CITY OF SANTA MONICA ANNUAL FINANCIAL REPORT OF THE

Transcription

1 ANNUAL FINANCIAL REPORT OF THE PROPOSITION A LOCAL RETURN FUND PROPOSITION C LOCAL RETURN FUND MEASURE R LOCAL RETURN FUND TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND FOR THE FISCAL YEARS ENDED JUNE 30, 2012 AND 2011

2 TABLE OF CONTENTS FINANCIAL SECTION PAGE Independent Auditor s Report 1 Proposition A Local Return Fund: Basic Financial Statements: Balance Sheets 3 Statements of Revenues, Expenditures and Changes in Fund Balance 4 Supplemental Information: Schedule of Expenditures Actual and Metro Approved Project Budget 5 Schedule of Capital Assets 6 Proposition C Local Return Fund: Basic Financial Statements: Balance Sheets 7 Statements of Revenues, Expenditures and Changes in Fund Balance 8 Supplemental Information: Schedule of Expenditures Actual and Metro Approved Project Budget 9 Schedule of Capital Assets 10 Measure R Local Return Fund: Basic Financial Statements: Balance Sheets 11 Statements of Revenues, Expenditures and Changes in Fund Balance 12 Supplemental Information: Schedule of Expenditures Actual and Metro Approved Project Budget 13 Schedule of Capital Assets 14 Transportation Development Act Article 3 Fund: Basic Financial Statements: Balance Sheets 15 Statements of Revenues, Expenditures and Changes in Fund Balance 16 Supplemental Information: Schedule of Transportation Development Act Allocation for Specific 17 Projects Notes to Financial Statements 18 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements 23 Performed in Accordance With Government Auditing Standards COMPLIANCE SECTION Independent Auditor s Report On Compliance 25 Compliance Matrix 26 EIT CONFERENCE 29

3 FINANCIAL SECTION

4 3600 WILSHIRE BOULEVARD, SUITE 1710 LOS ANGELES, CA (213) TELEPHONE (213) FA SIMPSON & SIMPSON CERTIFIED PUBLIC ACCOUNTANTS FOUNDING PARTNERS BRAINARD C. SIMPSON, CPA MELBA W. SIMPSON, CPA Independent Auditor s Report To the Honorable Members of the City Council of the City of Santa Monica, California and the Los Angeles County Metropolitan Transportation Authority We have audited the balance sheets of the Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, and Transportation Development Act Article 3 Fund of the City of Santa Monica, California (City) as of June 30, 2012 and 2011, and the accompanying statements of revenues, expenditures, and changes in fund balance for the years then ended. These financial statements are the responsibility of the City s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinions. As discussed in Note 2, the financial statements present only the Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, and Transportation Development Act Article 3 Fund and do not purport to, and do not, present fairly the financial position of the City of Santa Monica, California, as of June 30, 2012 and 2011, and the changes in financial position thereof for the years then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, and Transportation Development Act Article 3 Fund of the City of Santa Monica, California, as of June 30, 2012 and 2011, and the respective changes in their fund balances for the years then ended in conformity with accounting principles generally accepted in the United States of America.

5 In accordance with Government Auditing Standards, we have also issued our report dated November 19, 2012 on our consideration of the City of Santa Monica s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Santa Monica, California s Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, and Transportation Development Act Article 3 Fund financial statements as a whole. The accompanying supplemental information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. The schedules of expenditures are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The supplemental 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 information is fairly stated in all material respects in relation to the financial statements as a whole. This report is intended solely for the information and use of the City of Santa Monica and the Los Angeles County Metropolitan Transportation Authority and is not intended to be and should not be used by anyone other than these specified parties. Los Angeles, California November 19,

6 PROPOSITION A LOCAL RETURN FUND BALANCE SHEETS JUNE ASSETS Cash and investments $ 6,915,772 $ 7,460,893 Total assets $ 6,915,772 $ 7,460,893 LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ 93,478 $ 1,493 Total liabilities 93,478 1,493 Fund Balance Restricted 1,976,285 2,106,798 Rail reserve (Note 8) 3,232,983 3,754,600 Capital reserve (Note 9) 1,613,026 1,598,002 Total fund balance 6,822,294 7,459,400 Total liabilities and fund balance $ 6,915,772 $ 7,460,893 The accompanying notes are an integral part of the financial statements. 3

7 PROPOSITION A LOCAL RETURN FUND STATEMENTS OF REVENUES, EPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June REVENUES Proposition A $ 1,354,665 $ 1,250,957 Interest income 69,927 99,330 Project generated revenue Total revenues 1,424,742 1,350,324 EPENDITURES Various projects 2,061,848 1,448,598 Total expenditures 2,061,848 1,448,598 Deficiency of revenues over expenditures (637,106) (98,274) Fund balance at beginning of year 7,459,400 7,557,674 Fund balance at end of year $ 6,822,294 $ 7,459,400 The accompanying notes are an integral part of the financial statements. 4

8 For the Fiscal Year Ended June 30, 2012 (With Comparative Actual Amount for the Fiscal Year Ended June 30, 2011) 2012 Variance Project Metro Favorable 2011 Code Project Name Budget Actual (Unfavorable) Actual Downtown Shuttle Service $ 200,000 $ 200,000 $ - $ Fixed Route Transit 311, ,666 (27,010) 312, Paratransit Service 640, , , , Youth Transportation 51,600 50,350 1,250 55, Disabled Transportation 30,000 24,158 5,842 20, Senior Transportation 3, ,772 2, Arts Transportation 15,000 15,677 (677) 12, Bus Stop Shelter Maintenance 60,000 2,961 57,039 60, Widen Sidewalk at Bus Stop , Vehicle, Recreational Transit 41,855 41, Fare Subsidy Program 62,227 55,227 7,000 55, Transit Information/Pass Sales Center point of sale implementation and tenant 4,000 3, Rail Reserve: Exposition ROW Study 1,536,356 - * 1,536, Rail Reserve - Exposition Commuter Bike Path Component 562,469 - * 562,469 21, Bus Stop & Shelter Improvement Program 1,500,000-1,500, Exposition Light Rail Alternative Analysis - - * - 16, City Station Area Planning for Exposition Light Rail 7,280 7,280 * - 16, Rail Reserve - Expo Station Area Planning 500,900 50,237 * 450,663 53, Rail Reserve - Expo Light Rail Analysis 7,251 - * 7, Expo LRT Advisory Services 125,000 26,475 * 98, EPO Maintenance Yard Buffer 250, , EPO Maintenance Yard Buffer 50,000-50, Rail Reserve - Expo Bergamot and Memorial Park Station 365, , Rail Reserve - Expo Stations Preliminary Engineering Rail Reserve - Expo Right of Way Tree Relocation 350, , , Direct Administration Prop A 50,000 54,283 (4,283) 51, WISE Senior & Disabled Services 186, ,711 (6,311) 186,400 Total expenditures * Rail reserve expenditures (Note 8) CITY OF SANTA MONICA PROPOSITION A LOCAL RETURN FUND SUPPLEMENTAL INFORMATION SCHEDULE OF EPENDITURES ACTUAL AND METRO APPROVED PROJECT BUDGET $ 6,910,495 $ 2,061,848 $ 4,848,647 $ 1,448,598 See accompanying independent auditor's report. 5

9 PROPOSITION A LOCAL RETURN FUND SUPPLEMENTAL INFORMATION SCHEDULE OF CAPITAL ASSETS June 30, 2012 Date Balance Balance Acquired Description 7/1/2011 Additions Deletions 6/30/2012 1/8/ Starcraft All Star Type II $ 10,604 $ - $ - $ 10,604 Paratransit Bus 1/25/ Starcraft All Star Type II 10, ,604 Paratransit Bus 3/5/ El Dorado Amerivan PT 11, ,200 Paratransit Minivan 3/5/ El Dorado Amerivan PT 11, ,200 Paratransit Minivan 3/13/ El Dorado Amerivan PT 11, ,200 Paratransit Minivan 3/13/ El Dorado Amerivan PT 11, ,200 Paratransit Minivan 8/15/ Starcraft Allstar Type III 54, ,990 Paratransit Bus 12/2/ Starcraft Allstar Type III 54, ,949 Paratransit Bus 7/30/2008 Wall Mounted Brochure Holder 20, ,036 7/30/2008 Wall Mounted Brochure Holder 20, ,036 7/30/ Sided Freestanding Display 13, ,630 9/24/2009 Expo - Light Rail Alt Outreach 13,228 16,772-30,000 8/11/2009 Expo - City Station Area Planning 56,271 23,730-80,001 12/22/2009 Expo - Station - Appraisal 74, ,749 3/31/2010 Expo - Street Area Planning 20, , ,337 5/3/2011 Expo - Commuter Bike Path - 21,531-21,531 8/29/2011 Expo - Light Rail Alt Analysis - 26,475-26,475 2/29/2012 Expo - PE Bergamot Station - 245, ,000 2/29/2012 Expo - PE Mid-city Station - 119, ,719 6/5/2012 Expo - Relocate Trees - 108, ,310 Total $ 394,347 $ 665,424 $ - $ 1,059,771 See accompanying independent auditor's report. 6

10 PROPOSITION C LOCAL RETURN FUND BALANCE SHEETS JUNE ASSETS Cash and investments $ 3,291,341 $ 4,021,728 Total assets $ 3,291,341 $ 4,021,728 LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ 53,432 $ 143,903 Accrued liabilities - 1,699 Contract retainage 5,225 5,225 Total liabilities 58, ,827 Fund Balance Restricted 2,158,190 2,806,397 Capital reserve (Note 9) 1,074,494 1,064,504 Total fund balance 3,232,684 3,870,901 Total liabilities and fund balance $ 3,291,341 $ 4,021,728 The accompanying notes are an integral part of the financial statements. 7

11 PROPOSITION C LOCAL RETURN FUND STATEMENTS OF REVENUES, EPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June REVENUES Proposition C $ 1,124,384 $ 1,038,110 Interest income 37,348 59,098 Rent Income 8,748 - Total revenues 1,170,480 1,097,208 EPENDITURES Various projects 1,808,697 1,526,997 Total expenditures 1,808,697 1,526,997 Deficiency of revenues over expenditures (638,217) (429,789) Fund balance at beginning of year 3,870,901 4,300,690 Fund balance at end of year $ 3,232,684 $ 3,870,901 The accompanying notes are an integral part of the financial statements. 8

12 PROPOSITION C LOCAL RETURN FUND SUPPLEMENTAL INFORMATION SCHEDULE OF EPENDITURES ACTUAL AND METRO APPROVED PROJECT BUDGET For the Fiscal Year Ended June 30, 2012 (With Comparative Actual Amount for the Fiscal Year Ended June 30, 2011) 2012 Variance Project Metro Favorable 2011 Code Project Name Budget Actual (Unfavorable) Actual Fixed Route Transit $ - $ - $ - $ 676,472 Bicycle Technology Demonstration Project- 92,000-92, Design Transportation Management Organization 50,000 41,690 8, Formation Transit Mall Kiosk Enhancements , Cloverfield Corridor Bus Stop Impr 999, , Santa Monica Improvements 117, , Traffic Signal Updated 43,951 43,951-63, Rideshare Program 93,000 96,384 (3,384) 99, Real Time Signs for Bus Shelters 280,500 19, , No Net New Trips Rideshare Toolkit 78,027-78, Bicycle Valet Service 55,000 25,887 29,113 38, Train Operations and Existing Traffic 22,150-22,150 78, Circulation Analysis - Colorado Esplanade , Citywide Bikeway Network , Bicycle Transit Center Project 766, , ,532 79, Bicycle Rack Replacement Program , School Based Bicycle Training 65,500-65, Bicycle Rack Replacement Program 144,612 56,240 88, Street Paving on Transit Routes , ,247 (41,739) (5,009) Street Resurfacing on Transit Routes 539, , Street Improvement Project on transit routes 240, , Pavement Management System 61,460-61, Direct Administration Prop C 20,000 21,327 (1,327) 34,532 Total expenditures $ 4,394,636 $ 1,808,697 $ 2,585,939 $ 1,526,997 See accompanying independent auditor's report. 9

13 PROPOSITION C LOCAL RETURN FUND SUPPLEMENTAL INFORMATION SCHEDULE OF CAPITAL ASSETS June 30, 2012 Date Balance Balance Acquired Description 7/1/2011 Additions Deletions 6/30/2012 2/15/2011 Transit Mall Kiosk $ - $ 46,662 $ - $ 46,662 6/12/2011 Train Operations & Existing Traffic Cir. - 78,021-78,021 6/24/2011 Train Operations-Colorado Esplanade - 97,850-97,850 6/28/2011 Citywide Bikeway Network - 100, ,000 8/2/2011 Bike Center - 618, ,056 Total $ - $ 940,589 $ - $ 940,589 See accompanying independent auditor's report. 10

14 MEASURE R LOCAL RETURN FUND BALANCE SHEETS JUNE ASSETS Cash and investments $ - $ - Total assets $ - $ - LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ - $ - Total liabilities - - Fund Balance Restricted - - Total fund balance - - Total liabilities and fund balance $ - $ - The accompanying notes are an integral part of the financial statements. 11

15 MEASURE R LOCAL RETURN FUND STATEMENTS OF REVENUES, EPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June REVENUES Measure R $ 837,292 $ 775,604 Total revenues 837, ,604 EPENDITURES Various projects 837, ,604 Total expenditures 837, ,604 Excess (deficiency) of revenues over expenditures - - Fund balance at beginning of year - - Fund balance at end of year $ - $ - The accompanying notes are an integral part of the financial statements 12

16 MEASURE R LOCAL RETURN FUND SUPPLEMENTAL INFORMATION SCHEDULE OF EPENDITURES ACTUAL AND METRO APPROVED PROJECT BUDGET For the Fiscal Year Ended June 30, 2012 (With Comparative Actual Amount for the Fiscal Year Ended June 30, 2011) 2012 Variance Project Metro Favorable 2011 Code Project Name Budget Actual (Unfavorable) Actual 4.20 Operating subsidy to existing bus operator $ 837, ,292 $ - $ 775,604 Total expenditures $ 837,292 $ 837,292 $ - $ 775,604 See accompanying independent auditor's report. 13

17 MEASURE R LOCAL RETURN FUND SUPPLEMENTAL INFORMATION SCHEDULE OF CAPITAL ASSETS June 30, 2012 Date Balance Balance Acquired Description 7/1/2011 Additions Deletions 6/30/2012 $ - $ - $ - $ - Total $ - $ - $ - $ - See accompanying independent auditor's report. 14

18 TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND (PURSUANT TO PUBLIC UTILITIES CODE SECTION 99234) BALANCE SHEETS JUNE ASSETS Due from Metro (Note 10) $ 45,499 $ 6,527 Total assets $ 45,499 $ 6,527 LIABILITIES AND FUND BALANCE Liabilities Due to other fund $ 45,499 $ 6,527 Total liabilities 45,499 6,527 Fund Balance Reserved - - Total fund balance (deficit) - - Total liabilities and fund balance $ 45,499 $ 6,527 The accompanying notes are an integral part of the financial statements. 15

19 TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND STATEMENTS OF REVENUES, EPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June REVENUES Additional drawdown of prior year reserve (Note 10) $ - $ 6,527 Payment from prior year reserve 38,972 49,475 Total revenues 38,972 56,002 EPENDITURES Various projects 38,972 56,636 Total expenditures 38,972 56,636 Excess (deficiency) of revenues over expenditures - (634) Fund balance at beginning of year Fund balance at end of year $ - $ - The accompanying notes are an integral part of the financial statements. 16

20 TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND SUPPLEMENTAL INFORMATION SCHEDULE OF TRANSPORTATION DEVELOPMENT ACT ALLOCATION FOR SPECIFIC PROJECTS For the Fiscal Year Ended June 30, 2012 Program Unexpended Project Project Description Year Allocations Expenditures Allocations Status Local allocations Bikeways, lanes, and paths 2012 $ 45,499 $ 38,972 $ 6,527 Ongoing Total $ 45,499 $ 38,972 6,527 Fund balance at beginning of year - Due from Metro (Note 10) (6,527) Fund balance at end of year $ - See accompanying independent auditor's report. 17

21 NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2012 and 2011 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fund Accounting The operations of the Proposition A Local Return Fund (PALRF), Proposition C Local Return Fund (PCLRF), Transportation Development Act Article 3 Fund (TDAA3F) and Measure R Local Return Fund (MRLRF) are accounted for in separate sets of self-balancing accounts that comprise their assets, liabilities, fund balance, revenues, and expenditures. PALRF and PCLRF represents 25% and 20%, respectively, of the ½ cent Proposition A and ½ cent Proposition C sales taxes which are distributed to the jurisdictions within Los Angeles County based on population and must be used exclusively for transportation related programs and projects. MRLRF represents 15% of a ½ cent sales tax which is distributed to the jurisdictions within Los Angeles County based on a per capita basis and must be used exclusively for transportation purposes. Transportation Development Act Article 3 Fund (TDAA3F) is a Special Revenue Fund that accounts for the City s share of the Transportation Development Act Article 3 allocations which are legally restricted for specific purposes. Basis of Accounting PALRF, PCLRF, MRLRF, and TDAA3F are accounted for using the modified accrual basis of accounting whereby revenues are recognized when they become both measurable and available to finance expenditures of the current period and expenditures are generally recognized when the related fund liabilities are incurred. Budget and Budgetary Accounting The budgeted amounts presented in this report for comparison to the actual amounts are presented in accordance with accounting principles generally accepted in the United States of America. Unrealized Gain (Loss) In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and External Investment Pools, local governments are required to use fair value (instead of amortized cost) for financial reporting purposes. As a result of such implementation, the city recognizes the unrealized gain/ (loss). 18

22 NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2012 and 2011 (Continued) NOTE 2 ANNUAL FINANCIAL STATEMENTS The financial statements reflect only the financial position and results of operations of PALRF, PCLRF, MRLRF, and TDAA3F and their compliance with the Proposition A and Proposition C Local Return Program Guidelines, Measure R Local Return Program Guidelines, Transportation Development Act Article 3, and the Los Angeles County Metropolitan Transportation Authority Funding and Allocation Guidelines for Transportation Development Act Article 3 Bicycle and Pedestrian Funds. NOTE 3 PROPOSITION A AND PROPOSITION C LOCAL RETURN COMPLIANCE REQUIREMENTS In accordance with Proposition A and Proposition C Local Return Program Guidelines, funds received pursuant to these guidelines may only be used for Proposition A and Proposition C Local Return approved programs. NOTE 4 MEASURE R LOCAL RETURN COMPLIANCE REQUIREMENTS In accordance with Measure R Local Return Program Guidelines, funds received pursuant to these guidelines may only be used for Measure R Local Return approved programs. NOTE 5 TRANSPORTATION DEVELOPMENT ACT COMPLIANCE REQUIREMENTS In accordance with Public Utilities Code Section 99234, funds received pursuant to this Code s section may only be used for activities relating to pedestrians and bicycle facilities. NOTE 6 CASH AND INVESTMENTS The PALRF, PCLRF, MRLRF, and TDAA3F cash balances were pooled with various other City funds for deposit and investment purposes. The share of each fund in the pooled cash account was separately maintained and interest income was apportioned to the participating funds based on the relationship of their average quarterly balances to the total of the pooled cash and investments. NOTE 7 PROJECT GENERATED REVENUE Project generated revenue for PALRF for the years ended June 30, 2012 and 2011 amounting to $150 and $37, respectively, pertains to the paratransit revenue. Project generated revenue for PACLR for the years ended June 30, 2012 and 2011 amounting to $8,748 and $0, respectively pertains to concessionaire s rent for the city s bike transit centers. 19

23 NOTE 8 RAIL RESERVE CITY OF SANTA MONICA NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2012 and 2011 (Continued) On March 13, 1985, Metro and City entered into a Memorandum of Understanding to establish rail reserve fund (Fund) and allocated $504,916 of PALRF FY 1984/85 for rail development. In subsequent years, the City may annually allocate additional PALRF monies to the rail reserve fund in accordance with the Proposition A Local Return Rail Reserve Guidelines. Per agreement, all interest accrued and placed in the Fund for use exclusively for the projects identified under the Rail Reserve Fund. The Fund shall continue until such time as agreed upon by both parties and under the conditions set forth in the Proposition A Local Return Rail Reserve Guidelines. For the years ended June 30, 2012 and 2011, the following is the rail reserve amount for PALRF: Beginning balance at July 1, $ 3,754,600 $ 3,812,044 Add: interest 35,403 50,959 Expenditures during the year (557,020) (108,403) Ending balance at June 30, $ 3,232,983 $ 3,754,600 NOTE 9 CAPITAL RESERVE PALRF On July 1, 2008, Metro and the City entered into an agreement to establish a capital reserve account (Account) for the Bus Stop and Shelter Improvement Project in the initial amount of $1,500,000. The funding of the Account will continue through Proposition A allocations until June 30, If the project is not completed by June 30, 2013 any unexpended funds shall lapse and be returned to Metro. Per agreement all interest is accrued and placed in the capital reserve amount for use exclusively for the Bus Stop and Shelter Improvement Project. For the years ended June 30, 2012 and 2011, the following is the capital reserve amount for PARLF: Capital reserve: Beginning balance at July 1, $ 1,598,002 $ 1,577,504 Add: interest 15,024 20,498 Less: expenditures during the year - - Ending balance at June 30, $ 1,613,026 $ 1,598,002 20

24 NOTE 9 CAPITAL RESERVE (Continued) PCLRF: CITY OF SANTA MONICA NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2012 and 2011 (Continued) On July 1, 2008, Metro and City entered into capital reserve agreement to establish a capital reserve account (Account) for the Cloverfield Corridor Bus Stop Improvement Project in the initial amount of $1,000,000. On June 15, 2011, Metro and the City amended the agreement for a second term, which would continue the funding of the account through Prop C Allocations until June 30, If the project is not completed by June 30, 2014 any unexpended funds shall lapse and be returned to Metro. Per agreement all interest shall be accrued and placed in the capital reserve amount for use exclusively for the Cloverfield Corridor Bus Stop Improvement Project. For the years ended June 30, 2011 and 2010, the following is the capital reserve amount for PCLRF: Capital reserve: Beginning balance at July 1, $ 1,064,504 $ 1,050,836 Add: interest 9,990 13,668 Less: expenditures - - Ending balance at June 30, $ 1,074,494 $ 1,064,504 NOTE 10 DUE FROM METRO TDA3F The amount of $45,499 represents the City s claim for reimbursement of expenditures that occurred during the year ending June 30, 2012 of $38,972 and the remaining balance for the year ended June 30, 2011 of $6,527. The claim was submitted in May 2012 but payment was received after the fiscal year end. NOTE 11- TRANSPORTATION DEVELOPMENT ACT FUND REVENUE ALLOCATION The revenue allocation for the years ended June 30, 2012 and 2011 consisted of the following payment(s) and/or submitted claim form(s): FY 06/07 reserve $ - $ 769 FY 07/08 reserve 6,862 48,706 FY 08/09 reserve 38,637 - $ 45,499 $ 49,475 21

25 NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2012 and 2011 (Continued) NOTE 12 TRANSPORTATION DEVELOPMENT ACT FUND REVENUE RESERVED In accordance with TDA Article 3 (SB821) Guidelines, funds not spent during the fiscal year have been placed on reserve in the Local Transportation Fund (LTF) account with the County Auditor-Controller to be drawn down whenever the funds become eligible for a specific project and an approved drawdown request is received by Metro. As of June 30, 2012 and 2011, the City has funds on reserve as follows: FY 2007/08 $ - $ 6,862 FY 2008/09 13,928 52,565 FY 2009/10 39,422 39,422 FY 2010/11 37,180 37,180 FY 2011/12 44,657 - $ 135,187 $ 136,029 NOTE 13 SUBSEQUENT EVENTS The City has evaluated events or transactions that occurred subsequent to June 30, 2012, through November 19, 2012, the date the accompanying financial statements were available to be issued, for potential recognition or disclosure in the financial statements and determined no subsequent matters require disclosure or adjustment to the accompanying financial statements. 22

26 3600 WILSHIRE BOULEVARD, SUITE 1710 LOS ANGELES, CA (213) TELEPHONE (213) FA SIMPSON & SIMPSON CERTIFIED PUBLIC ACCOUNTANTS FOUNDING PARTNERS BRAINARD C. SIMPSON, CPA MELBA W. SIMPSON, CPA 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 To the Honorable Members of the City Council of the City of Santa Monica, California and the Los Angeles County Metropolitan Transit Authority We have audited the financial statements of the Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, and Transportation Development Act Article 3 (TDA 3) Fund of the City of Santa Monica, California (City), as of and for the year ended June 30, 2012, and have issued our report thereon dated November 19, 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 City s internal control over financial reporting of the local return funds and TDA 3 local fund as a basis for designing our auditing procedures for the purpose of expressing our opinions on these funds financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City s internal control over financial reporting of these funds. Accordingly, we do not express an opinion on the effectiveness of the City s internal control over financial reporting of the local return funds and TDA 3 local fund. 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 City s local return funds and TDA 3 local fund 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 of the local return funds and TDA 3 local fund that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting of these funds that we consider to be material weaknesses, as defined above.

27 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City s Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, and Transportation Development Act Article 3 Fund 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 the City of Santa Monica and the Los Angeles County Metropolitan Transportation Authority and is not intended to be and should not be used by anyone other than these specified parties. Los Angeles, California November 19,

28 COMPLIANCE SECTION

29 3600 WILSHIRE BOULEVARD, SUITE 1710 LOS ANGELES, CA (213) TELEPHONE (213) FA SIMPSON & SIMPSON CERTIFIED PUBLIC ACCOUNTANTS FOUNDING PARTNERS BRAINARD C. SIMPSON, CPA MELBA W. SIMPSON, CPA Independent Auditor s Report On Compliance To the Honorable Members of the City Council of the City of Santa Monica, California and the Los Angeles County Metropolitan Transit Authority We have audited the compliance of the City of Santa Monica, California (City) with the Proposition A and Proposition C Local Return Guidelines, Measure R Local Return Guidelines, Transportation Development Act Article 3, and the Los Angeles County Metropolitan Transportation Authority s Funding and Allocation Guidelines for the Transportation Development Act Article 3 Bicycle and Pedestrian Funds (Guidelines) for the year ended June 30, Management is responsible for the City s compliance with those guidelines. Our responsibility is to express an opinion on the City s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the Guidelines referred to in the preceding paragraph. Those standards and the Guidelines require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a local return program occurred. An audit includes examining, on a test basis, evidence about City s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of City s compliance with those requirements. In our opinion, as noted in the Compliance Matrix and the Schedule of Findings and Recommendations, the City of Santa Monica complied, in all material respects, with the compliance requirements referred to above that apply to Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, and Transportation Development Act Article 3 (TDA 3) Fund for the year ended June 30, This report is intended solely for the information and use of the City of Santa Monica and the Los Angeles County Metropolitan Transportation Authority and is not intended to be and should not be used by anyone other than these specified parties. Los Angeles, California November 19, 2012

30 COMPLIANCE MATRI Year Ended June 30, 2012 Compliance Requirement In Compliance Yes No Questioned Costs If no, provide details and management response. A. Proposition A and Proposition C Local Return Funds 1. Timely use of funds. 2. Expenditures were approved before being incurred. 3. Funds were used on approved projects only and expenditures were supported and allowable per Guidelines. 4. Expenditures did not exceed 25% of Metro's approved budget. 5. Administrative expenses were within the 20% cap. 6. All on-going and carryover projects were reported in Form B. 7. Annual Project Summary Report (Form B) was submitted on time. 8. Annual Expenditure Report (Form C) was submitted on time. 9. Cash or cash equivalents were maintained. 10. Accounting procedures, record keeping and documentation were adequate. 11. Revenues received including allocations, project generated revenues, and interest income were properly credited to the PALRF and PCLRF accounts. 26

31 COMPLIANCE MATRI Year Ended June 30, 2012 (Continued) Compliance Requirement In Compliance Yes No Questioned Costs If no, provide details and management response. B. Measure R Local Return Fund 1. Timely use of funds. 2. Expenditures were approved before being incurred. 3. Funds were used on approved projects only and expenditures were supported and allowable per Guidelines. 4. Fund were not substituted for property tax. 5. Administrative expenses were within the 20% cap. 6. Expenditure Plan (Form One) was submitted on time. 7. Expenditure Report (Form Two) was submitted on time. 8. Cash or cash equivalents were maintained. 9. Accounting procedures, record keeping and documentation were adequate. 10. Revenues received including allocations, project generated revenues, and interest income were properly credited to the Measure R account. 11. Funds were not used to supplant existing local revenues being used for transportation purpose. 27

32 COMPLIANCE MATRI Year Ended June 30, 2012 (Continued) Compliance Requirement In Compliance Yes No Questioned Costs If no, provide details and management response. C. Transportation Development Act Article 3 Fund 1. Timely use of funds. 2. Expenditures were incurred for activities relating to pedestrian and bicycle facilities and amenities. 28

33 EIT CONFERENCE

34 PROPOSITION A, PROPOSITION C, MEASURE R LOCAL RETURN FUNDS, AND TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND EIT CONFERENCE June 30, 2012 An exit conference was held on November 19, 2012 with the City of Santa Monica. Those in attendance were: Simpson & Simpson Representative: Braquel Simpson, Supervising Senior Auditor City s Representative: Randy Chow, Financial Reporting Supervisor Imelda De Leon, Senior Accountant Matters Discussed: Results of the audit disclosed no significant financial or compliance issues. A copy of this report was forwarded to the following City representative(s) for their comments prior to the issuance of the final report: Randy Chow, Financial Reporting Supervisor Imelda De Leon, Senior Accountant

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