City of Santa Monica,

City of Santa Monica, California Comprehensive Annual Financial Report Year ended June 30, 2004

Prepared by the Department of Finance Steve Stark Director of Finance / City Treasurer Candace Tysdal

Financial Operations Manager

Scott Lowe

Financial Reporting Supervisor

Randy Chow Senior Accountant Bill Jias Senior Accountant Denise Waterbury Senior Accountant Mary Cole

Accountant

Stephanie Manglaras Accountant Martha Romero Junior Accountant Nena Goasdoue

Disbursements Supervisor

Gayle Kirby Financial Systems Development Coordinator David Carr

Principal Budget Analyst-Investments

Annette Morales Senior Budget Analyst Caline Evans

Executive Administrative Assistant

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CITY OF SANTA MONICA, CALIFORNIA Comprehensive Annual Financial Report Year ended June 30, 2004 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..................................... CSMFO Certificate of Award for Outstanding 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 – Budget and Actual (Non-GAAP Basis) – Special Revenue Source 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 – Notes Receivable....................................................................................................... Note 7 – Capital Assets ............................................................................................................ Note 8 – Deferred Revenue...................................................................................................... Note 9 – Long-Term Liabilities ............................................................................................... Note 10 – Fund Deficits ............................................................................................................. Note 11 – Interfund Transactions............................................................................................... Note 12 – Restricted Net Assets................................................................................................. Note 13 – Reserved and Designated Fund Balances.................................................................. Note 14 – Litigation and Contingencies.....................................................................................

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CITY OF SANTA MONICA, CALIFORNIA Comprehensive Annual Financial Report Year ended June 30, 2004 Table of Contents, Continued Page

Note 15 – Self-Insurance............................................................................................................ Note 16 – Employee Benefit Programs......................................................................................

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Required Supplementary Information – Pension Funding Information ..........................................

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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 ........................................................................................................... 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: Low/Mod Housing Projects .................................................................................................. Earthquake Recovery Redevelopment Project...................................................................... Ocean Park Redevelopment Project...................................................................................... Downtown 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.................................................................... ii

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CITY OF SANTA MONICA, CALIFORNIA Comprehensive Annual Financial Report Year ended June 30, 2004 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 ........ STATISTICAL SECTION

Table

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 ........................................................................................................... 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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City of Santa Monica, California Year Ended June 30, 2004 INTRODUCTORY SECTION

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

October 18, 2004

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, 2004 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, 2004. 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 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, 2004, 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 auditors 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/City Treasurer, 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, 2004, 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, 2004, 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 90,300 as of January 1, 2003, which makes it the 19th 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 Treasurer who 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 and Financial Condition of the City and 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, multimedia and software industry firms like Sony Music, Oracle, Symantec, Universal Music Group and MTV are among over 200 hi-tech, multimedia, and related entertainment firms of all sizes. This cluster of hivii

tech and entertainment firms provide a critical mass of support businesses to other similar businesses in the area. The City invests significant governmental resources in its pedestrian-oriented commercial districts, including such nationally-recognized venues as the Third Street Promenade, the Santa Monica Pier, Main Street, and Montana Avenue. The City provides support for the Santa Monica Convention & Visitor’s Bureau, and a variety of other services and organizations, including parking in the downtown, the local Small Business Development Center, and the Westside Economic Collaborative. Recent City projects under construction include the new Main Library and Virginia Avenue Park in the Pico neighborhood. Also in the planning process are several circulation improvements to the waterfront area including the California Incline and the Pier Bridge projects. The City’s focus on “quality of life” issues has created an environment on the Westside that has attracted a stable, dynamic business base and a strong local economy. B. Financial Condition Beginning in FY 2001/02 the City of Santa Monica experienced declining revenues, compounded by the impact of September 11, 2001, at a time when the costs of providing services increased significantly due to escalating employee benefit costs for retirement, health care and workers’ compensation. Additionally, the financial condition of the State of California and it’s previous use of local revenues in an attempt to balance the State budget has created uncertainty with respect to future potential diversions of the City’s revenue streams. As a result, the City’s management addressed the budget challenges that faced Santa Monica. A budget balancing approach that utilized mostly ongoing measures was implemented for FY 2003/04 and FY 2004/05. Included in these measures was the elimination of vacant positions, service reductions in areas of lowest public contact and adjustments to capital improvement project funding. These measures allowed the City to continue to provide extraordinary financial flexibility even during a time of budgetary constraints. The City continues to maintain adequate reserves for continuing capital projects as well as equipment replacement plus a 10% undesignated fund balance for unanticipated events. Through continuing conservative financial management practices, Santa Monica looks to the future with great optimism. C. Debt Administration As of June 30, 2004, 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: $26.6 million of Main Library Improvements Project General Obligation Bonds; $29.0 million in Public Safety Lease Revenue Bonds; $85.2 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 $1.48 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. Certificates of Participation obligations). These are detailed in Note 9 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 viii

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 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 15 of the notes to the basic financial statements. F. Pension and Post Employment Benefits The City provides its full-time and part-time benefited 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 deferred compensation plan for public employees under the Omnibus Budget Reconciliation Act (“OBRA”). 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 16 to the basic financial statements.

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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 / City Treasurer Director of Human Resources Chief of Police Fire Chief Director of Planning and Community Development Building Officer Acting 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. James A. Hone Suzanne Frick Tim McCormick Gregory T. Mullen 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 Gregory T. Mullen

Police James T. Butts, Jr.

Big Blue Bus Stephanie Negriff

Fire James A. Hone

Resource Management Jeff Mathieu

Planning & Community Development Suzanne Frick

Environmental & Public Works Management Craig Perkins

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The Government Finance Officers Association of the United States and Canada (GFOA) has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Santa Monica, California for its Comprehensive Annual Financial Report (CAFR) for the Fiscal Year Ended June 30, 2003. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. City management believes that the 2004 CAFR conforms to the Certificate of Achievement Program requirements, and it is being submitted to GFOA for review.

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City of Santa Monica, California Year Ended June 30, 2004 FINANCIAL SECTION

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis Year ended June 30, 2004

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, 2004. 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, 2004 (“current fiscal year”) by $950.7 million. Of this amount, $418.1 million are capital assets, net of related debt, $219.8 million is for restricted uses as specified by entities outside of the City government, and $312.8 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 $89.2 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 $361.0 million, an increase of $56.1 million compared with the prior fiscal year (as restated). Of this amount, $315.0 million was reserved for uses set by various legal requirements, and $46.0 million was unreserved. Of the unreserved amount, $46.2 million was designated for various specific uses by the City Council, and ($0.2) million was unreserved and undesignated.

•

At the end of the current fiscal year, the General Fund fund balance was $175.0 million, a decrease of $7.4 million from the previous fiscal year, which consisted of a decrease of $25.3 million of reserved fund balance and an increase of $17.9 million of unreserved fund balance. Of the $62.2 million unreserved fund balance, $42.7 is designated and $19.5 million is undesignated.

•

The City’s investment in capital assets increased by $63.9 million or 12%. Please see further detail of capital assets in note 7.

•

The City’s long-term debt decreased by $6.5 million or 3% during the current fiscal year. Please see further detail of long-term debt in note 9.

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

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

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.

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

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 15 and 16 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the governmental-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statements of revenues, expenditures, and changes in fund balance provide reconciliation to the government-wide financial statements in order to facilitate this comparison between governmental funds and governmental activities. The City maintains 24 individual governmental funds for financial reporting purposes. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General, Special Revenue Source, Disaster Relief, and Downtown Redevelopment Project funds, which are considered to be major funds. Data for the other 20 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the non-major funds supplementary section of this report. The City adopts an annual appropriated budget for its General Fund, 12 of 13 special revenue funds, and 4 capital project funds. A budgetary comparison statement has been provided for the General Fund, Special Revenue Source Fund and Disaster Relief Fund in the basic financial statements. The governmental funds financial statements can be found on pages 18 through 26 of this report.

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

Proprietary funds. Proprietary funds provide the same type of information as the government-wide financial statements, but in more detail. The proprietary fund financial statements provide separate information for the wastewater and bus operations, which are considered to be major funds of the City. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its vehicle operations, risk management 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 28 through 32 of this report. Fiduciary funds. Fiduciary funds, which consist solely of trust and agency funds, are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not included in the government-wide financial statements because the resources are not available to support the City’s operations. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary funds financial statements can be found on page 33 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 35 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $950.7 million at the close of the current fiscal year. As shown below, the largest portion of the City’s net assets, $418.1 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.

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

A summary of the government-wide statement of net assets follows: CITY OF SANTA MONICA Net Assets (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

2004 497.7 327.7

2003 391.5 300.6

2004 171.9 288.4

2003 174.3 251.6

2004 669.6 616.1

2003 565.8 552.2

825.4

692.1

460.3

425.9

1,285.7

1,118.0

123.0 150.8

42.8 185.2

26.1 35.1

27.9 40.1

149.1 185.9

70.7 225.3

273.8

228.0

61.2

68.0

335.0

296.0

162.5 185.6 203.5

193.3 124.0 146.8

255.6 34.2 109.3

217.1 33.7 107.1

418.1 219.8 312.8

410.4 157.7 253.9

551.6

464.1

399.1

357.9

950.7

822.0

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

A summary of the government-wide statement of changes in net assets follows: CITY OF SANTA MONICA Changes in Net Assets (in millions) Governmental activities 2004 Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales tax Property tax Other taxes Settlement income 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 Total expenses Excess (deficiency) of revenues over expenses before transfers Transfers

Ending net assets

$

Business-type activities 2004

2003

Total 2004

2003

59.3 31.7 1.5

45.9 28.7 17.4

63.3 24.7 7.9

62.7 22.5 26.5

122.6 56.4 9.4

108.6 51.2 43.9

27.8 58.3 84.5 74.0 3.6 4.7

25.2 50.6 74.5 5.7 11.4

1.7 2.1 2.5

2.2 2.6

27.8 58.3 84.5 75.7 5.7 7.2

25.2 50.6 74.5 7.9 14.0

345.4

259.4

102.2

116.5

447.6

375.9

12.2 74.5 30.7 37.0 20.2

22.3 63.5 37.8 33.9 6.3

-

-

12.2 74.5 30.7 37.0 20.2

22.3 63.5 37.8 33.9 6.3

64.1 0.2 8.4 -

40.5 0.4 7.7 -

16.4 15.9 8.1 14.0 2.7 3.8 0.4 1.1 47.3 0.9 0.1 0.4

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

64.1 0.2 8.4 16.4 15.9 8.1 14.0 2.7 3.8 0.4 1.1 47.3 0.9 0.1 0.4

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

247.3

212.4

111.1

104.5

358.4

316.9

12.0 2.8

89.2 -

59.0 -

98.1 (9.3)

Increase in net assets Beginning net assets as restated

2003

47.0 (2.8)

(8.9) 9.3

88.8 462.8

44.2 419.9

0.4 398.7

14.8 343.1

89.2 861.5

59.0 763.0

551.6

464.1

399.1

357.9

950.7

822.0

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

Governmental Activities. Governmental activities increased the City’s net assets by $88.8 million for the current fiscal year, thereby accounting for 99% of the growth in the net assets of the City. This increase was primarily due to an increase of $74.0 million in settlement revenue and $7.7 million in property tax increment revenues due to increased assessed property tax valuation and developments. Beginning net assets were increased due to $1.2 million prior period loan receivable adjustment. Business-type Activities. Business-type activities increased the City’s net assets by $0.4 million for the current fiscal year, thereby accounting for 1% of the growth in the net assets of the City. Key elements of this increase were increases of $0.6 million for charges for services, transfers in of $9.5 million from the General Fund to the Pier Fund for current year’s operations and a decrease in capital contributions received by the Big Blue Bus of $18.6 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 nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financial requirements. In particular unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City’s governmental funds reported total fund balances of $361.0 million, $56.1 million or 18% increase in comparison with the prior year (as restated). Approximately $46.0 million or 13% total fund balances constitutes unreserved (designated and undesignated) fund balance, which is available to meet the City’s current and future needs. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has been committed to a variety of restricted purposes. 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 $62.2 million, while total fund balance was $175.0 million, which was $7.4 million or 4% less than the prior year’s General Fund total fund balance. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 33% of total General Fund expenditures, while total fund balance represents 94% 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 $62.2 million General Fund unreserved fund balance, 69% is designated. The most significant designations are $12.9 million for council policy, $5.4 million for environmental mitigation, $3.3 million for City Hall renovation, $2.0 million for a planning and community development audit findings, $4.4 million for future lease payments to the Redevelopment Agency for parking structures at Santa Monica Place, $1.9 million for civic area development, and $6.5 million for compensated absences. Unreserved and undesignated fund balance at year-end was $19.5 million. This amount constitutes funds available for spending at the government’s discretion.

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

The General Fund balance decreased $7.4 million during the fiscal year ended June 30, 2004. A variety of variances from the prior year--both positive and negative--contribute to the increase as follows: 1. Revenues reflect a net increase of $14.4 million over the prior fiscal year primarily from: a. A 14.3% increase in property taxes ($2.9 million) resulting from increased property values in the City. b. A 10.3% increase in sales taxes ($2.6 million) resulting from increased economic activity. c. A 7.8% increase in other taxes ($4.7 million) resulting from increased real property transfer tax revenue and increased transient occupancy tax revenue. d. A 6.9% increase in licenses and permits ($2.3 million) resulting from increased developer payments. e. A 13.1% increase in charges for services ($1.1 million) resulting from fee increases and new fees. f.

A 24.2% increase in fines and forfeitures ($2.6 million) resulting from parking citation rate increases.

g. A 32.5% decrease in investment income ($1.1 million) resulting from lower interest rates. 2. Expenditures were $0.8 million lower than the prior fiscal year primarily from completion of the Public Safety Facility, where most of the construction activity occurred in the prior year. 3. Proceeds from the sale of library general obligation bonds were a one-time other financing source of $25.1 million in the fiscal year ending June 30, 2003. 4. Operating transfers to the Pier Fund were $7.0 million higher than the prior year due to an increase in the subsidy to the Pier for capital expenditures. Special Revenue Source Special Revenue Fund The Special Revenue Source Fund fund balance increased by $63.2 million from the prior year. This increase was primarily due to the settlement of various lawsuits. Disaster Relief Special Revenue Fund The Disaster Relief Fund fund deficit increased by $2.4 million from the prior year. This increase 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 Capital Project Fund The Downtown Redevelopment Project Fund fund deficit increased by $0.1 million from the prior year. This increase was primarily due to increased capital improvement project expenditures in the current year. All other governmental funds’ fund balances increased $2.8 million or 3% from the previous fiscal year.

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

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 $0.8 million. This was due primarily to increases in charges for services of $0.6 million, transfers to the Pier Fund from the General Fund of $9.5 million capital expenditures and $18.5 million decrease in operating grants and capital contributions received by the Big Blue Bus. Unrestricted net assets of internal service funds at June 30, 2004 amounted to $25.6 million representing a decrease of $1.8 million over the previous year. Wastewater Enterprise Fund The total net assets of the Wastewater Fund increased by $0.4 million primarily due to increases in operating revenue. Big Blue Bus Enterprise Fund The total net assets of the Big Blue Bus decreased $1.4 million primarily due to an decrease in the Los Angeles County Metropolitan Transportation Authority and sales tax derived capital grants compared to the previous year. General Fund Budgetary Highlights Differences between the original budget and the final amended budget are briefly summarized as follows: Actual results for total revenues exceeded the original budget by $13.7 million and the final adopted budget by $9.8 million primarily due to property tax, sales taxes and other taxes exceeding budget by $1.2 million, $1.3 million and $4.0 million, respectively. An additional $116.7 million in the expenditure budget is comprised primarily of a $114.4 reappropriation of continuing capital improvement project budgets from FY 2002-03 to FY 2003-04. Final budgeted expenditures exceeded actual expenditures by $58.2 million mostly due to unspent continuing capital improvement project budgets. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. The City’s investment in capital assets as of June 30, 2004, amounted to $616.1 million (net of accumulated depreciation) an increase from the prior year balance of $63.9 million. This investment in a broad range of capital assets, including land, infrastructure, structures and improvements, equipment, and construction in progress, is detailed below:

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

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

2004 92.6 86.7 50.6 17.7 1.8 3.6 74.7 $ 327.7

$

2003 86.8 33.1 47.5 16.2 2.1 114.9 300.6

Business-type activities 2004 34.2 12.8 70.5 42.7 91.9 36.3 288.4

2003 34.2 13.0 79.6 47.3 50.6 26.9 251.6

Total 2004 126.8 99.5 121.1 60.4 1.8 95.5 111.0 616.1

2003 121.0 46.1 127.1 63.5 2.1 50.6 141.8 552.2

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

Additions to the General Fund construction in progress in FY 2003-04 included $11.2 million for a Main Library Construction Project.

•

Additions to the Special Revenue Source Fund include $3.6 million paid to the Southern California Water Company for both the right to sue and water rights related to their well located in the Charnock basin and construction in progress in FY 2003-04 included $2.2 million in expenditures for the Virginia Avenue Park Expansion and Renovation.

•

Additions to the Big Blue Bus Fund construction in progress in FY 2003-04 included $3.8 million in expenditures for their Advanced Fleet Management System project and $2.9 million in expenditures for the Campus Expansion design and construction project.

•

Additions to the Wastewater Fund include $3.3 million paid to the City of Los Angeles for Santa Monica’s share of the FY 2003-04 Hyperion Plant capital expenditures.

The City had construction commitments of $105 million at June 30, 2004. Some of the City’s major commitments were as follows: •

The General Fund had commitments of $4.4 million for the Civic Center Parking Structure project. These funds are for design and construction of a civic center parking structure. The City is issuing lease revenue bonds to fund the approximately $31.5 million total project.

•

The General Fund also had construction commitments of $32.4 million for the Main Library Construction project and $2.6 million for the master plan design and environmental work for Airport Park.

•

The Special Revenue Source Fund had construction commitments of $3.5 million for Main Library construction project and commitments of $2.7 million for the Virginia Avenue Park Expansion.

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004 •

The Big Blue Bus Fund had construction commitments of $21.4 million for the purchase of 52 new 40-foot low floor LNG-powered buses from New Flyer of America. The Big Blue Bus Fund also had construction commitments of $5.4 million for the Campus Expansion project, which includes 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 $3.9 million for their Advanced Fleet Management System project for the expansion of radio systems for vehicle locating and passenger counting.

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 or considered construction in progress since implementation of GASB 34 for fiscal year ended June 30, 2002. However, the accompanying government-wide financial statements do not reflect those infrastructure assets completed prior to July 1, 2001. In accordance with GASB 34, the retroactive historical value of the City’s infrastructure assets will be added prior to June 30, 2006. Additional information on the City’s capital assets can be found in note 7 to the basic financial statements. Long-term Debt. At the end of the current fiscal year, the City’s total long-term debt outstanding is $189.6 million, a decrease from the prior year of $6.5 million. This amount was compromised of $77.1 million of revenue bonds which are secured by both governmental and business-type revenue sources, $80.0 million of tax allocation bonds which are secured by future tax revenues, $1.6 million of certificates of participation which are secured by future revenue sources from business-type activities, $26.6 million of general obligation bonds which are backed by the assets of the City and $4.3 million of various loans payable. This is shown in the following table: Table 5 CITY OF SANTA MONICA Outstanding Debt (in millions) Governmental activities Business-type activities 2004 General obligation bonds (backed by the City) Revenue bonds and notes (backed by specific tax and fee revenues) Certificates of participation Other loans Total

$

$

2003

2004

2003

Total 2004

2003

26.6

28.2

-

-

26.6

28.2

124.8

128.1

32.3

33.3

157.1

161.4

151.4

156.3

1.6 4.3 38.2

1.9 4.6 39.8

1.6 4.3 189.6

1.9 4.6 196.1

The City’s total long-term debt decreased by $6.5 million or 3% during the current fiscal year. This decrease is due to ongoing debt service.

CITY OF SANTA MONICA, CALIFORNIA Management’s Discussion and Analysis, Continued Year ended June 30, 2004

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 note 9 to the basic financial statements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The City’s economic condition, which declined in FY 2000-01 and FY 2001-02, began a slow recovery during FY 2002-03 and a more moderate recovery in FY 2003-04. There are indications of 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 2003, decreasing from 17.2% in calendar year 2002 to 16.2% in calendar year 2003. Hotel occupancy rates decreased less than 1% in calendar year 2003 to 74.48%. Taxable sales for calendar year 2003 increased 9% to $2.4 billion, real property assessed valuation for fiscal year 2003-04 increased by 7.6% The City’s adopted General Fund budget for FY2004-05 reflects cautious optimism about the City’s financial future. Projection for key revenues over the next two years anticipates that they will continue to strengthen. While budget reductions are still required, expenditure constraints are considerably less than anticipated in the prior year financial forecast. The Adopted Budget has taken consideration of possible State’s actions to address its budget crisis. In order to avoid further program and service cuts, the budget was prepared with a voter approved Transient Occupancy Tax increase from 12% to 14%. Other changes in FY2004-05 Budget and FY2005-06 Financial Plan include phasing-in of expanded park and library operations as construction work nears completion. CONTACTING THE CITY'S FINANCE DEPARTMENT This management’s discussion and analysis is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have questions or need additional financial information, please contact the City of Santa Monica’s Finance Department at www.santa-monica.org/finance or at (310) 458-8281.

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets June 30, 2004

Governmental activities

Business-type activities

Total

Assets Cash and investments (note 5) Receivables (net, where applicable, of allowances for uncollectibles): Accounts Interest Property taxes Notes (note 6) Other governments Internal balances Inventory Prepaids Restricted cash and investments (note 5) Restricted cash with fiscal agent (note 5) Due from other governments, restricted Bond issuance costs, net Capital assets (note 7): 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 8) Due to other governments Liabilities payable from restricted assets Non-current liabilities: Compensated absences due within one year (note 9) Compensated absences due in more than one year (note 9) Claims payable due within one year (note 9 and 15) Claims payable due in more than one year (note 9 and 15) Long-term debt due within one year (note 9) Long-term debt due in more than one year (note 9) Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for (note 12): Housing and community development Miscellaneous grants Debt Service Development projects Perpetual care - nonexpendable Rail system All other purposes Unrestricted Total net assets See accompanying notes to basic financial statements.

$ 393,765,305

77,374,410

471,139,715

11,658,835 1,234,754 1,407,460 41,376,431 10,215,470 (6,114,640) 728,940 761,110 — 41,441,574 — 1,305,376

17,468,938 512,669 — — — 6,114,640 1,506,507 143,479 32,308,416 1,574,132 34,145,541 714,562

29,127,773 1,747,423 1,407,460 41,376,431 10,215,470 — 2,235,447 904,589 32,308,416 43,015,706 34,145,541 2,019,938

92,594,660 103,731,971 90,959,475 3,575,000 33,925,816 1,883,864 74,709,450 (73,718,992) 327,661,244 825,441,859

34,237,771 24,656,408 139,648,727 98,409,280 101,519,496 — 36,296,609 (146,370,840) 288,397,451 460,260,745

126,832,431 128,388,379 230,608,202 101,984,280 135,445,312 1,883,864 111,006,059 (220,089,832) 616,058,695 1,285,702,604

12,711,198 14,030,172 3,705,554 400,000 8,671,290 46,032,047 3,388,543 609,533

5,217,574 4,012,125 813,515 — 248,131 7,282,464 — 4,322,135

17,928,772 18,042,297 4,519,069 400,000 8,919,421 53,314,511 3,388,543 4,931,668

4,680,800 2,122,739 8,753,366 17,881,825 5,625,000 145,222,399 273,834,466

1,695,944 501,464 764,557 1,267,336 1,731,647 33,346,506 61,203,398

6,376,744 2,624,203 9,517,923 19,149,161 7,356,647 178,568,905 335,037,864

162,528,406

255,607,992

418,136,398

41,576,046 17,987,024 13,479,309 38,109,281 7,433,596 — 67,047,136 203,446,595 $ 551,607,393

— — — — — 34,145,541 — 109,303,814 399,057,347

41,576,046 17,987,024 13,479,309 38,109,281 7,433,596 34,145,541 67,047,136 312,750,409 950,664,740

CITY OF SANTA MONICA, CALIFORNIA Statement of Activities Year ended June 30, 2004

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 Settlement income Rental income Other income Investment earnings Miscellaneous: 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.

Expenses

Charges for services

Program revenues Operating grants and contributions

Net (expense) revenue and changes in net assets Capital grants and contributions

Governmental activities (5,123,099) (57,490,022) (1,802,166) (27,769,264) (19,687,330) (34,289,293) (244,438) (8,430,126) (154,835,738)

$

12,218,726 74,489,887 30,659,648 36,958,290 20,241,923 64,079,218 244,438 8,430,126 $ 247,322,256

7,005,002 15,671,730 15,105,283 7,842,184 178,555 13,478,114 — — 59,280,868

90,625 1,226,357 12,496,422 1,203,931 376,038 16,311,811 — — 31,705,184

— 101,778 1,255,777 142,911 — — — — 1,500,466

$

13,110,498 14,598,362 2,563,783 11,004,692 2,279,508 3,527,460 1,355,903 445,327 12,190,925 747,063 — 1,457,952 63,281,473

— — — 38,740 — 240,600 — — 24,392,603 — — — 24,671,943

— — — — — — — — 7,943,966 — — — 7,943,966

16,382,688 15,933,665 8,079,003 14,013,170 2,741,857 3,845,116 403,294 1,137,698 47,265,202 932,823 52,329 337,552 $ 111,124,397

Business–type activities — — — — — — — — —

Total (5,123,099) (57,490,022) (1,802,166) (27,769,264) (19,687,330) (34,289,293) (244,438) (8,430,126) (154,835,738)

— — — — — — — — — — — — —

(3,272,190) (1,335,303) (5,515,220) (2,969,738) (462,349) (77,056) 952,609 (692,371) (2,737,708) (185,760) (52,329) 1,120,400 (15,227,015)

(3,272,190) (1,335,303) (5,515,220) (2,969,738) (462,349) (77,056) 952,609 (692,371) (2,737,708) (185,760) (52,329) 1,120,400 (15,227,015)

19,249,942 58,267,374 27,825,098 65,196,019 73,978,421 2,059,914 2,653,781 3,645,712

— — — — 1,731,526 — 2,508,369 2,090,273

19,249,942 58,267,374 27,825,098 65,196,019 75,709,947 2,059,914 5,162,150 5,735,985

(9,257,834) 243,618,427 88,782,689 462,824,704 $ 551,607,393

9,257,834 15,588,002 360,987 398,696,360 399,057,347

— 259,206,429 89,143,676 861,521,064 950,664,740

$

Major Governmental Fund Financial Statements General Fund – To account for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in another fund. The General Fund supports essential City services such as police and fire protection, street maintenance, libraries, parks and open space management. Special Revenue Source Special Revenue Fund – To account for receipt and expenditure of monies collected for specific uses. Disaster Relief Special Revenue 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 Capital Projects 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.

CITY OF SANTA MONICA, CALIFORNIA Balance Sheet Governmental Funds June 30, 2004

Assets Cash and investments Receivables (net, where applicable, of allowances for uncollectibles): Accounts Notes Property taxes Interest Other governments Due from other funds Inventory Prepaids Cash with fiscal agent Capitalized lease receivable Advances to other funds Total assets 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 – payable from restricted assets Advances from other funds Total liabilities Fund balances: 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

$

General Fund 154,306,860

$

7,126,268 1,776,824 807,314 652,131 295,441 159,768 728,940 666,943 12,594,788 — 30,309,219 209,424,496

$

$

Special revenue funds Special Revenue Disaster Source Relief Fund Fund $ 144,344,504 2,759,955

Nonmajor governmental funds 67,495,638

Total governmental funds 371,806,161

3,612,504 6,036,932 — 125,109 — — — — — — — 154,119,049

— — — 19,942 8,701,156 — — 560 — — — 11,481,613

— 3 15,432 — — — — 2,877 5,250,000 — 8,167,516

118,885 33,562,675 600,143 320,628 1,218,873 — — 15,763 28,843,909 — 10,857,254 143,033,768

10,857,657 41,376,431 1,407,460 1,133,242 10,215,470 159,768 728,940 683,266 41,441,574 5,250,000 41,166,473 526,226,442

141,642 5,001,321 — — 8,162,740 — 45,370,618 — — 58,676,321

759,310 29,297 — 475,872 — 867 8,542,067 — 8,195,263 18,002,676

— — — — — 145 5,250,000 — 16,709,912 21,960,057

1,737,592 271,780 400,000 6,114,444 1,117,784 3,387,531 4,420,898 1,742 14,700,227 32,151,998

12,062,962 13,845,026 400,000 8,671,290 9,280,524 3,388,543 75,885,932 609,533 41,105,590 165,249,400

112,721,556

93,070,809

158,782

1,758,244

107,317,411

315,026,802

42,744,592 —

2,037,836

— —

— —

— 1,389,076

42,744,592 3,426,912

— (6,679,845) — (6,521,063) 11,481,613

— — (15,550,785) (13,792,541) 8,167,516

— 2,175,283 — 110,881,770 143,033,768

19,500,000 (4,170,479) (15,550,785) 360,977,042 526,226,442

9,424,418 8,542,628 — 2,080,974 — — 12,302,349 607,791 1,500,188 34,458,348

19,500,000 — — 174,966,148 209,424,496

$

334,083 95,442,728 154,119,049

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 reported 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 (7) Rounding Net assets of governmental activities See accompanying notes to basic financial statements.

Capital projects fund Downtown Redevelopment Project Fund 2,899,204

$

360,977,042

327,066,330 (5,250,000) 1,305,376 (161,356,492) 29,853,885

$

(988,749) 1 551,607,393

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) Governmental Funds For the fiscal year ended June 30, 2004

General Fund Revenues: Property taxes Incremental property taxes Sales taxes Other taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment income Rental income Settlement income Other Total revenues Expenditures: Current: General government Public safety General services Cultural and recreation services Library Retirement Housing and community development Other Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances (deficits) at beginning of year, as restated Fund balances (deficits) at end of year See accompanying notes to basic financial statements.

$

23,098,289 — 27,825,098 65,208,060 35,409,136 288,572 9,332,998 13,344,573 2,210,519 6,437,467 — 1,788,903 184,943,615

Special revenue funds Special Revenue Disaster Source Relief Fund Fund — — — — —

Capital projects fund Downtown Redevelopment Project Fund

Nonmajor governmental funds

Total governmental funds

239,917 — 514,460 — 73,929,382 2,546,528 77,230,287

— — — — — 8,631,215 — — — — — 277,783 8,908,998

1,291,362 — — — — — — — 36,684 1,289,712 — 10,938 2,628,696

— 34,653,601 — 2,869,375 253,371 19,642,907 8,828,198 — 1,710,035 126,962 — 1,193,143 69,277,592

24,389,651 34,653,601 27,825,098 68,077,435 35,662,507 28,562,694 18,401,113 13,344,573 4,471,698 7,854,141 73,929,382 5,817,295 342,989,188

22,768,297 63,428,190 17,371,193 30,631,170 16,872,822 13,258,631 21,714,560 241,524

403,749 — 9,419,918 2,727,661 971,500 — — —

— 124,499 11,181,864 — — — — —

— — — — — — 637,829 —

386,489 1,031,447 4,255,117 4,928,627 — — 40,823,402 —

23,558,535 64,584,136 42,228,092 38,287,458 17,844,322 13,258,631 63,175,791 241,524

— — 186,286,387

— — 13,522,828

— — 11,306,363

— 712,301 1,350,130

4,880,000 8,689,219 64,994,301

4,880,000 9,401,520 277,460,009

(1,342,772)

63,707,459

(2,397,365)

1,278,566

4,283,291

65,529,179

10,246,981 (16,335,013) (6,088,032)

— (458,984) (458,984)

— — —

— (1,384,010) (1,384,010)

12,800,948 (14,278,658) (1,477,710)

23,047,929 (32,456,665) (9,408,736)

(7,430,804)

63,248,475

(2,397,365)

(105,444)

2,805,581

56,120,443

182,396,952

32,194,253

(4,123,698)

(13,687,097)

108,076,189

304,856,599

$ 174,966,148

95,442,728

(6,521,063)

(13,792,541)

110,881,770

360,977,042

CITY OF SANTA MONICA, CALIFORNIA Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the fiscal year ended June 30, 2004

Net change in fund balances – total governmental funds

$

56,120,443

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

49,675,208 (7,463,191) (15,465,487)

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

87,432 4,880,000 6,897 (4,399) (123,174) (62,569) (397,803) 794,467 2,233,553

Internal service funds: 14) 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.

(1,498,688) $

88,782,689

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund balance - Budget and Actual (Non-GAAP Basis) General Fund For the fiscal year ended June 30, 2004

Revenues: Property taxes Sales tax Other taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment income Rental income Other Total revenues Expenditures: General government: City council Salaries Supplies Total city council City manager Salaries Supplies Total city manager Record and election services Salaries Supplies Total record and election services Finance Salaries Supplies Capital outlay Total finance

See accompanying notes to basic financial statements

$

Less 2002-2003 encumbered expenditures

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance with final budget positive (negative)

Original budget

Final budget

Actual

21,506,401 25,400,000 60,652,769 35,354,356 163,833 9,043,216 12,479,500 3,114,350 6,311,416 (2,799,147) 171,226,694

21,829,204 26,500,000 59,534,563 34,607,016 879,191 9,084,374 12,479,500 2,600,000 6,311,416 1,304,853 175,130,117

23,098,289 27,825,098 65,208,060 35,409,136 288,572 9,332,998 13,344,573 2,210,519 6,437,467 1,788,903 184,943,615

— — — — — — — — — — —

— — — — — — — — — — —

23,098,289 27,825,098 65,208,060 35,409,136 288,572 9,332,998 13,344,573 2,210,519 6,437,467 1,788,903 184,943,615

1,269,085 1,325,098 5,673,497 802,120 (590,619) 248,624 865,073 (389,481) 126,051 484,050 9,813,498

210,140 193,960 404,100

211,868 193,960 405,828

192,471 178,347 370,818

— — —

— — —

192,471 178,347 370,818

19,397 15,613 35,010

4,293,487 1,177,201 5,470,688

4,505,403 1,152,201 5,657,604

4,174,156 1,089,207 5,263,363

— 38,576 38,576

— 26,239 26,239

4,174,156 1,076,870 5,251,026

331,247 75,331 406,578

847,199 686,407 1,533,606

898,125 651,266 1,549,391

857,534 565,072 1,422,606

— — —

— 1,367 1,367

857,534 566,439 1,423,973

40,591 84,827 125,418

3,517,064 989,347 — 4,506,411

3,578,354 1,034,826 2,392 4,615,572

3,348,739 917,637 16,750 4,283,126

— 5,328 14,358 19,686

— 116,190 — 116,190

3,348,739 1,028,499 2,392 4,379,630

229,615 6,327 — 235,942

(Continued)

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund balance - Budget and Actual (Non-GAAP Basis) General Fund For the fiscal year ended June 30, 2004

City attorney Salaries Supplies Capital outlay Total city attorney Human resources Salaries Supplies Capital outlay Total human resources Capital improvement Total general government Public safety: Police Salaries Supplies Capital outlay Total police Fire Salaries Supplies Capital outlay Total fire Capital improvement Total public safety

$

Less 2002-2003 encumbered expenditures

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance with final budget positive (negative)

Original budget

Final budget

Actual

5,606,073 328,734 5,000 5,939,807

5,585,487 329,846 400 5,915,733

5,342,649 320,296 400 5,663,345

— — — —

— — — —

5,342,649 320,296 400 5,663,345

242,838 9,550 — 252,388

1,665,896 445,150 2,100 2,113,146 3,630,830 23,598,588

1,668,179 445,150 2,100 2,115,429 11,530,360 31,789,917

1,480,078 416,922 — 1,897,000 3,868,039 22,768,297

— — — — — 58,262

7,754 14,690 — 22,444 2,062,773 2,229,013

1,487,832 431,612 — 1,919,444 5,930,812 24,939,048

180,347 13,538 2,100 195,985 5,599,548 6,850,869

41,178,759 4,564,300 348,000 46,091,059

41,240,068 4,439,160 403,553 46,082,781

39,151,049 4,294,915 364,519 43,810,483

— 1,710 200,754 202,464

— 144,990 239,788 384,778

39,151,049 4,438,195 403,553 43,992,797

2,089,019 965 — 2,089,984

16,025,734 851,307 78,200 16,955,241 446,000 63,492,300

15,726,258 1,031,366 233,012 16,990,636 10,454,212 73,527,629

15,044,624 1,014,479 196,102 16,255,205 3,362,502 63,428,190

— 36,804 — 36,804 — 239,268

— 46,771 31,901 78,672 1,153,289 1,616,739

15,044,624 1,024,446 228,003 16,297,073 4,515,791 64,805,661

681,634 6,920 5,009 693,563 5,938,421 8,721,968

(Continued)

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund balance - Budget and Actual (Non-GAAP Basis) General Fund For the fiscal year ended June 30, 2004

General services: Environmental and public works management Salaries Supplies Capital outlay Total environmental and public works Capital improvement Total general services Cultural and recreation services: Community and cultural services Salaries Supplies Capital outlay Capital improvement Total cultural and recreation services Library Salaries Supplies Capital outlay Capital improvement Total library

$

Less 2002-2003 encumbered expenditures

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance with final budget positive (negative)

Original budget

Final budget

Actual

7,855,528 4,535,705 50,742 12,441,975 5,334,097 17,776,072

7,928,860 4,662,706 50,742 12,642,308 42,972,498 55,614,806

7,522,265 4,598,523 47,513 12,168,301 5,202,892 17,371,193

— 18,500 15,067 33,567 — 33,567

34,618 82,236 — 116,854 7,293,865 7,410,719

7,556,883 4,662,259 32,446 12,251,588 12,496,757 24,748,345

371,977 447 18,296 390,720 30,475,741 30,866,461

11,865,525 17,334,053 16,500 29,216,078 985,949 30,202,027

11,927,539 17,511,188 46,733 29,485,460 12,767,624 42,253,084

11,034,878 17,418,523 64,069 28,517,470 2,113,700 30,631,170

— 791,229 17,336 808,565 — 808,565

— 814,130 — 814,130 5,808,691 6,622,821

11,034,878 17,441,424 46,733 28,523,035 7,922,391 36,445,426

892,661 69,764 — 962,425 4,845,233 5,807,658

4,769,718 1,325,940 — 6,095,658 — 6,095,658

4,868,874 1,337,394 — 6,206,268 47,360,997 53,567,265

4,403,984 1,273,221 — 5,677,205 11,195,617 16,872,822

— 152,430 — 152,430 — 152,430

— 216,530 — 216,530 32,375,699 32,592,229

4,403,984 1,337,321 — 5,741,305 43,571,316 49,312,621

464,890 73 — 464,963 3,789,681 4,254,644

(Continued)

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund balance - Budget and Actual (Non-GAAP Basis) General Fund For the fiscal year ended June 30, 2004

Housing and community development: Planning and community development Salaries Supplies Capital outlay Total planning and community development Resource management Salaries Supplies Capital outlay Total resource management Capital improvement Total housing and community development Retirement Other: supplies Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing uses Net change in fund balances Fund balance at the beginning of year Fund balance at end of year

See accompanying notes to basic financial statements.

Less 2002-2003 encumbered expenditures

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance with final budget positive (negative)

Original budget

Final budget

Actual

8,416,219 5,627,345 25,700 14,069,264

8,488,103 5,653,440 147,600 14,289,143

7,743,986 5,270,105 118,789 13,132,880

64,667 644,471 7,229 716,367

19,800 450,867 24,739 495,406

7,699,119 5,076,501 136,299 12,911,919

788,984 576,939 11,301 1,377,224

2,517,316 5,942,944 41,700 8,501,960 — 22,571,224 12,721,796 264,815 176,722,480

2,542,302 6,140,572 42,071 8,724,945 84,000 23,098,088 13,258,631 264,815 293,374,235

2,390,219 6,071,890 42,071 8,504,180 77,500 21,714,560 13,258,631 241,524 186,286,387

— 111,967 — 111,967 — 828,334 — 81,617 2,202,043

— 178,951 — 178,951 — 674,357 — — 51,145,878

2,390,219 6,138,874 42,071 8,571,164 77,500 21,560,583 13,258,631 159,907 235,230,222

152,083 1,698 — 153,781 6,500 1,537,505 — 104,908 58,144,013

(5,495,786)

(118,244,118)

(1,342,772)

(2,202,043)

(51,145,878)

(50,286,607)

67,957,511

12,111,355 (10,349,948) 1,761,407

12,201,146 (16,361,366) (4,160,220)

10,246,981 (16,335,013) (6,088,032)

— — —

— — —

10,246,981 (16,335,013) (6,088,032)

(1,954,165) (26,353) (1,980,518)

(3,734,379)

(122,404,338)

(7,430,804)

(2,202,043)

(51,145,878)

(56,374,639)

(66,029,699)

182,396,952

182,396,952

182,396,952

—

—

182,396,952

—

$ 178,662,573

59,992,614

174,966,148

(2,202,043)

(51,145,878)

126,022,313

(66,029,699)

$

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Special Revenue Source Fund For the fiscal year ended June 30, 2004

Revenues: Charges for services Investment income Settlement income Other Total revenues Expenditures: General government: Capital improvement Total general government General services: Environmental and public works management Supplies Capital improvement Total general services Cultural and recreation services: Supplies Capital improvement Total cultural and recreation services Library Capital improvement Total library Housing and community development: Capital improvement Total housing and community development

$

Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses) - transfers out Net change in fund balance Fund balance at beginning of year, as restated Fund balance at end of year * No encumbrances were outstanding at June 30, 2003. See accompanying notes to basic financial statements.

$

Less 2002-2003 encumbered expenditures*

Actual, budgetary basis

Variance – positive (negative)

— — — — —

239,917 514,460 73,929,382 2,546,528 77,230,287

(10,083) (285,540) 71,026,210 1,413,195 72,143,782

— —

330 330

404,079 404,079

595,921 595,921

4,994,746 4,425,172 9,419,918

— — —

— 383,062 383,062

4,994,746 4,808,234 9,802,980

— 1,985,888 1,985,888

10,530 5,681,461 5,691,991

2,684 2,724,977 2,727,661

— — —

— 2,773,422 2,773,422

2,684 5,498,399 5,501,083

7,846 183,062 190,908

— —

6,738,782 6,738,782

971,500 971,500

— —

3,459,966 3,459,966

4,431,466 4,431,466

2,307,316 2,307,316

375,000 375,000

3,335,294 3,335,294

— —

— —

— —

— —

3,335,294 3,335,294

935,000

28,554,935

13,522,828

—

6,616,780

20,139,608

8,415,327

1,248,333 (431,600)

(23,468,430) (681,600)

63,707,459 (458,984)

— —

(6,616,780) —

57,090,679 (458,984)

80,559,109 222,616

816,733

(24,150,030)

63,248,475

—

(6,616,780)

56,631,695

80,781,725

32,194,253

32,194,253

32,194,253

—

—

32,194,253

—

33,010,986

8,044,223

95,442,728

—

(6,616,780)

88,825,948

80,781,725

Original Budget

Final Budget

250,000 800,000 — 1,133,333 2,183,333

250,000 800,000 2,903,172 1,133,333 5,086,505

239,917 514,460 73,929,382 2,546,528 77,230,287

— — — — —

— —

1,000,000 1,000,000

403,749 403,749

— 560,000 560,000

4,994,746 6,794,122 11,788,868

— — —

Actual

Plus 2003-2004 encumbrances

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 For the fiscal year ended June 30, 2004

Less 2002-2003 encumbered expenditures

Actual, budgetary basis

Variance – positive (negative)

— —

8,631,215 277,783

(9,368,785) (242,217)

—

—

8,908,998

(9,611,002)

124,499

—

—

124,499

—

124,499

124,499

—

—

124,499

—

321,900 163,900 6,500

334,976 163,900 6,500

313,321 114,314 —

— — —

— — —

313,321 114,314 —

21,655 49,586 6,500

492,300

505,376

427,635

—

—

427,635

77,741

—

25,556,629

10,754,229

100

1,136,286

11,890,415

13,666,214

Total general services

492,300

26,062,005

11,181,864

100

1,136,286

12,318,050

13,743,955

Total expenditures

492,300

26,186,504

11,306,363

100

1,136,286

12,442,549

13,743,955

18,027,700

(7,666,504)

(2,397,365)

(100)

(1,136,286)

(3,533,551)

4,132,953

(4,123,698)

(4,123,698)

(4,123,698)

—

—

(4,123,698)

—

$ 13,904,002

(11,790,202)

(6,521,063)

(100)

(1,136,286)

(7,657,249)

4,132,953

Original Budget

Final Budget

Actual

$ 18,000,000 520,000

18,000,000 520,000

8,631,215 277,783

— —

Total revenues

18,520,000

18,520,000

8,908,998

Expenditures: Public Safety: Capital improvement

—

124,499

—

General Services: Environmental and public works management Salaries Supplies Capital outlay Total environmental and public works

Revenues Intergovernmental Other

Total public safety

Capital improvement

Net change in fund balance Fund balance at beginning of year Fund balance at end of year

See accompanying notes to basic financial statements.

Plus 2003-2004 encumbrances

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

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

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets Proprietary Funds June 30, 2004

Wastewater

Big Blue Bus

17,841,441 —

12,248,108 486

26,343,014 4,321,649

56,432,563 4,322,135

42,900,991 —

2,127,573 126,986 — — 6,155

8,000,682 138,224 1,002,161 — 130,670

7,340,683 166,797 468,215 9,120,756 6,654

17,468,938 432,007 1,470,376 9,120,756 143,479

801,178 182,174 36,131 — 77,844

20,102,155

21,520,331

47,767,768

89,390,254

43,998,318

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

4,834,834 735,339 —

21,844,440 — 34,145,541

1,307,007 838,793 —

27,986,281 1,574,132 34,145,541

— — —

Capital assets (note 7): Land Buildings Improvements other than buildings Utility systems Machinery and equipment Construction in progress

3,242,514 574,990 31,426,404 97,202,721 1,273,287 4,395,024

25,635,557 8,230,541 29,767,152 — 71,085,907 22,463,966

5,359,700 15,850,877 78,455,171 1,206,559 4,209,746 9,404,574

34,237,771 24,656,408 139,648,727 98,409,280 76,568,940 36,263,564

— — — — 25,763,985 57,374

Less accumulated depreciation

138,114,940 (19,823,198)

157,183,123 (58,950,654)

114,486,627 (54,606,879)

409,784,690 (133,380,731)

25,821,359 (13,232,953)

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

Net capital assets

$

Total enterprise funds

Total internal service funds

Nonmajor enterprise funds

118,291,742

98,232,469

59,879,748

276,403,959

12,588,406

Advances to other funds (note 11) Bond issuance costs, net

8,284,137 675,592

— —

— 38,970

8,284,137 714,562

— —

Total noncurrent assets

132,821,644

154,222,450

62,064,518

349,108,612

12,588,406

$ 152,923,799

175,742,781

109,832,286

438,498,866

56,586,724

Total assets

See accompanying notes to basic financial statements.

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets, Continued Proprietary Funds June 30, 2004

Total enterprise funds

Total internal service funds

Wastewater

Big Blue Bus

Nonmajor enterprise funds

322,223 328,858 — — 735,338 1,130,000

1,919,935 3,624,609 16,014 — — —

2,618,331 2,097,434 232,117 — 78,177 601,647

4,860,489 6,050,901 248,131 — 813,515 1,731,647

1,005,321 343,778 — 9,517,923 — —

2,516,419

5,560,558

5,627,706

13,704,683

10,867,022

—

486

4,321,649

4,322,135

—

Noncurrent liabilities: Advances from other funds (note 11) Claims payable Deferred revenue (note 8) Long-term obligations, net of current portion (note 9)

— — — 28,145,663

— — 7,057,625 —

8,345,021 — 224,839 5,200,843

8,345,021 — 7,282,464 33,346,506

— 19,149,161 — —

Total noncurrent liabilities

28,145,663

7,057,625

13,770,703

48,973,991

19,149,161

Total liabilities

30,662,082

12,618,669

23,720,058

67,000,809

30,016,183

Net assets Invested in capital assets, net of related debt Restricted (note 12) Unrestricted

90,427,010 — 31,834,707

98,232,469 34,145,541 30,746,102

54,955,021 — 31,157,207

243,614,500 34,145,541 93,738,016

12,588,406 — 13,982,135

$122,261,717

163,124,112

86,112,228

371,498,057

26,570,541

Liabilities Current liabilities: Accounts payable Accrued liabilities Contracts payable (retained percentage) Claims payable Interest payable Current portion of long-term obligations (note 9) Total current liabilities Current liabilities payable from restricted assets – deposits

Total net assets

$

30,504,522 See accompanying notes to basic financial statements.

(2,945,232) 399,057,347

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 For the fiscal year ended June 30, 2004

Big Blue Bus

Nonmajor enterprise funds

Total enterprise funds

Total internal service funds

11,004,692

12,190,925

40,085,856

63,281,473

21,747,135

2,769,284 566,600 2,949,646 549,346 715,826 32,129 — 202,500

27,010,563 625,900 2,527,835 3,063 4,960,492 300,555 — 1,741,921

16,692,932 2,993,600 4,493,243 3,423,097 7,056,236 799,513 3,370,885 543,300

46,472,779 4,186,100 9,970,724 3,975,506 12,732,554 1,132,197 3,370,885 2,487,721

2,668,861 451,600 106,525 1,277,079 1,482,865 32,689 — 15,400

— — — — 3,017,888 1,564,350

— — — — 9,740,110 335,455

— — — — 3,909,853 3,812,742

— — — — 16,667,851 5,712,547

13,053,882 2,005,183 960,004 138,183 2,643,379 —

Wastewater Operating revenues - charges for services 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

12,367,569

47,245,894

47,095,401

106,708,864

24,835,650

Operating loss

(1,362,877)

(35,054,969)

(7,009,545)

(43,427,391)

(3,088,515)

38,740 — 164,576 (1,530,975) 43,157 318,638

— 24,392,603 362,984 — 42,898 1,105,207

240,600 — 1,346,356 (214,646) (2,305,513) 2,816,047

279,340 24,392,603 1,873,916 (1,745,621) (2,219,458) 4,239,892

— — 443,396 — (247,156) 1,008,594

(965,864)

25,903,692

1,882,844

26,820,672

1,204,834

(2,328,741)

(9,151,277)

(5,126,701)

(16,606,719)

(1,883,681)

— 2,839,358 (136,000)

7,943,966 737,172 (893,235)

— 12,347,688 (5,486,247)

7,943,966 15,924,218 (6,515,482)

— 427,300 (427,300)

374,617

(1,363,374)

1,734,740

745,983

(1,883,681)

121,887,100

164,487,486

84,377,488

370,752,074

28,454,222

$ 122,261,717

163,124,112

86,112,228

371,498,057

26,570,541

Nonoperating revenues (expenses): Other grants Sales tax proceeds Investment income Interest expense Gain (loss) on disposal of capital assets Other Total nonoperating revenues (expenses) Loss before capital contributions and transfers Capital contributions Transfers in Transfers out Change in net assets Net assets at beginning of year, as restated (note 4) Net assets at end of year

$

745,983

(384,996)

See accompanying notes to basic financial statements.

$

360,987

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 For the fiscal year ended June 30, 2004

Wastewater 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 revenue received

Big Blue Bus

Nonmajor enterprise funds

Total enterprise funds

Total internal service funds

$ 10,723,042 (7,616,356) — (2,769,284) 318,638

12,190,925 (11,964,413) — (26,642,697) 1,105,207

39,136,940 (39,240,394) — (16,692,932) 2,816,047

62,050,907 (58,821,163) — (46,104,913) 4,239,892

21,256,609 (5,953,791) (8,059,918) (2,668,861) 1,008,598

656,040

(25,310,978)

(13,980,339)

(38,635,277)

5,582,637

Cash flows from noncapital financing activities: Sales tax proceeds Other grants Repayment of advances made to other funds Transfers in Transfers out

— 38,740 — 2,839,358 (136,000)

19,623,341 — — 737,172 (893,235)

— 240,600 (48,000) 12,347,688 (5,486,247)

19,623,341 279,340 (48,000) 15,924,218 (6,515,482)

— — — 427,300 (427,300)

Net cash provided by (used in) noncapital financing activities

2,742,098

19,467,278

7,054,041

29,263,417

—

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 Advances made to other funds

— (4,774,869) 1,548,394 (1,004,999) (1,591,275) (2,608,795)

9,001,110 (10,207,380) 42,898 — — —

— (3,434,579) — (631,212) (225,207) 2,228,412

9,001,110 (18,416,828) 1,591,292 (1,636,211) (1,816,482) (380,383)

— (2,730,222) 87,227 — — —

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

(8,431,544)

(1,163,372)

(2,062,586)

(11,657,502)

(2,642,995)

Net cash provided by (used in) operating activities

Cash flows from investing activities – interest received on investments Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents

207,881

368,556

1,329,293

1,905,730

444,297

207,881

368,556

1,329,293

1,905,730

444,297

(4,825,525)

(6,638,516)

(7,659,591)

(19,123,632)

3,383,939

Cash and cash equivalents at beginning of year

28,237,139

40,731,550

40,470,054

109,438,743

39,517,052

Cash and cash equivalents at end of year

23,411,614

34,093,034

32,810,463

90,315,111

42,900,991

Cash and investments Restricted cash and investments

17,841,441 5,570,173

12,248,108 21,844,926

26,343,014 6,467,449

56,432,563 33,882,548

42,900,991 —

$ 23,411,614

34,093,034

32,810,463

90,315,111

42,900,991

Total cash and cash equivalents

There were no noncash capital financing or investing activities for the year ended June 30, 2004 See accompanying notes to basic financial statements.

CITY OF SANTA MONICA, CALIFORNIA Statement of Cash Flows, Continued Proprietary Funds For the fiscal year ended June 30, 2004

Wastewater 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 due from other funds 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.

$

Big Blue Bus

Nonmajor enterprise funds

Total enterprise funds

Total internal service funds

(1,362,877)

(35,054,969)

(7,009,545)

(43,427,391)

(3,088,515)

3,017,888 173,783

9,740,110 —

3,909,853 50,120

16,667,851 223,903

2,643,379 —

(281,650) (165) — — (1,169,524) 175,057 — (215,110) — 318,638

— (41,013) 80,495 — (1,456,007) 367,866 486 (53,153) — 1,105,207

(1,043,901) (664) (69,459) (8,162,740) (6,979,811) 1,305,642 1,114,526 89,593 — 2,816,047

(1,325,551) (41,842) 11,036 (8,162,740) (9,605,342) 1,848,565 1,115,012 (178,670) — 4,239,892

(490,525) 830,794 (4,061) — 136,971 343,778 — — 4,202,222 1,008,594

2,018,917

9,743,991

(6,970,794)

4,792,114

8,671,152

656,040

(25,310,978)

(13,980,339)

(38,635,277)

5,582,637

CITY OF SANTA MONICA, CALIFORNIA Statement of Fiduciary Assets and Liabilities Fiduciary Funds June 30, 2004

Total Agency Funds

Assets Restricted cash and investments Accounts receivable Total assets

$

1,149,717 5,073

$

1,154,790

$

1,154,790

$

1,154,790

Liabilities Accounts payable and accrued liabilities Total liabilities See accompanying notes to basic financial statements.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements Year ended June 30, 2004

(1)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. THE REPORTING ENTITY The City of Santa Monica, California (“City”) was incorporated November 30, 1886. The City operates under a Council-Manager form of government and provides traditional municipal services as authorized by its charter as well as various enterprise services. As required by accounting principles generally accepted in the United States of America (“GAAP”), the accompanying basic financial statements present the activities of the City and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operations or financial relationships with the City. None are considered major component units for reporting purposes. As required by GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The following entities are reported as blended component units because they have substantively the same governing board as the primary government. Blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with data of the City. Additional detailed information and/or separately issued financial statements for these component units can be obtained from the City’s Director of Finance/City Treasurer. The Redevelopment Agency of the City of Santa Monica (“Agency”) was established by the City of Santa Monica City Council in 1957 pursuant to the Community Redevelopment Law of California to eliminate blight and to promote economic revitalization within designated project areas of the City. The Parking Authority of the City of Santa Monica (“Authority”) was established by the City in 1950 and maintains and operates parking lots and parking structures. The Housing Authority of the City of Santa Monica (“Housing Authority”) was established by the City in 1975 to address unsanitary and unsafe inhabited dwelling accommodations and the shortage of affordable safe and sanitary dwelling accommodations for persons with low incomes. Since January 1, 1989, the Housing Authority has administered the Section 8 Housing Assistance Payments Program funded by the United States Department of Housing and Urban Development on behalf of the City. Following are brief descriptions of organizations created in 1984 as nonprofit public benefit corporations. These basic financial statements do not present these entities for which the City may meet criteria for discrete presentation but the economic resources received or held by an individual organization are not significant to the primary government. Each of the governing bodies acts on behalf of the City through members appointed by the City of Santa Monica City Council for the benefit of the citizens of Santa Monica. Separate financial statements for each can be obtained from the City’s Director of Finance/City Treasurer. The Pier Restoration Corporation 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, 2004

The Bayside District Corporation, formerly the Third Street Development Corporation, combats community deterioration by developing and improving the aging areas in and around the City’s central business district and coordinating public and private sector activities. The Santa Monica Arts Foundation promotes the arts by raising funds to finance art programs. On June 8, 1990, the City Council merged the City’s Arts Commission with the Santa Monica Arts Foundation. B. BASIC FINANCIAL STATEMENTS Basic financial statements consist of the following: • • •

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

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

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds 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. Sales taxes, franchise taxes, licenses, interest, special assessments, charges for services and other miscellaneous revenue are all considered to be susceptible to accrual and have been recognized as revenue in the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if susceptible to accrual criteria. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred, all other eligibility requirements have been met and are recorded at the time of receipt or earlier, and the susceptible to accrual criteria are met. All other revenue items are considered to be measured and available only when cash is received by the government. The accounts of the City are organized on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. The City reports the following major governmental funds: The General Fund is the City’s primary operating fund. It accounts for all the financial resources and the legally authorized activities of the City except those required to be accounted for in other specialized funds. The Special Revenue Source Special Revenue Fund accounts for the receipts and expenditures of monies collected for specific uses.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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 Downtown Redevelopment Project Capital Project Fund accounts for activities of the downtown redevelopment project area of the Santa Monica Redevelopment Agency. The City reports the following major proprietary funds: The Wastewater Enterprise Fund accounts for the activities of maintaining sanitary sewer and storm drain systems within the City. The Big Blue Bus Enterprise Fund accounts for the activities of the City’s municipal bus lines. Additionally, the City reports the following fund types: Permanent Funds account for resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support specific programs. Internal Service Funds account for vehicle operations, risk management, and information technology and communications operations that provide services to other departments of the City on a cost reimbursement basis. Fiduciary Funds, which consist solely of Agency funds, account for assets held by the City as a trustee or as an agent for individuals or other government units. The only fiduciary fund type used by the City is the Agency Fund type. Agency funds are custodial in nature and do not involve measurement of results of operations. Such funds are unlike all other types of funds, reporting only assets and liabilities. These funds account for assets held by the City in an agency capacity for individuals or other governmental units. 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 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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

D. ASSETS, LIABILITIES, NET ASSETS OR EQUITY Cash and Investments In order to maximize the flexibility of its investment program and to aid in cash budgeting, the City pools the cash of all funds, except for monies deposited with fiscal agents in accordance with related bond indentures. The cash and investments balance in each fund represents that fund's equity share of the City's cash and investment pool. As the City places no restrictions on the deposit or withdrawal of its equity from the pool by a particular fund, the pool operates like a demand deposit account for the participating funds. Interest income earned on pooled cash and investments is allocated quarterly to the various funds based on quarter-end balances and is adjusted at year-end. Interest income on restricted cash and investments with fiscal agents is credited directly to the related fund. 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 (no limit) Securities of U.S. government agencies (maximum 50% 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 (10% maximum per issuer, 30% maximum overall) 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. 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

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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 6. 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, 2004 allowance for uncollectible accounts for governmental and business-type activities is $11,919 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 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, leases, these bond monies may be invested in accordance with the ordinance, indentures specifying the types of investments its trustees or fiscal agents may ordinances, resolutions and indentures are generally more restrictive than the

certificates or resolutions or make. These City's general

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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. The City defines buildings and improvements other than buildings as assets with an initial individual cost of $100,000 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, 2004. 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. The City has elected not to capitalize its collection of artwork. GASB 34 waives the requirement for artwork capitalization if the collection meets all the following conditions: • • •

The collection is held for reasons other than financial gain. The collection is protected, kept unencumbered, cared for, and preserved. The collection is subject to an organizational policy requiring that the proceeds from sales of collection items be used to acquire other items for collections.

The City’s artwork collection meets the above criteria and therefore qualifies for the exemption from the capitalization requirement. The collection includes both permanent and portable artworks, artworks integrated into overall projects, murals, and stand-alone permanently installed paintings

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

and sculptures, art integrated into the design of public works projects (not stand-alone), and a contemporary collection of almost 100 portable artworks which are on display in public areas of City facilities. Lease Obligations The City leases various assets under both operating and capital lease agreements. In the government-wide and proprietary funds financial statements, capital leases and the related lease obligations are reported as liabilities in the applicable governmental activities or proprietary funds statement of net assets. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick leave benefits up to a maximum determined by bargaining unit agreements. Employees are paid 100% of their accumulated vacation 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

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

proceeds of bonds issued to acquire or construct capital assets. The nonexpendable portion of permanent funds is reported as a component of restricted net assets. The City's other restricted net assets are temporarily restricted (ultimately expendable) assets. All other net assets are considered unrestricted. In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. Self-Insurance Program The City has self-insurance programs to provide for general liability, bus and automobile liability, and workers' compensation claims. These activities are accounted for in self-insurance internal service funds. Premiums are charged to individual funds and are designed to cover future expenses. The City's Risk Manager oversees the self-insurance programs. It is his 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. (2)

BUDGETARY AND LEGAL COMPLIANCE The City Council is required to adopt an annual budget resolution by June 30 each fiscal year for the General Fund and each special revenue fund (except the 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 reappropriate 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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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 Treasurer.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

(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 Due from other funds Inventory Prepaids 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) 21,959,144

Other adjustments and eliminations (3) —

Statement of net assets totals 393,765,305

Total governmental funds $ 371,806,161

Long-term assets and liabilities (1) —

10,857,657 1,133,242 1,407,460 41,376,431 10,215,470 — 159,768 728,940 683,266 41,441,574 5,250,000 41,166,473 — — $ 526,226,442

— — — — — — — — — — — — 1,305,376 327,066,330 328,371,706

801,178 101,512 — — — 2,945,232 — — 77,844 — — — — 594,914 26,479,824

— — — — — (9,059,872) (159,768) — — — (5,250,000) (41,166,473) — — (55,636,113)

11,658,835 1,234,754 1,407,460 41,376,431 10,215,470 (6,114,640) — 728,940 761,110 41,441,574 — — 1,305,376 327,661,244 825,441,859

$ 12,062,962 13,845,026 — 400,000 8,671,290 75,885,932 9,280,524 3,388,543 609,533 —

— — 3,705,554 — — — — — — 4,680,800

648,236 185,146 — — — — — — — —

— — — — — (29,853,885) (9,280,524) — — —

12,711,198 14,030,172 3,705,554 400,000 8,671,290 46,032,047 — 3,388,543 609,533 4,680,800

— — — — — 41,105,590 165,249,400 360,977,042 $ 526,226,442

2,122,739 — — 5,625,000 145,222,399 — 161,356,492 167,015,214 328,371,706

— — — — — (41,105,590) (80,239,999) 24,603,886 (55,636,113)

2,122,739 8,753,366 17,881,825 5,625,000 145,222,399 — 273,834,466 551,607,393 825,441,859

— 8,753,366 17,881,825 — — — 27,468,573 (988,749) 26,479,824

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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 $594,914, net of accumulated depreciation, are not included in this amount. Less accumulated depreciation

$ 400,542,478 (73,476,148) 327,066,330

Bond issue costs to be amortized over the life of the debt

1,305,376

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

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.

$

(79,975,000) (26,615,000) (44,775,000) 567,504 (3,705,554) (112,234) 62,331 (6,803,539) (161,356,492) $ 167,015,214

$

(3,933,981)

$

2,945,232 (988,749)

$

(5,250,000)

$

29,853,886 24,603,886

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.

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, 2004

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 funds Bond issuance costs, net Capital assets Total assets

$

Total business-type internal service funds (1)

Other adjustments and eliminations

Statement of net assets totals

56,432,563

20,941,847

—

77,374,410

17,468,938 432,007 — — 1,470,376 143,479 32,308,416 1,574,132 34,145,541 8,284,137 9,120,756 714,562 276,403,959 438,498,866

— 80,662 — (2,945,232) 36,131 — — — — — — — 11,993,492 30,106,900

— — — 9,059,872 — — — — — (8,284,137) (9,120,756) — — (8,345,021)

17,468,938 512,669 — 6,114,640 1,506,507 143,479 32,308,416 1,574,132 34,145,541 — — 714,562 288,397,451 460,260,745

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

$

4,860,489 3,853,493 813,515 248,131 7,282,464 4,322,135 8,345,021 1,695,944

357,085 158,632 — — — — — —

— — — — — — (8,345,021) —

5,217,574 4,012,125 813,515 248,131 7,282,464 4,322,135 — 1,695,944

501,464 — — 1,731,647 33,346,506 67,000,809

— 764,557 1,267,336 — — 2,547,610

— — — — — (8,345,021)

501,464 764,557 1,267,336 1,731,647 33,346,506 61,203,398

$ 371,498,057

27,559,290

—

399,057,347

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

1)

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

$

27,559,290

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.

$

(2,945,232)

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

(4)

PRIOR PERIOD ADJUSTMENTS The accompanying financial statements reflect adjustments resulting from a restatement of beginning fund balance/net assets as of June 30, 2004 as follows: •

Decrease in Special Revenue Source Fund fund balance of $1,240,080 to record reduction in loan receivable recorded as revenue during the year ended June 30, 2003.

•

Increase in Vehicle Management Fund net assets of $617,012 to record fixed assets recorded as expense during the year ended June 30, 2003.

•

Increase in Wastewater Fund net assets of $38,800,077 to record fixed assets recorded net of reimbursements received during the years ended June 30, 2001 and 2002.

•

Increase in Stormwater Fund net assets of $1,328,294 to record revenue not recorded during the years ended June 30, 2002 and 2003.

The combined effect of these prior period adjustments on the government-wide financial statements is to decrease governmental activities net assets from $464,064,784 to $462,824,704 and increase business-type activities net assets from $357,950,977 to $398,696,360. (5)

CASH AND INVESTMENTS Cash and investments include the cash balances of substantially all funds, which are pooled and invested by the Director of Finance/City Treasurer 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. Deposits At June 30, 2004, the carrying amount of the City’s deposits was $982,451 and the corresponding bank balance was $2,190,125. The difference of $1,207,674 was principally due to outstanding checks and deposits in transit. Of the total bank balance, $300,000 was insured by Federal Depository Insurance and $1,890,125 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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

Investments are categorized according to degree of custodial credit risk. Category 1 - Insured or registered securities held by the City or its agent in the City’s name. Category 2 – Uninsured and unregistered investments with securities held by the counterparty’s trust department or agent in the City’s name. Not Required to be Categorized – Not considered “securities” for the purpose of credit risk classification. Includes pools managed by other governments, money market funds and certificates of deposit. Investments are stated at fair value, based on quoted market prices, in accordance with GASB 31. Investment income has been adjusted to reflect any unrealized gains or losses resulting from the GASB 31 fair value adjustment. The City has the ability and the intent to hold investments to maturity. The City’s investments balances as of June 30, 2004 are as follows: Category 1 Investments managed by City Treasurer: Federal agencies Corporate bonds Money market funds State Treasurer's Local Agency Investment Fund (LAIF) Investments held by others: Trustee-held securities: Certificates of Deposit Federal agencies Money market funds Cemetery and Mausoleum Perpetual Care Funds Total Investments Total deposits at carrying amount Other cash funds (imprest, revolving) Total cash and investments

$ 358,094,515 39,047,630 — —

— — — — $ 397,142,145

Category 2

Not required to be categorized

Fair value at June 30, 2004

68,821,983 — —

— — 18,028,063

$ 426,916,498 39,047,630 18,028,063

19,248,685

19,248,685

203,060 — 11,834,648 190,624 49,505,080

203,060 23,788,193 11,834,648 7,392,865 546,459,642 982,451 171,461 $ 547,613,554

—

— 23,788,193 — 7,202,241 99,812,417

Cash and investments by asset type: Cash and investments Restricted cash and investments Restricted cash with fiscal agent Total cash and investments (Statement of Net Assets) Fiduciary cash and investments Total cash and investments

$ 471,139,715 32,308,416 43,015,706 546,463,837 1,149,717 $ 547,613,554

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

$ 435,206,879 111,256,958 1,149,717 $ 547,613,554

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

(6)

NOTES RECEIVABLE Governmental Activities Balance at June 30, 2003 General Fund American Youth Hostel (a) Mountain View Mobile Inn Residents Assoc. (b) Step Up on Second (c) Total General Fund Special Revenue Source Fund Community Corporation of Santa Monica (d) Community Corporation of Santa Monica (e) Community Corporation of Santa Monica (f) Total Special Revenue Source Fund Other Governmental Funds 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) Low- and moderate-income housing (m) Low- and moderate-income housing (n) Low- and moderate-income housing (o) MERL Program (p) Low income senior housing (q) Total Non-Major Governmental Funds Total Notes Receivable

$

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

Increases — — — —

Decreases

Balance at June 30, 2004

40,000 — — 40,000

320,000 124,977 1,331,847 1,776,824

1,240,080 3,367,229 2,585,300 7,192,609

— 84,403 — 84,403

1,240,080 — — 1,240,080

— 3,451,632 2,585,300 6,036,932

701,418 1,069,260 470,432 3,263,000 200,000 200,000 2,119,795 255,209 — — 21,280,597 46,250 29,605,961 $ 38,615,394

— 186,759 — 379,010 — — — 25,456 3,614,400 903,600 — — 5,109,225 5,193,628

7,038 — — — — — 96,350 — — — 1,049,123 — 1,152,511 2,432,591

694,380 1,256,019 470,432 3,642,010 200,000 200,000 2,023,445 280,665 3,614,400 903,600 20,231,474 46,250 33,562,675 41,376,431

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 ninth of seventeen installment loan payments was received in 2004; the remaining principal balance at June 30, 2004 is $320,000. 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, 2004, $124,977 had been disbursed to the borrower. c. A promissory note in the amount of $1,331,252 was executed with Step Up on Second, L.P., a California limited partnership, for the construction of a thirty-six bed permanent housing project for mentally disabled low-income persons. The project is located at 1328 Second Street in Santa Monica. The original promissory note dated September 16, 1993 was amended, superseded and replaced in full by a promissory note dated September 9, 1996, the unpaid balance is due not later

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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, 2004 is $1,331,847. Special Revenue Source Special Revenue Fund d. A promissory note in the amount of $1,240,080 was executed with Community Corporation of Santa Monica for an affordable housing replacement project located at 502 Colorado Blvd. This is a 0% 55-year loan. Forty-four single room occupancy units have been constructed on the site. The full amount of the note was disbursed. At June 30, 2004, the borrower, per the terms of the promissory note, had repaid $1,240,080. e. 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, 2004, $3,451,632 had been disbursed to the borrower. f.

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- and moderate-income housing. This is a 0% loan with the principal amount due and payable after a two-year deferral period. At June 30, 2004, $2,585,300 had been disbursed to the borrower.

Other Governmental Funds g. On April 17, 2000, the City executed a promissory note with Community Corporation of Santa Monica for the construction of a twenty unit, large family, affordable housing complex located at 708 Pico Blvd. $579,000 is funded from the City’s Pico Neighborhood Trust Fund, while $221,000 is funded from the City-wide CDBG Fund. This note is a 0% loan to be repaid from residual receipts of the project and is due on October 22, 2053. At June 30, 2004, the outstanding balance is $694,380. 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- and moderate-income housing. This is a 0% loan with the principal amount due and payable after a two-year deferral period. At June 30, 2004, $1,256,019 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, 2004, $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 forty-unit income housing development. Both are 0% loans with the principal amount due and

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

payable after a two-year deferral period. At June 30, 2004, $1,950,043 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 additional five-year terms as long as the rental properties are maintained for low-and moderateincome households. The first note was due December 22, 1993, and has been extended for the third time to December 22, 2008 under the same terms and conditions; the second note was due December 29, 1994, and has been extended for the second time to December 29, 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 State 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, 2004, the outstanding balances of such loans total $2,023,445.

m. A promissory note in the amount of $1,200,000 was executed with Ocean Park Community Center for congregate housing and emergency shelter for very low-income use, located at 1751 Cloverfield Blvd. This loan is for the acquisition and rehabilitation of the site. This is a 55-year loan with 5.98% interest rate per annum with a two-year deferral period. Payments are to be made from residual receipts. At June 30, 2004, $280,665 had been disbursed to the borrower. n. A promissory note in the amount of $4,802,339 was executed with Community Corporation of Santa Monica for an affordable housing project located at 3021-3031 Santa Monica Blvd. This loan is for the acquisition and predevelopment expenses for future low- and moderate-income housing. This is a 0% loan with the principal amount due and payable after a two-year deferral period. At June 30, 2004, $3,614,400 had been disbursed to the borrower. o. A promissory note in the amount of $1,161,185 was executed with Community Corporation of Santa Monica for an affordable housing project located at 1342 Berkeley Street. This loan is for the acquisition and predevelopment expenses for future low- and moderate-income housing. This is a 0% loan with the principal amount due and payable after a two-year deferral period. At June 30, 2004, $903,600 had been disbursed to the borrower. p. The January 17, 1994 Northridge Earthquake resulted in damaged multifamily residences in the City of Santa Monica. To facilitate repair of damaged multifamily residences, the U.S Department of Housing and Urban Development awarded the City of Santa Monica a total of $33,388,000 in emergency funds to finance the City's Multifamily Earthquake Repair Loan (MERL) Program. The funds were allocated as follows: $2,027,000 – HOME Program Emergency Supplemental Fund, $6,361,000 – HOME Program Presidential Contingency Fund, and $25,000,000 – CDBG Program Emergency Supplemental Fund. As of June 30, 2004, 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:

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

Loan amount

Loan amount

authorized

disbursed

Fund Miscellaneous Grants CDBG Total

$ $

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

7,790,695 20,633,204 28,423,899

Loan balance at Amounts repaid 1,345,061 6,847,364 8,192,425

June 30, 2004 6,445,634 13,785,840 20,231,474

q. 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, 2004, loans totaling $46,250 are outstanding.

CITY OF SANTA MONICA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

(7) CAPITAL ASSETS Capital assets activity for the primary government for year ended June 30, 2004 is as follows: Balance at July 1, 2003 as restated Governmental activities: Capital assets, not being depreciated: Land Construction in progress

Balance at Increases

Decreases

June 30, 2004

$ 86,758,590 114,889,096

8,458,820 37,039,244

(2,622,750) (77,218,890)

92,594,660 74,709,450

201,647,686

45,498,064

(79,841,640)

167,304,110

52,161,601 86,513,086 — 31,757,780 2,323,759

61,006,350 8,385,087 3,575,000 4,377,352 —

(9,435,980) (3,938,698) — (2,209,316) (439,895)

103,731,971 90,959,475 3,575,000 33,925,816 1,883,864

Total capital assets being depreciated

172,756,226

77,343,789

(16,023,889)

234,076,126

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

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

(1,320,464) (3,705,084) (20,854) (2,476,019) (55,302) (7,577,723) 69,766,066

3,366,626 2,309,926 — 1,773,579 175,958 7,626,089 (8,397,800)

(17,003,097) (40,336,712) (20,854) (16,261,539) (96,790) (73,718,992) 160,357,134

Subtotal governmental activities

300,636,554

115,264,130

(88,239,440)

327,661,244

34,221,021 26,919,738

16,750 11,539,995

— (2,163,124)

34,237,771 36,296,609

61,140,759

11,556,745

(2,163,124)

70,534,380

24,688,117 151,928,591 93,920,673 103,015,580

200,000 1,652,172 4,488,607 4,331,483

(231,709) (13,932,036) — (5,827,567)

24,656,408 139,648,727 98,409,280 101,519,496

373,552,961

10,672,262

(19,991,312)

364,233,911

(11,638,432) (72,448,819) (4,498,736) (55,122,808)

(498,109) (7,320,228) (1,998,863) (9,379,498)

208,708 10,627,811 — 5,698,134

(11,927,833) (69,141,236) (6,497,599) (58,804,172)

(143,708,795) 229,844,166

(19,196,698) (8,524,436)

16,534,653 (3,456,659)

(146,370,840) 217,863,071

290,984,925

3,032,309

(5,619,783)

288,397,451

$ 591,621,479

118,296,439

(93,859,223)

616,058,695

Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Utility Systems Machinery and equipment Infrastructure

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, 2004

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

$

$

$

546,810 1,784,124 1,150,850 1,429,700 63,057 2,488,650 114,532 7,577,723

1,201,592 60,797 1,201,936 3,017,888 221,806 806,609 233,911 50,215 9,740,110 45,891 52,329 34,767

2,528,847 $ 19,196,698

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, 2004

(8) 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, 2004, $5,250,000 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 $8,542,067 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 Special Revenue Source Fund: Settlement proceeds Disaster Relief Fund: Receivable from FEMA Receivable/advances from OES Total Disaster Relief Fund Downtown Redevelopment Project Fund: Lease payments (1) Nonmajor governmental funds: Other receivables Interest on advances Total nonmajor governmental funds:

$

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 Civic Auditorium Fund: Rental advances Pier Fund: Rental advances Total enterprise funds Total deferred revenue

$

11,694,308 608,041 12,302,349

Eliminate interfund activity

(11,694,308) — (11,694,308)

Recognized in government-wide financials

Government-wide financial statements

— — —

— 608,041 608,041 45,370,618

45,370,618

—

—

7,762,982 779,085 8,542,067

— — —

(7,762,982) (779,085) (8,542,067)

— — —

5,250,000

(5,250,000)

—

—

53,388 4,367,510 4,420,898

— (4,367,510) (4,367,510)

— — —

75,885,932

(21,311,818)

(8,542,067)

53,388 — 53,388 46,032,047

222,351

—

—

222,351

6,835,274 7,057,625

— —

— —

6,835,274 7,057,625

214,334

—

—

214,334

10,505 7,282,464

— —

— —

10,505 7,282,464

(8,542,067)

53,314,511

83,168,396

(21,311,818)

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

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2004

(9)

LONG-TERM LIABILITIES Changes in long-term liabilities: Long-term liability activity for the year ended June 30, 2004, was as follows: Balance at July 1, 2003 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 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 Compensated absences Claims payable Subtotal business-type activities Total

$ 46,235,000 81,840,000 28,170,000 (66,729) 119,130 (630,073) 155,667,328 6,405,736 23,144,126 185,217,190

Additions — — — — — — — 4,782,649 11,357,160 16,139,809

Reductions

Balance at June 30, 2004

Due within one year

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

44,775,000 79,975,000 26,615,000

2,095,000 1,950,000 1,580,000

(4,398) 6,896 (62,569) 4,819,929 4,384,846 7,866,095 17,070,870

(62,331) 112,234 (567,504) 150,847,399 6,803,539 26,635,191 184,286,129

— — — 5,625,000 4,680,800 8,753,366 19,059,166

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

— — —

350,000 281,214 1,005,000

1,570,000 4,343,865 32,335,000

365,000 236,647 1,130,000

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

— — — 1,674,814 1,368,604 3,043,418

(9,920) (185,826) 1,440,468 1,698,553 657,447 3,796,468

(457,118) (2,713,594) 35,078,153 2,197,408 2,031,893 39,307,454

— — 1,731,647 1,695,944 764,557 4,192,148

$ 225,277,694

19,183,227

20,867,338

223,593,583

23,251,314

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2004

A summary of long-term debt 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 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, 2004

$

5,250,000 10,480,000 12,385,000 16,660,000 44,775,000

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%

18,450,000 61,525,000 79,975,000

June 25, 1998 Aug 27, 2002

3,060,000 25,000,000

July 1, 2010 July 1, 2022

4.00-4.30% 2.00-4.60%

2,865,000 23,750,000 26,615,000 151,365,000

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%

32,335,000 1,570,000

1,305,444

July 1, 2010

6.50-7.40%

155,522

$ 5,000,000

July 1, 2019

2.60%

Management believes it is in compliance with all debt covenants. For governmental activities, compensated absences are generally liquidated from the general fund.

4,188,343 4,343,865 38,248,865 $ 189,613,865

CITY OF SANTA MONICA CALIFORNIA Notes to Basic Financial Statements, Continued Year Ended June 30, 2004

Annual debt service requirements to maturity are as follows: Governmental activities Fiscal year ended June 30, 2005 2006 2007 2008 2009 2010-2014 2015-2019 2020-2024 2025-2029 2030-2034

Revenue bonds Principal Interest $

$

2,095,000 2,870,000 2,970,000 3,070,000 3,185,000 11,695,000 12,255,000 6,635,000 — — 44,775,000

1,879,604 1,797,571 1,699,560 1,593,044 1,476,891 5,893,789 3,059,769 516,318 — — 17,916,546

Tax allocation bonds Principal Interest

General obligation bonds Principal Interest

1,950,000 2,040,000 2,125,000 2,210,000 2,340,000 13,965,000 18,230,000 14,020,000 18,665,000 4,430,000 79,975,000

1,580,000 1,605,000 1,630,000 1,660,000 1,685,000 7,205,000 6,250,000 5,000,000 — — 26,615,000

4,447,644 4,363,676 4,276,610 4,168,056 4,034,925 17,864,105 13,503,565 9,066,855 4,259,250 132,900 66,117,586

1,000,844 961,966 921,899 878,203 823,327 3,215,024 1,943,125 571,250 — — 10,315,638

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

— — — — — — — — — — —

Total Principal

Interest

5,625,000 6,515,000 6,725,000 6,940,000 7,210,000 32,865,000 36,735,000 25,655,000 18,665,000 4,430,000 151,365,000

7,328,092 7,123,213 6,898,069 6,639,303 6,335,143 26,972,918 18,506,459 10,154,423 4,259,250 132,900 94,349,770

Business-type activities Fiscal year ended June 30, 2005 2006 2007 2008 2009 2010-2014 2015-2019 2020-2024

Revenue bonds Principal Interest $

$

1,130,000 1,190,000 1,255,000 1,330,000 1,405,000 8,260,000 10,350,000 7,415,000 32,335,000

1,470,675 1,419,825 1,366,275 1,303,525 1,237,025 5,109,314 3,043,225 645,325 15,595,189

Certificates of Participation Principal Interest 365,000 385,000 400,000 420,000 — — — — 1,570,000

74,447 55,130 34,320 11,760 — — — — 175,657

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

— — — — — — — — —

Loans payable Principal Interest 236,647 242,221 247,941 253,810 259,831 1,328,447 1,459,841 315,127 4,343,865

119,339 112,272 105,060 97,700 90,187 337,088 156,783 8,193 1,026,622

Total Principal 1,731,647 1,817,221 1,902,941 2,003,810 1,664,831 9,588,447 11,809,841 7,730,127 38,248,865

Interest 1,664,461 1,587,227 1,505,655 1,412,985 1,327,212 5,446,402 3,200,008 653,518 16,797,468

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

(10) FUND DEFICITS Special Revenue Funds. A deficit fund balance in the amount of $687,421 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 $6,521,063 exists in the Disaster Relief Fund. Recognition of deferred revenue related to FEMA receivables is expected to alleviate this deficit fund balance. Capital Projects Fund. A deficit fund balance in the amount of $13,792,541 exists in the Downtown Redevelopment Project Fund. This fund balance deficit is primarily due to interest expense on advances from the General fund. Management plans to use future tax increment revenues to pay off the advances and eliminate this fund deficit. Enterprise Fund. A net deficit in the amount of $641,871 exists in the Cemetery Fund due to reductions in revenue compared to previous years. The deficit is expected to be funded by increased operating and investment revenues. Internal Service Funds. A net deficit in the amount of $8,917,118 exists in the Self-Insurance Workers’ Compensation Fund and a net deficit in the amount of $480,930 exists in the Self-Insurance Comprehensive Fund. These deficits are primarily due to adverse development on new and existing claims related to prior years. Management expects to alleviate these net deficits by increasing future user charges, instituting cost containment measures, and continuing evaluation of reserve balances. Additionally, a $5,000,000 contribution from the General Fund to the Self Insurance Worker’s Compensation Fund is budgeted in FY 04-05. (11)

INTERFUND TRANSACTIONS The following tables summarize the due to/from other funds, interfund advances to/from, and transfers in/out at June 30, 2004: Due to/from Due to/from other funds at June 30, 2004 are as follows: Due from (receivable fund) General Fund Nonmajor enterprise fund Nonmajor enterprise fund

Due to (payable fund) Nonmajor special revenue fund Special Revenue Source Fund Earthquake Redevelopment Project Fund Total due to/from

$

$

Amount 159,768 8,162,740 958,016 9,280,524

During the previous 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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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, 2004 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 Nonmajor enterprise funds Total General Fund Earthquake Recovery Project Fund Nonmajor governmental funds General Fund Disaster Relief Special Revenue Fund Nonmajor enterprise funds Total advances to/from

$

$

Amount 16,709,912 5,343,161 8,256,146 30,309,219 3,465,452 5,891,614 1,500,188 8,195,262 88,875 49,450,610

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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

Transfers Transfers to/from other funds at June 30, 2004 are as follows: Transfer in (receivable fund) General Fund

Nonmajor governmental funds

Wastewater Fund

Big Blue Bus Fund

Nonmajor enterprise funds

Internal service funds

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

$

$

Amount 208,984 220,683 7,088,927 136,000 835,235 1,757,152 10,246,981 5,400,829 1,163,327 6,236,792 12,800,948 41,308 2,798,050 2,839,358 237,070 500,102 737,172 10,697,114 250,000 411,529 58,000 931,045 12,347,688 427,300 39,399,447

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. (12) RESTRICTED NET ASSETS Restricted net assets are net assets whose use is subject to constraints externally imposed. The following categories of net assets are restricted as to use by agreements with creditors, developers, grantors, or laws or regulations of other governments: debt service, 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, MTBE settlement, 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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

Net assets for governmental activities at June 30, 2004, 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 MTBE settlement

$

13,479,309 840,583 14,695,276 17,536,081 17,987,024 310,381 2,289,289 183,356 38,109,281 407,950 2,056,060 8,504,106 61,800,100

Net assets restricted for all other purposes

$

178,198,796

Perpetual care - nonexpendable

$

7,433,596

Net assets for business-type activities at June 30, 2004, totaling $34,145,541 are restricted for construction of a rail system. (13) 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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

In governmental funds, fund reservations are presented as a component of fund balances as follows: Special revenue funds

General Fund Reserved fund balances Prepaids and inventory Advances to other funds Encumbrances Cash liquidity Mall assessment district Library general obligation bonds Notes receivable Specific continuing capital projects Asset Seizure Traffic mitigation Long-term receivable from state Rail construction Low- and moderate-income housing Childcare center Parks Traffic Arts Third street mall/downtown parking Animal shelter Homeless contributions Roads MTBE settlement Debt service Perpetual care Total reserved fund balances

$

$

1,395,884 17,114,723 3,119,485 3,546,996 383,865 7,728,452 1,776,824 73,188,674 — 4,466,653 — — — — — — — — — — — — — — 112,721,556

Special Revenue Source Fund — — — — — — 6,036,933 14,750,471 — — — — 1,076,256 535,631 263,030 4,557,299 83,358 3,524,171 21,456 250,288 171,816 61,800,100 — — 93,070,809

Disaster Relief Fund 560 — — — — — — — — — 158,222 — — — — — — — — — — — — — 158,782

Capital projects funds Downtown Redevelopment Project Fund — — — — — — — 1,758,244 — — — — — — — — — — — — — — — — 1,758,244

Other governmental funds 15,763 6,489,744 25,749 — — — 33,562,377 35,631,185 393,193 — — 3,622,273 830,559 — — 183,356 — — — — 5,650,307 — 13,479,309 7,433,596 107,317,411

Total governmental funds 1,412,207 23,604,467 3,145,234 3,546,996 383,865 7,728,452 41,376,134 125,328,574 393,193 4,466,653 158,222 3,622,273 1,906,815 535,631 263,030 4,740,655 83,358 3,524,171 21,456 250,288 5,822,123 61,800,100 13,479,309 7,433,596 315,026,802

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. 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. 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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

Library General Obligation Bonds Reflects the balance of bond proceeds plus accumulated interest at June 30, 2004, which is legally restricted for the construction, improvement and remodeling of the Santa Monica Public Libraries. Notes Receivable Reflects the balances due on loans that are long-term in nature and do not represent available expendable resources of the City. Specific Continuing Capital Projects Reflects the amount needed to fund the full cost of uncompleted capital projects at June 30, 2004. Asset Seizure Represents amounts from equitable sharing program funds to be used for public safety. 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 moderateincome housing. Childcare Center Represents unspent balance of developer fees restricted for future childcare center. Parks Represents unspent balance of developers fees restricted for parks projects. Traffic Represents balance of developer fees restricted for traffic mitigation projects. Arts Represents balance of funds received from various sources to be used for arts projects. Third Street Mall/Downtown Parking Represents balance of funds received from various sources to be used for Third Street mall/downtown parking. Animal Shelter Represents unspent balance of contributions from citizens that are restricted for use for the City’s Animal Shelter.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

Homeless Contributions Represents balance of funds received from various sources to be used for homeless services. Roads Represents balance of funds received from various sources for road projects. Debt Service Represents balance of funds held by trustees for future debt service and associated payments in the Debt Service and Capital Projects Funds. MTBE Settlement Represents funds received from lawsuit related to MTBE contamination of City’s water. 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. In governmental funds, fund designations are presented as a component of fund balances as follows: Special revenue funds

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 Low- and moderate-income housing Rent control Affordable housing Consumer protection funds Cable Public safety facility & swim center maintenance Environmental mitigation Capital improvements project start-up Employee training Comprehensive land use plan Planning and Community Development Total designated fund balances

$

$

1,983,808 30,806 6,451,786 4,433,552 180,000 12,988,417 370,845 3,320,718 179,168 500,000 45,537 — — 46,413 — 838,542 5,400,000 1,925,000 150,000 1,900,000 2,000,000 42,744,592

Special Revenue Source Fund — — — — — — 37,836 — — — — — — — 2,000,000 — — — — — — 2,037,836

Other governmental funds — — 186,616 — — — — — — — 772,376 58,975 371,109 — — — — — — — — 1,389,076

Total governmental funds 1,983,808 30,806 6,638,402 4,433,552 180,000 12,988,417 408,681 3,320,718 179,168 500,000 817,913 58,975 371,109 46,413 2,000,000 838,542 5,400,000 1,925,000 150,000 1,900,000 2,000,000 46,171,504

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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. 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. Low- and Moderate-Income Housing Represents funds designated by Council for low- and moderate-income housing. Rent Control Represents funds designated by the Rent Control Board to provide for operations uncertainties and the future replacement of certain equipment. 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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

Consumer Protection Funds Represents funds designated for use by the City Attorney’s Office for consumer protection. Cable Represents settlement funds from Adelphia Communications Corporation for purposes including, but not limited to, cable related uses beneficial to the community. Public Safety Facility and Swim Center Maintenance Represents funds designated for maintenance of the new swim center and public safety facility. Environmental Mitigation Represents funds designated for environmental mitigation. Capital Improvements Program Project Start-up Represents funds designated for capital improvements projects related to the library, Virginia Avenue Park, Civic Center Courthouse mitigation and murals. Employee Training Represents funds designated for employee training. Comprehensive Land Use Plan Represents funds for a comprehensive land use plan. Planning and Community Development Represents funds for Planning and Community Development including permit center trailers in City Hall Courtyard. (14) LITIGATION AND CONTINGENCIES Litigation Several lawsuit and claims, arising in the normal course of City operations, were pending at June 30, 2004. 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, 2004 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

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

appropriation and are recorded at year-end as reservations of fund balances. Approximately $105 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, 2004:

Fiscal year ended June 30 2005 2006 2007 2008 2009 2010 - 2014 2015 - 2019 2020 - 2024 2025 - 2029 2030 - 2034 2035 - 2039 2040 - 2044 2045 - 2049 2050 - 2054 2055 - 2059 2060 - 2064 2065 - 2069

$

Rental revenue

Lease payments

6,318,367 3,512,894 3,135,039 2,802,664 2,678,097 11,976,841 15,081,498 15,021,295 14,277,302 12,639,098 12,073,292 12,073,292 12,073,292 12,073,292 12,073,292 12,073,292 12,073,292

1,420,660 1,273,739 407,039 411,113 415,555 452,415 173,967 − − − − − − − − − −

The total long-term lease rental revenues and expenditures/expenses for the year ended June 30, 2004, were $2,746,841 and $1,061,252, respectively. (15) SELF INSURANCE The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and others; 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 mediumsize California municipalities. The City retains self-insurance up to $1,000,000 for general liability , automobile liability, bus operations liability and workers’ compensation. ACCEL covers up to $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.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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, 2004, the City had $3,041,423 (18.9% of total) on deposit with ACCEL’s total assets at June 30, 2004 were $18,879,098. 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, 2004, based on interest rates ranging from 2.3% to 5.2%. 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:

Fund June 30, 2003: Comprehensive Bus Automobile Workers' Compensation June 30, 2004: Comprehensive Bus Automobile Workers' Compensation

Current-year claims and changes in Beginning of year estimates

Claims payments

End of year

Due within one year

$

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

$

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

2,459,258 1,368,604 173,584 8,724,318

(1,074,841) (657,447) (210,723) (6,580,531)

6,034,042 2,031,893 266,769 20,334,380

1,293,872 764,557 103,403 7,356,091

$

24,464,862

12,725,764

(8,523,542)

28,667,084

9,517,923

(16) EMPLOYEE BENEFIT PROGRAMS Santa Monica Public Employees’ Retirement Plan The City’s defined benefit pension plan, Santa Monica Public Employees’ Retirement Plan (“Plan”) provides retirement and disability benefits, annual cost-of living adjustments, and death benefits to plan members and beneficiaries. The Plan is part of the Public Agency portion of the California Public Employees Retirement System (“CalPERS”), an agent multiple-employer plan administered by Cal PERS, which acts as a common investment and administrative agent for participating public employers within the State of California. State statutes within the Public Employees’ Retirement Law establish a menu of benefit provisions as well as other requirements. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through City ordinance.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

CalPERS issue 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 2.4% 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. CalPERS prepare separate actuarial valuations for miscellaneous members, fire safety members and police safety members. The required employer contribution rate for the year ended June 30, 2004 was 19.051% for the period July 1, 2003 through September 20, 2003 and 19.100% for the period September 21, 2003 through June 30, 2004 for fire safety members. The required employer contribution rate was 22.801% for police safety members. The required employer contribution rate was 2.892% 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, 2004, the City’s annual pension cost and actual contributions were $8,471,393. The City also contributed $8,483,104 on behalf of employees. Employees directly contributed $71,081. Total contributions were $17,025,578. The required contribution for the year ended June 30, 2004 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) projected salary increases that vary by duration of service ranging from 3.75% to 14.20% for miscellaneous members (from 4.27% to 11.59% 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 payrolls on a closed basis over a period not to exceed twenty years.

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

Three-Year Trend Information for the Plan (Unaudited) Fiscal year ended June 30 2004 2003 2002

$

Annual pension cost (APC) 8,471,393 1,566,347 2,231,438

Percentage of APC contributed 100% 100% 100%

Net pension obligation — — —

As-Needed Employees Retirement Plan The City had established a non-qualified single-employer defined benefit retirement plan for all employees who were classified “as-needed” and who were not covered by CalPERS or currently receiving benefits from CalPERS. This plan was governed by the rules of Section 457 of the Internal Revenue Code. Vesting was full and immediate. The funding method was pay-as-you-go with employer contributions. There were no employee contributions. Lump sum benefits were payable to eligible employees upon termination of employment from the City. Lump sum payment calculations were based on earnings since January 1, 1992 and employee’s age at time of separation from the City. Lump sum benefits were also payable on an annual basis to active employees who had attained age 70 1/2. No death benefits were payable at any time. This plan was terminated on June 30, 2003 and final benefit payments were made in the current fiscal year. This plan was replaced by a separate deferred compensation plan for public employees under the Omnibus Budget Reconciliation Act (“OBRA”). 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. The City offers to its as-needed employees a separate Section 457 deferred compensation plan under the Omnibus Budget Reconciliation Act (“OBRA”). This plan is available to all as-needed employees who are not eligible to participate in CALPERS. This plan requires equal employer and employee contributions based on a percentage of earnings. These plans are administered through third-party administrators. The City does not perform the investing function and has no fiduciary accountability for the plans. Thus, plan assets and any related liabilities to plan participants have been excluded from the City’s basic financial statements. 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 become eligible for this benefit if they fulfill length of service requirements and have more than 50 or

CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued Year ended June 30, 2004

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 $4,051,278 is based upon current employee data and costs of medical coverage used for fiscal year 2004-05 budget projections. Currently, there are 83 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 2003-04 the City contributed $2,727,331 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, 2004

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, 2001 through 2003 are as follows (valuations for 2004 are not yet available): Miscellaneous Members (dollars in thousands) Valuation date (June 30) 2003 2002 2001

Entry age normal accrued liability $ 296,369 254,118 232,707

Actuarial value of assets $ 273,630 267,687 287,459

Underfunded (overfunded) liability (UAAL) $ 22,740 (13,569) (54,751)

Funded ratio 92.33 % 105.34 123.53

Annual covered payroll $ 80,761 75,491 71,357

UAAL as a percentage of payroll 28.16 % (17.97) (76.73)

Funded ratio 85.54 % 86.63 97.14

Annual covered payroll $ 10,071 9,795 9,845

UAAL as a percentage of payroll 146.15 % 136.85 27.78

Funded ratio 80.29 % 84.38 94.27

Annual covered payroll $ 17,622 17,066 16,691

UAAL as a percentage of payroll 198.71 % 154.48 55.27

Fire Safety Members (dollars in thousands) Valuation date (June 30) 2003 2002 2001

Entry age normal accrued liability $ 101,773 100,256 95,752

Actuarial value of assets $ 87,054 86,852 93,017

Underfunded (overfunded) liability (UAAL) $ 14,719 13,404 2,735 Police Safety Members (dollars in thousands)

Valuation date (June 30) 2003 2002 2001

Entry age normal accrued liability $ 177,691 168,756 161,011

Actuarial value of assets $ 142,674 142,392 151,785

Underfunded (overfunded) liability (UAAL) $ 35,017 26,364 9,226

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. 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. 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. 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, 2004

Total special revenue funds

Assets 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

Total capital projects funds

Total debt service funds

Total permanent funds

Total nonmajor governmental funds

26,843,468

40,644,248

—

7,922

67,495,638

86,077 29,839,931 — 145,496 1,218,873 15,763 — 9,357,066

— 3,722,744 600,143 175,132 — — 7,971,734 1,500,188

— — — — — — 13,479,309 —

32,808 — — — — — 7,392,866 —

118,885 33,562,675 600,143 320,628 1,218,873 15,763 28,843,909 10,857,254

$

67,506,674

54,614,189

13,479,309

7,433,596

143,033,768

$

1,291,456 271,780 400,000 604,176 159,768 368,381 4,420,898 1,742 3,842,973

446,136 — — 5,510,268 958,016 3,019,150 — — 10,857,254

— — — — — — — — —

— — — — — — — — —

1,737,592 271,780 400,000 6,114,444 1,117,784 3,387,531 4,420,898 1,742 14,700,227

Total liabilities

11,361,174

20,790,824

—

—

32,151,998

Fund balances: Reserved Unreserved - designated Unreserved - undesignated

46,717,977 1,389,076 8,038,447

39,686,529 — (5,863,164)

13,479,309 — —

7,433,596 — —

107,317,411 1,389,076 2,175,283

56,145,500

33,823,365

13,479,309

7,433,596

110,881,770

67,506,674

54,614,189

13,479,309

7,433,596

143,033,768

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 For the fiscal year ended June 30, 2004

Revenues: Incremental property taxes Other taxes Licenses and permits Intergovernmental Charges for services Investment income Rental income Other

$

Total revenues Expenditures: Current: General government Public safety General services Cultural and recreation services Housing and community development Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year, Fund balances at end of year

$

Total special revenue funds

Total capital projects funds

— 2,869,375 253,371 19,642,907 8,783,433 507,884 126,962 1,073,649

34,653,601 — — — — 514,651 — 119,494

— — — — — 125,877 — —

— — — — 44,765 561,623 — —

34,653,601 2,869,375 253,371 19,642,907 8,828,198 1,710,035 126,962 1,193,143

33,257,581

35,287,746

125,877

606,388

69,277,592

386,489 1,031,447 4,255,117 4,928,627 16,597,812

— — — — 24,225,590

— — — — —

— — — — —

386,489 1,031,447 4,255,117 4,928,627 40,823,402

— —

— 1,191,455

4,880,000 7,497,764

— —

4,880,000 8,689,219

27,199,492

25,417,045

12,377,764

—

64,994,301

6,058,089

9,870,701

(12,251,887)

606,388

4,283,291

— (6,624,551)

— (7,391,170)

12,800,948 —

— (262,937)

12,800,948 (14,278,658)

(6,624,551)

(7,391,170)

12,800,948

(262,937)

(1,477,710)

Total debt service funds

Total permanent funds

Total nonmajor governmental funds

(566,462)

2,479,531

549,061

343,451

2,805,581

56,711,962

31,343,834

12,930,248

7,090,145

108,076,189

56,145,500

33,823,365

13,479,309

7,433,596

110,881,770

CITY OF SANTA MONICA, CALIFORNIA Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2004

Community Development Block Grant

Miscellaneous Grants

7,818,804

—

8,041,800

7,138 — 2,310 183,815 10,024 —

11,196 6,822,110 43,166 — — —

3,292 16,172,187 1,978 209,452 — 6,238,166

33,563 6,845,634 52,221 797,474 — 3,118,900

1,112,574

14,695,276

22,625,075

18,889,592

373,384 60,470 — — — — — 1,742 3,842,973

271,991 — — — — — — — —

— — — — — — — — —

— — — 193,335 159,768 368,381 4,367,510 — —

45,207 2,267 400,000 401,706 — — 53,388 — —

Total liabilities

4,278,569

271,991

—

5,088,994

902,568

Fund balances: Reserved Unreserved - designated Unreserved - undesignated

535,946 — (1,223,367)

840,583 — —

6,822,110 371,109 7,502,057

18,042,545 — (506,464)

17,214,648 772,376 —

(687,421)

840,583

14,695,276

17,536,081

17,987,024

$ 3,591,148

1,112,574

14,695,276

22,625,075

18,889,592

Beach Recreation

Housing Authority

$ 3,544,876

909,287

30,888 — 15,384 — — — $ 3,591,148

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

Asset Seizure

Total nonmajor special revenue funds

Rent Control

AQMD

309,674

2,501,210

154,664

574,784

922,026

2,066,343

26,843,468

— — 707 — — —

— — 14,857 — 5,739 —

— — 560 28,132 — —

— — 2,497 — — —

— — 2,951 — — —

— — 8,865 — — —

86,077 29,839,931 145,496 1,218,873 15,763 9,357,066

310,381

2,521,806

183,356

577,281

924,977

2,075,208

67,506,674

— — — — — — — — —

23,474 209,043 — — — — — — —

— — — — — — — — —

50,360 — — — — — — — —

517,027 — — — — — — — —

10,013 — — 9,135 — — — — —

1,291,456 271,780 400,000 604,176 159,768 368,381 4,420,898 1,742 3,842,973

—

232,517

—

50,360

517,027

19,148

11,361,174

310,381 — —

16,239 245,591 2,027,459

183,356 — —

288,159 — 238,762

407,950 — —

2,056,060 — —

46,717,977 1,389,076 8,038,447

310,381

2,289,289

183,356

526,921

407,950

2,056,060

56,145,500

310,381

2,521,806

183,356

577,281

924,977

2,075,208

67,506,674

Gas Tax

CITY OF SANTA MONICA, CALIFORNIA Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) Nonmajor Special Revenue Funds For the fiscal year ended June 30, 2004

Community Development Block Grant

Beach Recreation

Housing Authority

— 253,371 — 5,267,852 47,868 103,570 651,085

— — 13,569,246 — 3,232 — 54,702

849,811 — — — 158,186 — —

— — 1,887,744 — 92,436 — —

1,931,764 — 2,364,323 — 111,390 — 231,000

Total revenues

6,323,746

13,627,180

1,007,997

1,980,180

4,638,477

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

291,250 — 2,031,217 2,097,227 —

— — — — 12,494,841

— — — — 102,082

— — — 2,089,078 159,713

94,574 401,557 1,568,945 626,880 202,197

Total expenditures

4,419,694

12,494,841

102,082

2,248,791

2,894,153

Excess (deficiency) of revenues over expenditures

1,904,052

1,132,339

905,915

(268,611)

1,744,324

(1,388,831)

(1,195,928)

(61,800)

(668,512)

(1,683,715)

Total other financing (uses)

(1,388,831)

(1,195,928)

(61,800)

(668,512)

(1,683,715)

Net change in fund balances

515,221

(63,589)

844,115

(937,123)

60,609

(1,202,642)

904,172

13,851,161

18,473,204

17,926,415

(687,421)

840,583

14,695,276

17,536,081

17,987,024

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

$

Other financing (uses): Transfers out

Fund balances (deficits) at beginning of year, as restated Fund balances (deficits) at end of year

$

TORCA

Miscellaneous Grants

Citizens Option for Public Safety

Rent Control

AQMD

Parks and Recreation

Asset Seizure

Gas Tax

Total nonmajor special revenue funds

— — 133,024 — 3,228 — —

— — — 3,515,581 48,177 — 5,942

— — — — 1,283 — 111,010

87,800 — — — 6,388 — —

— — 48,684 — 7,168 — —

— — 1,639,886 — 28,528 23,392 19,910

2,869,375 253,371 19,642,907 8,783,433 507,884 126,962 1,073,649

136,252

3,569,700

112,293

94,188

55,852

1,711,716

33,257,581

— 4,694 — — —

— — — — 3,580,808

665 — — — 58,171

— — — 115,442 —

— 625,196 — — —

— — 654,955 — —

386,489 1,031,447 4,255,117 4,928,627 16,597,812

4,694

3,580,808

58,836

115,442

625,196

654,955

27,199,492

131,558

(11,108)

53,457

(21,254)

(569,344)

1,056,761

6,058,089

—

—

—

—

—

(1,625,765)

(6,624,551)

—

—

—

—

—

(1,625,765)

(6,624,551)

131,558

(11,108)

53,457

(21,254)

(569,344)

(569,004)

(566,462)

178,823

2,300,397

129,899

548,175

977,294

2,625,064

56,711,962

310,381

2,289,289

183,356

526,921

407,950

2,056,060

56,145,500

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, 2004

Budget Revenues: Licenses and permits Charges for services Investment income Rental income Other

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance – positive (negative)

212,813 5,033,179 51,000 103,600 543,226

253,371 5,267,852 47,868 103,570 651,085

— — — — —

— — — — —

253,371 5,267,852 47,868 103,570 651,085

40,558 234,673 (3,132) (30) 107,859

Total revenues

5,943,818

6,323,746

—

—

6,323,746

379,928

Expenditures: General government: Capital improvement

369,830

291,250

—

—

291,250

78,580

369,830

291,250

—

—

291,250

78,580

1,207,306 823,911

1,207,306 823,911

— —

— —

1,207,306 823,911

— —

2,031,217

2,031,217

—

—

2,031,217

—

250,000

—

—

—

—

250,000

2,281,217

2,031,217

—

—

2,031,217

250,000

1,529,309

1,539,867

11,051

493

1,529,309

—

764,235

557,360

—

90,511

647,871

116,364

2,293,544

2,097,227

11,051

91,004

2,177,180

116,364

4,944,591

4,419,694

11,051

91,004

4,499,647

444,944

999,227

1,904,052

(11,051)

(91,004)

1,824,099

824,872

(1,480,500)

(1,388,831)

—

—

(1,388,831)

91,669

Total general government General services: Environmental and public works management Salaries Supplies Capital improvement Total general services Cultural and recreation services: Community and cultural services Supplies Capital improvement Total cultural and recreation services Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses) – transfers out

$

Actual

Less 2002-2003 encumbered expenditures

Net change in fund balance

(481,273)

515,221

(11,051)

(91,004)

435,268

916,541

Fund balance (deficit) at beginning of year

(1,202,642)

(1,202,642)

—

—

(1,202,642)

—

$ (1,683,915)

(687,421)

(11,051)

(91,004)

(767,374)

916,541

Fund balance (deficit) at end of year

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, 2004

Budget Revenues: Intergovernmental Investment income Other

Plus 2003-2004 encumbrances *

Actual, budgetary basis

Variance – positive (negative)

$ 12,408,100 16,000 —

13,569,246 3,232 54,702

— — —

— — —

13,569,246 3,232 54,702

1,161,146 (12,768) 54,702

12,424,100

13,627,180

—

—

13,627,180

1,203,080

12,488,741 6,100

12,488,741 6,100

— —

— —

12,488,741 6,100

— —

12,494,841

12,494,841

—

—

12,494,841

—

(70,741)

1,132,339

—

—

1,132,339

1,203,080

(1,195,928)

(1,195,928)

—

—

(1,195,928)

—

(1,266,669)

(63,589)

—

—

(63,589)

1,203,080

904,172

904,172

—

—

904,172

—

(362,497)

840,583

—

—

840,583

1,203,080

Total revenues Expenditures: Housing and community development: Supplies Capital improvement Total housing and community development 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 2002-2003 encumbered expenditures*

$

* No encumbrances were outstanding at June 30, 2003 and 2004.

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, 2004

Budget Revenues: Other taxes Investment income

$

Total revenues Expenditures: Housing and community development: Supplies Capital improvement Total housing and community development 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, 2003.

$

Actual

Less 2002-2003 encumbered expenditures *

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance – positive (negative)

200,000 100,000

849,811 158,186

— —

— —

849,811 158,186

649,811 58,186

300,000

1,007,997

—

—

1,007,997

707,997

2,717 10,361,643

2,717 99,365

— —

— 171,302

2,717 270,667

— 10,090,976

10,364,360

102,082

—

171,302

273,384

10,090,976

(10,064,360)

905,915

—

(171,302)

734,613

10,798,973

(61,800)

(61,800)

—

—

(61,800)

—

(10,126,160)

844,115

—

(171,302)

672,813

10,798,973

13,851,161

13,851,161

—

—

13,851,161

—

3,725,001

14,695,276

—

(171,302)

14,523,974

10,798,973

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, 2004

Budget Revenues Intergovernmental Investment income

Actual, budgetary basis

Variance – positive (negative)

1,887,744 92,436

— —

— —

1,887,744 92,436

(1,867,687) 27,436

3,820,431

1,980,180

—

—

1,980,180

(1,840,251)

100,000

—

—

—

—

100,000

100,000

—

—

—

—

100,000

2,568,130

2,089,078

—

14,292

2,103,370

464,760

2,568,130

2,089,078

—

14,292

2,103,370

464,760

72,100 589,836

72,100 87,613

— —

— 616

72,100 88,229

— 501,607

661,936

159,713

—

616

160,329

501,607

3,330,066

2,248,791

—

14,908

2,263,699

1,066,367

490,365

(268,611)

—

(14,908)

(283,519)

(773,884)

(749,567)

(668,512)

—

—

(668,512)

81,055

Expenditures: General Services: Environmental and public works management Capital improvement Total general services Cultural and recreation services: Community and cultural services Capital improvement Total cultural and recreation services Housing and community development: Supplies Capital improvement Total housing and community development

Total expenditures Excess (deficiency) of revenues over expenditures Other financing (uses) – transfers out Net change in fund balance

Fund balance at end of year

Plus 2003-2004 encumbrances*

$ 3,755,431 65,000

Total revenues

Fund balance at beginning of year

Actual

Less 2002-2003 encumbered expenditures*

(259,202)

(937,123)

—

(14,908)

(952,031)

(692,829)

18,473,204

18,473,204

—

—

18,473,204

—

$ 18,214,002

17,536,081

—

(14,908)

17,521,173

(692,829)

* No encumbrances were outstanding at June 30, 2003 and 2004.

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, 2004

Budget Revenues: Other taxes Intergovernmental Investment income Other

$

Actual

Less 2002-2003 encumbered expenditures*

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance – positive (negative)

1,910,497 8,785,523 300,000 —

1,931,764 2,364,323 111,390 231,000

— — — —

— — — —

1,931,764 2,364,323 111,390 231,000

21,267 (6,421,200) (188,610) 231,000

Total revenues

10,996,020

4,638,477

—

—

4,638,477

(6,357,543)

Expenditures: General government: Capital improvement

7,569,285

94,574

—

22,363

116,937

7,452,348

7,569,285

94,574

—

22,363

116,937

7,452,348

Public safety: Supplies Capital improvement

51,337 525,482

34,354 367,203

— —

— 78,173

34,354 445,376

16,983 80,106

Total public safety

576,819

401,557

—

78,173

479,730

97,089

12,442,275

1,568,945

—

723,649

2,292,594

10,149,681

12,442,275

1,568,945

—

723,649

2,292,594

10,149,681

12,566,647

626,880

—

1,759,889

2,386,769

10,179,878

12,566,647

626,880

—

1,759,889

2,386,769

10,179,878

3,100 2,484,645

— 202,197

— —

— —

— 202,197

3,100 2,282,448

2,487,745

202,197

—

—

202,197

2,285,548

35,642,771

2,894,153

—

2,584,074

5,478,227

30,164,544

(24,646,751)

1,744,324

—

(2,584,074)

(839,750)

23,807,001

Total general government

General services: Environmental and public works management Capital improvement Total general services Cultural and recreation services: Communiy and cultural services Capital improvement Total cultural and recreation services Housing and community development: Supplies Capital improvement Total housing and community development 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, 2003.

$

(1,683,715)

(1,683,715)

—

—

(1,683,715)

—

(26,330,466)

60,609

—

(2,584,074)

(2,523,465)

23,807,001

17,926,415

17,926,415

—

—

17,926,415

—

(8,404,051)

17,987,024

—

(2,584,074)

15,402,950

23,807,001

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, 2004

Budget Revenues: Intergovernmental Investment income

$

Total revenues Expenditures Public safety: Capital improvement Total expenditures Net change in fund balance Fund balance at beginning of year Fund balance at end of year * No encumbrances were outstanding at June 30, 2003.

$

Actual

Less 2002-2003 encumbered expenditures*

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance – positive (negative)

133,024 2,500

133,024 3,228

— —

— —

133,024 3,228

— 728

135,524

136,252

—

—

136,252

728

312,770

4,694

—

299,998

304,692

8,078

312,770

4,694

—

299,998

304,692

8,078

(177,246)

131,558

—

(299,998)

(168,440)

8,806

178,823

178,823

—

—

178,823

—

1,577

310,381

—

(299,998)

10,383

8,806

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, 2004

Revenues: Charges for services Investment income Other

$

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

$

Less 2002-2003 encumbered expenditures

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance – positive (negative)

Budget

Actual

3,488,700 98,373 4,000

3,515,581 48,177 5,942

— — —

— — —

3,515,581 48,177 5,942

26,881 (50,196) 1,942

3,591,073

3,569,700

—

—

3,569,700

(21,373)

3,084,269 741,555 50,757

3,002,397 548,822 29,589

— 10,500 —

— 10,500 —

3,002,397 548,822 29,589

81,872 192,733 21,168

3,876,581

3,580,808

10,500

10,500

3,580,808

295,773

(285,508)

(11,108)

(10,500)

(10,500)

(11,108)

274,400

2,300,397

2,300,397

—

—

2,300,397

—

2,014,889

2,289,289

(10,500)

(10,500)

2,289,289

274,400

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, 2004

Budget Revenues: Investment income Other

$

Actual

Less 2002-2003 encumbered expenditures*

Plus 2003-2004 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

10,000 100,500

1,283 111,010

— —

— —

1,283 111,010

(8,717) 10,510

110,500

112,293

—

—

112,293

1,793

174,993

665

—

—

665

174,328

Total general government

174,993

665

—

—

665

174,328

Housing and community development: Salaries Supplies

56,011 2,160

56,011 2,160

— —

— —

56,011 2,160

— —

58,171

58,171

—

—

58,171

—

233,164

58,836

—

—

58,836

174,328

(122,664)

53,457

—

—

53,457

176,121

129,899

129,899

—

—

129,899

—

7,235

183,356

—

—

183,356

176,121

Total revenues Expenditures: General government: Capital improvement

Total housing and community development Total expenditures Net change in fund balance Fund balance at beginning of year Fund balance at end of year

$

* No encumbrances were outstanding at June 30, 2003 and 2004.

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, 2004

Budget Revenues: Other taxes Investment income

$

Total revenues Expenditures: Cultural and recreation Capital improvement Total cultural and recreation Net change in fund balance Fund balance at beginning of year Fund balance at end of year * No encumbrances were outstanding at June 30, 2003.

$

Actual

Less 2002-2003 encumbered expenditures*

Plus 2003-2004 encumbrances

Actual, budgetary basis

Variance – positive (negative)

31,200 7,000

87,800 6,388

— —

— —

87,800 6,388

56,600 (612)

38,200

94,188

—

—

94,188

55,988

403,601

115,442

—

287,759

403,201

400

403,601

115,442

—

287,759

403,201

400

(365,401)

(21,254)

—

(287,759)

(309,013)

56,388

548,175

548,175

—

—

548,175

—

182,774

526,921

—

(287,759)

239,162

56,388

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, 2004

Revenues: Intergovernmental Investment income Rental income Other

Actual, budgetary basis

Variance – positive (negative)

Actual

1,597,765 40,000 28,000 —

1,639,886 28,528 23,392 19,910

— — — —

— — — —

1,639,886 28,528 23,392 19,910

42,121 (11,472) (4,608) 19,910

1,665,765

1,711,716

—

—

1,711,716

45,951

1,800 686,902

1,647 653,308

— —

— 33,594

1,647 686,902

153 —

688,702

654,955

—

33,594

688,549

153

977,063

1,056,761

—

(33,594)

1,023,167

46,104

(1,625,765)

(1,625,765)

—

—

(1,625,765)

—

(648,702)

(569,004)

—

(33,594)

(602,598)

46,104

2,625,064

2,625,064

—

—

2,625,064

—

1,976,362

2,056,060

—

(33,594)

2,022,466

46,104

Total revenues Expenditures: General services: Supplies Capital improvements Total general services Excess (deficiency) of revenues over expenditures

Net change in fund balance Fund balance at beginning of year Fund balance at end of year

Plus 2003-2004 encumbrances*

Budget $

Other financing (uses) – transfers out

Less 2002-2003 encumbered expenditures*

$

* No encumbrances were outstanding at June 30, 2003 and 2004.

CITY OF SANTA MONICA, CALIFORNIA Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2004

Low/mod Housing Projects

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

Ocean Park Redevelopment Project

Total nonmajor capital projects funds

7,711,137

30,122,118

2,810,993

40,644,248

1,772,701 120,005 28,625 371,826 —

318,307 443,342 131,457 5,933,980 1,500,188

1,631,736 36,796 15,050 1,665,928 —

3,722,744 600,143 175,132 7,971,734 1,500,188

10,004,294

38,449,392

6,160,503

54,614,189

Liabilities: Accounts payable Contracts payable (retained percentage) Due to other funds Due to other governments Advances from other funds

— — — — 1,500,188

300,159 5,510,268 958,016 3,019,150 3,465,452

145,977 — — — 5,891,614

446,136 5,510,268 958,016 3,019,150 10,857,254

Total liabilities

1,500,188

13,253,045

6,037,591

20,790,824

8,141,143 362,963

26,039,531 (843,184)

5,505,855 (5,382,943)

39,686,529 (5,863,164)

8,504,106

25,196,347

122,912

33,823,365

$ 10,004,294

38,449,392

6,160,503

54,614,189

Total assets

$

Earthquake Recovery Redevelopment Project Fund

Liabilities and Fund Balances

Fund balances: Reserved Undesignated Total fund balances 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, 2004

Total nonmajor capital projects funds

Low/mod Housing Projects

Earthquake Recovery Redevelopment Project Fund

7,511,209 56,519 72,540

24,890,021 418,560 46,954

2,252,371 39,572 —

34,653,601 514,651 119,494

7,640,268

25,355,535

2,291,943

35,287,746

—

6,562,669

—

6,562,669

5,647,655

11,600,036

415,230

17,662,921

5,647,655

18,162,705

415,230

24,225,590

34,967

1,022,292

134,196

1,191,455

Total expenditures

5,682,622

19,184,997

549,426

25,417,045

Excess (deficiency) of revenues over expenditures

1,957,646

6,170,538

1,742,517

9,870,701

(1,383,458)

(4,643,246)

(1,364,466)

(7,391,170)

Total other financing (uses)

(1,383,458)

(4,643,246)

(1,364,466)

(7,391,170)

Net change in fund balances

574,188

1,527,292

378,051

2,479,531

Fund balances (deficit) at beginning of year

7,929,918

23,669,055

(255,139)

31,343,834

8,504,106

25,196,347

122,912

33,823,365

Revenues: Incremental property taxes Investment income Other

$

Total revenues Expenditures: Housing and community development: Payment of property tax increment in accordance with pass-through agreements Capital improvements Total housing and community development Debt service expenditures – interest

Other financing (uses): Transfers out

Fund balances at end of year

$

Ocean Park Redevelopment Project

CITY OF SANTA MONICA, CALIFORNIA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Basis) Low/Moderate Housing Capital Projects Fund Year ended June 30, 2004

Less 2002-2003 encumbered expenditures*

Plus 2003-2004 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

Budget

Actual

7,122,800 236,000 —

7,511,209 56,519 72,540

— — —

— — —

7,511,209 56,519 72,540

388,409 (179,481) 72,540

7,358,800

7,640,268

—

—

7,640,268

281,468

12,614,246

5,647,655

—

—

5,647,655

6,966,591

12,614,246

5,647,655

—

—

5,647,655

6,966,591

43,500

34,967

—

—

34,967

8,533

Total project expenditures

12,657,746

5,682,622

—

—

5,682,622

6,975,124

Excess (deficiency) of revenues over expenditures

(5,298,946)

1,957,646

—

—

1,957,646

7,256,592

(1,772,700)

(1,383,458)

—

—

(1,383,458)

389,242

Total other financing (uses)

(1,772,700)

(1,383,458)

—

—

(1,383,458)

389,242

Net change in fund balance

(7,071,646)

574,188

—

—

574,188

7,645,834

7,929,918

7,929,918

—

—

7,929,918

—

858,272

8,504,106

—

—

8,504,106

7,645,834

Revenues: Incremental property taxes Investment income Other income

$

Total project revenues Expenditures: Housing and community development: Capital improvements Total housing and community development Debt service expenditures – interest

Other financing (uses): Transfers out

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

$

* No encumbrances were outstanding at June 30, 2003 and 2004.

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 Year ended June 30, 2004

Budget Revenues: Incremental property taxes Investment income Other

Actual

Less 2002-2003 encumbered expenditures*

Plus 2003-2004 encumbrance*

Actual, budgetary basis

Variance – positive (negative)

$ 23,399,334 481,600 75,000

24,890,021 418,560 46,954

— — —

— — —

24,890,021 418,560 46,954

1,490,687 (63,040) (28,046)

23,955,934

25,355,535

—

—

25,355,535

1,399,601

6,399,298 35,764,319

6,562,669 11,600,036

— —

— 6,350,542

6,562,669 17,950,578

(163,371) 17,813,741

42,163,617

18,162,705

—

6,350,542

24,513,247

17,650,370

Total project revenues Expenditures: Housing and community development: Payment of property tax increment in accordance with pass-through agreements Capital improvements Total housing and community development Debt service expenditures – interest

1,200,000

1,022,292

—

—

1,022,292

177,708

43,363,617

19,184,997

—

6,350,542

25,535,539

17,828,078

(19,407,683)

6,170,538

—

(6,350,542)

(180,004)

19,227,679

(4,767,700)

(4,643,246)

—

—

(4,643,246)

124,454

Total other financing (uses)

(4,767,700)

(4,643,246)

—

—

(4,643,246)

124,454

Net change in fund balance

(24,175,383)

1,527,292

—

(6,350,542)

(4,823,250)

19,352,133

23,669,055

23,669,055

—

—

23,669,055

—

(506,328)

25,196,347

—

(6,350,542)

18,845,805

19,352,133

Total project expenditures 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, 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 Capital Projects Fund Year ended June 30, 2004

Less 2002-2003 encumbered expenditures*

Plus 2003-2004 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

Budget

Actual

2,182,843 81,500 —

2,252,371 39,572 —

— — —

— — —

2,252,371 39,572 —

69,528 (41,928) —

2,264,343

2,291,943

—

—

2,291,943

27,600

4,664,470

415,230

—

—

415,230

4,249,240

4,664,470

415,230

—

—

415,230

4,249,240

—

134,196

—

—

134,196

(134,196)

4,664,470

549,426

—

—

549,426

4,115,044

(2,400,127)

1,742,517

—

—

1,742,517

4,142,644

(1,554,500)

(1,364,466)

—

—

(1,364,466)

190,034

Total other financing (uses)

(1,554,500)

(1,364,466)

—

—

(1,364,466)

190,034

Net change in fund balance

(3,954,627)

378,051

—

—

378,051

4,332,678

(255,139)

(255,139)

—

—

(255,139)

—

$ (4,209,766)

122,912

—

—

122,912

4,332,678

Revenues: Incremental property taxes Investment income Other Total project revenues Expenditures: Housing and community development: Capital improvements Total housing and community development

$

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, 2003 and 2004.

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, 2004

Budget Revenues: Incremental property taxes Investment income Property rental Other income

Plus 2003-2004 encumbrances*

Actual, budgetary basis

Variance – positive (negative)

1,297,945 16,000 1,379,700 —

1,291,362 36,684 1,289,712 10,938

— — — —

— — — —

1,291,362 36,684 1,289,712 10,938

(6,583) 20,684 (89,988) 10,938

2,693,645

2,628,696

—

—

2,628,696

(64,949)

2,392,234

637,829

—

—

637,829

1,754,405

2,392,234

637,829

—

—

637,829

1,754,405

275,700

712,301

—

—

712,301

(436,601)

2,667,934

1,350,130

—

—

1,350,130

1,317,804

25,711

1,278,566

—

—

1,278,566

1,252,855

(1,448,365)

(1,384,010)

—

—

(1,384,010)

64,355

Total other financing (uses)

(1,448,365)

(1,384,010)

—

—

(1,384,010)

64,355

Net change in fund balance

(1,422,654)

(105,444)

—

—

(105,444)

1,317,210

(13,687,097)

(13,687,097)

—

—

(13,687,097)

—

$ (15,109,751)

(13,792,541)

—

—

(13,792,541)

1,317,210

Total project revenues Expenditures: Housing and community development: Capital improvements Total housing and community development Debt service expenditures – interest Total project expenditures

$

Actual

Less 2002-2003 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, 2003 and 2004.

CITY OF SANTA MONICA, CALIFORNIA Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2004

City

Redevelopment Agency

Total nonmajor debt service funds

$

6,516,690

6,962,619

13,479,309

$

6,516,690

6,962,619

13,479,309

$

6,516,690

6,962,619

13,479,309

6,516,690

6,962,619

13,479,309

6,516,690

6,962,619

13,479,309

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 For the fiscal year ended June 30, 2004

City Revenues - investment income

$

Expenditures: Debt Service: Principal Interest 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

71,224

54,653

125,877

2,625,000 2,796,863

2,255,000 4,700,901

4,880,000 7,497,764

5,421,863

6,955,901

12,377,764

(5,350,639)

(6,901,248)

(12,251,887)

5,400,830

7,400,118

12,800,948

50,191

498,870

549,061

6,466,499

6,463,749

12,930,248

6,516,690

6,962,619

13,479,309

CITY OF SANTA MONICA, CALIFORNIA Combining Balance Sheet Nonmajor Permanent Funds June 30, 2004

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

$

Total assets

$

Cemetery Perpetual Care

Mausoleum Perpetual Care

Total nonmajor permanent funds

6,990

932

7,922

22,554 6,744,996

10,254 647,870

32,808 7,392,866

6,774,540

659,056

7,433,596

6,774,540

659,056

7,433,596

6,774,540

659,056

7,433,596

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 For the fiscal year ended June 30, 2004

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

38,440 511,694

6,325 49,929

44,765 561,623

550,134

56,254

606,388

(238,713)

(24,224)

(262,937)

311,421

32,030

343,451

6,463,119

627,026

7,090,145

6,774,540

659,056

7,433,596

Nonmajor Enterprise Fund Financial Statements Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises (a) where the intent is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or (b) where the City has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Water Fund – To account for revenues and expenses of providing water service to the citizens of the City. Solid Waste Management – To account for revenues and expenses of operating the City's refuse collection, street sweeping and cleaning, and recycling programs. Pier Fund – To account for revenues and expenses connected with management and development of the Santa Monica Pier. Civic Auditorium Fund – To account for revenues and expenses connected with management of the Santa Monica Civic Auditorium. Airport Fund – To account for revenues and expenses connected with management of the Santa Monica Municipal Airport. Stormwater Management Fund – To account for revenues and expenses associated with storm water management. Cemetery Fund – To account for revenues and expenses associated with operation of Woodlawn Cemetery. 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, 2004

Solid Waste

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

8,065,417 208,013

465,015 3,519,371

8,713,599 251,690

3,211,004 —

179,879 342,575

588,991 —

644,954 —

443,261 —

206,356 —

3,824,538 —

26,343,014 4,321,649

2,561,377 83,611 468,215 8,162,740 6,155

2,593,271 17,053 — — —

536 23,690 — — —

5,531 14,968 — — —

189,614 5,114 — — —

1,615,387 5,717 — — —

217,365 3,254 — — 499

157,602 2,099 — — —

— 947 — — —

— 10,344 — 958,016 —

7,340,683 166,797 468,215 9,120,756 6,654

Total current assets Noncurrent assets: Restricted cash and investments Restricted cash with fiscal agent Capital assets: Land Buildings Improvements other than buildings Utility systems Machinery and equipment Construction in progress

19,555,528

6,594,710

8,989,515

3,231,503

717,182

2,210,095

866,072

602,962

207,303

4,792,898

47,767,768

925,083 —

— —

— —

— —

— 838,793

81,924 —

— —

— —

— —

300,000 —

1,307,007 838,793

21,000 869,303 32,924,886 — 1,957,593 2,670,460

— 327,579 275,521 — 462,368 287,911

— 1,747,468 21,607,354 — 285,401 556,086

— 3,868,328 3,940,353 — 426,349 53,416

— 7,528,733 10,117,338 — 126,390 5,307,263

— — 7,390,087 1,206,559 35,750 362,784

— 587,876 575,558 — 163,588 166,654

— — — — 745,070 —

— — 784,940 — — —

5,338,700 921,590 839,134 — 7,237 —

5,359,700 15,850,877 78,455,171 1,206,559 4,209,746 9,404,574

Less accumulated depreciation

38,443,242 (18,292,651)

1,353,379 (747,904)

24,196,309 (15,836,132)

8,288,446 (5,346,977)

23,079,724 (10,171,872)

8,995,180 (669,522)

1,493,676 (938,885)

745,070 (603,644)

784,940 (563,670)

7,106,661 (1,435,622)

114,486,627 (54,606,879)

Net capital assets Bond issuance costs, net

20,150,591

605,475

8,360,177

2,941,469

12,907,852

8,325,658

554,791

141,426

221,270

5,671,039

59,879,748

—

—

—

—

38,970

—

—

—

—

—

Total noncurrent assets

38,970

21,075,674

605,475

8,360,177

2,941,469

13,785,615

8,407,582

554,791

141,426

221,270

5,971,039

62,064,518

Total assets

$ 40,631,202

7,200,185

17,349,692

6,172,972

14,502,797

10,617,677

1,420,863

744,388

428,573

10,763,937

109,832,286

$

Pier

Airport

Stormwater

Cemetery

Special Aviation

Parking Authority

Total nonmajor enterprise funds

Water

Assets

Civic Auditorium

Cable Communications

(Continued)

CITY OF SANTA MONICA, CALIFORNIA Statement of Net Assets, Continued Nonmajor Enterprise Funds June 30, 2004

Liabilities Current liabilities Accounts payable Accrued liabilities Contracts payable (retained percentage) Interest payable Current portion of long-term obligations

$

Total current liabilities Current liabilities payable from restricted assets – deposits Noncurrent liabilities Advances from other funds Deferred revenue Long-term obligations, net of current portion Total noncurrent liabilities

Civic Auditorium

Parking Authority

Total nonmajor enterprise funds

— — — — —

— 688 — — —

2,618,331 2,097,434 232,117 78,177 601,647

92,827

—

688

5,627,706

—

—

—

—

4,321,649

— — 3,973,915

1,958,108 — —

— — —

— — —

— — —

8,345,021 224,839 5,200,843

Cable Communications

Water

Solid Waste

Pier

1,668,029 744,203 183,125 — —

453,794 725,751 — — —

251,883 215,205 48,992 — —

18,800 166,382 — — —

128,806 98,854 — 41,878 387,218

45,514 403 — 36,299 214,429

19,364 85,262 — — —

32,141 60,686 — — —

2,595,357

1,179,545

516,080

185,182

656,756

296,645

104,626

208,013

3,519,371

251,690

—

342,575

—

— — —

— — —

— 10,505 —

— 214,334 —

6,386,913 — 1,226,928

Airport

Stormwater

Cemetery

Special Aviation

—

—

10,505

214,334

7,613,841

3,973,915

1,958,108

—

—

—

13,770,703

Total liabilities

2,803,370

4,698,916

778,275

399,516

8,613,172

4,270,560

2,062,734

92,827

—

688

23,720,058

Net Assets Invested in capital assets, net of related debt Unrestricted

20,150,591 17,677,241

605,475 1,895,794

8,360,177 8,211,240

2,941,469 2,831,987

12,171,469 (6,281,844)

4,137,314 2,209,803

554,791 (1,196,662)

141,426 510,135

221,270 207,303

5,671,039 5,092,210

54,955,021 31,157,207

37,827,832

2,501,269

16,571,417

5,773,456

5,889,625

6,347,117

(641,871)

651,561

428,573

10,763,249

86,112,228

Total net assets

$

s

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Enterprise Funds For the fiscal year ended June 30, 2004

Water Operating revenues: Charges for services

Solid Waste

Pier

Civic Auditorium

Airport

Stormwater

Cemetery

Cable Communications

Special Aviation

Parking Authority

Total nonmajor enterprise funds

$ 13,110,498

14,598,362

2,563,783

2,279,508

3,527,460

1,355,903

445,327

747,063

—

1,457,952

40,085,856

Operating expenses: Personnel services Administrative indirect Contractual services Repairs and maintenance Materials and supplies Utilities Water purchases Casualty, property and liability costs Depreciation Other

4,023,102 836,200 351,669 203,355 2,372,290 223,908 3,370,885 50,100 1,201,592 1,470,360

6,898,658 522,400 3,054,339 2,326,855 2,101,005 39,614 — 93,300 60,797 955,139

1,906,305 630,900 820,382 486,103 1,598,734 114,548 — 133,400 1,201,936 1,019,826

1,732,937 133,200 49,586 72,094 193,598 148,293 — 89,200 221,806 12,877

862,981 595,400 62,064 296,488 524,388 223,305 — 62,800 806,609 285,574

— — — — 8,196 — — — 233,911 46,285

649,240 99,400 48,351 22,247 164,069 46,579 — 26,800 50,215 8,280

618,759 — 106,852 15,955 93,956 3,266 — 20,700 45,891 7,531

— — — — — — — — 52,329 —

950 176,100 — — — — — 67,000 34,767 6,870

16,692,932 2,993,600 4,493,243 3,423,097 7,056,236 799,513 3,370,885 543,300 3,909,853 3,812,742

Total operating expenses

14,103,461

16,052,107

7,912,134

2,653,591

3,719,609

288,392

1,115,181

912,910

52,329

285,687

47,095,401

(992,963)

(1,453,745)

(5,348,351)

(374,083)

(192,149)

1,067,511

(669,854)

(165,847)

(52,329)

1,172,265

(7,009,545)

— 200,287 (18,375) (2,230,940) 1,978,358

— 48,101 — (11,517) 251,351

— 39,498 — (52,913) 36,512

— 35,020 — (9,565) 1,480

240,600 7,219 (83,752) — 243,197

— 6,773 (112,519) — 302,561

— 5,196 — (578) 656

— 4,456 — — 1,932

— 2,223 — — —

— 997,583 — — —

240,600 1,346,356 (214,646) (2,305,513) 2,816,047

(70,670)

287,935

23,097

26,935

407,264

196,815

5,274

6,388

2,223

997,583

1,882,844

Operating income (loss) Nonoperating revenues (expenses): Other grants Investment income Interest expense Gain (loss) on disposal of capital assets Other Total nonoperating revenues (expenses) Income (loss) before transfers

(1,063,633)

(1,165,810)

(5,325,254)

(347,148)

215,115

1,264,326

(664,580)

(159,459)

(50,106)

2,169,848

(5,126,701)

Transfers in Transfers out

250,000 (1,363,102)

1,808,745 (444,935)

9,721,922 (356,370)

— —

48,000 (535,100)

— (1,346,013)

262,937 —

256,084 —

— —

— (1,440,727)

12,347,688 (5,486,247)

Change in net assets Total net assets (deficit) at beginning of year, as restated

(2,176,735)

198,000

4,040,298

(347,148)

(271,985)

(81,687)

(401,643)

96,625

(50,106)

729,121

1,734,740

40,004,567

2,303,269

12,531,119

6,120,604

6,161,610

6,428,804

(240,228)

554,936

478,679

10,034,128

84,377,488

$ 37,827,832

2,501,269

16,571,417

5,773,456

5,889,625

6,347,117

(641,871)

651,561

428,573

10,763,249

86,112,228

Total net assets (deficit) at end of year

CITY OF SANTA MONICA, CALIFORNIA Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2004

Water Cash flows from operating activities Cash received from customers Cash payments for materials and services Cash payments to employees for services Other revenue received

Airport

Stormwater

Cemetery

Cable Communications

Special Aviation

Parking Authority

Total nonmajor enterprise funds

14,356,737 (7,840,718) (6,898,658) 251,351

2,631,197 (4,530,649) (1,906,305) 36,512

2,401,823 (684,735) (1,732,937) 1,480

3,469,782 (2,104,083) (862,981) 243,197

1,110,898 (103,961) — 302,561

411,364 (384,422) (649,240) 656

593,013 (221,927) (618,759) 1,932

— — — —

1,461,107 (249,632) (950) —

39,136,940 (39,240,394) (16,692,932) 2,816,047

(12,463,992)

(131,288)

(3,769,245)

(14,369)

745,915

1,309,498

(621,642)

(245,741)

—

1,210,525

(13,980,339)

— — 250,000 (1,363,102)

— — 1,808,745 (444,935)

— — 9,721,922 (356,370)

— — — —

240,600 (48,000) 48,000 (535,100)

— — — (1,346,013)

— — 262,937 —

— — 256,084 —

— — — —

— — — (1,440,727)

240,600 (48,000) 12,347,688 (5,486,247)

(1,113,102)

1,363,810

9,365,552

—

(294,500)

(1,346,013)

262,937

256,084

—

(1,440,727)

7,054,041

(2,743,529) — (18,375) —

(37,284) — — —

(56,625) — — —

(228) — — —

(373,745) (422,218) (92,502) —

(188,962) (208,994) (114,330) —

(34,206) — — 228,412

— — — —

— — — —

— — — 2,000,000

(3,434,579) (631,212) (225,207) 2,228,412

(2,761,904)

(37,284)

(56,625)

(228)

(888,465)

(512,286)

194,206

—

—

2,000,000

(2,062,586)

201,928

38,954

30,833

33,379

9,465

6,774

6,420

3,970

2,143

995,427

1,329,293

201,928

38,954

30,833

33,379

9,465

6,774

6,420

3,970

2,143

995,427

1,329,293

(16,137,070)

1,234,192

5,570,515

18,782

(427,585)

(542,027)

(158,079)

14,313

2,143

2,765,225

(7,659,591)

25,335,583

2,750,194

3,394,774

3,192,222

1,788,832

1,212,942

803,033

428,948

204,213

1,359,313

40,470,054

9,198,513

3,984,386

8,965,289

3,211,004

1,361,247

670,915

644,954

443,261

206,356

4,124,538

32,810,463

8,065,417 1,133,096

465,015 3,519,371

8,713,599 251,690

3,211,004 —

179,879 1,181,368

588,991 81,924

644,954 —

443,261 —

206,356 —

3,824,538 300,000

26,343,014 6,467,449

9,198,513

3,984,386

8,965,289

3,211,004

1,361,247

670,915

644,954

443,261

206,356

4,124,538

32,810,463

Cash flows from noncapital financing activities Other grants Repayment of advances made to other funds Transfers in Transfers out Net cash provided by (used in) noncapital financing activitie 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 yea $

Cash and investments Restricted cash and investments Total cash and cash equivalents

Pier

Civic Auditorium

$ 12,701,019 (23,120,267) (4,023,102) 1,978,358

Net cash provided by (used in) operating activities

Cash and cash equivalents at end of year

Solid Waste

$

CITY OF SANTA MONICA, CALIFORNIA Statement of Cash Flows Nonmajor Enterprise Funds, Continued For the fiscal year ended June 30, 2004

$

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 due from other funds 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

$

Total nonmajor enterprise funds

(52,329)

1,172,265

(7,009,545)

45,891 —

52,329 —

34,767 —

3,909,853 50,120

(33,963) (499) —

(154,050) — —

— — —

3,155 — —

(1,043,901) (664) (69,459)

—

—

—

—

—

(8,162,740)

(186,513)

(14,617)

(22,032)

(9,830)

—

338

(6,979,811)

68,255 14,074

— —

53,835 —

36,163 —

— —

— —

1,305,642 1,114,526

(1,164) 1,480

— 243,197

(34,863) 302,561

— 656

— 1,932

— —

— —

89,593 2,816,047

1,579,106

359,714

938,064

241,987

48,212

(79,894)

52,329

38,260

(6,970,794)

(3,769,245)

(14,369)

745,915

1,309,498

(621,642)

(245,741)

—

1,210,525

(13,980,339)

Pier

(992,963)

(1,453,745)

(5,348,351)

(374,083)

(192,149)

1,067,511

(669,854)

(165,847)

1,201,592 —

60,797 —

1,201,936 —

221,806 —

806,609 50,120

233,911 —

50,215 —

(409,479) (165) (69,459)

(241,625) — —

67,414 — —

27,330 — —

(57,678) — —

(245,005) — —

(8,162,740)

—

—

—

—

(6,671,658)

(103,094)

98,393

(70,798)

507,616 76,703

427,569 927,459

126,129 1,305

86,075 94,985

78,203 1,978,358

— 251,351

47,417 36,512

(11,471,029)

1,322,457

(12,463,992)

(131,288)

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

Parking Authority

Civic Auditorium

Cable Communications

Solid Waste

Airport

Stormwater

Cemetery

Special Aviation

Internal Service Fund Financial Statements Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City or to other governments, on a 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, 2004

Information Technology Replacement and Services

Self-Insurance Comprehensive

Self-Insurance Auto

Self-Insurance Workers’ Compensation

Total internal service funds

Self-Insurance Bus

$ 18,346,604

3,470,279

5,639,687

2,595,243

2,097,552

10,751,626

42,900,991

— 70,699 36,131 —

— 12,667 — —

— 25,894 — 71,741

— 9,963 — —

— 11,232 — —

801,178 51,719 — 6,103

801,178 182,174 36,131 77,844

18,453,434

3,482,946

5,737,322

2,605,206

2,108,784

11,610,626

43,998,318

24,943,170 33,045 (12,984,196)

791,095 24,329 (227,642)

2,849 — (2,279)

7,386 — (5,913)

919 — (735)

18,566 — (12,188)

25,763,985 57,374 (13,232,953)

11,992,019

587,782

570

1,473

184

6,378

12,588,406

$ 30,445,453

4,070,728

5,737,892

2,606,679

2,108,968

11,617,004

56,586,724

279,204 158,632 —

424,492 — —

184,780 — 1,293,872

77,881 — 764,557

24,368 — 103,403

14,596 185,146 7,356,091

1,005,321 343,778 9,517,923

437,836

424,492

1,478,652

842,438

127,771

7,555,833

10,867,022

—

—

4,740,170

1,267,336

163,366

12,978,289

19,149,161

Vehicle Management

Assets Current assets: Cash and investments Receivables: Accounts Interest Inventory Prepaids Total current assets Noncurrent assets: Capital assets: Machinery and equipment Construction in progress Less accumulated depreciation Net capital assets Total assets Liabilities Current liabilities: Accounts payable Accrued liabilities Claims payable

$

Total current liabilities Noncurrent liabilities: Claims payable Total noncurrent liabilities

—

—

4,740,170

1,267,336

163,366

12,978,289

19,149,161

437,836

424,492

6,218,822

2,109,774

291,137

20,534,122

30,016,183

Net assets Invested in capital assets, as restated Unrestricted

11,992,019 18,015,598

587,782 3,058,454

570 (481,500)

1,473 495,432

184 1,817,647

6,378 (8,923,496)

12,588,406 13,982,135

Total net assets (deficit)

$ 30,007,617

3,646,236

(480,930)

496,905

1,817,831

(8,917,118)

26,570,541

Total liabilities Net assets

CITY OF SANTA MONICA, CALIFORNIA Statement of Revenues, Expenses and Changes in Fund Net Assets All Internal Service Funds Year ended June 30, 2004

Vehicle Management

Information Technology Replacement and Services

Self-Insurance Comprehensive

Self-Insurance Bus

7,098,161

1,889,384

2,858,433

1,801,718

58,163

8,041,276

21,747,135

1,704,474 451,600 106,525 1,277,079 427,398 29,818 15,400

— — — — 1,034,769 — —

— — — — — — —

— — — — — — —

— — — — — — —

964,387 — — — 20,698 2,871 —

2,668,861 451,600 106,525 1,277,079 1,482,865 32,689 15,400

— — 1,775 — 2,527,370

— — — — 111,702

2,539,548 1,589,354 600,758 5,132 570

1,368,604 166,234 131,693 — 1,477

421,412 23,135 24,627 5,133 184

8,724,318 226,460 201,151 127,918 2,076

13,053,882 2,005,183 960,004 138,183 2,643,379

6,541,439

1,146,471

4,735,362

1,668,008

474,491

10,269,879

24,835,650

556,722

742,913

(1,876,929)

133,710

(416,328)

(2,228,603)

(3,088,515)

200,916 (33,503) 61,964

19,382 (213,653) 49

57,331 — 1,883

15,441 — 83

— — —

150,326 — 944,615

443,396 (247,156) 1,008,594

Total nonoperating revenues

229,377

(194,222)

59,214

15,524

—

1,094,941

1,204,834

Income (loss) before operating transfers

786,099

548,691

(1,817,715)

149,234

(416,328)

(1,133,662)

(1,883,681)

— —

— —

— (202,200)

— (150,900)

— (74,200)

427,300 —

427,300 (427,300)

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 Operating income (loss) Nonoperating revenues: Investment income Gain (loss) on disposal of capital assets Other revenue

Transfers in Transfers out

$

Self-Insurance Auto

Self-Insurance Workers’ Compensation

Total internal service funds

786,099

548,691

(2,019,915)

(1,666)

(490,528)

(706,362)

(1,883,681)

Net assets (deficit) at beginning of year, as restated

29,221,518

3,097,545

1,538,985

498,571

2,308,359

(8,210,756)

28,454,222

Total net assets (deficit) at end of year

$ 30,007,617

3,646,236

(480,930)

496,905

1,817,831

(8,917,118)

26,570,541

Change in net assets

CITY OF SANTA MONICA, CALIFORNIA Statement of Cash Flows All Internal Service Funds For the fiscal year ended June 30, 2004

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

Vehicle Management

Information Technology Replacement and Services

7,098,161 (2,572,057) — (1,704,474) 61,964

1,889,384 (615,411) — — 49

2,858,433 (2,010,465) (386,524) — 1,885

1,801,718 (177,727) (657,447) — 85

58,163 (31,793) (435,416)

7,550,750 (546,338) (6,580,531) (964,387) 944,615

21,256,609 (5,953,791) (8,059,918) (2,668,861) 1,008,598

2,883,594

1,274,022

463,329

966,629

(409,046)

404,109

5,582,637

— —

— —

— (202,200)

— (150,900)

— (74,200)

427,300 —

427,300 (427,300)

—

—

(202,200)

(150,900)

(74,200)

427,300

—

(2,123,876) 87,227

(606,346) —

— —

— —

— —

— —

(2,730,222) 87,227

(2,036,649)

(606,346)

—

—

—

—

(2,642,995)

202,538

17,728

60,216

13,558

4,834

145,423

444,297

1,049,483

685,404

321,345

829,287

(478,412)

976,832

3,383,939

Self-Insurance Comprehensive

Self-Insurance Bus

Self-Insurance Auto

Self-Insurance Workers’ Compensation

Total internal service funds

17,297,121

2,784,875

5,318,342

1,765,956

2,575,964

9,774,794

39,517,052

Cash and cash equivalents at end of year

$ 18,346,604

3,470,279

5,639,687

2,595,243

2,097,552

10,751,626

42,900,991

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

$

556,722

742,913

(1,876,929)

133,710

(416,328)

(2,228,603)

(3,088,515)

2,527,370

111,702

570

1,477

184

2,076

2,643,379

— — (4,061) (417,033) 158,632 — 61,964

— — — 419,358 — — 49

— 768,607 — 184,780 — 1,384,418 1,883

— 42,650 — 77,551 — 711,158 83

— 21,103 — 23,135 — (37,140) —

(490,525) (1,566) — (150,820) 185,146 2,143,786 944,615

(490,525) 830,794 (4,061) 136,971 343,778 4,202,222 1,008,594

2,326,872

531,109

2,340,258

832,919

7,282

2,632,712

8,671,152

2,883,594

1,274,022

463,329

966,629

(409,046)

404,109

5,582,637

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 accounts receivable (Increase) decrease in prepaids (Increase) decrease in inventories Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities Increase (decrease) in claims payable Other nonoperating revenue received Total adjustments Net cash provided by (used in) operating activities

$

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, 2004

Agency Funds General Trust

Street Light

Totals

$ 1,146,865 5,073

2,852 —

1,149,717 5,073

Total assets

$ 1,151,938

2,852

1,154,790

Accounts payable and accrued liabilities

$ 1,151,938

2,852

1,154,790

$ 1,151,938

2,852

1,154,790

Restricted cash and investments Accounts receivable

Total liabilities

CITY OF SANTA MONICA, CALIFORNIA Combining Statement of Changes in Fiduciary Assets and Liabilities Fiduciary Funds For the fiscal year ended June 30, 2004

Year ended June 30, 2003

Additions

Reductions

Year ended June 30, 2004

748,786

46,168,220

45,770,141

1,146,865

13,582

97,031

105,540

5,073

$

762,368

46,265,251

45,875,681

1,151,938

Accounts payable

$

762,368

45,679,177

45,289,607

1,151,938

Total liabilities

$

762,368

45,679,177

45,289,607

1,151,938

$

5,323

87,915

90,386

2,852

$

5,323

87,915

90,386

2,852

Accounts payable

$

5,323

21,391

23,862

2,852

Total liabilities

$

5,323

21,391

23,862

2,852

$

754,109

46,256,135

45,860,527

1,149,717

13,582

97,031

105,540

5,073

$

767,691

46,353,166

45,966,067

1,154,790

Accounts payable

$

767,691

45,700,568

45,313,469

1,154,790

Total liabilities

$

767,691

45,700,568

45,313,469

1,154,790

Agency Funds: General Trust Assets: Restricted cash and investments

$

Accounts receivable Total assets 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 Year Ended June 30, 2004 STATISTICAL SECTION

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CITY OF SANTA MONICA, CALIFORNIA YEAR ENDED JUNE 30, 2004 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

Cultural and recreation Public safety

General services

services

Total Library

Retirement

Other (1)

expenditures

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 $ 110,526,650 12.3% 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%

2003-04

44,482,857 23.9%

63,428,190 34.1%

17,371,193 9.3%

30,631,170 16.4%

16,872,822 9.1%

13,258,631 7.1%

241,524 0.1%

186,286,387 100.0%

(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

Other, capital projects and debt service

$180,000,000

Retirement

$160,000,000 $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

$1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

Fiscal Year

2000-01

2001-02

2002-03

2003-04

TABLE 2 CITY OF SANTA MONICA, CALIFORNIA GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION* LAST TEN FISCAL YEARS Cultural and Fiscal

General

year

government

Housing and

recreation Public safety

General services

services

Library

Retirement

community

Other and debt

development

service

Total expenditures $

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%

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 15.2%

16,282,153 12.0%

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%

29,222,212 11.1%

266,418,955 100.0%

2003-04

23,558,535 8.5%

64,584,136 23.3%

42,228,092 15.2%

38,287,458 13.8%

17,844,322 6.4%

13,258,631 4.8%

63,175,791 (1) 22.8%

14,523,044 (1) 5.2%

277,460,009 100.0%

* Includes all governmental fund types (General, special revenue, debt service, permanent, and capital projects funds). (1) Starting in FY 2003-04, capital project expenditures previously reported as "Other and debt service" are included in Housing and community development. Source: Audited Annual Financial Statements.

138,750,385 100.0%

TABLE 3 CITY OF SANTA MONICA, CALIFORNIA GENERAL FUND REVENUES BY SOURCE LAST TEN FISCAL YEARS

Fiscal Property taxes

year

Other taxes (1)

Licenses and

Fines and

Investment and

Inter-

Charges for

permits

forfeitures

rental income

governmental

services

Other

Total revenues

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%

2003-04

23,098,289 12.5%

93,033,158 50.3%

35,409,136 19.1%

13,344,573 7.2%

8,647,986 4.7%

288,572 0.2%

9,332,998 5.0%

1,788,903 1.0%

184,943,615 100.0%

(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

$1994-95

1995-96

1996-97

1997-98

1998-99

1999-00 Fiscal Year

2000-01

2001-02

2002-03

2003-04

TABLE 4 CITY OF SANTA MONICA, CALIFORNIA GENERAL GOVERNMENTAL REVENUES BY SOURCE* LAST TEN FISCAL YEARS Fiscal year

Property taxes

Sales tax

Other taxes (1)

Licenses and

Inter-

Charges for

Fines and

Investment and

permits

governmental

services

forfeitures

rental Income

All other

Total revenues

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%

2003-04

59,043,252 17.2%

27,825,098 8.1%

68,077,435 19.8%

35,662,507 10.4%

28,562,694 8.3%

18,401,113 5.4%

13,344,573 3.9%

12,325,839 3.6%

79,746,677 (3) 23.3%

342,989,188 100.0%

* Includes all governmental fund types (general, special revenue, debt service, permanent, 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. (3) In FY 2003-04 all other includes $73,929,382 settlement income. 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

Percent of

Delinquent

collections as

Outstanding

as percent of

Fiscal

Total secured

secured tax

levy

secured tax

Total tax

percent of total

delinquent

total secured

year

tax levy

collections

collected

collections (1)

collections

tax levy

taxes (2)

tax levy (2)

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

2003-04

16,674,558

16,235,740

97.4

486,656

16,722,396

100.3

420,562 438,818

(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

2.7 2.6

TABLE 6 CITY OF SANTA MONICA, CALIFORNIA ASSESSED VALUE LAST TEN FISCAL YEARS Fiscal

Net assessed Land

year

1994-95

$

4,820,062,441

Improvements

$

4,621,155,928

Personal property

$

72,296,906

Public utilities

$

1,926,564

Secured gross

$

9,515,441,839

Exemptions (1)

$

405,723,516

Secured net

$

9,109,718,323

Net unsecured

$

523,855,310

valuations

$

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

2003-04

8,398,483,440

6,720,989,375

110,879,795

3,076,425

15,233,429,035

458,910,480

14,774,518,555

936,652,394

15,711,170,949

(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 City

Fiscal year 1994-95

$

County

School districts

districts

Total

**

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

2003-04

0.02

1.00

0.05

0.01

1.08

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)

(3)

89,985

1995-96

90,262

9,265,572

76,145,000

3,910,938

1996-97

91,405

9,387,649

74,460,000

1997-98

92,578

9,534,083

1998-99

94,220

1999-00

9,633,574

$

77,725,000

Percentage of net

monies available from enterprise

1994-95

$

Debt payable

$

3,827,815

revenues (4) $

51,855,000

Net bonded debt $

bonded debt to

Net bonded debt

assessed value

per capita

22,042,185

0.23%

$

244.95

51,095,000

21,139,062

0.23%

234.20

4,154,460

50,280,000

20,025,540

0.21%

219.09

73,010,000

3,944,578

49,415,000

19,650,422

0.21%

212.26

10,202,641

71,090,000

4,075,082

48,485,000

18,529,918

0.18%

196.67

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

2003-04

90,300

15,711,171

183,700,000

13,270,035

42,815,000

127,614,965

0.81%

1,413.23

(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

TABLE 8 (continued)

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 $17,000,000 $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 $-

1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 Fiscal Year (1) Per State Department of Finance; January 1 each year

Net Bonded Debt Per Capita Percent Net Bonded Debt of Assessed Valuation

Percent 3.0%

Percentage of net bonded debt to assessed value

2.5%

Net bonded debt per capita

Dollars of Debt Per Capita $1,600 $1,400

2.0%

$1,200 $1,000

1.5%

$800 $600

1.0%

$400 0.5%

$200

0.0%

$0 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

Fiscal Year

TABLE 9 CITY OF SANTA MONICA, CALIFORNIA COMPUTATION OF LEGAL DEBT MARGIN June 30, 2004

Net assessed value Add: exempt property

$

15,711,170,949 567,647,028

Total gross assessed value

$

16,278,817,977

Debt limit - 10% of total assessed value (1)

$

1,627,881,798

Amount of debt applicable to debt limit: Total bonded debt Less: Assets in debt service funds available for payment of bonds

$

151,365,000

13,270,035

Total amount of debt applicable to debt limit Legal debt margin

138,094,965 $

1,489,786,833

(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, 2004

Jurisdiction

Los Angeles County

Gross debt

Amount applicable to Santa Monica

23,470,000

1.941%

455,553

Los Angeles County General Fund Obligations

1,451,352,949

1.941%

28,170,761

Los Angeles County Pension Obligations

1,320,852,395

1.941%

25,637,745

25,753,858

1.941%

499,882

Los Angeles County Flood Control District

137,945,000

1.977%

2,727,173

Metropolitan Water District

447,475,000

1.004%

4,492,649

63,839,971

63.687%

40,657,762

4,328,210,000

0.0003%

12,985

95,950,034

63.751%

61,169,106

376,210,000

1.941%

7,302,236

67,300,000

63.687%

42,861,351

Los Angeles Unified School District Certificates of Participation

768,252,800

0.0003%

2,305

Los Angeles Community College District

673,615,000

0.010%

67,362

21,271,501

63.751%

13,560,795

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

Santa Monica-Malibu Unified School District Certificates of Participation

$

Percentage applicable to Santa Monica

Total Gross Overlapping Debt Less:

227,617,665

Los Angeles County Certificates of Participation (100% self-supporting) from leasehold revenues on properties in Marina del Rey

Total Net Overlapping Bonded Debt

1,352,004 $

226,265,661

TABLE 10 (continued) In addition to overlapping debt, the following direct debt exists as of June 30, 2004:

Jurisdiction

City of Santa Monica Redevelopment Agency Lease Revenue Bonds (Downtown Refunding Project of 2002)

Gross debt

Amount applicable to Santa Monica

5,250,000

100.000%

1,570,000

100.000%

1,570,000

City of Santa Monica Redevelopment Agency Tax Allocating Bonds (Ocean Park Refunding Project of 2002)

18,450,000

100.000%

18,450,000

City of Santa Monica Parking Authority Lease Revenue Bonds (2002 Refunding)

10,480,000

100.000%

10,480,000

2,865,000

100.000%

2,865,000

City of Santa Monica General Obligation Bonds (2002) Main Library Improvements

23,750,000

100.000%

23,750,000

City of Santa Monica Wastewater Enterprise Revenue Bonds (1993) Refunding Series

32,335,000

100.000%

32,335,000

City of Santa Monica Public Safety Lease Revenue Bonds (1999)

12,385,000

100.000%

12,385,000

City of Santa Monica Earthquake Recovery Redevelopment Project Bonds (1999)

61,525,000

100.000%

61,525,000

City of Santa Monica Public Safety Lease Revenue Bonds (2002)

16,660,000

100.000%

16,660,000

City of Santa Monica Refunding Certificates of Participation (1995-Airport)

City of Santa Monica General Obligation Bonds Main Library Improvements Project (1998)

Total Direct Debt (Bonds and Certificates of Participation)

Source: California Municipal Statistics, Inc.

$

Percentage applicable to Santa Monica

$

$

5,250,000

185,270,000

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

Principal

Interest

Total debt service

General fund

general fund

(2)

expenditures (1)

expenditures

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 (3) (4)

7,112,122 (3) (4)

9,702,122

229,178,174

4.2

2002-03

1,625,000

6,941,798

8,566,798

197,782,481

4.3

2003-04

4,880,000

9,401,520

14,281,520

202,621,400

7.0

(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).

(3)

Downtown Redevelopment Project and Parking Authority debt were refunded May 2, 2002. Debt service payments on the 2002 bonds began in fiscal year 2002-03. Coverage ratios above reflect the 1992 bonds.

(4)

Does not include Public Financing Authority Lease Revenue Bonds (Public Safety Facility Project). All principal and interest due for the period through January 1, 2003 had been deposited with trustee per indenture agreement.

Source: City of Santa Monica Finance Department

TABLE 12 CITY OF SANTA MONICA, CALIFORNIA REDEVELOPMENT AGENCY DOWNTOWN PROJECT LEASE REVENUE BONDS COVERAGE

Fiscal year

Gross revenues

Direct operating expense

Net revenue available for debt service

Debt service requirement Principal Interest

Total

Coverage

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

2003-04

2,972,240

221,683

2,750,557

390,000

168,600

558,600

4.92

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 year

Gross revenues

Direct operating expense

Net revenue available for debt service

Debt service requirement Principal Interest

Total

Coverage

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

2003-04

2,896,936

182,117

2,714,819

865,000

859,091

1,724,091

1.57

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 year

Gross revenues (1)

Direct operating expense (2)

Net revenue available for debt service

Debt service requirement Principal Interest

Total

Coverage

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

10,818,410

3,775,061

890,000

1,698,075

2,588,075

1.46

2003-04

14,191,264

9,349,681

4,841,583

1,005,000

1,591,275

2,596,275

1.86

(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 2003-2004 Percentage of Taxpayer

Type of business

Douglas Emmett Realty Fund

Property Management

TST Colorado Avenue LLC

$

2003 Assessed

total assessed

valuation

valuation

314,083,128

1.99%

Commercial Real Estate

310,000,000

1.96%

Water Garden Realty Holding

Real Estate

243,024,746

1.54%

Sisters of Charity - St. John's Hospital

Commercial - Institutional

185,611,383

1.18%

Water Garden Company

Real Estate Investment

162,366,701

1.03%

Macerich Company

Shopping Center

136,278,357

0.86%

SHCI Santa Monica Beach Hotel

Hotel Management

132,036,410

0.84%

Ocean Avenue LLC

Commercial Real Estate

96,741,931

0.61%

Commonwealth Atlantic Arboretum LLC

Commercial Real Estate

85,937,040

0.54%

1299 Ocean LLC

Commercial Real Estate

59,344,506

0.38%

Total principal property taxpayers gross assessed value

$

1,725,424,202

10.93%

Total city assessed value

$

15,786,981,799

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, 2004 Type of Coverage

Coverage Description

Coverage Limits

Automobile and General Liability

Bodily injury, property damage, personal injury, public officials' liability, and errors and omissions. S.I.R $1,000,000.

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.

$

12,000,000

Bus Liability

Bodily injury and property damage. S.I.R $1,000,000.

Airport Liability

Bodily injury, property damage, personal injury, and contractual liability.

$

30,000,000

Personal injury.

$

30,000,000

Liability for others' aircrafts while stored at the airport hangars. Per aircraft Per occurrence

$ $

30,000,000 30,000,000

$

50,000,000

Hangar-keepers Liability

Aircraft Liability - City owned and non city owned.

Includes passenger liability.

Watercraft Physical Damage

$2,000 deductible for Monica 1.

$

169,039

Vehicles Excess of $100K Physical Damage

Bus and Fire Vehicles only. Off premises-peril of collision subject to $25,000 deductible.

$

74,767,000

Vehicle Physical Damage (on Premises)

All Risk coverage excluding collision, $25,000 deductible per claim.

$

110,057,000

City Property

All Risk - Basis

$

750,000,000

$

145,000,000

Per occurrence

Building contents and loss of rents. $25,000 deductible per occurrence. Wavewash $25,000 deductible. Terrorism - Coverage for foreign and domestic acts of terrorism. $25,000 deductible per occurance. Coverage is for certain specified facilities.

TABLE 17 (continued) Type of Coverage Main Library - Construction Project

Coverage Description Builder's Risk - All Risk Basis $25,000 Deductible. Earthquake 5% of building value after $5M S.I.R.

Coverage Limits $

49,395,900

$

49,395,900

Earthquake Insurance

All City facilities including contents except Pier and Main Library Construction Project. $10,000,000 S.I.R.

$

80,000,000

Public Employee Dishonesty Blanket Bond *

$50,000 deductible.

$

3,000,000

Boiler and Machinery Comprehensive

Property damage-all City locations. (Business Interruption/Extra).

$

100,000,000

Expediting expense.

$

10,000,000

Water damage.

$

10,000,000

$

3,000,000

$

250,000

$

100,000

$2,500 expense/deductible per claim (with certain exceptions). Faithful Performance Bond *

$50,000 deductible.

Treasurer's Bond * Travel Accident

City employees and appointed or elected City officials. Per individual according to defined benefit schedule.

Workers' Compensation

Work-related injuries and illnesses. $1,000,000 S.I.R

Excess Workers' Compensation

Work-related injuries and illnesses. (Includes Jones Act Coverage.) Employer's liability.

$ $

50,000,000 10,000,000

Volunteer Accident Insurance

Medical coverage for volunteers while working for the City.

$

10,000

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.

TABLE 18 CITY OF SANTA MONICA, CALIFORNIA MISCELLANEOUS STATISTICAL DATA June 30, 2004

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

102 sworn, 13 nonsworn 4 208 sworn, 180 nonsworn 1

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 109 245

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)

1994-95

3

26,990,115

(6)

40

19,814,478

(6)

1,918,759 (10)

9,633,573,633

1995-96

8

30,415,222

(7)

179

28,796,176

(7)

1,932,768 (10)

9,265,572,055

1996-97

14

32,632,266

(8)

116

30,962,726

(8)

1,767,075 (11)

9,387,649,426

1997-98

27

115,975,087

(9)

437

74,013,351

(9)

1,756,908 (11)

9,534,082,837

1998-99

15

142,841,619

610

68,016,702

3,686,266 (11)

10,202,640,765

1999-00

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

2003-04

3

4,670,000

465

77,822,100

Not Available (12)

15,711,170,949

(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) This information is no longer provided as citizens increasingly use the services of banks that may not be in the City's geographical area.

TABLE 20 CITY OF SANTA MONICA, CALIFORNIA PRINCIPAL EMPLOYERS June 30, 2004

Employer

Number of employees

City of Santa Monica

1,936

Santa Monica College

1,422

Saint John's Hospital Medical Center

1,200

Santa Monica-Malibu Unified School District

1,164

Santa Monica-UCLA Hospital

1,150

Rand Corporation

927

ET Whitehall

500

Specialty Laboratories, Inc.

475

Metro-Goldwyn Mayer, Inc.

367

Sanford Papermate

310

Total jobs provided by principal employers

9,451

Total jobs in Santa Monica

72,740

Principal employers as percent of total jobs

13.0%

Source:

Most recent voluntary reporting of employment levels to the City of Santa Monica by employers. 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

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

2003

4.6

8.0

7.0

6.7

6.0

Source: State of California Employment Development Department

Unemployment Statistics Unemployment Rate %

12.0 10.0 8.0 6.0 4.0 2.0 0.0 1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

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

1999-00

General fund

2000-01

2001-02

2002-03

2003-04

1,162.4

1,199.1

1,249.6

1,253.1

1,239.3

Beach

21.0

22.0

22.0

22.0

22.0

Civic auditorium

36.6

37.6

35.6

35.6

34.3

8.2

9.2

10.2

10.2

11.2

347.7

370.7

391.7

403.7

401.7

87.0

93.0

93.0

95.0

95.0

8.4

9.4

9.4

9.4

9.4

Wastewater

31.0

35.0

34.0

36.0

36.0

Water

50.0

50.0

50.0

50.0

50.0

Pier

27.5

27.5

27.5

26.5

27.0

Cable

10.4

10.6

10.4

10.7

10.4

Vehicle management

24.0

24.0

24.0

24.0

24.0

7.6

11.6

11.6

11.6

12.1

1,821.8

1,899.7

1,969.0

1,987.8

1,972.4

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

1999 $

General merchandise

162,581

2000 $

199,035

2001 $

200,819

2002 $

226,925

2003 $

261,483

148,564

150,898

136,931

126,873

124,612

72,496

70,966

71,078

71,202

67,164

308,300

343,847

336,022

334,187

349,724

Home furniture & appliances

77,507

82,692

79,859

72,084

89,881

Building materials & farm implements

62,690

73,224

75,532

80,603

91,713

356,869

429,191

419,497

428,873

626,233

51,585

59,893

56,461

61,094

78,484

358,685

389,043

354,301

337,339

330,273

1,599,277

1,798,789

1,730,500

1,739,180

2,019,567

477,330

520,362

509,855

501,250

391,485

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

$

2,076,607

$

2,319,151

$

2,240,355

$

2,240,430

$

2,411,052

TABLE 24 CITY OF SANTA MONICA, CALIFORNIA GENERAL FUND TAX REVENUES BY SOURCE (IN THOUSANDS)

Fiscal year ended June 30, 2004 2000

Source Utility user's tax

$

2001

23,920

$

2002

25,157

$

2003

27,512

$

2004

27,549

$

28,967

Sales taxes

24,360

26,186

24,586 (5)

25,236

27,825

Property taxes (1)

15,317

16,792

17,512

20,206

23,098

Business license taxes

15,472

16,957

17,498

17,745

17,894

Transient occupancy tax

17,880

19,218

16,348

17,059

19,850

Parking facility tax

4,736

5,372

5,636

5,898

6,098

State of California in-lieu taxes (2)

4,603

5,028

4,721

5,170

4,034

Real property transfer tax

3,714

3,911

3,233

3,968

5,350

Franchise taxes (3)

619

705

857

820

863

Condominium taxes

48

30

26

46

46

Total (4)

$

110,669

$

119,356

$

117,929

$

123,697

$

134,025

(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

2003-04

31,918,204

1,033,362

30,884,842

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

960,000

3,717,310

4,677,310

7.01

1,000,000

3,673,210

4,673,210

6.61

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