GASB 34 Report for the City of Beaumont

Transcription

1 GASB 34 Report for the City of Beaumont

2 This study is a review of the infrastructure assets for the City of Beaumont, California. The purpose of the Study was to fill in gaps in the City s existing records and to work with the City to meet their GASB 34 compliance requirement. This study included a review of the buildings, the roads and related infrastructure and land. Infrastructure related to utilities and other assets where historical values existed were excluded from this study. Don McDougall President MC Consulting

3 Governmental Activities Balance Prior Period Balance July 1, 2016 Adjustment Additions Deletions Transfers June Nondepreciable assets: Land $ - $ 11,940,820 $ - $ - $ - $ 11,940,820 Construction in progress Total nondepreciable assets - 11,940, ,940,820 Depreciable assets Building and improvements - 16,394, ,394,771 Machinery and equipment - 6,385, ,385,349 Vehicles - 2,482, , ,670,738 Infrastructure - 414,959, ,959,273 Subtotal - 440,221, , ,410,131 Less accumulated depreciation Building and improvements - (8,788,995) (272,882) - - (9,061,877) Machinery and equipment - (3,283,127) (210,072) - - (3,493,199) Vehicles - (2,305,500) (101,342) - - (2,406,842) Infrastructure - (197,766,018) (4,363,428) - - (202,129,446) Subtotal - (212,143,640) (4,947,724) - - (217,091,364) Total depreciable assets, net - 228,077,753 (4,758,986) ,318,767 Total $ - $ 240,018,573 $ (4,758,986) $ - $ - $ 235,259,587 General government $ 1,330,301 Public safety 1,182,026 Public works 2,126,008 Community development 134,965 Community services 174,424 Total depreciation expense $ 4,947,724

4 Business-Type Activities Balance Prior Period Balance July 1, 2016 Adjustment Additions Deletions Transfers June Nondepreciable assets: Land $ 502,560 $ - $ - $ - $ - $ 502,560 Construction in progress 2,715-1,054,735 - (2,715) 1,054,735 Total nondepreciable assets 505,275-1,054,735 - (2,715) 1,557,295 Depreciable assets Building and improvements 607,689-11,144-2, ,548 Machinery and equipment 76,637,172 11,670, ,707 (357,203) - 88,499,223 Vehicles 3,598, , ,878,071 Infrastructure - 133,023, ,023,061 Subtotal 80,843, ,693, ,118 (357,203) 2, ,021,903 Less accumulated depreciation Building and improvements (336,395) - (47,116) - - (383,511) Machinery and equipment (28,180,355) (4,099,316) (3,054,870) 357,203 - (34,977,338) Vehicles (2,089,436) - (448,807) - - (2,538,243) Infrastructure - (59,161,035) (3,490,390) - - (62,651,425) Subtotal (30,606,186) (63,260,351) (7,041,183) 357,203 - (100,550,517) Total depreciable assets, net 50,237,479 81,433,257 (6,202,065) - 2, ,471,386 Total $ 50,742,754 $ 81,433,257 $ (5,147,330) $ - $ - $ 127,028,681 Sewer Fund $ 6,458,463 Transit Fund 582,720 Total depreciation expense $ 7,041,183

5 Business-Type Activities - Sewer Balance Prior Period Balance July 1, 2016 Adjustment Additions Deletions Transfers June Nondepreciable assets: Land $ 502,560 $ - $ - $ - $ - $ 502,560 Construction in progress - - 1,040, ,040,473 Total nondepreciable assets 502,560-1,040, ,543,033 Depreciable assets Building and improvements 83, ,354 Machinery and equipment 76,159,547 11,670, ,461 (357,203) - 87,810,352 Vehicles 124, ,513 Infrastructure - 133,023, ,023,061 Subtotal 76,367, ,693, ,461 (357,203) - 221,041,280 Less accumulated depreciation Building and improvements (83,354) (83,354) Machinery and equipment (27,771,374) (4,099,316) (2,968,073) 357,203 - (34,481,560) Vehicles (124,513) (124,513) Infrastructure - (59,161,035) (3,490,390) - - (62,651,425) Subtotal (27,979,241) (63,260,351) (6,458,463) 357,203 - (97,340,852) Total depreciable assets, net 48,388,173 81,433,257 (6,121,002) ,700,428 Total $ 48,890,733 $ 81,433,257 $ (5,080,529) $ - $ - $ 125,243,461

6 Business-Type Activities - Transit Balance Prior Period Balance July 1, 2016 Adjustment Additions Deletions Transfers June Nondepreciable assets: Land $ - $ - $ - $ - $ - $ - Construction in progress 2,715-14,262 - (2,715) 14,262 Total nondepreciable assets 2,715-14,262 - (2,715) 14,262 Depreciable assets Building and improvements 524,335-11,144-2, ,194 Machinery and equipment 477, , ,871 Vehicles 3,474, , ,753,558 Infrastructure Subtotal 4,476, ,657-2,715 4,980,623 Less accumulated depreciation Building and improvements (253,041) - (47,116) - - (300,157) Machinery and equipment (408,981) - (86,797) - - (495,778) Vehicles (1,964,923) - (448,807) - - (2,413,730) Infrastructure Subtotal (2,626,945) - (582,720) - - (3,209,665) Total depreciable assets, net 1,849,306 - (81,063) - 2,715 1,770,958 Total $ 1,852,021 $ - $ (66,801) $ - $ - $ 1,785,220

7 Infrastructure Assets CITY OF BEAUMONT Infrastructure Assets As of 6/30/17 As of June Accum Deprec as of 6/30/16 Depreciation for Accum Deprec as of 6/30/17 Net Book Value as of 6/30/17 Infastructure Depreciation Cost Accumulated Depreciation Annual Depreciation Accumulated Depreciation Net Book Value Roads $ 320,157,060 $ 154,129,669 $ 1,867,179 $ 155,996,848 $ 164,160,212 Waste Water Transfer System $ 133,023,061 $ 59,161,035 $ 3,490,390 $ 62,651,425 $ 70,371,636 Curbs and Gutters $ 14,762,948 $ 6,547,895 $ 387,565 $ 6,935,460 $ 7,827,488 Sidewalks $ 80,039,265 $ 37,088,454 $ 2,108,684 $ 39,197,138 $ 40,842,127 $ 547,982,334 $ 256,927,053 $ 264,780,871

8 Introduction This report contains the summary of values and methodology used for the estimation of your June 30, 2017 financial reporting. The final reports are in the format of a fixed asset database and the software to manage the perpetuate the reported information.

9 What is GASB 34? Fresh Start Accounting for City's Prior to GASB 34, Cities did not need to report depreciation on their assets or infrastructure assets. Many never recorded the proper set of historical values. To rectify this GASB allows City's to have the missing data estimated so that the depreciation can be reported as if the proper values had been reported all along.

10 Road Estimation The City has had a complete road survey completed, this survey was used as the basis for the quotative date on the City's roads.

11 Traffic Control Systems Were Also Included The City has a respectable set of stop lights, with some shared with other local governments. They were valued and included based on average cost and age data.

12 Land The land values are mostly reported values as provided by the City of Beaumont. Some of the parcels were missing original cost. For those parcels, we reviewed local published land sales and then prepared a custom template to estimate deflationary trends in land values. From this we estimated the few parcels that did not have reported values. The reported values are less than 20% of the total reported land values. Your final numbers are +/- 5% from the most likely original cost. Well within GASB 34 allowed tolerances.

13 Buildings Where building values did not exist, MCC used the reported Insurable values and reported date of acquisition for these assets and reverse trended the Replacement Cost New to estimate the Original Cost of the structures. Most all of the City s structures are fully depreciated. The depreciation convention used is straight line, half year.

14 So how are building values estimated? Based on the current Reproduction cost of the buildings, we depreciated the values back to their acquisition date, then re-calculated the depreciation using straight-line depreciation with a ½ year convention.

15 Summary Beaumont is by California standards an older city, much of it s infrastructure and buildings are aging and have exceeded their accounting life. This study made use of existing records and available data from the City, and provided best estimates of the values that were not available. These values represent solid estimates of value that are reliable given the information available. They comply with GASB 34 requirement. Following completion of your review of these reported values, the building and infrastructure data will be incorporated into a fixed asset software system and a license transferred to the City.

16 Software and Maintenance

17 Perpetuation The software will run your fixed assets, and allow the City to maintain and update your asset roster and to calculate your depreciation for years to come. The licensing agreement includes training and support and was included in our fees.

18 Experience and Background Don McDougall Background: I was involved in many of the early implementations of GASB 34 in California, Arizona and Nevada. This included designing many of the original sets of best practices related to the valuation of assets for GASB 34 compliance, and defining services that met both the needs of the auditing CPA and the public entity. I have been involved in several hundred GASB 34 studies, and currently teaches as a guest lecturer on asset management and GASB 34 perpetuation for CalCPA Courses. Early Implementers: Many of the 1st public entities to complete their GASB 34 studies had no model or framework to start from. Many of the services had simply never been needed before. One key issue to making sure that these early reports met the needs and acceptability of the external auditor was to involve the audit firm from day one. The auditor was introduced to the services, procedures and practices that would be used to meet their client s needs. This philosophy has been a mainstay of all the services I provide. Many early implementers were phase II cities, wanting to get a jump on compliance and wanting to have a year to practice updating the fixed asset portion of their GASB 34 reports. These tier II cities lacked the resources of their larger brethren, and helped push a need for a cost effective means to meet their GASB 34 needs. Pioneering Studies: When GASB 34 started almost no one did their studies by system, instead detailed over worked and highly expensive reports were provided. Many of these reports were as expensive to update as they were to prepare. With this in mind a set of pioneering procedures and practices were created. My personal involvement was extensive, but included procedures for valuing bridges, estimating original cost for land, and the use of system based reports for roads and other infrastructure. One of the more innovative studies was a done for the City of Coronado. Where I prepared the reports with the city, and taught them perpetuation techniques on site. They assisted in the data gathering for the report, and helped review the final report for auditor acceptance. The report passed audit on the 1st review.

19 Experience and Background Don McDougall(Continued) Courses Taught: When GASB 34 was first announced I assisted in the implementation putting on a dozen presentations in association with GASB and KPMG. I currently teach 4-6 courses a year on GASB 34, focusing on perpetuation and asset clean up. General Experience: I ve been working in the valuation industry for over 25 years, and have been involved in some of the most unique and invocative valuations. By example, I have been involved in the following valuations; the interior of Winston Churchill s yacht from the Yalta conference, the film library of MGM studios, and the DreamWorks studios. Among studies for GASB 34, by client include the City of Stanton, some two miles in area, to the City and County of San Diego. A partial list of client served follows: City of San Diego City of Los Angeles City of Stanton Sonoma County County of Monterey City of Buellton Altadena County LA Metropolitan Transit Authority (MTA) City of Vallejo Los Angeles School District Los Angeles Community College County of San Diego UCLA USC San Bernardino County City of Gardena City of Corona City of Oxnard Napa County City of Santa Monica City of Covina City of Beverly Hills City of 1000 Oaks City of Paramount School association that include: All schools in LA County All Schools in San Diego County All Schools in Orange County All Schools in Kern County I have been involved in valuing over 110 Cities in total, 16 Counties, and 250 schools in California.