Comprehensive Annual Financial Report - City of Santa Monica
Comprehensive Annual Financial Report - City of Santa Monica
Comprehensive Annual Financial Report - City of Santa Monica
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CITY OF SANTA MONICA, CALIFORNIA<br />
Notes to Basic <strong>Financial</strong> Statements, Continued<br />
For the fiscal year ended June 30, 2009<br />
(4) POLLUTION REMEDIATION<br />
On December 1, 2006 the <strong>City</strong> entered into a settlement agreement with a consortium <strong>of</strong> oil companies<br />
in relation to methyl tertiary butyl ether (“MTBE”) contamination that had occurred at the <strong>City</strong>’s<br />
Charnock Well Field. The agreement called for the oil companies to pay the <strong>City</strong> $131.0 million in<br />
exchange for the obligation by the <strong>City</strong> to treat any water which does not meet applicable standards for<br />
MTBE, tertiary butyl alcohol (“TBA”) and related petroleum hydrocarbons promulgated by the<br />
California Department <strong>of</strong> Health Services.<br />
To meet this treatment obligation the <strong>City</strong> is constructing a remediation plant to filter the water using<br />
the proceeds <strong>of</strong> the settlement.<br />
The <strong>City</strong> measured the liability by the cost <strong>of</strong> construction/remediation contracts which include a<br />
contingency <strong>of</strong> 10% for unforeseen costs and therefore the <strong>City</strong>’s expected outlays are $85,481,000<br />
which is the present value <strong>of</strong> the cost <strong>of</strong> the contracts plus the cost <strong>of</strong> the plant operations.<br />
The pollution remediation expenditures have no future value once the remediation is complete; therefore<br />
the <strong>City</strong> has recorded these amounts as remediation liability and expense.<br />
Because the MTBE remediation is fully funded by a settlement whose proceeds have already been<br />
received, $85,481,000 has been recognized as income during the year.<br />
Additionally, the <strong>City</strong> engages in an ongoing program <strong>of</strong> pollution remediation related to its various<br />
properties. Two such sites are currently undergoing remediation in the form <strong>of</strong> either soil or vaporous<br />
contaminant removal or containment. By State law these occurrences are required to be reported to<br />
California Department <strong>of</strong> Health Services.<br />
As <strong>of</strong> June 30, 2009, total remediation expenses <strong>of</strong> $92,315,000 have been recorded in the Statement <strong>of</strong><br />
Activities and as a component <strong>of</strong> accrued liabilities on the Statement <strong>of</strong> Net Assets.<br />
(5) CASH AND INVESTMENTS<br />
Cash and investments as <strong>of</strong> June 30, 2009 are classified in the accompanying financial statements as<br />
follows:<br />
Statement <strong>of</strong> net assets:<br />
Cash and investments $ 598,738,328<br />
Restricted cash and investments 17,523,919<br />
Restricted cash with fiscal agent 27,484,796<br />
Fiduciary funds:<br />
Restricted cash and investments 3,896,199<br />
Total cash and investments $ 647,643,242<br />
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