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Significant Accounting Policies
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(vii) Storm Drain (Fund 221), Sewer Connection Fee (Fund 241), Water Connection Fee (Fund 251), Airport Grant (Fund 212), and Federal Grant (Fund 222) Funds account for the proceeds from specific revenue sources that are legally restricted for specific purposes. No specific minimum net position balance requirement is created by this policy. Rather, each fund must adhere to any underlying guidelines attached to that revenue source. (viii) Unrestricted net position for the enterprise operating funds (Fund 210, 230, and 250) should not exceed the minimum required level by 50%. Any excess net position should be used to (a) pay down long-term obligations, (b) fund capital projects and equipment, (c) pay one-time expenditures, and/or (d) keep future rate increases lower.
Internal Service Funds. In the Internal Service Funds, the minimum level of unrestricted net position is set at
12.5% of operating expenditures except for Risk
Management-Workers’ Compensation and Liability Insurance Funds. The insurance type funds are strongly subject to the element of uncertainty from claims; therefore, these funds will fully fund actuarially determined claim obligations at a minimum of the seventy percent (70%) confidence level.
G. DEBT POLICY
Long-term debt is used by the City to finance capital improvements of both the General Fund and Enterprise Fund types. As the CIP budget is developed, funding priorities are based on essentiality to public health and safety, availability of revenue to repay the debt and current debt load on the respective fund.
In the case of Enterprise debt, and other obligations that require a General Fund credit backing, the City will carefully analyze the effect an addition of such debt will have to ensure that the capacity of the General Fund to issue future obligations is not impaired. The cumulative annual payments from the General Fund related to debt shall not exceed 7.5% of the previous fiscal year's General Fund revenue.
The City may use long-term debt financings subject to the following conditions:
• The project to be financed must be approved by the City Council. • The project to be financed will have useful life of 30 years or more. • The weighted average maturity of the debt (or the portion of the debt allocated to the project) will not exceed the useful life of the project.
• The City estimates that sufficient revenues will be available to service the debt through its maturity. • The City determines that the issuance of the debt will comply with the applicable state and federal law. 312
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Glossary of Terms
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ACCRUAL BASIS
A basis of accounting in which transactions are recognized at the time they are incurred, as opposed to when cash is received or spent.
AGENCY FUNDS
Agency funds are used to account for assets held by the City acting in a fiduciary capacity for other entities. The City serves as the agent between bondholders and the assessed taxpayer.
APPROPRIATION
A legal authorization granted by the City Council to make expenditures and to incur obligations for specific purposes. For operating fund budgets, these appropriations lapse at the end of each fiscal biennium. For nonoperating/special fund budgets, such as the Capital Improvement Program funds, appropriations do not lapse but continue in force until fully expended or until the purpose for which they were granted has been accomplished, abandoned, or revised by the City Council.
ASSESSMENT DISTRICT
A funding mechanism for constructing public infrastructure. The City sells bonds to finance a specific list of capital improvements that benefit specific properties within a City determined district. Bond financing costs are repaid through assessments placed on properties receiving benefit from the financed improvements within the boundary of the assessment district. Assessments are secured through the existence of liens placed on the properties within the assessment district.
BUDGET
A financial operating plan for a given period which displays the estimated expenditures to provide services or to accomplish a purpose during that period together with the estimated sources of revenue (income) to pay for those expenditures. Once the fund totals shown in the budget are appropriated by the City Council, they become maximum spending limits.
CAPITAL PROJECT
Major construction, acquisition, or renovation activities that add value to a government’s physical assets or significantly increases the useful life.
CERTIFICATES OF PARTICIPATION (COPs)
Certificates of Participation are a form of tax-exempt municipal financing. Certificates of Participation (COPs) may be sold to finance equipment and/or facilities as long as the useful economic life of each class of property exceeds the term of the COPs payment schedule.
CIP
The acronym “CIP” stands for Capital Improvement Program. It is a 20- year plan of capital improvements approved by the City Council on a biennial basis. This plan also shows projected expenditures for an additional 3- year period for planning purposes, as well as “out years” although appropriations are only made for the first 2-year period. This plan is a blueprint that City staff can follow in implementation of the listed projects. The following 3- year period serves as a detailed foundation for planning the subsequent capital improvement budget.
GLOSSARY OF TERMS
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CONGESTION MANAGEMENT AGENCY (CMA)
A joint powers authority formed of the public agencies within Alameda County. The City of Livermore is represented on this agency. The Alameda County Transportation Commission maintains a Countywide Transportation Plan, which serves as a planning document for the funding of regional transportation improvements in Alameda County.
CONTRACTUAL SERVICES
Services rendered to a government by private firms, individuals, or other governmental agencies. Examples include utilities, rent, maintenance agreements, and professional consulting services.
DEBT SERVICE
The cost of paying principal and interest on borrowed money according to a predetermined payment schedule.
DEBT SERVICE FUNDS
Debt service funds are used to account for the payment of principal and interest on City debt and debt related entities.
DEPRECIATION
Expiration in the service life of capital assets attributable to wear and tear, deterioration, action of the physical elements, inadequacy, or obsolescence.
DEVELOPMENT IMPACT FEE
Development impact fees are charged against development to mitigate the impact of new development on existing facilities. The State Mitigation Fee Act (AB 1600) requires that a nexus be demonstrated between development impacts and the fee imposed to mitigate the impacts. Operating and maintenance costs cannot be recovered through development impact fees. Examples of City Development Impact Fees include the Traffic Impact Fee, the Water Connection Fee, and the Sanitary Sewer Connection Fee.
ENTERPRISE FUNDS
Enterprise funds account for City operations that are financed and operated in a manner similar to a private enterprise. Costs of providing service to the public are recovered through user charges and impact fees. Examples include the City Airport, the Las Positas Golf Course, and the Sewer Operating Fund.
FIDUCIARY FUNDS
Fiduciary funds are used to account for assets held by the City acting in a fiduciary capacity for other entities. Such funds are operated to carry out specific actions of agreements, ordinances, and other governing regulations.
FISCAL YEAR
A twelve-month period designated as the operating year for accounting and budgeting purposes in an organization. The City of Livermore’s fiscal year is from July 1st to June 30th of the following year. 314
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Glossary of Terms
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FUND
Governmental accounting systems are organized and operated on a fund basis. A fund is an interdependent financial and accounting entity with a self-balancing set of accounts in which financial transactions relating to resources, expenditures, assets, and liabilities are recorded. Funds are established to account for the use of restricted revenue sources and, normally, to carry on specific activities or pursue specific objectives. Funds may be established by the State Constitution, State statute, City ordinance, or Finance Director.
FUND BALANCE
The difference between resources and expenditures.
GASB 34
During the fiscal year ended June 30, 2005 the City completed a capital asset valuation study to comply with the requirements of GASB 34. The goal of the study was to estimate the acquisition cost of public domain or infrastructure assets which are to be included in the City’s governmental activities.
The study also provided a similar valuation of assets used in the City’s business-type activities. In addition, the City changed the categorization of certain assets to align them with the activities where they are being used. The results of this study and recategorizations were implemented in the City’s financial reports for the fiscal year ended June 30, 2005 and resulted in accounting adjustments in governmental and business-type activities. The results of these accounting adjustments are reported as a GASB 34 Implementation Adjustment at June 30, 2005.
GENERAL PLAN
The City’s controlling policy document for the physical development of the City. Under State law all capital improvement projects must be consistent with the City’s General Plan.
GIS
Geographic Information Systems. This is a comprehensive data system where maps and data are linked.
Information on City infrastructure, the General Plan, the Zoning Code, and development records are contained in Livermore’s GIS system.
GRANTS
A contribution by a government or other organization to support a particular function. Grants may be classified as either operational or capital, depending on the grantor.
INTERNAL SERVICE FUNDS
Internal service funds are used to account for the financing of services and supplies provided by one City department to another on a cost-reimbursement basis.
LARPD
The Livermore Area Recreation and Parks District. This agency is an agency separate from the City of Livermore which constructs and maintains parks and trails in the Livermore area. 315
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MEASURE B and MEASURE BB
Ballot measure approved by Alameda County voters and subsequently renewed for 20 years by the voters in 2000.
In November of 2014, Alameda County voters approved Measure BB, which will generate nearly $8 Billion dollars over 30 years for transportation projects in every city in Alameda County. The Alameda County Transportation Commission (ACTC) administers both Measure B and Measure BB. Funding for the program is provided by local sales tax. Funding is provided for both voter approved major projects, as well as discretionary street and trail construction and maintenance funding distributed to the public agencies of Alameda County.
OPERATIONS & MAINTENANCE COSTS (O&M)
The maintenance and operation costs for all new infrastructure in the CIP are shown on the various CIP worksheets whenever the project is adding new infrastructure to the City. The maintenance and operation cost assumptions are shown under the total funding on the
CIP worksheet.
PROPOSITION 1B
Refers to the $20 billion bond measure approved by California voters on November 7, 2006, of which $4.5 billion was allocated to projects statewide via a competitive process known as the Corridor Mobility Improvement Account (CMIA). The San Francisco Bay Area received $1.3 billion of the CMIA Program for 18 projects one of which is the Isabel Interchange. The Isabel Interchange was allocated $68 million of the CMIA Program as part of the competitive process.
PROJECT COSTS
The project costs (capital costs) are an estimate of the resources required to complete the capital project as described on the project description page. Costs typically include preliminary design, environmental clearance, final design, right-of-way acquisition, construction, contingencies, inspection, and contract administration. Many of the project costs shown in the CIP are preliminary in nature since no significant engineering or environmental evaluation has been done which would allow for more specific estimates to be produced. Most cost estimates are produced using rule-of-thumb approximations as opposed to specific lists of materials.
PROJECT SCHEDULES
Detailed project schedules are prepared by the various project managers using Gant Charts. This includes key milestone dates for environmental clearance, right of way acquisition, design and construction.
PROJECT STUDY REPORT
A planning document for State infrastructure used by and approved by Caltrans. The first step in completing improvements to or construction of State infrastructure is the Project Study Report, which identifies project alternatives and costs.
REVENUE
Sources of income received during a fiscal year, operating transfers from other funds, and other financing sources such as the proceeds derived from the sale of fixed assets. 316
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ROAD REPAIR AND ACCOUNTABILITY ACT OF 2017 (SB1)
The Road Repair and Accountability Act of 2017 (SB1) was adopted in April 2017. SB1 will increase gasoline and diesel fuel tax and provide for an inflation factor. SB1 also increased vehicle registration fees and imposes a vehicle registration fee on zero emission vehicles. The revenue generated from SB1 will be used for funding deferred maintenance for the state highway system and local street and road systems.
RULE 20A PROGRAM
A program funded by PG&E to underground existing overhead utilities in a continuous incremental way.
SOLID WASTE & RECYCLING IMPACT FEE
In June of 2007, the City Council approved a monthly fee charged to the City refuse hauler to mitigate the impact that refuse collection vehicles have on the useful life of City streets and to fund the implementation of a Neighborhood Preservation Fee. These funds will provide for the street maintenance program costs that are associated with the impact of heavy refuse collection vehicles and to support Neighborhood Preservation Programs which are directly related to solid waste activities.
SOUTH LIVERMORE VALLEY SPECIFIC PLAN ROAD IMPROVEMENT PROGRAM The South Livermore Valley Specific Plan Road Improvement Program (SLVSPRIP) is a cost-sharing program facilitated by the City for funding major road infrastructure in the South Livermore Valley Specific Plan area. Costs for all major South Livermore infrastructure is spread as a special development fee on South Livermore development. Developers constructing South Livermore infrastructure are reimbursed from the fee program.
STIP
The State Transportation Improvement Program. This program provides Federal and State funding for transportation improvements. Final funding for the STIP is made by the California Transportation Commission, based on recommendations by the Metropolitan Transportation Commission. The Alameda County Transportation Commission Countywide Transportation Plan serves as the basis for Alameda County transportation plans in the Regional Transportation Plan developed by the Metropolitan Transportation Commission.
TCFA
The Transportation Fund for Clean Air (TFCA) is a regional program administered by the Bay Area Air Quality Management District that provides funds for projects that contribute to improved air quality by reducing motor vehicle travel and vehicle emissions, such as bicycle and pedestrian improvement projects.
TDA
TDA is the Transportation Development Act (Article 3) and is a state program administered by the Metropolitan Transportation Commission that provides funds for bicycle and pedestrian transportation improvement projects.
TEA-21
TEA-21 is the federal Transportation Efficiency Act for the 21st Century which was adopted by Congress in 1988.
This federal legislation authorized a six-year extension of the federal transportation funding bill. 317
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TIF
TIF is the City’s Traffic Impact Fee Program. This program funds the construction for over $250 million in major transportation infrastructure over the next 20 years. Revenue is generated by new development paying the TIF fee.
Costs are allocated to new development based on a nexus study in compliance with the State Mitigation Fee Act (AB 1600). Projects include major streets, Interstate 580 interchanges, and High Occupancy Vehicle Lanes (HOV) on Interstate 580. Some facilities in this program are constructed by new development, with offsetting TIF fee credits and reimbursements being provided to developers.
TVTC
The Tri-Valley Transportation Council is a joint powers authority of the cities of Livermore, Pleasanton, Dublin, San Ramon, Danville, and the counties of Contra Costa and Alameda. The TVTC has identified important subregional transportation improvements. A subregional development impact fee, the Tri-Valley Transportation Development Fee has been established by the TVTC to provide “seed” money for major subregional transportation improvements.
USER CHARGES
User charges are the payment of a fee for direct receipt of a public service by the party who benefits from the service.
ZONE 1
A water pressure zone of the City water distribution system on the west side of Livermore. This zone serves the lowest elevations in Livermore. It is one of three water pressure zones in the City of Livermore’s water system.
ZONE 2
The middle pressure zone of the City water distribution system in the northern parts of Livermore. This zone primarily serves the Springtown area and adjacent areas. It is one of three water pressure zones in the City of Livermore’s water system.
ZONE 3
The highest-pressure zone of the City water distribution system in the eastern parts of Livermore. This zone primarily serves areas east of Vasco Road. It is one of three water pressure zones in the City of Livermore’s water system.
ZONE 7
The Alameda County Flood Control and Water Conservation Agency. Zone 7 is a dependent special district affiliated with Alameda County that is the water wholesaler and flood control agency in the Livermore Valley. Zone 7 operates a number of improved flood control channels in the Valley and has long-range plans for owning and maintaining major flood control facilities in the Valley. 318
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