city of upland comprehensive annual financial report year

CITY OF UPLAND

Comprehensive Annual Financial Report

Year ended June 30,2011

Prepared by

Finance Department

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City of Upland

Comprehensive Annual Financial Report


.Table of Contents

INTRODUCTORY SECTION:

Letter of Transmittal Officials of the City of Upland Certificate of Achievement for Excellence in Financial Reporting (GFOA) Organizational Chart

FINANCIAL SECTION:

lV

v vi

Independent Auditors' Report 1 Management's Discussion and Analysis 3 Basic Financial Statements:

Government-wide Financial Statements: +Statement of Net Assets 13 +Statement of Activities 14

Fund Financial Statements: Governmental Funds:

+Balance Sheet 16 + Reconciliation of the Balance Sheet of Governmental Funds to the

Statement of Net Assets 19 +Statement of Revenues, Expenditures and Changes in Fund Balance 20 +Reconciliation of the Statement of Revenues, Expenditures and Changes in

Fund Balances of Governmental Funds to the Statement of Activities 23

Proprietary Funds: +Statement of Net Assets 24 +Statement of Revenues, Expenses and Changes in Fund Net Assets 26 +Statement of Cash Flows 28

Agency Funds: +Statement of Fiduciary Assets and Liabilities 32

Notes to the Basic Financial Statements 33

REQUlRED SUPPLEMENTARY INFORMATION:

Notes to Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balances-

Budget and Actual: + General Fund + HOME Program Fund + Low and Moderate Income Housing Fund

78

79 80 81

SUPPLEMENTARY SCHEDULES:

Non-Major Governmental Funds:

+ Combining Balance Sheet + Combining Statement of Revenues, Expenditures and

Changes in Fund Balances

Non-Major Special Revenue Funds:

+ Combining Balance Sheet + Combining Statement of Revenues, Expenditures

and Changes in Fund Balances + Schedules of Revenues, Expenditures and

Changes in Fund Balances- Budget and Actual

Major and Non-Major Debt Service Funds:

+ Schedules of Revenues, Expenditures and Changes in Fund Balances- Budget and Actual

Major and Non-Major Capital Projects Funds:

+ Combining Balance Sheet + Combining Statement of Revenues, Expenditures and

Changes in Fund Balances + Schedules of Revenues, Expenditures and

Changes in Fund Balances- Budget and Actual

Internal Service Funds:

+ Combining Statement of Net Assets + Combining Statement of Revenues, Expenditures and

Changes in Fund Net Assets + Combining Statement of Cash Flows

Agency Funds:

+ Combining Statement of Assets and Liabilities + Statement of Changes in Assets and Liabilities

STATISTICAL SECTION:

Net Assets by Component Changes in Net Assets Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Assessed Value and Estimated Actual Value of Taxable Property Water Sales by User Type Direct and Overlapping Property Tax Rates Principal Property Taxpayers Principal Water Purchasers Property Tax Levies and Collections Ratios of Outstanding Debt by Type Direct and Overlapping Bond Debt Legal Debt Margin Information Pledged Revenue Coverage Demographic and Economic Status Principal Employers Full-time Equivalent City Government Employees by Function Capital Asset Statistics by Function Operating Indicators by Function

82

83

86

88

90

100

104

106

108

116

117 118

121 122

126 127 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145

December 16, 2011

Honorable Mayor and Members of the City Council City of Upland, California

The Comprehensive Annual Financial Report of the City of Upland, California for the fiscal year ended June 30, 2011 is hereby submitted.

The Comprehensive Annual Financial Report (CAFR) is prepared in accordance with generally accepted accounting principles as promulgated by the Government Accounting Standards Board (GASB). GASB has primary responsibility for determining current accounting and financial reporting standards for activities and transactions of state and local government entities. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge, the data enclosed is accurate in all material aspects; it is presented in a manner designed to fairly set forth the financial position and results of operations of the city as measured by the financial activity of its various funds; and all disclosures necessary to enable the reader to gain the maximum understanding of the City's financial activities have been included. For a more detailed discussion and analysis of the City's financial performance, refer to Management's Discussion and Analysis on page 3.

The Scope of the Comprehensive Annual Financial Report

In accordance with GAAP, the CAFR combines the financial statements of the City of Upland together with the Upland Community Redevelopment Agency (Agency) and the Upland Public Financing Authority (Authority) to constitute a single reporting entity. Although the Agency and the Authority are legally separate from the City, the City has certain responsibilities with respect to fiscal accountability of those entities.

, The City of Upland

The City of Upland is situated on the western border of San Bernardino County, bordered by the cities of Claremont, Montclair, Ontario and Rancho Cucamonga. Upland, known as the "City of Gracious Living," is nestled at the base of the San Gabriel Mountains and encompasses 15.2 square miles. It has an estimated population of 76,106 persons as of January 1, 2011.

It was the year of 1882 when brothers, George and W.B. Chaffey, arrived in California from Canada seeking a new place for a colony. The wide stretch of green against the foothills was lush and fertile, and they had found that for which they were looking. Mter acquiring the land, they used wise and longrange planning which facilitated giving Upland its unique characteristics.

City of Upland 460 North Euclid Avenue, Upland, CA 91786-4732 • (909) 931-4100 • Fax (909) 931-4123 • TDD (900) 735-2929 • www.ci.upland.ca.us

Upland's wide street, which the Chaffey' s named "Euclid" after the "Father" of geometry, is still an attraction and the envy of many. Upland was incorporated on May 15, 1906 and utilizes a CouncilManager form of government. The city provides a wide range of traditional municipal and public enterprise services.

Services Provided by the City of Upland Municipal Services

General Administrative Support

Police and Fire Protection

Highways and Streets

Public Improvements

Planning and Zoning

Housing and Community Development

Library and Cultural Recreation and Parks

Public Entemrise Services

Water

Solid Waste

Environmental Quality (Sewer)

Animal Shelter Services

The City Council consists of a directly elected Mayor and four Council members elected by the community at large. Council terms are for four years, elections are held every two years at which time either the mayor and one Council member, or three Council members are elected. The City Council appoints a City Manager to administer the affairs of the City, as well as a City Attorney. A listing of names of officials of the City of Upland and a City organization chart are included in the Introductory Section of this CAFR.

Officials responsible for City financial administration are the City Treasurer, City Manager and the Administrative Services Director. The City Treasurer is elected by the community at large to a four-year term. The City Treasurer is the custodian of all City funds. The Administrative Services Director is appointed by the City Manager and is responsible for establishing and maintaining the general accounting system for the City, auditing and approving for payment all demands or charges upon the City.

Outlook for the Future

The City has adopted a balanced operating budget for fiscal year 2011-12. As a result of the State budget adoption and anticipated loss of revenue, the City Council approved an amendment to the City General Fund Budget and reduced the General Fund reserve requirement to 10% of operating expenditures. This was due to the need of additional funding from reserves for payment of ongoing legal services and anticipated elections costs for an unanticipated special election.

Financial Controls

Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.

Budgetary Controls

The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. The legal level of budgetary control (that is,

11

the level at which expenditures cannot exceed the appropriated amount) is at the fund level. For budgeting purposes, the General Fund is composed of several departments while all other budgeted funds are each considered to be a single department. The City maintains an encumbrance accounting system as one technique of accomplishing budgetary control.

Risk Management

The City of Upland continues to be a self-insured public entity, and is a member of the Independent Cities Risk Management Authority (ICRMA), a joint powers authority, for pooled liability and worker compensation coverage. The City has a deductible of $750,000 per occurrence for worker's compensation and $500,000 per occurrence for liability claims. Excess coverage is provided by policies carried by ICRMA for members of the Authority. As of June 30, 2011, the liability for accrued claims payable for both worker's compensation and liability claims reported and unreported amounts to $6,094,053 and has been recorded in the Self-funded Insurance fund of the City.

OTHER RELEVANT INFORMATION

Auditor's Opinion

Included in the Financial Section is the independent auditors' opinion, which is a significant part of the CAFR. In this report, Mayer Hoffman McCann P.C., Certified Public Accountants, express their opinion that the financial statements are presented fairly in conformity with generally accepted accounting principles. The opinion is unqualified and therefore signifies a substantial level of achievement. This firm also conducts and prepares the single audit report as required by federal and state agencies.

Certificate of Achievement

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Upland for its CAFR for the fiscal year ended June 30, 2010. To receive the award, a governmental unit must publish an easily readable and efficiently organized CAFR whose contents confmm to program standards, and satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report conforms to the Certificate of Achievement program requirements and we are submitting it to GFOA.

Acknowledgements

Our sincere appreciation and thanks for the support of the City Council and City department staff for their continuing cooperation. Special thanks are also extended to the Finance Division staff whose dedication and perseverance resulted in producing this report.

In keeping with past practice, a copy of this CAFR will be placed on file in the City's library and sent to the City Council, City management personnel, bond rating agencies and other agencies (such as financial institutions and governments), which have expressed an interest in the financial affairs of the City of Upland. This CAFR will also be available online at W\~'w.ci.upland.ca.us.

Respectfully submitted,

a.,~ City Manager

iii

Stephanie A. Mendenhall Administrative Services Director

Kenneth W. Willis

Brendan Brandt

Gino Filippi

Debbie Stone

Dan Morgan

Jeff Mendenhall

Michael Antonucci

William P. Curley lll

Roberta Knighten

Rosemary Hoerning

Stephanie Mendenhall

Jeff Zwack

Officials of the City of Upland

Elected Officials

Ray Musser, Mayor

Executive Staff

Mayor Pro Tern

Council Member

Council Member

Council Member

City Treasurer

Stephen Dunn, City Manager

lV

Chief of Police

Fire Chief

City Attorney

Community Services Director

Public Works Director

Administrative Services Director

Development Services Director

Certificate of Achievement for Excellence

in Financial Reporting

Presented to

City of Upland California

For its Comprehensive Annual

Financial Report

for the Fiscal Year Ended

June 30,2010

A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers

Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial

reports (CAFRs) achieve the highest standards in government accounting

and financial reporting.

Executive Director

v

I City Treasurer Dan Morgan

City of Upland Organizational Chart Fiscal Year 2011-12

Citizens of Upland

City Council Mayor Ray Musser

Brendan Brandt Gino Filippi Debbie Stone Kenneth W. Willis

City Attorney City Manager William P. Curley III Stephen Dunn

Administrative Services Fire Director Michael Antonucci

Stephanie Mendenhall

Public Works Police Rosemary Hoerning Jeff Mendenhall

Development Services Community Services Jeff Zwack Director

Roberta Knighten

VI

Mayer Hoffman McCann P:C. An Independent CPA Firm

2301 Dupont Drive, Suite 200 Irvine, California 92612 949-474-2020 ph 949-263-5520 fx www.mhm-pc.com

Honorable Mayor and City Council City of Upland Upland, California

Independent Auditors ' Report

We have audited the accompanying financial statements of the governmental actiVIties, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Upland, California, as of and for the year ended June 30, 2011, which collectively comprise the City's basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the management of the City of Upland. Our responsibility is to express opinions on these financial statements based on our audit. The prior year partial comparative information has been derived from the financial statements of the City of Upland for the year ended June 30, 2010 and, in our report dated December 13, 2010, we expressed an unqualified opinion on those financial statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and 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 opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Upland, California, as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable, of the City of Upland, California for the year then ended in conformity with accounting principles generally accepted in the United States of America.

As described in note 20, the City's financial condition has deteriorated in the last few years resulting in fund deficits and reduced reserves. Additionally, the future operation of redevelopment agencies in the State of California may be impacted by the results of litigation initiated in response to certain actions enacted by the California State legislature.

As described further in notes 1 and 21 to the financial statements, the accompanying financial statements reflect certain changes in the reporting of fund types and fund balance classifications for governmental funds due to the implementation of GASB Statement No. 54.

Member of Kreston International- Cl global ~~~t~·o~k ()f ind~,Jen,l: ··,(::.ocr ,,-,:,,,, :in.-s

Honorable Mayor and City Council City of Upland Upland, California Page Two

The information identified in the accompanying table of contents as management's discussion and analysis and required supplementary information are not a required part of the basic financial statements, but are supplementary information required by the Governmental Accounting Standards Board. 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.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Upland's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

In accordance with Government Auditing Standards, we have also issued a report dated December 16, 2011 on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of out audit.

fll11f4 ~4'1 /llc f4t?/1 f C'. Irvine, California December 16, 2011

2

Management's Discussion and Analysis

Fiscal Year Ended June 30,2011

Our discussion and analysis of the City of Upland's financial performance provides an overview of the City's financial activities for the fiscal year ended June 30, 2011. It should be read in conjunction with the basic financial statements and the accompanying notes to the financial statements.

Financial Highlights

• The assets of the City of Upland exceeded its liabilities at the close of the fiscal year by $383.8 million. Of this amount, $39.9 million may be used to meet the City's ongoing obligations to citizens and creditors.

• The City's total debt decreased by $.1 million during the current fiscal year. The changes in debt are related to lower accounts payable and long-term bond debt at the end of the fiscal year.

• As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $27.2 million, a decrease of $5.4 million in comparison with the prior year.

• As of the close of the current fiscal year, the City's enterprise funds reported combined total net assets of $115.4 million, an increase of $4.7 million in comparison with the prior year.

• At the end of the fiscal year, unassigned fund balance for the general fund was $5.7 million or 17% of the FY 2011-12 Annual Budget- General Fund operating expenditures.

Using This Annual Report

This annual report consists of a series of financial statements. The Statement of Net Assets and Statement of Activities provide information about the activities of the City as a whole and present a long-term view of the City's finances. For governmental activities, these statements tell how these services were financed in the short-term as well as what remains for future spending. Fund financial statements report the City's operations in more detail than the government-wide statements.

3

Reporting the City's Most Significant Funds

Our analysis of the City's major funds begins on page 16. The fund financial statements begin on page 79 and provide detailed information about the most significant funds, not the City as a whole. Some funds are required to be established by State law and by bond covenants. However, the City Council established many other funds to help it control and manage money for particular purposes, or to show that it is meeting legal responsibilities for using certain taxes and other money (like grants received from the U.S. Department of Housing and Urban Development). The City's two kinds of funds - governmental and proprietary - use different accounting approaches.

• Governmental funds- Most of the City's basic services are reported in governmental funds, which focus on how money flows into and out of those funds, and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted into cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides.

Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. The difference of results in the Governmental funds statements to those in the Governmental-wide financial statements are explained in a reconciliation schedule following the Governmental Funds financial statements.

• Proprietary funds- When the City charges customers for the services it provides, whether to outside customers or to other units of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the City's enterprise funds (a component of proprietary funds) are the same as the business-type activities we report in the government-wide statements but provide more detail and additional information, such as cash flows. We use internal service funds (the other component of proprietary funds) to report activities that provide supplies and services for the City's other programs and activities such as the City's self-insurance fund. The internal service funds are reported with governmental activities in the government-wide financial statements.

The City as Trustee

The City is responsible for other assets that, because of a trust arrangement can be used only for the trust beneficiaries. All of the City's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets and Changes in Fiduciary Net Assets on page 120. We exclude these activities from the City's other fmancial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

Reporting the City as a Whole

The Statement of Net Assets and the Statement of Activities include all the assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid.

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These two statements report the City's net assets and changes in them. One can think of the City's net assets as one way to measure the City's financial health, or financial position. Over time, increases or decreases in the City's net assets are an indicator of whether its financial health is improving or deteriorating. There are other nonfinancial factors that should be considered, such as the condition of the City' s roads, to assess the overall health of the City.

City of Upland's Net Assets

As noted earlier, the City's combined net assets are $383.8 million. The City's net assets increased by $.2 million, mostly due to a reduction in expenditures. Overall, the City's financial position deteriorated slightly from the prior year as a result of the declining economy. Program expenses by function, general revenues by major source, excess and/or deficiency of revenues over expenses, changes in and total net assets are presented in the Statement of Activities. The City's combined Net Assets (in millions) for fiscal year ended June 30, 2011 were as follows:

Table 1 Net Assets

(In Millions)

Governmental Business-type Activities Activities Total

2011 2010 2011 2010 2011 2010

Current and other $42.5 $50.9 $46.0 $40.2 $88.5 $91.1

assets

Capital assets 304.9 300.8 85.7 87.1 390.6 387.9

Total assets $347.4 $351.7 $131.7 $127.3 $479.1 $479.0

Long-term liabilities 66.1 72.0 12.8 14.3 78.9 86.3

Other liabilities 12.8 6.8 3.6 2.3 16.4 9.1

Total liabilities $78.9 $78.8 $16.4 $16.6 $95.3 $95.4

Net assets:

Invested in assets

capital 247.5 241.4 73.2 74.0 320.8 315.4

Restricted 23.1 28.6 23.1 28.6

Unrestricted -2.2 2.9 42.1 36.7

40.0 39.6

Total net assets $268.4 $272.9 $115.3 $110.7 $383.8 $383.6

The City's programs for governmental activities include General Government, Public Safety, Public Works, Community Development, and Community Services. The programs for business-type activities include Water, Refuse, Sewer, and Animal Services operations. A comparison of each program's revenues and expenses (in millions) for the current years is presented below.

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Table 2 Change in Net Assets

(In Millions)


2011 2010 2011 2010 2011 2010 Revenues Program Revenues

Charges for services $8.7 $6.8 $37.7 $29.8 $46.5 $36.6 Operating Grants 6.6 6.1 0.0 6.6 6.1 Capital Contributions 2.1 4.1 0.3 2.1 4.4

General Revenues Taxes

Property Taxes 18.3 18.4 18.3 18.4 Tax Increment 7.6 6.0 7.6 6.0 Sales Taxes 7.2 6.9 7.2 6.9 Other Taxes 1.4 1.5 1.4 1.5

Investment Income 0.4 1.3 0.3 0.3 0.7 1.6 Motor Vehicle In Lieu 0.7 0.5 0.7 0.5 Gain on sale of assets .05 0.3 .05 0.3 Miscellaneous Revenues 0.4 2.0 0.4 2.0

Total Revenues $53.4 $53.9 $38.0 $30.4 $91.40 $84.3

Expenses General government $3.8 $3.8 $- $- $3.8 $3.8 Public Safety 27.0 28.0 27.0 28.0 Public Works 8.7 11.2 8.7 11.2 Community 13.3 11.0 13.3 11.0 Community Services 3.9 4.5 3.9 4.5 Interest on long term 2.2 2.3 2.2 2.3 Water 15.4 16.6 15.4 16.6 Refuse 9.7 9.7 9.7 9.7 Sewer 6.1 6.2 6.1 6 .2 Animal Services 1.1 1.1

Total Expenses $58.9 $60.8 $32.3 $32.5 $91 .20 $93.3

Excess (Deficiency) Before -$5.50 -$6.9 $5.7 -$2.1 $.20 -$9.0 Special Items and Transfers Transfers 1.1 -7.9 -1.1 7.9

Increase (Decrease) in Net -$4.4 -$14.8 $4.6 $5.8 $.20 -$9.0 Assets

l l

Net assets at beginning of $272.9 $287.7 $110.7 $104.9 $383.6 $392.6 year

Net assets at end of year $268.5 $272.9 $115.3 $110.7 $383.8 $383.6

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Governmental Activities

Revenues and transfers for the City's governmental activities totaled $54.6 million, while total expenses totaled $58.9 million. The City's net assets decreased by $4.4 million. The significant changes are highlighted below.

• Investment income showed a decrease of $0.5 million or 97% from the prior year, primarily due to a stagnant economy.

• Operating grants for governmental activities decreased by $0.3 million or 22%, these resources support public safety and street improvement projects.

• General Government and Public Safety expenditures being reported is $2.2 million or 12% more than the prior year due to increase in operational and legal expenditures.

The cost of all governmental activities for the fiscal year was $58.9 million, compared to $60.8 million in the prior year. The decrease was primarily due to a reduction of City expenses such as overtime, supplies, conferences and meetings, training and professional services.

Governmental Expenses $59.0 l\-Iillion

Comnmnity Services

6.7'!o

Conuuunity ---" Development

22.600

Interest E..-xpense 3 . 7~-o

Engiuea-ing and Pub lie \Vorks

14.8~·o

7

General Govenuneut.

6.6%

lie Safety 45.6~-o

Business-type Activities

As shown in the Statement of Activities .and Changes in Net Assets, the amount paid by users for services was about $37.8 million and Investment earnings were $0.3 million. The cost of all Proprietary (Business-type) activities this year was $32.3 million.

Total resources available during the year to fmance Proprietary Fund (Business type) activities were $148.8 million consisting of Net Assets at July 1, 2010 of $110.7 million and revenues of $38.0 million. Expenses during the year totaled $33.4 million; thus net assets were increased by $4.6 million to $115.3 million.

The City's Major Funds

The City's governmental funds reported a combined fund balance of $27.2 million, and its enterprise funds reported combined net assets of $115.3 million. The major changes are as follows:

• The fund balance at year-end for the City's General fund of $6.1 million is an overall decrease of $2.1 million, primarily due to decline in tax revenues and increase in legal expenditures.

• The HOME program fund balance shows a decrease of $.3 million due to pending program reimbursements from the State.

• The fund balance of the Low and Moderate Housing fund increased by $1.2 million due to increase in rental income.

• The Water Utility fund realized an increase of $5.9 million in net assets, the primary reason for the increase is water sales to other agencies to be used for future infrastructure improvements.

• The Solid Waste Utility remained about the same, with annual revenues funding program expenditures.

• The Environmental Quality fund showed a modest gain of $.2 million due to a rate increase.

• City created the Animal Services Fund to account for expenditures and revenues related to animal care and animal control services separately.

General Fund Budgetary Highlights

Over the course of the year the City Council revised the City budget several times. These budget amendments and supplemental appropriations that were approved after the beginning of the year are included in the final budget column. Comparing the fiscal year 2010-11 adopted General Fund budget of $37.4 million to the fmal budget of $39.7 million shows an increase of $2.3 million. Actual expenditures were $0.7 million under the final budget amounts. Resources available for appropriation were $4.8 million under the final budgeted amount.

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Capital Assets and Debt Administration

Capital Assets

At June 30, 2011, the City had $390.6 million invested in a broad range of capital assets, including police and fire vehicles, buildings, park facilities, roads, and water and sewer lines.

Land and rights of way Construction in progress Other capital assets

Totals

Table 3 Capital Assets at Year-End

(net of Depreciation, in Millions)

Governmental Business-type Activities Activities

2011 2010 2011 2010

$109.4 $109.4 $2.0 $2.0 6.4 7.2 1.2 1.0

189.1 184.2 82.5 84.1

$304.9 $300.8 $85.70 $87.1

Total

2011 2010

$111.4 $11 1.4 7.4 8.2

271.8 268.3 $390.6 $387.9

The City's fiscal year 2011-12 capital budget appropriates another $27.5 million for capital projects, principally for the completion of its various reconstruction projects.

Debt

At June 30, 2011 , the City had $84.8 million in debt outstanding versus $86.3 million in the prior year, a decrease of $1.5 million. Additional detailed information on long-term debt activity can be found in the notes to the financial statements, Note #6 through Note #11.

Table 4 Debt at Year-End

(In Millions)


2011 2010 2011 2010 2011 2010

Tax allocation Bonds $59.1 $60.8 $- $- $59.1 $60.8 Lease Revenue Bonds 1.4 1.6 13.3 13.9 14.7 15.5 Compensated Absences 3.1 3.0 0.4 0.4 3.5 3.4 Other Post Employment Benefits 1.3 0.7 1.3 0.7 Claims Payable 6.1 5.6 6.1 5.6 Capital Leases 0.1 0.3 0.1 0.3

Totals $71.1 $72.0 $13.7 $14.3 $84.8 $86.3

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Economic Condition and Outlook

On a national level, the economy is in recovery; however, the recovery may be at a slower pace than hoped. Housing activity has stabilized, but at historically low levels. Much of the construction activities can be attributed to stimulus-funded construction projects. Still struggling, however, is the unemployment rate, which remains high and commercial real estate problems persist. The looming concerns are both the federal and state deficits and the effect this will have on the local economy. Due to the court battle being waged over redevelopment, redevelopment financing has stalled local projects which would normally generate revenue and jobs. The future use of redevelopment funding is looking bleak.

The Inland Empire is showing signs of recovery, but still lagging behind other California regions. In the last three months the region has experienced some job gains and a nearly double digit increase in sales taxes. The housing market has shown signs of stabilization with fewer foreclosures. As far as unemployment goes, the Inland Empire's unemployment rate has also improved and has been reported as 13.4% a 1.4% drop from last year. Although these are all positive movement, it does not mean the region is out of the woods yet.

The City of Upland has also seen some positive movement in its local economy. Development activity has increased and there are several new residential developments under construction, causing a slight increase in building permit revenues. Sales tax revenues recently reported a measurable increase over last year. Although reports are positive, it is uncertain if the growth will continue and if the pace will be sufficient to meet ongoing costs as sales taxes is still 6.2% behind 2008 revenues. The City will continue to exercise significant fiscal prudence in the current year and into the future years.

Contacting the City's Financial Management

This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors, with a general overview of the City's finances. If you have any questions regarding this report or need additional financial information, please contact the Administrative Services Director, 460 North Euclid Avenue, Upland, CA 91786.

10

BASIC FINANCIAL STATEMENTS

11


12

CITY OF UPLAND Statement of Net Assets

June 30, 2011

Governmental Business-Type Totals Activities Activities 2011 2010

Assets: Cash and investments (note 2) $ 14,423,505 17,417,098 31,840,603 33,316,016 Cash and investments with fiscal agent (note 2) 6,031,295 813,682 6,844,977 6,924,378

Receivables: Accounts 442,502 4,877,827 5,320,329 5,072,592 Accrued interest 76,237 76,237 143,836 Notes 9,077,013 9,077,013 13,572,558

Due from other governments 4,844,519 4,844,519 2,640,342 Inventory and prepaid items 565,677 44,721 610,398 598,548 Interfund borrowing 498,331 (498,331) Deferred charges 1,319,408 377,815 1,697,223 1,814,327 Land held for resale 5,204,278 5,204,278 4,738,278 Investment in joint ventures (note 16) 23 ,017,918 23,017,918 22,294,244 Capital assets (note 4):

Land and rights of way 109,411,840 1,995,981 111,407,821 111,407,821 Construction in progress 6,352,162 1,162,228 7,514,390 8,209,815 Other capital assets, net 189,163,337 82,558,654 271,721,991 268,299,959

Total assets 347,410,104 131 '767 ,593 479,177,697 479,032,714

Liabilities: Accounts payable 3,878,900 2,299,541 6,178,441 4,630,988 Accrued salaries and benefits 897,798 72,155 969,953 1,945,391 Accrued interest payable 682,498 159,965 842,463 867,135 Deposits payable 2,292,498 170,898 2,463,396 1,719,882 Unearned revenue 4,736 4,736 Noncurrent liabilities (notes 6 to 14):

Due within one year 5,065,675 914,199 5,979,874 5,528,152 Due in more than one year 66,107,917 12,802,582 78,910,499 80,767,370

Total liabilities 78,925,286 16,424,076 95,349,362 95,458,918

Net assets: Invested in capital assets, net of related debt 247,582,946 73,202,621 320,785,567 315,374,379

Restricted for: Engineering and public works 771,734 771,734 3,242,903 Community development 22,328,183 22,328,183 25,342,609

Unrestricted (2, 198,045) 42,140,896 39,942,851 39,613,905

Total net assets $ 268,484,818 115,343,517 383,828,335 383,573,796

See accompanying notes to the basic financial statements.

13

Governmental activities: General government Public safety Engineering and public works Community development Community services Interest expense

Total governmental activities

Business-type activities: Water utility Solid waste utility Environmental quality Animal services

Total business-type activities

CITY OF UPLAND

Statement of Activities Year ended June 30, 2011

Program Revenues

Operating Capital Charges for Contributions Contributions

Expenses Services and Grants and Grants

$ 3,894,625

$

26,883,113 8,734,681

13,322,147 3,962,221 2,186,876

58,983,663

15,393,981 9,669,314 6,098,777 1,150,728

32,312,800

91,296,463

General revenues: Taxes:

Property taxes Tax increment Sales taxes Other taxes

Investment income

1,318,635 2,464,321

398,112 3,789,998

690,120

8,661,186

22,016,148 9,617,834 5,822,597

334,927

37,791 ,506

46,452,692

Motor vehicle in lieu, unrestricted Gain on sale of assets

Miscellaneous revenues Transfers

99,343 1,320,695 3,526,369 1,053,851

636,966

6,637,224

6,637,224

Total general revenues and transfers

Change in net assets

Net assets at beginning of year

Net assets at end of year

2,113,299

2,113,299

2,113,299


14

$

Net (Expense) Revenue and Changes in Net Assets Governmental Business-type Totals

Activities Activities 2011 2010

(2,476,647) (23,098,097) (2,696,901) (8,4 78,298) (2,635,135) (2,186,876)

(41,571,954)

(41,571,954)

18,288,333 7,628,784 7,228,970 1,359,820

411,082 674,770

47,086

377,996 1,135,830

37,152,671

(4,419,283)

272,904,101

268,484,818

6,622,167 (51 ,480)

(276,180) (815,801)

5,478,706

5,478,706

330,946

(1,135,830)

(804,884)

4,673,822

110,669,695

115,343,517

(2,476,647) (23 ,098,097) (2,696,901) (8,478,298) (2,635,135) (2,186,876)

(144,854) (24,023,983)

(5,439,070) (8,532,831) (3,366,578) (2,255,445)

(41,571,954) (43,762,761)

6,622,167 (2,090,550) (51,480) 53,991

(276,180) (377,679) (815,801) 26,946

5,478,706 (2,387,292)

(36,093,248) (46,150,053)

18,288,333 18,436,456 7,628,784 6,016,240 7,228,970 6,852,466 1,359,820 1,469,692

742,028 1,573,598 674,770 485,436

47,086 314,703

377,996 1,980,747

36,347,787 37,129,338

254,539 (9,020,715)

383,573,796 392,594,511

383,828,335 383,573,796

15

CITY OF UPLAND Balance Sheet - Governmental Funds

June 30, 2011

SEecial Revenue

Low and

HOME Moderate

General Program Housing

Assets: Cash and investments $ 1,200,714 5,374,686 Cash and investments with fiscal agent 1,784,632 Receivables:

Accounts 306,738 1,221 1,050 Accrued interest 76,237 Notes 66,409 4,644,351 4,208,107

Due from other funds (note 3) 4,876,366 121 ,976 Due from other governments 1,917,817 335,501 109,182 Inventory and prepaid items 393,974 Land held for resale 1,731,389

Total assets $ 8,838,255 4,981,073 13,331,022

Liabilities and Fund Balance

Liabilities: Accounts payable $ 969,762 142,454 181 ,178 Accrued salaries and benefits 854,212 3,347 Due to other funds (note 3) 555,416 Deposits payable 601 ,981 12,813

Deferred revenue 288,308 4,906,095 4,208,107

Total liabilities 2,714,263 5,603,965 4,405,445

Fund balance: Nonspendable:

Inventory and prepaid items 393,974 Restricted for:

Community development 8,925,577 Debt service Capital projects

Assigned Unassigned 5,730,018 (622,892)

Total fund balances (deficit) 6,123,992 (622,892) 8,925,577

Total liabilities and fund balances $ 8,838,255 4,981 ,073 13,331,022


16

Debt Service CaEital Projects

General

Redevelopment Capital Redevelopment Non-Major Total Governmental Funds

Agency ImErovements Agency Governmental 2011 2010

1,967,814 15,443 5,864,848 14,423,505 21,181,379 2,471 ,775 1,774,888 6,031,295 6,111,358

129,086 438,095 629,780 76,237 143,836

158,146 9,077,013 13,572,558 4,395,846 9,394,188 4,224,915

326,818 1,194,901 960,300 4,844,519 2,640,342 393,974 324,988

3,472,889 5,204,278 4,738,278

9,162,253 1,194,901 3,646,478 8,729,122 49,883,104 53,567,434

765,153 464,107 102,400 951 ,979 3,577,033 2,709,969 7,742 13,875 13,595 892,771 1,703,295

51 ,839 4,517,822 664,229 5,789,306 1,502,280 260,701 1,417,003 2,292,498 1,509,768 119,212 33,000 548,754 10,103,476 13,526,282

765,153 903,601 4,667,097 3,595,560 22,655,084 20,951,594

393,974 324,988

836,609 9,762,186 13,504,132 8,397,100 268,763 8,665,863 6,368,872

4,577,411 4,577,411 4,124,957 291,300 291,300 872,412

(1 ,020,619) (549,221) 3,537,286 7,420,479

8,397,100 291,300 (1,020,619) 5,133,562 27,228,020 32,615,840

9,162,253 1,194,901 3,646,478 8,729,122 49,883,104 53,567,434

17


18

CITY OF UPLAND

Governmental Funds

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets

June 30, 2011

Fund balances of governmental funds

Amounts reported for governmental activities in the statement of net assets are different because:

Capital assets, net of depreciation, have not been included as financial resources in governmental fund activity.

Capital assets Accumulated depreciation

Long-term debt and compensated absences that have not been included in the governmental fund activity:

Bonds and notes payable Compensated absences Other post employment benefits obligation Capital lease obligations Deferred charges on bonds and notes payable

Accrued interest payable for the current portion of interest due on bonds payable has not been reported in the governmental funds.

Revenues that are measurable but not available. Amounts are recorded as deferred.revenue under the modified accrual basis of accounting.

Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net assets.

Net assets of governmental activities


19

$ 27,228,020

363,408,513 (60,179,742)

(60,51 0,000) (3,062,567) (1,357,815)

(124,532) 1,319,408

(682,498)

10,103,476

(7,657,445)

$ 268,484,818

CITY OF UPLAND Statement of Revenues, Expenditures and Changes in Fund Balances -

Governmental Funds Year ended June 30, 2011

SEecial Revenue

Low and

HOME Moderate General Program Housing

Revenues: Taxes $ 27,832,379 1,814,265 Licenses and permits 587,948 Charges for services 4,711,284 Fines and penalties 460,768 Investment income 21,430 6,526 78,835 Rental income 419,241 3,000,465 Intergovernmental 1,029,681 331,679 Other 119,876 43,592 68,031

Total revenues 35,182,607 381,797 4,961,596

Expenditures: Current:

General government 5,360,853 Public safety 25,145,166 Engineering and public works 3,230,840 Community development 1,368,588 685,620 2,898,353 Community services 3,902,462

Debt service: Principal 314,480 Interest and fiscal charges 536,107 Pass-through payments

Total expenditures 39,007,909 685,620 3,748,940

Excess (deficiency) of revenues over (under) expenditures (3,825,302) (303,823) 1,212,656

Other financing sources (uses): Transfers in (note 17) 1,961,464 Transfers out (note 17) (262,597) Proceeds from sale of capital assets 47,086

Total other financing sources (uses) 1,745,953

Change in fund balances (2,079,349) (303,823) 1,212,656

Fund balances (deficit) at beginning of year, as restated, (note 21) 8,203,341 (319,069) 7,712,921

Fund balances (deficit) at end of year $ 6,123,992 (622,892) 8,925,577


20

Debt Service CaEital Projects

General Non-Major

Redevelopment Capital Redevelopment Governmental Total Governmental Funds

Agency lmErovements Agency Funds 2011 2010

7,257,061 1,310,226 38,213,931 37,799,498 416,978 1,004,926 992,516

4,711,284 4 ,390,535 460,768 638,627

88,401 12,138 73,871 281,201 1,119,133 23,885 31,516 3,475,107 3,390,859

1,063,679 4,736,251 7,161,290 6,657,431 538,366 125,715 12,464 908,044 1,980,747

7,345,462 1,614,183 149,600 6,581,306 56,216,551 56,969,346

5,360,853 4,120,131 1,311,199 26,456,365 27,545,584

4,722,288 3,429,625 11,382,753 12,931,622 628,383 2,947,975 1,444,629 9,973,548 11 ,046,686

177,513 4,079,975 4,519,662

1,350,520 195,000 1,860,000 1,800,000 1,626,936 68,208 2,231 ,251 2,295,709 1,442,542 1,442,542 4,852,006

5,048,381 4,722,288 2,947,975 6,626,174 62,787,287 69,111,400

2,297,081 (3,108,105) (2,798,375) (44,868) (6,570,736) (12,142,054)

2,526,990 262,597 4,751 ,051 21,650,371 (716,000) (2,636,624) (3,615,221) (21,650,371)

47,086 292,828

2,526,990 (716,000) (2,374,027) 1,182,916 292,828

2,297,081 (581,115) (3,514,375) (2,418,895) (5,387,820) (11 ,849,226)

6,100,019 872,415 2,493,756 7,552,457 32,615,840 44,465,066

8,397,100 291,300 (1,020,619) 5,133,562 27,228,020 32,615,840

21


22

CITY OF UPLAND Governmental Funds

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds

to the Statement of Activities

Year ended June 30, 2011

Net changes in fund balances of governmental funds

Amounts reported for governmental activities in the statement of activities is different because:

Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful Jives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.

Capital expenditures Depreciation expense Disposal of capital assets

Changes in long-term liabilities are reported as expenditures and other financing sources (uses) in the governmental funds, but are reported as increases and decreases of long-term liabilities in the statement of net assets.

Principal reduction Lease payments made Amortization of deferred charges

The statement of net assets includes accrued interest on long term debt.

To record as an expense the net change in compensated absences in the statement of activities.

To record as an expense the net change in the other post employment benefit obligation in the statement of activities.

Revenues that are measurable but not available. Amounts are not recorded

$ (5,387,820)

8,575,900 (2,576,456)

(673,877)

1,860,000 (200,090)

(69,385)

(18,798)

(63,574)

(650,755)

as revenue under the modified accrual basis of accounting. (3 ,422,806)

Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The net revenues (expenses) of the internal service funds is reported with governmental activities. (1,791 ,622)

Change in net assets of governmental activities $ (4,419,283)


23

CITY OF UPLAND Statement of Net Assets - Proprietary Funds

June 30, 2011

Business-T~Ee Activities-Enterprise Funds

Water Solid Waste Environmental

Assets Utili!}: Utilit~ Quali!}:

Current assets: Cash and investments $ 12,014,588 5,402,510 Receivables:

Accounts 2,747,425 1,180,888 949,514 Due from other funds (note 3) 72,388

Inventory and prepaid items 43,145

Total current assets 14,877,546 1,180,888 6,352,024

Noncurrent assets: Restricted cash and investments

with fiscal agent 813,682

Unamortized debt issuance costs 377,815

Investment in joint ventures 23,017,918

Capital assets: Land 1,995,981 Construction in progress 711,373 450,855 Other capital assets, net 60,591,652 3,962 14,262,869

Total noncurrent assets 87,508,421 3,962 14,713,724

Total assets I 02,385,967 1,184,850 21,065,748

Liabilities Current liabilities:

Accounts payable 878,611 688,435 641,568 Accrued salaries and wages 43,376 6,017 15,325 Due to other funds (note 3) 72,388 Interest payable 159,965 Unearned revenue Deposits payable 168,198 2,700 Advances from other funds Current portion of long-term liabilities:

Claims and judgments payable Compensated absences 150,495 34,518 62,253 Revenue bonds payable 642,198

Total current liabilities 2,042,843 801,358 721,846

Long-term liabilities: Claims and judgments payable Compensated absences 46,382 70,474

Revenue bonds payable 12,685,726

Total long-term liabilities 12,732,108 70,474

Total liabilities 14,774,951 801,358 792,320

Net assets Invested in capital assets, net of related debt 50,784,764 3,962 14,713,724

Umestricted

Total net assets

36,826,252 379,530 5,559,704

$ 87,611,016 383,492 20,273,428

See accompanying notes to the basic financial statements. 24

Animal

Services

1,576

1,576

7,700,171

7,700,171

7,701,747

90,927 7,437

498,331

4,736

24,735

626,166

626,166

7,700,171 (624,590)

7,075,581

Business-Type Governmental Activities Activities

Enterprise Funds Internal Service Funds

2011 2010 2011 2010

17,417,098 12,134,637

4,877,827 4,436,885 4,407 5,927 72,388 44,721 90,481 171 ,703 183,079

22,412,034 16,662,003 176,110 189,006

813,682 813,020

377,815 425,534 23,017,918 22,294,244

1,995,981 1,995,981 1,162,228 980,091

82,558,654 84,150,300 1,698,568 2,450,243

109,926,278 110,659,170 1,698,568 2,450,243

132,338,312 127,321,173 1,874,678 2,639,249

2,299,541 2,957,489 301 ,867 178,193 72,155 184,229 5,027 15,753

570,719 3,106,551 2,722,635 159,965 171 ,299

4,736 170,898 211,653

2,973,755

1,105,487 490,861 272,001 192,493 19,261 8,551 642,198 567,221

4,192,213 7,258,139 4,538,193 3,415,993

4,988,566 5,071,414 116,856 181,729 5,364 17,665

12,685,726 13,745,619

12,802,582 13,927,348 4,993,930 5,089,079

16,994,795 21,185,487 9,532,123 8,505,072

73,202,621 66,319,305 1,698,568 2,450,243 42,140,896 38,576,939 (9,356,013) (8,316,066)

115,343,517 104,896,244 (7 ,657 ,445) (5,865,823)


CITY OF UPLAND Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds


Business-T_y)2e Activities-Enterprise Funds

Water Solid Waste Environmental

Utili~ Utilit_y Qualit~

Operating revenues: Charges for services $ 19,166,305 9,496,509 5,621,976 Licenses and permits 207,670 200,621 Fines and penalties 172,510

Other 2,469,663 121,325

Total operating revenues 22,016,148 9,617,834 5,822,597

Operating expenses: Administrative costs 3,329,523 507,672 197,442 Maintenance and operations 9,052,703 537,881 1,501,697 Contractual services 404,922 8,622,906 3,751,512 Customer service 642,306 Claims expense Depreciation 1,802,988 855 502,855

Total operating expenses 15,232,442 9,669,314 5,953,506

Operating income (loss) 6,783,706 (51,480) (130,909)

Nonoperating revenues (expenses): Investment income 220,237 10,050 100,659 Share of joint venture

net income (loss) (note 16) 723,673 Gain (loss) on sale of assets (149,769) (145,271) Interest expense (735,443)

Total nQnoperating revenues (expenses) 58,698 10,050 (44,612)

Income (loss) before transfers and capital contributions 6,842,404 (41,430) (175,521)

Transfers and capital contributions: Transfers in (note 17) 280,000 Transfers out (note 17) (922,100) (280,000) (213,730)

Capital contributions: IEUA contributions Contributed from other funds

Total transfers and capital contributions (922,100) (280,000) 66,270

Changes in net assets 5,920,304 (321,430) (109,251)

Net assets (deficit) at beginning of year 81,690,712 704,922 20,382,679

Net assets (deficit) at end of year $ 87,611,016 383,492 20,273,428


Animal

Services

151,743 128,590

18,220 36,374

334,927

694,103 282,115

165,433

1,141,651

(806,724)

(9,077)

(9,077)

(815,801)

(815,801)

7,891 ,382

7,075,581

Business-Type Governmental Activities Activities

Enterprise Funds Internal Service Funds

2011 2010 2011 2010

34,436,533 29,312,146 4,117,140 1,979,425 536,881 300,470 190,730 218,540

2,627,362 745 17,094 89,506

37,791,506 29,831,901 4,134,234 2,068,931

4,728,740 5,116,693 11,374,396 11,688,359 355,295 355,265 12,779,340 13,187,672 2,448,952 2,171,263

642,306 634,825 2,583 ,900 2,481,146

2,472,131 2,019,921 762,552 782,425

31,996,913 32,647,470 6,150,699 5,790,099

5,794,593 (2,815,569) (2,0 16,465) (3,721,168)

330,946 274,432 224,843 274,995

723,673 934,721 (295,040) 21,875 (744,520) (776,562)

15,059 454,466 224,843 274,995

5,809,652 (2,361,103) (1,791 ,622) (3,446,173)

280,000 280,000 (1,415,830) (280,000)

270,118 7,864,436 480,107

(1,135,830) 8,134,554 480,107

4,673,822 5,773,451 (1,791,622) (2,966,066)

110,669,695 104,896,244 (5,865,823) (2,899, 757)

115,343,517 110,669,695 (7,657,445) (5,865,823)


CITY OF UPLAND Statement of Cash F1ows-Proprietary Funds


Business-Type Activities-Enterprise Funds

Water Solid Waste

Utili!Y Utilit~

Cash flows from operating activities: Cash received from customers $ 21 ,908,466 9,630,289

Cash received from user departments Cash payments to suppliers for

goods and services (10,472,141) (9,123,655) Cash payments to employees for services (2,928,285) (573,259)

Net cash provided by (used for) operating activities 8,508,040 (66,625)

Cash flows from noncapital financing activities:

Cash transferred from other funds 72,388 Cash transferred to other funds (994,488) (280,000)

Net cash provided by (used for) noncapital financing activities (994,488) (207,612)

Cash flows from capital and related financing activities:

Cash paid for acquisition and construction of capital assets (1,061,228) (1,948)

Proceeds from sale of capital assets Capital contributions Principal paid on debt (630,000) Interest paid on debt (685,961)

Net cash proved by (used for) capital and related financing activities (2,377, 189) (1,948)

Cash flows from investing activities: Interest received on investments 220,237 10,050

Net cash provided by (used for) investing activities 220,237 10,050

Net increase (decrease) in cash and cash equivalents 5,356,600 (266,135)

Cash and cash equivalents at beginning of year 7,471,670 266,135

Cash and cash equivalents at end of year $ 12,828,270

See accompanying notes to the basic fmancial statements. 28

Environmental

Qual it~

5,786,563

(4,152,682) (1 ,287 ,889)

345,992

280,000 (213,730)

66,270

(284,465)

(284,465)

100,659

100,659

228,456

5,174,054

5,402,510

Animal

Services

398,258

(388,851) (524,438)

(515,031)

498,331

498,331

(10,021)

(9,077)

(19,098)

(35,798)

35,798

Business-Type Activities

Enterprise Funds

2011 2010

37,723,576 29,989,915

(24,137,329) (27,932,320) (5,313,871) (3,890,996)

8,272,376 (1 ,833,401)

850,719 1,532,658 (1 ,488,218) (3,253,755)

(637,499) (1 ,721 ,097)

(1 ,357 ,662) (1 ,949,578)

21,875

270,118

(630,000) (610,000) (695,038)

(2,682,700) (2,267,585)

330,946 274,432

330,946 274,432

5,283,123 (5,547,651)

12,947,657 18,495,308

18,230,780 12,947,657


Internal Service Funds

2011 2010

4,146,631 1,997,098

(4,037,479) ( 1.968,406) (323,118) (303,687)

(213,966) (274,995)

(10,877)

(10,877)

224,843 274,995

224,843 274,995


CITY OF UPLAND Statement of Cash Flows-Proprietary Funds

(Continued)

Business-T_y12e Activities-Enterprise Funds

Water Solid Waste

Utility Utility

Reconciliation of amounts reported

on the Statement of Net Assets: Net Assets:

Cash and investments $ 12,014,588

Cash with fiscal agents 813,682

Cash and cash equivalents at end of year $ 12,828,270

Reconciliation of operating income to net cash provided by (used for)

operating activities: Operating income (loss) $ 6,783,706 (51,480)

Adjustments to reconcile operating income (loss) to net cash provided

by (used for) operating activities:

Depreciation 1,802,988 855

(Increase) decrease in accounts receivable (414,663) 12,455

(Increase) decrease in prepaid expense (Increase) decrease in inventory 47,335

Increase (decrease) in accounts payable 416,144 (9,644)

Increase (decrease) in accrued

salaries and benefits (96,275) (19,042)

Increase (decrease) in due to other funds

Increase (decrease) in deposits payable (39,216)

Increase (decrease) in compensated

absences 8,021 231

Increase (decrease) in claims and judgments payable

Total adjustments 1,724,334 (15,145)

Net cash provided by (used for) operating activities $ 8,508,040 (66,625)

Noncash Capital Financing, and Investing Activities

Contributed assets $


Environmental

Quality

5,402,510

5,402,510

(130,909)

502,855

(38,734)

56,587

(46,308)

2,700

(199)

476,901

345,992

Animal

Services

(806,724)

165,433

(1,576)

90,927

7,437

4,736

24,736

291,693

(515,031)

Business-Type Activities

Enterprise Funds

2011 2010

17,417,098 813,682

18,230,780

5,794,593

2,472,131 (440,942)

45,759 554,014

(154,188)

(31 ,780)

32,789

2,477,783

8,272,376

12,134,637 813,020

12,947,657

(2,815,569)

2,019,921

163,874

(9,383)

(1 ,211,965)

42,114

(4,239)

(18,154)

982,168

(1,833,401)

7,864,436


Internal Service Funds

2011 2010

(2,016,465) (3,721 ,168)

762,552 782,425 1,520 8,406

11 ,376 (183,079)

123,674 141,577

(10,726) 1,915

383,916 2,104,822

(1,591) (5,963)

531,778 596,070

1,802,499 3,446,173

(213,966) (274,995)

480,107


CITY OF UPLAND Statement of Fiduciary Assets and Liabilities

Agency Funds June 30, 2011

2011

Assets

Cash and investments (note 2) $ 2,651,235

Cash and investments with fiscal agent (note 2) 3,964,122

Accounts receivable 367,689

Total assets $ 6,983,046

Liabilities

Deposits payable $ 17,099

Due to bondholders 6,965,947

Total liabilities $ 6,983,046

See accompanying notes to the basic fmancial statements.

32

2010

2,305,054 3,963,255

306,927

6,575,236

21 ,000 6,554,236

6,575,236

CITY OF UPLAND

Notes to the Basic Financial Statements


(1) Summary of Significant Accounting Policies

The basic financial statements of the City of Upland, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government 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 City's accounting policies are described below.

(a) Reporting Entity

The City of Upland was incorporated on May 15, 1906 under the general laws of the State of California. The City is governed by an elected five-member board.

As required by generally accepted accounting principles, these financial statements present the City of Upland and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization's governing body and the City is able to impose its will on that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable for an organization if that organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City's financial statements to be misleading or incomplete.

Included within the financial reporting entity of the City of Upland are the Upland Community Redevelopment Agency and the Upland Public Financing Authority because each component unit meets the above-mentioned criteria.

A brief description of each component unit follows:

Upland Community Redevelopment Agency

The Upland Community Redevelopment Agency (the Agency) was established May 1981, with the adoption of Ordinance No. 1266 pursuant to the State of California Health and Safety Code Section 33000. The primary purpose of the Agency is to improve the commercial environment, upgrade residential neighborhoods, provide new public improvements, strengthen the City of Upland's economic base, generate added employment opportunities, improve and expand the City's industrial use and encourage the private redevelopment of property.

33

CITY OF UPLAND


(Continued)

(1) Summary of Significant Accounting Policies, (Continued)

Upland Public Financing Authority

The Upland Public Financing Authority (the Authority) is a Joint Exercise of Powers Authority under the Laws of the State of California. The Authority is authorized to issue bonds under the Marks-Roos Local Bond Pooling Act of 1985 (Article 1 through 4, Section 6500). The City of Upland Community Redevelopment Agency formed the Authority, in December 1988, by execution of the Joint Exercise of Powers Agreement. The purpose of the Authority is to provide financing to the Agency and the City for various project purposes.

Since the City Council serves as the governing board for these component units, all of the City's component units are considered to be blended component units . Blended component units, although legally separate entities, are in substance, part of the City's operations and so data from these units are reported with the interfund data of the primary government. The Upland Redevelopment Agency issues separate component unit financial statements. Upon their completion, financial statements of the component units can be obtained at City Hall.

(b) Basis of Accounting and Measurement Focus

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

(a) Government-wide financial statements (b) Fund financial statements (c) Notes to the basic financial statements

Financial reporting is based upon all GASB pronouncements, as well as the F ASB Statements and Interpretations, APB Opinions, and Accounting Research Bulletins that were issued on or before November 30, 1989 that do not conflict with or contradict GASB pronouncements. F ASB pronouncements issued after November 30, 1989 are not followed in the preparation of the accompanying financial statements.

34

CITY OF UPLAND


(Continued)

(1) Summary of Significant Accounting Policies. (Continued)

Government-wide Financial Statements

Government-wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business-type activities of the primary government (including its blended component units), as well as its discretely presented component units. The City of Upland has no discretely presented component units. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the City.

Government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government-wide financial statements. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities resulting from nonexchange transaction are recognized in accordance with the requirements of GASB Statement No. 33.

Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Taxes and other items not included among program revenues are reported instead as general revenues.

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

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in-lieu of taxes where the amounts are reasonably equivalent in value to the interfund services provided and other charges between the government's water

35

CITY OF UPLAND


(Continued)


and sewer function and various other functions of the government. Elimination of these charges would distort the direct cost and program revenues reported for the various functions concerned.

Fund Financial Statements

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

Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds are presented after the government-wide financial statements. These statements display information about the major fund individually and nonmajor funds in the aggregate for governmental and enterprise funds. Fiduciary statements include financial information for fiduciary funds and similar component units. Fiduciary funds of the City primarily represent assets held by the City in a custodial capacity for other individuals or organizations.

Governmental Funds

In the fund financial statements, governmental funds are presented using the modified accrual basis of accounting. Revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The City uses an availability period of 60 days for all revenues.

Sales taxes, property taxes, franchise taxes, intergovernmental revenue and rental income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the availability period. Other revenue items are considered to be measurable and available where cash is received by the government.

36

CITY OF UPLAND


(Continued)


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

In the fund financial statements, governmental funds are presented using the current financial resources measurement focus . This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund · balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period.

Non-current portions of long-term receivables due from governmental funds are reported on their balance sheets in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets.

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

37

CITY OF UPLAND


(Continued)


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

Proprietary and Fiduciary Funds

The City's enterprise and internal service funds are proprietary funds. In the fund financial statements, the proprietary funds and fiduciary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net assets.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies, taxes, and investment earnings result from nonexchange transactions or ancillary activities. Amounts paid to acquire capital assets are capitalized as assets in the enterprise fund financial statements, rather than reported as an expense. Proceeds of long-term debt are recorded as a liability in the enterprise fund financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the enterprise fund are reported as a reduction of the related liability, rather than as an expense. Agency funds are custodial in nature (assets equal liabilities) and do not involve the recording of City revenues and expenses.

(c) Fund Classifications

The City reports the following major governmental funds:

General Fund - The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The General Fund finances the basic services provided to residents including police, fire, and recreation.

38

CITY OF UPLAND


(Continued)


HOME Program Fund - This fund accounts for housing rehab loans/grants from the State Department of Housing and Community Development. These loans/grants are provided for single-family rehab, neighborhood restoration, and first time homebuyers.

Low and Moderate Housing Redevelopment Agency Fund - This fund accounts for acquisition and construction activity for low-income housing. As prescribed by the California Health and Safety Code, 20% of Redevelopment Agency gross tax increment revenue is set-aside in the fund for the purpose of low-income housing development.

Redevelopment Agency Debt Service Fund - This fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds.

General Capital Improvements Fund - To account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds.

Redevelopment Agency Capital Projects Fund - To account for the economic revitalization and redevelopment of the City through acquisition and development of City property determined to be in a declining condition.

The City of Upland reports the following major enterprise funds:

Water Utility Fund- This fund accounts for the sale of water to Upland's citizens and businesses and also records expenditures for water operations and capital improvement projects.

Solid Waste Utility Fund - This fund accounts for the refuse pick-up services provided by private contract. Billing and collection is assisted by City staff and an outside billing company for non-residential accounts. Activities include recycling and green waste programs.

Environmental Quality Fund - This fund records all City sewer service transactions and includes the additional services of storm drain maintenance and NPDES programs.

Animal Services Fund- This fund records all City animal services transactions.

Additionally, the City reports the following fund types:

39

CITY OF UPLAND


(Continued)


Internal Service Funds - These funds are used to account for self-funded insurance and vehicle replacement. Departments of the City are charged for the services provided or benefits received from these funds.

Agency Funds -Used to account for monies held for assessment districts and for the Welfare Committee.

(d) Encumbrances

Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of funds are recorded, is employed in the governmental funds. Encumbrances are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Encumbrances at year end are reported as restricted, committed, or assigned fund balance depending on the resources that have been identified to fund the applicable encumbrance.

(e) Cash and Investments

Investments are reported in the accompanying balance sheet at fair value, except for certain certificates of deposit and investment contracts that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates.

Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments.

The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund's share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled investments is allocated to the various funds based on each fund's average cash and investment balance.

(f) Cash Equivalents

For purposes of the statement of cash flows, cash equivalents are defined as shortterm, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates, and have an original maturity date of 3 months or less. Cash equivalents represent the proprietary funds' share in the cash and investment pool of the City of Upland. Certain restricted assets and deposits of proprietary funds consist of investments which are not considered to be cash equivalents as defined above and therefore excluded from the statements of cash flows.

40

CITY OF UPLAND


(Continued)


(g) Inventories

Inventories held by the General and Water Utility Enterprise Funds are capitalized at cost on a first-in, first-out basis and for the General Fund are recorded as expenditures as used (the consumption method). General Fund inventories consist primarily of office supplies, small hand tools, cement, custodial supplies, herbicides and pesticides. Water Utility Enterprise Fund inventories consist primarily of water pipe, water meters, valves and fittings.

(h) Land Held for Resale

Land held for resale represents land that was acquired for resale in accordance with the objective of the Redevelopment Project. These costs will be charged to current year project expenditures when the related land and structures are sold. Land held for resale are valued at the lower of cost or the sales price per contract with the developer.

(i) Property Taxes

Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters . The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of Upland accrues only those taxes which are received within 90 days after year end.

The property tax calendar is as follows:

Lien Date: Levy Date: Due Date:

Delinquent Date:

January 1 July 1 First Installment- November 1 Second Installment - February 1 First Installment - December 11 Second Installment - April 11

Taxes are collected by San Bernardino County and are remitted to the City periodically. Dates and percentages are as follows:

December 10 January 16 April10 May 15 July 31

41

30% Advance Collection No. 1 10% Advance Collection No. 2 Collection No. 3

CITY OF UPLAND


(Continued)


G) Claims and Judgments

The City records a liability for litigation, judgments, and claims when it is probable that an asset has been impaired or a liability (including incurred but not reported) has been incurred prior to year end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. This liability is recorded in the internal service fund that account for the City's self insurance activities.

(k) Employee Leave Benefits

In accordance with GASB Statement No. 16, a liability is recorded for unused vacation and similar compensatory leave balances since the employees' entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.

Under GASB Statement No. 16, a liability is recorded for unused sick leave balances only to the extent that it is probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receive termination payment, as well as those who are expected to become eligible to receive termination benefits as a result of continuing their employment with the City. Other amounts of unused sick leave are excluded from the liability since their payment is contingent solely upon the occurrence of a future event (illness) which is outside the control of the City and the employee.

(1) Capital Assets

Capital assets (including infrastructure) greater than $5,000 are capitalized and recorded at cost or at the estimated fair value of the assets at the time of acquisition where complete historical records have not been maintained. Contributed capital assets are valued at their estimated fair market value at the date of the contribution. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Capital assets include public domain (infrastructure) general fixed assets consisting of certain improvements including roads, bridges, curbs and gutters, streets and sidewalks, medians, sewers and storm drains . As allowed by GASB Statement No. 34, certain infrastructure assets that were acquired, reconstructed or significantly improved prior to June 30, 1980 have not been included in the City's financial statements due to the unavailability of the information.

42

CITY OF UPLAND


(Continued)


Depreciation has been provided using the straight-line method over the estimated useful life of the asset in the government-wide financial statements and in the fund financial statements of the proprietary funds.

Interest is capitalized on proprietary fund assets acquired with tax -exempt debt. The amount of interest to be capitalized is calculated by offsetting interest expense incurred from the date of the borrowing until completion of the project with interest earned on invested proceeds over the same period.

The following schedule summarizes capital asset useful lives:

Governmental Activities: Buildings Park improvements Equipment Vehicles Infrastructure - street system Infrastructure - storm drains

Business-type Activities: Pipelines Reservoirs Treatment facilities Equipment Vehicles

(m) Prior Year Data

50 years 50 years 5 years

5-10 years 30-100 years

100 years

50 years 50 years 50 years 5 years

5-10 years

Selected information regarding the prior year has been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the government's prior year financial statements, from which this selected fmancial data was derived.

(n) Deferred Charges

Bond premiums, discounts and issuance costs are deferred and amortized over the term of the bonds using the straight-line method, which materially approximates the effective interest method. Bond premiums and discounts are presented as a reduction of the face amount of the bonds payable whereas issuance costs are recorded as an asset, unamortized debt issuance costs.

43

CITY OF UPLAND


(Continued)


(o) Unamortized Loss on Refunding

Loss on refunding debt is deferred and amortized over the shorter of the term of the new debt or the refunded debt using the straight-line method, which materially approximates the effective interest method. Unamortized loss on refunding is presented as a reduction of the face amount of the bonds payable.

(p) 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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

( q) Fund Balance

The accompanying financial statements reflect certain changes that have been made with respect to the reporting of the components of fund balances for governmental funds. In previous years, fund balances for governmental funds were reported in accordance with previous standards that included components for reserved fund balance, unreserved fund balance, designated fund balance, and undesignated fund balance.

Due to the implementation of GASB No. 54, the components of the fund balances of governmental funds now reflect the component classifications described below. Prior year amounts have been restated to reflect the component designations required by GASB No. 54.

Fund balances are reported in the fund statements in the following classifications:

Nonspendable Fund Balance

Nonspendable Fund Balance - this includes amounts that cannot be spent because they are either not spendable in form (such as inventory) or legally or contractually required to be maintained intact (such as endowments).

44

CITY OF UPLAND


(Continued)


Spendable Fund Balance

Restricted Fund Balance - this includes amounts that can be spent only for specific purposes stipulated by legal requirements imposed by other governments, external resource providers, or creditors. City Council imposed restrictions do not create restricted fund balance unless the legal document that initially authorized the revenue (associated with that portion of fund balance) also included language that specified the limited use for which the authorized revenues were to be expended.

Committed Fund Balance - this includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the City Council. Those committed amounts cannot be used for any other purpose unless City Council removes or changes the specified use by taking the same type of action (for example, resolution, ordinance, minutes action, etc.) that it employed to previously commit those amounts. If the Council action that limits the use of the funds was separate from the action that initially created the revenues that form the basis for the fund balance, then the resultant fund balance is considered to be committed, not restricted. The City considers a resolution, an ordinance, or a minutes· action to constitute a formal action of City Council for the purposes of establishing committed fund balance.

Assigned Fund Balance- this includes amounts that are intended to be used for specific purposes as indicated either by City Council or be persons to whom City Council has delegated the authority to assign amounts for specific purposes.

Unassigned Fund Balance- this includes the remaining spendable amounts which are not included in one of the other classifications.

It is the City's policy that restricted resources will be applied first, followed by (in order of application) committed, assigned, and unassigned resources, in the absence of a formal policy adopted by the Council.

General Fund Reserve Policy

The City's policy is to maintain a General Fund Reserve equal to 25% of its operating budget. 25% of the fiscal year ending June 30, 2012 General Fund operating budget is $8,975,795. Fund balance of the General Fund at June 30, 2011 is $6,123,992.

45

CITY OF UPLAND


(Continued)

(2) Cash and fuvestments

Cash and investments as of June 30, 2011 are classified in the accompanying financial statements as follows:

Statement of net assets: Cash and investments Cash and investments with fiscal agent

Fiduciary funds: Cash and investments Cash and investments with fiscal agent

Total cash and investments

$31,840,603 6,844,977

2,651,235 3,964.122

$45.300.937

Cash and investments as of June 30, 2011 consist of the following:

Cash on hand Deposits with financial institutions ill vestments

Total cash and investments

46

$ 30,190 4,427,964

40,842.783

$45.300.937

CITY OF UPLAND


(Continued)

(2) Cash and Investments, (Continued)

Investments Authorized by the California Government Code and the City's Investment Policy

The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.

Authorized *Maximum *Maximum Investment Types By Investment *Maximum Percentage Investment Authorized by State Law Policy Maturity Of Portfolio In One Issuer

Local Agency Bonds No 5 years None None U.S. Treasury Obligations Yes 5 years None None U.S. Agency Securities Yes 5 years None None Banker's Acceptances No 180 days 40% 30% Commercial Paper Yes 270 days 15% 10% Negotiable Certificates of Deposit Yes 5 years 30% None Repurchase Agreements No 1 year None None Reverse Repurchase Agreements No 92 days 20% of base value None Medium-Term Notes Yes 5 years 30% 5% Mutual Funds Yes N/A 20% 10% Money Market Mutual Funds Yes NIA 20% 10% Mortgage Pass-Through Securities No 5 years 20% None County Pooled Investment Funds No NIA None None Local Agency Investment Fund (LAIF) Yes NIA None None JPA Pools (other investment pools) No NIA None None

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

Additionally, the City's investment policy requires at least 50% of the portfolio to mature in three years or less, 30% in two years or less, and 20% within one year or less.

47

CITY OF UPLAND


(Continued)


Investments Authorized by Debt Agreements

Investment of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. Generally, the table below identifies the investment types that are authorized for investments held by bond trustee, subject to certain additional restrictions in the debt agreements. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Authorized Investment Type

U.S. Treasury Obligations FederaJ Agency Securities (with certain exceptiOns) Banker's Acceptances Commercial Paper Money Market Funds State and Municipal Obligations Investment Agreements Repurchase Agreements Local Agency Investment Fund

Disclosures Relating to Interest Rate Risk

Maximum Maturity

None

None 30-360 days 270 days N/A None None None None

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

48

CITY OF UPLAND


(Continued)


Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity:

Remaining Maturity (in Months)

12 Months 13 to 24 25-60 More Than Investment Type Or Less Months Months 60 Months

Federal agency securities $ 3,019,870 520,405 1,002,530 1,496,935 Corporate bonds 1,782,556 1,013,513 769,043 Negotiable certificates of

deposit 7,474,000 1,300,000 3,489,000 1,635,000 1,050,000 Local Agency Investment Fund 17,739,427 17,739,427 Held by fiscal agent:

Money market mutual 5,373,151 5,373,151 funds Investment contracts 5,453,779 5,453,779

Total $40,842,183 25,426.021 4,178,448 2,631,530 8,QQQ,114

49

CITY OF UPLAND


(Continued)


Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the actual rating as of year end for each investment type.

Investment Type

Federal agency securities $ 3,019,870 Corporate bonds 1,782,556 Negotiable certificates of

deposit 7,474,000 Local Agency Investment Fund 17,739,427 Held by fiscal agent:

Money market mutual funds 5,373,151 Investment contracts 5.453,779

Total $40,842,183

Concentration of Credit Risk

Minimum Legal Rating

NIA A

N/A N/A

A N/A

Exempt From

Disclosure

Rating as of Year End Not

AAA Rated

3,019,870

5,373,151

1,782,556

7,474,000 17,739,427

5.453,779

8.393 021 32,449.762

The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. As of June 30, 2011 there were no investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City investments.

50

CITY OF UPLAND


(Continued)

(2) Cash and Investments. (Continued)

Custodial Credit Risk

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

As of June 30, 2011, City investments in the following investment types were held by the same broker-dealer (counterparty) that was used by the City to buy the securities:

Investment Type

Negotiable certificates of deposit (FDIC Insured)

Investment in State Investment Pool

Reported Amount

$7,449,000

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

51

CITY OF UPLAND


(Continued)

(3) Due From and To Other Funds

Interfund receivable and payable balances at June 30, 2011 are as follows:

Due from other funds

General Fund

Low and Moderate Housing

RDA Debt Service Fund

Water Utility

Due to other funds

HOME Program Fund General Capital Improvements Internal Service Fund Animal Services Non-Major Governmental Funds

RDA Capital Projects Fund

RDA Capital Projects Fund

Solid Waste Utility

Amount

$ 555,416 51 ,839

3,106,551 498,331 664,229

4.876,366

121,976

4,395.846

72.388

$9.466.576 *

*Interfund receivable and payable balances are a result of short-term cash borrowings to cover deficit cash balances at June 30, 2011.

52

CITY OF UPLAND


(Continued)

(4) Capital Assets

Capital asset activity for the year ended June 30, 2011 is as follows:

Balance at Balance at Government activities: June 30, 2010 Additions Deletions June 30, 2011

Buildings and improvements $ 37,452,425 1,210,989 38,663,414 Park improvements 12,195,464 128,150 12,323,614 Equipment 3,981,145 1,321,895 5,303,040 Vehicles 6,325,429 52,692 6,378,121 Infrastructure - street system 167,854,997 6,272,990 (4,047,824) 170,080,163 Infrastructure - storm drains 21,192,618 39,846 21,232,464

Total cost of depreciable assets 249.002,078 9,026,562 (4,047,824) 253,980,816

Less accumulated depreciation: Buildings and improvements (6,169,190) (745,809) (6,914,999) Park improvements (3,748,636) (397,825) (4,146,461) Equipment (3,455,333) (238,126) (3,693,459) Vehicles (3,875,185) (762,551) (4,637,736) Infrastructure - street system (45,131,075) (982,770) 3,373,947 (42,739,898) Infrastructure- storm drains (2,473,000) (211,926) (2,684,926)

Total accumulated depreciation (64,852,419) (3,339,007) 3,373,947 (64,817,479)

Net depreciable assets 184,149,659 5,687,555 (673,877) 189,163,337

Capital assets not depreciated: Land 5,979,029 5,979,029 Rights of way 103,432,811 103,432,811 Construction in progress 7,229,724 7,782,373 (8,659,935) 6,352,162

Capital assets, net $ 3Q0,7211223 13,462,228 (2.333,~H2) 304,221.332

53

CITY OF UPLAND


(Continued)

(4) Capital Assets, (Continued)

Depreciation expense was charged to the following functions in the Statement of Activities:

General government $ 87,778 Public safety 983,809 Engineering and public works 1,496,257 Community services 437,715 Redevelopment Agency 333.448

$3.339.007

Balance at Balance at Business-type activities: June 30, 2010 Additions Deletions June 30, 2011

Pipelines $43,153,343 907,493 (650,890) 43,409,946 Reservoirs 36,822,526 99,386 36,921,912 Buildings 7,829,027 4,476 7,833,503 Treatment facilities 20,805,912 733 20,806,645 Equipment and machinery 1,106,103 157,892 1,263,995 Vehicles 1,573,070 5 546 1.578,616

Total cost of depreciable assets 111,289.981 1,175,526 (650,890) 111,814,617

Less accumulated depreciation: Pipelines (12,438,639) (863,068) 355,849 (12,945,858) Reservoirs (6,495,992) (725,948) (7 ,221 ,940) Treatment facilities (6,601,254) (562,739) (7,163,993) Equipment (436,103) (173,796) (609,899) Vehicles (1,167.693) (146,580) (1,314.273)

Total accumulated depreciation (27,139,681) (2,472,131) 355,849 (29,255,963)

Net depreciable assets 84,150,300 (1 ,296,605) (295,041) 82,558,654

Capital assets not depreciated: Land 1,995,981 1,995,981 Construction in progress 980,091 1.325,293 (1,143,156) 1,162,228

Capital assets, net $8:U26~372 28.688 (L438.127) ssai6.863

54

CITY OF UPLAND


(Continued)

(4) Capital Assets, (Continued)

Depreciation expense was charged in the following programs of the primary government:

Water Utility Solid Waste Utility Environmental Quality Animal Services

(5) Accumulated Fund Deficits

$1,802,988 855

502,855 165,433

$2.472.131

The following funds reported deficits in fund balances/net assets as of June 30, 2011 :

Major Funds : HOME Program Fund

Non-Major Funds: Special Revenue Funds

CBD Parking and Business Improvement Police Grants

Internal Service Fund Self-Funded Liability

Deficit Balance

$(622,892)

(17,651) (531,570)

(9,345,136)

Management's explanations for the resolution of accumulated fund deficits are summarized as follows:

HOME Program Fund:

The deficit fund balance of $622,892 is the result of significant acquisitions that will be covered through future program income revenues.

Special Revenue Funds:

The deficit fund balance of $17,651 in the CBD Parking and Business Improvement fund and $531,570 in the Police Grants fund are the result of pending program reimbursements.

55

CITY OF UPLAND


(Continued)

(5) Accumulated Fund Deficits (Continued)

(6)

Internal Service Fund:

The deficit fund balance of $9,345,136 in the Self-Funded Liability Fund is a result of increased legal costs and claims in the current year and will be covered through future charges.

Long-Term Liabilities

Changes in long-term liabilities for the year ended June 30, 2011 are as follows:

Balance at Balance at Due within Governmental activities: June 30, 2010 Additions Deletions June 30, 2011 One year

Compensated absences payable * $3,025.209 2.562,213 (2,500.230) 3,087,192 1,910,656

Claims payable 5,562,275 1,637,265 (1,105.487) 6,094,053 1,105.487

Capital lease obligations 324,622 (200,090) 124,532 124,532

Other post employment liabilities 707,060 1,028,000 (377.245) 1,357,815

2002 Lease Revenue Bonds 1.560,000 (195.000) 1.365,000 205,000

Bonds Payable: 1998 Tax Allocation Bonds 17,030,000 (895,000) 16,135,000 930,000 2003 Tax Allocation Bonds 11,085,000 (610,000) 10,475,000 630,000 2006 Tax Allocation Bonds 14,695,000 (160,000) 14,535,000 160,000 2007 Housing Revenue Bonds 18,000,000 18,000.000

Total bonds payable 60,810,000 { 1 ,665 ,000) 59,145,000 1,720,000

Total long-term liabilities $71.989 166 5.227.478 (6.043.052) 71.173 592 5.065.675

* For governmental activities, compensated absences and other post employment benefit liabilities are generally liquidated by the general fund.

56

CITY OF UPLAND


(Continued)

(6) Long-Term Liabilities, (Continued)

Changes in general long-term liabilities for business-type activities for the year ended June 30, 2011 (including unamortized discounts and refunding costs) are as follows:

Balance at Balance at Due within Business-type activities: June 30, 2010 Additions Deletions June 30. 2011 One year

Compensated absences payable $ 356,068 424,406 (391,617) 388,857 272,001

Lease Revenue Bonds: 2002 Lease Revenue Bonds 5,030,000 (630,000) 4,400,000 655,000 Unamortized discount and refunding change (71,538) 10,219 (61,319) (10,219)

Subtotal 4,958,462 (619,781) 4,338,681 644,781

2003 Lease Revenue Bonds 8,935,000 8,935,000 Unamortized premium 56,826 (2,583) 54,243 (2,583)

Subtotal 8,991.826 (2,583) 8,989,243 (2,583)

Total long-term liabilities $14,306,3~6 424.406 (1.013,28ll 13,116,181 214,122

(7) Obligation Under Capital Leases

Fire Department Leases:

In 2007, the City entered into four different lease agreements for the acquisition of equipment for the fire department. The lease agreements qualify as a capital lease for accounting purposes (title transfer at end of lease) and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of inception. The system acquired during the fiscal year under these lease agreements is recorded at its acquisition cost of $1,982,668. The outstanding balance at June 30, 2011 was $124,532.

57

CITY OF UPLAND


(Continued)

(7) Obligation Under Capital Leases

The calculation of the present value of the future lease payments is as follows:

Amount of future lease payments for the year ending June 30,

2012

Less amount representing interest

Present value of future lease payments

(8) Lease Revenue Bonds

Governmental Activities:


Fire Dept.

$ 130,420

(5,888)

$ 124.532

2002 Lease Revenue Refunding Bonds (Police Building)

In June 2002, the City issued $3,040,000 of 2002 Lease Revenue Refunding Bonds to provide for the advance refunding of the remaining portion of the City's 1992 Certificates of Participation.

The bonds consist of $1,880,000 of serial bonds and $1,160,000 of term bonds. The serial bonds accrue interest at rates between 1.60% and 3.85% and mature between August 1, 2002 and August 1, 2011. The term bonds accrue interest at a rate of 4.60% and mature on August 1, 2016.

The reserve requirement at June 30, 2011 of $263,175 was fully satisfied. At June 30, 2011 the outstanding principal of the Lease Revenue Bonds is $1,365,000.

58

CITY OF UPLAND


(Continued)

(8) Lease Revenue Bonds, (Continued)

Business-type Activities:

2002 Lease Revenue Refunding Bonds (Water System)

In June 2002, the City issued $9,470,000 of Lease Revenue Refunding Bonds to provide for the advance refunding of the remaining portion of the 1992 Certificates of Participation (Water System).

The bonds consist of $5,725,000 of serial bonds and $3,745,000 of term bonds. The serial bonds accrue interest at rates between 1.60% and 3.85% and mature between October 1, 2002 and October 1, 2011. The term bonds accrue interest at 4.60% and mature on October 1, 2016.

The City has purchased a surety bond to satisfy the reserve requirements. At June 30, 2011, the outstanding principal of the Lease Revenue Bonds is $4,400,000.

2003 Lease Revenue Bonds (Water System)

In April 2003 , the City issued $8,935,000 of 2003 Lease Revenue Bonds to provide financing for the site acquisition and construction of certain improvements related to the expansion of the Upland Retention Basin.

The bonds consist of $1,490,000 of serial bonds and $7,445,000 of term bonds. The serial bonds accrue interest at rates between 4.75% and 5.00% and mature between October 1, 2017 and October 1, 2020. The first portion of term bonds with principal of $3,420,000 accrues interest at a rate of 5.00% and matures on October 1, 2027. The second portion of term bonds with principal of $4,025,000 accrues interest at a rate of 5.00% and matures on October 1, 2033. Term bonds are subject to mandatory redemption.

Principal and interest is payable from net revenues generated by the City's water utility. The reserve requirement of $795,750 at June 30, 2011 has been fully satisfied. At June 30, 2011, the outstanding principal of the Lease Revenue Bonds is $8,935,000.

59

CITY OF UPLAND


(Continued)

(8) Lease Revenue Bonds, (Continued)

Future requirements to amortize outstanding Lease Revenue Bonds as of June 30, 2011 are as follows:

Year Governmental Activities Business-tYRe Activities Ending 2002 Lease Revenue 2002 Lease Revenue 2003 Lease Revenue June 30 Principal Interest Principal Interest Principal Interest

2012 $ 205,000 57,306 655,000 184,879 445,888 2013 210,000 48,530 685,000 156,515 445,888 2014 220,000 38,640 715,000 124,315 445,888 2015 235,000 28,175 745,000 90,735 445,888 2016 245,000 17,135 780,000 55,660 445,888 2017 250,000 5,750 820,000 18,860 445,888 2018 345,000 445,888 2019 365,000 429,500 2020 380,000 411,250 2021 400,000 392,250 2022 420,000 372,250 2023 440,000 351,250 2024 465,000 329,250 2025 485,000 306,000 2026 510,000 281,750 2027 535,000 256,250 2028 565,000 229,500 2029 590,000 201,250 2030 620,000 171,750 2031 655,000 140,750 2032 685,000 108,000 2033 720,000 73,750 2034 755,000 37,750

Total $1!365!000 125.536 41400!000 630,264 81235,QQQ 7!2131716

60

CITY OF UPLAND


(Continued)

(9) Bonds Payable

Governmental Activities:

1998 Tax Allocation Refunding Bonds

On October 1, 1998, the Agency issued tax allocation refunding bonds in the amount of $25,000,000 to refund the outstanding aggregate principal amount of the Upland Public Financing Authority's 1988 Revenue Bonds, Series A and B. The remaining proceeds were used to finance certain capital improvements within the Upland Redevelopment Merged Project Area.

Interest rates on the bonds range from 3.10% to 4.85% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of bonds are payable from pledged tax increment revenues of the Merged Project Area. Term Bonds maturing September 1, 2011 , 2016 and 2023 are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2010, 2012 and 2017, respectively, and on each September 1 thereafter at a price equal to the principal amount thereof plus accrued interest.

There are certain limitations regarding the issuance of parity debt as further described in the official statement. The bond reserve requirement for the 1998 Tax Allocation Refunding Bonds, the 2003 Tax Allocation Bonds, and the 2006 Tax Allocation Bonds combined was $2,424,389. The combined amount held in bond reserve accounts at June 30, 2011 was $3,053,008. The principal balance of outstanding bonds at June 30, 2011 is $16,135,000.

2003 Tax Allocation Refunding Bonds

On May 15, 2003, the Agency issued tax allocation refunding bonds in the amount of $15,000,000 to refund the outstanding aggregate principal amount of the 1999 and 2001 Tax Allocation Bonds. The remaining proceeds were used to finance certain capital improvements within the Upland Redevelopment Merged Project Area. The refunding did not meet the criteria for a defeasance of debt.

Interest rates on the bonds range from 2.00% to 4.75% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable from pledged tax increment revenues of the Merged Project Area. Term Bonds maturing September 1, 2018 and September 1, 2023 are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2014 and September

61

CITY OF UPLAND


(Continued)

(9) Bonds Payable, (Continued)

1, 2019, respectively, and on each September 1 thereafter at a price equal to the principal amount thereof plus accrued interest.

There are certain limitations regarding the issuance of parity debt as further described in the official statement. The principal balance of outstanding bonds at June 30, 2011 is $10,475,000.

2006 Tax Allocation Bonds

On September 1, 2006, the Agency issued tax allocation refunding bonds in the amount of $15,000,000 to finance redevelopment projects benefiting the Project Area and to advance refund the Agency's $5,000,000 Magnolia Redevelopment Project, Tax Allocation Notes, issue of 2004.

The bonds accrue interest at 4.47% and mature on September 1, 2036. The interest and principal on the notes are payable from pledged tax increment revenues. The principal balance of outstanding notes at June 30, 2011 is $14,535,000.

2007 Housing Revenue Bonds

On August 1, 2007, the Agency issued revenue refunding bonds in the amount of $18,000,000 to finance redevelopment projects benefiting the Project Area and to advance refund the Agency's $6,700,000, Housing Revenue Bonds, issue of 1999.

The bonds bear interest at a variable rate that resets weekly. Interest on the bonds is payable on the first Wednesday of each month beginning September 5, 2007. Principal is payable on August 1, 2037. Payments of principal and interest are secured by a pledge of revenues generated by apartment rentals, a ten year irrevocable letter of credit issued by East West Bank, and a ten year irrevocable standby letter of credit issued by Federal Home Loan Bank of San Francisco. The principal balance of outstanding bonds at June 30, 2011 is $18,000,000.

62

CITY OF UPLAND


(Continued)

(9) Bonds and Notes Payable, (Continued)

Year ending

June 30

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037

Totals

The annual debt service requirements for the bonds as of June 30, 2011 are as follows: Interest on the 2007 Housing Revenue Bonds were estimated based on the variable interest rate of 0.23% at June 30, 2011.

1998 Tax 2007 Housing 2003 Tax 2006 Tax Allocation Bonds Revenue Bonds Allocation Bonds Allocation Bonds

Principal Interest Principal Interest Principal Interest Principal Interest

$ 930,000 764,975 41,425 630,000 459,393 160,000 625,681 970,000 725,450 41,425 650,000 439,705 165,000 618,881

1,015,000 680,688 41,425 670,000 418,255 175,000 6 11 ,869 1,065,000 633,644 41,425 690,000 395,475 180,000 604,431 1,115,000 584,388 41,425 720,000 364,425 190,000 596,781 1,165,000 532,819 41,425 755,000 332,025 195,000 588,706 1,220,000 578,938 41,425 790,000 298,050 205,000 580,419 1,275,000 419,768 41,425 830,000 262,500 210,000 572,731 1,340,000 357,930 41,425 860,000 225,150 220,000 564,331 1,405,000 292,940 41,425 905,000 184,300 230,000 555,531 1,470,000 224,758 41,425 950,000 41 ,313 240,000 546,331 1,545,000 153,503 41,425 990,000 96,188 250,000 536,431 1,620,000 78,570 41 ,425 1,035,000 49,163 265,000 525,806

41,425 2,460,000 514,544 41,425 2,580,000 409,994 41,425 1,005,000 300,344 41 ,425 1,055,000 257,63 1 41,425 380,000 211,475 41,425 460,000 194,850 41,425 480,000 174,725 41,425 500,000 153,725 41,425 535,000 131,850 41,425 560,000 107,775 41,425 585,000 82,575 41,425 610,000 56,250

18,000.000 41.425 640,000 28,800

$16,135 000 6.028 321 18 OOO,QOO I 011 Q50 10,425,000 3 565.242 14.535 QOQ 10 152 467

63

CITY OF UPLAND


(Continued)

(10) Post Employment Benefit Plan

Plan Description: The City administers a single-employer defined benefit plan which provides medical insurance benefits to eligible retirees and their spouses in accordance with various labor agreements. After age 65, Medicare automatically becomes the primary provider of health coverage. The City' s defined benefit plan becomes the secondary provider. Eligible retirees will have no noticeable change in health benefits or plan administration; however, there is a reduction in the City' s cost of health coverage as the secondary provider. The City's defined benefit plan administrator establishes the cost of secondary provider rates annually. There is no separate audited benefit plan report available. The City will pay a portion of the eligible retirees' health coverage depending on their years of service.

Eligibility: Employees are eligible for retiree health benefits if they retire from the City on or after age 50 with at least 5 years of service, and are eligible for a PERS pension. Membership of the plan consisted of the following at June 30, 2011, the date of the latest actuarial valuation:

Retirees and beneficiaries receiving benefits

Active plan members

Total

112

312

424

City's Funding Policy: The contribution requirements of plan members and the City are established and may be amended by City Council. The contribution required to be made under City Council and labor agreement requirements is based on a pay-as-you-go basis (i.e., as medical insurance premiums become due). For fiscal year 2010-11, the City contributed $377,245 to the plan for current premiums.

Annual OPEB Cost and Net OPEB Obligation. The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City' s net OPEB obligation for these benefits:

64

CITY OF UPLAND


(Continued)

(10) Post Employment Benefit Plan, (continued)

Annual required contribution

Interest on net OPEB obligation

Adjustments for net OPEB obligation

Annual OPEB cost (expense)

Contributions made (including premiums paid)

Increase in net OPEB obligation

Net OPEB obligation-beginning of year

Net OPEB obligation-end of year

$1,050,000

32,000

(54,000)

1,028,000

(377,245)

650,755

707,060

$1.357.815

The City's annual OPEB cost, the percentage of ammal OPEB cost contributed to the plan, and the net OPEB obligation for 2011 and the two preceding years were as follows:

Percentage of Annual Net

Fiscal Annual OPEB Cost OPEB Year OPEB Cost Contributed Obligation

6/30/09 $681,000 43% $354,613 6/30/10 $681,000 48% $707,060 6/30/11 $1,028,000 37% $1,357,815

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts 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 the benefits.

65

CITY OF UPLAND


(Continued)

(10) Post Employment Benefit Plan, (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 members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members 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 assets, consistent with the long-term perspective of the calculations.

The actuarial cost method used for determining the benefit obligations is the Frozen Entry Age Actuarial Cost Method. The actuarial assumptions included a 4.5 percent investment rate of return, which is the assumed rate of the expected long-term investment returns on plan assets calculated based on the funded level of the plan at the valuation date, and an annual healthcare trend rate of 9.05 percent initially, reduced by decrements of 0.65 per year to an ultimate rate of 4.5 percent after the seventh year. The UAAL is being amortized as a level percentage of projected payroll over 30 years open period. It is assumed the City's payroll will increase 3.25% per year.

SCHEDULE OF FUNDING PROGRESS

Actuarial Accrued UAALas a

Actuarial Liability Unfunded Percentage of Actuarial Value of (AAL)- AAL Funded Covered Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll

Date ill ilil (b-a) (alb) if} (b-a)!c)

6/30/07 NIA NIA NIA NIA N/A NIA 6/30/08 $0 $8,249,000 $8,249,000 0% $21 ,599,000 38.2% 6/30/11 $0 $8,675,000 $8,675,000 0% $24,016,000 36.1%

66

CITY OF UPLAND


(Continued)

(11) Letter of Credit

The City has a letter of credit securing the payment of principal and interest on the Housing Revenue Bonds. The letter of credit is issued in favor of the trustees and enables the trustees to make drawings against the letter of credit for payment of principal and interest amounts.

The terms of the letter of credit are summarized as follows:

Letter of Credit East-West Bank

Housing Revenue Bonds, Series 2007

(12) Defeasance of Debt

Trustee

U.S. Bank

Amount Expiration Date

$14,230,795 July 31, 2017

The City has defeased certain certificates of participation and bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old debt issues. Accordingly, the trust account assets and the liability for the defeased debt issues are not included in the City's financial statements. As of June 30, 2011, the following outstanding debt issues are considered defeased:

1988 Revenue Bonds, Series B 1986 Certificates of Participation (Police) 1986 Certificates of Participation (Water) 1992 Certificates of Participation (Police) 1992 Certificates of Participation (Water)

(13) Debt Without Government Commitment

$9,240,000 2,465,000 4,360,000 2,510,000 4,475,000

The following issues of Bonds are not reflected in the City's financial statements because they are special obligations payable solely from and secured by specific revenue sources described in the resolutions and official statements of the respective issues. Neither the faith and credit nor the taxing power of the City, the Redevelopment Agency, the State of California or any political subdivision thereof, is pledged for the payment of these bonds. No legal obligation on the part of the City or Agency exists to make payments on the bonds from any source other than the revenues or assets pledged therefore. The programs are completely administered by the trustees. ·

67

CITY OF UPLAND


(Continued)

(13) Debt Without Government Commitment, (Continued)

Type and Bond Issuer

Multi-Family Residential Housing Loan to Lender Revenue Bonds, New American Federal Credit Union Project, Americana Development Corporation, Los Angeles, California,

Date of Issue Original Amount

of Issue

1983 Series A April! , 1983 $ 4,165,000

Upland Community Redevelopment Agency Multi-Family Housing Revenue Refunding Bonds (Northwoods 1682) 1989 Series B May 1, 1989 7,775,000

Upland Community Redevelopment Agency Multi-Family Housing Revenue Refunding Bonds (Pebble Grove) 1989 Series C May 1, 1989 7,200,000

Housing Authority of the City of Upland Revenue Bonds, Issue A of 1990 May 1, 1990 10,145,000

1991 Sunset Haven Project Certificates of Participation, Sunset Haven, A California Nonprofit Public Benefit Corporation June 1, 1991 6,200,000

1993 Series, Certificate of Participation, San Antonio Community Hospital, Upland, California September 1, 1993 34,735,000

68

Outstanding at June 30, 2011

4,165,000

4,000,000

1,625,000

8,200,000

5,235,000

18,985,000

CITY OF UPLAND


(Continued)

(13) Debt Without Government Commitment, (Continued)

Original Amount Outstanding Type and Bond Issuer Date of Issue of Issue at June 30, 2011

Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Issue A and B (Northwoods 168 Project) February 9, 2000 7,775,000

Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Issue A and B (Northwoods 156 Project) February 9, 2000 7,100,000

Community Facilities District 2003-2 Improvement District 1 (The Colonies at San Antonio) March 13, 2004 19,650,000

Community Facilities District 2003-2 Improvement District 2 (The Colonies at San Antonio) March 13, 2004 22,500,000

Community Facilities District 2003-1 Series A of 2004 (Upland 54) December 22, 2004 1,750,000

69

7,775,000

7,100,000

18,575,000

22,075,000

1,595,000

CITY OF UPLAND


(Continued)

(14) Claims and Judgments

The City is exposed to various risks of loss related to its operation, including losses associated with errors and omissions, injuries to employees and members of the public. The City's Internal Service Risk Management Fund is used to account for and finance its uninsured risks of loss. The City purchases commercial insurance from Independent Cities Risk Management Authority (ICRMA) for general liability claims. Under this policy, ICRMA covers claims in excess of the City's self-insured retention of $500,000.

The City of Upland purchases commercial workers' compensation insurance from ICRMA. Under this policy, Employers recover claims in excess of the City's self insured retention of $750,000.

In the past three years, no claims for general liability or workers' compensation have exceeded the City's self-insured retention level.

The claims and judgments liability reported in the Internal Service Self-Funded Insurance Fund is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims and judgments be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of loss can be reasonably estimated. As of June 30, 2011, claims and judgments payable, including estimated claims for incurred but not reported claims, amounted to $6,094,053.

Changes in the claims and judgments payable amounts in fiscal years ended June 30, 2010 and 2011 for the Self-Funded Insurance Fund are as follows:

Current Year Beginning of Claims and Fiscal Year Changes in Claim Balance at

Liability Estimates Payments Fiscal Year End

2009-10 $4,996,205 1,801,816 (1,207,746) 5,562,275 2010-11 5,562,275 1,637,265 (1,105,487) 6,094,053

70

CITY OF UPLAND


(Continued)

(15) Defined Benefit Pension Plan CPERS)

The City of Upland contributes to the California Public Employees Retirement System (PERS), a cost sharing public employee defined benefit pension plan. PERS provides retirement, disability benefits, 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. PERS issues a publicly available financial report that includes financial statements and required supplementary information for the cost sharing plans that are administered by PERS. Copies of PERS' annual financial report may be obtained from its executive office at 400 "P" Street, Sacramento, California 95814.

Contributions and Funding Policy

Miscellaneous and safety participants are required to contribute 8% and 9%, respectively, of their annual covered salary. The City is required to contribute at an actuarially determined rate. The rate for the year ended June 30, 2011 is 11.913% for miscellaneous participants and 17.514% for safety participants, percent of annual covered payroll. The contribution requirements of plan members and the City are established and may be amended by City Council in conjunction with applicable labor contracts. The City's contributions to the miscellaneous plan for the years ending June 30, 2009, 2010, and 2011 were $2,682,650, $2,716,929, and $2,658,854, respectively, and were equal to the required contributions for each year. The City's contributions to the safety plan for the years ending June 30, 2009, 2010, and 2011 were $3,119,490, $3,080,569, and $3,230,098, respectively, and were equal to the required contributions for each year.

( 16) Joint Ventures

The City has an ownership in the San Antonio and West End water companies based upon the number of stock shares owned. To protect the water rights for the citizens of Upland, the City's water utility has followed the practice of purchasing shares of stock in the water companies as they become available. The City's primary motivation for owning

· shares in the water companies is to secure rights to well water pumped by the two companies. As development takes place within the City, the City requires developers to contribute 1.5 shares for each acre developed. The City's investment in the Authority has been recorded using the equity method of accounting and is reflected as an investment in joint venture in the accompanying financial statements.

71

CITY OF UPLAND


(Continued)

(16) Joint Ventures, (Continued)

On February 19, 1980, the Water Facilities Authority was created under a joint exercise of powers agreement for the acquisition and construction of facilities to supply water to the inhabitants within the boundaries of its members. The Authority's Board of Directors consists of one member appointed from each participating agency. The City's investment in the Authority has been recorded using the equity method of accounting and is reflected as an investment in joint venture in the accompanying financial statements.

The following schedule summarizes the City's investment in joint ventures at June 30, 2011 and the gain (loss) on the investment for the year then ended:

Total City' s Joint City's Share of

Percentage Venture Equity Joint Venture Water Company Ownership Equity Interest Net Income (Loss)

San Antonio Water Company 68% $23,945,831 16,252,035 761,045

West End Water Company 91% 1,502,962 1,370,401 (257,732)

Water Facilities Authority 23% 23,357,061 5,395,482 220,360

Total $ 23,Ql1,218 123,673

Separate financial statements may be obtained for the San Antonio Water Company and Liquidation Trust at 886 139 North Euclid Avenue in Upland, California, for the West End Consolidated Water Company at 460 N. Euclid Avenue in Upland, California, and for the Water Facilities Authority at 1775 North Benson Avenue in Upland, California.

72

CITY OF UPLAND


(Continued)

( 17) Transfers Inffransfers Out

The following schedule summarizes the City's transfer activity:

Transfers in

General Fund

General Capital Projects

Non-Major Governmental Funds

Environmental Enterprise Fund

Transfers out

RDA Capital Projects Non-Major Governmental Funds

Non-Major Governmental Funds Water Enterprise Fund Environmental Enterprise Fund

General Fund

Solid Waste Utility Fund

Amount

$ 716,000(a) 1 .245,464(a)

1.961,464

1,391,160(b) 922,100(b) 213,730(b)

2,526,990

262,597(c)

280,000(d)

$ 5,Q3l,Q51

(a) Transfers to the General Fund from the RDA Capital Projects Fund and NonMajor Governmental Funds were to reimburse the General Fund for expenses paid.

(b) Transfers to the General Capital Projects Fund from the Non-Major Governmental Funds , Water Enterprise Fund and Environmental Enterprise Fund were to fund construction projects.

(c) Transfers to the Non-Major Governmental Funds from the General Fund were to fund the annual debt service payment on the Police Building bond issue.

(d) Transfers to the Environmental Enterprise Fund from the Solid Waste Utility Fund were to transfer funds to cover landfill costs.

73

CITY OF UPLAND


(Continued)

(18) Jointly Governed Organizations

The City of Upland is a member of Inland Regional Narcotics Enforcement Team (I.R.N.E.T.), a joint powers authority of the police departments of the cities in San Bernardino and Riverside Counties, and participating counties federal and State law enforcement agencies. The Organization was formed on September 18, 1989, with the mission to promote coordinated law enforcement efforts and to address emerging criminal justice issues, mainly in the areas of drug trafficking and money laundering. The executive council consists of police chiefs of the cities and resident agents in charge of the federal and state law enforcement agencies. All financial decisions were made by the executive council. The members received monetary distributions from the asset seizures based on their respective contribution to the effort. Financial information for I.R.N.E.T. is not available. The City of Upland's percentage of participation is 3.57%.

(19) Expenditures in Excess of Appropriations

Expenditures for the year ended June 30, 2011 exceeded the appropriations of the following funds:

Budget Actual Variance Special Revenue Funds:

Police Grants $ 357,760 701,788 (344,028)

Capital Projects Funds: General Capital Improvements 4,564,794 4,722,288 (157,494) Community Facilities District 420,000 (420,000)

(20) Financial Condition and Management Plans

General Fund of the City of Upland

The General Fund is typically the focal point in analyzing the financial health of the City because the General Fund is expected to be able to cover both its costs and to act as a financial backstop for other funds in the event of revenue shortfalls. During the fiscal year ended June 30, 2011, the City reported a decrease in general fund balance of $3,825,302, resulting in an ending general fund balance of $6,123,992. Further, the Self-Funded Liability Fund has a deficit of $9,345,136, the HOME program has a deficit of $622,892, the CBD Parking and Business Improvement fund has a deficit of $17,651 and the Police Grants fund has a deficit of $531,570. While $662,126 of these deficits will be remedied by grant reimbursements, the General Fund is ultimately responsible for the foregoing deficits.

74

CITY OF UPLAND


(Continued)

(20) Cities Financial Condition and Management Plans, (Continued)

Management's Plans to Improve Operations and Limit City Obligations

The following are management's plans to reduce expenditures and increase revenue in future periods:

Management recognizes that accounting for grant funds should be more closely monitored. An internal audit of the various grant funds is to be performed by the Finance Division in fiscal year 2012.This will ensure that revenues and expenditures are recorded correctly and all year end reimbursements are filed with funding agencies prior to the final audit.

Recent Changes in Legislation Affecting California Redevelopment Agencies

On June 29, 2011, the Governor of the State of California signed Assembly Bills Xl 26 and 27 as part of the State's budget package. Assembly Bill X1 26 requires each California redevelopment agency to suspend (effective July 1, 2011) nearly all activities except to implement existing contracts, meet already-incurred obligations, preserve its assets and prepare for the impending dissolution of the agency. Assembly Bill X1 27 provides a means for redevelopment agencies to continue to exist and operate by means of a Voluntary Alternative Redevelopment Program by adopting an ordinance agreeing to make certain payments to the County Auditor Controller in fiscal year 2011-12 and annual payments each fiscal year thereafter.

Management believes that the Agency will have sufficient funds to pay its obligations as they become due during the fiscal year ending June 30, 2012. The nature and extent of the operation of redevelopment agencies in the State of California beyond that fiscal year are dependent upon the outcome of litigation surrounding the actions of the state.

75

CITY OF UPLAND


(Continued)

(21) Restatement of Fund Balance

During fiscal year 2011 the City combined its Traffic Safety special revenue fund with the City's General Fund for financial statement presentation as required under GASB 54.

The following schedules summarize the effects of the above-described restatements to the Fund Financial Statements

Governmental Funds:

Fund balance at beginning of

General Fund

year, as previously reported $8,202,754

Restatement to combine the Traffic Safety Fund with the General Fund 587

Fund balance at beginning of year, as restated $8.203.341

76

Other Governmental

Funds

7,553,044

(587)

7.552.457

REQUIRED SUPPLEMENTARY INFORMATION

77

CITY OF UPLAND

Notes to Required Supplementary Information


(1) Budgets and Budgetary Data

The City Council approves each year's budget submitted by the City Manager prior to the beginning of the fiscal year. Public hearings are conducted prior to the adoption by City Council.

Total appropriations for each fund may only be increased or decreased by the City Council by passage of a resolution amending the budget. During the year, there were budgetary appropriation increases amounting to $477,670.

The City Manager has authority to adjust the amounts appropriated between the funds and activities of a fund, provided, however, that the total appropriations for each fund may not exceed the amounts provided in the budget resolution.

The level on which expenditures may not legally exceed appropriations is the fund level.

The City Manager is also authorized to approve continuing appropriations at year-end for capital improvement projects and other expenditures previously approved by the City Council.

Budgets for the various funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Annual appropriated budgets are legally adopted for the general, special revenue, capital projects, and debt service fund types, except for the Sanitary Sewer Facility Development special revenue fund for which no budget is legally adopted and therefore no budget comparison schedule will be presented.

78

CITY OF UPLAND General Fund

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year ended June 30, 2011

Variance with Final Budget- Prior

Budgeted Amounts Positive Year

Original Final Actual (Negative) Actual

Revenues: Taxes:

Property taxes $ 17,357,830 19,230,767 18,557,648 (673,119) 18,705,152 Business license tax 978,500 978,500 817,339 (161 ,161) 855,672 Sales and use tax 9,860,160 9,860,160 7,228,970 (2,63 1,190) 6,852,466 Franchise tax 1,189,650 1,189,650 982,385 (207,265) 1,067,533 Other 468,800 328,885 246,037 (82,848) 264,541

Total taxes 29,854,940 31,587,962 27,832,379 (3,755,583) 27,745,364 Licenses and permits 433,770 433,770 587,948 154,178 500,866 Charges for services 5,387,480 5,625,950 4,711,284 (914,666) 4,390,535 Fines and penalties 242,220 612,470 460,768 (151,702) 236,438 Investment income 228,100 233,100 21,430 (211,670) 578,492 Rental income 394,200 433,000 419,241 (13,759) 408,134 Intergovernmental 523,960 843,880 1,029,681 185,801 1,316,078 Other 312,800 235,943 119,876 (116,067) 294,509

Total revenues 37,377,470 40,006,075 35,182,607 (4,823,468) 35,470,416


General government 4,402,700 6,388,436 5,360,853 1,027,583 4,120,131 Public safety: Police 14,841,950 15,360,180 15,828,255 (468,075) 14,911,608 Fire 9,393,640 9,393,640 9,3 16,911 76,729 9,889,943

Engineering and public works 3,629,770 3,419,670 3,230,840 188,830 3,140,264 Community development 1,292,480 1,367,618 1,368,588 (970) 2,179,071 Community services 3,919,630 3,828,947 3,902,462 (73,515} 4,374,958

Total expenditures 37,480,170 39,758,491 39,007,909 750,582 38,615,975

Excess (deficiency) of revenues over (under) expenditures (102,700) 247,584 (3,825,302) (4,072,886) (3,145,559)

Other fmancing sources (uses): Transfers in 512,700 1,961,460 1,961,464 4 1,531,423

Transfers out (410,000) (410,000) (262,597) 147,403 (274,364)

Proceeds from sale of capital assets 47,086 47,086

Total other financing sources (uses) 102,700 1,551,460 1,745,953 194,493 1,257,059

Change in fund balances 1,799,044 (2,079,349) (3,878,393) (1,888,500)

Fund balances at beginning of year 8,203,341 8,203,341 8,203,341 10,091,841

Fund balances at end of year $ 8,203,341 10,002,385 6,123,992 (3,878,393) 8,203,341

79

CITY OF UPLAND HOME Program Fund

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


Variance with Final Budget- Prior



Revenues: Investment income $ 10,000 10,000 6,526 (3,474) 9,827 Intergovernmental 1,615,000 1,615,000 331 ,679 (1,283,321) 706,935 Other 43,592 43,592 196,531

Total revenues 1,625,000 1,625,000 381,797 (1,243,203) 913,293


Community development 1,540,000 1,540,000 685,620 854,380 534,368

Total expenditures 1,540,000 1,540,000 685,620 854,380 534,368

Excess (deficiency) of revenues over (under) expenditures 85,000 85,000 (303,823) (388,823) 378,925

Other financing sources (uses): Transfers in 1,500,000

Total other financing sources (uses) 1,500,000

Net change in fund balance 85,000 85,000 (303,823) (388,823) 1,878,925

Fund balances (deficit) at beginning of year (319,069) (319,069) (319,069) (2, 197,994)

Fund balances (deficit) at end of year $ (234,069) (234,069) (622,892) (388,823) (319,069)

80

CITY OF UPLAND Low and Moderate Income Housing Fund



Variance with Final Budget - Prior



Revenues: Taxes $ 1,991,600 1,991 ,600 1,814,265 (177,335) 1,790,165

Investment income 112,250 112,250 78,835 (33,415) 143,969

Rental income 3,000,465 3,000,465 3,000,465 2,905,664

Other 50,000 50,000 68,031 18,031 106,482

Total revenues 5,154,315 5,154,315 4,961 ,596 (192,719) 4,946,280


Community development 9,047,490 9,047,490 2,898,353 6,149,137 2,868,468

Debt service: Principal 315,000 315,000 314,480 520 304,980

Interest and fiscal charges 735,000 735,000 536,107 198,893 543,206

Total expenditures 10,097,490 10,097,490 3,748,940 6,348,550 3,716,654

Excess (deficiency) of revenues over (under) expenditures (4,943,175) (4,943,175) 1,212,656 6,155,831 1,229,626

Other financing sources (uses): Transfers out (1 ,500,000) Proceeds from sale of capital assets 292,828

Total other financing sources (uses) (1 ,207,172)

Change in fund balances (4,943 ,175) (4,943,175) 1,212,656 6,155,831 22,454

Fund balances at beginning of year 7,712,921 7,712,921 7,712,921 7,690,467

Fund balances at end of year $ 2,769,746 2,769,746 8,925,577 6,155,831 7,712,921

81

CITY OF UPLAND

Combining Balance Sheet- Non-Major Governmental Funds

June 30, 2011

Debt Service Special Public Financing Capital Totals

Revenue Authori!}:: Projects 2011 2010 Assets

Cash and investments $ 2,498,559 3,366,289 5,864,848 6,820,622 Cash and investments

with fiscal agent 268,763 1,506,125 1,774,888 2,191,765 Receivables :

Accounts 129,086 129,086 34,683 Notes 17,192

Inventory and prepaid items 205 ,000 Due from other governments 960,300 960,300 609,647

Total assets $ 3,587,945 268,763 4,872,414 8,729,122 9,878,909

Liabilities and Fund Balance

Liabilities: Accounts payable $ 951 ,745 234 951,979 426,145 Accrued salaries and benefits 13,492 103 13,595 41,106 Due to other funds 369,563 294,666 664,229 818,359 Deposits payable 1,417,003 1,417,003 827,016 Deferred revenue 548 ,754 548,754 213,826

Total liabilities 3,300,557 295,003 3,595,560 2,326,452

Fund balance: Nonspendable:

Inventory and prepaid items 205,000 Restricted for:

Community development 836,609 836,609 3,296,865 Debt service 268,763 268,763 268,853 Capital projects 4,577,411 4,577,411 4,124,957

Unassigned (549,221) (549,221) (343,218)

Total fund balance 287,388 268,763 4,577,411 5,133,562 7,552,457

Total1iabilities and

fund balance $ 3,587,945 268,763 4,872,414 8,729,122 9,878,909

82

CITY OF UPLAND

Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Non-Major Governmental Funds


Debt Service Special Public Financing Capital Totals Revenue Authori!:Y Projects 2011 2010

Revenues: Taxes $ 648,983 661,243 1,310,226 1,103,306 Licenses and permits 416,978 416,978 491,650

Investment income 21,441 521 51 ,909 73,871 141,460

Rental income 31,516 31,516 59,947 Intergovernmental 4,736,251 4,736,251 4,368,438 Other 12,464 12,464 84,600

Total revenues 5,419,139 521 1,161,646 6,581,306 6,249,401


Public safety 1,3 11 ,199 1,31 1,199 1,384,318 Engineering and public works 2,897,946 531,679 3,429,625 4,503,205 Community development 1,444,629 1,444,629 786,610 Community services 177,51 3 177,513 144,704

Debt service: Principal 195,000 195,000 190,000

Interest and fiscal charges 68,208 68,208 75,286 Total expenditures 5,653,774 263,208 709,192 6,626,174 7,084,123

Excess (deficiency) of revenues over (under) expenditures (234,635) (262,687) 452,454 (44,868) (834,722)

Other fmancing sources (uses): Transfers in 262,597 262,597 445,129 Transfers out (2,636,624) (2,636,624) (437,723)

Total other fmancing sources (uses) (2,636,624) 262,597 (2,374,027) 7,406

Change in fund balances (2,871 ,259) (90) 452,454 (2,418,895) (827,316)

Fund balances at beginning of year 3,158,647 268,853 4,124,957 7,552,457 8,379,773

Fund balances at end of year $ 287,388 268,763 4,577,411 5,133,562 7,552,457

83

(This page intentionally left blank.)

84

NON-MAJOR SPECIAL REVENUE FUNDS

Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes.

The City of Upland has the following Non-Major Special Revenue Funds:

Gas Tax Fund - To account for gasoline taxes received from the State of California to be used for street maintenance and improvements only.

Sanitary Sewer Facility Development Fund- To account for revenue collected to expand both the City's and the region's sanitary sewage facilities to accommodate current and future growth.

Community Development Block Grant Fund- To account for revenue and costs related to the activities approved and funded by the United States Department of Housing and Urban Development.

Measure I Capital Infrastructure Fund - To account for revenue received from the State of California from a special '12% sales tax to be used for street maintenance and improvements only.

Air Quality Pollution Reduction Fund- To account for the receipt of funds generated by AB2766 which sets forth requirements for reduction of air pollution from mobile sources as promulgated by the SCAQMD.

CBD Parking and Business Improvement Fund - To account for revenues received from an additional levy of the general business license tax imposed on businesses to be used for the acquisition, construction and maintenance of parking facilities for the benefit of the area.

ISTEA Fund - To account for revenues and expenditures related to the Intermodal Surface Transportation Efficiency Act.

SB509 Public Safety Sales Tax Fund - To account for revenue and expenditures related to the half-cent sales tax enacted by Proposition 172 and SB509.

Police Grants Fund - To account for revenue received by the State of California and federal government including Local Law Enforcement Block Grants and State COPS.

Other Grants Fund - To account for revenue and expenditures related to state grants for library and recycling programs.

85

CITY OF UPLAND

Non-Major Special Revenue Funds

Combining Balance Sheet

June 30, 2011

Sanitary Sewer Measure I Gas Facility Capital Tax DeveloEment CDBG Infrastructure

Assets

Cash and investments $ 1,106,443 954,226 Receivables:

Accounts Notes

Inventory and prepaid items Due from other governments 224,386 203,605 143,319

Total assets $ 224,386 1,106,443 203,605 1,097,545

Liabilities and Fund Balances

Liabilities: Accounts payable $ 2,160 35,151 589,527 Accrued salaries and benefits 175 5,408 3,858 Due to other funds 2,247 89,548

Deposits payable 1,106,443

Deferred revenue 17,192

Total liabilities 4,582 1,106,443 147,299 593,385

Fund balances: Nonspendable:

Inventory and prepaid items Restricted 219,804 56,306 504,160 Unassigned

Total fund balances (deficit) 219,804 56,306 504,160

Total liabilities and

fund balances $ 224,386 1,106,443 203,605 1,097,545

86

Air Quality CBD Parking SB 509 Pollution and Business Public Safety Reduction hnprovement Sales Tax

18,317

49,745

18,317 49,745

67 9,935 17,651 49,491

10,002 17,651 49,491

8,315 254

(17,651) ----

8,315 (17,651) 254

18,317 49,745

Police Grants

385,120

326,625

711,745

287,753 1,105

200,691 310,560 443,206

1,243,315

Other Grants

52,770

110,769

12,620

176,159

37,154 2,879

88,356

128,389

47,770

(531,570) - --

(531,570) 47,770

711,745 176,159

87

Totals 2011 2010

2,498,559

129,086

960,300

3,587,945

951 ,745 13,492

369,563 1,417,003

548,754

3,300,557

836,609 (549,221)

287,388

3,587,945

4,319,001

34,683 17,192

205,000 605,725

5,181,601

424,684 33,717

523,711 827,016 213,826

2,022,954

205,000 3,296,865 (343,218)

3,158,647

5,181,601

CITY OF UPLAND

Non-Major Special Revenue Funds

Combining Statement of Revenues, Expenditures and Changes in Fund Balances


Sanitary Sewer Measure I Air Quality Gas Facility Capital Pollution

Tax Develo2ment CDBG Infrastructure Reduction

Revenues: Taxes $ Investment income 2,037 14,132 Intergovernmental 1,885,006 678,580 1,003,562 83,622

Other

Total revenues 1,887,043 678,580 1,017,694 83,622


Public safety Engineering and

public works 1,554,405 1,271,150 69,167 Community development 881,236

Total expenditures 1,554,405 881,236 1,271,150 69,167

Excess (deficiency) of revenues over (under) expenditures 332,638 (202,656) (253,456) 14,455

Other financing sources (uses): Transfers in Transfers out (1,184,000) (1,391,160)

Total other financing sources (uses) (1,184,000) (1,391,160)

Change in fund balances (851,362) (202,656) (1 ,644,616) 14,455

Fund balances (deficit) at beginning of year 1,071,166 258,962 2,148,776 (6,140)

Fund balances (deficit)

at end of year $ 219,804 56,306 504,160 8,315

88

CBD Parking SB 509 and Business Public Safety Police Other Totals

hnprovement Sales Tax Grants Grants 2011 2010

39,318 609,665 648,983 629,492 5,272 21,441 87,398

460,979 624,502 4,736,251 4,368,438 12,464 12,464 80,678

39,318 609,665 466,251 636,966 5,419,139 5,166,006

609,411 701,788 1,311,199 1,384,318

3,224 2,897,946 4,361,669 563,393 1,444,629 786,610

3,224 609,411 701,788 563,393 5,653,774 6,532,597

36,094 254 (235,537) 73,573 (234,635) (1,366,591)

180,203 (12,700) (48,764) (2,636,624) (437,723)

(12,700) (48,764) (2,636,624) (257,520)

36,094 254 (248,237) 24,809 (2,871,259) (1,624,111)

(53,745) (283,333) 22,961 3,158,647 4,782,758

(17,651) 254 (531,570) 47,770 287,388 3,158,647

89

CITY OF UPLAND Gas Tax Fund



Variance- Prior Final Positive Year

Budget Actual (Negative) Actual

Revenues: Investment income $ 25,000 2,037 (22,963) 32,553 Intergovernmental 1,437,850 1,885,006 447,156 1,903,569

Total revenues 1,462,850 1,887,043 424,193 1,936,122


Engineering and public works 2,017,363 1,554,405 462,958 3,247,783

Total expenditures 2,017,363 1,554,405 462,958 3,247,783

Excess (deficiency) of revenues over (under) expenditures (554,513) 332,638 887,151 (1 ,311,661)

Other financing sources: Transfers in Transfers out (1 ,184,000) (1,184,000) (370,765)

Total other financing sources (1,184,000) (1,184,000) (370,765)

Change in fund balances (1,738,513) (851,362) 887,151 ( 1 ,682,426)

Fund balances at beginning of year 1,071,166 1,071,166 2,753,592

Fund balances (deficit) at end of year $ (667,347) 219,804 887,151 1,071,166

90

CITY OF UPLAND Conununity Development Block Grant Fund





Revenues: Intergovernmental $ 1,156,280 678,580 (477,700) 696,159

Total revenues 1,156,280 678,580 (477,700) 696,159


Community development 1,151,833 881 ,236 270,597 479,667

Total expenditures 1,151,833 881,236 270,597 479,667

Excess revenues over expenditures 4,447 (202,656) (207,103) 216,492

Change in fund balances 4,447 (202,656) (207,103) 216,492

Fund balances at beginning of year 258,962 258,962 42,470

Fund balances at end of year $ 263,409 56,306 (207,103) 258,962

91

CITY OF UPLAND Measure I Capital Infrastructure Fund





Revenues: Investment income $ 60,000 14,132 (45,868) 39,930

Intergovernmental 890,950 1,003,562 112,612 830,323

Total revenues 950,950 1,017,694 66,744 870,253


Engineering and public works 3,938,165 1,271,150 2,667,015 1,032,632

Total expenditures 3,938,165 1,271,150 2,667,015 1,032,632

Excess (deficiency) of

revenues over (under) expenditures (2,987,215) (253,456) 2,733,759 (162,379)

Other financing sources (uses):

Transfers out (1,391,160) (1,391,160)

Total other financing sources (uses) (1,391,160) (1,391,160)

Change in fund balances (2,987,215) (1,644,616) 1,342,599 (162,379)


Fund balances (deficit) at end of year $ (838,439) 504,160 1,342,599 2,148,776

92

CITY OF UPLAND Air Quality Pollution Reduction Fund





Revenues: Intergovernmental $ 91,740 83,622 (8 ,118) 84,960

Total revenues 91,740 83,622 (8,118) 84,960


Engineering and public works 80,120 69,167 10,953 73,254

Total expenditures 80,120 69,167 10,953 73,254

Excess (deficiency) of revenues over (under) expenditures 11,620 14,455 2,835 11,706

Other financing sources (uses): Transfers in 9,438

Total other financing sources (uses) 9,438

Change in fund balances 11,620 14,455 2,835 21,144

Fund balances (deficit) at beginning of year (6,140) (6,140) (27,284)

Fund balances (deficit) at end of year $ 5,480 8,315 2,835 (6,140)

93

CITY OF UPLAND CBD Parking and Business Improvement Fund





Revenues: Taxes $ 45,500 39,318 (6, 182) 39,615

Total revenues 45,500 39,318 (6,182) 39,615


Engineering and public works 32,700 3,224 29,476 8,000

Total expenditures 32,700 3,224 29,476 8,000

Change in fund balances 12,800 36,094 23,294 31,615


Fund balances (deficit) at end of year $ (40,945) (17,651) 23,294 (53,745)

94

CITY OF UPLAND ISTEAFund


Revenues: Intergovernmental

Total revenues

Other financing sources (uses): Transfers in

Total other financing sources (uses)

Change in fund balances


$

Final Budget Actual

Fund balances (deficit) at beginning of year

Fund balances at end of year $

95

VariancePositive

(Negative)

Prior Year

Actual

15,296

15,296

170,765

170,765

186,061

(186,061)

CITY OF UPLAND SB 509 Public Safety Sales Tax Fund



Variance-Final Positive

Budget Actual (Negative)

Revenues: Taxes $ 631,650 609,665 (21,985) Investment income 8,000 (8,000)

Total revenues 639,650 609,665 (29,985)


Public safety 639,350 609,411 29,939

Total expenditures 639,350 609,411 29,939

Excess (deficiency) of revenues over (under) expenditures 300 254 (46)

Change in fund balances 639,650 254 (29,985)

Fund balances at beginning of year

Fund balances at end of year $ 639,650 254 (29,985)

96

Prior Year

Actual

589,877 4,047

593,924

593,924

593,924

CITY OF UPLAND Police Grants Fund





Revenues: Investment income $ 3,750 5,272 1,522 9,137 Intergovenunental 509,460 460,979 (48,481) 523,678

Total revenues 513,210 466,251 (46,959) 532,815


Public safety 357,760 701,788 (344,028) 790,394

Total expenditures 357,760 701,788 (344,028) 790,394


revenues over (under) expenditures 155,450 (235,537) (390,987) (257,579)

Other financing sources (uses): Transfers out (12,700) (12,700)

Total other financing sources (uses) (12,700) (12,700)

Change in fund balances 142,750 (248,237) (390,987) (257,579)


Fund balances (deficit) at end of year $ (140,583) (531,570) (390,987) (283,333)

97

CITY OF UPLAND Other Grants Fund





Revenues: Investment income $ 6,140 (6,140) 1,731

Intergovernmental 20,000 624,502 604,502 314,453 Other 627,400 12,464 (614,936) 80,678

Total revenues 653,540 636,966 (16,574) 396,862


Community development 658,540 563,393 95,147 306,943

Total expenditures 658,540 563 ,393 95,147 306,943


revenues over (under) expenditures (5,000) 73,573 78,573 89,919

Other financing sources (uses): Transfers out (48,760) (48,764) 4 (66,958)

Total other financing sources (uses) (48,760) (48,764) 4 (66,958)

Change in fund balances (53,760) 24,809 78,577 22,961

Fund balances at beginning of year 22,961 22,961

Fund balances (deficit) at end of year $ (30,799) 47,770 78,577 22,961

98

MAJOR AND NON-MAJOR DEBT SERVICE FUNDS

Debt Service Funds are used to account for the accumulation of resources for, and the payment of, long-term debt principal and interest.

The City of Upland has the following Major Debt Service Fund:

Redevelopment Agency Fund- To account for the payment of the principal and interest on debt of the Redevelopment Agency.

The City also has the following Non-Major Debt Service Fund:

Public Financing Authority- To account for the payment of principal and interest on the City's general debt issues.

99

CITY OF UPLAND Debt Service - Redevelopment Agency Fund





Revenues: Taxes $ 7,610,210 7,257,061 (353,149) 7,160,663 Investment income 93,500 88,401 (5,099) 89,773

Total revenues 7,703,710 7,345,462 (358,248) 7,250,436


Community development 19,800 628,383 (608,583) 366,701 Debt service:

Principal 1,305,050 1,350,520 (45,470) 1,305,020 Interest 1,701,410 1,626,936 74,474 1,677,217 Pass-through payments 1,998,330 1,442,542 555,788 1,893,350

Total expenditures 5,024,590 5,048,381 (23 ,791) 5,242,288

Excess (deficiency) of revenues over (under) expenditures 2,679,120 2,297,081 (382,039) 2,008,148

Other financing sources: Transfers out (18, 173,819)

Total other financing sources (18,173,819)

Change in fund balances 2,679,120 2,297,081 (382,039) (16,165,671)


Fund balances at end of year $ 8,779,139 8,397,100 (382,039) 6,100,019

100

CITY OF UPLAND Debt Service - Public Financing Authority Fund





Revenues: Investment income $ 1,000 521 (479) 538

Total revenues 1,000 521 (479) 538

Expenditures: Debt service:

Principal 195,000 195,000 190,000 Interest and fiscal charges 68,890 68,208 682 75,286

Total expenditures 263,890 263,208 682 265,286

Excess (deficiency) of revenues over (under) expenditures (262,890) (262,687) 203 (264,748)

Other financing sources: Transfers in 255,000 262,597 7,597 264,926

Total other fmancing sources 255,000 262,597 7,597 264,926

Change in fund balances (7,890) (90) 7,800 178

Fund balances at beginning of year 268,853 268,853 268,675

Fund balances at end of year $ 260,963 268,763 7,800 268,853

101


102

MAJOR AND NON-MAJOR CAPITAL PROJECTS FUNDS

Capital Projects Funds are used to account for the purchase or construction of major capital facilities which are not financed by Proprietary Funds or Trust Funds. Capital Projects Funds are ordinarily not used to account for the acquisition of furniture, fixtures, machinery, equipment and other relatively minor or comparatively short-lived capital assets.

The City of Upland has the following Major Capital Projects Funds:

Redevelopment Agency Capital Projects Fund- To account for the economic revitalization and redevelopment of the City through acquisition and development of City property determined to be in a declining condition.

General Capital Improvements Fund - To account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds .

The City of Upland has the following Non-Major Capital Projects Funds:

Park Acquisition and Development Fund - To account for revenue from the Dwelling Unit Construction Tax which must be used for the acquisition and development of park facilities within the City.

Storm Drain Development Fund - To account for the revenues received from the fees on various building permits to be used for the creation of a storm drain system in cooperation with other governmental entities in the area.

Street and Traffic Safety Development Fund- To account for the revenues received from fees on various building permits to be used for improved street and traffic facilities.

Community Facilities District Capital Projects Fund - This fund is used to account for the revenues received from the issuance of Community Facilities District debt and the acquisition and construction of certain capital projects within the Community Facilities District.

103

CITY OF UPLAND Non-Major Capital Projects Funds

Combining Balance Sheet

June 30, 2011

Park Acquisition and Storm Drain

Assets

Cash and investments Cash and investments with fiscal agent

Accounts receivable

Total assets

Liabilities and Fund Balances

Liabilities: Accounts payable Accrued salaries and benefits Due to other funds

Total liabilities

Fund balances:

Restricted

Total fund balances

Total liabilities and fund balances

Development Development

$

$

$

$

104

634,704

634,704

234 82

316

634,388

634,388

634,704

1,441,082

1,441,082

21

21

1,441,061

1,441,061

1,441,082

Street and Traffic Safety

Development

1,290,503

1,290,503

1,290,503

1,290,503

1,290,503

Community Facilities

District

1,506,125

1,506,125

294,666

294,666

1,211,459

1,211,459

1,506,125

Totals

2011

3,366,289 1,506,125

4,872,414

234

103 294,666

295,003

4,577,411

4,577,411

4,872,414

105

2010

2,501,621 1,922,912

3,922

4,428,455

1,461 7,389

294,648

303,498

4,124,957

4,124,957

4,428,455

CITY OF UPLAND Non-Major Capital Projects Funds

Combining Statement of Revenues, Expenditures and Changes in Fund Balances


Park Acquisition and Storm Drain

Development Development

Revenues: Taxes $ 661,243 Licenses and permits 219,356 Investment income 8,237 21,226 Rental income 31,516 Other

Total revenues 669,480 272,098


Community services 177,513 Engineering and public works 68,989

Total expenditures 177,513 68,989

Excess (deficiency) of revenues over (under) expenditures 491,967 203,109

Change in fund balances 491,967 203,109

Fund balances at beginning of year 142,421 1,237,952

Fund balances at end of year $ 634,388 1,441,061

106

Street and Community Traffic Safety Facilities Totals

Development District 2011 2010

661 ,243 473,814 197,622 416,978 491,650

19,251 3,195 51,909 53 ,524 31,516 59,947

3,922

216,873 3,195 1,161,646 1,082,857

177,513 144,704 42,690 420,000 531,679 141,536

42,690 420,000 709,192 286,240

174,183 (416,805) 452,454 796,617

174,183 (416,805) 452,454 796,617

1,116,320 1,628,264 4,124,957 3,328,340

1,290,503 1,211,459 4,577,411 4,124,957

107

CITY OF UPLAND

Capital Projects - Redevelopment Agency Fund

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




Revenues: Investment income $ 25,310 (25,310) 38,314

Rental income 16,920 23,885 6,965 17,114 Other 327,100 125,715 (201,385) 941,026

Total revenues 369,330 149,600 (219,730) 996,454


Community development 8,507,297 2,947,975 5,559,322 5,006,520

Debt service: Pass-through payments 2,958,656

Total expenditures 8,507,297 2,947,975 5,559,322 7,965,176

Excess (deficiency) of revenues over (under) expenditures (8,137,967) (2,798,375) 5,339,592 (6,968,722)

Other financing sources: Transfers in 17,106,517 Transfers out (716,000) (716,000)

Total other financing sources (716,000) (716,000) 17,106,517

Change in fund balances (8,853 ,967) (3,514,375) 5,339,592 10,137,795

Fund balances (deficit) at beginning of year 2,493,756 2,493,756 (7,644,039)

Fund balances (deficit) at end of year $ (6,360,211) (1 ,020,619) 5,339,592 2,493,756

108

CITY OF UPLAND Capital Projects- General Capital Improvements Fund




Revenues: Intergovernmental $ 1,759,480 1,063,679 (695,801)

Investment income 100,000 12,138 (87,862) 116,217 Other 45,000 538,366 493,366 357,599

Total revenues 1,904,480 1,614,183 (290,297) 473,816

Expenditures:

Current: Engineering and public works 4,564,794 4,722,288 (157,494) 5,288,153

Total expenditures 4,564,794 4,722,288 (157,494) 5,288,153

Excess (deficiency) of revenues over (under) expenditures (2,660,314) (3 ,108,105) (447,791) (4,814,337)

Other fmancing sources: Transfers in 2,335,805 2,526,990 191,185 1,067,302 Transfers out (1 ,264,465)

Total other fmancing sources 2,335,805 2,526,990 191 ,185 (197, 163)

Change in fund balances (324,509) (581,115) (256,606) (5,011,500)

Fund balances at beginning of year 872,415 872,415 5,883,915

Fund balances at end of year $ 547,906 291,300 (256,606) 872,415

109

CITY OF UPLAND Capital Projects - Park Acquisition and Development Fund

Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Year ended June 30, 2011

Variance-Final Positive

Budget Actual (Negative)

Revenues: Taxes $ 392,570 661,243 268,673 Investment income 3,750 8,237 4,487

Total revenues 396,320 669,480 273,160


Community services 661,687 177,5 13 484,174

Total expenditures 661,687 177,513 484,174

Excess (deficiency) of revenues over (under) expenditures (265,367) 491,967 757,334

Change in fund balances (265,367) 491,967 757,334

Fund balances (deficit) at beginning of year 142,421 142,421

Fund balances (deficit) at end of year $ (122,946) 634,388 757,334

110

Prior Year

Actual

473,814 4,078

477,892

144,704

144,704

333,188

333,188

(190,767)

142,421

CITY OF UPLAND Capital Projects - Storm Drain Development Fund




Revenues: Licenses and permits $ 150,060 219,356 69,296 225,142

Investment income 22,000 21 ,226 (774) 23,665 Rental income 62,700 31,516 (31,184) 59,947

Total revenues 234,760 272,098 37,338 308,754


Engineering and public works 1,570,969 68,989 1,501,980 89,675


Excess (deficiency) of revenues over (under) expenditures (1,336,209) 203,109 1,539,318 219,079

Change in fund balances (1 ,336,209) 203,109 1,539,318 219,079


Fund balances at end of year $ (98,257) 1,441,061 1,539,318 1,237,952

111

CITY OF UPLAND Capital Projects - Street and Traffic Safety Development Fund





Revenues: Licenses and permits $ 173,500 197,622 24,122 266,508 Investment income 21,000 19,251 (1 ,749) 21,877 Other 715,580 (715,580) 3,922

Total revenues 910,080 216,873 (693,207) 292,307


Engineering and public works 2,106,365 42,690 2,063,675 51,861


Change in fund balances (1,196,285) 174,183 1,370,468 240,446

Fund balances at beginning of year 1,116,320 1,116,320 875,874

Fund balances at end of year $ (79,965) 1,290,503 1,370,468 1,116,320

112

CITY OF UPLAND Capital Projects - Community Facilities District Fund




Revenues: Investment income $ 3,195 3,195 3,904

Total revenues 3,195 3,195 3,904

Expenditures:

Current: Engineering and public works 420,000 (420,000)

Total expenditures 420,000 (420,000)


revenues over (under) expenditures (416,805) (416,805) 3,904

Change in fund balances (416,805) (416,805) 3,904


Fund balances at end of year $ 1,628,264 1,211,459 (416,805) 1,628,264

11 3


114

INTERNAL SERVICE FUNDS

The internal service funds are used to account for goods and services provided by one City department to other City departments on a cost reimbursements basis.

The City of Upland has the following Internal Service Funds:

Self-Funded Liability - To account for the accumulation and allocation of costs associated with the City's Workers' Compensation Self Funded Liability Program.

Vehicle Replacement - To account for the accumulation and allocation of costs associated with the repair and maintenance of City owned vehicles.

115

Assets

Current assets: Cash and investments Receivables:

Accounts Prepaid items

Total current assets

Noncurrent assets: Capital assets:

Other capital assets, net

Total noncurrent assets

Total assets

Liabilities Current liabilities:

Accounts payable Accrued salaries and wages Due to other funds

CITY OF UPLAND Combining Statement of Net Assets

Internal Service Funds June 30, 2011

Self-Funded Vehicle

Liabilit~ ReQlacement

$

4,407 171,703

176,110

1,698,568

1,698,568

176,110 1,698,568

301 ,867 5,027

3,095,674 10,877 Current portion of long-term liabilities:

Claims and judgments payable 1,105,487

Compensated absences 19,261

Total current liabilities 4,527,316 10,877

Long-term liabilities: Claims and judgments payable 4,988,566

Compensated absences 5,364

Total long-term liabilities 4,993,930

Total liabilities 9,521 ,246 10,877

Net assets Invested in capital assets 1,698,568

Unrestricted (9,345, 136) (10,877)

Total net assets (deficit) $ (9,345,136) 1,687,691

116

Totals

2011 2010

4,407 5,927 171,703 183,079

176,110 189,006

1,698,568 2,450,243

1,698,568 2,450,243

1,874,678 2,639,249

301,867 178,193 5,027 15,753

3,106,551 2,722,635

1,105,487 490,861 19,261 8,551

4,538,193 3,415,993

4,988,566 5,071,414 5,364 17,665

4,993,930 5,089,079

9,532,123 8,505,072

1,698,568 2,450,243 (9,356,013) (8,316,066)

(7,657,445) (5,865,823)

CITY OF UPLAND Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Internal Service Funds


Self-Funded Vehicle Totals

Liabilit!: ReElacement 2011 2010

Operating revenues: Charges for services $ 4,117,140 4,117,140 1,979,425 Other 17,094 17,094 89,506

Total operating revenues 4,134,234 4,134,234 2,068,931

Operating expenses: Maintenance and operations 355,295 355,295 355,265 Contractual services 2,448,952 2,448,952 2,171,263 Claims expense 2,583,900 2,583,900 2,481 ,146

Depreciation 762,552 762,552 782,425

Total operating expenses 5,388,147 762,552 6,150,699 5,790,099

Operating income (1 ,253,913) (762,552) (2,0 16,465) (3 ,721,168)

Nonoperating revenues (expenses): Other nonoperating revenue 224,843 224,843 274,995

Total nonoperating revenues (expenses) 224,843 224,843 274,995

Income before transfers and capital contributions (1 ,029,070) (762,552) (1,791,622) (3,446,173)

Transfers and capital contributions: Contributed from other funds 480,107

Total transfers and capital contributions 480,107

Changes in net assets (1 ,029,070) (762,552) (1,791 ,622) (2,966,066)

Net assets (deficit) at beginning of year (8,316,066) 2,450,243 (5,865,823) (2,899,757)

Net assets (deficit) at end of year $ (9,345,136) 1,687,691 (7,657,445) (5,865,823)

117

CITY OF UPLAND Combining Statement of Cash Flows-Internal Service Funds


Cash flows from operating activities: Cash received from user departments Cash payments to suppliers for

goods and services Cash payments to employees for services

Net cash provided by (used for) operating activities

Cash flows from capital and related financing activities:

Cash paid for acquisition and construction of capital assets

Net cash proved by (used for) capital and related financing activities

Cash flows from investing activities: Interest received on investments

Net cash provided by (used for) investing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Self-Funded

Liability

$ 4,135,754

(4,037,479) (323,118)

(224,843)

224,843

224,843

Cash and cash equivalents at end of year ,;;,$==-==

118

Vehicle

Replacement

10,877

10,877

(10,877)

(10,877)

Totals

2011 2010

4,146,631 1,997,098

(4,037,479) ( 1 ,968,406) (323,118) (303,687)

(213,966) (274,995)

(10,877)

(10,877)

224,843 274,995

224,843 274,995

CITY OF UPLAND Combining Statement of Cash Flows-Internal Service Funds

(Continued)

Self-Funded Vehicle

Liability Replacement

Reconciliation of operating income to net cash provided by (used for)

operating activities: Operating income (loss) $ (1 ,253 ,913) (762,552)

Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities:

Depreciation 762,552

(Increase) decrease in accounts receivable 1,520

(Increase) decrease in prepaid expense 11,376

Increase (decrease) in accounts payable 123,674

Increase (decrease) in accrued

salaries and benefits (10,726)

Increase (decrease) in due to other funds 373,039 10,877

Increase (decrease) in compensated

absences (1,591)

Increase (decrease) in claims and judgments payable 531,778

Total adjustments 1,029,070 773,429

Net cash provided by operating activities $ (224,843) 10,877

Noncash Capital Financing, and Investing Activities

Contributed assets $

119

Totals

2011 2010

(2,0 16,465) (3,721,168)

762,552 782,425 1,520 8,406

11,376 (183,079) 123,674 141,577

(10,726) 1,915 383,916 2,104,822

(1,591) (5,963)

531,778 596,070

1,802,499 3,446,173

(213,966) (274,995)

480,107

AGENCY FUNDS

Agency Funds are used to account for assets held by a government in a trustee capacity or as an agent for individuals, private organizations, other governments, and/or other funds.

The City of Upland has the following Agency Funds:

1915 Assessment District 81-1 -To account for revenues received from the County to be used for the payment of debt issued to finance the acquisition of certain public rights of way and construction of certain public improvements.

1915 Assessment District 87-1 -To account for revenues received from the County to be used for the payment of debt issued to finance the acquisition of certain public rights of way and construction of certain public improvements.

Community Facilities District 2003-1 - To account for revenues received from property holders for the payment of debt issued to finance the acquisition of certain public rights of way and construction of certain public improvements.

Community Facilities District 2003-2- To account for revenues received from property holders for the payment of debt issued to finance the acquisition of certain public rights of way and construction of certain public improvements.

Welfare Committee - To account for employee contributions to provide future financial assistance to employees in the event of a personal financial emergency.

Upland 54 - To account for revenues received from property holders for the payment of debt issued to finance the acquisition of certain public rights of way and construction of certain public improvements.

120

CITY OF UPLAND

Combining Statement of Assets and Liabilities - Agency Funds

June 30, 2011

1915 Community Community Assessment Facilities Facilities Welfare District 87-1 District 2003-1 District 2003-2 Committee Upland 54

Assets

Cash and investments $ 1,253,316 1,214,168 17,099 166,652

Cash and investments with fiscal agent 2,252,469 1,584,827 126,826


Total assets $ 3,873,474 2,798,995 17,099 293,478

Liabilities


Due to bondholders 3,873,474 2,798,995 293,478

Totalliabilities $ .;;......~~~

3,873,474 2,798,995 17,099 293,478

121

Totals 2011

2,651,235

3,964,122 367,689

6,983,046

17,099 6,965,947

6,983,046

2010

2,305,054

3,963,255 306,927

6,575,236

21 ,000 6,554,236

6,575,236

CITY OF UPLAND Agency Fund

Statement of Changes in Assets and Liabilities


1915 ASSESSMENT DISTRICT 87-1

Cash and investments

Liabilities

Due to bondholders Accounts payable

Balance at July 1, 2010

$

$

$

COMMUNITY FACllJTIES DISTRICT 2003-1

Assets

Cash and investments $ 1,03 1,334

Cash and investments with fiscal agent 2,251,934


$ 3,576,476

Liabilities

Due to bondholders $ 3,576,476

Additions

346,389

346,389

221,982

535

74,481

296,998

296,998

122

Deletions

(346,389)

(346,389)

Balance at June 30, 2011

1,253,316

2,252,469

367,689

3,873,474

3,873,474



(Continued)

Balance at July 1, 2010 Additions

COMMUN1TY FACILITIES DISTRICT 2003-2

Assets

Cash and investments $ 1,119,176 94,992

Cash and investments

with fiscal agent 1,584,448 379

$ 2,703,624 95,371

Liabilities

Due to bondholders $ 2,703,624 95,371

WELFARE COMMITI'EE

Cash and investments $ 21,000

Liabilities


123

Deletions

(3,901)

(3,901)

Balance at June 30, 2011

1,214,168

1,584,827

2,798,995

2,798,995

17,099

17,099



(Continued)

Balance at Balance at Jul~ I, 2010 Additions Deletions June 30, 2011

UPLAND 54

Assets

Cash and investments $ 133,544 33,108 166,652

Cash and investments with fiscal agent 126,873 (47) 126,826

Accounts receivable 13,719 (13,719)

$ 274,136 33,108 (13,766) 293,478

Liabilities

Due to bondholders $ 274,136 33,108 (13,766) 293,478

TOTALS - ALL AGENCY FUNDS

Assets

Cash and investments $ 2,305,054 350,082 (3,901) 2,651,235

Cash and investments with fiscal agent 3,963,255 914 (47) 3,964,122

Accounts receivable 306,927 74,481 (13,719) 367,689

Total assets $ 6,575,236 425,477 (17,667) 6,983,046

Liabilities

Deposits payable $ 21,000 (3,901) 17,099

Due to bondholders 6,554,236 425,477 (13,766) 6,965,947

Accounts payable 346,389 (346,389)

Total liabilities $ 6,575,236 771,866 (364,056) 6,983,046

124

STATISTICAL SECTION

This part of the City of Upland's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about financial trends, revenue capacity, debt capacity, demographics, and

operating information.

Contents

Financial Trends

These schedules contain trend information to help the reader understand how the city's financial performance and well-being have changed over time.

126

Revenue Capacity 131 These schedules contain information to help the reader assess the factors affecting the city's ability to generate its property and sales taxes.

Debt Capacity 137 These schedules present information to help the reader assess the affordability of the city's current levels of outstanding debt and the city's ability to issue additional debt in the future.

Demographic and Economic Information 141 These schedules offer demographic and economic indicators to help the reader understand the environment within which the city's financial activities take place and to help make comparisons over time and with other governments.

Operating Information 143 These schedules contain information about the city's operations and resources to help the reader understand how the city's financial information relates to the services the city provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

125

City of Upland Net Assets by Component

Last Eight Fiscal Years (accrual basis of accounting)

(amounts expressed in millions)

Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011

Governmental activities Invested in capital assets, net of related debt $ 105 $ 122 $ 139 $ 153 $ 203 $ 245 $ 242 $ 248 Restricted 53 49 39 29 25 34 28 23 Unrestricted 30 24 16 24 32 9 3 (2)

Total governmental activities net assets $ 188 $ 195 $ 194 $ 206 $ 260 $ 288 $ 273 $ 268

Business-type activities ...... Invested in capital assets, net of related debt $ 39 $ 50 $ 55 $ N

50 $ 64 $ 66 $ 74 $ 73 0\ Restricted 0 0 0 0 0 0 0 0

Unrestricted 24 20 29 45 40 39 37 42 Total business-type activities net assets $ 62 $ 70 $ 84 $ 95 $ 104 $ 105 $ 111 $ 115

Primary government Invested in capital assets, net of related debt $ 143 $ 172 $ 194 $ 203 $ 267 $ 311 $ 316 $ 321 Restricted 53 49 39 29 25 34 28 23 Unrestricted 54 44 45 69 72 48 40 40

Total primary government net assets $ 250 $ 265 $ 278 $ 301 $ 364 $ 393 $ 384 $ 384

Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.

City of Upland

Changes in Net Assets Last Eight Fiscal Years

(accrual basis of accounting) (amounts expressed in thousands)

Fiscal Year Expenses 2004 2005 2006 2007 2008 2009 2010 2011 Governmental activities:

General government $ 3,201,344 $ 4,261,101 $ 4,283,066 $ 3,013,964 $ 4,732,144 $ 4,424,174 $ 3,845,613 $ 3,894,625 Public safety 17,975,034 21,456,384 23,425,371 24,131,173 25,509,677 24,736,537 27,994,406 26,883,113 Engineering and public works 5,262,501 13,869,229 10,228,416 9,070,869 7,767,952 17,926,088 11,196,658 8,734,681 Community development 3,862,325 4,866,327 6,154,683 6,913,597 15,181,133 11,165,502 11,058,341 13,322,147 Community services 4,441,662 4,958,427 5,794,921 5,202,440 3,976,025 1,353,790 4,460,801 3,962,221

Interest expense 1,990,453 2,890,402 2,241,455 2,629,911 5,020,678 1,567,438 2,255,445 2,186,876

Total governmental activities expenses 36,733,319 52,301,870 52,127,912 50,961,954 62,187,609 61,173,529 60,811,264 58,983,663

Business-type activities:

Water utility 11,983,199 11,170,149 11,185,157 12,654,182 13,633,781 16,904,301 16,580,163 15,393,981

Solid waste utility 6,824,413 7,337,711 7,788,765 8,860,304 10,905,935 9,758,184 9,730,993 9,669,314

Environmental quality 4,535,975 4,453,695 4,524,503 4,787,995 5,196,659 5,821,768 6,169,303 6,098,777

Animal services 0 0 0 0 0 0 8,852 1,150,728

Total business-type activities expenses 23,343,587 22,961,555 23,498,425 26,302,481 29,736,375 32,484,253 32,489,311 32,312,800

Total primary government expenses 60,076,906 75,263,425 75,626,337 77.264,435 91,923,984 93,657,782 93,300,575 91,296,463

Progfam Revenues ;:::;Governmental activities: -.l Charges for services:

General government 976,129 1,233,377 1,678,180 1,272,003 2,648,542 2,850,519 2,487,288 1,318,635 Public safety 2,827,034 2,833,987 2,823,659 3,088,857 2,799,992 2,760,224 2,487,629 2,464,321 Engineering and public works 343,604 554,364 362,550 505,997 420,351 426,987 364,187 398,112 Community development 2,706,784 1,783,585 3,949,919 3,501,508 1,661,939 470,048 514,645 3,789,998

Community services 699,134 640,067 623,239 604,578 837,149 903,935 902,971 690,120

Operating grants and contributions 7,109,781 8,350,796 7,130,904 5,588,669 15,264,569 6,968,247 6,153,273 6,637,224

Capital grants and contributions 40,233,268 11,497,640 3,977,652 3,644,1 16 51,902,682 38,292,605 4,138,510 2,113,299

Total governmental activities program revenues 54,895,734 26,893,816 20,546,103 18,205,728 75,535,224 52,672,565 17,048,503 17,411,709 Business-type activities

Charges for services: Water utility 12,861,275 16,415,143 17,868,860 16,630,059 16,077,444 15,717,899 14,219,495 22,016,148 Solid waste utility 8,038,729 8,391,140 8,668,026 9,053,671 10,054,093 9,949,742 9,784,984 9,617,834 Environmental quality 4,222,828 4,453,035 4,588,634 4,893,853 5,229,130 5,371,785 5,791,624 5,822,597 Animal services 0 0 0 0 0 0 35,798 334,927

Operating grants and contributions 0 0 0 1,413,178 839,054 0 0 0 Capital grants and contributions 126,741 24,697 1,851,924 3,361,628 4,024,394 1,614,270 . 270,118

Total business-type activities program revenues 25,249,573 29,284,015 32,977,444 35,352,389 36,224,115 32,653,696 30,102,019 37,791,506 Total primary government program revenue 80,145,307 56,177,831 53,523,547 53,558,117 Ill ,759,339 85,326,261 47.150,522 55,203,215

City of Upland

Changes in Net Assets Last Eight Fiscal Years

(accrual basis of accounting) (amounts expressed in thousands)

Net (expenses)/revenue

Governmental activities $ 18,162,415 $ (25,408,054) $(31,581,809) $(32,756,226) $ 13,347,615 $ (8,500,964) $ (43,762,761) $ (4 1,571,954) Business-type activities 1,905,986 6,322,460 9,479,019 9,049,908 6,487,740 169,443 (2,387,292) 5,478,706 Total primary government net expense 20,068,401 (19,085,594) (22,102,790) (23,706,318) 19,835,355 (8,331,521) (46,150,053) (36,093,248)

General Revenues and Other Changes in

Net Assets Governmental activities:

Taxes

Property taxes 7,600,178 13,270,141 15,748,826 19,068,422 19,219,566 18,380,458 18,436,456 18,288,333 Tax increment 4,728,754 5,629,001 5,624,420 6,787,912 8,456,028 8,812,255 6,016,240 7,628,784

Sales taxes 8,011,194 6,717,268 8,008,884 8,377,346 8,099,992 7 ,006,296 6,852,466 7,228,970 Other taxes 1,699,139 1,979,953 2,618,088 2,260,772 1,734,650 3,205,483 1,469,692 1,359,820

Investment income 378,390 2,195,137 789,382 1,809,955 760,153 2,096,228 1,299,166 4ll ,082 Rental income 151,852 14,855 0 0 0 0 0 0 Motor vehicle in lieu 3,201,251 2,028,789 509,460 404,229 605,573 518,539 485,436 674,770 Gain on sale of assets 0 0 0 6,011,642 359,100 564,698 292,828 47,086

;::::; Miscellaneous revenue 1,110,470 1,384,341 245,233 339,302 168,821 1,016,498 1,980,747 377,996 oo Transfers 36,000 (789,771) (3,359,744) (11,715) 100,000 186,459 (7 ,864,436) 1,135,830

Total governmental activities 26,917,228 32,429,714 30,184,549 45,047,865 39,503,883 41 ,786,914 28,968,595 37,152,671 Business-type activities:

Investment income 107,040 359,667 215,413 774,372 1,244,235 754,695 274,432 330,946 Share of joint venture net income 431,790 756,433 801,953 948,545 10,000 0 0 0 Miscellaneous revenue 500,000 0 0 0 0 0 21,875 0 Transfers (36,000) 789,771 3,359,744 11,715 (1 00,000) (186,459) 7,864,436 (1,135,830)

Total business-type activities 1,002,830 1,905,871 4,377,ll0 1,734,632 1,154,235 568,236 8,160,743 (804,884)

Total primary government $ 27,920,058 $ 34,335,585 $ 34,561,659 $ 46,782,497 $ 40,658,11 8 $42,355,150 $ 37,129,338 $ 36,347,787

Change in Net Assets

Governmental activities $ 45,079,643 $ 7,021,660 $ (1 ,397,260) $ 12,291 ,639 $ 52,851,498 $33,285,950 $ (14,794,166) $ (4,419,283) Business-type activities 2,908,816 8,228,33 1 13,856,129 10,784,540 7,641,975 737,679 5,773,451 4,673,822 Total primary government $ 47,988,459 $ 15,249,991 $ 12,458,869 $ 23,076,179 $ 60,493,473 $34,023,629 $ (9,020,715) $ 254,539


City of Upland Fund Balances of Governmental Funds

Last Eight Fiscal Years (modified accrual basis of accounting)

(amounts expressed in thousands)

Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011

General Fund

Reserved $ 5,432,017 $ 6,070,605 $ 4,036,110 $ 3,757,524 $ 4 ,504,251 $ 3,119,899 $ 288,827 $ Unreserved 12,007,829 10,705,621 11,646,197 16,089,365 12,038,900.00 6,971,355 7,913,927

Nonspendable 393,974

Restricted

Committed Assigned Unassigned 5,730,018

Total general fund $ 17,439,846 $ 16,776,226 $ 15,682,307 $ 19,846,889 $ 16,543,151 $ 10,091,254 $ 8,202,754 $ 6,123,992

Capital Project Funds

- Reserved $ $ $ $ $ $ $ $ N Unreserved 29,807,671 22,771,064 8,335,289 10,837,611 8,456,396 (3,035, 140) 4,357,471 \0

Restricted Assigned 291,300

Unassigned (1,020,619)

Total Capital Project Funds $ 29,807,671 $ 22,771,064 $ 8,335,289 $ 10,837,611 $ 8,456,396 $ (3,035,140) $ 4,357,471 $ (729,319)

All other governmental funds

Reserved $ 16,235,775 $ 14,796,471 $ 11,274,879 $ 11,622,432 $ 11,790,857 $ 12,039,958 $ 10,ll4,180 $ Unreserved, reported in:

Special revenue funds 10,061,239 14,375,747 9,015,891 4,651,173 5,513,516 5,521,555 6,401,610 Debt service funds 4,594,703 7,470,143 10,452,334 13,119,408 16,181 ,160 ~0.100,303 3,934,620 Permanent funds

Nonspendable Restricted

Community Development 9,762,186 Debt Service 8,665 ,863 Capital Projects 4,577,411

Committed

Assigned

Unassigned ( l.I 72, 113) Total all other governmental funds $ 30,891,717 $ 36,642,361 $ 30,743,104 $ 29,393,013 $ 33,485,533 $ 37,661,816 $ 20,450,410 $ 21,833,347


City of Upland

Changes in Fund Balances of Governmental Funds Last Eight Fiscal Years

(modified accrual basis of accounting)

(amounts expressed in thousands)

Fiscal Year

2004 2005 2006 2007 2008 2009 2010 2011

Revenues

Taxes $ 23,999,989 $26,854,079 $ 34,253,581 $ 38,991,262 $ 40,168,833 $ 39,741,446 $ 37,799,498 $ 38,213,931 Licenses and pennits 2,889,159 6,655,880 2,213,172 1,467, 168 891,566 948,778 992,516 1,004,926 Charges for services 3,659,003 3,447,135 3,393,404 3,390,271 4,406,533 4,894,688 4,390,535 4,711,284 Fines and penalties 948,038 1,180,446 1,281,493 1,331,232 1,290,164 926,545 638,627 460,768 Investment income 605,029 2,168,691 1,861,855 2,757,757 3,034,259 1,807,832 1,119,133 281,201

Rental income 1,396,896 2,014,594 3,187,954 2,858,176 3,062,207 2,348,894 3,390,859 3,475,107 Intergovernmental 7,597,666 11,381,102 5,9 19,230 5,353,059 9,976,340 9,057,297 6,657,431 7,161,290 Contributions from property owners 37,094,936 1,623,640 0 0 0 0 0 0 Other 3,726,090 5,150,141 3,693,036 2,250,960 7,592,760 1,013,468 1,980,747 908,044 Total revenues 81,916,806 60,475,708 55,803,725 58,399,885 70,422,662 60,738,948 56,969,346 56,216,551

Expenditures General government 3,182,804 2,779,382 3,962,482 3,517,250 5,023,565 5,171,784 4,120,131 5,360,853 Public safety 18,325,307 21,441,898 23,068,053 23,719,136 26,405,130 27,883,044 27,545,584 26,456,365 Engineering and public works 23,134,184 24,053,148 20,671,707 14,623,466 11,425,896 19,849,223 12,931,622 11,382,753 Corrununity development 4,024,563 5,634,120 11,171 ,822 13,868,883 23,197,869 12,227,932 11,046,686 9,973,548 Corrununity services 4,567,518 7,409,536 6,826,240 5,527,730 8,016,140 4,974,815 4,519,662 4,079,975 Debt service

Principal 12,470,081 1,812,089 1,861,971 3,245,000 8,245,000 1,740,000 1,800,000 1,860,000 Interest and fiscal charges 1,956,996 2,351,676 2,1 37,809 3,121,538 3,604,2 14 1,870,154 2,295,709 2,231,251 Pass-through payments 541,892 1,153,671 1,069,495 1,158,614 1,552,885 1,747,905 4,852,006 1,442,542

Total expenditures 68,203,345 66,635,520 70,769,579 68,781,617 87,470,699 75,464,857 69,111 ,400 62,787,287

Excess of revenues

over (under) expenditures 13,713,461 (6,159,812} (14,965,854) (10,381,732) (17,048,037) (14,725,909) (12,142,054) ( 6,570, 736)

Other financing sources (uses)

Transfers in 4,508,572 3,755,803 5,206,790 6,151,865 17,435,006 8,346,657 21,650,371 4,751,051 Transfers out (4,472,572) (4,545,574} (8,566,534) (6,563,580) (17,335,006) (8,160,198) (21 ,650,371) (3,615,221) Proceeds from sale of capital assets 0 0 0 6,0l1,642 596,576 0 292,828 47,086 Issuance of capital leases 798,000 0 0 0 0 772,300 0 0 Payments to bond escrow 0 0 0 (4,901,382) 0 0 0 0 Issuance of bonds 1,500,000 5,000,000 0 15,000,000 18,000,000 0 0 0 Total other fmancing sources( uses) 2,334,000 4,210,229 (3,359,744) 15,698,545 18,696,576 958,759 292,828 1,182,916

Net change in fund balances $ 16,047,461 $ (1,949,583) $ (18,325 ,598) $ 5,3 16,813 $ 1,648,539 $ (13,767,150) $ (11,849,226) $ (5,387,820)

Debt service as a percentage of noncapital

expenditures 29.7% 10.1% 9.7% 13.1% 20.6% 9.6% 13.7% 10.2%


130

....... w

Fiscal Residential Commercial

Year Property Prope:!r.__

2002 3,251 ,11 3,895 402,486,696

2003 3,303,268,969 434,306,651

2004 3,624,600,104 462,836,868

2005 3,980,628,520 494,107,329

2006 4,402,729,626 532,948,374

2007 5,041,850,948 670,793,062

2008 5,511,340,878 774,622,602

2009 5,682,352,967 852,615,225

2010 5,347,749,352 851,310,776

2011 5,320,151,058 836,916,220

City of Upland Assessed Value and Estimated Actual Value of Taxable Property,

Last Ten Fiscal Years

Less: Total Taxable Industrial Tax-Exempt Assessed

Property Other Property Value

107,798,378 230,121,169 174,547,563 3,816,972,575

138,603,315 391 ,205,251 181,243,453 4,086,140, 733

150,767,083 423,520,010 202,905,306 4,458,818,759

184,888,513 410,328,659 204,581,025 4,865,371 ,996

185,336,285 516,580,433 221,211,830 5,416,382,888

210,045,382 487,035,481 231,155,389 6,178,569,484

271,779,076 555,678,013 239,584,706 6,873,835,863

290,623,233 614,599,957 266,834,667 7,173,356,715

317,345,156 686,480,209 267,494,835 6,935,390,658

316,399,523 670,269,197 287,769,532 6,855,966,466

Source: HDL Coren & Cone - Use Category Summary

Total Estimated Taxable Assessed

Direct Actual Value( a) as a Tax Taxable Percentage of Rate Value Actual Taxable Value

0.25502% 3,816,972,575 100%

0.25653% 4,086,140, 733 100%

0.34423% 4,458,818,759 100%

0.26875% 4,865,371,996 100%

0.26939% 5,416,382,888 100%

0.27251% 6,178,569,484 100%

0.27771% 6,873,835,863 100%

0.28524% 7,173,356,715 100%

0.29355% 6,935,390,658 100%

0.29273% 6,855,966,466 100%

Note: The State Constitution requires property to be assessed at one hundred percent of the most recent purchase price, plus an increment of no more than two percent annually, plus any local overrides. These values are considered to be full market values.

Residential Fiscal Gallons %of

Year Consumed Total

2002 5,659,494,412 76.7%

2003 5,361,813,600 76.9%

2004 5,404,473,536 77.9%

2005 5,398,115,536 76.5%

2006 5,035,0 10,156 77.4%

2007 5,374,168,316 76.2%

2008 5,517,246,504 75.2%

2009 5,056,526,376 73.9%

2010 4,620,895,664 74.9%

2011 4,456,138,940 74.4%

City of Upland Water Sales By User Type


Commercial Gallons %of

Consumed Total

856,893,840 11.6%

782,954,040 11.2%

754,060,296 10.9%

828,174,380 11.7%

699,251,344 10.7%

729,630,616 10.3%

760,085,436 10.4%

777,416,596 11.4%

651,208,800 10.6%

648,324,512 10.8%

Source: City of Upland Finance Department-Utility Billing Report UBR360

132

Public Agency Irrigation Gallons %of Gallons %of

Consumed Total Consumed Total

299,451,328 4.1% 566,656,376 7.7%

297,487,080 4.3% 531,985,080 7.6%

250,630,864 3.6% 527,386,376 7.6%

307,598,544 4.4% 524,663,656 7.4%

286,251,372 4.4% 485,226,104 7.5%

337,765,384 4.8% 612,131,784 8.7%

345,603,676 4.7% 715,281,732 9.7%

331,785,124 4.9% 673,292,004 9.8%

239,059,304 3.9% 656,050,604 10.6%

229,503,604 3.8% 655,200,876 10.9%

City of Upland Direct and Overlapping Property Tax Rates,

Last Ten Fiscal Years (rate per $1,000 of assessed value)

City Direct Rates Overlapping Rates

General Obligation Redevelopment Total Flood

Fiscal Debt Debt Direct School Control

Year Service Service Rate District District County

2002 0.0000 0.0000 0.0000 0.2107 0.0089 1.0000 1.2196

2003 0.0000 0.0000 0.0000 0.2577 0.0067 1.0000 1.2644

2004 0.0000 0.0000 0.0000 0.2206 0.0061 1.0000 1.2267

2005 0.0000 0.0000 0.0000 0.2211 0.0058 1.0000 1.2269

2006 0 .0000 0.0000 0.0000 0.2213 0.0052 1.0000 1.2265

2007 0.0000 0.0000 0.0000 0.1791 0.0047 1.0000 1.1838

2008 0.0000 0 .0000 0.0000 0.1644 0 .0045 1.0000 1.1689

2009 0.0000 0 .0000 0.0000 0.1821 0.0043 1.0000 1.1864

2010 0.0000 0.0000 0.0000 0.1929 0 .0043 1.0000 1.1972

2011 0.0000 0 .0000 0.0000 0.2203 0.0037 1.0000 1.2240

Source: HDL Coren & Cone - Direct & Overlapping Property Tax Rates

133

Taxpayer

Granite Sr Woodlane LLC $

Colonies Pacific LLC

Rancho Monte Vista Apartment Homes

Koll Per College Business Park LLC

CT Retail Properties Finance II L.L.C.

Mountain Springs

Bill and Mary Matreyek Trust

Nu A68 Apartments LLC

College Park Apartment Homes LP

Pres-Mountain Grove LP

San Antonio Lakes Partners Limited

LDC Cougar LLC

Steadfast Arbor Park LP

Wohl College LLC

Waterton Villa LLC

AP-Upland Freeway Center LLC

Benson Street Apartments LLC

Totals $

City of Upland

Principal Property Taxpayers

Current Year and Ten Years Ago

2011

Percentage of

Taxable Total Taxable

Assessed Assessed

Value Rank Value

42,647,722 0.6%

39,754,525 2 0.6%

39,011,879 3 0.6%

38,493,000 4 0.6%

37,180,885 5 0.5%

34,014,157 6 0.5%

32,825,179 7 0.5%

30,363,633 8 0.4%

27,105,530 9 0.4%

26,133,835 10 0.4%

347,530,345 5.1%

Source: HdL Coren & Cone- Top Ten Property Taxpayers

134

2002

Percentage of Taxable Total Taxable Assessed Assessed

Value Rank Value

34,333,200 0.9%

16,762,661 3 0.4%

24,224,920 2 0.6%

16,713,563 4 0.4%

14,016,270 5 0.4%

13,034,146 6 0.3%

12,886,881 7 0.3%

12,276,720 8 0.3%

12,096,604 9 0.3%

12,086,979 10 0.3%

$ 168,431,944 4.4%

Water Purchaser

City of Upland

SanBag

Upland Unified School District

San Antonio Community Hospital

E L Yeager Construction

Mountain View Land Co

Upland Meadows Management Co

H W L Properties

Steadfast Properties

Upland Cascade

Caltrans

Upland Housing Authority

Upland El Dorado

American Golf Corp

Totals

City of Upland Principal Water Purchasers

Current Year and Ten Years Ago

2011

Percentage of

Gallons Total Gallons Consumed Rank Consumed

195,541,412 3.3%

104,972,824 2 1.7%

102,576,980 3 1.8%

54,752,852 4 0.9%

5 0.0%

47,015,540 6 0.8%

32,022,628 7 0.5%

26,030,400 8 0.4%

23,573,968 9 0.4%

19,223,600 10 0.3%

14,202,276 0.2%

0.0%

619,912,480 10.4%

Source: City of Upland Finance Department - Utility Billing Report UBR358

135

2002

Percentage of Gallons Total Gallons

Consumed Rank Consumed

238,808,724 3.2%

0.0%

128,516,872 2 1.7%

78,879,592 4 1.1%

99,989,648 3 1.4%

$ 0.5%

$ 0.4%

38,268,428 5

30,774,216 7

30,116,724 8 0.4%

23,201 ,464 10 0.3%

33,291 ,984 6 0.5%

0.0%

28,339,476 9 0.4%

730,187,128 9.9%

City of Upland Property Tax Levies and Collections


%of Current % of Total Tax Fiscal Total Tax Current Tax Levy Delinquent Tax Total Tax Collections to Tax Year Levy Collections Collected Collections Collections Levy

01-02 10,229,703 9,094,261 88.90% 941,298 10,035,559 98.10%

02-03 10,663,633 9,860,324 92.47% 547,920 10,408,244 97.61%

03-04 11,898,347 11,444,069 96.18% 884,863 12,328,932 103.62%

04-05 13,375,052 12,265,636 91.71% 712,821 12,978,457 97.03%

05-06 14,787,477 12,813,064 86.65% 1,644,435 14,457,499 97.77%

06-07 17,395,209 16,350,430 93.99% 1,363,382 17,713,812 101.83%

07-08 19,331,660 17,195,429 88.95% 1,862,999 19,058,428 98.59%

08-09 20,388,445 18,240,311 89.46% 2,027,972 20,268,283 99.41%

09-10 20,363,864 18,416,861 90.44% 1,641,957 20,058,818 98.50%

10-11 19,708,455 17,960,851 91.13% 1,361,067 19,321,918 98.04%

Source: Finance Department, City of Upland Hdl, Coren & Cone

136

...... w -.l

Fiscal

Year

2005

2006

2007

2008

2009

2010

2011

Lease Revenue

Bonds

2,460

2,290

2,115

1,935

1,750

1,560

1,365

HUD Section 108

Loan

500

250

0

0

0

0

0

City of Upland Ratios of Outstanding Debt by Type,

Last Seven Fiscal Years (dollars in thousands, except per capita)

Other Governmental Activities Debt

Redevelopment Capital Bonds Leases

48,140 527

46,860 372

59,040 210

63,975 1,592

62,420 1,168

60,810 325

59,145 125

Percentage of Taxable

Assessed Value

0.11%

0.09%

0.10%

0.10%

0.09%

0.09%

0.09%

Per Capita

698.83

671.70

816.36

898.39

870.77

823.79

796.72

Source: Finance Department, City of Upland - Long Term Debt Schedule

Water Lease Revenue

Bonds

16,433

15,925

15,408

14,870

14,575

13,965

13,335

Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (a) See Schedule 13 for personal income and population data.


Business-type Activities

Total Primary

Government

68,060

65,697

76,773

82,372

79,913

76,660

73,970

Percentage

ofPersona1 Income

3.70%

3.44%

3.78%

3.93%

3.79%

3.67%

3.46%

Per Capita

921.27

886.61

1,021.34

1,096.29

1,065.01

1,007.28

971.93

City of Upland Direct and Overlapping Bond Debt

June 30, 2011

FY 2010-11 Assessed Valuation Redevelopment Incremental Valuation Adjusted Assessed Valuation

Overlapping Tax and Assessment Debt: Metropolitan Water District Chaffey Community College District Chaffey Union High School District Alta Lorna School District Central School District Ontario-Montclair School District Upland Unified School District Upland Unified School District CFD No. 99-1 Upland Unified School District CFD No. 01-1 City of Upland Community Facilities District No. 2003-1 City Of Upland Community Facilities District No. 2003-2, I.A. Nos. 1 & 2

Total Overlapping Tax and Assessment Debt

Direct and Overlapping General Fund Debt: San Bernardino County General Fund Obligations San Bernardino County Pension Obligations San Bernardino County Flood Control Dist. Gen Fund Obligations Chaffey Community College District Gen. Fund Obligations Upland Unified School District COP City of Upland General Fund Obligations

Total Direct and Overlapping General Fund Debt

Combined Total Debt

Ratios to FY 2010-11 Assessed Valuation: Total Overlapping Tax and Assessment Debt

Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($1 ,560,000) Combined Total Debt

(I) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation

bonds and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

138

$

$

6,841,349,114 972,585,035

5,868,764,079

% Applicable Debt at 6/30111 0.329% $ 749,034 10.845% 16,290,162 0.955% 890,633 0.608% 107,374 3.446% 773,634 1.958% 1,029,906

91.420% 83,908,185 100.000% 2,103,000 100.000% 2,493,000 100.000% 1,630,000 100.000% 41,055,000

$ 151,029,928

5.151% $ 33,446,731 5.151% 30,996,946 5.151% 5,746,198

10.845% 1,349,190 91.420% 982,765 100.000% 1,365,000

$ 73,886,830

$ 224,916,758 (!)

2.21%

0.02% 3.83%

-....., \0

2005

City of Upland Legal Debt Margin Information,

Last Seven Fiscal Years (dollars in thousands)

Fiscal Year 2006 2007 2008 2009 2010 2011

Debt limit $647,402,837 $723,349,925 $ 818,148,609 $900,487,972 $933,319,281 $ 930,115,752 $ 882,507,215

Total net debt applicable to limit

Legal debt margin

Total net debt applicable to the limit

as a percentage of debt limit

$0.00

15%

0.00%

$0.00 $0.00

15% 15%

0.00% 0.00%

$0.00 $0.00 $0.00 $0.00

15% 15% 15% 15%

0.00% 0.00% 0.00% 0.00%

Legal Debt Margin Calculation for Fiscal Year 2011

FY 2010-11 Assessed Valuation Redevelopment Incremental Valuation Adjusted Assessed Valuation

Debt limit (15% of assessed value) Debt applicable to limit:

General obligation bonds Less: Amount set aside for repayment of general obligation debt Total net debt applicable to limit

Legal debt margin

Note: Under state finance law, the city's outstanding general obligation debt should not exceed 15 percent of total assessed property value. However, the city has established a more conservative internal limit of no more than 5 percent.


$ 6,855,966,466 972,585,035

$ 5,883,381,431

$ 882,507,215

0 0

$0 $ 882,507,215

City of Upland Pledged Revenue Coverage

Last Seven Fiscal Years (amounts expressed in thousands)

Water Bonds Special Assessment Bonds

Water Less: Net Special

Fiscal Charges Operating Available Debt Service Assessment Debt Service Year and Other Expenses Revenue Principal Interest Coverage Collections Principal Interest Coverage

2005 17,417,098 9,348,237 8,068,861 535,000 857,972 5.79 356,869 280,000 56,043 1.06

2006 18,765,955 9,057,052 9,708,903 545,000 1,125,331 5.81 2,420,864 295,000 2,601,082 0.84

2007 19,239,969 10,468,695 8,771,274 555,000 826,844 6.35 2,598,917 460,000 2,614,098 0.85

2008 17,608,967 11,584,227 6,024,740 575,000 808,364 4.36 2,957,694 510,000 2,527,715 0.97

2009 15,613,892 14,338,698 1,275,194 595,000 547,607 1.12 3,257,487 235,000 2,566,050 1.16

..... 2010 15,295,069 13,902,795 1,392,274 610,000 776,562 1.00 3,087,810 295,000 2,556,075 1.08 .j::. 0 2011 22,582,581 14,164,896 8,417,685 630,000 735,443 6.16 3,337,663 365,000 2,542,803 1.15

Note: Water Charges and Other includes total revenues (including investment earnings). Operating Expenses are exclusive of depreciation.

The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.

Source: Finance Department, City of Upland

Calendar

Year Population

2005 73,876

2006 74,099

2007 75,169

2008 75,137

2009 75,035

2010 76,106

2011 76,106

City of Upland Demographic and Economic Statistics

Last Seven Calendar Years

Personal Per

Income Capita (thousands Personal School of dollars) Income Enrollment

1,841,433 24,926 12,294

1,909,828 25,774 12,287

2,032,119 27,034 12,285

2,094,143 27,871 N/A

2,105,857 28,065 14,307

2,089,719 27,458 N/A

2,138,350 28,097 14,223

Sources: Hdl, Coren & Cone, California Department of Education

Unemployment Rate

3.7%

3.4%

3.8%

5.4%

9.3%

9.9%

9.9%


141

Employer

San Antonio Community Hospital

Upland Unified School District

Kohl's Department Store

Insurance Agency Network

Wal Mart

Home Depot

Shield Security

City of Upland

Lewis Group

Target

Totals

City of Upland Principal Employers

Current Year

Employees

2,001

1,435

501

500

400

351

335

325

300

250

6,398

2011

Percentage of Total City

Rank Employment

1 7.9%

2 5.7%

3 2.0%

4 2.0%

5 1.6%

6 1.4%

7 1.3%

8 1.3%

9 1.2%

10 1.0%

25.2%

Note: Data on principal employers nine years ago is not available. In addition, data is not available to show at least 50% of employment.

Source: Upland Chamber of Commerce

142

City of Upland Full-time Equivalent City Government Employees by Function

Last Seven Fiscal Years

Full-time Equivalent Employees

Function 2005 2006 2007 2008 2009

General government 79 82 83 88 91

Public safety

Police

Officers 82 84 82 84 84

Civilians 57 56 58 59 41

Fire

Firefighters and officers 39 39 39 39 39

Civilians 5 6 6 8 8

Highways and streets

Engineering 8 8 6 6 6

Operations 27 25 27 28 28

Recreation 7 10 10 11 12

Water 18 18 18 20 21

Solid Waste Utility 1

Environmental Quality 5 5 5 6 6

Total 310 316 317 332 332

Source: Finance Department, City of Upland


143

2010 2011

91 95

78 85

36 40

38 42

13 10

7 7

20 20

12 11

23 23

1 1

6 5

325 339

Function

Fire

Stations

Police

Patrol Units

Motorcycles

Library

Facilities

Recreation

Buildings

Parks

Soccer fields (lighted)

Baseball fields (lighted)

Softball fields (lighted)

Public Works

Miles of City Streets

Miles of State Highways

Miles of City Alleys

Water

Miles of Water Mains

Sewer

Miles of Sewer Lines

City of Upland Capital Asset Statistics by Function


Fiscal Year

2005 2006 2007 2008

4 4 4 4

23 23 25 24

5 5 5 6

3 3 3 3

13 13 12 12

6 6 6 6

7 7 7 7

4 4 4 4

210.12 210.12 210.12 210.12

7.25 7.25 7.25 7.25

N/A NIA NIA NIA

240.00 240.00 240.00 240.00

228.00 228.00 228.00 228.00

Source: Various Departments, City of Upland


144

2009 2010 2011

4 4 5

25 25 24

6 6 6

3 3 3

12 12 13

6 6 6

7 7 8

4 4 3

208.9 208.9 208.9

6.7 6.7 6.7

37.5 37.5 37.5

240.26 240.26 240.26

228.00 228.00 228.00

City of Upland Operating Indicators by Function


Fiscal Year

2005 2006 2007 2008 2009 2010 2011

Function

General government

Building permits issued 1,058 2,294 2,000 1,500 1,181 605 380

Police

Physical arrests 6,238 6,555 6,386 5,433 3,032 5,317 4,476

Traffic collisions 145 N/A 599 750 473 610 755

Fire

Emergency responses 6,099 6,081 6,247 6,538 6,049 6,748 7,120

Public Works

Miles of street sweeping 9,216 9,216 9,216 9,216 9,216 9,216 10,488

Potholes repaired 1,000 1,040 2,140 2,200 1,363 2,714 2,184

Number of trees pruned 6,816 6,816 7,765 7,600 6,771 7,192 3,349

Parks and recreation

Community center admissions 8,514 7,962 11,778 10,395 9,431 9,102 8,653

Library

Volumes in collection 147,578 148,552 148,867 148,867 148,867 148,867 154,463

Current Periodical & Serial Subscriptions 266 267 267 267 267 267 267

Audio-visual items 7,873 7,933 7,773 7,773 7,773 7,773 8,341

Water

New meter installations 566 600 379 534 553 676 376

Average daily consumption 18,870 22,000 22,732 23,478 19,924 22,589 16,529

(thousands of gallons)

Number of linear feet of new water pipelines 1,475 1,500 5,016 13,585 1,385 0 7,380

Refuse collection

Refuse collected (tons per day) 196 186 168 176 145 138 137

Recyclables collected (tons per day) 88 91 77 70 72 68 68

Environmental Quality

Number of sewer inspections conducted 178 186 200 216 198 214 208 Number of permitted dischargers/active permits 192 187 187 187 201 202 197

Source: Various Departments, City of Upland,


145


146

city of upland comprehensive annual financial report year

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