Open Space Preservation District
Special Revenue Fund
of the City of Santa Clarita
Santa Clarita, California
Financial Statements
and Independent Auditors’ Report
For the Year Ended June 30, 2023
Open Space Preservation District Special Revenue Fund
of the City of Santa Clarita
For the Year Ended June 30, 2023
Table of Contents
Page
Independent Auditors’ Reports
Report on the Audit of the Financial Statements .......................................................................................... 1
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 .............................................................. 5
Financial Statements:
Balance Sheet ..................................................................................................................................................... 9 Statement of Revenues, Expenditures and Change in Fund Balance ............................................................... 10 Notes to the Financial Statements .................................................................................................................... 11
Supplementary Information:
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual ............................. 15
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and the Members of City Council
of the City of Santa Clarita
Santa Clarita, California
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of the Open Space Preservation District Special Revenue Fund (the “Fund”) of the City of Santa Clarita, California (the “City”) as of and for the year ended June 30, 2023, and the related notes to the financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above pr esent fairly, in all material respects, the financial position of the Fund as of June 30, 2023, and the change in its fi nancial position for the year th en ended, in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accept ed in the United States of America (“GAAS”) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (“ Government Auditing Standards ”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 1 to the financial statements, the financial statements present only the Fund and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2023, the changes in its financial position, or, where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Responsibilities of Management 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 Stat es of America, and for 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.
To the Honorable Mayor and the Members of City Council
of the City of Santa Clarita
Santa Clarita, California
2 Auditors’ Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whet her the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, fo rgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
exercise professional judgment and maintain professional skepticism throughout the audit.
identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to t hose risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpo se of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Supplementary Information
Our audit was conducted for the purpose of forming opinion on the Fund’s financial statements. The Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying acc ounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, incl uding comparing and reconciling such in formation directly to the underlying accounting and other records used to prepare the financial st atements or to the financia l statements themselves, and other additional procedures in accord ance with GAAS. In our opinion, the Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual is fairly stated, in all material respects, in relation to the financial statements as a whole.
To the Honorable Mayor and the Members of City Council
of the City of Santa Clarita
Santa Clarita, California
3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our repor t dated December 21, 2023, on our consideration of the City’s internal control over financia l 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 ove r financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral pa rt of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Santa Ana, California
December 21, 2023
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200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
REPORT ON INT
ERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Independent Auditors’ Report
To the Honor
able Mayor and the Members of the City Council
of the City of Santa Clarita
Santa Clarita, 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 (“Government Auditing Standards” ), the financial statements of the Open Space Preservation District Special Revenue Fund (the “Fund”), of the City of Santa Clarita, California (the “City”), as of and for the year ended June 30, 2023, and the related notes to the financial statements, and have issued our report thereon dated December 21, 2023.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statem ents, we considered the City’s internal control over the Open Space Preservation District Special Revenue Fund’s fi nancial reporting (“internal control”) as a basis for designing audit procedures that are appropriate in the ci rcumstances 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 City’s internal control.
Accordingly, we do not express an opinion on the effectiveness of the City’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 defici encies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financ ial 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 or significant deficiencies may exist that were not identified.
To the Honorable Mayor and the Members of the City Council of the City of Santa Clarita
Santa Clarita, California
6 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether th e Fund'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 a nd material effect on the fina ncial statements. However, providing an opinion on compliance with those provisions w as 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.
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 entity'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.
Santa Ana, California
December 21, 2023
FINANCIAL STATEMENTS
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8 ASSETS
Cash and investments 6,893,812$
Receivables:
Interest 25,991
Taxes 49,421
Total assets 6,969,224$
LIABILITIES AND FUND BALANCE
Liabilities:
Accounts payable and accrued liabilities 50,379$
Total liabilities 50,379
Fund Balance:
Restricted for Open Space Preservation 6,918,845
Total fund balance 6,918,845
Total liabilities and fund balance 6,969,224$
June 30, 2023
Balance Sheet
Open Space Preservation District Special Revenue Fund
of the City of Santa Clarita
See accompanying Notes to the Financial Statements.
9 Revenues:
Special assessments 3,189,455$
Charges for services 12,272
Investment income 84,357
Other revenue 1,500
Total revenues 3,287,584
Expenditures:
Current:
Open space preservation 784,552
Capital outlay 1,615,794
Total expenditures 2,400,346
Excess of revenues over expenditures 887,238
Other Financing (Uses):
Transfers to the City (803,606)
Net change in fund balance 83,632
Fund Balance:
Beginning of year 6,835,213
End of year 6,918,845$
Open Space Preservation District Special Revenue Fund
Statement of Revenues, Expenditures, and Change in Fund Balance For the Year Ended June 30, 2023
of the City of Santa Clarita
See accompanying Notes to the Financial Statements.
10 Open Space Preservation District Special Revenue Fund of the City of Santa Clarita
Notes to the Financial Statements
For the Year Ended June 30, 2023
11 Note 1 – Organization and Summary of Significant Accounting Policies
A. Financial Reporting Entity
On July 17, 2007, the City of Santa Clarita (the “C ity”) established the Santa Clarita Open Space Preservation District (the “District”) pursuant to the provisions of the Landscape and Lighting Act of 1972, being Part 2 of Division 15 of the California Street and Highway Code. The purpose of the District is to fund a portion of the City’s open space, park and parkland progra m consisting of the acquisition, pr eservation, improvement, servicing, financing and maintenance of open-space land, parks an d parkland, and appurtenan t equipment and facilities, including the payment of debt service, of benefit to the property within the District. Facilities include, but are not limited to, open-space land, parks, parklands, the Santa Clarita River Watershed, trail systems and wildlife corridors. These are financed by special assessments levied on parcels within the City boundaries. The boundaries of the District are the same as the boundaries of the City. The City established the Open Space Preservation District Special Revenue Fund (the “Fund”) to account for the activities of the District. The City has title of the constructed assets within the boundaries of the District. Any debt issued for activities of the District are issued in the name of the City. The financial statements were prepared from only the accounts of the Fund and, therefore, do not present the financial position or results of operations of the City and changes in financial position thereof for the year then ended in conformity with generally accepted accounting principles in the United States of America.
B. Fund Accounting
The Fund’s statements are prepared in conformity w ith accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Fund is presented as a Special Revenue Fund of the City. The Governmental Accounting Standards Board (“GASB”) is the acknowledged standard-setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States.
C. Financial Statements Presentation, Basis of Accounting and Measurement Focus
Governmental fund financial statements include a balan ce sheet and a statement of revenues, expenditures, and changes in fund balance.
The Fund is accounted for on a spending or “current fina ncial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the balance sheet. The statement of revenues, expenditures, and changes in fund balance present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in the fund balance. The primary revenue sources are special assessments and interest revenue. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Revenues are considered available if they are collected within 90 days of the end of the current fiscal period, except for special assessments, which are within 60 days.
Expenditures are recorded in the accounting period in which the related fund liability is incurred.
D. Cash and Investments
The Fund’s cash balance was pooled with various other City funds for deposit and investment purposes. The City’s treasurer is responsible for the cash management of th e Fund’s cash balance, which pools available cash for investment purposes. The cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturity of three months or less from the date of acquisition. Each City fund owns a share of pooled cash and investments, which are separ ately maintained, and interest income was apportioned based on its average month-end cash balances to the total of the pooled cash and investments.
Open Space Preservation District Special Revenue Fund
of the City of Santa Clarita
Notes to the Financial Statements (Continued)
For the Year Ended June 30, 2023
12 Note 1 – Organization and Summary of Significant Accounting Policies (Continued)
E. Special Assessments
Special assessment taxes are attached as enforceable liens on real property on July 1, the beginning of the fiscal year, and are due in two installments on November 1 and February 1; however, no penalties or interest are assessed until December 10 and April 10, respectively. These taxes are determined annually based on property values, subject to limits based on Proposition 13, as of January 1 of the levy year, which is prior to the end of the previous fiscal year. The County of Los Angeles bills and collects these taxes for the District and are remitted on a monthly basis.
F. Fund Balance
In the Fund’s financial statements, fund balance is classified as follows:
Restricted - Restricted fund balances encompass the portion of net fund resources subject to externally enforceable legal restrictions. This includes exte rnally imposed restrictions by creditors, such as through debt covenants, grantors, contributors, laws or regulations of other go vernments, as well as restrictions imposed by law through constitutional provisions or enabling legislation. Expe nditures as they are incurre d are applied against these restricted net resources.
G. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates and assumptions.
Note 2 – Cash and Investments
The Fund’s share of the City’s pooled cash and investments at June 30, 2023 was in the amount of $6,893,812.
Cash is deposited in the City’s internal investment pool, which is reported at the amortized cost. The Fund does not own specifically identifiable securities in the City’s pool. Interest income is allocated based on average cash balances.
Investment policies and associated risk factors applicable to the Fund are those of the City and are included in the City’s basic financial statements. Please refer to the City’s Annual Comprehensive Financial Report for related disclosures for cash and investments.
Note 3 – Transfers to Other Funds of the City of Santa Clarita
The Fund made transfers to the City’s Public Financing Authority Debt Service Fund in the amount of $803,606 for current year debt service payments for the Lease Revenue Bond Series 2016B. As of June 30, 2023, $11,575,000 was outstanding. Revenues from the Fund are pledged for repayment of the bonds, but the City is not obligated to require additional amounts from the Fund in event the revenues of the fund are insufficient for bond repayment. Additional information regarding the Lease Revenue Bond Series 2016B is presented in the City’s Annual Comprehensive Financial Report.
SUPPLEMENTARY INFORMATION
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14 Variance with
Final Budget
Actual Positive
Original Final Amount s (Negative)
Revenues:
Special assessments 3,114,941 $ 3,114,941 $ 3,189,455 $ 74,514 $ Charges for services 85,627 85,627 12,272 (73,355) Investment income 96,674 96,674 84,357 (12,317) Other revenue - - 1,500 1,500 Total revenues 3,297,242 3,297,242 3,287,584 (9,658) Expenditures:
Open space preservation:
Operating:
Personnel 577,138 434,967 394,744 40,223 Operations and maintenance 451,216 534,216 389,808 144,408 Capital outlay 68,445 1,684,837 1,615,794 69,043
Total expenditures 1,096,799 2,654,020 2,400,346 253,674 Excess of revenues over expenditures 2,200,443 643,222 887,238 244,016 Other Financing Uses:
Transfers to the City (803,606) (803,606) (803,606) - Net change in fund balance 1,396,837$ (160,384) $ 83,632 244,016 $ Fund Balance:
Beginning of year 6,835,213
End of year 6,918,845$
Open Space Preservation District Special Revenue Fund
Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual For the Year Ended June 30, 2023
Budget Amounts
of the City of Santa Clarita
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