non-Major Funds/Other Financial Information

Nonmajor Governmental Fund Financial Statements Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for specified purposes. The nonmajor special revenue funds used by the City in this report are listed below: Beach Recreation Fund – To account for beach parking and concession revenues and expenditures related to beach maintenance and recreation activities. Housing Authority Fund – To account for the receipt and expenditure of Federal and State funds related to housing programs. Tenant Ownership Rights Charter Amendment (TORCA) Fund – To account for filing fee and conversion tax revenues and expenditures related to various housing programs authorized by Chapter XX of the City Charter. Community Development Block Grant (CDBG) Fund – To account for Federal entitlements under the Housing and Community Development Act of 1974, as amended. The City Council annually allocates CDBG funds to various programs. Miscellaneous Grants Fund – To account for the receipt and expenditure of Federal, State and County awarded grants and special allocations provided to the City. Citizens Option for Public Safety – To account for the receipt and expenditure of the Citizens Option for Public Safety program established by AB3229 of 1996. Rent Control Fund – To account for revenues and expenditures of the Rent Control Board. Air Quality Management District (AQMD) Fund – To account for the receipt and expenditure of Air Quality Management District funds. Parks & Recreation Fund – To account for funds collected under the City's Unit Dwelling Tax. These funds are to be used for the acquisition, improvement and expansion of public parks, playgrounds and recreational facilities. Special Revenue Source Fund – To account for receipt and expenditure of monies collected for specific uses. Asset Seizure Fund – To account for the receipt and expenditure of equitable sharing program funds. Gas Tax Fund – To account for State and County gasoline tax allocations and any Federal funds provided to the City for streetrelated purposes.

Capital Projects Funds are used to account for the accumulation of resources to be used for the acquisition or construction of major capital facilities of the Redevelopment Agency. The nonmajor capital projects funds used by the City in this report are listed below: Low-and Moderate-Income Housing (Downtown, Earthquake Recovery and Ocean Park Projects) – Under requirements of the State of California Health and Safety Code, the Santa Monica Redevelopment Agency is required to set aside 20% of tax increment revenues for housing projects benefiting low-and moderate-income households. Ocean Park Redevelopment Project Fund – To account for the revenues and expenditures of the Ocean Park Project area of the Santa Monica Redevelopment Agency. This thirty-three acre project consists of two areas: 1A and 1B. The redevelopment plan for the twenty-five acres of Area 1A was approved in June 1960 and work was completed in May 1987. The project contains two 17-story high-rise apartment buildings of 500 units and a park. The redevelopment plan for the eight acres of Area 1B was approved in January 1961 and work was completed in 1983. The project contains two senior citizen residential apartment complexes and a former utility building now used for other purposes. Debt Service Funds are used to accumulate resources for, and the payment of, general long-term debt principal, interest and related costs. The debt service funds used by the City in this report are listed below: City Fund – To account for accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs for library, public safety facility and parking authority bonds. Redevelopment Agency Fund – To account for accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs for the Ocean Park, downtown and earthquake recovery bonds. Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for restricted purposes. The specific permanent funds used by the City in this report are listed below: Cemetery Perpetual Care – To account for all funds received by the City from cemetery users for the perpetual care of the cemetery grounds. Mausoleum Perpetual Care Fund – To account for all funds designated for perpetual care of the mausoleum located at the City cemetery.

CITY OF SANTA MONICA, CALIFORNIA Combining Balance Sheet Nonmajor Governmental Funds By Fund Type June 30, 2003

Assets

Total special revenue funds

Total capital projects funds

53,062,214

Total nonmajor governmental funds

Total debt service funds

Total permanent funds

7,733,785

—

—

60,795,999

1,924,291 33,641,595 — 253,857 2,275,519 7,380 1,172,939 9,222,870

— 2,838,668 258,077 40,310 — — 7,803,545 —

— — — — — — 12,930,248 —

39,656 — — — — — 7,050,489 —

1,963,947 36,480,263 258,077 294,167 2,275,519 7,380 28,957,221 9,222,870

Cash and investments Receivables (net, where applicable, of allowances for uncollectibles): Accounts Notes Property tax Interest Other governments Prepaids Cash with fiscal agent Advances to other funds

$

Total assets

$

101,560,665

18,674,385

12,930,248

7,090,145

140,255,443

$

1,379,909 194,374 400,000 626,382 311,657 346,676 4,310,647 1,752 3,842,973

— — — — — — — — 10,999,606

— — — — — — — — —

— — — — — — — — —

1,379,909 194,374 400,000 626,382 311,657 346,676 4,310,647 1,752 14,842,579

Total liabilities

11,414,370

10,999,606

—

—

22,413,976

Fund balances: Reserved Unreserved - designated Unreserved - undesignated

66,174,031 2,971,830 21,000,434

12,530,714 — (4,855,935)

12,930,248 — —

7,090,145 — —

98,725,138 2,971,830 16,144,499

90,146,295

7,674,779

12,930,248

7,090,145

117,841,467

101,560,665

18,674,385

12,930,248

7,090,145

140,255,443

Liabilities and Fund Balances Liabilities: Accounts payable Accrued liabilities Short-term loan payable Contracts payable (retained percentage) Due to other funds Due to other governments Deferred revenue Deposits Advances from other funds

Total fund balances Total liabilities and fund balances

$

CITY OF SANTA MONICA, CALIFORNIA Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds By Fund Type Year ended June 30, 2003

Total special revenue funds Revenues: Property taxes Other taxes Licenses and permits Intergovernmental Charges for services Investment income Rent Other

$

Total capital projects funds

Total debt service funds

Total permanent funds

Total nonmajor governmental funds

— 2,860,310 195,744 22,040,794 8,617,285 1,223,852 126,711 4,633,349

9,767,252 — — — — 197,453 — 191,995

— — — — — 147,935 — —

— — — — 34,567 247,561 — —

9,767,252 2,860,310 195,744 22,040,794 8,651,852 1,816,801 126,711 4,825,344

39,698,045

10,156,700

147,935

282,128

50,284,808

725,544 566,750 7,987,669 4,927,488 20,169,843 —

— — — — — 3,131,362

— — — — — —

— — — — — —

725,544 566,750 7,987,669 4,927,488 20,169,843 3,131,362

— —

— 403,514

1,625,000 6,538,284

— —

1,625,000 6,941,798

34,377,294

3,534,876

8,163,284

—

46,075,454

5,320,751

6,621,824

(8,015,349)

282,128

4,209,354

— (6,735,577)

— (2,955,461)

13,391,879 —

— (187,166)

13,391,879 (9,878,204)

Total other financing sources (uses)

(6,735,577)

(2,955,461)

13,391,879

(187,166)

3,513,675

Net change in fund balances

(1,414,826)

3,666,363

5,376,530

94,962

7,723,029

91,561,121

4,008,416

7,553,718

6,995,183

110,118,438

90,146,295

7,674,779

12,930,248

7,090,145

117,841,467

Total revenues Expenditures: Current: General government Public safety General services Cultural and recreation services Housing and community development Capital projects Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out

Fund balances at beginning of year Fund balances at end of year

$

CITY OF SANTA MONICA, CALIFORNIA Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2003

Community Development Block Grant

Miscellaneous Grants

11,429,767

—

7,332,385

7,458 — 1,706 396,768 7,380 265,937 —

— 2,375,004 46,390 — — — —

— 17,075,459 7,526 229,648 — — 6,103,970

130,649 6,998,523 51,938 1,629,053 — — 3,118,900

1,208,687

13,851,161

23,416,603

19,261,448

353,104 55,338 — — — — — 1,752 3,842,973

304,515 — — — — — — — —

— — — — — — — — —

108,570 — — — 177,506 346,676 4,310,647 — —

327,783 778 400,000 606,472 — — — — —

Total liabilities

4,253,167

304,515

—

4,943,399

1,335,033

Fund balances: Reserved Unreserved - designated Unreserved - undesignated

738,912 124,829 (2,066,383)

7,380 — 896,792

13,317,270 495,029 38,862

18,868,782 483,403 (878,981)

13,676,578 828,648 3,421,189

(1,202,642)

904,172

13,851,161

18,473,204

17,926,415

$ 3,050,525

1,208,687

13,851,161

23,416,603

19,261,448

Beach Recreation

Housing Authority

Cash and investments Receivables (net, where applicable, of allowances for uncollectibles): Accounts Notes Interest Other governments Prepaids Cash with fiscal agent Advances to other funds

$ 2,967,051

529,438

69,998 — 13,476 — — — —

Total assets

$ 3,050,525

Assets

TORCA

Liabilities and Fund Balances Liabilities: Accounts payable Accrued liabilities Short-term loan payable Contracts payable (retained percentage) Due to other funds Due to other governments Deferred revenue Deposits Advances from other funds

Total fund balances (deficits) Total liabilities and fund balances

$

Citizens Option for Public Safety

Parks and Recreation

Special Revenue Source

Asset Seizure

Total nonmajor special revenue funds

Rent Control

AQMD

—

2,641,637

109,248

545,796

24,947,890

381,530

2,177,472

53,062,214

— — — — — 312,974 —

— — 13,761 — — — —

— — 601 20,050 — — —

200 — 2,179 — — — —

1,255,374 7,192,609 107,654 — — — —

— — 1,736 — — 594,028 —

460,612 — 6,890 — — — —

1,924,291 33,641,595 253,857 2,275,519 7,380 1,172,939 9,222,870

312,974

2,655,398

129,899

548,175

33,503,527

977,294

2,644,974

101,560,665

— — — — 134,151 — — — —

217,736 137,265 — — — — — — —

— — — — — — — — —

— — — — — — — — —

68,201 993 — — — — — — —

— — — — — — — — —

— — — 19,910 — — — — —

1,379,909 194,374 400,000 626,382 311,657 346,676 4,310,647 1,752 3,842,973

134,151

355,001

—

—

69,194

—

19,910

11,414,370

— — 178,823

13,000 1,039,921 1,247,476

— — 129,899

403,601 — 144,574

18,237,015 — 15,197,318

42,349 — 934,945

869,144 — 1,755,920

66,174,031 2,971,830 21,000,434

178,823

2,300,397

129,899

548,175

33,434,333

977,294

2,625,064

90,146,295

312,974

2,655,398

129,899

548,175

33,503,527

977,294

2,644,974

101,560,665

Gas Tax

CITY OF SANTA MONICA, CALIFORNIA Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds June 30, 2003

Beach Recreation

Housing Authority

TORCA

Community Development Block Grant

— 195,744 — 4,785,946 62,592 103,570 580,576

— — 11,576,412 — 18,743 — 20,226

1,038,472 — — — 299,000 — —

— — 3,469,448 — 19,710 — —

1,802,038 — 4,336,571 — 187,407 — —

Total revenues

5,728,428

11,615,381

1,337,472

3,489,158

6,326,016

Expenditures: Current: General government Public safety General services Cultural and recreation services Housing and community development

— — — 4,171,646 —

— — — — 10,632,612

— — — — 316,033

— — — — 5,029,867

406,652 231,649 6,676,667 640,541 144,024

Total expenditures

4,171,646

10,632,612

316,033

5,029,867

8,099,533

Excess (deficiency) of revenues over expenditures

1,556,782

982,769

1,021,439

(1,540,709)

(1,773,517)

(1,344,894)

(958,368)

(59,200)

(730,367)

(1,797,808)

Total other financing (uses)

(1,344,894)

(958,368)

(59,200)

(730,367)

(1,797,808)

Net change in fund balances

211,888

24,401

962,239

(2,271,076)

(3,571,325)

(1,414,530)

879,771

12,888,922

20,744,280

21,497,740

$ (1,202,642)

904,172

13,851,161

18,473,204

17,926,415

Revenues: Other taxes Licenses and permits Intergovernmental Charges for services Investment income Rent Other

Other financing (uses): Transfers out

Fund balances (deficits) at beginning of year Fund balances (deficits) at end of year

$

Miscellaneous Grants

Citizens Option for Public Safety

Rent Control

AQMD

Parks and Recreation

Special Revenue Source

Asset Seizure

Gas Tax

Total nonmajor special revenue funds

— — 174,795 — 4,009 — —

— — — 3,567,102 102,914 — 12,238

— — — — 4,678 — 247,722

19,800 — — — 8,905 — —

— — 150,000 264,237 472,098 — 3,772,587

— — 106,735 — 15,714 — —

— — 2,226,833 — 28,082 23,141 —

2,860,310 195,744 22,040,794 8,617,285 1,223,852 126,711 4,633,349

178,804

3,682,254

252,400

28,705

4,658,922

122,449

2,278,056

39,698,045

— 177,232 — — —

— — — — 3,817,686

318,892 — 33,598 — —

— — — — —

— — 1,218,792 115,301 229,621

— 157,869 — — —

— — 58,612 — —

725,544 566,750 7,987,669 4,927,488 20,169,843

177,232

3,817,686

352,490

—

1,563,714

157,869

58,612

34,377,294

1,572

(135,432)

(100,090)

28,705

3,095,208

(35,420)

2,219,444

5,320,751

—

—

—

—

(243,464)

—

(1,601,476)

(6,735,577)

—

—

—

—

(243,464)

—

(1,601,476)

(6,735,577)

1,572

(135,432)

(100,090)

28,705

2,851,744

(35,420)

617,968

(1,414,826)

177,251

2,435,829

229,989

519,470

30,582,589

1,012,714

2,007,096

91,561,121

178,823

2,300,397

129,899

548,175

33,434,333

977,294

2,625,064

90,146,295

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) – Budget and Actual (Non-GAAP Basis) Beach Recreation Special Revenue Fund Year ended June 30, 2003

Revenues: Licenses and permits Charges for services Investment income Rent Other Total revenues Expenditures: Cultural and recreation services: Salaries Supplies Capital improvement Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses) – transfers out Net change in fund balance Fund balance (deficit) at beginning of year Fund balance (deficit) at end of year * No encumbrances were outstanding at June 30, 2002.

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance – positive (negative)

Budget

Actual

196,494 4,731,800 82,000 103,570 42,150

195,744 4,785,946 62,592 103,570 580,576

— — — — —

— — — — —

195,744 4,785,946 62,592 103,570 580,576

(750) 54,146 (19,408) — 538,426

5,156,014

5,728,428

—

—

5,728,428

572,414

1,122,295 2,303,221 1,508,985

1,122,295 2,268,228 781,123

— — —

— — 128,230

1,122,295 2,268,228 909,353

— 34,993 599,632

4,934,501

4,171,646

—

128,230

4,299,876

634,625

221,513

1,556,782

—

(128,230)

1,428,552

1,207,039

(1,461,100)

(1,344,894)

—

—

(1,344,894)

116,206

(1,239,587)

211,888

—

(128,230)

83,658

1,323,245

(1,414,530)

(1,414,530)

—

—

(1,414,530)

—

$ (2,654,117)

(1,202,642)

—

(128,230)

(1,330,872)

1,323,245

$

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Housing Authority Special Revenue Fund Year ended June 30, 2003

Budget Revenues: Intergovernmental Investment income Other

Plus 2002-2003 encumbrances *

Actual, budgetary basis

Variance – positive (negative)

$ 11,518,300 33,000 —

11,576,412 18,743 20,226

— — —

— — —

11,576,412 18,743 20,226

58,112 (14,257) 20,226

11,551,300

11,615,381

—

—

11,615,381

64,081

10,711,400 8,500

10,624,112 8,500

— —

— —

10,624,112 8,500

87,288 —

10,719,900

10,632,612

—

—

10,632,612

87,288

831,400

982,769

—

—

982,769

151,369

(995,100)

(958,368)

—

—

(958,368)

36,732

(163,700)

24,401

—

—

24,401

188,101

879,771

879,771

—

—

879,771

—

716,071

904,172

—

—

904,172

188,101

Total revenues Expenditures: Housing and community development: Supplies Capital improvement Total expenditures Excess of revenues over expenditures Other financing (uses) – transfers out Net change in fund balance Fund balance at beginning of year Fund balance at end of year

Actual

Less 2001-2002 encumbered expenditures*

$

* No encumbrances were outstanding at June 30, 2002 and 2003.

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Tenant Ownership Rights Charter Amendment (TORCA) Special Revenue Fund Year ended June 30, 2003

Budget Revenues: Other taxes Investment income

$

Total revenues Expenditures: Housing and community development: Supplies Capital improvement Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses) – transfers out Net change in fund balance Fund balance at beginning of year Fund balance at end of year

$

Actual

Less 2001-2002 encumbered expenditures *

Plus 2002-2003 encumbrances *

Actual, budgetary basis

Variance – positive (negative)

102,200 170,000

1,038,472 299,000

— —

— —

1,038,472 299,000

936,272 129,000

272,200

1,337,472

—

—

1,337,472

1,065,272

4,200 10,374,914

2,762 313,271

— —

— —

2,762 313,271

1,438 10,061,643

10,379,114

316,033

—

—

316,033

10,063,081

(10,106,914)

1,021,439

—

—

1,021,439

11,128,353

(59,200)

(59,200)

—

—

(59,200)

—

(10,166,114)

962,239

—

—

962,239

11,128,353

12,888,922

12,888,922

—

—

12,888,922

—

2,722,808

13,851,161

—

—

13,851,161

11,128,353

* No encumbrances were outstanding at June 30, 2002 and 2003.

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Community Development Block Grant (CDBG) Special Revenue Fund Year ended June 30, 2003

Revenues Intergovernmental Investment income Total revenues Expenditures: Housing and community development: Supplies Capital improvement Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses) – transfers out Net change in fund balance Fund balance at beginning of year Fund balance at end of year * No encumbrances were outstanding at June 30, 2002.

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance – positive (negative)

Budget

Actual

4,036,201 130,000

3,469,448 19,710

— —

— —

3,469,448 19,710

(566,753) (110,290)

4,166,201

3,489,158

—

—

3,489,158

(677,043)

376,183 6,647,471

376,183 4,653,684

— —

— 155,177

376,183 4,808,861

— 1,838,610

7,023,654

5,029,867

—

155,177

5,185,044

1,838,610

(2,857,453)

(1,540,709)

—

(155,177)

(1,695,886)

1,161,567

(730,367)

(730,367)

—

—

(730,367)

—

(3,587,820)

(2,271,076)

—

(155,177)

(2,426,253)

1,161,567

20,744,280

20,744,280

—

—

20,744,280

—

$ 17,156,460

18,473,204

—

(155,177)

18,318,027

1,161,567

$

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Miscellaneous Grants Special Revenue Fund Year ended June 30, 2003

Budget Revenues: Other taxes Intergovernmental Investment income Other

$

Total revenues Expenditures: General government – capital improvement Public safety – capital improvement General services – capital improvement Cultural and recreation services – capital improvement Housing and community development – capital improvements Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses) – transfers out Net change in fund balance Fund balance at beginning of year Fund balance at end of year * No encumbrances were outstanding at June 30, 2002.

$

Actual

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance – positive (negative)

1,783,276 6,190,937 600,000 381,000

1,802,038 4,336,571 187,407 —

— — — —

— — — —

1,802,038 4,336,571 187,407 —

18,762 (1,854,366) (412,593) (381,000)

8,955,213

6,326,016

—

—

6,326,016

(2,629,197)

1,877,707 590,379 10,298,697

406,652 231,649 6,676,667

— — —

132,150 207,919 1,898,415

538,802 439,568 8,575,082

1,338,905 150,811 1,723,615

11,270,476

640,541

—

1,472,245

2,112,786

9,157,690

1,918,451

144,024

—

—

144,024

1,774,427

25,955,710

8,099,533

—

3,710,729

11,810,262

14,145,448

(17,000,497)

(1,773,517)

—

(3,710,729)

(5,484,246)

11,516,251

(1,878,095)

(1,797,808)

—

—

(1,797,808)

80,287

(18,878,592)

(3,571,325)

—

(3,710,729)

(7,282,054)

11,596,538

21,497,740

21,497,740

—

—

21,497,740

—

2,619,148

17,926,415

—

(3,710,729)

14,215,686

11,596,538

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Citizens Option for Public Safety Special Revenue Fund Year ended June 30, 2003

Budget Revenues: Intergovernmental Investment income

$

Total revenues Expenditures Public safety: Capital improvement Total expenditures

Fund balance at end of year

$

Plus 2002-2003 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

172,400 4,500

174,795 4,009

— —

— —

174,795 4,009

2,395 (491)

176,900

178,804

—

—

178,804

1,904

177,232

177,232

—

—

177,232

—

177,232

177,232

—

—

177,232

—

(332)

1,572

—

—

1,572

1,904

177,251

177,251

—

—

177,251

—

176,919

178,823

—

—

178,823

1,904

Net change in fund balance Fund balance at beginning of year

Actual

Less 2001-2002 encumbered expenditures*

* No encumbrances were outstanding at June 30, 2002 and 2003.

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Rent Control Special Revenue Fund Year ended June 30, 2003

Revenues: Charges for services Investment income Other

$

Total revenues Expenditures: Housing and community development: Salaries Supplies Capital outlay Capital improvement Total expenditures Net change in fund balance Fund balance at beginning of year Fund balance at end of year

$

Less 2001-2002 encumbered expenditures

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance – positive (negative)

Budget

Actual

3,485,596 153,806 4,000

3,567,102 102,914 12,238

— — —

— — —

3,567,102 102,914 12,238

81,506 (50,892) 8,238

3,643,402

3,682,254

—

—

3,682,254

38,852

2,769,628 1,056,100 57,203 20,200

2,708,395 1,062,683 26,408 20,200

— 35,500 6,236 —

— 10,500 — —

2,708,395 1,037,683 20,172 20,200

61,233 18,417 37,031 —

3,903,131

3,817,686

41,736

10,500

3,786,450

116,681

(259,729)

(135,432)

(41,736)

(10,500)

(104,196)

155,533

2,435,829

2,435,829

—

—

2,435,829

—

2,176,100

2,300,397

(41,736)

(10,500)

2,331,633

155,533

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) – Budget and Actual (Non-GAAP Basis) Air Quality Management District (AQMD) Special Revenue Fund Year ended June 30, 2003

Budget Revenues: Investment income Other Total revenues Expenditures:

$

General government - capital improvement General services - salaries Total expenditures Net change in fund balance Fund balance at beginning of year Fund balance (deficit) at end of year * No encumbrances were outstanding at June 30, 2002.

$

Actual

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance – positive (negative)

12,000 100,500 112,500

4,678 247,722 252,400

— — —

— — —

4,678 247,722 252,400

(7,322) 147,222 139,900

405,884 33,598 439,482 (326,982) 229,989

318,892 33,598 352,490 (100,090) 229,989

— — — — —

108 — 108 (108) —

319,000 33,598 352,598 (100,198) 229,989

86,884 — 86,884 226,784 —

(96,993)

129,899

—

(108)

129,791

226,784

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Parks and Recreation Special Revenue Fund Year ended June 30, 2003

Budget Revenues: Other taxes Investment income

$

Actual

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance – positive (negative)

53,000 7,000

19,800 8,905

— —

— —

19,800 8,905

(33,200) 1,905

60,000

28,705

—

—

28,705

(31,295)

Expenditures: Cultural and recreation - capital improvement

403,601

—

—

153,204

153,204

250,397

Total expenditures

403,601

—

—

153,204

153,204

250,397

(343,601)

28,705

—

(153,204)

(124,499)

219,102

—

—

—

—

—

—

(343,601)

28,705

—

(153,204)

(124,499)

219,102

519,470

519,470

—

—

519,470

—

175,869

548,175

—

(153,204)

394,971

219,102

Total revenues

Excess (deficiency) of revenues over expenditures Other financing (uses) – transfers out Net change in fund balance Fund balance at beginning of year Fund balance at end of year * No encumbrances were outstanding at June 30, 2002.

$

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Special Revenue Source Fund Year ended June 30, 2003

Budget Revenues: Charges for services Intergovernmental Investment income Other

$

Total revenues Expenditures: General government - capital improvement General services - capital improvement Cultural and recreation services - capital improvement Library - capital improvement Housing and community development - capital improvement Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses) - transfers out Net change in fund balance Fund balance at beginning of year Fund balance at end of year * No encumbrances were outstanding at June 30, 2002.

$

Actual

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance – positive (negative)

200,000 150,000 1,600,000 1,444,000

264,237 150,000 472,098 3,772,587

— — — —

— — — —

264,237 150,000 472,098 3,772,587

64,237 — (1,127,902) 2,328,587

3,394,000

4,658,922

—

—

4,658,922

1,264,922

— 3,509,246

— 1,218,792

— —

— 850,342

— 2,069,134

— 1,440,112

5,809,792 6,738,782

115,301 —

— —

240,944 2,883,518

356,245 2,883,518

5,453,547 3,855,264

2,077,411

229,621

—

3,339

232,960

1,844,451

18,135,231

1,563,714

—

3,978,143

5,541,857

12,593,374

(14,741,231)

3,095,208

—

(3,978,143)

(882,935)

13,858,296

(388,650)

(243,464)

—

—

(243,464)

145,186

(15,129,881)

2,851,744

—

(3,978,143)

(1,126,399)

14,003,482

30,582,589

30,582,589

—

—

30,582,589

—

15,452,708

33,434,333

—

(3,978,143)

29,456,190

14,003,482

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Gas Tax Special Revenue Fund Year ended June 30, 2003

Revenues: Intergovernmental Investment income Rent

$

Total revenues Expenditures: General services: Supplies Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses) – transfers out Net change in fund balance Fund balance at beginning of year Fund balance at end of year * No encumbrances were outstanding at June 30, 2002.

$

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances

Actual, budgetary basis

Variance – positive (negative)

Budget

Actual

2,209,939 70,000 28,000

2,226,833 28,082 23,141

— — —

— — —

2,226,833 28,082 23,141

16,894 (41,918) (4,859)

2,307,939

2,278,056

—

—

2,278,056

(29,883)

1,800 926,104

1,651 56,961

— —

— 713,207

1,651 770,168

149 155,936

927,904

58,612

—

713,207

771,819

156,085

1,380,035

2,219,444

—

(713,207)

1,506,237

126,202

(1,601,476)

(1,601,476)

—

—

(1,601,476)

—

(221,441)

617,968

—

(713,207)

(95,239)

126,202

2,007,096

2,007,096

—

—

2,007,096

—

1,785,655

2,625,064

—

(713,207)

1,911,857

126,202

CITY OF SANTA MONICA, CALIFORNIA Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2003

Assets Cash and investments Receivables (net, where applicable, of allowances for uncollectibles): Notes Property tax Interest Cash with fiscal agent Total assets

Earthquake Recovery Redevelopment Project Low/mod Housing 4,326,530

Ocean Park Redevelopment Project Low/mod Housing 83,895

Ocean Park Redevelopment Project 2,247,815

Total nonmajor capital projects funds 7,733,785

46,250 892 3,074 —

1,539,692 208,040 22,587 17,687

— 9,829 2,228 5,835,857

1,252,726 39,316 12,421 1,950,001

2,838,668 258,077 40,310 7,803,545

$ 1,125,761

6,114,536

5,931,809

5,502,279

18,674,385

$

—

5,242,188

—

5,757,418

10,999,606

—

5,242,188

—

5,757,418

10,999,606

1,125,761 —

872,348 —

5,931,809 —

4,600,796 (4,855,935)

12,530,714 (4,855,935)

1,125,761

872,348

5,931,809

(255,139)

7,674,779

$ 1,125,761

6,114,536

5,931,809

5,502,279

18,674,385

Downtown Redevelopment Project Low/mod Housing $ 1,075,545

Liabilities and Fund Balances Liabilities: Advances from other funds Total liabilities Fund balances: Reserved Undesignated Total fund balances (deficit) Total liabilities and fund balances

CITY OF SANTA MONICA, CALIFORNIA Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) Nonmajor Capital Projects Funds Year ended June 30, 2003

Downtown Redevelopment Project Low/mod Housing Revenues: Incremental property taxes Investment income Other

Ocean Park Redevelopment Project Low/mod Housing

Ocean Park Redevelopment Project

Total nonmajor capital projects funds

566,843 1,226 —

6,577,635 23,871 168,926

548,539 69,645 11,068

2,074,235 102,711 12,001

9,767,252 197,453 191,995

568,069

6,770,432

629,252

2,188,947

10,156,700

—

2,033,475

1,020,730

77,157

3,131,362

—

224,449

—

179,065

403,514

—

2,257,924

1,020,730

256,222

3,534,876

568,069

4,512,508

(391,478)

1,932,725

6,621,824

—

(939,633)

(481,366)

(1,534,462)

(2,955,461)

Total other financing (uses)

—

(939,633)

(481,366)

(1,534,462)

(2,955,461)

Net change in fund balances

568,069

3,572,875

(872,844)

398,263

3,666,363

557,692

(2,700,527)

6,804,653

(653,402)

4,008,416

$ 1,125,761

872,348

5,931,809

(255,139)

7,674,779

Total revenues Expenditures: Current: Capital Projects Debt Service: Interest Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses): Transfers out

Fund balances (deficit) at beginning of year Fund balances (deficit) at end of year

$

Earthquake Recovery Redevelopment Project Low/mod Housing

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Downtown Redevelopment Project Low/Mod Housing Capital Projects Fund Year ended June 30, 2003

Budget Project revenues: Incremental property taxes Investment income

$

Actual

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

358,080 11,024

566,843 1,226

— —

— —

566,843 1,226

208,763 (9,798)

369,104

568,069

—

—

568,069

198,965

Project expenditures – capital projects

860,997

—

—

—

—

860,997

Net change in fund balance

(491,893)

568,069

—

—

568,069

1,059,962

557,692

557,692

—

—

557,692

—

65,799

1,125,761

—

—

1,125,761

1,059,962

Total project revenues

Fund balance at beginning of year Fund balance at end of year

$

* No encumbrances were outstanding at June 30, 2002 and 2003.

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Earthquake Redevelopment Project Low/Mod Housing Capital Projects Fund Year ended June 30, 2003

Budget Project revenues: Incremental property taxes Investment income Other income

Actual

Less 2000-2001 encumbered expenditures*

Plus 2001-2002 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

$ 5,341,845 100,987 —

6,577,635 23,871 168,926

— — —

— — —

6,577,635 23,871 168,926

1,235,790 (77,116) 168,926

5,442,832

6,770,432

—

—

6,770,432

1,327,600

5,767,222 224,449

2,033,475 224,449

— —

— —

2,033,475 224,449

3,733,747 —

5,991,671

2,257,924

—

—

2,257,924

3,733,747

(548,839)

4,512,508

—

—

4,512,508

5,061,347

(939,733)

(939,633)

—

—

(939,633)

100

Total other financing (uses)

(939,733)

(939,633)

—

—

(939,633)

100

Net change in fund balance

(1,488,572)

3,572,875

—

—

3,572,875

5,061,447

(2,700,527)

(2,700,527)

—

—

(2,700,527)

—

$ (4,189,099)

872,348

—

—

872,348

5,061,447

Total project revenues Project expenditures: Capital projects Debt service expenditures – interest Total project expenditures Excess (deficiency) of revenues over expenditures Other financing (uses): Transfers out

Fund deficit at beginning of year Fund balance (deficit) at end of year

* No encumbrances were outstanding at June 30, 2002 and 2003.

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Ocean Park Redevelopment Project Low/Mod Housing Capital Projects Fund Year ended June 30, 2003

Budget Project revenues: Incremental property taxes Investment income Other income

$

Actual

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

548,216 87,989 —

548,539 69,645 11,068

— — —

— — —

548,539 69,645 11,068

323 (18,344) 11,068

636,205

629,252

—

—

629,252

(6,953)

6,728,812

1,020,730

—

—

1,020,730

5,708,082

(6,092,607)

(391,478)

—

—

(391,478)

5,701,129

(481,394)

(481,366)

—

—

(481,366)

28

Total other financing (uses)

(481,394)

(481,366)

—

—

(481,366)

28

Net change in fund balance

(6,574,001)

(872,844)

—

—

(872,844)

5,701,157

6,804,653

6,804,653

—

—

6,804,653

—

230,652

5,931,809

—

—

5,931,809

5,701,157

Total project revenues Project expenditures – capital projects Excess (deficiency) of revenues over expenditures Other financing (uses): Transfers out

Fund balance at beginning of year Fund balance at end of year

$

* No encumbrances were outstanding at June 30, 2002 and 2003.

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Downtown Redevelopment Project Capital Projects Fund (Major Fund) Year ended June 30, 2003

Budget Project revenues: Incremental property taxes Investment income Property rental Other income

Plus 2002-2003 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

1,431,322 259,400 591,250 —

2,217,771 233,250 591,250 89,475

— — — —

— — — —

2,217,771 233,250 591,250 89,475

786,449 (26,150) — 89,475

2,281,972

3,131,746

—

—

3,131,746

849,774

1,518,359

550,153

—

—

550,153

968,206

702,375

702,375

—

—

702,375

—

2,220,734

1,252,528

—

—

1,252,528

968,206

61,238

1,879,218

—

—

1,879,218

1,817,980

(877,700)

(846,066)

—

—

(846,066)

31,634

Total other financing (uses)

(877,700)

(846,066)

—

—

(846,066)

31,634

Net change in fund balance

(816,462)

1,033,152

—

—

1,033,152

1,849,614

(14,720,249)

(14,720,249)

—

—

(14,720,249)

—

$ (15,536,711)

(13,687,097)

—

—

(13,687,097)

1,849,614

Total project revenues Project expenditures: Capital projects Debt service: Interest Total project expenditures

$

Actual

Less 2001-2002 encumbered expenditures*

Excess (deficiency) of revenues over expenditures Other financing (uses): Transfers out

Fund deficit at beginning of year Fund balance (deficit) at end of year

* No encumbrances were outstanding at June 30, 2002 and 2003.

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Earthquake Recovery Redevelopment Project Capital Projects Fund (Major Fund) Year ended June 30, 2003

Budget Project revenues: Incremental property taxes Investment income Other

Actual

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrance

Actual, budgetary basis

Variance – positive (negative)

$ 21,369,380 539,700 75,000

25,665,755 927,654 158,475

— — —

— — —

25,665,755 927,654 158,475

4,296,375 387,954 83,475

21,984,080

26,751,884

—

—

26,751,884

4,767,804

Project expenditures: Payment of property tax increment in accordance with pass-through agreements Capital projects

6,587,739 31,844,628

6,577,635 9,364,328

— —

— 17,270,477

6,577,635 26,634,805

10,104 5,209,823

Total project expenditures

38,432,367

15,941,963

—

17,270,477

33,212,440

5,219,927

(16,448,287)

10,809,921

—

(17,270,477)

(6,460,556)

9,987,731

(4,731,000)

(4,358,529)

(4,358,529)

372,471

Total other financing (uses)

(4,731,000)

(4,358,529)

—

—

(4,358,529)

372,471

Net change in fund balance

(21,179,287)

6,451,392

—

(17,270,477)

(10,819,085)

10,360,202

17,217,663

17,217,663

—

—

17,217,663

—

$ (3,961,624)

23,669,055

—

(17,270,477)

6,398,578

10,360,202

Total project revenues

Excess (deficiency) of revenues over expenditures Other financing (uses): Transfers out

Fund balance at beginning of year Fund balance (deficit) at end of year * No encumbrances were outstanding at June 30, 2002.

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Ocean Park Redevelopment Project Capital Projects Fund Year ended June 30, 2003

Less 2001-2002 encumbered expenditures*

Plus 2002-2003 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

Budget

Actual

2,192,866 95,000 —

2,074,235 102,711 12,001

— — —

— — —

2,074,235 102,711 12,001

(118,631) 7,711 12,001

2,287,866

2,188,947

—

—

2,188,947

(98,919)

3,264,005

77,157

—

—

77,157

3,186,848

179,065

179,065

—

—

179,065

—

3,443,070

256,222

—

—

256,222

3,186,848

(1,155,204)

1,932,725

—

—

1,932,725

3,087,929

(1,545,123)

(1,534,462)

(1,534,462)

10,661

Total other financing (uses)

(1,545,123)

(1,534,462)

—

—

(1,534,462)

10,661

Net change in fund balance

(2,700,327)

398,263

—

—

398,263

3,098,590

(653,402)

(653,402)

—

—

(653,402)

—

$ (3,353,729)

(255,139)

—

—

(255,139)

3,098,590

Project revenues: Incremental property taxes Investment income Other Total project revenues Project expenditures: Capital projects Debt service: Interest Total project expenditures Excess (deficiency) of revenues over expenditures Other financing (uses): Transfers out

Fund deficit at beginning of year Fund balance (deficit) at end of year

$

* No encumbrances were outstanding at June 30, 2002 and 2003.

CITY OF SANTA MONICA, CALIFORNIA Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2003

City

Redevelopment Agency

Total nonmajor debt service funds

$

6,466,499

6,463,749

12,930,248

$

6,466,499

6,463,749

12,930,248

$

6,466,499

6,463,749

12,930,248

6,466,499

6,463,749

12,930,248

6,466,499

6,463,749

12,930,248

Assets Cash with fiscal agent Total assets Liabilities and Fund Balances Fund balances : Reserved - debt service Total fund balances Total liabilities and fund balances

$

CITY OF SANTA MONICA, CALIFORNIA Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds Year ended June 30, 2003

City Revenues - investment income

$

Expenditures: Debt Service: Interest Principal Total expenditures Deficiency of revenues over expenditures Other financing sources: Transfers in Net change in fund balance Fund balances at beginning of year Fund balances at end of year

$

Redevelopment Agency

Total nonmajor debt service funds

49,488

98,447

147,935

2,119,553 665,000

4,418,731 960,000

6,538,284 1,625,000

2,784,553

5,378,731

8,163,284

(2,735,065)

(5,280,284)

(8,015,349)

6,376,575

7,015,304

13,391,879

3,641,510

1,735,020

5,376,530

2,824,989

4,728,729

7,553,718

6,466,499

6,463,749

12,930,248

CITY OF SANTA MONICA, CALIFORNIA Combining Balance Sheet Nonmajor Permanent Funds June 30, 2003

Cemetery Perpetual Care

Mausoleum Perpetual Care

Total nonmajor permanent funds

$

29,599 6,433,520

10,057 616,969

39,656 7,050,489

$

6,463,119

627,026

7,090,145

6,463,119

627,026

7,090,145

6,463,119

627,026

7,090,145

Assets Receivables (net, where applicable, of allowances for uncollectibles): Accounts Cash with fiscal agent Total assets

Fund Balances Fund balances: Reserved for perpetual care Total fund balances

$

CITY OF SANTA MONICA, CALIFORNIA Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Permanent Funds Year ended June 30, 2003

Revenues: Charges for services Investment income

$

Total revenues Other financing (uses) - transfers out Net change in fund balance Fund balances at beginning of year Fund balances at end of year

$

Cemetery Perpetual Care

Mausoleum Perpetual Care

Total nonmajor permanent funds

21,207 205,476

13,360 42,085

34,567 247,561

226,683

55,445

282,128

(145,682)

(41,484)

(187,166)

81,001

13,961

94,962

6,382,118

613,065

6,995,183

6,463,119

627,026

7,090,145

Nonmajor Enterprise Fund Financial Statements Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises (a) where the intent is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or (b) where the City has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Solid Waste Management – To account for revenues and expenses of operating the City's refuse collection, street sweeping and cleaning, and recycling programs. Pier Fund – To account for revenues and expenses connected with management and development of the Santa Monica Pier. Civic Auditorium Fund – To account for revenues and expenses connected with management of the Santa Monica Civic Auditorium. Stormwater Management Fund – To account for revenues and expenses associated with storm water management. Cemetery Fund – To account for revenues and expenses associated with operation of Woodlawn Cemetery. Cable Communications Fund – To account for revenues and expenses related to coordinating, planning and operating the City's cable communications capacity. Special Aviation Fund – To account for revenues and expenses associated with aviation-related State funds provided to the City. Parking Authority Fund – To account for revenues and expenses associated with operating the various parking structures and parking lots owned by the City Parking Authority.

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets Nonmajor Enterprise Funds June 30, 2003

Solid Waste

Assets Current assets: Cash and investments Receivables (net, where applicable, of allowances for uncollectibles): Accounts Interest Due from other funds Total current assets Noncurrent assets: Restricted cash and investments Restricted cash with fiscal agent Capital assets: Land Buildings Improvements other than buildings Machinery and equipment Construction in progress Less accumulated depreciation Net capital assets Due from other funds Total assets

$

Civic Auditorium

Pier

67,062

2,982,659

3,004,373

2,351,646 7,906 —

67,950 15,025 —

32,861 13,326 —

2,426,614

3,065,634

3,050,560

2,683,132 —

178,457 233,658

187,849 —

— 327,579 404,427 510,778 250,627

— 1,747,468 21,607,354 285,401 552,374

— 3,923,049 3,985,333 426,349 53,188

1,493,411 (852,906)

24,192,597 (14,634,196)

8,387,919 (5,215,306)

640,505

9,558,401

3,172,613

—

—

—

5,750,251

13,036,150

6,411,022

Parking Authority

Total nonmajor enterprise funds

204,213

1,059,313

9,315,663

3,552 1,613 —

— 867 —

3,155 8,188 2,000,000

2,682,895 58,880 2,000,000

678,174

381,896

205,080

3,070,656

14,057,438

81,924 —

105,653 207,086

52,217 —

— —

300,000 —

3,589,232 440,744

— — 7,390,087 35,750 1,380,381

— 587,876 555,191 163,588 153,393

— — — 745,070 —

— — 784,940 — —

5,338,700 921,590 871,966 7,237 —

5,338,700 7,507,562 35,599,298 2,174,173 2,389,963

8,806,218 (435,611)

1,460,048 (888,670)

745,070 (557,753)

784,940 (511,341)

7,139,493 (1,433,687)

53,009,696 (24,529,470)

8,370,607

571,378

187,317

273,599

5,705,806

28,480,226

—

—

—

—

958,016

958,016

9,631,355

1,562,291

621,430

478,679

10,034,478

47,525,656

Cable Communications

Stormwater

Cemetery

1,131,018

490,294

376,731

40,329 7,477 —

183,402 4,478 —

1,178,824

Special Aviation

(Continued)

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets, Continued Nonmajor Enterprise Funds June 30, 2003

Solid Waste

Liabilities Current liabilities: Accounts payable Accrued liabilities Contracts payable (retained percentage) Interest payable Current portion of long-term obligations

Civic Auditorium

Pier

556,888 298,182 — — —

153,490 99,581 1,575 — —

208,947 80,307 1,164 — —

855,070

254,646

290,418

2,591,912

250,385

—

— —

— —

— —

Total liabilities

3,446,982

505,031

290,418

Net Assets Invested in capital assets, net of related debt Restricted Unrestricted

640,505 — 1,662,764

9,558,401 — 2,972,718

3,172,613 — 2,947,991

2,303,269

12,531,119

6,120,604

Total current liabilities Current liabilities payable from restricted assets – deposits Advances from other funds Long-term obligations, net of current portion

Total net assets

$

Cable Communications

Special Aviation

Parking Authority

Total nonmajor enterprise funds s

Stormwater

Cemetery

60,534 — 34,863 38,110 208,995

41,396 31,427 — — —

41,971 24,523 — — —

— — — — —

— 350 — — —

1,063,226 534,370 37,602 38,110 208,995

342,502

72,823

66,494

—

350

1,882,303

—

—

—

—

—

2,842,297

— 4,188,343

1,729,696 —

— —

— —

— —

1,729,696 4,188,343

4,530,845

1,802,519

66,494

—

350

10,642,639

3,973,269 — 1,127,241

571,378 — (811,606)

187,317 — 367,619

273,599 — 205,080

5,705,806 — 4,328,322

24,082,888 — 12,800,129

5,100,510

(240,228)

554,936

478,679

10,034,128

36,883,017

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Enterprise Funds Year ended June 30, 2003

Solid Waste Operating revenues: Charges for services

Pier

Civic Auditorium

$ 14,622,424

2,275,873

2,229,724

Operating expenses: Personnel services Administrative indirect Contractual services Repairs and maintenance Materials and supplies Utilities Casualty, property and liability costs Depreciation Other

6,343,833 598,500 2,155,415 2,110,874 2,846,841 47,713 141,600 73,725 878,057

1,864,070 420,600 916,068 521,963 384,096 134,851 115,400 1,033,972 674,754

1,625,406 118,200 94,902 90,480 170,151 193,745 88,900 415,036 8,421

Total operating expenses

15,196,558

6,065,774

2,805,241

(574,134)

(3,789,901)

(575,517)

25,988 — 184,287

93,202 (1,883) 66,816

62,223 — 9,041

210,275

158,135

71,264

(363,859)

(3,631,766)

(504,253)

1,784,003 (423,299)

2,682,453 (353,157)

333,200 —

996,845

(1,302,470)

(171,053)

1,306,424

13,833,589

6,291,657

2,303,269

12,531,119

6,120,604

Operating income (loss) Nonoperating revenues (expenses): Investment income Interest expense Other Total nonoperating revenues Income (loss) before transfers Transfers in Transfers out Change in net assets Total net assets at beginning of year Total net assets at end of year

$

Parking Authority

Total nonmajor enterprise funds

—

1,370,445

23,384,448

597,221 — 115,012 7,891 77,805 3,847 19,100 47,612 7,890

— — — — — — — 52,329 —

1,250 199,100 — — 21,409 — 47,800 271,423 6,877

11,046,004 1,435,500 3,321,502 2,780,511 3,639,729 422,943 439,800 2,146,553 1,625,185

1,056,583

876,378

52,329

547,859

26,857,727

1,568,021

(659,945)

(212,060)

(52,329)

822,586

(3,473,279)

41,151 (117,861) 201,905

16,972 — —

14,126 — 11,870

4,255 — —

11,339 — 3,637

269,256 (119,744) 477,556

125,195

16,972

25,996

4,255

14,976

627,068

1,693,216

(642,973)

(186,064)

(48,074)

837,562

(2,846,211)

600,000 (1,461,248)

187,166 —

348,410 —

— —

— (1,381,124)

5,935,232 (3,618,828)

831,968

(455,807)

162,346

(48,074)

(543,562)

(529,807)

4,268,542

215,579

392,590

526,753

10,577,690

37,412,824

5,100,510

(240,228)

554,936

478,679

10,034,128

36,883,017

Cable Communications

Stormwater

Cemetery

1,825,026

396,638

664,318

— — — 11,332 — — — 204,585 41,088

614,224 99,100 40,105 37,971 139,427 42,787 27,000 47,871 8,098

257,005

Special Aviation

CITY OF SANTA MONICA, CALIFORNIA Statement of Cash Flows Nonmajor Enterprise Funds Year ended June 30, 2003

Solid Waste Cash flows from operating activities: Cash received from customers Cash payments for materials and services Cash payments to employees for services Other nonoperating revenue received

Pier

Civic Auditorium

$ 14,254,071 (7,977,584) (6,343,833) 184,287

2,880,764 (3,158,018) (1,864,070) 66,816

2,238,103 (1,022,910) (1,625,406) 9,041

116,941

(2,074,508)

(401,172)

Cash flows from noncapital financing activities: Transfers in Transfers out

1,784,003 (423,299)

2,682,453 (353,157)

333,200 —

Net cash provided by (used in) noncapital financing activities

1,360,704

2,329,296

333,200

(107,181) — — —

(260,819) (30,718) (1,883)

(242,741) — — —

(107,181)

(293,420)

(242,741)

24,502

108,727

82,298

24,502

108,727

82,298

1,394,966

70,095

(228,415)

1,355,228

3,324,679

3,420,637

2,750,194

3,394,774

3,192,222

67,062 2,683,132

2,982,659 412,115

3,004,373 187,849

2,750,194

3,394,774

3,192,222

Net cash provided by (used in) operating activities

Cash flows from capital and related financing activities: Acquisition and construction of capital assets Reduction in long-term obligations Interest paid on long-term obligations Advances made to other funds Net cash provided by (used in) capital and related financing activities Cash flows from investing activities: Interest on investments Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

$

Cash and investments Restricted cash and investments Total cash and cash equivalents

$

Stormwater

Cemetery

Cable Communications

Special Aviation

Parking Authority

Total nonmajor enterprise funds

1,816,366 (22,110) — 242,993

418,862 (395,926) (614,224) —

669,541 (232,497) (597,221) 11,870

— — — —

1,381,383 (275,318) (1,250) 3,637

23,659,090 (13,084,363) (11,046,004) 518,644

2,037,249

(591,288)

(148,307)

—

1,108,452

47,367

600,000 (1,461,248)

187,166 —

348,410 —

— —

— (1,381,124)

5,935,232 (3,618,828)

(861,248)

187,166

348,410

—

(1,381,124)

2,316,404

(873,220) (203,696) (119,627) (600,000)

(20,576) — — —

— — — —

— — — —

— — — —

(1,504,537) (234,414) (121,510) (600,000)

(1,796,543)

(20,576)

—

—

—

(2,460,461)

41,151

25,225

14,815

5,611

27,470

329,799

41,151

25,225

14,815

5,611

27,470

329,799

(579,391)

(399,473)

214,918

5,611

(245,202)

233,109

1,792,333

1,202,506

214,030

198,602

1,604,515

13,112,530

1,212,942

803,033

428,948

204,213

1,359,313

13,345,639

1,131,018 81,924

490,294 312,739

376,731 52,217

204,213 —

1,059,313 300,000

9,315,663 4,029,976

1,212,942

803,033

428,948

204,213

1,359,313

13,345,639

(Continued)

CITY OF SANTA MONICA, CALIFORNIA Statement of Cash Flows Nonmajor Enterprise Funds, Continued Year ended June 30, 2003

Solid Waste Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss)

$

Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Add depreciation and amortization Change in assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in prepaids Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities Increase (decrease) in deposits Increase (decrease) in contracts payable Other nonoperating revenue received Total adjustments Net cash provided by (used in) operating activities

$

Pier

Civic Auditorium

(574,134)

(3,789,901)

(575,517)

73,725

1,033,972

415,036

(368,353) —

604,891 400

19,120 —

(337,481)

(5,422)

(223,492)

5,000 1,133,897

20,374 (5,638)

677 (10,741)

— 184,287

— 66,816

(35,296) 9,041

691,075

1,715,393

174,345

116,941

(2,074,508)

(401,172)

Stormwater

Cemetery

Cable Communications

Special Aviation

Parking Authority

Total nonmajor enterprise funds

1,568,021

(659,945)

(212,060)

(52,329)

822,586

(3,473,279)

204,585

47,871

47,612

52,329

271,423

2,146,553

(8,660) —

22,224 —

5,223 —

— —

10,938 —

285,383 400

36,535

617

(784)

—

(132)

(530,159)

— —

(2,055) —

(168) —

— —

— —

23,828 1,117,518

34,863 201,905

— —

— 11,870

— —

— 3,637

(433) 477,556

469,228

68,657

63,753

52,329

285,866

3,520,646

2,037,249

(591,288)

(148,307)

—

1,108,452

47,367

Internal Service Fund Financial Statements Internal Service Funds are used to account for the financing of good or services provided by one department or agency to other departments or agencies of the City or to other governments, on a cost-reimbursement basis.

Vehicle Management Fund – To account for user charges from other funds and expenses related to the replacement, maintenance and the fueling of over 650 City vehicles, including specialized mechanical equipment. Information Technology Replacement and Services – To account for user charges from other funds and expenses related to replacement of computer equipment. Self-Insurance, Comprehensive Fund – To account for user charges from other funds and expenses related to the administration and payment of general liability claims. Self-Insurance, Bus Fund – To account for user charges from the Transportation Fund and expenses related to the administration and payment of Municipal Bus Lines liability claims. Self-Insurance, Auto – To account for user charges from other funds and expenses related to the administration and payment of Automobile liability claims. Self-Insurance, Workers' Compensation Fund – To account for user charges from other funds and expenses related to the administration and payment of workers' compensation claims.

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets All Internal Service Funds June 30, 2003

Assets

Vehicle Management

Information Technology Replacement and Services

Self-Insurance Comprehensive

Self-Insurance Bus

Self-Insurance Auto

Self-Insurance Workers’ Compensation

Total internal service funds

Current assets: Cash and investments Interest receivable Prepaids Inventory

$ 17,261,456 72,321 — 32,070

2,784,875 11,013 — —

5,318,342 28,780 840,348 —

1,765,957 8,081 42,650 —

2,575,964 16,065 23,135 —

9,672,023 357,468 4,537 —

39,378,617 493,728 910,670 32,070

Total current assets

17,365,847

2,795,888

6,187,470

1,816,688

2,615,164

10,034,028

40,815,085

35,665

—

—

—

—

102,771

138,436

23,839,618 281,743 (12,222,130)

897,633 — (590,842)

2,849 — (1,709)

7,386 — (4,436)

919 — (551)

18,566 — (10,112)

24,766,971 281,743 (12,829,780)

Net capital assets

11,899,231

306,791

1,140

2,950

368

8,454

12,218,934

Total assets

29,300,743

3,102,679

6,188,610

1,819,638

2,615,532

10,145,253

53,172,455

696,237 —

5,134 —

— 1,205,757

331 536,553

3,265 92,145

165,416 5,431,814

870,383 7,266,269

696,237

5,134

1,205,757

536,884

95,410

5,597,230

8,136,652

—

—

3,443,868

784,183

211,763

12,758,779

17,198,593

—

—

3,443,868

784,183

211,763

12,758,779

17,198,593

696,237

5,134

4,649,625

1,321,067

307,173

18,356,009

25,335,245

11,899,231 16,705,275

306,791 2,790,754

1,140 1,537,845

2,950 495,621

368 2,307,991

8,454 (8,219,210)

12,218,934 15,618,276

$ 28,604,506

3,097,545

1,538,985

498,571

2,308,359

(8,210,756)

27,837,210

Noncurrent assets: Restricted cash and investments Capital assets: Machinery and equipment Construction in progress Less accumulated depreciation

Liabilities Current liabilities: Accounts payable Claims payable Total current liabilities Noncurrent liabilities: Claims payable Total noncurrent liabilities Total liabilities Net assets Net assets Invested in capital assets Unrestricted Total net assets (deficit)

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenses and Changes in Fund Net Assets All Internal Service Funds Year ended June 30, 2003 Information Technology Replacement and Services

Self-Insurance Comprehensive

Self-Insurance Bus

$ 6,982,795

1,496,789

2,648,980

1,428,850

440,597

6,231,537

19,229,548

1,591,811 525,500 135,872 1,217,222 876,155 35,037 24,800

— — — — 1,123,816 — —

— — — — — — —

— — — — — — —

— — — — — — —

892,310 — — — 6,260 3,163 —

2,484,121 525,500 135,872 1,217,222 2,006,231 38,200 24,800

— — 1,317 — 2,204,447

— — — — 175,825

1,939,018 810,590 367,346 — 570

439,610 276,376 129,346 8,000 1,477

365,915 2,898 37,304 — 184

6,853,478 195,222 147,823 181,997 2,863

9,598,021 1,285,086 683,136 189,997 2,385,366

6,612,161

1,299,641

3,117,524

854,809

406,301

8,283,116

20,573,552

Operating income (loss)

370,634

197,148

(468,544)

574,041

34,296

(2,051,579)

(1,344,004)

Nonoperating revenues: Investment income Gain (loss) on sale of capital assets Other revenue

366,277 31,413 42,050

58,590 — —

134,006 — 408

50,859 — 35

48,728 — —

315,550 — 628,376

974,010 31,413 670,869

Total nonoperating revenues

439,740

58,590

134,414

50,894

48,728

943,926

1,676,292

Income (loss) before operating transfers

810,374

255,738

(334,130)

624,935

83,024

(1,107,653)

332,288

— —

— —

— (197,300)

— (147,200)

— (72,400)

416,900 —

416,900 (416,900)

Vehicle Management Operating revenues – charges for services Operating expenses: Personnel services Administrative indirect Contractual services Repairs and maintenance Materials and supplies Utilities Casualty and liabilities Claims expense, net of claims reserve adjustments Insurance and bonds Miscellaneous fees and costs Administrative fees Depreciation Total operating expenses

Transfers in Transfers out Change in net assets Net assets (deficit) at beginning of year Total net assets (deficit) at end of year

Self-Insurance Auto

Self-Insurance Workers’ Compensation

Total internal service funds

810,374

255,738

(531,430)

477,735

10,624

(690,753)

332,288

27,794,132

2,841,807

2,070,415

20,836

2,297,735

(7,520,003)

27,504,922

$ 28,604,506

3,097,545

1,538,985

498,571

2,308,359

(8,210,756)

27,837,210

CITY OF SANTA MONICA, CALIFORNIA Statement of Cash Flows All Internal Service Funds Year ended June 30, 2003

Information Technology Replacement and Services

Self-Insurance Comprehensive

Self-Insurance Workers’ Compensation

Total internal service funds

6,982,795 (2,582,265) — (1,591,811) 42,050

1,496,789 (1,317,184) — — —

2,648,980 (1,218,200) (2,870,295) — 408

1,428,850 (319,482) (710,335) — 35

440,597 (67,137) (337,012)

6,231,537 (518,717) (5,596,762) (892,310) 628,376

19,229,548 (6,022,985) (9,514,404) (2,484,121) 670,869

2,850,769

179,605

(1,439,107)

399,068

36,448

(147,876)

1,878,907

— —

— —

— (197,300)

— (147,200)

— (72,400)

416,900 —

416,900 (416,900)

—

—

(197,300)

(147,200)

(72,400)

416,900

—

(2,222,051) 61,111

(36,021) —

— —

— —

— —

— —

(2,258,072) 61,111

(2,160,940)

(36,021)

—

—

—

—

(2,196,961)

481,696

73,162

201,233

56,581

68,839

78,835

960,346

1,171,525

216,746

(1,435,174)

308,449

32,887

347,859

642,292

16,125,596

2,568,129

6,753,516

1,457,508

2,543,077

9,426,935

38,874,761

Cash and cash equivalents at end of year

$ 17,297,121

2,784,875

5,318,342

1,765,957

2,575,964

9,774,794

39,517,053

Cash and investments Restricted cash and investments

$ 17,261,456 35,665

2,784,875 —

5,318,342 —

1,765,957 —

2,575,964 —

9,672,023 102,771

39,378,617 138,436

$ 17,297,121

2,784,875

5,318,342

1,765,957

2,575,964

9,774,794

39,517,053

370,634

197,148

(468,544)

574,041

34,296

(2,051,579)

(1,344,004)

2,204,447

175,825

570

1,477

184

2,863

2,385,366

— (4,235) 237,873 — 42,050

— — (193,368) — —

(840,348) — (40,264) (90,929) 408

94,350 — (110) (270,725) 35

(23,135) — (26,935) 52,038 —

(371) — 16,119 1,256,716 628,376

(769,504) (4,235) (6,685) 947,100 670,869

2,480,135

(17,543)

(970,563)

(174,973)

2,152

1,903,703

3,222,911

2,850,769

179,605

(1,439,107)

399,068

36,448

(147,876)

1,878,907

Vehicle Management Cash flows from operating activities: Cash received from customers Cash payments for materials and services Cash payments for claims and related expenses Cash payments to employees for services Other nonoperating revenue received

$

Net cash provided by (used in) operating activities Cash flows from noncapital financing activities: Transfers in Transfers out Net cash provided by (used in) noncapital financing activities Cash flows from capital and related financing activities: Acquisition and construction of capital assets Proceeds from sale of capital assets Net cash used in capital and related financing activities Cash flows from investing activities – interest on investments Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year

Cash and cash equivalents Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss)

$

Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Add depreciation Change in assets and liabilities: (Increase) decrease in prepaids (Increase) decrease in inventories Increase (decrease) in accounts payable Increase (decrease) in claims payable Other nonoperating revenue received Total adjustments Net cash provided by (used in) operating activities

$

Self-Insurance Bus

Self-Insurance Auto

Fiduciary Fund Financial Statements Agency Funds are custodial in nature and used to receive and disburse funds for an entity/individual, which is not part of the City. General Trust Fund - To account for funds given to the City for restricted purposes whereby the City is only acting as a passthrough agent. Street Light Fund - To account for all receipts and disbursements associated with 1911 Act Street Light Assessment Bonds.

CITY OF SANTA MONICA, CALIFORNIA Combining Statement of Fiduciary Assets and Liabilities Fiduciary Funds June 30, 2003

Agency Funds General Street Trust Light

Assets Restricted cash and investments Accounts receivable Total assets

Totals

$

748,786 13,582

5,323 —

754,109 13,582

$

762,368

5,323

767,691

$ $

762,368 762,368

5,323 5,323

767,691 767,691

Liabilities Accounts payable and accrued liabilities Total liabilities

CITY OF SANTA MONICA, CALIFORNIA Combining Statement of Changes in Fiduciary Assets and Liabilities Fiduciary Funds Year ended June 30, 2003

Year ended June 30, 2002

Additions

Reductions

Year ended June 30, 2003

Agency Funds: General Trust Assets: Restricted cash and investments

$

618,027

43,612,959

43,482,200

748,786

Accounts receivable Total assets

$

— 618,027

114,096 43,727,055

100,514 43,582,714

13,582 762,368

Accounts payable

$

618,027

43,727,055

43,582,714

762,368

Total liabilities

$

618,027

43,727,055

43,582,714

762,368

$

6,001

15,506

16,184

5,323

$

6,001

15,506

16,184

5,323

Accounts payable

$

6,001

15,506

16,184

5,323

Total liabilities

$

6,001

15,506

16,184

5,323

$

624,028

43,628,465

43,498,384

754,109

—

114,096

100,514

13,582

$

624,028

43,742,561

43,598,898

767,691

Accounts payable

$

624,028

43,742,561

43,598,898

767,691

Total liabilities

$

624,028

43,742,561

43,598,898

767,691

Liabilities:

Street Light Assets: Restricted cash and investments Total assets Liabilities:

Total Fiduciary Funds Assets: Restricted cash and investments Accounts receivable Total assets Liabilities:

CITY OF SANTA MONICA, CALIFORNIA Capital Assets Used in the Operation of Governmental Funds Schedules by Source June 30, 2003

Governmental funds capital assets: Land

$

86,758,590

Buildings

52,161,601

Improvements other than buildings

86,513,086

Machinery and equipment

30,837,813

Infrastructure Construction in progress Total governmental funds capital assets

2,323,759 $

114,889,096 373,483,945

$

230,069,547

Investments in governmental funds capital assets by source: General Fund Special revenue funds Capital projects funds Total governmental funds capital assets

58,003,986 $

85,410,412 373,483,945

This does not include internal service fund capital assets included in governmental activities.

CITY OF SANTA MONICA, CALIFORNIA Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity June 30, 2003

Land

Improvements other than buildings

Buildings

Machinery and equipment

Construction in progress

Infrastructure

Total

Function: General government

$

1,956,053

$

2,671,804

$

1,255,076

$

7,319,710

$

—

$

33,222,875

$

46,425,518

Public safety

184,400

3,775,670

349,771

15,151,483

—

45,177,891

64,639,215

General services

363,873

3,705,746

20,126,552

5,309,485

1,171,858

16,063,125

46,740,639

8,662,725

8,911,907

36,429,134

1,573,965

712,006

7,560,358

63,850,095

574,484

9,594,427

446,334

443,190

—

8,345,213

19,403,648

75,017,055

23,502,047

27,906,219

1,039,980

439,895

4,519,634

132,424,830

Cultural and recreational services Library Housing and community development Total governmental funds capital assets

$

86,758,590

$

52,161,601

$

This does not include internal service fund capital assets included in governmental activities

86,513,086

$

30,837,813

$

2,323,759

$

114,889,096

$

373,483,945

CITY OF SANTA MONICA, CALIFORNIA Capital Assets Used in the Operation of Governmental Funds Schedule of Changes by Function and Activity Year ended June 30, 2003

Governmental funds capital assets July 1, 2002

Increases

Governmental funds capital assets June 30, 2003

Decreases

Function: General government Public safety

$

43,817,953 44,349,771

$

4,653,136 20,730,005

$

(2,045,571) (440,561)

$

46,425,518 64,639,215

General services

32,341,999

15,015,581

(616,941)

46,740,639

Cultural and recreational services

57,484,176

9,303,557

(2,937,638)

63,850,095

Library

12,508,908

6,894,740

—

19,403,648

128,637,785

3,787,045

—

132,424,830

Housing and community development Total governmental funds capital assets

$

319,140,592

$

60,384,064

This does not include internal service fund capital assets included in governmental activities.

$

(6,040,711)

$

373,483,945

City of Santa Monica, California Year Ended June 30, 2003 STATISTICAL SECTION

CITY OF SANTA MONICA, CALIFORNIA YEAR ENDED JUNE 30, 2003 STATISTICAL SECTION (unaudited) Table 1

General Fund Expenditures by Function

2

General Governmental Expenditures by Function

3

General Fund Revenues by Source

4

General Governmental Revenues by Source

5

Property Tax Levies and Collections

6

Assessed Value

7

Property Tax Rates - All Direct and Overlapping Governments

8

Ratio of Net Bonded Debt to Assessed Value and Bonded Debt Per Capita

9

Computation of Legal Debt Margin

10

Computation of Direct and Overlapping Debt

11

Ratio of Annual Debt Service Expenditures for Bonded Debt to Total General Fund Expenditures

12

Redevelopment Agency Downtown Project Lease Revenue Bonds Coverage

13

Redevelopment Agency Ocean Park Project Tax Allocation Refunding Bonds Coverage

14

Wastewater Enterprise Revenue Bonds Coverage

15

2000 Census Summary

16

Principal Property Taxpayers

17

Schedule of Insurance

18

Miscellaneous Statistical Data

19

Property Value, Construction and Bank Deposits

20

Principal Employers

21

Unemployment Rates

22

Number of Budgeted Employees by Fund - Last Five Fiscal Years

23

Taxable Transactions by Type of Business - Last Five Calendar Years

24

General Fund Tax Revenues by Source - Last Five Fiscal Years

25

Redevelopment Agency Earthquake Recovery Project Tax Allocation Bonds Coverage

TABLE 1 CITY OF SANTA MONICA, CALIFORNIA GENERAL FUND EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS General government and housing and Fiscal

community

year

development

1993-94

$

Cultural and recreation Public safety

services

General services

Total Library

Retirement

Other (1)

expenditures

17,519,107 $ 17.0%

35,882,731 $ 34.7%

10,873,931 $ 10.5%

13,367,595 $ 12.9%

3,968,809 $ 3.9%

8,252,152 $ 8.0%

13,450,994 $ 103,315,319 13.0% 100.0%

1994-95

20,802,741 18.8%

38,993,331 35.3%

12,108,321 11.0%

12,979,663 11.7%

4,292,480 3.9%

7,763,124 7.0%

13,586,990 12.3%

110,526,650 100.0%

1995-96

18,519,453 16.9%

41,364,889 37.8%

12,574,125 11.5%

14,070,323 12.9%

4,476,422 4.1%

7,168,965 6.6%

11,115,876 10.2%

109,290,053 100.0%

1996-97

20,061,208 17.2%

43,232,544 37.1%

14,399,419 12.4%

15,812,335 13.6%

4,823,677 4.1%

6,503,114 5.6%

11,601,307 10.0%

116,433,604 100.0%

1997-98

23,955,250 19.1%

43,576,007 34.7%

14,964,283 12.0%

16,770,971 13.3%

5,663,797 4.6%

5,197,587 4.2%

15,292,685 12.1%

125,420,580 100.0%

1998-99

27,924,156 20.7%

45,605,413 33.9%

15,173,578 11.3%

17,445,492 13.0%

5,228,164 3.9%

9,204,945 6.8%

14,023,627 10.4%

134,605,375 100.0%

1999-00

28,641,585 18.0%

49,564,555 31.1%

27,929,423 17.5%

22,824,272 14.3%

5,940,473 3.7%

8,619,950 5.4%

15,996,699 10.0%

159,516,957 100.0%

2000-01

25,959,983 15.3%

59,003,870 34.7%

27,282,364 16.1%

22,708,323 13.4%

5,948,042 3.5%

7,621,026 4.5%

21,257,628 12.5%

169,781,236 100.0%

2001-02

39,409,953 21.1%

76,242,210 40.9%

26,592,628 14.3%

32,151,026 17.2%

7,385,216 4.0%

4,367,576 2.3%

349,609 0.2%

186,498,218 100.0%

2002-03

37,257,824 19.9%

77,107,871 41.2%

22,055,521 11.8%

30,252,427 16.2%

13,002,733 6.9%

7,068,355 3.8%

329,561 0.2%

187,074,292 100.0%

(1) Starting in FY 2001-02, expenditures previously reported as "Other" are included in functional categories, as appropriate. Source: Audited Annual Financial Statements.

General Fund Expenditures $200,000,000 $180,000,000

Other, capital projects and debt service

$160,000,000

Retirement

$140,000,000

Library

$120,000,000 Cultural and recreation services

$100,000,000 $80,000,000

General services

$60,000,000 Public safety

$40,000,000 $20,000,000

General government and housing community development

$1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

Fiscal Year

1999-00

2000-01

2001-02

2002-03

TABLE 2 CITY OF SANTA MONICA, CALIFORNIA GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION* LAST TEN FISCAL YEARS

Fiscal

General

year

government

1993-94

$

Public safety

General services

Cultural and

Housing and

Other, capital

recreation

community

projects and debt

Total

development

service

expenditures

services

Library

Retirement

11,159,651 $ 8.7%

37,802,939 $ 29.5%

12,543,289 $ 9.8%

17,170,670 $ 13.4%

4,046,558 $ 3.2%

8,252,152 $ 6.4%

17,846,952 $ 13.8%

19,434,525 $ 15.2%

128,256,736 100.0%

1994-95

11,731,148 8.5%

39,238,925 28.3%

16,241,825 11.7%

17,221,666 12.4%

4,292,480 3.1%

7,763,124 5.6%

23,159,007 16.7%

19,102,210 13.7%

138,750,385 100.0%

1995-96

11,610,602 8.7%

41,408,775 30.8%

15,419,506 11.5%

17,795,850 13.2%

4,476,422 3.3%

7,168,965 5.3%

20,317,620 15.1%

16,282,153 12.1%

134,479,893 100.0%

1996-97

12,154,158 8.3%

43,322,488 29.7%

20,362,774 13.9%

20,082,913 13.8%

4,823,677 3.3%

6,503,114 4.5%

21,508,027 14.7%

17,119,644 11.8%

145,876,795 100.0%

1997-98

14,309,500 9.1%

43,617,624 27.6%

23,584,316 14.9%

21,182,258 13.4%

5,663,797 3.6%

5,197,587 3.3%

22,169,524 14.0%

22,217,789 14.1%

157,942,395 100.0%

1998-99

16,864,659 9.4%

47,390,974 26.4%

22,475,490 12.5%

25,771,300 14.3%

5,228,164 2.9%

9,204,945 5.1%

28,317,222 15.8%

24,389,111 13.6%

179,641,865 100.0%

1999-00

18,318,874 6.5%

50,406,994 17.9%

50,461,320 17.9%

29,883,237 10.6%

5,940,473 2.1%

8,619,950 3.1%

25,969,624 9.2%

92,273,340 32.7%

281,873,812 100.0%

2000-01

17,887,258 7.1%

60,031,295 23.8%

38,688,651 15.4%

27,735,008 11.0%

5,948,042 2.4%

7,621,026 3.0%

31,912,393 12.7%

61,792,372 24.6%

251,616,045 100.0%

2001-02

21,625,401 8.7%

77,502,781 31.0%

42,328,024 17.0%

37,565,421 15.0%

7,385,216 3.0%

4,367,576 1.8%

36,446,926 14.6%

22,114,595 8.9%

249,335,940 100.0%

2002-03

21,872,722 8.2%

77,674,621 29.1%

46,117,908 17.3%

35,179,915 13.2%

13,002,733 4.9%

7,068,355 2.6%

36,280,489 13.6%

29,492,968 11.1%

266,689,711 100.0%

* Includes all governmental fund types (general, special revenue, debt service, and capital projects funds). Source: Audited Annual Financial Statements.

TABLE 3 CITY OF SANTA MONICA, CALIFORNIA GENERAL FUND REVENUES BY SOURCE LAST TEN FISCAL YEARS

Fiscal Property taxes

year 1993-94

$

Licenses and

Fines and

Investment and

Inter-

Charges for

permits

forfeitures

rental income

governmental

services

Other taxes (1)

Other

Total revenues

13,505,146 $ 12.2%

51,745,618 $ 46.9%

18,293,942 $ 16.6%

8,151,896 $ 7.4%

5,714,229 $ 5.2%

249,273 $ 0.2%

8,018,004 $ 7.3%

4,637,930 4.2%

$ 110,316,038 100.0%

1994-95

13,310,346 11.1%

56,025,596 46.9%

18,967,962 15.9%

7,362,718 6.2%

7,450,532 6.3%

265,586 0.2%

8,235,807 6.9%

7,791,807 6.5%

119,410,354 100.0%

1995-96

13,800,695 11.3%

61,043,108 50.0%

20,026,197 16.4%

7,803,342 6.4%

8,454,385 6.9%

433,612 0.4%

8,417,528 6.9%

2,095,282 1.7%

122,074,149 100.0%

1996-97

13,892,252 10.6%

66,238,904 50.5%

22,280,895 17.0%

7,670,742 5.9%

8,515,541 6.5%

291,152 0.2%

7,576,711 5.8%

4,620,508 3.5%

131,086,705 100.0%

1997-98

14,388,969 10.1%

71,151,827 50.1%

25,738,242 18.1%

8,228,026 5.8%

9,830,377 6.9%

159,681 0.1%

8,302,034 5.9%

4,264,496 3.0%

142,063,652 100.0%

1998-99

14,774,952 9.7%

73,650,960 48.5%

27,978,697 18.4%

8,739,641 5.8%

11,764,051 7.7%

277,684 0.2%

8,301,650 5.5%

6,350,500 4.2%

151,838,135 100.0%

1999-00

15,316,818 9.1%

79,879,950 47.3%

29,272,006 17.3%

9,000,597 5.3%

13,495,309 8.0%

517,766 0.3%

8,418,556 5.0%

12,918,754 (2) 7.7%

168,819,756 100.0%

2000-01

16,791,606 9.6%

85,607,500 49.2%

31,297,222 18.0%

8,539,835 4.9%

14,766,601 8.5%

842,903 0.5%

7,890,334 4.5%

8,296,585 (3) 4.8%

174,032,586 100.0%

2001-02

17,511,845 9.9%

82,919,039 46.7%

32,533,991 18.3%

9,858,930 5.6%

17,472,563 9.9%

1,297,106 0.7%

8,863,878 5.0%

6,914,362 3.9%

177,371,714 100.0%

2002-03

20,205,578 11.8%

85,745,613 50.3%

33,119,265 19.4%

10,742,425 6.3%

10,534,402 6.2%

285,522 0.2%

8,253,037 4.8%

1,691,714 1.0%

170,577,556 100.0%

(1)

Consists of proceeds from Sales Tax, Franchise Tax, Transient Occupancy Tax, Utility User Tax, Real Property Transfer Tax, Condominium Tax, Motor Vehicle In-lieu Tax and Parking Facility Tax (starting FY1993-94).

(2)

For FY 1999-00 this category includes settlement monies associated with Santa Monica Place totalling $4,062,389 and monies from sale of land to Redevelopment Agency totalling $3,100,000.

(3)

For FY 2000-01 this category includes $5,300,000 previously in deferred revenue recognized as a result of the City's adoption of Governmental Accounting Standards Board Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions. Source: Audited Annual Financial Statements.

General Fund Revenues $200,000,000 $180,000,000

Other revenue

$160,000,000 Charges for services

$140,000,000 Intergovernmental

$120,000,000 Investment and rental income

$100,000,000

Fines and forfeitures

$80,000,000 $60,000,000

Licenses and permits

$40,000,000

Other taxes

$20,000,000

Property taxes

$1993-94

1994-95

1995-96

1996-97

1997-98

1998-99 Fiscal Year

1999-00

2000-01

2001-02

2002-03

TABLE 4 CITY OF SANTA MONICA, CALIFORNIA GENERAL GOVERNMENTAL REVENUES BY SOURCE* LAST TEN FISCAL YEARS

Fiscal year 1993-94

Property taxes $

Sales tax

Licenses and

Inter-

Charges for

Fines and

Investment and

permits

governmental

services

forfeitures

rental Income

Other taxes (1)

All other

Total revenues

16,117,084 $ 11.6%

15,808,234 $ 11.4%

37,429,777 $ 26.9%

18,346,692 $ 13.2%

14,970,209 $ 10.8%

15,739,259 $ 11.3%

8,151,896 $ 5.8%

6,550,653 $ 4.7%

5,922,305 4.3%

$ 139,036,109 100.0%

1994-95

15,995,987 10.7%

16,626,354 11.1%

41,204,423 27.5%

19,027,742 12.7%

15,665,530 10.5%

16,261,600 10.8%

7,362,718 4.9%

8,583,178 5.7%

9,176,613 6.1%

149,904,145 100.0%

1995-96

16,786,161 10.4%

18,307,785 11.3%

44,894,798 27.8%

20,079,197 12.4%

24,066,464 14.9%

16,062,829 10.0%

7,803,342 4.8%

9,980,285 6.2%

3,573,095 2.2%

161,553,956 100.0%

1996-97

17,232,024 9.9%

19,638,900 11.3%

49,123,265 28.2%

22,352,870 12.8%

25,909,705 14.9%

16,195,163 9.3%

7,670,742 4.4%

10,161,377 5.8%

5,842,788 3.4%

174,126,834 100.0%

1997-98

20,488,145 11.2%

21,198,133 11.6%

52,093,373 28.5%

25,803,609 14.1%

21,468,468 11.7%

16,020,723 8.8%

8,228,026 4.5%

11,850,975 6.5%

5,677,125 3.1%

182,828,577 100.0%

1998-99

24,852,471 11.7%

21,423,677 10.1%

54,397,482 25.7%

28,038,957 13.3%

36,610,700 17.3%

15,796,635 7.5%

8,739,641 4.1%

13,924,740 6.6%

7,737,311 3.7%

211,521,614 100.0%

1999-00

34,281,263 14.0%

24,360,293 9.9%

58,853,994 24.1%

29,344,356 12.0%

41,477,482 16.9%

15,811,394 6.5%

9,000,597 3.7%

17,379,702 7.1%

14,188,276 5.8%

244,697,357 100.0%

2000-01

38,221,404 13.4%

26,186,186 9.1%

74,934,122 26.2%

31,351,322 11.0%

31,557,576 11.0%

16,627,486 5.8%

8,539,835 3.0%

20,286,388 7.1%

38,260,286 (2) 13.4%

285,964,605 100.0%

2001-02

47,446,878 18.4%

24,586,014 9.6%

61,092,973 23.8%

32,574,841 12.7%

28,466,987 11.1%

17,871,631 6.9%

9,858,930 3.8%

25,215,755 9.8%

10,089,427 3.9%

257,203,436 100.0%

2002-03

57,856,356 22.3%

25,235,982 9.7%

63,369,941 24.4%

33,315,009 12.8%

30,893,991 11.9%

16,904,889 6.5%

10,742,425 4.1%

14,157,732 5.5%

7,150,655 2.8%

259,626,980 100.0%

* Includes all governmental fund types (general, special revenue, debt service, and capital projects funds) (1) Consists of revenues from Franchise Tax, Transient Occupancy Tax, Utility Users' Tax, Real Property Transfer Tax, Condominium Tax, Trailer Coach License Tax, Motor Vehicle Inlieu Tax, Parking Facility Tax (starting 1993-94), TORCA Conversion Tax, Proposition A and C Local Return Taxes and Unit Dwelling Tax (2) In FY 2000-01 other taxes includes $13,400,000 in previously deferred revenue; all other includes $29,500,000 in previously deferred revenue. Revenue was recognized as a result of the City's adoption of Governmental Accounting Standards Board Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions. Source: Audited Annual Financial Statements.

TABLE 5 CITY OF SANTA MONICA, CALIFORNIA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS

Outstanding delinquent taxes

Total secured tax Current

Delinquent

Percent of

collections as

Outstanding

as percent of

Fiscal

Total secured

secured tax

levy

secured tax

Total tax

percent of total

year

tax levy

collections

collected

collections (1)

collections

tax levy

1993-94

$ 11,627,196

$ 10,877,645

1994-95

11,387,683

10,870,094

95.5

594,163

11,464,257

100.7

733,166

6.4

1995-96

12,066,921

11,497,361

95.3

517,975

12,015,336

99.6

692,554

5.7

1996-97

12,243,953

11,791,762

96.3

477,075

12,268,837

100.2

644,358

5.3

1997-98

12,388,966

11,955,444

96.9

549,974

12,505,418

100.9

650,574

5.3

1998-99

12,858,253

12,484,729

97.1

451,186

12,935,915

100.6

470,071

3.7

1999-00

13,287,593

12,891,562

97.0

426,560

13,318,122

100.2

442,199

3.3

2000-01

14,040,882

13,614,254

97.0

406,267

14,020,521

99.9

452,974

3.2

2001-02

14,713,556

14,282,425

97.1

412,287

14,694,712

99.9

446,478

3.0

2002-03

15,315,149

14,891,114

97.2

422,693

15,313,807

100.0

93.6 %

$

662,014 $ 11,539,659

99.3 %

delinquent total secured tax taxes (2) levy (2) $

869,341

420,562

(1)

Exclusive of penalties.

(2)

Reflects City of Santa Monica proportionate share of county-wide outstanding delinquencies. City specific statistics are not available from the County of Los Angeles.

Source: County of Los Angeles

8 %

2.7

TABLE 6 CITY OF SANTA MONICA, CALIFORNIA ASSESSED VALUE LAST TEN FISCAL YEARS

Fiscal

Net assessed Land

year 1993-94

$

4,696,514,389

Improvements $

4,548,918,873

Personal property $

74,027,674

Public utilities $

1,768,654

Secured gross $

9,321,229,590

Exemptions (1) $

363,440,667

Secured net $

8,957,788,923

Net unsecured $

516,134,363

valuations $

9,473,923,286

1994-95

4,820,062,441

4,621,155,928

72,296,906

1,926,564

9,515,441,839

405,723,516

9,109,718,323

523,855,310

9,633,573,633

1995-96

4,804,443,235

4,261,171,019

65,802,080

2,024,159

9,133,440,493

426,349,915

8,707,090,578

558,481,477

9,265,572,055

1996-97

4,800,513,466

4,261,844,662

51,375,296

586,379

9,114,319,803

339,998,231

8,774,321,572

613,327,854

9,387,649,426

1997-98

4,911,817,072

4,328,879,310

54,672,870

586,249

9,295,955,501

343,228,944

8,952,726,557

581,356,280

9,534,082,837

1998-99

5,222,114,071

4,496,230,347

48,065,652

577,895

9,766,987,965

327,617,031

9,439,370,934

763,269,831

10,202,640,765

1999-00

5,827,045,970

4,951,093,680

48,350,204

577,895

10,827,067,749

264,038,252

10,563,029,497

771,996,560

11,335,026,057

2000-01

6,387,678,650

5,382,788,280

26,836,372

577,895

11,797,881,197

335,631,820

11,462,249,377

820,704,082

12,282,953,459

2001-02

6,959,592,062

5,827,878,240

67,180,358

577,895

12,855,228,555

304,310,896

12,550,917,659

940,935,105

13,491,852,764

2002-03

7,743,067,190

6,378,861,320

77,861,370

577,895

14,200,367,775

432,908,920

13,767,458,855

830,892,607

14,598,351,462

(1) Includes Homeowner Exemption. City is reimbursed by State for taxes lost because of these exemptions. Source: Los Angeles County Auditor-Controller

TABLE 7 CITY OF SANTA MONICA, CALIFORNIA PROPERTY TAX RATES - ALL DIRECT AND OVERLAPPING GOVERNMENTS* LAST TEN FISCAL YEARS

Miscellaneous special Fiscal year 1993-94

City $

County **

$

1.00

School districts $

districts

Total

0.05 $

0.01

$

1.06

1994-95

**

1.00

0.05

0.01

1.06

1995-96

**

1.00

0.05

0.01

1.06

1996-97

0.01

1.00

0.05

0.01

1.07

1997-98

0.01

1.00

0.05

0.01

1.07

1998-99

**

1.00

0.06

0.01

1.07

1999-00

0.01

1.00

0.03

0.01

1.05

2000-01

**

1.00

0.04

0.01

1.05

2001-02

**

1.00

0.04

0.01

1.05

2002-03

0.02

1.00

0.06

0.01

1.09

*

Property tax rate is per $100 of assessed value. Prior to 1981-82, assessed value was 25% of market value. Since 1981-82, assessed value equals full market value as defined by law. Since 1978-79, the maximum allowable rate is levied by the County, property taxes are collected by the County, and the County allocates the City's share in accordance with distribution formulas established in law. Effective 1981-82, Proposition 13 allowed jurisdictions to impose rates over the $1.00 base rate only for bonded debt approved by the voters prior to 1978. However, in 1986, the State Constitution was amended to allow rates over the $1.00 base rate for voter approved General Obligation bonds.

**

For FY's 1993-94 through 1995-96, FY 1998-99, FY 2000-01, and FY 2001-02, City of Santa Monica property tax override for Library General Obligation bonds was less than $.01, but was levied.

Source: Los Angeles County Auditor-Controller

TABLE 8 CITY OF SANTA MONICA, CALIFORNIA RATIO OF NET BONDED DEBT TO ASSESSED VALUE AND BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS Debt services Fiscal year

Population (1)

Assessed value

Gross bonded

(in thousands)

debt (2)

$

9,473,923

$

79,065,000

Debt payable

Percentage of net

monies available from enterprise (3)

1993-94

89,809

$

5,176,845

1994-95

89,985

9,633,574

77,725,000

3,827,815

1995-96

90,262

9,265,572

76,145,000

1996-97

91,405

9,387,649

1997-98

92,578

1998-99

revenues (4) $

52,415,000

Net bonded debt $

bonded debt to

Net bonded debt

assessed value

per capita

21,473,155

0.23%

$

239.10

51,855,000

22,042,185

0.23%

244.95

3,910,938

51,095,000

21,139,062

0.23%

234.20

74,460,000

4,154,460

50,280,000

20,025,540

0.21%

219.09

9,534,083

73,010,000

3,944,578

49,415,000

19,650,422

0.21%

212.26

94,220

10,202,641

71,090,000

4,075,082

48,485,000

18,529,918

0.18%

196.67

1999-00

96,528

11,335,026

147,485,000

8,065,786

47,475,000

91,944,214

0.81%

952.51

2000-01

86,188

12,282,953

144,340,000

7,883,294

46,370,000

90,086,706

0.73%

1,045.23

2001-02

87,954

13,491,853

167,100,000

7,553,718

44,710,000

114,836,282

0.85%

1,305.64

2002-03

89,333

14,598,351

189,585,000

12,720,975

43,820,000

133,044,025

0.91%

1,489.30

(1)

Source: State Department of Finance. Fiscal Year 2000-01 decrease reflects results of 2000 Census.

(2)

Includes Parking Authority Revenue Bonds; Redevelopment Agency Lease Revenue Bonds, Tax Allocation and Refunding/Refinancing Bonds; Wastewater Fund Bonds; and General Fund General Obligation and Lease Revenue Bonds.

(3)

Excludes Debt Service available for Parking Authority Bonds.

(4)

Parking Authority and Wastewater Bonds.

Source: City of Santa Monica Finance Department

Population and Assessed Valuation Population (1)

Population (1)

Assessed value (in thousands)

190,000 170,000 150,000 130,000 110,000 90,000 70,000 50,000

Assessed Valuation in Thousands $16,000,000 $15,000,000 $14,000,000 $13,000,000 $12,000,000 $11,000,000 $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $-

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 Fiscal Year (1) Per State Department of Finance; January 1 each year

Net Bonded Debt Per Capita Percent Net Bonded Debt of Assessed Valuation Dollars of Debt Per Capita

Percent 3.0%

Percentage of net bonded debt to assessed value

2.5%

Net bonded debt per capita

$1,600 $1,400 $1,200

2.0%

$1,000 $800

1.5%

$600

1.0%

$400 0.5%

$200 $0

0.0% 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03

Fiscal Year

TABLE 9 CITY OF SANTA MONICA, CALIFORNIA COMPUTATION OF LEGAL DEBT MARGIN June 30, 2003

Net assessed value Add: exempt property

$

14,598,351,462 538,143,220

Total gross assessed value

$

15,136,494,682

Debt limit - 10% of total assessed value (1)

$

1,513,649,468

Amount of debt applicable to debt limit: Total bonded debt Less: Assets in debt service funds available for payment of bonds

$

156,245,000

12,720,975

Total amount of debt applicable to debt limit Legal debt margin

143,524,025 $

1,370,125,443

(1) Per Section 607 of the City Charter, bonded indebtedness of the City may not exceed 10% of total assessed valuation of property within the City, exclusive of any indebtedness incurred for the purpose of water supply or sewers or storm drains. Source: County of Los Angeles and City of Santa Monica Finance Department

TABLE 10 CITY OF SANTA MONICA, CALIFORNIA COMPUTATION OF DIRECT AND OVERLAPPING DEBT June 30, 2003

Gross debt

Jurisdiction Los Angeles County

$

30,225,000

Percentage

Amount applicable

applicable to

to

Santa Monica

Santa Monica

1.968% $

594,828

Los Angeles County General Fund Obligations

1,574,157,594

1.968%

30,979,421

Los Angeles County Pension Obligations

1,552,952,395

1.968%

30,562,103

27,754,320

1.968%

546,205

Los Angeles County Flood Control District

154,150,000

2.021%

3,115,372

Metropolitan Water District

444,295,000

1.023%

4,545,138

44,480,000

64.527%

28,701,610

4,364,490,000

0.0003%

13,093

99,390,034

64.590%

64,196,023

394,735,000

1.968%

7,768,385

68,150,000

64.527%

43,975,151

Los Angeles Unified School District Certificates of Participation

804,580,000

0.0003%

2,414

Los Angeles Community College District

507,030,000

0.010%

50,703

Los Angeles Community College District Certificates of Participation

86,280,000

0.010%

8,628

Santa Monica-Malibu Unified School District Certificates of Participation

21,601,501

64.590%

13,952,409

Los Angeles County Superintendent of Schools Certificates of Participation

Santa Monica Community College District Los Angeles Unified School District Santa Monica-Malibu Unified School District Los Angeles County Regional Park and Open Space Assessment District Santa Monica Community College District Certificates of Participation

Total Gross Overlapping Debt Less:

229,011,483

Los Angeles County Certificates of Participation (100% self-supporting) from leasehold revenues on properties in Marina del Rey

Total Net Overlapping Bonded Debt

1,637,966 $

227,373,517

TABLE 10 (continued) In addition to overlapping debt, the following direct debt exists as of June 30, 2003:

Jurisdiction City of Santa Monica Redevelopment Agency (2002)Refunding Lease Revenue Bonds (Downtown)

Gross debt

Amount applicable to

Santa Monica

Santa Monica

5,640,000

100.000% $

5,640,000

City of Santa Monica Refunding Certificates of Participation (1995-Airport)

1,920,000

100.000%

1,920,000

City of Santa Monica Redevelopment Agency (2002) Tax Allocation Refunding Bonds (Ocean Park)

19,315,000

100.000%

19,315,000

City of Santa Monica Parking Authority (2002) Refunding Lease Revenue Bonds

10,480,000

100.000%

10,480,000

City of Santa Monica General Obligation Bonds (1990) Main Library Improvements

260,000

100.000%

260,000

City of Santa Monica General Obligation Bonds (1998) Main Library Improvements

2,910,000

100.000%

2,910,000

City of Santa Monica General Obligation Bonds (2002) Main Library Improvements

25,000,000

100.000%

25,000,000

City of Santa Monica Wastewater Enterprise Revenue Bonds (1993) Refunding Series

33,340,000

100.000%

33,340,000

City of Santa Monica Public Safety Lease Revenue Bonds (1999)

12,805,000

100.000%

12,805,000

City of Santa Monica Earthquake Recovery Redevelopment Project Bonds (1999)

62,525,000

100.000%

62,525,000

City of Santa Monica Public Safety Lease Revenue Bonds (2002)

17,310,000

100.000%

17,310,000

Total Direct Debt (Bonds and Certificates of Participation)

Source: California Municipal Statistics, Inc.

$

Percentage applicable to

$

191,505,000

TABLE 11 CITY OF SANTA MONICA, CALIFORNIA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR BONDED DEBT TO TOTAL GENERAL FUND EXPENDITURES LAST TEN FISCAL YEARS Ratio of debt service to total Fiscal year 1993-94

Principal $

Total debt service

General fund

general fund

(2)

expenditures (1)

expenditures

Interest

1,892,500

$

3,506,839

$

5,399,339 $

105,396,176

5.1%

1994-95

1,947,500

3,615,399

5,562,899

112,835,499

4.9

1995-96

1,997,500

3,619,513

5,617,013

112,143,415

5.0

1996-97

2,062,500

3,511,244

5,573,744

119,502,922

4.7

1997-98

1,270,000

3,529,156

4,799,156

139,912,020

3.4

1998-99

1,355,000

3,516,152

4,871,152

138,437,054

3.5

1999-00

1,465,000

3,376,762

4,841,762

164,509,350

2.9

2000-01

2,445,000

8,409,242

10,854,242

175,238,024

6.2

2001-02

2,590,000

9,702,122

229,178,174

4.2

2002-03

1,625,000

8,566,798

197,782,481

4.3

(3)

7,112,122

(3)

6,941,798

(1)

Includes General Fund expenditures and other financing uses.

(2)

Includes Downtown Redevelopment Lease Revenue Bonds (General Fund revenues are paid to the Redevelopment Agency under various agreements for subsequent use to finance debt service) and Parking Authority Refunding Lease Revenue Bonds which refunded Certificates of Participation Improvement Project of 1986 (General Fund revenues are paid to the Parking Authority under a lease agreement). Does not include Public Financing Authority Lease Revenue Bonds (all principal and interest payment due for period through January 1, 2003, have been deposited with trustee per indenture agreement).

(3)

Downtown Redevelopment Project and Parking Authority debt were refunded May 2, 2002. Debt service payments on the 2002 bonds will begin in fiscal year 2002-03. Coverage ratios above reflect the 1992 bonds.

Source: City of Santa Monica Finance Department

TABLE 12 CITY OF SANTA MONICA, CALIFORNIA REDEVELOPMENT AGENCY DOWNTOWN PROJECT LEASE REVENUE BONDS COVERAGE

Fiscal

Gross

Direct operating

year

revenues

expense

1993-94

$

2,146,380

$

386,030

Net revenue available for debt service $

1,760,350

Debt service requirement Principal $

Interest

485,000

$

644,979

Total $

Coverage

1,129,979

1.56

1994-95

2,338,097

298,575

2,039,522

500,000

627,969

1,127,969

1.81

1995-96

2,691,561

296,495

2,395,066

520,000

607,799

1,127,799

2.12

1996-97

2,480,166

223,481

2,256,685

545,000

584,071

1,129,071

2.00

1997-98

2,645,734

328,243

2,317,491

570,000

557,014

1,127,014

2.06

1998-99

2,687,824

285,855

2,401,969

605,000

526,883

1,131,883

2.12

1999-00

2,776,080

286,809

2,489,271

635,000

493,539

1,128,539

2.21

2000-01

2,751,331

316,317

2,435,014

670,000

456,981

1,126,981

2.16

2001-02

2,823,105

313,397

2,509,708

710,000

417,296

1,127,296

2.23

2002-03

3,698,589

308,456

3,390,133

-

115,000

115,000

29.48

Note:

Redevelopment Agency of the City of Santa Monica Parking Lease Revenue Bonds were originally issued December 1, 1978 in the principal amount of $14,470,000 at an interest rate of 6.25 - 7.75%. These bonds were refunded on October 1, 1992 as Lease Revenue Bonds, Series 1992 (Downtown Redevelopment Refunding Project of 1992) issued in the principal amount of $11,635,000 at an interest rate of 5.98%. On May 2, 2002, the Agency issued $5,640,000 of Downtown Project refunding bonds bearing interest at 4.6% to defease the outstanding 1992 Downtown Project Bonds. Debt service payments on the 2002 bonds began in fiscal year 2002-03. Coverage ratios before FY 2002-03 above reflect the 1992 bonds.

Source: City of Santa Monica Finance Department

TABLE 13 CITY OF SANTA MONICA, CALIFORNIA REDEVELOPMENT AGENCY OCEAN PARK PROJECT TAX ALLOCATION REFUNDING BONDS COVERAGE

Fiscal

Gross

Direct operating

Net revenue available for

year

revenues

expense

debt service

1993-94

$

1,703,863

$

586,994

$

1,116,869

Debt service requirement Principal $

Interest

180,000

$

751,505

Total $

Coverage

931,505

1.20

1994-95

1,757,012

391,099

1,365,913

190,000

742,070

932,070

1.47

1995-96

1,762,918

134,525

1,628,393

200,000

732,125

932,125

1.75

1996-97

1,662,787

274,003

1,388,784

210,000

721,670

931,670

1.49

1997-98

1,677,009

155,599

1,521,410

225,000

710,240

935,240

1.63

1998-99

1,638,906

163,521

1,475,385

235,000

697,585

932,585

1.58

1999-00

1,848,217

186,823

1,661,394

250,000

683,755

933,755

1.78

2000-01

3,240,610

181,426

3,059,184

265,000

668,555

933,555

3.28

2001-02

2,944,183

206,004

2,738,179

280,000

651,925

931,925

2.94

2002-03

2,737,356

178,996

2,558,360

-

586,423

586,423

4.36

Note:

In October of 1984, the Redevelopment Agency issued Tax Allocation Bonds in the principal sum of $5,700,000 at an interest rate of 10.89%. Such obligations were serial in nature and matured annually with the final payment of $686,650 due in 2007. The bond proceeds were used to acquire land, construction of a public park, and for low and moderateincome housing. In April of 1988, the Redevelopment Agency issued Refunding and Refinancing Bonds in the principal sum of $8,775,000 at an interest rate of 5.2 - 8.25%. Such obligations were serial in nature and matured annually with the final payment of $754,906 due in 2019. The bond proceeds were used to defease the 1984 Ocean Park Bonds and to pay a portion of various Promissory Notes due to the City of Santa Monica. In November of 1992, the Redevelopment Agency issued Ocean Park Redevelopment Project Tax Allocation Refunding Bonds, Series 1992, in the principal sum of $11,325,000 at an interest rate of 6.89%. Such obligations are serial in nature and mature annually with the final payment of $931,500 due in 2019. The bond proceeds were issued to defease the 1988 Refunding and Refinancing Bonds and to pay a portion of various Promissory Notes due to the City of Santa Monica. Debt service payments began in fiscal year 1992-93. On May 2, 2002, the Agency issued $19,315,000 of Ocean Park refunding and new money bonds bearing interest at 5.03% to defease the outstanding 1992 Ocean Park Project Bonds and to provide funds for new low-moderate-income projects. Debt service payments on the 2002 bonds began in fiscal year 2002-03. Coverage ratios before FY 2002-03 above reflect the 1992 bonds.

Source: City of Santa Monica Finance Department

TABLE 14 CITY OF SANTA MONICA, CALIFORNIA WASTEWATER ENTERPRISE REVENUE BONDS COVERAGE

Fiscal

Gross

Direct operating

year

revenues

expense

1993-94

$

11,300,047

$

6,939,792

Net revenue available for debt service $

4,360,255

Debt service requirement Principal $

—

Interest $

1,222,529

Total $

Coverage

1,222,529

3.57

1994-95

12,057,693

8,133,397

3,924,296

255,000

2,324,156

2,579,156

1.52

1995-96

11,025,121

6,965,177

4,059,944

445,000

2,124,975

2,569,975

1.58

1996-97

11,615,361

7,139,128

4,476,233

485,000

2,089,375

2,574,375

1.74

1997-98

12,388,742

7,232,382

5,156,360

520,000

2,050,575

2,570,575

2.01

1998-99

12,816,715

4,688,426

8,128,289

565,000

2,008,975

2,573,975

3.16

1999-00

16,118,683

6,124,121

9,994,562

625,000

1,952,475

2,577,475

3.88

2000-01

19,211,915

10,772,786

8,439,129

700,000

1,877,475

2,577,475

3.27

2001-02

15,196,031

8,104,968

7,091,063

795,000

1,793,475

2,588,475

2.74

2002-03

14,593,471

11,628,410

2,965,061

890,000

1,698,075

2,588,075

1.15

(1) Operating plus non operating revenues and net interfund transfers. (2) Excludes depreciation expense and write-off of disposed assets. Note:

The Hyperion Project, Wastewater Enterprise Revenue Bonds were issued November 26, 1991 at an interest rate of 6.25% with ratings of A1 from Moody's Investors Service, Inc. and A+ from Standard and Poor's Corporation. Debt service began in FY 1992-93. These bonds were refunded by the issuance of insured Wastewater Enterprise Revenue Bonds, 1993 Refunding Series on December 22, 1993 with an interest rate of 5.3084% with ratings of Aaa and AAA by Moody's Investors Services, Inc. and Standard and Poor's Corporation, respectively. The Refunding Bonds are insured by AMBAC Indemnity.

Source: City of Santa Monica Finance Department

TABLE 15 CITY OF SANTA MONICA, CALIFORNIA 2000 CENSUS SUMMARY

Total Population

84,084

Household Composition

Change in Population 1990-2000

(2,821)

Occupied housing units Family households (families) Married-couple family Female householder no husband present Nonfamily households Householder living alone Householder 65 years or over

Sex Male Female

40,517 43,567

48.2% 51.8%

3,448 9,948 58,610 12,078

4.1% 11.8% 69.7% 14.4%

Age 0-4 5-19 20-64 65+

Total

39.3

Race/Ethnicity One race White Black or African American American Indian and Alaska native Asian Native Hawaiian and Pacific Islander Some other race Two or more races Hispanic or Latino (of any race)

80,609 65,832

95.9% 78.3%

3,176

3.8%

396 6,100

0.5% 7.3%

86 5,019 3,475

0.1% 6.0% 4.1%

11,304

13.4%

81,568 2,516

97.0% 3.0%

Relationship In households In group quarters

Source: U.S. Census Bureau, Census 2000

16,783 12,216

37.7% 27.5%

3,318 27,714 22,247

7.5% 62.3% 49.6%

4,729

10.6%

Average Household Size Average household size Average family size Average household size owner-occupied units Average household size renter-occupied units

Median Age

44,497

Total Year-Round Housing Units Vacant housing units For seasonal, recreational or occasional use

1.83 2.80 2.24 1.66

47,863 3,366

7.0%

767

1.6%

Homeowner vacancy rate Rental vacancy rate

1.4% 4.3%

Occupancy Status Occupied owner Occupied renter

13,277 31,220

29.8% 70.2%

TABLE 16 CITY OF SANTA MONICA PRINCIPAL PROPERTY TAXPAYERS FISCAL YEAR 2002-2003 Percentage of Taxpayer

Type of business

Water Garden Company

Real Estate Investment

TST Colorado Avenue LLC

$

2002 Assessed

total assessed

valuation

valuation

397,669,519

2.72%

Commercial Real Estate

359,978,400

2.47%

Douglas Emmett Realty Fund

Property Management

337,530,385

2.31%

Sisters of Charity - St. John's Hospital

Commercial - Institutional

273,913,013

1.88%

SC Enterprises SMBP LLC

Commercial Real Estate

205,999,000

1.41%

Macerich Company

Shopping Center

147,410,779

1.01%

SHCI Santa Monica Beach Hotel

Hotel Management

130,605,256

0.89%

1299 Ocean LLC

Commercial Real Estate

108,604,788

0.74%

SPK Arboretum Courtyard LLC

Commercial Real Estate

102,235,620

0.70%

Commonwealth Atlantic Arboretum LLC

Commercial Real Estate

84,252,000

0.58%

Total principal property taxpayers gross assessed value

$

2,148,198,760

14.72%

Total city assessed value

$

14,598,351,462

100.00%

Source: City of Santa Monica Finance Department (data from Los Angeles County Assessor)

TABLE 17 CITY OF SANTA MONICA, CALIFORNIA SCHEDULE OF INSURANCE June 30, 2003 Type of Coverage

Coverage Description

Coverage Limits

Automobile and General Liability

Bodily injury, property damage, personal injury, public officials' liability, and errors and omissions.

$

1,000,000 (S.I.R)

Excess Liability: Authority for California Cities Excess Liability (ACCEL - A Joint Powers Authority)

Bodily injury, property damage, personal injury, public officials' liability, and errors and omissions. (Includes general liability, automobile liability and bus coverage.)

$

9,000,000

Excess Liability (in addition to ACCEL)

Same as ACCEL.

$

10,000,000

Bus Liability

Bodily injury and property damage.

$

500,000 (S.I.R)

Excess Bus Liability

Bodily injury and property damage.

$

500,000

Airport Liability

Bodily injury, property damage, personal injury, and contractual liability.

$

20,000,000

Personal injury.

$

20,000,000

Liability for others' aircrafts while stored at the airport hangars.

$

20,000,000 Per aircraft

$1,000 per loss deductible.

$

20,000,000 per occurrence

Aircraft Liability (City-Owned)

Includes passenger liability.

$

50,000,000 per occurrence

Watercraft Physical Damage

$2,000 deductible for Monica I.

$

169,039

Vehicles Excess of $100K Physical Damage

Bus and Fire Vehicles only. Off premises-peril of collision subject to $25,000 deductible.

$

74,756,800

Vehicle Physical Damage (on Premises)

All Risk coverage excluding collision, $25,000 deductible per claim.

$

109,879,400

City Property

All Risk - Basis

$

750,000,000

Hangar-keepers Liability

Building contents and loss of rents. $25,000 deductible per occurrence. Wavewash deductible $100,000.

TABLE 17 (continued) Type of Coverage

Coverage Description

Coverage Limits

Earthquake Insurance

All City facilities including contents except Pier. SIR - $10,000,000.

$

80,000,000

Public Employee Dishonesty Blanket Bond *

Deductible $50,000.

$

3,000,000

Boiler and Machinery Comprehensive

Property damage-all City locations. (Business Interruption/Extra).

$

50,000,000

Expediting expense.

$

10,000,000

Water damage.

$

10,000,000

$

3,000,000

$

250,000

Expense/deductible $2,500 per claim (certain exceptions). Faithful Performance Bond *

Deductible $50,000.

Treasurer's Bond * Travel Accident

City employees and appointed or elected City officials.

$

100,000 per individual according to defined benefit schedule

Workers' Compensation

Work-related injuries and illnesses.

$

750,000 (S.I.R.)

Excess Workers' Compensation

Work-related injuries and illnesses. (Includes Jones Act Coverage.)

$

50,000,000

$

10,000,000 Employer's Liability

Volunteer Accident Insurance

Medical coverage for volunteers while working for the City.

$

S.I.R. Self Insurance Retention Source: City of Santa Monica Risk Management Division * Persons covered are: Honesty Blanket Bond - All employees not covered by Faithful Performance Bond. Faithful Performance Bond - Covers those employees specified under City Ordinance Section 26126.

10,000

TABLE 18 CITY OF SANTA MONICA, CALIFORNIA MISCELLANEOUS STATISTICAL DATA June 30, 2003

Form of government: Land area and use: Land area Land use (1991) Residential Commercial (retail and office) Industrial Public recreation Other public and quasi-public Circulation (streets) Vacant land Total

Council/Manager, seven council members elected at-large, four-year terms

8.3 square miles 43.7 % 11.0 2.8 4.7 9.8 26.6 1.4 100.0 %

Source: City of Santa Monica Land Use Survey and Data Base, Summary Report, Table 12-1, May 1991 Public safety: Fire protection: Number of employees Number of stations Police protection: Number of employees Number of stations

103 4

sworn, 11 nonsworn

214 1

sworn, 188 nonsworn

Source: City of Santa Monica Fire and Police Departments Recreation and parks: Description Parks Beaches Tot lots (playgrounds) Gyms Baseball diamonds Swimming pools Soccer fields (lighted) Tennis courts (lighted) Picnic tables Barbecues

Number 24 1 17 2 7 2 4 18 105 23

Acreage 106 245

3 7 3

Other facilities include volleyball courts, bowling green, horseshoe court, boccie court, shuffleboard courts, and basketball courts. Source: City of Santa Monica Community and Cultural Services Department

TABLE 19 CITY OF SANTA MONICA, CALIFORNIA PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS LAST TEN FISCAL YEARS

Commercial

Residential

Bank deposits

number of

Construction

number of

Construction

(3)

Total assessed

Fiscal year

units (1)

value

units (2)

value

(in thousands)

valuations (4)

1993-94

0

1994-95

$

23,519,638

(5)

49

3

26,990,115

(6)

1995-96

8

30,415,222

1996-97

14

1997-98

$

17,425,282

(5)

40

19,814,478

(7)

179

32,632,266

(8)

27

115,975,087

(9)

1998-99

15

1999-00

1,970,831 (10) $

9,473,923,286

(6)

1,918,759 (10)

9,633,573,633

28,796,176

(7)

1,932,768 (10)

9,265,572,055

116

30,962,726

(8)

1,767,075 (11)

9,387,649,426

437

74,013,351

(9)

1,756,908 (11)

9,534,082,837

142,841,619

610

68,016,702

3,686,266 (11)

10,202,640,765

15

28,539,000

396

56,845,763

3,597,143 (11)

11,335,026,057

2000-01

28

71,462,623

370

55,271,202

Not Available (12)

12,282,953,459

2001-02

7

15,139,000

275

48,867,400

Not Available (12)

13,491,852,764

2002-03

5

55,240,000

108

24,906,427

Not Available (12)

14,598,351,462

(1)

Represents the number of new commercial buildings. Source: City of Santa Monica Planning and Community Development Department

(2)

Represents the number of new dwelling units. Source: City of Santa Monica Planning and Community Development Department

(3)

Latest available data is June 30 of prior year.

(4)

Breakdown between commercial and residential property is not available at this time.

(5)

Does not include $35,577,258 in earthquake-related building permits.

(6)

Does not include $47,729,804 in earthquake-related building permits.

(7)

Does not include $33,073,621 in earthquake-related building permits.

(8)

Does not include $18,749,731 in earthquake-related building permits.

(9)

Does not include $35,164,309 in earthquake-related building permits.

(10) Source: Decision Research Sciences, Inc. (11) Source FDIC - Federal Deposit Insurance Corporation. (12) area.

$

TABLE 20 CITY OF SANTA MONICA, CALIFORNIA PRINCIPAL EMPLOYERS June 30, 2003

Employer

Number of employees

City of Santa Monica

1,938

Saint John's Hospital Medical Center

1,650

Santa Monica College

1,358

Rand Corporation

1337

Santa Monica-UCLA Hospital

994

Santa Monica-Malibu Unified School District

935

ET Whitehall

400

Specialty Laboratories, Inc.

329

Sanford Papermate

316

Metro-Goldwyn Mayer, Inc.

315

Loews

240

Macerich Real Estate Company

230

Total jobs provided by principal employers

10,042

Total jobs in Santa Monica

71,660

Principal employers as percent of total jobs

14.0%

Source:

Most recent voluntary reporting of employment levels to the City of Santa Monica by individual organizations. Total jobs is estimated by the City of Santa Monica Economic Development Division, Resource Management Department.

TABLE 21 CITY OF SANTA MONICA, CALIFORNIA UNEMPLOYMENT RATES

Calendar

City of

City of

County of

State of

United

Year

Santa Monica

Los Angeles

Los Angeles

California

States

1993

6.4 %

10.9 %

9.7 %

9.2 %

6.8 %

1994

6.2

10.6

9.4

8.6

6.1

1995

5.2

8.9

7.9

7.8

5.6

1996

5.4

9.3

8.2

7.2

5.4

1997

4.5

7.8

6.8

6.3

4.9

1998

4.3

7.4

6.5

5.9

4.5

1999

3.8

6.7

5.9

5.2

4.2

2000

3.5

6.1

5.4

4.9

4.0

2001

3.7

6.5

5.7

5.3

4.8

2002

4.4

7.7

6.8

6.7

5.8

Source: State of California Employment Development Department

Unemployment Statistics Unemployment Rate %

12 10 8 6 4 2 0 1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Calendar Year City of Santa Monica

City of Los Angeles

County of Los Angeles

State of California

United States

TABLE 22 CITY OF SANTA MONICA, CALIFORNIA NUMBER OF BUDGETED EMPLOYEES BY FUND* LAST FIVE FISCAL YEARS

Fund

1998-99

General fund

1999-00

2000-01

2001-02

2002-03

1,130.7

1,162.4

1,199.1

1,249.6

1,253.1

Beach

21.0

21.0

22.0

22.0

22.0

Civic auditorium

36.6

36.6

37.6

35.6

35.6

8.2

8.2

9.2

10.2

10.2

304.7

347.7

370.7

391.7

403.7

86.0

87.0

93.0

93.0

95.0

8.4

8.4

9.4

9.4

9.4

Wastewater

30.0

31.0

35.0

34.0

36.0

Water

49.0

50.0

50.0

50.0

50.0

Pier

25.0

27.5

27.5

27.5

26.5

Cable

10.6

10.4

10.6

10.4

10.7

Vehicle management

24.0

24.0

24.0

24.0

24.0

7.1

7.6

11.6

11.6

11.6

1,741.3

1,821.8

1,899.7

1,969.0

1,987.8

Airport Big blue bus Solid waste management Cemetery

Self-insurance Total all funds

* Includes permanent and temporary employees (2,080 hours = 1 full-time position). Source: City of Santa Monica Budget

TABLE 23 CITY OF SANTA MONICA, CALIFORNIA TAXABLE TRANSACTIONS BY TYPE OF BUSINESS (IN THOUSANDS)

Calendar Year Business Apparel stores

1998 $

General merchandise

143,180

1999 $

162,581

2000 $

199,035

2001 $

200,819

2002 $

226,925

145,191

148,564

150,898

136,931

126,873

66,010

72,496

70,966

71,078

71,202

272,295

308,300

343,847

336,022

334,187

Home furniture & appliances

71,785

77,507

82,692

79,859

72,084

Building materials & farm implements

57,559

62,690

73,224

75,532

80,603

328,838

356,869

429,191

419,497

428,873

45,207

51,585

59,893

56,461

61,094

310,937

358,685

389,043

354,301

337,339

1,441,002

1,599,277

1,798,789

1,730,500

1,739,180

454,802

477,330

520,362

509,855

501,250

Food stores Eating & drinking places

Auto dealers & auto suppliers Service stations Other retail stores Retail stores total All other outlets Total all outlets

Source: State Board of Equalization

$

1,895,804

$

2,076,607

$

2,319,151

$

2,240,355

$

2,240,430

TABLE 24 CITY OF SANTA MONICA, CALIFORNIA GENERAL FUND TAX REVENUES BY SOURCE (IN THOUSANDS)

Fiscal year ended June 30, 2003 Source Utility user's tax

1999 $

2000

23,969

$

2001

23,920

$

2002

25,157

$

2003

27,512

$

27,549

Sales taxes

21,424

24,360

26,186

24,586 (5)

25,236

Property taxes (1)

14,775

15,317

16,792

17,512

20,206

Business license taxes

14,230

15,472

16,957

17,498

17,745

Transient occupancy tax

15,418

17,880

19,218

16,348

17,059

Parking facility tax

4,402

4,736

5,372

5,636

5,898

State of California in-lieu taxes (2)

4,074

4,603

5,028

4,721

5,170

Real property transfer tax

3,683

3,714

3,911

3,233

3,968

Franchise taxes (3)

624

619

705

857

820

Condominium taxes

57

48

30

26

46

Total (4)

$

102,656

$

110,669

$

119,356

$

117,929

$

123,697

(1)

Includes ad valorem property taxes for purposes of paying debt service on general obligation bonds. Does not include tax increment received by redevelopment area.

(2)

Motor vehicle in-lieu taxes.

(3)

Does not include franchise fees paid by the City's cable television franchisee. These are recorded in the Cable Communications Fund.

(4)

Does not include Highway Users Taxes, which are recorded in the Gas Tax Fund or Unit Dwelling Taxes, which are recorded in the Parks and Recreation Facilities Fund.

(5)

Does not include a one-time prior period adjustment, made as of June 30, 2002, to reflect correction of the accrual of sales tax revenues.

Source: City of Santa Monica Finance Department

TABLE 25 CITY OF SANTA MONICA, CALIFORNIA REDEVELOPMENT AGENCY EARTHQUAKE RECOVERY PROJECT TAX ALLOCATION BONDS COVERAGE

Direct operating expenses

Net revenue available for debt service

Fiscal year

Gross revenues

2000-01

$ 17,910,624

2001-02

26,688,631

843,901

25,844,730

920,000

2002-03

33,522,316

756,744

32,765,572

960,000

Note:

$

731,954

$

17,178,670

Debt service requirement Principal Interest Total $

880,000

$

4,118,436

$

Coverage

4,998,436

3.44

3,759,610

4,679,610

5.52

3,717,310

4,677,310

7.01

On December 1, 1999, the Redevelopment Agency of the City of Santa Monica issued Earthquake Recovery Redevelopment Project Area Tax Allocation Bonds at various interest rates of 4.58% to 7.50% which were initially given underlying ratings of A by Fitch, Baa1 by Moody's, and A- by Standard and Poor's, but all rated the issue AAA with insurance.

Source: City of Santa Monica Finance Department