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CITY OF SAN LEANDRO, CALIFORNIA <br />Management's Discussion and Analysis <br />For the Fiscal Year Ended June 30, 2010 <br />Management of the City of San Leandro (the "City") provides this Management Discussion and <br />' Analysis of the City's Comprehensive Annual Financial Report (CAFR) for readers of the City's <br />financial statements. This narrative overview and analysis of the financial activities of the City <br />is for the fiscal year ended June 30, 2010. We encourage readers to consider this information in <br />conjunction with the additional information that is furnished in the letter of transmittal found in <br />the preceding Introductory Section, and with the City's basic financial statements and the <br />accompanying notes to those financial statements. <br />FINANCIAL HIGHLIGHTS <br />o The assets of the City exceeded its liabilities at fiscal year ending June 30, 2010 by $334.7 <br />million. Of this amount, $288.5 million was invested in capital assets, net of related debt. <br />The balance was restricted for capital projects of $19.5 million, debt service $5.2 million, <br />special revenue $6.6 million, and unrestricted $14.9 million. The unrestricted net asset of <br />$14.9 million includes $3.1 million from an agreement with Kaiser Permanente that is <br />designated in the General Fund for Community Impact and Street Improvements. The <br />negative capital projects is largely due to the Redevelopment Agency, which is required to <br />show indebtedness, thus resulting in expected negative net assets. <br />o The City's total net assets decreased by almost $13 million; representing a $17.1 million <br />decrease in Governmental and a $4.1 million increase in Business type activities. The net <br />assets decreased were largely due to the increase of the Redevelopment Agency indebtedness <br />with related non-capitalizable development expense. <br />o At the close of the current fiscal year, the City's governmental funds including the general, <br />special revenue, debt service, capital projects and Redevelopment funds, reported combined <br />ending fund balances of $59.7 million, a decrease of $13.6 million from the prior year. The <br />change primarily reflects a $13 million increase in funding for capital projects for the Senior <br />Center, downtown lighting and pedestrian rehabilitation and parking infrastructure which are <br />primarily funded by the Redevelopment Agency. Approximately $35.4 million is reserved <br />for capital projects, debt, and operations, of which $13.7 million is in the General Fund. <br />Unreserved fund balances fall into two basic categories — designated and undesignated. <br />Unreserved — designated fund balance totals $12.7 million, all in the General Fund. <br />Unreserved — undesignated fund balance totals $11.6 million (of which $6.8 million is in the <br />Special Revenue funds and $4.8 million in Capital Project funds). <br />o At the end of the fiscal year, unreserved/designated fund balance for the General Fund was <br />$12.7 million, or 17.1% of total general fund expenditures. This amount includes a $5 <br />million in emergency reserve, $6.9 million for economic uncertainty, and $776,000 in other <br />reserves. <br />3 <br />