MENDOTA REDEVELOPMENT
AGENCY
FINANCIAL STATEMENTS
For the Fiscal Year Ended
June 30, 2004
MENDOTA REDEVELOPMENT AGENCY
June 30, 2004
Table of Contents
Page
FINANCIAL SECTION
Independent Auditor’s Report ................................................................................................................1
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets ........................................................................................................... 3
Statement of Activities............................................................................................................... 4
Fund Financial Statements:
Balance Sheet – Governmental Funds..................................................................................... 5
Reconciliation of the Governmental Funds Balance Sheet
to the Government-wide Statement of Net Assets..................................................................6
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds ..............................................................................................................7
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Government-wide Statement of Activities........................................8
Notes to the Basic Financial Statements......................................................................................... 9
Required Supplementary Information:
Budgetary Comparison Schedule – Special Revenue Fund ................................................... 18
OVERALL COMPLIANCE AND INTERNAL CONTROLS SECTION
Report on Compliance and on Internal Control Over Financial
Reporting Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards .............................................................................21
Schedule of Findings and Questioned Costs........................................................................................ 24
Summary Schedule of Prior Audit Findings .......................................................................................... 25
FINANCIAL SECTION
THIS PAGE IS LEFT BLANK INTENTIONALLY.
INDEPENDENT AUDITOR’S REPORT
To the Honorable City Council of the
City of Mendota and the Board of Directors
of the Mendota Redevelopment Agency
Mendota, California
We have audited the accompanying financial statements of the governmental activities, each major fund
and the aggregate remaining fund information of the Mendota Redevelopment Agency (Agency), a
component unit of the City of Mendota, as of and for the fiscal year then ended June 30, 2004, as listed in
the table of contents. These financial statements are the responsibility of the Agency's management.
Our responsibility is to express an opinion 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 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 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 opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund and the aggregate remaining
fund information of the Agency as of June 30, 2004, 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.
The accompanying financial statements have been prepared assuming that the Mendota Redevelopment
Agency will continue as a going concern. As discussed in Note 8 to the financial statements, the tax
increment revenue that is collected by the Agency is insufficient to service the debt payments of the
Agency. These conditions raise substantial doubt about its ability to continue as a going concern.
Management’s plans regarding those matters also are described in Note 8. The financial statements do
not include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 1 to the basic financial statements, the Agency adopted the provisions of
Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements – and
Management’s Discussion and Analysis – for State and Local Governments; GASB Statement No. 37,
Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local
Governments: Omnibus; GASB Statement No. 38, Certain Financial Statement Note Disclosures and
GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in
Governmental Fund Financial Statements.
1
In accordance with Government Auditing Standards, we have also issued our report dated November 11,
2004, on our consideration of the Mendota Redevelopment Agency's internal control over financial reporting
and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report
is an integral part of an audit performed in accordance with Government Auditing Standards and should be
read in conjunction with this report in considering the results of our audit.
The Mendota Redevelopment Agency has not presented a management’s discussion and analysis.
Accounting principles generally accepted in the United States of America require that a management’s
discussion and analysis be presented as supplementary information.
The budgetary comparison information on page 18 is not a required part of the basic financial statements
but is supplementary information required by accounting principles generally accepted in the United States
of America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
November 11, 2004
2
MENDOTA REDEVELOPMENT AGENCY
STATEMENT OF NET ASSETS
June 30, 2004
Governmental
Activities
Assets
Cash and cash equivalents
Other receivables
Restricted assets:
Cash and cash equivalents
$
1,383,021
100,000
143,664
Total assets
1,626,685
Liabilities
Accounts payable
Due to primary government
Accrued interest
Long-term liabilities
Portion due or payable within one year:
Revenue bonds payable
Portion due or payable after one year:
Revenue bonds payable
766
451,432
497,336
155,000
6,745,000
7,849,534
Total liabilities
Net Assets
Invested in capital assets, net of related debt
Restricted for:
Low and moderate income housing
Debt service
Unrestricted
Total net assets
The notes to the financial statements are an integral part of this statement.
3
(6,900,000)
806,100
(128,949)
$
(6,222,849)
MENDOTA REDEVELOPMENT AGENCY
STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2004
Program Revenues
Operating
Capital Grants
Charges for
Grants and
and
Services
Contributions
Contributions
Expenses
Governmental Activities:
General government
Public safety
Municipal airport
Highways and streets
Sanitation
Public works
Culture and recreation
Urban redevelopment and housing
Economic development and assistance
Depreciation
Interest and fiscal charges
Total governmental activities
$
359,695
516,819
$
876,514
-
$
-
-
$
-
-
Net (Expense)
Revenue and
Changes in
Net Assets
Governmental
Activities
$
-
(876,514)
General revenues:
Taxes
Licenses and permits
Fines
Special assessments
Earnings on investments
Miscellaneous
Transfers
754,719
22,387
-
Total general revenues and transfers
777,106
Change in net assets
(99,408)
Net assets - beginning
Net assets - ending
The notes to the financial statements are an integral part of this statement.
4
(359,695)
(516,819)
(6,123,441)
$
(6,222,849)
MENDOTA REDEVELOPMENT AGENCY
BALANCE SHEET – GOVERNMENTAL FUNDS
June 30, 2004
Low Income
Housing #1
Debt Service
Project #1
Debt Service
Project #2
$ 575,055
100,000
-
$
$
Non-Major
Fund
Low Income
Housing #2
Capital
Projects
Total
Governmental
Funds
Assets
Cash and cash equivalents
Other receivables
Due from other funds
Restricted assets:
Cash and cash equivalents
Total assets
-
149,619
143,664
427,651
75,919
$
1,080,933
$
230,696
-
$ 1,383,021
100,000
1,156,852
-
143,664
$ 2,783,537
-
$ 1,080,933
$
230,696
$
$
-
$ 675,055
$
293,283
$
503,570
$
$
766
451,432
$
1,080,933
-
Liabilities and Fund Balances
Liabilities:
Accounts payable
Due to other funds
Due to primary government
-
Total liabilities
Fund balances:
Reserved for:
Debt service
Low and moderate income housing
Unreserved
Total fund balances
Total liabilities and fund balances
452,198
1,080,933
75,919
-
$
766
1,156,852
451,432
75,919
-
1,609,050
675,055
-
(158,915)
(577,363)
1,005,014
54,927
175,769
-
54,927
850,824
268,736
675,055
(158,915)
(577,363)
1,005,014
230,696
1,174,487
230,696
$ 2,783,537
$ 675,055
$
293,283
$
503,570
$ 1,080,933
The notes to the financial statements are an integral part of this statement.
5
$
MENDOTA REDEVELOPMENT AGENCY
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
GOVERNMENT-WIDE STATEMENT OF NET ASSETS
June 30, 2004
Total Fund Balances - Governmental Funds
$
To recognize accrued interest at year-end.
1,174,487
(497,336)
Long-term liabilities are not due and payable in the current period and,
therefore, are not reported as liabilities in the funds. Long-term liabilities
at year-end consist of:
Revenue bonds
Total net assets - governmental activities
The notes to the financial statements are an integral part of this statement.
6
(6,900,000)
$
(6,222,849)
MENDOTA REDEVELOPMENT AGENCY
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended June 30, 2004
Revenues:
Taxes
Revenue from the use of money
and property
Low Income
Housing #1
Debt Service
Project #1
Debt Service
Project #2
$
$
$
-
490,440
264,279
Capital
Projects
$
-
Non-major
Fund
Low Income
Housing #2
Total
Governmental
Funds
$
$
-
754,719
6,109
9,796
4,411
-
2,071
22,387
6,109
500,236
268,690
-
2,071
777,106
26,473
33,000
217,828
-
82,394
-
-
-
326,695
33,000
-
145,000
279,344
-
498
-
145,000
279,842
59,473
642,172
82,394
498
-
784,537
(53,364)
(141,936)
186,296
(498)
Other financing sources (uses):
Transfers in
Transfers out
98,088
-
(98,088)
(52,856)
Total other financing sources (uses)
98,088
(98,088)
(52,856)
Net change in fund balances
44,724
(240,024)
133,440
Fund balances, July 1, 2003
630,331
215,311
(710,803)
Total revenues
Expenditures:
Current:
Urban redevelopment and housing
Capital outlay
Debt service:
Principal
Interest
Total expenditures
Excess (deficiency) of revenues over
(under) expenditures
Prior period adjustment
Fund balances, June 30, 2004
-
(134,202)
$ 675,055
$ (158,915)
$ (577,363)
2,071
(7,431)
-
52,856
-
150,944
(150,944)
-
52,856
(498)
54,927
1,005,512
175,769
-
-
$ 1,005,014
$ 230,696
The notes to the financial statements are an integral part of this statement.
7
(7,431)
1,316,120
(134,202)
$ 1,174,487
MENDOTA REDEVELOPMENT AGENCY
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2004
Total net change in fund balances - governmental funds
$
(7,431)
The governmental funds report debt proceeds as another financing
source, while repayment of debt principal is reported as an
expenditure.
Payment revenue bonds
145,000
Interest on long-term debt in the statement of activities differs from
the amount reported in the governmental funds because interest is
recognized as an expenditure in the funds when it is due, and thus
requires the use of current financial resources. In the statement of
activities, however, interest expense is recognized as the interest
accrues, regardless of when it is due.
Changes in net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
8
(236,977)
$
(99,408)
MENDOTA REDEVELOPMENT AGENCY
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2004
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Mendota Redevelopment Agency (Agency) have been prepared in
conformity with generally accepted accounting principals (GAAP) as applied to governmental units. The
Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for
establishing governmental accounting and financial reporting principles. The more significant of the
government’s accounting policies are described below.
Reporting Entity
The Agency meets the criteria set forth in GAAP for inclusion as a component unit within the City of
Mendota reporting entity based on the City’s oversight responsibility in selection of the governing board.
In addition, all of the Agency’s activities are conducted within the geographic boundaries of the City. The
Agency's financial information is blended into the City of Mendota's Annual Financial Report.
The Agency has no financial or operational relationships with other related activities, organizations, or
functions of government which meet the reporting entity definition criteria of GASB Statement No. 14, The
Financial Reporting Entity, for inclusion as a component unit of the Agency.
Implementation of Governmental Accounting Standards Board Statements and Interpretation
In fiscal year 2004, the Agency adopted three new statements of financial accounting standards and one
interpretation issued by the Governmental Accounting Standards Board (GASB).
Statement No. 34. The Agency adopted the provisions of GASB Statement No. 34, Basic Financial
Statements – and Management’s Discussion and Analysis – for State and Local Governments. This
statement affects the manner in which the Agency records transactions and presents financial
information. State and local governments have traditionally used a financial reporting model substantially
different from the one used to prepare private-sector financial reports.
GASB Statement No. 34 establishes new requirements and a new reporting model for the annual
financial reports of state and local governments. The statement was developed to make annual reports
of state and local governments easier to understand and more useful to the people who use
governmental financial information to make decisions.
Statement No. 37. The Agency adopted the provisions of GASB Statement No. 37, Basic Financial
Statements – and Management’s Discussion and Analysis – for State and Local Governments: Omnibus.
Statement No. 37 addresses selected issues and amends GASB Statement No. 21, Accounting for
Escheat Property, and No. 34, Basic Financial Statements – and Management’s Discussion and Analysis
– for State and Local Governments. These Statements make selective changes including accounting for
Escheat Property, Management’s Discussion and Analysis, Capitalization of Construction – Period
Interest, Modified Approach for Reporting Infrastructure, Program Revenues and Major Fund Criteria.
Statement No. 38. The Agency adopted the provisions of GASB Statement No. 38, Certain Financial
Statement Note Disclosures. This statement modifies, establishes and rescinds certain financial
statement disclosure requirements. Accordingly, certain footnote disclosures have been revised to
conform to the provisions of GASB Statement No. 38.
9
MENDOTA REDEVELOPMENT AGENCY
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2004
NOTE 1 – SUMMARY SIGNIFICANT ACCOUNTING POLICIES (continued)
Interpretation No. 6. The Agency adopted the provisions of GASB Interpretation No. 6, Recognition and
Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements. This
interpretation clarifies the application of standards for modified accrual recognition of certain liabilities and
expenditures in areas where differences have arisen, or potentially could arise, in interpretation and
practice. The interpretation impacts the fund level financial statements required by GASB Statement
No. 34, but has no direct impact on the government-wide financial statements. Accordingly, the Agency
has not recognized the current portion of certain liabilities and related expenditures in the governmental
fund financial statements for amounts not considered to be due and payable as of June 30, 2004, and
has restated fund balances as of July 1, 2003, to reflect the cumulative effect of the change as of that
date.
Description of Funds
The accounts of the Agency are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, fund balance, revenues and expenditures. Government
resources are allocated to and accounted for in individual funds based upon the purposes for which they
are to be spent and the means by which spending activities are controlled. The minimum number of
funds is maintained consistent with legal and managerial requirements.
Government-Wide Financial Statements
The Agency’s government-wide financial statements include a Statement of Net Assets and a Statement
of Activities. These statements present summaries of governmental activities for the Agency
accompanied by a total column. The Agency does not have any business-type activities; therefore, only
governmental activities are reported.
These basic financial statements are presented on an “economic resources” measurement focus and the
accrual basis of accounting. Accordingly, all of the Agency’s assets and liabilities, including capital
assets and long-term liabilities, are included in the accompanying Statement of Net Assets. The
Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues
are recognized in the period in which they are earned while expenses are recognized in the period in
which the liability is incurred.
Certain types of transactions are reported as program revenues for the Agency in three categories:
(1) charges for services, (2) operating grants and contributions and (3) capital grants and contributions.
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables and receivables. All internal balances in the Statement of Net Assets have been
eliminated except those representing balances between the Agency activities and City, which are
presented as internal balances and eliminated in the total primary government column.
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds
aggregated. An accompanying schedule is presented to reconcile and explain the differences in net
assets as presented in these statements to the net assets presented in the government-wide financial
statements. The Agency has presented all major funds that met those qualifications.
10
MENDOTA REDEVELOPMENT AGENCY
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2004
NOTE 1 – SUMMARY SIGNIFICANT ACCOUNTING POLICIES (continued)
All governmental funds are accounted for on a spending or current financial resources measurement
focus and the modified accrual basis of accounting. Accordingly, only current assets and current
liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in
Fund Balances present increases (revenues and other financing sources) and decreases (expenditures
and other financing uses) in net current assets. Under the modified accrual basis of accounting,
revenues are recognized in the accounting period in which they become both measurable and available
to finance expenditures of the current period.
Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60
days after year-end) are recognized when due. The primary revenue sources, which have been treated
as susceptible to accrual by the Agency, are incremental property tax, intergovernmental revenues, other
taxes, interest revenue and certain charges for services. Expenditures are recorded in the accounting
period in which the related fund liability is incurred.
Deferred revenues arise when potential revenues do not meet both the “measurable” and “available”
criteria for recognition in the current period. Deferred revenues also arise when the government receives
resources before it has a legal claim to them, as when grant monies are received prior to incurring
qualifying expenditures. In subsequent periods when both revenue recognition criteria are met, or when
the government has a legal claim to the resources, the deferred revenue is removed from the balance
sheet and revenue is recognized.
The Reconciliation of the Fund Financial Statements to the Government-wide Financial Statements is
provided to explain the differences created by the integrated approach of GASB Statement No. 34.
The Agency reports the following major governmental funds:
The Low Income Housing #1 Fund is a Special Revenue Fund which is used to account for the activities
of the Agency's Low and Moderate Income Housing Fund for Project Area #1, in which the Agency is
required to set aside 20% of its tax increment funds for the purpose of increasing or improving the City's
supply of low or moderate income housing.
The Debt Service Funds for Project Area #1 and #2 are used to account for tax revenues and for the
payment of principal, interest and related costs on long-term debts for which a tax has been dedicated.
The Capital Projects Fund is used to account for proceeds from long-term debt financing and revenues
and expenditures related to authorized construction and other capital asset acquisitions. Upon
completion of a project, any unused bond proceeds are transferred to the Debt Service Fund and are
used to retire related bond principal.
Low and Moderate Income Housing
The California Health and Safety Code requires the Agency project areas to deposit 20% of allocated
incremental property tax revenues (or 20% of net bond proceeds plus 20% of tax incremental revenues in
excess of debt service payments on the bond) into a Low and Moderate Income Housing Fund. This
money is restricted for the purpose of increasing or improving the community’s supply of low and
moderate income housing. The Agency accounts for these revenues in special revenue funds.
Encumbrances
The Agency does not use encumbrance accounting.
11
MENDOTA REDEVELOPMENT AGENCY
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2004
NOTE 1 – SUMMARY SIGNIFICANT ACCOUNTING POLICIES (continued)
Budgetary Data
The official budget was prepared for adoption for the Capital Projects, Special Revenue and the Debt
Service Funds. The following procedures are followed in establishing the budgetary data reflected in the
general purpose financial statements:
1. Prior to the beginning of the fiscal year, the Agency prepares a budget for the next succeeding
fiscal year. The operating budget includes proposed expenditures and the means of financing
them.
2. A meeting is then called for the purpose of adopting the proposed budget. At least ten days’
public notice of the meeting must have been given.
3. Prior to the start of the fiscal year, the budget is legally enacted through passage of a resolution.
Once a budget is approved, it can be amended only by approval of a majority of the governing board.
As required by law, such amendments are made after fiscal year-end. All budget appropriations
lapse at year-end.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenditures during the reporting period. Actual results could differ
from those estimates.
Cash and Temporary Cash Investments
Under the Agency's cash management program, cash in excess of operating requirements from all funds
is pooled with the purpose of maximizing interest through investment activities. Interest income on
pooled investments is allocated on the end-of-month balance in each fund included in the pools. Excess
cash is deposited in savings accounts or invested in bank certificates of deposit (Category 1 type
investments) and the State of California Local Agency Investment Fund. Temporary cash investments
are stated at market in accordance with GASB Statement 31.
Government-wide Net Assets
Invested in Capital Assets, Net of Related Debt – This amount consists of capital assets net of
accumulated depreciation and reduced by outstanding debt that attributed to the acquisition,
construction, or improvements of the assets.
Restricted Net Assets – This amount is restricted by external creditors, grantors, contributors, or laws
or regulations of other governments.
Unrestricted Net Assets – This amount is all net assets that do not meet the definition of “invested in
capital assets, net of related debt” or “restricted net assets.”
12
MENDOTA REDEVELOPMENT AGENCY
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2004
NOTE 2 – CASH AND TEMPORARY CASH INVESTMENTS
Cash Deposits
As of June 30, 2004, the carrying amount of the Agency’s deposits with financial institutions was
$1,383,021. The bank balance was either insured or collateralized with securities held by pledging
financial institutions in the Agency’s name, as discussed below.
The Agency follows the practice of pooling cash and investments of all funds. Interest income earned on
pooled cash and investments is allocated monthly to the various funds based on the ending cash and
investment balances.
Collateral for Deposits
The California Government Code requires California banks and savings and loan associations to secure
the Agency’s cash deposits by pledging securities as collateral. This Code states that collateral pledged
in this manner shall have the effect of perfecting a security interest in such collateral superior to those of
a general creditor. Thus, collateral for cash deposits is considered to be held in the Agency’s name. The
market value of the pledged securities must equal at least 110% of an Agency’s deposits. California law
also allows financial institutions to secure Agency deposits by pledging first trust deed mortgage notes
having a value of 150% of an Agency’s total deposits.
Restricted Cash and Cash Equivalents
The restricted cash and cash equivalents represents amounts that are held by a trustee bank and
restricted for debt service.
As of June 30, 2004, the restricted cash and cash equivalents amounted to $143,664.
NOTE 3 – PROPERTY TAXES
Property tax revenue is recognized when measurable and available. The assessment, levy and collection
of property taxes are the responsibility of the County of Fresno. The Agency records property taxes as
revenue when received from the County, except at fiscal year-end, when property taxes received within
60 days after the end of the fiscal year are “available” and, therefore, recognized as revenue.
Secured property taxes become a lien on the property as of January 1 and are levied in two equal
installments: the first due November 1, and delinquent on December 11, and the second due February 1
and delinquent on April 11. Property taxes on unsecured property are due on the lien date of March 1
and become delinquent on September 1. The County of Fresno is responsible for the assessment,
collection and apportionment for all jurisdictions within the County, including the Mendota Redevelopment
Agency.
NOTE 4 – INTERFUND RECEIVABLES AND PAYABLES
Funds
Receivable
Debt Service Project #2
Capital Project Fund
Total
13
Payable
$
75,919
1,080,933
$
1,080,933
75,919
$
1,156,852
$
1,156,852
MENDOTA REDEVELOPMENT AGENCY
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2004
NOTE 5 – CHANGES IN LONG-TERM DEBT
The following is a summary of notes and bonds payable of the Mendota Redevelopment Agency for the
year ended June 30, 2004:
Outstanding
07/01/03
Issued/
Transferred
Retired/
Transferred
Outstanding
06/30/04
Governmental Activities
A. 1989 Redevelopment Lease Revenue
bonds, payable in annual principal
reductions from $5,000 to $35,000,
interest payable semi-annually at 7.7%
per annum.
B. 1994 Redevelopment Tax Allocation
bonds payable in annual principal
reductions from $100,000 to $585,000,
interest payable semi-annually at 7.4%
per annum.
Total General Obligations
Long-term Debt
$
360,000
$
6,685,000
$ 7,045,000
14
$
-
$
(10,000)
$
350,000
-
(135,000)
6,550,000
-
$ (145,000)
$ 6,900,000
MENDOTA REDEVELOPMENT AGENCY
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2004
NOTE 5 – CHANGES IN LONG-TERM DEBT (continued)
City of Mendota
Redevelopment
Agency Lease
Revenue Bonds
Year Ended
June 30
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
$
660,580
659,506
657,569
659,594
655,513
655,394
658,994
656,312
652,544
657,313
655,437
651,731
650,975
648,338
648,091
646,669
608,812
609,875
608,313
604,125
606,936
Total
13,512,621
Less interest
(6,612,621)
Net principal due
$
15
6,900,000
MENDOTA REDEVELOPMENT AGENCY
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2004
NOTE 6 – DEFICIT EQUITY BALANCES
The following funds had deficit fund equity at June 30, 2004:
Debt Service Project #1
Debt Service Project #2
(158,915)
(577,363)
NOTE 7 – COMMITMENTS
In February 2004, the Agency informed the trustee for the 1994 Redevelopment Tax Allocation Bonds,
U.S. Bank, that the Agency would not be making the full principal and interest payment, due February 1,
2004, of $241,886. A payment was also due in August 2004, of $386,888 including principal and interest.
The Agency sent $186,814 to the trustee in July 2004.
U.S. Bank, acting in their capacity as trustee, made the interest payment to bondholders by using funds
available in the Agency’s reserve fund. U.S. Bank had also previously used reserve funds to make the
payment due to bondholders. As a result, the reserve fund has a balance of approximately $143,616,
although the bond indenture requires a balance of $628,875.
NOTE 8 – CONTINGENCIES
Going Concern
The property tax increment revenue received by the Agency is insufficient for the Agency to make the
required payments on the revenue bonds. The Agency has experienced a significant decrease in tax
increment revenue as a result of a reduction in the assessed value of one major property owner within the
Agency. The uncertain conditions that the Authority faces regarding its ability to repay its debt create an
uncertainty about the Agency’s ability to continue as a going concern. Management of the Agency is
vigorously pursuing options to refinance the Agency’s debt. The ability of the Agency to continue as a
going concern is dependent on the Agency’s ability to refinance the debt. The financial statements do not
include any adjustments that might be necessary if the Agency is unable to continue as a going concern.
NOTE 9 – PRIOR PERIOD ADJUSTMENT
The Agency is party to an agreement with the Mendota Unified School District wherein the Agency
assumed responsibility for the District’s utility charges in exchange for the District allowing the Agency to
keep 100% of the tax increment revenue. In prior years, the Agency failed to accrue the expenses for the
utility charges that were due and payable to the City’s enterprise funds. As a result, fund balance was
overstated by $134,202.
16
REQUIRED SUPPLEMENTARY INFORMATION
17
MENDOTA REDEVELOPMENT AGENCY
BUDGETARY COMPARISON SCHEDULE
LOW INCOME HOUSING #1
For the Year Ended June 30, 2004
Original
Budget
Revenues:
Revenue from the use of money and property
$
Final
Budget
7,000
$
Actual
7,000
$
6,109
Variance with
Final Budget
Postive
(Negative)
$
(891)
7,000
7,000
6,109
Expenditures:
Current:
Urban redevelopment and housing
Capital Outlay
79,000
100,000
79,000
100,000
26,473
33,000
52,527
67,000
Total expenditures
179,000
179,000
59,473
119,527
(172,000)
(172,000)
(53,364)
118,636
Other financing sources (uses):
Transfers in
172,000
172,000
98,088
(73,912)
Total other financing sources (uses)
172,000
172,000
98,088
(73,912)
Net change in fund balance
-
-
44,724
44,724
Fund balances, July 1, 2003
630,331
630,331
630,331
-
630,331
$ 630,331
$ 675,055
Total revenues
Excess (deficiency) of revenues over (under)
expenditures
Fund balances, June 30, 2004
$
18
(891)
$
44,724
OVERALL COMPLIANCE AND INTERNAL CONTROLS SECTION
THIS PAGE IS LEFT BLANK INTENTIONALLY.
20
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL
REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable City Council of the
City of Mendota and Board of Directors
of the Mendota Redevelopment Agency
Mendota, California
We have audited the financial statements of the governmental activities, each major fund, and the
aggregate remaining fund information of the Mendota Redevelopment Agency (Agency), a component
unit of the City of Mendota, as of and for the year ended June 30, 2004, which collectively comprise the
Agency’s basic financial statements and have issued our report thereon, dated November 11, 2004. 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.
Compliance
As part of obtaining reasonable assurance about whether the Mendota Redevelopment Agency’s
financial statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts and grants, 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 that are required to be
reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Mendota Redevelopment Agency’s internal
control over financial reporting in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and not to provide assurance on the internal control
over financial reporting. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the internal control over financial reporting that might be material
weaknesses. A material weakness is a condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that misstatements in
amounts that would be material in relation to the financial statements being audited may occur and not be
detected within a timely period by employees in the normal course of performing their assigned functions.
We noted no matters involving the internal control over financial reporting and its operation that we
consider to be material weaknesses.
21
This report is intended solely for the information and use of the board of directors of the Mendota
Redevelopment Agency, the city council and management of the City of Mendota, and the State
Controller's Office, and is not intended to be and should not be used by anyone other than these
specified parties.
November 11, 2004
22
FINDINGS AND RECOMMENDATIONS SECTION
MENDOTA REDEVELOPMENT AGENCY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the Year Ended June 30, 2004
SECTION I – SUMMARY OF AUDITOR’S RESULTS
FINANCIAL STATEMENTS
Unqualified
Type of auditor's report issued:
Internal control over financial reporting:
Material weakness(es) identified?
Reportable condition(s) identified not considered to be material weaknesses?
Noncompliance material to financial statements noted?
SECTION II – FINANCIAL STATEMENT FINDINGS
None reported.
24
yes
X
no
yes
X
none
reported
yes
X
no
MENDOTA REDEVELOPMENT AGENCY
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the Fiscal Year Ended June 30, 2004
Finding/Recommendation
Current Status
NONE
25
Management’s Explanation
If Not Implemented