Carmel Annual Financial Report Fy Ending 2012

CITY OF CARMEL-BY-THE-SEA, CALIFORNIA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2012
Prepared by: Paul Wood Interim Finance Director
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City of Carmel-by-the-Sea, California

Basic Financial Statements For the year ended June 30, 2012 Table of Contents
Page INTRODUCTORY SECTION Table of Contents ..................................................................................................................................i Organization Chart ........................................................................................................................... iii List of Officials iv FINANCIAL SECTION Independent Auditors Report ........................................................................................................... 1 Managements Discussion and Analysis (Required Supplementary Information) ....................... 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets ........................................................................................................... 17 Statement of Activities ............................................................................................................ 18 Fund Financial Statements: Governmental Funds: Balance Sheet ................................................................................................................................ 22 Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Assets ........................................................................................................... 24 Reconciliation of Fund Basis Balance Sheet to Government-wide Statement of Net Assets Governmental Activities ............................................................... 25 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds ................................................................................ 26 Reconciliation of Fund Basis Statements to Government-wide Statement of Activities ............................................................................................................ 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................... 29 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual General Fund and Major Special Revenue Funds ................................................................................................. 30

Basic Financial Statements For the year ended June 30, 2012 Table of Contents, Continued
Page Basic Financial Statements, Continued: Notes to Basic Financial Statements .......................................................................................... 35 Other Supplemental Information: Required Supplementary Information: Other Postemployment Benefits Schedule of Funding Progress ................................................ 64 Combining and Individual Fund Financial Statements and Schedules: Nonmajor Governmental Funds: Combining Balance Sheet ............................................................................................................. 68 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ............................................................................................................... 70 Nonmajor Special Revenue Funds: Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget to Actual ............................................................................................................... 72 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standard .................................................................. 77
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Basic Financial Statements For the year ended June 30, 2012 Organization Chart
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Basic Financial Statements For the year ended June 30, 2012 List of Officials
CITY COUNCIL Jason Burnett, Mayor Ken Talmage, Vice Mayor Victoria Beach, Councilmember Paula Hazdovac, Councilmember Steve Hillyard, Councilmember
CITY OFFICIALS Jason Stilwell, City Administrator Don Freeman, City Attorney Heidi Burch, Asst City Administrator/ City Clerk James Emery , City Treasurer Sherman Low, City Engineer Deanna Allen, Finance Specialist Steve McInchak, Information Services Manager
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INDEPENDENT AUDITORS REPORT
To the Honorable Mayor and City Council of the City of Carmel-by-the-Sea Carmel-by-the-Sea, California
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Carmel-by-the-Sea, California (City), as of and for the year ended June 30, 2012, which collectively comprise the Citys basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Citys management. 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 of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Citys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions In our opinion, the financial statements referred to previously 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 Carmel-by-the-Sea, as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated April 30, 2013 on our consideration of the Citys internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
To the Honorable Mayor and City Council of the City of Carmel-by-the-Sea Carmel-by-the-Sea, California Page 2
Accounting principles generally accepted in the United States of America require that the Managements Discussion and Analysis, budgetary comparison information and other information listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with managements responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Citys financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 and individual nonmajor fund financial statements are fairly stated in all material respects in relation to the financial statements as a whole.
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Basic Financial Statements For the year ended June 30, 2012 Managements Discussion and Analysis
This section provides a narrative overview and analysis of the financial activities of the City of Carmel-by-the-Sea (City) for the fiscal year ended June 30, 2012. It should be read in conjunction with the accompanying transmittal letter and basic financial statements. FINANCIAL HIGHLIGHTS As of June 30, 2012, total assets of the City exceeded its liabilities by $39,338,401 (net assets). The portion of net assets that may be used to meet the governments ongoing obligations to citizens and creditors (unrestricted net assets) is $7,408,523. The portion of net assets that are restricted and may only be used for specific purposes is $555,524. The remaining $31,374,354 is invested in capital assets. As of June 30, 2012, the Citys governmental funds reported combined ending fund balances of $9,368,824. Approximately .5% of this total amount ($46,747) is non-spendable to indicate that it is not available because it represents amounts that are more long-term in nature or will never be converted to cash. Of the remaining balance, $555,524 is restricted because it represents resources that are required to be spent for specific purposes as provided by an external source. The committed balance of $4,258,441 represents a Council commitment for economic uncertainties and anticipated future short-term structural deficits. The assigned fund balances in Special Revenue and Capital Projects Funds amounted to $1,506,992 and represented Library, Parking and Ambulance Fund items. The remaining fund balance is unassigned. Capital assets, net of depreciation, increased to $31,374,354 from $18,593,603, mostly due to the capitalization of the City streets ($13,760,000) and other capital purchases ($1,066,867), routine depreciation ($714,071) and the remainder to net asset disposition ($422,764).

Basic Financial Statements For the year ended June 30, 2012 Managements Discussion and Analysis, Continued
OVERVIEW OF THE ANNUAL FINANCIAL REPORT This Annual Financial Report is in two major parts: 1) Introductory section, which includes the Transmittal Letter and general information; 2) Financial section, which includes the Managements Discussion and Analysis (this part), the Basic Financial Statements, which include the Government-wide and the Fund Financial Statements along with the notes to these financial statements and Combining and Individual Fund Financial Statements and Schedules. The Basic Financial Statements The Basic Financial Statements are comprised of the Government-wide Financial Statements and the Fund Financial Statements; these two sets of financial statements provide two different views of the Citys financial activities and financial position. The Government-wide Financial Statements The Government-wide Financial Statements provide a broad overview of the Citys activities as a whole and comprise the Statement of Net Assets and the Statement of Activities. The Statement of Net Assets provides information about the financial position of the City as a whole, including all its capital assets and long-term liabilities on the full accrual basis, similar to that used by corporations. The Statement of Activities provides information about all the Citys revenues and all its expenses, also on the full accrual basis, with the emphasis on measuring net revenues or expenses of each the Citys programs. The Statement of Activities explains in detail the change in Net Assets for the year. All of the Citys activities are grouped into Governmental Activities and Business-type activities, as explained below. All the amounts in the Statement of Net Assets and the Statement of Activities are separated into Governmental Activities and Business-type Activities in order to provide a summary of these two activities of the City as a whole. Governmental activities All of the Citys basic services are considered to be governmental activities, including general government, community development, economic development, public safety, animal control, engineering, community events, public improvements, planning and zoning, building inspections, and general administration. These services are supported by general City revenues such as taxes and by specific program revenues such as developer fees.

OVERVIEW OF THE ANNUAL FINANCIAL REPORT, Continued The Government-wide Financial Statements, Continued Business-type activities All the Citys enterprise activities are reported here. The Citys Business-type activity funds are the Sewer Service Funds. Unlike governmental services, these services are supported by charges paid by users based on the amount of the service they use. 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the Government-wide Financial Statements. However, unlike the Government-wide Financial Statements, Governmental Fund Financial Statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a governments near-term financing requirements. Because the focus of the Governmental Fund Financial Statements is narrower than that of the Government-wide Financial Statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the Governmentwide Financial Statement. By doing so, readers may better understand the long-term impact of the governments near-term financial decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Governmental Fund Financial Statements provide detailed information about each of the Citys most significant funds, called major funds. The concept of major funds, and the determination of which are major funds, was established by GASB Statement 34 and replaces the concept of combining like funds and presenting them as one total. Instead, each major fund is presented individually, with all non-major funds summarized and presented only in a single column. Subordinate schedules present the detail of these non-major funds. Major funds present the major activities of the City for the year, and may change from year to year as a result of changes in the pattern of the Citys activities.

OVERVIEW OF THE ANNUAL FINANCIAL REPORT, Continued Fund Financial Statements, Continued For the fiscal year ended June 30, 2012, the Citys major funds are as follows: GOVERNMENTAL FUNDS: General Fund Harrison Memorial Library Special Revenue Fund Parking Special Revenue Fund Ambulance Special Revenue Fund Notes to the Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the Government-wide and Fund Financial Statements. The notes to the basic financial statements can be found on pages 35-62 of this report. Required Supplementary Information follows the notes on Page 63. Combining and Individual Fund Financial Statements and Schedules The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the notes to the financial statements. Combining and individual fund statements can be found on pages 65-75 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a governments financial position. In the case of the City, assets exceeded liabilities by $25,578,401as of June 30, 2012. The Summary of Net Assets as of June 30, 2012, and 2011, follows:
Summary of Net Assets 2012 Governmental Activities Current and other assets Noncurrent assets Total assets Current and other liabilities Long-term liabilities Total liabilities Net assets: Invested in capital assets, net of relared debt Restricted Unrestricted Total net assets $ 11,027,118 39,349,535 50,376,653 1,377,759 9,660,493 11,038,252 $ 2011 Governmental Activities 11,390,087 26,634,170 38,024,257 923,715 9,181,803 10,105,518 $
Changes (362,969) 12,715,365 12,352,396 454,044 478,690 932,734
31,374,354 555,524 7,408,523 $ 39,338,401 $
18,593,603 440,523 8,884,613 27,918,739 $
12,780,751 115,001 (1,476,090) 11,419,662

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued The change in net assets for the fiscal years ended June 30, 2012, and 2011, follows:
Changes in Net Assets 2012 Governmental Activities Revenues: Program revenues: Charges for services Grants and contributions: Operating Capital General revenues: Property taxes and assessments Transient occupancy taxes Sales tax Franchises Business licenses Use of money and property Other general revenues Total revenues Expenses: Governmental activities: Administration Infrastructure capitalization Building maintenance Public safety Public works Forest, parks and beaches Culture and recreation Economic development Interest and fiscal charges Total expenses Excess (Deficiency) of revenues over expenditures before transfers Transfers Change in net assets Net assets: Beginning of year End of year 2011 Governmental Activities
Changes
493,248 871,230 -
409,677 668,762 465,881
83,571 202,468 (465,881)
4,571,481 4,179,900 1,743,748 491,674 532,019 55,995 276,751 13,216,046
4,157,789 4,002,509 1,805,510 476,597 591,248 109,602 142,923 12,830,498
413,692 177,391 (61,762) 15,077 (59,229) (53,607) 133,828 385,548
2,904,382 (13,760,000) 2,718,581 4,694,672 1,790,684 1,578,381 1,314,073 361,458 194,153 1,796,384 11,419,662 11,419,662 27,918,739 39,338,401
3,448,824 5,142,244 1,271,318 2,619,273 638,255 50,576 13,170,490 (339,992) (339,992) 28,258,731 27,918,739
(544,442) (13,760,000) (2,423,663) 3,423,354 (828,589) 940,126 1,314,073 50,576 (11,828,565) 12,214,113 12,214,113 28,258,731 40,472,844

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Revenues The Citys total revenues for governmental were $13,216,046 for the fiscal year ended June 30, 2012. Approximately 79% of the Citys key revenues are generated from three major sources. The following discusses variances in key revenues from the prior fiscal year: 1. Sales Tax. Annual receipts decreased approximately 3.4%. This decrease is attributed to a decrease in spending. We anticipate that sales tax revenue will remain flat next fiscal year. 2. Property Taxes. Property taxes increased 9.9% over last year reflecting a strengthening real estate market over the past year. 3. Transient occupancy taxes. Hostelry taxes increased 4.4% reflecting at least a stabilization of tourism and potential benefit from citywide and individual marketing efforts.

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Expenses Governmental activity expenses of the City for the year totaled $15,556,384 less infrastructure capitalization of $13,760,000. Public Safety costs represented 30% of total governmental activities expenses and represented the largest single expense for governmental activities. Governmental Activities The following table shows the cost of each of the Citys major programs and the net cost of the programs. Net cost is the total cost less fees and other direct revenue generated by the activities. The net cost reflects the financial burden that was placed on the Citys taxpayers by each of the programs. The total cost of services and the net cost of services for the fiscal years ended June 30, 2012, and 2011, are as follows:
2012 Total Cost of Services
Administration Infrastructure capitalization Building maintenance Public safety Public works Forest, parks and beaches Culture and recreation Economic development Interest and fiscal charges
2011 Net Cost of Services $ 2,899,647 (13,760,000) 2,718,581 4,065,576 1,096,067 1,578,381 1,278,043 361,458 194,153 431,906 $ Total Cost of Services 2,366,964 1,176,372 5,438,855 1,183,461 1,560,321 1,032,484 361,457 50,576 13,170,490 $ Net Cost of Services 2,037,298 1,176,372 5,381,002 1,097,757 1,560,321 660,983 361,457 50,576 12,325,766
2,904,382 (13,760,000) 2,718,581 4,694,672 1,790,684 1,578,381 1,314,073 361,458 194,153 1,796,384
Total
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GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Revenues by source for the fiscal years ended June 30, 2012, and 2011, are as follows:
Revenues by Source - Governmental Activities 2012
Use of money & property 0.42% Business licenses 4.03% Franchises 3.72% Other 2.09% Charges for services 3.73% Operating grants 4.46% Capital grants 2.13%
Sales and use tax 13.19%
Transient occupancy tax 31.63%
Property taxes 34.59%
Revenues by Source - Governmental Activities 2011 Use of money Other general

revenues 1.11% Business licenses 4.61% Franchises 3.71% and property 0.85% Charges for services 3.19% Operating grants 5.21% Capital grants 3.63%
Sales tax 14.07% Property taxes 32.41%
Transient occupancy taxes 31.20%
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GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Financial Analysis of the Governments Funds The City of Carmel-by-the-Sea uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The fund financial statements focus on individual parts of the City government, reporting the Citys operations in more detail than the government-wide financial statements. Governmental funds. The Citys governmental funds provide information on near-term inflows, outflows, and balances of spending resources. At the fiscal year ended June 30, 2012, the Citys governmental funds reported combined fund balances of $9,368,824. This is a decrease of $1,117,277 or 10.% under last year. The decrease was mainly due to the use of capital reserves to fund capital improvements. The General Fund is the chief operating fund of the City. At the fiscal year ended June 30, 2012, General Fund committed and unassigned fund balance totaled $7,259,561 of which $3,001,120 was unassigned. General Fund Budgetary Highlights The difference between the final budget and actual revenues reflects a positive amount of $126,127. This was mainly due to an increase in property tax revenue, resulting in property taxes being over budget. There was a $110,357 difference between the total original expenditures budget and the total final amended budget. Actual expenditures were $317,560 over budget (less than 2.5% of budget). This was mainly due to fees related to the Flanders suit. Capital Assets The Citys investment in capital assets for its governmental activities as of June 30, 2012, amount to $39,349,535. This investment in capital assets includes roads, curbs and gutters, streets and sidewalks, and drainage systems.
Governmental Activities 2012 2011 3,488,036 $ 3,960,656 1,467,918 1,467,918 19,257,849 20,059,332 409,114 451,827 13,760,000 966,618 614,517 39,349,535 $ 26,554,250
Land Art Buildings and improvements Vehicles Infrastructure Machinery and equipment Total
More detail of the capital assets and current activity can be found in the notes to the financial statements on Pages 41 and 42 for significant accounting policies and Note 4 on Page 50 for other capital asset information.
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GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Debt Administration Debt, considered a liability of governmental activities, increased by $322,155, reflecting the pay down of the Sunset bond and lease obligations, offset by an increase in the OPEB obligation, see Note 6 on page 52. Compensated absences decreased by $242,812 to $538,371 of which $179,465 is considered a current liability. Economic Outlook Fiscal year 2012-2013 will continue to be another challenging year. While rising national consumer spending and confidence, assisted by an extraordinary simulative Federal Reserve, helped to keep the US economy from a technical recession, most local governments have experienced otherwise. Many local governments have had to deal with the opposing financial needs of state government, particularly here in California, which has an estimated budget deficit of over $20 billion for each year through fiscal year 2015-2016, according to the Legislative Analyst's Office (LAO). The states fiscal crisis will likely impose any meaningful growth as the battle over budgetary cuts and the relentless pursuit for locally collected revenues continues. Somewhat promising, recent unemployment figures for the Monterey Region have fallen to 10.9 percent from over 12 percent last year. But, home prices remained suppressed in the region, and are down to levels not seen since 2001. These factors and the many unanswered questions concerning political, fiscal, including international monetary outcomes, will likely result in a relatively weak economic period ahead. The Citys major General Fund revenue sources are property taxes and transient occupancy tax (hostelry tax). Both of these revenue sources are affected by the current recession. We are estimating a modest increase for both of these revenues in fiscal year 20122013. The City maintains a multi-year forecasting model to project anticipated revenues and expenditures. The model predicts continued earnings through fiscal year 2022-2023. The Citys financial reserves will ensure that service levels are maintained until fiscal year 20222023. Requests for Information This Annual Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the Citys finances. If you have any questions about this report, need additional financial information, or would like to obtain component unit financial statements, contact the City of Carmel-by-the-Sea Finance Department, PO Box CC, Carmel-by-the-Sea, CA 93921, or visit the Citys web page at ci.carmel.ca.us/carmel/.
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BASIC FINANCIAL STATEMENTS
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Statement of Net Assets June 30, 2012
Governmental Activities ASSETS Current assets: Cash and investments Cash and investments with fiscal agents Receivables: Accounts receivable Intergovernmental receivable Other receivables Total current assets Noncurrent assets: Capital assets: Nondepreciable Depreciable Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable and accrued liabilities Deposits payable Compensated absences - current portion Total current liabilities Noncurrent liabilities: Long-term liabilities: Claims liabilities Compensated absences Due within one year Due after one year Net OPEB obligation Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $
8,923,429 485,365 1,318,546 297,475 2,303 11,027,118
4,955,954 34,393,581 39,349,535 50,376,653
768,016 430,278 179,465 1,377,759
460,000 358,906 434,487 7,540,694 866,406 9,660,493 11,038,252
31,374,354 555,524 7,408,523 39,338,401
The accompanying notes are an integral part of these basic financial statements.
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Statement of Activities For the year ended June 30, 2012
Functions/Programs Primary government: Governmental activities: Administration Infrastructure capitalization Building maintenance Public safety Public works Forest, parks and beaches Culture and recreation Economic development Interest and fiscal charges Total governmental activities Total primary government
Expenses
Program Revenues Operating Charges for Grants and Services Contributions
2,904,382 (13,760,000) 2,718,581 4,694,672 1,790,684 1,578,381 1,314,073 361,458 194,153 1,796,384
4,735 39,878 412,605 36,030 493,248
589,218 282,012 871,230
1,796,384
493,248
871,230
General revenues: Taxes: Property taxes, levied for general purposes Transient occupancy tax, levied for general purposes Sales and use tax Franchises Business licenses Use of money and property Other general revenues Total general revenues Transfers Total general revenues and transfers Change in net assets Net assets: Beginning of year Net assets - Ending
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Net (Expense) Revenue and Changes in Net Assets Governmental Activities
Totals
(2,899,647) 13,760,000 (2,718,581) (4,065,576) (1,096,067) (1,578,381) (1,278,043) (361,458) (194,153) (431,906) (431,906)
(2,899,647) 13,760,000 (2,718,581) (4,065,576) (1,096,067) (1,578,381) (1,278,043) (361,458) (194,153) (431,906) (431,906)
4,571,481 4,179,900 1,743,748 491,674 532,019 55,995 276,751 11,851,568 11,851,568 11,419,662 27,918,739 39,338,401
4,571,481 4,179,900 1,743,748 491,674 532,019 55,995 276,751 11,851,568 11,851,568 11,419,662 27,918,739 39,338,401
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FUND FINANCIAL STATEMENTS MAJOR FUNDS

The Fund Financial Statements present only individual major fiunds, while non-major funds are combined in a single column. Major funds are defined as having significant activities or balances in the current year.
Fund Governmental Funds: General Fund
Description
Primary operating fund of the City; accounts for all activities except those legally or administratively required to be accounted for in other funds. Accounts for activities associated with the Harrison Memorial Library
Harrison Memorial Library Special Revenue Fund
Parking Special Revenue Fund
Accounts for activities associated with parking in-lieu fees.
Ambulance Special Revenue Fund
Accounts for activities associated with ambulance service billings, which have been outsourced to a third party.
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Balance Sheet Governmental Funds June 30, 2012
General Fund ASSETS Cash and investments Cash and investments with fiscal agents Receivables: Accounts Intergovernmental Other receivable Due from other funds Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities Deposits payable Due to other funds Claims liabilities Total liabilities Fund balances: Nonspendable: Endowments Restricted reported in: Special revenue funds Committed Assigned reported in: Special revenue funds Unassigned (deficit), reported in: General Fund Total fund balances Total liabilities and fund balances $ $ 714,779 430,278 460,000 1,605,057 $ 7,359,947 40,986 870,694 260,489 2,303 330,199 $ 8,864,618
Major Funds Special Revenue Funds Harrison Memorial Library Parking $ 522,940 $ 522,940 $ $ 698,086 698,086
4,258,441 3,001,120 7,259,561 8,864,618 $
46,747
698,086 698,086 $ 698,086
476,193 522,940 522,940
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Ambulance $ 44,372 447,852 $ 492,224
Nonmajor Governmental Funds $ 342,456 400,007 36,986 $ 779,449 $ $
Totals 8,923,429 485,365 1,318,546 297,475 2,303 330,199 11,357,317
42,077 330,199 372,276
11,160 11,160
768,016 430,278 330,199 460,000 1,988,493
119,948 119,948 $ 492,224 $
555,524 212,765 768,289 779,449 $
46,747 555,524 4,258,441 1,506,992 3,001,120 9,368,824 11,357,317
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Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2012
Total fund balances - total governmental funds Amounts reported for governmental activities in the Statement of Net Assets 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. Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds balance sheet. Compensated absences Long-term liabilities Net OPEB obligation Governmental funds notes receivable from various loan programs are deferred under the current financial resources measurement focus. The notes receivable are recognized in the government-wide Statement of Net Assets under the accrual basis of accounting. Net assets of governmental activities $ (538,371) (7,975,181) (866,406)
9,368,824
39,349,535
(9,379,958)
$ 39,338,401
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Reconciliation of Fund Basis Balance Sheet to Government-wide Statement of Net Assets Governmental Activities June 30, 2012
Governmental Funds Balance Sheet ASSETS Current assets: Cash and investments Cash and investments with fiscal agents Receivables: Accounts receivable Interest receivable Intergovernmental receivable Other receivable Due from other funds Total current assets Noncurrent assets: Capital assets, net Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable and accrued liabilities Deposits payable Due to other funds Compensated absences - current Total current liabilities Noncurrent liabilities: Long-term liabilities: Claims liabilities Compensated absences Due within one year Due after one year Net OPEB obligation Total noncurrent liabilities Total liabilities FUND BALANCES/NET ASSETS Fund balances: Nonspendable: Restricted reported in: Special revenue funds Committed Assigned reported in: Special revenue funds Unassigned (deficit), reported in: Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total fund balances/ net assets Total liabilities and net assets
Reclassifications
Changes in GAAP
Statement of Net Assets
8,923,429 485,365 1,318,546 297,475 2,303 330,199 11,357,317 11,357,317
8,923,429 485,365 1,318,546 297,475 2,303 11,027,118 39,349,535 39,349,535 50,376,653
(330,199) (330,199) (330,199)
39,349,535 39,349,535 39,349,535
768,016 430,278 330,199 1,528,493
(330,199) (330,199)
179,465 179,465
768,016 430,278 179,465 1,377,759
460,000 460,000 1,988,493
(330,199)
358,906 434,487 7,540,694 866,406 9,200,493 9,379,958
460,000 358,906 434,487 7,540,694 866,406 9,660,493 11,038,252
555,524 4,258,441 1,506,992
(555,524) (4,258,441) (1,506,992)
9,368,824 11,357,317
9,368,824 (330,199)
31,374,354 555,524 (1,960,301) 29,969,577 39,349,535
31,374,354 555,524 7,408,523 39,338,401 50,376,653
25

Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the year ended June 30, 2012
General Fund REVENUES: Taxes and assessments Licenses and permits Fines and forfeitures Intergovernmental Use of money and property Charges for services Contributions Other revenues Total revenues EXPENDITURES: Current: Administration Building maintenance Public safety Public works Forest, parks and beaches Culture and recreation Economic development Capital outlay Debt service: Primcipal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances FUND BALANCES: Beginning of year End of year $ $ 11,497,256 430,250 27,385 419,326 226,616 60,228 26,830 93,944 12,781,835
Major Funds Special Revenue Funds Harrison Memorial Library Parking $ 10,764 1,579 19,154 302,330 333,827 $ 1,589 1,589
3,122,302 2,633,987 2,985,740 1,137,360 1,122,795 125,635 361,458 1,599,462 13,088,739
1,168,039 1,168,039
(306,904)
(834,212)
1,589
6,282,820 (7,212,155) (929,335) (1,236,239)
886,513 886,513 52,301
1,589
8,495,800 7,259,561 $
470,639 522,940 $
696,497 698,086
26
Ambulance $ 497,636 497,636
Other Governmental Funds $ 182,106 99,969 205,296 2,191 20,284 509,846 $
Totals 11,497,256 612,356 127,354 635,386 231,975 597,302 329,160 93,944 14,124,733
377,688 377,688
28,939 5,264 315,570 257,771 607,544
3,122,302 2,633,987 3,363,428 1,166,299 1,122,795 1,298,938 361,458 1,599,462 315,570 257,771 15,242,010
119,948
(97,698)
(1,117,277)
119,948
579,832 (537,010) 42,822 (54,876)
7,749,165 (7,749,165) (1,117,277)
$ 119,948 $
823,165 768,289 $
10,486,101 9,368,824
27

Reconciliation of Fund Basis Statements to Government-wide Statement of Activities For the year ended June 30, 2012
Capital Asset Fund Based Functions/Programs Governmental activities: Totals Debt Service Compensated Absences Depreciation (Additions)/ Retirements OPEB Obligation Governmentwide Totals
Administration $ Infrastructure capitalization Building maintenance Public safety Public works Forest, parks and beaches Culture and recreation Economic development Capital outlay
Debt service/Interest Total governmental activities
3,122,302 2,633,987 3,363,428 1,166,299 1,122,795 1,298,938 361,458 1,599,462 573,341
(379,188)
(20,456) (15,565) (39,257) (130,766) (23,107) (13,661) -
2,997 100,159 52,990 50,436 478,693 28,796 -
$ (1,066,867) (13,760,000) 1,317,511 704,715 (1,599,462) $ (14,404,103)
$ 866,406 $ 866,406
$ 2,904,382 (13,760,000) 2,718,581 4,694,672 1,790,684 1,578,381 1,314,073 361,458 194,153 $ 1,796,384
$ 15,242,010
$ (379,188)
$ (242,812)
714,071
28

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the year ended June 30, 2012
Net change in fund balances - total governmental funds Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the assets: Capital asset purchases capitalized Capital asset retirements Depreciation expense Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Change in interest payable Change in claim liabilities Capital lease obligations Change in compensated absences Certain employee benefit obligations are recorded on a pay-as-you-go basis in the governmental funds, but are accrued as liabilities in the Statement of Net Assets: Net OPEB obligation Change in net assets of governmental activities $ 14,826,867 (422,764) (714,071)
$ (1,117,277)
13,690,032
(63,618) (24,000) (441,881) 242,812
(286,687)
(866,406) $ 11,419,662
29

Statement of Revenues, Expenditures, and Changes in Fund Balances Budget to Actual - General Fund and Major Special Revenue Funds For the year ended June 30, 2012
General Fund Budgeted Amounts Original Final REVENUES: Taxes and assessments Licenses and permits Fines and forfeitures Intergovernmental Use of money and property Charges for services Contributions Other revenues Total revenues EXPENDITURES: Current: Administration Building maintenance Public safety Public works Forest, parks and beaches Culture and recreation Economic development Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from sales of assets Transfers in Transfers out Total other financing sources (uses) Net change in fund balances FUND BALANCES: Beginning of year End of year $ 11,295,608 412,000 85,200 731,459 213,300 65,200 5,600 95,500 12,903,867 $ 11,295,608 412,000 85,200 731,459 213,300 65,200 5,600 95,500 12,903,867 Variance w/Final Positive (Negative) $ 201,648 18,250 (57,815) (312,133) 13,316 (4,972) 21,230 (1,556) (122,032)
Actual $ 11,497,256 430,250 27,385 419,326 226,616 60,228 26,830 93,944 12,781,835
2,906,113 2,580,317 3,184,774 1,094,523 1,134,918 159,833 367,350 1,453,708 12,881,536
2,906,113 2,580,317 3,184,774 1,094,523 1,134,918 159,833 367,350 1,453,708 12,881,536
3,122,302 2,633,987 2,985,740 1,137,360 1,122,795 125,635 361,458 1,599,462 13,088,739
(216,189) (53,670) 199,034 (42,837) 12,123 34,198 5,892 (145,754) (207,203)
22,331
22,331
(306,904)
(329,235)
5,519,080 (4,221,000) 1,298,080 1,320,411
5,519,080 (4,221,000) 1,298,080 1,320,411
6,282,820 (7,212,155) (929,335) (1,236,239)
763,740 (2,991,155) (2,227,415) (2,556,650)
8,495,800 $ 9,816,211
8,495,800 $ 9,816,211
8,495,800 $ 7,259,561
$ (2,556,650)
30
Harrison Memorial Library Variance w/Final Budgeted Amounts Positive Original Final Actual (Negative) $ $ $ 10,764 1,579 19,154 302,330 333,827 $ 10,764 1,579 19,154 302,330 333,827 $
Parking Budgeted Amounts Original Final $ $ Variance w/Final Positive (Negative) $ 1,589 1,589
Actual 1,589 1,589
963,173 963,173
963,173 963,173
1,168,039 1,168,039
(204,866) (204,866)
(963,173)
(963,173)
(834,212)
128,961
1,589
1,589
963,173 963,173 -
963,173 963,173 -
886,513 886,513 52,301
(76,660) (76,660) 52,301
1,589
1,589
470,639 $ 470,639 $
470,639 470,639 $
470,639 522,940 $
52,301 $
696,497 696,497 $
696,497 696,497 $
696,497 698,086 $
1,589
(continued)
31

Statement of Revenues, Expenditures, and Changes in Fund Balances Budget to Actual - General Fund and Major Special Revenue Funds, Continued For the year ended June 30, 2012
Ambulance Budgeted Amounts Original Final REVENUES: Taxes and assessments Licenses and permits Fines and forfeitures Intergovernmental Use of money and property Charges for services Contributions Other revenues Total revenues EXPENDITURES: Current: Administration Building maintenance Public safety Public works Forest, parks and beaches Culture and recreation Economic development Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from sales of assets Transfers in Transfers out Total other financing sources (uses) Net change in fund balances FUND BALANCES: Beginning of year End of year $ $ 350,400 350,400 $ 350,400 350,400 $ Variance w/Final Positive (Negative) $ 147,236 147,236
Actual 497,636 497,636
462,400 -
462,400 -
377,688 -
84,712 84,712
462,400
462,400
377,688
(112,000)
(112,000)
119,948
231,948
112,000 112,000 -
112,000 112,000 -
119,948
(112,000) (112,000) 119,948
119,948 $
119,948
(concluded)
32
NOTES TO BASIC FINANCIAL STATEMENTS
33

Basic Financial Statements For the year ended June 30, 2012 Index to Notes to Basic Financial Statements
Page Note 1 - Summary of Significant Accounting Policies .................................................................... 35 Financial Reporting Entity ............................................................................................................. 35 Basis of Presentation...................................................................................................................... 37 Measurement Focus ....................................................................................................................... 39 Basis of Accounting ....................................................................................................................... 39 Assets, Liabilities, and Equity ....................................................................................................... 40 Revenues, Expenditures, and Expenses ......................................................................................... 45 Budgetary Accounting ................................................................................................................... 46 Note 2 Cash and Investments......................................................................................................... 47 Note 3 Accounts Receivable ........................................................................................................... 50 Note 4 Capital Assets ...................................................................................................................... 50 Note 5 Accounts Payable and Accrued Liabilities ....................................................................... 51 Note 6 Long-term Liabilities .......................................................................................................... 52 Note 7 Net Assets/ Fund Balances ................................................................................................. 54 Note 8 Interfund Transactions ...................................................................................................... 56 Note 9 Risk Management ............................................................................................................... 57 Note 10 Public Employee Retirement System .............................................................................. 58 Plan Description............................................................................................................................. 58 Funding Policy ............................................................................................................................... 58 Note 11 Other Post-Employment Benefits.................................................................................... 58 Note 12 Commitments and Contingencies .................................................................................... 61 Note 13 New Accounting Pronouncements................................................................................... 61 Note 14 Subsequent Events ............................................................................................................ 62
34

Notes to Basic Financial Statements For the year ended June 30, 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Carmel-by-the-Sea (City) was incorporated on November, 1956, under the laws and regulations of the State of California (State). The City operates under a City Council/Manager form of government and provides the following services: public works, planning and building, general administrative services, public safety (County Sheriff), fire suppression and prevention services, and sewage treatment services. The financial statements of the City have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. On June 15, 1987, GASB issued a codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The City applies all GASB pronouncements to its activities. In addition, the City applies all Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) issued after November 30, 1989, unless they conflict with or contradict GASB pronouncements. The more significant of these accounting policies are described below and, where appropriate, subsequent pronouncements will be referenced. Financial Reporting Entity The City operates as a self-governing local government unit within the State. It has limited authority to levy taxes and has the authority to determine user fees for the services that it provides. The Citys main funding sources include sales taxes, other intergovernmental revenue from state and federal sources, user fees, and federal and state financial assistance. All property taxes are paid to San Mateo County (County) as part of the revenue neutrality payment obligation. The financial statements do not reflect the amounts received on behalf of the City and retained by the County. The financial reporting entity consists of (a) the primary government, the City, (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entitys financial statements to be misleading or incomplete. Financial accountability is defined as the appointment of a voting majority of the component units board, and either (a) the City has the ability to impose its will on the organization, or (b) there is a potential for the organization to provide a financial benefit to or impose a financial burden on the City.
35

Notes to Basic Financial Statements, Continued For the year ended June 30, 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Financial Reporting Entity, Continued As required by GAAP, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. These component units are reported on a blended basis. Blended component units, although legally separate entities, are, in substance, part of the governments operations and so data from these units are combined with data of the primary government. The financial statements of the individual component units, if applicable as indicated below, may be obtained by writing to the City of Carmel-by-the-Sea, Finance Department, Post Office Box CC, Carmel-by-the-Sea, CA 93921. The Citys reporting entity includes the following blended component units: Carmel Public Improvement Authority Harrison Memorial Library The above component units are included in the Citys basic financial statements using the blended method. There are no component units of the City that meet the criteria for discrete presentation.
36

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Presentation Government-Wide Financial Statements The statement of net assets and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided by a given function or segment, 2) operating grants and contributions, and 3) capital grants and contributions restricted to the operating or capital requirements of a specific function or segment. All taxes and internally dedicated resources are reported as general revenues rather than program revenues. Fund Financial Statements Fund financial statements of the reporting entity are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of selfbalancing accounts, which constitute its assets, liabilities, fund equity, revenues, and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental fund are at least ten percent of the corresponding total for all funds of that category or type; and, b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund are at least five percent of the corresponding total for all governmental funds combined. The City reports the following major funds: General Fund Harrison Memorial Library Special Revenue Fund Parking Special Revenue Fund Ambulance Special Revenue Fund
37

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Presentation, Continued Descriptions of these funds are included on the divider page preceding the Governmental Funds Balance Sheet. The funds of the financial reporting entity are described below: Governmental Funds General Fund The General Fund is used to account for resources traditionally associated with the City which are not required legally or by sound financial management to be accounted for in another fund. From this fund are paid the Citys general operating expenditures, the fixed charges, and the capital costs that are not paid through other funds. Special Revenue Funds The Special Revenue Funds are used to account for specific revenues that are legally or otherwise restricted to expenditures for particular purposes. Debt Service Fund The Debt Service Fund is used to account for financial resources used for the repayment of debt.
38

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Measurement Focus Measurement focus is a term used to describe which transactions are recorded within the various financial statements. On the government-wide Statement of Net Assets and the Statement of Activities, governmental and business-type activities are presented using the economic resources measurement focus. The accounting objectives of this measurement focus are the determination of net income, financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Fund equity is classified as Net Assets, which serves as an indicator of financial position. In the fund financial statements, the current financial resources measurement focus is used for governmental funds. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. Basis of Accounting In the government-wide Statement of Net Assets and Statement of Activities, governmental and business-type activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under this modified accrual basis of accounting, revenues are recognized when measurable and available. Measurable means knowing or being able to reasonably estimate the amount. Available means the amount is collectible within the current period or soon enough thereafter to pay current liabilities. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year end, with the exception of grant revenues and ambulance billing revenues. Grant revenues and ambulance billing revenues are considered to be available if collected within 180 days of the end of the current fiscal period.
39

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Basis of Accounting, Continued Property taxes, transient occupancy taxes, franchise taxes, licenses, 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 year. All other revenue items are considered to be measurable and available only when cash is received by the government. Expenditures (including capital outlay) are recorded when the related fund liability is incurred. Assets, Liabilities, and Equity Cash Deposits and Investments The Citys cash and cash equivalents are considered to be cash on hand, demand deposits, and shortterm investments with original maturities of three months or less from the date of acquisition. The City pools cash and investments from all funds for the purpose of increasing income through investment activities. Highly liquid money market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Market value is used as fair value for those securities for which market quotations are readily available. Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those related to goods and services type transactions are classified as due to and from other funds. Long-term interfund loans (noncurrent portion) are reported as advances from and to other funds. Interfund receivables and payables between funds within governmental activities are eliminated in the Statement of Net Assets. See Note 9 for details of interfund transactions, including receivables and payables at year-end.
40

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Assets, Liabilities, and Equity, Continued Receivables In the government-wide statements, receivables consist of all revenues earned at year-end and not yet received. Major receivable balances for the governmental activities include property taxes, sales and use taxes, utility user taxes, intergovernmental subventions, interest earnings, and expense reimbursements. In the fund financial statements, material receivables in governmental funds include revenue accruals such as property tax, sales tax, utility user tax, and intergovernmental subventions since they are usually both measurable and available. Non-exchange transactions collectible but not available, such as property tax, are deferred in the fund financial statements in accordance with the modified accrual basis, but not deferred in the government-wide financial statements in accordance with the accrual basis. Interest and investment earnings are recorded when earned only if paid within 60 days since they would be considered both measurable and available. The loans receivable are recorded in the fund statements, but are deferred to indicate they do not represent current financial resources. The loans are recognized when advanced in the government-wide statements. The Citys experience is that all accounts receivable are collectible; therefore an allowance for doubtful accounts is unnecessary. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. In the governmental fund financial statements, prepaid items are offset with a reservation of fund balance for long-term assets to indicate they do not constitute current resources available for appropriation. Capital Assets The City's assets are capitalized at historical cost or estimated historical cost, if actual is unavailable, except for donated Capital Assets which are recorded at their estimated fair value at the date of donation. Policy has set the capitalization threshold for reporting at $5,000 for non-infrastructure capital assets and $25,000 for infrastructure capital assets.
41

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Assets, Liabilities, and Equity, Continued Capital Assets, Continued Government-Wide Statements Public domain (infrastructure) capital assets include roads, bridges, curbs and gutters, streets, sidewalks, drainage systems, and lighting systems. The accounting treatment of property, plant and equipment (capital assets) depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. Prior to July 1, 2003, governmental funds infrastructure assets were not capitalized, since then these assets have been valued at estimated historical cost. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Assets. Depreciation is provided over the assets estimated useful lives using the straight-line method of depreciation. No depreciation is recorded in the year of acquisition or in the year of disposition. The range of estimated useful lives by type of asset is as follows: Buildings and improvements Sewer Lines Machinery and equipment Computer Software 20 50 years 30 years 5 - 20 years 10 years
Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements.
42

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Assets, Liabilities, and Equity, Continued Compensated Absences Employees accrue vacation, sick, holiday, and compensatory time off benefits. City employees have vested interests in the amount of accrued time off, with the exception of sick time, and are paid on termination. Also, annually an employee may elect to be compensated for up to 40 hours of unused annual leave. However, this is contingent upon the employee using at least 40 hours during the previous year and, the employee having a minimum balance of 80 annual leave hours after the payment. All vacation pay is accrued when incurred in the government-wide and proprietary financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations or retirements and is currently payable. The City had no employee resignations or retirements for which compensated absences should be accrued in governmental funds at year-end. The general fund is typically used to liquidate compensated absences. Deferred and Unearned Revenues Deferred revenues in governmental funds arise when potential revenue does not meet both the measurable and available criteria for recognition in the current period. Unearned revenues in enterprise funds and the statement of net assets arise when resources are received by the City before it has legal claim to them, (i.e., when grant monies are received prior to the incurrence of qualifying expenses). Equity Classification Government-Wide Statements Equity is classified as net assets and is displayed in three components: a. Invested in capital assets, net of related debt consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net assets consists of net assets with constraints placed on the use by external groups such as creditors, grantors, contributors, or by laws or regulations of other governments or law through constitutional provisions or enabling legislation. c. Unrestricted net assets all other net assets that do not meet the definition of restricted or invested in capital assets, net of related debt.
43

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Equity Classification, Continued Fund Financial Statements Governmental fund equity is classified as fund balance. Fund balance is classified as nonspendable, restricted, committed, assigned, or unassigned. Proprietary fund equity is classified the same as in the government-wide statements. The classifications for governmental funds are defined as follows for the City: Nonspendable Fund Balance Assets that will never convert to cash (prepaid items, inventory). Assets that will not convert to cash soon enough to affect the current period (long-term notes or loans receivable). Resources that must be maintained intact pursuant to legal or contractual requirements (the principal of an endowment).
Restricted Fund Balance Resources that are subject to externally enforceable legal restrictions imposed by parties altogether outside the government (creditors, grantors, contributors and other governments). Resources that are subject to limitations imposed by law through constitutional provisions or enabling legislation (e.g., Gas Tax).
Committed Fund Balance Self imposed limitations set in place prior to the end of the period (encumbrances, economic contingencies and uncertainties). Limitation at the highest level of decision-making (Council) that requires formal action at the same level to remove.
Assigned Fund Balance Amounts in excess of nonspendable, restricted, and committed fund balance in funds other than the general fund automatically are reported as assigned fund balance.
Unassigned Fund Balance Residual net resources. Total fund balance in the general fund in excess of nonspendable, restricted, committed and assigned fund balance (surplus). Excess of nonspendable, restricted, and committed fund balance over total fund balance (deficit).
44

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Revenues, Expenditures, and Expenses Property Tax The County of Monterey (County) is responsible for the collection and allocation of property taxes. Under California law, property taxes are assessed and collected by the County up to 1% of the full cash value of taxable property, plus other increases approved by the voters and distributed in accordance with statutory formulas. The City recognizes property taxes when the individual installments are due, provided they are collected within 60 days after year-end. Secured property taxes are levied on or before the first day of September of each year. They become a lien on real property on March 1 preceding the fiscal year for which taxes are levied. These taxes are paid in two equal installments; the first is due November 1 and delinquent with penalties after December 10; the second is due February 1 and delinquent with penalties after April 10. Secured property taxes, which are delinquent and unpaid as of June 30, are declared to be tax defaulted and are subject to redemption penalties, cost, and interest when paid. If the delinquent taxes are not paid at the end of five years, the property is sold at public auction and the proceeds are used to pay the delinquent amounts due. Any excess is remitted, if claimed, to the taxpayer. Additional tax liens are created when there is a change in ownership of property or upon completion of new construction. Tax bills for these new tax liens are issued throughout the fiscal year and contain various payments and delinquent dates, but are generally due within one year. If the new tax liens are lower, the taxpayer receives a tax refund rather than a tax bill. Unsecured personal property taxes are not a lien against real property. These taxes are due on March 1, and become delinquent, if unpaid on August 31. The City participates in an alternative method of distribution of property tax levies and assessments known as the Teeter Plan. The State Revenue and Taxation Code allow counties to distribute secured real property, assessment, and supplemental property taxes on an accrual basis resulting in full payment to cities each fiscal year. Any subsequent delinquent payments and penalties and interest during a fiscal year will revert to Monterey County.
45

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Interfund Transfers Resources are reallocated between funds by reporting them as interfund transfers. For the purposes of the Statement of Activities, all interfund transfers between individual governmental funds have been eliminated. Budgetary Accounting The City Council establishes budgets for the General Fund and all Special Revenue Funds, except for certain Special Revenue Funds for which expenditures are controlled by grant funding or by assessments received. Budgetary control is legally maintained at the fund level for these funds. Department heads submit budget requests to the City Manager. The City Manager prepares an estimate of revenues and prepares recommendations for the next years budget. The preliminary budget may or may not be amended by the City Council and is adopted by resolution by the City Council on or before June 30 in accordance with the municipal code. The City Council may amend the budget by motion during the fiscal year. Only the Council can authorize transfers between funds and approve inter-fund loans. The City Manager is authorized to transfer budgeted amounts within a fund without formal council action or approval. The City Manager is authorized to increase expenditures in relation to revenues in funds receiving assigned revenues without approval by the City Council. Expenditures may not legally exceed appropriations at the fund level, which is the legal level of control. Supplemental appropriations, which increase appropriations, may be made during the fiscal year. There were no material supplemental appropriations made for the fiscal year ended June 30, 2012. Budget information is presented for the General and budgeted Special Revenue Funds in the fund financial statements. The budget information is presented on a basis consistent with generally accepted accounting principles. Appropriations, except open project appropriations, and unexpended grant appropriations, lapse at the end of each fiscal year. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates.
46

2. CASH AND INVESTMENTS At June 30, 2012, the Citys pooled cash and investments, classified by maturity, consisted of the following stated at fair value:
<1 Cash equivalents and investments pooled Pooled cash, at fair value Cash in bank Petty cash Total pooled items Pooled investments, at fair value Cash with fiscal agent - Union Bank money market State of California Local Agency Investment Fund Total pooled investments - interest obligations Total cash equivalents and investments pooled Amounts reported in: Governmental activities - Unrestricted Governmental activities - Restricted Total 7,173,674 7,173,674 7,173,674 400,007 400,007 400,007 1,835,113 400,007 7,173,674 7,573,681 9,408,794 8,923,429 485,365 9,408,794 Maturities (in years) 1 to 2 >2 Deposits Fair Market Value
1,834,008 1,105 1,835,113
1,834,008 1,105 1,835,113
$ $ $
Investment Type Money Market Mutual Funds Local Agency Investment Fund Total market value Portfolio weighted average maturity
Market Value $ 400,007 7,173,674 $ 7,573,681
Weighted Average Maturity (Years) N/A N/A
0.00
47

2. CASH AND INVESTMENTS, Continued California statutes authorize cities to invest idle or surplus funds in a variety of credit instruments as provided for in the California Government Code, Section 53600, Chapter 4 Financial Affairs. The table below identifies the investment types that are authorized for the City by the California Government Code (or the Citys investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. During the year ended June 30, 2012, the Citys permissible investments included the following instruments:
Maximum Maturity 5 years 5 years 180 days 270 days 5 years N/A N/A 5 years N/A 5 years 92 days Maximum Percentage of Portfolio None 50% 40% 15% 30% None None 30% 20% 50% 15% Maximum Investment in One Issuer None 50% 30% 10% 30% None None 30% 10% 50% 5%
Authorized Investment Type U.S. Treasury Obligations U.S. Agency Securities Bankers' Acceptances High-Grade Commercial Paper Negotiable Certificates of Deposit LAIF Local Government Investment Pools Medium-term Corporate Notes Money Market Mutual Funds Collateralized Negotiable Investments Repurchase Agreements
Interest rate risk In accordance with its investment policy, the City manages its exposures to declines in fair values by limiting the weighted average maturity of its investment portfolio to less than 5 years. As of June 30, 2012, the weighted average maturity was 1.84 years. Credit risk As of June 30, 2012, the Citys investments in money market funds were rated AAA by Standard & Poors and Fitch Ratings, and Aaa by Moodys Investors Service. The State of California Local Agency Investment Fund is not rated. The Citys policy related to credit risk is to invest in only AAA rated securities as measured by Standard & Poors and Fitch Ratings or unrated securities backed by the full faith and credit of the State of California. The current portfolio adheres to this credit risk policy. Concentration of credit risk The Citys investment policy does not allow for an investment in any one issuer that is in excess of five percent of the governments total investments. The investments made by the City Treasurer are limited to those allowable under State statutes as incorporated into the Citys Investment Policy, which is accepted annually by the City Council. There were no concentrations in any one issuer for the year. The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which has invested 0.76% of the pool funds in Structured Notes and AssetBacked Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and AssetBacked Securities are subject to market risk as to changes in interest rates.
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2. CASH AND INVESTMENTS, Continued Custodial credit risk deposits. For deposits, this is the risk that in the event of a bank failure, the Citys deposits may not be returned to it. The Citys Investment Policy addresses custodial credit risk, which follows the Government Code. As of June 30, 2012, the City had a balance of $1,010,442 in the pool exposed to custodial credit risk because they exceeded the $250,000 Federal Deposit Insurance Corporations insurance limits. The uninsured bank balance is collateralized by the pledging financial institutions at 110% of the deposits, in accordance with the State of California Government Code. Custodial credit risk investments. For investments, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside counterparty. For the investments maintained by the City, no security was uninsured or unregistered or held by a brokerage firm which is also the counterparty for the security. At June 30, 2012, the carrying amount of the Citys deposits was $1,835,113 and the balances in financial institutions was $1,900,542. Of the balance in financial institutions, $250,000 was covered by federal depository insurance and $1,650,542 was collateralized as required by State law (Government Code Section 53630), by the pledging financial institution with assets held in a common pool for the City and other governmental agencies, but not in the name of the City. As of June 30, 2012, the Citys investments were held by the Citys custodial agent, but not in the Citys name, and were insured up to specified limits by the Securities Investor Protection Corporation (SPIC) and supplemental private insurance up to a limit of $150 million. Investment in LAIF: LAIF is stated at amortized cost, which approximates fair value. The LAIF is a special fund of the California State Treasury through which local governments may pool investments. The total fair value amount invested by all public agencies in LAIF is $66,515,727,874 of which the City had a balance of $7,173,674, which approximated market value and was managed by the State Treasurer. Of the total invested, 99.24% was invested in non-derivative financial products and 0.76% in structured notes and asset-backed securities. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute. The fair value of the Citys investment in this pool is reported in the accompanying financial statements at amounts based upon the Citys pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.
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3. ACCOUNTS RECEIVABLE Accounts receivable consisted of the following at June 30, 2012:
Governmental Activities Accounts Intergovernmental Other receivables Total accounts receivable $ 1,318,546 297,475 2,303 1,618,324
These amounts resulted in the following concentrations in receivables: Other Governments 18.4% Individuals/Businesses 81.5% Other 0.1% Amounts do not indicate a significant concentration (greater than 25%) with any single individual, business, or agency. 4. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2012, was as follows:
Balance July 1, 2011 Governmental activities: Nondepreciable assets: Land Art Total nondepreciable assets Depreciable assets: Buildings and improvements Infrastructure Vehicles Machinery & equipment Total depreciable assets Total Accumulated depreciation: Buildings and improvements Infrastructure Vehicles Machinery & equipment Total accumulated depreciation Net depreciable assets Total net capital assets $ 3,960,656 1,467,918 5,428,574 26,194,698 1,975,306 2,077,648 30,247,652 35,676,226 (6,135,366) (1,523,479) (1,463,131) (9,121,976) 21,125,676 $ 26,554,250 $ Additions 718,732 13,760,000 348,135 14,826,867 14,826,867 (524,917) (86,278) (102,876) (714,071) 14,112,796 $ 14,112,796 $ Deletions (472,620) (472,620) (995,298) (995,298) (1,467,918) (995,298) $ (1,467,918) $ $ Transfers 296,793 106,842 403,635 403,635 (253,228) (253,228) 150,407 150,407 Balance June 30, 2012 $ 3,488,036 1,467,918 4,955,954 25,918,132 13,760,000 2,272,099 2,532,625 44,482,856 49,438,810 (6,660,283) (1,862,985) (1,566,007) (10,089,275) 34,393,581 $ 39,349,535
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4. CAPITAL ASSETS, Continued Depreciation expense for capital assets was charged to functions as follows:
Administration Building maintenance Public safety Public works Forest, parks and beaches Culture and recreation Total
2,997 100,159 52,990 50,436 478,693 28,796 714,071
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consisted of the following at June 30, 2012:
Governmental Activities Accounts payable $ Accrued payroll and related liabilities Total $ 474,893 293,123 768,016 $ $
Total 474,893 293,123 768,016
These amounts resulted in the following concentrations in payables: Vendors Employees 62% 38%
Amounts do not indicate a significant concentration (greater than 25%) with any single vendor or employee.
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6.
LONG-TERM LIABILITIES
Balance July 1, 2011 Transfers/ Retirements $ (280,000) (24,004) (121,435) (425,439) Balance June 30, 2012 $ 7,295,000 336,050 344,131 7,975,181 538,371 460,000 866,406 9,839,958 $ Due Within One Year 285,000 24,004 125,483 434,487 179,465 613,952
The following is a summary of changes in long-term liabilities for the year ended June 30, 2012:
Additions $
Governmental Activities: Sunset Center COP Countywide Radio Project Capital Lease Obligations Total governmental debt Compensated absences Claims liabilities Net OPEB obligation Total governmental activities
7,575,000 360,054 465,566 8,400,620 781,183 336,000 9,517,803
538,371 124,000 866,406 $ 1,528,777
(781,183) $ (1,206,622)
Sunset Center COP

In 2010, the Carmel Public Improvement Authority issued $7,485,000 in Certificates of Participation. The
proceeds were used to remodel the Sunset Cultural Center property. The COP bears interest at a rate of 4.73% per annum, payable each April and October 1st through 2031. The outstanding balance at June 30, 2012, was $7,295,000.
Countywide Radio Project In 2009, the City entered into a participation agreement with Monterey County to provide funding for the Next Generation Radio Project a FCC mandated alteration for public safety and local government radio systems. Payments will change as jurisdictions elect out of the project during the term of the agreement due to the costsharing nature of the project.
Capital Lease Obligations During fiscal year 2009, the City entered into a lease purchase agreement to acquire fire-fighting equipment in the amount of $435,982 at an interest rate of 4.5%, payable annually on July 1st through July 2015. During fiscal year 2010, the City purchased vehicles and accessories for its public safety department through a lease purchase agreement in the amount of $77,195 at an interest rate of 2%, payable annually on December 1st through 2013 under this agreement. Additionally, in 2010, the City purchased a wheel loader through a lease purchase agreement in the amount of $126,262 at an interest rate of 3.3% payable monthly through December 2013. Compensated Absences The City records employee absences, such as vacation, illness, and holidays, for which it is expected that employees will be paid as compensated absences. Compensated absences had a balance of $538,371 at June 30, 2012, of that amount $179,465 is expected to be paid within a year.
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6.
LONG-TERM LIABILITIES, Continued
Claims Liabilities The City has recorded a liability for potential claims in excess of amounts covered by the insurance pool. See Note 9 for further discussion on the Citys risk management activities. Net OPEB Obligation A net OPEB obligation is the cumulative differences between annual OPEB cost and an employers contributions to a plan. At June 30, 2012, the City had a Net OPEB Obligation of $866,406, See Note 11 for further discussion on OPEB. Future debt service for Governmental Activities at June 30, 2012, is as follows for all debt except compensated absences and claims liabilities:
Governmental Activities Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 Total Due within one year Due after one year Total $ $ $ $ Sunset Center COP Principal 285,000 285,000 290,000 295,000 1,585,000 1,845,000 2,710,000 7,295,000 285,000 7,010,000 7,295,000 $ $ $ Total 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 Total Due within one year Due after one year Total $ Principal 434,487 393,759 379,483 387,418 24,004 1,705,017 1,941,013 2,710,000 7,975,181 434,487 7,540,694 7,975,181 $ Interest 129,838 122,915 115,881 110,066 483,781 362,100 195,101 1,519,682 129,838 1,389,844 1,519,682 $ Interest 115,581 112,731 109,881 106,981 483,781 362,100 195,101 1,486,156 115,581 1,370,575 1,486,156 $ $ $ $ County-wide Radio Project Principal 24,004 24,004 24,004 24,004 24,004 120,017 96,013 336,050 24,004 312,046 336,050 $ $ $ $ Interest $ $ $ $ Capital Lease Obligations Principal 125,483 84,755 65,479 68,414 344,131 125,483 218,648 344,131 $ $ $ $ Interest 14,257 10,184 6,000 3,085 33,526 14,257 19,269 33,526
$ $ $
$ $ $
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7.
NET ASSETS/ FUND BALANCES

Governmental Activities Invested in capital assets, net of related debt Restricted Unrestricted Total
Net Assets
$ 31,374,354 555,524 7,408,523 $ 39,338,401
Restricted balances are for the same purposes as fund balance restrictions because external restriction requirements are the same. See descriptions of the restrictions below.
Fund Balance Nonspendable, Restricted and Committed fund balance consisted of the following at June 30, 2012:
Nonspendable: Major Funds: Harrison Memorial Library Total Major Funds - Nonspendable Restricted: Nonmajor Funds: Gas Tax Debt service Total Nonmajor Funds - Restricted Total Restricted Committed: General Fund Reserve Total Committed
46,747 46,747
$ $ $
155,516 400,008 555,524 555,524 4,258,441 4,258,441
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7.
NET ASSETS/ FUND BALANCES, Continued
The following describes the purpose of each nonspendable, restriction, and commitment account used by the City: Nonspendable Harrison Memorial Library Endowment - used to segregate that portion of fund balance to indicate that bequest and endowment amounts do not represent available, spendable resources because the principal is nonspendable.
Restricted Gas Tax represents amounts restricted for street purposes by the California Streets and Highways Code. Debt service represents amounts restricted for repayment of debt.
Committed General Fund Reserve represents amounts committed through Council Resolution for economic uncertainties and anticipated future short-term structural deficits. This amount can be changed only by Council Resolution.
There were no deficit net asset or fund balances at June 30, 2012. Excess of Expenditures and Transfers Over Appropriations: Expenditures and transfers exceeded appropriations for the year ended June 30, 2012, for the following funds:
Total Expenditures and Transfers Excess Expenditures over Appropriations
Final Budget Governmental Activities Major Funds: General Fund Harrison Memorial Library Non-major Funds: Special Revenue Funds: Traffic Safety Road Impact Fees Forest Theater* * Indicates Fund is not budgeted
$ 17,102,536 963,173
$ 20,300,894 1,168,039
(3,198,358) (204,866)
110,000 195,000 -
111,649 255,273 5,264
(1,649) (60,273) (5,264)
Sufficient fund balance existed in all of these funds to cover the excesses.
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8.
INTERFUND TRANSACTIONS
Due to and due from other funds consisted of the following as of June 30, 2012:
Due from Other Funds Governmental Activities Major Funds: General Fund Ambulance Total Major Funds Total
Due to Other Funds
330,199 330,199 330,199
330,199 330,199 330,199
Due to and from balances result from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, and (2) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Transfers consisted of the following at June 30, 2012:
Transfers In Governmental Activities Major Funds: General Fund Harrison Memorial Library - Special Revenue Total Major Funds Non-major Funds: Special Revenue Funds: Traffic Safety Road Impact Fees Grants Gas Tax Total Non-major Special Revenue Funds Debt Service Funds: General Debt Service Total Non-major Debt Service Funds Total Non-major Funds Total Governmental Activities Total Transfers Transfers Out
6,282,820 886,513 7,169,333
7,212,155 7,212,155
8,128 8,128 571,704 571,704 579,832 7,749,165 7,749,165
111,649 255,273 70,088 100,000 537,010 537,010 7,749,165 7,749,165
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8.
INTERFUND TRANSACTIONS, Continued
Transfers were made from the General Fund to the Harrison Memorial Library as part of the funding of a staffing agreement. The General Fund also received transfers from various programs to fund activities in the General Fund for which these revenue sources are dedicated. The General Fund also transferred amounts to the General Debt Service Fund to fund the current debt service payments. 9. RISK MANAGEMENT
The City of Carmel-by-the-Sea (City) is a member of CSAC-EIA (California State and County Excess Insurance Authority) which is a shared risk pool. CSAC-EIA covers claims for City for both Workers Compensation and General Liability. The Citys Liability SIR is pre-funded through CSAC-EIA for 8 quarters of payments made on behalf of City. Currently, the SIR fund for the City with CSAC-EIA is maintained at $8,414. If the pre-funded SIR balance drops below this amount, the City is billed by CSAC-EIA to replenish the fund to the $8,414 level. For Fiscal Year 2013/2014, this pre-funded level will increase to $10,784 because of claims paid on behalf of the City. The City does not make claim payments, they are all issued by the city's third party administrator from a CSA-EIA account. The City has two layers of Liability coverage through CSAC-EIA and under the first layer, the Primary General Liability layer, there is an SIR (Self Insured Retention) of $10,000 per claim. Thereafter, the next layer of coverage kicks in (General Liability 1 program) which carries an SIR of $100,000 which is satisfied by exhausting the coverage limit of $100,000 under the Primary Liability program. The maximum limit of coverage under the primary General Liability 1 program is $25 million. The City retains the risk of loss above $25 million. For Workers Compensation, the City is a member of both the CSAC-EIA Primary Workers Compensation program and then, the CSAC-EIA Excess Workers Compensation program. The Primary Workers compensation program provides dollar 1 coverage to the City for Workers Compensation claims. In other words, City has no deductible or SIR. This layer of Workers Compensation coverage carries a maximum limit of $125,000 per occurrence. Thereafter, CSACEIA's excess coverage steps in and the SIR (Self Insured Retention) is $125,000 which again, is satisfied by exhausting the limits of coverage under the Primary Workers Compensation program. The upper limit of coverage under the Excess Workers Compensation program is "statutory". What this means is that regardless of the total cost of the claim, it is covered under the CSAC-EIA Excess Workers Compensation program. There is absolutely no monetary exposure to the City under these two Workers Compensation programs except for the premium costs to purchase this coverage. The City has had no settlements which exceeded insurance coverage in the last three fiscal years and no significant changes or reductions in insurance coverage during the current year.
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10. PUBLIC EMPLOYEES RETIREMENT SYSTEM Plan Description The City of Carmel-by-the-Sea contributes to the California Public Employees Retirement System (PERS), a cost-sharing multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. All permanent and part-time employees working at least 1,000 hours per year are enrolled in PERS. Under PERS, benefits vest after five years of service. Upon retirement, participants are entitled to an annual retirement benefit, payable for life, in an amount equal to a benefit factor multiplied by their highest average monthly salary over 12 consecutive months of employment. Benefit provisions and all other requirements are established by State statute. The establishment and amendment of specific benefit provisions of the Plan is authorized by resolution of the City Council. PERS requires plans with less than 100 active participants to participate in risk pools. The City participated in the Miscellaneous 2% at 55 Risk Pool and in the Safety 3.0% at 50 Risk Pool for the year ended June 30, 2012. Copies of the PERS annual financial report may be obtained from their Executive Office at 400 P Street, Sacramento, CA 95814. Funding Policy The City is required to contribute at an actuarially determined rate. The current rate is 20.868% of the annual covered payroll for miscellaneous employees and 37.778% for safety employees. In November 2012, the City paid off a side-fund balance due to PERS by issuing Pension Obligation Bonds. This decreased the rate for miscellaneous employees in 2012-13. Effective April 10, 2012 the rate for miscellaneous employees was changed to 11.830%. The Citys contributions for the years ended June 30, 2012, 2011 and 2010 were $2,043,009, $1,553,399 and $1,545,914, respectively, which were equal to the required contributions for each year. Active PERS plan members are required to contribute a percentage of their annual covered salary. The percentage required is 8% for miscellaneous employees and 9% for safety employees. For City employees hired prior to April 15, 2012, the City makes the contributions required on their behalf and for their account, which amounted to $1,130,741 for the year ended June 30, 2012. The contribution requirement of plan members and the City are established and may be amended by PERS. 11. OTHER POST EMPLOYMENT BENEFITS Plan Description. The City of Carmel-by-the-Sea Retiree Healthcare Plan (Plan) is a single-employer defined benefit healthcare plan administered by the City. The Plan provides access to lifetime healthcare benefits to eligible retirees and their dependents. The City provides retiree medical benefits through the California Public Employees Retirement System healthcare program (PEMHCA). For eligible retirees, the City contributes not less than 5% of the active contribution times years in PEMHCA (max $100/month increase). The City pays actives the PEMHCA minimum, and the City joined PEMHCA in 1998. The Citys retiree contribution is $108.00 for 2011 and $112.00 for 2012.
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11. OTHER POST EMPLOYMENT BENEFITS, Continued Plan Description, Continued Eligibility: Employees are eligible to participate in the Citys Retiree Healthcare Plan if they retire directly from the City under CalPERS with five years of PERS service (there is no minimum service requirement if retirement is due to a service-connected disability.) Since PEMHCA is a community rated plan for most employers, an implied subsidy is not reflected under GASB 45. The City does not provide dental, vision, life, or Medicare Part B reimbursement to retirees. The Retiree Healthcare Plan does not issue a financial report. Membership of the plan consisted of the following at June 30, 2012 Retirees and beneficiaries receiving benefits Other participants fully eligible for benefits Other participants not yet fully eligible for benefits Total 27 43 25 95
Funding Policy. The contribution requirements of the Plan participants and the City are established by and may be amended by the City. The City currently does not prefund plan benefits. The Annual Required Contribution (ARC) is an amount actuarially determined in accordance with the parameters of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefit Other Than Pensions. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. For fiscal year 2012, the City contributed $48,875 for current benefit payments. Annual OPEB Cost and Net OPEB Obligation. The Citys annual other postemployment benefit cost (expense) is calculated based on the annual required contribution (ARC) of the employer. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years.
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11. OTHER POST EMPLOYMENT BENEFITS, Continued Annual OPEB Cost and Net OPEB Obligation, Continued The following table shows the components of the Citys annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the Citys Net OPEB obligation: Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) Benefit payments made Increase (Decrease) in net OPEB obligation Net OPEB obligation beginning of year Net OPEB obligation end of year $ 287,180 22,084 (24,955) $ 284,309 (48,875) $ 235,435 630,971 $ 866,406
The Citys annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for fiscal year 2012 and the two preceding fiscal years were as follows: Fiscal Year Ended 6/30/10 6/30/11 6/30/12 Annual OPEB Cost $ 247,677 265,640 284,309 Percentage of Annual OPEB Cost Contributed 3% 6% 17% Net OPEB Obligation 408,049 630,971 866,406
Funded Status and Funding Progress. The funded status of the Plan as of June 30, 2009, the Plans most recent actuarial valuation date, was as follows: Actuarial accrued liability (AAL) Actuarial value of Plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of Plan assets/AAL) Covered payroll (active Plan participants) UAAL as a percentage of covered payroll $ $ 2,752,948 0 2,752,948 0% $5,432,667 50.67%
Actuarial valuations of an ongoing plan involve estimates of the value of expected benefit payments and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
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11. OTHER POST EMPLOYMENT BENEFITS, Continued Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan participants) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan participants to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. For the June 30, 2009, actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions included a 3.5% discount rate. Premiums were assumed to increase with a preMedicare medical cost increase rate of 8.4% for HMOs and 9.0% for PPOs for 2012, both grading down to 4.5% for 2017 and thereafter. The post-Medicare medical cost increase rates were 8.7% for HMOs and 9.3% for PPOs for 2012, both grading down to 4.5% for 2017 and thereafter. The total UAAL calculated in the June 30, 2009, valuation was amortized as a level percentage of projected payroll over a fixed 21-year period beginning fiscal year 2012. 12. COMMITMENTS AND CONTINGENCIES The City is a party to claims and lawsuits arising in the ordinary course of business. The Citys management and legal council are of the opinion that the ultimate liability, if any, arising from these claims will not have material adverse impact on the financial position of the City. The City participates in a number of federal and state assisted grant programs. These programs are subject to program compliance audits by the grantors. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the City expects such amounts, if any, to be immaterial. 13. NEW ACCOUNTING PRONOUNCEMENTS The GASB has issued Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The objective of this Statement is to improve financial reporting by addressing issues related to service concession arrangements (SCAs), which are a type of public-private or public-public partnership. The implementation of this Statement did not have an effect on these financial statements. The GASB has issued Statement No. 61, The Financial Reporting Entity: Omnibus. The objective of this Statement is to improve financial reporting for a governmental financial reporting entity. The requirements of Statement No. 14, The Financial Reporting Entity, and the related financial reporting requirements of Statement No. 34, Basic Financial Statementsand Managements Discussion and Analysisfor State and Local Governments, were amended to better meet user needs and to address reporting entity issues that have arisen since the issuance of those Statements. The City will implement this Statement in fiscal year 2012-13.
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13. NEW ACCOUNTING PRONOUNCEMENTS, Continued The GASB has issued Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 789 FASB and AICPA Pronouncements. The objective of this Statement is to incorporate into the GASBs authoritative literature certain accounting and financial reporting guidance that is included in FASB and AICPA pronouncements issued on or before November 30, 1989, which does not conflict with or contradict GASB pronouncements. The implementation of this Statement did not have an effect on these financial statements. The GASB has issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4, Elements of Financial Statements, introduced and defined those elements as a consumption of net assets by the government that is applicable to a future reporting period, and an acquisition of net assets by the government that is applicable to a future reporting period, respectively. Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. The City will implement this Statement in Fiscal year 2012-13. The GASB has issued Statement No. 64, Derivative Instruments: Application of Hedge Accounting Termination Provisions. The objective of this Statement is to clarify whether an effective hedging relationship continues after the replacement of a swap counterparty or a swap counterpartys credit support provider. This Statement sets forth criteria that establish when the effective hedging relationship continues and hedge accounting should continue to be applied. The implementation of this Statement did not have an effect on these financial statements. The GASB has issued Statement No. 65, Item Previously Reported as Assets and Liabilities. This Statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The City will implement this Statement in Fiscal year 2012-13. The GASB has issued Statement No. 66, Technical Corrections 2012. The objective of this Statement is to improve accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The implementation of this Statement did not have an effect on these financial statements. 13. SUBSEQUENT EVENTS On November 29, 2012, the City issued $6,280,000 in 2012 Taxable Pension Obligation Bonds, the purpose of which was to fund certain PERS side fund obligations. The bonds bear an interest rate of .55% to 3.1% and mature on June 1, 2023.
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Required Supplementary Information For the year ended June 30, 2012
Required Supplementary Information Other Postemployment Benefits Schedule of Funding Progress Actuarial Value of Assets (a) n/a $0 Actuarial Accrued Liability (b) n/a $2,752,948 Unfunded Actuarial Accrued Liability (b-a) n/a $2,752,948 UAAL as a Percentage of Covered Covered Payroll Payroll (c) ((b-a)/c) n/a n/a $5,432,667 50.67%
Actuarial Valuation Date n/a 6/30/091

1
Funded Ratio (a/b) n/a 0%
The 6/30/09 Actuarial Accrued Liability was calculated using a discount rate of 3.5%.
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64
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
65
66
NON-MAJOR GOVERNMENTAL FUNDS
Fund Type Special Revenue Funds: Traffic Safety
Description
Accounts for traffic safety and public safety augmentation funds for police and fire
Road Impact Fees
Accounts for road impact fees used for transportation related expenditures. Accounts for grants utilized for specific purposes
Grants
Forest Theater
Accounts for activities related to the Forest Theater
Gas Tax
Accounts for revenues collected in accordance with the Streets and Highway Code
Debt Service Funds: General Accounts for activities related to the repayment of the Certificate of Participation and capital lease obligations
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Combining Balance Sheet Nonmajor Governmental Funds June 30, 2012
Special Revenue Funds
Traffic Safety ASSETS Cash and investments Cash and investments with fiscal agents Receivables: Intergovernmental Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Total liabilities Fund Balances: Restricted Assigned, reported in: Special revenue funds Unassigned (deficit), reported in: Special revenue funds Total fund balances Total liabilities and fund balances $ $ $ $ 14,152 $ 14,152 $ $
Road Impact Fees 59,496 59,496 $ $
Grants 40,435 25,000 65,435
9,537 9,537
14,152 14,152 14,152 $
59,496 59,496 59,496 $
55,898 55,898 65,435
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Forest Theater $ 83,848 $ 83,848 $ $
Gas Tax 144,524 11,986 156,510
General Debt Service $ 1 400,007 $ 400,008
Total Non-Major Governmental Funds $ 342,456 400,007 36,986 $ 779,449
629 629
994 994 155,516
400,008 400,008
11,160 11,160 555,524 212,765 768,289
83,219 83,219 $ 83,848 $
155,516 156,510 $
400,008
779,449
69

Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the year ended June 30, 2012
Special Revenue Funds
Traffic Safety
REVENUES: Fees and permits Fines and forfeitures Intergovernmental Use of money and property Charges for services Total revenues EXPENDITURES: Current: Public works Culture and recreation Debt Service: Primcipal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING (USES) FUND BALANCES: Beginning of year End of year $ $ 99,969 5,000 104,969 $
Road Impact Fees

182,106 182,106 $
Grants
85,463 85,463
104,969
182,106
85,463
8,128 (111,649) (103,521)
(255,273) (255,273)
(70,088) (70,088)
1,448
(73,167)
15,375
12,704 14,152 $
132,663 59,496 $
40,523 55,898
70
Forest Theater
$ 20,284 20,284 $
Gas Tax
114,833 554 115,387 $
General Debt Service

1,637 1,637
Total Non-Major Governmental Funds

$ 182,106 99,969 205,296 2,191 20,284 509,846
5,264
28,939 -
315,570 257,771
28,939 5,264 315,570 257,771 607,544
5,264
28,939
573,341
15,020
86,448
(571,704)
(97,698)
(100,000) (100,000)
571,704 571,704
579,832 (537,010) 42,822
15,020
(13,552)
(54,876)
68,199 $ 83,219 $
169,068 155,516 $
400,008 400,008 $
823,165 768,289
71

Combining Statement of Revenues, Expenditures and Changes in Fund Equity Special Revenue Funds - Budget and Actual Nonmajor Governmental Funds For the year ended June 30, 2012
Traffic Safety Variance w/Amended Positive (Negative) $ (31) 5,000 4,969 (4,969) 8,128 1,649 (6,479)
Original Budget REVENUES: Fees and permits Fines and forfeitures $ 100,000 100,000 100,000 (110,000) (110,000) $
Amended Budget 100,000 100,000 100,000 (110,000) (110,000) $
Actual 99,969 5,000 104,969 104,969 8,128 (111,649) (103,521)
Intergovernmental Use of money and property Charges for services

Total revenues EXPENDITURES:
Public works Culture and recreation

Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENSES AND OTHER FINANCING (USES) FUND BALANCE: Beginning of year End of year $
(10,000) 12,704 2,704 $
(10,000) 12,704 2,704 $
1,448 12,704 14,152 $
(11,448) (11,448)
72
Road Impact Fees Variance w/Amended Positive (Negative) $ 2,106 2,106 (2,106) (60,273) 60,273 $
Grants Variance w/Amended Positive (Negative) $ (28,537) (28,537) 28,537 277,890 (277,890)
Original Budget $ 180,000 180,000 180,000 (195,000) (195,000) $
Amended Budget 180,000 180,000 180,000 (195,000) (195,000) $
Actual 182,106 182,106 182,106 (255,273) (255,273)
Original Budget 114,000 114,000 114,000 (347,978) (347,978) $
Amended Budget 114,000 114,000 114,000 (347,978) (347,978) $
Actual 85,463 85,463 85,463 (70,088) (70,088)
(15,000) 132,663 $ 117,663 $
(15,000) 132,663 117,663 $
(73,167) 132,663 59,496 $
58,167 58,167 $
(233,978) 40,523 (193,455) $
(233,978) 40,523 (193,455) $
15,375 40,523 55,898 $
(249,353) (249,353)
(continued)
73

Combining Statement of Revenues, Expenditures and Changes in Fund Equity Special Revenue Funds - Budget and Actual, Continued Nonmajor Governmental Funds For the year ended June 30, 2012
Forest Theater Variance w/Amended Positive (Negative) $ 20,284 20,284 (5,264) (5,264) 15,020 -
Original Budget REVENUES: Fees and permits Fines and forfeitures $ $
Amended Budget $
Actual 20,284 20,284 5,264 5,264 15,020 -
Intergovernmental Use of money and property Charges for services

Total revenues EXPENDITURES:
Public works Culture and recreation

Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENSES AND OTHER FINANCING (USES) FUND BALANCE: Beginning of year End of year $
68,199 68,199 $
68,199 68,199 $
15,020 68,199 83,219 $
15,020 15,020
74
Gas Tax Variance w/Amended Positive (Negative) $ 44,333 (1,446) 42,887 43,531 43,531 (86,418) $
Total Variance w/Amended Positive (Negative) $ 2,106 (31) 20,796 (1,446) 20,284 41,709 (43,531) (5,264) (48,795) 79,976 8,128 215,968 (224,096)
Original Budget $ 70,500 2,000 72,500 72,470 72,470 30 (100,000) (100,000) $
Amended Budget 70,500 2,000 72,500 72,470 72,470 30 (100,000) (100,000) $
Actual 114,833 554 115,387 28,939 28,939 86,448 (100,000) (100,000)
Original Budget 180,000 100,000 184,500 2,000 466,500 72,470 72,470 394,030 (752,978) (752,978) $
Amended Budget 180,000 100,000 184,500 2,000 466,500 72,470 72,470 394,030 (752,978) (752,978) $
Actual 182,106 99,969 205,296 554 20,284 508,209 28,939 5,264 34,203 474,006 8,128 (537,010) (528,882)
(99,970) 169,068 $ 69,098 $
(99,970) 169,068 69,098 $
(13,552) 169,068 155,516 $
(86,418) (86,418) $
(358,948) 423,157 64,209 $
(358,948) 423,157 64,209 $
(54,876) 423,157 368,281 $
(144,120) (304,072)
(concluded)
75
76
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Carmel-by-the-Sea as of and for the year ended June 30, 2012, which collectively comprise the Citys basic financial statements and have issued our report thereon dated August 15, 20X1. 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. Internal Control Over Financial Reporting Management of the City is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Citys internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Citys internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Citys internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entitys financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined previously.
Compliance and Other Matters As part of obtaining reasonable assurance about whether the Citys financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, the City Council, and others within the entity, and is not intended to be and should not be used by anyone other than these specified parties.
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April 30, 2013 JJACPA, Inc.

Carmel Annual Financial Report Fy Ending 2012

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Carmel Annual Financial Report Fy Ending 2012

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CITY OF CARMEL-BY-THE-SEA, CALIFORNIA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2012

Prepared by: Paul Wood Interim Finance Director

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City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

INDEPENDENT AUDITORS REPORT

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

Changes (362,969) 12,715,365 12,352,396 454,044 478,690 932,734

31,374,354 555,524 7,408,523 $ 39,338,401 $

18,593,603 440,523 8,884,613 27,918,739 $

12,780,751 115,001 (1,476,090) 11,419,662

City of Carmel-by-the-Sea, California

409,677 668,762 465,881

83,571 202,468 (465,881)

4,571,481 4,179,900 1,743,748 491,674 532,019 55,995 276,751 13,216,046

4,157,789 4,002,509 1,805,510 476,597 591,248 109,602 142,923 12,830,498

413,692 177,391 (61,762) 15,077 (59,229) (53,607) 133,828 385,548

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

Sales and use tax 13.19%

Transient occupancy tax 31.63%

Property taxes 34.59%

Revenues by Source - Governmental Activities 2011 Use of money Other general

Sales tax 14.07% Property taxes 32.41%

Transient occupancy taxes 31.20%

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

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BASIC FINANCIAL STATEMENTS

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City of Carmel-by-the-Sea, California

8,923,429 485,365 1,318,546 297,475 2,303 11,027,118

4,955,954 34,393,581 39,349,535 50,376,653

768,016 430,278 179,465 1,377,759

460,000 358,906 434,487 7,540,694 866,406 9,660,493 11,038,252

31,374,354 555,524 7,408,523 39,338,401

City of Carmel-by-the-Sea, California

Program Revenues Operating Charges for Grants and Services Contributions

4,735 39,878 412,605 36,030 493,248

589,218 282,012 871,230

Net (Expense) Revenue and Changes in Net Assets Governmental Activities

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FUND FINANCIAL STATEMENTS MAJOR FUNDS

Fund Governmental Funds: General Fund

Harrison Memorial Library Special Revenue Fund

Parking Special Revenue Fund

Accounts for activities associated with parking in-lieu fees.

Ambulance Special Revenue Fund

City of Carmel-by-the-Sea, California

4,258,441 3,001,120 7,259,561 8,864,618 $

698,086 698,086 $ 698,086

476,193 522,940 522,940

Ambulance $ 44,372 447,852 $ 492,224

Nonmajor Governmental Funds $ 342,456 400,007 36,986 $ 779,449 $ $

Totals 8,923,429 485,365 1,318,546 297,475 2,303 330,199 11,357,317

42,077 330,199 372,276

768,016 430,278 330,199 460,000 1,988,493