HomeMy WebLinkAbout17 - Financial Statement Audit Results for FY 2019-20 and Related CommunicationQ SEW Pp�T
CITY OF
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== z NEWPORT BEACH
<,FORN'P City Council Staff Report
March 23, 2021
Agenda Item No. 17
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Scott Catlett, Finance Director/Treasurer - 949-644-3123,
scatlett@newportbeachca.gov
PREPARED BY: Scott Catlett, Finance Director/Treasurer,
scatlett@newportbeachca.gov
TITLE: Financial Statement Audit Results for FY 2019-20 and Related
Communication
ABSTRACT:
The City of Newport Beach (City) is audited annually by an independent auditing firm,
presently Clifton LarsonAllen LLP. The audit process takes several months, beginning
after the finance system year-end close (typically in September) and concluding several
months later once the financial statements have been prepared. On March 11, 2021, the
Finance Committee met with representatives of Clifton LarsonAllen LLP and reviewed the
results of the audit in detail. The City's financial statements for the fiscal year ended
June 30, 2020, are available online, as detailed in Attachment A to this report. Also
attached are the auditors' required communications with the Finance Committee in their
capacity as the City's Audit Committee and the auditors' Report on "Internal Control Over
Financial Reporting and on Compliance and Other Matters." These reports are being
placed on the City Council agenda for the first time this year to enhance transparency
related to the City's financial information.
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
and
b) Receive and file.
DISCUSSION:
The City is audited annually by an independent auditing firm, presently Clifton LarsonAllen
LLP. The Finance Committee met with representatives of CliftonLarsonAllen LLP on
March 11 and reviewed the results of the audit in detail.
17-1
Financial Statement Audit Results for FY 2019-20 and Related Communication
March 23, 2021
Page 2
The auditors' opinion letter can be found within the financial statements (link provided in
Attachment A). The letter reflects an unmodified or "clean" audit opinion, meaning that
the financial statements are presented fairly, in all material respects, and in conformity
with generally accepted accounting principles.
The letter included as Attachment B is intended to communicate to the Finance
Committee and the City Council matters of particular significance as required by auditing
standards. These include:
• Qualitative Aspects of Accounting Practices
• Difficulties Encountered in Performing the Audit
• Corrected and Uncorrected Misstatements
• Disagreements with Management
• Management Representations
• Management Consultations with Other Independent Accountants
• Other Audit Findings or Issues
The auditors reported no significant difficulties encountered in connection with the
performance of the audit, no material corrected and uncorrected misstatements, no
disagreements with management, and no other audit findings or issues.
The report included as Attachment C is intended to communicate information regarding
deficiencies in internal control, instances of non-compliance, and other related matters as
required by auditing standards. The auditors did not identify any deficiencies in internal
control that would need to be communicated to the Finance Committee, nor did they
identify any instances of noncompliance or other matters to report.
The Single Audit, a compliance audit of federally assisted grant programs, is still ongoing.
While no audit findings are anticipated as a result of the Single Audit, staff will
communicate any findings, should they occur, to the Finance Committee at a future
meeting.
FISCAL IMPACT:
There is no fiscal impact related to this item.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
17-2
Financial Statement Audit Results for FY 2019-20 and Related Communication
March 23, 2021
Page 3
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Comarehensive Annual Financial Report for the Fiscal Year Ended
June 30, 2020
Attachment B —Auditor's Required Communications with the Audit Committee
Attachment C —Auditor's Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters
17-3
ATTACHMENT A
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED
JUNE 30, 2020
Please note that the Annual Report document is available for viewing
electronically at:
https://www.newportbeachca.gov/government/departments/finance/comprehensive-annual-financial-reports
The Annual Report document is also available for viewing in person at the City
Clerk's Office and at the Central Library.
17-4
a
CITY OF
NEWPORT BEACH
COMPREHENSIVE ANNUA
FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2020
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2020
Prepared by the Finance Department
Scott Catlett, Finance Director/Treasurer
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LJ
7v -.W PO\
The City of Newport Beach was incorporated September 1, 1906
The present City Seal was adopted July 22,1957
61
11
1�
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CITY OF NEWPORT BEACH
Comprehensive Annual Financial Report
Year Ended June 30, 2020
TABLE OF CONTENTS
INTRODUCTORY SECTION
(Unaudited)
Tableof Contents.......................................................................................................................1
Letterof Transmittal................................................................................................................... 5
GFOA Certificate of Achievement for Excellence in Financial Reporting ................................ 19
Listof City Officials..................................................................................................................20
OrganizationChart...................................................................................................................21
FINANCIAL SECTION
Independent Auditors' Report............................................................................................
25
Management's Discussion and Analysis..........................................................................31
(Required Supplementary Information)
Basic Financial Statements
Government -wide Financial Statements:
Statement of Net Position...............................................................................................
53
Statementof Activities.....................................................................................................
54
Fund Financial Statements:
Governmental Funds:
BalanceSheet..............................................................................................................60
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Position.......................................................................................
63
Statement of Revenues, Expenditures and Changes in Fund Balances ......................
64
Reconciliation of Statement of Revenues, Expenditures and Changes
in Fund Balances of Governmental Funds to the Statement of Activities ..............
67
Budgetary Comparison Statements:
GeneralFund.........................................................................................................68
Tide and Submerged Land — Operating Fund ........................................................
70
Tide and Submerged Land — Harbor Capital Fund ................................................
71
MeasureM Fund....................................................................................................72
Proprietary Funds:
Statementof Net Position.............................................................................................
76
Statement of Revenues, Expenses and Changes in Net Position ...............................
77
Statement of Cash Flows.............................................................................................
78
Fiduciary Funds:
Statement of Fiduciary Assets and Liabilities — Agency Funds ....................................
82
Notes to the Financial Statements.....................................................................................
85
i
Required Supplementary Information
Defined Benefit Plan For Miscellaneous Employees:
Schedule of Changes in the Net Pension Liability and Related Ratios .........................150
Schedule of Contributions.............................................................................................151
Defined Benefit Plan For Safety Employees:
Schedule of Changes in the Net Pension Liability and Related Ratios .........................152
Schedule of Contributions.............................................................................................153
Post -Employment Health Care Benefits (OPEB):
Schedule of Changes in the Net OPEB Liability and Related Ratios ............................154
Schedule of Contributions.............................................................................................155
Supplementary Schedules
Other Governmental Funds:
Combining Balance Sheet.............................................................................................162
204
Combining Statement of Revenues, Expenditures and Changes in
FundBalances..............................................................................................................170
Budgetary Comparison Schedules:
Revenue Capacity:
StateGas Tax Fund......................................................................................................178
Assessed Value and Estimated Actual Value of Taxable Property ..................................... 213
SB1 Gas Tax RMRA Fund............................................................................................179
AssetForfeiture Fund...................................................................................................180
OTS DUI Grant Fund....................................................................................................181
Circulation and Transportation Fund.............................................................................182
Building Excise Tax Fund..............................................................................................183
Community Development Block Grant Fund.................................................................184
Air Quality Management District Fund..........................................................................185
Environmental Liability Fund.........................................................................................186
Supplemental Law Enforcement Fund..........................................................................187
ContributionsFund.......................................................................................
188
FIINFund.....................................................................................................189
CARES Small Business Grant Fund.................................................................190
Internal Service Funds:
Combining Statement of Net Position...........................................................................194
Combining Statement of Revenues, Expenses and Changes in Net Position ..............195
Combining Statement of Cash Flows............................................................................196
Fiduciary Funds:
Combining Statement of Fiduciary Assets and Liabilities..............................................199
Statement of Changes in Fiduciary Assets and Liabilities ............................................
200
STATISTICAL SECTION (Unaudited)
Financial Trends:
Net Position by Component................................................................................................
204
Changesin Net Position......................................................................................................206
Fund Balances of Governmental Funds..............................................................................208
Changes in Fund Balance of Governmental Funds............................................................ 210
Revenue Capacity:
Assessed Value and Estimated Actual Value of Taxable Property ..................................... 213
Property Tax Rates, Direct and Overlapping Governments................................................214
Principal Property Taxpayers..............................................................................................215
2
Property Tax Levies & Collections...................................................................................... 216
Debt Capacity:
Ratios of Outstanding Debt by Type...................................................................................218
Ratios of General Bonded Debt..........................................................................................
220
Schedule of Direct and Overlapping Debt...........................................................................221
Computation of Legal Debt Margin.....................................................................................222
Demographic and Economic Information:
Demographic and Economic Statistics................................................................................225
PrincipalEmployers............................................................................................................226
Operating Information:
Full -Time City Employees by Function................................................................................229
Operating Indicators by Function........................................................................................230
Capital Asset Statistics by Function....................................................................................
232
Water Sold by Customer Type............................................................................................
234
UtilityRates.........................................................................................................................235
Major Water Customers......................................................................................................
236
1
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1 EDW PO
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January 27, 2021
Honorable Mayor, Members of the City Council,
and Residents of the City of Newport Beach, California
CITY OF NEWPORT BEACH
100 Civic Center Drive
Newport Beach, California 92660
949 644-3127 1 949 644-3339 FAX
newportbeachca.gov/finance
The City Charter and California state law require that the City of Newport Beach ("City")
issue a complete set of financial statements annually and that an independent firm of
certified public accountants audit this report in conformance with generally accepted
auditing standards (GAAS). The Comprehensive Annual Financial Report (CAFR) of the
City of Newport Beach for the year ended June 30, 2020, is hereby submitted.
The CAFR was prepared in conformance with generally accepted accounting principles
(GAAP) as promulgated by the Governmental Accounting Standards Board (GASB). This
report consists of City management's representations concerning the finances of the City
of Newport Beach. Responsibility for the accuracy and completeness of the data
presented rests with the City. Management of the City is also responsible for establishing
and maintaining an internal control structure designed to ensure that the assets of the
government are protected from loss, theft, or misuse, and to ensure that adequate
accounting data is compiled to allow for the preparation of financial statements in
conformity with generally accepted accounting principles. The internal control structure
is designed to provide reasonable, but not absolute, assurance that these objectives are
met. The concept of reasonable assurance recognizes that: (1) the cost of a control
should not exceed the benefits likely to be derived; and (2) the valuation of costs and
benefits requires estimates and judgments by management. We believe the information
presented in this report is complete and accurate in all material respects, and that it is
reported in a manner designed to fairly present the financial position and results of
operations of the various activities of the City of Newport Beach.
The City of Newport Beach's financial statements have been audited by
CliftonLarsonAllen LLP, a firm of licensed certified public accountants. The goal of the
audit was to provide reasonable assurance that the financial statements of the City of
Newport Beach for the fiscal year (FY) ended June 30, 2020 are free of material
misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and
evaluating the overall financial statement presentation. The independent auditor
concluded, based on the audit, that there was a reasonable basis for rendering an
unmodified opinion that the City of Newport Beach's financial statements for the year
ended June 30, 2020 are fairly presented in conformity with GAAP. The independent
auditor's report is presented as the first component of the financial section of this report.
A narrative introduction, overview, and analysis accompany the basic financial statements
in the form of the Management's Discussion and Analysis (MD&A). The letter of
transmittal is designed to complement the MD&A and should be read in conjunction with
it. The City of Newport Beach MD&A can be found immediately following the report of
the independent auditors and will provide further information regarding the format and
content of this report.
PROFILE OF THE CITY
Newport Beach is a community located in the coastal center of Orange County, in the
heart of Southern California, with Los Angeles County to the north and San Diego County
to the south. There are currently 34 cities within the county. In terms of population,
Orange County is the third largest county in California trailing Los Angeles and San Diego.
It is the sixth largest county in the nation.
The general vicinity of Newport Beach and the County of Orange relative to the counties
of Los Angeles, San Bernardino, Riverside, and San Diego is illustrated on the map
below:
Cos
Angeles
County Son
Bernardino
County
IV v ®
® Riverside
Orange County
county
NEWPORT
BEACH
IV
v
Son
Diego
County
Newport Beach surrounds Newport Bay, well known for its picturesque islands and one
of the greatest recreational harbors in the world, accommodating about 4,300 recreational
and sports charter boats docked within its 21 -square -mile harbor. The bay and the ten
miles of ocean beach offer outstanding fishing, swimming, surfing, and aquatic sports
activities. The city has a permanent population of 85,780, which typically grows to well
over 100,000 during the summer months, including 20,000 to 100,000 or more tourists
daily. There are fine residential areas, modern shopping facilities, and a quality school
system. The University of California, Irvine, is located immediately adjacent to the city,
and several other colleges are within a 30 -mile -radius.
The following map illustrates the communities within Newport Beach; the upper bay, the
recreational harbor, and beachfront topography; and the city's location relative to the
bordering cities of Costa Mesa to the north, Irvine to the east, and Laguna Beach to the
south.
� r
' 1 Airport Area
Costa Mesa
\�
<
Irvine
�
Eastbluff-
r. '��.r•
�
Mariners
/ WestNewpori
�•
ti
Harbor View
Fashion bland
Udo Isle
1
City Hall Spyglass
Newport Pier
Balboa island
Balboa Pier
� New ort Coast
Corona.0elMar p
The Wedge
Crystal Cove
Crystal Cove
Sate Park
---��
Laguna Beach
Newport Beach was incorporated September 1, 1906. The City Charter was originally
adopted in 1954 but has been updated and amended over time. The City operates under
a Council -Manager form of government. Council Members are elected by district but
voted on by the population as a whole, and serve four-year staggered terms. The
governing council consists of the Mayor and six other members and is responsible for,
among other things, policy-making, passing local ordinances, adopting the budget,
appointing committees, and hiring the City Manager, City Attorney, and City Clerk. The
City Manager is responsible for carrying out the policies and ordinances of the City
Council, for overseeing the day-to-day operations of the City, and for appointing heads of
departments.
The City of Newport Beach is a full service city providing its residents and visitors with the
following functional services: general governance, legal, financial, information
technology, and administrative management; police, fire, paramedic, lifeguard, and
emergency medical transport services; engineering, construction, and maintenance of
public facilities, public streets, beaches, and parks; planning, zoning, and economic
development services; building inspection, plan check and code enforcement services;
libraries and cultural and arts services; recreation and senior services; and water,
wastewater, and street light utility services. The City provides water and wastewater
service to most areas within city limits, but it does not provide gas, cable television,
electrical, or other utility services. Public elementary and secondary education is provided
by the Newport -Mesa Unified School District and the Laguna Beach Unified School
District.
Component Unit: The City's financial statements present the financial activity of the City
of Newport Beach (the primary government) and the Newport Beach Public Facilities
Corporation (a component unit of the City). The Corporation is blended into the City's
financial statements because of its operational and financial relationship with the City.
Even though it is a legally separate organization, City of Newport Beach elected officials
are accountable for fiscal matters of the Corporation. Additional information about the
Newport Beach Public Facilities Corporation and the reporting entity in general can be
found in Note (1a) of the notes to the financial statements.
DEMOGRAPHICS
Reflective of a mature community, vacant land has become increasingly scarce and the
city is relatively built -out. Currently at 85,780, the population has been very stable as
indicated by the following chart.
I x0,000
90,000
80,000
70.000
6C),000
50.000
40.000
30,004
20,000
10,000
0
Population
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Fiscal Year
8
The effective buying income and median household income are generally higher in
Newport Beach than in other areas of the State and the U.S. overall. As illustrated by the
table below, Newport Beach median household income is nearly twice that of the U.S.
median household income.
City of Newport Beach $128,294
Orange County 95,934
California 80,444
USA 65,712
The leading industries here are professional, scientific, health care, finance, insurance,
legal, and travel/tourism. Unemployment in the city stands at 5.6% due to the economic
impacts associated with the COVID-19 but is significantly lower when compared to the
state and the county as illustrated on the following chart.
Historical Unemployment Rates
I4.0° a (Rates ary n*, fmsveallY a j �stedf
�Zrnport Beach
1101/6
-0x9n7 Cauun'
10.0%-califonna
—
2011 2012 7013 2013 2015 2016 2017 2018 2019 20200
Calendar Year . throuo No ber 20, 2020
More detailed information concerning the city's demographics and statistics are contained
within the Statistical Section of this report.
LOCAL ECONOMY
The City of Newport Beach's General Fund revenue sources have been adversely
impacted by the health-related and economic impacts of the COVID-19 pandemic. Efforts
to respond to and mitigate the spread of COVID-19 have had a severe impact on the
State and local economy and triggered a recession. There have been many fiscal
challenges attributed to the global COVID-19 pandemic, including a projected gross
domestic product decline, historic increases in unemployment claims in the region, travel
restrictions and a decline in consumer spending resulting from closures of non-essential
goods and services. The COVID-19 pandemic and the efforts to mitigate its spread has
resulted in significant declines in City revenues from recent levels. Additionally,
uncertainty exists with inflation, and state, local, federal and international policies that
may result in further declines in the future. The temporary closures caused by COVID-
19 have led to a stark increase in unemployment across the County and the nation.
Depending on the length and the breadth of the impacts of COVID-19, the economic costs
may be very significant for the City and the region's economy. As more restaurants, retail
stores and other non-essential businesses temporarily or permanently close,
unemployment figures could continue to remain elevated. According to the State
Employment Development Department, the unemployment rate of the City, County and
State in September 2020 was 5.6%, 7.5% and 9.0%, respectively.
TOP THREE REVENUE SOURCES
The swift reaction by consumers and businesses to the outbreak of COVID-19 in Newport
Beach caused a massive decrease in spending on certain goods and services. The
national and state response combined with the uncertainty of how long the presence of
the virus would disrupt the U.S. economy made forecasting revenues particularly
challenging. The City's revised FY 2019-20 revenue forecast and associated budget
amendment was presented to, and approved by, the City Council on April 28th, 2020.
General Fund revenues were reduced by $13 million and provisions were made to realize
at least $13 million in expenditure savings for the remainder of the fiscal year as a "bridge"
solution to narrow the revenue shortfall chasm. The actual revenue results ended up
being much better than anticipated. General fund revenues ended FY 2019-20 at $229.9
million and were, $10.8 million or 5%, higher than the projected budget in almost all
categories. The top three individual revenue sources, Property Taxes, Sales Taxes and
Sales Tax in Lieu, and Transient Occupancy Taxes (TOT), represent 74 percent of all
General Fund revenues. Tax revenues in total, including business licenses, franchise
fees, and other taxes represent nearly 80 percent of all General Fund revenues while only
21 percent was generated by other revenue sources.
General Fund Revenues
■ Property Taxes
■ Sales Taxes
1
TranslentOccupancy Taxes
Other Taxes
9%
■ All Other Sources
Property Taxes
Unlike many cities, property taxes, not sales taxes, are the number one source of revenue
for the City of Newport Beach, representing almost half (49 percent) of all General Fund
revenues. FY 2019-20 revenue was 0.5% higher than projected. Property tax revenue
10
estimates were decreased for FY 2019-20 in anticipation of economic hardship due to the
pandemic and the Governor's Executive Order (N-61-20) suspending penalties and
interest of property taxes. Secured property tax revenue, which makes up almost 85% of
all property tax revenue, ended up coming in stronger than expected. Property taxes are
likely to remain among the least affected revenue sources by the pandemic (at least in
the short term). Due to the limited supply of scenic coastal property and the unique
access to the Newport Bay, the Newport Beach community has been developed into
affluent residential neighborhoods and high-end commercial districts. Consistent and
vigorous demand for coastal property has allowed the City to enjoy long-term growth
trends with its number one revenue source. Value changes in Newport Beach show
continued appreciation in property values in FY 2019-20. Over the past 10 years,
assessed valuation increased an average of 4.7 percent per annum and 6.8 percent over
a twenty-year period. Newport Beach's assessed property values increased 5.3 percent
and with a local assessed value at $60.7 billion for FY 2019-20.
After Californians passed Proposition 13 in 1978, assessed property value is reassessed
to market value only when the property changes ownership. Otherwise, the assessed
value (AV) grows by no more than 2 percent per year. This practice creates a constant
lag and buffer between assessed and market values, effectively insulating the tax base
from more market volatility.
While property tax growth rates fell sharply during the Great Recession, the City has
experienced positive AV growth during each of the past 20 years (see chart below with
the past 15 years of AV growth demonstrated). This positive growth occurred while many
other cities experienced decreases in their AV during 2008 through 2011. Note that while
growth slowed, the assessed value never declined throughout the recession.
S70.000,00o,wo
sw.000,wo,aw
5W.Ow-Wo.WU
$".000.000.000
MOMMOAM
510.000.OMODo
S_
Total Assessed Property Value Growth
$ 8 S a a
n n n H ry n
r
o a a o 0 0 0
Estimated average single-family home values of $2,900,000 in Newport Beach far exceed
the countywide average value of $922,000.
0
0
0
0
0
on
0
ONO
on
NEI
0
0
1
$ 8 S a a
n n n H ry n
r
o a a o 0 0 0
Estimated average single-family home values of $2,900,000 in Newport Beach far exceed
the countywide average value of $922,000.
CITY
Single
OF
Family
NEWPORT
-Values*
Home
%
Year
Value
Change
2011
$
1,570,000
-5.11%
2012
$
1,620,000
3.18%
2013
$
2,140,000
32.10%
2014
$
2,230,000
4.21%
2015
$
2,350,000
5.38%
2016
$
2,440,000
3.83%
2017
$
2,560,000
4.92%
2018
$
2,760,000
7.81%
2019
$
2,840,000
2.90%
2020
$
2,900,000
2.11%
* Source: Zillow
Sales Taxes
The second largest funding source for the General Fund is sales tax revenue which
finished the year $1.8 million higher than projected. The City's sales tax base is largely
generated from three main industry categories including Autos and Transportation,
General Consumer Goods, and Restaurants/Hotels. These industries are also heavily
impacted by tourism. At the onset of the pandemic when businesses were shut down,
sales tax revenue potential appeared drastically diminished. The projections for the year
held the ongoing assumption that the restrictions in place in April 2020 would remain for
the rest of the Fiscal Year. Sales tax revenues were higher than anticipated because
businesses pivoted in creative ways to reach their customers, they were able to open at
some capacity sooner than expected, and consumer spending was relatively strong.
Online car sales increased and sales at local dealerships picked up in May and June.
RVs and boat sales became more popular as families could not travel internationally.
Online sales increased dramatically as the City's county pool allocation for 2Q2020 went
up 40% (from $1.1 million to $1.6 million) and there appeared to be in an uptick in sales
related to home improvement projects. For these reasons all three main industry
categories performed better than expected. Although FY 2019-20 wasn't as bad as
budgeted, due to the severe impacts on economic activity we saw across all industry
categories, sales taxes receipts were $2.3 million less than the prior year.
The City's sales tax base is generated from a relatively diverse business community and
is not dependent on any one merchant or industry. The following chart demonstrates the
diversity of the City sales tax revenue. The largest segment, "Transportation," accounts
for 40 percent of total sales taxes. The next largest segments, "Food Products" and
"General Retail," account for 22 and 16 percent of total sales taxes, respectively. The
next largest sales tax segment, "Business to Business" accounts for 21 percent of total
sales. Sales Taxes in total represent 16 percent of all General Fund revenues.
I
Sales Tax by Business Segment
1676 = —
21%
■Genera! Retail
■ Food Products
1%
■ Transportation
22% ■ Construction
■ Business to business
40%
Transient Occupancy Taxes (TOT)
TOT accrues to the City at a rate of 10 percent of room charges with 18 percent of this
collection going to the local destination marketing organization (Newport Beach & Co.) to
promote Newport Beach as a tourist destination. The City distinguishes its transient
occupancy taxpayers in two broad property type categories, commercial and residential
property. The commercial category is composed of approximately 20 inns, motels, hotels,
and resorts and accounts for 80 percent of TOT revenues. The residential category is
made up of approximately 1,500 vacation rentals representing 20 percent of TOT
revenue; together, they accounted for $20.8 million in TOT revenue during FY 2019-20-
a 15.6% decrease from the prior year.
Transient occupancy tax (TOT) revenue was the most severely impacted revenue source
as most major hotels within the City were temporarily closed at the end of March 2020
and many didn't start reopening until late May or early June. Also, short term rentals were
not allowed in the City from early April 2020 until May 20, 2020 which further dampened
tax revenues. Revenue projections for FY 2019-20 were calculated with the expectation
that hotels and short-term lodging would remain at severely reduced capacity through the
end of the fiscal year. Because hotels started opening sooner than anticipated, FY 2019-
20 transient occupancy tax receipts were $1.8 million, or 9%, higher than projected. Even
though TOT ended higher than projected, FY 2019-20 revenue was $3.8 million less than
the prior year. Additionally, not all hotels closed during the pandemic. Some of the larger
hotels that remained opened included Pelican Hill, Newport Dunes, Lido House and
Balboa Bay Club. Smaller hotels that remained open include the Balboa Inn, Little Inn by
the Bay, Bay Shores Peninsula Hotel and Extended Stay. The Fashion Island Hotel
closed but moved remaining guests to Pelican Hill. The Marriott kept two of their five
hotels open during the pandemic and some shuttered hotels reopened around Memorial
Day. At the start of the pandemic, some visitors extended their stay due to the uncertain
conditions of their home state. And once restrictions began to lift, the City saw an influx
of regional hotel visitors from Los Angeles, San Diego and Palm Desert. The Newport
Dunes experienced an increase in camping and RVs that further increased the City's tax
revenue.
13
LONG TERM FINANCIAL PLANNING
The City continues to be in excellent financial health during the global pandemic due to
its strong underlying tax base, disciplined fiscal decisions, and governance. Conservative
budgeting and sound financial policies have resulted in a trend of General Fund operating
surpluses and strong reserve levels for several years. This is still no less the case even
amid the significant economic downturn the City is currently experiencing. Conservative
budgeting practices coupled with better than expected consumer demand have resulted
in higher revenues and lower expenditures than budgeted in FY 2019-20.
The City's long-term financial planning is guided by its strong financial policies, prudent
budgeting decisions, and proactive planning in such critical areas as facilities replacement
and pensions.
Financial Policies
The City Council has adopted prudent fiscal policies concerning its investments, reserves,
budget administration, revenue initiatives, competitive contracting, facility replacement
planning, and more. The budget surplus utilization policy directs the use of surplus funds
resulting from unrestricted General Fund annual revenues exceeding total actual
expenditures, encumbrances, and commitments for that year. Roughly fifty percent of the
budget surplus is typically used to address long-term obligations such as pension
liabilities, other post -employment benefits, bonded debt, lease obligations, and other
long-term needs. The remaining surplus is typically used to address one-time
infrastructure or neighborhood capital improvements, guided by a philosophy that these
expenditures improve the community's safety, aesthetics, transportation, or quality of life.
The City's debt policy establishes criteria for the issuance of debt and assures that the
amount of any debt is affordable and cost effective. The City's debt policy was recognized
by the California Debt and Investment Advisory Commission as one of only 14 counties
and cities in California whose policies have 20 or more debt management best practice
elements. The City's debt and other financial policies can be found on the City's website
in the City Council section under City Government at:
www.newportbeachca.gov/policies
14
Annual Budget
The annual budget serves as the foundation for the City of Newport Beach's financial
planning and control and allows the City Council to prioritize City expenditures so that
they are aligned with core community values. The City of Newport Beach, along with
other local jurisdictions, states, and the federal government faced an exceptionally
challenging economic environment as a result of the COVID-19 Pandemic. The stock
market plunge, massive unemployment increases, and eroding consumer confidence
from this unprecedented halt in economic activity resulted in deteriorating revenue
streams. As previously mentioned, actual revenue results ended up much better than
anticipated and actual expenditures ended the year lower than budgeted due to the
careful management of operating expenditures (hiring freeze and the curtailment of other
expenditures) and budget adjustments during the last quarter of the fiscal year. The City's
revised FY 2019-20 revenue forecast and associated budget amendment was presented
to, and approved by, the City Council on April 28, 2020. General Fund revenues were
reduced by $13 million and provisions were made to realize at least $13 million in
expenditure savings for the remainder of the fiscal year as a "bridge" solution to narrow
the revenue shortfall chasm.
Per current policy, appropriations for operating expenditures are balanced in relation to
current revenue sources and do not over -rely on one-time revenue sources or reserves.
When significant uncertainty exists concerning revenue volatility or threatening/pending
obligations, the City Council and City Manager reserve the right to impose any special
fiscal control measures, including personnel hiring freezes, and other spending controls,
as was the case in FY 2019-20 and in the development of the FY 2020-21 budget.
Through a combination of early retirement plans, attrition, outsourcing, and lay-offs over
the last ten years, the full-time work force has been reduced 4.6 percent since FY 2011-
12 as depicted in the chart below:
Full Time Positions Trend
763
752
tG 736
.N
O
a 730 728 734 725 72b 727 728
6 724
7213
710
7OMO
2012 2073 2014 2415 2016 2017 2018 2014 2024 2421
Fiscal Year
The City has traditionally taken a conservative approach to forecasting revenues, often
assuming only modest growth. This fiscal conservatism has created a stable financial
base. As a result, even in a downturn, the City of Newport Beach is able to maintain its
15
services at a high level, while reducing expenses to accommodate reduced revenues.
The City's fiscal discipline has allowed it to prepare balanced budgets and to save, both
during prosperous and difficult economic periods. As the economy continues to improve,
these trends are likely to hold; however, a great deal is unknown as the global pandemic
continues.
The City Council may authorize the use of Contingency reserves during emergency
situations as set forth by the Council Reserve Policy. Current policy requires that the
Contingency Reserve equal 25 percent of the General Fund annual "Operating Budget."
Credit rating agencies consider a high level of available "fund balance" to be a credit
strength. In 2020, Moody's rating agency reaffirmed the City's AAA credit rating noting
the City's extensive tax base, a very strong wealth and income profile, and a robust
financial position. It also noted the City's moderate debt burden and an elevated pension
burden in its rationale.
Facilities Financial Plan (FFP) Commitment & Major Construction Initiatives
The City's FFP is a comprehensive master facilities replacement schedule that projects
the timing of construction of facility projects; projects the schedule of any planned debt
issuance; includes all relevant revenue sources and expenditures on a yearly, project -by -
project basis; and determines the long-term "level funding" annual budget commitment
that is required to support the program. The FFP was the winner of the prestigious "Helen
Putnam Award — Internal Administration category" from the League of California Cities in
2008.
The City continued its financial commitment to the Facilities Financial Plan Reserve
(FFPR) in FY 2019-20 by allocating resources to debt service, fire stations, parks and
community centers, and other projects.
Facilities Financial Planning Reserve
Fund
Beginning Balance 7/1/19
$ 14,297,412
Sources
Licenses, Permits and Fees
208,822
Property Income
258,425
Transfer In from General Fund
9,915,459
1 nvestment Income
357,822
Net increase in fair value of investments
305,897
Total Sources
11,046,425
Uses
2010 Civic Center COPS Debt Service
(8,086,599)
Strategic Plan
(109,199)
Junior Guard
(50,000)
Parks and Community Centers
(7,515)
Misc - Other Facilities
(43,685)
Total Uses
(8,296,998)
Ending Balance 6/30/20
$ 17,046,839
The transfer is net of the Build America Bonds subsidy, which is
recorded in the Debt Service Fund
0
Overall, the FFPR balance is increasing by $2.7 million from the prior fiscal year.
Pensions
As of the actuarial valuation date of June 30, 2019, the City had an Unfunded Accrued
Liability (UAL) of $326 million. The City has taken a number of actions in recent years to
mitigate the impact of rising pension costs including:
• Established lower benefit formulas for new hires.
• Eliminated the Employer Paid Member Contribution (EPMC).
• Employees contributed 62 percent of the Normal Cost of the plan, approaching
$10.6 million annually.
• Reduced the number of full-time staff by 100 Full Time Equivalent (FTE) positions
between 2009 and today.
• Adopted a fixed and shorter amortization period of the unfunded liability.
• Making Additional Discretionary Payments (ADP)
• Contributing no less than Actuarial Determined Contribution (ADC) each & every
year.
• Analyzed our schedule of amortization bases annually in an effort to avoid negative
amortization.
• Amortized all gains/losses no longer than a 20 -year closed period.
• Avoided asset smoothing or "rate phase-in" schedules if possible. Otherwise, the
City's goal is to not exceed 5 years for any one smoothing cycle.
• Established a General Fund Surplus Utilization Policy F-5 to set aside one-half of
any annual budget surplus to fund debts such as the pension liability.
• Maintaining a contingency reserve to protect against economic recessions and to
avoid negative impacts of asset smoothing and rate phased -in schedules.
Local governments with pensions have a total pension liability, which is the obligation to
pay deferred pension benefits in the future. When the total pension liability is greater than
the pension plan's assets there is a net pension liability, also known as unfunded pension
liability. As required by GASB 68, the City reports the net pension liability in the
government wide financial statements, as well as in the proprietary fund statements, in
the CAFR — see Note (10) of Notes to the Financial Statements.
The City implemented GASB 75 in FY2017-18, which requires local governments offering
other post -employment health care benefits (OPEB) to report net OPEB liability in the
government wide financial statements, as well as in the proprietary fund statements, in
the CAFR — see Note (11) in the Notes to the Financial Statements. When the total OPEB
liability is greater than the OPEB plan's assets there is a net OPEB liability, also known
as unfunded OPEB liability.
As with past practice, the City will continue to fund our pension and OPEB obligations at
an amount equal to or greater than the minimum employer contribution rate. The City has
not and will never intentionally short -fund its pension and OPEB obligations. Annually the
17
City evaluates the cost and benefits of paying down the unfunded pension and OPEB
liabilities on a faster schedule.
AWARDS AND ACKNOWLEDGMENTS
The City has prepared a comprehensive annual financial report for the past 27 years.
The City has received awards for excellence in financial reporting each of those years.
The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of
Newport Beach for its comprehensive annual financial report for the fiscal year ended
June 30, 2019. In order to be awarded a Certificate of Achievement, a government unit
must publish an easily readable and efficiently organized comprehensive annual financial
report. This report must satisfy both generally accepted accounting principles and
applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current
comprehensive annual financial report continues to conform to the Certificate of
Achievement program requirements and we are submitting it to GFOA to determine its
eligibility for another certificate.
Acknowledgments: Preparation of this report was accomplished through the efficient and
dedicated services of everyone in the City's Financial Reporting Division. In addition,
members of the Finance Department would like to thank the City Manager, and the Mayor,
and the City Council for their interest and support in planning and conducting the financial
operations of the City in a responsible and progressive manner. We would also like to
thank our auditors, CliftonLarsonAllen LLP, for their time and assistance in the
preparation of the report. This report was completely prepared and published by City
employees.
Grace K. Leung
City Manager
18
Scott Catle
Finance DirectorfTreasurer
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Newport Beach
California
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June 30, 2019
Executive Director/CEO
19
City Council Members
Joy Brenner
Council Member
District 6
Will O'Neill
Council Member
District 7
City Executive Staff
Aaron Harp
Grace K. Leung Leilani Brown
City Attorney
City Manager City Clerk
Carol Jacobs............................................................................................................................
Assistant City Manager
Tara Finnigan.............................................................................................................................
Deputy City Manager
Scott Catlett.....................................................................................................................Finance
Director/Treasurer
Seimone Jurjis......................................................................................................Community
Development Director
JeffBoyles.....................................................................................................................................................Fire
Chief
KurtBorsting........................................................................................................................................
Harbormaster
Barbara Salvini..................................................................................................................
Human Resources Director
Tim Hetherton......................................................................................................................
Library Services Director
JonT. Lewis..............................................................................................................................................
Police Chief
DaveWebb...............................................................................................................................
Public Works Director
Laura Detweiler...............................................................................................
Recreation & Senior Services Director
Mark Vukojevic..................................................................................................................................Utilities
Director
20
LECTORATE
Board of
Harbor Commission
Library Trustees 11L
Building & Fire Parks, Beaches &
Code of Appeals ecreation Commission
MAY
&
City Arts COUNCIL Planning
Commission Commission
city
Civil Service Boar EELFM� Committees
CITY CITY CITY
CLERK MANAGER ATTORNEY
Community - - Library
Development Services
Finance Police
Public
Fire Works
Harbor Recreation &
Senior Services
Human
ResourcesUtilities
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22
23
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0
INDEPENDENT AUDITORS' REPORT
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
Report on the Financial Statements
CliftonLarsonAllen LLP
CLAconnect.com
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
Newport Beach, California (the City), as of and for the year ended June 30, 2020, 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 financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors' 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 auditors' 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 auditors consider 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.
OA member of
Nexia
International
25
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, 2020, and the respective
changes in financial position and, where applicable, cash flows thereof and the respective budgetary
comparison statement for the General Fund, the Tide and Submerged Land -Operating Special Revenue
Fund, the Tide and Submerged Land -Harbor Capital Special Revenue Fund, and the Measure M
Special Revenue Fund for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Other Matters
Report on Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, the schedules of changes in net pension liability and related
ratios and the schedules of contributions for the City's defined benefit pension plans, and the schedule
of changes in net OPEB liability and related ratios and the schedule of contributions for the City's
other post -employment health care benefits plan, identified as Required Supplementary Information
(RSI) in the accompanying table of contents, 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 RSI 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 RSI because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
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. The introductory section, combining
statements and individual fund schedules, and statistical section are presented for purposes of
additional analysis and are not a required part of the basic financial statements.
The combining statements and individual fund schedules (supplementary information), as listed in the
table of contents, are the responsibility of management and were derived from and relate directly to the
underlying accounting and other records used to prepare the basic financial statements. Such
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
supplementary 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.
26
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
January 27, 2021, 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 solely 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
the effectiveness of the City's 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.
CliftonLarsonAllen LLP
Irvine, California
January 27, 2021
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28
DISCUSSION
29
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30
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the City of Newport Beach's Comprehensive Annual Financial Report (CAFR)
presents management's discussion and analysis of the City's financial performance during the
fiscal year that ended on June 30, 2020. This analysis should be read in conjunction with the
Transmittal Letter at the front of this report and the accompanying Basic Financial Statements.
OVERVIEW OF THE FINANCIAL STATEMENTS
The financial section of the Comprehensive Annual Financial Report contains the following
information: IndependentAuditors' Report, Management's Discussion and Analysis (this section),
the Basic Financial Statements, the Required Supplementary Information, and the Supplementary
Information section, an optional section that presents combining and budgetary schedules for
individual non -major funds. The Basic Financial Statements are comprised of three components:
1) Government -wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the
Financial Statements. Management's Discussion and Analysis is intended to be an introduction
to the Basic Financial Statements.
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements — The Government -wide Financial Statements use the
economic resources measurement focus and accrual basis of accounting which is similar to the
accounting standard used by private sector companies. The government -wide financial
statements are intended to provide a "Big Picture" view of the City. With the economic resources
measurement focus and accrual basis of accounting, changes in net position are recognized as
soon as the event occurs regardless of the timing of related cash flows.
The Statement of Net Position includes all of the City's assets (including non -spendable assets
like streets, roads, and land rights), deferred outflows of resources, liabilities (including long-term
liabilities that may be paid over twenty years), and deferred inflows of resources. All of the current
year revenues and expenses are accounted for in the Statement of Activities regardless of when
cash is received or paid.
The Government -wide Financial Statements report the City's net position and how they have
changed. Net position — the difference between the City's assets, deferred outflows of resources,
liabilities and deferred inflows of resources — is one way to measure the City's financial health.
Over time, increases or decreases in the City's net position are an indicator of whether its financial
health is improving or deteriorating, respectively. To assess the overall health of the City, one
should also consider additional non-financial factors such as changes in the City's property tax
base and the condition of its facilities and other major infrastructure.
The Government -wide Financial Statements of the City are divided into two categories
Governmental Activities — This category depicts the extent to which programs are self-
supporting and the net amount provided by property taxes and other general revenues.
Most of the City's basic services are included in this category such as the public safety,
public works, community development, community services and general administration.
Taxes and other general revenues finance most of these activities.
31
Business -type Activities — The City accounts for its Water and Wastewater utilities as
business enterprises. The City charges fees to customers to recover the cost of providing
Water and Wastewater services.
Fund Financial Statements — A fund is a grouping of related accounts used to maintain control
over resources that have been segregated for specific activities or objectives. The City uses fund
accounting to ensure and demonstrate compliance with finance -related legal requirements such
as State and Federal law or bond covenants. Other funds are utilized simply to control and
manage resources intended for particular purposes. The Fund Financial Statements provide more
detailed information about the City's most significant funds (major funds) but not the City as a
whole.
Fund Financial Statements have a short-term focus measuring inflows of current spendable
assets. The resulting net difference between current financial assets and deferred outflows of
resources, and current financial liabilities and deferred inflows of resources, otherwise known as
fund balance (or net working capital in the private sector) is a measure of the City's ability to
finance activities in the near term.
The City utilizes three broad categories of funds:
Governmental Funds — Unlike Government -wide Financial Statements, Governmental
Fund Financial Statements utilize the financial resources measurement focus and thus
concentrate on near-term inflows and outflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Consequently, the
Governmental Fund Financial Statements provide a detailed short-term view that helps a
reader determine whether there are more or fewer financial resources that can be spent
in the near future to finance City programs. Also included in the Governmental Funds are
Permanent Funds. These funds are used to report resources that are legally restricted to
the extent that only earnings, not principal, may be used for purposes that support City
programs.
Proprietary Funds — Business -like services for which the City provides goods or services
to the general public are generally reported in Proprietary Funds (Enterprise Funds and
Internal Service Funds). Like the Government -wide Financial Statements, these funds
provide both long and short-term financial information utilizing the economic resources
measurement focus. The City's Enterprise Funds (Water and Wastewater Funds) are
individual funds represented in the combined presentation of Business -type Activities in
the Government -wide Financial Statements. The individual fund presentation provides
more detailed information about each business segment, its operating statements, and
statements of cash flow. The City also uses Internal Service Funds that are utilized to
report and allocate the cost of certain centrally managed and operated activities (e.g. fleet
maintenance and other equipment, risk management, retiree insurance,
telecommunications systems, information technology services, etc.). Because the Internal
Service Funds primarily serve the government, they are reported with Governmental
Activities rather than the Business -type Activities in the Government -wide Financial
Statements.
Fiduciary Funds — The City utilizes Fiduciary Funds to account for assets held by the City
in a trustee capacity, or as an agent for other governmental entities, private organizations,
or individuals. All of the City's fiduciary activities are reported in a separate statement of
fiduciary assets and liabilities, and a statement of changes in fiduciary assets and
32
liabilities. We exclude these activities from the City's Government -wide Financial
Statements because the City cannot use these assets to finance its operations.
Notes to the Financial Statements — The financial statements also include the Notes to the
Financial Statements that provide important narrative details about the information contained in
the financial statements. Information contained in the Notes to the Financial Statements is critical
to a reader's full understanding of the Government -wide and Fund Financial Statements.
Required Supplementary Information — In addition to the Basic Financial Statements, we have
included a Required Supplementary Information section, which includes the Schedule of Changes
in Net Pension Liability and Related Ratios, Post -employment Health Care Benefits (OPEB)
Liability and Related Ratios, and the Schedule of Plan Contributions.
Supplementary Information — In addition to the required elements of the Basic Financial
Statements, we have also included a Supplementary Information section, which includes
budgetary and combining schedules that provide additional details about the City's Other
Governmental Funds, Internal Service Funds, and Fiduciary Funds.
ANALYSIS OF GOVERNMENT -WIDE FINANCIAL STATEMENTS
The Government -wide Financial Statements provide long-term and short-term information about
the City's overall financial condition. This analysis addresses the financial statements of the City
as a whole.
Net Position Discussion
As shown in Figure 1, the City's combined net position for the year ended June 30, 2020 was $2.3
billion, increasing $23.8 million or 1.0% over the prior year. Net position can serve as an important
indicator of whether the City's overall financial condition is improving or deteriorating over time.
Current and other assets increased $27.8 million. This increase is primarily due to increases in
cash and investments, and accounts receivable (net of allowance), offset by decreases in
intergovernmental receivables and interest receivable. Capital assets decreased $2.0 million,
mostly due to fewer additions to work in progress as more projects during the fiscal year were
considered maintenance in nature.
Current liabilities increased $138,584 primarily due to increases in accrued payroll and unearned
revenue, offset by decreases in accounts payable, accrued interest payable and deposits
payable.
Long-term liabilities decreased $6.7 million. The decrease is primarily due to decreases in
outstanding certifications of participation, workers' compensation and net pension liability. See
Note (6), Note (10) and Note (11) of Notes to the Financial Statements for more information.
33
Figure 1
Net Position
(in thousands)
The largest portion of the City's net position, at $2.3 billion of net position, reflects the net
investment in capital assets (e.g., land, right of way, street trees, buildings, infrastructure, and
equipment) less accumulated depreciation and any related outstanding debt used to acquire
those assets. The City uses these capital assets to provide services to residents. Therefore, they
do not represent a financial resource to the City and consequently are not readily available for
funding current obligations.
Restricted net position totaled only $67.7 million of net position. An increase of $11.3 million from
the prior year was mostly due to the restriction of resources for harbor related capital projects and
the restriction of resources received from the Federal government for small business relief related
to the COVID-19 pandemic.
As of June 30, 2020, unrestricted net position had a deficit of $59.9 million. The deficit decreased
$11.8 million from the prior year primarily due to the receipt of unrestricted revenues such as
property taxes and sales taxes that were not spent or restricted by the end of the fiscal year.
34
Governmental Activities
Business -Type Activities
Total
2019
2020
2019
2020
2019
2020
Current and other assets
$ 270,408
$ 298,255
$ 42,642
$ 42,604
$ 313,050 $
340,859
Capital assets
2,322,225
2,318,827
119,346
120,769
2,441,571
2,439,596
Total assets
2,592,633
2,617,082
161,988
163,373
2,754,621
2,780,455
Deferred Outflows of Resources
75,975
66,119
2,406
1,863
78,381
67,982
Current liabilities
25,283
25,177
3,589
3,833
28,872
29,010
Long-term liabilities
463,044
456,589
10,806
10,600
473,850
467,189
Total liabilities
488,327
481,766
14,395
14,433
502,722
496,199
Deferred Inflows of Resources
7,849
6,088
321
234
8,170
6,322
Net Position
Net investment in capital assets
2,218,040
2,217,853
119,346
120,292
2,337,386
2,338,145
Restricted
56,427
67,708
-
-
56,427
67,708
Unrestricted
(102,035)
(90,214)
30,332
30,277
(71,703)
(59,937)
Total net position
$ 2,172,432
$ 2,195,347
$ 149,678
$ 150,569
$ 2,322,110 $
2,345,916
The largest portion of the City's net position, at $2.3 billion of net position, reflects the net
investment in capital assets (e.g., land, right of way, street trees, buildings, infrastructure, and
equipment) less accumulated depreciation and any related outstanding debt used to acquire
those assets. The City uses these capital assets to provide services to residents. Therefore, they
do not represent a financial resource to the City and consequently are not readily available for
funding current obligations.
Restricted net position totaled only $67.7 million of net position. An increase of $11.3 million from
the prior year was mostly due to the restriction of resources for harbor related capital projects and
the restriction of resources received from the Federal government for small business relief related
to the COVID-19 pandemic.
As of June 30, 2020, unrestricted net position had a deficit of $59.9 million. The deficit decreased
$11.8 million from the prior year primarily due to the receipt of unrestricted revenues such as
property taxes and sales taxes that were not spent or restricted by the end of the fiscal year.
34
GOVERNMENTAL ACTIVITIES
Governmental activities are generally financed through taxes, intergovernmental revenues, and
other non-exchange revenues. The Statement of Activities is intended to illustrate how the cost
of governmental activities is financed and determine the annual change in net position.
Revenues:
Program Revenues:
Charges for services
Operating grants and capital contributions
Capital grants and contributions
Total program revenues
General Revenues:
Taxes:
Property taxes
Sales tax
Transient occupancy taxes
Othertaxes
Investment related income
Other
Total general revenues
Total revenues
Expenses:
General government
Public safety
Public works
Community development
Community services
Interest
Water
Wastewater
Total expenses
Increases in net position
Net position at beginning of year
Restatement
Net position at beginning of year, as restated
Figure 2
Changes in Net Position
(in thousands)
Governmental Activities
Business -Type Activities
Total
20,714
2019
2020
2019
2020
2019
2020
53,340
60,055
11,493
12,842
11,493
12,842
$ 57,104
$ 57,670
$ 30,913
$ 31,211
$ 88,017 $
88,881
14,022
14,659
-
-
14,022
14,659
6,638
7,352
-
-
6,638
7,352
77,764
79,681
30,913
31,211
108,677
110,892
108,365
113,314
-
-
108,365
113,314
37,168
36,233
37,168
36,233
24,697
21,097
24,697
21,097
11,349
11,869
-
-
11,349
11,869
4,879
5,142
1,326
1,358
6,205
6,500
3,495
2,117
-
-
3,495
2,117
189,953
189,772
1,326
1,358
191,279
191,130
267,717
269,453
32,239
32,569
299,956
302,022
20,549
20,714
20,549
20,714
111,556
119,194
111,556
119,194
53,340
60,055
53,340
60,055
11,493
12,842
11,493
12,842
27,758
26,668
27,758
26,668
7,188
7,065
- - 7,188
7,065
-
-
26,898 27,387 26,898
27,387
4,222 4,292 4,222
4,292
231,884 246,538 31,120 31,679 263,004 278,217
35,833 22,915 1,119 890 36,952 23,805
2,138,806 2,172,432 147,808 149,678 2,286,614 2,322,110
(2,207) ' - 751 3 (1,456) 12 -
2,136,599 2,172,432 148,559 149,678 2,285,158 2,322,110
Net position at end of year $ 2,172,432 $ 2,195,347 $ 149,678 $ 150,568 $ 2,322,110 $ 2,345,915
' Prior year net position was restated to adjust for compensated absences liability in Fiscal Year 2017-18.
2 Prior year net position was restated to adjust for capital assets in Fiscal Year 2017-18.
Revenues Associated with Governmental Activities Discussion
Figure 2 illustrates in detail how the $269.5 million in Governmental Activities revenue was
derived. Figure 3 summarizes this revenue by major source. As shown on Figures 2 and 3, $57.7
million, or 21.4%, of the revenues were recovered from those who directly benefited from the
programs as a charge for service. Another $22.0 million, or 8.2%, of the revenues were
generated by contributions and grants received from governmental organizations, developers,
and property owners for both capital and operating activities. The remaining $189.8 million, or
70.4%, represented general revenues of the City including taxes, intergovernmental revenues,
and other miscellaneous revenues.
35
8%
Figure 3
Governmental Activities Revenue Sources
Year Ended June 30, 2020
3%
1%
■ Charges for Services
■ Contributions and grants
■ Taxes
Other
As illustrated in Figure 2, program revenues related to Governmental Activities increased $1.9
million from the prior year. This increase was primarily attributable to an increase in capital grants
and contributions due to the issuance of limited obligation improvement bonds for three
assessment districts and an increase in operating grants and contributions due to funding
received from other governmental agencies in response to economic challenges created by the
COVID-19 global pandemic.
The City's general revenues related to Governmental Activities decreased about $181,000 from
the prior year primarily due to the pandemic as there were decreases in sales taxes, transient
occupancy taxes and other general revenues due to a delay in reimbursement from the federal
government. Property taxes increased, but not enough to offset the decreases in the other
categories.
Property tax is the largest individual revenue source for the City and collections finished the year
$4.9 million higher than the previous year. This increase was mostly due to an increase in secured
taxes as a robust demand for coastal property continued driving property values higher.
At $36.2 million, sales taxes represent the second largest individual revenue source for the City.
Sales taxes decreased $935,094 from the previous year. This was due to a decrease in economic
activity across all industry categories because of the global pandemic.
Transient occupancy taxes (TOT), the City's third largest revenue source, finished the year at
$21.1 million, which is a decrease of $3.6 million from the previous fiscal year. The net decrease
stems from a decrease in commercial TOT due to falling occupancy rates and closures of hotels
because of the coronavirus global pandemic, offset by an increase in residential TOT.
Investment income, comprised of both interest income and unrealized gains, totaled $5.1 million,
an increase of about $263,000 over the prior fiscal year. Most of the increase is from a net
36
increase in the fair value of investments, which is consistent with the fiscal year's generally
decreasing interest rate environment.
Expenses Associated with Governmental Activities Discussion
The City is a full service city providing residents and visitors with the following functional services:
General Government is comprised of six departments (City Council, City Clerk, City Manager,
City Attorney, Human Resources, and Finance) providing general governance, information
technology services, executive management, legal services, records management, risk
management, finance, and accounting.
Public Safety is comprised of two departments (Police and Fire) providing general law
enforcement, fire suppression and prevention services, paramedic and medical transport
services, disaster preparedness, and ocean lifeguard services.
Public Works is comprised of two departments (Public Works and Utilities) providing engineering,
construction and maintenance of public streets, highways, buildings, beaches, parks, facilities
and related infrastructure; as well as traffic engineering, and street lighting.
Community Development is comprised of one department (Community Development) that
provides planning, building and zoning services, economic development services, and building
plan check and code enforcement services.
Community Services is comprised of three departments (Library Services, Recreation & Senior
Services and Harbor) providing library services, cultural and arts programs, recreation services,
senior social and transportation services and harbor programs and services.
Business Enterprise Operations are overseen by the Utilities Department providing water and
wastewater services. These are considered business -type activities and are discussed further in
the Business -Type Activities section.
Figure 2 illustrates in detail how the $246.5 million of Governmental Activities expense was
derived. The increase of $14.7 million from the prior year is mostly due to an increase in the
government wide adjustment relating to pension expense, and increase in maintenance type
capital improvement projects and increases in salaries and benefits.
37
Figure 4 below summarizes the governmental activities expense shared across function.
Figure 4
Governmental Activities Functional Expenses
Year Ended June 30, 2020
3%
5%
9%
■ Public Safety
■ Public Works
11% ■ Community Services
48%
General Government
Community Development
I nterest
24%
Figures 5 and 6 illustrate the net cost of each service. The net cost represents the amount that
governmental activities are subsidized by taxes and other general revenues of the City.
General government
Public safety
Public works
Community development
Community services
Interest
Figure 5
Governmental Activities
(in thousands)
2019
Total Cost Net Cost
of Service of Service
$ 20,549
$ (14,658)
111,556
(86,574)
53,340
(31,822)
11,493
(1,142)
27,758
(12,737)
7,188
(7,188)
2020
Total Cost
Net Cost
of Service
of Service
$ 20,714
$ (15,497)
119,194
(94,767)
60,055
(38,463)
12,842
(2,860)
26,668
(8,204)
7,065
(7,065)
$ 231,884 $ (154,121) $ 246,538 $ (166,856)
38
Figure 6
Program Expenses and Revenue — Governmental Activities
Year Ended June 30, 2020
(in millions)
$130.0 -
$120.0
$110.0 -
$100.0 -
$90.0
$80.0
$70.0
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0 -
$0.0
General Public Safety Public Works Community Community Interest
Government Development Services
■Total Expenses ■Program Revenues
BUSINESS -TYPE ACTIVITIES
As noted earlier, the City combines the Water Enterprise Fund and Wastewater Enterprise Fund
into Business -type Activities for the presentation of the Government -wide Financial Statements.
Business -type activities are mainly funded by charging fees to customers to recover the cost of
providing services.
Revenues Associated with Business -Type Activities Discussion
As displayed in Figure 2, total revenues related to Business -type activities totaled $32.6 million,
of which, $31.2 million is related to program revenues. As shown in Figure 7 on the following
page, Water activities represents about $27.1 million (86.9°/x) of program revenues, while
Wastewater activities represents $4.1 million (13.1 %) of program revenues.
39
Figure 7
Program Expenses and Revenue — Business -type Activities
Year Ended June 30, 2020
(in millions)
$30.0
$25.0
$20.0 —
$15.0
$10.0
$5.0
$0.0
Water Wastewater
■Total Expenses ■ Program Revenues
Expenses Associated with Business -Type Activities Discussion
Current year expenses for Business -type activities totaled $31.7 million, an increase of about
$559,000 over prior year as shown in Figure 2. This is attributable to an increase in employee
related costs, utilities, professional services and general and system maintenance.
Major Business -type expenses in the current fiscal year included the following:
Water
Of the $27.4 million in water related expenses, $11.9 million (43.4%) is for the purchase of water,
$5.6 million (20.4°/x) covers employee related costs, $4.9 million (18.0%) is for maintenance,
supplies, and depreciation of the water system, $2.8 million (10.2%) is for professional services,
and the remaining $2.2 million (8.0%) is collectively attributable to miscellaneous other expenses.
Wastewater
Of the $4.3 million in wastewater related expenses, $1.7 million (40.2%) is for maintenance,
supplies, and depreciation of the wastewater system, $1.8 million (41.4%) is for employee related
costs, and the remaining approximately $789,000 (18.4%) is attributable to professional services
and other miscellaneous expenses.
Figure 7 summarizes Business -type expenses separately for Water and Wastewater activities.
40
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City uses fund accounting to highlight available financial resources and to
ensure and demonstrate compliance with finance -related legal requirements.
Governmental Funds
Utilizing the financial resources measurement focus, the City's Governmental Funds provide
information on near-term inflows and outflows, and balances of spendable resources. This
information is useful in assessing the City's financing requirements and may serve as a useful
measure of a government's net resources available for spending at the end of the fiscal year.
Fund Balance — As shown in Figure 8, the City's Governmental Funds reported combined fund
balances of $205.0 million, an increase of $17.0 million from the prior year. The increase is the
net result of increases in fund balances in the General Fund, Facilities Financial Planning Reserve
Fund, Tide and Submerged Land — Harbor Capital Fund, other special revenue funds, other
capital funds and other permanent funds in aggregate; offset by decreases in the Tide and
Submerged Land — Operating Fund, Measure M Fund and Civic Center COP Fund in aggregate.
The General Fund represented $99.1 million or 48.3% of the combined fund balances of the
Governmental Funds.
Figure 8
Governmental Funds Fund Balance
(in thousands)
Nonspendable Fund Balance — The City has $16.5 million in fund balance classified as
nonspendable to indicate that it cannot be readily converted to cash. Of the $16.5 million
nonspendable fund balance, $945,647 is for prepaid items, $258,557 is for inventories, $10.7
million is for long-term loan receivables, and $4.6 million is for permanent endowments.
Restricted Fund Balance — The City has $59.0 million in fund balance classified as restricted to
indicate that it has an externally imposed restriction on how the money may be spent. Of the
$59.0 million restricted fund balance, $ 5.7 million is restricted in the General Fund, of which $1.3
million is for Affordable Housing, $1.5 million is for Oceanfront Encroachment and $2.9 million is
41
2019
2020
Change
General Fund
$ 96,586
$ 99,083
$ 2,497
Tide and Submerged Land - Operating
6,409
2,872
(3,537)
Tide and Submerged Land - Harbor Capital
7,133
16,399
9,266
Measure M
2,111
1,737
(374)
Facilities Financial Planning Reserve
14,297
17,047
2,750
Civic Center COP
2,362
1,159
(1,203)
Non -major special revenue
20,727
21,319
592
Non -major capital projects
31,927
38,740
6,813
Non -major permanent
6,438
6,667
229
$ 187,990
$ 205,023
$ 17,033
The following describes the classification of
fund balance
as of June 30,
2020. Additional
information on the City's fund balance can be found in Note
(16) of the Notes to the Financial
Statements.
Nonspendable Fund Balance — The City has $16.5 million in fund balance classified as
nonspendable to indicate that it cannot be readily converted to cash. Of the $16.5 million
nonspendable fund balance, $945,647 is for prepaid items, $258,557 is for inventories, $10.7
million is for long-term loan receivables, and $4.6 million is for permanent endowments.
Restricted Fund Balance — The City has $59.0 million in fund balance classified as restricted to
indicate that it has an externally imposed restriction on how the money may be spent. Of the
$59.0 million restricted fund balance, $ 5.7 million is restricted in the General Fund, of which $1.3
million is for Affordable Housing, $1.5 million is for Oceanfront Encroachment and $2.9 million is
41
restricted for support of public access channel programming, training, and community benefits;
$2.2 million is restricted in the Tide and Submerged Land - Operating Fund, of which $1.1 million
is restricted for capital projects and maintenance and repairs, and $1.1 million is restricted for the
Upper Newport Bay restoration; $16.4 million is restricted in the Tidelands and Submerged Land
- Harbor Capital Fund for capital projects; $1.7 million is restricted in the Measure M Fund; $1.2
million is restricted for Civic Center COP debt service; and $4.4 million is restricted in the Facilities
Financial Planning Reserve Fund for park improvements. Of the remaining $27.4 million in
restricted fund balance, $21.3 million is restricted for various special revenue funds, $4.1 million
is restricted for the Assessment District Fund, and $2.0 million of fund balance is restricted for
permanent funds.
Committed Fund Balance - The City has $50.2 million in fund balance classified as committed
to indicate that the City Council has committed how the money will be spent. Of the $50.2 million
committed fund balance, $2.2 million is committed to the General Fund, of which $2.2 million is
for encumbrances and miscellaneous projects; $720,000 is committed to the Tide and Submerged
Land - Operating; $12.6 million is committed to the Facilities Financial Planning Reserve Fund;
$11.3 million is committed to the Fire Station Fund, $8.6 million is committed in the Unrestricted
Capital Improvements Fund; $3.8 million is committed in the Parks and Community Center Fund,
$1.8 million is committed to the Civic Center, $2.6 million is committed to the Facilities
Maintenance Fund; $5.0 million is committed to the Neighborhood Enhancement Fund, $1.0
million is committed to Balboa Village Parking Management District and $622,467 is committed
to various capital projects.
Assigned Fund Balance - The City has $2.6 million in fund balance which is not restricted or
committed and is classified as assigned to indicate the City Manager's intent to be used for
specific purposes.
Unassigned Fund Balance - The remaining $76.7 million in fund balance is classified as
unassigned to indicate that it is the residual balance not otherwise restricted, committed, or
assigned.
Major Governmental Funds results for the year included the following
Overall General Fund revenues finished $140,422 or 0.1 % higher than the prior year, while
expenditures finished $2.8 million or 1.5% higher than the prior year. The net result is that
General Fund income before transfers and other financing sources and uses decreased
by $2.7 million. Actual General Fund revenues were $10.9 million over the estimated
revenues primarily due to many revenue categories recovering sooner, or not
experiencing as large of a negative impact during the fiscal year as originally projected at
the start of the COVID-19 pandemic. Expenditures came in at $4.0 million under budget
primarily because of spending reduction in response to the COVID-19 pandemic,
particularly in labor and contracted services. In total, fund balance in the General Fund
increased $2.5 million ending the year at $99.1 million.
The Tide and Submerged Land - Operating Fund decreased $3.5 million and ended the
current year with $2.9 million in fund balance. The decrease was due to the City reducing
its subsidy of the operations of the Tide and Submerged Land - Operating Fund.
• The Tide and Submerged Land - Harbor Capital Fund increased $9.3 million ending with
$16.4 million in fund balance. This was largely due to a transfer from the General Fund for
42
harbor related capital improvements and net results from operations as the fund
accumulates resources for future harbor related uses.
• The Measure M Fund decreased $374,974 and ended the current year with $1.7 million
in fund balance due to capital outlay expenditures being more than revenues.
The Facilities Financial Planning Reserve Fund increased $2.7 million to end the current
year at $17.0 million in fund balance. This was mainly due to the net result of transfers.
Proprietary Funds
The City's Proprietary Funds (Enterprise and Internal Service Funds) presented in the Fund
Financial Statements section basically provide the same type of information in the Government -
wide Financial Statements, but include individual segment information.
Enterprise Fund results for the year included the following:
• Net position in the Water Fund increased $670,189 mainly due to the fund's substantial
share of the City's pooled cash and investments, which resulted in the fund receiving a
significant amount of investment income during the fiscal year.
Net position in the Wastewater Fund decreased $94,479 mainly due to expenses
exceeding revenues. The implementation of a multi-year rate increase is ongoing.
Major Internal Service Fund activity in the current fiscal year included the following:
• Total net position in the Internal Service Funds increased $8.8 million in the current year.
This was mostly due to operating income of $5.8 million, which was a result of an increase
in revenue from charges for services for insurance reserves and information technology.
The remaining $3.0 million was due to non-operating revenues and net transfers.
GENERAL FUND BUDGETARY HIGHLIGHTS
Changes to Original Budget
Final budgeted revenues for the General Fund decreased $10.1 million from the original budget
during the year ended June 30, 2020. Factors contributing to this fluctuation are highlighted as
follows:
• Property tax revenue estimates were decreased $877,848 based on anticipation of
economic hardship due to the COVID-19 pandemic and the Governor's Executive Order
(N-61-20) suspending penalties and interest on property taxes.
Sales tax revenue estimates were decreased $1.3 million based on an expected overall
decrease in economic activity across all industry categories as businesses and
restaurants were closed due to the pandemic.
• Transient occupancy tax budget was reduced $5.4 million in total as most major hotels
and short-term lodging were temporarily closed at the onset of the pandemic with the
expectation that those remaining open would operate at severely reduced capacity.
43
• Revenue categories, charges for services, property income, other taxes, licenses, permits
and fees, fines and forfeitures were adjusted down $5.0 million based on the trends seen
during the beginning of the pandemic with the anticipation that those trends would
continue throughout the remainder of the fiscal year.
• Final budgeted intergovernmental revenue increased $993,332 due to an anticipated
increase in grants from other governmental agencies.
• Donations increased $633,465 due to the receipt of donations that were not known at the
beginning of the year.
• Final budgeted other revenue increased $783,193 from the original budget, mostly
because of upward revisions to prior estimates of donations to the library and grants for
senior services.
Final budgeted expenditures for the General Fund decreased $20.1 million from the original
budget during the year ended June 30, 2020. The significant factors contributing to the decrease
are as follows:
• Planned city-wide expenditure reductions in salaries, contract services and professional
services in response to the COVID-19 pandemic.
The routine reclassification of General Fund expenditures as Tidelands expenditures. This
reclassification occurs at year end once all such eligible expenditures can be properly
attributed to Tidelands activity.
Variance with Final Budget
Actual General Fund revenues came in at $10.9 million above final budgeted revenues for the
year ended June 30, 2020. Significant factors contributing to this favorable variance are
summarized as follows:
• A favorable variance of $589,909 in property taxes was mostly due to secured property
taxes coming in above expectations and the actual impact of Governor's Executive Order
(N-61-20) suspending penalties and interest on property taxes was less severe than
estimated in the short term.
• A favorable variance of $1.8 million in sales tax revenue was due to sales beginning to
recover sooner than the initial projections at the onset of the pandemic that the same
restrictions in place in April 2020 would remain for the remainder of the fiscal year, as
consumer spending remained strong.
• A favorable $1.8 million variance in transient occupancy tax was due to hotels opening up
sooner than anticipated, with overnight visits in either hotels or short-term rentals from
regional travelers looking for a quick "staycation" close to home.
• Other Taxes ended the year $1.0 million higher than projected due to all taxes within this
category performing better than expected at the onset of the pandemic, especially
business license taxes, property transfer taxes, and utility and cable franchise taxes.
44
• Intergovernmental revenues came in $1.0 million higher than budgeted due to
unanticipated grants.
• A favorable variance of $1.2 million in net investment related revenue, which includes
investment income and net fair value of investments, was due to an unexpected decrease
in interest rates towards the end of the fiscal year which made the City's portfolio more
valuable as most securities were purchased before the rates decreased.
• Charges for services ended the year $2.1 million higher due to a smaller impact on
services than expected as City departments devised electronic and contactless
modifications to services in response to the pandemic.
• Property income finished the year $1.2 million higher than expected due to most income
properties making their scheduled payments and parking revenues increasing late in the
fiscal year as the public flocked to the beaches with the loosening of pandemic lockdown
restrictions.
Actual General Fund expenditures of $195.1 million were less than final budgetary estimates of
$199.0 million. The $3.9 million favorable variance was due to the City's response to the COVID-
19 pandemic including city-wide salary savings due to the hiring freeze, and savings in contract
services and professional services.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City's capital assets for governmental and business -type activities as of June 30, 2020,
amounts to $2.4 billion, net of accumulated depreciation. This is comprised of a broad range of
capital assets including land, buildings, machinery and equipment, park facilities, road
improvements, storm drains, piers, oil wells, sound walls, an 800 MHz radio communications
system, parking pay stations and meters, and bridges. The total capital assets decreased $2.0
million over the prior fiscal year.
Figure 9
Capital Assets at Year End
(net of depreciation, in thousands)
45
Governmental
Business -Type
Activities
Activities
Total
2019
2020
2019
2020
2019
2020
Land
$ 1,897,376 $
1,897,520
$ 2,219 $
2,219
$ 1,899,595 $
1,899,739
Structures
188,252
190,481
440
424
188,692
190,905
Equipment
19,365
18,774
151
167
19,516
18,941
Infrastructure
206,102
206,039
116,248
115,104
322,350
321,143
Work in progress
11,131
6,013
289
2,855
11,420
8,868
Totals
$ 2,322,226 $
2,318,827
$ 119,347 $
120,769
$ 2,441,573 $
2,439,596
45
Major capital asset events during the current fiscal year included the following:
• Capital asset additions totaled $30.3 million in both the Governmental and Business Type
Activities in the current year. Of the $30.3 million, $10.4 million represents additions of
infrastructure assets mostly related to the road system and water system; and $7.2 million
is related to structure additions. The remaining $12.7 million is comprised of additions of
non -depreciable assets such as work in progress, $8.7 million, and land and rights of way
additions of $144,355, along with depreciable equipment additions of $3.8 million.
• Of the $26.3 million of additions in governmental assets in the current year, additions in
infrastructure contributed $9.3 million, which was mostly due to upgrades in the road
system. The remaining $17.0 million added in the current year as governmental assets, is
comprised of $7.2 million of structure additions related to a new fire station and library,
$5.8 million of work in progress, mostly related to upgrades to the road system and the
ongoing design and construction of a fire station, $3.8 million of equipment additions
mostly related to vehicles and $144,355 of land additions.
• The $4.0 million of business -type asset additions in the current year is comprised of $1.1
million in water system infrastructure additions and $2.9 million of work in progress
additions related to water system improvements.
Additional information on the City's capital assets can be found in Note (5) of the Notes to the
Financial Statements.
Long-term Debt
Figure 10
Outstanding Debt at Year End
(in thousands)
Governmental Business -Type
Activities Activities
2019 2020 2019 2020
Total
2019 2020
Certificates of participation $ 104,100 $ 100,695 $ $ $ 104,100 $ 100,695
Bond premium 121 - 121 -
Pre -annexation agreement - - - -
CDBG Loan 756 585 756 585
Totals $ 104,977 $ 101,280 $ $ $ 104,977 $ 101,280
The City's total debt decreased $3.7 million during the current fiscal year. The decrease is the
result of expected debt service payments. Additional information on the City's long-term debt
obligation can be found in Note (6) of the Notes to the Financial Statements.
46
FACTORS AFFECTING NEXT YEAR'S BUDGET
Economy
The economic outlook remains very uncertain, with a protracted recovery anticipated over the
next several months. After the unprecedented sudden shock in the first half of the year, with global
GDP in the second quarter of 2020 10% lower than at the end of 2019, output picked up sharply
in the third quarter as containment measures became less stringent, businesses reopened and
household spending resumed. Despite the welcome upturn, output remained below pre -pandemic
levels in the third quarter, close to the peak decline in output experienced during the global
financial crisis. Without the prompt and effective policy support introduced by the federal
government to cushion the impact of the shock on household incomes and companies, output
and employment would have been substantially weaker. On a cumulative basis, the labor market
has added about 12.3 million jobs since May, more than half the 22.2 million lost in March and
April. However, the labor market is still a long way from a full recovery as more than 10.7 million
people remain unemployed. Given a resurgence of the virus across the US, the labor market is
likely to remain challenged over the near-term. With pandemic -related unemployment benefits set
to expire at year-end, there is mounting pressure on Congress to negotiate another fiscal relief
bill.
Developments on the vaccine front remain favorable and a limited number of doses are expected
to be available for US healthcare workers and nursing home residents before year-end. While
widespread distribution of a vaccine is not expected until the second or third quarter of next year,
ongoing progress on both vaccines and therapeutics will help fuel the economic recovery in 2021.
In the near-term, economic data may soften as many regions contend with the virus and renewed
lockdown measures.
Local Revenue Trend
The closure of businesses and public facilities has negatively impacted various sources of City
revenues, including sales tax and transient occupancy tax revenues, which are among two of the
City's largest tax revenue sources. The State has delayed the deadline for the filing and payment
of sales and use taxes by 90 days for all but the largest taxpayers. The Governor has also issued
an Executive Order for waivers of late penalties on property taxes. Such efforts to relieve the
financial impact of the COVID-19 pandemic on taxpayers have resulted in delayed revenue
collection by the City. More significantly, hoteliers suffered a sudden and dramatic decline in
occupancy in the fourth quarter of FY 2019-20. Transient occupancy taxes finished roughly $4
million less and sales tax fell short $2.3 million when compared to the prior year. In all, the
financial impact of COVID-19 in the fourth quarter of FY 2019-20 proved to be less impactful to
the City than was previously feared. At the onset of the pandemic City Management lowered
revenue estimates by $13 million; however, General Fund revenues finished at nearly the original
estimate of $229 million roughly $10 million above the revised revenue estimate of $219 million
by year end.
However, the negative impacts from the COVID-19 pandemic on the City's revenues in FY 2019-
20 are expected to continue into FY 2020-21 and potentially several fiscal years beyond
depending on the pace of recovery of the local economy and the return of conventions and tourism
activity to the levels which existed prior to the outbreak of the COVID-19 pandemic. While certain
businesses and industries have begun to reopen, social distancing protocols currently remain
intact. These protocols could continue to limit the capacity of businesses, and many other tourism
and sales tax generating activities for the City. A recent UCLA Anderson Forecast suggests
California's pre -coronavirus economic boom won't reappear for at least two years. A full recovery
47
to pre -recession levels of economic activity is not expected until after 2022 in the state. Although
a noticeable improvement might begin to emerge by the end of 2020, the Anderson forecast made
it clear that the road to a return to a pre -coronavirus economy statewide is in the 2023 timeframe.
Discretionary Appropriations
The annual budget serves as the foundation for financial planning and control, and allows the City
Council to prioritize expenditures in alignment with core community values. The budget as
adopted is reflective of strong revenues, healthy reserves, and a sound debt position. This budget
reflects a strong local economy that continues to provide stable revenues which support a wide
variety of programs and initiatives. It also includes competitive wages for City employees that will
further our goal of attracting and retaining a well-qualified workforce to meet the high expectations
of our community.
The City Council adopted an FY 2020-21 budget that maintains a deliberate resource balance
between these important municipal expenses:
• Addressing long-term obligations such as pension liabilities, post -employment health care
benefits, and debt service;
• Keeping a level of operations that reflects the community's desire for an active, safe, and
attractive community; and
• Investing in infrastructure to maintain a high-quality natural and physical environment.
An aspect of the City's balanced approach to fiscal management is managing resources as
efficiently as possible, responsibly managing debt, and working collaboratively with employees to
recalibrate the compensation structure and share in the costs of pension obligations.
Fiscal Year 2020-21 will mark another year of an accelerated plan to pay down the City's unfunded
pension liability. Increasing the City's pension contribution now will result in a lower, level -dollar
payment in the future, so the adopted budget also includes an additional $10.2 million to
discretionary payment towards the City's unfunded liability.
Overall, the City's total debt burden is low and remains affordable. The economy benefits from the
City's mature, wealthy tax base and strong employment among a diversity of business sectors, as
well as retail shopping and tourism activity. Residential and commercial property values are among
the highest in the country. Our overall assessed valuation (AV) has been stable despite the
economic downturn of between 2009 and 2012, with growth in the each of the last 25 years.
A strong financial profile is a particularly important factor considered by rating agencies in their
evaluation of the creditworthiness of local government debt. The rating agencies Fitch, Moody's,
and Standard & Poor's which have all assigned the City the highest quality credit rating of AAA.
Moody's reaffirmed their AAA ratings in 2020. Expenditure controls within the past decade have
included early retirement incentive plans, increased employee contributions to pension plans,
contracting services, and freezing vacant positions when necessary, usually during recessionary
periods. Financial operations produced net surpluses (after transfers) in the last nine years due to
conservative budgeting, successful negotiation of labor concessions, and a stable and growing tax
revenue base. The City has used surpluses for important one-time things, like paying more towards
retirement obligations or investing in IT and communications. Financial management policies are
robust and have continued to improve in recent years.
48
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and
creditors with a general overview of the City's finances and to demonstrate the City's
accountability for the money it receives. If you have questions about this report or need additional
financial information, contact the City's Finance Department, 100 Civic Center Drive, Newport
Beach, CA 92660, (949) 644-3146. The City's Budgets, Comprehensive Annual Financial
Reports, as well as other City financial information can be found on the City's website at:
www.newportbeachca.gov/financialinfo
49
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50
114
FINANCIAL STATEMENTS
51
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52
CITY OF NEWPORT BEACH
Statement of Net Position
June 30, 2020
Assets:
Cash and investments (note 4)
Receivables:
Accounts (net of allowance)
Interest
Intergovernmental receivables
Restricted cash and investments with fiscal agent (note 4)
Internal balances
Investment in joint ventures (note 14)
Inventory
Prepaid items
Capital assets (note 5):
Non -depreciable
Depreciable
Accumulated depreciation
Total assets
Deferred Outflows of Resources:
Deferred amount from pension plans (note10)
Deferred amount from OPEB (note 11)
Total deferred outflows of resources
Liabilities:
Accounts payable
Accrued payroll
Accrued interest payable
Deposits payable
Unearned revenue
Noncurrent liabilities (note 6):
Due within one year
Due in more than one year:
Net pension liability (note 10)
Net OPEB liability (note 11)
Other
Total liabilities
Deferred Inflows of Resources:
Deferred amount from pension plans (note 10)
Deferred amount from OPEB (note 11)
Total deferred inflows of resources
Net Position:
Net investment in capital assets
Restricted for:
Public safety
Public works
Community services
Community development
Debt Service
Permanent funds:
Nonexpendable
Expendable
Unrestricted
Total net position
Governmental
Business -type
306,719,430
Activities
Activities
Total
125,023,855
-
125,023,855
$ 266,322,835
$ 36,753,712
$ 303,076,547
7,488,670
6,127,558
13,616,228
1,261,074
-
1,261,074
11,203,121
101,089
11,304,210
8,752,177
-
8,752,177
379,143
(379,143)
-
246,470
-
246,470
671,572
-
671,572
1,930,027
-
1,930,027
1,903,533,195
5,074,624
1,908,607,819
672,799,714
187,564,765
860,364,479
(257,505,832)
(71,870,042)
(329,375,874)
2,617,082,166
163,372,563
2,780,454,729
2,037,522
-
2,037,522
58,924,800
1,471,870
60,396,670
7,193,982
391,342
7,585,324
66,118,782
1,863,212
67,981,994
9,099,335
3,630,006
12,729,341
4,306,603
171,049
4,477,652
3,491,913
-
3,491,913
2,579,459
31,886
2,611,345
5,700,000
-
5,700,000
12,831,412 - 12,831,412
297,286,830
9,432,600
306,719,430
21,446,544
1,168,197
22,614,741
125,023,855
-
125,023,855
481,765,951
14,433,738
496,199,689
5,554,961
204,628
5,759,589
533,237
29,058
562,295
6,088,198
233,686
6,321,884
2,217,852,660
120,291,689
2,338,144,349
1,111,257
-
1,111,257
30,818,082
-
30,818,082
25,478,920
-
25,478,920
1,325,038
-
1,325,038
2,307,625
-
2,307,625
4,629,781
-
4,629,781
2,037,522
-
2,037,522
(90,214,086)
30,276,662
(59,937,424)
$ 2,195,346,799
$ 150,568,351
$ 2,345,915,150
See accompanying notes to basic financial statements
53
CITY OF NEWPORT BEACH
Statement of Activities
Year Ended June 30, 2020
Net Position at beginning of year
Net Position at end of year
See accompanying notes to basic financial statements
54
Program Revenues
Operating
Capital
Total
Charges for
Grants and
Grants and
Program
Expenses
Services
Contributions
Contributions
Revenues
Functions/Programs
Primary government:
Governmental activities:
General government
$ 20,714,050 $
3,846,962
$ 1,369,758
$ $
5,216,720
Public safety
119,194,302
22,232,248
2,195,198
24,427,446
Public works
60,054,860
5,054,694
9,454,093
7,082,970
21,591,757
Community development
12,842,020
9,599,848
337,036
44,749
9,981,633
Community services
26,668,079
16,936,285
1,302,931
224,688
18,463,904
Interest on long-term debt
7,064,521
-
-
-
-
Total governmental activities
246,537,832
57,670,037
14,659,016
7,352,407
79,681,460
Business -type activities:
Water
27,387,120
27,100,429
-
-
27,100,429
Wastewater
4,291,755
4,110,815
4,110,815
Total business -type activities
31,678,875
31,211,244
-
-
31,211,244
Total primary government
$ 278,216,707 $
88,881,281
$ 14,659,016
$ 7,352,407 $
110,892,704
General revenues:
Taxes:
Property tax
Sales tax
Transient occupancy tax
Business license tax
Franchise tax
Othertaxes
Investment income
Net increase in fair
value of investments
Other
Total general revenues
Change in net position
Net Position at beginning of year
Net Position at end of year
See accompanying notes to basic financial statements
54
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental Business -type
Activities Activities
Total
$ (15,497,330) $
$ (15,497,330)
(94,766,856)
(94,766,856)
(38,463,103)
(38,463,103)
(2,860,387)
(2,860,387)
(8,204,175)
(8,204,175)
(7,064,521)
(7,064,521)
(166,856,372) - (166,856,372)
(286,691) (286,691)
(180,940) (180,940)
(467,631) (467,631)
(166,856,372) (467,631) (167,324,003)
113,313,535
113,313,535
36,232,969
36,232,969
21,097,384
21,097,384
4,882,419
4,882,419
4,394,156
4,394,156
2,592,369
2,592,369
2,621,488
732,099
3,353,587
2,520,033
625,864
3,145,897
2,116,884
-
2,116,884
189,771,237
1,357, 963
191,129,200
22,914,865
890,332
23,805,197
2,172,431,934 149,678,019 2,322,109,953
$ 2,195,346,799 $ 150,568,351 $ 2,345,915,150
See accompanying notes to basic financial statements
55
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56
57
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58
GOVERNMENTAL FUNDS
Major Funds
The General Fund is used to account for fiscal resources that are dedicated to
governmental operations of the City, and not required to be accounted for in
another fund.
The Tide and Submerged Land — Operating Fund is a Special Revenue Fund
used to account for revenues related to the operation of the City's tidelands,
including beaches and marinas, and the related expenditures. Revenue from
tideland operations includes, but is not limited to, rents from moorings, piers, and
leases, as well as income from parking lots, meters, and the sale of oil.
The Tide and Submerged Land — Harbor Capital Fund is a Special Revenue
Fund used to account for incremental increases in revenue from certain property
lease, pier, and mooring rentals that exceed Council designated base year
revenue amounts, as well as other designated revenues and the related
expenditures for capital projects, maintenance, and servicing of loan advances
from the General Fund.
The Measure M Fund is used to account for the revenues and expenditures of
funds received from the Orange County Transportation Authority. Expenditures
from this fund are used exclusively for transportation related purposes.
The Facilities Financial Planning Reserve Fund is used to account for the
receipt and expenditure of funds for the replacement of facilities. In prior years,
this fund was called the Facilities Replacement Fund.
The Civic Center COP Fund is used to account for debt service transactions
related to the Certificates of Participation issued to finance the construction of the
Civic Center.
Other Governmental Funds
Other governmental funds are those governmental funds that do not meet the
criteria of a major fund. For reporting purposes in this section, they are
combined as Other Governmental Funds.
59
Assets
Cash and investments (note 4)
Receivables:
Accounts (net of allowance)
Interest
Intergovernmental receivables
Restricted cash and investments with fiscal agent (note 4)
Advance to other funds (note 12)
Due from other funds (note 12)
Prepaid items
Inventory
Total assets
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
Accrued payroll
Deposits payable
Unearned revenue
Advance from other funds (note 12)
Due to other funds (note 12)
Total liabilities
Deferred Inflows of Resources:
Unavailable revenue
Total deferred inflows of resources
Fund balances (deficits):
Nonspendable:
Prepaid items
Inventories
Long-term loan receivable
Permanent endowment
Restricted:
Affordable housing
Oceanfront encroachment
Upper Newport Bay restoration
Other
Committed:
Oil and gas
Other
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of
resources and fund balances
CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2020
Page 1 of 2
Special Revenue Funds
Tide and
Tide and
Submerged
Submerged
General Land - Operating
Land - Harbor Capital
Measure M
$ 86,746,555 $ 3,242,024
$ 27,188,090 $
1,267,254
3,485,105 1,790,646
-
-
1,261,074 -
-
8,034,496
1,019,031
10,676,659
377,249
928,899
258,557
$ 111,768,594 $ 5,032,670
$ 27,188.090 $
2,286,285
$ 4,747,929 $ 909,661 $ 112,899 $ 151,669
4,032,481 20,126 - -
2,394,535 184,924
1,260,676 757,105 -
- - 10,676,659
12,435,621 1,871,816 10,789,558 151,669
249,501 289,331
249,501 289,331
928,899
258,557
10,676,659
1,321,736
1,457,744
2,930,954
2,210,811
2,598,828
76,699,284
1,099,953
1,051,570
720,000
398,094
398,094
16,398,532 1,736,522
99,083,472 2,871,523 16,398,532 1,736,522
$ 111,768,594 $ 5,032,670 $ 27,188,090 $ 2,286,285
(continued)
See accompanying notes to basic financial statements
60
Assets
Cash and investments (note 4)
Receivables:
Accounts (net of allowance)
Interest
Intergovernmental receivables
Restricted cash and investments with fiscal agent (note 4)
Advance to other funds (note 12)
Due from other funds (note 12)
Prepaid items
Inventory
Total assets
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
Accrued payroll
Deposits payable
Unearned revenue
Advance from other funds (note 12)
Due to other funds (note 12)
Total liabilities
Deferred Inflows of Resources:
Unavailable revenue
Total deferred inflows of resources
Fund balances (deficits):
Nonspendable:
Prepaid items
Inventories
Long-term loan receivable
Permanent endowment
Restricted:
Affordable housing
Oceanfront encroachment
Upper Newport Bay restoration
Other
Committed:
Oil and gas
Other
Assigned
Unassigned
CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2020
Page 2 of 2
Capital Project Fund Debt Service Fund
Facilities
Financial Planning Civic Center
Reserve COP
Other
Governmental
Funds Totals
$ 11,605,682 $
$ 70,091,898 $
200,141,503
20,739
396,114
5,692,604
-
-
1,261,074
1,148,239 476,220
10,677,986
6,551,417 2,200,760
8,752,177
-
- -
10,676,659
5,442,129
-
5,819,378
-
16,748
945,647
-
-
258,557
$ 17,068,550 $
7,699,656 $ 73,181,740 $
244,225,585
$ $ 39 $ 2,324,753 $ 8,246,950
- - 4,052,607
- 2,579,459
21,711 3,660,508 5,700,000
- - - 10,676,659
5,391,992 59,674 5,451,666
21,711 5,392,031 6,044,935 36,707,341
4,446,847
12,599,992
1,148,239 410,438 2,495,603
1,148,239 410,438 2,495,603
1,159,386
16,748 945,647
- 258,557
- 10,676,659
4,629,781 4,629,781
1,321,736
1,457,744
- 1,099,953
27,417,708 55,141,519
- 720,000
34,712,267 49,523,070
- 2,598,828
(50,137) 76,649,147
Total fund balances 17,046,839 1,159,386 66,726,367 205,022,641
Total liabilities, deferred inflows of
resources and fund balances $ 17,068,550 $ 7,699,656 $ 73,181,740 $ 244,225,585
See accompanying notes to basic financial statements
61
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62
CITY OF NEWPORT BEACH
Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position
June 30, 2020
Fund balances of governmental funds $ 205,022,641
Amounts reported for governmental activities in the statement of net position are
different because:
Capital assets net of accumulated depreciation have not been included
as financial resources in governmental fund activity. Amount excludes
capital assets from internal service funds which are added below. 2,302,946,800
Long-term debts have not been reported in the governmental fund activity.
Amounts exclude long-term debt activity from internal service funds
which have been added below:
Certificates of participation payable (100,695,000)
CDBG loan (585,000)
Pension related debt applicable to the governmental activities are not due and payable in
the current period and accordingly are not reported as fund liabilities. Deferred outflows
of resources and deferred inflows of resources related to pension are only reported in
the Statement of Net Position as the changes in these amounts affect only the
government -wide statements for governmental activities. Amounts exclude internal
service fund activity which has been added below:
Deferred outflows of resources 57,956,702
Deferred inflows of resources (5,420,369)
Pension liability (291,082,707)
OPEB related debt applicable to the governmental activities are not due and payable in
the current period and accordingly are not reported as fund liabilities. Deferred outflows
of resources and deferred inflows of resources related to OPEB are only reported in
the Statement of Net Position as the changes in these amounts affect only the
government -wide statements for governmental activities. Amounts exclude internal
service fund activity which has been added below:
Deferred outflows of resources 6,936,584
Deferred inflows of resources (514,125)
OPEB liability (20,678,180)
Accrued interest payable for the current portion of interest due on long-term debt
has not been reported in the governmental funds. (3,491,913)
Some of the revenue will be collected after year-end, but is not available soon
enough to pay for the current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds. 2,495,603
Internal service funds are used by management to charge the costs of certain
activities, such as self-insurance, workers' compensation, compensated absences,
retiree insurance, fleet management and information technology, to individual funds.
The assets (including capital assets) and liabilities of the internal service funds must be
added to the statement of net position. 41,830,150
Investment in joint ventures is not a current financial resource and therefore not reported
in the governmental funds. 246,470
Internal balance created by the consolidation of internal service fund activities
related to enterprise funds is not reported in the governmental funds. 379,143
Net position of governmental activities $ 2,195,346,799
See accompanying notes to basic financial statements
63
Revenues:
Taxes and assessments:
Property tax
Sales tax
Transient occupancy tax
Othertaxes
Intergovernmental
Licenses, permits and fees
Charges for services
Fines and forfeitures
Investment income
Net increase in fair value of investments
Property income
Donations
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service (note 6):
Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in (note 13)
Transfers out (note 13)
Total other financing sources
(uses)
Net change in fund balances
Fund balances, beginning
Fund balances, ending
CITY OF NEWPORT BEACH
3,031,932
5,414,939
Governmental Funds
2,497,334
(3,537,916)
Statement of Revenues, Expenditures and Changes in Fund
Balances
96,586,138
For the Year Ended June 30, 2020
7,132,798
2,111,496
Page 1 of 2
2,871,523 $
16,398,532 $
1,736,522
Special Revenue Funds
(continued)
Tide and
Tide and
Submerged
Submerged
General Land - Operating
Land - Harbor Capital
Measure M
$ 113,313,535 $
$
$
36,232,969
20,847,883
11,868,944
3,848,205
2,381,906
4,703,970 56,863
-
21,115,081 10,541
3,487,164 22,719
-
1,295,547 337,036
484,209
50,209
1,404,696 288,127
413,945
42,923
10,392,662 11,227,661
3,772,612
-
786,111 -
-
656,249 -
-
-
229,953,016 11,942,947
4,670,766
2,475,038
14,863,427
105,452,011
39,050,719
12,503,677
23,044,258
195,347
195,109,439
1,104,658
12,420,766
2,977,453
2,661
1,384,651
622,606
819,971 2,850,012
18,512,795 819,971 2,850,012
34,843,577 (6,569,848) 3,850,795 (374,974)
3,042,672
(32,346,243) (10,740)
5,414,939
(32,346,243)
3,031,932
5,414,939
2,497,334
(3,537,916)
9,265,734
(374,974)
96,586,138
6,409,439
7,132,798
2,111,496
$ 99,083,472 $
2,871,523 $
16,398,532 $
1,736,522
(continued)
See accompanying notes to basic financial statements
64
Revenues:
Taxes and assessments:
Property tax
Sales tax
Transient occupancy tax
Othertaxes
Intergovernmental
Licenses, permits and fees
Charges for services
Fines and forfeitures
Investment income
Net increase in fair value of investments
Property income
Donations
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service (note 6):
Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in (note 13)
Transfers out (note 13)
Total other financing sources
(uses)
Net change in fund balances
Fund balances, beginning
Fund balances, ending
CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2020
Page 2 of 2
Capital Project Fund Debt Service Fund
Facilities
8,086,599
Other
(390,000)
Financial Planning
Civic Center
Governmental
17,030,920
Reserve
COP
Funds
Totals
$ 17,046,839 $
1,159,386 $
66,726,367 $
205,022,641
$
$
$ $
113,313,535
36,232,969
20,847,883
719,738
12,588,682
1,148,239
5,294,581
12,672,931
208,822
-
814,207
5,783,862
-
-
21,125,622
-
-
-
3,509,883
357,822
21,281
1,219,649
3,765,753
305,897
-
1,021,711
3,477,299
258,425
-
25,651,360
-
9,450
795,561
-
-
5,294,030
5,950,279
1,130,966
1,169,520
14,373,366
265,715,619
-
-
-
15,968,085
418,070
118,290,847
3,702,793
45,730,965
106,413
12,612,751
45,333
24,474,242
-
16,083,517
20,376,106
3,405,000
171,000
3,576,000
7,053,961
16,395
7,265,703
-
10,458,961
20,543,521
248,294,699
1,130,966
(9,289,441)
(6,170,155)
17,420,920
9,915,459
(8,296,998)
8,086,599 13,914,312 40,373,981
- (110,000) (40,763,981)
1,618,461
8,086,599
13,804,312
(390,000)
2,749,427
(1,202,842)
7,634,157
17,030,920
14,297,412
2,362,228
59,092,210
187,991,721
$ 17,046,839 $
1,159,386 $
66,726,367 $
205,022,641
See accompanying notes to basic financial statements
65
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66
CITY OF NEWPORT BEACH
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Year Ended June 30, 2020
Net change in fund balances - total governmental funds $ 17,030,920
Amounts reported for governmental activities in the statement of activities differ
from the amounts reported in governmental funds because:
Governmental funds report capital outlays as expenditures. However, in the statement
of activities, the costs of those assets is allocated over their estimated useful lives (3,421,830)
as depreciation expense. This is the amount by which depreciation exceeded
capital outlay in the current period.
The issuance of long-term debt provides current financial resources to governmental funds, while
repayment of the principal and issuance costs of long-term debt consumes the current financial
resources of the governmental funds. Issuance of bond principal is an other financing source and
repayment of bond principal is an expenditure in governmental funds, but the issuance increases
long-term liabilities and the repayment reduces long-term liabilities in the Statement of Net Position.
The amounts are the net effect of these differences in the treatment of long-term debt:
Repayment of principal 3,576,000
Premium on bonds is recognized as revenues in the period received; however, in the 120,553
statement of activities, it is amortized over the life of the bond.
Accrued interest for debt service is the net change in accrued interest for the current period. 80,629
Pension expense reported in the governmental funds includes the employer contributions made.
In the Statement of Activities, pension expense includes the change in the net pension liability
and related change in pension amounts for deferred outflows of resources and deferred inflows
of resources. (6,779,351)
OPEB expense reported in the governmental funds includes the employer contributions made.
In the Statement of Activities, OPEB expense includes the change in the net OPEB liability
and related change in OPEB amounts for deferred outflows of resources and deferred inflows
of resources. 2,391,781
Some of the revenue will be collected after year-end, but is not available soon
enough to pay for the current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds. This is the net change in unavailable revenue
for the current period. 1,414,177
Internal service funds are used by management to charge the costs of certain
activities, such as self-insurance, workers' compensation, compensated absences,
retiree insurance and fleet management, to individual funds. The net revenue of the internal
service funds is reported in the statement of activities. 8,757,531
Investment in joint ventures creates an explicit, measurable equity interest reported only
in the statement of activities. 59,077
Internal balance created by the consolidation of internal service funds activities related
to enterprise funds is reflected as a reduction of revenues in the statement of activities. (314,622)
Change in net position of governmental activities $ 22,914,865
See accompanying notes to basic financial statements
67
CITY OF NEWPORT BEACH
Budgetary Comparison Statement
General Fund
For the Year Ended June 30, 2020
See accompanying notes to basic financial statements
68
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Taxes and assessments:
Property
$ 113,601,474
$ 112,723,626
$ 113,313,535
$ 589,909
Sales
35,697,090
34,411,405
36,232,969
1,821,564
Transient occupancy
24,483,131
19,087,031
20,847,883
1,760,852
Other taxes
11,591,386
10,834,670
11,868,944
1,034,274
Intergovernmental
1,842,767
2,854,873
3,848,205
993,332
Licenses, permits and fees
4,859,712
4,511,573
4,703,970
192,397
Charges for services
21,472,581
18,976,502
21,115,081
2,138,579
Fines and forfeitures
3,362,928
2,974,408
3,487,164
512,756
Investment income
1,505,673
1,505,673
1,295,547
(210,126)
Net increase in fair value of investments
-
-
1,404,696
1,404,696
Property income
10,153,739
9,166,963
10,392,662
1,225,699
Donations
116,500
749,965
786,111
36,146
Other
484,371
1,267,564
656,249
(611,315)
Total revenues
229,171,352
219,064,253
229,953,016
10,888,763
Expenditures:
General government:
City council
881,199
861,884
678,330
183,554
City clerk
1,065,439
1,043,448
975,626
67,822
City attorney
2,623,784
2,475,079
2,284,088
190,991
City manager
3,344,155
2,563,679
2,174,546
389,133
Finance
7,231,447
6,167,328
5,918,252
249,076
Human resources
3,293,238
2,937,503
2,832,585
104,918
Total General government
18,439,262
16,048,921
14,863,427
1,185,494
Public safety:
Police
66,040,641
61,360,725
61,502,999
(142,274)
Fire
53,193,484
43,731,539
43,949,012
(217,473)
Total Public safety
119,234,125
105,092,264
105,452,011
(359,747)
Public works:
Public works - general services
27,194,832
27,492,650
26,000,625
1,492,025
Public works
10,841,460
7,385,311
8,393,210
(1,007,899)
Utilities
4,758,696
4,634,105
4,656,884
(22,779)
Total Public works
42,794,988
39,512,066
39,050,719
461,347
See accompanying notes to basic financial statements
68
Community development:
Community development
Code and water quality enforcement
Total Community development
Community services:
Parking operations
Library services
Recreation and senior services
Total community services
Debt service:
Interest and fiscal charges
Total expenditures
Excess of revenues
over expenditures
Other financing (uses):
Transfers out
Total other financing
(uses)
Net change in fund balance
Fund balance, beginning
Fund balance, ending
CITY OF NEWPORT BEACH
Budgetary Comparison Statement
General Fund
For the Year Ended June 30, 2020
(continued)
2,304,921
2,482,663
1,944,820
Variance with
9,265,651
9,741,880
9,078,408
Final Budget
Budgeted
Amounts
12,021,030
Positive
Original
Final
Actual
(Negative)
12,048,980
12,027,859
11,453,714
574,145
1,123,948
1,122,198
1,049,963
72,235
13,172,928
13,150,057
12,503,677
646,380
2,304,921
2,482,663
1,944,820
537,843
9,265,651
9,741,880
9,078,408
663,472
13,853,165
12,912,149
12,021,030
891,119
25,423,737
25,136,692
23,044,258
2,092,434
46,896
46,896
195,347
(148,451)
219,111,936
198,986,896
195,109,439
3,877,457
10,059,416
20,077,357
34,843,577
14,766,220
(31,680,252) (32,346,243) (32,346,243)
(31,680,252) (32,346,243) (32,346,243)
(21,620,836) (12,268,886) 2,497,334 14,766,220
96,586,138 96,586,138 96,586,138 -
$ 74,965,302 $ 84,317,252 $ 99,083,472 $ 14,766,220
See accompanying notes to basic financial statements
69
CITY OF NEWPORT BEACH
Budgetary Comparison Statement
Tide and Submerged Land - Operating
For the Year Ended June 30, 2020
Expenditures:
General government
-
1,104,658
1,104,658
Variance with
Public safety
-
12,420,766
12,420,766
Final Budget
Public works
Budgeted
Amounts
2,977,453
Positive
Community development
Original
Final
Actual
(Negative)
Revenues:
1,799,159
1,879,282
1,384,651
494,631
Licenses, permits and fees
$ 65,950
$ 47,983
$ 56,863
$ 8,880
Charges for services
14,000
10,160
10,541
381
Fines and forfeitures
19,032
20,890
22,719
1,829
Investment income
36,611
36,611
337,036
300,425
Net increase in fair value of investments
-
-
288,127
288,127
Property income
11,994,982
10,574,032
11,227,661
653,629
Total revenues
12.130.575
10.689.676
11.942.947
1.253.271
Expenditures:
General government
-
1,104,658
1,104,658
-
Public safety
-
12,420,766
12,420,766
-
Public works
745,830
3,188,692
2,977,453
211,239
Community development
-
-
2,661
(2,661)
Community services
1,799,159
1,879,282
1,384,651
494,631
Capital outlay
-
1,013,205
622,606
390,599
Total expenditures
2,544,989
19,606,603
18,512,795
1,093,808
Excess (deficiency) of revenues
over expenditures
9,585,586
(8,916,927)
(6,569,848)
2,347,079
Other financing sources:
Transfers in - 3,042,672 3,042,672 -
Transfers out - (10,740) (10,740) -
Total other financing
sources - 3,031,932 3,031,932 --
Net change in fund balance 9,585,586 (5,884,995) (3,537,916) 2,347,079
Fund balance, beginning 6,409,439 6,409,439 6,409,439 -
Fund balance, ending $ 15,995,025 $ 524,444 $ 2,871,523 $ 2,347,079
See accompanying notes to basic financial statements
70
CITY OF NEWPORT BEACH
Budgetary Comparison Statement
Tide and Submerged Land - Harbor Capital
For the Year Ended June 30, 2020
Other financing sources:
Transfers in - 5,414,939 5,414,939 -
Net change in fund balance 3,630,820 (2,118,713) 9,265,734 11,384,447
Fund balance (deficit), beginning 7,132,798 7,132,798 7,132,798 -
Fund balance (deficit), ending $ 10,763,618 $ 5,014,085 $ 16,398,532 $ 11,384,447
See accompanying notes to basic financial statements
71
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Investment income
$ 123,054
$ 123,054
$ 484,209
$ 361,155
Net increase in fair value of investments
-
-
413,945
413,945
Property income
3,507,766
3,543,889
3,772,612
228,723
Total revenues
3,630,820
3,666,943
4,670,766
1,003,823
Expenditures:
Capital outlay
-
11,200,595
819,971
10,380,624
Excess (deficiency) of revenues
over expenditures
3,630,820
(7,533,652)
3,850,795
11,384,447
Other financing sources:
Transfers in - 5,414,939 5,414,939 -
Net change in fund balance 3,630,820 (2,118,713) 9,265,734 11,384,447
Fund balance (deficit), beginning 7,132,798 7,132,798 7,132,798 -
Fund balance (deficit), ending $ 10,763,618 $ 5,014,085 $ 16,398,532 $ 11,384,447
See accompanying notes to basic financial statements
71
Revenues:
Intergovernmental
Investment income
Net increase in fair value of investments
Total revenues
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance, ending
CITY OF NEWPORT BEACH
Budgetary Comparison Statement
Measure M
For the Year Ended June 30, 2020
- 7,045,521 2,850,012
5,465,030 (1,665,681) (374,974)
2,111,496 2,111,496 2,111,496
$ 7,576,526 $ 445,815 $ 1,736,522
See accompanying notes to basic financial statements
72
4,195, 509
1,290,707
$ 1,290,707
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual
(Negative)
$ 5,465,030 $ 5,379,840
$ 2,381,906
$ (2,997,934)
- -
50,209
50,209
- -
42,923
42,923
5,465,030 5,379,840
2,475,038
(2,904,802)
- 7,045,521 2,850,012
5,465,030 (1,665,681) (374,974)
2,111,496 2,111,496 2,111,496
$ 7,576,526 $ 445,815 $ 1,736,522
See accompanying notes to basic financial statements
72
4,195, 509
1,290,707
$ 1,290,707
73
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74
PROPRIETARY FUNDS
Business -type Activities
The Water Fund is a Major Fund used to account for the operations of the City's
water utility, a self-supporting activity which is entirely financed though user
charges.
The Wastewater Fund is a Major Fund used to account for the operations of the
City's wastewater system, a self-supporting activity which is entirely financed
through user charges.
Governmental Activities
The Internal Service Funds are used to allocate the cost of providing goods and
services by one department to other departments on a cost reimbursement basis.
75
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Net Position
June 30, 2020
Assets and Deferred Outflows of Resources
Current assets:
Cash and investments
Receivables:
Accounts (net of allowance)
Intergovernmental receivables
Inventories
Prepaid items
Total current assets
Noncurrent assets:
Capital assets (note 5):
Land
Structures
Equipment
Software
Infrastructure
Work in progress
Less accumulated depreciation
Total capital assets (net of accumulated depreciation)
Total assets
Deferred outflows of resources:
Deferred amount from pension plans
Deferred amount from OPEB
Total deferred outflows of resources
Liabilities and Deferred Inflows of Resources
Current liabilities:
Accounts payable
Accrued payroll
Deposits payable
Due to other funds (note 12)
Workers' compensation - current
General liability - current
Compensated absences - current
Total current liabilities
Noncurrent liabilities:
Workers' compensation (note 6)
General liability (note 6)
Compensated absences (note 6)
Net pension liability (note 10)
Net OPEB liability
Total noncurrent liabilities
Total liabilities
Deferred inflows of resources:
Deferred amount from pension plans
Deferred amount from OPEB
Total deferred inflows of resources
Net Position
Net investment in capital assets 91,085,924 29,205,765 120,291,689 16,358,855
Unrestricted 29,187,080 1,468,725 30,655,805 25,471,295
Total net position $ 120,273,004 $ 30,674,490 150,947,494 $ 41,830,150
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds (379,143)
Net position of business -type activities $ 150,568,351
See accompanying notes to basic financial statements
76
Enterprise Funds
Governmental
Total
Activities
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
$ 33,511,517
$ 3,242,195 $
36,753,712
$ 66,181,332
5,263,908
863,650
6,127,558
1,796,066
101,089
-
101,089
525,135
-
-
413,015
-
-
-
984,380
38,876,514
4,105,845
42,982,359
69,899,928
2,219,450
-
2,219,450
-
688,396
-
688,396
39,581
289,186
35,988
325,174
40,737,329
-
-
-
3,603,419
139,063,704
47,487,491
186,551,195
-
1,646,283
1,208,891
2,855,174
299,296
(52,396,085)
(19,473,957)
(71,870,042)
(28,799,348)
91,510,934
29,258,413
120,769,347
15,880,277
130,387,448
33,364,258
163,751,706
85,780,205
1,063,462
408,408
1,471,870
968,098
282,755
108,587
391,342
257,398
1,346,217
516,995
1,863,212
1,225,496
3,470,522
159,484
3,630,006
852,385
130,042
41,007
171,049
253,996
31,886
-
31,886
-
-
-
367,712
2,867,523
2,694,118
-
-
-
4,022,771
3,632,450
200,491
3,832,941
11,058,505
-
-
-
12,653,477
5,266,830
-
-
-
9,070,548
6,815,313
2,617,287
9,432,600
6,204,123
844,054
324,143
1,168,197
768,364
7,659,367
2,941,430
10,600,797
33,963,342
11,291,817
3,141,921
14,433,738
45,021,847
147,849
56,779
204,628
134,592
20,995
8,063
29,058
19,112
168,844
64,842
233,686
153,704
Net Position
Net investment in capital assets 91,085,924 29,205,765 120,291,689 16,358,855
Unrestricted 29,187,080 1,468,725 30,655,805 25,471,295
Total net position $ 120,273,004 $ 30,674,490 150,947,494 $ 41,830,150
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds (379,143)
Net position of business -type activities $ 150,568,351
See accompanying notes to basic financial statements
76
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Revenues,
Expenses and Changes in Net Position
For the Year Ended June 30, 2020
Operating expenses
Purchase of water
11,871,043
Enterprise Funds
11,871,043
-
Salaries and benefits
5,572,554
1,778,730
7,351,284
Governmental
Depreciation
1,631,573
635,398
Total
Activities
Professional services
2,844,875
493,284
Enterprise
Internal Service
Maintenance and supplies
Water
Wastewater
Funds
Funds
Operating revenues:
1,268,432
147,557
1,415,989
-
Charges for sales and services:
-
-
-
353,635
Water sales
$ 26,893,650
$
$ 26,893,650
$ -
Charges for services
-
-
-
30,587,750
Sewer service and connection fees
4,043,961
4,043,961
-
Intergovernmental
-
-
555,135
Retiree reimbursements
-
-
311,356
Employee contributions
-
-
-
73,580
Other
206,779
66,854
273,633
2,115,972
Total operating revenues
27,100,429
4,110,815
31,211,244
33,643,793
Operating expenses
Purchase of water
11,871,043
-
11,871,043
-
Salaries and benefits
5,572,554
1,778,730
7,351,284
4,049,878
Depreciation
1,631,573
635,398
2,266,971
3,548,544
Professional services
2,844,875
493,284
3,338,159
302,208
Maintenance and supplies
2,013,721
940,618
2,954,339
2,384,264
System maintenance
1,268,432
147,557
1,415,989
-
Fleet parts and supplies
-
-
-
353,635
Telecommunication
-
-
169,443
Hardware
-
-
372,386
Software
-
-
94,490
Fire equipment
-
-
525,135
Workers' compensation
-
-
1,646,315
Claims and judgments
-
-
6,559,117
Compensated absences
-
-
2,924,542
OPEB ARC - Cash subsidy
-
-
-
4,924,751
Other
2,440,162
355,550
2,795,712
-
Total operating expenses
27,642,360
4,351,137
31,993,497
27,854,708
Operating income (loss)
(541,931)
(240,322)
(782,253)
5,789,085
Nonoperating revenues:
Investment income
653,473
78,626
732,099
1,304,659
Net increase in fair value of investments
558,647
67,217
625,864
1,115,338
Gain on sale of capital assets
-
-
-
158,449
Total nonoperating revenues
1,212,120
145,843
1,357,963
2,578,446
Income (loss) before transfers
670,189
(94,479)
575,710
8,367,531
Transfers in (note 13)
-
-
1,000,000
Transfers out (note 13)
-
(610,000)
Total transfers
-
-
390,000
Change in net position
670,189
(94,479)
575,710
8,757,531
Net position, beginning of year
119,602,815
30,768,969
33,072,619
Net position, end of year
$ 120,273,004
$ 30,674,490
$ 41,830,150
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
314,622
Change in net position of business -type activities
$ 890,332
See accompanying notes to basic financial statements
77
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Cash Flows
For the Year Ended June 30, 2020
Enterprise Funds
Governmental
Total Activities
Enterprise Internal Service
Water Wastewater Funds Funds
Cash flows from operating activities
Cash received from customers or user departments
$ 26,769,672
$ 3,952,082
$ 30,721,754 $
29,130,422
Cash payments to employees for services
(5,366,188)
(1,701,922)
(7,068,110)
(8,486,743)
Cash payments to suppliers for goods and services
(17,908,066)
(1,469,571)
(19,377,637)
(12,924,158)
Cash received (payments made) for other operating activities
(2,233,383)
(288,696)
(2,522,079)
2,219,552
Net cash provided by operating activities
1,262,035
491,893
1,753,928
9,939,073
Cash flows from noncapital financing activities:
Cash received from other funds
Cash paid to other funds
Net cash (used) by noncapital financing activities
1,000,000
(2,090,965)
(1,090,965)
Cash flows from capital and related financing activities:
Acquisition of capital assets (2,481,077) (1,208,891) (3,689,968) (3,572,106)
Proceeds from sale of capital assets 158,449
Net cash (used) for capital and related financing activities (2,481,077) (1,208,891) (3,689,968) (3,413,657)
Cash flows from investing activities:
Investment income
Net cash provided by investing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Reconciliation to the statement of net position:
Cash and investments reported on statement of net position
Cash and cash equivalents
Reconciliation of operating income to net cash
provided by operating activities:
Operating income (loss)
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities:
Depreciation
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(Increase) Decrease in intergovernmental receivables
Decrease in inventories
(Increase) in prepaid items
Increase in accounts payable and accrued payroll
Increase in deposits payable
(Decrease) in workers' compensation
Increase in general liability
Increase in compensated absences
Increase in net pension liability and deferred cash flows
(Decrease) in net OPEB liability and deferred cash flows
Total adjustments
Net cash provided by operating activities
Noncash investing, capital and financing activities:
Net increase in fair value of investments
Total of noncash activities
1,212,120 145,843 1,357,963 2,419,997
1,212,120 145,843 1,357,963 2,419,997
(6,922) (571,155) (578,077) 7,854,448
33,518,439 3,813,350 37,331,789 58,326,884
$ 33,511,517 $ 3,242,195 $ 36,753,712 $ 66,181,332
$ 33,511,517 $ 3,242,195 $ 36,753,712 $ 66,181,332
$ 33,511,517 $ 3,242,195 $ 36,753,712 $ 66,181,332
$ (541,931) $ (240,322) $ (782,253) $ 5,789,085
1,631,573
635,398
2,266,971
3,548,544
(171,980)
(91,879)
(263,859)
472,866
38,605
38,605
(525,135)
-
-
26,025
-
-
-
(468,328)
115,591
119,273
234,864
147,065
9,397
-
9,397
-
-
-
(749,000)
1,009,041
-
-
-
524,342
278,014
106,764
384,778
253,081
(97,234)
(37,341)
(134,575)
(88,513)
1,803,966
732,215
2,536,181
4,149,988
$ 1,262,035
$ 491,893
$ 1,753,928 $
9,939,073
$ 558,647
$ 67,217
$ 625,864 $
1,115,338
$ 558,647
$ 67,217
$ 625,864 $
1,115,338
See accompanying notes to basic financial statements
78
Il
79
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FIDUCIARY FUNDS
Agency Funds, a type of Fiduciary Funds, are used to account for assets
held by the City as an agent for other government entities, private
organizations, or individuals.
81
CITY OF NEWPORT BEACH
Agency Funds
Statement of Fiduciary Assets and Liabilities
June 30, 2020
Assets
Cash and investments (note 4)
Restricted cash and investments with fiscal agent (note 4)
Receivable:
Interest
Total assets
Liabilities
Due to bondholders
Due to others
Total liabilities
613,943
1,752,685
1,124
$ 2,367,752
$ 2,053,051
314,701
$ 2,367,752
See accompanying notes to basic financial statements
82
83
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84
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
(1) Summary of Significant Accounting Policies
The basic financial statements of the City of Newport Beach (the "City") have been
prepared in conformity with generally accepted accounting principles ("GAAP") as
applicable to government units. The Governmental Accounting Standards Board ("GASB")
is the accepted standard-setting body for establishing governmental accounting and
financial reporting principles.
a. Reporting Entity
The City of Newport Beach was incorporated on September 1, 1906. The current
City Charter was adopted in 1954. Since adoption, the Charter has been amended
several times. The most recent Charter amendment was approved by the voters
on November 2, 2010. The City operates under a Council -Manager form of
government and provides the following services: public safety (police, fire, and
marine), highway and streets, cultural and recreation, public improvements,
planning and zoning, utilities, and general administrative services.
The financial statements present the financial activity of the City of Newport Beach
(the primary government) and its component unit. The component unit discussed
below is included in the City's reporting entity because of the significance of its
operational or financial relationship with the City. This entity is legally separate
from the City. However, the City of Newport Beach's elected officials have
continuing full or partial accountability for fiscal matters of the component unit. The
financial reporting entity consists of: (1) the City, (2) organizations for which the
City is financially accountable, and (3) organizations for which the nature and
significance of their relationship with the City are such that exclusion would cause
the City's financial statements to be misleading or incomplete.
An organization is fiscally dependent on the primary government if it is unable to
adopt its budget, levy taxes or set rates or charges, or issue bonded debt without
approval by the primary government. In a blended presentation, a component
unit's balances and transactions are reported in a manner similar to the balances
and transactions of the City. Component units are presented on a blended basis
when the component unit's governing body is substantially the same as the City's
or the component unit provides services almost entirely to the City.
Blended Component Unit
The financial statements of the City of Newport Beach include the financial
activities of the Newport Beach Public Facilities Corporation (the "Corporation").
The Corporation was formed on March 9, 1992, for the purpose of assisting the
City of Newport Beach in the financing of public improvements, including a public
library and most recently the new civic center project. The Corporation is governed
by a Board of Directors which is comprised of the seven City Council Members of
the City of Newport Beach. The Corporation's financial data and transactions are
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
included in the debt service fund. Separate financial statements are not prepared
for the Corporation. The debt service fund is used solely to account for the activities
of the Corporation and contains no other City debt financing activities.
b. Basis of Accounting and Measurement Focus
The basic financial statements of the City are composed of the following:
• Government -wide financial statements
• Fund financial statements
• Notes to the financial statements
Government -wide Financial Statements
Government -wide financial statements display information about the reporting
government as a whole, except for its fiduciary activities. These statements include
separate columns for the governmental and business -type activities of the primary
government (including its blended component units). The City of Newport Beach
has no discretely presented component units. Eliminations have been made in the
Statement of Activities so that certain allocated expenses are recorded only once
(by the function to which they were allocated). However, general government
expenses have not been allocated as indirect expenses to the various functions of
the City.
Government -wide financial statements are presented using the economic
resources measurement focus and the accrual basis of accounting. Under the
economic resources measurement focus, all (both current and long-term)
economic resources and obligations of the reporting government are reported in
the government -wide financial statements. Basis of accounting refers to when
revenues and expenses are recognized in the accounts and reported in the
financial statements. Under the accrual basis of accounting, revenues, expenses,
gains, losses, assets, and liabilities resulting from exchange and exchange -like
transactions are recognized when the exchange takes place.
Program revenues include charges for services, special assessments, and
payments made by parties outside of the reporting government's citizenry if that
money is restricted to a particular program. Program revenues are netted with
program expenses in the statement of activities to present the net cost of each
program.
Amounts paid to acquire capital assets are capitalized as assets in the
government -wide financial statements, rather than reported as an expenditure.
Proceeds of long-term debt are recorded as a liability in the government -wide
financial statements, rather than as an other financing source. Amounts paid to
reduce long-term indebtedness of the reporting government are reported as a
reduction of the related liability, rather than as an expenditure.
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June 30, 2020
Sometimes the City will fund outlays for a particular purpose from both restricted
(e.g., restricted bond or grant proceeds) and unrestricted resources. In order to
calculate the amounts to report as restricted — net position and unrestricted — net
position in the government -wide and proprietary fund financial statements, a flow
assumption must be made about the order in which the resources are considered
to be applied. It is the City's practice to consider restricted -net position to have
been depleted before unrestricted — net position is applied.
Fund Financial Statements
The underlying accounting system of the City is organized and operated on the
basis of separate funds, each of which is considered to be a separate accounting
entity. The operations of each fund are accounted for with a separate set of self -
balancing accounts that comprise its assets, liabilities, deferred inflows/outflows of
resources, fund equity, revenues and expenditures or expenses, as appropriate.
Governmental resources are allocated to and accounted for in individual funds
based upon the purposes for which they are to be spent and the means by which
spending activities are controlled.
Fund financial statements for the primary government's governmental, proprietary,
and fiduciary funds are presented after the government -wide financial statements.
These statements display information about major funds individually and non -
major funds in the aggregate for governmental and enterprise funds. Fiduciary
funds are excluded from government -wide financial statements. Fiduciary
statements include financial information for fiduciary funds. Fiduciary funds of the
City primarily represent assets held by the City in a custodial capacity for other
individuals or organizations.
Governmental Funds
In the fund financial statements, governmental funds are presented using the
modified -accrual basis of accounting. Their revenues are recognized when they
become measurable and available as net current assets. Measurable means that
the amounts can be estimated, or otherwise determined. Available means that the
amounts were collected during the reporting period or soon enough thereafter to
be available to finance the expenditures accrued for the reporting period. The City
uses an availability period of 60 days for all revenues.
Property taxes, sales taxes, franchise taxes, gas taxes, motor vehicle license fees,
transient occupancy taxes, grants, and interest associated with the current fiscal
period are all considered to be subject to accrual and so have been recognized as
revenues of the current fiscal period to the extent normally collected within the
availability period. Other revenue items are considered to be measurable and
available when cash is received by the City.
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Notes to Basic Financial Statements
June 30, 2020
Revenue recognition is subject to the measurability and availability criteria for the
governmental funds in the fund financial statements. Exchange transactions are
recognized as revenues in the period in which they are earned (i.e., the related
goods or services are provided). Locally imposed derived tax revenues are
recognized as revenues in the period in which the underlying exchange transaction
upon which they are based takes place. Imposed non-exchange transactions are
recognized as revenues in the period for which they were imposed. If the period of
use is not specified, they are recognized as revenues when an enforceable legal
claim to the revenues arises or when they are received, whichever occurs first.
Government -mandated and voluntary non-exchange transactions are recognized
as revenues when all applicable eligibility requirements have been met.
In the fund financial statements, governmental funds are presented using the
current financial resources measurement focus. This means that only current
assets and deferred outflows of resources, and current liabilities and deferred
inflows of resources are generally included on their balance sheets. The reported
fund balance is considered to be a measure of "available spendable resources".
Governmental fund operating statements present increases (revenues and other
financing sources) and decreases (expenditures and other financing uses) in fund
balance. Accordingly, they are said to present a summary of sources and uses of
"available spendable resources" during a period.
Non-current portions of long-term receivables due to governmental funds are
reported on their balance sheets in spite of their spending measurement focus.
Because of their spending measurement focus, expenditure recognition for
governmental fund types excludes amounts represented by non-current liabilities.
Since they do not affect "available spendable resources", such long-term amounts
are not recognized as governmental fund type expenditures or fund liabilities.
Amounts expended to acquire capital assets are recorded as expenditures in the
year that resources were expended, rather than as fund assets. The proceeds of
long-term debt are recorded as other financing sources rather than as a fund
liability. Amounts paid to reduce long-term indebtedness are reported as fund
expenditures.
Permanent Funds, also referred to as Endowment Funds, are governmental funds
used to report resources that are legally restricted to the extent that only earnings,
and not principal, may be used for purposes that support City programs. The
amount of net appreciation on investments that is available to support City
programs is $2,037,522. The amount of investment earnings available for
expenditure is reported as Restricted Fund Balance in the fund level financial
statements. The endowment principal is reported as Nonspendable for Permanent
Endowments in the Balance Sheet. The State law governing the spending of
endowment funds investment earnings is California Probate Code Section 18504.
The authority for spending investment earnings for scholarships resides with the
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
City Manager and for periodic maintenance dredging in the Newport Bay resides
with the City Council.
Proprietary & Fiduciary Funds
The City's enterprise and internal service funds are proprietary funds. In the fund
financial statements, proprietary and fiduciary funds are presented using the
accrual basis of accounting. Revenues are recognized when they are earned and
expenses are recognized when the related goods or services are delivered. In the
fund financial statements, proprietary funds are presented using the economic
resources measurement focus. This means that all assets, deferred outflows of
resources, all liabilities and deferred inflows of resources (whether current or non-
current) associated with their activity are included on their balance sheets.
Proprietary fund type operating statements present increases (revenues) and
decreases (expenses) in total net position.
Proprietary fund operating revenues, such as charges for services, result from
exchange transactions associated with principal activity of the fund. Exchange
transactions are those in which each party receives and gives up essentially equal
values. Non-operating revenues, such as subsidies, taxes, and investment
earnings result from non-exchange transactions or ancillary activities. Amounts
paid to acquire capital assets are capitalized as assets in the proprietary fund
financial statements, rather than reported as expenditures. Proceeds of long-term
debt are recorded as a liability in the proprietary fund financial statements, rather
than as other financing sources. Amounts paid to reduce long-term indebtedness
of the proprietary funds are reported as reductions of the related liabilities, rather
than as expenditures.
When both restricted and unrestricted resources are combined in a proprietary
fund, expenses are considered to be paid first from restricted resources, and then
from unrestricted resources.
Agency funds are custodial in nature (assets equal liabilities) and do not involve
the recording of City revenues and expenses and have no measurement focus.
C. Fund Classifications
The City utilizes the following broad categories of funds:
Major Funds — Major funds are those funds which are either material or of
particular importance.
Major Governmental Funds — Governmental funds are generally used to account
for tax supported activities. The following governmental funds meet the criteria of
a major fund:
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Notes to Basic Financial Statements
June 30, 2020
General Fund
The General Fund is the general operating fund of the City. It is used to account
for all activities, except those required to be accounted for in another fund.
Special Revenue Funds
Tide and Submerged Land — Operating
The Tide and Submerged Land — Operating Fund is a special revenue fund used
to account for revenues related to the operation of the City's tidelands, including
beaches and marinas, and the related expenditures. Revenue from tideland
operations includes, but is not limited to, rents from moorings, piers, and leases,
as well as income from parking lots, meters, and the sale of oil.
Tide and Submerged Land — Harbor Capital
The Tide and Submerged Land - Harbor Capital Fund is used to account for
incremental increases in revenue from certain property lease, pier, and mooring
rentals that exceed Council designated base year revenue amounts, as well as
other designated revenues and the related expenditures for capital projects,
maintenance, and servicing of loan advances from the General Fund.
Measure M Fund
The Measure M Fund is used to account for revenues and expenditures of funds
received from the Orange County Transportation Authority. Expenditures from this
fund are used exclusively for transportation related purposes. In prior years, this
fund was called the Combined Transportation Fund.
Capital Proiect Funds
Facilities Financial Planning Reserve Fund
The Facilities Financial Planning Reserve Fund is used to account for the receipt
and expenditure of funds for the replacement of facilities. In prior years, this fund
was called the Facilities Replacement Fund.
Debt Service Fund
Civic Center COP
The Civic Center COP Fund is used to account for debt service transactions
related to the Certificates of Participation issued to finance the construction of the
new Civic Center Complex.
Major Proprietary Funds — Proprietary funds are used to report an activity for which
a fee is charged to external users to recover the cost of operation.
Water Fund
The Water Fund is an enterprise fund used to account for the activities associated
with the transmission and distribution of potable water by the City to its users.
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June 30, 2020
Wastewater Fund
The Wastewater Fund is an enterprise fund used to account for the activities
associated with providing sewer services by the City to its users.
Other Governmental Funds — Other Governmental Funds are those funds which
do not meet the criteria of a major fund. Other Governmental Funds used by the
City fall into the following governmental fund types:
Other Special Revenue Funds — Other Special Revenue Funds are used to
account for the proceeds of specific revenue sources which are legally restricted
to expenditures for specified purposes.
Other Capital Projects Funds — Other Capital Projects Funds are used to account
for resources used for the acquisition and construction of capital facilities by the
City, except those financed by Enterprise Funds.
Permanent Funds — Permanent Funds are used to report resources that are legally
restricted for the extent that only earnings, not principal, may be used for purposes
that support the reporting government's programs.
Internal Service Funds — The Internal Service Funds are used to account for the
City's self-insured general liability and workers' compensation, compensated
absences, retiree insurance, the cost of maintaining and replacing the City's rolling
stock fleet, parking equipment, coordinated communications systems equipment,
certain fire equipment, recreation equipment, as well as the cost of maintaining
and replacing the City's information technology systems. City departments are the
primary users of these services and are charged a fee on a cost reimbursement
basis.
Fiduciary Funds — The Fiduciary Funds are used to account for assets held by
the City as an agent for property owners with special assessments, local
businesses in business improvements districts, and other individuals who have
made miscellaneous special deposits with the City.
d. New Accounting Pronouncements
Current Year Standards
In fiscal year 2019-2020, the City implemented the following Government
Accounting Standards Board (GASB) Statements:
• GASB Statement No. 95 — "Postponement of the Effective Dates of Certain
Authority Guidance", effective during fiscal year 2019-2020 and resulted in
delaying the implementation requirements for certain Statements and
Implementation Guides to provide temporary relief to governments and other
stakeholders in light of the COVID-19 pandemic.
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
• GASB Statement No. 97 — "Certain Component Unit Criteria, and Accounting
and Financial Reporting for Internal Revenue Code Section 457 Deferred
Compensation Plans — an amendment of GASB Statements No. 14 and No.
84, and a superression of GASB Statement No. 32", effective for fiscal years
beginning after June 15, 2021, paragraphs 4 and 5. The requirements of these
paragraphs did not impact the City.
Pendinq Accounting Standards
GASB has issued the following statements, which may impact the City's financial
reporting requirements in the future:
• GASB Statement No. 84 —" Fiduciary Activities", effective for periods beginning
after December 15, 2019.
• GASB Statement No. 87 —"Leases", effective for periods beginning after June
15, 2021.
• GASB Statement No. 89 — "Accounting for Interest Cost Incurred before the
End of a Construction Period", effective for periods beginning after December
15, 2020.
• GASB Statement No. 90 — "Majority Equity Interests", effective for periods
beginning after December 15, 2019.
• GASB Statement No. 91 — "Conduit Debt Obligations", effective for periods
beginning after December 15, 2021.
• GASB Statement No. 92 — "Omnibus 2020", primarily effective for periods
beginning after June 15, 2020.
• GASB Statement No. 93 — "Replacement of Internbank Offered Rates",
effective for periods beginning after June 15, 2021
• GASB Statement No. 94 — "Public -Private and Public -Public Parnterships and
Availability Payment Arrangements", effective for periods beginning after June
15, 2022.
• GASB Statement No. 96 — "Subscription -Based Information Technology
Arrangements", effective for fiscal years beginning after June 15, 2022.
• GASB Statement No. 97 — "Certain Component Unit Criteria, and Accounting
and Financial Reporting for Internal Revenue Code Section 457 Deferred
Compensation Plans — an amendment of GASB Statements No. 14 and No.
a
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
84, and a superression of GASB Statement No. 32", effective for fiscal years
beginning after June 15, 2021, except for the requirements of paragraphs 4
and 5.
Accounts Receivables
Accounts receivables represent all service and capital project billings other than
intergovernmental receivables stated below. As of June 30, 2020 accounts
receivable deemed to be uncollectible with an outstanding balance over 120 days
past due were written off the City's accounting records to ensure that the income
statement and balance sheet are fairly stated at the amount expected to be
collected in receivables. Receivables with governmental organizations are
generally excluded from the write-off as they are more likely to be received due to
the governments' creditworthiness.
Cash and Investments
Cash and Cash Eauivalents
Cash and cash equivalents are defined to be cash on hand, demand deposits and
highly liquid investments with a maturity of three months or less from the date of
purchase.
Investments
Investments are generally stated at fair value which is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
Cash and investments are pooled to maximize investment yields. The net change
in fair value and interest earned on the investments is allocated to the respective
funds based on each fund's average monthly cash and investments balance.
The City's investment in LAIF is $74,865,641 at June 30, 2020. This investment
value is based on information provided by the State Treasurer's Office. The
carrying value of the City's position in the fund is materially consistent with the fair
value of the fund shares. This pool is under the regulatory oversight of the State
Treasurer's Office. The LAIF Board consists of five members as designated by
Statute. The Chairman is the State Treasurer, or his designated representative.
Two members qualified by training and experience in the field of investment or
finance, and two members who are treasurers, finance or fiscal officers or business
managers employed by any county, city or local district or municipal corporation of
this state, are appointed by the State Treasurer. The term of each appointment is
two years, or at the pleasure of the appointing authority.
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Notes to Basic Financial Statements
June 30, 2020
g. Intergovernmental Receivables
Intergovernmental receivables represent grant reimbursement requests, capital
project billings, and pending transfers of taxes and fees collected by other
government agencies. As of June 30, 2020, the balance of these accounts totaled
$11,304,210.
h. Inventories and Prepaid Items
Inventories are valued at cost, which approximates market, using the first -in, first -
out method. The City follows the consumption method for inventory control. The
costs of governmental fund and internal service fund inventories are recorded as
expenditures when consumed.
Certain payments to vendors reflect costs applicable to future accounting periods
and are recorded as prepaid items. The City follows the consumption method for
prepaid items.
L Capital Assets
Capital assets, which include land, structures, equipment, and infrastructure
assets, are reported in the applicable governmental or business -type activities
columns in the Government -wide Financial Statements. Capital assets are
recorded at cost where historical records are available and at an estimated original
cost where no historical records exist. Equipment purchased in excess of $5,000
is capitalized if it has an expected useful life in excess of one year. Building,
infrastructure, and improvements are capitalized if cost is in excess of $30,000 if it
has an expected useful life in excess of one year. The cost of normal maintenance
and repairs that do not add to the value of the asset's life are not capitalized. The
City chose to value and report on infrastructure assets in their entirety (e.g. prior
to 1980).
Major capital outlay for capital assets and improvements are capitalized as projects
are constructed. Capital assets acquired through lease obligations are valued at
the present value of future lease payments at the date acquired. Contributed
capital assets are valued at their estimated acquisition value at the date of
contribution.
Capital assets used in operations are depreciated over their estimated useful lives
using the straight-line method in the government -wide financial statements and in
the fund financial statements of the proprietary funds. Depreciation is charged as
an expense against operations and accumulated depreciation is reported on the
respective balance sheet. The ranges of useful life for depreciation purposes for
each capital asset class are as follows:
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Structures
15-75 years
Equipment
3-15 years
Infrastructure
20-75 years
Claims and Judgments
The City accounts for material claims and judgments and associated legal and
administrative costs when it is probable that the liability claim has been incurred
and the amount of the loss can be reasonably estimated. The City records the
estimated loss liabilities in the Internal Service Fund. Included therein are claims
incurred but not reported, which consists of (a) known loss events expected to be
presented as claims later, (b) unknown loss events that are expected to become
claims, and (c) expected future development on claims already reported. This is
based upon historical actual results that have established a reliable pattern
supplemented by specific information about current matters. Small dollar claims
and judgments are recorded as expenditures when paid.
Property Taxes
The assessment, levy, and collection of property taxes are the responsibility of the
County of Orange. The City records property taxes as revenue when received from
the County, except at year-end, when property taxes received within 60 days are
accrued as revenue. Property taxes are assessed and collected each fiscal year
according to the following property tax calendar:
Lien date Jan 1
Levy date July 1
Due dates November 1 1St installment
March 1 2nd installment
Collection dates December 10 1St installment
April 10 2nd installment
Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused
vacation and limited amounts of earned but unused sick leave benefits, which will
be paid to employees upon separation from City service. Beginning in fiscal year
1990, the City adopted a general leave plan to replace the traditional vacation and
sick leave plan. The City uses a general leave plan which permits a maximum of
three years' accrual for every employee, above which the excess is paid out as
current compensation. All employees hired prior to January 1, 1990, were given the
option of remaining in the traditional vacation and sick leave plan or enrolling in the
general leave plan. All employees hired on or after January 1,1990, are
automatically enrolled in the general leave plan. Compensated absences are
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
accrued in the Compensated Absence Internal Service Fund when employee
services have been rendered and when it becomes probable that the City will
compensate the employees for benefits through paid time off or cash payments at
termination or retirement. Benefits that have been earned but are not yet available
for use because employees have not met certain conditions are accrued to the
extent it is probable that the employees will meet the conditions for compensation
in the future.
M. Deposits Payable
In the government -wide and fund -level financial statements, deposits payable
represent monies collected for developer deposits, demolition deposits, planning
deposits and others, for services which have not yet been performed. These
unspent portions are reported as liabilities on the financial statements.
n. Unearned Revenue
Unearned revenues are those where asset recognition has been met, but the
revenue recognition criteria have not been met.
o. Deferred Inflows/Outflows of Resources
In addition to assets, the statement of net position and the governmental funds
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 that applies to future periods
and so will not be recognized as an outflow of resources (expense) until that time.
The City has three items that qualify for reporting in this category. The first item is
the deferred outflows related to employer pension and OPEB contributions made
after the measurement date. The second item is a deferred outflows related to
pensions and OPEB resulting from changes in assumptions. This amount is
amortized over a closed period equal to the average of expected remaining service
lives of all employees that are provided pensions and OPEB through the plans.
The third item is a deferred outflows related to pensions and OPEB resulting from
the difference between expected and actual experience. This amount is amortized
over a closed period equal to the average of expected remaining service lives of
all employees that are provided pensions and OPEB through the plans.
In addition to liabilities, the statement of net position and the governmental funds
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 that applies to future periods
and will not be recognized as an inflow of resources (revenue) until that time. The
City has five items that qualify for reporting in this category. The first item is
unavailable revenues, which is only reported in the governmental funds balance
sheet. The governmental funds report unavailable revenues from two sources:
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
grants receivable and rent collections. These amounts are deferred and
recognized as an inflow of resources in the period that the amounts become
available. The second item is a deferred inflow related to pensions resulting from
the difference between actual and expected experience. This amount is amortized
over a closed period equal to the average of the expected remaining service lives
of all employees that are provided pensions through the plans. The third item is a
deferred inflow related to pensions resulting from the change in assumptions. This
amount is amortized over a closed period equal to the average of expected
remaining service lives of all employees that are provided pensions through the
plans. The fourth item is a deferred inflows resulting from the net difference in
projected and actual earnings on investments of the OPEB plan fiduciary net
position. This amount is amortized over five years. The fifth item is the net
difference in projected and actual earnings on investments of the pension plan's
fiduciary net position. This amount is amortized over five years.
P. Fund Balance Classifications
The governmental fund balance is made up of different classifications and the
following provides explanations as to the nature and purpose of each classification:
Nonspendable fund balance
That portion of fund balance that typically includes amounts that are either (a) not
in a spendable form such as inventories and prepaid items, or (b) legally or
contractually required to be maintained intact such as endowments.
Restricted fund balance
The portion of fund balance that reflects constraints placed on the use of resources
(other than nonspendable items) that are either (a) externally imposed by creditors,
grantors, contributors, or laws or regulations of other governments; or (b) imposed
by law through constitutional provisions or enabling legislation.
Committed fund balance
That portion of a fund balance that includes amounts that can only be used for
specific purposes pursuant to constraints imposed by formal action by the
government's highest level of decision making authority, and remain binding
unless removed in the same manner. The City Council has authority to establish
or modify a fund balance commitment by legislation (Council action) and can only
rescind a fund balance commitment by new legislation requiring the same voting
consensus. The City considers a resolution to constitute a formal action of the City
Council for the purposes of establishing committed fund balance.
Assigned fund balance
That portion of a fund balance that includes amounts that are constrained by the
City's intent to be used for specific purposes and do not meet the criteria to be
classified as restricted or committed. Constraints imposed on the use of assigned
amounts are more easily removed or modified than those imposed on amounts
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
classified as committed. The City's Reserve Policy gives the City Manager the
authority to establish, modify, or rescind a fund balance assignment.
Unassigned fund balance
That residual portion of a fund balance that is not otherwise restricted, committed
or assigned. Positive unassigned fund balance is available to be used for any
purpose. Only the general fund may report a positive unassigned fund balance.
Funds, except the general fund, may report negative unassigned fund balance in
certain circumstances.
In the governmental fund statements, when expenditures are incurred for purposes
for which both restricted and unrestricted (committed, assigned, or unassigned)
fund balances are available, the City uses the most restrictive funds first. The City
uses the appropriate funds in the following order: restricted, committed, assigned,
and finally unassigned amounts.
Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of certain assets, deferred outflows of resources, liabilities and deferred inflows of
resources, disclosure of contingent assets and liabilities, and the related amounts
of revenues and expenditures. Actual results could differ from those estimates.
Management believes that the estimates are reasonable.
Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows
of resources related to pensions, and pension expense, information about the
fiduciary net position of the City of Newport Beach's California Public Employees'
Retirement System (CaIPERS) plans (Plans) and additions to/deductions from the
Plans' fiduciary net position have been determined on the same basis as they are
reported by CaIPERS. For this purpose, benefit payments (including refunds of
employee contributions) are recognized when due and payable in accordance with
the benefit terms. Investments are reported at fair value.
GASB 68 requires that the reported results must pertain to liability and asset
information within certain defined timeframes. For this report, the following
timeframes are used.
Valuation Date (VD)
Measurement Date (MD)
Measurement Period (MP)
98
June 30, 2018
June 30, 2019
July 1, 2018 to June 30, 2019
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
S. Post -Employment Health Care Benefits (OPEB)
For purposes of measuring the net OPEB liability and deferred outflows/inflows of
resources related to OPEB and OPEB expense, information about the fiduciary net
position of the City of Newport Beach's California Public Employees' Retirement
System (CaIPERS) Health Plan and additions to/deductions from the Plans'
fiduciary net position have been determined on the same basis as they are
reported by CaIPERS. For this purpose, benefit payments (including refunds of
employee contributions) are recognized when due and payable in accordance with
the benefit terms. Investments are reported at fair value.
GASB 75 requires that the reported results must pertain to liability and asset
information within certain defined timeframes. For this report, the following
timeframes are used.
Valuation Date (VD)
Measurement Date (MD)
Measurement Period (MP)
June 30, 2019
June 30, 2019
July 1, 2018 to June 30, 2019
(2) Reconciliation of Government -wide and Fund Financial Statements
a. Explanation of Differences Between Governmental Funds Balance Sheet
and the Statement of Net Position
The "total fund balances" of the City's governmental funds $205,022,641 differs
from "net position" of governmental activities $2,195,346,799 reported in the
statement of net position. This difference primarily results from the long-term
economic focus of the statement of net position versus the current financial
resources focus of the governmental funds balance sheet.
Capital Related Items
When capital assets (property, plant, and equipment) that are to be used in
governmental activities are purchased or constructed, the costs of those assets
are reported as expenditures in governmental funds. However, the statement of
net position includes those capital assets among the assets of the City as a whole.
Cost of capital assets $2,531,653,284
Accumulated depreciation (228,706,484)
Total capital assets, net* $2,302,946,800
*Amount excludes net capital assets of $15,880,277 from
Internal Service funds
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Long-term Debt Transactions
Long-term liabilities applicable to the City's governmental activities are not due and
payable in the current period and accordingly are not reported as fund liabilities.
All liabilities (both current and long-term) are reported in the statement of net
position. Balances at June 30, 2020 were:
Certificates of participation $100,695,000
CDBG loan 585,000
Total $101,280,000
Accrued Interest
Accrued liabilities in the statement of net position differ from the amount reported
in governmental funds due to accrued interest on outstanding debt payable (see
Note 6).
Accrued interest added $3,491,913
Investment in Joint Venture
Investment in joint venture is not a current financial resource and hence reported
only in the statement of net position.
Net equity in joint venture 246 470
Unavailable Revenue
Some of the revenue will be collected after year-end, but is not available soon
enough to pay for the current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.
Unavailable revenue $2,495,603
Internal Service Funds
Internal service funds are used by management to charge the costs of certain
activities (such as equipment management and self-insurance authorities) to
individual funds. The assets (including capital assets) and liabilities of the internal
service funds are included in governmental activities in the statement of net
position because they primarily serve governmental activities of the City.
Internal Service Funds $41,830,150
100
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Deferred Outflows of Resources, Deferred Inflows of Resources and Net Pension
Liability — GASB 68
Pension related debt applicable to the governmental activities are not due and
payable in the current period and accordingly are not reported as fund liabilities.
Deferred outflows of resources and deferred inflows of resources related to
pension are only reported in the Statement of Net Position as the changes in these
amounts effects only the government -wide statements for governmental activities.
Internal service funds amounts are excluded.
Deferred Outflows of Resources $57,956,702
Deferred Inflows of Resources (5,420,369)
Pension Liability (291,082,707)
Deferred Outflows of Resources, Deferred Inflows of Resources and Net Post -
Employment Health Care Benefits Liability — GASB 75
Post -employment health care benefits (OPEB) debt applicable to the
governmental activities are not due and payable in the current period and
accordingly are not reported as fund liabilities. Deferred outflows of resources and
deferred inflows of resources related to OPEB are only reported in the Statement
of Net Position as the changes in these amounts effects only the government -wide
statements for governmental activities. Internal service funds amounts are
excluded.
Deferred Outflows of Resources $6,936,584
Deferred Inflows of Resources (514,125)
OPEB Liability (20,678,180)
Internal Balance
Internal balance created by the consolidation of internal service fund activities
related to enterprise funds is not reported in the governmental funds.
Internal Balance 13M 143
Reclassifications and Eliminations
Interfund balances must generally be eliminated in the government -wide
statements, except for net residual amounts due between governmental activities.
Amounts involving fiduciary funds should be reported as external transactions. Any
allocations must reduce the expenses of the function from which the expenses are
being allocated, so that expenses are reported only once in the function in which
they are allocated.
101
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Explanation of Differences Between Government Funds
Balance Sheet and the Statement of Net Position
Total assets and deferred outflows of resources $ 244,225,585 $ 2,531,653,284 $ (228,706,484) $ 64,893,286
Liabilities, Deferred Inflows of Resources
and Fund Balances/Net Position
Liabilities:
Total
Capital
$ 8,246,950 $ $ $
Long-term
4,052,607
Governmental
Related
Accumulated
Debt
Claims payable
Funds
Items
Depreciation
Transactions
Assets and Deferred Outflows of Resources
Unearned revenue
5,700,000
Due to other funds
5,451,666
Cash and investments
$ 200,141,503
$
$
$
Receivables:
Accounts (net of allowance)
5,692,604
Advances to other funds
10,676,659
Interest
1,261,074
Intergovernmental receivables
10,677,986
Restricted cash and investments with fiscal agent
8,752,177
Interfund balances
5,819,378
Investment in joint venture
-
Inventory
258,557
Prepaid items
945,647
Capital assets
-
2,531,653,284
Accumulated depreciation
(228,706,484)
Total assets
$ 244,225,585
$ 2,531,653,284
$ (228,706,484)
$
Deferred Outflows of Resources:
Deferred amount from pension plans
-
57,956,702
Deferred amount from OPEB
6,936,584
Total deferred outflows of resources
64,893,286
Total assets and deferred outflows of resources $ 244,225,585 $ 2,531,653,284 $ (228,706,484) $ 64,893,286
Liabilities, Deferred Inflows of Resources
and Fund Balances/Net Position
Liabilities:
Accounts payable
$ 8,246,950 $ $ $
Accrued payroll
4,052,607
Accrued interest payable
-
Deposits payable
2,579,459
Claims payable
-
Workers' compensation payable
Compensated absences payable
-
Unearned revenue
5,700,000
Due to other funds
5,451,666
Advance from other funds
10,676,659
Long-term liabilities
413,040,887
Total liabilities
36,707,341 413,040,887
Deferred Inflows of Resources:
Unavailable revenue 2,495,603 -
Deferred amount from pension plans - 5,420,369
Deferred amount from OPEB 514,125
Total deferred inflows of resources 2,495,603 5,934,494
Fund balances / net position 205,022,641 2,531,653,284 (228,706,484) (354,082,095)
Total liabilities, deferred inflows of resources
and fund balances / net position $ 244,225,585 $ 2,531,653,284 $ (228,706,484) $ 64,893,286
102
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Investment
Internal
Reclassifications
Interest in Joint
Unavailable
Service
and
Statement of
Payable Venture
Revenue
Funds
Eliminations
Net Position
$ $
$
$ 66,181,332
$
$ 266,322,835
4,022,771
-
1,796,066
5,700,000
7,488,670
(5,819,378)
-
-
(10,676,659)
-
33,963,342
-
1,261,074
3,491,913 45,021,847
(16,496,037)
525,135
11,203,121
- (2,495,603) -
-
134,592
8,752,177
5,554,961
19,112
(5,440,235)
379,143
246,470
6,088,198
-
379,143
246,470
-
413,015
(16,116,894)
671,572
984,380
1,930,027
44,679,625
2,576,332,909
-
(28,799,348)
(257,505,832)
$ $ 246,470
$
$ 85,780,205
$ (16,116,894)
$ 2,617,082,166
-
968,098
58,924,800
257,398
7,193,982
-
1,225,496
66,118,782
$ $ 246,470
$
$ 87,005,701
$ (16,116,894)
$ 2,683,200,948
$ $ $ $ 852,385 $
$ 9,099,335
253,996
4,306,603
3,491,913 -
3,491,913
- -
2,579,459
2,694,118
2,694,118
2,867,523
2,867,523
4,022,771
4,022,771
-
5,700,000
367,712
(5,819,378)
-
-
(10,676,659)
-
33,963,342
447,004,229
3,491,913 45,021,847
(16,496,037)
481,765,951
- (2,495,603) -
-
134,592
5,554,961
19,112
533,237
(2,495,603) 153,704
-
6,088,198
(3,491,913) 246,470 2,495,603 41,830,150
379,143
2,195,346,799
$ - $ 246,470 $ $ 87,005,701 $
(16,116,894)
$ 2,683,200,948
103
101
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Explanation of Differences Between Enterprise Funds and Government -wide
Statement of Net Position
Net position of the City's Enterprise Funds of $150,947,494 differs from net
position of the business -type activities of $150,568,351 reported in the
government -wide statement of net position. The difference, $379,143 results from
the consolidation of internal service fund activities related to the enterprise funds.
Explanation of Differences Between Enterprise Funds
and Government -wide Statement of Net Position
Total Internal Government -wide
Enterprise Service Statement of
Funds Funds Net Position
Assets and Deferred Outflows of Resources
Cash and investments
Receivables:
Accounts (net of allowance)
Intergovernmental receivables
Interfund balances
Capital assets, net
Total assets
$ 36,753,712 $ $ 36,753,712
6,127,558 6,127,558
101,089 101,089
- (379,143) (379,143)
120,769,347 120,769,347
163,751,706 (379,143) 163,372,563
Deferred outflows of resources:
Deferred amount from pension plans 1,471,870
Deferred amount from OPEB 391,342
Total deferred outflows of resources 1,863,212
Total assets and deferred outflows of resources
Liabilities and Deferred Inflows of Resources
1,471,870
- 391,342
1,863,212
$ 165,614,918 $ (379,143) $ 165,235,775
Liabilities:
Accounts payable
$ 3,630,006 $
$ 3,630,006
Accrued payroll
171,049
171,049
Deposits payable
31,886
31,886
Net pension liability
9,432,600
9,432,600
Net OPEB liability
1,168,197
1,168,197
Total liabilities
14,433,738
14,433,738
Deferred inflows of resources:
Deferred amount from pension plans
204,628
204,628
Deferred amount from OPEB
29,058
29,058
Total deferred inflows of resources
233,686
233,686
Total liabilities and deferred inflows of resources
Net Position
Net investment in capital assets
Unrestricted
Total net position
104
$ 14,667,424 $ - $ 14,667,424
$ 120,291,689 $ - $ 120,291,689
30,655,805 (379,143) 30,276,662
$ 150,947,494 $ (379,143) $ 150,568,351
C.
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Explanation of Differences Between Governmental Fund Operating
Statements and the Statement of Activities
The "net change in fund balances" for governmental funds $17,030,920 differs
from the "change in net position" for governmental activities $22,914,865 reported
in the statement of activities. The differences arise primarily from the long-term
economic focus of the statement of activities versus the current financial resources
focus of the governmental funds. The effect of the difference is illustrated below.
Capital Related Items
When capital assets that are to be used in governmental activities (excluding those
reported in Intenal Service Funds) are purchased or constructed, the resources
expended for those assets are reported as expenditures in governmental funds.
However, in the statement of activities, the cost of those assets is allocated over
their estimated useful lives and reported as depreciation expense. In governmental
funds, significant maintenance projects are reclassified as functional expenses in
the statement of net assets. Also, contributed capital is not recorded in
governmental funds; therefore, it is added to the statement of net activities.
Capital outlays
$ 22,681,840
Transfers out of WIP
(10,953,051)
Capital outlays, net
11,728,789
Governmental funds - asset deletions
(3,008,725)
Net change in capital related items
8,720,064
Depreciation expense
(13,357,307)
Deletions in governmental funds accumulated depreciation
1,215,413
Net change in accumulated depreciation
(12,141,894)
Total $ (3,421,830)
105
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Long -Term Debt Transactions
Payment of debt service is reported as an expenditure in governmental funds and
has the effect of reducing fund balance because current financial resources have
been used. Issuance of debt is reported as an other financing source in
governmental funds and increases fund balance. For the City as a whole, however,
the principal payments reduce the liabilities, and proceeds from long-term debt
increase liabilities in the statement of net position.
Civic Center certificates of participation $3,405,000
CDBG loan 171,000
Amortization of debt premium 120,553
Total debt payments $3,696,553
Accrued Interest
Interest accrued on outstanding debt payable is not recorded as an expenditure in
governmental funds and has been added to the statement of activities.
Net change in accrued interest JK 629
Investment in Joint Venture
Investment in joint venture creates an explicit, measurable equity interest reported
only in the statement of activities.
Net change in investment in joint venture 159 077
Unavailable Revenue
Some of the revenue will be collected after year-end, but is not available soon
enough to pay for current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.
Net change in unavailable revenue $1,414,177
Pension Expense
Pension expense reported in the governmental funds includes the annual required
contribution. In the Statement of Activities, pension expense includes the change
in the net pension liability and related change in the pension amounts for deferred
outflows of resources and deferred inflows of resources.
Pension expense ($6.779.351)
106
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Post -Employment Health Care Benefits Expense
Post -employment health care benefits (OPEB) expense reported in the
governmental funds includes the annual required contribution. In the Statement of
Activities, OPEB expense includes the change in the net OPEB liability and related
change in the OPEB amounts for deferred outflows of resources and deferred
inflows of resources.
OPEB expense $2,391,781
Internal Service Funds
Internal service funds are used by management to charge the costs of certain
activities, such as equipment management and self-insurance activities, to
individual funds. The adjustments for internal service funds "close" those funds by
reimbursing or charging additional amounts to participating departments in
individual funds for costs over or under charged for those activities.
Net change in internal service funds $8,757,531
Reclassification and Eliminations
Interfund balances must generally be eliminated in the government -wide financial
statements, except for net residual amounts due between governmental and
business -type activities. Any allocations must reduce the expenses of the function
from which the expenses are being allocated, so that expenses are reported only
once — in the function in which they are allocated. Amounts involving fiduciary
funds should be reported as external transactions. Reclassifications and
eliminations are used by management to consolidate internal service funds into
the Statement of Activities.
Net change in reclassifications and
eliminations to consolidate
internal service funds 314 622
107
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Explanation of Differences Betweeen Government Funds
Operating
Statement and the Statement of Activities
Total
Capital
Long-term
Governmental
Related
Accumulated
Debt
Funds
Items
Depreciation
Transactions
Revenues:
Taxes and assessments
$ 182,983,069
$
$
$
Intergovernmental
12,672,931
Licenses and permits
5,783,862
Charges for services
21,125,622
-
Fines and forfeitures
3,509,883
-
Investment income
3,765,753
Net increase in fair value of investments
3,477,299
-
Property income
25,651,360
Share of joint venture net gain
-
Donations
795,561
-
Gain on sale of capital assets
-
-
Other
5,950,279
-
Total revenues
265,715,619
-
Expenditures:
Current:
General government
15,968,085
2,669,772
526,787
Public safety
118,290,847
52,023
668,368
2,483,810
Public works
45,730,965
2,695,106
6,692,780
633,362
Community development
12,612,751
-
5,082
342,502
Community services
24,474,242
261,596
2,105,892
401,109
Capital outlay
20,376,106
(11,728,789)
-
-
Debt service:
Principal retirement
3,576,000
(3,576,000)
Interest and fiscal charges
7,265,703
Amortization of gain on refunding
-
Amortization of debt premium
-
-
(120,553)
Total expenses
248,294,699
(8,720,064)
12,141,894
691,017
Other financing sources (uses):
Transfers in
40,373,981
-
-
Transfers out
(40,763,981)
-
Total other financing sources
(uses)
(390,000)
-
-
Net change in fund balances /
net position
17,030,920
8,720,064
(12,141,894)
(691,017)
Fund balances / net position, beginning of year
187,991,721
2,522,933,220
(216,564,590)
(353,391,078)
Fund balances / net position, end of year
$ 205,022,641
$ 2,531,653,284
$ (228,706,484)
$ (354,082,095)
108
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
109
Investment
Internal
Reclassifications
Interest
in Joint
Unavailable
Service
and
Statement of
Payable
Venture
Revenue
Funds
Eliminations
Activities
$
$
$ -
$
$
$ 182,983,069
1,414,177
14,087,108
-
5,783,862
-
(314,622)
20,811,000
-
3,509,883
-
1,304,659
5,070,412
-
1,115,338
4,592,637
-
25,651, 360
59,077
59,077
-
-
795,561
158,449
158,449
-
-
-
5,950,279
59,077
1,414,177
2,578,446
(314,622)
269,452,697
-
-
(878,518)
2,427,924
20,714,050
-
-
(3,153,295)
852,549
119,194,302
-
(809,567)
5,112,214
60,054,860
-
(341,518)
223,203
12,842,020
-
(606,187)
31,427
26,668,079
(8,647,317)
-
(80,629)
(120,553)
7,064,521
120,553
-
(80,629)
(5,789,085)
-
246,537,832
1,000,000
(41,373,981)
-
(610,000)
41,373,981
-
-
-
390,000
-
-
80,629
59,077
1,414,177
8,757,531
(314,622)
22,914,865
(3,572,542)
187,393
1,081,426
33,072,619
693,765
2,172,431,934
_L_a,491,9131
$ 246,470
$ 2,495,603
$ 41,830,150
$ 379,143
$ 2,195,346,799
109
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
d. Explanation of Differences Between Enterprise Funds Operating Statement
and the Statement of Activities
The change in net position for the City's enterprise funds $575,710 differs from the
change in net position of the business -type activities $890,332 reported in the
government -wide statement of activities. The difference, $314,622, results from
the consolidation of internal service fund activities related to the enterprise funds.
Explanation of Differences Between Enterprise Funds
Operating Statement and the Statement of Activities
Operating revenues:
Charges for sales and services:
Water sales
Sewer service and connection fees
Intergovernmental
Other
Total operating revenues
Operating expenses:
Purchase of water
Salaries and wages
Depreciation
Professional services
Maintenance and supplies
System maintenance
Other
Total operating expenses
Operating income
Nonoperating revenues (expenses)
Total Internal Business -type activities
Enterprise Service Statement of
Funds Fund Activities
$ 26,893,650 $
4,043,961
273,633
31,211,244
- $ 26,893,650
4,043,961
273,633
31,211,244
11,871,043 -
7,351,284 -
2,266,971 -
3, 338,159 -
2,954,339 (314,622)
1,415,989 2,795,712 -
31,993,497 (314,622)
(782,253) 314,622
11,871,043
7,351,284
2,266,971
3,338,159
2,639,717
1,415,989
2,795,712
31,678,875
(467,631)
Investment income 732,099 - 732,099
Net increase in fair valur of investments 625,864 - 625,864
Total nonoperating revenues (expenses) 1,357,963 - 1,357,963
Change in net position 575,710 314,622 890,332
Net position, beginning of year 150,371,784 (693,765) 149,678,019
Net position, end of year $ 150,947,494 $ (379,143) $ 150,568,351
E
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
(3) Budgetary Control and Compliance
The City adheres to the following general procedures in establishing the budgetary data
reflected in the financial statements:
• During April, the City Manager submits to the City Council a proposed operating
budget for the fiscal year commencing the following July 1. The operating budget
includes proposed expenditures and the means of financing them. Public hearings
are conducted at City Council meetings to obtain taxpayer comments. Prior to July
1, the budget is legally adopted through passage of an appropriation resolution.
• Budgets are adopted on an annual basis consistent with generally accepted
accounting principles for General and Special Revenue Funds.
• The City of Newport Beach does not present budget information on Capital
Projects Funds since the City approved project -length budgets. These project -
length budgets authorize total expenditures over the duration of a construction
project rather than year -by -year budgeting.
• The City of Newport Beach does not present budget information on Debt Service
and Permanent Funds since the City is not required to and does not adopt an
annual budget for these funds.
• The budget is formally integrated into the accounting system and employed as a
management control device during the year.
• The legal level of budgetary control is at the fund level. The City Manager is
authorized to transfer budgeted amounts between departments within any fund;
however, any revisions which alter the total appropriations of any fund must be
approved by City Council.
• At fiscal year-end, budget appropriations lapse. Budget appropriations for
incomplete capital projects are re -budgeted in the following fiscal year by Council
action and are included in the revisions noted above. Projects that are not started
during the budget year are re-evaluated in the following year.
• Encumbrances represent commitments related to unperformed contracts for
goods and services. The City utilizes an encumbrance system as a management
control technique to assist in controlling expenditures. Under this system,
encumbrance accounting for the expenditure of funds is recorded in order to
indicate outstanding commitments and is employed in the governmental fund
types. Encumbrances outstanding at year-end are reported as committed or
restricted fund balances since they do not constitute expenditures or liabilities.
Encumbrances and their related budgets are honored in the subsequent year to
fulfill these commitments and are presented in the original adopted budget.
(4)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Expenditures exceeded appropriations in the following governmental funds:
Appropriations Expenditures
Supplemental Law Enforcement $ 1651000 $ 206,333
The following funds reported deficit fund balances:
Other Governmental Funds
Junior Lifeguards $ 50,137
Internal Service Funds
Compensated Absences $ 8,024,141
Variance
$ (41,333)
The City's intentions are to eliminate deficit fund balances through future grant funding,
other future revenue sources, or interfund transfers.
Cash and Investments
Cash and investments as of June 30, 2020, are classified in the accompanying financial
statements as follows:
Statement of net position:
Cash and investments
Restricted cash and investments
with fiscal agent
Fiduciary funds:
Cash and investments
Restricted cash and investments
with fiscal agent
Total cash and investments
$ 303,076,547
8,752,177
613,943
1,752,685
$ 314,195,352
Cash and investments as of June 30, 2020, consist of the following:
Cash on hand
Deposits with financial institutions
Cash and receivables in investment accounts
Investments
Total cash and investments
112
$ 24,662
10,253,704
50
303,916,936
$ 314,195,352
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Investments Authorized by the California Government Code and the Entity's Investment
Policy
The table below identifies the investment types that are authorized for the City by the
California Government Code (or the City's investment policy, where more restrictive). The
table also identifies certain provisions of the California Government Code (or the City's
investment policy, whichever is more restrictive) that address interest rate risk and
concentration of credit risk. This table does not address investments of debt proceeds held
by bond trustees that are governed by the provisions of debt agreements of the City, rather
than the general provisions of the California Government Code or the City's investment
policy.
113
Maximum
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maturity*
of Portfolio*
in One Issuer*
Local Agency Bonds
5 years
30%
5%
U.S. Treasury Obligations
5 years
No Limit
No Limit
U.S. Agency Securities
5 years
No Limit
No Limit
Banker's Acceptances
180 days
40%
5%
Commercial Paper
270 days
25%
5%
Negotiable Certificates of Deposit
2 years
30%
5%
Repurchase Agreements
30 days
No Limit
5%
Reverse Repurchase Agreements
30 days
10%
5%
Medium -Term Notes
5 years
30%
5%
Mutual Funds
N/A
20%
10%
Money Market Mutual Funds
N/A
20%
20%
Mortgage Pass -Through Securities
5 years
20%
5%
LA County Pooled Investment Funds
N/A
5%
5%
Local Agency Investment Fund (LAIF)
N/A
$75 million
$75 million
Supranationals
5 years
20%
10%
* Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.
113
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustees (i.e., fiscal agents) are governed by
provisions of the debt agreements, rather than the general provisions of the California
Government Code or the City's investment policy. The table below identifies the
investment types that are authorized for investments held by bond trustees. The table
also identifies certain provisions of these debt agreements that address interest rate risk,
credit risk, and concentration of credit risk.
Disclosures Relating to 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. One of the ways that
the City manages its exposure to interest rate risk is by purchasing a combination of
shorter term and longer term investments and by timing cash flows from maturities so that
a portion of the portfolio is maturing or coming close to maturity over time as necessary to
provide the cash flow and liquidity needed for operations.
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:
114
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maximum Maturity
Allowed
in One Issuer
U.S. Treasury Obligations
6 months — No Limit
No Limit
No Limit
U.S. Agency Securities
6 months — No Limit
No Limit
No Limit
Banker's Acceptances
6 months
No Limit
No Limit
Commercial Paper
180 days - 6 months
No Limit
10%
Money Market Mutual Funds
N/A
No Limit
No Limit
Investment Agreements
6 months — No Limit
No Limit
No Limit
Certificates of Deposit
6 months — No Limit
No Limit
No Limit
Demand Deposits
6 months — No Limit
No Limit
No Limit
Time Deposits
6 months — No Limit
No Limit
No Limit
Local Agency Bonds
6 months — No Limit
No Limit
No Limit
Forward Delivery Agreement
6 months
No Limit
No Limit
Forward Purchase Agreement
6 months
No Limit
No Limit
Repurchase Agreements
6 months — No Limit
No Limit
No Limit
Local Agency Investment Fund (LAIF)
N/A
No Limit
No Limit
Municipal Obligations
6 months — No Limit
No Limit
No Limit
County Pooled Investment Funds
N/A
No Limit
No Limit
Disclosures Relating to 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. One of the ways that
the City manages its exposure to interest rate risk is by purchasing a combination of
shorter term and longer term investments and by timing cash flows from maturities so that
a portion of the portfolio is maturing or coming close to maturity over time as necessary to
provide the cash flow and liquidity needed for operations.
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:
114
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Some of the City's investments may have call features where the investments' principal
may be paid down before its maturity. Such investments include asset backed securities,
investments with make whole call provisions, and investments with call dates.
The City's asset backed securities pay monthly coupons, at which time principal may be
paid down. As of June 30, 2020, the City held asset backed securities of $12,314,509.
Investments with make whole call provisions generally may be called any time, but the
terms of the call price generally mitigate the financial impact of a call. As of June 30, 2020,
the City held corporate bonds with make whole call provisions as summarized below:
Maturity
Value
July 2020
Investment Maturities (In Years)
September 2020
646,729
Fair Value
Less than 3
1 to 3
3 to 5 More than 5
Total
Investment Type
December 2021
519,155
January 2023
1,050,500
May 2023
Money Market Funds
$ 305,747 $
305,747
$ - $
S -
S 305;747
U.S. Treasuries
57,100,252
9,581,929
47,518,323
- -
57,100,252
U.S. Agency Bonds
88,867,843
6,828,862
67,434,136
14,604,844 -
88,867,843
Asset Sacked Securities
12,314,509
-
5,057,172
7,257,337 -
12,314,509
Corporate Bonds
47,366,946
20,804,611
21,702,780
4,859,555 -
47,366,946
Commercial Papers
4;798,780
4.798,780
-
- -
4,798,780
Municipal Bonds
2,070,640
-
-
2,074,640 -
2,470,640
LAW
74,865,641
74,865.641
-
- -
74,865,641
Supranationals
5,721,765
5,721.765
-
- -
5,721,765
Investments with Fiscal Agent.
Money Market Funds
10,366,067
10,366,067
-
-
10,386,067
U.S. Treasuries
138,746
138,746
-
- -
138,746
S 303.916.936 S
133.412,150
$ 141.712.410 S
28.792,376 S -
$ 303,916,936
Assunnng callable securities (if any) will not be called.
Some of the City's investments may have call features where the investments' principal
may be paid down before its maturity. Such investments include asset backed securities,
investments with make whole call provisions, and investments with call dates.
The City's asset backed securities pay monthly coupons, at which time principal may be
paid down. As of June 30, 2020, the City held asset backed securities of $12,314,509.
Investments with make whole call provisions generally may be called any time, but the
terms of the call price generally mitigate the financial impact of a call. As of June 30, 2020,
the City held corporate bonds with make whole call provisions as summarized below:
Maturity
Value
July 2020
$ 996,788
September 2020
646,729
February 2021
710,227
May 2021
3,079,630
July 2021
2,022,520
December 2021
519,155
January 2023
1,050,500
May 2023
1,057,070
January 2024
1,628,255
February 2024
2,070,640
$ 13,781,513
Investments with call dates may be called anytime on or after the call date. As of June
30, 2020, the City held corporate bonds with call dates as summarized below:
115
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Maturity
Value
Call Date
October 2020
$ 1,427,242
September 2020
February 2021
453,816
January 2021
April 2021
1,522,875
March 2021
December 2021
1,028,810
November 2021
January 2022
1,032,920
December 2021
February 2022
1,797,408
January 2022
August 2023
1,045,300
June 2023
February 2024
2,186,000
January 2024
$ 10,494,371
Investments may have both a make whole call provision and a regular call date. As of
June 30, 2020, the City held corporate bonds with both a make whole call provision and a
regular call date as summarized below:
Maturity
Value
Call Date
December 2020
$ 1,006,590
November 2020
May 2021
2,440,070
April 2021
June 2021
1,525,575
May 2021
February 2022
2,050,040
November 2021
May 2022
2,067,960
March 2022
December 2022
1,056,090
October 2022
March 2023
1,059,040
January 2023
June 2023
2,178,740
May 2023
$ 13,384,105
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations
As of June 30, 2020, the City did not have any investments (including investments held
by fiscal agent) whose fair values were highly sensitive to interest rate fluctuations.
Disclosures Relating to Credit Risk
Generally, 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 in the following schedule
is the minimum rating (where applicable) required by the California Government Code, the
City's investment policy, or debt agreements, and the actual rating by Standard & Poor's
as of the June 30, 2020 for each investment type.
116
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Concentration of Credit Risk
The investment policy of the City and the California Government Code limit the amount
that can be invested in any one issuer as previously discussed. Investments in any one
issuer (excluding U.S. Treasury Bills, U.S. Treasuries, mutual funds, and pooled
investments) that represent 5% or more of total City's investments are as follows:
Issuer
Investment Type
Mrrnmum Legal
Amount
FHLB
Federal agency securities
kwestmem Type
Fair Value
Benno
AAA
AW1m AA+ AA AA- A* A A-1
A- Not Rated
Money Market Funds
S 305,747
AAArn
$ - S
305,747 S - S - S - S - S - $ - S
- S -
U.S.Treasunes
57,100252
VA
- 57,100.252
U.S. Agency Bonds
88,867,843
NIA
-
- 88,867.843 - - - -
- -
Asset Backed Secumies
12314,509
AAA
7.151.099
- -
Corporate8onds
47,366,946
A
-
1,057,070 3,237.780 3.098,130 10,301,491 19,713,771 -
9,960,703 -
00n1merCial Papers
4,79$,780
A-1
-
- - - - - - 4,798,790
- -
Municipal Bands
2.070,640
A
-
- 2.070,640 - - - - -
- -
LAIF
74,865,641
WA
-
- - - -
74,865,641
Supranatronafs
5,721,765
AA
3,985,140
- - - - - - -
- 1,736,628
Invesir11Bnts With Fiscal Agent
Money Market Funds
10,366,067
AAm
-
10,366,067 - - - - - -
- -
U S. Treasuries
138,746
VA
-
- 138,746 - - - - -
- -
$ 303,916,936
S 11,136.239 $
10,671,814 $149,234,551 S 3,237,780 S 3,086,130 S 10,301,491 $19,713,771 $ 4.798,780 $
9,980,703 S 81,765,677
Concentration of Credit Risk
The investment policy of the City and the California Government Code limit the amount
that can be invested in any one issuer as previously discussed. Investments in any one
issuer (excluding U.S. Treasury Bills, U.S. Treasuries, mutual funds, and pooled
investments) that represent 5% or more of total City's investments are as follows:
Issuer
Investment Type
Reported
Amount
FHLB
Federal agency securities
$
52,398,600
FFCB
Federal agency securities
$
25,837,964
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository
financial institution, a government will not be able to recover its deposits or will not be able
to recover collateral securities that are in the possession of an outside party. The custodial
credit risk for investments is the risk that, in the event of the failure of the counterparty
(e.g., broker-dealer) to a transaction, a government will not be able to recover the value
of its investment or collateral securities that are in the possession of another party. The
California Government Code and the City's investment policy do not contain legal or policy
requirements that would limit the exposure to custodial credit risk for deposits or
investments, other than the following provision for deposits: The California Government
Code requires that a financial institution secure deposits made by state or local
governmental units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The fair
value of the pledged securities in the collateral pool must equal at least 110% of the total
amount deposited by the public agencies. California law also allows financial institutions
to secure City deposits by pledging first trust deed mortgage notes having a value of 150%
of the secured public deposits. As of June 30, 2020, none of the City's deposits with
financial institutions in excess of federal depository amounts were held in uncollateral ized
accounts.
For investments identified herein as restricted cash with fiscal agent, the fiscal agent
selects the investment under the terms of the applicable trust agreement, acquires the
investment, and holds the investment on behalf of the reporting government.
117
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is
regulated by the California Government Code under the oversight of the Treasurer of the
State of California. The fair value of the City's investment in this pool is reported in the
accompanying financial statements at amounts based upon the City's pro -rata share of
the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized
cost of that portfolio). The balance available for withdrawal is based on the accounting
records maintained by LAIF, which are recorded on an amortized cost basis. LAIF is not
rated.
Limitations and restrictions apply to the City's investment in LAIF. Up to 15 transactions
with LAIF are permitted each month. Balances in LAIF may not exceed $75 million, with
the exception of bond accounts. LAIF requests one day prior notice for withdrawals of
$10 million or more.
Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established
by generally accepted accounting principles. The hierarchy is based on the valuation
inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in
active markets for identical assets. Level 2 inputs are significant other observable inputs.
Level 3 inputs are significant unobservable inputs.
Most of the City's investments are in Level 2 of the fair value hierarchy. Examples of Level
2 valuation inputs include:
a)Quoted prices for similar assets or liabilities in active markets
b)Quoted prices for identical or similar assets or liabilities in markets that are not active
c) Inputs other than quoted prices that are observable for the asset or liability
d)Inputs that are derived principally from or corroborated by observable market data
by correlation or other means.
118
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Following are the City's recurring fair value measurements as of June 30, 2020:
Money Market Funds
U.S. Treasuries
U.S. Agency Bonds
Asset Backed Securities
Corporate Bonds
Commercial Papers
Municipal Bonds
LAIF
Supranationals
Investments with Fiscal Agent:
Money Market Funds
U.S. Treasuries
10,366,067 10,366,067 - - -
138,746 - - 138,746 -
$ 303,916,936 $ 85,537,456 $ - $ 218,379,481 $ -
Quoted Prices
Investments
Quoted Prices
for Similar
Significant
That Are Not
in Active Markets
Assets in Active
Unobservable
Subject to Fair
for Identical
Markets
Inputs
Fair Value
Value Hierarchy
Assets (Level 1)
(Level 2)
(Level 3)
$ 305,747
$ 305,747
$ -
$ -
$ -
57,100,252
-
-
57,100,252
-
88,867,843
-
-
88,867,843
-
12,314,509
-
-
12,314,509
-
47,366,946
-
-
47,366,946
-
4,798,780
-
-
4,798,780
-
2,070,640
-
-
2,070,640
-
74,865,641
74,865,641
-
-
-
5,721,765
-
-
5,721,765
-
10,366,067 10,366,067 - - -
138,746 - - 138,746 -
$ 303,916,936 $ 85,537,456 $ - $ 218,379,481 $ -
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
(5) Capital Assets
Capital asset activity for the year ended June 30, 2020, was as follows:
Governmental Activities:
Beginning
Balance Additions Deletions
Non -depreciable:
Land and rights of way $ 1,897,376,130
Work in progress 11,130,736
1,908,506,866
Depreciable:
Structures
Equipment
Infrastructure
Less accumulated
depreciation for:
Structures
Equipment
Infrastructure
Net Depreciable
Net Capital Assets
$ 144,355 $ -
5,835,025 (10,953,051)
5,979,380 (10,953,051)
Balance
June 30, 2020
$ 1,897,520,485
6,012,710
1,903,533,195
232,851,518
7,229,573
(202,531)
239,878,560
52,280,904
3,798,437
(2,241,707)
53,837,634
372,522,070
9,256,557
(2,695,107)
379,083,520
657,654,492
20,284,567
(5,139,345)
672,799,714
(44,600,003)
(4,999,754)
202,531
(49,397,226)
(32,915,937)
(4,375,205)
2,227,407
(35,063,735)
(166,420,073)
(7,530,892)
906,094
(173,044,871)
(243,936,013)
(16,905,851)
3,336,032
(257,505,832)
413,718,479
3,378,716
(1,803,313)
415,293,882
$ 2,322,225,345
$ 9,358,096
$ (12,756,364)
$ 2,318,827,077
Governmental Activities capital assets net of accumulated depreciation at June 30, 2020
are comprised of the following:
General Capital Assets, net $ 2,302,946,800
Internal Service Fund Capital Assets, net 15,880,277
$ 2,318,827,077
120
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Business -type Activities:
Beginning
Balance
Balance
Additions
Deletions June 30, 2020
Non -depreciable:
Land and rights of way $ 2,219,450 $
- $
- $
2,219,450
Work in progress 288,902
2,855,174
(288,902)
2,855,174
2,508,352
2,855,174
(288,902)
5,074,624
Depreciable:
Structures 688,396
-
-
688,396
Equipment 288,376
36,798
-
325,174
Infrastructure 185,497,850
1,104,684
(51,339)
186,551,195
186,474,622
1,141,482
(51,339)
187,564,765
Less accumulated
depreciation for:
Structures (248,784)
(15,357)
-
(264,141)
Equipment (137,951)
(20,359)
-
(158,310)
Infrastructure (69,249,889)
(2,231,255)
33,553
(71,447,591)
(69,636,624)
(2,266,971)
33,553
(71,870,042)
Net Depreciable 116,837,998
(1,125,489)
(17,786)
115,694,723
Net Capital Assets $ 119,346,350 $
1,729,685 $
(306,688) $
120,769,347
Depreciation expense was charged in the following functions
in the Statement of Activities:
Governmental
Business -type
Activities*
Activities
General government
$ 4,963,767
$ -
Public safety
1,667,379
-
Public works
7,714,605
-
Community development
5,082
-
Community service
2,555,018
-
Water
-
1,631,573
Wastewater
-
635,398
$ 16,905,851
$ 2,266,971
*Internal Service Fund depreciation of $3,548,544 is allocated to
governmental functions above.
121
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
(6) Long -Term Liabilities
Changes in Long -Term Liabilities
The long-term liabilities for the year ended June 30, 2020, are as follows:
Governmental activities:
Other debt:
Certificates of participation
payable
Bond premium - Series 2010A
Direct borrowing:
CDBG loan
Other long-term liabilities:
Workers' compensation
payable
Claims and judgments payable
Compensated absences
Amounts
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
$ 104,100,000 $
120,553
756,000
- $ (3,405,000) $ 100,695,000 $
(120,553) -
- (171,000) 585,000
16,270,000 1,646,315 (2,395,315) 15,521,000
6,951,907 6,559,117 (5,550,076) 7,960,948
12,568,977 2,924,542 (2,400,200) 13,093,319
3,065,000
182,000
2,867,523
2,694,118
4,022,771
Total governmental activities $ 140,767,437 $ 11,129,974 $ (14,042,144) $ 137,855,267 $ 12,831,412
Internal service funds predominantly serve the governmental funds. Accordingly, long-term
liabilities for them are included as part of the above totals for governmental activities. Also,
liabilities for workers' compensation, claims and judgments, compensated absences, and net
OPEB obligation are typically liquidated from the internal service funds through resources
collected from individual funds.
Governmental Activities
• Certificates of Participation
In Fiscal Year 2010-11, the City issued $20,085,000 of Series 2010A (Tax Exempt)
and $106,575,000 of Series 2010B (Federally Taxable Direct Pay Build America
Bonds) Certificates of Participation. The 2010A Certificates were issued to prepay the
$3,990,000 principal outstanding on the 1998 Library Certificates of Participation.
Accordingly, the 1998 Library Certificates have been defeased and are no longer
outstanding. The remaining proceeds from the Series 2010A Certificates were used
to finance the acquisition, improvement and equipping of the Civic Center Project. The
Series 2010B Certificates were issued to provide additional financing for the Civic
Center Project. The proceeds of the Certificates were applied to pay certain costs of
issuance incurred in connection with the Certificates.
122
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
The lease payments made by the City are held by a trustee who makes semi-annual
payments on the Certificates of Participation. The lease payments began January 1,
2011, and are in amounts sufficient to cover the payment of principal and interest of
the Certificates. Interest on the Certificates is payable semiannually on January 1 and
July 1 of each year. The 2010A Certificates have been defeased and are no longer
outstanding. The 2010B Certificates interest rates range from 4.45% to 7.17%. The
City has designated the Series 2010B Certificates as "Build America Bonds" (BABs)
under the provisions of the American Recovery and Reinvestment Act of 2009. Thus,
the City receives refundable credits from the United States Treasury on the interest
paid on the 2010B Certificates. As of June 30, 2020 the City has received $21,723,624
of BABs Subsidy from the United States Treasury and expects to receive subsidy
equal to about 33% on future interest payable on the 2010B Certificates. Principal
payments are payable annually on July 1 of each year. The remaining principal
payment the Series 2010B Certificates, which commenced July 1, 2018 and are
payable through July 1, 2040, range from $3,065,000 to $7,245,000. The total
outstanding balance at June 30, 2020 amounted to $100,695,000. The following
assets have been pledged as collateral for the outstanding balance: Central Library,
Civic Center, Fire Station 3, Fire Station 4, Fire Station 7, Mariner's Library, Newport
Coast Community Center, Oasis Senior Center and the Police Station.
The annual amortization requirements of the outstanding Series 2010B Certificates of
Participation are as follows:
Year Ending
June 30
Principal
2021
$ 3,065,000
2022
3,165,000
2023
3,275,000
2024
3,390,000
2025
3,510,000
2026-2030
20,165,000
2031-2035
25,220,000
2036-2040
31,660,000
2041
7,245,000
$100,695,000
• CDBG Loan
Interest
Total
$ 6,895,351
$ 9,960,351
6,733,265
9,898,265
6,556,869
9,831,869
6,365,978
9,755,978
6,142,971
9,652,971
26,660,418
46,825,418
18,624,173
43,844,173
8,476,518
40,136,518
259,661
7,504,661
$ 86,715,204 $187,410,204
In fiscal year 2003, the City received $2,400,000 in Section 108 loan proceeds to assist
with the funding for the Balboa Village Improvement Program. The loan is
collateralized by future Community Development Block Grant allocations. The original
loan was refinanced in fiscal year 2015 lowering the average interest rate from 6.5%
to 1.5%. Future principal payments range from $182,000 to $208,000 through June
30, 2023. The outstanding balance at June 30, 2020, amounts to $585,000.
123
(7)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
The annual amortization requirements for the CDBG Loan are as follows:
Year Ending
June 30 Principal
2021 $182,000
2022 195,000
Interest Total
$11,480 $193,480
7,387 202,387
2023 208,000 2,548 210,548
$ 585,000 $ 21,415 $ 606,415
• Claims and Judgments
The City retains the risk of loss for general liability and workers' compensation claims
as described in Note (8). These amounts represent estimates of amounts to be paid
for reported general liability and workers' compensation claims including incurred -but -
not -reported claims based upon past experience, modified for current trends and
information. While the ultimate amount of losses incurred through
June 30, 2020, is dependent on future developments based upon information from the
City's attorney, the City's claims administrators and others involved with the
administration of the programs, City management believes the accrual is adequate to
cover such losses. The estimated liability at June 30, 2020, for general liability
amounted to $7,960,948 and for workers' compensation was $15,521,000.
• Compensated Absences
The City's policies relating to compensated absences are described in Note (1). This
liability, to be paid in future years from available and future resources, at June 30,
2020, is $13,093,319. Compensated absences are liquidated from the Compensated
Absences internal service fund.
• Unused Credit
The City has a letter of credit in the amount of $317,922.
Limited Obligation Bonds
Special Assessment Districts Bonds
The City has issued certain Assessment District and Community Facilities District Bonds.
Although the City collects and disburses funds for these districts, the City has no obligation
or duty to pay any delinquency out of any available funds of the City. Neither the faith and
credit nor the taxing power of the City is pledged to the payment of the bonds, and
therefore the bonded indebtedness is not shown in the financial statements of the City.
The City holds reserve funds on behalf of bondholders, and the assets are recorded in the
124
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Special Assessment Agency Fund. Bonds outstanding at June 30, 2020, for each district
under the Bond Acts of 1911 and 1915, and other special assessments, are as follows:
Assessment District
Reassessment District 2012
Assessment District No. 117
Assessment District No. 116
Assessment District No. 116B
Assessment District No. 111
(8) Risk Management — General Liability and Workers' Compensation
The City is exposed to various risks of loss related to torts, theft of, damage to, and
destruction of assets, errors and omissions, injuries to employees, and natural disasters.
The City carries commercial insurance with independent third parties for loss risks
associated with real and personal property, and automotive liability. The City purchases
fidelity bonds for employees in key positions. Settled claims from these risks have not
exceeded commercial insurance coverage for the past three years.
The City utilizes Public Risk Innovation, Solutions, and Management (PRISM), formerly
called California State Association of Counties — Excess Insurance Authority (CSAC-EIA),
a joint powers authority, to provide excess insurance for the general liability and workers'
compensation programs. PRISM provides coverage under the terms of a joint -powers
agreement with the City as follows:
Type of Coverage Self -Insured Retention (SIR) Coverage Limits
General Liability $500,000 $25,000,000
Workers' Compensation $500,000 Statutory
PRISM was established for the purpose of creating a risk management pool for all
California public entities. PRISM is governed by a Board of Directors consisting of
representatives of its member public entities.
The Insurance Reserve fund was established to account for costs associated with general
liability and workers' compensation. The Insurance Reserve fund is accounted for as an
internal service fund where assets are set aside for risk management, administration,
claim settlements and benefit distribution. A premium is charged to each fund that
accounts for part-time or full-time employees. The total charge allocated to each of the
funds is calculated using trends in actual experience after considering unexpected and
unusual claims.
Fund liabilities are reported when it is probable that a loss has occurred and the amount
of the loss can be reasonably estimated. Liabilities include an amount for claims that have
125
Bonds Outstanding
Original
Issue
June 30, 2020
$13,583,436
$3,215,459
$
2,955,000
$2,785,000
$
1,575,000
$1,575,000
$
665,000
$ 665,000
$
2,412,000
$2,412,000
(8) Risk Management — General Liability and Workers' Compensation
The City is exposed to various risks of loss related to torts, theft of, damage to, and
destruction of assets, errors and omissions, injuries to employees, and natural disasters.
The City carries commercial insurance with independent third parties for loss risks
associated with real and personal property, and automotive liability. The City purchases
fidelity bonds for employees in key positions. Settled claims from these risks have not
exceeded commercial insurance coverage for the past three years.
The City utilizes Public Risk Innovation, Solutions, and Management (PRISM), formerly
called California State Association of Counties — Excess Insurance Authority (CSAC-EIA),
a joint powers authority, to provide excess insurance for the general liability and workers'
compensation programs. PRISM provides coverage under the terms of a joint -powers
agreement with the City as follows:
Type of Coverage Self -Insured Retention (SIR) Coverage Limits
General Liability $500,000 $25,000,000
Workers' Compensation $500,000 Statutory
PRISM was established for the purpose of creating a risk management pool for all
California public entities. PRISM is governed by a Board of Directors consisting of
representatives of its member public entities.
The Insurance Reserve fund was established to account for costs associated with general
liability and workers' compensation. The Insurance Reserve fund is accounted for as an
internal service fund where assets are set aside for risk management, administration,
claim settlements and benefit distribution. A premium is charged to each fund that
accounts for part-time or full-time employees. The total charge allocated to each of the
funds is calculated using trends in actual experience after considering unexpected and
unusual claims.
Fund liabilities are reported when it is probable that a loss has occurred and the amount
of the loss can be reasonably estimated. Liabilities include an amount for claims that have
125
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
been incurred but not reported (IBNR). Claims liabilities are calculated considering the
effects of inflation, recent claim settlement trends including frequency and amounts of
payouts and other economic and social factors. The total liability claims payable includes
$23,481,948, which represents the discounted present value at June 30, 2020. The claims
are discounted using an interest rate of 3.0 percent.
General Liability Workers' Compensation
(9) Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with
Internal Revenue Code Section 457. The plan, available to all City employees, permits
them to defer a portion of their salary until future years.
Section 457 plan assets were placed in trust for the exclusive benefit of all employees and
their beneficiaries. Therefore, all employee assets held in Section 457 plans are not the
property of the City and are not subject to the claims of the City's general creditors. The
assets under the plan, which are not included in the accompanying financial statements,
totaled $120,659,966 at June 30, 2020.
126
June 30, 2019
June 30, 2020
June 30, 2019
June 30, 2020
Unpaid claims, beginning of fiscal year
$ 12,944,391
$ 6,951,907
$ 16,489,000
$ 16,270,000
Incurred claims (including IBNR)
1,296,366
6,559,117
2,351,675
1,646,315
Claim payments
(7,288,850)
(5,550,076)
(2,570,675)
(2,395,315)
Unpaid claims, end of fiscal year
$ 6,951,907
$ 7,960,948
$ 16,270,000
$ 15,521,000
For the past four years, no
payment on any
claim or judgment
has exceeded the amount
of applicable insurance.
(9) Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with
Internal Revenue Code Section 457. The plan, available to all City employees, permits
them to defer a portion of their salary until future years.
Section 457 plan assets were placed in trust for the exclusive benefit of all employees and
their beneficiaries. Therefore, all employee assets held in Section 457 plans are not the
property of the City and are not subject to the claims of the City's general creditors. The
assets under the plan, which are not included in the accompanying financial statements,
totaled $120,659,966 at June 30, 2020.
126
(10)
Pension Plans
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
a. General Information about the Pension Plans
Plan Descriptions — All qualified permanent and probationary employees are eligible to
participate in the City of Newport Beach's separate Safety (police and fire) and
Miscellaneous (all other) Employee Pension Plans, agent multiple -employer defined
benefit pension plans administered by the California Public Employees' Retirement
System (CaIPERS), which acts as a common investment and administrative agent for its
participating member employers. Benefit provisions under the Plans are established by
State statute and Local Government resolution. CalPERS issues publicly available reports
that include a full description of the pension plans regarding benefit provisions,
assumptions and membership information that can be found on the CalPERS website.
Benefits Provided— CalPERS provides service retirement and disability benefits, annual
cost of living adjustments and death benefits to plan members, who must be public
employees and beneficiaries. Benefits are based on years of credited service, equal to
one year of full time employment. Members with five years of total service are eligible to
retire at age 50 to 62 with statutorily reduced benefits. PEPRA miscellaneous members
become eligible for service retirement upon attainment of age 52 with at least 5 years of
service. All members are eligible for non -duty disability benefits after 5 years of service.
The death benefit is one of the following: the Basic Death Benefit, the 1959 Survivor
Benefit, the Optional Settlement 2W Death Benefit, or the 1957 Survivor Benefit. Safety
members can receive a special death benefit if the member dies while actively employed
and the death is job-related. Fire members may receive the alternate death benefit in lieu
of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively
employed and has at least 20 years of total CalPERS service. The cost of living
adjustments for each plan are applied as specified by the Public Employees' Retirement
Law.
127
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
The Plans' provisions and benefits in effect for the measurement period ended
June 30, 2019 are summarized as follows:
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Prior to
November 24,201;
2.5%@55
5 years service
monthly for life
50-55
2.0% to 2.5%
12.35%- 13.0%
27.40% - 28.05%
Miscellaneous
On or after
November 24,2012
2.0%@60
5 years service
monthly for life
50-63
1.092% to 2.418%
12.35% -13.0%
23.98% - 24.63%
On or after
January 1, 2013
2.0%@62
5 years service
monthly for life
52-67
1.0% to 2.5%
12.35% -13.0%
22.48% - 23.13%
Prior to
On or after
On or after
November 24,2012
November 24,2012
January 1, 2013
3.0%@50
2.0%@50; 3.0%@55
2.7%@57
5 years service
5 years service
5 years service
monthly for life
monthly for life
monthly for life
50-55
50-55
50-57
3.0%
2.0% - 2.7%; 2.4% - 3.0%
2.0% to 2.7%
12.0% -14.6%
12.0% -14.6%
12.0% -14.6%
61.55% - 64.15%
61.55% - 64.15%
63.05% - 65.65%
Employees Covered — At the measurement date of June 30, 2019, the following
employees were covered by the benefit terms for each Plan:
Inactive employees or beneficiaries
currently receiving benefits
Inactive employees entitled to but not
yet receiving benefits
Active employees
Total
Miscellaneous
664
585
505
1,754
Safet
439
88
264
791
Contributions — Section 20814(c) of the California Public Employees' Retirement Law
requires that the employer contribution rates for all public employers are determined on
an annual basis by the actuary and shall be effective on the July 1 following notice of a
change in the rate. The total plan contributions are determined through CaIPERS' annual
actuarial valuation process. The actuarially determined rate is the estimated amount
necessary to finance the costs of benefits earned by employees during the year, with an
additional amount to finance any unfunded accrued liability. The City is required to
contribute the difference between the actuarially determined rate and the contribution rate
of employees. City contribution rates may change if plan contracts are amended.
128
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Payments made by the employer to satisfy contribution requirements that are identified by
the pension plan terms as plan member contributions requirements are classified as plan
member contributions.
b. Net Pension Liability
The City's net pension liability for each Plan is measured as the total pension liability, less
the pension plan's fiduciary net position. The net pension liability of each of the Plans is
measured as of June 30, 2019, using an annual actuarial valuation as of June 30, 2018
rolled forward to June 30, 2019 using standard update procedures. The General fund and
Tidelands funds have typically been used in prior years to liquidate the net pension liability.
A summary of principal assumptions and methods used to determine the net pension
liability is shown below.
Actuarial Assumptions — The total pension liabilities in the June 30, 2018 actuarial
valuations were determined using the following actuarial assumptions:
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Payroll growth
Projected salary Increase
Investment Rate of Return
Mortality Rate Table (2)
Post Retirement Benefit Increase
Miscellaneous
June 30, 2018
June 30, 2019
Safety
June 30, 2018
June 30, 2019
Entry -Age Normal Cost Method
7.15%
2.75%
3.00%
7.15%
2.75%
3.00%
Varies by Entry Age and Service
7.375%(1)
7.375% (1)
Derived using CaIPERS' Membership Date
for all Funds
Contract COLA up to 2.0% until Purchasing
Power Protection Allowance Floor on
Purchasing Power applies, 2.5% thereafter
(1) Net of pension plan investment and administrative expenses, including inflation.
(2) The mortality table was developed based on CalPERS'specific data. The table includes
15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP
2016. For more details on this table, please refer to the December 2017 experience study
report (based on CaIPERS demographic data from 1997 to 2015) that can be found on the
CaIPERS website.
All other actuarial assumptions used in the June 30, 2018 valuation were based on the
results of an actuarial experience study for the period from 1997 to 2011, including
updates to salary increase, mortality and retirement rates. The Experience Study report
can be obtained at the CalPERS website under Forms and Publications.
129
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Discount Rate — The discount rate used to measure the total pension liability was 7.15%.
The projection of cash flows used to determine the discount rate assumed that
contributions from plan members will be made at the current member contribution rates
and that contributions from employers will be made at statutorily required rates, actuarially
determined. Based on those assumptions, the Plan's fiduciary net position was projected
to be available to make all projected future benefit payments of current plan members.
Therefore, the long-term expected rate of return on plan investments was applied to all
periods of projected benefit payments to determine the total pension liability.
Long-term Expected Rate of Return — The long-term expected rate of return on pension
plan investments was determined using a building-block method in which expected future
real rates of return (expected returns, net of pension plan investment expense and
inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both
short-term and long-term market return expectations as well as the expected pension fund
cash flows. Using historical returns of all of the funds' asset classes, expected compound
(geometric) returns were calculated over the short-term (first 10 years) and the long-term
(11+ years) using a building-block approach. Using the expected nominal returns for both
short-term and long-term, the present value of benefits was calculated for each fund. The
expected rate of return was set by calculating the rounded single equivalent expected
return that arrived at the same present value for cash flows as the one calculated using
both short-term and long-term returns. The expected rate of return was then set equal to
the single equivalent rate calculated above and adjusted to account for assumed
administrative expenses.
The expected real rates of return by asset class are as followed:
Assumed
(" In the Ca1PERS' CAFR, Fixed Income is included in Global Debt Securities; Liquidity is
included in Short-term Investments; Inflation Assets are included in both Global Equity
Securities and Global Debt Securities.
(2) An expected inflation of 2.0% used for this period.
(3) An expected inflation of 2.92% used for this period.
130
asset
Real return
Real Return
Asset class
allocation
Years 1-10 (2)
Years 11+(3)
Global equity
50.00%
4.80%
5.98%
Fixed income
28.00%
1.00%
2.62%
Inflation assets
-
0.77%
1.81%
Private equity
8.00%
6.30%
7.23%
Real assets
13.00%
3.75%
4.93%
Liquidity
1.00%
-
-0.92%
(" In the Ca1PERS' CAFR, Fixed Income is included in Global Debt Securities; Liquidity is
included in Short-term Investments; Inflation Assets are included in both Global Equity
Securities and Global Debt Securities.
(2) An expected inflation of 2.0% used for this period.
(3) An expected inflation of 2.92% used for this period.
130
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Subsequent Events
There were no subsequent events that would materially affect the results presented in this
disclosure.
c. Changes in the Net Pension Liability
The changes in the Net Pension Liability for each Plan for the measurement period follow:
Miscellaneous Plan:
Balance at June 30, 2018
Changes in the year:
Service cost
Interest on the total pension liability
Changes in benefit terms
Changes of assumptions
Differences between expected and
actual experience
Net Plan to Plan Resource Movement
Contribution — employer
Contribution — employee
Net investment income
Benefit payments, including refunds of
employee contributions
Administrative Expense
Other Miscellaneous Income/(Expense)
Net changes
Balance at June 30, 2019
131
Increase (Decrease)
Total Pension
Plan Fiduciary
Net Pension
Liability
Net Position
Liability/(Asset)
$ 417,442,358
$ 303,385,616
$ 114,056,742
7,084,444
-
7,084,444
29,409,624
-
29,409,624
403,676
-
403,676
-
1,570
(1,570)
15,700,833
(15,700,833)
-
3,955,144
(3,955,144)
-
19,895,019
(19,895,019)
(20,129,701)
(20,129,701)
-
-
(216,502)
216,502
-
700
(700)
16,768,043
19,207,063
(2,439,020)
$ 434,210,401
$ 322,592,679
$ 111,617,722
131
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Safety Plan:
Balance at June 30, 2018
Changes in the year:
Service cost
Interest on the total pension liability
Changes in benefit terms
Changes of assumptions
Differences between expected and
actual experience
Net Plan to Plan Resource Movement
Contribution — employer
Contribution — employee
Net investment income
Benefit payments, including refunds of
employee contributions
Administrative Expense
Other Miscellaneous Income/(Expense)
Net changes
Balance at June 30, 2019
4,798,077 -
Increase (Decrease)
- (1,570)
Total Pension
Plan Fiduciary
Net Pension
Liability
Net Position
Liability/(Asset)
$ 566,357,864
$ 369,931,799
$ 196,426,065
9,292,715
-
9,292,715
40,081,524
-
40,081,524
4,798,077 -
4,798,077
- (1,570)
1,570
- 28,344,445
(28,344,445)
- 3,162,044
(3,162,044)
- 24,254,890
(24,254,890)
(30,443,097) (30,443,097) -
- (263,991) 263,991
- 855 (855)
23,729,219 25,053,576 (1,324,357)
$ 590,087,083 $ 394,985,375 $ 195,101,708
Sensitivity of the Net Pension Liability to Changes in the Discount Rate — The following
presents the net pension liability of the City for each Plan, calculated using the discount rate for
each Plan, as well as what the City's net pension liability would be if it were calculated using a
discount rate that is 1 -percentage point lower or 1 -percentage point higher than the current rate:
Miscellaneous Safety
1 % Decrease 6.15%
Net Pension Liability $169,623,775
Current Discount Rate 7.15%
Net Pension Liability $111,617,722
1% Increase 8.15%
Net Pension Liability $63,735,602
132
6.15%
$272,137,957
7.15%
$195,101,708
8.15%
$131,423,449
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Pension Plan Fiduciary Net Position — Detailed information about each pension plan's
fiduciary net position is available in the separately issued CalPERS financial reports.
d. Pension Expenses and Deferred OutflowslInflows of Resources Related to
Pensions
For the year ended June 30, 2020, the City recognized pension expense of $52,285,854
($20,891,673 Miscellaneous Plan and $31,394,181 Safety Plan). At June 30, 2020, the
City reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Pension contributions subsequent to
measurement date
Differences between expected and
actual experience
Changes in assumptions
Net differences between projected and
actual earnings on plan investments
Total Miscellaneous Plan
Pension contributions subsequent to
measurement date
Differences between expected and
actual experience
Changes in assumptions
Net differences between projected and
actual earnings on plan investments
Total Safety Plan
Grand Total
133
Miscellaneous Plan
Deferred Deferred
Outflows Inflows
of Resources of Resources
$ 16,351,592 $ -
1,065,323 -
(894,937)
(1,526,471)
$ 17,416,915 $ (2,421,408)
Safety Plan
Deferred
Deferred
Outflows
Inflows
of Resources
of Resources
$ 28,531,744
$ -
5,344,872
(842,231)
9,103,139
(853,833)
- (1,642,117)
$ 42,979,755 $ (3,338,181)
$ 60,396,670 $ (5,759,589)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
$44,883,336 reported as deferred outflows of resources related to contributions
subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ending June 30, 2021. Other amounts reported as deferred outflows of
resources and deferred inflows of resources related to pensions will be recognized as
pension expense as follows:
Year Ending
Total
June 30
Misc.
Safety
Amount
2021
1,143,153
9,331,501
10,474,654
2022
(2,395,977)
473,112
(1,922,865)
2023
(446,418)
748,964
302,546
2024
343,157
556,253
899,410
Thereafter
-
-
-
e. Payable to the Pension Plan
At June 30, 2020, the City had no outstanding amount of contributions to the pension plan
required for the year ended June 30, 2020.
f. Plan Description - Defined Contribution Plan
Pursuant to City Council Resolution No. 91-106, the City entered into a defined
contribution plan administrated by the private administrator known as Public Agency
Retirement System ("PARS") for all of its part-time employees, pursuant to the
requirements of Section 11332 of the Social Security Act. The City Council has the
authority for establishing and amending the plan's provisions per the Resolution, including
establishing and amending contribution requirements. In a defined contribution plan,
benefits depend solely on amounts contributed to the plan plus investment earnings. All
part-time employees are eligible to participate from the date of employment. Federal
legislation requires contributions of at least 7.5% to a retirement plan, and City Council
resolved to match the employees' contributions of 3.75%. The City's contributions for each
employee (and interest earned by the accounts) are fully vested immediately.
For the year ended June 30, 2020, the City's covered payroll for employees participating
in the plan was $3,506,431. Employees made contributions of $131,492 (3.75% of current
covered payroll), which was matched by the employer in the same amount. Assets of the
plan totaled $2,451,992 at June 30, 2020.
(11) Post -Employment Health Care Benefits (OPEB)
The following description of the City of Newport Beach Retiree Health Savings ("RHS")
Plan provides only general information. Participants should refer to the Plan agreement
for a more complete description of the Plan's provisions.
134
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Plan Description
Effective January 2006, the City and employee associations agreed to major changes in
the Post -Employment Health Care Plan. All employees and eligible retirees will participate
in a Retiree Health Savings ("RHS") sponsored by the City, the single employer of the plan
and held in trust and managed by the International City Management Association
Retirement Corporation ("ICMA-RC") (Trustee), under IRS Revenue Ruling 2002-41 (June
26, 2002) and IRS Notice 2002-45 (June 26, 2002).
All employees hired after January 1, 2006, and certain employees hired prior to this date,
as well as employees who elected to fully convert (Fully Converted) to a defined
contribution formula, participate in a program that requires mandatory employee and
employer contributions. However, once these contributions have been made to the
employee's account, the City has no further funding obligation to the Plan on their behalf,
except for the Public Employees' Medical and Hospital Care Act ("PEMHCA") minimum
which is the responsibility of the City.
Certain employees hired prior to January 1, 2006, had the option to retain a hybrid of the
former defined benefit Plan, or to fully convert to the new Plan. Employees electing to
retain a hybrid of the former defined benefit formula (Hybrid) participate in a program
requiring mandatory defined contributions by employees and employer, as well as a
defined benefit consisting of an ongoing contribution from the City to the participant's RHS
account, each month after retirement. Additionally, these employees are eligible to receive
health care benefits under the City's group health care plans. However, in order to receive
these benefits these employees are required to pay the City $100 per month up until their
retirement to offset the unfunded portion of post -employment health care benefits existing
at the inception of the Plan.
For fully converted employees, the City will make a one-time contribution into their
individual RHS account of $100 per month for every month the employee contributed to
the previous defined benefit plan, for a maximum of 15 years. For employees who elected
to retain a hybrid plan, the City will make a one-time contribution into their individual RHS
account of $75 per month for every month the employee contributed to the previous
defined plan for a maximum of 15 years. In order to receive this, the employee must retire
from the City. At June 30, 2020, the liability for the conversion part of the RHS Plan was
$1,742,890. It is not included in the Net OPEB Liability, but is included in the compensated
absences liability. See Notes (6) and (17).
Employees who retired prior to January 1, 2006, continue to receive an ongoing defined
benefit consisting of a contribution made by the City to the participant's RHS account each
month. The defined benefit portion of the plan is closed to new participants.
135
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Employees Covered
As of the measurement date June 30, 2019, the following current and former employees
were covered by the benefit terms under the plan:
Inactive employees, spouses, or beneficiaries currently receiving benefits 605
Inactive employees or beneficiaries entitled to but not yet receiving benefits 53
Active employees 790
Total 1,448
Contributions
Contribution requirements are established by City policy and may be amended by the City
Council. The annual contribution is based on the actuarially determined contribution. For
the year ended June 30, 2020, the City's cash contributions were $4,557,236 to the trust
in premium payments, the estimated implicit subsidy was $822,563, resulting in total
payment of $5,379,799.
Net OPEB Liability
The City's net OPEB liability was measured as of June 30, 2019, and the total OPEB
liability used to calculate the net OPEB liability was determined by an actuarial valuation
dated June 30, 2019. The General fund and Tidelands funds have typically been used in
prior years to liquidate the net OPEB liability. A summary of the principal assumptions
and methods used to determine the total OPEB liability is shown below.
Actuarial Assumptions
The total OPEB liability as of June 30, 2019 actuarial valuation was determined using the
following actuarial assumptions and applied to all periods included in the measurement,
unless otherwise specified:
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Projected Salary Increase
Expected long term investment rate of return
Healthcare Cost Trend Rates
Post Retirement Turnover
Mortality
136
June 30, 2019
June 30, 2019
Entry -Age Normal Cost Method
6.50%
2.50%
2.75% per annum, in aggregate
6.50%
6.50% HMO/6.50% PPO
Derived from CalPERS pension plan
Derived from CALPERS pension plan updated to
reflect most recent experience study
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
The actuarial assumptions used in the June 30, 2019 valuation were based on a standard
set of assumptions the actuary has used for similar valuations, modified as appropriate for
the City.
The long-term expected rate of return was determined using a building-block method in
which best -estimate ranges of expected future real rates of return (expected returns, net
of OPEB plan investment expense and inflation) are developed for each major asset class.
The asset class percentages are taken from the current composition of the California
Employers' Retiree Benefit Trust ("CERBT"), and the expected yields are taken from a
recent CalPERS publication for the pension fund:
Discount Rate
The discount rate used to measure the total OPEB liability is 6.50% per annum. This is
the expected long-term rate of return on City assets using investment strategy 1 within
CERBT. The projection of cash flows used to determine the discount rate assumed that
the City contribution will be made at rates equal to the actuarially determined contribution
rates. Based on those assumptions, the OPEB plan's fiduciary net position is projected
to cover all future OPEB payments. Therefore, the discount rate was set equal to the long-
term expected rate of return.
137
Long -Term
Target
Expected Real
Asset Class
Allocation
Rate of Return
CERBT
Global Equity
59.00%
5.50%
Global Debt Securities
25.00%
2.35%
Inflation Assets
5.00%
1.50%
Commodities
3.00%
1.75%
RE ITs
8.00%
3.65%
Total
100.00%
Discount Rate
The discount rate used to measure the total OPEB liability is 6.50% per annum. This is
the expected long-term rate of return on City assets using investment strategy 1 within
CERBT. The projection of cash flows used to determine the discount rate assumed that
the City contribution will be made at rates equal to the actuarially determined contribution
rates. Based on those assumptions, the OPEB plan's fiduciary net position is projected
to cover all future OPEB payments. Therefore, the discount rate was set equal to the long-
term expected rate of return.
137
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Changes in the Net OPEB Liability
The changes in the net OPEB liability are as follows:
Balance at June 30, 2018
Changes in the year:
Service cost
Interest on the total OPEB liability
Changes of benefit terms
Changes of assumptions
Differences between expected and actual
experience
Contributions - employer
Contributions - employees
Net investment income
Benefit payments, including refunds of
employee contributions
Administrative expenses
Other expense
Net changes
Balance at June 30, 2019
Change of Assumptions
Increase (Decrease
Total OPEB
Plan Fiduciary
Net OPEB
Liability
Net Position
Liability
(a)
(b)
(a) - (b)
$ 44,296,670
$ 21,696,948
$ 22,599,722
524,717
2,795,490
114,311
2,532,319
(3,627,695)
524,717
2,795,490
4,460,937
1,495,861
(3,627,695)
(4,980)
2,532,319
(4,460,937)
(1,495,861)
4,980
2,339,142 2,324,123 15,019
$ 46,635,812 $ 24,021,071 $ 22,614,741
The inflation rate changed from 2.75% to 2.50%. The projected salary increases rate
changed from 3.00% to 2.75%. The HMO healthcare cost trend rate changed from 6.00%
to 6.50%.
Change of Benefit Terms
There was no change of benefit terms.
Subsequent Events
There were no subsequent events that would materially affect the results presented in this
disclosure.
138
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate
The following presents the total OPEB liability of the City, calculated using the discount
rate for the Plan, as well as what the City's total OPEB liability would be if it were calculated
using a discount rate that is 1 -percentage point lower or 1 -percentage point higher than
the current rate:
1 % Decrease Current Discount Rate 1 % Increase
5.50% 6.50% 7.50%
Net OPEB Liability $ 27,299,124 $ 22,614,741 $ 18,639,125
Sensitivity of the Net OPEB Liability to Changes in Health -Care Cost Trend Rates
The following presents the total OPEB liability of the City, as well as what the City's total
OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 -
percentage point lower (5.50% HMO/5.50% PPO) or 1 -percentage point higher (7.50%
HMO/7.50% PPO) than current healthcare cost trend rates:
1 % Decrease
(5.5%HMO/5.5%PPO
decreasing to
4.0%HM0/4.0%PP0)
Net OPEB Liability $
Current Healthcare
Cost Trend Rates
(6.5%HM0/6.5%PP0
decreasing to
5.0%HM0/5.0%PP0)
1 % Increase
(7.5%HM0/7.5%PP0
decreasing to
6.0%HM0/6.0%PP0)
20,865,882 $ 22,614,741 $ 25,039,131
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the year ended June 30, 2020, the City recognized OPEB expense of $2,092,808. At
June 30, 2020, the City reported deferred outflows of resources and deferred inflows of
resources related to OPEB from the following sources:
Description
OPEB contributions subsequent to measurement date
Differences between expected and actual experience
Changes of assumptions
Net difference between projected and actual earnings on
OPEB plan investments
Total
Deferred Outflows of
Resources
$ 5,379,799
2,110,266
95,259
Deferred Inflows of
Resources
- (562,295)
$ 7,585,324 $ (562,295)
The differences between expected and actual experience and changes of assumptions
are amortized over a six year period.The net difference between projected and actual
earnings on plan investment is amortized over a five year period.
139
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
An amount of $5,379,799, which is reported as deferred outflows of resources related to
contributions subsequent to the measurement date, will be recognized as a reduction of
the net OPEB liability in the year ending June 30, 2021.
Amounts reported as deferred outflows of resources and deferred inflows of resources
related to OPEB will be recognized in OPEB expense as follows:
Year Ending
June 30 Amount
2021
204,841
2022
204,843
2023
363,065
2024
429,376
2025
441,105
Payable to the OPEB Plan
At June 30, 2020, the City had no outstanding amount of contributions to the OPEB plan
required for the year ended June 30, 2020.
(12) Interfund Receivables and Payables
At June 30, 2020, interfund advances receivable and payable were as follows:
Advance from Advance to
General Fund $10,676,659 $ -
Tide and Submerged Land - Harbor Capital Fund - 10,676,659
Total $10,676,659 $10,676,659
The General Fund advance to the Tide and Submerged Land — Harbor Capital Fund is
primarily for dredging and other high impact projects within the City's Tidelands. The
advance will be paid back to the General Fund from incremental revenue increases
generated from certain leases, mooring rents, commercial and residential pier rents and
parking meter revenues.
140
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
The annual amortization of the repayment of the advance is as follows:
Harbor Capital Fund Advance - Repayment Terms
(Zero Interest Advance)
Fiscal
Year
Advance #1
Dredging
Projects
Repayment
Advance #2
Marina Park
Project
Repayment
Total
Repayment
2021
750,000
500,000
1,250,000
2022
750,000
500,000
1,250,000
2023
750,000
500,000
1,250,000
2024
750,000
500,000
1,250,000
2025
750,000
500,000
1,250,000
2026
750,000
500,000
1,250,000
2027
750,000
500,000
1,250,000
2028
426,659
500,000
926,659
2029
-
500,000
500,000
2030
-
500,000
500,000
Total
$ 5,676,659
$ 5,000,000
$10,676,659
At June 30, 2020, interfund receivables and payable were as follows:
General Fund
Facilities Financial Planning Reserve Fund
Civic Center COP
Internal Service Funds
Other Governmental Funds
Total
Due from Due to
$ 377,249 $ -
5,442,129 -
- 5,391,992
367,712
59,674
$ 5,819,378 $ 5,819,378
The above balances are primarily due to reclassification of negative cash balances in the
city-wide cash pool.
141
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
(13) Interfund Transfers
Interfund transfers at June 30, 2020, consisted of the following:
Total $ 3,042,672 $ 5,414,939 $ 9,915,459 $ 8,086,599 $ 1,000,000 $ 13,914,312 $41,373,981
The City typically uses transfers to fund ongoing subsidies. The General Fund transferred
$3,042,672 to subsidize the maintenance and operation of the Tide and Submerged Land
— Operating Fund; $5,414,939 to the Tide and Submerged Land — Harbor Capital Fund to
cash fund Harbor Capital projects; $9,915,459 to the Facilities Financial Planning Reserve
Fund to cash fund construction projects for General Fund supported facilities; $1,000,000
to the Insurance Reserve internal service fund; $12,973,173 to Other Governmental Funds
which includes $5,025,724 to the Neighborhood Enhancement Fund to fund construction
projects and acquire Rule 20A credits, $2,301,391 to the Facilities Maintenance Fund,
$5,557,254 to the Unrestricted Capital Improvements Fund for General Fund capital
improvements, and $88,804 to the Assessment District Fund for assessment district
expenditures.
The Facilities Financial Planning Reserve Fund transferred $8,086,599 to the Civic Center
COP Fund for the debt service payments related to the Civic Center Certificates of
Participation; $210,399 to Other Governmental Funds to cash fund construction projects
which includes $109,199 to the Strategic Planning Fund; $50,000 to the Junior Lifeguards
Fund, $43,685 to the Miscellaneous Facilities Financing Fund, and $7,515 to the Sunset
Ridge Park Fund.
The Information Technology Fund transferred $610,000 to the Unrestricted Capital
Improvements Fund for updates to the General Plan.
142
Transfers In
Tide and
Tide and
Facilities
Submerged
Submerged
Financial
Internal
Other
Land -
Land - Harbor
Planning
Civic Center
Service
Governmental
Operating
Capital
Reserve
COP
Funds
Funds
Total
General Fund
$ 3,042,672
$ 5,414,939
$ 9,915,459
$
$ 1,000,000
$ 12,973,173
$32,346,243
Tide and
Submerged Land -
-
-
-
-
10,740
10,740
Operating
Facilities Financial
8,086,599
210,399
8,296,998
Planning Reserve
Internal Service
610,000
610,000
Funds
Other
Governmental
110,000
110,000
Funds
Total $ 3,042,672 $ 5,414,939 $ 9,915,459 $ 8,086,599 $ 1,000,000 $ 13,914,312 $41,373,981
The City typically uses transfers to fund ongoing subsidies. The General Fund transferred
$3,042,672 to subsidize the maintenance and operation of the Tide and Submerged Land
— Operating Fund; $5,414,939 to the Tide and Submerged Land — Harbor Capital Fund to
cash fund Harbor Capital projects; $9,915,459 to the Facilities Financial Planning Reserve
Fund to cash fund construction projects for General Fund supported facilities; $1,000,000
to the Insurance Reserve internal service fund; $12,973,173 to Other Governmental Funds
which includes $5,025,724 to the Neighborhood Enhancement Fund to fund construction
projects and acquire Rule 20A credits, $2,301,391 to the Facilities Maintenance Fund,
$5,557,254 to the Unrestricted Capital Improvements Fund for General Fund capital
improvements, and $88,804 to the Assessment District Fund for assessment district
expenditures.
The Facilities Financial Planning Reserve Fund transferred $8,086,599 to the Civic Center
COP Fund for the debt service payments related to the Civic Center Certificates of
Participation; $210,399 to Other Governmental Funds to cash fund construction projects
which includes $109,199 to the Strategic Planning Fund; $50,000 to the Junior Lifeguards
Fund, $43,685 to the Miscellaneous Facilities Financing Fund, and $7,515 to the Sunset
Ridge Park Fund.
The Information Technology Fund transferred $610,000 to the Unrestricted Capital
Improvements Fund for updates to the General Plan.
142
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
The Building Excise Tax Fund transferred $110,000 to the Parks and Community Centers
Fund for the Central Library Lecture Hall project.
The Tide and Submerged Land — Operating Fund transferred $10,740 to the
Environmental Liability Fund.
(14) Joint Venture Agreements
Bonita Canyon Public Facilities Financing Authority
The Bonita Canyon Public Facilities Financing Authority (Authority) is a joint venture
formed by the City of Newport Beach, Irvine Unified School District, and Newport -Mesa
Unified School District. The Authority's Board is comprised of two members appointed by
each of the member agencies. The Authority created Community Facilities
District 98-1 to finance public facilities that will benefit the properties within their
boundaries. In 1998, the Authority issued $45,000,000 of special tax bonds to be repaid
by special assessments. The Authority paid the City $30,577,712 (81.7%) to pay for the
costs of acquiring and constructing public facilities including parks and road
improvements. In Fiscal Year 2011-12, the Authority issued $38,330,000 of special tax
bonds to refinance the 1998 Series. In Fiscal Year 2017-18, the Authority issued
$28,245,000 of special tax bonds to refinance the 2012 series; the City is not obligated in
any manner to repay the bonds. At June 30, 2020, the contributions from property owners
have been fully spent and no funds are held in trust as cash with fiscal agent. The City
does not make any annual contributions to this joint venture. The City does not include
the Authority as a component unit, as the City is not financially accountable for the
Authority's activities and the Authority is not fiscally dependent on the City. The City's
equity interest in this joint venture is not readily determinable. Complete separate financial
statements can be obtained at the Newport Mesa Unified School District, 2985 Bear
Street, Suite 8M, Costa Mesa, California.
Metro Cities Fire Authority
The City of Newport Beach is a member of a joint venture agreement with the cities of
Anaheim, Brea, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, and Orange
for the operation of a communication network to provide fire suppression, emergency
medical assistance, and rescue services. The oversight board consists of one voting
member and one alternate appointed by the governing body of each member agency. The
City of Newport Beach's costs are based each fiscal year upon the number of recorded
incidents attributable to the City divided by the recorded incidents attributable to all
members during the year, and are recorded in the General Fund as an expenditure for
service. Upon termination of the agreement, the proceeds from the sale of the property
and assets of the joint venture will be paid to each member agency pursuant to their fair
share percentage. Annually, the amounts paid by the City to this joint venture are
approximately $750,086. The City's 11.23% interest in the net equity of this joint venture
at June 30, 2020, amounts to $246,470. Complete separate financial statements can be
143
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
obtained at the Metro Cities Fire Authority offices at 201 S. Anaheim Boulevard, Suite 302,
Anaheim, California.
Integrated Law and Justice Agency of Orange County
The City is a participant in a joint venture agreement with several other public agencies in
Orange County for the operation of the Integrated Law and Justice Agency of Orange
County (ILJAOC). The ILJAOC went into effect in fiscal year 2007, and consists of 25
member agencies, with an oversight board consisting of 16 members from the
participating agencies and 1 alternate. Annually, each member agency pays a percentage
of the operating and replacement costs for the ILJAOC. The City's annual contribution and
interest in the net equity of this joint venture was immaterial as of June 30, 2020. The City
of Newport Beach acted as the Treasurer/Controller of the ILJAOC from inception through
the end of fiscal year 2011-12. Beginning July 1, 2011, the City of Brea, another member
agency, was appointed to serve as Treasurer/Controller, and assumed responsibility for
all operating activities of the ILJAOC. Complete separate financial statements can be
obtained from the City of Brea, 1 Civic Center Circle, Brea, California 92821.
(15) Commitments and Contingencies
Claims and Judaments
Numerous claims and suits have been filed against the City in the normal course of
business. The estimated liability under such claims, based upon information received from
the City Attorney, contracted attorneys and the Risk Manager, has been estimated and
recorded as accrued claims and judgments payable. (See Notes 6 and 8.)
Operating Agreements
The City of Newport Beach first entered into an agreement with Visit Newport Beach Inc.
(VNB), a legally separate non-profit marketing organization, in 1987. The primary
responsibility of the VNB is to attract additional visitor business by promoting the City as
the premier tourist and business destination in Orange County. The VNB is governed by
an Executive Committee comprised of seven individuals not appointed by the City Council
of the City of Newport Beach. The current agreement was entered into on September 27,
2011 and subsequently amended on January 28, 2014 extending the agreement through
December 31, 2024. The City pays VNB 18% of the Total Transient Occupancy Tax
collected during the fiscal year. For the Fiscal Year ending June 30, 2020, the City paid
VNB $4,529,608.
144
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
Contractual Commitments
Construction and contractual commitments for major construction projects are as follows:
Unexpended
Commitments
At fiscal year end, the City's encumbrances with contractors were as follows:
3,136,163
2,654,944
2,181, 003
1,606,880
1,373,062
1,012,562
1,003,074
909,085
855,900
692,335
667,897
556,642
512,878
Annual
Project YTD
Other Governmental Funds
Special Capital
Revenue Project Permanent
Funds Funds Funds
Budget
Expenditures
Advanced Metering Infrastructure
$ 3,185,362
$ 62,529
Cameo Highlands Street Rehab
2,900,000
201,057
Bonita Canyon Rd Pavement Rehab
2,655,088
345,851
General Plan Update
2,110,000
347,431
Newportt Pier Area Water Main Replc
2,526,621
1,153,642
UUD 22 Balboa Blvd
2,418,453
1,133,730
Concrete Street Pavement Reconstruc
1,622,124
619,050
Traffic Signal Rehabilitation
988,860
45,038
Slurry Seal Program
998,005
142,105
Lower Sunset View Park Concept
5,768,660
438,108
Police Station Remodel
750,548
83,114
Central Library Lecture Hall
639,948
84,662
Sewer Main Lining / Repairs
1,443,340
930,462
Unexpended
Commitments
At fiscal year end, the City's encumbrances with contractors were as follows:
3,136,163
2,654,944
2,181, 003
1,606,880
1,373,062
1,012,562
1,003,074
909,085
855,900
692,335
667,897
556,642
512,878
145
General
Major Governmental Funds
Tide and Tide and
Submerged Submerged
Land Operating Land Harbor Capital Measure M
Other Governmental Funds
Special Capital
Revenue Project Permanent
Funds Funds Funds
Total
Drainage
$ -
$ -
$ $ -
$ - $
353,648 $
$ 353,648
Streets
20,446
39,243
1,150,989
5,553,789
2,615,498
9,379,965
Facilities
-
-
-
-
981,235
981,235
Miscellaneous and studies
-
2,078,785
2,078,785
Parks
119,354
1,437,826
1,557,180
Contract services
1,229,057
-
1,229,057
Supplies and materials
292,733
-
292,733
Maintenance and repairs
268,212
604,097
872,309
General
145,830
3,368
149,198
Beaches
-
248,244
454,498
-
-
702,742
Equipment
-
330,110
209,969 -
36,338
-
576,417
Total encumbrances
$ 2,075,632
$ 617,597
$ 664,467 $ 1,150,989
$ 5,590,127 $
8,074,457 $
$ 18,173,269
145
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
(16) Fund Balance
Governmental Fund Balance at June 30, 2020, is classified as follows:
146
Other Governmental Funds
Tide and
Tide and
Facilities
Special
Capital
Submerged
Submerged
Financial Planning Civic Center
Revenue
Project
Permanent
General Land - Operating Land - Harbor Capital
Measure M Reserve COP
Funds
Funds
Funds
Totals
Nonspendable:
Prepaid items (legally restricted)
$ 928,899 $
- $
- $
- $ - $ - $
16,748 $
- $
-
$ 945,647
Inventories (legally restricted)
258,558
-
-
- - -
-
-
-
258,558
Long-term loan receivable (form restricted)
10,676,659
-
-
- - -
-
-
-
10,676,659
Permanent endowment (legally restricted)
-
-
-
- - -
-
-
4,629,781
4,629,781
Restricted:
Affordable housing
1,321,736
-
-
- - -
-
-
-
1,321,736
Oceanfront encroachment
1,457,744
-
-
- - -
-
-
-
1,457,744
Upper Newport bay restoration
-
1,099,953
-
- - -
-
-
-
1,099,953
Cable franchise reserve
2,083,366
-
-
- - -
-
-
-
2,083,366
Community development
847,590
-
-
- - -
-
-
-
847,590
Streets and highways
-
-
-
- - -
368,745
-
-
368,745
Public safety
-
-
-
- - -
862,654
-
-
862,654
Parks
-
-
-
- 4,446,847 -
84,709
-
-
4,531,556
Facilities
-
-
-
- - -
84,709
-
-
84,709
Transportation
-
-
-
- - -
2,271,172
-
-
2,271,172
Air quality improvement
-
-
-
- - -
915,825
-
-
915,825
Environmental liability mitigation
-
-
-
- - -
8,581,826
-
-
8,581,826
Dredging
-
-
6,771,897
- - -
-
-
1,593,881
8,365,778
Libraries
-
-
-
- - -
-
-
215,565
215,565
Scholarships
-
-
-
- - -
-
-
228,076
228,076
Fiin
-
-
-
- - -
1,332,932
-
-
1,332,932
Debt service
-
-
-
- - 1,159,386
-
-
-
1,159,386
Capital re -appropriations
-
433,973
8,962,168
585,533 - -
1,205,949
4,074,617
-
15,262,240
Coronavirus recovery
3,619
3,619
Encumbrance resene:
Beaches
-
248,244
454,498
- - -
-
-
-
702,742
Streets
-
39,243
-
1,150,989 - -
5,553,789
-
-
6,744,021
Equipment
-
330,110
209,969
- - -
36,338
-
-
576,417
Committed:
Strategic planning
-
-
-
- - -
-
157,239
-
157,239
Facilities replacement
-
-
-
- 12,599,992 -
-
-
-
12,599,992
Facilities maintenance
-
-
-
- - -
-
4,114,749
-
4,114,749
Civic center and park
-
-
-
- - -
-
1,724,507
-
1,724,507
Sunset ridge park
-
-
-
- - -
-
96,951
-
96,951
Fire station
-
-
-
- - -
-
2,190,772
-
2,190,772
Oil and gas liabilities
-
720,000
-
- - -
-
-
-
720,000
Parks and community centers
-
-
-
- - -
-
344,281
-
344,281
Parking management
135,180
-
-
- - -
-
830,895
-
966,075
Neighborhood enhancement
-
-
-
- - -
-
3,494,934
-
3,494,934
Capital re -appropriations
-
-
-
- - -
-
13,686,784
-
13,686,784
Encumbrance reserve:
Drainage
-
-
-
- - -
-
353,648
-
353,648
Streets
20,446
-
-
- - -
-
2,615,498
-
2,635,944
Facilities
-
-
-
- - -
-
981,235
-
981,235
Miscellaneous and studies
-
-
-
- - -
-
2,078,785
-
2,078,785
Parks
119,354
-
-
- - -
-
1,437,826
-
1,557,180
Contract services
1,229,057
-
-
- - -
-
-
-
1,229,057
Supplies and materials
292,733
-
-
- - -
-
-
-
292,733
Maintenance and repairs
268,212
-
-
- - -
-
604,097
-
872,309
General
145,830
-
-
- - -
-
3,368
-
149,198
Assigned:
Recreation and senior services
593,720
-
-
- - -
-
-
-
593,720
Fair value adjustment reserve
2,005,108
-
-
- - -
-
-
-
2,005,108
Unassigned:
76,699,280
-
(50,137)
76,649,143
Total fund balances
$99,083,472 $
2.871,523 S
16,398.532 $
1.736,522 $ 17,046.839 $ 1.159.386 $ 21,319,015 $38,740,049 $
6.667,303 $205,022,641
146
(17)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2020
COVID-19 Pandemic
On January 30, 2020, the World Health Organization ("WHO") announced a global health
emergency because of an outbreak of a new strain of coronavirus ("COVID-19 outbreak")
and the risks that is posed to the international community as the virus spread globally
beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as
a pandemic based on the rapid increase in exposure globally.
The City's operations are primarily dependent on the ability to collect property taxes,
transient occupancy taxes, sales taxes, franchise taxes and utility user taxes. Additionally,
access to grants and contracts from federal, state, and local governments may decrease
or may not be available depending on appropriations. The COVID-19 outbreak may have
a continued material adverse impact on economic and market conditions, triggering a
period of global economic slowdown. This situation is expected to depress certain tax
bases and other areas in which the City receives revenue during fiscal year 2021.
However, property taxes, which are the number one source of revenue for the City, are
expected to remain among the least affected revenue sources by the pandemic.
The City has continued to provide core services including public safety (police and fire),
and water and sewer services without disruption during the COVID-19 pandemic.
However, the COVID-19 pandemic has impacted certain other services that the City
provides. During periods when the stay at home orders have been in effect, City Hall and
the City's public libraries and community centers are closed for public use. The City has
implemented an Emergency Telecommuting Policy that specifies the conditions under
which employees are allowed to telecommute and the rules for doing so. The City has
also mandated that City employees work A/ B shifts to ensure continuity of operations,
accommodate social distancing and reduce viral load within City Hall.
The negative impacts from the COVID-19 pandemic on the City's revenues in fiscal year
2019-20 are expected to continue into fiscal year 2020-21 and potentially several fiscal
years beyond depending on the pace of recovery of the local economy and the return of
conventions and tourism activity to the levels which existed prior to the outbreak of the
COVID-19 pandemic. While certain businesses and industries have begun to reopen,
social distancing protocols currently remain intact. These protocols could continue to limit
the capacity of businesses, and many other tourism and sales tax generating activities for
the City.
(18) Subsequent Events
Certificates of Particiaation for Fire Station No. 2
On December 8, 2020 the City issued $7,860,000 of City of Newport Beach Certificates
of Participation 2020A (Fire Station No. 2). The bonds are issued in serial maturities over
ten years with all bonds having a 4.0% coupon. The bond proceeds will primarily be used
to provide financing for the acquisition, improvement and equipping of a new Fire Station
No. 2. Bond proceeds will also be used to pay costs of issuance of the bonds.
147
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148
149
City of Newport Beach
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2020
Last 10 Years *
Defined Benefit Plan for Miscellaneous Employees
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years*
Measurement Period
Total Pension Liability
Service cost
Interest on total pension liability
Differences between expected and actual experience
Changes in assumptions
Changes in benefits
Benefit payments, including refunds of employee contributions
Net Change in Total Pension Liability
Total Pension Liability - beginning
Total Pension Liability - ending (a)
Plan Fiduciary Net Position
Contributions - employer
Contributions - employee
Net investment income
Administrative expense
Other miscellaneous income/(expense)
Plan to plan resource movement
Benefit payments
Net change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - beginning
Plan Fiduciary Net Position - ending (b)
Net pension liability - ending (a) -(b)
2020
2019
2018
2017
2016
73.34
2015
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2014
$ 7,084,444
$ 7,334,861
$ 7,151,754
$ 6,303,642
$ 6,087,960
$
6,523,874
29,409,624
28,226,598
27,069,673
26,375,073
25,427,094
24,624,559
403,676
2,243,854
(4,912,853)
(2,686,814)
(4,736,006)
-
-
(2,522,093)
22,616,424
-
(6,309,248)
for voluntary benefit changes as well as any
-
(20,129,701)
(18,458,539)
(17,249,398)
(16,714,022)
(16,374,370)
(15,290,340)
16,768,043
16,824,681
34,675,600
13,277,879
4,095,430
15,858,093
417,442,358
400,617,677
365,942,077
352,664,198
348,568,768
332,710,674
$ 434,210,401
$ 417,442,358
$ 400,617,677
$ 365,942,077
$ 352,664,198
$
348,568,767
$ 15,700,833
$ 15,797,595
$ 10,509,243
$ 9,904,636
$ 6,615,920
$
5,793,768
3,955,144
3,979,337
4,134,130
4,206,942
4,321,646
4,319,336
19,895,019
23,855,196
28,349,491
1,241,432
5,687,908
38,237,161
(216,502)
(435,499)
(375,172)
(155,791)
(287,862)
-
700
(827,021)
-
-
-
-
1,570
(700)
-
(2,387)
26,981
-
(20,129,701)
(18,458,539)
(17,249,398)
(16,714,022)
(16,374,370)
(15,290,340)
19,207,063
23,910,369
25,368,294
(1,519,190)
(9,777)
33,059,925
303,385,616
279,475,247
254,106,953
255,626,143
255,635,920
222,575,995
$ 322,592,679
$ 303,385,616
$ 279,475,247
$ 254,106,953
$ 255,626,143
$
255,635,920
$ 111,617,722
$ 114,056,742
$ 121,142,430
$ 111,835,124
$ 97,038,055
$
92,932,847
Plan fiduciary net position as a percentage of the total pension liability 74.29%
72.68%
69.76%
69.44%
72.48%
73.34
Covered payroll $ 42,153,383 $
41,468,634 $
41,727,563
$ 40,031,404
$ 38,512,011 $
37,775,051
Net pension liability as percentage of covered payroll 264.79%
275.04%
290.32%
279.37%
251.97%
246.02%
Notes to Schedule:
* Fiscal year 2015 was the first year of implementation, therefore only 6 years are shown.
Benefit Changes:
The figures above do not include any liability impact that may have resulted from plan changes which
occurred after the June
30, 2018 valuation date. This applies
for voluntary benefit changes as well as any
offers of Two Years Additional Service Credit (a.k.a Golden Handshakes).
Change in Assumptions:
None in 2019. In 2018 ,demographic assumptions and inflation rate were changed in accordance to the CaIPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no
changes in the discount rate. In 2017, the discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate
from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.
150
* Fiscal year 2015 was the first year of implementation, therefore only six years are shown.
151
City of Newport Beach
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2020
Last 10 Years *
Defined Benefit Plan for Miscellaneous Employees
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years*
2020 2019
2018
2017
2016
2015
Actuarially determined contribution
$ 13,080,630 $ 12,374,026
$ 11,924,053
$ 10,412,963
$ 9,943,342
$ 7,117,065
Contributions in relation to the actuarially determined contributions
(16,351,592) (15,713,898)
(15,742,587)
(10,412,963)
(9,943,342)
(7,117,065)
Contribution deficiency (excess)
$ (3,270,962) $ (3,339,872)
$ (3,818,534)
$
$
$
Covered payroll
$ 43,902,594 $ 42,153,383
$ 41,468,634
$ 41,727,563
$ 40,031,404
$ 38,512,011
Contributions as a percentage of covered payroll
37.25% 37.28%
37.96%
24.95%
24.84%
18.48
Notes to Schedule:
Valuation date:
6/30/2018 6/30/2017
6/30/2015
6/30/2014
6/30/2013
6/30/2012
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Entry age Entry age
Entry age
Entry age
Entry age
Entry age
Amortization method
(1) (1)
(1)
(1)
(1)
(1)
Asset valuation method
Market Value Market Value
Market Value
Market Value
Market Value
Market Value
Inflation
2.75% 2.75%
2.75%
2.75%
2.75%
2.75%
Salary increases
(2) (2)
(2)
(2)
(2)
(2)
Investment rate of return
7.375%(3) 7.375%(3)
7.5%(3)
7.5%(3)
7.5%(3)
7.5%(3)
Retirement age
(4) (4)
(4)
(4)
(4)
(4)
Mortality
(5) (5)
(5)
(5)
(5)
(5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation
(4) 50 years (2.5%@55 and 2.0%@60) and 52 years (2.0%@62) **
(5) Mortality assumptions are based on mortality rates resulting from
the most recent CalPERS Experience Study adopted by the CaIPERS Board
* Fiscal year 2015 was the first year of implementation, therefore only six years are shown.
151
City of Newport Beach
an Agent Multiple -Employer Defined Benefit Pension Plan
As of June 30, 2020
Last 10 Years *
Defined Benefit Plan for Safety Employees
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years*
leasurement Period
Total Pension Liability
Service cost
Interest on total pension liability
Differences between expected and actual experience
Changes in assumptions
Changes in benefits
Benefit payments, including refunds of employee contributions
Net Change in Total Pension Liability
Total Pension Liability - beginning
Total Pension Liability - ending (a)
Plan Fiduciary Net Position
Contributions - employer
Contributions - employee
Net investment income
Administrative expense
Plan to plan resource movement
Benefit payments
Other miscellaneous income/(expense)
Net change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - beginning
Plan Fiduciary Net Position - ending (b)
Net pension liability - ending (a) -(b)
2020
2019
2018
2017
2016
2015
June 30, 2019
June
30, 2018
June
30, 2017
June
30, 2016
June
30, 2015
June
30, 2014
$ 9,292,715
$
9,223,465
$
9,015,985
$
8,075,553
$
8,077,826
$
8,091,585
40,081,524
38,458,387
37,083,966
36,239,226
35,098,055
33,807,462
4,798,077
3,278,018
(2,192,667)
(1,613,985)
(316,827)
-
-
(1,630,045)
30,110,384
-
(8,359,009)
-
(30,443,097)
(29,183,598)
(28,074,414)
(27,447,982)
(25,838,982)
(24,529,802)
23,729,219
20,146,227
45,943,254
15,252,812
8,661,063
17,369,245
566,357,864
546,211,637
500,268,383
485,015,571
476,354,508
458,985,263
$ 590,087,083
$
566,357,864
$
546,211,637
$
500,268,383
$
485,015,571
$
476,354,508
$ 28,344,445
$
26,779,897
$
19,260,537
$
18,496,776
$
21,529,513
$
12,089,637
3,162,044
3,104,318
2,967,318
2,826,831
2,969,503
3,122,237
24,254,890
29,064,749
34,814,011
1,561,480
7,049,577
47,151,493
(263,991)
(532,480)
(462,427)
(193,780)
(357,866)
-
(1,570)
(855)
-
2,387
-
-
(30,443,097)
(29,183,598)
(28,074,414)
(27,447,982)
(25,838,982)
(24,529,802)
855
(1,011,188)
25,053,576
28,220,843
28,505,025
(4,754,288)
5,351,745
37,833,565
369,931,799
341,710,956
313,205,931
317,960,219
312,608,474
274,774,909
$ 394,985,375
$
369,931,799
$
341,710,956
$
313,205,931
$
317,960,219
$
312,608,474
$ 195,101,708
$
196,426,065
$
204,500,681
$
187,062,452
$
167,055,352
$
163,746,034
Plan fiduciary net position as a percentage of the total pension liability 66.94% 65.32% 62.56% 62.61% 65.56% 65.63
Covered payroll $ 33,935,043 $ 32,866,620 $ 32,450,020 $ 30,816,246 $ 30,189,633 $ 29,944,665
Net pension liability as percentage of covered payroll 574.93% 597.65% 630.20% 607.03% 553.35% 546.83
Notes to Schedule:
* Fiscal year 2015 was the first year of implementation, therefore only six years are shown.
Benefit Changes:
The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2018 valuation date. This applies for voluntary benefit changes as well as any
offers of Two Years Additional Service Credit (a.k.a Golden Handshakes).
Change in Assumptions:
None in 2019. In 2018 ,demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no
changes in the discount rate. In 2017, the discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate
from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.
152
* Fiscal year 2015 was the first year of implementation, therefore only six years are shown.
153
City of Newport Beach
an Agent Multiple -Employer Defined Benefit Pension
Plan
As of June 30, 2020
Last 10 Years *
Defined Benefit Plan for Safety Employees
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years*
2020 2019
2018
2017
2016
2015
Actuarially determined contribution
$ 22,980,289 $ 22,227,698
$ 21,524,636
$ 19,338,360
$ 18,466,207
$ 13,393,374
Contributions in relation to the actuarially determined contributions
(28,531,744) (28,346,069)
(26,620,697)
(19,338,360)
(18,466,207)
(20,993,374)
Contribution deficiency (excess)
$ (5,551,455) $ (6,118,371)
$ (5,096,061)
$ -
$
$ (7,600,000)
Covered payroll
$ 34,279,062 $ 33,935,043
$ 32,866,620
$ 32,450,020
$ 30,816,246
$ 30,189,633
Contributions as a percentage of covered payroll
83.23% 83.53%
81.00%
59.59%
59.92%
69.54
Notes to Schedule:
Valuation date:
6/30/2018 6/30/2017
6/30/2015
6/30/2014
6/30/2013
6/30/2012
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Entry age Entry age
Entry age
Entry age
Entry age
Entry age
Amortization method
(1) (1)
(1)
(1)
(1)
(1)
Asset valuation method
Market Value Market Value
Market Value
Market Value
Market Value
Market Value
Inflation
2.75% 2.75%
2.75%
2.75%
2.75%
2.75%
Salary increases
(2) (2)
(2)
(2)
(2)
(2)
Investment rate of return
7.375%(3) 7.375%(3)
7.5%(3)
7.5%(3)
7.5%(3)
7.5%(3)
Retirement age
(4) (4)
(4)
(4)
(4)
(4)
Mortality
(5) (5)
(5)
(5)
(5)
(5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation
(4) 50 years (2.5%@55 and 2.0%@60) and 52 years (2.0%@62) **
(5) Mortality assumptions are based on mortality rates resulting from
the most recent CalPERS Experience Study adopted by the CalPERS
Board
* Fiscal year 2015 was the first year of implementation, therefore only six years are shown.
153
City of Newport Beach
Post -Employment Health Care Benefits (OPEB) Retirement Plan
As of June 30, 2020
Last 10 Years *
SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years*
Benefit payments, including refunds of member contributions
Net change in Total OPEB Liability
Total OPEB Liability - beginning
Total OPEB Liability - ending (a) $
Plan fiduciary net Position
Contributions - employer $
Contributions - member
Net investment income
Benefit payments, including refunds of member contributions
Administrative expense
Other expense
Net change in plan fiduciary net position
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b) $
44,296,670
2020
2019
2018
Measurement Period
June 30, 2019
June 30, 2018
June 30, 2017
Total OPEB Liability
4,460,937
$ 4,675,193
$ 4,594,772
Service cost
$ 524,717
$ 509,434
$ 478,341
Interest
2,795,490
2,814,685
2,830,153
Differences between expected and actual experience
2,532,319
-
-
Changes in assumptions
114,311
2,947,450
21, 696, 948
Changes in benefits terms
-
24,021,071
$ 21,696,948
Benefit payments, including refunds of member contributions
Net change in Total OPEB Liability
Total OPEB Liability - beginning
Total OPEB Liability - ending (a) $
Plan fiduciary net Position
Contributions - employer $
Contributions - member
Net investment income
Benefit payments, including refunds of member contributions
Administrative expense
Other expense
Net change in plan fiduciary net position
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b) $
44,296,670
44,614,266
44,819,178
46,635,812
$ 44,296,670
$ 44,614,266
48.98%
42.80%
Covered- employee payroll $
4,460,937
$ 4,675,193
$ 4,594,772
1,495, 861
1,605,114
1,875, 536
(3,627,695)
(3,641,715)
(3,513,406)
(4,980)
(11,076)
(9,452)
-
(25,258)
-
2,324,123
2,602,258
2,947,450
21, 696, 948
19, 094,690
16,147,240
24,021,071
$ 21,696,948
$ 19,094,690
City's Net OPEB liability - ending (a) -(b) $
22,614,741 $
22,599,722 $
25,519,576
Plan fiduciary net position as a percentage of the total OPEB liability
51.51%
48.98%
42.80%
Covered- employee payroll $
75,814,626 $
73,999,059 $
74,484,613
City's Net OPEB liability as percentage of covered -employee payroll
29.83%
30.54%
34.26%
Notes to Schedule:
* Fiscal year 2018 was the first year of implementation, therefore only three years are shown.
154
City of Newport Beach
Post -Employment Health Care Benefits (OPEB) Retirement Plan
As of June 30, 2020
Last 10 Years *
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years*
2020 2019 2018
Actuarially determined contribution
$ 3,834,916 $
3,827,337 $
3,925,087
Contributions in relation to the actuarially determined contributions
(5,379,799)
(5,133,062)
(5,309,626)
Contribution deficiency (excess)
$ (1,544,883) $
(1,305,725) $
(1,384,539)
Covered -employee payroll $ 77,637,171
Contributions as a percentage of covered -employee payroll -6.93%
Notes to Schedule:
Valuation date: June 30, 2019
* Fiscal year 2018 was the first year of implementation, therefore only three years are shown.
155
$ 75,814,626 $ 73,999,059
-6.77% -7.18%
June 30, 2017 June 30, 2017
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156
INFORMATION
MENTAL FUNDS
157
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158
OTHER GOVERNMENTAL FUNDS
Other Special Revenue Funds
Special Revenue Funds are used to account for the proceeds of specific revenue sources
which are legally restricted to expenditures for specified purposes. The City of Newport
Beach Special Revenue Funds are as follows:
The State Gas Tax Fund accounts for all State Gas Tax related revenues and expenditures,
including street repair, construction, and maintenance. State law requires that these funds be
used exclusively for maintenance of the street and highway system.
The SB1 Gas Tax RMRA Fund accounts for all Road Maintenance and Rehabilitation Account
related revenues and expenditures. State law requires that these funds be used exclusively for
the transportation system. RMRA revenues are from fuel and vehicle registration taxes imposed
by the state's Road Repair and Accountability Act of 2017.
The Asset Forfeiture Fund was established to account for all revenues resulting from the
seizure of assets in conjunction with criminal cases (primarily drug trafficking). It is the City's
policy that all such funds shall be used for enhancement of law enforcement programs.
The Office of the Traffic Safety (OTS) DUI Grant Fund is used to account for federal funding of
the Selective Traffic Enforcement Program (STEP). These funds are used exclusively for DUI
enforcement.
The Circulation and Transportation Fund is used to account for fair share revenues collected
from developers and restricted for capital improvement projects meeting the circulation element of
the City's General Plan.
The Building Excise Tax Fund is used to account for revenues received from builders or
developers on building or remodeling projects within the City. Expenditures from this fund are
used exclusively for public safety, libraries, parks, beaches, or recreational activities.
The Community Development Block Grant Fund is used to account for revenues and
expenditures relating to the City's Community Development Block Grant program. These funds
are received from the Federal Department of Housing and Urban Development and must be
expended exclusively on programs for low or moderate income individuals/families.
The Air Quality Management District Fund is used to account for revenues received from the
South Coast Air Quality Management District restricted for the use of reducing air pollution.
The Environmental Liability Fund is used to account for solid waste fees restricted for
mitigation of future environmental liability relating to the handling of solid waste.
The Supplemental Law Enforcement Services Fund (SLESF) is used to account for revenues
received from the county to be used exclusively for front line law enforcement services.
The Contributions Fund is used to account for revenues received from other government
agencies or private developers and expended for specific streets, highway, construction, or water
quality projects.
159
The Fostering Interest in Nature (FIIN) Fund is restricted for recreation and education
programming as a mitigation effort by the California Coastal Commission.
The CARES Small Business Grant Fund is used to account for federal funding passed through
the County of Orange under the Federal Coronavirus Aid, Relief, and Economic Security Act
(CARES). These funds are used exclusively for economic support to small businesses in
connection with the COVID-19 pandemic.
Other Capital Projects Funds
Capital Projects Funds are used to account for resources used for the acquisition and
construction of capital facilities by the City, except those financed by Enterprise Funds.
The City of Newport Beach Capital Projects Funds are as follows:
The Assessment District Fund is used to account for the receipt and expenditure of funds
received from 1911 Act and 1915 Act Assessment Districts for capital improvement projects.
The Fire Station Fund is used to account for the design and construction of new fire stations.
The Facilities Maintenance Fund is used to account for revenues and expenditures associated
with the maintenance of existing facilities.
The Civic Center and Park Fund is used to account for the design and construction of a new
Civic Center Complex. In prior years, this fund was called City Hall Improvements Fund.
The Sunset Ridge Park Fund is used to account for the design and construction of the Sunset
Ridge Park.
The Strategic Planning Fund is used to account for expenditures for study and concept
development needed to further refine the Facilities Financing Planning Program. It includes
developing both interim and long-term use plans for the old City Hall site on Newport Boulevard.
The Newport Uptown Undergrounding Fund is used to account for the receipt and
expenditures related to the development within the Newport Uptown Planned Community
Development Plan.
The Miscellaneous Facilities Financing Fund is used to account for expenditures for small
scale facility rehabilitation, expansion and/or replacement in accordance with the Facilities
Financing Planning Program.
The Parks and Community Centers Fund is used to account for expenditures for park and
community center rehabilitation, expansion and/or replacement in accordance with the Facilities
Financing Planning Program.
The West Newport Community Center Fund is used to account for the design and construction
of the West Newport Community Center.
The Balboa Village Parking Management District Fund is used to account for revenues and
expenditures associated with parking management improvements in Balboa Village.
The Misc. Santa Ana Heights (SAH) Projects Fund is used to account for various grants and
projects associated with providing public works, parks and recreation opportunities within the part
of the City known as Santa Ana Heights.
160
The Neighborhood Enhancement Fund is used to account for projects that will enhance
neighborhood aesthetics and functionality.
The Junior Lifeguards Fund is used to account for capital improvement projects related to the
Junior Lifeguards program.
The Unrestricted Capital Improvements Fund is used to separately account for general fund
capital improvement projects.
Other Permanent Funds
Permanent Funds are used to report resources that are legally restricted for the extent that
only earnings, not principal, may be used for purposes that support the reporting
government's programs. The City of Newport Beach Permanent Funds are as follows:
The Bay Dredging Fund is used to account for the receipt of permanent endowments intended
to fund the ongoing cost of maintaining and dredging of the Upper Newport Bay.
The Ackerman Fund is used to account for the receipt of permanent endowments intended as
follows: 75% of the fund's investment proceeds will be used for the purchase of high-tech library
equipment while the remaining 25% will be used for scholarships for needy students.
161
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2020
Page 1 of 8
162
Special Revenue
State
SBI Gas Tax
Asset
OTS
Gas Tax
RMRA
Forfeiture
DUI Grant
Assets
Cash and investments
$
2,837,911
$
1,596,353
$
862,654
$
Receivables:
Accounts (net of allowance)
-
-
-
Intergovernmental receivables
-
230,577
Restricted cash and investments with fiscal agent
-
-
Prepaid items
-
-
-
Total assets
$
2,837,911
$
1,826,930
$
862,654
$
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
115,190
$
218,778
$
$
Unearned revenue
-
-
Due to other funds
-
-
Total liabilities
115,190
218,778
-
Deferred inflows of resources:
Unavailable revenue
-
-
Fund balances (deficits):
Nonspendable:
Prepaid items
Permanent endowment
-
-
Restricted
2,722,721
1,608,152
862,654
Committed
-
-
-
Assigned
Unassigned
-
-
-
Total fund balances (deficits)
2,722,721
1,608,152
862,654
Total liabilities, deferred inflows of resources
and fund balances
$
2,837,911
$
1,826,930
$
862,654
$
(continued)
162
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2020
Page 2 of 8
163
Special Revenue
Circulation
Building
Community
Air Quality
and
Excise
Development
Management
Transportation
Tax
Block Grant
District
Assets
Cash and investments
$ 2,636,962
$
497,350
$
$
1,229,487
Receivables:
Accounts (net of allowance)
-
-
-
Intergovernmental receivables
-
38,544
27,284
Restricted cash and investments with fiscal agent
-
-
-
Prepaid items
-
-
-
-
Total assets
$ 2,636,962
$
497,350
$
38,544
$
1,256,771
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$ -
$
145
$
29,007
$
7,002
Unearned revenue
-
-
-
-
Due to other funds
-
-
9,537
-
Total liabilities
-
145
38,544
7,002
Deferred inflows of resources:
Unavailable revenue
-
-
-
27,284
Fund balances (deficits):
Nonspendable:
Prepaid items
-
-
-
Permanent endowment
-
-
-
Restricted
2,636,962
497,205
1,222,485
Committed
-
-
-
Assigned
-
Unassigned
-
-
-
Total fund balances (deficits)
2,636,962
497,205
-
1,222,485
Total liabilities, deferred inflows of resources
and fund balances
$ 2,636,962
$
497,350
$
38,544
$
1,256,771
(continued)
163
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2020
Page 3 of 8
(continued)
164
Special Revenue
Supplemental
Environmental
Law
Liability
Enforcement Contributions
FIIN
Assets
Cash and investments
$
8,641,288
$
$
1,833,799
$
1,334,785
Receivables:
Accounts (net of allowance)
9,588
383,154
-
Intergovernmental receivables
-
179,815
Restricted cash and investments with fiscal agent
-
-
-
Prepaid items
16,748
-
-
Total assets
$
8,667,624
$
$
2,396,768
$
1,334,785
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
62,440
$
$
88,122
$
1,853
Unearned revenue
-
-
98,391
-
Due to other funds
-
-
-
Total liabilities
62,440
-
186,513
1,853
Deferred inflows of resources:
Unavailable revenue
-
383,154
-
Fund balances (deficits):
Nonspendable:
Prepaid items
16,748
Permanent endowment
-
-
-
Restricted
8,588,436
1,827,101
1,332,932
Committed
-
-
-
Assigned
Unassigned
-
-
-
Total fund balances (deficits)
8,605,184
1,827,101
1,332,932
Total liabilities, deferred inflows of resources
and fund balances
$
8,667,624
$
$
2,396,768
$
1,334,785
(continued)
164
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2020
Page 4 of 8
165
Special Revenue
Capital Projects
CARES Small
Business
Assessment
Facilities
Grant
District
Fire Station
Maintenance
Assets
Cash and investments
$
2,127,046
$
2,146,138
$
11,657,959
$
2,681,067
Receivables:
Accounts (net of allowance)
-
-
-
-
Intergovernmental receivables
-
-
-
Restricted cash and investments with fiscal agent
2,200,760
Prepaid items
-
-
-
-
Total assets
$
2,127,046
$
4,346,898
$
11,657,959
$
2,681,067
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
-
$
272,281
$
338,507
$
123,520
Unearned revenue
2,123,427
-
-
-
Due to other funds
-
-
-
-
Total liabilities
2,123,427
272,281
338,507
123,520
Deferred inflows of resources:
Unavailable revenue
-
-
-
-
Fund balances (deficits):
Nonspendable:
Prepaid items
Permanent endowment
-
-
Restricted
3,619
4,074,617
-
-
Committed
-
-
11,319,452
2,557,547
Assigned
-
-
Unassigned
-
-
-
-
Total fund balances (deficits)
3,619
4,074,617
11,319,452
2,557,547
Total liabilities, deferred inflows of resources
and fund balances
$
2,127,046
$
4,346,898
$
11,657,959
$
2,681,067
(continued)
165
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2020
Page 5 of 8
166
Capital Projects
Newport
Civic Center
Sunset
Strategic
Uptown
and Park
Ridge Park
Planning
Undergrounding
Assets
Cash and investments
$
1,779,462
$
105,951
$
157,239
$
3,302
Receivables:
Accounts (net of allowance)
-
-
-
-
Intergovernmental receivables
-
Restricted cash and investments with fiscal agent
-
Prepaid items
-
-
-
-
Total assets
$
1,779,462
$
105,951
$
157,239
$
3,302
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
1,950
$
$
-
$
Unearned revenue
-
-
Due to other funds
-
-
Total liabilities
1,950
-
-
Deferred inflows of resources:
Unavailable revenue
-
-
-
Fund balances (deficits):
Nonspendable:
Prepaid items
-
-
-
Permanent endowment
-
-
-
Restricted
-
-
3,302
Committed
1,777,512
105,951
157,239
-
Assigned
-
-
-
Unassigned
-
-
-
-
Total fund balances (deficits)
1,777,512
105,951
157,239
3,302
Total liabilities, deferred inflows of resources
and fund balances
$
1,779,462
$
105,951
$
157,239
$
3,302
(continued)
166
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2020
Page 6 of 8
167
Capital Projects
Balboa Village
Parks and
West Newport
Parking
Misc Facilities
Community
Community
Management
Financing
Centers
Center
District
Assets
Cash and investments
$
14,996
$
3,964,101
$
344,281
$
1,066,848
Receivables:
Accounts (net of allowance)
-
-
-
3,372
Intergovernmental receivables
-
-
-
Restricted cash and investments with fiscal agent
-
-
Prepaid items
-
-
-
-
Total assets
$
14,996
$
3,964,101
$
344,281
$
1,070,220
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
$
124,418
$
-
$
25,893
Unearned revenue
-
-
Due to other funds
-
-
Total liabilities
124,418
25,893
Deferred inflows of resources:
Unavailable revenue
-
-
-
-
Fund balances (deficits):
Nonspendable:
Prepaid items
-
-
Permanent endowment
-
-
Restricted
-
-
-
-
Committed
14,996
3,839,683
344,281
1,044,327
Assigned
-
-
-
-
Unassigned
-
-
-
-
Total fund balances (deficits)
14,996
3,839,683
344,281
1,044,327
Total liabilities, deferred inflows of resources
and fund balances
$
14,996
$
3,964,101
$
344,281
$
1,070,220
(continued)
167
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2020
Page 7 of 8
168
Capital Projects
Unrestricted
Misc
Neighborhood
Junior
Capital
SAH Projects
Enhancement
Lifeguards
Improvements
Assets
Cash and investments
$
1,438,690
$
5,433,852
$
$
9,028,175
Receivables:
Accounts (net of allowance)
-
-
-
Intergovernmental receivables
-
Restricted cash and investments with fiscal agent
-
-
Prepaid items
-
-
-
Total assets
$
1,438,690
$
5,433,852
$
$
9,028,175
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
-
$
472,579
$
$
438,169
Unearned revenue
1,438,690
-
-
-
Due to other funds
-
-
50,137
-
Total liabilities
1,438,690
472,579
50,137
438,169
Deferred inflows of resources:
Unavailable revenue
-
-
-
-
Fund balances (deficits):
Nonspendable:
Prepaid items
Permanent endowment
Restricted
-
-
Committed
4,961,273
8,590,006
Assigned
-
-
Unassigned
-
(50,137)
-
Total fund balances (deficits)
-
4,961,273
(50,137)
8,590,006
Total liabilities, deferred inflows of resources
and fund balances
$
1,438,690
$
5,433,852
$
-
$
9,028,175
(continued)
168
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2020
Page 8 of 8
169
Permanent Fund
Total
Other
Ackerman
Governmental
Bay Dredging
Donation
Funds
Assets
Cash and investments
$
5,450,881
$
1,221,321
$
70,091,898
Receivables:
Accounts (net of allowance)
-
-
396,114
Intergovernmental receivables
476,220
Restricted cash and investments with fiscal agent
-
-
2,200,760
Prepaid items
-
-
16,748
Total assets
$
5,450,881
$
1,221,321
$
73,181,740
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable
$
$
4,899
$
2,324,753
Unearned revenue
-
-
3,660,508
Due to other funds
-
59,674
Total liabilities
-
4,899
6,044,935
Deferred inflows of resources:
Unavailable revenue
-
410,438
Fund balances (deficits):
Nonspendable:
Prepaid items
-
16,748
Permanent endowment
3,857,000
772,781
4,629,781
Restricted
1,593,881
443,641
27,417,708
Committed
-
-
34,712,267
Assigned
-
Unassigned
-
-
(50,137)
Total fund balances (deficits)
5,450,881
1,216,422
66,726,367
Total liabilities, deferred inflows of resources
and fund balances
$
5,450,881
$
1,221,321
$
73,181,740
169
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2020
Page 1 of 8
Special Revenue
State S131 Gas Tax Asset OTS
Revenues:
Othertaxes
$ - $
- $
- $
Intergovernmental
1,992,467
1,509,947
99,712 193,104
Licenses, permits and fees
-
-
- -
Investment income
64,296
38,853
16,108
Net increase in fair value of investments
54,966
33,214
13,770
Donations
-
-
-
Other
-
-
-
Total revenues
2,111,729
1,582,014
129,590 193,104
Expenditures:
Current:
Public safety 18,633 193,104
Public works - -
Community development
Community services - -
Capital outlay 2,341,070 1,858,283
Debt service:
Principal - -
Interest and fiscal charges - - - -
Total expenditures 2,341,070 1,858,283 18,633 193,104
Excess (deficiency) of revenues
over expenditures (229,341) (276,269) 110,957 -
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses) -
Net change in fund balances (229,341) (276,269) 110,957
Fund balances (deficits), beginning 2,952,062 1,884,421 751,697
Fund balances (deficits), ending $ 2,722,721 $ 1,608,152 $ 862,654 $
(continued)
170
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2020
Page 2 of 8
Other financing sources (uses):
Transfers in
Transfers out (110,000)
Total other financing sources (uses) (110,000)
Net change in fund balances 392,166 32,465 146,572
Fund balances (deficits), beginning 2,244,796 464,740 1,075,913
Fund balances (deficits), ending $ 2,636,962 $ 497,205 $ $ 1,222,485
(continued)
171
Special Revenue
Circulation
Building
Community
Air Quality
and
Excise
Development
Management
Transportation
Tax
Block Grant
District
Revenues:
Othertaxes
$
$
$ -
$
Intergovernmental
287,403
110,630
Licenses, permits and fees
299,380
133,428
-
-
Investment income
50,023
9,449
23,152
Net increase in fair value of investments
42,763
8,078
19,792
Donations
-
-
-
Other
-
-
-
Total revenues
392,166
150,955
287,403
153,574
Expenditures:
Current:
Public safety
-
-
-
-
Public works
-
Community development
101,513
Community services
-
-
-
Capital outlay
8,490
-
7,002
Debt service:
Principal
-
171,000
-
Interest and fiscal charges
-
14,890
-
Total expenditures
-
8,490
287,403
7,002
Excess (deficiency) of revenues
over expenditures
392,166
142,465
-
146,572
Other financing sources (uses):
Transfers in
Transfers out (110,000)
Total other financing sources (uses) (110,000)
Net change in fund balances 392,166 32,465 146,572
Fund balances (deficits), beginning 2,244,796 464,740 1,075,913
Fund balances (deficits), ending $ 2,636,962 $ 497,205 $ $ 1,222,485
(continued)
171
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2020
Page 3 of 8
Expenditures:
Current:
Public safety - 206,333
Public works 409,271 -
Community development - -
Community services - 36,026
Capital outlay 1,262,849 -
Debt service:
Principal -
Interest and fiscal charges - - - -
Total expenditures 409,271 206,333 1,262,849 36,026
Excess (deficiency) of revenues
over expenditures 655,236 - (267,899) 13,608
Other financing sources (uses):
Transfers in 10,740
Transfers out -
Total other financing sources (uses) 10,740 -
Net change in fund balances 665,976 (267,899) 13,608
Fund balances (deficits), beginning 7,939,208 2,095,000 1,319,324
Fund balances (deficits), ending $ 8,605,184 $ $ 1,827,101 $ 1,332,932
(continued)
172
Special Revenue
Supplemental
Environmental
Law
Liability
Enforcement Contributions
MIN
Revenues:
Othertaxes
$ 719,738
$ - $
- $
Intergovernmental
-
206,333
894,985
Licenses, permits and fees
-
-
-
Investment income
167,352
36,829 26,758
Net increase in fair value of investments
143,066
31,486 22,876
Donations
-
9,450 -
Other
34,351
-
22,200 -
Total revenues
1,064,507
206,333
994,950 49,634
Expenditures:
Current:
Public safety - 206,333
Public works 409,271 -
Community development - -
Community services - 36,026
Capital outlay 1,262,849 -
Debt service:
Principal -
Interest and fiscal charges - - - -
Total expenditures 409,271 206,333 1,262,849 36,026
Excess (deficiency) of revenues
over expenditures 655,236 - (267,899) 13,608
Other financing sources (uses):
Transfers in 10,740
Transfers out -
Total other financing sources (uses) 10,740 -
Net change in fund balances 665,976 (267,899) 13,608
Fund balances (deficits), beginning 7,939,208 2,095,000 1,319,324
Fund balances (deficits), ending $ 8,605,184 $ $ 1,827,101 $ 1,332,932
(continued)
172
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2020
Page 4 of 8
Expenditures:
Current:
Public safety -
Public works 3,293,522
Community development -
Community services - -
Capital outlay 1,039,580 1,374,718
Debt service:
Principal - -
Interest and fiscal charges - - -
Total expenditures - 3,293,522 1,039,580 1,374,718
Excess (deficiency) of revenues
over expenditures 3,619 2,054,141 (600,053) (1,239,825)
Other financing sources (uses):
Transfers in 88,804 2,301,391
Transfers out - -
Total other financing sources (uses) - 88,804 2,301,391
Net change in fund balances 3,619 2,142,945 (600,053) 1,061,566
Fund balances (deficits), beginning - 1,931,672 11,919,505 1,495,981
Fund balances (deficits), ending $ 3,619 $ 4,074,617 $ 11,319,452 $ 2,557,547
(continued)
173
Special Revenue
Capital Projects
CARES Small
Business
Assessment
Facilities
Grant
District
Fire Station
Maintenance
Revenues:
Other taxes
$
$
$ $
Intergovernmental
Licenses, permits and fees
Investment income
1,951
70,696
236,956
72,723
Net increase in fair value of investments
1,668
39,488
202,571
62,170
Donations
-
-
-
-
Other
-
5,237,479
Total revenues
3,619
5,347,663
439,527
134,893
Expenditures:
Current:
Public safety -
Public works 3,293,522
Community development -
Community services - -
Capital outlay 1,039,580 1,374,718
Debt service:
Principal - -
Interest and fiscal charges - - -
Total expenditures - 3,293,522 1,039,580 1,374,718
Excess (deficiency) of revenues
over expenditures 3,619 2,054,141 (600,053) (1,239,825)
Other financing sources (uses):
Transfers in 88,804 2,301,391
Transfers out - -
Total other financing sources (uses) - 88,804 2,301,391
Net change in fund balances 3,619 2,142,945 (600,053) 1,061,566
Fund balances (deficits), beginning - 1,931,672 11,919,505 1,495,981
Fund balances (deficits), ending $ 3,619 $ 4,074,617 $ 11,319,452 $ 2,557,547
(continued)
173
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2020
Page 5 of 8
Expenditures:
Capital Projects
Current:
Newport
Civic Center
Sunset Strategic
Uptown
and Park
Ridge Park Planning
Undergrounding
Revenues:
Othertaxes
$
$ $
$
Intergovernmental
Community services
-
-
Licenses, permits and fees
Capital outlay
-
Investment income
34,075
2,126 3,096
65
Net increase in fair value of investments
29,130
1,818 2,646
56
Donations
-
- -
-
Other
-
-
-
Total revenues
63,205
3,944 5,742
121
Expenditures:
Current:
Public safety
Public works
Community development
Community services
-
-
Capital outlay
4,302
3,995
Debt service:
Principal
-
-
Interest and fiscal charges
1,505
-
Total expenditures
5,807
3,995
-
Excess (deficiency) of revenues
over expenditures
57,398
(51)
5,742
121
Other financing sources (uses):
Transfers in
-
7,515
109,199
-
Transfers out
-
-
Total other financing sources (uses)
-
7,515
109,199
-
Net change in fund balances
57,398
7,464
114,941
121
Fund balances (deficits), beginning
1,720,114
98,487
42,298
3,181
Fund balances (deficits), ending
$ 1,777,512 $
105,951 $
157,239 $
3,302
(continued)
174
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2020
Page 6 of 8
Expenditures:
Current:
Public safety
Public works
Community development
Community services - - -
Capital outlay 29,149 693,290 131,594
Debt service:
Principal - - -
Interest and fiscal charges - - -
Total expenditures 29,149 693,290 - 131,594
Excess (deficiency) of revenues
over expenditures (28,436) (537,799) 12,572 284,612
Other financing sources (uses):
Transfers in 43,685 110,000
Transfers out - -
Total other financing sources (uses) 43,685 110,000 -
Net change in fund balances 15,249 (427,799) 12,572 284,612
Fund balances (deficits), beginning (253) 4,267,482 331,709 759,715
Fund balances (deficits), ending $ 14,996 $ 3,839,683 $ 344,281 $ 1,044,327
(continued)
175
Capital Projects
Balboa Village
Parks and
West Newport
Parking
Misc Facilities
Community
Community
Management
Financing
Centers
Center
District
Revenues:
Other taxes
$ $
$
$
Intergovernmental
Licenses, permits and fees
381,399
Investment income
384
83,828
6,778
18,765
Net increase in fair value of investments
329
71,663
5,794
16,042
Donations
-
-
-
-
Other
-
-
-
Total revenues
713
155,491
12,572
416,206
Expenditures:
Current:
Public safety
Public works
Community development
Community services - - -
Capital outlay 29,149 693,290 131,594
Debt service:
Principal - - -
Interest and fiscal charges - - -
Total expenditures 29,149 693,290 - 131,594
Excess (deficiency) of revenues
over expenditures (28,436) (537,799) 12,572 284,612
Other financing sources (uses):
Transfers in 43,685 110,000
Transfers out - -
Total other financing sources (uses) 43,685 110,000 -
Net change in fund balances 15,249 (427,799) 12,572 284,612
Fund balances (deficits), beginning (253) 4,267,482 331,709 759,715
Fund balances (deficits), ending $ 14,996 $ 3,839,683 $ 344,281 $ 1,044,327
(continued)
175
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2020
Page 7 of 8
Capital Projects
Unrestricted
Misc Neighborhood Junior Capital
SAH Projects Enhancement Lifeguards Improvements
Revenues:
Other taxes $ $ $ $
Intergovernmental
Licenses, permits and fees
Investment income 123,749 201
Net increase in fair value of investments 105,792 171
Donations - -
Other - -
Total revenues 229,541 372
Expenditures:
Current:
Public safety
Public works
Community development
Community services - -
Capital outlay 1,836,798 100,509 5,391,888
Debt service:
Principal - - -
Interest and fiscal charges - - -
Total expenditures 1,836,798 100,509 5,391,888
Excess (deficiency) of revenues
over expenditures (1,607,257) (100,137) (5,391,888)
Other financing sources (uses):
Transfers in 5,025,724 50,000 6,167,254
Transfers out - - -
Total other financing sources (uses) 5,025,724 50,000 6,167,254
Net change in fund balances 3,418,467 (50,137) 775,366
Fund balances (deficits), beginning 1,542,806 7,814,640
Fund balances (deficits), ending $ $ 4,961,273 $ (50,137) $ 8,590,006
(continued)
176
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2020
Page 8 of 8
Other financing sources (uses):
Transfers in 13,914,312
Transfers out (110,000)
Total other financing sources (uses) 13,804,312
Net change in fund balances
Permanent Funds
30,542
7,634,157
Fund balances (deficits), beginning
5,251,832
Total
59,092,210
Fund balances (deficits), ending
Other
1,216,422 $
66,726,367
Ackerman
Governmental
Bay Dredging
Donation
Funds
Revenues:
Other taxes
$
$
$ 719,738
Intergovernmental
5,294,581
Licenses, permits and fees
814,207
Investment income
107,311
24,125
1,219,649
Net increase in fair value of investments
91,738
20,624
1,021,711
Donations
-
-
9,450
Other
-
-
5,294,030
Total revenues
199,049
44,749
14,373,366
Expenditures:
Current:
Public safety
-
-
418,070
Public works
-
3,702,793
Community development
4,900
106,413
Community services
9,307
45,333
Capital outlay
-
16,083,517
Debt service:
Principal
171,000
Interest and fiscal charges
-
16,395
Total expenditures
-
14,207
20,543,521
Excess (deficiency) of revenues
over expenditures
199,049
30,542
(6,170,155)
Other financing sources (uses):
Transfers in 13,914,312
Transfers out (110,000)
Total other financing sources (uses) 13,804,312
Net change in fund balances
199,049
30,542
7,634,157
Fund balances (deficits), beginning
5,251,832
1,185,880
59,092,210
Fund balances (deficits), ending
$ 5,450,881 $
1,216,422 $
66,726,367
177
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2020
Budgeted Amounts
Original Final
Variance with
Final Budget
Positive
Actual (Negative)
Revenues:
Intergovernmental $ 2,291,196 $ 1,794,699 $ 1,992,467 $ 197,768
Investment income 9,133 9,133 64,296 55,163
Net increase in fair value of investments - - 54,966 54,966
Total revenues 2,300,329 1,803,832 2,111,729 307,897
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance, ending
- 5,120,587 2,341,070 2,779,517
2,300,329 (3,316,755) (229,341) 3,087,414
2,952,062 2,952,062 2,952,062 -
$ 5,252,391 $ (364,693) $ 2,722,721 $ 3,087,414
178
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
SB1 Gas Tax RMRA Fund
For the Year Ended June 30, 2020
Budgeted Amounts
Original Final
Variance with
Final Budget
Positive
Actual (Negative)
Revenues:
Intergovernmental $ 1,443,005 $ 1,284,900 $ 1,509,947 $ 225,047
Investment income - - 38,853 38,853
Net increase in fair value of investments - - 33,214 33,214
Total revenues 1,443,005 1,284,900 1,582,014 297,114
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance, ending
4,637,397 1,858,283 2,779,114
1,443,005 (3,352,497) (276,269) 3,076,228
1,884,421 1,884,421 1,884,421 -
$ 3,327,426 $ (1,468,076) $ 1,608,152 $ 3,076,228
179
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Asset Forfeiture Special Revenue Fund
For the Year Ended June 30, 2020
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental
$ -
$ -
$ 99,712
$ 99,712
Investment income
6,333
6,333
16,108
9,775
Net increase in fair value of investments
-
-
13,770
13,770
Total revenues
6,333
6,333
129,590
123,257
Expenditures:
Public safety
40,000
40,000
18,633
21,367
Net change in fund balance
(33,667)
(33,667)
110,957
144,624
Fund balance, beginning
751,697
751,697
751,697
-
Fund balance, ending
$ 718,030
$ 718,030
$ 862,654
$ 144,624
180
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
OTS DUI Grant Special Revenue Fund
For the Year Ended June 30, 2020
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental $ - $ 198,423 $ 193,104 $ (5,319)
Expenditures:
Public safety - 198,423 193,104 5,319
Net change in fund balance - - - -
Fund balance, beginning - - - -
Fund balance, ending $ - $ - $ - $ -
181
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Circulation and Transportation Special Revenue Fund
For the Year Ended June 30, 2020
182
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Licenses, permits and fees
$ 224,769
$ 224,769
$ 299,380
$ 74,611
Investment income
25,559
25,559
50,023
24,464
Net increase in fair value of investments
-
-
42,763
42,763
Total revenues
250,328
250,328
392,166
141,838
Expenditures:
Capital outlay
-
365,790
-
365,790
Net change in fund balance
250,328
(115,462)
392,166
507,628
Fund balance, beginning
2,244,796
2,244,796
2,244,796
-
Fund balance, ending
$ 2,495,124
$ 2,129,334
$ 2,636,962
$ 507,628
182
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Building Excise Tax Special Revenue Fund
For the Year Ended June 30, 2020
Revenues:
Licenses, permits and fees
Investment income
Net increase in fair value of investments
Total revenues
Expenditures:
Capital outlay
Excess (deficiency) of revenues
over expenditures
Other financing (uses):
Transfers out
Net change in fund balance
Fund balance, beginning
Fund balance, ending
183
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
$ 202,950
$ 200,000
$ 133,428
$ (66,572)
3,697
3,697
9,449
5,752
-
-
8,078
8,078
206,647
203,697
150,955
(52,742)
-
376,851
8,490
368,361
206,647
(173,154)
142,465
315,619
-
(110,000)
(110,000)
-
206,647
(283,154)
32,465
315,619
464,740
464,740
464,740
-
$ 671,387
$ 181,586
$ 497,205
$ 315,619
183
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Community Development Block Grant Special Revenue Fund
For the Year Ended June 30, 2020
Revenues:
Intergovernmental
Expenditures:
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Budgeted Amounts
Original Final
Variance with
Final Budget
Positive
Actual (Negative)
$ 359,743
$ 367,434
$ 287,403
$ (80,031)
117,311
128,602
101,513
27,089
-
52,942
-
52,942
160,000
171,000
171,000
-
17,561
14,890
14,890
-
294,872
367,434
287,403
80,031
64,871 - - -
$ 64,871
184
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Air Quality Management District Special Revenue Fund
For the Year Ended June 30, 2020
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental $ 100,000 $ 100,000 $ 110,630 $ 10,630
Investment income 12,395 12,395 23,152 10,757
Net increase in fair value of investments - - 19,792 19,792
Total revenues 112,395 112,395 153,574 41,179
Expenditures:
Capital outlay - 350,000 7,002 342,998
Net change in fund balance 112,395 (237,605) 146,572 384,177
Fund balance, beginning 1,075,913 1,075,913 1,075,913 -
Fund balance, ending $ 1,188,308 $ 838,308 $ 1,222,485 $ 384,177
185
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Environmental Liability Special Revenue Fund
For the Year Ended June 30, 2020
186
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Other taxes
$ 655,257
$ 655,257
$ 719,738
$ 64,481
Investment income
109,130
109,130
167,352
58,222
Net increase in fair value of investments
-
-
143,066
143,066
Other revenue
40,000
40,000
34,351
(5,649)
Total revenues
804,387
804,387
1,064,507
260,120
Expenditures:
Public works
576,030
576,030
409,271
166,759
Capital outlay
-
6,610
-
6,610
Total expenditures
576,030
582,640
409,271
173,369
Excess of revenues
over expenditures
228,357
221,747
655,236
433,489
Other financing sources:
Transfers in
-
10,740
10,740
--
Net change in fund balance
228,357
232,487
665,976
433,489
Fund balance, beginning
7,939,208
7,939,208
7,939,208
-
Fund balance, ending
$ 8,167,565
$ 8,171,695
$ 8,605,184
$ 433,489
186
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Supplemental Law Enforcement Special Revenue Fund
For the Year Ended June 30, 2020
Revenues:
Intergovernmental
Expenditures:
Public safety
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 165,000 $ 165,000 $ 206,333 $ 41,333
165,000 165,000 206,333 (41,333)
187
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Contributions Fund Special Revenue Fund
For the Year Ended June 30, 2020
188
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 2,265,834
$ 5,079,199
$ 894,985
$ (4,184,214)
Investment income
27,670
27,670
36,829
9,159
Net increase in fair value of investments
-
-
31,486
31,486
Donations
500,000
507,500
9,450
(498,050)
Other
-
1,710,931
22,200
(1,688,731)
Total revenues
2,793,504
7,325,300
994,950
(4,641,619)
Expenditures:
Capital outlay
-
6,806,562
1,262,849
5,543,713
Net change in fund balance
2,793,504
518,738
(267,899)
(786,637)
Fund balance, beginning
2,095,000
2,095,000
2,095,000
-
Fund balance, ending
$ 4,888,504
$ 2,613,738
$ 1,827,101
$ (786,637)
188
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
FIIN Special Revenue Fund
For the Year Ended June 30, 2020
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:
Investment income $ 11,420 $ 11,420 $ 26,758 $ 15,338
Net increase in fair value of investments - - 22,876 22,876
Total revenues 11,420 11,420 49,634 38,214
Expenditures:
Community services
Net change in fund balance
Fund balance, beginning
Fund balance, ending
147,000 147,000 36,026 110,974
(135,580) (135,580) 13,608 149,188
1,319,324 1,319,324 1,319,324 -
$ 1,183,744 $ 1,183,744 $ 1,332,932 $ 149,188
189
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
CARES Small Business Grant Special Revenue Fund
For the Year Ended June 30, 2020
Revenues:
Intergovernmental
Investment income
Net increase in fair value of investments
Total revenues
Expenditures:
Community services
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Budgeted Amounts
Original Final
$ - $ 2,123,427
2,123,427
190
2,123,427
Variance with
Final Budget
Positive
Actual (Negative)
$ - $ (2,123,427)
1,951 1,951
1,668 1,668
3,619 (2,119,808)
- - 3,619 3,619
3,619 $ 3,619
•
ARY INFORMATION
ICE FUNDS
11
191
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192
INTERNAL SERVICE FUNDS
The Internal Service Funds are used to allocate the cost of providing
goods and services by one department to other departments on a cost
reimbursement basis.
The City of Newport Beach Internal Service Funds are listed below:
The Insurance Reserve Fund is used to account for the City's self-
insured general liability and workers' compensation program.
The Compensated Absences Fund is used to account for the City's
accumulated liability for compensated absences.
The Retiree Insurance Fund is used to account for the cost of providing
post -employment health care benefits.
The Equipment Maintenance Fund is used to account for the cost of
maintaining and replacing the City's rolling stock fleet, parking equipment,
coordinated communications system equipment, fire equipment and recreation
equipment.
The Information Technology Fund is used to account for the cost of
maintaining and replacing the City's computers, printers, copiers and
telecommunication services to other departments.
193
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Net Position
June 30, 2020
194
Total
Insurance
Compensated
Retiree
Equipment
Information
Internal
Assets
Reserve
Absences
Insurance
Maintenance
Technology
Service Funds
Current assets:
Cash and investments
$ 35,082,745
$ 5,376,909
$ 791,893
$ 15,196,621
$ 9,733,164
$ 66,181,332
Receivables:
Accounts (net of allowance)
1,750,877
-
35,763
9,426
-
1,796,066
Intergovernmental receivables
-
-
525,135
525,135
Inventories
-
-
413,015
-
413,015
Prepaid items
43,270
254,924
509,902
176,284
984,380
Total current assets
36,876,892
5,376,909
1,082,580
16,654,099
9,909,448
69,899,928
Noncurrent assets:
Capital assets:
Equipment
-
-
-
37,331,192
3,406,137
40,737,329
Structures
39,581
-
39,581
Software
-
3,603,419
3,603,419
Work in progress
299,296
299,296
Less accumulated depreciation
(23,562,564)
(5,236,784)
(28,799,348)
Total capital assets (net of
accumulated depreciation)
13,808,209
2,072,068
15,880,277
Total assets
36,876,892
5,376,909
1,082,580
30,462,308
11,981,516
85,780,205
Deferred outflows of resources:
Deferred amount from pension plans
-
-
-
322,229
645,869
968,098
Deferred amount from OPEB
85,674
171,724
257,398
Total deferred outflows of resources
-
-
-
407,903
817,593
1,225,496
Liabilities
Current liabilities:
Accounts payable
48,219
307,731
5,380
193,010
298,045
852,385
Accrued payroll
8,628
-
150,384
25,580
69,404
253,996
Due to other funds
-
367,712
-
-
367,712
Workers' compensation - current
2,867,523
-
2,867,523
General liability- current
2,694,118
-
2,694,118
Compensated absences - current
-
4,022,771
4,022,771
Total current liabilities
5,618,488
4,330,502
523,476
218,590
367,449
11,058,505
Noncurrent liabilities:
Workers' compensation
12,653,477
-
-
-
-
12,653,477
General liability
5,266,830
-
5,266,830
Compensated absences
-
9,070,548
-
-
9,070,548
Net pension liability
-
2,065,010
4,139,113
6,204,123
Net OPEB liability
-
-
255,745
512,619
768,364
Total noncurrent liabilities
17,920,307
9,070,548
-
2,320,755
4,651,732
33,963,342
Total liabilities
23,538,795
13,401,050
523,476
2,539,345
5,019,181
45,021,847
Deferred inflows of resources:
Deferred amount from pension plans
-
-
-
44,799
89,793
134,592
Deferred amount from OPEB
6,361
12,751
19,112
Total deferred inflows of resources
51,160
102,544
153,704
Net Position
Invested in capital assets
-
-
14,286,787
2,072,068
16,358,855
Unrestricted
13,338,097
(8,024,141)
559,104
13,992,919
5,605,316
25,471,295
Total net position
$ 13,338,097
$ (8,024,141)
$ 559,104
$ 28,279,706
$ 7,677,384
$ 41,830,150
194
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Revenues, Expenses
and Changes in Net Position
For the Year Ended June 30, 2020
195
Total
Insurance
Compensated
Retiree
Equipment
Information
Internal
Reserve
Absences
Insurance
Maintenance
Technology
Service Funds
Operating revenues:
Charges for services
$ 11,224,997
$ 2,625,002
$ 3,852,251
$ 5,736,361
$ 7,149,139
$ 30,587,750
Intergovernmental
-
-
-
555,135
-
555,135
Retiree reimbursements
311,356
-
311,356
Employee contributions
-
73,580
-
-
73,580
Other
1,348,022
709,149
58,579
222
2,115,972
Total operating revenues
12,573,019
2,625,002
4,946,336
6,350,075
7,149,361
33,643,793
Operating expenses:
Salaries and wages
-
-
5,378
1,205,281
2,839,219
4,049,878
Depreciation
-
2,837,462
711,082
3,548,544
Professional services
12,079
290,129
302,208
Maintenance and supplies
936,980
1,447,284
2,384,264
Fleet parts and supplies
353,635
-
353,635
Telecommunication
-
169,443
169,443
Hardware
372,386
372,386
Software
-
94,490
94,490
Fire equipment
-
525,135
-
525,135
Workers' compensation
1,646,315
-
1,646,315
Claims and judgments
6,559,117
-
6,559,117
Compensated absences
-
2,924,542
-
2,924,542
OPEB
-
-
4,924,751
-
4,924,751
Total operating expenses
8,205,432
2,924,542
4,930,129
5,870,572
5,924,033
27,854,708
Operating income (loss)
4,367,587
(299,540)
16,207
479,503
1,225,328
5,789,085
Nonoperating revenues:
Investment income
681,135
97,528
12,292
331,502
182,202
1,304,659
Net Increase in fair value of investments
582,294
83,375
10,509
283,397
155,763
1,115,338
Gain on sale of capital assets
-
-
-
158,449
-
158,449
Total nonoperating revenues
1,263,429
180,903
22,801
773,348
337,965
2,578,446
Income (loss) before transfers
5,631,016
(118,637)
39,008
1,252,851
1,563,293
8,367,531
Transfers in
1,000,000
-
-
-
1,000,000
Transfer out
-
(610,000)
(610,000)
Total transfers
1,000,000
-
-
(610,000)
390,000
Change in net position
6,631,016
(118,637)
39,008
1,252,851
953,293
8,757,531
Net position, beginning
6,707,081
(7,905,504)
520,096
27,026,855
6,724,091
33,072,619
Net position, ending
$ 13,338,097
$ (8,024,141)
$ 559,104
$ 28,279,706
$ 7,677,384
$ 41,830,150
195
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Cash Flows
For the Year Ended June 30, 2020
196
Total
Insurance
Compensated
Retiree
Equipment
Information
Internal
Reserve
Absences
Insurance
Maintenance
Technology
Service Funds
Cash flows from operating activities
Receipts from user departments
$ 9,474,120
$ 2,625,002
$
4,154,051
$ 5,728,110
$ 7,149,139
$ 29,130,422
Payments to employees
(2,391,534)
(2,233,656)
-
(1,147,489)
(2,714,064)
(8,486,743)
Payments to suppliers
(5,635,249)
-
(2,686,723)
(2,407,011)
(2,195,175)
(12,924,158)
Other operating cash receipts
1,348,022
782,729
88,579
222
2,219,552
Net cash provided by operating activities
2,795,359
391,346
2,250,057
2,262,189
2,240,122
9,939,073
Cash flows from noncapital financing activities:
Cash received from other funds
1,000,000
-
-
-
-
1,000,000
Cash paid to other funds
-
-
(1,480,965)
-
(610,000)
(2,090,965)
Net cash provided (used) by noncapital financing activities
1,000,000
(1,480,965)
(610,000)
(1,090,965)
Cash flows from capital and related financing activities:
Acquisition of capital assets
-
-
-
(3,220,726)
(351,380)
(3,572,106)
Proceeds from sale of capital assets
158,449
158,449
Net cash (used) for capital and related financing activities
(3,062,277)
(351,380)
(3,413,657)
Cash flows from investing activities:
Investment income
1,263,429
180,903
22,801
614,899
337,965
2,419,997
Net cash provided by investing activities
1,263,429
180,903
22,801
614,899
337,965
2,419,997
Net increase (decrease) in cash and cash equivalents
5,058,788
572,249
791,893
(185,189)
1,616,707
7,854,448
Cash and cash equivalents, beginning
30,023,957
4,804,660
15,381,810
8,116,457
58,326,884
Cash and cash equivalents, ending
$ 35,082,745
$ 5,376,909
$
791,893
$ 15,196,621
$ 9,733,164
$ 66,181,332
Reconciliation to the statement of net position:
Cash and investments reported on statement of net position
$ 35,082,745
$ 5,376,909
$
791,893
$ 15,196,621
$ 9,733,164
$ 66,181,332
Cash and cash equivalents
$ 35,082,745
-T 5,376,909
$
791,893
$ 15,196,621
$ 9,733,164
$ 66,181,332
Reconciliation of operating income (loss) to net cash
provided by operating activities:
Operating income (loss)
$ 4,367,587
$ (299,540)
$
16,207
$ 479,503
$ 1,225,328
$ 5,789,085
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities:
Depreciation
-
-
-
2,837,462
711,082
3,548,544
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(1,750,877)
-
2,231,994
(8,251)
-
472,866
(Increase) decrease in intergovernmental receivable
-
-
-
(525,135)
-
(525,135)
Decrease in inventories
-
-
-
26,025
-
26,025
(Increase) decrease in prepaid items
(43,270)
-
(10,763)
(509,902)
95,607
(468,328)
Increase (decrease) in accounts payable and accrued payroll
(38,122)
166,544
12,619
(92,287)
98,311
147,065
(Decrease) in workers' compensation
(749,000)
-
-
-
-
(749,000)
Increase in general liability
1,009,041
-
-
-
-
1,009,041
Increase in compensated absences
-
524,342
-
-
-
524,342
Increase in net pension liability and deferred cash flows
-
-
-
84,236
168,845
253,081
(Decrease) in net OPEB liability and deferred cash flows
(29,462)
(59,051)
(88,513)
Total adjustments
(1,572,228)
690,886
2,233,850
1,782,686
1,014,794
4,149,988
Net cash provided by operating activities
-1-2 .795.359
$ 391.346
-4-2 .250.057
-L-2 .262.189
-4-2 .240.122
-L-9 .939.073
Noncash investing, capital, and financing activities:
Net increase in fair value of investments
$ 582,294
$ 83,375
$
10,509
$ 283,397
$ 155,763
$ 1,115,338
Total of noncash activities
$ 582,294
$ 83,375
$
10,509
$ 283,397
$ 155,763
$ 1,115,338
196
197
FIDUCIARY FUNDS
Fiduciary Funds are used to account for assets held by the City in a trustee
capacity, or as an agent for other government entities, private
organizations, or individuals.
The City of Newport Beach Fiduciary Funds are listed below:
The Special Assessment District Fund is used to account for funds received
from affected property owners and payable to holders of 1911 Act, 1915 Act and
other special assessment bonds.
The Business Improvement District Fund is used to account for monies
collected from local business districts for district property improvements and
business enhancement.
198
CITY OF NEWPORT BEACH
Agency Funds
Combining Statement of Fiduciary Assets and Liabilities
June 30, 2020
Assets
Cash and investments
Restricted cash and investments with fiscal agent
Receivable:
Interest
Total assets
Liabilities
Due to bondholders
Due to others
Total liabilities
199
Special
Assessment
District
$ 299,283
1,752,685
Business
Improvement
$ 314,660
Totals
$ 613,943
1,752,685
1,124 - 1,124
$ 2,053,092 $ 314,660 $ 2,367,752
$ 2,053,051 $ - $ 2,053,051
41 314,660 314,701
$ 2,053,092 $ 314,660 $ 2,367,752
CITY OF NEWPORT BEACH
Agency Funds
Statement of Changes in Fiduciary Net Position
For the Year Ended June 30, 2020
Special Assessment District:
Assets
Cash and investments
Restricted cash and investments with fiscal agent
Receivable:
Interest
Total assets
Liabilities
Due to bondholders
Due to others
Total Liabilities
Business Improvement District:
Assets
Cash and investments
Liabilities
Due to others
$ 613,526 $ 4,173,606 $ (4,472,472) $ 314,660
$ 613,526 $ 4,173,606 $ (4,472,472) $ 314,660
Totals - All Agency Funds:
Balance
Balance
June 30, 2019
Additions
Deductions
June 30, 2020
Cash and investments
$
1,018,613
$
$
405,087
$
1,219,856
$
(1,325,660)
$
299,283
1,401,713
2,016,952
1,401,713
Receivable
(1,665,980)
463
1,752,685
1,124
463
1,124
Total assets
(463)
3,036,028
1,124
$
2,422,502
$
2,622,693
$
(2,992,103)
$
2,053,092
Due to bondholders
$
2,422,448
$
$
2,422,448
$
4,497,576
$
(4,866,973)
$
2,053,051
5,488,138
54
1,314,532
(1,314,545)
$
41
$
2,422,502
$
5,812,108
$
(6,181,518)
$
2,053,092
$ 613,526 $ 4,173,606 $ (4,472,472) $ 314,660
$ 613,526 $ 4,173,606 $ (4,472,472) $ 314,660
Totals - All Agency Funds:
Assets
Cash and investments
$
1,018,613
$
5,393,462
$ (5,798,132)
$
613,943
Restricted cash and investments with fiscal agent
2,016,952
1,401,713
(1,665,980)
1,752,685
Receivable
463
1,124
(463)
1,124
Total assets
$
3,036,028
$
6,796,299
$ (7,464,575)
$
2,367,752
Liabilities
Due to bondholders
$
2,422,448
$
4,497,576
$ (4,866,973)
$
2,053,051
Due to others
613,580
5,488,138
(5,787,017)
314,701
Total liabilities
$
3,036,028
$
9,985,714$
(10,653,990)
$
2,367,752
200
161
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202
FINANCIAL TRENDS
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) 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. The
statistical information presented herein is un -audited.
The following schedules contain trend information illustrating how the City's
financial performance and well-being has changed over time:
• Net Position by Component
• Changes in Net Position
• Fund Balances of Governmental Funds
• Changes in Fund Balance of Governmental Funds
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive Annual Financial Reports and underlying accounting records for the relevant
years.
203
Governmental activities:
Net investment in capital assets
Restricted
Unrestricted
Total governmental activities
Business -type activities:
Net investment in capital assets
Restricted
Unrestricted
Total business -type activities
Primary government:
Net investment in capital assets
Restricted
Unrestricted
Total primary government
CITY OF NEWPORT BEACH
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2011 2012' 2013 2014
$ 2,087,403,003
$ 2,098,349,998
$ 2,124,797,794
$ 2,148,942,928
63,940,282
61,923,719
72,119,674
59,998,344
67,500,916
82,515,232
77,966,414
(184,990,765)
$ 2,218,844,201
$ 2,242,788,949
$ 2,274,883,882
$ 2,023,950,507
$ 108,976,459 $ 108,981,237 $ 111,177,135 $ 115,948,522
9,442, 988 15, 089, 798 19,172, 398 13,160, 611
$ 118,419,447 $ 124,071,035 $ 130,349,533 $ 129,109,133
$ 2,196,379,462 $ 2,207,331,235 $ 2,235,974,929
63,940,282 61,923,719 72,119,674
76,943,904 97,605,030 97,138,812
$ 2,337,263,648 $ 2,366,859,984 $ 2,405,233,415
$ 2,264,891,450
59,998,344
(171,830,154)
$ 2,153,059,640
Reflects restatement of net
position due to the implementation of GASB 65 in fiscal year ended June 30, 2013.
2 Reflects restatement of net
position due to the implementation of GASB 68 in fiscal year ended June 30, 2015 and an
adjustment to record deferred amount from gain on refunding.
3 Reflects restatement of net
position due to compensated absences and deferred outflow adjustments related to fiscal
year ended June 30, 2016.
4 Reflects restatement of net
position due to deferred outflow adjustments related to fiscal year ended June 30, 2017.
5 Reflects restatement of net
position due to implementation of GASB 75 in fiscal year ended June 30, 2018.
6 Reflects restatement of net
position due to adjustments for capital assets and compensated absences liability in fiscal
year ended June 30, 2019.
The City of Newport Beach implemented GASB 63 and GASB 65 for the fiscal year ended June 30, 2013.
The City of Newport Beach implemented GASB 68 for the fiscal year ended June 30, 2015.
The City of Newport Beach implemented GASB 75 for the fiscal year ended June 30, 2018.
204
CITY OF NEWPORT BEACH
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2015' 2016' 2017' 2018' 2019 2020
$ 2,176,644,408 $ 2,193,773,102 $ 2,201,552,683 $ 2,208,832,391 $ 2,218,040,304 $ 2,217,852,660
45,689,702 44,033,677 45,753,736 49,791,908 56,426,811 67,708,225
(150,532,773) (130,468,268) (133,461,197) (122,024,754) (102,035,181) (90,214,086)
$ 2,071,801,337 $ 2,107,338,511 $ 2,113,845,222 $ 2,136,599,545 $ 2,172,431,934 $ 2,195,346,799
$ 113,914,514 $ 117,055,576 $ 116,238,944 $ 119,375,596 $ 119,346,350 $ 120,291,689
21,756,124 23,430,189 28,890,311 29,183,382 30,331,669 30,276,662
$ 135,670,638 $ 140,485,765 $ 145,129,255 $ 148,558,978 $ 149,678,019 $ 150,568,351
$ 2,290,558,922 $ 2,310,828,678 $ 2,317,791,627 $ 2,328,207,987 $ 2,337,386,654 $ 2,338,144,349
45,689,702 44,033,677 45,753,736 49,791,908 56,426,811 67,708,225
(128,776,649) (107,038,079) (104,570,886) (92,841,372) (71,703,512) (59,937,424)
$ 2,207,471,975 $ 2,247,824,276 $ 2,258,974,477 $ 2,285,158,523 $ 2,322,109,953 $ 2,345,915,150
205
CITY OF NEWPORT BEACH
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
' 2013 data varies from trend because of increased capital assets related to contribution from State of Cafrfornia.
2 Data varies from trend because of one-time receipt of developer contributions.
The City of Newport Beach implemented GASB 63 and GASB 65 for the fiscal year ended June 30, 2013.
The City of Newport Beach implemented GASB 68 for the fiscal year ended June 30, 2015.
The City of Newport Beach implemented GASB 75 for the fiscal year ended June 30, 2018.
206
Fiscal Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
F.pon .
Governmental activities:
General government
$ 15,857,397
$ 14,325,966 $
15,830,575
$ 18,834,165
$ 24,558,041
$ 19,335,275
$ 20,443,569
$ 19,011,099
$ 20,549,224
$ 20,714,050
Public safety
78,128,006
75,696,570
83,235,188
87,676,062
96,945,872
91,046,455
102,494,314
107,647,562
111,556,065
119,194,302
Public works
40,341,323
48,913,412
47,794,631
42,953,118
45,774,939
45,443,988
54,039,601
47,615,000
53,339,878
60,054,860
Community development
8,637,525
9,365,676
9,223,098
10,283,481
10,073,248
9,943,868
12,056,086
12,377,394
11,493,204
12,842,020
Community services
17,272,374
21,554,696
22,244,661
21,357,271
22,418,287
22,700,052
26,583,440
27,307,115
27,758,097
26,668,079
Interest on long-term debt
5,078,881
8,204,928
7,989,339
7,888,192
7,711,334
7,615,094
7,472,188
7,381,743
7,187,971
7,064,521
Total governmental activities
'p""
165,315,506
178,061,248
186,317,492
188,992,289
207,481,721
196,084,732
223,089,198
221,339,913
231,884,439
246,537,832
Business -type activities:
Water
19,824,996
18,358,646
20,208,300
22,037,284
21,175,964
21,605,197
22,004,013
23,724,918
26,898,075
27,387,120
Wastewater
3,936,949
3,360,418
3,462,165
3,368,656
3,452,398
3,818,165
4,218,926
4,158,155
4,222,228
4,291,755
Total business -type activities
expenses
23,761,945
21,719,064
23,670,465
25,405,940
24,628,352
25,423,362
26,222,939
27,883,073
31,120,303
31,678,875
Total primary government
expenses
189,077,451
199,780,312
209,987,957
214,398,229
232,110,073
221,508,094
249,312,137
249,222,986
263,004,742
278,216,707
Program revenues
Governmental activities:
Charges for services:
General government
2,722,527
2,593,741
2,759,306
3,046,232
3,647,210
3,722,557
5,089,123
5,355,887
5,887,265
3,846,962
Public safely
15,686,314
16,240,135
16,008,421
19,124,113
19,386,017
19,108,222
19,899,242
20,733,883
21,979,376
22,232,248
Public works
2,938,315
4,576,208
5,019,835
5,517,103
5,276,991
5,319,510
5,214,426
5,789,579
5,778,441
5,054,694
Community development
5,599,737
6,202,080
7,057,010
8,043,390
8,608,645
8,419,588
10,838,114
9,956,226
9,902,445
9,599,848
Community services
8,962,818
14,119,869
13,176,050
13,270,316
13,667,775
13,964,018
13,653,466
13,974,329
13,556,360
16,936,285
Operating Grants and
Contributions:
10,710,266
11,418,147
11,290,989
15,196,696
10,673,286
17,826,914
11,632,188
11,943,941
14,021,506
14,659,016
Capital Grants and
Contributions:
11,101,239
14,838,783
25,613,846 '
563,786
38,157,665 2
2,717,504
27,993,317 2
1,815,464
6,638,356
7,352,407
Total governmental activities
program revenues
57,721,216
69,988,962
80,925,457
64,761,636
99,417,589
71,078,313
94,319,876
69,569,309
77,763,749
79,681,460
Business -type activities:
Charges for services:
Water
20,097,227
23,877,685
26,795,767
29,397,882
27,705,129
24,499,952
25,371,307
26,931,193
26,843,751
27,100,429
Wastewater
3,348,433
3,382,905
3,450,638
3,438,670
3,326,362
3,065,762
3,161,114
3,445,772
4,069,265
4,110,815
Total business -type activities
program revenues
23,445,660
27,260,590
30,246,405
32,836,552
31,031,491
27,565,714
28,532,421
30,376,965
30,913,016
31,211,244
Total primary government
program revenues
81,166,876
97,249,552
111,171,862
97,598,188
130,449,080
98,644,027
122,852,297
99,946,274
108,676,765
110,892,704
Net revenues (openses):
Governmental activities
(107,594,290)
(108,072,286)
(105,392,035)
(124,230,653)
(108,064,132)
(125,006,419)
(128,769,322)
(151,770,604)
(154,120,690)
(166,856,372)
Business -type activities
(316,285)
5,641,526
6,575,940
7,430,612
6,403,139
2,142,352
2,309,482
2,493,892
(207,287)
(467,631)
Total net revenues(openses)
$ (107,910,575)
$ (102,530,760) $
(98,816,095)
$ (116,800,041)
$ (101,660,993)
$ (122,864,067)
$ (126,459,840)
$ (149,276,712)
$ (154,327,977)
$ (167,324,003)
' 2013 data varies from trend because of increased capital assets related to contribution from State of Cafrfornia.
2 Data varies from trend because of one-time receipt of developer contributions.
The City of Newport Beach implemented GASB 63 and GASB 65 for the fiscal year ended June 30, 2013.
The City of Newport Beach implemented GASB 68 for the fiscal year ended June 30, 2015.
The City of Newport Beach implemented GASB 75 for the fiscal year ended June 30, 2018.
206
CITY OF NEWPORT BEACH
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Primary Revenue
$120,000,000
$100,000,000
$80,000,000
$60,00D,00D
$40,000,000
$20.000:00
2011 2012 2013 2014 D15 2016 2017 2018 2019 2020
• Property Taxes
le Sales Tax
• Transient Occupancy Taxes
• Sales Tax - In Lieu
207
Fiscal Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
General revenues and other changes in net position:
Governmental activities:
Taxes:
Property tax
$ 71,630,345 $
71,546,249 $
81,603,194 $
79,889,346
$ 84,121,461 $
91,516,611 $
96,964,060
$ 101,593,290
$ 108,365,261
$ 113,313,535
Sales tax
18,455,181
20,107,597
20,764,204
23,142,065
24,832,412
33,937,986
33,702,895
36,373,253
37,168,063
36,232,969
Sales tax in -lieu
6,284,266
6,523,492
7,078,517
7,727,876
8,046,424
2,870,474
-
-
-
-
Transient occupancy tax
13,082,451
14,798,191
16,500,285
18,176,369
20,369,158
21,083,199
22,382,361
22,857,737
24,697,446
21,097,384
Business license tax
4,090,634
4,073,725
4,145,666
4,156,130
4,141,282
4,024,386
4,149,016
4,282,935
4,428,440
4,882,419
Franchise tax
3,730,819
3,845,901
3,820,723
3,998,943
4,189,130
4,047,584
4,026,005
4,228,469
4,286,496
4,394,156
Motor vehicle license fees
403,042
42,911
-
-
-
-
-
-
-
-
Other taxes
226,257
278,521
286,880
216,604
354,919
327,009
358,209
3,346,987
2,633,720
2,592,369
Investment income
366,081
405,674
219,091
642,915
437,272
584,259
589,001
632,808
2,644,319
2,621,488
Net increase in fair value of
vestments
369,235
246,119
-
53,783
61,337
376,311
-
-
2,234,249
2,520,033
Other
2,601,538
2,789,471
2,748,524
3,803,728
3,161,567
4,001,486
2,290,482
3,416,348
3,495,085
2,116,884
Change in accounting estimates
-
8,484,000
-
-
-
-
-
-
-
-
Capitalcontributions
-
7,352
319,884
-
-
-
-
-
-
-
Transfers
(3,500,000)
Total governmental activities
121,239,849
133,149,203
137,486,968
141,707,759
149,714,962
162,769,305
160,962,029
176,731,827
189,953,079
189,771,237
Business -type activities:
Investmenlincome
52,996
49,718
22,442
128,439
123,445
216,576
77,752
184,906
713,970
732,099
Net increase in fair value of
vestments
58,977
67,696
-
18,199
34,921
148,527
-
-
612,358
625,864
Other
-
-
-
-
-
2,375,000
-
-
-
-
Capital contributions
-
(7,352)
(319,884)
-
-
22,516
-
-
-
-
Transfers
3,500,000
Total business -type activities
111,973
110,062
(297,442)
146,638
158,366
2,762,619
3,577,752
184,906
1,326,328
1,357,963
Total primary government
121,351,822
133,259,265
137,189,526
141,854,397
149,873,328
165,531,924
164,539,781
176,916,733
191,279,407
191,129,200
Changes in net position
Governmental activities
13,645,559
25,076,917
32,094,933
17,477,106
41,650,830
37,762,886
32,192,707
24,961,223
35,832,389
22,914,865
Business -type activities
(204,312)
5,651,588
6,278,498
7,577,250
6,561,505
4,904,971
5,887,234
2,678,798
1,119,041
890,332
Total primary government
$ 13,441,247 $
30,728,505 $
38,373,431 $
25,054,356
$ 48,212,335 $
42,667,857 $
38,079,941
$ 27,640,021
$ 36,951,430
$ 23,805,197
Primary Revenue
$120,000,000
$100,000,000
$80,000,000
$60,00D,00D
$40,000,000
$20.000:00
2011 2012 2013 2014 D15 2016 2017 2018 2019 2020
• Property Taxes
le Sales Tax
• Transient Occupancy Taxes
• Sales Tax - In Lieu
207
CITY OF NEWPORT BEACH
Fund Balances of Governmental Funds'
Last Ten Fiscal Years
(modified accrual basis of accounting)
All other governmental funds
Nonspendable
$ 5,898,234
Fiscal Year
$ 4,697,220
$ 4,629,781
2011
2012
2013
2014
General fund:
Committed
115,923,344
70,500,156
33,961,163
Nonspendable
$ 1,031,742 $
7,854,478
$ 9,919,486
$ 16,316,499
Restricted
1,681,333
2,263,049
2,410,373
3,939,751
Committed
27,619,902
29,673,333
29,371,507
12,782,235 4
Assigned
11,865,835
19,431,475
6,843,417
1,326,170
Unassigned
20,570,033
20,570,023
32,585,375
51,015,820 4
Total general fund
$ 62,768,845 2 $
79,792,358
$ 81,130,158
$ 85,380,475
All other governmental funds
Nonspendable
$ 5,898,234
$ 5,396,436
$ 4,697,220
$ 4,629,781
Restricted
36,445,842
30,957,184
27,433,342
33,243,790
Committed
115,923,344
70,500,156
33,961,163
19,513,389
Assigned
5,633,558
-
-
-
Unassigned
(2,988,102)
(11,339,671)
(15,723,261)
(14,291,969)
Total all other governmental funds
$ 160,912,876 3
$ 95,514,105
$ 50,368,464
$ 43,094,991
Total all governmental funds
$ 223,681,721
$ 175,306,463
$ 131,498,622
$ 128,475,466
' The City of Newport Beach implemented GASB 54 for the fiscal year ending June 30, 2011.
2 2011 general fund data varies from trend due to $31.3 million transfer from General Fund to Facilities
Financial Planning Reserve Fund.
3 2011 other governmental funds data varies from trend due to issuance of Civic Center COPS.
4 Data varies from trend due to the reclassification of the contingency reserve from committed fund balance to
unassigned fund balance per council approval.
s Data varies from trend due to the moving of general fund capital projects to a separate capital project fund.
6 Data varies from trend due to additional funds set aside for seawall construction and pension related items
208
CITY OF NEWPORT BEACH
Fund Balances of Governmental Funds'
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2015 2016 2017 2018 2019 2020
$ 15,784,396 $ 15,210,896 $ 14,434,017 $ 14,050,930 $ 13,147,221 $ 11,864,115
5,389,810 3,083,133 3,797,009 4,412,302 4,757,437 5,710,434
11,847,852 2,726,020 a 10,570,638 6 13,444,487 13,335,675 2,210,811
1,421,225 4,201,311 567,132 590,368 1,199,682 2,598,828
55,509,258 56,618,041 60,009,244 61,415,049 64,146,123 76,699,284
$ 89,952,541 $ 81,839,401 e $ 89,378,040 s $ 93,913,136 $ 96,586,138 $ 99,083,472
$ 4,669,269 $ 4,629,781 $ 4,666,256 $ 4,787,243 $ 4,715,545 $ 4,646,529
29,842,384 33,662,859 31,950,139 38,629,419 45,958,167 53,310,518
26,159,261 40,248,977 49,510,047 41,731,742 40,732,124 48,032,259
(12,495,729) (15,422,984) (6,308,331) (376,162) (253) (50,137)
$ 48,175,185 $ 63,118,633 $ 79,818,111 $ 84,772,242 $ 91,405,583 $ 105,939,169
$ 138,127,726 $ 144,958,034 $ 169,196,151 $ 178,685,378 $ 187,991,721 $ 205,022,641
$180,000,000
$160,000,000
$140,000,000
$120,000,000
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
Fund Balances
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
■Total General Fund
■Total all other Governmental Funds
209
CITY OF NEWPORT BEACH
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
210
Fiscal Year
2011
2012
2013
2014
Revenues:
Taxes
$ 117,983,765 $
121,710,955
$ 134,733,550
$ 137,910,879
Intergovernmental
11,467,471
12,122,963
11,393,589
16,825,839
Licenses, permits and fees
5,198,986
6,691,125
7,682,555
6,659,203
Charges for services
15,285,813
16,020,825
16,254,399
16,864,092
Fines and forfeitures
3,545,229
3,795,787
3,649,532
3,272,951
Investment income
1,045,592
1,142,935
372,514
1,136,062
Net increase in fair value of investments
882,317
704,656
-
124,439
Property income
15,538,387
17,458,143
19,847,371
22,214,256
Donations
1,790,073
13,977,850
587,445
1,170,171
Other
5,091,527
691,125
3,543,894
1,400,048
Total revenues
177,829,160
194,316,364
198,064,849
207,577,940
Expenditures:
Current:
General government
15,424,734
12,896,492
13,671,480
14,471,167
Public safety
74,947,173
75,377,871
80,546,969
82,642,988
Public works
31,442,076
32,399,178
32,451,624
32,414,457
Community development
8,430,813
8,939,825
8,994,710
9,768,928
Community services
15,662,011
19,296,505
18,872,022
19,047,813
Capital outlay
37,645,882
80,617,948
72,133,582
33,572,193
Debt service:
Principal
6,230,080
4,529,854
3,998,000
4,091,000
Interest and fiscal charges
1,179,612
8,320,500
8,152,488
8,052,927
Issuance of debt costs
1,219,071
-
-
-
Total expenditures
192,181,452
242,378,173
238,820,875
204,061,473
Excess (deficiency) of revenues over
(under) expenditures
(14,352,292)
(48,061,809)
(40,756,026)
3,516,467
Other financing sources (uses):
Transfers in
58,763,620
24,640,318
47,875,107
41,223,727
Transfers out
(58,763,620)
(24,953,767)
(50,926,922)
(47,245,283)
Proceeds from issuance of debt
126,660,000
Proceeds from sale
-
-
-
-
Issuance of debt premium
1,155,300
Proceeds from loan issuance
-
-
-
-
Payment to refunded loan escrow agent
-
-
-
-
Totalotherfinancing sources (uses)
127,815,300
(313,449)
(3,051,815)
(6,021,556)
Net change in fund balances
$ 113,463,008 $
(48,375,258)
$ (43,807,841)
$ (2,505,089)
Debt service as a percentage of
noncapital expenditures
4.8%
8.3%
15.8%
6.9
210
CITY OF NEWPORT BEACH
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2015 2016 2017 2018 2019 2020
$ 146,664,903 $ 158,386,385 $ 162,184,218 $ 171,982,240 $ 183,455,182 $ 182,983,069
11,813,208 17,262,147 17,073,653 16,148,754 15,818,543 12,672,931
14,676,754 6,571,123 9,844,908 6,405,668 6,302,603 5,783,862
16,914,210 18,827,991 19,197,065 19,828,786 19,472,866 21,125,622
3,732,405 3,684,602 3,590,700 3,181,823 3,347,714 3,509,883
928,729 1,157,539 772,546 1,143,210 3,490,992 3,765,753
177,485 769,460 - - 2,938,136 3,477,299
21,406,667 22,259,425 23,553,188 25,430,217 26,674,107 25,651,360
22,249,427 4,190,822 16,827,889 414,123 402,709 795,561
6,984,418 2,982,924 2,277,322 2,893,770 5,173,716 5,950,279
245,548,206 236,092,418 255,321,489 247,428,591 267,076,568 265,715,619
14, 060, 512
14, 629, 672
15, 086, 397
16, 099, 310
16, 769, 920
15, 968, 085
94,568,122
96,225,784
98,750,981
109,760,129
116,054,531
118,290,847
33,694,578
36,000,905
35,961,024
38,012,230
44,132,877
45,730,965
9,876,706
10, 913, 205
11, 696, 779
12, 979, 656
12, 310, 621
12, 612, 751
20,235,546
21,784,680
23,607,284
25,538,966
26,372,495
24,474,242
47,169,671
31,934,463
30,822,972
24,054,866
26,347,312
20,376,106
4,183,000
4,272,000
4,401,000
3,335,000
3,470,000
3,576,000
7,957,811
7,839,341
7,704,957
7,617,107
7,428,469
7,265,703
231,745,946
223,600,050
228,031,394
237,397,264
252,886,225
248,294,699
13,802,260
12,492,368
27,290,095
10,031,327
14,190,343
17,420,920
53,281,956
48,523,132
45,342,446
45,308,862
54,664,532
40,373,981
(57,431,956)
(54,185,192)
(49,390,226)
(45,850,962)
(59,548,532)
(40,763,981)
995,802
1,339,000
(1,339,000)
6.6% 7.2% 6.0% 5.3% 4.8% 4.8%
211
REVENUE CAPACITY
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) 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. The
statistical information presented herein is un -audited.
The following schedules present factors affecting the City's ability to generate its
own revenue and its most significant local revenue source, the property tax:
• Assessed Value and Estimated Actual Value of Taxable Property
• Direct and Overlapping Property Tax Rates
• Principal Property Tax Payers
• Property Tax Levies and Collections
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive Annual Financial Reports and underlying accounting records for the relevant
years.
212
CITY OF NEWPORT BEACH
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
Secured
Fiscal Year
Change
Total Direct
Tax Rate
38,751,370,481
0.24%
Ended June
39,115,501,760
0.94%
1.000%
40,183,130,504
30
Residential
Commercial
Other
Unsecured
2011
30,853,053,683
4,711,084,222
1,516,055,361
1,671,177,215
2012
31,603,505,416
4,504,291,343
1,442,600,505
1,565,104,496
2013
32,522,843,119
4,627,463,458
1,435,546,888
1,597,277,039
2014
34,678,952,381
4,688,189,694
1,489,111,147
1,484,909,241
2015
36,814,891,583
5,007,508,388
1,348,136,131
1,581,520,801
2016
39,263,791,190
5,264,898,550
1,394,764,145
1,465,016,213
2017
41,834,060,284
5,539,551,197
1,398,481,252
1,569,593,832
2018
44,862,969,434
5,953,148,011
1,499,414,812
1,464,683,763
2019
48,246,937,786
6,466,645,074
1,474,416,367
1,513,162,553
2020
50,791,887,238
6,807,750,346
1,552,189,492
1,592,979,478
NOTE
Total Taxable
Assessed Value
Change
Total Direct
Tax Rate
38,751,370,481
0.24%
1.000%
39,115,501,760
0.94%
1.000%
40,183,130,504
2.73%
1.000%
42,341,162,463
5.37%
1.000%
44,752,056,903
5.69%
1.000%
47,388,470,098
5.89%
1.000%
50,341,686,565
6.23%
1.000%
53,780,216,020
6.83%
1.000%
57,701,161,781
7.29%
1.000%
60,744,806,554
5.27%
1.000%
In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed
value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor' (limited to a maximum increase of
2%). With few exceptions, property is only re -assessed as a result of new construction activity or at the time it is sold to a new owner. At that point, the
property is reassessed based upon the added value of the construction or at the purchase price or economic value of the property sold. The assessed
valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the
limitations described above.
Source: HdL, Coren & Cone; Avenu Insights & Analytics
213
CITY OF NEWPORT BEACH
Direct and Overlapping Property Tax Rates
(Rate per $100 of assessed value)
Last Ten Fiscal Years
Fiscal Year
taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as
a percentage of assessed property values for the payment of other debt obligations.
Source: HdL, Coren & Cone; Avenu Insights & Analytics
214
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
City Direct Rates:
City basic rate
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
Total City Direct Rate
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
Overlapping Rates:
Water Districts
0.081
0.081
0.081
0.081
0.047
0.047
0.047
0.047
0.047
0.032
School Districts
0.1548
0.1546
0.1646
0.1702
0.1819
0.1826
0.1730
0.1764
0.1612
0.1726
Total Overlapping Rate
0.236
0.236
0.245
0.251
0.228
0.229
0.219
0.223
0.208
0.205
Total Direct & Overlapping Rate
$ 1.236
$ 1.236
$ 1.245
$ 1.251
$ 1.228
$ 1.229
$ 1.219
$ 1.223
$ 1.208
$ 1.205
NOTE:
In 1978, California voters passed Proposition 13 which sets the property
tax rate at
a 1.00% fixed amount.
This 1.00% is shared
by all
taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as
a percentage of assessed property values for the payment of other debt obligations.
Source: HdL, Coren & Cone; Avenu Insights & Analytics
214
CITY OF NEWPORT BEACH
Principal Property Taxpayers
Current Year and Nine Years Ago
Source: HdL, Coren & Cone; Avenu Insights & Analytics
215
2020
2011
Percent of Total
Percent of Total
Taxable Assessed
City Taxable
Taxable Assessed
City Taxable
Taxpayer
Value
Rank
Assessed Value
Value
Rank
Assessed Value
The Irvine Company
$ 1,308,633,624
1
2.15%
$ 1,943,855,195
1
5.02%
PH Finance LLC
301,250,758
2
0.50%
N/A
-
0.00%
Villas at Fashion Island
262,841,532
3
0.43%
N/A
0.00%
HG Newport Owner LLC
180,030,000
4
0.30%
N/A
0.00%
520 Newport Center Drive LLC
177,543,021
5
0.29%
N/A
0.00%
650 Newport Center Drive LLC
160,971,896
6
0.26%
N/A
0.00%
Newport Bluffs LLC
159,552,819
7
0.26%
137,816,296
3
0.36%
WJ Newport LLC
141,159,898
8
0.23%
N/A
-
0.00%
UDR Newport Beach North LP
138,091,341
9
0.23%
117,510,707
5
0.30%
Balboa Bay Club Ventures LLC
134,362,404
10
0.22%
126,251,407
4
0.33%
Source: HdL, Coren & Cone; Avenu Insights & Analytics
215
CITY OF NEWPORT BEACH
Property Tax Levies and Collections
Last Ten Fiscal Years
Net collections reflect deductions for refunds and impoundments.
2 Exclusive of penalty charges
3 The total amount of Fiscal Year 2020 delinquent taxes collected in subsequent years was not available as of the
date the information was collected for the City's Comprehensive Annual Financial Report.
Source: Orange County Auditor Controller's Office
216
Collected within the Fiscal
Year of Levy
Total Collections
to Date
Fiscal Year
Collections in
Ended June
Taxes Levied for
Percent of
Subsequent
Percent of
30
the Fiscal Year
Amount'
Levy
Years 2
Amount
Levy
2011
70,476,893
68,577,472
97.30%
1,069,122
69,646,594
98.82%
2012
71,157,295
69,435,794
97.58%
985,344
70,421,138
98.97%
2013
74,165,333
72,532,734
97.80%
736,983
73,269,717
98.79%
2014
79,195,727
77,758,504
98.19%
650,273
78,408,777
99.01%
2015
83,843,488
82,191,604
98.03%
642,292
82,833,896
98.80%
2016
84,166,940
81,762,526
97.14%
612,863
82,375,389
97.87%
2017
86,264,321
84,019,053
97.40%
574,124
84,593,177
98.06%
2018
92,139,181
90,279,099
97.98%
581,969
90,861,068
98.61%
2019
98,471,700
96,356,203
97.85%
646,203
97,002,406
98.51%
2020
102,636,451
100,701,002
98.11%
- 3
100,701,002
98.11%
Net collections reflect deductions for refunds and impoundments.
2 Exclusive of penalty charges
3 The total amount of Fiscal Year 2020 delinquent taxes collected in subsequent years was not available as of the
date the information was collected for the City's Comprehensive Annual Financial Report.
Source: Orange County Auditor Controller's Office
216
DEBT CAPACITY
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) 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. The
statistical information presented herein is un -audited.
The following schedules exhibit the City's levels of outstanding debt over time, to
help readers assess the affordability of the current level of outstanding debt, and
the City's ability to issue additional debt:
• Ratios of Outstanding Debt by Type
• Ratios of General Bonded Debt Outstanding
• Direct and Overlapping Debt
• Legal Debt Margin Information
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive Annual Financial Reports and underlying accounting records for the relevant
years.
217
CITY OF NEWPORT BEACH
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Note: This schedule excludes claims and judgments, employee compensated absence, OPEB and Early
Retirement Incentive Plan Liabilities. Details regarding the City's outstanding debt can be found in the notes to
the financial statements.
Amounts include any applicable bond premium.
2 These ratios are calculated using personal income and population for the prior calendar year.
218
Governmental Activities
Fiscal
Year
Purchase
Ended
Certificates of
Pre -Annexation
Agreement
June 30
Participation 1
Note Payable Agreement
CDBG Loan Capital Leases
Payable
2011
127,744,977
737,854 7,200,000
1,788,000
750,000
2012
125,884,424
- 6,000,000
1,686,000
-
2013
123,073,871
4,800,000
1,578,000
2014
120,178,318
3,600,000
1,462,000
2015
117,197,765
2,400,000
1,339,000
2016
114,137,212
1,200,000
1,207,000
2017
110,956,659
-
1,066,000
2018
107,651,106
916,000
2019
104,220,553
756,000
2020
100,695,000
-
585,000
-
Note: This schedule excludes claims and judgments, employee compensated absence, OPEB and Early
Retirement Incentive Plan Liabilities. Details regarding the City's outstanding debt can be found in the notes to
the financial statements.
Amounts include any applicable bond premium.
2 These ratios are calculated using personal income and population for the prior calendar year.
218
CITY OF NEWPORT BEACH
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Business -type Activities
Total
Percentage of
Governmental Water Revenue Total Business-
Total Primary
Personal
Debt Per
Activities Bonds type Activities
Government
Income 2
Capita 2
138,220,831 -
138,220,831
2.34%
1,619
133,570,424 -
133,570,424
2.30%
1,553
129,451,871 -
129,451,871
1.85%
1,498
125,240,318 -
125,240,318
1.81%
1,442
120,936,765 -
120,936,765
1.77%
1,386
116,544,212 -
116,544,212
1.77%
1,383
112,022,659 -
112,022,659
1.66%
1,319
108,567,106 -
108,567,106
1.48%
1,245
104,976,553 -
104,976,553
1.36%
1,204
101,280,000 -
101,280,000
1.24%
1,181
219
Fiscal Year Certificates of
Ended June 30 Participation'
2011
127,744,977
2012
125,884,424
2013
123,073,871
2014
120,178,318
2015
117,197,765
2016
114,137,212
2017
110,956,659
2018
107,651,106
2019
104,220,553
2020
100,695,000
CITY OF NEWPORT BEACH
Ratios of General Bonded Debt
Last Ten Fiscal Years
Amounts
restricted for
debt service Total
(1,488,670)
(2,532,561)
(1,157,250)
(2,352,746)
(2,350,210)
(2,362,904)
(2,364,034)
(2,384,338)
(2,362,228)
(1,159,389)
126,256,307
123,351,863
121,916,621
117,825,572
114,847,555
111,774,308
108,592,625
105,266,768
101,858,325
99,535,611
Percent of
Assessed
Value
0.33%
0.32%
0.30%
0.28%
0.26%
0.24%
0.22%
0.20%
0.18%
0.16%
General
Bonded Debt
Per Capita
1,479
1,434
1,410
1,356
1,316
1,326
1,279
1,207
1,168
1,160
' Amounts include any applicable bond premium.
2 Assessed value was used because the actual value of taxable property is not readily available in the
State of California.
220
CITY OF NEWPORT BEACH
Direct and Overlapping Debt
June 30, 2020
City Net Assessed Valuation:
OVERLAPPING DEBT:
Metropolitan Water District
Coast Community College District
Rancho Santiago Community College District
Rancho Santiago Community College District School Facilities Improvement District No. 1
Laguna Beach Unified School District
Laguna Beach Unified School District Community Facilities District No. 98-1
Newport Mesa Unified School District
Newport Mesa Unified School District Community Facilities District No. 90-1
Santa Ana Unified School District
Irvine Ranch Water District Improvement Districts
Bonita Canyon Public Facilities Financing Authority Community Facilities District No. 98-1
California Statewide Communities Development Authority Community Facilities District No.
2018-3
City of Newport Beach 1915 Act Bonds
Orange County Newport Coast Assessment District No. 01-1
Orange County Newport Coast Reassessment District No. 17-1 R
Orange County General Fund Obligations
Orange County Pension Obligation Bonds
Orange County Board of Education Certificates of Participation
Coast Community College District Certificates of Participation
Santa Ana Unified School District Certificates of Participation
Overlapping Tax Increment Debt (Successor Agencies):
TOTAL OVERLAPPING DEBT
DIRECT DEBT:
City of Newport Beach Certificates of Participation
Community Development Block Grant Loan
TOTAL DIRECT DEBT
TOTAL DIRECT AND OVERLAPPING DEBT
GROSS COMBINED TOTAL DEBT 121
$ 60,744,806,554
Percentage
Outstanding Debt
Estimated Share of
Applicable Ill
6/30/20
Overlapping Debt
1.964%
$ 37,300,000
$ 732,572
34.373%
908,050,757
312,124,287
2.911%
220,164,038
6,408,975
5.495%
166,020,000
9,122,799
15.195%
20,005,000
3,039,760
100.000%
7,760,000
7,760,000
73.167%
248,378,251
181,730,915
100.000%
2,445,000
2,445,000
6.780%
285,682,392
19,369,266
2.847%-
448,318,900
53,036,701
100.000%
100.000%
23,525,000
23,525,000
100.000%
8,300,000
8,300,000
100.000%
10,652,458
10,652,458
100.000%
4,019,000
4,019,000
100.000%
24,855,000
24,855,000
9.707%
386,745,000
37,541,337
9.707%
466,863,754
45,318,465
9.707%
12,930,000
1,255,115
34.373%
2,600,000
893,698
6.780%
62,467,085
4,235,268
3.749%-
13,070,000
5,898,796
66.569%
$ 3,360,151,635
$ 762,264,412
100.000%
$ 100,695,000
$ 100,695,000
100.000%
585,000
585,000
$ 101,280,000
$ 101,280,000
$ 863,544,412
$ 863,544,412
1
The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by
determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value.
2
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded capital lease obligations.
Ratios to 2019-20 Net Assessed Valuation:
Total Overlapping Debt 1.25%
Total Direct Debt ($101,280,000) 0.17%
Gross Combined Total Debt 1.42%
Ratios to Redevelopment Incremental Valuation ($1.275.334.9041
Total Overlapping Tax Increment Debt 0.46%
Source: California Municipal Statistics, Inc.
221
Assessed valuation
Conversion percentage
Adjusted assessed valuation
Debt limit percentage
Debt limit
Total net debt applicable to limit:
General obligation bonds
Legal debt margin
Total debt applicable to the limit
as a percentage of debt limit
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
2011 2012 2013 2014
$ 1,453,176,393 $ 1,466,831,316 $ 1,506,867,394 $ 1,587,793,592
0.0% 0.0% 0.0% 0.0%
NOTE:
The State of California Government Code Section 43605 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.
Source: City Finance Department
222
25%
25%
25%
25%
9,687,842,620
9,778,875,440
10,045,782,626
10,585,290,616
15%
15%
15%
15%
1,453,176, 393
1,466,831, 316
1, 506, 867, 394
1,587,793,592
$ 1,453,176,393 $ 1,466,831,316 $ 1,506,867,394 $ 1,587,793,592
0.0% 0.0% 0.0% 0.0%
NOTE:
The State of California Government Code Section 43605 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.
Source: City Finance Department
222
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
2015 2016 2017 2018 2019 2020
25% 25% 25% 25% 25% 25%
11,188,014,226 11,847,117,525 12,585,421,641 13,445,054,005 14,425,290,445 15,186,201,639
15% 15% 15% 15% 15% 15%
1,678,202,134 1,777,067,629 1,887,813,246 2,016,758,101 2,163,793,567 2,277,930,246
$ 1,678,202,134 $ 1,777,067,629 $ 1,887,813,246 $ 2,016,758,101 $ 2,163,793,567 $ 2,277,930,246
0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
223
DEMOGRAPHIC AND ECONOMIC INFORMATION
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) 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. The
statistical information presented herein is un -audited.
The following schedules depict demographic and economic indicators to assist
the reader in understanding the socio-economic, environment in which the City's
financial activities take place:
• Demographic and Economic Statistics
• Principal Employers
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive Annual Financial Reports and underlying accounting records for the relevant
years.
224
CITY OF NEWPORT BEACH
Demographic and Economic Statistics
Last Ten Fiscal Years
Population estimates are as of January 1 of the year shown and do not reflect revised
estimates made available after the date the information was collected for the City's
Comprehensive Annual Financial Report.
Sources:
(') California State Department of Finance, E-4 Population Estimates for Cities, Counties
and State 2008-2010; and, E-1 Population Estimates for Cities, Counties and State
January 1, 2015 - 2020.
(Z) U.S. Census Bureau - American Community Survey 1 -Year Estimates
(3) State of California, Employment Development Department
225
Personal Income
Per Capita
Unemployment
Fiscal Year
Population'
(in thousands)
Income (2)
Rate (3)
2011
85,376
5,916,215
69,296
5.8%
2012
85,990
5,809,828
67,564
5.1%
2013
86,436
6,995,784
80,936
4.2%
2014
86,874
6,926,725
79,733
3.6%
2015
87,249
6,848,523
78,494
4.0%
2016
84,270
6,574,071
78,012
3.4%
2017
84,915
6,736,392
79,331
3.1%
2018
87,182
7,334,970
84,134
2.9%
2019
87,180
7,704,445
88,374
2.6%
2020
85,780
8,183,755
95,404
4.6%
Population estimates are as of January 1 of the year shown and do not reflect revised
estimates made available after the date the information was collected for the City's
Comprehensive Annual Financial Report.
Sources:
(') California State Department of Finance, E-4 Population Estimates for Cities, Counties
and State 2008-2010; and, E-1 Population Estimates for Cities, Counties and State
January 1, 2015 - 2020.
(Z) U.S. Census Bureau - American Community Survey 1 -Year Estimates
(3) State of California, Employment Development Department
225
CITY OF NEWPORT BEACH
Principal Employers'
Current Year and 9 years ago
' Figures reflect number of employees of employer at the time the information was collected.
2 Company listed was unable to provide employee data for 2011.
Source: Data obtained from companies listed and compiled by City Finance Department.
226
2020
2011
Number of
Percent of Total
Number of
Percent of Total
Employer
Employees
Rank
Employment
Employees
Rank
Employment
Hoag Memorial Hospital
5,200
1
6.32%
5,000
1
6.22%
Irvine Management Company
1,809
2
2.20%
N/A 2
-
N/A
Pacific Life Insurance
1,293
3
1.57%
1,119
2
1.39%
PIMCO Advisors
1,250
4
1.52%
1,005
4
1.25%
Glidewell Dental
967
5
1.18%
1,100
3
1.37%
Resort at Pelican Hill
955
6
1.16%
750
7
0.93%
Newport -Mesa Unified School District
800
7
0.97%
895
5
1.11%
Jazz Semi -Conductor
779
8
0.95%
554
8
0.69%
City of Newport Beach
727
9
0.88%
807
6
1.00%
Hyundai Capital America
590
10
0.72%
N/A 2
-
N/A
Fletcher Jones Motor Cars Inc.
510
11
0.62%
450
11
0.56%
Hyatt Regency Newport Beach
400
12
0.49%
N/A 2
-
N/A
' Figures reflect number of employees of employer at the time the information was collected.
2 Company listed was unable to provide employee data for 2011.
Source: Data obtained from companies listed and compiled by City Finance Department.
226
OPERATING INFORMATION
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) 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. The
statistical information presented herein is un -audited.
The following schedules present information on the City's operations and
resources including service and infrastructure data to facilitate the readers'
understanding of how financial statement information relates to the services the
City provides and the activities it performs:
• Full Time City Employees by Functions
• Operating Indicators by Function
• Capital Asset Statistics by Function
• Water Sold by Customer Type
• Utility Rates
• Major Water Customers
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive Annual Financial Reports and underlying accounting records for the relevant
years.
227
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228
CITY OF NEWPORT BEACH
Full-time City Employees by Function
Last Ten Fiscal Years
Full -Time Employees as of June 30
Function 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
General government
94
95
94
79
78
77
77
79
80
78
Public safety
381
359
357
366
370
374
371
372
375
375
Community development
51
58
56
53
52
52
52
53
53
53
Public works
144
130
128
119
109
104
99
98
96
100
Community services
70
68
70
74
75
79
81
79
78
78
Water
37
38
32
32
31
32
31
33
34
33
Wastewater
15
15
15
13
13
12
13
11
11
11
Total
792
763
752
736
728
730
724
725
726
727
Source: City Finance Department
229
CITY OF NEWPORT BEACH
Operating Indicators by Function
Last Ten Fiscal Years
Police:
Adult Arrests
Parking Citations Issued
Fire:
Fire Responses
Fire Inspections
General Services:
Street Patching (tons of mix)
Sidewalk Repair (square feet)
Recreation & Senior Services:
Co -Sponsored Youth Organization Attendance
Senior Transportation Services
Water:
New Connections
Average Daily Consumption (hundred cubic feet)
Sewer:
New Connections
Miles of Pipe Cleaned
Library Services:
Library Circulation of Materials
Fiscal Year
2011
2012
2013
2014
3,093
2,982
3,161
2,794
67,459
55,418
58,823
51,609
165
201
342
356
7,100
4,315
4,338
3,352
2,580
2,246
1,708
2,408
39,972
34,000
37,607
37,607
322,000
257,322
293,938
294,000
15,063
15,264
13,112
13,956
28
35
54
72
17.25
15.15
14.02
15.96
6
15
14
22
235
248
215
245
1,770,683 1,582,953 1,582,914 1,689,870
Data varies with trend due to inclusion of responses to fires, hazardous materials, medical and other emergencies
Source: City of Newport Beach
230
CITY OF NEWPORT BEACH
Operating Indicators by Function
Last Ten Fiscal Years
Fiscal Year
2015
2016
2017
2018
2019
2020
3,472
3,158
3,178
3,266
3,520
3,093
59,753
64,762
69,246
56,685
67,048
73,372
305
300
247
248
209
11,913
1,281
1,201
1,216
1,307
1,033
2,842
2,711
1,890
1,439
1,403
1,402
913
27,175
27,000
20,490
22,925
14,840
11,729
303,152
305,000
425,000
437,751
469,959
439,954
13,740
14,000
13,500
13,071
13,386
9,300
187
194
229
210
210
256
16.39
11.66
13.80
14.07
13.75
13.44
20
17
41
137
46
10
260
250
202
211
196
221
1,610,818
1,575,000
1,464,640
1,424,594
1,376,041
1,084,206
231
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Police:
Stations
Fire:
Fire Stations
Lifeguard Headquarters
Public works:
Streets (miles)
Streetlights
Traffic Signals
Recreation & Senior Services:
Parks
Community Centers (includes leased property)
Aquatic Center
Water:
Water Mains (miles)
Maximum Daily Capacity (thousands of gallons)
Wastewater:
Sanitary Sewers (miles)
Storm Sewers (miles)
Library Services:
Libraries
Source: City of Newport Beach
Fiscal Year
2011
2012
2013
2014
1
1
1
1
8
8
8
8
1
1
1
1
395
395
395
395
5,978
5,977
5,977
5,977
803
808
808
808
63
63
64
64
14
14
14
14
1
1
1
1
303.25
303.25
303.25
298.37
28,540
27,508
26,916
27,704
202.40
202.40
202.40
202.62
95.40
95.40
95.40
70.62
232
4 4 4 4
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Fiscal Year
2015
2016
2017
2018
2019
2020
1
1
1
1
1
1
8
8
8
8
8
8
1
1
1
1
1
1
395
399
400
400
400
400
5,977
5,978
5,978
5,978
5,971
5,972
808
808
808
808
808
808
64
64
64
64
65
65
14
15
15
15
15
15
1
1
1
1
1
1
299.58
299.77
300.64
300.30
300.88
300.82
27,800
27,800
27,800
27,800
27,800
27,800
202.64
202.75
202.72
203.56
203.99
204.10
94.14
92.08
94.74
95.12
95.35
95.89
4 4 4 4 4 4
233
CITY OF NEWPORT BEACH
Water Sold by Type of Customer
Last Ten Fiscal Years
(in hundred cubic feet)
Fiscal Year
Source: City Utilities Department
234
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Type of Customer:
Residential
3,656,705
4,001,344
3,890,973
3,902,007
3,853,566
3,072,589
3,564,203
3,603,927
3,439,655
3,747,408
Commercial
1,145,843
2,369,492
2,389,822
2,525,169
2,560,620
1,847,372
2,142,952
2,201,254
2,075,812
2,081,860
Government
320,821
374,091
394,787
455,251
396,605
263,116
305,214
289,738
256,398
270,638
Total
5,123,369
6,744,927
6,675,582
6,882,427
8,791
6, 10
5,183,077
6,012,369
6,094,919
5,771,865
6,099,907
Total direct rate
per 100 cubic ft.
$ 2.46
$ 2.73
$ 2.96
$ 3.08
$ 3.08
$ 3.08
$ 3.08
$ 3.08
$ 3.08
$ 3.08
Source: City Utilities Department
234
CITY OF NEWPORT BEACH
Utility Rates'
Last Ten Fiscal Years
Fiscal Year
Ended June
Monthly
Rate per
30
Base Rate
100 cubic ft
2010
12.77
2.55
2011
17.59
2.81
2012
19.61
3.08
2013
21.13
3.31
2014
21.77
3.43
2015
21.77
3.43
2016
21.77
3.43
2017
21.77
3.43
2018
23.73
3.46
2019
24.34
3.50
2020
28.09
3.57
Rates are based on 5/8" or 3/4" meter,
which are the standard household meter
sizes. Rates include sewer service. The
City charges an excess -use rate above
normal demand.
Source: City Revenue Division
235
CITY OF NEWPORT BEACH
Major Water Customers
Current Year and Nine Years Ago
Source: City Revenue Division
236
2020
2011
Percent of Total
Percent of Total
Water Customer
Water Charges
Rank
Water Revenues
Water Charges
Rank
Water Revenues
Irvine Company Apartment
$ 182,793
1
0.65%
$ 309,815
2
1.54%
Irvine Company Office
173,422
2
0.61%
239,028
3
1.19%
Bluffs Homeowners Association
135,518
3
0.48%
228,745
5
1.13%
Big Canyon Country Club
128,868
4
0.46%
174,812
8
0.87%
Newport Beach Country Club
116,742
5
0.41%
212,512
6
1.05%
Hoag Memorial Hospital
94,657
6
0.33%
312,130
1
1.55%
Newport -Mesa Unified School District
82,727
7
0.29%
152,443
9
0.76%
Park Newport Ltd
66,555
8
0.24%
198,953
7
0.99%
UDR Newport Beach
62,512
9
0.22%
231,063
4
1.15%
Irvine Company Retail
62,076
10
0.22%
121,663
11
0.60%
Pacific View - Pierce Bros.
58,885
11
0.21%
144,035
10
0.71%
Jasmine Creek Community Association
55,154
12
0.19%
76,235
19
0.00%
North Bluff Bay View
52,044
13
0.18%
66,085
22
0.00%
Harbor Ridge Master Association
43,900
14
0.16%
72,647
20
0.00%
One Ford Road Community Association
42,877
15
0.15%
55,464
25
0.00%
$ 1,358,730
4.80%
$ 2,595,630
11.54%
Source: City Revenue Division
236
y
7
�1
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
(949) 644-3123
www.newportbeachca.gov/cafr
ATTACHMENT B
AUDITOR'S REQUIRED COMMUNICATIONS WITH THE AUDIT COMMITTEE
17-5
0
To the Honorable Mayor and
Members of the City Council
of the City of Newport Beach
Newport Beach, California
CliftonLarsonAllen LLP
CLAconnect.com
We have audited the financial statements of the governmental activities, the business -type activities,
each major fund, and the aggregate remaining fund information of the City of Newport Beach,
California (the City), as of and for the year ended June 30, 2020. Professional standards require that we
provide you with information about our responsibilities under generally accepted auditing standards, as
well as certain information related to the planned scope and timing of our audit. We have
communicated such information in our letter on planning matters dated May 7, 2020. Professional
standards also require that we communicate to you the following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 to the financial statements. No new
accounting policies were adopted. Other than the policy for writing off uncollectible receivables, the
application of existing policies was not changed during 2020. In prior years, management would
establish an allowance for uncollectible accounts on receivables older than 90 days with a low
expected collectability and then, after 3 years, write off any remaining uncollected balance. The current
year policy is to write off receivables that are over 120 days with a low expected collectability and not
establish any allowance. This change in existing policy did not significantly impact the City's financial
statements. We noted no transactions entered into by the City during the year for which there is a lack
of authoritative guidance or consensus. All significant transactions have been recognized in the
financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events affecting them
may differ significantly from those expected.
The most sensitive estimates affecting the City's financial statements are as follows:
a. The annual required contributions, pension expense, net pension liability and
corresponding deferred outflows of resources and deferred inflows of resources for
the City's public defined benefit plans are based on actuarial valuations provided by
CalPERS.
�A member of
Nexia
International
1
17-6
Significant Audit Findings (Continued)
Qualitative Aspects of Accounting Practices (Continued)
b. The actuarially determined contribution, OPEB expense, net OPEB liability, and
corresponding deferred outflows of resources and deferred inflows of resources for
the City's OPEB plan are based on actuarial valuations provided by a third party.
c. Management's estimate of the claims payable liabilities related to general liability
and worker's compensation claims are based on actuarial valuations provided by a
third parry.
We evaluated the key factors and assumptions used to develop these estimates in determining that they
were reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosures affecting the financial statements were
reported in Note 8 regarding claims payable, Note 10 regarding the City's defined benefit plans, and
Note 11 regarding the City's Other Post -Employment Benefit Plan. The financial statement disclosures
are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are clearly trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. The significant misstatements noted
related to grant revenue recognition. However, none of the misstatements detected as a result of our
audit procedures and corrected by management were material, either individually or in the aggregate,
to each opinion unit's financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditors' report. We are pleased to report that no such disagreements arose during the
course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated January 27, 2021.
2
17-7
Significant Audit Findings (Continued)
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the City's financial statements or a determination of
the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the City's auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses
were not a condition to our retention.
Other Matters
We applied certain limited procedures to management's discussion and analysis, the schedules of
changes in net pension liability and related ratios and the schedules of contributions related to the
City's defined benefit plans, and the schedule of changes in net OPEB liability and related ratios and
the schedule of contributions related to the City's OPEB plan, which are required supplementary
information (RSI) that supplements the financial statements. Our procedures consisted of inquiries of
management regarding 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 did not audit the RSI
and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining and individual fund financial statements and schedules
(supplementary schedules), which accompany the financial statements but are not RSI. With respect to
this supplementary information, we made certain inquiries of management and evaluated the form,
content, and methods of preparing the information to determine that the information complies with
accounting principles generally accepted in the United States of America, the method of preparing it
has not changed from the prior period, and the information is appropriate and complete in relation to
our audit of the financial statements. We compared and reconciled the supplementary information to
the underlying accounting records used to prepare the basic financial statements or to the basic
financial statements themselves.
We were not engaged to report on the introductory and statistical sections, which accompany the
financial statements but are not RSI. We did not audit or perform other procedures on this other
information and we do not express an opinion or provide any assurance on them.
Restriction on Use
This information is intended solely for the use of the City Council and management of the City of
Newport Beach and is not intended to be, and should not be, used by anyone other than these specified
parties.
LLQ
CliftonLarsonAllen LLP
Irvine, California
January 27, 2021
3
17-8
ATTACHMENT C
AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS
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CliftonLarsonAllen LLP
CLAconnect.com
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GO VERNMENTA UDITING STANDARDS
The Honorable Mayor and
Members of City Council
City of Newport Beach
Newport Beach, California
We have audited, in accordance with the 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, the financial statements of the governmental
activities, the business -type activities, each major fund, and the aggregate remaining fund information
of the City of Newport Beach, California (the City), as of and for the year ended June 30, 2020, and the
related notes to the financial statements, which collectively comprise the City's basic financial
statements and have issued our report thereon dated January 27, 2021.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate
in the circumstances for the purpose of expressing our opinions on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly,
we do not express an opinion on the effectiveness of the City's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal
control that is less severe than a material weakness, yet important enough to merit attention by those
charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph and
was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies
in internal control that we consider to be material weaknesses. However, material weaknesses may
exist that have not been identified.
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
CliftonLarsonAllen LLP
Irvine, California
January 27, 2021
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