Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Park considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the Park.
The Park reports the following major governmental fund:
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the Park.
#1..
- 281 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
16 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the Park is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed – Amounts constrained to specific purposes by the Park itself, using the Park’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the Park takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period. • Assigned – Amounts the Park intends to use for a specific purpose. Intent can be expressed by the Park at either the highest level of decision-making or by an official or body to which the Park delegates the authority.
• Unassigned – The residual classification for the Park that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.
The Park establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy. This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts. Assigned fund balance is established by the Park through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the Park’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed.
Net Position: Net position represents the residual interest in the Park’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
#1..
- 282 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
17 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update: During the year ending June 30, 2021, the Park implemented the following standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests - an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021.
#1..
- 283 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021 which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the Park are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance.
Credit quality ratings are not available for the Park’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.
Cash in the City pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The Park does not have any deposits with financial institutions as of June 30, 2021.
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 29,303
Total cash and investments $ 29,303
Deposits with City of Modesto
Cash and investment pool $ 29,303
Total cash and investments $ 29,303
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the Park’s position in the pool is the same as the value of its pool shares.
NOTE 3 – RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
Restricted for Park Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the Park.
#1..
- 284 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 4 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the Novel Coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the Park remains unknown. #1..
- 285 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the City of Modesto Community Facilities District Number 1998-1 (Enterprise Business Park) (the Park), as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the Park’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Park’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Park’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Park’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Park’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 286 -
21 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Park’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 287 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 288 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report.......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:
Statement of Net Position – Governmental Activities ........................................................................ 11 Statement of Activities – Governmental Activities ............................................................................. 12 Balance Sheet – Governmental Funds ................................................................................................ 14 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position – Governmental Activities....................................................................... 15 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds.............................................................................................. 16 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Change in Net Position of
Governmental Activities.................................................................................................................... 17 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Special Revenue Fund – Budget and Actual.............................................................. 18 Notes to Basic Financial Statements.................................................................................................................. 19 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...................................................................................................................... 26 #1..
- 289 -
7473 N. INGRAM AVE., SUITE 102 ⬧ FRESNO, CA 93711
_______________________________________________________________________________________________ P (559) 412-7576 ⬧ F (559) 493-5325 ⬧ WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2003-1 (Fairview Village) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District, as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.
#1..
- 290 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 291 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 2003-1 (Fairview Village) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with your reading of the accompanying basic financial statements.
THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.
The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.
BACKGROUND AND MANAGEMENT’S DISCUSSION
In 1989, the City adopted the Urban Growth Management Strategy, which requires that any future development within the “Urban Reserve” be planned and annexed as “villages” under the auspices of Specific Plans. This action was seen as necessary to prevent new development from occurring in undeveloped areas prior to there being adequate consideration for public facilities such as roadways, parks, schools, and utility improvements.
Fairview Village is a proposed planned community with an expected population of 5,000 people living in approximately 2,250 homes. The project is to be developed on a 364-acre site located just outside the southwest edge of the City in Stanislaus County. The Fairview Village Plan Area is essentially square with each edge approximately three-quarters of a mile in length. It is contiguous to the Bret Harte neighborhood on the east, and is bounded by the expanded Hatch Road to the north, Carpenter Road to the west, and Whitmore Avenue to the south.
The District is designed around a large central neighborhood park and new elementary school that forms the center of the new community. Fairview Village will also include a secondary elementary school and a commercial center with shops, offices, and apartments.
In December 2003, the City Council formed the District and authorized the District to issue up to $25 million in bonded indebtedness to acquire or construct certain water, storm drain, and sewer system improvements and a bike trail and all appurtenances and appurtenant work in connection therewith. The only qualified voter eligible to vote during the formation of the District was Del Valle Corporation (the Developer), the owner of approximately
81.66 acres. A final map was recorded subdividing the Developer’s 81.66 acres into 382 single-family residential lots.
In September 2005, the District issued Special Tax Bonds, Series 2005 in the principal amount of $5 million. The majority of the net construction proceeds were used to reimburse the Developer for the District-funded infrastructure it will install pursuant to the Acquisition & Shortfall Agreements entered into with the District. In October 2005, supplemental information concerning the bond issue was distributed to the repositories. This supplemental information advised the bond holders and market of the amendments to the Acquisition & Shortfall Agreement that allow the issuance of certain occupancy permits prior to the completion of the infrastructure projects specified in the Acquisition & Shortfall Agreement. #1..
- 292 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
Matters related to the Developer’s subdivision located in the District were first memorialized in an Acquisition & Shortfall Agreement between the City and Norman Galas, etc. in December 1997. On January 9, 2003, the Acquisition & Shortfall Agreement was amended and named Del Valle Capital Corporation, Inc., as a party to the Acquisition & Shortfall Agreement. Since that time, two subsequent amendments have occurred, and additional agreements have between executed between the City and the District. The chronology of the agreements related to the Developer’s subdivision follows:
• The Acquisition & Shortfall Agreement between the City and Norman Galas, June Galas, Stanley Galas, and Bonnie K. Galas dated as of September 16, 1997, as amended by the First Amendment to the Acquisition & Shortfall Agreement between the City and Norman Galas, June Galas, Stanley Galas, Bonnie K. Galas, and Del Valle Capital Corporation, Inc., dated as of January 9, 2003, and as further amended by the Second Amendment to the Acquisition & Shortfall Agreement between the City and Norman Galas, June Galas, Stanley Galas, Bonnie K. Galas, and Del Valle Capital Corporation, Inc., dated as of June 10, 2003, and as finally amended by the Third Amendment to the Acquisition & Shortfall Agreement between the City and Norman Galas, June Galas, Stanley Galas, Bonnie K. Galas, Del Valle Capital Corporation, Inc., dated as of June 22, 2004.
• Advanced Funding Agreement for the District dated as of October 28, 2003, Subdivision Agreement, dated as of December 23, 2003, pertaining to Galas Brothers Subdivision Unit No. 1. • Subdivision Agreement, dated as of December 23, 2003, pertaining to Galas Brothers Subdivision Unit No.
2. • Agreement to Complete Necessary Infrastructure Prior to Final Inspection or Occupancy, dated as of December 23, 2003, as amended by the Amendment to Agreement dated as of January 25, 2005, and as further amended by the Second Amendment to Agreement dated as of November 9, 2005, and as further amended by the Third Amendment to Agreement dated as of December 14, 2005, and as finally amended by the Fourth Amendment to Agreement, dated as of June 27, 2006. • Two Acquisition & Shortfall Agreements between the District and Del Valle Homes, each dated as of June 22, 2004.
• Agreement by and between the City, Del Valle Capital Corporation, Inc., D.R. Horton, Inc., and Pulte Home Corporation Regarding the Funding and Construction of Certain Interim Water Improvements in Return for City’s Issuance of Certain Permits, dated as of September 30, 2005. • Letter of Agreement between City and Del Valle Homes dated as of February 2, 2007. • Agreement for the Acceptance of Completed Public Improvements and Partial Release of Security, dated as of June 12, 2007.
On November 25, 2008, the City Council approved a Settlement Agreement and Mutual Release with the Developer.
The City agreed to accept the infrastructure improvements remaining to be accepted such as the well, storage, booster pumps, wellhead treatment system, and some in-tract subdivision improvements. In return, the Developer received a gross payment of $1.3 million minus $452,365 that was withheld pursuant to the terms of the Settlement Agreement, of which approximately $99,000 will be utilized by City crews to complete repairs to the accepted infrastructure. The Developer received a net payment of $847,635. #1..
- 293 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
Government-Wide:
• The District’s net position increased to $923,487 for fiscal year 2021. • Total District revenues were $521,890.
• Total District expenses were $487,033.
Funds Basis:
• Special Revenue Fund revenues of $198,530 were $7,746 less than the prior year which was primarily due to a decrease in interest and investment income and expenditures of $175,541 were $3,335 more than the prior year due to an increase in professional service expenditures. The Special Revenue Fund balance increased by $22,989 to an ending fund balance of $397,106. • Debt Service Fund revenues of $317,333 were $5,891 higher than the prior year primarily due to an increase in facilities and maintenance tax revenue and expenditures of $305,277 were $3,486 higher than the prior year due to an increase in professional service expenditures. The Debt Service Fund balance increased by $12,056 to an ending fund balance of $457,562.
THE BASIC FINANCIAL STATEMENTS
The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.
Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.
The Statement of Net Position and the Statement of Activities present information about the following:
Governmental activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.
#1..
- 294 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.
As of June 30, 2021, total assets of $4,557,295 and deferred outflows of resources of $113,222 were offset by liabilities of $3,747,030. The District’s net position from governmental activities increased to $923,487 in 2021 from $888,630 in 2020. All of the District’s net position is restricted as follows: $399,442 for District maintenance and $524,045 for debt service.
The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 659,655 $ 620,231 $ 39,424
Cash and investments with fiscal agent 195,193 195,673 (480) Taxes receivable 6,027 7,146 (1,119)
Assessments receivable 3,694,254 3,824,254 (130,000)
Prepaid expenses 636 630 6
Interest receivable 1,530 2,652 (1,122)
Total assets 4,557,295 4,650,586 (93,291)
Deferred loss on refunding 113,222 121,214 (7,992)
Current and other liabilities 57,030 63,170 (6,140)
Long-term debt 3,690,000 3,820,000 (130,000)
Total liabilities 3,747,030 3,883,170 (136,140)
Net position:
Restricted for:
District maintenance 399,442 374,117 25,325
Debt service 524,045 514,513 9,532
Total net position $ 923,487 $ 888,630 $ 34,857
Statement of Net Position - Governmental Activities
#1..
- 295 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue came from facilities and maintenance special tax of $522,640 and investment earnings (loss) of ($750). District expenses of $487,033 were for professional services, utilities, and interest.
The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues:
General revenues:
Facilities and maintenance special tax $ 522,640 $ 493,841 $ 28,799 Investment earnings (loss) (750) 23,877 (24,627)
Total revenues 521,890 517,718 4,172
Expenses:
Community development 325,356 312,640 12,716
Interest on long-term debt 161,677 167,709 (6,032)
Total expenses 487,033 480,349 6,684
Change in net position 34,857 37,369 $ (2,512)
Net position, Beginning of Year 888,630 851,261
Net position, End of Year $ 923,487 $ 888,630
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s two funds. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.
The fund financial statements provide detailed information about each of the District’s most significant funds, called major funds. Major funds present the major activities of the District for the year, and may change from year to year as a result of changes in the pattern of District’s activities. All of the District’s funds are presented here as major funds; their purpose is explained in Note 1 to the financial statements. All the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses. #1..
- 296 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balance for both the Special Revenue Fund and the Debt Service Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 198,530 $ 206,276 $ (7,746)
Expenditures 175,541 172,206 3,335
Changes in fund balance 22,989 34,070 $ (11,081)
Fund balance, Beginning of Year 374,117 340,047
Fund balance, End of Year $ 397,106 $ 374,117
2021 2020 Change
Revenues $ 317,333 $ 311,442 $ 5,891
Expenditures 305,277 301,791 3,486
Changes in fund balance 12,056 9,651 $ 2,405
Fund balance, Beginning of Year 445,506 435,855
Fund balance, End of Year $ 457,562 $ 445,506
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Debt Service Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental funds reported combined fund balances of $854,668, which was a $35,045 increase from fiscal year 2020. The Special Revenue Fund realized a $22,989 increase and the Debt Service Fund realized an increase of $12,056 due to facilities and maintenance special tax. #1..
- 297 -
9 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.
Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.
DEBT ADMINISTRATION
The District issued Special Tax Bonds, Series 2005 in the principal amount of $5 million in September 2005. Except for approximately $20,000 that was used to reimburse the City’s water fund for work performed by its crews, the proceeds were used to reimburse the Developer for infrastructure it installed pursuant to the Acquisition & Shortfall Agreements entered into between Developer and the District.
The District issued Refunding Special Tax Bonds, Series 2014 in the principal amount of $4.4 million in December 2014 to refund the outstanding Special Tax Bonds, Series 2005.
The balance of the long-term debt at June 30, 2021, is $3.69 million. Additional details can be found in Note 3 to the financial statements.
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 298 -
10 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION
AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting as that used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.
The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.
The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 299 -
The accompanying notes are an integral part of the financial statements. 11 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 659,655
Cash and investments with fiscal agent 195,193
Taxes receivable 6,027
Assessments receivable 3,694,254
Prepaid expenses 636
Interest receivable 1,530
Total Assets 4,557,295
DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding 113,222
Total Deferred Outflows of Resources 113,222
LIABILITIES
Accounts payable 6,600
Interest payable 50,430
Long-term debt:
Due within one year 140,000
Due in more than one year 3,550,000
Total Liabilities 3,747,030
NET POSITION
Restricted for:
District maintenance 399,442
Debt service 524,045
Total Net Position $ 923,487
#1..
- 300 -
The accompanying notes are an integral part of the financial statements. 12 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community development $ 325,356 $ - $ (325,356)
Interest on long-term debt 161,677 - (161,677)
$ 487,033 $ - (487,033)
General Revenues:
Facilities and maintenance special tax 522,640
Investment earnings (loss) (750)
Total General Revenues 521,890
34,857
Net Position, Beginning of Year 888,630
Net Position, End of Year $ 923,487
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
#1..
- 301 -
13 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The District determined all its funds to be major funds. They are:
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
The Debt Service Fund accounts for the payment of principal and interest on the 2014 Refunding Special Tax Bonds. #1..
- 302 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Special Debt
Revenue Service
Fund Fund Total
ASSETS
Cash and investments $ 402,948 $ 256,707 $ 659,655
Cash and investments with fiscal agent - 195,193 195,193 Taxes receivable 2,336 3,691 6,027
Assessments receivable - 3,694,254 3,694,254
Prepaid expenses - 636 636
Interest receivable 758 772 1,530
Total Assets $ 406,042 $ 4,151,253 $ 4,557,295
LIABILITIES
Accounts payable $ 6,600 $ - $ 6,600
Total Liabilities 6,600 - 6,600
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 2,336 3,693,691 3,696,027
Total Deferred Inflows of Resources 2,336 3,693,691 3,696,027
FUND BALANCES
Restricted:
District maintenance 397,106 - 397,106
Debt service - 457,562 457,562
Total Fund Balances 397,106 457,562 854,668
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $ 406,042 $ 4,151,253 $ 4,557,295 #1..
- 303 -
The accompanying notes are an integral part of the financial statements. 15 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position:
Total Fund Balances - Governmental Funds $ 854,668
Other long-term assets are not available to pay for the current period expenditures and therefore are deferred in the funds. 3,690,000 Revenues not available for current-period expenditues are deferred in governmental funds, but are considered earned in the Statement 6,027 of Net Position.
Long term liabilities, and the related deferred loss on refunding, are not due and payable in the current period and therefore are not reported in the funds.
Long-term debt (3,690,000)
Deferred loss on refunding 113,222
Interest payable (50,430)
Total Net Position - Governmental Activities $ 923,487
#1..
- 304 -
The accompanying notes are an integral part of the financial statements. 16 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Special Debt
Revenue Service
Fund Fund Total
REVENUES
Facilities and maintenance special tax $ 198,668 $ 317,945 $ 516,613 Interest income 3,074 2,472 5,546
Change in fair value of investments (3,212) (3,084) (6,296) Total Revenues 198,530 317,333 515,863
EXPENDITURES
Services - professional and other 141,304 19,815 161,119 Utilities 34,237 - 34,237
Debt service:
Principal payments - 130,000 130,000
Interest and fiscal charges - 155,462 155,462
Total Expenditures 175,541 305,277 480,818
Changes in Fund Balances 22,989 12,056 35,045
Fund Balances, Beginning of Year 374,117 445,506 819,623 Fund Balances, End of Year $ 397,106 $ 457,562 $ 854,668 #1..
- 305 -
The accompanying notes are an integral part of the financial statements. 17 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES CHANGE IN NET
POSITION OF GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of the Governmental Fund to the Statement of Activities:
Net change in Fund Balance - Governmental Fund $ 35,045 Revenues previously recognized in the Statement of Activities that did not provide current financial resources and therefore were not reported as revenues in the funds are reported as revenues in the funds this year when received. (130,000)
Revenues that are considered earned in the Statement of Activities that did not provide current financial resources in the current year were not reported as revenues in the governmental funds. 6,027 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal long-term debt and the payment to refunding escrow consumes current financial resources of governmental funds. Neither transaction, however, has any effect on net position:
Repayment of the principal of long-term debt 130,000
Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds:
Amortization of deferred loss on refunding (7,992)
Interest payable 1,777
Change in Net Position - Governmental Activities $ 34,857 #1..
- 306 -
The accompanying notes are an integral part of the financial statements. 18 COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Maintenance special tax $ 195,000 $ 195,000 $ 198,668 $ 3,668 Interest income - - 3,074 3,074
Change in fair value
of investments - - (3,212) (3,212)
Total Revenues 195,000 195,000 198,530 3,530
EXPENDITURES
Services - professional
and other 139,917 139,917 141,304 (1,387)
Utilities 44,100 44,100 34,237 9,863
Total Expenditures 184,017 184,017 175,541 8,476
Changes in Fund Balance $ 10,983 $ 10,983 22,989 $ 12,006 Fund Balance, Beginning of Year 374,117
Fund Balance, End of Year $ 397,106
Budgeted Amounts
#1..
- 307 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 2003-1 (Fairview Village) (the District) was formed in December 2003 by a vote of the property owners within the proposed district. The District, a separate legal entity, was formed to provide a funding and reimbursement mechanism for public facilities and services required by the District Specific Plan. The District encompasses approximately 359 gross acres of land located in the southwest area of the City of Modesto, California (the City), the south side of Hatch Road and east of Carpenter Road. The District is expected to yield 383 single-family residential lots, a water well, storm drainage basin, water tank, sewer outfall line, and a portion of the central neighborhood park site and related infrastructure on 81.66 acres located in the northeast portion of the District. The remaining properties with the 359 acres are expected to annex to the District in the future, as the area develops.
The District is an integral part of the City of Modesto, California (the City) and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.
Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.
The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.
The District reports the following major governmental funds:
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of infrastructure within the District.
The Debt Service Fund accounts for the payment of principal and interest on the 2014 Refunding Special Tax Bonds. #1..
- 308 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Maintenance Special Taxes: The maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District.
The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.
Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.
In addition to assets, the Statements of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.
In addition to liabilities, the Statement of Net Position will sometimes report section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed - Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned - Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned - The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes. #1..
- 309 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
21 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fund Balance (continued): The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy. This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts. Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed.
Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No. 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021. #1..
- 310 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
22 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022 GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District, with the exception of cash and investments with fiscal agents, are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.
Cash in the City pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form.
#1..
- 311 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
23 NOTE 2 – CASH AND INVESTMENTS (continued)
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 659,655
Cash and investments with fiscal agent 195,193
Total cash and investments $ 854,848
Deposits with City of Modesto
Cash and investment pool $ 659,655
Money market fund 195,193
Total cash and investments $ 854,848
Concentration of Credit Risk
The District is required to disclose investments that represent a concentration of five percent or more of investments in any one issuer held by individual funds in the securities of issuers other than U.S. Treasury securities, mutual funds, and external investment pools. At June 30, 2021, the Debt Service Fund did not hold any other investments.
Fair Value Hierarchy
The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets.
Level 1 inputs are quoted prices in an active market for identical assets; level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The inputs and techniques used for valuing securities are not necessarily an indication of risk associated with investing in those securities. The District’s investment in the City’s pool and money market fund are exempt from fair value measurement disclosures.
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares.
NOTE 3 – LONG TERM DEBT
On December 16, 2014, the District issued Refunding Special Tax Bonds (refunding bonds) with a par amount of $4,420,000 to refund the District’s $4,660,000 outstanding Special Tax Bonds (refunded bonds) issued on September 1, 2005, which were issued primarily to finance various public improvements needed to develop property located within the District. Interest on the refunding bonds is payable semiannually on each March 1 and September 1 through September 1, 2035. The refunding bonds were issued with an interest rate of 4.1% and are payable solely from revenues derived from the assessment of annual special taxes to be levied on the taxable property within the District and from certain other funds pledged under the Trust Indenture. The principal of these bonds are not subject to acceleration.
#1..
- 312 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
24 NOTE 3 – LONG TERM DEBT (continued)
Any one or more of the following events shall constitute an “event of default” for these bonds:
(a) Default in the due and punctual payment of the principal of or redemption premium, if any, on any bond when and as the same shall become due and payable, whether at maturity as there in expressed, by declaration or otherwise.
(b) Default in the due and punctual payment of the interest on any bond when and as the same shall become due and payable.
(c) Except as described in (a) or (b), default shall be made by the District in the observance of any of the agreements, conditions, or covenants for a period of thirty (30) days after the District shall have been given notice in writing of such default by the Trustee or the owners of twenty-five percent (25%) in aggregate principal amount of the outstanding bonds.
The long-term debt activity for the year ended June 30, 2021 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Refunding Special Tax Bonds 3,820,000 $ -$ (130,000) $ $ 3,690,000 $ 140,000 Annual debt service requirements for the refunding bonds are shown below:
Year Ended June 30, Principal Interest
2022 $ 140,000 $ 148,420
2023 155,000 142,373
2024 165,000 135,813
2025 180,000 128,740
2026 195,000 121,053
2027-2031 1,200,000 469,245
2032-2036 1,655,000 178,248
$ 3,690,000 $ 1,323,892
Interest expense for the year ended June 30, 2021 was $161,677.
NOTE 4 - RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.
Restricted for Debt Service - the portion of fund balance legally restricted to the payment of principal and interest on long-term liabilities.
#1..
- 313 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2003-1 FAIRVIEW VILLAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
25 NOTE 5 – DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that will initiate foreclosure proceedings against delinquent parcels as follows:
a. Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within 120 days after the third delinquency.
b. All parcels delinquent at June 30 when the District received Special Taxes totaling less than 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initiated by September 1 following the end of the fiscal year.
At June 30, 2021, the District had five parcels that were delinquent for a total of $6,027, one of which were delinquent for more than three consecutive payments.
The District received 99.21% of the Special Revenue Fund and Debt Service Fund facilities and maintenance special taxes levied during the year ended June 30, 2021. The delinquencies total of $4,084 at June 30, 2021 is included in assessments receivable on the Statement of Net Position and Balance Sheet.
NOTE 6 – DEFICIENCY OF EXPENDITURES OVER APPROPRIATIONS Deficiency of expenditures over appropriations for the year ended June 30, 2021 was as follows:
Expenditures Amount
Special Revenue Fund:
Services - professional and other $ (1,387)
NOTE 7 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus (COVID-19) require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to COVID-19. The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 314 -
7473 N. INGRAM AVE., SUITE 102 ⬧ FRESNO, CA 93711
_______________________________________________________________________________________________ P (559) 412-7576 ⬧ F (559) 493-5325 ⬧ WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2003-1 (Fairview Village) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 315 -
27 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 316 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 317 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report ......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:
Statement of Net Position – Governmental Activities ........................................................................ 10 Statement of Activities – Governmental Activities ............................................................................. 11 Balance Sheet – Governmental Funds ................................................................................................ 13 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position – Governmental Activities ........................................................................ 14 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds ................................................................................................ 15 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Change in Net Position of Governmental Activities ............................................................................ 16 Statement of Revenues, Expenditures, and Changes in
Fund Balance – Special Revenue Fund – Budget and Actual ............................................................... 17 Notes to Basic Financial Statements .................................................................................................................. 18 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................................................................................... 24 #1..
- 318 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and major funds of the City of Modesto Community Facilities District Number 2007-2 (Kiernan Business Park West) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the Special Revenue Fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major funds of the District, as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the Special Revenue Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. #1..
- 319 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 320 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 2007-2 (Kiernan Business Park West) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with your reading of the accompanying basic financial statements.
THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.
The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.
BACKGROUND AND MANAGEMENT’S DISCUSSION
On April 1, 1997, the City Council approved the Kiernan Business Park Specific Plan that set forth a plan of development for approximately 614 acres that were, at that time, located adjacent to the City’s northern border, east of Highway 99 and south of Kiernan Avenue in a portion of unincorporated Stanislaus County. To date approximately 250 acres within the Kiernan Business Park Specific Plan have been annexed into the City.
Approximately 88 of the City annexed acres will ultimately be included within the District. The Kiernan Business Park Specific Plan is intended to provide for the development of a new business park, commercial and industrial uses that will assist in implementing the City’s long-range objectives to enhance its local economy, generate jobs for residents and create a better job housing balance.
The District was formed by the City Council in September 2007 to generate funding for construction of certain roadway improvements and the ongoing maintenance of landscaped medians, a bike path, well site, storm drainage pump and basin and related facilities.
#1..
- 321 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
Government-Wide:
• The District’s net position increased to $145,392 for fiscal year 2021. • Total District revenues were $100,827.
• Total District’s expenses were $43,110.
Funds Basis:
• Capital Projects Fund revenues of $42,335 were $42,335 higher than the prior year due to increase in facilities special tax. Expenditures of $0 were the same as the previous year. The Capital Projects Fund ending fund balance increased by $42,335, with an ending fund balance of $42,335. • Special Revenue Fund revenues of $49,790 were $2,721 greater than the prior year due to increased maintenance special tax collections. Expenditures of $43,110 were $3,577 greater than the prior year due to an increase in community development expenses. The Special Revenue Fund balance increased by $6,680 to an ending fund balance of $88,451.
THE BASIC FINANCIAL STATEMENTS
The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.
Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.
The Statement of Net Position and the Statement of Activities present information about the following:
Governmental activities – All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.
#1..
- 322 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.
As of June 30, 2021, total assets of $148,747 were offset by liabilities of $3,355. The District’s net position from governmental activities increased to $145,392 in 2021 from $87,675 in 2020. The District’s net position is restricted as follows: $42,335 for acquisition or construction of infrastructure and $103,057 for maintenance of infrastructure.
The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 133,872 $ 86,551 $ 47,321
Taxes receivable 14,606 5,904 8,702
Interest receivable 269 314 (45)
Total assets 148,747 92,769 55,978
Current and other liabilities 3,355 5,094 (1,739)
Net position:
Restricted for:
Capital projects 42,335 - 42,335
District maintenance 103,057 87,675 15,382
Total net position $ 145,392 $ 87,675 $ 57,717
Statement of Net Position - Governmental Activities
#1..
- 323 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue mainly came from maintenance special tax collections of $58,412 and facilities special tax collection of $42,335. District expenses of $43,110 were for professional services and utilities expenses.
The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues:
General revenues:
Facilities special tax $ 42,335 $ - $ 42,335
Maintenance special tax 58,412 50,045 8,367
Investment earnings 80 2,928 (2,848)
Total revenues 100,827 52,973 47,854
Expenses:
Community development 43,110 39,533 3,577
Change in net position 57,717 13,440 $ 44,277
Net position, beginning of year 87,675 74,235
Net position, end of year $ 145,392 $ 87,675
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s funds. The fund financial statements measure only current revenues and expenditures and fund balance; they exclude capital assets, long-term debt, and other long-term amounts.
The fund financial statements provide detailed information about each of the District’s most significant funds, called major funds. Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of the District’s activities. All of the District’s funds are presented here as major funds; their purpose is explained in Note 1 to the financial statements. All of the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses. #1..
- 324 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balances for both Capital Projects Fund and the Special Revenue Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 42,335 $ - $ 42,335
Expenditures - - -
Changes in fund balances 42,335 - $ 42,335
Fund balances, beginning of year - -
Fund balances, end of year $ 42,335 $ -
2021 2020 Change
Revenues $ 49,790 $ 47,069 $ 2,721
Expenditures 43,110 39,533 3,577
Changes in fund balances 6,680 7,536 $ (856)
Fund balances, beginning of year 81,771 74,235
Fund balances, end of year $ 88,451 $ 81,771
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Capital Projects Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental funds reported combined fund balances of $130,786, which was a $49,015 increase from fiscal year 2020. The Capital Projects Fund realized a $42,335 increase, due to facilities special tax, while the Special Revenue Fund realized a $6,680 increase due to maintenance special tax exceeding professional services and utilities expenditures.
CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.
Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets. #1..
- 325 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 326 -
9 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION
AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.
The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.
The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 327 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 133,872
Taxes receivable 14,606
Interest receivable 269
Total Assets 148,747
LIABILITIES
Accounts payable 3,355
Total Liabilties 3,355
NET POSITION
Restricted for:
Capital projects 42,335
District maintenance 103,057
Total Net Position $ 145,392
#1..
- 328 -
The accompanying notes are an integral part of the financial statements. 11 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 43,110 $ - $ (43,110)
$ 43,110 $ - (43,110)
General Revenues:
Facilities special tax 42,335
Maintenance special tax 58,412
Investment earnings 80
Total General Revenues 100,827
57,717
Net Position, Beginning of Year 87,675
Net Position, End of Year $ 145,392
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
#1..
- 329 -
12 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The District determined its funds to both be major funds. They are:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 330 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
ASSETS
Cash and investments $ 42,335 $ 91,537 $ 133,872
Taxes receivable - 14,606 14,606
Interest receivable - 269 269
Total Assets $ 42,335 $ 106,412 $ 148,747
LIABILITIES
Accounts payable $ - $ 3,355 $ 3,355
Total Liabilities - 3,355 3,355
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 14,606 14,606
Total Deferred Inflows of Resources - 14,606 14,606
FUND BALANCES
Restricted for:
District maintenance 42,335 88,451 130,786
Total Fund Balances 42,335 88,451 130,786
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 42,335 $ 106,412 $ 148,747 #1..
- 331 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position:
Total Fund Balances - Governmental Funds $ 130,786
Adjustments to the Balance Sheet of the Governmental Funds to reconcile with the Statement of Net Position:
Revenues not available for current-period expenditures are deferred in governmental funds, but are considered earned in the Statement of Net Position. 14,606
Total Net Position - Governmental Activities $ 145,392
#1..
- 332 -
The accompanying notes are an integral part of the financial statements. 15 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
REVENUES
Facilities special tax $ 42,335 $ - $ 42,335
Maintenance special tax - 49,710 49,710
Interest income - 1,227 1,227
Change in fair value of investments - (1,147) (1,147)
Total Revenues 42,335 49,790 92,125
EXPENDITURES
Services - professional and other - 40,120 40,120
Utilities - 2,990 2,990
Total Expenditures - 43,110 43,110
Changes in Fund Balances 42,335 6,680 49,015
Fund Balances, Beginning of Year - 81,771 81,771
Fund Balances, End of Year $ 42,335 $ 88,451 $ 130,786
#1..
- 333 -
The accompanying notes are an integral part of the financial statements. 16 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT
OF ACTIVITIES CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2021
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities:
Changes in Fund Balances - Governmental Funds $ 49,015
Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balances of the Governmental Funds to reconcile with the Statement of Activities:
Revenues that are considered earned in the Statement of Actvities that did not provide current financial resources in the current year were not reported as revenues in the governmental funds. 8,702 Change in Net Position - Governmental Activities $ 57,717 #1..
- 334 -
The accompanying notes are an integral part of the financial statements. 17 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Maintenance special tax $ 50,000 $ 50,000 $ 49,710 $ (290) Interest income - - 1,227 1,227
Change in fair value
of investments - - (1,147) (1,147)
Total Revenues 50,000 50,000 49,790 (210)
EXPENDITURES
Services - professional
and other 41,719 41,719 40,120 1,599
Utilities 2,600 2,600 2,990 (390)
Total Expenditures 44,319 44,319 43,110 1,209
Changes in Fund Balance $ 5,681 $ 5,681 6,680 $ 999
Fund Balance, Beginning of Year 81,771
Fund Balance, End of Year $ 88,451
Budgeted Amounts
#1..
- 335 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 2007-2 (Kiernan Business Park West) (the District) was formed in October 2007 by a vote of the property owners within the proposed district. The District, a separate legal entity, was formed to provide a funding and reimbursement mechanism for public facilities and services required by the District Specific Plans. The District is the vehicle that will be used to ensure that all landowners in the District pay their share of the public improvements. The District is a proposed 88-acre project, a portion of the Kiernan-Carver Comprehensive Planning District, and bounded on the North by Kiernan Avenue, on the East by Dale Road, on the South by Bangs Avenue, and on the West by Modesto’s City Limits.
The District is an integral part of the City and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.
Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.
The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings and other items which are not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.
The District reports the following major governmental funds:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 336 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Facilities and Maintenance Special Taxes: The facilities and maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due October 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District. The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.
Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.
In addition to assets, the Statements of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.
In addition to liabilities, the Statement of Net Position will sometimes report section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed – Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned – Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned – The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes. #1..
- 337 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fund Balance (continued): The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy. This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts. Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed.
Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No. 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021. #1..
- 338 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
21 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022 GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.
Cash in the City Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021.
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 133,872
Total cash and investments $ 133,872
Deposits with City of Modesto
Cash and investment pool $ 133,872
Total cash and investments $ 133,872
#1..
- 339 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
22 NOTE 2 – CASH AND INVESTMENTS (continued)
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares.
NOTE 3 – RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
Restricted for Capital Projects – the portion of fund balance legally restricted for the acquisition, construction, and formation/annexation activities.
Restricted for District Maintenance – the portion of fund balance legally restricted for maintenance of parkways and open space within the District.
NOTE 4 – DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that it will initiate foreclosure proceedings against delinquent parcels as follows:
a. Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within 120 days after the third delinquency.
b. All parcels delinquent at June 30 when the District received Special Taxes totaling less than 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initiated by September 1 following the end of the fiscal year.
The District has also covenanted that it will pursue the foreclosure proceedings until the delinquent Special Taxes have been paid.
At June 30, 2021, the District had 7 parcels that were delinquent for a total of $14,606, seven of which were delinquent for more than three consecutive payments.
The District received 82.82% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2021. The delinquencies total of $10,310 at June 30, 2021 is included in taxes receivable on the Statement of Net Position and Balance Sheet.
NOTE 5 – DEFICIENCY OF EXPENDITURES OVER APPROPRIATIONS Deficiency of expenditures over appropriations for the year ended June 30, 2021 was as follows:
Expenditures Amount
Special Revenue Fund: $ (390)
Utilities
#1..
- 340 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-2 KIERNAN BUSINESS PARK WEST
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
23 NOTE 6 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus (COVID-19) require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to COVID-19. The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 341 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major funds of the City of Modesto Community Facilities District Number 2007-2 (Kiernan Business Park West) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the Special Revenue Fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 342 -
25 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 343 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 344 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report ......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:
Statement of Net Position – Governmental Activities ........................................................................ 10 Statement of Activities – Governmental Activities ............................................................................. 11 Balance Sheet - Governmental Funds ................................................................................................. 13 Statement of Revenues, Expenditures, and Changes in
Fund Balances - Governmental Funds ................................................................................................. 14 Statement of Revenues, Expenditures, and Changes in -
Fund Balance - Special Revenue Fund – Budget and Actual ................................................................ 15 Notes to Basic Financial Statements .................................................................................................................. 16 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................................................................................... 21 #1..
- 345 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 1997-1 (North Beyer Park) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.
#1..
- 346 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 347 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 1997-1 (North Beyer Park) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with your reading of the accompanying basic financial statements.
THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.
The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.
BACKGROUND AND MANAGEMENT’S DISCUSSION
On November 26, 1996, the City Council of the City approved the North Beyer Park Specific Plan, allowing for a maximum of 1,200 residential units to be developed on 160 acres within the Specific Plan area. In addition, three areas within the Specific Plan were designated “Mixed Use,” two of which were expected to develop as neighborhood commercial shopping centers and the third which was expected to develop as office space. At the same meeting at which the City Council approved the Specific Plan, a residential subdivision was approved for 263 dwelling units to be built on 55 acres within the Specific Plan. One condition of the tentative map of this subdivision required formation of or annexation into a Mello-Roos Community Facilities District (CFD) to fund maintenance of parkways and open space within the development.
In order to comply with the condition of the tentative map, in June 1997 the District was formed and authorized to levy a special tax to pay for capital improvements (medians on Coffee and Oakdale Roads) and ongoing maintenance costs. Subsequent development has annexed to this CFD.
To date, the CFD has been unable to construct the medians. This is because (1) insufficient tax monies have been collected for the construction projects and (2) the medians cannot be installed until the property owners on both sides of Coffee and Oakdale Roads dedicate the necessary right-of-way to construct the full street width. However, the CFD has levied and collected taxes sufficient for the ongoing maintenance expenses. In fact, the CFD has built sufficient reserves that the levy of the annual maintenance tax ceased as of fiscal year 2003-2004 and is not expected to be reinstated until the authorized improvements have been installed. #1..
- 348 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
Government-Wide:
• The District’s net position decreased $9,883 in fiscal year 2021. • At June 30, 2021, net position was $69,089.
• Total general revenues were an investment loss of $6.
Funds Basis:
• Capital Projects Fund revenues were $6. This is a decrease of $1,570 from the prior year. The revenues are attributed to interest earnings and investment loss.
• Capital Projects Fund ending fund balance increased $6 to $45,433. • Special Revenue Fund revenues of ($12) were $1,090 less than last year, attributed to a decrease in interest earnings and investment loss. Expenditures of $9,877 were $3,115 more than the prior year. • Special Revenue Fund ending fund balance decreased $9,889 to $23,656.
THE BASIC FINANCIAL STATEMENTS
The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.
Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.
The Statement of Net Position and the Statement of Activities present information about the following:
Governmental activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. Formation deposits, special facilities taxes, and annual maintenance assessments support these services. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.
#1..
- 349 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.
As of June 30, 2021, total assets were $69,089. The District’s net position from governmental activities decreased to $69,089 in 2021 from $78,972 in 2020. All of the District’s net position is restricted as follows: $45,433 for capital projects and $23,656 for District maintenance.
Following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 68,959 $ 78,724 $ (9,765)
Interest receivable 130 248 (118)
Total assets 69,089 78,972 (9,883)
Net position:
Restricted for:
Capital projects 45,433 45,427 6
District maintenance 23,656 33,545 (9,889)
Total net position $ 69,089 $ 78,972 $ (9,883)
Statement of Net Position - Governmental Activities
#1..
- 350 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 recognized an investment loss of $6. Community Development expenses increased by $3,115 due to an increase in salaries and benefits by City employees providing administrative and program services charged to the District.
Following is a condensed Statement of Activities:
2021 2020 Change
Revenues:
General revenues:
Investment earnings (loss) $ (6) $ 2,654 $ (2,660)
Expenses:
Community development 9,877 6,762 3,115
Change in net position (9,883) (4,108) $ (5,775)
Net position, beginning of year 78,972 83,080
Net position, end of year $ 69,089 $ 78,972
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s two funds. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.
The fund financial statements provide detailed information about each of the District’s most significant funds, called major funds. Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of the District’s activities. All of the District’s funds are presented here as major funds; their purposes are explained in Note 1 to the financial statements. All the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses. #1..
- 351 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
Following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balances for the Capital Projects Fund and the Special Revenue Fund for the years ended June 30, 2021 and 2020:
2021 2020 Change
Revenues $ 6 $ 1,576 $ (1,570)
Expenditures - - -
Changes in fund balances 6 1,576 $ (1,570)
Fund balances, beginning of year 45,427 43,851
Fund balances, end of year $ 45,433 $ 45,427
2021 2020 Change
Revenues $ (12) $ 1,078 $ (1,090)
Expenditures 9,877 6,762 3,115
Changes in fund balances (9,889) (5,684) $ (4,205)
Fund balances, beginning of year 33,545 39,229
Fund balances, end of year $ 23,656 $ 33,545
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Capital Projects Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental funds reported combined fund balances of $69,089, which is a decrease of $9,883 compared with last year. The Capital Projects Fund realized a $6 increase due to investment earnings, while the Special Revenue Fund realized a $9,889 decrease due to professional services expenditures being more than investment revenues.
#1..
- 352 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.
Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 353 -
9 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION
AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.
The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.
The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 354 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 68,959
Interest receivable 130
Total Assets 69,089
NET POSITION
Restricted for:
Capital projects 45,433
District maintenance 23,656
Total Net Position $ 69,089
#1..
- 355 -
The accompanying notes are an integral part of the financial statements. 11 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 9,877 $ - $ (9,877)
$ 9,877 $ - (9,877)
General Revenues:
Investment earnings (loss) (6)
Total General Revenues (6)
(9,883)
Net Position, Beginning of Year 78,972
Net Position, End of Year $ 69,089
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
#1..
- 356 -
12 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The District determined all its funds to be major funds. They are:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 357 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
ASSETS
Cash and investments $ 45,342 $ 23,617 $ 68,959
Interest receivable 91 39 130
Total Assets $ 45,433 $ 23,656 $ 69,089
FUND BALANCES
Restricted for:
Capital projects $ 45,433 $ - $ 45,433
District maintenance - 23,656 23,656
Total Fund Balances $ 45,433 $ 23,656 $ 69,089
Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position:
Total Fund Balances - Governmental Funds $ 69,089
Adjustments to the Balance Sheet of the Governmental Funds to reconcile with the Statement of Net Position: -
Total Net Position - Governmental Activities $ 69,089
#1..
- 358 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
REVENUES
Interest income $ 422 $ 201 $ 623
Change in fair value of investments (416) (213) (629)
Total Revenues 6 (12) (6)
EXPENDITURES
Services - professional and other - 9,877 9,877
Total Expenditures - 9,877 9,877
Changes in Fund Balances 6 (9,889) (9,883)
Fund Balances, Beginning of Year 45,427 33,545 78,972
Fund Balances, End of Year $ 45,433 $ 23,656 $ 69,089
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities:
Changes in Fund Balances - Governmental Funds $ (9,883) Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balances of the Governmental Funds to reconcile with the Statement of Activities: -
Change in Net Position - Governmental Activities $ (9,883) #1..
- 359 -
The accompanying notes are an integral part of the financial statements. 15 COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Interest income $ - $ - $ 201 $ 201
Change in fair value
of investments - - (213) (213)
Total Revenues - - (12) (12)
EXPENDITURES
Services - professional
and other 11,817 11,817 9,877 1,940
Total Expenditures 11,817 11,817 9,877 1,940
Changes in Fund Balance $ (11,817) $ (11,817) (9,889) $ 1,928 Fund Balance, Beginning of Year 33,545
Fund Balance, End of Year $ 23,656
Budgeted Amounts
#1..
- 360 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
16 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 1997-1 (North Beyer Park) (the District) was formed in June 1997 by a vote of the property owners within the proposed District. The District, a separate legal entity, was formed to provide a funding mechanism for public facilities and services as required by the District Specific Plan. The District is a 160-acre project, the boundaries of which are recorded in Book 2, page 80 of the Book of Assessment District Maps in the Stanislaus County Recorder’s Office.
The District is an integral part of the City of Modesto, California (the City) and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.
Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.
The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.
The District reports the following major governmental funds:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 361 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
17 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed - Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned - Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned - The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.
The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy.
This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts.
Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed.
Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
#1..
- 362 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Net Position (continued):
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022 GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021
#1..
- 363 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.
Cash in the City Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021.
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 68,959
Total cash and investments $ 68,959
Deposits with City of Modesto
Cash and investment pool $ 68,959
Total cash and investments $ 68,959
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares.
NOTE 3 – RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
Restricted for Capital Projects - the portion of fund balance legally restricted for the acquisition, construction, and formation/annexation activities.
Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.
#1..
- 364 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1997-1 NORTH BEYER PARK
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 4 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the Novel Coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 365 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 1997-1 (North Beyer Park) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 366 -
22 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 367 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 368 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report ......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:
Statement of Net Position – Governmental Activities ........................................................................ 10 Statement of Activities – Governmental Activities ............................................................................. 11 Balance Sheet – Governmental Funds ................................................................................................ 13 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds ................................................................................................ 14 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Special Revenue Fund – Budget and Actual ................................................................ 15 Notes to Basic Financial Statements .................................................................................................................. 16 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................................................................................... 21 #1..
- 369 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2002-1 (Northpointe) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.
#1..
- 370 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 371 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 2002-1 (Northpointe) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with your reading of the accompanying basic financial statements.
THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.
The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.
BACKGROUND AND MANAGEMENT’S DISCUSSION
On April 1, 1997, the City Council approved the Kiernan Business Park Specific Plan that set forth a plan of development for approximately 614 acres that were, at that time, located adjacent to the City’s northern border, east of Highway 99 and south of Kiernan Avenue in a portion of unincorporated Stanislaus County. To date, approximately 250 acres within the Kiernan Business Park Specific Plan have been annexed into the City.
Approximately 55 of the City-annexed acres are included within the District. The Kiernan Business Park Specific Plan is intended to provide for the development of a new business park, commercial and industrial uses that will assist in implementing the City’s long-range objectives to enhance its local economy, generate jobs for residents, and create a better jobs/housing balance.
The District was formed by the City Council in February 2002 in order to generate funding for landscaping improvements, a variety of maintenance responsibilities (weed control, litter removal, landscape maintenance, and general maintenance and replacement of storm drainage facilities), and improvement and replacement costs necessitated by development of the projects within the District. The Capital Projects Fund, earmarked to fund the storm drain basin landscape improvements, will be utilized once the final configuration of the storm drain basin has been determined.
#1..
- 372 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
Government-Wide:
• The District’s net position increased to $434,855 for fiscal year 2021. • Total District revenues were $68,030.
• Total District expenses were $36,011.
Funds Basis:
• Capital Projects Fund revenues of $4 were $1,574 lower than the prior year due to decrease in interest income and investment loss. Expenditures of $0 were the same as the previous year. The Capital Projects Fund ending fund balance increased by $4, with an ending fund balance of $45,467. • Special Revenue Fund revenues of $68,026 were $11,050 lower than the prior year primarily due to there being a decrease in interest income and investment loss in the current year. Expenditures of $36,011 were $1,314 higher than the prior year due to an increase in rental and utilities expenditures. The special revenue fund balance increased by $32,015 to an ending fund balance of $389,388.
THE BASIC FINANCIAL STATEMENTS
The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.
Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.
The Statement of Net Position and the Statement of Activities present information about the following:
Governmental Activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.
#1..
- 373 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.
As of June 30, 2021, total assets of $435,288 were offset by liabilities of $433. The District’s net position from governmental activities increased to $434,855 in 2021 from $402,836 in 2020. All of the District’s net position is restricted as follows: $45,467 for acquisition or construction of infrastructure and $389,388 for maintaining that infrastructure.
The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 434,123 $ 402,594 $ 31,529
Assessments receivable 323 - 323
Interest receivable 842 1,326 (484)
Total assets 435,288 403,920 31,368
Current and other liabilities 433 1,084 (651)
Net position:
Restricted for:
Capital projects 45,467 45,463 4
District maintenance 389,388 357,373 32,015
Total net position $ 434,855 $ 402,836 $ 32,019
Statement of Net Position - Governmental Activities
#1..
- 374 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue came primarily from maintenance special tax of $60,074, investment earnings of $36, and miscellaneous revenue of $7,920. District expenses of $36,011 were for professional services and utilities expenses.
The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues:
General revenues:
Maintenance special tax $ 60,074 $ 59,790 $ 284
Investment earnings 36 13,184 (13,148)
Miscellaneous 7,920 7,680 240
Total revenues 68,030 80,654 (12,624)
Expenses:
Community development 36,011 34,697 1,314
Change in net position 32,019 45,957 $ (13,938)
Net position, beginning of year 402,836 356,879
Net position, end of year $ 434,855 $ 402,836
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s two funds. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.
The fund financial statements provide detailed information about each of the District’s most significant funds, called major funds. Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of the District’s activities. All of the District’s funds are presented here as major funds; their purpose is explained in Note 1 to the financial statements. All the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses. #1..
- 375 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balances for both the Capital Projects Fund and the Special Revenue Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 4 $ 1,578 $ (1,574)
Expenditures - - -
Changes in fund balances 4 1,578 $ (1,574)
Fund balances, beginning of year 45,463 43,885
Fund balances, end of year $ 45,467 $ 45,463
2021 2020 Change
Revenues $ 68,026 $ 79,076 $ (11,050)
Expenditures 36,011 34,697 1,314
Changes in fund balances 32,015 44,379 $ (12,364)
Fund balances, beginning of year 357,373 312,994
Fund balances, end of year $ 389,388 $ 357,373
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Capital Projects Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental funds reported combined fund balances of $434,855, which was a $32,019 increase from fiscal year 2020. The Capital Projects Fund realized a $4 increase, due to investment earnings, while the Special Revenue Fund realized a $32,015 increase due to maintenance special tax and investment revenues exceeding professional services and utilities.
#1..
- 376 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.
Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 377 -
9 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION
AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.
The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.
The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 378 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 434,123
Assessments receivable 323
Interest receivable 842
Total Assets 435,288
LIABILITIES
Accounts payable 433
Total Liabilities 433
NET POSITION
Restricted for:
Capital projects 45,467
District maintenance 389,388
Total Net Position $ 434,855
#1..
- 379 -
The accompanying notes are an integral part of the financial statements. 11 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 36,011 $ - $ (36,011)
$ 36,011 $ - (36,011)
General Revenues:
Maintenance special tax 60,074
Investment earnings 36
Miscellaneous revenue 7,920
Total General Revenues 68,030
32,019
Net Position, Beginning of Year 402,836
Net Position, End of Year $ 434,855
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
#1..
- 380 -
12 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The District determined all its funds to be major funds. They are:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 381 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
ASSETS
Cash and investments $ 45,376 $ 388,747 $ 434,123
Assessments receivable - 323 323
Interest receivable 91 751 842
Total Assets $ 45,467 $ 389,821 $ 435,288
LIABILITIES
Accounts payable $ - $ 433 $ 433
Total Liabilities - 433 433
FUND BALANCES
Restricted for:
Capital projects 45,467 - 45,467
District maintenance - 389,388 389,388
Total Fund Balances 45,467 389,388 434,855
Total Liabilities and Fund Balances $ 45,467 $ 389,821 $ 435,288 Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position:
Total Fund Balances - Governmental Funds $ 434,855
Adjustments to the Balance Sheet of the Governmental Funds to reconcile with the Statement of Net Position: -
Total Net Position - Governmental Activities $ 434,855
#1..
- 382 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
REVENUES
Maintenance special tax $ - $ 60,074 $ 60,074
Interest income 423 3,355 3,778
Change in fair value of investments (419) (3,323) (3,742) Miscellaneous revenue - 7,920 7,920
Total Revenues 4 68,026 68,030
EXPENDITURES
Services - professional and other - 29,807 29,807
Utilities - 6,204 6,204
Total Expenditures - 36,011 36,011
Changes in Fund Balances 4 32,015 32,019
Fund Balances, Beginning of Year 45,463 357,373 402,836 Fund Balances, End of Year $ 45,467 $ 389,388 $ 434,855 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities:
Changes in Fund Balances - Governmental Funds $ 32,019
Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balances of the Governmental Funds to reconcile with the Statement of Activities: -
Change in Net Position - Governmental Activities $ 32,019 #1..
- 383 -
The accompanying notes are an integral part of the financial statements. 15 COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Maintenance special tax $ 60,000 $ 60,000 $ 60,074 $ 74 Miscellaneous revenue - - 7,920 7,920
Interest income - - 3,355 3,355
Change in fair value
of investments - - (3,323) (3,323)
Total Revenues 60,000 60,000 68,026 8,026
EXPENDITURES
Services - professional
and other 27,792 32,021 29,807 2,214
Utilities 6,000 6,000 6,204 (204)
Total Expenditures 33,792 38,021 36,011 2,010
Changes in Fund Balance $ 26,208 $ 21,979 32,015 $ 10,036 Fund Balance, Beginning of Year 357,373
Fund Balance, End of Year $ 389,388
Budgeted Amounts
#1..
- 384 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
16 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 2002-1 (Northpointe) (the District) was formed in February 2002 by a vote of the property owners within the proposed District. The District, a separate legal entity, was formed to provide a funding and reimbursement mechanism for public facilities and services required by the District Specific Plans. The District is the vehicle used to ensure that all landowners in the Specific Plans pay their fair share of the public improvements. The District is a 55-acre project bounded on the East by Highway 99, and by Pelandale Avenue on the South. The District will provide for the development of new business park and industrial uses and includes such tenants as Costco, Lowe’s, and Union Safe Deposit Bank.
The District is an integral part of the City of Modesto, California (the City) and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.
Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.
The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.
The District reports the following major governmental funds:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 385 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
17 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Maintenance Special Taxes: The maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District.
The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed – Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned – Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned – The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.
The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy.
This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts.
Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed. #1..
- 386 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No. 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022. #1..
- 387 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022 GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.
Cash in the City pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021.
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 434,123
Total cash and investments $ 434,123
Deposits with City of Modesto
Cash and investment pool $ 434,123
Total cash and investments $ 434,123
#1..
- 388 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2002-1 NORTHPOINTE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 2 – CASH AND INVESTMENTS (continued)
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares.
NOTE 3 – RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
Restricted for Capital Projects - the portion of fund balance legally restricted for the acquisition, construction, and formation/annexation activities.
Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.
NOTE 4 – EXCESS OF EXPENDITURES OVER APPROPRIATIONS
Excess of expenditures over appropriations for the year ended June 30, 2021 were:
Expenditures Amount
Special Revenue Fund:
Utilities (204)
NOTE 5 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus (COVID-19) require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the COVID-19. The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 389 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2002-1 (Northpointe) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 390 -
22 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 391 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 392 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report.......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:
Statement of Net Position – Governmental Activities ........................................................................ 10 Statement of Activities – Governmental Activities ............................................................................. 11 Balance Sheet – Governmental Funds ................................................................................................ 13 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position – Governmental Activities ........................................................................ 14 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds ................................................................................................ 15 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Change in Net Position of Governmental Activities ............................................................................ 16 Statement of Revenues, Expenditures, and Changes in
Fund Balance – Special Revenue Fund – Budget and Actual ............................................................... 17 Notes to Basic Financial Statements .................................................................................................................. 18 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...................................................................................................................... 26 #1..
- 393 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2004-1 (Village One #2) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended, in accordance with accounting principles generally accepted in the United States of America.
#1..
- 394 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 395 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 2004-1 (Village One #2) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with your reading of the accompanying basic financial statements.
THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.
The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.
BACKGROUND AND MANAGEMENT’S DISCUSSION
The Village One #2 Specific Plan encompasses approximately 1,840 gross acres of land within the City, on which a pedestrian-oriented, mixed-use, planned community is anticipated to be developed. In 1996 the City Council formed City of Modesto Community Facilities District (CFD) No. 1996-1 to provide funding for the acquisition or construction of certain road, storm drainage, and park improvements. In 2004 it was determined that the tax rates set forth in CFD No. 1996-1 would be insufficient to fund the required infrastructure; therefore, in early 2004, the City Council formed the District to assist in the financing of the remaining required infrastructure. The District includes a onetime facilities special tax, an annual facilities special tax, and an annual maintenance special tax. The District, in conjunction with CFD No. 1996-1, will provide the funding needed to complete the District funded core infrastructure needed for the Village One #2 area.
Below is a summary of the District funded infrastructure that was under design, construction or constructed/acquired for the Village One #2 area in fiscal year 2020-2021 using tax monies and bond proceeds from the District:
Under Design and Construction
• Sylvan Avenue between Oakdale and Wood Sorrell
• Oakdale Road between Floyd Avenue and Sylvan Avenue
• Roselle Avenue between Sylvan Avenue and Floyd Avenue • Signal at Roselle Avenue and Bellharbour Drive
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
Government-Wide:
• The District’s total net position in fiscal year 2021 was $16.9 million. • At June 30, 2021, total assets were $43.3 million while total liabilities were $26.6 million. • Total District revenues were $3.2 million and expenses were $1.9 million. #1..
- 396 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
Funds Basis:
• Capital Projects Fund revenues decreased from $1.6 million in the prior year to $877k for fiscal year 2021 and expenditures decreased from $2.6 million in the prior year to $1k for fiscal year 2021. The decrease in revenues is attributed to a decrease in interest income and change in fair value of investments, and the decrease in expenditures is attributed to a decrease in activity in development of capital projects. • Capital Projects Fund ending fund balance for fiscal year 2021 increased from $13.4 million to $14.3 million.
This increase is primarily attributed to a decrease in activity in development of capital projects. • Special Revenue Fund revenues increased from $735k in the prior year to $988k for fiscal year 2021 and expenditures decreased from $729k in the prior year to $694k for fiscal year 2021. The increase in revenue is due to an increase in the maintenance special tax, and the decrease in expenditures is due primarily to an decrease in services and utilities expenditures.
• Special Revenue Fund ending fund balance increased from ($57k) in prior year to $243k in current year. • Debt Service Fund revenues decreased from $2.04 million in the prior year to $1.95 million in fiscal year 2021 and expenditures increased from $1.84 million in the prior year to $1.88 million for fiscal year 2021.
The increase in expenditures is attributed to the increase in debt service payments compared to the prior year.
• Debt Service Fund ending fund balance increased for fiscal year 2021 from $2.71 million to $2.79 million.
THE BASIC FINANCIAL STATEMENTS
The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.
Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and comprise the statement of net position and the statement of activities. The statement of net position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The statement of activities provides information about the District’s revenues and all its expenses. The statement of activities explains in detail the change in net position for the year.
The Statement of Net position and the Statement of Activities present information about the following:
Governmental activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments.
Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector. #1..
- 397 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.
As of June 30, 2021, total assets and deferred outflows of resources of $44.3 million were offset by liabilities and deferred inflows of $27.4 million. The District’s net position from governmental activities increased to $16.9 million in 2021 from $15.6 million in 2020. This increase was due to a decrease in capital outlay expenditures and increase in maintenance special tax revenue. The District’s net position has restrictions as follows: $14.3 million for acquisition or construction of infrastructure, $2.4 million for debt service, and $262k for District maintenance.
The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Restated
Cash and investments $ 15,340,681 $ 14,137,101 $ 1,203,580 Cash and investments with fiscal agent 2,738,621 2,809,261 (70,640) Due from other governments - 15,668 (15,668)
Taxes receivable 91,770 21,852 69,918
Assessments receivable 25,124,693 25,824,693 (700,000)
Interest receivable 31,813 63,135 (31,322)
Prepaid assets 154 333 (179)
Total assets 43,327,732 42,872,043 455,689
Deferred loss on refunding 930,368 991,711 (61,343)
Current and other liabilities 427,219 495,850 (68,631)
Long-term debt 26,130,996 26,897,655 (766,659)
Total liabilities 26,558,215 27,393,505 (835,290)
Deferred assessments 812,681 866,264 (53,583)
Net position:
Restricted for:
Capital projects 14,256,980 13,419,959 837,021
Debt service 2,368,004 2,234,870 133,134
District maintenance 262,220 - 262,220
Unrestricted - (50,844) 50,844
Total net position $ 16,887,204 $ 15,603,985 $ 1,283,219 Statement of Net Position - Governmental Activities
#1..
- 398 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue came primarily from annual facilities and maintenance special taxes, which amounted to $3,136,141, capital grants and contributions in the amount of $14,629, along with additional investments earnings of ($1,002). District expenses of $1,896,373 were primarily for capital outlay, and interest on long term debt. The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020:
2021 2020 Change
Restated
Revenues:
Program revenues:
Capital grants and contributions $ 14,629 $ 16,567 $ (1,938) General revenues:
Facilities special tax 2,167,643 2,248,515 (80,872)
Maintenance special tax 968,498 850,648 117,850
Investment earnings (1,002) 622,400 (623,402)
Other 29,824 16,304 13,520
Total revenues 3,179,592 3,754,434 (574,842)
Expenses:
Community development 750,173 3,597,616 (2,847,443)
Interest on long-term debt 1,146,200 1,180,509 (34,309) Total expenses 1,896,373 4,778,125 (2,881,752)
Change in net position 1,283,219 (1,023,691) $ 2,306,910 Net position, beginning of year (restated) 15,603,985 16,646,676 Prior period adjustment - (19,000)
Net position, end of year $ 16,887,204 $ 15,603,985
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s two funds. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.
#1..
- 399 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The fund financial statements provide detailed information about each of the District’s most significant funds, called major funds. Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of District’s activities. All of the District’s funds are presented here as major funds; their purpose is explained in Note 1 to the financial statements. All the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses.
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balance for the Capital Projects Fund, the Special Revenue Fund, and the Debt Service Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 876,661 $ 1,607,157 $ (730,496)
Expenditures 857 2,636,492 (2,635,635)
Other financing sources (uses) (38,783) (216,764) 177,981 Changes in fund balances 837,021 (1,246,099) $ 2,083,120 Fund balances, beginning of year 13,419,959 14,666,058
Fund balances, end of year $ 14,256,980 $ 13,419,959
2021 2020 Change
Restated
Revenues $ 987,781 $ 734,930 $ 252,851
Expenditures 693,539 729,096 (35,557)
Changes in fund balances 294,242 5,834 $ 288,408
Fund balances, beginning of year (50,844) (37,678)
Prior period adjustment - (19,000)
Fund balances, end of year $ 243,398 $ (50,844)
2021 2020 Change
Revenues $ 1,953,459 $ 2,042,347 $ (88,888)
Expenditures 1,880,175 1,840,540 39,635
Changes in fund balances 73,284 201,807 $ (128,523)
Fund balances, beginning of year 2,713,646 2,511,839
Fund balances, end of year $ 2,786,930 $ 2,713,646
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Capital Projects Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Debt Service Fund
#1..
- 400 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
THE DISTRICT’S FUND FINANCIAL STATEMENTS
The District’s fiscal year 2021 revenue primarily came from facilities special taxes in the amount of $2.8 million and maintenance special taxes in the amount of $0.9 million.
District expenditures of $2.6 million in fiscal year 2021 consisted of $857 in Capital Projects Fund expenditures, $694k in Special Revenue Fund expenditures for maintenance of District facilities and ongoing administrative expenditures, and $1.9 million in Debt Service Fund expenditures.
At June 30, 2021, the District’s governmental funds reported combined fund balances of $17.3 million, an increase of $1.2 million compared with last year. This increase was primarily due to a combination of increased facilities special tax and maintenance special tax revenues and decreased capital outlay expenditures for the decrease in activity in development of capital projects.
CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.
Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.
DEBT ADMINISTRATION
The District issued Special Tax Bonds, Series 2006 in the principal amount of $31.1 million in March 2006. The proceeds have been and will continue to be used to reimburse developers for infrastructure they install pursuant to the Acquisition & Shortfall Agreements entered into between developers and the District as well as to fund authorized facilities installed by the District.
The District issued Refunding Special Tax Bonds, Series 2014 in the principal amount of $29.3 million with a premium of $1.5 million in July 2014 to refund the outstanding Special Tax Bonds, Series 2006.
The balance of the long-term debt at June 30, 2021, is $26.1 million. Additional details can be found in Note 3 to the financial statements.
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 401 -
9 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION
AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting as that used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.
The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.
The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the change in net position and reconciled with the Statement of Net Position. #1..
- 402 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 15,340,681
Cash and investments with fiscal agent 2,738,621
Taxes receivable 91,770
Assessments receivable 25,124,693
Interest receivable 31,813
Prepaid assets 154
Total Assets 43,327,732
DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding 930,368
LIABILITIES
Accounts payable 46,052
Interest payable 381,167
Long-term debt:
Due in one year 841,659
Due in more than one year 25,289,337
Total Liabilities 26,558,215
DEFERRED INFLOWS OF RESOURCES
Unavailable assessments 812,681
NET POSITION
Restricted for:
Capital projects 14,256,980
Debt service 2,368,004
District maintenance 262,220
Total Net Position $ 16,887,204
#1..
- 403 -
The accompanying notes are an integral part of the financial statements. 11 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Capital Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community development $ 750,173 $ 14,629 $ (735,544)
Interest on long-term debt 1,146,200 - (1,146,200)
$ 1,896,373 $ 14,629 (1,881,744)
General Revenues:
Facilities special tax 2,167,643
Maintenance special tax 968,498
Investment earnings (1,002)
Other 29,824
Total General Revenues 3,164,963
1,283,219
Net Position, Beginning of Year 15,622,985
Prior Period Adjustment (19,000)
15,603,985
Net Position, End of Year $ 16,887,204
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
Net Position, Beginning of Year (restated)
#1..
- 404 -
12 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The District determined all its funds to be major funds. They are:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
The Debt Service Fund accounts for the payment of principal and interest on the 2014 Refunding Special Tax bonds.
#1..
- 405 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Capital Special Debt
Projects Revenue Service
Fund Fund Fund Total
ASSETS
Cash and investments $ 14,228,696 $ 282,039 $ 831,126 $ 15,341,861 Cash and investments with
fiscal agent - - 2,738,621 2,738,621
Taxes receivable - 27,257 64,513 91,770
Assessments receivable - 25,124,693 - 25,124,693
Interest receivable 28,284 156 3,373 31,813
Prepaid assets - - 154 154
Total Assets $ 14,256,980 $ 309,452 $ 28,762,480 $ 43,328,912
LIABILITIES
Accounts payable $ - $ 46,052 $ - $ 46,052
Deposits - 1,180 - 1,180
Total Liabilities - 47,232 - 47,232
DEFERRED INFLOWS OF RESOURCES
Unavailable assessments - - 812,681 812,681
Unavailable revenues - 18,822 25,162,869 25,181,691
Total Deferred Inflows
of Resources - 18,822 25,975,550 25,994,372
FUND BALANCES
Nonspendable - - 154 154
Restricted:
Capital projects 14,256,980 - 14,256,980 -
District maintenance - 243,398 - 243,398
Debt service - - 2,786,776 2,786,776
Total Fund Balances 14,256,980 243,398 2,786,930 17,287,308 Total Liabilities, Deferred
Inflows of Resources
and Fund Balances $ 14,256,980 $ 309,452 $ 28,762,480 $ 43,328,912 #1..
- 406 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position:
Total Fund Balances - Governmental Funds $ 17,287,308
Other long-term assets are not available to pay for the current-period expenditures and therefore are deferred in the funds. 25,120,000 Revenues not available for current-period expenditures are deferred in the governmental funds, but are considered earned in the Statement of Net Position. 61,691 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds:
Long-term debt (26,130,996)
Deferred loss on refunding 930,368
Interest payable (381,167)
Total Net Position - Governmental Activities $ 16,887,204 #1..
- 407 -
The accompanying notes are an integral part of the financial statements. 15 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Capital Special Debt
Projects Revenue Service
Fund Fund Fund Total
REVENUES
Facilities special tax $ 872,525 -$ 1,952,249$ $ 2,824,774 Maintenance special tax 949,676 - - 949,676
Intergovernmental 14,629 - - 14,629
Interest income 116,656 7,192 13,880 137,728
Change in fair value of investments (127,149) 1,089 (12,670) (138,730) Other revenue - 29,824 - 29,824
Total Revenues 876,661 987,781 1,953,459 3,817,901
EXPENDITURES
Services - professional and other 494,187 - 16,994 511,181 Utilities 199,352 - - 199,352
Capital outlay 857 - - 857
Debt service:
Principal - - 700,000 700,000
Interest and fiscal charges - - 1,163,181 1,163,181
Total Expenditures 693,539 857 1,880,175 2,574,571
OTHER FINANCING SOURCES (USES)
Transfers out to City funds (38,783) - - (38,783)
Total Other Financing Sources (Uses) (38,783) - - (38,783) Changes in Fund Balances 837,021 294,242 73,284 1,204,547 Fund Balances, Beginning of Year 13,419,959 (31,844) 2,713,646 16,101,761 Prior Period Adjustment (19,000) - - (19,000)
Fund Balances, End of Year $ 14,256,980 243,398$ 2,786,930$ $ 17,287,308 #1..
- 408 -
The accompanying notes are an integral part of the financial statements. 16 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT
OF ACTIVITIES CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2021
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities:
Change in Fund Balances - Governmental Funds $ 1,204,547 (700,000)
61,691
700,000
Amortization of bond premium 66,659
Amortization of deferred loss on refunding (61,343)
Interest payable 11,665
Change in Net Position - Governmental Activities $ 1,283,219 Revenues previously recognized in the Statement of Activities that did not provide current financial resources and therefore were not reported as revenues in the funds are reported as revenues in the funds when received.
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt and the payment to refunding escrow consumes current financial resources of governmental funds. Neither transactions, however, has any effect on net position:
Repayment of the principal of long-term debt.
Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds:
Revenues that are considered earned in the Statement of Activities that did not provide current financial resources in the current year were not reported as revenues in the governmental funds.
#1..
- 409 -
The accompanying notes are an integral part of the financial statements. 17 COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Maintenance special tax $ 900,000 $ 900,000 $ 949,676 $ 49,676 Interest income - - 7,192 7,192
Change in fair value
of investments - - 1,089 1,089
Other revenue - - 29,824 29,824
Total Revenues 900,000 900,000 987,781 87,781
EXPENDITURES
Services - professional
and other 473,579 473,579 494,187 (20,608)
Utilities 270,050 270,050 199,352 70,698
Total Expenditures 743,629 743,629 693,539 50,090
OTHER FINANCING SOURCES
Transfers in from City funds - 93,706 - (93,706)
Changes in Fund Balance $ 156,371 $ 250,077 294,242 $ 44,165 Fund Balance, Beginning of Year (31,844)
Prior Period Adjustment (19,000)
Fund Balance, End of Year $ 243,398
Budgeted Amounts
#1..
- 410 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 2004-1 (Village One #2) (the District) was formed in April 2004 by a vote of the property owners within the proposed district. The District, a separate legal entity, was formed to provide a funding and reimbursement mechanism for public facilities and services required by the District Specific Plan. The District is the vehicle used to ensure that all landowners in the Specific Plan area contribute to the cost of public improvements. The District encompasses approximately 1,840 gross acres of land on which a pedestrian-oriented, mixed-use, planned community is anticipated to be developed. The District is located in the North Eastern portion of the City of Modesto, California (the City), bordered by Sylvan Avenue to the North, Claus Road to the East, Briggsmore to the South, and Oakdale Road to the West. The District is expected to yield 6,186 residential dwelling units at buildout; in addition to 15 acres of commercial property and 220 acres of industrial property.
The District is an integral part of the City of Modesto, California (the City) and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.
Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.
The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities to the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. However, principal and interest expenditures are recorded as fund liabilities when due or when amounts have been accumulated in the Debt Service Fund for payments early in the following year.
Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period.
Miscellaneous revenues are considered to be measurable and available only when cash is received by the District. #1..
- 411 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The District reports the following major governmental funds:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of infrastructure within the District.
The Debt Service Fund accounts for the payment of principal and interest on the 2014 Refunding Special Tax Bonds.
Facilities and Maintenance Special Taxes: The facilities and maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District. The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the special taxes will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.
Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed - Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned - Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned - The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes. #1..
- 412 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fund Balance (continued): The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy. This is typically done through the adoption or the amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts. Assigned fund balance is established by the District through the adoption or the amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed.
Net Position: Net position represents the residual interest in the City’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.
In addition to assets, the Statements of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.
In addition to liabilities, the Statement of Net Position will sometimes report section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.
Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
#1..
- 413 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
21 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):
GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021.
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District, with the exception of cash and investments with fiscal agents, are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto. #1..
- 414 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
22 NOTE 2 – CASH AND INVESTMENTS (continued)
Cash in the City Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021.
The District is a voluntary participant in the California Asset Management Program (CAMP), a California Joint Powers Authority that falls under California Government Code Section 53601(p), which is directed by a Board of Trustees that is made up of experienced local government finance directors and treasurers. The District reports its investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the pool share.
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 15,340,681
Cash and investments with fiscal agent 2,738,621
Total cash and investments $ 18,079,302
Deposits with City of Modesto
Cash and investment pool $ 15,340,681
Deposits with fiscal agents
California Asset Management Program (CAMP) 2,738,621
Total cash and investments $ 18,079,302
Concentration of Credit Risk
The District is required to disclose investments that represent a concentration of five percent or more of investments in any one issuer held by individual funds in the securities of issuers other than U.S. Treasury securities, mutual funds, and external investment pools. At June 30, 2021, no investments represented a concentration of five percent or more of investments in any one issuer held by the District in the securities of issuers other than U.S. Treasury securities, mutual funds, and external investment pools.
Fair Value Hierarchy
The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets.
Level 1 inputs are quoted prices in an active market for identical assets; level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The inputs and techniques used for valuing securities are not necessarily an indication of risk associated with investing in those securities. The District’s investment in the City’s pool and money market fund are exempt from fair value measurement disclosures.
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares. #1..
- 415 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
23 NOTE 3 – LONG-TERM DEBT
On July 30, 2014, the District issued Refunding Special Tax Bonds (refunding bonds) with a par amount of $29,320,000 to refund the District’s $29,925,000 outstanding Special Tax Bonds (refunded bonds) issued on March 8, 2006, which were issued primarily to finance various public improvements needed to develop property located within the District. Interest on the refunding bonds is payable semiannually on each March 1 and September 1 through September 1, 2036. The refunding bonds were issued with interest rates varying from 2% to 5% and are payable solely from revenues derived from the assessment of annual special taxes to be levied on the taxable property within the District and from certain other funds pledged under the Trust Indenture. The principal of these bonds is not subject to acceleration.
Any one or more of the following events shall constitute an “event of default” for these bonds:
(a) Default in the due and punctual payment of the principal of or redemption premium, if any, on any bond when and as the same shall become due and payable, whether at maturity as there in expressed, by declaration or otherwise.
(b) Default in the due and punctual payment of the interest on any bond when and as the same shall become due and payable.
(c) Except as described in (a) or (b), default shall be made by the District in the observance of any of the agreements, conditions, or covenants for a period of thirty (30) days after the District shall have been given notice in writing of such default by the Trustee or the owners of twenty-five percent (25%) in aggregate principal amount of the outstanding bonds.
The long-term debt activity for the year ended June 30, 2021 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Refunding Special Tax Bonds 25,820,000 $ -$ (700,000) $ $ 25,120,000 $ 775,000 Premium on Refunding Bonds 1,077,655 - (66,659) 1,010,996 66,659 Total $ 26,897,655 -$ (766,659) $ $ 26,130,996 $ 841,659 Annual debt service requirements for the bonds are shown below:
Year Ended June 30, Principal Interest
2022 $ 775,000 $ 1,124,125
2023 860,000 1,083,250
2024 945,000 1,038,125
2025 1,035,000 988,625
2026 1,130,000 934,500
2027-2031 7,290,000 3,678,750
2032-2036 1,835,000 2,295,875
2037 11,250,000 225,000
$ 25,120,000 $ 11,368,250
Interest expense for the year ended June 30, 2020 was $1,146,200. #1..
- 416 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
24 NOTE 4 – RESTRICTED FUND BALANCES
Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
• Restricted for Capital Projects, the portion of fund balance legally restricted for the acquisition, construction, and formation/annexation activities.
• Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.
• Restricted for Debt Service - the portion of fund balance legally restricted to the payment of principal and interest on long-term liabilities.
NOTE 5 – DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds discussed in Note 3 that it will initiate foreclosure proceedings against delinquent parcels as follows:
a. Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within 120 days after the third delinquency.
b. All parcels delinquent at June 30 when the District received Special Taxes totaling less than 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initiated by September 1 following the end of the fiscal year.
At June 30, 2021, the District had nine parcels that were delinquent for a total of $61,691, two of which were delinquent for more than three consecutive payments.
The District received 99.7% of the Special Revenue Fund and Debt Service Fund facilities and maintenance special taxes levied during the year ended June 30, 2021. The delinquencies total of $9,618 at June 30, 2021 is included in assessments receivable on the Statement of Net Position and Balance Sheet.
NOTE 6 – DEFICIENCY OF EXPENDITURES OVER APPROPRIATIONS Deficiency of expenditures over appropriations for the year ended June 30, 2021 was as follows:
Expenditures Amount
Special Revenue Fund:
Services - professional and other $ (20,608)
#1..
- 417 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2004-1 VILLAGE ONE #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
25 NOTE 7 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the Novel Coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown.
NOTE 8 – PRIOR PERIOD ADJUSTMENT
A prior period adjustment in the amount of $(19,000) was posted to the Special Revenue Fund and governmental activities for the year ending June 30, 2020 to correct the revenues and deposit liabilities not reported in the prior year.
#1..
- 418 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2004-1 (Village One #2) (the District), as of and for the year ended June 30, 2021, budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 419 -
27 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 420 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 421 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report.......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:
Statement of Net Position – Governmental Activities ........................................................................ 10 Statement of Activities – Governmental Activities ............................................................................. 11 Balance Sheet – Governmental Funds ................................................................................................ 13 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds ................................................................................................ 14 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Special Revenue Fund – Budget and Actual................................................................ 15 Notes to Basic Financial Statements .................................................................................................................. 16 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...................................................................................................................... 22 #1..
- 422 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 1996-1 (Village One) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District, as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.
#1..
- 423 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 424 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 1996-1 (Village One) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with your reading of the accompanying basic financial statements.
THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.
The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.
BACKGROUND AND MANAGEMENT’S DISCUSSION
In 1989-1990, the City initiated planning of the area now known as Village One. The original Village One plan contemplated a pedestrian oriented, self-contained neighborhood concept that offered housing to accommodate various income levels. In addition, the original plan called for a number of landscaped areas as well as other amenities. Over the years, substantial revisions to the original plan occurred, including a reconfiguration of streets, a reduction of landscaped areas, and modification of the financing strategy. At the close of fiscal year 2003-2004, the Village One area was based on the Specific Plan, the Infrastructure Financing Plan, and the Facilities Master Plan adopted in April 2003. The 2003 Infrastructure Financing Plan calls for a combination of funding sources, including the City’s Capital Facilities Fees (CFF) program and a Mello-Roos Community Facilities District (CFD). #1..
- 425 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
Government-Wide:
• The District’s net position increased to $1,138,325 for fiscal year 2021. • Total District revenues were $1,022,913.
Funds Basis:
• Capital Projects Fund revenues and other financing sources of $58,262 were $155,306 lower than the prior year due to an decrease in transfers in from the City of Modesto. The Capital Projects Fund ending fund balance increased $58,262, with an ending fund balance of $159,293. • Special Revenue Fund revenues and other financing sources of $955,073 was $86,132 greater than the prior year due to increased maintenance special tax collections and expenditures of $631,761 were $29,834 less than the prior year due to a decrease in services and utilities expenditures. The Special Revenue Fund balance increased by $323,312 to an ending fund balance of $969,454.
THE BASIC FINANCIAL STATEMENTS
The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.
Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.
The Statement of Net Position and the Statement of Activities present information about the following:
Governmental Activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.
#1..
- 426 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.
As of June 30, 2021, total assets of $1,183,201 were offset by liabilities of $44,876. The District’s net position from governmental activities increased to $1,138,325 in 2021 from $747,173 in 2020. All of the District’s net position is restricted as follows: $1,138,325 for acquisition or maintenance of infrastructure.
The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 1,159,117 $ 810,059 $ 349,058
Assessments receivable 22,062 10,042 12,020
Interest receivable 2,022 2,307 (285)
Total assets 1,183,201 822,408 360,793
Current and other liabilities 44,876 75,235 (30,359)
Net position:
Restricted for:
District maintenance and
capital projects 1,138,325 747,173 391,152
Total net position $ 1,138,325 $ 747,173 $ 391,152
Statement of Net Position - Governmental Activities
#1..
- 427 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue came primarily from maintenance special tax of $957,984. District expenses of $631,761 were for professional services and utilities.
The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues:
General revenues:
Facilities special tax $ 57,729 $ - $ 57,729
Maintenance special tax 957,984 848,255 109,729
Investment earnings 72 11,861 (11,789)
Other 7,128 6,804 324
Transfers, net - 215,589 (215,589)
Total revenues 1,022,913 1,082,509 (59,596)
Expenses:
Community development 631,761 661,595 (29,834)
Change in net position 391,152 420,914 $ (29,762)
Net position, Beginning of Year 747,173 326,259
Net position, End of Year $ 1,138,325 $ 747,173
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s two funds. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.
The fund financial statements provide detailed information about each of the District’s most significant funds, called major funds. Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of the District’s activities. All of the District’s funds are presented here as major funds; their purpose is explained in Note 1 to the financial statements. All the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses. #1..
- 428 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balance for both the Capital Projects Fund and the Special Revenue Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 58,262 $ (3,196) $ 61,458
Expenditures - - -
Other financing sources (uses) - 216,764 (216,764)
Changes in fund balances 58,262 213,568 $ (155,306)
Fund balances, Beginning of Year 101,031 (112,537)
Fund balances, End of Year $ 159,293 $ 101,031
2021 2020 Change
Revenues $ 955,073 $ 870,116 $ 84,957
Expenditures 631,761 661,595 (29,834)
Other financing sources (uses) - (1,175) 1,175
Changes in fund balances 323,312 207,346 $ 115,966
Fund balances, Beginning of Year 646,142 438,796
Fund balances, End of Year $ 969,454 $ 646,142
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Capital Projects Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental funds reported combined fund balances of $1,128,747, which was a $381,574 increase from fiscal year 2020. The Capital Projects Fund realized a $58,262 increase during 2021, while the Special Revenue Fund realized a $323,312 increase due to maintenance special tax and investment revenues being more than professional services and utilities.
#1..
- 429 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.
Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 430 -
9 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION
AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting as that used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.
The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.
The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 431 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 1,159,117
Assessments receivable 22,062
Interest receivable 2,022
Total Assets 1,183,201
LIABILITIES
Accounts payable 44,876
Total Liabilities 44,876
NET POSITION
Restricted for:
Capital projects 159,293
District maintenance 979,032
Total Net Position $ 1,138,325
#1..
- 432 -
The accompanying notes are an integral part of the financial statements. 11 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Net (Expense) Revenue
and Changes in Net
Position
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 631,761 $ - $ (631,761)
$ 631,761 $ - $ (631,761)
General Revenues:
Facilities special tax 57,729
Maintenance special tax 957,984
Investment earnings 72
Other 7,128
Total General Revenues 1,022,913
391,152
747,173
Net Position, End of Year $ 1,138,325
Program
Revenues
Change in Net Position
Net Position, Beginning of Year
#1..
- 433 -
12 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The District determined all its funds to be major funds. They are:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 434 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
ASSETS
Cash and investments $ 158,967 $ 1,000,150 $ 1,159,117
Assessments receivable - 22,062 22,062
Interest receivable 326 1,696 2,022
Total Assets $ 159,293 $ 1,023,908 $ 1,183,201
LIABILITIES
Accounts payable $ - $ 44,876 $ 44,876
Total Liabilities - 44,876 44,876
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - 9,578 9,578
FUND BALANCES
Restricted for:
District maintenance and capital projects 159,293 969,454 1,128,747 Total Fund Balances 159,293 969,454 1,128,747
Total Liabilities, Deferred Inflows of
Resources and Fund Balances $ 159,293 $ 1,023,908 $ 1,183,201 Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position:
Total Fund Balances - Governmental Funds $ 1,128,747
Adjustments to the Balance Sheet of the Governmental Funds to reconcile with the Statement of Net Position:
Revenues not available for current-period expenditures are deferred in the governmental funds, but are considered earned in the Statement of Net Position. 9,578 Total Net Position - Governmental Activities $ 1,138,325 #1..
- 435 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
REVENUES
Facilities special tax $ 57,729 $ - $ 57,729
Maintenance special tax - 948,406 948,406
Interest income 1,935 5,424 7,359
Change in fair value
of investments (1,402) (5,885) (7,287)
Other - 7,128 7,128
Total Revenues 58,262 955,073 1,013,335
EXPENDITURES
Services - professional and other - 433,906 433,906
Utilities - 197,855 197,855
Total Expenditures - 631,761 631,761
Changes in Fund Balances 58,262 323,312 381,574
Fund Balances, Beginning of Year 101,031 646,142 747,173 Fund Balances, End of Year $ 159,293 $ 969,454 $ 1,128,747 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities:
Changes in Fund Balances - Governmental Funds $ 381,574 Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balances of the Governmental Funds to reconcile with the Statement of Activities:
Revenues that are considered earned in the Statement of Activities that did not provide current financial resources in the current year were not reported as revenues in the governmental funds. 9,578
Change in Net Position - Governmental Activities $ 391,152 #1..
- 436 -
The accompanying notes are an integral part of the financial statements. 15 COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Maintenance special tax $ 900,000 $ 900,000 $ 948,406 $ 48,406 Interest income - - 5,424 5,424
Change in fair value
of investments - - (5,885) (5,885)
Other - - 7,128 7,128
Total Revenues 900,000 900,000 955,073 55,073
EXPENDITURES
Services - professional
and other 419,935 419,935 433,906 (13,971)
Utilities 271,150 271,150 197,855 73,295
Total Expenditures 691,085 691,085 631,761 59,324
Changes in Fund Balance $ 208,915 $ 208,915 323,312 $ 114,397 Fund Balance, Beginning of Year 646,142
Fund Balance, End of Year $ 969,454
Budgeted Amounts
#1..
- 437 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
16 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 1996-1 (Village One) (the District) was formed in October 1996 by a vote of the property owners within the proposed district. The District, a separate legal entity, was formed to provide a funding and reimbursement mechanism for public facilities and services required by the District Specific Plan. The District is the vehicle used to ensure that all landowners in the Specific Plan area contribute to the cost of public improvements. The District encompasses approximately 1,840 gross acres of land.
The District is located in the North Eastern portion of the City of Modesto, California (the City), bordered by Sylvan Avenue to the North, Claus Road to the East, Briggsmore to the South, and Oakdale Road to the West. The District is expected to yield 6,186 residential dwelling units at buildout, in addition to 15 acres of commercial property and 220 acres of industrial property.
The District is an integral part of the City and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.
Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.
The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.
The District reports the following major governmental funds:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 438 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
17 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Maintenance Special Taxes: The maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District.
The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.
Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.
In addition to assets, the Statements of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.
In addition to liabilities, the Statement of Net Position will sometimes report section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed - Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest-level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned - Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned - The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes. #1..
- 439 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fund Balance (continued):
The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy.
This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts.
Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed.
Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021. #1..
- 440 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021.
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.
Cash in the City Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021. #1..
- 441 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 2 – CASH AND INVESTMENTS (continued)
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 1,159,117
Total cash and investments $ 1,159,117
Deposits with City of Modesto
Cash and investment pool $ 1,159,117
Total cash and investments $ 1,159,117
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares.
NOTE 3 – RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
Restricted for Capital Projects - the portion of fund balance legally restricted for the acquisition, construction, and formation/annexation activities
Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.
NOTE 4 – DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that it will initiate foreclosure proceedings against delinquent parcels as follows:
a. Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within 120 days after the third delinquency.
b. All parcels delinquent at June 30 when the District received Special Taxes totaling less than 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initiated by September 1 following the end of the fiscal year.
At June 30, 2021, the District had 26 parcels that were delinquent for a total of $9,578, ten of which were delinquent for more than three consecutive payments.
The District received 99.5% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2021. The delinquencies total of $4,277 at June 30, 2021 is included in assessments receivable on the Statement of Net Position and Balance Sheet.
#1..
- 442 -
COMMUNITY FACILITIES DISTRICT
NUMBER 1996-1 VILLAGE ONE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
21 NOTE 5 – EXCESS OF EXPENDITURES OVER APPROPRIATIONS
Excess of expenditures over appropriations for the year ended June 30, 2021 was as follows:
Expenditures Amount
Special Revenue Fund:
Services - professional and other $ (13,971)
NOTE 6 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the Novel Coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 443 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 1996-1 (Village One) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 444 -
23 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 445 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 446 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report ......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:
Statement of Net Position – Governmental Activities ........................................................................ 10 Statement of Activities – Governmental Activities ............................................................................. 11 Balance Sheet – Governmental Funds ................................................................................................ 13 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds ................................................................................................ 14 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Special Revenue Fund – Budget and Actual ................................................................ 15 Notes to Basic Financial Statements .................................................................................................................. 16 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................................................................................... 22 #1..
- 447 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2016-1 (Kiernan Business Park East #2) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.
#1..
- 448 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 449 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 2016-1 Kiernan Business Park East #2 (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with your reading of the accompanying basic financial statements.
THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.
The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.
BACKGROUND AND MANAGEMENT’S DISCUSSION
The Kiernan Business Park Specific Plan Area encompasses approximately 614 acres and is comprised of regional commercial, office, medical campus, mixed use, and medium high density residential and business park land uses.
Within this specific plan area, there are three distinct sub-areas: Kiernan Business Park West, Kiernan Business Park South and Kiernan Business Park East #2 (KBP East). KBP East covers approximately 160 acres and is bound by Kiernan Avenue to the North, Pelandale Avenue to the South, Dale Road to the West, and American Avenue to the East.
On January 26, 2016, the City of Modesto formed the City of Modesto Community Facilities District No. 2016-1 (CFD No. 2016-1). The authorized services to be funded by special tax revenues include repair and replacement of parkways, landscaped medians, storm drainage pump and basin facilities, catch basins, manholes, underground infiltration trenches and pipes, landscaped bioswale lots and medians, storm water treatment devices and filters, shrubs, vines, ground cover, and irrigation systems. The services to be provided include, but are not limited to, litter and debris removal, pruning, staking, fertilizing, mowing, plant replacement and restoration, fire and weed control, erosion control, trimming of vegetation, and storm drain system and bioswale maintenance. #1..
- 450 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
Government-Wide:
• The District’s net position increased to $606,219 for fiscal year 2021. • Total District revenues were $141,413.
Funds Basis:
• Capital Projects Fund revenues of $7,179 were $3,853 lower than the prior year due to lower investment earnings. Expenditures of $0 were consistent with the previous year. The Capital Projects Fund ending fund balance increased by $7,179, with an ending fund balance of $328,224. • Special Revenue Fund revenues of $127,444 were $9,619 more than the prior year due to an increase in maintenance special tax collections. Expenditures of $79,871 were $45,722 more than the prior year due to an increase in repair and maintenance expenditures. The Special Revenue Fund balance increased by $47,573 to an ending fund balance of $271,205.
THE BASIC FINANCIAL STATEMENTS
The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.
Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.
The Statement of Net Position and the Statement of Activities present information about the following:
Governmental activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.
#1..
- 451 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.
As of June 30, 2021, total assets of $650,306 were offset by liabilities of $44,087. The District’s net position from governmental activities increased to $606,219 in 2021 from $544,677 in 2020. All of the District’s net position is restricted as follows: $328,224 for acquisition or construction of infrastructure and $277,995 for maintaining that infrastructure.
The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Restated
Cash and investments $ 642,266 $ 548,506 $ 93,760
Assessments receivable 6,789 3,350 3,439
Interest receivable 1,251 1,832 (581)
Total assets 650,306 553,688 96,618
Current and other liabilities 44,087 9,011 35,076
Net position:
Restricted for:
Capital projects 328,224 321,045 7,179
District maintenance 277,995 223,632 54,363
Total net position $ 606,219 $ 544,677 $ 61,542
Statement of Net Position - Governmental Activities
#1..
- 452 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue came from annual facilities and maintenance special taxes, which amounted to $141,344, and investment earnings of $69. District expenses of $79,871 were for professional services and utilities.
The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues: Restated
General revenues:
Facilities special tax $ 7,148 $ - $ 7,148
Maintenance special tax 134,196 110,927 23,269
Investment earnings 69 17,930 (17,861)
Total revenues 141,413 128,857 12,556
Expenses:
Community development 79,871 34,149 45,722
Change in net position 61,542 94,708 $ (33,166)
Net position, beginning of year (restated) 544,677 453,974 Prior period adjustment - (4,005)
Net position, end of year $ 606,219 $ 544,677
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s two funds. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.
The fund financial statements provide detailed information about each of the District’s significant funds, called major funds. Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of the District’s activities. All of the District’s funds are presented here as major funds; their purpose is explained in Note 1 to the financial statements. All of the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means it measures only current financial resources and uses.
#1..
- 453 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balance for both the Capital Projects Fund and the Special Revenue Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 7,179 $ 11,032 $ (3,853)
Expenditures - - -
Changes in fund balances 7,179 11,032 $ (3,853)
Fund balances, beginning of year 321,045 310,013
Fund balances, end of year $ 328,224 $ 321,045
2021 2020 Change
Restated
Revenues $ 127,444 $ 117,825 $ 9,619
Expenditures 79,871 34,149 45,722
Changes in fund balances 47,573 83,676 $ (36,103)
Fund balances, beginning of year (restated) 223,632 143,961 Prior period adjustment - (4,005)
Fund balances, end of year $ 271,205 $ 223,632
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Capital Projects Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental funds reported combined fund balances of $599,429 which was a $54,752 increase from fiscal year 2020. The Capital Projects Fund realized an $7,179 net change from prior year, due to interest income and change in fair value of investments, while the Special Revenue Fund realized an $47,573 increase due to facilities and maintenance special taxes, investment revenues, and time and materials fees exceeding professional services and utilities.
#1..
- 454 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.
Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 455 -
9 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION
AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.
The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.
The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 456 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 642,266
Assessments receivable 6,789
Interest receivable 1,251
Total Assets 650,306
LIABILITIES
Accounts payable 44,087
Total Liabilties 44,087
NET POSITION
Restricted for:
Capital projects 328,224
District maintenance 277,995
Total Net Position $ 606,219
#1..
- 457 -
The accompanying notes are an integral part of the financial statements. 11 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 79,871 $ - $ (79,871)
$ 79,871 $ - (79,871)
General Revenues:
Facilities special tax 7,148
Maintenance special tax 134,196
Investment earnings 69
Total General Revenues 141,413
61,542
Net Position, Beginning of Year 548,682
Prior Period Adjustment (4,005)
544,677
Net Position, End of Year $ 606,219
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
Net Position, Beginning of Year (restated)
#1..
- 458 -
12 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The District determined all its funds to be major funds. They are:
• The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
• The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 459 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
ASSETS
Cash and investments $ 327,576 $ 314,690 $ 642,266
Assessments receivable - 6,789 6,789
Interest receivable 648 603 1,251
Total Assets $ 328,224 $ 322,082 $ 650,306
LIABILITIES
Accounts payable $ - $ 44,087 $ 44,087
Total Liabilities - 44,087 44,087
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - 6,790 6,790
Total Deferred Inflows of Resources - 6,790 6,790
FUND BALANCES
Restricted for:
Capital projects 328,224 - 328,224
District maintenance - 271,205 271,205
Total Fund Balances 328,224 271,205 599,429
Total Liabilities, Deferred Inflows of Resources, $ 328,224 $ 322,082 $ 650,306 and Fund Balances
Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position:
Total Fund Balances - Governmental Funds $ 599,429
Adjustments to the Balance Sheet of the Governmental
Funds to reconcile with the Statement of Net Position:
Revenues not available for current-period expenditures are deferred in the governmental funds, but are considered
earned in the Statement of Net Position. 6,790
Total Net Position - Governmental Activities $ 606,219
#1..
- 460 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
REVENUES
Facilities special tax $ 7,148 $ - $ 7,148
Maintenance special tax - 127,406 127,406
Interest income 3,014 2,430 5,444
Change in fair value of investments (2,983) (2,392) (5,375) Total Revenues 7,179 127,444 134,623
EXPENDITURES
Services - professional and other - 78,628 78,628
Utilities - 1,243 1,243
Total Expenditures - 79,871 79,871
Changes in Fund Balances 7,179 47,573 54,752
Fund Balances, Beginning of Year 321,045 227,637 548,682 Prior Period Adjustment - (4,005) (4,005)
Fund Balances, End of Year $ 328,224 $ 271,205 $ 599,429 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities:
Changes in Fund Balances - Governmental Funds $ 54,752
Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balances of the Governmental Funds to reconcile with the Statement of Activities:
Revenues that are considered earned in the Statement of Activities that did not provide current financial resources in the current year were not reported as revenues in the governmental funds. 6,790 Change in Net Position - Governmental Activities $ 61,542 #1..
- 461 -
The accompanying notes are an integral part of the financial statements. 15 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Maintenance special tax $ 112,842 $ 112,842 $ 127,406 $ 14,564 Interest income - - 2,430 2,430
Change in fair value
of investments - - (2,392) (2,392)
Total Revenues 112,842 112,842 127,444 14,602
EXPENDITURES
Services - professional
and other 32,515 80,235 78,628 1,607
Utilities 1,500 1,500 1,243 257
Total Expenditures 34,015 81,735 79,871 1,864
Changes in Fund Balance $ 78,827 $ 31,107 47,573 $ 16,466 Fund Balance, Beginning of Year 227,637
Prior Period Adjustment (4,005)
Fund Balance, End of Year $ 271,205
Budgeted Amounts
#1..
- 462 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
16 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 2016-1 (Kiernan Business Park East #2) (the District) was formed in January 2016 by a vote of the property owners within the proposed district. The District, a separate legal entity, was formed to provide a funding and reimbursement mechanism for public facilities and services required by the District Specific Plans. The District is the vehicle that will be used to ensure that all landowners in the District pay their share of the public improvements. The District covers approximately 160 acres and is bound by Kiernan Avenue to the North, Pelandale Avenue to the South, Dale Road to the West, and American Avenue to the East.
The District is an integral part of the City and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.
Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.
The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.
The District reports the following major governmental funds:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 463 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
17 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.
In addition to liabilities, the Statements of Net Position will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.
Maintenance Special Taxes: The maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District.
The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed - Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned - Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned - The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.
The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy.
This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts. #1..
- 464 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fund Balance (continued):
Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed.
Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests - an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021. #1..
- 465 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021.
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.
Cash in the City Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021.
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 642,266
Total cash and investments $ 642,266
Deposits with City of Modesto
Cash and investment pool $ 642,266
Total cash and investments $ 642,266
#1..
- 466 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 2 – CASH AND INVESTMENTS (continued)
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares.
NOTE 3 – RESTRICTED FUND BALANCE
Restrictions of Fund Balance: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
Restricted for Capital Projects - the portion of fund balance legally restricted for the acquisition, construction, and formation/annexation activities.
Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.
NOTE 4 – DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that will initiate foreclosure proceedings against delinquent parcels as follows:
a. Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within 120 days after the third delinquency.
b. All parcels delinquent at June 30 when the District received Special Taxes totaling less than 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initiated by September 1 following the end of the fiscal year.
At June 30, 2021, the District had 3 parcels that were delinquent for a total of $6,790, one of which was delinquent for more than three consecutive payments.
The District received 96.62% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2021. The delinquencies total of $4,452 at June 30, 2021 is included in assessments receivable on the Statement of Net Position and Balance Sheet.
NOTE 5 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the Novel Coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 467 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-1 KIERNAN BUSINESS PARK EAST #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
21 NOTE 6 – PRIOR PERIOD ADJUSTMENT
A prior period adjustment in the amount of ($4,005) was posted to the Special Revenue Fund and governmental activities for the year ending June 30, 2020 to correct the revenues and deposit liabilities not reported in the prior year.
#1..
- 468 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2016-1 (Kiernan Business Park East #2) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the Special Revenue Fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 469 -
23 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 470 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 471 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report .......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ........................................................................................ 3 Basic Financial Statements:
Statement of Net Position – Governmental Activities ......................................................................... 10 Statement of Activities – Governmental Activities .............................................................................. 11 Balance Sheet – Governmental Funds ................................................................................................. 13 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position – Governmental Activities ......................................................................... 14 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds ................................................................................................. 15 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Change in Net Position of Governmental Activities ............................................................................. 16 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Special Revenue Fund – Budget and Actual ................................................................. 17 Notes to Basic Financial Statements ................................................................................................................... 18 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................................................................................... 24 #1..
- 472 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2007-1 (North Beyer Park #2) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.
#1..
- 473 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 474 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 2007-1 (North Beyer #2) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with your reading of the accompanying basic financial statements.
THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.
The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.
BACKGROUND AND MANAGEMENT’S DISCUSSION
The North Beyer Specific Plan Area encompasses approximately 160 gross acres of land and is comprised of a variety of residential, commercial, and office land uses. On June 24, 1997, Community Facilities District No. 1997-1 (North Beyer Park) (“CFD 1997-1”) was formed and the levy of special taxes was authorized. At this time, approximately 124+/- acres of residential property, representing 464 residential units or lots have already been developed and 15 +/- commercial acres and 26+/- residential acres remain to be developed. CFD 1997-1 was previously formed to fund and maintain the construction and maintenance of the street and landscape medians on Coffee and Oakdale Roads between Claratina and Mable Avenues.
On May 8, 2007, the City of Modesto formed City of Modesto Community Facilities District No. 2007-1 (CFD No. 2007-1). The authorized services to be funded by special tax revenues include maintenance and repair of parks, landscaped medians, storm drainage basins, and related facilities, including but not limited to, concrete curbs and walks, trees, shrubs, vines, ground cover, turf, lights and irrigation systems. The services to be provided include, but are not limited to, litter and debris removal, graffiti abatement, painting repairs to landscape structures, building maintenance and repairs, pruning, staking, fertilizing, plant replacement and restoration, fire and weed control, erosion control, mowing of lawns, trimming of vegetation, and maintenance, repair and replacement of lighting systems within the parks.
The facilities authorized to be funded by special tax revenues include installation of the landscaped medians on Oakdale and Coffee Roads, which may but will not necessarily include, concrete curbs and walks, trees, shrubs, ground cover, lights, and irrigation systems.
#1..
- 475 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
Government-Wide:
• The District’s net position increased to $625,893 for fiscal year 2021. • Total District revenues were $90,858.
• Total District expenses were $73,146.
Funds Basis:
• Capital Projects Fund revenues of $41 were $17,720 lower than the prior year due to an decrease in interest and investment revenue. Expenditures of $0 were the same as the previous year. The Capital Projects Fund ending fund balance increased by $41, with an ending fund balance of $514,873. • Special Revenue Fund revenues of $90,073 were $2,270 lower than the prior year primarily due to decreased in interest and investment revenue. Expenditures of $73,146 were $3,127 more than the prior year due to an increase in repair and maintenance expenditures. The Special Revenue Fund balance increased by $16,927 to an ending fund balance of $110,276.
THE BASIC FINANCIAL STATEMENTS
The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.
Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.
The Statement of Net Position and the Statement of Activities present information about the following:
Governmental activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.
#1..
- 476 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.
As of June 30, 2021, total assets of $633,365 were offset by liabilities of $7,472. The District’s net position from governmental activities increased to $625,893 in 2021 from $608,181 in 2020. All of the District’s net position is restricted as follows: $514,873 for acquisition or construction of infrastructure and $111,020 for maintaining that infrastructure.
The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 630,973 $ 616,445 $ 14,528
Assessments receivable 1,154 411 743
Interest receivable 1,238 2,059 (821)
Total assets 633,365 618,915 14,450
Current and other liabilities 7,472 10,734 (3,262)
Net position:
Restricted for:
Capital projects 514,873 514,832 41
District maintenance 111,020 93,349 17,671
Total net position $ 625,893 $ 608,181 $ 17,712
Statement of Net Position - Governmental Activities
#1..
- 477 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue of $90,858 came primarily from maintenance special tax of $90,870. District expenses of $73,146 were for professional services and utilities expenses.
The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues:
General revenues:
Maintenance special tax $ 90,870 $ 89,400 $ 1,470
Investment earnings (loss) (12) 20,704 (20,716)
Total revenues 90,858 110,104 (19,246)
Expenses:
Community development 73,146 70,019 3,127
Change in net position 17,712 40,085 $ (22,373)
Net position, beginning of year 608,181 568,096
Net position, end of year $ 625,893 $ 608,181
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s two funds. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.
The fund financial statements provide detailed information about each of the District’s most significant funds, called major funds. Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of the District’s activities. All of the District’s funds are presented here as major funds; their purpose is explained in Note 1 to the financial statements. All the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses. #1..
- 478 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balance for both the Capital Projects Fund and the Special Revenue Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 41 $ 17,761 $ (17,720)
Expenditures - - -
Changes in fund balances 41 17,761 $ (17,720)
Fund balances, beginning of year 514,832 497,071
Fund balances, end of year $ 514,873 $ 514,832
2021 2020 Change
Revenues $ 90,073 $ 92,343 $ (2,270)
Expenditures 73,146 70,019 3,127
Changes in fund balances 16,927 22,324 $ (5,397)
Fund balances, beginning of year 93,349 71,025
Fund balances, end of year $ 110,276 $ 93,349
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Capital Projects Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental funds reported combined fund balances of $625,149, which was a $16,968 increase from fiscal year 2020. The Capital Projects Fund realized a $41 increase due to interest earnings, while the Special Revenue Fund realized a $16,927 increase due to maintenance special tax and investment revenues exceeding professional services and utilities.
#1..
- 479 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.
Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 480 -
9 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION
AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.
The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.
The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 481 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 630,973
Assessments receivable 1,154
Interest receivable 1,238
Total Assets 633,365
LIABILITIES
Accounts payable 7,472
Total Liabilities 7,472
NET POSITION
Restricted for:
Capital projects 514,873
District maintenance 111,020
Total Net Position $ 625,893
#1..
- 482 -
The accompanying notes are an integral part of the financial statements. 11 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 73,146 $ - $ (73,146)
$ 73,146 $ - (73,146)
General Revenues:
Maintenance special tax 90,870
Investment earnings (loss) (12)
Total General Revenues 90,858
17,712
Net Position, Beginning of Year 608,181
Net Position, End of Year $ 625,893
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
#1..
- 483 -
12 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The District determined all its funds to be major funds. They are:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 484 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
ASSETS
Cash and investments $ 513,853 $ 117,120 $ 630,973
Assessments receivable - 1,154 1,154
Interest receivable 1,020 218 1,238
Total Assets $ 514,873 $ 118,492 $ 633,365
LIABILITIES
Accounts payable $ - $ 7,472 $ 7,472
Total Liabilities - 7,472 7,472
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 744 744
Total Deferred Inflows of Resources - 744 744
FUND BALANCES
Restricted for:
Capital projects 514,873 - 514,873
District maintenance - 110,276 110,276
Total Fund Balances 514,873 110,276 625,149
Total Liabilities, Deferred Inflows
of Resources and Fund Balances $ 514,873 $ 118,492 $ 633,365 #1..
- 485 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position:
Total Fund Balances - Governmental Funds $ 625,149
Adjustments to the Balance Sheet of the Governmental Funds to reconcile with the Statement of Net Position:
Revenues not available for current-period expenditures are deferred in governmental funds, but are considered earned in the Statement of Net Position. 744
Total Net Position - Governmental Activities $ 625,893
#1..
- 486 -
The accompanying notes are an integral part of the financial statements. 15 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
REVENUES
Maintenance special tax $ - $ 90,126 $ 90,126
Interest income 4,755 806 5,561
Change in fair value of investments (4,714) (859) (5,573) Total Revenues 41 90,073 90,114
EXPENDITURES
Services - professional and other - 59,570 59,570
Utilities - 13,576 13,576
Total Expenditures - 73,146 73,146
Changes in Fund Balances 41 16,927 16,968
Fund Balances, Beginning of Year 514,832 93,349 608,181 Fund Balances, End of Year $ 514,873 $ 110,276 $ 625,149 #1..
- 487 -
The accompanying notes are an integral part of the financial statements. 16 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT
OF ACTIVITIES CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2021
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities:
Changes in Fund Balances - Governmental Funds $ 16,968
Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balances of the Governmental Funds to reconcile with the Statement of Activities:
Revenues that are considered earned in the Statement of Activities that did not provide current financial resources in the current year were not reported as revenue in the governmental funds. 744 Change in Net Position - Governmental Activities $ 17,712 #1..
- 488 -
The accompanying notes are an integral part of the financial statements. 17 COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Maintenance special tax $ 90,000 $ 90,000 $ 90,126 $ 126 Interest income - - 806 806
Change in fair value
of investments - - (859) (859)
Total Revenues 90,000 90,000 90,073 73
EXPENDITURES
Services - professional
and other 61,330 61,330 59,570 1,760
Utilities 21,000 21,000 13,576 7,424
Total Expenditures 82,330 82,330 73,146 9,184
Changes in Fund Balance $ 7,670 $ 7,670 16,927 $ 9,257
Fund Balance, Beginning of Year 93,349
Fund Balance, End of Year $ 110,276
Budgeted Amounts
#1..
- 489 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 2007-1 (North Beyer Park #2) (the District) was formed in May 2007 by a vote of the property owners within the proposed District. The District, a separate legal entity, was formed to provide a funding mechanism for public facilities and services as required by the District Specific Plan. The District is a 160-acre project, the boundaries of which are recorded in Book 2, page 80 of the Book of Assessment District Maps in the Stanislaus County Recorder’s Office.
The District is an integral part of the City of Modesto, California (the City) and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.
Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.
The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.
The District reports the following major governmental funds:
The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 490 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Maintenance Special Taxes: The maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District.
The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.
Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.
In addition to assets, the Statements of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.
In addition to liabilities, the Statement of Net Position will sometimes report section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed - Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned - Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned - The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes. #1..
- 491 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fund Balance (continued): The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy. This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts. Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed.
Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No. 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021. #1..
- 492 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
21 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022 GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.
Cash in the City Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021. #1..
- 493 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
22 NOTE 2 – CASH AND INVESTMENTS (continued)
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 630,973
Total cash and investments $ 630,973
Deposits with City of Modesto
Cash and investment pool $ 630,973
Total cash and investments $ 630,973
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares.
NOTE 3 – RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
Restricted for Capital Projects - the portion of fund balance legally restricted for the acquisition, construction, and formation/annexation activities.
Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.
NOTE 4 – DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that will initiate foreclosure proceedings against delinquent parcels as follows:
a. Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within 120 days after the third delinquency.
b. All parcels delinquent at June 30 when the Distict received Special Taxes totaling less that 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initated by September 1 following the end of the fiscal year.
At June 30, 2021, the District had 1 parcels that were delinquent for a total of $744, none of which were delinquent for more than three consecutive payments.
The District received 100% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2021. The delinquencies total of $0 at June 30, 2021 is included in assessments receivable in the Statement of Net Position and Balance Sheet.
#1..
- 494 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2007-1 NORTH BEYER PARK #2
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
23 NOTE 5 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus (COVID-10) require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to COVID-19. The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 495 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2007-1 (North Beyer Park #2) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 496 -
25 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 497 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 498 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report ......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:
Statement of Net Position – Governmental Activities ........................................................................ 9 Statement of Activities – Governmental Activities ............................................................................. 10 Balance Sheet – Governmental Fund .................................................................................................. 12 Statement of Revenues, Expenditures, and Changes in
Fund Balance – Governmental Fund ................................................................................................... 13 Statement of Revenues, Expenditures, and Changes in
Fund Balance – Special Revenue Fund – Budget and Actual ............................................................... 14 Notes to Basic Financial Statements .................................................................................................................. 15 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................................................................................... 20 #1..
- 499 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and major fund of the City of Modesto Community Facilities District Number 2016-2 (The Vintage) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of the District, as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. #1..
- 500 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 501 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 2016-2 (The Vintage) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.
Please read this overview in conjunction with your reading of the accompanying basic financial statements.
THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.
The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.
BACKGROUND AND MANAGEMENT’S DISCUSSION
On January 26, 2016, the City Council approved the Vintage Specific Plan that set forth a plan of development for approximately 45 acres that were, at that time, located west of Dale Road and north of Vintage Faire Mall. The Vintage Specific Plan is intended to provide for the development of 170 single-family residential lots, 6.05 acres of multi-family residential development, and approximately 10 acres for commercial development that will assist in implementing the City’s long-range objectives to enhance its local economy, generate jobs for residents, and create a better jobs housing balance.
The District was formed by the City Council in January 2016 to generate funding for construction of certain roadway improvements and the ongoing maintenance of landscaped medians, a bike path, well site, storm drainage pump and basin, and related facilities.
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:
Government-Wide:
• The District’s net position increased to $110,256 for fiscal year 2021. • Total District revenues were $135,848.
Funds Basis:
• Special Revenue Fund revenues of $134,959 were $106,312 greater than the prior year due to increased maintenance special tax revenues. Expenditures of $41,250 were $20,050 greater than the prior year due to an increase in community development expenses. The Special Revenue Fund balance increased by $93,709 to an ending fund balance of $109,367.
#1..
- 502 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
THE BASIC FINANCIAL STATEMENTS
The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.
Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.
The Statement of Net Position and the Statement of Activities present information about the following:
Governmental activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.
#1..
- 503 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.
As of June 30, 2021, total assets of $114,610 were offset by liabilities of $4,354. The District’s net position from governmental activities increased to $110,256 in 2021 from $15,658 in 2020. The District’s net position is restricted as follows: $110,256 for maintenance of infrastructure.
The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 111,967 $ 14,680 $ 97,287
Interest receivable 204 52 152
Taxes receivable 2,439 1,102 1,337
Total assets 114,610 15,834 98,776
Current and other liabilities 4,354 176 4,178
Net position
Restricted for:
District maintenance 110,256 15,658 94,598
Total net position $ 110,256 $ 15,658 $ 94,598
Statement of Net Position - Governmental Activities
#1..
- 504 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue came from maintenance special taxes of $135,839 and investment earnings of $9. Facilities special tax revenue was not collected in fiscal year 2021, as these revenues are collected at the time of building permit issuance, and no such development occurred in the District in fiscal year 2021. District expenses of $41,250 were for professional services and utilities.
The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues:
General revenues:
Maintenance special tax $ 135,839 $ 28,364 $ 107,475
Investment earnings 9 283 (274)
Total revenues 135,848 28,647 107,201
Expenses:
Community development 41,250 21,200 20,050
Change in net position 94,598 7,447 $ 87,151
Net position, beginning of year 15,658 8,211
Net position, end of year $ 110,256 $ 15,658
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s fund. The fund financial statements measure only current revenues and expenditures and fund balance; they exclude capital assets, long-term debt, and other long-term amounts.
The fund financial statements provide detailed information about the District’s significant funds, called major funds.
Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of the District’s activities. The District’s one fund is presented here as a major fund; its purpose is explained in Note 1 to the financial statements. The District’s Special Revenue Fund is a governmental fund; financial statements for this fund are prepared on the modified accrual basis of accounting, which means it measures only current financial resources and uses.
#1..
- 505 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balance for the Special Revenue Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 134,959 $ 28,647 $ 106,312
Expenditures 41,250 21,200 20,050
Changes in fund balances 93,709 7,447 $ 86,262
Fund balance, beginning of year 15,658 8,211
Fund balance, end of year $ 109,367 $ 15,658
Statement of Revenues, Expenditures, and
Change in Fund Balance - Special Revenue Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental fund reported a fund balance of $109,367, which was a $93,709 increase from fiscal year 2020 due to special maintenance tax revenue and investment earnings exceeding professional services expenses.
CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.
Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 506 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION
AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.
The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.
The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 507 -
The accompanying notes are an integral part of the financial statements. 9 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 111,967
Interest receivable 204
Taxes receivable 2,439
Total Assets 114,610
LIABILITIES
Accounts payable 4,354
Total Liabilities 4,354
NET POSITION
Restricted for:
District maintenance 110,256
Total Net Position $ 110,256
#1..
- 508 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 41,250 $ - $ (41,250)
$ 41,250 $ - (41,250)
General Revenues:
Maintenance special tax 135,839
Investment earnings 9
Total General Revenues 135,848
94,598
Net Position, Beginning of Year 15,658
Net Position, End of Year $ 110,256
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
#1..
- 509 -
11 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.
The District determined its fund to be a major fund. That is:
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 510 -
The accompanying notes are an integral part of the financial statements. 12 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUND
JUNE 30, 2021
Special
Revenue
Fund
ASSETS
Cash and investments $ 111,967
Interest receivable 204
Taxes receivable 2,439
Total Assets $ 114,610
LIABILITIES
Accounts payable $ 4,354
Total Liabilities 4,354
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 889
Total Deferred Inflows of Resources 889
FUND BALANCE
Restricted for:
District maintenance 109,367
Total Fund Balance 109,367
Total Liabilities, Deferred Inflows of Resources, and Fund Balance $ 114,610 Reconciliation of the Balance Sheet of the Governmental Fund to the Statement of Net Position:
Total Fund Balance - Governmental Fund $ 109,367
Adjustments to the Balance Sheet of the Governmental Fund to reconcile with the Statement of Net Position:
Revenues not available for current-period expenditures are deferred in the governmental fund, but are considered earned in the Statement of Net Position. 889
Total Net Position - Governmental Activities $ 110,256
#1..
- 511 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE – GOVERNMENTAL FUND
FOR THE YEAR ENDED JUNE 30, 2021
Special
Revenue
Fund
REVENUES
Maintenance special tax $ 134,950
Interest income 590
Change in fair value of investments (581)
Total Revenues 134,959
EXPENDITURES
Services - professional and other 40,776
Utilities 474
Total Expenditures 41,250
Changes in Fund Balance 93,709
Fund Balance, Beginning of year 15,658
Fund Balance, End of year $ 109,367
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of the Governmental Fund to the Statement of Activities:
Changes in Fund Balance - Governmental Fund $ 93,709
Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balance of the Governmental Fund to reconcile with the Statement of Activities:
Revenues that are considered earned in the Statement of Activities that did not provide current financial resources in the current year were not reported as revenues in the governmental fund. 889 Change in Net Position - Governmental Activities $ 94,598 #1..
- 512 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Maintenance special tax $ 153,606 $ 153,606 $ 134,950 $ (18,656) Interest income 32,000 32,000 590 (31,410)
Change in fair value
of investments - - (581) (581)
Total Revenues 185,606 185,606 134,959 (50,647)
EXPENDITURES
Services - professional
and other 28,094 58,094 40,776 17,318
Utilities - 3,000 474 2,526
Total Expenditures 28,094 61,094 41,250 19,844
Changes in Fund Balance $ 157,512 $ 124,512 93,709 $ (30,803) Fund Balance, Beginning of Year 15,658
Fund Balance, End of Year $ 109,367
Budgeted Amounts
#1..
- 513 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
15 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 2016-2 (The Vintage) (the District) was formed in January 2016 by a vote of the property owners within the proposed district. The District, a separate legal entity, was formed to provide a funding and reimbursement mechanism for public facilities and services required by the District Specific Plans. The District is the vehicle that will be used to ensure that all landowners in the District pay their share of the public improvements. The District is a proposed 45-acre project, west of Dale Road and north of Vintage Faire Mall.
The District is an integral part of the City of Modesto, California (the City) and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.
Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.
The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.
Governmental fund 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 collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.
The District reports the following major governmental fund:
The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
#1..
- 514 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
16 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.
In addition to liabilities, the Statements of Net Position will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.
Maintenance Special Taxes: The maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District.
The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.
Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed – Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned – Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned – The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.
The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy.
This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts.
Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed. #1..
- 515 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
17 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net Investment in Capital Assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests - an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2022. #1..
- 516 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021.
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.
Cash in the City pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021.
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position- Governmental Activities:
Cash and investments $ 111,967
Total cash and investments $ 111,967
Deposits with City of Modesto
Cash and investment pool $ 111,967
Total cash and investments $ 111,967
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares. #1..
- 517 -
COMMUNITY FACILITIES DISTRICT
NUMBER 2016-2 THE VINTAGE
CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 3 – RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:
Restricted for District Maintenance – the portion of fund balance legally restricted for maintenance of parkways and open space within the District.
NOTE 4 – DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that it will initiate foreclosure proceedings against delinquent parcels as follows:
a. Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within 120 days after the third delinquency.
b. All parcels delinquent at June 30 when the District received Special Taxes totaling less than 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initiated by September 1 following the end of the fiscal year.
At June 30, 2021, the District had 2 parcels that were delinquent for a total of $889, none of which were delinquent for more than three consecutive payments.
The District received 99.34% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2021. The delinquency total of $889 at June 30, 2021 is included in assessments receivable on the Statement of Net Position and Balance Sheet.
NOTE 5 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the Novel Coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 518 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the City of Modesto Community Facilities District Number 2016-2 (The Vintage) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 519 -
21 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 19, 2021
#1..
- 520 -
CITY OF MODESTO, CALIFORNIA
ABANDONED VEHICLE ABATEMENT PROGRAM
INDEPENDENT AUDITORS’ REPORT
AND
FINANCIAL STATEMENT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 521 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report ........................................................................................................................... 1 Financial Statement:
Statement of Receipts and Costs ................................................................................................................ 3 Notes to the Financial Statement ................................................................................................................ 4 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards and the AVA Program Handbook ................................................................ 5
#1..
- 522 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
To the Honorable City Council
City of Modesto, California
Report on the Financial Statement
We have audited the accompanying statement of receipts and costs of the City of Modesto, California, Abandoned Vehicle Abatement Program (the Program) for the year ended June 30, 2021, and the related notes to the financial statement, as listed in the table of contents.
Management’s Responsibility for the Financial Statement Management is responsible for the preparation and fair presentation of this financial statement in accordance with the cash basis of accounting described in Note 1; this includes determining that the cash basis of accounting is an acceptable basis for the preparation of the financial statement in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of a financial statement that is free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and certain provisions of the Abandoned Vehicle Abatement (AVA) Program Handbook, issued by the California Highway Patrol. Those standards and the AVA Program Handbook require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statement referred to above presents fairly, in all material respects, the receipts and costs of the Program for the year ended June 30, 2021, in accordance with the cash basis of accounting described in Note 1.
#1..
- 523 -
2 Emphasis of Matter
Basis of Accounting
We draw attention to Note 1 of the financial statement, which describes the basis of accounting. The financial statement is prepared on the cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. As discussed in Note 1, the Program is intended to present the statement of receipts and costs of the Program. It does not purport to, and does not present fairly the financial position of the City of Modesto, California as of June 30, 2021, the changes in its financial position, or, where applicable, its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to these matters.
Other Reporting Required by Government Auditing Standards and the AVA Program Handbook In accordance with Government Auditing Standards and the AVA Program Handbook, we have also issued our report dated October 15, 2021, on our consideration of the Program’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and the AVA Program Handbook in considering the Program’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 15, 2021
#1..
- 524 -
The accompanying notes are an integral part of this financial statement. 3 CITY OF MODESTO, CALIFORNIA
ABANDONED VEHICLE ABATEMENT PROGRAM
STATEMENT OF RECEIPTS AND COSTS
FOR THE YEAR ENDED JUNE 30, 2021
Receipts received
Registration fees $ 239,102
Costs disbursed
Personnel 127,502
Services and supplies 19,635
Total costs disbursed 147,137
Excess of receipts received over costs disbursed 91,965 Surplus, beginning of year 476,064
Surplus, end of year $ 568,029
#1..
- 525 -
CITY OF MODESTO, CALIFORNIA
ABANDONED VEHICLE ABATEMENT PROGRAM
NOTES TO THE FINANCIAL STATEMENT
4 NOTE 1 – BASIS OF PRESENTATION
The Abandoned Vehicle Abatement Program (the Program) is a statewide program administered by the California Highway Patrol (CHP). The City of Modesto (the City) administers and operates the local vehicle abatement program pursuant to Section 22710 of the Vehicle Code, Modesto Municipal City Code Section 3-2.1002 et seq., and the Stanislaus Area Association of Governments (SAAG) Abandoned Vehicle Program and Plan. Section 9250.7 of the Vehicle Code establishes the funding source for the abatement of abandoned vehicles by a county-based Service Authority (the Authority), pursuant to the provisions of Section 22710 of the Vehicle Code. The Vehicle Code imposes a service fee of one dollar ($1) on vehicles registered to an owner with an address in the County of Stanislaus that established the Authority. This fee is paid to the Department of Motor Vehicles (DMV) at the time of registration or renewal of registration. The DMV, after deducting its administrative costs, at least quarterly transmits the net amount collected to the State Controller’s Office (SCO) for deposit in the Abandoned Vehicle Trust Fund. All money in the fund is continuously appropriated to the SCO for allocation to an Authority that has an approved Program pursuant to Section 22710 of the Vehicle Code, and for payment of the administrative costs of the SCO. SAAG, the Authority established pursuant to Vehicle Code Section 22710, distributes Program funds to participating entities based on the allocations determined in the Vehicle Abatement Services Agreement. The receipts and costs of the Program are included in the General Fund of the City’s basic financial statements. The financial statement presents the Statement of Receipts and Costs of the Program. It does not purport to, and does not present fairly the financial position of the City of Modesto, California as of June 30, 2021, the changes in its financial position, or, where applicable, its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Financial Statement Presentation: The financial statement is prepared on the method of accounting prescribed by the California Highway Patrol (CHP) and the Abandoned Vehicle Abatement (AVA) Program Handbook. The financial statement presents the information requested by the CHP and, therefore, does not purport to reflect results of operations in accordance with accounting principles generally accepted in the United States of America.
Basis of Accounting: The financial statement for the Program is prepared on the cash basis of accounting in which revenue is recognized when distributions are received and costs are recognized as disbursed and claimed in accordance with the AVA Program Handbook Guidelines.
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statement.
Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 15, 2021, which is the date the financial statement was available to be issued.
NOTE 2 – CONTINGENCY
Coronavirus Pandemic
On March 4, 2020 Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the novel coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. A vaccination has been created and is being administered throughout the state, including the City’s service area. The ultimate impact of COVID-19 on the operations and finances of the Program remains unknown. #1..
- 526 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND THE AVA PROGRAM HANDBOOK.
To the Honorable City Council
City of Modesto, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and certain provisions of the Abandoned Vehicle Abatement (AVA) Program Handbook, issued by the California Highway Patrol, the statement of receipts and costs of the City of Modesto, California, Abandoned Vehicle Abatement Program (the Program) for the year ended June 30, 2021, and the related notes to the financial statement, and have issued our report thereon dated October 15, 2021.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statement, we considered the Program’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statement, but not for the purpose of expressing an opinion on the effectiveness of the Program’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Program’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Program’s financial statement is free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards or the AVA Program Handbook.
#1..
- 527 -
6 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal controls and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Program’s internal controls or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards and the AVA Program Handbook in considering the Program’s internal controls and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 15, 2021
#1..
- 528 -
MODESTO-CERES FIRE PROTECTION AGENCY
ANNUAL FINANCIAL REPORT
WITH
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 529 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report.......................................................................................................................... 1 Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position ................................................................................................................... 3 Statement of Activities ........................................................................................................................ 4 Fund Financial Statements:
Balance Sheet - Governmental Fund ................................................................................................... 5 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Governmental Fund .................................................................................................. 6 Statement of Revenues, Expenditures, and Changes in Fund Balance- Budget to Actual - General Fund ....................................................................................................... 7 Notes to Financial Statements ........................................................................................................................... 8 Other Information:
Schedule of Officers ...................................................................................................................................... 14 Other Report:
Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...................................................................................................................... 15 #1..
- 530 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors
Modesto–Ceres Fire Protection Agency
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and major fund of the Modesto-Ceres Fire Protection Agency (the Agency) as of and for the year ended June 30, 2021, the budgetary comparison for the general fund and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of the Agency, as of June 30, 2021, and the respective changes in financial position and the budgetary comparison for the year then ended in accordance with accounting principles generally accepted in the United States of America. #1..
- 531 -
2 Other Matters
Required Supplementary Information
Management has omitted management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency’s basic financial statements. The Schedule of Officers is presented for purposes of additional analysis and is not a required part of the basic financial statements.
The Schedule of Officers has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 5, 2021, on our consideration of the Agency’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Agency’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 5, 2021
#1..
- 532 -
The accompanying notes are an integral part of the financial statements. 3 MODESTO–CERES FIRE PROTECTION AGENCY
STATEMENT OF NET POSITION
JUNE 30, 2021
Governmental
Activities
ASSETS
Cash and investments $ 257,559
Interest receivable 1,080
Taxes receivable 22,414
Total Assets 281,053
LIABILITIES
Accounts payable 281,053
Total Liabilities 281,053
NET POSITION
Restricted -
Total Net Position $ -
#1..
- 533 -
The accompanying notes are an integral part of the financial statements. 4 MODESTO–CERES FIRE PROTECTION AGENCY
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Net (Expense)
and Revenue
Program and Changes
in Net Position
Charges for Governmental
Functions/Programs Expenses Services Activities
Governmental Activities:
Fire and ambulance services $ 643,753 $ - $ (643,753)
Totals $ 643,753 $ - (643,753)
General Revenues:
Taxes 644,176
Interest 1,921
Change in fair value of investments (2,344)
Total General Revenues 643,753
-
Net Position, Beginning of Year -
Net Position, End of Year $ -
Revenues
Change in Net Position
#1..
- 534 -
The accompanying notes are an integral part of the financial statements. 5 MODESTO–CERES FIRE PROTECTION AGENCY
BALANCE SHEET – GOVERNMENTAL FUND
JUNE 30, 2021
ASSETS
Cash and investments $ 257,559
Interest receivable 1,080
Taxes receivable 22,414
Total Assets $ 281,053
LIABILITIES AND FUND BALANCE
Liabilities
Accounts payable $ 281,053
Total Liabilities 281,053
Fund Balance
Restricted -
Total Fund Balance -
Total Liabilities and Fund Balance $ 281,053
Reconciliation of the Balance Sheet of the General Fund to the Statement of Net Position:
Total Fund Balance - General Fund $ -
Adjustments to the Balance Sheet of the General Fund
to reconcile with the Statement of Net Position: -
Total Net Position - Governmental Activities $ -
#1..
- 535 -
The accompanying notes are an integral part of the financial statements. 6 MODESTO–CERES FIRE PROTECTION AGENCY
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE – GOVERNMENTAL FUND
FOR THE YEAR ENDED JUNE 30, 2021
REVENUES
Taxes $ 644,176
Interest 1,921
Change in fair value of investments (2,344)
Total Revenues 643,753
EXPENDITURES
Professional services 4,510
Liability insurance 2,285
City of Modesto - administrative fee 1,899
Other 2,769
Total Expenditures 11,463
Excess (Deficiency) of Revenues Over
(Under) Expenditures 632,290
OTHER FINANCING SOURCES (USES)
Distributions to Member Agencies:
City of Modesto (351,237)
City of Ceres (281,053)
Total Other Financing Sources (Uses) (632,290)
Net Change in Fund Balance -
Fund Balance, Beginning of Year -
Fund Balance, End of Year -$
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of the General Fund to the Statement of Activities:
Net change in Fund Balance - General Fund -$
Adjustments to the Statement of Revenues, Expenditures, and Changes in Fund Balance of the General Fund to reconcile with the Statement of Activities: -
Change in Net Position - Governmental Activities -$
#1..
- 536 -
The accompanying notes are an integral part of the financial statements. 7 MODESTO–CERES FIRE PROTECTION AGENCY
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – BUDGET TO ACTUAL - GENERAL FUND
FOR THE YEAR ENDED JUNE 30, 2021
Original Final
REVENUE
Taxes $ 661,508 $ 661,508 $ 644,176
Interest 3,423 3,423 1,921
Change in fair value of investments - - (2,344)
Total Revenue 664,931 664,931 643,753
EXPENDITURES
Professional services 5,341 5,341 4,510
Liability insurance 1,400 1,400 2,285
City of Modesto - administrative fee 5,900 5,900 1,899
Other 4,800 4,800 2,769
Total Expenditures 17,441 17,441 11,463
Excess (Deficiency) of Revenues
Over (Under) Expenditures 647,490 647,490 632,290
OTHER FINANCING SOURCES (USES)
Distributions to Member Agencies:
City of Modesto (359,681) (359,681) (351,237)
City of Ceres (287,809) (287,809) (281,053)
Total Other Financing
Sources (Uses) (647,490) (647,490) (632,290)
Changes in Fund Balance -$ -$ -
Fund Balance, beginning of year -
Fund Balance, end of year -$
8,444
6,756
15,200
-$
831
(885)
4,001
2,031
5,978
(15,200)
(21,178)
Budgeted Amounts Actual
Amounts
Variance
With Final
(2,344)
(1,502)
$ (17,332)
#1..
- 537 -
MODESTO – CERES FIRE PROTECTION AGENCY
NOTES TO FINANCIAL STATEMENTS
8 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization: The Modesto-Ceres Fire Protection Agency (the Agency) was formed on March 13, 2007 by a joint powers agreement made in accordance with Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (commencing with Section 6500) between the Industrial Fire District (the District), the City of Modesto, and the City of Ceres, for the cities to provide fire protection and administrative services within the District. The Agency operates under the Fire Protection District Law of 1987 and the Health and Safety Code, Sections 13801- 13999.
Revenue to finance the Agency's operation is derived from the County of Stanislaus property tax rolls.
Reporting Entity: The Agency’s financial statements include the accounts of all Agency operations. The criteria for including organizations as component units within the Agency’s reporting entity, as set forth in Section 2100 of the Governmental Accounting Standards Board’s (GASB) Codification of Government Accounting and Financial Reporting Standards, include whether:
• The organization is legally separate (can sue and be sued in their own name) • The Agency holds the corporate powers of the organization • The Agency appoints a voting majority of the organization’s board • The Agency can impose its will on the organization
• The organization has the potential to impose a financial benefit/burden on the Agency • There is fiscal dependency by the organization on the Agency. Based on the criteria, the Agency has no component units.
Measurement Focus, Basis of Accounting and Financial Statement Presentation: The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the Agency’s activities. The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied.
Governmental Fund Financial Statements: Governmental fund financial statements (i.e., Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance) 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. Revenues susceptible to accrual are property taxes, interest on investments, and intergovernmental revenues.
Property taxes are recorded as revenues in the fiscal year in which they are levied, provided they are collected in the current period or within sixty days thereafter. A one-year availability period is used for all other revenues. Interest on invested funds is recognized when earned. Intergovernmental revenues that are reimbursements for specific expenditures are recognized when all eligibility requirements are met. Expenditures generally are recorded when a liability is incurred, as under accrual accounting; however, debt service expenditures are recorded only when payment is due.
#1..
- 538 -
MODESTO – CERES FIRE PROTECTION AGENCY
NOTES TO FINANCIAL STATEMENTS (continued)
9 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Fund Financial Statements (continued): 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 government’s near-term financing decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The Agency reports one major governmental fund:
The General Fund is the primary operating fund and accounts for all financial resources of the Agency.
The Agency adopts annual appropriated budgets for its general revenue fund which is a major fund. A budgetary comparison statement has been provided for this fund to demonstrate compliance with the budgets. The budgetary comparison statement is presented on a budgetary basis which differs from generally accepted accounting principles in the method of accounting for accruals and encumbrances.
Budget: The budget for the General Fund is prepared on the cash and expenditures/encumbrances basis. Revenues are budgeted in the year receipt is expected; expenditures, which include encumbrances, are budgeted in the year that the applicable warrant requisitions are expected to be issued.
Annual budget requests are submitted by the Agency staff to the Agency’s Board of Directors for review. After public hearing, a budget is approved by the Agency’s Board of Directors, with a resolution adopting said budget. Copies of the approved budget are sent to all required agencies.
The General Fund budget is prepared within the limit on spending as regulated by Proposition 4 Appropriations Limitation. Unencumbered appropriations for annually budgeted funds lapse at year-end.
Proposition 4: The Proposition 4 Appropriations Limitation for the year ended June 30, 2021, was $1,272,813.
Cash and Investments: The Agency maintains its cash account with the City of Modesto as part of the cash and investment pool. The City of Modesto is restricted by Government Code Section 53635 pursuant to Section 53601 to invest in time deposits, U.S. government securities, state registered warrants, notes or bonds, State Treasurer’s investment pool, bankers’ acceptances, commercial paper, negotiable certificates of deposit, and repurchase or reverse repurchase agreements.
In accordance with GASB Statement No. 43, Accounting and Financial Reporting for Certain Investments and External Investment Pools, investments held by the City of Modesto are stated at fair value. The fair value of pooled investments is determined monthly and is based on current market prices received from the securities custodian.
The balance available for withdrawal is based on the accounting records maintained by the City of Modesto.
Property Tax: Secured property taxes attach as an enforceable lien on real property as of the 1st day of January.
Taxes are payable in two installments on November 1 and February 1, and become delinquent if not paid before December 10th and April 10th. Unsecured property taxes are billed in one installment, are due March 15th, and become delinquent if not paid on or before August 31st. The County of Stanislaus bills and collects all property taxes and remits to the Agency its share of the 1% property tax allocation.
Employees’ Retirement Plan: The Agency no longer participates in the County of Stanislaus retirement plan since firefighters are paid by the cities of Modesto and Ceres. #1..
- 539 -
MODESTO – CERES FIRE PROTECTION AGENCY
NOTES TO FINANCIAL STATEMENTS (continued)
10 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Net Position: Net position represents the residual interest in the Agency’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Fund Balance: In the fund financial statements, in accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, governmental funds report fund balance as nonspendable, restricted, committed, assigned or unassigned based primarily on the extent to which the Agency is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required to be maintained intact. The Agency did not have any nonspendable resources as of June 30, 2021. • Restricted – Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. The Agency did not have any restricted resources as of June 30, 2021. • Committed – Amounts constrained to specific purposes by the Agency itself, using its highest level of decision-making authority, the Board of Directors (Agency Board). To be reported as committed, amounts cannot be used for any other purpose unless the Agency Board takes the same highest level action to remove or change the constraint. The Agency did not have any committed resources as of June 30, 2021. • Assigned – Amounts the Agency intends to use for a specific purpose. Intent can be expressed by the Agency or by an official or body to which the Agency Board delegates the authority. The Agency did not have any assigned resources as of June 30, 2021.
• Unassigned – Amounts that are available for any purpose. The Agency did not have any unassigned resources as of June 30, 2021.
In circumstances when an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the Agency considers amounts to have been spent first out of committed funds then assigned funds, and finally unassigned funds, as needed, unless the Board has provided otherwise in its commitment or assignment actions.
#1..
- 540 -
MODESTO – CERES FIRE PROTECTION AGENCY
NOTES TO FINANCIAL STATEMENTS (continued)
11 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update: During the year ending June 30, 2021, the Agency implemented the following standards:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021.
#1..
- 541 -
MODESTO – CERES FIRE PROTECTION AGENCY
NOTES TO FINANCIAL STATEMENTS (continued)
12 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements.
Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 5, 2021, which is the date the financial statements were available to be issued.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the Agency are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the Agency’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto. Cash in the City pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The Agency does not have any deposits with financial institutions as of June 30, 2021.
Cash and investments as of June 30, 2021 are classified in the accompany financial statements as follows:
Statement of Net Position:
Cash and investments $ 257,559
Total cash and investments $ 257,559
Summary of Deposits:
Cash and investments as of June 30, 2021 consist of the following:
Deposits with City of Modesto:
Cash and investments Pool $ 257,559
Total cash and investments $ 257,559
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the Agency’s position in the pool is the same as the value of its pool shares.
NOTE 3 – DEFICIENCY OF EXPENDITURES OVER APPROPRIATIONS Deficiency of expenditures over appropriations for the year ended June 30, 2021 was as follows:
Expenditures Amount
General Fund:
Liability insurance $ (885)
#1..
- 542 -
MODESTO – CERES FIRE PROTECTION AGENCY
NOTES TO FINANCIAL STATEMENTS (continued)
13 NOTE 4 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the novel coronavirus require disclosure in accordance with accounting standards. On March 4, 2020 Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the novel coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the Agency remain unknown. #1..
- 543 -
MODESTO-CERES FIRE PROTECTION AGENCY
OTHER INFORMATION
#1..
- 544 -
14 MODESTO-CERES FIRE PROTECTION AGENCY
SCHEDULE OF OFFICERS
JUNE 30, 2021
President Tom Westbrook - City of Ceres
City Manager
Secretary Valerie Fabela - City of Modesto
Executive Assistant
City of Modesto Joseph P. Lopez - City of Modesto
City Manager
City of Ceres Michael Botto
Fire Chief
City of Modesto Alan Ernst - City of Modesto
Fire Chief
#1..
- 545 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the Board of Directors
Modesto–Ceres Fire Protection Agency
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the ModestoCeres Fire Protection Agency (the Agency), as of and for the year ended June 30, 2021, the budgetary comparison for the general fund and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements, and have issued our report thereon dated October 5, 2021.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Agency’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Agency’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #1..
- 546 -
16 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Agency’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 5, 2021
#1..
- 547 -
TUOLUMNE RIVER REGIONAL PARK
ANNUAL FINANCIAL REPORT
AND
INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 548 -
TABLE OF CONTENTS
Page
Independent Auditors’ Report.......................................................................................................................... 1 Management’s Discussion and Analysis........................................................................................................... 3 Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position................................................................................................................... 11 Statement of Activities........................................................................................................................ 12 Fund Financial Statements:
Balance Sheet – Governmental Funds ................................................................................................ 13 Reconciliation of the Balance Sheet – Governmental
Funds to the Statement of Net Position............................................................................................ 14 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Governmental Funds................................................................................................. 15 Reconciliation of the Changes in Fund Balance of the
Governmental Funds with the Change in Net Position
Of Governmental Activities ............................................................................................................... 16 Notes to Financial Statements........................................................................................................................... 17 Required Supplementary Information
Schedule of Revenues, Expenditures, and Changes in Fund Balance – General Fund – Budget and Actual.................................................................................. 25 Notes to the Required Supplementary Information.......................................................................................... 26 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...................................................................................................................... 27 Schedule of Findings and Responses................................................................................................................. 29 Schedule of Prior Year Findings and Responses................................................................................................ 31 #1..
- 549 -
7473 N. INGRAM AVE., SUITE 102 ⬧ FRESNO, CA 93711
_______________________________________________________________________________________________ P (559) 412-7576 ⬧ F (559) 493-5325 ⬧ WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
To the Tuolumne River Regional Park Commission,
The Board of Supervisors of the County of Stanislaus, California, and The City Councils of Modesto and Ceres, California
Tuolumne River Regional Park
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the Tuolumne River Regional Park (the Park) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the Park’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Park, as of June 30, 2021, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
#1..
- 550 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 29, 2021, on our conclusion of the Park’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the Park’s internal control over financial reporting or on the compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Park’s internal control over financial reporting and compliance.
HUDSON HENDERSON & COMPANY, INC.
Fresno, California
October 29, 2021
#1..
- 551 -
3 TUOLUMNE RIVER REGIONAL PARK
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
This section of the annual financial report presents a discussion and analysis of financial performance of Tuolumne River Regional Park (the Park) during the past fiscal year. Please read it in conjunction with the Park’s financial statements, which follow this section.
FINANCIAL HIGHLIGHTS
The assets of the Park exceeded liabilities at the close of the 2021 fiscal year by $7,962,162 (net position). Of this amount, $7,525,853 is invested in capital assets, and $436,309 (unrestricted net position) may be used to meet ongoing obligations to citizens and creditors.
• Total net position decreased by $258,457 from current year activity. • As of June 30, 2021, the Park’s funds reported combined fund balance of $211,303, a decrease of $68,568 in comparison with the prior year.
• At the end of the fiscal year, the General Fund had a fund balance of $63,253.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Park’s basic financial statements. The basic financial statements are made up of three components: 1) Government-Wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Basic Financial Statements. Required Supplementary Information is included in addition to the basic financial statements.
Government-Wide Financial Statements are designed to provide readers with a broad overview of Park finances, in a manner similar to a private-sector business.
The Statement of Net Position presents information on all assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Park is improving or deteriorating.
The Statement of Activities presents information showing how net position changed during the most recent fiscal year. All changes in net position 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 inflows or outflows in future fiscal periods.
The sole function of the Park is the administration of parks and recreation. It is principally supported by contributions from the three participating agencies of the Park joint powers agreement, the County of Stanislaus and the Cities of Modesto and Ceres, rather than by user fees, and thus, is considered a governmental activity.
The government-wide financial statements can be found on pages 11 and 12 of this report.
Fund Financial Statements provide evidence of accountability by demonstrating compliance with budgetary decisions. A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or purposes stipulated by laws, regulations, or policies. Both Park funds are governmental funds.
#1..
- 552 -
4 TUOLUMNE RIVER REGIONAL PARK
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2021
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds 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 a government’s near-term financing requirements.
Because the focus of governmental funds financial statements 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 government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The Park maintains two individual governmental funds. 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 both the General Fund and the Capital Projects Fund.
The governmental funds financial statements can be found on pages 13 through 16 of this report.
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 can be found on pages 17 through 24 of this report.
Required Supplementary Information presents a budgetary comparison schedule for the General Fund to demonstrate compliance with the budget. Required supplementary information can be found on pages 25 through 26 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. Net position of the Park was $7,962,162 at the close of fiscal year 2021, compared with $8,220,619 as of June 30, 2020. #1..
- 553 -
5 TUOLUMNE RIVER REGIONAL PARK
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2021
Statement of Net Position – Governmental Activities
2021 2020
Current and other assets $ 514,228 $ 525,165
Capital assets 7,525,853 7,735,694
Total assets 8,040,081 8,260,859
Current and other liabilities 77,919 40,240
Net position:
Net investment in capital assets 7,525,853 7,735,694
Unrestricted 436,309 484,925
Total net position $ 7,962,162 $ 8,220,619
The largest portion of net position, $7,525,853, is made up of the Park’s net investment in capital assets. The Park uses these assets to provide its parks and recreation services; consequently, they are not available for future spending.
Current and other assets decreased by $10,937 or 2.08% primarily due to an increase in due from other governments of $136,181, offset by a decrease in cash of $145,287. The increase is due to increased invoicing of grants funding capital and non-capital projects. All active projects are currently in the development stage and we anticipate a greater increase to grant invoicing in the future when these projects break ground.
The resulting unrestricted net position is $436,309. This amount is the balance at year-end which may be used to meet the Park’s ongoing obligations.
The Park’s net position decreased by $258,457 during the current fiscal year. #1..
- 554 -
6 TUOLUMNE RIVER REGIONAL PARK
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2021
Statement of Activities – Governmental Activities
2021 2020
Revenues
Program revenues:
Charges for services $ 24,059 $ 46,866
Capital grants and contributions 195,336 97,279
Operating grants and contributions 385,526 371,636
General revenues:
Investment earnings (loss) and other (151) 270,778
Total revenues 604,770 786,559
Expenses
Parks and recreation 863,227 917,446
Change in net position (258,457) (130,887)
Net position, beginning of year 8,220,619 8,351,506
Net position, end of year $ 7,962,162 $ 8,220,619
The 2021 net position decreased by $258,457 which is mainly attributable to the overall decrease in charges for services and contributions. Additionally, a large one-time request for payment was received for an insurance claim in 2020, which is reported as other revenue.
FINANCIAL ANALYSIS OF PARK FUNDS
As noted earlier, the Park uses fund accounting to ensure and demonstrate compliance with budgetary decisions.
Governmental funds. The parks and recreation function of the Park is recorded in the General and Capital Projects Funds. The focus of these governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Park’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of net resources available for spending at the end of the fiscal year.
At June 30, 2021, the Park’s governmental funds reported a combined fund balance of $211,303, a decrease of $68,568 in comparison with the prior year.
The General Fund is the chief operating fund of the Park. At June 30, 2021, the General Fund had a fund balance of $63,253, a decrease of $7,914 from the prior year. This decrease can be attributed to a decrease in contributions and a decrease in operating rental revenues due to necessary closures due to the COVID-19 Pandemic.
General and Capital Projects funds revenues totaled $584,818 in fiscal year 2021, a decrease of $118,618 or 16.86% from fiscal year 2020. The following table presents the revenues from various sources as well as increases or decreases from the prior year.
#1..
- 555 -
7 TUOLUMNE RIVER REGIONAL PARK
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2021
Revenues Classified by Source
Governmental Funds
Revenues by Source Amount
Percent of
Total Amount
Percent of
Total Amount Percent
Rents $ 24,059 4.11% $ 46,866 6.66% $ (22,807) -48.66%
Contributions by supporting agencies 385,526 65.92% 371,636 52.83% 13,890 3.74% Intergovernmental 175,384 29.99% 14,156 2.01% 161,228 1138.94% Other -0.02% (151) 270,778 38.50% (270,929) -100.06%
$ 584,818 100.00% $ 703,436 100.00% (118,618) $ -16.86% 2021 2020 Change
The decrease in revenues is mainly attributable to the overall decrease in charges for services and contributions.
Additionally, a large one-time request for payment was received for an insurance claim in 2020, which is reported as other revenue.
The following table presents expenditures by function compared to prior year amounts.
Expenditures by Function
Governmental Funds
Expenditures by Function Amount
Percent of
Total Amount
Percent of
Total Amount Percent
Parks and recreation $ 417,348 63.87% $ 459,962 77.13% $ (42,614) -9.26% Capital Outlay 236,038 36.13% 136,411 22.87% 99,627 73.03% $ 653,386 100.00% $ 596,373 100.00% $ 57,013 9.56%
2021 2020 Change
Current expenditures for operations showed an increase, primarily due to increased project expenses (capital outlay) for the year, with an increase in active projects, moving closer to the construction phase. Parks and Recreation expenses experienced a decrease in material and supplies expenses, as well as a decrease in staff time due to closed facilities and cancelation of classes in response to the COVID-19 Pandemic. #1..
- 556 -
8 TUOLUMNE RIVER REGIONAL PARK
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2021
The current year changes in fund balances as compared to the prior year are presented in the following table:
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
2020
General
Fund
Capital
Projects
Fund
Total
Governmental
Funds
Total
Governmental
Funds
Revenues $ 409,434 $ 175,384 $ 584,818 $ 703,436
Expenditures (417,348) (236,038) (653,386) (596,373)
Other financing sources (uses)
Transfers in - - - 32,859
Transfers out - - - (32,859)
Changes in fund balances (7,914) (60,654) (68,568) 107,063 Fund Balance (Deficit),
Beginning of Year 71,167 208,704 279,871 172,808
Fund Balance,
End of Year $ 63,253 $ 148,050 $ 211,303 $ 279,871
2021
The fund balance of the Park’s General Fund decreased by $7,914 during the fiscal year, compared to the final budget anticipated increase of $558,299. The key factor was a decrease in rental revenues and contributions. Although total expenditures had decreased during the fiscal year, the Park continues to see an increase to maintenance expenses overall.
GENERAL FUND BUDGETARY HIGHLIGHTS
Actual revenues were lower than final budgetary estimates by $20,642. This is mainly attributable to lower than budgeted other revenues, specifically in rental revenue due to park closures throughout the year. Actual expenditures were $14,078 lower than final budgetary estimates. This is mainly attributable to lower than actual billed services (i.e., staff support by the City of Modesto) and material and supplies expenses due to park closures throughout the year.
#1..
- 557 -
9 TUOLUMNE RIVER REGIONAL PARK
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2021
CAPITAL ASSETS
The Park’s net investment in capital assets as of June 30, 2021, amounted to $7,525,853 (net of accumulated depreciation). This investment in capital assets includes land, buildings and other improvements, and construction in progress. The investment in capital assets decreased by $209,841, or 2.7% over the prior year. The major components of this change were:
Depreciation expense $ (445,879)
Capital asset additions 236,038
Total $ (209,841)
Additional information on the Park’s capital assets can be found in Note 4 on page 23 of this report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
In early March 2020, the TRRP Commission approved a budget for FY 2020/21 that included increased contribution amounts for both the City of Modesto and Stanislaus County, and does not include a contribution from the City of Ceres. The majority of participating agencies’ apportionments are allocated to an increase in operating costs, utility costs, and maintenance costs. Shortly after the budget was approved, the COVID-19 pandemic occurred, resulting in financial insecurity and in a closure to some of the services provided by the Park. These closures continued for a majority of FY 2020/21, which reduced rental revenue for the Park in FY 2020/2021. Due to the pandemic, the City of Modesto reduced its contribution for FY 2020/21, however the City of Modesto provided in-kind services in lieu of the contribution amount. The TRRP Commission is looking for revenue sources to continue to fund the Park.
In early June 2021, the TRRP Commission approved a budget for FY 2021/22 that included restoring the full contribution from the City of Modesto and no increase in the contribution from the County. This budget does not include a contribution from the City of Ceres. It is expected that rental revenues will slowly recover during FY2021/22 and return to pre-pandemic levels by the start of FY 2022/23.
The City of Modesto’s Parks, Recreation, and Neighborhoods Department began a project to plan for the future development of the Park when the JPA of the City of Modesto, City of Ceres, and Stanislaus County adopted the Park Master Plan in December 2001. In April 2005, staff began work on the Precise Plan and the Finding of Conformance to the MEIR for the Gateway Parcel project, and in September 2005, the City Council approved the Precise Plan for the Gateway Parcel of the Park. Since then, three phases of restoration work, totaling approximately 63 acres, have been completed.
Staff and the Park Commission continue to seek funding from all appropriate grant sources. During the past couple years, the Park also received grant funding for some other projects such as the River Overlook at the Gateway Parcel ($849,940), the Neece Drive Boat Launch ($780,000), the Carpenter Road Area (Bellenita) Soccer Complex ($1,000,000) and the River Pavilion and Learning Theatre at Legion Park ($500,000). In 2021, staff also received grant funding for the TRRP Riverwalk Trail from the Gateway Parcel to Neece Drive ($2,968,885). These projects will be completed over the next few years and future grant funding is being sought for additional projects in the TRRP such as the Riverwalk Trail from the Gateway Parcel to Legion Park and additional phases of the development of an event venue at the Gateway Parcel.
The three agencies that make up the Park’s JPA continue to work collaboratively to ensure that the vision for this urban river corridor becomes a reality.
#1..
- 558 -
10 TUOLUMNE RIVER REGIONAL PARK
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2021
REQUESTS FOR MORE INFORMATION
This financial report is designed to provide a general overview of the Park’s finances for those interested in its finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Modesto, Accounting Division, P.O. Box 642, Modesto, California 95353.
#1..
- 559 -
The accompanying notes are an integral part of the financial statements. 11 TUOLUMNE RIVER REGIONAL PARK
STATEMENT OF NET POSITION
JUNE 30, 2021
Governmental
Activities
ASSETS
Cash and investments $ 183,851
Due from other governments 330,097
Interest receivable 280
Capital assets:
Nondepreciable 2,945,018
Depreciable, net 4,580,835
Total Assets 8,040,081
LIABILITIES
Accounts payable 77,919
Total Liabilities 77,919
NET POSITION
Net investment in capital assets 7,525,853
Unrestricted 436,309
Total Net Position $ 7,962,162
#1..
- 560 -
The accompanying notes are an integral part of the financial statements. 12 TUOLUMNE RIVER REGIONAL PARK
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Expenses Charges for Services
Capital Grants and
Contributions
Operating Grants
and Contributions Governmental Activities
$ 863,227 $ 24,059 $ 195,336 $ 385,526 $ (258,306)
$ 863,227 $ 24,059 $ 195,336 $ 385,526 (258,306)
Investment earnings (loss) (151)
(151)
(258,457)
8,220,619
$ 7,962,162
Program Revenues
Net (Expense) and
Revenues and Changes
in Net Position
Net Position, Beginning of Year
Net Position, End of Year
Functions/Programs
Governmental
Activities:
Parks and recreation
Total Governmental
Activities
General Revenues
Total General Revenues
Change in Net Position
#1..
- 561 -
The accompanying notes are an integral part of the financial statements. 13 TUOLUMNE RIVER REGIONAL PARK
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
General
Fund
Capital
Projects
Fund
Total
Governmental
Funds
ASSETS
Cash and investments $ 93,370 $ 90,481 $ 183,851
Due from other governments - 330,097 330,097
Interest receivable 280 - 280
Total Assets $ 93,650 $ 420,578 $ 514,228
LIABILITIES
Accounts payable $ 25,654 $ 52,265 $ 77,919
Unearned income 4,743 - 4,743
Total Liabilities 30,397 52,265 82,662
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - 220,263 220,263
FUND BALANCE
Committed - 148,050 148,050
Unassigned 63,253 - 63,253
Total Fund Balance 63,253 148,050 211,303
Total Liabilities, Deferred Inflows of Resources
and Fund Balance $ 93,650 $ 420,578 $ 514,228
#1..
- 562 -
The accompanying notes are an integral part of the financial statements. 14 TUOLUMNE RIVER REGIONAL PARK
RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
Total Fund Balance - Governmental Funds $ 211,303
225,006
7,525,853
Net Position of Governmental Activities $ 7,962,162
Revenues not available for current-period expenditures are deferred in governmental funds, but are considered earned in the Statement of Net Position.
Capital assets used in governmental activities are not current assets or financial resources and, therefore, are not reported in the governmental funds.
Amounts reported for governmental activities in the Statement of Net Position are different from those reported in the governmental funds because of the following:
#1..
- 563 -
The accompanying notes are an integral part of the financial statements. 15 TUOLUMNE RIVER REGIONAL PARK
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
General
Fund
Capital
Projects
Fund
Total Governmental
Funds
REVENUES
Rents $ 24,059 $ - $ 24,059
Operating grants and contributions 385,526 - 385,526
Intergovernmental - 175,384 175,384
Investment earnings (loss) (151) - (151)
Total Revenues 409,434 175,384 584,818
EXPENDITURES
Contractual services 402,012 - 402,012
Materials and supplies 2,301 - 2,301
Insurance and taxes 13,035 - 13,035
Capital outlay - 236,038 236,038
Total Expenditures 417,348 236,038 653,386
Net Change in Fund Balance (7,914) (60,654) (68,568)
Fund Balance, Beginning of Year 71,167 208,704 279,871
Fund Balance, End of Year $ 63,253 $ 148,050 $ 211,303
#1..
- 564 -
The accompanying notes are an integral part of the financial statements. 16 TUOLUMNE RIVER REGIONAL PARK
RECONCILIATION OF THE CHANGES IN FUND BALANCE OF THE GOVERNMENTAL FUNDS WITH THE CHANGE IN
NET POSITION OF GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Net change in fund balance of the Governmental Funds $ (68,568) 19,952
Capital outlay expenditures 236,038
Depreciation expense (445,879)
Net capital outlay (depreciation) expenditures (209,841) Change in Net Position of Governmental Activities $ (258,457) Revenues earned in the Statement of Activities in a previous year that did not provide current financial resources in that year were not reported as revenue in the governmental funds until they provided current financial resources this year.
Governmental funds report capital outlay expenditures. However, in the Statement of Activities, the cost of those assets are capitalized and allocated over their estimated useful lives and reported as depreciation expense.
Amounts reported for governmental activities in the Statement of Activities are different from those reported in the governmental funds because of the following:
#1..
- 565 -
TUOLUMNE RIVER REGIONAL PARK
NOTES TO FINANCIAL STATEMENTS
17 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization: Tuolumne River Regional Park (the Park) was founded in 1972 by an agreement between the County of Stanislaus (the County) and the cities of Modesto and Ceres (the Cities). The agreement provides for financing, development, and maintenance of the Park facilities. The Park includes approximately 180 developed and 330 undeveloped acres with group picnic areas, play equipment lots, ballfields, and Legion Hall. Rent is generated from public use of these facilities. The County and Cities provide additional operating funds. The Park is governed by the Tuolumne River Regional Park Committee, which consists of two members of the County’s Board of Supervisors, two members of the City of Modesto’s City Council, and one member of the City of Ceres’ City Council. Financial transactions initiated by the Park are processed and accounted for by the City of Modesto’s financial system.
Reporting Entity: The Park’s financial statements include the accounts of all Park operations. The criteria for including organizations as component units within the Park’s reporting entity, as set forth in Section 2100 of the Governmental Accounting Standards Board’s (GASB) Codification of Government Accounting and Financial Reporting Standards, include whether:
• the organization is legally separate (can sue and be sued in their own name). • the Park holds the corporate powers of the organization. • the Park appoints a voting majority of the organization’s board. • the Park can impose its will on the organization.
• the organization has the potential to impose a financial benefit/burden on the Park. • there is fiscal dependency by the organization on the Park based on the criteria that the Park has no component units.
Measurement Focus, Basis of Accounting and Financial Statement Presentation: The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the Park’s activities. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by contributions, rents, and intergovernmental revenues. The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues.
Direct expenses are those that are clearly identifiable with a specific function or segment.
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
The Statement of Activities demonstrates the degree to which the direct expenses are offset by program revenues.
Direct expenses are those that are clearly identifiable with the parks and recreation function. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by the parks and recreation function and 2) grants and contributions that are restricted to meeting the operational requirements of the parks and recreation function. Revenues that are not classified as program revenues, including investment earnings and other revenues, are reported as general revenues. Separate financial statements are provided for governmental funds. #1..
- 566 -
TUOLUMNE RIVER REGIONAL PARK
NOTES TO FINANCIAL STATEMENTS (continued)
18 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Measurement Focus, Basis of Accounting and Financial Statement Presentation (continued): Governmental fund financial statements (i.e., Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance) 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.
For this purpose, the Park considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Interest on invested funds is recognized when earned. Intergovernmental revenues that are reimbursements for specific expenditures are recognized when all eligibility requirements are met. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
Major individual governmental funds are reported as separate columns in the fund financial statements. 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 government’s near-term financing decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The Park reports two major governmental funds:
The General Fund is the primary operating fund and accounts for all financial resources of the Park.
The Capital Projects Fund is used to account for financial resources restricted for specific purposes.
The Park adopts annual appropriated budgets for its General Fund, which is a major fund. A budgetary comparison schedule has been provided for this fund to demonstrate compliance with these budgets. The budgetary comparison schedule is presented on a budgetary basis which differs from generally accepted accounting principles in the method of accounting for accruals and encumbrances.
Budget: The budget for the General Fund is prepared on the cash and expenditures/encumbrances basis. Revenues are budgeted in the year receipt is expected; expenditures, which include encumbrances, are budgeted in the year that the applicable warrant requisitions are expected to be issued.
Annual budget requests are submitted by the Park’s staff to the Park’s Board of Directors for review. After public hearing, a budget is approved by the Park’s Board of Directors, with a resolution adopting said budget. Copies of the approved budget are sent to all required agencies.
Cash and Investments: The Park maintains its cash account with the City of Modesto as part of the cash and investment pool. The City of Modesto is restricted by Government Code Section 53635 pursuant to Section 53601 to invest in time deposits, U.S. government securities, state registered warrants, notes or bonds, State Treasurer’s investment pool, bankers’ acceptances, commercial paper, negotiable certificates of deposit, and repurchase or reverse repurchase agreements.
In accordance with GASB Statement No. 43, Accounting and Financial Reporting for Certain Investments and External Investment Pools, investments held by the City of Modesto are stated at fair value. The fair value of pooled investments is determined monthly and is based on current market prices received from the securities custodian.
The balance available for withdrawal is based on the accounting records maintained by the City of Modesto. #1..
- 567 -
TUOLUMNE RIVER REGIONAL PARK
NOTES TO FINANCIAL STATEMENTS (continued)
19 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Due From Other Governments: Grant revenues and contributions are recorded as receivables in the funds when they are susceptible to accrual (i.e. when all eligibility requirements have been met and deemed available per the Park’s revenue recognition policies) and not yet received as of year-end. The total amount due from governments for grants and contributions at June 30, 2021 is $330,097. Management believes all amounts are fully collectible, and as such no allowance has been recorded against the due from other governments balance as of June 30, 2021. Additionally, there was no allowance for doubtful accounts.
Capital Assets: Capital assets acquired are recorded at cost or estimated cost where cost is not available. Donated or contributed capital assets are recorded at estimated fair value on the date received. Capital assets are defined by the Park as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. The costs of normal maintenance and repairs are charged to operations as incurred. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable.
Depreciation of capital assets is computed using the straight-line method applied over the estimated useful lives of the assets as follows:
Buildings: 30 Years
Improvements: 20 Years
Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.
In addition to assets, the Statements of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.
In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not collected.
Risk Management: The Park is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Park participates in the City of Modesto’s insurance pool to mitigate the risk of loss and contributes its pro-rata share of estimated losses. The City of Modesto’s insurance pool does not maintain separate records for estimated outstanding liabilities, including incurred but not reported claims. Refer to the City of Modesto’s Annual Comprehensive Financial Report for further information related to the insurance pool. Additional insurance is purchased for special events when certain Park facilities are rented to the public.
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Net Position: Net position represents the residual interest in the Park’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
#1..
- 568 -
TUOLUMNE RIVER REGIONAL PARK
NOTES TO FINANCIAL STATEMENTS (continued)
20 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Net Position (continued):
Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.
When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.
Fund Balance: In the fund financial statements, in accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, governmental funds report fund balance as nonspendable, restricted, committed, assigned or unassigned based primarily on the extent to which the Park is bound to honor constraints on how specific amounts can be spent.
Nonspendable – Amounts that are not in spendable form (such as inventory) or are required to be maintained intact. The Park did not have any nonspendable resources as of June 30, 2021.
Restricted – Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. The Park did not have any restricted resources as of June 30, 2021.
Committed – Amounts constrained to specific purposes by the Park itself, using its highest level of decisionmaking authority (Park’s Commission). To be reported as committed, amounts cannot be used for any other purpose unless the Park’s Commission takes the same highest-level action to remove or change the constraint.
The Park had $148,050 as committed resources as of June 30, 2021.
Assigned – Amounts the Park intends to use for a specific purpose. Intent can be expressed by the Park or by an official or body to which the Board of Supervisors delegates the authority. The Park did not have any assigned resources as of June 30, 2021.
Unassigned – Amounts that are available for any purpose. $63,253 of the Park’s resources were considered unassigned as of June 30, 2021.
In circumstances when an expenditure is incurred for which restricted, committed, assigned, or unassigned fund balances are available, the Park considers amounts to have been spent first out of restricted funds then committed funds, and finally assigned and unassigned funds, as needed, unless the Park Board has provided otherwise in its commitment or assignment actions.
Governmental Accounting Standards Update: During the year ending June 30, 2021, the Park implemented the following standards with no financial impact:
GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019. #1..
- 569 -
TUOLUMNE RIVER REGIONAL PARK
NOTES TO FINANCIAL STATEMENTS (continued)
21 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):
GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.
GASB Statement No. 90 – Majority Equity Interests - an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.
GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021
GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2022.
GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021.
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 29, 2021, which is the date the financial statements were available to be issued.
#1..
- 570 -
TUOLUMNE RIVER REGIONAL PARK
NOTES TO FINANCIAL STATEMENTS (continued)
22 NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the Park are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance.
Credit quality ratings are not available for the Park’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto. Cash in the City Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The Park does not have any deposits with financial institutions as of June 30, 2021.
Cash and investments as of June 30, 2021 are classified in the accompany financial statements as follows:
Statement of Net Position:
Cash and investments $ 183,851
Total cash and investments $ 183,851
Summary of Deposits:
Cash and investments as of June 30, 2021 consist of the following:
$ 183,851
Total cash and investments $ 183,851
Deposits with City of Modesto
Cash and investments pool
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the Park’s position in the pool is the same as the value of its pool shares.
NOTE 3 – RELATED PARTY TRANSACTIONS
The Park reimburses the City of Modesto for administrative and other costs incurred by the City of Modesto on the Park’s behalf. During the 2021 fiscal year, contractual service expenditures included $88,518 of the City of Modesto’s payroll costs that were allocated to the Park.
#1..
- 571 -
TUOLUMNE RIVER REGIONAL PARK
NOTES TO FINANCIAL STATEMENTS (continued)
23 NOTE 4 – CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2021, was as follows:
Beginning Balance Additions
Deletions/
Adjustments Ending Balance
Capital assets, not being depreciated:
Land $ 2,528,566 $ - -$ $ 2,528,566
Construction in progress 180,414 236,038 - 416,452
Total capital assets not being depreciated 2,708,980 236,038 - 2,945,018 Capital assets, being depreciated:
Buildings 455,935 - - 455,935
Improvements 10,689,250 - - 10,689,250
Total capital assets, being depreciated 11,145,185 - - 11,145,185 Less accumulated depreciation for:
Buildings (419,101) (1,425) - (420,526)
Improvements (5,699,370) (444,454) - (6,143,824)
Total accumulated depreciation (6,118,471) (445,879) - (6,564,350) Total capital assets, being depreciated, net 5,026,714 (445,879) - 4,580,835 Capital assets, net $ 7,735,694 $ (209,841) -$ $ 7,525,853 Depreciation expense for the year ended June 30, 2021 was $445,879.
NOTE 5 – INTERFUND TRANSACTIONS
Interfund transactions are reported as either loans, services provided, reimbursements, or transfers. Loans are reported as interfund receivables and payables, as appropriate, and are subject to elimination upon consolidation.
Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when a fund incurs a cost, charges the appropriate benefitting fund, and reduces its related costs as a reimbursement. All other interfund transactions are treated as transfers. Transfer amounts of governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial statements.
The Park had no transfers in/transfers out for the year ended June 30, 2021.
NOTE 6 – DEFICIENCY OF EXPENDITURES OVER APPROPRIATIONS For the year ended June 30, 2021, expenditures exceeded appropriations as follows:
Expenditures Amount
General Fund:
Materials and supplies $ (651)
Insurance and taxes (633)
#1..
- 572 -
TUOLUMNE RIVER REGIONAL PARK
NOTES TO FINANCIAL STATEMENTS (continued)
24 NOTE 7 – CONTINGENCIES
Coronavirus Pandemic: Management has determined the events regarding the novel coronavirus require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a State of emergency in California due to the novel coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the Park is unknown. #1..
- 573 -
TUOLUMNE RIVER REGIONAL PARK
REQUIRED SUPPLEMENTARY INFORMATION
#1..
- 574 -
25 TUOLUMNE RIVER REGIONAL PARK
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE – GENERAL FUND – BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2021
Original Final
REVENUES
Rents $ 63,550 $ 44,550 $ 24,059
Operating grants and contributions 408,800 385,526 385,526 Investment earnings (loss) - - (151)
Total Revenues 472,350 430,076 409,434
EXPENDITURES
Contractual services 458,783 417,374 402,012
Materials and supplies 1,675 1,650 2,301
Insurance and taxes 11,052 12,402 13,035
Total Expenditures 471,510 431,426 417,348
OTHER FINANCING SOURCES (USES)
Transfers in 209,654 559,649 -
Total Other Financing Sources (Uses) 209,654 559,649 -
Changes in Fund Balance $ 210,494 $ 558,299 (7,914)
Fund Balance, Beginning of Year 71,167
Fund Balance, End of Year $ 63,253
(20,642)
Budgeted Amounts
Actual Amounts
Variance With
Final Budget
-
$ (20,491)
(151)
$ (6,564)
15,362
(651)
(633)
14,078
-
-
#1..
- 575 -
TUOLUMNE RIVER REGIONAL PARK
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
26 NOTE 1 – BUDGETS AND BUDGETARY ACCOUNTING
Tuolumne River Regional Park (the Park) operates under the general laws of the State of California and annually adopts a budget for its General Fund to be effective July 1 the ensuing fiscal year. The budget must be approved by each of the legislative bodies of the parties to the joint powers agreement. From the effective date of the budget, which is adopted and controlled at the fund level, the amounts stated therein as proposed expenditures become appropriations. The Park may amend the budget by approval from each of the legislative bodies of the parties to the agreement during the fiscal year. The budget for the General Fund is prepared on the cash and expenditures/encumbrance basis. Revenues are budgeted in the year receipt is expected; expenditures, which include encumbrances, are budgeted in the year that the applicable warrant requisitions are expected to be issued.
There were no encumbrances outstanding as of June 30, 2021, so the actual budgetary-basis expenditures are the same as the actual GAAP-basis expenditures.
#1..
- 576 -
7473 N. INGRAM AVE., SUITE 102 ⬧ FRESNO, CA 93711
_______________________________________________________________________________________________ P (559) 412-7576 ⬧ F (559) 493-5325 ⬧ WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the Tuolumne River Regional Park Commission,
The Board of Supervisors of the County of Stanislaus, California, and The City Councils of Modesto and Ceres, California
Tuolumne River Regional Park
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the Tuolumne River Regional Park (the Park), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the Park’s basic financial statements, and have issued our report thereon dated October 29, 2021.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Park’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Park’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Park’s internal control.