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CITY OF PLEASANTON
<br />
<br />NOTES TO BASIC FINANCIAL STATEMENTS
<br />FOR THE YEAR ENDED JUNE 30, 2022
<br />
<br />
<br />Note 6: Long-Term Liabilities (Continued)
<br />
<br />e. Arbitrage and Debt Covenant Compliance
<br />
<br />The Tax Reform Act of 1986 instituted certain arbitrage restrictions with respect to the
<br />issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations pertain to
<br />the investment of tax-exempt bond proceeds at an interest yield greater than the interest
<br />yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively
<br />rendered taxable if applicable rebates are not reported and paid to the U.S. Treasury at
<br />least every five years. The City has evaluated each bond issued subject to the arbitrage
<br />rebate requirements and has determined that no arbitrage liability exists at June 30, 2022.
<br />
<br />As of June 30, 2022, the City was in compliance with all bond covenants as they pertain
<br />to reserve and sinking fund requirements.
<br />
<br />Note 7: Leases Receivable
<br />
<br />For the year ended June 30, 2022, the financial statements include the adoption of
<br />GASB Statement No. 87, Leases. The primary objective of this statement is to enhance the
<br />relevance and consistency of information about governments' leasing activities. This statement
<br />establishes a single model for lease accounting based on the principle that leases are financings
<br />of the right to use an underlying asset. Under this Statement, a lessee is required to recognize
<br />a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize
<br />a lease receivable and a deferred inflow of resources. For additional information, refer to the
<br />disclosures below.
<br />
<br />Effective July 1, 2021, the City implemented GASB 87 impacting the leases with Case Avenue
<br />Associates for land, and cell towers with T-Mobile, Verizon Wireless, and AT&T. Upon
<br />implementation, the leases had 384, 89, 132, and 30 months remaining, respectively. An initial
<br />lease receivable was recorded in the amount of $6,855,601, $206,373, $267,363, and $73,076,
<br />respectively. The City recognized $279,246 of lease revenue in total during the year and has a
<br />balance in lease receivable of $7,123,167 at June 30, 2022. As of the date thereon, the City
<br />had a balance of $34,328 of short-term lease receivable that is not subject to GASB 87
<br />implementation.
<br />
<br />Year ending
<br />June 30, Principal Interest
<br />2023 282,611$ 19,342$
<br />2024 315,350 18,314
<br />2025 259,048 16,286
<br />2026 263,231 14,950
<br />2027 265,402 13,566
<br />Thereafter 5,737,525 130,169
<br />Total 7,123,167$ 212,627$
<br />Principal and Interest Expected to Maturity
<br />Governmental Activities
<br />
<br />85
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