Financial Report 06-30-2008CITY OF CUPERTINO, CALIFORNIA
COMPREHENSIVE AT~TNUAL
FINANCIAL REPORT
FOR FISCAL YEAR ENDED
JUNE 30, 2008
PREPARED BY:
CITY OF CUPERTINO
ADMINISTRATIVE SER`JICES DEPARTMENT
DAVID WOO
FINANCE DIRECTOR
INTR OD UCTOR Y SECTION
CITY OF CUPERTINO, CALIFORNIA
Comprehensive Annual Financial Report
For the Year Ended June 30, 2008
Table of Contents
Page
INTRODUCTORY SECTION
Table of Contents i
Letter of Transmittal iv
Organization Chart xiv
Commissions and Committees xv
City Council and Directory of City Officials xvi
Certificate of Award for Excellence in Financial Reporting xvii
FINANCIAL SECTION
Independent Auditor's Report on Basic Financial Statements 3
Management's Discussion and Analysis 4
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets 26
Statement of Activities 27
Fund Financial Statements:
Major Governmental Funds:
Balance Sheet 29
Reconciliation of the Governmental Fiends -Balance Sheet with the
Statement of Net Assets 30
Statement of Revenues, Expenditures, and Changes in Fund Balance 31
Reconciliation of the Net Change in Fund Balances Total Governmental
Funds with the Statement of Activities 32
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Budget and Actual:
General Fund 33
Major Proprietary Funds:
Statement of Net Assets 35
Statement of Revenue, Expenses, and Changes in Fund Net Assets 36
Statement of Cash Flows 37
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CITY OF CUPERTIi~TO, CALIFORNIA
Comprehensive Annual Financial Report
For the Year Ended June 30, 2008
Table of Contents
Page
FINANCIAL SECTION (Continued)
Fiduciary Funds:
Statement of Fiduciary Net Assets 39
Notes to Basic Financial Statements 41
Supplemental Information:
Major Governmental Funds Other Than the General Fund and Special Revenue Funds:
Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget
and Actual:
Public Facilities Corporation Debt Service Fund . 69
Non-major Governmental Funds:
Combining Balance Sheets 72
Combining Statements of Revenues, Expenditures, and Changes in Fund Balance 74
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual 76
Internal Service Funds:
Combining Statement of Net Assets 81
Combining Statements of Revenues, Expenses and Changes in Net Assets 82
Combining Statements of Cash Flows 83
Fiduciary Funds:
Combining Statement of Changes in Assets and Liabilities -All Agency Funds 85
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CITY OF CUPERTINO, CALIFORNIA
Comprehensive Annual Financial Report
For the Year Ended June 30, 2008
Table of Contents
Page
STATISTICAL SECTION
Financial Trends:
Net Assets by Component 90
Changes in Net Assets 92
Fund Balances of Governmental Funds 96
Changes in Fund Balance of Governmental Fiords 98
Revenue Capacity:
Assessed and Estimated Actual Value of Taxable Property 100
Property Tax Rates, All Overlapping Governments 101
Principal Property Taxpayers 102
Property Tax Levies and Collections 103
Debt Capacity:
Ratio of Outstanding Debt by Type 104
Computation of Direct and Overlapping Debt 105
Computation of Legal Bonded Debt Margin 106
Ratio of General Bonded Debt Outstanding 10"7
Demographic and Economic Information:
Demographic and Economic Statistics 108
Principal Employers 109
Operating Information:
Full-Time Equivalent City Government Employees by Function 1 10
Operating Indicators by Function/Program 1 1 1
Capital Asset Statistics by Function/Program. 112
COMMUNITY PROFILE
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CITY OF CUPERTINO
CITY HALL
10300 TORRE AVENUE CUPERTINO, CA 95014-3202
C V P E RT I N O (408) 777-CITY • Www.CUPERTINO.ORG
November 18, 2008
To the Citizens of Cupertino, Honorable Mayor,
Members of the City Council, and City Manager
It is our pleasure to submit the Comprehensive Annual Financial Report (CAFR) for the City of
Cupertino (the City) for the fiscal year ended June 30, 2008. The report is prepared in accordance
with generally accepted accounting principles (GAAP) as promulgated by the Governmental
Accounting Standards Board (GASB). The report presents City information on an entity-wide
basis and on a more detailed fund level basis. The fund-level reports emphasize the City's major
funds. A Management Discussion and Analysis (MDBzA) presents a comparative analysis of
current and prior year results, changes in finan~~ial position, a comparison of actual versus
budget, financial highlights, trends, and disclosure of any known significant events or decisions
that affect the financial condition of the City. This transmittal letter is designed to complement
the MDBLA, and should therefore be read in conjunction with it. The MDc&A is required
supplementary information and is found in the Financial Section of the CAFR.
The accuracy of the data presented and the completeness and fairness of the presentations,
including all disclosures, are the responsibility o:F the management of the City. To provide a
reasonable basis for making these representations, management has established a comprehensive
internal control framework that is designed to protect the City's assets and provide sufficient,
reliable information for the proper preparation of these financial statements. We believe the data
is accurate in all material respects and is presented in a manner that fairly sets forth the City's
financial position. Furthermore, we believe that all disclosures necessary to enable the reader to
gain an understanding of the City's financial activity have been included.
REPORTING ENTITY
This CAFR includes all component units and funds of the City. It reports all activities for which
the City is considered to be financially accountable. The general governmental funds support a
full range of services, including law enforcement, community development, recreation, public
works, public information, and general administrative activities. This financial report
incorporates data for the City of Cupertino, the Cupertino Public Facilities Corporation and the
Cupertino Redevelopment Agency.
The City operates under aCouncil-City Manager form of government- There are five council
members, including the Mayor, who serve staggered four-year terms. The City Council appoints
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the City Manager who is responsible for the dail:,~ administration of the City affairs. The City
Council also appoints the City Attorney and tree City Treasurer. All other employees are
appointed by the City Manager.
ECONOMIC CONDITIONS
The City of Cupertino is located in Santa Clara C~~unty at the southern end of the San Francisco
Bay Peninsula- The City is comprised of 13 square miles and is bordered by the cities of San
Jose, Saratoga, Sunnyvale, Santa Clara and Los Altos. Its residential population of 55,162
expands another 22,368 when including the daytime workforce.
Patduma. ~ Situated at the west end of Silicon Valley, Cupertino
has earned the reputation of a balanced community
vau.;° with a healthy climate for business and well
R,S; ~ maintained residential neighborhoods, community
M:u ' parks and public facilities- The excellent reputation of
vanes .ai~e.,.°nd Cuperti:no's schools has been a major attraction for
-o.tiand families wishing to settle in close proximity to jobs in
S°° -Alameda the Santa Clara Valley. The City recognizes the
Francisco -San Leandro
-liavward importance of quality school facilities and programs to
sao ~ all Cupertino residents, and works in partnership with
Mata°- ~ -Frsmont
r.~.:ir~ the schools in many programs affecting education and
i><.,,,,
youth. The City's median household income of
Mountain. MiiPitas
~,M, -sannyvaie $1 1 O,5 ] 8 was ranked Number Two on Money
CUPERTINO ~ -'°" Magazine's top ten list for highest income in 2006.
(' Cupertino is the corporate headquarters of almost 20
"`~~Y" comparnies including Apple and Symantec and houses
60 high-tech firms including key divisions of Hewlett-Packard. Other major employers include
DeAnza Community College, the Fremont Union High School and Cupertino Union School
Districts, NetManage, and B1ueCoat. Apple has purchased over 60 acres for a major expansion
north of Highway 280 along Pruneridge Avenue between Wolfe Road and Tantau Avenue. In
2007, 3.7 million sq. ft. of office space existed, with 60,000 additional square feet under
development. The average vacancy rate was a very low 2% for the region.
Retail space encompassed 3.6 million square feet in 2007, with 50,000 square feet under
development and 120 operating eating establishments. The 1.2 million sq. ft. Cupertino Square
Mall comprises most of the City's redevelopment project area. With two levels of enclosed
shopping, new parking structures, three existing anchor stores, anew 16-screen AMC theatre
complex, and a new Strike Cupertino bowling center, the City had great optimism that the
revitalization of the long struggling complex would get under way. Unfortunately, a 2006 voter
referendum reversed the permit for two residential developments near the mall and the
nationwide credit crisis hit the mall owners and potential tenants severely, resulting in a
bankruptcy filing by the owners in September 2008.
Sales taxes continued their three-year rise through October of 2007, increasing up to 11% year-
to-year up to that point. Then the mortgage crisis rind resulting economic slowdown began to take
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its toll on the second and third-ranked retail and restaurant sectors of the City. The leading tax
sector, business-to-business, however continued to strengthen throughout the year, led by Apple,
which introduced the hugely popular iYhone, new Mac notebooks, and iMac desktops running on
Intel chips. A major new technology solution provider, Insight, opened their western regional
sales office here in 2007 and has become one of City's top sales tax providers. As the credit crisis
has evolved into afull-Mown recession, effecting jobs, businesses, and overseas markets so vital
to Silicon Valley companies, the City forecasts worsening sales tax conditions in the upcoming
fiscal year that will begin to effect the business-to-business sector, including Apple and Insight,
and continue to drag retail and restaurant down further. Mervyn's, a national clothing retailer, has
declared bankruptcy and will shut down their local store this year.
'I~he following chart shows actual sales tax receipts over the past ten years.
Sales Tax Trend
$14.000
$1 z.ooo
$ I o,ooo
~s.ooo
$6.000
$4.000
~2A00
$O
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
The sub-prime mortgage and foreclosure dilemma has impacted Cupertino and a few other Bay
Area cities far less than other regions of California- The City's renowned school district has kept
residential properties in high demand and the local economy and low office vacancy rates have
kept commercial values up_ I-however, 2008-09 assessed valuation growth is slowing from its
previous years' pace, so the City expects lower property tax increases in 2009-10. It's possible
that the slowdown of overseas economies, diminishment of equity wealth, tough credit, and
rising unemployment has begin to affect even this market.
The 2006 voter referendum, difficult housing market, and tight credit will continue to punish the
residential construction market and begin to impact commercial developments in 2008-09.
Development-related fees for the City will continue their recent declines into 2008-09. Fee
revenues will depend on major commercial or residential projects approved in recent years, but
yet to be built, such as the 24,455 sq. ft_ retail expansion of Cupertino Village, the 10,582 sq_ ft.
retail building at Tantau Avenue and Stevens Creek Blvd., the 51,000 sy. ft. mixed-use building
and 122-room hotel at the Oaks Shopping Center, the Rose Bowl mixed-use project, and the 1 16-
unit apartment complex at Villa Serra.
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The California Legislature passed the state's 2008-09 budget a record three months late. Up to $1
million in property taxes, sales taxes, vehicle license fees, and the Citizen Option for Public
Safety grant, at various times, were threatened to be borrowed or outright taken by the state from
Cupertino in order to balance the state budget. The state had already deferred five months of
gasoline taxes to cities during the second half of 2007-08 to solve their mid-year budget shortfall.
Eventually, a small amount of Redevelopment Agency tax increment and state mandated cost
reimbursements were taken for 2008-09. However, because California did nothing to solve their
structural deficit of revenues versus expenditures and because of diminishing income and sales
tax receipts coming into state coffers due to the recession, foreclosures, and plunging real estate
values in the central and southern portions of the state, analysts have already forecasted a large
shortfall by this mid-year and a worsening deficit in 2009-10. The Legislature will surely again
consider additional cuts or borrowings from local. governments. Moreover because of the late
budget passage, the state was forced to delay and then issue revenue anticipation notes in the
midst of the credit freeze and difficult municipal bend market. They successfully issued a portion
of the needed notes, albeit at a high interest cost, but they will need to float more notes to meet
cash flow needs until spring 2009_
City voters must pass a modern telecommunication utility user tax (UUT) ordinance in the
November 2009 election in order to preserve approximately $O.5 million per year in ongoing
UUT revenues from wireless communications and up to $1.5 million in past such revenues. The
City is collecting the tax under an outdated ordinance written in the days of traditional landline
service- An attempt to bring such a measure to voters in 2007 met stiff community opposition
and the item did not make it to the ballot. The revenues support general City services such as
parks, streets, and public safety.
Depending on the degree of the revenue losses, the City would have to consider expenditure cuts
if normal expenditure budget savings are not enoup~h to maintain reserve policy levels in the five-
year budget. These downturns demonstrate the need for diversification of the City's revenue
base and along-term balance of revenues and expenditures as described in the City's Fiscal
Strategic Plan. The City needs to find other reverues to mitigate the fluctuating nature of sales
taxes, hotel taxes, user fees, and state borrowings of local taxes in times of budget distress. It
needs to reduce the concentration of sales taxes among its top companies and top economic
sector, the volatile business-to-business area. R<:cent passage of legislation raising the City's
property tax share and the opening of a western region sales office of a major technology solution
provider were early successes of the strategic plan, but many other tax or fee initiatives in the
plan have incurred opposition to their implementation. However, the City's Economic
Development department attempts to generate revenues by recruiting and retaining retail,
facilitating development, branding and outreachin;~ new business, revising policies, coordinating
with regional organizations, and promoting economic vitality, as listed in the major initiatives
section below.
The City's unfunded retiree medical liability will be disclosed in the City's financial statements
starting in fiscal 2008-09. The City must expense the annual installment to payoff this long-term
liability. An updated valuation of these costs was obtained in 2007-08 disclosing a $22 million
unfunded liability with an annual expense starting at $2.5 million if the City continues to fund
the benefits on apay-as-you-go basis.
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The City has been setting aside monies annually for this purpose since 2004 and has accumulated
$6 million of such assets in a separate City fund ley the end of 2007-08. The City has budgeted
the placing of these assets in an irrevocable trust during 2008-09 to order reduce the unfunded
liability and annual cost.
MAJOR INITIATIVES
1. Ensure Land Use is Compatible with Community Character
• Examined "Main Street Cupertino": a mixed-use project proposal and environmental
study of 17.4 acre site at Stevens Creek and Finch to include lifestyle retail, hotel and
fitness club, office space and senior/age restricted housing.
• Initiated a limited review of the R1 Ordinance relating to-the 1 s`/2°d floor ratio to achieve
greater architectural diversity.
• Conducted a review of Green Building Standards, including the implementation of a
voluntary checklist for all residential projects.
• Worked with Sand Hill Properties to develop the South Vallco Master Plan.
2. Protect and Promote our Public Safety
• Crimes against persons decreased 4%. Property crimes increased 3% due to a significant
rise in auto burglaries. Residential burglaries rose in the earlier part of the year, but with a
number of arrests, those crimes decreased significantly during the latter part. The
Sheriffs Office responded to 10,553 calls for service, an increase of 107 from the
previous year with an average response time: of 5.1 minutes for first priority calls.
• Driving under the influence patrols and seat belt enforcement was stepped up, funded by
state grants.
• The Sheriff and Public Works staff will implement a $0.3 million plan to improve traffic
safety around schools.
• Two school resource officers continued their involvement in youth programs aimed at
education, prevention, and intervention.
• Emphasized emergency response and preparedness by conducting monthly workshops,
initiating an emergency supply program fox neighborhood block leaders, and holding two
emergency operation center exercises among many other activities.
3. Ensure the Financial Health of the Community
• Extensive facilitation of 20 new retail lease;>.
• Created Cupertino Restaurant Association and developed dining brochure.
• Held over 300 meetings/contacts with the real estate industry regarding Cupertino
properties.
• Advised on over 1 O retail expansion projects and tenant build-outs.
• Created new economic development brochure and marketing package. Produced
Cupertino Commercial News with a circulation of over 700.
• Amended temporary sign ordinance to encourage well-designed, pedestrian oriented
signage.
viii
Worked with the Silicon Valley Econornic Development Alliance, NOVA Connect
Center, Cupertino Rotary, and Chamber of Commerce.
Produced 136 new business welcome packages and helped numerous businesses with
specific needs or issues.
4. Enhance Services
• Added ability to schedule building inspections, check plan review status, renew business
licenses, and make bill payments through the City website.
• Implemented a new code enforcement complaint tracking system, Citizenserve.
• Completed the moving of all historical resolutions, ordinances, and minutes into an
online database.
5. Foster a Sense of Community
• Numerous community events were held throughout the year including the Fourth of July
celebrations, Shakespeare in the Park, the Summer Concert Series, the Diwali Festival,
the Cherry Blossom Festival, the Cupertino Jubilee Celebrations, the Citywide Garage
Sale, the Lunar New Year Unity Festival and Parade, the Organization of Special Needs
Families Festival, and the Health and Safet}~ Fair.
• More than 200 residents participated in the Cupertino Neighborhood Block Leader
program.
6. Pursue Infrastructure Improvements
• The new Mary Avenue Bicycle Footbridge will be completed in early 2009.
• The new Stevens Creek Corridor Park will open in summer 2009.
• Will acquire the Sterling/Barnhart park parcel in late 2008.
ACCOUNTING AND BUDGETARY CONTROL
In developing and evaluating the City's accounrting system, consideration is given to the
adequacy of internal accounting controls. The City's controls are designed to provide reasonable,
but not absolute, assurance regarding the safeguarding of assets against losses from unauthorized
use or disposition and the reliability of financial records for preparing financial statements and
maintaining accountability of assets. The concept of reasonable assurance recognizes that the
costs of a control should not exceed the benefits likely to be derived and that the evaluation of
costs and benefits requires estimates and judgments by management.
The City's budget is a detailed operating plan that identifies estimated costs and results in
relation to estimated revenues. The budget includes 1) the programs, projects, services and
activities to be provided during the fiscal year; 2) estimated revenue available to finance the
operating plan; and 3) the estimated spending requirements of the operating plan. The budget
represents a process through which policy decisions are made, implemented and controlled.
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Changes in Financial Reporting
A new GASB pronouncement related to defined t~enefit pension disclosures is reflected in Note
12 to the Basic Financial Statements.
Cash Management
The City maintains a cash and investment pool for all City funds. The City Treasurer invests the
City's funds according to state code and the investment policy adopted by the City Council. The
objectives of the policy, in order of priority, are sa=fety, liquidity, and yield. The policy addresses
soundness of financial institutions and the type;: of investments permitted by the California
government code.
The City's investments consists of U.S. Treasury and Federal agency obligations, FDIC insured
certificates of deposit, money market funds consisting of Treasuries, Federal agency notes, and
repurchase agreements, and the State Treasurer's Local Agency Investment Fund. Year-end cash
and investments had a market and book value of $63.9 million, with the balance up $4.3 million
from the previous year as cash was stockpiled and budgeted for major capital outlays in 2008-09.
The average portfolio yield nosedived to 2.94% at June 30, 2008 compared to 4.88% a year ago.
Rates decreased during the year, as the Federal Reserve lowered rates and pumped liquidity into
the banking system in order to combat the mortgage and credit crisis. Because of the growing
problems in financial markets, City managemer~t shifted the portfolio's weighting to more
conservative Treasury bonds in order to reduce credit risk. See Notes 2 and 14 to the Basic
Financial Statements for more information.
Risk Management
Risk management issues factor substantially in the City's long term financial planning. Whether
through risk pools or self-insurance programs, the City strives to maintain sufficient assets to pay
expected losses, maintain funding stability to avoid substantial fluctuation in annual expense, and
monitor risk management policies and claim administration to mitigate future losses.
The City maintains a program of commercial insurance combined with self-insurance for
substantially all of its governmental operations except for major construction projects and
contractor-supplied services. In such circumstances, insurance to protect the City is provided by
each contractor.
INDEPENDEh~T AUDIT
City ordinance requires an annual audit of the financial records by an independent certified
public accounting firm selected by the City Council and its audit committee. Maze and
Associates audited the City's Basic Financial Statements, and their opinion thereon is included in
the Financial Section of this report.
~:
CERTIFICATE OF ACHIEVEMENT
The Government Finance Officers Association of tlhe United States and Canada (GFOA) awarded
a Certificate of Achievement for Excellence in Fi~iancial Reporting to the City of Cupertino for
its CAFR for the year ended June 30, 2007 In order to be awarded a Certificate of Achievement,
a government unit must publish an easily readable and efficiently organized CAFR. This report
must satisfy both GAAP and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
report continues to meet the Certificate of Achievement Program's requirements and we are
submitting it to the GFOA to determine its eligibility for another certificate.
Respectfully submitted,
G
David Woo
Finance Director
xi
ACI~TOWLEDGMENTS
I would like to express my appreciation to the City employees, City Manager, and the members
of the City Council for their interest in conducting the financial operations of the City in a
responsible manner. Special thanks go to the Finance staff -Tina Mao, Yulia Rumalean, and
Richard Wong -for their continued support and dedication. Special recognition goes to Jennifer
Chang, Dorothy Steenfott, and David Woo for their efforts in the preparation and production of
this report-
Reviewed by,
C.E'
Carol A. Atwood
Director of Administrative Services
xii
CITY OF CUPERTINO, CALIFORNIA
Fiscal Year 2007/08
CITY COUNCIL
;- = = ~ - -
~- ' ~
Dolly Sandoval Orrin Mahoney 1~1xnk SUn[ofU
Mug o~- Vrce Ma~'or Cou~~ciLncmbc~r
DIRECTORY OF CITY OFFICIALS
David W. Knapp -City Manager
Charles T. Kilian -City Attorney
Carol Atwood -Director of Administrative Services
Mark Linder -Director of Parks and Recreation
Steve Piasecki -Director of Community Development
Ralph Qualls -Director of Public Works
Xvt
Certific~~te of
Achieve;ment
for Excellence
in Fina~r~cial
Rep oriting
Presented-to
City of Cupertino
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2007
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.
~ `"'~" ~ President
•~
~~ ~~~~
Executive Director
xvii
Citizens
of Cupertino
City
Council
CITY OF
Citizen Adivisory ' ~'
Commissions and u
Committees C O P E RT I N O
City Attorney Ciry Manager Ciry Treasurer
Charles Kilian David Knapp Carol Atwood
Public & Environmental
Affairs Dhector
Rick Kitson
DireU Or of Director of Director of Direc tor of
Administrat
4 n._i ive Services C
~.....i ommunity Developmem Parks and Recreation Public
c.-..-n:..--i.: ~~..i. r:.~.- n.~_t Works
n...n.
C•
IT Manager Ciry Clerk Building Official RecreaVon Supervisor Recreation Supervise CiryArchitea Assistant Directs
Mariyab $erratos Kimberly Smith Greg Casteel Sports Center Senior Center Terry Grane of Public Works- Eng.
Don McCartlry Julia Lamy Glenn Goepfert
Finance Dvecta Human Remurces City Planner RecreaGOn Supervisor Recreation Supervise Public Works Environmental
David Woo Director Gary Chao Youth Programs FacilitieslCommuniry Events Project Manager ProgramsManagtt
Sandy Abe Christine Hanel Tom Walters Carmen Lynaugh Cheri Donnelly
Code Outreach Economic Development/ Assistant Director Senior Civil Engineer
Enforcement Programs RDA Nanager of Public Waks -Maim David Stillman
Kelly Kline Roger Lee
Parks Facilities SUee6 Public Works
Supervisor Supervisor Supervise Supervise
John Bisely Chris On Diane Mahan Ron Silva
CITY OF CUPERTINO, CALIFORNIA
Fiscal Year 2007/08
COMMISSIONS ANI) COMMITTEES
AUDIT COMMITTEE PARKS 8c RECREATION COMMISSION
Myoung Kang
Orrin Mahoney
Stanley Stemkoski
Garrett Wade
Gilbert Wong
Jeanne Bradford
David Greenstein
David Lee
Darcy Paul
Debbie Stephens Stauffer
HOUSING COMMISSION
Sarah Hathaway-Feit
Radha Kulkarni
Frances Seward
Winnie Lee
FINE ARTS COMMISSION
Nancy Canter
KC Chandratreya
Michael Harkin
Robert Harrison
Jessi Kaur
PUBLIC SAFETY COMMISSION
Charles Caldwell
Nina Daruwalla
Tamara Pow
TEEN COMMISSION
Raghav Aggarwal Sanjana Ramachandran
Sruthi Damodar Nirali Shah
Ojas Goyal Anandi Somasundaram
Anusha Koganti Pranati Sreepathy
Pooja Kundargi Stephanie Szeto
Nikhil Menon Mishika Vora
Soumya Murag
BICYCLE PEDESTRIAN COMMISSION
Donald Armstrong
May Koski
Geoffrey Paulsen
Joseph Walton
James Wiant
~~ENIOR COMMISSION
Ralph Otte
Christine Kennedy Pierce
Mavis Smith
Thycaud Subramonian
Linda Walker
LIBRARY COMMISSION
Ram Gopal
Ronald Miller
Janet Riddell
Katherine Staney
Susanna Tsai
PLANNING COMMISSION
F'aul Brophy
Lisa Giefer
David Kaneda
Marty Miller
Jessica Rose
ECONOMIC DEVELOPMENT
F3ob Adams
Carol Atwood
F'aul Brophy
Mike Foulkes
Shawna Holmes
Kelly Kline
David Knapp
Orrin Mahoney
Steve Piasecki
Ralph Qualls
Dolly Sandoval
Scott Stauffer
TECHNOLOGY INFORMATION cot
COMMUNICATIONS COMMISSION
~'Villiam Allen
Peter Friedland
E'~vinash Gadre
~'Vallace Iimura
~~ndrew Radle
xv
FINANCIAL SECTION
MAZE 8c
ASSOC/AYES
INDEPENDENT Ai7DITOR'S REPORT ON gCCOUNTANCY CORPORAT/ON
BASIC FINANCIAL STATEMENTS 3478 BusKirK Ave. -Suite 215
To the City Council P/easant Hi//, Ca/ifornia 94523
(925) 930-0902 -FAX (925) 930-0135
City of Cupertino, Califon~ia maze G~mazeassociates_com
www mazeassociates.com
We have audited the basic financial statements of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City of Cupertino as of and for the year ended June 30, 2008, which
collectively comprise the City's basic financial statements as listed in the Table of Contents. These basic financial
statements are the responsibility of the City's management. Our responsibility is to express an opinion on these basic
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in the United States of America and
generally accepted government audit standards issued by the Comptroller General of the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are
free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the basic 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 Cupertino at June 30, 2008 and the results of its operations and the cash flows of its proprietary
fund types thereof and the respective budgetary comparisons lie;ted as part of the basic financial statements for the year then
ended, in conformity with generally accepted accounting principles in the United States of America.
In accordance with Government Auditing Standards, we haves also issued our report dated September 19, 2008 on our
consideration of the City of Cupertino's internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on the interval control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results
of our audit.
Management's Discussion and Analysis is required by the Government Accounting Standards Board, but is not part of the
basic component unit financial statements. We have applied certain limited procedures to this information, principally
inquiries of management regarding the methods of measw-ement and presentation of this information, but we did not audit
this information and we express no opinion on it.
Our audit was made for the purpose of foaming an opinion on the basic financial statemments taken as a whole. The
supplemental section listed in the Table of Contents are presented for purposes of additional analysis and are not a
required part of the basic financial statements of the City of Cupertino. Such information has been subjected to the
auditing procedures applied in our 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 N hole.
The introductory section and statistical section listed in the Table of Contents were not audited by us, and we do not express
an opinion on these information.
September 19, 2008 ~~ ~~~~~'
A Professions/ ~~orporation
MANAGEMENT'S DISCUSSION AND ANALYSIS
This is the Finance Department's report on the City of Cupertino's financial performance for the year.
Please read it in conjunction with the accompanying Transmittal Letter and Basic Financial Statements.
2007-08 FINANCIAL HIGHLIGHTS
Highlights of the year include the following:
• The City's total net assets increased $10 million during fiscal 2007-08, ending the year at $146.3
million.
• Total City revenues, including program and gener~~l revenues, were $57 million, while total expenses
were $47 million in fiscal 2007-08.
• Net assets in governmental activities were $138.34 million, while net assets in business-type activities
were $7.93 million.
• Governmental revenues were $49.6 million, up from $49 million in 2006-07.
• Governmental expenses were $41.1 million in 200"'-08, up from $38.9 million in the prior year.
• Revenues from business-type activities were $7.4 million in current year, down from $8.4 million in
the prior year.
• Expenses of business-type activities were $5.9 million in current year, down from $7.3 million in the
prior year.
• General Fund revenues of $41 37 million represented a decrease of $0.75 million from the prior year;
General Fund expenditures increased from $28.49 million to $31.01 million in 2007-08.
• Actual expenditures in the General Fund were $2.95 million less than the final 2007-08 budget;
however revenues fell short of the final budget by 9~ 1 .12 million.
• With revenues exceeding expenditures by $10.36 million and net transfers out of $17.04 million, the
General Fund balance declined $6.68 million to enci the year at $19.67 million.
OVERVIEW OF THE FINANCIAL STATEMENTS
The Basic Financial Statements comprise the City-wide Financial Statements and the Fund Financial
Statements; these two sets of financial statements provide two different views of the City's financial
activities and position.
The City-Wide Financial Statements provide along-term view of the City's activities as a whole, and
comprise the Statement of Net Assets and the Statement of Activities. These statements are prepared on
the accrual basis, which means they measure the flow of all economic resources of the City as a whole.
The accrual basis of accounting is similar to the accounting used by most private sector companies. The
Statement of Net Assets provides information about the financial position of the City as a whole,
including all its capital assets and long-term liabilities. The Statement of Activities provides information
about all the City's revenues and all its expenses, also on the full accrual basis, with the emphasis on
measuring net revenues or expenses for each of the Cit_/'s programs. The Statement of Activities explains
in detail the change in Net Assets for the year. Over time, increases or decreases in net assets can be
indicators of whether the financial condition of the Cit}' is improving or deteriorating.
All of the City's activities are grouped into Governmental activities and Business-type activities, as
explained below. The Statement of Net Assets and the Statement of Activities provide a summary of
these two types of activities for the City as a whole.
• Governmental activities-Most of the City's b~isic services are considered to be governmental
activities, including public works, law enforcement, community development, recreation, public
information, and general administration. These services are supported by general City revenues such
as property, sales and other taxes, and by specitic program revenues such as developer fees and
grants.
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The City's governmental activities include the a~~tivities of a separate legal entity, the Cupertino
Redevelopment Agency, because the City is considered to be financially accountable for the Agency.
The Cupertino Public Facilities Corporation, from which the City leases its major facilities through
the payment of long-term debt, is also included as z~ component unit.
Business-type activities-All the City's enterprises are reported here, including solid waste
management and some of the City's recreational operations. .Unlike governmental services, these
services are supported by charges paid by users based on the amount of the service they use.
The Fund Financial Statements report the City's operations in more detail than the government-wide
statements and focus primarily on the short-term activities of the City's General Fund and other major
funds. The Fund Financial Statements measure only current revenues, expenditures, assets, and
liabilities; they exclude long-term assets and liabilities. Because these statements focus on the near-term
inflows and outflows of spendable resources, such information may be useful in evaluating near-term
financing requirements.
The Fund Financial Statements provide detailed information about each of the City's most significant
funds, called major funds. Cupertino's Fund Financial Statements include governmental, enterprise and
internal service funds as discussed below. Each major fund is presented individually, with all non-major
funds summarized and presented only in a single column. Subordinate schedules, which follow the Notes
to the Financial Statements, present the detail of these non-major funds. Major funds present the
significant activities of the City for the year, and may change from year to year as a result of changes in
the pattern of City's activities and public interest. For example, the Capital Improvement Projects Fund
may or may not appear as a major fund depending on the volume of construction activity in a certain year.
Governmental Fund Financial Statements are prepared on the modified accrual basis, which means they
measure only current financial resources and uses. They present essentially the same functions reported
as governmental activities in the government-wide financial statements. However, capital assets and
other long-lived assets, along with long-term liabilities, are not presented in the Governmental Fund
Financial Statements. Reconciliations are provided to facilitate a comparison between governmental
funds and governmental activities statements to allow a better understanding of the long-term impact of
the government's near-term financial decisions.
Enterprise and Internal Service Fund financial staterents are prepared on the full accrual basis, as in
the past, and include all their assets and liabilities, current and long-term. Enterprise funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements, and in more detail in the fund financial statements.
Since the City's Internal Service Funds provide goods and services only to the City's governmental and
business-type activities, their activities are reported only in total at the fund level. Internal Service Funds
may not be major funds because their revenues are derived from other City funds. These revenues are
eliminated in the City-wide financial statements and any related profits or losses are returned to the
activities which created them, along with any residual net assets of the Internal Service Funds. For this
City, internal service activities predominantly benefit p~overnmental rather than business-type functions,
and are therefore included within governmental activities in the government-wide financial statements.
Comparisons of budget and actual financial information are required in the Basic Financial Statements
only for the General Fund and other major funds that: are Special Revenue Funds. Since none of the
City's Special Revenue Funds are considered major funds, budgetary comparison statements for these
funds are included in this document as supplemental statements only.
Fiduciary Fund statements provide financial information about the activity of an assessment district.
The City acts strictly as an agent for the district holding, amounts collected from property owners, prior to
transferring the money to the districts' bond trustees. The City's fiduciary activities are reported in the
separate Statement of Fiduciary Net Assets and the Al;ency Funds Statement of Changes in Assets and
Liabilities. These activities are excluded from the C'ity's other financial statements because the City
cannot use these assets to finance its own operations.
The Notes to Basic Financial Statements provide additional detail that is essential to a full
understanding of the information provided in the goveniment-wide and fund financial statements.
CITY-WIDE FINANCIAL ACTIVITIES
This analysis focuses on the net assets and changes ire net assets of the City's Governmental Activities
(Tables 1, 2 and 3) and Business-Type Activities (Tables 4, 5 and 6) presented in the City-wide Statement
of Net Assets and Statement of Activities that follow.
Governmental Activities
Table 1
Governmental Net Assets at June 30
(in Millions)
Governmental Activities
2008 2007
Cash and investments $ 55.1 $ 51.7
Other assets 9.5 6.9
Capital assets 133.6 130.1
Total assets 198.2 188.7
Long-term debt 48.4 49.7
Other liabilities 11.5 10.1
Total liabilities 59.9 59.8
Net assets:
Invested in capital assets, net of debt 85.2 80.3
Restricted 9.9 93
Unrestricted 43.2 39.2
Total net assets
The City's net assets from governmental activities increased $9.5 million or 7% from the prior year. This
increase is detailed in the Change in Net Assets, Table 2, and is also explained below:
• $3.4 million of the net asset increase went into the City's investment portfolio.
• Other assets increased $2.6 million because of grants due from the Santa Clara Valley
Transportation Authority (VTA) for the Mary Ewenue Bicycle Footbridge project.
• Capital assets increased by a net $3.5 million. $1.3 million in street re-pavement and curb and
gutter work was added to infrastructure. $4.8 million in Mary Avenue Bicycle Footbridge and
$1.4 million in Stevens Creek Corridor Park work were added to construction in progress. $1.6
million of facility and park improvements were built. $0.4 million in business-type capital assets
from Blackberry Farm were transferred to governmental activities. Depreciation of buildings,
infrastructure, equipment, and improvements was $6 million.
• Principal payments on the 2002 certificates of participation totaled $1 3 million.
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• Capital assets net of related debt increased $4.9 million primarily due to the $3.5 million capital
asset increase and $1 .3 million debt decrease.
• Restricted net assets increased $0.6 million representing growth in funds dedicated to street
projects.
• Unrestricted net assets is the part of net assets that can be used to finance day-to-day operations
or reserved for certain purposes by the City Council, without constraints established by debt
covenants or other legal requirements. $43.2 million of unrestricted net assets existed at June 30,
2008, $4 million higher than a year ago. "This rise results from a $9.5 million increase in net
assets, described in 'T'able 2, less the $4.9 million in capital assets net of related debt and $0.6
million in restricted net. asset changes described above.
• The increase to unrestricted net assets is committed in the City's future budgets to the Sterling-
Barnhart park acquisition, the Mary Avenue Bicycle Footbridge completion, the Stevens Creek
Corridor Park completion, more recreational facility improvements, and forthcoming retiree
health costs.
Sources of Revenue, Governmental Activities, 2007-08
Other Taxes
3%
Franchise 7
5%
Utility User Tax
6%
Operating
~ntributions 8c
Grants
5%
Transient Occupancy
Tax
5%
Sale
2
Capital Grants Fc
Contributions
11%
~perty Tax
22%
As the Sources of Revenue chart above shows, sales tax increased its lead as the largest category of
governmental revenue, rising from 23% of receipts last year to 28% this year. Reasons for sales tax
growth are discussed under the Revenues and Gcncrcrl Funcl sections of this MDBcA. Property tax is the
City's second largest revenue generator and is the City's leading own-source revenue, since sales taxes
are collected and allocated to the City by the state. Capital grants 8c contributions increased from 7% to
1 1 % of revenues this year due to VTA grants for the Mary Avenue Bicycle Footbridge and Proposition
1 B bond money for pavement management projects.
7
Inter-
governmental 1 nvestment
I% Earnings Charges for
3°~~ Services
Functional Expenses, Governmental Activities, 2007-08
Administration
I n[eresl 4%
$%
Public
Works
40%.
Law
icemen[
ly%
Public
Information
3%
4dministrative Services
10%
"!'he Functional Expenses chart above includes only current year expenses, which are discussed in detail
below- Percentages are consistent with last year. The chart does not include capital outlays or principal
payments on debt. Capital outlays are instead shown as additions to capital assets and principal payments
are reported as long-term liability reductions.
The Statement of Activities presents program revenues, expenses, and general revenues. These are all
elements of the Changes in C:overnmental Net Assets summarized below.
ni
services
Community 9,/
t)evelnpmcnl
10%
Table 2
Change in Governmental Net Assets
(in Millions)
Governmental Activities
2007-OS 2006-07
Expenses
Administration $ I.6 $1 .7
Law Enforcement 7.7 7.1
Public Information 1.2 1.2
Administrative Services 3.9 3.9
Recreation Services 3.8 2.5
Community Development 4.1 4. 1
Public Works 16.6 16.2
Interest on long-term debt 2.2 2.2
Total expenses 41.1 38.9
Revenues
Program revenues:
Charges for services 5.3 6.2
Operating contributions and grants 2.4 3.0
Capital grants and contributions 5.7 3.5
Total program revenues 13.4 12.7
General revenues:
Taxes:
Property tax 7.1 6.7
Property tax in-lieu of motor vehicle fee 3.9 3.6
Sales tax 13.2 1 1.3
Transient occupancy tax 2.7 2.5
Utility user tax 3.2 3.0
Franchise tax 2.5 2.5
Other taxes 1 .7 2.7
Intergovernmental, unrestricted=
Motor vehicle license fee 0.3 0.4
Investment earnings 1 .5 1 .8
Miscellaneous O. 1 0.3
Gain on the sale of capital assets --- 1 .5
Total general revenues 36.2 36.3
Total revenues 49.6 49.0
Excess of revenues over expenses, before transfers 8.5 10.1
Transfer-in of non-capital assets 0.6 O.5
Transfer-in of capital assets 0.4
Increase in net assets $2.~ $10.6
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Revenues
Table 2 shows that total governmental revenues rose only $0.6 million or 1% over last year, finishing at
$49.6 million.
Growth resulted from more VTA reimbursements for the Mary Avenue Bicycle Footbridge ($1.3 million
additional capital grants), new state bond proceeds for streets ($0.9 million more capital contributions), a
new regional sales office for a national business technology company and strong sales from the City's
leading tax provider (both causing a sales tax jump of $1 .9 million), plus sustained growth in assessed
value ($0.7 million rise in property taxes including those in-lieu of motor vehicle fees) reflecting the
desirability of living in a school district that consistently scores high on state achievement tests. The
growth was mostly offset by large declines in property sale gains ($1.5 million drop), construction taxes
(other taxes down $1 million), planning and building hermit fees ($0.9 million shrinkage in charges for
services), gasoline sales tax, storm drain/Calabazas Creek project aid from the regional water district
(both making operating contributions lower by $0.6 million), and investment earnings (down $03
million).
The results reflect a weak residential building market, resulting from the current housing slump and a
2006 voter referendum that cancelled two housing developments. Construction taxes were lower in 2007-
08 due to the lack of new commercial projects similar to the scope of the new AMC theatres and Whole
Foods Market built in 2006-07. A one-year suspension of gasoline sales tax remittances to cities occurred
in 2007-08, by state statute- No surplus property sales ~~ccurred after 2006-07, as budgeted. The property
tax in lieu of motor vehicle license fees results from <r 2005 state law that provides additional property
taxes to cities at the expense of schools, to make up for the loss of revenue due to the lower motor vehicle
license fee rate. The state then backfills the schools.
Expenses
City-wide governmental expenses, representing non-capitalized spending, grew $2.2 million or 6% over
2006-07. Increases occurred in Recreation Services ($1.3 million), Law Enforcement ($0.6 million), and
Public Works ($0.4 million), with Administration declining $O.1 million.
This was the first year of the new three-year agreements with the City's two bargaining units and one
management group. All groups received a 4% wage increase for the year. An enhanced defined benefit
pension plan went into effect for all employees retiring on or after December 22, 2007 with the benefit
rising from 2% at age 55 to 2.7% at 55. The City's cost for funding this improvement, sponsored by the
California Public Employees Retirement System (CaIPERS) rose 2.8% in 2007-08. However, employees
are paying 1 % of this increase out of their salary.
Two new sheriff deputies were added in the middle of 2006-07, so 2007-08 represented the first full year
of the enhanced public safety coverage.
Recreation Services rose because Blackberry Farm's picnic grounds, swimming pool, retreat center, and
Blue Pheasant Restaurant operations changed from business-type functions to governmental activities.
The City's Senior Center also went from a business-type activity to governmental. Because of the
changing priorities and programs of these entities, they no longer generated enough revenues to sustain
more than 50% of the operations.
City-wide governmental revenues in excess of expenditures fell to $8.5 million compared to the $10.1
million of last year, due to relatively flat revenues acid rising expenses. After $0.6 million in transfers
from business-type activities, for reimbursement of past waste cleanup costs, and cone-time $0.4 million
transfer of Blackberry Farm and Senior Center business-type capital assets to governmental activities,
overall net assets of governmental activities increased $9.5 million, compared to $10.6 million during
2006-07. The City's intense capital improvement program of the past few years, led by the Mary Avenue
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Footbridge, Stevens Creek Corridor Park, and street r~:-surfacing projects, along with sales tax growth,
has increased net assets significantly.
Net Cost and Revenues
Table 3 presents the net cost or revenue of the City's programs. Net cost is defined as total program cost
less the revenues generated by those specific activities; it reflects the financial burden placed on the City's
general taxpayers by each function. Net revenue repre~:ents activities that generate revenues in excess of
direct costs. General taxpayers are not supporting that function; instead the net revenue generated covers
overhead provided by other City functions.
Table 3
Net Cost (Revenue) of Governmental Activities
(in Millions)
Net Cost (Reven ue)
Of Activities
2007-08 2006-07
Administration $1 .6 $1 .6
Law Enforcement 6.7 6.0
Public Information 1.2 1.2
Administrative Services 3.9 3.9
Recreation Services 3.0 2.3
Community Development (O.1) (1.2)
Public Works 9.2 10.2
Interest on Long-term Debt 22 22
Total Governmental Activities $27.7 $ 2Sr.2
• Administration includes activities of the City Council, Commissions, City Manager and City
Attorney. Administrative Services includes Finance, Human Resources, Information Technology,
City Clerk, Code Enforcement and Emergence Preparedness. Net cost was unchanged between
the two years.
• The City's $0.6 million cost increase for Law Enforcement provided by the Santa Clara County
Sheriff was deepened by a $0.2 million decresise in citations and fines, but mitigated by a $O.1
million retroactive recognition of a Citizen Option for Public Safety grant. Two sheriff deputies
were added for more school and overnight coverage in the middle of 2006-07.
• Public Works expenses include Transportation, Engineering, Environmental Programs, and the
maintenance and improvement of the City's :streets, parks, and facilities. Offsetting revenues
include federal, state, and local grants, gasoline taxes, environmental fees, facility rental, damage
restitutions, and storm drain fees totaling $7.4 million, leaving $9.2 million as the 2007-08 net
cost of public works- Bond money for pavement improvement projects was not going to be used
until early into the next fiscal year, causing the net cost of Public Works to decline by $1 million
in this fiscal year.
• Community Development programs include they Planning, Building, Economic Development, and
Housing divisions, and the Redevelopment Agency. Net revenues plunged from $1.2 million last
year to $O.l million this year due to a decline in residential and commercial development
applications. Remaining net revenues went toward covering development support services
provided by Administration, Administrative Services, and Public Works' facility maintenance.
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• Some of the City's Recreation programs are reported as business-type activities for which fees are
charged to fully recover the costs of the programs. However, many community events, programs
and services are available to the public for free: or at a reduced price. The costs of administering
these general (governmental) activities are partially offset by membership fees, class charges,
travel revenues, rentals, and leases that amounted to $0.9 million in 2007-08. Net cost of
recreation rose from $2.3 million to $3 millior~ due to the recreational enterprises that moved to
governmental activities this year.
• Interest on the long-term debt that was re-finan~~ed in 2002 remained at $2.2 million.
Business Type Activities
Business-type activities in the City-wide Financial Statements include the City's enterprise funds.
Enterprise funds are used to account for recreational and solid waste management operations that are
financed and operated in a manner similar to private business enterprises where the intent is that the costs
of providing services and facilities to the general public on a continuing basis can be financed or
recovered primarily through user fees.
Business-type net assets totaled $7.9 million at June 30, 2008, an increase of $O.5 million from the prior
year. Cash and investments rose $0.8 million, while the moving of the Senior Center's entire operations
and the Blackberry Farm's picnic grounds, retreat center, swimming pool and Blue Pheasant restaurant to
governmental activities caused other current assets, capital assets, and current liabilities to decline. The
Blackberry Farm golf course, the Resource Recovery :solid waste franchise, the Sports Center operation,
and other recreational programs remained as business-type endeavors.
Overall revenues of $7.4 million this year were $1 million or 14% lower than last year. $0.7 million in
Senior Center travel, membership, and class earnings, $0.4 million in Blackberry Farm admissions,
catering, and concessions, and $O.1 million in Blue Pheasant rent became a part of governmental instead
of business-type activities. Cultural events, youth and teen programs, sports, dance and fitness classes
from other recreational enterprises generated $O.1 million or 4% more over last year- Interest earnings
rose $O.1 million.
Expenses dove 19% or $1.4 million from the prior year as the $0.8 million in Senior Center and $0.6
million in Blackberry Farm operations moved to the governmental side. Revenues over expenses, before
transfers, improved to $1.5 million in 2007-08 as oppo:>ed to $1.1 million in 2006-07, reflecting the better
margins of the remaining golf course, recreational, and solid waste enterprises. Transfers-out doubled to
$1 million this year because of Blackberry Farm and Senior Center capital and unrestricted net assets
moving to the governmental segment. The major proprietary funds section of the MDBcA provides more
information on business-type results.
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Table 4
Business-Type Net Assets at June 30
(in Millions)
Business-Ty pe Activities
2008 2007
Cash and investments $8.7 $7.9
Other current assets 0.3 0.4
Capital assets O1 O5
Total assets 9_1 8_8
Current liabilities 12 14
Total liabilities 1_2 1_4
Net assets:
Invested in capital assets O.1 O.5
Unrestricted 78 69
Total net assets $7.9 $7.4
Table 5
Change in Business-Type Net Assets
(in Millions)
Business-Type Activities
2007-08 2006-07
Expenses
Resource Recovery $2.1 $2.1
Blackberry Farm 0.4 1 .O
Sports Center 1.5 1.6
Recreation Programs 1.9 1.8
Senior Center 0.8
Total expenses 559 73
Revenues
Program revenues:
Charges for services 7.0 8.0
Other revenues ---- O1
Total program revenues 7O 8I
General revenues:
Investment income 0.4 0.3
Total revenues 7_4 84
Excess of revenues over expenses, before transfers 1_5 1_1
Transfer-out of non-capital assets (0.6) (O.5)
Transfer-out of capital assets ~.~ _
Change in net assets ~~ $ O"6
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Consistent with the improvement in revenues over expenses, Table 6 shows that business-type overall net
revenue grew significantly from $789,000 to $1,102,O~D0, a 40% jump. The Senior Center's low margin
travel program and tax-supported community services of counseling, social activities, and entertainment,
have all moved to the General Fund. Blackberry Farm's net revenue of $191,000 on the municipal golf
course remains as an enterprise, while the re-positioning of the Farm's picnic grounds, creek area, and
swimming pool as a public benefit for City residents rather than as a facility available for corporate rental,
necessitated the switch to the General Fund. Resource Recovery net revenue improved due to salary
savings resulting from the retirement and subsequent hiring of a new program manager.
Table 6
Net Cost (Revenue) of Business-Type Activities
(in thousands)
Net Cost (Revenue)
Of Activities
2007-08 2006-07
Resource Recovery $(213) $(146)
Blackberry Farm (191) (127)
Cupertino Sports Center (58) (31)
Recreation Programs (640) (566)
Senior Center 81
Total Business-type Activities $!1_1021 $(7891
MAJOR GOVERNMENTAL FUNDS
General Fund
Revenues
General Fund revenues of $41.4 million ended up $1.1 million or 3% below the final budget and $0.7
million or 2% below the original budget for the year ended June 30, 2008. This was $0.8 million or 2%
under last year. It was a mixed revenue picture. Downturns in building and planning fees, construction
taxes, fines, intergovernmental remittances, and one-time property sales were somewhat offset by
increases in property taxes, transient occupancy (hotel) taxes, utility user taxes, and use of money and
property (interest and rent). Sales taxes rose over last year, but came in below budget. Planning fees sunk
below last year, but exceeded what was projected for tl~e current year budget. Property taxes and planning
fees ended up higher than budget, but sales taxes and building permits finished the year below budget.
The economic slowdown, started by the housing industry, effected development revenues and sales taxes,
but resilient local demand for housing due to the highly desirable school district and avoidance of a severe
downturn in the region's technology and business-to-business sector spared the City from the heavier
financial impacts effecting many other municipalities;. Table 7 displays year-to-year variations, while
Table 8 shows budget versus actual differences.
Property taxes ended the year at $10.8 million, rising 6% or $0.7 million over last year's result, 5% or
$O.5 million over the original budget, and 2% or $0.2 million higher over the final budget. This reflects
tax roll growth in 2007 where year-to-year sales volumes were declining but average median price was
still rising. The housing downturn was picking up steam but the demand for homes in the City did not
decline as much as in other neighboring cities due to the popular school district. This category includes
$3.9 million in property taxes received in place of motor vehicle license fees lost due to the statewide fee
rate reduction in 2005.
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Sales taxes had mixed results. Taxes surged $1.9 million or 17% higher than last year to finish up at $13.2
million. It was $0.3 million or 2% above the original budget, but came in $1 million or 7% below the final
budget. The first four months of the year saw strong :revenue growth with taxes growing 11% over the
pace of the prior year, led by the City's two top tax producers in the business-to-business services and
office equipment area. This strong early growth prompted a budget increase of $13 million. However
retail sales declined starting in November, as adjustsible rate mortgage resets, fewer jobs, rising fuel
prices, and rising food costs started taking their toll on consumer discretionary spending, culminating
with retail sales taxes plunging 29% in the final quarter of the fiscal year when compared to the year-ago
quarter. Moreover, $O.5 million of back taxes due to tl~e City weren't received this year as expected. If it
wasn't for continued robust sales from the City's leading tax provider, followed by revenues from a new
provider who debuted at number two, the sales tax revenue picture of the City would be more aligned
with the bleaker regional picture. The concentration of taxes in the volatile business-to-business sector
though increased from 60% last year to 68% this year with the top two tax generators comprising most of
that sector.
The four hotels in the City remitted $2.7 million in transient occupancy taxes this year, a rise of 8% or
$0.2 million over last year and the original budget. It vas on target with the final budget. Regional high-
tech industries in Silicon Valley have not been hit as severely in this downturn as they were during the
dot-com bust in the earlier part of this decade. Foreign demand for the products designed in the Valley
also kept local businesses humming. Occupancy rates per hotel were either flat or slightly higher. The
degree of the revenue increase was markedly down frorn fiscal 2007's 22% jump over fiscal 2006.
The City's 2.4% utility user tax on telephone, gas, and electric services increased 5% or $0.2 million over
last year. These $3.2 million in revenues, just under ~[he final budget, was $1.1 million better than the
original budget. Wireless communication tax revenues were restored into the budget as they are
considered valid and earned revenues despite court challenges in other jurisdictions as to the legality of
such taxes on modern telecommunication systems. The City plans to put on the November 2009 ballot an
updated utility user tax ordinance that will preserve monies currently received from contemporary
telecom systems. Until that ordinance is passed, the City will set aside these revenues in General Fund
reserves.
Franchise taxes from electric, gas, water, solid waste, and cable utilities were mostly unchanged at $2.5
million when compared to last year's results and this year's budget.
Other taxes include business license, construction, and ~oroperty transfer taxes. Construction taxes plunged
by 86% or $0.8 million from the prior year as that previous period included two large commercial
projects, the building of the 16 screen AMC Theatres at the Cupertino Square shopping center and the
creation of the 63,000 square foot Whole Foods ]\Qarket. The previous year also had a one-time
recognition of $O.1 million in special assessment taxes from along-closed improvement district in the
Cupertino Square area. With business licenses and property transfer taxes flat, other taxes as a whole fell
significantly by $0.9 million or 37% from 2006-07. Seeing that construction of additional stores and
restaurants in the Square area was not going to occur pis anticipated, the other taxes budget was adjusted
downward at mid-year by $0.4 million. The results came out $O.1 million or 6% better than the ending
budget.
Licenses and permits plummeted 20% from $3.3 million in 2006-07 to $2.7 million in 2007-08. It was
12% or $0.4 million below the final budget and 16% or $O.5 million below the original budget. Reflecting
the national downturn in housing, residential construction in the City extended the decline that began in
2006-07. Moreover, zoning permits for two major multi-family residential developments were reversed in
a voter referendum in 2006, further chilling the climate for these types of projects. Commercial
construction continued to be active however, with the expansion of the Marketplace Shopping Center, the
new office building at Cupertino Landing and the new "['antau Office Building.
15
Zoning, planning, and engineering review fees compri:~e two-thirds of the charges for services category,
with recreational programs encompassing the rest. The: category fell from $1.5 million last year to $1 3
million this year, an 11% drop. It exceeded the final Midget by $0.2 million or 18%, but that was after a
large mid-year reduction of the budget by $0.9 million :is the construction downturn that effected building
permits was also afflicting zoning, planning 8c engineering fees. These development-related fees ended up
falling $O.5 million or 37% from the prior year. Howe~~er, the recreational portion of charges for services
were boosted by the moving of the City's Senior Center enterprise to the General Fund at the beginning of
the fiscal year, resulting in $0.4 million of recreational fees now appearing in this segment rather than in
the proprietary funds-
Intergovernmental revenues of $0.7 million fell 29% or $0.3 million from last year and were short of the
original budget by 30%. It exceeded the final budget ley 7%. Last year's results included one-time state
corrections of motor vehicle license fee payments and state reductions of mandated cost reimbursements.
The General Fund is part of the City's pooled investment portfolio. Investment returns of the pool are
allocated to the Fund based on the Fund's monthly cash balance. These returns plus the renting of City
facilities comprise use of money and property revenues, which rose 14% over last year, finishing at $2
million compared to $1.8 million last year. The results include $O.1 million in unrealized gains from
increases in market value on the fixed rate securities in the City's pooled investment portfolio. Current
results were 4% under the final budget but 36% butter than the original budget, as the pushed-out
expenditure timeline on the large Mary Ave. Footbridge and Stevens Creek Corridor Park capital projects
kept cash balances higher than expected. A further explanation of the investment picture for the year is in
the transmittal letter and in Note 2 of the Basic Financial Statements. Rent income escalated from $0.3
million in 2006-07 to $O.5 million in 2007-08 as the operating lease from the Blue Pheasant Restaurant
and the renting of Senior Center facilities moved from proprietary funds to the General Fund this year.
Fines and forfeitures dove 22% or $0.2 million under last year and 10% or $O.1 million under the final
budget as 2006-07's results included $0.2 million in one-time fines received from the County courts,
resulting from a fiscal 2002 through 2004 audit by them. The final budget was $O.1 million below the
original budget, as the ramifications from prior-year, ore-time revenue were realized.
In 2006-07, two surplus parcels related to the former City-operated water system were sold for $1.7
million. There were no property sales this year.
Transfers into the General Fund nearly tripled from $C~.S million last year to $1.3 million this year. Both
years contained $O.5 million from the Resources Recovery enterprise fund. However, the current year
added $0.8 million consisting of: a) $0.4 million in S1:evens Creek Corridor Park capital budget savings
returned to the General Fund, b) $0.3 million in Library Field and Memorial Park Softball Field project
dollars freed up when the financing was switched to :recreation enterprise funds, and c) $O.1 million in
reserves coming from the transfer of the Senior Center proprietary function to the General Fund.
16
Table 7
Revenue Changes, General Fund
Fiscal 2008 ~vs. 2007
(in thousands)
Increase/(Decrease)
Fiscal 2008 From Fiscal 2007
Revenues by Source Amount '% of Total Amount Percent
Property Taxes $10,788 26% $655 6%
Sales Taxes 13,155. 32 1,902 17
Transient Occupancy Taxes 2,712 6 200 8
Utility User Taxes 3,176 8 164 5
Franchise Taxes 2,547 6 10 --
Other Taxes 1,486 4 (879) (37)
Use of Money Rc Property 2,016 5 252 14
Intergovernmental 659 2 (275) (29)
Licenses and Permits 2,656 6 (670) (20)
Charges for Services 1,363 ~ 3 (174) (11)
Fines and Forfeitures 722 2 (204) (22)
Other Revenue 85 --- (69) (45)
Proceeds from Land Sale ------_ 1( •664) (I OO)
Total Revenues $4~ 10 % $f752) ~2
Transfers In 1 300 100% 800 160%
Table 8
Re venue Budget and Actual Compariso ns
General Fund, 2007-0 8
(in thousands)
Bud>eted Amounts Actual Over/
Original Final Under) Final
Property Taxes $10,290 $10,604 $10,788 $184
Sales Taxes 12,870 14,190 13,155 (1,035)
Transient Occupancy Taxes 2,5_°~O 2,660 2,712 52
Utility User Taxes 2,100 3,240 3,176 (64)
Franchise Taxes 2,SFt0 2,580 2,547 (33)
Other Taxes 1,770 1,400 1,486 86
Use of Money and Property 1,4E~3 2,100 2,016 (84)
Intergovernmental 9~~0 616 659 43
Licenses and Permits 3,172 3,030 2,656 (374)
Charges for Services 2,066 1,152 1,363 211
Fines and Forfeitures 690 800 722 (78)
Other Revenue 1 CIO 1 16 85 _~3 1)
Total Revenues $406:1 $42.488 X41.365 $(1.123)
Transfers In 1 230 1 300 1 300 $----
l7
Expenditures
Fiscal 2007-08 overall expenditures, at $31 million, we;re $2.5 million or 9% higher than last year's total
of $28.5 million. However, this result came in 9% or $3 million under the final and original budget. The
4% wage increase and net 1 .8% defined benefit pension plan cost increase described in the Governmental
Fund, Government-Wide discussion of this MDBcA will effect all departments described below, except
for Law Enforcement, which is performed under contract by the County Sheriff. Year-to-year and budget
versus actual results by General Fund department are described below and in Tables 9 and 10.
Administration expenses of $1.4 million rose modestl~~ by 5% over last year while finishing 10% under
final and original budget. Spending of the contingency budget was down in 2007-08 as ad-hoc initiatives
or spending requests were down.
Current year Law Enforcement costs of $7.5 million vt~ere under the final budget by $O.5 million or 7%.
The budget contains dollars for unexpected events or incidences, so by the end of the year, the normal rate
of general law enforcement, service requests, emerger.~cy calls, patrol, and investigations usually brings
budget savings. $O.1 million was added to the original budget for traffic safety improvements around the
McClellan Avenue school corridor. The results exceedled past year expenditures by 7% or $O.5 million,
due to this being the first full year of two additional deputies, plus the annual cost escalators built into the
sheriff contract.
Public Information expenditures increased 4% to $1.2 million this year but were 8% below the final and
original budget- The re-establishment of a receptionist for the City Hall information desk was offset by
lower outlays for software and contract services in the community relations division. Technology
purchases for this department were moved to the Management Information Systems internal service fund,
to create a sinking fund for long-term replacement. Budget savings came from software, contract services
and the initial vacancy of the new staff position.
Administrative Services rose only 2% over last year an~.J finished 16% or $0.7 million under final budget.
Reduced material, supply and contract spending in accounting, duplicating, mailing, elections, disaster
preparation, and insurance helped offset the labor cost increases and commencement of a $0.2 million
subsidy to the County to open the Cupertino Library on Mondays. Lower expenditures in insurance,
elections, human resources and duplicating caused most of the budget surplus. The final budget was $O.1
million over the original budget due to budget savings from the previous year carried over to the current
year for insurance, litigation, and small projects.
The Senior Center, Blackberry Farm's Blue Pheasant Restaurant lease, and Blackberry Farm picnic
operations shifted from their respective proprietary funds to the Recreation Department of the General
Fund at July 1, 2007_ Revenues no longer covered more than 50% of the costs of the operations.
Accordingly, Recreation Services outlays jumped 56°0 or $1.3 million over 2006-07 to finish at $3.7
million for this year. It was a small 4% under the final and original budget.
The lower amount of building activity and the associated reduction in plan checking, inspections, and
development approvals caused Community Development costs to dip 2% from last year in spite of the
compensation increases and the addition of an Assistant Planner. Contract plan checking services were
reduced because of the lesser workload. The North Val lco Study was completed in 2006-07. Department
costs were 8% below the final budget due to staff turnover and vacancies. The final budget was $O.1
million under the original budget as the green building study and sustainability initiative in this
Department was halted during 2007-08, to be re-established in 2008-09 as part of a new environmental
affairs program in the Public Information Department.
Public Works expenditures of $10.1 million were $O.~S million or 6% over the prior year due to more
school site maintenance, overpass and median work, and street tree maintenance. It was $] million or 9%
under final budget due to unneeded engineering, traffic problem, and maintenance contingencies.
18
The McClellan school corridor traffic improvements will commence in 2008-09 and the unused budget
for that work will be carried forward into that year.
Transfers out of the General Fund grew from $14.6 rriillion in 2006-07 to $18.3 million in 2007-08, as
finally budgeted, with $7.7 million for the Stevens Creek Corridor Park, $3.5 million for ongoing debt
service, $1.9 million for retiree health obligations, $1.5 million for the Lawrence Linear Park, $1 million
set-aside for capital and infrastructure reserves, $O.'~5 million for ongoing street maintenance, $0.7
million for the Sports Center's tennis facility lighting and new multi-purpose court, $0.4 million for
McClellan Ranch improvements, $0.15 million for the Quinlan fountain replacement, $0.2 million for
information technology purchases, and $O.5 million for other projects involving streets, parks, and
facilities. $2.7 million of the transfers were added at mid-year.
Table 9
Expenditure Change from Prior Year
General Fund, 2007-08
(in thousands)
Increase/(Dec rease)
from previous year
Expenditures by Service Area Amount '% of Total Amount Percent
Administration $ 1,351 4% $ 64 5%
Law Enforcement 7,457 24 481 7
Public Information 1,169 4 48 4
Administrative Services 3,797 12 81 2
Recreation Services 3,745 12 1,342 56
Community Development 3,418 11 (68) (2)
Public Works 10.074 33 572 6
Total Expenditures $3 1.O 1 1 100% 2 520 9%
Transfers Out $18.335 100% 3 757 26%
Table l0
Expenditure Budget and Actual Comparison
General Fund, 2007-08
(in thousands)
Bud>>eted Amounts Actual Under
Original Final Final
Administration $1,488 $1,499 $1,351 $148
Law Enforcement 7,865 7,982 7,457 525
Public Information 1,254 1,276 1,169 107
Administrative Services 4,384 4,541 3,797 744
Recreation Services 3,874 3,970 3,745 165
Community Development 3,814 3,722 3,418 304
Public Works 10 88.8 11.033 10.074 959
Total Expenditures $33.561 X33.963 $31.01 1 2 952
Transfers Out 15 64.8 $18.335 $18.335 $---
19
Fund Balance
At June 30, 2008, the General Fund reported a combined ending fund balance of $19.7 million, down
significantly by $6.7 million from the prior year. The City Council designated $12.5 million of this
ending balance for economic uncertainty and disaster contingencies. $1.4 million was reserved for
outstanding purchase orders, advances to the Redevel~~pment Agency, and public access programming.
$1.3 million are low-income and employee housing loans due to the City. $1.1 million are utility user
taxes that are set-aside pending the passage of a new ordinance. $1.8 million of one-time revenues and
$1.7 million in unreserved, undesignated funds will be re-deployed in the five-year operating and capital
budget.
The $6.7 million fund balance decline resulted from revenues exceeding expenditures by $10.3 million
offset by a net transfer out of $17 million. The undesig~ated, unreserved portion of the fund balance bore
the brunt of the decline as it dropped by $5.5 million. The City changed its reserve policy during the year-
Economic and disaster contingencies were raised, a Ca1PERS pension contribution contingency was
eliminated, and utility user tax designations were increased. One million dollars of designated capital
project reserves were transferred from the General FLind to the Capital Improvement Project fund and
there was a $0.2 million net decrease in other reserves and designations.
Public Facilities Corporation
This fund accounts for the payments of principal and interest on the 2002 certificates of participation
(COPs~, which refinanced the long-term debt that funded many of the City's major parks and facilities. As
in the previous year, General Fund transfers into the fund cover the debt service payments of $3.5 million.
Capital Improvement Projects
Reflecting the City's increased capital work, this becarne a major fund during the year. All of the City's
non-enterprise capital projects are in this fund, except for the Mary Avenue Bicycle Footbridge and
Stevens Creek Corridor Park, which are in their own fiends. Outlays for various park, facility, and traffic
projects jumped from $O.3 million in 2006-07 to $0.8 million in 2007-08. Library and Community Hall
upgrades, the Veterans Memorial, and the Monta Vista Recreation Building heating and air conditioning
upgrade were some of the major projects accomplished this year. The General Fund infused $3.2 million
for capital endeavors into this fund this year, as described in the General Fund expenditure portion of this
MDBzA. This surpassed the $2.4 million contributed during 2006-07. On top of this, the General Fund
added $1 million in capital and infrastructure reserves to this fund during 2007-08, doubling the $O.5
million added in 2006-07. Starting in 2007-08, City capital and infrastructure reserves are all reflected in
this fund rather than being split between the General Fund and this fund. At June 30, 2008, the
infrastructure reserve is at $0.6 million, up $O.1 million.. and the capital reserve is at $0.9 million.
Stevens Creek Corridor Park
This $13.6 million project to completely re-design the picnic grounds at Blackberry Farm, to re-align and
restore the natural habitat of the creek, to renovate the swimming pool facilities, and to build the creek
trail, completed its design phase and began construction. Outlays rose to $1.4 million compared to $O.5
million the previous year. The General Fund finances two-thirds of the project, with the City's recreation
enterprise fund, State grants, and the Santa Clara Valley Water District backing the rest of the
undertaking. The project received $7.7 million of its General Funding this year, although $0.4 million was
transferred back to the General Fund late in the year, as budget savings from lower-than-expected bids on
the construction were returned to the General Fund coffers.
~:O
Before bids were opened, project managers had estim~eted that project costs were going up due to scope
and design changes, requiring a budget increase of $0.8 million financed by savings in other completed
projects. The Corridor Park project is due to be complered by the summer of 2009.
Mary Avenue Bicycle Footbridge
This fund accounts for the design and construction of a $14.8 million pedestrian and bicycle bridge over
Interstate 280 at the end of Mary Avenue. The volatile competitive bidding environment, especially in
materials, required a change from a concrete bridge to ,a steel bridge and an increase in the project budget
by $4.1 million, made possible by $3.4 million more from the Santa Clara Valley Transportation
Authority (VTA), $0.6 million more from City gasoline tax reserves, and $O.1 million more from funds
unneeded in other capital projects. The General Fund backs $2 million of the project, with the rest coming
from the state general fund, grants and sales taxes funrieled through VTA, grants and general funds from
the City of Sunnyvale, and gasoline taxes. Final plans: and specifications were completed in September
2007; a contract was awarded in November 2007; and construction started in early 2008. Completion is
scheduled for Spring 2009. Capital outlays for 2007-(18 were $4.8 million compared to $0.9 million in
2006-07. Grants are received on a pay-as-you-go reimbursement basis, with the City General Fund
fronting the expenditures. At June 30, 2008, $1.5 million of General Fund cash was advanced to the
project for this purpose and is shown as a liability. Grants received up to sixty days after year-end are
accrued as fund revenues. $5.5 million in grant revenues were recognized for 2007-08. As of June 30,
2008, $4.1 million of these revenues were billed and due as a receivable from the VTA, with the rest
received in cash. $5.3 million in construction and construction management contracts were encumbered
leaving a $3.4 million deficit unreserved fund balance which is covered by grant commitments from
VTA.
MAJOR PROPRIETARY FUNDS
Resources Recovery
The City's solid waste disposal enterprise did not have significant differences in waste pickup revenues
from the previous year. Contract service costs for pickup, landfill disposal, and recycling were also flat,
while personnel costs declined $42,000 due to the retirement and subsequent replacement of the
environmental programs manager. Operating income improved $67,000 to $213,000 this year. Interest
earnings were mostly unchanged. Operating income and interest earnings offset the final year of the $O.5
million transferred to the General Fund for past waste; cleanup costs, causing unrestricted net assets to
remain at $5.5 million. The transfer was the last installment of $2 million given to the General Fund over
four years.
Blackberry Farm
The City-owned Blackberry Farm contains picnic grouizds, a swimming pool, a conference retreat center,
a Blue Pheasant Restaurant, executive golf course and pro shop. Stevens Creek meanders through much
of the Farm_ The operation of the restaurant is leased to a private company. The picnic grounds,
swimming pool, and retreat center closed temporarily in September 2006 for major renovations and
restoration as described above in the Stevens Creek Corridor Park project. Because the capacity of the
picnic grounds will be significantly reduced after its re-design lowering potential rental and admission
revenues and because corporate rentals are de-emphasis ed while public residential usage is promoted, the
picnic grounds, pool, and retreat center was deemed to be no longer meeting the 50% operating margin
requirement to remain as a proprietary entity. It was al:~o determined that the Blue Pheasant building and
lease was maintained by General Fund resources. Accordingly, the capital assets and operations of the
grounds, pool, retreat center and restaurant were switched to the General Fund on July 1, 2007. The golf
course and pro shop remained in the Blackberry Farm proprietary fund.
c: l
City employees, with a teaching professional on contract, staff the golf course and pro shop. Green fees
were slightly down as the City is exploring ways to encourage more youth to use the course and bring in
more revenues. Operating costs of the golf course were unchanged as the slightly higher salaries and
benefits were offset by lower material and supply costs. Overall operating revenues dropped from $1 .1
million last year to $0.6 million this year due to the removed operations and, for the same reason,
expenses dropped significantly from $1 million in 2006-07 to $O.5 million this year. Reflecting the better
margins of the golf course, operating income doubled to $0.2 million, causing the unrestricted net asset
balance to increase by the same measure. Capital assets of the former enterprises, amounting to a book
value of $0.4 million, were transferred out of this proprietary fund to the governmental activities balance
sheet. At June 30, 2008, unrestricted net assets were $0.3 million, with only a small amount of golf
equipment remaining in capital assets-
Cupertino Sports Center
Tennis lesson, membership, and fitness class revenues were flat compared to last year. However
membership revenues were up while tennis and fitness class earnings were down. The latter two
categories require contract instructors; as a result, contract service costs dropped $104,360 off of last
year's mark. Moreover, net income improved by $32,:540 over last year, garnering $77,861 by June 30,
2008. Ending unrestricted net assets grew to $193,95 1 ley year-end.
Recreation Programs
Cultural events, youth and teen programs, sports, dance and fitness classes generated earnings of $2.5
million, which was $O.1 million or 4% more over last }'ear, for this enterprise operated out of the Quinlan
Community Center, Monta Vista Recreation Center, McClellan Ranch, Creekside Park building, eight
school sites, and various parks- Program expenses, including full-time administrative and programming
staff, part-time activity leaders, and class instructors on contract were relatively unchanged from 2006-07.
With the improved program attendance, operating income was 13% better than last year, finishing at $0.6
million. After adding interest earnings, the fund ended up with an increase in net assets of $0.7 million
and an unrestricted net asset balance of $1.9 million. $0.35 million of these reserves will be used in 2008-
09 for renovations of the softball field at Memorial Par]c and the multi-purpose field next to the library.
Senior Center
The Senior Center became a part of the General Fund at the beginning of 2007-08, transferring $50,165 in
net assets to the General Fund at that time. The Center is a mix of revenue-generating programs and social
services and it was determined that the financial position and mission of the Center is better represented
in the General Fund.
CAPITAL ASSETS
At June 30, 2008 the City had $133.7 million, net of depreciation, invested in a broad range of capital
assets used in governmental and business-type activities, as shown in the following table and in Note 5 to
the Basic Financial Statements:
32
Table 11
Capital Assets, Net of Depreciation, at June 30
(in Millions)
2008 2007
Governmental Activities:
Land $ 59.3 $ 58.9
Construction in progress 9.6 3.4
Buildings 28.1 29.0
Improvements other than buildings 6.6 7. 1
Machinery and equipment 1.4 1.2
Roads, curbs, gutters, sidewalks, medians and brid€;es 19.6 20.6
Storm drain structures and mains 7.4 8.2
Traffic signals 1 .6 1.7
Total Governmental Activities $ $
Business-type Activities:
Land $ --- $ .4
Improvements other than buildings --- . 1
Machinery and equipment 1 ---
Total Business-type Activities $ O1 $ 4,~
Total City $133.7 $130.6
Capital assets increased by a net $3.1 million. $1.3 million in street re-pavement and curb and gutter work
was added to infrastructure. $4.8 million in Mary Averiue Bicycle Footbridge and $1 .4 million in Stevens
Creek Corridor Park work were added to construction in progress. $1.6 million of facility and park
improvements were built. Depreciation of buildings, infrastructure, equipment, and improvements was $6
million. The $0.4 million book value transfer of ]Blackberry Farm picnic grounds, retreat center,
swimming pool, and Blue Pheasant Restaurant capital assets from business-type to governmental
activities resulted in the changes in land values.
DEBT ADMINISTRATION
The City's only long-term debt liability comes from $`i6.6 million in Certificates of Participation (COPS)
issued in 2002 by the Cupertino Public Facilities Corporation. The certificates refunded previously issued
COPS that financed the Wilson Park, Blackberry Farm; and Creekside Park purchases, the Memorial Park
expansion, the Quinlan Community Center constructions, and the City Hall remodel. It provided capital for
the new library opened in 2004. The serial, fixed interest rate debt ranging from 2% to 5% requires annual
debt payments of $3.5 million that are paid out of tl~e General Fund. The June 30, 2008 outstanding
principal of $48.4 million is due to be paid off by 2030.
At June 30, 2008, a total of $95,000 in special asse~:sment district debt was outstanding. This debt is
secured by a traffic impact fee, charged as a special :assessment on the three commercial parcels in the
district. The City, which is not liable for the debt, acts solely as the district's agent for the collection and
remittance of the assessment.
More information can be found in Note 6 to the Basic Financial Statements.
ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The impact of the economic environment and a description of the City's major initiatives for the coming
year are discussed in detail in the accompanying "Transmittal Letter.
Z3
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This Comprehensive Annual Financial Report is intencjed to provide residents, taxpayers, investors, and
creditors with a general overview of the City's finances. Further information can be provided by the City
of Cupertino Finance Department, City Hall, 10300 Torre Avenue, Cupertino CA 95014, phone (408
777-3220, or by the City website at www.cupertino.org.
:?4
CITY OF CUP'ERTINO
STATEMENT OF NE,T ASSETS AND
STATEMENT OF ACTIVITIES
The Statement of Net Assets and the Statement of Activities summarize the entire City's financial activities
and financial position. They are prepared on the same basis as is used by most businesses, which means
they include all the City's assets and all its liabilities, as well as all its revenues and expenses. This is
known as the full accrual basis-the effect of all the City's transactions is taken into account, regardless of
whether or when cash changes hands, but all material internal transactions between City funds have been
eliminated.
The Statement of Net Assets reports the difference between the City's total assets and the City's total
liabilities, including all the City's capital assets and all its long-term debt. The Statement of Net Assets
presents similar information to the old balance sheet format, but presents it in a way that focuses the reader
on the composition of the City's net assets, by subtractinl~ total liabilities from total assets.
The Statement of Net Assets summarizes the financial position of all the City's Governmental Activities in a
single column, and the financial position of all the City's. Business-Type Activities in a single column; these
columns are followed by a Total column which presents the financial position of the entire City.
The City's Governmental Activities include the activities of its General Fund, along with all its Special
Revenue, Capital Projects and Debt Service Funds. Since the City's Internal Service Funds service these
Funds, their activities are consolidated with Governmental Activities, after eliminating inter-fund
transactions and balances. The City's Business Type Activities include all its Enterprise Fund activities.
The Statement of Activities reports increases and decrea:~es in the City's net assets. It is also prepared on the
full accrual basis, which means it includes all the City': revenues and all its expenses, regardless of when
cash changes hands. This differs from the "modified accrual" basis used in the Fund financial statements,
which reflect only current assets, current liabilities, available revenues and measurable expenditures.
The format of the Statement of Activities presents the C'ity's expenses first, listed by program, and follows
these with the expenses of its business-type activities.. Program revenues, that is revenues which are
generated directly by these programs, are then deducted from program expenses to arrive at the net expense
of each governmental and business-type program. The City's general revenues are then listed in the
Governmental Activities or Business-type Activities column, as appropriate, and the Change in Net Assets
is computed and reconciled with the Statement of Net Assets.
Both these Statements include the financial activities of the City, the Cupertino Redevelopment Agency, and
the Cupertino Public Facilities Corporation, which are legally separate but are component units of the City
because they are controlled by the City, which is financially accountable for their activities.
:? 5
CITY OF CUF'ERTINO
STATEMENT OF NET ASSETS
JUNE 30, 2008
ASSETS
Cash and investments (Note 2)
Cash and investments with fiscal agents (Note 2)
Receivables:
Accounts
Loans (Note 3J
Prepaid expenses and other assets
Land held for housing development (Note If)
Capital assets (Note 5):
Non-depreciable
Depreciable, net of accumulated depreciation
Total Assets
LIABILITIES
Accounts payable and accruals
Accrued payroll and benefits
Deposits
Unearned revenue
Compensated absences (Note 1 h):
Due in one year
Due in more than one year
Claims payable (Note 9):
Due in one year
Due in more than one year
Long-term debt (Note 6):
Due in one year
Due in more than one year
Total Liabilities
NET ASSETS (Note 7)
Governmental Business-Type
Activities Activities Total
$52,719,148 $8,655,157 $61,374,305
2, 444, 5 3 1 2,444, 53 1
6,557,202 341,803 6,899,005
2,164,998 2, 164,998
141,885 l,1 1 O 142,995
615,000 615,000
68,91 1,879 68,91 1,879
64,647,1 19 84,126 64,73 1,245
198,201,762 9,082, 196 207,283,958
5,496,982
341,411
1,669,21 O
34,743
145,284
2,288,725
369,000
1,12 8, 000
1,415,000
46,970,000
383,286
28,601
722,965
1 4,07 1
5,880,268
370,012
1,669,21 O
757,708
159,355
2,288,725
369,000
1,128,000
59,858,355
1.148.923
Invested in capital assets, net of related debt _ 85,173,998 84,126
Restricted for:
Special revenue projects 8,406, 145
Affordable housing 814,867
Public access television 654,043
Debt service 51,715
Total Restricted Net Assets 9,926,770
Unrestricted _ 43,242,639 7,849, 147
Total Net Assets $138,343,407 $7,933,273
See accompanyin g notes to financial statements
1,415,000
46,970,000
61,007,278
85,258,124
8,406, 145
814,867
654,043
S 1,715
9,926,770
51,091,786
$146,276,680
2f>
CITY OF CUPERTINO
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008
Net (Expense) Revenue and
Program Revenues Changes in Net Assets
Operating Capital
Charges for Grants and Grants and Govemmen[al Business-type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Governmental Activities:
Administration $1,636,284 $10,711 $44,885 ($1,580,688) ($1,580,688)
Law enforcement 7,679,467 _ 799,350 189.733 (6,690,384) (6,690,384)
Public information 1,216,164 (1,216,164) (1,216,164)
Administrative services 3,923,217 (3,923,217) (3,923,217)
Recreation services 3,845,873 847,424 22.905 (2,975,544) (2,975,544)
Community development 4,059,740 3,551,478 595.621 87,359 87,359
Public works 16,569,310 135,942 1,539.843 $5,696,124 (9,197,401) (9,197,401)
Interest on long -term debt 2,183,403 (2,183,403) (2,183,403)
Total Governmental Activities 41,113,458 5,344,905 2,392.987 5,696,124 (27,679,442) (27,679,442)
Business-type Activities
Resource recovery 2,056,061 2,254,790 14.309 $213,038 213,038
Blackberry farm 450,206 640,771 190,565 190,565
Cupertino sports center 1,547,402 1,605,545 58,143 58,143
Recreation programs 1,853,217 2,493,214 639,997 639,997
Total Business-type Activities 5,906,886 6,994,320 14.309 1,101,743 1,101,743
Total $47,020,344 $12,339,225 $2,407.296 $5,696,124 (27,679,442) ],101,743 (26,577,699)
General revenues:
Taxes:
Property taxes
Property tax in lieu of motor vehicle fee
Incremental property tax
Sales taxes
Transient occupancy [ax
Utility user tax
Franchise tax
Other taxes
Intergovernmental, unrestricted:
Motor vehicle license fee
Investment earnings
Miscellaneous
Transfers (Note 4)
Transfer of capital assets (Note S)
Total general revenues and transfers
Change in Net Assets
Net Assets-Beginning
Net Assets-Ending
See accompanying notes to financial statements
6,941,91 O 6,941,91 O
3,894,502 3,894,502
220,267 220,267
13,154,749 13,154,749
2,71 1,590 2,71 1,590
3,175,724 3,175,724
2,547,439 2,547,439
1,709,892 1,709,592
266,789 266,789
1,451,973 378,828 1,83Q801
103,529 103,529
550,165 (550,165)
441,985 (441,985)
37,170,514 (613,322) 36,557,192
9,491,072 488,421 9,979,493
128,852,335 7,444,852 136,297,187
$138,343,407 $7,933,273 $146,276,680
<~ 7
FUND FINANCiAi, STATEMENTS
In the Fund Financial Statements only individual major funds are presented, while non-major funds are
combined in a single column. Major funds are defined generally as having significant activities or balances
in the current year.
The funds described below were determined to be Major Funds by the City for fiscal 2008. Individual
non-major funds may be found in the Supplemental sec~tion_
GENERAL FUND
The general fund is the general operating fund of the City. It is used to account for all financial resources
except those that are required to be accounted for in another fund.
PUBLIC FACILITIES CORPORATION DEBT SEP:VICE FUND
This fund accounts for the payments of principal and ,interest on certificates of participation issued to
provide for the financing of the Civic Center/Library, Wilson Park and Memorial Park and other City
facilities.
CAPITAL IMPROVEMENT PROJECT FUND
This fund accounts for activities related to the acquisition or construction of major capital facilities.
STEVENS CREEK CORRIDOR PARK CAPITAL PROJECT FUND
This fund accounts for the development of the master Flan and the design and construction of the Stevens
Creek Corridor Park.
MARY AVENUE BICYCLE FOOTBRIDGE CAPITAL PROJECT FUND
This fund accounts for-the design and construction of a bicycle footbridge extension of Mary Avenue over
Interstate 280. It includes gateways, paths, residential buffering elements and landscaping.
?8
CITY OF CUPL'RTINO
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, ?_008
Public Capital Stevens Creek Mary Avenue Other Total
Facilities Im provem en[ Corridor Bicycle Governmental Governmental
General Corporation P:-ojec[s Park Footbridge Funds Funds
ASSETS
Cash and investments (Note 2) $18,243,676 $51,715 $1,014,132 $8,003,186 $8,274,550 $41,587,259
Cash and investments with fiscal agents (Note 2) 2,444,531 2,444,531
Receivables:
Accounts 2,147,855 $4,108,408 264,896 6,521,159
Loans (Note 3) 1,299,556 865,442 2,164,998
Prepaid items 22,082 22,082
Due from other funds 1,457,512 1,457,512
Land held for housing development (Note If) 615,000 615,000
Advance to other funds (Note 4) 263,324 263,324
Other assets 3,884 100,000 103,884
Total Assets $23,437,889 $2,496,246 $7,114,132 $8,003,186 $4,108,408 $10,019,888 $55,179,749
LIABILIT[ES
Accounts payable and accruals $1,777,465 $2,444,531 $41,971 $123,493 $732,429 $304,446 $5,424,335
Accrued payroll and benefits 303,385 19,834 323,219
Deposits 1 ,669,21 O 1 ,669,2 10
Due to other funds 1,457,512 1,457,512
Advance from other funds (Note 4) 263,324 263,324
Unearned revenue 21,346 13,397 34,743
Deferred revenue 197,875 197,875
Total Liabilities 3,771,406 2,444,531 41,971 123,493 2,189,941 798,876 9,370,218
Fund balance (Note 7)
Reserved for:
Encumbrances 429,909 481,234 3,377,066 5,280,155 270,372 9,838,736
Debt service 51,715 51,715
Advances to other funds 263,324 263,324
Prepaid items and other assets 22,082 100,000 122,082
Loans receivable 1,299,556 865,442 2,164,998
Land held Cor housing development 615,000 615,000
Low and moderate income housing 199,867 199,867
Public access television 654,043 654,043
Unreserved, reported in:
General Fund 16,997,569 16,997,569
Special Revenue Funds 7,270,331 7,270,331
Capital Project Funds 6,490,927 4,502,627 (3,361,688) 7,631,866
TOTAL FUND BALANCES 19,666,483 51,715 "x,072,161 7,879,693 1,918,467 9,221,012 45,809,531
Total Liabilities and Fund Balances $23,437,889 $2,496,246 $'x,114,132 $8,003,186 _ $4,108,408 $10,019,888 $55,179,749
See accompanying notes to financial statements
r
~"
CITY OF CUPERTINO
Reconciliation of the
GOVERNMENTAL FUNDS -- BALANCE SHEET
with this
STATEMENT OF TdET ASSETS
JUNE 30, 008
Total fund balances reported on the governmental funds balance sheer $45,809,531
Amounts reported for Governmental Activities in the Statement of N~~t Assets
are different from those reported in the Governmental Funds above because of the following:
CAPITAL ASSETS
Capital assets used in Governmental Activities are not current assets or financial resources and
therefore are not reported in the Governmental Funds. 132,595,020
ALLOCATION OF INTERNAL SERVICE FUND NET ASSETS
Internal service funds are not governmental funds. However, they are used by management to
charge the costs of certain activities, such as insurance and central services and maintenance
to individual governmental funds. The net current assets of the Internal Service Funds are therefore
included in Governmental Activities in the following line items in the Statement of Net Assets.
Cash and investments 11,131,889
Accounts receivable 36,043
Prepaids 15,919
Capital assets, net of accumulated depreciation 963,978
Accounts payable and accruals (72,647)
Accrued payroll and bene£ts (18,192)
Compensated absences (99,358)
Claims payable (1,497,000)
ACCRUAL OF NON-CURRENT REVENUES AND EXPENSE:>
Revenues which are deferred on the Fund Balance Sheets because they are not available currently
are taken into revenue in the Statement of Activities. 197,875
LONG TERM ASSETS AND LIABILITIES
The assets and liabilities below are not due and payable in th~~ current period and therefore are not
reported in the Funds:
Long-term debt (48,385,000)
Non-current portion of compensated absences (2,334,651)
NET ASSETS OF GOVERNMENTAL ACTIVITIES $138,343,407
See accompanying notes to financial statements
30
CITY OF CUPERTINO
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURE; AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDEll JUNE 3Q 2008
REVENUES
Taxes
Use of money and property
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Other revenue
Total Revenues
EXPENDITURES
Current:
Administration
Law enforcement
Public inform anon
Administrative services
Recreation services
Community development
Public works
Capital outlay
Debt service
Principal
Interest and fiscal charges
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in (Note 4)
Transfers (out) (Note 4)
Total Other Financing Sources (Uses)
NET CHANGE IN FUND BALANCES
BEGINNENG FUND BALANCES
ENDING FUND BALANCES
Public Capital Stevens Creek Mary Avenue Other Total
Facibties Improvement Corridor Bicycle Governmental Govemmental
General Corporation Projects Park Footbridge Funds Funds
$33,863,497 $725,642 $34,589,139
2,015,653 $5,767 469,024 2,490,444
659,487 $75,924 $5,544,884 2,004,985 8,285,280
2,656,01 7 2,656,017
1 ,363,1 96 364,903 1,728,099
722,087 722,087
85,388 10,000 95,385
41,365,325 5,767 85,924 5,544,884 3,564,554 50,566,454
1,351,273 1,351,273
7,456,661 7,456,661
1,169,247 1,169,247
3,797,156 3,797,1 56
3,745,244 3,745,244
3,417,590 513,465 3,931,055
10,073,546 1 ,064,389 1 1 ,1 37,935
;'51,915 $1,356,657 4,846,780 1,378,741 8,334,093
1,355,000 1,355,000
2,183 403 2,183,403
31,010,717 3,538,403 "'51,915 1,356,657 4,846,780 2,956,595 44,461,067
10,354,608 (3,532,636) (ti65 991) (1,356,657) 698,104 607,959 6,105,387
1,300,165 3,538,000 4,-..91,000 8,546,000 716,000 845,000 19,136,165
(18,334,750) (1;!11,000) (420,000) (740,000) (20,705,750)
(17,034,585) 3,538,000 2,980,000 8,126,000 716,000 105,000 (1,569,585)
(6,679,977) 5,364 2,514,009 6,769,343 1,414,104 712,959 4,535,802
26,346,460 46,351 4;[58,152 1,110,350 504,363 5,508,053 41,273,729
$19,666,483 $51,715 $7,072,161 $7,879,693 $1,915,467 $9,221,012 $45,809,531
See accompanyi ng notes to financial s [atem en[s
31
CITY OF CUPLRTINO
Reconciliation of the
NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS
with the
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008
The schedule below reconciles the Net Changes in Fund Balan~;es reported on the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current
liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the
Statement of Activities, which is prepared on the full accrual basis.
NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS $4,535,802
Amounts reported for governmental activities in the Statement of Activities
are different because of the following:
CAPITAL ASSETS TRANSACTIONS
Governmental Funds report capital outlays as expenditures. I-Iowever,
in [he Statement of Activities the cost of those assets is capitalized and -allocated over
their estimated useful lives and reported as depreciation expense.
The capital asset expenditures are therefore added back [o fund balance
(Net of internal service fund additions of $557,235):
Capital outlay 8,334,093
Public Works 171,690
Depreciation expense is deducted from the fund balance
(Depreciation expense is net of internal service fund depreciation
of $330,312 which has already been allocated to serviced funds) (5,686,298)
Retirement of capital assets, net of proceeds from sale (12,134)
Transfer of capital assets 441,985
LONG TERM DEBT PROCEEDS AND PAYMENTS
Repayment of bond principal is an expenditure in the governmental funds, but
in the Statement of Net Assets the repayment reduces long-term liabilities.
Repayment of debt principal is added back to fund b:dance 1,355,000
ACCRUAL OF NON-CURRENT ITEMS
The amounts below included in the Statement of Activities do not provide or (require) the use of
current financial resources and therefore are not reported as revenue or expenditures in
governmental funds (net change):
Non-current portion of compensated absences 139,714
Deferred revenue (1,481,700)
ALLOCATION OF INTERNAL SERVICE FUND ACTiV IT`C
Internal Service Funds are used by management to charge t:~e costs of certain activities,
such as equipment acquisition, maintenance, and insurance to individual funds.
The portion of the net revenue (expense) of these Intern:d Service Funds arising out
of their transactions with governmental funds is reported with governmental activities,
because they service those activities.
Change in Net Assets -All Internal Service Funds 1,692,920
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $9,491,072
See accompanying notes to financial statements
32
CITY OF CUPI~RTINO
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2008
Revenues:
Taxes
Use of money and property
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Other revenue
Amounts available for appropriation
Charges for appropriation (outflows)
Administration
Law enforcement
Public information
Administrative services
Recreation services
Community development
Public works
Total charges for appropriations
EXCESS OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out)
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
BEGINNING FUND BALANCE
ENDING FUND BALANCE
Variance with
Budgeted Amounts Final Budget
Positive
Orifainal Pinal Actual Amounts (Negative)
$32,160,000 $34,560,000 $33,863,497 ($696,503)
1,483,000 2,100,000 2,015,653 (84,347)
950,000 729,870 659,487 (70,383)
3,172,000 3,030,000 2,656,017 (373,983)
2,066,000 1,151,685 1,363,196 211,511
690,000 800,000 722,087 (77,913)
100,000 116,200 85,388 (30,812)
40,62],000 42,487,755 41,365,325 (1,122,430)
1,488,000 1,499,095 1,35 1,273 147,822
7,865,000 7,982,421 7,456,661 525,760
1,254,000 1,275,848 1,169,247 106,601
4,384,000 4,540,610 3,797,156 743,454
3,874,000 3,910,044 3,745,244 164,800
3,814,000 3,722,479 3,417,590 304,889
]0,888,000 11,032,843 10,073,546 959,297
33,567,000 33,963,340 31,010,7]7 2,952,623
7,054,000 8,524,415 10,354,608 1,830,193
1,230,000 1,300,165 1,300,165
(15,648,000) (18,334,750) (78,334,750)
(14,418,000 (17,034,585) (17,034,585)
$7,364,000) ($8,510,170) (6,679,977) $1,830,]93
26,346,460
$19,666,483
See accompanying notes to 1 financial statements
33
MAJOR PROPRIE"GARY FL7NDS
Proprietary funds account for City operations financed and operated in a manner similar to a private
business enterprise. The intent of the City is that the cost of providing goods and services be financed
primarily through user charges.
The City has identified the funds below as major proprietary funds for fiscal 2008_
RESOilI2CES RECOVERY FUND
This fund accounts for activity related to the collection amd disposal of solid waste. A private company has
been issued an exclusive franchise to perform these services.
BLACKBERRY FARM FiJND
This fund accounts for activities related to operating the €;olf course.
CUPERTINO SPORTS CENTER FUNID
This fund accounts for the operation and maintenance of the Cupertino Sports Facility.
RECREATION PROGRAMS FL7ND
This fund accounts for activities of the City's community center.
SENIOR CENTER FUND
This fund accounts for the activities of the City's senior center.
?.4
CITY OF CUPL'RTINO
PR0PRIETARI" FUNDS
STATEMENT OF rlET ASSETS
JUNE 30, 2008
ASSETS
Current Assets:
Cash and investments (Note 2)
Accounts receivable
Prepaid expense
'T'otal current assets
Capital Assets (Note 5):
Depreciable, net of
accumulated depreciation
Total Assets
LIABILITIES
Curren[ Liabilities:
Accounts payable and accruals
Accrued payroll and benefits
Compensated absences
Claims payable (Note 9)
Unearned revenue
Total current liabilities
Non-current Liabilities:
Compensated absences (Note 1 h)
Claims payable (Note 9)
Total Liabilities
NET ASSETS (Note 7)
Invested in capital assets
Unrestricted
Total Net Assets
Business-type Activities-Enterprise Funds Governmental
Cupen.ino Activities-
Resources Blackberry Sports Recreation Senior Internal Service
Recovery Farm Cenl er Programs Center Totals Funds
$5,303,039 $342,610 $5X,169 $2,489,339
335,522 6,281
1,110
5,638,561 342,610 520,169 2,496,730
47,871 8,320 27,935
5,686,432 350,930 54E., 104 2,496,730
171,842 20,527 143,370 47,547
2,381 2,618 `_,612 17,990
509 13,562
1 7 ~ ,236 545,729
174,732 36,707 326,218 611,266
174,732 36,707 326,218 611,266
47,871 8,320 2"x,935 84,126 963,978
5,463,829 305,903 1971,951 1,885,464 7,849,147 9,496,654
$5,511,700 $314,223 $221,886 $1,885,464 $7,933,273 $10,460,632
See accompanying notes [o financial statements
$8,655,157 $11,131,889
341,803 36,043
1,110 15,919
8,998,070 1 1,183, 85 1
84,126 963,978
9,082,196 12, 147,829
383,286 72,647
28,601 18,192
14,071
369,000
722,965
1,148,923 459,839
99,358
1,128,000
1,148,923 1,687,197
_; 5
CITY OF CUPF;RTINO
PROPRIETARY FUNDS
STATEMENT OF REVE',VUE, EXPENSES
AND CHANGES IN FU]'JD NET ASSETS
FOR THE YEAR ENDEIJ JUNE 30, 2008
OPERATING REVENUES
Charges for services
Other
Total Operating Revenues
OPERATING EXPENSES
Salaries and benefits
Materials and supplies
Contractual services
Insurance and claims
Depreciation (Note 5)
Total Operating Expenses
Operating Income (Loss)
NONOPERAT[NG REVENUES (EXPENSES)
Interest income
Total Nonoperating Revenues (Expenses)
Income (Loss) Before Contributions and Transfers
Transfer of capital assets (Note 5)
Transfers in (Note 4)
Transfers (ouq (Note 4)
Net transfers
Change in net assets
Net Assets-Beginning
Net Assets-Ending
Business-type Activities-Enterprise Funds Governmental
Cupertino Activities-
Resources Blackberry Sports Recreation Senior .Internal Service
Recovery Farts Center Programs Center Totals Funds
$2,254,790 $623,540 51,600,604 $2,493,215 $6,972,149 $2,151,062
14,309 17,232 4,940 36,481
2,269,099 640,772 1,605,544 2,493,215 7,008,630 2,151,062
70,104 127,163 296,897 467,546
24,035 24,885 150,874 172,554
1,958,970 293,515 1,092019 1,213,117
2,952 4,643 7,612
2,056,061 450,206 1 ,547,402 1,853,217
213,038 190,566 58,142 639,998
257,056 11,981 19,719 90,071
257,056 1 1 981 19 719 90 071
470,094 202,547 77,861 730,069
(441,985)
(500 000)
(500 000) (441 985)
(29,906) (239,438) 77,861 730,069
961,710 826,917
372,348 564,264
4,557,621 3 10,884
1,027,917
15,207 330,312
5,906,886 3,060,294
1,101,744 (909,232)
378,827 482,402
378,827 482,402
1,480,571 (426,830)
(441,985)
2,119,750
($50,165) (550,165)
(50,165) (992,150) 2,119,750
(50,165) 488,421 1,692,920
5,541,606 553,661 144,025 1,155,395 50,165 7,444,852 8,767,712
$5,511,700 $314,223 $221,886 $1,885,464 $7,933,273 $10,460,632
See accompanying notes [0 1 financial statements
36
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers
Cash payments to suppliers
for goods and services
Cash payments to employees
Ne[ cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Medicare retiree drug subsidy
Transfers in
Transfers (ouQ
Cash Flows from Noncapital
Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of capital assets
Loss on equipment disposal
Cash Flows from Capital and
Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Cash Flows from Investing Activities
Ne[ Cash Flows
Cash and investments al beginning of year
Cash and investments a[ end of year
Reconciliation of operating income (loss) [o
net cash provided by operating activities:
Operating income (loss)
Adjustments [o reconcile operating income to
net cash provided by operating activities:
Depreciation
Change in assets and liabilities:
Accounts receivable
Prepaid expense
Accounts payable and accruals
Accrued payroll and benefits
Deposits
Deferred revenue
Compensated absences
Net cash provided by operating activities
CITY OF CUPL•RTINO
PROPRIETARY FUNDS
STA TEMENT OF CASH FLOWS
FOR TH E YEAR ENDED JUNE 30, 20 08
Business-type Activit ies-Enterprise F unds
Governmental
Cupertino Activities-
Resources Blackberry Sports Recreation Senior Internal Service
Recovery Farm Center Programs Center Totals Funds
$2,238,759 $650,012 $1,623,192 $2,464,502 $76,357 $7,052,822 $2,151,062
(1,978,175)
(126,612) (33'5,853) (1,253,212)
(119,145) (296,351) (1,353,756)
(466,406) (8,761)
(20,589) (4,929,757)
(1,029,703) (1,760,248)
(807,915)
133,972 195,014 73,629 644,340 47,007 1,093,962 (417,1 OI )
(500,000)
(500,000)
(49,349) (6,564) (17,989)
(114;627) (614 627)
(36,043)
2,1 19,750
(114,627) (614,627) 2,083,707
(73,902) (556,920)
(49,349) (6,564) (17,989) (73,902) (556,920)
257,056 11,981 19,719 90,071 378,827 482,402
257,056 11,981 19,719 90,071 378,827 482,402
(158,321) 200,431 75,359 734,411 (67,620) 784,260 1,592,088
5,461,360 142,179 444,810 1,754,928 67,620 7,870,897 9,539,801
$5,303,039 $342,61 O $520,169 $2,489,339
$8,655,157 $11,131,889
$213,038 $190,566 $58,142 $639,998 $1,101,744 ($909,232)
2,952 4,643 7,612 15,207 330,312
(30,340) 9,240 IQ601 $76,357 65,858 '
(1,110) 84,084 82,974 (4,938)
4,830 (17,453) (10,319) 33,025 (1,026) 9,057 25,755
384 (810) 546 1,140 (2,460) (1,200) 5,924
13,078
17,648 (39,374) (91,819) (113,485) 122,000
(56,892) 8,828 (18,129) (66,193)
$133,972 $195,014 $73,629 $644,340 $47,007 $1,093,962 ($417,101)
See accompanying notes [o fi nancial statements
3'7
FIDUCIARY FUNiDS
Fiduciary Funds include all agency funds that account for assets held by the City as an agent for
individuals, private organizations, other governmental units and/or other funds.
Agency Funds are custodial in nature and do not involve measurement of results of operations. Such
funds have no equity since any assets are due to individuals or other entities at some future time.
Special district assessments held by the City, acting as yin agent for bond debt service payments, comprise
Agency funds. The City is not liable for re-payment of the bonds.
3,~
CITY OF CUPERTINO
FIDUCIARY FUNDS
STATEMENT OF FIDUC[ARY NET ASSETS
JUNE 30, 2008
Agency
Funds
ASSETS
Cash and investments (Note 2) $117,308
Total Assets
$117,308
LIABILITIES
Deposits
$1 17,308
Total Liabilities $117,308
See accompanying notes to financial statements
39
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Reporting Entity
The City of Cupertino, California (the City) was incorporated on October 3, 1955, under
the laws of the State of California. Ttie City operates under aCouncil -City Manager
form of government and provides services through the following departments:
Administrative Services, Community D~welopment, City Manager, Parks and Recreation,
Public Information, and Public Works~'Engineering_ Fire services are provided by the
Santa Clara County Fire District, and the City contracts with the Santa Clara County
Sheriff s Department for police services, and with the Los Altos Garbage Company for
garbage and recycling services.
The accompanying basic financial statements include all funds and boards and
commissions that are controlled by the City Council. The basic financial statements
include the City's blended component units, entities for which the City is considered to
be financially accountable. A blended component unit, although a legally separate
entity, is in substance, part of the City's operations and so data from this unit is
combined with the City.
Blended component units - The Cupertino Public Facilities Corporation (the
Corporation) was incorporated in M[ay 1986, under the Nonprofit Public Benefit
Corporation Law of the State of California. The Corporation was organized as a
nonprofit corporation for the purpose of assisting the City in the acquisition,
construction, and financing of public improvements which are of public benefit to the
City. The Corporation, after acquiring certain properties from the City, leases these back
to the City. The lease money provides the funds for the debt service for the Certificates
of Participation issued by the Corporation to acquire the properties. The Cupertino
Redevelopment Agency was formed in 2000 under the California Health 8z. Safety Code
to assist in the elimination of areas considered to be in a blighted condition. The City
Council acts as the Board of Directors of the Corporation and the Agency. The Mayor
and Vice Mayor of the City have been elected President and Vice President, respectively,
of the Corporation. The City Clerk has. been elected Secretary, and the City's Director of
Administrative Services has been appointed Treasurer of both entities.
No separate financial statements are issued for the Corporation, since it is reported
separately in the basic financial statements. The Redevelopment Agency's separate
report is available from the City of Cupertino's website at www.cupertino.org.
(b) Measurement Focus_ Basis of Accountine and Basis of Presentation
The City's Basic Financial Statemerits are prepared in conformity with accounting
principles generally accepted in the United States of America. The Government
Accounting Standards Board is the acF:nowledged standard setting body for establishing
accounting and financial reporting standards followed by governmental entities in the
U.S.A.
~l I
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Measurement Focus. Basis of Accounting and Basis of Presentation (continued)
Government-wide Statements: The ~>tatement of Net Assets and the Statement of
Activities display information about the primary government (the City) and its
component units. These statements include the financial activities of the overall City
government, except for fiduciary activities. These statements distinguish between the
governmental and business-type activities of the City. Governmental activities generally
are financed through taxes, intergovernmental revenues, and other nonexchange
transactions. Business-type activities are financed in whole or in part by fees charged to
external parties.
The Statement of Activities presents a comparison between expenses and program
revenues for each segment of the business-type activities of the City and for each
function of the City's governmental activities. Expenses include direct and indirect
types. Direct expenses are those than. are specifically associated with a program or
function and, therefore, are clearly identifiable to a particular function. Indirect expenses
such as depreciation, information. technology, insurance and equipment replacement are
included in expenses for individual activities and functions. Program revenues include
(a) charges paid by the recipients of goods or services offered by the programs, (b) grants
and contributions that are restricted to meeting the operational or capital needs of a
particular program and (c) development fees which are considered capital grants under
California law. Revenues that are not classified as program revenues, including taxes, are
presented as general revenues. Program revenues and direct expenses related to
interfund services are included and indirect expenses funded by interfund transfers are
excluded from the Statement of Activities. The Statement of Net Assets eliminates
interfund balances between governmental funds and interfund balances between
proprietary funds.
Fund Financial Statements: The fund financial statements provide information about
the City's funds, including fiduciary funds and blended component units. Separate
statements for each fund category -governmental, proprietary, and fiduciary - are
presented. The emphasis of fund financial statements is on major individual
governmental and enterprise funds, each of which is displayed in a separate column. All
remaining governmental and enterprise funds are aggregated and reported as nonmajor
funds.
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. Nonoperating
revenues, such as subsidies and investment earnings, result from nonexchange
transactions or ancillary activities-
<12
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Measurement Focus. Basis of Accounting and Basis of Presentation (continued)
Major Funds -The City's major governmental and business-type funds are identified
and presented separately in the fund financial statements. All other funds, called non-
major funds, are combined and reported in a single column, regardless of their fund-type.
Major funds are defined as funds, v<~hich have either assets, liabilities, revenues or
expenditures equal to ten percent of their fund-type total and five percent of the grand
total. The General Fund is always a major fund. The City may select other funds it
believes should be presented as major funds.
The City reported the following major governmental funds in the accompanying
financial statements:
The General Fund is the general operating fund of the City. It is used to account for all
financial resources except those that are required to be accounted for in another fund.
The Public Facilities Corporation D~sbt Service Fund accounts for the payments of
principal and interest on certificates of participation issued to provide for the advance
refunding of the City Hall/L,ibrary, Wilson Park and Memorial Park certificates of
participation.
The Capital Improvement Project Fund accounts for activities related to the acquisition or
construction of major capital facilities.
The Stevens Creek Corridor Park Cap,?tal Project Fund accounts for the development of
the master plan and the design and consiruction of the Stevens Creek Corridor Park.
The Mary Avenue Bicycle Footbridge+ Capital Project Fund accounts for design and
construction of a bicycle footbridge e:ctension of Mary Avenue over Interstate 280. It
includes gateways, paths, residential buffering elements and landscaping.
The City reports all its enterprise fun~~s as major funds in the accompanying financial
statements:
The Resources Recovery Fund accounts for activity related to the collection and disposal of
solid waste. A private company has been issued an exclusive franchise to perform these
services.
The Blackberry Farm Fund accounts for activities related to the municipal golf course.
The Cupertino Sports Center Fund accounts for the operation and maintenance of the
Cupertino Sports Facility.
~F3
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Endedl June 30, 2008
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (continued)
The Recreation Programs Fund accounts for activities of the City's community center.
The Senior Center Fund accounts for the activities of the City's senior center.
The City also reports the following fund types:
Internal Service Funds. These funds account for workers' compensation, management
information system maintenance acid replacement, equipment maintenance and
replacement, and long-term disability coverage; all of which are provided to other
departments on acost-reimbursement basis. Funds for current and future retiree health
costs are also reserved here.
Fiduciary Fund. The City acts as an argent for re-payment of certain special assessment
debt described in Note 6 of this section. This fund accounts for the tax assessments used
for bond payments.
Basis of Accounting -The government-wide and proprietary financial statements are
reported using the economic resources measurement focus and the full accrual basis of
accounting. Revenues are recorded when earned and expenses are recorded at the time
liabilities are incurred, regardless of when the related cash flows take place.
Governmental funds are reported using the current financial resources measurement
focus and the modjied accrual basis of accounting. Under this method, revenues are
recognized when measurable and available. The City considers all revenues reported in
the governmental funds to be available if the revenues are collected within sixty days
after year-end. Expenditures are recorded when the related fund liability is incurred,
except for principal and interest on long-term debt which are recognized as expenditures
to the extent they have become due aid payable. General capital asset acquisitions are
reported as expenditures in governmental funds. Proceeds from long-term debt and
acquisitions under capital leases are reported as other financing sources.
Fiduciary financial statements consisting of agency funds, report only assets and
liabilities, and therefore have no measurement focus. They recognize receivables and
payables on a full accrual basis.
Property taxes, transient occupancy taxes, utility taxes, franchise taxes, interest and
special assessments are susceptible to :accrual. Sales taxes collected and held by the state
at year end on behalf of the City are al:>o recognized as revenue- Other receipts and taxes
are recognized as revenue when the ca:;h is received.
•~4
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Measurement Focus, Basis of Accountir~e and Basis of Presentation (continued)
Grant revenues are recognized in the fiscal year in which all eligibility requirements are
met. Under the terms of grant agreements, the City may fund certain programs with a
combination of cost-reimbursement grants, categorical block grants, and general revenue.
Thus, both restricted and unrestricted net assets may available to finance program
expenditures. The City's policy is to first apply restricted grant resources to such
programs, followed by general revenuers if necessary.
The City follows statements and inter~~retations of the Financial Accounting Standards
Board and its predecessors that were issued on or before November 30, 1989, in
accounting for its business-type activities, unless they conflict with Government
Accounting Standards Board pronounce:ments.
GASB 33 Non-Exchange Transaction -Non-exchange transactions, in which the City
gives or receives value without direcrly receiving or giving equal value in exchange,
include property taxes, grants, entitlements, and donations. On the accrual basis, revenue
from property taxes is recognized in the fiscal year for which the taxes are levied or
assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal
year in which all eligibility requirements have been satisfied.
(c) Budgetary Practices
The budget of the City is a detailed operating plan which identifies estimated costs and
results in relation to estimated revenues. The budget includes (1) the programs, projects,
services and activities to be provided during the fiscal year; (2) estimated revenue
available to finance the operating plar~; and (3) the estimated spending requirements of
the operating plan. The budget represents a process through which policy decisions are
made, implemented and controlled. Tlie City prohibits expending funds for which there
is no legal appropriation. Operating appropriations lapse at fiscal year end.
In May of each year, the City Manager submits to the City Council a proposed budget for
the fiscal year beginning July 1. Public hearings on the proposed budget are held during
the month of June and the budgets for' all fund types are legally adopted by Resolution
prior to June 30. Original budget amounts are presented on the accompanying budgetary
statements include these legally adopted amounts.
The City Manager is responsible for ~~ontrolling the City's expenditures in accordance
with the adopted budget. The City Manager is authorized to transfer appropriations
within functional expenditure classifications. Any revision which requires transfers
between functional expenditure classifications or increases total appropriations must be
approved by the City Council. Requests for additional personnel or capital outlay also
require the approval of the City Council. The legal level of budgetary control is at the
departmental or project level.
CIS
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(1)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Budgetary Practices (continued)
Budgets for governmental funds are adopted on a basis consistent with generally
accepted accounting principles. Budget information is presented for the general, special
revenue and debt service funds only. Capital project funds are budgeted on a long-term
project-by-project basis and, hence, budgets for these funds are not presented in the basic
financial statements.
(d) Cash and Investments
The City pools its cash resources, consisting of cash and investments, of all funds for
investment except for restricted funds generally held by an outside fiscal agent. Cash
amounts are reported net of outstanding warrants.
Investments are stated at fair value.
(e) Capital Assets
Capital assets are recorded at cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at their estimated fair value on the date
donated.
Public domain (infrastructure) capital assets consisting of roads, bridges, curbs, gutters,
medians, sidewalks, drainage and lighting systems have been capitalized and depreciated.
Depreciation is recorded using the straight-line method over the following useful lives:
Years
Buildings 25
Improvements 3 1
Vehicles 4-1 O
Street equipment 3-20
Water equipment 3-50
Office equipment 3-5
Road, curbs, gutters, sidewalks, medians and bridges 30-40
Streetlights 20
Storm drain structure and mains 40
Traffic signals 20
The City capitalizes capital assets exceeding $5,000.
Major outlays for capital assets and improvements are capitalized as projects are
constructed. Interest incurred during th~a construction phase is reflected in the capitalized
value of the asset constructed, net of interest earned on the invested proceeds over the
same period.
46
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(1)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e) Capital Assets (continued)
Some capital assets may be acquired u:;ing federal and state grant funds, or they may be
contributed by developers or other governments. These contributions are accounted for
as revenues at the time the capital asset:a are contributed.
(f) Land Held for Housing Development
Land held for redevelopment of $615,000 at June 30, 2008 is stated at the lowest of
historical cost, net realizable value or ~igreed-upon sales price. The land was purchased
using Federal grant funds for housing a~~tivities.
(g) Claims and Judgments Payable
Claims and judgments payable are accrued when the liability is incurred and the amount
can be reasonably estimated. Claims and judgments payable are recorded in an internal
service fund for workers' compensation and long-term disability. General liability claims
and judgments are not material and are not accrued.
(h) Compensated Absences
Compensated absences comprise vested accumulated vacation and sick leave. The City's
liability for compensated absences is recorded in Governmental Activities or various
Proprietary funds as appropriate. The liability for compensated absences is determined
annually. For all governmental funds, amounts expected to be "permanently liquidated,"
such as what is due to be paid because of a realized employment action, are recorded as
fund liabilities; the long-term portion is recorded in the Statement of Net Assets. In prior
years, the governmental or proprietary fund associated with the ongoing salary and
benefit cost of the employee has liquidated the long-term liability.
The changes in compensated absences v~ere as follows:
Governmental Business-Type
Activities Activities Total
Beginning Balance $:2,560,645 $80,264 $2,640,909
Additions 366,212 14,491 380,703
Payments (492,848) (80,684) (573,532)
Ending Balance $:2,434,009 $14,071 $2,448,080
G~rrent Portion $145,284 $14,071 $159,355
47
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(1)
SUMMARY OF SIGNIFICANT ACCOUNTII~TG POLICIES (continued)
(i) Fund Equity
Reservations of fund balances represent those portions of fund balances which are not
available for appropriation or expenditure or are legally restricted for a specific future
use. Designated fund balances represent management's tentative plans for future use of
financial resources.
(j) Property Tax Calendar
All property taxes are levied and collected by the County of Santa Clara. Secured taxes
are levied on July 1, are due in two installments on November 1 and March 1 and become
delinquent on December 1 O and April 1 O. Unsecured taxes are due on July 1 and become
delinquent on August 31. The lien date for secured and unsecured property taxes is
March 1.
The City, in fiscal year 1993-94, adopted an alternative method of property tax
distribution (the "Teeter Plan"). Under this method, the City receives 100% of its
secured property tax levied in exchange for foregoing any interest and penalties collected
on delinquent taxes. The City receives: remittances as a series of advances made by the
County during the year.
(k) Interfund Transactions
Transactions constituting reimbursements to a fund for expenditures/expenses initially
made from it that are properly ~ipplicable to another fund, are recorded as
expenditures/expenses in the reimbursing fund and as reductions of
expenditures/expenses in the fund that is reimbursed.
(1) Statement of Cash Flows
For purposes of reporting cash flows :For the City's proprietary funds, pooled cash and
investments are considered cash equivalents as the proprietary funds can access pooled
cash and investments in a manner similar to a demand deposit account.
(m) Bond Discounts and Issue Costs
Debt discounts and issuance costs are recognized in the current period. Debt discounts
and issuance costs incurred by proprietary fund types are amortized over the term of the
debt using the bonds-outstanding method, which approximates the effective interest
method.
X48
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(1) SUMMARY OF SIGNIFICANT ACCOUNTI2yG POLICIES (continued)
(n) Inventories and Prepaids
Inventories are accounted for under the purchases method, which considers inventories to
be recognized as an expenditure upon purchase, with inventories insignificant at year-
end. Prepaid expenses are reported under the consumption method, which recognizes the
expense in the period associated with the service rendered or goods consumed.
(o) Expenditures in Excess of Budget
For the year ended June 30, 2008, expenditures exceeded the budgeted expenditures by
$340 in the Public Facilities Corporation Debt Service Fund.
(2) CASH AND INVESTMENTS
The City's pooled idle funds are invested pursuant to investment policy guidelines adopted by the
City Council. The objectives of the policy are to invest funds to the fullest extent possible and to
invest in accordance with the provisions of the California Government Code with the priority of
safety, liquidity and yield. The policy addresses; the safekeeping of securities, types of investment
instruments, diversification, maturities, reporting requirements, and internal control. The City
maintains a cash and investment pool that is available for use by all funds. Each fund type's portion
of this pool is displayed on the combined balance: sheet as "cash and investments."
(a) Policies
California Law requires banks and sa,rings and loan institutions to pledge government
securities with a market value of 1 10°/~ of the City's cash on deposit, or first trust deed
mortgage notes with a market value of 150% of the deposit, as collateral for these deposits.
Under California Law this collateral is held in a separate investment pool by another
institution in the City's name and places the City ahead of general creditors of the
institution.
The City and its fiscal agents invest iii individual investments and in investment pools.
Individual investments are evidenced b;y specific identifiable securities instruments, or by
an electronic entry registering the owner in the records of the institution issuing the security,
called the book entry system. Security instruments owned by the City are held in
safekeeping by a third party custodian acting as agent for the City under the terms of a
custody agreement.
The City's investments are carried at f~eir value. The City adjusts the carrying value of its
investments to reflect their fair value at each fiscal year end, and it includes the effects of
these adjustments in interest income for that fiscal year.
~E9
CITY OF CUPERTIN~~, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Endedl June 30, 2008
(2)
CASH AND INVESTMENTS (continued)
(b) Classification
The City's total cash and investments, at fair value, are presented on the accompanying
statement of net assets in the following allocation:
Statement of"Net Assets
Cash and investments
Cash and investments with fiscal agent for bond repayments
Subtotal
Fiduciary Funds
Cash and investments
Total Cash and investments
$61,374,305
2,444,53 1
63,818,836
1 17,308
$63,936,144
50
CITY OF CUPERTINIJ, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
CASH AND INVESTMENTS (continued)
(c) Authorized Investments by the City
The City's Investment Policy and the California Government Code allow the City to
invest its pooled idle funds in th_ a following, under limits and provisions that address
interest rate risk, credit risk, and concentration of credit risk. This does not include the
City's investments of debt proceeds ]field by fiscal agents that are governed by the
provisions of debt agreements of the City.
(2)
Maximum
Maximum Minimum Percentage of Maximum Investment
Authorized Investment Type Maturity _ Credit Quality Portfolio In One Issuer
U.S. Treasury obligations 5 years N/A None None
Federal Agency securities (A) 5 years (B) N/A None None
Up to $40
California Local Agency Investment million, per State
Fund N/A N/A law None
Non-negotiable Certificates of Deposit ~ 5 years N/A None 1 O% of portfolio; 5% of
(time deposits) issuer's net worth
State of California registered state 5 years N/A None 1 O%
warrants, treasury notes, or bonds
California local agency bonds, notes, 5 years N/A None 1 O%
warrants or other obligations
Bonds issued by the local agency 5 years N/A None 1 O%
Bankers Acceptances 180 days N/A 40% None
1 O% of portfolio; 5% of
Commercial Paper 270 days A-1+ / P-I 25% issuer's net worth; 10%
of outstanding paper of
issuer.
Negotiable Certificates of Deposit 5 yeazs N/A 30% 1 O% of portfolio; 5% of
issuer's net worth
Repurchase Agreements 1 year N/A None 1 O% of portfolio; 5% of
issuer's net worth
Medium Term Corporate Notes 5 years A or better 30% 1 O% of portfolio; 5% of
issuer's net worth
Money market mutual funds investing
in U.S. Treasury, Government Agency N/A N/A 20% 1 O%
securities, or repurchase agreements
(A) Securities issued by agencies of the federal government such as the Government National Mortgage Association, (GNMA), the
Federal Home Loan Bank (FHLB), the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage
Corporation (FHLMC), and the Federal Farm Credit Bank (FFCB).
(B) As allowed by City investment policy, the City Council approved an exception to the 5-year maturity limit with an investment in
1993 of one FHLMC security with maturity in 2007. The investment principal amortizes to zero upon maturity.
51
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(2)
CASH AND INVESTMENTS (continued)
(d) Authorized Investments by Debt Agreen-tents
The City must maintain required amourtts of cash and investments with trustees or fiscal
agents under the terms of certain debt issues. These funds are unexpended bond proceeds
or are pledged reserves to be used if the City fails to meet its obligations under these debt
issues. The California Government Code requires these funds to be invested in
accordance with City ordinances, bond indentures or State statutes. The City's
Investment Policy allows investments of bond proceeds to be governed by provisions of
the related bond indentures. The following identifies the investment types that are
authorized for investments held by fiscal agents under the terms of the bond indentures of
the related debt issue:
Maximum
Maximum Minimum Credit Percentage of
Authorized Investment Type 1\ilaturity Quality Portfolio
Aaam or
Money market mutual funds N/A AAAm-G None
Up to $40
California Local Agency Investment million, per
Fund N/A N/A State law
U.S. Treasury obligations N/A N/A None
U.S. Federal agency obligations (A) N/A N/A None
Pre-refunded local agency municipal
obligations that are non-callable or Highest rating
irrevocably callable on a specified date N/A category None
General obligations of states N/A A2/A None
U.S. dollar denominated deposit
accounts, federal funds and bankers
acceptances 350 days P-1, A-1+, A-1 None
Commercial paper 270 days P-l, A-1 None
Time or demand accounts or certificates
of deposits, collateralized N/A N/A None
Investment agreements or other forms of
investments, including repurchase
agreements, approved by the financial
guaranty insurance carrier. N/A N/A None
(A) Securities issued by agencies of the federal p;overnment such as the Government National Mortgage
Association, (GNMA), the Federal Home Loan Bank (FHLB), the Federal National Mortgage Association
(FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), and the Federal Farm Credit Bank
(FFCB).
52
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(2) CASH AND INVESTMENTS (continued)
(e) Interest Rate Risk
Interest rate risk is the risk that change:; 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.
Information about the sensitivity of the fair values of the City's investments (including
investments held by bond trustees) to rrlarket interest rate fluctuations is provided by the
following table that shows the distribution of the City's investments by maturity or
earliest call date:
12 Months 13 to 25 to
or less 24 Months 60 Months Total
U.S_ Treasury Securities $17,147,000 $17,147,000
Federal Agency Obligations ]0,991,308 $3,049,690 14,040,998
IA CaI Agency Investment Fund 17,039,962 17,039,962
Government Securities Money Market Funds 14,173,572 14,173,572
Non-negotiable Certificates of Deposit 1,295,657 98,063 $95,725 1,489,445
Total Investments $60,647,499 $3,147,753 $95,725 63,890,977
Cash in banks and on hand 45,167
Total Cash and Investments
$63,936,144
The City is a participant in the Local f\gency Investment Fund (LAIF) that is regulated
by California Government Code Section 16429 under the oversight of the Treasurer of
the State of California. The City reports its investment in LAIF at the fair value amount
provided by LAIF, which is the same as the value of the pool share. The balance is
available for withdrawal on demand, alld is based on the accounting records maintained
by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment
portfolio are U.S. Treasuries, Federal. Agency obligations, time deposits, negotiable
certificates of deposits, commercial palter, corporate bonds, and security loans. At June
30, 2008, these investments had weighted average maturity of 212 days.
Money market funds are available for withdrawal on demand and at June 30, 2008,
carried investments with an 16 day average maturity.
~~ 3
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
C2)
CASH AND INVESTMENTS (continued)
(~ Credit Risk
Credit risk is the risk that an issuer of .an investment will not fulfill its obligation to the
holder of the investment. This is measccred by the assignment of a rating by a nationally
recognized statistical rating organization. Presented below is the actual rating as of June
30, 2008 for each investment type, including those with fiscal agents, as provided by
Moody's ratings:
Investment Type Aaa Total
Federal Agency Obligations $14,040,998 $14,040,998
Government Securities Money Market Funds 14,173,572 14,173,572
Totals $28,214,570 28,214,570
Exempt from Credit Rating Disclosure:
U_S. Treasury Securities 17,147,000
Not Rated:
Local Agency Investment Fund 17,039,962
Certificates of deposit 1,489,445
Total Investments $63,890,977
(g) Concentration of Credit Risk
The City's investment policy contains certain limitations on the amount that can be
invested in any one issuer. In certain ~~ategories, these limitations are more restrictive
than those required by California Government Code Sections 53600 et seq. Investments
in any one issuer, other than U.S. 'T'reasury securities, mutual funds, and external
investment pools, that represent 5% or more of total Entity-wide investments are as
follows at June 30, 2008:
Issuer
Investment Type
Federal Agencies Obligation
Federal Agencies Obligation
Amount
Federal Home Loan Bank
Federal Farm Credit Bank
$7,983,448
6,057,550
5.}
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(3)
RELATED PARTY LOANS
In conjunction with the City's executive housing assistance program, loans totaling
$1,535,860 have been provided to three executive managers. These 40-year loans bear an
interest rate equal to the 1 lth District Cost of Funds at the time of the loan, and require
monthly principal and interest payments. In addition, there is a two percent deferral on
the interest rate for the first five years of the loan, at which time the interest rate may be
adjusted to the current 1 ]th District Co~:t of Funds for the remainder of the loan. At June
30, 2008, the balance remaining on the three loans was $800,621.
(4)
INTERFUND TRANSACTIONS
Transfers between funds during the fiscal year ended June 30, 2008 were as follows:
Fund Making Transfers Fund Receiving Transfers Amount Transferred
General Fund Public Facilities Corporation Debt Service Fund $3,538,000 (A)
Stevens Creek Corridor Park Fund 7,736,000 (B)
Capital Improvement Projects Funds 4,191,000 (C)
Non-major governmental funds 750,000 (D)
Internal Service Funds 2,119,750 (E)
Stevens Creels Corridor Park Fund General Fun~J 420,000 (F)
Capital Improv¢m¢nt Projects Funds General Fund 330,000 (G)
Stevens Creek Corridor Park Fund 810,000 (H)
Mary Avenue Bicycle Footbridge Capital Project Fund 71,000 (I)
Non-major governmental funds Mary Avenue Bicycle Footbridge Capital Project Fund 645,000 (I)
Non-major governmental funds 95,000 (J)
Enterprise Fund
Resource Recovery General Fund 500,000 (K)
Senior Center General Fund 50,165 (L)
Total Inte rfund Transfers $21,255,915
The reasons for these transfers are set forth below:
(Aj For debt service.
(B) To fund the Stevens Creek Corridor Park construction with current and future y ear re-allocations.
(C) For capital projects (budget and midyear adjustments).
(D) To fund other capital projects (budget and midyear adjustments) and street maintenance.
(E) To fund retiree medical, IT and equipment rep lace~ment.
(F) To return project savings to General Fund.
(G) To return project funding to General Fund.
(H) To fund the Stevens Creek Corridor Park construotion project.
(I) To fund the Mary Avenue Bike footbridge project.
(J) To fund the Bolliger Bike Lane project.
<K) "fo reimburse General Fund costs for waste cleanup.
(L) To close out fund and transfer residual equity to General Fund.
>5
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(4) INTERFUND TRANSACTIONS (continued)
As development of the Cupertino Square project area is still in progress, tax increment
revenues are not yet sufficient to finance Redevelopment Agency operations. To assist
the Agency until project redevelopment generates additional tax increment revenues, the
City's General Fund has advanced funds to the Agency, a part of non-major
governmental funds, to finance operations. As of June 30, 2008 the balance of the
advance was $263,324_
Internal Balances -The City-wide financial statements had no net interfund receivables
and payable remaining after the elimination of all such balances within governmental and
business-type activities.
56
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(5) CAPITAL ASSETS
A summary of changes in capital assets follows:
Balance at Balance at
June 30, 2007 Additions Retirements Transfers June 30, 2008
Governmental activities
Capital assets not being depreciated:
Land $58,908,393 $389,929 $59,298,322
Construction in pro }mess:
Infrastructure 2,662.785 $4,846,780 7,509,565
Other capital projects 747.334 1,356,658 2,103,992
Total capital assets no[ being depreciated 62,318.512 6,203,438 389,929 68,91 1,879
Capital assets being depreciated:
Buildings 39,774.781 574,048 8,747 40,357,576
Improvements other than buildings 24,959.179 281,125 614,664 25,854,968
Machinery and Equipment -governmental funds 1,869.934 20,019 ($97,485) 111,031 1,903,499
Road, curbs, gutters, sidewalks, medians
and bridges 99,757.061 1 ,31 2,276 1 O 1 ,069,337
St ree[lights 6,547255 6,547,255
Storm drain structure and mains 31,604.207 64,877 31,669,084
Traffic sigm als 5,917.411 50,000 5,967,411
Total capital assets being depreciated 210,429.828 2,302,345 (97,485) 734,442 213,369,130
Less accumulated depreciation for:
Buildings 1 0,791 ..579 1 ,494,632
Improvements other than buildings 17,849 685 800,220
Machinery and Equipment -governmental funds 1,405.356 121,751
Road, curbs, gutters, sidewalks, medians
and bridges 79,177..617 2,353,454
Streetlights 6,504 091 2,369
Storm drain structure and mains 23,440.691 792,269
Traffic si{~tals 4,233.637 121,602
Total accum ul ated depreciation 143,402.656 5,686,297
Net governmental Fund program
8,747 1 2,294,95 S
597,1 27 19,247,032
(85,351) 76,512 1,518,268
81,531,071
6,506,460
24,232,960
4,355,239
(85,351) 682,386 149,685,988
Capital assets being depreciated 67,027,172 (3,383,952) (12,134) 52,056 63,683,142
Internal service fund capital assets
Machinery and equipment 4,590,574 557,235 (164,201) 4,983,608
Less Accum ul a[ed depreciation 3,853,204 330,312 (163,885) 4,019,631
Net internal service capital assets
Being depreciated 737,370 226,923 (316) 963,977
Governmental activity capital assets, net $130,083,054 $3,046,409 ($12,450) $441,985 $133,558,998
J'- 7
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(5) CAPITAL ASSETS (continued)
Balance at Balance at
June 30, 2007 Additions Retirements "IYansfe rs June 30, 2008
Business-fyp¢ actfvifies:
Capital assets not being depreciated:
Land and improvements $389,929 ~ ($389,929)
Total capital assets not being depreciated 389,929 (389,929)
Capital assets being depreciated:
Improvements other than buildings 628,4(14 (623,41 1) $5,053
Machinery and Equipment 303,2_19 $73,902 ($28,017) (111,031) 238,113
Total capital assets being depreciated 931,7'13 73,902 (28,017) (734,442) 243,166
Less accumulated depreciation for:
Improvements other than buildings 509,8 `i9 (605,874) (96,015)
Machinery and Equipment 344,3?7 15,207 (28,017) (76,512) 255,055
Total accumulated depreciation 854,2:56 15,207 (28,017) (682,386) ] 59,040
Net capital assets being depreciated 77,4!{7 58,695 (52,056) 84,126
Business-type activity capital assets, net $467,416 $58,695 ($441,985) $84,126
Depreciation expense was charged to functions and programs based on their usage of the related
assets. The amounts allocated to each function or program is as follows:
~:orrrnmental Activi-ties
A d ntin is fret io n
Law Enforcement
Public Information
Administrative Services
Recreation Service
Community Develo ptnent
Public Works
Internal Service funds
Amount
$261,680
9,136
21,] 13
28,248
15,535
576
5,350,009
330,312
Total $6,016,609
JrH
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(5) CAPITAL ASSETS (continued)
Business-Type Activities Amount
Resources Recovery $2,952
Blackberry Fatms 4,643
Cupertino Sports Center 7,612
Total $15,207
The Blackberry Farm picnic grounds closed temporarily on September 29, 2006 for
approximately two years to allow for a major renovation and re-design of the grounds as
planned in the Stevens Creek Corridor F'ark capital improvement project. The only major
capital asset temporarily affected is the picnic ground portion, which consists of
$389,929 in land value, and $52,056 in net depreciable assets, which has been transferred
to governmental activities. The closed area takes up approximately 58% of the Farm
acreage. The City's municipal golf course, which takes up the remaining acreage,
remains in full operation.
(6) LONG-TERM DEBT
(a) Cupertino Public Facilities Corporation Certificates of Participation
Original Balance Balance
Issue June 30, June 30, Curren[
Amount 2007 Retirements 2008 Portion
Governmental Activity Debt:
2002 Refinancing and Capital
lm prove ment Project,
2.00-5.00%, due 07/01/2030 $56,640,000 $49,740,000 $1,355,000 $48,385,000 $1,415,000
The Cupertino Public Facilities Corporation issued Certificates of Participation to
provide financing for the construction of the Community Center, remodeling of City Hall
and the Library in July of 1986, to purchase Wilson Park in 1989, to finance Memorial
Park Expansion in 1990, and to purchase Blackberry Farm and Fremont Older site in
1991. Cupertino Public Facilities Corporation, as lessor, leased real property to the City
(under the lease agreement with the lessee) and assigned the base rental payments to the
trustee for the benefit of the owners of the certificates of participation. The rental
payments are scheduled to be sufficient in both time and amount, when the principal and
interest of the certificates are due.
On October 1, 2002, $56,640,000 principal amount of 2002 Refinancing and Capital
Improvement Project Certificates of Participation, (2002 COPS) were issued to finance the
costs of acquiring and constructing a new public library and to refund the 1992A COPS, the
1992B COPS and the 1993A COPS ("Refunded COPS").
`~9
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(6)
LONG-TERM DEBT (continued)
(a) Cupertino Public Facilities Corporation Certificates of Participation (continued)
Annual debt service requirements for the Certificates of Participation are shown below=
Governmental Activities
For the Year
Ending June 30
Principal
2009 $1,415,000
201 O 1,46Q000
201 1 1,500,000
207 2 1, 545,000
2013 1,600,000
2014-2018 9,000,000
2019-2023 1 1,23Q000
2024-2028 14,045,000
2029-2030 6,590,000
Total ~ $48,385,000
(b) 19]5 Act Bonds Without Citv Commitment
Interest
$2,1 16,394
2,073,944
2,030,144
1,985,144
(,934,931
8,663,055
6,433,812
3,621,412
473,099
$29,331,935
The City acts as agent for the property owners of parcels upon which assessments were
made for local improvements. The I~ity collects the assessments and forwards the
collections to bond holders. The City its not directly liable for the repayment of special
assessment district bonds as such bonds and interest payable are secured by fixed lien
assessments on real property; however, the City has determined that it is not probable that
the government would assume responsibility for all or part of the debt in the event of
default. The amount of unmatured bond. principal at June 30, 2008 was $95,000.
(c) Conduit Debt
On October 1, 2001, the City authorized the issuance of the Multi-Family Housing
Revenue Bonds in an amount up to $1.6 million to assist a developer in financing the cost
of site acquisition and construction of a 24 unit multi-family rental housing project. The
bonds are payable solely out of loan repayments received from the developer. The City
has no legal or moral liability with respect to the payment of this debt.
60
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(7) NET ASSETS AND FUND BALANCES
Net Assets are measured on the full accrual basi:a while Fund Balance is measured on the modified
accrual basis.
Net Assets -Net Assets is the excess of all the City's assets over all its liabilities, regardless of
fund. Net Assets are divided into three capti~~ns under GASB Statement 34. These captions
apply only to Net Assets, which is determined only at the Government-wide level, and are
described below:
Invested in Capital Assets, net of related deE~t describes the portion of Net Assets which is
represented by the current net book value of the <~ity's capital assets, less the outstanding balance of
any debt issued to finance these assets.
Restricted describes the portion of Net Assets which is restricted as to use by the terms and
conditions of agreements with outside parties, g~~vernmental regulations, laws, or other restrictions
which the City cannot unilaterally alter. -These principally include developer fees received for use
on capital projects, debt service requirements, and redevelopment funds restricted to low and
moderate income purposes.
Governmental fund balances represent the net current assets of each fund. Net current assets
generally represent a fund's cash and receivables, less its liabilities. Portions of a fund's balance
may be reserved or designated for future expenditure.
Fund Balances, Reserves and Designations - In the Fund financial statements, fund balances
represent the net current assets of each fund. 1~(et current assets generally represent a fund's cash
and receivables, less its liabilities. Portions of a fund's balance may be reserved or designated
for future expenditure.
The unreserved fund balances include amounts which have been internally designated to be set
aside and are not considered to be available for immediate appropriation. The components of the
designated fund balance for the Governmental Funds at June 30, 2008 are as follows:
General Fund:
Economic Uncertainty $12,500,000
Utilities Users TaxRevenue 1,105,000
One-Time Revenue 1,731,000
Special Revenue Funds, Gas Tax Projects 3,689,386
Capital Project Funds:
Capital Improvement Projects 900,000
Infrastructure 600,000
Total designated fund balances $20,525,386
~$ 1
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(7) NET ASSETS AND FUND BALANCES (continued)
(a) Closed fund
In fiscal 2007-08, the Senior Center Enter-f~rise Fund was closed and all activities were
transferred to the General Fund.
(8) COMMITMENTS AND CONTINGENCIES
The City participates in a number of federal and state grant programs subject to financial and
compliance audits by the grantors or their reF~resentatives. Audits of certain grant programs,
including those for the year ended June 30, 2008, have yet to be conducted. The amount, if any,
of expenditures that may be disallowed by the: granting agencies cannot be determined at this
time. Management believes that such disallow~cnces, if any, would not have a material effect on
the financial statements.
The City has an agreement, expiring in 2019, to lease a building to the County of Santa Clara for
the purpose of providing library service to the City's residents. The lease requires a minimum
annual payment of $120,000 adjusted for Cupertino's portion of book circulation and increase of
assessed valuation. This is an operating lease with a renewable option. At June 30, 2008, the cost
and carrying value of the building which ~~pened in October 2004, is $21,935,325 and
$19,300,682, respectively, with $2,634,643 in ac:cumulated depreciation.
(9) LIABILITIES UNDER SELF-INSURANCE .AND RISK MANAGEMENT
The City is self-insured for the first $250,Oa~0 of general and automobile liability for each
occurrence, and the excess (up to $10,000,000) is covered through the City's participation in the
Association of Bay Area Governments (ABAG) Plan general liability risk pool. The pool consists
of 32 agencies within the San Francisco Bay area. The stated purpose of the ABAG pool is to
provide certain levels of liability insurance coverage, claims management, risk management
services, and legal defense to each participatin;~ city within the pool. Each city was required to
make an initial deposit premium based on an actuarial study of each City's risk exposure. The
premium consists of a risk portion and administrative portion. The premium is revised each year
based on claims experience and risk exposure.. Complete financial statements for ABAG plan
may be obtained from their offices at the following address: ABAG Plan Corporation, Finance
Department, P.O. Box 2050, Oakland, CA 94604.
6:2
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(9)
LIABILITIES UNDER SELF-INSURANCE AND RISK MANAGEMENT (continued)
The City belongs to the (SAC Excess Insurance Authority (EIA), a joint power authority which
provides excess workers' compensation liability claims coverage above the City's self-insured
retention of $500,000 per occurrence. Losses above the self-insured retention are pooled with
excess reinsurance purchased to a $300,000,000 limit. ELA was established in 1979 for the
purpose of creating a risk management pool for :ill California public entities. EIA is governed by a
Board of Directors consisting of representatives of its member public entities.
During the fiscal year 2007/08, an outside independent actuary performed an analysis of the
City's workers' compensation program. The resulting unpaid claims liability recorded by the City
includes those based on existing open claims plus those estimated on an incurred but not reported
basis. Allocated loss adjustment expenses, such as fees paid to outside attorneys, were also
considered.
Changes in the balances of claim liabilities during the past two fiscal years are as follows:
Workers'
Compensation
Claims liability, June 30, 2006 $1,275,000
Incurred claims 161,228
Claim payments/credits (61,228)
Claims liability, June 3Q 2007 1,375,000
Claim payments/credits (166,148)
Incurred claims 288,148
Claims liability, June 30, 2008 $1,497,000
Current portion $369,000
63
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(10) OTHER POST EMPLOYMENT RETIREMENT BENEFITS
Permanent employees who retire under the City's retirement plan (CALPERS) are, pursuant to
their respective collective bargaining agreements, eligible to have their medical insurance
premiums paid by the City. Retirees receive the amount necessary to pay the cost of his/her
enrollment, including the enrollment of his/her family members, in a health benefit plan up to the
maximum received by active employees in their respective bargaining unit. The cost of retiree
medical insurance premiums are recognized a:; an expenditure when benefits are paid. There
were 94 retirees participating in the plan as of June 30, 2008. The City has established an
Internal Service Fund to fund the liabilities associated with this retiree medical benefit. That fund
had $6,320, 1 96 in net assets.
Retiree medical insurance premium expenses fir the past five fiscal years ended June 30 are as
follows:
2004 $501,568
2005 53 6,190
2006 558,366
2007 614,692
2008 604,992
(11) DEFERRED COMPENSATION PLAN
Due to the passage of the Small Business Job Protection Act (Act) of 1996, and the issuance of
Governmental Accounting Standards Board Statement No_ 32 "Accounting and Financial
Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans," governmental
entities who have established deferred compensation plans under Internal Revenue Code Section
457 are required to establish trusts to hold plan assets for the exclusive benefit of plan
participants and their beneficiaries. This Act supercedes previous regulations, which required
that plan assets remain the property of the Cit}• until paid or made available to the participants,
subject only to the City's general creditors- In compliance with the new regulations, the City
established separate trusts to hold plan assets. 7'he value of assets held in trust under Section 457
deferred compensation plans is approximately $12,533,546 as of June 30, 2008. These assets
have been excluded from the financial statements.
6.4
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(12) DEFINED BENEFIT PENSION PLAN
(a) Plan Descriesion
Substantially all City employees are eligible to participate in pension plans offered by California
Public Employees Retirement System (CALPERS), an agent multiple employer defined benefit
pension plan which acts as a common investment and administrative agent for its participating
member employers. CALPERS provides retirement and disability benefits, annual cost of living
adjustments and death benefits to plan members, who must be public employees and
beneficiaries. The City's employees participate in the Miscellaneous Employee Plan. Benefit
provisions under both Plans are established b~~ State statute and City resolution. Benefits are
based on years of credited service and compensation. Audited annual financial statements are
available from CALPERS at P.O. Box 942709, 'Sacramento, CA 94229-2709.
(b) Funding Policy
Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by
CALPERS; the City must contribute these amounts. The Plans' provisions and benefits in effect
at June 30, 2008, are summarized as follows:
Benefit vesting schedule
Benefit payments
Eligble retsement age
Benefits, as a % of annual salary
multiplied by years of service and
annual salary
Required employee contrbution rates
Required employer contrbution rates
Miscellaneous
5 years service
Monthly for life
50
2% - 2.7%
8%
17.043
ES
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(12) DEFINED BENEFIT PENSION PLAN (continued)
(c) Annual Pension Cost
CALPERS determines contribution requirements using a modification of the Entry Age Normal
Method. Under this method, the City's total normal benefit cost for each employee from date of
hire to date of retirement is expressed as a le;vet percentage of the related total payroll cost.
Normal benefit cost under this Method is the level amount the employer must pay annually to
fund an employee's projected retirement benefit-. This level percentage of payroll method is used
to amortize any unfunded actuarial liabilities. The actuarial assumptions used to compute
contribution requirements are also used to compute the actuarially accrued liability. The City
uses the actuarially determined percentages of payroll to calculate and pay contributions to
CALPERS. This results in no net pension obligations or unpaid contributions. Annual Pension
Costs, representing the payment of all contributions required by CALPERS, for the years ended
June 30, 2008, 2007 and 2006 amounted to $1,454,415, $1,237,257, and $1,312,167 respectively.
__
A nnua I
Required
Contrbution I Contrbution
Fiscal Year' ! (A.RC Rate
_6/30/2006 ' $1,312,16_7 ' 12.393%;
6/30/2007 ~ 1,237,257 11.529%
6/30/2008 1,454,415 14.201%
CALPERS uses the market related value method of valuing the Plan's assets. An investment rate
of return of 7.75% is assumed, including inflation rate at 3.0%. Annual salary increases are
assumed to vary by duration of service. Changes in liability due to plan amendments, changes in
actuarial assumptions, or changes in actuarial methods are amortized as a level percentage of
payroll on a closed basis over twenty years. All gains and losses are realized and amortized over
a rolling thirty year period. Market value flue:tuations in the actuarial value of plan assets are
smoothed over 15 years.
CALPERS' latest available actuarial value (which differs from market value) and funding
progress are set forth below at their actuarial valuation date of June 30, 2006.
Actuarial
Unfunded
Fntry Age Unhanded Annual (Overfunded)
Valuation Accrued Value of (Overfunded) Funded Covered Liability as
Date Liability Assets Liability Ratio Payroll of Pay roll
6/30/04 $44,001,844 $38,356,851 $5.644,993 87.2% $9,749,961 57.9%
6/30/05 47,054,446 41,347,290 5.707,156 87.9% 9,304,690 61.3%
6/30/06 54,287,591 44,876,584 9,411,007 82.7% 10,133,914 92.9%
66
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2008
(13) DEFICIT FUND BALANCE
As of June 30, 2008, the General Fund had advanced funds to the Redevelopment Agency
(Agency) for staffing costs, legal and consultin;~ fees, as the Cupertino Square project area's tax
increment revenues are not yet sufficient to finance Agency operations. Such expenditures have
resulted in a deficit fund balance of $67,37]. Orrce development leads to improved tax increment,
the Agency will repay the advance.
(14) SUBSEQUENT EVENT
The owners of the Cupertino Square shopping center that comprises most of the Cupertino
Redevelopment Agency project area, filed for Chapter 11 bankruptcy on September 2, 2008. The
Square ran into financing difficulties with Gramercy Capital Corporation leading to a lawsuit and
foreclosure actions. Further development of the; Square is on hold pending resolution of the suit,
possible refinancing, or sale of the property.
The unprecedented turmoil in the financial and credit markets in 2008 has led the City to
reposition its investment portfolio to a much mere conservative weighting toward US Treasuries
and money market funds invested solely in Treasuries. As of late October, 2008, the portfolio
comprises two-thirds of such investments. The portfolio contains no direct investments in Fannie
Mae or Freddie Mac, AIG, Lehman Brothers, or Washington Mutual.
E~7
MAJOR GOVERNMENTAL FUNDS OTHER THAN THE GENERAL FUND AND
SPECIAL REVEt~IJE FUNDS
This section is provided for the presentation of Budget-to-Actual Statements for the Public Facilities
Corporation Debt Service Fund_ Although the fund is considered to be a major government fund, GASB
Statement 34 dictates that budget-to-actual information in the basic financial statements should be limited to
the General Fund and major Special Revenue Funds. E\ll other major governmental fund schedules with
such information must be included as Supplemental Information.
Public Facilities Corporation Debt Service Fund - Ac~:ounts for the accumulation of resources for and
the payments of principal and interest on certificates of participation issued in 2002 to advance refund
debt that was previously issued to finance City Hall, Literary, Wilson Park and Memorial Park projects.
6!3
CITY OF CUPERTIIVO
PUBLIC FACILITIES CORPORATION DEBT SERVICE FUND
SCHEDULE OF REVENUES, E?:PENDITURES
AND CHANGES IN FUND 13ALANCE
BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDEL> JUNE 30, 2008
REVENUES
Use of money and property
Total Revenues
EXPENDITURES
Debt service:
Principal
Interest and fiscal charges
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Total Other Financing Sources (Uses)
NET CHANGE IN FUND BALANCE
BEGINNING FUND BALANCE
ENDING FUND BALANCE
Variance
Positive
Budget Actual (Negative)
$5,767 $5,767
5,767 5,767
$ 1,:55,000 1,355,000
2, 7 83,063 2,1 83,403 <340)
3,`38,063 3,538,403 (340)
(3,`_38,063) (3,532,636) 5,427
3,`38,000 3,538,000
3,`38,000 3,538,000
($63) 5,364 $5,427
46,35 1
$51,715
6~J
NON-MAJOR GOVERNMENTAL FUNDS
All funds not defined as major funds for the Fund Financial Statements are consolidated in one column
entitled "Other Governmental Funds." These non-major funds are identified and included in this
supplemental section and includes all of the City's Speci~il Revenue Funds.
The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are
legally restricted to expenditures for specified purposes.
Storm Drain -Accounts for the construction ar~d maintenance of storm drain facilities including
drainage and sanitary sewer facilities.
Park Dedication -Accounts for the activity granted by the business and professions code of the
State of California in accordance with the open space and conservation element of the City's
General Plan. Revenues of this fund are restricted for the acquisition, improvement, expansion
and implementation of the City's parks and recreation facilities.
Environmental Management -Accounts for all :activities related to operating the non-point source
pollution program.
Transportation -Accounts for the City's gas t«x, sales tax and grant revenues and expenditures
related to the maintenance and construction of City streets. All revenue in this fund is restricted
exclusively for street and road purposes including related engineering and administrative
expenses.
Housing Development -Accounts for the Federal Housing and Community Development Grant
Program activities administered through the (~ounty. Monies collected from developers that
mitigate the impact of housing needs are also included. Monies in this fund are governed by the
program rules.
Redevelopment Agency -Accounts for the CuX~ertino Square project area and low and moderate
income housing funds.
71
CITY OF CUPERTINO
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALAN(~E SHEETS
JUNE 30, 2008
SPECIAL REVENUE FUNDS
Assets
Cash and investments
Accounts receivable
Loans receivable
Land held for housing development
Total assets
Liabilities
Accounts payable and accruals
Accrued payroll and benefits
Advance from other funds
Unearned revenue
Deferred revenue
Total Liabilities
Fund balances
Reserved for:
Encumbrances
Loans receivable
Land held for housing development
Low and moderate income housing
Unreserved, reported in:
Special Revenue Funds
Total fund balances (deficit)
Total liabilities and fund balances
Storm Park Environmental Housing
Drain Dedication Management Transportation Development
$1,056,029 $_ 34,476 $220,715 $3,995,516 $2,467,947
239,668 25,228
865,442
61 5,000
$1,056,029 $334,476 $220,715 $4,235,184 $3,973,617
$1,765 $261,803 $40,878
$1 ,OS 8 2, 741 1 O, 226 1 , 895
1 3,397
197,875
1,058 4,506 285,426 240,648
(0,000 260,372
865,442
615,000
1,054,971 $334,476 206,209 3,689,386 2,252,527
1,054,971 334,476 216,209 3,949,758 3,732,969
$1,056,029 $_34,476 $220,715 $4,235,184 $3,973,617
72
SPECIAL
REVENUE
FUND
Total
Nonmaj or
Redevelopment Governmental
Agency Funds
$199,867 8,274,550
264, 896
865,442
615,000
$199,867 $10,019,888
$304,446
$3,914 19,834
263,324 263,324
13,397
197,875
267,238 798,876
270,372
865,442
615,000
199, 867 199, 867
(267,238) 7,270,33 1
(67,371) 9,221,012
$199,867 $10,019,888
73
CITY OF CUPERTINO
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2008
SPECIAL REVENUE FUNDS
Storm Park Environmental Housing
Drain Dedication Management Transportation Development
REVENUES
Taxes $50,105 9;173,392 $281,878
Use of money and property 51,068 10,731 $4,278 $188,326 207,840
1 ntergovernmental 1, 880, 5 53 124,432
Charges for services 364,903
Total Revenues 101,173 184,123 369,181 2,068,879 614,150
EXPENDITURES
Current:
Community development 304,403
Public works 328,922 735,467
Capital outlay 64,877 1,313,864
Total Expenditures 64,877 328,922 2,049,331 304,403
EXCESS OF REVENUES
OVER EXPENDITURES 36,296 184,123 40,259 19,548 309,747
OTHER FINANCING SOURCES (USES)
Transfers in 845,000
Transfers (out) (95,000) X645,000)
Total O[her Financing Sources (Uses) (95,000) 200,000
NET CHANGE IN FUND BALANCES (58,704) 184, 123 40,259 219,548 309,747
BEGINNING FUND BALANCES (DEFICIT) 1,113,675 150,353 175,950 3,730,210 3,423,222
ENDING FUND BALANCES (DEFICIT) $1,054,971 $334,476 $216,209 $3,949,758 $3,732,969
7~~
SPECIAL
REVENUE
Fi_JND
Total
Nonmajor
Redevelopment Governmental
Agency Funds
$220,267 $725,642
6,78 7 469,024
2,004,985
364,903
227,048 3,564,554
209,062 5 13,465
1,064,3 89
],378,74 t
209,062 2,956,595
1 7,986 607,959
845,000
(740,000)
t 05,000
1 7,986 712,959
(85,357) 8,508,053
($67,371) $9,221,012
7J
CITY OF CUPBRTINO
BUDGETED NON-MAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES TN FUND BALANCES
BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2008
SPECIAL REVENUE FUNDS
REVENUES
Taxes
Use of money and property
Intergovernmental
Charges for services
Total Revenues
EXPENDITURES
Current:
Community development
Public works
Capital outlay
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out)
Total Other Financing Sources (Uses)
NET CHANGE IN FUND BALANCES
BEGINNING FUND BALANCES (DEFICIT)
ENDING FUND BALANCES (DEFICIT)
STORM DRAIN
Variance
Positive
Budget Actual_ (Negative) Budge[
$50,000 $SQ 105 $105 $I,lOQ,000
30,000 51,068 21,068 8,000
Variance
Positive
Actual (Negative)
$173,392 ($926,608)
10,731 $2,731
80,000 101,173 21,173 1,108,000 184,123 (923,877)
1,053,876 64,877 988,999 72,673 72,673
1,053,876 64,877 988,999 72,673 72,673
(973,876) 36,296 1,010,172 1,035,327 184,123 (851,204)
(95,000) (95,000)
($973,876) 36,296
1,113,575
$1,149,971
$1,010,172 $1,035,327 184,123 ($851,204)
150,353
$334,476
PARK DEDICATION
7b
SPECIAL REVENUE FUNDS
ENVIRONMENTAL
MANAGEMENT TRANSPORTATION HOUS ING DEVELOPMENT
Variance Variance Variance
Positive Positive Positive
Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative)
$300,000 $281,878 ($18,122)
$4,000 $4,278 $278 $90,000 $188,326 $98,326 63,000 207,840 144,840
1,355,000 1,880,553 525,553 398,000 124,432 (273,568)
365,000 364,903 (97)
369,000 369,181 181 1,445,000 2,068,879 623,879 761
000 614
150 (146
850)
, , ,
960,469 304,403 656,066
416,924 328,922 88,002 747,209 735,467 11,742
4,099,290 1,313,864 2,785,426
416,924 328,922 88,002 4,846,499 2,049,331 2,797, 168 960,469 304
403 656
066
, ,
(47,924) 40,259 88,183 (3,401,499) 19,548 3,421,047 (199,469) 309
747 509
216
, ,
845,000 845,000
(645,000) (645,000)
200,000 200,000
($47,924) 40,259 $88,183 <$3,201,499) 219,548 $3,421,047 ($199,469) 309,747 $509,216
175,950 3,73 0,21 O 3,423,222
$216,209 $3,949,758 $3,732,969
(Continued)
']'7
CITY OF CUP:ERTINO
BUDGETED NON-MAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FLND BALANCES
BUDGET AND ACTUAL
FOR THE FISCAL YEAR E]VDED JUNE 30, 2008
SPECIAL REVENUE FUND
REDEVELOPMENT AGENCY
REVENUES
Taxes
Use of money and property
Intergovernmental
Charges for services
Total Revenues
EXPENDITURES
Current:
Community development
Public works
Capital outlay
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (ouQ
Total Other Financing Sources (Uses)
NET CHANGE IN FUND BALANCES $355,865
BEGINNING FUND BALANCES (DEFICIT)
ENDING FUND BALANCES (DEFICIT)
Variance
Positive
Budget Actual (Negative)
$575,000 $220,267 ($354,733)
6,781 6,781
575,000 227,048 (347,952)
219,135 209,062 10,073
219,135 209,062 10,073
_ 355,865 17,986 (337,879)
7:3
17,986 ($337,879)
(85,357)
($67,371)
INTERNAL SERVICE FUNDS
The Internal Service Funds are used to account for the: financing of goods or services provided by one
department to other departments of the City on a cost reimbursement basis.
The concept of major funds does not extend to internal service funds because they do not do business
with outside parties. For the Statement of Activities, the net revenues and expenses of each internal
service fund are eliminated by netting them against the operations of the City departments that generated
them. The remaining balance sheet items are consolidated with these same funds in the Statement of Net
Assets. However, internal service funds are still presem:ed separately in the Fund Financial Statements.
Management Information Systems -Accounts for the activities related to the maintenance and
replacement of the City's technology infrastructure.
Workers' Compensation - Accounts for the activities in support of the self-insured workers'
compensation program.
Equipment Revolving -Accounts for the activities related to the maintenance and replacement of
the City's vehicle fleet.
Long-Term Disability -Accounts for the activities related to the City's program for long-term
disability.
Retiree Medical -Contains funds set aside for other post employment retirement benefits
80
CITY OF CUPFiRTINO
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
JUNE 30, 2008
Management
Information Workers' rquipmen[ Long-Term Retiree
Systems Compensation -Revolving Disability Medical Total
ASSETS
Cash and investments $1,565,183 $1,582,810 $1,679,902 $19,841 $6,284,153 $11,131,889
Accounts receivable 36,043 36,043
Prepaid expense 15,919 15,919
Total current assets 1,581,102 1,582,810 1,679,902 19,841 6,320,196 11,183,851
Capital assets,
net of accumulated depreciation 227,688 736,290 963,978
Total Assets 1,808,790 1,582,810 2,416,192 19,841 6,320,196 12,147,829
LIABILITIES
Current Liabilities:
Accounts payable and accruals 29,077 2,239 41,331 72,647
Accrued payroll and benefits 9,884 445 7,863 18,192
Claims payable 369,000
369,000
Total current liabilities 38,961 371,684 49,194 459,839
Non-current Liabilities:
Compensated absences 22,242 77,116 99,358
Claims payable 1,128,000
1, ] 28, 000
Total Liabilities 61,203 1,499,684 126,310 1,687,197
NET ASSETS
Invested in capital assets 227,688 736,290 963,978
Unrestricted 1,519,899 83,126 1,553,592 19,841 6,320,196 9,496,654
Total Net Assets $1,747,587 $83,126 $2,289,882 $19,841 $6,320,196 $10,460,632
8 ;l
CITY OF CUPERTINO
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENSES AND
CHANGES IN FUND VET ASSETS
FOR THE YEAR ENDED JUNE 30, 2008
OPERATING REVENUES
Charges for services
Total Operating Revenues
OPERATING EXPENSES
Salaries and related expenses
Materials and supplies
Contractual services
Insurance claims
Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
Interest income
Total Nonopera[ing Revenues (Expenses)
Income (Loss) Before Transfers
Transfers in
Change in Net Assets
BEGINNING NET ASSETS
ENDING NET ASSETS
Management
Information Workers' Equipment Long-Term Retiree
Systems Compensation Revolving Disability Medical Total
$909,000 $292,936_ $899,000 $50,126 $2,151,062
909,000 292,936_ 899,000 50,126 2,151,062
414,089 19,986 392,842 826,917
299,089 265,175 564,264
223,823 87,061 3 10,884
374,676 48,249 $604,992 1,027,917
1 14,125 _ 216,187 330,312
1,051,126 394,662_ 961,265 48,249 604,992 3;060,294
(142,126) (]01,7261 (62,265) 1,877 (604,992) (909,232)
72,563 70,482 _ 79,982 874 258,501 482,402
72,563 70,482 _ 79,982 874 258,501 482,402
(69,563) (31,2441 17,717 2,751 (346,491) (426,830)
193,750 44,000 1,882,000 2,119,750
124,187 (31,244] 61,717 2,751 1,535,509 1,692,920
],623,400 114,370- 2,228,165 17,090 4,784,687 8,767,712
$1,747,587 $83,126 $2,289,882 $19,841 $6,320,196 $10,460,632
g.~
CITY OF CUPIiRTINO
INTERNAL SERV]CE FUNDS
COMBINING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers
Cash payments to suppliers for goods and services
Cash payments [o employees
Cash Flows from Operating Activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Medicare retiree drug subsidy
Transfers in
Cash Flows from Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of capital assets
Cash Flows From Capital and Related
Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Cash Flows from Investing Activities
Ne[ Cash Flows
Cash and investments at beginning of year
Cash and investments at end of year
Reconciliation of operating income (loss) to net cash flows
from operating activities:
Operating income (loss]
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities:
Depreciation
Change in assets and liabilities:
Prepaid expenses
Accounts payable and accruals
Accrued payroll and benefits
Compensated absences
Claims Payable
Cash Flows from Operating Activities
Management
Information Workers' Equipment Long-Term Retiree
Systems Compensation Revolving Disability Medical Total
$909,000 $292,936 $899,000 $50,126 $2,151,062
(513,840) (210,437) (342,730) (48,249) ($604,992) (1,760,248)
(407,052) X19,887) (380,976) (807,915)
(11,892) :L2,612 175,294 1,877 (604,992) (417,107)
(36,043) (36,043)
193,750 44,000 1,882,000 2,119,750
193,750 44,000 1,845,957 2,083,707
(20 l,sa3) (355,077) (s56,9zo)
(201,843) (355,077) (556,920)
72,563 "0,482 79,982 874 258,501 482,402
72,563 '0,482 79,982 874 258,501 482,402
52,578 93,094 (55,80]) 2,751 1,499,466 1,592,088
1,512,605 1,4!:9,716 1,735,703 17,090 4,784,687 9,539,801
$1,565,183 $1,582,810 $1,679,902 $19,841 $6,284,153 $11,131,889
($142,126) ($101,726) ($62,265) $1,877 ($604,992) ($909,232)
114,125 216,187 330,3 12
(4,938) (4,938]
14,010 2,239 9,506 25,755
4,081 99 1,744 5,924
2,956 10,122 13,078
1".2,000 122,000
($11,892) $22,612 $175,294 $7,877 ($604,992) ($417,101)
8.3
AGENCY FLJIVDS
All Agency Funds, representing all fiduciary funds of tl~e City, are custodial in nature and do not involve
measurement of results of operations. Such funds have no equity since any assets are due to individuals
or other entities at some future time.
These funds are presented separately from the Governmental and Fund Financial Statements.
8•~
CITY OF CUPEF,TINO
Combining Statement of Changes in Assets and Liabilities
All Agency Funds
All Agency Funds
Assets
Cash and investments
Liabilities
Deposits
For the Fiscal Year Ended June 30. 2008
Balance Balance
June 30, 2007 Additions Deletions June 30, 2008
$ 119,252 $1,944 $1 17,308
$119,252 $1,944 $117,308
g:~
STA TISTICA.L SECTION
g~
STATISTICAL SECTION
This part of the City's Comprehensive Annual Financial Report presents detailed information as a context
for understanding what the information in the financial statements, note disclosures, and required
supplementary information says about the City's overall financial health. Zn contrast to the financial
section, the statistical section information is not subject to independent audit.
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:
1 . Net Assets by Component
2. Changes in Net Assets
3. Fund Balances of Governmental Funds
4. Changes in Fund Balance of Governmental Funcls
Revenue Capacity
These schedules contain information to help the reader assess the City's most significant own-source
revenues, property tax:
1 . Assessed and Estimated Actual Value of Taxable Property
2. Property Tax Rates, All Overlapping Governments
3. Principal Property Taxpayers
4. Property Tax Levies and Collections
Debt Capacity
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:
1 . Ratio of Outstanding Debt by Type
2. Computation of Direct and Overlapping Debt
3. Computation of Legal Bonded Debt Margin
4. Ratio of General Bonded Debt Outstanding
Demographic and Economic Information
These schedules offer demographic and economic indic;~tors to help the reader understand the environment
within which the City's financial activities take place:
1 . Demographic and Economic Statistics
2. Principal Employers
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in
the City's financial report relates to the services the City provides and the activities it performs:
1. Full-Time Equivalent City Government Employees by Function
2. Operating Indicators by Function/Program
3. Capital Asset Statistics by Function/Program
Sources
Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual
Financial Reports for the relevant year. The City implemented GASB Statement 34 in 2002-03;
schedules presenting government-wide information include information beginning in that year.
S39
CITY OF CUPERTINO
NET ASSETS BY I~OMPONENT
LAST SIX FISCAL YEARS
(Accrual basis o1' accounting)
Governmental Activities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total governmental activities net assets
Business-Type Activities
Invested in capital assets, net of related debt
Unrestricted
Total business-type activities net assets
Primary Government
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total primary government net assets
Fiscal Year Ended June 30
201)3 2004 2005 2006
$79,705,041 $85,425,753 $86,530,017 $83,064,879
9,081,791 7,416,930 7,291,925 8,329,671
24,472,451 18,541,954 21,202,795 26,916,679
$113,259,283 $111,384,637 $115,024,737 $118,311,229
688,33 1
6,5 73,514
$7,261,845
80,393,372
9, 081, 791
31,045,965
$120,521,128
645,290
7,3 14,068
$7,959,358
86,071,043
7,416,930
25,856,022
$1 19,343,995
578,962
6,028,989
$6,607,951
87,108,979
7,291,925
27,23 1,784
$121,632,688
497,681
6,291,439
$6,789,120
83,562,560
8,329,671
33,208,1 18
$125,100,349
5'O
CITY OF CUPERTINO
NET ASSETS BY I~OMPONENT
LAST SIX FISCAL YEARS
(Accrual basis of accounting)
2007 2008
$80,343,053 $85,173,998
9,265,565 9,926,770
39,243,717 43,242,639
$128,852,335 $138,343,407
467,416 84,126
6,977,436 7,849,147
$7,444,852 $7,933,273
80,810,469 85,258,124
9,265,565 9,926,770
46,221,153 51,091,786
$136,297,1 87 $146,279,680
91
CITY OF CUYERTINO
CHANGES IN NET ASSETS
LAST SIX FISCAL YEARS
(Accrual Basis of Accounting)
Expenses
Governmental Activities:
Administration
Law Enforcement
Public Information
Administrative Services
Recreation Services
Community Development
Public Works
Interest on Long Term Debt
Total Governmental Activities Expenses
Fiscal Year Ended June 30
2003 2004 2005 2006
$1,635,846 $1,430,523 $1,280,339 $1,354,543
6,041,831 6,090,038 6,179,326 6,577,199
763,254 710,754 824,3 ] 7 914,024
3,556,]29 3,923,377 3,750,174 4,208,389
2,156,972 2,234,509 2,173,936 2,359,966
3,234,456 2,678,109 3,269,475 4,541,965
1 7,534,128 15,546,461 14,585,232 16,384,026
_3,796,472 2,317,837 2,289,526 2,262,913
38,719,088 34,931,608 34,352,325 38,603,025
Business-Type Activities:
Resource Recovery
Blackberry Farm
Cupertino Sports Center
Recreation Programs
Senior Center
Total Business-Type Activities Expense
Total Primary Government Expenses
1,897,425 1,793,083 2,927,060 2,101,198
1,497,420. 1,353,362 1,341,712 1,302,855
1,130,077 1,3 52,509 1,452,957 1,448,048
1,554,834 1,590,302 1,689,436 1,729,194
_ 570,412 493,244 438,440 588,818
_6,650,168 6,582,500 7,849,605 7,170,113
$45,369,256 41,514,108 42,201,930 45,773,138
Program Revenues
Governmental Activities:
Charges for Services:
Administration
Law Enforcement
Administrative Services
Recreation Services
Community Development
Public Works
Operating Grants and Contributions
Capital Grants and Contributions
Total Government Activities Program Revenues
Business-Type Activities:
Charges for Services:
Resource Recovery
Blackberry Farm
Cupertino Sports Center
Recreation Programs
Senior Center
--- --- --- $23,201
$468,110 $838,457 $694,952 722,164
294,577 16,650 --- ---
161,969 148,337 163,462 240,074
1,624,181 1,903,277 4,164,792 5,286,336
348,905 325,959 286,280 201,250
2,388,199 2,496,689 593,657 3,403,762
_ 965,21 1 3,612,102 2,164,907 522,950
6,251,152 9,341,471 8,068,050 10,399,737
2,397,439 2,398,819 2,395,282 2,203,127
1,479,312 1,301,092 ],218,958 1,155,986
1,109,799 I ,1 84,860 1,3 85,83 7 1,419,672
1,872,004 1,910,599 2,167,705 2,331,409
484,530 456,211 473,787 704,390
92
CITY OF CU]PERTINO
CHANGES IN 1\"ET ASSETS
LAST SIX FISCAL YEARS
(Accrual Basis of Accounting)
2007 2008
$1,675,443 $1,636,284
7,148,187 7,679,467
1,186,929 1,216,164
3,874,003 3,923,217
2,517,725 3,845,873
4,090,959 4,059,740
16, 23 O, 2 74 16, 5 69, 3 10
2,239,657 2,1 83,403
38,963,177 41,113,458
2,122,805 2,056,061
975,064 450,206
1,623,839 1,547,402
1,830,401 1,853,217
771,570 ---
7,323,679 5,906,886
46,286,856 47,020,344
$3,618 $10,71 1
1,031,736 799,350
193,752 847,424
4,768,026 3,551,478
200,969 13 5,942
3,048,512 2,392,987
3,496,095 5,696,124
12,742,708 13,434,016
2,254,416
1,101,564
1,655,169
2,396,720
690,603
2,254,790
640,771
1,605,545
2,493,214
S'3
CITY OF CU:PERTINO
CHANGES IN NET ASSETS
LAST SIX FISCAL YEARS
(Accrual Basis o1' Accounting)
Fiscal Year Ended June 30
2003 2004 2005 2006
Operating Grants and Contributions
Total Business-Type Activities Program Revenue
Total Primary Government Program Revenues
_ 61,441 84,660 28,860 135,539
_7,404,525 7,336,241 7,670,429 7,950,123
13,594,236 16,677,712 15,73 8,479 18,349,860
Net (Expense) Revenue
Governmental Activities
Business-Type Activities
Total Primary Government Net Expense
-32,467,936 -25,590,137 -26,284,275 -28,203,288
_ 754,357 753,741 -179,176 780,010
-$31,713,579 -$24,836,396 -$26,463,451 -$27,423,278
General Revenues and Transfers
Governmental Activities:
Taxes:
Property Taxes
Property Tax In Lieu of Motor Vehicle Fee (1)
Incremental Property Tax
Sales Taxes
Transient Occupancy Tax
Utility User Tax
Franchise Tax
Other Taxes
Transfers
Intergovernmental
Investment Earnings
Miscellaneous
Gain on Sale of Land
Total Government Activities
Business-Type Activities:
Investment Earnings
Transfers
Total Business-Type Activities
Total Primary Government
$4,100,856 $3,944,459 $4,296,940 $4,728,811
--- --- 2,930,000 3,569,300
25, 83 1 76, 5 70 1 5, 974 1 8 5, 676
8,843,792 8,654,185 9,224,661 10,671,642
L,679,225 1,632,514 1,790,917 2,054,904
:?,566,265 2,636,264 2,705,888 2,809,587
:?,175,913 2,194,651 2,217,313 2,353,575
L,110,545 ],248,437 3,146,516 2,534,393
225,000 175,000 1,388,000 800,000
3,215,866 2,460,137 978,059 -300,039
1,207,017 526,560 684,952 669,820
79,280 166,714 545, 1 55 1 89,262
--- --- --- 1,222,849
2_i,229,590 23,715,491 29,924,375 31,489,780
211,093 95,127 215,769 201,159
-225,000 -175,000 -1,388,000 -800,000
106,496 -56,228 -1,172,231 -598,841
$2_x,336,086 $23,659,263 $28,752,144 $30,890,939
Change in Net Assets
Government Activities
Business-Type Activities
Total Primary Government
-$7,238,346 -1,874,646 3,640,100 3,286,492
860,853 697,513 -1,351,407 181,169
-$6,377,493 -$1,177,133 $2,288,693 $3,467,661
(1) Replaced the reduced motor vehicle license fee (an intergovernmental revenue) in 2005.
94
CITY OF CUYERTINO
CHANGES IN NET ASSETS
LAST SIX FISCAL YEARS
(Accrual Basis of Accounting)
2007 2008
14, 3 43 14, 3 09
8,1 12,815 7,008,629
20,855,523 20,442,645
-26,220,469 -27,679,442
789,136 1,1 O 1,743
-$25,431,333 -26,577,699
$6,529,772 $6,941,910
3,652,509 3,894,502
187,276 220,267
1 ] ,252,341 13,154,749
2,511,184 2,711,590
3,011,755 3,175,724
2,537,018 2,547,439
2, 661, 449 1, 709, 892
500,000 992,150
364,261 266,789
1,752,177 1,451,973
291,423 103,529
1,510,410 ---
36,761,575 37,170,514
366,596 378,828
-500,000 -992,1 50
-133,404 -613,322
$36,628,171 $36,557,192
10,541,106 9,491,072
655,732 488,421
$11,196,838 $9,979,493
5'S
CITY OF CUYERTINO
FUND BALANCES OF GO`~ERNMENTAL FUNDS
LAST SIX FISCAL YEARS
(Modified Accrual Basis of Accounting
Fiscal Year Ended June 30
2003 2004 2005 2006 2007
General Fund
Reserved
Unreserved
Total General Fund
All Other Governmental Funds
Reserved
Unreserved, reported in:
Special Revenue Funds
Capital Project Funds
Total All Other Governmental Funds
$3,782,689 $3,897,270 $3,864,969 $2,931,046 $2,711,586
13,099,033 12,632,286 18,313,846 23,866,568 23,634,874
$16,881,722 $16,529,556 $22,178,815 $26,797,614 26,346,460
$20,891,656 $9,784,645 $2,701,067 $4,925,900 $8,555,042
3,976,517 3,736,446 3,618,814 6,249,004 6,844,632
6,576,208 2,236,730 1,663,033 -1,208,341 -472,405
$31,444,381 $15,757,821 $7,982,914 $9,966,563 $14,927,269
The City implemented GASB Statement 34 in fiscal year 2003 and has elected to show the above information
from that date.
')6
CITY OF CUIPERTINO
FUND BALANCES OF GO~JERNMENTAL FUNDS
LAST SIX FISCAL YEARS
(Modified Accrual Basis of Accounting
2008
$2,668,914
16,997,569
$19,666,483
$1 1,240,85 1
7,270,33 1
7,63 1, 866
$26,143,048
S-7
CITY OF CUI'ERTINO
CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS
LAST SIX FISCAL YEARS
(Modified Accrual Basis of Accounting)
Revenues
Taxes
Use of Money and Property
Intergovernmental
Licenses and Permits
Charges for Services
Fines and Forfeitures
Other Revenue
Fiscal Year Ended June 30
2003 2004 2005 2006
$:0,200,250 $21,004,405 $23,614,623 $25,616,553
1,910,503 940,963 ],119,399 1,607,837
6,318,523 7,236,955 5,567,266 5,896,167
1,410,572 1,540,760 2,896,000 3,614,953
855,844 930,050 1,568,935 2,143,729
550,377 723,748 559,791 629,586
59.219 1.009.260 1.792.795 245.176
Total Revenues
Expenditures
Current:
Administration
Law Enforcement
Public Information
Administrative Services
Recreation Services
Community Development
Public Works
Capital Outlay
Debt Service
Principal Repayment
Interest and Fiscal Charges
Total Expenditures
Excess (deficiency) of Revenues Over
(under) expenditures
Other Financing Sources (Uses)
Bond Proceeds
Proceeds from Sale of Land
Payment to Refunded Debt Escrow Agent
Transfers In
Transfers Out
?1,305,288 33,386,141 37,118,809 39,754,001
1,474,924
6,015,036
703,43 1
3,475,991
2,104,167
3,177,406
] 0,440,335
6,812,856
1,222, 5 81
5,950,849
686,798
3,758,806
2,141,431
2,563,242
9,322,086
20,246,23 7
1,162,096
6,144,695
758,314
3,671,303
2,121,366
3,156,908
9, 63 7, 3 14
10,025,935
1,236,390
6,499,91 1
853,484
4,103,497
2,302,995
4,467,655
10,386,055
2,771,502
6,925,948 1,220,000 1,245,000 1,270,000
2,939,757 2,317,837 2,289,526 2,262,913
X14,069,851 49,429,867 40,212,457 36,154,402
-7 2,764,563 -16,043,726 -3,093,648 3,599,599
57,677,519 --- --- ---
--- --- --- 2,422,849
-39,208,286 --- --- ---
25,775,538 4,765,307 7,904,763 8,364,084
-7.5,840,538 -4,760,307 -6,936,763 -7,784,084
Total Other Financing Sources ].8,404,233 5,000 968,000 3,002,849
Net Change in Fund Balances $5,639,670 -$16,038,726 -$2,125,648 $6,602,448
Debt service as a percentage of
noncapital expenditures 25.3% 11.6% 11.4% 10.6%
The City implemented GASB Statement 34 in fiscal year 2003. This calculation is included only for
fiscal years from that date.
1) Noncapital expenditures is total expenditures less capital assets added each year to statement of
net assets_ 9$
CITY OF CUI'ERTINO
CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS
LAST SIX FISCAL YEARS
(Modified Accrual Basis of Accounting)
2007 2008
$28,903,993 $34,589,139
2,169,977 2,490,444
8,200,519 8,285,280
3,325,844 2,656,017
2,062,067 1,728,099
926,310 722,087
154,235 95,388
45,742,945 50,566,454
1,287,1 O1 1,351,273
6,975,517 7,456,661
1,121,437 1,169,247
3,715,994, 3,797,156
2,403,296 3,745,244
3,969,837 3,931,055
10,477,727 1 1,13 7,93 5
4,292,]69 8,334,093
1,295,000 1,355,000
2,239,657 2,1 83,403
37,777,735 44,461,067
7,965,210 6,105,387
1,663,842
9,658,000 19,136,165
-14,777,500 -20,705,750
-3,455,658 -1,569,585
4,509,552 4,535,802
10.6% 10.9%
99
CITY OF CUPERTINO
ASSESSED AND ESTIMATED ACTUAL
VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YF;ARS
Total Estimated Direct
Fiscal Total Assessed Full Market Tax
Year Secured Unsecured Exemptions Valuation Valuation Rate
1999 $5,591,299,195 $443,973,509 $67,859,400 $6,043,669,471 $6,043,669,471 O.OS%
2000 $6,045,504,382 $500,020,465 $73,148,676 $6,553,278, 1 15 $6,553,278, 115 O.OS%
2001 $6,986,833,015 $416,844,493 $67,242,848 $7,407,208,836 $7,407,208,836 0.04%
2002 $7,836,349,904 $634,624,124 $82,089,594 $8,562,981,335 $8,562,981,335 0.04%
2003 $8, 1 1 9,969,820 $565,2 12,987 $75,795,294 $8,685,5 l 5,766 $8,685,5 1 5,766 O.OS%
2004 $8,689,558,802 $530,097,614 $80,704,482 $9,219,879,996 $9,219,879,996 0.04%
2005 $9,159,184,070 $367,378,773 $80,678,889 $9,526,841,379 $9,526,841,379 O.OS%
2006 $9,942,314,157 $350,391,447 $88,612,732 $10,292,965,413 $10,292,965,413 O.OS%
2007 $ 1 0,794,991 ,704 $38 I ,307,801 $94,957,979 $ t 1 ,1 76,5 1 3, 1 1 5 $1 1,1 76,5 1 3,1 1 5 0.06%
2008 $ l 1 ,5 1 2,949,952 $41 7,564,226 $96,690,91 O $1 1 ,930,5 14,1 78 $ 1 1 ,930,5 14,1 78 0.06%
$14,000,000,000
$12,000,000,000
$10,000,000,000
$8,000,000,000
$6,000,000,000
$4,000,000,000 j
I
$2,000,000,000
- -
$0
~ Secured Property
~ Unsecured Property
Source: HdL Companies
100
CITY OF CUI'ERTINO
PROPERTY TAX RATES
ALL OVERLAPPING GOVERNMENTS
LAST TEN FISCAL YEARS
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
County 1 .000 1 .000 1 .000 1 .000 1 .000 1 .000 1 .000 1 .000 1 .000 1 .000
County School Service --- --- --- --- --- --- 0.031 0.031 0.031 0.031
County Bond --- --- --- --- --- --- 0.239 0.239 0.135 0.135
County Retirement .0388 .0388 .0388 .0388 .0388 .0388 0.031 0.031 0.038 0.038
Library Retirement .0043 .0043 .0043 .0043 .0043 .0043 .0043 .0043 .0258 0.026
Central Fire District O. 151 O.1 51 O. 15 1 O. 151 O.1 5 1 O. 151 O. 15 ] 0.151 O.1 51 O. 1 52
Cupertino Elementary .0247 .0247 _0247 .0247 .0247 .0247 .0247 .0247 .0247 0.247
Foothill College Maintenance 0.064 0.064 0.064 0.064 0.064 0.064 0.064 0.064 0.063 0.064
Fremont High Maintenance 0.167 0.167 0.167 0.167 0.167 0.167 0.167 0.167 0.167 0.167
Mid Peninsula Open Space .0156 .0156 .0156 _0156 .0156 .0156 .0156 .0156 .0155 .0155
Bay Area Air Quality Mgmt .0018 .0018 .0018 .0018 .0018 .0018 .0018 .001 8 .0018 .0018
SCV Water D-N Central .0097 .0097 .0097 .0097 .0097 .0097 .0097 .0097 .0090 .0090
SCV WD State Water Project .0053 .0053 .0053 .0053 .0053 .0053 .0053 .0053 .0048 .0049
SCV Water District D-Zone W-4 0.002 0.002 0.002 0.002 0.002 0.002 .0014 .0014 .0012 .0013
SCV Water D-District .0018 .0018 .0018 _0018 .0018 .0018 .001 8 .0018 _0016 .0016
Educational Rev. Augment. Fund --- --- --- --- --- --- --- --- --- 0.086
Cupertino .0002 .0002 .0002 .0002 .0002 .0002 .0002 .0002 0.057 0.057
TOTALS 1.486 1.486 1.486 1.486 1.486 1.486 1.486 1.747 1.747 2.037
Source: The HdL Companies
101
CITY OF CUPERTINO
PRINCIPAL PROPERTY TAX PAYERS
CURRENT YEAR AND NINE YEARS AGO
2008 Percentage of 1999 Percentage of
Assessed Total Assessed Assessed Total Assessed
Taxpayer Valuation Valuation Valuation Valuation
Apple Inc. $587,716,742 4.79% $110,099,496 1.80%
Hewlett Packard 390,024,744 3.50% 333,991,828 5.47%
Tandem Computer --- 0.00% 267,977,189 4.39%
Cupertino Gateway Partners --- 0.00% 127,735,977 2.09%
Symantec 174,878,921 1.43% --- 0.00%
Cupertino City Center 83,271,997 0.68% 69,004,026 1.13%
Teachers Insurance 8z Annuity --- 0.00% 85,721,138 1.40%
Irvine Company LLC 68,461,286 0.59% 37,212,000 0.61%
ECI Two Results LLC 67,651,689 0.55% --- 0.00%
Cupertino Square LLC 45,971,724 1.66% --- 0.00%
Hazel B. Lester --- --- 44,762,384 0.73%
Vallco International Shopping 24,393,725 0.85% --- 0.00%
Sears 21,004,325 0.76% --- 0.00%
JC Penney 16,470,274 0.60% --- 0.00%
Ridgeview Court Associates --- 0.00% 56,000,000 0.92%
Sumitomo Bank Leasing 8L Finance _ 0.00% 52.677.800 0.86%
$1,479.845.427 15.41% $1.185.181_838 19.40%
Source: The HdL Companies
102
CITY OF CUF'ERTINO
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
Fiscal Total Current Tax
Year Tax Levv Collections
1999 $2,804,662 $2,804,662
2000 $3,075,546 $3,075,546
2001 $3,209,623 $3,209,623
2002 $4,024,705 $4,024,705
2003 $4,126,687 $4,126,687
2004 $4,021,029 $4,021,029
2005 $4,312,914 $4,312,914
2006 $4,914,487 $4,914,487
2007 $6,717,048 $6,717,048
2008 $7,162,177 $7,162,177
Percent of
Percent Delinquent Total Total Tax
of Levy Tax Tax Collections
Collected. Collections Collections to Tax Lew
100.00% $O $2,804,662 100.00%
100.00% $O $3,075,546 100.00%
100.00% $O $3,209,623 100.00%
100.00% $O $4,024,705 100.00%
100.00% $O $4,126,687 100.00%
100.00% $O $4,021,029 100.00%
100.00% $O $4,312,914 100.00%
100.00% $O $4,914,487 100.00%
100.00% $O $6,717,048 100.00%
100.00% $O $7,162,177 100.00%
Source: County of Santa Clara, Department of Finance
103
CITY OF CUPERTINO
RATIO OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
Governmental Activities and Primary Government
Percentage of Estimated % of
Fiscal Certificates 1915 Actual Market Value Personal
Year of Participation Act Bonds Total of Taxable Property Per Capita Income (1)
1999 49,160,000 730,000 49,890,000 0.83% 0.10% ---
2000 47,005,000 --- 47,005,000 0.72% 0.11% ---
2001 44,745,000 --- 44,745,000 0.60% 0.11% ---
2002 42,370,000 --- 42,370,000 0.49% 0.12% ---
2003 54,770,000 --- 54,770,000 0.63% 0.09% ---
2004 53,550,000 --- 53,550,000 0.58% 0.10% ---
2005 52,305,000 --- 52,305,000 0.55% 0.10% ---
2006 51,035,000 --- 51,035,000 0.50% 0.11% ---
2007 49,740,000 --- 49,740,000 0.45% 0.11% ---
2008 48,385,000 --- 48,385,000 0.41% 0.11% 1.53%
(1) Not available prior to 2008
1 04
CITY OF CUl'ERTINO
COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT
JUNE 30, 2008
2007-08 Assessed Valuation: $11,930,514,178
Redevelopment Incremental Valuation: 20.856.720
Adjusted Assessed Valuation: $11,909,657,458
Total Debt City's Share of
OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/08 % Aaolicable (1) Debt 6/30/08
Foothill-DeAnza Community College District $484,814,288 13.869% $ 67,238,894
West Valley Community College District 85,325,000 0.660 569,745
Santa Clara Unified School District 16'7,580,000 2.109 3,534,262
Fremont Union High School District 13:2,000,000 29.403 38,811,960
Cupertino Union School District 12;8,129,883 49.154 62,980,963
EI Camino Hospital District 146,365,000 1.488 2,177,911
SCV Water District Benefit Assessment District 16:5,020,000 4.698 7,752,640
City of Cupertino 1915 Act Bonds 95,000 100. 95.000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $183,161,375
DIRECT_AND OVERLAPPING GENERAL FUND DEBT:
Santa Clara County General Fund Obligations $89:5,655,000 4.698% $ 42,077,872
Santa Clara County Pension Obligations 389,484,822 4.698 18,297,997
Santa Clara County Board of Education COP 1:5,445,000 4.698 725,606
Foothill-De Anza Community College District COP 2'7,685,000 13.869 3,839,633
Santa Clara Unified School District COP 12,980,000 2.109 273,748
Cupertino Union School District COP 2,375,000 49.154 1,167,408
City of Cupertino Certificates of Participation 49,740,000 100. 49,740,000
Santa Clara County Vector Control District COP 1,275,000 4.698 200,840
Midpeninsula Regional Open Space Park District COP 101,840,193 7.664 8.034.952
TOTAL DIRECT AND OVERLAPPING GENERAL F UND DEBT $124,358,056
COMBINED TOTAL DEBT $307,519,431 (2)
(1) Percentage of overlapping agency's assessed valuatio n located within boundaries of the city.
(2) Excludes tax and revenue anticipation notes, enterpri se revenue, mortgage revenue and tax allocation bonds and non-
bonded capital lease obligations.
Ratios to 2007-08 Assessed Valuation:
Total Overlapping Tax and Assessment Debt . 1 .54%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($49,740,000) ..........0.42%
Combined Total Debt .......................................2.58%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30.08: $O
Source: Municipal Resource Consultants
105
CITY OF CUPERTINO
COMPUTATION OF LEGAL 13ONDED DEBT MARGIN
JUNE 30, 2008
Assessed Valuation:
Secured property assessed value, net of exempt real property $11,512,949,952
Adjusted valuation - 25% of assessed valuation $2,878,237,488
Debt limit - 15% of adjusted valuation $431,735,623
Amount of Debt Subject to Limit:
Total Bonded Debt $48,385,000
Less: Certificates of Participation not subject to
debt limit - 48.385.000
Amount of debt subject to limit
Legal Bonded Debt Margin
Total net debt
Total Net Legal applicable to the
Fiscal Debt Debt Applicable Debt limit as a % of
Year Limit to Limit Margin debt limit
1999 226,637,606 O 226,637,606 O
2000 245,747,930 O 245,737,930 O
2001 277,770,332 O 277,7'70,332 O
2002 321,111,800 O 321,111,800 O
2003 325,706,841 O 325,706,841 O
2004 345,745,500 O 345,745,500 O
2005 357,745,500 O 357,2:>6,552 O
2006 376,159,758 O 376,159,752 O
2007 408,373,114 O 408,3'73,114 O
2008 431,735,623 O 431,735,623 O
O
$43 1,73 5,623
The Government Code of the State of California provides for a legal debt limit of 1 5% of gross assessed
valuation. However, this provision was enacted when assessed valuation was based upon 25% of
market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of
market value (as of the most recent change in ownership for that parcel. The computations shown
above reflect a conversion of assessed valuation data for each fiscal year from the current full
valuation perspective to the 25% level that was in effect at the time that the legal debt margin was
enacted by the State of California for local governments loc~ited within the state.
Source: City Finance Department
106
CITY OF CUF'ERTINO
RATIO OF GENERAL BONDS:D DEBT OUTSTANDING
LAST TEN FISCAL YEARS
Ratio of General
Fiscal Assessed General Bonded Debt Bonded Debt to
Year Population Value Bonded Debt Per Capita Assessed Value
1999 50,000 $6,043,669,471 --- --- ---
2000 52,000 $6,553,278,115 --- --- ---
2001 50,546 $7,407,208,836 --- --- ---
2002 50,546 $8,562,981,335 --- --- ---
2003 52,000 $8,685,515,766 --- --- ---
2004 52,628 $9,219,879,996 --- --- ---
2005 52,600 $9,526,841,379 --- --- ---
2006 52,600 $10,292,965,413 --- --- ---
2007 55,162 $11,176,513,115 --- --- ---
2008 55,162 $11,512,949,952 --- --- ---
Source: (1) State of Ca lifornia, Department of Finance, Demographics Research Unit
(2J County of S anta Clara and City Administrative Services
11)7
CITY OF CUP'ERTINO
DEMOGRAPHIC AND ECONOM IC STATISTICS
LAST TEN FISCAL YEARS
Total Per Capita School Unemploy-
Fiscal County Personal Personal Enrollment ment
Year Population Population Income (4) lnccme (4) Grades 9-12 Rate
1999 50,000 1,647,419 ----- ----- 8,762 1.9%
2000 52,000 1,682,585 ----- ----- 8,822 1.3%
2001 50,546 1,674,634 ----- ----- 8,822 2.4%
2002 50,546 1,668,309 ----- ----- 9,063 4.6%
2003 52,000 1,675,915 ----- ----- 9,108 5.1%
2004 52,600 1,656, 128 ----- ----- 9,147 3.7%
2005 52,600 1,759,585 ----- ----- 9,138 3.2%
2006 53,840 1,773,258 ----- ----- 9,875 2.9%
2007 55,162 1,794,522 ----- ----- 9,823 3.0%
2008 55,162 1,748,976 $3,153,407,456 $4'7,672 10,300 3.8%
Source: (1) State of California, Department of Finance, Demographics Research Un it
(2) Fremont Union High School District
(3) Department of Employment Statistics
(4) Not avail able prior to 2008
City
Population
of County
3.04%
3.09%
3.02%
3.03%
3.10%
3. 1 8%
2.99%
3.04%
3.07%
3.15%
108
CITY OF CU:PERTINO
PRINCIPAL EP/IPLOYERS
CURRENT YEAR AND El'GHT YEARS AGO (1)
2007-08 1999-00
Percentage Percentage
Number of off Total City Number of of Total City
Employer Employees Employment I3) Employees Employment
Apple, Inc. 21,600 --- (2) 3,000 ] 1.45%
Symantec 17,100 --- (2) 1,300 4.96%
Hewlett-Packard 3,000 12.30% 3,500 13.36%
DeAnza College Not Avail. 0.00% 3,000 1 1 .45%
Fremont Union High School District 429 1.76% 722 2.76%
Durect Corporation 349 1.43% O 0.00%
Arc Sight Inc. 335 1.37% O 0.00%
Chordiant Software 285 1.17% O 0.00%
Health Care Center at the Forum 250 1.02% O 0.00%
Trend Micro Inc. 250 1.02% O 0.00%
Target 220 0.90% O 0.00%
Tandem Computers O 0.00% 3,000 1 1.45%
Cupertino Union School District Not avail. 0.00% 1,400 5.34%
Sears Not avail. 0.00% 294 1.12%
JC Penney Not avail. 0.00% 280 1.07%
Dakota Brothers 200 0.82% O 0.00%
(1) The City was able to obtain historical data only back to fiscal year 1999-00.
(2) Because employees outside of the City are included, percentage of City employment is not included
(3) Total city labor force is 24,400 in 2008 according to the California Employment Development Dept
Other Source_ InfoUSA.com
109
CITV OF CUPF,RTINO
FULL-TIME, EQUIVALENT
CITY GOVERNMENT EMPLOYEES BV FUNCTION
LAST TEN FISCAL YEARS
80.00
70.00
60A0
~ Council/Commissions
~Administ ration
50.00
~ Public Information
40.00 Administrative Services
~ Yarks &c Recreation
30.00 Community [>eveloprnent
~ Public Works
20.00 ~ Redevelopment Agency
1 0.00
0.00
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Function
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Council/Commissions 0.49 0.50 0.50 0.50 0.80 0.80 0.80 1.40 1.40 1.40
Administration 4.85 4.85 4.85 4.60 4.70 4.65 4.70 4.30 4.30 4.85
Public Inforn~ation 4.15 4.15 4.15 4.15 4.40 4.40 4.40 5._55 6.50 732
Administrative Services 16.90 18.90 17.90 19.90 2030 20.30 20.35 21.63 21.83 22.33
Parks 8c Recreation 24.65 24.65 28.65 35.15 32.63 33.13 32.13 31.96 28.76 30.77
Community L7evelopment 17.96 18.95 18.95 19.95 20.75 20.75 1934 20.47 23.68 23.78
Public Works 63.00 66.00 69.00 70.00 70.22 70.22 71.22 71.13 71.13 72.30
Redevelopment Agency 0.00 0.00 0.00 0.00 0.00 0.00 032 0.92 1 .42 1 .92
Source: City of Cupertino Budget
110
CITY OF CUYERTINO
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST FOUR FISCAL YEARS (1)
Function/Proeram 2005 2006 2007 2008
Public Information:
Access Cupertino 3 Days 3 Days 3 Days 3 Days
Public Safety Sheriff Response:
Priority One 5.37 Min. 4.94 Min. 4.94 Min. 5.83 Min.
Priority Two 8.61 Min. 8.09 Min. 7.15 Min. 7.95 Min.
Priority Three 18.92 Min. 16.74 Min. 15.82 Min. 15.73 Min.
Public Works:
Street Sweeping 696 Curb Miles 696 Curb Miles 696 Curb Miles 696 Curb Miles
Street Maintainence 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call
Culture 8c Recreation:
Teen Center Memberships 441 550 51 O 444
Teen Dances 10 10 9 9
Sports Center Memberships 916 1,027 1,336 1,419
Senior Center Memberships 2,000 3,100 1,935 2,1 10
Community Development:
Planning Applications 165 216 207 157
Building Permit Applications 2,252 2,190 2,302 2,254
Building Inspections 19,243 21,022 24,423 19,358
Administrative Services:
Investment Return Greater than LAIF Less than LAIF Less than LAIF Less than LAIF
Accounts Payable Processing 5 Days 5 Days 5 Days 5 Days
Duplication Requests 1 Day 1 Day 1 Day 1 Day
Recruitments 60 Days 45 Days 45 Days 45 Days
(1) Statistical information was not tracked prior to 2005.
111
CITY OF CUI'ERTINO
CAPITAL ASSET STATISTICS BY
FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
Function/ProQram 1999 2000 200.L 2002
Public Works:
Miles of Streets 450 450 450 450
Streetlights 3250 3,250 3,25() 3,250
Traffic Signals 39 39 39 39
Culture 8r Recreation:
City Parks 15 15 l.i 15
City Park Acreage (1) 1 50.8 150.8 ] 50.8 150.8
City Trails 1 1 1
Golf Courses 1 1 ] 1
Boathouse 1 1 ] 1
Community Center 1 1 ] 1
Community Hall O O O O
Senior Center 1 1 ] 1
Sports Center 1 1 ] 1
Swimming Pools 1 1 ] 1
Tennis Courts 17 17 1 ;' 1 7
Sports Fields 1 1 ] 1
City Library 1 1 1 1
2003 2004 2005
450 450 450
3,250 3,250 3,250
39 39 39
IS 15 ]5
150.8 150.8 150.8
1 1 1
1 1 1
1 1 1
1 1 1
O O ]
1 1 1
1 1 1
1 1 1
17 17 17
1 1 1
1 I 1
112
CITY OF CUI'ERTINO
CAPITAL ASSET STATISTICS BY
FUNCTION/PIC2OGRAM
LAST TEN FISCAL YEARS
2006 2007 2008
450 450 450
3,250 3,250 3,250
39 39 39
15 15 IS
150.8 150.8 150.8
1 1 1
1 1 l
1 1 1
1 1 1
1 1 1
1 1 1
1 1 1
1 1 1
17 17 17
1 1 1
1 1 1
113
COMMZlNITY
PR OF'ILE
~~5
~i_s-t~ry
Cupertino owes its name and earliest mention in recorded history to the 1776 expedition led by the Spaniard, Don Juan
Bautista de Anza, from Sonora, Mexico to the Port of San Fran<isco to found the presidio of St. Francis.
Leaving the majority of the party of men, women, and children in
Monterey to rest from their travels, deAnza, his diarist and cartographer,
Petrus Font, and 18 other men pressed on through the Santa Cl:ira Valley
in late March to their San Francisco destination.
With the expedition encamped in what is now Cupertino, Font ~~hristened
the creek next to the encampment the Arroyo San Joseph Cupertino in
honor of his patron, San Guiseppe (San Joseph) of Cupertino, Italy. The
arroyo is now known as Stevens Creek.
The village of Cupertino sprang up at the crossroads of Saratoga-
Sunnyvale Road (now DeAnza Boulevards and Stevens Creek
Boulevard. It was first known as West Side; but by 1898 the host office
at the Crossroads needed a new name to distinguish it from other similarly named towns. John T. Doyle, a San Francisco
lawyer and historian, had given the name Cupertino to his winery in recognition of the name bestowed on the nearby
creek by Petrus Font. In 1904 the name was applied to the Crossroads and to the post office when the Home Union Store
incorporated under the name, The Cupertino Stores, Inc.
M:iny of Cupertino's pioneer European settlers planted their
larid in grapes. Vineyards and wineries proliferated on
M~~ntebello Ridge, on the lower foothills, and on the flat
lands below.
After 1906 a lot more than grape growing was going on in
Cupertino. Orchards were thriving and new businesses were
being started. In the late 1940's Cupertino was swept up in
Santa Clara Valley's postwar population explosion.
Concerned by unplanned development, higher taxes, and
pic;cemeal annexation to adjacent cities, Cupertino's
community leaders began a drive in 1954 for incorporation.
Cupertino rancher Norman Nathanson, the Cupertino -
Monta Vista Improvement Association, and the Fact Finding
Committee played important roles in this movement.
Incorporation was approved in the September 27, 1955 election. Cupertino officially became Santa Clara County's 13`"
City on October 10, 1955.
A major milestone in Cupertino's development was the creation by some of the city's largest landowners of Vallco
Business and Industrial Park in the early 1960's. Of the 25 property owners, 1 7 decided to pool their land to form Vallco
Park, six sold to Varian Associates, a thriving young electronics firm, founded by Russell Varian, and two opted for
transplanting to farms elsewhere. The name Vallco was derived from the names of the principal developers: Varian
Associates and the Leonard, Lester, Craft, and Orlando families;.
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2008 C ~ i~ ,~y'c~~
Cupertino, with a population of 55,1 62 and city limits stretching, across 13 square miles, is considered to be one of the San
Francisco Bay Area's most prestigious cities in which to live and work.
Economic health is an essential component to maintaininl~ a balanced environment, which provides high-level
opportunities, and services that create and help sustain a sense of community and quality of life. Public and private
interests must be mutual in that our success as a partnership i:> a direct reflection of our success as a community_ The
cornerstone of this partnership is that of a cooperative and responsive government that provides an environment for
business and residential prosperity and fosters strong working relationships with all sectors of the community.
Our economic development strategies are tailored to address the specific needs of the community. As the City of
Cupertino is a mature city with over 90% buildout, our focus concentrates more on business retention and revitalization.
Business recruitment is site specific and targeted to industries that enhance, rather than draw from, our existing business
base.
As home to many well-known high-tech companies, Cupertino offers a dynamic and exciting business climate. Apple is
headquartered in the city along with Symantec. In addition, key divisions of Hewlett Packard are also located in
Cupertino.
The City's proactive economic development efforts have resulted in a number of innovative, mutually beneficial
partnerships with local companies. The City strives to retain and attract local companies through policies of balanced
growth and streamlined permitting.
Cupertino Square includes Macy's, Penney's and Sears as anchors and features a 16-screen AMC theatre and an upscale
bowling alley, Strike Cupertino. Shoppers can also enjoy icesl:ating at the mall's ice skating rink or a nice meal at Todai
Restaurant.
The City of Cupertino has a history of providing high-level municipal services to complement the sense of community
and quality of life enjoyed by our constituents. The City will continue to enhance and promote a strong local economy to
provide municipal services that make Cupertino a place that people are proud to call home.
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2 008 C%~y' ~rc~ fi.ZPi
The City of Cupertino operates as a general law city with a cite council-city manager form of government. Five council
members serve four year, overlapping terms, with elections held every two years. The council meets twice a month on the
first and third Tuesday at 6:45 p.m. in the Community Hall.
The City has 162 authorized full-time benefited employees. City departments include administrative services (finance,
human resources, IT, city clerk, emergency preparedness, outreach programs, code enforcement); community
development (planning, building, and economic development); parks and recreation; public works (engineering,
maintenance, transportation, and environmental); and public arnd environmental affairs. Police service is provided by the
Santa Clara County Sheriffls Department, and fire service is provided through the Santa Clara County Fire District.
Assisting the city council are several citizen advisory commissions/committees which include housing,
telecommunications, fine arts, library, planning, audit, parks and recreation, bicycle and pedestrian, teen, senior, and
public safety. Members of the volunteer boards are appointed by the city council and vacancies are announced so that
interested residents may apply for the positions. Residents are kept informed about city services and programs through
the Cupertino Scene, a monthly newsletter; Cupertino's government access cable TV channel; The City Channel; and the
city's website_
Housing
Apartment and duplex rentals range from $1,320 to $3,655
per month. As of May 2008, the average price of an
existing single family home is $1,291,460 and the average
price of a condominium/townhouse is $673,449.
Community Health Care Facilities
Cupertino is served by the Cupertino Medical Clinic,
NovaCare Occupational Health Services. Nearby hospitals
include EI Camino Hospital in Mountain View, O'Connor
Hospital in San Jose, Community Hospital of Los Gatos,
Kaiser Permanente Medical Center in Santa Clara, Stanford
Hospital in Palo Alto, and the Saratoga Walk-in Clinic in
Saratoga.
Utilities
Gas c4c electric - Pacific Gas and Electric, (800) 743-5000.
Phone - ATBaT, residential service (800) 894-2355;
business service (800) 750-2355.
Cable - Comcast, (800) 945-2288.
Garbage -Los Altos Garbage, (408) 725-0420.
Water - San Jose Water Company <408) 279-7900 and
California Water (650) 917-0152.
Sewer Service -Cupertino Sanitary District (408) 253-7071
Tax Rates and Government Services
Residential, commercial, and industrial property is
appraised at full market value, as it existed on March 1,
1'375, with increases limited to a maximum of 2% annually.
Property created or sold since March 1, 1975 will bear full
cash value as of the time created or sold, plus the 2%
annual increase. The basic tax rate is $1.00 per $100 full
c:xsh value plus any tax levied to cover bonded
iridebtedness for county, city, school, or other taxing
ap~encies. Assessed valuations and tax rates are published
annually after July 1 .
Retail Sales Tax: State (General Fund): 5%; State (Fiscal
Recovery Fund): 0.25%; State (Local Revenue Fund):
0.50%; State (Local Public Safety Fund): 0.50%; County
Transportation Funds: 0.25%; Santa Clara County Valley
Transportation Authority: 1 %; Cupertino: 0.75%; Total:
8.25%.
Assessed Valuation: (Secured and Unsecured)
Cupertino: $11,930,514,178 (6/30/08)
County: $285,951,384,691 (6/30/08)
Transportation
Rail -Southern Pacific, San Jose to San Francisco, with
spur line in Cupertino.
Air -Seven miles north of San Jose International Airport;
32 miles south of San Francisco airport.
Bus -Santa Clara Valley Transportation Authority,
Greyhound bus lines
Highways -Interstate Route 280, State Route 85.
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Facts and Figures
Population in City Limits 55,162
Median Household Income $143,000
Median Age 39
Sales Tax Rate 8.2.5%
Registered Voters 26,7.28
Democrats 9,fS85
Republicans 8,] 88
Independent =~ 57
Other 533
Did Not State 7,365
Top 40 Sales Tax Producers
Second Quarter 2008
(In Alphabetical Order)
Alexander's Steakhouse
Apple Inc.
Argonaut Window &c Door
BJ's Bar 8c Grill
California Dental Arts
Chevron Service Stations
Cypress Hotel 8c Helio's
DeAnza College Campus Center
Dynasty Restaurant
Elephant Bar
Granite Rock
Hewlett-Packard
IBM Corporation
Insight Direct
Jade Galore
JC Penney
Joy Luck Place
Longs Drug Store
Macy' s
Marina Foods
Mervyn' s
Michael's Arts Bc Crafts
Mirapath
Outback Steakhouse
Ranch 99 Market
Rotten Robbie Service Station
Scandinavian Designs
Sears
Shane Diamond Jewelers
Shell Service Station
Sodexho Marriott Management
Strike Cupertino
Symantec
Target
TGI Friday's
TJ Maxx
Union 76 Service Station
Valero Service Stations
Verigy US
Verizon Wireless
Demographic Information
White 50.1
Asian 44.4%
Hispanic 4.0%
Black 0.7%
Americ,~n Indian 0.2%
Native Hawaiian O.1%
1 20
Blackberry Farm
This 33-acre recreational facility is currently closed.
The City is currently working on the Stevens Creek
Restoration Project which affects the grounds of
Blackberry Farm. Highlights of the completed project
include: a new Blackberry Farm community park,
park/picnic upgrades, remodeled pool and catering
station, and a fully accessible trail between Blackberry
Farm and McClellan Ranch. The project is expected to
be completed in the spring of 2009.
The nine-hole golf course remains open during the
restoration project. The golf course is located at 22100
Stevens Creek Boulevard. Telephone: (408) 253-9200.
The Quinlan Community Center Civic Center and Library
The City of Cupertino's Quinlan Community Center is a
27,000 square foot facility that provides a variety of
recreational opportunities.
Most prominent is the Cupertino Room - a multi-
purpose room that can accommodate 300 people in a
banquet format- For more information, call (408) 777-
3120_
Cupertino Sports Center
The complex has a 6,000 square foot Community Hall,
plaza with fountain, trees and seating areas. City Council
n'ieetings are now held in the Community Hall as well as
Planning Commission and Parks and Recreation
Commission.
The new 54,000 square foot library, despite reduced hours
dice to budget cuts, continues to be one of the busiest in the
Santa Clara County Library system. For more information
call (408) 446-1677.
The Sports Center is a great place to meet friends. The
facility features 17 tennis courts, complete locker room
facilities, and a fully equipped fitness center featuring
free weights, Cybex, and cardio equipment. A teen
center is also included as well as a child watch center.
The center is located at the corner of Stevens Creek
Boulevard and Stelling Road. Telephone: (408) 777-
3760.
Cupertino Senior Center
The Senior Center provides a welcome and friendly
environment for adults over age 50. There is a full
calendar of opportunities for learning, volunteering, and
enjoying life. There are exercise classes, a computer lab
and classes, language instruction including English as a
second language, and cultural and special interest
classes. The center also coordinates trips and socials.
The Senior Center is located at 21251 Stevens Creek
Boulevard and is open Monday through Friday 8 a.m. to
5 p.m. Telephone: (408) 777-3150.
tl->rcClel[an Ranch Park
A horse ranch during the 1930'and 40's, this 18-acre park
h:rs the appearance of a working ranch. Preserved on the
property are the original ranch house, milk barn, livestock
barn, and two historic buildings: Baer's Blacksmith Shop,
originally located at DeAnza and Stevens Creek, and the
olid water tower from the Parish Ranch, now the site of
N[emorial Park_ Rolling Hills 4-H Club members raise
rabbits, chickens, sheep, swine, and cattle and a Junior
Nature Museum, which features small live animal exhibits
acid dispenses information about bird, animal, and plant
species of the area. McClellan Ranch is located at 22221
N[cClellan Road. Telephone: 777-3120.
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~a~e;cc~or~
Winner of numerous state and national awards for excellence, our
city's schools are widely acknowledged to be models of quality
instruction.
Cupertino Union School District serves over 17,000 students in a 26
square mile area that includes Cupertino and portions of five other
cities. The district has 20 elementary schools and five middle schools,
including several choice programs. Eighteen schools have received
state and/or national awards for educational excellence.
Student achievement is exceptionally high- Historically, district test
scores place Cupertino among the premier public school districts in
California. The district is a leader in the development of a staindards-
based system of education and is nationally recognized for leadership
in the use of technology as an effective tool for learning. Quality teaching and
district's success.
The Fremont Union High School District serves over 10,000 students in a 42 square mile area covering all of Cupertino,
most of Sunnyvale and portions of San Jose, Los Altos, Saratoga, and Santa Clara. The five high schools of the district
have garnered many awards and recognition based on both the achievement of students and the programs designed to
support student achievement. Student achievement is at an all time high based on the statewide Academic Performance
Index (API). All five high schools in the district exceeded their state established achievement targets for the 2000 API.
District students are encouraged to volunteer and/or provide service to organizations within the community. During their
senior year, if students complete 80 hours of service to a non-F~rofit community organization, they are recognized with a
"Community Service Award" medal that may be worn during their graduation ceremonies.
Cupertino is served by four local
institutions of higher education:
DeAnza College, the University of
San Francisco, National University
and the UCSC Extension. In
addition to these schoots,
Cupertino's location offers easy
access to Stanford University, Santa
Clara University and San Jose State
University.
Building on its tradition of excellence and innovation, DeAnza
College challenges students of every background to develop their
intellect, character and abilities; to achieve their educational goals-
and to serve their community in a diverse and changing world.
DeAnza College offers a wide range of quality programs and
services to meet the work force development needs of our region.
The college prepares current and future employees of Silicon
Valley in traditional classroom settings and through customized
training arranged by employers. Several DeAnza programs
encourages economic development through college credit courses,
short-term programs, services for manufacturers, technical
assistance, and/or recruitment and retention services.
1 ~'.2
parent involvement are the keys to the
' ~ta- ala- an,aL Seems
Euphrat Museum of Art
The highly regarded Euphrat Museum of Art adjacent to the ]Flint Center on the DeAnza College campus traditionally
presents one-of-a-kind exhibitions, publications and events reflecting the rich diverse heritage of our area. The Museum
prides itself on its changing exhibitions of national and international stature, emphasizing Bay Area artists. Museum
hours are 1 1 a_m. - 4 p.m. Tuesday, Wednesday, Thursday; 6-8 p.m. Tuesday and 1 1 a.m. - 2 p.m. Saturday. Telephone:
408-864-8836.
Minolta DeAnza Planetarium
Stargazers have a Cupertino facility catering to their interests, tl~e Minolta Planetarium on the DeAnza College campus. It
hosts a variety of planetarium shows and events, including educational programs for school groups and family astronomy
evenings on Saturdays at 7:00 p.m. For more information and current schedule of events, visit the website at
www.planetarium.deanza.fhda or call 408-864-8814.
Flint Center
The cultural life of the Peninsula and South Bay is enhanced by programs presented at the Flint Center for Performing
Arts located at 21250 Stevens Creek Boulevard at DeAnza College campus. The center opened in 1971 and was named in
honor of Calvin C. Flint, the first chancellor of the Foothill-DeAnza Community College District. The box office is open
10 a.m. - 4 p.m. Monday through Friday and one and one half hours prior to any performance. Box office: 408-864-
8816; administrative office: 408-864-8820.
Cupertino Historical Society
On May 2, 1966, the Cupertino Historical Society was founded as anon-profit organization by a group of 177 longtime
residents concerned about the rapid growth in the area and its impact on the quickly vanishing Cupertino heritage. On
March 30, 1990, the Society opened the Cupertino Historical l~iuseum dedicated to the preservation and exhibition of the
city's history. Through its exhibits the museum attempts to develop and expand the learning opportunities that it offers to
the ethnically diverse community of the City of Cupertino. 7'he Society continues to build partnerships with the local
school districts to ensure that the history of Cupertino is offered as part of the educational curriculum. The Society is
located at the Quinlan Community Center, 10185 N. Stelling Road_ Telephone: 408-973-8049.
Farmers' Market
Residents and visitors can visit the farmers' market every Friday from 9:00 a.m. to
1 :00 p.m. The market is located at the Vallco Fashion Park behind Macy's.
California History Center
The California History Center is located on the DeAnza College campus- The
center has published 39 volumes on California history and has a changing exhibit
program. The center's Stocklmeir Library Archives boasts :3 large collection of
books, a pamphlet file, oral history tapes, videotapes and a couple thousand student
research papers. The library's collection is for reference only. Heritage events focusing on California's cultural or natural
history are offered by the center each quarter. For more infonnation, call 408-864-8712. The center is open September
through June 8:30 a.m. to noon and 1:00 p.m. to 4:30 p.m. Monday through Thursday.
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