City of Stockton
Stockton, California
Independent Accountants’ Report on
Applying Agreed-Upon Procedures
on Core Revenues
For the Year Ended June 30, 2021
Attachment B
INDEPENDENT ACCOUNTANTS’ REPORT ON APPLYING
AGREED-UPON PROCEDURES ON CORE REVENUES
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
We have performed the procedures enumerated below on the Core Revenues Schedule of the City of Stockton, California (the “City”) for the year ended June 30, 2021. The City’s management is responsible for the Core Revenues Schedule.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of meeting the requirements of Artic le IV Covenants, Section 4.02(b) - Not later than 210 days after and as of the end of each fiscal year, audited financial statements of th e City, which financial statements shall include a statement of net position, statement of activities and changes in net position. The audited financial statements shall be audited by independent certified public accountants from a firm experi enced in the field of municipal audits and licensed in the State of California, and prepared in accordance with GAAP, and shall be delivered together with an agreed-upon procedures letter from such account ants addressed to Assured Guaranty providing a report showing that such accountants have recomputed the calculations of the Ac tual Core Revenues and the Contingent General Fund Payment made by the City with respect to such Fiscal Year and have compared the data used in such calculations and found it to be consistent with the au dited financial statements or other int ernal accounts and records of the City for such Fiscal Year . The report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report a nd may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures are appropriate for their purposes.
The procedures and associated findings are as follows:
1. Obtained and reviewed Reimbursement Agreement between Assured Guaran ty Municipal Corp. and the City of Stockton dated February 25, 2015.
Findings: No exceptions were noted.
2. Obtained the Contingent General Fund Payment deta il and recalculated the C ontingent General Fund Payment in accordance to Article II, Settlement Terms and Payments Section 2.03 Contingent General Fund Payments of the Reimbursement Agreement.
Under the Reimbursement Agreement between Assured G uaranty Municipal Corp. and City of Stockton dated as of February 25, 2015, Article II Settlement T erms and Payments, Section 2.03(a), for each Fiscal Year, commencing with the Fiscal Year ending June 30, 2018 and ending in the Fiscal Year ending June 30, 2052 (subject to extension pursuant to the prov isions of subsection (d) below), in which the Actual Core Revenues exceed the Baseline Core Revenues, the City shall pay to the Payees, in the manner described in Section 2.05, a payment equal to the Allocable Share of the average Incremental Revenue Ratio for such Fiscal Year and each of the previous two Fiscal Ye ars multiplied by the Shortfall Amount (each such payment, a “Contingent General Fund Payment”). The Pa yment Date for the estimated Contingent General Fund Payments with respect to any Fiscal Year s hall be June 1 of such Fiscal Year, commencing June 1, 2018 to and including June 1, 2052, subject to the provisions of subsections (c) and (d) of this Section 2.03.
200 E. Sandpointe Ave., Suite 600, Santa Ana, California 92707 Tel: 949-777-8800 • Fax: 949-777-8850
www.pungroup.c
pa
3939352 Pun & McGeady_L_final.pdf 2 1/14/14 3:48 PM To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
The Firm obtained and recalculated the Contingent Ge neral Fund Payment. In addition, we verified the payment was remitted by the City before the due date on June 1, 2021.
Findings: No exceptions were noted.
3. Obtained and reviewed calculations of the actual core revenues as stated in the Reimbursement Agreement.
Core Revenues is defined as follows:
According to the Reimbursement Agreement between Assured Guaranty Municipal Corp. and City of Stockton dated as of February 25, 2015, Article I Definitions, Core Revenues means, for each Fiscal Year, the City’s Unrestricted General Fund receipts, net of any required refunds, rebates or legally required adjustments from the following sources: a) ad valo rem property tax (excluding any special overrides for voter-approved general obligation bonds); (b) sal es and transaction and use taxes; (c) utility taxes; (d) transient occupancy taxes; (e) franchise taxes; (f) bu siness license taxes; (g) doc ument transfer taxes; (h) motor vehicle license fees; (i) oth er Unrestricted taxes approved by th e voters after Fiscal Year 2013-14; and (j) net revenues generated from the sale of Surpl us Property; provided, that Core Revenues does not include any Annexed Area Revenues or Realignment Revenues.
General Fund Core Revenues Fiscal Year 2020-21
Property Taxes
Property Taxes 38,496,017 $
In Lieu of Motor Vehicles License Fees 25,848,041
Motor Vehicles License Fees 233,615
Total Property Tax 64,577,673
Sales Tax
Point of Sale 63,094,957
Proposition 172 2,105,894
Measure A 40,810,516
Total Sales Tax 106,011,367
Other Taxes
Utility Users Tax 36,413,826
Franchise Tax 16,900,562
Business License Tax 14,090,618
Hotel/Motel Tax 2,887,420
Document Transfer Tax 1,221,516
Revenue Generated by Sale of Surplus Property 6,095
Total Other Taxes 71,520,037
Total Core Revenues 242,109,077$
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
Performed procedures on the following core revenues:
Property taxes:
For property taxes, the firm obtained the total pr operty tax revenue population amounted to $38,496,017. We performed analytical procedures on the total population by comparing prior year amounts to current year and budgeted amounts. The firm also sent confirmation to th e County for total property taxes allocated to the City during the period July 1, 2020 to June 30, 2021. We received the confirmation in the mail and agreed amounts with no variance noted. The firm also agreed the property tax amounts to the ACFR for the year ended June 30, 2021.
For in lieu of motor vehicle license fees, the firm obtained the total motor vehicle license fee population amounted to $25,848,041. The fi rm sent confirmation to the County for motor vehicle license fees allocated to the City during the period July 1, 2020 to June 30, 2021. We recei ved the confirmation in the mail and agreed amounts with no variance noted. In lieu of moto r vehicle license fee was included as part of the other governmental revenue, the firm agreed the in lieu of motor vehicles license fees amounts to the other governmental revenue, and also to the ACFR for the year ended June 30, 2021.
Findings: No exceptions were noted.
Sales and Transaction and Use Tax:
For sales and transaction and use taxes, the firm obtai ned the total sales and transaction and use tax revenue population amounted to $106,011,367. We performed analytical procedures on the total population by comparing prior year amounts to current year and budgeted amounts. Measure A was approved by voters on November 5, 2013 as a three-quarter (0.75%) transaction a nd use tax (sales tax) effective April 1, 2014. The firm sent confirmation to the California Department of Tax and Fee Administration for the 1.00% 1ocal sales and use tax and Measure A transaction and use tax re venues distributed to the City during the period July 1, 2020 through June 30, 2021 in the amount of $6 3,094,957 and $40,810,516, respectively. In addition, the firm sent confirmation to the County of San Joa quin for the Proposition 172 revenue distributed to the City during the period July 1, 2020 through June 30, 2021 in the amount of $2,105,894. We received the confirmation in the mail and agreed amounts with no material variance noted.
The 1% local sales and use tax and Proposition 172 re venue are reported as intergovernmental revenue – sales and use tax levied by state in the ACFR. The Measu re A transaction and use tax revenue is reported as tax revenue – sales – levied by City in the ACFR. Th e firm agreed the amount to the ACFR for the year ended June 30, 2021.
Findings: No exceptions were noted.
Utility Users Tax:
For utility users taxes, the firm obtained the to tal utility users tax revenue population amounted to $36,413,826. We performed analytical procedures on the total population by comparing prior year amounts to current year and budgeted amounts. The firm perfo rmed additional ratio analysis by comparing the month to month trend of revenue and cash receipts from re venue detail and cash distribution detail schedules provided by the City. The firm also agreed the total u tility users tax amount to the ACFR for the year ended June 30, 2021.
Findings: No exceptions were noted.
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
Franchise Tax:
For franchise taxes, the firm obtained the total franc hise tax revenue population amounted to $16,900,562.
We performed analytical procedures on the total popula tion by comparing prior year amounts to current year and budgeted amounts. The firm also sent out confirma tion to Comcast and Allied Waste for the residential and commercial franchise tax payments paid to the City during the period July 1, 2020 through June 30, 2021 in the amount of $1,982,473.77 and $4,033,517, respectively. We received the confirmations in the mail and agreed amounts with no material variances noted. The fi rm also agreed the total franchise tax amount to the ACFR for the year ended June 30, 2021.
Findings: No exceptions were noted.
Business License Tax:
For the business license taxes, the firm obtained the total business license tax re venue population amounted to $14,090,618. We performed analytical procedures on the total population by comparing prior year amounts to current year and budgeted amounts. The fi rm performed additional ratio analysis by comparing the month to month trend of revenue and cash rece ipts from revenue detail and cash distribution detail schedules provided by the City. The firm also agreed th e total business license ta x amount to the ACFR for the year ended June 30, 2021.
Findings: No exceptions were noted.
Transient Occupancy (Hotel/Motel) Tax:
For the transient occupancy (hotel/motel) taxes, the fi rm obtained the total transi ent occupancy tax revenue population amounted to $2,887,421. We performed analytical procedures on the total population by comparing prior year amounts to current year and budge ted amounts. The firm also agreed the total transient occupancy tax amount to the ACFR for the year ended June 30, 2021.
Findings: No exceptions were noted.
Document Transfer Tax:
For the document transfer taxes, the firm obtained the total documen t transfer tax revenue population amounted to $1,221,516. We performed analytical pr ocedures on the total population by comparing prior year amounts to current year and budgeted amounts. Th e firm also agreed the total document transfer tax amount to the ACFR for the year ended June 30, 2021.
Findings: No exceptions were noted.
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
Revenues Generated from the Sale of Surplus Property:
For the net revenues generated from the sale of surp lus property, the firm obtained the net revenue population amounting to $6,095. We performed analytical procedures on the total population by comparing prior year amounts to current year. The firm also ag reed the total net revenue generated from the sale of surplus property amount to the ACFR for the year ended June 30, 2021.
Findings: No exceptions were noted.
We were engaged by the City to perfo rm this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Core Revenues Schedule. Accordingly, we do not express such an opinion or c onclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
We are required to be independent of the City and to meet our ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures agreement.
This report is intended solely for the information and u se of the City Council, City management and Assured Guaranty Municipal Corp. and is not in tended to be and should not be used by anyone other than these specified parties.
Santa Ana, California
March 4, 2022