Financial Report 06-30-2013 For Fiscal Year ended June 30, 2013
2012-2013 comprehensive
annual Financial report
city of cupertino, california
www.cupertino.org
INTRODUCTORY SECTION
CITY OF CUPERTINO Comprehensive Annual Financial Report For the Year Ended June 30, 2013 Table of Contents
INTRODUCTORY SECTION Page
Table of Contents .......................................................................................................................................... 1
Letter of Transmittal ..................................................................................................................................... 3
Organization Chart ........................................................................................................................................ 8
City Council and Directory of City Officials ................................................................................................ 9
Commissions and Committees .................................................................................................................... 10
Certificate of Award for Excellence in Financial Reporting ...................................................................... 11
FINANCIAL SECTION
Independent Auditor’s Report ................................................................................................................. 15 Management’s Discussion and Analysis (Unaudited) ............................................................................ 19 Basic Financial Statements: Government-wide Financial Statements:
Statement of Net Position ................................................................................................................. 37
Statement of Activities ..................................................................................................................... 38 Fund Financial Statements:
Balance Sheet .................................................................................................................................... 42
Reconciliation of the Governmental Funds Balance Sheet with the
Statement of Net Position................................................................................................................ 43
Statement of Revenues, Expenditures and Changes in Fund Balances ............................................. 44
Reconciliation of the Net Change in Fund Balances – Total Governmental Funds
with the Statement of Activities ...................................................................................................... 45
Statement of Revenues, Expenditures and Changes in Fund Balance –
Budget to Actual - General Fund .................................................................................................... 46 Proprietary Funds:
Statement of Net Position.................................................................................................................. 48
Statement of Revenue, Expenses and Changes in Fund Net Position ............................................... 49
Statement of Cash Flows ................................................................................................................... 50 Fiduciary Funds:
Statement of Net Position.................................................................................................................. 52
Statement of Changes in Fiduciary Net Position .............................................................................. 53 Notes to the Basic Financial Statements ................................................................................................ 55 Required Supplementary Information (Unaudited):
Schedules of Funding Progress ........................................................................................................... 86
1
CITY OF CUPERTINO Comprehensive Annual Financial Report For the Year Ended June 30, 2013 Table of Contents
FINANCIAL SECTION (Continued) Page
Other Supplementary Information:
Schedule of Revenues, Expenditures, and Changes in Fund Balance –
Budget and Actual - Public Facilities Corporation Debt Service Fund ............................................ 88 Non-major Governmental Funds:
Combining Balance Sheets ............................................................................................................... 90
Combining Statements of Revenues, Expenditures and
Changes in Fund Balances .............................................................................................................. 92
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual ............................................................................ 94 Internal Service Funds:
Combining Statement of Net Position ............................................................................................... 98
Combining Statements of Revenues, Expenses and
Changes in Fund Net Position ......................................................................................................... 99
Combining Statements of Cash Flows ............................................................................................ 100 Agency Fund:
Statement of Changes in Assets and Liabilities ............................................................................. 102
STATISTICAL SECTION
Financial Trends:
Net Position by Component – Last Ten Fiscal Years ....................................................................... 107
Changes in Net Position – Last Ten Fiscal Years ............................................................................. 108
Fund Balances of Governmental Funds – Last Ten Fiscal Years ..................................................... 110
Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years .................................... 111 Revenue Capacity:
Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ...................... 112
Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years .............................................. 113
Principal Property Taxpayers – Current Year and Nine Years Ago ................................................. 114
Property Tax Levies and Collections – Last Ten Fiscal Years ......................................................... 115 Debt Capacity:
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years .......................................................... 116
Direct and Overlapping Bonded Debt ............................................................................................... 117
Legal Debt Margin Information – Last Ten Fiscal Years ................................................................. 118
Ratio of General Bonded Debt – Last Ten Fiscal Years ................................................................... 119
Demographic and Economic Information:
Demographic and Economic Statistics – Last Ten Calendar Years .................................................. 120
Principal Employers – Current Year and Ten Years Ago ................................................................. 121 Operating Information:
Full-Time Equivalent City Employees by Function/Program – Last Ten Fiscal Years .................... 122
Operating Indicators by Function/Program – Last Nine Fiscal Years .............................................. 123
Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ............................................ 124 Other Property Tax and Sale Statistics ................................................................................................. 125
COMMUNITY PROFILE 130
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3
4
5
6
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C itize n A d viso ry
C o m m itte e s a n d Co m m issio ns
C ity A tto rn ey
E co no m ic D e ve lo pm e nt C ity C le rk
S u sta in a b ility
P ro g ra m s
E m e rg e n cy
P re pa re dn e ss
N e ig h bo rho od
W a tch
C o m m u n ity
R e la tio ns
C o m m u n ica tion
D e pa rtm e nt
P u b lic A ffa irs
F in an ce
In form ation
T e ch no lo gy
H u m an R e so u rces
A d m in istra tive S e rvices
B u ild ing
P la nn ing
C o m m u n ity D eve lo pm e nt
S p o rts C en ter S e n io r C en ter
Y o u th P ro gra m s F a cilitie s a nd
C o m m u n ity E ve n ts
P a rks a n d R e cre a tion
C a pita l Im p ro ve m e nt
P ro g ram
T ra nsp ortatio n a nd
D e velo p m e nt
E n viro n m e n tal
P ro g ra m s
G ro un ds F a cilitie s T re e /R O W F le et/S tre e ts
S e rvice C e n ter
P u b lic W o rks
C ity M an a g er C ity T re a su rer
C ity C o u n cil
C itizen s of C u pe rtino
8
CITY OF CUPERTINO, CALIFORNIA Fiscal Year 2012-13
CITY COUNCIL
Orrin Mahoney
Mayor
Barry Chang Rod Sinks Mark Santoro
Councilmember Councilmember Councilmember
DIRECTORY OF CITY OFFICIALS
David Brandt - City Manager
Carol Korade - City Attorney
Carol Atwood – Director of Administrative Services
Timm Borden – Director of Public Works
Carol Atwood – Interim Director of Parks and Recreation
Aarti Shrivastava - Director of Community Development
Gilbert Wong
Vice Mayor
9
CITY OF CUPERTINO, CALIFORNIA
Fiscal Year 2012/13
COMMISSIONS AND COMMITTEES
AUDIT COMMITTEE PARKS & RECREATION COMMISSION
Angela Chen Sivakumar Budaraju
Mark Santoro David Fung
Rod Sinks David Greenstein
Eno Schmidt Darcy Paul
Raymond Yin Geoffrey Paulsen
HOUSING COMMISSION LIBRARY COMMISSION
Harvey Barnett Annie Ho
Jimmy Chien Rose Grymes
Krista Wilson Adrian Kolb
Nicole Maroko Jerry Liu
Rajeev Raman Ann Stevenson
FINE ARTS COMMISSION PLANNING COMMISSION
KC Chandratreya Paul Brophy
Jessi Kaur Margaret Gong
Russell Leong Winnie Lee
Rajeswari Mahaliagan Alan Takahashi
Michael Sanchez Don Sun
PUBLIC SAFETY COMMISSION BICYCLE PEDESTRIAN COMMISSION
Nina Daruwalla Vidula Aiyer
Andy Huang William Chan
Lily Lim Pete Heller
Robert McCoy Ashish Kolli
Daniel Nguyen Jill Mitsch
TEEN COMMISSION ECONOMIC DEVELOPMENT
Carissa Chan Sanika Puranik Carol Atwood Erin Cooke
Ashley Ding Chris Doyle Orrin Mahoney Aarti Shrivastava
Meyhaa Buvanesh Celine Mol Timm Borden Rod Sinks
Dana Lujack Madeline Yip Mike Foulkes John Zirelli
Greg Pommier Mike Rohde Kevin McClelland
Darcy Paul Maria Streeby
Winnie Lee
TECHNOLOGY, INFORMATION & FISCAL STRATEGIC COMMITTEE
COMMUNICATIONS COMMISSION
Peter Friedland Gilbert Wong Aarti Shrivastava
Wallace Iimura Mark Santoro Roger Lee
Shishir Chavan Carol Atwood David Woo
Rod Livingood Timm Borden
Beverly Siegel
10
11
NOTES
12
FINANCIAL SECTION
13
NOTES
14
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and City Council
City of Cupertino, California
Report on Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the City
of Cupertino as of and for the year ended June 30, 2013, and the related notes to the financial
statements, which collectively comprise the City’s basic financial statements as listed in the Table
of Contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of the financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the City’s preparation and fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the City’s internal control. Accordingly, we express no such
opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
15
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City as of June 30, 2013, and the
respective changes in financial position and, where applicable, cash flows thereof and the respective
budgetary comparisons listed as part of the basic financial statements for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
Emphasis of Matters
Management adopted the provisions of the following Governmental Accounting Standards Board
Statements, which became effective during the year ended June 30, 2013, and had material effects
on the financial statements:
Statement No. 63 - Financial Reporting of Deferred Outflows of Resources, Deferred
Inflows of Resources, and Net Position.
Statement No. 65 – Financial Reporting of Items Previously Reported as Assets and
Liabilities. This Statement establishes accounting and financial reporting standards that
reclassify, as deferred outflows of resources or deferred inflows of resources, certain
items that were previously reported as assets and liabilities and recognizes, as outflows of
resources or inflows of resources, certain items that were previously reported as assets
and liabilities. The City elected to early implement this Statement.
The emphasis of these matters does not constitute a modification to our opinions.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that
Management’s Discussion and Analysis and Schedule of Funding Progress be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who considers
it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic or historical context. We have applied certain limited procedures
to the required supplementary information in accordance with auditing standards generally accepted
in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained during
our audit of the basic financial statements. We do not express an opinion or provide any assurance
on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
16
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements as a whole. The Introductory Section,
Other Supplementary Information, and Statistical Section as listed in the Table of Contents are
presented for purposes of additional analysis and are not required parts of the basic financial
statements.
The Other Supplementary Information is the responsibility of management and was derived from
and relates directly to the underlying accounting and other records used to prepare the basic
financial statements. The information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare
the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the Supplemental Information is fairly stated, in all material respects, in
relation to the basic financial statements as a whole.
The Introductory and Statistical Sections have not been subjected to the auditing procedures applied
in the audit of the basic financial statements and, accordingly, we do not express an opinion or
provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
October 14, 2013, on our consideration of the City’s internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in
considering the City’s internal control over financial reporting and compliance.
Pleasant Hill, California
October 14, 2013
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This Page Left Intentionally Blank
18
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
This describes the City of Cupertino’s financial performance for the year. Please read it in conjunction with the
accompanying Transmittal Letter and Basic Financial Statements.
2012-13 FINANCIAL HIGHLIGHTS
Governmental activity revenues climbed 17% over last year while expenses increased 3%.
Revenues and expenses from business-type activities both rose 6% from the prior year.
Governmental net position increased 6% to $172,254,000 while business-type net position rose 7% to
$11,627,000.
General Fund revenues increased 15% from the prior year while General Fund expenditures rose 5%.
General Fund expenditures came in 11% under budget, with revenues 6% over budget.
The General Fund balance grew 38% to end the year at $36,044,000.
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 a long-term view of the City’s activities as a whole, and
comprise the Statement of Net Position 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
Position 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, with the emphasis on measuring net revenues or expenses for each of the City’s programs. The
Statement of Activities explains in detail the change in net position for the year. Over time, increases or
decreases in net position can be indicators of whether the financial condition of the City 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 Position 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 basic services are considered to be governmental activities,
including public works, law enforcement, community development, recreation, public & environmental
affairs, and general administration. These services are supported by general City revenues such as property,
sales and other taxes, and by specific program revenues such as developer fees and grants.
The City’s governmental activities include the activities of a separate legal entity, the Cupertino Public
Facilities Corporation, because the City is considered to be financially accountable for the Corporation. The
City leases its major facilities from the Corporation, which then uses the lease payments to pay principal and
interest on the Corporation’s long-term debt.
Business-type activities—All the City’s enterprises are reported here, including solid waste management
and most 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.
19
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
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, liabilities, and deferred
inflows and outflows of resources; 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 Basic
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 statements are prepared on the full accrual basis and include
current and long-term assets and liabilities and deferred inflows and outflows of resources. 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 position of the Internal Service Funds. For this City, internal service activities
predominantly benefit governmental 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 included in the Basic Financial Statements for the
General Fund and other major Special Revenue Funds. Since none of the City’s Special Revenue Funds are
considered major funds, budgetary comparison schedules for these funds are included in this document as
supplemental information only.
Fiduciary Fund statements provide financial information about the activities of the Successor Agency to the
Redevelopment Agency and of a special assessment district. The City’s fiduciary activities are reported in the
Statement of Net Position and Statement of Changes in Fiduciary Net Position. These activities are excluded
from the City’s other financial statements because the City cannot use these assets to finance its own operations.
The Successor Agency to Redevelopment Agency Private-Purpose Trust Fund holds the remaining assets,
liabilities, and deferred inflows and outflows of the City’s former Redevelopment Agency. See Note 14 to the
Basic Financial Statements. The City’s Agency Fund holds special assessment district taxes remaining after the
maturity of the special assessment district’s debt. The City acts strictly as an agent for the special assessment
district.
20
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
The Notes to Basic Financial Statements provide additional detail that is essential to a full understanding of
the information provided in the government-wide and fund financial statements.
CITY-WIDE FINANCIAL ACTIVITIES
This analysis focuses on the net position and changes in net position of the City’s Governmental Activities
(Tables 1 and 2) and Business-Type Activities (Tables 3 and 4) presented in the City-wide Statement of Net
Position and Statement of Activities that follow. The Statement of Activities Tables 2 and 4 show activity from
a revenue and expense perspective.
Governmental Activities
2013 2012
Assets:
Cash and investments 61,008$ 45,832$
Other assets 9,391 10,474
Capital assets 158,364 161,380
Total assets 228,763 217,686
Liabilities:
Long term debt 42,020 43,940
Other liabilities 14,489 10,615
Total liabilities 56,509 54,555
Net Position:
Invested in capital assets, net of debt 116,344 117,440
Restricted 8,351 7,573
Unrestricted 47,559 38,117
Total net position 172,254$ 163,130$
Table 1
Condensed Statement of Net Position at June 30
(in thousands)
Governmental Activities
The City’s net position from governmental activities rose 6% from the prior year. The following significant
changes within asset, liability, and net position categories occurred:
Increased sales, property, construction, and park dedication tax receipts, new debt service payments held
in trust, receipt of the State Proposition 1A receivable, and more accounts payable and accrued
liabilities were the primary cause of the cash and investments increase.
Depreciation on existing capital assets exceeded capital asset additions in infrastructure and equipment.
Other liabilities rose over the prior year because a May 2012 debt refunding eliminated the current
liability of the debt service payment due a year ago. Sales tax consulting agreement and inter-fund
advance liabilities also grew this year.
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
Ninety-eight percent of the unrestricted net position increase came from the excess of revenues over
expenses and transfers, while two percent came from capital asset decreases, long-term debt decreases,
and restricted net position increases.
As the Sources of Revenue chart above shows, property and sales taxes make up 55% of governmental revenue.
The Functional Expenses chart below includes only current year expenses with Public Works maintenance and
repairs of streets, facilities, parks, and storm drains comprising the largest activity. 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.
Charges for
Services
15%
Operating Grants &
Contributions
2%
Capital Grants &
Contributions
1%
Property Tax
23%
Sales Tax
32%
Transient
Occupancy Tax
6%
Utility User Tax
5%
Franchise Tax 5%
Other Taxes
10%
Misc. 1%
Sources of Revenues, Governmental Activities 2012-13
Administration
5%
Law Enforcement
19%
Public & Environmental
Affairs
3%
Administrative Services
8%
Recreation Services
9%
Community Development
9%
Public
Works
44%
Interest
3%
Functional Expenses, Governmental Activities 2012-13
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
The Statement of Activities presents program revenues, expenses, general revenues, and the resulting change in
net position as summarized in the next table.
Table 2
Condensed Statement of Activities for the Year Ended June 30
(in thousands)
Governmental Activities
2013 2012
Expenses
Administration $2,367 $1,837
Law enforcement 9,275 8,777
Public and environmental affairs 1,596 1,743
Administrative services 4,171 4,390
Recreation services 4,474 4,577
Community development 4,676 4,922
Public works 22,149 20,388
Interest on long-term debt 1,257 1,838
Total expenses 49,965 48,391
Revenues
Program revenues:
Charges for services 8,973 7,292
Operating grants and contributions 2,752 2,509
Capital grants and contributions 720 781
Total program revenues 12,445 10,582
General revenues:
Taxes:
Property tax 8,793 7,479
Property tax in-lieu of motor vehicle fee 4,772 4,487
Incremental property tax ---- 203
Sales tax 18,721 17,326
Transient occupancy tax 3,769 3,113
Utility user tax 2,995 3,265
Franchise tax 2,849 2,808
Other taxes 4,561 1,377
Intergovernmental, unrestricted:
Motor vehicle license fee 30 29
Investment earnings 177 61
Miscellaneous 127 83
Total general revenues 46,794 40,231
Total revenues 59,239 50,813
Excess of revenues over expenses,
before extraordinary item and transfers 9,274 2,422
Extraordinary item – Assets transferred to Successor Agency ---- (1,131)
Transfers (150) 207
Change in net position 9,124 1,498
Beginning net position 163,130 161,632
Ending net position 172,254 163,130
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
City-wide Governmental Revenues
Table 2 shows that total governmental revenues jumped $8,426,000 or 17% over last year, finishing at
$59,239,000.
Property tax categories rose $1,396,000 or 11% over last year due to assessed value increases reflective of the
strong housing recovery in the South Bay area and due to a one-time refund of county tax administration
charges. See the General Fund portion of this Analysis for discussion of the sales tax increase. One-time
construction and park improvement taxes from major mixed-use development projects such as the Rose Bowl
and Biltmore caused the other tax category to rise by 231% or $3,184,000 over last year.
Program revenues grew $1,863,000 or 18% over last year, primarily due to $1,681,000 more in charges for
services, driven by building and entitlement permit growth from Apple Campus 2, the Rose Bowl, the Aloft
Hotel, the Apple cafeteria, the Biltmore expansion, Homestead Square, and Saich Way Station.
To increase the fenced dog park capital budget, the City’s recreational enterprise fund received a $150,000
transfer from governmental general revenues in 2012-13. To finance the Stevens Creek Corridor Park capital
project, the City’s recreational enterprise transferred $207,000 to the City’s public works governmental unit in
2011-12.
City-wide Governmental Expenses
City-wide governmental expenses in Table 2 rose $1,574,000 or 3% above 2011-12. Law Enforcement,
Administration, and Public Works rose while Community Development, Public & Environmental Affairs,
Administrative Services, Recreation Services, and debt interest declined.
Administration rose because there was a City Manager vacancy for two months in the prior year. Legal costs of
other programs were consolidated under this function, new sales tax legal costs were incurred, and an assistant
city attorney position was filled in 2012-13. A larger operating loss allocation from internal service funds also
impacted expenses.
Law Enforcement was higher because of contract cost-of-living adjustments, increased sheriff deployment and
the higher internal service operating loss allocation.
Public & Environmental Affairs declined due to a different cost allocation method for City Channel equipment.
Administrative Services fell because of the biannual election last year, different cost allocations for human
resource and accounting systems, and the legal expense shift to Administration.
Recreation Services decreased due to lower recreational trip expenses, one-time smoking cessation grant
expenses last year, and class registration system costs newly allocated to business-type activities this year. The
savings offset higher depreciation and internal service fund operating loss allocations.
Community Development General Fund costs grew over last year because of more planning and building
applications and the filling of the economic development manager position. However, declines in Community
Development Other Governmental Fund outlays, stemming from the Redevelopment Agency dissolution in
2012 and the disposition of the Cleo Avenue affordable housing parcels in 2011 to Habitat for Humanity
overshadowed the General Fund increases.
24
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
As for the Public Works increase, new cost allocations for accounting, human resource, and permit systems
began in 2012-13. Starting in the middle of 2011-12 and continuing for all of 2012-13, Blackberry Farm utility
costs were charged to Public Works instead of Recreation Services, to be consistent with the charges at other
park facilities. Additionally, some street light utility costs should have been recorded in the prior year rather
than the current year. Increased street pavement, sign, and marking expenses in Other Governmental Funds and
a higher internal service fund operating loss allocation also affected Public Works.
Annual debt service interest dropped because of the Public Facilities Corporation’s May 2012 refinancing of its
certificates of participation.
Upon the Cupertino Redevelopment Agency’s dissolution on January 31, 2012, $1,131,000 in remaining
governmental activity assets was transferred to the City’s Successor Agency, a fiduciary trust fund that is
reported separately in this CAFR.
Change in Net Position
The City-wide $9,124,000 governmental net position increase significantly exceeded the $1,498,000 increase of
a year ago, reflecting the strong 17% jump in revenues against the modest 3% rise in expenses.
Business Type Activities
Business-type activities in the City-wide Financial Statements include the City’s four 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. The major proprietary funds section of this report provides more information on business-type results.
As shown in Table 3, the business-type net position totaled $11,627,000 at June 30, 2013, an increase of
$745,000 from the prior year with unrestricted net position rising $808,000 and the net position of capital assets
falling $63,000.
As described in Table 4, revenues for all business-type activities climbed 6% to finish at $6,860,000 this year.
Expenses rose 6% over last year to $6,265,000. The $745,000 net position increase surpassed the $325,000
increase of 2011-12, mostly because of different transfers. A $150,000 transfer from governmental activities to
business-type activities in 2012-13 funded the fenced dog park project, while a $207,000 transfer from business-
type activities to governmental activities in 2011-12 provided financing for the Stevens Creek Corridor Park
project.
25
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
2013 2012
Assets:
Cash and investments 11,768$ 10,905$
Other assets 271 258
Capital assets 762 825
Total assets 12,801 11,988
Other liabilities 1,174 1,106
Total liabilities 1,174 1,106
Net Position:
Invested in capital assets 762 825
Unrestricted 10,865 10,057
Total net position 11,627$ 10,882$
Table 3
Condensed Statement of Net Position at June 30
(in thousands)
Business Type Activities
2013 2012
Expenses
Resources recovery 1,765$ 1,566$
Blackberry farm 463 461
Sports center 2,012 1,897
Recreation programs 2,025 1,986
Total expenses 6,265 5,910
Revenues
Program revenues:
Charges for services 6,829 6,430
Operating contributions and grants - -
Total program revenues 6,829 6,430
General revenues:
Investment income 31 12
Total revenues 6,860 6,442
Transfers 150 (207)
Change in net position 745 325
Beginning net position 10,882 10,557
Ending net position 11,627$ 10,882$
(in thousands)
Business Type Activities
Condensed Statement of Activities For The Year Ended June 30
Table 4
26
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
MAJOR GOVERNMENTAL FUNDS
General Fund
General Fund Revenues
General Fund revenues of $54,662,000 ended $3,527,000 or 7% above the final budget and $12,005,000 below
the original 2012-13 budget. Actual revenues were up $7,129,000 or 15% compared to the prior year.
Development-related taxes and fees, property taxes, and transient occupancy taxes showed the strongest year-
over-year percentage gains while the fines and forfeitures and miscellaneous revenue sources suffered the
largest percentage declines. Higher than anticipated sales tax as well as development-related taxes and fees
accounted for most of the fluctuation in budgeted revenues. Table 5 displays year-to-year variations in actual
revenues, while Table 6 shows budgeted revenues compared to actuals.
Property taxes ended the year at $14,933,000, up 25% or $3,017,000 above last year and consistent with the
final budget. This increase is mostly due to a one-time state payback of taxes borrowed in 2010 under
Proposition 1A ($1,419,000) and a refund of county tax administration charges ($593,000). Excluding these
one-time tax payments, actual property growth was 9.7% due to assessed value increases reflective of the strong
housing recovery in the South Bay Area.
Sales taxes grew by $1,395,000 or 8% above last year to finish at $18,721,000. It exceeded the final budget by
$2,229,000 or 14%. Strong business-to-business sales tax growth in the second and third quarters of the fiscal
year, led by Apple Inc., offset declining taxes in first quarter, and mitigated the fourth quarter sales tax loss from
Hewlett-Packard’s move from the City. Anticipated fourth quarter remittances from a major taxpayer were not
received until the first quarter of the following fiscal year. The final budget was significantly lower than the
original because the City had originally anticipated it would receive new sales taxes with the approval of the
Apple Campus 2 development. A mid-year adjustment was made in December 2012 to reflect the longer than
anticipated approval process. In October 2012, the California State Board of Equalization notified the City that
the Board proposes a $10,550,721 reallocation of previously received sales taxes. Under the Board’s procedures,
the City has appealed the proposed reallocation.
The City’s five hotels paid $3,769,000 in transient occupancy taxes this year; $656,000 or 21% over last year’s
performance due to the opening of the new Aloft Hotel in December 2012. Revenue was 16% or $517,000
above the final and original budget. Average revenue per available room for all five hotels rose from $111 to
$119 reflecting the pickup in business travel to companies located in the City. Additionally, the voter-approved
increase in the City’s transient occupancy tax rate from 10% to 12% of the room charge became effective
January 1, 2012.
The City’s 2.4% utility user tax on telecommunication, gas, and electric services provided $2,995,000 in
revenues, which were down 8% compared to last year and $364,000 or 11% under the original and final budget.
This decrease is reflective of lower electricity usage resulting from the large investments in solar infrastructure
by educational institutions in Cupertino.
Franchise taxes were relatively unchanged from last year while other taxes greatly exceeded expectations. Other
taxes experienced a year-over-year growth of $740,000 or 55% and surpassed the final budget by 33%. The
increase in other taxes was led by unexpected construction tax growth mostly attributable to the Rose Bowl
project. Franchise taxes originate from electric, gas, water, solid waste, and cable utilities. Other taxes include
business license, construction, and property transfer taxes. The County assesses the transfer tax, at $1.10 per
$1,000 in sales price, upon recording the ownership change, and gives the City one-half of the tax. The other tax
original budget was decreased significantly because of the longer than expected Apple Campus 2 entitlement
process.
27
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
Licenses and permits include fees for reviewing building plans, building inspections, construction, tenant
improvements, and commercial/residential installations for compliance with state and municipal building codes.
License and permit fees grew by 21% compared to last year due to the Rose Bowl and Biltmore construction
projects. However, it did miss original and final budget targets by 33% and 19%, respectively as the Apple
Campus 2 and Main Street construction project timetables roll out later than expected. The original budget was
reduced to the final budget number to reflect this revised timetable. Moreover, general plan amendment fees
from the Main Street development project were budgeted under licenses and permits rather than the charges for
services category that they were received in, causing some of the budget versus actual fluctuation in both
categories.
Zoning, planning, and engineering review fees comprised 80% of the charges for services category, with non-
enterprise recreational programs making up 18% and false alarm and damage recoveries accounting for 2%.
Charges for services increased by $1,215,000, a 42% improvement compared to last year. Zoning, planning, and
engineering review fees increased by $1,256,000 or 62% over the prior year mostly due to the Apple Campus 2,
Main Street, and Biltmore development projects. Developer funding for the upcoming general plan amendment
also arrived this year. False alarm and damage recoveries tripled over last year, rising by $42,000. The increases
were offset by an $83,000 or 10% decline in non-enterprise recreation revenues consisting of Senior Center
membership, travel, and activity fees, Blackberry Farm pool, concession, and picnic fees, and youth and teen
activity fees. Charges for services finished $1,614,000 or 65% over the final budget caused by stronger than
expected growth in development activity and the different budget classification of general plan amendment fees
described in the preceding licenses and permit analysis. However, it was $141,000 or 4% above the original
budget. The original budget was decreased to the final budget at mid-year because of later than expected fees
from development projects; however, those fees were ultimately realized this year.
Intergovernmental revenues of $383,000 fell 7% or $30,000 from last year, and fell short of the final budget by
8% or $32,000. The decrease was driven by a decline in one-time grant receipts.
General Fund cash 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 income from City facility rentals
comprise use of money and property revenues, which saw an 11% year-over-year increase, to finish at $721,000.
However, this increase was $154,000 or 18% under budget expectations. The continued low interest rate
environment and the portfolio’s concentration in safe, short-term Treasuries due to credit risk, has kept
investment returns steady, but relatively low for the last few years. Since interest rates did not increase as
anticipated and the City has not diversified into higher-yielding, less secure investments, the interest income fell
below budget. Additionally the City kept the portfolio fairly liquid and of a short duration in anticipation of a
large deposit to the retiree health trust and rising interest rates. Rent income remained relatively flat over last
year. A further explanation of the investment picture for the year is in Note 2 of the Basic Financial Statements.
Fines and forfeitures fell by 15% or $102,000 compared to the prior year and $90,000 or 14% below budget, to
complete the year at $560,000. Revenues have been decreasing for several years as courts assess lower fines and
fewer officers issue parking fines.
Other revenues of $56,000 declined significantly over last year because of large one-time energy saving
reimbursements and rebates received in 2011-12. Additionally, certain development-related revenues that
previously appeared in this miscellaneous category are now being categorized in charges for service.
No transfers into the General Fund occurred in 2012-13. Capital project savings from Other Governmental
Funds were transferred into the General Fund in 2011-12.
28
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
Revenue by Source Amount % of Total Amount Percent
Taxes:
Property $ 14,933 27% $ 3,017 25%
Sales 18,721 34% 1,395 8%
Transient occupancy 3,769 7% 656 21%
Utility user 2,995 5% (270)-8%
Franchise 2,849 5% 41 1%
Other 2,077 4% 740 55%
Use of money & property 721 1% 73 11%
Intergovernmental 383 1% (30)-7%
Licenses and permits 3,503 6% 602 21%
Charges for services 4,095 7% 1,215 42%
Fines and forfeitures 560 1% (102) -15%
Other 56 0% (208) -79%
Total revenues $ 54,662 100% $ 7,129 15%
Other financing sources:
Transfers in - 0% $ (35) -100%
Total other financing sources $ - 0% $ (35)-100%
Fiscal 2013 From Fiscal 2012
Table 5
Revenue Changes
General Fund, Fiscal 2013 vs. 2012
(in thousands)
Increase/(Decrease)
29
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
Over/(Under)
Original Final Actual Final
Taxes:
Property 14,062$ 14,762$ $ 14,933 171$
Sales 23,492 16,492 18,721 2,229
Transient occupancy 3,252 3,252 3,769 517
Utility user 3,359 3,359 2,995 (364)
Franchise 2,845 2,845 2,849 4
Other 8,558 1,558 2,077 519
Use of money & property 875 875 721 (154)
Intergovernmental 315 415 383 (32)
Licenses and permits 5,205 4,346 3,503 (843)
Charges for services 3,954 2,481 4,095 1,614
Fines and forfeitures 650 650 560 (90)
Other 100 100 56 (44)
Total revenues 66,667$ 51,135$ 54,662$ 3,527$
Table 6
Budgeted Amounts
(in thousands)
General Fund, 2012-13
Revenue Budget and Actual Comparisons
General Fund Expenditures
Fiscal 2012-13 overall expenditures, at $36,495,000, were $1,649,000 or 5% higher than last year. However,
this result came in 11% or $4,679,000 under the final budget and 6% or $2,413,000 below the original budget.
Year-to-year and budget versus actual results by General Fund program are described below and in Tables 7 and
8.
Administration expenditures of $2,005,000 rose 31% or $472,000 over last year, but remained $247,000 or 11%
under final budget. There was a City Manager vacancy for two months in the prior year. Legal costs of other
departments were consolidated under this function, new sales tax legal costs were incurred, and an assistant city
attorney position was filled in 2012-13. These factors also affected budget increases during the year.
Law Enforcement sheriff contract costs of $8,784,000 were 4% or $338,000 over the prior year, but under the
final budget by $350,000 or 4%. The budget contains dollars for anticipated service levels and unexpected
events or incidences. By the end of the year, the actual rate of general law enforcement, service requests,
emergency calls, patrol, and investigations resulted in budget savings for the City. Annual contract billing rate
increases are tied to a deputy’s total compensation growth, capped at the regional consumer price index plus two
percent. Actual costs rose this year because of a 1.4% billing rate increase and more hours of sheriff
deployment. Funds for school traffic safety were carried over from the previous year and added to the original
budget.
Public and Environmental Affairs expenditures of $1,487,000 fell $173,000 or 10% under the prior year and
came within $34,000 or 2% of final budget. The cost allocation of City Channel audio/video equipment was
changed, with much of the cost moved to other City departments. Purchase order carryovers caused the variance
from original to final budget.
30
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
Administrative Services outlays were $331,000 or 8% below a year ago and finished 18% or $852,000 under
final budget. Biannual City Council and one-time transient occupancy tax election expenditures occurred last
year. Accounting and human resource system costs were newly allocated to other City departments this year.
Human resource legal costs moved to Administration. Budget savings were realized in disaster preparedness
grant expenditures, accounting consultants, city clerk and human resource staff vacancies, and insurance
premiums and claims. The budget increased $299,000 during the year for the disaster preparedness grant award,
budget carryovers from last year, labor negotiations, and workstation ergonomic improvements.
Non-enterprise Recreation expenditures ended up $236,000 or 5% under last year’s spending and $363,000 or
8% under final budget. Senior Center recreational trip expenses fell, in accordance with lower revenues. One-
time smoking cessation grant expenditures occurred last year. A portion of registration system costs was re-
allocated to recreation enterprise funds this year. Budget savings primarily came from lower trip expenses and
administrative staff vacancies. The Blackberry Farm utility budget under the Recreation program decreased
during the year to correct a duplicate budget that was under the Public Works program.
Community Development costs of $3,762,000 were $1,248,000 or 33% below the final budget due to the multi-
year general plan amendment project budget that was added in 2012-13 and carried over into 2013-14. Budget
savings came from planning and economic development positions filled at lower classifications than budgeted or
occupied on a part-time rather than the budgeted full-time basis. Planning and economic development contract
savings also occurred. Actual expenditures grew 10% or $328,000 over last year because of more planning and
building applications, the filling of the economic development manager position, and shifting some of the
housing planner’s costs from Other Governmental Funds to the General Fund. Prior year budget carryovers, an
additional planner for two years because of the new Apple Campus 2, and appropriations for the general plan
amendment, made the final budget $610,000 higher than the original.
Public Works maintenance, repair, and engineering expenditures of $12,510,000 climbed 10% or $1,173,000
over the prior year. Storm drain maintenance staff costs shifted from Other Governmental Funds to the General
Fund in 2012-13 due to the lack of storm drain development fees in Other Governmental Funds resulting from
the recession and low fee rates that were not covering costs. New cost allocations for accounting, human
resource, and permit systems began in 2012-13. Recent purchases of new maintenance vehicles and equipment
caused an increased outlay to build up the internal service fund to replace this equipment in the future. Starting
in the middle of 2011-12 and continuing for all of 2012-13, Blackberry Farm utility costs were charged to Public
Works instead of Recreation, to be consistent with the recording of utility charges at other park facilities. Some
street light utility costs should have been recorded in the prior year rather than the current year.
Public Works was $1,482,000 or 11% under final budget due to project management, engineering, maintenance,
and administrative staff vacancies and lower than expected City Hall reconfiguration, engineering consultant,
and school traffic improvement costs. A temporary additional staff engineer for the new Apple Campus 2
development review, new City Hall office reconfiguration and repairs, and encumbrance, job order and school
traffic improvement budgets carried over from last year comprised the $853,000 increase from original to final
budget.
Transfers out of the General Fund rose from $6,431,000 in 2011-12 to $8,221,000 in 2012-13, with $3,181,000
for annual debt service, $1,400,000 for retiree health obligations, $1,900,000 for road maintenance, $1,420,000
for capital projects, $75,000 for accrued leave payouts, and $245,000 for new information technology and fleet
equipment. The increase from 2011-12 resulted from more capital project and retiree health funding.
31
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
Function/Program Amount % of Total Amount Percent
Administration $ 2,005 6% $ 472 31%
Law enforcement 8,784 24% 338 4%
Public and environmental affairs 1,487 4% (173) -10%
Administrative services 3,773 10% (331)-8%
Recreation services 4,084 11% (236)-5%
Community development 3,762 10% 328 10%
Public works 12,510 34% 1,173 10%
Capital outlay 90 0% 78 650%
Total expenditures $ 36,495 100% $ 1,649 5%
Transfers out $ 8,221 100% $ 1,790 28%
Table 7
Increase/(Decrease)
From Fiscal 2012
Expenditure Changes from Prior Year
General Fund, Fiscal 2013 vs. 2012
(in thousands)
Fiscal 2013
Under
(Over)
Function/Program Original Final Actual Final
Administration $ 1,931 $ 2,252 $ 2,005 $ 247
Law enforcement 9,097 9,134 8,784 350
Public and environmental affairs 1,504 1,521 1,487 34
Administrative services 4,326 4,625 3,773 852
Recreation services 4,475 4,447 4,084 363
Community development 4,400 5,010 3,762 1,248
Public works 13,139 13,992 12,510 1,482
Capital outlay 36 193 90 103
Total expenditures $ 38,908 $ 41,174 $ 36,495 $ 4,679
Transfers out $ 26,505 $ 8,725 $ 8,221 $ 504
Budgeted Amounts
(in thousands)
General Fund, 2012-13
Expenditure Budget and Actual Comparison
Table 8
32
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
General Fund Balance
The General Fund carried a June 30, 2013 ending fund balance of $36,044,000, up 38% or $9,946,000 from the
prior year. The City assigns $12,500,000 of this for general economic uncertainty, $1,400,000 for state budget
actions that impact City revenues, $2,000,000 for economic fluctuations, and $500,000 for potential pension
liabilities. Non-spendable rehabilitation and employee housing loan receivables and prepaid expenses totaled
$957,000 of the fund balance. A total of $726,000 is restricted for public, education, and government access
programming. Lastly, $17,961,000 is unassigned as of June 30, 2013 and available for purchase orders and
future budget actions.
The increase in total fund balance resulted from revenues exceeding expenditures by $18,167,000 reduced by
$8,221,000 in transfers to other funds. The $9,946,000 increase was distributed as follows: $9,916,000 to
unassigned fund balance and $30,000 to restricted for public, education, and government access programming.
Assigned one-time revenues of $1,329,000 and non-spendable loan receivables and prepaid expenses of $46,000
were released to unassigned.
Public Facilities Corporation
On May 9, 2012, a $43,940,000 par amount of 2012 Certificates of Participation (COPs) was issued to currently
refund the 2002 COPs, to fund a reserve fund for the 2012 COPs, and pay costs in connection with issuance.
This current refunding was undertaken to reduce debt service payments over the next eighteen years by
$6,518,000 or $362,000 per year. On a present value basis, adjusted for issuance and reserve funds, the debt
service savings total $6,637,000 or 15% of the refunded principal. The new COPs fixed interest rates range from
0.35% to 3.125% through the July 1, 2030 maturity, with a true interest cost of 2.81% over that time. The COPs
were issued with an $884,000 premium. New debt proceeds and existing Corporation funds of $44,898,000 were
given to the bond trustee to accomplish the refunding. Underwriter discounts and issuance costs of $615,000
and $228,000, respectively, occurred in the refunding.
The refunding caused year-to-year fluctuations in principal and interest payments. The first $1,920,000 principal
payment on the 2012 COPs is payable on July 1, 2013 and accrued for 2012-13. Because of the refunding in
May 2012, one semi-annual interest payment and the annual principal payment on COPs were eliminated in
2011-12. The Corporation paid $995,000 in interest and trustee costs from one semi-annual debt payment on
the old 2002 COPs prior to its refunding in 2011-12. In 2012-13, the Corporation incurred $1,257,000 in
interest and trustee costs resulting from two semi-annual interest installments on the new 2012 COPs.
See Note 7 to the Basic Financial Statements and the Debt Administration section of this Analysis for more
information.
MAJOR PROPRIETARY FUNDS
Resources Recovery
The City’s has a solid waste franchise agreement with Recology that shares collection, landfill disposal, and
recycling revenues and costs. This enterprise fund receives 17% of Recology's revenues in the City, with the
funds going toward landfill costs, regulatory fees, and staffing costs that the City incurs to manage solid waste,
recycling and household hazardous waste programs. Because of the improving economy and resulting increase
in tonnage that Recology handled, this fund experienced a 9% comparative yearly increase in residential and
commercial pickup revenues, offset by 10% higher contract expenses for landfill disposal. Operating income fell
from $162,000 last year to $118,000 this year. With interest earnings, net position increased by $135,000, down
from $169,000 in growth last year, to end the year with a $6,313,000 unrestricted balance.
33
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
Blackberry Farm
City employees, with a teaching professional on contract, staff the City-owned Blackberry Farm golf course and
pro shop. The number of rounds played and accordingly, green fees, have been declining for five years. With
rounds played falling from 31,567 in 2011-12 to 28,326 in 2012-13, operating revenues accordingly dropped 6%
from $411,000 to $387,000. Expenses were flat at $463,000 this year with minimal staffing levels maintained at
the course and lower water costs offset by increased cost allocation from governmental activities and
depreciation. Financed by the Recreation Programs enterprise, a $482,000 capital project will provide cost-
saving golf course irrigation alternatives. With lower revenues, the golf course’s operating loss increased from
$50,000 last year to $77,000 this year. After interest income, net position declined $74,000, compared to last
year’s $49,000 decrease. At June 30, 2013, unrestricted net position was $750,000.
Cupertino Sports Center
Tennis lesson, membership, fitness class and rent revenues of $2,150,000 rose by $184,000 or 9% over last year,
resulting from 8% more in tennis lesson revenues, a 28% rise in monthly pass fees, and an 8% rise in annual
pass fees. With contract instructor, facility support, and maintenance costs growing by $114,000 or 6%,
operating income in 2012-13 improved to $139,000, compared to $68,000 produced in 2011-12. After adding-in
interest earnings, the increase in net position of $141,000 brought unrestricted net position to $584,000 by year-
end.
Recreation Programs
This enterprise operates the Quinlan Community Center, Monta Vista Recreation Center, McClellan Ranch,
Creekside Park building, eight school sites, and various parks. The improved economy and enhanced marketing
helped cultural events, youth and teen programs, sports, dance and fitness classes generate $2,410,000 in
revenues that were 4% better than last year. Ongoing program expenses of $2,025,000, including full-time
administrative and programming staff, part-time activity leaders, and class instructors on contract increased a
modest 2% from 2011-12. Operating income climbed to $384,000 compared to $340,000 a year ago. To increase
the fenced dog park capital budget, the fund received a $150,000 transfer from Other Governmental Funds.
After interest earnings and transfers, the fund ended up with an increase in net position of $544,000 and an
unrestricted net position balance of $3,218,000 that is needed for future operating budgets.
CAPITAL ASSETS
At June 30, 2013 the City had $159,126,000, net of depreciation, invested in a broad range of capital assets used
in governmental and business-type activities, as shown in Table 9 and in Note 6 to the Basic Financial
Statements. While the City’s capital asset total declined by 2%, equipment acquisitions and street improvements
provided major capital additions with depreciation of existing assets offsetting the additions.
34
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2013
2013 2012
Governmental Activities:
Land 60,471$ 60,471$
Easements 19,492 19,492
Buildings 21,042 22,465
Improvements other than buildings 14,941 16,107
Machinery and equipment 1,762 1,616
Roads, curbs, gutters, sidewalks, medians and bridges 33,803 33,373
Streetlights 1,835 1,937
Storm drain structures and mains 3,798 4,591
Traffic signals 1,220 1,328
Total Governmental Activities 158,364 161,380
Business-Type Activities
Buildings 241 273
Improvements other than buildings 490 494
Machinery and equipment 31 58
Total Business-Type Activities 762 825
Total City 159,126$ 162,205$
Table 9
Capital Assets, Net of Depreciation, at June 30
(in thousands)
DEBT ADMINISTRATION
The City’s only long-term debt liability at June 30, 2013, comes from $43,940,000 in Certificates of
Participation (COPs) issued in May 2012 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 construction, the City Hall remodel,
and the new library opened in 2004. The serial, fixed interest rate debt ranging from 0.35% to 3.125% requires
annual debt payments of approximately $3,171,000 that are covered by the General Fund. The June 30, 2013
outstanding principal of $42,020,000 is due to be paid off by 2030. More information can be found in Note 7 to
the Basic Financial Statements and in the Public Facilities Corporation discussion earlier in this Analysis.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Comprehensive Annual Financial Report is intended to provide a general overview of the City’s finances.
Further information can be provided by the City of Cupertino Finance Department, 10300 Torre Avenue,
Cupertino CA 95014, phone (408) 777-3220, or by the City website at www.cupertino.org.
35
This Page Left Intentionally Blank
36
STATEMENT OF NET POSITION AND
STATEMENT OF ACTIVITIES
The Statement of Net Position 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 Position reports the difference between the City’s total assets and deferred outflows
and the City’s total liabilities and deferred outflows, including all the City’s capital assets and all its long-
term debt.
The Statement of Net Position 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 decreases in the City’s net position. It is also prepared
on the full accrual basis, which means it includes all the City’s 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 City’s expenses first, listed by program, and
follows these with the expenses of its business-type activities. Program revenues, that are 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
Position is computed and reconciled with the Statement of Net Position.
Both these Statements include the financial activities of the City and the Cupertino Public Facilities
Corporation, which is a legally separate component unit of the City because it is controlled by and
financially accountable to the City.
37
CITY OF CUPERTINO
STATEMENT OF NET POSITION
JUNE 30, 2013
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments (Note 2) $56,931,070 $11,768,475 $68,699,545
Restricted cash and investments (Note 2) 4,076,845 4,076,845
Receivables:
Accounts 2,935,565 243,853 3,179,418
Interest 135,541 27,560 163,101
Intergovernmental 25,000 25,000
Loans (Note 4) 1,681,101 1,681,101
Prepaid expenses and other assets 106,257 106,257
Property held for resale (Note 1f) 247,875 247,875
Net OPEB asset (Note 12) 4,259,897 4,259,897
Capital assets (Note 6):
Non-depreciable 79,962,928 79,962,928
Depreciable, net of accumulated depreciation 78,400,990 762,013 79,163,003
Total Assets 228,763,069 12,801,901 241,564,970
LIABILITIES
Accounts payable and accruals 6,360,383 415,342 6,775,725
Accrued payroll and benefits 655,515 56,084 711,599
Deposits 2,133,342 2,133,342
Unearned revenue 461,790 665,494 1,127,284
Compensated absences (Note 1h):
Due in one year 394,867 15,912 410,779
Due in more than one year 2,505,886 21,577 2,527,463
Claims payable (Note 10):
Due in one year 436,636 436,636
Due in more than one year 1,540,913 1,540,913
Long-term debt (Note 7):
Due in one year 2,040,000 2,040,000
Due in more than one year 39,980,000 39,980,000
Total Liabilities 56,509,332 1,174,409 57,683,741
NET POSITION (Note 8)
Net investment in capital assets 116,343,918 762,013 117,105,931
Restricted for:
Special revenue projects 3,726,827 3,726,827
Affordable housing 2,211,414 2,211,414
Public access television 725,903 725,903
Debt service 1,686,974 1,686,974
Total Restricted Net Position 8,351,118 8,351,118
Unrestricted 47,558,701 10,865,479 58,424,180
Total Net Position $172,253,737 $11,627,492 $183,881,229
See accompanying notes to financial statements
38
CITY OF CUPERTINO
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2013
Net (Expense) Revenue and
Program Revenues Changes in Net Assets
Operating Capital
Charges for Grants and Grants and Governmental Business-type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Governmental Activities:
Administration $2,367,255 $5,676 $110,445 ($2,251,134)($2,251,134)
Law enforcement 9,274,536 637,595 100,000 (8,536,941)(8,536,941)
Public and environmental affairs 1,595,982 (1,595,982)(1,595,982)
Administrative services 4,171,440 (4,171,440)(4,171,440)
Recreation services 4,473,861 970,292 (3,503,569)(3,503,569)
Community development 4,676,273 6,765,564 793,981 2,883,272 2,883,272
Public works 22,149,063 593,501 1,748,067 $719,880 (19,087,615)(19,087,615)
Interest on long - term debt 1,256,922 (1,256,922)(1,256,922)
Total Governmental Activities 49,965,332 8,972,628 2,752,493 719,880 (37,520,331)(37,520,331)
Business-type Activities:
Resource recovery 1,764,993 1,882,517 $117,524 117,524
Blackberry farm 463,336 386,753 (76,583) (76,583)
Cupertino sports center 2,011,483 2,150,139 138,656 138,656
Recreation programs 2,025,416 2,409,720 384,304 384,304
Total Business-type Activities 6,265,228 6,829,129 563,901 563,901
Total $56,230,560 $15,801,757 $2,752,493 $719,880 (37,520,331) 563,901 (36,956,430)
General revenues:
Taxes:
Property taxes 8,793,110 8,793,110
Property tax in lieu of motor vehicle fee 4,772,355 4,772,355
Sales taxes 18,721,193 18,721,193
Transient occupancy tax 3,768,504 3,768,504
Utility user tax 2,994,526 2,994,526
Franchise tax 2,848,950 2,848,950
Other taxes 4,561,219 4,561,219
Intergovernmental, unrestricted:
Motor vehicle license fee 30,256 30,256
Investment earnings 176,782 31,573 208,355
Miscellaneous 126,690 126,690
Transfers (Note 5)(150,000) 150,000
Total general revenues and transfers 46,643,585 181,573 46,825,158
Change in Net Position 9,123,254 745,474 9,868,728
Net Position, beginning of year 163,130,483 10,882,018 174,012,501
Net Position, end of year $172,253,737 $11,627,492 $183,881,229
See accompanying notes to financial statements
39
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40
FUND FINANCIAL 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 2012-13. Individual
non-major funds may be found in the Supplemental section.
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 SERVICE 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, Memorial Park, and other City
facilities.
41
CITY OF CUPERTINO
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2013
Public Other Total
Facilities Governmental Governmental
General Corporation Funds Funds
ASSETS
Cash and investments (Note 2) $38,569,562 $97,908 $10,180,820 $48,848,290
Restricted cash and investments (Note 2) 4,076,845 4,076,845
Receivables:
Accounts 2,486,543 449,022 2,935,565
Interest 105,710 10,731 116,441
Intergovernmental 25,000 25,000
Loans (Note 4) 920,593 760,508 1,681,101
Prepaid items 36,234 36,234
Advance to other funds (Note 5) 560,564 560,564
Property held for resale (Note 1f) 247,875 247,875
Other assets 3,884 3,884
Total Assets $42,708,090 $4,174,753 $11,648,956 $58,531,799
LIABILITIES
Accounts payable and accruals $3,450,044 $2,487,779 $249,383 $6,187,206
Accrued payroll and benefits 593,605 31,826 625,431
Deposits 2,133,342 2,133,342
Unearned revenue 461,790 461,790
Total Liabilities 6,638,781 2,487,779 281,209 9,407,769
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - loans 129,602 129,602
Unavailable revenue - grants 25,000 25,000
Total Deferred Inflows of Resources 25,000 129,602 154,602
FUND BALANCES (Note 8):
Nonspendable 956,827 956,827
Restricted 725,903 1,686,974 5,938,241 8,351,118
Assigned 16,400,000 5,299,904 21,699,904
Unassigned 17,961,579 17,961,579
Total Fund Balances 36,044,309 1,686,974 11,238,145 48,969,428
Total Liabilities, Deferred Inflows of Resources
and Fund Balances $42,708,090 $4,174,753 $11,648,956 $58,531,799
See accompanying notes to financial statements
42
CITY OF CUPERTINO
Reconciliation of the
GOVERNMENTAL FUNDS -- BALANCE SHEET
with the
STATEMENT OF NET POSITION
JUNE 30, 2013
Total fund balances reported on the governmental funds balance sheet $48,969,428
Amounts reported for Governmental Activities in the Statement of Net Position
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.156,899,326
ALLOCATION OF INTERNAL SERVICE FUND NET POSITION
Internal service funds are used by management to charge the costs of activities such as
information technology, insurance, equipment acquisition and maintenance, and certain
employees' benefits to governmental funds. The assets and liabilities of the internal service
funds are therefore included in the governmental activities of the statement of net position.11,193,827
RECEIVABLES NOT AVAILABLE
Certain receivables are not available to pay for current period expenditures and
therefore are deferred in the governmental funds.154,602
LONG TERM LIABILITIES
The liabilities below are not due and payable in the current period and therefore are not
reported in the governmental funds:
Long-term debt (42,020,000)
Claims payable (100,000)
Compensated absences (2,843,446)
NET POSITION OF GOVERNMENTAL ACTIVITIES $172,253,737
See accompanying notes to financial statements
43
CITY OF CUPERTINO
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2013
Public Other Total
Facilities Governmental Governmental
General Corporation Funds Funds
REVENUES
Taxes $45,343,962 $3,038,608 $48,382,570
Use of money and property 721,149 $2,299 20,748 744,196
Intergovernmental 382,536 2,458,871 2,841,407
Licenses and permits 3,502,617 3,502,617
Charges for services 4,095,150 419,916 4,515,066
Fines and forfeitures 560,417 560,417
Other revenue 56,093 1,735 57,828
Total Revenues 54,661,924 2,299 5,939,878 60,604,101
EXPENDITURES
Current:
Administration 2,005,176 2,005,176
Law enforcement 8,783,885 8,783,885
Public and environmental affairs 1,486,910 1,486,910
Administrative services 3,772,714 3,772,714
Recreation services 4,083,822 4,083,822
Community development 3,762,180 633,421 4,395,601
Public works 12,510,066 1,486,450 13,996,516
Capital outlay 90,037 4,594,639 4,684,676
Debt service:
Principal 1,920,000 1,920,000
Interest and fiscal charges 1,256,922 1,256,922
Total Expenditures 36,494,790 3,176,922 6,714,510 46,386,222
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 18,167,134 (3,174,623) (774,632) 14,217,879
OTHER FINANCING SOURCES (USES)
Transfers in (Note 5) 3,181,000 5,257,707 8,438,707
Transfers (out) (Note 5) (8,220,503) (2,087,707) (10,308,210)
Total Other Financing Sources (Uses) (8,220,503) 3,181,000 3,170,000 (1,869,503)
NET CHANGE IN FUND BALANCES 9,946,631 6,377 2,395,368 12,348,376
BEGINNING FUND BALANCES 26,097,678 1,680,597 8,842,777 36,621,052
ENDING FUND BALANCES $36,044,309 $1,686,974 $11,238,145 $48,969,428
See accompanying notes to financial statements
44
CITY OF CUPERTINO
Reconciliation of the
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2013
The schedule below reconciles the Net Changes in Fund Balances 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 Position 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 $12,348,376
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. However,
in the Statement of Activities the cost of those assets is capitalized and allocated over
their estimated useful lives and reported as depreciation expense.
Expenditures for capital assets reported as:
Capital outlay 4,248,588
Depreciation expense is deducted from the fund balance (7,316,594)
LONG TERM DEBT TRANSACTIONS
Principal payments 1,920,000
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):
Compensated absences (129,890)
Claims payable (100,000)
Deferred revenue (1,394,497)
ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal Service Funds are used by management to charge the costs of certain activities,
such as equipment acquisition, maintenance, and insurance to individual funds.
The portion of the net revenue (expense) of these Internal Service Funds arising out
of their transactions with governmental funds is reported with governmental activities,
because they service those activities.
Change in Net Position - All Internal Service Funds (452,729)
CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $9,123,254
See accompanying notes to financial statements
45
CITY OF CUPERTINO
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2013
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)
Revenues:
Taxes $55,568,000 $42,268,000 $45,343,962 $3,075,962
Use of money and property 875,000 875,000 721,149 (153,851)
Intergovernmental 315,000 415,000 382,536 (32,464)
Licenses and permits 5,205,000 4,346,000 3,502,617 (843,383)
Charges for services 3,954,000 2,481,038 4,095,150 1,614,112
Fines and forfeitures 650,000 650,000 560,417 (89,583)
Other revenue 100,000 100,000 56,093 (43,907)
Amounts available for appropriation 66,667,000 51,135,038 54,661,924 3,526,886
Charges for appropriation (outflows)
Current
Administration 1,931,213 2,252,075 2,005,176 246,899
Law enforcement 9,097,344 9,134,243 8,783,885 350,358
Public and environmental affairs 1,503,332 1,521,128 1,486,910 34,218
Administrative services 4,326,443 4,625,334 3,772,714 852,620
Recreation services 4,475,331 4,446,633 4,083,822 362,811
Community development 4,400,156 5,009,827 3,762,180 1,247,647
Public works 13,138,653 13,992,140 12,510,066 1,482,074
Capital outlay 35,500 193,000 90,037 102,963
Total charges for appropriations 38,907,972 41,174,380 36,494,790 4,679,590
EXCESS OF REVENUES
OVER EXPENDITURES 27,759,028 9,960,658 18,167,134 8,206,476
OTHER FINANCING SOURCES (USES)
Transfers (out) (26,505,000) (8,725,000) (8,220,503) 504,497
Total other financing sources (uses) (26,505,000) (8,725,000) (8,220,503) 504,497
NET CHANGE IN FUND BALANCE $1,254,028 $1,235,658 9,946,631 $8,710,973
BEGINNING FUND BALANCE 26,097,678
ENDING FUND BALANCE $36,044,309
See accompanying notes to financial statements
46
MAJOR PROPRIETARY FUNDS
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 2012-13.
RESOURCES RECOVERY FUND
This fund accounts for activity related to the collection, disposal, and recycling of solid waste. A private
company has been issued an exclusive franchise to perform these services.
BLACKBERRY FARM FUND
This fund accounts for activities related to operating the City-owned golf course.
CUPERTINO SPORTS CENTER FUND
This fund accounts for the operation and maintenance of the Cupertino Sports Center.
RECREATION PROGRAMS FUND
This fund accounts for activities of the City’s community centers and park facilities.
47
CITY OF CUPERTINO
PROPRIETARY FUNDS
STATEMENT OF NET POSITION
JUNE 30, 2013
Business-type Activities-Enterprise Funds Governmental
Cupertino Activities-
Resources Blackberry Sports Recreation Internal Service
Recovery Farm Center Programs Totals Funds
ASSETS
Current Assets:
Cash and investments (Note 2) $6,200,381 $790,369 $874,771 $3,902,954 $11,768,475 $8,082,780
Accounts receivable 243,613 240 243,853
Interest receivable 14,665 1,867 2,068 8,960 27,560 19,100
Prepaid items 66,139
Total current assets 6,458,659 792,476 876,839 3,911,914 12,039,888 8,168,019
Noncurrent assets:
Net OPEB asset (Note 12)4,259,897
Capital Assets (Note 6):
Depreciable, net of
accumulated depreciation 30,483 62,147 108,173 561,210 762,013 1,464,592
Total noncurrent assets 30,483 62,147 108,173 561,210 762,013 5,724,489
Total Assets 6,489,142 854,623 985,012 4,473,124 12,801,901 13,892,508
LIABILITIES
Current Liabilities:
Accounts payable and accruals 133,469 8,140 174,889 98,844 415,342 173,177
Accrued payroll and benefits 7,337 5,120 10,033 33,594 56,084 30,084
Advance from other funds (Note 5)560,564
Compensated absences (Note 1h) 3,279 10,595 2,038 15,912 21,861
Claims payable (Note 10)436,636
Unearned revenue 104,468 561,026 665,494
Total current liabilities 144,085 23,855 291,428 693,464 1,152,832 1,222,322
Non-current Liabilities:
Compensated absences (Note 1h) 1,520 18,272 1,785 21,577 35,446
Claims payable (Note 10)1,440,913
Total Liabilities 145,605 42,127 293,213 693,464 1,174,409 2,698,681
NET POSITION (Note 8)
Net investment in capital assets 30,483 62,147 108,173 561,210 762,013 1,464,592
Unrestricted 6,313,054 750,349 583,626 3,218,450 10,865,479 9,729,235
Total Net Position $6,343,537 $812,496 $691,799
$3,779,660 $11,627,492 $11,193,827
See accompanying notes to financial statements
48
CITY OF CUPERTINO
PROPRIETARY FUNDS
STATEMENT OF REVENUE, EXPENSES
AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2013
Business-type Activities-Enterprise Funds Governmental
Cupertino Activities-
Resources Blackberry Sports Recreation Internal Service
Recovery Farm Center Programs Totals Funds
OPERATING REVENUES
Charges for services $1,866,458 $369,628 $2,149,255 $2,408,539 $6,793,880 $3,399,453
Other 16,059 17,125 884 1,181 35,249 7,352
Total Operating Revenues 1,882,517 386,753 2,150,139 2,409,720 6,829,129 3,406,805
OPERATING EXPENSES
Salaries and benefits 210,302 143,450 291,746 460,601 1,106,099 3,163,409
Materials and supplies 53,961 74,752 176,276 155,109 460,098 576,007
Contractual services 1,497,379 233,492 1,514,180 1,304,770 4,549,821 494,070
Insurance and claims and premium 934,072
Depreciation (Note 6)3,351 11,642 29,281 104,936 149,210 440,461
Total Operating Expenses 1,764,993 463,336 2,011,483 2,025,416 6,265,228 5,608,019
Operating Income (Loss)117,524 (76,583) 138,656 384,304 563,901 (2,201,214)
NONOPERATING REVENUES
Investment income 17,154 2,186 2,310 9,923 31,573 28,982
Total Nonoperating Revenues 17,154 2,186 2,310 9,923 31,573 28,982
Income (Loss) Before Transfers 134,678 (74,397) 140,966 394,227 595,474 (2,172,232)
Transfers in (Note 5)150,000 150,000 1,719,503
Change in net position 134,678 (74,397) 140,966 544,227 745,474 (452,729)
Net Position-Beginning of year 6,208,859 886,893 550,833 3,235,433 10,882,018 11,646,556
Net Position-End of year $6,343,537 $812,496 $691,799 $3,779,660 $11,627,492 $11,193,827
See accompanying notes to financial statements
49
CITY OF CUPERTINO
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2013
Business-type Activities-Enterprise Funds
Governmental
Cupertino Activities-
Resources Blackberry Sports Recreation Internal Service
Recovery Farm Center Programs Totals Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $1,886,491 $386,513 $2,190,595 $2,446,694 $6,910,293 $3,416,908
Cash payments to suppliers
for goods and services (1,642,999) (314,225) (1,613,390) (1,442,147) (5,012,761) (1,009,417)
Cash payments to employees (209,651) (141,441) (295,619) (463,989) (1,110,700) (3,154,069)
Cash payments for judgment and claims (552,501)
Net cash provided (used) by operating activities 33,841 (69,153) 281,586 540,558 786,832 (1,299,079)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Advance repayment from other funds 504,497
Advance from other funds 560,564
Transfers in 150,000 150,000 1,719,503
Cash Flows from Noncapital
Financing Activities 150,000 150,000 2,784,564
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisitions of capital assets (6,539) (27,832) (52,165) (86,536) (492,128)
Cash Flows from Capital and
Related Financing Activities (6,539) (27,832) (52,165) (86,536) (492,128)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 7,463 1,014 739 3,499 12,715 15,447
Cash Flows from Investing Activities 7,463 1,014 739 3,499 12,715 15,447
Net Cash Flows 41,304 (74,678) 254,493 641,892 863,011 1,008,804
Cash and investments at beginning of year 6,159,077 865,047 620,278 3,261,062 10,905,464 7,073,976
Cash and investments at end of year $6,200,381 $790,369 $874,771 $3,902,954 $11,768,475 $8,082,780
Reconciliation of operating income (loss) to
net cash provided by operating activities:
Operating income (loss)$117,524 ($76,583) $138,656 $384,304 $563,901 ($2,201,214)
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation 3,351 11,642 29,281 104,936 149,210 440,461
Change in assets and liabilities:
Accounts receivable 3,974 (240)1,680 5,414
Prepaid expense (35,674)
Net OPEB assets 28,058
Accounts payable and accruals (91,659) (5,981) 77,066 17,732 (2,842) 106,437
Accrued payroll and benefits 98 253 (826) (3,388) (3,863)284
Deposits (19,002)
Deferred revenue 40,456 35,294 75,750
Claims payable 381,571
Compensated absences 553 1,756 (3,047)(738)
Net cash provided (used) by operating activities $33,841 ($69,153) $281,586 $540,558 $786,832 ($1,299,079)
See accompanying notes to financial statements
50
FIDUCIARY FUNDS
Fiduciary Funds include a private-purpose trust fund that accounts for the accumulation of resources to be
used for payments at appropriate amounts and times in the future.
Fiduciary Funds also include agency funds that account for assets held by the City as an agent for
individuals, private organizations, other governmental units, or other entities. Agency Funds are custodial
in nature and do not involve measurement of operation results. Such funds have no equity since all assets
are due to individuals or other entities in the future.
SUCCESSOR AGENCY TO FORMER REDEVELOPMENT AGENCY PRIVATE-PURPOSE
TRUST FUND
This fund holds the net position of the City’s former redevelopment agency. The net position is dedicated
to remaining agency obligations.
AGENCY FUNDS
Special district assessments held by the City, acting as an agent for bond debt service payments, comprise
City Agency funds. The City is not liable for the debt payments.
51
CITY OF CUPERTINO
FIDUCIARY FUNDS
STATEMENT OF NET POSITION
JUNE 30, 2013
Successor
Agency to
Redevelopment
Agency
Private-purpose Agency
Trust Fund Funds
ASSETS
Cash and investments (Note 2)$775,719 $81,403
Total Assets $775,719 $81,403
LIABILITIES
Accrued payroll and benefits $1,992
Deposits $81,403
Total Liabilities 1,992 $81,403
NET POSITION
Held in trust for restricted purposes $773,727
See accompanying notes to financial statements
52
CITY OF CUPERTINO
FIDUCIARY FUND
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED JUNE 30, 2013
Successor
Agency to
Redevelopment
Agency
Private-purpose
Trust Fund
ADDITIONS
Use of money and property $469
Other revenue - ABAG refund 67,655
Total additions 68,124
DEDUCTIONS
Community development activities 64,742
Total deductions 64,742
Change in net position 3,382
Net position - beginning of year 770,345
Net position - end of year $773,727
See accompanying notes to financial statements
53
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54
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 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. The City operates under a Council - City Manager form of government and provides
services through the following departments: Administrative Services, Community Development, City
Manager, Parks and Recreation, Public and Environmental Affairs, and Public Works. 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 Recology 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
unit entity 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 unit - The Cupertino Public Facilities Corporation (the Corporation) was
incorporated in May 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 Corporation does not issue separate financial statements, since it is reported separately in the City’s
basic financial statements.
(b) Measurement Focus, Basis of Accounting and Basis of Presentation
The City’s basic financial statements are prepared in conformity with accounting principles generally
accepted in the United States. The Government Accounting Standards Board (GASB) is the
acknowledged standard setting body for establishing accounting and financial reporting standards
followed by governmental entities in the United States.
Government-wide Statements - The Statement of Net Position 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.
55
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (Continued)
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 that 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 and (b) grants and contributions that
are restricted to meeting the operational or capital needs of a particular program. 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 Position 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 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.
Major Funds - The City’s major governmental and enterprise funds are identified and presented
separately in the fund financial statements. All other funds, called nonmajor funds, are combined and
reported in a single column, regardless of their fund type.
Major funds are defined as funds, which have either assets (plus deferred outflows), liabilities (plus
deferred inflows), revenues or expenditures in excess of ten percent of their fund-type total and five
percent of the aggregate total for both governmental funds and enterprise funds. The General Fund is
always a major fund. The City may select other funds it believes should be presented as major funds.
56
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (Continued)
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 Debt Service Fund accounts for the payments of principal and
interest on certificates of participation issued to provide for the financing of City Hall, Library, Wilson
Park, Memorial Park, and other City facilities.
The City reports all its enterprise funds as major funds in the accompanying financial statements:
The Resources Recovery Fund accounts for activity related to the collection, disposal, and recycling 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 Center.
The Recreation Programs Fund accounts for activities of the City’s community centers and park
facilities.
The City also reports the following fund types:
Internal Service Funds. These funds account for workers’ compensation, management information
systems maintenance and replacement, equipment maintenance and replacement, retiree health costs,
accrued leave payouts, and long-term disability coverage; all of which are provided to other departments
on a cost-reimbursement basis.
Fiduciary Fund Types. The financial activities of these funds are excluded from the Government-wide
financial statements. The Successor Agency to Redevelopment Agency Private-Purpose Trust Fund
accounts for net position restricted to satisfying the remaining obligations of the former Redevelopment
Agency. See Note 14 for more information. The Agency Fund accounts for the City’s role as an agent
for repaying special assessment debt.
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.
57
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (Continued)
Governmental funds are reported using the current financial resources measurement focus and the
modified 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 the City has provided financial resources to a debt service fund for payment
of these liabilities that mature early in the following year. 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.
Unearned revenues are considered on a full accrual basis, while unavailable revenues are based on the
modified accrual measure.
Fiduciary financial statements consist of a private-purpose trust fund and agency fund. The
measurement focus and basis of accounting of the private-purpose trust fund is similar to a proprietary
fund. The agency fund reports only assets and liabilities and therefore has no measurement focus. It
recognizes 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. Other receipts and taxes are recognized as revenue when the cash is received.
Sales taxes collected and held by the state at year end on behalf of the City are also recognized as
revenue. Sales tax consultant payments which are contingent on revenues collected are netted against
the related revenues.
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. The City’s policy is to first apply
restricted grant resources to such programs, followed by general revenues if necessary. Grant revenues
are recognized after eligibility and billing occurs, but may be a deferred inflow if not received within
sixty days of year-end. Because of the cost-reimbursement and recognition nature of some grants,
certain capital project funds may carry deficit fund balances until billing and receipt of grants. The City
may also front the capital outlays with cash advances from other funds.
Non-exchange transactions, in which the City gives or receives value without directly 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 is recognized as described above. Entitlement and donation revenues
are recognized when cash is received.
58
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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 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. The 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’s legal level of budgetary control is at the functional level for the general fund and at the fund
level for other funds. The City Manager is responsible for controlling the City’s expenditures in
accordance with the adopted budget. The City Manager is authorized to administer and transfer
appropriations between budget accounts within the operating budget when in his opinion such transfers
become necessary for administrative purposes. Any revision which 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.
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 projects 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. Capital assets are defined as assets with an
initial individual cost of more than $5,000 for general capital assets and $100,000 for intangible assets.
59
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e) Capital Assets (Continued)
Depreciation is recorded using the straight-line method over the following useful lives:
Years
Buildings 15 - 25
Improvements 10 - 15
Vehicles 4 - 10
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
Major outlays for capital assets and improvements are capitalized as projects are constructed. For
enterprise funds, interest incurred during the construction phase is reflected in the capitalized value of
the asset constructed, net of interest earned on the invested proceeds over the same period. Some capital
assets may be acquired using 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 assets are
contributed.
(f) Property Held for Resale
Property held for resale is stated at the lowest of historical cost, net realizable value or agreed-upon
sales price.
The City operates an affordable housing program funded by development impact fees that are recorded
in the Housing Development Special Revenue Fund. To effectuate a change in private ownership of a
condominium built under the program, the City, using Housing Development Fund cash, purchased the
unit in a foreclosure sale on April 4, 2013 for $247,875 and recorded the asset as Property Held for
Resale in the same Fund.
(g) Claims and Judgment 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, and other claims and judgments are recorded in the
General Fund or enterprise funds, as appropriate.
60
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h) Compensated Absences
Compensated absences comprise vested accumulated vacation and sick leave. The City’s liability for
compensated absences is recorded in governmental or business-type activities 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 Position.
Compensated absences are liquidated by the fund that has recorded the liability. The long-term portion
of governmental activities compensated absences are liquidated primarily by the General Fund, using
the Compensated Absences and Long-Term Disability internal service fund to account for termination
payouts.
The changes in compensated absences for the year ended June 30, 2013 were as follows:
Governmental
Activities
Business-Type
Activities Total
Beginning Balance $2,789,865 $38,227 $2,828,092
Additions 415,355 4,635 419,990
Payments (304,467) (5,373) (309,840)
Ending Balance $2,900,753 $37,489 $2,938,242
Current Portion $394,867 $15,912 $410,779
Non-current Portion $2,505,886 $21,577 $2,527,463
(i) Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position or balance sheet will sometimes report a
separate section for deferred outflows of resources. This separate financial statement element, deferred
outflows of resources, represents a consumption of net position or fund balance that applies to a future
period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position or balance sheet will sometimes report a
separate section for deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net position or fund balance that applies to a future
period(s) and so will not be recognized as an inflow of resources (revenue) until that time.
61
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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 February 1 and become delinquent after
December 10 and April 10. Unsecured taxes are levied on July 1 and become delinquent on August 31.
The lien date for secured and unsecured property taxes is January 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 applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund
and as reductions of expenditures/expenses in the fund that is reimbursed.
(l) 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) Prepaid Items
Prepaid items are reported under the consumption method, which recognizes the expenditures/expense
in the period associated with the service rendered or goods consumed.
(n) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and assumptions that affect
certain amounts and disclosures. Accordingly, actual results could differ from those estimates.
(o) Early Implementation of New GASB Pronouncement
GASB issued Statement No. 65, “Items Previously Reported as Assets and Liabilities”, which
establishes accounting and financial reporting standards that reclassify, as deferred outflows of
resources or deferred inflows of resources, certain items that were previously reported as assets and
liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were
previously reported as assets and liabilities. This Statement also provides other financial reporting
guidance related to the impact of the financial statement elements deferred outflows of resources and
deferred inflows of resources, such as changes in the determination of the major fund calculations and
limiting the use of the term deferred in financial statement presentations. This Statement is effective for
fiscal periods beginning after December 15, 2012. The City has elected to early implement this
Statement to be effective this fiscal year ending June 30, 2013.
62
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 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 Statement of Net
Position and the balance sheet as “cash and investments.”
(a) Policies
California Law requires banks and savings and loan institutions to pledge government securities with a
market value of 110% 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 in individual investments and in investment pools. Individual
investments are evidenced by 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 fair 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 investment
income for that fiscal year.
(b) Classification
The City's total cash and investments, at fair value, are presented on the accompanying financial
statements in the following allocation:
Private -
Primary Purpose Agency
Government Trust Fund Funds Total
Cash and Investments $68,699,545 $775,719 $81,403 $69,556,667
Restricted Cash and Investments:
Held by Fiscal Agent for Bond Repayments 4,076,845 4,076,845
Total Cash and Investments $72,776,390 $775,719 $81,403 $73,633,512
63
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 2 – 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 the 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 held by fiscal
agents that are governed by the provisions of debt agreements of the City.
Minimum Maximum Maximum
Maximum Credit Percentage of Investment in
Authorized Investment Type Maturity Quality Portfolio One Issuer
U.S. Treasury Obligations 5 years N/A None None
U.S. Agency Securities * 5 years N/A None None
California Local Agency Investment N/A N/A Up to $50
million
None
Fund (LAIF)
Non-negotiable Certificates of 5 years N/A 30% *** 10% of portfolio;
Deposits (time deposits) 5% of issuer's net worth. **
State of California registered state 5 years N/A None None
warrants, treasury notes, or bonds
California local agency bonds, notes, 5 years N/A None None
warrants, or other obligations
Bond issued by the local agency 5 years N/A None None
Bankers' Acceptances 180 days N/A 40% None
10% of portfolio;
Commercial Paper 270 days A-1+/P-1 25% 5% of issuer's net worth;
10% of outstanding paper of
issuer. **
Negotiable Certificates of Deposit 5 years N/A 30% 10% of portfolio;
5% of issuer's net worth. **
Repurchase Agreements 1 year N/A None 10% of portfolio;
5% of issuer's net worth. **
Medium Term Corporate Notes 5 years A or better 30% 10% of portfolio;
5% of issuer's net worth. **
Money market mutual funds investing
5 years
Aaa/AAA
20%
None
in U.S. Treasury, Government
Agency securities or repurchase
agreements collaterized by
U.S. Treasury or Government
Agency securities
* Securities issued by agencies of the federal government such as the Government National Mortgage Association (GNMA), the
Federal Farm Credit System (FFCB), the Federal Home Loan Bank (FHLB), the Federal National Mortgage Association
(FNMA), the Student Loan Marketing Association (SLMA), and the Federal Home Loan Mortgage Association (FHLMC).
** Represents restriction in which the City’s investment policy is more restrictive than the California Government Code.
*** 30% maximum % of portfolio if using a private sector entity to assist in the placement of the time deposits. No maximum for
others.
64
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 2 – CASH AND INVESTMENTS (Continued)
(d) Authorized Investments by Debt Agreements
The City must maintain required amounts 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:
Minimum Maximum
Maximum Credit Percentage of
Authorized Investment Type Maturity Quality Portfolio
Cash or obligations of the U.S. including U.S. Treasury obligations N/A N/A None
Federal agencies obligations which represent full faith N/A N/A None and credit of the U.S.
Direct federal agencies obligations which are not fully N/A N/A None guaranteed by the full faith and credit of the U.S.
U.S. dollar denominated deposit accounts, federal funds and 360 days P-1, A-1+, A-1 None
bankers' acceptances with domestic commercial banks
Commercial Paper 270 days P-1, A-1 None
Money market funds N/A Aaam or AAAm-G None
Pre-refunded municipal obligations that are not callable Highest rating
category
prior to maturity or as to which irrevocable instructions N/A None
have been given to call on the date specified in the notice
Municipal obligations or General obligations of states N/A Aaa, AAA, A2, A None
California Local Agency Investment Fund (LAIF) N/A N/A Up to $50
million
Shares in a California common law trust established pursuant
to Title 1, Division 7, Chapter 5 of the California Government
Code which invests exclusively in investments permitted by N/A N/A None
Section 53635 of Title 5, Division 2, Chapter of the California
Government Code, as it may be amended.
65
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 2 – CASH AND INVESTMENTS (Continued)
(e) Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair
value to changes in market interest rates.
Information about the sensitivity of the fair values of the City’s investments (including investments held
by bond trustees) to market 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 More than
Investment Type or less 24 Months 24 Months Total
U.S. Treasury Securities $30,020,410 $9,001,210 $2,993,430 $42,015,050
U.S. Agency Notes 18,672,900 18,672,900
Local Agency Investment Fund 1,111,385 1,111,385
Money Market Mutual Funds 6,426,057 6,426,057
Total Investments $37,557,852 $9,001,210 $21,666,330 68,225,392
Cash in banks and on hand 5,408,120
Total Cash and Investments $73,633,512
The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California
Government Code Section 16429 under the oversight of the Treasurer of the State of California. The
Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of
five members as designated by State Statute. 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, and 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 paper, corporate
bonds, and security loans. These investments had weighted average maturity of 278 days.
Money market mutual funds are available for withdrawal on demand. At June 30, 2013, money market
mutual funds, used for pooled investment and held by fiscal agent purposes, had a weighted average
maturity of approximately 45 days.
66
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 2 – CASH AND INVESTMENTS (Continued)
(f) 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 measured by the assignment of a rating by a nationally recognized statistical rating
organization. Presented below is the actual rating as of June 30, 2013 for each investment type,
including those with fiscal agents, as provided by Moody’s ratings:
Investment Type Ratings Total
Money Market Mutual Funds AAA $6,426,057
U.S. Agency Notes AAA 18,672,900
Exempt from Credit Rating Disclosure:
U.S. Treasury Securities Exempt 42,015,050
Not Rated:
Local Agency Investment Fund Not Rated 1,111,385
Total Investments $68,225,392
(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 categories, these limitations are more restrictive than those required by California
Government Code Sections 53600 et seq. Excluding those issued or explicitly guaranteed by the U.S.
government and investments in the local agency investment fund and mutual funds, the City had the
following investments that represent 5% or more of total City-wide investments:
Issuer Investment Type 2013
Federal Home Loan Mortgage Corporation (FHLMC) U.S. Agency Notes $6,322,260
Federal National Mortgage Association (FNMA)U.S. Agency Notes 7,224,300
67
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 3 – PROPOSITION 1A BORROWING BY THE STATE OF CALIFORNIA
Under the provisions of Proposition 1A and as part of the 2009‐10 budget package passed by the
California state legislature on July 28, 2009, the State of California borrowed 8% of the amount of
property tax revenue, including those property taxes associated with the in‐lieu motor vehicle license
fee, the triple flip in lieu sales tax, and supplemental property tax, apportioned to cities, counties and
special districts (excluding redevelopment agencies). The amount of this borrowing pertaining to the
City was $1,419,497. The State of California repaid this borrowing, plus $94,367 in interest, on June
24, 2013.
The repayment by the State of California removed a receivable in the accompanying basic financial
statements. Under the modified accrual basis of accounting, the repayment was recognized as tax and
use of money and property revenues in the governmental fund financial statements. In the government-
wide financial statements, the tax revenues were recognized in the 2009-10 fiscal year for which they
were levied.
NOTE 4 – LOANS RECEIVABLE
(a) Related Party Loans
In conjunction with the City’s executive housing assistance program, a loan totaling $584,360 has been
provided to an executive manager. The 40-year loan bears an interest rate equal to the 11th District Cost
of Funds at the time of the loan, and requires bi-weekly 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 11th District Cost of Funds for the remainder of the loan. At
June 30, 2013, the balance remaining on the loan was $440,180.
(b) Housing Program Loans
On June 30, 1995, the City loaned $821,000 to Community Housing Developers, a California nonprofit
public benefit corporation. The note bears interest at three percent per annum, compounded annually,
payable to the extent of surplus cash, and all unpaid principal and interest due June 30, 2035. At
June 30, 2013, the balance remaining on the loan was $821,000.
On June 6, 1996, the City loaned $320,000 to Cupertino Community Services, a California nonprofit
public benefit corporation. The note bears interest at three percent per annum and due on July 14, 2026.
At June 30, 2013, the balance on the loan was $234,627.
In addition to these loans, the City has $185,294 in housing and other loans receivable at June 30, 2013.
These loans bear interest at 3 to 6 percent and are due by June 30, 2025.
68
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 5 - INTERFUND TRANSACTIONS
Transfers between funds during the fiscal year ended June 30, 2013 were as follows:
Fund Making Transfers Fund Receiving Transfers Amount Transferred
General Fund Public Facilities Corporation Debt Service Fund $3,181,000 (A)
Non-major governmental funds 3,320,000 (B), (C)
Internal Service Funds 1,719,503 (D)
Non-major governmental funds Non-major governmental funds 1,937,707 (E), (F)
Recreation Programs Enterprise Fund 150,000 (G)
$10,308,210
Total Interfund Transfers
The reasons for these transfers are set forth below:
(A) For annual lease payment for 2012 Certificates of Participation Debt.
(B) For capital projects.
(C) To fund street maintenance & pavement management.
(D) To fund retiree medical, IT, equipment replacement and compensated absences.
(E) To fund Stevens Creek Corridor Park phase II project.
(F) To finance several park, facility and traffic improvement projects.
(G) Additional dog park funding from capital improvement project reserve.
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.
Advance to and advance from other funds
During fiscal year ended June 30, 2013, the General Fund loaned the Retiree Medical Internal Service
Fund $560,564 to fund the Annual Required Contribution (ARC) implicit subsidy. The Retiree Medical
Internal Service Fund is expected to repay the General Fund during fiscal year ended June 30, 2014.
69
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 6 - CAPITAL ASSETS
A summary of changes in governmental activities capital assets is as follows:
Balance at Balance at
June 30, 2012 Additions Retirements June 30, 2013
Governmental activities
Capital assets not being depreciated:
Land $60,470,969 $60,470,969
Easements 19,491,959 19,491,959
Total capital assets not being depreciated 79,962,928 79,962,928
Capital assets being depreciated:
Buildings 40,771,283 $92,971 40,864,254
Improvements other than buildings 41,330,356 457,565 41,787,921
Machinery and Equipment - governmental funds 1,989,619 172,903 ($20,702)2,141,820
Road, curbs, gutters, sidewalks, medians and bridges 126,387,613 3,511,501 129,899,114
Streetlights 8,543,894 8,543,894
Storm drain structure and mains 32,003,522 7,900 32,011,422
Traffic signals 6,137,862 5,748 6,143,610
Total capital assets being depreciated 257,164,149 4,248,588 (20,702) 261,392,035
Less accumulated depreciation for:
Buildings (18,305,825) (1,516,831)(19,822,656)
Improvements other than buildings (25,222,918) (1,623,660)(26,846,578)
Machinery and Equipment - governmental funds (1,786,818) (78,075)20,702 (1,844,191)
Road, curbs, gutters, sidewalks, medians and bridges (93,014,652) (3,081,902)(96,096,554)
Streetlights (6,606,605) (102,195)(6,708,800)
Storm drain structure and mains (27,412,919) (800,088)(28,213,007)
Traffic signals (4,810,008) (113,843)(4,923,851)
Total accumulated depreciation (177,159,745) (7,316,594)20,702 (184,455,637)
Net governmental fund program
Capital assets being depreciated 80,004,404 (3,068,006)76,936,398
Internal service fund capital assets
Machinery and equipment 6,304,898 492,128 (163,359) 6,633,667
Less Accumulated depreciation (4,891,973) (440,461) 163,359 (5,169,075)
Net internal service fund capital assets
being depreciated 1,412,925 51,667 1,464,592
Governmental activity capital assets, net $161,380,257 ($3,016,339)$158,363,918
70
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 6 - CAPITAL ASSETS (Continued)
A summary of changes in business-type activities capital assets is as follows:
Balance at Balance at
June 30, 2012 Additions Retirements June 30, 2013
Business-type activities:
Capital assets being depreciated:
Buildings $337,118 $337,118
Improvements other than buildings 623,333 $86,536 709,869
Machinery and Equipment 272,088 ($23,564)248,524
Total capital assets being depreciated 1,232,539 86,536 (23,564) 1,295,511
Less accumulated depreciation for:
Buildings (64,319) (32,128)(96,447)
Improvements other than buildings (129,548) (89,907)(219,455)
Machinery and Equipment (213,985) (27,175) 23,564 (217,596)
Total accumulated depreciation (407,852) (149,210) 23,564 (533,498)
Total capital assets, being depreciated, net 824,687 (62,674)762,013
Business-type activity capital assets, net $824,687 ($62,674)$762,013
Depreciation expense was charged to functions and programs based on their usage of the related assets.
Depreciation expense was charged to governmental activities as follows:
Governmental Activities Amount
Administration $237,838
Public and environment affairs 15,328
Administrative Services 26,620
Parks and Recreation 126,722
Public Works 6,910,086
Internal Service funds 440,461
Total $7,757,055
Depreciation expense was charged to the business-type activities as follows:
Resources Recovery $3,351
Blackberry Farms 11,642
Cupertino Sports Center 29,281
Recreation Program 104,936
Total $149,210
71
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 7 - LONG-TERM DEBT
(a) Cupertino Public Facilities Corporation Certificates of Participation
Original Balance Balance
Issue June 30,June 30, Current
Amount 2012 Retirements 2013 Portion
2012 Refinancing Certificates
of Participation
0.350-3.125%, due 07/01/2030 $43,940,000 $43,940,000 $1,920,000 $42,020,000 $2,040,000
Total long-term debt 43,940,000 1,920,000 42,020,000 $2,040,000
Less current portions (1,920,000)(2,040,000)
Non-current portions $42,020,000 $1,920,000 $39,980,000
The Cupertino Public Facilities Corporation issued Certificates of Participation to provide financing for
the construction of the Community Center, improvements of the City Hall and the Library in July 1986;
purchase of Wilson Park in 1989; finance the Memorial Park Expansion in 1990; and purchase the
Blackberry Farm and Fremont Older site in 1991. The 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 (“Prior
COPS”).
On May 9, 2012, $43,940,000 principal amount of 2012 Refinancing Certificates of Participation (2012
COPs) were issued to refund the 2002 COPs, to fund a reserve fund for the 2012 COPS, and pay costs
incurred in connection with issuance. This current refunding was undertaken to reduce debt service
payments over the next 18 years by $6,518,000, and resulted in an economic gain (difference between
the present value of the debt service requirements on the old and new bonds discounted at the effective
interest rate on the new debt and adjusted for any additional cash) of $6,637,000.
The 2012 COPs are payable by a pledge of revenues from the lease payments payable by the City
pursuant to the Lease Agreement between the Cupertino Public Facilities Corporation and the City for
the use and possession of the Site and Facility as described in the Lease Agreement. The City also
covenanted in the Lease Agreement to include all lease payments in its annual budget. Total debt
service payments remaining on the 2012 COPs is $53,898,337 payable through July 1, 2030. For the
year-ended June 30, 2013, the bonds had $1,920,000 principal and $1,255,422 interest due.
72
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 7 - LONG-TERM DEBT (Continued)
(a) Cupertino Public Facilities Corporation Certificates of Participation (Continued)
Annual debt service requirements for the 2012 COPs are shown below:
For the Year
Ending June 30 Principal Interest
2014 $2,040,000 $1,128,838
2015 2,055,000 1,118,638
2016 2,090,000 1,077,538
2017 2,135,000 1,035,738
2018 2,180,000 993,038
2019 - 2023 11,790,000 4,060,638
2024 - 2028 13,675,000 2,182,490
2029 - 2031 6,055,000 281,419
Total $42,020,000 $11,878,337
Governmental Activities
(b) 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 principal balance outstanding of the bonds and any accrued and
unpaid interest is due and payable on October 1, 2031. The City has no legal or moral liability with
respect to the payment of this debt. The amount of outstanding conduit debt principal was paid off
March 27, 2013.
NOTE 8 - NET POSITION AND FUND BALANCES
Net Position is measured on the full accrual basis while Fund Balance is measured on the modified accrual
basis.
Net Position – The government-wide and proprietary fund financial statements utilize a net position
presentation. Net position is categorized as follows:
Net investment in capital assets – This category groups all capital assets including, infrastructure, into one
component of net position. Accumulated depreciation and outstanding balances of debt that are
attributable to the acquisition, construction or improvement of these assets reduce the balance in this
category.
73
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 8 - NET POSITION AND FUND BALANCES (Continued)
Restricted – This category represents net position that has external restrictions imposed by creditors,
grantors, contributors or laws or regulations of other governments and restrictions imposed by law
through constitutional provisions or enabling legislation.
Unrestricted – This category represents net position of the City that do not meet the definition of “net
investment in capital assets” or “restricted.”
Fund Balances – As prescribed by GASB Statement No. 54, governmental funds report fund balance in
classifications based primarily on the extent to which the City is bound to honor constraints on the
specific purposes for which amounts in the funds can be spent. Fund balances for governmental funds
are made up of the followings:
Nonspendable Fund Balance – includes amounts that are (a) not in spendable form, or (b) legally or
contractually required to be maintained intact. The “not in spendable form” criterion includes items that
are not expected to be converted to cash, for example: prepaid items, property held for resale and long-
term notes receivable.
Restricted Fund Balance – includes amounts that can be spent only for the specific purposes stipulated
by external resource providers, constitutionally or through enabling legislation. Restrictions may
effectively be changed or lifted only with the consent of resource providers.
Committed Fund Balance – includes amounts that can only be used for the specific purposes determined
by a formal action of the City’s highest level of decision-making authority, the City Council.
Commitments may be changed or lifted only by the City taking the same formal action that imposed the
constraint originally (for example: resolution and ordinance). The City has no amount in this category.
Assigned Fund Balance – comprises amounts intended to be used by the City for specific purposes that
are neither restricted nor committed. Intent is expressed by the City Council or official to which the City
Council has delegated the authority to assign amounts to be used for specific purposes. Through the
adopted budget, the City Council establishes assigned fund balance policy levels and also sets the means
and priority for the City Manager to fund these levels.
Unassigned Fund Balance – is the residual classification for the General Fund and includes all amounts
not contained in the other classifications. Unassigned amounts are technically available for any purpose.
In circumstances when an expenditure may be made for which amounts are available in multiple fund
balance classifications, the fund balance in General Fund will generally be used in the order of
restricted, unassigned, and then assigned reserves. In other governmental funds, the order will generally
be restricted and then assigned.
74
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 8 - NET POSITION AND FUND BALANCES (Continued)
The City Council has established reserve policy levels for various capital and contingency purposes.
These balances are reported as part of the governmental funds’ assigned fund balance as follows:
Fund Amount Purpose
General Fund:
Economic uncertainty I $12,500,000 For economic downturns and major unforeseen outlays.
Economic uncertainty II 1,400,000 For shifts of funds to address state budget deficits.
Economic fluctuation 2,000,000 For unexpected fluctuations in the economy.
PERS liability 500,000 For potential PERS liabilities.
Capital Project Funds:
Capital Improvement reserve 200,113 Reserves set aside for future capital projects.
Infrastructure Reserve 1,200,000 Funds set aside for citywide infrastructure improvements.
Budgeted projects 3,823,867 Resources for project budgets.
Designated project 75,924 Designated, but not budgeted for specific project.
Total assigned fund balances $21,699,904
Fund balances for all major and nonmajor governmental funds as of June 30, 2013, were distributed as
follows:
General
Public
Facilities
Corporation
Other
Governmental
Funds Total
Nonspendable:
Loans receivable $920,593 $920,593
Prepaid items 36,234 36,234
Subtotal 956,827 956,827
Restricted for:
Public access television 725,903 725,903
Debt service $1,686,974 1,686,974
Storm drain system $1,038,169 1,038,169
Parks and open space 1,669,194 1,669,194
Environmental management 320,309 320,309
Streets and road projects 699,155 699,155
Housing programs 2,211,414 2,211,414
Subtotal 725,903 1,686,974 5,938,241 8,351,118
Assigned to:
General government 16,400,000 16,400,000
Capital projects 5,299,904 5,299,904
Subtotal 16,400,000 5,299,904 21,699,904
Unassigned 17,961,579 17,961,579
Total $36,044,309 $1,686,974 $11,238,145 $48,969,428
75
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 9 - COMMITMENTS AND CONTINGENCIES
(a) Federal and State Grant
The City participates in a number of federal and state grant programs subject to financial and
compliance audits by the grantors or their representatives. Audits of certain grant programs, including
those for the year ended June 30, 2013, 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 disallowances, if any, would not have a material effect on the financial statements.
(b) Encumbrances
The City uses encumbrances to control expenditure commitments for the year. Encumbrances represent
commitments related to executor contracts not yet performed and purchase orders not yet filled.
Commitments for such expenditure of monies are encumbered to reserve a portion of applicable
appropriations. Encumbrances still open at year end are not accounted for as expenditures and
liabilities, but as restricted, or unassigned fund balance. As of June 30, 2013, the City had the following
encumbrances outstanding:
Governmental Funds:
General Fund $1,267,233
Other Governmental Funds 2,076,301
Total encumbrances $3,343,534
(c) Lease Agreement with County of Santa Clara
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, 2013, the cost and carrying
value of the building which opened in October 2004, is $21,935,325 and $14,911,213 respectively, with
$7,024,112 in accumulated depreciation.
(d) Consulting Agreement for Sales Taxes
The City entered into agreements with two companies to provide services consisting of the assessment
and creation of new sales and use tax revenue sources for the City. The City agreed to pay the
companies based on a sliding scale payment schedule dependent on the level of new sales tax revenue
realized by the City as defined in the consulting agreements.
(e) Sales Tax Reallocation
During fiscal year 2013, the California State Board of Equalization (Board) has notified the City of a
proposed $10,550,721 reallocation of previously received sales taxes. Under the Board procedures, the
City has appealed the proposed reallocation.
76
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 10 - LIABILITIES UNDER SELF-INSURANCE AND RISK MANAGEMENT
(a) General and Property Liability
The City is self-insured for the first $250,000 of general and property liability for each occurrence, and
the excess (up to $10,000,000 for each occurrence and annual aggregate) is covered through the City’s
participation in the Association of Bay Area Governments Pooled Liability Assurance Network (ABAG
PLAN). The risk pool consists of 30 agencies within the San Francisco Bay Area. The stated purpose
of the ABAG PLAN is to provide certain levels of liability insurance coverage, claims management, risk
management services, and legal defense to its participating members. ABAG PLAN is governed by a
Board of Directors, which comprises officials appointed by each participating member. Premiums paid
to ABAG are subject to possible refund based on the results of actuarial studies and approval by the
Board of Directors. Complete financial statements for ABAG PLAN may be obtained from their offices
at the following address: ABAG PLAN, Finance Department, P.O. Box 2050, Oakland, CA 94604.
Premiums are revised each year based on the City’s claims experience and risk exposure. For the year
ended June 30, 2013, the City paid ABAG PLAN premiums of $209,746.
(b) Workers’ Compensation Liability
The City belongs to the CSAC 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 $50,000,000 statutory limit. EIA was established in 1979 for the purpose of creating a risk
management pool for all California public entities. EIA is governed by a Board of Directors consisting of
representatives of its member public entities. Complete financial statements for EIA may be obtained
from their offices at the following address: CSAC Excess Insurance Authority, Finance Department,
75 Iron Point Circle, Suite 200, Folsom, CA 95630. For the year ended June 30, 2013, the City paid
premiums of $64,326 EIA.
It is the City’s practice to obtain biennial actuarial studies for the self-insured workers’ compensation
liability. The claims liabilities included in the workers’ compensation internal service fund is based on
the results of actuarial studies and include amounts for claims incurred but not reported and loss
adjustment expenses. Claim liabilities are calculated considering the effects of inflation, recent claim
settlement trends, including frequency and amount of payouts, and other economic and social factors.
Inflation of 2.5%, annual rate of return of 3%, claim severity increase at 2.5% were assumed. In the
current year, management used actuarial estimates based on a 90% confidence level.
Settlements have not exceeded insurance coverage in the past three years.
77
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 10 - LIABILITIES UNDER SELF-INSURANCE AND RISK MANAGEMENT
Changes in the balances of workers’ compensation and general claims liabilities during the years ended
June 30 are as follows:
2013 2012
Claims liability, beginning of year $1,495,978 $1,651,953
Incurred claims and changes in estimate 693,219 57,022
Claim payments and credits (211,648) (212,997)
Total claims liability, end of year 1,977,549 1,495,978
Less current portion (436,636) (333,694)
Non-current portion $1,540,913 $1,162,284
NOTE 11 - DEFINED BENEFIT PENSION PLAN
(a) Plan Description
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 (Plan). Benefit provisions under the Plan are
established by State statute and City resolution. Benefits are based on years of credited service and
compensation. Audited annual financial statements are available from CalPERS at www.calpers.ca.gov.
(b) Funding Policy
The contribution requirements of plan members and the City are established and may be amended by
CalPERS. The City is required to contribute at an actuarially determined rate for 2012-13 based on the
June 30, 2011 actuarial report.
The City covered 75% of the employees’ required payroll contributions for fiscal year 2012-13. The
City uses the actuarially determined percentages of payroll to calculate and pay 100% of the required
contributions to CalPERS. This results in no net pension obligations or unpaid contributions.
78
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 11 - DEFINED BENEFIT PENSION PLAN (Continued)
(c) Annual Pension Cost
The required contribution was determined as part of June 30, 2011 actuarial valuations using the entry
age normal method. The actuarial value of CalPERS assets was determined using techniques that
smooth the effects of short-term volatility in the market value of investments over a fifteen-year period.
The excess of the total actuarial accrued liability over the actuarial value of plan assets is called the
unfunded actuarial accrued liability. Funding requirements are determined by adding the normal cost
and an amortization of the unfunded liability as a level percentage of assumed future payrolls. Initial
unfunded liabilities are amortized over a closed period that depends on the plan’s date of entry into
CalPERS. Subsequent plan amendments are amortized as a level percentage of pay over a closed 20-
year period. Gains and losses that occur in the operation of the plan are amortized over a 30-year rolling
period, which results in an amortization of about 6% of unamortized gains or losses each year.
Recent Annual Pension Costs, which equal the Annual Required Contribution to CALPERS, were as
follows:
Fiscal Year Annual Pension Cost (APC) Contribution
6/30/2011 $2,088,898 100%
6/30/2012 2,657,476 100%
6/30/2013 2,880,647 100%
(d) Funded Status and Funding Progress
The significant actuarial assumptions used to prepare the City’s June 30, 2011 actuarial valuation
include the following:
Valuation date:June 30, 2011
ARC:Determined for fiscal year 2013/2014
Actuarial Cost Method:Entry Age Normal Cost Method
Amortization Method:Level percent of payroll
Average Remaining Period 22 Years as of Valuation Date
Asset Valuation Method:15 Year Smoothed Market
Actuarial Assumptions:
Investment Rate of Return: 7.50% (net of administrative expenses)
Projected Salary Increase: 3.30% to 14.20% depending on Age, Service and type of employment
Inflation:2.75%
Payroll Growth:3.00%
Individual Salary Growth: A merit scale varying by duration of employment coupled with an assumed
annual inflation growth of 2.75% and an annual production growth of 0.25%.
79
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 11 - DEFINED BENEFIT PENSION PLAN (Continued)
CalPERS’ latest available actuarial data and funding progress are set forth below at their actuarial
valuation date as of June 30, 2011.
Actuarial accrued liability (AAL)$85,378,376
Actuarial value of plan assets (65,003,058)
Unfunded actuarial accrued liability (UAAL) $20,375,318
Funded ratio (actuarial value of plan assets/AAL) 76.1%
Covered payroll (active plan members)$12,449,203
UAAL as a percentage of covered payroll 163.7%
Actuarial valuations of an on-going plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Amounts determined
regarding the funded status of the plan and the annual required contribution of the City are subject to
continual revision as actual results are compared with past expectations and new estimates are made
about the future. The schedule of funding progress, presented as required supplementary information
following the notes to basic financial statements, presents multi-year trend information about whether
the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued
liability for benefits.
(e) Public Employees’ Pension Reform Act (PEPRA)
Assembly Bill (AB) 340 pension reform created the Public Employees’ Pension Reform Act (PEPRA)
that implemented new benefit formulas and final compensation period, as well as new contribution
requirements for new employees hired on or after January 1, 2013 who meet the definition of new
member under PEPRA.
The bill limits new members to a retirement package that provides for a 2% at 62, three year average.
However, the City has negotiated a 2% at 60, three year average retirement benefit which would apply
to any new Cupertino employee who had previously served with a CalPERS participating agency within
the previous six month period.
80
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 11 - DEFINED BENEFIT PENSION PLAN (Continued)
(e) Public Employees’ Pension Reform Act (PEPRA) (Continued)
The Table below provides information on the benefit formula compensation information on the benefit
formula, final compensation period and the employer and member contribution rates effective January
1, 2013 for the City employees under PEPRA.
Benefit Formula 2.7% at Age 55 2% at Age 60 2% at Age 62
Applies to
Current employees
hired before
12/29/12
New employees to
Cupertino hired after
12/29/12 and in the
CalPERS system or a
reciprocity system less
than 6 months ago
New Employees to
Cupertino and
CalPERS (or has not
worked for 6months in
CalPERS)
Employer Contribution Rate
as a percentage payroll 21.058% 21.058% 21.058%
Member Contribution Rate
as a percentage of payroll 8% 7% N/A
Member Contribution Rate
at 50% Normal Cost
(12.5%) N/A until 2018 N/A until 2018 6.25%
Final Compensation Period Highest year Highest 3 year average Highest 3 year average
Benefit Vesting Schedule 5 years of service 5 years of service 5 years of service
Benefit payments Monthly for life Monthly for life Monthly for life
Minimum retirement age 50 50 52
81
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 12 - OTHER POST EMPLOYMENT BENEFITS (OPEB)
(a) Plan Description
Permanent employees who retire under the City’s CalPERS retirement plan 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 provided by CalPERS up to the
maximum received by active employees in their respective bargaining unit.
The City contracts with CalPERS for this insured-benefit plan established under the state Public
Employees’ Medical and Hospital Care Act (PEMHCA). The plan offers employees and retirees three
CalPERS’ self-funded options, setup as insurance risk pools, or offers various third-party insured health
plans. The plan’s medical benefits and premium rates are established by CalPERS and the insurance
providers. The City contribution is established by City resolution. Retirees and active employees pay
the difference between the premium rate and the City’s contribution. Premiums and City contributions
are based on the plan and coverage selected by actives and retirees, with the City’s potential
contribution ranging from zero to $1,515 per month per employee or retiree. The responsibility for
benefit payments has transferred to the insurers and the City does not guarantee the benefits in the event
of default by the insurers. A comprehensive annual financial report of CalPERS, inclusive of their
benefit plans, is available at www.calpers.ca.gov.
The City participates in the Public Agency Retirement System (PARS) Public Agencies Post Retirement
Health Care Plan Trust Program (PARS Trust), an agent-multiple employer irrevocable trust established
to fund other postemployment benefits. The PARS Trust is approved by the Internal Revenue Code
Section 115 and invests funds in equity, bond, and money market mutual funds. Copies of PARS Trust
annual financial report is available at the City’s Finance Department.
An employee is eligible for lifetime medical benefits under the OPEB Plan, along with his/her spouse or
declared domestic partner at the time of retirement, if all criteria listed below are met:
The employee was hired or the City Council member was elected prior to August 1, 2004, and the
employee has five or more full-time years of service and the City Council member has five or more
years of elected service with the City of Cupertino; or
The employee was hired or the City Council member was elected on or after August 1, 2004, and
the employee has ten or more full-time and/or elected years of CalPERS service, five years of which
must be from the City of Cupertino; and
The employee is eligible for retirement as defined under the CalPERS retirement system; and
The employee retires from the City of Cupertino.
In addition, the eligible employee’s dependent children at the time of retirement who are under 23 years
old are eligible for medical benefits. In addition to extending the eligibility of dependents from age 23
to age 26 in accordance with the recent healthcare reform act, effective July 1, 2010, employees that
retire or resign from service with the City of Cupertino and who are not eligible for retiree medical
benefits can continue on the City’s medical and dental plans provided that they pay the premiums in full.
82
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 12 - OTHER POST EMPLOYMENT BENEFITS (OPEB) (Continued)
(b) Funding Policy
OPEB Plan contributions are set by the adopted budget. The cost of the benefits provided by the OPEB
Plan is currently being paid by the City on a fully pre-funded basis. The City has expressed intent to
fully fund the annual required contribution (ARC) each year. Based on the actuarial valuation date of
January 1, 2013, the annual required contribution rate is 15.40% of annual covered payroll. For the year
ended June 30, 2013, the City contributed $1,400,000 to the PARS Trust and paid $786,661 in
healthcare premium payments to pre-fund the OPEB Plan.
(c) Annual OPEB Cost and Funded Status
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of certain events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are subject
to continual revision as actual results are compared with past expectations and new estimates are made
about the future. The schedule of funding progress, presented as required supplementary information
following the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the
time of each valuation and the historical pattern of sharing of benefit costs between the employer and
plan members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce effects of short-term volatility in actuarial accrued liabilities and the actuarial value
of assets, consistent with long-term perspective of the calculations.
The other significant actuarial assumptions used to prepare the City’s January 1, 2013 actuarial
valuation include the following:
Valuation date:January 1, 2013
Actuarial Cost Method:Entry Age Normal
Amortization Method: Level percent of pay closed
Amortization Period:16 year
Asset Valuation Method: Market value
Actuarial Assumptions:
Discount Rate 6.00%
Payroll Growth 3.00%
Ultimate Rate of Medical Inflation: 5.00%
The January 1, 2013 actuarial valuation also included implicit subsidy for the first time. Prior valuation
as of January 1, 2011, did not include implicit subsidy.
83
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 12 - OTHER POST EMPLOYMENT BENEFITS (OPEB) (Continued)
(c) Annual OPEB Cost and Funded Status (Continued)
The City’s annual OPEB cost and actual contributions to the OPEB Plan for the past three years are as
follows:
Fiscal Year
OPEB Annual
Cost (AOC)
Actual
Contribution
Percentage of
AOC
Contributed
Net OPEB
Obligation
(Asset)
6/30/2011 $1,870,000 $2,688,723 144% ($4,565,406)
6/30/2012 1,900,000 1,622,549 85% (4,287,955)
6/30/2013 2,214,719 2,186,661 99% (4,259,897)
The City’s Net OPEB asset is recorded in the Retiree Medical Internal Service Fund and is calculated as
of June 30, 2013 as follows:
Annual required contribution $2,142,501
Interest on prior year net OPEB asset (257,277)
Adjustment to annual required contribution 329,495
Annual OPEB cost 2,214,719
Insurance premiums paid on behalf of retirees (786,661)
Contributions to trust (1,400,000)
Decrease (increase) in net OPEB asset 28,058
Net OPEB obligation (asset) June 30, 2012 (4,287,955)
Net OPEB obligation (asset) June 30, 2013 ($4,259,897)
The latest available actuarial data and funding progress are set forth below at their actuarial valuation
date of January 1, 2013.
Actuarial accrued liability (AAL) $24,791,457
Actuarial value of planned assets (12,835,681)
Unfunded actuarial accrued liability (UAAL) $11,955,776
Funded Ratio (actuarial value of plan assets/AAL) 51.8%
Covered payroll (active plan members)$13,909,000
UAAL as a percentage of covered payroll 86.0%
NOTE 13 – CONCENTRATION RISK
The City has an economic dependency on revenues generated directly or indirectly from one company.
For the year ended June 30, 2013, more than 10% of the City General Fund’s total revenues are derived
from the company. The City’s operations would be adversely impacted if there are any significant
declines in taxes received from the company.
84
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2013
NOTE 14 – SUCCESSOR AGENCY TO REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST
FUND (SUCCESSOR AGENCY)
The redevelopment agency dissolution acts, ABx1 26 and AB 1484 provide mechanisms for: a) state and
county reviews of the activities of the former Redevelopment Agency and current Successor Agency
(Agencies) to ultimately determine the amount available for distribution to other taxing entities; b) paying
remaining obligations of the Agencies; c) management of remaining assets of the Agency; and d) effecting
the eventual dissolution of the Successor Agency.
The County Auditor-Controller (CAC) completed the agreed-upon procedure and the due diligence
reviews of all funds of the Agencies and concluded that there was no amount available for distribution to
other taxing entities. On September 6, 2012, the Oversight Board of the Cupertino Successor to the
Former Redevelopment Agency approved the reviews and authorized the transmission of the reviews to
the State Department of Finance (DOF) and to the CAC. The DOF accepted the review conclusions on
January 11, 2013 and March 27, 2013. The DOF subsequently issued a Finding of Completion letter to the
Successor Agency on April 26, 2013, signifying the completion of the reviews. Because the reviews
identified no real property assets for the Successor Agency, the Agency will not issue a long-range
property management plan.
In addition, ABx1 26 and AB 1484 direct the State Controller Office (SCO) to review the activities of all
redevelopment agencies to determine whether an asset transfer between an agency and any public agency
occurred on or after January 1, 2011. If an asset transfer did occur and the public agency that received the
asset is not contractually committed to a third party for the expenditure or encumbrance of the asset, the
legislation purports to require the SCO to order the asset returned to the Successor Agency. On May 3,
2013, the SCO allowed the asset transfers that occurred during the review period.
AB 1484 directs that the Successor Agency will dissolve within one year after the Agency’s final payment
obligation as shown in the Agency’s final Recognized Obligation Payment Schedule (ROPS). With the
final payment occurring in July 2012, as per the ROPS, the DOF acknowledged the Agency’s complete
dissolution in an October 20, 2012 letter. As of July 1, 2013, the state Board of Equalization removes the
Agency’s tax rate area, the CAC apportions its property taxes directly to other jurisdictions, and the
Agency dissolves.
85
CITY OF CUPERTINO
Required Supplementary Information (Unaudited)
For the Year Ended June 30, 2012
Schedule of Funding Progress – CalPERS Defined Benefit Retirement Miscellaneous Plan:
Unfunded
Entry Age Unfunded Annual (Overfunded)
Valuation Accrued Value of (Overfunded) Funded Covered Liability as %
Date Liability Assets Liability Ratio Payroll of Payroll
6/30/2009 $74,955,504 $57,934,851 $17,020,653 77.3% $11,668,964 145.9%
6/30/2010 79,939,987 61,358,259 18,581,728 76.8% 12,428,055 149.5%
6/30/2011 85,378,376 65,003,058 20,375,318 76.1% 12,449,203 163.7%
Schedule of Funding Progress – Defined Benefit Other Post Employment Benefits Plan:
Unfunded
Actuarial Unfunded Actuarial
Actuarial Accrued Actuarial Actuarial Liability as
Valuation Liability Value of Accrued Funded Covered Percentage of
Date Entry Age Assets Liability Ratio Payroll Covered Payroll
1/1/2009 $18,069,366 $18,069,366 0.00% $11,892,000 151.95%
1/1/2011 20,869,058 $7,438,341 13,430,717 35.64% 12,724,000 105.55%
1/1/2013 24,791,457 12,835,681 11,955,776 51.77% 13,909,000 85.96%
86
MAJOR GOVERNMENTAL FUNDS OTHER THAN THE
GENERAL FUND AND SPECIAL REVENUE 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, budget-
to-actual information in the basic financial statements is limited to the General Fund and major Special
Revenue Funds. All other major governmental fund schedules with such information are therefore
included as Supplemental Information.
PUBLIC FACILITIES CORPORATION DEBT SERVICE 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, Memorial Park, and other City
facilities.
87
CITY OF CUPERTINO
PUBLIC FACILITIES CORPORATION DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2013
Variance
Positive
Budget Actual (Negative)
REVENUES
Use of money and property $2,299 $2,299
Total Revenues 2,299 2,299
EXPENDITURES
Debt service:
Principal $1,920,000 1,920,000
Interest and fiscal charges 1,261,422 1,256,922 4,500
Total Expenditures 3,181,422 3,176,922 4,500
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (3,181,422) (3,174,623) 6,799
OTHER FINANCING SOURCES (USES)
Transfers in 3,181,000 3,181,000
Total Other Financing Sources (Uses) 3,181,000 3,181,000
NET CHANGE IN FUND BALANCE ($422) 6,377 $6,799
BEGINNING FUND BALANCE 1,680,597
ENDING FUND BALANCE $1,686,974
88
NONMAJOR GOVERNMENTAL FUNDS
All funds not considered as major funds on the Fund Financial Statements are consolidated in one column
entitled “Other Governmental Funds.” These non-major funds are identified and included in this
supplementary section and includes the City’s Special Revenue Funds and Capital Project 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 Improvement - Accounts for the construction and maintenance of storm drain
facilities including drainage and sanitary sewer facilities. Revenues were collected from
developers as a result of connections to the storm drainage sewer system.
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 / Clean Creeks - Accounts for all activities related to operating the
non-point source pollution program. A parcel tax provides revenues.
Transportation - Accounts for the City's gas tax, vehicle registration fees 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 expenditures.
Housing Development - Accounts for the Federal Housing and Community Development Grant
Program activities administered through the County. Monies collected from developers that
mitigate the impact of housing needs are also included. Monies in this fund are governed by the
program’s rules.
Capital Projects Funds account for the financial resources committed to the construction or improvement
of major facilities.
Capital Improvement Projects Fund – Accounts for activities related to the acquisition or
construction of major capital facilities.
Stevens Creek Corridor Park Capital Projects Fund – Accounts for the design and construction
of the Stevens Creek Corridor Park projects.
Don Burnett Bicycle-Pedestrian Bridge – 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.
89
SPECIAL REVENUE FUNDS
Storm Environmental
Drain Park Management/Housing
Improvement Dedication Clean Creeks Transportation Development
Assets
Cash and investments $1,039,211 $1,665,255 $326,497 $689,174 $1,059,389
Accounts receivable 72,833 353,723
Interest receivable 2,458 3,939 380 1,630 2,324
Loans receivable 760,508
Property held for resale 247,875
Total assets $1,041,669 $1,669,194 $326,877 $763,637 $2,423,819
Liabilities
Accounts payable and accruals $3,500 $1,394 $39,357 $82,629
Accrued payroll and benefits 5,174 25,125 174
Total liabilities 3,500 6,568 64,482 82,803
Deferred Inflows of Resources
Unavailable revenue - loans 129,602
Total deferred inflows of resources 129,602
Fund balances
Restricted 1,038,169 $1,669,194 320,309 699,155 2,211,414
Assigned
Total fund balances 1,038,169 1,669,194 320,309 699,155 2,211,414
Total liabilities, deferred inflows of resources
and fund balances $1,041,669 $1,669,194 $326,877 $763,637 $2,423,819
CITY OF CUPERTINO
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2013
90
Don Burnett Total
Capital Stevens Creek Bicycle Nonmajor
Improvement Corridor Pedestrian Governmental
Projects Park Bridge Funds
$3,724,160 $1,663,284 $13,850 10,180,820
22,466 449,022
10,731
760,508
247,875
$3,746,626 $1,663,284 $13,850 $11,648,956
$117,701 $4,802 $249,383
1,353 31,826
117,701 6,155 281,209
129,602
129,602
5,938,241
3,628,925 1,657,129 $13,850 5,299,904
3,628,925 1,657,129 13,850 11,238,145
$3,746,626 $1,663,284 $13,850 $11,648,956
CAPITAL PROJECT FUNDS
91
SPECIAL REVENUE FUNDS
Storm Environmental
Drain Park Management/ Housing
Improvement Dedication Clean Creeks Transportation Development
REVENUES
Taxes $178,771 $2,484,900 $374,937
Use of money and property 2,767 5,127 $579 $1,572 10,703
Intergovernmental 2,016,047 402,417
Charges for services 10,300 367,046 42,570
Other revenue
Total Revenues 181,538 2,500,327 367,625 2,060,189 788,057
EXPENDITURES
Current:
Community development 633,421
Public works 7,900 376,945 1,101,605
Capital outlay 3,486,328
Total Expenditures 7,900 376,945 4,587,933 633,421
EXCESS OF REVENUES
OVER (UNDER) EXPENDITURES 173,638 2,500,327 (9,320) (2,527,744) 154,636
OTHER FINANCING SOURCES (USES)
Transfers in 1,900,000
Transfers (out) (1,450,000)
Total Other Financing Sources (Uses) (1,450,000) 1,900,000
NET CHANGE IN FUND BALANCES 173,638 1,050,327 (9,320) (627,744) 154,636
BEGINNING FUND BALANCES 864,531 618,867 329,629 1,326,899 2,056,778
ENDING FUND BALANCES $1,038,169 $1,669,194 $320,309 $699,155 $2,211,414
CITY OF CUPERTINO
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2013
92
Don Burnett Total
Capital Stevens Creek Bicycle Nonmajor
Improvement Corridor Pedestrian Governmental
Projects Park Bridge Funds
$3,038,608
20,748
$40,407 2,458,871
419,916
$1,735 1,735
40,407 1,735 5,939,878
633,421
1,486,450
794,362 $298,649 15,300 4,594,639
794,362 298,649 15,300 6,714,510
(753,955) (298,649) (13,565) (774,632)
2,232,586 1,125,121 5,257,707
(625,121) (12,586)(2,087,707)
1,607,465 1,112,535 3,170,000
853,510 813,886 (13,565) 2,395,368
2,775,415 843,243 27,415 8,842,777
$3,628,925 $1,657,129 $13,850 $11,238,145
CAPITAL PROJECT FUNDS
93
BUDGETED NON-MAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2013
SPECIAL REVENUE FUNDS
STORM DRAIN IMPROVEMENT PARK DEDICATION
Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)
REVENUES
Taxes $105,000 $178,771 $73,771 $150,000 $2,484,900 $2,334,900
Use of money and property 5,000 2,767 (2,233) 10,000 5,127 (4,873)
Intergovernmental
Charges for services 10,300
Total Revenues 110,000 181,538 71,538 160,000 2,500,327 2,330,027
EXPENDITURES
Current:
Community development
Public works 7,900 (7,900)
Capital outlay 959,671 959,671
Total Expenditures 959,671 7,900 951,771
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (849,671) 173,638 1,023,309 160,000 2,500,327 2,340,327
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out)(1,450,000) (1,450,000)
Total Other Financing Sources (Uses) (1,450,000) (1,450,000)
NET CHANGE IN FUND BALANCES ($849,671) 173,638 $1,023,309 ($1,290,000) 1,050,327 $2,340,327
BEGINNING FUND BALANCES 864,531 618,867
ENDING FUND BALANCES $1,038,169 $1,669,194
CITY OF CUPERTINO
94
SPECIAL REVENUE FUNDS
ENVIRONMENTAL MANAGEMENT/
CLEAN CREEKS TRANSPORTATION HOUSING DEVELOPMENT
Variance Variance Variance
Positive Positive Positive
Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative)
$50,000 $374,937 $324,937
$1,000 $579 ($421) $10,000 $1,572 ($8,428) 75,000 10,703 (64,297)
2,272,000 2,016,047 (255,953) 310,000 402,417 92,417
365,000 367,046 2,046 42,570 42,570
366,000 367,625 1,625 2,282,000 2,060,189 (221,811) 435,000 788,057 353,057
719,797 633,421 86,376
538,587 376,945 161,642 1,089,322 1,101,605 (12,283)
4,010,023 3,486,328 523,695
538,587 376,945 161,642 5,099,345 4,587,933 511,412 719,797 633,421 86,376
(172,587) (9,320) 163,267 (2,817,345) (2,527,744) 289,601 (284,797) 154,636 439,433
1,900,000 1,900,000
1,900,000 1,900,000
($172,587) (9,320) $163,267 ($917,345) (627,744) $289,601 ($284,797) 154,636 $439,433
329,629 1,326,899 2,056,778
$320,309 $699,155 $2,211,414
95
This Page Left Intentionally Blank
96
INTERNAL SERVICE FUNDS
Internal Service Funds are used to finance and account for special activities and services provided by one
department or program 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 or 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 Position.
However, internal service funds are still presented separately in the Fund financial statements.
Information Technology - 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 and other equipment.
Compensated Absences and Long-Term Disability - Accounts for accrued leave payouts and the
City’s long term disability insurance program.
Retiree Medical – Contains funds set-aside for other post employment retirement benefits.
97
CITY OF CUPERTINO
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET POSITION
JUNE 30, 2013
Compensated
Absences and
Information Workers' Equipment Long-Term Retiree
Technology Compensation Revolving Disability Medical Total
ASSETS
Current Assets:
Cash and investments $3,678,643 $2,127,109 $2,263,715 $13,313 $8,082,780
Interest receivable 8,701 5,014 5,354 31 19,100
Prepaid items 66,139 66,139
Total current assets 3,753,483 2,132,123 2,269,069 13,344 8,168,019
Noncurrent Assets:
Net OPEB assets $4,259,897 4,259,897
Capital assets, depreciable net of
accumulated depreciation 542,911 921,681 1,464,592
Total noncurrent assets 542,911 921,681 4,259,897 5,724,489
Total Assets $4,296,394 $2,132,123 $3,190,750 $13,344 $4,259,897 $13,892,508
LIABILITIES
Current Liabilities:
Accounts payable and accruals $138,930 $6,120 $11,894 $6,233 $10,000 173,177
Accrued payroll and benefits 18,509 901 10,674 30,084
Advance from other funds 560,564 560,564
Compensated absences 19,692 2,169 21,861
Claims payable 436,636 436,636
Total current liabilities 177,131 443,657 24,737 6,233 570,564 1,222,322
Non-current Liabilities:
Compensated absences 26,758 8,688 35,446
Claims payable 1,440,913 1,440,913
Total non-current liabilities 26,758 1,440,913 8,688 1,476,359
Total Liabilities 203,889 1,884,570 33,425 6,233 570,564 2,698,681
NET POSITION
Net investment in capital assets 542,911 921,681 1,464,592
Unrestricted 3,549,594 247,553 2,235,644 7,111 $3,689,333 9,729,235
Total Net Position $4,092,505 $247,553 $3,157,325 $7,111 $3,689,333 $11,193,827
98
CITY OF CUPERTINO
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENSES AND
CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2013
Compensated
Absences and
Information Workers' Equipment Long-Term Retiree
Technology Compensation Revolving Disability Medical Total
OPERATING REVENUES
Charges for services $1,716,300 $423,100 $1,194,000 $66,053 $3,399,453
Other 7,352 7,352
Total Operating Revenues 1,716,300 423,100 1,201,352 66,053 3,406,805
OPERATING EXPENSES
Salaries and related expenses 559,341 26,122 363,227 $2,214,719 3,163,409
Materials and supplies 311,132 264,875 576,007
Contractual services 343,536 2,250 138,284 10,000 494,070
Insurance claims and premium 687,342 246,730 934,072
Depreciation 193,649 246,812 440,461
Total Operating Expenses 1,407,658 715,714 1,013,198 246,730 2,224,719 5,608,019
Operating Income (Loss)308,642 (292,614) 188,154 (180,677) (2,224,719) (2,201,214)
NONOPERATING REVENUES (EXPENSES)
Interest income 10,187 5,799 6,112 205 6,679 28,982
Total Nonoperating Revenues (Expenses)10,187 5,799 6,112 205 6,679 28,982
Income (Loss) Before Transfers 318,829 (286,815) 194,266 (180,472) (2,218,040) (2,172,232)
Transfers in 200,000 44,503 75,000 1,400,000 1,719,503
Change in Net Position 518,829 (286,815) 238,769 (105,472) (818,040) (452,729)
BEGINNING NET POSITION 3,573,676 534,368 2,918,556 112,583 4,507,373 11,646,556
ENDING NET POSITION $4,092,505 $247,553 $3,157,325 $7,111 $3,689,333 $11,193,827
99
CITY OF CUPERTINO
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2013
Compensated
Absences and
Information Workers'Long-Term Retiree
Technology Compensation Equipment Disability Medical Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $1,716,300 $426,970 $1,201,352 $72,286 $3,416,908
Cash payments to suppliers for goods and services (574,635)(434,782)(1,009,417)
Cash payments to employees (551,009) (26,098) (358,811) (31,490) ($2,186,661) (3,154,069)
Cash payment for judgment and claims (305,771)(246,730)(552,501)
Cash Flows from (used for) Operating Activities 590,656 95,101 407,759 (205,934) (2,186,661) (1,299,079)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Advance repayment from other funds 504,497 504,497
Advance from other funds 560,564 560,564
Transfers in 200,000 44,503 75,000 1,400,000 1,719,503
Cash Flows (used for) Noncapital Financing Activities 200,000 549,000 75,000 1,960,564 2,784,564
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of capital assets (265,151)(226,977)(492,128)
Cash Flows from Capital and Related
Financing Activities (265,151)(226,977)(492,128)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 4,018 2,406 1,990 178 6,855 15,447
Cash Flows from Investing Activities 4,018 2,406 1,990 178 6,855 15,447
Net Cash Flows 529,523 97,507 731,772 (130,756) (219,242) 1,008,804
Cash and investments at beginning of year 3,149,120 2,029,602 1,531,943 144,069 219,242 7,073,976
Cash and investments at end of year $3,678,643 $2,127,109 $2,263,715 $13,313 $8,082,780
Reconciliation of operating income (loss) to net cash flows
from operating activities:
Operating income (loss) $308,642 ($292,614) $188,154 ($180,677) ($2,224,719) ($2,201,214)
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities:
Depreciation 193,649 246,812 440,461
Change in assets and liabilities:
Prepaid expenses (35,674) (35,674)
Net OPEB asset 28,058 28,058
Accounts payable and accruals 115,707 6,120 (31,623) 6,233 10,000 106,437
Accrued payroll and benefits (376) 24 636 284
Compensated absences 8,708 3,780 (31,490) (19,002)
Claims Payable 381,571 381,571
Cash Flows from Operating Activities $590,656 $95,101
$407,759 ($205,934) ($2,186,661) ($1,299,079)
100
AGENCY FUNDS
All Agency Funds, representing all fiduciary funds of the 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.
Special district assessments held by the City, acting as an agent for bond debt service payments, comprise
City Agency funds. The City is not liable for the debt payments.
101
CITY OF CUPERTINO
Statement of Changes in Assets and Liabilities
All Agency Funds
For the year ended June 30, 2013
Balance Balance
June 30, 2012 Additions Deletions June 30, 2013
All Agency Funds
Assets
Cash and investments $81,403 $81,403
Liabilities
Deposits $81,403 $81,403
102
STATISTICAL SECTION
103
NOTES
104
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. In 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 wellbeing have changed over time:
1. Net Position by Component
2. Changes in Net Position
3. Fund Balances of Governmental Funds
4. Changes in Fund Balance of Governmental Funds
Revenue Capacity
These schedules contain information to help the reader assess the City’s most significant own-
source revenue, property tax.
1. Assessed and Estimated Actual Value of Taxable Property
2. Direct and Overlapping Property Tax Rates
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. Ratios 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 indicators 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 Assets Statistics by Function/Program
Other Property Tax and Sale Statistics
Sources
Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual
Financial Reports for the relevant year.
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2004200520062007200820092010201120122013Governmental ActivitiesInvested in capital assets, net of related debt 85,425,753$ 86,530,017$ 83,064,879$ 80,343,053$ 85,173,998$ 103,341,905$ 120,405,290$ 120,724,205$ 117,440,257$ 116,343,918$ Restricted7,416,930 7,291,925 8,329,671 9,265,565 9,926,770 6,661,074 8,692,175 7,721,962 7,572,865 8,351,118 Unrestricted18,541,954 21,202,795 26,916,679 39,243,717 43,242,639 33,290,050 31,087,861 33,185,903 38,117,361 47,558,701 Total governmental activities net position/assets (1)111,384,637 115,024,737 118,311,229 128,852,335 138,343,407 143,293,029 160,185,326 161,632,070 163,130,483 172,253,737 Business-Type ActivitiesInvested in capital assets, net of related debt645,290 578,962 497,681 467,416 84,126 136,127 788,213 777,521 824,687 762,013 Unrestricted7,314,068 6,028,989 6,291,439 6,977,436 7,849,147 8,949,142 9,063,616 9,779,087 10,057,331 10,865,479 Total business-type activities net position/assets (1)7,959,358 6,607,951 6,789,120 7,444,852 7,933,273 9,085,269 9,851,829 10,556,608 10,882,018 11,627,492 Primary GovernmentInvested in capital assets, net of related debt 86,071,043 87,108,979 83,562,560 80,810,469 85,258,124 103,478,032 121,193,503 121,501,726 118,264,944 117,105,931 Restricted7,416,930 7,291,925 8,329,671 9,265,565 9,926,770 6,661,074 8,692,175 7,721,962 7,572,865 8,351,118 Unrestricted25,856,022 27,231,784 33,208,118 46,221,153 51,091,786 42,239,192 40,151,477 42,964,990 48,174,692 58,424,180 Total primary government net position/assets (1)119,343,995$ 121,632,688$ 125,100,349$ 136,297,187$ 146,276,680$ 152,378,298$ 170,037,155$ 172,188,678$ 174,012,501$ 183,881,229$ (1) Represents net assets thru June 30, 2011 and net position after that.(Accrual basis of accounting)(Unaudited)Fiscal Year Ended June 30Last Ten Fiscal YearsNet Position/Assets by Component (1)CITY OF CUPERTINO107
2004200520062007200820092010201120122013ExpensesGovernmental activities:Administration1,430,523$ 1,280,339$ 1,354,543$ 1,675,443$ 1,636,284$ 1,769,500$ 1,911,665$ 1,860,451$ 1,837,072$ 2,367,255$ Law enforcement6,090,038 6,179,326 6,577,199 7,148,187 7,679,467 8,804,195 8,385,476 8,434,885 8,776,633 9,274,536 Public and environmental affairs710,754 824,317 914,024 1,186,929 1,216,164 1,624,210 1,653,034 1,625,876 1,743,151 1,595,982 Administrative services3,923,377 3,750,174 4,208,389 3,874,003 3,923,217 4,001,738 4,080,134 3,993,654 4,309,503 4,171,440 Recreation services2,234,509 2,173,936 2,359,966 2,517,725 3,845,873 4,206,343 4,444,536 4,528,968 4,577,243 4,473,861 Community development2,678,109 3,269,475 4,541,965 4,090,959 4,059,740 6,177,879 4,351,975 5,961,774 4,922,237 4,676,273 Public works15,546,461 14,585,232 16,384,026 16,230,274 16,569,310 18,104,649 19,320,151 20,224,662 20,387,508 22,149,063 Interest on long-term debt2,317,837 2,289,526 2,262,913 2,239,657 2,183,403 2,118,714 2,076,264 2,032,464 1,837,655 1,256,922 Total governmental activities expense34,931,608 34,352,325 38,603,025 38,963,177 41,113,458 46,807,228 46,223,235 48,662,734 48,391,002 49,965,332 Business-type activities:Resource recovery1,793,083 2,927,060 2,101,198 2,122,805 2,056,061 1,998,184 2,018,147 1,801,599 1,566,229 1,764,993 Blackberry farm1,353,362 1,341,712 1,302,855 975,064 450,206 495,845 457,169 457,065 460,698 463,336 Cupertino sports center1,352,509 1,452,957 1,448,048 1,623,839 1,547,402 1,594,325 1,478,143 1,716,741 1,897,611 2,011,483 Recreation programs1,590,302 1,689,436 1,729,194 1,830,401 1,853,217 1,739,892 1,854,648 1,753,156 1,985,618 2,025,416 Senior center493,244 438,440 588,818 771,570 - - - - - - Total business-type activities expense6,582,500 7,849,605 7,170,113 7,323,679 5,906,886 5,828,246 5,808,107 5,728,561 5,910,156 6,265,228 Total primary government expense41,514,108 42,201,930 45,773,138 46,286,856 47,020,344 52,635,474 52,031,342 54,391,295 54,301,158 56,230,560 Program RevenuesGovernmental activities:Charges for services:Administration- - 23,201 3,618 10,711 2,240 21,873 15,801 6,454 5,676 Law enforcement838,457 694,952 722,164 1,031,736 799,350 869,295 811,676 797,757 696,498 637,595 Administrative services16,650 - - - - - - - - - Recreation services148,337 163,462 240,074 193,752 847,424 801,280 930,773 1,020,159 1,166,323 970,292 Community development1,903,277 4,164,792 5,286,336 4,768,026 3,551,478 3,586,993 3,310,355 4,149,620 4,919,216 6,765,564 Public works325,959 286,280 201,250 200,969 135,942 157,311 556,636 549,065 503,225 593,501 Operating grants and contributions2,496,689 593,657 3,403,762 3,048,512 2,392,987 4,014,036 2,042,557 2,351,287 2,508,917 2,752,493 Capital grants and contributions3,612,102 2,164,907 522,950 3,496,095 5,696,124 4,759,485 5,511,359 1,972,951 780,761 719,880 Total government activities program revenue 9,341,471 8,068,050 10,399,737 12,742,708 13,434,016 14,190,640 13,185,229 10,856,640 10,581,394 12,445,001 Business-type activities:Charges for services:Resource recovery2,398,819 2,395,282 2,203,127 2,254,416 2,254,790 2,100,704 2,104,299 1,931,076 1,727,783 1,882,517 Blackberry farm1,301,092 1,218,958 1,155,986 1,101,564 640,771 596,944 568,770 447,797 411,056 386,753 Cupertino sports center1,184,860 1,385,837 1,419,672 1,655,169 1,605,545 1,732,282 1,578,330 1,722,700 1,965,684 2,150,139 Recreation programs1,910,599 2,167,705 2,331,409 2,396,720 2,493,214 2,364,037 2,249,191 2,260,296 2,325,705 2,409,720 Senior center456,211 473,787 704,390 690,603 - - - - - - Operating grants and contributions84,660 28,860 135,539 14,343 14,309 14,471 6,895 - - - Total business-type activities program revenue 7,336,241 7,670,429 7,950,123 8,112,815 7,008,629 6,808,438 6,507,485 6,361,869 6,430,228 6,829,129 Total primary government program revenue 16,677,712 15,738,479 18,349,860 20,855,523 20,442,645 20,999,078 19,692,714 17,218,509 17,011,622 19,274,130 (Continued)(Unaudited)CITY OF CUPERTINOFiscal Year Ended June 30Change in Net Position/Assets (4)Last Ten Fiscal Years(Accrual basis of accounting)108
2004200520062007200820092010201120122013(Unaudited)CITY OF CUPERTINOFiscal Year Ended June 30Change in Net Position/Assets (4)Last Ten Fiscal Years(Accrual basis of accounting)Net (Expense) Revenue:Governmental activities (25,590,137) (26,284,275) (28,203,288) (26,220,469) (27,679,442) (32,616,588) (33,038,006) (37,806,094) (37,809,608) (37,520,331) Business-type activities 753,741 (179,176) 780,010 789,136 1,101,743 980,192 699,378 633,308 520,072 563,901 Total primary government net expense (24,836,396) (26,463,451) (27,423,278) (25,431,333) (26,577,699) (31,636,396) (32,338,628) (37,172,786) (37,289,536) (36,956,430) General Revenues and TransfersGovernmental activities:Taxes:Property taxes 3,944,459 4,296,940 4,728,811 6,529,772 6,941,910 7,491,965 7,488,701 7,296,970 7,479,132 8,793,110 Property tax in lieu of motor vehicle fee (1) - 2,930,000 3,569,300 3,652,509 3,894,502 4,299,902 4,420,912 4,404,795 4,487,412 4,772,355 Incremental property tax76,570 15,974 185,676 187,276 220,267 1,211,128 1,322,925 1,251,777 202,793 - Sales taxes8,654,185 9,224,661 10,671,642 11,252,341 13,154,749 14,139,190 9,930,530 14,539,243 17,326,460 18,721,193 Transient occupancy tax 1,632,514 1,790,917 2,054,904 2,511,184 2,711,590 2,140,274 2,142,137 2,536,501 3,112,934 3,768,504 Utility user tax2,636,264 2,705,888 2,809,587 3,011,755 3,175,724 3,205,073 3,271,452 3,227,942 3,264,896 2,994,526 Franchise tax2,194,651 2,217,313 2,353,575 2,537,018 2,547,439 2,618,125 2,597,930 2,841,344 2,808,136 2,848,950 Other taxes1,248,437 3,146,516 2,534,393 2,661,449 1,709,892 1,317,767 1,211,899 1,491,316 1,377,211 4,561,219 Intergovernmental (2)2,460,137 978,059 (300,039) 364,261 266,789 171,621 166,440 259,289 29,064 30,256 Investment earnings526,560 684,952 669,820 1,752,177 1,451,973 889,823 295,059 259,217 61,096 176,782 Miscellaneous166,714 545,155 189,262 291,423 103,529 81,342 119,393 1,144,429 82,684 126,690 Gain on sale of land- - 1,222,849 1,510,410 - - - - - - Extraordinary items (3)- - - - - - - - (1,130,797) - Transfers175,000 1,388,000 800,000 500,000 992,150 - - 15 207,000 (150,000) Total Government Activities23,715,491 29,924,375 31,489,780 36,761,575 37,170,514 37,566,210 32,967,378 39,252,838 39,308,021 46,643,585 Business-type activities:Investment earnings95,127 215,769 201,159 366,596 378,828 171,804 67,182 71,486 12,338 31,573 Transfers(175,000) (1,388,000) (800,000) (500,000) (992,150) - - (15) (207,000) 150,000 Total business-type activities(56,228) (1,172,231) (598,841) (133,404) (613,322) 171,804 67,182 71,471 (194,662) 181,573 Total primary government23,659,263 28,752,144 30,890,939 36,628,171 36,557,192 37,738,014 33,034,560 39,324,309 39,113,359 46,825,158 Change in Net Position/Assets (4)Government activities(1,874,646) 3,640,100 3,286,492 10,541,106 9,491,072 4,949,622 (70,628) 1,446,744 1,498,413 9,123,254 Business-type activities697,513 (1,351,407) 181,169 655,732 488,421 1,151,996 766,560 704,779 325,410 745,474 Total primary government(1,177,133)$ 2,288,693$ 3,467,661$ 11,196,838$ 9,979,493$ 6,101,618$ 695,932$ 2,151,523$ 1,823,823$ 9,868,728$ (1) Replaced the reduced motor vehicle license fee (an intergovernmental revenue) in 2005.(2) The 2006 state take-away of sales taxes, property taxes, and vehicle license fees is reported in this category.(3) Asset transfer to Successor to Redevelopment Agency fiduciary trust in 2012.(4) Represents changes in net assets thru fiscal year ended June 30, 2011 and changes in net position after that.109
2004200520062007200820092010General FundReserved3,897,270$ 3,864,969$ 2,931,046$ 2,711,586$ 2,668,914$ 2,325,283$ 2,308,290$ Unreserved12,632,286 18,313,846 23,866,568 23,634,874 16,997,569 19,871,574 13,622,828 Total General Fund16,529,556 22,178,815 26,797,614 26,346,460 19,666,483 22,196,857 15,931,118 All Other Governmental FundsReserved9,784,645 2,701,067 4,925,900 8,555,042 11,240,851 4,180,483 5,465,423 Unreserved, reported in:Special Revenue Funds3,736,446 3,618,814 6,249,004 6,844,632 7,270,331 3,692,187 5,113,020 Capital Project Funds2,236,730 1,663,033 (1,208,341) (472,405) 7,631,866 968,077 3,788,810 Total All Other Governmental Funds15,757,821 7,982,914 9,966,563 14,927,269 26,143,048 8,840,747 14,367,253 Total Governmental Funds32,287,377$ 30,161,729$ 36,764,177$ 41,273,729$ 45,809,531$ 31,037,604$ 30,298,371$ 2011 (1)20122013General FundNonspendable1,023,950$ 1,003,438$ 956,827$ Restricted663,254 695,564 725,903 Assigned14,739,394 17,729,297 16,400,000 Unassigned3,380,279 6,669,379 17,961,579 Total General Fund19,806,877 26,097,678 36,044,309 All Other Governmental FundsNonspendable615,000 - Restricted6,314,106 6,877,301 7,625,215 Assigned4,303,822 3,646,073 5,299,904 Total All Other Governmental Funds11,232,928 10,523,374 12,925,119 Total Governmental Funds31,039,805$ 36,621,052$ 48,969,428$ (1)The City implemented GASB Statement No. 54 under which governmental fund balances are reported as nonspendable, restricted, assigned and unassigned compared to reserved and unreserved.Fiscal Year Ended June 30CITY OF CUPERTINOFund Balances of Governmental FundsLast Ten Fiscal Years(Modified accrual basis of accounting)(Unaudited)110
2004200520062007200820092010201120122013RevenuesTaxes21,004,405$ 23,614,623$ 25,616,553$ 28,903,993$ 34,589,139$ 36,395,950$ 30,994,583$ 37,582,299$ 40,265,944$ 48,382,570$ Use of money and property940,963 1,119,399 1,607,837 2,169,977 2,490,444 1,300,508 774,219 792,035 661,602 744,196 Intergovernmental7,236,955 5,567,266 5,896,167 8,200,519 8,285,280 6,896,394 7,539,835 3,543,641 2,678,888 2,841,407 Licenses and permits1,540,760 2,896,000 3,614,953 3,325,844 2,656,017 2,740,463 2,583,131 2,901,944 2,900,936 3,502,617 Charges for services930,050 1,568,935 2,143,729 2,062,067 1,728,099 1,707,533 1,701,157 2,311,216 3,273,946 4,515,066 Fines and forfeitures723,748 559,791 629,586 926,310 722,087 761,320 736,239 695,666 661,899 560,417 Other1,009,260 1,792,795 245,176 154,235 95,388 80,835 689,941 73,881 264,302 57,828 Total revenues33,386,141 37,118,809 39,754,001 45,742,945 50,566,454 49,883,003 45,019,105 47,900,682 50,707,517 60,604,101 ExpendituresCurrent:Administration1,222,581 1,162,096 1,236,390 1,287,101 1,351,273 1,336,921 1,469,004 1,528,070 1,533,070 2,005,176 Law enforcement5,950,849 6,144,695 6,499,911 6,975,517 7,456,661 8,133,168 8,384,310 8,434,885 8,445,917 8,783,885 Public and environmental affairs686,798 758,314 853,484 1,121,437 1,169,247 1,486,443 1,487,265 1,497,263 1,659,856 1,486,910 Administrative services3,758,806 3,671,303 4,103,497 3,715,994 3,797,156 3,634,043 3,733,414 3,695,076 4,103,982 3,772,714 Recreation services2,141,431 2,121,366 2,302,995 2,403,296 3,745,244 3,789,260 4,003,764 4,117,477 4,319,983 4,083,822 Community development2,563,242 3,156,908 4,467,655 3,969,837 3,931,055 5,841,428 4,125,739 5,693,541 4,762,229 4,395,601 Public works9,322,086 9,637,314 10,386,055 10,477,727 11,137,935 11,914,584 11,961,218 12,234,726 12,528,194 13,996,516 Capital outlay20,246,237 10,025,935 2,771,502 4,292,169 8,334,093 22,262,369 4,710,360 5,281,927 3,523,047 4,684,676 Debt service:Principal repayment1,220,000 1,245,000 1,270,000 1,295,000 1,355,000 1,415,000 1,460,000 1,500,000 - 1,920,000 Interest and fiscal charges2,317,837 2,289,526 2,262,913 2,239,657 2,183,403 2,118,714 2,076,264 2,032,464 1,837,655 1,256,922 Payment to refunded debt escrow agent- - - - - - - - 44,897,800 - Total expenditures49,429,867 40,212,457 36,154,402 37,777,735 44,461,067 61,931,930 43,411,338 46,015,429 87,611,733 46,386,222 Excess (deficiency) of revenues over(under) expenditures(16,043,726) (3,093,648) 3,599,599 7,965,210 6,105,387 (12,048,927) 1,607,767 1,885,253 (36,904,216) 14,217,879 Other Financing Sources (Uses)Bond proceeds- - - - - - - - 44,823,839 - Proceeds from sale of capital assets- - 2,422,849 1,663,842 - - - 1,055,449 421 - Transfers in4,765,307 7,904,763 8,364,084 9,658,000 19,136,165 5,035,925 7,788,417 5,684,483 6,484,426 8,438,707 Transfers out(4,760,307) (6,936,763) (7,784,084) (14,777,500) (20,705,750) (7,758,925) (10,135,417) (7,883,751) (7,692,426) (10,308,210) Total other financing sources5,000 968,000 3,002,849 (3,455,658) (1,569,585) (2,723,000) (2,347,000) (1,143,819) 43,616,260 (1,869,503) Extraordinary ItemAssets transferred to Successor Agencies- - - - - - - - (1,130,797) - Change in fund balances(16,038,726)$ (2,125,648)$ 6,602,448$ 4,509,552$ 4,535,802$ (14,771,927)$ (739,233)$ 741,434$ 5,581,247$ 12,348,376$ Debt service as a percentage ofnoncapital expenditures (1)12.1% 11.7% 10.6% 10.6% 9.8%8.9% 9.1% 8.7% 55.6% 7.6%(1) Noncapital expenditures is total expenditures less capital assets added each year to statement of net position/assets.(Unaudited)Fiscal Year Ended June 30CITY OF CUPERTINOChanges in Fund Balances of Governmental FundsLast Ten Fiscal Years(Modified accrual basis of accounting)111
Total Assessed &DirectTotalSBESecuredEst. Full MarketTaxFiscal YearSecured (a)Unsecured (a)NonUnitaryExemptionsValuation (a)Rate20048,689,558,802 530,097,614 223,580 80,704,482 9,219,879,996 1.73%20059,159,184,070 367,378,773 278,536 80,678,889 9,526,841,379 1.66%20069,942,314,157 350,391,447 259,809 88,612,732 10,292,965,413 4.37%200710,794,991,704 381,307,801 213,610 94,957,979 11,176,513,115 5.74%200811,512,949,952 417,564,226 - 96,690,910 11,930,514,178 5.87%200912,637,622,059 533,413,208 1,390,000 99,950,894 13,172,425,287 6.26%201012,979,346,158 564,277,611 1,390,000 99,947,559 13,545,013,769 6.51%201113,017,910,372 476,332,025 1,390,000 96,704,811 13,495,632,397 6.51%201213,219,574,367 527,310,319 1,390,000 96,081,912 13,748,274,686 6.24%201313,882,147,291 738,243,050 1,390,000 108,468,872 14,621,780,341 6.20%(a) Net of exemptionsSource: HdL, Coren & ConeCITY OF CUPERTINO(Unaudited)Last Ten Fiscal YearsAssessed and Estimated Actual Value of Taxable Property$0$2$4$6$8$10$12$142004200520062007200820092010201120122013BillionsSecured PropertyUnsecured Property112
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Basic Levy 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 - - - - - - 0.0122 0.0095 0.0047 0.0051 County Library Retirement Levy0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 County Retirement Levy0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 Cupertino Elementary 2012- - - - - - - - - 0.0281 Cupertino Elementary0.0357 0.0360 0.0350 0.0289 0.0337 0.0306 0.0312 0.0308 0.0290 0.0317 El Camino Hospital 2003- - - 0.0129 0.0129 0.0129 0.0129 0.0129 0.0129 0.0129 Foothill/DeAnza College 19990.0110 0.0129 0.0119 0.0346 0.0113 0.0123 0.0322 0.0326 0.0297 0.0287 Fremont High0.0249 0.0268 0.0260 0.0243 0.0241 0.0339 0.0306 0.0365 0.0415 0.0390 Los Gatos/Saratoga High 19980.0417 0.0409 0.0371 0.0351 0.0345 0.0330 0.0352 0.0377 0.0381 0.0368 Santa Clara Unified0.0263 0.0344 0.0861 0.0797 0.0271 0.0743 0.0701 0.0519 0.0836 0.0819 Santa Clara Valley Water District0.0087 0.0092 0.0078 0.0072 0.0071 0.0061 0.0074 0.0072 0.0064 0.0069 Saratoga Elementary0.0385 0.0361 0.0356 0.0351 0.0363 0.0363 0.0388 0.0437 0.0444 0.0452 West Valley College 2012- - - - - - - - - 0.0150 West Valley College 2004- - 0.0140 0.0126 0.0118 0.0032 0.0140 0.0139 0.0074 0.0084 West Valley College Bond 2004 (Bab)- - - - - - - - 0.0063 0.0055 Total Direct & Overlapping Rates 1.2280 1.2375 1.2947 1.3116 1.2400 1.2838 1.3258 1.3179 1.3452 1.3864 City's Share of 1% Levy0.02234 0.02234 0.04343 0.05725 0.05706 0.05661 0.05641 0.05644 0.05650 0.05652 Redevelopment Rate1.04990 1.05040 1.04900 1.04840 1.04830 1.04730 1.04860 1.04840 1.04760 - Total Direct Rate0.01726 0.01664 0.043740.057420.05870 0.06263 0.06510 0.06507 0.06238 0.06204Source: HdL, Coren & ConeLast Ten Fiscal Years(Per $100 Assessed Valuation)(Unaudited)County Bond 2008 Hospital FacilityCITY OF CUPERTINODirect and Overlapping Property Tax Rates113
2013Percentage of2004Percentage ofAssessed Total Assessed Assessed Total AssessedValuationValuationValuationValuationApple Inc.933,312,667$ 6.38%240,237,868$ 2.61%Campus Holdings Inc.699,845,700 4.79%- - Tandem Computers Inc.- - 191,785,568 2.08%Cupertino City Center Buildings136,245,008 0.93%116,791,511 1.27%Hewlett Packard84,858,034 0.58%421,721,552 4.57%Vallco Shopping Mall LLC72,927,533 0.50%- - Sumitomo Bank Leasing and Financing- - 74,895,540 0.81%IAC At Cupertino LLC72,696,592 0.50%- - Teachers Insurance & Annuity- - 67,399,718 0.73%Irvine Apartment Commons LP- - 63,710,592 0.69%ECI Two Results LLC66,133,210 0.45%- - RWC LLC- - 61,108,806 0.66%Rocktino Fee LLC63,058,716 0.43%- - Ridgeview Court Associates- - 56,778,208 0.62%Cupertino Village LP56,008,581 0.38%- - 500 Forbes LLC55,947,615 0.38%- - Villa Serra Apartments- - 52,910,979 0.57%Total2,241,033,656$ 15.32%1,347,340,342$ 14.61%Source: HdL, Coren & ConeCITY OF CUPERTINOPrincipal Property TaxpayersCurrent Year and Nine Years Ago(Unaudited)Taxpayer114
Percent ofPercent Delinquent Total Total TaxFiscal Total Current Tax of Levy Tax Tax CollectionsYear Tax Levy Collections Collected (1) Collections (1) Collections to Tax Levy2004 4,021,029 4,021,029 100.00% - 4,021,029 100.00%2005 4,312,914 4,312,914 100.00% - 4,312,914 100.00%2006 4,914,487 4,914,487 100.00% - 4,914,487 100.00%2007 6,717,048 6,717,048 100.00% - 6,717,048 100.00%2008 7,162,177 7,162,177 100.00% - 7,162,177 100.00%2009 8,703,093 8,703,093 100.00% - 8,703,093 100.00%2010 8,760,881 8,760,881 100.00% - 8,760,881 100.00%2011 8,497,119 8,497,119 100.00% - 8,497,119 100.00%2012 7,681,925 7,681,925 100.00% - 7,681,925 100.00%2013 8,199,752 8,199,752 100.00% - 8,199,752 100.00%(1) Per the Teeter Plan, the City receives 100% of the tax levy, while the County receives delinquencies and penalties.Source: City of CupertinoCITY OF CUPERTINOProperty Tax Levies and CollectionsLast Ten Fiscal Years(Unaudited)115
Percentage of Estimated % ofFiscal Certificates Actual Market Value PersonalYear of Participation of Taxable Property Per Capita Income 2004 53,550,000 0.58% 1,033 2.26%2005 52,305,000 0.55% 995 2.01%2006 51,035,000 0.50% 963 1.82%2007 49,740,000 0.45% 929 1.60%2008 48,385,000 0.41% 886 1.44%2009 46,970,000 0.36% 853 1.36%2010 45,510,000 0.34% 815 1.36%2011 44,010,000 0.33% 755 1.70%2012 43,940,000 0.32% 744 1.56%2013 42,020,000 0.29% 705 1.41%Source: City of CupertinoCITY OF CUPERTINORatios of Outstanding Debt by TypeLast Ten Fiscal Years(Unaudited)116
14,621,780,341$
Total Debt %City’s Share of
6/30/2013 Applicable (1) Debt 6/30/13
Santa Clara County 805,800,000$ 4.738% 38,178,804$
Foothill-DeAnza Community College District 621,564,288 13.387% 83,208,811
West Valley Community College District 308,533,073 0.736% 2,270,803
Santa Clara Unified School District 428,710,000 1.918% 8,222,658
Fremont Union High School District 299,550,108 29.611% 88,699,782
Cupertino Union School District 164,416,973 49.251% 80,977,003
El Camino Hospital District 141,310,000 1.281% 1,810,181
Santa Clara Valley Water District Benefit Assessment 123,100,000 4.738% 5,832,478
Total Overlapping Tax and Assessment Debt 2,892,984,442 309,200,521
Overlapping Debt:
Santa Clara County General Fund Obligations 819,956,840 4.738% 38,849,555$
Santa Clara County Pension Obligations 378,994,822 4.738% 17,956,775
Santa Clara County Board of Education Certificates of Participation 10,400,000 4.738%492,752
Foothill-De Anza Community College District Certificates of Participation 17,225,000 13.387% 2,305,911
West Valley-Mission Community College District General Fund Obligations 65,435,000 0.736%481,602
Santa Clara Unified School District Certificates of Participation 13,430,000 1.918%257,587
Santa Clara County Vector Control District Certificates of Participation 3,455,000 4.738%163,698
Midpeninsula Regional Open Space Park District Certificates of Participation 135,649,717 7.565% 10,261,901
Subtotal Overlapping General Fund Debt 1,444,546,379 70,769,780
Direct Debt: City of Cupertino Certificates of Participation 42,020,000 100.000% 42,020,000
Total Direct and Overlapping General Fund Debt 1,486,566,379 112,789,780
Totals by Category:
Total Direct Debt 42,020,000 42,020,000
Total Overlapping Debt 4,337,530,821 379,970,302
Combined Total Debt 4,379,550,821$ 421,990,302$ (2)
Ratios to 2012-13 Assessed Valuation:
Total Overlapping Tax and Assessment Debt 2.11%
Total Direct Debt ($43,940,000) 0.29%
Combined Total Debt 2.89%
(1)
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and
non-bonded capital lease obligations.
Direct and Overlapping Bonded Debt
CITY OF CUPERTINO
Percentage of overlapping agency's assessed valuation located within boundaries of the city.
Source: MuniServices
Overlapping Tax and Assessment Debt:
(Unaudited)
2012-13 Assessed Valuation
Direct and Overlapping General Fund Debt
June 30, 2013
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Total net debtTotal Net Legal applicable to theFiscal Debt Debt Applicable Debt limit as a % ofYear Limit to Limit Margin debt limit2004 345,745,500 - 345,745,500 - 2005 357,745,500 - 357,256,552 - 2006 376,159,758 - 376,159,752 - 2007 408,373,114 - 408,373,114 - 2008 431,735,623 - 431,735,623 - 2009 473,910,827 - 473,910,827 - 2010 486,725,480 - 486,725,480 - 2011 488,171,639 - 488,171,639 - 2012495,734,039 - 495,734,039 - 2013520,580,523 - 520,580,523 - Debt Limit:Secured property assessed value, net of exempt real property13,882,147,291$ Adjusted valuation - 25% of assessed valuation3,470,536,823 Debt limit - 15% of adjusted valuation520,580,523 Amount of Debt Subject to Limit:Total Bonded Debt42,020,000 Less: Certificates of Participation not subject to debt limit(42,020,000) Amount of debt subject to limit- Legal Debt Margin520,580,523 Source: City of Cupertino(Unaudited)Last Ten Fiscal YearsLegal Debt Margin InformationNote: The Government Code of the State of California provides for a legal debt limit of 15% 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 located within the state.CITY OF CUPERTINO118
Ratio of GeneralFiscal Assessed General Bonded Debt Bonded Debt toYear Population Value Bonded Debt Per Capita Assessed Value2004 51,858 9,219,879,996 - - - 2005 52,590 9,526,841,379 - - - 2006 53,012 10,292,965,413 - - - 2007 53,549 11,176,513,115 - - - 2008 54,584 11,930,514,178 - - - 2009 55,045 13,172,425,287 - - - 2010 55,838 13,545,013,769 - - - 2011 58,302 13,495,632,397 - - - 2012 59,022 13,748,274,686 - - - 2013 59,220 14,621,780,341 - - - Sources: HdL, Coren & Cone City of CupertinoCITY OF CUPERTINORatio of General Bonded DebtLast Ten Fiscal Years(Unaudited)119
% of % of Population Population CityCity Per CapitaOver 25 with Over 25 with Calendar City County Population Personal Personal High School Unemployment Median High School Bachelor'sYear Population Population % of County Income Income Enrollment Rate Age (1) Degree (1) Degree (1)2003 51,858 1,656,128 3.13% $2,368,206,000 $45,667 9,138 5.4% ---2004 52,590 1,759,585 2.99% $2,595,892,000 $49,361 9,320 4.1% ---2005 53,012 1,773,258 2.99% $2,805,559,000 $52,923 9,631 3.4% ---2006 53,549 1,794,522 2.98% $3,117,408,000 $58,216 9,890 2.8% ---2007 54,584 1,748,976 3.12% $3,369,668,000 $61,734 10,228 3.0% ---2008 55,045 1,857,621 2.96% $3,442,884,000 $62,547 10,333 3.8% ---2009 55,838 1,800,876 3.10% $3,350,250,000 $59,999 10,339 7.2% 40.5 96.5% 69.3%2010 58,302 1,781,642 3.27% $2,586,120,000 $44,357 10,235 7.3% 39.1 96.3% 72.6%2011 59,022 1,809,378 3.26% $2,818,655,000 $47,756 10,351 6.3% 39.2 97.0% 74.7%2012 59,620 1,842,254 3.24% $2,985,829,000 $50,081 10,481 5.4% 39.5 96.7% 75.5%(1) Statistic available in 2009Sources: HdL, Coren & Cone Fremont Union High School DistrictUS Census BureauCalifornia Department of FinanceCITY OF CUPERTINODemographic and Economic StatisticsLast Ten Calendar Years(Unaudited) 120
PercentagePercentageNumber of of Total City Number of of Total CityEmployerEmployees Employment Employees EmploymentApple Inc.15,000 46.6%6,000 27.0%Hewlett-Packard- - 4,682 21.1%Cupertino Union School District 1,597 5.0% 1,500 6.8%Foothill/DeAnza Community College District 1,183 3.7% 1,200 5.4%Fremont Union High School District 961 3.0% 735 3.3%Seagate Technology LLC 500 1.6% - - Symantec - - 400 1.8%Sears - - 294 1.3%Affymax Inc. 304 0.9% - - Chordiant Software Inc. 285 0.9% - - Trend Micro Inc. 250 0.8% - - Health Care Center at The Forum 250 0.8% - - Target Stores 220 0.7% 270 1.2%Honeywell-Measurex - - 220 1.0%JCPenney - - 200 0.9%(1) Information from nine years ago not available.Sources: InfoUSA.com Cupertino Union School District Fremont Union High School District Foothill/DeAnza Community College District CA Employment Development Department Labor Market Information Keyser Marston May 2013 report - Economic and Fiscal Impacts Generated by Apple in Cupertino CITY OF CUPERTINOPrincipal EmployersCurrent Year and Ten Years Ago (1)(Unaudited)20132003121
Function/Program2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Council/Commissions0.80 0.80 0.80 1.40 1.40 1.40 1.47 1.46 1.47 1.52Administration4.65 4.70 4.70 4.30 4.30 4.85 4.90 4.85 5.05 5.05Public & Environmental Affairs 4.40 4.40 4.40 5.55 6.50 7.45 6.95 6.95 6.95 6.90Administrative Services20.30 20.35 20.35 21.63 21.88 22.33 22.33 22.34 22.48 22.26Parks & Recreation33.13 32.13 32.13 31.96 31.76 30.77 30.78 30.78 29.78 29.53Community Development 20.75 21.15 21.15 22.78 23.78 23.78 23.73 23.78 23.43 23.90Public Works70.22 71.22 71.22 71.13 71.13 72.17 72.59 72.59 73.59 73.59 Total154.25 154.75 154.75 158.75 160.75 162.75 162.75 162.75 162.75 162.75Source: City of Cupertino BudgetCITY OF CUPERTINOFull-Time Equivalent City Employees by Function/ProgramLast Ten Fiscal Years(Unaudited)0204060801001201401601802004 2005 2006 2007 2008 2009 2010 2011 2012 2013Public WorksCommunity DevelopmentParks & RecreationAdministrative ServicesPublic & EnvironmentalAffairsAdministrationCouncil/Commissions122
2005 (a)20062007200820092010201120122013Law Enforcement Sheriff ResponsePriority One-Respond within 5 minutes5.37 Min. 4.94 Min. 4.94 Min. 5.83 Min. 3.88 Min. 3.95 Min. 4.49 Min. 4.84 Min. 3.76 Min.Priority Two-Respond within 9 minutes8.61 Min. 8.09 Min. 7.15 Min. 7.95 Min. 5.94 Min. 5.90 Min. 5.76 Min. 6.44 Min. 5.98 Min.Priority Three-Respond within 20 minutes 18.92 Min. 16.74 Min. 15.82 Min. 15.73 Min. 9.40 Min. 9.77 Min. 9.79 Min. 10.62 Min. 10.29 Min.Public WorksStreet Sweeping696 Curb Miles 696 Curb Miles 696 Curb Miles 696 Curb Miles 696 Curb Miles 696 Curb Miles 696 Curb Miles 575 Curb Miles 575 Curb MilesStreet Maintenance 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of CallRecreation ServicesTeen Center Memberships441550510444400447492576564Sports Center Memberships9161,0211,3361,4191,7001,3851,5981,7761,852Senior Center Memberships2,0003,1001,9352,1102,2432,2872,3872,4702,456Local Resident Rentals at Blackberry Farm (b)----2891120135141Quinlan Community Center Rental Revenue (b)----$80,000$71,000$91,000$133,000$120,000Community DevelopmentApproved Building Plan SetsWithin 5 Days Within 5 Days Within 5 Days Within 5 Days91% Within 5 Days 96% Within 5 Days 97% Within 5 Days 93% Within 5 Days 92% Within 5 DaysDiscretionary Land Use ApplicationsWithin 21 Days Within 21 Days Within 21 Days Within 21 Days95% Within 21 Days 100% Within 21 Days 100% Within 21 Days 99% Within 21 Days 99% Within 21 DaysPublic Notice of Upcoming ProjectsWithin 10 Days Within 10 Days Within 10 Days Within 10 Days100% Within 10 Days 100% Within 10 Days 100% Within 10 Days 100% Within 10 Days 100% Within 10 DaysAdministrative ServicesAccounts Payable Processing 5 Days 5 Days 5 Days 5 Days 5 Days 5 Days 5 Days 7 Days 7 DaysBusiness License Renewal Certificates 3 Days 3 Days 3 Days 3 Days 3 Days 3 Days 3 Days 3 Days 3 Days(a) First year of available information (b) New operating indicatorSource: City of CupertinoFunction/ProgramCITY OF CUPERTINOOperating Indicators by Function/ProgramLast Nine Fiscal Years(Unaudited)123
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Public WorksCenterlane Miles of Streets142 142 142 142 142 142 142 142 142 142 Streetlights2,950 2,950 2,950 2,950 2,950 2,950 2,950 2,950 2,950 2,950 Traffic Signals39 39 39 39 39 39 39 39 39 48 Culture & RecreationParks and Open Spaces17 17 17 17 17 17 18 19 19 19Park and Landscape Acreage 150.8 150.8 150.8 150.8 150.8 150.8 151.4 152.0 152.0 152.0City Trails1111111111Golf Courses1111111111Boathouse1111111111Community Center 1111111111Community Hall0111111111Senior Center1111111111Sports Center1111111111Swimming Pools1111111111Tennis Courts17 17 17 17 17 17 17 17 17 17Sports Fields1111111111City Library1111111111Source: City of Cupertino(Unaudited)Function/ProgramCITY OF CUPERTINOCapital Asset Statistics by Function/ProgramLast Ten Fiscal Years124
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COMMUNITY
PROFILE
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History
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 Francisco 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
Clara Valley in late March to their San Francisco
destination.
With the expedition encamped in what is now
Cupertino, Font christened 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
Boulevard) and Stevens Creek Boulevard. It was first known as West Side; but by 1898 the post
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.
Many of Cupertino’s pioneer European settlers
planted their land in grapes. Vineyards and
wineries proliferated on Montebello 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 piecemeal 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.
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Incorporation was approved in the September 27, 1955 election. Cupertino officially became
Santa Clara County’s 13th 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, 17 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.
2013 Community Economic Profile
Cupertino, with a population of 59,620 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 maintaining a balanced city, 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 so that our success as a partnership is a
direct reflection of our success as a community. The cornerstone of this partnership is a
cooperative and responsive government that fosters business and residential prosperity and
strengthens working relationships among all sectors of the community.
Our economic development strategies are tailored to address the specific needs of Cupertino.
Because this is a mature, and 90% built-out city, the focus is on business retention and
revitalization. Business recruitment is site specific and targeted to industries that enhance,
rather than draw from, our existing business base.
Cupertino is home to many well-known high-tech companies, and offers a dynamic and
exciting business climate. Apple Inc., CRC Health Corporation, Durect Corporation, and
Seagate Technology are headquartered in the city. DeAnza College, one of the largest single-
campus community colleges in the country, is another major employer.
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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 active outreach and an entitlement process that is responsive and
customer oriented.
The Vallco Shopping Mall includes Macy’s, JCPenney, and Sears as anchors and features many
exciting entertainment and eating venues. Shoppers can enjoy the latest shows at the AMC 16-
screen theater, skate at the mall’s full-size ice rink, workout at the Bay Club Silicon Valley, and
bowl at the chic and upscale BowlMor Lanes. They can begin or top off the evening with fine
dining at the critically-acclaimed Alexander’s Steakhouse or enjoy more casual cuisine at TGI
Friday’s, Benihana’s, Dynasty Seafood Restaurant, Tatami, and the international food court. The
city features many other stores, including Target, TJ Maxx and Home Goods, and Whole Foods,
and over 160 restaurants to serve the local workforce and residents.
Five hotels occupy the city: Hilton Garden Inn, Marriott Courtyard, Cupertino Inn and the
Cypress Hotel, operated by the Kimpton Group. The fifth hotel, The Aloft Cupertino Hotel,
operated by Starwood Hotels & Resorts, opened in 2012.
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.
2013 City Profile
The City of Cupertino operates as a general law city with a City 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 163 authorized full-time benefited employee positions. City departments include
Administration (City Council, commissions, city manager, city attorney); Administrative
Services (finance, human resources, information technology, city clerk, neighborhood watch,
emergency preparedness, code enforcement); Community Development (planning, building,
and economic development); Parks and Recreation; Public Works (engineering, maintenance,
transportation, solid waste, and storm drain management); and Public and Environmental
Affairs. Police service is provided by the Santa Clara County Sheriff’s 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, economic development, strategic planning, and public safety. Members of
the volunteer boards are appointed by the City Council and vacancies are announced so that
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interested residents may apply for the positions. Residents are kept informed about city
services and programs through the Cupertino Scene, a monthly newsletter; The City Channel,
Cupertino’s government access cable TV channel; and the city’s website.
Housing
The average sales price of an existing single-
family home is $1,220,500 as of 2013.
Community Health Care Facilities
Cupertino is served by the Cupertino Medical
Clinic, NovaCare Occupational Health
Services. Nearby hospitals include Kaiser
Permanente Medical Center in Santa Clara, El
Camino Hospital in Mountain View,
O’Connor Hospital in San Jose, Community
Hospital of Los Gatos, Stanford Hospital in
Palo Alto, and the Saratoga Walk-in Clinic in
Saratoga.
Utilities
Gas & Electric – Pacific Gas and Electric, 800-
743-5000.
Phone – AT&T, residential service, 800-894-
2355; business service, 800-750-2355.
Cable – Comcast, 800- 945-2288.
Solid Waste & Recycling – Recology, 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, 1975, 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 cash value plus
any tax levied to cover bonded indebtedness
for county, city, school, or other taxing
agencies. Assessed valuations and tax rates
are published annually after July 1.
Retail Sales Tax: Cupertino 1%, State General
Fund 3.9375%, State and Local Revenue Fund
1.0625%, State Local Public Safety 0.5%, State
Local Revenue 0.5%, County Transportation
0.25%, Local District (Valley Transportation
Authority) 1.125%. Grand Total = 8.7500%.
Assessed Valuation: (Secured and Unsecured)
Cupertino: $16,204,836,709 (7/1/13)
County: $334,580,873,994 (7/1/13)
Transportation
Rail – CalTrain service to Gilroy and San
Francisco, with local station four miles north of
city; Amtrak station is 10 miles south.
Air –Mineta San Jose International Airport 11
miles south; San Francisco International
Airport 30 miles north.
Bus – Santa Clara Valley Transportation
Authority.
Highways – Interstate Route 280, State Route
85.
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Community Statistics
Facts and Figures
Population in City Limits 59,620
Median Household Income $131,517
Median Age 39
Registered Voters 25,934
Democrats 9,507
Republicans 5,479
American Independent 367
Other 297
No Political Party designated 10,284
Top 40 Sales Tax Producers
Second Quarter 2013
(In Alphabetical Order)
A2Z Development Elephant Bar Scandinavian Designs
Advantest Granite Rock Sears
Alexander’s Steakhouse Hewlett-Packard Shane Diamond Jewelers
Apple Computers Corporation JC Penney Shell Service Station
Argonaut Window & Door Jo-Ann Fabrics Staples
Benihana of Tokyo Joy Luck Place Target
BJ’s Restaurant and Brewhouse Macy’s TJ Maxx
California Dental Arts Marina Foods Union 76 Service Station
Chevron Service Stations Michael’s Arts & Crafts US Gas Service Station
CVS Pharmacy Mirapath Valero Service Station
Cypress Hotel – Park Place
Restaurant
Outback Steakhouse Verizon Wireless
DeAnza College Campus Center Rohde & Schwarz Whole Foods
Dynasty Restaurant Rotten Robbie Service
Station
Insight Direct Ranch 99 Market
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Demographic Information
Community and Recreation Services
Blackberry Farm
Blackberry Farm has been upgraded and
restored to improve the natural habitat for
native trees, animals, and fish.
Improvements to the park include
construction of a new ticket kiosk, re-
plastered pools, a new water slide, bocce
ball, horseshoe courts, and numerous
upgrades to the west bank picnic area. The
park is located at 21979 San Fernando
Avenue. Telephone: 408-777-3140.
The Blackberry Farm golf course is located at 22100 Stevens Creek Boulevard. Telephone: 408-
253-9200.
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The Quinlan Community Center
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. Telephone:
408-777-3120.
Cupertino Sports Center
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: 408-777-3160.
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.
Civic Center and Library
The complex has a 6,000 square foot
Community Hall, plaza with fountain, trees
and seating areas. City Council meetings
are held in the Community Hall as well as
Planning Commission and Parks and
Recreation Commission sessions.
The 54,000 square foot library continues to
be one of the busiest in the Santa Clara
County Library system. For more
information call
408-446-1677.
McClellan Ranch
Park
A horse ranch
during the 1930’s and 40’s, this 18-acre park
has 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 old water tower
from the Parish Ranch, now the site of
Memorial 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 and dispenses information about
bird, animal, and plant species of the area.
McClellan Ranch is located at 22221
McClellan Road. Telephone: 408-777-3120.
Education
Winner of numerous state and national awards for excellence, our city’s schools are widely
acknowledged to be models of quality instruction.
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Cupertino Union School District serves 18,000 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 standards-based system of education and is nationally recognized for
leadership in the use of technology as an effective tool for learning. Quality teaching and parent
involvement are the keys to the district’s success.
The Fremont Union High School District serves 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. Many high schools in the district exceed their established achievement targets for
the State Academic Performance Index. 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-profit community organization, they are recognized with
a “Community Service Award” medal that may be worn during their graduation ceremonies.
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 encourage economic development through
college credit courses, short-term programs, services for manufacturers, technical assistance,
and/or recruitment and retention services.
Cupertino is served by two local
institutions of higher education: DeAnza
College and the University of San
Francisco. In addition to these schools,
Cupertino’s location offers easy access to
Stanford University, Santa Clara
University and San Jose State
University.
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Things to do and See
Euphrat Museum of Art
The highly regarded Euphrat Museum of Art, at its new location next to the new Visual Arts
and Performance Center at DeAnza College, 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 10 a.m. – 3 p.m. Monday through Thursday. Telephone: 408-864-
5464.
Fujitsu Planetarium
Stargazers have a Cupertino facility catering to their interests, the Fujitsu 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. For more information,
visit the website at http://planetarium.deanza.edu 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. Tuesday 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
The Cupertino Historical Society was founded in 1966 by a group of 177 longtime residents and
is dedicated to the preservation and exhibition of the city’s history. Their museum, located at
the Quinlan Community Center, 10185 N. Stelling Road, attempts to develop and expand the
learning opportunities that it offers to the ethnically diverse community of the City of
Cupertino. Telephone: 408-973-1495.
Farmers’ Market
Residents and visitors can visit the two farmers’ markets on
Friday from 9:00 a.m. to 1:00 p.m. at the Vallco Shopping
Mall parking lot behind JCPenney, and every Sunday from 9:00 a.m. to
1:00 p.m.
at the Cupertino Oaks Shopping Center, 21275 Stevens Creek Blvd.
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California History Center
The California History Center and Foundation is located on the DeAnza
College campus. The center has published 37 volumes on California
history and has a changing exhibit program. The center’s Stocklmeir
Library Archives boasts a 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 information, call 408-864-8987. The center is open September through June 9:30 a.m. to
noon and 1:00 p.m. to 4:00 p.m. Tuesday through Thursday.
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