City of Stockton
Stockton, California
Independent Accountants’ Report on
Applying Agreed-Upon Procedures
on Core Revenues
For the Year Ended June 30, 2023
ATTACHMENT B
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
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 (the “Schedule”) of the City of Stockton, California (the “City”) for the year ended June 30, 2023. The City’s management is responsible for the Schedule.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of meeting the requirements of Article 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 the City , which financial statements shall include a statement of net position, statement of activities and changes in net positi on. The audited financial statements shall be audited by independent certified public accountants from a firm experienced in the field of municipal audits and licensed in the State of California, and prepared in accordance with G AAP, and shall be delivered t ogether with an agreed-upon procedures letter from such accountants addressed to A ssured 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 audited financial statemen ts or other internal accounts and records of the City for such Fiscal Year . The report may not be suitabl e for any other purpose. The pro cedures performed may not address all the items of interest to a user of this report and 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 and obtained unde rstanding of the Contingent General Fund Payments, Actual Core Revenues, and Baseline Core Revenues.
Findings: No exceptions were noted.
2. Obtained the Contingent General Fund Payment detail and recalculated the Contingent 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 Guar anty Municipal Corp. and City of Stockton dated as of February 25, 2015, Article II Settlement Terms and Payments, Sec tion 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 provisions of su bsection (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 Years multiplied by the Shortfall Amount (each such payment, a “Contingent General Fund Payment”). The Payment Date for the estimated Con tingent General Fund Payments with respect to any Fiscal Year shall 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.
ATTACHMENT B
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
2 We obtained and recalculated the Cont ingent General Fund Payment. In addition, we verified the payment was remitted by the City before the due date of June 1, 2023.
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, Artic le I Definitions, Core Revenues means, for each Fiscal Year, the City’s Unrestricted General Fund receipts, net of any requi red refunds, rebates or legally required adjustments from the following sources: a) ad valorem property tax (excluding any special overrides for voter-approved general obligation bonds); (b) sales and transaction and use taxes; (c) utility taxes; (d) transient occupancy taxes; (e) franchise taxes; (f) business license taxes; (g ) document transfer taxes; (h) motor vehicle license fees; (i) other Unrestricted taxes approved by the voters after Fiscal Year 2013-14; and (j) net revenues generated from the sale of Surplus Property; provided, that Core R evenues does not include any Annexed Area Revenues or Realignment Revenues. For purposes of clarification, Core Revenues include any such receipts, whether paid directly to the City, or to the City by another public agency, including the State of California, as a result of structural ch anges in tax distributions imposed by the State of California (except to the extent such amounts constitute Realignment Revenues) or otherwise.
General Fund Core Revenues Fiscal Year 2022-23
Property Taxes
Property Taxes 42,567,420 $
In Lieu of Motor Vehicles License Fees 29,343,468
Motor Vehicles License Fees 331,550
Total Property Tax 72,242,438
Sales and Transaction Tax
1.00% Local Sales and Use Tax 73,526,747
Proposition 172 3,427,403
Measure A 49,703,488
Total Sales and Transaction Tax 126,657,638
Other Taxes
Utility Users Tax 42,445,100
Franchise Tax 18,937,580
Business License Tax 21,992,189
Hotel/Motel Tax 3,443,439
Document Transfer Tax 1,028,481
Revenue Generated by Sale of Surplus Property 44,165
Total Other Taxes 87,890,954
Total Core Revenues 286,791,030$
ATTACHMENT B
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
3 Performed procedures on the following core revenues:
Property taxes:
For property taxes, the firm obtained the total pr operty tax revenue population amounted to $42,567,420. 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 the County for total property taxes allocated to the City during the period July 1, 2022 to June 30, 2023. We received the confirmation in the email and agreed amounts with no variance noted.
For in lieu of motor vehicle license fees, the firm obtained the total in lieu of motor vehicle license fee population amounted to $29,343,468. The firm sent confir mation to the County for motor vehicle license fees allocated to the City during the period July 1, 2022 to June 30, 2023. We received the confirmation in the email and agreed amounts with no variance noted.
For motor vehicles license fees, the firm obtained the total motor vehicle license fee population amounted to $331,550. The firm reviewed the cash receipts from the County during the period July 1, 2022 to June 30, 2023 and performed analytical procedures on the total population by comparing prior year amounts to current year and budgeted amounts.
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 $126,657,638. 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 and use tax (sales tax) effective April 1, 2014. The firm obtained the confirmation online from the Californi a Department of Tax and Fee Administration for the
1.00% 1ocal sales and use tax and Measure A transaction and use tax revenues distributed to the City during the period July 1, 2022 through June 30, 2023 in the amount of $73,526,747 and $49,703,488, respectively. In addition, the firm sent confirmation to the County of San Joaquin for the Proposition 172 revenue distributed to the City during the period July 1, 2022 through June 30, 2023 in the amount of $3,427,403. We received the confirmation in the mail and agreed amounts with no material variance noted.
Findings: No exceptions were noted.
Utility Users Tax:
For utility users taxes, the firm obtained the tota l utility users tax revenue population amounted to $42,445,100. We performed analytical procedures on the total population by comparing prior year amounts to current year and budgeted amounts.
Findings: No exceptions were noted.
ATTACHMENT B
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
4 Franchise Tax:
For franchise taxes, the firm obtained the total franc hise tax revenue population amounted to $18,937,580.
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 confirmati on to Pacific Gas and Electric for the residential and commercial franchise tax payments paid to the City dur ing the period July 1, 2022 through June 30, 2023 in the amount of $2,980,414. We received the confirmati ons in the mail and agreed amounts with no material variances noted.
Findings: No exceptions were noted.
Business License Tax:
For the business license taxes, the firm obtained the total business license tax revenue population amounted to $21,992,189. We performed analytical procedures on the total population by comparing prior year amounts to current year and budgeted amounts.
Findings: No exceptions were noted.
Transient Occupancy (Hotel/Motel) Tax:
For the transient occupancy (hotel/mot el) taxes, the firm obtained the total transient occupancy tax revenue population amounted to $3,443,439 performed analytical procedures on the total population by comparing prior year amounts to current year and budgeted amounts.
Findings: No exceptions were noted.
Document Transfer Tax:
For the document transfer taxes, the firm obtaine d the total document transfer tax revenue population amounted to $1,028,481. We performed analytical procedures on the total population by comparing prior year amounts to current year and budgeted amounts.
Findings: No exceptions were noted.
Revenues Generated from the Sale of Surplus Property:
For the net revenues generated from the sale of surplus property, the firm obtained the net revenue population amounting to $44,165. We performed analytical procedures on the total population by comparing prior year amounts to current year.
Findings: No exceptions were noted.
ATTACHMENT B
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
5 We were engaged by the City to perfo rm this agreed-upon procedures engageme nt and conducted our engagement in accordance with attestation standards established by the Ameri can 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 conclusion. Had we performed additional pr ocedures, other matters might have come to our attention that would have been reported to you.
We are required to be independent of th e City and to meet our ethical respons ibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures agreement.
This report is intended solely for the information and use of the City Council, City management and Assured Guaranty Municipal Corp. and is not intended to be and should not be used by anyone other than these specified parties.
Santa Ana, California
March 13, 2024
ATTACHMENT B