City of San Gabriel, California COMPREHENSIVE ANNUAL ...

City of San Gabriel, California

COMPREHENSIVE ANNUAL

FINANCIAL REPORT

FOR FISCAL YEAR ENDED

JUNE 30, 2019

This page intentionally left blank

CITY OF SAN GABRIEL, CALIFORNIA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

WITH REPORT ON AUDIT

BY INDEPENDENT

CERTIFIED PUBLIC ACCOUNTANTS

For the Year Ended June 30, 2019

Prepared by:

FINANCE DEPARTMENT

Paula Chamberlain

Interim Director of Finance

City of San Gabriel

Comprehensive Annual Financial Report

For the year ended June 30, 2019

Table of Contents

Page

Number INTRODUCTORY SECTION:

Letter of Transmittal i Officials of the City of San Gabriel viii Organization Chart ix

GFOA Certificate of Achievement for Excellence in Financial Reporting x

FINANCIAL SECTION:

Independent Auditors’ Report 1

Management’s Discussion and Analysis (Required Supplementary Information) 4

Basic Financial Statements: 15

Government-wide Financial Statements: 17

Statement of Net Position 19

Statement of Activities 20

Fund Financial Statements: 21

Governmental Funds: 23

Balance Sheet 24

Reconciliation of the Governmental Funds Balance Sheet

to the Government-wide Statement of Net Position 27

Statement of Revenues, Expenditures and Changes in Fund Balances 28

Reconciliation of the Governmental Funds Statement of Revenues,

Expenditures and Changes in Fund Balances to the Government-wide

Statement of Activities 30

Proprietary Fund Financial Statements: 31

Statement of Net Position 32 Statement of Revenues, Expenses and Changes in Net Position 33

Statement of Cash Flows 34

Fiduciary Fund Financial Statements: 35 Statement of Fiduciary Net Position 36

Statement of Changes in Fiduciary Net Position 37

Notes to Basic Financial Statements 41

City of San Gabriel



Table of Contents, Continued

Page

Number FINANCIAL SECTION (CONTINUED):

Required Supplementary Information: 86 Schedule of Proportionate Share of the Net Pension Liability - Miscellaneous 84

Schedule of Contributions - Defined Benefit Pension Plans - Miscellaneous 85

Schedule of Proportionate Share of the Net Pension Liability - Safety 86 Schedule of Contributions - Defined Benefit Pension Plans - Safety 87

Schedule of Changes in the Net OPEB Liability and Related Ratios 88

Schedule of Contributions - OPEB 89

Budgetary Comparison Schedules:

General Fund 91

Retirement Special Revenue Fund 93

Development Impact Fees Special Revenue Fund 94

Measure R Special Revenue Fund 96

Other Grants Special Revenue Fund 97

Sewer Assessment Special Revenue Fund 98

Note to Required Supplementary Information 99

Supplementary Information: 101

Other Governmental Funds:

Description of Other Governmental Funds 103

Combining Balance Sheet 106

Combining Statement of Revenues, Expenditures and

Changes in Fund Balances 110

Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual:

Proposition A Local Return Special Revenue Fund 114

Citizens Option for Public Safety (COPS) Special Revenue Fund 115 Parks and Recreation Activity Special Revenue Fund 116

Mission Playhouse/Facility Special Revenue Fund 117

Air Quality Management District Special Revenue Fund 118

Narcotic Seizure Special Revenue Fund 119 Proposition C Local Return Special Revenue Fund 120

Street Light Special Revenue Fund 121

Office of Traffic Safety Grant Special Revenue Fund 122 Community Development Block Grant Special Revenue Fund 123

Waste Management Special Revenue Fund 124

State Gas Tax Special Revenue Fund 125 Road Maintenance and Rehabilitation Fund 126

Measure M Special Revenue Fund 127

City of San Gabriel



Table of Contents, Continued

Page

Number FINANCIAL SECTION (CONTINUED):

Supplementary Information (Continued):

Internal Service Funds: Description of Internal Service Funds 129 Combining Statement of Net Position 130 Combining Statement of Revenues, Expenses and Changes in Net Position 131 Combining Statement of Cash Flows 132 Agency Fund: Description of Agency Fund 133 Statement of Changes in Fiduciary Assets and Liabilities 134

STATISTICAL SECTION: Description of Statistical Section 135 Financial Trends: Net Position by Component 136 Changes in Net Position 138 Fund Balances of Governmental Funds 140 Changes in Fund Balances of Governmental Funds 142 Revenue Capacity: Assessed Value and Estimated Actual Value of Taxable Property 144 Property Tax Rates - Direct and Overlapping Governments 145 Principal Property Taxpayers 146 Property Tax Levies and Collections 147 Debt Capacity: Direct and Overlapping Debt 148 Legal Debt Margin Information 150 Ratios of Outstanding Debt by Type 152 Demographic and Economic Information: Demographic Statistics 153 Principal Employers 154 Top 25 Sales Tax Producers 155 Operating Information: Full-Time Equivalent City Government Employees by Function/Program 156 Operating Indicators by Function/Program 157 Capital Asset Statistics by Function 158

i

December 20, 2019

December 20, 2019 Honorable Mayor and City Council City of San Gabriel San Gabriel, California Introduction

Presented herein is the Comprehensive Annual Financial Report (CAFR) of the City of San Gabriel for the fiscal year ended June 30, 2019. The report is intended to update readers on the status of the City’s financial position and results of operations for the past year. This report consists of management’s representations concerning the finances of the City of San Gabriel. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of San Gabriel has established a comprehensive internal control framework that is designed to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of San Gabriel’s financial statements in conformity with generally accepted accounting principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City of San Gabriel’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Audit

The City of San Gabriel’s financial statements have been audited by White, Nelson, Diehl, Evans LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of San Gabriel for the fiscal year ended June 30, 2019, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of San Gabriel’s financial statements for the fiscal year ended June 30, 2019, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in

Phone: 626.308.2800

Fax: 626.458.2830

City Hall: 425 South Mission Drive, San Gabriel, California

Mail: P.O. Box 130, San Gabriel, California 91778-0130

Web: SanGabrielCity.com

ii

conjunction with it. The City of San Gabriel’s MD&A can be found immediately following the report of the independent auditors. City of San Gabriel Profile

The City of San Gabriel is a historically rich residential community borne from the fourth California Mission, which was established in 1771. Due to this fact it has earned the moniker—“The Birthplace of the Los Angeles

Region”. San Gabriel is located approximately 10 miles northeast of the City of Los Angeles and was incorporated in 1913 as a general law city which operates under the Council-Manager form of government. Policy-making and legislative authority are vested in a governing council consisting of five members of the City Council elected on a non-partisan basis at large for a four-year term. Council members serve four-year, staggered terms, with an election every two years. One member is appointed by the City Council to serve as Mayor for a one-year term; one is appointed as Mayor Pro Tem. The Council is responsible for, among other things, establishing policy, passing ordinances and resolutions, adopting the annual budget, appointing members to various City Commissions and Boards and hiring the City Manager and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the government, and for appointing the heads of the various departments. The City provides a full range of municipal services including police and fire protection, community development (building, planning, code enforcement, and economic development), public works (street maintenance, engineering, traffic control, storm water, and facilities), maintenance and construction of public improvements, community services (parks and recreation services), and general administrative activities. The annual budget serves as the foundation for the City of San Gabriel’s financial planning and control. All departments of the City of San Gabriel are required to submit requests for appropriation and the City Manager uses these requests as the starting point for developing a proposed budget. The Manager then presents this proposed budget to the Council for review prior to the Council holding public hearings on the proposed budget and to adopt a final budget by no later than June 30th. The appropriated budget is prepared by fund and function (e.g. Police, Fire). Department heads may make transfers of appropriations within a department. The City Manager may make transfers of appropriations between departments within each fund up to $15,000; transfers of appropriations over $15,000 or between funds, however, require the approval of the City Council. Budget-to-actual comparisons are provided throughout the fiscal year, and in this CAFR for each individual governmental fund for which an appropriated annual budget has been adopted. This comparison is presented as Required Supplementary Information for major funds, while a comparison of non-major

iii

funds with appropriated budgets is presented as Supplementary Information after the Notes to the Financial Statements. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of San Gabriel operates. Local Economy

San Gabriel is a “bedroom community” with an abundance of superb eating establishments but no major retailers or auto dealerships. Despite this, San Gabriel’s economy continues to improve each year, evidenced by steady increase in year-over-year revenue growth. Development is expected to continue over the next few years with numerous mixed use projects, in addition to the construction of an additional branded hotel scheduled to welcome their first guest in FY 2020-21. The four main revenue sources for general government purposes are property taxes, sales taxes, utility users’ taxes, and transient occupancy taxes. Property taxes have increased as properties have been sold and new developments are added to the tax rolls. Sales taxes have improved in all categories, including distributions from the County pool, while transient occupancy taxes have been bolstered by the addition of the Sheraton Hotel which opened in late 2017-18. Utility users’ taxes have decreased over the past year due to changes in the communications industry. San Gabriel's local economy is performing well. As stated in the Profile of the City of San Gabriel, produced by Southern California Association of Governments (SCAG) in May 2019, the median existing home sales price in 2018 was $745,000 while median household income levels were $55,939 for the same period. The City has 13,543 housing units with a 45.2% homeownership rate. According to the U.S. Census Bureau, San Gabriel has 12.3% persons in poverty. The City’s assessed valuation has increased 6.0% over the prior year which positively impacts both the General Fund and the Retirement Special Revenue Fund. As San Gabriel remains a desirable location, both geographically and due to its many cultural amenities, home values locally are expected to remain strong. From an economic development perspective, the City is seeing interest in numerous projects, particularly multi-unit housing, office projects and national retailers looking to establish a presence in San Gabriel. Long-term Financial Planning

In light of the City’s current financial condition, a number of actions were taken during the fiscal year including amending the 2018-19 budget to reduce expenditures, approving a variety of policies, and receiving and reviewing a multitude of fiscal reports. In February 2019, the City Council reviewed a new Long-term Financial Plan and gave direction to staff to further explore revenue enhancements and alternative service delivery options. On May 7, 2019, the City Council adopted Resolution number 19-16 approving the City’s Fiscal Sustainability Policy. This policy established guidelines for the City’s overall fiscal planning and management and is intended to foster and support continued financial strength and stability of the City. The policy is quite comprehensive and covers areas of Budget, Economic Development, Risk Management, Accounting-Auditing-Financial Reporting, Cash Management and Investments, and Debt Management. The policy also required a separate Fund Balance Policy to ensure fiscal health of the City. Part of the Fund Balance Policy adopted by the City Council also on May 7, 2019, requires the General Fund to have a “Committed

iv

Fund Balance” of 17% of operating expenditures, less the amount provided by the transfer-in from the Retirement Special Revenue fund, by June 30, 2028. The policy provides a scale for reaching the 17% starting with 3% as of June 2021 and ending with the 17% in 2028. Together, these reports are intended to improve the City’s financial and operational decision making and pave the way to greater fiscal health. These document as well as other documents are readily available on the City’s website. The City Council has also authorized the placement of an initiative on the March 2020 ballot, to increase sales tax in the City. In addition to the fiscal challenge within the General Fund, the City must also address a wide variety of infrastructure, risk management and pension related issues. Towards that end, major road and sewer improvement projects have been identified such as street improvement or intersection improvement projects on Las Tunas, San Gabriel, and Del Mar, as well as, the recently completed San Gabriel Trench Project. The City's sewer system continues to take positive steps forward with the continued collection of a sewer user fee which will ensure the long-term viability of the system. In order to improve the City’s risk profile and contain costs, the City has collaborated with our Insurance Authority Risk Pool to implement a specific series of items under their “Loss Cap Program” Lastly, the City continues to be committed to ensuring mission critical and community based programs are delivered which secures the family oriented high quality of life San Gabriel residents wish to enjoy.

Cash Management

Temporarily idle cash was invested during the year in certificates of deposit, mutual funds, and the State investment pool. The City manages all of its cash and investments on a pooled basis with the exception of Deferred Compensation fund or loan proceeds that are managed by the appointed fiscal agents. Interest earnings are allocated to the various funds based on each fund’s share of monthly cash balances. The average value of the City’s monthly investment portfolio was $16.3 million and the average yield on investments managed by the City was 1.08%. Risk Management

The City of San Gabriel is a member of the California Joint Powers Insurance Authority (Authority). The Authority was established in 1978 under a joint powers agreement pursuant to California Government Code §6500 et seq. and is presently comprised of more than 120 California public entities. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. Each member agency has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee. The Authority’s net position for 2019 is $112.4 million, which represents a 7% increase in net position from 2018 ($105.1 million). At June 30, 2019, the claims payable for workers' compensation and general liability, based on information available to the City, were $1,149,867 and $338,205 respectively. Listed below are the Authority’s coverage limits and pooling/cost sharing methodology. Self-Insurance Programs of the Authority

Each member pays an annual contribution at the beginning of each coverage period, with retrospective adjustments conducted annually thereafter for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustments.

v

The total funding requirement for the self-insurance programs are determined by actuarial analyses. Costs are allocated to individual agencies based on payroll and claims history relative to other members in the risk-sharing pool. Liability Claims are pooled separately between police and general government exposures. Pooling and cost allocation is determined by: (1) the payroll of each member relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula; (2) the first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers. The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Subsidence losses have a sub-limit of $40 million per occurrence. The coverage structure includes retained risk that is pooled among members, reinsurance, and excess insurance. More detailed information about the various layers of coverage is available on the following website: https://cjpia.org/protection/coverage-programs.

Workers’ Compensation Claims are pooled separately between public safety (police and fire) and general government exposures. Pooling and cost allocation is determined by: (1) the payroll of each member relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $100,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers.

For 2018-19, the Authority’s pooled retention is $2 million per occurrence, with reinsurance to statutory limits under California Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer’s Liability losses from $5 million to $10 million are pooled among members. Purchased Insurance

Pollution Legal Liability Insurance The City of San Gabriel participates in the pollution legal liability insurance program which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of San Gabriel. Coverage is on a claims-made basis. There is a $50,000 deductible. The Authority has an aggregate limit of $50 million

vi

for the 3-year period from July 1, 2017 through July 1, 2020. Each member of the Authority has a $10 million sub-limit during the 3-year policy term.

Property Insurance The City of San Gabriel participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City of San Gabriel property is currently insured according to a schedule of covered property submitted by the City of San Gabriel to the Authority. City of San Gabriel property currently has all-risk property insurance protection in the amount of $35,189,205. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500 deductible. Adequacy of Protection

During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2018-19. Pension and Other Post-Employment Benefits The City of San Gabriel provides pension benefits to safety and non-safety employees through the California Public Employees Retirement System (CalPERS). CalPERS provides retirement, disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The City was successful in negotiating two tier rates for new employees in all bargaining units beginning in 2011-12 (November 3, 2012). With the State’s pension Public Employees’ Pension Reform Act (PEPRA) implemented January 1, 2013, the City now has three tiers. As of June 30, 2018, the City has 94 active Tier 1 employees, 25 active Tier 2 employees, and 59 active Tier 3 (PEPRA) employees. The City paid employee contributions as negotiated benefit for many years, however, on June 13, 2013, all employees began paying the full employee share of CalPERS contributions. PERS acts as a common investment and administrative agent for participating public entities within the State of California. The City of San Gabriel also provides post-retirement healthcare benefits for certain retirees and their dependents through CalPERS. As of the end of the current fiscal year, there were 127 retired employees receiving these benefits. Beginning with FY 2017-18 the City implemented GASB Statement 75, which significantly changed the financial accounting and reporting for postemployment benefits other than pensions and significantly increased related liabilities which, in turn, decreased the City’s Total Net Position. Beginning in 2008-09, the City established a trust with CalPERS for OPEB and has made ten payments according to the other post-employment benefits prefunding actuarial schedule. Due to increasing pension rates, required annual unfunded accrued liability payments, and retiree health pay-as-you-go payments, the City did not contribute to the OPEB trust account in FY 2018-19. The balance in the PERS trust at year-end was $5,950,785. After the City made all required annual contributions to the pension plans and paid the current costs of retiree health for FY 2018-19, $1,636,461 remains available in the City’s Retirement Special Revenue Fund.

vii

Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of San Gabriel for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2018. This was the twenty-ninth consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of the Comprehensive Annual Financial Report in accordance with GASB 34 financial reporting model was made possible by the dedicated work of the Finance Department Staff. Each member of the staff has our sincere appreciation for their contributions made in the preparation of the report. We would also like to thank the members of the City Council for their interest and support in planning and conducting the financial operations of the City, and to the White, Nelson, Diehl, Evans accounting firm for their professional assistance and expertise. Respectfully submitted, Mark Lazzaretto Paula Chamberlain City Manager Interim Finance Director

SAN GABRIEL CITY OFFICIALS At June 30, 2019

City Council

JASON PU DENISE MENCHACA Mayor Vice Mayor JULI COSTANZO JOHN R. HARRINGTON CHIN HO LIAO Councilmember Councilmember Councilmember

Other Elected Officials Julie Nguyen .................................................................................................... City Clerk Kevin Sawkins .......................................................................................... City Treasurer

Executive Team Mark Lazzaretto ....................................................................................... City Manager

Arminé Chaparyan .................. Asst City Manager/Community Development Director Sharon Clark ...........................................................................................Chief City Clerk Keith Lemieux ........................................................................................... City Attorney Rebecca Perez ................................................................. Community Services Director Paula Chamberlain .............................................................. Finance Director (Interim) Steven Wallace ................................................................................. Fire Chief (Acting) Edward Macias ................................................ Human Resources/Risk Mgmt Director Rebecca Perez ...................................................... Mission Playhouse Director (Acting) Eugene Harris .............................................................................................. Police Chief Greg de Vinck ...................................................... Public Works Director/City Engineer

TiffanyF

Text Box

viii

Residents

City of San Gabriel Organizational Chart

City Clerk

Sharon Clark

Human Resources

Edward Macias

Community Development

Arminé Chaparyan

Fire

Steven Wallace (Acting)

Mission Playhouse

Rebecca Perez

(Acting)

Community Services

Rebecca Perez

Police

Eugene Harris

Public Works

Greg de Vinck

Finance

Paula Chamberlain (Interim)

City Council

Jason Pu ~ Mayor Denise Menchaca ~ Vice Mayor Juli Costanzo ~ Councilmember

John R. Harrington ~ Councilmember Chin Ho Liao ~ Councilmember

City Manager

Mark Lazzaretto

Administration

City Clerk

Julie Nguyen

City Treasurer

Kevin B. Sawkins

Commissions

Civil Service Community Services

Design Review Historic Preservation

Planning

City Attorney

Keith Lemieux

-Elections -Minutes -Records

-Benefits

-Recruitment

-Labor and Employee Relations

-Risk Management

-Training

-Compensation

-Building and Safety

-Economic Development

-Neighborhood Improvement

-Planning

-Successor Agency

-CDBG Program-Green Programs

-Fire Suppression -Emergency Operations -Disaster Preparedness -Fire Prevention

-Portfolio and Asset Management

-Accounting and Financial Reporting

-General Services

-Information Technology

-Purchasing

-Internal Control

-Patrol -Investigations -Administration Services -Traffic

-Engineering

-Street Services

-Maintenance Services

-Vehicle Services

-Urban Forestry

-Sewers and Storm Drains

-Facilities Maintenance

-Park Maintenance

-Recreation Programs

-Aquatics

-Youth and After School Programs

-Senior Services and Programs

-Event Production -Facility Maintenance -Facility and Event Marketing

ix

ltang

Typewritten Text

ix

ltang

Rectangle

ltang

Rectangle

TiffanyF

Text Box

x

2875 Michelle Drive, Suite 300 | Irvine, California 92606 | WNDECPA.com | 714.978.1300

1

INDEPENDENT AUDITORS’ REPORT

Honorable Mayor and City Council of the City of San Gabriel San Gabriel, California Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of San Gabriel, California (the City), as of and for the year ended June 30, 2019, and the related notes to the basic financial statements, which collectively comprise the City’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 opinions 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 auditors’ 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 auditors consider internal control relevant to the City’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 City’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 opinions.

2

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of San Gabriel, as of June 30, 2019, and the respective changes

in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matters

As discussed in Note 13 to the financial statements, the City has suffered significant reductions in fund

balance in the General Fund. This condition raises concerns about the financial condition of the City’s General Fund and impact on future operations of the City. Management’s plan regarding this matter is also described in Note 13. The basic financial statements do not include any adjustments that might

result from the outcome of this uncertainty. Our opinions are not modified with respect to this matter.

Other Matters

Report on Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the

management’s discussion and analysis, the schedules of proportionate share of the net pension

liability - miscellaneous and safety, the schedules of contributions - defined benefit pension plans -

miscellaneous and safety, the schedule of changes in the net OPEB liability and related ratios, the

schedule of contributions - OPEB, and the budgetary comparison schedules, identified as Required

Supplementary Information (RSI) in the accompanying 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 RSI 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 the audit of the basic financial statements. We do not express an

opinion or provide any assurance on the RSI because the limited procedures do not provide us with

sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements that

collectively comprise the City’s basic financial statements. The introductory section, combining

statements and individual fund schedules and statistical section, as listed in the table of contents, are

presented for purposes of additional analysis and are not a required part of the basic financial statements.

3

Other Matters (Continued)

Other Information (Continued)

The combining statements and individual fund schedules, as listed in the table of contents, are the

responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional

procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally

accepted in the United States of America. In our opinion, the combining statements and individual fund schedules are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion or provide any

assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated

December 20, 2019, on our consideration of the City’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

the 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 City’s internal

control over financial reporting and compliance.

Irvine, California

December 20, 2019

4

CITY OF SAN GABRIEL

Management’s Discussion and Analysis

Year Ended June 30, 2019

The following Management’s Discussion and Analysis (MD&A) of the City of San Gabriel’s financial performance provides an introduction and overview to the financial activities of the City for the fiscal year ended June 30, 2019. This narrative discussion and analysis focuses on the fiscal year 2018-19 activities, resulting changes and current known facts; therefore, the information presented here should be considered in conjunction with additional information furnished in the transmittal letter and the accompanying basic financial statements. FINANCIAL HIGHLIGHTS

The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the fiscal year by $60.0 million. The Net Position is composed of $125.0 million Investment in Capital Assets, $28.4 million Restricted and ($93.4) Unrestricted. The negative unrestricted Net Position is mainly due to GASB 68 and GASB 75 which required the City to report the total unfunded pension and Other Post Employment Benefit liabilities in the amount of $111.7 million combined.

As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $19.86 million.

At the end of the current fiscal year, the fund balance for the General Fund reflected a deficit of $1.8 million, which is a significant improvement over the $2.6 million deficit reported at June 30, 2018.

The City has taken significant steps in its effort to improve its financial condition including the review and acceptance of a long-term financial plan, the adoption of a fiscal sustainability policy, improvements to the transparency of financial reporting, and the adoption of an updated fund balance policy. Future steps include an analysis of alternative methods of service delivery for fire services and the placement of an initiative for voter consideration on the March 2020 ballot to increase the sales tax rate in the City.

On October 16, 2018, the City received its Final Letter of Determination from the California Department of Finance acknowledging the end of the Redevelopment Agency existence.

USING THIS ANNUAL REPORT

This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities provide information about the activities of the City as a whole and present a longer-term view of the City’s finances. Fund financial statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City’s operations in more detail than the government-wide statements by providing information about the City’s most significant funds. The remaining statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government. OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis portion of the annual financial report is intended to serve as an introduction to, and provide the reader with a fundamental understanding of, the Comprehensive Annual Financial Report (CAFR) for the City of San Gabriel. The CAFR is divided into four main sections. First is the Introductory Section which provides the letter of transmittal, an organizational chart, and a list of City officials. The Introductory Section is followed by the Financial Section, which contains the independent

CITY OF SAN GABRIEL

Management’s Discussion and Analysis, Continued


5

auditor’s report, the management’s discussion and analysis, and finally the basic financial statements. These statements contain the “core” financial information for the City of San Gabriel. The basic financial statements include the government-wide financial statements, followed by the fund financial statements, and finally, the notes to the financial statements. The Financial Section is followed by the Supplemental Data portion of the report, which provides individual fund and combining information that rolls up into the amounts shown in the basic financial statements. The final portion of the CAFR is the Statistical Section. This section presents selected financial and demographic information, generally presented on a multi-year basis. Government-wide financial statements. The government-wide financial statements are designed to provide the reader with a broad overview of the City of San Gabriel’s finances, in a manner similar to a private sector business. Information contained within the government-wide statements includes the entire City government (except fiduciary funds). These statements use the accrual basis of accounting with the measurement focus on that of economic resources. All assets and deferred outflows of resources and liabilities and deferred inflows of resources, both financial and capital, short-term and long-term, are included. All revenues and expenses during the year, regardless of when cash is received or disbursed, are reported. The government-wide financial statements include the Statement of Net Position and the Statement of Activities. The Statement of Net Position presents information on all of the City of San Gabriel’s assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between the two reported as “net position”. Increases or decreases in net position may serve as a useful indicator as to whether the financial condition of the City of San Gabriel is improving or deteriorating over time. The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event causing the change occurs, regardless of when cash is actually received or disbursed. This means that revenues and expenses in this statement are recorded when earned or a liability is incurred. Thus, items such as the value of earned but unused vacation leave will be recorded as an expense of the current period, even though the actual use of the vacation time may not be until subsequent periods. Typically, government-wide financial statements are distinguished between governmental activities which are principally supported by taxes or intergovernmental revenues and business-type activities which are intended to recover all or a significant portion of their costs through user fees and charges. The governmental activities of the City of San Gabriel include general government, public safety, community development, public works, community services, and interest and fiscal charges. The City of San Gabriel does not have funds that operate as a business-type activity. Fund financial statements. A “fund” is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of San Gabriel, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. The fund financial statements provide more detailed information about the City’s most significant funds, not the City as a whole. All of the funds of the City of San Gabriel can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds include activities of the City that are not proprietary or fiduciary. These funds are used to account for, essentially, the same functions reported as “governmental activities” in the

CITY OF SAN GABRIEL



6

government-wide financial statements. Unlike the government-wide financial statements, however, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows and outflows of spendable resources, as well as the balances of spendable resources available at the end of the fiscal year. Only assets expected to be used and liabilities that come due during the year or soon thereafter are reported on the Balance Sheet. No capital assets are included. Revenues for which cash is received during or soon after the end of the year, and expenditures for goods and services that have actually been received during the year, are included within the Statement of Revenues, Expenditures, and Changes in Fund Balance. 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 in the fund financial statements with similar information presented for “governmental activities” in the government-wide financial statements. By doing so, the reader may better understand the long-term impact of the City’s near-term financing decisions. Both the Governmental Fund Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balance provide a reconciliation to facilitate this comparison. The City of San Gabriel maintains 24 individual governmental funds. Individual fund information is presented for the “major” funds in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance. The major funds presented include the General Fund, the Retirement Tax Fund, the Development Impact Fee Fund, the Measure R Fund, the Sewer Assessment Fund, and the Other Grants Fund. Information for the remaining governmental funds is combined into a single “other governmental funds” column on the face of the financial statements. Individual fund data for each of these non-major governmental funds is provided in the form of “combining statements” presented in the Supplemental Data portion of the report. Proprietary funds are used to report two types of funds: enterprise funds and internal service funds. Enterprise funds report the same functions presented as “business-type” activities in the government-wide financial statements. These include activities that the City operates similar to a private business. The City of San Gabriel has chosen to operate the Mission Playhouse Fund as a special revenue fund rather than an enterprise fund and does not provide any other services that require the use of enterprise funds. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City of San Gabriel uses internal service funds to account for its risk management and fleet maintenance activities. Because these two services benefit governmental type functions, the activity has been included within “governmental activities” in the government-wide financial statements. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reflected in the government-wide financial statements because the funds are custodial in nature, and therefore, these resources are not available to fund the City of San Gabriel programs. Notes to the financial statements. The notes to the financial statements provide additional information that is essential to a full understanding of the information contained in the government-wide and fund financial statements.

CITY OF SAN GABRIEL



7

2019 2018

Current and other assets 24,537,785$ 25,488,405$

Advances to trust fund - 559,694

Capital assets 134,625,637 61,725,622

Total assets 159,163,422$ 87,773,721$

Deferred outflows of resources 32,028,200 20,265,498

Current liabilities 4,464,102$ 4,776,280$

Noncurrent liabilities 123,858,603 104,780,423

Total liabilities 128,322,705$ 109,556,703$

Deferred inflows of resources: 2,846,853 1,286,152

Net Position:

Net investments in capital assets 125,053,120$ 53,824,523$

Restricted for:

Debt service 6,651,667 6,911,667

Special projects 21,728,835 20,330,264

Unrestricted (93,411,558) (83,870,090)

Total net position 60,022,064$ (2,803,636)$

The combining statements referred to earlier in connection with non-major governmental funds and internal service funds are presented immediately following the notes to the financial statements. GOVERNMENT-WIDE FINANCIAL ANALYSIS

Net position. As mentioned earlier, net position may serve over time as a useful indicator of a government’s financial position. Total net position has increased when compared to the prior year mainly due to the completion of the ACE trench project. Below is a summary schedule showing the components that make up the City’s net position at June 30, 2019 and 2018. Statement of Net Position

For the City of San Gabriel, total assets and deferred outflow of resources exceeded total liabilities and deferred inflows of resources by $60 million at June 30, 2019. As the table above shows, the amount of $125.0 million is reported as net investment in capital assets. This amount represents those capital assets (land, buildings, improvements, equipment, and work in progress) which have been constructed or donated over time. The City of San Gabriel uses these capital assets to provide services to the residents of the City, and the assets are therefore not available for meeting current financial obligations. An additional portion of net position, in the amount of $28.4 million, reported as restricted net position represents resources that are subject to external restrictions on how the funds may be used. Restrictions include assets that are legally set aside for future capital development, capital projects, and other legally restricted amounts including debt service. The remaining balance is the unrestricted net position of ($93.4 million). It is not uncommon in government entities to see an unrestricted net position deficit.

CITY OF SAN GABRIEL



8

2019 2018

Revenues

Program revenues:

Charges for services 8,469,388$ 7,503,290$

Operating contribution and grants 5,230,720 7,224,937

Capital contributions and grants 72,028,183 1,560,996

General revenues:

Taxes

Property taxes 18,410,087 17,137,916

Sales taxes 4,574,744 4,228,585

Utility users' taxes 4,220,173 4,477,367

Transient occupancy taxes 3,042,962 2,077,757

Business licenses taxes 695,898 716,215

Franchise taxes 631,983 538,126

Property transfer taxes 145,009 173,930

Other Taxes 19,642 -

Interest and use of property 104,136 104,362

Other 273,116 518,818 Total revenues 117,846,041 46,262,299

Expenses:

General government 9,653,309 7,544,585

Public safety 28,821,771 26,434,439

Community development 4,205,443 3,233,842

Public works 8,210,981 7,660,741

Community services 3,723,848 4,667,127

Interest on long-tem debt 404,989 235,979 Total expenses 55,020,341 49,776,713

Increase (decrease) in net position 62,825,700$ (3,514,414)$

Net position - beginning of year, as restated (2,803,636)$ 710,778

Net position - end of year 60,022,064$ (2,803,636)$

There are many reasons why this could occur but the City of San Gabriel has a deficit due to the large unfunded retirement liabilities including the City’s net pension liability in the amount of $67.3 million, and the net OPEB liability in the amount of $44.4 million. Changes in net position. The statement of net position provides a snapshot at a given point in time of the assets and liabilities of the City. The other citywide statement provided is the Statement of Activities. This statement provides the reader with information regarding the revenues, expenses, and changes in net position over the fiscal year. Generally, all changes to the City’s net position from one fiscal year to the next flow through the statement of activities. The City’s programs for governmental activities include legislative and support services, Police, Fire (collectively Public Safety), Community Development, Community Services, and Public Works. The following is a summary schedule showing the components that make up the City’s changes in net position for the years ended June 30, 2019 and 2018. Statement of Activities

CITY OF SAN GABRIEL



9

Governmental Activities - The City’s program revenues totaled $85.7 million including a significant amount related to a contribution of an infrastructure asset. The cost of all governmental activities for the current year was $55.0 million. As indicated above the amount taxpayers ultimately financed for the $55.0 million in activities was reduced by Charges for Services revenue ($8.5 million), and/or by other governments and organizations that subsidized certain programs with operating contributions and grants ($5.2 million).

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

The City uses governmental fund accounting to ensure compliance with budgetary allocations and to maintain control over resources that are legally, or otherwise, restricted for specific purposes. Following is a discussion of the individual “major” funds as shown on the Balance Sheet for Governmental Funds in the basic financial statements.

General Fund – The General Fund is used to account for the general operations of the City. It is used to account for all financial resources, except those required to be accounted for in another fund. The General Fund is always reported as a “major” fund. The General Fund reported $30.8 million in revenues and $37.3 million in expenditures resulting in expenditures in excess of revenues in the amount of $6.5 million before accounting for net other financing sources of $7.3 million. The result from these transaction was an increase to the General Fund fund balance of $0.8 million for the fiscal year. Total fund balance at June 30, 2019 was deficit in the amount of $1.8 million, composed of $9.2 million in assets against $11.0 million in liabilities. The City’s General Fund Unassigned Fund Balance is approximately ($8.5) million. This is due in part because the City has pledged $6.65 million of its reserves as collateral for a loan to construct the new public works facility. Consequently, $6.65 million is currently restricted for this purpose, however, this restriction will decrease over time as principal payments are made. As to the deficit fund balance, the City Council has undertaken a variety of steps to address the issue as described in Note 13 within the Note section of this report. In summary, the City Council adopted a fiscal sustainability policy that established guidelines for the City’s overall fiscal planning and

CITY OF SAN GABRIEL



10

management. The Policy encompasses Budget; Economic Development; Risk Management; Accounting, Auditing and Financial Reporting; Cash Management and Investments; and Debt Management and are intended to foster and support the financial strength and stability of the City. The Council also approved an updated Fund Balance Policy setting the minimum fund balance at 17% of annual expenses less the amount provided by the Retirement Tax Fund with a tiered schedule of meeting this minimum and setting forth new procedures for budget preparation and annual reporting to be more transparent in financial matters. Retirement Tax Fund – The Retirement Tax Fund accounts for the revenues received from a special ad valorem tax passed by San Gabriel voters in 1948 to fund the City’s cost of employee CalPERS retirement benefits, and the transfers-out to funds with expenses related to those payments. The City’s special revenue Retirement fund revenues were $7.7 million for 2018-19, an increase of $486,000 over 2017-18 due to an increase in the City’s assessed valuation. Transfers-out of this special revenue fund to the General, Mission Playhouse, and Risk Management Funds increased $565,500 over the prior fiscal year predominately due to increases in the CalPERS normal cost rate, the unfunded accrued liability payment, and retiree health benefit costs. No contributions were made to the City’s OPEB Trust account in 2018-19. Development Impact Fees Fund – This fund is used to account for the collection of fees from developers pursuant to Government Code §66066. The City currently collects five types of impact fees: Park and Open Space Impact, Sanitary Sewer System Facilities Impact, Police Facility Impact, Fire Facility Impact and Traffic Impact. Revenues received in the Development Impact Fee fund fluctuate year to year based on anticipated development as indicated with the payment of building permit fees. Revenue for 2018-19 was $374,700, a decrease of $126,300 over 2017-18. Expenditures for the year were $383,800 including $330,000 in police and fire facility improvements and $28,000 in park improvements. Fund balance for all impact fees is $5.2 million of which $1.2 million has been appropriated to projects within the current Capital Improvement Program. As an additional resource, under requirements of Government Code §66066, the City issues a separate report detailing annual activity of Development Impact Fees. This report may be viewed on the City’s website. Measure R Fund – This fund is used to account for the City’s share of the half-cent sales tax approved by Los Angeles County voters in 2008 for developing and/or improving local public transit, paratransit and related transportation infrastructure. Measure R revenue for 2018-19 was $523,000 with expenditures of $2.7 million and an ending fund balance of $1.4 million. Of the $2.7 million in expenditures, $344,000 was for the current year loan repayment of the IBank loan (see Debt Administration), $857,000 was paid towards the Del Mar Rehabilitation – Wells to Valley project, $1.44 million for the Great Streets and Accelerated Great Streets project, and $61,000 for the Del Mar Rehabilitation – Wells to Mission project. At June 30, 2019, the fund balance of Measure R was $1.4 million, most of which has been appropriated to the current Capital Improvement Program.

Other Grants Fund – The Other Grants fund accounts for the revenues received and expenditures made for federal, state and or county approved programs and projects. The Other Grants fund has historically been a “major” fund based on criterion set forth by GASB 34. For the fiscal year, the Other Grants fund reported $429,600 in revenues and $170,000 in expenditures resulting in revenues over expenditures of $260,000. The entire fund balance of $680,000 is restricted for specific purposes.

CITY OF SAN GABRIEL



11

Sewer Fund – This fund is used to account for revenues received and expenditures made for sewer improvements and maintenance. Financing is provided by the City’s sewer user fee made pursuant to Resolution 14-14. The Sewer Fund received $2.0 million in revenue and expended $949,207 during FY 2018-19. This is an increase in both revenue of $59,200 and expenditures of $2,400 over the 2017-18 fiscal year. The accumulated fund balance of $5.6 million will be used to finance sewer infrastructure improvements as shown in the capital improvement program budget. Funding for projects approved, but not expended at June 30, 2019, is authorized at $4.2 million with an additional $950,000 approved in the 2019-20 capital improvement program budget. Non-Major Funds – The Non-Major Governmental Funds show a combined fund balance total of $7.2 million, an increase of $310,500 over the prior year. GENERAL FUND BUDGETARY INFORMATION

The budget, as adopted on June 19, 2018, contained $39.3 million in appropriations and transfers out to fund operations and services. This amount increased to $41.5 million when funding approved for projects in 2017-18 but were not expended by June 30, 2018 was carried forward to 2018-19. By the end of the fiscal year, through City Council approved budget amendments, the amount was reduced to $40.8 million. This was a decrease of $704,400 over the original budget with carryovers. The change in appropriations was primarily due to:

A reduction in capital project carryover funding of $1.7 million.

The elimination $701,000 in contributions to the Fleet Services fund for future equipment replacements.

A change in accounting that moved the $1,519,000 appropriation for retiree health costs from the Risk Management Fund to the General Fund with a corresponding increase to the revenue estimate for the transfer in from the Retirement Tax Fund.

The reclassification of the $77,100 property tax administrative fee from revenue estimates to appropriations, thus increasing appropriations and reducing revenue estimates.

Both General Fund revenues and expenditures were under budget at the completion of the fiscal year.

As adopted on June 19, 2018, the City's FY 2018-19 General Fund revenue budget, including transfers-in, reflected $41.1 million in anticipated revenues. With approved budget adjustments, the total was amended to $42.8 million. Actual revenue for FY 2018-19 was $38.7 million, $4.0 million below the final budgeted estimate. Revenue in all categories fell below budget most notably in the taxes ($1.17 million), licenses and permits ($1.0 million), and departmental ($835,000) categories due to the under achieving of anticipated growth in these areas.

2018-19

Adopted

Budget

2018-19

Adopted

Budget with

Carryovers

2018-19 Final

Amended

Budget

2018-19

Actuals

% Actuals to

Amended

Budget

Total revenue / transfers in 41,114,014$ 41,182,209$ 42,778,044$ 38,743,223$ 91%

Total expenditures / transfers out 39,257,116 41,547,603 40,843,184 37,986,504 93%

Net 1,856,898$ (365,394)$ 1,934,860$ 756,719$

General Fund

Revenue and Expense Analysis

CITY OF SAN GABRIEL



12

As adopted, the City's FY 2018-19 General Fund expenditures budget was initially approved with $39.3 million in appropriations and transfers-out which increased to $41.5 million when carryover appropriations were finalized. With approved budget adjustments, the final total was amended to $40.8 million. Overall, actual expenditures for FY 2018-19 are at $38 million, $2.9 million below the final adopted budget. The main contributor to these savings is $2.0 million in salary and benefit savings due to employee turnover and the cumulative vacancy of full-time positions offset by an increase in overtime to compensate for those vacancies, and overbudgeting for health insurance premiums, $400,000 in operational cost savings, the elimination of $701,000 in contributions to future fleet replacements, and a $119,300 reduction to transfers-out for the contribution to the Mission Playhouse for its operational shortfall. Although below overall appropriations, two departments exceeded appropriations as shown below:

Final Budget Actual Variance Human Resources 784,990 1,002,952 (217,962) Community Services 1,612,074 1,613,753 (1,679)

Expenses within the Human Resources Department exceeded budget due to extraordinary legal expense for ongoing litigation (Flores vs. San Gabriel). DEBT ADMINISTRATION

At the end of the fiscal year, the City had total long-term debt outstanding of $125.7 million. Loans Payable – On December 16, 2014, the City entered into a loan agreement with Citizens Business Bank for a loan of $7.8 million. The loan proceeds were for the construction of the new public works maintenance facility. The loan is collateralized with a ten-year certificate of deposit held with the lender for $6.65 million that is shown as restricted cash and investments in the financial statements. At year-end, the City’s liability for this loan was $6,651,667, and the amount due within one year is $260,000. Additional details regarding this loan may be found in Note 5. Loans Payable – On May 1, 2015, the City entered into an installment sale agreement with the California Infrastructure and Economic Development Bank (IBank) to finance the Accelerated Great Streets Program, which was to upgrade, reconstruct, and rehabilitate approximately 1.6 lane miles of public streets within the City. Interest accrues on the entire principal balance, whether or not disbursed, at in interest rate of 3.5% per annum. Principal and interest payments are due on each August 1 and February 1, commencing on August 1, 2016 and maturing on August 1, 2029. In addition, on August 1 of each year, the City must pay an annual fee of 0.3% on the outstanding principal component of the remaining

2019 2018 See

Loans payable 9,783,925$ 10,274,205$ Note 5

Compensated absences 2,654,434 2,719,281 Note 5

Claims payable 1,488,072 1,820,469 Note 10

Net pension liability 67,285,462 67,662,053 Note 8

Net OPEB liability 44,459,272 24,213,507 Note 9

Total 125,671,165$ 106,689,515$

Governmental Activities

CITY OF SAN GABRIEL



13

principal balance. At year-end, the City’s liability for this loan was $3,132,258, and the amount due within one year is $238,340. Additional details regarding this loan may be found in Note 5. City has compensated absences for accumulated employee vacation and sick-time. At year-end, the City’s liability for Compensated Absences was $2,654,434, a reduction of $64,847 over the prior year. Of the $2,654,434, $782,626 is anticipated to be due within one year. PENSION AND OTHER POST EMPLOYMENT BENEFITS (OPEB) PAYMENTS

Details on pension and OPEB liabilities are found in Note 8 and Note 9, however much of this information is based on the valuation period rather than the current year costs of those liabilities e.g. amounts actually paid during the year. To provide the reader with data beyond the required valuation period data the following table has been prepared. CASH MANAGEMENT

To obtain flexibility in cash management, the City employs a pooled cash system (Reference Note 2 in the Notes to the Basic Financial Statements). Under the pooled cash concept, the City invests the cash of all funds with maturities planned to coincide with cash needs. Idle cash is invested in certain eligible securities as constrained by law and further limited by the City’s Investment Policy. The goals of the City’s Investment Policy are safety, liquidity and yield. CAPITAL ASSETS

The capital assets of the City are those assets, which are used in the performance of the City’s functions including infrastructure assets. At June 30, 2019, net capital assets of the governmental activities totaled $134.6 million and is detailed in the following table. The largest increase in Capital Assets was in the Infrastructure class with the acceptance of the $70.32 million trench project facilitated by the Alameda Corridor East (ACE) and transferred to the City in FY 2018-19. This project constructed a 2.2-mile trench to allow the rail line to pass below, separated from surface auto traffic, thereby eliminating conflicts and safety issues caused by growth and development in the San Gabriel Valley. Additional information on the City of San Gabriel’s capital assets may be found in Note 4 of the Notes to the Basic Financial Statements.

Governmental

Activities Fiduciary Funds Total

Cash and investments 14,205,237$ 1,847,168$ 16,052,405$

Restricted cash and investments 6,651,667 - 6,651,667

Total 20,856,904$ 1,847,168$ 22,704,072$

Retirement 2018-19 2017-18 2018-19 2017-18 2018-19 2017-18

Public Safety 4,833,269$ 4,462,509$ 22.346% 21.418% 17.334% 16.498%

Miscellaneous 1,991,180 1,810,956 13.084% 12.470% 8.346% 7.850%

Replacement Benefit 60,036 60,153

OPEBRetiree Health 1,233,512 1,111,215 Trust fund contributions - 112,899 2018-19 2017-18 2018-19 2017-18 Totals 8,117,997$ 7,557,732$ 127 115 $ 1,788 $ 1,766

Number of Retirees Max Rate per Retiree

Amounts Paid Tier 1 PERS Normal Rate Tier 2 PERS Normal Rate

CITY OF SAN GABRIEL



14

NEXT YEAR’S BUDGET

The fiscal year 2019-20 budget is basically a “hold the line” budget including carrying forward cost saving measures from 2018-19 such as the elimination of contributions to future fleet purchases. Department Directors assumed a greater role in revenue estimate development which were conservatively, but accurately, proposed for adoption. Consultant services were utilized to estimate the City’s largest revenue sources such as property tax and sales tax while estimates provided by outside agencies such as LA METRO and AQMD were used for other funds when available. Appropriations were refined to reflect current employee salary and benefits and line-items were scrutinized to be more in line with actual needs and historical data. While it is the goal of the City Council to adopt a budget that is balance with on-going revenues meeting operating expenses, the 2019-20 adopted budget includes the sale of available restricted Prop A funds in exchange for unrestricted General Fund resources as a one-time revenue. Overall, the City is “cautiously optimistic” about future budgets but has taken additional steps to ensure its future fiscal health. Looking towards the 2020-21 budget, the City Council has authorized the placement of a ballot measure to increase the sales tax rate within the City which, if approved, would increase General Fund on-going revenue by approximately $3.4 million. In addition, another hotel is due to open during FY 2020-21 which would also significantly increase on-going General Fund revenue. Lastly, the City Council has received and accepted a long-term financial plan, which will be updated in 2021, the Mission District Economic Analysis and Market Study, and an analysis of current operations of the Mission Playhouse is underway, all of which will aid in the fiscal rebound of the City. CONTACTING THE CITY’S FINANCIAL MANAGEMENT

This financial report is designed to provide San Gabriel residents, taxpayers, customers, investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. Questions about this report or any additional financial information, should be directed to the City of San Gabriel Finance Department at 425 S. Mission Drive, San Gabriel, California, 91776.

2019 2018

Land 5,693,699$ 5,693,699$

Construction in progress 4,238,243 4,371,708

Buildings and improvements 28,438,456 28,134,873

Machinery and equipment 13,598,976 13,665,494

Infrastructure 162,168,631 85,949,100

Totals 214,138,005$ 137,814,874$

Accumulated appreciation (79,512,368) (76,089,252)

134,625,637$ 61,725,622$


15

BASIC FINANCIAL STATEMENTS

16


17

GOVERNMENT-WIDE

FINANCIAL STATEMENTS

18


City of San Gabriel

Statement of Net Position

June 30, 2019

Primary

Government

Governmental

Activities

ASSETS:

Current assets:

Cash and investments 14,205,237$

Restricted cash and investments 6,651,667

Accounts receivable 1,742,576

Interest receivable 69,559

Due from other governments 1,868,746

Total current assets 24,537,785

Noncurrent assets:

Capital assets:

Nondepreciable assets 9,931,942

Depreciable assets, net 124,693,695

Total noncurrent assets 134,625,637

Total assets 159,163,422

DEFERRED OUTFLOWS OF RESOURCES:

Deferred amounts on OPEB plan 15,699,398

Deferred amounts on pension plans 16,328,802

Total deferred outflows of resources 32,028,200

LIABILITIES:

Current liabilities:

Accounts payable 2,103,232

Accrued liabilities 490,206

Due to other governments 33,992

Deposits payable 24,110

Long-term liabilities, due within one year 1,812,562

Total current liabilities 4,464,102

Noncurrent liabilities:

Long-term liabilities, due in more than one year 12,113,869

Net OPEB liability, due in more than one year 44,459,272

Net pension liability, due in more than one year 67,285,462

Total noncurrent liabilities 123,858,603

Total liabilities 128,322,705

DEFERRED INFLOWS OF RESOURCES:

Deferred amounts on OPEB plan 99,213

Deferred amounts on pension plans 2,747,640

Total deferred inflows of resources 2,846,853

NET POSITION (DEFICIT):

Net investment in capital assets 125,053,120

Restricted:

Debt service 6,651,667

Community services 868,930

Public safety 1,040,405

Retirement benefits 1,636,461

Sewer service 7,511,619

Street improvements 8,471,348

Waste management programs 1,519,562

Neighborhood improvement and rehabilitation 680,510

Unrestricted (93,411,558)

Total net position (deficit) 60,022,064$

See accompanying notes to basic financial statements.

19

City of San Gabriel

Statement of Activities


Net (Expense)

Revenue and

Changes in

Charges Operating Capital Net Position

for Grants and Grants and Governmental

Expenses Services Contributions Contributions Activities

Primary government:

Governmental activities:

General government 9,653,309$ 218,255$ 20,924$ -$ (9,414,130)$

Public safety 28,821,771 2,185,508 648,504 68,776 (25,918,983)

Community development 4,205,443 3,128,928 2,717,271 92,224 1,732,980

Community services 3,723,848 932,894 14,801 148,856 (2,627,297)

Public works 8,210,981 2,003,803 1,829,220 71,718,327 67,340,369

Interest 404,989 - - - (404,989)

Total governmental activities 55,020,341$ 8,469,388$ 5,230,720$ 72,028,183$ 30,707,950

General revenues:

Taxes:

Property taxes 18,410,087

Sales taxes 4,574,744

Utility users tax 4,220,173

Franchise taxes 631,983

Transient occupancy taxes 3,042,962

Business license taxes 695,898

Property transfer tax 145,009

Other tax 19,642

Investment income 104,136

Other 273,116

Total general revenues 32,117,750

Change in net position 62,825,700

Net Position - Beginning of Year (2,803,636)

Net Position - End of Year 60,022,064$

Program Revenues

Functions/Programs


20

21

FUND FINANCIAL STATEMENTS

Governmental Fund Financial Statements

Proprietary Fund Financial Statements

Fiduciary Fund Financial Statements

22


23

GOVERNMENTAL FUND


City of San Gabriel

Balance Sheet

Governmental Funds

June 30, 2019

Development

General Retirement Impact Fees

ASSETS

Cash and investments -$ 1,493,133$ 1,209,181$

Restricted cash and investments 6,651,667 - -

Accounts receivable 1,456,358 - -

Interest receivable - 4,859 16,925

Due from other funds - - 4,000,000

Due from other governments 1,061,298 138,469 -

Total assets 9,169,323$ 1,636,461$ 5,226,106$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES

Liabilities:

Accounts payable 998,366$ -$ 17,876$

Accrued liabilities 448,445 - -

Due to other funds 9,523,370 - -

Due to other governments 33,992 - -

Deposits payable - - -

Total liabilities 11,004,173 - 17,876

Fund Balances (Deficit):

Restricted 6,651,667 1,636,461 5,208,230

Unassigned (8,486,517) - -

Total fund balances (deficit) (1,834,850) 1,636,461 5,208,230

Total liabilities, deferred inflows

of resources and fund balances 9,169,323$ 1,636,461$ 5,226,106$

Special Revenue Funds


24

Other Total

Other Sewer Governmental Governmental

Measure R Grants Assessment Funds Funds

1,342,969$ 684,038$ 558,526$ 6,847,749$ 12,135,596$

- - - - 6,651,667

211,408 - 4,311 70,499 1,742,576

4,235 - 18,087 19,072 63,178

- - 5,000,000 781,568 9,781,568

- 59,166 39,519 570,294 1,868,746

1,558,612$ 743,204$ 5,620,443$ 8,289,182$ 32,243,331$

156,300$ 62,694$ 55,605$ 770,922$ 2,061,763$

- - 7,544 28,823 484,812

- - - 258,198 9,781,568

- - - - 33,992

- - - 24,110 24,110

156,300 62,694 63,149 1,082,053 12,386,245

1,402,312 680,510 5,557,294 7,455,436 28,591,910

- - - (248,307) (8,734,824)

1,402,312 680,510 5,557,294 7,207,129 19,857,086

1,558,612$ 743,204$ 5,620,443$ 8,289,182$ 32,243,331$

Special Revenue Funds (Continued)

25

26


City of San Gabriel

Reconciliation of the Governmental Funds Balance Sheet

to the Government-Wide Statement of Net Position

June 30, 2019

Fund balances - total governmental funds 19,857,086$

Amounts reported for governmental activities in the Statement of Net Position

are different because:

Capital assets used in governmental activities are not current financial resources

and therefore are not reported in the governmental funds balance sheet. This

amount does not include $2,050,950 of internal service fund net capital assets.

Capital assets 210,821,534$

Accumulated depreciation (78,246,847)

132,574,687

Long-term liabilities are not due and payable in the current period and, therefore,

are not reported in the governmental funds. Long-term liabilities consist of

the following:

Compensated absence - governmental activities (2,587,206)$

Compensated absences - internal service funds (67,228)

Claims payable (121,677)

Loan payable (6,651,667)

Installment sale agreement (3,132,258)

(12,560,036)

Pension and OPEB related debt applicable to the City's governmental activities are not due

and payable in the current period and accordingly are not reported as fund liabilities.

Deferred outflows of resources and deferred inflows of resources related to pensions

and OPEB are only reported in the Statement of Net Position as the changes in these

amounts effects only the government-wide statements for governmental activities:

Net Pension liability (67,285,462)$

Deferred outflows of resources - pension 16,328,802

Deferred inflows of resources - pension (2,747,640)

Net Other post-employment benefits (OPEB) liability (44,459,272)

Deferred outflows of resources - OPEB 15,699,398

Deferred inflows of resources - OPEB (99,213)

(82,563,387)

Internal service funds are used by management to charge the costs of activities

such as equipment management to departments within the City. The assets and

liabilities of the internal service funds are included in the Statement of Net Position. 2,713,714

Net position of governmental activities 60,022,064$


27

City of San Gabriel

Statement of Revenues, Expenditures and Changes in Fund Balances

Governmental Funds


Development

General Retirement Impact Fees

REVENUES:

Taxes 23,310,253$ 7,714,705$ -$

Intergovernmental 596,840 - -

Charges for services 3,386,112 - 330,947

Fines and forfeitures 910,570 - -

Licenses and permits 2,280,570 - -

Investment income 127,855 14,397 43,732

Other 204,579 - -

Total revenues 30,816,779 7,729,102 374,679

EXPENDITURES:

Current:

General government 6,255,890 - -

Public safety 21,505,976 - -

Community development 2,610,636 - -

Community services 1,613,753 - -

Public works 4,629,319 - -

Capital outlay 358,339 - 383,835

Debt service:

Principal payments 260,000 - -

Interest and fiscal charges 110,187 - -

Total expenditures 37,344,100 - 383,835

EXCESS OF REVENUES OVER

(UNDER) EXPENDITURES (6,527,321) 7,729,102 (9,156)

OTHER FINANCING SOURCES (USES):

Transfers in 7,926,444 - -

Transfers out (642,404) (7,994,015) -

Total other financing sources (uses) 7,284,040 (7,994,015) -

NET CHANGE IN FUND BALANCES 756,719 (264,913) (9,156)

FUND BALANCES (DEFICIT):

Beginning of year (2,591,569) 1,901,374 5,217,386

End of year (1,834,850)$ 1,636,461$ 5,208,230$


28

Other Total

Other Sewer Governmental Governmental

Measure R Grants Assessment Funds Funds

-$ -$ -$ -$ 31,024,958$

512,463 409,393 - 4,491,968 6,010,664

- - 2,000,803 1,239,968 6,957,830

- - - - 910,570

- - - - 2,280,570

10,473 - 42,536 54,196 293,189

- 20,184 2,755 30,648 258,166

522,936 429,577 2,046,094 5,816,780 47,735,947

- - - - 6,255,890

- - - 180,176 21,686,152

- - - 74,174 2,684,810

- - - 1,569,483 3,183,236

- - 678,960 547,049 5,855,328

2,358,115 170,007 170,247 3,845,394 7,285,937

230,280 - - - 490,280

113,659 - - - 223,846

2,702,054 170,007 849,207 6,216,276 47,665,479

(2,179,118) 259,570 1,196,887 (399,496) 70,468

- - - 709,975 8,636,419

- - - - (8,636,419)

- - - 709,975 -

(2,179,118) 259,570 1,196,887 310,479 70,468

3,581,430 420,940 4,360,407 6,896,650 19,786,618

1,402,312$ 680,510$ 5,557,294$ 7,207,129$ 19,857,086$



29

City of San Gabriel

Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes

in Fund Balances to the Government-wide Statement of Activities


Net change in fund balances - total governmental funds 70,468$

Amounts reported for governmental activities in the Statement of Activities

are different because:

Governmental funds report capital outlays as expenditures. However,

in the Statement of Activities, the cost of those assets is allocated over

the estimated useful lives as depreciation expense. This is the amount

by which capital outlays exceed depreciation and retirements in the current

period. This does not include internal service fund activity of $84,708 in

additions, $334,373 in depreciation expense, and $5,793 loss on disposals.

Capital asset purchases 6,283,722$

Depreciation expense (3,441,233)

Disposals (2,016)

Capital contributions 70,315,000

73,155,473

To record as an adjustment to expense the net change in compensated absences

in the statement of activities:

Compensated absences expenses - governmental activities 71,857$

Compensated absences expenses - internal service funds (7,010)

64,847

The issuance of long-term debt provides current financial resources to

governmental funds, while repayment of the principal and issuance cost of

long-term debt consumes the current financial resources of the governmental

funds. Issuance of loan principal is an other financing source and repayment of

loan principal is an expenditure in governmental funds, but the issuance increases

long-term liabilities and the repayment reduces long-term liabilities in the Statement

of Net Position. The amounts are the net effect of these differences in the

treatment of long-term debt:

Repayment of principal 490,280

Pension and OPEB expense reported in the governmental funds includes the annual

required contributions and actuarially determined contributions, respectively. In the

Statement of Activities, pension and OPEB expense includes the change in the net

pension and OPEB liability, and related change in pension and OPEB amounts for

deferred outflows of resources and deferred inflows of resources. (9,667,172)

Internal service funds are used by management to charge the costs of activities

such as equipment management to departments within the City. The net income

is reported with Governmental Activities. The assets and liabilities of the internal

service funds are included in the Statement of Net Position. (888,293)

Certain revenues in the governmental funds are unavailable revenues

because they are not collected within the prescribed time period after year-end.

However, the revenues are included in the government-wide statements. (399,903)

Change in net position of governmental activities 62,825,700$


30

31

PROPRIETARY FUND


City of San Gabriel

Statement of Net Position

Proprietary Funds

June 30, 2019

Governmental

Activities

Internal

Service

Funds

ASSETS:

Current assets:

Cash and investments 2,069,641$

Interest Receivable 6,381

Total current assets 2,076,022

Noncurrent assets:

Capital assets:

Being depreciated (net of accumulated depreciation) 2,050,950

Total noncurrent assets 2,050,950

Total assets 4,126,972

LIABILITIES:


Accounts payable 41,469

Accrued payroll 5,394

Compensated absences, due within one year 67,228

Claims payable, due within one year 409,919

Total current liabilities 524,010


Claims payable, due in more than one year 956,476

Total noncurrent liabilities 956,476

Total liabilities 1,480,486

NET POSITION:

Investment in capital assets 2,050,950

Unrestricted 595,536

Total net position 2,646,486$


32

City of San Gabriel

Statement of Revenues, Expenses and Changes in Net Position

Proprietary Funds


Governmental

Activities

Internal

Service

Funds

OPERATING REVENUES:

Charges for services 6,316,224$

Total operating revenues 6,316,224

OPERATING EXPENSES:

Personnel services 319,675

Contractual services 17,254

Vehicle operating 470,973

Depreciation 334,373

Insurance premiums 6,065,617

Claims and judgments 11,698

Total operating expenses 7,219,590

OPERATING LOSS (903,366)

NONOPERATING REVENUES (EXPENSES):

Investment income 13,856

Loss on sale of capital assets (5,793)

Total nonoperating revenues (expenses) 8,063

CHANGE IN NET POSITION (895,303)

NET POSITION:

Beginning of the year 3,541,789

End of the year 2,646,486$


33

City of San Gabriel

Statement of Cash Flows

Proprietary Funds


Governmental

Activities

Internal

Service

Funds

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from user departments 6,316,224$

Cash payments to suppliers for goods and services (7,045,013)

Cash payments to employees for services (312,804)

Net cash used for operating activities (1,041,593)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Cash received from other funds 2,191,065

Net cash provided by noncapital financing activities 2,191,065

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Payments to acquire capital assets (84,707)

Net cash used for capital and related financing activities (84,707)

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received from investments 7,475

Net cash provided by investing activities 7,475

Net increase in cash and cash equivalents 1,072,240

CASH AND CASH EQUIVALENTS:

Beginning of the year 997,401

End of the year 2,069,641$

RECONCILIATION OF OPERATING LOSS TO

NET CASH USED FOR OPERATING ACTIVITIES:

Operating loss (903,366)$

Adjustments to reconcile operating loss to

net cash used for operating activities:

Depreciation expense 334,373

Changes in assets and liabilities:

Increase (decrease) in accounts payable (147,074)

Increase (decrease) in accrued payroll (139)

Increase (decrease) in compensated absences payable 7,010

Increase (decrease) in claims payable (332,397)

Net cash used for operating activities (1,041,593)$


34

35

FIDUCIARY FUND


City of San Gabriel

Statement of Fiduciary Net Position

Fiduciary Funds

June 30, 2019

Successor Agency

to the San Gabriel

Redevelopment

Agency

Private-Purpose

Trust Fund Agency Fund

ASSETS:

Cash and investments -$ 1,847,168$

Total assets - 1,847,168$

LIABILITIES:

CURRENT LIABILITIES:

Accounts payable - 76,825$

Deposits payable - 1,770,343

Total liabilities - 1,847,168$

NET POSITION:

Restricted for private purpose -

Total net position -$


36

City of San Gabriel

Statement of Changes in Fiduciary Net Position

Fiduciary Funds


Successor Agency

to the San Gabriel

Redevelopment

Agency

Private-Purpose

Trust Fund

ADDITIONS:

Taxes -$

Total additions -

DEDUCTIONS:

Community development (181,142)

Total deductions (181,142)

Change in net position 181,142

NET POSITION:

Beginning of Year (181,142)

End of Year -$


37

38


39

NOTES TO BASIC


40


City of San Gabriel

Notes to Basic Financial Statements

June 30, 2019

41

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The basic financial statements of the City of San Gabriel, California (the City), have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below.

A. Description of Reporting Entity

The City of San Gabriel (City) was incorporated April 24, 1913, under the general laws of the State of California and enjoys all the rights and privileges pertaining to such “General Law” cities. The City is a municipal corporation governed by an elected five-member council.

As required by generally accepted accounting principles, these financial statements present the City of San Gabriel and its component unit, an entity for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization’s governing body and the City is able to impose its will on that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable for an organization if that organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City’s financial statements to be misleading or incomplete. The City has no component units.

B. Basis of Accounting and Measurement Focus

The basic financial statements of the City are composed of the following:

Government-wide financial statements

Fund financial statements

Notes to the basic financial statements

City of San Gabriel

Notes to Basic Financial Statements, Continued

June 30, 2019

42

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

B. Basis of Accounting and Measurement Focus (Continued)

Government-Wide Financial Statements

Government-wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business-type activities of the primary government (including its blended component units), as well as its discretely presented component units. The City of San Gabriel has no business-type activities or discretely presented component units. Certain eliminations have been made in regards to interfund transfers, payables and receivables. All internal balances in the Statement of Net Position have been eliminated. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the City. Internal service fund activity has been eliminated and net balances are included in the governmental activities. Interfund services provided and used, if any, are not eliminated in the consolidation process.

Government-wide financial statements are presented using the economic resources measurement

focus and accrual basis of accounting. Measurement focus is a term used to describe which transactions are recorded within the various financial statements. Under the economic resources

measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government-wide financial statements. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from nonexchange transactions, such grants, are recognized as revenue as soon as all eligibility requirements have been met.

Program revenues include charges for services and grants and contributions made by parties outside the reporting government’s citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the government-wide financial statements, rather than as an other financing source. Amounts paid to reduce long term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure.

City of San Gabriel


June 30, 2019

43



Fund Financial Statements

The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, deferred inflows of resources, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Fund financial statements for the primary government’s governmental, proprietary, and fiduciary funds are presented after the government-wide financial statements. These statements display information about major funds individually and nonmajor funds in the aggregate for governmental funds. Fiduciary statements, even though excluded from the government-wide financial statements represent the private-purpose trust fund and agency fund. Fiduciary funds of the City primarily represent assets held by the City in a custodial capacity for other individuals or organizations.

Governmental Funds

In the fund financial statements, governmental funds are presented using the modified-accrual

basis of accounting. Their revenues are recognized when they become measurable and available. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The City uses an availability period of sixty days.

Sales taxes, property taxes, franchise taxes, gas taxes, motor vehicle in lieu, transient occupancy taxes, grants and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the availability period. Other revenue items are considered to be measurable and available where cash is received by the government.

Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed nonexchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government-mandated and voluntary nonexchange transactions are recognized as revenues when all applicable eligibility requirements have been met.

City of San Gabriel


June 30, 2019

44



Governmental Funds (Continued)

In the fund financial statements, governmental funds are presented using the current financial

resources measurement focus. This means that only current assets, current liabilities and deferred inflows of resources are generally included on their balance sheets. The reported fund balance is considered to be a measure of “available spendable resources”. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

Noncurrent portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus.

Due to the nature of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect current assets or liabilities, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.

Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing source rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures.

Proprietary Funds

The City’s internal service funds are proprietary funds. Because the principal users of the internal services are the City’s governmental activities, the financial statements of the internal service fund are consolidated into the governmental activities column when presented in the government-wide financial statements. To the extent possible, the cost of these services is reported in the appropriate functional activity (general government, public safety, community development, culture and recreation, or transportation). The City uses the internal service funds to account for risk management and automotive maintenance.

In the fund financial statements, proprietary funds are presented using the accrual basis of

accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the economic resources measurement focus. This means that all assets and liabilities (whether current or noncurrent) associated with their activity are included on their statement of net position. Their reported fund equity presents total net position.

City of San Gabriel


June 30, 2019

45



Proprietary Funds (Continued)

Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net position. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s internal service funds are charges to departments for sales and services. Operating expenses for internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

Amounts paid to acquire capital assets are capitalized as assets in the proprietary fund financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the proprietary fund financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the internal service funds are reported as a reduction of the related liability, rather than as an expenditure.

Fiduciary Funds

In the fund financial statements, fiduciary funds represent the private-purpose trust fund and agency fund.

The Private-Purpose Trust Fund accounts for the assets held by the City for the Successor Agency to the San Gabriel Redevelopment Agency in which principal and income benefit individuals, private organizations, or other governments. The private-purpose trust fund is reported using the economic resources measurement focus and the accrual basis of accounting.

The Agency Fund is custodial in nature and has no measurement focus but utilizes the accrual basis for reporting its assets and liabilities.

C. Major Governmental Funds, Internal Service Funds and Fiduciary Fund Types

The City reports the following major governmental funds:

The General Fund is the primary fund of the City and is used to account for all revenues and expenditures of the City not legally restricted as to use. A broad range of municipal activities are provided through this fund including City Manager, City Attorney, Finance, City Clerk, Community Development, Public Safety and Culture and Recreation.

City of San Gabriel


June 30, 2019

46


C. Major Governmental Funds, Internal Service Funds and Fiduciary Fund Types (Continued)

The Retirement Special Revenue Fund is used to account for the receipt of property taxes of a voter-approved tax levy and pay the City’s cost of retirement for employees.

The Development Impact Fees Special Revenue Fund is used to account for the collection of fees from developers. These funds are used for public facility improvements.

The Measure R Special Revenue Fund is used to account for the City’s share of the half-cent sales tax for Los Angeles County. These funds are used for traffic relief and transportation upgrades.

The Other Grants Special Revenue Fund is used to account for funds from the State and Federal grants for neighborhood improvement and rehabilitation purposes. The Sewer Assessment Special Revenue Fund is used to account for the sewer user fees used to

pay for the maintenance and capital improvements of the sewer infrastructure.

Additionally, the City reports the following fund types:


The Special Revenue Funds are used to account for the revenues derived from specific revenue sources, which are usually required by law or administrative regulation, to be accounted for in separate funds.

Internal Service Funds

The Internal Service Funds - These funds are used to finance and account for goods and services provided by one City department to other City departments. Goods and services provided include payments for the City’s workers’ compensation and general liability claims and operations of an automotive equipment maintenance facility.

Fiduciary Funds

The Private-Purpose Trust Fund is used to account for the assets, liabilities, and activities of the City of San Gabriel Successor Agency.

The Agency Fund is used to account for deposits collected by the City which will be refunded at some later date.

City of San Gabriel


June 30, 2019

47


D. New Accounting Pronouncements

Current Year Standards

GASB 83 - Certain Asset Retirement Obligations, effective for periods beginning after June 15, 2018, and did not impact the City. GASB 88 - Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, effective for periods beginning after June 15, 2018, and did not significantly impact the City.

Pending Accounting Standards

GASB has issued the following statements, which may impact the City’s financial reporting requirements in the future:

GASB 84 - Fiduciary Activities, effective for periods beginning after December 15, 2018.

GASB 87 - Leases, effective for periods beginning after December 15, 2019.

GASB 89 - Accounting for Interest Cost Incurred before the End of a Construction Period, effective for periods beginning after December 15, 2019.

GASB 90 - Majority Equity Interests – an amendment of GASB Statements No. 14 and No. 61, effective for periods beginning after December 15, 2018.

GASB 91 - Conduit Debt Obligations, effective for periods beginning after December 15, 2020.

E. Cash Equivalents

For purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Cash equivalents also represent the proprietary funds’ share in the cash and investment pool of the City of San Gabriel. Cash equivalents have an original maturity date of three months or less from the date of purchase. For purposes of the statement of cash flows, the entire balance of cash and investments on the combining statement of net position for the internal service funds is considered cash and cash equivalents.

City of San Gabriel


June 30, 2019

48

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Investments

The City reports certain investments at fair value in the accompanying financial statements and recognizes the corresponding change in the fair value of investments in the year in which the change occurred as investment income. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments that are not traded on a market, such as investments in external pools, are valued based on the stated fair value represented by the external pool. The City pools cash and investments of all funds. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled investments is allocated to the various funds based on each fund’s average cash and investment balances.

G. Prepaid Costs

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid costs in both government-wide and fund financial statements. Prepaid costs are recorded under the consumption method.

H. Receivables and Payables Activity between funds, that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year, is referred to as either “due to/from other funds” (short-term) or “advances to/from other funds” (long-term). Advances between funds, as reported in the fund financial statements are reported as restricted in the special revenue funds and in the general fund, are offset by nonspendable fund balance for noncurrent assets to indicate that they do not constitute resources available for appropriation, and deferred inflows of resources for the portion attributable to interest receivable.

I. Capital Assets

Capital assets are recorded at cost where historical records are available and at an estimated historical cost where no historical records exist. Contributed capital assets are valued at their acquisition value at the date of the contribution. Generally, capital asset purchases in excess of $5,000 are capitalized if they have an expected useful life of three years or more.

Capital assets include additions to public domain (infrastructure) fixed assets consisting of certain improvements including roads, streets, sidewalks, medians, and storm drains. Infrastructure acquired prior to fiscal years ended June 30, 1980 is reported.

City of San Gabriel


June 30, 2019

49


I. Capital Assets (Continued)

Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method in the government-wide financial statements and in the fund financial statements of the internal service funds. Depreciation is charged as an expense against operations and accumulated depreciation is reported on the respective balance sheet. The ranges of lives used for depreciation purposes for each capital asset class are as follows:

Buildings and improvements 20 - 50 years Machinery and equipment 5 - 20 years Infrastructure 15 - 50 years

J. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of

resources, represents a consumption of net position that applies to future periods and will not be recognized as an outflow of resources (expense/expenditure) until that time. The City has the following items that qualify for reporting in this category:

Deferred outflows related to pensions and OPEB equal to employer contributions made after the measurement date of the net pension liability and net OPEB liability, respectively.

Deferred outflows related to pensions for differences between expected and actual experiences. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans.

Deferred outflows related to pension plans for the changes in employer’s proportion and differences between the employer’s contributions and the employer’s proportionate share of contributions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans.

Deferred outflows related to pensions resulting from the difference in projected and actual earnings on investments of the pension plans fiduciary net position. These amounts are amortized over five years.

Deferred outflows related to pensions and OPEB resulting from changes in assumptions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions and OPEB through the respective plans.

City of San Gabriel


June 30, 2019

50


J. Deferred Outflows/Inflows of Resources (Continued)

In addition to liabilities, the statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The City has the following items that qualify for reporting in this category:

Deferred inflows related to pensions resulting from the differences between expected and actual experiences. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans.

Deferred inflows related to pension plans for the changes in employer’s proportion and differences between the employer’s contributions and the employer’s proportionate share of contributions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans.

Deferred inflows related to pensions resulting from changes in assumptions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plans.

Deferred inflow related to OPEB resulting from the difference in projected and actual earnings on investments of the OPEB plan’s fiduciary net position. These amounts are amortized over five years.

K. Compensated Absences

Permanent City employees earn from 10 to 20 vacation days, 12 holidays and 12 sick leave days a year. In addition, if an employee works overtime, they may receive compensatory time pursuant to the Fair Labor Standards Act. Upon termination, employees are paid for all unused vacation hours, holiday and compensatory time earned. Upon a service retirement, employees are paid one-third of accumulated sick leave and all of their accumulated vacation, holiday and compensatory time earned. The remaining unused accumulated sick leave is used to increase service credit pursuant to the California Public Employees Retirement System.

A liability is recorded for unused vacation, holiday and compensatory leave balances since the employees’ entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.

City of San Gabriel


June 30, 2019

51


K. Compensated Absences (Continued)

A liability is recorded for unused sick leave balances only to the extent that it is probable that the unused balances will result in termination payments. This liability is estimated by using 33% of the unused balances of employees age 51 and above and 10% of the unused balances of employees aged 45-50. Employees under age 45 are not estimated to receive termination payments but are anticipated to receive the benefit of their unused sick leave through their service to the City.

L. Property Taxes

Under California law, property taxes are assessed and collected by the counties up to 1 % of assessed value, plus other increases approved by the voters. The property taxes go into a pool and are then allocated to the cities based on complex formulas. Accordingly, the City of San Gabriel accrues only those taxes that are received from the county within 60 days after year-end:

Lien Date: March 1 Levy Date: July 1 to June 30 Due Dates: November 1 - 1st installment March 1 - 2nd installment Collection Dates: December 10 - 1st installment April 10 - 2nd installment

M. Net Position

In the government-wide financial statements and the proprietary and fiduciary fund financial statements, net position is classified in the following categories:

Net investment in capital assets - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets.

Restricted net position - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments.

Unrestricted net position - This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position”.

Net Position Flow Assumptions

Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted - net position and unrestricted - net position in the government-wide and proprietary and fiduciary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied.

It is the City’s practice to consider restricted - net position to have been depleted before unrestricted - net position is applied.

City of San Gabriel


June 30, 2019

52


N. Fund Balances

In the Governmental Fund Financial Statements, fund balances are classified in the following categories:

Nonspendable - Items that cannot be spent because they are not in spendable form, such as prepaid items and inventories, items that are legally or contractually required to be maintained intact, such as principal of an endowment or revolving loan funds.

Restricted - Restricted fund balances encompass the portion of net fund resources subject to externally enforceable legal restrictions. This includes externally imposed restrictions by creditors, such as through debt covenants, grantors, contributors, laws or regulations of other governments, as well as restrictions imposed by law through constitutional provisions or enabling legislation.

Committed - Committed fund balance includes amounts that can be used only for specific purpose determined by the highest level of decision making. These committed amounts cannot be used for any other purpose unless the City removes or changes the specified use through the same type of formal action taken to establish the commitment. The City Council is considered the highest authority for the City and the adoption of a formal resolution prior to the end of the fiscal year is required to establish a fund balance commitment. This policy was adopted with City Council Resolution No. 11-18.

Assigned - Assigned fund balances encompass the amounts that can be used by the City for a specific purpose but are not restricted or committed. The City Council Resolution No. 11-18 designates the City Manager as the City Official to determine and define the amounts of those components of fund balance that are classified as “Assigned Fund Balance”.

Unassigned - This classification includes the residual balance for the government’s General Fund and includes all spendable amounts not contained in other classifications. The General Fund is the only fund that can have a positive unassigned fund balance. In other funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balances are available, the City’s policy is to apply restricted fund balance first.

When an expenditure is incurred for purposes for which committed, assigned and/or unassigned fund balance classifications could be used, and all those funds are available, the City will spend in the order of the committed, assigned and unassigned.

City of San Gabriel


June 30, 2019

53


O. Pensions

For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

P. Post-Employment Benefits Other Than Pensions (OPEB)

For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s OPEB Plan and additions to/deductions from the OPEB Plans’ fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the City’s OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Q. Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources 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 year. Actual results could differ from those estimates.

NOTE 2 - CASH AND INVESTMENTS

Cash and Investments

Cash and investments as of June 30, 2019 were classified in the accompanying financial statements as follows:

Government- Fiduciary

Wide Funds

Statement of Statement of

Net Position Net Position Total

Cash and investments 14,205,237$ 1,847,168$ 16,052,405$

Restricted cash and investments 6,651,667 - 6,651,667

Total cash and investments 20,856,904$ 1,847,168$ 22,704,072$

City of San Gabriel


June 30, 2019

54

NOTE 2 - CASH AND INVESTMENTS (CONTINUED)

Cash and investments at June 30, 2019 consisted of the following:

Cash on hand 5,950$

Deposits with financial institutions 11,643,720

Local Agency Investment Fund (LAIF) 11,054,402

Total cash and investments 22,704,072$

The restricted cash and investments balance of $6,651,667 is a portion of a certificate of deposit with Citizens Business Bank that matures on January 20, 2025. The certificate of deposit is pursuant to the requirement for collateral of the loan payable through the maturity date of the loan of January 21, 2025 (see Note 5). The City’s investment policy limits the maximum maturity of certificates of deposit to 5 years with the exception of this investment in the certificate of deposit with Citizens Business Bank which is 10 years. Investments Authorized by the California Government Code and the City’s Investment Policy

The table below identifies the investment types that are authorized for the City by the California Government Code and the City’s investment policy. The table also identities certain provisions of the California Government Code (or the City’s investment policy, if more restrictive) that address interest rate risk, and concentration of credit risk.

Authorized

by Investment

Policy

Maximum

Maturity*

Maximum

Percentage of

Portfolio*

Maximum

Investment in

One Issuer*Local Agency Bonds Yes 5 years None None

U.S. Treasury Obligations Yes 5 years None None

U.S. Government Sponsored

Agency Securities Yes 5 years 20% None

Banker’s Acceptances Yes 180 days 40% 30%

Commercial Paper Yes 270 days 25% 10%

Negotiable Certificates of Deposit Yes 5 years 30% None

Repurchase Agreements Yes 1 year None None

Reverse Repurchase Agreements Yes 92 days 20% of basic

value

None

Medium-Term Notes Yes 5 years 30% None

Mutual Funds Yes N/A 10% 10%

Money Market Mutual Funds Yes N/A 20% 10%

Mortgage Pass-Through Securities Yes 5 years 20% None

County Pooled Investment Funds Yes N/A None None

Local Agency Investment Fund (LAIF) Yes N/A None None

JPA Pools (other investment pools) Yes N/A None None

*Based on state law requirements or investment policy requirements, whichever is more restrictive.

N/A - Not Applicable

Investment Types

Authorized by State Law

City of San Gabriel


June 30, 2019

55


Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Due to the high liquidity of LAIF, its investment maturity is considered to be less than one year.

Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City’s investment in LAIF is not rated. Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2019, the City’s deposits were insured by the Federal Deposit Insurance Corporation or collateralized as required by California law. Investment in State Investment Pool - LAIF

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio. The balance available for withdrawal is based on the accounting records maintained by LAIF.

City of San Gabriel


June 30, 2019

56


Fair Value Measurements

The City categorizes its fair value measurement 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. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The City’s investment in LAIF is not subject to the fair value hierarchy.

NOTE 3 - INTERFUND TRANSACTIONS

Due To and Due From

The composition of interfund balances as of June 30, 2019 is as follows:

Due From Due To Amount

General Fund Development Impact Fees Special Revenue Fund 4,000,000$

Sewer Assessment Special Revenue Fund 5,000,000

Other Governmental Funds 523,370

Other Governmental Funds Other Governmental Funds 258,198

9,781,568$

The outstanding balances between Other Governmental Funds result mainly from interfund borrowings to cover temporary cash shortfalls. The outstanding balances between the General Fund and other funds result from interfund borrowings due to the General Fund’s liquidity problems (see note 13).

Interfund Transfers

The composition of interfund transfers for the year ended June 30, 2019 is as follows:

Transfers In Amount

General Fund Retirement Special Revenue Fund (a) 7,926,444$

Other Governmental Funds Retirement Special Revenue Fund (a) 67,571

General Fund (b) 642,404

8,636,419$

Transfers Out

Transfers are used to provide funding for (a) retirement costs and (b) operating costs of Mission Playhouse/Facility.

City of San Gabriel


June 30, 2019

57

NOTE 4 - CAPITAL ASSETS

Capital asset activity for governmental activities for the year ended June 30, 2019 was as follows:

Balance at Deletions/ Balance at

July 1, 2018 Additions Transfers June 30, 2019

Capital assets, not being depreciated:

Land 5,693,699$ -$ -$ 5,693,699$

Construction in progress 4,371,708 894,471 (1,027,936) 4,238,243

Total capital assets, not

being depreciated 10,065,407 894,471 (1,027,936) 9,931,942

Capital assets, being depreciated:

Buildings and improvements 28,134,873 303,583 - 28,438,456

Machinery and equipment 13,665,494 293,781 (360,299) 13,598,976

Infrastructure 85,949,100 76,219,531 - 162,168,631

Total capital assets,

being depreciated 127,749,467 76,816,895 (360,299) 204,206,063

Less accumulated depreciation for:

Buildings and improvements (6,553,607) (802,970) - (7,356,577)

Machinery and equipment (8,443,125) (739,622) 352,490 (8,830,257)

Infrastructure (61,092,520) (2,233,014) - (63,325,534)

Total accumulated depreciation (76,089,252) (3,775,606) 352,490 (79,512,368)


being depreciated, net 51,660,215 73,041,289 (7,809) 124,693,695

Total capital assets, net 61,725,622$ 73,935,760$ (1,035,745)$ 134,625,637$

During the fiscal year ended June 30, 2019, the City received contributed infrastructure assets from the San Gabriel Valley Council of Government, a joint power authority, with acquisition value of $70,315,000. Depreciation expense was charged to the following functions in the Statement of Activities:

General government 142,285$

Public safety 344,826

Community development 1,400,033


Public works 1,351,387

Total 3,775,606$

City of San Gabriel


June 30, 2019

58

NOTE 5 - LONG-TERM LIABILITIES

Changes in long-term liabilities during the year ended June 30, 2019 were as follows:

Due in

Balance Balance Due Within More Than

July 1, 2018 Additions Deletions June 30, 2019 One Year One Year

Direct borrowing:

Loan payable 6,911,667$ -$ (260,000)$ 6,651,667$ 260,000$ 6,391,667$

Installment sale agreement 3,362,538 - (230,280) 3,132,258 238,340 2,893,918

Compensated absences 2,719,281 484,535 (549,382) 2,654,434 782,626 1,871,808

Claims payable (Note 10) 1,820,469 2,591,169 (2,923,566) 1,488,072 531,596 956,476

Total long-term liabilities 14,813,955$ 3,075,704$ (3,963,228)$ 13,926,431$ 1,812,562$ 12,113,869$

Loan Payable

On December 16, 2014, the City entered into a loan agreement with Citizens Business Bank for a loan of $7,800,000. The loan proceeds were used for the construction of the new public works maintenance facility. Interest on the loan is computed on a 365/360 basis at an annual fixed interest rate of 1.6%. The City will repay the loan, beginning on February 21, 2015, in 119 principal payments of $21,667 each and one final principal and interest payment of $5,221,667 on January 21, 2025. In addition, the City will pay regular monthly payments of accrued unpaid interest due as of each payment date. The loan is collateralized with a ten-year certificate of deposit held with the lender in the amount of $6,651,667 that is shown as restricted cash and investments in the financial statements.

The City has an option to extend the term of the loan for two additional 10 year periods. If the first option is utilized, the interest rate would increase by 1.0% to an annual rate of 2.6% and the loan would mature on January 21, 2035. If the second option is utilized, the rate would increase by 1.0% over the extended term rate to an annual rate of 3.6% and the loan would mature on January 21, 2045. Upon utilizing either option, the City would be required to collateralize the loan with a new ten-year certificate of deposit held with the lender in the amount of the balance of the loan. The annual requirements to amortize the loan payable outstanding at June 30, 2019 are as follows:

FiscalYear Ending Principal Interest Total

2020 260,000$ 104,520$ 364,520$ 2021 260,000 100,360 360,360 2022 260,000 96,200 356,200 2023 260,000 92,040 352,040 2024 260,000 87,880 347,880 2025 5,351,667 49,574 5,401,241

Totals 6,651,667$ 530,574$ 7,182,241$

City of San Gabriel


June 30, 2019

59

NOTE 5 - LONG-TERM LIABILITIES (CONTINUED)

Installment Sale Agreement

On May 1, 2015, the City entered into an installment sale agreement with the California Infrastructure and Economic Development Bank (IBank) to finance the accelerated great streets program, which will upgrade, reconstruct, and rehabilitate approximately 1.6 lane miles of public streets within the City. IBank has issued tax-exempt bonds for which the City will submit reimbursement requests upon incurring project costs. The City can utilize proceeds in an amount up to $3,800,000. Interest accrues on the entire principal balance, whether or not disbursed, at an interest rate of 3.5% per annum. Principal and interest payments are due on each August 1 and February 1, commencing on August 1, 2017 and maturing on August 1, 2029. In addition, on August 1 of each year, the City must pay an annual fee of 0.3% on the outstanding principal component of the remaining principal balance.

In order to carry out its obligation, the City shall maintain a distinct fund separate and apart from other funds. All Measure R revenues received shall be deposited in trust in this separate fund and shall be applied in the following order until the loan has matured: (1) establish a reserve account in the amount equal to $343,798, (2) payment of annual debt service 0.3% fee, (3) payment for any lawful purpose allowed by Measure R. The Measure R activity is recorded in the Measure R Special Revenue Fund. During the fiscal year ended June 30, 2019, the Measure R intergovernmental revenues recognized in the governmental fund financial statements totaled $522,936 and principal and interest payments totaling $343,939 were made. During fiscal year 2018-19, $3,588,592 of loan proceeds were disbursed, leaving $211,408 of loan proceeds to be disbursed, which is recorded as accounts receivable in the Measure R Special Revenue Fund. The liability and outstanding balance at June 30, 2019, is $3,132,258 and the annual payment requirements are as follows:

FiscalYear Ending Principal Interest Total

2020 238,340$ 105,458$ 343,798$ 2021 246,682 96,970 343,652 2022 255,315 88,185 343,500 2023 264,252 79,093 343,345 2024 273,500 69,682 343,182

2025 - 2029 1,517,968 195,311 1,713,279 2030 336,201 5,884 342,085

Totals 3,132,258$ 640,583$ 3,772,841$

Compensated Absences

The City’s policies relating to compensated absences are described in Note 1K. This liability, amounting to $2,654,434 at June 30, 2019, is expected to be paid in future years from future resources and is typically liquidated from the General Fund.

City of San Gabriel


June 30, 2019

60

NOTE 6 - EXPENDITURES IN EXCESS OF APPROPRIATIONS

Expenditures for the year ended June 30, 2019 exceeded the appropriations of the following departments/funds:

Final Variance withBudget Actual Final Budget

Major Funds:General Fund:

Human resources 784,990$ 1,002,952$ (217,962)$ Community services 1,612,074 1,613,753 (1,679)

Other Governmental Funds:Citizens Option for Public Safety

Special Revenue Fund:Public safety 125,375 151,635 (26,260)

NOTE 7 - FUND DEFICITS

At June 30, 2019, the following funds had a deficit balance:

Major Funds:General Fund (1,834,850)$

Other Governmental Special Revenue Funds:Citizens Option for Public Safety (24,464) Mission Playhouse/Facility (223,843)

Internal Service Fund - Risk Management (142,471) The deficits in the other governmental special revenue funds and internal service fund are expected to be remedied with future revenues or transfers. See note 13 for disclosure regarding the deficit in the General Fund.

City of San Gabriel


June 30, 2019

61

NOTE 8 - DEFINED BENEFIT PENSION PLANS (CalPERS)

A. General Information about the Pension Plans

Plan Descriptions

All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) Employee Pension Plans, cost-sharing multiple employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided

CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least 5 years of services. California Public Employees’ Pension Reform Act of 2013, PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least 5 years of service. All members are eligible for non-duty disability benefits after 5 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. Safety members can receive a special death benefit if the member dies while actively employed and the death is job-related. Fire members may receive the alternate death benefit in lieu of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

City of San Gabriel


June 30, 2019

62

NOTE 8 - DEFINED BENEFIT PENSION PLANS (CalPERS) (CONTINUED)

A. General Information about the Pension Plans (Continued)

Benefits Provided (Continued)

The Plans’ provisions and benefits in effect at measurement date ended June 30, 2018, and fiscal year ended June 30, 2019, are summarized as follows:

Tier I Tier II Tier III - PEPRA

Prior to On or After On or After

Hire date November 3, 2012 November 3, 2012 January 1, 2013

Benefit formula 2.7%@55 2%@60 2%@62

Benefit vesting schedule 5 years of service 5 years of service 5 years of service

Benefit payments monthly for life monthly for life monthly for life

Retirement age 50 - 55 50 - 63 52 - 67

Monthly benefits, as a % of eligible

compensation 2.0% to 2.7% 1.092% to 2.418% 1.0% to 2.5%

Required employee contribution rates 8% 7% 6.5%

Required employer contribution rates:

Measurement date June 30, 2018:

Normal cost rate 12.470% 7.850% 6.908%

Payment of unfunded liability $1,136,314 $165 $334

Fiscal year end date June 30, 2019:

Normal cost rate 13.084% 8.346% 7.266%

Payment of unfunded liability $1,313,253 $1,111 $645

Miscellaneous




Benefit formula 3%@50 2%@50 2.7%@57



Retirement age 50 - 55 50 - 55 50 - 57






Normal cost rate 21.418% 16.498% 12.729%

Payment of unfunded liability $2,766,577 * $0 $315


Normal cost rate 22.346% 17.334% 12.965%


*

Safety - Police

The payment of the unfunded liability of $2,766,577 and $3,255,835 consists of the total for both the police and

fire defined benefit pension plans.

City of San Gabriel


June 30, 2019

63


A. General Information about the Pension Plans (Continued)

Benefits Provided (Continued)

The Plans’ provisions and benefits in effect at measurement date ended June 30, 2018, and fiscal year ended June 30, 2019, are summarized as follows (Continued):




Benefit formula 3%@50 2%@50 2.7%@57



Retirement age 50 - 55 50 - 55 50 - 57






Normal cost rate 21.418% 16.498% 12.729%



Normal cost rate 21.418% 17.334% 12.965%

Payment of unfunded liability $3,255,835 * $1,370 $278

*

Safety - Fire

The payment of the unfunded liability of $2,766,577 and $3,255,835 consists of the total for both the police and

fire defined benefit pension plans.

Contributions

Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. City contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. Pension liability is primarily liquidated from the general fund.

City of San Gabriel


June 30, 2019

64


B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to

Pensions

As of June 30, 2019, the City reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows:

Proportionate

Share of

Net Pension

Liability

Miscellaneous 17,824,500$

Safety 49,460,962

Total Net Pension Liability 67,285,462$

The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2018, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2017 rolled forward to June 30, 2018 using standard update procedures. The City’s proportionate share of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for each Plan as of the measurement dates ended June 30, 2017 and 2018 was as follows:

Miscellaneous Safety

Proportion - June 30, 2017 0.46576% 0.82510%

Proportion - June 30, 2018 0.47296% 0.84296%

Change - Increase (Decrease) 0.00720% 0.01786%

City of San Gabriel


June 30, 2019

65



Pensions (Continued) For the year ended June 30, 2019, the City recognized pension expense of $2,834,459 for the miscellaneous plan and $7,744,689 for the safety plan. At June 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred

Outflows Inflows

of Resources of Resources

Pension contributions subsequent to measurement date 2,003,491$ -$

Differences between expected and actual experience 683,895 (232,725)

Change in assumptions 2,032,046 (498,015)

Change in employer's proportion and differences

between the employer's contributions and the

employer's proportionate share of contributions 300,967 (588,741)

Net differences between projected and actual

earnings on plan investments 88,121 -

Total 5,108,520$ (1,319,481)$

Miscellaneous

Deferred Deferred

Outflows Inflows

of Resources of Resources

Pension contributions subsequent to measurement date 4,883,007$ -$

Differences between expected and actual experience 1,062,749 (4,031)

Change in assumptions 4,852,983 (654,754)

Change in employer's proportion and differences

between the employer's contributions and the

employer's proportionate share of contributions 86,668 (769,374)

Net differences between projected and actual

earnings on plan investments 334,875 -

Total 11,220,282$ (1,428,159)$

Safety

City of San Gabriel


June 30, 2019

66



Pensions (Continued) $2,003,491 and $4,883,007 reported as deferred outflows of resources related to contributions subsequent to the measurement date for the miscellaneous and safety plan, respectively, will be recognized as a reduction of the net pension liability in the year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year

Ending

June 30, Amount

2020 1,734,840$

2021 910,886

2022 (699,858)

2023 (160,320)

2024 -

Thereafter -

Year

Ending

June 30, Amount

2020 4,323,427$

2021 2,411,521

2022 (1,483,239)

2023 (342,593)

2024 -

Thereafter -

Miscellaneous

Safety

Actuarial Assumptions

The total pension liability for the June 30, 2018 measurement period was determined by an actuarial valuation as of June 30, 2017, with update procedures used to roll forward the total pension liability to June 30, 2018.

City of San Gabriel


June 30, 2019

67



Pensions (Continued) Actuarial Assumptions (Continued)

The total pension liability was based on the following actuarial methods and assumptions:


Valuation Date June 30, 2017 June 30, 2017

Measurement Date June 30, 2018 June 30, 2018

Actuarial Cost Method Entry-Age Normal Entry-Age Normal

Cost Method Cost Method

Actuarial Assumptions:

Discount Rate 7.15% 7.15%

Inflation 2.50% 2.50%

Salary Increases (1) (1)

Mortality Rate Table (2) (2)

Post Retirement Benefit Increase (3) (3)

(1) Varies by entry age and service

(2)

(3) Contract COLA up to 2.00% until Purchasing Power Protection Allowance Floor on

Purchasing Power applies, 2.50% thereafter.

The mortality table used was developed based on CalPERS-specific data. The table includes

15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016.

For more details on this table, please refer to the December 2017 experience study report

(based on CalPERS demographic data from 1997 to 2015) that can be found on the

CalPERS website.

Long-term Expected Rate of Return

The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

City of San Gabriel


June 30, 2019

68



Pensions (Continued)

Long-term Expected Rate of Return (Continued)

The expected real rates of return by asset class are as follows:

Assumed Real Return Real Return

Asset Years Years

Allocation 1 - 10 (b) 11+ (c)

Global Equity 50.00% 4.80% 5.98%

Fixed Income 28.00% 1.00% 2.62%

Inflation Assets 0.00% 0.77% 1.81%

Private Equity 8.00% 6.30% 7.23%

Real Assets 13.00% 3.75% 4.93%

Liquidity 1.00% 0.00% -0.92%

Total 100.00%

(a)

(b) An expected inflation of 2.0% used for this period

(c) An expected inflation of 2.92% used for this period

Asset Class (a)

In the CalPERS CAFR, Fixed Income is included in Global Debt Securities; Liquidity is

included in Short-term Investments; Inflation Assets are included in both Global Equity

Securities and Global Debt Securities

Discount Rate

The discount rate used to measure the total pension liability was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

City of San Gabriel


June 30, 2019

69



Pensions (Continued) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount

Rate

The following presents the City’s proportionate share of the net pension liability for each Plan, calculated using the discount rate for each Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:


1% Decrease 6.15% 6.15%

Net Pension Liability 26,163,192$ 70,964,305$

Current Discount Rate 7.15% 7.15%


1% Increase 8.15% 8.15%


Pension Plans Fiduciary Net Position

Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

C. Payable to the Pension Plans

At June 30, 2019, the City had no outstanding amount of contributions to the pension plan required for the year ended June 30, 2019.

City of San Gabriel


June 30, 2019

70

NOTE 9 - OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN

A. Plan Description The City contracts with the California Public Employees’ Retirement System to provide post-retirement health benefits. As an agent multi-employer postemployment benefit plan, the City pays $150 per month towards health insurance premiums for employees who retired before July 1, 2003. The amount the City pays for employees who retire after July 1, 2003 with at least 5 years of employment with the City of San Gabriel is varied based on years of service. The exact amount is calculated based on CalPERS vesting schedule. California Government Code 22871 sets the state health coverage contributions for retired employees (annuitants). The amount is equal to 100 percent of the weighted average of the premiums in the four basic health plans with the largest state enrollment for the previous benefit year. The schedule is adjusted annually based on the 100%/90%, employee/dependent, formula as provided in Section 22825.1 of the Public Employees’ Medical and Hospital Act. For the fiscal year ended June 30, 2019, the schedule is as follows:

Years of

CalPERS % of Employer

Service 1 Party 2 Party 3+ Party Contribution

Less than 10 -$ -$ -$ 0%

10 367.00 699.00 894.00 50%

11 403.70 768.90 983.40 55%

12 440.40 838.80 1,072.80 60%

13 477.10 908.70 1,162.20 65%

14 513.80 978.60 1,251.60 70%

15 550.50 1,048.50 1,341.00 75%

16 587.20 1,118.40 1,430.40 80%

17 623.90 1,188.30 1,519.80 85%

18 660.60 1,258.20 1,609.20 90%

19 697.30 1,328.10 1,698.60 95%

20 or more 734.00 1,398.00 1,788.00 100%

Employees Covered

As of measurement date June 30, 2018, the following current and former employees were covered by the benefit terms under the plan:

Inactive employees, spouses, or beneficiaries currently

receiving benefit payments 115

Active employees 180

Total Plan Participants 295

City of San Gabriel


June 30, 2019

71

NOTE 9 - OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED)

A. Plan Description (Continued)

Contributions

The contribution requirements of plan members and the City are established and may be amended by the City Council. Currently, contributions are not required from plan members. Administrative costs of the OPEB plan are financed through investment earnings. The annual contribution is based on the actuarially determined contributions. For the measurement period ended June 30, 2018, the City contributed $112,900 to the California Retiree Benefit Trust (CERBT), paid $1,111,215 for current premiums, and the estimated implied subsidy was $188,404, resulting in total contributions of $1,412,519. The contributions to the OPEB plan are generally made from the risk management internal service fund. The liability for governmental activities is primarily liquidated from the risk management internal service fund.

For the fiscal year ended June 30, 2019, the City did not make a contribution to the CERBT, paid $1,233,512 for current premiums and the estimated implied subsidy was $196,039, resulting in total contributions of $1,429,551. The contributions for the fiscal year ended June 30, 2019 were made from the general fund.

B. Total OPEB Liability

The City’s total OPEB liability for the June 30, 2018 measurement period was determined by an actuarial valuation as of June 30, 2017, with update procedures used to roll forward the total OPEB liability to June 30, 2018.

Actuarial Assumptions

The total OPEB liability in the June 30, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Valuation Date June 30, 2017

Measurement Date June 30, 2018

Actuarial Cost Method Entry-age normal level percentage of salary

Actuarial Assumptions:

Discount Rate 3.78%

Long-Term Expected

Rate of Return on Investments 7.00%

Inflation 2.75%

Salary Increase 3.00% in aggregate

Healthcare Cost Trend Rates 6.00% HMO/6.50% PPO in 2019 trending

down to 5.00% in 2021+ for HMO and 2022+

for PPO

Mortality Derived from CalPERS pension plan updated

to reflect most recent experience study

City of San Gabriel


June 30, 2019

72


B. Total OPEB Liability (Continued) The actuarial assumptions used in the June 30, 2017 valuation were based on a standard set of assumptions the actuary has used for similar valuations, modified as appropriate for the City. The long-term expected rate of return was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the OPEB plan’s target asset allocation as of measurement date June 30, 2018 are summarized in the following table:

Long-TermTarget Expected Real

Allocation Rate of ReturnCERBT

Global Equity 57.00% 5.50%Global Debt Securities 27.00% 2.35%Inflation Assets 5.00% 1.50%Commodities 3.00% 1.75%REITs 8.00% 3.65%Total 100.00%

Asset Class

Discount Rate

The discount rate used to measure the total OPEB liability was 3.78%. The City does not currently have a pre-funding policy or practice for additional prefunding but does not reimburse for its current retiree payments from the CERBT. The projection of cash flows used to determine the discount rate assumed that no future contributions are made to the CERBT. The discount rate is a blended rate between the long-term expected rate of return at 7.00% and 3.50%, which is the average of three 20-year municipal bond rate indices as of measurement date June 30, 2018: S&P Municipal Bond 20 Year High Grade Rate Index, Bond Buyer 20-Bond GO Index, and Fidelity GO AA 20 Year Bond Index. The long-term expected rate of return on CERBT investments was applied from years 2018 through 2031 and the average municipal bond rate was applied from years 2032 and after to determine the total OPEB liability.

City of San Gabriel


June 30, 2019

73


C. Changes in the Net OPEB Liability

The changes in the net OPEB liability are as follows:

Total Plan Net

OPEB Fiduciary OPEB

Liability Net Position Liability

Balance at June 30, 2017

(Measurement Date) 29,306,985$ 5,093,478$ 24,213,507$

Changes in the Year:

Service cost 955,322 - 955,322

Interest on the total OPEB liability 2,072,875 - 2,072,875

Changes in assumptions 19,026,463 - 19,026,463

Contribution - employer - 1,412,519 (1,412,519)

Net investment income - 405,826 (405,826)

Benefit payments (1,299,620) (1,299,620) -

Administrative expenses - (2,710) 2,710

Other expense - (6,740) 6,740

Net Changes 20,755,040 509,275 20,245,765

Balance at June 30, 2018

(Measurement Date) 50,062,025$ 5,602,753$ 44,459,272$

Increase (Decrease)

Change of Assumptions

The discount rate was lowered from 7.00% as of June 30, 2017 to 3.78% as of June 30, 2018. Change of Benefit Terms

There were no changes of benefit terms.

Subsequent Events

There were no subsequent events that would materially affect the results presented in this disclosure.

City of San Gabriel


June 30, 2019

74


C. Changes in the Net OPEB Liability

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate

The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (2.78%) or 1-percentage point higher (4.78%) than the current discount rate:

1% Decrease Discount Rate 1% Increase(2.78%) (3.78%) (4.78%)

Net OPEB Liability 53,994,999$ 44,459,272$ 37,000,068$

Sensitivity of the Net OPEB Liability to Changes in Healthcare Cost Trend Rates

The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage point lower (5.0%/5.5% decreasing to 5.0%) or 1-percentage point higher (7.0%/7.5% decreasing to 6.0%) than the current healthcare cost trend rates:

Current Healthcare 1% Decrease Cost Trend Rates 1% Increase(5.0%/5.5% (6.0%/6.5% (7.0%/7.5%

decreasing to 4.0%) decreasing to 5.0%) decreasing to 6.0%)Net OPEB Liability 35,940,523$ 44,459,272$ 55,588,733$

D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB

For the year ended June 30, 2019, the City recognized OPEB expense of $7,404,073. At June 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred DeferredOutflows Inflows

of Resources of ResourcesOPEB contributions subsequent to measurement date 1,429,551$ -$ Change in assumptions 14,269,847 -

Differences between projected and actual earnings - (99,213)

Total 15,699,398$ (99,213)$

City of San Gabriel


June 30, 2019

75


D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)

$1,429,551 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

YearEnding

June 30, Amount2020 4,726,590$ 2021 4,726,590 2022 4,726,588 2023 (9,134) 2024 -

Thereafter -

E. Payable to the OPEB Plan

At June 30, 2019, the City had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2019.

NOTE 10 - RISK MANAGEMENT

Description of Self-Insurance Pool Pursuant to Joint Powers Agreement

The City of San Gabriel is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 116 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The Authority began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee.

Primary Self-Insurance Programs of the Authority

Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. The total funding requirement for primary self-insurance programs is based on an actuarial analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risk-sharing pool.

City of San Gabriel


June 30, 2019

76

NOTE 10 - RISK MANAGEMENT (CONTINUED)

Primary Self-Insurance Programs of the Authority (Continued)

Primary Liability Program

Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers. The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Subsidence losses have a sub-limit of $40 million per occurrence. The coverage structure includes retained risk that is pooled among members, reinsurance, and excess insurance. More detailed information about the various layers of coverage is available on the following website: https://cjpia.org/protection/coverage-programs. Primary Workers’ Compensation Program

Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs in excess from $100,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers.

For 2018-19 the Authority’s pooled retention is $2 million per occurrence, with reinsurance to statutory limits under California Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer’s Liability losses from $5 million to $10 million are pooled among members.

Crime Insurance

The City of San Gabriel purchases crime insurance coverage in the amount of "Non Participant" with a "Non Participant" deductible. The fidelity coverage is provided through the Authority.

City of San Gabriel


June 30, 2019

77

NOTE 10 - RISK MANAGEMENT (CONTINUED)

Purchased Insurance

Pollution Legal Liability Insurance

The City of San Gabriel participates in the pollution legal liability insurance program which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of San Gabriel. Coverage is on a claims-made basis. There is a $50,000 deductible. The Authority has an aggregate limit of $50 million for the 3-year period from July 1, 2017 through July 1, 2020. Each member of the Authority has a $10 million sub-limit during the 3-year term of the policy.

Property Insurance

The City of San Gabriel participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. The City of San Gabriel’s property is currently insured according to a schedule of covered property submitted by the City of San Gabriel to the Authority. The City of San Gabriel’s property currently has all-risk property insurance protection in the amount of $35,189,205. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance, which has $2,500 deductible.

Adequacy of Protection

During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2018-19.

Reconciliation of Changes in Aggregate Liabilities Reconciliation of the changes in the City’s aggregate liabilities for the years ended June 30, 2019 and 2018 is as follows:

Liability Claims and Liability

Beginning Changes in Claims End

of Year Estimates Payments of Year

2019:

Liability claims 154,827$ 1,415,847$ (1,232,469)$ 338,205$

Workers' compensation 1,665,642 1,175,322 (1,691,097) 1,149,867

1,820,469$ 2,591,169$ (2,923,566)$ 1,488,072$

2018:

Liability claims 165,029$ 338,114$ (348,316)$ 154,827$

Workers' compensation 1,485,321 1,984,104 (1,803,783) 1,665,642

1,650,350$ 2,322,218$ (2,152,099)$ 1,820,469$

As of June 30, 2019, the total claims liability of $1,488,072 includes $841,908 of claims from when the City was self-insured and was not a part of the California Joint Powers Insurance Authority.

City of San Gabriel


June 30, 2019

78

NOTE 11 - CONSTRUCTION COMMITMENTS

The following material construction commitments existed at June 30, 2019:

Expenditures

as of Remaining

June 30, 2019 Commitments

Project Name:

Great Streets Program 2,164,494$ 2,677,094$

Dewey/Brighton Sewer Upgrade - 1,405,015

Del Mar Sewer Upgrade 43,180 1,197,532

Del Mar/Alhambra Wash Bridge Replacement 412,601 1,143,376

Broadway/Walnut Grove Intersection Imp. 13,255 938,746

San Gabriel Bl Sewer Imp - Wells/Angeleno 24,578 622,480

Police Facility 52,387 542,568

Intersection Safety Improvement (HSIP) 41,890 527,910

Sewer Master Plan Update - 500,000

Storm Drain Catch Basin Inserts 7,972 481,673

Citywide Bridge Repair 39,000 451,925

Las Tunas Sewer Rehabilitation - 377,877

San Gabriel Bl Sewer Imp - Dewey/Wells 12,140 333,218

San Gabriel Bl - Roses Rd Crosswalk (HSIP) 17,277 252,923

Vincent Lugo Park Renovation Phase II 14,594 243,188

Station 52 Upgrade 278,177 236,958

Traffic Signal - SG Blvd at Commercial 5,184 229,816

Las Tunas Rehab SG Muscatel - 125,521

Sewer Lift Station SCADA System - 85,000

School and Ped. Safety Facilities 22,474 84,298

Vincent Lugo Park Equipment - 61,006

Smith Park Facility - 59,372

Traffic Signal Upgrade Program 548 59,176

Citywide Series Street Light Retrofit - 49,008

City Hall Refurbishment & Remodeling 27,230 13,275

Sewer Manhole Rehabilitation Program - 12,280

Various smaller projects 350,769 898,373

Total 3,527,749$ 13,609,608$

City of San Gabriel


June 30, 2019

79

NOTE 12 - CLASSIFICATION OF NET POSITION AND FUND BALANCES

Fund Balances

Fund balances are presented in the following categories: nonspendable, restricted, committed, assigned and unassigned (see Note 1N for a description of these categories). A detailed schedule of fund balances at June 30, 2019, is as follows:

Development OtherGeneral Impact Other Sewer Governmental

Fund Retirement Fees Measure R Grants Assessment Funds TotalRestricted:

Debt service 6,651,667$ -$ -$ -$ -$ -$ -$ 6,651,667$ Community services - - 721,953 - - - 146,977 868,930 Public safety - - 639,773 - - - 400,632 1,040,405 Future retirement benefits

payments - 1,636,461 - - - - - 1,636,461 Sewer service and capital

improvements - - 1,954,325 - - 5,557,294 - 7,511,619 Street improvements - - 1,892,179 1,402,312 - - 5,388,265 8,682,756 Waste management

programs - - - - - - 1,519,562 1,519,562 Neighborhood improvement

and rehabilitation - - - - 680,510 - - 680,510 Total Restricted 6,651,667 1,636,461 5,208,230 1,402,312 680,510 5,557,294 7,455,436 28,591,910

Committed to:Automation & engineering

consultant services 20,856 - - - - - - 20,856 Total Committed 20,856 - - - - - - 20,856

Unassigned (8,507,373) - - - - - (248,307) (8,755,680)

Total Fund Balances (1,834,850)$ 1,636,461$ 5,208,230$ 1,402,312$ 680,510$ 5,557,294$ 7,207,129$ 19,857,086$


City of San Gabriel


June 30, 2019

80

NOTE 12 - CLASSIFICATION OF NET POSITION AND FUND BALANCES (CONTINUED)

Net Position

Net position is presented in the following categories: net investment in capital assets, restricted, and unrestricted (see Note 1M for a description of these categories). A detailed schedule of net position at June 30, 2019, is as follows:

Governmental

Activities

Net investment in capital assets:


net of accumulated depreciation 134,625,637$

Less: total capital related debt (9,783,925)

Plus: loan proceeds receivable 211,408

Net investment in capital assets 125,053,120

Restricted for:

Debt service 6,651,667


Public safety 1,040,405

Retirement benefits 1,636,461

Sewer service 7,511,619

Street improvements 8,471,348

Waste management programs 1,519,562

Neighborhood improvement and rehabilitation 680,510

Total restricted net position 28,380,502

Unrestricted (93,411,558)

Total Net Position 60,022,064$

City of San Gabriel


June 30, 2019

81

NOTE 13 - UNCERTAINTIES

The General Fund is the focal point in analyzing the financial health of the City as the General Fund is expected to act as a financial backstop for other funds in the event of an insufficiency in those funds. For fiscal year 2015-16, 2016-17 and 2017-18, the General Fund’s expenditures have exceeded revenues by $6,647,156, $2,627,559 and $4,783,046, respectively, resulting in a deficit fund balance of $2,591,569 as of June 30, 2018. During fiscal year 2018-19, the General Fund had a positive change in fund balance $756,719 that decreased the fund deficit to $1,834,850 as of June 30, 2019. The General Fund has liquidity problems and needed to borrow cash from other funds in fiscal year 2016-17, 2017-18, and 2018-19 totaling $6,289,979, $10,749,859, and $9,523,370, respectively. The General Fund did not have the ability to provide any resources to other funds in fiscal year 2018-19. In response to the City’s financial condition, during fiscal year 2018-19, the City eliminated or delayed capital improvement projects funded by the General Fund, transferred capital improvement related expenditures from the General Fund to other funds when the expenditures were an allowable use of those other funds, and eliminated General Fund’s contributions for future equipment replacement. The City also adopted modifications to the Municipal Code for purchasing and business license provisions, revised and updated the Citywide Fee Schedule, and adopted an Interfund Borrowing Policy. In addition, the City has approved a series of policies to improve budgeting and financial reporting including the adoption of a Fiscal Sustainability Policy and a revised Fund Balance Policy that establishes a tiered approach to growing the General Fund’s reserves to 17% by June 20, 2028. Beginning in fiscal year 2019-20, the budget for revenues was estimated more conservatively, but realistically, and for expenditures was based on actual known costs and historical data. The fiscal year 2019-20 operating budget was adopted with revenues slightly in excess of expenditure appropriations. The City expects the General Fund’s revenues to grow as a third major hotel is scheduled to open in fiscal year 2020-21, which will increase transient occupancy taxes revenue, and the City’s assessed property valuation reflects an increase of over 7%, which will increase property taxes revenue in the General Fund as well as the Retirement Special Revenue Fund. The City has also adopted provisions to place a sales tax measure on the March 2020 election’s ballot for voter consideration that, if approved, will generate approximately $3.4 million of revenue to the General Fund beginning fiscal year 2020-21. If the above actions prove insufficient in balancing the City’s budget and replenishing the General Fund’s fund balance, the City Council, City Manager, and executive team are prepared to adjust the budget for expenditures accordingly.

NOTE 14 - SUBSEQUENT EVENTS

In preparing these financial statements, the City has evaluated events and transactions for potential recognition or disclosure through December 20, 2019, the date the financial statements were available to be issued.

82


83

REQUIRED SUPPLEMENTARY INFORMATION

City of San Gabriel

Schedule of Proportionate Share of the Net Pension Liability - Miscellaneous

Last Ten Fiscal Years*

Fiscal year ended June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015

Measurement period June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014

Plan's proportion of the

net pension liability 0.18497% 0.18514% 0.18891% 0.19831% 0.17884%

Plan's proportionate share

of the net pension liability 17,824,500$ 18,360,499$ 16,346,939$ 13,611,684$ 11,128,292$

Plan's covered payroll 6,578,458$ 6,407,196$ 6,137,547$ 5,530,560$ 5,152,007$


of the net pension liability as a

percentage of covered payroll 270.95% 286.56% 266.34% 246.12% 216.00%

Plan's proportionate share of the

fiduciary net position as a

percentage of the Plan's total

pension liability 75.26% 73.31% 74.06% 78.40% 76.48%

Plan's proportionate share of

aggregate employer contributions 1,669,141$ 1,556,141$ 1,414,990$ 1,351,495$ 1,108,270$

Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

From fiscal year June 30, 2015 to June 30, 2016:


There were no changes in assumptions.


The discount rate was reduced from 7.65% to 7.15%.


There were no significant changes in assumptions.

* Fiscal year 2015 was the 1st year of implementation, therefore only five years are shown.

GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment

expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014

measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date

is without reduction of pension plan administrative expense.

84

City of San Gabriel

Schedule of Contributions - Defined Benefit Pension Plans - Miscellaneous



Contractually required contribution

(actuarially determined) 2,033,491$ 1,806,091$ 1,695,780$ 1,569,998$ 1,136,914$

Contributions in relation to

the actuarially determined

contributions (2,033,491) (1,806,091) (1,695,780) (1,569,998) (1,136,914)

Contribution deficiency (excess) -$ -$ -$ -$ -$

Covered payroll 6,901,477$ 6,578,458$ 6,407,196$ 6,137,547$ 5,530,560$

Contributions as a percentage of

covered payroll 29.46% 27.45% 26.47% 25.58% 20.56%

Notes to Schedule:

Valuation Date 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012

Methods and Assumptions Used to Determine Contribution Rates:

Actuarial cost method Entry age Entry age Entry age Entry age Entry age

Amortization method (1) (1) (1) (1) (1)

Asset valuation method Market Value Market Value Market Value Market Value 15 Year

Smoothed

Market Method

Inflation 2.75% 2.75% 2.75% 2.75% 2.75%

Salary increases (2) (2) (2) (2) (2)

Investment rate of return 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3)

Retirement age (4) (4) (4) (4) (4)

Mortality (5) (5) (5) (5) (5)

(1) Level percentage of payroll, closed

(2) Depending on age, service, and type of employment

(3) Net of pension plan investment expense, including inflation

(4) 50 years (2.7% @ 55 and 2% @ 60) and 52 years (2% @ 62)

(5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study

adopted by the CalPERS Board.


85

City of San Gabriel

Schedule of Proportionate Share of the Net Pension Liability - Safety



Measurement period June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014

Plan's proportion of the

net pension liability 0.51328% 0.49713% 0.50881% 0.53055% 0.51986%


of the net pension liability 49,460,962$ 49,301,554$ 44,027,527$ 36,416,665$ 32,348,126$

Plan's covered payroll 8,694,792$ 7,901,890$ 7,697,142$ 7,854,454$ 7,572,009$


of the net pension liability as a

percentage of covered payroll 568.86% 623.92% 572.00% 463.64% 427.21%

Plan's proportionate share of the

fiduciary net position as a

percentage of the Plan's total

pension liability 75.26% 73.30% 74.06% 78.40% 76.12%

Plan's proportionate share of

aggregate employer contributions 4,493,825$ 3,551,186$ 3,297,274$ 3,314,579$ 2,853,651$

Notes to Schedule:

Benefit Changes:





There were no changes in assumptions.


The discount rate was reduced from 7.65% to 7.15%.


There were no significant changes in assumptions.


GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment

expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014

measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date

is without reduction of pension plan administrative expense.

86

City of San Gabriel

Schedule of Contributions - Defined Benefit Pension Plans - Safety



Contractually required contribution

(actuarially determined) 4,883,007$ 4,444,968$ 3,956,628$ 3,626,414$ 2,991,604$

Contributions in relation to

the actuarially determined

contributions (4,883,007) (4,444,968) (3,956,628) (3,626,414) (2,991,604)

-$ -$ -$ -$ -$

Contribution deficiency (excess)

8,382,275$ 8,694,792$ 7,901,890$ 7,697,142$ 7,854,454$

Covered payroll

Contributions as a percentage of 58.25% 51.12% 50.07% 47.11% 38.09%

covered payroll

Notes to Schedule:

Valuation Date 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012


Actuarial cost method Entry age Entry age Entry age Entry age Entry age

Amortization method (1) (1) (1) (1) (1)

Asset valuation method Market Value Market Value Market Value Market Value 15 Year

Smoothed

Market Method

Inflation 2.75% 2.75% 2.75% 2.75% 2.75%

Salary increases (2) (2) (2) (2) (2)

Investment rate of return 7.375% (3) 7.50% (3) 7.50% (3) 7.50% (3) 7.50% (3)

Retirement age (4) (4) (4) (4) (4)

Mortality (5) (5) (5) (5) (5)

(1) Level percentage of payroll, closed

(2) Depending on age, service, and type of employment

(3) Net of pension plan investment expense, including inflation

(4) 50 years (3%@50, 2%@50, and 2.7%@57)

(5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study

adopted by the CalPERS Board.


87

City of San Gabriel

Schedule of Changes in the Net OPEB Liability and Related Ratios


Fiscal year end June 30, 2019 June 30, 2018

Measurement date June 30, 2018 June 30, 2017

Total OPEB Liability:

Service cost 955,322$ 892,825$

Interest on total OPEB liability 2,072,875 1,955,646

Changes of assumptions 19,026,463 -

Benefit payments (1,299,620) (1,172,916)

Net Change in Total OPEB Liability 20,755,040 1,675,555

Total OPEB Liability - Beginning of Year 29,306,985 27,631,430

Total OPEB Liability - End of Year (a) 50,062,025 29,306,985

Plan Fiduciary Net Position:

Contributions - employer 1,412,519 2,063,381

Net investment income 405,826 401,794

Benefit payments (1,299,620) (1,172,916)

Administrative expense (2,710) (2,039)

Other expense (6,740) -

Net Change in Plan Fiduciary Net Position 509,275 1,290,220

Plan Fiduciary Net Position - Beginning of Year 5,093,478 3,803,258

Plan Fiduciary Net Position - End of Year (b) 5,602,753 5,093,478

Net OPEB Liability - Ending (a)-(b) 44,459,272$ 24,213,507$

Plan fiduciary net position as a percentage of the

total OPEB liability 11.19% 17.38%

Covered - employee payroll 15,273,250$ 14,309,086$

Net OPEB liability as percentage of

covered - employee payroll 291.09% 169.22%

Notes to Schedule:

Benefit Changes:



The discount rate decreased from 7.00% to 3.78%.

* Fiscal year 2018 was the first year of implementation; therefore, only two years are shown.


88

City of San Gabriel

Schedule of Contributions - OPEB


Fiscal year ended June 30, 2019 June 30, 2018

Actuarially determined contribution 3,521,938$ 3,486,951$

Contributions in relation to the actuarially determined contributions (1,429,551) (1,412,518)

Contribution deficiency (excess) 2,092,387$ 2,074,433$

Covered - employee payroll 15,283,752$ 15,273,250$

Contributions as a percentage of covered - employee payroll 9.35% 9.25%

Notes to Schedule:

Valuation Date 6/30/2017 6/30/2017


Single and agent employers Entry age normal

Amortization method Level percent of pay, closed 20 year period

Asset valuation method Market value

Inflation 2.75%

Medical trend rates HMO - 6.00% in 2018, decreasing to 5.00% in 2022 and later

PPO - 6.50% in 2018, decreasing to 5.00% in 2021 and later

Salary increases 3.00%

Investment rate of return 7.00%

Retirement age

Mortality rate

* Fiscal year 2018 was the first year of implementation; therefore, only two years are shown.

According to the retirement rates under the most recent CalPERS pension plan

experience study.

According to the pre-retirement and post-retirement mortality rates under the

CalPERS pension plan updated to reflect the most recent experience study.

89

90


City of San Gabriel

Budgetary Comparison Schedule

General Fund


Variance with

Final Budget

Original Final Positive

Budget Budget Actual (Negative)

REVENUES:

Taxes 19,802,000 24,479,068$ 23,310,253$ (1,168,815)$

Intergovernmental 5,142,849 609,946 596,840 (13,106)

Charges for services 4,266,067 4,266,067 3,386,112 (879,955)

Fines and forfeitures 1,135,000 1,135,000 910,570 (224,430)

Licenses and permits 3,286,500 3,286,500 2,280,570 (1,005,930)

Investment income 424,400 424,400 127,855 (296,545)

Other 382,000 383,098 204,579 (178,519)

Total revenues 34,438,816 34,584,079 30,816,779 (3,767,300)

EXPENDITURES:

General government:

City council 246,966 254,401 239,322 15,079

City clerk:

City clerk 455,021 455,021 437,745 17,276

Elections 43,372 43,372 41,841 1,531

Administration:

City manager 479,023 474,526 458,733 15,793

Public information 146,662 143,723 134,995 8,728

City attorney 298,200 298,200 277,489 20,711

Finance:

City treasurer 220,983 220,983 188,744 32,239

Finance 1,336,441 1,288,441 1,296,839 (8,398)

Information technology 360,404 360,404 292,710 67,694

Purchasing 244,269 244,269 212,487 31,782

General services 156,135 108,135 103,453 4,682

Human resources 784,990 784,990 1,002,952 (217,962)

Non-departmental 263,000 1,858,835 1,568,580 290,255

Total general government 5,035,466 6,535,300 6,255,890 279,410

Public safety:

Police 14,323,947 14,208,287 13,177,227 1,031,060

Fire 8,788,598 8,601,598 8,328,749 272,849

Total public safety 23,112,545 22,809,885 21,505,976 1,303,909

Community development:

Administration 575,711 527,711 525,055 2,656

Planning 595,376 595,376 421,720 173,656

Building and safety 1,188,105 1,188,106 1,027,543 160,563

Neighborhood improvement 353,677 353,677 312,840 40,837

Economic development 342,466 358,965 323,478 35,487

Total community development 3,055,335 3,023,835 2,610,636 413,199

(Continued)

See accompanying note to required supplementary information. 91

City of San Gabriel

Budgetary Comparison Schedule, Continued

General Fund


Variance with

Final Budget



EXPENDITURES, CONTINUED:

Community services:

Administration 832,790$ 832,790$ 832,713$ 77$

Aquatics 149,413 149,413 140,026 9,387

Community facilities 144,526 175,610 160,376 15,234

Recreation 378,663 454,261 480,638 (26,377)

Total community services 1,505,392 1,612,074 1,613,753 (1,679)

Public works:

Administration 1,759,097 1,759,099 1,339,261 419,838

Street services 1,216,857 1,168,857 1,336,367 (167,510)

Stormwater management 185,000 185,000 42,802 142,198

Park maintenance 1,163,935 1,076,962 957,731 119,231

Aquatic facilities 93,470 93,470 65,584 27,886

Facilities 262,202 263,484 266,836 (3,352)

Engineering 568,135 568,135 620,738 (52,603)

Total public works 5,248,696 5,115,007 4,629,319 485,688

Capital outlay 156,000 603,397 358,339 245,058

Debt service:

Principal payments 260,000 260,000 260,000 -

Interest and fiscal charges 122,000 122,000 110,187 11,813

Total debt service 382,000 382,000 370,187 11,813

Total expenditures 38,495,434 40,081,498 37,344,100 2,737,398

EXCESS OF REVENUES

UNDER EXPENDITURES (4,056,618) (5,497,419) (6,527,321) (1,029,902)

OTHER FINANCING SOURCES (USES):

Transfers in 6,675,198 8,193,965 7,926,444 (267,521)

Transfers out (761,682) (761,682) (642,404) 119,278

Total other financing sources (uses) 5,913,516 7,432,283 7,284,040 (148,243)

NET CHANGE IN FUND BALANCE 1,856,898 1,934,864 756,719 (1,178,145)

FUND BALANCE:

Beginning of year (2,591,569) (2,591,569) (2,591,569) -

End of year (734,671)$ (656,705)$ (1,834,850)$ (1,178,145)$

See accompanying note to required supplementary information. 92

City of San Gabriel


Retirement Special Revenue Fund


Variance with

Final Budget



REVENUES:

Taxes 7,000,000$ 7,000,000$ 7,714,705$ 714,705$


Total revenues 7,035,000 7,035,000 7,729,102 694,102

OTHER FINANCING USES:

Transfers out (8,312,928) (8,312,928) (7,994,015) 318,913

NET CHANGE IN FUND BALANCE (1,277,928) (1,277,928) (264,913) 1,013,015

FUND BALANCE:

Beginning of year 1,901,374 1,901,374 1,901,374 -

End of year 623,446$ 623,446$ 1,636,461$ 1,013,015$

See accompanying note to required supplementary information.93

City of San Gabriel


Development Impact Fees Special Revenue Fund


Variance with

Final Budget



REVENUES:

Charges for services 1,030,000$ 1,030,000$ 330,947$ (699,053)$


Total revenues 1,075,000 1,075,000 374,679 (700,321)

EXPENDITURES:

Capital outlay 300,000 2,066,940 383,835 1,683,105


(UNDER) EXPENDITURES 775,000 (991,940) (9,156) 982,784

FUND BALANCE:


End of year 5,992,386$ 4,225,446$ 5,208,230$ 982,784$


City of San Gabriel


Measure R Special Revenue Fund


Variance with

Final Budget



REVENUES:

Intergovernmental 450,000$ 450,000$ 512,463$ 62,463$


Total revenues 462,000 462,000 522,936 60,936

EXPENDITURES:

Capital outlay - 3,599,637 2,358,115 1,241,522

Debt service:

Principal payments 222,493 222,493 230,280 (7,787)


Total expenditures 345,000 3,944,637 2,702,054 1,242,583


(UNDER) EXPENDITURES 117,000 (3,482,637) (2,179,118) 1,303,519

FUND BALANCE:


End of year 3,698,430$ 98,793$ 1,402,312$ 1,303,519$


City of San Gabriel


Other Grants Special Revenue Fund


Variance with

Final Budget



REVENUES:

Intergovernmental 803,499$ 2,349,060$ 409,393$ (1,939,667)$

Other - 230,196 20,184 (210,012)

Total revenues 803,499 2,579,256 429,577 (2,149,679)

EXPENDITURES:

Capital outlay 803,499 3,151,266 170,007 2,981,259


(UNDER) EXPENDITURES - (572,010) 259,570 831,580

FUND BALANCE (DEFICIT):

Beginning of year 420,940 420,940 420,940 -

End of year 420,940$ (151,070)$ 680,510$ 831,580$


City of San Gabriel


Sewer Assessment Special Revenue Fund


Variance with

Final Budget



REVENUES:

Charges for services 2,000,000$ 2,000,000$ 2,000,803$ 803$

Investment income 17,000 17,000 42,536 25,536

Other - - 2,755 2,755

Total revenues 2,017,000 2,017,000 2,046,094 29,094

EXPENDITURES:

Current:

Public works 943,636 1,017,911 678,960 338,951

Capital outlay 1,408,500 4,716,842 170,247 4,546,595

Total expenditures 2,352,136 5,734,753 849,207 4,885,546


(UNDER) EXPENDITURES (335,136) (3,717,753) 1,196,887 4,914,640

FUND BALANCE:


End of year 4,025,271$ 642,654$ 5,557,294$ 4,914,640$


98


City of San Gabriel

Note to Required Supplementary Information

June 30, 2019

99

NOTE 1 - BUDGETARY INFORMATION

The City adheres to the following general procedures in establishing its annual budget, which is reflected in the accompanying basic financial statements:

The annual budget adopted by the City Council provides for the general operations of the City. It includes proposed expenditures and the means of financing them. Budgeted remaining appropriations lapse at the end of the fiscal year.

The City Council approves total budgeted appropriations and amendments to appropriations throughout the year. The City Council must approve budget appropriation transfers between departments within a fund. The departments of the General Fund are considered to be departments for purposes of this requirement. Actual expenditures for the General Fund may not legally exceed budgeted appropriations at the department level. Actual expenditures for all other funds may not legally exceed budgeted appropriations at the fund level.

Annual budgets are adopted for all Governmental Fund Types on a basis substantially consistent with Generally Accepted Accounting Principles (GAAP).

Formal budgetary information is employed as a management control device. Commitments for materials and services, such as purchase orders and contracts are recorded during the year as encumbrances to assist in controlling expenditures. Appropriations, which are encumbered at year end, lapse and then are added to the following year’s budgeted appropriations. However, encumbrances at year-end are reported as committed fund balance.

100


101

SUPPLEMENTARY INFORMATION

102


103

OTHER GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

(Non-Major Programs)

Proposition A Local Return Fund

To account for the City's share of the half-cent sales tax. These funds are used for local transit. Citizens Option for Public Safety Fund

To account for the revenues received from the California Department of Justice to be used to enhance existing law enforcement services.

Parks and Recreation Activity Fund

To account for revenues and expenditures for the City's recreation programs provided through contract services.

Mission Playhouse/Facility Fund

To account for monies paid by facility clients and to assure that they are set aside for operation,

maintenance and improvement to the Mission Playhouse.

Air Quality Management District Fund

To account for revenues received from the Air Quality Management District for the improvement of

air quality.

Narcotic Seizure Fund

To account for revenues seized by the Police Department during narcotics investigations.

Proposition C Local Return Fund

To account for monies received from an allocation of sales tax revenue restricted to fund local

transportation related activities in accordance with Proposition C regulations.

Street Light Fund

To account for fees collected from new developments. These funds are used for the construction of

street lights in certain areas of the City.

Office of Traffic Safety Grant Fund

To account for the revenues from the California Office of Traffic Safety to be used towards a

comprehensive traffic safety program.

Community Development Block Grant Fund

To account for funds from the Community Development Block Grant for neighborhood improvement and rehabilitation purposes.

Waste Management Fund

To account for the collection of a waste surcharge from consumers to finance waste management

programs.

104


105

OTHER GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS (CONTINUED)

(Non-Major Programs)

State Gas Tax Fund

To account for the City’s share of state and county gasoline tax allocation. These funds are expended on street maintenance and construction.

Road Maintenance and Rehabilitation Fund

To account for the City’s share of the SB1 allocation. These funds are expended on street maintenance and construction.

Measure M Fund To account for monies received from an allocation of sales tax revenue restricted to fund local

transportation related activities in accordance with Measure M guidelines.

City of San Gabriel

Combining Balance Sheet

Other Governmental Funds

June 30, 2019

Citizens

Option for

Proposition A Public

Local Return Safety

ASSETS

Cash and investments 1,093,621$ -$

Accounts receivable - -

Interest receivable 3,559 -

Due from other funds - -

Due from other governments - 55,948

Total assets 1,097,180$ 55,948$

LIABILITIES AND FUND BALANCES

Liabilities:

Accounts payable 32,572$ -$

Accrued liabilities 1,853 3,330

Due to other funds - 77,082

Deposits payable - -

Total liabilities 34,425 80,412

Fund Balances (Deficits):

Restricted 1,062,755 -

Unassigned - (24,464)

Total fund balances (deficits) 1,062,755 (24,464)

Total liabilities and fund balances 1,097,180$ 55,948$


106

Air

Parks and Mission Quality

Recreation Playhouse/ Management Narcotic Proposition C Street

Activity Facility District Seizure Local Return Light

170,215$ -$ 168,083$ 392,430$ 1,733,902$ 54,719$

- 2,070 - - - -

- - 547 1,277 5,642 -

- - - - - -

- - 13,760 - - -

170,215$ 2,070$ 182,390$ 393,707$ 1,739,544$ 54,719$

20,052$ 70,186$ -$ -$ 19,800$ -$

3,189 13,729 - - 2,540 -

- 117,888 - - - -

- 24,110 - - - -

23,241 225,913 - - 22,340 -

146,974 - 182,390 393,707 1,717,204 54,719

- (223,843) - - - -

146,974 (223,843) 182,390 393,707 1,717,204 54,719

170,215$ 2,070$ 182,390$ 393,707$ 1,739,544$ 54,719$

(Continued)


107

City of San Gabriel

Combining Balance Sheet, Continued


June 30, 2019

Office of

Traffic Community

Safety Development

Grant Block Grant

ASSETS

Cash and investments 3,131$ -$

Accounts receivable - 15,550

Interest receivable - -

Due from other funds - -

Due from other governments 3,794 362,868

Total assets 6,925$ 378,418$

LIABILITIES AND FUND BALANCES

Liabilities:

Accounts payable -$ 311,005$

Accrued liabilities - 4,182

Due to other funds - 63,228

Deposits payable - -

Total liabilities - 378,415

Fund Balances (Deficits):

Restricted 6,925 3

Unassigned - -

Total fund balances (deficits) 6,925 3

Total liabilities and fund balances 6,925$ 378,418$


108

Road Total

Maintenance Other

Waste State Gas and Governmental

Management Tax Rehabilitation Measure M Funds

799,946$ 1,699,223$ 155,012$ 577,467$ 6,847,749$

52,879 - - - 70,499

- 5,529 504 2,014 19,072

781,568 - - - 781,568

- - 133,924 - 570,294

1,634,393$ 1,704,752$ 289,440$ 579,481$ 8,289,182$

114,831$ 117,418$ -$ 85,058$ 770,922$

- - - - 28,823

- - - - 258,198

- - - - 24,110

114,831 117,418 - 85,058 1,082,053

1,519,562 1,587,334 289,440 494,423 7,455,436

- - - - (248,307)

1,519,562 1,587,334 289,440 494,423 7,207,129

1,634,393$ 1,704,752$ 289,440$ 579,481$ 8,289,182$


109

City of San Gabriel

Combining Statement of Revenues, Expenditures and Changes in Fund Balances



Citizens

Option for

Proposition A Public

Local Return Safety

REVENUES:

Intergovernmental 823,522$ 204,694$

Charges for services - -

Investment income 11,378 -

Other - -

Total revenues 834,900 204,694

EXPENDITURES:

Current:

Public safety - 151,635

Community development - -

Community services - -

Public works 453,066 -

Capital outlay - -

Total expenditures 453,066 151,635


(UNDER) EXPENDITURES 381,834 53,059

OTHER FINANCING SOURCES:

Transfers in - -

Total other financing sources - -

NET CHANGE IN FUND BALANCES 381,834 53,059

FUND BALANCES (DEFICITS):

Beginning of year 680,921 (77,523)

End of year 1,062,755$ (24,464)$


110

Air

Parks and Mission Quality

Recreation Playhouse/ Management Narcotic Proposition C Street

Activity Facility District Seizure Local Return Light

-$ 6,340$ 53,076$ 66,016$ 683,088$ -$

193,411 586,913 - - - -

- - 1,294 3,108 13,444 -

385 30,263 - - - -

193,796 623,516 54,370 69,124 696,532 -

- - - - - -

- - - - - -

185,413 1,333,491 - - - -

- - - - 93,983 -

- - 27,325 - 75,979 -

185,413 1,333,491 27,325 - 169,962 -

8,383 (709,975) 27,045 69,124 526,570 -

- 709,975 - - - -

- 709,975 - - - -

8,383 - 27,045 69,124 526,570 -

138,591 (223,843) 155,345 324,583 1,190,634 54,719

146,974$ (223,843)$ 182,390$ 393,707$ 1,717,204$ 54,719$

(Continued)


111

City of San Gabriel

Combining Statement of Revenues, Expenditures and Changes in Fund Balances, Continued



Office of

Traffic Community

Safety Development

Grant Block Grant

REVENUES:

Intergovernmental 34,542$ 459,578$

Charges for services - -

Investment income - -

Other - -

Total revenues 34,542 459,578

EXPENDITURES:

Current:

Public safety 28,541 -

Community development - 74,174

Culture and recreation - 50,579

Transportation - -

Capital outlay - 311,005

Total expenditures 28,541 435,758


(UNDER) EXPENDITURES 6,001 23,820


Transfers in - -

Total other financing sources - -

NET CHANGE IN FUND BALANCES 6,001 23,820

FUND BALANCES (DEFICITS):

Beginning of year 924 (23,817)

End of year 6,925$ 3$


112

Road Total

Maintenance Other

Waste State Gas and Governmental

Management Tax Rehabilitation Measure M Funds

-$ 788,253$ 796,545$ 576,314$ 4,491,968$

459,644 - - - 1,239,968

- 15,179 3,635 6,157 54,195

- - - - 30,648

459,644 803,432 800,180 582,471 5,816,779

- - - - 180,176

- - - - 74,174

- - - - 1,569,483

- - - - 547,049

1,072,565 1,091,830 751,804 514,885 3,845,393

1,072,565 1,091,830 751,804 514,885 6,216,275

(612,921) (288,398) 48,376 67,586 (399,496)

- - - - 709,975

- - - - 709,975

(612,921) (288,398) 48,376 67,586 310,479

2,132,483 1,875,732 241,064 426,837 6,896,650

1,519,562$ 1,587,334$ 289,440$ 494,423$ 7,207,129$


113

City of San Gabriel

Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Proposition A Local Return Special Revenue Fund


Variance with

Final Budget

Final Positive

Budget Actual (Negative)

REVENUES:

Intergovernmental 780,000$ 823,522$ 43,522$


Total revenues 790,000 834,900 44,900

EXPENDITURES:

Current:

Public works 617,912 453,066 164,846


Total expenditures 768,065 453,066 314,999


EXPENDITURES 21,935 381,834 359,899

FUND BALANCE:

Beginning of year 680,921 680,921 -

End of year 702,856$ 1,062,755$ 359,899$

114

City of San Gabriel


Citizens Option for Public Safety Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:


EXPENDITURES:

Current:

Public safety 125,375 151,635 (26,260)

EXCESS OF REVENUES

UNDER EXPENDITURES 4,625 53,059 48,434


Beginning of year (77,523) (77,523) -

End of year (72,898)$ (24,464)$ 48,434$

115

City of San Gabriel


Parks and Recreation Activity Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:

Charges for services 207,600$ 193,411$ (14,189)$

Other 800 385 (415)

Total revenues 208,400 193,796 (14,604)

EXPENDITURES:

Current:

Community services 245,409 185,413 59,996


(UNDER) EXPENDITURES (37,009) 8,383 45,392

FUND BALANCE:


End of year 101,582$ 146,974$ 45,392$

116

City of San Gabriel


Mission Playhouse/Facility Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:

Intergovernmental 11,680$ 6,340$ (5,340)$

Charges for services 712,470 586,913 (125,557)

Other 10,500 30,263 19,763

Total revenues 734,650 623,516 (111,134)

EXPENDITURES:

Current:

Community services 1,636,138 1,333,491 302,647


(UNDER) EXPENDITURES (901,488) (709,975) 191,513


Transfers in 880,645 709,975 (170,670)

NET CHANGE IN FUND BALANCE (20,843) - 20,843



End of year (243,686)$ (222,843)$ 20,843$

117

City of San Gabriel


Air Quality Management District Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:


Investment income 1,100 1,294 194

Total revenues 57,100 54,370 (2,730)

EXPENDITURES:

Capital outlay 27,325 27,325 -


(UNDER) EXPENDITURES 29,775 27,045 (2,730)

FUND BALANCE:


End of year 185,120$ 182,390$ (2,730)$

118

City of San Gabriel


Narcotic Seizure Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:

Intergovernmental -$ 66,016$ 66,016$

Investment income 3,550 3,108 (442)

Total revenues 3,550 69,124 65,574

EXPENDITURES:

Capital outlay - - -


EXPENDITURES 3,550 69,124 65,574

FUND BALANCE:


End of year 328,133$ 393,707$ 65,574$

119

City of San Gabriel


Proposition C Local Return Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:



Total revenues 681,500 696,532 15,032

EXPENDITURES:

Current:

Public works 332,614 93,983 238,631

Capital outlay 1,322,392 75,979 1,246,413

Total expenditures 1,655,006 169,962 1,485,044


(UNDER) EXPENDITURES (973,506) 526,570 1,500,076

FUND BALANCE:

Beginning of year 1,190,634 1,190,634 -

End of year 217,128$ 1,717,204$ 1,500,076$

120

City of San Gabriel


Street Light Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES

Intergovernmental 2,000$ -$ (2,000)$

EXPENDITURES:



(UNDER) EXPENDITURES (47,008) - 47,008

FUND BALANCE:


End of year 7,711$ 54,719$ 47,008$

121

City of San Gabriel


Office of Traffic Safety Grant Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:


EXPENDITURES:

Current:

Public safety 100,000 28,541 71,459


EXPENDITURES - 6,001 6,001

FUND BALANCE:

Beginning of year 924 924 -

End of year 924$ 6,925$ 6,001$

122

City of San Gabriel


Community Development Block Grant Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:


EXPENDITURES:

Current:

Community development 88,001 74,174 13,827

Community services 64,288 50,579 13,709

Capital outlay 311,013 311,005 8

Total expenditures 463,302 435,758 27,544





End of year (48,000)$ 3$ 48,003$

123

City of San Gabriel


Waste Management Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:

Charges for services 507,000$ 459,644$ (47,356)$

EXPENDITURES:

Capital outlay 2,684,382 1,072,565 1,611,817


(UNDER) EXPENDITURES (2,177,382) (612,921) 1,564,461



End of year (44,899)$ 1,519,562$ 1,564,461$

124

City of San Gabriel


State Gas Tax Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:


Investment income 18,000 15,179 (2,821)

Total revenues 1,010,000 803,432 (206,568)

EXPENDITURES:

Capital outlay 2,782,400 1,091,830 1,690,570


(UNDER) EXPENDITURES (1,772,400) (288,398) 1,484,002

FUND BALANCE:


End of year 103,332$ 1,587,334$ 1,484,002$

125

City of San Gabriel


Road Maintenance and Rehabilitation Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:


Investment income - 3,635 3,635

Total revenues 750,000 800,180 50,180

EXPENDITURES:

Capital outlay 1,028,399 751,804 276,595





End of year (37,335)$ 289,440$ 326,775$

126

City of San Gabriel


Measure M Special Revenue Fund


Variance with

Final Budget

Final Positive


REVENUES:


Investment income 300 6,157 5,857

Total revenues 330,300 582,471 252,171

EXPENDITURES:

Capital outlay 600,000 514,885 85,115



FUND BALANCE:


End of year 157,137$ 494,423$ 337,286$

127

128


129

INTERNAL SERVICE FUNDS

Internal Service Funds are used to finance and account for goods and services provided by one City

department to other City departments for agencies. Funds included are:

Risk Management Fund

To account for payments made for the City’s workers’ compensation and general liability claims.

Automotive Maintenance Fund

To account for costs of operating a maintenance facility for automotive equipment used by City

departments.

City of San Gabriel

Combining Statement of Net Position


June 30, 2019

Automotive

Risk Management Maintenance Total

ASSETS:

Current assets:

Cash and investments 1,233,333$ 836,308$ 2,069,641$

Interest receivable 3,660 2,721 6,381

Total current assets 1,236,993 839,029 2,076,022

Noncurrent assets:

Capital assets:

Being depreciated (net of accumulated depreciation) - 2,050,950 2,050,950

Total noncurrent assets - 2,050,950 2,050,950

Total assets 1,236,993 2,889,979 4,126,972

LIABILITIES:


Accounts payable 13,069 28,400 41,469

Accrued payroll - 5,394 5,394

Compensated absences, due within one year - 67,228 67,228

Claims payable, due within one year 409,919 - 409,919

Total current liabilities 422,988 101,022 524,010


Claims payable, due in more than one year 956,476 - 956,476

Total noncurrent liabilities 956,476 - 956,476

Total liabilities 1,379,464 101,022 1,480,486

NET POSITION:

Investment in capital assets - 2,050,950 2,050,950

Unrestricted (142,471) 738,007 595,536

Total net position (142,471)$ 2,788,957$ 2,646,486$

130

City of San Gabriel

Combining Statement of Revenues, Expenses and Changes in Net Position



Automotive


OPERATING REVENUES:

Charges for services 5,335,224$ 981,000$ 6,316,224$

Total operating revenues 5,335,224 981,000 6,316,224

OPERATING EXPENSES:

Personnel services - 319,675 319,675

Contractual services - 17,254 17,254

Vehicle operating - 470,973 470,973

Depreciation - 334,373 334,373

Insurance premiums 6,065,617 - 6,065,617

Claims and judgments 11,698 - 11,698

Total operating expenses 6,077,315 1,142,275 7,219,590

OPERATING LOSS (742,091) (161,275) (903,366)

NONOPERATING REVENUES (EXPENSES):


Loss on sale of capital assets - (5,793) (5,793)

Total nonoperating revenues (expenses) 5,658 2,405 8,063

CHANGE IN NET POSITION (736,433) (158,870) (895,303)

NET POSITION:

Beginning of the year 593,962 2,947,827 3,541,789

End of the year (142,471)$ 2,788,957$ 2,646,486$

131

City of San Gabriel

Combining Statement of Cash Flows



Automotive


CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from user departments 5,335,224$ 981,000$ 6,316,224$

Cash payments to suppliers for goods and services (6,403,287) (641,726) (7,045,013)

Cash payments to employees for services - (312,804) (312,804)

Net cash provided by (used for)

operating activities (1,068,063) 26,470 (1,041,593)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES:

Cash received from other funds 2,191,065 - 2,191,065

Net cash provided by

noncapital financing activities 2,191,065 - 2,191,065

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES:

Payments to acquire capital assets - (84,707) (84,707)

Net cash used for capital

and related financing activities - (84,707) (84,707)

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received from investments 1,998 5,477 7,475

Net cash provided by investing activities 1,998 5,477 7,475

Net increase (decrease) in cash

and cash equivalents 1,125,000 (52,760) 1,072,240

CASH AND CASH EQUIVALENTS:

Beginning of the year 108,333 889,068 997,401

End of the year 1,233,333$ 836,308$ 2,069,641$

RECONCILIATION OF OPERATING

LOSS TO NET CASH PROVIDED BY

(USED FOR) OPERATING ACTIVITIES:

Operating loss (742,091)$ (161,275)$ (903,366)$

Adjustments to reconcile operating loss to

net cash provided by (used for) operating activities:

Depreciation expense - 334,373 334,373

Changes in assets and liabilities:

Increase (decrease) in accounts payable 6,425 (153,499) (147,074)

Increase (decrease) in accrued payroll - (139) (139)

Increase (decrease) in compensated absences payable - 7,010 7,010

Increase (decrease) in claims payable (332,397) - (332,397)

Net cash provided by (used for)

operating activities (1,068,063)$ 26,470$ (1,041,593)$

132

133

AGENCY FUND

The Agency Fund is used to account for assets held by the City as an agent for individuals, private

organizations, other governments and/or other funds. The Agency Fund operates as a clearing

mechanism. Cash resources are collected, held for a brief period and then distributed to the proper recipients. The City has a fiduciary responsibility for the assets, which it does not own outright.

Deposit Fund

To account for deposits collected by the City which will be refunded at some later date.

City of San Gabriel

Statement of Changes in Fiduciary Assets and Liabilities

Agency Fund


Balance at Balance at

July 1, 2018 Additions Deletions June 30, 2019

Deposit Agency Fund

ASSETS:

Cash and investments 1,732,943$ 1,163,467$ (1,049,242)$ 1,847,168$

Total assets 1,732,943$ 1,163,467$ (1,049,242)$ 1,847,168$

LIABILITIES:

Accounts payable 30,702$ 1,062,269$ (1,016,146)$ 76,825$

Deposits payable 1,702,241 1,161,703 (1,093,601) 1,770,343

Total liabilities 1,732,943$ 2,223,972$ (2,109,747)$ 1,847,168$

134

Contents Page

Financial Trends 136-143

Revenue Capacity 144-147

Debt Capacity 148-152

Demographic and Economic Information 153-155

Operating Information 156-158

These schedules offer demographic and economic indicators to help

the reader understand the environment within which the government's

financial activities take place.

These schedules contain service and infrastructure data to help the

reader understand how the information in the government's financial

report relates to the services the government provides and the

activities it performs.

Sources: Unless otherwise noted, the information in these schedules is

derived from the comprehensive annual financial reports for the

relevant year.

STATISTICAL SECTION

This part of the City of San Gabriel's comprehensive annual financial report presents detailed

information as a context for understanding what the information in the financial statements,

note disclosures, and required supplementary information says about the government's overall

financial health.

These schedules contain trend information to help the reader

understand how the government's financial performance and well-

being have changed over time.

These schedules contain information to help the reader assess the

government's most significant local revenue source, the property tax.

These schedules present information to help the reader assess the

affordability of the government's current levels of outstanding debt

and the government's ability to issue additional debt in the future.

135

City of San GabrielNet Position by Component

Last Ten Fiscal Years

(accrual basis of accounting)

2019 2018 2017 2016

Primary government

Investment in capital assets 125,053,120$ 53,824,523$ 47,221,824$ 44,929,618$

Restricted (1)28,380,502 27,241,931 26,700,097 27,988,037

Unrestricted (93,411,558) (83,870,090) (62,637,635) (61,019,107)

Total primary government net position 60,022,064$ (2,803,636)$ 11,284,286$ 11,898,548$

(1) The City of San Gabriel adopted the provisions of GASB 54 on June 7, 2010, for fiscal year 2010-11.

Fiscal Year

136

TABLE 1

2015 2014 2013 2012 2011 2010

38,923,809$ 39,736,996$ 40,680,317$ 40,773,686$ 39,375,000$ 37,827,601$

15,175,788 15,319,010 12,393,282 10,408,493 14,665,685 -

(47,541,083) (2,111,415) 458,790 2,508,800 2,179,372 20,371,939

6,558,514$ 52,944,591$ 53,532,389$ 53,690,979$ 56,220,057$ 58,199,540$

Fiscal Year

137

City of San GabrielChanges in Net Position


(accrual basis of accounting)

2019 2018 2017 2016Expenses


General government 9,653,309$ 7,544,585$ 5,054,531$ 5,820,395$

Public safety 28,821,771 26,434,439 23,774,313 21,210,784 Community development 4,205,443 7,413,445 8,156,129 6,899,388

Community Services 3,723,848 6,037,114 5,669,801 4,967,684

Public Works 8,210,981 2,111,151 3,333,714 1,248,794

Interest 404,989 235,979 347,600 123,159

Loss on disposal of capital assets - - Total primary government expenditures 55,020,341 49,776,713 46,336,088 40,270,204

Program Revenues


Charges for services:

General government (2)218,255 921,508 859,092 873,165

Public safety 2,185,508 1,917,588 2,469,550 2,733,338

Community development (1)3,128,928 4,445,702 5,987,521 5,929,340

Community services 932,894 928,707 938,587 921,712

Public works (1)2,003,803 6,000 6,000 6,000

Operating grants and contributions 5,230,720 7,224,937 5,575,088 4,549,618

Capital grants and contributions 72,028,183 1,560,996 2,228,849 3,488,072 Total government activities program revenues 85,728,291 17,005,438 18,064,687 18,501,245

Net revenue/(expenses)

Total primary government net expense 30,707,950$ (32,771,275)$ (28,271,401)$ (21,768,959)$


Taxes

Property taxes 18,410,087$ 17,137,916$ 16,199,887$ 15,449,170$

Sales taxes 4,574,744 4,228,585 4,217,723 4,149,964

Utility users tax 4,220,173 4,477,367 4,496,220 4,317,061

Franchise taxes 631,983 538,126 497,699 575,991 Transient occupancy tax 3,042,962 2,077,757 1,601,695 1,592,425

Business license taxes (2)695,898 - - -

Property transfer tax 145,009 173,930 183,926 152,399

Other tax (3)19,642 - - -

Motor vehicle in lieu (unrestricted) - - - -

Investment earnings 104,136 104,362 87,295 284,257

Miscellaneous 273,116 518,818 372,694 587,726

Total governmental activities: 32,117,750 29,256,861 27,657,139 27,108,993 Total primary government 32,117,750 29,256,861 27,657,139 27,108,993

Extraordinary item - - - -

Changes in Net Position

Total primary government 62,825,700$ (3,514,414)$ (614,262)$ 5,340,034$

(1) In fiscal year 2019-20, Sewer users fee was reclassified from community development to public works.

(2) In fiscal year 2019-20, Business license taxes was removed from General Government Charges for Services to Governmental Activities Taxes

(3) In fiscal year 2019-20, Other taxes was added for Motor Vehicle Excess payment

Fiscal Year

138

TABLE 2

2015 2014 2013 2012 2011 2010

6,891,875$ 6,907,530$ 7,153,952$ 6,324,430$ 6,863,837$ 6,437,800$

19,628,528 18,953,862 19,644,859 19,695,496 18,558,140 17,748,076

5,782,405 5,469,123 5,451,019 8,880,924 8,984,098 6,406,734

3,809,983 3,290,862 3,512,514 3,259,953 3,178,378 2,929,024

3,427,420 2,105,289 2,984,929 1,563,573 3,069,674 1,688,865

52,030 - - - - -

- - 27,481 - - - 39,592,241 36,726,666 38,774,754 39,724,376 40,654,127 35,210,499

845,229 881,188 811,645 788,719 788,664 738,643

2,894,409 2,169,374 2,149,555 2,292,293 2,356,082 2,227,266

4,597,675 1,982,011 1,784,826 1,653,036 1,784,907 1,496,009

814,717 815,468 850,741 780,451 675,849 762,501

6,000 6,000 6,000 6,000 6,000 6,000

5,773,315 4,147,332 5,788,085 5,948,416 6,900,218 3,648,642

1,720,849 787,239 911,063 1,687,194 2,897,964 4,302,455 16,652,194 10,788,612 12,301,915 13,156,109 15,409,684 13,181,516

(22,940,047)$ (25,938,054)$ (26,472,839)$ (26,568,267)$ (25,244,443)$ (22,028,983)$

10,888,734$ 10,261,507$ 9,718,176$ 9,237,775$ 8,990,057$ 8,193,637$

4,205,561 4,177,364 4,221,735 3,860,989 4,690,820 3,090,531

4,480,156 4,596,568 4,655,606 4,514,886 880,057 4,685,188

555,940 587,201 585,104 582,469 3,527,569 563,514

1,453,521 1,425,873 1,167,616 948,223 582,088 760,976

- - - - - -

155,164 176,835 118,016 87,613 86,649 130,419

- - - - - -

4,011,131 3,836,014 3,706,552 3,611,799 3,716,904 3,597,698

113,396 118,520 195,987 654,325 697,253 645,521

206,848 170,374 105,000 67,915 93,564 146,830

26,070,451 25,350,256 24,473,792 23,565,994 23,264,960 21,814,314 26,070,451 25,350,256 24,473,792 23,565,994 23,264,960 21,814,314

- - - 1,805,302 - -

3,130,404$ (587,798)$ (1,999,047)$ (1,196,971)$ (1,979,483)$ (214,669)$

Fiscal Year

139

City of San GabrielFund Balances of Governmental Funds


(modified accrual basis of accounting)

2019 2018 2017 2016

General fund

Nonspendable -$ 350,174$ 773,276$ 1,331,203$

Reserved - - -

Restricted 6,651,667 6,911,667 7,171,667 7,450,168

Committed 811,533 1,988,515 1,591,702

Assigned - - 94,006

Unassigned (8,486,517) (10,664,943) (7,741,981) (5,648,043)

Unreserved - - - Total general fund (1,834,850)$ (2,591,569)$ 2,191,477$ 4,819,036$

All other governmental funds

Reserved

Restricted 21,940,243$ 22,703,370$ 22,425,770$ 24,337,869$

Committed - - - -

Unassigned - - - -

Special revenue funds (248,307) (325,183) (472,605) (18,417)

Capital projects funds - (68,806) -

Total all other governmental funds 21,691,936$ 22,378,187$ 21,884,359$ 24,319,452$

As of July 1, 2010, the City of San Gabriel adopted the provisions of Government Accounting Standards Board ("GASB")Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.

Fund balance explanation: comparing 2018 to 2019

General fund

All other governmental funds

Restricted and Unassigned categories for all other funds did not change significantly.

Fiscal Year

The balances for Reserved, Assigned and Unreserved categories either have no or only insignificant changes from 2018. The balance for

Restricted funds decreased by about $260,000, which mainly represents the 2018-19 payment on the City's $7.8 million loan from Citizens

Business Bank. The balance for Committed funds decreased because the funding for projects have changed. The balance for Unassigned

funds increased by $2.2 million related to the City's pledging of Certificates of Deposit as collateral for the bank loan of $7.8 million.

Lastly, Nonspendable funds declined by $350,174 due to advances to other funds.

140

TABLE 3

2015 2014 2013 2012 2011 2010

1,284,945$ 1,284,945$ 1,284,945$ 1,291,035$ 5,457,078$

- - - - - 11,037,947$

- 18,247 10,525 21,907 244,594 -

6,929,562 2,951,643 3,294,439 5,836,526 6,121,090 -

15,093 132,488 56,076 - - -

3,236,592 2,962,914 3,365,984 1,140,249 (639,868) -

- - - - - 122,874 11,466,192$ 7,350,237$ 8,011,969$ 8,289,717$ 11,182,894$ 11,160,821$

4,090,559$

15,175,788$ 15,056,442$ 12,382,757$ 11,084,898$ 14,845,426$ -

- - - - - -

- - - - (5,631,679) -

(113,724) (7,840) (5,248) (824,635) - 10,288,265

- - - - - (2,067,856)

15,062,064$ 15,048,602$ 12,377,509$ 10,260,263$ 9,213,747$ 12,310,968$

Fiscal Year

141

City of San GabrielChanges in Fund Balances of Governmental Funds


(modified accrual basis of accounting)

2019 2018 2017 2016

Revenues

Taxes 23,310,253$ 19,711,009$ 22,765,499$ 22,007,184$

Intergovernmental 596,840 17,205,621 9,043,036 8,878,018

Charges for services 3,386,112 6,549,613 7,645,744 10,165,807

Fines and forfeitures 910,570 643,798 798,782 838,920

Licenses and permits 2,280,570 2,278,140 3,003,502 2,829,532

Investment income 127,855 250,370 227,185 243,608

Other 204,579 519,877 1,184,292 575,580

Total revenues 30,816,779 47,158,428 44,668,040 45,538,649

Expenditures

General government 6,255,890 5,273,096 5,350,904 7,190,134

Police 13,177,227 14,025,947 13,008,035 11,763,828

Fire 8,328,749 8,651,832 8,915,538 7,864,657

Community development 2,610,636 6,588,290 7,057,181 5,847,288

Community services 1,613,753 4,870,603 4,618,828 4,089,106

Public Works 4,629,319 532,209 1,785,822 567,218

Capital outlay 358,339 9,563,082 6,289,720 8,376,848

Debt Service

Principal Payments 260,000 482,493 474,969 260,000


Total expenditures 37,344,100 50,223,531 47,848,597 46,082,238

Excess of revenues

over (under) expenditures (6,527,321) (3,065,103) (3,180,557) (543,589)

Other financing sources (uses)

Proceeds from loan - - - 3,800,000

Transfers in 7,926,444 6,888,715 6,214,803 7,473,959

Transfers out (642,404) (8,112,830) (8,096,898) (8,120,138)

Sales of capital assets -

Total other financing

sources (uses) 7,284,040 (1,224,115) (1,882,095) 3,153,821

Extraordinary item - - - -

Net change in fund balances 756,719$ (4,289,218)$ (5,062,652)$ 2,610,232$

Debt service as a percentage of

noncapital expenditures 1.19% 1.72% 1.92% 1.02%

The City of San Gabriel had no debt prior to FY 2014-15

Fiscal Year

142

TABLE 4

2015 2014 2013 2012 2011 2010

21,739,077$ 21,225,348$ 21,115,668$ 19,707,269$ 19,971,918$ 18,967,156$

9,208,954 7,665,587 8,911,593 9,353,878 8,851,153 8,865,299

7,084,354 3,457,711 3,258,226 3,295,442 3,255,034 2,897,685

994,034 857,420 907,211 1,099,215 1,121,834 1,010,089

2,257,281 1,898,675 1,802,968 1,721,882 1,682,928 1,525,324

248,905 769,084 942,989 1,425,700 1,589,883 1,717,467

1,208,887 251,544 923,047 195,915 1,830,805 402,551

42,741,492 36,125,369 37,861,702 36,799,301 38,303,555 35,385,571

6,811,618 6,228,126 6,405,502 5,476,596 6,129,782 5,748,554

10,795,608 10,607,474 10,588,300 11,011,904 10,579,871 10,288,761

7,657,473 6,398,977 6,254,470 6,459,510 6,342,987 6,102,152

5,111,672 4,507,884 4,430,192 6,745,302 5,140,022 5,178,331

2,966,338 2,956,061 3,056,792 2,993,283 2,872,819 2,840,657

1,839,783 676,760 1,689,974 595,409 1,998,050 797,342

9,762,538 1,572,501 2,596,974 6,349,023 7,474,667 3,488,540

108,333 - - - - -

52,030 - - - - -

45,105,393 32,947,783 35,022,204 39,631,027 40,538,198 34,444,337

(2,363,901) 3,177,586 2,839,498 (2,831,726) (2,234,643) 941,234

7,800,000 - - - - -

5,306,780 4,446,410 4,858,716 5,315,085 5,813,008 5,768,687

(6,613,462) (5,614,635) (5,858,716) (6,135,322) (6,653,513) (6,580,756)

- - - - - -

6,493,318 (1,168,225) (1,000,000) (820,237) (840,505) (812,069)

- - - 1,805,302 - -

4,129,417$ 2,009,361$ 1,839,498$ (1,846,661)$ (3,075,148)$ 129,165$

0.45% - - - - -

Fiscal Year

143

City of San Gabriel TABLE 5

Assessed Value and Actual Value of Taxable Property


Fiscal

Year

Residential

Property

Commercial

Property

Industrial

Property

Less: Tax-

Exempt

Property

Total Taxable

Assessed Value

Total Assessed

ValueTotal Direct

Rate

2009-2010 2,722,164,237 918,206,629 78,518,715 35,961,299 3,718,889,581 3,754,850,880 0.27553

2010-2011 2,775,114,206 918,057,248 77,679,876 34,857,400 3,770,851,330 3,805,708,730 0.27532

2011-2012 2,856,205,133 909,646,117 80,043,712 35,658,601 3,845,890,962 3,881,549,563 0.27546

2012-2013 2,948,513,283 924,559,905 73,486,182 35,351,485 3,946,559,370 3,981,910,855 0.27426

2013-2014 3,077,659,813 933,384,303 78,114,044 40,290,255 4,089,297,310 4,129,587,565 0.24374

2014-2015 3,226,829,597 970,630,484 80,074,371 42,574,924 4,277,534,452 4,320,109,376 0.24384

2015-2016 3,407,339,170 1,022,934,271 82,866,431 43,241,832 4,513,139,872 4,556,381,704 0.24395

2016-2017 3,578,102,131 1,059,071,807 90,260,235 42,343,035 4,727,434,173 4,769,777,208 0.24404

2017-2018 3,769,933,014 1,144,617,776 90,254,101 40,384,860 5,004,804,891 5,045,189,751 0.24357

2018-2019 3,988,817,226 1,223,707,273 93,292,195 40,933,054 5,305,816,694 5,346,749,748 0.25023

Source: Los Angeles County Assessor's Office

144


Property Tax Rates

Direct and Overlapping Governments


(rate per $100 of assessed value)

2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10

Agency

Basic Levy 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000

Alhambra Unified School District 0.05404 0.10300 0.06111 0.06558 0.06595 0.06666 0.06760 0.07411 0.05996 0.05151

El Monte Union High School 0.08793 0.08243 0.08469 0.09155 0.08418 0.09799 0.08992 0.09591 0.08475 0.09654

Garvey School District 0.08705 0.08332 0.06067 0.05874 0.05947 0.05978 0.06037 0.05686 0.05733 0.05378

Garvey-Alhambra 0.08800 0.04805 0.02806 0.02906 0.02912 0.03154 0.02795 0.02718 0.02770 0.02458

LA Community College 0.04621 0.04599 0.03596 0.03575 0.04017 0.04454 0.04875 0.03530 0.04031 0.02311

Metropolitan Water District 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00370 0.00370 0.00430

Pasadena Community College 0.00767 0.00819 0.00885 0.00872 0.01032 0.01899 0.02056 0.01956 0.01986 0.02300

Rosemead School District 0.09260 0.11979 0.08533 0.09997 0.09886 0.10314 0.10240 0.10507 0.10743 0.11358

San Gabriel Unified School District 0.10563 0.10078 0.10534 0.10684 0.11444 0.10082 0.10523 0.08454 0.10190 0.10070

Tax District #1 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000

Temple City Unified 0.10245 0.10232 - - - - - - - -

Total Direct and Overlapping Tax Rates 1.81508 1.83737 1.61351 1.63971 1.64600 1.66697 1.66628 1.64222 1.64294 1.63110

City's Share of 1% Levy Per Prop 13 0.10637 0.10637 0.10637 0.10637 0.10637 0.10637 0.10637 0.10637 0.10637 0.10637

Voter Approved City Debt Levy 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000 0.14000

Redevelopment Rate - - - - - - - 1.14370 1.14370 1.14370

Total Direct Rate 0.25023 0.24357 0.24404 0.24395 0.24384 0.24374 0.27426 0.27546 0.27532 0.27553

Source: Los Angeles County Assessor 2009/10 -2018/19 Tax Rate Table.

Fiscal Year

Direct Rate is the rate applied pursuant to Proposition 13 and excludes revenues derived from aircraft. Overlapping rates are those of local and county governments that apply to property owners within theCity. Not all overlapping rates apply to all city property owners.

145

City of San Gabriel Table 7

Principal Property Taxpayers


(amounts expressed in thousands)

Taxable

Assessed

Value Rank

Percentage

of Total

Taxable

Assessed

Value

Taxable

Assessed

Value Rank

Percentage

of Total

Taxable

Assessed

Value

Taxpayer

Landwin Hospitality LLC 79,111$ 1 1.49% 51,880$ 2 1.40%

Universal Shopping Plaza 67,529 2 1.27% 59,666 1 1.60%

SGVMC CALMED Investment LP (aka

San Gabriel Valley Medical Center) 42,020 3 0.79% 37,128 3 1.00%

Pacific Square San Gabriel 32,253 4 0.61%

Forever Enterprises LLC 31,141 5 0.59%

Lancer Investment LLC 24,061 6 0.45% 25,905 4 0.70%

NHP PMB San Gabriel Vly Med. Plaza (aka San Gabriel Medical Plaza LLC) 21,946 7 0.41% 21,552 6 0.58%

San Yi US Investment Company Inc. 16,874 8 0.32%

Demer Properties Inc. 20,005 9 0.38% 17,677 8 0.48%

Royal Vista Care Properties LLC 19,309 10 0.36% -

Valley Del Mar Plaza LLC - - 22,440 5 0.60%

Tony C. Chu Trust 21,300 7 0.57%

Setiawan Boedi Trust 16,854 9 0.45%

SG Gateway Center 16,801 10 0.45%

354,249$ 6.68% 291,203$ 7.83%

Source: Los Angeles County Assessor

20102019

146


Property Tax Levies and Collections


(amounts expressed in thousands)

Total Tax

Levy for

Fiscal Year Fiscal Year (1) Amount (2)Amount

2009-2010 8,974,995 8,127,697 91% 328,444 8,456,142 94%

2010-2011 8,530,846 8,258,096 97% 298,579 8,556,675 100%

2011-2012 9,047,677 8,520,858 94% 569,336 9,090,194 100%

2012-2013 9,585,668 9,128,515 95% 176,089 9,304,604 97%

2013-2014 9,627,987 9,289,993 96% 140,421 9,430,414 98%

2014-2015 10,209,947 9,726,022 95% 124,800 9,850,821 96%

2015-2016 10,754,860 10,222,984 95% 144,623 10,367,607 96%

2016-2017 11,071,673 10,592,003 96% 193,677 10,785,680 97%

2017-2018 11,617,441 11,055,784 95% 304,234 11,360,018 98%

2018-2019 13,069,050 12,522,902 96% 198,372 12,721,274 97%

(1) Total original tax levy for the fiscal year.

(2) Collections excluded penalty and interest.

Source: Los Angeles County Auditor-Controller

Subsequent YearsPercentage of Levy

Total Collections to Date

Percentage of Levy

Collected within the

Fiscal Year of the Levy Collections in

147


Schedule of Direct and Overlapping Debt

June 30, 2019

6/30/2019

Direct Debt:

CITY INDEBTEDNESS 1.000 $ 9,241,930

Overlapping Bonded Debt:

METROPOLITAN WATER DISTRICT 0.410 23,317,224 95,614

GARVEY SCHOOL DISTRICT 2004 SERIES 2006 12.329 12,674,618 1,562,647

GARVEY SCHOOL DISTRICT 2004 SERIES C 12.329 8,317,964 1,025,517

GARVEY SCHOOL DISTRICT 2011 REFUND BONDS 12.329 3,175,000 391,444

GARVEY SCHOOL DISTRICT 2013 REFUND BONDS 12.329 950,000 117,125

GARVEY SCHOOL DISTRICT 2014 REFUND BONDS 12.329 3,575,000 440,760

GARVEY SCHOOL DISTRICT 2016 SERIES A 12.329 19,500,000 2,404,145

ROSEMEAD SCHOOL DISTRICT DS 2007 SERIES D 11.212 120,000 13,455

ROSEMEAD SCHOOL DISTRICT DS 2008 SERIES A 11.212 215,000 24,107

ROSEMEAD SD DS 2011 REFUNDING BONDS 11.212 6,195,000 694,612


ROSEMEAD SD DS 2008 SERIES T 1 11.212 7,566,503 848,391


ROSEMEAD SD DS 2016 REFUNDING BONDS 11.212 12,235,000 1,371,844

ROSEMEAD SD DS 2014 SERIES A 11.212 9,000,000 1,009,121

ROSEMEAD SD DS 2014 SERIES T 2 11.212 175,000 19,622

EL MONTE UNION HSD DS 2008 SERIES A 2.403 30,041,132 721,888

EL MONTE UNION HSD DS 2008 SERIES B 2.403 25,830,000 620,695

EL MONTE UNION HSD DS 2015 REFUND BONDS 2.403 10,765,000 258,683

EL MONTE UNION HSD DS 2016 REF DLYD DLVR 2.403 4,165,000 100,085

EL MONTE UNION HSD DS 2008 SERIES C 2.403 48,525,000 1,166,056

EL MONTE UNION HSD DS 2016 REF BONDS 2.403 10,650,098 255,922

EL MONTE UNION HSD DS 2008 SERIES D 2.403 56,430,000 1,356,013

LA CCD DS 2003 TAXABLE SERIES 2004B 0.582 2,115,000 12,302

LA CCD DS 2001 TAXABLE SERIES 2004A 0.582 31,555,000 183,548

LA CCD DS 2008, 2009 TAXABLE SERIES B 0.582 75,000,000 436,257

LA CCD DS 2008, 2010 TAXABLE SERIES D 0.582 125,000,000 727,094

LA CCD DS 2008, 2010 TAX SERIES E (BABS) 0.582 900,000,000 5,235,078

LA CCD DS 2008 2012 SERIES F 0.582 202,000,000 1,174,984

LA CCD DS 2013 REFUNDING BONDS 0.582 38,945,000 226,533

LA CCD DS 2008 SERIES G 0.582 212,070,000 1,233,559

LA CCD DS 2015 REFUNDING SERIES A 0.582 1,429,435,000 8,314,671

LA CCD DS 2015 REFUNDING SERIES B 0.582 28,830,000 167,697

LA CCD DS 2015 REFUNDING SERIES C 0.582 252,150,000 1,466,694

LA CCD DS 2008 SERIES I 0.582 210,570,000 1,224,834

LA CCD DS 2008 SERIES J 0.582 174,965,000 1,017,728

LA CCD DS 2016 REF BONDS 0.582 247,755,000 1,441,130

PASADENA AREA CCD DS 2002, 2006 SERIES D 0.403 1,840,000 7,408

PASADENA AREA CCD DS 2002, 2009 SER E (BABS) 0.403 25,295,000 101,837

PASADENA AREA CCD DS 2014 REF SERIES A 0.403 13,900,000 55,961

PASADENA AREA CCD DS 2016 REF SERIES A 0.403 32,395,000 130,422

SAN GABRIEL USD DS 2010 REFUND BONDS 75.227 8,404,370 6,322,324

SAN GABRIEL USD DS 2008 SERIES B 75.227 5,900,000 4,438,371

SAN GABRIEL USD DS 2012 REF BOND SERIES B 75.227 14,177,023 10,664,896

SAN GABRIEL USD DS 2008 SERIES C 75.227 22,918,806 17,241,045

SAN GABRIEL USD DS 2015 REF BOND SERIES A 75.227 31,925,000 24,016,101

ALHAMBRA USD DS 1999 SERIES A 0.016 6,512,345 1,047

Percent Applicable

to City of

San Gabriel

Amount Applicable

to City of

San Gabriel

$ 9,241,930

148


Schedule of Direct and Overlapping Debt

June 30, 2019

6/30/2019

Percent Applicable

to City of

San Gabriel

Amount Applicable

to City of

San Gabriel

ALHAMBRA USD DS 2005 REFUNDING BONDS 0.016 4,565,000 734

ALHAMBRA USD DS 2008 SERIES A SFID 0.016 11,324,708 1,821

ALHAMBRA USD-GARVEY DS 2004 SERIES B 0.016 21,694,695 3,488

ALHAMBRA USD DS 2008 SERIES B-1 QSCB 0.016 7,934,000 1,276

ALHAMBRA USD-GARVEY DS 2012 REF SERIES A 0.016 34,315,000 5,517

ALHAMBRA USD DS 2012 REF SERIES B 0.016 3,455,000 555

ALHAMBRA USD-GARVEY DS 2016 REF SERIES A 0.016 10,670,000 1,715

ALHAMBRA USD DS 2016 REF BOND SERIES B 0.016 22,985,000 3,695

ALHAMBRA USD DS 2016 SERIES A 0.016 30,000,000 4,823

ALHAMBRA USD-GARVEY DS 2016 SERIES A 0.016 25,000,000 4,019

TEMPLE CITY USD DS 1998 SERIES B 0.003 4,331,661 138

TEMPLE CITY USD DS 2005 REFUNDING BOND 0.003 8,580,000 273

TEMPLE CITY USD DS 2012 SERIES A 0.003 21,915,863 696

TEMPLE CITY USD DS 2012 SERIES B 0.003 33,457,588 1,063

TEMPLE CITY USD DS 2017 REFUNDING BOND 0.003 19,720,000 627

Total Overlapping Debt: 101,571,683

Total Direct and Overlapping Debt:

Source: HdL Coren & Cone, Los Angeles County Assessor and Auditor Combined 2018/19 Lien Date Tax Rolls.

110,813,613$

Overlapping governments are those that coincide, at least in part, wth the geographic boundaries of the city. The percentage of overlapping debt applicable is

estimated by using taxable assessed values. Applicable percentages were estimated by determining the portion of anothe rgovernmental unit's taxable assessed value

that is within the city's coundaries and dividing it by each unit's total taxable assessed value

149

City of San GabrielLegal Debt Margin Information


2019 2018 2017 2016

5,305,816,694 5,004,804,891 4,727,434,173 4,513,139,872

25% 25% 25% 25%

1,326,454,174 1,251,201,223 1,181,858,543 1,128,284,968

15% 15% 15% 15%

198,968,126 187,680,183 177,278,781 169,242,745

- - - -

198,968,126 187,680,183 177,278,781 169,242,745

0% 0% 0% 0%

Source: (1) Los Angeles County Assessor

(2) City Finance Department

Conversion percentage

Fiscal Year

Adjusted assessed valuation

Debt limit percentage

Debt limit

The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision

was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed

at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of

assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the

legal debt margin was enacted by the State of California for local governments located within the state.

Legal debt margin

Total debt applicable to the limit as a percentage

of debt limit

Total net debt applicable to limit:

Total Taxable Assessed value

150

TABLE 10

2015 2014 2013 2012 2011 2010

4,277,534,452 4,089,297,310 3,946,559,370 3,845,890,962 3,770,851,330 3,718,889,581

25% 25% 25% 25% 25% 25%

1,069,383,613 1,022,324,328 986,639,843 961,472,741 942,712,833 929,722,395

15% 15% 15% 15% 15% 15%

160,407,542 153,348,649 147,995,976 144,220,911 141,406,925 139,458,359

- - - - - -

160,407,542 153,348,649 147,995,976 144,220,911 141,406,925 139,458,359

0% 0% 0% 0% 0% 0%

Fiscal Year

151

City of San GabrielRatios of Outstanding Debt by Type

Last Five Fiscal Years

2019 2018 2017 2016 2015


Loan Payable 1 6,651,667$ 6,911,667$ 7,171,667$ 7,431,667$ 7,691,667$

Installment Sale Agreement 2 3,132,258 3,362,538 3,585,031 3,800,000 -

Total Long-Term Liabilities 9,783,925$ 10,274,205$ 10,756,698$ 11,231,667$ 7,691,667$

41178 40920 41,020 40,424 40,219

Number of Households 12925 12946 12,333 12,723 12,535

Median Household Income 62,050$ 65,080$ 51,579$ 60,222$ 57,666$

Per Capita Personal Income 27550 29063 24,891$ 27,059$ 24,891$

Debt per Capita 238$ 251$ 262$ 278$ 191$

Notes: 1

2

Sources:

TABLE 11

Fiscal Year

California State Department of Finance; US Census Bureau; California Hometown Locator.com

Population - State Department of Finance

January 1

On December 16, 2014, the City entered into a loan agreement with Citizens Business Bank for a loan of $7,800,000. The

loan proceeds were used for the construction of the new public works maintenance facility. The City began repaying the

loan, beginning on February 21, 2015, in 119 principal payments of $21,667 each and one final principle and interest

payments of $5,221,667 on January 21, 2025. Please see Notes to Basic Financial Statements, No. 5, for further details.

On May 1, 2015, the City entered into an installment sale agreement with the California Infrastructure and Economic

Development Bank (I-Bank) to finance the accelerated great street program, which will upgrade, reconstruct and

rehabilitate approximately 1.6 lane miles of public streets within the City. Principal and interest payments are due on each

August 1 and February 1, commencing on August 1, 2016 and maturing on August 1, 2029. Please see Notes to Basic

Financial Statements, No. 5, for further details.

152


Demographic Statistics


Fiscal Year

2010 42,984 956,609 22,255 10.40%

2011 39,926 984,455 24,657 10.10%

2012 40,153 1,009,727 25,147 7.60%

2013 40,313 995,691 24,699 6.20%

2014 40,332 991,119 24,574 5.10%

2015 40,424 1,006,220 24,891 4.10%

2016 41,020 949,919 23,157 3.20%

2017 40,920 976,112 23,854 3.60%

2018 41,178 1,017,730 24,715 3.70%

2019 41,255 *

(*) Estimated

Source: (1) Estimates from California State Department of Finance(2) HDL report. (3) California Employment Development Department

Personal Income (2)

(In Thousands)City Population (1)

Per Capita Personal

Income (2)

Unemployment

Rate (3)

153

City of San GabrielPrincipal Employers


Employer

No. of

Employees Rank

% of Total

City

Employees

No. of

Employees Rank

% of Total

City

Employees

AHMC SAN GABRIEL VALLEY

MEDICAL1062 1 11.27% 924 1 11.51%

LANDWIN HOSPITALITY LLC. 150 2 1.59% 80 10 1.00%

IVY CREEK HEALTHCARE &

WELLNESS CENTRE147 3 1.56%

SGV HEALTHCARE INC. (aka Live

Oak)147 4 1.56% 137 4 1.71%

99 RANCH MARKET #208 (TAWA) 143 5 1.52% 180 2 2.24%

ROYAL VISTA CARE CENTER, LLC

(aka Vista Cove Care Center)123 6 1.31% 103 6 1.28%

SAN GABRIEL COUNTRY CLUB 120 7 1.27%

PINE GROVE HEALTHCARE &

WELLNESS CENTRE116 8 1.23%

FIVE STAR SEAFOOD

RESTAURANT105 9 1.11%

SAN GABRIEL SUPERSTORE 105 10 1.11% 139 3 1.73%

HAWAII SUPERMARKET 99 11 1.05%

BROADWAY HEALTH CARE

CENTER91 12 0.97%

168 MARKET #803 72 13 0.76%

ALDERWOOD MANOR 114 5 1.42%

MISSION LODGE SANITARIUM 87 8 1.08%

PARK UNIFORM RENTAL 85 9 1.06%

FERNWOOD CONVALESCENT

HOSPITAL95 7 1.18%

MARCO'S AUTO BODY, INC. 65 12 0.81%

A G SAN GABRIEL, LLC 71 11

O'DONNELL CHEVROLET-GEO

BUICK59 13 0.73%

Source: City Finance Dept

20102019

TABLE 13

154

City of San Gabriel Table 14

Top 25 Sales Tax Producers


Sales Tax Producers Business Category Sales Tax Producers Business Category

76 Service Stations 99 Ranch Market Grocery Stores

Airstream Los Angeles Trailers/RVs Albertsons Grocery Stores

Boston Lobster Casual Dining AM PM Mini Mart Service Stations

Chong Hing Jewelers Jewelry Stores Carl's Jr Quick-Service Restaurants

Ferguson Enterprises Plumbing/Electrical Supplies Chong Hing Jewelers Jewelry Stores

Five Star Seafood Restaurant Casual Dining Ferguson Enterprises Plumbing/Electrical Supplies

Garvey Equipment Garden/Agricultural Supplies Garvey Equipment Garden/Agricultural Supplies

Golden Deli Vietnamese Restaurant Casual Dining Hilton Hotels-Liquor

Hilton Hotels-Liquor Hing Wa Lee Jewelers Jewelry Stores

Hing Wa Lee Jewelers Jewelry Stores Howards Appliances Electronics/Appliance Stores

Mission Car Wash Service Stations JHM Supply Garden/Agricultural Supplies

Mission Hardware Building Materials Kwik/Al Sal Oil Service Stations

Newport Seafood Casual Dining Marcos Auto Body Auto Repair Shops

Oil Lee Service Stations MCS Water Technology Contractors

Sam Wood BBQ Casual Dining Mission Car Wash Service Stations

San Gabriel 76 Service Stations Mission Hardware Building Materials

San Gabriel Country Club Leisure/Entertainment New Capital Seafood Restaurant Fine Dining

San Gabriel Mobil Servince Center Service Stations Newport Seafood Casual Dining

Service King Paint & Body Auto Repair Shops O Donnell Chevrolet Buick New Motor Vehicle Dealers

Shancheng Lameizi Casual Dining Plumbing Wholesale Outlet Plumbing/Electrical Supplies

Sun Nong Dan Casual Dining San Gabriel 76 Service Stations

T Mobile Electronics/Appliance Stores San Gabriel Nursery Florist Garden/Agricultural Supplies

Tivoli Jewelry Jewlery Stores San Gabriel Service Center Service Stations

Union 76 Service Stations Shell Service Stations

USA Gasoline Service Stations Union 76 Service Stations

*Firms Listed Alphabetically

Source: HDL Report

2019 2010Fiscal Year

155


Full-time Equivalent City Government Employees by Function/Program


2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Function/Program

General government

Management services 20 18 18 18 8 8 7 7 7 6

Finance 9 10 10 10 9 8 9 7 8 9

Planning 4 4 4 4 3 3 3 4 4 3

Building 4 4 4 4 2 2 4 4 4 4

Other 7 7 7 9 4 4 5 5 5 4

Police

Officers 54 54 54 54 51 53 52 52 53 54 Civilians 15 15 15 15 16 15 14 14 14 15Fire

Firefighters and officers 35 36 35 34 28 28 29 29 30 33

Civilians 1 1 1 1 1 1 1 1 1 1Highways and streets Engineering 9 15 15 12 4 3 3 3 3 2

Maintenance 26 17 17 17 13 13 16 17 17 17

Redevelopment 0 0 0 0 0 0 0 1 1 1

Parks and recreation 14 14 14 12 18 18 20 21 21 22

Total 198 195 194 190 157 156 163 165 168 171

Source: City Finance Department

Full-time Equivalent Employees

156


Operating Indicators by Function/Program


2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Function/Program

General government

Building permits issued 941 632 1,765 2,040 1,935 1,734 1,682 1,517 1,349 1,355

Building inspections conducted 3,981 896 5,219 4,851 5,448 5,103 4,794 5,256 5,143 5,381

Business licenses processed 4,000 3,900 3,996 3,900 3,874 3,817 3,777 3,484 3,379 3,380

Overnight parking applications processed 1,741 1,600 1,576 1,650 1,635 1,604 1,576 1,484 1,425 1,450

Number of city website visitors * 480,191 439,175 376,701 337,024 313,979 195,557

Police

Physical arrests 691 609 725 608 582 587 617 691 825 722

Parking violations 10,905 7,472 11,815 13,151 14,246 14,689 14,246 18,196 18,196 17,165

Traffic violations 5,541 4,227 5,005 5,549 5,059 5,617 6,312 9,400 9,400 10,001

Fire

Emergency responses 2,453 2,987 3,210 3,260 2,451 2,340 2,283 2,300 2,102 2,008

Inspections 1,729 1,499 2,515 2,515 2,485 3,408 2,641 2,173 2,638 2,615

Highways and streets

Street resurfacing (miles) 3.4 20.0 7.6 1 4 - 1 10 1 3

Culture and recreation

Classes offered 426 448 347 452 489 362 459 326 352 352

Facility rentals 514 500 626 740 803 105 44 55 52 51

* The City of San Gabriel began tracking website visitors in 2013-14.

Source: City Departments

Fiscal Year

157

City of San GabrielCapital Asset Statistics by Function


2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Function/Program

Public safety

Police

Stations 1 1 1 1 1 1 1 1 1 1

Patrol units 43 40 40 38 34 38 37 35 27 26

Fire

Fire stations 2 2 2 2 2 2 2 2 2 2

Highways and streets

Streets (miles) 80 80 80 80 80 80 72 72 72 72

Streetlights 1043 848 834 816 800 800 800 800 800 800

Traffic signals 36 37 37 36 36 36 36 36 36 36

Culture and recreation

Parks acreage * 31.62 31.62 29.27 25 25 25 25 25 25 25

Parks 7 7 6 4 4 4 4 4 4 4

Swimming pools 1 1 1 1 1 1 1 1 1 1

Tennis courts 6 6 6 6 6 6 6 6 6 6

Community centers 2 2 2 2 2 2 2 2 2 2

* By agreement between the City of San Gabriel and the San Gabriel Unified School District, the City will use parks owned by the school district as public parks.

The parks are: Coolidge School Park 1.75 acres

Washington School Park 2.52 acres

Source: City Departments

TABLE 17

Fiscal Year

158

City of San Gabriel, California COMPREHENSIVE ANNUAL ...

Documents

Transcript of City of San Gabriel, California COMPREHENSIVE ANNUAL ...